CURRENT INTELLIGENCE WEEKLY SUMMARY

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• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A002000060001-4
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• Document Creation Date: December 20, 2016
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• Publication Date: October 28, 1999
• Content Type: SUMMARY

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0
COW I~ENIINL
r~~eEr
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
COPY NO. 49
OCI No.5646/58
4 December 1958
AUTH: !HR 70-2
DATE:(.~q~i EVYER:
NEXT REVIEW DAT L-
DOCUMM}ENT NO.
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CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
CONFIDENTIAL
RETURN TO ARCRiVE`S ft RECUHUS CENTER
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THIS MATERIAL CONTAINS INFORMATION AFFECT-
ING THE NATIONAL DEFENSE OF THE UNITED STATES
WITHIN THE MEANING OF THE ESPIONAGE LAWS,
TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS-
SION OR REVELATION OF WHICH IN ANY MANNER TO
AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
The Current Intelligence Weekly Summary has been prepared
primarily for the internal use of the Central Intelligence
Agency. It does not represent a complete coverage of all
current situations. Comments and conclusions represent
the immediate appraisal of the Office of Current Intelligence.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
4 December 1958
MIDDLE EAST DEVELOPMENTS
Iraq
Harassment of foreigners
in Iraq, particularly American
and British, continues amid a
general atmosphere of tension.
Further negotiations with the
Iraq Petroleum Company (IPC)
regarding company-government
relations are in prospect, but
the responsible ministers ap-
pear unfamiliar with the tech-
nical aspects and have been
publicly hostile to the company.
Iraqi Foreign Minister Jumard
professes to oppose the more
obvious manifestations of anti-
Western sentiment, such as the
Baghdad press play given to
nonexistent Communist demonstra-
tions against Vice.President
Nixon in London, but Jumard ap-
pears to have little influence.
The political situation
in Khartoum is still unsettled,
but there are some signs that
General Abboud is emerging as
a genuine "strong man." The
cabinet last week approved ac-
ceptance of American economic
aid, curbed pro-UAR newspapers,
and had pro-Communist leaders
arrested. At the same time,
however, the government has
recognized Communist China.
The Egyptian press claims a
new Sudanese offer to negotiate
the Nile waters question will
be forthcoming in a few days.
ments.
yan-American base and aid agree-
Libya
In a measure to increase
the popularity of the govern-
ment and at the same time to
build up pressure on the United
States, Prime Minister Kubaar an-
nounced on 30 November he would
demand renegotiations of the Lib-
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The lifting of martial law
in Jordan this week signified
no real improvement in the se-
curity situation, but was de-
signed to give the government
a psychological boost and to
undercut UAR propaganda refer-
ring to Jordan as a police state.
The legal powers of the Rifai
government to deal summarily
with suspected subversives re-
main unimpaired.
The new rightist-oriented
French National Assembly--sched-
uled for its first legislative
session next April--lacks the
balance of forces Premier de
Gaulle desired, and may serious-
ly curtail his freedom of ma-
neuver in seeking an early so-
lution to France's principal
problem--Algeria. De Gaulle
is expected to be elected presi-
dent on 21 December and to ap-
point a new premier shortly
thereafter. With his prestige
at a new high and his power to
govern by decree extending for
some time, he may try to move
rapidly toward the comparatively
liberal solution he is assumed
to favor.
Information Minister Jacques
Soustelle's Union of the New
Republic (UNR), which has
emerged as the strongest party
in France, will be an unknown
quantity until its real posi-
tion in the assembly and its
degree of cohesiveness are de-
termined. United only by unde-
fined "Gaullism," the UNR is
erEdmond Michelet, to an ex-
treme rightist fringe. The par-
ty apparently has attracted
votes from all parties includ-
ing the Communists and has ab-
sorbed the Poujadist movement
practically entirely.
The election results were
far from a clear mandate for
the integration of Algeria with
France, but they will be inter-
preted as such; De Gaulle's
problem will be to decide how
far he can go in disregarding
this view. Although the UNR
is pledged to support the pre-
mier's policies, Soustelle im-
mediately hailed the election
as a victory for "French Algeria."
This view is presumably shared
by most of the 71 deputies from
Algeria and the Sahara, where
only a few victorious Socialists
in Algeria may deviate from the
prointegration program advocated
by the army and the European
settlers. Most of the 132 In-
dependents, second numerically
in the National Assembly, and
George Bidault's 13-member
actually a heterogeneous group "Christian Democratic" wing of
ranging from completely loyal the Popular Republicans would
Gaullists, typified by cofound- also back integration.
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SECRET
CURRENT. INTELLIGENCE WEEKLY SUMMARY
4 December ? 1958
De Gaulle should be able
to divert some of the national-
istic criticism of any moves
he makes toward a comparatively
liberal Algerian solution by
pushing other programs popular
with the nationalists. These
include his efforts to enhance
France's international prestige
by demanding equality with the
United States and Britain in
coordinating global policies,
to press for a national nuclear-
weapons program, and even to
call for further European in-
tegration under French leader-
ship. De Gaulle can also divide
the rightists on economic and
social policies, since truly
Gaullist elements of the UNR
will be inclined to join forces
with the Socialists and Popular
Republicans on such matters
rather than with the economical-
ly and socially conservative
Independents.
The Socialists, smarting
from their sharp drop in assem-
bly strength, will be strongly
INDEPENDENTS
132
ALGERIAN BLOC
67
inclined to go into opposition,
with an eye.to consolidating
their new position as the domi-
nant parliamentary representa-
tives of the left. Socialist
left-wing elements may press
for close ties with the Commu-
nists in order to constitute
a united left in the assembly.
They will probably agree that
much of the drop in Communist
electoral strength resulted
from abstentions..rather than
from desertions to the right.
The Radicals and the Popu-
lar Republicans will probably
call.on the Socialist party to
keep an open mind on the question
of participation in the govern-
ment. They will be eager to
put forth the left and center
as an alternative to the Inde-
pendents if the UNR shows-any
willingness to make good its pro-
fessed rejection.of the right
ist label. De Gaulle will al-
most certainly prefer this in
order to avoid permitting the 25X1
bloc.
assembly to be dominated by the
UNR'right wing and the Algerian
In further moves to estab-
lish a record which will place
on the West the onus for any
failure to reach agreements,
Soviet bloc delegates in both
Geneva conferences have intro-
duced formal "declarations"
summarizing bloc proposals and
criticizing Western positions.
These declarations, one of which
has already been published, are
further efforts to place the
bloc in the strongest possible
position in the final stage of
the talks and may foreshadow
proposals to raise the talks to
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the foreign minister level. In
his 2 December interview with
Premier Khrushchev, Senator
Humphrey gained the impression
that Moscow is willing to make
some concessions in order to
reach some kind of agreement
for nuclear test cessation.
However, the Soviet leader gave
the impression he does not an-
ticipate agreement on measures
to prevent surprise attack.
Nuclear Test Cessation Talks
On 29 November the Soviet
delegate introduced a declara-
tion stressing the "merits" of
the Soviet position and accusing
the West of evading an agree-
ment by insisting on detailed
discussion of a control system.
After listing four major points
in the Western position which
"cast doubt on the successful
completion" of the talks, the
Soviet declaration stated that
the USSR would not object to
the inclusion of "basic provi-
sions on control" in a treaty
on the cessation of tests.
This ostensible concession was
intended to remove a weak point
in the Soviet position--the
vague relationship between the
Soviet-proposed treaty and a
protocol on controls.
On 1 December the Soviet
delegate clarified the declara-
tion, stating that although he
would prefer to have the treaty
and control provisions embodied
in two separate documents, he
was prepared to accede to West-
ern insistence on one document.
The Soviet delegate objected
to the article in the American
draft agreement requiring the
parties to pledge prompt and
full cooperation with a nuclear
weapons test control organiza-
tion on the grounds that the
American concept would create
an international organization
not under control of the three
nuclear powers.
On 3 December the Soviet
delegate retreated from the
recommendations made by the ex-
perts at Geneva last summer for
a world-wide inspection system,
alleging that the technical
talks at that time did not
examine the question of whether
an "entire" system was needed.
He is now insisting that any
control organization be limited
to the three nuclear powers,
with decisions based on unan-
imous agreement. This, in ef-
fect, would provide Moscow with
a veto over all actions of the
organization.
It is apparent from his
further comments that the Soviet
delegate is particularly in-
terested in his government's
veto power over decisions in-
volving inspection of any sus-
pected violation. He insisted
that inspection be performed
by ad hoc groups formed- only
after receipt of evidence from
which the organization "decides"
there is a "strong suspicion"
of a nuclear explosion. He
then contended that a system
confined to the territorial
possessions of the three nuclear
powers and to the oceans would
be adequate at present, since
this would cover 80 percent of
the territory of the world, and
"100 percent of that of the
nuclear powers."
The agreement to embody
all commitments in one document
is a concession in form only and
does not alter the basic Soviet
position that an agreed draft
of a permanent and unconditional
test cessation agreement with
only the briefest reference to
controls must precede discussion
of the details of the control
system.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Surprise-Attack Talks
On 28 November the Soviet
delegate introduced a declara-
tion which spelled out bloc
proposals linking "concrete
measures" to reduce the danger
of surprise attack with specif-
ic disarmament measures. The
Czech delegate followed with
a draft agreement along the
same lines. Both documents re-
stated with minor variations
long-standing Soviet proposals
for ground control posts and
aerial photography to be ac-
companied by such "concrete"
disarmament measures as reduc-
tion of foreign forces in
Europe by one third and denucle-
arization of both parts of
Germany.
