CURRENT INTELLIGENCE WEEKLY SUMMARY

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• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A002100080001-1
• Release Decision: RIPPUB
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• Document Page Count: 44
• Document Creation Date: December 20, 2016
• Document Release Date: December 16, 2005
• Sequence Number: 1
• Publication Date: October 26, 1999
• Content Type: SUMMARY

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CONFIDENTIAL
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
COPY NO. 54
OCI NO.0490/59
26 February 1959
DOCUMENT NO.
NO CHANGE 1N CLASS.
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CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
"" ; 771118 M
RETURN TO ARrP
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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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VVI\I 1v?... ? - -- -- s
CURRENT INTELLIGENCE WEEKLY SUMMARY
26 February 1959
OF IMMEDIATE INTEREST
Khrushchev chose the oc-
casion of a day's recess in his
talks with Prime Minister Mac-
millan to make a tough speech
on 24 February in which he
countered the West's proposal
for a four-power foreign min-
isters' conference with a call
for a heads-of-government meeting.
His offer to sign a nonaggres-
sion pact with Britain probably
was deliberately designed to
embarrass Macmillan and place
him in a difficult spot in
view of the likelihood of a Brit-
ish general election later this
year. Khrushchev rejected the
West's position on the level,
composition, and agenda of East-
West talks and vigorously re-
affirmed the USSR's unwilling-
ness to discuss German reunifi-
cation and its determination to
defend East Germany.
Khrushchev charged that,
in proposing negotiations on
the foreign minister level, the
Western powers "obviously" wish
to involve the USSR in a "laby-
rinth of diplomatic negotiations
so that we will get bogged down
for several years." Condemn-
ing the exclusion of other
countries which fought against
Hitler's Germany, such as Czech-
oslovakia and Poland,,'he called
the Western proposal "not a
businesslike formulation of
the questions," and said, "We
cannot agree with this."
The Soviet premier called
instead for a meeting of the
heads of government, who alone
"can take the necessary deci-
sions." He failed to list the
participants at such a confer-
ence except to say they should
be "the powers in question who
are fully responsible for ensur-
ing universal peace."
While the Soviet leaders
probably will press the West to
accept parity of representation 25X1
at a heads-of-government meet- 25X1
ing, it is unlikely they will
stick on this point.
In his Moscow speech, Khru-
shchev insisted that the first
task of a summit meeting should
be the conclusion of a German
peace treaty which would include
a solution of the Berlin question.
A summit meeting should also, he
stated, examine questions of
European security, the withdrawal
of troops from foreign territories,
military disengagement, and dis-
armament questions such as the
reduction of armed forces and
prohibition of nuclear weapons
and tests.
The speech gave further
evidence that, in the absence
of agreement with the Western
powers on a peace treaty with
both German states, the USSR
plans to sign a separate peace
treaty with East Germany either
prior to or simultaneously with
the transfer to the East Ger-
mans of control over access to
Berlin. Khrushchev claimed
that the signing of a treaty
"with the two German states or
with one of them" would inval-
idate all the obligations re-
garding Germany's occupation,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
26 February 1959
"both ours and those of our
allies." Hence,-he added,
maintenance by the Western powers
of their occupation functions,
or, if challenged, defense of
their rights to access to West
Berlin, "are out of the question."
The Soviet press attache
in East Berlin had told West
German correspondents on 19
February that the USSR, by a
separate peace treaty, wishes to
establish the sovereignty of
East Germany "beyond all le-
gal doubt." Otherwise, he
added, the West might be in a
better legal position to chal-
lenge East Germany's sovereign
rights over access to Berlin.
He also hinted that such a
treaty might be concluded be-
fore 27 May.
Khrushchev may have be-
lieved that Prime Minister
Macmillan, under pressure from
domestic public opinion to bring
about a relaxation of world
tensions, would be forced to
respond favorably to the Soviet
call for a heads-of-government
meeting and a nonaggression
pact. There are reports that
Macmillan and his delegation
are moving toward the view that
only a heads-of-government con-
ference could provide a realistic
discussion of European problems.
Khrushchev's public advocacy
of an Anglo-Soviet nonaggression
pact apparently was a deliberate
attempt to embarrass Macmillan.
Neither side had raised this sub-
ject in the private talks, al-
though some reference to it was
apparently made in a toast by
Gromyko. Khrushchev's speech
has evidently put an end to any
ideas Macmillan may have enter-
tained that such a pact could
provide one tangible but harmless
result of his visit to the USSR.
The British press, which had
been printing rumors that a non-
aggression pact might be con-
cluded, raised a chorus of ob-
jections to Khrushchev's pro-
posal and especially to the con-
text in which it appeared.
Sharpest words came from the
stanch pro-Conservative Tele-
graph, which called it a "cal-
cu a ed trap," acceptance of
which would constitute "ap-
peasement, pure and simple."
Khrushchev's insistence on
summit talks received a mixed
reaction in Britain.
Soviet press articles
over the past week have em-
phasized the "positive" aspects
of the visit, particularly the
benefits of personal contact
between high government lead-
ers. The usual daily anti-
British items have disappeared
from the Soviet press, and
Pravda and Izvestia have car-
ried editorials citing the
World War II alliance and Khru-
shchev's 1956 visit to Britain
as high points in Anglo-Soviet
relations.
West German Reaction
The West German press re-
ports that Khrushchev's speech
was received in Bonn govern-
ment circles with disappoint-
ment and amazement. Bonn is
now reported to feel that the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
26 February 1959
optimism over Macmillan's trip
was premature. Some papers com-
mented that Khrushchev's appar-
ent rejection of a foreign min-
isters' conference opens up a
"new situation" for the Western
powers; others criticized a pos-
sible British-Soviet nonaggres-
sion pact as the first move in
paralyzing the Western determi-
nation to stand firm on Berlin.
SOVIET-IRANIAN RELATIONS
Soviet Premier Khrushchev
and the Shah of Iran continue
to exchange recriminations fol-
lowing Khrushchev's personal at-
tack on the Shah in his speech
at Tula on 17 February. In a
24 February speech at Moscow,
the Soviet premier again charged
that the Shah's regime is seek-
ing the aid of external forces
for protection against its own
people. His remarks on the Shah
personally were somewhat more
temperate than at-Tula.
The Soviet propaganda cam-
paign is part of a mounting ef-
fort by the USSR to discredit
the Shah and undermine the pres-
tige of his regime in Iran.
Moscow's increasing emphasis on
the dangers of an Iranian bi-
lateral defense agreement with
the United States is probably
designed to justify Soviet coun-
termoves after the agreement is
signed. The Shah stated public-
ly on 21 February that Iran
would not invoke the agreement
unless attacked and denied So-
viet charges that rocket-launch-
ing sites would be set up in
Iran. His statements are un-
likely to satisfy Moscow, how-
ever,
Soviet Ambassador Pegov has
told various individuals in Te-
hran during the past week, ac-
cording to Iranian Prime Minis-
ter Eqbal, that if Iran signs
the agreement with the United
States the USSR will occupy
Azerbaijan Province in north-
west Iran. Unconfirmed reports
of this alleged Soviet threat
have been repeated by press and
diplomatic circles in Tehran.
