CURRENT INTELLIGENCE WEEKLY SUMMARY

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• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A002400060001-0
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• Document Creation Date: December 20, 2016
• Document Release Date: December 22, 2005
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• Publication Date: October 19, 1999
• Content Type: SUMMARY

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CONFIDENTIAL
c r~T
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
COPY NO. 58
OCI NO.4675/69
10 September 1959
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CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
State Department review completed
CONFIDENTIAL
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THIS MATERIAL CONTAINS INFORMATION AFFECT-
ING THE NATIONAL DEFENSE OF THE UNITED STATES
WITHIN THE MEANING OF THE ESPIONAGE LAWS,
TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS-
SION OR REVELATION OF WHICH IN ANY MANNER TO
AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
The Current Intelligence Weekly Summary has been prepared
primarily for the internal use of the Central Intelligence
Agency. It does not represent a complete coverage of all
current situations. Comments and conclusions represent
the immediate appraisal of the Office of Current Intelligence.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
10 September 1959
OF IMMEDIATE INTEREST
PRELIMINARIES TO KHRUSHCHEV'S VISIT TO WASHINGTON
In a speech on 4 September
at the opening of the Polish
exhibition in Moscow, Khrushchev
again attempted to ease Western
apprehension over Soviet inten-
tions and to prepare the ground
for his visit to the United
States. Adopting a tone of un-
usual moderation, he stressed
the importance of "peaceful co-
existence" and of actions which
can contribute to a lessening
of world tensions.
Soviet spokesmen, while
playing down the possibility
that specific agreements will
be reached during the Khru-
shchev-Eisenhower exchange of
visits, have stressed the pros-
pects for improved relations.
An official at the Soviet Em-
bassy in Berlin remarked that
no concrete results should be
expected from the visits but
said they could prove useful
and lead to better understand-
ing. Expressing hope they would
in turn lead to a meeting'at
the summit, he stated that he
envisaged such a meeting com-
prising only the Big Four,
The counselor of the Soviet
Embassy in Paris told an Amer-
ican official on 7 September
that President Eisenhower and
Khrushchev, in order to bring
about a "change in atmosphere,"
should discuss "all issues" but
not negotiate details. He ex-
pressed the opinion that agree-
ments probably could be reached
on cultural and economic ex-
changes and that progress could
be made on disarmament and the
control of nuclear weapons. He
said an agreement on trade and
credit at an early stage of
Khrushchev's visit would facil-
itate "political concessions"
later. The Soviet diplomat
also commented that the "aging"
Khrushchev wants to be remem-
bered as the man who, after 40
years of revolutionary strug-
gle, was able to raise the USSR's
standard of living and bring
about peace and prosperity.
Soviet propaganda has at-
tempted to build up Khrushchev's
personal prestige on the eve
of his visit. A Pravda article
on 8 September asserted that
nine out of ten Americans con-
sider the Soviet premier an
"emissary of peace" and regard
his visit as marking the begin-
ning of a new period in American
foreign policy. The article re-
ferred to Khrushchev's "immense
authority" and declared that
Americans want peace and there-
fore insist that their leaders
"listen more often and more at-
tentively" to his voice.
Concern Over Asian Situation
The Soviet leaders are show-
ing concern that the Sino-Indian
border dispute and develop-
ments in Laos will have an ad-
verse effect on Khrushchev's
visit. Moscow moved to soft-
pedal the dispute between Pei-
ping and New Delhi by issuing a
TASS statement on 9 September
which condemned alleged efforts
by "Western circles," especially
in the United States, to exploit
the dispute as a?ments of ob-
structing a relaxation of ten-
sion on the eve of the exchange
of visits. While deploring the
"incident" on the Sino-Indian
frontier, the statement care-
fully refrained from assigning
blame to either party And
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CURRENT INTELLIGENCE WEEKLY SUMMARY
10 September 1959
underscored the USSR's friendly
relations with both countries.
The statement said "Soviet lead-
ing quarters" are confident that
the two governments will reach
a peaceful settlement based on
mutual interests and the "tra-
ditional friendship between the
peoples of China and India."
Regarding events in Laos,
Soviet diplomats in London and
Paris have termed the situation
"very untimely" and "most in-
opportune" from the USSR's view-
point.
Visit to Peiping
On 4 September Khrushchev
announced that he plans to go
to Peiping on 29 September, im-
mediately following his visit
to the United States, to attend
Communist China's 10th anniver-
sary,celebrations. The visit--
Khrushchev's second since head-
ing the Soviet delegation of the
1954 celebrations--will provide
an opportunity for a major pub-
lic display of intrabloc soli-
darity.
At the same time, one of
Khrushchev's main tasks will be
to allay signs of apprehensions
of Chinese Communist leaders
over the effect which his talks
in Washington might have on
their international objectives,
especially regarding Taiwan.
On 7 September a Soviet diplo-
mat in Paris stated that the
Chinese are "definitely unhappy"
over the Eisenhower-Khrushchev
exchange. Despite Peiping's
private misgivings, on 9 Sep-
tember Chou En-lai repeated
Communist China's official en-
dorsement of the meetings, but
this time omitted the call for
an "unremitting struggle" to
defeat the West which Foreign
Minister Chen Yi made on 15
August.
Khrushchev may also seek
to ease some points of ideolog-
ical differences, such as have
arisen over the communes, by
reaffirming his recent statement
that each bloc country engaged
in "building socialism" must
take into consideration its "na-
tional, cultural, and economic
peculiarities." Peiping is
likely to press, however, for
a strong endorsement of its in-
ternal program, some aspects
of which Khrushchev has criti-
cized on occasion.
Western European Views
President Eisenhower's trip
to Europe evidently confirmed
the British conviction that his
talks with Khrushchev will fur-
ther the prospects of peace, and
increased the belief in Paris
and Bonn that the exchange au-
gurs well for the protection of
their interests and for peace.
The West German press, unan-
imously approving the Presi-
dent's European. trip, has
stressed that his success in
strengthening the unity and de-
termination of the West will
enhance his authority when he
meets with Khrushchev.
A reliable opinion survey
taken in late August reports
that 91 percent of the West
Germans interviewed were aware
of the Eisenhower-Khrushchev
exchange, 76 percent feeling it
would be good, and 7 percent
bad. Most of those questioned
believed the President agreed
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CURRENT INTELLIGENCE WEEKLY SUMMARY
10 September 1959
to the exchange in the hope it
would relax East-West tensions
and maintain world peace. While
most thought that disarmament
would be the main topic cov-
ered, the largest number pre-
ferred that the President and
Khrushchev discuss German re-
unification. The poll also
gave-evidence that West German
hopes for reunification are
fading, however, as the number
of persons viewing the chances
for unity as "bad" or "very
bad" has increased from 52 per-
cent.in April 1959 to 61 per-
cent.
The French press has been
generally pleased with the re-
sults of the President's Euro-
pean trip and remains optimis-
tic regarding his exchange of
visits with Khrushchev as a
gesture toward prolonging peace.
Some papers,however, raise the
question whether anything basic
in the international picture
has really changed. Meanwhile
French official circles wel-
come the formation of the 10-
nation disarmament group as
permitting the resumption of
negotiations in a broad frame-
work--which France has consist-
ently preferred to discussions
limited to nuclear disarmament
or test bans.
President Eisenhower's
European trip strengthened the
British people's belief in his
sincerity in his search for
peace and their conviction
that he is going about it in
the right way. The American
Embassy in London observes
that his visit left Anglo-Amer-
ican relations in a rosy. glow
and unquestionably enhanced
British confidence in the
United States' leadership of
the free world. The President
is credited with the concilia-
tory tone of Adenauer's reply
to Khrushchev and broadcast
concerning Poland. Some doubt
has been expressed, however,
whether the results of the
visit-to France may not be "too
good to be true."
Following Secretary Her-
ter's statement before the North
Atlantic Council on 4 September,
unanimous support of the Amer-
ican position was tempered with
some warnings of the dangers of
giving the public the impres-
sion that international tension
had relaxed. While Belgian
Foreign Minister Wigny urged
expanding East-West exchanges,
including trade, Greek Foreign
Minister Averoff opined that
the risks of Khrushchev's visits
outweigh the hopes, and Turkish
Foreign Minister Zorlu similar-
ly advised that popular fears
of a Soviet-American detente
be kept in mind. Secretary
General Spaak expressed mem-
bers' confidence in the United
States but supported the
Greek and Turkish warnings.
SINO-INDIAN BORDER DISPUTE
The Sino-Indian border dig-
pute seems headed for the dip-
lomatic conference table, al
though localized clashes are
still possible. While reassert-
ing their territorial claims,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
10 September 1959
JAMMU MID KASIIMIR
(Star in dispute) )
Cp
Cam
in
Sol,
Camping
Ground
I m.. Khurnak Fort
Lake
CHIN Nrak
L ke
Spanegar Rudok
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,Limeking
61
vbansiriI_s` z
INDIA Mar,
MITES 30
Peiping and New Delhi apparently
agree on the desirability of
discussions.
