CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A003200120001-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 39
• Document Creation Date: December 16, 2016
• Document Release Date: March 3, 2005
• Sequence Number: 1
• Publication Date: July 13, 1961
• Content Type: SUMMARY

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(CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
COPY N0. 7s
OCI N0. o28s/sl
13 July 1961
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
DOCUMENT NO. Z
NO CHANGE !N CLASS. ~
C; DECLASSIt=(ED
CLASS. C!-4A^~GED T O: TS S
P;E~CT?EV;Et;~=d DATE:
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~~ ~ ~~~~
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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
13 July 1961
1' H E W E E K I N B R I E F
EAST-WEST RELATIONS Page 1
Khrushchev's speech on 8 July and the Soviet Aviation
Day air show on the following day underscored Moscow's
current dual line which combines readiness to negotiate
on Berlin and Germany with measures to impress the West
with Soviet military power. His announcement of a sus-
pension of force reductions planned for 1961 and an in-
crease of over three billion rubles in defense alloca-
tions--following publicity concerning proposed US mili-
tary budget increases of $3.5 billion--was intended as a
warning that the US5R will not be deterred from carry-
ing out its declared ini:e~itions bn Berlin by any mili-
tary measures the Western powers may take. Khrushchev
sought to maintain the political initiative in the
maneuvering on Berlin by renewing his call for a nego-
tiated settlement which would protect West Berlin's
freedom and communications. :These moves are designed
to make it difficult for the. Western powers to main-
tain a common front and to induce them to consent to
negotiations under terms favorable to the USSR.
LAOS ~ Page 6
Communist bloc deleg~ltes at Geneva continue to press
for a discussion of neutrality drafts andyto charge the
West with seek~.ng to break up the confe~'ence with demands
for prior consideration of control mechanisms. While
the three Laotian princes are still trading suggestions
for the site of further talks on a possible coalition
government, General Phoumi is pursuing his program to
give the King a dominant role in forming a future govern-
FRANCE-ALGERIA Page 8
De Gaulle is determined to relieve France of its
Algerian burden without delay--preferably through negotia-
tions but by a complete political withdrawal from Algeria
if necessary--and is stressing the need to prepare for
the approaching Berlin crisis to underline his urgency.
While his 12 July speech re-emphasized the disadvantages
for both the provisional A1ge~Cian government (PAG) and
France if negotiations fail, there are indications that
the French will have a more flexible position, particu-
larly on the Sahara issue, when negotiations are re-
sumed. The PAG is concentrating its efforts on muster-
ing African support for its claims that the Sahara is
an integral part of Algeria, while reiterating that it
is prepared to make political and economic concessions
if the French recognize this.
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KUWAIT . . . . . . . . . . . e . o . . . Page. 10
Baghdad`s news coverage of the Kuwaiti issue has
largely been supplanted by press attention to the cele-
brations of the 14 July Iraqi revolution. Press stories
that British employees of the Iraq Petroleum Company will
be replaced by Italians have been formally denied by'Iraqi
authorities. The British now are trying to find an
alternative means of guaranteeing the independence of
Kuwait which would permit early withdrawal of their
troops. At the 12 July Arab League Council meeting the
UAR pressed for the replacement of British troops in
Kuwait by those-from Arab countries not borderin r 1,
thus excluding the UAR.
CONGO . . . . . . . . . . . . . . . . . . . Page 11
Negotiations concerning the composition of a new
government are continuing between representatives of the
Leopoldville government and the Stanleyville regime.
Tshombd?s apparent intention to boycott the forthcoming
parliamentary session poses the threat that pro-Gizenga
forces will be able to control it; a pro-Gizenga spokes-
man has expressed the fear that "army elements" may at-
tempt a coup should parliament approve a government not
13 July 1961
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acceptable to them.
