CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A002500110001-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 45
• Document Creation Date: December 16, 2016
• Document Release Date: February 25, 2005
• Sequence Number: 1
• Publication Date: December 30, 1959
• Content Type: SUMMARY

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CONFIDENTIAL
S~2~T
(CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
CONFIDENTIAL
StuZCT
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COPY NO. ''
OCI N0.5885/59
30 December 1959
Document No.
No Change In Class. p
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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 U E IIAL
30 December 1959
T H E W E E K IN B R I E F
PART I
OF IMMEDIATE INTEREST
EAST-WEST RELATIONS . . . . . . . . . . . . . . . . . . . Page 1
Khrushchev's cordial and prompt acceptance on 25
December of the Western proposal for a four-power summit
meeting in Paris carefully refrained from injecting any
controversial issues. In an effort to avoid any impres-
sion that Khrushchev's suggestion of two alternate dates
for the meeting was intended as a form of pressure on the
Western governments, a Soviet Foreign` Ministry spokesman
explained that the 27 April date proposed by the West
would conflict with Moscow's May Day celebration, and
Moscow immediately accepted the subsequent Western sug-
gestion of 16 May. Khrushchev's specific reference in
his 25 December letter to a four-power meeting suggests
that he does not intend to press for full participation
by the two German states. This formula, however, would
not preclude subsequent Soviet proposals for some form of
German participation in discussions of the German and
Berlin questions.
IRAQI-IRANIAN RELATIONS . . . . . . . . . . . . . . . . . Page 4
.Although mutual recriminations and minor shows of
force continue to. embitter relations between Iraq and
Iran, spokesmen for both governments have taken steps to
calm the irritations aroused because of the Shatt al Arab
dispute. Iran has cautioned its military leaders against
taking any action that could be regarded as provocative.
An attempt may soon be made to settle the issue by direct
negotiations or by submitting the case to an international
tribunal. There remains, however, a danger of local mili-
tary incidents which could further arouse nationalistic
THE POLITICAL CRISIS IN LAOS . . . . . . . . . . . . . . . Page 6
The political conflict between Premier Phoui and the
young reformist Committee for Defense of National Inter-
ests (CDNI) continues unresolved. While the likelihood of
a coup attempt against Phoui is receding, the premier re-
mains in a difficult position. He will probably have to
accede to the position of the King and the CDNI that the
National Assembly no longer exists and be forced to organ-
ize a transitional government including the CDNI.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 December 1959
NOTES AND COMMENTS
SINO-INDONESIAN RELATIONS . . . . . . . . . . . . . . . . Page 1
A period of negotiation may be pending in the Sino-
Indonesian disputes arising from Djakarta's decree banning
alien retail trade in rural areas. Indonesian Foreign
Minister Subandrio suggested last week that Chinese For-
eign Minister Chen Yi visit Indonesia "if circumstances
permit." Subsequently, Chen Yi proposed to Subandrio the
prompt exchange of ratification instruments of the 1955
Sino-Indonesian citizenship treaty and the establishment
of a joint committee in Djakarta to implement the treaty.
Indonesia is reported planning further forced evacuations
of Chinese in rural areas, and this could provoke renewed
friction.
ELECTION PROSPECTS IN INDIA'S KERALA STATE . . . . . . . . Page 1
The working agreements achieved by the non-Communist
parties in India's Kerala State seem to give them a con-
siderable preponderance of strength over the Communists,
as campaigning for the 1 February state elections gets
under way. The "United Democratic Front" formed by the
anti-Communist parties should deny the Communists their
usual opportunity to win a disproportionate number of
assembly seats by splitting the non-Communist vote. How-
ever, communal antagonisms and personal rivalries among
the non-Communist forces could still narrow their elec-
toral margin and almost certainly would complicate efforts
to form an effective coalition government following the
elections. F_ I
AFGHANISTAN PREPARES FOR SECOND FIVE-YEAR PLAN . . . . . . Page 2
The Afghan Government, apparently recognizing that
its development programs have suffered from haphazard
planning, expects to employ about 60 foreign advisers from
the Soviet bloc and the free world to strengthen the Min-
istry of Planning as it prepares the Second Five-Year Plan
(1961-1966). The government probably will try to expand
its control over the nation's economy, neglecting or sup-
pressing private enterprise. The USSR can be expected to
cooperate fully with Afghanistan's planning efforts in
order to increase its influence there.
SOVIET PARTY MEETING ACCOMPLISHES LITTLE . . . . . . . . . Page 4
The Soviet party central committee, which met in Mos-
cow from 22 to 26 December to consider agricultural issues,
announced few results in the way of decision-making, even
though it had been scheduled long in advance and various
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 December 1959
PART II (continued)
agricultural problems require solution. The major speech
by Khrushchev caustically criticized presidium member
Nikolay. Belyayev's poor management of the Kazakhstan har-
vest and barely concealed his disappointment with this
year's agricultural performance in general. He advanced
some proposals for increasing output but did not come up
with any major innovations; a go-slow policy toward form-
ing collective farm unions and urbanizing the countryside
was advocated. According to one report, the committee
held a special closed session on 26 December, and rumors
were current in Moscow that important developments in
Sino-Soviet relations were being "explained."
NEW SOVIET ARMORED DIVISION . . . . . . . . . . . . . . . Page 5
A new type of armored division designated the "heavy
tank shock division" is believed to have been organized in
the Soviet Army. With some 6,500 personnel, the division
includes 210 heavy tanks and 93 assault guns, as well as
armored reconnaissance vehicles and antiaircraft weapons.
Among its various possible missions would be supporting
attacks by standard tank divisions, counterattacking enemy
forces which might reach the Soviet rear area, and
rapid crossing of areas contaminated by radioactivity.
THE BULGARIAN ECONOMY IN 1959 . . . . . . . . . . . . . . Page 7
The Bulgarian economy made substantial progress in
1959, while falling short of the impracticable "leap for-
ward" goals proclaimed by the party. A party announcement,
which compared the year's achievements favorably to origi-
nal targets under the 1958-1962 plan, indicates that the
increase in national income was 10 to 15 percent; the
value of agricultural production rose 26 percent; unemploy-
ment was sharply reduced; and industrial output almost
reached the 1959 "leap" goal. While the "leap forward"
slogan appears to have been shelved, the announcement com-
mitted Bulgaria to further rapid economic development in
1960.
BLOC ACTIVITY IN THE WORLD RUBBER MARKET . . . . . . . . . Page 8
The Soviet Union continues to buy rubber in Southeast
Asia at the increased rate noted early last year, but be-
cause of reduced Chinese Communist activity in Asian rub-
ber markets, total bloc rubber purchases in 1959 apparent-
ly will not reach 1958's record level of 450,000 tons.
The USSR has made heavy purchases from Malaya, replacing
some of the rubber normally bought through China and
through West European middlemen. Bloc buying continues to
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 December 1959
PART II (continued)
be switched from country to country in response to the
prevailing political climate and the needs of the bloc's
economic program in underdeveloped countries.
TUNISIA . . . . . . . . . . . . . . . . . . . . . . . . . Page 9
A more conciliatory tone in the speech of Tunisian
President Bourguiba on 23 December may indicate a modera-
tion in the pace of his government's program to sequester
foreign-owned properties, and thus a more propitious atmos-
phere for forthcoming negotiations of outstanding Tunisian-
French problems. Bourguiba apparently was impressed by the
tactics of the newly arrived French ambassador, who stated
that Paris now wanted to reduce the size of the French
colony in Tunisia. A French official in Tunis, however,
attributes the "new" Tunisian approach to the Eisenhower-
Murphy conversations with Bourguiba.
POLITICAL TRENDS IN THE BELGIAN CONGO . . . . . . . . . . Page 10
Several leading African nationalist groups in the Bel-
gian Congo have joined in a demand that Belgium establish
a Congolese government with the prerogatives of an indepen-
dent state following legislative elections anticipated in
March. Such a demand may force Brussels to accelerate
further its four-year program for the Congo's independence
despite growing political instability and tribal disorders.
CARIBBEAN TENSIONS CONTINUE . . . . . . . . . . . . . . . Page 11
The Castro regime is stimulating class antagonisms
in Cuba and is attempting to strengthen its domestic posi-
tion by repeatedly warning the public of the danger of
imminent invasions by counterrevolutionaries. Cuba has
given moral support, and in some instances material aid,
to opposition groups in Nicaragua, Guatemala, Panama, and
the Dominican Republic and to strikers in Costa Rica.
DEVELOPMENTS IN BRITISH GUIANA . . . . . . . . . . . . . . Page 12
Cheddi Jagan, Communist leader of the government of
partially self-governing British Guiana, is seeking closer
economic relations between the colony and the Soviet bloc
in the form of a Soviet loan and Hungarian aid in building
a glass plant. Constitutional talks in London in February
will probably bring greater autonomy and an increase in
Jagan's power, even though London is determined to retain
some control. Jagan in general has been cooperating with
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 December 1959
PART II (continued)
London, but a breakdown in the talks or an impasse over
Soviet aid could cause him to demand early elections to
help consolidate his political predominance.
ANTI-SEMITIC ACTIVITY IN WEST GERMANY . . . . . . . . . . Page 14
The recent defacing of a synagogue and an anti-Nazi
memorial in Cologne by two members of the neo-Nazi German
Reich party is the latest in a series of minor outbreaks
of Nazi-like activity in West Germany. Although the party
immediately expelled the two accused men and dissolved its
branch in Cologne, the incidents may be used as an excuse
to ban the party in all of the Federal Republic or in in-
dividual states.
PATTERNS AND PERSPECTIVES
COMMUNIST BLOC ECONOMIC ACTIVITY IN LATIN AMERICA . . . . Page
The Soviet bloc since early 1959 has been including
the major Latin American countries in its long-range pro-
gram for improving economic relations with underdeveloped
countries. The bloc effort in the past had centered
largely on exploitation of targets of opportunity, but
there now are indications that a long-term effort is
under way to take greater advantage of economic and polit-
ical instability in Latin America. Recent activities in-
clude strategically timed sugar purchases from Cuba;
Mikoyan's visit to Mexico to open the Soviet exhibition,
which also is to be shown in Havana; the conclusion of a
Soviet-Brazilian three-year trade pact; and a proposal
for a more attractive oil-wool exchange with Uruguay.
