CURRENT INTELLIGENCE WEEKLY SUMMARY

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• Collection: General CIA Records
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• Document Creation Date: December 20, 2016
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• Publication Date: October 19, 1999
• Content Type: SUMMARY

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IDEN~IA~-.
COPY NO. 56
OCI NO.2735/59
18 June 1959
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
DOCUMENT NO. _
L~
SS
.
NO CHANC ;r CLA
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CL, . CHANCaco TO,.
DATE/ EVIEWER
CENTRAL INTELLIGENCE AGENCY
111 OFFICE OF CURRENT INTELLIGENCE
CONFIDENTIAL
State Dept. review completed
23.2 ~~*z -
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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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VVIVI IVLIr 1 IIU.. VNW-V
AF"r
OF IMMEDIATE INTEREST
EAST-WEST NEGOTIATIONS . . . . . . . . . . . . . . . . . . Page 1
Gromyko continues to reject any agreement which
would affirm Western occupation rights in West Berlin
indefinitely. Soviet spokesmen, however, have hinted at
Moscow's willingness to soften its 10 June proposal of
a one-year interim settlement in exchange for Western
concessions, and they have reiterated earlier denials
that this proposal was intended as an ultimatum. The
USSR apparently is still interested in working out an
agreement under which the West might remain in West Berlin
for the time being on some new basis which would super-
sede the original quadripartite agreements. However, if
the Allies remain united in rejecting ,such a formula, the
Soviet leaders probably believe they will at least be
able to maneuver the West into taking the initiative f
t or an extended recess of this talks. I 25X1
MIDDLE EAST HIGHLIGHTS .
Page 4
The Iraqi Communist press has become increasingly
critical of the Qasim government, especially of its deci-
sion to permit a number of Iraqis banished to distant
parts of the country to return to their homes. Qasim seems
to be trying to renew direct contact with the army officer
corps, on which he would depend for support in any crisis.
UAR President Nasir is reported apprehensive that the
British are seeking to prevent him from re-establishing
good relations with the West. A session of the Lebanese
Parliament has been called for 23 June; this may intensify
maneuvering over the possible formation of a new or ex-
panded cabinet. New army violence in Yemen appears symp-
tomatic of serious unrest which threatens Crown Prince
Badr?s government.
JAPANESE - SOUTH KOREAN RELATIONS NEAR BREAKING POINT . . Page 7
The tentative agreement reached in, Geneva for the
repatriation of Koreans in Japan to North Korea has pro-
voked a South Korean suspension of all trade with Japan
and may lead to a complete rupture of relations between
Seoul and Tokyo. Seoul is threatening to use force to
stop any repatriation ships. North Korea has enhanced
its international standing by the Geneva negotiations,
and will benefit from the deterioration in relations be-
tween South Korea and Japan. 25X1
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CURRENT INTELLIGENCE WEEKLY SUMMARY
18 June 1959)
NOTES AND COMMENTS
LABOR UNREST IN FRANCE . . . . Page 2
. . . . . . . . . . . . . .
The failure of the major French labor unions to main-
tain their strike call for 16 June in the face of Premier
Debr4's order to mobilize rail workers who strike has tem-
porarily enhanced the government's prestige and avoided
the immediate threat of a general wage-price spiral. La-
bor agitation will probably increase, however, and the
Communist-led General Labor Confederation now can claim
that it has achieved cooperation with non-Communist-labor
SPANISH LABOR FEARS STABILIZATION PROGRAM Page 2
Spanish labor, restive for some time over rising
living costs, has in recent weeks become concerned over
austerity measures in the economic stabilization program
Spain is adopting to win membership in the Organization
for European Economic Cooperation. Diseontent has been
greatest in Catalonia, where local Christian Democratic
and Socialist leaders have reportedly felt compelled to
support the Communist party's call for a 24-hour general
strike on 18 June. Further threats of :Labor unrest may
oblige General Franco to undertake a public defense and
l
EUROPEAN CIVIL AVIATION . Page 3
An agreement concluded late last month in Paris has
evidently cleared the way for formation of a powerful
consortium--now called Airunion--comprising four of the
five major airlines of the European Common Market countries.
The Dutch line KLM has refused to participate for business
and perhaps political reasons, and may try to form a rival
consortium with such companies as Swissair and the Scan-
dinavian SAS. In any event, the Airunion combine promises
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CURRENT INTELLIGENCE WEEKLY SUMMARY
PART II (continued)
to accelerate competition with American and British lines
on major international routes, and may feel it will be in
a strong position to seek additional landing rights in the
ICELAND'S GENERAL ELECTION . . . . . . . . . . . . . . . Page 4
Iceland on 28 June will hold the first of two parlia-
mentary elections required to revise the electoral law
which now favors the rural areas. The campaign is being
fought mainly on this and other domestic issues. Its out-
come remains in doubt, but the Conservatives seem likely
to emerge with increased strength though not with a clear
majority of seats. The Social Democrats, who have con-
stituted a minority government since the Communist-domi-
nated Labor Alliance and the Progressives were ousted from
the ruling coalition last December, stand in some danger
of losing their parliamentary representation. Such a
development would put the Communists back into a key bar-
BLOC CONTINUES PRESSURE AGAINST MISSILE BASES IN GREECE
AND ITALY . . . . . . . . . . . . . . . . . . . . . . . . Page 5
Khrushchev's reaffirmation, during his Albanian visit,
of previous Communist proposals for a Balkan zone free of
missiles and nuclear weapons has been followed up since
his return to Moscow by diplomatic notes to Italy and Greece
from the USSR and the Balkan satellites. Belgrade's re-
sponse has been guardedly favorable, as in the past, but
the proposals have had little effect on Italy and Greece.
Statements by Khrushchev and the East German delegation
during their visit to'Riga last Week revived the Baltic
""sea of peace" theme and foreshadow a Soviet offensive
to counter NATO in that area _as well during Khrushchev's
Scandinavian tour in August.
