CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A001700120001-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 47
• Document Creation Date: December 20, 2016
• Document Release Date: December 5, 2005
• Sequence Number: 1
• Publication Date: October 19, 1999
• Content Type: SUMMARY

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CONFIDENTIAL
(CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
COPY NO. 50
OCI NO.1791/58
29 May 1958
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CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
CONFIDENTIAL
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THIS MATERIAL CONTAINS INFORMATION AFFECT-
ING THE NATIONAL DEFENSE OF THE UNITED STATES
WITHIN THE MEANING OF THE ESPIONAGE LAWS,
TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS-
SION OR REVELATION OF WHICH IN ANY MANNER TO
AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
The Current Intelligence Weekly Summary has been prepared
primarily for the internal use of the Central Intelligence
Agency. It does not represent a complete coverage of all
current situations. Comments and conclusions represent
the immediate appraisal of the Office of Current Intelligence.
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CURRENT INTELLIGENCE WEEKLY SIM4EY
29 May 1958
OF IMMEDIATE INTEREST
FRANCE AND NORTH AFRICA
De Gaulle's Position
Although at midday on 29
May, the question of De Gaulle's
accession to power was not set-
tled, it was already evident
that, once in office, he would
have to deal immediately with
critical problems of internal
security and North Africa. He
might subsequently be expected
to concentrate on internal po-
litical reforms and on increas-
ing France's influence in the
Western alliance.
Elements of both the So-
cialist and Communist parties
have indicated an intention to
go underground if a De Gaulle
government comes to power, and
it is possible that new anti-
Gaullist demonstrations similar
to the one of 28 May might pro-
voke police intervention and
precipitate violence.
De Gaulle's long-range
plans for Algeria will probably
be too liberal to find easy ac-
ceptance by right-wing extreme'
ists. As far as is known, he
still favors an autonomous Al-
gerian state which, along with
Tunisia and Morocco, would be
federally associated with France.
Although he has said it is too
late for any Algerian policy
based on assimilation or inte-
gration, the recent claims of
success along this line by the
Algerian Committee of Public
Safety may lead him to revise
his position on this issue.
De Gaulle's reported de-
mand that Parliament be sus-
pended for one year while he
oversees the drafting of a new
constitution to strengthen the
executive will run afoul of the
present constitution. Any
formula devised to give De Gaulle
the premiership' in a "legal"
framework must involve some
form of investiture Vote by the
National Assembly and probably
also the inclusion of a few
prominent party leaders in his
cabinet. This, however, would
involve his backing down some-
what from his original position
that his resumption of power
must be unconditional. More-
over, it would give legal status
to a parliamentary opposition
to his regime and would permit
the machinery of the political
parties to continue to operate.
Constitutional provisions also
stipulate that the National As-
sembly must convene in October
and that the parliamentary vaca-
tion cannot exceed five months
per year.
France under De Gaulle
would probably remain a member
of NATO --land possibly of-'the
existing institutions for Euro-
pean integration. However, un-
der a De Gaulle regime, Paris
would put its greatest empha-
sis on building up French na- 25X1
tional strength and using it to 25X1
push a policy bordering at times
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SECRET
CURRENT INTELLIGENCE WEEKLY SUMM Y
29 May 1958
De Gaulle would not neces-
sarily be hostile to Moscow and
may even consider the possibil-
ity of a French-Soviet "deal"
to give Europe time to "rebuild
strength." He believes the
USSR is not interested in making
war, and he may seek to repair
friendly relations with the So-
viet Union. De Gaulle also may
be influenced by reported as-
surances of Soviet Ambassador
Vinogradov that Moscow prefers
having France rather than the
United States in North Africa.
Algeria
Premier Pflimlin's resigna-
tion on 28 May was hailed as an
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important victory by leaders'of
the ruling junta in Algeria.
The extralegal all-Algeria Com-
mittee of Public Safety indicated
the following day, however, that
only the return to power of De
Gaulle would be ultimately ac-
ceptable, and the army, which
gives the impression of being
in full control of local devel-
opments, seems to be in full
accord with this position. Indi-
cations are that plans for some
sort of direct action, probably
coordinated with military ele-
ments in the metropole, are in
readiness, and the chances for
their early implementation will
increase if De Gaulle is not
actually installed in power soon
on terms acceptable to
the junta.
The new Algerian
leaders are continuing
to promote displays
of what is heralded
as a "miraculous" rec-
onciliation between
Moslems and Europeans
in Algeria and to claim
that the-42-month-old
guerrilla war has been
steadily diminishing
since the events of
13 May. This line is
aimed primarily at
convincing the metro-
pole that support of
the new regime in Al-
geria is the surest
means of ending the
war, but many local
leaders profess to be-
lieve that the recent
show of strength and
unity by the French
has had a genuine
"beneficial" influence
on Algerian Moslems.
In an effort to
maximize this influ-
ence, virtually all
public speakers have
been emphasizing the
theme that racial and
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CURRENT INTELLIGENCE WEEKLY SUMMARY
29 May 19 58
religious differences have been
wiped out and that there now
are only "Frenchmen" in Algeria.
Led by Jacques Soustelle, who
accepted membership on the
three-man "coordinating council"
created to "advise" General
Salan, these speakers have gone
on to demand full integration
of Algeria with metropolitan
France, and for the time being
at least this program has gained
complete ascendancy.
Such a "solution" faces
major obstacles, however, in-
cluding the hostility its prac-
tical implications are bound
to arouse in the Metropole and,
almost certainly, the eventual
opposition of European extrem-
ists in Algeria, who are for
the moment either going along
with the tide or remaining si-
lent. In addition, the pro-
gram's advocates are confronted
with De Gaulle's own apparent
inclination toward some type
of federal relationship for Al-
geria. Nevertheless, the Amer-
ican consul general in Algiers
doubts that even De Gaulle could
at present overcome the local
pressures favoring an ambitious
French Algerian policy.
It is still most unlikely
that participation by Moslems
in rallies hailing the "new
French Algeria" really reflects
their desire to be "Frenchmen."
In any event, the junta's at-
tempt to woo Moslems has made
no perceptible dent in the de-
termination of the Algerian Na-
tional Liberation; Front (FLN)
to fight on for independence.
A high-level FLN spokesman in
Tunis recently insisted there
has been no "rallying" to the
French by rebel fighters, and
this was confirmed by a 27 May
statement by Salan in which he
reiterated his earlier offer of
a "pardon" to rebels who would
surrender with their weapons.
Rebel spokesmen have also
stated categorically that the
rebels would have nothing to do
with the Salan junta but would
deal only with a French govern-
ment having "real authority"
and one willing to accept Al-
gerian independence. At least
some elements within the FLN
are apparently hopeful that a
De Gaulle - led regime will make
the adjustments necessary for
an accommodation acceptable to
the FLN, but these hopes are
undoubtedly tempered by distrust
of many of the forces and per-
sonalities who are bringing the
general to power.
Tunisia
In Tunisia, where clashes
between Tunisian and French mil-
itary units occurred at Gafsa
on 22 May and at Remada on 24-
25 May, the government, assisted
by the Neo-Destour party, is
taking precautions against a
feared French military attempt
to reoccupy the country, but is
faced with an acute shortage of
ammunition. Armed civilians
under the direction of the
Tunisian Army and police,report-
edly assisted by Algerian rebel
units, have taken up defensive
positions at roadblocks, par-
ticularly surrounding French
bases in the central and southern
partsocf the country. All Tuni-
sians who have served with
the French Army are being
recalled.
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CURRENT 'INTELLLGENCE WEEKLY SUMMARY
29 May 19 58
The Neo-Destour is chan-
neling popular anti-French
agitation into well-policed and
generally orderly popular demon-
strations. The most serious
incident has been the desecra-
tion of a French flag which as
torn from French gendarmerie
headquarters in Tunis.
The Tunisian Government on
26 May rejected,an offer of the
French Government for a partial
evacuation of French troops from
Tunisia, and demanded instead
that a firm timetable be drawn
up for the evacuation of all
9,000 French troops outside the
base at Bizerte when a timetable
is agreed to. This offer, in
the opinion of American Ambas-
sador Jones, is a favorable new
development in French-Tunisian
relations.
President Bourguiba an-
nounced on 26 May his decision
to return to the Security Coun-
cil, and his delegation at the
UN may soon ask for a Security
Council meeting to present Tu-
nisia's complaints against
France. The delegation is be-
ing reinforced by Ahmed Mestiri,
Bourguiba's tough-minded secre-
tary of state for justice, and
Ahmed Tlili, leader of the
most important labor union, who
has good contacts in Western
Europe and the United States.
For the time being, however,
Tunis is still trying to avoid
a showdown in order not to em-
barrass the United States and
Britain.
Bouguiba, however, is em-
bitter6d by the refusal of the
United'States and Britain to
fulfill his request for immedi-'
ate shipment of arms. He is re-
ported to believe that the United
States is overly concerned about
the dangers of provoking the re-
gime in Algiers and is not giv-
ing him the public backing he
needs and.deserves. On 27 May
when he addressed a crowd of
100,000 clamoring for arms, he
pointedly refrained from calling
for support from the United
States or the free world and ex-
pressed confidence that Tunisia
would "win, if necessary, alone."
Morocco
The Moroccan Government is
also fearful of French aggres-
sion and is rushing military
and civilian reinforcements to
the Algerian border. The gov-
ernment has committed itself to
"complete and total solidarity"
with Tunisia and on 26 May
reiterated its earlier demands
Morocco.
for the complete evacuation
of French troops from eastern
Efforts to find a politi-
cal basis for settling the fight-
ing in Lebanon have failed. Even
Prime Minister Suhl's public
declaration on 27 May that the
cabinet would not try to change
the constitution to enable
President Chamoun to seek a sec-
ond term has apparently not
moved opposition leaders toward
compromise. Earlier in the week,
some moderate opposition leaders
abandoned attempts to seek a com-
promise, under which Chamoun would
have been permitted to serve un-
til the end of his term in Sep-
tember, and joined the extreme
opposition in demanding Chamoun's
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CURRENT INTELLIGENCE WEEKLY 3
29 May 1958
immediate resignation. The po-
litical maneuvering, therefore,
has resulted in a major setback
to the government in that Chamoun
has been virtually compelled to
renounce his ambition to suc-
ceed himself as president. The
opposition, with growing UAR
support, stands firm.
The UN Security Council
has decided to postpone consid-
eration of the Lebanese com-
plaint against UAR interference
until 3 June, in order to permit
the Arab League, meeting in
Tripoli, Libya, on 21 May, to
attempt to reach a solution.
Lebanese government lead-
ers, meanwhile, are increasingly
pessimistic over the ability of
the security forces of 13,000
to 14,000 men to maintain order
against an estimated 8,000 armed
rebels, assisted by the UAR.
The rebels now virtually control
the countryside. A major factor
in the deterioration in the gov-
ernment's position is the ap-
parent unwillingness
of army commander
General Shihab to
risk alienating re-
bellious opposition
leaders by attempting
vigorous action
against rebel forces.
Despite the third
week of violence,the
government had not,
as of.28 May, pro-
claimed a state of
emergency. Army re-
luctance to move
forcefully reflects
the contention of
General Shihab that
such a move might
cause the conflict
to degenerate into a
Moslem-Christian strug-
gle.
UAR assistance
to the rebels con-
CRY
tinues in the form of major
logistical and propaganda sup-
port and some personnel rein-
forcements. A Cairo press re-
port heralding formation of a
"popular government" in South
ern Lebanon, whence forces would
march on Beirut, may indicate
that Cairo is attempting to
unite antigovernment elements
for more intensive attacks
against the government. Severe
attacks against the Chamoun gov-
ernment in the Cairo and Damascus
press have also blasted the
United States.
Syrian press reports that
"volunteers" had petitioned
Interior Minister Sarraj for
permission to "fight alongside
the Lebanese people" against
the Chamoun government and out-
side intervention could prepare
the ground for more open UAR
participation in Lebanon's
civil war, or be used in the
UN Security .Council to refute
Lebanon's, charges of official
UAR intervention.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
29 May 19 58
The manifest UAR interven-
tion in Lebanon has raised fear
in other pro-Western Arab states
as to who will be next. Suda-
nese officials have expressed
concern that UAR success in Leb-
anon would be followed by new
moves against the Khalil govern-
ment. Leaders of Jordan, which
is now beset by a new UAR-sup-
ported ultranationalist conspiracy
among army and political offi-
cials, are deeply worried.
Djakarta's military cam-
paign against the North
Celebes dissidents continues
with operations to isolate the
dissident capital of Menado.