For the first time, Moscow
set forth its views on the num-
ber and general location of
control posts at railroad junc-
tions, major ports, and high-
ways. According to the decla-
ration, 28 control posts should
be located on the territories
of members of the Warsaw Treaty,
including six in the USSR, and
54 posts in NATO and Baghdad
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Pact countries, including six
in the United States. These
totals were said to be based
on the density of population
and communications networks.
In addition to Moscow's
standard proposal for aerial
photography in a zone 500 miles
on either side of the demarca-
tion line in Europe, the Geneva
declaration for the first time
extended aerial inspection to
Greece, Turkey, Iran, Japan,
and Okinawa. Aerial inspec-
tion zones in the Soviet Far
East and the western United
States were made conditional
on the establishment of both
ground control posts and aerial
photography zones in Europe
and the Middle East.
This omnibus plan linking
inspection systems with specific
disarmament steps is designed
to sharpen the contrast between
the bloc's demand for "practical"
measures to prevent surprise
attack with Western insistence
on a careful technical study of 25X1
the problem, avoiding political
issues posed by the Soviet dis-
armament proposals.
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CONFIDENTIAL
CURRENT INTELLIGENCE WEEKLY SUMMARY
4 December 1958
NOTES AND COMMENTS
AFRO-ASIAN ECONOMIC CONFERENCE
The widely heralded Afro-
Asian Economic Conference, to
be held in Cairo from 8 to 11
December, will provide a major
forum for Soviet and Egyptian
anti-Western propaganda. Al-
though the purpose of the meet-
ing is to search for ways to in-
crease foreign trade and eco-
nomic cooperation among Asian-
African countries, significant
progress along these lines ap-
pears unlikely. The Soviet Un-
ion probably will use the con-
ference to reiterate its pledge,
"tell us what you need, we can
help you," which was given at
the Afro-Asian Solidarity Con-
ference held in Cairo last year.
Moscow. probably will attempt to
gain maximum benefit from its
Aswan High Dam aid agreement.
UAR leaders have expressed
concern over what they describe
as the eventual "evils" of the
European Common Market. Nasir
believes the Common Market will
result in discrimination against
Egyptian goods and higher prices
for European goods. The UAR
leaders may therefore attempt to
push plans for an Arab "common
market" scheme to counter alleged
Western economic imperialism.
Iraq, which in previous
Arab meetings has been a restrain-
ing influence on such Egyptian
maneuvers, reportedly will rec-
ommend the creation of a "big
Asian-African economic organiza-
tion" which would establish trade
centers for principal products
of the area. Baghdad has al-
ready called for the establish-
ment of a rice center in Commu-
nist China and a cotton center
in Egypt.
While Cairo claims that in-
vitations have been sent to "194
economic organizations in 101
Afro-Asian countries," a sub-
stantially smaller number of
countries are likely to be rep-
resented. Communist China, Mon-
golia, North Vietnam, North Ko-
rea, and the Soviet Union will-
send delegates. Although many
countries are sending legitimate
Chamber of Commerce representa-
tives, the meeting will be domi-
nated by Egyptians, Russians,
and fellow travelers.
Because the problems of
establishing meaningful rela-
tionships among these underde-
veloped areas are so complex,
the conference probably will
concentrate on setting up perma-
nent planning bodies rather than
announcing immediate solutions.
These study groups, however,
should provide still another ve-
hicle for the extension of So-
viet and Egyptian influence
throughout Asia and Africa.
AFRICA AND THE EUROPEAN ECONOMIC COMMUNITY
The current visit to Afri-
ca's east coast of a delegation
from the Commission of the Euro-
pean Economic Community (EEC)
could be significant for Western
Europe's future relations with
the African continent as a whole.
The mission, headed by Director
General for Overseas Territories
Helmut Allardt, will be the first
real sounding of local sentiment
toward the EEC in Madagascar,
Somalia, and French Somaliland,
which were among those colonial
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PART II NOTES AND COMMENTS
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CURRENT INTELLIGENCE 'WEEKLY -SUMMARY
4 December 1958
and trust territo-
ries associated with
the Common Market
in keeping with the
Eurafrican concept.
When the idea
of European-African
cooperation was in-
itially advanced by
the French in 1956,
it was greeted with
great reserve by the
other EEC members,
but it has become
more acceptable as
the EEC itself has
increased in stature.
Allardt and others
on the commission
staff are effective
advocates of a
"European effort" to
secure an economic
hegemony in Africa
not based on preser-
vation of the polit-
cal status quo. They
believe the EEC's oww-
seas development fund
of $581,000,000 may
be an effective weap-
on in achieving this
objective. Some
members of the Euro-
pean Parliamentary
Assembly who fear
Soviet gains from
S K DENMA
T ~N ET
~1 [
Flome\
!A/lIN1 l 1 ,14- 25 V.
IT
0 Eurafrica (African areas associated
with the European Economic Community)
associate Morocco, Tunisia, and Libya with
the Economic Community. (The following
non-African territories have been associated
with the Economic Community or will be the
subject of further negotiations to that end:
St. Pierre and Miquelon
New Caledonia and dependencies
French settlements in Oceania
French Antarctic Territories
Dutch New Guinea, Surinam and
the'Dutch West Indies)
the dissolution of colonial ties
support this thesis and have
pressed the commission to assert
an "independent position."
Problems arising from
Guinea's rejection of the new
French constitution have added
a note of urgency to these pleas
for a "European" policy. The
commission, anxious to establish
the principle that association
with the EEC does not depend on
membership in the French commu-
nity, believes a campaign to win
African confidence would be off
to a poor start if cooperation is
ruled out with one of the first
African states to obtain inde-
pendence after formation of the
AND
N YAS ALA ND
Common Market. This thesis has
not yet been accepted in Paris,
but Allardt feels sufficiently
strongly about it to postpone
his trip to western Africa rather
than go there without stopping
in Guinea.
The unresolved conflict
over Guinea points up both the
delicacy and the importance of
the EEC's position. The com-
mission's efforts to establish
itself in Africa as a separate
entity representing the six-
nation community could aggra-
vate the colonial problems of
France and Belgium, and, in the
event of conflict, the com-
mission's influence among
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PART II NOTES AND COMUENTS
FRENC
EQUAT.
AFRICA
AMEROUI/
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Common Market members might
be jeopardized. On the other
hand, a position of relative in-
dependence is probably essential
if the EEC is to gain wide-
spread acceptance in Africa
and develop as an important
funnel for Western economic
and technical assistance to the
Africans.
PAKISTANI REGIME BEGINNING TO IMPLEMENT REFORMS
Pakistan's military regime
has begun to implement its prom-
ises of political and economic
reform. The government's pres-
tige depends largely on its
ability to provide the country
with substantial evidence of
progress, particularly in agri-
culture. It is already encoun-
tering opposition from large
landowners and the business
community.
Politically, the new regime
has consolidated its control of
the government and withdrawn the
army from most local martial-law
administration. Among its many
new measures, it has delegated
extensive administrative author-
ity to government units below
the provincial level, apparently
to forestall renewed demands for
provincial autonomy,- along lin-
guistic lines. It has also taken
strong measures to eliminate
corruption in public and business
life.
To strengthen the economy,
highest priority apparently is
being given to raising agricul-
tural production. However, gov-
ernment land reform proposals
may have important political re-
percussions if they threaten the
position of the powerful land-
lord class. Owners of large
estates are already trying to
obtain the highest possible com-
pensation for lands they may
lose. Plans being prepared by
the Land Reforms Commission to
prevent uneconomic fragmenta-
tion of productive lands are
being attacked as "un-Islamic"
because they contravene Islamic
inheritance laws. In the face
of this opposition, the reforms
finally implemented by the gov-
ernment may be less substantial
than originally hoped.
Although the public has
welcomed the regime's initial
efforts to reduce prices, the
Planning Commission and some
civilian government officials
are emphasizing the dangers of
the regime's price-control pro-
posals. These, they hold, may
destroy the incentive of pro-
ducers and discourage badly need-
ed new investment.
Should the army submit
to pressures from large land-
owners and industrialists and
modify previously announced
policies, popular disillusion-
ment could build up rapidly and
weaken the government's position.
In addition to its econom-
ic and political activities,
the military regime is pressing
for further modernization of
Pakistan's armed forces. Prob-
ably partly to test Western
attitudes toward the new regime
and American intentions regarding
future military aid, Ayub's
government has requested F-100
fighters from the United States
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CURRENT INTELLIGENCE WEEKLY SUMMARY
The five-party coalition
government of Karl August Fag-
erholm resigned on 4 December
as a result of Soviet pressure.
Moscow intensified its
two-month-old campaign against
Finland last week by canceling
orders from several large Fin-
nish firms and by refusing re-
quests for additional shipments
of crude oil. The Finns, in an
effort to reduce this year's
trade imbalance with the USSR,
had attempted to purchase So-
viet oil for stockpiling--a
measure which would only tem-
porarily have alleviated the
large trade credit balance now
held by Finland. By its re-
fusal, Moscow is seeking a
firmer orientation of Finland's
trade with the USSR. Cancel-
lation of orders and postpone-
ment of advance payments total
nearly $6,000,000, according
to the Finnish Foreign Ministry.
