CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A002400050001-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 54
• Document Creation Date: December 21, 2016
• Document Release Date: October 21, 2008
• Sequence Number: 1
• Publication Date: September 3, 1959
• Content Type: SUMMARY

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CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
COPY NO. J8
OCR N0.4449/59
3 September 1959
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CENTRAL IN-TELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 September 1959
OF IMMEDIATE INTEREST
KHRUSHCHEV PREPARES FOR TALKS . . . . . . . . . . . . . . Page 1
Soviet Premier Khrushchev ended his Crimea vacation
with a speech on 30 August which was a further effort to
create a favorable climate for his visit to the United
States. He characterized Soviet-American relations as
"somewhat better than in the past" and cited President
Eisenhower's press conference statement on 25 August as
establishing a "good basis for a beneficial exchange of
views." In the October Foreign Affairs, Khrushchev under-
scored his contention that t ee on-Ty alternative to peace-
ful coexistence on Soviet terms is the "most destructive
war in history." Khrushchev's favorable comment on Chan-
cellor Adenauer's recent reply to the Soviet premier's
letter of 18 August was intended to make it appear that
even Adenauer is moving gradually toward an accommodation
with the USSR based on Western acceptance of the status
quo in Eastern Europe and East Germany. Moscow moved to
strengthen its position on the nuclear test cessation
question by announcing on 28 August that the USSR will not
conduct any further tests "if the Western powers do not
resume the testing of atomic and hydrogen weapons."
KHRUSHCHEV'S ENTOURAGE FOR HIS AMERICAN VISIT . . . . . . Page 4
Khrushchev will be accompanied on his 12-day visit
to the United States by at least 95 persons. His immedi-
ate party, to which additions are still being made, will
include members of his family and a number of government
officials of ministerial rank. The remainder of the
delegation is composed principally of a staff of 30,
personal guards, servants, and a 39-man press corps.
Thus far the delegation does not include any of Khrushchev's
associates on the party presidium or any high-level mili-
tary or trade official.
BORDER INCURSIONS SHARPEN TENSION BETWEEN INDIA AND
CHINA . . . . . . . . . . . . . . . . . . . . . . . . . . Page 6
Prime Minister Nehru's statements in Parliament
detailing Chinese Communist border incursions have had a
powerful impact in India. India's once strong regard for
China is now at a new low. Peiping's three-mile penetra-
tion into Assam on 25-26 August probably resulted in
large part from a belief that the recently activated
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3 September 1959
PART II (continued)
DE GAULLE'S ALGERIAN POLICY . . . . . . . . . . . . . . . Page 3
There is mounting expectation in Paris that De Gaulle,
reportedly assured that he now has the necessary support
of the army in Algeria, will soon make new proposals for
an'Algerian solution in an effort to strengthen France's
case, particularly at the impending UN General Assembly
session. His speeches to army and Moslem groups during
his 27-30 August military inspection tour of Algeria
stressed a three-part program for pacification, reconstruc-
tion, and self-determination which he believes can be made
acceptable to France, to the Algerians, and to France's
TUNISIA EXPANDS CONTACTS WITH SINO-SOVIET BLOC . .
. Page 4
Tunisia now seems to be moving to implement President
Bourguiba's policy of nonalignment with either East or
West by normalizing relations with the Sino-Soviet bloc.
Tunisia had only minimal contacts with the bloc prior to
midsummer, but late in July it announced the imminent
exchange of diplomatic missions with Czechoslovakia.
While Bourguiba is unlikely to permit the early exchange
of other diplomatic missions, he may recognize Peiping.
BLOC ECONOMIC APPROACHES TO GUINEA AND GHANA . . . . . . . Page 5
The Soviet Union, in its drive to increase bloc ties
with West Africa, recently extended to Guinea a $35,000,000
economi.: aid credit providing for material and technical
assistance in establishing industrial enterprises, devel-
oping agriculture, and building roads. Since October 1958,
when Guinea gained its independence, bloc countries have
made concerted efforts to establish close economic rela-
tions, frequently using gifts as a means of establishing
rapport. Ghana, on the other hand, has resisted Soviet
blandishments.
HUNGARY PLANS COMPLEX INDUSTRIAL PROGRAM . . . . . . . . . Page 7
Hungarian plans for industrial growth during the next
six years call for decentralization and for shifting the
emphasis of the nation's industrial output to a greater
concentration on industries best suited to Hungary's rela-
tively ample manpower and shortage of raw materials. The
program will be difficult to execute because of past
investment errors, a chronic shortage of investment capi-
tal, and short-term conflicts among competing projects.
Implementation of the over-all program would improve
Hungary's position as an exporter and reduce problems of
supply, manpower, and production costs.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 September 1959
PART II (continued)
PEIPING CONTINUES TO MODIFY COMMUNE PROGRAM . . . . . . . Page 8
The Chinese Communist party central committee reso-
lution of 26 August makes significant, changes in Peiping's
commune program. The commune is to remain as an all-
purpose rural organization with important responsibilities
in coordinating production, but the collective farm has
in effect re-emerged as the basic production unit in the
countryside.
. Page 10
There appears to be good reason for the growing con-
cern manifested in recent party pronouncements in China
over this year's crop prospects. The drought which started
in late June in vital farming regions has already lasted
long enough and spread over a broad enough area to make
doubtful the attainment of even the regime's sharply re-
duced goal of a 10-percent increase in grain and cotton for
1959. This year's grain crop may even be smaller than last
year's.
NORTH KOREA REORGANIZES INDUSTRIAL MANAGEMENT . .
. Page 11
A top-heavy administrative system and a shortage of
technicians for North Korea's drive to establish small-
scale, local industry have prompted the Korean party cen-
tral committee to reorganize the industrial management
system. The committee has decided to merge or abolish
existing central ministries and send some 20 to 30 percent
of their managerial and technical personnel to rural areas.
In addition, some ministerial functions are to be turned
over to local management.
TAIWAN STRAIT SITUATION . . . . . . . . . . . . . . . . . Page 13
While recent activities could indicate preparatory
moves for a step-up in military operations, the Chinese
Communists do not appear to be preparing for a major
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 September 1959
PART I (continued)
Indian outposts there challenged Chinese authority in the
sensitive Tibetan border area. Reports of further Chinese
incursions have not been confirmed. Peiping and New
Delhi will probably agree to discussions on small areas
in dispute,, but any definitive over-all settlement is
unlikely.
SITUATION IN LAOIS . . . . . . . . . . . . . . . . . . . . Page 9
The.coordinated Communist attacks which began in north-
eastern Sam Neua Province on 30 August may signal acceler-
ated operations to win control of that Laotian province.
A number of lightly held government posts have fallen to
the attacking forces, which may have totaled three battal-
ions.
Government troops, apparently
anticipating a Communist drive on Sam Neua, are preparing
a defensive line northeast of the provincial capital. The
USSR on 27 August rejected a British proposal for a neutral
observer in Laos and countered with a suggestion that the
heads'of the Polish, Indian, and Canadian delegations to
the International Control Commission personally investigate
the situation. Hanoi and Peiping remain firm in their
demand for the reactivation of the commission.