BUSINESS ADAPTATION TO THE EUROPEAN COMMON MARKET . . . . Page 6
Even in advance of anticipated major changes in the
volume and pattern of intro-European trade, the European
Common Market is having a profound impact on Europe's
economy. The bigger community enterprises are actively
preparing for participation in a larger market, there is
a strong trend toward rationalization and concentration
of industry, and foreign investments have increased sharp-
ly. While some of these developments will cause difficul-
ties--the cartel problem is particularly pressing--Euro-
pean industry appears to have acquired a vested interest
in the Common Market's success.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
PART III (continued)
IRAQ'S POLITICAL PARTIES . . . . . . . . . . . . . . . . . Page 10
Iraqi partisan politics, banned since the 1958 revo-
lution,are scheduled to resume openly after 6 January as
a part of the preparations for election of a new National
Assembly. A year and a half of semiclandestine political
operation and agitation has left the Communist party in
the strongest position in terms. of organization and disci-
pline. The non-Communist left-wing National Democratic
party is developing strength, however, among the peasants
in the countryside. The ultimate role of the army, which
can be the most important element of the Iraqi political
situation, is still uncertain, and all non-Communist par-
ties seem likely to concentrate on securing military sup-
port as well as on breaking the Communists' near-monopoly
of public information media. If partisan strife becomes
severe, more may be heard of a nonparty "movement" headed
by Prime Minister Qasim himself.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 December 1959
OF IMMEDIATE INTEREST
Khrushchev's cordial and
prompt acceptance on 25 Decem-
ber of the Western proposal for
a four-power summit meeting in
Paris carefully refrained from
injecting any controversial
issues. In an effort to avoid
any impression that Khrushchev's
suggestion of two ,alternate
dates for the meeting was in-
tended as a form of pressure
on the Western governments, a
Soviet Foreign Ministry spokes-
man explained that the 27 April
date proposed by the West would
conflict with Moscow's May Day
celebration, and Khrushchev in
a letter on 30 December im-
mediately accepted the sub-
sequent Western suggestion of
16 May.
Khrushchev's offer of two
alternate dates for the meeting
--either 21 April or 4 May--and
the prompt reply to the West-
ern letters of 29 December
were probably intended as
further demonstrations of So-
viet flexibility in accommodat-
ing Western views. In an ef-
fort to underline this posi-
tion, Soviet propaganda media
have dismissed procedural mat-
ters, such as the time and
place, as relatively insignifi-
cant, emphasizing that the
alacrity with which the USSR
responded reflects the "great
importance" it attaches to the
fact that the summit prepara-
tions have entered the "final
and decisive stage."
In his 25 December reply
to the three Western leaders'
letters of 21 December, Khru-
shchev expressed "profound sat-
isfaction" that they had found
it desirable to discuss "major
international problems" at sum-
mit meetings which "should be
held from time to time in con-
tries participating in such con-
ferences." Khrushchev's char-
acterization of the Western of-
fer as "confirming" a readiness
to take part in a four-power
meeting at the highest level
implied that the Western move
was merely a response to a So-
viet initiative. He also re-
iterated the standard Soviet
position that only this type of
meeting can "effectively" solve
those international problems
which are "ripe".for solution.
Khrushchev's specific
reference in his 25 December
letter to a "four-power" meet-
ing suggests that he does not
intend to press for full par-
ticipation by the two German
states. His formula, however,
would not preclude subsequent
Soviet proposals for some form
of German participation in dis-
cussions of the German and Ber-
lin questions.
Continuing East German
claims to some form of par-
ticipation, most recently reit-
erated by the East German dep-
uty foreign minister on 23
December, suggest that Moscow
may intend to take up this
question in future diplomatic
exchanges or at the meeting.
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In commenting on the is-
sues involved in an East-West
meeting, the Soviet press has
underlined the Soviet view
that Khrushchev's plan for
universal disarmament must be
given serious consideration at
the conference and that the
problem of West Berlin's status
cannot be subordinated to un-
related problems such as Euro-
pean security, partial disarma-
ment, and German unification.
Soviet propaganda media
have used press speculation
that the West hopes to avoid
reaching specific solutions at
the summit to launch an attack
on Western efforts to continue
the arms race and delay deal-
ing with the USSR's disarmament
proposals. Moscow's intention
to use the summit conference
as a platform for expounding
this plan was clearly evident
in a Pravda article which la-
beled d sarmament a "top sub-
ject," with the implication
that "only statesmen invested
with full powers" could de-
cide : on such pressing prob-
lems.
Soviet criticism of the
alleged plan of the Western
powers to link any discussion
of Berlin to the question of
German unity probably reflects
Moscow's estimate that the West
can be quickly brought to a dis-
cussion of an interim Berlin so-
lution separate from German uni-
fication. Moscow charged that
attempts to revive the thorough-
ly "discredited" Western package
proposal, introduced at the Ge-
neva foreign ministers' con-
ference on 14 May, were mere
tactical moves to placate Chan-
cellor Adenauer and extract
concessions from the USSR,
since the Western leaders no
longer believe that a separate
discussion of Berlin can be
avoided.
Characterizing this alleged
Western plan as a "step back-
ward," the Soviet press rejected
such maneuvers on the grounds
that the USSR did not plan to
attend a summit meeting for pur-
poses of trading. It was fur-
ther claimed that some Western
circles were ignoring the posi-
tive results already achieved
at the Geneva conference.
Moscow also carried over
its efforts to appear accommo-
dating to Western views in its
28 December aide-memoire accept-
ing a Western proposal to con-
vene the ten-power disarmament
committee in Geneva on 15 March.
Recalling its earlier exchange
of notes with the United States,
the Soviet reply repeated the
willingness of bloc members to
meet at the "earliest possible
date in 1960," while noting
that since the Western powers
were not prepared for an early
meeting, the date of 15 March
or "another time near this
date" would be acceptable.
The USSR probably hopes
that its expression of immediate
readiness for disarmament nego-
tiations, coupled with a flexi-
ble position in adjusting to
Western desires, will convey
the impression that the West is
delaying the talks because of
its "difficult" position in
seeking to counter Khrushchev's
proposals for comprehensive dis-
armament.
french !~ore ign Minister
Couve de Murville, in a foreign
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CURRENT INTELLIGENCE WEEKLY SUMMARY
policy statement before the
National Assembly on 28 Decem-
ber, said that a summit meet-
ing "can bring only limited
agreement," but that it would
be justified if some "practi-
cal" agreements were reached
on disarmament questions and
"normalization" of East-West
relations. The foreign min-
ister indicated that one of
the French conditions for a
summit meeting was being ful-
filled by stating that "nothing
has disturbed the international
atmosphere in the past few
months." He also indicated
France's agenda priorities by
stressing the importance of
disarmament to the French Gov-
ernment, although he added that
"it may be possible to reach
some agreement on the principle
of our rights."
Couve de Murville's state-
ment on NATO, including France's
belief that NATO and US par-
ticipation in the defense of
Europe were "as necessary as
before,"-were designed to calm
France's allies and French par-
liamentary critics of De Gaulle's
policies toward the Atlantic al-
liance. His public remarks that
France must participate in glob-
al strategy decisions, includ-
ing the decision to use nuclear
weapons, appear designed at
least in part for Soviet con-
sumption, perhaps to indicate
that France is still working to
exert a moderating influence on
the "Anglo-Saxons."
The British press has ex-
pressed a general relief that
a date for summit is being set-
tled, although most papers agree
that a "nibble" at some of the
political problems is all that
can be hoped for in the talks.
Prime Minister Macmillan is
credited for the idea of a
series of summit meetings.
British newspapers are mainly
concerned, however, at the
lack of agreement among the
Western allies. The liberal
Manchester Guardian contends
that the emptiness of the Paris
meetings is becoming more and
more apparent, and the Con-
servative press deplores the
fact that President Eisenhower
was not able to mend the fund-
amental breach with De Gaulle.
Despite a degree of reas-
surance as a result of the West-
ern summit meeting in Paris,
there is concern in West Ger-
many over reports of softness
in the Western position in re-
gard to Berlin. A newspaper
close to Chancellor Adenauer
has indicated that in view of
the difficulties which may be
anticipated within the Western
four-power working group pre-
paring for the summit, Adenauer
may decide to visit Washington
during next spring's discus-
sions.
The German position on
Berlin, as enunciated by fed-
eral press chief Eckardt, is
that the Western powers should
reserve complete freedom of ac-
tion during the summit meeting,
and that there is no legal or
diplomatic obligation for them
to return to "compromise" posi-
tions taken last July. Eckardt
warned that any Allied troop
withdrawal from 'Berlin would
make the Western position in
the city untenable.
Nuclear Test Problem
Pravda's immediate attack,
published within a few hours
after the 29 December American
announcement reserving the right
to resume nuclear tests after
the expiration of its moratorium
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 December 1959
on 31 December, suggests that
Moscow will counter the move
with a campaign to place the
West on the defensive by creat-
ing the impression that the
United States is seeking a pre-
text to resume tests. The
Pravda article charged that the
decision was a "very dubious
sign of peaceful intentions"
and strongly implied that the
United States had already re-
sumed underground testing.
Moscow probably believes
this line of attack will be the
most effective means.of prevent-
ing the United, States from re-
suming tests as well as fore-
stalling or blunting the effect
of a Y/estern. proposal for a lim-
ited treaty,,.excuding,.uander-
ground tests from a permanent
ban, pending a settlement of
the technical dispute on de-
tecting underground explosions.
IRAQI-IRANIAN RELATIONS
Despite Baghdad's blus-
tery statements regarding its
determination to assert sov-
ereignty over disputed por-
tions of the Shatt al Arab
river and charges that Iran
is massing troops along Iraq's
border, the Iraqi Foreign Min-
istry has assured the Ameri-
can ambassador that the Iraqi
objective is to negotiate a
settlement with Iran in ac-
cordance with existing treaties
between the two countries.
Although Iraq is not willing
to concede what it considers
its rights under the Iraqi-
Iranian Treaty of 1937, a com-
promise over administrative
arrangements may be possi-
ble.
If direct negotiations
fail, it is likely that Iraq
will appeal to the Internation-
al Court of Justice (ICJ) or
the United Nations. Foreign
Minister Jawad indicated to the
British ambassador last week
that he would welcome British
efforts in Tehran to ease the
current crisis. Shipping in
the Shatt meanwhile is moving
normally.
Over-all Iraqi military
strength in the Basra area is
believed to be stronger than
opposing Iranian forces in the
Khorramshahr-Abadan area.
Iranian officials-are be-
coming increasingly concerned
over the rapid deterioration
of relations with Iraq, and
the Shah has ordered his For-
eign Ministry to study the com-
parative advantages of sub-
mitting the issue to the ICJ
or the UN Security Council. He
has also considered a unilateral
denunciation of the treaty of
1937. Meanwhile, Iranian mil-
itary leaders have been directed
to avoid provocative actions,
and the Iranian press is being
calmed. The Iranian foreign
minister is also receptive to
the idea of direct discussions
with his Iraqi counterpart.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Iran is largely respon-
sible for the present tension
with Iraq by having threatened
to contest by force Iraqi navi-
gational controls on the river.
The Iranian Government fears
that any regime which follows
Qasim would be even more ob-
structive to Iranian interests
on the Shatt al Arab and de-
cided to make an all-out ef-
fort to have the mid-point of
the navigable channel estab-
lished as the boundary.
Last October the Iranians
attempted to assert their con-
trol over navigation to Iranian
ports by requiring that the
Iranian flag be flown by ves-
sels until they are 12 miles
out and that pilots be li-
censed in Iran. Naval protec-
tion was authorized where nec-
essary. This action irritated
SUDAN
YEMEN
ETHIOPIA
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CURRENT INTELLIGENCE WEEKLY SUMMARY
the Iraqis, and Prime Minister
Qasim declared on 2 December
that Iraq had been forced by
the British in 1937 to cede the
portions of the river at the
Iranian ports and that he would
seek their return. Since that
time he has reiterated his con-
tention, although professing
that he wished to regain this
territory by measures short of
force.
Definition of the Boundary
Control over navigation
on the Shatt al Arab has long
been a source of difficulty
between the two countries. Be-'
tween the Persian Gulf and a
point a few miles above Khorram-
shahr, the frontier between the
two countries runs along the
low-water mark on- the Iranian
shore of the Shatt, except for
two short stretches opposite
Khorramshahr and Abadan, where
it follows the thalweg--the
deepest part of the channel--
so as to leave these ports
and their jetties in Iranian
waters.
