CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A002400010001-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 46
• Document Creation Date: December 16, 2016
• Document Release Date: February 23, 2005
• Sequence Number: 1
• Publication Date: August 6, 1959
• Content Type: SUMMARY

Approved For Release 2005/03/15 : CIA-RDP79-OOWA0024000100
CONFIDENTIAL
SEC
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
COPY NO. "3
OCI NO. 4061/59
6 August 1959
N) Ou{ .ILNT NO. /
fdO CHANGE IN CLASS. l i
0' DFICLASSIFIE-D
CLA& S? CHANGED TO: + S S
r AE4;~trf DATE:
J?. !''.fi'rc'~.9
L:~
fSFViEWEFi.
CENTRAL INTELLIGENCE AGENCY
i OFFICE OF CURRENT INTELLIGENCE
State Department review completed
cry
25X1
25X1
Approved For Release 2005U Al RNUTI AL27A0024 00 1
 Approved For Rse 2005/03/15 : CIA-RDP79-00927A00010001=6"
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.
Approved For Release 2005/03/15 : CIA-RDP79-00927A002400010001-6
 Approved For Release 20&s:EIA-RDP79-OQQWA002400010001-6
CONFIDENTIAL
CURRENT INTELLIGENCE WEEKLY SUMMARY
6 August 1959
T H E W E E K I N B R I E F
OF IMMEDIATE INTEREST
5X1
25X1
25X1
EAST-WEST NEGOTIATIONS . . . . . . . . . . . . . . . . . . Page 1
Soviet spokesmen have moved promptly to create a
favorable climate for Khrushchev's forthcoming trip to
the United States following the announcement on 3 August
of the agreement between President Eisenhower and the
Soviet premier to exchange visits. Khrushchev adopted
a posture of moderation and restraint in his press con-
ference on 5 August, stressing the prospects for estab-
lishing a "climate of confidence and mutual understanding."
His apparent intention to avoid actions which would jeop-
ardize this favorable atmosphere was evident in his re-
newed pledge that the status of Berlin would not be changed
while negotiations are in progress. Reaction in Western
Europe ranged from the enthusiasm in Britain and left-
wing circles on the Continent to critical comments from
some French and West German circles. Comments in the
Afro-Asian area were largely favorable, with the exception
of Nationalist China and South Korea, where reaction re-
flected underlying fears of a shift in American policy.
MIDDLE EAST HIGHLIGHTS . . . . . . . . . . . . . . . . . . Page 5
The Iraqi Communist party appears to be shifting to
more moderate tactics to forestall repression by Qasim,
who has been angered by its persistent agitation and its
role in the Kirkuk disorders last month. The regime is
taking further steps to try to eliminate Communist control
of mass organizations, while the Communist-infiltrated
Popular Resistance Force has been rendered temporarily in-
effective. The UAR has agreed to release the Israeli-
chartered freighter it has been holding since last May,
but the fundamental quests of Israeli use of the Suez
Canal remains unresolved . 25X1
he Iranian Government continues Its
firm stand against the Soviet propaganda campaign, which
last week included new personal attacks on the Shah. 0 25X1
THE OAS FOREIGN MINISTERS' MEETING ON CARIBBEAN TENSIONS . Page 7
At the inter-American meeting of foreign ministers
convening in Santiago on 12 August to discuss Caribbean
tensions, Dominican dictator Trujillo is likely to face
CONFIDENTIAL
sgre~ i
Approved For Release 2005/03/15 : CIA-RDP79-00927A002400010001-6
THE WEEK IN BRIEF
 Approved F release 2005fFJCRFcg-RDP79-00002400010001-6
CURRENT INTELLIGENCE WEEKLY SUMMARY
6 August 1959
PART I (continued)
a powerful diplomatic onslaught led by Venezuela and Cuba.
Leftist circles are trying to mobilize hemisphere public
opinion as well as organize demonstrations in Chile to
bring pressure for strong condemnation of dictatorships.
Meanwhile, the serious tensions which led to the call for
the meeting continue to trouble Cuba the Dominican
Republic, Haiti, and Nicaragua. 1 -1 25X1
LAOS . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 10
The government's military position in northern Laos
remains weak despite the arrival of some reinforcements.
Communist rebel forces control considerable areas of Sam
Neua and Phong Saly Provinces, where several army outposts
have fallen and others are under threat of attack, Indi-
cations are that the insurgency may spread to other parts
of the country. There is no doubt that the Communist
bloc has instigated the current fighting in Laos, but firm
evidence of involvement of North Vietnamese units is
lacking. The Communist bloc and India are pressing for
the return of the International Control Commission in Laos,
and the Communists charge that the United States is respon-
sible for the critical situation there. Hanoi termed
the Phoui government's letter to the UN accusing North
Vietnam of intervention a "provocative" move which "may
render the situation in Laos more serious." 25X1
NOTES AND COMMENTS
USSR STRENGTHENS TIES WITH AFGHANISTAN . . . . . . . . . . Page 1
The USSR has strengthened its ties with Afghanistan
over the past six months through a number of agreements
providing for extension of Soviet activities into southern
Afghanistan. Moscow apparently hopes that by such aid--
including Soviet advisory personnel--and by political sup-
port it can overshadow Western assistance in Afghanistan
and induce Afghan leaders to abandon neutral policies in
favor of closer alignment with the Communist bloc.
BLOC EXPANDS RELATIONS WITH IRAQ .
Page 3
The Sino-Soviet bloc is continuing to expand and con-
solidate its relations with Iraq through projects in such
fields as civil aviation, medical aid, and the peaceful
use of atomic energy, and by rapidly implementing military,
SECRET
ii
Approved For Release 2005/03/15 : CIA-RDP79-00927AO02400010001-6
THE WEEK IN BRIEF
 Approved Forlease 2005/03/15: CIA-RDP79-0092702400010001-6
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
6 August 1959
PART II (continued)
economic, and technical aid agreements. Bloc leaders,
although undoubtedly concerned over recent setbacks suf-
fured by the Iraqi Communist party, have maintained a
posture of "friendship" toward Premier Qasim and his
government.
PEIPING'S "SERIOUS WARNINGS" .
Page 4
Peiping clings tenaciously to its effort to document
"US aggression.', The "61st serious warning," charging
"violation" of Communist-claimed air space over the
Paracel Islands, was issued 31 July and continues the
long list of alleged grievances. In recording the "in-
trusions," Peiping also seems intent on emphasizing its
territorial claims and has recently focused its attention
on the Paracels, in the South China Sea.
CHINESE COMMUNIST PARTY CONDUCTING MAJOR MEMBERSHIP
DRIVE . . . . . . . . . . . . . . .
. . . Page 5
Concurrent with the "giant leap forward" and commune
programs, the Chinese Communist party has been conducting
a major recruitment drive aimed at strengthening its
organization in rural areas and assuring the effective
implementation of its sweeping domestic policies. Al-
ready the largest Communist party in the world, it prob-
ably will reach a membership of about 15,000,000 by the
end of 1959. This would comprise about 2.3 percent of
the Chinese population; the Soviet party's membership
amounts to about 4 percent of the population.
ILYA EHRENBURG AGAIN EXPRESSING UNORTHODOX VIEWS . . . . . Page 6
Ilya Ehrenburg, who earned the displeasure of the
Soviet regime by going too far during the period of liber-
alization following Stalin's death, has again begun to
express unorthodox views. Ehrenburg's prominence in the
"international peace movement" may have contributed to
official reluctance thus far to censure him. His contin-
uing disregard for the efforts of the regime to enforce
cultural conformity, however, may force the authorities
to act against him.
PRESIDENT'S RULE IN KERALA . . . . . . . . . . . . . . . . Page 8
New Delhi's take-over of the administration of Kerala
State on 31 July climaxed the six-week struggle by com-
bined anti-Communist groups to oust the Communist govern-
ment. Dismissal of the Communists in Kerala has been a
serious setback to Communist prestige throughout India.
SECRET
25X1
25X1
iii
Approved For Release 2005/03/15 : CIA-RDP79-00927AO02400010001-6
THE WEEK IN BRIEF
 Approved Felease 2005T6~'r5?l-RDP79-009002400010001-6
CURRENT INTELLIGENCE WEEKLY SUMMARY
6 August 1959
PART II (continued)
Retaliatory action by the Communists in other key states
has been confined to nonviolent demonstrations. In turn,
Nehru's Congress party now faces a critical test of its
ability to win the new state. elections--likely to be held
within six months--and provide a more effective and stable
state government.
CEYLON . . . . . . . . . . . . . . . . . . . . . . . . . . Page 8
Prime Minister Bandaranaike's government--with a one-
man majority in the Ceylonese Parliament--remains in a
vulnerable position, despite Parliament's approval of the
budget in a critical vote on 31 July. Conservative ele-
ments probably will continue to try to subvert Bandaranaike's
support, even though their efforts during the past two
months have failed. The government's uncertain future is
likely to inhibit effective action on Ceylon's major prob-
lems, and this in turn may stimulate further opposition
planning for "direct action" to end Bandaranaike's admin-
istration.
CYPRUS . . . . . . . . . . . . . . . . . . . . . . . . . . Page 9
The differences between Archbishop Makarios and for-
mer EOKA leader George Grivas have caused an open break,
and Cyprus is again faced with the possibility of violence.
Makarios, who is confident that he enjoys the support of
the overwhelming majority of Greek Cypriots, has replied
in mild terms to Grivas' action in "dissociating" himself
from the Cyprus settlement. Greek Government leaders,
recognizing Grivas as a potentially dangerous rival for
power, have bluntly denied his charges that he was pre-
sented with a fait accompli at the time the accord was
reached.
. . . . Page 10
A mounting cabinet crisis in Morocco induced Mohamed V
to leave Paris abruptly on 2 August without meeting
De Gaulle as planned. The Moroccan Government has become
increasingly skeptical that any benefits could be derived
from a meeting with De Gaulle. It is also beset with
serious financial difficulties and popular agitation aris-
ing from border incidents involving French troops in
Algeria and Moroccan-based Algerian rebels.
INDONESIA . . . . . . . . . . . . . . . . . . . . . . . . Page 11
The new Indonesian cabinet, still preoccupied with
government reorganization under the revised 1945 constitu-
tion, has announced the formation of two consultative
bodies: the Supreme Advisory Council, headed by President
Sukarno, and the National Planning Board under leftist
SECRET
iv
25X1
2 X11
Approved For Release 3/Q : CIW-~IRPI ;00927AO02400010001-6
 Approved For Release 2005/ , -RDP79-00%2 A002400010001-6
CURRENT INTELLIGENCE WEEKLY SUMMARY
6 August 1959
PART II (continued)
minister Mohammed Yamin. Inclusion on the Supreme Advisory
Council of two top Communist party leaders, along with
representatives of eight other parties, indicates that
Sukarno may still hope to maintain a balance among politi-
cal parties and the armed forces. In addition, Sukarno
apparently is backing Defense Minister Nasution's plan to
increase the army role in government. However, if Sukarno
felt Nasution was becoming a threat to his own power, he
would probably move to downgrade or remove him.
WEST GERMAN ECONOMIC ACTIVITY IN AFRICA . . . . . . . . . Page
The visit of a West German economic delegation to
Liberia and Ghana during the week of 3 August highlights
West Germany's increasing interest in developing economic
relations with independent African states. The negotia-
tions, which are expected to produce agreements for in-
creased trade and technical assistance, follow recent
commitments of $24,000,000 in credits for the Sudan-and
$7,000,000 for Ethiopia. West German economic assistance
and impending diplomatic recognition are intended to
counter East German political and economic inroads in
Guinea.
BOLIVIA UNDER PRESSURE TO ACCEPT BLOC ECONOMIC AID . . . . Page 14
The Bolivian Government is under increasing political
pressure to accept bloc economic overtures as a result of
perennial political instability, leftist maneuvers, and
growing popular discontent with the deteriorating economy
under the US-backed stabilization program. Moderate
President Siles, the principal defender of the program,
expects Congress, now in session, to challenge the govern-
ment's failure to act on bloc credit offers to the national
oil company, amounting to about $60,000,000. His power
to resist leftist pressure in favor of bloc aid and against
some aspects of stabilization appears to be diminishing.