Lt. Col. Jusuf, tactical com-
mander for the Menado assault,
states that both paratroops and
amphibious forces will be used
and that small marine detach-
ments and intelligence agents
have already infiltrated the
area to prepare for the land-
ings. Djakarta forces occupied
the Sangihe and Talaud island
groups north of Celebes on 25
May, and the government claims
all dissident forces on the is-
land of Morotai have surrendered-.
The dissidents apparently are
continuing to resist, however,
in the Djailolo, Palu, and
Gorontalo areas.
In Central Sumatra, Dja-
karta administrators are en-
countering the problems of oc-
cupation and reconstruction.
Principal problems are passive
resistance to central government
officials and a lack of school-
teachers and civil servants,
who either fled or were intimi-
dated by the dissidents. Colonel
,n
Oonggal:.
. _....
--5ura bayu
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CURRENT INTELLIGENCE WEEKLY S,UkKARY
29 May 1958
Jani, the military administrator
for the area, told the American
assistant army attache trouble
can be expected if the govern-
ment "does not move and quit
talking." Presumably he was
referring to the possibility
of increased guerrilla warfare
by the approximately 3,000 armed
dissidents estimated still in
Sukarno will prob-
oose to reshuffle the
ably
Djuanda cabinet, ousting the
leftists, since this choice
would evoke less opposition
than the more drastic changes
advocated by the army.
The National party on 27
May issued a statement in Dja-
karta which, although not naming
the Communists, amounted to an
attack on them, and is the first
public anti-Communist move by'
the National party leadership.
A member of the Masjumi recently
warned, however, that the non-
Communist parties must do more
than wage a propaganda war
against the Communists. He
said the Communist party is
building its popularity soundly
on a basis of actual service to
the people.
The minister of information
has announced that the government'
has no intention of postponing
the 1959 general elections if
the domestic situation "remains
unchanged." The army has been 25X1
pressing for a postponement
Secretary General Aidit l'has 25X1
Publicly stated that post- 25X1
ponement of general elec-
tions would be a "sin against
the people."
Communist party 2
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WIVrIULIV I IAL
CURRENT INTELLIGENCE WEEKLY SUMM.RV
29 May 1958
NOTES AND COMMENTS
THE CHINESE COMMUNIST PARTY CONGRESS
The second session of the
Chinese Communist party's eighth
congress, meeting from 5 to 23
May, reaffirmed hard lines in
domestic and foreign policy
which have been developing
since last fall. Mao Tse-tung
apparently continues to domi-
nate the party. Liu Shao-chi
and Teng Hsiao-ping seem to
have improved their chances to
capture control of the party
when Mao dies or retires.
They are regarded as the lead-
ing figures of an "organization-
al" group among Mao's lieuten-
ants, so named because of its
members' roles in directing
the key organs of the party,
as distinguished from the
state.
Major Speeches
The most important report,
summarizing the party's situa-
tion, general line, and tasks,
was made by Liu Shao-chi. The
other two major reports were
given by Teng Hsiao-ping, on
intrabloc relations, and by
Teng's deputj. ?Tan' Chen-lin, on
agriculturaldevelopment. Mao
himself did not make a major
report, apparently limiting his
role to setting the tone for
the congress. However, the
speakers credited Mao person-
ally with originating the main
policies which are to guide the
regime for the next year, poli-
cies with which "organizational"
figures have been. particularly
closely identified.
In reviewing the _:ifiter-
national situation, Liu and
Teng emphasized.Peiping'e close
ties with Moscow. The congress
reiterated the Chinese condem-
nation of the Yugoslav party
program, and its resolution ex-
ceeded in harshness Peiping's
5 May blast at Tito. It charged
Belgrade with the role of "pro-
vocateur and interventionist"
in Hungary. In language reminis-
cent of the 1948 Cominform reso-
lution expelling Yugoslavia,
Peiping declared that Yugoslav
leaders have "alienated them-
selves" from the international
Communist movement.
In summing up domestic ac-
complishments, Liu expressed
satisfaction with party work
since the last congress, espe-
cially the party's major effort
of the past year to cleanse its
ranks through "rectification."
He warned that the party must
be prepared to wage prolonged
and repeated struggles against
"rightists" throughout the
period of "transition to social-
ism." The congress rebuked as.
"rightists," and may drop,
three alternate members of the
central committee.
Industry and Agriculture
The congress reaffirmed
the leadership's forced-draft
program for economic development.
Various party policies are con-
solidated in a "general line
for socialist construction,"
under the slogan of "utmost
effort" to achieve "greater,
faster, better, and more eco-
nomicAl" results. The line
urges the "simultaneous devel-
opment of industry and agri-
culture while giving priority
to heavy industry," and, within
certain limits, the "simul'taneous
development of national and local
industries, and of large, medium,
and small enterprises." Liu
Shao-chi's vigorous defense of
the program and the congress'
appeal to close ranks and work
for it with "one mind and one
heart" suggest the existence
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SEA'
CURRENT INTELLIGENCE WEEKLY SUMMARY
29 May 1958
of continuing opposition in the
party.
Tan Chen-lin, who in the
past year has displaced Teng
Tzu-hui as the party's leading
spokesman on agriculture, ex-
plained to the congress the
second revised draft--as yet
unpublished--of 'the national
program for agricultural de-
velopment. The congress ap-
proved the revised program "in
principle," instructing the
central committee to make any
necessary changes. The new
revision takes into considera-
tion the greatly increased em-
phasis given agriculture and
industries supporting agricul-
ture since last fall. The re-
vised program remains an ambi-
tious one. Tan did introduce
a cautious note, however, in
warning of the dangers of work-
ing only for "flashy results."
Personnel Changes
Like the other proceedings
of the congress, new appoint-
ments to the party politburo
show the increasing strength of
the "organizational" group.
Ko Ching-shih, the party boss
in East China, has been close
to.both Liu Shao-chi and Teng
Hsiao-ping in recent years.
Tan Chen-lin of the secretariat
has been closely associated with
Teng for at least the past three
years. Li Ching-chuan, who made
an unprecedented jump directly
to the politburo from a provin-
cial party post, was one of
Teng's top lieutenants when Teng
was party boss of the
Southwest before 1952.
KEY ORGANS OF CHINESE COMMUNIST PARTY
MAO TSE-TUNG, Chairman
LIU SHAO-CHI, Vice Chairman
CHOU EN- LA Vice Chairman
CHU TE, Vice Chairman
CHEN YUN, Vice Chairman
LIN PIAO, . Vice Chairman
TENG HSIAO-PING
LIN PO- CHU
TUNG PI-WU
PENG CHEN
* LO JUNG-HUAN
CHEN YI
LI FU-CHUN
PENG TE-HUAI
* LIU PO-CHENG
HO LUNG
LI HSIEN-NIEN
KO CHING-SHIN
LI CHING-CHUAN
TAN CHEN-LIN
ULANFU
CHANG WEN-TIEN
LU TING-I
CHEN PO-TA Nonvoting
Members
YANG SHENG
POI-PO
POLITBURO STANDING
COMMITTEE
MAO TSE-TUNG
LIU SHAO-CHI
CHOU EN-LAI
CHU TE
CHEN YUN
TENG HSIAO-PING
LIN PIAO
TENG HSIAO-PING
PENG CHEN
LI FU-CHUN
LI HSIEN-NIEN
TAN CHEN-LIN
WANG CHIA-HSIANG
TAN CHENG
HUANG KO-CHENG
LI HSUEH-FENG
LIU LAN-TAO, Alternate
YANG SHANG-KUN, Alternate
HU CHIAO-MO, Alternate
"Organisational" figures
Underlining indiea ea new members of
party organ.
* Apparently inactive.
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PART I I
NOTES AND COMMENTS
The politburo as
a voting body will
probably continue to
be responsive to Mao,
even if "organizational"
figures should choose
to stand together in
opposition to Mao on
an important issue.
However, the "organi-
zational" group seems
now markedly stronger
in the politburo than
another group which
has been regarded as
responsive to Chou
En-lai.
The One other
change in the polit-
buro was the designa-
tion of Lin Piao as a
new vice chairman of
the central committee
and politburo and as
a new member of the
politburo's standing
committee. Lin was
once Mao's favorite
military leader, but
for the past six years
has been seriously ill.
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CURRENT INTELLIGENCE WEEKLY BRAY
29 May 1958
03
at least three line divisions,
or about 50,000 Soviet troops,
twice the number stationed there
before the uprising. There are
still 35,000 soviet troops in
Poland and over 350,000 in East
Germany. The Warsaw Pact Comte
mittee'also.announced that the
forces of all Eastern European
satellite countries e,dept Hun-
gary and East Germany would be
out. The total reduction would
be 119,000, which would leave
the ' er-all strength of the
Eastern European satellite
forces at about one million men.
The announced withdrawals
and reductions, together with
the renewal of a fionag ression
treaty offer to the NANO coun-
tries, seem intended to Make
the Soviet stand on the entire
range of disarmament issues
appeal more credible during
presummit talks, as well as
to reinforce the tSSR's refusal
to discuss the satellites at a
summit conference. Another pur-
pose is to make NANO defense
measures appear less urgent.
These steps were accompanied,
however, by $hrushchev's warn-
ing in a speech to the meeting
that, should missile sites be
established in Western Europe,
the Warsaw Pact countries "would
be forced...to examine the
question" of establishing mis-
sile bases in last Germany,
Poland, and Czechoslovakia.
The USSR took the occasion
to ieiterate its demand for par-
ity at the summit and to attempt
to enhance the satellites'
claims for participation. Cor-
responding to the Western pow-
ers' suggestion that Italy be
included in the talks, the War-
saw Pact countries proposed that,
in addition to the USSR, two or
three Communist states--Poland,
Czechoslovakia, and possibly
Rumania--be represented.
Yugo-Plavia
The Soviet decision to
"postpone" for five years about,
$278,000,000 in industrial ex-
pansion credits for Yugoslavia
was undoubtedly discussed dur-
ing the Moscow CEMA meetings.
Moscow's hint that some compen-
sation might be arranged through
goods exchanges suggests that
the imposition of i total
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CURRENT INTELLIGENCE WEEKLY aUMMARY
29 May 1958
economic boycott, however, is
not contemplated for the imme-
diate future. As yet no deci-
sion regarding $90,000,000 in
Polish and Czech credit--Bel-
grade's other bloc creditors--
has been announced. Unofficial
reports from Belgrade suggest
that the Yugoslavs are not
optimistic regarding their fu-
ture bloc.economic ties.
Any other decisions on Yu-
goslavia reached probably will
be mirrored in more propaganda
attacks and other coordinated
bloc actions concerning Bel-
grade.
WARSAW PACT ARMED FORCES
While some of the East
European satellite armed forces
have greatly improved their com-
bat capability in the three
years since the inception of
the Warsaw Pact, there has ap-
parently been no concerted ef-
fort to make them an integrated
and vital adjunct to the Soviet
forces, with the possible ex-
ception of air defense. The
recent meeting of the Political
Consultative Committee of the
Warsaw Pact probably discussed
this question.
There have been some large-
scale combined maneuvers and
command-post exercises involv-
ing both satellite and Soviet
forces in the past two years,
but these have been infrequent
and have never involved all the
satellites. A Soviet-Polish
exercise was held recently in
Poland. Soviet, Czech, and
East German units reportedly
are planning to conduct a large-
scale joint maneuver in East
Germany, or possibly Czeehoslb-
vakia. These same countries
have engaged in ,dint training
previously.
In the satellite ground
forces, alone, which are in,
general well equipped ahd or-
ganized, there are nearly a
million men and 63 line divi-
sions. These forces have re-
mained relatively stable in the
past few years with the excep-
tion of those in Hungary, which
were completely disorganized in
1956, and the East German forces,
which have been vastly improved.
Since its organization in
January 1956, the East German
Army has undergone reorganiza-
tion and greatly modernized its
weapons and equipment. In sev-
eral major equipment categories,
the army now has a decided ad-
vantage over those of the other
satellites. Two mechanized di-
visions have been converted into
tank divisions and an antiair-
craft artillery division has
been formed. In addition, the
rifle divisions have been con-
verted to "motorized rifle di-
visions" by increasing the divi-
sional armored support.
Other satellites also have
received new equipment from the
USSR. A significant number of
T-54 medium tanks, which have
been replacing the T-34's in
Soviet units since 1954, were
issued to Polish units in 1957.
The East German, Czech, and prob-
ably Bulgarian forces also have
these tanks. Major items of
heavy equipment believed to have
been stored during the 1956 up-
risings have been observed re-
cently in the hands of Hungarian
troops. Judging by the type of
equipment involved, it appears
that efforts are being made to
re-establish an effective army
in Hungary which will probably
consist of from six to nine line
divisions but without a signifi-
cant combat capability until at
least the fall of 1959.
