CURRENT INTELLIGENCE WEEKLY SUMMARY

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• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A002200080001-0
• Release Decision: RIPPUB
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• Document Page Count: 46
• Document Creation Date: December 20, 2016
• Document Release Date: December 19, 2005
• Sequence Number: 1
• Publication Date: October 18, 1999
• Content Type: SUMMARY

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CONFIDENTIAL
SF2RET
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
p DECLASSIFIED
CLASS. CHANGED TO: T
NO CHANGE IN CLASS. Q
COPY NO.
OCI NO. 1685/59
30 April 1959
DOCUMENT NO.
NEXT REVIEW DATE:
AUTH: LlR 70'
DATE/
I REVIEWER
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
RE U N 10 60 9
%MMEtAWEL, s '
CONFIDENTIAL
State Department review completed
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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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CONFIDENTIAL
CURRENT INTELLIGENCE WEEKLY SUMMARY
30 April 1959
OF IMMEDIATE INTEREST
EAST-WEST NEGOTIATIONS
In line with the USSR's
general posture toward East-
West negotiations, the two-day
meeting of Warsaw Pact foreign
ministers, attended by the Chi-
nese Communist deputy foreign
minister, struck a "moderate"
tone with the avowed purpose of
encouraging Western "flexibili-
ty" in the forthcoming talks.
The conference communique is-
sued on 28 April expressed unan-
imous approval and support of
Moscow's proposals for a German
peace treaty and for converting
West Berlin into a free city.
The communique repeated
charges made in the recent So-
viet notes to the Unites States
and West Germany that alleged
measures to speed up the nun='
clear rearmament of West German
.forces are designed to confront
the foreign ministers' confer-
ence with a fait accompli. It
also denounced Bonn's policies
as "counteracting" all proposals
to ease tensions and achieve a
disarmament agreement, includ-
ing a nuclear-free zone in Cen-
tral Europe. The communique,
avoided, howeV'et, bellicose
threats and pledged that bloc
governments will do "everything
in their power to ensure the
success of the negotiations."
Foreign Minister Gromyko's
general line of action at Geneva
was foreshadowed in the commu-
nique, which called for "full
participation" of Poland and
Czechoslovakia in both the for-
eign ministers' and summit meet-
ings. It asserted that the two
German states have the right to
"take their due place at the
conference table in Geneva,"
suggesting that the-USSR will
not insist on full participation
of the East German representa-
tive and will accept observer
or consultant status for the
two German delegations.
The communique served no-
tice that one of Gromyko's main
tactical aims will be to defeat
Western insistence that Berlin
and a German treaty must be dis-
cussed in the broader context-
of German reunification and
European security. It reiter-
ated that reunification is the
exclusive problem of the two
Germanys, and charged that pro-
posals to "tie those problems
up in one knot" would be aimed
at "making it difficult to adopt
any agreed decisions" on any
of them.
~~NTI1~L
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 April 1959
Moscow's confidence that
it will enter the foreign min-
isters' meeting with a strong
bargaining position was reflect-
ed in Soviet propaganda stress-
ing disunity among the Western
powers.
Nuclear Test Cessation
In a characteristically
bold maneuver to divide his
opponents and extricate himself
from a difficult position, Khru-
shchev, in letters to Prime
Minister Macmillan and President
Eisenhower on 23 April, accepted
a suggestion by Macmillan for
a predetermined number of annual
on-site inspections of suspected
nuclear explosions. This shift
in the Soviet position was pre-
sented as an effort to break
the deadlock on the crucial is-
sue of inspection procedures
and pave the way for an agree-
ment to halt all nuclear-weap-
ons,, tests.
Khrushchev rejected the
American and British proposal
for a phased approach, beginning
with suspension of atmospheric
tests, as on "unfair deal" de-
signed to mislead public opinion
and enable the Western powers
to continue their nuclear weap-
ons development programs. The
Western proposal, advanced on
13 April, had thrown the USSR
on the defensive, and Khrushchev
probably believed acceptance
of Macmillan's compromise pro-
posal. would not only enable him
to regain the initiative in the
nuclear test talks but also to
exploit any Western differences
on this issue.
Soviet delegate Tsarapkin
at Geneva is resorting to the
time-honored Soviet tactic of
demanding that the West must
first accept Khrushchev's new
proposal in principle before
details can be discussed. On
28 April, however, he clarified
the Soviet position by stating
that the USSR will drop its de-
mand for a veto on the dispatch
of inspection teams if the num-
ber of inspections of suspected
nuclear explosions to be per-
mitted each year is agreed on
in advance. He also announced
that Moscow would agree to hav-
ing a "permanent inspection team
located somewhere" and to permit
automatic inspection when con-
trol-system instruments indicate
a suspicious event.
Tsarapkin made it clear
that the USSR contemplated only
a small number of annual inspec-
tions, echoing a statement by
Khrushchev in his letter to
President Eisenhower. Moreover,
Tsarapkin insisted that the an-
nual quota must be fixed by a
"political decision," not on a
technical basis, and that the
three nuclear powers must now
work out a "political compro),-'
mice."
The political objectives
of dividing the United States
and Britain underlying this
latest Soviet move were evident
in Tssarapkin's remark that he
expected the American and British
delegates to support Khrushchev's
new proposal, in view of the
fact that the original suggestion
for an inspection quota had been
made by Macmillan. Khrushchev
also expressed confidence in his
letter to the prime minister
that the British delegate at
Geneva would be instructed to
work for a solution on this
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CURRENT INTELLIGENCE WEEKLY SRy
30 April 1959
basis, "taking into account the
considerations you (Macmillan)
expressed in Moscow."
West Germany and West Berlin
A recent public opinion
survey revealed that on the
question of accepting East Ger-
man control over Berlin access
routes or sending a convoy
through at the "risk of war,"
over 50 percent of the Berliners
would prefer a risk of war,
while only 21 percent of the
West Germans would advocate
such a move. Some dealings with
East Germans on access would
be acceptable to 41 percent in
West Germany, while 38 percent
were undecided.
A majority of both West
Germans and Berliners believed
that the Western powers would
"stand firm" in insisting on
free access to Berlin. Although
the chances for unification
were considered poor by over
50 percent, a majority of those
interviewed expected some worth-
while results from the forth-
coming East-West conferences.
Eighty percent in Berlin and
59 percent in West Germany ex-
pected the Soviet Union to com-
promise or back down on the
Berlin question.
Almost two thirds of the
West Germans interviewed favored
direct political negotiations
between Bonn and the East'Ger-
man"Government on unification,
indicating that Bonn's policy
of rejecting such negotiations
is apparently not supported by
the majority of the public.
West Berlin opinion on the ques-
tion.was almost evenly divided.
Free elections, however, are
considered an essential condi--
tion for unification by a major-
ity of those questioned.
The poll shows a general
indecisiveness over East-West
troop withdrawals from Germany
prior to unification. While
39 percent of the West Germans
fell: that such a move would en-
danger German security, 37 per-
cent; believed it would not be
dangerous or would make no dif-
ference, and 24 percent were un-
decided.
Prime Minister Macmillan's
decision not to call general
elections this spring will tend
to increase pressures on his
government to,promote compro-
mises in coming East-West ne-
gotiations. The elections,
mandatory by May 1960, now are
most likely in October. The
holding of elections soon after
summit talks would place Mac-
millan under maximum pressure
to secure agreement there, in
view of the expected closeness
of the electoral contest.
Meanwhile, the government
has publicly reiterated its
endorsement of a special zone
of arms limitation in Central
Europe. Despite the toning
down of its controversial ideas
for the sake of immediate agree-
ment on a united Western posies'.
tion for the Geneva foreign min-
isters' meeting, Foreign Secre-
tary Lloyd told Parliament on
27 April that he believed ten-
sion might be lessened by means
of a special zone of arms limi-
tation and inspection. He did
not tie this directl to Ger-
m n reunification.
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;CURRENT INTELLIGENCE WEEKLY SUMMARY
30 April 1959
MIDDLE EAST HIGHLIGHTS
Iraq
New appointments to a re-
vamped Iraqi cabinet still
not been announced
because lead-
ers
e National Democratic
party (NDP)--the extreme left-
wing element which forms the
core of the present cabinet and
which is collaborating with the
Communists in a "national front"
--are trying to bargain with the
Communists in an effort to limit
Communist influence. The Commu-
nists, in line with their appar-
ent tactic of avoiding the ap-
pearance of an abrupt take-over
in Iraq, may agree to limit
their participation in the cabi-
net, but recent articles in the
Iraqi Communist press indicate
that they are seeking direct,
open membership in the govern-
ment for the first time since
the revolution.
The position of the NDP
has almost certainly been seri-
ously weakened by the departure
last week end of its chief,
Kamil Chadirchi, for medical
treatment in the USSR.
The Communists meanwhile
are further consolidating their
position elsewhere in the coun-
try. New instances of Cpmmunist-
ifisp redi terror tactics have
occurred in Basra, in southern
Iraq, where an army officer was
killed by his own troops and
where other officers apparently
have been murdered following
disputes with the Communist-
dominated Popular Resistance
Force.
Economy Minister Kubba,who
spearheads the Soviet economic
penetration effort in Iraq,an-
nounced on 27 April that he
would seek revision of trade
agreements with nonbloc states
in order to bring Iraq's trade
with the free world in line with
the controlled economy he wants
to impose on the country.
Iraq's first budget, an-
nounced this week, reflects the
economic stagnation which now
characterizes the country. It
shows an estimated d?ficit of
more than $21,000,000, despite
the fact that a higher propor-
tion of oil revenue is to be
used for current operations
than was the practice under the
Nuri government. The deficit
is due in large part, however,
to a decline in world oil prices
rather than to the specific
practices of the regime. Budg-
eted military spending--and
there is probably spending not
included in the published fi-
gures--will account for about
$94,,000,000, about'.'.a third.'.. _
of the planned total expenditure
of $286,000,000.
The Baghdad government aaso
remains concerned over border
problems with the UAR, Turkey,
and Iran.
A Turkish Foreign Ministry
announcement on 26 April stated
that some 700 Kurds have been
given asylum in southern Turkey.
This group reportedly comprises
largely women and children, who
have fled Iraq as a result of a
dispute between the leader of
their tribe and Mulla Mustafa
Barz;ani, the pro-Soviet Kurdish
leader. The Kurds repatriated
recently from the USSR to Iraq
are 3arzanis. The UAR apparent-
ly is still hopeful that it can
use the Shammar tribesmen who
have been disturbing the Iraqi-
Syrian border area.