Pegov emphatically denied at a
UAR Embassy reception on 22
February and again to reporters
on 24 and 25 February having
made any such statement.
Bloc diplomats at the UAR
reception reportedly stressed
the gravity of the situation
which would arise if Iran con-
cluded the bilateral agreement
with the United States, and
Pegov's public denials have
called attention to the possi-
bility of such a Soviet move.
The Tehran government may
welcome the wide publicity given
the alleged Soviet threat in
order to enhance its pose of
stanchly resisting intimidation,
and to strengthen its claim for
American moral and material sup-
port. According to the American
ambassador, it is widely believed
in Tehran that the Shah ordered
a harsh note sent to Moscow re-
garding Khrushchev's Tula speech.
Iranian Foreign Minister Hekmat,
however, apparently only deliv-
ered a verbal protest to Pegov
regarding Soviet radio attacks.
The Shah declared to the
Iranian Parliament on 24 Feb-
ruary that a Russian military
attack on his country would start
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CURRENT INTELLIGENCE WEEKLY SUM
26 February 1.959
World War III and
that Iran was not
afraid of any foreign
threat. The Shah as-
serted that the USSR
had personally in-
sulted the nation and
his person, and he
charged that Khrush-
chev's attack on him
was "contrary to
international eti-
quette." The Iranian
ruler denied the So-
viet premier's claims
that he feared his
own people or that he
put money in British
banks.
In his Moscow
speech, Khrushchev
again asserted that
the Shah was seeking
American assurance of
help to "deal with
forces which might
act against him, with his own
Iranian people," and reiterated
that "no external forces will
be able to save the rulers who
turn against their own people."
Apparently to authenticate his
interpretation of the Shah's
motives, the Soviet premier de-
clared, "We already have the
text" of the US-Iranian agree-
ment. Soviet diplomats in
Tehran, however, pressed the
Americahs at a reception on 23
February for information as to
the, date of signing and the
wording of the agreement.
The Moscow speech, somewhat
more conciliatory in tone than
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Khrushchev's previous remarks
and lacking implied threats,
may be intended to blunt exces
sive Iranian charges of Soviet
intimidation, as well as to re-
inforce Moscow's pose of thwart-
ed friendship. The Soviet lead-
er, who described relations with
Iran as "very bad," said he did
not want to worsen them, but
wanted them to improve. Soviet
propaganda broadcasts in Persian,
however, have made appeals to
"patriotic" Iranian Army offi-
cers to frustrate the defense
agreement, and also have recalled25X1
how officers in Egypt and Iraq
overthrew "hated regimes" in
their countries.
The Cambodian military
situation remains obscure, fol-
lowing the occupation of the
Siem Reap headquarters of dis-
sident General Dap Chhuon on
22 February by a government
armored convoy led personally
by Army Chief of Staff Lon Nol.
Phnom Penh's announcement that
Chhuon barely escaped in time
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CURRENT INTELLIGENCE WEEKLY SUMMARY
26 February 1959
with only a few followers and
that the bulk of his forces re-
main loyal to the Sihanouk gov-
ernment appears exaggerated.
uon
left at least 48 hours earlier
with his entire gar'rison;, be-
lieved to number several hun-
dred.
Chhuon's present wherea-
bouts, strength of forces, and
intentions are unknown. Before
the government's decisive re-
sponse to Chhuon's declaration
of dissidence in a letter to the
throne, he had been actively
planning an early general up-
rising against Sihanouk. At
that time, he claimed the loy-
alty of some 3,000 troops, in-
cluding the Palace Guard in
Phnom Penh and three battalions
scattered throughout the north-
western provinces of Siem Reap
and Kompong Thom.
Presumably, Chhuon will
engage in guerrilla warfare
against the Sihanouk regime,
which he is convinced is lead-
ing Cambodia into the Chinese
Communist camp. In such a role,
Chhuon benefits from broad ex-
perience as the leading resist-
ance fighter opposing the return
of French rule in Cambodia after
World War II. The government's
apprehension is indicated by
tightened security measures
being taken in the Phnom Penh
area and by the appearance of
a strong bodyguard for Sihanouk.
On 24 February, Sihanouk stated
that insecurity will "reappear"
in Siem Reap and will also fol-
low in other provincial centers
as a result of activity by "for-
eign-supported" dissident bands.
Meanwhile, Vietnamese-
Cambodian relations have been
exacerbated as a result of
Sihanouk's public accusations
of Saigon's involvement in
the Chhuon plotting. The Diem
government has refuted Siha-
nouk's claim that two "Viet-
namese officers," along with
a radio transmitter, were
seized at Chhuon's villa in
Siem Reap. Saigon previously
had strongly protested Siha
nouk's charge that Vietnam's 25X1
representative in Phnom Penh
was the ringleader of foreign
intrigue in Cambodia.
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CURRENT INLAGENCE WEEKLY SUMMARY
26 February 1959
NOTES AND COMMENTS.'
PROSPECTS FOR INCREASING MEMBERSHIP OF EUROPEAN COMMON MARKET
Sentiment in the European
Common Market (EEC) is report-
edly increasing in favor of of-
fering Greece, Turkey, Denmark,
and possibly Austria the pros-
pect of early association with
the EEC. Such a geographical
extension would significantly
increase the Common Market's
already considerable influence
in free world affairs; at the
same time, it would almost cer-
tainly aggravate the conflict
over the proposed Free Trade
Area (FTA), a divisive issue
in the North Atlantic community.
While it has always been
likely that the EEC would ul-
timately gain new members, the
suggestion of taking immediate
steps in this direction is a
direct consequence of the col-
lapse of the FTA talks last
fall and the subsequent efforts
of the EEC Commission to pro-
pose a basis for their resump-
tion. Commissioner Rey--the
EEC"s "foreign minister"--told
Ambassador Butterworth on 19
February that it was part of
his FTA plans to propose "some
real political gesture to en-
courage adherence to or asso-
ciation with the EEC."
these in ucements
would inc u e an extension of
the EEC's 12- to 15-year transi-
tional period for the removal
of tariffs and quotas, an in-
crease in the $1 billion capi-
tal of the European Investment
Bank, and institutional changes
in the EEC Council and Commis-
sion.
As a tactical move in the
dispute over the FTA, an EEC
offer along such lines would
have political importance. It
would tend to divide the solid
front of those countries, led
by Britain, which have been hop-
ing that loose multilateral
ties with the EEC would solve
their essential trade problems
and at the same time perhaps
delay the rapid progress toward
Continental unity.