NOTES AND COMMENTS
MIDDLE EAST HIGHLIGHTS . . . . . . . . . . . . . . . . . . Page 1
Iraqi Prime Minister Qasim continues to maintain an
uneasy balance among pro-Communists, anti-Communists, and
his own followers. Trials of persons charged with insti-
gating the Kirkuk disturbances are scheduled to begin soon
and may have anti-Communist overtones. The UAR is main-
taining its heavy propaganda against the Iraqi regime and
on the Palestine issue; internally the UAR is preparing
quietly for an extensive government reorganization.
In the Sudan t e trig s o
officers involved in the May coup attempt are nearly over,
and the announcement of sentences could touch off further
unrest in the army.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 September 1959
PART II (continued)
military undertaking in the Taiwan Strait at this time.
Peiping retains, however, the capability to initiate
military action in this area with little or no warning.
Recent typhoons have caused considerable damage and
slowed activity in the area.
DISCONTENT REPORTED INCREASING IN RULING THAI MILITARY
GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . Page 15
Grumbling within the ruling Thai military group over
Premier Sarit's alleged failure to consult it,or to con-
sider its interests seems to be growing. The latest impor-
tant leader to express dissatisfaction is the commander of
the key First Infantry Division in Bangkok. Although he
claims steps will be taken in "the foreseeable future" to
eliminate Sarit, malcontents within the military group do
not appear at present to have a leader strong enough to
cha l lenge Sar it .
FINLAND'S MINORITY GOVERNMENT MAY BE BROADENED . . . . . . Page 17
Prime Minister Sukselainen seems to be considering a
broadening of his eight-month-old minority Agrarian govern-
ment shortly after Finland's parliament reconvenes in mid-
September. Domestic political stability favors an enlarg-
ing of the government's base--now only 47 seats in a cham-
ber of 200--but Agrarian party leaders fear that inclusion
of the regular Social Democratic leaders and the Conserva-
tives might incur serious Soviet displeasure as in the
autumn of 1958. The Communist-front Finnish People's Demo-
cratic League is not likely to be included in view of the
continued opposition of most other parties.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 September 1959
PART II (continued)
PRENSA LATINA, CUBAN-BACKED NEWS AGENCY .
Prensa Latina, a Latin American news agency formally
launched on 9 June in Havana, was organized in response to
Cuban Prime Minister Fidel Castro's bitter criticism of
"foreign news monopolies" which he charged with deliberate
distortion of events in Cuba during and after his revolu-
tion against the Batista dictatorship. Prensa Latina is
believed to be substantially financed by the Castro regime,
and Its staff is composed largely of persons with an anti-
US bias, some of them suspected Communists.
PATTERNS AND PERSPECTIVES
Page 18
KHRUSHCHEV'S VISIT TO THE UNITED STATES . . . . . . . . . Page
Soviet Premier Khrushchev probably regards the forth-
coming exchange of visits with President Eisenhower as the
culmination of his persistent efforts over the past two
years to bring the Western leaders into top-level negotia-
tions under conditions he believes are favorable to the
USSR. He apparently envisages the visits as the opening
phase of a long series of meetings with Western leaders
during which the Soviet Union hopes a combination of pres-
sure and inducements, domestic and international, will
gradually bring the West to accept the partition of Germany
and Soviet hegemony over Eastern Europe. Probably Khru-
shchev does not expect to engage the President in definitive
negotiations on major East-West problems, but will seek to
cultivate a favorable climate for broader and more detailed
SOVIET INTEREST IN US TRADE . . . . . . . . . . . . . . . Page 5
While in the United States, Premier Khrushchev will
probably seek to advance the campaign he launched in June
1958 for a "normalization" of Soviet-US economic relations.
Khrushchev and other Soviet leaders, who can procure in
Western Europe most of the items they seek from the United
States, apparently believe that expanded Soviet-US trade
would serve important political goals. Elimination of
American trade restrictions, and particularly the granting
of credits for Soviet purchases, would be major steps to-
ward what is probably Moscow's principal objective--remov-
al of the stigma now attached in much of the free world
to doing business with the USSR.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 September 1959
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PART III (continued)
CHINESE REPRESENTATION IN THE UNITED NATIONS . . . . . . . Page 8
Nationalist China is expected to retain its seat at
this years UN General Assembly, but the gradual erosion
of its support in the United Nations will probably con-
tinue, despite Peiping's aggressive actions in Tibet.
Many UN members who believe Peiping must eventually be
admitted are restive over continued postponement of the
issue through the procedural devise of an annual morato
rium. The concept of universality of UN membership, plus
the desire on the part of many countries to bind Communist
China to the principles of the UN Charter and other inter-
national agreements, would work toward the seating of
Peiping in any open vote brought about by a substantive
discussion in the'UN.
THE STATUS OF TRADE UNIONISM IN ITALY . . . . . . . . . . Page 11
unions.
Over the past decade anti-Communist labor organiza-
tions have gradually become serious contenders with the
Communist-dominated General Confederation of Labor as
the principal bargaining agents of Italian labor. Pros-
pects for the free unions are darkened, however, by an
unusually strong antiunion stand by employers, which has
tended to force the Catholic-oriented Confederation of
Workers' Unions into unity of action with the Communist
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 September 1959`
Soviet Premier Khrushchev
ended his Crimea vacation with
a speech at Veshenskaya on 30
August which was a further ef-
fort to create a favorable cli-
mate for his visit to the Unit-
ed States.- He characterized
Soviet-American relations as
"somewhat better than in the
past" and said "we are quite
satisfied" with President Eisen-
hower's press conference state-
ment on 25 August which, he
said, shows the President "is
prepared to promote the removal
of tensions." Khrushchev pro-
fessed to see in this "a good
basis for a beneficial exchange
of views."
The speech also provided.
further possible clues as to
the main themes Khrushchev
will stress during his visit.
He challenged the United States
to engage in "peaceful compe-
tition" with the "socialist
bloc" and called for an accom-
modation based on peaceful co-
existence which would commit
both sides to refrain from
interference in each other's
internal affairs and to settle
"ideological disputes and
other controversial problems"
by peaceful means. Such an
accommodation, according to
Khrushchev, would open the way
for agreements on disarmament,
prohibition of nuclear weapons,
and on "all other questions
which worry the whole world."
The Soviet premier reaf-
firmed his desire for agree-
ments on the "most acute in-
ternational problems" and as-
signed top priority to a Ger-
man peace treaty, which he
claimed would "normalize the
situation in Europe, remove
the barriers between the two
German states, and liquidate
the remnants of the occupation
regime in West Berlin."
