CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A002800050001-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 40
• Document Creation Date: December 20, 2016
• Document Release Date: December 28, 2005
• Sequence Number: 1
• Publication Date: October 27, 1999
• Content Type: SUMMARY

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COPY NO. 71
OCI NO. 3335/60
14 July 1960
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
DOCUMENT NQ.
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CENTRAL INTELLIGENCE AGENCY
I I I OFFICE OF CURRENT INTELLIGENCE
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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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14 July 1960
OF IMMEDIATE INTEREST
In a series of threats and
warnings during the past week'
Khrushchev has intensified the
Soviet campaign to discredit
American leadership in the free
world and encouraged rifts with-
in the Western alliance. Mos-
cow's stiffening attitude to-
ward the West suggests that
Soviet leaders feel the US elec-
tion period allows considerable
latitude in pressing their anti-
American campaign.
Germany
The Soviet premier con-
cluded his visit to Austria on
8 July by threatening to "con-
sider" signing a separate peace
treaty with East Germany if
Bonn holds its annual Bundestag
session in Berlin this fall.
Khrushchev's primary aim prob-
ably is to force West Germany
into a position of either back-
ing down from this established
practice or accepting the re-
sponsibility for provoking a
new and dangerous crisis. Ex-
pectations of Western disunity
and of divergencies between
Bonn and Berlin on the question
probably are a major factor in
Khrushchev's calculations.
visaged before a new summit is
conditional on Western willing-
ness'to refrain from "provoca-
tive actions."
Cuba
In a speech on 9 July to a
teachers' congress in Moscow,
Khrushchev departed from a re-
port of his Austrian visit to
project the USSR into the Cuban
situation and inflate the is-
sue into a major international
question. Khrushchev resorted
to a familiar Soviet political
warfare device of implying
strong Soviet countermoves in a
hypothetical situation, but with-
out actually committing the USSR
to a specific course of action.
After charging the United States
with economic aggression and
plans for armed intervention,
Khrushchev stated that "figura-
tively speaking, Soviet artil-
lerists, in the event of neces-
sity, can with their rocket
firepower support the Cuban peo-
ple if the aggressive forces in
the Pentagon dare begin inter-
vention against Cuba."
As in past cases of such
calculated ambiguity, Khrushchev
began to soften the implications
Khrushchev may be using
the new threat to dispel West-
ern speculation that he is seek-
ing a way out of his commitment
to change the status of Berlin.
He also probably hopes to make
it clear that his pledge to
maintain the status quo during
the six to eight months he en-
almost immediately.
In his press conference
on 12 July Khrushchev merely
promised Soviet "support" in the
event of aggression toward Cuba.
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14 July 1960
Moscow is apparently ma-
euvering to be in a position
for Khrushchev to claim, during
his forthcoming visit to Havana,
that the USSR compelled the US
to abandon plans for armed in-
tervention. The Soviet premier's
participation in the dispute
may also be the propaganda
groundwork for an arms agree-
ment between Castro and the bloc.
Soviet propaganda coverage of
the Cuban situation reached a
record high in the week ending
10 July.
The RB-47
Almost immediately follow-
ing Khrushchev's statements on
Cuba, Soviet Foreign Minister
Gromyko on 11 July handed notes
to the US, Britain, and Norway
protesting the alleged intru-
sion of an American RB-47 over
Soviet territorial waters and
stating that the USSR had shot
it down on 1 July. The notes
emphasized that the incident
substantiated the Soviet Gov-
ernment's claim that the US,
with the aid of its allies, was
continuing "to proceed on the
same path" which led to the
breakup of the summit confer-
ence and endangered world peace.
Moscow also used the incident
to cast doubt on the President's
statements in Paris that flights
over the USSR had been suspend-
ed.
The move may have been
timed for maximum impact on the
12 July British parliamentary
discussions of the issue of
control over US bases in Brit-
ain. The notes warned that
failure of America's allies
to refuse further participation
in these incidents would bring
"great danger on the peoples of
those countries." Moscow warned
that British involvement would
not only block any further im-
provement of Soviet-British re-
lations along the lines of the
Khrushchev-Macmillan communique
in 1959, but could undo the
"good results achieved in that
direction."
Norway was charged with
"incomprehensible lighthearted-
ness" in appraising the conse-
quences of US policy for the
"cause of peace and Norway in
particular."
In his press conference on
12 July Khrushchev charged that
the United States and its al-
lies were "openly provoking a
serious military conflict." He
took pains to impart a sense of
urgency to the question of US
bases.
He explained that the USSR
had refrained from carrying out
Marshal Malinovsky's threat of
instant retaliation against the
bases of intruding aircraft only
because the plane had been in-
tercepted in the initial stage
of penetration. He warned, how-
ever, that Malinovsky's state-
ments were still valid, and added
later that "spy planes" would
be shot down and the warning of
the minister of defense would
be put into effect should U-2
flights be resumed.
The Kremlin lost no time
in calling for a UN Security Coun-
cil meeting to consider formal
Soviet charges on the RB-47 in-
cident. The Soviet move on 13
July followed the general lines
of the USSR's complaint on the
U-2 incident. In his press con-
ference, Khrushchev dismissed
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 July 1960
the possibility of obtaining
successful results, but em-
phasized that the action was
necessary to "expose" the Se-
curity Council.
The prospect of an early
trial for Francis Powers, an-
nouncement of plans to try the
crew of the RB-47, Soviet ac-
tion in the UN on the RB-47 in-
cident, and Khrushchev's
strong alignment with Cuba
all point to continuing vigorous
agitation by Moscow to sus-
tain its charges that the
United States is to blame for
the deterioration of the inter-
national situation.
The immediate response
among Castro followers to Khru-
shchev's declaration of support
for the Castro regime on 9 July
was fast and enthusiastic. "Che"
Guevara told the 10 July rally,
called to protest US "acts of
economic warfare" against the
regime, that "today Cuba is a
glorious island defended by the
rockets of the greatest mili-
tary power in history. We are
practically the arbiters of
world peace."
In contrast, Fidel Castro,
in his sickbed talk to the na-
tion, recognized Khrushchev's
"spontaneous" declaration of
support, but added that "Cuba
does not depend for the defense
of its sovereignty and inde-
pendence on Soviet rockets, but
rather on the reason and justice
of its cause." Three days
later Guevara publicly stated
that if the Soviet Union at-
tempts to establish Cuba as a
Soviet satellite, "We will
fight it to the last. drop of
blood."
President Dorticos, in his
bitter anti-US harangue at the
Sunday rally, announced Soviet
willingness to take the sugar
cut from Cuba's 1960 US quota.
Moscow is apparently prepared
to take whatever quantities are
considered politically expedient.
Barter arrangements for the su-
gar, necessitating stepped-up
exports of Soviet goods to Cuba,
would further strengthen Soviet-
Cuban economic ties.
The American Embassy be-
lieves most educated Cubans op-
pose Castro's alignment of his
country with the Soviet bloc,
although opposition is still
unorganized and leaderless. De-
spite the blustering statements
by Cuban officials assuring the
public that the regime can,
with Soviet help, survive "the
economic onslaught of US im-
perialism," some are worried.
A reliable contact of the em-
bassy's agricultural attache
reports that Castro's ministers
of economy and commerce fear the
US may embargo food shipments
to Cuba, This, they reportedly
fear, would create a "dangerous"
situation in Cuba, worse than
the impending shortage in
farm and industrial machinery
parts.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 July 1960
The trends in Cuba continue
toward tighter dictatorship and
enhanced Communist influence.
The offices of the Havana Bar
Association were seized, and on
8 July pro-Castro lawyers named
a new governing board, thus
"decisively incorporating the
legal profession into the revo-
lution." At about the same
time, all provincial-level of-
ficers of the powerful Commu-
nist-dominated Cuban Labor Con-
federation (CTC) were replaced
by "men who truly respond to
the revolutionary moment in
which the country now lives."
The CTC is the regime's chief
instrument of control over
labor.
The Castro regime is be-
lieved to be considering the
appointment of Carlos Rafael
Rodriguez, a high Communist
leader and director of the par-
ty's daily, as minister of fi-
nance to replace the compliant
but ineffective incumbent, Ro-
lando Diaz Asterain. Rodriguez
has long been among Castro's
closest advisers.
LATIN AMERICAN REACTION TO CARIBBEAN TENSIONS
The major Latin American
countries are taking an increas-
ingly active interest in Car-
ibbean tensions. Venezuelan
charges of Dominican "aggres-
sion" by involvement in the 24
June attempted assassination of
President Betancourt evoked a
unanimous vote--barring the
parties involved--in the Organ-
ization of American States (OAS)
for a meeting of foreign min-
isters under the mutual defense
treaty, an unprecedented step.
Khrushchev's missile threat
and Cuba's drive for a UN Se-
curity Council debate have
startled many Latin American
governments out of aloofness
toward the Cuban problem. The
majority now is tending to fa-
vor formal inter-American con-
sideration of this issue, al-
though several are inclined
to be fainthearted. supporters
at best of the United States
in any US-Cuban dispute.
The unanimous vote on 8
July of the OAS Council to call
a meeting of American foreign
ministers probably reflects a
strong presumption of Trujillo's
guilt and some backing for Betan-
court's position that the Do-
minican Republic must be consid-
ered before Cuba in the OAS.
Panama, the United States, Mexico,
Uruguay, and Argentina were ap-
pointed to a committee to in-
vestigate the charges immediate-
ly. The strongly pro-Castro
Venezuelan foreign minister
told US Ambassador Sparks that
Venezuela will insist on all
sanctions except armed action
provided under Article 8 of the
Rio treaty, including breaking
diplomatic and consular rela-
tions. He claimed that eight
Latin American countries which
have no diplomatic representa-
tion in the Dominican Republic
would not consider a mere with-
drawal of ambassadors :..ade-
quate.