Ankara has become increas-
ingly concerned over the Com-
munist threat in Iraq and its
implications for Turkish secu-
rity. Prime Minister Menderes
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 April 1959
has proposed immediate American-
Turkish talks on Iraq and the
Middle Eastern situation in
general and maintains that the
adoption of a common US-Turkish
policy is a matter of utmost
urgency. While Ankara may still
hope that Qasim can be persuaded
of the Communist danger, Tur-
key's action in giving asylum
to Kurdish refugees from Iraq
suggests that it is seeking to
exert greater influence over
the situation in Iraq even at
the risk of jeopardizing its
tenuous access to Qasim.
UAR-Soviet Relations
Soviet leaders are continu-
ing their effort to convince
Nasir that his long-term inter-
ests will be best served by re-
laxing his anti-Communist cam-
paign.
On 20 April Khrushchev
sent Nasir a conciliatory 20-
page letter in which he apolo-
gized for his remark on 16 March
that Nasir was using the "lan-
guage of imperialism." He flat-
tered the UAR President as "the
only leader of the Arab world"
and observed that Soviet support
of Iraq merely. fulfilled Nasir's
own request during his Moscow
visit last summer. Khrushchev
cautioned Nasir not to look to
the West for aid, and observed
that, despite the "humiliation"
to which the USSR had been sub-
jected by Nasir's remarks,Soviet
aid would be forthcoming as prom-
ised. for the Aswan High Dam. The
Soviet leader concluded by pro-
posing that Nasir call off the
anti-Communist campaign. Khru-
shchev reportedly added a per-
sonal appeal by asserting that
Nasir's attacks on him had hurt
his position, since the Soviet
policy toward the UAR is iden-
tified as his own.
Following up Khrushchev's
letter, Radio Moscow this week
announced that there is "no
foundation" for "talk" of a stop-
page of Soviet aid to the UAR,
and the UAR High Dam Committee
has been informed--almost three
weeks'Ahead of schedule--that
studies of detailed plans for
construction of -the dam have
been completed. The', Egyptian min-
ister of public works, heading
an, expert committee, is sched-
uled to fly to Moscow next week
for discussions.
Nasir nevertheless report-
edly said he intends to continue
to attack Communism in the Arab
world--although he might not re-
peat his criticism of conditions
in. the USSR and Eastern Europe.
As a tactic to promote a quarrel
between the Iraqi prime minister
and the Communists, he has ordered
all attacks on Qasim personally
to cease. In his recent speech-
es, Nasir has followed this line,
and has also included attacks
on Western "imperialism."
The attacks on the West
probably are motivated both by
a desire to maintain a "neutral"
posture and his abiding suspi-
cion that the West will not
support him, even in an anti-
Communist drive. Nasir is es-
pecially suspicious of the Brit-
ish, whom UAR propaganda por-
trays as collaborating with the
Iraqi Communists. London's fi-
nancial maneuvers against the 25X1
UAR and the British decision
to sell arms to Iraq are like1v
to confirm Nasir's view.
Soviet-Iranian Relations
The USSR has begun a new
phase in its propaganda cam-
paign to undermine the Iranian
regime by initiating broadcasts
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 April 1959
aimed at fomenting unrest among
tribal elements Radio Moscow
on 27 April gave its first spe-
cific support to the Iranian.
Kurds and the traditionally
antiregime Qashqai tribes in
Persian-language broadcasts to
Iran. About the same date, a
new clandestine station--"The
National Voice of Iran"--which
is Soviet inspired if not ac-
tually in the USSR, began at-
tacking the Shah's tribal pol-
The principal Qashaai
tribal chief, Nasr Khan,
General Sadiq Shara, whom they
have accused of'conspiring
aga:Lnst,the `King. _ Prime Minis-
ter Rifai, however, has defended
Share against the Bedouin ele-
ments' demand that he be arrested
immediately on his return to
Amman from accompanying Husayn
on a world.tour .
This maneuvering has pro-
duced a new spate of rumors that
a cabinet change may occur soon.
Prospective candidates to re-
place "strong man" Rif ai are
seeking popular favor by announc-
ing they would attempt to achieve
a reconciliation with Nasir.
King Husayn has continued to
assert that he regards Nasir as
the prime threat to the Arab
world, and the King is likely
to find himself again strongly
at odds with the opposition pol-
iticians.
may accept So-
viet support. Realizing that
Iran is already concerned about
the loyalties of its estimated
750,000 Kurds, Nasr Khan may be
attempting to obtain prompt set-
tlement of his property claims
from the Iranian Government by
threatening to cause unrest
among the estimated 300,000
Qashqai tribesmen in southern
Iran.
King Husayn returns to Jor-
dan in the midst of intensified
political intrigue. Bedouin
elements are still seeking to
oust the army chief of staff,
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 Tibet's rugged terrain, how-
ever, will permit survival
.of small rebel bands.
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
30 April 1959
Chinese Communist troops
continue their efforts to clear
out the remnants of Tibetan
rebellion. Concentrations
of rebel forces have been
broken up by the Chinese
drive into the Khamba-
occu,pied area of southeast-
ern': Tibet
Simultaneously with the
"pacification" operations
against hold-out rebels, the
Chinese are attempting to seal
Tibet's border with Nepal,
Bhutan, and India and to pre-
vent a large-scale exodus of
refugees. While this action
will cut down the number of
escapees, possibly as many
as 5,000 have already crossed
into Bhutan and India.
IKNkNG UIG/-4U2 AUTO
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Katman
Stung, by New Delhi's
sympathy for the Tibetans and
Tsaidam
6astn
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..SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
30 April 1959
by its continuing criticism
of Chinese actions., Peiping
is stepping up fit-,,accusations
against India. It is attempt-
ing to prove Indian complicity
in the revolt by "documenting"
charges that Tibetans in Kalim-
pong "had asked the Indian Gov-
ernment to carry out open
interference." The Chinese
Communists also hope to
.keep pressure on New Delhi
to curtail its criticism
by charging that the Dalai
Lama's "abductors" are abet-
ted by Indian "expansion-
ists."
People's Daily on 26 April
said a ru s admission that
the Dalai Lama wrote three
letters to the Chinese repre-
sentative in Tibet in an effort
to avoid an armed clash in
Lhasa "automatically confirms"
that the Tibetan leader is
"held under duress." The Da-
lai Lama has claimed the
letters were "doctored" by
Peiping. This duress line is
useful in Peiping's efforts
to "prove" that the Dalai Lama
supports its policies and to
keep the door open for any
future negotiations with
him.
The Peiping press has main-
tained its bitter tone toward
all detractors. An Indonesian
newspaper was accused of "dis-
torting the facts" by suggest-
ing Communist China did not
recognize religion as a nation-
al way of life. The UAR was
charged with "scurrilous at-
tacks" on China. The crown
prince of Sikkim was charged
with "slander."
Official Communist protests
have been lodged with New Delhi
over the defacing of Mao Tse-
tung's portrait by a mob of
tomato-hurling Indians, and
Cambodian Premier Sihanouk's
remark, made in France, that he
would not have shown Nehru's
restraint was reportedly pro-
tested by the Chinese Communist
ambassador in Phnom Penh last
week.
Prime Minister Nehru, re-
acting to this tougher line,
has lashed out at Peiping.
Following his 24 April meeting
with the Dalai Lama at Mussoorie,
Nehru categorically denied
charges that the Dalai Lama
had been abducted. He "then
launched his strongest rebuttal
of Communist China's charges,
accusing Peiping of using lan-
guage of the cold war and
maintaining that its charges
against India were made "re-
gardless of truth or propriety."
Terming the charges "so fan-
tanstic, I find it difficult
to deal with them," Nehru added
that he had made a formal pro-
test to Peiping.
Nehru, clearly angered by
the growing attacks on.India,
despite his efforts to cairn. the
situation, apparently believes
that his past efforts to avoid
recriminations have been inter-
preted in Peiping as a sign of
weakness. He probably intends
to make Communist China aware
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 April 1959
that while he hopes to keep the
breach between New Delhi and
Peiping from widening, a con-
tinuation of such charges could
have serious long-term effects
on Sino-Indian relations. Pei-
ping, for its part, has kept
the way clear for eventual rap-
port with Nehru by avoidin
personal attacks on him.
CHINESE COMMUNIST GOVERNMENT CHANGES
The naming of Liu Shao-chi
to the chairmanship of the Pei-
ping regime is another indica-
tion that Mao Tse-tung wishes
Liu to succeed him eventually
as chairman of the Chinese Com-
munist party. The government
post, although largely ceremo-
nial, adds to Liu's prestige
and will facilitate the task
of building up the image of Liu
as a benign father-figure like
Mao.
No significant change in
the Chinese Communist scene
is expected to result. Both
Mao and Liu--who has identified
himself closely with Mao and
his policies--advocated a close
relationship with the USSR
while preserving China's free-
dom from Soviet control.
Mao told the party last
December he did not want to be
nominated for the government
chairmanship again because he
wanted to devote his time to
theory and questions of nation-
al policy. Shortly thereafter,
the regime began to encourage
discussion of Vice Chairman
Chu Te for the top government
post. Chou, as an esteemed
party elder with nothing much
to do, seemed the right man
for the .ob.
Sometime after January,
Mao, apparently changed his
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vow SECRET
CURRENT INTELLIGENCE WEE1{LY SUMMARY
30 April 1959
mind. It may be that Chu con-
tributed to this, contending
that he was too old (72) or
lacked the ability to deal ef-
fectively with foreign visitors.
Moreover, Liu himself may have
decided he wanted the post and
persuaded Mao to give it to
him. In any case, it is virtu-
ally certain that the appoint-
ment is a mark of favor for
Liu, not a "kick upstairs."
The most important govern-
ment post, the premiership,
will remain in Chou's hands.
His reappointment to this post
--which probably is the basis
of his power in the party--ap-
pears to ensure his positic.l as
the third ranking leader, be-
hind, Mao and Liu.
Chou's new cabinet--ap-
proved at the closing session
of the National People's Con-
gress--remains essentially the
same as the previous one, al-
though four deputy premiers have
been added. These include the
party's principal spokesmen on
agriculture and on propaganda,
and the regime's public securi-
ty officer. In other appoint-
ments, Chen Yi remains foreign
minister and Peng Te-huai has
been renamed minister of defense.
Chu Te replaced Liu Shao-
chi as chairman of the stand-
ing committee of the congress.
The congress named both the
Dalai and Panchen Lamas to the
largely honorary posts of dep-
uties on Chu's standing commit-
tee.
The two new vice chairmen
of the goverment are compara-
tively unimportant figures.