25X6
The
"cue asses ion" of Greece,
Turkey, Denmark, and Austria,
if carried out, would add some:
35,000,000 consumers to an eco-
nomic union which alro :? rivals
the US or the USSR in popula-
tion and aspires to the crea-
tion of a "federal Europe,"
An offer of association
bordering on full membership
would raise problems for all four
countries. The Greeks and the
Turks, who could use some of
the development funds at the
disposal of the European Bank
and who at best could hope only
for limited participation in
the FTA, may be the most recep-
tive to the idea of direct ties
with the EEC. Agricultural in-
terests in Denmark have long
favored full EEC membership, but
a reluctance to break with the
other Scandinavian countries
would probably require a major
political decision.
The most serious problem,
however, would probably be faced
by Austria, which, while eco-
nomically dependent on the EEC,
has been warned by the USSR that
such an association would be
considered a violation of Austrian
neutrality.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
26 February 1959
EUROPE'S COAL CRISIS
The overproduction crisis
in Western Europe's coal in-
dustry has confronted the Euro-
pean Coal-Steel Community (CSC)
with the potentially most dis-
ruptive situation in its seven-
year existence. The CSC's High
Authority has been compelled to
consider drastic measures which
are difficult to administer,
displeasing both to producers
and consumers, and by no means
certain to cure the coal in-
dustry's ills.
Corrective measures--pri-
marily a curb on imports of Amer-
ican coal--have not been effec-
tive. Aggravated by
low industrial demand
for coal, a mild winter,
and continued high t,ro-
duction at the mines,
unsold stocks of coal
now have reached 25,-
000,000 tons and could
climb another 8,000,-
000 tons by the end
of 1959. While many
observers believe this
surplus will gradual-
ly decline as economic
activity revives, this
view may be too opti-
mistic in light of the
prospective 10-percent
increase in fuel oil
imports expected this
year.
schedule. The Socialists have
brought the politically thorny
issue of nationalization to the
fore as a possible remedy.
Under pressure from Belgium,
the High Authority has begun con-
sultations to see if there is
sufficient support within the
CSC to declare a "manifest
crisis." This would involve
the introduction of production
quotas and the institution of
community-wide import controls.
If restrictions of output can-
not be agreed on, the High
Authority may attempt to en-
courage "voluntary" production
DFR SPIEGEL 11 FEB'59
BRILLIANT IDEA FOR THE RUHR: COAL ALPS AS TOURIST ATTRACTION
Although the ton-
nage of excess coal is greatest
in West Germany, the problem
has proved difficult in Belgium,
where many of the older coal
mines are noncompetitive. Under
pressure from the CSC, Brussels
now has agreed to close submar-
ginal pits and to undertake a
general reorganization of the
mining industry. This has caused
serious labor unrest in the af-
fected mining areas, however, and
a threatened general strike has
compelled the shaky government
coalition to delay the closing
cuts by providing unemployment
benefits for miners who would
lose their jobs in the process.
The Netherlands, as a coal-im-
porting country,will be loathe
to accept import restrictions,
which would mean a further loss
of transit business for the
port of Rotterdam.
In view of its past re-
luctance to supervise too closely
the CSC's coal and steel indus-
tries, and its desire to main-
tain a nonprotectionist reputation
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CURRENT INTELLIGENCE WEEKLY SUMMARY
26 February 1959
abroad, the High Authority's
willingness now to consider
drastic measures indicates a
fear of losing control of the
situation. While Brussels'
threats to take unilateral ac-
tion can probably be discounted,
Bonn's recent decision to im-
pose tariff quotas without
adequate reference to the CSC
gave cause for some concern. 25X1
Consequently, the High Authority
cannot afford any further weak-
ening of its position,
aenewed agitation for cul-
tural autonomy among the German-
speaking minority in the former
Austrian South Tyrol--roughly
the area of Italy's Boizano
Province--increases the prob-
lems of Premier Segni's new
government. If Segni yields
to rightist opposition to
greater autonomy for that area,
serious disturbances could re-
sult. Moreover, the three
South Tyrolean People's party
deputies, once consistent sup-
porters of Segni's Christian
Democrats, would probably join
the parliamentary opposition,
which now embraces all the other
parties except the rightists.
If hE yields to Soutsi Tyrolean
pleas for greater regional au-
Approximate area of German-
speaking population (South Tyrol)
-Region boundary
...... Province boundary
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tonomy, other regions may raise
the old question of decentrali-
zation of federal power.
So far, student demonstra-
tions of a strongi;; Fascist
flavor have taken place in a
number of Italian cities, and
the Boizano court has been
ordered to inquire into a charge
of "antinational activities
abroad" lodged by the Italian
neo-Fascists (MSI) against the
five South Tyrolean leaders who
went to Vienna to inform the
Austrian Government of their
problem.
The De Gasperi - Gruber
agreements of 1946 called for
local autonomy for the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
26 February 1959
Trentino - Alto Adige Region,
which comprises Bolzano and
Trento Provinces, but the
German-speaking population in
Bolzano has continued to charge
Rome with failure to provide it
equal cultural privileges.
In protest against a new
Italian housing law,; South Tyrol
People's party members of the
regional assembly quit their
posts, leaving the Italians in
a quandary in view of a consti-
tutional provision that the as-
sembly must represent German-
and Italian-speaking groups in
proportion to their size in the
regional council, where the
Christian Democrats have 21 out
of 48 councilors. The People's
party has 15. Matters came to
a head when Italian officials,
claiming that disturbances might
take place, refused to permit
several Austrian dignitaries to
attend a 19 February celebra-
tion commemorating the 150th
anniversary of the death of the
Tyrolean patriot, Andreas Hofer.
The People's party now has
proposed to the Italian Parlia-
ment that Bolzano be given
local autonomy and separated
from Trento Province, which is
largely Italian.
The Austrian Government,
facing national elections this
year, may seek Western in-
tervention and has threat-
ened to take the dispute t
an "international forume" -
Premier Segni
told Parliament on 24 February
that the South Tyrol problem
is an internal Italian matter,
but added that he would wel-
come consultations with Vienna.
The Austrians, disturbed by
Segni's speech, have recalled
their ambassador for consulta-
tion.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
26 February 1959
Statements on the nuclear-
test-cessation issue in Khru-
shchev's 24 February speech in
Moscow were intended to support
the Soviet delegation's efforts
at the Geneva talks to prepare
Moscow's public position should
the negotiations break down.
Khrushchev charged the United
States and Britain with seeking
to prevent agreement so that
they may resume nuclear tests
and warned that, while the USSR
would regret it, "we shall be
compelled to do the same in the
interests of our security until
a wise settlement is found."
The principal burden of
his remarks on the test issue
was to present the Soviet posi-
tion in a "reasonable" light
in contrast with that of the
West. He strongly attacked the
Western position as "absurd and
unacceptable," treating at length
the Anglo-American viewpoints
on voting in the control commis-
sion, staffing of control posts,
the functions of the control
organization administrator, on-
the-site inspection teams, and
new data on detection of under-
ground explosions.