25X1
25X1
Certain key Latin Amer-
ican governments now believe
the Castro regime should be con-
sidered a hemisphere problem.
Colombian President Lleras Camargo
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 July 1960
believes that OAS action against
Trujillo will set a precedent
for action against Castro. Peru
has suggested a further meeting
of foreign ministers to consid-
er threats to the OAS and to
"American democratic principles!'
The right-wing leader of
Bolivia's government party
warned that no Latin American
country would speak out strong-
ly against Castro, since all
"felt grateful to him for having
awakened the United States to
Latin American realities." Boliv-
ia is nevertheless expected to
take a reasonably firm stand
against Soviet intrusion in
American affairs. Even Mexico--
for many years the most "inde-
pendent" of the Latin American
countries in foreign policy--
now will, according to press
reports,' support OAS considera-
tion of US-Cuban problems. Most
of the smaller Latin American
countries have for some time
tended to the view that the
Cuban regime poses a major
problem for most American
countries.
THE REPUBLIC OF THE CONGO
The Congo Government's ap-
peal to the UN for, aid in re-
storing order, together with its
denunciations of Belgian inter-
vention, have moved the new
state's internal troubles into
the international political
arena. The UN Security Council
on 14 July decided to assemble
a police force from African
countries to restore order in
the Congo. Departure' of Belgian
troops following the arrival of
the UN force would remove a
major irritant between the
Congolese and Europeans. The
situation in the Leopoldville
area, however, remains critical.
An imminent food shortage, to-
gether with the failure of many
Congolese to receive salaries
from employers who have fled,
could lead to civilian rioting.
The first known instance in
which Congolese civilians in-
itiated attacks on Europeans
occurred near Leopoldville on
12 July.
On the same day, in a clash
with mutinous units of the Force
Publique at Matadi, Belgian
forces were checked and one or
more of their supporting air-
craft shot down. Reinforcements
were flown to Leopoldville on
13 July, and occupied sections
of the city following brief
clashes with the mutineers. The
city was quiet on 14 July, and
in view of the UN action it was
not clear whether Brussels would
carry through with earlier plans
to reinforce still further its
troops in Leopoldville Province.
Premier Patrice Lumumba has
renewed demands for the with-
drawal of Belgian forces. Al-
though Lumumba's leftist infor-
mation minister charged on 13
July that "Belgium has declared
war on us," the government seems
sharply divided on the question
of how to meet the present crisis.
In contrast to Lumumba, Foreign
Minister Bomboko has avoided
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FEDERATION OF RHODESIA
AND NYASALAND /
anti-Western pronouncements and
has favored Belgian intervention
in view of the breakdown of the
Congo's own security forces.
Elsewhere, a Ghanaian offer
to send troops--either directly
or as part of a UN contingent--
was publicly accepted by the
Congo on 13 July. Prime Min:.-
ister Nkrumah, Who has high
hopes that the Congo under
Lumumba will support Ghana's
militant pan-African policy,
has already sent to Leopoldville
a special mission, including
two army officers and the head
of Ghana's Bureau of African
Affairs.
In Katanga Province, pro-
vincial Premier Moise Tshomb4
has hedged somewhat his 11 July
proclamation of an "independent"
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14 July 1960
Katanga, observing that the
provincial legislature is mere-
ly "examining the situation."
In the absence.of Belgian recog-
nition of Katanga.'s independ-
ence, Tshombd may wish to re-
tain some freedom of action in
case the Lumumba government
should fall.
Despite Belgian Premier
Eyskens' pledge to respect the
Congo's independence and to
continue economic aid, the Bel-
gian Government's position on
an independent Katanga is am-
biguous. Elements among the
Liberals and right-wing Social
Christians in the cabinet re-
gard the secession movement as
providing an opportunity for
Belgium to protect its exten-
sive financial interests in
Katanga Province. The American
Consulate in Elisabethville
believes that Belgian officials
in Katanga may be quietly abet-
ting Tshomb6.
The USSR and other bloc
countries have strongly sided
with the Congolese and have por-
standing.
trayed the situation as the na-
tural result of decolonization.
Following Khrushchev's denuncia-
tion of Brussels' dispatch of
troops to the Congo to restore
order, the USSR on 13 July is-
sued a statement accusing the
US, the UK, Belgium, France,
and West Germany Of seeking to
"liquidate" the new Congo state
through direct military action
and under cover of the UN. In
the UN Security Council, Soviet
delegate Sobolev backed the
Tunisian resolution authorizing
UN assistance and insisted that
the clause calling for the with-
drawal of Belgian troops be re-
tained. In supporting Lumumba's
charges of Belgian "aggression,"
Moscow probably hopes to fur-
ther its pose as the protector
of newly independent African
states.
Pravda, alleging a "mon-
strous conspiracy of the col-
onizers" against the young Af-
rican republic, predicted on
13 July that the forthcoming vis-
it of Premier Khrushchev to Af-
rican would be marked by in-
creased Soviet-African under-
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July 1960
NOTES AND COMMENTS
The Japanese Diet will
probably designate Hayato
Ikeda as new prime minister
following his election on 14
July as president of the ruling
Liberal-Democratic party (LDP).
'Ye is expected to form
a new government and to pre-
pare for general elections--
anticipated for late fall or
winter--which he hopes will
provide him with long-run con-
trol of the government and
party.
Attempts to establish a
strong conservative government
will be hampered by continuing
factionalism within the LDP,
which has been intensified by
the drive to unseat Prime Min-
ister Kishi, by the month-long
wrangle over choosing his suc-
cessor, and by preparations
among his rivals for a new test
of power after the election.
Leftists have launched a wide-
spread propaganda offensive in
rural strongholds of conserva-
tive strength and against US
bases to take advantage of LDP
complacency.
Ikeda is considered a
strong leader, but he does not
have dynamic popular appeal.
His possible heavy-handed ap-
proach in controlling party
factionalism may antagonize
other party leaders. Ikeda,
like Kishi, is associated with
the bureaucracy, and his elec-
tion is a disappointment to a
large number of LDP members
who had hoped fora career pol-
itician as the new party lead-
er. Now 60, Ikeda has spent
most of his 357year career in
the field of finance, having
served since June 1959 as min-
ister of international trade
and industry in the third Kishi
cabinet.
Ikeda is professedly
pro-Western and militantly
anti-Communist but is likely
to be less effective in con-
tinuing Kishi's close coopera-
tion with the United States. He
may try to establish economic
relations with Communist China
in an effort to mollify the
Socialists and LDP dissidents
and to divert attention from
domestic political issues.
Last January he stated that
following ratification of the
US-Japanese security treaty
Japan should actively seek an
accommodation with Peiping. For
fear of inviting renewed attacks,
his government may also be slow
to implement various administra-
tive agreements under-'the new
security treaty.
Before resigning, the Kishi
government took a first step to-
ward forestalling participation
by unionized government workers
in future political strikes by
announcing dismissal, suspension,
or pay cuts for leaders and mem-
bers of the postal and railway
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workers' unions who took part in
recent demonstrations. The
Supreme Court is expected to
rule on 20 July on ordinances
relating to demonstrations; con-
flicting lower court rulings
have so far rendered the ordi-
nances ineffective. However,
the absence of strong public
reaction against the recent
violence and illegal strikes,
and public aversion to strong
police powers, will hinder gov-
ernment efforts to prevent
further disruption by a well-
organized leftist minority.
LDP leaders are faced with
widespread complacency among
conservatives and with a failure
of the party thus far to present
its case clearly to the elec-
torate through an adequate public
relations campaign. Lulled by
early July victories in guber-
natorial elections in Aomori and
Saitama prefectures, party
members appear to be taking it
for granted that their support
in rural areas will continue.
The leftists on the other
hand are mounting an intensive
propaganda campaign to increase
their strength in the tradi-
tionally conservative small
cities and farm areas. They in-
terpret their success in the
recent demonstrations as a major
gain in the formation of a wide
popular front under Communist
direction and are seeking to
broaden their support before
the general election. They
concede privately that their
defeats in Aomori and Saitama
reflect the strong aversion
among most Japanese, especially
outside the larger cities, to
the leftist policy of violence.
One of the most important
new leftist propaganda organi-
zations formed to overcome con-
servative opposition is a "get-
to-the-people" movement called
Kikyo-Undo, which is composed of
leftist students, teachers, and
other intellectuals who partici-
pated in recent demonstrations.
Members returning to their home
towns during the summer academic
recess are expected to press
leftist convictions on their
rural neighbors in a major ef-
fort to penetrate the strong-
holds of conservative support.
In addition, officials of the
Japanese Socialist party de-
cided on 8 July to send teams
of party leaders and speakers
throughout the country in July
and August.
Extreme leftists are in-
creasing pressure against the
continuing presence of US forces
in Japan. The demonstration
on 10 July against an American
base at Atsugi centered on the
charge that U-2 planes had been
based there. The Council Against
Atomic and Hydrogen Bombs, which
often follows the Communist line,
announced on 13 July that it
would demand government inspec-
tion of US bases and negotiation
for withdrawal of US forces.
Prospects for long-range success
of the pro-Communist program will
be enhanced if the conservatives
continue, as in the past, to
make little effort to present
their case.
De Gaulle's speeches during
his 6-10 July tour of Normandy
appear to have reinforced the
French public's optimism con-
cerning the possibility of an
early end to the fighting in
Algeria and the application of
his self-determination formula.
In fact, however, while some
rebel leaders had reportedly
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14 July 1960
hoped the President's speeches
in Normandy would produce con-
cessions, his remarks did not
include anything likely to help
break the present deadlock in
cease-fire negotiations with
the rebels.
