CURRENT INTELLIGENCE WEEKL;Y SUMMARY

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• Document Creation Date: December 20, 2016
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• Publication Date: October 27, 1999
• Content Type: SUMMARY

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T
4-D
COPY NO. i
OCI NO. 3336/60
21 July 1960
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
N (7)
CL!.~-s _.
A:ITH/Wfi -
GAT
CENTRAL INTELLIGENCE AGENCY
I I OFFICE OF CURRENT INTELLIGENCE
CON1IDEN4
State Department review completed
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THIS MATERIAL CONTAINS INFORMATION AFFECT-
ING THE NATIONAL DEFENSE OF THE UNITED STATES
WITHIN THE MEANING OF THE ESPIONAGE LAWS,
TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS-
SION OR REVELATION OF WHICH IN ANY MANNER TO
AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
The Current Intelligence Weekly Summary has been prepared
primarily for the internal use of the Central Intelligence
Agency. It does not represent a complete coverage of all
current situations. Comments and conclusions represent the
immediate appraisal of the Office of Current Intelligence.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 July 1960
Premier Lumumba's stated
intention to address the UN Se-
curity Council this week end
suggests that he does not plan
to appeal immediately for the
dispatch of Soviet troops to the
Congo. Although his cabinet re-
solved on 20 July to request
that the USSR "or other Afro-
Asian nations" send troops to
force a Belgian withdrawal,
Lumumba has indicated he will
await action by the UN. The
Congo's reiteration of its 14
July threat to ask Soviet inter-
vention appears designed to ob-
tain a UN resolution demanding
the immediate withdrawal from
the Congo of all Belgian troops.
Moscow has not committed
itself on sending troops. In
the event of a formal appeal
from the Congo Government for
Soviet intervention, it is un-
likely that Moscow would respond
by dispatching Soviet forces.
Moscow would probably avoid an
outright rejection, however,
while attempting to exploit the
threat of unilateral action as
a means of stimulating pressure
for the speedy and complete evac-
uation of Belgian troops from
the Congo. In the UN Security
Council meeting on 21 July, So-
viet delegate Kuznetsov intro-
duced a resolution calling for
the withdrawal of Belgian forces
within three days. The council
adjourned without adopting any
resolution.
The USSR has continued its
campaign of official statements,
diplomatic activity, and propa-
ganda to exploit the Congo sit-
uation as part of its strong
anti-American line,as well as to
establish itself in the eyes of
African and Asian peoples as
their protector and friend in
their struggle against colonial-
ism. Moscow has sought to rally
neutralist support to brand
the Western countries with
"imperialist aggressi0n" a-
gainst the new Congo state.
First Deputy Premier Mikoyan
and Foreign Minister Gromyko,
expounding Soviet views on the
Congo to diplomats at a recep-
tion on 13 July, called for
Afro-Asian countries to join
the USSR in denouncing the West's
"intervention."
On 19 July the USSR offi-
cially protested as an "imper-
missible act" the sending of a
20-man American military group
to Leopoldville to assist in
the airlift of UN troops, de-
spite the fact that Hammarskjold
informed Sobolev on 16 July that
he had authorized such action.
At the same time, Moscow is at-
tempting to obtain maximum prop-
aganda from its own aid to the
Congolese by circumventing the
UN facilities set up in Italy
for distributing relief supplies
to the Congo. TASS reported
that the three Soviet planes
which delivered food directly
to Leopoldville on 20 July would
proceed to Accra, allegedly at
Ghana's request, to transport
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CURRENT INTELLIGENCE WEEKLY SUIIKARY
21 July 1960
CENTRAL AFRICAN REPUBLIC
SUDAN
Bornu
Ubong;
p ~~ /~ Jele
I
~'.. OIeI ENTAI E
Congo Lake Alber
Ar
~Stanleyville,~.,?,J ' UGA
Coquilhatville -Doke o
~o ,Edward
V
REPUBLIC?" OF C?'
UANDA
Leopold 11 Bukavu
-URUNDI
?
0 wa TFIE CONDO
asOi Sankuru
I Atlantic
Ocean
Ghanaian troops to the
Congo.
The security situation in
the Leopoldville area has eased
somewhat with the arrival, by
20 July, of about 3,000 UN
troops. The presence of around
75,000 unemployed in the area
constitutes an element of insta-
bility, however, particularly
if a serious food shortage de-
Luluaburg
a
\s
FEDERATION OF RHODESIA
AND NYASALAND
velops. Since many Belgians
have left the Congo for good,
prospects for the near future
appear likely to include a ma-
jor economic dislocation. In
the Congo interior, sporadic
disorders continue to take place.
In Katanga Province, which
declared its independence of the
Congo on 11 July, Belgian offi-
cials have assured Premier
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21 JULY 1960
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 July 1960
Tshomb6 of Brussels' willingness
to provide technical and other
assistance and have communicated
the impression that their pres-
ence constitutes de facto recog-
nition of Katanga's independ-
ence. Brussels continues hesi-
tant concerning formal recog-
nition, but Lumumba's pro-Com-
munist tendencies may prompt
nations such as South Africa,
the Rhodesian Federation, or
Portugal to recognize Katanga.
Premier Lumumba continues
to associate himself with the
anti-Belgian and antiwhite sen-
timent engendered by the Force
Publique rebellion, but he ap-
pears unable to control or di-
rect i
Although the cabinet re-
mains largely responsive to Lu-
mumba's anti-Belgian polemics,
his recent performance appears
to have generated considerable
opposition elsewhere. The Congo
legislature reportedly is con-
sidering a resolution censuring
Lumumba for "dictatorial" and
"pro-Communist" acts, and rumors
concerning plotting against the
Lumumba regime have increased.
Lumumba probably plans to take
advantage of the UN occupation
to stabilize his regime and to
develop a police force respon-
sive to himself.
According to Lumumba's
leftist vice premier, Antoine
Gizenga, the Congo expects to
receive from bloc countries after
the Belgians depart, arms, tech-
nicians, and volunteers for a
Congolese army. While Gizenga's
remarks may have been designed
in part to impart an aura of
strength to the shaky Lumumba
regime
Bloc propaganda continues
its heavy support of the Congo
Government, charging intervention
and aggression by the "imperial-
ist powers" headed by the United
States. Moscow radio boasts
that the Congolese leaders are
turning to the USSR for help
because they know that Soviet
aid is unselfish and will not
be used as a means of inter-
fering in the Congo's internal
affairs, Following Moscow's
lead, Bulgaria, Czechoslovakia,
and East Germany have made of-
ficial statements promising aid
and support to the Congo Gov-
ernment. American assistance
is attacked as an attempt to
aid the Belgian forces, and
Moscow has charged Katanga 25X1
leader Tshomb6 with being in
the service of "American monop-
DEVELOPMENTS IN SOVIET FOREIGN RELATIONS
During the past week the
USSR mobilized the full range
of its diplomatic and propa-
ganda resources in its effort
to indict the US Government
on charges of conducting a de-
liberately provocative and reck-
less policy toward the Communist
world and toward underdeveloped
countries which "resist" Western
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21 July 1960
pressure. An increasingly hard
and uncompromising Soviet
posture toward the West is
reflected in Moscow's refusal
to conduct serious negotiatib'ns
and in its exploitation of
those opportunities which have
arisen--Cuba, the Congo, air-
craft incidents, and Germany.
Variations in Soviet de-
nunciations of American poli-
cies were apparent in Moscow's
statement to the UN Security
Council on the Cuban situation,
in its declaration on Western
policy in the Congo, and in its
complaints to the US over the
alleged buzzing of Soviet ships
by American aircraft. Moscow
declared that the RB-47 affair
and the buzzing of. Soviet ships
resulted from a "calculated
policy of infringing on the
sovereignty of the Soviet Union,
a policy aimed at heightening
international tensions."
Moscow has attempted to
create a crisis atmosphere
through its warnings of the
consequences if American actions
remain unchecked. The TASS
statement of 16 July on the Mon-
roe Doctrine said plans for US
intervention in Cuba were "in-
creasingly definite." While
repeating Khrushchev's offer
of support for Cuba, TASS
avoided spelling out a clear
Soviet commitment. In the UN
Security Council debate on 19
July, the Soviet delegate also
took an ambiguous position on
the extent of militaryassiSt-
ance Moscow would provide if
requested by Cuba, and he dis-
claimed that the USSR had ac-
tually threatened the United
States with missiles.