Iraq's boundary with Iran
is basically that which was
agreed on with the Ottoman
Empire in the Treaty of Erze-
rum in 1847, demarcated by a
boundary commission in 1913-
14, and reaffirmed with some
changes by an agreement in
1937. Article 4 of the 1937
treaty states that the Shatt
is open on equal terms to mer-
chant ships of all countries
and to Iraqi and Iranian war-
ships; also that use of the
Shatt, which the agreement
clearly recognizes as Iraqi
internal waters, is not af-
fected by the fact that the
frontier alternates between
the low-water mark and the
deepest part of the channel.
Navigation from the river mouth
up to the port of Basra has
been under Iraqi control.
Although Iran has not of-
ficially questioned Iraqi sov-
ereignty over the Shatt, it
has been pressing for a conven-
tion on navigation, which the
1937 agreement calls for. Up
to the present time, the Iraqis
have refused to negotiate. In
several instances in the past,
Iran has complained that the
1937 agreement is invalid be-
cause it was signed "under duress"
--British pressure. However,
as long as the Basra Port Au-
thority was run by the British,
the quesition was not considered
pressing.
The political conflict be-
tween Premier Phoui's conserva-
tive Rally of the Lao People
(RLP) and the young reformist
Committee for Defense of Na-
tional Interests (CDNI) remains
unresolved. The King has now
unofficially thrown his consid-
erable influence behind the
CDNI position that the National
Assembly's mandate expired on
25 December and' Phoui's'
all-conservative government,
formed on 15 December, there-
fore no longer has any legal
basis. The King seems reluctant,
however, to involve himself of -
fically in moves to relieve the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
crisis, and has placed the
burden on Phoui himself to find
some means of accommodating to
the CDNI position.
Phoui is in an unenviable
position, even though the like-
lihood of a coup attempt against
him by the CDNI's military mem-
bers is receding. On the one
hand, he is probably having
difficulty persuading RLP dep-
uties to admit publicly that
they had erroneously interpreted
the constitution and a 1957
electoral law in an effort to
continue parliamentary govern-
ment after 25 December. On the
other hand, he is under consid-
erable pressure from the CDNI
and the King. While the premier
can be expected to continue to
maneuver to salvage as much of
the conservative position as
practicable, in the end he will
probably have to find some
face-saving means of acceding
to the terms of the CDNI and
the King.
The conservatives have re-
ceived a further setback in the
sudden death of Deputy Premier
Katay, a wily politician who
was one of the RLP strong men.
While constitutional mat-
ters have been in the forefront
of the dispute between the
CDNI and Phoui, the crisis
stems basically from the ef-
forts of the young CDNI ac-
tivists to displace the older
conservatives, who represent
a few powerful clans, as the
ruling elite of Laos. The
CDNI accuses the conservatives
of corruption, lack of mass
support, and a lack of dyna-
mism in their approach to the
government's serious problems.
The conservatives, on the oth-
er hand, claim the young re-
formists are brash and inex-
perienced and tend to take
ill-considered actions.
ists.
The situation remains
potentially explosive, but
the most likely outcome is a
peaceful solution in which
Phoui would be redesignated
premier in a nonparliamentary,
transitional government pend-
ing new elections. At some
point, perhaps immediately, the
CDNI would re-enter his govern-
ment. In any event, the balance 25X1
of power within the government
may be shifting to the reform-
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NOTES AND COMMENTS
A period of negotiation may
be pending in the Sino-Indonesian
dispute arising from Djakarta's
decree banning alien retail
trade in rural areas. Indonesian
Foreign Minister Subandrio an-
noinced on 22 December, "If
circumstances permit, it would
be well for Chinese Foreign Min-
ister Chen Yi to visit Indonesia."
A 24 December letter from Chen
Yi to Sibandrio made a "specific
proposal" that the two countries
promptly exchange in Peiping
ratification instruments of the
Sino-Indonesian citizenship
treaty signed in 1955 and ap-
pointed Peiping's ambassador in
Djakarta as the senior Chinese
delegate on a joint committee
to implement the treaty.
Chen Yi's letter would seem
to amount to an admission that
Peiping cannot compel Djakarta
to reverse action against the
Overseas Chinese. Peiping may
hope to obtain some compensation
for dispossessed Chinese who
wish to remain in Indonesia, as
well as Djakarta's agreement that
those Chinese who wish to return
to China can retain money and
possessions.
Peiping's propaganda accus-
ing the Djakarta government of
"discriminationllz has virtually
halted. While posing as cham-
pions of Overseas Chinese inter-
ests, Chinese leaders appear
anxious to keep Indonesia in the
neutralist camp and to prevent
a break in Sino-Indonesian re-
lations.
Indonesian Government cir-
cles apparently feel that
Djakarta has won the first phase
of the dispute. Chiefly con-
tributing to this impression are
the virtual completion of Chi-
nese evacuations from West Java,
despite repeated Chinese protests
and interference, and the ces-
sation of Peiping's propaganda
campaign.
Although the dispute may
have entered a less heated phase,
Indonesia reportedly is planning
further action, which is likely
to promote renewed friction.
ELECTION PROSPECTS IN INDIA'S KERALA STATE
The working agreements
achieved by the non-Communist
parties in India's Kerala State
seem to give them a considerable
preponderance of strength over
the Communists as campaigning
for the 1 February state as-
sembly elections gets under way.
At the moment, however, no one
party appears capable of win-
ninga majority of the assembly
seats. A coalition government
seems the most likely election
outcome.
The lessons learned by
Congress and socialist party
politicians following their
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CURRENT INTELLIGENCE WEEKLY SUMMARY
defeat in the 1957 elections
apparently are paying dividends.
Congress leaders have taken firm
steps to revitalize the party
and correct the chronic weak-
nesses which permitted the Com-
munists to come to power. Na-
tional leaders, including Prime
Minister Nehru, now are provid-
ing the state party with the
material support and direction
which was previously lacking.
The state leadership, long para-
lyzed by factionalism and dis-
credited in Kerala, has been
placed in the hands of a promis-
ing politician from the more
numerous lower caste of Hindus.
His realistic policies and tal-
ent for fostering cooperation
among Kerala's rival communi-
ties have injected new life
into the party organization.
The apparently firm agree-
ment establishing a "United
Democratic Front"--under which
leaders of the Congress party,
the Praja Socialists, and the
Moslem League have allocated
the constituencies each group
will contest--denies the Com-
munists their previous oppor-
tunity to win a disproportionate
number of seats by splitting the
non-Communist vote. The anti-
Communist front will also bene-
fit from active support of the
Hindu and Christian communal
organizations which led the
successful agitation against
the Communist government last
summer.
Widespread disillusionment
with the Communist party in Ke-
rala has been another important
factor in improving its oppon-
ents' prospects. The Communists'
inability to come: up with any
real answers to Kerala's chronic
economic problems has lowered
their stock, and the party's
reputation has been further
downgraded as a result of its
national leadership's "un-
patriotic" reaction to the
India-China border dispute.
The Communist party none-
theless remains the best orga-
nized and financed group in Ke-
rala. Party workers have been
propagandizing vigorously since
August, and already have an im-
pressive campaign apparatus in
the field. The non-Communist
effort, on the other hand, is
just beginning, and Congress
planners apparently still have
some doubt that the funds and
equipment supplied by their na-
tional headquarters will be ade-
quate. In addition, the demo-
cratic front has not yet moved
to exploit at the village level
the Communist position on In-
dia's dispute with China. While
this issue has had a strong im-
pact on the educated elite, it
has not been brought home to
the illiterate masses. The
personal rivalries and communal
antagonisms traditional in Ke-
rala politics lie just beneath
the surface of the "united"
democratic front. These weak-
nesses could still work against
the anti-Communist elements
and almost certainly would
hamper efforts to form an
effective coalition government
after the elections. 25X1
The Afghan Government, rec-
ognizing that its development
programs have suffered from hap-
hazard planning during the First
Five-Year-Plan period (1956-
61), intends to strengthen the
Ministry of Planning as it pre-
pares for the Second Five-Year
Plan (1961-66).
The First Five-Year Plan
is a hodgepodge of projects
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 December 1959
supported by various ministries,
and was drafted without the
benefit of even rudimentary
statistics. The Afghan Govern-
ment accordingly intends to give
the Ministry of Planning a more
powerful role in 1960, adding
seven technical committees to
its staff and three policy com-
mittees. Kabul apparently ex-
pects to employ about 60 foreign
advisers from the Soviet bloc
and the-free world on these new
committees, bringing large num-
bers of foreign advisers into
the ministry for the first time.
Most of the foreign advis--.
ers apparently are already work-
ing on other projects in Afghan-
istan, and reportedly have al-
read been chosen.
the USSR is said to have prom-
ised a team of ten experts, of
whom seven now are in the coun-
try. If Kabul actually plans
to utilize field technicians in
advisory posts, it may limit
the effectiveness of its pro-
gram by not having the best
qualified personnel. Should
Kabul also intend to mix the
nationalities of advisers on
each committee, it might find
committee members working at
cross purposes.
In addition to enlarging
the staff of the Ministry of
Planning, the government expects
to take its first national
census in 1960 to secure the
statistics required for nation-
al economic planning.
The Afghans probably intend
to put greater emphasis on the
development of productive proj-
ects during the second plan.
Transportation development has
received top priority so far,
but there probably will be
greater interest under the new
plan in building factories whose
products could move in greater
volume over the newly built
roads,. More local manufacturing
is needed to improve Afghanistan's
balance of payments, particular-
ly in reference to the USSR.
The USSR can be expected
to cooperate fully with Afghani-
stan's enlarged Ministry of Plan-
ning, welcoming the opportunity
to increase its influence with-
in the Afghan Government. Prime
Minister Daud regards economic
development as essential to the
preservation of the royal fam-
ily's power. He is inclined to
expand the government's control
over the economy, neglecting or
suppressing private enterprise.
Soviet advisers would probably
encourage Afghan planners to go
further along these lines.
Some of Daud's moderniza-
tion policies are meeting re-
sistance from the country's
Pushtoon tribes and from con-
servative religious elements
generally. The tribes fear
that road improvements in their
territory will be used to ex-
tend the government's control
over them. This fear apparently
is resulting in increasingly
frequent tribal incidents.
Since the government began
last August as part of its
social reform program to encour-
age women to appear in public
without the veil, opposition
has apparently become widespread.
The resulting antigovernment
riots in Kandahar on 21 and 23
December are probably viewed by
Daud as a serious challenge
to his authority. He will prob-
ably press ahead with his mod-
ernization policies, however,
feeling that to give in to the
country's conservative religious
leaders would ultimately
lead to the downfall of the
royal family and the inter-
vention of foreign powers.
(Concurred in
by ORR
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 December 1959
SOVIET PARTY MEETING ACCOMPLISHES LITTLE
The Soviet party central
committee, which met in Moscow
from 22 to 26 December to con-
sider agricultural issues, an-
nounced few results in the way
of decision-making. Most major
issues were made the object of
further study, although the
meeting had been scheduled a
half year in advance and these
issues had been under discus-
sion in the interim. The most
likely explanation for the gen-
eral failure to produce bold
new programs is that the Soviet
leaders, especially Khrushchev,
have been too preoccupied with
other interests to figure out
their next moves in agriculture.
The plenum had seemed a
logical forum for some dramatic
proposal, since various prob-
lems require solution and this
year's mediocre harvest got the
Seven-Year Plan off to a weak
start in agriculture. The
lower harvest, however, may
have had the reverse effect of
causing the leaders to act more
cautiously.
