CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A001600100001-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 35
• Document Creation Date: December 20, 2016
• Document Release Date: December 1, 2005
• Sequence Number: 1
• Publication Date: February 27, 1958
• Content Type: SUMMARY

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tONFIDENTIAL
I m . ^ w N .
0.0
II,
CURRENT
INTELIlGENCE
WEEKLY
SUMMARY
COPY NO. 16
OCI NO.0034/58
27 February 1958
DOCUMENT NO. &
NO CHANGE IN CLASS. 0
0 DECLASSIFIED
CLASS. CHANGED TO:
T.S
NEXT REVIEW DATE:
w1~
R - n
ts
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
CONFIDENTIAL
DIA and DOS review(s) completed.
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T'HI 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-
SIO,N4 OR REVELATION OF WHICH IN ANY MANNER TO
AN -UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
Thi 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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'VLFAUL.' III L ?.?"
CURRENT INTELLIGENCE WEEKLY SUMMARY
27 February 1958
OF IMMEDIATE INTEREST
President Sukarno is sched-
uled to make a major speech on
3 March in which he is expected
to call for an all-out campaign
against the Sumatran and North
Celebes rebels and their sympa-
thizers. This address presum-
ably will be an appeal to the
people over the heads of any
military and political leaders
who may be reluctant to support
his decision to use force..
Sukarno is also likely to
renew charges of Western in-
volvement in the dissident move-
ment, and probably will expand
considerably on the subject of
"imperialist attempts" to divide
the country. The 20 February
incident in Makassar Strait in
which a Dutch destroyer seized
and disarmed a former Dutch mer-
chant vessel now manned by Indo-
nesians may be used as the basis
for new and stronger charges of
Western interference in Indo-
nesian affairs.
The struggle between
the dissidents and the cen-
tral government is intensify-
ing ethnic antipathies between
Javanese and non-Javanese, as
evidenced by recent reactions
to bombings by the govern-
ment's forces. Sukarno, how-
ever, has gained significant
political support among non-
Communist Javanese political
leaders during the past week,
and has the continued firm
INDONESIA
o MILE91,. Goo
K I s i_. i f C
~~ MOR
aE J/
FlOREG
NEW GUINEA I
(Statusin DIIsputa)
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 February 1958
support of the Communist party,
which is chiefly Java-based.
Army Chief of Staff General
Nasution who supports Sukarno,
is
faced with the uncermi-n loyalty
of many military units in Java
from which troops almost cer-
tainly would be recruited, and
with the fact that considerable
forces are necessary in West
and Central Java to contain the
long-standing Darul Islam armed
dissident movement. Troops from
East Java are nevertheless re-
ported assembling in Djakarta
presumably for use in the dis-
sident provinces. Djakarta has
already sent commandos to Goron-
th Celebes
talo in rebellious Nor
to support a small body of if government troons attack Cen-
t 1 Sumatra
be satisfied because of a deci-
sion by the Singapore government
to ban shipment of war materiel
to both contending forces in
Indonesia. The Djakarta request
suggests that South Sumatra,
Djakarta's normal source for
high-octane fuel, is denying
supplies to the central govern-
ment.
The rebels have moved their
headquarters from Bukittinggi
to an undisclosed location in
the hills to avoid further air
attack and apparently are con-
tinuing to count on the support
of sympathetic forces in the
military districts both to the
north and south.
Lt. Col. Barlian in South
Sumatra has stated he will not
permit government troops to move
through his command, and all
non-Communist political parties
in his province on 26 February
demanded the resignation of the
Djuanda cabinet-in Djakarta.
The Atjehnese in North Sumatra,
also an armed dissident group
of long standing, have made no
open declaration of support for
the rebels but may attack the
pro-Djakarta area around Medan 25X1
troops there who had announced ra
their continued loyalty to the
central government.
The Indonesian Air Force
may soon be forced to curtail
air operations against the dis-
sidents because of high octane
fuel shortages. An alleged re-
quest to Singapore by the Dja-
karta government for urgent de-
livery of 13,000 gallons cannot
PROSPECTS LESSENING FOR SETTLEMENT OF FRENCH-TUNISIAN SITUATION
Bitterness against France The basic disparity in
is now so widespread in Tunisia views between France and Tunisia
that President Bourguiba proba- regarding the subjects to be
bly would not be supported in considered under the US-British
efforts to achieve a rapproche- good offices proposal shows the
ment with Paris. almost impossible task to be
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 February 1958
faced in getting France and Tu-
nisia to negotiate. Bourguiba's
government has stressed that a
solution of the Algerian war
must be "the keystone of Ameri-
can policy in North Africa" and
that. consideration of Tunisia's
internal problems must not be
allowed to interfere. Bourguiba
gpposes any Tunisian participa-
tion in an international commis-
sion to patrol the Algerian-
Tunisian border. Paris, on the
other hand, is adamant that the
conflict in Algeria not be dis-
cussed because such talks would
internationalize the problem.
President Bourguiba is not
likely to back down regarding
Algeria because of Tunis' strong
sympathies with the Algerian
nationalists, the presence of
at least 60,000 Algerian refu-
gees and several thousand armed
nationalists in Tunisia, and
his strong belief that no North
African state can enjoy politi-
cal stability until the Algerian
problem is settled.
Bourguiba has already lost
the support of many politically
minded Tunisians--90 percent
oppose his "conciliatory" poli-
cies
He has been censured for not
pressing his case in the UN Se-
curity Council, for having "con-
ceded victory" to France in ac-
cepting Anglo-American good of-
fices, and for not keeping pres-
sure on the United States and
France to withdraw all French
troops. He made a strong bid
for popular support when he re-
jected Paris' proposal of 22
February to regroup the 22,000
French forces in Tunisia, and
charged that the proposal to
transfer over half of.the 4,000
French troops in the Tunis area
to the base at Bizerte and con-
centrate almost all of the
forces south of Tunis at Gafsa,
Sfax, and Gabes was a tactical
measure to improve the French
military position and was not
designed to prepare the troops
for embarkation, as demanded
by Tunis.
MEDITERRANEAN SEA
27 FEBRUARY 1936
p Miles 2pp
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 February 1958
French Premier Felix Gail-
lard's right wing threatens
to abandon the government dur-
ing the current budgetary debate,
and other elements of his coali-
tion are becoming restive.
Leaders of the left and center
parties are probably still re-
luctant to risk a crisis; their
decision may hinge on the course
of US-British good offices on
the Tunisian issue.
On 18 February, the Inde-
pendents voted solidly against
Gaillard's equivocal proposals
on the Bizerte question. Both
Antoine Pinay and Roger Duchet,
fearful that the premier might
relinquish full French control
of the base, appear determined
to bring about his fall. Dis-
cussion of the budget, which
started on 26 February, is ex-
pected to reopen the Tunisian
issue, on which Pinay and Duchet
may press an all-out attack.
The premier is also faced
with loss of both his Socialist
and Popular Republican support.
The American Embassy in Paris
has reported a growing "aloof-
ness" among the Socialists, who
were embarrassed because the
government's authority was ap-
parently flouted when Sakiet
was bombed. There is also a
growing unwillingness within
the Socialist party to back
Lacoste's Algerian policy un-
reservedly.
The Popular Republicans,
who have thus far stood behind
the government on all issues,
have disapproved of Gaillard's
acquiescence in sending his
proposed constitutional amend-
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PART I OF IMMEDIATE INTEREST
ments back to committee. They
have since been mollified by
the cancellation of debate on
electoral reform measures, which
they feared would lead to a new
system limiting their chances
in future elections. This
step, however, has further
alienated the coalition's right
wing--the Independents and many
Radicals.
Despite the attitude of
Pinay and Duchet, most of the
leaders within the coalition
are probably unwilling to risk
a crisis now. Nevertheless,
some steps are apparently being
taken to try to limit the dura-
tion of the next crisis by lin-
ing up a successor government
prior to Gaillard's fall. Ex-
Premier Rene Pleven is being
mentioned as an agreed candi-
date whom both Socialists and
Independents would support.
Similar deals have been con-
templated in the past, but have
not worked out.
In an effort to head off
a vote of no confidence, Gaillard
can be expectdd to emphasize
the importance of supporting
British and American good of-
fices on the Tunisian issue.
This tactic may boomerang, how-
ever, as the right becomes in-
creasingly incensed over Bour-
guiba's determination to include
Algeria as a topic in any dis-
cussion of French-Tunisian rela-
tions. If the right should
muster all its strength on this
issue, the full support of Gail-
lard's left and center coali-
tion partners might not be suf-
ficient to pull him through.