As a result, unemployment has
been increasing sharply.
Fagerholm quit following
the resignation of the five
Agrarian cabinet ministers.
The Agrarian party leaders have
been insisting on the necessity
of thoroughgoing changes. Un-
til a new government is formed,
Prime Minister Fagerhoim will
also act as foreign minister.
In his search for a gov-
ernment with which the USSR X11_
deal, President Kekko-
nen is'said to favor
one composed of all
non-Communist par-
ties but the "regu-
lar" Social Demo-
crats, some of whose
leaders are particu-
larly disliked by
the USSR. The regu-
lar Social Democrats
would be replaced by
the opposition Social
Democrats, who were
expelled from the par-
ty on 29 November.
This formalization of the
split in the Social Democratic
party will have widespread
political repercussions and
could lead to Communist domi-
nation of the Finnish trade
union movement through a paral-
lel split in the Confederation
of Labor (SAK). The opposi-
tion Social Democrats control
SAK, but the regular Social
Democrats have already formed
a rival organization--the
"Joint Organization of Trade
Unions."
Kekkonen and the other
Finnish leaders probably
hope to satisfy the USSR
without including the Com-
munist-front Finnish People's
Democratic League (SKDL)
in the cabinet. The possi-
bility of SKDL's partici-
pation in the next govern-
ment, however, cannot be
excluded. Pravda has quoted
the Finnish Communist press
to the effect that only
the formation of a govern-
ment based on "the working
class" could solve Finnish
economic problems and in-
crease trade with the USSR.
The Communists are now in
their strongest position
since 1948 to demand in-
clusion in the government
and are organizing a mass
demonstration on 9 December
to press their demands.
(Concurred in by ORR)
FINNISH DIET
200 SEATS JULY 1958 QUADRENNIAL ELECTIONS
GOVERNMENT COALITION
1FNTFR /:ENTER
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CURRENT INTELLIGENCE WEEKLY SUMMARY
4 December 1958
BULGARIA'S NEW ECONOMIC PROGRAM
Bulgarian party chief Zhiv-
kov, speaking at the central
committee plenum last month,
called for a"great leap for-
ward" in economic development,
making even more unrealistic
demands on agriculture than
the decision in October to ful-
fill the present five-year plan
(1958-62) ahead of schedule.
The primary means to be
employed for reaching the new
targets--mobilization of the
masses, day and night operation
of equipment, and economies in
the use of raw materials--sug-
gest that the concept of a "leap'
forward" will be used propagan-
distically to wring the maximum
output from production facili-
ties. Although using Chinese
Communist terminology, the ap-
peal is probably inspired by
the USSR's recently published
Seven-Year Plan. In presenting
this plan Khrushchev pointed
out that the next few years
will be decisive in the strug-
gle between Communism and capi-
talism.
The Bulgarians are proud
their steadfast adherence to
orthodox methods has brought
acknowledgment in bloc publi-
cations that their country is
the most advanced of the "peo-
ple's democracies" in "building
socialism,"and they have clearly
taken a cue from Khrushchev's
prediction and have launched
an ambitious program of their
own in order to retain their
leading position.
Zhivkov calls on agricul-
ture to double 1958 production
next year and triple`it in 1960,
an apparently impossible achieve-
ment. In recent years, gross
agricultural output has de-
creased from the previous year's
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NOTES AND COMMENTS
Page 5 of 11
level as often as it has risen,
and the five-year plan scheduled
only a 35-percent increase.
The agricultural sector is
to concentrate on irrigation,
other land improvements, and
construction--relying heavily
on the labor and means of the
collective farms, which are ,
now being enlarged by mergers.
These mergers apparently entail
the transfer of some production
activities of the villages to
the enlarged farms in order to
process part of the produce on
the spot. The mergers,; will
necessitate a reorganization of
district party organs, and the
Bulgarian press has stated
there will be only one village
council for each enlarged farm.
Citing Chinese Communist ex-
perience, Zhivkov has said that
experimental plots will be en-
couraged on the enlarged farms.
Capital investment for
food and light industries rath-
er than for heavy industry is
emphasized because of the huge
production increases expected
from agriculture and because
such investment will have an
immediate economic effect.
Present plans for heavy in-
dustry apparently are not being
scrapped. Zhivkov cites various
methods by which industrial,
construction, and transportation
performances can be improved,
including reduction of all non-
essential imports and the use
of substitutes, introduction
of additional shifts and as-
sembly-line methods, and more
technical training for workers.
Bulgaria has many unem-
ployed, and labor heads the
list of reserves on which the
economy will draw in its "leap
forward." Men under 50, women
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 December 1958
under 45, and government and
party workers are to give from
30 to 40 voluntary workdays in
production annually. Even cen-
tral committee members are in-
cluded under the motto: "Let
out leaders step in the mud a
little."
While 1962 industrial tar-
gets could be achieved in 1960
at the present rate of growth,
none of the methods outlined
by Zhivkov, can bring about
the huge rise in agricultural
output demanded.
(Prepared by ORR)
COMMUNIST CHINA'S DRIVE FOR MORE
Peiping -ha9?-- t'sing3ed out
the iron and steel industry for
special emphasis in its "giant
leap forward." Tens of mil-
lions of workers have been mo-
bilized in an intensive program
to double production this year
by turning out 17,000,000 tons
of pig iron and 10,700,000 tons
of steel. A substan-
tial portion of the
expected increase-is
to come from the num-
erous small iron and
steel installations.
recently set up in
the countryside. The
goals are likely to
be achieved, but the
product will probably
be of substandard and
uneven quality and of
questionable utility.
The campaign to
increase production
of iron and steel--
unusual even in.Com-
munist China, where
a mass campaign of
some type is almost
always under way--
has received a tre-
mendous amount of at-
tention and "every-
one," from Madame
Sun Yat-sen to the
ordinary peasant has
been engaged in
making iron and steel
"in his spare time." Hundreds
of thousands of small, locally
operated blast furnaces have
sprung up during the past few
months. Development of the
three large modern centers at
Anshan, Wuhan, and Paotow has
been stepped up, and work is
proceeding on a number of
MALL IRON SMELTING FURNACES IN SINKIANG
AND SZECHWAN PROVINCES
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CURRENT INTELLIGENCE WEEKLY SUMMARY
C . COMMUNIST RON&S"" PRODUCTION
Po IRON
into steel because of
excessive impurities.
The utility of
the steel is impaired
because the form and
shape in which it is
cast is probably often
not suitable for proc-
essing in a rolling
mill. The use to
which such a product
can be put would there-
fore be limited to
smaller, relatively modern
plants.
The program, which began
in earnest only last summer,
seems to have been one of im-
provisation with little advance
planning. Production of pig
iron was stressed almost exclu-
sively at first. Peiping then
took up the problem of making
good steel from the varied
quality of pig iron and is now
beginning to turn its attention
to providing finishing capacity
for steel. One of the major
problems connected with the
small-plant approach to iron
production lies in the varia-
tions in quality; much pig iron
is unsuitable for conversion
blacksmith forging in-
to simple tools or
for smelting for the producti:>>i
of ingots or castings in larger
plants. The movement just get-
ting under way for consolidating
the thousands of small facilities
into larger, more efficient units
is, in part, a result of this
problem.
In addition to the benefit
from the extra production, Pei-
ping also stands to gain from
the propaganda impact at home
and abroad, particularly in under-
developed areas. The Indian
Government, for example, is plan-
ning to send a delegation to 25X1
study the new Chinese iron
and steel program.
(Prepared by ORR)
North wean Premier Kim
Il-sung is coiipleting the last
leg of a good-will tour of Com-
munist China and North Vietnam.
He is accompanied by Vice Premier
Pak Chong-ae, Foreign Minister Nam
II, and Education-Culture Minis-
ter Yi Il-kyong. Minister of Na-
tional Defense Kim Kwang-hyop
heads a "military good-will mis-
Kim set the tone for his
public statements in China in
a speech at the Manchurian bor-
der city of Antung by referring
to "sharing the bitter with the
sweet in the war against the
American imperialists" and to
"friendship and unity sealed with
blood."
sion" which left Pyongyang on ! Following a "tumultuous but
21 November on the same train conventional good-will visit to
and apparently is accompanying Peiping, a top-level meeting of
the premier's delegation. Chinese Communists and North
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Koreans took place on 26 Novem-
year. This
trip,
Kim's first
ber at Wuhan. The New China
to Hanoi,
parallels the re-
News Agency dispatch on the
cent visit
of
South Korean
meeting was limited to a state-
President
Rhee
to South
ment that Mao Tse-tung, Liu
Vietnam.
Shao-chi, Chou En-lai, Teng
Hsiao-ping, and Chu Te were the
Chinese representatives. No
mention was made of the topics
discussed. Participation by
senior policy and ideological
authorities emphasizes the im-
portance attached by both par-
ties to the meeting.
Discussions there probably
involved further efforts to ad-
vance the Ccufimunist program Por
the unification of Korea and a
coordination of policy positi _l_J
on "other divided areas" in
Far East. Relations with Ja.:,aa
and joint action to further the
objective of an American disen-
gagement in the western Pacific
may also have been covered, as
well as such topics as increased
Chinese economic assistance to
North Korea and the ideological
impact of the commune program
on Asian Communism.