Shillong'
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40 Location-of-clashes
-- Boundary shown on recent
Selected road
---Selected trail
10 SEPTEMBER 1959
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CURRENT INTELLIGENCE WEEKLY SUMMARY
10 September 1959
e ru as
frequently stressed the desir-
ability of resolving certain
border questions through diplo-
matic means and thus will en-
dorse Chou's suggestion for
"friendly negotiations." Chou's
claims to extensive border areas
long regarded as Indian will not
be acceptable to New Delhi,which
continues to declare that its
"internationally recognized"
frontier is not subject to ne-
gotiation--except for minor
modifications .
Nehru--heavily committed
to defend the McMahon line--
is also unlikely to agree to
Chou's demand for a withdrawal
from all the areas near the
line occupied since spring.
clashes could occur if the Chi-
nese troops continue to enforce
Peiping's claim that Longju is
in Tibet and the Indians then
attempt to expel them forcibly.
Following an earlier stiff
Chinese Communist diplomatic
note accusing India of "aggres-
sion," the Indian Government on
7 September publicized the full
scope of the Sino-Indian border
dispute by issuing a 122-page
White Paper documenting New
Delhi's case against Peiping.
The paper included the texts of
a series of Indian protests and
Chinese replies on questions of
disputed border claims, Tibetan
refugee activity, treatment of
Indian and Bhutanese nationals
in Tibet, and the recent border
incursions.
New Delhi also took steps
earlier in September to notify
the Soviet and Polish ambas-
sadors formally of its serious
concern over Chinese border
activity. The Indian foreign
secretary apparently informed
the bloc representatives that
if the incidents were to con-
tinue, New Delhi would be forced
to reappraise its policy of
nonalignment.
The Indian Communist party,
already hard hit by Peiping's
earlier action in Tibet,has in-
structed its secretary general
to explain personally to party
leaders in Moscow and Peiping
the even more serious dilemma
created by the Chinese incursions into
India. The USSR's desire to soft-
pedal the dispute was reflected
in a TASS statement on 9 September
which stressed Moscow's friendly
relations with both Peiping and New 25X1
Delhi and expressed hope that a
peaceful settlement would be
reached.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
10 September 1959
Widely scattered skirmishing
between Laotian Army forces and
Communist partisan elements con-
tinues in Sam Neua and Phong
Saly provinces. The town of
Sam Neua apparently remains
threatened by Communist forces
which crossed the Nam Ma River
on 30 August, although the Com-
munists do not appear to have
followed up their initial ad-
vantage. A Laotian Army patrol
was reported to have been at-
tacked recently on the edge of
the town's airfield. Almost
daily fighting has also been
reported at Muong
Poua, about 15 miles
northeast of Sam
Neua town.
The relative ab-
sence of contact be-
tween the opposing
forces in northeast-
ern Sam Neua Province
has led Laotian of-
ficials to speculate
that some of the Com-
munist forces have
been withdrawn to
North Vietnam. The
Laotian Army G-2 em-
phasizes, however,
that this is merely
a possibility which
remains unconfirmed.
Government sourc-
es claim the recap-
ture of Muong Son,in
Communist-infested
western Sam Neua
Province. The Lao-
tian Army's ability
to retain the post is
problematical. Gov-
ernment forces in the
Sam Teu district in
the southeastern part
of the province are
apparently under heavy
partisan pressure and
may be forced to attempt a
withdrawal.
Partisan forces in south-
eastern Phong Saly Province,
reportedly recently augmented
by fresh troops in about bat-
talion strength, have become
more active. They appear to
have occupied the government
post at Muong Poua.
Laotian Appeal
The advance contingent
of the UN Security Council fact-
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10 September 1959
finding subcommittee, created
as an alternative to the emer-
gency force Laos requested on
4 September, is due shortly to
arrive in Vientiane. It is
anticipated that the subcommit-
tee, composed of Argentina,
Japan, Italy, and Tunisia, may
eventually be expanded to in-
clude 15 men from each country.
Problems of terrain and weather
will seriously hamper their in-
vestigations. The group has
no authority to make recommenda-
tions but will merely report
its findings to the council "as
soon as possible."
(India would
take no further initiative on
the Laotian problem now that
the matter is in the hands of
the UN, al-
though In a has felt the In-
ternational Control Commission
(ICC) should be reconvened to
prevent the situation from
deteriorating into open con-
flict, it was now unlikely that
India would make any new move
for some time.
While the USSR has main-
tained a solid front with Pei-
ping and Hanoi, the remarks of
Soviet diplomats suggest that
Moscow is concerned that the
Laotian issue will have an ad-
verse effect on Premier Khru-
shchev's visit to the United
States. The Soviet delegate
to the United Nations, backed
by Soviet propaganda, has
charged that "certain circles
in the West" are using Laos to
"poisons" the international at-
mosphere on the eve of Khru-
shchev's arrival. Soviet Am-
bassador Malik on 7 September
remarked that the Laotian situa-
tion was not only dangerous but
also "very untimely just when
the program of high-level visits
is taking place and we are all
looking forward to a summit
meeting."
At the Security Council
meeting on 7 September, Soviet
delegate Sobolev challenged the
legality of the Western resolu-
tion, contending that the es-
tablishment of a council sub-
committee was equivalent to an
investigation of the Laotian
complaint and that the decision
was therefore subject to the
veto. Sobolev complained that
the creation of a subcommittee
would "subvert" the Geneva
agreements of 1954.
Soviet propaganda has dis-
missed the Laotian charge of
North Vietnamese aggression as
a "lie" and charged that the
move to bring the issue to the
United Nations was an American
maneuver to pave the way for
"open interference under the
UN flag." Moscow contends that
the actions of the Sananikone
government have provoked a
"civil war" and that now that
the government is unable to sup-
press the "democratic and pa-
triotic forces" in Laos, it has
fabricated a "tale of aggres-
sion by North Vietnam to open
the gates for Western inter-
vention in Laotian internal af-11
fairs.
Laos' UN appeal and sub-
sequent Security Council ac-
tion brought on a flurry of pro-
tests from Peiping and Hanoi.
The Soviet contention that the
Security Council action was
illegal was echoed in a North
Vietnamese Foreign Ministry
statement on 9 September which
was strongly supported in a
speech by Communist China's
foreign minister on the same
day. On 10 September, the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
10 September 1959
Peiping People's Daily published
a long commentary charging that
the United States was usurping
the name of the United Nations
"to engineer a new conspiracy
of interference in Laos." Nu-
merous Moscow commentaries and
news broadcasts reiterated the
Soviet position. Bloc state-
ments during the past week re-
newed at every opportunity de-
mands for the recall of the ICC
in Laos.
A possible new line in
North Vietnam's propaganda ap-
peared on 8 September when Hanoi
publicized a statement attrib-
uted to the Pathet Lao party,
the Neo Lao Hak Zat (NLHZ),
which asserted that the only
solution to the Laotian roblem
was negotiation between the
parties concerned--the royal
government and the Pathet Lao
forces. Heretofore, bloc prop-
aganda has proposed revival of
the ICC in Laos as the "only"'
solution_ to" the situation.
The new willingness to nego-
tiate on the part of the
NLHZ may reflect confidence
that the rebellion has 25X1
achieved sufficient success
to provide a basis for nego-
tiation.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
10 September 1959
Iraq
Qasim seemed on the point of
striking definitively against
them. In contrast to the
right-wing victory in elections
by the Iraqi lawyers' associa-
tion, Communists were elected
last week as presidents of the
journalists' and teachers' as-
sociations, after the respec-
tive executive committees had
agreed on "unity"-lists of can-
didates. The various Baghdad
newspapers, however, continue
to assault each other bitterly.
The continuing, effusive
demonstrations of Kurdish-Arab
unity are one symptom of under-
lying tensions; the government
;?resumably feels that these
demonstrations are necessary in
order to disguise or mitigate
the reality, which remains one
of widespread suspicion between
the two groups.
The Communists meanwhile
are maintaining the softer line
they adopted late in July, when
SECRET
The anti-UAR charges ap-
pearing in the Iraqi press and
radio set off a brief flurry
in UAR-Soviet relations last
week. On 5 September the UAR's
controlled press denounced So-
viet "interference" in the UAR's
internal affairs; the form of
the "interference" has been the
reproduction by Soviet bloc
propaganda media of material
originating in Iraq. The UAR
organs threatened to "expose"
the Soviet Union by republish-
ing Khrushchev's speech on
Stalin. The affair seems to
have been a one-shot operation,
rather than the beginning of a
continuing campaign, and is one
more symptom of Nasir's extreme
sensitivity to any form of prop-
aganda criticism.
In the general field of
UAR-Soviet relations, however,
the UAR minister of education
has stated that it' is now UAR
policy to reduce the number of
students from Egypt and Syria
attending Soviet bloc institu-
tions, and to place as many as
possible either in the West or
in UAR institutions with West-
ern instructors.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
10 September 1959
The Imam of Yemen, having
vented publicly and privately
his irritation over the unset-
tled conditions that prevailed
during his absence in Italy,
now appears to be in a calmer
frame of mind. Some changes in
administration have taken place,
and persons involved;in the out-
bursts of violence last May have
apparently been punished.
The Qadi Ahmad al-Siyaghi,
chairman of Yemen's represent-
ative council and perhaps the
most eminent individual to suf-
fer the Imam's wrath, fled tem-
porarily to Beihan in the Aden
Protectorate, but has since re-
turned and reportedly is again
in the good graces of the Imam.
