CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A001900070001-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 47
• Document Creation Date: December 20, 2016
• Document Release Date: December 12, 2005
• Sequence Number: 1
• Publication Date: October 19, 1999
• Content Type: SUMMARY

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QJ1fJDENTIAL rP
-
SECRET-'CONFIDENTIALCURRENT
INTELLIGENCE
WEEKLY
SUMMARY
COPY NO. 50
OCI NO. 4049/58
2 October 1958
Next Review Date: 4__f(---------
Class. Changed to: TS S G) 25X1
No Change In Class. ^
^ Declassified
Document No. ---- ------------
Auth.: HR 70-3
Dxte: By
CENTRAL INTELLIGENCE AGEN
ONFIDENTIAL
%45111
State Department review completed
OFFICE OF CURRENT INTELLIGENCE 01
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...SECRET.
CURRENT INTELLIGENCE WEEKLY SUMMARY
2 October 1958
OF IMMEDIATE INTEREST
TAIWAN STRAIT SITUATION
Propaganda - Diplomacy
The absence of Mao Tse-
tung and Liu Shoa-chi from Pei-
ping during the latter two
thirds of September, at a time
when the standing committee of
the Chinese Communist party
politburo would be expected to
meet frequently over the Taiwan
Strait situation, suggests that
Chou En-tai has been directing
China's campaign to recover the
offshore islands within the
framework of policy: laid down
at a politburo meeting in late
August.
Peiping's propaganda con-
tinues to reflect a desire to
continue the Warsaw talks, blam-
ing the deadlock on American in-
sistence on an immediate cease-
fire but making no threat to
suspend the negotiations. Brit-
ish Foreign Secretary Lloyd told
Secretary Dulles on 25 September
that the British charge in Pei-
ping reported a conversation with
an Indian Embassy officer there,
from which it appeared that the
Chinese Communists "want to keep
the Warsaw talks going." The
charge's report apparently con-
tained a hint that India might
undertake mediation between the
Chinese Communists and the
United States. Peiping is un-
likely, however, to desire such
mediation at this time.
The Chinese Communists ap-
parently hope to derive from the
Warsaw talks substantial politi-
cal benefits which will further
their campaign to achieve wider
international acceptance. They
clearly believe that bilateral
negotiations further their ef-
forts to appear as "near equals"
with the United States. Their
negotiator, Wang Ping-nan,
publicly declared on 29 Septem-
ber that Communist China's au-
thority in the "international
arena is rising ever higher."
Peiping's propaganda
strongly suggests a willingness
to consider "recovery" of the
offshore islands as the price
for a temporary renunciation
of force in the Taiwan Strait
area. Repeated commentaries
state that Communist China
has "every right and necessity"
to take "military measures"
against the offshore islands
and imply that other territo-
ries--Taiwan and the Penghus
(Pescadores)--could be '!liber-
ated" by peaceful means. In
his National Day speech on 1
October, Defense Minister Peng
Te-huai continued this approach,
distinguishing between the
"direct menace" from the off-
shore islands and Communist
China's aim to liberate Taiwan
"at a suitable time."
Mao Tse-tung, appealing
for international condemnation
of the United States, recently
declared that in its threats
of "atomic war,;" the United
States has alienated more than
90 percent of the "people of
the whole world." This approach
was repeated in a People's
Daily editorial on 30 September
wTi1c'h stated that American
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- Brid
Bridge
(under construction)
Lungchi
threats of nuclear war confront
the "people of the world" with
the task of "staying the hands"
of the United States.
Pravda on 29 September
echoed andamplified Peiping's
position that American insist-
ence on a cease-fire.in the
strait area and "renunciation
of force" is completely "out
of the question," inasmuch as
a state of war does not exist
between the United States and
Communist China. Pravda also
charged that the United States
is seeking to break off the
talks in order to bring the
16TAfAN
EHRTAN
question before the United Na-
.tions, where American pressure
tactics and intimidation could
be employed. Soviet propagan-
dists have instead stressed the
seating of Communist China in
the UN, and some have stated
this to be the "only solution"
to the crisis.
The first Soviet hint
since the onset of the Taiwan
Strait crisis of willingness to
supply "volunteer" assistance
to Communist China appeared in
the army newspaper Red Star on
25 September. In an article
recounting how Soviet pilot
volunteers had fought in China
against the Japanese, it was
claimed that Soviet pilots are
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CURRENT INTELLIGENCE WEEKLY SUMMARY
2 October 1958
"ready, if necessary, to come
to the aid of their true Chi-
nese friends...." Soviet Avia-
tion has subsequently rie
similar items hinting at mili-
tary support of Peiping; it re-
ferred on 28 September to the
comradeship-in-arms of Soviet
and Chinese Communist pilots
and asserted that "like brothers
we will fight the hated enemy
together if they dare attack
us."
The American Embassy in
Moscow believes these articles
provide the first indications
that Soviet military personnel
are being psychologically pre-
pared for service in China. So-
viet military press organs have
been consistently 1_less:~? re-
strained inscommenting on the
Taiwan Strait issue than other
Soviet propaganda media.
A Pravda editorial of I
October repeated previous warn-
ings that the Soviet Govern-
ment regards an attack on Com-
munist China as an attack on the
USSR itself, adding that the
Soviet people "are prepared at
any moment to go to the assist-
ance" of the Chinese Communists.
The Chinese Communist De-
fense Ministry's announcement
that parts of Sidewinder mis-
siles fired by Nationalist
planes have been recovered and
brought to Peiping for "public
exhibition" indicates that Amer-
ican "warmongering" will con-
tinue to be a major theme in
Communist propaganda during the
Warsaw talks. The announcement
promised "punitive" action
against the Chinese Nationalist
Air Force: Premier Chou En-lai
on 30 September made a similar
promise.
Military Situation
Communist artillery con-
tinues its harassing and inter-
dictory fire on the Chinmens.
Delayed-action fuses are being
used to increase shell penetra-
tion of Nationalist defenses.
there are
200 new Communist gun positions
in the Chinmen area, making a
total of over 1,000 positions,
of which about 650 have guns.
There has been a corresponding
rtillery increase in the Matsu
area, where there are now 105
guns as compared with 70 on
30 June.
The resupply of the Chin-
men Islands has improved during
the past week despite bad
weather and continued Communist
artillery fire. The average
tonnage delivered per day has
risen from approximately 100
to nearly 200 tons. A number
of innovations have been re-
sponsible for this increase,
including off-loading of bulk
cargo from LST's offshore to
LCM's for delivery to the beach,
stepping-up of air drops, use
of motor junks for delivery of
foodstuffs, and off-loading of
partly filled drums into the
sea to be towed ashore. As of
30 September, the Chinmen gar-
rison still had a supply of ap-
proximately 30 days of food-
stuffs and ammunition.
The loan by the United
States of 16 C-119 transport
aircraft should substantially
increase air-drop deliveries
as soon as these are placed in
operation. The Taiwan Defense
Command expects that improvement
in air-drop tonnage and in sea
supply will raise tonnages de-
livered to a total adequate to
support the islands indefinite-
ly.
Civilian food stocks on
Chinmen are believed to be ade-
quate to support the civil pop-
ulation through next spring.
The supply is believed adequate
to permit some diversion to
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CURRENT INTELLIGENCE WEEKLY SUMMARY
2 October 1958
military use without causing
undue hardship. The Nationalist
press, however, reports that
the situation of the civilians
on Little Chinmen is critical,,
with only a 15-day supply of
food remaining on the island.
Chinese Nationalist of-
ficials now are optimistic that
the blockade of Chinmen has
been broken and that the island
is "strangulation proof" unless
the Communists use new weapons
or new interdiction tactics. They
are also more hopeful that means
will be found to supply the gar-
risons on the hard-pressed lesser
islands of Tatan an d~ rhtan.
25X1
MIDDLE EAST DEVELOPMENTS
Lebanon
President Shihab has post-
poned until next week the spe-
cial session of Parliament which
will be asked to return A vote
of confidence for the cabinet
of Tripoli rebel leader Rashid
Karame. The delay will permit
more time to consider proposals
for increasing the size of the
cabinet to admit some members
acceptable to the pro-Chamoun
faction. Karame, however, has
declared that he will not agree
to enlarge the cabinet until
it has received parliamentary
approval. Chamoun, on the other
hand, has asserted that his
supporters in the legislature
will not approve Karame's cab-
inet.
Shihab has threatened to
dissolve the chamber, which is
dominated by Chamoun supporters,
if the cabinet does not win
support. Dissolution would re-
quire Karame-controlled elec-
tions within three months, with
results unfavorable to Chamoun.
Shihab intends to add 22
seats to the 66-man legislature
in order to provide "balanced"
representation, and he has in-
dicated that he would also like
to obtain decree powers and sus-
pend the legislature for six
months. He then could rule
without interference from the
pro-Chamoun Parliament.
All seven ministers origi-
nally proposed for membership
in the Karame cabinet are op-
posed to Chamoun's pro-Western
foreign policy, and four sided
with the rebels against Chamoun
during the rebellion.
Militant pro-Chamoun forces
have adopted the tactics former-
ly used by the anti-Chamoun
rebels by employing violence
to seek more favorable repre-
sentation in the cabinet. The
reported intention of two anti-
Chamoun Maronite Christian min-
isterial candidates to resign
could open the way for a polit-
ical compromise and for the ap-
pointment of pro-Chamoun rep-
resentatives to the cabinet.
An outright increase in cabinet
seats is also being discussed
as a possible solution, failing
which, the Moslem-Christian
split will widen. Shihab appar-
ently has already embarked on
a policy of removing or reas-
signing members of security
forces who actively opposed the
rebellion this summer.
Syrian Interior Minister
Sarraj recently told a European
diplomat in Damascus that "noth-
ing would stop Lebanon's associa-
tion with the UAR," and that he
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CURRENT INTELLIGENCE WEEKLY SUMMARY
was prepared to use violence,
mented was probably timed to
deprive advocates of union with
the UAR, which just proclaimed
such reforms in Syria, of a ma-
jor popular issue. Iraqi land
reforms would probably increase
agitation in Iran against the
Shah, whose chief support is
from large landowners. Some
Soviet bloc arms have been
furnished Iraq in the recent
past by the UAR. Iraq has also
permitted stationing of UAR
MIG fighters in Iraq.
if necessary, to accomplish this. j
Jordan
Extensive political maneu-
vering by military and civilian
leaders in Jordan is continuing.
New rumors are spreading
in Amman and Jerusalem that
King Husayn is preparing to bring
representatives of opposition
groups, possibly including the
National Socialist party, into
the government, presumably in
a bid to avert antigovernment
violence after British troops
are withdrawn. Such a move
could also establish a basis for
an orderly transition toward a
policy of accommodation with
Jordan's Arab neighbors. In-
stallation of a neutral govern-
ment in Jordan could also pre-
pare the way for the King's de-
parture for a "vacation and
medical checkup," following
withdrawal of British troops.