Khrushchev's effort to
create the impression that the
Western leaders are moving
gradually toward an accommoda-
tion with the USSR based on
Western acceptance of the
status quo in Eastern Europe
and East Germany was reflected
in his favorable comment on
Chancellor Adenauer's recent
reply to the Soviet premier's
letter of 18 August. Khru--
shchev said the reply produced
a "favorable impression" and
noted that it was cast in a
"more restrained tone" con-
siderably different from
earlier West German notes, He
asserted that Soviet - West
German relations could be im-
proved "if deeds follow these
words" and expressed hope that
the Bonn government "really
wants to make its contribution
to easing international ten-
sions."
Moscow radio added on 1
September that Adenauer's reply
represents a "shift in the di-
rection of sober considerations,
and the quasi-clandestine sta-
tion in Prague which broadcasts
to Italy ascribed the chancel-
lor's "sudden change of tactics"
to his fear of being left be-
hind in the development of the
world situation.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 September 1959
The main points Khrushchev
will stress in the US are sum-
marized in his article in the
October Foreign Affairs, which
underscored his contention that
the only alternative to peace
ful coexistence based on West-
ern acceptance of the present
bloc frontiers is the "most de-
structive war in history." He
repeated the standard denial of
Soviet aggressive intentions,
but insisted that the superi-
ority of the "socialist system"
would be confirmed in history.
In response to the recent
announcements by the United
States and Britain extending
the suspension of their nuclear
tests beyond the original one-
year period which expires on 31
October, the USSR announced on
28 August that it will not con-
duct any tests so long as the
"Western powers" do not "resume"
their tests. This announcement
formalized the pledge Khrushchev
made in a letter published on
10 August to the leaders of the
"European Federation for Atomic
Disarmament" that the USSR is
"ready to accept the most solemn
obligation not to be the first
to conduct any further tests of
nuclear weapons." The announce-
ment stated explicitly that a
resumption of Western tests
would free the USSR from this
pledge.
In addition to placing the
onus on the West for any renew-
al of Soviet testing, the USSR,
by reaffirming its insistence
on a permanent and uncondition-
al test ban, apparently is con-
tinuing its efforts to undercut
and evade Western proposals
for an atmospheric test ban
and technical discussions on
the problem of detecting under-
ground tests.
Moscow's announcement
raises the possibility that the
Soviet leaders are seeking, in
effect, to bypass the Geneva
test talks and to draw the Unit-
ed States and Britain into an in-
definite and uncontrolled test
cessation without a formal agree-
ment.
In recent weeks,Khrushchev
has again voiced his long-stand-
ing skepticism regarding Western
intentions in the Geneva nuclear
test talks. In his letter to
the European Federation for
Atomic Disarmament, he said he
saw no reason to believe that
the Western powers would "show
more readiness to put an end
to nuclear tests" now than they
had when the USSR unilaterally
suspended its tests in March
1958. He added that "our mis-
givings are intensified" by the
"negative attitude" of the
United States and Britain in
the Geneva talks.
Khrushchev's suspicion of
Western proposals for interna-
tional inspection and control
were also reflected in his 30
August speech, in which he made
the liquidation of Western
military bases a precondition
to Soviet agreement to establish
accontrol system to enforce
agreements to reduce armaments
and withdraw forces from foreign
territories. He asserted that
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CURRENT INTELLIGENCE WEEKLY S Y
3 September 1959
the desire of the Western pow-
ers to place their "controllers"
everywhere in the USSR while
"retaining their military bases
situated around our country" is
not a "case for disarmament, but
an ultimatum."
In another development in
the disarmament field, Foreign
Minister Gromyko on 1 September
handed to Western representa-
tives in Moscow a Soviet revi-
sion of a four-power draft com-
muniqu6 on the creation of a
new ten-nation disarmament
group. Gromyko's proposed re-
visions were designed to estab-
lish a more direct link between
the new disarmament body and
the United Nations, in an ap-
parent attempt to create a prec-
edent for insisting on parity
of representation on other UN
organs.
Gromyko's revised text re-
ferred to the new group as a
"disarmament committee" and
avoided the phraseology proposed
by the West which indicated that
the group would be "outside"
the United Nations. The Soviet
text also omitted the appoint-
ment of a UN observer, probably
because this would seem to
place the UN in a separate sta-
tus and imply that the new body
was not an integral part of'the
UN.
Western European Views
President Eisenhower's
visit to Western Europe has
tended to lessen the apprehen-
sion voiced in Bonn and Paris
toward the Eisenhower-Khru-
shchev exchange.
In a move to demonstrate
his accord with the President's
efforts to ease world tensions,
Adenauer's conciliatory 27 Au-
gust note to Khrushchev calling
for renewed disarmament talks
for the first time failed to
insist on simultaneous talks be-
ing held on German reunification.
The chancellor said that the
progress in disarmament would
facilitate the solution of other
outstanding problems, such as
German unity. Adenauer also
stated that ideological differ-
ences need be no obstacle to
cooperation between states and
that "it is never too late to
make a change for the better"
in Bonn-Moscow relations.
Five days later, on the an-
niversary of Hitler's attack on
Poland, Adenauer voiced regret
for Hitler's attack, expressed
German friendship and good will
toward the people of Poland, and
said he looked forward to the
day when the German and Polish
people could be good neighbors.
While Adenauer probably feels
that some understanding could
be reached with the Poles, he
does not intend to take steps
toward formalizing relations un-
til after the 1961 election.
Both West German Government
and opposition party leaders
have praised Adenauer's new ap-
proach to foreign policy which
is regarded as an attempt to
quash all talk about West German
"obstructionism."
The semiofficial French
Press Agency (AFP) on 1 Septem-
ber denied that France opposed
the Eisenhower-Khrushchev ex-
change and expressed total con-
fidence in the President. AFP
affirmed that French reservations
at the time of the announcement
were based solely on the fact
that France had been informed
but not consulted. AFP described
official Paris circles as at-
tributing Adenauer's concilia-
tion in his statement.on Poland
not only to Eisenhower's visit
to Bonn and to Vice President
Nixon's visit to Warsaw, but
also to the "very clear"
French policies in favor of
Poland.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 September 1959
The British attitude to-
ward the coming Eisenhower-
Khrushchev exchange continues
overwhelmingly favorable. This
parallels the Foreign Office's
press guidance that the gov-
ernment "wholeheartedly wel-
comes" the exchange.
KHRUSHCHEV'S ENTOURAGE FOR HIS AMERICAN VISIT
Khrushchev will be accom-
panied on his 12-day visit to
the United States by at least
95 persons. His immediate par-
ty will include members of his
family and a number of govern-
ment officials of ministerial
rank. The remainder of the
delegation is composed princi-
pally of a staff of 30, person-
al guards, servants, and a 39-
man press corps. Additions are
still being made to the origi-
nal list submitted by the Soviet
Foreign Ministry on 28 August.
Thus far the delegation does
not include any of Khrushchev's
associates on the party presid-
ium or any high-level military
or trade officials.
The official delegation
will include Foreign Minister
Gromyko; Vyacheslav Yelyutin,
minister of higher and middle
specialized education; Vasiliy
Yemelyanov, head of the Chief
Directorate for Peaceful Use of
Atomic Energy; and Nikolay Ti-
khonov,metallurgical special- 25X6
ist who is chairman of one
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 September 1959
of the economic regions in the
Ukraine.