TurLg Pi-wu is one of two surviv-
ing founders of the Chinese
Communist party, Mao being the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 April 1959
other. Soong Ching-ling, sis-
ter of Madame Chiang Kai-shek,
is the widow of Sun Yat-sen,
Chinese revolutionary leader
of the early 20th century. The
selection of Soong--a non-Com-
munist--appears to be a gesture
to "democratic'" personages and
Overseas Chinese. Two vice
THE SITUATION
The prompt reaction of
other American countries to the
recent landing of small inva;-r-
gicn forces in Panama has prob-
ably strengthened the unstable
De la Guardia government and
discouraged support for the in-
vaders from other antiadminis-
tration groups. The Council
of the Organization of Ameri-
can States; (OAS), in response
to Panamanian appeals for help,
sent an investigating committee
on 28 April and recommended that
member states give favorable
consideration to Panamanian re-
quests for arms. Guatemala and
PANAMA
- wrr San Highway
u - yt. --all-weather .....under construction
chairmen apparently .Werese-
lected--in violation of the con-
stitution--to avoid the ticklish
situation of having a non-Com-
munist succeed to the chairman-
ship in the event of Liu'
den retirement or death.
IN PANAMA
the United States have made arms
and other equipment available to
the Panamanian National Guard,
which is reluctant to engage the
revolutionaries. Air and sea
patrol facilities are being made
available to the investigating
committee.
Premier Fidel Castro and
other Cuban officials have con-
demned participation of Cuban
citizens--reportedly 80 of a
total of 86 attackers--in the in-
vasion and promised stringent
action against them. The de-
parture of the expedition from
r - AfJ.e Lemding
-70 April II men
ISLA
DEL REY
GULF OF PANAMA D W R I E N
CM0K13I
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IWO
CURRENT INTELLIGENCE WEEKLY SUMMARY
30 April 1959
Cuba on 19 April may have been
toles an off i-
cials
e revo u-
tionaries apparently have not
received the local. support they
expected. Their leader, Roberto
Arias, has taken asylum in the
Brazilian Embassy. A radical
student group has expressed
sympathy with them, however, and
may take advantage of the Nation-
al Guard's preoccupation with
the landing to incite scattered
disorders commemorating the seri- -
ous,; riots between students and
the National Guard in May 1958.
These would probably be harassing
hit-and-run attacks against the
unpopular guard, a politically
dominated urban police force
which has been disconcerted by
the ;scattered small revolts and
landings of the past month.
Guard Commandant Vallarino,
whose support has kept De la
Guardia in office against numer-
ous attempts to oust him, has
appeared nervous and unsure of
the guard's willingness or abil-
ity to fight the well-armed in-
vaders. He and other members of
the ruling clique apparently fear
another successful landing might
arouse latent resentment and
discontent among Panama's pover-
ty-stricken city dwellers, but
seem incapable of taking ef-
fective action. They apparently
intend to let the OAS committee
handle -'; the'.situatioh.
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CURRENT INTELLIGENCE WEEKLY SAY
30 April 1959
COMMUNIST CHINA_ TEMPERS OPTIMISM ON ECONOMIC PLAN
The session of the Chinese
Communist National People's
Congress just concluded has
given its stamp of approval to
the regime's highly ambitious
1959 plan and budget. Based on
the leadership's belief that
the economy can continue to leap
ahead in 1959 at rates which
compare favorably with those
said to have been achieved last
year, these plans reflect the
general air of economic optimism
prevalent at the congress. There
was a growing recognition, how-
ever, that achievement of these
objectives would not be easy.
The principal
speakers at the con-
gress pointed out that
despite the undoubted
victories of the re-
gime's policies in
general, there was
little ground for
complacency, since
China was still poor
and unable to meet
all the demands of
its huge population
and expanding economy.
They admitted that
shortages of materials,
power, and transport
would continue to
plague the rapid in-
dustrialization drive,
that the lack of ma-
chinery, chemical fer-
tilizer, and adequate
protection against ca-
lamities would hamper
agricultural develop-
zlYent, and that the
output of daily nec-
essities would con-
tinue to lag behind
demand.
The ~ speakers
enumerated "not a few
shortcomings" which
have characterized
the leap to date and which the
regime is aiming to overcome
this year. It will, for example,
try to overcome the lack of di-.
rection evident in the enthusi-
astic pursuit of many of the re-
gime's programs by a close in-
sistence on a state-directed
system of strict priorities in
both construction and production.
In industry the priority
system starts with steel, since,
as Premier Chou En-lai observed,
an insufficient supply has "ham-
pered" the growth of the entire
economy. Thus the weight of the
COMMUNIST CHINA'S PRODUCTION
CLAIMS AND TARGETS
Total Value of Industrial and
Agricultural Production
(billion dollars)
Total Value of Industrial
Production
(handicrafts included)
(billion dollare)
Steel (million tons)
Pig iron (million 1:ons)
Total Value of Agricultural
Production
(billion dollars)
Food grains (million tons)
Cotton (million tons)
Soybeans (million tons)
Hogs (million head)
~ti~11A~
1959
TARGET
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 April 1959
COMMUNIST CHINA'S BUDGETS
SOCIAL SERVICES,
CULTURAL
AND EDUCATION
PROFITS OF
STATE-OWNED
ENTERPRISES -
1957
RESULTS
industrial production effort
this year and a large share of
construction funds are to be
concentrated on the steel in-
dustry and industries serving
steel directly.
In agriculture, priority
is to be given to ensuring that
the regime's seemingly extrava-
gant grain and cotton targets
will be reached, To help achieve
this, misuses of rural manpower
and irrationality in some agri-
cultural practices are to be
corrected. Tong Tzu-hui, a
leading spokesman on agriculture
in earlier days, told the con-
gress that shortages of rural
manpower had led to improper
gathering and handling of late
crops last year, resulting in
an anomaly which he described
as "high production but not a
bumper harvest."
Premier Chou En-lai has
directed that at least 80 per-
cent of rural manpower should
be assigned to farming and re-
lated tasks like forestry, ani-
mal husbandry, and fishing. In-
dustrial projects in the com-
000 BILLION DOLLARS (2.46 YUAN=$1.00)
00o PERCENTAGE
DEFENSE-
REPAYMENT OF
DOMESTIC AND
FOREIGN LOANS
FOREIGN AID-'
OTHER
EXPENDITURES
A
RESULTS ' BUDGET RESULTS BUDGET
30 APRIL 1959
munes, he said, should be pro-
graYridd ""with the farming season
in mind," Touching on some of
the new farming practices popu-
larized during last year's leap,
Chou cautioned that they should
not be applied "indiscriminately."
Tong Tzu-hui reported that
crop failures had been caused
in some areas last year by in-
judicious close planting and
,recommended that new methods be
completely proved in experimental
plots before being widely used.
He also played down the effec
tiveness?of some water conserv..
anoy` projects and stressed, as
did other speakers,the continued
dependence of Chinese agriculture
on the weather.
Public recital of diffi-
culties such as these is not
new in China,although they were
generally played down during
the height of the leap. The
growing prominence given them
at this time suggests that Pei-
ping is beginning to lay the
groundwork for a gradual easing
of the intensive pace of the
giant leap.,
(Prepared by OUR)
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 April 1959
INTRAPARTY DIFFERENCES FLARE UP IN EAST GERMANY
The present drive in East
Germany to increase production
may well reopen the fundamental
conflict between economic real-
ists and doctrinaire party bu-
reaucrats which led last year
to the purge of Karl Schirdewan
and Others opposing party boss
Ulbricht's program of accelerat-
ed socialization. As a result,
those of Ulbricht's critics who
still hold office are likely to
find their positions increasing-
ly difficult.
The regime's demand for
major increases in production
will place new strains on the
party organization and may fur-
ther undercut the position of
the remaining moderates. The
regime is,attempting to under-
cut opposition to its econom-
ic policies by the use of in-
centive plans and wage increas-
es. Nevertheless, East German
workers are said to be "testy
and assertive" in the face of
the regime's demands. One pro-
Ulbricht functionary reportedly
summed up the situation: "If
we don't attain our goal, the
masses will laugh at us. If
we do reach it, we'll have lost
the workers."
Like Schirdewan, Selbmann
was dropped from the Socialist
Unity (Communist) party (SED)
central committee because of
his opposition to the economic
policies and tactics of Ulbricht.
Despite self-criticism at the
party congress last summer,Selb-
mann, has remained in a precar-
ious professional and political
position. Ulbricht has several
times included him in general
charges of factionalism and "con-
servatism" leveled at Schirdewan
and in addition has charged him
with failing to wage a suffi'
ciently resolute struggle a-
gainst "enemy agencies." Selb-
mann, not a Moscow-trained pro-
fessional bureaucrat like Ul-
bricht, often came into conflict
with Moscow-trained top party
officials when he was one of
the leading figures in East
German industry,
The regime in recent weeks
has been conducting a campaign
against middle- and low-level
party functionaries suspected
of sympathies for Schirdewan
and opposition to accelerated
socialization. The regime's
campaign is in line with Ul-
bricht's demand at the fourth
party plenum for elimination
of all such elements, andl
some such officials have been
removed in various long " es,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 April 1959
SOVIET-NEPALI TIES EXPANDED
The USSR and Nepal, which
in the past have maintained
diplomatic contact through their
missions in New Delhi, have
agreed to exchange resident dip-
lomatic.missions, The USSR 'by
breaking a "gentlemen's agree-
ment" with India of several
years' standing to postpone
opening a diplomatic mission in
Katmandu, is thus likely to in-
cur some disfavor with the
Indian Government--particular-
ly in view of developments in
Tibet. New Delhi regards Nepal
as within its sphere of influ-
ence. Communist China, which
has permission to open a con-
sulate in Katmandu, may also
press for establishment of an
embassy.
The decision was announced
by Moscow on 23 April and in
Katmandu on 24 April following
the signing of two agreements
covering Soviet economic assist-
ance in the form of outright
grants of about $7,500,000 to
Nepal. These agreements pro-
vide for a hospital, construc-
tion of 'power plants, sugar
factory, a cigarette factory,
and a survey for an east-west
road. The Soviet ambassador
to New Delhi, Ponomarenko, who
is also accredited to Nepal,
believes the embassy in Katmandu
will be opened by summer, and
that the technicians will ar-
rive by duly, These specialists
are to supervise construction
and train Nepali hospital per-
sonnel.
Ponomare.nko is being re-
placed in New Delhi by I. A.
Benediktov, who served as ambas-
sador there for five months in
1953. It is not known whether
Benediktov will also be appoint-
ed to head the new mission in
Nepal.
The agreements apparently
were pushed through by a small
Nepali government-palace clique,
including disgruntled lame-duck
ministers defeated in the re-
cent national elections which
resulted in a landslide victory
for the Congress party. Ac-
cording to the Katmandu news-
paper Kalpana, which reflects
Congress pay views, the agree-
ment to establish embassies was
made without the party's knowledge,
This is supported by the' fact; that
General Subarno, chairman of
the Council of Ministers and
a Congress leader who opposed
the agreement, was absent from
Katmandu at the time.
