CURRENT INTELLIGENCE WEEKLY SUMMARY

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• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A002800070001-5
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• Document Page Count: 33
• 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. 67
OCR NO. 3337/60
28 July 1960
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
DOCUMENT NQ.
NO CHAN EE P, i
CLA ~. TC:
AUTH:.wi3A'L-2
OFFICE OF CURRENT INTELLIGENCE
C FE ENITIAL
CENTRAL INTELLIGENCE AGENCY
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
28 July 1960
OF IMMEDIATE INTEREST
By 27 July, UN troops had
taken over control in parts of
five of the Congo's six prov-
inces. Only in Katanga--which
declared itself independent on
11 July and subsequently called
in Belgian troops to maintain
order--does security remain the
responsibility of the Belgians.
The status of Katanga Prov-
ince and of bases in the Congo
has become a major source of
friction between UN and Belgian
officials. On 26 July, Brus-
sels protested statements pur-
portedly made by the UN command-
er, General on Horn, "order-
ing" the Belgians to evacuate
Katanga. A later statement by
Von Horn that Katanga appeared
to be "a part of the Congo
problem" as far as the UN was
concerned has failed to mollify
Brussels.
negotiations started between
Tshomb6 and the Lumumba govern-
ment. Tshomb6 has indicated
his willingness to support a
loosely joined Congo federa-
tion, but not a highly central-
ized unitary state as espoused
by Lumumba. Renewed criticism
of Katanga's self-proclaimed
independence by Tshombe's par-
liamentary opposition, however,
may have damaged his prestige
for any dealings with Lumumba.
Brussels probably hopes to de-
lay the UN entry into Katanga
lest such a move further weaken
Tshombb's bargaining position.
In an unexplained move,
the Congo Senate on 22 July
voted itself a three-week vaca-
tion. The lower house had
agreed the previous day t_o ad-
journ until 1 September. The
action by the Senate--which
has been the main center of
criticism directed at Lumumba's
leftist policies--suggests that
his opponents will await the
results of his trip before con-
sidering further action. Lu-
mumba may feel that his polit-
ical future depends in part on
his ability to obtain large-
scale aid for the Congo during
his present trip to the United
Stites and Canada. The Congo's
desperate need for technical
and financial assistance, how-
ever, together with Lumumba's
pro-Communist'bent, makes it
likely that he will also solicit
aid from the bloc.
Belgium's policy appears
to be to delay decisions con-
cerning its bases and Katanga.
Ambassador Burden in Brussels
observes that the Belgians hope
to use any time gained to get
Among independent African
states, eight of which are con-
tributing troops to the UN force,
there continues to be a strong
tendency to denounce Belgium's
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28 July 1960
OF IMMEDIATE INTEREST
By 27 July, UN troops had
taken over control in parts of
five of the Congo's six prov-
inces. Only in-Katanga--which
declared itself independent on
11 July and subsequently called
in Belgian troops to maintain
order--does security remain the
responsibility of the Belgians.
The status of Katanga Prov-
ince and of bases in the Congo
has become a major source of
friction between UN and Belgian
officials. On 26 July, Brus-
sels protested statements pur-
portedly made by the UN command-
er, General Von Horn, "order-
ing" the Belgians to evacuate
Katanga. A later statement by
Von Horn that Katanga appeared
to be "a part of the Congo
problem" as far as the UN was
concerned has failed to mollify
Brussels.
negotiations started between
Tshomb6 and the Lumumba govern-
ment. Tshomb6 has indicated
his willingness to support a
loosely joined Congo federa-
tion, but not a highly central-
ized unitary state as espoused
by Lumumba. Renewed criticism
of Katanga's self-proclaimed
independence by Tshombe's par-
liamentary opposition, however,
may have damaged his prestige
for any dealings with Lumumba.
Brussels probably hopes to de-
lay the UN entry into Katanga
lest such a move further weaken
Tshombe's bargaining position.
In an unexplained move,
the Congo Senate on 22 July
voted itself a three-week vaca-
tion. The lower house had
agreed the previous day t_o ad-
journ until 1 September. The
action by the Senate--which
has been the main center of
criticism directed at Lumumba's
leftist policies--suggests that
his opponents will await the
results of his trip before con-
sidering further action. Lu-
mumba may feel that his polit-
ical future depends in part on
his ability to obtain large-
scale aid for the Congo during
his present trip to the United
States and Canada. The Congo's
desperate need for technical
and financial assistance, how-
ever, together with Lumumba's
pro-Communist'bent, makes it
likely that he will also solicit
aid from the bloc.
Belgium's policy appears
to be to delay decisions con-
cerning its bases and Katanga.
Ambassador Burden in Brussels
observes that the Belgians hope
to use any time gained to get
Among independent African
states, eight of which are con-
tributing troops to the UN force,
there continues to be a strong
tendency to denounce Belgium's
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CURRENT INTELLIGENCE WEEKLY SUMMARY
28 July 1960
actions, especially in Katanga,
as an attempt by "imperialism"
to reimpose its control over a
former colony. The most ex-
treme anti-Belgian reaction has
come from Guinea, whose con-
tingent arrived in Leopoldville
this week insisting it wanted
to proceed to Katanga "to fight
Belgians." Earlier Conakry had
"postponed" acceptance of cre-
dentials from Belgium's ambas-
sador-designate and urged other
African states to sever diplo-
matic ties with Brussels.
So far, at least, this sug-
gestion has nOt been adopted
anywhere; some of the more mod-
erate African states--notably
Libya, Tunisia, and Morocco--
have in fact shown some dis-
position to back away from all-
out support of Lumumba, es-
pecially when the Congolese
leader threatened to seek So-
viet troops. The Africans are
particularly anxious to keep
all intervention within the UN
framework and to provide as much
as possible themselves of the
assistance requested.
Ghana's President Nkrumah,
who has cultivated and subsi-
dized Lumumba since the first
African People's Conference in
Accra in 1958, continues to be
more intimately involved in the
situation than any other African
leader outside the Congo. He
has committed over 2,000 troops
--the bulk of Ghana's army--to
the UN operation and reportedly
has said they will remain in
the Congo in support of Lumumba
until "every Belgian" has left
the country. Nkrumah apparent-
ly hopes his initiatives in the
Congo will enhance his reputa-
tion as a pan-African leader
while also strengthening his di-
rect influence among Congolese
leaders, to whom he looks for
support in promoting his cher-
ished scheme for African polit-
ical unification.
Moscow's concern over the
Congo crisis appears to have
lessened following the 21 July
UN Security Council resolution,
Lumumba's statement that Soviet
forces were no longer needed,
and the subsequent easing of
tension in the area. While the
Soviet press and radio continue
to devote considerable atten-
tion to Congo developments and
to assert the USSR's readiness
to "undertake decisive action,"
the note of urgency which char-
acterized earlier Soviet state-
ments now has been replaced by
Moscow's claim that it "forced
the United States to desist
from armed intervention."
There is, however, increased
criticism of UN officials for
their handling of the situation,
particularly for "cooperating"
with Belgian forces, and for
failing to bring Katanga "un-
der military control." Pravda
on 27 July termed the struggle
in the Congo "nothing but a
war" waged by Belgium, the US,
and other NATO countries to
enslave the Congolese.
The USSR's decision to sup-
port the moderate UN resolution
sponsored by Tunisia and Ceylon
was probably designed to avoid
isolation from the "Afro-Asian
position" and damage to its pose
as champion of the African peo-
ples against "imperialist aggres-
sion."