Khrushchev charged that,
while "only two or three weeks"
should have been needed to
prepare and sign a treaty on
test cessation, the United
States and Britain have delayed
the negotiations with the ap-
parent intention of "thwarting"
the. talks and laying the blame
on the Soviet Union. He stated
that Western proposals at Geneva
were designed to give the United
States and Britain power "to
dictate their will to the Soviet
Union" through majority control
in the commission. He charged
that the Western proposal on
staffing of the control posts
would force the USSR "to hand
over our territory to supervi-.
Sion by the aggressive NATO bloc
....such proposals do not stand
a chance of being accepted."
The Soviet delegation at
Geneva this week continued its
efforts to discredit the Western
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CURRENT INTELLIGENCE WEEKLY SUMMARY
26 February 1959
position in the talks. Charg-
ing that the Western delegations
were ignoring world public opin-
ion, Soviet chief delegate
Tsarapkin on 24 February read
into the record a long series
of highly emotional messages
from individuals inside and
outside the bloc appealing to
the conference to reach agree-
ment.
On 20 February the Soviet
team complained about "distor-
tions" in the Western press
of Moscow's position on staff-
ing of the control posts.
Tsarapkin then "restated" the
Soviet position on this issue,
suggesting for the record that
foreign "controllers" in the
Soviet plan for staffing the
posts predominantly with nation-
als from the host country would
perform not only operating tasks
but also "some executive func-
tions."
Queried on this statement
on 23 February, he stated that
there had been "no change" in
the Soviet position concerning
operating and executive func-
tions of the controllers, but
that the Soviet delegation
would be prepared to discuss
later the question of what tech-
nical or administrative func-
tions could be assigned these
foreign personnel.
On 23 February Tsarapkin
introduced a draft article on
peaceful uses of nuclear ex-
plosions, stating that, although
the Soviet position remains
that explosions of all types
should be subject to universal
cessation forever, Moscow wants
to prevent the peaceful-uses
issue from becoming an obstacle
to agreement.
The article would require
submission in advance of "a
full description and blueprints"
of the device to be detonate:: rl,
internal and external inspection
of the device, and strict inter-
national-control of the site of
the explosions. The Soviet dele-
gate charged that failure of the
American proposal on peaceful
uses to provide for technical
inspection of the device is evi-
dence of the West's desire to
evade real cessation of tests
by testing bombs under the guise
of peaceful explosions.
In New York, members of the
Soviet United Nations delegation
have approached the American
mission in an effort to discover
whether the United States will
break off the talks at Geneva
and refer them to the 82-member
Disarmament Commission. Accord-
ing to one Soviet representative,
the possibility of reaching agree-
ment in the commission after a
breakoff at Geneva is remote.
There are still no indications,
however, that Moscow will take
the initiative in ending the
negotiations. UN Secretary
General Hammarskjold doubts that
a majority of UN members would
be overwhelmingly convinced by
reading the record of the Geneva
talks that the West's position
is unassailable. He fears the
West has a tendency to feel too
confident that its case on record
would carry in debates in larger
forums.
A member of
the
Soviet dele-
gation in Geneva
said
privately
that the USSR did
not
expect
any Western moves
at
the talks
until after the conclusion of
the Macmillan visit to Moscow.
Despite the rather severe tone
of Khrushchev's remarks on the
test-cessation issue on 24 Feb-
ruary, Moscow probably still
hopes to succeed in including
in a joint communique at the
close of the visit a statement
which it could claim represents
British endorsement of So-
viet views on a permanent ces-
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CURRENT INTELLIGENCE WEEKLY SUMMARY
26 February 1959
SINO-SOVIET BLOC EXPANDING ECONOMIC RELATIONS WITH IRAQ
An Iraqi economic dele-
gation headed by the minis-
ters of economics and develop-
ment arrived in Moscow in late
February' to conclude an eco-
nomic and technical aid agree-
ment with the Soviet Union.
Arrangements will be made
in Moscow for training Iraqi
personnel in both the Soviet
Union and Iraq. The Iraqi
delegation also intends to
review with Soviet officials
some government-owned proj-
ects in Iraq which could bene-
fit from Soviet experience
in raising technical standards
and the level of productivity.
The announced reasons for the
mission's visit, along with
the composition of the mis-
sion itself, suggest that Mos-
cow will engage in a wide range
of activities in Iraq, in"
eluding industrial, irrigation,
transportation, and petroleum
projects.
Talks on Soviet partici-
pation in Iraq's new devel-
opment program were begun in
Baghdad last month and re-
sulted in an agreement in
principle on preliminary of-
fers of Soviet aid. The So-
viet delegation reportedly
considered participation in
about half of the fifty-odd
projects called for under the
new Iraqi development pro-
gram. Unconfirmed reports of
the magnitude of the Soviet
line of credit involved have
ranged from $50,000,000 to
$100,000,000, with repayment
to be at a low rate of in-
terest over a ten-year peri-
od--probably in hard curren-
cy.
The present Iraqi Govern-
ment has also concluded trade
agreements with the Soviet
Union, Communist China, and
six of the seven European
satellites. Although trade
goals in terms of value have
not yet been released, Bagh-
dad has apparently assured
itself of markets for most
of its limited exports other
than oil, particularly dates.
The bloc will probably have
a substantial export surplus
in its trade with Iraq, how-
ever, and this should result
in a net gain of hard currency
of the bloc countries.
Most of the Soviet bloc
countries formerly traded with
Iraq, but they rarely pro-
vided more than .2 percent
of Iraq's imports. Iraq ex-
ported nothing to the bloc in
1957 and a negligible amount
in 1958. Bloc exports to
Iraq--goods formerly imported
from the West--should rise ap-
preciably in the next few
years, especially if the sched-
ules called for by the trade
pacts are realized.
Hungary has made overtures
to Iraq concerning the opening
of an air service between the
two and the USSR re-
cently extended an invitation
to the Iraqi minister of com-
munications when he scheduled
a trip to Budapest and other
satellite capitals.
In the past two months the
Soviet Union has supplied Iraq
with arms and military equipment
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CURRENT INTELLIGENCE WEEKLY SUMMARY
26 February 1959
reportedly worth $170,000,000.
Four shiploads of materiel have
thus far been delivered to the
Persian Gulf port of Basra.
Moscow, under its arms agree-
ment with Baghdad, will supply
jet bombers and fighters, tanks,
artillery, and other equipment--
possibly including small naval
craft. About 50 Soviet military
specialists are in Iraq training
Iraqi military personnel to use
the Soviet arms now being sup-
plied,
NEW COLLECTIVIZATION DRIVE IN HUNGARY
The Hungarian regime, hav-
ing decided last December to
step up the pace of collectivi-
zation, is resorting to coercive
measures against independent
farmers, in violation of repeated-
assurances of respect for the
"voluntary principle." At its
central committee plenum last
December, the Hungarian party
called for the dispatch of 500
agitators and propagandists
from Budapest to towns and vil-
lages to join regional and local
teams in organizing the "volun-
tary" formation of cooperatives.
What was then advertised as a
propaganda campaign to induce
peasants to join the coopera-
tive movement is now emerging
as a highly organized and coer-
cive drive.