The UAR-operated "Jorda-
nian People's Radio," which
broadcasts from Syria, has con-
tinued a torrent of unusually
fierce exhortations to over-
throw the pro-Western government
in Jordan.
Iraq
Baghdad authorities con-
tinue cautious maneuvering to
reduce the influence and pres-
tige of the faction within the
government favoring union with
the UAR. Premier Qasim has
further strengthened his posi-
tion by dismissing pro-UAR Dep-
uty Premier and Interior Min-
ister Arif, as well as two otheri
pro-UAR cabinet members. Arif
is being sent to West Germany
as ambassador.
Announcement that a land
reform program is to be imple-
Reports from Baghdad re-
flect the existence of a group
of senior officers, apparently
emerging as the actual locus
of power in Iraq. This group,
which includes the four division
commanders, did not participate
directly in the 14 July
revolt.
Arif's former brigade has
been sent on a security mission
to southern Iraq, and elements
of Qasim's brigade may also have
been withdrawn from Baghdad.
These moves may be intended to
reduce the possibility of a
countercoup by politically
oriented units in the capital.
Middle East Oil
Nasir's expected attempt
to gain ultimate control over
the terms under which Western
oil interests operate in the
Arab states has apparently be-
gun. His establishment of a
Public Corporation for Petro-
leum Affairs to plan UAR petro-
leum policy will assure Cairo
of control in all details over
Syrian oil matters. Cairo has
already stymied Syrian negotia-
tions with the American company
(Tapline) operating the pipe-
line from Saudi Arabia--a~ move
presumably intended to shift
decisive negotiations to Cairo.
The new petroleum authority
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CURRENT INTELLIGENCE WEEKLY SUMMARY
may well emerge as the instru-
ment for implementing Nasir's
over-all Arab oil policy toward
Western oil companies.
A spokesman for the Egyp-
tian-dominated Arab League an-
nounced in Cairo on 29 September
that Kuwait, the Middle East's
largest oil producer, had ap-
plied for membership, and that
the league's secretary general
would visit Kuwait in response
to an invitation from the Ruler.
Kuwait's adherence could set a
precedent for the oil-producing
Persian Gulf states of Bahrein
and Qatar.
According to the Cairo
press, Kuwait's deputy ruler
declared in Cairo on 24 Septem-
ber that Kuwait was prepared to
join the league and contribute
to an Arab development bank.
Britain is empowered by treaty
and custom to handle Kuwait's
foreign relations, but in Arab
affairs the Ruler, who feels
that accommodation with Nasir
is necessary, has recently as-
sumed an increasingly independ-
ent position.
The Foreign Office in Lon-
don has stated that it was not
consulted on the deputy ruler's
move. The Kuwaiti Government
secretariat has also denied that
Kuwait would join the league.
The denial, however, suggests
that the powerful deputy ruler
may be attempting to cultivate
favor with Nasir and with the
Kuwaiti nationalists at the ex-
pense of the Ruler, who is tied
to treaty relations with Brit-
ain.
Saudi Arabia
In Saudi Arabia, Crown
Prince Faysal's frustration
over budgetary problems has led
him to charge that the Arabian-
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American Oil Company (Aramco)'
is indifferent to'Saudi finan-
cial difficulties. Faysal, ap-
parently reflecting the influ-
ence of his pro-Egyptian petro-
leum adviser, hinted to the
American ambassador that action
to curtail Aramco's rights may
be under consideration.
The ambassador also in-
ferred that some form of re la-
tione with the Sino-Soviet bloc
was under consideration. Saudi
banks have been notified ver-
bally that the unofficial ban
on Soviet bloc imports has been
lifted. This is in line with
Faysal's intention to promote
a "neutral" foreign policy.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Nasir's Reorganization Plan
Nasir is expected to re-
veal soon the details of his
plan to centralize the govern-
ment of the United Arab Repub-
lic, giving Egypt greater con-
trol over Syria. His choice
of personnel is not yet known,
but it appears certain that
several prominent officials,
including Vice Presidents
Hawrani, Asali, and Baghdadi,
will be dropped because of
their past disagreements with
Nasir's policies. Syrian strong
man Sarraj, at present minister
of interior for the Syrian re-
gion, has been mentioned as
Nasir's choice to head a new
"executive council" for that
region, with the task of im-
plementing Cairo's policies.
Preliminary steps have al-
ready been taken. Nasir has
promulgated a state-of-emergency
decree, announced a land-reform
program for Syria, abolished
the extralegal status of Syrian
tribes, and is reported to be
transferring numerous Syrian
military personnel to duty in
Egypt.
The land-reform'law, limit-
ing individual holdings to about
175 acres of irrigated or 650
of nonirrigated land, 'will
arouse resentment among Syria's
numerous large landholders. The
law will virtually confiscate
excess acreage, since compensa-
tion will be in nonnegotiable
40-year bonds at only 1.5-per-
cent interest,
Syrian tribes, previously
exempt from many state laws and
regulations effective in urban
Syrai, are now "subject to all
laws, decrees, and arrangements
applying to townsfolk in the
Syrian region."
dominance.
The number of Syrian offi-
cers who have actually moved
to Egypt seems to have been
significant, and reports that
many of them were followers
of Akram Hawrani's dissident
Baath party indicate that
their transfer was a delib-
erate effort to remove from 25X1
Syria another possible source
of resistance to Cairo's
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CURRENT INTELLIGENCE WEEKLY SUMMARY
2 October 1958
NOTES AND COMMENTS
BRITISH.PUT CYPRUS PLAN INTO EFFECT
Despite the fact that Brit-
ain started on 1 October to im-
plement its Cyprus plan, NATO
Secretary General Spaak is still
trying to persuade Britain,
Greece, and Turkey to confer
about the island and head off
a major crisis to the alliance.
Greece considers any con-
ference useless now in view of
Britain's start in implementing
its Cyprus plan. Athens is
still re-examining its ties
with the West. The cabinet,
however, apparently has reject-
ed, at least for the present,
:Foreign Minister Averoff's
recommendation that Greece
break relations with Turkey, de-
nounce the Balkan Pact, and with-
draw from NATO. Averoff may re-
sign over this rebuff to his
policies--a move which would
probably precipitate a new cri-
sis in the Greek Government.
The developing political situ-
ation in Greece has caused King
Paul to interrupt his vacation
in Austria and hurry back to
Athens.
On Cyprus, the first of Oc-
tober and the prior announcement
of the appointment of the Turkish
consul general in Nicosia as the
official Turkish representative
to the governor of Cyprus were
celebrated by Turkish Cypriots,
but Greek Cypriots called a gen-
eral strike which brought vir-
tually all activity on the-is-
land to a halt. Meanwhile,
sporadic attacks on British de-
pendents, ambushes of British
troops, and island-wide sabotage
occurred with increasing fre-
quency. While the Predicted 1
October "all-out offensive" by
EOKA did not materialize, British
officials continue to predict
that a major campaign of violence
will occur but may not be n for
another two weeks.
France's overwhelming ap-
proval of De Gaulle's constitu-
tion will probably encourage
the premier to seek an early
solution to the Algerian prob-
lem, even at the risk of alien-
ating his rightist and perhaps
some of his military supporters.
The forthcoming electoral re-
form will be aimed at reducing
Communist representation in the
National Assembly, but there
is some fear it may also favor
the right at the expense of
the center parties.
Under pressure of a public
mandate to bring peace to Al-
geria, De Gaulle must now main-
tain the momentum of a drive
for an early solution within
the framework of his promise
in June to negotiate with the
elected representative of the
Algerian people. His immediate
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CURRENT INTELLIGENCE WEEKLY SUMMARY
2 October 1958
aim, therefore, is to indicate
the broad lines of the solution
he favors, so that extremists
on both sides will not be dis-
illusioned too abruptly. In
view of the almost unanimously
favorable referendum vote in
Algeria, De Gaulle may be in no
hurry to assuage FLN sensibili-
ties, but his unwillingness to
support the integration theme
runs the danger of further ex-
citing irreconcilable elements
among the settlers and army.
The Algerian solution De
Gaulle envisages will have a
direct bearing on the electoral
law under which the new assem-
bly will be chosen in November.
He would like to reduce Commu-
nist strength to perhaps 30
deputies, compared with 150 at
present. The fear has been ex-
pressed, however, that this
could be achieved only at the
cost of a heavily rightist ori-
entation of the assembly, which
would sharply reduce the possi-
bility of a liberal solution in
Algeria. Moreover, such a dis-
tribution of assembly strength
would play into the hands of
the Communist party by forcing
other leftist deputies to align
themselves in a single bloc with
the Communists. If De Gaulle is
to avoid eventual capitulation
to the right, he will therefore
have to consider an electoral
law which would foster a respon-
sible left and center.
De Gaulle has long been
disinclined to take measures to
outlaw the Communist party, as
Soustelle and other rightists
have demanded publicly. He
believes that Communist electoral
strength--averaging a quarter of
the electorate under the 1946
constitution--has been essen-
tially a protest vote against
the old system and this convic-
tion has been reinforced by the
party's inability to muster all
its former supporters to oppose
the constitution. Instead of
trying to reduce Communist
strength solely by electoral de-
vices, De Gaulle will probably
offer a program of socio-eco-
nomic reforms to lure the pro-
test vote away from the Commu-
nists.
FRENCH WEST
The secession of Guinea
and the reported intention of
the rich Ivory Coast, and per-
haps also of Mauritania, vir-
tually to cut their ties with
the Federation of French West
Africa are likely to destroy
the federation's ability to
function effectively.
French West Africa--a fed-
eration of eight territories
with a total population of over
19,000,000 diverse peoples--
covers almost 2,000,000 square
miles of desert, steppes, and
jungle. Only since 1946 has
the federation, centered at
Dakar, had real administrative
significance.
Recently many African na-
tionalists have sought to en-
hance the powers of the federal
government as a means of gain-
ing greater independence from
France, but representatives of
at least two territories--the
agriculturally rich Ivory Coast
and the backward, predominate-
ly Caucasian Mauritania--have
opposed Dakar's growing power
and have demanded stronger
individual ties With France.
The Ivory Coast is expected
to break its ties with Dakar
soon and to take measures to
halt the flow of its tax
money for use by the federa-
tion's poorer territories.
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Most French West African
leaders urged their followers
to vote yes in the constitution-
al referendum in order to assure
the continuation of French eco-
nomic development funds. At the
same time, they expect to take
advantage of the constitution's
provisions permitting a later
request for independence. In
contrast, Premier Sekou Toure
of Guinea received the support
of about 98 percent of the Guin-
ea electorate when he urged a
vote for immediate independence.