SECRET
25X1
6X1
v
Approved For Release 2005/03/15 : CIA-RDP79-00927AO02400010001-6
THE WEEK IN BRIEF
 Approved Fc elease 2005/03/15 : CIA-RDP79-009,002400010001-6
SECRET
6 August 1959
PATTERNS AND PERSPECTIVES
25X6
25X1
25X1
Page4
Increasing reluctance of many UN members to supply
funds and manpower threatens the existence of the 5,000-man
UN Emergency Force (UNEF). A major cut in the size of the
force by the General Assembly this fall would result in
substantial savings but would reduce UNEF's effectiveness
in maintaining order along the UAR-Israeli border. Key
factors in determining the future of the force are the
continued support of India, whose 1,166 men form the
largest single contingent, and the support in principle if
not financially of the Latin American bloc. Secretary
General Hammarskjold's strong personal advocacy and volun-
tary contributions from the United States, Britain, and
France, in addition to regular pro rata assessments,
may suffice to obtain assembly endorsement through
1960. F_ I
b a b e Page 6
President Sukarno's new cabinet has acknowledged
the priority need for decisive action to adjust Indonesia's
inflated economy. Causes of the economic deterioration
are underproduction both for the domestic and the world
market, a shortage of consumer goods, and the government's
growing deficit, caused chiefly by military expenditures.
Other factors are poor internal distribution, illegal
barter trade, continued economic dislocation resulting
from the December 1957 take-over of Dutch interests, and
inefficiency of government-controlled import-export
companies. The cabinet apparently envisages some sort
of stopgap remedial measures, but a long-term project is
needed to provide a solution effective on a national
scale.
SECRET
vi
Approved For Release 2005/03/15 : CIA-RDP79-00927AO02400010001-6
THE WEEK IN BRIEF
 Approved Felease 2005/03/15: CIA-RDP79-004002400010001-6
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
6 August 1959
25X1
SECRET
vii
Approved For Release 2005/03/15 : CIA-RDP79-00927AO02400010001-6
THE WEEK IN BRIEF
 Approved Fc elease 2005/0 1 R RDP79-0092A002400010001-6
CURRENT INTELLIGENCE WEEKLY SUMMARY
6 August 1959
OF IMMEDIATE INTEREST
Visits
Soviet spokesmen have moved
promptly to create a favorable
atmosphere for Khrushchev's
forthcoming trip to the United
States following the announce-
ment on 3 August of the agree-
ment between President Eisen-
hower and the Soviet premier
to exchange visits.
Khrushchev used one of his
rare press conferences--his
third since becoming premier--
as a forum to adopt a posture
of statesmanlike moderation
and restraint. He stressed the
prospects for establishing a
"climate of confidence and
mutual understanding" between
the two countries and under-
scored the "immense importance"
of the state of US-Soviet rela-
tions for maintaining peace.
He contended there are no ter-
ritorial disputes or "insoluble
contradictions" standing in the
way of "improved relations."
The Soviet press has greet-
ed the exchange of visits ef-
fusively as an event of great
historical importance for im-
proving US-Soviet relations and
for solving international prob-
lems. There has been a sharp
drop in Soviet press articles
critical of American living
standards and the Sokolniki ex-
hibition.
Khrushchev's apparent in-
tention to avoid actions which
would jeopardize a favorable
atmosphere for the exchange of
visits was evident in his re-
newed pledge during his press
conference on 5 August that the
status of Berlin would not be
changed while negotiations are
25X1
The great satisfaction
among Soviet officials over the
exchange of visits was reflected 25X1
in the jubilant reaction of the
Soviet Foreign Ministry press
chief
from the Soviet standpoint the
Geneva talks had been a great
success, since they had result-
ed in the long-sought invita-
tion for Khrushchev to visit the
United States and hold private
talks with President Eisenhower.
The Soviet spokesmen also
expressed the belief that the
President's invitation to Khru-
shchev signified a basic change
in American foreign policy and
greater American receptivity to
the Soviet view that a relaxa-
tion of tensions could be
achieved by US acceptance of
the global "status quo." They
professed to believe that the
United States would make clear
its recognition of the USSR's
hegemony over the Socialist
bloc and said Moscow, in turn,
would accept the Western sphere
of influence and engage only
in "peaceful competition." They
stressed the USSR's need for
time to consolidate economic
and political gains within the
bloc and contended that, after
this period of consolidation,
Moscow would be in a position
SECRET
Approved For Release 2005/03/15 : CIA-RDP79-00927A002400010001-6
PART I OF IMMEDIATE INTEREST Page 1 of 12
 Approved For Release 2005/03/15 : C A-RDP79-009,#002400010001-6
uECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
6 August 1959
to resume a dynamic offensive
against the West by "peaceful
competition" which would ulti-
mately end in a Communist vic-
tory,
This professed expectation
of a-Soviet-American detente
based on the status quo prob-
ably will receive increasing
emphasis in Soviet propaganda.
A broadcast to Turkey on 3
August by a clandestine station
25X1 escribed
Vice President Nixon ,s trip as
a "turning point" in East-West
relations and advised the Turks
to accept Soviet offers of
"friendly and neighborly rela-
tions" because the United States
might soon come to an under-
standing with the USSR without
consulting Turkey.
Gromyko's tactics during
the final week of the foreign
ministers' talks reflected Khru-
shchev's apparent decision not
to force the issue on Berlin
and a separate peace treaty at
this time and to agree to allow
the talks to recess indefinite-
ly in the belief that negotia-
tions will be resumed on a high-
er level and under conditions
more favorable to the USSR fol-
lowing the Soviet-American ex-
change of visits.
The conference recessed on
5 August without any important
modifications in Soviet positions.
Gromyko's maneuvers in the final
stage of the talks were aimed
at probing the West on the pos-
sibility of reaching what a TASS
correspondent termed a "minimum
agreement" confined to a Western
commitment to reduce Allied
forces in West Berlin in,ex-
change for Soviet procedural
concessions.
PART I
25X1
in return
for Western agreement in prin-
ciple on a reduction of forces,
the USSR would agree to soften
its insistence on a link be-
tween an interim Berlin arrange-
ment and an all-German commit-
tee.
i Western concessions on
troop levels were forthcoming,
the USSR would make certain
"gestures" concerning all-Ger-
man talks, even
a reduction of 1,000 men would
satisfy the USSR. A TASS cor-
respondent was even more ex-
plicit on 30 July, stating: "If
the West will cut its troops,
the USSR will drop the all-
German committee." The Russians
also hinted that Gromyko would
be willing to abandon his ear-
lier opposition to a four-power
commission to handle access
problems under an interim agree-
ment.
In a private talk with
Secretary Herter on 29 July,
Gromyko repeatedly pressed for
a-Western commitment to reduce
troops. He implied that if
agreement could be reached on
this issue, the Soviet demand
for an all-German committee
could be discussed "separately."
When Secretary Herter suggested
in the private session on 30
July that the ministers should
begin drafting some of the pro-
visions of an interim agreement,
Gromyko demurred, saying it
would be difficult to draft
other clauses in the absence of
agreement on force levels,.
Gromyko gave the impression
he did not regard the question
of prohibiting subversive ac-
tivities in Berlin as a matter
of major importance and hinted
SECRET
Approved For Release 2005/03/15 : CIA-RDP79-00927AO02400010001-6
OF IMMEDIATE INTEREST Page 2 of 12
25X1
25X1
25X1
 Approved For-Release 2005/03/15 : CIA-RDP79-00WA002400010001-6
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
6 August 1959
at the possibility of an "ap-
propriate" declaration by East
Germany outside the framework
of an interim agreement.
On the basic issue of the
status of Western rights after
the expiration of an interim
agreement, however, Gromyko
continued to the end to refuse
to commit himself beyond re-
peating that the USSR would
take no unilateral actions re-
garding Berlin during the in-
terim agreement or the ensuing
rrt;gotiations. He also said
the USSR. could not accept a
five-year interim agreement., as
proposed by the West, stating
that this was too long, or
to have the agreement con-
tinue automatically if talks
at the end of the interim
period failed.
Gromyko's concluding speech
at the 5 August plenary ses-
sion was designed to establish
the main lines of Moscow's po-
sition in future negotiations
on Berlin and a German treaty.
He contended that the confer-
ence had agreed that the situ-
ation in West Berlin should be
changed, that an interim agree-
ment must cover such questions
as Western force levels, pre-
vention of subversive activi-
ties and hostile propaganda,
a ban on nuclear weapons and
rockets in West Berlin, a
definite time period, and sub-
sequent negotiations.
The remaining differences,
according to Gromyko, related
to specific Western commitments
to reduce forces and the dura-
tion of an agreement. He con-
tinued to insist on a link be-
tween a Berlin arrangement and
all-German negotiations, claim-
ing that the Western powers,
by "virtually recognizing" the
necessity of all-German talks,
had made a "certain advance"
toward accepting the role of
both German states in discuss-
ing a peace treaty, reunifica-
tion, and contacts.
Gromyko concluded by call-
ing for "fresh efforts" to re-
solve the remaining differences
and said a summit meeting "must
examine and settle the issues
on which the ministers could
not agree." This position ap-
pears to foreshadow future So-
viet opposition to any Western
proposal to resume negotiations
at the foreign ministers' level.
Eastern European Reaction
Eastern European news
media echoed Moscow's belief
that the Khrushchev-Eisenhower
exchange offers an opportunity
for a "detente" and will en-
hance the prospects for world
peace. East German commentators
considered the visit "a most
serious blow to Bonn," claiming
that Adenauer had made "last-
ditch efforts" to prevent the
meeting of the two leaders.
They also pointed out that the
visits are "no substitute-for
a summit conference." Yugo-
slav President Tito welcomed
the visits as being of "extra-
ordinary significance."
Peiping initially reported
the exchange invitations factual-
ly without comment.. On 5 August,
leading newspapers carried ed-
itorials stating that the Chi-
nese people "unanimously wel-
come" the announced visits and
"warmly support" Soviet efforts
to ease international tension.
Both Peiping and Pyongyang de-
clared the exchange a victory
for the USSR's diplomatic in-
itiative,
SECRET
Approved For Release OF IMMEDIATE INTEREST 7A00240001000'lPage 3 of 12
PART I
 Approved Fc elease 2005/q,,1,t irRDP79-00902400010001-6
CURRENT INTELLIGENCE WEEKLY SUMMARY
6 August 1959
Western Europe
Generally, European reac-
tion has been marked with cau-
tious optimism, and relief that
the end of the Geneva foreign
ministers' conference did not
result in a sharpening of the
crisis over Berlin. The more
right-wing papers expressed
the greatest fear regarding the
outcome of the visits--that a
Washington-Moscow deal might
cause a dismantling of the
Western defense system;
the left-wing press has been
the most enthusiastic.
While approving the visits
as offering a possible way
out of the Berlin impasse,: the
West German press with near
unanimity viewed the announce-
ment as a Soviet diplomatic
success.
In France, government
circles were reported cool, and
French press approval was
tempered with warnings of the
possibilities of a "new Yalta."
Former Premier Georges Bidault
underlined right-wing skep-
ticism with his public charge
that the two-power meetings
could be "the beginning of the
capitulation of the free world."
Dutch Foreign Minister
Luns' statement that "better
proof of an easing of tension
can hardly be imagined" stands
out among the generally "cor-
rect" official statements from
Continental government leaders,
Italian Socialist leader Nenni
took the exchange as constitut-
ing a personal triumph for his
own ideas; European Communists
have been jubilant.
Special concern about ar-
rangements for Western consulta-
tion has appeared in Italy and
in some other smaller NATO na-
tions. Italian Foreign Minis-
ter Pella privately stated that
the exclusion of Italy from
the President's consultations
later this month was extremely
serious. The Italian Govern-
ment has pressed its proposal
for a NATO heads-of-government
meeting at the time of the
President's visit to Europe.
Initial Belgian reaction also
showed pique at being excluded
from the preliminary consulta-
tions.