Khrushchev's immediate
party will also include Yuriy
Zhukov. and Aleksandr Markov,
a professor of medicine. Zhu-
kov, chairman of the State Com-
mittee for Cultural Relations
with Foreign Countries, has re-
cently played a prominent role
in meetings between Khrushchev
and Western statesmen and re-
portedly is a fast-rising Khru-
shchev protege. Markov is
chairman of the statistics sec
tion in a public health insti-
tute. Once an official in the
Kremlin hospital, he may be
accompanying the group as Khru-
shchev's private physician.
Soviet writer Mikhail
Sholokhov was added to the orig-
inal list following the much-
publicized invitation extended
personally by Khrushchev. Author
of And Quiet Flows The Don,
ShoT 1 hov genera Sly acclaimed
throughout the world as the So-
viet Union's foremost novelist.
In addition to a large
coterie of Foreign Ministry
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 September 1959
experts, Khrushchev
is bringing with him
a number of high-
level propaganda of-
ficials, including
Leonid Ilyichev,
head of the central
committee's agitprop
department. Vladimir
Burdin, who accom-
panied both Mikoyan
and Kozlov to the
United States and
has been described
as "one of the
Soviet Union's lead-
ing intelligence
experts on the
United States," will
also be a member of Khru-
shchev's staff. Two of Khru-
shchev's long-time personal
assistants-.--G. T. Shuisky; and
Andrey Shevchenko, an agri-
cultural specialist who has
twice toured the United 25X1
States with Soviet agricultur-
al delegations--will make the
trip.
BORDER INCURSIONS SHARPEN TENSION BETWEEN INDIA AND CHINA
Prime Minister Nehru's
statements in Parliament on 28
and 31 August detailing Chinese
Communist border incursions have
had a powerful impact in India.
India's once-strong regard for
China has reached a new low.
Nehru has emphasized, however,
that New Delhi, while strength-
ening its frontier defenses and
repelling any incursions, will
try to settle its border prob-
lems with Peiping by negotia-
tion.
The most serious clashes
took place in August in a vir-
tually unexplored sector of the
Assam-Tibet frontier. As a re-
sult of engagements on 25 and
26 August involving several hun-
dred Chinese troops and smaller
Indian border contingents, the
Chinese captured the Indian out-
post of Longju three miles
south of the McMahon Line, forc-
ing the Indians to withdraw to
the less advanced post at Lime-
king. The McMahon Line follows
the Himalayan crest ridge and
since 1914 has marked the bound-
ary recognized by most countries
but never accepted by Chinese
governments.
Nehru labeled the viola-
tions of this territory in Assam
as a "clear case of aggression,"
in contrast to the other in-
cidents during 1958 and 1959
in the Ladakh area of Kashmir
which he also disclosed. He
felt disputes in Ladakh could
be expected to occur in view of
the poorly defined border and
should be resolved by mutual
discussion.
Nehru since 1950 has re-
peatedly pledged to defend the
McMahon Line and he reiterated
on 28 August that "there could
be no alternative policy for us."
He told Parliament that the en-
tire northeast frontier area had
been placed under military rath-
er than civilian control. Army
reinforcements have been moved
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SECRET
1 }IIIf.MMMU
UKRK
s in llsputd
CEASE-p~E LIN~ \
`5iinagar
1 ~, P
C nab
I TAN'
Location of clashes
--- Boundary shown on recent
Chinese Communist maps
- Selected road
25X1 --- Selected trail
3 SEPTEMBER 1959
p MILES 200
CURRENT INTELLIGENCE WEEKLY SUMMARY
3 September 1959
Gart
JAMMU fyllb KASHMIR
(Star m dispute)
U L.k`
Chush pi
SpanggI
Cainmping
Ground
l P ) (BURMA
Shillong'
d d outpost-,,
ZLimeking
5'ubanstri~s"4ws /
INDIA Mara
MIiE9 9i
'T I B E T
~xrr C H I N A
to advanced positions but ap-
parently for the present are not
being deployed on the border it-
self. While highly placed In-
dian officials indicate that
New Delhi does not intend to
allow the Longju outpost to re-
main in Chinese hands, there is
no firm information that action
to retake the position is under
way.
The Chinese penetrations
have not gone more than a few
miles south of the McMahon Line.
These incursions probably stem
in large part, from Peiping's
clear irritation with anti-
Chinese sentiment displayed in
India since the Tibetan revolt
and from Chinese belief that
Indian border troops have been
aiding Tibetan escapees. In
the context of the Tibetan de-
velopments, Peiping probably
considers the recently actin.
vated Indian outposts along the
McMahon.Line a direct challenge
to Chinese authority in.the'area.
Before the revolt, these
Indian outposts were kept some
miles below the frontier. Last
spring, however, the Indians
moved them up to the line and
they promptly became the sub-
ject of Chinese protests. The
Chinese reportedly asked that
the outposts be withdrawn
five miles until the bound-
ary question could be set-
tled, and Peiping has spe-
cifically charged that the
Indian pickets near Longju
"intruded" into Tibet.
While the 25-26 August at-
tack on Longju seems intended
to back up this particular pro-
test, the Chinese probably also
are seeking a general Indian
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CHIN Ny.k
~,Sp.ngges ~Rudok
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 September 1959
disengagement along the entire
Assam frontier. Peiping defi-
nitely considers New Delhi's in-
fluence detrimental to its in-
tegration of Tibet, and Indian
nationals there are being de-
liberately harassed in what ap-
pears to be an effort to force
them out gradually.
Farther west, in Ladakh,
where the Chinese have estab-
lished de facto control in the
northeastern corner by building
a road, they, like Nehru, prob-
ably feel the controversy to
be less critical than in Assam.
Nehru's admission that Ladakh
boundaries are vague probably
is viewed in Peiping as providing
considerable room for maneuver.
So far, there has been no
public comment from Peiping on
the Indian charges of aggression.
However, in a possible hint that
Communist China is willing to
enter into discussions with New
Delhi on the border situation,
Foreign Minister Chen Yi stated
in a speech primarily directed
toward developments in Laos:
"In international affairs, we
always stand for settlement of
disputes between nations through
peaceful negotiations."
The Indian Government on
1 September said it had no in-
formation on reported fresh Chi-
nese incursions and engagements
with Indian troops along the
frontier.
In addition, the Bhutanese
prime minister stated that the
situation in Bhutan was quiet.
He will discuss the problem of
frontier security in a meeting
with Nehru on 7 September. Bhu-
tanese leaders have welcomed
Nehru's reaffirmation that India
would defend their border state
in the event of an external at-
tack, and apparently would like
New Delhi to expand its military
aid. They are concerned, how-
ever, over signs that India is
assuming diplomatic and defen-
sive responsibilities for Bhutan
beyond those granted in the
Indo-Bhutanese treaty of 1949,
and are exploring the possibil-
ity of establishing diplomatic
relations with several major
powers as a counterweight to
Indian influence.
