CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A003000080001-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 48
• Document Creation Date: December 20, 2016
• Document Release Date: June 27, 2005
• Sequence Number: 1
• Publication Date: October 16, 1999
• Content Type: SUMMARY

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N 84F,
cpl1FIDENTIA
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
COPY NO. 70
OCI NO. 0261/61
5 January 1961
State Department review
completed
DOCUMEiV1 NO.
NO CHANGE IN CLASS.
[_.1 DELLA
CLASS. CE-/:NGED TO: TS
NEXT REW -E- V: DATE:
CENTRAL INTELLIGENCE AGENCY
AUT
DAT &
10
OFFICE OF CURRENT INTELLIGENCE
EN
25X1
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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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1%W1 _00010- 14W
'O W'N` "IAL
5 January 1961
PART I
{w~ OF IMMEDIATE INTEREST
LAOS O . o . . O . O O . O O O . . O O 0 O O O O 4 . O O Page 1
The rebel forces of Captain Kong Le and the Pathet
Lao are consolidating their gains following the capture of
the strategic Plaine des Jarres area in Xieng Khouang
Province and retain the initiative. There is no substan-
tiation for Laotian Government claims that sizable ele-
ments of regular forces from North Vietnam participated
in the Xieng Khouang fighting, However, North Vietnamese
advisers, technicians, and gun crews are probably working
with the Pathet Lao.
The Communist bloc, in calling for reactivation of the
International Control Commission (ICC), is insisting
that the ICC deal only with ex-Premier Souvanna Phouma.
CUBAN AND CENTRAL AMERICAN DEVELOPMENTS . . . o . . . . . Page 3
The Castro regime has responded defiantly to the 3
January break in relations by the United States and may
demand US withdrawal from the Guantanamo naval base.
Soviet bloc comment has characterized the break as a new
act of US "aggression," while the initial Latin American
reaction has taken no predominant line. The Soviet bloc
military equipment displayed in Havana's 2 January parade
included heavy tanks--hitherto supplied to no other non-
bloc country but Egypt--as well as various other armored
vehicles and artillery of World War II design,
The Salvadoran Government apparently intends to
cut back US economic and military assistance, probably
reflecting growing pro-Castro and pro-Communist influence
in that government,
. . . . . . . 4 . . . . . . o e . . . . . . o o Page 5
The prestige of the Mobutu interim government has
been damaged by the incursions into Kivu Province by
Gizenga dissidents from Orientale. An attempt by Mo-
butu's forces to halt the dissidents was repulsed.
African leaders now meeting in Casablanca are ex-
pected to discuss means of aiding the dissidents.
The arrival of Secretary General Hammarskjold and the
UN conciliation commission in Leopoldville will lend
impetus to new efforts to restore civil government in
BMDIINP"
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CURRENT INTELLI(ENCE WEEKLY SUMMARY
5 January 1961
PART I (continued)
EAST-WEST RELATIONS , , , , , , , , , , , , , , > . ? , . Page 7
The USSR last week made further moves toward a formal
bid for high-level talks with the new IBS administration.
At a New;, Year's Eve reception, Khrushchev stated the
USSR's willingness to drop UN consideration of the U-2
incident and emphasized his belief that the move would
be "correctly understood" by the new President. Moscow
may plan to follow up private hints and release the two
RB-47 crew members to eliminate another obstacle:to a
high-level meeting. The flexibility and initiative dis-
played by East German and Soviet negotiators in trade
talks with Bonn reflect Khrushchev's desire to avoid
precipitating a Berlin crisis which might jeopardize a
bid for new negotiations with the West.
FRANCE-?ALGERIA . , , , , , , , , , , , , , , , , , Page 10
Threats of new disorders in Algeria accompany
preparations for the 6-8 January referendum on De Gaulle's
Algerian program, expected by the American Embassy to re-
ceive a 65-percent favorable vote in metropolitan France.
After the referendum, De Gaulle will probably seek negoti-
ations with the Provisional Algerian Government (PAG)
on terms less rigid. than in the past. Tunisian Presi-
dent Bourguiba, who has publicly endorsed De Gaulle's
objectives, will probably urge the PAG to negotiate.
Both the PAG and the European rightists, however, still
seem determined to rejebt a middle-of-the-road solution.
Furthermore, a recently reported deterioration in mili-
tary morale may disrupt army unity and deprive De Gaulle
of the army backing he is counting on.
PART II
NOTES AND COMMENTS
SOVIET PLAN AND BUDGET FOR 1961 ..._._,..
The planned targets for the Soviet economy in 1961,
presented to the Supreme Soviet on 20 December, bear out
the official contention that the gross industrial Seven-
Year Plan (1959-65) goal, as well as goals for most of
the major industrial products, 4iw, likely to be achieved
ahead of schedule. The announcement four days later
that certain targets of the plan will be increased
thus may presage no more than adjustments to the ex-
pected- overfulfillmebtsand those which have already
taken place. During 1959 and 1960, gross industrial
output reportedly increased by nearly 23 percent instead
of the 17 percent originally scheduled. The state budget
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5 January 1961
PART II (continued)
for 1961 indicates growth in all major budget categories
except in the explicit defense allocation.
MOSCOW FIRES AGRICULTURE MINISTER . . . . . . . . . . . . Page 3
The dismissal of Vladimir Matskevich from his post
as Soviet minister of agriculture on 29 December clears
the way for reforms long advocated by some of the top
political figures and agricultural specialists in the
Soviet Union. His replacement by Mikhail Olshansky,
an agronomist and plant breeder, suggests that the re-
forms will include greater emphasis on science and
modern technology in agriculture. Olshansky's lack of
executive experience may presage a cutback in the
ministry's operational functions--perhaps including
its de facto administration of the collective farm
system. The central committee plenum on agriculture
scheduled for 10 January presumably will approve the
new program.
. . . . . . Page 4
The Rumanian administrative reform announced on 24
December apparently is intended to rationalize the coun-
try's economic structure and, at the same time, to further
the regime's efforts to deal with the troublesome Hungar-
ian minority, Regional boundary adjustments and other
measures will increase the proportion of Rumanians in
the Hungarians' "autonomous region" in central Rumania.
Rumanian national sentiments are reflected in the
restoration of traditional Rumanian place names to
various provincial areas. The reorganization as a
whole will eliminate considerable administrative over-
head, and Bucharest officials anticipate substantial
savings over the next few years.
FOOD SITUATION IN COMMUNIST CHINA . . . . . .
. . . Page 6
Communist China's first announcements concerning
economic performance in 1960 stress the seriousness of
the situation in agriculture. The "most serious natural
calamities in a century" are said to have affected not
only agricultural output but industrial output as well.
Although Peiping is probably exaggerating the extent
of damage to crops--the grain crop is expected to be
about the same as in 1959--food shortages are severe,
with no prospects of improvements through the winter.
As a result, labor efficiency will suffer and popular
disgruntlement will increase.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
5 January 1961
PART II (continued)
COMMUNIST CHINA SUPPLYING ALBANIA WITH GRAIN . . . . . . . Page
Albania, suffering the effects of three consecutive
years of drought, is faced with a severe shortage of
grain. Communist China, which also has a poor crop, was
providing Albania with grain--purchased abroad--during
1960, presumably in "payment" for Albania's support in the
Sino-Soviet dispute.