A similar pattern of care-
fully worded warnings and
promises of support has charac-
terized Soviet moves in exploit-
ing the Congo situation. The
Soviet declaration on the Congo
cited "colonialist intervention"
there as "fresh proof that cer-
tain powers, primarily the US,
are continuing along the dan-
gerous path of aggression and
provocation."
Germany and Berlin
In a statement on 19 July,
East German party chief Ulbricht
reinforced Khrushchev's warnings
that a meeting of the West Ger-
man Bundestag in Berlin this
fall could provide the occasion
for signing a separate peace
treaty. On 19 July, Moscow de-
livered protest notes against
alleged American plans to equip
the West German forces with
Polaris missiles and warned that
the USSR would be forced to take
"countermeasures." 25X1
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 July 1960
to'adhere to the strategy of
achieving foreign policy gains
without incurring grave risks,
but at the same time to use all
available opportunities to de-
nounce US policy and try to
shake the confidence of other
Western powers in American
leadership.
Moscow apparently will con-
tinue to exert intermittent
pressure on the German and Ber-
lin questions but without caus-
ing a new crisis, and to refuse
to conduct serious negotiations
until the expiration of the
eight-month waiting period set
by Khrushchev in Paris. The So-
viet leaders apparently are con-
vinced they can pursue these
contradictory lines without
permanently damaging the chances
of reopening negotiations with
the West.
Post-Summit Policies
The central committee reso-
lution on 16 July endorsing
Khrushchev's "political line"
at the Bucharest meeting prob-
ably marks the end of the for-
eign policy review promised by
Khrushchev after the abortive
summit meeting. The main lines
of Moscow's post-summit policy,
as it has emerged from Soviet
actions and statements since
late June, apparently continue
In Geneva, after maintain-
ing a reserved and noncommittal
attitude toward new US proposals
at the nuclear test talks, chief
Soviet delegate Tsarapkin on 19
July sharply rejected the Ameri-
can plan for safeguards against
the use of nuclear research tests
for weapons purposes. Addressing
a session of the UN-sponsored .1
World Federation of United
Nations Associations, Tsarapkin
described as "fantastic and non-
sensical" the US plan for
all three powers to place
nuclear devices in a common
pool to be used in research
tests for improving detection
techniques.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 July 1960
A member of the Soviet
delegation echoed this view
privately, claiming that manda-
tory pooling of nuclear devices
was "absolutely unacceptable
politically." He indicated that
a formal statement to this ef-
fect would be made at the con-
ference table.
Tsarapkin also charged that
the United States was responsi-
ble for the lack of progress at
the conference, and another So-
viet official stated that recent
American proposals were disap-
pointing and failed to indicate
willingness to negotiate major
issues. Following publication
of US plans to conduct 11 re-
search tests, Moscow said the
project constituted a further
effort to aggravate the inter-
national situation and would
have a serious effect on the
conference.
The unanimous vote in the
Council of the Organization of
American States on 18 July for
a meeting of foreign ministers
to consider the "exigencies of
the international situation" re-
flects general Latin American
support of the western hemis-
phere's exclusive political sys-
tem in the face of Khrushchev's
ambiguous missile threat and
Cuba's bypassing the OAS for
the United Nations Security
Council.
Both Venezuela and Cuba
formally reserved their govern-
ments' positions on agenda and
place of meeting, however, while
Venezuela had an additional res-
ervation on timing. Diversity
of Latin American opinion on the
Castro regime is revealed in the
failure to cite Cuba by name,
and many governments are con-
strained to modify their criti-
cism of the Cuban Government by
the strength of pro-Castro po-
litical movements within their
countries.
The vote in the UN Security
Council on 19 July postponed
consideration of Cuba's com-
plaint against Washington pend-
ing a report from the OAS. Jose
Correa of Ecuador, president of
the council, sharply warned the
USSR, indirectly but clearly,
that the principle of noninter-
vention has been "clothed with
flesh and blood" and that Latin
America will fight to preserve
this principle. Correa's state-
ment had unusual impact, because
over the past year he has sev-
eral times taken a line at
variance with Washington's.
Argentina and Peru, despite
internal pro-Castro pressures,
have been willing to initiate
some action on the Cuban prob-
rgen na officially asked the
Castro regime to repudiate So-
viet support--a request subse-
quently endorsed by Ecuador.
Peru, whose President Prado
aspires tq a historic role in
world politics, drafted and
presented the request for the
OAS meeting.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 July 1960
Other influential Latin
American governments are taking
softer stands on Cuba. In Brazil,
oest that proponents of a strong
stand could achieve was an af-
firmation of Brazil's intention
to abide by its legal commit-
ments. The conservative Chilean
Government has been one of the
most reluctant to agree to a,
foreign ministers' meeting and
has strongly advocated a solu-
tion through Latin American medi-
Ationo Uruguay.,,hampered by
indecisiveness in its ninewman
bipartisan executive council,
has remained silent as much as
possible.
In Mexico, where demon
strating independence of the
United4"States is a traditional
foreign policy goal, important
government figures have suggested
that their government may support
Cuba rather than the United
States. In Venezuela, pro-Cas-
tro forces are stronger than any-
where else outside Cuba, but
President Betancourt himself has
been sharply critical of the
Castro regime. The Central
American countries generally
advocate a strong stand on Cuba.
DEVELOPMENTS IN CUBA
The Castro regime and the
Communists continue to tighten
their grip on Cuba. The Castro-
sponsored Latin American Youth
Congress, scheduled to open on
26 July in Cuba's Sierra Maestra
mountains and later to move to
Havana, is certain to be Commu-
nist dominated, Designed to
strengthen support for Castro
in the other Latin American
countries, the congress was
first discussed at the Commu-
nist-front World Youth Festival
in Vienna last summer. Cubans
have for months been traveling
throughout Latin America, where,
with the help of local Commu-
nists,they have stimulated the
organization of delegations to
the congress.
Although delegations to
the congress are expected from
most Latin American countries,
the Peruvian APRA youth group
and other anti-Communist youth
organizations, including Cath-
olic groups, have decided to
boycott it. Representatives
are also en route from the Sino-
Soviet countries, including North
Vietnam, and from Afro-Asian
countries, including a delega-
tion of Algerian rebels. The
congress is certain to be a ma-
jor propaganda effort.
In a related development,
Havana University now has become
virtually a creature of the re-
gime after a militant pro-Castro
minority seized control and
ousted "counterrevolutionary"
professors. The Communist-in-
filtrated ruling student federa-
tion is discussing the recruit-
ment of professors from other
Latin American countries. Stich
a program would be almost cer-
tain to end in the establishment
of a pro-Communist faculty.
The Communist press in Cuba
received a significant boost on
14 July when, in what is described
as a "simple but emotional cere-
mony," the Communist daily news-
paper Hoy was given the print-
ing plan recently vacated by
the official newspaper of Cas-
tro's 26 of July Movement, Rev-
olucion, which moved to a b gger
p ate. Hoy now will have a rel-
atively modern plant and presum-
ably will be able to increase
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 July 1960
its circulation, presently about
20,000 on weekdays and 40,000
on Sundays.
The government's moves have
aroused protests from several
important groups,and Ambassador
Bonsai believes that Soviet
Premier Khrushchev's declara-
tions of support for Cuba have
been, in general, a serious
blow to the Castro regime. They
have, done more, he believes1
than anything else to clear up
doubts among Cubans as to the
Communist orientation of the
government.
The Catholic hierarchy in
Cuba, which has thus far vac-
illated in its public attitude
toward the regime, will probably
be impelled toward a stronger
stand by the spontaneous anti-
Communist demonstrations by
Havana churchgoers on 17 and 18
July. Church leaders previously
have admitted that they have >
only limited influence with the
Cuban people and that, unless
careful preparations are made,
most Cubans would support Castro
in the event of a showdown be-
tween him and the church.
Divergent attitudes toward
Castro by the large number of
Spanish-born priests in Cuba
and the native Cuban clergy
have also thus far hindered
church unity on the question.
The government's use of force
in suppressing the 17 and 18
July demonstrations will, how-
ever, tend to bring about a uni-
fied stand. Ambassador Bonsai
feels the recent incidents have
created a tense atmosphere in
influential Catholic lay cir-
cles and that serious repercus-
sions may develop.