The recent Sino-Indian
border clashes, apparently on
a larger scale than previous
skirmishes, are the latest in
a series of such incidents along
the Himalayan frontier over the
past nine years. Other inci-
dents are likely to occur in
the future as the two sides seek
to consolidate their positions.
The Chinese, however, have con-
fined their latest patrol forays
to the vicinity of the McMahon
Line, and apparently do not in-
tend to drive south to the bor-
der shown on their maps.
Nehru appears willing to
discuss certain limited border
disputes, and Chen Yi has inti-
mated Peiping may be willing.
Communist China's past record
of similar discussions with the
Burmese has shown that Peiping
will make no major concessions;
Nehru likewise has said he is
not prepared to discuss Chinese
claims to "huge chunks" of ter-
ritory. Negotiations, then, are 25X1
likely to be prolonged indefi-
nitely without producing any
lasting solution.
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SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
3 September 1959
Heavy coordinated Communist
attacks which began on 30 August
along a broad front in north-
eastern Laos may signal a new
phase of intensive operations
to seize control of Sam Neua
Province. The attacking force,
which the American army attache
estimates-may have totaled three
battalions, swept over the Lao-
tian Army's lightly garrisoned
posts along the Nam Ma River
and now poses a threat to Sam
Neua town, the provincial cap-
ital, The Laotian Army has
formed a defense line northeast
of Sam Neua, and late press re-
ports state that Communist pa-
trols have been sighted 12 to
18 miles north of the town.
against the Communist stronghold
in the Muong Son salient. This
new Communist pressure may place
government forces again on the
defensive while small Communist
bands circulate freely through-
out the province, propagandizing
and intimidating the villagers.
The situation in most of
Phong Saly Province has remained
relatively quiet, although there
is a small concentration of Com-
munist partisans operating in
the extreme southeastern corner
of the province. However, in
both Phong Saly and Sam Neua,
Laotian Army commanders consider
the supply situation serious.
Communist dissidents are ac-
tive in northeastern Luang Pra-
bang Province, and toward the
The attacks in
northeastern Laos may
have been timed to
spread out government
forces and stall the
attack developing
SECRET
GOVERNMENT
POSTS
SEIZED
SAM NEUA PROVINCE
0 50 MILES
3 SEPTEMBER 1959
NORTH\
Muong *Nt 1 VIETN
A
..Sop Sai
-Muong Hang
'm,, MCI
GOVERNMENT
DEFENSE LINE J
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3 September 1959
end of August about 1,000 peo-
ple from:.this region had taken
refuge in the royal capital,
Luang Prabang. A government
post at Muong Hiem in the ex-
treme northeast of the province
reportedly is threatened by
several companies of Communist
partisans.
Soviet Moves
The USSR on 27 August re-
jected Britain's proposal for
a neutral UN observer to Laos,
terming it a "substitute for
the procedure" provided by the
Geneva agreements, "directed at
abrogation.of the agreement con-
cerning the International Con-
trol Commission (ICC)." In an
interview with a British For-
eign Office official, Soviet
Ambassador Malik proposed in-
stead that the heads of the three
delegations of the suspended com-
mission for Laos, together with
"some auxiliary personnel," in-
vestigate the causes of the
present situation and report to
the cochairmen, Britain and the
USSR. While the Soviet proposal
is designed to appear to com-
promise on previous demands for
return of the ICC to Laos, its
reference to "the resumption of
the International Commission's
activities in Laos" and to "the
functioning of the commission"
as an "indispensable" and "in-
tegral" part of the Geneva agree-
ments clearly shows that the So-
viet aim is complete reactiva-
tion of the ICC.
Following the Soviet pro-
posal a Pravda editorial on 30
August, claiming that the new
American military assistance to
Laos has "seriously aggravated"
the situation, called for an
end of US "intervention" but
did not demand the return of
the ICC. TASS on 27 August as-
serted that the dispatch of UN
observers to Laos would only
be a maneuver to cover up Amer-
ican interference.
The entire Communist bloc
has vigorously protested the
American decision to send emer-?
gency aid to Laos, terming it
"another serious violation of
the Geneva agreements."
Hanoi-Peiping Responses
In a speech made on the
occasion of North Vietnam's Na-
tional Day on 2 September, Pre-
mier Pham Van Dong stated that
American policy "directly and
seriously threatens North Viet-
nam and jeopardizes peace in
Indochina and Southeast Asia."
In the next part of his speech,
however, Dong commented on the
forthcoming Eisenhower-Khru-
shchev talks, remarking that
the "Vietnamese people believe
that this exchange will help to
settle problems between the East
and West." Given the context
of this statement, it suggests
that Hanoi may expect the So-
viet premier to discuss the
Laotian situation during his US
stay.
Chinese Communist Foreign
Minister Chen Yi has been high-
ly critical of American ac-
tivities in Laos, using language
which is markedly similar to
Hanoi's, while adding that Amer-
ican actions menace the securi-
ty of China as well as North
Vietnam. In his speech, made
on the occasion of Hanoi's Nation-
al Day, Chen Yi categorically
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SECRET
3 September 1959
stated that the "neutrality of
Laos must be guaranteed in ac-
cordanpe with the Geneva agree-
ments."
The Communists have ex-
hibited a certain sensitivity
to Western accusations of
aggression. Chen Yi flatly
asserted on 2 September that
China has never "encroached
on other countries" and that
"we stand for the settlement
of disputes between nations
through peaceful negotiations."
On 3'September, Hanoi felt it
necessary to issue a statement
categorically denying "recent
allegations by Americans and
royal Laotian circles that North
Vietnamese Army units are on
Laotian territory."
The Hanoi spokesman rea-
soned that the United States
was attempting to "deceive world
opinion" and to gain a pretext
for expanding the civil war.
He warned that the American and
Phoui Sananikone governments
must bear full responsibility
for a situation which "the
themselves created."
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 September 1959
NOTES AND COMMENTS
MIDDLE EAST HIGHLIGHTS
Iraq
Iraqi Prime Minister Qasim
has continued to maintain an
uneasy balance among pro-Com-
munists, anti-Communists, and
his own followers. On 30 Au-
gust he issued a directive
ordering: first, that in view
of the opening of`a new school
year all students and teachers
under arrest for "minor incite.
dents" are to be released un-
conditionally or on bail; and,
second, ':that all students and
teachers, as well as "officials;"
are to stay clear of matters
which do not concern them--i.e.,
politics.
On the anti-Communist side,
the Iraqi lawyers' association,
formerly a hotbed of left-wing
sentiment, last week elected a
relatively moderate president
and executive board. The first
administrative act of the new
president is reported to have
been the firing of practically
the entire staff of the associa-
tion, The Communist press has
attacked the election bitterly,
claiming that "democratic" ele-
ments were barred from the=elec-
tions by reactionary maneuver-
ing.
Another blow to Communist
influence in a key area has
been reported from Basra, where
the garrison commander has con-
firmed that 185 Communists have
been arrested in the port area
for plotting the destruction of
the port, police station, and
post office. In addition, the
government has announced that
the commission investigating
the Kirkuk disorders last July
has completed its report and
that charges are being referred
to military courts other than
that of Col. Mahdawi, the
notorious Communist tool.