NEW BLOC AID FOR CAMBODIA . . . . . . . . . . . . . . . . Page 8
As a result of Prince Sihanouk's recent visits to
Czechoslovakia, the USSR, and Communist China, these coun-
tries have agreed to extend substantial new economic aid
to Cambodia. The new Chinese Communist commitments--
totaling nearly $40,000,000--will retain for Peiping its
predominant role in bloc economic activities in Cambodia,
but both Czechoslovakia and the USSR have joined the
effort on a larger scale, with promises of credit--re-
payable in Cambodian products--and considerable technical
assistance. This is the first time Cambodia has accepted
bloc credits; all previous bloc aid has been in the form
of grants, including $28,000,000 from Communist China
and $6,000,000 from the USSR.
MIDDLE EAST DEVELOPMENTS . . . . . . . . . . . . . . . . Page 9
The Arab states are moving toward a better coordinat-
ed anti-Western line on the issues of Algeria, the Congo,
and the Israeli nuclear program. Cairo and Baghdad have
taken the lead with lengthy criticisms of Western policies.
The new Saudi Arabian budget is in line with King Saud's
promise of an expanded program of economic development;
the King is likely, however, to find ways to step up
royal expenditures and thus precipitate a major dispute
with influential "liberal" ministers. In Israel, the
crisis in the governing Mapai party over the "Lavon
affair" has caused Prime Minister Ben-Gurion to threaten
to resign.
MALI . . . . . . . . . . . . . . . . . . . . . . . . . . Page 12
Mali has been aligning itself much more closely with'
Guinea and Ghana during the past month, suggesting that
militant left-wing elements are gaining the ascendancy
in Mali's single-party Marxist-influenced regime.
Cabinet changes reflecting such a shift in the internal
balance of power may be announced shortly. Mali's
neutralism now may take on a more pro-Soviet flavor,
and its susceptibility to bloc blandishments may in-
crease.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
5 January 1961
PART II (continued)
. . Page 13
Chief Minister Julius Nyerere of Tanganyika, although
confronted with incompetence and disloyalty in his own
party and with increasing sentiment favoring rapid "African-
ization" of the government, appears preoccupied with vi-
sions of an East African federation and is making little.
effort to keep his followers in line. As a concession to
rising African dissatisfaction with ::his government,
he may be forced to yield to internal pressure and de-
mand early independence from Britain, thereby giving up
his hopes for territorial integration.
SOUTH KOREAN INTERNAL SECURITY SITUATION . . . . . . . . . Page 14
The low level of South Korean police capabilities is
reflected in the serious deterioration of public order.
Fearing that opponents of the government will seek to
exploit the situation to unseat the administration and
that Communist espionage and subversion are increasing,
the. Chang Myon government is attempting to take remedial
action.
. Page 15
The opposition Socialists have maintained their wide-
spread work stoppages for or two weeks, but have been
unable to bring decisive pressure against the Eyskens
government''usterity program because the powerful
Roman Catholic trade unions have refused to join them
in a general strike. Possible solutions reportedly
under consideration are an early reorganization of
the government or the calling of new national elec-
tions after the austerity program has been fully
debated and approved by parliament. 25X1
COMMON MARKET DEVELOPMENTS . . . . . . . . . . . . . . . . Page 16
The tariff adjustments put into effect on 1 January
by the European Common. Market (EEC) have brought the six
member countries considerably closer to the objective of
a full customs and economic union. Intra-EEC tariff re-
ductions made in the last two years now total 30 percent,
and the first step toward the imposition of a single
tariff against nonmembers has been taken--a year ahead
of the schedule set forth in the EEC treaty. The EEC
proposes to reduce the projected single tariff by 20
percent in forthcoming negotiations in GATT, but Out-
siders now will begin to feel its pinch, and the divi-
sion between the Common Market and the Outer Seven
seems more firmly drawn than ever.
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5 January 1961
PART II (continued)
SPAIN'S ECONOMIC SITUATION ..... a a o 0 4 0 o a s o o Page 17
While there has recently been a modest revival in
several sectors of the Spanish economy, the government's
failure to remove bars to economic expansion is threaten-
ing the gains made under the US-backed economic stabili-
zation program. Under present conditions, there is
increasing doubt that adequate economic growth can be
stimulated without renewed inflation. Increased emi-
gration of skilled workers to other Western European
countries has tended to reduce discontent over unem-
ployment but may impede any further industrial expan-
sion.
PATTERNS AND PERSPECTIVES
BLOC ECONOMIC AND MILITARY SUPPORT FOR THE CASTRO REGIME o Page 1
Bloc support for Cuba has mounted steadily since the
Mikoyan visit last February. The new agreements concluded
during he Guevara?s recent tour of the bloc indicate
that Havana plans to depend almost entirely on the bloc
as a source of supply and as a market for as much as
two thirds! of the island's sugar crop; future Cuban
plans for industrialization and expansion rest almost
solely on the procurement of large-scale material and
technical assistance from the bloc. Moscow appears
willing to make unusual efforts to accommodate Cuban
needs, and planned trade and aid in 1961 should provide
enough goods and services to sustain the Cuban economy.
BRITAIN''S INFLUENCE ON EAST AND CENTRAL AFRICAN
DEVELOPMENTS u c o u > < o V V e 0 n c n 6 o u C u c 4 0 4 Page 5
Britain-'.s difficulty in arranging an orderly transi-
tion toward early independence for its East and Central
African territories will be seen again when the Federa-
tion of Rhodesia and Nyasaland constitutional conference,
resumes.,within a few weeks and at subsequent conferences
for Tanganyika and Uganda. The British-Are relying
increasingly on the demonstrated persuasive powers of
certain, government leaders, particularly Colonial
Secretary Macleod.
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W JtCNE t
with which the Pathet Lao - Kong
Le elements achieved their mili-
tary objectives suggest that
the operation was at least
planned and directed by non-
Laotian officers. There is a
possibility, moreover, that
North Vietnamese units helped
the Second Pathet Lao Battalion
take Nong Het, after which it
would have been an easy matter
CURRENT INTELLIGENCE WEEKLY SUMMARY
5 January. 1961
OF IMMEDIATE INTEREST
The forces of the Communist
Pathet Lao and Captain Kong Le
scored significant military suc-
cesses in Xieng Khouang Province
with the capture on 1 January
of the strategic Plaine des
Jarres area, the nearby town of
Xieng Khouang, and Nong Het on
the Laotian - North Vietnamese
frontier. Communist broadcasts
attribute the capture of the
Plaine des Jarres to a joint
Pathet Lao - Kong Le force and
the capture of Nong Het to the
Second Pathet Lao Battalion.
The latter unit was once inte-
grated into the Laotian Army
but defected to the Laos - North
Vietnam border area in May 1959.
The Laotian Government?s
claims that from five to seven
North Vietnamese battalions
were also involved in the fight-
ing remain unsubstantiated; how-
ever, the speed and efficiency
for them to withdraw
across the nearby
frontier.
General Phoumi
dropped 300 men of the
First Parachute Bat-
talion on a point a
few miles outside of
Xieng Khouang town on
1 January. The pres-
ent status of this
force is the subject
of conflicting reports.
The government claims
it has reoccupied
Xieng Khouang town,
while the Communists
assert that the para-
troopers are surrounded
some distance from the
town. In any event,
the paratroopers are
isolated from other government
troops in the province and will
need substantial resupply and
reinforcement if they are to
reverse Communist military gains.
Control of the Plaine des Jarres
gives the Pathet Lao - Kong Le
forces a major base area, with
a good airfield, from which they
are in a position to move against
either Vientiane or Luang Pra-
bang.