GRAIN CROP PROSPECTS IN USSR AND EUROPEAN SATELLITES . . . Page 7
A mediocre grain harvest--well be=low the 1958 bumper
crop--is in prospect for the Soviet Union this year be-
cause of below-normal precipitation over the period since
last October. Even if rainfall increases during the re-
mainder of the growing season, it is doubtful that grain
production will be above average. In the satellites the
outlook has improved since 15 May s a result of recent 25X1
rains.
YUGOSLAV PROBLEMS WITH YOUTH . . . . . . . . . . . . . . . Page 8
Recent student demonstrations in Yugoslavia show that
that country has had little if any more success than its
satellite neighbors in winning the enthusiasm of its
younger people. Although nonpolitical in inspiration,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
18 June 1959
PART II (continued)
the demonstrations have alarmed regime officials. Their
public explanations that foreign and domestic "enemies"
caused the disorders and their privately expressed feel-
ing that the situation is comparable to that which pre-
vailed among students at the onset of the Hungarian re"
volt attest to the regime's concern over its continuing
4 only to bei?h en student d ssattsfact
SPEED-UP CAMPAIGNS FOR EAST GERMAN LABOR . . . . . . . . . Page 9
East Germany, in an effort to achieve its ambitious
industrial goals, is applying a variety of speed-pup and
extra-work systems which so far affect some 80 percent
of its industrial labor force of nearly three million per
sons
Th
h
.
ese
eavy pressures have already caused limited
strikes, and will tend to nullify the boost recently given
work
l
er mora
e by improved living standards.
SITUATION IN TIBET . . . . . . . . . . . . . . . . . . . . Page 10
Peiping is making a concerted effort in the wake of
the revolt in Tibet to impose there the "democratic re-
forms" which had been postponed since 1957. A leading
Chinese Communist expert on minorities has arrived in
Lhasa, and many Tibetans and Tibetan-speaking Chinese have
returned to Tibet after completing studies in China.
AGITATION AGAINST COMMUNIST GOVERNMENT IN KERALA STATE . Page 10
Agitation by Indian political and communal groups
against the Communist government in Kerala State continues
with mass demonstrations and sporadic violence. Serious
clashes between agitators and Communist.-directed police,
in which 12 persons have been killed and many injured,,
now appear to be tapering off. Unless extensive violence
recurs, the Communist government probably will be able to
BURMA . . . . . . . . . . . . . . . . . . . . . . . . . Page 11
Burmese Premier Ne Wints chief military advisers are
urging him to modify his plans for general elections next
winter by postponing them once again and allowing selected
army officers to stand for Parliament. They argue that
both ex-Premier Nuts "Clean" faction of the Anti-Fascist
People's Freedom League and the Ba Swe - Kyaw Nyein "Stable"
faction are worthless and that continued army participation
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PART II (continued)
in the government is necessary to preserve Ne Win's reforms.
The premier appears confident, however, that the army can
control whatever government may emerge.
CABINET CHANGES IN IRAN , .
The replacement.of Iran's ministers of foreign affairs,
interior, and commerce on 11 June suggests that the Shah
intends to initiate a more forceful policy in both internal
and foreign affairs. The Shah regarded former Foreign Min-
ister Hekmat's attitude as "too old-fashioned to cope with
Soviet diplomatic methods," but he believes the new min-
ister9 Jalal Abdob, who has been Iran's permanent repre-
sentative to the UN since 1955, is strong, experienced,
and anti-Soviet. The newly appointed ministers of interior
and commerce are regarded by American observers as inade-
quate for their positions.
RACIAL DISORDERS MAY BE IMMINENT IN SOUTH AFRICA . . . . . Page 13
Disorders inspired by African nationalists may occur
in the Union of South Africa on 26,June, marking the anni-
versary of the 1955 Freedom CharterR which set forth the
non-Europe? demands for racial equality. A nationwide
native boycott of goods produced by advocates of "apartheid"
(segregation) is to begin on 26 June, and some African
groups plan a public mass burning of native identity docu-
ments as a gesture of defiance against government racial
regulations. Violence and bloodshed acre likely if the
police react with their usual severity.
. Page 14
Indonesian dissidents are raiding North Sumatran
rubber plantations in an economic warfare campaign designed
to obtain funds and barter goods for the rebels as well
as to obstruct the rubber production from which Djakarta
obtains a large share of its foreign exchange. A dis-
proportionate share of the attacks has been directed at
American holdings, particularly Goodyear's Wingfoot estate,
the largest rubber plantation in Indonesia. Government
troops in the area appear reluctant to drive off the raid-
ers.
Page 12
CONSTITUTIONAL CRISIS MAY BE DEVELOPING IN SOUTH KOREA , . Page 16
Indications that President Rhee might agree to a
constitutional amendment providing for the indirect elec-
tion of the South Korean president and vice president by
the.National Assembly could lead to a constitutional crisis
similar to those of 1952 and 1954. Such a change prior
to the 1960 elections would assure Rhee's retention of the
presidency without the necessity of resorting to embarrassing
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CURRENT INTELLIGENCE WEEKLY SUMMARY
18 June 1959
PART II (continued)
repressive tactics to overcome growing popular opposition
to his administration. It also could destroy South Korea's
embryonic two-party system b s littin the opposition
Democratic party. E 25X1
GUATEMALAN PRESIDENT'S POSITION WEAKEYING . , , , , , . , Page 16
e
uisite may wreck Argentina's effortsasures as a rare -
25X1
e
mergency request for a
$300,000,000 loan from the United States is being watched
closely in South America as a test of ITS policy. Brazil
is making the issue a question of "basic confidence" be-
tween the two countries. In Argentina, however, where
President Frondizi is under critical pressure as a result
of his US- and IMF-backed stabilization program, the min-
ister of economy has expressed fears that Brazil's insist-
ence on a loan without austerit m
A new period of political tensions appears to be
developing in Guatemala, where President Ydigoras has been
steadily losing political strength. The important election
on 5 July for mayor of the capital city is expected to en-
gender bitter rivalries. The Communists are preparing
demonstrations for 25 June, and these could get out of hand.