In mid-February Budapest
reported that 59,000 new mem-
bers and 525,000 acres were
added to advanced-type collec-
tives during the first six weeks
of 1959. These figures, indicat-
ing an expansion in a six-week
period of at least 11 percent,
not only suggest coercive tac-
tics but also reflect a major
switch from the previous policy,
which emphasized the formation
of less-advanced types of col-
lectives. Moreover, measures
for making the collectives more
"attractive" through direct
financial subsidization, pref-
erential marketing, and tax
benefits were supplemented last
week by a decision of the Coun-
cil of Ministers, which raised
income and property taxes on
all except small-scale private
farmers retroactive to l January.
Isolated instances have
been reported of police tactics
by party officials to force re-
calcitrant peasants to join the
collectives. The American Le-
gation has received reports that
farmers holding out have been
summoned to militia stations,
COLLECTIVE FARM ACREAGE IN HUNGARY
AS PERCENT OF TOTAL ARABLE LAND
interrogated at length, and de-
tained overnight for further
questioning. The legation has
also learned that excess securi-
ty personnel from the cities
have been sent to the country-
side to bolster local militia
units.
To date, the regime seems
to be exerting its major effort
in the western counties of Hun-
gary--particularly the Gyor-So-
pron region, where peasant re-
sistance to collectivization
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CURRENT INTELLIGENCE WEEKLY SUMMARY
26 February 1959
has been strongest in the past.
Concentration of pressure on
the western counties suggests
that the regime may have select-
ed this area for a pilot drive
aimed at gauging the extent and
seriousness of peasant resist-
ance.
The present level of food
reserves is sufficient for the
time being to cope with any dis-
ruption resulting from the cam-
paign. If the campaign stretches
into the spring planting season,
1959 production may be disrupted.
Kadar has long held out
against pressure from Stalin-
ists in the Hungarian party to
step up the pace of collecti-
vization and to employ coercive
measures against the peasants.
His recent statements, however,
indicate a change in his position,
possibly as a result of pressure
from Moscow and from Stalinists
within his own party. Kadar's
claims that "conditions" now
warrant this change in tempo, 25X1
however may now be an accurate
reflection of his views.
CHINESE COMMUNIST TRADE DRIVE
Total Chinese Communist
trade with the free world grew
in 1958, but exports increased
at a slower rate than did im-
ports. In Southeast Asia, how-
ever, reaction to Peiping's ag-
gressive trade tactics has caused
closer regulation of Chinese
trade, and in Europe, traders
complain that China is failing
to fulfill export contracts.
Peiping's economic offensive
in Southeast Asia has been set
back by local reactiaq to ag-
gressive Chinese trade tactics.
In Malaya, China's branch banks
are being closed, legislation
is proposed against dumping,
and quotas and embargoes have
been imposed on Chinese goods.
In Singapore, Chinese trade has
been increasingly regulated.
Last year Peiping retaliated
with a ban on trade with Malaya
and Singapore but later resumed
direct trade with Singapore and
indirect trade with Malaya
through Singapore. Despite ob-
structions during the last half
of 1958, China's trade with these
countries amounted to $100,000,-
000--an increase of one third
over 1957.
The cancellation of all
official trade with Japan over
the problem of Japanese recog-
nition of China and the sale of
large amounts of rice to increase
China's influence in Indonesia
--a traditional customer of
Southeast Asian rice producers--
have resulted in growing aware-
ness of the political motivation
behind China's trade policy and
greater recognition of the po-
tential economic threat posed
by Communist China. Peiping's
exports continue to grow despite
these hindrances. Incomplete
statistics for 1958 indicate
that Chinese exports to the area
may exceed those of 1957 by more
than 10 percent,
The domestic demands of
China's "leap forward" program
have in some cases, however,
affected the availability of com-
modities for export. Traders
in the United Kingdom, Finland,
West Germany, and Hong Kong re-
port that Peiping is failing to
fulfill its export obligations.
Most frequently, these minor
cancellations and postponed
deliveries appear to be a re-
sult of mismanagement and over-
taxed transport facilities in
China.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
26 February 1959
Partial trade figures for
China's 1958 trade with Western
Europe reveal that Chinese ex-
ports exceeded those of the pre-
vious year. Imports from the
area have surged ahead and prob-
ably are at least 60 percent
higher'than in 1957. These
enlarged imports reflect the di-
version of purchases from Japan
to Western Europe and an in-
creased demand for Western ma-
chinery and raw materials to
support China's expanded indus-.
trialization program.
Communist China's recent
statements on Sino-Japanese re-
lations are aimed at weakening
the ruling Liberal-Democratic
party in Japan's upper-house
elections in June and helping
the opposition Socialists.
The Chinese have also rejected
Kishi's offer to hold talks
between the two countries on the
Peiping apparently hopes
that rejection of Kishi's of-
fer to resume trade will favor
the Socialist party, which can
claim that it is best able to
break the trade impasse. The
Chinese have indicated that the
Socialists are the only party
acceptable to Peiping for trade
talks,
Peiping's latest move to
convince the Japanese that it 25X1
will cooperate only with anti- 25X1
Kishi elements was Chou En-lai's
that China would agree
selected Japanese firms, but
only on the condition that these
firms are not "anti-Chinese
Communists." The possibility of
resuming partial and selective
trade with small- and medium-
size Japanese enterprises--a
program of "people's trade"--
has received considerable at-
tention in the Japanese press.
o resume limited trade with
In the hope that Peiping's
tactics will boomerang, as they
did last May, Japanese Vice
Foreign Minister Yamada has
called Chou's statement inter-
ference in Japan's internal
affairs and warned that Tokyo
could not'.approvethe. proposed Chi-
nese Communist: 'procedure. Japanese
Foreign Minister Fujiyama criti-
cized the "ideological strings"
attached to such trade.
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%WW
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
26 February 1959
SOUTH KOREAN POLITICAL DEVELOPMENTS
There has been little
abatement of the internal South
Korean political struggle pre-
cipitated by the administra-
tion's use of force on 24 De-
cember to enact legislation de-
signed to ensure President
Rhee's re-election in 1960,
although the conflict has been
overshadowed by the recent
flare-up in relations with Ja-
pan. Despite a strong display
of bipartisanship regarding
Japan, the administration con-
tinues to suppress sporadic
demonstrations protesting the
new National Security Law, and
the National Assembly remains
deadlocked on the issue. Fac-
tionalism in both the govern-
ing Liberal party and the op-
position Democratic party. as
well as maneuvering for the
succession to 84-year-old Pres-
ident Rhee, appears to have
been intensified.
The faction within the
Liberal party that advocates
harsh action to secure the re-
election of Rhee has exploited
the crisis to challenge the
power position of ailing party
chief Yi Ki-pung and his mod-
erate faction. There also
have been tentative indications
that Yi Pom-sok, strong man of
the disbanded National Youth
corps and a former Rhee lieu-
tenant, may be maneuvering to
resume an active political role.