The situation in Phong Saly
Province, a traditional Pathet
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CURRENT INTELLIGENCE WEEKLY SUMMARY
5 January 1961
Lao area of strength, is obscure.
Communist broadcasts claimed the
capture of Phong Saly town, but
it was apparently occupied by
Lt. Col. Khamouane, the nominal
government commander in the
province who, since the Kong Le
coup last August, has tried to
maintain a precarious neutrality
between the contending factions.
Although there have been re-
ports that Khamouane has been
in contact with the Pathet Lao,
it is probably premature to as-
sume that he has :thrown in his
l0t7, with the Communists. There
are even reports that he has
asked General Phoumi for supply
drops. Should Khamouane defect
to the Communists it would be
a major blow to the government,
since he is reputed to be one
of the best commanders in the
army.
The Laotian Government's
initial response to the reverses
in Xieng Khouang was one of near
panic; although a more balanced
view of the situation has since
been taken, there is a distinct
possibility that if the situa-
tion continued to worsen, the
government might appeal to SEATO
or to the UN Security Council.
The National Assembly on
4 January gave the provisional
Boun Oum government a unanimous
vote of confidence, taus bring-
ing the government's creation
into full conformity with normal
Laotian constitutional practices.
This step should make it easier
for Western and uncommitted
states to deal with the Boun
Oum government and will weaken
bloc claims that the defunct
Souvanna Phouma government re-
mains the "lawful government"
of Laos. Souvanna was quoted
in Phnom Penh to the effect that
once tho Boun Oum government
was constitutionally established,
he would immediately tender his
formal resignation. He is in
a bitter mood and subject to
strong bloc pressures in Phnom
Penh, however, and may choose
not to follow through on his
reported promise.
The bloc continues to
charge the US with aggression
in Laos and persists in its ap-
peal for reactivation of the
International Control Commission
(ICC) and a new conference of
the 1954 Geneva participants.
However, while the bloc tries
to exert diplomatic pressure on
the US, it shows an inclination
to hedge against immediate stabi-
li2.at_i:on of the situation through
international action so long as
the Communists are moving suc-
cessfully against government
forces.
The bloc's appeal for the
renewal of the ICC predicates
conditions for its reactivation
upon coordination with "the
legal government of Souvanna
Phouma." By insisting on this
fiction of a legal Laotian Gov-
ernment represented in the per-
son of Souvanna, the bloc prob-
ably feels it will gain time
for further Communist military
gains before the issue is nego-
tiated in international forums.
The Communists also see the
Laotian crisis as an opportunity
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5 January 1961
to put strain on the Western
alliance. A recent Pravda arti-
cle attacked US policy toward
Laos for "pushing its military
bloc allies toward open aggres-
sion against the people of Laos."
The article alluded to dissension
within SEATO ranks over the
proper course of action to be
taken in Laos and claimed that
Washington was irritated "over
the cautious attitude of Britain
and France."
forces.
ers are assisting Pathet Lao
Despite Laotian Army re-
ports of North Vietnamese troops
in Laos, no regular North Viet-
namese Army units have been
identified operating against
the Phoumi forces. It seems
quite probable, however, that
a number of North Vietnamese
technicians, heavy weapons crews,
cadres, and possibly combat lead-
CUBAN AND CENTRAL AMERICAN DEVELOPMENTS
The Castro regime has re-
sponded defiantly to the 3 Jan-
uary break. in diplomatic and
consular relations by the
United States, calling this a
new "imperialist" move prepara-
tory to "aggressions" It may
also formally demand US with-
drawal from the Guantanamo
naval base.
Initial Soviet reaction
to the break in relations was to
label the move "a; new step to-
ward aggression." Early Chinese
Communist reaction was harsher
and lengthier.
The news was treated as a
flash item by Latin American
media, but early comment took
no predominant line and many of-
ficials were reluctant to make
statements. A leading Brazil-
ian newspaper called the US-
Cuban rupture the worst crisis
in Pan American history and
urged other Latin American gov-
ernments to seek a solution and
not merely to follow the US ex-
ample, since this would make
them "satellites." In Peru,
which broke relations with Cuba
on 30 December, a. leading paper
headlined: "Number one power in
the world follows Peru's example."
Venezuela and Honduras,
which had been considering break-
ing with Castro, may now hesi-
tate to follow the US action
too closely for fear of being
labeled by their domestic oppo-
sition as "lackeys" of the United
States. The Chilean foreign
minister told the press on 4
January that he saw no reason
for Chile to break with Cuba
under present circumstances.
On the other hand, there are
indications that Panama may
shortly declare the Cuban am-
bassador there persona non
grata, and pressure has been
mounting in Colombia for a dip-
lomatic break with Cuba.
In Mexico--where sympathy
for Latin American revolutionary
movements runs deep, stemming
from Mexico's own experiences--
the foreign minister told the
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5 January 1961
US Embassy that he feels the
situation has reached the point
where it would be difficult to
influence Cuba "back into the
inter-American family." He said
it is primarily a problem for
the Cuban people to solve, but
they will need "a little bit of
outside help" which must be in
a form, however, that would not
"lower the prestige of any na-
tion."
In the Mexican foreign min-
ister's opinion, the only way
the Organization of American
States (OAS) can act on the Cu-
ban problem is by using the 1954
anti-Communist Caracas resolu-
tion, but Mexico will have to
abstain if this resolution is
invoked, inasmuch as it is the
only Latin American country
that has not endorsed it. The
American Embassy sees this con-
versation as an indication that
Mexico may "convey a benevolent
nod for someone else to termi-
nate the Cuban headache while
Mexico goes on abstaining."
Meanwhile, Latin American
Communists and front groups are
urging increased popular support
in their countries for Castro.
The Uruguayan Communist party
issued an "ardent appeal" on 3
January urging the Uruguayans
to "rise up in defense of the
Cuban people." According to
the Cuban press service, Argen-
tine university students pub-
licly warned on 3 January that
"a second front will open up
in the streets" if aggression
is perpetrated against Cuba.
Castro's 2 January anni-
versary parade in Havana, in
which some bl weapons
were displayed, rev.:that
at least 15 JS-2 heavy tanks,
15 T-34 medium tanks, and 19
self-propelled assault guns,
various artillery, and other
weapons are now in the hands
of the Cuban Army. Soviet jeeps
and truck-mounted rocket launch-
ers--possibly six-tube 280-mm.
--also were observed.
The armored fighting ve-
hicles and some of the artillery
are World War II models no
longer in use by the Soviet
armed forces. With the excep-
tion of 60 JS-3 tanks deliv-
ered to Egypt in 1955, Soviet
heavy tanks have not been sup-
plied to any other nonbioc
country. However, since 1958,
Soviet arms deliveries outside
the bloc--particularly to the
UAR and Iraq--have included T-
54 medium tanks and more modern
artillery and heavy weapons.
Premier Khrushchev, along
with other high Soviet officials,
attended the 2 January recep-
tion at the Cuban Embassy in
Moscow and made a speech sharply
critical of US policy, labeling
as "foul slander" reports that
the Soviet Union had set up
rocket bases in Cuba. Despite
the belligerent tone of his re-
marks, however, Khru.-;. :ov con-
tinued to be vague in pledging
Soviet support and promised only
that "the Cuban people can al-
ways count on the support and
aid of the Soviet people." This
speech follows the familiar
Soviet pattern of making harsh
pronouncements concerning Cuba
immediately prior to UN consid-
eration of Cuban complaints
against the United States.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
5 January 1961
The many foreign delegates
in Havana for the 2 January
celebrations, which may have
totaled more than a thousand,
included representatives from
the USSR, Communist China, East
Germany, and Czechoslovakia,as
well as sizable groups from
Latin American countries and
the United States. Most, if
not all, of the transportation
costs for these delegations
were paid by the Cuban Govern-
ment. The Chinese Communist
delegation, headed by Peiping's
leading "peace" spokesman Tuo
Mo-jo, was particularly prominent
at the celebrations.