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CURRENT INTELLIGENCE WEEKLY SUMMARY
28 July 1960
A small party of Soviet
representatives headed by a
Foreign Ministry-o4ficial ar
rived in Leopoldville on 21
July aboard a Soviet food plane,
apparently to serve as Mos-
cow's direct link with the
Congolese Government both for
the coordination of further
moves and for channeling first-
hand information on future de-
velopments to Moscow. Soviet
leaders may have become con-
cerned over the exaggerated ex-
pectations of the Congolese re-
garding possible Soviet support
and wished to be in a position
to influence further Congolese
initiatives which would direct-
ly involve the USSR.
Top-level Soviet officials
continue to confirm the validity
of the policy of peaceful co-
existence, but the tone of
their pronouncements on Soviet
policy is being brought increas-
ingly into line with Moscow's
more aggressive behavior in
recent weeks. Speeches by pre-
sidium members Suslov, Kuusinen,
and Shvernik emphasize the need
to remain vigilant, expose the
imperialists, and perfect and
strengthen the defenses of the
Soviet Union.
Moscow's careful maneuver-
ing on the Cuban and Congo sit-
uations over the past week in-
dicates, however, that the Krem-
lin does not intend to go beyond
exploitation of these issues as
part of its current agitation
and propaganda abuse of US mo-
tives and policies. Soviet prQpa
ganda is continuing to claim
that the United States is poised
for aggression against Cuba,
but Khrushchev's message to
Castro and the joint communique'
with Raul Castro retreat con-
siderably from Khrushchev's
missile threat of 9 July. Mos-
cow has also dropped the note
of urgency reflected in its
earlier statements on the Congo
crisis.
UN Security Council
In his opening statement
to the UN Security Council on
the RB-47 incident, Deputy For-
eign Minister Kuznetsov made
it clear that the USSR's pur-
pose in the debate was to uti-
lize the public forum as a
sounding board for continuing
its violent denunciation of
American motives and policies.
Kuznetsov hammered at the charge
that the United States is con-
ducting an aggressive policy
which could bring on a new war,
and he asserted that the Soviet
Government had exercised great
patience and self-control in
the case of the RB-47. He warned
that the USSR reserved the "full
right to take more far-reaching'
measures" and would not have to
limit itself to stopping the
intruding aircraft. He concluded
his statement on 22 July by in-
troducing a resolution calling
for a condemnation of the US
actions.
When this resolution was
defeated the Soviet delegation
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CURRENT INTELLIGENCE WEEKLY SUMMARY
28 July 1960
apparently made no effort--as it
had done during the Security
Council debate on the U-2 inci-
dent--to encourage a more moder-
ate resolution which it could
attempt to amend or represent
as an indirect condemnation of
the United States. After dis-
missing the American motion for
an impartial investigation as
an effort to "confuse a clear
issue," Kuznetsov vetoed it, as
he did an Italian resolution re-
questing permission for the In-
ternational Red Cross to see the
RB-47 survivors.
Khrushchev also used the
disarmament issue to abuse the
US. In letters and notes of
23 and 25 July to the United
States, Britain, and Canada,
Khrushchev vigorously denied any
responsibility for an increase
in international tension and
ran through a list of familiar
charges against the US Govern-
ment, beginning with the U-2
incident.
The main purpose of the dis-
armament letters, however, was
to blunt the American initiative
in requesting an immediate meet-
ing of the UN Disarmament Com-
mission. The dismissal of the
American plan as a "guise for
espionage," together with a de-
nial that the USSR broke off the
Geneva talks to avoid considering
it, suggests that Moscow feels
it is presently in a weak tacti-
cal position for a UN debate.
Moscow probably viewed a detailed
criticism of the American pro-
posals as part of the necessary
groundwork to strengthen its
charge that the Western powers
refuse to conduct serious nego-
tiations in accordance with the
UN General Assembly resolution
of 1959 calling for'complete and
general'disarmament=under effec-.
tive control.
In his letter to Macmillan
and note to the United States,
Khrushchev distorted the Amer-
ican proposal as rejecting com-
plete disarmament by its "fail-
ure" to provide disarmament
measures in the first stage, and
"reducing any agreement to the
first stage only." To support
this claim, the letters con-
centrate on such first-stage
"omissions" as the lack of pro-
posals for eliminating foreign
bases and troops, liquidating
means of delivering nuclear
weapons, or prohibiting the weap-
ons themselves, while ignoring
the inclusion of provisions for
these measures in later stages.
In an effort to make the
strongest possible case against
the American plan, Khrushchev's
letters discounted the proposals
to discontinue production of
fissionable materials for weap-
ons and transfer agreed amounts
to stockpiles for peaceful uses.
He claimed that these proposals
serve no practical purpose and
could easily be evaded.
Moscow also used the notes
to reject, in effect, the 82-
nation UN Disarmament Commission
as the forum for discussing fu-
ture negotiations. On the other
hand, as in his letters of 27
June to the Western heads of
government, Khrushchev again
implied that the USSR will pro-
voke a dispute over the limited
composition of the ten-nation
talks in order to forestall
any UN action to revive that
body as a medium for continuing
the talks.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
28 July 1960
Nuclear Test Ban Talks
In the conference on ban-
ning nuclear tests, Moscow for
the first time put forward a
proposal for a specific number
of inspections which it would
allow inside the USSR. Accord-
ing to chief Soviet delegate
Tsarapkin's proposal on 26
July, the United States and
Britain could make a total of
three inspections each year of
unidentified events picked up
by the detection system and
qualified as possible nuclear
explosions.
The USSR, in turn, would
be allowed three inspections
in the United States and three
in Britain. At the end of two
years, this annual quota would
be subject to review and revi-
sion. The three inspections
in the USSR would apply to de-
tected occurrences both above
and below the "threshold" agreed
on by the three powers which
separates permanently banned
tests from the smaller and less
detectable explosions. Tsarapkin
also rejected the US suggestion
for 20 inspections above the
threshold.
The USSR has consistently
claimed since April 1959 that
the specific annual quota should
be determined by a high-level
political decision unrelated
to any scientific estimates of
the likely number of natural
occurrences which could be sus-
pected of being nuclear tests.
That they have now dropped this
contention and introduced the
issue before the conference sug-
gests that the Soviet leaders
may have decided to bring about
a showdown at Geneva, which
would strengthen their prop-
aganda and negotiating position
and possibly force a recess of
a few months. They are appar-
ently preparing for this by
setting out a Soviet stand on
all unresolved major issues.
The Soviet delegation's
immediate tactical aim, however,
probably is to force the United
States to commit itself on the
duration of a moratorium cover-
ing small underground tests,
which would not be permanently
banned by the projected treaty.
In late June the Soviet dele-
gate suggested to the US dele-
gate in private a "gentlemen's
agreement" to submit a specific
quota figure if the US would
state its position on the dura-
tion of the moratorium. At the
conclusion of his proposal on
26 July, Tsarapkin alluded to
this conversation and called
for the United States to make
a prompt reply on the question
of the moratorium.
Sino-Soviet Relations
After a three-week lull
in its public dispute with Mos-
cow, Peiping has resumed ob-
lique criticism of Khrushchev,'s
policies with new attacks on
"modern revisionism." At the
meeting of bloc leaders in Bu-
charest in late June, Khru-
shchev was unable to convince
the Chinese Communists to ac-
cept the Soviet position.
Peiping
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28 July 1960
was evidently persuaded, how-
ever, to mute its open criti-
cism of Khrushchev in the in-
terest of maintaining an ap-
pearance of bloc unity.
On many occasions subse-
quent to Bucharest, Moscow has
put forth arguments for detente
and coexistence which the Chi-
nese find repugnant, and the
Chinese leadership probably
now feels compelled to restate
its views on these issues.