These trials may well develop
further anti-Communist over-
tones.
Regarding Mahdawi, Qasima
again last week told the Ameri-
can ambassador that only he--
Qasim--and Foreign Minister
Jawad were the official inter-
preters of Iraqi foreign policy
and that his speech of 13 August
supporting Mahdagi's "every
word" was not intended to extend
to foreign affairs or to all
that Mahdawi had said in the
past. Qasim's general attitude
in his interview with the am-
bassador seemed little different
from that of,previous occasions;
he again evinced suspicion of
American intrigue against Iraq
and urged the United States to
support Algerian independence,
an Arab cause which Iraq seems
to be trying to adopt as pecul-
iarly its own.
Additional evidence of
economic malaise is accumulat-
ing. While,the steady upward
trend of wages during the first
half of the year was abruptly
halted on 14 July and new meas-
ures have been taken to restore
labor discipline and increase
production, there have been
sharp increases in the prices
of certain critical items--both
locally produced goods, such
as bricks, and imported items,
such as+ structural steel. Grain
prices also jumped again during
the past week, and large im-
ports of rice and wheat have
been authorized.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 September 1959
Cairo's propaganda remains
aimed at the Iraqi problem and
at the Palestine issue, which
is now being considered by the
Arab League conference in Casa-
blanca.
Internally, Nasir is ex-
pected to streamline the re-
gional governments of Egypt and
Syria this fall, with major em-
phasis given to increasing
Cairo's control of Syria through
Syrian Interior Minister Sarraj.
Nasir probably hopes the reor-
ganization will allow more rapid
and efficient action to solve
the myriad of economic and po-
litical problems in Syria. He
may be hard pressed to improve
the situation, however, without
increased use of arbitrary
measures which have already
caused Syrian resentment.
The creation of separate
regional ministries under a
central cabinet in Cairo at the
time of union last year was
largely a concession Nasir made
to the Syrian desire for local
representation. The National
Union elections last July and
the formation of the first UAR
national assembly expected this
fall will take care of local
participation in government and
allow Nasir to tighten his
executive organization by elim-
inating the regional "cabinets."
Whatever legislative powers the
national assembly,:maytbe granted,
however, are not expected to
interfere with the Cairo regime's
plans for reforming the general-
ly laissez-faire Syrian economy
and bringing it into line with
the Egyptian economy, which is
more closely controlled by the
government.
Old-line politicians in
Syria were given new life by
the regime's support of their
successful efforts to undercut
Vice President Hawrani's Baath-
ist party in the July elections.
Nasir seems almost certain, how-
ever, to disappoint the hopes
of these politicians, whose
narrower aims are fundamentally
in conflict with his "socialist,
cooperative" plans for the UAR.
Hawrani, meanwhile, seems
likely to lose out in the 'cabi-
net reshuffle and is already
reported searching for al-
lies in opposing Nasir's
plans.
Nasir is unlikely to make
the rapid progress he says he
anticipates in solving Syria's
economic troubles--which have
been accentuated by two years
of drought--without massive out-
side aid. Without this progress,
and faced by still more politi-
cal infighting, he will probably
continue to rely on his own
adroit handling of individuals
and the public,,iii Syria, backed
by the tight security measures
of hatchetman Sarraj. The time
purchased by this kind of en-
forced stability may allow
achievement of some of the prom-
ises made by the regime and get
it safely past its present teeth-
ing stage.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 September 1959
The series of courts-martial
against army officers involved
in the abortive 22 May coup at-
tempt are almost over, and the
Abboud government's announcement
of sentences, expected in the
next few days, may lead to fur-
ther trouble. The military gov-
ernment's hopes that the trials
would provide a public example
of resolute discipline and jus-
tice have not been fulfilled; the
prosecution has, for the most
part, failed to present convinc-
ing evidence, and one prosecution
witness admitted that he had
changed his testimony "after 90
days of jail and torture."
A large part of the populace--
military and civilian alike--
believes that the courts-martial
were "rigged" from the outset.
Many of the younger officers in
three of the five regional com-
mands are reported still antag-
onistic toward the present mili-
tary leadership, and several in- 25X1
fluential political leaders are
continuing to press for a return
td civilian government.
There is mounting expecta-
tion in Paris that De Gaulle,
reportedly assured that he now
has the necessary support of
the army in Algeria, will soon
make new proposals for an Al-
gerian solution in an effort
to strengthen France's case, in
particular at the impending UN
General Assembly session. His
speeches to'army and Moslem
groups during his 27-30 August
military inspection tour of Al-
geria stressed a three-part
program for pacification, recon-
struction, and self-determina-
tion which he believes can be
made acceptable to France, to
the Algerians, and to France's
allies.
De Gaulle recently told
the Australian ambassador that
he planned to make a public
statement on Algeria prior to
the 15 September opening of the
UN General Assembly. A "spe-
cial status" for Algeria in the
"French Community--presumably
involving closer ties to France
than those of the autonomous
republics--may be proposed at
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SECRET
3 September 1959
the 10 September meeting of the
Community's Executive Council.
Such an offer would in-
volve no immediate change in
Algeria's relationship to
France, but the implication of
the eventual right to independ-
ence could be used in a cam-
paign to win France internation-
al support. Moreover, Paris
probably expects that the pres-
ence of four African leaders
of the Community on the French
UN delegation will illustrate
the support of France's Commu-
nity partners for De Gaulle's
Algerian policy.
Press accounts of the 26
August French cabinet review
of the Algerian problem. indi-
cate that, although the min-
isters were divided, the major-
ity appeared to favor a "liberal"
solution. The cabinet reported-
ly agreed, however, to give De
Gaulle a free hand to manage
Algerian affairs.
De Gaulle's public insist-
ence that the Algerian war is
not a war of conquest, combined
with his praise of the army and
appeals to it to have confidence
in the country, indicate his
concern over the army's reser-
vations about a liberal policy.
While his reference to "self-
determination" apparently runs
counter to last year's army de-
mands for "integration," there
has been no evidence of mili-
tary unrest, according to
French and American journalists
on the scene.
Although the Algerian reb-
els continue to favor a nego-
tiated solution to the war, in-
surgent leaders appear divided.
as to what would constitute
acceptable terms for negotia-
tions with the French. Rebel
moderates, led by Ferhat Abbas,
appear favorably disposed to-
ward cease-fire talks with De
Gaulle if Algeria's future po-
litical status is also dis-
cussed. The more powerful mili-
tary group, however, would prob-
ably oppose any meeting held un-
der conditions which might be
interpreted as a rebel capitu-
lation, and would probably de- 25X1
independence.
mand--at least initially--early
autonomy and a timetable for Algerian
TUNISIA EXPANDS CONTACTS WITH SINO-SOVIET BLOC
Tunisia now seems to be
moving to implement President
.Bourguiba's;policy of nonalign-
ment with -either East or West
by normalizing relations with
the Sino-Soviet bloc. Many
Tunisians believe more contact
with the bloc is necessary to
demonstrate that their country
is not subservient to the West-
ern powers.