Toure has frequently indi-
cated his desire to retain close
ties with France after gaining
independence, and hopes to re-
main within the franc
zone and to associate
with the French com-
munity provided for
by the new constitu-
tion. He has prom-
ised no "great up-
heaval" in the social
and economic struc-
tures, since Guinea,
which is rich in min-
eral wealth, urgently
needs assistance for
economic development.
His past record as a
leftist labor leader,
however, suggests he
will favor socialist,
economic policies.
In view of his(previ-
ous political activ-
ities, he will proba-
bly pursue a dynamic
nationalist program
Paris has already announces
that Guinea is no longer entitled
to representation in the govern-
ment councils at Dakar and Par-
is, that French economic aid is
being curtailed, and that the
services of French administrators
and technicians will be phased
out over a two-month period. Al-
though Guinea gained at least de
facto independence on 30 Septem-
ber, France is withholding de
jure recognition until the con-
clusion of diplomatic and eco-
nomic negotiations, which are
expected to be rather lengthy
and difficult. Paris has warned
that diplomatic recognition by
other countries could lead to
"unpleasantness" with France,
o MUNL.. 2 j BELGIAN
GABON CONGO
Brazzaville
to gain recognition as the out-
standing leader in West Africa,
and he may eventually attempt
to enlarge Guinea at the ex-
pense of neighboring Liberia
and Sierra Leone.
its recognition and similar ac-
tion is likely on the pars of
several other African, Aram
Communist governments.
BLOC MOVES ON RECOGNITION OF ALGERIAN GOVERNMENT
Moscow is hesitating to
recognize the Algerian provi-
sional government. The USSR
is faced with the problem of
attempting, as it has in the
past, to avoid undue provocation
of France while at the same time
upholding the Soviet pose as
the champion of anticolonialism.
The USSR has apparently adopted
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Fort Lamy
FRENCH
CAM._J ~EQUATORI
//77
/
r RICA
AMEROUN NGX' SHARI
I ,? s) 0~ \..`/..
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a firmer pro-Algerian line, how-
ever, in view of Khrushchev's
recent strong attack on the De
Gaulle government's policies,
including its failure to end
the "iniquitous colonial war
against the Algerian people."
N. A. Mukhitdinov, a top
Soviet spokesman on Middle East-
ern and Arab affairs, had two
"frank and sincere" meetings
with "ministers" of the Algerian
provisional government during
his recent visit to the UAR.
The heavy publicity given by
Moscow to these meetings--the
first such high-level Soviet
contact with the rebels--is de-
signed to impress Afro-Asian
opinion with its sympathy for
the new regime. Soviet leaders
may be deferring a decision on
the question of recognition,
however, pending receipt of
Mukhitdinov's report on the
prospects of the new government
and an assessment of De Gaulle's
policies following the consti-
tutional referendum.
The European satellites
will probably follow Moscow's
lead, although East Germany,
which does not have diplomatic
relations with France, might
undertake recognition in advance
of the other Communist regimes
in Europe.
Communist China, the first
bloc country to recognize the
provisional Algerian regime,
clearly sought to gain the sym-
pathy of Arab countries--par-
CHINESE COMMUNIST ECONOMIC ACTIVITIES IN AFRICA
Communist China this year
is seeking greater economic ad-
vantage in its trade with Africa
now that it has begun to achieve
its earlier objective in this
trade--enhanced political status
in the area. Peiping established
ticularly Morocco and Tunisia--
for its own efforts to win in-
creased foreign recognition.
North Korea and North Vietnam,
which quickly followed Peiping's
lead, have found it very diffi-
cult to gain international ac-
ceptability. Hanoi's relations
outside the bloc are limited to
a few consulates,while Pyongyang
has never received even de facto
recognition from the most strin-
gently neutral countries. Al-
though neither North Vietnam
nor North Korea is represented
in the United Nations, both try
hard to identify themselves with
the Asian-African bloc, and
recognition of the Algerians
is a logical extension of this
policy.
Peiping's move undoubtedly
reflects its impatience with
Paris, which, despite sporadic
signs of interest, has neverthe-
less refused to take actual steps
to establish diplomatic exchanges.
The risk of offending France
thus has little meaning for Pei-
ping, and North Vietnam and
North Korea are in a similar
position.
movement."
First-hand, high-level con-
tact could be made between the
Algerians and the Chinese Commu-
nists later this year, as numer-
ous reports have stated that
Premier Chou En-lai will travel
to Cairo. The Chinese would ex-
ploit any meeting with the rebel
leaders to demonstrate their
good will toward the "liberation
its first economic ties with
Africa in the belief that trade
eventually would lead to diplo-
matic recognition. Now offi-
cially recognized by Egypt, Chi-
na has a permanent trade office
in Cairo and has laid the
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groundwork for closer ties
through initial trade agreements
with Tunisia and Southern Rho-
desia. Negotiations are also
under way for a trade protocol
with the Sudan and renewal of
the Sino-Moroccan trade pact.
Under its original agree-
ment with Egypt, which expires
this month, Peiping was willing
to import substantial quantities
of cotton for cash in order to
promote political ties. It now
insists on a barter deal to re-
duce its sterling payments, which
have totaled $50,000,000 during
the past three years; for the
same reason, a barter agreement
is being arranged with the Su-
dan. Peiping's imports from
Communist China's 1957 Trade with Africa
T Trade agreement in existence
UGANDA II
3
FEDERATION OF 113
RHODESIA AND
NYASALAND 0
KENYA 16
160
22
L450
I
UNION OF 1,450
SOUTH AFRICA 3
FRENCH ? 1,500
WEST AFRICA 0
1 700
1,700
0
l
2 550
EXPORTS
IMPORTS
Figures are in thousand dollars
30
^
Egypt amounted to $42,000,000
last year, nearly equal to
China's total exports to Africa.
China has been trying to
increase purchases in Western
Europe following the break in
economic relations with Japan
and is negotiating barter ex-
changes with France and the
United Kingdom involving Africa.
To secure a larger share of
China's West European contracts,
France, which normally sells
more to China than it buys, has
agreed to a barter basis for its
trade. This will enable Peiping
to retain much of the foreign
exchange earned in the African
franc area, where its sales
greatly exceed its purchases.
Y. BR0
FR-
BELGIAN
CONGO
LIBYAEGYPT
FRENCH
EQl ATORD
g AFRICA
io~nwo
I\ UNION OF
SOUTH AFRICA
)MAD
TOTALS 43,527
44,346
SECRET
FED. OF -
RHODESIA
AND
r_ NYSALAND
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delegation sent to Southern
Rhodesia in July has concluded
a six-month agreement for the
export of Chinese products, in-
cluding rice, in return for to-
bacco. The mission also ex-
pressed interest in obtaining
African minerals in exchange for
a wide range of machinery and
machine tools. Similar offers
were made to the Union of South
Africa during August, and Pei-
ping has proposed to export
tires and tubes to Ghana.
CURRENT INTELLIGENCE WEEKLY SUMMARY
To save foreign exchange, Pei-
ping is also proposing to im-
port British tractors on the
condition that London negotiate
the delivery of Chinese tex-
tiles.to West Africa.
In 1957, China traded
with 14 African areas; although
it imported from only half of
them, total Sino-African trade,
which amounted to $100,000,000,
was balanced. To help gain a
creditor trade position, Com-
munist China continues to seek
new markets in Africa. A trade
(Prepared by
The Sino-Soviet bloc is
conducting an apparently well-
planned attack on Yugoslav
state affairs, despite Moscow's
repeated allegations that it
desires to maintain correct
state relations with Belgrade.
In this attack, definite limits
appear to have been set. Bloc
countries are not to sever re-
lations with Belgrade,csince
blame for any diplomatic rup-
ture must clearly fall on Yugo-
slavia. Each member of the
bloc is attacking Yugoslavia
on specific issues which each
has determined would be most
embarrassing. Moscow probably
feels that a return to the
heavy-handed approach Stalin
adopted after 1948 would only
increase international sympathy
for Tito and permit him to re-
taliate in a manner embarrass-
ing to Khrushchev's interna-
tional position.
The pyrotechnics charac-
teristic of the anti-Yugoslav
campaign last spring have sub-
sided, and ideological argumen-
tation, previously the primary
element in the dispute, now
plays a role secondary to spe-
cific attacks against the Yugo-
slav state. Moscow has not
swerved from its stated inten-
tion of destroying Yugoslav
revisionism theoretically and
politically, but it is appar-
ently in no hurry to accomplish
this.
To date, the USSR, Commu-
nist China, and Albania have
led the anti-Yugoslav campaign.
Moscow has restricted the dis-
tribution of Yugoslav publica-
tions in the USSR, has vacil-
lated regarding a promised
shipment of 200,000 tons of
wheat to Yugoslavia, and re-
portedly has refused outright
to ship coking coal. The Chi-
nese Communists are allegedly
boycotting Yugoslav ships and
ports, and Belgrade's diplomatic
relations with Peiping, as well
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CURRENT INTELLIGENCE WEEKLY SUMMARY
2 October 1958
as with Tirana, are becoming
increasingly strained. While
such developments are reminis-
cent of Moscow's dispute with
Belgrade after 1958, it still
appears unlikely that differ-
ences this fall will reach the
intensity of the earlier dis-
pute, Yugoslav allegations not-
withstanding. The other Commu-
nist states still confine them-
selves to propaganda assaults,
except for Poland which has re-
mained virtually aloof from the
arguments.
The USSR, in what-is prob-
ably a tactical move, appears
now to have reversed its earlier
decision to withold its wheat
shipment, hoping thereby to
discredit insistent Yugoslav
arguments that economic rela-
tions with the USSR are corre-
lated with political compati-
bility and to undermine Bel-
grade's position in its economic
talks with the United States.
Such economic harassment will
probably continue, and the bloc
can be expected to take an
equivocal position on the de-
livery of vital commodities to
Yugoslavia. Khrushchev has
stated, however, that trade
will continue when mutually
advantageous.
SECRET
As more and more elements
of Yugoslav public life have
become involved in the polemics,-
the sensitive question of Yugo-
slavia's policy toward its Al-
banian and Macedonian minori-
ties has arisen again. Tirana
and Sofia have become exceed-
ingly vituperative on the sub-
ject, and the Yugoslavs have
publicly accused both of "openly
expressing aspirations to some
territories of our country."