China's decision to re-
open the debate may have been
reached at a high-level party
meeting believed to have been
held this month. As one re-
sult, Peiping appears to be
mounting a major "cultural"
campaign which, while clearly
pertinent to the domestic scene
in China, is also being used to
strike anew at Soviet detente
policies. Thus far three major
Chinese cultural spokesmen have
used a current congress of
writers and artists in Peiping
to issue the sharpest slaps
at the USSR since early July.
Peiping's new offensive is not,
however, at the extreme level
which prevailed prior to the
Bucharest meeting.
In his letter of congrat-
ulations to Fidel Castro on the
seventh anniversary of the
founding of the 26th of July
Movement, Khrushchev seemed to
be making a further effort to
calm the adverse reaction evoked
throughout the world by his ear-
lier threat to use missiles
against the United States in the
event of intervention against
Cuba. Although taking the occa-
sion again to accuse "monopolistic
circles" in the United States of
striving, by an economic block-
ade and by planning to intervene
against Cuba, to destroy the
revolution, he declared that the
Cuban people are not alone in
their struggle, and pledged that
the Soviet Union would give "the
necessary support" in case of
armed intervention.
These less belligerent
statements, in no way committing
the Soviet Union to any specific
action, follow closely on the
joint Cuban-Soviet communique
issued on 20 July at the close
of Raul Castro's four-day visit
to Moscow. Khrushchev at that
time resorted to the ambiguous
phrase "use everything to pre-
vent US armed intervention."
He minimized the likelihood of
this by saying that the US state-
ment disavowing any intention
for such a move was a commitment
assumed before the entire world.
While the communique makes clear
that the US statement was issued
after Khrushchev's threat, it
refrains from claiming credit
for it, even by implication.
The communique's emphasis
on "economic repression" and
Soviet readiness to make up for
supplies cut off by the West on
a trade rather than aid basis
tends to divert attention from
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CURRENT INTELLIGENCE WEEKLY SUMMARY
28 July 1960
the potential Soviet military
role in Cuba.
Economic Agreements With Bloc
Communist China's new eco-
nomic pact with Cuba marks the
first Chinese trade and aid
effort in the western hemisphere
and probably foreshadows estab-
lishment of diplomatic relations.
The pact calls for Peiping to
take 500,000 tons of Cuban sugar
annually during the next five
years in exchange for Chinese
rice, textiles, and industrial
products. As now envisaged,
total Sino-Cuban trade will
amount to about $70,000,000 a
year--far more than China's past
trade with all of Latin America.
The Chinese also offer to extend
long-term credits for industrial
development and to send tech-
nicians to Cuba. Details
for such a program are to
be worked out we,.n a Cuban del-
egation pays a return visit
to Peiping.
By stepping in to absorb
the cut in Cuba's US sugar quota,
Moscow and Peiping have facili-
tated the drastic reorientation
of Cuba's economy toward the
bloc. The bloc now has agreed to
purchase about 2,500,000 tons of
Cuban sugar this year--worth some
$170 000,000. Bloc purchases may
amount to as much as one half of
total Cuban sugar sales; they
already exceed the amount sold
the United States.
Shipments of bloc goods to
date have been confined chiefly
to Soviet oil and fertilizers,
but machinery and equipment from
bloc sources will soon begin ar-
riving in quantity.
Under both trade and credit
agreements, the bloc is to sup-
ply Cuba with some 56 "complete
factories," ranging from a steel
plant to small workshops turning
out light industrial products.
The total cost of machinery and
equipment for these installations
is estimated at over $50,000,000,
not including the steel mill. Bloc
technical assistance is to be
furnished on a large scale.
Soviet performance to date
in exploiting the Cuban situa-
tion indicates that a major ef-
fort will be made to carry out
the new commitments. The prom-
ised economic aid, plus mounting
bloc sugar purchases, makes Cuba
more dependent on expanded eco-
nomic relations with the bloc.
Latin American Youth Congress
The long-planned Latin
American Youth Congress, which
began officially on 26 July in
the Sierra Maestra, is a major
propaganda effort to promote
the Castro and Communist goal of
"liberating America from US
imperialism." Important groups
in Venezuela, Bolivia, Chile,
Peru, and other countries boy-
cotted the meeting because of
its expected Communist domination,
but delegates from nearly all
Latin American countries are tak-
ing part. Most Sino-Soviet bloc
nations sent delegations.
Prominent Latin American
leftist leaders in Cuba for the
celebrations on 26 July included
former President Arbenz of
Guatemala--who left his Uruguayan
exile despite Montevideo's
warning that he would not be re-
admitted--and Mexican Communist
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CURRENT INTELLIGENCE WEEKLY SUMMARY
28 July 1960
leader Vicente Lombardo Toledano,
who flew to Cuba from a 20 July
anti-Trujillo labor conference
in Caracas.
Pro-Castro groups in other
Latin American countries have
been active with demonstrations
of support for Cuba timed to
coincide roughly with the 26
July anniversary. On 23 July
the Venezuelan Chamber of Depu-
ties unanimously passed a reso-
lution supporting "the struggle
of the Cuban people for their
national liberation"--a move
which may strengthen the hand
of the pro-Castro foreign minis-
ter in his differences with
President Betancourt over treat-
ment of the Castro regime. In
Mexico City, a leftist-sponsored
mass demonstration is planned
for 31 July in ostensible sup-
port of President Lopez Mateos,
but probably with the intent of
pressing his government to take
a firmer pro-Castro stand,
Internal Opposition
Prominent Cubans are con-
tinuing to resign their posi-
tions, and further defections
are likely. Dr. Perez Cisneros,
alternate Cuban representative
to the OAS Council, resigned
over the pro-Soviet trend of
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Despite the lack of organi-
zation among anti-Castro ele-
ments, the increasing security
measures being taken by the
government reveal its concern
over internal opposition.
On the economic front,
Enrico Mattei, head of the
Italian oil monopoly, has re-
jected an initial Cuban request
for him to assume full responsi-
bility for operating the refin-
eries, but he is considering sup-
plying refinery equipment and
technical assistance on a cash
basis. Officials of the seized
refineries in Cuba say access
to replacement parts is likely
to be Cuba's biggest problem.
in running them.
nition to East Germany,
West Germany continues to
delay concluding a trade agree-
ment with Cuba, and Bonn of-
ficials have recently expressed
concern that the Castro regime,
annoyed at these hesitations,
may grant diplomatic recog-
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PART II
NOTES AND COMMENTS
The African townships ad-
joining Southern Rhodesia's two
largest cities, Salisbury and
Bulawayo, have been the scene
of native rioting and anti-
European demonstrations start-
ing on 19 July. Southern Rho-
desian authorities, concerned
that the unrest in the Congo
would stimulate African nation-
alism in the Federation of
Rhodesia and Nyasaland, ar-
rested several officials of the
National Democratic party--
Southern Rhodesia's leading na-
tive movement. This action led
to protest demonstrations in
the Salisbury African townships
--including a general strike
which was 70 percent effective
--and an attempt by several
thousand Africans to march to
the center of Salisbury. The
government arrested several
hundred natives and banned all
African political meetings.
that rioting against the white
settlers' minority control
could easily spread throughout
the territory. However, it is
also an effort by Southern Rho-
desian Prime Minister Whitehe.aSl,
who plans a quick parliamentary
election this autumn, to con-
vince the European electorate
that his United Federal party
will protect European inter-
ests as well as the rightist
opposition Dominion party would
do.