Enthusiasm in Britain was
not mixed. The stanch Con-
servative Telegraph agreed
with some Continental opinion
that,it might seem that a So-
viet victory had emerged from
the Berlin ultimatum, The mass
circulation papers quickly
claimed a success for British
diplomacy in bringing about
the Eisenhower-Khrushchev meet-
ing, but gave secondary credit
to Vice President Nixon. The
press unanimously saw the visits
as paving the way for a formal
four-power summit conference
at a later date. Possibly with
an eye to the forthcoming elec-
tion campaign, Prime Minister
Macmillan's 3 August press re-
lease cultivated the notion of
a British triumph by reminding
the British public how he had
championed the resolving of
tensions through more personal
contacts.
Non-Communist Asia
Statements expressing of-
ficial satisfaction have been
reported from Baghdad, Tehran,
New Delhi, Tokyo, Kabul, Manila,
and other capitals. While some
papers expressed the opinion
that the exchanges were unlike-
ly to result in the immediate
solution of international prob-
lems, the majority felt that
they would create a favorable
. SECRET
Approved For Release 2005/03/15 : CIA-RDP79-00927A002400010001-6
PART I OF IMMEDIATE INTEREST Page:4 of 12
 Approved Fo lease 2005/OgLtt RDP79-0092,02400010001-6
lqw
CURRENT INTELLIGENCE WEEKLY SUMMARY
6 August 1959
climate for easing tensions.
Many voiced hope that they
would offer a way out of the
deadlocked Geneva conference.
An Israeli paper viewed the
Eisenhower invitation as "an
important personal victory"
for Khrushchev, and the Japanese
press generally regarded the
move as a major shift in US
policy. Philippine public opin-
ion was pessimistic concerning
the results of the visits.
The reaction in Nationalist
China and South Korea reflected
underlying fears of a shift in
US policy. Taipei's official
statement indicated restraint,
warning that the visits will
bear fruit only if the USSR
can be induced to abandon its
policy of "aggression." China
News hoped that Mr. Eisenhower
'Twill not be fooled" by Khru-
shchev. Comment in the South
Korean press was along similar
lines, recalling that President
Roosevelt made "too many mis-
takes" in World War II "by
trusting Soviet Russia too much,"
Seoul radio said the pro-
posed exchange is undesirable
and "fraught with great danger,"
and that the Korean "man-in-the-
street" is convinced that the
United States has been success-
fully "blackmailed" by the
USSR.
The only significant
Latin American comment has come
from Brazil, where the press
editorialized that the exchange
may presage an easing of the
cold war, and President Kubit-
schek offered his personal "ap-
plause" for "every sincere move
to preserve peace in the world."
The Brazilian foreign minister's
statement that the development
requires Latin American na-
tions to re-examine their own
attitudes and possibly formulate
new policies is seen by the
American Embassy as .point-
ing to an imminent review of
Brazil's policy of nonrecogni-
tion of the USSR.
Iraq
Prime Minister Qasim's
obvious anger over the persist-
ent agitation of the Iraqi Com-
munist party and over what he
apparently believes was its role
in the disorders at Kirkuk and
elsewhere last month has led
the party to admit mistakes by
its own "ill-advised individ-
ual leadership."
At a press conference on
29 July Qasim delivered his
strongest warning to date that
the "anarchist" elements--by
which he clearly meant the lo-
cal Communists--must mend their
ways or be "crushed." He has
also spoken in increasingly
strong terms of the necessity
for the students', women's,
peasants', and front organiza-
tions to get out of politics
and to purge themselves of
leaders who would subvert them
to the purposes "of a certain
party." On 3 August Qasim
spoke even more sternly to rep-
resentatives of the trade-union
federation, and showed them
pictures of 750 "anarchists"
whom they should watch out for,
The headquarters of the Commu-
nist-dominated federation was
closed on 4 August, and its
secretary is reported under ar-
rest,
The Communists' first re-
sponse--which was to blame "im-
perialist agents" and "irrespon-
sible elements" for the dis-
orders--apparently was felt in-
adequate to parry Qasim's wrath.
SECRET
25X1
PART I Approved For Releaf,2"(f4,TJIAI?I?KWSQq?927A00240001006ge 5 of 12
 Approved Folease 2005/03/15: CIA-RDP79-009202400010001-6
...........SECRET'
CURRENT INTELLIGENCE WEEKLY SUMMARY
6 August 1959
The party's subsequent state-
ment attributed its differences
with the"highest authority"
to faulty appreciation of the
nature of that authority and
of the capabilities of the "na-
tional forces" to defend the
Iraqi republic. The party
also reasserted its loyalty to
Qasim. This statement would
seem to be the product of a
plenum of the Iraqi Communist
party which was reported by
TASS, the Soviet news agency,
as having been held in an atmos-
phere of high-principledness,
self-criticism, concern for par-
ty unity, and awareness of the
party's responsibilities before
the Iraqi people.
apologetics combine d with Qasim's
irritation deprives the Commu-
nists for the time being of
what had been their most impor-
tant asset, the public belief
that they were the major power
in the government and that they
would take over in the not too
distant future.
Meanwhile the Communists'
potential paramilitary asset,
the Popular Resistance Force
(PRF), has been in effect de-
activated.
UAR-Israel
The dispute between the
UAR and Israel over Israeli use
of the Suez Canal may enter a
new phase as a result of a UAR
decision to release the Israeli-
chartered Danish freighter Inge
Toft with its cargo. Ali Sabri,
President Nasir's top aide,
stated on 2 August that the
ship could return to the Med-
iterranean at any time. The
Israeli cabinet--minus Prime
Minister Ben-Gurion, who was
ill with a cold--discussed the
problem at length on the same
day, and Foreign Minister Meir
subsequently indicated that the
release of the ship would be a
test of Nasir's "sincerity" in
wishing to reach some quiet
modus vivende on the issue.
The UAR's gesture, although
it may resolve the immediate
diplomatic problem of the fate
of the ;ship, nevertheless does
not meet the fundamental Israeli
view that the conditions which
Nasir wants to impose on Israeli
use of the canal are such that
Israel's effort to develop trade
and influence with East African
and Asian countries would be
continually at his mercy. Mrs.
Meir contends that if Nasir is
successful in imposing his will
on the canal issue, he may try
to bar the Gulf of Aqaba to the
Israelis. On this point, the
Israelis are extremely sensitive,
not only because of the economic
potential of their port of Eilat
SECRET
Approved For Release 2005/03/15 : CIA-RDP79-00927A002400010001-6
PART I OF IMMEDIATE INTEREST Page 6 of 12
 Approved For Release 2005/03/15 : CIA-RDP79-0092 002400010001-6
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
6 August 1959
at the head of the gulf but also
because the use of the gulf was
the one "permanent" gain achieved
by the 1956 Suez campaign. Mrs.
'heir says that if Nasir threat-
ens Aqaba, Israel's reaction will
come in a "matter of minutes."
The Iranian Government
continues its firm stand against
the Soviet propaganda campaign
which last week included new
personal attacks on the Shah.
Some broadcasts emphasized
that the struggle of "patriotic
officers" against the "unpatri-
otic" is daily becoming more
violent. The Shah, Prime Min-
ister Eqbal, and members of the
Iranian Parliament have made a
number of statements against
the USSR. Meetings have been
held by political groups on
ways to counter the propaganda.
Despite the brave front
displayed by the government,
there are some signs that the
broadcasts are having an anti-
regime effect
THE OAS FOREIGN MINISTERS' MEETING ON CARIBBEAN TENSIONS
At the inter-American meet-
ing of foreign ministers conven-
ing in Santiago on 12 August to
discuss Caribbean tensions, Do-
minican dictator Trujillo is
likely to face a powerful diplo-
matic onslaught led by Venezuela
and Cuba. In the face of the
strong Latin American tradition
of nonintervention, leftist cir-
cles are trying to mobilize hem-
isphere public opinion as well
as organize demonstrations in
Chile to bring pressure for stung
condemnation of dictatorships.
The Chilean Social-Commu-
nist coalition FRAP is reported
organizing a rally of Latin Amer-
ican leftists in honor of the
Castro regime in Santiago dur-
ing the foreign ministers' meet-
ing.
Venezuelan President Betan-
court has long favored the es-
tablishment of inter-American
sanctions on antidemocratic
governments, and his representa-
tives in Santiago will strongly
urge the creation of machinery
that would provide for concerted
pressure on dictatorial regimes.
Betancourt, an old enemy of
Trujillo, told the US ambassador
in Caracas on 4 August he could
SECRET
25X1
Approved For Release 2005/03/15 : CIA-RDP79-00927A002400010001-6
PART I OF IMMEDIATE INTEREST Page 7 of 12
 Approved For ease 2005/f2 'RDP79-00927 0002400010001-6
6 August 1959
not see how he could have his
foreign minister sit down at
the same table with the Domini-
can representative at the San-
tiago meeting. At the same time
he said he would not permit
any member of the Venezuelan
delegation to participate in
popular demonstrations for
Venezuela in Chile.
Official reactions thus
far to the second agenda item--
the effective observance of
human rights and representative
democracy--have been cautious
in approach. Several foreign
ministers believe that the meet-
ing should issue a declaration
and organize a committee to re-
port its results to the 11th
Inter-American Meeting in Quito
in February 1960.
Meanwhile, the serious po-
litical tensions in the Carib-
bean which led to the calling
of the meeting of foreign min-
isters continue to trouble the
area.
The Castro regime, which
mounted the abortive rebel in-
cursions into the Dominican Re-
public in June and assisted
Nicaraguan exiles in unsuccess-
ful attempts to oust the Somoza
regime, appears still determined
to force the overthrow of the
Trujillo dictatorship. It may
also be continuing to give
covert support to the Nicaraguan
exiles. There are
preparations in Cuba for new
rebel attacks on the Dominican
Republic. The Cuban Government
adamantly denies, however, that
it has intervened against any
neighboring government.
Cuban officials are show- 25X1
ing increased concern over the
threat of a counterrevolution
effort
Dominican Republic
The virtually friendless
regime of Generalissimo Rafael
Trujillo may reconsider taking
what it has termed "defensive
action" against Cuba if the
Santiago meeting fails to pro-
duce what Trujillo considers
adequate protection against
more Cuban-backed rebel incur-
sions into the Dominican Repub-
lic. Any benefit obtained by
Trujillo at Santiago is likely
to be a mere by-product of the
nonintervention principle.
Attacks on Trujillo will
probably emphasize his employ-
ment of "foreign mercenaries,"
referring to a vigorous recruit-
ing campaign being carried out
by Trujillo's agents in Europe 25X1
to enlist thousands of "immi-
grants" ostensibly for industrial
jobs,
SECRET
Approved For Release 2005/03/15 : CIA-RDP79-00927AO02400010001-6
PART I OF IMMEDIATE INTEREST Page 8 of 12
 Approved Fo lease 2005/03LIS _- t fDP79-00927 002400010001-6
SECR NW
6 August 1959
The Trujillo regime, suf-
fering from an economic down-
turn, appears nevertheless to
be firmly in control following
the crashing of the Cuban-backed
incursions of June. Machete-
bearing peasants
are alleged to
have suppor ed the Dominican
armed forces in liquidating
the rebel forces.
Haiti
The weak Duvalier regime
in Haiti fears intervention
either by Cuban-backed rebels
intent on invading the Domini-
can Republic through Haiti or
by Dominicans trying to frus-
trate such a move. According-
ly, it asked last month for a
US naval patrol of its shores.
Nicaragua
The government of Nicara-
guan President Luis Somoza--
the target of abortive rebel
incursions
early June
neuvering b
from Costa
and subsequ
y Cuban-sup
Rica
ent
port
in
ma-
ed
rebel
groups, which were pre-
vented
by
the Costa. Rican and
Honduran
crossing
armed forces from
into Nicaragua--is now
faced
with
additional harassing
rebel
raids
from across the
Costa
Rican
border. Another
small
rebel
group may have suc-
cessfully entered the country
from Honduras in the north.
The government is simulta-
neously being subjected to an
unprecedented wave of popular
indignation as the result of
the 23 July killing of five uni-
versity students during a demon-
stration in Leon that provoked
a trigger-happy military unit
to fire into the student
crowd. Subsequent protest dem-
onstrations in Managua and oth-
er cities and a mob attack on
the home of the Leon police
chief appear to have been spon-
taneous public reactions to the
student deaths.