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CONFIDENTIAL
CURRENT INTELLIGENCE WEEKLY SUMMARY
27 February 1958
MIDDLE EAST DEVI~PMENTS
Gamal Abdul Nasir, in visit-
ing Syria accompanied by other
high Egyptian officials, appears
to be trying to make the most
of the emotions worked up by
the plebiscite last week which
made him President of+_the United
Arab Republic (UAR). On 26
February he made his first pub-
lic attack on the Iraqi-Jorda-
nian federation, citing it with
the Baghdad Pact as a union
created by the "imperialists"
to oppose the real will of the
"Arab people." Nasir's move
probably presages an=other Egyp-
tian-Syrian campaign to intimi-
date King Saud from supporting
the federation and to undermine
King Husayn.
The Egyptian leader may
also be gaining a first-hand
look at the Syrian political
situation; he soon will have to
name the persons who will head
the local Syrian government.
Syrian Foreign Minister Bitar,
one of the leaders of the radi-
cal nationalists, is reported
ready to visit Cairo again to
help work out some of these
problems.
During Nasir's visit, Syr-
ian G-2 chief Sarraj and Chief
of Staff Bizri have been most
prominent among Syrians seen
with Nasir on public occasions.
Bizri, whom Nasir had previously
indicated he wished removed,
last week was particularly
friendly to the American mili-
tary attache during a Soviet
party; he may be still trying
to erase the impression that he
is pro-Communist.
The Iraqi-Jordanian federa-
tion--which apparently will be
officially transliterated as the
Arab Union (AU)--has not enjoyed
a similar succession of psycho-
logical boosts. Ilmost three
months are supposed to elapse
before the federation's con-
stitutional committee will com-
plete its work.
While the new federation
is not popular in Jordan--there
have been demonstrations in Nab-
lus in West Jordan which com-
pelled the government to close
schools there--it probably has
given some further sense of sta-
bility to the government. This
in turn seems to be encouraging
Husayn's ministers to take a
firm stand against subversive
agitation. They..intend to
crack down on a "new" conspiracy
by radical nationalist army of-
ficers, and some cryptoleftists
high in the civil service have
been fired. Jordan's security
situation, however, still does
not seem likely to improve much
over the long run and would de-
teriorate rapidly if Nasir de-
cided to mount a full-scale sub-
versive attack.
The Jordanian and Iraqi
leaders continue to seek closer
support from King Saud. Foreign
ministers of the two countries
went to Riyadh on 26 February
to "explain" their union further
and probably to tempt him into
more forthright gestures in
Saud's smaller neighbors
along the Persian Gulf are
the subjects of a number of
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 February 1958
rumors regarding their future
association with Saudi Arabia,
the UAR, or the AU. These ru-
mors have focused mainly on
Kuwait, whose oil revenues
would be a welcome addition to
the income of any of the Arab
states. The Kuwaiti populace
favors the UAR; however, there
is no indication at this time
that the ruling family, which
has been torn by disagreement
over the eventual successor to
the present ruler, has any
significant interest in ex-
changing its present profit-
able relationship with Britain
for Arab domination. A similar
situation probably prevails on
Bahrein, with the added com-
plicatign of Iranian claims to
sovereignty over the island.
Tehran has been much exercised
recently over any possible shift
in Bahrein's status.
The Egyptian-Sudanese dis-
pute over the status of three
border areas appears to have
calmed.
The Sudan's pariiamenTary -
tions began on schedule on 27
February and are to continue
until 8 March.
Military movements along
the Egyptian-Israeli border
may presage new tension in that
area,.which has been quiet
since the Sinai campaign. The
general Israeli posture of very
watchful waiting was underlined
by Prime Minister Ben-Gurion's
press conference statements
this week which in effect put
the West on notice that even
the pro-Western Iraqi-Jordanian
federation is viewed by Tel
Aviv as a distinctly unfavor-
able development.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 February 1958
GOVERNMENT CRISIS IN FRENCH CAMEROONS
The fall of the Mbida gov-
ernment in the. French Cameroons,
recall Of the French high com-
missioner, and continuation of
guerrilla warfare by a Commu-
nist-dominated nationalist
movement are symptomatic of
instability in this African
territory.
The fall from office on
16 February of Premier Andre
Mbida, the first African to
head the government since the
grant of internal autonomy to
the trust territory by France
in 1956, was caused by the
ma=
F R E N C H ` , WEST AFR I C A
GULF OF
G V.
N
MI~E,
27 FEBRUARY 1958
an early date for Cameroons in-
dependence and to foster the
reunification of the British
and French Cameroons.
Paris decided to remove
High Commissioner Jean Ramadier
after only a two-week tenure
in Yaounde, following charges
by Mbida that Ramadier inter-
fered in local politics. Mess-
mer, the previous French high
commissioner, was removed in
late January because of dis-
agreement with Minister of Over-
seas France Jacquet on the date
for independence. This spring
Li,
the minister intends
to set the date, prob-
ably sometime in 1960,
in full recognition
that Cameroons inde-
pendence will set a
precedent for other
French possessions
in tropical Africa.
An outstanding
problem which the new
government must face
is the Communist-domi-
nated, outlawed move-
ment, the Union of
the Cameroons People
(UPC). The UPC was
responsible for an
abortive uprising in
Douala in 1955, and
since then has kept
~4FRENCH EQUATORIAL AFRICA
personal animosity between
Mbida and other African leaders,
who feared his request for
strong powers to control anti-
government agitation would be
used against rival politicians.
The new premier,Ahmadou
Ahihjo, is a member of the
same pro-French party as Mbida
and was deputy premier in the
former government. In an ef-
fort to keep extremists from
profiting by the government
crisis, Ahidjo's government
will probably increase pres-
sure on Paris, however, to set
up its antigovernment propaganda,
particularly from Cairo, where
several leaders took refuge
following the Douala incident.
The UPC engaged in violence
during the December 1956 elec-
tions campaign, and during the
past several months has carried
out guerrilla warfare in the
southwestern forested area of
the Cameroons. With an esti-
mated 400 tough fighters, the
UPC has killed, wounded, or
kidnaped about 150 persons. Its
members murdered a deputy of
the legislative assembly,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 February 1958
burned 60 villages, and have
tied down several hundred French
and Cameroons troops. In Decem-
ber, France sent two infantry
companies to reinforce the 1,-
500 French troops in the Camer-
.oons and prevent the develop-
ment of a situation similar to
that in Algeria.
The UPC's potential is
strong in the political field,
where demands for independence
and unification find growing
popular support in the southern
areas, and its international
connections suggest possible
foreign support. Its activity
at the Afro-Asian Solidarity
Conference at Cairo won
the UPC's delegate a seat 25X1
on the permanent secretariat
responsible for mat-
ters.
ORGANIZATION ESTABLISHED FOR TECHNICAL COOPERATION IN AFRICA
A new intergovernmental
organization--the Foundation
for Mutual Assistance in Africa
South of the Sahara (FAMA)--
designed to facilitate the ex-
change of technical assistance
to the area, was officially
launched on 20 February at a
conference in Accra, the capi-
tal of Ghana. Eventual inclu-
sion of other independent Afri-
can states might end inter-
colonial rivalries and begin
technical cooperation between
African entities6
will be eligible to receive
technical assistance under the
aegis of FAMA.
Membership in the founda-
tion presumably will be limited
at the outset to present members
of CCTA. Invitations to join
the new organization, however,
will probably be extended to
non-CCTA member countries with
territorial responsibilities in
Africa south of the Sahara, in-
cluding the Sudan, Ethiopia,
Italy, and Spain.
The parent organization of
FAMA is the Commission for Tech-
nical Cooperation in Africa
South of the Sahara (CCTA)--
which includes Britain, France,
Belgium, Portugal, South Africa,
the Federation of Rhodesia and
Nyasaland, Liberia, and Ghana.
CCTA agreed in 1954 to establish
the foundation for the expan-
sion of technical assistance.
The foundation is to act as a
clearing house for offers of,
and requests for, technical as-
sistance among countries in the
area, and serve to bring inter-
ested parties together. It
will supervise the expenditure
of funds for experts, advisers,
and teaching material, but will
have no funds itself for aid al-
location. All countries of
Africa south of the Sahara, in-
cluding nonmember countries,
Participation in FAMA by
countries without territorial
interests in Africa--such as
the United States, West Germany,
or the Netherlands,--was favored
by members prior to the Accra
conference. The American ob-
server at the conference, how-
ever, stated that most delegates
showed considerable coolness
to such participation at this
time. This attitude may be an
attempt to forestall any Soviet
attempt to participate in the
foundation. In fact, some mem-
bers regard the organization as
a way to counter increased So-
viet influence in the area, the
threat of which was underlined
by the USSR's recent "offer" of
aid to underdeveloped countries 25X1
and announcement of an intention
to establish diplomatic rela-
tions with Ghana.