Kalpana accused the
Nepalese oreign Ministry
of "international adventur-
ism" and said it is in-
volving the country in
power blocs. The paper's
report suggests that the
new government, which is
soon to take office, may
stall on the openin of
the Soviet embassy.
The Communist bloc's in-
fluence in Cambodia is growing.
There is a continuing belief
among Cambodian leaders that
the United States was involved
in some degree in the recent
Sam Sary - Dap Chhuon plotting
against the Sihanouk govern-
ment. Tape recordings of Pre-
mier Sihanouk's demagogic
speeches, in which he virtually
said that the United States was
a co-conspirator with South
Vietnam and Thailand, are being
broadcast in provincial centers
throughout Cambodia.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 April 1959
In contrast, Sihanouk's
critical remarks regarding
Chinese Communist repression
in Tibet--made in an interview
in France, where he is con-
valescing from a recent opera-
tion--have been suppressed in
the Cambodian press. This ap-
parently resulted both from
pressure by the Chinese Commu-
nist and Soviet embassies in
Phnom Penh and from the incre-
dulity of Cambodian officials
that Sihanouk had been quoted
correctly.
Communist influence in the
Cambodian Ministry of Informa-
tion has become increasingly
apparent during the past year
and the Cambodian press now is
oriented toward the left. The
growing role of radio as a
propaganda medium is indicated
by Communist China's supplying
of three transmitters to the
Sihanouk government; one medium-
wave unit already is in opera-
tion and two for short-wave
broadcasting are to be ready by
the end of this year. The Cam-
bodian market has been flooded
with low-priced radio receivers
made in Communist China, and
radio stations in Peiping and
Hanoi. have stepped up their
Cambodian- and Chinese-language
broadcasts beamed to Cambodia.
In addition to exploiting
radio in Cambodia for internal
subversion, the Communist bloc
probably hopes to derive prop-
aganda gains from a multilingual
international broadcasting pro-
gram envisaged by Cambodia with
its new facilities. Sihanouk
has referred to Peiping's "gen-
erous" assistance as providing
Cambodia with the means to break
out of its international isola-
tion and to "answer victoriously
the gross calumnies and insults"
of certain foreign press and
radio sources. Current anti-
Sihanouk broadcasting by "Radio
Free Cambodia"--a clandestine
operation apparently supported
by South Vietnam and Thailand--
and -a threatened renewal of the
Phnom Penh - Saigon press war
can only serve to perpetuate Cam-
motives.
bodia's distrust of free world
Prime Minister Sarit re-
turned to Bangkok on 27 April
amid reports that Lt. Gen. Krit
Punnakan may be plotting a coup
against him. Krit, who like
most of the other leaders of
Thailand's ruling military
clique, is pro-Western and anti-
Communist, has long been at odds
with Sarit. Although Sarit has
sought to reduce Krit's power
by placing him in an unimpor-
tant staff position, Krit is
popular among junior officers--
who are perennially dissatis-
fied with their share of the
spoils--and is believed to re-
tain substantial support among
the armored units which he
formerly commanded. Moreover,
his brother, Maj. Gen. Pony;
Punnakan, holds the lucrative
Communications Ministry port-
folio in Sarit's cabinet.
Sarit is probably aware of
Krit's machinations. While he
would probably prefer to avoid
an early showdown, Sarit may
feel it essential to his con-
tinued control to deal decisive-
ly with the problem of Krit's
disaffection before it assumes
more serious proportions. His
most likely solution would be
to order Krit out of the country
on some face-saving diplomatic
assignment. Such a course might
cause considerable tension with-
in the military group, but Sarit
probably has ample power at this
point to accomplish it.
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CURRENT INTELLIGENCE WEEKLY SUNMMY
30 April 1959
At the governmental level,
Sarit and his colleagues have
been preoccupied with economic
matters. In addition to coping
with the chronic problems of
sluggish retail trade and "c,reep-
ing inflation," Sarit is anxious
to accelerate the pace of Thai-
land's economic development by
attracting substantial foreign
investment. Several proposed
ventures now are under consid-
eration, including competing
offers by Shell-Stanvac and
Standard Oil of Indiana to
build a 25,000-barrel-per-day
refinery.
There are indications that
former Premier Pridi Phanomyong
wishes to leave Communist China,
where he has been in exile for
ten years. However, his implica-
tion in the 1946 regicide case re-
mains a serious obstacle to his
return to Thailand. Sarit and
other Thai leaders are said to
regard Pridi as potentially of
great use as an economic adviser.
It is also open to question, how-
ever, that Peiping would permit
Pridi to leave China, particularly
if he has broken with the Commu-
nists as recent reports have
claimed.
Recent events in Singapore
appear to have enhanced the pros-
pect that the Conun=ist-infil-
trated People's Action party
(PAP) will form the next govern-
ment with a clear majority in
the island's first legislative
assembly to be entirely elected.
The elections on 30 May will
immediately precede the grant-
ing of a large measure of self-
government to the new State of
Singapore.
Filing of candidacies by
the other Singapore parties re-
flects the nearly complete col-
lapse of Chief Minister Lim Yew
Hock's plans for forming an anti-
PAP coalition to prevent split-
ting the vote among moderate and
conservative voters. Lim's mod-
erate Singapore People's Alli-
ance nominated 39 candidates
and the conservative Liberal So-
cialists 32. In addition, there
are 34 independent candidates
as well as numerous nominees
representing ten other parties,
most of whom will add to the
fragmentation of the moderate
vote. Even Lim may have trouble
retaining an assembly seat in
his supposedly "safe" district,
since the'non-PAP vote will be
split with his bitter enemy,
former Chief Minister David
Marshall, and with a Liberal
Socialist candidate.
The group of well-known
PAP candidates was bolstered
by the party's nomination of
the popular former mayor of
Singapore, Ong Eng Guan, and
12 city councilors following
the resignation of Ong and the
entire city council faction on
18 April. On nomination day,
the PAP was the only party to
file a complete slate of candi-
dates for all 51 assembly seats.
Initial analysis of the candidate
lists indicates that the party
has averted serious competition
from other left-wing parties
and independent candidates.
Despite the apparently in-
creased friction between the
PAP "moderates" and the pro-
Connnunist left wing, the party
is expected to avoid an open
split prior to the elections.
Indications are growing, however,
that a serious fight may develop
shortly after; the election
which could easily result in
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CURRENT INTELLItGENC:~ ?WEEKLY SUMMARY
30 April 1959
substantially increased ex-
tremist influence in the par-
ty's central executive commit-
tee. The Communists are al-
ready deeply entrenched in lo-
cal organizations.
Chief Minister Lim may be
able to force the withdrawal of
JAPANESE CONSERVATIVES
The decisive victories of
Japan's ruling conservative par-
ty over the opposition Social-
ists in the 23 April elections
for key gubernatorial and munic-
ipal posts stemmed the pro-So-
cialist trend of recent years
and should provide a favorable
climate for the conservatives
in the upper-house election in
early June. They should also
strengthen Prime Minister K.ishi's
personal position and quell,
at least temporarily, dissident
elements in the party. The So-
cialist leadership is certain
to come under fire from both
the right and left wings, and
the party's adverse showing
will possibly weaken its unity.
With approximately 80 per-
cent of the electorate voting,
conservatives were elected in
18 of the 20 gubernatorial con-
tests, including the key gov-
ernorships of Tokyo, Osaka,
an Hokkaido. Socialists were
elected governors only in
Fukuoka and Ibaragi prefectures,
Conservatives won mayoral races
in the important cities of
Osaka and Yokohama and, despite
some Socialist gains, the con-
servatives maintained over-
whelming control in Japan's 46
prefectural assemblies. Most
Japanese commentators tenta-
some of the moderate candidates.
It is doubtful, however, if
any action taken by him
at this late date, short of
instigating disorders to force
postponement of the elections,
can reverse the trend to-
ward a PAP election victory.
WIN ELECTION VICTORIES
tively agree that young voters
were less inclined than in pre.-
vious elections to support So-
cialist candidates.
While local issues and per-
sonalities were major factors in
the outcome, both parties made
foreign policy an issue in the
major contests. The conserva-
tive party charged the Social-
ists with "pro-Communism" be-
cause of their recent endorse-
ment of the Chinese Communist
position on several Asian ques-
tions, and the Socialists at-
tackEed the US-Japanese security
treaty. Conservative victories,
at least in the big cities, ap-
pear to reflect some popular
disillusionment with the Socic,.--
ists,
Hokkaido had been a Social-
ist stronghold during most of
the postwar period, The new con-
servative-led administration
there may help improve civilian-
military relations in a major
defense area where there is a 25X1
relatively large concentration of
Japanese forces in some American
installations.
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30 April 1959
ISRAEL DEVELOPING PORT OF EILAT
UAR harassment of Israeli
shipping through the Suez Canal
again emphasizes the importance
of Israel's port of Eilat on the
Gulf of Aqaba as a substitute
outlet to African and Asian
markets. While the Israelis
will continue to seek passage
rights through the canal, they
are planning to expand trade
through Eilat, and Prime Minister
Ben--Gurion has reiterated Israel's
determination to defend its
"freedom of navigation" in the
Red Sea against any UAR claims.
Between 1956--when Israel
broke Egypt's blockade of the
Gulf of Aqaba--and 1958, some
174 ships called at Eilat. Ex-
clusive of oil, Eilat now handles
about 3,000 tons of cargo per
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 April 1959;
month--only a frac-
tion of its capacity,
even with the port's
present limited facil-
ities. On completion
of a new pier which
has been under con-
struction for almost
a year--together with
the recent installa-
tion of new bulk-load-
ing equipment--Eilat
could probably handle
annually over 100,000
tons of outbound car-
go alone. In addi=
tion, approximately
28,000 barrels a day
of Iranian oil now
are received there
for transport by pipe-
line to the Haifa re-
finery.
In 1958, Israel
shipped from 120,000
to 130,000 tons of
cargo through the
Suez Canal on ships
flying neutral flags.
If this route were
denied entirely to
the Israelis, Eilat's
capacity probably
would. enable Israel
to maintain its trade
with East and South
Africa and Asia for
a limited period at
nearly its present
-Road
--.- Railroad
O MILES 50
30437
SINAI PENINSULA
volume. This would be an ex-
pensive stopgap at best, since
trucking costs from production
centers in the north across
150'miles of Negev wastelands
are extremely high. An even-
tual railway extension from
Beersheba to Eilat is contem-
plated.
The government might sub-
sidize overland shipments be-
cause of the political impor-.
tance of Israel's African and
Asian trade. Economically, this
trade is of minor importance,
constituting less than 5 per-
cent of Israel's total commerce.