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CURRENT INTELLIGENCE WEEKLY SUARY
29 May 1958
In general, the satellite
armies are adequately trained
to conduct combined arms com-
bat operations with large units.
With the exception of Albania
and Hungary, all the satellites
have conducted at least diva{
lion-level army training. The
quality of training, however,
cannot be favorably compared
with the world's modern armies--
largely because of the relative
lack of communications equip-
ment and modern transportation.
more than 3,500 aircraft of all
types, of which about 2,000 are
jet fighters. Since the forma-
tion of the Warsaw Pact, the
satellite air forces have con-
centrated on a'mission of air
defense. The integration of
later model interceptors in the
areas in which only satellite
air forces are operating--Bul-
garia and Czechoslovakia--fur-
ther indicate the extent to
which the USSR is using the
Warsaw Pact as the legal in-
strument to expand its air de-
The satellite air forces
have a combined strength of
RECENT PUBLIC ACTIVITIES OF
The absence of party pre-
sidium member and central com-
mittee secretary Mikhail Suslov
during the recent Moscow con-
ferences of bloc leaders and
the visit of Finnish President
Kekkonen raises some question
about Suslov's present role in
the Soviet leadership, He was
last identified on 16 May.
Suslov has long held spe-
cial responsibility for Soviet-
satellite relations, as was
demonstrated by his prominence
at the meetings of bloc leaders
last November in Moscow and by
the fact that he reported on
the results of the meetings to
the December plenum of the So-
viet Communist party. His
failure to appear at the re.
cent conferences,-. which involved
not only economic '.special--'.
ists of CEMA and military ex-
perts of the Warsaw Pact but
also high party officials, has
caused the Polish Communists
to conjecture that he has been
removed from the Soviet party
presidium.
It is possible, however,
that Suslov is either occupied
with other.pressing matters. or
is on vacation--he was away
fense system.
SOVIET PRESIDIUM MEMBERS
from Moscow during late May and
early June in both 1956 and 1957.
Nevertheless, he has shown signs
from time to time of resisting
Khrushchev's leadership, and
this plus his usual conspicuous-
ness in Soviet-satellite party
negotiations lend weight to the
Polish speculation.
Presidium member Bulganin,
who was demoted from premier' to
head of the State Bank on 27 25X1
March, has been out of the pub- 25X1
lic eye since the May Day fes-
tivities.
squite ovous
e as been relegated to
the wings of. the current lead-
ership scene.
Mikhail Pervukhin, whose
appointment as ambassador to
East Germany in mid-February
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CURRENT INTELLIGENCE WEEKLY wMMAItY
29 May 19 58
aroused speculation that he
had been dropped as a candidate
member of the party presidium,
apparently retains his top
party post. In mid-April,
when the Komsomol congress
elected the entire party pre-
sidium as honorary delegates
to the congress, Pervukhin was
included on the list. He was
also listed along with party
presidium members attending
dinners given on 22 May in
honor of Finnish President Kek-
konen and on 24 May in honor
of bloc delegates to the CEMA
and Warsaw Pact conferences.
In addition to Khrushchev,
party presidium members who
have been in the forefront late-
ly are A. I. Mikoyan, F. R.
Kozlov, and A. I. Kirichenko.
These four were the party pre-
sidium members on the Soviet
delegation to the conference
of CEMA representatives.
SOVIET ATTITUDE TOWARD DE GAULLE
The caution in the recent
Soviet propaganda treatment of
De Gaulle suggests that Moscow
does not want to handicap any
future relations with him and
believes it can benefit from
some of his nationalistic poli-
cies. The remarks of Soviet
diplomats in Paris before the
present crisis began suggested
that the USSR expected that a
De Gaulle government would be
a disruptive force in NATO and
might seek closer. relations
with the USSR. On the other
hand, Moscow may foresee a
greater possibility under a De
Gaulle government for the type
of settlement in Algeria that
would weaken the chances for
expanding Communist influence
in North Africa.
While Moscow may consider
that A De Gaulle government
would be a net gain to the USSR
in the foreign policy area, it
is also alert to the possibility
that united action by the Com-
munist and Socialist parties
against De Gaulle might lead
to a popular front government.
The USSR probably does not
anticipate violent revolution-
ary activity leading to a
Communist seizure of power but
rather united political action
by the parties of the left that
would eventually give the Com-
munists an influence on French
foreign policy. Since present
Soviet tactics for world Com-
munism place a high premium on
Communist cooperation with other
leftist parties, the prolonged
isolation of the French Commu-
nist party has been a source
of concern to the Soviet lead-
ership. The USSR is probably
uncertain, however, about
whether De Gaulle would seek
to establish a dictatorship
and would suppress the Commu-
nist party,.
Soviet propaganda has en-
dorsed French Communist efforts
to unite the parties of the left
and has publicized the Commu-
nist criticisms of De Gaulle.
While French Communist attacks
on De Gaulle have intensified
and have included the claim
that the USSR opposes him, Mos-
cow has restrained its own com-
mentary on De Gaulle and has
centered its criticism on the
military leadership in Algeria.
Both Soviet and French Commu-
nist propaganda launched at-
tacks on the Pflimlin govern-
ment for its "compromises"
and "capitulation."
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CURRENT INTELLIGENCE WEEKLY 'AlU.4MARY
29 May 19 58
DECENTRALIZATION IN THE NORTHERN SATELLII'SS
Economic administrations
are being rapidly decentralized
in Czechoslovakia, East Germany,
and Poland, the most highly in-
dustrialized satellites. The
reorganization is designed to
increase industrial production
and decrease costs by establish-
ing more efficient operating
procedures, while eliminating
many administrative posts and
assigning most of the incum-
bents to production tasks.
Another aim of the program is
to curtail the power of the eco-
nomic : ministries, which, much
reduced in size, are to be con-
cerned mainly with long-range
planning and bloc coordination.
The recent elimination, of
the Polish central boards--
transmission belts of authority
from the ministries to the basic
enterprises--means that now in
all three countries, associa-
tions of enterprises will have
the operational authority. These
associations, grouped according
to a particular type of produc-
tion, will have responsibility
for short-term planning, approval
of investments,and settlement
of accounts that were formerly
the responsibility of the min-
istries. Other powers formerly
exercised t?y economic ministries
are to be. vested in the local
government councils and in the
managers of enterprises, who are
to have more authority.over the
disposition of investments and
profits.
As economic structures are
being reshaped, the solution of,
concomitant personnel, problems
-is proving difficult. "Large
numbers of administrative per-
sopnel are being shifted from
the capitals to work in district
administrations or in industry.
Zn.;Czechoslovakia, the number
of persons so affected ranges
from 40,000 to 100,000. Many
of these-workers refuse to seek
.manual labor and the result
is a considerable group of
unemployed,., discontented
people in Prague.
East Germany seems to be
having the most trouble with
its decentralization, partly be-
cause it is being pushed too
fast and partly because here,
unlike Czechoslovakia and Poland,
the economic ministries are be-
ing entirely eliminated and:re-
placed by a state planning com-
mission. Further, the vagueness
of operational directives is
confounding district officials..
As in Prague, many party mem-
bers slated to leave Berlin for
assignments in the districts
are resisting the move.
While Poland's actual ad-
ministrative reorganization'is
similar to that of Czechoslovakia
and East Germany, it is part of
a larger program to put Polish
industry on a basis of ;"'profit-
ability," exemplified by a cam-
paign to last until 1960 which
has eliminated 150,000 industrial.
and administrative workers to
date. Next year, as a part of
this wider economic program, the
Polish price structure is to. be
revised as called for by the
"new economic model."
The success of the economic
decentralization is far from
assured. Power may~have a ten-..
dency to shift back to top lev-
els--the ministries or the
equivalent state planning .com-
mission--with.a consequent growth
of red tape to encumber the pro
cedures.of procurement, account-
ing, planning, and. marketing.
The additional authority of'the
plant managers over plans,
profits, and investments may
lead to conflicts with the party
representatives, since these lat-
ter are rarely able to deal with
economic. problems from a stand-
point that is solely economic.
Workers stand to,benefit only if
they work harder to increase plant
profits . (Pre- . 25X1
pared by R
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CURRENT INTELLIGENCE WEEKLY SUMMARY'
May 1958
THE BULGARIAN PARTY ON THE EVE OF ITS, SEVENTH PARTY CONGRESS
The Bulgarian Communist
party will convene its seventh
congress on 2 June in an atmos-
phere of success and self-
assurance. The doctrinaire rul-
ing triumvirate of party First '
Secretary Zhivkov, Premier Yugov,
and politburo member Vulko
Chervenkov--Bulgaria's "little
Stalin"---is no longer under
pressure to liberalize, and
its'.: undeviating "Stalinist"
approach can be shown to have
paid off in almost complete
collectivization and undisputed
control of the country.
. The Bulgarian regime also
? finds itself in a strong posi-
tion as far as the renewed
Soviet-Yugoslav dispute is
concerned. Since Bulgaria did
not establish close relations
with Yugoslavia during the pe-
riod When reconciliation with
Belgrade was in vogue and did
not set out on its own "road
to socialism," it will be well
equipped at its party's congress
to denounce the Yugoslav "revi-
sionist heresies" and present
the Moscow-approved line on
satellite behavior. Zhivkov,
who will report at the congress
on the activities of the party
since its sixth congress in 1954,
will probably deliver the author-
itative statement on this ques-r
tios.
The current Soviet-.Yugoslav
split and MMcpscow'ss renewed ap-.
proval of more "orthodox" lines
of internal policy for the sat-
ellites make unlikely any sig-
nificant changes in the Bulgarian
leadership at the congress.
Although Chervenkov was demoted
during Bulgaria's limited thaw,.
he was replaced by like-minded
"hard=linerdland managed to re-
main in the highest leadership
circles. Zhivkov, his former
lieutenant, has apparently re-
ceived Moscow's blessing and.
has risen to the number-one
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CURRENT INTELLIGENCE WEEKLY SUMMARY
29 Ma y 19.5,8
position in Sofia without an-
tagonizing Chervenkov, who re-
portedly is more able and has
a big following in the--local
party organizations.'
Yugov, while still the
second most important figure in
the regime, is said to have
slipped somewhat because of his
half-hearted support of the
Bulgarian party shake-up last
July. What little party fac-
tionalism exists appears to
stem from dissatisfaction with
relative power positions rather
than policy differences, and
even this has reportedly been
minimal since'.the July ouster
of politburo member Georgi
Chankov.
Another member of the Bul-
garian party, party secretary
and politburo member Dimiter
Ganev, also appears to have
risen to top leadership stature
in the past year,;.supposedly
with Chervenkov's backing. Al-
though there are rumors in Sofia
that Ganev is attempting to
replace Zhivkov, evidence does
not support these rumors at
this time.
As a precautionary measure,
before the congress the Bul-
garian party at Zhivkov's
instigation reportedly expelled
from its ranks last month up to
30 Kostovites-.-the group ousted
for Titoism in 1949-50. These
individuals, who were rehabil-
itated in the spring of 1956
but not readmitted to the top
party leadership, reportedly
have been dissatisfied with both
their positions and the compen-
sation paid for their years in
prison. Although ousted from
the party, the 30 Kostovites
have not as yet been removed
from their jobs or arrested.
The Bulgarian Army also is
a cause of some concern to the
regime. Some of its leaders
were readmitted to the central
committee at the party's sixth
congress in 1954 after removal
or arrest in connection with
the Kostov affair in 1949-50.
If any of these rehabilitated
officers have exhibited reluc-
tance'to go along with the cur
rent line, which has turned away
from "liberalization," they may
be again removed from their jobs.
Such a process may already have
begun in the reshuffle of the
party leadership in July 1957,
with the removal of central
committee members Dobri Terpeshev
and Yonko Panov.
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29 May 19 58
BRAZILIAN.- SOVIET BLOC TRADE
Brazil's three-year barter
agreement with Poland, in-
volving the exchange of coffee
and other bulk commodities for
14 merchant ships worth about
$25,000,000, reflects its con-
tinuing dollar crisis, its
growing coffee surplus, and
its desire to offset the al-
most inevitable cutbacks in
dollar and sterling expenditures
for the government's economic
development plan. The Polish
deal and a reported Czech deal
involving $12,000,000 worth of
coffee for agricultural equip-
ment probably foreshadow
other barter deals with the So-
viet bloc, even though they do
not point to any fundamental
change in Brazil's preference
for trading within Western
multilateral arrangements.