The government appears to
realize the delicateness of its
position and is trying to moll-
ify public opinion. The absence
in June of significant antigov-
ernment feeling and of a clear
issue against the regime were
prime factors in the failure of
the rebel efforts then. The
student killings have largely
nullified the record of modera-
tion which the regime estab-
lished by its near bloodless
suppression of the June incur-
sions and President Somoza&s pre-
vious liberalizing moves. The
killings have prompted attacks
on Somoza elsewhere in the hemis-
phere and will probably be
brought up at the foreign minis-
ters' meeting as evidence of
his repressive methods.
Though the rebel raids
across the border in early Au-
gust appear not by themselves se-
riouslyto threaten the regime,
a more formidable rebel group
appears to be organizing under
pro-Communist Nicaraguan exile
Guillermo Urbina Vasquez. This
may be receiving Cuban Govern-
ment assistance for a new at-
tempt against Somoza later this
year.
SECRET
Approved For Release 2005/03/15 : CIA-RDP79-00927A002400010001-6
PART I OF IMMEDIATE INTEREST Page 9 of 12
25X1
 Approved Forease 2005/03/15: CIA-RDP79-009272400010001-6
SECRET.
CURRENT INTELLIGENCE WEEKLY SUMMARY
6 August 1959
The military situation in
northern Laos remains fluid, De-
spite a temporary lull in enemy
activity and the issuance of
optimistic communiques by the
government designed to allay
public concern, further military
action is expected.
Communist rebel forces,
numbering perhaps 1,500 control
considerable areas of Sam Neua
and Phong Saly provinces, where
several army outposts have been
overrun, and others are threaten-
ed. With the arrival in Sam
Neua Province of major components
of Laos' two parachute battalions
plus some infantry companies,
government strength
in the area has been
raised to about 2,000.
Additional troop move-
ments to the fighting
area would necessitate
leaving vital areas
uncovered in the other
ten provinces. Under BURMA
the circumstances, the
Laotian Army is re-
calling chiefs of its
own former anti-Com-
munist guerrilla units
to assist in organiz-
ing guerrilla forces
to operate in the
north.
Heavy rains,
rugged terrain, and
extremely limited air-
lift capabilities are
impeding government
countermeasures. The
pro-Communist orienta-
tion of the bulk of
the local population,
predominantly minor-
ity groups, is also
a factor.
There are in-
dications that the
insurgency may spread to other
parts of the country.
25X1
Resistance units formed by demo-
bilized Pathet Lao troops who
have taken to the bush in recent
months to avoid possible repres-
sion, are especially active in
antigovernment propaganda and
intimidation among the rural
population. Scattered harassing
attacks against army detachments
have occurred in central Laos,
25X1
The government
Areas where state of emergency
has been declared.
I
SECRET
25X1
Approved For Release 2005/03/15 : CIA-RDP79-00927AO02400010001-6
PART I OF IMMEDIATE INTEREST Page 10 of 12
 Approved For Release 2005/03/15 : CIA-RDP79-00927A002400010001-6
SECRET.
CURRENT INTELLIGENCE WEEKLY SUMMARY
6 August 1959
already has declared a state
of emergency in five provinces,
including Sam Neua and Phong
Saly. The poorly trained and
understrength Laotian Army of
some 22,500 would be unable
to cope with a countrywide up-
rising.
Communist Bloc Involvement
There is no doubt that the
present fighting in Laos is in-
spired by the Communist powers;
the current plan of action was
probably decided on in Hanoi
and. Peiping, with concurrence
given by Moscow. Although evi-
dence of the intervention of
North Vietnamese regular units
is lacking, the local Laotian
Communist forces are almost
certainly directed and supplied
by Hanoi. Given the inadequacy
of the Laotian Army, it would
seem unnecessary for either
North Vietnam or Communist China
to intervene with regular units,
Included among insurgent forces
in Laos are tribesmen who in-
habit both sides of the Laotian-
Vietnamese border, making na-
tional identification difficult
and providing Hanoi with ready
assets to train, equip, and
deploy.
The Communist bloc has
been motivated to take drastic
action in Laos by the fact that
the Phoui government has become
increasingly pro-Western in its
orientation, and is meeting
with relative success in under-
mining the local Communist move-
ment, and in re-establishing
royal authority in formerly Com-
munist-dominated areas. The
adjournment in July 1958 of the
International Control Commission
(ICC), which had been established
by the 1954 Geneva agreements to
supervise the Indochinese armi-
stice, is another factor.
In Laos, the Polish members
of the ICC had acted as inter-
mediaries between the local Com-
munist movement and Hanoi; India,
ICC chairman, was interested in
promoting strict neutrality.
These developments are a setback
to bloc hopes for preserving
Laos as a "friendly neutralist"
buffer state and eventually
bringing it. into the Communist
camp.
The guerrilla attacks in
northern Laos are coincidental
with the arrival of an American
military training mission. This
mission, and the Laotian Govern-
ment's "harassing" of the former
Pathet Lao battalion which de-
fected last May, are being used
by North Vietnam as justifica-
tion for a "civil war" in Laos.
Bloc Propaganda
On 5 August, the Hanoi press
termed the "interference of US
imperialism both the deep-seated
source of and the immediate cause
for the serious situation in
Laos." Hanoi has also asserted
that military developments are
a "threat to the security" of
North Vietnam to which it can-
not remain indifferent.
SECRET
Approved For Release 2005/03/15 : CIA-RDP79-00927AO02400010001-6
PART I OF IMMEDIATE INTEREST Page 11 Of 12
 CI~ DP79-00927AVD0 2400010001-6
Approved Fore ease 2005/Otr,
6 August 1959
Another accusation which
the Communists now are leveling
is that Laos, with US connivance,
is attempting to bring SEATO
into the picture. The North
Vietnamese Foreign Ministry on
5 August stated that the Phoui
government's letter to the UN,
accusing North Vietnam of inter-
vention in Laos, and the consid-
eration of an appeal to SEATO
"were dangerous and provocative
moves which may render the situ-
ation still more serious."
The brunt of the propaganda
campaign has been borne by Hanoi,
with Peiping largely repeating
the former's charges verbatim.
Diplomatic Pressure
The USSR, however, as a
cochairman of the 1954 Geneva
conference, has been the primary
agent in bringing diplomatic
pressure to bear on the West
for the return of the ICC to
Laos. Soviet Foreign Minister
Gromyko, who predicted on 9
June to British Foreign Secre-
tary Lloyd--the UK is the other
cochairman--that the situation
in Laos "would get worse," re-
peated Moscow's previous charges
in another meeting with Lloyd
on 2 August. Recent Soviet
broadcasts have termed the Lao-
tian situation "extremely danger-
ous."
The Laotian Government had
requested UN Secretary General
Hammarskjold on 4 August to
inform UN members of the "seri-
ous situation in Laos caused
by thinly veiled intervention
from North Vietnam." Premier
Phoui is considering following
up with a request for an ob-
server force or other UN action
if the situation warrants.
Hammarskjold, however, reportedly
is unwilling to intercede on his
own initiative and favors using
the ICC as a "bridge" between
Vientiane and Hanoi.
According to the Laotian
ambassador in the United States,
Hammarskjold has urged Nehru
to send Indian Commonwealth
Secretary Desai- -.. former ICC
chairman--to Vie4ztiarte to per-
suade the Laotian 11,.. ornment to
end its objections :-oc:onven-
ing the ICC. Nehru Las taken
a "grave" view of the fighting
in Laos and is consulting with
the two 1954 Geneva cochairmen.
While Britain continues to sup-
port Laos' stand on the issue,
Foreign Secretary Lloyd has
urged that the door not be shut
on possible return of the ICC
since the Indian and Canadian
members "might be able to
play a constructive role,"
SECRET
Approved For Release 2005/03/15 : CIA-RDP79-00927A002400010001-6
PART I OF IMMEDIATE INTEREST Page 12 of 12
25X1
 Approved Fo lease 200(3// E?1A-RDP79-00927 P02400010001-6
CURRENT INTELLIGENCE WEEKLY SUMMARY
6 August 1959
USSR STRENGTHENS TIES WITH AFGHANISTAN
The USSR has strengthened
its ties with Afghanistan over
the past six months through a
number of agreements providing
for extension of Soviet activi-
ties into southern Afghanistan.
Moscow apparently hopes that
by such aid--including Soviet
advisory personnel--and by po-
litical support it can over-
shadow Western policies and
assistance in Afghanistan
and induce Afgan leaders to
abandon neutral policies in
favor of closer alignment with
the Communist bloc.
Soviet radiobroadcastsand
printed materials distributed
by the Soviet Ewbassy in Kabul
are trying to stimulate Afghan
apprehensions over US military
aid to Pakistan and Iran and
the intentions of these coun-
tries, especially of the Ayub
regime in Pakistan toward Af-
ghanistan.
oscow
apparently is also encouraging
the renewal by Kabul of agita-
tion on the "Pushtoonistan" is-
sue, especially recent charges
that the US-Pakistani defense
pact is designed to convert
the Pushtu region into a US mil-
itary base area.
In late May, a new aid
agreement was concluded under
which the USSR will construct
a 470-mile "first-call motor
road" from the Soviet-Afghan-
border to Kandahar and build
an airfield in western Afghan-
istan. So-
viet aid under this agreement
will amount to $80,000,000,
but--in deference to Afghanistan's
reluctance to add to its for-
eign debt--will not cost Af-
ghanistan "a single penny."
This is the first time Moscow
has given large-scale grant
aid outside the bloc.
Several smaller agreements
concluded earlier this year pro-
vided for a gift of 40,000 tons
of wheat; expeditious transit
of Afghan goods through Soviet
territory to European ports at
rates lower than those available
on free-world routes; and con-
struction, on a grant basis,
of port facilities at Qizil
Qala on the Amu Darya River, a
project originally begun under
the $100,000,000 economic cred-
it extended in 1956.
Meanwhile, the Soviet Union
has attained a dominant position
in Afghanistan's foreign commerce,
accounting by mid-1959 for an
estimated 40 percent of total
Afghan foreign trade. The USSR
provides the bulk of Afghani-
stan's sugar and petroleum imports
and takes virtually all Afghan
exports of cotton and wool.
The recent aid agreements
will add to the estimated thou-
sand bloc economic specialists
already in Afghanistan and will
put Soviet personnel in southern
Afghanistan--an area from which
bloc nationals have hitherto
been excluded. By an agreement
announced in Kabul on 18 July,
Soviet technicians will assist
in the construction of three
road bridges in sensitive tribal
territory near the Pakistani
border. Ten Soviet experts are
also slated to help work out
details of Kabul's second five-
year economic plan.
SECRET
Approved For Release 2005/03/15 : CIA-RDP79-00927AO02400010001-6
PART II NOTES AND COMMENTS Page 1 of 15
 Approved Fo FIease 2005/0,DP79-00927i4902400010001-6
CURRENT INTELLIGENCE WEEKLY SUMMARY
6 August 1959
The presence of the Afghan
army deputy chief. of staff on
the delegation which went to
Moscow in March suggests that
negotiations for addition-
al, arms .aid have:-,taken
place. Since the start of
its military aid program in Af-
ghanistan in 1956, the USSR
Kabul's total arms debt may not
have increased.
There are other signs of
increased Soviet-Afghan mili-
tary cooperation. The arrival
in Kabul in June of a Soviet
major general, with the re-
ported title of "director
Stalinaba
SSR/'
QizilQal
i-
All-weather road
MAJOR ROAD PROJECTS
USSR -
Spin Baldak
Fort 1
Sandeman
Rawalpindi
PAKISTAN
has provided an estimated $75,-
000,000 in arms aid including
60 jet fighters and 12 jeb:bomb-
ers 120:medium tanks, and large
amounts of artiller .
while Soviet military aid to
Afghanistan may be increasing,
general of Soviet military
groups in Afghanistan," sug-
gests that Soviet military
technical and advisory person-
nel are being organized into a
formal military assistance
group. These technicians, now
numbering about 150, have hith-
erto functioned individually in
various Afghan training programs.