The Algerians expect ne-
gotiations to be resumed, but
insist that the initiative must
come from De Gaulle. Rebel Pre-
mier Ferhat Abbas reportedly
has left for a vacation in
Switzerland and hopes the French
will approach him there.
The rebels' preconditions
for new negotiations reportedly
emphasize French recognition
of their "equality" as nego-
tiators, although not recognition
of the provisional government
itself. In effect, they insist
that substantive negotiations
must be arranged by mutual a-
greement and not on French terms.
Rebel moderates are said to be
willing to dispense with another
advance party and to send a
substantive delegation headed
by Abbas if an accommodation
can be reached on procedural
matters.
During his speaking tour,
De Gaulle spelled out for the
first time some details of the
solution he prefers. In partic-
ular, he said that after the
fighting stops he wants "all
the Algerians" to return home
and to "renew contacts with
each other" before deciding on
their country's future. He
also noted that an "Algerian
Algeria" would involve creation
of separate legislative and
judicial institutions--a touchy
point with French rightists.
De Gaulle reportedly may
also move ahead rapidly. to or-
ganize previously elected Al-
gerian officials into study
commissions to lay the basis
for new Algerian institutions,
leaving the rebels on the
sidelines of political dis-
cussions as long as they delay
a cease-fire.
Although De Gaulle may
have been trying in his Normandy
speeches to prepare French pub-
lic opinion for some of the
realities of an Algerian solu-
tion, his unilateral pronounce-
ment on a topic previously desig-
nated for bilateral discussion--
the future of the combatants--
is likely to annoy the rebel
leaders.
A group of rightist ex-
tremists--consisting of former
Poujadists, "ultras" from the
Independent party, right-wing
Algerian parliament members,
and a few army officers--on 8
July established an organization
calling itself the National
Front for French Algeria (FNAF).
This group has publicly attacked
the De Gaulle regime for "treason
and abandonment" and apparently
hopes to displace Jacques
Soustelle's multiparty group
as the champion in metropolitan
France of a French Algeria.
The FNAF already has the
approval of another group, the
French Algerian Front (FAF),
which has mushroomed among pro-
French groups in Algeria since
the rebels' announcement on 20
June that they would negotiate
in Paris. Thus far, however, the
FAF has avoided overt links with
the Soustelle organization. 25X1
Although the widespread
anti-Fascist rioting has sub-
sided to what the Italian. press
calls "a tense calm," the basic
causes for the disorders remain.
The Christian Democrats must
choose between continuing Pre-
mier Tambroni's neo-Fascist -
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14 July 1960
supported government--at the
risk of polarizing Italian poli-
tics--and precipitating a cabi-
net crisis which in itself could
set off further disorders,
Already vulnerable because,
of the neo-Fascist alliance, the
Tambroni government laid itself
open to further criticism by its
handling of arrangements for a
neo-Fascist party congress. The
government first acquiesced in
the choice of Genoa, a seat of
the wartime anti-Fascist resist-
ance, as the site for the con-
gress. Then, in the face of pro-
test demonstrations, the govern-
ment indicated it would not take
steps to protect the congress,
even though the holding of the
meeting was unassailable from
a legal-. standpoint. The con-
gress was subsequently canceled.
While the existence of the
Italian Social Movement violates
the spirit of a constitutional
provision against the revival
of the dissolved Fascist party,
the MSI has never been banned.
The neo-Fascists will probably
continue their sporadic rioting
against the Communists, but will
be reluctant to overthrow the
government and thus lose their
present position controlling its
tenure.
The Christian Democratic
party, although embarrassed by
COMMUNITY MOVEMENT I
(PSDU
INDEPENDENT LEFT 1
UMMARY
difficult of solution as the one
which caused a two-month gap in
government this year. It is not
clear, in any case, whether
President Gronchi can be per-
suaded tb oust Tambroni at this
time.
Nevertheless, some Chris-
tian Democrats are fearful of
approaching the nationwide local
elections this fall under the
present stigma. There are some
hints that elections may be
postponed, or that Monarchist
(Italian Democratic party) par-
liamentary support may be sub-
stituted for that of the neo-
Fascists. The left-center parties,
including the Nenni Socialists,
are pointing to the disorders
as exemplifying the need for a
more representative center-left
government.
The Communists, seeking
to exploit the nationwide reac-
tion against Fascism as a means
ITALIAN
PARLIAMENT
SOUTH TYROLEANS(SVP)
VALDOSTAN UNION (UVD)
14 JULY 1960
Tambroni, is fearful that his
sudden ouster would substantiate
Communist claims of victory or
at best create a crisis :as
to revive
last year
bases.
SECRET
to emerge from their
own isolation, re-
capture the Nenni
Socialists, and per-
haps take control of
the entire democratic
left, will probably
try to promote further
disorders. Thus far,
they have shown little
disposition to try to
divert the agitation
to NATO installations
in Italy, but some new
turn of events could
lead the Communists
their campaign of
against the US missile
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CURRENT INTELLIGENCE WEEKLY SUMl1ARY
14 July 1960
Khrushchev", 1n -his 30 June -
3 July,,visit to.. Austria, failed
to impress the populace. His..
abuse of Austrian. hospitality
by his intemperate attacks bn
the United States and West Ger
many embarrassed.;Austrian offi-
.c .als, who ,could find little
positive to salvage from the
"diplomatic wreckage" of the
visit. Even the mild Soviet
concessions in the accompanying
economic talks were criticized
by the independent Austrian
press as meager compensation
for the visit.
Despite careful prepara-
tions by the Austrian Commu.-'
nists, rallies for the Soviet
premier were sparsely attended.
Prominent Austrian officials,
including cabinet members of
Chancellor Raab's own party,
were angered by the chancellor's
insistence on accompanying Khru-
shchev on the tour and his re-
sulting presence during Khru-
shchev's diatribes against
Austria's friends.
After protests from the
American and West German ambas-
sadors, Raab apologized. in two
public statements at the end of
the visit, saying he had com-
plained to Khrushchev about the
blasts at Adenauer. The cabinet,
however, has now balanced out
even these weak statements by
rejecting the protests and af-
firming that only Austria could
decide on problems relating to
its neutrality; in effect re-
jecting also a Khrushchev
pledge made during the visit
"not to remain idle" if Austria
were attacked.
Instead, Khrushchev agreed to
cancel, effective next year, the
annual exchange of 500,000 tons
of Austrian crude oil for 500,-
000 tons of Soviet crude oil
with a higher sulfur content.
The Soviet Union also agreed to
permit discontinuance in 1964--
one year ahead of schedule--of
Austria's remaining annual ship-
ments of 500,000 tons of oil to
the USSR.
Moscow further agreed to
accept other Austrian repara-
tions deliveries--valued at
$25,000,000 annually--as ordinary
imports under the new five-year
trade pact to be negotiated in
September. Khrushchev's speeches
and the final joint communique
made clear, however, that the
USSR intends to keep its trade
with Austria in balance--which
would mean that Austrian imports
from the USSR must be almost
doubled to match the $25,000,000
figure.
Soviet-Austrian economic
relations were'discussed in
detail, but Austria's hopes for
cancellation of its outstanding
oil reparation payments to the
USSR were not fully realized.
In addition, Soviet and
Austrian officials may have dis-
cussed plans to extend the Soviet
bloc's oil pipeline from Czecho-
slovaki.a to Vienna. Khrushchev
inspected a complete oxygen-
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 July 1960
converter-type steelmaking
installation--first developed
in Austria--during the visit,
and Austria may have agreed to
sell the USSR one, along with
the technical know-how to build
and operate it.
(Prepared jointly with ORR)
EFFECT OF BEVAN'S DEATH ON BRITISH LABOR PARTY
The issue of who should
succeed the. late'Aneuran Bevan
as deputy leader of Britain's
labor party threatens to add
to the sharp intraparty contro-
versy now raging over Labor's
position on defense policies.
Left-wing elements, in-
creasingly dissatisfied with
Hugh Gaitskell's leadership of
the party, are likely to push
the candidacy of Harold Wilson,
who is "chancellor of the excheq-
uer" in Labor's "shadow cabinet."
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 July 1960
Wilson, despite his academic
background and his party repu-
tation for unreliability,
appeals to the left because he
has feuded intermittently with
Gaitskell, most recently over
the nationalization issue, on
which Gaitskell now has backed
down.
Gaitskell's problem is .
accentuated by the ' imminent re-
tirement from politics of the
shadow minister of labor,. Alfred
Robens, a moderate with a broad
following in the trade. unions
who might otherwise have been
a compromise candidate to re-
place Bevan.
The '_ ad ing right-wing co:--
tender fo:- "evan's post appear:-:
to be George Brown, the shadow
defence ministD, , Who the
o has Politically desirable trade
union ckground to balance
Gaitskell's "intellectualism,,,
but is probably too moderate to
be acceptable to the increas-
ingly aggressive radicals. An-
other prospective right-wing
candidate is James Callaghan,
who `_as gained favorable atten-
tion for his parliamentary
ability as shadow colonial sec-
retary but who still lacks broad
support within the party. All
l.i:ree contenders are in their
forties.
Rather than undergo another
interparty battle, Gaitskell
would probably prefer to select
the deputy leader from among the
older members who entertain no
notion of advancing to the
leadership, such as Bevan's
predecessor, James Griffiths,
now 69. If the Wilson candidacy
gains strength, Gaitskell's
recent tactics of compromise
suggest he would accept Wilson.
The party's new defense state-
ment goes far to conciliate the
left by incorporating major
elements of the program of those
advocating unit%tteral nuclear
disarmament. The Gaitskell
camp also appears ready to see
the party treasurership go to
a nominee of trade union leader
Frank Cousins, Gaitskell's most
powerful critic on defense.