Economic pressures are increasing as a result of lower
coffee and cotton prices and a reduction in US aid, 0
IMPLICATIONS OF BRAZIL'S FINANCIAL CRISIS . . .
. Page 19
Brazil's break with the International Monetary Fund
(IMF) and its subsequent
PART III
PATTERNS AND PERSPEe'TIVES
CHINA TIDYING UP ITS COMMUNES
. . . . Page 1
In an effort to win mass support for the communes
and particularly to maintain incentives for the peasants,
Peiping is making considerable changes in its commune
system. It is introducing payments more closely geared
to specified work norms, leaving important elements of
daily commune operations to the control of subordinate
units, providing for the private raising of hogs and fowl,
suggesting that communes be more concerned with agricul-
ture than industry, and--at least in some areas of South
China--suspending temporarily the operation of communal
mess halls. The top leadership is still firmly committed
to the belief that communes are the best means to speed
up China's "socialist construction," and they stand as a
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CURRENT INTELLIGENCE WEEKLY SUMMARY
18 June 1959
PART III (continued)
fundamental reorganization of China's rural society.
There are indications that experimental work on communes 25X1
in
b
ur
an centers is going forward.
EDUCATIONAL REFORM IN THE SATELLITES Page 5
The East European regimes are taking measures to re-
organize their educational systems along the lines of
last December's changes in the USSR, which greatly in-
creased the emphasis on vocational training in Soviet
schools,. The reforms are intended to create a reservoir
of trained labor and to improve control over youths.
Even Poland, which is attempting a sbnewhat different
approach, has proposed that there should be a period of 25X1
compulsory labor before students are eligible for college. 25X1
CONSTITUTIONAL CHANGE IN INDONESIA . . . . . . . . . . . Page 13
Indonesian President Sukarno's call for return to the
1945 constitution is motivated by his 'belief that it would
provide a legal basis for his concept of "guided democracy,"
a program for increasing the powers of the executive at
the expense of political parties and Parliament. Indo-
nesia's constitutional history began with the adoption of
the 1945 constituion, a vaguely worded document designed
to support an improvised, revolutionary government as the
Japanese occupation gave way to',the returning Dutch. Dur-
ing the ensuing 14 years, Sukarno, as the nation's first
and only chief executive, has directed the country's
political development with little regard for either the
word or the spirit of whatever constitution has prevailed.
THE TAIWAN ECONOMY . . . , . . Page 16
. . . . . . . . . . . . .
Taiwan is maintaining a moderate economic growth,
although there are a number of soft spots in the economy.
Economic expansion has thus far kept ahead of the popula-
tion growth, but the rate of investment is declining, the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
18 June 1959)
PART III (continued)
upward trend of military spending continues, and infla-
tionary pressures will be intensified by a large budgetary
deficit expected for the next fiscal year. Unless these
trends are reversed, the rapid population increase ulti-
mately will force a decline in living standards. With
continuing American aid, prospects for a stable economy
over the next few years seem good.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
OF IMMEDIATE INTEREST
EAST-WEST NEGOTIATIONS
Foreign Minister Gromyko
maintained his firm opposition
to any agreement which would
perpetuate Western occupation
rights in West Berlin indefinite-
ly, as the Geneva conference
moved into the decisive stage
with the presentation of a final
draft of Western proposals for
a Berlin settlement. Gromyko
made some brief preliminary com-
ments in, the restricted session
on 17 June and reserved the
right to make a more considered
reply later.
The USSR apparently is still
interested in working out an
agreement under which the West-
ern powers might remain tempo:-
racily in West Berlin on some
new basis which would supersede
existing agreements. Gromyko's
tactics have been aimed at in-
ducing the Western ministers to
abandon or at least modify their
insistence on an unconditional
Soviet reaffirmation of Allied
rights in Berlin and to agree
to the compromise formula :out-
lined by Gromyko in
meetings the first week o June.
Pressure on Britain
A key element in Soviet con-
ference strategy has been the
assumption that Britain would
ultimately take the initiative
to work out an accommodation on
Berlin in order to prevent the
negotiations from collapsing.
The Russians probably regarded
British Foreign Secretary Lloyd's
return to London for consulta-
tions over the week end of 13-
14 June as a crucial turning
point in the conference. Fol-
lowing the meeting of 25X1
the four foreign ministers in
Geneva on 15 June, Gromyko re-
portedly expressed disappoint-
ment that Lloyd's trip had not
produced a split among the Al- 25X1
lies.
The Soviet
leaders
probably
believe such a
formula,
which
would omit any
explicit
refer-
ence to Western
rights
and be
confined to specific arrange-
ments governing Allied access,
would advance the USSR's prin-
cipal objective of obliging the
West to consent to a change in
the status of Berlin which would
prejudice the Western position
there. Agreement on this basis,
in the Soviet view, would also
open the way to a summit meet-
ing.
CONfIDENTlAC
r~
PART I OF IMMEDIATE TNTF.RPRT 130 er~ 1 of 8
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CURRENT INTELLIGENCE WEEKLY- SUNY
A TASS 25X1
correspondent in Geneva noted
this was the first time Moscow
had even mentioned a continua-
tion of Western occupation rights
in West Berlin and said the USSR
definitely has no intention of
breaking off the talks.
Hints of Flexibility
The USSR followed up Gro-
myko's Berlin proposals of 9
and 10 June for a one-year in-
terim settlement with state-
ments designed to offset West-
ern charges that the new plan
confronted the West with an-
ultimatum and to encourage
Western initiatives to arrange
a compromise. Soviet spokes-
men implied the USSR would be
willing to amend and soften its
proposals in exchange for West-
ern concessions.
Khrushchev declared in his
Riga speech on 11 June that the
proposals were advanced "in the
desire of furthering the suc-
cess of the Geneva talks." So-
viet propaganda stressed that
the proposals are a "major step
to meet the Western position
half . way" and complained that
the Western ministers had re-
jected them "without giving them
serious study."
proposals were intended as a
basis for further negotiation
and were in no way an ultimatum.