Al-Siyaghi is said to have
feared the Imam's suspicion of
his close relationship with
Crown Prince Badr, whose rela-
tively modest attempts at re-
form proved anathema to the
Imam. A shifting of other of-
ficials, both civil and mili-
tary, is probably continuing.
Badr's own status is still
somewhat in doubt. Aside from
the administrative reform meas-
ures, which the Imam interpreted
as a tacit and unallowable
admission that something was
indeed wrong in Yemen, Badr.'s
seemingly weak methods of deal-
ing with tribal and military
dissidents obviously infuriated
his father. There is some evi-
dence also that Badr's reliance
on the Egyptian mission in Yemen
alarmed the xenophobic Imam. The
Imam,however, has taken no ac-
tion toward the Egyptians.
Badr, meanwhile, has prob-
ably been stripped of all real
authority, although the Imam
seems still to consider the
crown prince capable of being
reshaped in his own image and
-thus serving as his eventual
successor.
Jordan
The general security situa-
tion in Jordan has improved,and,
the position of King Husayn's
government appears superficial-
ly firmer now than it has seemed
for some time. During a mid-Au-
gust tour of West Jordan, where
the Palestine refugee population
is concentrated and where oppo-
sition to the Amman monarchy is
normally considerably stronger
than elsewhere in the country,
Husayn and Prime Minister Ma-
jalli were given warmer recep-
tions than observers had ex-
pected.
While part of this improve-
ment results from Majalli's ef-
forts to conciliate old oppo-
nents of the government, most of
it stems from the recent rap-
prochement between Jordan and
the UAR. Earlier orders from
Cairo telling Jordanian politi-
cal refugees in Syria to sus-
pend activity reportedly have
been reinforced, along with a
suggestion that some of the
emigrds might return to Jordan
and reconcile themselves to
Husayn,
Opposition political
groups within Jordan, notably
the Jordanian Baath party and
the Communists, have been weak-
ened organizationally by the
long period, of repression under
former Prime Minister Rifai,and
their morale has suffered from
the. setbacks which fellow Commu-
nists and Baathists have re-
ceived at the hands of Nasir in
neighboring Syria. The domestic
opposition is merely muffled,
however, and the government's
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CURRENT INTELLIGENCE WEEKLY SUMMARY
10 September 1959
reliance on British and Ameri-
can assistance and advice re-
mains basically unpopular with
most groups.
Moreover, the factionalism
and personal rivalries which
afflict the Jordanian Army and
the civil government seem un-
abated, and the current trial
of the former army chief of
staff, one of Jordan's ablest
officers, on charges of treason
could create new-feuds as well
as dim the prestige of the gov- 25X1
ernment by having. army and pal-
ace dirty linen-exposed in the-
courtroom.
BRITISH SEEK WAYS TO BOLSTER CENTO
London believes the Shah
of Iran requires more sup-
port through the Central Treaty
Organization (CENTO) --the for-
mer Baghdad Pact--and is there-
fore advocating various measures
to give the alliance an appear-
ance of greater vitality with-
out imposing any drain on the
British exchequer.
Since Iraq's withdrawal,
British officials have viewed
the pact essentially in terms
of is usefulness in strength-
ening Iran. The British con-
sider Iran "of direct and great"
importance to themselves, cit-
ing it as a major non-Arab
source of oil and as an impor-
tant link in Britain's air com-
munications with the Persian
Gulf and the Far East. Foreign
Office Deputy Under Secretary
Sir Roger Stevens, a former am-
bassador to Tehran, has expressed
London's general pessimism re-
garding Iran and fear that the
country might go neutralist if
the Shah does not receive the
material and moral support he
deems necessary.
London does not appear
ready to increase its own modest
material support to CENTO. The
British do not plan to increase
their military aid--mainly for
the building of radar installa-
tions--beyond the present $1,-
400,000 annual figure. Similar-
ly, London plans to continue
its present level of economic
support--including the princi-
pal backing for the pact's nu-
clear center--at about $2,200,-
000 a year. The British assert
that, in any event, greater
economic aid probably would not
have the desired political ef-
fect.
Looking toward the CENTO
ministerial council meeting in
Washington in October, Britain
is backing other measures de-
signed to impress the Shah.
While opposed to establishing
a command structure with the
Shah as commander in chief, Lon-
don might favor setting up a
CENTO air command.
Britain also urges CENTO
contingency military planning
covering USSR-incited aggres-
sion from Iraq and Afghanistan.
The British believe that there
is little risk of such aggres-
sion in the next few years, but
consider that Iranian and Paki-
stani military forces would be
useful only for "local" wars,
and that in any event such
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CURRENT INTELLIGENCE WEEKLY SUMMARY
10 September 1959
MIDDLE EAST MEMBERS OF FREE WORLD SECURITY ORGANIZATIONS
10 SEPTEMBER 1959 L~ { cJ
planning might reassure the
Shah. The British think it
might be useful to establish a
NATO-like annual review proce-
dure to emphasize balance in
economic and military capabili-
ties.
The Foreign Office is also
considering whether any addi-
tional bilateral British-Iranian
assurances of mutual support,
along the lines of the US-
Iranian bilaterial agreement of
March 1959, might not prove
beneficial.
The Sino-Soviet bloc,
which since 1956 has extended
about $30,000,000 in military
aid and more than
$40,000,000
in economic assi
stance to
Yemen,
is persisting in
its
efforts
to implement the
various
projects
called for under
the
aid programs, despite a general
lack of cooperation on the part
of the Yemeni Government. While
offers of bloc aid originally
were favorably received and in
some instances even solicited
by Yemen, bloc attempts to carry
out the projects have been
hampered by traditional Yemeni
apathy and xenophobia.~
Almost 800 bloc "economic
technicians," about 700 of them
Chinese coolies and engineers
Czech technicians are work-
ing on a number of projects in
Yemen, including an airfield
at Sana, Soviet specialists
are progressing with the port
development project at Ras al
Kathib, and the Chinese are
continuing to work on the new
road from Al Hudaydah to Sana.
Communist China presented a
gift of 10,000 tons of wheat
this past summer, and bloc
economic missions reportedly
offered this spring to estab-
lish industrial enterprises,
including a textile factory
in Sana and a cement plant.
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10 September 1959
In addition, Moscow may
be attempting to revitalize its
military aid program in Yemen.
There about 75 bloc military
specialists in the country at-
tempting to train Yemeni person-
nel in the use of bloc
arms, which for the
most part have thus
far gone unused. As
yet no Yemeni mili-
tary personnel have
been sent to the bloc
for training.
The exact terms
of repayment for bloc
economic aid are not
known, but it is be-
lieved that Yemen is
not required to make
any payments in hard
currency. Bloc mili-
tary aid--which ap-
parently carries a
two-thirds discount--
is to be repaid in
Yemeni agricultural
exports, but thus far
there has been lit-
tle evidence to in-
dicate that the Yemeni
Government has made
any serious attempt
to fulfill its com-
mitments.
to economic and military aid,
as well as to encourage anti-
Western tendencies. Further-
more, bloc officials presumably
hope to exercise some influence
on the internal Yemeni situa-
Major Bloc Projects in Yemen
Ras al 1Cathib
SOVIET PORT /
SAUDI ARABIA
CHINESE COMMUNIST
ROAD PROJECT
Section being Y E MEN
Worked on
, Sana
L % $9 - CZECH
~jil~ .-~ AIRFIFI D PRO1FCTS.
DEVELOPMENT
PROJECT
Bloc leaders, despite the
difficulties involved, persist
in attempting to carry out their
programs in Yemen because of
the prestige value they attach
tion when the Imam dies, as well
as to establish a position 25X1
from which the bloc can later
exploit nationalistic movements
112 Aden and Oman.
(Prepared by ORR)
PEIPING ATTACKS ITS DOMESTIC AND SOVIET CRITICS
Mao Tse-tung and his top
lieutenants have been strident-
ly defending their past and
present domestic policies a-
gainst criticism from several
quarters, including the Soviet
Communist party. They have
warned their comrades to stop
criticizing and get to work,
and they have in effect told
Moscow that Peiping will con-
tinue to follow its own "road
to socialism." Mao apparently
intends to underline his point
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CURRENT INTELLIGENCE WEEKLY SUMMARY
10 September 1959
by punishing some party lead-
ers below the politburo level.
A series of editorials in
the party press has reflected
the shortfall in the "leap for-
ward" in 1958, the downward re-
vision of 1959 goals, and the
latest modification of the com-
mune program, all announced in
late August. The positions
being defended in these pro-
nouncements are primarily those
of Mao and the "party-machine"
leaders, including Mao's heir
apparent, Liu Shao-chi, and the
party secretary general, Teng
Hsiao-ping. The articles are
intended to conceal the extent
of the dominant group's previous
miscalculations, to find a
scapegoat, for them, and to re-
animate the party cadres for a
new production effort.
The line of defense taken
by the dominant leaders has
been to insist on the "complete
correctness" of their programs
as conceived, as well as to in-
sist that they themselves took
the initiative in repairing the
"errors and shortcomings" in
implementing their programs.