The Yugoslavs have main-
tained a fairly calm and re-
strained attitude throughout
the campaign, but have--when
they considered it necessary--
stubbornly defended their
position. For the present, Tito's
objective apparently is to prove
to the world that Moscow is
carrying the fight to extremes
by interfering in the internal
affairs of Yugoslavia, attempt-
ing to discredit his policies,
and seeking to separate
him from his people. Whether
Tito will abandon this
policy. in favor of specific
steps in retaliation for
bloc harassment seems to
depend on how' much further
Moscow wil 25X1
25X1
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CURRENT INTELLIGENCE WEEKLY SUMMARY
USSR DISCLOSES LARGE NUCLEAR POWER PLANT
The Soviet delegation to
the Second International Confer-
ence on the Peaceful Uses of
Atomic Energy at Geneva an-
nounced-that a nuclear electric-
power plant is in operation at
an undisclosed location in Si-.-
beria. The announcement stated
that the power plant, now oper-
ating at a power level of 100,-
000 electrical kilowatts, was to
be expanded to a total capacity
of 600,000 kilowatts, which
would make it the largest in
the world.
The plant may be located
at the large atomic energy com-
plex just north of Tomsk, where
what appeared to be dual-purpose
reactors and associated power-
generating facilities were ob-
served under construction in
1957. Some or all of the elec-
tric power generated may be con-
sumed by the gaseous-diffusion
plant being expanded at this
highly secret nuclear-energy
complex.
This plant was not specifi-
cally mentioned among those
which, according to the Sixth
Five-Year Plan, would make up
most of the 2,000,000-'to 2,500,,-
000-kilowatt nuclear-power plant
capacity scheduled to be in op-
eration by 1960. Present indi-
cations are that the installed
capacity of stations specifi-
cally designed for power produc-
tion will not exceed 700 mega-
watts by that time. It is be-
lieved that the lag in the con-
struction program of these plants
prompted the USSR to publicize
this dual-purpose reactor, and
that it considers the propaganda
advantages sufficient to out-
weigh the possible security
hazards involved.
Only one of the large nu-
clear-power plants scheduled
under the Sixth Five-Year Plan
was reported by V. S. Yemelyanov,
chief of the Main Administra-
tion for Peaceful Uses of Atomic
Energy, to be under construction--
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CURRENT INTELLIGENCE WEEKLY SUMMARY
the 420-megawatt nuclear power the Urals near Beloyarsk, east
plant at Voronezh. He said a of Sverdlovsk. No mention was
similar plant in the Leningrad made of the fourth or fifth
area will be built. He also large plant in the original
reported that a large nuclear- Sixth Five-Year Plan.
power plant with a capacity of
400 megawatts would be built in
"LOCALISM" IN SOVIET INDUSTRIAL MANAGEMENT
While Soviet leaders have suppressed in time, they may
expressed satisfaction with the disorganize our socialist econ-
reorganized system of industrial omy."
management, the press during the
past year has attacked various
problems arising from the new
system for industrial adminis-
Shortly after the plenum,
the first articles appeared
attacking investment practices
tration which are indiscrimi- by officials of the regional
nately classified .as "localist economic councils (sovnarkhozy).
tendencies.." The removal, four days after the
At first, official crit-
icism was leveled primarily
against nonfulfillment of
deliveries among the various
economic regions. This culmi-
nated in decrees in late spring
which provided for a reorgan-
ization of the supply system
and the application of criminal
sanctions to repeating violators
of cooperative delivery con-
tracts.
In mid-May the attack
shifted to misuse of investment
funds by regional administrators
acting against central direc-
tives in pursuance of projects
primarily of local significance.
This campaign probably resulted
from an unpublicized decision of
the central committee at its
May plenum. Although official
statements have claimed that
the plenum was devoted entirely
to development of the chemical
industry, Party Life last Au-
gust, in criticizing illegal
investments, referred for the
first time to "the decisions
of the May plenum which noted
that if violations of state
discipline are not resolutely
plenum, of N. K. Baybakov,
planning chief of the Russian
Republic (RSFSR), may also have
been connected with the central
committee decision.
About the same time, an
investigation by the Industrial
Bank into the financial opera-
tions of 89 sovnarkhozy revealed
that 29 had diverted some 428,-
000,000 rubles($75,000,000)
from centrally planned capital
construction into local projects.
In mid-August, Pravda, Izvestia,
and Party Life singled out nine
prominent sovnarkhozy for partic-
ularly serious malfeasance. The
Karaganda Sovnarkhoz, for in-
stance, was castigated for using
almost 75, 000, 000 rubles ($13,-
000,000) of the funds assigned
for development of the coal and
metal industries for such things
as the construction of theaters,
rest homes, and a circus.
Khrushchev has placed heavy
reliance on regional party or-
ganizations to check on their
counterpart economic councils.
At times, however, regional
party officials are faced with
a conflict of interests between
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national demands and local re- are serious limitations on ac-
quirements. The severe criti- tions the regime can take to
cigm of regional party commit- improve the efficiency of the
tees responsible for the errant industrial administration by
sovnarkhozy attests to the prob- encouraging local initiative.
lem of keeping local party units A pointed example stems from a
responsive to Moscow's demands. Khrushchev proposal last April
"Localism," though not a
new phenomenon in the Soviet
system, has taken new forms un-
der the reorganized industrial
management and perhaps has been
given a wider framework in which
to operate. While Soviet lead-
ers are well aware of the prob-
lem and will continue to take
measures to prevent serious dis-
ruptions of the economy, there
to decentralize planning of
capital construction to permit
the sovnarkhozy, rather than
the Moscow planning authorities,
to choose construction projects.
Recent signs indicate that Khru-
shchev's suggestion has been
severely watered down, at least
temporarily, partly because of
sovnarkhoz investment malfea-
sance. (Con- 25X1
curred in by ORR)
EAST GERMANS MAY EASE DOMESTIC POLICIES
The East German regime, cultural and economic policies
disturbed by the mass flights
of intellectuals, professional
personnel, and technicians to
the West and by other signs of
increasing popular dissatisfac-
tion is reconsidering the se-
vere domestic program enunciat-
ed at the fifth congress of the
East German Communist party in
July. A party plenum scheduled
for mid-October may decide on
a new approach intended to slow
the exodus and to encourage
greater productivity.
In following a less rigid
course, the Ulbricht regime
would in part be adopting the
moderate program advocated by
the purged Schirdewan and Oels-
sner and by Fritz Selbmann,
whose opposition to Ulbricht
cost him his central committee
seat and, quite recently, his
post as deputy premier. Selb-
mann remains a deputy planning
commissioner., however, and may
yet have a hand in carrying
out a more liberal economic
program.
The recent concession to
physicians and an easement of
hinted at by regime leaders at
a recent central committee meet-
ing suggest that a relaxation
is in the offing. The decree
affecting the status of physi-
cians stated that the "apoliti-
cal specialist" has a place in
East Germany, suggesting that
the replacement of industrial
specialists by party hacks dur-
ing the current reorganization
of the economic admistrative
structure will cease. The ranks
of specialists and technicians
have been the hardest hit of all
manpower categories by the
flights to the West, and East
German manpower reserves are
almost exhausted.
The propaganda campaign
which was to prepare the way
for an increase in work norms
throughout industry has stopped
abruptly. In an apparent effort
to avoid raising norms but still
to increase labor productivity,
the worker is to be ex-
ploited by the "voluntary
brigade" system, and stu-
dents and children are to
be drafted for part-time
work.
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There is a. possibility
that pressure on the private
business sector will be eased,
since large-scale flights of
retailers have caused distribu-
tion problems. A slowdown in
the collectivization of agri-
culture also appears likely,
because so far in 1958 over
six tunes as many cooperatives
have been formed as in 1957.
The regime could use an interim
period in which to bring the
newly seized lands of these co-
PRE-ELECTION DEVELOPMENTS IN PAKISTAN
The success of Pakistan's
ruling parties in dealing with
political disturbances in East
and West Pakistan fomented by
the opposition has apparently
strengthened the national gov-
ernment's position. It should
lso reduce the possibility of
authoritarian moves to suspend
parliamentary government or to
curtail political party activ-
ity. These developments should
clear the way for holding the
country's first national elec-
tions as expected in February,
although the government's sin-
cerity in this respect is still
open to question.
In East Pakistan, sessions
of the provincial assembly on
20 and 23 September ended in
violent clashes and the arrest
of 12 opposition members. The
deputy speaker later died of
injuries. While the ruling
Awami League members appear' to
have shared responsibility for
the disorders, the opposition
politicians probably sparked
the violence in an attempt to
force the national government
to impose President's Rule and
SECRET
operatives into "socialist pro-
duction."
(Prepared jointly with URRY_
Germany by 1961.
to bring its standard of
living up to that of West
A general relaxation of
hard policies will probably not
be effective in reducing de-
fections from East Germany, but
it is one of the few posi-
tive steps the regime can take
to further its ambitious plan 25X1
thus deprive, the Awami League
of its control of the adminis-
tration during the crucial elec-
tion period. The provincial
leaders managed to pass the re-
quired budget in the absence
of the opposition, however, and
adjourned with no further test
of their strength likely prior
to the February elections.
In West Pakistan, Karachi
was the scene of violent agita-
tion by the Moslem League, an
opposition party, in protest
against a recent government ban
on semimilitary party auxilia-
ries. The outlawing of the
Moslem League's "national guard"
robs it of an instrument which
would have been of considerable
use during the elections. In
the face of indications that the
government was prepared to take
drastic counteraction against
the party if it decided to defy
the ban, its leaders postponed
plans for a civil disobedience
campaign. Their retreat may
damage the party's prestige
and stop the recent growth in
its popular support. 25X1
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COMMUNIST WEAKNESSES APPEAR IN INDIA'S KERALA STATE
Attention in India now is
becoming focused on the failure
of Kerala's Communist-controlled
government during 18 months in
power to make any progress in
solving the state's basic eco-
nomic problems.
Prior to July, the Commu-
nists had appeared to be firmly
entrenched in Kerala. In July,
however, violent Communist at-
tacks on student and labor agi-
tators resulted in several
deaths, producing widespread
fear that the government would
not maintain law and order ex-
cept in favor of the Communists.
Popular indignation in
India reached such a pitch that
the Kerala government finally
granted all student demands,
thus suffering its first major
defeat since it took office in
April 1957. Additional pub-
licity regarding the possibility
of an investigation by New Delhi
has put the state government on
the defensive and made it neces-
sary for Communists in other
states to abandon attacks on
New Delhi and spring to the de-
f ense of the Kerala regime.
More significant, however,
is the fact that public atten-
tion is turning from immediate
incidents to longer range ap-
praisals which are bringing to
light the Communists' failure
to keep pace with other states
over. Kerala ministers have un-
successfully toured India and
foreign countries attempting to
attract private capital and as-
sure Kerala's achievement of its
Second Five-Year Plan targets.