In an effort to convey the
USSR's desire to work out an
accommodation, the counselor of
the Soviet Embassy in Paris, in
a talk with an American official
in Geneva on 10 and 12 June,
stressed the possibility of
agreement on the question of
Western forces in West Berlin
if the Allies establish an "ade-
quate" force level and indicate
their intention to reduce this
over a period of time if cir-
cumstances permit. On the issue
of Western rights in West Ber-
lin, the Soviet diplomat urged
a formula that would avoid any
reference to "occupation" so as
not to contradict Khrushchev's
repeated insistence that the
occupation regime must not con-
tinue. He conceded that West-
ern troops had the right, as
victors in war, to remain in
Berlin until a peace treaty is
signed but argued that since
they had not been used in an
"occupation" sense for some
years, some new basis should be
devised to govern their status.
He suggested the issue might be
resolved by a formula stating
in effect that "the Western
presence in West Berlin is
legitimate," without mentioning
the term "occupation."
Summit Prospects
Soviet spokesmen have dis-
played both displeasure with
the Western position making a
summit meeting dependent on the
outcome of the foreign ministers'
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CURRENT INTELLIGENCE WEEKLY SUMMARY
18 June 1959
talks and confidence that the
West can be brought to the sum-
mit regardless of the results
of the present conference.
Gromyko,at the plenary session
on 12 June, stated that "there
is no foundation for any link
between the results of this
conference and the convening
of a summit meeting."
Nuclear Test Talks
The Soviet delegate's im-
plied acknowledgment that tech-
nical discussions on high-alti-
tude detection methods--sched-
uled, to begin on 22 June--would
not be limited to conclusions
of last year's Geneva experts'
conference reflects Moscow's
aim to keep open the test cessa-
tion agreement issue during this
crucial period in the foreign
ministers' conference. Moscow's
amended draft of the American
proposal to hold technical-level
meetings--accepted on 15 June
by the United States and Britain
with the understanding that the
experts would be free to discuss
'other relevant material"--clear-
ly reaffirmed Soviet insistence
on gearing such technical studies
to the experts' conclusions last
year.
The probable Soviet posi-
tion at the technical talks was
clearly suggested on 12 June
when the Soviet delegate stated
that, while new American data
could be considered, the original
experts' conclusions are "well
established" and none of the new
data have "detracted from their
validity."
The Soviet delegate has
continued his efforts to involve
his Western counterparts in dis-
cussions on control-post staff-
ing, charging that it is the West-
ern "'turn to come forward with
new proposals." In a further
effort to encourage Western move-
ment, he suggested thatif this
issue were resolved, agreement
should be possible on the ques-
tion of whether veto rights would
apply to the recruitment and
dismissal of staff personnel.
The Soviet delegate has al-
so attempted to demonstrate a
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CURRENT INTELLIGENCE WEEKLY SUMMARY
+4
willingness to agree to techni-
cal talks on the crucial under-
ground-test detection issue. He
has repeatedly called for techni-
cal discussions on "criteria for
suspicious events," expressing
"surprise" that the Western del-
egations had not followed up
their earlier interest in such
talks. However, he has consist-
ently refused to recognize the
right of any technical group to
modify the conclusions of the
experts'report on this issue
last year by taking recent Ameri-
can data on seismic phenomena in-
to consideration. He has criti-
cized Western efforts to intro-
duce new data such as the Berkner
Panel report as attempts to un-
dermine the progress made at the
1958 experts' talks.
Western Reactions
The West European press
views the Geneva conference with
extreme pessimism, speculating
whether the talks will be broken
off sharply or recessed. Most
West German papers doubt that a
summit conference will be held
unless Gromyko shows a concilia-
tory attitude on Berlin. The
independent French paper, Le
Figaro, comments that if the-
es iad been more "constantly
and spectacularly united" during
the negotiations,Gromyko might
have realized "the road he chose
was not the best one leading to
the summit."
The negative British press
reaction to Gromyko's proposal
on Berlin presented publicly on
10 June indicates that the im-
mediate pressure on the Macmil-
lan government to reach an agree-
ment may have eased'siightly.
The) influential. Manchester Guard-
ian, an advoc,a'_; P rapproche-
menit, calls on scow to take
one step backwa? rather than
for the West to Lake a step for-
ward.
The We;.: ` Germans, with
apparent -_h support, are
reportedly ing a recess
in the talks, providing a
firm date can be set for
resuming negotiations. Bonn
and Paris pro'iably feel that
if the talks are broken off,
public pressure for a summit
conference will place the
West in an unfavorable
position. President de Gaulle,
who has been lukewarm toward
a summit meeting, told West
Berlin mayor Willy Brandt
on 11 June that the Western
Allies must remain "resolute"
on Berlin even though this
entails the risk of war.
British opinion still holds,
however, that the West
must persist in its ef-
fort to negotiate
ing of the Berlin
preferably through
mit meeting.
OS I:
crisis,
a sum-
(Concurred in by
MIDDLE EAST HIGHLIGHTS
Iraq
The Iraqi Communists, who
have continued to press for
official sanctioning of party
activities in spite of Qasim's
adamant stand, last week entered
into a new and more serious
dispute with the prime minister.
The party newspaper took strong
exception to Qasim's decision
to grant amnesty on the occasion
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CURRENT INTELLIGENCE WEEKLY SUMMARY
of the 1?-19 June Moslem reli-
gious holiday to a large number
of Iraqis who have been in en-
forced residence in various
parts of the country. The Com-
munists contend that these are
mostly "feudalists and reaction-
aries" whose release "will lead
to nothing but disturbance of
the peace and stability of the
republic."