Fidel Castro's reaction to
the anti-Communist demonstrations
by churchgoers was prompt and
bitter, indicating concern over
evidence of church opposition
to the government's growing eco-
nomic and political ties with
the bloc. He interrupted his
convalescence to deliver a strong
public blast against the "coun-
terrevolutionary activities" of
"Falangist" priests, whom he
accused of being responsible for
the demonstrations.
The joint Soviet-Cuban com-
munique"issued after Raul Cas-
tro's interview with Khrushchev
in Moscow on 18 July seems de-
signed to define formally the'
present relationship between the
two countries. In the document,
Khrushchev professed the "pro-
found solidatity" of the Soviet
people with the people of Cuba
and called the Cuban revolution
and its objectives a "common
cause" for all independent peo-
ples. He reiterated his pledge
that the "'socialist. countries"
can and will fully meet Cuba's
requirements in oil and other
goods.
The assertion that the So-
viet Union "would use every means
to prevent US armed intervention
against Cuba," together with the
absence of any statement commit-
ting the USSR to a specific
course of action in such an
event, are probably aimed at
assuaging the world-wide appre-
hension which followed Khru-
shchev's rocket-rattling state-
ment of 9 July. This formal ex-
pression of Soviet support of
Cuba, however, will probably
further alarm Cuban anti-Commu-
nists.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 July 1960
NOTES AND COMMENTS
Recent official Soviet
statements indicate that the
formal harmony reached at the
meeting of bloc leaders in
Bucharest in late June does not
include.a compromise by the USSR
of the basic theoretical posi-
tions it has evolved in recent
years.
In a resolution issued by
the Soviet party central com-
mittee on 16 July commenting on
the communique of the Bucharest
meeting, Moscow lays its great-
est stress on the basic line
which it has been asserting in
the face of Peiping's vociferous
objections. The resolution,
however, does move somewhat away
from the Soviet position of the
pre-summit period by asserting
that vigilance is necessary to
"expose imperialist designs"--
a propaganda shift which provides
support for the Soviet Union's
aggressive initiatives through-
out the world.
The expression of this view,
reflecting the stiffening Soviet
attitude toward the United States
and the Atlantic community, re-
sults in a formulation similar
to that of the Bucharest com-
munique which both the USSR and
China can use to demonstrate
''socialist unity." This ap-
parent accommodation to Peiping's
views does not, however, affect
the basic tenets of the Soviet
position with which the Chinese
have disagreed. In fact, the
resolution, as the Bucharest
communique did not, specifically
condemns "dogmatism, left-wing
secretarianism, and narrow na-
tionalist tendencies"--all de-
rogatory descriptions of the
Chinese concepts.
Moscow has followed this
with three successive editori-
als discussing the resolution
of the central committee, each
strongly reaffirming Khrushchev's
positions. The 20 July editori-
&l attacked "revisionism, dogma-
tism, and sectarianism" in un-
mistakable, terms as views that
must be eradicated to sustain
the "purity of Marxism-Leninism."
The editorial defined the major
error of the dogmatists as their
opposition to the line on peace-
ful coexistence as developed by
the Soviet Union and stressed
the preventability of war--a
position the Chinese have not
yet fully accepted. It went on
to underscore the support Moscow's
positions are now receiving from
other Communist parties.
The editorials and the res-
olution suggest that Moscow is
concerned lest its tougher
tactics and an accompanying
emphasis on the need for vig-
ilance against Western imperial-
ism be construed by Communists
to mean a compromise or accom-
modation with the Chinese views.
Moscow seems to be attempting
to make a clear distinction be-
tween what it intends to be a
temporary tactic and its long-
term policy toward the West.
Despite the recent series of
threats and warnings to the
West, Moscow over the long
term probably continues to view
a return to the strategy of
detente as the only realistic
course under conditions of a
nuclear stalemate and as the
most effective means of achieving
foreign policy gains without
incurring grave risks.
The European satellites
have, for the most part, shown
considerable caution in dealing
with the Bucharest communique.
Resolutions of the Hungarian and
Bulgarian parties and speeches
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21 July 1960
of leaders of other parties
took care to emphasize'the high-
lights of Khrushchev's positions
without attempting to express
the qualifications the Soviet
Union now has placed in its
formulations. It seems likely
that, with the exception of
Albania, the satellites con-
cluded from the Bucharest meet-
ing that it was the better part
of valor to avoid any impression
of support for the Chinese.
With the present stiffening
of Soviet tactics and the con-
current justification in Soviet
propaganda, the Chinese may be-
lieve that it is not now neces-
sary to continue their earlier
extreme form of opposition.
Thinly veiled Chinese attacks
on Khrushchev as a "very naive
person" have not been resumed
since they were dropped from
Peiping's propaganda in early
July. Peiping's theoretical
journal Red Flag, which pro-
vided doinal-justification
for the Chinese position op-
posed to Khrushchev's policies,
has not published any article on
the international situation in
its issues since mid-June.
Under Mos,cow's pressure,
the Chinese appear to have made
a few nominal concessions to
Soviet doctrines, none of which,
however, substantially alters
their basic position. On the
matter of "revisionism" the
Chinese now avoid repeating
Chou En-lai's 6 June statement
that a major task facing "the
working class of the world is to
continue to expose fully the
traitorous feature of modern
revisionists."
On the subject of war,
central committee member Liao
Cheng-chih told the World Peace
Council delegates on 14 July
that by "struggles" it will be
possible "to postpone or even
stop the imperialist plan for
starting a new world war"--a
concession to Moscow's more
optimistic treatment of the
subject which Liao went on to
blur by calling for vigilance
against "the danger that imperial-
ism will unleash another war."
On the matter of disarmament,
the Chinese moved from their
position, stated in the 7 June
People's Daily editorial that
the UnTfeU States "will never
agree" to disarmament, toward
Moscow's position, and now state
that by "struggle" it will be
possible to compel the imperial-
ists to sit down and "seriously
negotiate for a certain agree-
ment on disarmament." On the
matter of negotiations as a
basic policy, Peiping now fuses
its position with that of Moscow's
by maintaining that "struggle
of the masses provides diplomatic
negotiations with the strongest
backing," but its emphasis is
clearly on the primary impor-
tance of 'struggle" against the
United States.
The Chinese are primarily
interested in preventing Khru-
shchev from returning to moderate
detente tactics. They fear such
a step would seal the status quo
in the Taiwan Strait. Their
apparent belief that the summit
collapse provided them with an
opportunity to appeal effectively
for a "hard line" to other bloc
countries probably has been
modified, following clear signs
that the European satellites
are almost unanimously supporting
Soviet positions. They will
probably continue to mute their
earlier extreme attacks on
Khrushchev's policies and
profess to support Moscow's
tactical moves, but a basic
change in their opposition
to a reduction of "cold-
war" tensions, Soviet-US
negotiations, and "frsendly
contacts" with the United
States is unlikely for some
time to come.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 July 1960
SOVIET CENTRAL COMMITTEE PLENUM AND MIDYEAR PLAN RESULTS
The plenum of the Soviet
party central committee held
last week in Moscow to deal with
problems of modernizing indus-
try adopted a resolution which,
although a pale reflection of
the instructions issued by last
year's technological plenum,
nevertheless contains some novel
economic features. It covers
numerous subjects and criticizes
a variety of failings, hitting
in particular the chronic
Soviet problem of concentrating
solely on output to the detri-
ment of efficiency--"the
pernicious practice of fulfill-
ing the plan at any price."
The June 1959 plenum as-
signed to various economic
organizations specific tasks
with precise deadlines in the
fields of automation and mech-
anization and the improvement
of the quality of production.
Apparently no over-all report
on progress in implementing
these assignments was presented
at this year's plenum, but
agencies were strongly censured
for failure to carry out partic-
ular tasks. The plenum also
criticized the "harmful trend
of individual leaders toward
economic isolationism," pre-
sumably localism; the failure
to analyze the effectiveness
of new equipment before its
introduction; and lack of
attention to planning and raising
the effectiveness of capital
investments.
in the demand on the part of
the population." Prices of
wholesale goods are to reflect
costs more accurately.
The resolution also re-
affirms the key role of party
organizations in stimulating
and overseeing economic activity
but warns against "unnecessary
tutelage, substitution, and pet-
ty interference by party commit-
tees in the work of economic
organs." The statement recalls
the speech of Agricultural Minis-
ter Matskevich at the recent
Agricultural Conference in which
he asked that the skill of the
agricultural specialist be re-
spected.