Contacts in these markets, how-
ever, permit the Israelis to
cultivate friendships which aid
them in disputes with the Arabs.
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CUIt'IENT INTELLIGENCE WEEKLY SUMMARY
30 April 1959
The new French Senate
elected on 26 April is similar
in political complexion to its
Fourth Republic predecessor,
the Council for the Republic,
and thus possesses a closer
balance between right and left
than the rightist-dominated Na-
tional Assembly elected in the
tide of Gaullist enthusiasm
last November. Since the new
constitution gives the Senate
a political role almost equal
to that of the assembly, it may
serve De Gaulle as a counter-
weight if he decides to press
policies--particularly his Al-
gerian policy--which are un-
FRENCH NATIONAL ASSEMBLY
FIGURES ARE TENTATIVE
PENDING FINAL ALIGNMENTS
GERIAM BILOC*
acceptable to his rightist sup-
porters, and it may become im-
portant in the event of con-
flicts between Premier Debrd
and the assembly.
Of the 255 senators elec t-
ed in metropolitan France, 1e
were members of the old council11
and 30 were former assembly dep-
uties defeated in November. The
second-ranking French Communist,
Jacques Duclos, and Jeannette
Vermeersch, wife of Communist
party Secretary General Maurice
Thorez, both of whom were de-
feated in November, were elected
to the Senate. This may mean a.
"Administrative formations" (for purposes of participation
on assembly committees).
(1) Mostly Radical-Socialists and Democratic Resistance Union.
(2) Mostly conservative Radicals.
131 Includes Georges Bidault (formerly in MRP) and overseas deputies.
NEW FRENCH SENATE
METROPOLITAN FRANCE ONLY*
FIGURES IN PARENTHESES
ARE FOR OUTGOING SENATE
LEFT\
*255 senators elected in Metropolitan France; 34 to be elected
later are in Algeria and the Sahara; 7 in Overseas Departments;
5 in Overseas Territories; 6 by Frenchmen living abroad.
SECRET
shift of the Commu-
nists' parliamentary
focus from the assem-
bly to the Senate.
The proportionately
greater number of
left and center ele-
ments in the Senate
would afford the Com-
munists a more favor-
able propaganda forum
on such traditionally
divisive questions as
the church-school is-
sue, which Debrd seems
certain to bring up.
The Debrd govern-
ment's parliamentary
backing, which is firm
in the assembly because
of the absolute major! 25X1
ity comprised of the
'Union for a New Repub-
lic (UNI1) and the In-
dependent party, de-
pends in the Senate on
the third member of
the coalition, the Pop-
'alar Republicans. The
UNR's loss of two sen-
atorial seats,following
only moderate gains in
the March municipal
elections, may even
damage the party's co-
'`ies ion in the lower
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30 April 1959
house,particularly as it gets
down for the first time to
actual policies and legislative
programs with the opening of
parliament on 28 April.
The 34 senators to be
elected on 31 May from Algeria
will probably strengthen the
government coalition, but the
remaining 18 senators--repre-
senting overseas departments and
territories, and Frenchmen liv-
ing abroad--will probably be
scattered among several parties.
No cabinet changes will ensue
since the three cabinet min=
isters who ran and won have
decided to remain in the
cabinet.
WEST AFRICAN
Two centers of power po-
tentially hostile to each other
are developing among the auton-
omous,-, of the French
Community which formerly were
included in the Federation of
French West Africa. The Mali
Federation, which was formed
by Senegal and Soudan, in early
April, seems headed for early
independence. A rival grouping
of four republics, headed by
the rich Ivory Coast and now
associated for economic cooper-
ation, strongly supports the
French Community.
FRENCH TROPICAL AFRICA
Villa CI ws
MAURITANIA
CURRENT INTELLIGENCE WEEKLY SUMMARY
CwM R N9 J/
:J Federation of Mali
^?^^^? Republic boundary
30 APRIL 1959
to ~ ereua~oie
DEVELOPMENTS
The leaders of the Mali
Federation--President Modibo
Keita and Leopold Senghor, who
is president of the federal as-
sembly--have recently stated
that Mali should have its own
diplomatic missions and repre-
sentation at the United Nations.
Furthermore, they believe each
republic within the French Com-
munity should be delegated local
jurisdiction over powers en-
trusted to the community--de-
fense, foreign affairs, and fi-
nance. Their interpretation of
the French constitution as
CENTRAL AFRICA
SECRET
FRENCH
SOMALILAN
Dlibouti
Mars Ababa
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SECRET .
CURRENT INTELLIGENCE WEEKLY SUMMARY
30 April 1959
permitting the evolution of
autonomous republics into sov-
ereign countries and transfor-
mation of the community into a
multinational confederation
probably goes far beyond any-
thing contemplated by Paris.
French representatives at Dakar
reportedly are already recon-
ciled to the idea that Mali
will soon be independent.
Meanwhile, Felix Houphouet-
Boigny, political boss of the
Ivory Coast,, is developing a
pro-French Community grouping
based on economic cooperation
between his resources-rich pub-
lic and the underdeveloped re-
publics of Volta, Niger, and
Dahomey. The Ivory Coast ap-
pears willing to give some fi-
nancial assistance to the other
states., to enter into a customs
union, and to share in the con-
trol of its modern port of Abid-
jan and the rail links to the
interior.
If economic cooperation
should spread beyond the pres-
ent four republics to em-
brace the other three states
of former French West Africa--
Senegal, Soudan, and Mauritania
--it might be possible to re-
construct the economic unity
that existed prior to the
establishment of the new French
Community on 6 April. However,
if, as is likely, Ivory Coast
economic assistance develops
into political influence--
particularly in the' case of
the Voltaic Republic which
hhs traditionally close'con-
tacts with Abidjan--then the
cleavage of West Africa into at
least two conflicting blocs is
a real threat. This danger
now has increased because of
Houphouet-Boigny's decision
on 27 April to accept the
Ivory Coast premiership and
relinquish his ministerial
post in Paris, F
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 April 1959
AUSTRIA'S GENERAL ELECTIONS
The campaigning for the
10 May parliamentary elections
has further stimulated strong
pressures for drastic revision
of the coalition pact which has
given Austria a stable and
strongly pro-Western government
since 1945. It still seems
likely that the People's party
and the Socialists will recon-
stitute the coalition in some
form, but a radical shift in
party strengths as a result of
the elections might make it ex-
tremely difficult to achieve a
coalition agreement at all.
While both major parties
are nominally in favor of the
coalition, several
developments have
combined to make it
the only really con--
troversial election
issue. During the
past two years, in-
terparty relations
have progressively
deteriorated to the
point where govern-
ment operations have
become extremely dif-
ficult. Moreover,
disclosure during
the past year of cor-
ruption involving the
L W R HOUSE
. VOTES 1936 ELECTIONS
01
IVAN
SECRET
upper ranks of both parties has
caused many to question the
system of allocating public of-
fices on a rigidly proportioned
basis.
Ostensibly in an effort to
meet these problems, the People's
party has declared its inten-
tion to revise the coalition
agreement so as to deprive
either party of a "veto." Under
the proposed system, the two
parties would be required to
concert their views only on
foreign policy and financial
questions; all other issues
would be resolved by parliamen-
tary vote. The Socialists have
Aul;TRIAN NATIONALRAT
,717
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 April 19419
been quick to charge that this
is in fact "one-party rule,"
and to accuse the People's
party of hoping to establish a
parliamentary majority by al-
lying with the Liberals--a
small pan-German, Nazi-tinged
party now in the opposition.
Most observers believe it
unlikely that either coalition
party will achieve an absolute
majority by itself. If the
People's party holds its own
and the Liberals make signifi-
cant gains, the Socialists could
be forced from the government.
Although the Liberals--formerly
the Union of Independents--
have steadily declined in
SOVIET OVERTURES FOR WESTERN CREDITS
The USSR has renewed its
search for credits to finance
growing imports from Western
industrial countries... Soviet
representatives are probing
Western European governments,
financial institutions, and
exporters in an attempt to
secure government loans, gov-
ernment-guaranteed credits,
and long-term. commercial credits.
During British Prime Minister
Macmillan's recent visit to
Moscow, Khrushchev sought five-
year credits worth a total of
$700,000,000 to run from 1959
to 1963.
The Soviet Union's demand
for Western equipment, particu-
larly for the chemical industry,
is greater than its ability to
finance purchases in the West
through exports, despite efforts
to increase sales to the free
world. The USSR presumably also
wishes to secure credits to
permit it to develop a reputa-
tion as a reliable long-run.
trader making consistent pur-
chases of Western equipment--
in contrast to the erratic pur-
chases which have marked such
Soviet importing in the past.
strength since first appearing
on the ballot in 1949, they have
recently shown some revival of
strength in local elections.
Disappearance of the coal-
ition would unpredictably com-
plicate Austrian politics.
While the People's party and
the Socialists have reconciled
many of the differences which
brought their predecessor
parties to armed conflict in the
1930s, it is not entirely cer-
tain the fundamental antago-
nisms can be kept within bounds,
and the emergence of the Liberals
in a "balance-of-power" role
would sharpen these antagonisms.
A Soviet purchasing mis-
sion in Italy reportedly has
signed $20,000,000 worth of
contracts with private firms,
The wide
range of equipment and goods
involved reveals a Soviet at-
tempt to generate pressures
from numerous industries for
government participation in
large credits to sustain sales
of goods to the USSR. The Soviet
group reportedly also urged
Italian producers "not to miss
the favorable turning point in
Soviet foreign trade" but to
procure five-year credits to
enable the USSR to purchase a
variety of other complete plants;
the group alleged it could get
the plants elsewhere i Europe
if Italian credit is not forth-
coming.
Most officials in Western
Europe point out that normal
commercial short-term credits
are available to all traders,
but that long-term official or
government-guaranteed credits
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 April 1959
or the USSR are unlikely, ex-
cept for specific large-scale
projects normally handled with
special financial terms. The
British Government is currently
considering the extent to which
it may guarantee private cred-
its,., and it plans to send a
nigh-level trade mission to
Moscow in May--reportedly au-
thorized.to approve extension
of private credits up to $140,-
000,000. The Dutch, now ne-
gotiating the sale of ships tc
the USSR, indicate they may
extend some five-year credits
to the Russians for these
vessels,
Italy has taken the ini-
tiative in NATO for joint meas-
ures: to avoid official financial
commitments. The Italians see
a propaganda motive in the Soviet
bids timed to anticipate the
foreign ministers' conference,
and they are apprehensive that
favorable response from one or
more Western nations would lead
to a divisive competitive scram-
ble.tO increase export to the
bloc on a credit basis.