In the Democratic party,
Vice President Chang Myon, who
is competing with his Demo-
cratic coleader Cho Pyong-am
for the party's 1960 presiden-
tial nomination, has resisted
Cho's efforts to compromise
with the Liberals on the secu-
rity law issue. Cho's actions
have caused speculation that
he may be planning to bolt the 25X1
Democratic party.
Rhee still appears to retain
the loyalty of the army and na-
tional police leaders--key ele-.
ments in any attempt to unseat
him by unconstitutional means.
Recent widespread shifts in the
military high command appear to
assure Rhee of the continued
support of his top military com-
manders. The intensified fac-
tional plotting, aimed at gain-
ing control of the spoils of
power after Rhee's rule, however,
suggests that the country may be 25X1
tion date approaches.
headed for a period of mounting
political strife as the 1960 elec-
Political conflict in Laos
between young civil and mili-
tary reformers and old-line con-
servative politicians threatens
to split the new cabinet. The
immediate issue is Prime .:*.nis-
ter Phoui Sananikone's ina;_)ility
to win cabinet approval to im-
plement promises made to his
party--the Rally of the Lao People
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CURRENT INTELLIGENCE WEEKLY SUMMARY
26 February 1959
(RLP). The four civilian cabi-
net members from the reformist
Committee for the Defense of-
the National Interests (CDNI),
together with the three mili-
tary officers in the cabinet,
have blocked Phoui's efforts
to create important provincial
posts for RLP deputies and
name them to an "advisory coun-
cil."
Phoui and the RLP have re-
acted sharply, apparently con-
vinced that the reformers' rig-
id attitude stems from CDNI
determination to consolidate
its gains in the government
and to supplant the RLP as the
leading representative of non-
Communist Laotian nationalism.
If denied government patronage
and an opportunity to associate
itself directly with the large-
scale village aid and public
works program, the RLP would
probably disintegrate.
Phoui and the RLP are ma-
neuvering to'undermine the
CDNI's position by splitting
its alliance with the army.
The influential crown prince
appears to be supporting the
CDNI and its military collabora-
tors in the conflict with Phoui
and the RLP.
Laos' disunity may weaken
its determination to withstand
mounting Communist bloc pres-
sure to retract its 11 February
denunciation of the Geneva ac-
cords and to reactivate the In-
ternational Control Commission
(ICC). Peiping put this issue
before the Geneva cochairmen--
Great Britain and the USSR--in
a 19 February note requesting
them to take "speedy action."
President Sukarno appears
likely to obtain approval for
a government reorganization
which will strengthen his own
power and reduce that of Par-
liament, but at the price of
significant compromises on some
elements of his plans. He of-
ficially announced on 20 Feb-
ruary that the cabinet had
agreed on the reinstatement of
the 1945 constitution and par-
ticipation of "functional
groups" in Parliament.
Sukarno also stated that
prior to his April trip abroad
he would appear at a plenary
session of the Constituent As-
sembly--which has the task of
drafting a constitution--to re-
quest the readoption of the 1945
document. In addition, Sukarno
will ask the cabinet to draft
two bills for Parliament's ac-
ceptance, one to reduce the
number of political parties, and
the other to permit functional
representation in Parliament.
Sukarno hopes these changes can
be completed by August.
The battle between Sukarno
and the political parties over
the core of his plan--represen-
tation in Parliament by such
groups as labor, peasants, and
the army--has ended 4-1 compro-
mise. As it now stan.s, the
plan no longer guarantees a means
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26 February 1959
of controlling expected Commu-
nist parliamentary gains in
the 1960 elections.
Although functional repre-
sentatives would theoretically
comprise half the legislature,
these individuals would be se-
lected by the parties and would
be elected as party members.
Thus they would not be appointed
by the army-dominated National
Front and screened by Sukarno
as originally planned. The only
appointive seats would be 35
reserved for the military, po-
lice, and village guards.
The principal remaining
instrument in Sukarno's plan
for obstructing increased Com-
munist influence in the govern-
ment will be the greater powers
available to him under the 1945
constitution. This flexible
document provides for a strong
executive and is actually geared
for "emergency" government. For-
mer Vice President Hatta has
commented, however, that it is
doubtful whether Sukarno will
either undertake serious day-
to-day governmental responsi-
bilities himself or be willing
to give anyone else a free hand.
Despite the widely heralded
government changes, the task of
obstructing the Communist party
in Indonesia is likely to con-
tinue to rest with the army.
PAKISTAN'S FINANCIAL DIFFICULTIES
The Ayub government has
informed the American Embassy
in Karachi that Pakistan's fi-
nancialposition is consider-
ably weaker than it previously
estimated. Foreign-exchange
reserves--including gold--amount
to only $162,000,000, the low-
est figure on record for this
time of year. The foreign-ex-
change gap for the first half
of 1959 is estimated
to be at least $30,-
000,000 and may be
considerably more.
The major rea-
son for this situa-
tion is Pakistan's
increasingly unfa-
vorable terms of
trade. The prices
of the country's ex-
ports have not risen
as fast as the prices
of its imports. In
addition, Pakistan 106
has had considerable
difficulty selling
its cotton, and the
necessity for large-
scale food-grain imports has re-
quired extensive foreign ex-
change.
The government--despite
sharp cuts in civil and defense
expenditures--does not have the
funds to provide adequate im-
ports of raw materials for pri-
vate industry. If imports are
held at the level presently
PAKISTAN: FOREIGN TRADE PRICE INDEX
1953 =100
194
EXPORTS
IMPORTS
180
158
152
0
142
0000
142
117
120
118
107
102
99
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CURRENT INTELLIGENCE WEEKLY SUMMARY
26 February 1959
scheduled, the short-
age of consumer goods
will make it extreme-
ly difficult to pre-
vent renewed infla-
tion. In addition,
Karachi does not have
the funds to complete
economic development
projects now under
way. Karachi believes
its ability to hold
prices down and ex-
pand the economic de-
velopment program will
be key factors in its
ability to retain pop-
ular support. Recent
reports indicate a
more critical popular
attitude toward the
regime's failure to
improve economic con-
ditions rapidly.
87
1951 1952 1953 1954 1955 1956 1957 1958
11 MONTHS
*1951-1955 figures for fiscal years beginning 1 April. 11 MONTHS
26 FEBRUARY 1959
PAKISTAN
FIGURES SHOWN IN MILLIONS OF DOLLARS
The government has
decided to cut defense imports
by 40 percent below recent
levels, has canceled plans to
purchase three submarines, and
is scrapping the navy's only
cruiser.