After leaving truhan, Kim
went to Hanoi, returning Ho
Chi Minh's state visit of last
A joint communiqud is-
sued on 1 December at the
conclusion of the talks in
Hanoi scored the US for
maintaining military bases
in the Far East and de-
manded the withdrawal of
all foreign troops from
the territory of other na-
tions. Unification of both
Korea and Vietnam was pro-
claimed a common concern,
although a clear distinction
was made in the solutions
to be sought. Korean uni-
fication is to be an in-
ternal matter "to be set-
11.1
MALAYA
Kim II-sung's Tour,
Peiping d'~?.........
* Antung
Pyongyang
SOUTH
KOREA
tied by the Korean people
themselves"; Vietnam must be
reunited in "conformity with
the Geneva agreement."
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PART II NOTES AND COMMENTS
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Thie widening breach between
Thailand and Cambodia threatens
to undermine Western efforts to
advance regional cooperation
aimed at thwarting Communist ex-
pansionism-in Southeast Asia.
If relations between the two
countries' continue to deterio-
rate,. Cambodian Premier Sihanouk
may turn to Communist China for
support as he did last summer
during his border dispute with
South Vietnam.
Sihanouk is surprised by
the furor created by his suspen+-
sion last week .of relations with
Bangkok over ?oritical tt*ms~ :
the Thai press... He :now ap-
pears anxious to patch up the
quarrel. The ruling Thai mili-
tary group, however, apparently
wanting to keep the issue alive
for domestic political purposes,
has stiffened its requirements
for.:.a .restoration of relations.
In addition, Thailand is con-
sidering submitting the dispute
to the UN Security Council. Cam-
bodia has already circulated a
letter of protest at the UN
charging that Thailand's activi-
ties are "a threat to the peace
These developments preclude an
early settlement of differences
between the two countries.
The disposition of Thai
leaders to ascribe Cambodia's
actions to Communist influence
or pressure increases the like-
lihood that Sihanouk will charge
Thailand with acting under "SEATO
instructions" to overthrow his
neutralist regime. Rumors of
American complicity with Thai-
.,land in the present crisis are
already current in Cambodian of-
ficial circles. Should Thailand
use its American-trained forces
ia..:border reprisals against Cam-
'bodia's detention of 32 Thai na-
tionals--as is being urged by
some Thai military leaders--Siha-
nouk might feel driven to seek
military equipment from Peiping.
The Laotian Government is
in the initial phase of a pro-
gram of administrative and se-
curity reforms designed to re-
store public confidence and
check Communist expansion in
the rural areas. A sweeping
monetary reform has been fol-
lowed by an extensive shifting
of inept or corrupt administra-
tive officials. More effective
patrolling by the Laotian Army
has reassured villagers in some
areas of the government's abili-
ty to protect them from repris-
als by the Communist-dominated
Neo Lao Hak Zat (NLHZ) party.
In several provinces heavily
infested by the NL,H?y military of-
f icers have been appointed deputy
governors in order to ensure ef-
fective army security measures.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
4 December 1958
These first stirrings of
a positive government program
are threatened by displaced
conservative politicians,: who
continue to harass the govern-
ment in the hope of recovering
former positions of influence
now held by young reformist
leaders in the cabinet. It is
possible these individuals will
use the special session of the
National Assembly in January as
an opportunity to overthrow the
government. Phoui is searching
for some means to mollify them,
perhaps by expanding his cabi-
net or by creating suitable gov-
ernment sinecures.
Revulsion against the nar-
row opportunism of conservative
deputies runs strong along the
reform axis of Laotian politics
the Crown, the army, and the
reformist Committee for the De-
fense of the National Interest
(CDNI). The parliamentary sys-
tem has become increasingly dis-
credited,
THE SITUATION IN CUBA
The Batista government in
Cuba, which announced new ar-
rests of disaffected army offi-
cers last week, is in a more
precarious position than at any
time since Fidel Castro landed
on Cuba's southeastern coast
two years ago.
Rebel forces, now estimated
at more than 8,000, virtually
control Oriente Province, Cuba's
largest and most populous prov-
ince, and sabotage and harass-
ment activities in three other
provinces have increased. Al-
though the Cuban Army retains
possession of the major cities
in Oriente, it has been unable
to break rebel blockades which
have cut off Santiago, Guantana-
mo City, and other cities, or
to prevent the rebels from dis-
rupting transportation and com-
munications in the eastern half
of the island. Provisions are
in short supply in many locali-
ties.
The rebel drive is serious-
ly endangering Cuba's hitherto
prosperous economy. Rebel ac-
tivities have interfered with
the coffee harvest and will
probably hinder the sugar har-
vest scheduled to begin in a
few weeks. The disruption of
transportation has already caused
heavy losses by preventing the
shipment of products to domes-
tic markets. Rebel activities
have forced several companies,
including some US owned, to cur-
tail operations or to shut down,
and unemployment,:,patticularly
in Santiago, is becoming a seri-
ous problem.
Heavy government expendi-
tures to support the campaign
against the rebels are also be-
coming a drain on the economy.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
The prolonged political insta-
bility has had an adverse ef-
fect on both trade and tourism,
causing unrest within business
and commercial circles.
The deterioration of the
economy and the government's
failure to stem the Castro re-
bellion are causing serious dis-
affection in the armed'forces.
Some sen or officers
are believed to be considering
a move with civilian coopera-
tion to establish a military
junta which would attempt to 25X1
negotiate a truce with the rebel
movement.
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CONFIDENTIAL
PARTY PROBLEMS IN THE POLISH COUNTRYSIDE
Two years after his return
to power in Poland, Wladyslaw
Gomulka still.lacks=?fu'lll control
over portions of the party ap-
paratus, especially at the
grass-roots level. This has
been one of the more serious
hindrances to his program
for the development of "social-
ism" in Poland. Local party
functionaries--mostly appointed
by the Stalinist Bierut regimeand
still sympathetic to its prin-
ciples--exhibit a guarded hos-
tility toward Gomulka. Some of
them are able to hamper his
program, and most remain a po-
tential danger to his author-
ity. Despite his efforts since
October 1956, he has not yet
succeeded in winning over these
hostile bureaucrats or in re-
placing them with men loyal to
him.
Most lower- and middle-
echelon party functionaries in
the provinces apparently ex-
pected Gomulka's tenure as
party leader to be a short one.
In order to be on the safe side
if a change should occur, many
of them preferred not to become
too closely identified with
him. Furthermore, their sense
of security in following such
a course was bolstered by Go-
mulka's disavowal of tough
Stalinist measures to compel
compliance with his program.
The fact that Gomulka had long
been out of contact with the
party and did not know most of
the middle- and lower-level of-
ficials, nor they him, also
made his problem more diffi-
cult.
Period Since October 1956
Since October 1956 the
local organizations of the Po-
lish United Workers (Communist)
party (PZPR) have virtually
disintegrated as effective or-
gans of control. Gomulka was
so engrossed with pressing high-
level problems involving the
very survival of his regime, in
the face of attacks by the
Soviet-backed elements of the
PZPR, he had little opportunity
to devote attention to the party
organization in the countryside.
Some of the changes which
Gomulka himself introduced
tended to reduce still further
the effectiveness of local party
bodies. In an effort to cut
costs and rid the party of some
of the top-heavy bureaucracy
which had grown up under the
former leaders, Gomulka decreed
a sharp reduction in the number
of paid party workers. In many
instances the abler party workers
at the lower levels lost their
jobs, while the entrenched bu-
reaucrats higher in the PZPR
hierarchy were able to retain
theirs. The loss of police
power also proved to be a great
handicap to the party apparatus
in rural areas.
The populace in rural areas,
which never had much respect for
the average party functionary,
soon came to ignore the activ-
ists and treat them as having
virtually no authority. Go-
mulka's disavowal of forced
collectivization and the sub-
sequent dissolution of most
collective farms encouraged the
Polish peasant's individualism
and traditional disrespect for
authority.
In addition to the weak-
nesses deriving from these fac-
tors, party authority in rural
areas was further weakened by
the elimination of the "nomen-
clatural' privilege, which had
permitted party secretaries at
all levels to approve candidates
for specific civil, commercial,
and industrial positions. At
provincial and lower levels this
authority was transferred to
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CURRENT INTELLIGENCE WEEKLY SUMMARY
4 December 1958
local government officials, thus
increasing their prestige and
power at the expense of the
party functionaries.
The relatively free elec-
tions of January 1957 in which
strong identification with the
party frequently proved a handi-
cap, swept into office substan-
tial numbers of people who had
rather tenuous ties with the
PZPR and even a number of non-
party individuals. The local
party secretaries found they
could not depend on the newly
elected to reward loyal PZPR
activists with the good jobs,
so later that year a limited
"nomenclatural' privilege was
restored to party secretaries.
The power of party secretaries
has since increased to some de-
gree, but they have not regained
their former authority.
The period immediately
following October 1956 also
brought a significant revival
of the old United Peasant party
(ZSL) and the beginning of-a
new struggle between it and the
PZPR for dominance in the coun-
tryside. Farmers now felt free
to express a preference for the
ZSL and to reject the efforts
of the PZPR activists to induce
them to follow Communist direc-
tives, a situation contributing
further to the party bureau-
cracy's weakness and lack of
influence.