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CURRENT INTELLIGENCE WEEKLY SO'AR-i
27 February 1958
The wide margin of victory
for Arturo Frondizi and his In-
transigent Radical party in the
Argentine general election of
23 February has diminished the
possibility that conservative
military elements will attempt
to prevent Frondizi from taking
office on 1 May. Frondizi's
party won all 22 provincial gov-
FRONDIZI
ernorships, over two thirds of
the seats in the Chamber of
Deputies, and may control
the entire Senate, which will
be selected by the incoming pro-
vincial legislatures during
March.
Provisional President
Aramburu and Vice President
Rojas are believed disappointed
with the outcome of the elec-
tion, but they have publicly
reiterated their determination
to prevent military interference
in the political process.
At the same time, however,
supporters of exiled former
President Peron--to whom Fron-
dizi owes a substantial measure
of his victory--are inviting
military unrest by making pub-
lic demands on Frondizi. During
the campaign, Frondizi openly
promised most of the things the
Peronistas are now "demanding"
--a general amnesty and an end
to restrictions against Peron-
i8ta political and labor organi-
zations. Frondizi has said he
will let Congress decide wheth-
er Peron should be permitted
In addition to these polit-
ical problems, Frondizi will be
ARGENTINE ELECTIONS
OF 23 FEBRUARY 1958
(NEARLY COMPLETE RETURNS)
PRESIDENCY
POPULAR VOTE
Frondizi ...................................... 4,086,653
Balbin .......................................... 2,581,964
Others .......................................... 2,644,006
Blank votes . .................................. 687,377
ELECTORAL COLLEGE (ABSOLUTE MAJORITY REQUIRED)
Frondizi .................................................. 319
Balbin ......................................................142
466
CHAMBER OF DEPUTIES
Intransigent Radicals ............................133
(UCRI) (Frondizi)
Popular Radicals ................................... 52
(UCRP) (Balbin)
Liberal Party of
Corrientes Province ............................... 2
confronted with extremely seri-
ous economic and foreign ex-
change difficulties and will
probably seek large-scale for-
eign assistance. He has not
been especially friendly toward
the United States, but he has
already put out feelers on Wash-
ington's attitude toward loans
to Argentina.
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CURRENT INTELLIGENCE WEEKLY i ?
27 February 1958
POLITICAL PROSPECTS IN BOLIVIA
The prospective visit to
Bolivia of former President
Paz Estenssoro, now ambassador
to London, promises an unusual-
ly critical period in mid-March
for the government of moderate
President Sales Zuazo. Paz'
reported intention to reunite
the government party, the Na-
tionalist Revolutionary Move-
ment (MNR) which he still heads,
may presage an attempt to re-
store the balance between the
leftist critic of the stabiliza-
tion program, Juan Lechin, and
the program's leading backer,
President Siles--a balance
which during the past year has
tipped increasingly in favor
of Sales. Paz' visit was prob-
ably timed to coincide with the
MNR's convention to nominate
candidates for the late spring
congressional elections.
During Paz' term of office
from 1952 to 1956, he was re-
garded both as a national hero
and as Bolivia's one politician
sufficiently adept to persuade
leftists and moderates to work
together. During the past 18
months, however, his reputation
has suffered from apparently
well-founded charges of corrup-
tion and contrasts with that of
his politically effective but
simpler and more straightfor-
ward successor. In several
clashes during this period be-
tween Sales and labor leader
Lechin, Paz from London has
tended to support Lechin. Over
the past year and a half Sales
has nevertheless gained sharply
in popular appeal at the ex-
pense of the labor leader.
Nominations for next
spring's elections--for one
half of the deputies and one
third of the senators--will be
decided at the forthcoming con-
vention of the MNR, the party
which polled 82 percent of the
total vote in national elec-
tions in 1956. During the con-
vention prior to the 1956 elec-
to:ons. Lechin dominated the con-
gressional nominations, while
the moderates gained the presi-
dential nomination for Sales.
For the 1958 convention, how-
ever, pro-Sales forces, supported
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CURRENT INTELLIGENCE WEEKLY SUP;3MARY
27 February 1958
by leftists in rivalry with
Lechin, apparently have felt
no need to make a similar com-
promise. Early in January, the
government-owned La Nacion,
throwing the concept party
unity to the winds, suggested
that the disgruntled leftists
withdraw from the MNR and form
a "constructive opposition."
Under these circumstances,-
efforts by Paz Estenssoro to
regain party unity may weaken
the Siles government, persuade
it to compromise with the pro-
Lechin group, and undermine its
attempt to implement the US-
backed economic stabilization
program.
COMMUNISTS CONTINUE PRESSURE FOR KOREAN SETTLEMENT
The Communists are sustain-
ing their diplomatic and propa-
gauda offensive for a Korean
settlement launched earlier this
month. The Soviet Foreign Min-
istry on 20 February issued a
statement urging that Korea be
made a nuclear- and missile-
free zone and proposed that a
"conference of interested states"
be convened to discuss a Korean
settlement.
The Soviet statement was
issued with an eye to neutralist
support for the Communist posi-
tion. Indian Prime Minister
Nehru suggested last January
that the concept of a nuclear-
free zone be extended to the
Far East. New Delhi was ap-
parently given advance notice
of Peiping's intention to with-
draw its forces unilaterally
and is expected to.urge--in--
formally at least--UN with-
drawals. V. K. Krishna Menon
publicly stated on 17 February
that withdrawal of foreign
f orces.fiom Korea would remove
one of the deterrents to seat-
ing Peiping in the UN and de-
clared that if the "other side"
responded to the Chinese with-
drawals, "it would be a great
force for peace."
The Chinese Communists are
hopeful of isolating the United
States from the other 15 nations
in the UN Command. On 20 Feb-
ruary, the Peiping People's
Daily claimed that other UN Com-
-mand nations "have not been in-
flexible" on the issue of troop
withdrawals and declared that
the United States will "feel
more isolated than ever". if it
continues to reject Communist
proposals. In an effort to
maintain Western solidarity,
the British are urging that the
UN Command nations work out a
common position at an early
meeting, lest they respond to
new Communist initiatives "with
different voices."
On 24 February the North
Korean - Chinese Communist com-
mand called a meeting of the
Military Armistice Commission
to reiterate Pyongyang's pro-
posals for a Korean settlement--
the withdrawal of all foreign
troops, elections to be held
under supervision of "neutral"
nations,-North-South negotia-
tions, and reduction of North
and South force levels.
The hijacking of a South
Korean airliner on 16 February
has provided the North Koreans
with an additional bargaining
weapon in their efforts to bring
about North-South negotiations.
North Korean spokesmen are in-
sisting that the release of pas-
sengers desiring to return to
the South depends entirely on
South Korean willingness to
enter into direct talks with
Pyongyang. Seoul is aware of
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CURRENT INTELLIGENCE WEEKLY. SUMMARY
27 February 1958
the Communists' desire to un-
dercut Rhee's contention that
the South Korean Government
is the only Korean government
and has flatly rejected all
overtures for direct talks.
South Korea-is holding
mass demonstrations in Seoul
in reaction to the airliner
incident and is carrying out
maneuvers involving. 50,000
troops adjacent to the demili-
tarized zone. Although Presi-
dent Rhee has refrained from
threats to take violent ac-
tion, the Communists seem wary
that he might consider Chinese
withdrawals as a sign of weak-
ness.
Chinese military
spokesmen have threatened to
re-enter Korea in the event
of renewed hostilities.
25X1
25X1
25X1
25X1
SINO-JAPANESE TRADE TALKS TO BE RESUMED
The return to Peiping of
a Japanese trade delegation
with new proposals for an unof -
ficial trade agreement and for
an exchange of permanent trade
missions indicates that strong
domestic pressure for increased
trade with the China mainland
is forcing the Kishi government
toward recognition of Commu-
nist China. The proposals,
which were developed by Tokyo
following Peiping's rejection
of Japanese terms last fall,
would relax entry requirements
for Communist Chinese trade
representatives and accord them
certain diplomatic privileges
in Japan.
The Japanese Government has
avoided official negotiations
with Communist China on the
trade issue and, instead, has
worked through private trade
representatives to conclude a
fourth unofficial trade agree-
ment to replace the one which
expired in May 19 57. Peiping,
however, has made the conclusion
of an agreement contingent on
a political accord to exchange
trade missions, which an be
decided only by the Japanese
Government. Under pressure from
many sources, including all
political elements, the Kishi
government has obtained Diet
passage of legislation relaxing
fingerprinting requirements for
aliens and has authorized its
trade delegation to offer some
diplomatic privileges to pros-
pective Chinese trade officials
in Japan.