Mistakes are said to have de-
rived principally from the un-
precedented scope of the pro-
grams.
The editorials take the
offensive at several points,
primarily against "right op-
portunists" within the Chinese
party--and, by implication,
within the Soviet Communist
party. "Rightist opportunists,"
it is repeatedly said, have
failed to understand the poten-
tial of mass movements like the
"leap" and the commune program,
have not done their best, have
minimized accomplishments and
exaggerated problems, have dis-
couraged initiative and enthu-
siasm and encouraged lethargy
and pessimism, and indeed "have
lost faith in the whole under-
taking."
It is plausibly implied in
some editorials that the right-
ists in China have been buttress-
ing their positions with cita-
tions of Soviet experience and
of Soviet attitudes toward the
radical Chinese programs. Mos-
cow had seemed embarrassed by
the preposterous claims made
for the "leap" and had given
them little publicity; the So-
viet party was clearly hostile
to the ideological claims made
for the commune program; and
Soviet spokesman, including
Khrushchev,had publicly and
privately criticized the com-
mune concept. The arguments at-
tributed in Peiping's comment
to opponents of the communes
are similar to those made in
articles by Soviet theorists,
One editorial emphasized
that the Chinese people have
been making remarkable progress
under "their own party" and
"their own leader." The Chi-
nese party leadership--under
the "great leader" Mao--is pre-
sented as a true Marxist-Lenin-
ist leadership which exploits
to the fullest the potential of
mass undertakings, in "direct
contrast" to an "opportunist"
type of leadership.
Further in this vein, the
Chinese leadership, far from
being guilty of "fanaticism','
as hostile observers assert,
is said to know well that there
are not "ready patterns for
everything." Soviet experience
is available for "reference and
study" and is "important... but"
the Chinese party in "building
socialism" is faced with spe-
cial conditions--a backward
agrarian economy and a huge
population. The problem of in-
tegrating Marxist-Leninist'doc-
trine with Chinese conditions
has been "solved" by Mao--e.g.,
the "leap" and the commune
program.
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W
CURRENT INTE LL:tGENCE WEEKLY SUMMARY
10 September 1959
Peiping's threats against
the "right opportunists" in the
Chinese party have been ambiva-
lent. Some statements offer
the rightists the hope of re-
demption. Other formulations
treat them as already lost--as
having joined "enemy elements"
and as having engaged in "crim-
inal activity."
Both lines seem to be ac-
curate pointers. That is, most
of the "right opportunists," by
seizing the opportunity to move
to the left, will probably be
saved, Others, however, have
probably already been marked
for punishment, and more will
fall as the party leaders con-
tinue to exhort the party to
"go all out."
The chances are that the
party leadership will begin to
select its scapegoats at the
provincial level, as in 1957-
58, when several provincial
leaders were purged for a simi-
lar lack of confidence in and
enthusiasm for the party's basic
programs. If action at this
level does not stop the criti-
cism and restore morale--as it
probably will not--it is likely
that higher level figures will
be toppled.
Mao apparently does not
intend to reach into the polit-
buro, Those politburo members
who have been to the right of
Mao and the party-machine fig-
ures.in recent years--senior
administrators and economic
specialists--nevertheless agreed
with the dominant leaders that a
period of rapid progress was
ahead, apparently viewed the
"leap" and the commune program
as worthwhile experiments, and
seemed to be trying their best
to implement the programs. More-
over, although they may continue
to have reservations about Mao's
programs, they probably will
,again cooperate in Mao's ef-
fort
Despite Peiping's professed
satisfaction with the economic
situation at the end of June
1959, production figures for the
first half of the year indicate
that the "continued leap for-
ward" planned for 1959 has not
succeeded. The regime's deci-
sion to reduce targets set forth
in the original 1959 national
economic plan probably results
largely from this failure, as
well as from a realization that
there is little prospect for a
noticeably faster rate of prog-
ress in the second half of the
year.
The total value of indus-
trial production at the end of
June was only 44 percent of the
year's goal, whereas 47-48 per-
cent is ordinarily fulfilled
by the end of June. Only 19
of the 33 principal industrial
targets for 1959 were fulfilled
by 40 percent or better. The
14 major industrial products
for which fulfillment was 30
percent or less included steel,
cement, sulfuric acid, power
equipment, locomotives, and
rolling stock. The products
in which the poorest showing
was made were those most im-
portant to development in the
building, transport, power,
chemical, and consumer-goods
industries.
Faced with industrial pro-
duction levels which in no way
approached earlier plans for
the "continued leap forward"
in 1959, with overworked and
badly maintained equipment, and
with shortages of raw materials
which preclude greater increases
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CURRENT INTELLIGENCE WEEKLY SUMMARY
10 September 1959
in the second half of the year,
Peiping had to reduce annual
targets to a level more nearly
approximating feasible rates
of development.
The performance by agricul-
ture was even less satisfactory.
Whereas the summer grain harvest
normally accounts for 30 percent
of total annual output, the 1959
output of winter wheat, winter
coarse grains, and early rice
was only 13 percent of the orig-
inal 1959 target. Target revi-
sions, based on greatly reduced
figures for 1958 grain produc-
tion, bring the summer crop to
27 percent of total grain out-
put for the year. Regardless of
statistical juggling, the 1959
summer harvest constitutes only
a 2-percent increase over last
year's officially claimed sum-
mer harvest. With adverse
weather conditions dimming pros-
pects for any sizable increase
in the fall harvest, even the
much-reduced grain target ap-
pears to be out of reach.
of 1959 makes the levels reached
during the first half of the
year noticeably more presentable.
It will also remove the burden
of impossible targets and en-
able the regime, on the occasion
COMMUNIST CHINAS PRODUCTION
IN FIRST HALF OF 1959
PERCENTAGE OF YEAR'S GOAL 25X1
0 so
TOTAL VALUE OF 30
INDUSTRIAL OUTPUT BILLION DOLLARS
STEEL
COAL
ELECTRICITY
MACHINE TOOLS
COTTON YARN
9.5
MILLION TONS
5.3
MILLION TONS
174
MILLION TONS
18.4
BILLION KWH
45,000
UNITS
4,147,000
BALES
SUGAR 780,000
TONS
WHEAT, COARSE GRAINS, 69.5
AND EARLY RICE MILLION TONS
of its 10th anniversary on
1 October, to place its
achievements in indimstrial
The downward revision of
production targets for the end
and agricultural pr,.cluc-
tion in a better LLght,
COMMUNIST CHINA PREPARES TO ENTER INTERNATIONAL MARITIME TRADE
Except for occasional voy-
ages down the South China coast
to North Vietnam, Communist Chi-
na still uses foreign-flag mer-
chant ships to carry its over-
seas trade. Renewed purchases
of ocean-going vessels from the
West, however, plus a stepped-up
program of domestic shipbuilding
and training of merchant marine
crews, suggest that Peiping is
preparing to enter international
maritime trade on its own.
Since the beginning of 1958,
27 vessels suitable for operation
in overseas trade have been add-
ed to the Chinese merchant
marine. Sixteen of these were
purchased from Western countries,
increasing total merchant ton-
nage by 100,000 tons, or more
than 25 percent. In addition,
six major vessels were purchased
from bloc countries last year
and another five were produced
in Chinese shipyards. These
acquisitions increase by 37 per-
cent the total tonnage of the
Chinese Communist merchant fleet,
which now stands at about 375,000
gross tons and includes 113
vessels. At present, all
these vessels are engaged
in trade along the Chi-
na coast.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
10 September 1959
Sometime last year, another
Chinese merchant shipping agency
was created--the Ocean Transport
Bureau. This organization has
been developing a maritime train-
ing program and promoting do-
mestic construction of ocean-
going vessels, apparently in
furtherance of plans to develop
a merchant fleet capable of en-
gaging in international trade.
Organizations already exist for
all other phases of foreign
shipping operations.
In conjunction with the es-
tablishment of the Ocean Trans-
port Bureau, there has been in-
creased recruiting of Chinese
for service in the merchant
fleet. For years small numbers
of Chinese have been gaining
experience aboard Polish ocean-
going vessels. Plans to enter
the Chinese Communist merchant
fleet in international trade
may thus be contingent on the
availability of sufficient
trained crews.
Peiping has an ambitious
domestic construction program
calling for five large vessels
to be finished by the end of
1961. One of these--the 12,000-
gross-ton "Leap Forward"--should
be completed in the near future,
and two others sometime in 1960.
Launched at Dairen last Novem-
ber, the "Leap Forward" is the
first vessel of this size to be
built at a Chinese shipyard.
It should be prepared to go to
sea within the next six months
and quite possibly will be the 25X1
Chinese vessel nominated to
make the initial venture into
international trade.
(Prepared by ORR)
The formation on 30 August
of a Pan-Somali Nationalist
Movement (PNM) by nationalist
leaders representing ethnic
Somali inhabitants of five po-
litical entities in the Horn of
Africa--the Italian Trust Ter-
ritory of Somalia, the British
and French Somaliland enclaves,
northern Kenya, and Ethiopia's
eastern province of Ogaden--
will produce a sharp reaction
from Addis Ababa and probably
will contribute to a further
deterioration in Ethiopian-
Somali relations.