In early May, Brazil's dol-
lar balances reached the zero
mark and continued imports were
possible only through emergency
loans from private banks in the
United States. Brazil has been
negotiating with the Interna-
tional Monetary Fund (IMF) for
a second drawing but has in-
sisted that the reforms asked
by the IMF will be politically
infeasible without substantial
additional US loans and credits.
Coffee, which normally pro-
vides up to 80 percent of $ra-
zil's dollars and 70 percent-of
total foreign exchange--between
$800,000,000 and $1 billion an-
nually--has dropped about 15
percent in price since last May,
and Brazil's sales were off
about one half in the first
quarter of 1958. World-wide
overproduction, resulting from
increased plantings in 1954,
is expected to continue for
several years. A continued
weakness in the market would
almost certainly stimulate the
already serious nationalist
campaign against the United
States, whose commodity markets
determine world coffee prices.
Brazil has trade agree-
ments with Poland, Hungary, and
Czechoslovakia, its principal
trading partners in the bloc.
Trade with the bloc declined
some 10 percent in 1957 to a
level of $76,400,000, but is
likely to increase in the next
few years, partly as a result
of Polish credits already ad-
vanced during 1957.
Most Brazilian officials
see the possibilities of bloc
trade, however, as limited not
only by the rigid bilateralism
of bloc commercial arrangements
but also by the lack of a broad
market there for coffee. They
fear that large sales of coffee
to any bloc country would re-
sult in resales in Brazil's
usual Western markets. While
there has been considerable
interest in bloc offers of
heavy equipment, most top of-
ficials are also fearful of
large-scale transactions that
would involve the presence of
bloc technicians.
(Concui?red in by ORR)
SUDANESE POLITICAL SITUATION
Prime Minister Khalil'ss
recently installed coalition
government in the Sudan faces
the same difficulties encoun-
tered by the almost identical
coalition he headed in aid-
1956. The opposition continues
to attack the government on its
generally pro-Western alignment
and its refusal to grant greater
local autonomy to the non-Arab
southern Sudan. The Egyptian
subversive effort to bribe or
otherwise influence various
wavering elements, in many in-
stances paralleling Communist
efforts, now is threatening
Khalil's slim parliamentary
majority.
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CURRENT INTELLIGENCE WEEKLY BUS1NARY
29 May 1958
Government officials have
lately expressed growing anxiety
over Egypt's intentions, and
fear that if Nasir's venture
in Lebanon is successful, he
will make a similar attempt in
the Sudan.
Antigovernment forces in
the Sudan are sponsoring demon-
strations and heavy propaganda
attacks against Khalil's accept-
ance of an American aid program.
Last week's parliamentary vote
on the new government's first
policy statement was won by the
coalition membership in the all-
important House of Representa-
tives by a vote-of 98 to 70.
Actual parliamentary approval
of an aid agreement, however,
will not be attempted until
the end of June. Meanwhile, a
combination of pro-Egyptians,
Communists, and the opposition
National Unionist party (NUP)
will be working vigorously to
win away the numerous independ-
ent southern and other half-
hearted supporters of the coali-
tion.
sult of its public statements
favoring a "positive neutralist"
policy in foreign affairs. . For-
eign Minister Mahjoub, in line
with this policy, recently stated
that the government.would wel-
come a Soviet technical and eco-
nomic aid offer with "no strings
attached. " 25X1
25X1
Southern delegates walked
out of last .waek's meeting of
Parliament in protest against
the new constitution now being
written, apparently dissatisfied
with its concentration of power
in the central government.
These delegates' allegiance
to the coalition is tenuous,
and a combination of'Egyp-
tian money and 'promises.of
greater local autonomy under
an NUP government might bring'
about enough defections to
be fatal to Khalil's coalition.
The government may face
further embarrassment as a re-
MIRZA HOPES TO REGAIN CONTROL
Pakistan's President Mirza
has made it clear he intends to
exploit the latest outbreak of
.political instability to assure
his future control over the gov-
ernment. He may either try to
force the formation of a nation-
al government more amenable to
his control or resort to dicta-.torial rule. Two factors in
his favor are Prime Minister
Noon's implication in a widely
publicized defamation-of-charac-
ter. case. and the possibility
that the East Pakistan provin-
dial government will collapse
early in June.
Noon-has been seriously
bar-rassed by -a recent court
25X1
OVER PAKISTANI COALITION
judgment casting reflections on,
his role in the defamation of
M. A. Gurmani, one of Pakistan's
leading politicians. The Supreme
Court granted Noon's request for
a hearing, however, and his
petition to have the reference
to him'in the judgment stricken
will be heard on 23 June. if'
Noon is unsuccessful in clearing
his name, he will have little
choice but to resign.
Mirza' claims to be ready
to seize the initiative follow-
ing court action on Noon's peti-
tion and to bring down the pres-
ent Republican.'party government,
which was installed in the face
of Mirza's opposition "last
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CURRENT INTELLIGENCE WEEKLY I rURY
29 May 19 58
December. Mirza hopes to elimi-
nate the influence of former
Prime Minister Suhrawardy, who
is the chief support of the
present government and Mirza's
one real rival for political
supremacy. The President,
aware that his political and
popular. support has diminished
during the past year, apparent-
ly intends to ensure his con-
tinuance in office after the
elections now scheduled for No-
vember by maneuvering at this
time for a new amenable coali-
tion or, failing this, using
the current instability as an
excuse for assuming dictatorial
rule.
The forces which support
the present government, and
want to prevent any development
which might delay the elections,
are working strenuously to avert
a realignment of the coalition.
These politicians, helped by
the court's agreement to hear
Noon's petition, could make it
difficult, if not impossible,
for Mirza to line up a workable
majority. Their hand would be
weakened, however, if the East
Pakistan provincial government,
headed by Suhrawardy's Awami
League, fails to win the pro-
vincial assembly's confidence
in crucial sessions early in
June, and makes it necessary
for the central government to
step in. Both these circum-
stances could increase the pros-
pects of a take-over by Mirza.
THE,BURMESE POLITICAL CRISIS
On 5 June the Burmese Par-
liament will choose between the
leadership of Premier Nu and
Deputy Premier Ba Swe. This
showdown vote will also mark
the end of the Anti-Fascist
People's Freedom League (AFPFL),
which has led Burma since inde-
pendence in 1948. The new gov-
ernment,. whether based on a
single party with a slender
parliamentary majority or on
a coalition of minority parties,
will probably be short-lived
and unstable.
U Nu is expected to call
for new general elections im-
mediately following the parlia-
mentary vote regardless of its
outcome. The Communists and
rightist extremists would be
the major beneficiaries in such
elections because former AFPFL
voters will be divided.
Civil strife, common to
Burma in the past, has so far
been contained. All top po-
litical contenders have signed
pledges to refrain from violence.
The army, still politically neu-
tral, appears in firm control
of the situation in Rangoon.
Violence in rural districts,
however, is already reported
increasing.
Deputy Premier Ba Swe,
counting on two thirds of the
current AFPFL parliamentary votes,
claims he will obtain a clear
majority in the 250-seat Chamber
of Deputies. However, his con-
fidence appears to be decreasing
as Nu's faction reports success
in converting deputies previous-
ly pledged to Ba Swe. In addi-
tion, the premier has the sup-
port of the 46 to 49 votes of
the Communist-dominated Nation-.
al Unity Front party. There
have been public charges in
Rangoon that both.-,Sides are
offering up cto.~ , 1,.000,, ~.l.kyats
($210) for .' eabhj,!,,.unoommitted
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-SECRET.-.
29 May 19 58
parliamentary vote, and no
firm estimate of the outcome
will be possible prior to the
balloting.
Both the U Nu and Ba Swe
factions are committed to demo-
cratic ideals. The prospects
for the emergence of a responsi-
ble two-party system from the
present crisis are dimmed, how-
ever, by the strength of the
National Unity Front in Parlia-
ment. Because of the split in
the AFPFlo, Communist parliament-
ary influence for the first
time cannot be ignored, whether
in support of one side of the
other. In the national elec-
tions, whib.h must be held by
1960 at the latest, the leftists
are almost certain to increase
their representation--perhaps 25X1
nist vote.
even win a majority--because
of the pplit of the non-Commu-
JAPAN CONCERNED OVER CHINESE COMPETITION IN SOUTHEAST ASIA
Japanese government offi-
cials and businessmen are be-
coming seriously concerned over
Chinese Communist competition
in Southeast Asian markets and
are seeking means to counter
this trend. Representatives of
the generally depressed Japa-
nese textile industry, which is
hardest hit by competition from
Peiping, have suggested that the
United States, in order to block
Communist penetration of the
area, assist the Japanese with
long-term, low-interest credits
toward purchases of American
cotton, which would improve
Japan's competitive position.
The representatives believe
that if they can obtain five-
year credits on low-grade cot-
ton at 2 percent interest, Ja-
pan could regain a considerable
portion of those Southeast Asian
markets which have been lost
to Communist China.
Many Japanese who have be-
lieved the China mainland could
become the lucrative market of
the prewar period are apparent-
ly undergoing a gradual change
in attitude. They are begin-
ning to realize that the Chi-
nese economy may be a compet-
ing rather than a Qomp;iementary
one.
There is particular concern
about Chinese textile exports.
According to Japanese estimates,
Peiping's textile sales in four
Southeast Asian countries in-
creased from approximately 15,-
000,000 square yards in 1954 to
about 300, 000, 000 in 1957, with
Indonesia the leading buyer.
The major portion of this in-
crease has been at the expense
of Japanese industry.
Early in 1958, the Chinese
Communists were reported selling
Japanese steel in Singapore at
a price lower than Japan itself
could offer. While it is doubt-
ful that Peiping can significant-
ly increase its present small-
scale sales of heavy industrial
materials in Southeast Asia, the
Japanese regard this as an ex-
ample of Communist willing- 25X1
mess to allow political
considerations to outweigh eco-
nomic factors.
(Concurred in b H
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29 May 1958
JAPANESE ELECTION STRENGTHENS PRIME MINISTER KISHI
The return to power of I in any election since 1949.
Prime Minister Kishi's Liberal-
Democratic party in the 22 May
election for the lower house of
the Japanese Diet should
strengthen his control of the
government and encourage him to
continue cooperating with the
United States. Because of antip-
athy aroused in Japan by Sino-
Soviet efforts to influence the
election, Kishi now may also
be in a better position to re-
sist pressures for political
concessions to Communist China
for the sake of trade.
As a result of the party's
and his own good showing, Kishi
is in a stronger position to
cope with Liberal-Democratic
factionalism, despite the fact
that factional strengths are
relatively unchanged. If Kishi
is successful in bringing Hayato
Ikeda, leader of the adherents
of former Prime Min-
ister Yoshida, into
a cabinet or party
post following con-
vocation of the Diet
on 10 June, the pros-
pects for political
stability will be
enhanced.
The expected
addition of independ-
ent conservatives to
the ruling party will
not give it the two-
thirds majority nec-
essary for a consti-
tutional amendment,
but Kishi will ha in
This could cause the party's
right wing to demand that the
party seek support from elements
other than labor, which has been
its mainstay to date. The par-
ty's failure to win more seats
has aggravated the cleavage be-
tween its right and left wings
and increased criticism of party
leaders.
Communist China is probably
disappointed in the election re-
sults, but shows no inclination
to alter the strategy it adopted
in hopes of influencing the
election. Peiping apparently
plans to continue its economic
boycott and insistence on fly-
ing its national flag over a
projected trade mission in Japan.
The Chinese claim Kishi must
make the next move by abandoning
his "hostile" attitude toward
Peiping.
JAPANESE LOWER HOUSE
W5%) -MINOR PARTIES
A 11
INDEPENDENTS
LIBERAL-
DEMOCRATS
SOCIALISTS 287
166 (58.4%)
(32.6%)
467
SEATS
a position to con- 29 MAY 1958
tinue the build-up and
modernization of Japan's defense
forces. He also probably will
believe he has a popular man-
date to take a stronger stand
in outstanding problems of Jap-
anese-American relations, such
as Okinawa, the Bonin Islands,
and nuclear weapons.
The eight-seat gain made
by the Socialists is the smallest
Following the election,
Kishi told the press he would
not recognize Communist China
but would seek to expand trade.
Further disillusionment in
dealing with Peiping may cause
Tokyo to press more strongly
for economic expansion in South-
east Asia.
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`' SECRET
CURREN t - IW1E LICENCE WEEKLY $UOURy
29 May 1958
IMPLICATIONS OF THE ITALIAN ELECTIONS
The center of gravity of
Italian politics has shifted
somewhat to the left as a re-
sult of gains made by the non-
Communist left and center par-
ties and the sharp losses suf-
fered by the right in the 25-
26 May national elections. Two
interrelated problems now face
Italian politicians--the for-
mation of a government coali-
tion led by the Christian Demo-
crats, and renewed efforts to-
ward reunification of the Nenni
and the Saragat Socialists.