(Prepared jointly with ORR~7
25X1
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CONFIDENTIAL
CURRENT INTELLIGENCE WEEKLY SUMMARY
30 April 1959
PART III
PATTERNS AND PERSPECTIVES
THE PROBLEM OF WESTERN ACCESS TO BERLIN
The Western powers' rights
of access to Berlin derive from
their participation in the de-
feat of Germany in World War II
and the agreements reached with
the USSR concerning the postwar
occupation. These are embodied
in a number of documents includ-
ing a London agreement of Sep-
tember 1944 and an exchange of
letters between President Tru-
man and Stalin, and
a verbal agreement be-
tween General Clay and
Marshal Zhukov during
the summer of 1945.
The Paris Agreement
of 1949 terminating
the Berlin blockade
is also relevant.
There is, however,
no single document
signed by all four
powers providing for
unrestricted access
to the city by sur-
face and air. Allied
rights are based on
precedent and usage.
At the time of
the Soviet-East Ger-
man treaty of 1955
which granted "sov-
ereignty" to East
Germany, there was
an exchange of let-
ters between East
German Foreign Min-
ister Bolz and Soviet
Deputy Foreign Minis-
ter Zorin in which
the USSR stated that
it would "temporar-
ily" retain control
of Allied access to
Berlin pending the
`-,REPUBLIC
'
conclusion of further agree-
ments with the Allies. It is
the Soviet contention that the
USSR's planned peace treaty
with East Germany will inval-
idate all Allied occupation
agreements, including those
governing control of access to
West Berlin. This control
would then pass to the "sover-
eign" East German regime.
Road and Rail Access
The West's right to ground
access to Berlin was established
during a June 1945 meeting be-
tween General Clay, Marshal Zhu-
kov, and a British representa-
tive, The memorandum of conver-
sationL resulting from this meet-
ing was never authenticated,
however. The agreement has, in
practice, been interpreted to
mean that the Allies would sub-
mit to Soviet traffic regula-
tions and document checks but
not to inspection of vehicles
or cargo. Zhukov stated at the
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CO M UN T QN ROUTES BETWEEN
W T..GERMANY AND BERLIN!
chhoOh
Gclenfuerst
011 L I N
9
POLAND
C7ECHOSVAKIA
--- Railroad Autobahn Road
-Canal Air Corridor,
West German East German
` rail checkpoints
40
A highway checkpoints a
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CURRENT INTELLIGENCE WEEI{LY SUMMARY
30 April 1959
meeting that he did not deny
the right of Allied access, but
that the Soviet Union would not
"give a corridor." The agree-
ment is vague enough to be open
to honest differences of opin-
ion by both sides and has given
the USSR manifold opportunities
to harass traffic.
All Allied road traffic
must travel via the Helmstedt-
Berlin autobahn. There are
three other routes open to non-
Allied nationals, but 80 per-
cent of all road traffic goes
via Helmstedt. Some 37 percent
of Berlin's imports and 57 per-
cent of its exports by tonnage
go by road. Of military inter-
est is the fact that the 105-
mile stretch in East Germany
includes 47 bridges (the Elbe
bridge is over 1,200 yards
long, including 160 yards over
water) and 91 overpasses. There
are Allied, West German, Soviet,
and East German barriers or
checkpoints at each end.
After passing the Western
checkpoints, Allied vehicles
come to a barrier manned by
East Germans which normally is
raised automatically. Then
comes the Soviet checkpoint,
where the movement order--is-
sued unilaterally by Allied
military authorities--is
stamped, but the delay is
generally longer than would
seem necessary. The Allied
vehicle driver or convoy com-
mander is given a small white
form when he leaves the Soviet
checkpoint. This is surren-
dered at another East German
barrier--some 75 yards farther
inside East Germany--which nor-
mally is raised without ques-
tion.
The form appears to be no
more than permission from the
Russians to the East Germans to
permit the vehicle to proceed.
This procedure for passing
through an East German manned
barrier gives the East Germans
a foot in the door toward full
control of access. When Allied
vehicles leave East Germany go-
ing east or west, the East Ger-
mans merely raise the barriers
and no white form is involved.
The Russians do, however, check
the travel documents at their
checkpoint.
All Allied rail traffic
and all rail freight goes via
the Marienborn-Berlin rail line,
which roughly parallels the
Helmstedt autobahn. There are
five other interzonal rail lines
in use. Some 35 percent of West
Berlin's imports and 21 percent
of its exports, by tonnage, as
well as 98 percent of Allied
freight to the Berlin garrisons,
are handled by rail. Allied
trains while in East Germany are
hauled by East German locomotives
with ].3ast German crews.
The Allies operate 24 reg-
ularly scheduled trains per
week, with the arrangements be-
ing made between West and East
German railway officials. There
are a considerable number of
similar low-level trade and com-
mercial agreements between the
two railroad systems. There is
only one checkpoint on the rail
line, four miles from the zonal
border at Marienborn. Allied
trains have no contact with East
German officials; processing is
handled by the Russians.
Air Access
The question of air access
is the only one governed by a
properly authenticated document.
This was approved by the Allied
Control Council in 1945 and up-
dated in 1949. There are a num-
ber of points, however, which
are not entirely clear: one is
whether the Allies have exclu-
sive or priority rights to the
three air corridors. Thus far
the Russians have, in general,
appeared to recognize that the
Allies have exclusive rights,
since they have seldom used the
corridors themselves.
The most pressing question
is that of minimum and maximum
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 April 1951)
altitudes. A maximum altitude
of 10,000 feet was mentioned
in a draft of the 1945 agree-
ment, but did not appear in the
final document. There is a
10,000-foot altitude limit with-
in 20 miles of Berlin.
The air space. around Ber--
lin, known as the Berlin Control
Zone, is administered by one
of the two remaining quadripar-
tite bodies: the Berlin Air
Safety Center (BASC). The group
administering Spandau Prison is
the other such body. The BASC,
located in West Berlin, coordi-
nates traffic in and out of the
three airfields in West Berlin
and the one airfield just out-
side East Berlin but within
the Berlin Control Zone. This
does not mean, however, that
the Soviet Union normally sub-
mits its flight plans to the
BASC, as the Allies do; the
USSR schedules its flights so
as not to conflict with Allied
flights.
In addition to military
traffic, three civil air lines
from the three Allies regular-
ly operate to and from West
Berlin. None of the naviga-
tional aids, such as beacons
or radars, servicing the three
corridors are in East Germany.
Air travel to Berlin is
the only means.of travel which
is not subject to Communist
control. This freedom made
possible the Berlin airlift;
it also enables the Allies to
transport East German refugees
from West Berlin to West Ger-
many.
The Allied garrisons
could be supplied almost indef-
initely by airlift if a sur-
face blockade were enforced--
even if the Communists jammed
Allied air navigational aids,
making all but visual flights
impossible. An airlift could
not, however, sustain the West
Berlin civil population if
surface access were de-
nied.
Canal Traffic
Barge traffic via the ex-
tensive canal and river system
is of considerable importance
to West Berlin, although not
to the Allies. Some 2,600
West German barges are licensed
for interzonal movement, and
last year they carried some 25
percent of all freight in and
out of West Berlin. All canals
and locks in East Germany are
controlled by the East Germans.
As in the case of rail access,
arrangements for barge traffic
are made at a technical level
between West and East German
authorities. The canals were
closed during the Berlin block-
ade, and since then the East
Germans have from time to time
harassed traffic by closing the
locks "for repairs."
RESUMPTION OF POLITICAL CONTROVERSY ON CYPRUS
The spirit of conciliation
on Cyprus which grew out of the
signing of the London agree-
ments in February is being dis-
sipated by acts of violence
committed by rightist Greek
Cypriots against leftist Greek
Cypriots as well as against the
British. In addition, the fa-
voritism shown by Archbishop
Maka,rios toward members or sym-
pathizers of the former EOKA
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CYPRUS
CURRENT INTELLIGENCE WEEKLY SUMMARY
30 April 1959
Towns which will have both Greek
and Turkish Cypriot muntclpalitles.
Approximate areas where Britain
will retain sovereignty.
Greeks 361,199(80 2%) 416,986(78,9%)
Turks 80,548(17.9%) 92,642(17.5%)
Others 8,367 (1.9%) 19,251 (3.6%)
? Greek or mainly Greek
? Turkish or mainly Turkish
?' 1953 1956 Turks - 7.956
Nicosia 40,500 81,700 301
Limassol 27,000 36,500 15%
Famagusta 20 700 - 17%
Larnaca 16,400 - 20%
Paphos 6,500 - 37%
Kyrenia 3,400 - 19%
Letka - almost entirely Turkish
A higher proportion of Turks f oe is towns then Greek,
Paphos ?, ,...
~? Lisol
terrorist group in selecting
his provisional cabinet has
aroused the fears of other
Greek Cypriot factions and the
Turkish Cypriots.
Steps Toward Independence
The London agreement es-
tablished three committees to
work out by next February the
details for setting up an in-
dependent government, and to
spell out the international
guarantees for the island's
independence. A "transition-
al committee" on Cyprus con-
sists of British Governor Foot,
Greek Cypriot leader Archbishop
Makarios, Turkish Cypriot lead-
er Fazil Kucuk, and Greek and
Turkish Cypriot "provisional
ministers." These ministers
will gradually take over the
functions of government from
the British.
A constitutional committee
is also meeting on Cyprus, while
in London a joint committee is
negotiating on such matters as
British base rights and the
treaties guaranteeing the in-
dependence of Cyprus. The con-
stitutional and joint committees
include representatives of the
Greek, Turkish, and British gov-
ernments, in addition to Cypriot
leaders. Future steps toward
independence will include es-
tablishing a British-Greek-
Turkish military headquarters
on Cyprus and holding parlia-
mentary elections, probably
next spring.
Greek Cypriots
The youthful leaders of
the former terrorist EOKA group
announced on 1 April the forma-
tion of a new political party,
the United Democratic Reform
Front (EDMA). It has the ap-
proval of Makarios and is
likely to be the principal non-
Comnnunist political organiza-
tion among the Greek Cypriots.
These leaders are also report-
edly being brought into the
formerly ineffectual right-wing
Cyprus Confederation of Workers
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 April 1959
(SEK) in order to recruit mem-
bers at the expense of the is-
land's largest trade union, the
Communist Pan-Cyprian Federa-
tion of Labor (PEO).
Of the seven "provisional
ministers" chosen by Makarios,
two were high-ranking EOKA
leaders and most of the others
had cooperated with EOKA. The
average age of these Greek
Cypriot "provisional ministers"
is 32. Few have been prominent
in politics or civil affairs on
Cyprus.