The PNM was formulated in
Mogadiscio by a preparatory coin-
mittee headed by Mahmoud Harbi,
former prime minister of French
Somaliland who was removed by
Paris. The movement's announced
-goals are to achieve unity and
independence for all Somali
territories "by peaceful and
legal means," to abolish tri-
balism, and to establish and
maintain close relations with
other African peoples and with
the Moslem world.
Somalia's governing party
--the Somali Youth League (SYL)
--in an attempt to re-establish
its dwindling prestige, recently
withdrew its support for continu-
ing the territory's trusteeship
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CURRENT INTELLIGENCE WEEKLY SUMMARY
10 September 1959
status until December 1960 in
favor of independence "as soon
as possible"--a popular issue
among politically conscious
Somalis. As a follow-up to this
action the Somali Government
now is supporting the PNM, ap-
parently hoping to further en-
hance its popularity and at the
same time to restrain the move-
ment's more extreme leaders.
The nationalist conferees
were permitted use of the leg-
islative assembly building in
Mogadiscio for the preparatory
committee sessions, which lead-
ing members of the government--
including the prime minister--
attended. The controlled press
in Mogadiscio devoted extensive
coverage to the nationalists'
activities, and Mogadiscio has
been selected as the site for a
350,000 Somalis live.
Addis Ababa, which
has long sought to
establish hegemony
over the Somali ter-
ritories, has warned
it'will resort to
arms to protect its
Ogaden Province, and
it recently activated
a frontier guard to
patrol the Somali bor-
der area. Ethiopia
demonstrated its ex-
treme sensitivity
over the prospect of
even limited Somali
unity last February
when Addis Ababa's
controlled radio and
press bitterly at-
tacked the United
States for support-
ing London's decision
to permit a future
association between
the British protec-
torate and Somalia.
While Somalia
remains friendly to-
ward the United States,
Ethiopia's relations
with the West have become
further complicated by the
apparent softening in Addis
Ababa's attitude toward the
Soviet bloc. Meanwhile, So-
malia's expected request to
the UN for earlier independ-
ence and its support for
the PNM may soon lead to
pressure on the United States
from both Mogadiscio and
Addis Ababa for support of
their respective interests.
SECRET
planned pan-Somali conference
in late 1960, as well as for the
location of the movement's
headquarters.
The PNM and Mogadiscio's
support for the movement are
certain to be denounced in neigh-
boring Ethiopia, where some
SOMALI TRIBAL PATTERN
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CURRENT INTELLIGENCE WEEKLY SUMMARY
10 September 1959
BELGIAN CONGO PROBLEMS
The Belgian Congo's grow-
ing economic and political
problems have become a matter
of increasing concern to Brus-
sels. On 3 September liberal-
minded Minister of the Congo
Maurice van Hemelrijck resigned
because the government refused
his plan for speedier political
reform in the Congo. His res-
ignation may arouse an adverse
reaction among Congolese polit-
ical groups who regard him as
their spokesman in Brussels,
and it could have important re-
percussions in Belgium by giv-
ing the opposition Socialists
an opportunity to attack the
coalition Catholic-Liberal gov-
ernment.
Since the race riot in
Leopoldville last January,Bel-
gium has been confronted with
serious problems in the Congo
arising both from economic dif-
ficulties and from increasing
African political agitation.
The mineral-rich colony has been
hard hit by the low world prices
of primary commodities, and for
the first time Brussels will
have to give the Congo budget-
ary assistance. Investors' con-
fidence in Congo stocks has been
so shaken by the political sit-
uation that the value of those
stocks has dropped over _25 per-
cent in the Brussels financial
market.
Brussels' announcement last
January of a program of politi-
cal reform for the Congo--which
envisaged the early establish-
ment of an autonomous state
with increasing legislative and
executive powers and eventual
independence--has led to the
formation of a spate of Congo-
lese political parties often
based on tribal or regional
loyalties. Many of these par-
ties have become critical of
Belgium's gradual program and
have demanded a speed-up in the
Congo's preparation for inde-
pendence. Several nationalist
leaders have been arrested, and
the acting governor general re-
cently described the political
situation in the Congo as "very
grave."
In the forefront of the po-
litical agitation is Joseph
Kasavubu, the African leader of
the lower Congo valley area.
He is opposing Belgium's policy
of a unified Congo state by
seeking to create a regional
tribal state with its own execu-
tive. He has called for elec-
tions in late fall to select
its officers, demonstrating his
considerable hold over his tri-?
bal group by initiating a suc-
cessful regional boycott of
recent municipal council elec-
tions. These were designed as
the first step in Brussels' pro-
gram for the creation of.Congo-
lese consultative institutions.
Faced with the deteriorat-
ing situation, Van Hemelrijck
in late August asked the Bel-
gian cabinet to speed up the
pace of reform by establishing
a Congolese government and leg-
islative council in March 1960.
The cabinet refused to accept
his program--particularly the
grant of legislative powers--
and Van Hemelrijck submitted
his resignation. The cabinet
adopted a compromise plan, and
a Congo expert, Auguste de Sch-
ryver, was appointed the new
minister. Although he is a sup-
porter of Van Hemelrijck, De
Schryver is considered more mod-
erate in his actions than his
predecessor and may be able to
deal more successfully with the
diverse political elements in
Brussels.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
10 September 1959
De Gaulle has announced he portedly a "nonpolitical" offi
will make a public statement of cer.
his policy toward Algeria on
16 September, the day after the
UN General Assembly convenes.
Algerian rebel officials,
in reacting to press reports
that De Gaulle will outline a
program providing autonomy for
Algeria, have indicated annoy-
ance that such a program might
be "imposed from above," i.e.,
implemented by France. Algerian
representatives at the Arab
League conference in Casablanca
state flatly that there can be
no cease-fire in Algeria without
prior negotiations between the
French and the insurgent National
Liberation Front (FLN), The
rebels probably feel that their
capability for military and ter-
rorist activity gives them a
veto over any unilaterally im-
posed French program in Algeria,
and that eventually the French
must negotiate with them.
The military in Algeria are
reportedly reassured by De
Gaulle's continued commitment to
pacification. They continue to
act as a brake on any policy
statement which implies accept-
ance of independence for Al-
geria, and any proposal of a
liberal solution in De Gaulle's
statement will probably be care-
fully blurred to retain the
army's confidence. France's
ranking soldier, Marshal Al-
phonse Juin, warned publicly on
5 September that there must be
no "appeasement of the US" in
any new plan for an Algerian
solution. Meanwhile, however,
De Gaulle and the cabinet on 9
September replaced Army Chief
of Staff Henri Zeller, who has
been identified in the press
with the "hard line" on Algeria,
by General Andre Demetz, re-
Two Algerians, self-ap-
pointed intermediaries between
Paris and the rebels, have re-
portedly discussed with rebel
leaders a statement of principles
the intermediaries hope would be
mutually acceptable and which
might be issued prior to any
cease-fire talks.
In the proposed statement
the two parties would agree that
the Algerian people have a right
to self-determination; that a
military solution is impossible;
and that following a cease-fire
Algeria would be administered by
an "interim administration" ac-
ceptable to both sides which
would prepare for voting on
Algeria's future status. The
unlikelihood of French accept-
ance of any such plan, however,
is underscored by Premier Debre's
vigorous repudiation on 8 Septem-
ber of any political negotiations
and particularly of any "Algerian
state."
The rebels have long fav-
ored a negotiated settlement of
the war, and individual leaders
have indicated that self-deter-
mnination might be an acceptable
alternative to independence.
The rebels, however, will almost
certainly demand some status
for the FLN, despite De Gaulle's
emphasis that it does not repre-
sent the Algerian people.
French pressure on rebel
military forces within Algeria
continues, and rebel strength,
now is confined largely to areas
in northeastern Algeria where
the French are concentrating
their major military effort.
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CURRENT INTELLIGENCE WEEKLY SUMMARy
10 September 1959
FOUR SATELLITES PROMISE BIG HOUSING PROGRAMS
Czechoslovakia, East
Germany, Hungary, and Poland,
possibly taking their cue from
the very high priority being
given housing in the USSR, re-
cently have announced long-term
housing plans vastly more am-
bitious than any in the past.
If fulfilled, they will do much
to reduce critical housing short-
ages arising from wartime damage
and years of neglect. Bulgaria
and Rumania may soon follow
suit. Underlying the plans is
a desire to reduce the embarrass-
ing contrast of satellite
housing to that in Western
Europe, to lessen popular dis-
satisfaction, and to improve
worker 3erfDrmance in key in-
dustrial areas.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
10 September 1959
Success of these plans
will depend on a willingness
greatly to expand investments
in housing despite sharp com-
petition for scarce investment
LIVING SPACE PER CAPITA IN USSR AND
FOUR EUROPEAN SATELLITES,1959
(SQUARE FEET)
MINIMUM HEALTH STANDARD
ADOPTED IN USSR HOUSING CODE
975~FT. (9 SQMELERS)
90
deterioration of the housing
situation seems inevitable; dur-
ing the next few years. Hungary's
plan would not eliminate the
housing shortage even by 1975,
as official propaganda alleges,
but appreciable headway will
probably have been made by then.