The new resolution is more
concerned with transport than
any similar document has been
for several years--an indica-
tion that the problem of supply
remains an urgent one. The reso-
lution also reiterates the long-
felt necessity in Soviet indus-
try to subcontract and special-
ize in order to eliminate the
inefficient practice of having
plants manufacture their own
parts. It is also concerned,
as was last year's resolution,
with the applicability of re-
search to technology. The USSR,
which in some cases outdistances
the West in theoretical knowl-
edge of automation and mecha-
nization, has nevertheless
lagged in applying this knowl-
edge to industrial problems.
Far fewer assignments were
made by this year's plenum, and
dates for carrying them out were
for the most part omitted. The
resolution does, however, hit
several points not touched on by
last year's meeting. It speci
fies that the prices of consumer
goods must reflect not only the
cost of labor but the "changes
The resolution orders that
proposals be worked out for
further improving the criteria
for measuring the fulfillment of
the state plan, an unexpected
development in light of the
increasingly frequent press
complaints of excessive con-
centration on goals for gross
output to the neglect of those
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CURRENT INTELLIGENCE UZKLY SUMMARY
21 July 1960
for cost reduction and product
assortment. Ambitious current
programs to economize on capital
investment resources, to reduce
labor expenditures in connection
with the shorter workweek, and
to establish incentives for cost
reduction require better measure-
ment of performance than is
provided by existing indexes,
which stress output.
Plan Fulfillment 'at 'Midyear '
Notwithstanding the de-
ficiencies hampering technolog-
ical advancement which were
cited at the plenum, the Central
Statistical Board reports steady
progress for the economy. For
the first six months of this
year, gross value of industrial
production was reported up more
than 10 percent over the corre-
sponding period last year.
The state labor force ex-
perienced the largest increase
in the past decade--3,900,000--
although nearly half of this
resulted from the transfer of
collective farmers to state
farms and thus does not consti-
tute a net increase in the total
labor force. The 6.4-percent
increase in industrial labor
productivity, although smaller
than last year's, was above the
SOVIET PRODUCTION OF SELECTED ITEMS
(MILLION METRIC TONS
UNLESS OTHERWISE SPECIFIED)
{ PRODUCTION FIRST HALF
1959
PERCENTAGE INCREASE
PRODUCTION FIRST HALF FIRST HALF 1960 OVER
1960 FIRST HALF 1959
ANLWAL PERCENTAGE
INCREASE moo TO ACINEVE
SEVEN-YEAR PLAN GOALS
CRUDE STEEL
PIG IRON
21 .0
22.9
ROLLED STEEL
23.1
25.3
COAL
252.0
257.0
PETROLEUM
61 .7
70.7
CEMENT
18.6
21 . 7
ELECTRIC POWER
126.0
142.0
!BILLION KWH)
GAS
17.5
22.5
(BILLION CUBIC METERS
CHEMICAL EQUIPMENT
68
0
1
03
BILLION RUBLES)
.
.
14.0
17.0
PERCENTAGE INCREASE
FIRST HALF 1959 OVER FIRST HALF 1958
GROSS INDUSTRIAL
PRODUCTION
LABOR PRODUCTIVITY
IN INDUSTRY
LABOR PRODUCTIVITY
IN CONSTRUCTION
VOLUME OF CAPITAL
INVESTMENT
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21 July 1960
annual rate needed to meet Seven-
Year-Plan goals. Since several
million additional industrial
workers changed to a shorter
working day during the first
half of 1960, the increase in
output per manhour was even
greater than 6.4 percent.
The six-month plan was ful-
filled by all-union republics,
all but one economic region
(sovnarkhoz), and most basic
industries. The steel figure
projected to year's end would
mean a production increase of
about five million metric tons
for 1960, an achievement the
USSR would probably contrast
with US production, which, ac-
cording to latest estimates,
will be lower this year than in
three of the last six years.
Production of machinery and
equipment continued to show im-
pressive increases.
In agriculture, the total
area sown in fall and spring
crops this year exceeds that of
1959 by 16,000,000 acres. Some
33,000,000 more acres were de-
voted to spring crops this year;
however, about 20,000,000 acres
of this had originally been al-
located to fall crops and had to
be replanted because of harsh
winter weather and dust storms.
The plenum also took up
some unfinished organizational
business by releasing ailing
79-year-old Kliment Voroshilov
from the party presidium and
removing his successor in
the Soviet presidency, Leonid
Brezhnev, from the party
secretariat. Voroshilov has
been almost totally absent from
the Moscow scene since the
Supreme Soviet received his
resignation as titular head
of state on 7 May. Brezh-
nev's status, similarly, was
merely formalized:
with his appointment to
the presidency, he was no
longer functioning as a party
secretary.
The party secretariat
thus has been officially re-
duced to five members--Khru-
shchev and four other sec-
retaries. One of these, Frol
Kozlov, who was appointed to
the secretariat on 4 May,
delivered the formal report
to the plenum on the Bucha-
rest meeting of bloc leaders.
The designation of Kozlov,
who was not in Bucharest,
rather than Khrushchev,,who
headed the Soviet delega-
tion, or Mikhail Suslov, who
has in the past been close-
ly connected with interparty
affairs, may be an indica-
tion of Kozlov's emerging pow-
er in the party.
(Prepared jointly with ORR;
concurred in by OSI)
Five Soviet scientific re-
search ships are conducting op-
erations in the northwest At-
lantic in continuation of the
USSR's extensive oceanographic
research program, which has in
recent years far exceeded that
of any other nation in both num-
bers of research ships and ex-
tent Of effort. The Soviet
Union has announced that re-
search ships will explore the
confluence of the warm Gulf
Stream, and the cold Labrador
Current. Strong navy interest
in the activity is shown by the
participation of two naval re-
search ships and the fact that
the operations are being directed
by an admiral. The expedition
will obtain data useful for
basic oceanographic research
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 July 1960
and fishing and will also pro-
duce valuable information for
submarine operations in the
northwest Atlantic.
Following a TASS announce-
ment on 23 May that seven scien-
tific research ships would con-
--and four trawlers. During the
latter part of June the seven
ships conducted operations in
waters between Bermuda and the
northeastern United States.
Subsequently two of the trawlers
apparently withdrew from the ex-
pedition, and the remaining five
ships entered Canadian
east coast ports.
Prior to resump-
tion of operations in
early July, the USSR
informed the United
States, the United
Kingdom, and Canada
of Soviet plans to
emplace instruments
for long periods of
time to measure the
speed of the current
at various depths with-
in a radius of 100 to
120 miles of four spe-
cific points in the
northwest Atlantic.
However, no elabora-
tion was provided con-
cerning the nature of
the instruments nor
the length of time
they would be in place.
The locations desig-
nated by the USSR are
SOVIET OCEANOGRAPHIC
OPERATIONS
Area of late June operations
? Points designated by USSR
duct an expedition in the At-
lantic between June and October,
two Soviet naval research ships
were observed beginning opera-
tions north of Bermuda about
mid-June. These ships were
joined by the Mikhail Lomonosov
--which operates under the aus-
pices of the Academy of Sciences
appropriate for the announced
type of research.
The USSR has made no effort
to coordinate findings with the
United States, which conducted
a similar survey in this area
from April to June 1960
(Concurred in by OSI and ORR)
YUGOSLAVIA PLANS TO ADOPT SOME. WESTERN TRADE PRACTICES
The Yugoslav regime has
planned a series of economic
reforms which will establish a
foreign trade system similar to
those of Western nations. The
plan involves adoption next
January of a realistic, single
rate of exchange, a devaluation
of the dinar, and a liberaliza-
tion of import controls, there-
by exposing Yugoslav importers
and exporters to the forces of
competition. These plans indi-
cate that Belgrade believes its
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21 July 1960
economic growth is dependent on
a continued expansion of trade
with the industrial markets of
Western, rather than Eastern,
Europe. Its ability to make
the planned changes, however,
will depend on whether it can
negotiate the necessary loans
in the West.
Belgrade?s willingness to
abandon its standard Communist-
type state trading practices
results from its conviction
that these have outlived their
usefulness and are impeding
economic progress. Central to
this judgment is a fear of be-
ing unable to compete
in the new trading
blocs being formed in
Western Europe by coun-
tries with which Bel-
grade has in the past
few years carried on
almost half 'of" its
foreign trade.