Although Labor's delegation
in Parliament--where Gaitskell's
position is strongest--will
make the actual selection when
a new Parl ia-ent opens in Novem-
f : r, it is ?obably not strong
enough to against any decided
preference or the deputy lead-
ership sho-.-= at the party con-
ference in October, when the
defense s_ L;uo will be fought
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CURRENT INTELLIGENCE WEEKLY SUMXARY
14 July 1960
The Communist regime in
East Germany, apparently with
Soviet backing, is emphasizing
in official statements its long-
standing goals in the German
and Berlin questions: a peace
treaty between the allies and
both Germanys if possible, a
separate treaty with East Ger-
many otherwise, and a demili-
tarized free-city status for
West Berlin. To this end, party
r
The East Germans have strongly
supported Khrushchev's efforts
to stop Bonn from holding Bunde-
stag meetings in West Berlin.
In recent weeks, East Ger-
man propaganda has been trying
Areas in East Germany Denied
to Western Military Liaison Missions
ti..
a.lMarxStodgy
r
j,
C Z } C Ii O S L O V A
boss Ulbricht has launched a
campaign of threats designed
to back up his claim that East
Germany is the only legal Ger-
man state--an assertion echoed
recently by Czech leader Novotny.
to provoke demonstra-
tions against Adenauer
by urging West German
students and workers to
follow the example of
the Japanese rioters.
Other moves have in-
cluded a note to the
Western Allies protest-
ing alleged recruitment
in West Berlin for the
West German Army. This
was followed by a So-
viet note recapitulat-
ing the East German
charges. TASS has re-
ported the revival of
.East German proposals
for nonaggression pacts
with Baltic countries,
aimed at making the
Baltic a "sea of peace."
Premier Grotewohl
and Polish Premier
Cyrankiewicz on 6 July
celebrated in Magdeburg
the tenth anniversary
of the treaty establish-
ing the Oder-Neisse line
as the Polish - East
German border, stress-
ing the theme that "our
common frontier against
West German militarism
is the frontier of the
Elbe"--East Germany's
Western boundary. In addition,
the Ulbricht regime has sharply
protested to Bonn against al=
leged violations of that boun-
dary by West Germans.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 July 1960
East German police have
continued to harass the West-
ern military liaison missions
in an effort to force them to
recognize a degree of control
by the German Communists. Re-
cent developments suggest that
Moscow is supporting the cam-
paign,
As a result of the three
most recent incidents on 4 and 5
July, the British commander in
chief has temporarily suspended
travel by the mission. Soviet
authorities have imposed an al-
most complete ban on travel by
the missions for the period 13-
21 July. While this action may
have been taken primarily for
military security reasons, it
also has the effect of further
harassing the missions. The
US and French missions had
also been subjected to con-
tinued, although less severe,
harassment.
The many transfers and ap-
pointments in the Soviet dip-
lomatic service within the past
two months, probably part of
the normal periodic turnover of
the diplomatic corps, are note-
worthy for the number of offi-
cials transferred to the Ministry
of Foreign Affairs from other
government departments and high-
level party posts. Only two of
the eight new ambassadors are
career diplomats; three came
from party posts, two from
other government departments,
and one, although already serv-
ing in the diplomatic corps,
had formerly been a government
minister.
The reason for such an
influx of outsiders at this
time is not clear, and probably
varies from case to case. It
may be related, however, to the
practice since Stalin's death
in 1953 of using the diplomatic
service as a dumping ground for
men who for one reason or an-
other have become surplus talent
in the domestic administration.
In many instances to date, such
men have been usefully employed
in revitalizing and improving
Soviet diplomatic activity.
The practice of staffing
the top posts in Soviet bloc
countries with former party
and government careerists has
been continued with the assign-
ment of Georgy Denisov to Bul-
garia and Vladimir Ustinov to
Hungary. Denisov was head of
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 July 1960
the agriculture de-
partment "for the un-
ion republics" in the
party's central staff
in Moscow, and Ustinov
was party first secre-
tary in Moscow. Nei-
ther had been criticized,
but Denisov could have
been held responsible
for some of the diffi-
culties plaguing Soviet
agriculture.
Denisov's prede-
cessor had been in Bul-
garia over six years
and was due for reas-
signment, but Terenty
Shtykov had been in
Hungary oftly a year.
CHRONOLOGY OF RECENT CHANGES IN USSR MINISTRY
OF FOREIGN AFFAIRS
3 June 1960
10 June 1960
27 June 1960
1 July 1960
5 July 1960
7 July 1960
The replacement of Boris
Volkov as ambassador to Indo-
nesia was almost certainly an
aftermath of Khrushchev's
Southeast Asia trip in February.
Volkov was sent home during
Khrushchev's stay in Indonesia
allegedly for ineptness in handling
of arrangements for the visit.
Volkov was replaced by former
USSR Minister of Culture Niko-
lay Mikhaylov, who had been out
of a job since 4 May when Yeka-
terina Furtseva took over the
Culture Ministry. This is the
second time Mikhaylov has been
"exiled" to diplomatic work.
He was for many years in or
near the top levels of the par-
ty, and then spent a year as
ambassador in Warsaw before be-
coming minister of culture in
March 1955. _
The new ambassador to
Switzerland, Iosif Kuzmin, had
also been out of a job before
assignment to his diplomatic
G. A. Denisov replaced Yu. K. Prikhodov as
ambassador to Bulgaria.
I. I. Kuzmin replaced N. I. Koryukin as
ambassador to Switzerland.
S. F. Antonov replaced M. V. Degtyar as
ambassador to Afghanistan.
V. I. Avilov replaced S. G. Lapin as
ambassador to Austria.
N. A. Mikhaylov replaced B. M. Volkov as
ambassador to Indonesia.
V. I. Ustinov replaced T. F. Shtykov as
ambassador to Hungary.
S. M. Kudryavtsev appointed ambassador to
Cuba.
post. He was appointed USSR
deputy premier and state
planning chief in 1957 at the
time of the industrial re-
organization but lost that job
to Aleksey Kosygin in early
1959; he then was appointed
chairman of the State Scien-
tific-Economic Council, from
which he was fired on 22 April
1960. The former ambassador,
who had been in Switzerland
only slightly over a year, may
have been recalled as a result
of Swiss expulsion of two Soviet
diplomats in early May on charges
of espionage.
Mikhail Degtyar had been am-
bassador in Afghanistan for
seven years and was due for
reassignment. His replacement,
Sergey Antonov, had been USSR
minister of meat and dairy prod-
ucts industry, and during
the past two years was charge
d'affaires in Peiping during
the frequent and extended ab-
sences of the ambassador.
Viktor Avilov, the replace-
ment for Sergey Lapin in Austria,
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14 July 1960
is a career foreign service of-
ficer who had previously been
ambassador to Belgium and then
deputy head of the Foreign
Ministry's press division.
Lapin had left Austria several
weeks earlier to take up a new
assignment in Moscow as first
deputy to Yury Zhukov, head of
the State Committee for Cultural
FIelations with Foreign Countries.
In addition to the trans-
fers, ambassadors were appointed
for the first time to the Togo
Republic and, after a lapse
of over eight years, again to
Cuba. Dzhabar Rasulov, the
ambassador to Togo, is a central
Asian Moslem and formerly a re-
public party secretary in
Tadzhikistan. The new ambassador
to Cuba, Bergey Kudryavtseq, en-
tered the diplomatic service be-
fore World War II and most re-
cently was counselor of the em-
bassy in Paris. From 1942 to 1944,
when he was first secretary of
the Soviet Embassy in Ottawa,
Kudryavtsev organized and ran
the Soviet atomic spy ring there,
and there has been some specula-
tion that his assignment to
Cuba may include the direction
of espionage activities against
the United States.
TASS stated on 9 July that
American pilot Francis Powers
has been arraigned on charges
of espionage. It announced that
the State Security Committee
(KGB) has completed its in-
quiry into the case and that
the Soviet prosecutor general
has referred the indictment to
the Military Collegium of the
Soviet Supreme Court. This sug-
gests that Powers will stand
trial soon, perhaps within the
next two weeks.
to nine months with the per-
mission of the "proper authori-
ties."
The referral of the in-
dictment to the Military Col-
legium of the Soviet Supreme
Court makes it virtually cer-
tain that Powers will be tried
by that body. Under Soviet law,
all espionage cases are heard
by courts-martial, and the
Supreme Court can sit as a court
of first instance in "especially
important cases."
Powers has been charged
with violating Article 2 of the
Law on Criminal Liability for
Crimes Against the State, which
defines espionage by a for-
eigner or stateless person as
the transmission of state
secrets to a foreign government
or the gathering of intelligence
information with the intent of
of transmitting it to a foreign
power. Inquiry into such cases
is reserved to the KGB, and the
secret police may hold the
accused for a pre-trial inves-
tigation period of two months;
this period can be extended up
The Kremlin might well see
considerable propaganda advan-
tage in staging a show trial.
Several Soviet spokesmen, in-
cluding First Deputy Premier
Mikoyan, have asserted that the
trial will be public, and Soviet
propaganda has emphasized that
it will serve as a warning to
war provocateurs. A public
trial before the Soviet Union's
highest military tribunal, re-
plete with the solemn trappings
of post-Stalin "socialist legal-
ity," might therefore be used as
a forum for further attacks on
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 July 1960
the United States. In such an
event, the prosecuting attorney
is likely to be Roman Rudenko,
the prosecutor general and former
chief Soviet attorney at the
Nuremberg war crimes trial.