The Christian Democrats,
although increasing their seats
in both houses, do not have a
majority by themselves, and cam-
paign developments are likely
to make their former center
coalition partners reluctant
to join a Christian Dea,ocratf .
led coalition. With the Social
Democrats committed to attempt
reunification with the Nenni
Socialists, and the Liberals
and Republican-Radicals 1.still .'
SEATS HELD ON D14LL7LOiN9F_PARLIAMEN7
-.-- SA~~~I11 EARENTHESE----
popular all- w' O?hx,1.stian :Demo-
cratic minority government with
supporting votes from the now
greatly reduced National and
Popular Monarchist parties or,
alternatively, a Christian
Democratic - Liberal -- Monarch-
ist coalition with only minor
cabinet posts going to the
small partners. Another possi-
bility is an all - Christian
Democratic government supported
by nonpartioipa,ting former
coalition allies of the center--
perhaps with benevolent ab-
stention from the Nenni Social-
ists.
The Christian Democratic
electoral gains strengthen the
position of Party Secretary
Amintore Fanfani, who also
leads his party's left-center
faction, Fanfani can claim
that much of the party's suc-
cess at the polls resulted from
his efforts to organize a modern
party machine since the 1953
elections.,
SPAMM
144
PN
1
MONARCHISTS
13 aiPMP
1TASCI)TS M51
The over-all
shift to the left has
not benefited the Com-
munists, The Commu-
nists were able to re- 25X1
tain their past strength
--one f ifthz of the pop-
tilar vote--but their
prestige has been di-
minished by the gains
made by the Nenni So-
t;?.._ali? is in bbth .
h ruses after the lat-
ter refused to give
in to Communist cam-
paign threats to "re-
new the unity-of-ac-
tion pact or face an
open break."
29 MAY 1958
smarting from the revived
clerical issue, the Christian
Democrats may have to look to
the right for allies.
This might mean a contin-
uation of the past year's un-
Prospects for Socialist
reunification have improved as
a result of two developments.
One is the increase in parlia-
mentary strength registered by
the Democratic Socialist party
SECRET
IAN CH AMBER OF QEPIJTJES
COMMU
NISTS
PCI
1401142)
- MAY 1958
CO UNITY
`*REPU9LICANSPRI
RADICALS- PR
PSRI ,--
23
NENNI 61
SOCIALISTS
CHRISTIAN DEMOCR
CD
PSI
273 (2611
84 119
ATS
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.:CURRENT: INTELLIGENCE WEEKLY `) UMNARY
29 May 1958
following Secretary General
Saragat's repeated campaign
calls for postelection efforts
toward reunification. The other
is the way Nenni's successful
conduct of the campaign has in-
ICELAND AND THE TERRITORIAL WATERS ISSUE
After a prolonged dispute
between the Social Democratic
and Communist-front Labor Al-
liance members of the cabinet,
Iceland's tripartite coalition
government has decided to delay
until 30 June the issuance of
regulations extending the "fish-
eries conservation
limits" to 12 miles.
The decree will be-
come effective
September.
The Communists
had demanded an im-
mediate and unquali-
fied extension from
the present four-mile
limit, but the Social
Democrats had in-
sisted that the an-
nouncement and the
effective date Should
allow a period for
Iceland to adjust
differences with its
NATO allies, particu-
larly Britain. The
Communists threatened
to resign on 19 May but appar-
ently neither they nor the other
parties want general elections
at this time, fearing these
would only strengthen the al-
ready powerful opposition Con-
servative party.
There are still points of
disagreement within the coali-
tion whether any negotiations
will be undertaken. It is un-
likely, however, that the ruling
leftist coalition will break up
in the near future.
creased his prestige vis-a-vis
the pro-Communists in his party.
Serious points of difference
between the two Socialist par-
ties nevertheless remain.
The Icelandic Communist
newspaper Thjodviljinn carried
on 28 May The a eged text of
the agreement reached by the
government parties. The con-
servation area is to be ex-
tended to 12 nautical miles
with no change in the base lines.
Foreign vessels will be banned
from the area, while Icelandic
trawlers will be permitted to
operate in the outer eight
miles subject to special pro-
visions. The period from now
until 1 September will be used
to "gain recognition for and
understanding of the legality
and necessity for an extension."
The British, however, chal-
lenge Iceland's right to resort
to unilateral action and would
be reluctant to accept some
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CURRENT INTELLIGENCE WEEKLY SUMMARY
29 May 1958
aspects of the proposal. London
has emphasized it will not
agree to any fish conservation
which would reduce the total
catch British trawlers now get
from these waters. On the other
hand, the practically universal
popular support for the measure
in Iceland restricts the govern-
ment's latitude in negotiating
a compromise.
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CONFIDENTIAL
29 May 1958
PATTERNS AND PERSPECTIVES
FRANCE AND ALGERIAN OIL
The opening up of petroleum
resources in the Sahara in re-
cent years has enhanced the eco-
nomic value of Algeria to France
and encouraged ardent national-
ists in the belief that Algerian
oil can assure France great-
power status. Explorations to
date indicate very extensive
deposits, but their exploitation
is both costly and difficult.
Successive governments have
pushed an ambitious oil develop-
ment program in Algeria despite.
the financial strain on France's
economy, and small investors
have responded enthusiastically.
Algeria
CURRENT INTELLIGENCE WEEKLY SUMMARY
In the postwar period, a
growing number of Frenchmen
have seen Algeria as an economic
asablanca
MOROCCO ?J
(01, Colomb Bechar
., N111
MAURITANIA ??`
SUDAi\?
? Oil field
Oil pipeline
---?- Proposed oil pipeline
~--~~ Railroad
/,.
le, " N I G E R
CONFIDENTIAL
C
liability, because its present
agricultural and industrial re-
sources are grossly inadequate
to support its rapidly increas-
ing population, while new in-
dustrial development would re-
quire outside capital, tariff
protection, and probably out-
right French subsidies. Algeria
and metropolitan France are each
other's best customers, but only
50 to 60 percent of Algerian
imports from France are covered
by exports.
The recent discovery of
oil and other minerals in sparse-
ly settled southern Algeria has
raised French hopes that the
present economic relationship
can be reversed. There have
been a number of very optimistic
official estimates regarding the
Bo?gie_ Philippeville
('H
Rhardaia?
,TUNISIA
Biskra 1
I
/
Gabes
t p _
I ouggour)
Tripoli
1'Cr
.1 ~
Ouargla? j
HASSI MESSAOUD
4I i
` 1.0
\ Gad,-es
1I11
TIGUENTOURINEri~ARZAITI NE
G E R I A EDJEL 6E
?In Salah / 1--l B i A
) FEZZAN
FRENCH
? EQUATORIAL
AFRICA
L
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CURRENT INTELLIGENCE WEEKLY SUMMARY
29 May 1958
future of the Saharan oil devel-
opment program in particular--
estimates that tend to under-
play the cost of developing and
protecting these resources.
Oil and French Nationalism
For many Frenchmen, the
oil of southern Algeria has had
greater political than economic
importance, generating a new
confidence in France's place
in the.world. The shutting off
of.Middle Eastern oil during
the Suez crisis was a political
humiliation to French national-
ists because it emphasized the
extent to which the postwar
economy had become dependent
on day-to-day supplies from
countries over which France
could exercise little control.
The experience stimulated a de-
termination to make France as
independent as possible of for-
eign sources of basic energy
and provided a sympathetic audi-
ence for such predictions as
the statement that Saharan oil
could make the French Union
self-sufficient in petroleum
by 1972.
The best expressions of
the new attitude occurred at
the 13 January ceremony cele-
brating the arrival of the first
oil train at Philippeville on
the Algerian coast when Max
Lejeune, then minister for the
Sahara, said: "In a few years
France...will have her own in-
dependent fuel supply. France
will become, after the United
States and the Soviet Union,
the third greatest world power
in terms of energy. We plan to
attain the goal and nothing will
keep us from it." More recent-
ly, General de Gaulle, in his
19 May press conference,- re-
ferred to the oil discoveries
as "a card in France's hand."
Although it is still too
early to estimate the total
probable Algerian oil reserves,
there is little doubt that the
area is a major oil province.
In only two years, French com-
panies have brought in four
major fields'.
The first major Algerian
discovery was at Hassi Messaoud
in late 1956. The field was
producing a token 6,300 barrels,
a day during March 1958. The
field, which is not yet fully
defined, has proved reserves
of about 800,000,000 barrels,
but this figure may reach into
the billions when exploratory
work is completed. Even with
this conservative reserve esti-
mate, Hassi Messaoud has about
five times the crude reserves
of France itself.
As is the case with other
Algerian fields, the major prob-
lem is transportation. Pres-
ently, the Hassi Messaoud oil
moves through 100 miles of 6-
inch pipe to a railhead at Toug-
gourt, from where it is moved
about 275 miles to the coast
by tank car. Work has started
on a 24-.inch line from Hassi
Messaoud to the coastal town of
Bougie, a project which it is
estimated will cost more than
$100,000,000 and be finished
probably by the end of next year.
The completed line is designed
to carry initially about 100,-
000 barrels daily, although its
ultimate capacity will be over
300,000 barrels a day.
The other three Algerian
fields are located in the east-
ern Sahara near the Libyan bor-
der. Together these three may
exceed Hassi Messaoud's present
proved reserves by a considera-
ble margin. The Edjele field,
which has been fairly well de-
fined, is about 18 riles long
and 2.5 miles wide. Its recover-
able reserves are conservatively
estimated at about 375,000,000
barrels.
Tiguentourine and Zarzaitine
have not been sufficiently ex-
ploited to determine their ulti-
mate size, although the French
claim that Zarzaitine could very
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CURRENT INTELLIGENCE WEEKLY SU
29 May 1958
well exceed Edjele. These fields
have crude of excellent quality,
but extensive and costly pipe-
lines will be needed before any
of the three is brought into
production.
Marketing Algerian crude
is more of a political than a
technical problem. Ideally, a
pipeline should be constructed
linking Hassi Messaoud, Tiguen-
tourine, Zarzaitine, and Edjele
to the Mediterranean by way of
Tunisia or Libya. This route
has several advantages, not the
least of which is that it is
about 200 miles shorter than a
route confined to Algerian ter-
ritory. For political reasons,
however, the French have appar-
ently considered linking the
eastern Saharan fields by a
375-mile pipeline to Hassi Mes-
saoud in order to bypass any
foreign territory.
France's Financing Problems
The cost of the Saharan
oil development program puts a
severe strain on France, which
has for some time been overcom-
mitted financially. In 1957
,.alone, over $50,000,000 was
spent on exploration and drill-
ing in the Algerian Sahara, and
total expenditures since the
first rights were granted in
1952 amount to $127,200,000.
Expenditures planned for 1958
amount to $176,000,000, roughly
half for exploration and half
for pipeline construction and
other transportation facilities.
Under these circumstances, Paris
has shown a willingness to bring
in both foreign and private
French investors to help carry
the burden.
Funds for exploration and
development of the Saharan oil
fields have come largely from
public sources--about 65 per-
cent in 1957 and 70 Percent in
1956. These-funds have been
supervised by the Bureau of
Petroleum Research "(BRP), a
special branch under the Mints-
try, of Interior. The BRP ini-
SECRET
ART
tially licensed seven companies
--in most of which the French
Government holds important in-
terests--to undertake explora-
tions. Subsequently, concession
areas have been opened to bids
by other companies.' Government
contributions were required not
only to improve transportation
and other facilities in the Sa-
hara, but also to provide the
partially government-owned op-
erating companies with addition-
al capital for development pur-
poses.
Foreign participation has
been subject to certaih restric-
tions, such as insistence on at
least a 51-percent French in-
terest, incorporation of a sub-
sidiary company with headquarters
in France, and priority in mar-
keting for supply of the franc
area. Several American inde-
pendent oil companies have ac-
cepted these terms and gone in-
to Saharan operations, although
the major international compa-
nies have remained aloof.
The government also turned
to the French nation for financ-
ing. Beginning in October 1957,
the BRP conducted public sales
of certificates against its hold-
ings in a number of oil companies
with remarkable success. By the
end of 1957, an estimated $350,-
000,000 had been raised by public
subscription from numerous small
investors who can be counted on
to back the government's Saharan
program to the limit.