Preliminary negotiations with
Indian industrial interests for
establishing a rayon pulp factory
in Kerala have produced much
adverse publicity for the Com-
munist government, whose tenta-
tive agreement to assist the
project and to give management
considerable control over factory
labor raised a storm of criticism
not only from Indian labor circles
but also from the national head-
in increasing agricultural pro- I quarters of the Communist party.
duction and their inability to
attract much-needed industry to I Increasing publicity regard-
Kerala to relieve widespread ing these failures in long-range
unemployment. objectives will tend to weaken
the Communists' hold on Kerala.
Indian Planning Commission The non-Communist opposition
statistics show that Kerala has there, which includes the Con-
the poorest 'record in South In- 1 gress party, is not likely to
dia in increasing its food pro- attempt to take over in the im-
duction. Furthermore, no im- j mediate future, however, as it 25X1
portant Indian or foreign pri-
vate industry has invested in
Kerala since the Communists took
is not sufficiently well or-
ganized to improve on the Com-
munists' record.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
General Ne Win's military
take-over in Burma on 26 Sep-
tember, welcomed by all but the
Communists and the crypto-Com-
munists, appears to have halted
the country's drift toward po-
litical violence and chaos.
Government authorities in Ran-
goon insist there has been no
"coup," that the full cabinet
approved the move, and that
Premier Nu "invited" Ne Win to
Strongly anti-Communist
General Ne Win can expect nearly
unanimous support from the feud-
ing factions of the Anti-Fascist
People's Freedom League (AFPFL)
when he is nominated in Parlia-
ment on 28 October as interim
premier. He is pledged to give
the country six months of non-
partisan government and to sup-
ervise national elections next
April. The rival leaders of the
factions of 'the AFPFL--U Nu on
the one hand and Ba Swe and Kyaw
Nyein on the other--will have
an opportunity for a reconcilia-
tion under conditions involving
a minimum loss of prestige to
either side.
Members of the Communist
People's Comrade party have
left Rangoon and returned to
the jungle. This group, con-
sidered the best disciplined of
the Communist-front organiza-
tions, has maintained close
liaison with the Burma Communist
party of Than Tun. Presumably,
it now will resume its guerrilla
warfare with weapons known to
have been cached in the jungle
as its members surrendered dur-
ing recent months. The crypto-
Communists of the National United
Front, who have supported Nu
since June, have denounced the
government move, charging that
Ne Win has been made a tool of
right-wing reactionaries.
Ne Win, apparently prompted
by Home Ministry plans to con-
vert the army into a government
party instrument through arrest
or retirement of its top lead-
ers, delivered an ultimatum to
U Nu on 23 September. Although
this demand was backed by the
armed forces surrounding Rangoon,
Nu appears to have accepted the
move as a much-needed reprieve.
His gamble to continue control
with Communist support was fail-
ing, he appeared to have lost
his parliamentary majority, and
the prospects were for inconclu-
sive returns and large Communist
gains in the projected November
national elections.
The AFPFL faction of Ba
Swe and Kyaw Nyein is favored
by the development. Under the
heavy and clumsy hand of Home
Minister Bo Min Gaung, its mem-
bers had been persecuted and
could have expected increasingly
severe repression as the elec-
tion date approached. Now
government pressures have 25X1
been halted and the faction's
prospects for election gains
have much improved,
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PART II NOTES AND COMMENTS
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The lack of progress by
Singapore's moderate parties
toward developing an. effective
political coalition during more
than a year of negotiations
points'up the growing Communist
threat as this British colony
approaches internal self-govern-
ment next year. Formation of
the United Socialist Front (USF),
proposed by Chief Minister Lim
Yew Hock in June, has again been
postponed several times. Even
if formed in the near future,
there seems to be little chance
that the USF, or any other mod-
erate coalition, can develop in
time to compete effectively with
the Communist-influenced Peo-
ple's Action party (PAP) in the
Legislative Assembly elections
which are to precede self-rule.
The party's strength appears un-
diminished since its candidates
won 13 of the 14 seats it con-
tested in last December's city
council election and since,
more recently, it won a by-elec-
tion against united moderate
opposition.
The Singapore government's
chief legal weapon against Com-
munist subversion, the Preser-
vation of Public Security Ordi-
nance (PPSO), will probably be
extended by the Legislative As-
sembly prior to its expiration
this month. While the PPSO has
been an effective weapon under
Chief Minister Lim's strongly
anti-Communist government, a
PAP victory in the elections
next year would put leftists in
a position to set aside the law
and obtain the release of key
leftist leaders now imprisoned
under the law's detention clause.
These leftists could then rejoin
the PAP with the prospect of
achieving early Communist con-
trol over the party, now "moder-
ately" led. Thus, the Communist
position in the PAP and the like-
lihood of a PAP election victory
next year increase the Commu-
nists' chances of controlling
the new government of the state
of Singapore.
Communist domination of the
PAP, and through it the govern-
ment, might still lead to the
appearance of a moderate govern-
ment in Singapore, however, for
the Communists presumably would
wish to avoid any provocation
which would cause the British
to use their reserve powers to
rescind the constitution. Fur-
thermore, the Communists know
their hope of an eventual merger
of Singapore and the Federation
of Malaya can be realized only 25X1
by allaying Malayan fears of an
extreme left-wing government in
Singapore.
The inauguration this month
of the first international pe-
troleum pipeline in South Amer-
ica, from Sicasica in Boliva to
Chile's Pacific port of Arica,
will provide. a new impetus to
Bolivian petroleum development.
The capacity of the new pipe-
line is 50,000 barrels a day,
an indication of the great in-
crease contemplated for Boliv-
ian production. Present pro-
duction, however, cannot provide
a steady flow, even at the ini-
tially planned rate of 7,000
barrels a day. Exploitation by
the Bolivian Government amounted
to only 2,000 barrels a day in
1952, but it jumped nearly 300
percent by 1954 and almost
equaled local demand. Steady
increases since then have pro-
vided about 5 percent of the
country's export earnings.
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Bolivia's successful ef-
forts to become a net exporter
of oil increased its. awareness
of the costs of oil development,
and in 1955 the government pro-
mulgatbd a new oil
code that attracted
substantial invest-
ment by American
companies, as well
as by Royal Dutch
Shell. These com-
panies have complet-
ed considerable geo-
logical exploration
and seismic work, but
production still
comes exclusively
from the national
company, which in-
creased its produc-
tion only 12 percent
in 1957, basically
because of the ab-
sence of adequate
transportation from
the fields to ports.
The Bolivian-
Brazilian impasse
over the development
of promising oil
land in eastern Bo-
livia has been over-
come, and several
private Brazilian
companies have taken
initial steps to
meet the requirement
of beginning operations in Bra-
zil's sector before Septem-
ber 1959. All land not under
concession by that date will
revert to Bolivian control.
Because of its acute financial
crisis, Bolivia has been inter-
ested in granting the land to
foreign concessionaires, who
would not only bear the produc-
tion costs but also pay royal-
ties and provide foreign ex-
change.
Leftist forces are threat-
ening this source of new foreign
exchange earnings with a con-
gressional amendment to Boliv-
ia's oil code. Leftist labor
leader Juan Lechin, President
Siles' chief political rival,
has proposed an amendment pro-
viding for ratification of cer-
tain oil contracts by Bolivia's
erratic and frequently leftist-
inclined Congress. Such a
change would be likely to have
an unfavorable effect on the
development plans of foreign
companies now operating in Bo-
livia, as well as on prospec-
tive investors.
SECRET
BOLIVIA
l Oil field
Oil pipeline
~- Railroad
Promising oil are.
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An adjustment of Austria's
pro-Western foreign policy has
become apparent since Chancel-
lor Raab's visit to Moscow last
July. Vienna's ties with the
West basically are still strong,
but a continuation of this trend
may make uncertain Vienna's sup-
port on major East-West issues.
Austria's intention to
pursue a "balanced" policy has
been evidenced in various ways
in recent weeks--including ab-
stention in the UN vote on the
Chinese moratorium issue. Vienna
is still maintaining most of
the restrictions placed on Amer-
ican overflights during the Mid-
dle Eastern crisis, and pros-
pects are fora much less lenient
policy than heretofore. By con-
trast, Austria is trying to im-
prove relations with Prague and
has hesitated to take a strong
stand with the Kadar regime in
Hungary over serious border
provocations. There has also
been a sharp increase in offi-
cial visits between Austria and
the bloc--Defense Minister Graf
is expected to leave for a week's
visit to Moscow on 4 October.
Various factors are in-
svolved in these developments.
Many Austrians, including Chan-
cellor Raab, think of Vienna as
a central European capital and
ICELAND SEEKING UN CONSIDERATION OF FISHING DISPUTE WITH BRITAIN
The Icelandic-British "fish I The Icelandic Government
war," now beginning its second
month, continues to be marked
by sporadic encounters between
patrol vessels and trawlers of
the two countries. Iceland
plans to seek early UN consid-
eration of the dispute, appar-
ently in the belief that polit-
ical decisions must be made
of Austria as a potential medi-
ator in East-West affairs. Com-
petition between the Socialists
and the People's party in the
coalition government has made
the chancellor particularly anx-
ious to score successes in nego-
tiations with the bloc. Other
Austrians, from a feeling of in-
security, want to pattern Aus-
tria's neutrality after that
of Sweden or Switzerland, or
even to equate Austria's inter-
national status with that of
Finland.
A "policy of no principles,"
however, does not appeal to many
Austrians, and, with elections
in prospect next year, Raab may
hesitate to expose himself to
Socialist charges of too cordial
a relationship with the Kremlin.
Austrian politicians in the past
have been disillusioned by de-
velopments in the bloc.
Shrewd calculation may in
part underlie Vienna's flirta-
tions. Gestures toward the
East may make it possible for
Austria to make more impor-
tant moves toward the West,
such as joining the free 25X1
trade area or working out
some association with the
European Common Market.
has rejected proposals to refer
the problem either to a minis-
terial-level meeting of the NATO
countries or to the Internation-
al Court. It does not desire
another Conference on the Law
of the Sea; it wants the matter
discussed during the present
session of the UN General As-
since talks among legal experts sembly. According to Foreign
have proved fruitless. Minister Gudmundsson, the fact
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CURRENT INTELLIGENCE WEEKLY SUMMARY
extension of its fish-
ing limits. London's
principal concern ap-
pears to be in main-
taining a posture that
will be firm enough
to discourage other
nations from declar-
ing any similar ex-
tensions, while keep-
ing the door open for
negotiations. Brit-
ain has also declared
its willingness to
have the dispute sub-
mitted to the Inter-
national Court.
that the question of calling
another Conference on the Law
of the Sea is on the assembly
agenda means that the Icelandic
dispute will come up for dis-
cussion "as a matter of course."
The Icelandic position has
hardened and the government be-
lieves time is on its side.
Icelanders are confident that
their position enjoys widespread
sympathy among UN members and
that pressure resulting from
assembly discussion of the mat-
ter would force Britain to back
down.