The principal drama of the
meeting was provided by Khru-
shchev's scathing criticism of
agriculture in Kazakhstan, which
constituted a final demand on
Kazakh party boss Nikolay Bel-
yayev to remedy an intolerable
situation. Revealing to the
plenum what Belyayev and Ka-
zakh Premier Kunayev had
"lacked the courage to say,"
Khrushchev described the or-
ganization of the Kazakh har-
vest as "bad, very bad indeed."
Over 3,500,000 acres of bread-
grain crops had not been gath-
ered; 18,000 combines had stood
idle during the harvesting sea-
son, and several thousand others
had broken down in the fields.
He laid the blame for this sit-
uation squarely on Belyayev's
shoulders, and implied that
the latter had hoodwinked the
party presidium by refusing
Moscow's offers of help.
Khrushchev's reminder that
"friendship is friendship, but
work is work" and his statement
that it is quite normal to re-
move those who are unable to
cope with their jobs make it
amply clear that Belyayev's
continued tenure in Kazakhstan,
and perhaps his membership on
the central party presidium, are
very much in question.
Khrushchev barely concealed
his general disappointment with
this year's harvest and did not
give any figure for tbtal grain
output this year, which is ap-
parently only roughly three
fourths of last year's record
harvest. He noted only that
state grain procurements fell
below the average of the last
four years. He did not mention
output figures for other major
field crops. He suggested, as
means to increase future output,
using some 30,000,000 acres of
fallow land, devoting more land
to higher yielding crops, such
as corn, and better use of both
organic and chemical fertilizers.
His emphasis was on programs
which are not costly to the
state.
He told the plenum that
collective farmers' pay should
not exceed that of state farmers
and urban workers in any given
locale, and that, in readjusting
prices paid to collective farm-
ers, gross inequities among
various collective farms should
be eliminated. He said the time
was not distant when the party
would grapple with the problem
of better construction in vil-
lages--particularly apartment
houses for farm-labor. This
has long been a touchy issue,
and Khrushchev said, the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 December 1959
government would go very slowly
in this direction.
On the issue of the future
form of administering collec-
tive farms, the resolution,
which followed Khrushchev's
speech, instructed the party
presidium to study the matter,
including proposals to estab-
lish collective farm unions.
In recent months some unions
have already been established
at the rayon level. The unions
are to administer intercollec-
tive enterprises, principally
construction units; to create
and supervise mutual assistance
projects for aiding poor farms;
and generally to oversee the
activities of collective farms.
Collective farm unions are
controversial from various
standpoints. The amount of
support richer' farms should ex-
tend to poorer ones is a vexa-
tious question; another is the
amount of authority which col-
lective farm unions might take
from the Ministry of Agricul-
ture.
The plenum gave no indica-
tion when a collective farmer's
congress would be held, or even
if it would be held. At the
time of the machine-tractor
'stations reform in 1958, it was
stated that such a congress
would be convened early in 1959.
The plenum again endorsed the
trend toward monthly cash wage
payments and the rapid spread
of intercollective farm con-
struction organizations, but it
did not outline future develop-
ments in these spheres.
The plenum instructed Gos-
plan to draw up a plan for
fertilizer production and to
draw up within one month plans
for enabling farmers to carry
out sowing and harvesting within
shorter time periods, as well as
plans for developing'the design
and experimental base of the
agricultural machine building
industry.
After the resolution was
passed on 25 December, there was
no announcement that the commit-
tee had concluded its work, but
there have been no reports of
any later session. According to
information received by the
American Embassy in Moscow, how-
ever, a special closed session
was held on 26 December. If this
is true, the committee probably
considered such politically sen-
sitive subjects as intrabloc rela-
tions or criticism of high party
leaders. There are rumors in
Moscow that important developments
(Prepared jointly with RR
"explained."
25X1
in Sino-Soviet relations are being
NEW SOVIET ARMORED DIVISION
A new type of Soviet combat
division, designated the "heavy
tank shock" division, has re-
cently been reported. The new
division is believed capable of
functioning either as part of a
tank army or independently as a
reserve unit of the High Com-
mand. Several of these divi-
sions are believed to have been
organized as early as 1957, but
the number of them is not known.
Although the basic armored
fighting vehicle of this divi-
sion is reportedly the T-10
heavy tank, some heavy tank
shock divisions--particularly
those with the Group of Soviet
Forces in Germany (GSFG)--are
still equipped with the older
JS-3 heavy tank. The replace-
ment of the JS-3 with the T-10,
however, is expected.
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HEAVY TANK
SHOCK DIVISION
HEAVY TANK
REGIMENT
ASSAULT - GUN
BATTALION
ANTIAIRCRAFT
ARTILLERY
REGIMENT
HEAVY - TANK
BATTALION
ENGINEER
BATTALION
SIGNAL
BATTALION
RECONNAISSANCE
BATTALION
MOTORIZED
RIFLE
COMPANY
ANTIAIRCRAFT
ARTILLERY
BATTERY
The creation of this divi-
sion preserves the traditional
Soviet arrangement of having
three types of line divisions,
with varying "mixes" of armor
and infantry. Its organization
reflects the continuing Soviet
stress on armored firepower and
mobility in its line units. The
standard tank division, which
has been retained,now apparently,
holds the intermediate stage
among Soviet line divisions
between the motorized rifle
division and the heavy tank
shock division. This position
was formerly occupied by the
mechanized division, which
is now apparently being phased-
out.
MOTOR
TRANSPORT
BATTALION
CHEMICAL
DEFENSE
COMPANY
The personnel strength of
the heavy tank shock division
is reportedly between 6,000
and 6,500; its complement of
major weapons includes 210 heavy
tanks, 93 heavy assault guns,
and an appropriate number of
armored reconnaissance vehicles
and antiaircraft weapons.
The main striking force
consists of three heavy tank
regiments, each with its own
assault gun battalion, a mo-
torized rifle company, and an
antiaircraft artillery battery.
The tank regiments are supported
by a reconnaissance battalion,
an antiaircraft artillery regi-
ment, a motor transport battalion,
an engineer battalion, a chemical
defense company, and a signal
battalion.
When functioning as part of
a tank army, the new division
reportedly will operate with
three standard tank divisions
and an artillery force. In any
major drive it will be in the
first echelon; otherwise it
will follow one or more standard
tank divisions, in a good posi-
tion to support them if they
are held up by a superior force.
Its offensive role will be to
assist in major breakthroughs,
penetrate deeply into enemy rear
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 December 1959
areas, and generally disrupt
enemy communication zones.
The division's relatively
small size and high mobility will
enable it to launch attacks from
assembly areas as far as 25 miles
behind the forward edge of the
battle area, A normal defensive
role for it would be to serve
as a High Command reserve force
to be used against any enemy
penetration that has not been
halted by the tank armies.
The all-round armor pro-
tection of nearly all the di-
vision's vehicles and the mo-
bility of its units would en-
able it to move most of its
elements through areas of ra-
diation. The T-10 tank is more
resistant to the blast effects
of tactical atomic weapons than
are other Soviet tanks. The
development of this division may
reflect Soviet doctrine for the
employment of armored forces in
atomic warfare: that the force
should be capable not only of
penetrating radioactive obstacle
areas, but also of advancing
close behind friendly atomic
fire. 25X1
A Bulgarian party announce-
ment on economic development in
1959 reveals substantial achieve-
ments in industry and a level
of agricultural production ap-
proaching the postwar peak, but
over-all performance fell far
short of the revised "leap for-
ward" goals for 1959. The re-
gime has resorted in many in-
stances to comparisons with tar-
gets of the original Third Five-
Year Plan (1958-62), thus avoid-
ing direct admission that the
revised 1959 targets were not
met and putting results in the
most favorable light.
The volume of agricultural
production for 1959 is estimated
at 10-20 percent above the 1958
level but somewhat below that
of 1957, the best postwar year.
The officially claimed 26-per-
cent increase in value of agri-
cultural production--compared
with a planned increase of 74
percent--over 1958. reflects
higher prices paid for.agri-
cultural products this year,
as well as increased volume.
Disruption of the supply
and distribution system, ap-
parently much more serious than
usual, caused shortages through-
out the country. Difficulties
appear to have been caused mainly
by breakdowns in the trade net-
work as a result of the sweeping
administrative reorganization
of early 1959.
A substantial expansion of
industrial output by about 25
percent--close to the 28-percent
figure planned for 1959--and
higher agricultural production
led to a considerable growth in
the national income, possibly
by 10-15 percent. Because a
large part of this increase
appears to have been used for
investments--up a claimed 50
percent--the consumer obviously
was not the principal beneficiary.
For the regime, the "leap
forward" can probably be termed
a success in a number of ways,
despite absurdly high 1959 tar-
gets for agriculture and national
income. The Bulgarian economy
expanded at a more rapid rate
than in recent years. The number
of unemployed, for many years
a problem, apparently has been
sharply reduced; additions to
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 December 1959
the industrial labor force in
1959.were about twice as high
as in 1958. Redundant labor in
rural areas was put to work on
various agricultural schemes
which, although not immediately
beneficial, constitute a basis
for future increases in agri-
cultural production.
Although these achievements
would probably not have been
possible without the policies of
the "leap forward," the regime
probably expected even more.
There is no indication, however,
that party First Secretary Todor
Zhivkov will be affected. Ad-
ministrative changes decreed by
the central committee plenum on
8 and 9 December sought to
strengthen the party's control
over the economy, and further
changes may be in the offing.
Although the phrase "leap
forward" does not appear in con-
nection with future plans, the
party announcement makes it clear
that the leadership is committed
to an "accelerated program" for
all sectors of the economy. In
most instances, 1960 goals call
for lower rates of increase
than were demanded in 1959, but
targets are still quite high
and imply continuing heavy
demands on resources and
pressure on the population.
(Prepared by ORR)
The Soviet Union continues
to bay rubber in Southeast Asia
at'the increased rate noted
since last year, and the volume
of its rubber imports in 1959
probably will match the previous
peak of 220,000 tons achieved
in 1958. Communist China has
been less active in. Asian rub-
ber markets, however, and total
bloc rubber purchases this year
apparently will not reach 1958's
record level of 450,000 tons.
During the first ten months of
1959 the bloc bought an esti-
mated 340,000 tons, almost all
of which came directly from
South and Southeast Asian rub-
ber producers.
Rubber is a commodity wide-
ly re-exported within the bloc.
In recent years Chi-
SINO-SOVIET BLOC RUBBER PURCHASES
THOUSAND TONS 450
Satellite purchases
=Soviet purchases
1950 1951 1952 1953 1954 1955 1956 1957 1958 1959
9 MONTHS
(ESTIMATED)
SECRET
nese purchases in ex-
cess of domestic de-
mand have been re-ex-
ported to the USSR
and Eastern Europe.
Heavy Soviet purchases
direct from Malaya--
amounting to 16 per-
cent of the Federa-
tion's rubber exports
in the first half of
1959--partially re-
place rubber the USSR
normally bought'
through China and
through West Euro-
pean middlemen, who
in 1958 supplied the
bloc with 28 percent
of its imports.
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Bloc rubber purchases fluc-
tuate widely from year to year,
partly because of turnover of
stockpiles. Current buying is
not considered greatly in ex-
cess of normal stockpiling and
internal requirements, which
have expanded along with the
rate of economic development.
Increased Imports by the USSR
since 1956 probably have gone
to rebuild depleted stockpiles
and to compensate for a lag in
construction of new synthetic
rubber facilities. Chinese pur-
chases--restricted largely to
Indonesia this year--are con-
sidered more than adequate to
meet Peiping's current needs,
while East European countries
continue to buy normal quanti-
ties.