The possibility of wide-
spread violence is becoming
more likely as white officials
continue to miscalculate the
strength of African national-
ist aspirations and to antag-
onize moderate African lead-
ers who might still be able to
guide the force of nationalism
toward a racial accommoda-
tion.
The disorders then spread
to the Bulawayo area, and riot-
ing continued from 24 to 26
July, as African mobs looted
and burned European and govern-
ment property in the native
areas. The police, reinforced
with troops, generally con-
tained the rioting within the
African sections. The 2,000-
man force used tear gas and
clubs and resorted` to fire-
arms only on 26 July. Never-
theless, 13 Africans were
killed, five of them by the
police.
The government's tough
policy reflects its concern
In nearby Nyasaland, there
is increased danger of violent
nationalist and racial agita-
tion
regardless of
the outcome of constitutional
talks begun in London on 25
July between Nyasaland nation-
alists led by Dr. Hastings
Banda and the British Govern-
ment. Banda's Malawi Congress
party has charged that enemies
of the party plan civil dis-
turbances to discredit it. If
Banda is dissatisfied with the
talks, the Malawi Congress par-
ty itself may soon begin a cam-
paign against the status quo:
25X1
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CURRENT INTELLIGENCE WEEKLY SUMMARY
28 July 1960
Diplomatic relations be-
tween Rumania and Israel have
improved since the low point of
May 1959. At that time, the
Israeli minister in Bucharest
remarked that relations were
bad enough to warrant their
suspension. In January, Bu-
charest lifted several of its
year-old travel restrictions
on Israeli Legation personnel,
allowing them to visit Jewish
communities outside the capital
and to enter local synagogues.
Rumanian Jews may visit the
Israeli Legation without risk-
ing police interrogation. Is-
raeli Minister Shmuel Bendor,
who arrived in Bucharest in
March 1959, was finally re-
ceived this spring by Premier
Chivu Stoica.
A small number of rabbis
from Western countries have re-
ceived tourist visas for Ru-
mania. In March 1960 the re-
gime commuted to two years the
18-year prison sentence of a
Rumanian employee of the Is-
raeli Legation, and two weeks
ago the Rumanian Foreign Minis-
try announced that Israeli
tourists would be permitted to
visit relatives in Rumania.
While the Israelis have wel-
comed these moves, they doubt
that these relaxations will
continue for long.
Bucharest, always sensi-
tive to strong world press re-
- VISAS ISSUED
- ACTUAL DEPARTURES'
S 0 N D J F M A M J J A S 0 N D J F M A M J
-1956-x' 1959 1960-
`FIGURES FOR NOV DEC 1959 AND APR MAY 1960 ARE AVERAGES
IN THE ABSENCE OF CONFIRMED MONTHLY FIGURES
actions to its repression of
the large Jewish minority in Ru-
mania, still considers this ele-
ment politically unreliable,
and it continues to arrest Jews
on political or economic grounds,
restrict their worship, and lim-
it the supply of sacramental
objects, religious books, and
foods. At the same time, how-
ever, it has sought to provide
some solution to the "problem"
of the Jews by sporadically
permitting emigration to Israel.
Between 4,000 and 5,000
exit permits have been issued
since last November, and ap-
proximately 100,000 Rumanian
Jews have registered for emigra-
tion. The regime probably is
not prepared to expand emigra-
tion into a large-scale exodus,
however, hoping thereby to
avoid pressure from the Arab
world.
At least two of the four
Israeli Legation officials ex-
pelled in the past two years
were ejected as a sop'to the
Arabs. One instance followed
a formal Arab protest against
the large-scale emigration to
Israel in February 1959. The
other was an effort to placate
the UAR, which had been offended
by an anti-UAR speech made by
Syrian Communist leader Khalid
Bakdash at a Rumanian party
congress. A contributing fac-
tor in the choice of diplomats
expelled probably was their
Rumanian origin and their in-
timate knowledge of Rumania's
languages, peoples, and cus-
toms.
Rumanian leaders probably
feel they can take extreme
measures against Israeli rep-
resentatives in order to mol-
lify the Arabs, since Tel Aviv
has demonstrated great patience
in the face of strong provoca-
tions in the past for the
sake of keeping alive the pros-
pects for increased emigra-
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CURRENT INTELLIGENCE WEEKLY SUMMARY
28 July 1960
MIDDLE EAST DEVELOPMENTS
Iraq
For the first time since
he came to power in Iraq two
years ago, Prime Minister Qasim
has made a major propaganda is-
sue of a disagreement between
the government and the Western-
owned iraq Petroleum Company
(IPC), Apparently misinformed
on many aspects of the problem
by Acting Oil Minister Shaybani,
Qasim on 21 July publicly charged
the company with an arbitrary
breach of its agreements with
the Iraqi Government at the ex-
pense of the "rights of the
Iraqi people." His statement has
been followed by sharp attacks
on the company by Radio Baghdad
and almost all Iraqi newspapers.
The dispute centers on a
unilateral move by the Iraqi
Government to raise port dues
from 6.5 to 78 cents per ton
on oil exports through the
Persian Gulf. The company has
responded by sharply reducing
production in the southern
Iraqi oil fields--from which
these exports come--to a level
which entails a loss to the
government of more than $4,-
000,000 per month.
his cabinet. He is expected
to increase the already large
proportion of military officers
and, perhaps, drop two pro-Com-
munist civilians. Muhammad
Hadid, the capable conserva-
tive former finance minister,
may be reappointed to a key
ministerial post.
A new sign of gradual prog-
ress toward a rapprochement be-
tween Iraq and the UAR was the
attendance by Military Governor
General'Abdi and Foreign Minis-
ter Jawad at a reception held
by the UAR Embassy in Baghdad
to celebrate the eighth an-
niversary of the Egyptian rev-
olution.
There are rumors in Bagh-
dad that Qasim will soon revise
Nasir may be ~ laying 1
the groundwork for new negotia-
tions with the Soviet Union
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CURRENT INTELLIGENCE WEEKLY SUMMARY
28 July 1960
for economic and technical as-
sistance, this time in conjunc-
tion with the latest. ambitious
version of his ten-year develop-
ment scheme. He has gone out
of his way recently to make
favorable comments about Soviet
bloc aid programs, and most
of his speeches for many
weeks have included pointed
criticism of American poli-
cies.
Top Israeli officials
have been anticipating that the
UAR would soon obtain more mili-
tary equipment from the bloc.
Deputy Defense Minister Peres
asserted in a speech two weeks
ago that the Arabs believe
"the critical moment is approach-
ing when their military po-
tential will reach its optimum
standard." He implied that
trouble could be averted only
if nations friendly to
Israel assist in redressing
the arms balance.
Arab solidarity against
Israel was a major theme of the
UAR's anniversary celebration
of the Egyptian revolution. The
"vanguard" of the UAR's new
"Palestine Liberation Army" took
part in the two-hour parade and
exhibition of military forces
on 23 July.
A border clash between Is-
raeli and Syrian units occurred
the day before, and a spokesman
for the Syrian Army accused Is-
rael of trying to take advan-
tage of the diversion of Syrian
troops for the revolution cele-
brations. Further violent border
incidents are likely soon, and
they may lead to a new crisis
between the Arab states and Is-
rael.
On 23 July, a date that
made his action particularly
irritating to Nasir, the Shah of
Iran told the press that his
government recognizes Israel,but
that this is nothing new. Pre-
viously Iran had carefully a-
voided publicity about its close
de facto relations with Israel.