While London is ready to
negotiate a settlement, it
doubts that Iceland would agree
to any compromise not explicitly
recognizing Iceland's unilateral
Britain and Denmark, mean-
while, are scheduled to resume
talks in London on 2 October
in an effort to reach agreement
on extending the fishing bound-
aries around the Faeroe Islands.
While the Danes appear anxious
to reach an amicable settlement
with Britain on this issue, they
are fearful that any compromise
now would affect the Faroese
provincial elections scheduled
for 8 November, since dissident
separatist elements would
claim that Denmark had failed
to protect Faroese interests.
British Foreign Office offi- 25X1
cials reportedly are pessi-
mistic about the talks and
anticipate a deadlock.
THE COMMON MARKET AND THE FREE TRADE AREA
The meeting of the Council
of the European Common Market
(EEC) in Venice from 18 to 20
September appears to have dimmed
considerably the prospects for
an early conclusion of the nego-
tiations on the free trade area
(FTA). Although progress was
made toward the objective of a
joint policy toward the free
trade project, the six EEC mem-
bers--France, Italy, West Ger-
many,.and the Benelux countries
--are still some distance from
that goal. Both in timing and
substance there appears to have
been a general retreat from
more negotiable positions taken
earlier this year.
The most serious problems
seem likely to arise from a
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rangemen-bm proposed for the FTA
by the EEC Council seem par-
ticularly cumbersome. The Com-
mon Market countries would be
individually represented on
the FTA council, but the pro-
cedures for arriving at the
"common positions" they would 25X1
take have yet to be worked out.
proposed study of the "distor-
tions" which the Commonwealth's
preferential system--among other
things--would allegedly cause
in the FTA: The findings of
this study, to be carried out
by a committee under the direc-
tion of the EEC Commission and
to be completed in three to six
months, could serve as a basis
for excluding from the FTA or
otherwise restricting those
products in which the United
Kingdom has an advantage be-
cause of its preferred access
to raw materials in other Com-
monwealth countries. It will
not be easy to agree on the
composition of such a list of
products, and in any case the
conclusion of the FTA treaty
will probably be impossible
while the EEC is making its
study.
Further difficulties seem
implicit in the council's views
on the timing of tariff reduc-
tions. The French have report-
edly reneged on their agreement
of last July that the tariff re-
ductions of the FTA would coin-
cide with those of the EEC, and
they apparently have had some
success in persuading other EEC
countries to accept this posi-
tion. The institutional ar-
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responsible for the FTA are re-
ported under strong pressure to 25X1
procrastinate, and, in view of
this, the other EEC countries
may be reluctant to push the
French too hard less this jeop-
ardize French commitments under
the Common Market. A default
on these commitments, which be-
gin to fall due in January,
would be a serious blow to the
Common Market, and without the
Common Market there would be
little reason for and perhaps'
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PATTERNS AND PERSPECTIVES
UAR President Nasir, seek-
ing to expand his influence in
the Middle East and Africa, is
faced with problems which may
severely test his leadership.
Divisive forces in the Cairo
regime and within the UAR, an
independent attitude on the
part of Iraq, and possible new
alignments within the Arab
League are all potential sources
of difficulty. Although he con-
tinues to depend heavily on
Soviet economic and military
aid, he is concerned over the
USSR's backing of Middle Eastern
Communists and over activities of
UAR elements in Iraq
and Syria. Nasir's
attitude of suspicion
and his uncompromis-
ing actions toward
the West show little
sign that he will try
to better relations.
Nasir has become
deeply committed
through propaganda
and subversive ac-
tivities to an ex-
pansion of UAR in-
fluence throughout
the Middle East and
Africa, and he would
probably be unable to
withdraw without
risking loss of sup-
port at home, since
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Egypt's stagnating economy and
restrictions on individual free-
dom are continuing causes of
public discontent. Nasir has
indicated dissatisfaction with
his subordinates' handling of
domestic problems, and the re-
ported plan for reorganization
of the UAR Government is likely
to include measures designed to
provide scapegoats and give the
appearance of positive steps
toward improving unsatisfactory
conditions.
Trouble within the regime's
inner circle has been widely re-
ported. Able Egyptian
Vice President for
Economic Affairs Abd
al-Latif Baghdadi is
slated for removal,
and rumors are grow-
ing of the pending
dismissal of Nasir's
heretofore closest
.adviser, All Sabri.
Past differences in-
volving key figures
in the regime have
been settled rela-
tively smoothly, how-
ever, and the present
difficulties will
probably be handled
in the same fashion.
Rumors of these dis-
putes nevertheless
it is primarily the appearance
of dynamism which sustains his
regime.
In Egypt, Nasir has never
been free from concern over his
regime's stability, but judi-
cious placement of personnel in
lucrative or influential posi-
tions and the maintenance of
extreme security precautions
have stifled individual and
group opposition. The forma-
tion of any potentially suc-
cessful opposition in the near
future appears unlikely, but
reach the public and increase
popular distrust of the regime's
motives and activities.
After the first surge of
enthusiasm, the process of merg-
ing Egypt and Syria into a
United Arab Republic slowed down
markedly. The reality of Egyp-
tian dominance instead of the
hoped-for goal of equal partner-
ship has not been well received
in Syria. Although Nasir's per-
sonal popularity does not appear
to have suffered appreciably,
Cairo's efforts to suppress some
of the individualistic tendencies
of the Syrians have met resistance,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
2 .October 1958
Syrian politicians and
businessmen appear particularly
disillusioned by Nasir's at-
tempts to curb party activities
and to regulate the free Syrian
economy. Syria's outstanding
political figure before the
union, Akram Hawrani, has re-
portedly alienated Nasir by
his independent behavior. He
may lose his vice presidency
and perhaps all real authority
if Nasir effects his govern-
ment reorganization plan, which
would centralize control in
Cairo over both the Syrian and
Egyptian regions.
Syria's reaction to a pro-
gram patently designed to
tighten Cairo's control of
Syrian affairs is likely to be
an intensification of the re-
sentment already prevalent
there. The compulsory land re-
form program recently announced
may well mitigate the resent-
ment of the public, even though
it antagonizes large landhold-
ers who stand to lose both eco-
nomic and political influence.
Another problem facing Na-
sir, which also involves Syria,
is the independent spirit being
shown by the new leaders of
Iraq. The natural affinity be-
tween Syria and Iraq, based on
geographic, economic, and cul-
tural factors, may be accentuat-
ed by Syrian dissatisfaction
with union and the possibility
that Iraqi leaders may attempt
to challenge Nasir's pre-emi-
nence in the Arab world. Egyp-
tian efforts to rush Iraq into
formal union or federation with
the UAR have been at least
temporarily parried. Iraq's
ardently pro-UAR deputy premier
Abd al-Salaam Arif, appears to
have been stripped of much of
his authority by Premier Qasim,
who is showing extreme caution
on the question of union and is
assuming a more individualis-
tic,nationalistic role.
Egyptians believe that the
Iraqi Communists, fearing that
a growth in Nasir's influence
would result in their suppres-
sion as in Syria and Egypt,
have done much to retard a move-
ment toward union. Nasir has
said he complained to Soviet
party presidium member Mukhit-
dinov, during the latter's re-
cent nine-day visit to Cairo,
about Soviet backing of Commu-
nist activity in the area,
especially in Iraq.
The role of Iraq in the
recent accession of Morocco
and Tunis to the Arab League
immediately following the visit
of Iraqi Foreign Minister Jumard
to each country is not clear.
There is evidence, however, that
Iraq may hope to form a bloc to
counter UAR influence and change
the league from an Egyptian in-
strument to a more nearly rep-
resentative Arab body. The
Cairo meeting of the league be-
ginning on 1 October may pro-
vide some indication of whether
or not Nasir will continue to
dominate the organization. The
future role in the league of
oil-rich Kuwait, which has re-
cently indicated its intent to
join, may prove important on
this question.
The apparent, if not always
real, success of Nasir's for-
eign ventures has been the main-
stay of his regime. "Victories"
in the name of Arab nationalism
and anti-imperialism have fore-
stalled internal opposition by
diverting public attention from
the regime's failure to cope
with basic problems at home.
Nasir's appreciation of the ef-
fectiveness of such a policy
will probably compel him to con-
tinue intrigues abroad.
Nasir continues publicly
to use opposition to "Western
imperialism" as a popular rally-
ing point, despite private as-
surances that he desires friend-
ship with the West. He has main-
tained a steady attack on Amer-
ican and British intervention
in Lebanon and Jordan, and has
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CURRENT INTELLIGENCE WEEKLY SUMMARY'
not completely stopped the UAR
subversive activities which
helped precipitate the crises
in those countries. The pos-
sibility of a rapprochement
with the British was set back
by Nasir's refusal to ease his
demands in the UK-UAR financial
discussions in Rome early in
September. He now appears to
be planning to put pressure on
the West by assuming a stronger
role in determining Arab oil
policy. As a first step he has
made an impossible demand for
higher revenues from the Tapline
operation in Syria, which car-
ries Saudi oil to the Mediter-
ranean.
The UAR offensive in Africa
shows signs of receiving great-
er emphasis and wider scope.
Cairo radio continues to incite
East Africans to struggle for
independence from "imperialism,"
and the recent completion of
new transmitting facilities in
Egypt probably presages a great-
er effort. Nas.ir is also provid-
The basic Soviet political
objective of maximizing the
growth of national power con-
tinues to dominate economic
planning five years after the
death of Stalin. Toward this
end, the traditional emphasis
on a rapid growth of heavy in-
dus.try and maintenance of a
strong military position have
been preserved, but the new
leadership has embellished
Stalin's central theme with the
additional objectives of creat-
ing the world's show place of
Communist economic achievement
and generating active popular
support for the regime.
In place of the rigidity
of approach to economic problems
which characterized the Stalin
period, the past five years have
been marked. by innovation and
experimentation. A more flexible
system of economic priorities
SECRET
ing refuge, funds, and facili-
ties in Cairo for exiled na-
tionalist leaders from French
territories.
Within the Arab world--par-
ticularly Jordan, Libya, and
the Sudan--the UAR campaign of
propaganda and subversion is
likely to be intensified.
The recent installation of a
Lebanese Government devoted to
accommodation with the UAR prom-
ises to encourage the growth of
pro-Nasir sentiment and the
type of neutralism espoused by
Cairo, an advantage which Nasir
can be expected to follow up.
Saudi Arabian and, more recently,
Kuwaiti moves toward "living
with Nasir" provide definite
opportunities for exploitation.
The result of Moroccan and Tuni-
sian alignment with the Arab
League remains to be determined.