In El Salvador, the grow-
ing influence of pro-Communists
and pro-Castro elements in the
provisional government may be
responsible for the apparent
government decision to reduce
US economic and military assist-
ance programs. On 24 December,
one US-supported project
was closed and another may
shortly be shut down. The min-
ister of defense told a group
of US officials on 28 Decem-
ber that his government intends
to replace US advisers to the
National Police with Chileans
or Italians or both, and
added that all US assistance
programs have been "void of
beneficial results for El
Salvador."
These statements completely
reverse expressions of support
for US assistance programs made
by the minister earlier in De-
cember and apparently reflect
a high-level policy decision by
the government.
Meanwhile, Communists con-
tinue their efforts to extend
their influence outside the gov-
ernment. The increasing Commu-
nist activity appears to stem
from confidence resulting from 25X1
the confusion and rivalries among
anti-Communists, both military
Successful incursions into
Kivu Province by Gizenga dissi-
dents based in Orientale Prov-
ince have damaged the prestige
of the Mobutu interim gov-
ernment and underscore the
threat of full-scale civil
war.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
5 January 1961
The original movement into
Kivu by Gizenga's militiamen,
on 25 December, may have been
prompted by a serious food
shortage in Stanleyville. The
success of the "invasion"--
accomplished by only a few
hundred soldiers--appears to
have stemmed less from the show
of military force than from
general confusion and divided
REPUBLIC OF THE CONGO
ocotdville
Cngi
Gemena
Congo
Z uabourq
Luputa
gains in Kivu was climaxed
on 1 January when a Con-
golese Army contingent--air-
lifted to Kivu by way of Ruanda-
Urundi--was repulsed with
casualties at Bukavu. Mobutu's
force advanced under a white
flag in hopes of winning
over the dissidents; its
defeat presumably ended what-
ever expectation Mobutu had
-Lske e
Ed-d
Bukavu
Kin u
_ongolo AN ANYWA
Loke
Albertvill rt Tonpanylko
llsabethville'
of rallying the
dissidents by psycho-
logical action.
Although Mobutu
has given no indica-
tion as to his next
move, the setback at
Bukavu may increase
pressure from the
army for military
action against
Stanleyville. At
the same time, the
rebuff may have
rekindled doubts
within the army
concerning Mobutu's
capacity to de-
feat the dissi-
dents.
Pro-Gizenga Afri-
can states, meeting
in Casablanca to dis-
cuss the Congo and
Algeria, appear un-
ANDvNYASALAND
loyalties. President,Kasavul?u
has hinted that in some parts
of the interior the dissidents
may be regarded by the populace
as representing the Leopoldville
government.
An unsuccessful attempt
by Mobutu to check dissident
decided as to how, and to what
extent, to aid the dissidents.
The conferees--who include rep-
resentatives of Ghana, Guinea,
Mali, and the UAR---will prob-
ably endorse the Gizenga re-
gime as the legal Congo-
lese government; they may
also agree on a program of
covert aid.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
5 January 1961
In Leopoldville, the ar-
rival of Secretary General Ham-
marskjold and the UN concilia-
tion commission, is likely to
signal a new effort to restore
civil government in the Congo.
President Kasavubu on 2 January
called for a round-table con-
ference of Congo political lead-
ers on 25 January. In an ap-
parent move to forestall any
UN move to reconvene parliament,
where pro-Lumumba sentimant is
still significant, Kasavubu
characterized parliament as not
representative of the whole
country.
Although Mobutu will prob-
ably not oppose a round-table
conference, there are no indi-
cations that he agrees with
Kasavubu's aim of displacing
the student commissioners with
the Kasavubu-appointed cabinet
headed by Joseph Ileo. The dis-
parate interests of various
Congo leaders, together with
their inability to control the
areas and groups in whose
names they speak, make it
doubtful that the round table
will lead to a political solu-
tion.
Khrushchev last week con-
tinued the USSR's efforts on
several fronts to set the stage
for a formal demarche to the
new US administration for high-
level talks. At a New Year's
Eve reception at the Kremlin
he said the USSR was willing to
drop the UN debate on the U-2
incident, making it clear that
this was intended as a gesture
toward the new US administration.
Recalling remarks by the Presi-
dent-elect on the U-2 incident,
Khrushchev said, "We would like
this unfortunate incident to
become a thing of the past-.-
and we think that one need not
return to it." He added, "We
would like to believe that our
striving to improve relations
will be correctly understood by
both the American people and
the new President,"
The main purpose of Khru-
shchev's remarks probably was
to end any speculation that a
US apology for the U-2 remained
a prerequisite for new negotia-
tions. Although he avoided any
specific reference to the RB-47
incident, which is combined with
the U-2 in the Soviet UN com-
plaint, other Soviet officials
have hinted that the two crew
members of the RB-47 might be
released. The Soviet leaders
are probably aware that con-
tinued exploitation of these
affairs could prevent a new top-
level meeting, and Soviet action
in clearing away obstacles of
this kind suggests that an early
bid for a summit conference or
a personal contact with the new
President will be forthcoming.
Soviet propaganda, such as
the TASS statement on the French
nuclear test, and high-level
comments, such as Khrushchev's
speech on 2 January at the
Cuban Embassy reception, have
continued to express a harsh
criticism of specific aspects
of Western policies. Soviet New
Year's greetings to Western
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CURRENT INTELLIGENCE WEEKLY SUMMARY
5 January 1960
leaders, however, were cordial
and correct, avoided any polem-
ics or recriminations, and
stressed the prospects for set-
tling international issues--dis-
armament and the German question
--during 1961. In his speech
at the Cuban Embassy, Khrushchev
appears to have gone'out of his
way to identify his attacks on
the US with "the present govern-
ment of the US."
Bloc - West German Trade Talks
The flexibility and ini-
tiative displayed by the Com-
munist representatives in the
negotiations renewing Soviet
and East German trade agreements
with Bonn reflect Khrushchev's
desire to avoid precipitating
a crisis which might jeopardize
his design for high-level talks
with the West. The compromise
formulas offered by the East
Germans and the Soviet initia-
tive in breaking the impasse
over the status of West Berlin
further suggest that Khrushchev
is seeking to establish a con-
ciliatory atmosphere on the key
issues of Berlin before making
a formal demarche for a new
summit meeting.
Although the bloc nego-
tiators took positions which
permit both sides to save face,
the results of the two sets of
talks do not alter the basic
Communist position on Berlin.
A further important factor was
the Communist interest in ensur-
ing continued deliveries of im-
portant industrial products to
East Germany.
Interzonal Trade Talks
After almost four weeks
of negotiations, the East and
West German representatives
agreed on 29 December to rein-
state the interzonal trade
agreement.. A..:compromise was
reached on the main issue, an
East German decree of 8 Septem-
ber restricting West German
travel into East Berlin, which
had led Bonn to cancel the trade
agreement. The East Germans
apparently made some type of
commitment not to implement the
decree but refused to rescind
the law as 3onn originally de-
manded. Existing East German
controls over commercial access
to West Berlin will be eased,
and certain points concerning
access will be discussed fur-
ther. In return, the West Ger-
mans will lift their ban on
participation in the important
annual East German industrial
fair at Leipzig this spring.