Nasir responded by express-
ing hope that the Iranian peo-
ple would overthrow the Shah,
by directing the Iranian ambas-
sador to leave the UAR, and by
ordering the closing of the UAR
Embassy in Tehran. The Shah,
not to be outdone, ordered the
UAR ambassador out of Iran. The
press and radio of Iraq, Jordan,
and Lebanon have joined the UAR
in condemning the Shah's move,
and the matter is to be raised
at a foreign ministers' meet-
ing of Arab League members on
22 August in Beirut.
Continuing serious economic
conditions in Syria, reflected
in a gradual but steady decline
in the value of the Syrian pound,
have caused growing discontent.
Open criticism of Nasir has be-
come prevalent. Nasir has again
apparently decided to postpone
contemplated measures for
nationalization of some private
Syrian industries and for unifi-
cation of Egyptian and Syrian
currencies.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
28 July 1960
GREECE AND THE COMMON MARKET
The negotiations to asso-
ciate Greece with the European
Economic Community (EEC or Com-
mon Market), despite considerable
progress earlier, have encoun-
tered increasingly difficult
obstacles in the last few weeks.
Specific Greek demands have con-
flicted with broader EEC ob-
jectives, and there have been
sharp recriminations from both
sides, Nevertheless, the deep
commitment of both to some
sort of arrangement makes an
eventual compromise likely.
Most of the present problems
stem from Athens' efforts to ob-
tain both a maximum of EEC
assistance in developing the
Greek economy and maximum ac-
cess for Greek exports to the
Common Market. The first ob-
jective has led the Greeks to
ask for $250,000,000 in low-
interest EEC loans over the next
five years--an amount which
American Embassy observers in
Athens seriously doubt the
Greek economy could absorb.
Athens' eagerness for market
outlets for citrus fruits and
vegetables has worried Italy
in particular, and Greek repre-
sentatives have charged that
Rome has insisted on reserving
the right to take "unilateral"
action if Italian exports are
hurt.
The EEC's already embar-
rassing problem with tobacco
tariffs has been especially
complicated by Greek hopes for
favored treatment. The EEC
has for some time contemplated
an ad valorem common external
tariff of 30 percent on im-
ported tobacco--a figure Wash-
ington has warned would jeopard-
ize American support of the
Common Market. Greece, however,
is urging that the ad valorem
rate be linked with a high
specific minimum tariff to go
into effect when a bilateral
agreement is signed. Athens
alsc wants the EEC to agree
to double its imports of Greek
tobacco in five years.
Broader political considera-
tions on both sides have tended
thus far to aggravate these
difficulties but may in the
end be the basis for compromise.
Common Market policy has been
strongly influenced, for ex-
ample, by the fact that Greek
association would be a "pilot
project." While the member
countries have been loath to
establish a precedent of ex-
cessive generosity, EEC officials
have also been eager to prove
that bilateral association is
a practical possibility which
others--notably members of the
Outer Seven--may want to explore.
The Greek Government's hard
bargaining reflects both an
awareness of these EEC hopes
for early agreement and a re-
luctance to accept a "second-
class" association which would
be politically difficult to
defend. It is nevertheless
doubtful that the Greeks are
prepared to pursue their de-
mands to the point of prevent-
ing an agreement, since their
foreign minister recognizes
that the alternative to closer
economic relations with the
West is growing trade with the
Communist bloc.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
28 July 1960
FRENCH NAVAL DEVELOPMENTS
De Gaulle's effort to in-
crease France's national pres-
tige is reflected in the building
and training program of the
French Navy. New emphasis has
been placed on the creation of
a sea-borne, nuclear striking
force and the increasing use
of the fleet for flag-showing
visits.
To justify its refusal to
yield to Tunisian pressure and
evacuate Bizerte, France has
urged its allies to proclaim
that 'the French naval base
there'.,' ~stre:ngtherls`
NATO because it sttengh-
e.ns the French Navy.
Despite De Gaulle's
decision in March 1959
to withdraw the Medi-
terranean fleet from
NATO control, fleet
units have continued
to participate in
NATO training exer-
cises as well as
bilateral and national
squadron exercises.
Since the start of
the regular training
period last September
however, large-scale
training has taken
second place to flag-
showing visits to
African ports--es-
pecially those of the
French Community.
Major combat ships
were sent to greet
President de Gaulle
during his recent
visits to Dakar in
West Africa and Diego-
Suarez on Madagascar.
The present French naval
building program is geared
primarily to the creation of a
navy with a purely national
mission. Two aircraft carriers
--the Clemenceau, now running
sea trials, and the Foch, under
SECRET
PART II NOTES AND COMMENTS
construction at Penhoet-Loire--
will be equipped with jet
Etendard IV fighter-bombers
capable of carrying nuclear
weapons. When fully operational,
they will constitute a major
step toward De Gaulle's desire
for a national nuclear striking
force. Under the proposed naval
building program, another carrier
and three missile-equipped light
cruisers probably will be added
to the fleet by 1964.
La Galissonniere, an experi-
mental antisubmarine destroyer: will
Official Model of LA GALISSONNIERE,.
probably begin operations within
a year. The construction of a
nuclear-powered submarine e-
quipped for launching guided
missiles.is again being pressed.
The French Navy is highly
effective in conventional
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CURRENT INTELLIGENCE WEEKLY SUMMARY
28 July 1960
submarine and antisubmarine war-
fare. The lack of a missile
capability limits antiaircraft
defense against modern jets.
While a shortage of helicopters
still hampers some amphibious
operations, techniques and
training are excellent, and exten-
sive experience has been gained
in Algeria by helicopter crews
and commando units. A weak
mobile logistics system is off- 25X1
set somewhat by the presence of
good bases in the eastern Atlantic
and Mediterranean, the fleet's
normal operating areas.
CANADIAN POLITICS
Popular support for Canadi-
an Prime Minister Diefenbaker's
Conservative government has
shown a sharp decline in recent
months. A Gallup poll early in
July showed Conservative popu-
larity dropping to 42 percent--
barely ahead of Lester Pearson's
Liberals. This is a fall of 6
percentage points from last May
and of 17 from a year ago. Lib-
eral party upset victories in
provincial elections in Quebec
and New Brunswick last month
also appear to point to the same
trend. While a general election
is not mandatory until 1963,
Diefenbaker may call one be-
fore his prestige drops fur-
ther.
AND FOREIGN POLICY
One reason for this decline
seems to be the government's
spotty record in carrying out
the nationalistic foreign policy
program it advocated during the
campaign in mid-1957. During the
past year, Canadian public atten-
tion has centered on foreign is-
sues, and particularly on Canada's
joint defense arrangements with
the United States. The most hot-
ly argued issue is whether to
allow the storage and use of
nuclear weapons. The U-2 inci-
dent touched off further argu-
ment over conditions for permit-
ting continued US operations in
Canada.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
28 July 1960
External Affairs Secretary
Green, who took his post only
a year ago with no previous'ex-
perience in foreign affairs,
is on record as op-
posing any nuclear tests by
any country.
There are indications that
the government is drawing away
from Diefenbaker'e earlier state-
ments that Canada should play
an effective role among the
big powers. In mid-July, Green
questioned whether Canada should
remain a member of the ten-
power disarmament group and
also advocated closer Canadian
alignment with the "middle
powers."
The government's greater
interest in Latin America could
be the beginning of such an align-
ment. Diefenbaker's official trip
to Mexico and Green's more ex-
tensive tour of South America
last spring were the first such
trips by Canadian officials. One
result has been that Canada,
which has until now declined to
join the Organization of American
States (OAS), plans to send an
observer to the conference in
Quito next winter and is-?adtive-
ly considering OAS membership.
Such a move would not affect its
membership in the Commonwealth.