Belgrade has
turned to the West
for examples of effi-
cient economic prac-
tice. The central
government plans to
play a smaller role
in the allocation of
foreign exchange, and
it will use the stand-
ard Communist-type bi-
lateral trade agree-
ments only in dealing
that for tourists, which Belgrade
feels should be temporarily left
at 400 to the dollar, because
Yugoslavia?s tourist facilities
are already overcrowded.
Yugoslavia believes the
proposed foreign-exchange reform
will help eliminate many of the
disproportions in the Yugoslav
economy. Janko Smole, head of
the Yugoslav National Bank, has
admitted the difficulty in plan-
ning under the old system of
multiple rates; under the single
rate, he said, enterprises would
respond to market forces alone
and this would permit future in-
OTHERS
LATIN AMERICA
1959
05.5 TOTAL TRADE
(VOLUME SHOWN IN
2.2-1.3- MILLIONS OF DINARS)
REGIONS
142
WEST EUROPE
(OEEC COUNTRIES)
(SHOWN AS PERCENT
OF TOTAL)
USSR AND EAST
EUROPE
with the Soviet bloc The official dinar/dollar rate is 300 to the dollar. This is unrealistic,
and certain Asian however, because of the use of multiple foreign exchange rates.
countries. While the 00719
regime still retains
certain trade and financial
controls, the reforms will per-
mit far greater freedom for in-
dividual trading enterprises
than is allowed by any other
Communist country.
Belgrade plans to lower
the value of the dinar from the
current official rate of 300 to
around 700 to the dollar. The
only different rate will be
vestments, particularly in in-
dustry, to be made on a rational
basis. With the liberalization
of import restrictions, the re-
gime hopes Yugoslav industry,
which has been subsidized in
both foreign and domestic mar-
kets, will be stimulated by the
profit motive to produce more
efficiently
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 July 1960
To make these plans work,
Belgrade would need substantial
loans to build up greater for-
eign-exchange reserves and to
meet an anticipated increase in
the value of imports and a de-
crease in the value of exports.
The regime estimates that it
needs immediate pledges of ap-
proximately $340,000,000 in
foreign loans to be honored
over the next two years. If
pledges are not received by
September, the plans will be
delayed.
Belgrade has turned to
the United States, West European
nations, and international
organizations for support. Of-
ficials of the International
Monetary Fund (IMF), who have
examined the Yugoslav scheme,
believe it is well planned and
"has a good chance of being ac-
complished without great diffi-
culty." The IMF is sending a
working group to Yugoslavia in
August to discuss details of
the plan.
The IMF is expected to
pro'ride:.: $15- rnm,illion..ot?:,$20
million, and Smole expects to
get slightly smaller amounts
from the European Fund and the
Bank for International Settle-
ments. The Yugoslavs are re-
portedly optimistic about get-
ting assistance from British,
French, West German, Italian,
and Swiss financial circles.
Yugoslav officials discussed
the possibilities of extended
American aid with US Under
Secretary of State Dillon, who
arrived in Belgrade on 17 July..
25X1
CZECHOSLOVAKIA'S "VICTORY OF SOCIALISM"
The Czechoslovak Communist
party celebrated its "victory
of socialism" this month as the
first country after the USSR
to have achieved this level of
Communist development. A new
constitution was adopted changing
the name of the country to the
"Czechoslovak Socialist Republic"
to indicate its change from a
"people's democracy." While
the other satellites are com-
pleting the transition stage,
the "building of socialism,"
the Czech party will be "per-
fecting a mature socialist so-
ciety.'.' Later all of the sat-
ellites are to launch the "con-
struction of .'Communism''. simul-
taneously,,.
At a national party con-
ference on 5 July, party leader
Novotny revealed that Czechoslo-
vakia's major claim to its ad-
vanced status is based on the
growth of socialist awareness in
the ,Czech popiulatibn.~ as shown by
the party's accomplishments over
the past two years. Novotny
could not refrain from self-
cor;gratulation over the successes
of the party in pushing through
its program--the most ambitious
ever undertaken by any European
satellite in such a short time
--while at the same time sur-
passing certain goals set by the
Five-Year Plan which ends next
December. Such accomplishments
set the stage for raising a num-
ber of the indexes in the new
Five-Year Plan (1961-65).
The increase in over-all
industrial production is to be
56 instead of 50 percent, and
industrial investments are to
be higher than those envisaged
last September when the plan
was first drafted. Although
the party is urging that the
five-year agricultural plan be
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21 July 1960
a
1958
Reorganization of economic management.
1 JAN 1959 - 31 MAY 1960
Reform of wages and norms.
MARCH 1959- JULY 1960
Agricultural reforms:
Socialization- -86 percent of agricultural land
is now in the socialist sector; farming of
private plots as part of a collective; farm
collectives try experimental industrial wage
system.
Increasing production--new produce-purchasing
system; reduction of machine tractor stations
to repair units and sale of tractors to collec-
tives; merger of collective farms.
APRIL 1959-1962
Educational Reform: Introduction of 11-year
schooling and part-time factory training.
SEPT 1959-JUNE 1960
Territorial reorganization of government, party,
and mass organizations: number of regions re-
duced from 19 to 10; number of districts reduced
from 306 to 108.
SEPT 1959 - JULY 1960
Adoption of socialist constitution.
12 JUNE - 11 JULY 1960
National elections: Election of National Assembly and
all local government bodies; new Council of Min-
isters named, with increased Slovak representation.
rJ SEPT 1959 -JULY 1960
Launching of Third Five-Year Plan (1961-65).
completed in four years, this
objective was not incorporated
into the final plan, nor does
it appear likely to be fulfilled..
Novotny's administrative
reforms, particularly the ter-
ritorial reorganization, have
centralized considerable power
in Prague, Control has been
simplified by reducing the
number of regions and districts,
which has enabled Novotny to re-
staff them with his most trusted
men. Bratislava--Slova-
kia's capital--has been
downgraded in rank
and the whole Slovak
area put under more
direct control by
bringing many Slovak
government and party
leaders to Prague to
serve concurrently in
the central adminis-
tration. At the same
time, the Slovak Board
of Commissioners,
which ran the equiva-
lent of ministries for
Slovakia, has been
eliminated, and most
of the Slovak minis-
terial apparatus has
been dissolved.
With regard to
foreign affairs,
Novotny's speech at
the conference was a
strong declaration of
support for Khrushchev
on all major issues
and in effect elim-
inated the potentially
serious ideological
differences between
Moscow and Prague that
were evident in late
1959 and early 1960.
His references to issues
at dispute between Chi-
na and the USSR placed
the Czech party squarely
behind Khrushchev.
Not only did he declare
that wars are not inevitable,
but he strongly implied that
they were unlikely with the
present balance of power and
in view of the state of mind of
the world's masses. Turning to
Africa and Asia, Novotny de-
clared that for these countries,
"Peaceful coexistence is an
active defense against imperial-
ist interference and the basic
method of struggle against new
forms of colonialism." The
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 July 1960
party leader condemned both
revisionism and dogmatism in
terms borrowed from the Soviet
20th party congress in 1956 and
currently in vogue i ow
25X1
EAST GERMAN POLITICAL AND ECONOMIC DIFFICULTIES
On the eve of the harvest,
the Ulbricht regime is taking
urgent measures to cope with
peasant discontent and maintain
its control in the East German
countryside. It is also seek-
ing to force local party and
government officials, who ap-
pear to have become demoralized
as a result of widespread purges
and rapid shifts in the party
line, to comply with'its direc-
tives.
Discontent among the farm-
ers, evidenced by moves among
those newly collectivized to
withdraw from collective farms,
appears to be spreading. Short-
ages of potatoes, meat, dairy
products, fruit, and vegetables
are becoming more evident, and
long queues are reappearing in
the cities. Many of these cir-
cumstances stem from the disor-
ganization resulting from last
winter's all-out collectiviza-
tion campaign. The Ministry
of Justice recently admitted
in its official publication
that "crimes against the state,
sabotage,... and an incitement
campaign" had proved a "serious
obstacle" to increasing agri-
cultural production; it called
for an all-out campaign of re-
pression and "persuasion" to
force the farmers into line.