These privileges presumably
would include customs and tax
waivers, guarantees of personal
safety and immunity from arrest,
use of communication codes, and
freedom to travel freely through-
out Japan. The use of the Chi-
nese Communist flag, which Pei-
ping has demanded, apparently
still would not be permitted
under the new proposals. In
addition the number of Chinese
representatives to be allowed
in Japan would not be specified,
although the Japanese will at-
tempt to obtain an understanding
on a limit of 15 persons.
Japanese economic interests
believe the 20-percent drop in
Sino-Japanese trade to $127,000,-
000 in 1957 resulted from the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 February 1958
absence of a new trade agreement
and are anxious for both an
agreement and mission accord.
The Japanese Foreign Ministry,
however, has recommended to
Prime Minister Kishi that,'if
such an accord is signed, the
arrival of the Chinese Commu-
nist trade mission be delayed
until after the Japanese elec-
tions expected sometime this
year.
The recent $280,000,000
iron care -steel barter deal be-
tween Communist China and Ja
pan--negotiated at Peiping's .
initiative--may be the Chinese
reaction to the Kishi govern-
ment's authorization of "quasi-
diplomatic" status for the pros-
pective trade mission. Although
some increase in Sino-Japanese
trade in 1958 is to be expected
as a result of this and other
recent trade contacts, a long-
range increase in trade and
Japanese access to mainland raw
materials will depend on further
accommodation by Japan to P
ning's political pressure.
PETROLEUM INDUSTRY CONTINUES TO DISAPPOINT PEIPING
Communist China's petroleum
industry was responsible for
the. only significant 'industrial
shortfall during the nation's
First Five-Year Plan (1953-1957),
achieving less than 75 percent
of its goal. Despite heavy im-
ports--averaging some 50 percent
of total supply--shortages of
petroleum products affected eco-
nomic programs, most notably the
development of truck transport.
Peiping last year began to ex-
plore more intensively alternate
fuel sources for trucks, such
as charcoal or coal burners.
The minister of the petro-
leum industry was removed on 11
February 1958 after admitting
to a number of shortcomings in
his ministry, including waste-
fulness and a tendency to build
"too large, too soon." He was
replaced by Yu Chui-li, an army
general with no known previous
experience in the petroleum in-
dustry, who has enunciated a
program based on a more careful
and methodical development of
all phases of the industry. This
year, one of generally ambitious
economic goals, the industry
plans the smallest production
increase thus far. The total
output of 1,,550,,000 tons of crude
oil is air, increase of only 6
percent over 1957 as compared
with an average annual increase
of 27 percent achieved in the
First Five-Year Plan. Workers
in the industry have already
pledged to exceed this modest
target by 110,000 tons.
Also reflecting a more
careful approach, investment
funds for the industry have been
sliced below last year. Projects
for the year include a 90-mile
pipeline from the Karamai oil
field to the Tushantzu refinery..
Full exploitation of the field,
for which Peiping continues to
have high hopes, will probably
not be possible until the Trans-
Sinkiang Railroad is completed
sometime in 1959 or 1960. How-
ever, Karamai is expected to be-
gin producing on a small scale
this year and the refinery at
Tushantzu is to be expanded to
an annual capacity of 400,000
tons. Construction will be con-
tinued on the large, million-ton
refinery at Lanchow, which will
use crude oil from the Yumen
fields brought to the refinery-
by rail.
Noteworthy in the 1958 pro-
gram is increased interest in
the development 'of relative-
lyd expensive' shale-oil and
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 February 1958
CHINESE COMMUNIST PE ROLEUM INDUSTRY
27 F
U
LpNCHOU"L
Churigk'
KWEICHOU
A 1-1
TUSHANTZU ? a neinK .,mr>,ia
J~ ~U~mchi
Petroleum refinery
Synthetic--oil plant
Railroad
Railroad under construction or planned
synthetic-oil enterprises, in-
dicating not only a more realis-
tic attitude toward the develop-
ment of natural crude-oil re-
sources but also a need to turn
to more readily available re-
sources.
Existing shale-oil plants
at Fushun and Huatien will be
expanded and preparatory work
begun on a new shale-old plant;
at Mourning in southwestern
Kwangtung to exploit the large
reserves of high-quality shale
there and provide South China
with its own source of oil, now
largely supplied from,. abroad.
Also planned is the future de-
velopment of a synthetic indus-
try using coal as a raw material.
This is a still more costly and
even less satisfactory substi-
tute, offering only the advan-
tage of location. Peiping has
suggested that experience in
the liquefaction of-coal. in..the
nortneast could be used in sim-
ilar plants ii.in ' Shansi and
Kweiohow Provinces.
The search for natural
crude oil--the only long-range
answer to China's liquid fuel
problem--is to be pressed in
various parts of the country.
But the search is evidently pro-
ceeding with an increased aware-
ness that every oil seep is not
an oil field and that an oil
field cannot be developed over-
night. For some time, domestic
sources of petroleum will re-
main inadequate to meet the
rapidly growing demands of Chi-
na's industrializing economy
and imports will continue to
be required.
(Prepared by OR
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CURRENT INTELLIGENCE WEEKLY SUL R1ARY
27 February 1958
SOVIET ARMED FORCES DAY--40TH ANNIVERSARY
Soviet Minister of Defense
Marshal Rodion Malinovsky de-
livered the major speech in
Moscow on 22 February on the
eve of the 40th anniversary of
Soviet armed forces. In attend-
ance were most of the top polit-
ical and military leaders. The
anniversary had been anticipated
for several weeks with commemo-
rative articles in the Soviet
press by leading military fig-
ures, and the day itself was
marked by a large Kremlin re-
ception. As usual, however,
there was no military display.
Malinovsky claimed that
all branches of the Soviet armed
forces are in a state of readi-
ness and are equipped with the
latest weapons. He made the
usual charges that the West was
pursuing an aggressive policy
and that the Soviet armed forces
must, accordingly, be capable of.
"inflicting so crushing a coun-
terblow that it will once and
for all put an end to any at-
tempts from any quarter to hin-
der through force of arms the
natural progress of the people
toward Communism." He observed
that the USSR has "rockets of
short, intermediate, long, and
superlong range action."
Anniversary speeches and
articles by military leaders in
years past contained similar
confident claims. Malinovsky's
words seem to have been, on the
whole, neither more nor less
truculent than those of previous
orators on this occasion.
One distinguishing feature
of Malinovsky's speech was its
frequent invocation of the
Communist party and the tribute
paid the party's system of po-
litical control in the armed
forces, a line which has been
persistently pursued since the
dismissal of Marshal Zhukov as
defense minister last October.
Referring to his predeces-
sor, Malinovsky asserted that
"the party has justly condemned
the mistakes and checked the
harmful practices of the former
minister of defense, Zhukov,
who pursued a policy of abolish-
ing the leadership and control
of the army and the navy by the
party, its central committee,
and the government." Malinov-
sky did emphasize, however, the
importance of a single command
in military matters, ruling out
the old system of dual control
by political commissars and mil-
itary commanders.
An interesting sidelight to
the anniversary celebrations was
the appearance of Nikita Khru-
shchev in military uniform sport-
ing his World War II rank of
lieutenant general. Also, in
the.course of the proceedings,
Marshals Budenny, Grechko, and
Biryuzov were awarded the cov-
eted title of'Hero of the Soviet
Union. They were the only mar-
shals of the Soviet Union who
did not hold this award.
SETBACK IN DEVELOPMENT PLANS FOR EASTERN REGIONS OF THE USSR
There is considerable dis-
parity between planned state
capital investment in the east-
ern regions of the USSR for this
year and that originally sched-
uled for 1958 under the defunct
Sixth Five-Year 'Plan (1956-1960).
Only about 27 percent of total
Soviet capital investment for
1958 has been earmarked for the
eastern area, whereas the orig-
inal plan allocated 40 percent
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 February 1958
to this area during the five-
year period, suggesting that
the rate of development for
the area has been retarded,.pos-
sibly by as much as two years.
Key projects in the de-
velopment of the area include
the Bratsk and Krasnoyarsk hy-
droelectric power stations.
These were formerly scheduled
to start partial operation in
1960 and 1961 respec-
tively, but will not
now begin operating
until 1962 and 1963.
Bratsk, with a
planned installed
capacity of 3,600,-
000 kilowatts, and
Krasnoyarsk, with
4,000,000 kilowatts,
will be the largest
hydroelectric sta-
tions in the world.