Since his selections pro-
vided no representation for con-
servative business or left-wing
elements, Makarios included
representatives of these groups
in a widely representative 50-
man advisory council. He has
also publicly urged Governor
Foot to end the ban on the Com-
munist party--the Reform Party
of the Working People (AKEL).
Turkish and Greek Cypriots
The concern of the Turkish
Cypriots over the youth and ex-
tremist background of the mem-
bers of Makarios' provisional
cabinet, as well as his appeal
to end the ban on AKEL, was
probably responsible for the
Turkish Cypriots' pressing their
political and economic demands
more vigorously than previously.
The London agreements stipulated
that the Greek Cypriots would
select seven of the ten "provi-
sional ministers" and that the
Turkish Cypriots would select
three, including one of the im-
portant ministries. When the
transitional committee dis-
cussed how the posts would be
distributed, the hard bargain-
ing engaged in by the Turkish
and Greek Cypriots destroyed
some of the good will which had
prevailed on both sides.
The agreements left for
later negotiation the status of
separate Turkish and Greek Cyp-
riot municipal authorities in
the five major towns on Cyprus.
Makarrios' public statement that
the London agreement never rec-
ognized any Turkish Cypriot right
to administer separate zones in-
creased the Turkish Cypriots'
suspicions and caused them to
press their campaign for eco-
nomic self-sufficiency more
vigorously. However, Makarios
now apparently has agreed to a
compromise on the Turkish Cyp-
riots' demands to administer
their own municipal zones.
Turkish Cypriot leader Dr.
Fazi1L Kucuk visited Ankara last
month and sought a $5,600,000
loan to assist his followers in
developing cooperatives and other
enterprises. Since his return,
other Turkish Cypriot leaders
are encouraging Turkish Cypriot
landowners living in predom-
inantly Greek Cypriot areas to
sell their farms and move to
Turkish areas on Cyprus. Such
efforts to achieve partition in
economic and geographic terms
face major obstacles, since Turk-
ish and Greek Cypriot landhold-
ings throughout the island can-
not be separated easily ,and
the Greeks are more' experi-
enced businessmen and trad-
ers.
Makarios' statement to the
press in March that no inhabited
areas should be included in the
bases to be retained by Britain
has added to the difficulty of
solving the base problem.
In the declarations pub-
lished after the London talks,
Britain agreed to cede sover-
eignty over the island with
the specific exception of two
base areas. The British now
are determining the precise
limits of the areas they will
require. While British Defense
Minister Sandys has recently
expressed willingness to take
Makarios' views into considera-
tion, it seems unlikely that
the base areas, located in the
populous sections of the island,
could entirely exclude inhabited
places.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 April 1959
Future Implications
The former EOKA leaders,
now at the peak of their pop-
ularity, are publicly committed
to cooperate with Makarios.
Their acceptance of prominent
roles in the provisional cab-
inet, the major rightist polit-
ical party, and other right-
wing organizations may keep
their energies within normal
political channels. However,
the individuals who now lead
EDMA could be an unstable in-
fluence. They might resort to
their old habits of intimida-
tion and violence, particular-
ly if AKEL resumed activity
as a legal party or if the Com-
munist union, PEO, countered
rightist efforts to win away
its members. Greek Cypriots
have already clashed with po-
lice, who prevented them from
posting EDMA slogans on
walls.
The Communists on Cyprus,
apparently wanting to avoid
open competition for popular
support while the right wing
is at the peak of its popu-
larity, appear to be limiting
their response to EDMA's pre-
dominant position. They have
only remonstrated that EDMA
should adopt policies which
would allow all Greek Cypriots
to rally behind it. They prob-
ably expect their own strength
to increase as factional splits
occur and individual rivalries
for posts in the government de-
velop among the non- Com-
munists.
Andreas Ziartides, the
capable leader of PEO, appears
willing to support Makarios'
candidates for the legislative
elections, to be held sometime
in 1960. Bargaining appears to
be in progress over the legis-
lative seats the Communists
should get in return for their
cooperation. Makarios appears
desirous of maintaining the. sup-
port of all Greek Cypriots dur-
ing the transition to independ-
ence.
George Grivas, leader of
the EOKA terrorists, has left
Cyprus, has renounced any fur-
ther personal political role,
and has urged all Greek Cyp-
riots to unite behind Maka-,
rios,
Governor Foot believes
Makarios has capitulated to the
EOKA elements in the provisional
cabinet choices and that they
may have exerted pressure on
him. EOKA appears to be urg-
ing Makarios to have a showdown
with the Communists while right-
ist elements are still stronger
than the Communists.
Probably the key factor in
Makarios' tactics is his desire
to retain personal political
power. His remarks to the press
on British base rights and Turk-
ish separate municipal zones ap-
pear to reflect a desire to re-
tain his support in the face of
extremist contenders for leader-
ship, like Bishop Kyprianos of
Kyrenia, who still loudly de-
mands union with Greece.
For their part, the Turkish
Cypriots can be expected to re-
spond to any further hard bar-
gaining by the Greek Cypriots
with extreme demands of their
own. Since the Turkish Cypriots
are generally subject to close
control from Ankara, however,
they are unlikely to remain un-
cooperative in the face of An-
kara's desire for a settlement.
While Athens' influence over the
Greek Cypriots is less direct,
Greece is likely to influence
Makarios against actions which
would seriously endanger ;the
achievement of independence
next February.
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5EC:KP 1
30 April 1959
During the past year, the
European Economic Community
(EEC) or Common Market has come
to play an increasingly impor-
tant role in the economics and
politics of the free world.
While nonmembers view the six-
nation Common Market's future
relations with the international
trading community with suspi-
cion and concern the organiza-
tion seems bound to play an
influential role in determin-
ing the rules which govern world
trade. Whether that influence
will be cohesive or divisive
will depend largely on the res-
olution of conflicting tendencies
which have already become ap-
parent.
The "Hallstein Report"
The reaction in Western
Europe to a report prepared
early in March by President
Hallstein of the EEC Commission
has disclosed the complexity
of the problems posed by the
community. Compiled at the
request of the EEC Council,
which wanted a solution to the
deadlocked dispute over the
proposed Free Trade Area (FTA),
the report instead was an at-
tempt to write a general for-
eign policy for the community.
The report's central thesis
is that since the Common Market
has joined the United States
and Britain as one of the three
major forces in the free world
economy, it has assumed world-
wide responsibilities. Accord-
ingly, the EEC's priority objec-
tives must be to participate in
a program of assistance to the
underdeveloped countries and
actively support the General
Agreement on Tariffs and Trade
(GATT). In this larger context,
the problems posed by the FTA
would themselves be minimized,
and interim intra-European trade
concessions might pave the way
for a broader European economic
association.
Politics and a European Policy
Since its official release,
the Hallstein report has been
severely criticized, particularly
by those who are reluctant to
see the commission establish
itself as spokesman for the
community. Much of this criti-
cism has reflected the funda-
mental conflicts within the
European movement, the extent
of which was indicated in an
EEC memorandum of early April.
According to this analysis,
there are three fundamental ob-
stacles to any solution to the
problem of a larger European
economic association: (1) the
opposition of the French, who
hope by opposing British desires
for an FTA to advance De Gaulle's
claims to a larger role in At-
lantic councils; (2) the per-
sisting view in London--guided
by its "balance-of-power" tradi-
tion--that early collapse of
the European community would
pave the way for a European as-
sociation on British terms; (3)
the encouragement of London in
this view by elements within
the community--particularly in
the Netherlands and West Germany
--which are anxious to maintain
economic and political ties with
Britain.
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30 April 1959
There are other factors in-
volved in French opposition to
the PTA, but these obstacles
suggest the divisive impact of
the dispute on the EEC. They
make it extremely doubtful that,
short of a broad political agree-
ment, efforts to write a "Euro-
pean policy" for the community
are likely to succeed soon.
Trade Conflict
With hope receding for a
broader European association
like the FTA, several disruptive
trends are emerging. The most
formidable of these is the in-
creased support for an agree-
ment which would meet the es-
sential needs of the
non-EEC countries
without regard for
mutual obligations
to the GATT. Such a
preferential agree-
ment might involve
tariff and quota con-
cessions on an intra-
OEEC basis without
guarantees that the
resulting association
would fulfill GATT
requirements either
for customs unions
or free trade areas.
Benelux off1*
ciais, who are among
the advocates of this
approach, note that
the United States and
Canada since World
War II have accepted
OEEC discrimination
against dollar imports
to promote European
recovery and consider
as a delusion any
hope that further
discrimination can be
prevented within the
GATT.
A series of agree-
ments now being ne-
gotiated by the French
is also encouraging
a trend toward bilat-
eralism. Intended as
SUMMARY
an interim answer to the charges
of preferential treatment leveled
at the EEC, such an agreement
has been concluded between Paris
and London, and the French now
are talking with the Scandinavians
and Austrians. In principle,
these agreements are contrary
to the community approach fore-
seen by the EEC treaty, they
undermine the position of the
EEC's institutions, and they are
in opposition to the multilateral
principle implicit in the FTA
plan.
It may also prove dangerous
in the long run that several
countries--Britain, the Scandi-
navian countries, Austria,
Coal-Steel Community, EURATOM, and
the European Economic Community
G Members of the Organization tor
European Economic Cooperation (OEEC)
BR SOM
ETHIOPIA
0 Eurafrica (African areas as>ociated
Negotiations will be opened later to
associate Morocco, Tunisia, and Libya with
the Economic Community. (The following
non-African territories have been as:,ociated
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)
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OZA~BIpUE
`II
1
NTRAL AFRICA
REPUBLIC.-.~
r 1
BELGIAN
RUANr
URUND!
CONGO
RHODES!
AND
NYASALAND
MALGACHE
REPUBLIC
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 April 1959
Switzerland, and Portugal--are
surveying the possibility of a
customs union to compete with
the EEC. Ostensibly intended
to improve the bargaining posi-
tion of its members in future
talks on the FTA, such "alter-
natives" also have as their
objective a weakening of the
EEC--by threatening West Germany,
in particular, with isolation
from its other European markets.
This promises to deepen the
present cleavage and offers
little comfort to those under-
developed countries--such as
Greece and Turkey--which would
probably be left out of both
groups.
An African Policy
The chaotic state of the
EEC's relations with the rest
of Europe should not, however,
obscure a number of more hope-
ful developments on other fronts
--particularly the prospect of
closer ties with Africa. In
those African areas associated
with the community by the EEC
treaty, progress is being made
toward launching the projects
for which a half-billion-dollar
development fund has been set
aside. The EEC mission to
Africa earlier this year and
the more recent tour of the
community countries by African
leaders were intended to es-
tablish the Africans' confidence
in the EEC as an entity separate
from its colonialist members.