In an attempt to eliminate
the serious administrative short-
comings which have contributed
to nonfulfillment of plans, the
regime announced on 15 July that
politburo member Willi Stoph,
who is also a deputy premier,
had been relieved of his duties
as minister of defense and been
appointed to oversee "coordina-
tion and control of the imple-
mentation of the resolutions of
the central committee and Coun-
cil of Ministers in the state
apparatus." This suggests that
party boss Ulbricht is endeavor-
ing to use Stoph's known admin-
istrative talents to ensure that
subordinate party and govern-
ment organs carry out directives.
Giving clear evidence of
declining morale among the East
German populace, the flow of
refugees to West Berlin and West
Germany is rising far above
last year's figures, despite
greatly intensified security
precautions. In the week end-
ing 12 July, more than 3,400
persons fled to West Berlin
alone--1,600 more than in the
same week a year ago; in the
first six months, some 88,500
persons fled to West Berlin and
West Germany, which is almost
17,000 more than for the first
six months of 1959.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 July 1960
Trade officials in West
Germany are pessimistic about
the West German - Soviet nego-
tiations expected to begin in
Bonn in September for a new
trade agreement to replace the
three-year accord signed in
1958.
Much of the German negoti-
ators' pessimism probably stems
from the recognition that they
were outmaneuvered in Moscow
last February in negotiations
on the annual trade protocol pro-
vided for under the 1958 agree-
ment. There they agreed to in-
creased exports of producer
goods to the USSR, including
result not only to the ineptitude
of the West German negotiators,
but also to pressure from German
industry, which is eager to ex-
pand exports to the USSR regard-
less of whether there is a de-
mand for Soviet commodities on
the German market. West German
exports to the USSR increased
during the first quarter of 1960
over the same period in 1959,
totaling $44,000,000. If this
rate of delivery continues, West
Germany may come close to ful-
filling its share of the 1960
trade protocol, which calls for
an exchange of goods totaling
approximately $180,000,000 each
way.
WEST GERMAN --USSR T - -- - ADE 360
24 53
29 j
EXPORTS
IMPORTS
large quantities of steel pipe
and other industrial items--
such as chemical plant equip-
ment--tailored to the require-
ments of the Soviet Seven-year
Plan. In return they accepted
Soviet goods, including a con-
siderable quantity of petroleum
products, which West Germany
could acquire more cheaply else-
where. If filled, the 1960 So-
viet petroleum quota would pro-
vide West Germany with 9 percent
of its crude oil and 25 percent
of its gasoline.
The US Embassy in Bonn at-
tributes this unsatisfactory
180
180
1960(TARGET)
21 JULY 1960
In the September
negotiations, the USSR
is expected to ask again
for larger.trade quotas
and may repeat--at
least as an initial
bargaining position--
its previous demand for
West German exports con-
sisting entirely of pro-
ducer goods. Moscow
probably will continue
to be interested in
large-diameter steel pipe and in
entire industrial plants, par-
ticularly in the chemical field,
and insist on buying West German
merchant ships.
The Soviet negotiators may
raise the subject of Western em-
bargoes on strategic goods and
ask that Bonn bring pressure on
the other Western powers to re-
lax COCOM restrictions. They
may also suggest more liberal
West German credit terms on capi-
tal goods, as an alternative to
Germany's taking unwanted Soviet
commodities now.
(Concurred in by ORR)
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21 July 1960
Difficulties encountered
in the negotiations for replac-
ing the Tambroni cabinet sug-
gest that the new government
will leave unresolved the right-
left stalemate which has almost
paralyzed effective government
in Italy. The Christian Demo-
crats are principally concerned
with removing the stigma of
neo-Fascist parliamentary sup-
port that was Premier Tambroni's
main difficulty and thus improv-
ing their prospects in the na-
tionwide local elections sched-
uled f_.or. October. The the
small center parties promised
their parliamentary support to
prevent Communist exploitation
of the anti-Fascist issue but
only to prevent polarization
of the Italian political situa-
tion.
Following the widespread
anti-Fascist rioting from 28
June to 10 July, most elements
in the Christian Democratic
party agreed that the Tambroni
government had to be replaced.
The disturbances also convinced
the three small center parties
--the Liberals, Democratic So-
cialists, and Republicans--that
they must for the time being
provide parliamentary support
for an alternative government.
They have not overcome, however,
the basic ideological differ-
ences which kept them from
agreeing on a government during
the two-month crisis which pre-
ceded Tambroni's decision to
depend on neo-Fascist support.
Tambroni himself had shown
reluctance to resign, and Presi-
dent Gronchi had also resisted
a change of premier.
The Democratic Socialists
and Republicans look with fa-
vor on anew all Christian Demo-
cratic cabinet, preferably
headed by former Premier Fan-
fani, and Socialist party leader
Nenni has indicated he would
not vote against it. Neverthe-
less, the probability that ex-
Premier Scelba would return
to his old post as minister of
interior was probably displeas-
ing to these parties. Scelba
has consistently urged re-estab-
lishment of a cabinet made up
of all four center parties, al-
though in previous quadripartite
cabinets important legislation
was impeded by dissension be-
tween Democratic Socialists and
Liberals.
The conservative Liberal
party appears to have consented
to support a new Christian Demo-
cratic cabinet only after an
intraparty struggle. Some of
its members object to Fanfnai
as a leader of the Christian
Democratic left wing and to the
possibility of Nenni Socialist
support. All the center parties
seem to favor the continuance
of former Premier Segni as
foreign affairs minister.
gets as NATO bases in Italy.
The Communists, anxious
to avoid isolation, have prom-
ised to support a government
which would respect the consti-
tution but are already laying
the groundwork for attacking the
new regime. Having now lost
through Tambroni's resignation
the popular issue of resistance
to Fascism, they may turn to
demonstrating against such tar-
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 July 1960
The Haitian Government of
President Francois Duvalier is
drifting steadily to the left
as it sinks lower in graft and
administrative disorganization.
Duvalier appears to be in poor
health, not having completely
recovered from his May 1959
heart attack. He is delegating
much of his authority to a
clique of leftist advisers,
among whom Jules Blanchet, a
probable Communist, is one of
the most influential.
The influence of these ad-
visers is apparently responsible
for the regime's equivocal stand
on the Castro regime in Cuba.
The American Embassy received
a clear implication from the
Haitian Foreign Ministry on 8
July that Haitian support of a
foreign ministers' meeting under
the Organization of American
States on the Cuban problem does
not mean that Haiti will support
any action against the Cuban
regime.
Leftist influence is also
evident in the extremely bitter
attacks by President Duvalier
and other high officials on
United States economic aid to
Haiti. They maintain that the
raid is both inadequate and
granted under conditions incon-
sistent with Haitian sovereignty.
Last April, Jules Blanchet cas-
tigated the "new imperialism in
the guise of technical assist-
ance" before an international
gathering in Panama and warned
that the democratic order sought
by Latin America cannot be at-
tained without revolutionary
changes in the social order and
a strong fight against "monopoly
and capitalists."
Duvalier and his aides have
recently promoted a series of
public demonstrations against
US aid projects and have even
made veiled hints that Haiti
may seek aid from the Soviet
bloc. The President's insistence
on using US aid projects for
political patronage has already
seriously crippled the program.
Clement Barbot, presiden-
tial secretary, secret police
chief, and long one of Duvalier's
closest aides, was arrested on
15 July within a few hours of
making a strong bid to the
American ambassador for US sup-
port against Duvalier. He told
the ambassador he had been dis-
cussing the political situation
with top army officers and they
agree that Duvalier's policies
are plunging Haiti toward a new
period of political chaos and
"the situation cannot continue
much longer."
The army as presently con-
stituted remains the most cohe-
sive force in Haiti friendly to
the US. Army Chief of Staff
General Merceron probably shares
Barbot's concern, but he and
other top army leaders are prob-
ably unwilling at this time to
act decisively to halt the drift
toward administrative disorgani-
zation and leftist control
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 July 1960
SOVIET ECONOMIC RELATIONS WITH INDONESIA
Moscow and Djakarta, not-
ing the "successful fulfillment"
of their past economic agree-
ments, have embarked on even
more grandiose plans for Soviet
participation in Indonesia's
economic development. The
$250,000,000 credit extended
by Khrushchev in Indonesia last
February was formally approved
during Indonesian First Minis-
ter Djuanda's stay in Moscow.