Powers can be sentenced to
death or to a prison term of
seven to fifteen years. The
severity of the sentence, how-
ever, is determined by the court
on the basis of any mitigating
circumstances, among which are
confession and the conduct of
the accused. The alleged text
of Powers' confession was dis-
played at the U-2 exhibit in
Gorky Park in Moscow, and some
Soviet spokesmen have stated
that his conduct has been "good:'
Under the terms of the law, a
person convicted of a crime
against the state becomes eligi-
ble for parole after serving
two thirds of his sentence.
Khrushchev stated at a
recent press conference that
Powers will "probably" be tried
separately from the. two
crew.'men of the RB-47
aircraft downed. on 1 July.
Communist China, by secur-
ing Ghana's agreement on 5 July
to exchange ambassadors, has re-
ceived an endorsement from a
leading African neutral at a
time when four new African
states--Mali, the Congo, and
the Malagasy and Somali repub-
lics--face the question of Chi-
nese recognition. Ghana, the
second African nation, after
Guinea, to accept Peiping's dip-
lomats, claims to have inherited
from Britain its recognition of
the Communist regime. Although
Ghana apparently made no move
to solicit diplomatic ties, its
foreign minister told the Ameri-
can ambassador three months ago
that envoys would be exchanged
if requested by Peiping.
The African states are im-
portant to Communist China's
long-term effort to build a
strongly pro-Peiping bloc among
the underdeveloped nations. As
an inducement, Peiping will
probably agree to participate
in their economic development
programs.
are feted in Peiping and occa-
sionally given funds for propa-
ganda activity. Guinea is re-
ceiving technical assistance to
increase its rice yield, and
recently has been given 10,000
tons of rice. Peiping, which
is represented on both the Afro-
Asian People's Solidarity Coun-
cil and the Afro-Asian Economic
Organization, this year manuevered
to increase its power in these
bodies.
In its propaganda, Com-
munist China pledges support to
those Africans still engaged in
the "anticolonial struggle" and
exhorts the newly independent
states to "uphold" their recent
independence by resisting "neo-
colonialism," which the Chinese
equate with the US economic
presence in Africa. Peiping,
in fact, has tried hard to in-
ject its own animosity for Amer-
icans into the "liberation move-
ment" and at present is accusing
the United States of trying to
suppress the Congo mutiny, which
Peiping termed a "Just struggle."
The Chinese Communists
have used a variety of appeals
to advance their position in
Africa. African nationalists
While Peiping's efforts have
impressed many Africans, all the
spoils have not fallen to the
Communists. Taipei, which has
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 July 1960
MOROCCO
with CC C
SPANISH
SAHARA
with C
IVORY
COAST
UPPER
VOLTA
LIBYA
with NC
/ BR.
CAMEROONS
OMEY
NIGERIA yJ
/If WithK
CC NC 0
Country having formal
diplomatic relations with NC
with Nationalist China
Country having formal
diplomatic relations with CC
with Communist China
Country expected to
become independent
in 1960
CENTRAL AFRICAN
REPUBLIC
REPUBLIC
OF THE CONGO
BECHUANALA
UAR
(EGYPT)
with CC
SUDAN
with CC
r,F /Brtsu
recently stepped up its own dip-
lomatic campaign in Africa, is
recognized by Liberia and Cam-
eroun, and by Togo, which agreed
to establishment of a Chinese Na-
tionalist embassy at the same
time Communist China was extend-
ing recognition to the new re-
public. Peiping, despite its
bitter opposition to "two Chi-
nas," has not withdrawn recogni-
tion of Togo, nor has it failed
to recognize the Malagasy Re-
public, where the Chinese Na-
tionalists already have a con-
sulate general and feel certain
of getting an embassy.
with NC
Taipei, which plans trade
and technical aid offers, also
appears confident of recogni-
tion by the Somalis. It has an-
nounced diplomatic relations
with the Mali Federation, but
there has been no confirmation
from Dakar, where some offi-
cials hope it will be possi-
ble to recognize both Chinas.
Although the Chinese National-
ists, unlike the Chinese Com-
munists, were invited to the
independence ceremony in the
Republic of the Congo, they
are less assured of success
there.
SECRET
PART II NOTES AND COMMENTS
AFRICA
ANGOLA
i\
FEDERATION ORI
RHODESIA AN-D+~
NYASALAND
MOZAMBIQUE
yV
MALAGASY
REPUBLIC
SOUTH-WES, N\-,_ _j \ 7 II
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 July 1960
The selection of Abdirascid
Ali Scermarche as premier-des-
ignate completes the roster of
top officials of the new Somali
Republic and ends much of the
uncertainty that has existed
since the new state became in-
dependent on 1 July. Abdirascid's
selection should strengthen pro-
Western forces and at least de-
lay Mogadiscio's agreement to
closer relations with the Sino-
Soviet bloc, The premier-desig-
nate, who is a leading flarot
tribesman from the former Somali
area, lacks executive experience
and did not hold a ministerial
position in the previous Somalia
government.
The new Somali Republic--
comprising the former British
Somaliland protectorate and the
Italian-administered trust ter-
ritory of Somalia--has been
threatened with disintegration
because of disagreement over the
distribution of political in-
fluence and arrangements for
military forces and their Brit-
ish and Italian advisers. A
riot instigated by an extremist
opposition party led to blood-
shed in Mogadiscio on 1 July.
At present, however, the
republic appears to have weath-
ered its first storm as an inde-
pendent state. The legislative
assembly with little opposition
elected Aden Abdullah Osman,
revered leader from Somalia,
president, On 7 July, the more
controversial post of assembly
president was won by Jama
Abdullahi Kalib from the former
British area, thereby satisfying
regional demands for political
influence and easing the way for
the subsequent more important
election of the prime minister.
The former prime minister of
Somalia,Abdullahi Issa Mohamud,
who had stirred up tribal op-
position and religious anger by
his maladroitness in handling
an invitation for Israel to
attend the independence cele-
bration, lost to Abdirascid All
Scermarche.
Abdirascid is a fervent
Moslem and ideologically opposed
to Communism. He is likely to
delay the establishment of
diplomatic relations with the
Communist bloc nations and will
hesitate to accept offers of
economic assistance. However,
his political inflexibility is
likely to cause him political
difficulties, particularly if
the experienced Abdullahi Issa,
who holds no major office, mends
his political fences.
The new government of this
poverty-stricken- area must im-
mediately tackle the problem of
foreign relations and economic
assistance. Border troubles
with Ethiopia are a persistent
problem. Negotiations with
Italy have not been successfully
concluded because of Mogadiscio's
objections to Italian control
over some budgetary expenditures
and the management of Italian
technical advisers. Nevertheless,
the republic's leaders are re-
luctant to accept assistance
from the Communist bloc.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 July 1960
King Mohamed v continues
to maintain a precarious bal-
ance between Moroccan political
factions. The principal tar-
get of left-wing criticism,
Crown Prince Moulay Hassan, as
deputy premier largely respon-
sible for routine governmental
affairs, is maneuvering to con-
solidate conservative and mil-
itary backing for the monarchy.
pate in his cabinet, by endors-
ing in toto the program of the
pro-left Ibrahim government
which he dismissed in May. Left-
ists imprisoned for an alleged
plot to assassinate the crown
prince have been released with-
out trial, a move which casts
doubt on the validity of the
original charges.
The King seems to have
quietly permitted the legaliza-
tion on 4 July of a rightist-
sponsored labor union. Four
ministers who were reported in-
tent on resigning if the organ-
ization were legalized appar-
ently have not done so. The
new union was formed in an at-
tempt to win grass-roots labor
support away from the Moroccan
Union of Labor (UMT), which is
the base of the strength of the
leftist National Union of Pop-
ular Forces (UNFP).
The' UMT and UNFP appar-
ently have decided to take no
immediate retaliatory action
against the rival group. The
King also backed his adminis-
tration's attempt to reduce the
growing strength of the left by
invalidating on charges of
fraud the 8 May election of the
Casablanca Chamber of Commerce
and Industry in which the UNPP
and UMT won all seats.
On the other hand, the King
has made several significant
gestures toward the loft since
assuming personal responsibility
for governmental affairs seven
weeks ago. He has sought to
stifle the criticism of the
UNFP, which refused to partici-
Sure of its strength in
major industrial centers on
Morocco's west coast, the UNFP
is now concentrating on build-
ing up a following in the Moroc-
can interior, where it was
weakest in the communal elec-
tions of 29 May. It is also
openly demanding a popularly
accepted constitution, as op-
posed to one imposed by the
King. A leading UMT official
has sharply criticized in pri-
vate the King and the monarchic
establishment. Such views
have not yet been expressed
openly by leftist leaders.
The replacement of Mohamed
Laghzaoui, former director of
national security who is close
to the King, and the subordina-
tion of Laghzaoui's well-disci-
plined force to the Ministry of
the Interior--long-sought goals
of the left--may reduce the ef-
fectiveness of this force as a
mainstay of the King's power.
A clash of views between Laghzaoui
and the crown prince apparently
instigated the change. The
prince, having won his point,
can be expected to attempt to
reorient the loyalty of this
force to himself rather than to
his father. The force probably
will also become a major target
for leftist indoctrination.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 July 1960
Ceylon's national elections
on 20 July are unlikely to re-
solve the political stalemate
which resulted from the elections
last March, when no single party
won a majority in Parliament.
In terms of:vote-getting ability,
the moderate-socialist Sri Lanka
Freedom party (SLFP) and the rel.
atively conservative United Na-
tional party (UNP) appear about
evenly matched, with the UNP pos-
Mrs. Bandaranaike campaigning.
sibly holding the slight edge it
won last March.
minister's widow, whose emotional
campaigning in March revived
some of the pro-SLFP sentiment
inspired by Bandaranaike.
The UNP, however, depart-
ing from the pedestrian themes
of its March campaign, is vigor-
ously exploiting two important
issues--the Singhalese-Buddhist
community's deep prejudice against
the Tamil-speaking minority, and
Lhe role of local Communists.