The chaotic situation re-
sulting from the lowered morale,
power, and prestige of the local
(PZPR) organizations led to a
clamor by provincial officials
for aid from the party's na-
tional headquarters. The of-
ficials repeatedly asked the
central committee for more
trained personnel, but, because
of the economy measures under-
taken by Gomulka, few paid ac-
tivists could be added to the
party payroll. Party funds had
been cut sharply because of the
large number of Communists not
paying their dues following Oc-
tober. Even after a measure of
party discipline had been re-
stored in the early months of
1958, it was reported that not
more than 50 percent of the mem-
bers were paying their full dues.
Problems of Rebuilding
Although Gomulka has demon-
strated remarkable political
skill in rebuilding the Polish
party from its state of near
dissolution two years ago, his
inability to reorganize the en-
tire party into a cohesive unit
responsive to his will remains
a potential threat to his po-
sition. No matter how firm his
control may be at the top, he
must depend on the large number
of officials at the grass roots
to translate party orders into
action. This remains Gomulka's
most pressing problem, since he
has for the most part succeeded
in gaining control of the party
apparatus at the national and
provincial levels.
Gomulka has Kilrays, been
reluctant to unleash a Stalinist
"witch hunt." Nevertheless he
has carried out a quiet purge
of antagonistic and poorly quali-
fied party functionaries, and
he has succeeded in weeding out
many incompetents and unreli
abler without fuss on fanfare
He has consistently refused to
be stampeded into rash actions
in this direction lest they in-
crease his problems instead of
solving them.
Many doctrinaire Stalinist
holdovers are especially opposed
to Gomulka's agricultural poli-
cies. The collective farm is
an instrument of political con-
trol as well as a unit of pro-
duction, and the Stalinists con-
sidered Gomulka's action in per-
mitting the dissolution of the
collective farms "a return to
capitalism" and an ideological
heresy. Gomulka has always
maintained that the "socializa-
tion" of agriculture., is 'the
basic goal of the PZPRl.'ind
has said that capitalism In
the countryside is incompatible
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CURRENT INTELLIGENCE WEEKLY SUMMARY
4 December 1958
with socialism in the cities.
He differs with his opponents,
however, on the pace and the
methods to be employed. He
claims the old coercive meas-
ures, which aimed at rapid col-
lectivization, were harmful and
caused peasant hostility to the
party, as well as low produc-
tivity of the socialized sector
of Polish agriculture.
an integral part of life for
millions of Poles and that an
all-out war against the church
would result in a Pyrrhic vic-
tory at best.
Gomulka has been adamant
in his position that the prin-
ciple of voluntary acceptance
of socialization in the coun-
tryside must be strictly ob-
served. He advocates a pro-
gram of education aimed at con-
vincing farmers of the advan-
tages of collectivization, and
state aid to existing collec-
tives in order to enable them
to modernize their facilities
and surpass the productivity
of private farms. To further
this objective, Gomulka has
urged that successful and re-
spected peasants be recruited
as party activists.
Old-line party function-
aries in rural areas are dis-
gruntled because Gomulka made
a truce with the church which
permitted it a greater measure
of freedom than it enjoyed un-
der the Bierut regime. They
consider the church agreement
one of Gomulka's greatest back-
ward steps, for now the village
priest has again become more
powerful than the local Commu-
nist party official. The
priest's influence in Catholic
Poland, and especially in rural
areas, extends far beyond reli-
gious matters, permeating so-
cial, political, and economic
life as well.
Gomulka too would like to
curb the power of parish priests.
He has several times character-
ized the political activities
of the clergy in the country-
side as a serious problem to
be overcome by the party. Go-
mulka hopes to accomplish his
aims gradually through subtle
rather than harsh tactics and
without provoking trouble. He
realizes that Catholicism is
Gomulka today probably is
more popular among the peasants
than with any other group in
Poland, largely because of his
liberal policies toward agri-
culture and the church. At the
same time, the PZPR is weakest
in the countryside and has lit-
tle following among the peasants,
who in their political thinking
tend to separate Gomulka from
his party.
In meeting the formidable
task of revitalizing the party
in rural areas, Gomulka will
probably follow a policy of try-
ing to bring into positions of
authority able men who are loyal
to him and at the same time have
some standing with the people.
Few people meet these require-
ments, however.
Revitalizing the Party
One of the most important
innovations introduced by Go-
mulka to combat demoralization
and to revitalize the party at
the lower levels was the crea-
tion of "problem commissions"
by the local first secretaries
to solve various problems faced
by the organization. "Volun-
teers" from the party ranks
would be named for the commis-
sion at a party meeting, and
the group thus formed would be
assigned to work with a full-
time party official. The compo-
sition of these commissions was
arranged so that no one ever
worked on a problem involving
his own area of responsibility.
Since most problems arose in
the fields of propaganda, party
education, and discipline, most
commissions worked with party
officials responsible for these
activities.
Through the use of the
Problem Commissions, the local
party organization was able to
get much of its work performed
by unpaid party activists under
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CURRENT INTELLIGENCE WEEKLY SIIMMY
4 December 1958
the supervision of a full-time
party functionary. While the
problem commissions frequently
were able to shore up the shaky
local party apparatus, they
did not necessarily strengthen
Gomulka's control at the lower
levels.
The "verification" of
party membership, ordered by
the 10th plenum in October 1957
at Gomulka's behest, was an-
other attempt to restore party
discipline, rid the ranks of
factional and opportunistic
elements, and win better con-
trol of the party apparatus.
Neither politically nor organ-
izationally did it produce all
the results Gomulka hoped for,
however, since the "verifica-
tion" was carried out by the
apparatus itself. For the most
part, those affected were the
most apathetic rank-and-file
members--15 percent of the par-
ty's total membership was
dropped--leaving the hard core
of the local party machines in-
tact.
Party weakness in the
countryside has been an impor-
tant factor in the repeated
postponement of the long-over-
due Third Party Congress, now
scheduled to open on 10 March
1959. Gomulka refused to call
the congress until he consid-
ered his control over the cen-
tral party organization suf-
ficiently strong to enable him
to push through his program.
The first secretary's announce-
ment at the party's 12th cen-
tral committee plenum on Octo-
ber of a date for the congress
reflects his confidence that
he now has this control.
While no drastic moves
against opponents seem likely
between now and the congress,
many Stalinists, opportunists,
and incompetents in the party
apparatus probably will be
quietly replaced with Gomulka
supporters. Gomulka's stra-
tegy appears to be one of
gradually weakening the conser-
vative faction and, whenever
possible, winning over party
bureaucrats instead of assault-
ing his political opponents
frontally. Gomulka would pre-
fer to placate, persuade, and
reassure able party function-
aries and use them for his own
purposes rather than carry out
a drastic purge.
Gomulka is taking no
chances on not having a major-
ity of the delegates to the
party congress on his side.
Delegates are to be chosen by
the party organizations at the
provincial level and in indus-
trial enterprises. By having
delegates elected by higher
level organizations, where he
is strong, instead of at the
lower levels and in the country-
side where his control is weak-
est, Gomulka will assure himself
of a loya l majority at the congress.
Following the election of
a new central committee . by. the
carefully chosen congress,Gomul-
ka will for the first time be in
a position to remake the entire
party apparatus into an instru-
ment responsive to his own ideas
and capable of implementing his
his policies.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
THE POLITICAL POTENTIAL OF ARAB LABOR UNIONS
Arab labor unions operate
predominantly as political,
rather than economic, organiza-
tions, and have been subject to
governmental suppression or
control. Union leaders are
conditioned to political action
because material gains for their
memberships can be achieved
only through bargaining with
and pressure on the governments,
or through labor representation
in the governments. The moti-
vation for strikes has been
political more often than eco-
nomic.
Generally speaking, the
Arab union movements are still
new, loosely organized, and
weak, and their development
varies sharply from country
to country. Their potential
as a real political force stems
from the basic weakness of
other political institutions
and from the chronic instabil-
ity of most Arab governments.
since encouraged their growth
but has made sure at every step
that they remain dependent on
the government and subject to
his orders.
Before the creation of
the UAR last February, the
Syrian unions had some inde-
pendence and a number of pro-
Communist leaders. At Nasir's
instigation, however, several
of the stronger leaders, both
Communist and independent, have
already been ousted. He now
has a program under way for the
gradual federation of the Egyp-
tian and Syrian trade union
movements; he plans an elaborate
new control apparatus to pro-
vide close government super-
vision and direction of union
activities down to the factory
level. Thus the UAR union move-
ment is an asset to Nasir's
political position rather than
a threat.
Arab unions have long been
a primary target for Communist
penetration, and have also be-
come involved in the struggle
between Nasir's pan-Arab nation-
alism and the nationalist move-
ments of other Arab states.
Continuing failure by unstable
Arab governments to take the
forceful measures necessary
to improve economic conditions
will promote tighter cohesion
among workers, further growth
of unions, and an increase in
their inclination and capabil-
ity to participate in anti-
government actions.
United Arab Republic
In Egypt, where the union
movement has been a carefully
controlled creation of the gov-
ernment and is dependent on
government beneficence, union
membership has grown rapidly.