Djuanda now is in Eastern Europe
seeking additional bloc commit-
ments to bolster Indonesia's
economy during the forthcoming
Five-Year Plan. While the wide
sweep of the new Soviet-IndoF-
nesian agreement raises con-
siderable doubt over the possi-
bilities for early fulfillment,
Moscow apparently is determined
to push vigorously its economic
program in Indonesia.
Of some $126,000,000 in
economic aid extended to Indo-
nesia by the USSR between 1956
and 1959, only about $30,000,000
worth of goods has been delivF
ered, although most of the total
now has been obligated for specif-
ic projects. The only major
Soviet industrial project con-
tracted for is a steel mill to
be built in western Java, but
it will not be finished until
at least 1965. Other undertak-
ings still in the early stages
include road-building projects
in Borneo, a fertilizer plant,
a school of marine sciences at
Ambon, and mechanization of
rice farming. The Asian Games
stadium in Djakarta is under
construction, but chaotic con-
ditions at the building site
make completion by the target
date of 1962 doubtful.
The new $250,000,000 credit
is earmarked for a wide range
of Indonesian industrial and
agricultural enterprises. So-
viet technicians are to travel
to Djakarta this year to begin
survey work for proposed proj-
ects. A seven-year cutoff
date for drawing up and approv-
ing contracts may eliminate
some bottlenecks and speed use
of the credit. Firm Soviet in-
tentions notwithstanding,Indo-
nesia's low level of technical
training, scarcity of rupiah
financing for local costs, poor
planning and implementation, and
constant bureaucratic entangle-
ments are unfavorable for the
type of program envisaged in
the new agreement.
A new factor in Soviet-
Indonesian relations is Moscow's
success in persuading Djakarta
to conclude a long-term trade
agreement for 1961-63. The
agreement apparently does not
embody Moscow's repeated re-
quests for a long-term rubber
commitment, but does provide
a framework for a gradual in-
crease in trade commensurate
with the planned aid program.
Soviet-Indonesian trade last
year totaled less than $20,000,-
000 and was composed almost
entirely of rubber shipments
to the USSR. The planned tri-
pling of this total by 1963 is
possible if the aid program is
carried through promptly and
if shipments of Soviet industrial
goods are greatly expanded.
In contrast to the slowly
implemented economic aid pro-
gram, shipments of bloc arms
have been timely and well re-
ceived. During Djuanda's
visit to Moscow, his delegation
may have pursued the USSR's
earlier proposal to su ply addi-
tional naval equipment7
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 July 1960
The Indonesian Army, react-
ing to the local Communist par-
ty's bitter criticism of the
cabinet during the second week
of July, has initiated counter-
action which President Sukarno
has at least partially opposed.
Presumably Sukarno
is aware that despite the par-
ty's protestations of loyalty
to him, several points of its
criticism strike at programs he
has personally ordered and
strongly supported.
The party's public chal-
lenge to the government consisted
of a lengthy statement by Secre-
tary General Aidit and editorial
assessments by two Communist
dailies on 8 July severely criti-
cizing both internal and exter.=
nal government policies and de-
manding that the cabinet move
further to the left. Both Aidit
and the Communist press offered
their customary praise of Sukar-
no's leadership, emphasizing
that the blame for present
troubles lies with his subordi-
nates. A fourth Communist blast
occurred at a labor conference
held from 14 to 16 July to dis-
cuss the formation of a unified
labor movement. The representa-
tive of SOBSI, the Communist
federation, delivered a blister-
ing attack on both the plan and
the labor minister.
Reports conflict as to the
extent of the army's somewhat
delayed reaction and of Sukar-
no's opposition to it. It ap-
pears, however, that on 16 July
the army arrested Sakirman, a
member of the Communist party
politburo who is concurrently
a vice chairman of the govern-
ment's National Plannin? Council
The army has also banned
the Communist daily, Harian
Rakjat. This action, however,
appears to have been a counter-
move to the banning of an anti-
Communist paper, Nusantara, on
Sukarno's orders during the
absence of Army Chief of Staff
General Nasution from Djakarta.
Nasution also issued an unusual-
ly strong anti-Communist state-
ment on 18 July in which he
linked the Communists with the
various insurgent groups, charg-
ing that, as a whole, they con-
stituted that small segment of
the population which opposed
government policy.
refuse to support anti-Communist
action, the army hopes to avoid
a head-on conflict with him.
Sukarno will undoubtedly attempt
to prevent significant anti-
Communist action, since he feels
he needs the party as a balance
against the army. He would
probably support some mild form
of chastisement, anticipating
that the Communists, having run
into greater opposition than
they had anticipated, would re-
turn to a qualified progovern-
ment position.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 July 1960
CAMBODIAN CRITICISM OF AMERICAN MILITARY AID
Chief of State Sihanouk's
propaganda campaign against al-
leged shortcomings in American
military aid to Cambodia shows
no sign of abating. He contin-
ues to threaten to accept prof-
fered Communist bloc arms un-
less the United States meets
what he claims to be Cambodia's
defense needs against its "over-
armed" neighbors--South Vietnam,
Thailand, and Laos.
The persistence and inten-
sity of Sihanouk's invective
over the past several weeks have
led observers in Phnom Penh to
speculate that he may already
have secretly concluded an arms
deal with the bloc, and now is
building a case for popular ac-
ceptance. Indications are grow-
ing that a Cambodian-Czech arms
deal of some kind is imminent.
Sihanouk is anxious to
strengthen Cambodia's poorly
equipped paramilitary forces as
a village-level cushion against
external intrusions, and possibly
as a counterpoise to the regular
army. He probably considers that
the receipt of Czech arms for
these irregulars--in contrast
to the acceptance of a major
military aid program from the
bloc--would not compromise Cam-
bodia's neutrality and would
not jeopardize American support
of the regular armed forces.
to send three of his sons to
school in Communist China--ap-
parentl as a warning to the
West
Sihanouk's recent decision 25X1
ar ous other
Cambodian officials, including
Foreign Minister Tep Phan and
Education Minister Chea Chinkok,
have conveyed their anxiety to
American officials that Sihanouk
may feel compelled to make good
his threat to accept Communist
military aid. Despite this
undercurrent of concern, Sihanouk
probably could count on the con-
tinued loyalty of both civil and
military subordinates if he moved
closer to the bloc.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 July 1960
Hayato Ikeda's election as
Japanese prime minister on 18
July with the support of 275 of
the 286 Liberal-Democratic party
(LDP) members of the lower house
and his unusually speedy forma-
tion of a cabinet indicate that
the new government will empha-
size an appearance of party
harmony in preparation for the
general elections expected'this
fall or winter. The near ab-
sence of major party figures
in the cabinet inaugurated on
19 July suggests, however, that
the government will be an in-
terim one.
The relative youth and in-
experience of the new cabinet
indicate that Ikeda may use the
period before elections to mold
a new image of himself and of
the conservative party. Ikeda
is the only major holdover from
the Kishi government, in which
he served as minister of inter-
national trade and industry, and
only six of the 17 new ministers
have held cabinet posts previ-
ously. The appointment of Ja-
pan's first woman minister--US-
educated Welfare Minister Mrs.
Masa Nakayama--may be an attempt
to broaden popular support.
Ikeda is considering the
establishment of a new ministry
for public information to count-
er the leftist propaganda offen-
sive. Failure of the LDP's
public relations has been one of
the party's chronic weaknesses.
The new government draws
support from essentially the
same elements that backed the
Kishi government. Most major
LDP factions are represented in
the cabinet, but the reportedly
unenthusiastic participation of
Mitsujiro 'Ishii and the lukewarm
support of Bamboku Ono, Ikeda's
opponents in the race for prime
minister, suggest that factional
rivalries are being set aside
only until after the election.
Ikeda has made no move to in-
clude in the cabinet those ex-
treme LDP elements who did not
cooperate in the ratification
of the US-Japanese security
treaty, and their exclusion
will be another divisive factor.
Ikeda, a bureaucrat like
Kishi, has tried to overcome
friction between the professional
politicians who opposed him and
the bureaucratic element of the
LDP whom he represents by appoint-
ing only five bureaucrats to the
new cabinet. Similarly, only
one of the top three party posts,
which have been divided equally
among the pro-Kishi factions,
went to a bureaucrat--Etsusaburo
Shiina, new chairman of the
policy board.