With a combined pro-
duction of about
40 billion kilo-
watts, they will
supply power to the
major industrial
station has been postponed be-
cause of construction problems
with the project itself. Last
year, its builders three times
won first place in the quarter-
ly all-union socialist competi-
tion, were awarded the Chal-
lenge Red Banner, and fulfilled
their ten-month plan 20 days
ahead of schedule. The delay is
probably the result of a gen-
eral reduction in the tempo of
HYDROELECTRIC ST,ITI0N
industrialization in the east-
ern regions. Construction is
lagging in most branches of in-
dustry in the area, including
ferrous and nonferrous metal-
lurgy and coal, and construc-
tion at the Bratsk station
apparently has been rescheduled
to coincide with that of the
new industrial plants it will
serve. Prepared by ORR)
25X1
areas of Irkutsk, Krasnoyarsk,
and the Kuznetsk Basin (Kuzbas),
where large power-demanding in-
dustries in such fields as alu-
minum, magnesium, ferroalloys,
chemicals, and probably fis-
sionable materials are to be
built.
It is not likely that the
completion date of the Bratsk
PERVUKHIN NAMED AMBASSADOR TO EAST GERMANY
Mikhail G. Pervukhin has
been named Soviet ambassador to
East Germany, replacing Georgi
Pushkin who returned to the
USSR on 9 January. There has
been no announcement concern-
ing Pervukhin's position as
candidate member of the party
presidium, but'-his.''appointment
to L a position away.from Moscow
probably means he will be dropped.
Pervukhin has been in-
cluded in the upper levels of
Soviet officialdom for nearly
20 years--as a member of the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 February 1958
party central committee since
1939 and of the presidium since
1952--but last June, at the
time of the purge of Malenkov,
Molotov, Kaganovich, and Shepi-
lov, he was demoted from full
to candidate membership on the
presidium. The fact that his
MIKHAIL G. PERVUKHIN
name did not appear earlier
this month on the lists of
nominees for election to the
Supreme Soviet foretold his
current appointment.
While it appears to be
a demotion, Pervukhin is
nonetheless well qualified to
fill this important diplomatic
post. An electrical engineer,
he became chief of the Soviet
electrical industry in 1939 at
the age of 35 and then took on
general responsibility for the
fuel and chemical industries.
His broad experience in the eco-
nomic field will serve him well
in East Germany, where an ex-
tensive economic reorganization
is under way.
In July 1957, following
the purge of the "antiparty
group," Pervukhin was named
chairman of the new State Com-
mittee for Foreign Economic
Relations. Semyon A. Skachkov
has now replaced him on this
committee, which is responsible
for directing the expanding eco-
nomic activities of the USSR
with both bloc and free world
countries. Skachkov was a party
central committee organizer for
tank production during World
War II, a tractor plant direc-
tor following the war, later a
USSR deputy minister for trans-
port machine building, and most
recently chairman of the Kharkov
Sovnarkhoz in the Ukraine. He
is not a member of the party
central committee
Czechoslovakia, having re-
gained most of the West Euro-
pean air routes it held in 1948,
has the most extensive civil
air operations of the satel-
lites. The Czech airline has
recently received three Soviet
70-passenger TU-104-A jet
transports and will probably
soon resume scheduled flights
to Cairo and Damascus. Czecho-
slovakia already has air agree-
ments with Egypt and Syria, and
once.a ' foothold" in' the Middle
East is regained, the Czechs
can be expected to press vig-
orously to establish further
international routes, particu-
larly into South Asia. Prague's
interest in expanding air op-
erations to South America has
also been reported.
After the Communists took
over in February 1948, Czech
international flights declined
as a result of the bloc policy
of curtailing commercial contacts
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CURRENT INTELLIGENCE WEEKLY SPRY
27 February 1958
with the West, although Czecho-
slovakia retained its member-
ship in the UN affiliated Inter-
national Civil Aviation Organ-
ization (ICAO). Poland is the
only other bloc member. This
decline was accelerated by the
Western action to restrict
Soviet-satellite airlines to
bloc air space. Czechoslo-
vakia's air operations reached
their nadir in 1953, when its
routes were limited to Sofia,
Budapest, Bucharest, the Soviet
sectors of Berlin and Vienna,
and only one Western European
link, Copenhagen.
Shortly thereafter the
Soviet policy of restricting
relations with the West was re-
laxed and Prague capitalized
on its central position as an
exchange point for such serv-
ices as the Air France - Soviet
Aeroflot route between Paris
and Moscow and the Indian air-
line's New Delhi - London route.
Czechoslovakia has since been
the most active bloc country
in seeking air ri hts in the
free world. Pre-
pared by ORR
HUNGARIAN ECONOMIC OUTLOOK FOR 1958
the Rtingar'iad i'dgime may
succeed this year either in bal-
ancing its foreign trade or in
maintaining the standard of
living achieved last year, but
probably will not be able to do
both, as it has planned. Domes-
tic production must be relied
on to meet these objectives,
since bloc loans of about
$300,000,000 which were largely
responsible for Hungary's
industrial recovery during 1957
are unlikely to be made again
this year. Living standards of
urban workers will probably be
sacrificed, and peasant income
will also suffer.
The uprising, which the
regime says caused nearly $1.7
billion (at the official rate)
worth of damage, put the
planned growth of Hungary's
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SPAIN
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CURRENT INTELLIGENCE WEEKLY SUIIddARY
27 February 1958
economy a year behind schedule.
Nevertheless, the raw material
supply did improve in 1957
through bloc did, and industrial
production, though costlier than
the previous year, topped the
1955 level.
Imports in 1957 were 24
percent higher than in 1955,
and a $170,000,000 deficit was
incurred. The 1958 industrial
plan calls for increased out-
put particularly among those
industries likely to contribute
to Hungary's export potential.
A 22-percent increase in exports
and a 12.5-percent
reduction of imports
are considered neces-
sary this year to
balance trade. How-
ever, even if Hun-
gary balances its
trade in 1958, the
basic economic prob-
lem of paying its
debts to.the bloc,
which begin to ma-
ture in 1959, re-
mains essentially
unsolved.
Agricultural
production is to be
raised this year by
The need for increasing agri-
cultural production will prob-
ably also prevent a return to
compulsory crop deliveries or
a reduction of state buying
prices.
Firm measures are being
taken to curb theft and waste
of state property in industry.
The managerial level particu-
larly is under fire because of
the growing backlog of uncom-
pleted investment projects,
which mounted to more than
150 percent of total 1957 in-
vestment at the end of the year.
HUNGARY: GROSS INDUSTRIAL PRODUCTION
ANNOUNCED PERCENTAGE CHANGE OVER PREVIOUS YEAR
4.6 percent, despite
a level of investment which is
far short of that for 1955. In
contrast to 1956 and 1957, no
imports of bread and fodder
grains are planned. The need
for greater production should
preclude extending the col-
lectivized sector in 1958 much
beyond its present level of 11
percent--less than half that
before the revolution. A re-
cent increase in agricultural
taxes, however, will reduce
peasant incomes and could later
provide a means of forcing pri-
vate farmers into collectives.
(PLAN)
80225
Steps being taken to in-
crease discipline among indus-
trial workers include greatly
stepped-up activity by regime-
sponsored factory councils,
which replaced the revolution-
ary workers' councils. Recent
changes in the wage system,
which. emphasized making raises
contingent on increased pro-
ductivity, presage a cheer-
less outlook for the Hun-
garian worker in 1958.
(Prepared by ORR)
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 February 1958
THE AFRO-ASIAN WOMEN'S CONFERENCE
The Afro-Asian Women's
Conference held in Ceylon from
15 to 24 February apparently
maintained the nonpolitical
nature which its organizers
planned, and the Communists
were unsuccessful in their ef-
fort to use the meeting as a
propaganda vehicles
Sponsored by Burma, Ceylon,
India, Indonesia, and Pakistan,
the meeting was attended by
about 150 delegates from 19
Afro-Asian countries and by
representatives of UNESCO,
UNICEF, the World Health Or-
ganization, and the Interna-
tional Labor Organization. Five
Afghan delegates attended--
the first time Afghan women
have participated at such a
conference.
'T'opics on the agenda were
limited primarily to the fields
of education, health, citizen-
ship, slavery, labor, and the
promotion of closer contacts
among women of the area. How-
ever, familiar themes of anti-
colonialism, "peaceful coex-
istence," the banning of nu-
clear weapons tests, and ces-
sation of the East-West arms
race were brought up by dele-
gates from Communist China,
Mongolia, and Ghana. No pub-
licity adverse to the West ap-
peared to result from the men-
tion of such topics. The key-
note of closing speeches at
the conference was the growing
spirit of cooperation and
friendship existing among women
of Afro-Asian countries.