Pakistan has secured a
$28,000,000 long-term loan from
the United Kingdom and has ar-
ranged a $25,000,000 stand-by
credit from the International
Monetary Fund. Finance Minis-
ter Shoa ib, who now is in Wash-
ington, claims that his govern-
ment's energetic fiscal and eco- 25X1
nomic reforms and firm pro-West-
ern policy entitle it to in-
Iraq
The Iraqi regime, while
allowing cordial press report-
ing of the event, apparently
succeeded in reducing to a
minimum any impact from the cel-
ebrations of the first anniver-
sary of the UAR. Prime Minis-
ter Qasim did not attend the
UAR Embassy's party on the oc-
casion, although he appeared
at the Soviet Embassy's Soviet
Armed Forces Day reception two
days later. Those Iraqis who
did come to the UAR Embassy on
22 February to extend congratu-
lations were harassed by Commu-
nists, who gathered outside the
embassy compound shouting "down
with Nasir," throwing stones
at guests and cars, and even
invading the embassy itself at
one point. These activities
were tolerated by the Iraqi
police, who seem to arrested
only pro-U!~'. persons the melee.
SECRET
COTTON
MJUTE
INDUSTRIAL MANUFACTURED GOODS
INDUSTRIAL RAW MATERIALS
FOOD, BEVERAGES & TOBACCO
LI
352. 333 _354
OTHER 440
F59
340 335 274
106 102
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CURRENT INTELLIGENCE WEEKLY SUMMARY
26 February 1959
Other Communist activities
in Baghdad drew attention away
from the VAR celebration. An
Arab student conference was
held there last week, and, in
contrast to the Arab literary
conference in Kuwait last Decem-
ber, the UAR delegation threat-
ened to withdraw from the con-
ference-because of the dominance
of Iraqi leftists. Also during
the week the Communists spon-
sored an Iraqi "workers' rally,"
which the local Communist press
hailed as the first expression
of the "solidarity of the pro-
letariat" in the new "democrat-
ic" republic of Iraq, and which
was addressed by the chief judge
of the military court conducting
the current series of political
trials.
These activities appear
to have had government blessing,
and were impressive in their
orderliness and organization.
They suggest that Qasim still
relies on the Communists to pro-
vide him with "street" support,
and that the Communists are
taking full advantage of the
situation to demonstrate their
prowess.
UAR
Nasir has attempted what
seems to be some domestic and
foreign fence-mending. In his
speech on 21 February, which
had been touted as gn ' important"
one, Nasir dwelt at length on
the advantages which the crea-
tion of the UAR had brought to
Syria. He recalled that the
Syrians themselves demanded the
union and asserted that it is
largely up to them to pull them-
selves together and make it work.
By frequent references to
Arab nationalism's mission to
bring about "social revolution,"
Nasir indicated his awareness
that he faces in the leftist
Iraqi regime a competitor for
leadership of the forces of
change in the Near East, as well
as a new Arab government which
is not under his influence.
Bloc-UAR Relations
Nasir has also sought to
dispel any popular impression
that his attacks on Communists
have resulted in a withdrawal
of Soviet support for the UAR.
He and Khrushchev have both
publicly affirmed that, while
"ideological differences" re-
main, close cooperation between
their governments will continue.
Nasir revealed in his 21 Febru-
ary speech that, following Khru-
shchev's criticism before the
21st party congress of the UAR's
anti-Communist campaign, he had
written the Soviet premier for
an explanation, and quoted Khru-
shchev's 10-page reply as stating
that Cairo's attitude toward
Communism is purely an internal
matter.
The UAR President also dis-
missed the possibility of Jewish
emigration from the USSR by
quoting the Soviet Government
newspaper Izvestia's denunciation
of Western repor-#s to this ef-
fect. By these words, and by
some conciliatory references'. to
Iraq, Nasir appears to be ini-
tiating a gradual retreat from
his vocal anti-Communist cam-
paign.
Khrushchev, speaking ex-
temporaneously in Moscow on 24
February, praised Nasir's re-
marks in Cairo which had charged
"imperialists" with seeking to
disrupt Soviet-UAR relations
and reaffirmed Soviet support
for the UAR and other underde-
veloped countries.
However, despite assurances
by bloc leaders and indications
that Nasir is moving toward a
somewhat more conciliatory po-
sition on Iraq, it is doubtful
that the basic contest for in- 25X1
fluence in Iraq between the So-
viet Union and the UAR will be
affected.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
26 February 1959
AFRICAN EXTREMISM IN NYASALAND
African nationalism in
Nyasaland, under the leadership
of extremist Dr. Hastings Banda,
is presenting the white-settler-
dominated Federation of Rhodesia
and Nyasaland with
its most severe chal-
lenge since its found-
ing in 1953. The
federal government;
has mobilized the
white territional re-
serves of Southern
Rhodesia and rein-
forced the troops and
police in Nyasaland
as a result of the
riots there. The
Southern Rhodesian
Government has de-
cla.T. -)d. a state of
emer, r:y.cy. The secu-
rity forces have act-
ed promptly against
the rioting, but con-
tinued "disorders,
spreadin to other
parts she federa-
tion, are expected as
part of a civil dis-
obedience campaign.
There is growing
sentiment among Euro-
pean settlers in the
Rhodesias for a sepa-
RHODESIA AND NYASALAND
? Locations of recent disorders
NORTHERN
thousands of Nyasas working in
the mining area of Northern
Rhodesia have left moderate na-
tionalist organizations to form
new branches of the Nyasaland
I
KARI
DAM
Lak '
(~~asa
NYA(;:4LAND
Lilo gwe
SOU HERN
RHODESIA
rate status for Nyas :,?-
land, but Rhodesian and British
officials oppose such action at
this time. The nationalist
agitation, designed to. secure
Nyasaland's secession from the
federation, will play an influ-
ential role in the 1960 discus-
sions between Britain and the
federation on Rhodesian inde-
pendence and could lead to an
earlier breakup of the federa-
tion.
Dra Banda has revitalized
the Nyasaland African Congress
and launched a successful cam-
paign to discredit the moderate
African leaders of Abrthern and
Southern Rhodesia.. Al: eady
African Congress, Nyasa na-
tionalists are believed to have
been in3trumental in organizing
the current strike of 5,000
African workers at the Kariba
Dam site.
Banda has proclaimed un-
yielding opposition to the fed-.
eration and has warned his fol-
lowers to be prepared to suffer
imprisonment "by the millions"
to win freedom for Nyasa'].and.
His preaching of positive action
and civil disobedience resulted
in s. -,?ious riots at Blantyre in
Janus: x y and an intend ification
of d..'.,-,;orders at scattered points
throughout Nyasaland since 19
February.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
26 February 1959
Banda has taken advantage
of the sharp rise in the Afri-
can's distrust of the white
government. In early 1958 South-
ern Rhodesia's racially liberal
prime minister fell from power
and last June the basically
European electorate gave in-
creased support to segregation-
ist-minded candidates. Since
then the influence of nation-
alist organizations has in-
creased among the politically
articulate Africans. There has
been a growing distrust of of-
ficial promises regarding a
multiracial program for Rho-
desia.
In 1960 the question of
the federation's revised con-
stitutional position--particu-
larly early independence--is to
be discussed by. British and
Rhodesian officials. Many im-
portant circles in London dis-
trust Rhodesia's racial policies,
and the Nyasaland agitation in
favor of breaking up the feder-
ation is likely to strengthen
those groups that desire to
deny the present federation
independence.