The party's charge that the SLFP
has a "secret pact" with the
Tamil Federal party may have
weakened the SLFP's solid hold
in the rural Singhalese areas,
which are particularly anti-Tamil.
The three-party electoral.
agreement has given the UNP
grounds to accuse the SLFP of
being a front for the Marxists.
This charge was reinforced by a
much-publicized meeting on 15
June between two Trotskyite lead-
ers and the Soviet ambassador.
The incident has forced SLFP
leaders to make defensive state-
ments revealing their conflicting
interests. Some have emphatically
denied any plans for post-elec-
tion cooperation with the Marxists,
while others have proclaimed that
the party will form a "government
with Marxist support."
The SLFP has a theoretical
advantage as a result of its
electoral agreement eliminating
competition with the Trotskyite
and the orthodox Communist
parties. If voting follows the
March pattern, the agreement
could cut the UNP's 50 seats by
as much as eight or ten. The
SLFP also has in its favor the
continuing personal campaign of
Mrs. Bandaranaike, the late prime
Continuing press speculation
on international Communist efforts
to "merge all Marxist forces" in
Ceylon may arouse latent suspicion
of Communist methods and inten-
tions, although it is not clear
whether discussion of this issue
hag reached enough voters to affect
election trends. In addition,
popular reaction against the worn-
out campaign slogans and repeated
charges and countercharges may
cause voters to vote solely on
the basis of local personalities.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 July 1960
SINO-INDONESIAN DISPUTE HEIGHTENED
Sino-Indonesian tensions
have been sharpened by an in-
cident in the West Java town
of Tjimahi on 3 July in which
two Overseas Chinese women
were shot and killed while dem-
onstrating against Indonesian
Army efforts to force Chinese
residents into repatriation
staging areas. Chinese Com-
munist Ambassador Huang Chen on
4 July lodged a strong protest
with Djakarta, demanding punish-
ment for the "murderers," pay-
ment of compensation, and an
end to forcible resettlement.
In a note a week later Peiping
demanded an "open apology" and
that measuresLbe taken "at once"
to prevent a recurrence. Such
incidents, it said, have "se-
riously affected" Sino-Indo-
nesian relations.
On orders from the Chinese
Embassy, Chinese shops in the
Bandung area closed on 4 July
to protest the killings. On
the mainland, returnees from
Indonesia--numbering over
40,000 in 1960--have staged
indignation rallies in the course
of which their compatriots still
in Indonesia were assured of the
"powerful backing" of Communist
China. If the Indonesian re-
ply to the Chinese note is un-
satisfactory, Peiping may order
a closure of Chinese-operated
shops throughout Indonesia.
Such action, if carried out,
would have=a crippling effect
on retail trade.
The Chinese Embassy is be-
lieved to have organized the
Tjimahi demonstrations. Pei-
ping claims ,the. incident was
"deliberately created" by
Indonesia, and that the In-
donesian version of the af-
fair--that troops were forced
to fire on an attacking crowd
of Chinese--was an "out-and-
out falsehood."
Peiping's protests cul-
minated a month of increasingly
vigorous propaganda attacks
prompted by the resumption of
forcible removal of Overseas
Chinese from rural areas of West
Java. The Chinese Communists
view the revival of forced
evacuations as a breach of
promise, asserting that
Indonesian Foreign Minister
Subandrio had stated in March
that the program was terminated.
The Chinese, charging American
connivance, claimed that US
Embassy personnel have been
active in areas in which for-
cible evacuations have been
resumed.
The Indonesian Government
appears apprehensive over the
effect of the Tjimahi incident
on its relations with Peiping.
The government has imposed strict
censorship on press reporting
of the affair and, beyond
official statements on 4 July
which sought to explain what
had happened, has made no
further attempt to justify the
action of Indonesian troops.
Although the government
asserts that the "obstinate
behavior;of the, Overseas Chi-.
nese" brought on the incident,
anarmy spokesman has announced
that:the~cabinet is taking
steps toward a "proper settle-
ment of :'the affair" and is pre-
paring a statement expressing
regret. Indonesian Army troops
reportedly have surrounded the
Chinese Embassy in Djakarta, ap-
parently to protect embassy person-
nel from demonstrations that have
allegedly been planned.
Djakarta's conciliatory
attitude indicates that it
will meet at least some of
China's demands related to
the Tjimahi incident, unless
Peiping takes action in the
near future which Indonesia
considers unduly provocative.
Djakarta may even try to im-
prove the processing of the
Overseas Chinese.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 July 1960
PATTERNS AND PERSPECTIVES
RECENT SOVIET-JAPANESE RELATIONS
Soviet involvement in the
recent Japanese political crisis
marks a tactical shift in Mos-
cow's policy toward the Japa-
nese Government. Prior to the
summit failure, the USSR had
made a point of refraining from
associating itself with the in-
ternal political situation in
Japan. Afterward, the Soviet
Union pursued a policy which
resulted in virtual open sup-
port of elements demonstrating
against Prime Minister Kishi's
handling of the US-Japanese se-
curity pact. Moscow's actions
also served to reaffirm to the
world the change in Khrushchev's
line regarding the President.
Moscow's Change of Policy
During President Eisenhow-
er's tour last December, Moscow
in its campaign for detente
urged various Communist parties
and front groups to avoid dem-
onstrations and even to par-
ticipate in welcoming the Pres-
ident as a partner in creating
a new era of international re-
lations.
For the past two months,
however, Moscow has been seek-
ing to capitalize as quickly
and as effectively as possible
on the radically new circum-
stances precipitated by the
U-2 flight and the summit col-
lapse. The timely conjuncture
of events focused attention on
Japan. The President's sched-
uled trip to Tokyo, Kishi's in-
creasing unpopularity symbolized
in violent opposition to the
US-Japanese security treaty,
and the presence of U-2 bases
in Japan were all ripe for So-
viet exploitation. Through a
series of well-timed diplomatic
and propaganda maneuvers warn-
ing of the implications for Jap-
anese security, Moscow was able
to assist Communist and leftist
organizations in forcing can-
cellation'of'the President's
visit, and the subsequent an-
nouncement of Kishi's resigna-
tion.
Soviet-Japanese relations
had actually reached a turning
point when the US-Japanese se-
curity treaty was signed on 19
January 1960. Both Moscow and
Peiping had long considered
Japan a principal target in
Asia, and the USSR had used an
extensive and sustained campaign
of threats, inducements, and
propaganda agitation in an ef-
fort to influence Tokyo to
adopt a more neutralist posi-
tion. Standard themes were of-
fers of massive trade agree-
ments and a more liberal fish-
ing treaty, and mention of the
possible return to Japan of
the Russian-held Habomai and
Shikotan islands off Hokkaido.
After the treaty was signed,
however, Moscow on 27 January
formally withdrew its pledge to
return the islands--a pledge
conditioned on the conclusion
of an eventual Russo-Japanese
peace treaty.
A subsequent series of
diplomatic notes to Japan im-
plicitly recognized the forth-
coming treaty ratification strug-
gle as a critical period in
Japanese relations with the
West. During the remaining
months, both the USSR and Com-
munist China continued their
"hard" policy toward the Japa-
nese Government in the hope of
eventually preventing the treaty's
ratification. Moscow, while
making no attempt to advocate
Kishi's overthrow or even to
offer support for the anti-
Kishi rioters, usually timed
its notes to take advantage of
scheduled demonstrations against
the treaty.
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CURRENT'-' INTELLIGENCE WEEKLY OMRY
14 July 1960
Apparently
caught unaware by
lower house r4tifica-
tion of the treaty
on 20 May, thq USSR
sought to stimulate
violent demongtra-
tions by radical stu-
dent and labor grcups
with a strongly worded
note delivered the
same day. Moscow
bitterly attacked
Kishi and cited the
presence of U-2 air-
ctaft in Japan as
proof of his coopera-
tion with American
forces in "war prep-
arations" againsttthe
Soviet Union..
The timing of
the ratification as-
sured the treaty's
final adoption on the
day scheduled for the
President's arrival
in Tokyo. Facing
this diplomatic set-
back to its long-term
efforts to force Ja-
pan into a neutralist
posture, and fearing
the prospect of a ma-
jor Western prop-
aganda gain in the
President's visit, the USSR em-
barked on an all-out attempt
to discredit Ifishi's policy and
force a postponement of the
President's trip.
This decision was dramati-
cally voiced by Khrushchev dur-
his speech to,a labor conference
in Moscow on 28 May. In the
first official statement from
the USSR commenting explicitly
on the domestic political crisis
in Japan, the Soviet premier
said:
"It -is no accident
that the voice of the peo-
ple--is resoundhna4.w4th
grow ing'iv6lume - in Japan
--people-who have risen
to the struggle for the
independence of their
homeland, for the crea-
tion of a government
which would really meet
the interests of the
Japanese people and
would be guided by them
in its activities."
Khrushchev also referred
to a 26 May demonstration which
he said "protested the visit by
President Eisenhower to Japan."
While subsequent Moscow radio
and press commentary did not
immediately associate the Tokyo
demonstrations with opposition
to the President's forthcoming
trip, it is almost certatn that,
following the U-2 episode and
the summit debacle, Khrushchev
decided to lift all previous
restraints that would have lim-
ited the scope of Communist
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14 July 1960
party demonstrations against
the President.
Japanese Communists and USSR
The Japanese Communist
party at first avoided a con-
spicuous public role in the
struggle to block ratification
of the treaty. The Communists,
avoiding any unilateral move
that would be too far:out of
step with public opinion, car-
ried out their activities with-
in various groups, including
the pro-Communist labor organi-
zation Sohyo and the People's
Congress Against the Revision
of the US-Japanese Security
Treaty. The radical student
federation Zengakuren, over
which the Japanese Communist
party had lost control in July
1958, pursued a more violent
course of action.