Several violent incidents
between Communist and non-Commu-
nist elements have taken place
over the past three weeks. The
Communist press has complained
that these were assaults by
"reactionary groups" against
trade unions, peasant organiza-
tions, and "other democratic
bodies." It has also objected
to curtailment of the activities
of the Popular Resistance Forces
and to the establishment of
special units in some government
departments to "watch progres-
sive movements." A party spokes-
man has demanded a "purge" of
Radio Baghdad on the grounds it
is becoming a "den for opportu-
nists and reactionaries" and
a "branch of the National Demo-
cratic party."
At the same time, there
are persistent reports of a
major split within the central
committee of the Communist par-
ty itself. One wing allegedly
favors maintaining pressures
of all types to force Communist
participation in the government;
the other counsels caution and
continuing public support for
Qasim until the hard core of
the party has had time to improve
the organization and disci-
pline of its mass of recent
adherents.
Some non-Communist army
and government officials have
told Americans in Baghdad that
they think a showdown between
Qasim and the Communists is
fast approaching. Unusual move-
ments of Iraqi Army units to~the
Baghdad area have been noted,
but it is not clear whether
these are in anticipation of
trouble or in preparation for
the big celebrations on 14 July
of -the anniversary of the revolu-
tion. Qasim's most recent
speeches, directed primarily at
army audiences, suggest that
he is trying to gt back in con-
tact with the ",,sass roots" of
the army officer corps, whose
support of him would be essen-
tial should a new crisis arise.
In these speeches to army
groups Qasim has also mentioned
an important announcement which
he plans to make on 22 June and
which he says "will consolidate
Iraqi economic existence" and
"surprise foreigners and imperi-
alists." He may announce an
agreement with the Western-owned
Iraq Petroleum Company--which
hitherto has had a concession to
prospect for oil in almost all
of Iraq--to give up a large
part of its concession areas
in the western part of the coun-
try. The company has long re-
gard-ed these areas as relative-
ly unpromising. In the future
the Iraqi Government itself is
expected to run oil exploration
and exploitation operations'.in
these areas with the assistance
of Soviet specialists and tech-
nicians.
UAR policy appears to be
drifting at the moment, awaiting
further developments in Iraq.
Cairo is still suspicious that
Qasim may be a Communist in dis-
guise.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
18 June 1959
President Nasir also re-
portedly feels that his trou-
bles with Israel over the use
of the Suez Canal and the bor-
der troubles between Syria and
Jordan may all be: part of a.
larger British scheme to frus-
trate efforts to improve the
UAR's relations with the West,
particularly the United States.
Characteristically, Nasir also
sees the Iraqi Communists as an
element in the unholy alliance.
He isrnsaid to rationalize the
UAR pressure on Jordan--the
Syrian border is still partially
closed--on the ground that this
is necessary to keep the British
master plotters on the defensive.
Much UAR attention is de-
voted to internal developments,
primarily the elections for lo-
cal committees of the National
Union--the regime's latest de-
vice for guiding mass political
activity. Reports from Damas-
cus suggest that the elections
there are regarded as a test of
the strength of the Baath, the
party led by Akram Hawrani and
other radical nationalist poli-
ticians which pushed most
strongly for the formation of
the UAR a year and a half ago.
Many of the old-line politicians
andcommer?cial interests are
said to have entered into an
alliance to defeat the Baath
and thus discredit it in Nasir's
eyes as a useful political or-
ganization. These groups are
hopeful that they may have at
least the tacit support of Syr-
ian security chief Sarraj, al-
though'there has been no good
evidence of his attitude.
Kuwait
The death this week of the
Kuwaiti sheik who heads the
Public Works Department, the
most financially lucrative di-
vision of the Kuwaiti Govern-
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ment, may precipitate a flurry
within the ruling Subbah family
over, who gets this particular
plum. The Kuwaiti Ruler has
recently backed efforts to curb
the extreme extravagance of
the sheiks, who have even ob-
jected to indicating for what
they intended to spend their
drafts on the treasury.
Lebanon
Political activity in Leb-
anon again increased this week
with the announcement of a
new session of the Lebanese
Parliament scheduled for 23
to 30 June. This session has
been called to "consider" some
160.decree laws issued by the
four--man Karami cabinet. Should
serious opposition arise in
the assembly, new political
complications could follow.
The decrees, which make up the
bulk of the behind-the-scenes
work of the cabinet over the
past six months, are administra-
tive reform and legislative
measures designed to enhance
the government's authority in
many areas.
The American Embassy in
Beirut feels that the decrees,
if implemented, would have the
effect of substituting a non-
political civil service for the
present structure dominated
largely by followers of former
President Chamoun. Full imple-
mentation, however, would ap-
pear very doubtful, since the
idea of a nonpolitical bureauc-
racy probably strikes most
Lebanese as impossible.
Yemen
New army violence has oc-
curred in Yemen, apparently as
a result of new local incidents
which awakened the hostility of
the Yemeni Army to civilian
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authority. The situation ap-
pears to be symptomatic of seri-
ous unrest and indiscipline
which could threaten Crown Prince
Badr's government.
ing them to fix their attention.
Some observers feel that
the real need is for the return
of the Imam--who is still under
medical treatment in Italy--to
"cut off a few heads." Certainly
the recurring violence at least
damages the crown prince's pres-
tige and distracts the people's
interest from the "reform" pro-
grain on which Badr has been urg-
JAPANESE - SOUTH KOREAN RELATIONS NEAR BREAKING POINT
Long-standing'strained re-
lations between Tokyo and Seoul
have been brought to the breaking
point by a tentative agreement
reached on 11 June between the
representatives of the Japanese
and North Korean Red Cross organ-
izations in Geneva for the vol-
untary repatriation of Koreans
in Japan to North Korea. South
Korea has already severed all
trade relations with Japan, and
final agreement in Geneva may
lead Seoul to break its limited
diplomatic relations with Tokyo
and to step up action against
Japanese fishing boats. The
agreement still requires approval
by the International Committee
for the Red Cross (ICRC), as
well as by Tokyo and Pyongyang.