(Prepared joint-
ly with ORR)
SECRET
25X1
PART I I Approved For ReleasNOTES SAND CMMMENT500927A002400010(Page 2 of 15
 Approved For ase 2005/03/15 : CIA-RDP79-009270 2400010001-6
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
6 August 1959
BLOC EXPANDS RELATIONS WITH IRAQ
The Sino-Soviet bloc is
continuing to expand and con-
solidate its relations with Iraq
through projects in such fields
as civil aviation, medical aid,
and the peaceful use of atomic
energy, and by rapidly imple-
menting military, economic, and
technical aid agreements. Bloc
leaders, although undoubtedly
concerned over recent setbacks
suffered by the Iraqi Communist
party, have maintained a posture
of "friendship" toward Premier
Qasim and his government through
favorable propaganda and such
demonstrations of "good will"
as sending high-level delega-
tions to the recent Iraqi revo-
lutionary day celebration.
The Soviet delegation,
headed by Deputy Foreign Minis-
ter Kuznetsov and including
Khrushchev's son-in-law, carried
an invitation from the Soviet
leader to Qasim--which he has
accepted--to visit the USSR.
. Baghdad on 3O July announced
its decision--in response to
Soviet overtures--to send a
delegation to Moscow in August
to conclude an agreement for
"the peaceful use of atomic
energy." Baghdad had previous-
ly reported a Soviet offer to
supply Iraq with an atomic fur-
nace for nuclear research.
On 28 July the director of
the Iraqi civil airline an-
nounced that Iraq planned to
open a Baghdad-Prague air route
on 18 August. Negotiations to
establish civil air routes with
the Soviet Union and Hungary
also are under way. The direc_
for also stated that Iraqi Air-
ways had asked the Soviet Union
to provide details on an un-
specified Soviet passenger plane
which would be used on both in-
ternal and external routes.
Moscow previously had offered
to supply modern aircraft to
Iraqi Airways, and may have ex-
pressed a willingness to supply
pilots and other personnel to
aid Iraqi Airways in its
current operations.
The bloc--primarily be-
cause the only two foreign news
agencies now servicing the Iraqi
press are TASS and Communist
China's NCNA--is attaining a
dominant position from which it
can exploit, for propaganda
value, its dealings with Bagh-
dad. The Iraqi Government it-
self, however, still has access
to Western news sources.
There now are more than
250 bloc technicians in Iraq,
and additional specialists are
scheduled to arrive shortly.
They are engaging in a wide
variety of activities, some of
which are called for under the
Soviet $137,500,000 economic
aid agreement, including the
improvement of port facilities
at Basra and the surveys for
an improved Baghdad-Basra rail-
road. Other bloc experts--who
in some instances have replaced
Western technicians--are partic-
ipating in petroleum operations,
medical assistance, civil de-
fense, and municipal improve-
ment projects, such as estab-
lishing fire departments, de-
veloping sewerage, systems, and
organizing street-cleaning,op-
erations.' High-level bloc
specialists, in addition, are
advising Iraqi ministries.
Under cultural agreements
signed with bloc members, the
president of Baghdad University
visited the Soviet Union and
Eastern Europe earlier this year
to recruit about 160 teachers
for Iraqi educational institu-
tions. Soviet physicians had
SECRET
Approved For Release 2005/03/15 : CIA-RDP79-00927AO02400010001-6
PART II NOTES AND COMMENTS Page 3 of 15
 Approved Forase 2005/03/15 : CIA-RDP79-00927 2400010001-6
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY.
6 August 1959
arrived in Iraq earlier to
teach at medical schools. The
Iraqi Teachers Union decided
this spring, under existing
cultural pacts, to send 80
teachers to PO1aand and Czecho-
slovakia to acquaint themselves
with bloc educational achieve-
ments. In addition, the Minis-
try of Education has announced
that 500 Iraqi students will
study in bloc countries next
.school year.
An estimated 150 bloc
military specialists are help-
ing Iraqi troops in assembling
and familiarizing themselves
with Soviet weapons and equip-
.ment, which continue to arrive
regularly at the port of Basra
under the Soviet $168,000,000
arms deals Iraq;.:for.its part,
reportedly is planning to send
additional personnel to the
bloc for military training.
Previously about 135 Iraqi mili-
tary personnel had been sent
to the USSR and Czechoslovakia
for training, including flight
instruction.
Meanwhile, the bloc has
rapidly implemented its trade
agreements with Baghdad. Soviet
vessels arrive about twice a
week with cargoes of wheat,
trucks, machinery, construc-
tion materials, and other stand-
ard trade commodities. In
turn the bloc's share of Iraq's
limited exports is increasing.
Communist China alone has al-
ready taken 60,000 tons of
surplus dates--Iraq's chief
export. Since Iraq's exports,
other than petroleum, are com-
paratively small, the bloc
countries are accruing a sub-
stantial trade surplus which
is resulting in a net gain for
them of hard currency, mainly
sterling
125X1
PEIPING!S"SERIOUSWARNINGS"
Peiping is still tenacious-
ly engaged in an effort to "docu-
ment" its charge that the United
States is the gggressor in the
Far East. On 31 July,. the Chi-
nese Communists issued the "61st
serious warning;' charging a US
naval patrol plane with "vio-
lating" Communist-claimed air
space over the Paracel Islands
in the South China Sea.
Peiping apparently intends
the warnings in part to give
its territorial claims an air of
legality. On 4 September 1958,
at the height of the Taiwan
Strait crisis, the Chinese Com-
munists extended their territo-
riai limit 12 miles outside the
most seaward of the coastal is-
lands. The "first serious warn-
ing" followed on 7 September and,
until late October,Peiping pro-
tested almost daily against "in-
trusions" by US ships and planes
operating near the Nationalist-
held islands. When US vessels
moved farther offshore, the
warnings dropped off sharply.
Only nine warnings were
issued between 12 November and
22 June; thereafter, routine US
aerial reconnaissance over the
Paracel Islands became a source
of frequent complaint despite
the fact Peiping had not previously
SECRET
Approved For Release 2005/03/15 : CIA-RDP79-00927AO02400010001-6
PART II NOTES AND COMMENTS Page 4 of 15
 Approved For ease 2005/03/15: CIA-RDP79-00927AO 2400010001-6
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
6 August 1959
taken official notice of these
flights. The spate of warnings
on the Paracels--eight so far--
suggests that Peiping hopes the
protests might result in elimina-
tion of the flights. Peiping
PARACEL IS.
1 :1
NAUTICAL MILES 20
30595
would view such a response as
implied recognition of its
claims to the islands.
Within the past six weeks,
four-warnings also have been
made about "intrusions" by US
naval vessels into the area of
the Matsu-Paichuan islands off
the Fukien coast. Chinese Na-
tionalist air and naval activi-
ties--considered aspects of
"China's civil war"--have never
drawn numbered warnings.
The only military action
to follow a warning, however,
was directed against the Nation-
alists, when the Communists re-
sumed the bombardment of Chiri-
men on 20 October some ten hours
after the "36th serious warning"
charged four US vessels with
escorting Nationalist convoys
to the island. To date, none
of the warnings has threatened
direct military action against
US fleet or air units.
A recent survey found that
the warnings now have little
impact among non-Communist Asians,
who had expressed alarm when
they first appeared. Even Chi-
nese Communist propaganda media
provide scant publicity beyond
the sterile Foreign Ministry
press release.
Peiping probably will use
the warnings in a future prop-
aganda campaign summing up "US
acts of aggression which threat-
en peace in Asia." While
such a campaign might pre-
cede renewed hostility a-
gainst the Nationalists, it
is more likely to be a
purely political effort to
embarrass the United States.
CHINESE COMMUNIST PARTY CONDUCTING MAJOR MEMBERSHIP DRIVE
Concurrent with the "giant
leap forward" and commune pro-
grams, the Chinese Communist
party (CCP) has been conducting
a major recruitment drive aimed
at strengthening its organiza-
tion in rural areas and assuring
the effective implementation of
its sweeping domestic policies.
By the end of 1959 the party
probably will have grown by 2,-
000,000 members,
bringing
its
total membership
to around
15,-
000,000.
Although numerically the
largest of all Communist par-
ties, the CCP comprises only
about 2.3 percent of China's
650,000,000 population. The
Soviet Union has 8,700,000 par-
ty members, or about 4 percent
of its population.
SECRET
25X1
Approved For Release 2005/03/15 : CIA-RDP79-00927AO02400010001-6
PART II NOTES AND COMMENTS Page 5 of 15
 Approved Forrlease 2005/03/15 : CIA-RDP79-00922 2400010001-6
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
6 August 1959
During the "rectification"
and "antirightist" campaigns of
1957 and 1958, the CCP suspend-
ed most recruitment except for
"reliable" intellectuals. A
number of members were dismissed
from the party during this pe-
riod, but expulsions apparently
did not affect a substantial
percentage of the mem-
bership.
The new campaign
to recruit members
developed during the
last four months of
1958, when the commu-
nalization drive was
at its peak. The par-
ty then claimed it
had too few members
in rural areas, even
though 60 percent of
its membership was
engaged in agri-
culture. As in the
case of the agricul-
tural collectiviza-
tion drive of 1955-
About a million members
were added to the party in 1958,
and projection of the available
figures suggests that twice
that many will have been admit-
ted by the end of 1959.
The current drive is likely
to be followed by another period
CHINESE COMMUNIST PARTY
MEMBERSHIP
MILLIONS 12.7
56, when recruitment 908045
was also pushed, Pei-
ping evidently looked to ex-
panded party membership to help
advance its drive for a
radical reorganization of the
countryside.
1945 1949 1953 1956 1957 1959
(EST.)
6 AUGUST 1959
of "rectification" in which the 25X1
new members will be investigated
and those found wanting will be
expelled from the partL.-J--
Soviet author Ilya Ehren-
burg appears to be developing
into a self-appointed conscience
of the individual in Soviet so-
ciety. In two recent articles
on Chekhov, Ehrenburg argues
that the individual bears moral
responsibility for crimes com-
mitted by the state.
In these articles, Ehren-
burg used the technique. he had
employed in his June 1957 arti-
cle on Stendhal. Under the
guise of literary criticism of
an "approved" classic, he ham-
mered home his own ideas by
means of carefully selected quo-
tations. As in the Stendhal
article, he asserted that truth
is attainable only in art,
not in politics; he again de-
nounced censorship and the stul-
tifying effect of tyranny on
the intelligentsia; and he em-
phasized that "petty reforms"
cannot cure an "unjust so-
ciety."
SECRET
Approved For Release 2005/03/15 : CIA-RDP79-00927AO02400010001-6
PART II NOTES AND COMMENTS Page 6 of 15
 Approved For ease 2005/05K.JLA7RDP79-009272400010001-6
CURRENT INTELLIGENCE WEEKLY SUMMARY
6 August 1959
Ehrenburg quoted Chekhov's
lament: "I can see from the
books which I have read and am
reading that we have imprisoned
millions of people, without
reason-, without trial, in a
barbaric manner; we have chased
the people in irons and in the
cold over thousands of versts,
contaminated them. with syphilis,
corrupted them., bred criminals,
and blamed this all. on the
red-nosed prison wardens. Now
all of educated Europe knows
that not,jnst the wardens are
guilty but all of us--." From
this he: argued that "true pa-
triotism" involves not only pain
at one's country's shortcomings,
but also a sense of personal,
guilt as a Russian. for crimes
committed by the state.
Ehrenburg's strong avowal
of man's responsibility to his
individual fellow man is in
sharp contrast to the Communist
emphasis on the individual's
responsibility to society as a
whole. This emphasis on per-
sonal guilt must alsocontrast
sharply for Soviet readers with
official "explanations" since
1953, blaming similar Soviet
crimes and injustices on the
"red-nosed prison wardens,"
Beria and Stalin..
To his implied rejection
of Stalin and Beria as scape
goats for past Soviet crimes,
Ehrenburg added. the argument
that even the end used by them
to justify their criminal acts.
may be illusory. He quoted
Chekhov's description of a ty-
rant whose crimes are committed
"in the name of the improvement
of human race ..an illusion, a
mirage." Ehrenburg commented
that this might have applied to.
Hitler, but its application to
a society currently concerned
with the development of "the
new Communist man;" whose avowed
goal is the improvement of the
human race, will certainly not
be lost on the Soviet readers.