Under its plan, Poland should
stabilize its housing situation
by the early 1960s and then
gradually diminish its huge short-
age during the late 1960s and
early 1970s.
The satellites will rely
heavily on expansion of housing
construction by industrial enter-
prises and tenant cooperatives.
This locally sponsored scheme
for construction, still relatively
untried, has the dual advantage
of reducing government expendi-
tures for housing and of in-
creasing the amount of property
in the "socialist sector" as
resources from heavy industry
and other sectors of the econ-
omy which in the past have en-
joyed much higher priorities.
The first tests of the sincerity
of the four satellites
in this will come in
East Germany and Po-
land, which plan sub-
stantially higher
rates of housing con-
struction during
1959-60 than they have
ever achieved.
East Germany's
claim that its hous-
ing shortage will be
eliminated by 1965
is greatly exagger-
ated, but the prob-
lem could be solved
HOUSING CONSTRUCTION IN FOUR EUROPEAN SATELLITES
O PAST ACHIEVEMENTS C LONG-TERM PLANS
THOUSANDS OF DWELLINGS; YEARLY AVERAGE IN PARENTHESES
by 1970. Headway will depend
to a large extent on the future
course of emigration to the
West. Fulfillment of the Czech-
oslovak 12-year program should
greatly reduce the housing prob-
lem there.
In Hungary and Poland, de-
spite the new programs, further
1950-58 1959-75 1950-58 1959-65
HUNGARY POLAND
opposed to that privately owned.
At the same time, blame for
unfilled plans can be avoided
by the regimes. As under past
housing plans, priority is as-
signed key industrial areas,
where improvements in housing
will most directly aid economic
growth. (Pre- 25X1
pared by ORR)
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CURRENT INTELLIGENCE WEEKLY SUMMARY
10 September 1959
The immediate threat of
revolutionary action in Argen-
tina was dispelled on 4 Septem-
ber when President Frondizi
acceded to army demands for
changes in top command posts.
Frondizi's action, however,
strengthened that army faction
seeking greater influence on
executive policy, especially
regarding the Peronistas and
Communists. Threats of force
from dissident army elements,
intended mainly to oust the war
secretary, apparently alarmed
high navy and air force officers,
who feared civil war.
The difficulties were pre-
cipitated by the army commander
in chief, Major General Carlos
Toranzo Montero, who ordered
changes in several key army
commands without clearing them
with War Secretary Anaya. His
dismissal by Anaya on 2 Septem-
ber prompted strong enough pro-
tests to indicate that Toranzo
Montero had majority support
among key army commands. On 3
September, therefore, he es-
tablished a "rebel command" in
a Buenos Aires army school to
demand the ouster of Anaya but
not of Frondizi, a personal
friend. Important outlying
garrisons offered support.
A truce was negotiated on
4 September, Toranzo Montero
was reinstated in his post,
Anaya resigned, and Major Gen-
eral Rodolfo Larcher, a proms'--
nent intermediary in the nego-
tiations, was named war sec-
retary. Larcher, retired in
1957, has an antinationalist
anti-Peronista background which
should please the Toranzo Mon-
tero partisans, who considered
Anaya too conciliatory toward
the nationalists and Peronistas.
Changes in other posts, es-
pecially those held by several
generals who did not support
Toranzo Montero, are also under
way. Minister of Economy Alvaro
Alsogaray, however, has denied
reports that he too might resign
in view of his earlier strong
criticism of Toranzo Montero's
action as damaging to Argentina's
prestige and jeopardizing the
success of the US-backed stabi-
lization program.
Air Force Secretary Abrahin,
who had assured Frondizi of
air force support if needed to
defend the President against
rebel action, has subsequently
offered his resignation, which
has thus far been refused. The
navy remained aloof
Frondizi's capitulation to
strong army pressure damages
his prestige and increases his
vulnerability to future pres-
sure, especially since it fol-
lows similar disputes with the
army and navy in June and
July. The incident is also
a further blow to discipline
within the armed forces, whose
support is especially neces-
sary in view of popular: unrest
over economic difficulties.
Cuba and Venezuela have
apparently turned to economic
warfare in their continuing
effort to oust Dominican dic-
tator Trujillo.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
10 September 1959
On 24 August, Venezuelan
labor unions joined Cuban labor
in a communications and trans-
portation boycott of the Do-
minican Republic. The Venezue-
lan and Cuban governments clear-
ly sympathize with the boycott,
which may have been instigated
by the Cuban Government. The
Cuban press reported on 2 Sep-
tember that travelers with pass-
ports visaed by the Dominican
Government would be barred from
Cuba,
In Haiti the weak Duvalier
government is anxiously await-
ing the arrival of the Inter-
American Peace Committee, which
was strengthened by the Ameri-
can foreign ministers' confer-
ence.in Santiago last month in
the hope that it would become
an instrument in ameliorating
Caribbean tensions. Although
the small rebel group that
landed in Haiti from Cuba on
13 August has been liquidated,
the Haitian regime fears fur-
ther involvement in the Cuban-
Dominican struggle. Cuban of-
ficials, including Castro him-
self, condemned the Duvalier
regime as "immoral" and pro-
Trujillo following the depar-
ture on 30 August of the entire
Cuban diplomatic mission from
Haiti,
Within Cuba, although there
appears to be no well-organized
anti-Castro-resistance of appre-
ciable'strength at this time,,
sporadic acts of violence by
isolated. antizoyernment groups
Font inu.e
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SECRET
CURRENT INTELLIGENCE WEEKLY 9MR Y
10 September 1959
COMMUNAL PROBLEMS ENDANGER STABILITY IN MALAYA
The national elections in
Malaya on 19 August reflected
a continuing trend toward polar-
ization of voting along racial
lines which, if not halted, may
eventually destroy political
stability in this two-year-old
democracy. The ruling Alliance
party, a moderate pro-Western
coalition of three communal or-
ganizations, now is the only
party which seriously advocates
and attempts to implement its
policy of interracial political
cooperation--a policy essential
to stability in Malaya, where
slightly less than half the
people are Malay., 37 percent
are Chinese, and 11 percent are
Indian.
A decline in the popular-
ity of the Alliance was reflected
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CURRENT INTELLIGENCE WEEKLY SUMMARY
10 September 1959
in
the August
elections. While
the
Alliance
won 73 of 104 seats
in
the House
of Representatives,
it
polled only 51.4 percent of
the
vote--a marked decline from
80
percent in 1955 and 55.5 per-
cent in state elections earlier
this year. At the same time,
the vote of the narrow, exclu-
sively Malay Pan-Malayan Islamic
party (PMIP) jumped from 4 per-
cent to more than 21 percent;
the combined vote of several
Chinese-dominated parties rose
from 6 percent to nearly 20 per-
cent of the total popular vote.
The Chinese are mainly urban
workers and businessmen. The
educated Malays are primarily
employed in the armed forces
and civil service, while the
masses are engaged chiefly in
primitive agriculture.
These basic differences are
further exacerbated by the Malays'
resentment of the wealth of the
Chinese and their economic dom-
ination of the country. For
their part, the Chinese resent
the traditional special priv-
ileges of the Malays in govern-
ment employment and
Federation of Malaya,
Kuala .....gams
71 KELANTTAN`
1 , TRENGGANU
{
AHANG
{ ~ E~vS~ICAN
The Communal Problem
Virtually all political
issues in Malaya arise from or
are affected by the racial com-
plexion of the country. Al-
though the two major races--
Chinese and Malay--lived in
relative harmony for genera-
tions under British rule, there
has been virtually no mixture.
They lack common nationalistic
feelings, language, religion,
or historical background, and
the livelihood of the two races
is largely derived from differ-
ent forms of economic activity.
elected 51 Malays to
the House of Repre-
sentatives. The junior
partner is the faction-
ridden Malayan Chinese
Association (MCA),
which elected 19. The
third component, the
Malayan Indian Congress
(MIC), is a politically
insignificant group
that elected three
House members mainly because of
Alliance prestige.
While the Alliance remains
the only party in Malaya with a
relatively effective nationwide
organization, its strength is
being eroded by the growing chal-
lenge from the opposition parties
and by dissension both within
and between its racial compo-
nents. Its dilemma is to achieve
compromises which will hold the
multiracial party together with-
out detracting from its appeal
to either one of the fundamen-
tally antagonistic racial groups
from which it must draw its sup-
port.
SECRET
landownership as well
as Malay efforts, es-
pecially in the schools,
to "Malayanize" the
Chinese population.
The Alliance
The Alliance
coalition is dominated
by the United Malay
National Organization
(UMNO), which, under
A14 1 the Alliance banner,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
10 September 1959
This conflict of interest
reached a climax in mid-July,
when a complete break between
the MCA and UMNO was narrowly
averted. While personal ambi-
tions and jealousy played a
part in the dispute, the racial
issue was basic. The MCA de-
manded 40 Chinese candidates
under the Alliance banner in
order to forestall a two-thirds
Malay majority in the House
which many Chinese leaders
feared would lead to unilat-
eral discriminatory amendment
of the constitution by the
Malays.