Much emphasis has been giv-
en to the theory that the pro-
gram will mean a major saving
in the long run, since over 90
percent of present French oil
requirements are paid for in
foreign exchange. Optimistic
French estimates have claimed
that by 1960 proper exploitation
of the Saharan fields could
save France over $500,000,000
per year, a figure exceeding
France's recent unfavorable
balance of trade.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
29 May 19 58
ALGERIAN REBEL LEADERSHIP
Leadership of the Algerian
rebellion, which erupted on 1
November 1954, is shared by
about a dozen Algerian Moslems
of varying political views. Un-
like the Tunisian or Moroccan
nationalist movements, in which
Habib Bourguiba and King Mohamed
V were the dominant figures,
the Algerian drive for independ-
ence has no single, undisputed
spokesman. While the Moroccan
and Tunisian independence strug-
gles were the effort largely of
single parties, the Algerian
struggle is being carried on by
the Algerian National Liberation
Front (FLN), a coalition of po-
litical groups, including re-
ligious scholars banded together
in the Society for the Algerian
Ulema, the bourgeoisie of the
moderate Democratic Union for
the Algerian Manifesto, and
splinter groups from the work-
ers' Triumphant Movement of Dem-
ocratic Liberties.
The FLN is governed by a
54-member National Council of
the Revolution. However, the
executive body--the so-called
Committee for Coordination and
Execution--is composed of nine
members, six of whom are pri-
marily military leaders and the
remaining three political fig-
ures. Its headquarters was
transf erred from Cairo to Tunis
last fall.
The six military leaders,
in their early and middle thir-
ties, are practically unknown.
Of these, Krim Belkacem is
thought to be the ablest and to.
have outmaneuvered Abane Ram-
dane, who was reported on 27
May to have died from battle
wounds, in a struggle for para-
mount military control. Of
the other four, Amar Ouamrane is
known to have worked closely
with the Tunisians, probably in
arranging for the transit of arms
to Algeria, while Abdelhafiz
Boussouf, rebel commander in
western Algeria, is said to fear
Egypt's influence and to be favor-
ably disposed toward the Moroc-
cans. All six served with the
French Army during wartime and
one, Mahmoud Cherif, was awarded
the Legion of Honor for his per-
formance as a first lieutenant
during World War II and also
served in Indochina.
Probably best known among
the three, political leaders is
58-year-old Ferhat Abbas, a
moderate who has been prominent
in Algerian politics for nearly
three decades. Abbas has long
sought more autonomy for an Al-
geria closely aligned with
France. After vainly attempting
to obtain commitments from Paris
for broad, progressive reforms
for Algeria, he finally fled
from France to Cairo in April
1956, when he announced his sup-
port of the FLN. Valued mainly
for his prestige and personal
ties, Abbas has given a tone of
respectability to the FLN and
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29 May 1958
is a possible president of an
Algerian government.
25X1
25X1
Abbas is more likely
to be foreign minister in a gov-
ernment headed by Mohamed ben
Bella, who is not one of the
nine committeemen but is an
honorary member of the group.
Ben Bella, a former noncommis-
sioned officer in the French
Army, Is an original instigator
of the rebellion. At the time
of his abduction by the French
in October 1956, he was thought
to be the rebels' chief of staff.
Although at present he is im-
prisoned in Paris with the de
facto status of a political
prisoner, he maintains a limited
contact with the FLN. Some
French officials, who consider
him a moderate and believe
his incarceration to-.have been
a major error, would like to
see the terms ..of his imprison-
ment relaxed in order to permit
him to exercise a moderating
influence on other FLN leaders.
Other political leaders of
the FLN are Abdelhamid Mehri,
the FLN's representative to
Syria,
Debaghine, a 41-year-old lawyer,
who headed an FLN delegation to
the latest congress of the Yugo-
slav Communist party. Mehri
was the FLN's spokesman during
the conference of North African
political parties held in Tan-
gier late in April and probably
was in large part responsible
.f or the adamant position main-
tained by its delegation.
Although the formation of
an Algerian government after
consultation with the Moroccan
and Tunisian governments was ap-
proved in principle by the
conference, details on its for-
mation, composition, and prob-
able headquarters are uncer-
tain.
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CURRENT INTELLIGENCE WEEKLY SUMMARY.
29 May 19 58
KHRUSHCHEV'S STATUS AND THE YUGOSLAV DISPUTE
Warsaw reports contend
that Khrushchev did not lead
the present anti-Tito off en-
sive and that his dominance
as a policy maker may have been
qualified over this issue. Khru-
shchev has in fact failed to
associate himself publicly and
emphatically with the present
Soviet position on Yugoslavia,
but his part in the development
of the controversy with Tito
remains 'unclear. It is possible
that he had to yield to pres-
sures for a harder line in East-
ern Europe. Continuing prob-
lems in the satellites, com-
bined with domestic economic
issues, could provoke a new
round of political controversy
within the party hierarchy.
Speculation that there has
been a division of opinion
within the Kremlin on the Yugo-
slav question has been prompted
mainly by a hardening in the
Soviet attitude between 18
April and 9 May, when Pravda's
reformulation of the offal
line threatened to place the
dispute on the governmental as
well as the ideological level.
Conceivably, the shift may
have resulted from a policy
debate in the presidium. If
such an issue arose, however,
it apparently was resolved by
6 May, when Moscow, before the
central committee met, published
in full Peiping's People's Dail
editorial of 5 May, the mo
scathing attack on the Yugo-
slavs yet to appear. Therefore,
while the plenum of 6-7 May
seems to have heard a state-
ment on Soviet-Yugoslav rela-
tions, there is no reason to
believe that policy conflicts
were carried there from the
presidium, nor that any action
affecting Khrushchev's author-
ity was taken. The most that
can be conjectured with respect
to Khrushchev's behavior in the
Yugoslav affair is that, rather
than allow the issue to degener-
ate into an internal political con-
troversy, he gave way under
pressure within the presidium
for a stiffer Soviet attitude.
The Yugoslavs, who have
long interpreted the shifting
currents in Soviet policy to-
ward themselves as expressions
of factionalism in the Soviet
leadership, have identified
Khrushchev as the chief culprit
in the latest episode. The
Yugoslav ambassador in Moscow
has told diplomatic colleagues
he does not believe there has
been conflict within the Soviet
hierarchy over policy toward
Yugoslavia. In his opinion,
this policy was inaugurated by
Khrushchev personally and has
been fully backed by the party
presidium. He rejected the
idea that Khrushchev is subject
to pressure either from within
the Soviet leadership or "from
without," apparently referring
to Communist China.
Ambassador Thompson sup-
ports this appraisal, with the
reservation that he thinks the
Chinese Communist position may
have influenced Khrushchev's
Yugoslav policy to some extent.
Possibly to suppress specula-
tion that the Chinese were back-
ing Stalinist opponents of Khru-
shchev on the issue of Yugoslav
revisionism, Peiping has point-
edly endorsed the role of Khru-
shchev personally. In its sum-
mary of the proceedings of the
Chinese Communist party congress
held between 5 and 23 May, Pei-
ping approved as "necessary and
correct" the steps taken toward
Yugoslavia since 1954 by the
Sotiriet party central committee
"headed by N. S. Khrushchev."
Khrushchev's Strengths
The power, prestige, and or-
ganizational strength Khrushchev
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CURRENT INTELLIGENCE WEEKLY
SUMMARY
29 May 1958
has accumulated since Stalin's
death has put him in a position
in which a successful challenge
to his leadership would be ex-
tremely difficult.
. On the plus side is Khru-
shchev's organizational
strength and maneuvering abil-
ity. The interlocking direc-
torate which he has built to
connect the party secretariat
to the presidium would appear
to be the best kind of insur-
ance for preserving his dom-
inance over both formulation
and execution of policy. At
the same time, the directorate
does not contain a rising star
around which a second force
might coalesce. There are
dangers, however, in assuming
that the five-year round of
disputes in the presidium has
suddenly ended, or in trying
to evaluate these individuals,
either for leadership poten-
'tial or for allegiance to a
particular leader.
The central committee is
a somewhat different story.
Its composition has apparently
remained relatively unaltered
during the past two years and
it has demonstrated consistent
support for its first secretary,
Khrushchev. In return, Khru-
shchev continually gives the
impression of going out of his
way to keep the central com-
mittee with him. His con-
tinued control of the central
committee is not a foregone
conclusion, although the odds
are probably well on, his side.
The principal factor now is
that many of Khrushchev's pol-
icies are reaching the point
where they are finally getting
the full test. If one of his
major economic policies were
to fail or his control of the
satellites slip, a consider-
ably different evaluation
would be in order.
Possible Difficulties
The aftermath of the Tito
feud: If, as some o servers
suggest, the present feud with
Tito was prompted primarily by
Soviet anxiety over continued
restlessness in Eastern Europe,
particularly Poland, and a de-
termination to restore Soviet
control emphatically, then the
present course marks not only
the collapse of the attempt at
reconciliation with Tito but,
more importantly, a further re-
treat from the post-Stalin pol-
icy of relaxing satellite bonds.
The "liberalization" policy
culminated in October 1956 with
Gomulka's rise in Poland and
the Hungarian revolution. It
is possible that Khrushchev
is responsible for the hardening
of the Soviet line since then.
. ',L 'he November 1957 meeting
of Communist parties in Moscow,
which touched off a bloc-wide
campaign against "revisionists,"
the Khrushchev-Gomulka meeting
in January. 1958, and the April
article in Kommunist, which
seemed to demand an-increased
tempo of collectivization in
the satellites, may have been
steps along the way to the
break with Tito. Moreover, the
political situation within the
Soviet leadership has changed
considerably as a result of. the
series of purges of Khrushchev
rivals.
On the other hand, since
this would mean he was totally
relinquishing an Eastern
European policy which he had
pursued fairly consistently
since at least 1955, the hard-
ened position may have resulted
from a shift in the balance of
opinion in the presidium. Even
after the shock of Hungary,
Khrushchev seemed intent on
saving something of his satel-
lite policy; for example, his
meeting with Tito in Rumania
last August.
The problem of Poland: In
any case, a harder line Vo-ward
the satellites has Apparently
emerged. The question of how
it will be applied to Poland
could become a source of polit-
ical conflict in the Kremlin.
Moscow clearly wishes to ob-
tain the maximum in bloc unity
against Yugoslavia and may
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CURRENT INTELLIGENCE WEEKLY SUMMARY
29 May 1958
make a mistake in believing
that Gomulka can be forced to
adopt the bloc line. Yet the
Soviet leaders must realize
the dangers inherent in demand-
ing that Gomulka make state-
ments against Yugoslavia which
would in effect deny his own
ideological base for the Polish
"road to socialism."
Gomulka's own domestic
strength rests on his insist-
ence, in the name of autonomy,
that the Kremlin and the bloc
generally must not interfere
in the internal affairs of any
individual bloc nation. If he
were now to join Moscow in
what is essentially an attempt
to dictate to Belgrade on in-
ternal affairs, such a state-
ment would deprive him of the
basis for his own control of
internal policy, encourage his
opposition, and possibly even
lead to a Polish national up-
rising.
Khrushchev's speech to
the recent party plenum indi-
cates that at least a tenta-
tive decision has been made
on the question of economic
priorities, i.e., the stress
on a maximum expansion of heavy
industry has been modified to
permit greater emphasis than
before on the consumer sector.
This decision would result in
a better balanced economy, but
in political terms, Khrushchev
may have some trouble with
"traditionalist" elements who
feel that catching up with
the West in heavy industrial
production should have first
priority. A similar, essen-
tially ideological-political
problem is created by the
policy of soliciting Western
technical assistance. The
question might arise, "Is it
wise to do anything which
eases the economic crisis of
capitalism?"
Khrushchev seems to be
raising new issues at a time
when he is trying to put his
economic house in order. Granted
that he will probably gain
ground with the Soviet people
by adopting a Malenkov-like
line on consumer goods, at the
same time, he is continuing to
complicate his political prob-
lems, and these are the ones
more likely to cause him trouble.
As for some of the other innova-
tions, the machine tractor sta-
tion reorganization still car-
ries the threat of at least a
temporary weakening of control
in the countryside. Then, too,
there is the new lands program
which has not yet proved itself
over the long run and might
still be used to discredit its
author.
Khrushchev's economic in-
novations could jeopardize the
capability of the Soviet lead-
ership to keep a strong and un-
contested hand on the throttle
of Soviet economic development.
For example, by whetting the
appetite of the Soviet consumer,
Khrushchev, to a minor degree
thus far, has had to restrict
the availability of Soviet re-
sources for other important
national objectives, i.e., for-
eign economic programs, the con-
tinued rapid increase of pro-
ducer goods, and production
of military hardware.