All four center parties
supporting Premier Fanfani's
Christian Democratic minority
government differ on their views
of the government's longevity,
but they all welcome the time
available to try to compose in-
ter- and intraparty differences
COMMUNITY MOVEMENT 1-
(PSDI)
INDEPENDENT LEFT I
before'the-nationwide local elec-
tions, which now again may be
postponed from fall until spring.
The Liberals and right-wing Chris-
tian Democrats see in the re-
newed collaboration of the four
parties a means of avoiding
indefinitely a center-left cab-
inet dependent on the
Nenni Socialists. Dem-
ocratic Socialist,
ITALIAN 25X1 Republicans, and left-
PARLIAMENT wing Christian Democrats,
iVALUUSIAN UNION(UVU)
LIBERALS)PLI)
SECRET
NOTES AND COMMENTS
on the other hand, re-
gard it as a transition
to such a government.
Fanf ani's govern-
ment was formed over
the objections of a
variety of Political
elements who preferred
the Tambroni cabinet
and can be expected to
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CURRENT INTELLIGENCE WEEKLY SUMMARY
28 July 1960
try to stir up trouble for this
one. Both the Communists and
the neo-Fascists stood to profit
from the polarization of Italian
politics which continuance of
the Tambroni government tended
to promote. Tambroni himself,
reluctant to the end to leave
the premiership, refused with
some acerbity a post in Fanfani's
cabinet. Inclusion of former
Premier Pella as budget minister
is said to have been a means of
preventing Pella--an opponent of
Fanfani's center-left policies
--from joining up with the pro-
Tambroni forces.
Although the support of the
small center parties is expected
to assure a parliamentary vote
of confidence--possibly as soon
as 6 August--ideological differ-
ences within And between the
parties will make it difficult
for them to maintain their pres-
ent truce, particularly if con-
troversial legislative measures
such as the proposals for use
of the proportional system in
local elections should later
be raised.
Reports that these elec-
tions--now scheduled for October
--may be postponed until spring
suggest that the Christian Dem-
ocrats are anxious to let time
elapse so that the experiment
with neo-Fascist allies will
be less vivid in the minds of
the electorate, and that all
the government parties may
seek more time to compose their 25X1
internal differences before
going to the people.
GUATEMALA CLAMPS DOWN ON OPPOSITION
In an effort to suppress
opposition subversive activity
in Guatemala, President Ydigoras
is adopting stronger measures
than at any time in his two and
a half years in office. The
state of siege declared on 19
July suspends certain constitu-
tional guarantees for 30 days
and gives the military wide
powers. Army leaders, who had
long urged strong measures, are
believed loyal and dependable.
The President does not appear
to be seriously threatened by
either his rightist or extreme
leftist opponents.
The year-old campaign of
terrorist bombings in the capital
city, which resulted in the first
fatalities on'18 July, has been
principally the work of rightist
opposition factions. These
groups, which lack significant
popular backing, apparently
hoped thereby to create such a
climate of unrest as to prompt
the army to seize direct control
of the government.
Leftist splinter parties
and the underground Communist
party sought to capitalize on
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28 July 1960
the unrest, and engaged in des-
ultory activity against the
regime. These groups, using
leftist-inclined students, were
apparently responsible for the
antiregime demonstrations of
19 and 20 July protesting the
state of siege. The police,
backed by regular troops, sup-
pressed the demonstrations,and
their threat to use even stronger
measures has apparently discour-
aged new demonstrations.
The moderate leftist Rev-
olutionary party (PR), the larg-
est single party in Guatemala,
has thus far remained generally
aloof from the anti-Ydigoras
activities of the other opposi-
tion groups. Its leaders rec-
ognize that the party stands to
gain most by peaceful political
competition that may well bring
it to power in the 1963 national
elections. PR leader Mario
Mendez Montenegro would probably
commit his party to strong
however, if he became convinced
that Ydigoras had succumbed to
rightist pressure for authoritar-
ian government. The PR would
also probably fight to prevent
any effort by extreme leftists
to seize power.
By dwelling on the danger
from the extreme left and pub-
licly ignoring the rightist
threat to his regime, Ydigoras
has deprived his rightist oppo-
nents of their chief issue-=his
alleged "softness" on the left-
ists. The chance that these
rightists would find support
in the army for a coup against
the President is, at least for
the present, remote.
In anticipation of the
arrival next month in West New
Guinea of Dutch naval units on
a flag-showing voyage,Indonesian
President Sukarno is reviving
official and public interest in
his country's claim to that
area. He apparently hopes
thereby not only to achieve the
maximum propaganda effect from
the-visit, but also to provide
a build-up for his traditional
independence day speech on
17 August and to divert atten-
tion from the Communist party's
recent criticism of the cabinet.
A Sukarno-appointed com-
mittee has prepared a draft
"action program for the libera-
On the propaganda front,
Abdulgani, vice chairman of the
Supreme Advisory Council,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
28 July 1960
announced in a speech on 19 July
that the Dutch still have
"hidden designs" to reimpose
colonialism. He said Indonesia
should not fear international
reaction over using force against
Dutch force but should be "proud
of causing trouble for the im-
perialist colonialists."
Foreign Minister Subandrio re-
iterated to the press on 21 July
that Indonesia would take
"equivalent action to counter
any provocation by the Dutch
in strengthening their military
potential in West New Guinea."
An encounter between Indonesian
and Dutch military units, how-
ever, continues to appear un=likely.
The Dutch naval units which
have aroused so much resentment
in Indonesia include the air-
craft carrier Karel Doorman,
two destroyers, and a tanker.
Aboard the Karel Doorman
are 12 Hawker Hunter jet
fighters which are to be sta-
tioned in New Guinea. During
August the Netherlands is
scheduled to send approximately
1,350 men to the area, and
additional aircraft and air
force personnel are to arrive
still later.
The Indonesian Army's
interrogation of at least five
Communist leaders on that
party's 8 July criticism of the
cabinet appears unlikely to
result in any significant anti-
Communist action. Sukarno
appears willing to protect the
party and to overlook its
criticism, and Army Chief of
Staff General Nasution has-not
indicated any intention to press
the matter further at this time.
Sukarno's attitude is motivated
by his belief that he needs the
Communist, party to balance army
strength.
GOVERNMENT CHANGES IN NORTH VIETNAM
Hanoi has announced sweeping
personnel and administrative
changes in the North Vietnamese
regime. The reorganization,
based on a revised constitution
promulgated earlier this year,
was approved by the newly
elected National Assembly on
15 July and closely parallels
that of Communist China in
recent years.
The establishment of agri-
cultural and industrial boards
directly under the premier's
office and the subdivision of
the Ministry of Industry are part
of Hanoi's preparations for
implementing its First Five-
Year Plan (1961-65), which will
stress industrialization.
Party chief Ho Chi Minh, who
recently celebrated his 70th
birthday, was unanimously re-
elected President by the assembly.
However, the National Assembly's
Standing Committee, under the
chairmanship of party theoretician
Truong Chinh, may increase in
influence, and Ho may reserve
his voice for decisions of major
importance.
The vice presidency, vacant
since 1946, has been filled by
Ton Duc Thang, who will presumably
take over some of the less im-
portant ceremonial and honorific
jobs from Ho. Thang is an old
man with little influence in the
regime but, as a native of South
Vietnam, will probably be used to
symbolize national unity.
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28 July 1960
Pham Van Dong retains the
posts of premier and foreign
minister but, since the vice
presidency now has been filled,
would no longer become acting
chief of state'on Ho's.death.