The USSR and China have
freely switched their buying
activities from country to
country in response to the pre-
vailing political-climate and
the needs of the bloc's eco-
nomic programs in underdeveloped
countries. As in 1958, Malaya
probably will be the principal
source of bloc rubber imports
this year, chiefly because of
the Soviet decision to purchase
there directly rather than
through a London agent.
China now is a less im-
portant factor in the Malayan
market, and is relying almost
exclusively on continued large
shipments from Indonesia. The
USSR this year tried to win
Djakarta's acceptance of a long-
term contract specifying much
larger deliveries of Indonesian
rubber, but it succeeded only
in obtaining an increase in the
export commitment from 14,000 to
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A more conciliatory tone
in the speech of Tunisian Pres-
ident Bourguiba on 23 December
may indicate a moderation in
the pace of his government's
program to sequester foreign-
owned properties and, conse-
quently, a more propitious at-
mosphere for forthcoming nego-
tiations of outstanding Tunisian-
French problems. The accelera-
tion in nationalistic measures
was marked following the general
election on 8 November, and by
early December a situation close
to panic had built up among for-
eign residents and property own-
ers.
Farm lands in the northern
part of the country had been
seized, industrial establish-
ments nationalized, and dis-
criminatory labor legislation
implemented. Some French in-
vestors have investigated the
possibility of American govern-
ment loans for their enterprises,
apparently in the belief that
the United States might exert
pressure on Tunisia to postpone
nationalization.
Bourguiba has been under
increasing domestic pressure to
achieve his goal of full employ-
ment. Noting Tunisia's scarcity
of natural resources and pushing
public works programs as the
quickest means of reaching his
goal, he had criticized earlier
this month the conditions imposed
on the use of American aid funds.
At that time he openly bid for
economic aid from other sources,
including the Soviet bloc. He
reportedly did not solicit eco-
nomic aid from Czechoslovakia
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30 December 1959
when Ambassador Emmanuel Brazda
presented his credentials on
22 December as that country's
first emissary to Tunis. Never-
theless, Bourguiba's remark
that he would welcome expanded
trade and cultural relations
with Prague suggests that he
might welcome an aid offer.
Bourguiba apparently has
been impressed by the tactics
of the newly arrived French am-
bassador, Jean-Marc Boegner.
When he presented his creden-
tials on 15 December, Boegner
announced that Paris has changed
its policy regarding the French
colony and understands Tunisia's
desire to "Tunisify" French ag-
ricultural lands and industrial
enterprises. He also stated
that. France wants to reduce the
size of the French colony in
Tunisia,probably a welcome ges-
ture to Bourguiba, who is ac-
complishing the same end by re-
serving most jobs for Tunisians.
Apparently as a quid pro
quo to Boegner's remarks,Bour-
guiba asserted publicly on
23 December that the persons
and properties of all foreigners
must be respected, and that de-
colonization is a governmental,
not an individual problem.
Another factor contributing
to a more moderate approach by
Bourguiba has been the prestige
factor of President Eisenhower's
visit. The French counselor of
embassy in Tunis attributes the
"new" Tunisian approach to the
Eisenhower-Murphy conversa-
tions with Bourguiba.
I
POLITICAL TRENDS IN THE BELGIAN CONGO
Representatives of several
important Congolese nationalist
parties have joined in a demand
that Belgian officials meet with
African representatives on 5 Jan-
uary to discuss the details of
handing over authority to a
Congolese government to be
formed following legislative
elections now anticipated in
March. The nationalist repre-
sentatives have approved a res-
olution calling for the trans-
formation of the Congo into a
"Union of African Republics"--
a federal republic of six au-
tonomous states--with a prime
minister and two-chamber legis-
lature. The federal government
would immediately be given con-
trol over foreign affairs, fi-
nance, education, and defense.
Brussels, which reportedly
has refused the African demands,
had already set 18 January as
the date for a conference with
nationalist leaders to discuss
early autonomy for the Congo
and a more gradual evolution
into an independent state over
a period of several years.
Support for the national-
ist proposals has been voiced
privately by the managing di-
rector of the Union Miniere,
the huge mining company which
dominates the economy of the
mineral-rich Katanga Province
in the southeastern Congo. He
believes that a federation
would preserve the economic
unity of the Congo while giv-
ing the Katanga considerable
autonomy and the possibility
for secession if a federal
Congo government interfered
with local provincial inter-
ests. His statements suggest
that the Union Miniere will be-
come increasingly involved in
Congo politics in an effort to
preserve its privileged eco-
nomic position.
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30 December 1959
24 December the Union Miniere
and other local European in-
terests urged African coopera-
tion in the formation of an au-
tonomous Katanga government to
present a fait accompli to tour-
ing King Baudouin.
While there is apparent
agreement among the leading na-
tionalist parties, except for
the absent Lumumba faction of
the National Congolese Move-
ment, the communal and terri-
torial elections held in De-
cember showed that no single
group could claim to speak
for the large majority of the
13,000,000 Congolese. In
these elections, tribal group-
ings with unknown party affilia-
tions--and frequently responsive
only to local issues--won the
largest number of contests.
Among the parties, the moderate
and settler-influenced Party
of National Progress secured
the largest number of seats.
Nationalist extremists
represented by the Lumumba and
Kalonji factions of the Na-
tional Congolese Movement
showed voting strength only in
Stanleyville and Luluabourg.
In Leopoldville, the power of
the Abako movement, led by
Joseph Kasavubu, was demon-
strated by the popular support
for the Abako-ordered boycott
of the elections. Only 31
percent of those eligible voted,
compared with 70 to 93 per-
cent elsewhere in the
Congo.
CARIBBEAN TENSIONS CONTINUE
The Castro regime is stim-
ulating class antagonisms in
Cuba and is attempting to
strengthen its domestic position
by repeatedly warning the pub-
lic of the danger of imminent
invasions by counterrevolutionary
forces. Cuba has given moral
support, and in some instances
material aid, to opposition
groups in Nicaragua, Guatemala,
Panama, and the Dominican Republic
and to the strikers in Costa Rica.
Nicaraguan exiles are planning a
new foray against the Somoza re-
gime, perhaps in, January.
Fidel Castro's drastic
reform program, his stimulation
of class antagonisms by bitter
attacks on the wealthy, the
growing strength of Communists
and pro-Communists in the gov-
ernment, and his increasingly
authoritarian methods have re-
sulted in a definite narrowing
of the base of his regime. Up-
per- and middle-class elements,
many of whom were originally
among his backers, now are large-
ly disillusioned. The opposition,
representing widely diverse
interests and views and lacking
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30 December 1959
in effective leadership, is only
slowly coalescing and, barring
Castro's assassation., does not
appear to'. be an immediate threat
to the Cuban leader.
To strengthen his domestic
position, Castro continues to
foster the public impression
that Cuba is threatened on all
sides by enemies. Repeated
strident warnings by the regime
of imminent invasions by counter-
revolutionaries from the Domini-
can Republic, Florida, and else-
where in the area have led the
public to expect violent new
outbreaks at any time. In
other Latin American countries,
he poses as the stanch champion
of the people's interests
against entrenched oligarchies
and the "imperialism" of
foreign monopolies. A Castro-
subsidized Latin American news
agency and a nascent hemispheric
labor organization are useful
instruments in this effort.
Although the Cuban-mounted
rebel incursions into the
Dominican Republic last June
ended in disastrous failure, the
Castro regime still regards the
Trujillo dictatorship as a
mortal enemy that must eventually
be-destroyed. Dominican exile
groups, heavily infiltrated by
Communi
in Cuba
In Costa Rica, a Communist-in-
spired strike of banana workers
began on 21 December, further
straining the limited capabili-
ties of the Costa Rican police,
who have for some months been
vainly trying to clean the bor-
der area of Nicaraguan rebel
bands. A pro-Castro Costa Rican
legislator announced on 27
December that the strikers are
to be given $50,000 and pro-
visions by the Cuban labor move;-
ment.
Cheddi Jagan, Communist
leader of the government of
British Guiana, is seeking
closer economic relations with
the Soviet bloc and will press
London for complete internal
self-government at the consti-
tutional talks scheduled for
February.
British Guiana will prob-
ably accept a Hungarian offer
to build a glass plant unless
a better Western offer materi-
alizes. The low bid and easy
credit terms would make it dif
ficult for London to oppose
the proposition if formally ad-
vanced by the local government.
The four-man Hungarian trade
mission which visited Guiana in
November appears to have dis-
covered few prospects for in-
creasing trade, however. In
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30 December 1959
the first nine months of 1959,
B-itish Guiana's imports from
Hungary amounted to only 0.3
percent of its total imports,
and the colony exported noth-
ing in return.
Jagan, who is minister of
trade and industry, implies
that he may seek a Soviet loan,
especially if the gap of
$8,800,000 to $11,900,000 in
the 1960-64 development plan
is not filled by Western aid.
He has made no positive move
on this since publicly broach-
ing the subject last August,
but might launch a determined
campaign for such a loan after
the February talks.
These talks will center on
calling the constitutional com-
mission--on which Jagan's
People's Progressive party (PPP)
has a majority--to establish
full internal self-government.
Defense and foreign affairs
would be handled by a council,
half of which would be appointed
by the Governor and half by the
Guianese prime minister
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A breakdown in
e constitutional
talks, or an impasse
with London over ac-
cepting Soviet aid,
might cause Jagan to
demand elections be-
fore the present sched-
uled date in 1961.
Elections would help
him deal with growing
dissension within the
PPP and undercut the
weak opposition Peo-
ple's National Con-
gress before it becomes
a' ?serious threat.
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The defacing on Christmas
Eve of a synagogue and an anti-
Nazi memorial in Cologne is the
latest in a series of minor
outbreaks of Nazi-like activity
in West Germany. The arrest of
two members of the neo-Nazi
German Reich party (DRP) for
the incidents may lead to a
ban of the party.
In an effort to stave off
government action, the DRP im-
mediately expelled the two ac-
cused men and dissolved the
Cologne branch of the party,
Anti-Semitism, in the form
of pamphlets and desecratory
acts against Jewish buildings
and cemeteries, has been grow-
ing in West Germany in recent
months. Considerable attention
was paid both inside and out-
side Germany to the trial last
October in Frankfurt of hooli-
gans who had terrorized a
Jewish cafd owner. The trial
resulted in short prison sen-
tences and fines for several
offenders, but the court found
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no evidence of a concerted
anti-Semitic plot.
The government has been
criticized by opposition par-
ties for not having exerted
itself sufficiently to see
justice done in a number of
previous cases of anti-Semitism,
and the courts have also been
attacked for taking advantage
of legal technicalities to dis-
miss charges brought against
perpetrators of anti-Jewish acts.
The DRP, which hopes to
attract the support of extreme
right-wing voters, consists
largely of members of the for-
mer Socialist Reich party,out-
lawed in 1952 for violating
the constitutional prohibition
against parties advocating the
overthrow of democratic govern-
ment. Although it picked up
only one percent of the popular
vote in the 1957 national elec-
tions, the DRP scored a major
political victory when it re-
ceived just over the necessary
5 percent of the vote last
April in the Rhineland-Palati-
nate state election to gain a
seat in the state parliament.
Despite active campaigning,how-
ever,the party failed to surmount
this limitation in' state elec-
tions in Lower Saxony--a pre-
vious stronghold--or in
Bremen.