In an attempt to promote
efficiency and release local
initiative, the regime is be-
ginning to shift some of the
economic decision making out-
side Moscow. Moreover, to
enable local officials to make
better economic decisions as
to. the means to be used to
achieve prescribed ends, the
regime is giving consideration
to the possibility of adopting
a pricing policy which would
better reflect the real cost
and relative scarcity of var-
ious goods and services. The
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CURRENT INTELLIGENCE WEEKLY SUMMARY
29 May 1958
"traditionalists" could well
fear these developments and feel
that they would lead all too
easily to review and criticism
by local officials of the basic
economic decisions of the cen-
tral regime.
In essence, many of the
potentially divisive issues in
the Soviet Union derive from the
fact that on the one side there
is Khrushchev, "the innovator in
a hurry," and on the other people
around him and under him, not
necessarily Stalinists or dogmat-
ists but hardheaded "conserva-
tive" Communists who feel safer
doin things in the old way.
Concurred in by ORR)
SOVIET-SATELLITE ECONOMIC RELATIONS SINCE 1956
The Eastern European satel-
lites have gained important eco-
nomic concessions from the USSR
since 1956, and Moscow is now
attempting to nationalize intra-
bloc exchanges through the CEMA
program, rather than draining
their individual national eco-
nomies. The growth of the bloc
toward an integrated economy,
however, which began in earnest
two years ago, has had only
limited success, and several
difficult problems will continue
to hinder it for the next few
years.
Increasing coordination
and integration of bloc economic
activity is designed to assure
the most effective use of total
resources, and efforts are under
way to improve satellite eco-
nomic well-being to forestall
popular unrest:
The five-day meeting in
Moscow of the bloc's Council for
Mutual Economic Assistance
(CEMA) issued a communique on
24 May stating that CEMA had the
responsibility of taking "prac-
tical measures" to assure the
implementation of Soviet bloc
economic integration. Khru-
shchev, during a visit to Hun-
gary in April, had criticized
the failure of the satellites
to cooperate with one another
in the economic field and stated
This lack of cooperation
had led Bulgarian leaders to re-
quest a special meeting with
Khrushchev in February to air
their complaints. In Hungary
he pointed out that increased
economic cooperation and indus-
trial specialization within the
bloc rather than national self-
sufficiency was required to over-
take the West. The USSR intends
to convince satellite leaders
that Communism's successful com-
petition with the West in the
raising of living standards de-
pends ultimately on a division
of labor within the bloc and the
resulting lowering of unit pro-
duction costs. The USSR presum-
ably also is eager to counter
the growing economic unity of
Western Europe.
While the USSR probably is
willing to continue economic and
financial assistance to Eastern
Europe, which during the past
two years totaled $4 billion,
it probably will indicate that
such aid should support economic
growth through integration ra,th?-
er than serve as relief payments
to imbalanced national economies.
An important manifestation
of its status vis-a-vis Moscow
is Eastern Europe's trade and
credit relations with the West,
growth of which apparently has
met with no serious Soviet ab-
that the next CEMA meeting jections. The USSR in fact has
would be attended by high-level assisted the satellites in
Soviet and satellite party and
government chiefs. SEC ET
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CURRENT INTELLIGENCE WEEKLY S
29 May 1958
extending trade with the West
during the past two years
through gold and foreign ex-
change loans.
The USSR has argued in jus-
tification that, as the bloc
does not have to rely on free
world sources, non-Communist
countries can no longer impose
one-sided conditions
in their economic re-
lations with the bloc.
Furthermore,, such
trade is an important
element in the pres-
ent Soviet theme of
competitive coexist-
ence.
hand the USSR has
permitted an exten-
sion of relations
outside the bloc, it
the two countries signed another
protocol concerning cooperation
in the engineering, metallurgi-
cal, and chemical industries.
To assist further in trade
coordination, CEMA members have
drawn uu a multilateral commer-
cial .clearing system for intra-
bloc trade, although the over-
SOVIET- SATELLITE TRADE
(MILLION DOLLARS)
1955
PERCENT OF COUNTRY'S
TOTAL TRADE
1957
PERCENT OF COUNTRY'S
TOTAL TRADE
ALBANIA
21
40
37
BULGARIA
249
46
387
55
CZECHOSLOVAKIA
743
35
932
33
EAST GERMANY
985
38
1,525
45
HUNGARY
262
22
343
36
POLAND
719
32
675
31
RUMANIA
478
49
-
has also called for increased
economic collaboration within
the bloc through a more rational
use of economic resources and
production capabilities. This
is to be accomplished by the co-
ordination of national economic
plans, production specialization,
and exchange of industrial and
technical experience.
Economic Integration
Although the satellites
have moved slowly on integration,
12 permanent functional commit-
tees of CEMA have been estab-
lished to promote industrial
specialization and the use of
common standards, and the mem-
bers have agreed to coordinate
long-term economic planning.
As a result, direct ties between
producing enterprises in satel-
lite countries are growing, and
working-level CEMA conferences
have already engaged in develop-
ing coordinated economic plans
to run through 1965, the termi-
nal date of the yet-to-be an-
nounced Soviet Seven-Year Plan.
Other forms of cooperation also
have begun recently. Czechoslo-
vakia and Poland have agreed to
cooperate in the modernization
of Polish coal mines, and Prague
has granted a loan. On 17 May
whelming bulk of this trade will
continue for some time to be
conducted on a bilateral basis.
The new system will make intra-
bloc trade more attractive, how-
ever, inasmuch as it will not
require that a country accept
goods which have only marginal
use in the settlement of trade
imbalances.
The more difficult problem
in economic integration--the
reluctance to relinquish inef-
ficient production--continues
to delay the achievement of ma-
jor gains in the field of spe-
cialization. Unreliability of
deliveries from other satellites
in the past has encouraged each
country to develop its own sup-
plier industries despite fre-
quently higher costs and inef-
ficiency. During the next few
years, nationalistic desires
for economic independence and
technical disagreements on basic
proposals for specialization
also will continue to hinder
the growth of bloc economic
unity.
Trade is the most impor-
tant form of Soviet-satellite
cooperation. The European
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CURRENT INTELLIGENCE WEEKLY SUMMARY
29 May 19 58
satellites account for almost
50 percent of total Soviet trade.
The satellites are heavily de-
pendent on the USSR and, in the
case of many basic industrial
raw materials, are receiving
60 to 90 percent of their re-
quirements from the Soviet Un-
ion. Since the East European
uprisings of 1956, the USSR
provides larger quantities of
industrial raw materials and
foodstuffs in short supply in
the satellites, often on credit.
Prior to 1956 the USSR frequent-
ly declined to raise such ex-
ports above the level of re-
quired Soviet imports from each
satellite.
Soviet imports also have
registered changes during the
now concluded a new series of
three-year trade agreements
with most of the satellites.
These agreements, and repay-
ment obligations for Soviet,
loans granted in the last two
years, will keep the European
satellites closely bound to
the Soviet economy for several
.years.
Soviet credits and-loans
to some extent have always al-
leviated economic crises and
abated popular discontent in
the satellites. Credits and
loans in 1956-57 were equal in
volume to the total of similar
aid granted in the previous 11
years and
SOVIET ECONOMIC ASSISTANCE TO THE SATELLITES
(MILLION DOLLARS)
CREDITS AND LOANS
EXTENDED
DEBT CANCELLATIONS
AND OTHER FINANCIAL
1945-55 1956-57
CONCESSIONS
1957
ALBANIA
106
48
105
BULGARIA
70
148
-
CZECHOSLOVAKIA
48
-
-
EAST GERMANY
363
280
1615
HUNGARY
40
294
210
POLAND
614
300
600
RUMANIA
33
103
715
TOTAL
1274
1173
3245
past year. There is a notice-
able increase in Soviet receipts
of finished consumer goods to
create jobs in satellite indus-
tries. Engineering products,
however, continue to occupy a
major place in.exports from the
industrial satellites to the
USSR..
. By early 1958 the- ec onomic
conditions, which remained un-
settled since the 1956 uprisings,
became sufficiently stable to
permit a return to long-term
trade planning. The USSR has
were made with more
favorable repayment
terms. The Soviet
goal during the past
two years--to prevent
further disaffection
by restoring stability
within the satellites
--has required that
the USSR renounce its
former privileged
status in Eastern
Europe. Through war
booty and reparations,
privileges held in the
joint Soviet-satellite
companies, and agree-
ments formalizing So-
viet economic exploi-
tation, the USSR pre-
viously obtained a
vast quantity of un-
requited imports. Hav-
ing renounced such ar-
rangements and stepped up its
program of economic aid to the
satellites, the USSR has become
a net exporter of goods and
services to the bloc.
In addition to credits and
loans in 1956-57, the USSR can-
celed satellite debts of $1 bil-
lion for previous loans and
credits extended before 1956 and
for the repurchase of the Soviet
share in the joint stock.com-
panies. The USSR also renego-
tiated--to the advantage of the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
29 May 1958
satellites--previoug agreements
concerning prices for commercial
and noncommercial services,
costs of Soviet troop mainte-
nance, and transfers of Soviet
property worth over $2 billion.
Foreign exchange credits
since the 1956 uprisings have
been about twice as large as
those granted previously and
have been important aids to in-
creased satellite trade with
the West. The recently granted
credits also have included siz-
able loans for agricultural
development in the less-devel-
THE INDONESIAN COMMUNIST PARTY
The Indonesian Communist
party (PKI) has become more pow-
erful than ever before and its
influence is growing. With an
estimated membership of about
750,000 and the support of a
fifth of the electorate, the
PKI is the largest political
party in Java--where five
eighths of Indonesia's
population is con-
centrated--and is the
second largest in the
country.. It is the
most disciplined,
most active party in
Indonesia, and its
oped satellites, although prior
to this period credits had been
largely limited to the develop-
ment of the industrial satellites.
The USSR also has agreed
to aid those satellites suffer-
ing from unemployment by plac-
ing supplemental orders in de-
pressed areas. In many cases,
agreements have been con-
cluded assuring long-term
sales of the major output
(Prepared by 25X1
ORR)
members, who are at least fel-
low travelers, and through 18
of 45 members of the National
Council established in June
1957 as part of President
Sukarno's "guided democracy"
concept to "advise" the
cabinet.
INDONESIAN PARLIAMENT
NATIONAL
PARTY
57
leadership is able SUPPORTERS
and dedicated.
With more than
6,000,000 votes--16
percent--in the 1955
elections, the PKI
has only 32 seats of
the 260 in Parlia-
260
SEATS
MASJUMI
57
ALL OTHERS
52
COMMUNIST
PARTY
32
went, but is usually supported
by 17 members of other left-
wing political parties. The
party is in a position to influ-
ence government policies more
directly through four cabinet
80526 2
Outside the government, the
Communists wield great economic
power through SOBSI, Indonesia's
largest labor federation, claim-
ing 2,500,000 members. SOBSI
affiliates control vital oil,
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-CURRENT INTELLIGENCE
WEEKLY 8 AF&T
29 May, 1958
plantation, and transportation
workers' unions and have at
times threatened to use their
power against American economic
interests in Indonesia. These
unions constitute the nucleus
of PKI strength outside Java,
and are concentrated in such
important places as the estates
area in North Sumatra and the
oil centers of Borneo and Cen-
tral and South Sumatra. The
Communists also operate a wide
variety of front organizations
and maintain a paramilitary
veterans' organization. known as
PERBEPSI. Through these groups,
the PKI has been steadily de-
veloping its now extensive
"grass-roots" support.
The Communists have ex-
ploited the central government's
preoccupation with the dissi-
dents in the past three months
to strengthen their position in
several respects. During the
anti-Dutch campaign late last
year, the PKI not only took the
lead in seizing Dutch firms and
property but also tried to es-
tablish its control over the
management of these enterprises.
Although the army is technically
in charge of these operations,
the PKI probably wields consid-
erable influence. With fight-
ing going On in Sumatra and East
Indonesia, the army has not been
inclined to interfere with the
Communists' efforts to consoli-
date and expand their influence
in Indonesia's economy.
The Communists derive even
greater strength from their un-
wavering support of Sukarno's
"guided democracy" concept and,
more recently, of the central
government's campaigns against
the Dutch and the revolutionary
movement. Presumably they have
influenced the President through
promises of continued political
support.
Finally, the Communists
can be expected to benefit from
the propaganda and material sup-
port the bloc has been extend-
ing to Indonesia. This aid
probably appears to many Indo-
nesians as a fulfillment of PKI
promises and assertions that
only the Communist world is pre-
pared unconditionally to back
the Indonesians in the "defense"
of their independence.