Prior to midsummer, Tuni-
sia had negotiated trade agree-
ments with most bloc states but
otherwise had only minimal con-
tacts. The small Czech,Soviet,
and Polish trade missions were
not very active, and trade with
the bloc in 1958 totaled less
than 2 percent of Tunisia's
foreign trade. At the end of
July, however,Tunisia announced
the imminent exchange of diplo-
matic missions with Czechoslo-
vakia, and a one-man Bulgarian
trade mission was established
in Tunis. Since then, two Tu-
nisian secretaries of state
have visited the Soviet Union,
and a delegation of four Tu-
nisian women--including for
the first time two who are Com-
munists or Communist sympathiz-
ers--have gone to Peiping.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 September 1959
A 26-member Tunisian dele-
gation representing the nation-
al students .organization,which
is an associate member of the
Communist-dominated Interna-
tional Union of Students, at-
tended the World Youth Festi-
val in Vienna as part of a
North African :group. Little
publicity, however, was given
to its departure or activities.
Following the festival, five
students went to East Germany,
compared with 21 who visited
West Germany. Despite govern-
ment controls, students are
curious about the bloc
Bourguiba, fearing the
subversive and disrupting ef -
BLOC ECONOMIC APPROACHES TO GUINEA AND GHANA
The Soviet Union, in its
drive to increase bloc ties with
West Africa, recently extended
to Guinea a $35,000,000 economic
aid credit providing for mate-
rial and technical assistance
in establishing industrial en-
terprises, developing agricul-
ture, and building roads. While
the credit is to be repaid at
2.5-percent interest over a pe-
riod of 12 years, Moscow--in
keeping with the bloc's pro-
grams of economic penetration
in other underdeveloped coun-
tries--presumably will accept
partial, if not complete, re-
payment in Guinean commodity
exports, thereby increasing
the bloc's role in Guinea's
foreign trade.
Since October 19.58, when
Guinea gained its independence
the Sino-Soviet bloc has made
concerted efforts to establish
close economic relations, 'fre-
quently using gifts in an of -
in 1956 by the Hungarian regime
and have little desire to in-
feet--particularly among the
Algerian rebels--of Communist
representatives in Tunisia, is
likely to continue to keep
tight control over bloc con-
tacts and acceptance of invita-
tions to visit the bloc. He
is unlikely to permit the early
exchange of other diplomatic
missions but may allow the es-
tablishment of more bloc com-
mercial missions. He recently
received a Chinese Communist
cultural group and may even
recognize Peiping.
Although a comparatively
sizable proportion of Tunisia's
bloc trade is with Hungary,most
Tunisians,,-remember the harsh re-
pression of the revolutionaries 25X1
crease contacts.
fort to establish rapport.
Czechoslovakia presented a gift
of military equipment to the
Guinean Army in the spring of
1959, and later, in conjunction
with Poland and East Germany,
Prague gave Conakry road-con-
struction machinery and fishing
equipment. In addition, both
East Germany and Czechoslovakia
reportedly have offered to pro-
vide Guinea with a radio trans-
mitter. Communist China made
a gift shipment of 5,000 tons
of rice in'June.
In a recent interview with
a Soviet correspondent, Presi-
dent Sekou Tourd emphasized
Guinea's desire to develop
trade with the Sino-Soviet
bloc. The Soviet Union, Czech-
oslovakia, Poland, East Ger-
many, and Hungary have agree-
ments with Conakry, and talks
are believed to be in prog-
ress With Communist China.
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SECRET
W
CURRENT INTELLIGENCE WEEKLY SUMMARY
3 September 1959
In the same interview,
Tour6 revealed that Guinea is
about to implement its first
three-year economic development
plan, which apparently will con-
centrate on agriculture--the
basis of Guinea's economy. In
view of the Soviet-Guinean eco-
nomic and technical cooperation
agreement, however, the plan ap-
parently will include attempts
to develop Guinea's nascent in-
dustry as well, which will pro-
vide the Soviet Union with an
opportunity to exploit Guinea's
need for economic specialists.
The bloc has already begun
to take advantage of Guinea-Is
lack of qualified technical per-
sonnel. There appear to be
about 100 bloc technicians in
Guinea, some of them working on
public works projects being car-
ried out by the Guinean Minis-
try of Interior. Others are
investigating possibilities for
developing other facets of the
economy. There is also a Czech
military mission advising the
Guinean Army.
The bloc has been much less
successful in its efforts to
expand economic relations with
Ghana since it received inde-
pendent status in early 1957,
primarily because of Accra's
reluctance to become involved
with the bloc. A Soviet dele-
gation failed this spring to
arrange a trade pact after a
three-week visit, and thus far
no firm bilateral trade agree-
ment has been concluded with
any bloc country. The USSR,
Czechoslovakia, East Germany,
and Poland, however, have recent-
ly established permanent trade
missions in Accra.
Both East Germany and Po-
land have offered industrial
equipment to Ghana--presumably
under medium-term credits--in
order to stimulate trade, but
neither offer was accepted.
Bloc press reports of these pro-
ceedings suggested that more was
accomplished than actually was
the case. Accra, however, is
committed to and needs extensive
foreign aid for the multimillion-25X1
dollar Volta River project--
for hydroelectric power and
Q1?min,mm ri bWt;An.
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I
~1111!w low
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
3 September 1959
HUNGARY PLANS COMPLEX INDUSTRIAL PROGRAM
Hungarian plans for indus-
trial development over the next
six years call for decentraliza-
tion and for shifting the em-
phasis of the nation's indus-
trial output to a greater con-
centration on industries best
suited to Hungary's relatively.
ample manpower and shortage of
raw material. Moves to shift
the emphasis, slated to be ap-
proved by a party congress in
November, appear to have a three-
fold objective of reducing to-
tal production costs, producing
an export surplus to help cover
the nation's foreign debts, and
advancing the specialization .
policies of the bloc's Council
for Mutual Economic Assistance
(CEMA).
The machine and chemical
industries are scheduled to grow
almost twice as fast as total
industry from 1959 to 1965.
Among the branches of these in-
dustries to receive special at-
tention are telecommunications,
precision instruments, bearings,
machine tools, plastics, and
fertilizers..
The regime has also mani-
fested an interest in industrial
decentralization because of the
economic and sociological dif-
ficulties--such as periodic fuel
and water shortages and over-
crowding--resulting from the
present concentration of indus-
try and manpower in Budapest.
Air-defense considerations may
also influence plans for decen-
tralization. A start has al-
ready been made in this program.,
and during 1961-65 there will
be an increasing emphasis on
the development of "industrially
backward" areas.
Because these programs. will
compete for Hungary's limited
investment resources, their
simultaneous implementation will
permit little or no deviation
Sites of New or Expanded Plants Identified by
Regime as Planned or Under Construction
Outside Budapest Area --e%-
AUSTRIA
? Szombathely
r
Szony- Labatlan
Gyor?