There has as yet been no
official reaction to these ar-
ticles. Criticism of the 1957
Stendhal article was similarly
slow in appearing, and no real
attack was made on it for al-
most a year. The regime is.cur-
rently attempting to fight
writer dissidence with acts of
moderation and reconciliation
in line with Khrushchev's
speech at the Third USSR Writers'
Congress in May. Such an ap-
proach has the advantage of ap-
pealing primarily to literary
circles,: whereas public criti-
cism would fan popular interest.
Ehrenburg's services in
the "international peace move-
ment".may also have contributed
to official reluctance to at-
tack him publicly. However, his
disregard for, t1i.. , regime's ef-
forts at enforcing cultural con-
formity among Soviet writers
will tend to encourage his
colleagues in their literary 25X1
dissidence and may force
the regime to act more
strongly against him.
SECRET
Approved For Release 2005/03/15 : CIA-RDP79-00927AO02400010001-6
PART II NOTES AND COMME4TS Page 7 of 15
 Approved Folease 2005/03/15 : CIA-RDP79-009202400010001-6
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
6 August 1959
PRESIDENT'S RULE IN KERALA
New Delhi's take-over of
the administration of Kerala
State on 31 July brought to a
successful conclusion the six-
week struggle by combined anti-
Communist groups to oust the
Communist government. Presi-
dent Prasad's dismissal of the
Communists and the scheduling
of new elections under Presi-
dent's Rule have been a serious
setback to Communist prestige
throughout India. In turn,
Prime Minister Nehru's Congress
party now faces a critical test
of its ability to win the elec-
tions and provide a more effec-
tive and stable government.
With the exception of De-
fense Minister Krishna Menon,
apparently all top leaders of
the Congress party and of the
government finally endorsed the
recommendation that Prasad in-
voke his emergency powers. De-
spite some misgivings over the
methods employed to force the
Communists out of office, New
Delhi's move has been generally
supported by the Indian press
and public opinion. Nehru
justified the intervention on
grounds that the Communist gov-
ernment in Kerala was no longer
able to function constitutionally
and that majority opinion in
the state had clearly turned
against the Communists. Nehru
was quoted as describing the
state government's performance
as an "astonishing failure."
Most Congress leaders, and
Nehru in particular, are none-
theless fearful of the outcome
of the state elections, which
are likely to be held within
six months. The Congress party
in Kerala still has much work to
do in strengthening its leader-
ship, organization, and financial
position if it is to defeat the
Communists by a safe margin.
Even more important will be the
need to maintain the present
close cooperation with other
non-Communist groups in order
to avoid splitting the vote and
to form an effective coalition
government. Experience gained
in the recent agitation has in-
creased the prospect for unity
among Kerala's traditionally
divided factions, but coopera-
tion may deteriorate as the
competition for power increases.
The Indian Communist party
has been shaken by the course of
events in Kerala, and its leaders
are at odds over future policy.
The minority faction favoring
a more aggressive opposition
role has been strengthened as a
result of the failure of the
"Kerala experiment," and advocates
of the "peaceful, parliamentary'.'
approach to power are under heavy
pressure to adopt a harder line.
The moderate leaders apparently
have contained this pressure so
far, however, and by making minor 25X1
concessions to the extremists they
probably can continue to con-
trol party policy.
25X1
Prime Minister Bandara-
naike's government--with a one-
man majority in the Ceylonese
Parliament--remains in a vulner-
able position, despite Parlia-
ment's approval of the budget
in a critical vote on 31 July.
Conservative elements probably
will continue to try to subvert
Bandaranaike's support, even
though their efforts during the
past two months have failed. The
government's uncertain future
is likely to inhibit effective
SECRET
Approved For Release 2005/03/15 : CIA-RDP79-00927A002400010001-6
PART II NOTES AND COMMENTS Page 8 of:-,5
 Approved Forase 2005/03/15 : CIA-RDP79-009272400010001-6
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
6 August 1959
action on Ceylon's major prob-
lems, and this in turn may stim-
ulate further opposition planning
for "direct action" to end Ban-
daranaike's administration.
Both leftist and rightist
opposition groups will keep the
government under steady pressure.
Their next opportunity for a
test of strength will occur soon
when the combined opposition pre-
sents a motion calling for the
establishment of a special com-
mission to investigate the many
recent allegations of corrup-
tion in official quarters. Wide-
spread public feeling, stimulated
by the press, that a thorough
investigation is needed may make
it difficult for the government
to maintain its opposition to
any such proposal.
Bandaranaike's success in
settling the leftist-led strikes
which plagued the government
during June and July has eased
his problems in this field,
but the politically controlled
labor organizations retain con- 25X1
siderable potential for stirring
up trouble when it suits their
interests.
The differences between
Archbishop Makarios and former
EOKA leader George Grivas have
caused an open break, and Cyprus
is faced with the possibility
of renewed violence. Grivas
has accused Makarios and the
Greek Government of presenting
him with a fait accompli in the
Cyprus settlement. He charges
that he was not consulted on
the terms prior to the accord
negotiated with the Turks and
British last February, and that
he had no alternative to accept-
ing the agreement and ending his
four-year-old terrorist campaign.
Grivas has concentrated
his attack, however, on the al-
leged existence of "oral com-
mitments" to the British entered
into by the Greek Government.
For this reason, he has "dis-
sociated" himself from the set-
tlement and has threatened to
renew underground activity to
"smash the dark forces who seek
to enslave the island."
Makarios and the Greek Gov-
ernment responded quickly to
Grivas' charges, both accepting
responsibility for negotiating
the settlement. Makarios, while
SECRET
Approved For Release 2005/03/15 : CIA-RDP79-00927A002400010001-6
PART II NOTES AND COMMENTS Pare 9 of '15
 Approved For
ease 2005/0S R1UTRDP79-009272400010001-6
CURRENT INTELLIGENCE WEEKLY SUMMARY
6 August 1959
denouncing those.who "sow dis-
sension and seek to create.con-
fusion," replied in mild terms
to the direct challenge.... Re-
ports indicate that the arch-
bishop enjoys the overwhelming
support of the Greek Cypriot
community, including that of
many former high-ranking sub-
ordinates of Grivas in the EOKA
movement, Makarios has the sup-
port of the Greek-language. press
on Cyprus with the exception of
the Communist papers, which are
unlikely to support the vio-
lently anti-Communist Grivas.
There probably does exist,
however, a small band of extrem-
ists loyal to Grivas who will
join him, either directly or in-
directly, in acts of violence
if he gives the order. A signifi-
cant supply of weapons and am
munition is believed to be in
the hands of former EOKA members,
and both Greek and Turkish Cyp-
riots are believed to be smug-
gling arms. At least one explo-
sion of undetermined origin has
already occurred; and isolated
acts of violence may increase.
Greek Government leaders
responded bluntly to Grivas,
whom they recognize as a poten-
tially dangerous rival for
power because of his popularity
in Greece. Grivas, meanwhile,
continues to confer with Greek
opposition politicians, and an
early announcement of the crea-
tion of a new Greek political
movement under his leadership
is expected,.
'Turkish Cypriots and the
British are watching the develop-
ments warily. Turkish Cypriot
leaders have strongly backed
Makarios in the dispute and have
warned that Grivas' activities
could lead to disaster. They fear
that fanatics, encouraged by the
former EOKA leader, will intimi-
date the moderate majority of
Greek Cypriots into adopting a
less conciliatory attitude to-
ward the final settlement still
being worked out. British security
forces, meanwhile, have set up
roadblocks" for the first time
since. the end of the emergency
in March in an attempt to stop
arms smuggling..nto Cyprus.
MOROCCAN GOVERNMENT CRISIS
A mounting cabinet crisis
in Morocco induced King Mohamed
V to leave Paris abruptly on 2
August without either meeting
De Gaulle as planned or under-
going minor surgery scheduled
for this week. Acting in his
usual cautious manner, the King
may take no immediate or forth-
right steps to halt the crisis
but instead probably will maneu-
ver toward the installation of
the more broadly based govern-
ment he has long desired. Such
a coalition would be difficult
to form in the face of the bit-
ter antagonism between rival
Istiglal groups.. Rumors that
the government of Premier Ab-
dallah Ibrahim has already
resigned are denied by Ra-
bat.
25X1
The government has become
increasingly skeptical that
any advantages could be derived
from a meeting with De Gaulle.
Serious. disagreement apparent-
ly has also arisen within the gov-
ernment as to the need for de-
valuating the Moroccan franc,
now considered overvalued at
420 to the dollar. Paris, which
devaluated its own currency last
December, suspended Morocco's
operations accounts at the end
of June in an attempt to force
realignment of the Moroccan
franc with that of France. France
demands devaluation as a price
SECRET
Approved For Release 2005/03/15 :. CIA-RDP79-.00927A002400010001-6
?ART II NOTES AND COMMENTS Page 10 of 15
 Approved For jase 2005/03/15 : CIA-RDP79-009272400010001-6
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
6 August 1959
for considering financial as-
sistance to Morocco.
The Moroccan Government is
also embroiled with both France
and the Algerian rebels over an
increasingly tense border situation
developing from Algerian rebel
use of Moroccan soil as a base
of operations against French
troops in Western Algeria.
Moreover, agitation for the
total evacuation of'foreign troops
in Morocco--FrenchSpanish, and-
American--has been renewed, and
some groups are even 'calling. for
rupture of relations with France,
Meanwhile, opponents of
the government are seeking to
offset the impact of the re-
ceipt last week of a $15,000,-
000 installment of American aid
funds by speculating whether
the government had obtained
this aid by agreeing to modify
Morocco's policy of nonalign-
ment.
The government also is
faced with increasing aggres-
siveness on the part of the
Moroccan Labor Union, which.
draws its members largely from
major urban centers, and with
opposition from Moroccan ir-
regulars to its efforts to con-
fiscate the numerous small
arms dispersed throughout the
country.
The return of the King may
have been precipitated by the
report that an antimonarchical
faction within the govern-
ment, including Premier Ibrahim
and Vice Premier Bouabid, was
attempting to exploit the
worsening situation by ramming
through a series of measures
reducing the powers of the King.
Similar efforts to divest the
King of his direct control over 25X1
military and security forces con-
tributed'to the fall of the Bala-
frej government last year,
I F7
5X1
The Indonesian Government
continues to be preoccupied
with reorganization under the
newly decreed 1945 constitution,
while specific programs in many
areas remain obscure. On 30
July, a cabinet spokesman an-
nounced formation of a 45-member
Supreme Advisory Council,formal-
ly headed by President Sukarno
and with Sukarno's confidant
Ruslan Abdulgani as vice chair-
man, and.a 77-man National Plan-
ning Council under leftist cabi-
net minister Mohammed Yamin.
The advisory council, com-
prising representatives of
"functional" groups including
the armed forces, geographic
regions, and 12 representatives
of nine political parties, will,
according to Abdulgani, be the
major vehicle for implementing
Sukarno's "guided democracy"
concept, although its authority
to advise and make recommenda-
tions to the cabinet does not
necessarily envisage a key pol-
icy role. The planning board,
composed of functional, region-
al, and religious representatives,
appears too unwieldy to under-
take effective economic plan-
ning.
Appointment to the Supreme
Advisory Council of two top
Communist party leaders--among
a reported total of 21 Commu-
nists on both councils--indi-
cates that Sukarno still intends
to use the Communists as a bal-
ancing factor against other par-
ties and the armed forces. Com-
munist influence, however, can
SECRET
Approved For Release 2005/03/15 : CIA-RDP79-00927AO02400010001-6
PART II NOTES AND COMMENTS Page 11 of 15
 Approved For ease 200gf EqTA-RDP79-009272400010001-6
6 August 1959
be limited by the much larger
non-Communist voting strength.
Totally excluded from both
bodies is the Masjumi party,
which opposed Sukarno's concept
and is considered by him sympa-
thetic to rebel forces,
The old Parliament, now in
recess until October, has been
sworn under the new constitu-
tion and,-with the appointment
of "functional" representatives
in the near future, its member-
ship is expected to compose the
new provisional People's Con-
sultative Council. The cabinet
on 1 August partially lifted
the ban on political activity,
but ordered all top civil offi-
cials to sever party affilia-
tions. It has ordered the crea-
tion of a supervisory body to
investigate and control govern-
ment "apparatuses" and decreed
new stiff penalties for economic
"saboteurs."