The Communists' strategy
in Indonesia has paid off in
two important respects. First,
their party has achieved in-
creased stature as a loyal, na-
tionalistic group. Second, this
new stature diminishes the pros-
pects that Sukarno could repu-
diate his most ardent supporters,
even if he wanted to, or that
the army might suppress them.
Any effective anti-Commu-
nist action in the foreseeable
future would have to depend al-
most exclusively on the initia-
tive of the army, which remains
essentially non-Communist de-
spite PKI efforts at infiltra-
tion. Indonesia's most outspo-
ken anti-Communist political
leaders have been discredited
as dissidents. The non-Javanese
wing of the anti-Communist Mas-
jumi party has suffered because
of its sympathetic attitude to-
ward the dissidents. The lead-
ers of other political parties,
notably the Nationalist (PNI)
and the Moslem Nahdlatul Ulama
(NU), have for some time pro-
fessed awareness of the growing
Communist threat and have re-
peatedly said they intend to de-
vise measures to counteract it.
However, no such countermeasures
have yet emerged, nor have the
non-Communist parties shown any
serious inclination to submerge
differences among themselves or
to work harder at "mending their
fences."
Army spokesmen have indi-
cated that in the absence of
provocation, there would be no
outright suppression.of the Com-
munists. The army, however, has
recently taken steps to curb
Communist activity, issuing de-
tailed regulations for the con-
duct of May Day celebrations and
caxiceling an "anti-intervention"
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SECRET
29 May 1958
rally scheduled for
16 May.
addition,
several Indonesian
officials,
both military and
civilian,
have hinted that a
In
new government will be formed
after the dissident movement
has been defeated and that this
government, on army insistence,
would move against the Commu-
nists.
turn of political and military
events, from Djakarta's point
of view, may nevertheless en-
courage the government seriously
SECRET
to consider some measures to
prevent a Communist take-over
from within,
The PKI's strategy for the
present appears to be to main-
tain its present momentum, with-
out resorting to force, in the
hope of winning the national
elections scheduled for 1959.
The party has taken pains to
avoid giving provocation which
might precipitate an army crack-
down and has, in-fact, praised
Nasution and the army for their
successful campaign against the
dissidents.
There is a possibility that
the Communists will overplay
their hand by taking military
action against the government
as they did at Madium in 1948.
It is more likely, however, that
any switch in strategy and tac-
tics will be dictated by grow-
ing resistance to their advances
or suppression of their activi-
ties. The PKI is probably dis-
turbed by recent army restric-
tions and by the recent sugges-
tion by the commander in North
Sumatra that elections be
postponed for five years,
The army presently appears
to have both the will and
ability to resist an overt
Communist effort to take over
the government, but a showdown
struggle at any time in the
near future would probably
be a touch-and-go affair.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
29 May 1958
SECRET
ACTIVITIES IN FINLAND
Helsinki are staffed by approx-
imately 195 officials, ~f whom.
over two thirds are attached to
the Soviet Embassy and commer-
cial mission.
1. General Bloc Policy: Sino-
Soviet bloc activity in Finland
is aimed at weakening Finland's
policy of "friendly" neutrality
in favor of closer relations
with the bloc and at advancing
Soviet foreign policy objectives
toward other countries of north-
ern Europe. The USSR can put
considerable political and eco-
nomic pressure on Finland; how-
ever, Kremlin leaders realize
that such measures might move
Finland closer to the West, as
well as cause adverse reactions
by the Scandinavian countries.
Moscow has also found it prof-
itable to point to Soviet-
Finnish relations as an example
of peaceful coexistence between
a small and a large country hav-
ing opposing social systems.
Finland has thus been able gen-
erally to conduct its external
and internal affairs without
overt bloc interference.
2. During the past year, the
Soviet Union has continued its
efforts to use Finland to en-
courage the Scandinavian coun-
tries to pursue policies which
would weaken their political
ties with the West and to les-
sen the effectiveness of Den-
mark's and Norway's participa-
tion in NATO. The USSR, Poland,
and East Germany have periodt-
cally. urged Finland to. support
the establishment of a Baltic
"sea of peace" with the objec-
tive of excluding Western naval
and air forces from the area.
Moscow is also attempting to
strengthen its economic and
cultural relations with Finland.
3. Diplomatic Activity: Fin-
land maintains diplomatic rela-
tions with the USSR, Communist
China, and all the Eastern
European countries except East
Germany. The bloc missions in
4. Economic Activity: Fin-
.land's over-all trade-with bloc
countries increased from $430,-
000,000 in 1956 to approximately
$518,000,000 in 1957, account-
ing for 29 percent of Finnish
exports--a slight increase--
and 31 percent of imports--a
rise from 25 percent in 1956.
In the first quarter of 1958,
Finnish purchases from the
USSR declined sharply; it can-
not be determined whether this
trend will continue, particu-
larly inasmuch as Finnish offi-
cials are taking corrective meas-
ures to restore the level of
trade. The Soviet Union sup-
planted Great Britain last year
as Finland's principal trading
partner, and substantial in-
creases in trade were regis-
tered with Poland and Czecho-
slovakia. Transactions with
Rumania fell off, however, as
the Finns shifted from imports
of refined petroleum to pur-
chases of crude oil from the
USSR in order to take advan-
tage of their expanded refin-
ery facilities.
5. Last year's growth in Fin-
nish commerce with the bloc re-
sulted from a number of factors.
Imports rose as delayed deliv-
eries of Soviet goods were made
and the Finns tried to liquidate
a large credit balance with the
USSR. The slight rise in ex-
ports resulted in part from ex-
panded sales to Poland. Finnish
inflation also tended to stim-
ulate trade with the bloc: the
Finnish Government increased its
purchases from the bloc and held
down Western imports during most
of 1957 in order to conserve for-
eign exchange, while some Finnish
goods which were priced too high
for Western markets found bloc
buyers.
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. `"''e SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
29 May 1958
6. On several occasions dur-
ing the past year the Soviet
Union has offered credits and
loans to the.Finnis:h Government
for industrial expansion. De-
spite considerable agitation by
Finnish Communists to accept.
Soviet assistance in order to
industrialize the northernmost
provinces, the. Finnish Govern-
ment has not responded to these
overtures.
7. Cultural and Propaganda
Activity: Finland is the pri-
mary target in northern Europe
for Soviet cultural and prop-
aganda activities and has the
largest program of cultural ex-
changes with the bloc of any
free world country. Exchange
visits between Finland and the
bloc rose sharply in 1957 to a
total of 180 delegations; Fin-
land sent 106 delegations--in-
cluding a group of 1,600 to
2,000 to the Moscow Youth Fes-
tival--and was visited by 74
bloc delegations. Artist groups
and sports teams accounted for
two fifths of the exchange vis-
its, with the balance repre-
senting labor unions, the pro-
fessions, industry, government,
and acknowledged Communist or
front organizations.
8. The bloc supports a total
of seven friendship and cul-
tural societies and centers in
Finland. The "Finland-Soviet
Union Society," with 18 branches
scattered throughout Finland and
an estimated membership of some
230,000, is the largest and
most active such organization.
While its members include many
non-Communist Finns--including
the President of Finland, who
is the honorary president--Com-
munists hold positions of con-
trol and the society functions
as a major outlet for Soviet
propaganda.
9. Sino-Soviet bloc radio
broadcasts in Finnish at present
total 41.5 hours per week, a
slight increase since early
1957. Some of the bloc's
broadcasts of about 42 hours
per week in Swedish probably are
also intended for listeners in
Finland. In addition to a TASS
representative, three major So-
viet newspapers have correspond-
ents in Helsinki, and the Soviet
Information Bureau--a news dis-
seminating agency--is represented
by a sizable staff.
10. Subversive Activity: The
Finnish Communist party (SKP)
has a membership of approxi-
mately 25,000, a drop of about
5,000 over the past year. In-
terest in party activity is cur-
rently low; only a small per-
centage of members are partic-
ipating in meetings and a mood
of passivity prevails among the
rank and file, particularly in
the countryside. The aftermath
of the crises in Eastern Europe
during 1956 and their continuing
impact on the international Com-
munist movement apparently are
the cause of these difficulties.
SKP leaders are also somewhat
disquieted over the USSR's of-
ficial policy toward Finland,
on the grounds that it strength-
ens anti-Communist elements to
the detriment of the Communists.
The Soviet leadership is reported
to consider the SKP's operations
as inadequate despite heavy fi-
nancial support.
11. The SKP is participating in
regional coordination of Commu-
nist party activities in north-
ern Europe. In October and
again in February, representa-
tives of the Danish, Norwegian,
and Swedish Communist parties
met in Helsinki with SKP lead-
ers.
12. The Finnish People's Demo-
cratic League (SKDL), the po-
litical-parliamentary front of
the Finnish Communists, is Fin-
land's third largest political
party and has consistently se-
cured about one fifth of the
electoral vote. The SKDL, like
other Communist fronts and mass
organizations, is currently suf-
fering somewhat from lack of
interest. The most important
target of Communist penetration
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SECRET
29 May 1958
in Finland: is the Confederation
of Finnish Trade Unions (SAK).
Communists and their sympathiz-
ers account for about 40 percent
of SAK's membership and. hold
three positions en the 17-man
SAK executive committee. Seven
of the 36 affiliated national
unions are-dominated by Commu-
nists, including the key con-
struction workers' union. In
the metalworkers' union--Fin-
land's largest--Communist
strength is close_to one half.
13. The Communists control four
fairly important daily newspa-
pers. Circulation of Kansan
Uutiset--official organo both
the SKP and SKDL--has fallen
from almost 58,000 in 1956 to
about 45,000.
14. The Communists still con-
stitute a substantial threat to
Finland's internal security and
political stability. The S.KP
hard core which forms the basis
of the Communist capability for
sabotage has not been notably
.affected by recent difficulties;
through their position in the
trade union movement, the Com-
munists are able to stimulate
labor unrest and inhibit gov-
ernment efforts to achieve eco-
nomic stability.
15. Finnish Reaction to Bloc
Activities: Informed inns and
governmental figures are well
aware of the USSR's potential
for political and economic
sanctions against Finland, as
well as the ultimate threat of
Soviet military action. The
Finnish Government is there-
fore careful to calculate the
impact of its foreign policy
actions on Soviet-Finnish rela-
tions.. On the other hand, Hel-
sinki has yielded only a limited
extent to pressure from Moscow
to further bloc objectives
among the Scandinavian coun-
tries.
16. Trade with the bloc is vi-
tal to the Finnish economy. The
USSR is the main foreign outlet
for the exports of the metal-
working and shipbuilding indus-
tries, which are noncompetitive
in Western markets, and the USSR
supplies the bulk of Finland's
coal, Oil, wheat, and fertiliz-
er. Nevertheless, the economic
and political implications of
the progressive increase in Fin-
nish trade with the bloc are
viewed with serious misgivings
by many Finns, and Helsinki has
taken steps to maintain the West-
ern orientation of the economy.
Finland has concluded multilat-
eral payments agreements with
Western European countries, and,
in September 1957, devaluated
the finnmark and liberalized im-
port licenses. The currency
devaluation has thus far en-
abled Finland to hold its West-
ern markets in spite of a weak-
ening demand for major Finnish
products. The Finns have also
shown some interest in joining
OEEC, but are hesitating be-
cause they are concerned over
possible disruption of trade
with the bloc; Soviet inquiries
in April regarding the economic
consequences of Finnish member-ship in OEEC have contributed
to Finland's caution.
17. The Finnish Communists are
scorned by the majority of the
population as subservient to
foreign control. Despite ex-
tensive cultural exchange and
propaganda programs, Moscow has
not been successful in overcom-
ing the inherent distrust and
dislike of Russia by most FAhns.
18. The Outlook Finland's rela-
tions with he USSR will remain
potentially dangerous to Helsin-
ki, and the Soviet Union would
probably not hesitate to under-
take drastic measures if Fin-
nish actions were felt to war-
rant such a step Moscow ap-
pears content, however, to con-
tinue its policy of "calculated
tolerance," at least for the
near future. Helsinki's abil-
ity to maintain a balance in
its economic relationships with
the West and with the bloc is
also an important factor: in-
creased economic dependence on
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SECRET
'le
CURRENT INTELLIGENCE WEEKLY SUMMARY
29 May 1958
bloc countries could be exploit-
ed by Moscow for political pur-
poses, while drastic changes in
Finland's economic relationships
in. favor of the West might re-
suit in an adverse reaction from
Moscow.
19. Within Finland,; the bitter
fights now taking place in the
SECRET
Social Democratic party and in
the SAK are of potential benefit
to the Communists, particularly
in the Finnish labor. movement.
A split in the SAK would prob-
ably enable. Communist elements
to gain control of several of
the national labor federations
and possibly of the SAK itself.
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