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30 December 1959
PATTERNS AND PERSPECTIVES
COMMUNIST BLOC ECONOMIC
The Sino-Soviet bloc since
early 1959 has been including
the major Latin American coun-
tries in its long-range pro-
gram for improving economic re-
lations in underdeveloped coun-
tries. The USSR has thus far
relied chiefly on sporadic ex-
ploitations of Latin American
economic and political fluctua-
tions, but there now are indi-
cations that a long-term effort
is under way to take greater
advantage of economic
and political insta-
bility in the area.
Latin America
was responsible for
30 percent of bloc
trade with underdevel-
oped countries in 1955,
but its share had
dropped to 12.5 per-
cent by 1958. In re-
cent months, however,
the bloc has stepped
up its activities in
Latin America, al-
though the area still
is not being accorded
the high priority as-
signed to Asia and
the Middle East. A-
mong recent economic
activities are Miko-
yan's visit to Mexico
in late November to
open a Soviet exhibi-
tion--which also is to
be shown in Havana
shortly.-the conclu-
sion of a Soviet-
Brazilian three-year
trade a6reernent in
Moscow on 9 1 ecembe ?,
strategically timed
sugar purchases from
Cuba, attempts to pur-
chase Chilean copper
directly rather than
through West European
middlemen, and a pro-
posal for a more at-
tractive oil-wool ex-
change with Uruguay.
Soviet and Satellite Roles
The European satellites'
trade effort in Latin America
is motivated in considerable
part by valid commercial con-
siderations. Some of the East
European countries, particularly
Czechoslovakia, have long had
trade ties in the area and in
recent years have been able to
satisfy some Latin American de-
mands for industrial equipment.
BLOC ECONOMIC ACTIVITY
IN LATIN AMERICA
Trade or Payment. agreement with the USSR
Trade or Payments agreement with one or
more East European Satellite
Haiti Dominican
f Republic
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30 December 1959
Satellite commercial
delegations have con-
cluded numerous con-
tracts to provide
machinery, transpor-
tation equipment, and
plants under both pri-
vate and governmental
long-term agreements.
The satellites have
been able to secure
essential raw mate-
rials and foodstuffs
and to diversify their
sources of imports by
trade from Latin Amer-
icad.
Although Soviet
and Chinese purchases
SINO-SOVIET BLOC TRADE WITH LATIN AMERICA
MILLIONS OF DOLLARS
and sales there are not devoid
of an economic rationale, they
are frequently timed to advance
the political objective of re-
ducing Western--particularly US
--influence in the area.
the USSR is, trying to es-
tablish as a model a success-
ful economic relationship with
at Yeast one Latin American
Coutttrjr. L ,tin American re-
gimes generally are interested
in economic relations with the
Soviet bloc more for economic
advantage than for the implicit
protest against the West which
underlies much of the bloc's
economic appeal to some other
underdeveloped areas. Despite
tfie conclusion of numerous trade
agreements and the extension of
some credits, bloc economic ac-
tivity has made only a slight
im4ct in Argentina, Brazil,
Uruguay, And Ceiba--the coun-
tries which in 19bg accounted
for about 90 percent of all
Latin American trade with the
blcc.
Argentina
Argentina IS the only
Latin American country to: have
signed an agreement providing
for Major Soviet economic de-
velopment assistance--a $100,-
000,000 credit for petroleum
equipment. The Soviet offer
O COMMUNIST CM A
?ussm
0 EAST EUIO!IAN SATRM
was made in July 1958,just be-
fore Argentina's first announce-
ment welcoming extensive foreign
financing for oil development.
In October 1958 an' Argentine
mission visited Moscow and con-
cluded specific contracts under
the credit for about $30,000,000
worth of material. Delivery,
accompanied by a small number
of Soviet technicians,has just
begun. Officials in Buenos
Aires indicate that most of the
credit probably will not be
used.
Earlier experience, more-
over, has served to moderate
Argentine expectations about
trade with the USSR. In 1955,
when Argentina was seeking a
source of nondollar industrial
imports and an outlet for its
agricultural surpluses, the
USSR increased its purchases by
30 percent--on credit under a
clearing agreement. The lack
of acceptable Soviet goods, how-
ever, caused Argentine imports
of Soviet goods to rise only 10
percefit. Argentina continues
to find that Soviet industrial
goods available for export fre-
quently do not meet its needs,
and as a result it has found
itself supporting Soviet trade
by holding credits,which exerts
an inflationary effect on the
economy.
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30 December 1959
policy from opportunism to a
planned campaign for a perma-
nent growth in relations.
e official states
-that oc purchases under these
pacts "are not important enough
to warrant continuation of the
system." Argentina's official
relations with the bloc have
cooled--six bloc diplomats were
ousted this year--and this prob-
ably contributed to the less-
ened enthusiasm for bloc trade.
The satellites have sup-
plied a wide variety of manu-
factured goods, raw materials,
complete plants for sugar proc-
essing, coal-washing facilities,
and a power plant. They also
purchase a wide variety of Ar-
gentine goods. In 1958 the
chief satellite purchases were
spread over at least 15 major
Argentine export commodities.
The USSR, in order to increase
the impact of its trade, con-
centrated its purchases on
hides, wool, and quebracho ex-
tract. The bloc directly bought
over 40 percent of Argentina's
hide exports in 1958.
Brazil
Brazil provides the best
illustration of the transition
of Soviet foreign economic
Taking advantage of Brazil's
financial difficulties, the
USSR arranged in early 1959 for
the first trade exchanges in
several years and has delivered
$1,300,000 worth of crude oil
and purchased $3,000,000 worth
of coffee and cocoa. This ad
hoc arrangement had been pre-
ceded by more extensive offers
which Rio de Janeiro declined.
The satisfactory fulfillment
of Soviet contracts in 1959,
renewed Soviet offers with as-
surances that Brazilian coffee
would not be re-exported, in-
ternal political considerations,
mounting coffee surpluses, and
the scarcity of foreign exchange
led Brazil to accept a more ex-
pansive Soviet agreement setting
a $214,000,000 target for trade
during the next three years.
During the agreement the
USSR is to purchase some cocoa,
hides, and vegetable oils, as
well as 70,000 tons of coffee--
about 7 percent of Brazil's
present accumulated surplus,
which now exceeds its 1960 ex-
port quota. Recent annual
average Soviet consumption of
coffee has been less than 5,000
tons. The USSR is to supply
principally petroleum, machinery,
SINO-SOVIET BLOC TRADE WITH SELECTED COUNTRIES
192 ARGENTINA
6%
48
1955 '56 '57 '58 '59
1ST
HALF
MILLIONS OF DOLLARS
% OF COUNTRY'S TRADE WITH BLOC
BRAZIL I CUBA
3% 3%
85 86
3% 3%
F777 175 1
4%
53~
I
1955 '56 '57 '58 '59
1ST
HALF
3%
39
1%
18
13%
35
3% 4% 4% 23%
13 19 F561 1 116 i
1955 '56 '57 '58 '59 1 1955 '56 '57 '58 '59
1ST 1ST
HALF QUARTER
30 DECEMBEv 1959
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30 December 1959
and wheat. In 1960 the USSR
specifically is to deliver
150,000 tons of wheat worth
$9,000,000;,600,000 tons of
crude oil worth about $7,000,
000, which could reduce Brazil's
current foreign exchange out-
lay for oil by about 2.5 per-
cent; and $9,000,000 worth of
machinery and equipment. Trade
exchanges are to rise from
$25,000,000 each way in 1960
to $37,000,000 in 1961 and
reach $45,000,000 each way in
1962.
Soviet trade with Brazil
is expected to remain within
the bounds set by the agree-
ment--less than 3 percent of
Brazil's expected foreign trade
in 1960-62. The USSR is not
likely to foster great consum-
er demand for coffee when the
traditional drink, tea, is
available in barter trade with
China. Other Brazilian goods
specified for export to the
USSR are either exported only
in small quantities by Brazil
or are not in significant de-
mand in the USSR. Further-
more, the USSR presumably will
not deliver large amounts of
oil in barter trade with Brazil.
Soviet oil now is a major for-
eign exchange earner in the
West, where Soviet demand for
plants and equipment is much
greater than its current abil-
ity to pay.
To press its advantage,
however, it is possible that
the USSR will, during 1960--
an election year in Brazil--
propose an economic develop-
ment credit. This might be
attractive to Brazil as an al-
ternative to economic reforms
that would be a prerequisite
to new loans by the Interna-
tional Monetary Fund.
Until this year, Brazil's
trade with the bloc had been
largely limited to exchanges
with Czechoslovakia,,Poland,
Hungary, and CoMMunist China.
Czechoslovakia and Poland have
established a firm basis for
continuing trade on extremely
favorable terms by supplying
machinery and transportation
equipment for foodstuffs and
raw materials in demand in their
own economies.
Uruguay
The USSR found in Uruguay
an economy small enough to per-
mit major inroads within a rel.-
Ative]. short time. Sticking
to a restricted program encom-
passing purchases of wool and
deliveries of oil, the USSR has
achieved a position of consider-
able economic importance. Bloc
trade, which had been responsible
for only 3 to 5 percent of Uru-
guay's foreign trade, suddenly
rose to 13 percent in 1958 and,
most important, accounted for
one third of Uruguay's wool sales.
In late 1958 the USSR made
its purchases of wool conditional
on Uruguayan acceptance of Soviet
oil, at least in partial payment.
As a result, the USSR this year
is supplying more than one fourth
of the petroleum consumed in
Uruguay. As Uruguay is reluc-
tant to continue this barter
trade, the USSR has offered to
buy $25,000,000 worth of wool in
1960--almost twice its purchases
this year. Moscow insists, how-
ever, that Montevideo accept oil
for at least two thirds of the
wool. To make the deal attrac-
tive, Moscow proposes to pay
cash for the wool and to permit
Montevideo to pay for the oil
over a 9- to 12-month period.
Bloc trade with Cuba has
consisted almost entirely of
Soviet sugar purchases, which
have ranged from 200,000 to
500,000 tons annually in the
past few years. Orders have
usually been placed following
shortfalls of Soviet beet-sugar
crops. Soviet purchases in late
1959, totaling 500,000 tons for
delivery in 1959-60, were timed
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30 December 1959
to take advantage of 164 world
prices and bolster the ban
~F;
sugar market. Since Sc4iet beet-
sugar production fell f~r short
of plan goals this year;,, addi-
tional orders probably lavill be
placed in 1960.
The
USSR has carefully avoided, how-
ever, identifying its economic
activities as direct support for
the Castro regime, which is in-
creasingly unpopular among
Latin American leaders
Cuba has accepted Moscow's
offer to present its exhibition
in any Latin American country
following its stay in Mexico
City. The exhibit is now sched-
uled to open. in Havana about
February.
Satellite missions have
visited or are planning to visit
Cuba to try to capitalize on
anti-Western sentiment and es-
tablish trade relations. Czech-
oslovakia has already estab-
lished a permanent trade rep-
resentative in Havana.
Others
Eastern Europe accounts
for nearly all of the negligi-
ble bloc trade with other Lat-
in American countries. This
amounted in 1958 to about $10,-
000,000,mostly exports from
Czechoslovakia.
Official bloc visitors in
Latin America frequently pro-
pose expanded economic contacts,
and Soviet delegates to inter-
national conferences in the
area within the past year have
announced that economic assist-
ance is available. More spe-
cific aid offers have been made
to Bolivia, Uruguay, and Mexico.
The USSR indicated in mid-1959
that it would consider an appli-
cation for $60,000,000 worth of
credits to assist oil develop-
ment in Bolivia. No advanced
negotiations are known to have
taken place, however. Soviet
willingness to provide major
long-term aid following natural
disasters in Uruguay was indi-
cated in quasi-official approach-
es earlier this year.