The MCA also demanded the
use of Chinese in school exam-
inations as an alternate to the
official Malay and English lan-
guages. Leaders of the UMNO
refused to accede to the Chi-
nese demands, which they be-
lieved would be politically
disastrous for the UMNO. The
latter had already been hurt
by surprising PMIP gains in
elections in two rural, Malay-
dominated east coast states. At
the time, PMIP campaigners were
stressing the theme that the
UMNO had already "sold out" to
the Chinese.
The UMNO-MCA split has
only been temporarily healed,
at the cost of numerous defec-
tions from the MCA, and further
serious disputes are likely to
arise. It is, in fact, doubt-
ful that effective and lasting
political cooperation between
racial groups in Malaya can
ever be achieved. The limited
cohesion the Alliance does en-
joy is at least partly engen-
dered by fear among the better
informed that a breakup of the
Alliance would lead to wide-
spread racial conflict.
Prime Minister Abdul Rah-
man has been the'key figure in
holding the Alliance together.
He is the only political figure
in Malaya who enjoys widespread
popularity among all racial
groups. His leadership appears
essential if any real progress
is to be made toward the govern-
ment's long-range goal of sub-
stituting a Malayan society for
the present heterogeneous Malay,
Chinese, and Indian societies.
Opposition Parties
To date there appears to
be no satisfactory substitute
for the Alliance, as all opposi-
tion parties have tended to be
irresponsible on racial matters.
If an effective "loyal" opposi-
tion were to evolve, it would
probably come from the left and
might develop around the Social-
ist Front, now a loose and weak
coalition of the Chinese-dom-
inated Labor party and the
Malay-dominated People's party.
A multiracial Socialist. party
in Malaya faces many obstacles,
however, the biggest being that,
in general, a poor Malay feels
he has much more in common with
a ..rich. Malay than he does with
a poor Chinese. Similarly the
Chinese feel closer to fellow
members of their own nationality
than to their Malay economic
counterparts.
Economic Development
If Malaya is eventually
to solve its communal problems,
the relatively good economic
conditions and the government's
development programs will play
an important role. A large,
well-conceived rubber-replanting
program begun in 1953 will re-
sult in a major expansion of
rubber production beginning next
year as the newhigh-yield trees
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CURRENT INTELLIGENCE WEEKLY SUMMARY
10 September 1959
come into production. At the same
time, the government is press-
ing forward with other develop-
ment programs and is optimistic
about ' its,.> schemes . to ::. at-
tract foreign investments.
If. world .economic conditions
and these economic policies
permit a steady increase in
Malaya's standard of living, the
Rahman government will enhance
its prospects for reversing the
trend toward increased communal-25X1
ism and for satisfying the aspi-
rations of both Malavs and Chi-
nese.
AFGHANISTAN'S ECONOMIC DEVELOPMENT
Afghanistan is making
steady but slow progress in
modernizing its economy, al-
though lack of trained person-
nel and inadequate financial
resources have forced Kabul to
curtail its original over-ambi-
tious plans. The program now
being carried out is generally
well conceived, with major em-
phasis on transportation and
lesser emphasis on agriculture,
power, and industry. When the
projects now scheduled or un-
der way are completed, Afghan-
istan will have a more bal-
anced economy, and its major
economic handicap--inadequate
transportation facilities--
should be largely overcome.
Reliance on foreign aid in fi-
nancing the plan will impose a
.heavy burden of debt repayment
on the country.
Background
Afghanistan's first at-
tempt at economic development
was conceived and executed in
the 1930s by the Banke Mille, a
private development bank. The
bank drew up a modest program
with emphasis on light indus-
tries, particularly cotton tex-
tiles. While the government
was directly involved in parts
of the program, its major role
was to provide the bulk of the
necessary, foreign exchange.
This program made moderate
progress during the thirties,
but World War II subsequently
made it impossible to obtain
the needed imports of capital
goods.
Afghanistan emerged from
World War II with relatively
large foreign-exchange hold-
ings because of the lack of
wartime imports and the good
prices it had received for
karakul, its principal export.
Abdul Majid Zaboli--who was
both head of the Banke Mille
and minister of national economy
--drafted a five-year economic plan
in the belief that the large
foreign exchange holdings could
speed up development. Within a
few years, however, it became
evident that the plan was be-
yond Afghanistan's financial
ability and that large-scale
foreign assistance was neces-
sary.
Even if Afghanistan had
been able to secure all the
necessary foreign aid it de-
sired instead of only a small
part, the success of the plan
would have required the con-
tinued close cooperation of the
Banke Mille and the government,
a cooperation that did not last.
While the Bank Mille was respon-
sible for most of the country's
economic development, it had
made very large profits and had
acquired a near--monopolistic
control over important parts of
the economy. Thus it became a
target for government attacks.
Abdul Majid Zaboli lost his
post as minister of national
economy in 1951, and relations
between the bank and the govern-
ment deteriorated. Since most
Afghans possessing business or
technical abilities were directly
or indirectly associated with
the bank, economic development,
except for a few projects, made
little progress.
Daud's Regime
When Prince Daud became
prime minister in 1953, he was
determined to speed up the
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10 September 1959
FOREIGN AID TO AFGHANISTAN (MILLION DOLLARS)
1951
1952
1953
1954
1955
1956
1957
1958
1959
UNITED STATES
21.0
0.3
2.0
20.9
2.0
18.1
20.5
33.9
17.2
WEST GERMANY
3.1*
UNITED NATIONS
0.2
0.6
0.4
0.4
0.2
1.5
1.1
1.1
SOVIET UNION
3.7
2.1
100.0
15.0
86.6
CZECHOSLOVAKIA
5.0
MILITARY AID
SOVIET UNION
CZECHOSLOVAKIA
TOTAL 1
21.2
0.9
2.4
28.1
9.3
144.6
44.0
35.8
103.8
*EXACT YEAR UNKNOWN; APPROXIMATELY 1954
economic development of the
country. Both Daud and his
brother Prince Naim--the dep-
uty prime minister and foreign
minister--were convinced that' '
their people would become in-
creasingly impatient over the
lack of economic development in
Afghanistan in view of the
progress being made in neigh-
boring countries. They be-
lieved that if the government
did not bring about at least
limited progress, the royal
family would eventually be
overthrown.
The first basic problem
Daud had to resolve in order
to speed economic development
was the question of the gov-
ernment's relAtionship to the
Banke Mille. Daud.could either
return to the earlier reliance
on the bank as the moving force
for the country's development
or take for the government the
role the bank had played. Daud
chose the latter course, stead-
ily placing increased controls
on the private sector of the
economy, particularly the Banke
Mille.
The second problem Daud
faced was that of securing
large-scale foreign aid. Where-
as in the past Afghanistan had
attempted to keep foreign powers
out of the country to the ex-
tent possible, Daud now sought
to induce them to play a role
in Afghan affairs by. sponsoring
and financing economic develop-
ment projects. He hoped that
FREE
WORLD
ECONOMIC
AID
144.5
SOVIET
BLOC
ECONOMIC
AID
213.2
MILITARY
AID
32.4
TOTAL AID
135.9 UNITED STATES
3.1 WEST GERMANY
~ 5.5 UNITED NATIONS
207.4 SOVIET UNION
5. 8 CZECHOSLOVAKIA
both the West and the Soviet
bloc would aid Afghanistan,
thereby enabling the country
to continue its policy of neu-
trality in a new and more
profitable form.
Afghanistan had secured a
$21,000,000 loan from the United
States Export-Import Bank in
1951 for development of the
Helmand Valley. In 1954 Afghan-
istan accepted Soviet and Czech
offers of $10,800,000 in aid to
construct a bakery, cement fac-
tory, and fruit cannery, pave
roads in Kabul, and undertake
several smaller projects.
Five-Year Plan
In 1954 the government
also began to draft its own
five-year plan, but little ef-
fort was devoted to the task
until the announcement of the
$100,000,000 Soviet loan in
December 1955. This announce-
ment, made during the visit of
Khrushchev and Bulganin, re-
sulted in a flurry of activity,
and a Five-Year Plan (1956-61)
was prepared for use in discus-
sion with the Soviet economic
mission which visited Kabul in
March 1956 to allocate the loan
to specific projects.
Total cost of the plan was
estimated at approximately
$325,000,000 exclusive of debt
repayments on past loans for
economic development. Total
foreign exchange requirements of
the plan were about $180,000,000,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
10 September 1959
of which about $165,000,000 was
to come from foreign aid. Agri-
culture was to absorb 46 percent
of the government's direct ex-
penditures, transportation and
communications .8 percent,
social services. 13.. percent,
and mining and miscellaneous
8 percent..
Although Afghanistan has
received more foreign aid than
originally called for, it
is clear, it. cannot
complete the plan by
taxes in 1956, but by late 1957
it was apparent that this move
would not result in adequate
revenues. There was a reliance
on deficit financing and a sub-
stantial credit expansion be-
tween 1954 and 1957, which re-
sulted in substantial inflation
and pressure on the balance of
payments.
Kabul apparently concluded
that it could not safely finance
1961. The major prob, -AFGHANISTAN
lem is the shortage
of Afghan administra-
tive and technical
personnel. This has
led the government
to attempt to reach
a modus vivendi with
both the Banke Mille
and the private sector
during the past 18
months, although so
far this has meant
merely a reduction of
hostility rather than
real cooperation. In
addition, the United
States has not im-
plemented its proj-
ects as rapidly as
Kabul expected, and
Afghan-Soviet dis-
agreements over the
cost of certain proj-
ects have delayed
their construction.