There are indications that
Seoul will attempt to include
in its trade embargo about $40,-
000,000 worth of American aid
goods purchased annually in Ja-
pan for South Korea. Other re-
taliation.might betaken, in-
cluding attempts to interfere
with repatriation ships,
the South Koreans have threat-
ened to stop by force.
"advisory" rather than a
"supervisory" role for the ICRC,
and dropping plans for a formal
grievance committee.
Although agreement was
reached without major conces-
sions on the part of North Ko-
rea, Pyongyang modified its
initial stand on two points.
It agreed to some ICRC par-
ticipation and to the drawing
up of new lists of repatriation
applicants, making no use of
those already prepared by pro-
Communist Korean groups in Japan.
An official of the ICRC
has indicated that the committee
is confident it can exercise
sufficient influence as adviser
to the Japanese Red Cross to
assure the Koreans in Japan
full freedom of choice as to
repatriation. Foreign Minister
Fuji.yama also has publicly ex-
pressed the belief that the
ICRC will approve the agreement.
Whi`.-:- North Korea might attempt
i. :,. ., way to circumvent the
ICRC, Japanese officials have
indicated that ICRC disapproval
would block the repatria-
tion.
The tenative agreement at
Geneva was made possible by Jap-
anese concessions accepting an
Further aggravation of re-
lations between Japan and South
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CURRENT INTELLIGENCE WEEKLY SUMMARY
18 June 1959
Korea was probably a major
North Korean motive in seeking
the repatriation settlement.
Pyongyang probably hopes also
that the United States will be
embarrassed by a further de-
terioration of relations be-
tween two of its Asian allies.
North Korea can be expect-
ed to take full propaganda ad-
SECRET
vantage of an agreement with a
free-world country as an
indication of increased in-
ternational prestige. These
advantages will partially
offset any damage to North
Korea's position which might
result if relatively few of
the 600,000 Korean residents
in Japan desire repatriation
to North Korea.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
The failure of the major
French labor unions to maintain
their strike call for 16 June
in the face of Premier Debrd's
order to mobilize rail workers
who strike has temporarily en-
hanced the government's prestige
and avoided the immediate threat
of a general wage-price spiral.
Labor agitation will probably
increase, however, and the Com-
munist-led General Labor Con-
federation (CGT) can claim that
it has achieved cooperation
with non-Communist labor on the
national level.
French labor, particular-
ly in the nationalized in-
dustries, is increasingly in-
clined to feel it is bearing
the brunt of the current eco-
nomic stabilization program.
A slight disparity between wage
and price rises over the past
year has been aggravated by
cutbacks in special allowances
and a reduction in the hours
worked. Meanwhile, official
expressions of satisfaction
over increasing improvement in
the national financial position,
along with evidence of a re-
newed business upswing, goaded
labor to demand wage hikes pend-
ing since 1957 in the national-
ized industries.
Debrd maintains that it
is too early to relax his aus-
terity program. He insists
that productivity increases must
be large enough to cover some
price reduction and investment
as well as compensate for wage
rises. The unions called off
the strike on condition that
the government open wage negotia-
tions. Minister of Transport
Buron agreed to discuss a pro-
ductivity bonus now and wage in-
creases in November, when the
1960 budget will be prepared.
While both the government
and the non-Communist unions
apparently wanted to avoid a
test of strength with wide polit-
ical repercussions, the Commu-
nists will be able to use this
incident to advance their ap-
peals for unity of action between
Communist and non-Communist un-
ions. Heretofore the Socialist
and Catholic confederations had
been relatively successful in
avoiding the implication of broad
agreement on strike action with
the CGT. Union statements that
"government decisions are not
of a nature to eliminate the
causes of the dispute" indicate
that labor intends to press its
demands, and the CGT will prob-
ably avoid using labor issues
politically in an effort to
work closely with the free un-
ions.
In any event, the tense
labor situation will bring in-
creasing problems to the left-
win?; political parties. The
Socialists view the government
action as "paternalism" and
may be forced to take the lead
in more active opposition, par-
ticularly if the other leftist
elements now seeking to or-
ganize a new political forma-
tion continue to show a will-
ingness to consider cooper -
th he Communists.
SPANISH LABOR FEARS STABILIZATION PROGRAM
Spanish labor, restive for
some time over rising living
costs, has in recent weeks be-
come concerned over the auster-
ity measures in the economic
stabilization program Spain is
adopting to win membership in
the Organization for European
Economic Cooperation (OEEC).
Discontent has been greatest in
in Catalonia, where local Chris-
tian Democratic and Socialist
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CURRENT INTELLIGENCE WEEKLY SUMMARY
18 June 195!1
leaders have reportedly felt
compelled to support the Commu-
nist party's call for a 24-hour
general strike on 18 June.
Protest strikes broke out
in May in several plants in the
Barcelona area after management
resorted to production cutbacks,
elimination of overtime pay, and
layoffs in order to stay in busi-
ness. Living costs are rising,
but the government opposes new
blanket wage increases. The
official position, most recent-
ly stated by the labor minister
on 28 May, is that pay boosts
must be tied to greater produc-
tivity and achieved through col-
lective bargaining on a company-
by-company basis.
The stabilization program,
recently negotiated between
Spanish officials and OEEC and
International Monetary Fund ex-
perts, calls for restrictions
on public expenditures and on
the extension of credit by pri-
vate banks, elimination of mul-
tiple exchange rates, abolition
of price and trade controls,
and liberalization of imports.
Final approval is expected dur-
ing the visit of a high-level
OEEC mission to Madrid starting
on 22 June, Labor is particu-
larly worried that curbs on bank
credit will force industry to
curtail output and dismiss
workers.
No high-ranking government
official has yet explained pub-
licly and adequately the objec-
tives and implications of the
program. Recent pronouncements
by the commerce and finance min-
isters have avoided the more
controversial aspects; the former
stated that stabilization was
possible without harsh effects
on the economy and would im-
prove living standards. Gen-
eral. Franco himself, although
said to support the program
fully, has avoided taking a
public position, probably to
escape personal blame for
the hardships it may impose
on the working class.