During the negotiations the
East Gerttans--apparently on
Moscow's orders--made no serious
effort to extract a measure of
diplomatic recognition and re-
frained from challenging the
authority of the West German
representative to negotiate for
West Berlin. East German prop-
aganda glossed over this issue
by claiming that the negotiations
dealt only with reinstatement of
the existing agreement, which
specifically combines West Ger-
many and West Berlin as one cur-
rency unit.
The West Germans feel that
East Germany acceded to all of
Bonn's demands, but the East
Germans were apparently success-
ful in insisting that their con-
cessions would remain in effect
only if the strictest secrecy
were maintained, thus providing
a pretext for denunciation of
the agreement if Soviet tactics
should dictate such a move.
Bonn probably made it clear that
any new harassments would result
in further retaliation against
interzonal trade. Thus the
situation remains uneasy.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
5 January 1961
The secrecy provisions
place East Germany in a posi-
tion to claim that it scored
gains without having to make
important concessions. In his
New Year's speech Ulbricht said,
"Trade with East Germany is to
develop further. . .but in such
a way that production in the
German Democratic Republic does
not fall into a state of depend-
ency. "
Neues Deutsch-
an. , in its 1 Decem eFi r comment
on the reinstatement of the
agreement, reiterated the stand-
ard East German positions on
Berlin and Germany--notably that
East Germany "sits on the long
end of the lever."
Soviet - West German Talks
The status of West Berlin
was also the crux of the earlier
deadlock in the Soviet - West
German trade agreement, signed
on 31 December, which calls for
a 7-percent annual increase in
total trade during the next
three years. The impasse devel-
oped over Bonn's insistence
that West Berlin be treated in
the agreement as part of West
Germany. No mention was made
of West Berlin in the 1958
agreement, but the USSR had in
practice allowed goods from
West Berlin to be included as
Westi,German goods,and never
formally objected to the ar-
rangement.
The same practical result
was achieved in the new pact
through the mechanism of a
letter from Bonn's Foreign Minis-
tty. to Soviet Ambassador
Smirnov stating that Bonn as-
sumed that "the area of appli-
cability" of the new agreement
would remain unchanged. The
new language was worked out, ap-
parently on Smirnov's initiative,
at a meeting last week with
Chancellor Adenauer. Smirnov
had orginally rejected a more
precise formula which provided
that the agreement would be
valid for the currency area.of
the West German mark, thereby
explicitly treating West Berlin
and West Germany as a political
unit.
In both agreements the
West Germans were successful
in preserving the status quo
pending the outcome of high-
level East-West talks. The
harassments imposed by the East
Germans last fall have been sus-
pended, and Bonn succeeded
in maintaining the crucial
link between the West Ber-
lin and West. German,econ-
omies.
The settlement of the two
trade problems has been accom-
panied by a softer propaganda
line on Germany. The European
press is quoting Soviet spokes-
men, who have revived specula-
tion of a meeting between Ade-
nauer and Khrushchev. Khrushchev's
New Year's greetings to Ade-
nauer urged that "every effort"
be made to solve the German prob-
lem in the flaw year. East Ger:-
man party chief Ulbricht has be- 25X1
gun to press his proposal for a
ten-year "truce of God" between
East and West Germany.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
5 January 1961
Following the 6-8 January
referendumvon his Algerian
program--which the American Em-
bassy in Paris has estimated
would produce a favorable vote
of about 65 percent in metro-
politan France--De Gaulle will
probably seek negotiations with
the Provisional Algerian Govern-
ment (PAG) on terms less rigid
than in the past. Tunisian
President Bourguiba, who has
publicly endorsed De Gaulle's
referendum objectives,will prob-
ably urge the PAG to negotiate.
Both the PAG and the European
rightists, however, still seem
determined to reject any mid-
dle-of-the-road solution. Fur-
thermore, a recently reported
deterioration in military
morale may disrupt army unity
and deprive De Gaulle of the
army backing he is counting on.
Although in his 31 December
speech De Gaulle implied that
if he did not get a "frank and
massive" vote he would resign,
he seems likely to use a favor-
able vote of any size as a
mandate to make a new offer of
negotiations. On 20 December
he singled out the leaders of
the rebellion as "notably" among
those who would decide the con-
ditions of self-determina-
tion.
.Bourguiba's public endorse-
ment of De Gaulle's referendum
objectives reportedly,has an-.
noyed some members of the
rebel government, especially
Deputy Premier and Foreign Min-
ister Belkacem Krim. A favor-
able vote for De Gaulle's plan
will strengthen Bourguiba's hand
in dealing with the rebels, and
in view cif his conviction that
the continuation of the Algerian
war represents a threat not only
to his regime but to all North
Africa, he can be expected to
urge the PAG to negotiate.
The French African, states
which in November sent represent-
atives to both De Gaulle and the
PAG in an effort to mediate in
the Algerian impasse apparently
plan no further concerted ef-
forts to this end, but each re-
portedly intends to continue at
every occasion to press the
French to resume negotiations,
feeling that it is now up to De
Gaulle to take the first step.
They are prepared, however, to
use their influence to encourage
the rebels to accept any French 25X1
overtures.
The European rightist ele-
ments in Algeria have denounced
the referendum as illegal and
reiterated their, opposition to
any middle-of-the-road solution.
The likelihood of further
violent demonstrations, espe-
cially in the major cities of
Algeria, remains high. Paris
has reinforced its already
large security forces in Algeria
by moving army and marine units
from Europe and sending 15
ships of the Mediterranean
Fleet to Algerian bases.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
5 January 1961
Military opposition to his pol-
icy is likely to stiffen if
De Gaulle attempts a new ini-
tiative on the basis of a slim
over-all referendum majority
or a negative result in Algeria.
Extensive Moslem abstention, as
ordered by PAG Premier Ferhat
Abbas or further major pro-
rebel demonstrations in Algeria
would probably be interpreted
by many French officers as
evidence of the failure of De
Gaulle's policy.
Recent public statements
critical of De Gaulle's policy
by leading French military
figures including-Marshal Al-
phonse Juin and General Jean
Valluy, the former commander of
NATO forces in Central Europe,
are reportedly having repercus-
sions among officers in Algeria.
The Juin statement has also
been vehemently seconded in a
"letter to the French people"
signed by 16 army reserve
generals--including former
Chief of Staff Auguste
Guillaume--who previously held
commands in North Africa.
On the other hand, some
French officers are now, re-
ported to feel Algeria is lost
to France and the West, and
they are adopting attitudes of
bitter resignation or indif-
ference. If such sentiment
spreads it may reduce the like-
lihood of overt military oppo-
sition to De Gaulle's policies
in the immediate future, but
it would probably have serious
repercussions on the army's
efficiency in the post-refer-
endum period, when he will have
to rely on it to control both
settler and Moslem extremists.
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:5 January 1961
CURRENT INTELLIGENCE WEEKLY SUMMARY
The planned targets for
the Soviet economy in 1961 pre-
sented to the Supreme Soviet
on 20 December by Gosplan Chief
V. N. Novikov bear out the offi-
cial contention that the gross
industrial Seven-Year Plan (1959
-1965) goal, as well as goals
for most of the major industrial
products, . is:- likely to be
achieved ahead of schedule. The
announcement four days later
that certain targets of the
plan will be increased thus
may presage no more than ad-
justments to the expected over-
fulfillments and those which
have already taken place.