Truong Chinh, as chairman
of the Standing Committee of
the National Assembly, has prob-
ably enhanced his chances of
eventually succeeding Ho. Liu
Shao-chi, after holding the
comparable office in Communist
China, went on to succeed Mao
as chief of state in 1959. In
recent weeks Truong Chinh has
continued to make important party
pronouncements, and unless he
suffers a sudden decline at the
party congress in September, his
election to the post of standing
committee chairman should not be
viewed as an eclipse Of his
fortunes.
Defense Minister Vo Nguyen
Giap's election to the chairman-
ship of the important National
Scientific Research Commission
and his retention of the vice
premiership should dispel re-
ports of his imminent political
demise. In recent years Giap
has been absent from the public
scene for extended periods,
and it has been believed that
he was being eclipsed by "hard-
line" .elements. Although factions
undoubtedly exist, the compo-
sition of the group of top
leaders has been remarkably stable
over the past 15 years, probably
because of Ho Chi Minh's arbitra-
tion and the genuine loyalty
given him.
The elevation of a National
Reunification Commission to
cabinet rank underscores Hanoi's
growing emphasis on "the struggle"
for South Vietnam. The designation
of a general to head the com-
mission may presage further
increase in subversion and
guerrilla activities, although
lip service will continue to be
paid to "peaceful unification."
GROWING UNEASINESS IN SOUTH AFRICAN CABINET
The shootings of Africans
at Sharpeville last March have
led to considerable soul-search-
ing in the South African cabi-
net. The incident gave whites
in the Union their first indi-
cation of the potential power of
the country's natives, and the
subsequent repercussions con-
firmed South Africa's inter-
national isolation.
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CURRENT INTELLIGENCE WEEKLY $UUARY
28 July 1960
Although all members of the
government still support the
policy of apartheid, many feel
that implementation of the pol-
icy should be drastically speed-
ed up. They believe the white
community should make consider-
able sacrifices in order to
establish viable political en-
tities for the Africans in des-
ignated areas of South Africa.
A few cabinet members apparent-
ly have begun to wonder whether
any economically and socially
feasible apartheid measures can
head off the rise of African
nationalism.
Cracks in the facade of
cabinet unity became apparent
shortly after Prime Minister
Verwoerd was hospitalized, when
Lands Minister Paul Sauer pub-
licly raised the question of a
change in racial policy and was
subsequently rebuked by External
Affairs Minister Eric Louw. With
Verwoerd's resumption of active
leadership, the dissenting voices
--in the cabinet and elsewhere
in the ruling Nationalist party
--were stilled.
A lack of confidence in
apartheid apparently remains,
however, and crops up repeatedly
in the public and private state-
ments of various ministers. In
a recent speech, Defense Minister
Jim Fouche said the policy of
apartheid might lead "the pro-
tectors of the future of the
white man" either "to victory
or to a hero's death." Trans-
port Minister Ben Schoeman, who
is occasionally mentioned as a
possible successor to Verwoerd,
recently told the American am-
bassador, "We may be swamped,
but we are going to try to make
it work."
Although these expressions
of doubt reflect growing uneasi-
ness within the Nationalist party,
Verwoerd, who retains his firm
personal control over the govern-
ment's policy-making machinery,
has made only a few changes in
his program. The government re-
portedly plans to ease some of
the more onerous restrictions
on urban Africans, and it may
give them some voice in the ad-
ministration of the native areas
in the cities. It is also at-
tempting to accelerate the de-
velopment of the rural native
"homelands" and apparently is
considering measures to retain
the loyalty of other nonwhite
groups.
Verwoerd will be able to dic-
tate the pace at which these
changes are made, but he may be
troubled to an increasing extent
by hesitation and confusion in
his cabinet.
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28 July 1960
INDIA'S THIRD FIVE-YEAR PLAN (1961-1966)
Now published in draft
form for consultations by the
state and central governments,
India's Third Five-Year Plan
calls for a total outlay of
$23.625 billion between April
1961 and March 1966. This sum
is roughly equal to the total
outlay of the previous two
five-year plans. Like its two
predecessors, the new plan:':s
broad targets remain the prob-
lems of poverty, hunger, illiteracy,
underemployment, and overpopula-
tion. It aims at an increasing
tempo of industrialization,
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28 July 1960
INDIA'S THIRD FIVE-YEAR PLAN (1961-1966)
Now published in draft
form for consultations by the
state and central governments,
India's Third Five-Year Plan
calls for a total outlay of
$23.625 billion between April
1961 and March 1966. This sum
is roughly equal to the total
outlay of the previous two
five-year plans. Like its two
predecessors, the new plan:';s
broad targets remain the prob-
lems of poverty, hunger, illiteracy,
underemployment, and overpopula-
tion. It aims at an increasing
tempo of industrialization,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
28 July 1960
expanded employment opportur
cities, and self-sufficiency in
food production.
The plan Will require sub-
stantial amounts of external
assistance. It will necessitate
continued. deficit financing,
although not of the same magni-
tude as during the Second Five-
year Plan, now in its last
year. It will require addition-
al taxation and greater profits.
by state-owned enterprises.
In addition, it will demand
continued belt-tightening within
India, not only to prevent in-
creased per capita consumption
from literally eating up the
gains in productivity and a
fast-growing population from
nullifying accretions to
national income, but also to
prevent inflation from absorb-
ing savings and foreign ex-
change reserves from falling
to the point where vital im-
port programs Would be crippled.
Previous Five-Year Plans
The new plan i$ the third
in a series of five national
plans designed to modernize
and develop the Indian nation
INDIA
THIRD FIVE-YEAR PLAN
(MILLION DOLLARS)
OUTLAY FOR THR - YEA S P .,
tow"* #MBUA
GOVT.
P NV f
FIRST NAN MM PLAN
(1951 ?'56) -(1956-61)
over, a period of 25 Years.
The first was in effect a
grouping of programs, some of
which were already in existence
when it was inaugurated in 1951.
It Sought to repair the damage
and dislocation caused by World
War II and partition of the sub-
continents It emphasized the
need to expand food production
and at the same time to lay
the groundwork for future in-
dustrialization. As a result
of good harvests find substantial
foreign exchange reserves, the
targets of the plan were largely
met for overfulfilled.
Encouraged by this
success, New Delhi
launched its bold and
industrially oriented
second plan in April
PUBLIC
INVESTMENT
PRIVATE
INVESTMENT
TOTAL
AGRICULTURE, MINOR IRRIGATION,
AND COMMUNITY DEVELOPMENT
1,418
3,098
MAJOR AND MEDIUM IRRIGATION
1,344
1,344
POWER
1,943
105
2,048
VILLAGE AND SMALL INDUSTRIES
336
578
914
INDUSTRY AND MINERALS
3,150
2,100
5,250
TRANSPORT AND COMMUNICATIONS
3,044
420
3,464
SOCIAL SERVICES
1,365
2,257
3,622
INVENTORIES
420
1,260
1,680
13,020
8,400
PUBLIC OUTLAY (SEPARATELY
BUDGETED) FOR NONINVESTMENT
PURPOSES
2,205
23,625
SECRET
1956. Nearly three
times larger than its
predecessor, it sought
to increase "the coup.-..
try's productive po-
tential in a way that
will make possible ac-
celerated development
in succeeding plan
periods." In a sense,
it was the start of
true economic planning
in India.
The second plan
was barely into its
second year when in-
flationary pressures,
poor harvests, and
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CU'IRENT INTELLIGENCE W
28 July 1960
resultant food imports put,
a squeeze on foreign exchange
reserves, forcing the planners
to lower their sights. Direct
cuts, coupled with the indirect
effect of rising prices, re-
sulted in an approximately 12-
percent reduction in the scope
of the plan.