LATIN AMERICAN COMMUNIST MEETINGS IN CUBA
Cuban Communists, after
five years of illegal, under-
ground existence during the
Batista regime, now are staging
a series of overt demonstrations
and meetings concerned with both
internal and foreign matters.
The first important public
meeting, a three-day session of
the national committee of the
Popular Socialist (Communist)
party (PSP) that began on 26
January, dealt with the domestic
situation and emphasized issues
which would identify'the party
with the program and policies
of the provisional Cuban Govern-
ment.
The Cuban Communist party
now is apparently becoming in-
creasingly concerned with inter-
national meetings, perhaps part-
ly in response to a Latin Amer-
ican Communist effort during
the past year to achieve greater
coordination among the various
parties and partly as an at-
tempt to regain the prominence
--both in Cuba and abroad--that
it enjoyed during the early
1940s, At the Soviet 21st
party congress last month, Cuban
delegate Severo Aguirra-delivered
a well-publicized speech claim-
ing considerable credit'for the
PSP in ousting' former dictator
Batista.
Several Latin American Com-
munist delegations have been
invited to meetings in Havana
in late February. At one meet-
ing, to which the Costa Rican
and Nicaraguan parties have been
invited, the present "excellent"
position of the Cuban party and
its past and present efforts
to support and influence the
Castro government are to be
discussed, as well as plans to
overthrow the government of
Nicaraguan President Somoza.
This last point reflects
increasing Communist efforts to
exploit and benefit from the
popular antidictator upsurge
encouraged by Castro. Commu-
nists have already formed an
organization of Nicaraguan
exiles in Venezuela which they
hope will become the instrument
of Nicaragua's "liberation" and
are believed to have considera-
ble influence in a similar
Dominican group in Venezuela.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
26 February 1959
GUATEMALAN POLITICAL DETERIORATION
A rapid deterioration in
the Guatemalan political situ-
ation is becoming evident. The
corruption of President Ydigoras'
closest advisers, including mem-
bers of his family, is receiving
increasing public attention.
This, combined with the Presi-
dent's political maladroitness
and a worsening economic: situ-
ation resulting in past from a
decline in income from coffee
exports, has so weakened his
position that the government may
fall.
The newly reconvened con-
gress, which contains an anti-
Ydigoras majority, is likely to
increase tension by demanding
the interpellation of cabinet
ministers on charges of govern-
mental irregularities and by
investigating graft in high
places. Ydigoras, probably
aware of his danger, is believed
preparing to reorganize his cab-
inet by dropping some of those
most publicly identified with
graft.
He may also attempt to di-
vert public attention from his
difficulties by making another
of his political grandstand
plays--such as his only partially
PANAMANIAN
The substantial public sup-
port which quickly rallied to
the 19-20 February demonstration
against graft in Panama City's
municipal council apparently
impressed the small and power-
ful group which, in shifting
combinations, dominates Panama-
nian politics.
The council's reluctant de-
cision to take a 90-day leave
of absence while it is being in-
vestigated undoubtedly resulted
successful attempt in January
to exploit a territorial waters
dispute with Mexico and earlier
efforts to arouse nationalistic
fervor over Guatemala's claim
to British Honduras.
Plotting to oust the re-
gime is increasing among sev-
eral disparate groups ranging
from the extreme right to the
moderate left and appears more
widespread now than at any time
since Ydigoras assumed office a
year ago. The plotters are
working at cross purposes, how-
ever, and their efforts to unite
have thus far been unsuccessful.
Nevertheless, if the present
political deterioration contin-
ues and the opposition is able
to achieve a degree of unity,
a coup attempt would become a
virtual certainty.
Key army officers, the
ultimate locus of political
power, have already begun to
show an interest in the plots.
They have been responsive to
public pressure in the past
and, once convinced that the
majority of the people are
against Ydigoras, they are
likely to withdraw their sup-
port from him. His overthrow
would then follow quickly,
from pressure exerted by lead-
ers of the administration's
coalition party--to which most
of the councilmen belong--since
the national administration was
also a target of the ,protests.
An opposition Liberal party
leader promptly supported the
demonstrators, while National
Guard Commandant Vallarino,
whose backing is essential to
any Panamanian government, was
unusually careful to avoid any
strong-arm methods in handling
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CURRENT INTELLIGENCE WEEKLY SUMMARY
26 February 1959
the crowds which kept the capi-
tal in turmoil for several days.
The situation was calmed,
at least temporarily, on 21 Feb-
ruary when President de la Guar-
dia appointed an interim city
council which includes six mem-
bers named by the revolutionary
municipal junta formed by the
demonstrators. Ramon Pereira,
the radiobroadcaster who first
attacked the council and led the
crowd which seized the city hall,
accepted the temporary council
and urged the public to return
to normal activity. However,
some agitators accused him of
selling out and unsuccessfully
tried to start riots among the
demonstrators.
The intense struggle now
being waged among opposing groups
within the oligarchy for advan-
tage in the next presidential
elections has probably heighten-
ed their responsiveness to pub-
lic opinion. Neither of the
parties eligible to name candi-
dates, however, is liable to
make any real effort to solve the
gross maldistribution of wealth
.in Panama, which is the basic
cause of the country's chronic
unrest. Ricardo Arias and Aqui-
lino Boyd, the two outstanding
presidential aspirants, are both
adept at raising nationalistic
issues--which divert attention 25X1
from domestic problems--by at-
tacking the United States' posi-
tion in the Canal Zone.
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JGC:Kr. I *moo,
CURRENT INTELLIGENCE WEEKLY SUMMARY
26 February 1959
Rising unrest among Peru's
5,000,000 Indians--who make up
half the population--is sug-
gested by recent violence among
the long-docile Indian miners
and by the increasingly frequent
attempts of predominantly In-
dian mobs to seize land. Fac-
tors contributing to the unrest
are Communist agitation, in-
creasing contacts between the
poverty-stricken Indians and
the relatively wealthy coastal
dwellers, and depressed condi-
tions in mining and agriculture,
the principal occupations in
the Indians' Andean homeland.
Peru's Indian population
is concentrated in the Sierra--
the Andean regions above 9,000
feet. Most speak no Spanish,
are illiterate in any language,
and have thus far played no
role in Peru's political life.
Some are employed in copper,
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ECUADOR
Percent of total population
Percent of total area
CURRENT INTELLIGENCE WEEKLY SUMMARY
26 February 1959
Cerro a
de Pasco
coast and sierra inhabitants has been
increased over the past two years by
Arcqurpa
Toquepaia
lead, and zinc mines, which
have been adversely affected
by the depressed market for
nonferrous metals. Most still
engage in subsistence farming,
but this has been made more
difficult in recent years by
repeated devastating droughts.
Many are migrating to the coast-
al cities, attracted by the
much higher standard of living
there.
One of the first moves of
the incumbent conservative gov-
ernment on taking power in 1956
was to appoint a commission to
draw up a program for housing
l rrkc
711