The agreement concluded
late last month in Paris by
representatives of Air France,
Lufthansa, Alitalia, and Sabena
has evidently cleared the way
for formation of a powerful con-
sortium comprising four of the
five major airlines of the Eu-
ropean Common Market countries.
It may still be some time before
the combine--the name of which
has been changed from Europair
to Airunion--is in full opera=
tion, but the result will prob-
ably be accelerated competition
with American and British civil
aviation and the formation of
other, competing combines. The
,Airunion partners may also in-
tend to concert their demands
for additional landing rights
in the United States.
The major feature of the
Airunion agreement is the ar-
rangement for disbursement of
revenues--for the present in ac-
cordance with current contribu-
tions by the partners but eventu-
ally on the basis of agreed
quotas. Air France ultimately
will get 34 percent; Lufthansa,
:30 percent; Alitalia, 26 per-
cent; and Sabena, 10 percent.
This sliding scale allows for
anticipated expansion of the
German and Italian lines, the
difficulty which led the Dutch
KLM line to withdraw from the
Europair negotiations last April.
The agreement, which runs for
99 years from April 1960, also
provides for a provisional Air-
union secretariat in Paris and
for permanent committees to
put the combine in operation.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Recent statements from the
lour companies indicate the
ambitious objectives of the
consortium. Airunion will han-
dle joint sales and centralized
advertising, coordinate schedules
and use of aircraft, centralize
aircraft maintenance, and as-
sign routes to the partners.
This program has not yet been
worked out in detail, and it
is not clear to what extent the
individual airlines will lose
their identities and merge their
personnel.
The companies anticipate
that their total ton/kilometer
passenger capacity--now roughly
equal to that of Pan American--
will more than double in 9 to
12 years. These expansion plans
make the future of KLM, now one
of the best established air-
lines in Europe, doubly uncer-
tain. Although the Airunion
agreement is open to others,
KLM has been warned that it
would have to accept the condi-
tions set forth by the charter
members. On the other hand,
Airunion partners have shown
some concern that the Dutch
might invoke the anticartel pro-
visions of the Common Market trea-
ty or join a non - Common Mar-
ket consortium of such companies
as Swissair, the Scandinavian-
SAS,-and British European Airways.
. Such a move would tend to
confirm the suspicion that in-
creasing Dutch disenchantment
with the=European integration
movement is a factor in KLM's
attitude toward the air consortium
despite the absence of any-direct
connection between Airunion and
the Common Market. A high Dutch
official who recently became
vice president of KLM has been
one of the most persistent 25X1
critics of the Common Market--
particularly of French-German
influence in it.
ICELAND'S GENERAL ELECTION
Iceland on 28 June will
hold the first of two parlia-
mentary elections required to
revise the electoral law. The
campaign is being fought pri-
marily on this and other domes-
tic issues. The electoral pro-
posal, aimed at correcting the
existing overrepresentation of
rural interests in the Althing
(parliament) by.rede-
termining the constit-
uencies, already has
been approved by the
Althing with the sup-
port of the Conserva-
tives, the Communist-
dominated Labor Al-
liance, and the So-
cial Democrats. The
largely rural Progres-
sives bitterly oppose
the revision, since they stand
to lose heavily by the projected
redistricting.
The election outcome re-
mains in doubt, but the Conserv-
atives seem likely to emerge
with increased strength though
not with a majority of seats.
The dissension-ridden Labor
SOCIAL
DEMOCRATS
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PROGRESSIVES
~ (15.6)
CONSERVATIVES
(42.4)
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CURRENT INTELLIGENCE WEEKLY 'SUMMARY
Alliance and the Progressives
seem likely at least to hold
their own.
The Social Democrats, who
have constituted a minority gov-
ernment with Conservative par-
liamentary support since the
Labor Alliance and the Progres-
sives were ousted from the rul-
ing coalition last December,
fear losses and could conceiva-
bly lose their representation
entirely through failure to
capture the single directly
elected Althing seat necessary
for their other votes to be
counted under proportional rep-
resentation... This is because
the party is not running in al-
liance with Progressives as it
did in 1956 when three of its
four directly elected Althing
seats were gained mainly as a
result of Progressive support.
As the present minority
government, the Social Democrats
may have incurred some labor
antagonism by their anti-infla-
tionary program and refusal to
yield on wage terms. The Labor
Alliance, seeking to gain un-
disputed title as labor's cham-
pion., is subjecting the Social
Democrats to special attack.
These negative factors may be
partially offset, however, by
the popularity among urban
groups of the government's ef-
forts to curb inflation and re-
duce prices of essential com-
modities.
The successful outcome
of the constituency reform de-
pends on whether the Conserva-
tives and the Social Democrats
emerge from the elections with
a majority--at present they
control 27 of the 52 seats in
parliament.. A setback for either
of these two parties would not
only postpone action on the
electoral reform measure, but
it would also put the Communists
in a pivotal position, with the
Conservatives and Progressives
vying for their support. The
Communists' price would be
high, and they might be able to
exact concessions at the expense
of Iceland's NATO ties. The
Communists would also be likely
to demand more extreme measures
in the fishing dispute with
Britain such as breaking off
diplomatic relations with London.
BLOC CONTINUES PRESSURE AGAINST MISSILE BASES IN G22ECE AND ITALY
The intensified Soviet
attack on projected US missile
bases in Italy and Greece, which
was a major theme of Khrushchev's
Albanian visit, has been fol-
lowed up in diplomatic and prop-
aganda moves by Moscow and the
Balkan satellites. A second
note from Moscow to the Italian
Government on 10 June repeated
that the setting up of missile
bases on Italian territory in-
creases the danger of nuclear
war, It again urged the conclu-
sion of a Soviet-Italian treaty
of friendship and nonaggression
and again called for prohibition
of nuclear weapons in the Bal-
kan-Adriatic zone.