The only incidents of a
controversial nature reported
were three walkouts by Chinese
Communist delegates'-during
the reports of UN agency repre-
sentatives, on the excuse that
Peiping had been deprived of
its legitimate rights at the
UN. The leading Turkish dele-
gate urged deletion from the
record of remarks sympathetic
to Communist China reportedly
made by the leader of Ceylon's
delegation. The issue of Pei-
ping's exclusion from the UN
did not otherwise arise.
Chinese Communist dele-
gates concentrated mainly on
being friendly at social events.
The Chinese Communist ambas-
sador in Colombo, however,
aroused some antagonism by
several requests prior to the
conference to increase the num-
ber of Chinese delegates and
by bringing pressure to bear
on non-Communist leaders during
the conference. Such efforts
evidently hnd 1 7 e effect.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 February 1958
PATTERNS AND PERSPECTIVES
CURRENT POLISH-SOVIET
In the past year, Poland
seems to have regained a meas-
ure of Soviet confidence, and
the meetings in January between
Khrushchev and Gomulka may have
narrowed the areas of disagree-
ment between them. Poland and
the USSR have avoided open
clashes and misunderstandings.
To do this, Polish leaders,
while preserving the basic pol-
icy outlined at the eighth par-
ty plenum in October 1956, have
moved to temper the more en-
thusiastic expectations many
Poles attributed to the October
1956 changes.
Internal Affairs
Gomulka to a large extent
continues to manage his coun-
try's internal affairs, but re-
mains mindful of the necessity
of preserving Communist domi-
nance and of not provoking the
USSR.
There are some developments
in Poland about which Khrushchev
and Gomulka are in agreement.
Gomulka's efforts to strengthen
the party's youth program and
to purge anti-Communist elements
from the mass organizations,
coupled with his determination
not to permit workers' councils
to interfere with trade union
activity, may have increased
Khrushchev's confidence in him.
Khrushchev's proposal to reor-
ganize machine tractor stations
in the Soviet Union appears to
parallel very closely Poland's
reorganization, and some of the
recent suggestions for future
changes in Soviet priding bear
some resemblance to the recom-
mendations made by Gomulka's
economic council last year.
To combat anti-Soviet at-
titudes, the Polish1'regime has
tried to prohibit the publish-
ing of criticism of the Soviet
Union, has revived the Polish-
Soviet Friendship Society, and
sFNeRr~"
CONFIDENTIAL
has signed an agreement for an
extensive cultural exchange with
the USSR. In addition, Gomulka
has been most circumspect in
his own statements about the
Soviet Union, and has empha-
sized the great help it has giv-
en Poland. He has not tried
to force the population to en-
gage in mass demonstrations of
affection for the Soviet Union
but has called for self-
restraint necessitated by Po-
land's geographic position.
These efforts, however,
have not appreciably altered
traditional Polish antipathy
toward the Soviet Union. The
Polish people ignore, boycott,
or privately criticize Soviet
plays, literature, art, music,
and movies. The anti-USSR feel-
ing which swept across Poland
during Khrushchev's attempted
interference in internal Pol-
ish affairs in October 1956
has not been alleviated by the
removal of most Soviet officers
from the Polish Army, nor by
two agreements since October
which established Polish con-
trol over the movement of So-
viet troops in Poland.
The Polish Army's politi-
cal commissar wrote of wide-
spread anti-Soviet attitudes
within the service in an article
forthe army's official maga-
zine n.mId-June 1957. As re-
cently as December, a poll of
Szczecin,, (formerly the German
city of Stettin) residents re-
vealed that anti-Russian and
even anti-Communist attitudes
were present to an overwhelming
degree, a situation to which
Gomulka's own periodical,
Polityka, has addressed itself.
Ideological Considerations
While some of the causes
for Soviet cconcern over 'Pol-
ish ideological developments
have been eliminated, basic
CONFIDENTIAL
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27 February 1958
disagreements continue to exist
and are unlikely to be settled
in the near future. Gomulka
has probably eased Soviet wor-
ries by his clear adherence to
the principle that the party has
the leading role in the Commu-
nist state;, and, by his, attempts
to strengthen his party through
the purge introduced at the
tenth plenum.
On the other hand, ideolog-
ical disagreement between the
two countries is evident in the
attacks on Polish policy and on
ideological debate which has
been stepped up in both Soviet
and satellite publications since
the November anniversary meet-
ing in Moscow. These articles
particularly rankle the Poles
because some of them have crit-
icized established Polish pol-
icy in the field of agriculture
and church relations. Other
articles criticized material
which appeared in the Polish
press in earlier periods, yet
failed to mention the fact that
its appearance was immediately
followed by expressions of of-
ficial Polish disapproval.
observers, they must be viewed
with reserve.
The subsequent Soviet and
satellite propaganda campaign
against revisionism, using Pol-
ish writers as the example, sug-
gests that Gomulka did at least
succeed in the insertion of the
clause permitting each party
to decide for itself the degree
of the threat posed by revision-
ism.
Foreign Policy
Warsaw before Gomulka con-
sistently followed the USSR's
lead in its policy toward the
West, presuming only to modify
Moscow's propaganda tone. Po-
land sees eye to eye with the
USSR on the Oder-Neisse line
and on a demilitarized Germany,
and this identity of interests
has helped to prevent serious
policy deviations in other areas.
Gomulka declared in the London
Times interview that Poland's
Iti ernational policy is and
will be in accordance with the
policy of the whole Socialist
camp."
Poland has heretofore been
firm in opposing the formation
of an international Communist
organization, as well as par-
ticipation in the publication
of a journal of international
Communism. The various Commu-
nist parties reportedly decided
last November that such a jour-
nal would be published, and Po-
land's continued refusal to con-
tribute may be one of the rea-
sons why this journal has not
yet appeared.
Gomulka's activity at the
November Moscow conference of
Communist leaders is still the
subject of various reports al-
leging that he succeeded in his
efforts toward softening the
language of the final communi-
que, particularly in regard to
the rate of agricultural col-
lectivization, the leading role
of the Soviet party in the work
of other Communist parties, and
the dangers of revisionism.
Since the reports may have been
tailored to appeal to Western
Poland's expanded contacts
with the West have not been in-
consistent with Soviet policy
statements. Poland has justi-
fied its acceptance of Western
economic assistance by its
desperate economic situation,
though this acceptance was prob-
ably not pleasing to the Soviet
Union. The USSR's failure to
respond to repeated Polish re-
quests for more economic support
has left it little choice but
to concur in Poland's reception
of Western aid.
Outwardly Poland's rela-
tions with Yugoslavia have been
within the limits of the public-
ly announced Soviet policy of
friendship and cooperation with
Yugoslavia. Soviet leaders ap-
parently were not officially
informed of the subjects dis-
cussed by Gomulka and Tito last
September, and may have been
expressing disapproval of the
talks by virtually ignoring in
their propaganda media the fact
that they even took place. How-
ever, Gomulka took great pains
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 February 1958
to assure the USSR of his
friendship and fidelity in the
speeches he made in Yugoslavia.
Poland regards its plan
for a nuclear-free zone in
central Europe as a step to-
ward attaining greater inde-
pendence in the field of for-
eign affairs. The Rapacki
plan was a major topic at two
meetings between Soviet and
Polish leaders in January.
Foreign Minister Rapacki.has
little hope that the plan will
be fully accepted, but hopes
to promote discussion of it
as a stimulant to East-West
talks. To this end the Polish
leaders apparently convinced
Soviet leaders to agree to
limit the plan's geographic
scope and to permit the Poles
to propose more detailed dis-
cussion of control factors than
has been normal Soviet practice.
remain.
Prospects
Polish-Soviet relations
will probably remain on their
present plane for the foresee-
able future since Gomulka is
likely to continue generally
to support the Kremlin's for-
eign policy while avoiding in-
ternal actions that would of-
fend the Soviet leaders. Po-
land may in time attain a small
measure of independence in the
international arena, within
the obvious limitations imposed
by its relationship with the
USSR. Khrushchev is probably
satisfied that Gomulka's rule
in Poland is not having dis-
astrous consequences for bloc
unity and therefore he will
probably not oppose those Pol-
ish innovations introduced
up to now. The seeds of con-
tinuing differences in the in-
ternal and ideological fields
SINO-SOVIET BLOC AID AND TRADE OFFENSIVE ENTERS FIFTH YEAR
Soviet statements at the
Afro-Asian Solidarity Confer-
ence in Cairo and the UN Far
East Economic Commission meet-
ing in Bangkok indicate that
the bloc this year will continue
to expand its trade and aid
program in underdeveloped free
world countries. The Middle
East and South and Southeast
Asia, which have received 75
percent of total bloc aid to
date and all of the $560,000,-
000 worth of aid the bloc has
extended since mid-1957, will
probably continue to receive
major attention. However,
stepped-up economic relations
are likely to be promoted with expire. Bloc countries now
Latin American and African are either negotiating or plan-
countries, particularly those ning agreements with underde-
suffering from depressed mar- veloped countries which have
kets for their major exports. heretofore accepted little or
no bloc assistance.