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those of the United States. The
desire to overtake the United
States even more rapidly than
these rates permit will probably
induce the leadership to con-
tinue its efforts to obtain
greater efficiency.
has permitted the introduction
of economic incentives as a re-
placement for some of the more
oppressive coercive measures
used by Stalin. Pursuit of
these new objectives has created
a situation in which the Soviet
consumer and Soviet agriculture,
recognized by the post-Stalin
leadership as possible deter-
rents to continued high growth
rates in heavy industry, no
longer face the certain prospect
of being sacrificed to industry
with each new problem in that
area.
The post-Stalin regime has
brought the economy through a
difficult period of adjustment
with only a slight decline in
rates of industrial growth and
with considerable im-
provement in agri-
culture. Further-
more, the regime's
innovations in the
operation of the
economy probably have
increased its ability
to cope with future
obstacles to continu-
ing high rates of
growth, such as ris-
ing investment costs
and the rising ab-
solute increases in
output which are re-
quired to maintain
Industry
The economic innovations
of the 1953-55 period--first
Malenkov's program for manu-
factured consumer goods and
then Khrushchev's agricultural
consumer-goods program--did not
deprive heavy industry of the
resources required for continued
rapid growth. A new program of
automation and re-equipment was
expected to raise industrial
productivity to the desired
USSR: AVERAGE ANNUAL RATES OF GROWTH
REPORTED FIFTH
E(yE_,?EAAR -P1AN
(1951"55)
ORIGINAL SIXTH
FIVE-YEAR PLAN
(1956-60)
REPORTED 1957
PLANNED 1958
SEVEN-YEAR
PLAN GOALS
(1959-65)
13.1
10.5
10.0
7.6
~BUDE STEEL
10.6
8.6
4.9
5.0
5.9
Al `
8.4
8.7
7.9
5.6
-
= PE1 RQUR
13.3
13.3
17.3
14.5
10.5
ELECTRIC POWER
13.3
13.5
9.1
10.3
11.7
EMENT_ _ ..
17.1
19.5
16.0
17.3
12.9
constant percentage gains from
a growing base.
The individual output goals
revealed thus far for 1965 and
the broader objectives of the
forthcoming Seven-Year Plan
(1959-1965), suggest no letup
in the continuing Soviet ambi-
tion to catch up with the West
in the shortest possible time.
Industrial growth goals during
the period of the Seven-Year
Plan--to be discussed at the
21st party congress in January
--probably will be maintained
at rates nearly as high as those
achieved during the past two
years. Those rates, although
lower than those of the Fifth
Five-Year Plan (1951-55), were
still considerably higher than
level soon. Limited changes in
industrial administration and
increased use of incentives were
expected to give another boost
to industry. However, during
those years faulty coordination
of plans for new plant capacity
with plans for increases in the
output of raw-material industries
led to a severe shortage of in-
dustrial raw materials during
1956.
The Sixth Five-Year Plan
(1956-60), which relied on mod-
ernization of industry and great-
er use of raw materials from
the eastern areas to solve the
productivity and raw-material
problem, proved inadequate to
cope with the emergency. The
regime therefore abandoned the
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plan, cut back industrial out-
put goals for 1957 and subse-
quently for 1958, and ordered
the formulation of a seven-year
plan. It also launched a re-
medial investment program in
raw-material industries, while
maintaining ambitious programs
in agriculture and housing, and
in July 1957 instituted a sweep-
ing reorganization of the in-
dustrial administrative struc-
ture.
The industrial reorganiza-
tion was intended to achieve a
more efficient management of the
economy by reducing the amount
of detail planned in Moscow and
thereby giving greater opportu-
nity for local initiative.
The revised industrial out-
put goals, calling for increases
of'only 7 and 7.5 percent in
1957 and 1958, proved unneces-
sarily low, since actual growth
was reported to be 10 percent
in 1957 and 10.5 percent at mid-
year 1958. Nevertheless, the
performance of some basic ma-
terials industries, particular-
ly those producing ferrous met-
als, remained poor. Production
capacity additions in these in-
dustries fell considerably short
of goals in 1957 and will be
inadequate in 1958 as well.
Production goals for 1965 in
the basic materials industries
suggest that priority treatment
for these industries will have
to be continued.
There will probably be no
increase in the industrial
growth rate above the 10-per-
cent level of the past two
years, since this would require
a substantial overfulfillment
of production goals in the basic
materials industries. An an-
nual rate of 8 to 10 percent
over the next seven years is
more likely. In ferrous met-
allurgy the present investment
plan is likely to produce an
average annual growth rate of
only some 6 percent during the
next seven years. Even if re-
sources devoted to this indus-
try were increased, it is un-
likely that the growth of steel
output could approach the aver-
age annual rate of 9.5 percent
achieved during the past seven
years.
The slower growth of steel
output will in turn limit the
growth of machinery output at a
time when the slower increase
of the labor force is heighten-
ing the demand for labor-saving
machinery. The construction
portion of investment is not
subject to the same raw materials
constraints as machinery and
equipment, but industrial con-
struction growth is restricted
by the availability of equipment
and manpower for use in new fac-
tories.
In order to assure suf-
ficient industrial manpower to
maintain projected industrial
growth rates, substantial trans-
fers of labor from agriculture
to industry will be required,
since the total increase in the
labor force over the next seven
years will be approximately
3,000,000 men fewer than during
the past seven years. The hous-
ing program promises to provide
continuing improvement in the
well-being of the labor force
and will facilitate the transfer
of workers from agriculture to
industry, but present ambitious
agricultural programs will ex-
ert pressures to hold labor in
agriculture.
The reorganization of the
industrial administrative struc-
ture, now in existence for a
year, has not greatly eased the
regime's problems in removing
the restraints on future high
industrial growth rates. Some
simplification of decision-mak-
ing at the center has been
achieved, the role of the party
has been strengthened, and Gos-
plan's influence in planning
and controlling economic activ-
ity has been increased. However,
the exercise of local initia-
tive has been hindered by a num-
ber of measures designed to
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CURRENT INTELLIGENCE WEEKLY SUMMARY
forestall any serious erosion
of central leadership and con-
trol. These actions have pre-
cluded the freedom of action at
the local level which would be
necessary to bring about great-
er efficiency in the use of re-
sources.
Agriculture
The average annual rate of
increase in agricultural pro-
duction during the next seven
years will probably be about 3
percent, compared with
the
7.5-
percent average annual
rate
dur-
ing the past five years. There
are several reasons for this:
the average annual rate of in-
crease in sown acreage will be
only about one fourth that
achieved in recent years; the
corn program will not contribute
to future agricultural output
on the same scale as in the
past; and the new "single-price
system" may provide less in-
centive than the previous multi-
price system.
Transfer to collective-
farm control of most of the
machinery formerly under the
machine-tractor stations (MTS)
may help to increase output,
as it will eliminate the area
of conflict between the collec-
tive farm chairman and the MTS
director. The collective farm
chairman now has a free hand in
managing the utilization of
machinery and has the undivided
use of more skilled labor. On
the other Band, the central or-
gans continue to determine pro-
curement goals, and there are
few indications that the enter-
prise manager is exercising a
significant choice in what and
how much he will produce.
State control over agri-
cultural activities apparently
will not be weakened by recent
organizational changes, as po-
litical functions of the former
MTS's are being shifted to other
organizations.
The Soviet leaders, with
an eye to propaganda gains, have'
designated per capita consump-
tion as a new area of competi-
tion with capitalist countries.
Even if the USSR succeeds with-
in the next seven years in its
effort to match the United
States in per capita consump-
tion of selected food products
such as meat and milk, over-
all per capita consumption in
the USSR will remain well below
that in the United States and
most of Western Europe because
of the lag in other areas, es-
pecially consumer durables and
housing. Moreover, the Soviet
consumer will not experience as
rapid an increase in over-all
consumption as he did during
the past seven years, but there
will be a qualitative improve-
ment in consumption, and the
USSR- PER CAPITA CONSUMPTION
1957=100
OTHER
GOODS
SOFT
GOODS
DURABLE
GOODS
SECRET
housing situation will
improve.
The post-Stalin
leadership has sought
to distribute in-
creases in consumption
selectively by raising
the cash income of
lower paid groups in
the population while
holding retail prices
relatively stable.
The first to be af-
fected were the peas-
ants, whose total real
income rose about 18
percent from 1953 to
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2 October 1958
1957. Another group to benefit
was the urban labor force; since
1955 a major wage and salary
reform, the first since 1932,
has been under way with the aim
of relating wages more closely
to productivity. These meas-
ures, together with a higher
minimum wage level and the in-
crease in consumer supplies
POTENTIAL POLITICAL INSTABILITY IN GREECE
Prime Minister Karamanlis'
pro-Western government retains
a solid working majority in the
Greek Parliament, but there are
some indications that the rel-
ative government stability which
Greece has enjoyed for six years
may be threatened. Foreign and
domestic problems alike are
mounting. Developments in the
explosive Cyprus issue could
at almost any time lead Karaman
lis to resign and in time even
result in some degree of Greek
disengagement from NATO obli-
gations. There is no potential
successor to Karamanlis who
would be better able to cope
with the government's pressing
issues. The Communists or Com-
munist-front groups in Greece
are not likely to gain control
of the gove:rnmentt by either
legal or extralegal means, but
available from the growth of
agricultural output, raised the
real income of the average ur-
ban wage earner about 18 per-
cent. A doubling of pension
levels late in 1956 put. pen-
sioners at about the same con-
sumption level as employed
workers. Prepared
by ORR)
an authoritarian regime even-
tually might be instituted by
the army to counter the left-
ists.
Present Political Parties
Greek politics today are
dominated by Premier Karamanlis
and his National Radical Union
(ERE), which controls 170 of the
300 seats in the Greek Chamber of
Deputies but had the support of
only 41 percent of the electorate
in the May 1958 election. The
ERE is a heterogeneous group
of right-center politicians
held together by Karamanlis,
the absence of effective non-Com-
munist opposition parties to
which-disaffected politicians
might defect, and.the fear of the
increasing strength of the Commu-
nist-front United Democratic Left
(EDA).
PROGRESSIVE AGRARIAN
DEMOCRATIC UNION (PADE)
DEMOCRATIC UNION (DE)
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2 October 1958
The premier has the sup-
port of the monarchy, and Greeks
generally believe he also enjoys
the backing of the United States
He has often threatened to re-
sign and has actually taken
steps to do so on several occa-
sions during the recurrent
crises over Cyprus. A further
deterioration in the Cyprus
situation--particularly if com-
bined with publicly proclaimed
American support for the Brit-
ish--could cause him to insist
that the King accept his resig-
nation.
The major opposition to
Karamanlis is furnished by EDA,
the legal front for the out-
lawed Communist party of Greece
(KKE). While EDA has the back-
ing of international Communism,
it also has the support of many
non-Communists. Its figurehead
chairman, John Passalides, is
apparently a left-wing social-
ist. EDA, as a tactical move
to attract left-of-center sup-
port, espouses a neutralist for-
eign policy and domestic objec-
tives in line with generally
propounded "socialist" aims
rather than openly advocating
out-and-out Communist pol-
icies.