The new defense minister,
Lt. Gen. Nasution, has outlined
to the American ambassador a
plan to increase the military
role in the government through
the appointment of officers to
"assist" key ministries. He ad-
mitted that, although democratic
forms would be preserved under
civilian ministers, the military,
already a substantial influence
in the cabinet, might acquire a
dominant voice in the government.
While this plan apparently has
Sukarno's support, it offers no
guarantee of effective remedies
for the nation's complex problems,
However, if Sukarno felt Nasution 25X1
was becoming a threat to his own
power, he would probably move
downgrade or remove him,
The visit of a West German
economic delegation to Liberia
and Ghana during the week of 3
August highlights West Germany's
increasing interest in develop-
ing economic relations with in-
dependent African states. The
negotiations, which are expected
to produce agreements for in-
creased trade and technical as-
sistance, follow recent commit-
ments of $25,000,000 in credits
to the Sudan and $7,000,000 for
Ethiopia.
In addition to Bonn's con-
centration on developing economic
relations with the Middle East
and Asia, its growing interest
in Africa has been indicated in
recent years by exchanges of
high-level official visits with
the independent states and by
West Germany's participation
in the European Common Market.
Much of Bonn's interest in
joining came from the equal ac-
cess. West German firms are
granted to the extensive African
territories under French and
3elgian control, Of the Common
Market's $581,000,000 Develop-
ment Fund for the combined over-
seas territories of member coun-
tries, $200,000,000 comes from
West Germany,
Apart from finding markets
for German industrial goods and
sources of certain raw materials
and foodstuffs, Bonn is also
anxious to combat East German
SECRET
Approved For Release 2005/03/15 : CIA-RDP79-00927AO02400010001-6
PART II NOTES AND COMMENTS Page 12 of 15
 Approved For1ease 2005/03/15 : CIA-RDP79-00927,2400010001-6
SECRET
6 August 1959
inroads in Africa
--especially in
Guinea, where the
German Communist'
regime has estab-
lished a trade mis-
sion. West German
officials are hop-
ing that by devel-
oping significaftt
economic ties with
Guinea they can
bloc Guinean rec-
ognition of East
Germany. Although
restrained from
taking forthright
action by fear of
offending Paris,
Bonn sent an envoy
to Conakry on 21
July to discuss
arrangements for es-
tablishment of:a
permanent diplo-
matic mission, and
will probably send
an ambassador to
Guinea this fall
on the presumption
that Guinea does
not plan' to rec-
ognize the East.
German regime.
WEST GERMAN COMMERCIAL AND ECONOMIC
AGREEMENTS WITH INDEPENDENT AFRICAN COUNTRIES
SUDAN Credits totaling about $25,000,000 consisting of: $6,000,000
in credits guaranteed by Hermes (West German government-
owned export insurance company) for purchase of goods for
development purposes; $12,000,000 in credits provided through
private banks for purchase of West German manufactures;
$7,000,000 in special export guarantee for hydroelectric plant.
ETHIOPIA $7,000,000 in export credits for delivery of German machinery
and other capital goods specifically gearedtofive-year plan and
specific aid for paper mill and oil-seed conservation projects;
a $240,000 grant for public health purposes; a $280,000 grant
for a hospital. Oil explorations rights extended to West Ger-
man firm.
TUNISIA $360,000 in credits for Tunisian development projects for fis-
cal year 1958-59; only $7,000 expended by end of 1958. Despite
considerable efforts by German businessmen to build up com-
mercial contacts, trade with Tunisia remains limited.
MOROCCO One-year trade agreement effective 1 January 1959 established
trade quotas, automatically extendable for second year.
LIBYA Germans have indicated willingness to provide technical assist-
ance for constructive projects,but Libyan officials have not put
forth a program. A West German firm is seeking an oil con-
cession.
GHANA Trade and technical assistance negotiations presently under way
in Accra. Clhana's finance minister will visit Bonn 13 August to
discuss projects for his country's development plan.
LIBERIA $4,240,000 in credits for Greenville harbor development. West
German - owned African Fruit Company has concession for
600,000-acre banana and rubber plantation. Another German
firm has palm-oil production concession. Additional credits
up to $3,000,000 promised. Negotiations presently under way.
GUINEA Technical assistance agreement concluded March 1959. Nego-
tiations presently under way concerning West German economic
assistance (sugar, fertilizer) to Guinea.
Bonn is also
cultivating contacts with Af-
rican territories expected to
become independent in the next
year or two. With this end
in view, it intends to open
consulates soon in Cameroun,
Togo, and perhaps.Somalia.
25X1
25X1
25X1
SECRET
Approved For Release 2005/03/15: CIA-RDP79-00927AO02400010001-6
PART II NOTES AND COMMENTS Page 13 of 15
 Approved Fq`elease 2005/03/15 : CIA-RDP79-009002400010001-6
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
6 August 1959
25X1
BOLIVIA UNDER PRESSURE TO ACCEPT BLOC ECONOMIC AID
The Bolivian Government is
under increasing political pres-
sure to accept bloc economic
overtures as a result of peren-
nial political instability,
leftist maneuvers, and growing
popular discontent with the de-
teriorating economy under the
US-backed stabilization program.
Moderate President Siles,
the principal defender of the
program, expects Congress, now
in session, to challenge the
government's failure to act on
bloc credit offers to the na-
tional oil company, YPFB,
amounting to about $60,000,000.
His power to resist leftist
pressures in favor of bloc aid
and against some aspects of
stabilization appears to be di-
minishing. Siles believes that
close economic relations with
the USSR would lead to diplo-
matic relations, which the low-
er house of Congress proposed
last September.
Bolivia's economy, which is
largely dependent on mineral
production and exports, declined
sharply in 1958 and the outlook
for 1959 is dim. The oil industry,
SECRET
Approved For Release 2005/03/15 : CIA-RDP79-00927AO02400010001-6
PART II NOTES AND COMMENTS Page 14 of 15
 Approved For (Release 2005/03/15 : CIA-RDP79-009#002400010001-6
. . SECRET
CURRENT INTELLIGENCE ;MEEKLY SUMMARY
6 August 1959
which offers one of the few
bright spots for long-term re-
covery, suffered a production
decline in 1958, and the trend
may continue this year. More-
over, Communists are effectively
exploiting the presence of for-
eign oil companies in Bolivia
as a "threat" to YPF3, a symbol
of national prestige.
In addition to anticipated
congressional pressures to seek
bloc aid, labor representatives
of YPF3, which agreed to hire
Czech geologists last December,
now are advocating a loan from
the USSR to solve the company's
financial difficulties--primar-
ily a lack of capital for equip-
ment and development. The
scheduled trip to Moscow this
month of Juan Lechin, key left-
ist labor leader, senator, and
frequent opponent of Siles on
stabilization issues, may be
primarily for economic purposes.
Moreover, the government is con-
sidering sending a mission to
Moscow to investigate Soviet oil,
equipment.
Former President Paz, chief
of the ruling party who tends to
favor Lechin's left-wing faction,
may attempt to use bloc offers,
including a Czech credit proposal
which was made to him during his
visit to Prague in June, as a
means of obtaining a sizable US
loan. Siles, who may be collab-
orating in this effort, has
stated that Soviet offers to
YPFB have been presented. to the
Bolivian embassies in Mexico
City and Buenos Aires, where
the USSR has missions. Siles
told the American ambassador,
however, that Paz had advised
caution in dealings with the
Russians. The USSR and Czech-
oslovakia, which has the only
bloc mission in La Paz, reported-
ly also made a joint offer of
$100,000,000 for agricultural
aid to Bolivia recently.
Bloc overtures to Bolivia
appear to be effectively coor-
dinated with local Communist
propaganda against stabilization
and the foreign oil companies.
SECRET
Approved For Release 2005/03/15 : CIA-RDP79-00927AO02400010001-6
PART II NOTES AND COMMENTS Page 15 of 15
25X1
 25X6 Approved For Release 2005/03/15 : CIA-RDP79-00927AO02400010001-6
Next 2 Page(s) In Document Exempt
Approved For Release 2005/03/15 : CIA-RDP79-00927AO02400010001-6
 Approved Folease 2005/03/15 : CIA-RDP79-0092W02400010001-6
SECRET
6 August 1959
Increasing reluctance on
the part of many UN members to
supply funds and manpower
threatens the existence of
.tjie ~5tU00-.axe.. ;UN,:_Fmergen~
cy Force .(UNEF). , Reduc-
tion of the UNEF's size by the
General Assembly this fall
would result in substantial
savings, but many UN officials
fear a major cut would reduce
the effectiveness of the force
in maintaining relative peace
along the UAR-Israeli border.
Key factors in determining the
future of the UNEF are the con-
tinued support of India, which
maintains the largest contingent
--1,166 men--in the area, and
the support of the Latin Amer-
ican bloc in principle if not
financially.
As directed by last year's
assembly, Secretary General
.Hammarskjold now is consulting
with UN members concerning fu-
ture financing of the force.
His strong personal support
and voluntary contributions
from such members as the United
States, France, and Britain--
in addition to their assessed
payments--may prove sufficient
to persuade the assembly to
continue UNEF through 1960.
Establishment of UNEF
The UNEF was established
by the General Assembly in
November 1956 to patrol the
Gaza and Sinai areas after
the , withdrawal--of --the Brit-
ish-French-Israeli..invasion .
troops. UN members volunteered
troops, and the force was formed
from those national contingents
acceptable to the host country
--Egypt. Thus the precedent
was set for large-scale UN
police operations manned only
by the smaller UN members and
those countries not directly
involved in the hostilities.
Although a police rather than
a fighting force, UNEF is run
as a military operation and has
sufficient weapons to defend it-
self if attacked.
The contingents of the vari-
ous participating countries were
placed under the direct control
of the UN General Assembly and
the secretary general. In the
field, the UNEF is under the
command of Major General E.L.M.
Burns of Canada, former chief
of staff of the UN Truce Super-
vision Organization in Pales.'ine.
During the early months
Hammarskjold's leadership ~.nd
negotiating ability saved UNF
from foundering on several oc-
casions. UNEF's relationship
with the local population in
the areas it patrols has been
good, with only the usual minor
incidents expected when foreign
troops are in an area.
Composition
Of the 25 nations which
volunteered to contribute troops,
ten were accepted by both Egypt
and the United Nations: Brazil,
Colombia, Canada, Denmark, Fin-
land, India, Indonesia, Norway,
Sweden, and Yugoslavia. Con-
tingents from these nations
totaled approximately 6,000
men, including combat and sup-
port units. The UN agreed to
subsidize these forces to a
limited degree both financially
and through provision of equip-
ment. Member countries pay
their own contingents and pro-
vide uniforms.
Peak strength of UNEF was
6,043 men in July 1957. Since
that time, the detachments from
Colombia, Finland, and Indone-
sia have been withdrawn for
domestic financial reasons. Fi-
nancial difficulties led Brazil
to consider withdrawing early
this year, but after the UN
agreed to pay the costs of main-
taining the Brazilian contingent,
Rio de Janeiro decided to con-
tinue its participation.
The force now numbers
5,026 men. Retention of "non-
Western't forces, such as those
from India and Yugoslavia, in
SECRET
Approved For Release 2005/03/15 : CIA-RDP79-00927AO02400010001-6
PART III PATTERNS AND PERSPECTIVES Page 4 of 13
 Approved Fcelease 2005/03/15 : CIA-RDP79-009W002400010001-6
SECRET
CURRENT INTELLIGENCE WEEKLY' SUMMARY
6 August 1959
UNEF is important
to the international
concept of the un-
dertaking.
Deployment
Operations in
the field have gone
through three stages,
The first, roughly
from mid-November
until the end of
December 1956, cen-
tered in the vicin-
ity of the Suez
Canal, mainly at
Port Said and Port
Fuad, and was con-
cluded with the
withdrawal of the
Anglo-French troops.
The second stage .ex-
tended from late
December 1956 to
early March 1957,
during which the
activities of the
force covered the
Sinai Peninsula
following the
phased withdrawal
of Israeli forces.