During 1959 and 1960, gross
industrial output reportedly
increased by nearly 23 percent
instead of the 17 percent orig-
inally scheduled.
The 24 December announce-
ment also revealed that Soviet
planners are still attempting
to revamp the planning system
so that, by dovetailing current
with future annual plans, future
adjustments will become increas-
ingly automatic.
The state budget for 1961,
read before the Supreme Soviet
by Finance Minister V. F.
USSR: PLANNED BUDGET REVENUES AND EXPENDITURES
(BILLION NEW RUBLES)
72.33
SOCIAL
INSURANCE RECEIPTS 3.35*
STATE LOANS 1.10t
TAXES ON ENTERPRISES
/L
3.40
1.20'
3.80*
1.40*
2.30*
20.50
SOCIAL-
CULTURAL
MEASURES
FINANCING
THE
NATIONAL TRANSPORT AND
2.50
COMMUNICATIONS
3.03
* Estimated. 1959 1960 1961 1959 1960 1961
In the new budget, planned losses of individual enterprises are apparently being deducted from gross
reported profits instead of being charged to expenditures, as in previous years.
'0104 A
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74.48
6.145
70.76
6.24
4
5.89
9.255
9.61
-1.10-
9.61
1.11
1.15
24
74
27.10
23.22
.
**
11.0
10.83
11.83
2.60
2.54
3.23
4.20
14.53
a
0
"I
15.18
00
"
16.10
77.50
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CURRENT INTELLIGENCE WEEKLY SUMMARY
5 January 1961
USSR: PLANNED ANNUAL INCREASES IN CAPITAL INVESTMENTS
( PERCENT )
1959 1960 1961 1959 1960 1961 1959 1960 1961 1959 1960 1961
FERROUS MACHINE CHEMICALS ELECTRIC
METALLURGY BUILDING POWER
Garbuzov, indicates growth in
all major budget categories ex-
cept in the explicit defense
allocation. Planned revenues
are 78.9 billions and planned
expenditures 77.5 billions (new
rubles), increases of 4.9 per-
cent and 6.7 percent respectively
over comparable figures for 1960.
The drop in the explicit de-
fense allocation from 9.61 in
1960 to 9.26 billion rubles in
1961 is reasonably consistent
with what was expected as a
result of the announced military
manpower.reduction. Other de-
fense expenditures, however,
such as those for research and
development, the atomic energy
program, and possibly sizable
amounts for military hardware
are concealed in other budget
categories.
Explicit expenditures for
scientific research increased
by 16 percent, continuing the
rapid rate of annual increase
which began in 1955. In six
years, expenditures for scientif-
ic. research institutions have
increased from slightly above
2 percent of total budget ex-
penditures to almost 5 percent
of planned expenditures.
In the plan for 1961, gross
industrial production is sched-
uled to increase 8.8 percent.
Although this is only slightly
higher than the 8.6 percent
contemplated in the Seven-Year
Plan, the real increase is sub-
stantial since actual achieve-
ments in 1959 and
196U averaged nearly
11 percent.
The 1961 in-
vestment allocations
to ferrous metallurgy
and machine building
are above those needed
to fulfill the
Seven-Year Plan in-
vestment goals. Sched-
uled investments in
the construction and
building materials
industries for 1961 are also
above the original Seven-Year
Plan figures, presumably in
reaction to Khrushchev's May
1960 criticisms of lags in the
development of the construction
base. Electric power investment
plans have been underfulfilled
for the first two years of the
plan; the projected rate for
1961 is, however, just about
equal to the average annual
rate necessary to fulfill 1959-
65 investment plans.
The rates of investment in
the chemicals and oil and gas
industries are--as in 1959 and
1960--considerably lower than
the annual rates necessary to
fulfill the Seven-Year Plan in-
vestment goals. Thus the equip-
ment problems of the chemicals
industry and the shortcomings
in the refinery and pipeline
construction programs probably
have not been solved.
The most interesting announce-
ment with respect to capital in-
vestments is the planned increase
of 54 percent over 1960-in in-
vestments in the light and food
industries. Probably one half
of the announced increase is
"fictional" in the sense that
it will probably result from a
"bookkeeping" operation--the
transfer of investments from
the cooperative sector to the
state account. Neverthless, the
"corrected" investments allocated
to these consumer industries do
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CURRENT INTELLIGENCE WEEKLY SUMMARY
5 January 1961
indicate a change in the plan,
one specifically attributed to
Khrushchev.
The picture for the con-
sumer is not as rosy with re-
spect to housing. Novikov
stated that 96.2 million square
meters of housing are planned
for 1961--4 million square
meters more than were built in
1960. This indicates that the
1960 housing plan of 101 mil-
lion square meters was under-
fulfilled by 8-9 million square
meters. The lag is believed to
have been almost exclusively
in the private housing program,
probably as a result of the
abolition of state loans for
private housing. The cessation
of the loan program will also
bring about a sharp curtail-
ment of private construction in
1961 and will lessen the other-
wise good chance for a substan- 25X1
tial overfulfillment of the
Seven-Year Plan housing goal.
Prepared by OREt;
concurred in by OSI)
MOSCOW FIRES AGRICULTURE MINISTER
The dismissal of Valdimir
Matskevich,from his post as
Soviet minister of agriculture
on 29 December clears the way
for reforms long advocated by
some of the top political fig-
ures and agricultural special-
ists in the Soviet Union but
resisted by Matskevich. He has
been made to shoulder blame for
the second successive poor year
in agricultural production. The
central committee plenum on
agriculture--which was to have
been held in December and now
is scheduled for 10 January--
presumably will approve the
main lines the reforms are in-
tended to take.
Matskevich, 57,
minister of agricul-
ture since 1955, suc-
cessfully opposed pro-
posals for forming new
agencies for agricul-
tural administration
championed by party
presidium members
Polyansky and Podgorny
at the central commit-
tee plenum in December
1959. Their proposals
would have had the ef-
fect of sharply re-
ducing the administra-
tive responsibilities
of Matskevich's min-
istry. Renewed efforts to bring
about organizational changes
have recently been noted, and
the Ministry of Agriculture and
Matskevich have been criticized
for poor administrative work.
Matskevich has also been
criticized for" failing to in-
stitute agronomical practices
advocated by Trofim Lysenko,
controversial Soviet geneticist
and agricultural specialist.
Lysenko fell into disfavor af-
ter Stalin's death but since
1956 has been hailed as one
of the Soviet Union's leading
agronomists. Khrushchev has
supported a, number of his
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CURRENT INTELLIGENCE WEEKLY SUMMARY
5 January 1961
proposals, but Matskevich ap-
parently was not convinced of
their value.
cal results, however, Lysenko's
biological theories are un-
likely to be pushed.
The selection of veteran
academic specialist Mikhail
Olshansky, 53, to replace Mat-
skevich suggests radical changes.
Olshansky lacks the practical
administrative experience pre-
sumably required to handle the
ministry as currently organized.
A reorganization to relieve the
ministry of some of its manage-
rial responsibilities--perhaps
including its de facto admin-
istration of the collective
farm system--and to create new
agencies to handle them would
appear to be contemplated.
Olshansky, who has a back-
ground as an agronomist and
plant breeder, has long been an
ardent advocate of Lysenko's
b,,-,1o,gical theories--rejected by
Western scientists as scientif-
ically unfounded--as well as
Lysenko's proposals in the field
of agronomy--some of which are
acceptable by Western standards,
The new direction in Soviet agri-
culture is certain to include
greater emphasis on science and
modern technology, and Lysenko's
views on soil management and
field-crop production will re-
ceive greater application than
heretofore. In view of Khru-
shchev's insistence on practi-
Olshansky, like Matskevich,
is a product of the Ukraine and
its party organization. He was
born in the village of Sarny
and studied at the All-Union
Scientific Research Selection-
Genetics Institute in Odessa.