The present tense relations
between Tunisian President
Bourguiba and Paris and his
refusal to accept France as in-
termediary for the community
have made contacts between
Tunis and the.EEC exceedingly
delicate. Formal EEC-Tunisian
talks, once they are launched,
will be crucial. The EEC Com-
mission feels that Tunisian
association might pave the way
for ties with other states which
become free, and some progress
has already been made among the
newly independent African states
toward establishing ties with
Tunisia.
EURC13EAN ECONOMIC COMMUNITY (EEC)
The organization of six Continental countries, also
known cs the European Common ;Market, which came into
being cn 1 January 1958. It has as its major objec-
tive the establishment of a complete economic union
during a 12- to 15-year transitional period. At the
and of thts.pertod, all restrictions on the circula-
tion oj' goods, workers, and capital would be removed,
a common external tariff would be enforced by the
member countries, and social and economic policies
would be concerted.
ORGANIZATION FOR EUROPEAN
ECGNOMIC COOPERATION (O EEC)
The organization of 17 Western European countries
formed in 1947 to facilitate cooperation in fulfill-
ing the objectives of the Marshall Plan. Initially
concerred with preparation of economic recovery pro-
grams, it has since sought to promote cooperation to
increase production and trade, modernize industry,
stabilize finances, and reduce trade barriers-
-pri-marily by removing quota restrictions.
FREE TRADE AREA (FTA)
The projected organization initially proposed by the
United Kingdom in 1956 as a means of linking the six
ETC countries with the other OEEC countries in a
broader free trading area. Its major objective would
be the removal of restrictions on commerce among its
membero, but in contrast with the EEC, member coun-
tries would retain jurisdiction over the level of
their tariffs on imports from non-FTA countries.
GENERAL AGREEMENT GN TARIFFS
AND TRADE (GATT)
The multilateral trade agreement negotiated in 1947
in Geneva and now including 37 contracting parties.
The GA T is primarily a code of international conduct
on commercial policy, attempting to enforce the gen-
eral rule of unconditional mostfavored-nation treat-
ment on customs matters, to prevent discriminatory
and preferential application of tariffs and quotas,
and to discourage introduction of other trade re-
strictions.
The Hallstein report recom-
mends a coordinated approach to
the problem of all underdeveloped
areas;, and Belgian Foreign Min-
ister Wigny is the author of a
plan for a cooperative program
of world-wide technical and f i-
nancial assistance supported by
the community, Britain, and the
United States.
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SOME STATISTICS 0 OMIC
CURRENT INTELLIGENCE WEEICLY SUMMARY
30 April 1959
The French, de-
spite, their authorship
of the Eurafrican
concept, are--since
the advent of De
Gaulle and the French
Community--one of the
major obstacles to
its implementation
by the EEC. Ultimate
conflict with the
French Community seEm
inevitable. The out-
come will largely
depend on whether the
French realize the
extent to which they
are dependent on Eu-
ropean support and
assistance in main-
tainIng their presence
in Africa.
COMPARISON WITH
THE UNITED STATES
NOW
1957 1957 OVER 1950
USA EEC USA EEC
Population (millions) 171 164 13 6
Gross product (billion dollars) 434 150* 52 100*
Per capita gross product (dollars) 2,537 915* 35 90*
Total exports (billion dollars) 19 22 95 141
Total imports (billion dollars) 13 25 47 121
*Estimate
From each other
From overseas territories
From the United Kingdom
From other OEEC countries
From the United States
From all other countries
TOTAL
ESTIMATED PERCENTAGE OI?
TOTAL WORLD TRADE
European Community
United Kingdom
United States
Rest of the world
A World Policy
90427 3B
The difficulties
over the FTA have also tended
to cloud the extent to which
the EEC--outside the area of
its European relations--has
apparently accepted the GATT
regulations as setting the
standard in international trade.
In keeping with a compromise
agreement of last year, GATT
machinery is being utilized by
those countries which complain
that their trade is being harmed
by the Common Market, and con-
sultations on a number of
primary products--mostly of
tropical origin--have been com-
pleted. The results have been
disappointing, however. The
complaining producing countries
showed little disposition to
push their cases, and the EEC
was unresponsive to claims of
damage. Nonetheless, an im-
portant precedent has been
established.
More hopeful is the ap
parent disposition of the EEC
to accept the Hallstein recom-
mendation that the EEC part'ic--
ipate in a round of GATT ne-
gotiations beginning in 1960.
Initially proposed by Under
Secretary Dillon,, in 1958, the
BILLION PERCENT
DOLLARS OF TOTAL
6.3 28
1.9 9
1.2 6
2.5 11
3.0 13
7.2 33
IMPORTS EXPORTS
PRIMARY INDUSTRIAL
PRODUCTS PRODUCTS
31 33
18 16
16 26
35 25
GATT talks have been strongly
supported by the United States
as a means of utilizing the
tariff reductions authorized
by the US Reciprocal Trade Agree-
ments Renewal Act of 1958, and
as the best hope of negotiating
a reduction in the EEC's common
tariff which begins to take
effect in 1962.
Whether this hope is justi-
fied will depend on whether pro-
tectionist-minded countries-
particularly France--are then
prepared to lower tariffs, and
whether they are willing to
utilize the EEC Commission as
an instrument of negotiation.
The EEC Council "is expected to
take up this question at its
5 May meeting.
The potential of the Euro-
pean ]Economic Community is
enormous--if it survives. That
survival remains in question is
partly the result of outside
pressures from those who have
legitimate economic interests
to be protected and from those
who see the community as :a
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CURRENT INTELLIGENCE WE1KLY SUMMARY
30 April 1959
political threat. The latter
are able to thrive on the in-
ternal divisions in the commu-
nity and on the weakness of the
European institutions generally.
Despite the extent to which
the EEC has been accepted, dif-
ferences within it extend even
to ultimate objectives--partic-
ularly the goal of a federated
Europe. The ardent European
federalists have accepted this
goal and would have the rest
of Europe participate in its
achievement by accession
to the, community and ac-
ceptance of its political prin-
ciples.
The federalists are opposed
by those who are more concerned
with the retention of political,
military, and commercial ties
outside the community and would
be willing to sacrifice it if
necessary for the sake of a
broader and looser arrangement.
The community?s major task is to
mediate between these extremes,
to preserve itself intact, and to
avoid the emergence of solutions
which would create chaosin inter-
national trade.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 April 1959
COMMUNIST CHINA'S FOREIGN AID PROGRAM
Communist China's foreign
aid program continued its expan-
sion in late 1958 and early 1959
with new aid totaling $275,000,-
000, Peiping has allocated
from $160 million to $190
million to carry the drive for-
ward this year. Since 1953J.
China has extended nearly $800,-
000,000 in foreign economic aid,
one third of which was made
available since the end of 1957.
Grants constituted the main form
of China's foreign assistance
until 1958, when repayable loans,
which tend to strengthen econom-
ic ties between the parties in-
volved,became the usual practice.
The major portion of Chi-
nese aid--$630,000,000--has been
made to bloc countries, includ-
ing during the last year long-
term loans of $75,000,000 to
North Vietnam, an estimated
$50,000,000 to North Korea,
$25,000.,000 to Mongolia, and
$13,500,000 to Albania. With
the exception of Albania, where
these credits will be used
chiefly to finance limited Sino-
Albanian trade for several years,
these agreements specify large
deliveries of Chinese equipment
and supplies, plus technical
assistance, for the industrial
and agricultural development of
the liar Eastern satellites, In
Mongolia, 10,000 Chinese labor-
ers have been employed since
1955 on projects receiving
this aide
While Peiping's economic
offensive in the free world has
been focused principally on in-
creased trade, marked by an in-
tensive export drive in Asia, it
also includes a foreign aid pro-
gram of increasing importance.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 April 1959
Communist Chinese Foreign Aid Pro-gra1i1300.0Q250OQ
30 APRIL 1959 N
-Total aid
Aid extended since
January 1958
Total aid extended to nonbloc
countries since 1956 amounts to
at least $140,000,000, of which
60 percent has been granted
since the beginning of 1958.
Indonesia became the prin-
cipal free world recipient of
Chinese foreign aid last year
when a $40,000,000 loan was ac-
cepted to facilitate the pur-
chase of rice and textiles.
Thus far, at least $11,500,000
has been spent, and negotiations
are in progress for'the utili-
zation of $20,000,000 in devel-
oping Indonesia's textile in-
dustry. Communist China has
also recently become involved
in the bloc's arms transactions
with Djakarta, but the value of
the credits for this purpose
is not known.
Ceylon is now receiving
aid under a 1957 grant of $15,-
750,000 to be delivered in the
form of commodities, the sale
of which provides funds for
local aid projects. This aid
is being augmented by deliveries
of machinery and equipment under
a $10,500,000 loan, concluded
last year.
Nepal is to receive ma-
chinery for a cement factory
this year and other equipment
by 1960 to use up the $8,400,-
000 balance of the Chinese 1956
$12,600,000 aid grant. China
provided Nepal with $4,200,000
in cash during the past two
years. Last year Peiping also
added a $5,600,000 grant to its
1956 gift of $22,400,000 to Cam-
bodia. In response to urgent
requests from the Chinese, Phnom
Penh has stepped up preparatory
work for the construction of
several small factories, schools,
and public buildings. Else-
where in South Asia a $4,200,000
Chinese loan to Burma for the
constrruction of a textile factory
is expected to be implemented
this year.
Yemen continues to be the
focal point of China's foreign
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30 April 1959
aid activity in the Middle East.
Approximately one third of Pei-
ping's $16,300,000 interest-
free loan was allocated in
1958, and increased Chinese
activity has been apparent in
recent months. At least 300
Chinese specialists and labor-
ers arrived to carry out road
construction and factory proj-
ects. Egypt is the only other
Middle East country to Dave re-
ceived Chinese aid. In Secem-
ber of last year Cairo accepted
a $5,600,000 gift to assist in
meeting its Suez Canal debts,
a grant similar tothat pro-
vided by China during the 1956
Suez crisis to meet Egypt's
foreign exchange needs.
Early this year, Peiping
extended its influence into
North Africa by granting $5,-
000, 000 to t:he."Algerian
Provisional. Government, ":pa3qt'
of iwhtch is. .td; be . used. for
the purchase of arms and military
supplies. Presumably this grant
is being implemented by an Al-
gerian military mission now
visiting China.
Although China's economic
aid program is small in compari-
son to total bloc assistance to
underdeveloped areas, it is an
important factor in Peiping's
drive for recognition as a world
power. Through long-term re-
payment provisions and the in-
troduction of Chinese consumer
goods in new markets, Peiping
is able to enjoy the prestige
associated with economic assist-
ance and at the same time en-
courage the growth of future
economic relations.
(Prepared by ORR)
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