The third
stage began on 8
March 1957, when
Israeli forces had
fully withdrawn
from the Gaza strip and had
begun their withdrawal from
the Sharm al Shaikh area. Op-
erations since that time have
centered on the Egyptian-
Israeli armistice demarca-
tion line and along the inter-
national frontier south of the
Gaza strip.
Deployment of UNEF at the
mouth of the Gulf of Aqaba has
resulted in ' virtually. unimpeded pas-
sage of Israeli shipping to Eilat
by giving. Egypt a domestically pal-
atable excuse for not harassing such
shipping more actively. The
presence of UNEF in the Gaza
strip and along the UAR-Israeli
border has contributed to the
relative quiet in the area and
probably has deterred large-
scale "incidents." Israel has
refused to allow the stationing
of UNEF troops on its side of
the demarcation line. The fact
that UNEF troops are stationed
only on the Egyptian side has
been the basis of Tel Aviv's
acceptance of the force.
Financing
UNEF's expenses are met by
assessing the 82 members of the
UN on the same pro rata basis
used for assessments toward the
regular UN budget. This method
differs from financing such
other extracurricular UN pro-
grams as technical assistance
and refugee aid, which depend
on voluntary contributions. The
Soviet bloc has refused to pay
its assessed obligations, main-
taining that such financing of
SECRET
25X1
Approved For Release 2005/03/15 : CIA-RDP79-00927A002400010001-6
PART III PATTERNS AND PERSPECTIVES Page 5 of 13
 6 August 1959
25X1
UNEF is illegal and insisting
that the "aggressors"--Britain,
France, and Israel--should pay
the entire costs. Other UN
members, particularly the Latin
American bloc, have defaulted
in their payments because of
Approved For ease 2005/03/15: CIA-RDP79-009274W2400010001-6
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
1957 1958 1959
*UNEF budget is met by separate assessment,
domestic financial difficulties.
However, because the Latin
American bloc controls 25 per-
cent of the votes while paying
only 5 percent of the budget,
its support in principle of the
percentage assessment is a key
factor in General Assembly con-
tinuation of UNEF.
The voluntary contribu-
tions by the United States,
France, and Britain have made
up deficits. The United States,
through voluntary contribu-
tions and assessments, covered
47 percent of authorized UNEF
expenses during 1957 and 1958,
and expects to cover about 44
percent in 1959..
UNEF's budget is large in
terms of total UN costs but has
been declining yearly. This
factor may also induce UN mem-
bers to recommend continuation
of UNEF at least through 1960.
25X1
THE INDONESIAN ECONOMY
President Sukarno's new
cabinet, installed on 9 July,
has acknowledged the priority
need for decisive action to
adjust Indonesia's inflated
economy. Severe inflation has
been brought about by under-
production for both the domes-
tic and the world market, a
shortage of consumer goods, and
the government's growing deficit,
resulting mainly from military
expenditures. Other factors
are poor internal distribution,
illegal barter trade, continued
economic dislocation resulting
from the December 1957 take-over
of Dutch interests, and ineffi-
ciency of government-controlled
import-export companies.
The cabinet apparently en-
visages some sort of stopgap re-
medial measures, but a long-term
project is needed to provide a
solution effective on a nation-
al scale.
Foreign Trade
Indonesia is dependent on
an export economy whose principal
SECRET
Approved For Release 2005/03/15 : CIA-RDP79-00927AO02400010001-6
PART III PATTERNS AND PERSPECTIVES Page 6 of 13
 Approved FoIease 2005/03/15 : CIA-RDP79-0092,W02400010001-6
SECRET
6 August 1959
products are oil, rub-
ber, and tin, In 1958
these respectively ac-
counted for 37, 35,
and 5 percent of to-
tal export values.
Other export products
are copra, coffee,
tea-, kapok, and sugar.
The economy sus-
tained two severe
blows in 1958 from
which it has not yet
recovered. One em-
anated from the pro-
INDONESIA
PRINCIPAL EXPORTS
THOUSAND DOLLARS
1953
1954
1955
1956
1957
1958
Rubber
270,528
285,441
429,913
303,913
350,423
261, 257
POL Products
195,484
226,242
212,329
224,623
322, 540
282, 506
Tin Ore & Slag
80,790
59,474
59,488
61,987
49,000
35,434
Copra
56,930
50,946
35,328
38,766
37,996
16,425
Foodstuffs
115, 614
160,527
117, 175
123, 655
138,466
103, 827
Other
100,287
93,434
77,182
129,046
71,044
55,952
Total
819,633
856,064
931,415
881,990
969,469
755,401
vincial rebellion, which dis-
rupted production in some areas,
involved extensive smuggling
and illegal barter trade, and
denied the government consid-
erable revenues and foreign ex-
change. The other resulted
from the government's take-
over of large-scale Dutch
economic interests in December
1957 and the subsequent eco-
nomic dislocation and decrease
in both production and quality
of produce on many Dutch-owned
estates which had previously
contributed substantially to
Indonesia's export trade.
Between mid-1958 and the
end of the year, exports began
to recover from the very low
levels of early 1958 as a
result of the government's re-
capture of rebel ports and the
reduction of illegal trade. Even
so, export values for 1958 were
20 percent lower than for 1957,
and the trend is expected to be
INDONESIA
PRINCIPAL IMPORTS
THOUSAND DOLLARS
similar in 1959. The Indonesian
Ministry of Finance has esti-
mated that foreign exchange
earnings for 1959 will be 30
percent lower than for 1957,
owing to continued illegal bar-
ter in some districts, reduced
production of crops on estates
formerly supervised by Dutch
technicians, loss of production
in insecure areas, difficulties
of transport and marketing, and
reduced world market prices.
Despite the reduction in
exports, the government was suc-
cessful in bringing trade into
a favorable balance by the end
of 1958 and has continued the
favorable balance of payments
to 1959. It has done so, how-
ever, by so drastically re-
stricting imports that neces-
sary consumer goods and raw
materials for local industry
have become increasingly
scarce.. Reduced quantities
of consumer goods and a decline
in industrial output
1953
1954
1955
1956
1957
1958
Foodstuffs
122, 800
90, 344
56, 918
171, 100
128, 629
Manufactured Goods
209, 398
297, 700
319,856
378,560
350,745
o
Machinery &
Transport Equipment
67,679
113,406
101,072
148, 817
138, 115
m
ca
Other
353,093
127, 649
126, 341
154, 638
179, 554
Total
752, 970
629, 099
604, 187
853, 115
797, 043
SECRET
of.some products rang-
ing from 30 to 50 per-
cent have increased
already serious infla-
tional pressures.
Domestic Finances
In contrast to
the improvement in for-
eign trade balances,
domestic finances have
markedly deteriorated.
The government's def-
icit is expected to be
25X1
Approved For Release 2005/03/15 : CIA-RDP79-00927AO02400010001-6
PART III PATTERNS AND PERSPECTIVES Page 7 of 13
 Approved For lease 2005/03/15 : CIA-RDP79-009271Q 02400010001-6
SECRET
6 August 1959
INDONESIA : TOTAL EXPORTS
000 TOTAL WORLD
000 TOTAL SINO- SOVIET BLOC
SOVIET BLOC
1953
90731 3A
twice as large as planned for
the calendar year 1959 and to
reach . the -equivalent of-,about
$533,000,000, Most of the ad-
ditional funds will be used for
military expenditures. The ex-
pected 1959 deficit would be 50
percent greater than that-of
1958 and over three times that
of 1957. Bank notes in circula-
tion increased in 1958 by nearly
50 percent and have continued
to rise in 1959. As a result
of these factors and the limited
availability of goods, price
levels in 1958 increased 46 per-
cent over those of 1957 and an-
other 21 percent during the first
quarter of 1959.
Confidence in the rupiah
has so dwindled that a growing
number of shopkeepers
prefer barter to cash
1958
6 AUGUST 1950
taken by the new
government.
Only two factors
have prevented the
economic deterioration
from having even more
serious political and
economic effects. One
is that the price of
rice, the basic food-
stuff, has been held
at the 1958 level so
far during 1959. This
has been achieved by
large rice imports,
injection of rice in-
to the market in areas
of critical shortage,
and a fairly honest supervision
of government price controls.
The other factor is that the
economic crisis has not yet se-
riously affected the majority
of Indonesians engaged in sub-
sistence farming and not sub-
stantially dependent on a mone-
tary economy.
Stabilization Measures
The government has insti-
tuted a series of stabilization
measures which have undoubtedly
had some ameliorating effect but
have failed to meet Djakarta's
hopes. In an effort to discour-
age imports and to withdraw money
from circulation, it raised the
prepayment requirement on im-
ports in April to the unusual
transactions. The INDONESIA: TOTAL IMPORTS
THOUSAND DOLLARS
ru
iah
i
ll
p
nom
na
y set
, at 11.4 to the dollar, O 000 TOTAL WORLD
is officially permit- ooo TOTAL SINO-SOVIET BLOC
ted to be exchanged
at 30 to the dollar
and in June was sell-
ing on the Singapore
free market at 175.
Formation of Presi-
dent Sukarno's new
cabinet 'in' July'
strengthened the ru-
piah to 137 to the
dollar, but this will
be only a temporary
respite unless res-
olute .,action' :ill
.
40,366
14 49;
_ ?3
797,
043
O
41,503
3,403
33,403
374
30,179
629,099
21,029
15.333
754,970 11,196
6,955
_
_
9,929
=.RT _
-2,129 3,537
1953 1954 1955 1956
90731 3B * BASED ON ANNUAL RATE FOR JANUARY-NOVEMBER
SECRET
CHINA &
N.VIETNAM 931,415
33, 898
CHINA &
N
VIETNAM
853,115 n 503,965*
1958
6 AUGUST 1959
25X1
Approved For Release 2005/03/15 : CIA-RDP79-00927AO02400010001-6
PART III PATTERNS AND PERSPECTIVES Page 8` of 13
 CURRENT INTELLIGENCE WEEKLY SUMMARY
6 August 1959
level of 230 percent of the im-
port value. The anti-inflation,
ary effect of this measure, how-
ever, will be reduced by the
decision to permit at least two
large government-owned trading
companies to finance this pay-
ment with bank credit. The gov-
ernment has also restricted
credit ceilings for banks to the
August 1958 level, has gradual-
ly reduced illegal barter trade,
and has improved tax collections.
In late April, ;:Djakarta
centralized imports of nine ma-
JOi''.commodities in addition to
rice, cloves, cambrics,and fer-
tilizers-import of which is
already controlled. It did so
by giving sole import privileges
to nine government-owned trading
companies. The announced pur-
pose of the regulation was to
control speculation and facili-
tate distribution of the limited
supply of foreign-exchange im-
ports. Many of the directors
of the companies are inexperi-
enced;, however, and have ac-
tually slowed distribution.
A number of measures have
been taken to keep prices at
authorized national levels.
Rice, however, appears to be
the only product with which the
government has succeeded in this
respect. In East Java, Indo-
nesia's most populous area,
where the local army commander
has been particularly effective
in holding the line on prices,
he found that Djakarta's policy
was driving goods out of the
market--either under the counter
or to other parts of Java where
prices were higher. In defiance
of the central government, he
freed the textile market and may
do the same with copra, hoping
thereby to "flood" East Java
with supplies. Merchants pri-
vately state, however, that only
an increase in total supplies--
which in the case of textiles
means more imports--will al-
leviate the situation.
Efforts toward equitable
distribution and price control
are severely hampered by defi-
ciencies in interisland shipping
brought on in December 1957 when
the government lost the services
of KPM, the Dutch-owned shipping
line which had carried approxi-
mately 60 percent of internal
trade. The government has
bought' some ships and chartered
others, but still lacks about 50
percent of the tonnage available
for interisland shipping before
the KPM seizure. By 1962 it
hopes to have nearly recovered
its 1957 shipping position.
25X1
AA
Medan
Approved FQQ telease 2005/03/15 : CIA-RDP79-009 K002400010001-6
SECRET
Palemban'
. 11111
NUR,'TH
ORNEO
SARAWAK
BORNEO
Bandjarmasin
Bandung ? Semarang I_----r
Malang
Origin of Indonesia's Chief Exports
0 Rubber E Tin = Copra A Petroleum
PHILIPPINES.
SUM-$A
FLORES_ ~