The second plan now has
a chance of achieving about
80 to 85 percent of its revised
goals, although the range of
achievement will vary considera-
bly for different targets. Be-
WHOLESALE PRICES
INDIA:
ECONOMIC INDEXES
FROM 1951 TO 1961, NATIONAL INCOME WILL
HAVE RISEN BY ABOUT 42 PERCENT; PER CAPITA 100
INCOME BY ABOUT 20 PERCENT, AND PER
CAPITA CONSUMPTION BY ABOUT 16 PERCENT.
EKLY SUMMARY
cause of rising costs,, total
outlay will exceed revised
estimates made in 1958 and will
probably be larger than the
original planned outlay of
$15.1 billion. Included in
this total is private investment,
which is likely to exceed its
target by about $1.47 billion.
National income will have
risen about 20 percent since
1956, 5 percent short of the
goal. Population increases in
excess of the planners' esti-
mates, however, may diminish
much of this gain in per capita
terms. Nonetheless, the achieve-
1956 1959
FOOD GRAINS ONLY
1949 1951 1956 1959 1961*
ALL INDUSTRIAL COMMODITIES
1949 1951 1956 1959 1961"
IRON AND STEEL
1951= 100
100 190
1956 1959 1961'; 1951 1956 1959 1961*
MACHINERY CHEMICALS
215
1951= 100
' ESTMMATBD FIGWN "NOT AVANANE
1959 1961**
28 JULY 1960
SECRET
Inents of the second
plan have been sub-
stantial. Food pro-
duction has been in-
creased considerably;
more electricity now
is available for in-
dustry; oil reserves
are being tapped; the
new steel mills are in
production; more chil-
dren are in better
schools; and the na-
tion's democratic in-
stitutions remain
strong.
Third-Plan Goals
The Third Five-
Year Plan seeks to
raise national income
by 25 percent, increase
savings to 11 percent
of national income,
and expand the level
of investment, govern-
ment and private, from
the current 7 to 14
percent of national
income. It foresees
the need for $3.5
billion in additional
central government
and state taxes and
anticipates deficit
financing totaling
about one billion
dollars.
Agriculture will re-
ceive renewed emphasis.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
28 July 1960
New methods, more irrigation,
and massive use of fertilizers
are held to be the key to ex-
panding food production by more
than 30 percent. A total of
about $5.7 billion will be spent
on agriculture, community de-
velopment, irrigation, and
fertilizer production. This
emphasis on agriculture reflects
New Delhi's recognition that
however striking may be the
creation of steel mills, the
continuance of Congress party
rule rests in the plan's suc-
cess in providing India's
burgeoning millions with adequate
food supplies and growing suffi-
cient export crops to finance
industrial imports.
Industrialization will
proceed apace, with total in-
vestment to exceed $6.7 billion.
More than half of this amount
will be allocated to heavy in-
dustry. Priority will be ac-
corded first to the completion
of carry-over projects; from
the second plan, second to con-
tinuing investment in heavy
capital goods industries, third
to major producers' goods such
as chemicals, and fourth to
"increased production of com-
modities required to meet es-
sential needs."
The planned construction
of a fourth state-owned steel
mill and the expansion of the
other three government-owned
plants are expected to add
more than 4,000,000 tons an-
nually to the nation's steel-
making capacity, bringing in-
stalled capacity to 10,200,OU0
tons of crude steel. The ex-
pansion of the electric power
industry, including the construe..
tion of the cbuntry's first
nuclear power station, and the
development of other heavy
capital goods industries are
the other principal items in
the allocation to industry.
Among the social services
planned are increased teacher-
training facilities, more
schools, a higher percentage
,of children in school, and a
widespread effort to improve
the quality of the nation's
drinking water. A total of
$4.88 billion has been allotted
for the development and expan-
sion of such social services.
Prospects for Success
It is unlikely that India
will be able to fulfill its
third-plan goals in their en-.
tirety. The plan probably will
be tailored as it progresses
to meet the resources available
and the problems encountered.
Apart from the second plan's
shortfalls, which have the ef-
fect of lowering the third plan's
starting points, the question
of resources poses the principal
obstacle to the plan's fulfill-
ment. India's foreign-exchange
reserves have declined steadily
since the beginning of 1960,
and it is doubtful that even a
better-than-average fourth
quarter upturn in export earnings
would rebuii4 the reserves to
the point where they would
afford New Delhi much of a
cushion with which to start
the third plan.
Bence the foreign-exchange
requirements of the plan will
have to be met with increased
external assistance, probably
amounting to more than $5
billion. 1xcluding the proceeds
of US surplus agricultural
commodities sales, New Delhi
has to date obtained firm
promises covering little more
than 10 percent of this amount.
Over and above this requirement,
India must continue making
payments on earlier loans and
credits. The total of such
payments to be made before
1966 exceeds one billion, dollars,
with the largest portion re-
quired during the first year of
the plan.
The negotiation of moratoria
provides a possible solution,
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CUr ENT INTELLIGENCE, ?9J JT',L SUMMARY
28 July 1960
but would only serve to push
the problem into a future al-i
ready crowded with debt. Cuts
in the scope of the plan offer
the only ,real answer but are like-
ly to intensify other prob-
lem, such as inflation and un-{ ..
employment, and to have unfavor-
able political repercussions.
The unemployment question
is perhaps of greatest signifi-
cance because of the shadow it
casts on the national elec-
tions of 1962. The second
plan originally set as its
goal the creation of 10,000,000
new jobs by 1961, and this,
it was acknowledged, would
have left a shortfall by even
the most optimistic calculations.
Retrenchment in 1958 caused
the lowering of this goal to
8,000,000. The Indian Govern-
ment now concedes that the
actual number of jobs created
during the plan will probably
not exceed 6,500,000.
Inasmuch as population
growth was underestimated and
reliable unemployment figures
are unobtainable, it can be
assumed that India may finish
its second plan in 1961 with a
minimum of 7, u00, 000 unemployed.
While there is no reliable es-
timate of underemployment in ag-
riculture, all authorities agree
that it too is large and be-
coming larger.
In this situation, the
third plan's promise of 13,500,-
000 new jobs does not appear
realistic. Moreover, authorities
are already predicting the entry
into the labor market of 15, OUO,-
0U0 persons between 1961 and
1966. One of the major causes
Of this growing disparity has
been the cutback of the second
plan and the unavoidable fact
that the bulk of India's in-
vestment during the past two
plans has been in capital-in-
tensive rather that labor-in-
tensive industries. Labor-
saving devices inherent in the
production patterns of modern
capital-intensive industries
hamper New Delhi's efforts to
spur employment.
The new plan only hints
at the possible use of labor-
intensive public works programs
to meet this dilemma. The in-
auguration of such programs
would also cost money, however,
and if the plan must ultimately
be cut back from its present
size in order to correspond
with available resources, the
labor picture would become even
darker.
On the other hand, the
outlook for external assistance
is improving, and private foreign
investtitent is expanding. The
private sector of the economy
appears to be making encouraging
progress and may, as in the
past, make up for shortfalls
in the government-owned sector.
India's leaders, aware of
the gargantuan proportions of
the problem, i3utn in its eco-
nomic and in its political as-
pects, are still determined to
push the development program.
The plan may be criticized as
unrealistic with some justifi-
cation, but in their drafting of
such an ambitious plan, India's
leaders are spurred by their
conviction that their country's
economic and social problems
demand heroic measures and by
the realization that the Con-
gress party, if it is to re-
main in power, must sponsor an
imaginative development program.
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