LAKE'.
13ALATON
Lorinci
?
Inota? Szekesfehervar `rvar Szolnok_
Q' Szeged
0
Debrecen
Bekescsaba?
RUMANIA
SECRET
Illlll
? Miskolc
Zagyvapalfalva
? G
Kecskemet
30635
PART II NOTES AND COMMENTS Page 7 of 19
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SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
3 September 1959
from plans. The fact
that the regime in-
sists that invest-
ments to expand ex-
isting capacities
must
exceed those
MACHINE_ INDUSTRY ?~ .
r
for
new construction
Telecommunications & precision instruments
will
work against
Chemical & food-processing equipment
the
decentralization
Main-line diesel locomotives
????
program. In some
cases it will also
work against altering
the composition of
industrial output,
since many old in-
HUNGARY
TENTATIVELY PLANNED INDUSTRIAL EXPANSION FOR 1965
PERCENTAGE INCREASES OVER 1958 PRODUCTION
TOTAL INDUSTRY.....
g6
+
?
CHEMICAL INDUSTRY .:..... ........: .......: :. ............ 9 00 .
Pharmaceuticals ....................... ....................................... 100 +
Nitrogen fertilizers ?.? ......... ..::.... .............300
Synthetic materials . ........ ........ ............600
vestment projects--left over
from days when heavy industry
was always given first priority
--still remain to be finished.
Those plants and industries
which have vested interests in
Budapest are likely to act as
a drag on the decentralization
program. Furthermore, govern-
ment policy for the last our
or five years has emphasized
raising the technical level and
labor productivity in present 25X1
plants, rather than constructing
new ones. This aim, although
essential, is at variance with
decentralization. On the other
hand, growing strains on Buda-
pest's facilities and the dis-
placement of agricultural work-
ers--as collectivization and
mechanization proceed--may tempt
officials to push decentral-
_ization.
25X1
I
PEIPING CONTINU S TO MODIFY COMMUNE PROGRAM
The Chinese Communist party
central committee resolution of
26 August makes significant
changes in Peiping's commune
program. In a measure said to
apply "at the present stage,"
the resolution announced that
the "production brigade" now
possesses "basic" ownership of
the means of production in the
commune. The resolution confirms
earlier indications that the
lower level production brigade
--in most cases corresponding
to the pro-commune collective
:f arm--has assumed more and mb'e
of the control functions former-
ly exercised by the commune ad-
ministrative committee and in
fact has become the major unit
of economic activity irk the
countryside.
The relatively modest "t.idy-
ing up" process inaugurated by
the December 1958 commune res-
olution has thus been transformed
into a major reorganization of
the commune system. The first
change, evident in the decen-
tralization of control, under-
cuts the original plan to trans-
fer to the state within three
to six years the controls over
economic production and controls
over distribution of income with-
in- the commune.
A second change is the
virtual abandonment of the com-
mune as a vehicle for rural in-
dustrialization leading to the
rapid mechanization and elec-
trification of agriculture.
Last fall's rural iron and steel
campaign resulted in a critical
shortage of labor for reaping
and storing the autumn harvest,
disruption of the handicraft
industry, clogging of the
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SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
3 September 1959
transportation system, and an
end product of low-quality iron
and steel, much of which was
unusable.
By August 1959 the reversal
of this major policy decision
was almost complete. Many of
the small-scale communal indus-
trial installations have been
scrapped, much of the original
labor force returned to agri-
cultural and handicraft pur-
suits, industrial raw materials
and equipment in commune ware-
houses transferred to modern en-
terprises, and the commune, like
the pre-commune collective farm,
now is engaged almost exclu-
sively in agricultural produc-
tion.
A third change is the
return to "private plots" as a
means of increasing production
to meet critical shortages of
meat, vegetables, and other sub-
sidiary farm produce. Recent
reports reveal that so-called
"free markets" have reappeared
in certain areas as an addi-
tional incentive for stimulating
individual production. Both
"private plots" and the "free
market', were attacked during
the initial period of communal-
ization as ideological aberra-
tions.
A fourth change is the in-
creasing recognition of mater-
vial incentives as the stimulus
for production in place of the
earlier reliance on exhortation
and enthusiasm. The original
commune system of income dis-
tribution, combining a fixed
monetary wage and "free" supply
of goods in abundance, has been
transformed. The former dol-
lective-farm practice of cal-
culating individual income ac-
cording to "labor points" has
been revived to take the place
of fixed wages. The "free"
supply of food has been turned
more and more into a form of
incentive, with rations deter-
mined for each individual on
the basis of age, health, and
both the type and quantity of
work performed. In effect the
change vindicates Khrushchev's
criticism of the communes as
lacking proper incentives.
The final change is the
continuing de-emphasis of mess-
halls and other communal serv-'
ices. As originally conceived,
the commune was to organize a
collective way of life by means
of communal messhalls, nur-
series, kindergartens, and vil-
lage "housing estates." By
August 1959, however, the re-
gime was back-pedaling rapidly
in the face of widespread peas-
ant discontent with these radi-
cal social experiments. Eating
in the dining halls now is
"voluntary"; placement of chil-
dren in the nurseries and kin-
dergartens is not obligatory;
and the'grandiose plans for
rural "housing estates" are
now shunted aside in the effort
to 'increase food production.
The first of the original
concepts of the commune to be
revised was the ideological
pretension that the commune and
related programs constituted a
special Chinese road to Commu-
nism permitting the achieve-
ment of this ultimate goal at
a relatively early date. Next
to go were the unqualified as-
sertions of superiority for the
commune as the organizer of a
collective way of life. Even
the image of the commune as a
superior form of economic or-
ganization has become badly
distorted as more of the in-
stitutional forms and practices
of the pre-commune collective
farm have reappeared.
Despite the changes, the
party has not abandoned the
commune system. The resolution
adopted by the recent central
committee plenum makes clear
that the commune is to remain
SECRET
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SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
3 September 1959
an all-purpose economic, social,
political, and military organ-
ization with important respon-
sibilities in coordinating farm
production. The commune in
practice, however, has changed
radically, and the pre-commune
collective farm has in effect
reemerged as the basic pro-
duetinn unit in the countryside.
COMMUNIST CHINA'S 1959 CROP OUTLOOK
Growing concern over this
year's crop prospects in China
played an'important part in the
recent deliberations of the
party leaders which culminated
in the recantation of the wild-
ly exaggerated "leap forward"
production figures and targets.
The resolution issued by the
central committee after the
plenum early last month takes
a most cautious view on agri-
culture, stating that fulfill-
ment of even the modest re-
vised goal of a 10-percent in-
crease in grains and cotton de-
pends on overcoming. the "natural
calamities" of flood, drought,
and insects.
PRECIPITATION IN SELECTED AGRICULTURAL AREAS IN COMMUNIST CHINA
1 JUNE THROUGH 20 AUGUST 1959
MILES 600
3 SEPTEMBER 1959 10-Day Averages as Percent of Normal
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