He stayed on to work at the in-
stitute and eventually became
its director. Since 1951 he
has been a vice president of
the All-Union Agricultural Acad-
emy in Moscow. He joined the
Communist party in 1932 and was
active in party work in the
Ukraine during the period Khru-
shchev was Ukrainian party chief.
Matskevich has been given
a relatively minor assignment
as head of the government in
the new Tselina (Virgin Soil)
Kray in northern Kazakhstan
where his work, as far as agri-
culture is concerned, will be
under the supervision of another
former agricultural minister,
A. I. Kozlov, fired by Khru-
shchevin 1955, also for poor
management. Kozlov made a
limited comeback a year ago and
was made Kazakh Republic minister
in charge of agriculture in
the northern part of the re-
public.
RUMANIAN ADMINISTRATIVE REORGANIZATION
The Rumanian administrative
reform, announced on 24 Decem-
ber as a prelude to quadrennial
parliamentary elections early
in 1961, provides the country
with a more effective economic
organization and at the same
time will have significant po-
litical effects. The ethnic
character of the former Magyar
Autonomous Region--renamed Mures
Magyar Autonomous Region--has
been changed as a result of the
loss of two predominantly
Hungarian districts. Rumanian
politburo member Nicolae
Ceausescu has estimated that
the reform will result in a
substantial savings to the
regime during the next fe w
years, primarily through the
reduction of administrative
overhead.
As its last official act,
the incumbent National Assembly
SECRET
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SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
HUNEDOARA
0
Deva
MURES
MAGYAR
BRASOV
(STALIN)
ARGES
(PITESTI)
Oradea
0
CRISANA
(ORADEA)
BANAT
(TIMISOARA)
MARAMURES
(BATA MARE)
0
Bai~
OLTENIA
jy;J ((:RAIOVA)
SUCEAVA
Suceava0
41(NISSTRATIY D/V(S/E 5 <
) eNi :FE[visi)
ffo~mar dri
amended the 1952 constitution,
including Article 19--which
guaranteed the ethnic "compact-
ness" of the Hungarian region--
and abrogated minor laws to
provide for 16 constituent
regions.
In addition to Mures, sev-.
eral other regions have had
their traditional Rumanian
names restored--an act which,
in a small way, will appeal to
the nationalistic sentiment of
the local population. The
regions are to be subdivided in-
to 146 raions, or 43 less than
at present, a move which will
link economically marginal
areas with relatively sounder
adjacent ones. Bucharest, the
capital, and Constanta, whose
limits have been extended to
include its Black Sea port of
Mangalia and a coastal strip
approximately ten miles wide,
are to be federal units with
5 January 1961
SECRET
the political prerogatives of
a region.
The Mures Magyar Autono-
mous Region will incorporate
the economically important Sarmas,
Ludus, and Tirnaveni raions from
the adjacent Cluj and Brasov
regions, but will cede the pre-
dominantly Hungarian-speaking
districts of Sfintu Gheorghe
and Tirgu Sacuesc to Brasov.
While Mures will have a net gain
of 45,000 inhabitants, the
shifts will result in a signifi-
cant drop in the percentage of
ethnic Hungarians in the region.
At the same time the region will
gain 74,000 acres of agricultural
land and will obtain an increased
industrial capacity.
Sarmas has sizable methane
gas deposits; Ludus is the site
of a modern sugar refinery; and
Tirnaveni boasts Rumania's
largest chemical plant. The
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CURRENT INTELLIGENCE WEEKLY SUMMARY
5 January 1961
regional capital, Tirgu Mures?
close to the former regional
boundaries, now has a "hinter-
!arid"; while the former dis-
tricts of Sfintu Gheorghe
and Tirgu Sacuesc, located far
distant from Tirgu Mures, are
fairly close to their new ad-
ministrative center of Brasov
city.
These measures are an-
other step toward minimizing
the ethnic singularity of the
Hungarian region. Last year
the Hungarian university at
Cluj was merged with the Ru-
manian university. The regime
apparently has sought to avoid
adverse reaction by providing
Mures with added economic
resources. (Con- 25X1
curred in by ORR
Communist China's first
announcements concerning econom-
ic performance in 1960 stress
the seriousness of the situa-
tion in agriculture. The "most
serious natural calamities in
a century" are said to have
affected not only agricultural
output but industrial output as
well. Neither agriculture nor
light industry, which depends on
agriculture for raw materials,
will reach planned goals this
year, according to Peiping.
More than half of China's farm-
land is said to have been af-
fected by the calamities, and
crop losses on more than one
third of this area were de"
scribed as "serious."
this year was great enough to
account for the poor harvest
Peiping is apparently preparing
to announce. The regime is
probably seeking to absolve it-
self from blame for -the serious
food situation and laying the
groundwork for the publication
of reasonably realistic agri-
cultural statistics--a practice
not engaged in since the advent
of the "leap forward" in 1958.
The grain crop for 1960 is
believed to approximate the
190,000,000 tons estimated for
1959, mainly because an increase
in sown acreage probably offset
the slightly more serious weather
damage in 1960. The food situ-
ation has worsened, nevertheless;
Peiping's statements dur-
ing most of the 1960 growing
season, indicated that various
calamities were lowering har-
vest prospects, but it appears
that Peiping is exaggerating
their effects. Weather data
and soil moisture estimates
show that much of China was
affected by drought this year,
particularly the major wheat
areas in the north, and the
coastal areas, especially in
the northeast, were battered
by typhoons. Rainfall in the
imps.?';a.nt central and southern
rice areas was not significant-
ly less than in 1959, however,
and in some cases was greater.
On the whole, it seems most
unlikely that weather damage
SECRET
this is the second year without 25X1
an increase
in
grain
output,
while
there
now
are
30,000,000
more
people
to
feed.
People's Daily on 30 Novem-25X1
ber called for an accurate tally
of the harvest and of grain
stocks so that "reasonable" pro-
vision could be made for the
food needs of the country. There
are no prospects for a lessening
of the food shortages before the
early harvest next summer.
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-Awl SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
5 January 1961
The Reuters cor-
respondent in Peiping reports
that usually reliable sources
have noted an increasing num-
ber of cases of absenteeism
among workers because of nutri-
tional ailments.`
For several months the
regime has been taking steps
to conserve the harvest as it
became available and to prepare
the people psychologically for
another hungry winter. The US
Consulate General in Hong Kong
reports that Peiping is con-
ducting a quiet campaign against
the flow of peasants into cit-
ies, including stricter surveil-
lance of passenger traffic,house-
to-house checks for illegal resi-
dents, and the requirement that
restaurant patrons have ration
coupons. Moreover, the great
majority of rural residents--
:and for the first time a large
proportion of urban residents---
now must eat in mess halls,
where consumption can be more
effectively controlled.
Peiping has recently pur-
chased sizable amounts of wheat
and rice from abroad--350,000
tons of rice from Burma and
324,000 tons of wheat from Aus-
tralia--and there are indications
it is in the market
for wheat
from Canad
tina. The
sumably fo
trade comm
neverthele
on domesti
a and corn
se imports
r re-expor
itments, b
ss ease th
c sources.
from Argen
are pre-
t to meet
ut will
e strain
Continued food
shortages
will further affect
labor ef-
ficiency,
aggravate
disgruntle-
ment over
past shortages, and 25X1
further undermine the confidence
of the people in the regime.