Because of its known con-
nection with the KKR, EDA for
years seemed incapable of gain-
ing more than 15 percent of:the
vote in a national election.
The 25 percent it received in
May 1958, which enlarged its
parliamentary representation from
17 to 79, has caused a general
reappraisal of Greek politics.
While the number of Communist
votes in Greece has grown signif-
icantly in recent years, as shown
in the last election, it is be-
lieved that not more than 15 per-
cent of the EDA vater came from
ideological supporters of the ex-
treme left. The rest of the EDA
vote came from a large and grow-
ing section of the Greek elec-
torate which is dissatisfied with
the economic situation and the
foreign policies of the national-
ist parties.
The non-Communist opposi-
tion parties in Greece were
seriously-weakened in the May
elections. The traditional
centrist pro-Western Liberal par-
ty fell behind EDA in the vote
and had its parliamentary repre-
sentation cut from 67 to 35. A
lack of constructive leadership,
a program not easily differenti-
ated from that of ERE, and a
growing polarization of Greek
politics between the right and
extreme left caused the Liberal
loss.. There is no indication
at present that the Liberals can
regain their former position in
Greece. Their parliamentary
leader, George Papandreou, is
striving without appreciable
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success to unite all national-
ist opposition parties into a
new political party.
Several small parties in
the Chamber of Deputies, al-
though relatively insignificant
in size, contain ambitious and
controversial politicians. Of
these, the most vocal is the
brilliant but erratic Spyros
Markezinis, a spokesman for the
Progressive Agrarian Democratic
Union, who considers himself
Greece's "man of destiny."
a a z s, ea o the Agrarian
party, is actively attempting
to keep the Greek rural vote,
a current target of EDA, from
going to the far left.
Karamanlis' major internal
problems are related--the growth
of Communist influence,which in
turn has resulted in part from
the government's failure to
more rapidly develop the economy
of the nation.
Following EDA's success in
the elections, Karamanlis estab-
lished an anti-Communist commit-
tee within the government to
recommend action against the ex-
treme left. A subsequent gov-
ernment campaign to acquaint
the public with EDA's close ties
with the KKE has been accompa-
nied by the arrest of several
EDA leaders and other harassing
tactics. Rumors are increasing
in Athens that EDA will soon be
outlawed.
. Such a move might destroy
EDA as an organization and at
least temporarily crush the
morale of the extreme leftists.
On the other hand, other camou-
flaged left-wing parties would
probably soon arise, while popu-
lar dissatisfaction with the
nationalist parties and support
for EDA's principles would not
be erased.. Possibly anticipat-
ing repressive action, EDA re-
cently created a new left-wing
party--the Democratic Union.
This new party, and others which
are expected to appear, probably
was formed as'a haven for EDA
members when and if the parent
party is proscribed and also
will be used by EDA as a bridge
to the political center.
The armed forces are an
element of stability in Greece,
since their leaders are anti-
Communist and almost universally
loyal to the crown. The Sacred
Bond of Greek Officers (IDEA),
formed during World War II, is
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a secret, ultrapatriotic, and
anti-Communist organization
within the armed forces. IDEA
has been largely quiescent since
1951 but EDA's recent success
at the polls may lead to a re-
vival of IDEA activity. If a
leftist rise to power appeared
imminent, by either legal or
extralegal means, the armed
forces would probably attempt
to establish a right-wing au-
thoritarian regime.
In the economic field,Kara-
manlis has; recently indicated
that he intends to put increased
emphasis on the development of
agriculture--backbone of the
Greek economy. Also, partly to
combat left-wing charges that
the government has failed to
solve economic problems, he
has proposed measures aimed at
slashing imports of luxury
goods, stamping out tax eva-
sion, and ensuring a more
equitable distribution of the
national wealth. The drive to
speed development of the Greek
economy is handicapped by a
lack of available capital, how-
ever, and this largely accounts
for the emphasis in the press
on the need to secure large-
scale West German credits--pres-
ently under discussion in Bonn.
Soviet blandishments in the
economic field have largely
been ignored thus far.
Foreign Problems
Nearly all foreign and do-
mestic issues in Greece are af-
fected by the Cyprus problem.
This highly emotional issue
could result in the govern-
ment's resignation, and both
Communist and nationalist oppo-
sition leaders have vainly
sought to bring this about. The
premier and foreign minister
have long since tired of the
Cyprus controversy and desire a
settlement, but they are forced
by intense Greek nationalism and
the leaders of the Greek Cyp-
riots to take the lead in the
fight against British "colonial-
ism."
The Cyprus problem has at
least temporarily ended Turkish-
Greek collaboration in NATO, has
damaged traditionally friendly
Anglo-Greek relations, and has
caused a steady decline in Amer-
ican prestige in Greece--the
United States being accused of
supporting Britain and Turkey
in the dispute--and has even re-
sulted in recurrent Greek threats
to leave NATO. Greek disillu-
sionment with the West was re-
cently reflected in the UN Gen-
eral Assembly, when the Greek
delegate abstained on the Indian
resolution for Chinese Communist
representation. This indication
of a new "independent" Greek
foreign policy was warmly ap-
plauded by all segments of the
Greek press.
Traditional good relations
between Greece and certain Arab
states, notably the UAR, have
improved during the past two
years. This results partly from
the existence of Greek communi-
ties in the Middle East and the
position of the Greek Orthodox
Church in that area, but is also
based on UAR support for Greece
in the Cyprus dispute. Conse-
quently, when American and Brit-
ish troops were dispatched to
Lebanon and Jordan in July, the
Greek press was nearly unanimous
in criticizing the Western moves,
although the government quietly
cooperated with the United States
by granting facilities for Amer-
ican planes. Many Greek Govern-
ment leaders have expressed the
view that the United States fails
to appreciate Greece's potential
value as a bridge between. the
West and Nasir.
Diplomatic relations with
the Soviet Union are correct but
cool. A recent agreement with
the USSR envisages a large in-
crease in trade between the two
countries, but the level pro-
posed remains a small percent-
age of total Greek foreign trade.
However, in certain products,
such as tobacco, the increased
levels will have an important
economic and political impact.
Moscow's attempts to expand cul-
tural exchanges have recently
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CURRENT INTELLIGENCE WEEKLY SUMMARY
been rebuffed by Athens, which
also took action to reduce the
volume of Soviet propaganda
disseminated in Greece. Never-
theless, the entire Soviet bloc
has backed Greece on the Cyprus
issue, although not as vigorous-
ly as might have been expected.
In light of the supreme impor-
tance of this problem to the
Greek people, the USSR can ex-
ploit this support in an effort
to reduce the traditional ties
of Greece with its Western al-
lies.
FIDEL CASTRO'S "26TH OF JULY" MOVEMENT
Fidel Castro's "26th of
July" movement has in less than
two years become the symbol of
revolutionary opposition to
the regime of Cuban' President
Fulgencio Batista.
As the revolutionary move-
ment has spread and become more
violent, heretofore uncommitted
Cubans have been forced to take
a stand for or against the gov-
ernment, but the bulk of the
population probably still favors
a peaceful transition to con-
stitutional government through
elections. It is more the move-
ment's success than its revolu-
tionary program which has won
it a widely varied following,
including some respected civic,
business, and religious groups.
A good many supporters,
however, would not want to see
Castro become president. De-
spite his frequent statements
to the contrary, Castro is be-
lieved to entertain personal
political ambitions, and many
responsible members of Cuba's
political opposition fear he
could become a more formidable
dictator than Batista.
Organization, Accomplishments
The "26th of July" move-
ment, so called after the date
of an unsuccessful coup in 1953,
is a loose organization nominal-
ly headed by Fidel Castro,'whose
long record of revolutionary
activity and whose penchant for
the dramatic. provide a strong
emotional appeal for Cuban
youth. In practice, Castro
wields direct control only over
the rebels under his command in
the Sierra Maestra of Oriente
Province. Other rebel groups,
such as that under the command
of his brother Raul in eastern-
most Oriente, are at least semi-
autonomous, principally because
of difficult communications.
The Castro movement has
grown from 12 survivors of the
expedition which landed in
Oriente in December 1956 to an
island-wide organization with ef-
fective branches in -several
other American republics. Re-
cent estimates place the number
of armed rebels in Oriente
Province-between 4,000 and 6,000,
with the majority under Raul's
command in the larger "second-
front" area. There are prob-
ably a substantial number of
"part-time" rebels who take up
arms during night raids and
others who could be counted on
to join the movement under con-
ditions of intensified hostili-
ties. A shortage of arms and
other supplies has limited the
size of the fighting force.
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The rebels control, most of
Oriente Province, except the
cities and areas of army con-
centration, and reportedly have
opened "fronts" in Camaguey,
Las Villas, and Pinar del Rio
provinces. One of Fidel Castro's
principal lieutenants has re-
cently moved into Camaguey Pi,ov-
ince with a column of men, in-
dicating that the movement may
attempt to gain control over
Camaguey similar to that exer-
cised in Oriente, The rebels
have demonstrated their ability
to paralyze transportation in
Oriente Province*at will. They
have not, however, shown them-
selves capable of inspiring
spontaneous popular support for
"all-out" offensives and twice
have failed in attempts to call
nationwide general strikes.
An underground organization
of nonfighting members operates
in many cities and carries on
liaison with other opposition
groups, both inside and outside
Cuba, as well as with "26th of
July" groups in exile. Exile
groups are most active in Mexico,
Venezuela, and the United States,
and provide the rebels with im-
portant financial and logistical
support; Smaller groups operate
in other Latin American coun-
tries.
At present the Castro move-
ment is supported by the, major-
ity of opposition groups, both
in Cuba and in exile, although
this unity, as in the case of
earlier movements, could prove
short-lived. The two opposi-
tion political parties which
have offered presidential candi-
dates for the 3 November general
elections--the "autenticos" of
former President Ramon Grau Sari
Martin and the Free People's
party formed in August 1957 and
led by Carlos Marquez Sterling--
have been excluded from the
unity pact and have renounced
revolution as a means of solv-
ing Cuba's political problems.
Support for the rebels also
emanates from such groups as
the Civic Resistance Movement-,
an organization of respected
businessmen-and civic leaders
which has provided important
financial backing. Some indi-
vidual members of the Roman Cath-
olic hierarchy are believed to
support the movement, but the
church itself, although increas-
ingly anti-Batista, has never
indicated a pro-Castro policy
and officially favors a peace-
ful change in government.
Organized labor, although
declaring itself neutral, has
placed itself firmly in Batista's
camp and has endorsed the labor
program offered by the govern-
ment's presidential candidate,
Andres Rivero Aguero.
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