SECRET
Since mid-1957, two large
credits and a number of smaller
ones have been extended by the
bloc; obligations have been as-
sumed under large credits pre-
viously offered; progress con-
tinues on projects started in
earlier periods; trade continues
to increase; arms deliveries
continue; and agreements have
been made for additional deliv-
eries after present contracts
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 February 1958
SINO-SOVIET BLOC AID
TO UNDERDEVELOPED AREAS SINCE MID-1957
MIDDLE EAST
EGYPT
Soviet economic development loan
Czech economic development loan
SYRIA
Soviet economic development loan
Soviet arms agreement
YEMEN
Chinese economic assistance loan
Soviet economic assistance loan
(probably concluded Jan. 1958)
INDIA
Czech loan for Ranchi foundry
CEYLON
Soviet economic assistance loan
Chinese economic assistance loan
Czech economic assistance loan
BURMA
Soviet loan for agricultural development
Chinese loan for textile industry
New Offensive
The boldness of the eco-
nomic offensive in recent
months is traceable in part to
the-bloc's Aew prestige gained
by fulfilling its economic as-
sistance commitments and by
the launching of the sputniks.
The skepticism which greeted
offers in the past has been
largely dispelled.
The uncertainties that may
have induced Soviet leaders to
be cautious about increasing
their foreign economic commit-
ments, particularly in the pe-
eriod immediately following the
Hungarian uprising, have large-
ly been overcome. The bloc now
is in a position to exploit the
opportunities that appear and
to create additional ones.
The importance the USSR
attaches to its economic off en-
sive was indicated by the crea-
tion of the State Committee for
Foreign Economic Relations in
July 19 57 to replace the Chief
Directorate for Economic Rela-
tions, a lower ranking body.
The committee controls economic
organizations which in turn pre-
175
56
168
30
pare aid and trade
offers and arrange aid
and trade programs.
These organizations
prepare plans for
factories to be built
abroad, supply for-
eign governments with
technicians, and ar-
range for the pro-
duction and delivery
of equipment. Since
the committee's crea-
tion, continuing reor-
ganization apparently
has taken place to
enable it to do its
16
25(MIN.)
25 Job more efficiently
and to cope with new
foreign trade problems.
Preliminary data
on 1957 bloc trade
13 with underdeveloped
countries indicate
that total turnover
may have been about
25 percent greater
than in 1956. During
the first six months of the year,
bloc trade in this area was
about $1,850,000 on an annual
rate basis. The level of trade
in 1956 was about $1,480,000.
The bloc's exports to under-
developed countries rose,sig-
nificantly during 1957, but its
imports increased even more and
were up to 40 percent higher
than in 1956.
Sino-Soviet bloc credits
and grants to underdeveloped
countries now total about $2
billion. New credits were of-
fered to only a limited extent
between mid-1956 and mid-1957
but were increased during the
last half of 1957 by about
$400,000,000.
Some new agreements already
have been negotiated in 1958,
and there are several bloc of-
fers outstanding on which nego-
tiations may be opened during
the coming months. The USSR
is offering Iran a general plan
of assistance for economic de-
velopment as well as a number
of separate, specific proposals,
including one for the develop-
ment of petroleum in northern
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CURRENT INTELLIGENCE WEEKLY'SUMMARY
27 February 1958
Iran. Poland has offered tech-
nical assistance and a credit
to Brazil for the development
of its iron ore. General bloc
offers to other underdeveloped
countries, including Tunisia,
the Sudan, Ghana, and Pakistan,
appear to remain open for con-
sideration.
Latin America, confronted
with falling world prices for
its chief exports of agricul-
tural goods and minerals, is
also receiving renewed atten-
tion. An Argentine mission
now in the bloc seeking to use
up trade credits earned there
during the past two years has
expressed willingness to con-
sider a bloc offer of additional
credits for industrial goods
normally imported from the West.
Argentina has neither the cred-
its nor the foreign exchange
with which to purchase these
goods from the West.
Elsewhere in Latin Amer-
ica, particularly in Uruguay,
Colombia, and Brazil, bloc mis-
sions are offering both loans
and the exchange of industrial
goods for surplus agricultural
SINO-SOVIET BLOC AID TO
UNDERDEVELOPED AREAS SINCE 1954
(in millions of dollars)
Economic loans* It Military loans
Communist China has given outright gifts in the amounts specified
to the following: Cambodia ($23,000,000), Ceylon ($16,000,000),
Nepal ($13,000,000), and Egypt ($5,000,000).
z t, v t [ ~ v
BRAZIL
5
ICELAND
SECRET
products. Chile, faced with
depressed markets for its cop-
per, has indicated an interest
in selling copper wire to the
USSR.
In addition to inviting
delegations to the Afro-Asian
Solidarity Conference meeting
in Cairo in December 1957 to
submit requests for assistance
for economic development, the
Soviet participant, in an at-
tempt to create an investment
climate unfavorable to private
venture capital, recommended
the nationalization of foreign-
owned enterprises as a means of
obtaining capital for develop-
ment.
It is increasingly the
practice of the bloc to accept
payments of a loan in terms of
specific commodities from the
one-crop nations, or to accept
local currencies from states
such as India, with the result
that the bloc is carving out
for itself a larger share of
the foreign trade of these coun-
tries.
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27 February 1958
In January, the USSR's del-
egate at the Bangkok meeting of
the UN Economic Commission for
Asia and the Far East (ECAFE)
cites as major causes of current
difficulties in the ECAFE the
reduced demand for raw materials
resulting from the business
"recession" in capitalist coun-
tries and the area's heavy trade
deficit with the United States.
He said the USSR would grant
credits 'of up to five years for
the purchase of machinery and
equipment by underdeveloped
countries of the region, and
would study the possibilities of
signing long-term agreements for
purchase of certain basic export
items of the area.
Observers from Czechoslo-
vakia and Hungary also offered
to discuss long-term agreements
under which their countries
would acquire area raw materi-
als directly rather than through
international markets as they
now do.
Limitations
In the long run there are
certain disadvantages which the
USSR must overcome if it is to
threaten the present commercial
superiority of the principal
capitalist countries. The pres-
ent reliance on bilateral trade
arrangements restricts the
range and total volume of trans-
actions. Often the problem of
making periodic bilateral set-
tlements is solved by restrict-
ing trade so as to minimize im-
balances.
The inconvertibility of
Soviet and satellite currencies
has not hindered the expansion
of trade, except in Latin Amer-
ica, but it will pose problems
for Moscow as trade is further
increased.
The USSR has an advantage
in its ability to propose
either general or specific aid
offers on short notice, thus
exploiting situations as they
arise. However, once a pro-
gram is under way, the USSR
appears to be considerably less
flexible. This is partly a re-
sult of its planned economy.
The committee responsible for
foreign aid may have to consult
with as many as 100 regional
economic councils when setting
up production schedules for aid
goods.
The USSR already this year
has refused a request for changes
in the operation of its aid pro-
gram in India.
Moscow may find that wide-
spread foreign assistance gen-
erates new problems. The suc-
cess of an aid program in one
country may give rise to criti-
cism from other countries where
the results of development loans
are not so spectacular. The
Soviet Union urged Syria to ac-
cept Soviet loans for its devel-
opment program which had been
acknowledged by most economic
experts as a reasonable scheme
and likely to succeed. On the
other hand, Egyptian requests
for economic development loans
were not enthusiastically re-
ceived by Moscow since they were
not expected to produce as fa-
vorable results as Syria's.
(Prepared by ORR)
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CURR9NT INTELLIGENCE WEEKLY SUMMARY
27 February 1958
The Turkish Government
failed in 1957 to carry out
many stabilization measures
which it had adopted the previ-
ous year. As a result, last
year's apparent slight economic
advance was achieved at the
price of increased monetary in-
stability. Although Ankara
maintains that inflation will
be halted in 1958 and has pre-
sented a ba1aFnced budget, the
prospects for success seem
doubtful, barring a marked shift
in government policy and sub-
stantial outside aid.