Nasir recognized the potential
of the trade unions early and
used them in his take-over from
Naguib in early 1954. He has
SECRET
The International Confeder-
ation of Arab Trade Unions
(ICATU) was established under
Egyptian aegis in March 1956,
and its purpose is to spread
Nasir's gospel and influence
among trade unionists in other
Arab states and in African
states. In some countries, such
as Lebanon, Jordan, and Iraq,
this effort is a logical ad-
junct of more direct UAR polit-
ical intrigue; in others, where
the governments quickly clamp
down on such political interfer-
ence but are disinclined to take
unpopular measures against labor,
it presents an opening for entry
of the Nasir doctrine.
When the ICATU was founded,
Nasir said it would permit the
trade union federations of the
individual Arab states to belong
to their own "neutral" inter-
national organization, rather
than to either the "imperialist-
controlled" International Con-
federation of Free Trade Unions
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CURRENT INTELLIGENCE WEEKLY SUMMARY
4 December 1958
MOROCCO
9,800,000 P 800,000 M
ALGERIA
9,600,000 P 115,000 M 42 U
TUNISIA
3,800,000 P 230,000 M
LIBYA
1,350,000 P 5,500 M 7 U
SUDAN
10,000,000 P 55,000 M 112 U.
UAR (EGYPT)
23,600,000 P 350,000 M 1,200 U
UAR (SYRIA)
4,150,000 P 40,000 M
LEBANON
1,500.000 P 25,000 M
JORDAN
1,500,000 P 12,000 M
Arab Labor Unions
P Population
M Union membership
u Number of unions
(ICFTU) or the Communist-con-
trolled World Federation of ;Trade
Unions (WFTU). In practice,
however, while many Arab feder-
ations have severed their con-
nections with the pro-Western
ICFTU, the new ICATU has worked
closely with the Communist fed-
eration. The most recent ex-
ample was joint sponsorship by
the ICATU and the WFTU of the
propagandistic meeting in Sep-
tember of "Trade Unionists in
Support of Algeria."
The leadership of the ICATU
has become starkly pro-Communist.
Its Egyptian secretary general,
Fathi Kamel, is reported to be
a party member. Its non-Commu-
nist Syrian president, Subhi
SAUDI ARABIA
7,000,000 P - M - U
KUWAIT
207,000 P - M
QATAR AND TRUCIAL SHEIKDOMS
40,000 P - M - U
MUSCAT AND OMAN
550,000 P - M - U
ADEN
140,000 P 12,000 M
Arab states of North Africa as
an area particularly appro-
priate for such expansion, but
there he must contest with the
aspirations of the General Fed-
eration of Tunisian Workers,
which is trying to form a con-
federation of North African
labor unions independent of
Nasir's influence.
The labor union movement
in Morocco is the largest among
the Arab states, and almost all
members are in unions affiliated
with the Moroccan Labor Union
(UMT) created in 1955 under the
auspices of the ICFTU. The UMT
is becoming increasingly power-
Khatib, has not been present at iful and Marxist. Allied with
recent important meetings and the radical left wing of the
has apparently been quietly eased (ruling Istiglal party, it is
out. Several other members of challenging the power of the
the ICATU executive body have
Communist party records.
King and his moderate government.
In Algeria, union members,
Presently affiliated with 1 predominantly Europeans, Are af-
the ICATU are the big general ` filiated vrith four federations
confederations of both Egypt and which are branches of French
Syria, the Communist-controlled labor groups. The Algerian af-
workers' federation of the Sudan, filiate of the French General
two of the four major federations Confederation of Labor was out-
of Lebanon, the Jordanian Fed- lawed, along with the Algerian
eration of Trade Unions, and the Communist party, in September
one sizable federation of Libya. !1955. The ICFTU-affiliated Gen-
leral Union of Algerian Workers,
Nasir is eager to expand created under the auspices of
the membership to include trade the Algerian National Liberation
union federations of other states Front, which is directing the
in Africa and Asia. He sees the four-year-old rebellion, has
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CURRENT INTELLIGENCE WEEKLY SUMMARY
4 December 1958
probably carried out some clan-
destine operations in Algeria,
but its main activity is out-
side the country and political
in nature. The Syndicalist
Union of Algerian Workers, cre-
ated by the rival nationalist
organization, the Algerian Na-
tional Movement, never estab-
lished a foothold in Algeria,
but claims to have 75,000 dues-
paying members among Algerian
workers in France.
In Tunisia, 98 percent of
Tunisian trade unionists belong
to the General Federation of
Tunisian Workers (UGTT). The
UGTT is an auxiliary organiza-
tion of the Neo-Destour party
and has five posts in the 11-
member cabinet. A small Commu-
nist-directed federation, the
Union of Syndicates of Tunisian
Workers, dissolved itself in
September 1956. The UGTT, hav-
ing aided the formation of
ICFTU affiliates in Morocco and
Algeria, is pressing for the
formation of a North African
trade union confederation.
Three fourths of Libyan
unionists are in unions affili-
ated with the Libyan General
Workers' Union. The port work-
ers of Tripoli have Libya's
best-organized union. The new,
small but rapidly growing Oil
Workers' Union reportedly has
pro-Communist leaders.
The union movement in the
Sudan is more significant than
its small membership would sug-
gest. Members are concentrated
in the key sectors of Sudanese
industry and transport, and pri-
or to the 17 November military
coup, the Sudanese Communist
party controlled the big Rail-
way Workers' Union and the ma-
jor Sudanese Workers' Trade
Union Federation. The new mili-
tary government has begun action
to curtail Communist influence
in the unions, dissolve front
groups, and drive the party
underground.
Iraq
The overtly organized union
movement in Iraq is practically
nonexistent. But because past
Iraqi governments consistently
suppressed regular unions, a
system of covert workers' groups
has sprung up in which the Com-
munist party has played a major
role. The Communists have had
a part in directing organized
activity by the Baghdad tobacco
workers and the Basra oil workers,
but little is known generally
about other workers' groups, ex-
cept that they remained strong
enough, even in the face of
stern reprisals by the Nuri Said
government, to call strikes and
mobilize street demonstrators.
The Nuri Said government's
practice of labeling virtually
all its domestic opponents
Communists and of resorting to
waves of indiscriminate arrests
resulted in a general feeling
among Iraqi workers that the
Communists must be on their side.
The continuing failure of suc-
ceeding Iraqi governments to
improve the lot of the workers
has resulted in an antigovern-
ment bias of long standing. The
return of Communists from exile
and the release of Communist
leaders from prison since Qasim's
coup have permitted an increase
in party activities among Iraqi
workers.
Lebanese trade unions are
well developed, relatively in-
dependent, and basically anti-
Communist. About 90 percent of
the members are in unions affili-
ated with the "big-four" fed-
erations, all of which have non-
Communist leadership. The Com-
munist party controls one tech-
nically illegal federation and
seven or eight small unions.
The union movement is strong
enough to exert considerable
political influence. It has not
done so as yet, primarily because
of wrangling and differing views
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CUIRENT INTELLIGENCE WEEKLY SUlfrCIiARY
4 December 1958
among the leaders of the four
main federations.
Trade unions in Jordan are
heavily concentrated on the west
bank of the Jordan River. Unions
accounting for about half the
total membership are affiliated
in the Jordan Federation of Trade
Unions. King Husayn's government
last year disbanded many of the
unions and ousted both pro-Nasir
and pro-Communist union leaders.
The government has permitted--
and supervised--reorganization
of some of the outlawed unions
and formation of a number of new
ones. As a result, the present
union movement does not appear
strong enough to initiate anti-
governmental political action,
but a well-planned coup to over-
throw Husayn could probably count
on Jordanian unions to furnish
organized support.
able Arab-nationalist and Com-
munist agitation among the oil
workers. In Bahrein, the focal
point for worker agitation was
the Arab-Nationalist, anti-British
Committee of National Unity
(CNU)2 which called 'frequent
strikes and terrorist demonstra-
tions until the government sup-
pressed it and imprisoned its
leaders in late 1956. No force-
ful opposition group has yet
emerged to replace the CNU, but
Egyptian, Iranian, and Saudi
agitators continue to be active
among the workers.
In Saudi Arabia, Yemen,
Oman and Muscat, Qatar, and the
Trucial Sheikdoms, there is lit-
tle industry--except for oil
operations--and no appreciable
workers' movement, organized or
unorganized. In Kuwait and Bah-
rein, there are still no trade
unions, but laws permitting their
organization are being instituted.
In Kuwait, there is consider-
Three fourths of Aden's
union members, including the oil
workers, belong to unions affil-
iated in the Aden Trade Union
Congress. The congress, created
by the British to forestall de-
velopment of a "radical labor
movement," has become a focal
point for Arab nationalism and
anti-British activity. Under
strong influence from Cairo, it
staged general strikes for po-
litical purposec in April and
November of this year. These
strikes, which closed down oil
operations and the bunkering
facilities of one of the world's
most important bunkering ports,
endanger the future value of
Aden as a British military base.
WESTERN EUROPEAN RECESSION AND THE UNDERDEVELOPED COUNTRIES
The continuing mild downturn
in Western Europe's economy has
already caused the curtailment
of imports from the underdevel-
oped primary-producing countries;
and, if the trend intensifies,
it may seriously aggravate the
exporting and foreign exchange
difficulties of those raw-materi-
als producers. Although a seri-
ous recession in Western Europe
is not expected, the continuing
threat to the economic growth of
the underdeveloped countries is
likely to lead many of them to
press for enlarged international
development funds and price sta-
bilization arrangements.