More recently, during his
visit to Mexico, Mikoyan dis-
cussed extension of a standard
Soviet $100,00CI,000 economic de-
velopment credit. To avoid pos-
sible outright rejection by
Mexican officials, who are un-
der no economic or political
pressure to accept Soviet assist-
ance, Mikoyan apparently did not
press his proposal.
On the whole, the bloc is
probably encouraged by the Latin
American response to its trade
promotion program. A Colombian
trade delegation renewed trade
pacts with several bloc coun-
tries during a trip to Europe
earlier this year. On the heels
of the departure of the official
Brazilian trade mission to Mos-
cow, Santiago announced that an
unofficial Chilean delegation
would leave on 4 January to in-
vestigate trade possibilities
in Moscow, Prague, and Warsaw.
Small but attractive trade
deals presumably will be offered
to entice wider acceptance of
the bloc--first economically,
then politically--in countries
where economic problems are
forcing governments to.consider
any proposal which holds prom-
ise of promoting economic ex-
pansion.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
BUSINESS ADAPTATION TO THE EUROPEAN COMMON MARKET
The European Economic Com- I to show a substantial gain in
munity (EEC or Common Market)--
although still in the initial
stages of its development--is
already beginning to have a pro-
found impact on the economic
life of Western Europe. Even
in advance of major changes in
the volume and patterns of intra-
European trade, the effects of
the EEC are particularly evi-
dent in the widespread prepara-
tions for a growing market, in
the trend toward rationaliza-
tion and concentration of indus-
try, and in the sharp upsurge of
foreign investments. These de-
velopments may be the most im-
portant consequence of the or-
ganization to date, and while
certain to give rise to many
problems, are the primary basis
for the hope that achievement
of the economic objectives of
the Common Market can be speeded.
Economic and Trade Trends
Economic activity in the
six EEC countries is expected
1959 as it has in the other
countries of Western Europe.
Year-end data are not yet avail-
able, but by last June the in-
dex of community industrial pro-
duction was 6.4 percent above
the corresponding period of 1958,
and expansion has continued in
recent months. In the same
period, intracommunity trade
increased by 16 percent and ex-
ports to the outside world by
11 percent. EEC imports from
nonmember countries tended to
lag in the early part of 1959,
but community officials predict
a marked increase as production
expands.
The EEC's 10-percent tariff
reduction and 20-percent quota
enlargement of last January--
extended generally to other free
world countries--probably were
not directly responsible for
this general recovery or for the
modest shift toward expanded in-
tracommunity trade. Indirectly
and psychologically, however,
these moves were of
European Community !Coal -Steal Community,
EURATOM, European Economic Communilyi
ADWmants for association with the
European Economic Community
Q Organization for European Economic
Cooperation
considerable signif-
icance. They helped,
for example, in per-
suading the French
Government of the need
for its highly success-
ful fiscal and economic
reforms of the past
year, and, within the
3CC as a whole, they
demonstrated the prob- 25X1
lems the national busi-
ness communities face
in adapting to a re-
gional market.
Business Response
European busi-
nessmen appear to be
making a vigorous re-
sponse to this challenge.
The search for market
outlets which had al-
ready begun in 1958 has
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CURRENT INTELLIGENCE WEEKLY-SUMMARY
30 December 1959
developed during the past year
into a "mass mutual invasion."
According to the French consul
general in Duesseldorf, for ex-
ample, much of his work now is
concerned with assisting French
businessmen to establish -sales fa-
cilities in the Ruhr, and Ger-
man salesmen are similarly in-
vading France. There are
numerous other reports of ar-
rangements for joint selling,
of preparations for the market-
ing of a range of community
products, and of distributors'
showing a preference for ;.hair-__
dling EEC items a*Cl'sively.
This trend toward the de-
velopment of a regional market
is being supported by an array
of commercial organizations.
Out of initial business contacts
which developed while the Com-
mon Market was still in the dis-
cussion state have emerged a
number of trade associations,
the most important of which is
the EEC-wide Committee of Com-
mercial Organizations of the
Common Market Countries, with
headquarters in Paris. There
is also a Union of Wholesale and
Export Traders located at The
Hague, and by mid-1959 some 40
other associations. had been formed
by the various branches of trade.
Industrial Reorganization
Parallel to this activity
in the commercial field, there
has been a decided trend in the
past two years toward a general
regrouping of business enter-
prises. By last April, more
than 60 consolidations, mergers,
or other combinations within the
individual EEC countries had been
recorded. Many of these have
been officially encouraged to ad-
vance the specialization of pro-
duction, pooling of facilities,
or sharing of technical infor-
mation.
EXAMPLES OF INDUSTRY COLLABORATION, RATIONALIZATION, AND
CONCENTRATION IN THE EUROPEAN ECONOMIC COMMUNITY
Community-wide Industry or Trade Associations
Union of Industries of the Etropean Community (at Brussels)
Liaison Committee of the Rtzropean Metal Industries (at Parts)
Study Committee of the Coal Producers of Western Etarope (at Brussels)
International Association of the Federation of Shoemakers (at Paris)
Ltaison-Committee of the Automobile Industry of the EEC (at Frankfurt)
Intra-EEC Agreements
Renault/Alfa-Romeo (Automobile sales and manufacture--France-Italy)
Alfa-Romeo/N.S.U. Werke A.G. (Automobile sales and assembly--Italy - best Germany)
Badische Antlin and Sodafabrik/Kuhlmann (Synthetics-- West Germany - France
i.ontecatint/Pechiney/Soctete Normande de ii3tieres Plasttques (Agreement on patent licensing
in plastics Industry--Italy-France)
European Syndicate for Research and Finance (Organized by large banks of several
EEC countries)
Agreements between EEC and lion-EEC Firms or Investments by Non-EEC Firms
Titanium Metals Corporation of America/Deutsche Edelstahlwerke A.G. (Agreement to set up
Luxembourg company to distribute DS roducts-- US - West Germany
Society for the South European Pipeline (AAssociation of 19 oil companies to build Mediter-
ranean-Rhine pipeline)
Project by Baker Platinum of Canada to build industrial center near Rome
Siemens Schuckert and Siemens Halske/Enaolux (Two Austrian-nattonal ized industries owning
40 percent of Luxembourg's manufacture of wire and cables)
B.F. Goodrich/A.K.U. (Joint synthetic rubber factory, Netherlands)
Concentrations and Agreements on the National Level
Daimler Benz/Auto Union (West Germany)
Society for the Promotion of Synthetic Textiles (Belgium)
France-Hines (Sales association for producers of mining equipment--France)
Sphinx/S.A. Ceramtque de l.hastricht (Grouping of pottery producers--Netherlands)
Euro,frican Company for the Financing of Pipelines (Financing company of four large French banks)
912288 30 DECEMBER 1959
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30 December 1959
Similar objectives have
also been claimed for the numer-
ous other agreements which cut
across national frontiers and
which have been particularly
prevalent among the automobile,
electronics, chemical, and avia-
tion industries. Additional
agreements of this type will
probably be encouraged by the
existence of a blanket organ-
ization of EEC industries (the
Union of Industries of the
European Community, with head-
quarters at Brussels) and by
the tendency toward extensive
cooperation among
banking and financial
circles.
Various EEC banks 320
have established close
working ties, and in-
terest in investing 1,240
in "European" shares
has resulted both in 760
the listing of for- 240
eign shares on na-
tional stock exchanges',
and in the founding of
a number of European 200
investment funds.
The Foreign Response
Increasing activ- 140
ity by foreign firms
--especially American 1
--has been one of the
natural consequences 14580
of the first steps
toward a regional mar-
ket. Anticipating a
and tax rebates--is reflected
in the inflow of American in-
vestments, especially since
January 1959, when the EEC be-
came effective. Total private
American investment in the Com-
mon Market countries ($1.9 bil-
lion in June 1959) is still
smaller than in the United King-
dom alone ($2.6 billion), but
the EEC's share of US capital
exports is increasing faster
than that of all other foreign
areas. These investments are
being made in a wide range of
manufacturing, processing, and
WRIA, I - W'7,
TOTAL US DIRECT
INVESTMENT ABROAD
US DIRECT
INVESTMENT
IN OTHER
W. EUROPEAN
COUNTRIES
US DIRECT INVESTMENT
IN EEC COUNTRIES
195'1 19x2
substantial economic growth in
the EEC and fearing exclusion
from it as the external tariff
gradually becomes effective,
foreign firms are attempting to
improve their sales organiza-'
tions, to consolidate existing
plants in the EEC area, to nego-
tiate licensing arrangements
with Continental manufacturers,
and to establish assembly or
production facilities.
The attractiveness of the
various inducements offered by
the EEC countries--low initial
costs, relatively cheap labor,
merchandising industries, and
there is a distinct trend toward
the establishment of subsidiaries
owned entirely by American inter-
ests.
Some Negative Factors
There are, of course, a
number of flaws which detract
from the impressiveness of this
over-all response. Thus far,
the larger enterprises are par-
ticipating most in the rationali-
zation process, and it remains
to be seen whether the smaller
and more backward companies will
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be lured by the,, prospects of
increased profits from a larger
turnover. The formidable in-
dustrial,.and commercial organi-
zations which have been formed,
moreover, are yet to be matched
by an. equally powerful organi-
zation of labor. There is a
regional organization in Brus-
sels of the non-Communist unions
of the EEC, but European labor
is still a long way from in-
dustry-wide bargaining across
national frontiers.
Similar reservations also
arise in the external sphere.
Gearing themselves to a Conti-
nental market, the EEC indus-
tries are tending to deepen the
cleavage between the Common Mar-
ket and the rest of Europe.
Proponents in the UK of a larger
free-trade association have
long feared that the split be-
tween the EEC and the European
Free Trade Area at the official
level will soon be consolidated
at the business level as well.
The concern of British business-
men that a disproportionate
share of American investments
would be attracted to the EEC
was a factor in London's de-
sire to speed the EFTA to an
early agreement.
The Cartel Problem
The danger.,that the EEC
will become the framework for
a "gigantic cartel" has occa-
sioned the most serious reserva-
tions., the associations now
being formed will be formidable,
not only in their relations
with labor, but also in their
relationship to the institu-
tions that are supposed to con-
trol theth. Moreover, while the
rationalization of industry how
in piobess is the hecessar_ r con-:
sequence of the opening of the
Common Market and essential to
the full realizatit ti of its
benefits, there is little doubt
that agreements have already
been made with the intent Of
minimizing the Competition the
EEC was designed to inspire.
As of now,. the machinery to
deal 'with this threat is woe-
Tully weak, When the FEC treaty
came into effect, some of the
member countries had no anti-
cartel legislation, and only
under pressure of the Common
Market have they moved to
remedy the situation. The 17C
treaty contains articles void-
ing all agreements intended to
impair trade between the member
countries or to restrict com-
petition,and the EEC Commission
has declared these provisions
to be in full effect. Imple-
menting decrees, however, are
still to be issued, and there
is no enforcement machinery.
Some Broader Implications
Despite these negative
considerations, the first two
years of the Common Market have
seen remarkable progress--at
least in the economic field.
The first tariff and quota
changes were accepted by in-
dustry without serious cavil;
the 1 January 1960 quota en-
largement and the tariff reduc-
tion next July have provoked no
alarm; and the industry associa-
tion is on record in favor of
accelerating the future tariff
and quota changes. Since Euro-
pean businessmen provided some
of the strongest initial opposi-
tion to the Common Market, this
is an encouraging reversal in
European thought.