25X1
25X1
%iW Iris r rc
SECRET
acts by the main wing of Zenga
In assuming the leadership
and initiative of the anti-US
movement, relegating other or-
ganizations to the background,
the Japanese Communist party
succeeded in changing the char-
acter of the demonstrations so
that opposition to the Presi-
dent's trip became the leading
issue. This was a radical de-
parture from an earlier pre-sum-
mit warning on 14 May by the
party's secretary general to
avoid any rash incidents during
the visit and to guard against
identification with more violent
While Moscow was
reluctant to attribute
leadership of the move-
ment to the Communist
party, constant ref-
erences were made to
the new direction the
Japanese people were
taking in their "lib-
eration" struggle.
The party itself was
careful to identify
the demonstrations with
the mass movement of
the Japanese people
against the security
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 July 1960
treaty. In view of the strong
opposition among certain Japa-
nese leftist groups to violent
tactics, any emphasis on the
party's leading role in the
riots would almost certainly
have hampered its future ac-
tivities within Communist-di-
rected front groups.
Japanese Communist party
leaders played a vital role in
directing the riots attending
Press Secretary Hagerty's ar-
rival in Tokyo. Encouraged by
the impact of these demonstra-
tions, Moscow sharply increased
its propaganda coverage of the
political struggle and directly
linked the riots to Eisenhower's
visit. Succeeding demonstra-
tions, sparked by Communist
party members who delivered
harangues against the Presi-
dent and the United States, re-
ceived additional support from
the Soviet Union on 15 June. On
that date, the USSR addressed
another note to Japan attacking
the security treaty and fore-
cast great calamities for Japan
if it continued its present
policy. The same, day, Japan
formally withdrew the -invita-
tion to President Eisenhower.
Prospects
The USSR will probably main-
tain its pressure on Japan, pub-
licly supporting pro-Communist
movements as demands for dis-
solution of the Diet and new
elections increase. In light
of the U-2 incident and its
implications for the pro-West-
ern countries in which the Unit-
ed States maintains bases, Mos-
cow may feel that past devel-
opments in Japan have already
seriously impaired the value
of the security treaty as a
significant factor in US-Japa-
nese relations. Nevertheless,
the Soviet Union will continue
to maintain that its abroga-
tion remains a necessary con-
dition for an improvement in
Soviet-Japanese relations as
well as a sine qua non for the
conclusion of a peace treaty
with the USSR.
The Japanese Communist
party can be expected to con-
tinue demonstrations on a small-
er scale within front organiza-
tions and to intensify leftist
electioneering as demands grow
for new elections.
Peiping apparently intends
to continue to add to the long
list of "serious warnings" it
has issued to the United States
since September 1958 protesting
"intrusions" of Chinese Commu-
nist territory. Despite the
fact that the more than a hun-
dred warnings could 'be oohs
strued' as demonstrating Com-
munist China's military weak-
ness, Peiping probably views
them as a necessary part of its
long-term controversy with the
US and the Chinese Nationalists.
Peiping would regard American
tacit acceptance of its uni-
laterally proclaimed 12-mile
zone of territorial waters as
reinforcing its legal position,
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CURRENT INTELLIGENCE WEEKLY SAY
14 July 1960
particularly to its claim to
the Nationalist-held offshore
islands, which are well within
12 miles of the mainland.
The Communists also find
their warnings a useful device
for pointing up American "prov-
ocations''' and in "proving"
that the United States, not
China, is responsible for ten-
sion in the Taiwan Strait area.
Following the U-2 incident and
the summit collapse, Peiping
stepped up the pace of its warn-
ings. In commenting on the
100th warning, issued on 26
May, the official People's
Daily stated that "violations"
had-nearly doubled in the past
year.
People's Daily claimed that
American reconnaissance planes
had flown over the mainland,
and other Chinese press commen-
tary compared these flights with
the U-2 flights over the USSR.
In 1958, Peiping had issued
warnings on 10 September, 22
October, and 6 December charg-
ing that flights over Chekiang,
Fukien, and Kwangtung provinces
were made by American "U-2 air-
craft."
The first 40 "serious warn-
ings" came in quick succession
following Peiping's claim in
September 1958 during the Taiwan
Strait crisis that the Unitdd
States was openly threatening
to "expand aggression" against
the mainland. Fol-
lowing this sustained
burst, the warnings
appeared sporadically,
with occasional gaps
of a month or more
between them. This
pattern changed again
when 16 warnings were
issued in the 30 days
following the 97th
warning on 22 May 1960.
Emil i I I I I
,.The newspaper went on to make
two basic points regarding Pei-
ping's view of the internation-
al situation. It stated that
"whether peaceful coexistence
is attainable or not is deter-
mined not only by us, but also
by the US imperialists"--sug-
gesting that Peiping's hostil-
ity toward the US will not
change. On the matter of the
cold war, People's Daily con-
tradicted Soviet statements by
insisting that American "intru-
sions proved the ice has never
thawed," and reaffirmed the
basic Chinese position that
"only by fully exposing US im-
perialism and waging a resolute
struggle against it" can world
peace be maintained.
The Chinese Com-
munists have never
issued a "serious
warning'" to any other
nation. Movements inside Pei-
ping's claimed waters by Burmese
and British naval vessels, how-
ever, have led the Communists
to send formal notes of protest.
Although Chinese Nationalist
aircraft and ships operate daily
inside the claimed 12-mile lim-
it, Peiping, which regards this
situation as part of the "civil
war" and an "internal matter,"
has never charged the National-
ists with "intrusions."
Hong Kong Area
Nine of the recent warnings
have involved dither',.US hircraft,
both, commercial and mi.lit,ary;
I-lying near Shanwei ($wabue)
peninsula--roughly 60 miles
SECRET
NUMBER OF"SERIOUS WARNINGS"
PER MONTH
(From September 1958 through June 1960,
-- - Peiping issued warnings, numbers 1 through -
---- 115, against alleged US actions.)
Alk
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 July 1960
northeast of Hong Kong, near
the colony's air approach--or
US warships operating near the
Lima Islands south of the col-
ony. Only occasional warnings
for this area had previously
been issued, although Chinese-
claimed waters extend as far
as 30 miles to sea at some
points near Hong Kong.
Base line drawn through outer islands
12-mile territorial claim
14 JULY 1960
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Peiping began last March
to make more precise its terri-
torial claims to the waters
surrounding Hong Kong. The
British, to avoid publicizing
new Chinese Communist restric-
tions, and stimulating a possi-
ble showdown, modified the pat-
tern of vessel movements in
colony waters, including the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 July 1960
movement of ships between the
colony and Canton.
The Chinese Communists may
hope that the increase in warn-
ings to the United States will
cause the British--already sen-
sitive to Communist claims con-
cerning waters surrounding the
colony--to prevail on Mashing-
ton to alter the course of Amer-
ican aircraft flying to and
from Hong Kong. The Communists
could claim that modification
of the flight pattern by Ameri-
can aircraft was in effect tac-
it:recognition of their claims.
Paracel Islands
Since 11 May 1960 an un-
usually high number of protests
have been directed against US
overflights of the Paracel Is-
lands in the South China Sea.
The warnings concerning the
Paracels apparently stem in
large part from the Communists'
desire to underscore their
claims to the islands,.which
are also claimed by Nationalist
China and South7Vietnam. Com-
munist China asserted its sov-
ereignty over the islands
shortly after coming to power
and in 1955 established a perma-
nent colony there. The Chinese
Communists now have land-based
radar on the islands,
Radar may well have provided
Peiping with a new basis for
accelerating the pace of its
warnings.
Other Areas
During the Taiwan Strait
flare-up in 1958, 18 of the
first 40 warnings issued con-
cerned the Chinmen area. At
that time, US naval and air
units were operating in the
general area. Peiping has is-
sued no warning concerning that
area since late October 1958.
Warnings covering the Hai-
tan, Matsu, and Tungyin islands
have continued since 1958.
About 60 of these appear to have
been in response to very slight
penetrations of the Communist-
claimed 12-mile limit by patrol1
ling American naval vessels.
Peiping has thus far issued
six warnings charging that Amer-
ican naval aircraft had intruded
over the Yushan and Taichou is-
lands off the Chekiang coast.
Peiping's Intentions
The Chinese leaders would
credit themselves with an im-
portant victory were their warn-
ings!to result in abandonment
of US patrol operations inside
the "12-mile limit."
The Communists have made
it clear they will stop their
warnings only after US "intru-
sions" are halted. Following
a series of warnings during
October 1958 concerning part of
the Matsu Islands area, Pei-
ping's protests ceased prompt-
ly after the American patrol-
ling pattern was altered.
The warnings will continue
to serve the Chinese as a "rec-
ord" to document their "strug-
gle" with the United States.
Indicating that they are delib-
erately controlling the fre-
quency of some warnings, the
Communists have stated that a
warning has not been issued for
each "violation." People's Daily
on 26 May stated that during tie
period of the first 100 warnings,
181 US naval craft had "intruded"
on 88 occasions and 242 naval
aircraft had overflown Chinese
territory on 68 occasions.
The recent high level of the
"serious warning" campaign has
tapered off. The "record,"
however, will continue to be
cited in propaganda commentaries
directed to the Chinese people
to demonstrate that the United
States is their "greatest enemy"
and to the people of the whole
world, who "must have no un-
realistic illusions regarding
the nature of American imperial-
ism."