The Italian Foreign Minis-
try as of 12 June had drafted
a note in answer, welcoming dis-
armament measures as long as
they are based on adequate in-
spection and control.
Rumania on 6 June issued
a formal note to Greece reiterat-
ing all the provisions of Ru-
maniaLn Premier Stoica's 1957
proposal for a Balkan conference
to include Rumania, Bulgaria,
Albania, Yugoslavia, Greece,
and Turkey, The note did not
mention Italy, It repeated
Khrushchev's threat that if
Greece installed missile bases,
countermeasures must follow
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CURRENT INTELLIGENCE WEEKLY SUMKLIRY
from the "threatened countries,"
adding that there can be no
Balkan rapprochement as long
as there are missile bases in
Greece. There was a new sug-
gestion that after agreement
had been reached in the Balkans,
a guarantee of the Balkans as
a zone of peace should be sought
from the "great powers."
In a 9 June note to Athens,
Bulgaria proposed negotiations
to settle all outstanding fi-
nancial differences, including
Greek claims on Bulgaria for
World War II reparations; con-
clusion of a bilateral nonag-
gression treaty; and a Balkan
conference of heads of state
or their representatives.
Athens has responded firm-
ly and in detail to both the
Soviet and Rumanian notes, but
it does not intend to reply to
the latest Bulgarian note. The
Greek position is that a denu-
clearized zone in the Balkans
and a Balkan conference designed
to promote such a zone are un-
realistic, in view of Soviet
claims of world-wide rocket
capability, and that any attempt
by threat or propaganda to
force Greece to prohibit rocket
bases is unacceptable interfer-
ence in Greek internal affairs.
On 15 June the Albanian
Council of Ministers issued a
statement supporting the 6 June
Rumanian declaration. The
Albanians propose, however, that
the whole "Mediterranean basin"
be kept free of nuclear weapons.
They cite Khrushchev as the
source of this proposal and
state incorrectly that it was
also mentioned in the Rumanian
declaration. The Albanian state-
ment does not mention the Ru-
manian proposal that a Balkan
nonaggression zone be guaranteed
by the "great powers."
Yugoslavia's attitude to-
ward a Balkan summit conference
and the denuclearization of the
Balkans closely parallels that
of the bloc. Apparently some-
what embarrassed by this, Bel-
grade has qualified its support
for these proposals in such a
way that, regardless of future
actions in this sphere, it will
retain considerable freedom of
action. Tito emphasized in an
8 June speech that Khrushchev's
proposal for a missile-free
Ba)Lkan and Adriatic zone is un-
realistic unless "states in this
area cooperate normally and main-
tain neighborly relations on
the basis of mutual respect v' He
added, however, that such a zone
has long been Yugoslav policy.
Yugoslav reaction to Khru-
shchev's remarks regarding a
Balkan conference has been re-
served. Government spokesman
Kunc on 5 June stated that
Belgrade had received no invita-
tion to such a conference, and
that Yugoslavia's attitude--
that it will attend if all other
Balkan states also consent to
be present--is "already known,"
Statements by Khrushchev
and the East German delegation
during their visit to Riga
last week revived the Baltic
"sea of peace" theme and fore-
shadow a Soviet offensive to
counter NATO in that area as
well during Khrushchev's Scan-
dinavian tour in August. The
USSR may put heavy pressure on
Finland to join the campaign
for a Scandinavian zone
free of nuclear
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CURRENT INTELLIGENCE WEEKLY SUMMARY.
18 June 1959
GRAIN CROP PROSPECTS IN USSR AND EUROPEAN SATELLITES
A mediocre grain harvest--
well below the 1958 bumper crop
is in. prospect for the Soviet
Union this year because of be-
low-normal precipitation over
the period since last October.
Spring seeding in the USSR
started earlier than usual this
year because of above-normal tem-
peratures and relatively dry
weather in the principal agri-
cultural region during March
and April. By 5 June the acre-
age of spring crops sown on col-
lective and state farms was
310,800,000 acres and the plan
for spring seeding had been ful-
filled by 100.6 percent. About
306,400,000 acres, or 99 percent
of plan, had been sown by 5
June last year.
The advantage of a longer
growing season resulting from
the early spring appare; !. y will
be offset this year by the lim-
ited soil moisture. Precipita-
tion from October 1958 through
March 1959 was some 10 to 20
percent below normal. Rainfall
during April in the principal
agricultural areas was some 30
to 40 percent below normal and
during May was somewhat less
than half the normal amount.
Even if rainfall increases dur-
ing the remainder of the grow-
ing season, it is doubtful the
grain production will be above
average. If rainfall continues
below normal during the late
spring and early summer, grain
yields will be well below aver-
age.
In the Balkan satellites,
the outlook for spring-planted
crops has improved since 15 May
as a result of rain during the
Belorussia
Precipitation
1 z
?_
in Selected Agricultural Areas
of the Soviet Union
Monthly Averages as Percent of Normal
BALTIC SEA 0
18 JUNE 1959
U z
m
a
.rarwre maEE 1.00
Uk
i
ne
ra
-F10
Minsk.
~RBELO
U551A~'~ ~~
Central
X100%
Non-Black Soil
Zone
K1ev,J Moscow
O
TRA
~
UKRAINE'
t
ACK SOIL
ZON
ENTRAL'..'E GOrkiy
0
-1
JOX.
o
m
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11~~ ZONE
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BLACK ...\-4-
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N
ort Cauc
asus
Rostov r-?
S Stalingradu shey +
lLOWE 1 ~y
y
Genkr I
Black Soil
Zane
11
00%
SEA NORTH
~VOLGA z
tDU
CAUCASUS,
o
Guryev ~
r
~
~
--~NVS
LANI)6 AREA '
p
-1Q
0
0%
u
z m
a w
a
z
CASPIAN
SEA Kara >tt6a v
%
> u
o
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i
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SEA i +
z
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--- ~'
wa
nds Are
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0
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..
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- - w~~ % ;
m u
p o
z
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30513