For the first time since
1952, total industrial production
in the second quarter of this
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CURRENT INTELLIGENCE WEEKLY SUMMARY
4 December 1958
year in Western Europe turned
downward--a decline of about 1
percent--following a much re-
tarded rate of growth in 1957.
Subsequent data on various im-
portant industries--for example,
the present moderate decline in
orders for steel products in
France and Britain--suggest that
the total decline for the year
as a whole has been appreciably
larger.
A general decrease in the
demand for resources, both for
internal consumption and for ex-
port, began in the second half
of 1957 and has continued during
1958. Slackened demand is mani-
fested generally in the accumula-
tion of stocks in the coal and
textile industries, which are
unable to compete effectively in
world trade. A moderate slack-
ening of demand in the steel and
metal-fabricating industries is
more significant as it reflects
somewhat reduced investment in
machinery and equipment and the
fact that capacity is catching
up with demand. The present
tendency to reduce industrial
inventories also suggests a pause
in economic growth, which might
become more serious before new
impetus to demand develops.
There has also been a sig-
nificant reduction in employment
levels throughout Western Europe,
although with considerable varia-
tion from country to country.
In Britain, for example, unem-
ployment--2.8 percent of the
COMMODITY PRICE INDEX
1952 =100
81124 2A DECEMBER 1958 25X1
labor force in October--is caus-
ing political concern for almost
the first time since the war.
In West Germany, on the other
hand, renewed expansion in the
building and durable consumer
goods-;industries'has reduced
unemployment-to a new low.
European:Mh?ket?s Sigti ieance
Western Europe's high in-
dustrial development and com-
parative lack of raw materials
make it the most important mar-
ket of the countries producing
raw materials. Although Western
Europe's gross national product
is only 60 percent of that of
the United States, its imports
of raw materials during 1956 were
valued at $12.2 billion, or about
double those of the United States
and Canada.
The coincidence of Europe's
stagnation with the recent US
recession intensifies its impact
on the exports of the countries
producing basic materials. In
contrast with the situation in
1953-54, when Western Europe's
then buoyant economy provided a
strong demand for raw materials
to offset reduced US buying, the
slowdowns in both areas in 1957-
58 largely overlapped, with
Europe's occurring before the
American recovery could exert a
compensatory effect.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Impact in Asia, Latin America
A further downturn in West-
ern Europe's economy, even if
limited, can be expected to have
disproportionately adverse ef-
fects on the economies of the
countries producing raw materi-
als. Reduced marketing of their
products since the third quarter
of 1957 and the general weakness
of commodity prices during the
past two years have already seri-
ously depleted foreign exchange
holdings of most of these coun-
tries and led to financial crises
in many. Mid-1958 reserves of
nonindustrial countries, other
TRADE OF NONINDUSTRIAL COUNTRIES OF FREE WORLD
( BILLION DOLLARS)
The recent resort to emer-
gency foreign financial assist-
ance in Brazil, Colombia, Chile,
Peru, and Bolivia was made nec-
essary mainly by depressed prices
and reduced exports of coffee
and nonferrous metals. Current
foreign exchange difficulties
among all South Asian and Middle
Eastern countries, except Iran,
are caused to a large extent by
rising imports in relation to
exports and worsening terms of
trade accompanying the slack de-
mand for their products by in-
dustrial countries.
Prospects
Reversing the
cliche that "when the
US economy sneezes,
Western Europe catches
pneumonia," OEEC ex-
perts see in the Ameri-
can recovery an impetus
toward renewed expan-
sion in Europe sometime
in 1959. But, since
Western Europe did not
reach its peak of in-
dustrial production
until the first quarter
of this year--about 15
months after the crest
Excludes the United States, Canada, Japan, and the OEEC countries,
as well as the petroleum exporters -Brunei, Sarawak, the Netherlands
Antilles, Venezuela, Trinidad, and the Middle East oil producers.
811242C 4 DECEMBER 1958
than petroleum exporters, were
down nearly $2 billion from a
year and a half earlier.
Payments and reserves dif-
ficulties in Malaya, Ceylon, In-
donesia, and most other free
Asian and Far Eastern countries
are largely attributable to
trade deficits brought on by de-
clines in world prices and mar-
keting of major exports such as
rubber, tin, and tea. India and
Turkey, experiencing internation-
al financial crises brought on
by overambitious development pro-
grams, also face reduced earnings
from exports such as fibers and
chrome.
in the United States--
there may well be a de-
lay of several months
before the upturn is
felt in Western Europe.
Moreover, although the
US upturn began in May,
there has been a considerable de-
lay in the expected increase in
the US demand for imports from
primary producers, as indicated
by a stable level of total com-
modity imports through September.
Countries exporting raw
materials can derive some reas-
surance from an incipient up-
ward trend in world prices for
some of the more important com-
modity exports and from a sharp
rise in October of letters of
credit issued by American banks
to finance increased imports
early in 1959. Nevertheless,
conditions in' Europe, the
major export outlet of the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
4 December 1958
underdeveloped countries may
deteriorate even further before
an upturn occurs.
Most of the underdeveloped
countries, therefore, can be
expected to maintain pressure
for early implementation of
nrooosals to enlarge interna-
PEIPING'S SHIFTING VIEWS ON TRANSITION TO COMMUNISM
Peiping has recently al-
tered its stand on the immi-
nence of Communism in China and
now is stressing that the coun-
try is still in the stage of
"socialist" construction. Pol-
itburo member Chu Te on 21 No-
vember called for the indus-
trialization of the "entire
country" and of the communes,
for management of agriculture
in the same manner as industry,
and for attainment of the "high-
est world levels in science and
culture."
In describing the last-
mentioned goal as one of the
"necessary conditions" for
eliminating the "serious" dis-
crepancies between industry
and agriculture, town and coun-
try, and mental and physical
labor, Chu in effect added an-
other obstacle to China's rapid
progress toward socialism on
the road to Communism. He com-
plained that Peiping's achieve-
ments to date "are still far
behind what is needed to com-
plete the building of social-
ism," and warned against "be-
having like Utopians."
Chu's remarks are more in
line with current Soviet doc-
trine than earlier Chinese
statements which had played
tional development assistance
and credit facilities such as
an international development
association. They will also
press for larger resources for
the Tnternational Monetary
Fund:and for international com-
modity price stabilization ar-
rangements.
down a high level of industrial-
ization as a necessary condition
for the transition to Communism.
In a recent article, the
People's Daily on 22 Noveiuoer
stated that payment according
to "work" rather than "need"
would continue throughout the
"course of socialist construc-
tion." Chinese propagandists
now state that the principle
of pay-according-to-work, pre-
viously described as a "vulgar"
practice, is an "objective and
unavoidable rule in the econom-
ic life of a socialist society."
They also say the system of
payment in food according to
"need" can be introduced only
in those communes where sup-
plies are abundant.
The negative cast of Pei-
ping's current statements on
the transition to Communism
gives some support for the view
that Peiping has begun to defer
to Soviet leadership, particu-
larly since Soviet Ambassador
Yudin on 7 November corrected
China's claim of rapid "progress
toward Communism." Yudin said
that the Soviet Union, where
production is beginning to rival
that of the most advanced capi-
ta list.countries,'.is just reach-
ing the point where socialism
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CURRENT INTELLIGENCE WEEKLY SUMMARY
4 December 1958
begins to change to Communism.
By this statement, he implied
that the Chinese could not hope
to enter the Communist stage
of development until a much
higher level of production has
been reached.
Before November the Chi-
nese had based their views on
the future form of Communism
almost exclusively on several
works of Marx and Engels and
on some of Lenin's early writ-
ings, rather than on current
Soviet theses. They claimed
that their views on labor un-
der Communism were similar to
those generally expressed in
Marx's Critique of the Gotha
Program, in which Marx speaks
of the "enslaving subordina-
tion of the individual to di-
vision of labor" disappearing
in the "higher phase of Com-
munist society."
Mao Tse-tung's chief lieu-
tenant, Liu Shao-chi, implicit-
ly attacked labor specializa-
tion on 16 September, declar-
ing that "all capable persons
in out society must engage in
labor--particularly physical
labor." Propaganda department
chief Lu Ting-i made a direct
attack earlier the same month,
calling for the training of
"all-purpose workers" who would
be capable of various jobs in
the factory, on the farm, and
in the militia. Liu cited Mao
as well as Marx and Engels as
authority, but he did not give
any Maoist text. Lu quoted
the following from Engles' Prin-
ciples of Communism: "Educa-
tion allows young people to
familiarize themselves quickly
with all systems of production
and to alternate from one meth-
od to another depending on the
needs of society."
In discussing the emanci-
pation of women, the Chinese
have stressed liberation from
household chores, as discussed
in Engles' Origin of the Fami-
ly, State and Private Property
and Lenin:'.s 1919 work, The
Great Beginning. Communal mess
halls, nurseries, and kinder-
gartens are justified by cita-
tions from Lenin's article.
Thus Peiping's approach to
freeing women from the "slav-
ery" of the old-style family
continues to differ consider-
ably from Moscow's.
Peiping's claim of early
September that it had attained
eight of the ten conditions
for achieving Communism laid
down in the Communist Manifesto
and that the last two "are just
now beginning to be attained"
has not been repeated. The
position now seems to be that
communalization--a "socialist"
process--will take more than
six years in some areas of the
country, and that Communism
will be achieved only after a
"relatively long historical
period."