Although the $100,-
000,000 Soviet loan
was extended over
three years ago, only
about three fourths
of it has been obli-
gated for specific
projects.
J Ni
Far
l
I RAN
2ahedan
us
Airfield L
Port
Road paving
Salang Pass Road I Area of oil exPloiation
5j Metalworking factory Oil storage depot
Another important factor
behind the delays has been the
inability of the Afghan Govern-
ment to raise the necessary lo-
cal currency for the plan. While
this is a major problem facing
all underdeveloped countries, it
is particularly acute in Afghan-
istan, where the taxation and
banking systems are rudimentary.
The government increased some
USSR
Sslang Pass
the local currency costs of the
plan in this manner, and a more
conservative financial course
was adopted late in 1956. This
reduced inflationary pressures
and was the major factor behind
an increase of gold and foreign
exchange reserves from $54,421,000
in March 1955 to $67,819,000 in
March 1958. Since then the re-
serves have been maintained at
about the 1958 level.
SECRET
?ANI
KASHMIR
Smcus in n iprim e)
CHINA
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CURRENT INTELLIGENCE WEEKLY.SUMMARY
10 September 1959
When it became apparent
that the plan could not be car-
ried out on schedule, a number
of projects--chiefly for irriga-
tion--were postponed. This de-
cision, coupled with the recent
acceptance of a'Soviet offer to
improve the road between Herat
and Kandahar, placed top pri-
ority on transportation, with
agriculture receiving reduced
emphasis. Despite these delays
in implementing the plan, local
currency expenditures by Kabul
for economic development in
1957-58 were as much as 25 per-
cent over 1956-57.
Progress to Date
The economy has been
strengthened in recent years,
but major improvements are still
in the future. New port facil-
ities have been completed on the
Amu Darya., Both the United
States and the USSR have started
construction of an improved road
system. Ariana Airline has been
improved, and the new Kandahar
international airport will soon
be open. The country's largest
power plant, a cement plant,
and the Jungalot industrial
complex in Kabul are in opera-
tion. The Helmand Valley proj-
ect has made only limited prog-
ress, however, and most agricul-
tural progress has taken place
north of the Hindu Kush moun-
tain ranges.
Production of food grains
appears to have increased sub-
stantially between 1948-52 and
1955-56, although poor weather
has hampered production in re-
cent years. Cotton production
more than doubled between 1948-
52 and 1955-56, and the output
of products such as cotton tex-
tiles, matches, and soap and of
electric power has increased
significantly. While construc-
tion of the Gulbahar textile
mill has fallen behind schedule,
this project when completed
within the next few years should
at least triple Afghanistan's
output of cotton textiles.
A major failure, however,
has been Kabul's inability to
expand coal production more
rapidly. Despite an increase
from about 5,000 tons in 1949-
50 to over 25,000 tons in 1956-
57, production will have to be
increased more rapidly than now
appears likely if adequate fuel
is to be available for the ex-
panded requirements of the new
industrial projects now under
construction.
Outlook for Future Progress
Recognizing the necessity
for reducing its short-run'am-
bitions, Kabul has nevertheless
been working on several major
reforms which should result in
increased economic growth in
the future. The government is
introducing a new bugetary and
accounting system which should
greatly improve administrative
practice and provide much-im-
proved instruments for carrying
out economic policies. In addi-
tion, a high-level committee has
been appointed to recommend a
comprehensive reform of the tax-
ation system. Such reform
should result in substantially
increased government revenue.
While some of this increased
revenue is likely to be used
for nondevelopment and military
expenditures--particularly if
Kabul continuesto expand its
armed forces--there should be
more funds available for eco-
nomic development as well.
When the projects remain-
ing in the plan are completed,
Afghanistan will have a
much
better
balanced economy.
Agri-
culture
and industry are
likely
to make
modest progress,
the
education system will be
im-
proved, and--most important of
all--for the first time there
will be an adequate road and air
transportation system. There
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CURRENT INTELLIGENCE WEEKLY SUMMARY
10 September 1959
should also be a modest rise
in the standard of living, par-
ticularly of the urban popula-
tion.
Foreign Economic Relations
Afghanistan has received
at least $357,700,000 in for-
eign economic aid since 1951,
of which about $300,000,000 has
been extended for use during
the five-year-plan period.
Afghan leaders initially were
inclined to accept any loans
offered, but by late 1957 af-
ter having accepted $213,085,000
in loans--including $32,391,000
for arms from Czechoslovakia
and the USSR--they became con-
cerned over their repayment
ability and announced a policy
of accepting no new foreign
loans. Since then the addi-
tional foreign aid Afghanistan
has received from the United
States and the USSR has all
been in the form of grants.
Afghan annual repayment
of foreign-.loans amounts to
$7,000,000-$9,000,000 at pres-
ent and will reach a peak of
about $13,000,000 in 1964, af-
ter which it will decline to
about,$9,000,000 annually. These
obligations are a
heavy burden on a
country whose total
exports are about
$50,000,000 annually,
and its ability to
meet its obligations
depends on the extent
to which the develop-
ment, program enables
Kabul to increase ex-
ports or decrease im-
ports.
Foreign Trade
While the inade-
quacy of trade statis-
tics prevents any pre-
cise analysis of the
country's foreign
trade, it is possible
to discern its broad
trends. Tradition-
ally, Afghanistan ex-
ported karakul to the
West--chiefly the
AFGHANISTAN: IMPORTS & EXPORTS, 1956-1957
FUR
SKINS
COTTON
TEXTILES
United States--in return for
manufactured goods, and ex-
ported cotton and fruits to
India in return for cotton
textiles and tea.
During recent years, how-
ever, there has been a major
reorientation in the direction
of Afghan trade. In part this
resulted from Kabul's diffi-
culty in retaining its tradi-
tional markets for certain com-
modities, particularly in India
and Pakistan, but the Soviet
drive to increase its economic
relations with Afghanistan
through the offer of especially
attractive terms has also been
an important factor. Afghan
exports to the USSR increased
from 17 percent of total ex-
ports in 1951-52 to 28 percent
in 1956-57, and Afghan imports
from the USSR rose from 16 to
36 percent of total imports
during the same period. While
no detailed figures are avail-
able after 1956-57, there are
indications that about 40 per-
cent of Afghanistan's total
foreign trade now is with the
USSR, and 5 percent is with
other bloc countries, chiefly
Czechoslovakia.
DRIED
FRUIT
FRESH
FRUIT
TOTAL IMPORTS 53.8
(111111 FROM USSR 19.3)
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CURRENT INTELLIGENCE WEEKLY SUMMARY
10 September 1959
Afghanistan's foreign
trade has also increased sharply
in recent years. Total exports
rose by over 100 percent in
value between 1951-52 and 1956-
57, and during the same period
imports grew by over 150 per-
cent, largely because of Kabul's
ability to finance the plan by
foreign aid.
The completion of the pres-
ently scheduled development
projects--probably by about
1964--should enable Afghanistan
to repay its foreign debt obli-
gations. The new road system
will make possible a major ex-
pansion in the country's al-
ready large fruit exports. When
the textile expansion program
is completed, Kabul will be able
to reduce sharply its textile
imports, which now are its most
expensive import. There is
also a reasonable chance that
the Soviet-sponsored petroleum
exploration program in the north-
ern part of the country will be
commercially successful and
further improve the balance of
trade. In any case, Afghanistan
may be able to obtain a post-
ponement of payment obligations
if it has difficulty with the
present repayment schedule.
Afghanistan's heavy reli-
ance on trade with the bloc, how-
ever, makes it vulnerable to So-
viet pressure tactics. If the
USSR were to halt its trade, the
impact on the domestic economy
would be serious. While the
subsistence nature of most of
the economy and Kabul's modest
foreign exchange reserves would
temporarily cushion the impact
of Soviet pressures, economic
conditions, especially in urban
areas, would probably deteriorate
fairly rapidly, and the develop-
ment program would have to be
sharply curtailed.
The completion of the devel-
opment projects--particularly
the road system--would, however,
make Afghanistan less vulnerable
to Soviet economic pressure than
at present. The US-sponsored
Afghan-Pakistani transit devel-
opment project would be of con-
siderable value should Kabul
try to reorient trade away from
the bloc, and the new roads
within the country would enable
commodities to move to the Pak-
istani border more rapidly and
more cheaply.
In addition, Afghanistan's
import needs are relatively small
and readily available in the
West, although Kabul probably
would require some additional
Western aid until it found new
export markets. The problem
of finding Western markets for
certain of the country's ex-
ports would be more difficult,
but these exports, because of
their small quantity, could
probably be absorbed without
dislocation of the present pat-
tern of free world trade. The
prices Afghanistan would re-
ceive, however, would probably
be less advantageous than those
paid by the USSR. While the
lower prices available in West-
ern markets would result in
some loss to Afghanistan, this
loss would be more than offset
by the cessation of debt repay-
ments to the USSR which prob-
ably would follow any Soviet
trade embargo
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