Turkey has been seeking
since 1950 to develop its econ-
omy as fast as possible. In-
dustrial as well as agricultural
production--the mainstay of over
80 percent of the population--
has been substantially increased.
While industrial production has
risen 61 percent in real terms
since 1948, agriculture still
accounts for about half the na-
tional income. The gross na-
tional product in current prices
has climbed almost 140 percent
since 1950, but the real in-
crease in per capita income has
been small because of the rapid
rise in prices.
Ankara's financial problem
has been caused largely by its
policy since 1950 of maintaining
a rate of investment substantial-
ly higher than warranted by.
available internal and external
resources. The resulting infla-
tion has either largely miti-
gated or wiped out many of the
gains from investment.
By 1956, Turkey's attempt
to build its economic house
without a plan and without ap-
parent regard for the conse-
quences had brought the problem
to a crisis. The government--
in response to pressures from
the United States, the OEEC,
and the International Monetary..
Fund--adopted a policy of keep-
ing investment within the
limits of available noninfla-
tionary financing. A maximum
of $130,000,000 was to be made
available for 1956 from nonin-
flationary sources and a finance
committee was to be established
to supervise expenditures.
However, the usual politi-
cal pressures for more spending
proved irresistible and total
of $308,000,000 was cominitted
during the year, This 130-per-
cent overexpenditure furced
prices up while the Turkish
pound continued to depreciate.
Similarly in 1957, Turkey pre-
sented a balanced budget which
nonetheless ended in a sub-
stantial deficit. There are in-
dications, however, that the
Turkish Government is viewing its
economic problem more seriously
and may be willing to make sub-
stantial economic policy changes.
These moves would be conditional
on a substantial multilateral
aid program involving the OEEC,
the United States, and the In-
ternational Monetary Fund.
Foreign Trade
The Turkish Government's
encouragement of foreign borrow-
ing to acquire materials for
industrialization resulted in
a trade deficit of over $100,-
000,000 in 1956 and almost half
a billion dollars in the last
three and a half years. Turkey's
foreign debt probably totals
more than $1.2 billion.
Government restrictions
reduced the trade deficit some-
what during the first eight
months of 1357 but resulted in
widespread shortages of consumer
goods and raw materials. Thus,
factories dependent on foreign
raw materials were idle or
operated part time while the
government plunged further into
debt to build more plants. The
General Electric light-bulb
plant in Istanbul, for example,
was Idle from August 1957 to
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TURKEY: FOREIGN TRADE 1954-1957
MILLIONS OF DOLLARS
GERMANY
UNITED KINGDOM
UNITED STATES
SOVIET BLOC
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CURRENT'INTELLIGENCE WEEKLY SUMMARY
GERMANY
UNITED KINGDOM
UNITED STATES
SOVIET BLOC
early February 1958 for lack of
$75,000 in foreign exchange
needed to purchase raw materials.
Government agricultural pricing
policies have caused a gross
distortion of local prices com-
pared with world prices, and,
in many cases, exports are made
possible only by government
subsidies.
Turkey's trade with the So-
viet bloc has been increasing
in recent years. In the first
eight months of 1957, the bloc
accounted for about 18 percent
of total trade. West Germany
and the United States provided
about 45 percent of Turkey's
imports in 1956 and
took about 36 percent
of its exports.
Accomplishments
Despite the seri-
ous monetary insta-
bility, economic ac-
tivity in Turkey has 75
increased considera-
bly during the past 50
several years. This
higher production, 25
however, could have
been attained with
considerably less
tional investment program. Still,
from the Turkish point of view,
these years have been marked
with success despite the pres-
ent financial problems. The
gross national product in real
terms--eliminating the effects
of increased prices--was about
43 percent higher at the end
of 1955 than in 1948. In addi-
tion, industrial development
grew faster than the economy as
a whole.
Much of the investment
has been in projects with a
long-term payoff, such as elec-
tric power plants, but which
are a prerequisite for further
TURKEY: TRADE BALANCE
(MILLIONS OF DOLLARS )
-1955
cost had the govern- 17 FI:6RUARY 1958
ment adopted a ra-
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IMPORTS
1ST 2ND 3RD 4TH 1ST 2ND 3RD
1956 1957 -
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 February 1958
development. The production
of electricity, gas, and water
has increased faster than for
any other type of industrial ac-
tivity, and by the end of 1955
had increased 128 percent over
1948.
While industry has received
favored treatment, improvement
in agriculture and the raising
of farm incomes have been a
major economic and political
goal of the present government.
exploration. Since
then at least a dozen
Western companies have
received concessions,
but no major discov-
eries have been made.
The only production
is from the Raman
field (4,000 barrels
per day) in south-
eastern Anatolia, dis-
covered in 1941, and
the Garzan field (2,-
300 barrels per day)
in Thrace, discovered
in 1951. The proved
reserves of these
two fields are es-
timated to be about
65,000,000 barrels,
a relatively small
quantity even when
measured against Tur-
key's own requirements
of only about 10,000,-
000 barrels annually.
From 1949 to 1955 the number
of tractors increased seven-
fold to over 41,000 units. An
extensive training program de-
signed to acquaint farmers with
modern agricultural developments
has been undertaken with vary-
ing degrees of success. Physical
factors, however, still dominate
the Turkish agricultural picture.
Crop production fluctuates wide-
ly, varying with the amount of
rainfall and causing an un-
stable national income. Wheat
yields, for example, may vary
from 636 to 1,153 pounds per
acre.
As a result of the high
level of investment, rapidly
growing money incomes have in-
creased domestic consumption of
agricultural products in many
cases rather than making higher
production available for export.
This also holds true for many
products of industry.
In early 1954 Turkey passed
a liberal petroleum law which
opened the country to foreign
oil companies and ended the
government's monopoly on oil
Ankara has high hopes for
oil discoveries. As economic
development continues, the coun-
try's petroleum consumption is
increasing substantially and
continues to be a large factor
in the balance-of-payments def-
icit. In 1956, domestic pro-
duction supplied less than 18
percent of requirements.
Monetary Survey
The financial sector of
Turkey's economy mirrors the
general deterioration of the
economy since 1950. All mone-
tary indicators paint an ex-
ceedingly gloomy picture and
suggest a further deterioration
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 February 1958
unless the government takes
drastic action. The govern-
ment's reckless borrowing spree
has resulted in near chaos as
prices continue to spiral up-
ward and government debt in-
creases alarmingly. Since 1950,
wholesale prices have increased
over 180 percent, resulting in
a concomitant rise in the cost
of living. The creation of
money for investment has in-
creased central bank claims by
over $1,4 billion in the last
seven years and has expanded
the money supply
from about $715,000,-
000 in 1950 to over
$2.1 billion by the
end of 19 56 .
The government's
recent price control
measures will prob-
ably fail, as virtual-
ly all such measures
have in the past.
Through a series of
exceptions, the
prices of goods will
be allowed to rise
until the upward
spiral of prices is
again in full swing.
The Turkish
foreign exchange
position is exceeding-
ly weak, and the gov-
tion of the Turkish pound ac-
companied by stringent measures
to restrict increases in domes-
tic consumption and to reduce
sharply the country's invest-
ment program. The Turkish
pound, now officially pegged
at 2.8 to the dollar, has been
selling for up to 14 to the
dollar in Beirut. Some econ-
omists believe an eight-to-
one rate would be realistic.
While a devaluation probably
would provide welcome relief,
the results would be transitory
I
T
R
Y
1
O
A
ET
11
4
I
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L-)
ernment is operating on a hand-
to-mouth basis. Oil companies
have refused to extend further
credit and will make deliveries
only on a cash basis. Since
Turkish capabilities to in-
crease exports are limited, the
balance-of-payments problem can
be solved only bya substantial
reduction in imports of capital
goods and building materials.
Prospects
Turkey's major trading
partners are seeking a devalua-
unless accompanied by a sub-
stantial change in the gov-
ernment's economic policy.
Ankara thus far remains ada-
mant in rejecting both devalua-
tion and a lower level of
investment.
Ankara's attitude toward
its financial situation suggests
that the Turks believe that
in the event of a major crisis,
Western economic aid would
be forthcoming in amounts ade-
quate to see Turkey through its
problems.
SECRET
PART III PATTERNS AND PERSPECTIVES Page 10 of 10
Approved For Release 2007/10/23: CIA-RDP79-00927AO01600100001-4
 Approved For Release 2007/10/23: CIA-RDP79-00927AO01600100001-4
Approved For Release 2007/10/23: CIA-RDP79-00927AO01600100001-4