Prepared
by ORR)
COMMUNIST CHINA SUPPLYING ALBANIA WITH GRAIN
Albania, suffering the ef- without importing 165,000 metric
fects of three consecutive years I tons of grain.
of drought, is faced with a
severe shortage of grain in the
1960-61 consumption year, which
began 1 July 1960. The 1960
grain harvest in Albania was
the smallest since 1952 and
probably did not exceed 240,000
metric tons--less than half
of the amount planned. Com-
munist China, also suffering
from a poor crop, was provid-
ing Albania with grain during
1960. Grain is a staple item
in the Albanian diet, and food
consumption levels--already the
lowest in Europe--could not be
maintained at the 1959-60 level
Khrushchev visited Albania
in the spring of 1959 and--since
Albania is ill suited topograph-
ically for planting large
areas of grain--urged greater
emphasis on fruits and grapes.
He intimated that Albania's
cereal needs would be met by the
USSR and other'European satel-
lites. Importation of grain from
the USSR in 1959 was less than
in 1958, however.
China purchased grain in France
and Australia for delivery to Al-
bania in 1960, and contracted with
Australia for an additional
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SL UKt;1
CURRENT INTELLIGENCE WEEKLY SUMMARY
5 January 1961
40,000 metric tons to be de-
livered Ito Albania during the
first quarter of 1961.
China's concern for the
welfare of the Albanians,, partic-
ularly at a time when the
Chinese people are on short ra-
tions, is probably a form of
"payment" for Albania's support
of China in the Sino-Soviet dis-
pute.
25X1
ere have en
indications since the Moscow
conference of world Communist
leaders that 'the USSR and the
European satellites are increas-
ing political `forms of pressure-
on recalcitrant Albania.
(Prepared by OR
As a result of Prince
Sihanouk's recent trip to the.
bloc, Czechoslovakia, the USSR,
and Communist China have agreed
to. extend to Cambodia substan-
tial new economic aid. The new
Chinese Communist commitments--
totaling nearly $40,000,000--
will retain for Peiping its
predominant role in bloc eco-
nomic activities in Cambodia,
but both Czechoslovakia and the
USSR have joined the effort on
a larger scale--no specific
amounts were announced--with
promises of credit repayable
in Cambodian products and con-
siderable technical assistance.
This is the first time
Cambodia has accepted bloc
credits; all previous bloc aid
has been in the form of grants,
including $28,000,000 from Com-
munist China and $6,000,000
from the USSR.
Khrushchev personally of-
fered Sihanouk a gift of a tech-
nological institute, which Cam-
bodia had requested earlier
from the United States. The So-
viet Union also responded fa-
vorably to Sihanouk's request
for aid in the construction of
two hydroelectric projects and
for technical assistance in
surveying Cambodian mineral re-
sources. These two undertakings
apparently were accepted in
principle, and formal contracts
will be drawn up and announced
later. Moscow's only previous
aid to Cambodia was a grant for
a hospital which was begun last
August. While work on this proj-
ect apparently proceeded smooth-
ly, Moscow has shown little in-
terest in becoming too deeply
involved with such programs in
Cambodia.
Czechoslovakia agreed to
provide long-term credits to be
used to construct a sugar re-
finery, a tire factory, and a
tractor-assembly plant. The
first two projects have been
under discussion since at least
last summer. Provision was also
made for the establishment of a
joint Czech-Cambodian shipping.
firm which, along with a similar
Chinese-Cambodian firm, will
train Cambodian personnel in
merchant marine matters and su-
pervise the small volume of
shipping between Cambodian and
bloc ports.
On his return from Commu-
nist China, Sihanouk revealed
that Peiping was prepared to
expand its efforts in behalf of
Cambodia greatly, with large
new economic aid and promises
of extensive technical assist-
ance. A new grant of $11,400,000.
is to be provided to complete
and expand the four factories
the Chinese are building under
an earlier agreement, and an
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"`v SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
5 January 1961
additional $25,700,000 is to be
used for construction of several
new factories, including a small
steel mill and a plant to pro-
duce tools. The Chinese will
also provide technical assist-
ance to reorganize Cambodian
producer cooperatives, improve
agricultural methods, and intro-
duce new crops. Chinese techni-
cians are to survey part of the
proposed Phnom Penh - Sihanouk-
25X1
25X1
The Arab states are moving
toward a united front on the
recent developments in the Con-
go, Algeria,"and Israel. Cairo
and Baghdad have taken the lead
with lengthy criticisms of
Western policies, and a similar
but less vehement reaction has
been evident in other Arab
capitals.
ex-
pressed again the strong anti-
Western feeling of his Port
Said speech on 23 December.
Nasir again remarked that he
might have to abandon "positive
neutrality" because of his
conflict with Western policies,
a move also suggested by the
UAR deputy foreign minister in
a talk with the American ambas-
sador.
Nasir claimed to have informa-
tion proving the US and UK had
aided France in equipping the
Israeli military and developing
Israel's reported atomic poten-
tial. Nasir added that the
USSR had agreed to furnish the
UAR with more arms, including
MIG-19 aircraft, and hinted that
he could get along without West-
tern economic aid.
Baghdad's foreign policy
line also is emphasizing that
ville railroad and eventually
to construct at least part of
it.
Although both Czechoslovakia
and Communist China have offered
to provide Cambodia with military
equipment--a point frequently
noted by Sihanouk, apparently
no agreement for military
aid was concluded.
(Prepared by ORR)
Western actions on Israel and
Africa may push the Arabs into
alignment with the Communist
bloc. Iraqi Foreign Minister
Jawad, considered relatively
pro-Western, has recently made
unprecedented public attacks on
the United States. Prime
Minister Qasim has attacked
France and "other imperialist
states," while the Iraqi press
and radio have called on the
Arabs to start an immediate
political and economic boycott
of France. Cairo's Al Ahram
stated in a recent atj.cle that
during the forthcoming Arab
League meeting Jawad would
announce Iraq's intention to
nationalize France's 23.75-per-
cent share of the Iraq Petroleum
Company.
Saudi Arabian press cover-
age on Israel has been generally
in line with the UAR position,
and the Sudanese Government on
31 December recalled its ambassa-
dor from France, following the
third French nuclear test in
the Sahara. Jordan's Prime
Minister Talhuni has talked
of a moratorium on intra-Arab
disputes in order to pull to-
gether Arab opposition to the
"new Israeli threat." Several
Lebanese politicians and news-
papers are declaring that the
Arabs too must acquire an atomic
potential.
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5 January 1961
The Arab League foreign
ministers' conference scheduled
for this month is expected to
discuss the African and Israeli
issues and is likely to display
an unusual measure of agreement
on an anti-Western line.
Saudi Arabia
The 1961 budget announced
by King Saud's new government
last week appears to differ
little, if at all, from a draft
prepared by Crown Prince Faysal
before he resigned as prime
minister, The pattern of planned
expenditures is, nevertheless,
consistent with the King's
promise to improve the economy
through government financing
of more development projects.
The budget is balanced, with
both revenues and expenditures
set 9 percent higher than last
year. Scheduled outlays for
development projects--including
the construction of mosques--
have been increased by some 40
percent.
Defense expenditures have
been reduced by 6 percent, while
the allocation for debt retire-
ment is very close to that of &:'
last year: ' xpenditttreg f6bothe
royal. family. are:.set..-at the. t