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CURRET INTELLIGENCE WEEKLY SUMMARY
14 July 1960
The petroleum agreement
recently concluded between the
government of Tunisia and ENI,
the Italian fuel agency, has
intensified the running fight
ENI's chief, Enrico Mattes, is
waging with the major interna-
tional oil companies and re-
flects the same aggressivness
with which he has sought busi-
ness deals with the Soviet
bloc. Lack 6f effective govern-
ment control has permitted
Mattel to build up an extensive
economic domain which gives him
unique power in Italy.
The government had origi-
nally appointed Mattei to liqui-
date certain residual state
interests in the petroleum field
but he immediately launched
grandiose expansion schemes in
defiance of Rome's orders to
desist. The discovery of enor-
mous deposits of natural gas in
the Po Valley in 1946 vindicated
his stand and led eventually to
the creation of ENI, which now
includes more than 50 companies
and is still growing.
Mattel, who has closely
linked the fortunes of the
fuel agency with his own
prestige, has pushed ENI into
the fields of refining, distri-
bution, and the manufacture of
various products in the petro-
chemical field, e.g., synthetic
rubber and fertilizer. The
marketing of gasoline, through
its subsidiary AGIP, has put
ENI into the fillingr49tation add
motel business. Similarly, oil
extraction has led ENI into the
construction of drillings rigs
and control of Italy's largest
tanker fleet.
A many-sided ENI project
that may have considerable im-
pact on the Italian economy is
one based on oil resources at
Gela, Sicily, Gela oil is of
relatively poor quality, but
Mattei intends to turn this to
advantage by converting its :;
sulfur content (8.16 percent)
into fertilizer. As part of
the same project, he plans to
enlarge a local airfield and
build new port facilities, a
hotel, and workers' housing,
making this chronically de-
pressed area "the richest spot
in the Mediterranean."
Battle With "The Cartel"
Italian oil production--
1,700,000 tons in 1959--is
less than a tenth of domestic
consumption, -26, 500, 000 tons,
in 1959. Mattes sought to
create a place for ENI among
Italy's foreign suppliers by
associating himself with the
major international oil compa-
lieq, but his effotts to do so
were, according to his own
version, rudely rebuffed.
Mattei's response was to set
up a joint oil company with the
Iranian Government in 1957,
giving the latter more favorable
terms than the traditional
50-50 profit split. This epi-
sode marked the beginning of the
continuing endaity between Mattes
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CURRENT INTELLIGENCE WEEKLY SUI[KARY
14 July 1960
and what he refers to as "The
Cartel."
This enmity reached the
stage of "all-out war," accord-
ing to Mattei, in January 1959,
when a group of the major oil
companies announced plans to
build a pipeline into southern
Germany. Mattei says he thought
of it first, his idea being to
service a refinery he would
build in Switzerland on a trans-
alpine pipeline which would ex-
tend into Bavaria. Only a token
section of Mattei's line has
been laid so far and its future
is uncertain, Opposition has
developed among certain private
Swiss interests--rail, shipping,
and marketing--which foresee in
the proposed line a loss of
income.
The conservative Milan
financial newspaper 24 Ore has
attacked the plan, argu ni g that
to pump oil a mile high is too
costly. Mattei, however, paints
a glowing picture of its ad-
vantages to Italy, with 400 oil
tankers a year calling at the
port of Genoa to discharge some
13,000,000 tons of crude oil.
An ENI subsidiary, Suedpetrol
AG, has bought some 400 acres
at Ingolstadt, Bavaria, where
it will begin construction of
a terminal refinery this year.
Price War in Italy
Mattei seems to be pur-
suing his attack on the inter-
national oil companies by cut-
ting prices in an attempt to
make their sale of gasoline un-
profitable in Italy. His only
comment when queried on the
point was that if he was losing
money on gasoline, the interna-
tional companies were losing
even more. He apparently wants,
however, to prevent any drop
in the price of fuel oil, to
which the price of natural gas
is equated by law. In this
way, he can continue to draw
on his virtual monopoly of
natural gas resources in Italy
to provide the means for risky,
or at least at the outset
unprofitable, ventures.
Some of the large anti-
Mattei companies of Italy's
industrial north regard ENI's
natural gas enterprise as one
of the chief props of his
power, and in the hope of under-
cutting him they are studying a
plan to pipe African natural
gas across the 90 miles of the
Mediterranean Sea between Tunisia
and Sicily and on up the penin-
sula.
ENI Flirtation With the Bloc
Mattei's determination to
establish himself as a peer of
the international oil companies
has led him to concentrate on
those parts of the world where
the older companies are not so
well established: the under-
developed countries of Asia
and Africa and the Soviet bloc.
The Soviet Union, by offering
large quantities of crude oil
at low prices, supported ENI
against the private companies.
Italian crude imports from the
USSR, which have risen sharply
since 1955, amounted to 2,300,-
000 tons in 1959. The trade
protocol for 1960 calls for
2,500,000 tons; as in the past
few years, actual imports will
presumably exceed this amount.
The deputy director of the
economic affairs branch of the
Foreign Ministry said Mattei had
informed him that the USSR had
offered ENI 38,000,000 tons of
crude over the next four or
five years at a substantial
discount. Mattei, however,
shares the now common world
problem of an excess of oil,
with production rising at ENI's
wells,in the Persian Gulf and
on the Sinai Peninsula. The
means of payment is also a
problem, although ENI has in the
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CURRENT INTELLIGENCE WEEKLY `SMW&Ry
14 July 1960
past contributed to payment for
Soviet imports with synthetic
rubber from ENI's plant at Ravenna.
The minister of state
holdings, ENI's nominal supe-
rior, "understood" in January
1960 that ENI would build a
pipeline through Poland and
Czechoslovakia to the USSR in
payment, for deliveries of
Soviet crude, but all subse-
quent reports portray ENI as
having less and less to do
with any Eastern European
G N I Activities (Ea ern Hemisphere)
Ente Nazionale Idrocarburi
???.??? PIPELINE PROJECTED
PRODUCING OILFIELD
REFINERY IN OPERATION
teghor
Z.
REFINERY TO BF BUILT IN PARTNERSHIP
WITH LOCAL GOVERNMENT
REFINERY PROJECTED
OIL PROSPECTING RIGHTS HELD BY ENI
OIL PROSPECTING RIGHTS SOUGHT BY ENI
DISTRIBUTING FACILITIES IN OPERATION
DISTRIBUTING FACILITIES PROJECTED
li1l% PETROCHEMICAL PLANT
Cs~ PETROCHEMICAL PLANT PROJECTED
MANUFACTURE OF DRILLING RIGS
SECRET
pipeline. Mattei's sense of
frustration in his dealings
with the international oil
companies may be leading him
into deeper involvement with
the bloc than he would other-
wise, as a good Christian Dem-
ocrat, be inclined to go. He has
reportedly threatened to estab-
lish acentral.purchasing.system
under ENI control of all crude
oil imports, an increasing part
of which would come from the
USSR.
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CURRENT INTELLIGENCE WEEKLY SUIYARY
14 July 1960
ENI has done some business
with Communist China, but appar-
ently not to the extent the corn- _
pany hoped. Mattes traveled
there in late 1958.
ENI in Near East and Africa
ENI men, and frequently
Mattei, have visited almost
every country of Africa and the
Middle East where oil might con-
ceivably be found or sold, and'
in almost every case--so Mattei
believes--against the direct or
devious opposition of the inter-
national oil companies. The
Italian Foreign Ministry has on
occasion echoed his line that
there is a conspiracy of the
big companies to block ENI.
In-Sudan, Morocco, Ghana,
and Tunisia, ENI has outmaneu-
vered the big companies in ob-
taining exploration rights,
contracts for the construction
of refineries, or other busi-
ness. The local governments
generally find it difficult to
resist ENI's offer of more than
half the profits and an oil re-
finery for no money down. Beyond
this, Mattes appears to have a
special knack for convincing
local authorities that he is
attentive to their needs and
will give then a square deal.
This is in contrast with
the attitude sometimes shown
by representatives of the older
companies, who tend to favor
the status quo and are dilatory
in their response to proposals
of the local governments.
During the latter part of
1959, the government of Tunisia
became interested in the con-
struction of a refinery. In
January 1960, the Tunisian
minister of industry told the
American ambassador that the
traditional distributors had
talked about their willingness
to make a deal, but had done
nothing, whereas ENI had put
forth some very specific and
attractive proposals. Later,
specific proposals were made
by the companies, headed by
Esso, but they were unwilling
to gamble to the same extent as
Mattes on a large increase in
petroleum consumption within
Tunisia. Mattei intends to
help bring about this increased
consumption by building a
chain of filling stations and
motels there.
On 10 June ENI signed con-
tracts providing for the con-
struction of a million-ton
refinery in Tunisia and for
joint Italian-Tunisian explo-
ration. The Tunisian Govern-
ment will receive title to half
of any oil discovered plus
half the profits of the Italian
exploration company. The projects
are of particular interest to
the Italian Government in that
they can be expected to provide
employment for a large number
of Italian nationals residing
in Tunisia.
Mattei in Italian Politics
The question naturally
arises whether Mattei, in spread-
ing his resources so thin, is
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CURRENT INTELLIGENCE WEEKLY 83tY
14 July 1960
acting as a shrewd and far-
sighted investor or whether
he is irresponsibly throwing
around public funds for the
greater glory of himself and
ENI. It is doubtful that the
Italian Government itself
could answer this question.
Mattei has established himself
as something of a sacred cow,
and keeps his balance sheet
close to his chest.
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its own borders and has be- 25X1
come the center of at least a
small petroleum empire,
to one that produces a substan-
tial amount of fuel within
No one has accused Mattei
of trying to enrich himself at
public expense. He enjoys
power and probably gets a
patriotic satisfaction out of
heading the organization that
in a few years' time has changed
Italy from a country almost
wholly dependent on fuel imports
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