By acquiring a vested in-
terest in the Common Market,
European industry is strength-
ening the project and'establish-
ing the essential base for a
fully integrated economy. This
will be an important contribu-
tion to the continued economic
growth without which the EEC
could not survive, ahd'it will
lnake more feasible the diffi.-
Cult steps an integrated econ-
omy will ultimately require--
the coordination of national eco-
nOthic and fiscal policies, the
pooling of monetary reserves,and
the eventual institution of a
Europeah Currency. The ardent
"pro-Europeans" have always be-
lieved that, once such measures
have been taken, only a Euro-
pean political authority can
make them work.
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CURRENT INTELLIGENCE SUMMARY
IRAQI POLITICAL PARTIES
While Iraq's political
parties have been covertly ac-
tive since the 1958 revolution,
their legal existence and ac-
tivities have been proscribed.
On the first anniversary of
the revolution, last July,Prime
Minister Qasim promised that a
transition back to "normal"
political life would begin on
6 January 1960. Since the an-
nouncement, Iraqi politicians
have been engaged in strength-
ening their positions in an-
ticipation of the resumption
of overt party activities and
elections for a National Assem
bly to be held sometime before
14 July 1960.
Like other political par-
ties in the Arab world, Iraqi
parties have only a compara-
tively small number of actual
members. The leaders are sup-
ported by followers whose ad-
herence to the party is ex-
tremely transitory, varying
with the apparent influence of
the party within the country's
power structure.
excluding the "14th of July
Communists" who jumped on the
Communist bandwagon following
the revolution. The party
probably has two members in
the present cabinet--Minister
of Municipalities Nadia Dulay-
mi and Minister of Works and
Housing Awni Yusuf--although
they are not openly identified
as Communists.
Only one member of the
party's central committee has
been definitely identified, but
retary General Salim Adil, a
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has been publicly identified.
Adil attended the last party
congress in the USSR last Feb-
ruary. There seems to be lit-
tle question that the party is
under direct or indirect con-
Of the nearly a dozen po-
litical groups existing in a
suppressed condition prior to
1958, only a few have assumed
any importance since then.
Iraqi Communist Party
Heavily suppressed by the
The official party organ
is Ittihad al-Shaab, edited by
Bus anti whiich is backstopped
by two journals--Sawt al-Ahrar
and Sawt al-Shaab. The English-
language Iraq Times has been
reduced to thelevel of a party
mouthpiece by intimidation.
former royal regime, the Commu- Rumors of a split within
nist party has now grown to be the party have not been con-
in many ways the strongest par- firmed, It is possible, how-
ty in Iraq. It is the best or- ever, that certain Communist
ganized and disciplined, and and pro-Communist elements led
exercises great influence through by Director of Oil Refinery
its control over a number of Ibrahim and People's Court
front or anization President Mahdawi will announce
the formation of a new party,the
People's party. Other Communist-
front parties have been mentioned.
Party MeMDem- In any"ease,it is likely'that
may n u m b e r as h-igh as 5,000, these groupings would form a
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30 December 1959
united front for the elec-
tions.
National Democratic Party
The National Democratic
party (NDP) was founded in
1946 under middle-class leader-
ship, and its political philos-
ophy is somewhat comparable to
that of the British Labor par-
ty. Two of its present lead-
ers--Finance Minister Muhammad
Hadid and Foreign Minister Ha-
shim Jawad--were pupils of Harold
Laski, late left-wing intellec-
tual leader of the British La-
bor party. The influence of
Kamil Chadirchi, the titular
head of the NbP, has waned con-
siderably.
Although N'DP membership
is estimated to be about 1,000,
its influence is much greater
than its size. Within the past
few months it has been building
up its organitation throughout
Iraq and has concentrated on
challenging the Communists' con-
trol of the federation of Peas-
ants Associations. The NBP has
two official newspapers, Al-Ahali
in Baghdad and another journal
in Basra.
Of all Iraqi patties, the
NDP seems at the moment to have
the best chance of competing
successfully with the Commu-
nists. Hadid, Jawad, and a law-
yer, Khaduri Khaduri, are pro-
viding the forceful leadership
which the party has lacked un-
til recently.
Baath (Renaissance) Party
The Baath is the ideologi-
cal offspring of the Baath par-
ty in Syria but operates clan-
destinely. Pan-Arab and anti-
Western in its sentiments, the
?3aath has been a special target
of Qasim since its effort to
bring about a union with the
UAR a few months after the 1958
revolution.
Although its strength is
in the neighborhood of 5,000,
the Baath suffers from poor
organitation and discipline,
governmental persecution, and
-nixiimal strength in the coun-
tryside. It hag had no press
outlet since its mouthpiece
Al-Jumhurriya was closed in the
3ai1 of 19$8: Most prominent
Baathist leaders are either in
eXi1e in the TJAR, in hiding, or
in Iraqi jails.
The Baath, or an element
of it, was behind the attempt
on Qasim's life last October,
and a number of its members
are being tried for their
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complicity. Contact is main-
tained with the rightist Istiq-
lal party, as well as with
UAR intelligence. It is
smuggling arms to its support-
ers in Iraq. The party almost
certainly will not be licensed
to resume operations in January.
Istiglal (Independence) Party
Strongly pan-Arab nation-
alist, but to the right of the
Baath, the Istiglal has been
in eclipee since the failure
of Rashid Ali to overthrow
Qasim last December. The party
is led by Sadiq Shanshal, inac-
tive Sovereignty Council mem-
ber Muhammad Mahdi Kubba, and
recently arrested President of
the Lawyer's Association Abd
al-Razzaq Shahib. The Istiq-
lal numbers around 2,000 ad-
herents, and has no official
party paper, although Al-Fajr
al-Jadid (The New Dawn) re-
flects party thinking.
On occasion the Istiglal has
shown some,:strength, particular-
ly when the NDP has chosen to
throw ~ts support to the tstiq-
lal against the Communists.
It is very doubtful that
the Istiglal will be licensed,
or that it will exert much in-
fluence on the Qasim regime un-
der present conditions.
United Democratic Party of
Kurdistan
The UbPK,the successor to
the Kurdish National Libera-
tion party, a group which sought
an independent Kurdistan, os-
tensibly works for Kurdish auton-
omy within Iraq. ' iowever, its
ultimate aim may be Kurdish in-
dependence. There is a party
newspaper in Kurdish, Khabat,
whose circulation is small and
influence negligible. The par-
ty's present policy is one of
absolute cooperation with Qasim,
and little is known of its or-
ganization or strength. The
party probably Will be licensed.
Party Activity Since 1953
Immediately after the revolu-
tion there was an almost com-
plete agreement among the po-
litical parties, including.the
Communists, as to the short-
range goals of the Iraqi le-
public--the eradication of all,
traces of direct Western in-
fluence in Iraqi affairs, and
neutrality in the East-West
conflict. However, inept at-
tempts of Deputy Prime Minister
Arif, backed by the Baathists,
to effect an immediate union
with the UAR quickly dispelled
this agreement.
The Communists resorted
to the time-tested tactic of
working through a national
front to weaken nationalist
and anti-Communist elements,
especially the Istiqlal and
13aath parties, but excepting
the National. Democratic party.
An ineffectual attempt to over-
throw the regime in December
1958 assisted the Communists
in discrediting the' FRaath
and Istiqlal parties in Qasim's
eyes.
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CURRENT INTELLIGENCE SUMMARY
30 December 1959
By early 1959 the Commu-
nists felt sufficiently strong
to drop the national-front fa-
cade and to operate openly.
They gained control of a number
of associations, unions, and
federations that were being
formed and used them as fronts.
A special target for Communist:
domination was the Popular Re-
sistance 'f'orces (PRA'), a para-
military organization utilized
on occasion by the Communists
to hunt down "enemies of the
republic."
The Istiqlal and Baath
parties offered little effec-
tive resistance to counter the
Communist tactics, except to
submit the resignations of
their members in the cabinet.
Qasim accepted these with alac-
rity, and the two parties were
eliminated as effective forces
within the Iraqi Government.
The NDP, which in the past
had cooperated with the Commu-
nists against the royal regime,
did not cross swords with the
Communists during early 1959.
The party was strengthened by
the elimination of the Baath
and Istiqlal parties from the
cabinet. In its first brush
with the Communists, the NDP
was bested and lost a cabinet
member, the minister of guid-
ance.
Communist strength and in-
fluence reached their zenith
following the revolt in Mosul
in March 1959. A wave of Com-
munist-inspired terror swept
the country,and thousands of
suspected Baath members, na-
tionalists, and anti-Communists
were imprisoned.
In early May, evidently
believing that it had Oiasim's
backing and that it fully domi-
nated the political scene, the
Communist party began a campaign
for actual participation in the
cabinet and the resumption of
political party activity. C?asim
countered this demand with a May
Day statement declaring that al-
though Iraq was on the road to
democratic rule, the time was
not ripe for political parties.
The Communists challenged
Qasim on the issue and con-
tinued their demands; they were
partially met in the reorgani-
zation of the cabinet on 14
July by the inclusion of three
party liners, including the
first woman cabinet minister
in the Arab world.
Meanwhile, the NDP out-
maneuvered the Communists by
announcing that it would heed
Qasim's wishes and cease all
political activities. Thir
forced the Communists to back-
track on their demands, which
they now referred to as "ulti-
mate objectives." They also
attempted to revive the national
front, but they failed to se-
cure the adherence of the NDP.
During the late spring and early
summer, stronger leadership as-
serted itself in the NDP, and
a concerted effort was begun
to build support among the
peasants.
The greatest blow to Com-
munist pretensions followed the
Communist-inspired Kirkuk massa-
cres in mid-July, when the PRF
Was disarmed and disbanded.
This setback prompted the:par-
ty's central committee to ac-
knowledge its errors in tactics
and mistakes in policy, par-
ticularly in deviating from
the principles of collective
leadership. The indictment
pointed out the need for disci-
pline, reorganization, and
solidarity. Communist power
was further reduced by a series
of searches, seizures, and
closing of Communist-front or-
ganizations, particularly in
the provinces.
In mid-August, however,
Qasim's strong backing of pro-
Communist People's Court Presi-
dent Mahdawi's handling of the
trials of those implicated in
the Mosul affair dismayed al-
most all non-Communist Iraqis,
and gave back to the Communists
much of their lost prestige.
To counter Communist propa-
ganda and to demonstrate that
non-Communists as well as the
Communists are capable of
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CURRENT INTELLIGENCE WEEKLY SUMMARY
effective organization and
have some government friends,
the NDP staged a large parade
in Baghdad on 18 December.
Thousands of peasants paraded
before Qasim for ten hours.
Carried out despite strenuous
Communist protests, the parade
received government backing in
the form of reduced rail fares
for participants brought in
from 'such distant -towns 'as
Mosul,>,Basra, and Kirkuk, and
in widespread coverage by Radio
Baghdad.
Prospects
Although the Communists
remain thebest organized and
most aggressive political group
inr;the country, their forward
surge seems to have been checked.
The NDP is still the only politi-
cal party in sight, however,which
could compete with the Communists
in the open political arena. To
do this, the NDP needs at least
to keep its influence in the
state's machinery and to obtain
a larger following among anti-
Communist army elements. Should
party strife become too obvious-
ly divisive after 6 January,Qasim
may well push the idea of a non-
party "movement" under his lead-
ership harder than he has so far.
The struggle between the Commu-
nists and anti-Communists would
then focus on control of the a -
paratus of his movement.
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