Peiping appears at best
to be moving toward an announce-
ment at some time within the
next four years that the "main"
foundations of socialism have
been built in China and that a
socialist society can be "com-
pletely" built--a declaration
which may place its progress
toward Communism somewhat be-
hind the advance of Bulgaria
and Czechslovakia and consid-
erably behind the USSR's posi-
tion.
In discussing Communism the
Chinese have cited Mao Tse-tung's
Selected Works only to illus-
trate the conkitions for Commu-
nism but not as a basic source
defining these conditions. The
concept of the commune as the
basic unit for China's future
Communist society has been at-
tributed to him, however. In
the event that he issues a thesis
on the subject,.Mao almbst:cer-
tainly will point to the unique-
ness of the commune program and
apply it to "China's concrete
conditions" in order to avoid a 25X1
bloc.
direct challenge to Moscow's
ideological leadership in the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
CHINESE COMMUNIST TRADE
Communist China's trade
with the free world, which is
often conducted with political
objectives in mind, has in-
creased from 26 percent of Pei-
ping's total trade in 1954--
after the Korean war--to 38
percent in 1957, when it was
valued at $1.16 billion. It is
expected to amount to nearly
$1.3 billion this year, out of
China's planned $3.5 billion
worth of foreign trade.
At least half of China's
trade with the free world is
with the Far East and South-
east Asia, where potential mar-
kets for expanding
light industrial ex-
ports exist. China's
exports to these areas
have consistently ex-
ceeded imports, earn-
ing foreign exchange
for Peiping's purchas-
es in Western Europe.
Hong Kong and Japan
normally account for
half of China's Far
East commerce.
During the early
period of the Chinese
Communist regime, Hong
Kong served as an en-
tl-'epot for goods from
Western Europe. Now,
as a result of estab-
lishment of direct
WITH THE FREE WORLD
na has found a relatively fer-
tile
export market in Japan,
its
purchases from
that coun-
try
have been made
partly from
the
desirability of
maintain-
ing
a balance of trade. Ja-
pan's high production costs
make its prices for steel and
fertilizer comparable to iden-
tical goods from Western Europe,
but it is a nearby source for
emergency purchases--as in 1956
when immediate demands for ce-
ment were fulfilled rapidly. Ja-
pan's payments in sterling for
its import surplus have provided
China with about $185,000,000
in foreign exchange to help meet
its trade debts in Europe over
the past eight years.
COMMUNIST CHINA:
TRADE WITH FREE WORLD
(00%) PERCENT OF TOTAL TRADE
trade relations with Europe,
China's imports from the col-
ony have fallen from more than
$250,000,000 in 1950 to only
$20,000,000 last year. On the
other hand, Peiping's sales
have gradually increased to
the point where it now earns
more than $150,000,000 in ster-
ling annually from its export
surplus with Hong Kong.
Trade with Japan was in-
significant until 1954, when
China stepped up exports of ag-
ricultural commodities and raw
materials. At the same time,
but to a lesser degree, Peiping
increased imports from Tokyo
and by early this year trade
was nearly balanced. While Chi-
China presumably will not
be greatly affected over the
long run by its cancellation
of trade with Japan last spring.
Trade contacts are in fact be-
ing maintained through Hong
Kong. Indirect trade by Sep-
tember had amounted to $4,000,-
000.
Southeast Asia
Peiping has been able to
further the impression through
trade in Southeast Asia that
China is the industrial giant
of the Far East. It has cap-
tured a growing share of mar-
kets for light industrial goods,
particularly in Indonesia and
Malaya, despite a general re-
uction in demand for these
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goods as a result of depressed
economic activity in the area.
The large Overseas Chinese pop-
ulation in Southeast Asian coun-
tries has assisted Peiping in
introducigg its consumer goods.
The Bank of China branches
in Southeast Asia supply Pei-
ping with commercial intelligence
and provide easy credit terms
for importers of Chinese goods.
Peiping offers products at pric-
es as much as 10 to 20 percent
uelow those prevailing in the
current market, and has report-
edly offered rebates to mer-
chants to compensate for im-
port'taxes. The Chinese effort
is not limited to exports. Com-
munist China diverts its rubber
purchases from one source to an-
other in order to develop inter-
nal pressures for increased eco-
nomic.relations With : iping,
The Singapore press reports
that China now is banning all
exports to Malaya, probably in
retaliation for Malaya's an-
nounced intention to close
branches of the Bank of China.
Peiping presumably hopes that
Malayan merchants, who received
loans and financial concessions
from China, will press the gov-
ernment for an accommodation
with Peiping. Peiping may also
decide to withdraw from Malaya's
rubber market where, in the
first eight months of 1958, Pei-
ping almost doubled its total
1957 purchases. The cancella-
tion would be a temporary set-
back to China's program for
economic penetration. It is
likely that some trade with Ma-
laya would continue through
Singapore.
Exploiting Indonesia's
anti-Western attitude and dis-
rupted economy, Peiping has se-
cured a firm foothold through
long-term commercial credits,
loans, and emergency food ship-
ments. In 1957, China supplied
over 70 percent of the cotton
cloth purchased by Indonesia.
To assure retention of this mar-
ket, Peiping is delivering on
long-term credit cotton tex-
tiles equal to 25 percent of
its ..,sales" in Indonesia last
year. China has offered to
supply textile machinery and
is exporting rice to Indonesia
on credit. The Bank of China
in normal commercial transac-
tions with Indonesian importers
arranges to provide importers
of Chinese goods with the 100-
percent deposit now required
to obtain import licenses. Pei-
ping also offers contracts quot-
ing fixed prices for future de-
liveries, at a time of wildly
fluctuating commodity prices.
In other parts of Asia,
China uses credit programs and
trilateral trade deals to in-
troduce increasing quantities
of its goods in return for sur-
plus agricultural commodities.
A loan to Cambodia enabled a
wide variety of Chinese consum-
COMMUNIST CHINA'S
EXPORTS TO
SOUTHEAST ASIA
(MILLION DOLLARS) 96
1954 1955 1956 1957 1958(m)
er. goods to be exported. Tex-
tile equipment continues to be
delivered to Burma, and ceme.iit
factories have been offered to
Pakistan. India is importing,
for the second year, a variety
of Chinese chemicals and news-
print. China is offering in-
dustrial raw materials and light
manufactured goods to secure a
permanent place in the Ceylon-
ese market. New direct shipping
lines from New Zealand and Aus-
tralia to the mainland are be-
ginning to stimulate trade be-
tween these areas.
Western Europe
China's imports from West-
ern Europe, mostly nonstrategic
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CURRENT INTELLIGENCE WEEKLY SUMMARY
4 December 1958
goods, showed sudden increases
in the last half of 1956 and
in the last part of 1957, as a
result of "exception" proce-
dures to trade controls and
the subsequent relaxation of
these restrictions. Increased
direct purchases of iron and
steel--totaling about 125,000
tons in 1957--usually purchased
and transshipped via Eastern
Europe accounted for most of
the recorded increases in ship-
ments of strategic goods. A-
bout 1,000,000 tons of iron
and steel have been bought in
Western Europe this year, re-
flecting, in part,.the cancel-
lation of planned purchases of
400,000 tons from Japan in 1958.
Peiping's trade with in-
dividual countries of Western
Europe has been subject to wide
fluctuations, resulting from
political considerations and
variations in China's economic
planning. It is common Chi-
nese practice to withhold trade
contracts until a. foreign trade
delegation arrives in Peiping
in order to propagandize the
accomplishments of such mis-
sions.
West Germany and the United
Kingdom normally account for 50
percent of China's trade with
Western Europe. Sino - West
German trade has grown rapidly
in recent years. It is stimu-
lated this year by China's pur-
chase of over 300,000 tons of
steel plates. China's imports
from the United Kingdom during
the first nine months of 1958
were 75 percent higher than
during the same period in 1957.
These imports consist chiefly
of metals, wool tops, and ma-
chine tools.
Trade under the initial
agreements signed with the Scan-
dinavian countries in the lat-
ter part of 1957 may increase
China's trade deficit in West-
ern Europe.
Peiping established its
first economic tie; with Africa
in 1955 by concluding a trade
agreement with Egypt. China
now conducts $100,000,000
worth of trade annually with
14 African countries, having
official trade pacts with four.
Peiping's purchase of Egyptian
cotton, amounting to about $42,-
000,000 in 1957, has kept Sino-
African trade balanced. China
is now insisting on barter
agreements with those trade
partners with whom it has had
trade deficits, while its cur-
rent trade drive elsewhere in
Africa is primarily to seek
markets for its own goods.
Although the American em-
bargo has virtually eliminated
trade with China's former major
trading partner in the western
hemisphere, Peiping is increas-
ing its efforts to expand rela-
tions with Canada and Latin
America. China's purchases of
Canadian wheat amount to over
100,000 tons this year--ten
times greater than last year.
In Latin America, Peiping is
stepping up imports of Brazil-
ian sugar and exporting large
quantities of coal to Argentina.
Trade with Latin America prob-
ably will reach a new peak this
year and may total $50,000,000.
Communist China's growing
import requirements from the in-
dustrial West are largely bal-
anced by its growing trade in
underdeveloped areas where its 25X1
export balance provides the nec-
essary foreign exchange.
(Prepared by ORR)
25X1
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~CCRE7~
CONF/DENT/AL
CONFIDENTIAL
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