A continued pro-Western
policy seems assured by the ap-
pointment of Zentaro Kosaka as
foreign minister. A former
businessman and labor minister
in the fifth Yoshida cabinet,
he has little experience with
international affairs but was
active in the drive to ratify
the security treaty. Ishii,
appointed to the important Minis-
try of International -Trade and
Inaustry, is also known to favor
close relations with the US.
However, Ikeda said in his in-
augural remarks that Japan would
seek closer cultural and eco-
nomic ties with Communist nations.
The new labor minister is
Hirohide Ishida, a former jour-
nalist who fought Communist
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 July 1960
infiltration of labor unions and
is one of the party's rising
leaders at 45. When Ishida
occupied this post in 1957, he
followed a firm but nonrepres-
sive program.
Ishida was faced almost
immediately with a crisis caused
by top labor, Socialist, Com-
munist, and student leaders who
have threatened to use force to
bar resumption of operations at
the Miike coal mine on Kyushu
Island. The mine, where workers
have been on strike since Jan-
uary, has become a focal point
in the struggle between manage-
ment and labor over moves to
reduce the labor force and
raise efficiency and produc-
tivity in key Japanese industries.
Ishida in his first public state-
ment as labor minister affirmed
his intention to avoid bloodshed
by mediation in an effort to fore-
stall leftist moves to use the
mine dispute in continuing po-
litical tension.
SOUTH KOREAN PARLIAMENTARY ELECTIONS
The South Korean parlia-
mentary elections on 29 July
seem likely to result in a multi-
party legislature and a period
of political instability under
a succession of minority and
coalition governments. Each
seat in the lower house is being
contested by an average of seven
candidates, and there are signs
that former Vice President Chang
Myon's front-running conserva-
tive Democratic party will split
after the elections,
particularly if it
wins a strong major-
ity. A greater number
of foreign observer
teams during the elec-
tion and the political
neutralization of the
police and the mili-
tary will encourage
the freest if not
the most orderly na-
tional election in
South Korean history.
Over 1,500
candidates, including
some 1,000 independ-
ents, are competing
for the 233 lower-
house seats. About
300 Democrats are run-
ning, including many
without party endorsement.
Hostile public opinion report-
edly has forced over 20 of the
54 candidates of former Presi-
dent Rhee's discredited Liberal
party to withdraw; many others
are running as independents. The
150 to 200 socialist candidates
are handicapped by a lack of
funds and organization, although
they should be favored by the re-
duction of voting age from 21-to
20 and may have considerable
support in the major urban areas.
UNIFICATION PARTY
SOUTH KOREA : NATIONAL ASSEMBLY
HOUSE OF REPRESENTATIVES (LOWER HOUSE)
(AS OF 8 JUNE 1960)
* Includes about 100 former members of the Liberal
party who left the party following Rhee's ouster.
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21 July 1960
Elections for the
less powerful upper
house are being
held concurrently
with those for the
lower chamber. Un-
like their colleagues
in the lower house,
who are elected for
an indefinite term
not to exceed four
years, half of those
elected to the 58-
seat upper house will
serve three years,
and half for a full
six-year term. The
two houses in joint
session will elect
the president, a nonpartisan
figurehead post under the new
constitution. Acting Chief of
State Huh Chung recently pub-
licly disclaimed any political
ambition, perhaps with the in-
tention of enhancing his pros-
pects for selection as the first
president of the second repub-
lic.
The government formed
following the election is ex-
pected to continue South Korea's
close ties with the United
States and is unlikely to seek
relations with the Communist
bloc. The Social Masses party,
largest of the new reformist
groups, has publicly advocated
unification of Korea through a
compromise with Pyongyang, but
the public response, including
that of other socialists, has
been adverse. The overriding
issue of the campaign is the
correction of the abuses of
the former Rhee regime, al-
though local issues and loyal-
ties will strongly influence
balloting, particularly in the
conservative rural areas.
Democratic party leader
Chang Myon has been a wavering
candidate for both the premier-
ship and presidency.
INDIAN GOVERNMENT WORKERS" STRIKE
The Indian Government
scored only a partial victory
against leftist labor leaders
in forcing an end to the nation-
wide strike of government work-
ers from 12 to 16 July. While
the socialist- and Communist-
led labor movement suffered a
serious blow to its prestige, the
government's tough tactics in
dealing with the strikers probably
will further alienate the ruling
Congress party from government
and other unions.
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21 July 1960
The strike was far less
effective than planned, but
political and economic reper-
cussions may be felt for some
time to come. The walkout be-
gan on 12 July in defiance of
New Delhi's ban--imposed sever-
al days earlier--on strikes in
"essential services." Disrup-
tion of rail, postal, and tele-
graph services in many areas
was followed by incidents of
violence and sympathy strikes,
particularly in Bombay and Cal-
cutta. The response among the
2,000,000 workers called out
was never complete, however,
and most of the essential gov-
ernment services were maintained
by nonstrikers and army reserv-
ists.
The strike was called off
after five days, following con-
ferences between top government
officials and Praia Socialist
party leader Asoka Mehta, who
told the press he expected the
government to make "significant
concessions" on the issues of
raising the minimum wage and
relating wages to the rising
cost of living. Mehta denied,
however, that there had been
any conditions to calling off
the strike.
The principal losers in
the recent developments are the
Praia Socialists, who acted as
a front for the Communists in
leading the workers out. Social-
ist labor leaders were among the
several thousand arrested during
the strike, whereas the Commu-
nists remained underground, re-
portedly ready to take over the
leadership had the strike ap-
peared to be succeeding. The
Communists now are in a position
to place the onus of failure on
the socialist labor leadership.
Although the government
during the walkout adamantly
opposed the strikers' demands,
Nehru probably will be willing
to compromise on some questions
now that the situation is under
control. It is doubtful, how-
ever, that even the "significant
concessions" anticipated by Mehta
would do much to heal the growing
breach between the Congress par-
ty and the Indian labor movement.
Those top officials in govern-
ment who advocate a hard line
toward labor, moreover, are
likely to be encouraged by the
failure of the strike to crack
down in the future on similar
efforts by labor groups to im-
prove working conditions.
MODERATE SOCIALIST PARTY HEADS NEW GOVERNMENT IN CEYLON
The outcome of Ceylon's
national elections on 20 July
leaves the prospects for stable
parliamentary government still
doubtful. As compared with the
political fragmentation follow-
ing previous national elections,
however, the present results
indicate progress toward a two-
party system dominated by mod-
erate and relatively conserva-
tive groups.
The Sri Lanka Freedom par-
ty (SLFP), committed to the
socialist-neutralist policies
of the late Prime Minister Ban-
daranaike, won 75 of the 151
elected seats. With six ap-
pointed members and its leftist
supporters, the party commands
a comfortable majority. The
relatively conservative United
National party, winner of a slim
plurality in the elections last
March, now is the leading oppo-
sition party, with 30 seats.
The three leftist parties have
lost further : ?.strength ' since ;
March.,.end-together. now. hold
only 19 seats.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 July 1960
Mrs. Bandaranaike, the
SLFP's president and leading
campaigner, was sworn in as
prime minister on 21 July.
While she did not contest a
seat in Parliament, as the par-
ty's choice for the prime min-
istership she can hold the po-
sition pending a parliamentary
by-election.
To assure her party a com-
pletely safe parliamentary ma-
jority, Mrs. Bandaranaike may in-
vite the support, although prob-
ably not the active participation
in the government, of the Trot-
skyite Lanka Sama Samaj party
and the smaller orthodox Commu-
nist party, both of which entered
into an electoral agreement with
the SLFP. Since the party's
parliamentary group could sur-
vive without outside support,
however, the extreme leftist
minority will not wield the in-
fluence it had anticipated, and
the new government will probably
retain the essentially moderate
outlook of the former Bandara-
naike regime.
The ideological and personal
conflicts among the SLFP politi-
cians and the probable struggle
for behind-the-scenes control
will weaken the government, how-
ever, and limit its ability to
deal with the pressing economic
and social problems neglected
during the past four years of
political instability.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 July 1960
In 1960 consumption of
crude oil in the free world is
likely to reach 19,000,000 bar-
rels a day (b/d), of which
slightly more than half will
be consumed in the United
States. Despite the record
level of consumption, the in-
ternational oil industry, with
present facilities and proved
liquid petroleum reserves of
about 262 billion barrels, can
produce about 26,600,000 b/d.
Thus, not including North Afri-
ca, which has begun to export
oil only recently, surplus
capacity amounts to 7,600,000
b/d