. Page 12
Extensive preparations are being made for the 26
July celebrations, and government officials and prom-
inent personalities from many countries are expected
to attend. The Cuban regime may use this occasion to
dis la its recentl ac uired MIG air ra t
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American Communists and labor leaders will meet in
Havana at the same time to organize a new, Communist-
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DOAdINICAN REPUBLIC . .. . . . . . . . . . Page 14
Pro-Castro extremists in the Dominican Republic are
emerging as ,the most aggressive of the anti-Trujillo
groups and threaten to overshadow more moderate opposi-
tion elements with which the extremists are seeking to
ally themselves, The mob violence sparked by the
extremists on 7 July has raised another obstacle to the
cautious moves of President Balaguer to create a more
democratic, climate; pressure within the regime for a
return to past repressive tactics against all opposi-
tion elements has probably increased. On 5 July
Balaguer named a new cabinet replacing the one in-
stalled by the late dictators
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CURRENT INTELLIGENCE WEEKLY SUMMARY
13 July 1961
SOVIET INDUSTRIAL CONSTRUCTION LAGS Page 15
Problems of industrial construction have evidently
become serious enough in at least three major areas to
require the direct intervention of one of Moscow's top
economic trouble shooters, A. N. Kosygin. Kosygin's
trip last month to construction sites and factories
in Kuybyshev, Saratov, and Kemerovo oblasts was prob-
ably intended to give him a chance to investigate at
first hand the inefficiencies and shortages of building
materials and equipment which have plagued the construc-
tion program at various locations throughout the country.
PARTY JOURNAL CLARIFIES SOVIET AGRICULTURAL POLICY Page 17
The authoritative party journal Kommunist has set
forth what appears to be the official line in the high-
level controversy over the future development of the
Soviet farm system. It has come out against the whole-
sale conversion of collective farms into state farms.
Those who argue that the time has come to speed up
conversions, eliminate the private plots of collective
farmers, and transfer all collective farms to the sys-
tem of guaranteed monthly cash wages are branded "deep-
ly incorrect." The high rate of conversions in 1960
will probably slow down, and pressures to tailor the
collective farm more closely to the state farm pat-
tern may decrease.
EAST GERMAN MOVES TO COUNTER EVANGELICAL CHURCH CONGRESS Page 18
The East German regime is maneuvering to reduce
attendance by East and West Germans at the Evangelical
Church's all-German congress scheduled to meet in West
Berlin from 19 to 23 July. The Communists appear
reluctant, however, to attempt coercive measures against
Western attendance. East Berlin authorities have banned
congress sessions in the Soviet sector but have not
revealed whether they will forbid religious services
as well or what steps they would take to prevent West
Germans and West Berliners from attending such services.
The regime is pressin East German church members to
boycott the meeting.
SINO-SOVIET RIVALRY IN ASIA page 19
Heightened activity by Moscow and Peiping in rela-
tion to the Asian Communist parties during the past few
months reflects the continued strain in Sino-Soviet rela-
tions, now expressed in increased political and economic
rivalry rather than in the doctrinal debates which char-
acterized the peak of the dispute last year. Moscow,
with the example of Albania fresh in mind, has apparently
turned its attention to the task of consolidating its
position with the important Communist parties of Asia.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
13 July 1961
The Chinese have also been trying to expand their in-
fluence in the areao While both countries' are inter-
ested in sauntering Western speculations of competi-
tion, their protestations of "unity" cannot submer e
the clear signs of their rivalry.
ECONOMIC DEVELOPMENTS IN COMMUNIST CHINA . Page 22
Serious difficulties still grip both industry and
agriculture, Production stoppages at individual plants,
arising from various causes, have been numerous; there
appears to have been a. significant slowdown in industry
as a whole in order to rebuild stockpiles of fuel and
raw materials and to overhaul equipment, Problems
with raw materials, parts, and labor productivity con-
tinue. Industrial output in 1961 will probably fall
TURKEY'S CONSTITUTIONAL REFERENDUM . Page 23
Approval of the new Turkish constitution in the
national referendum on 9 July was a major step toward
a return to representative government, General Gursel
has renewed his promise to hold parliamentary elections
by mid-Octobero However, the vote in favor of the new
constitution was far below the ovex"whelming endorse-
ment desired by the military regimen The results re-
flect both general voter apathy and, apparently, con-
siderable disillusipnment with the handling of govern-
ment affairs during the past year by the CNU, The
substantial negative vote also indicates continued
opposition to the Republican People's party and its
anticipated xeturn to power following the elections.
POLITICAL STRIKE LIKELY IN NORTHERN RHODESIA . Page 2~
African nationalists in Northern Rhodesia have called
for "immediate` positive action" to protest recent British
proposals for a constitution for the protectorate, If
these proposals were put into effect, the main African
political group--the United National Independence
party (UNIP)--would probably run a poor second to the
principal European party in any early election. Through
strikes and associated agitation, the UNIP probably
could disrupt much of the Northern Rhodesian economy
for a short eriod
Brit-
ain nevertheless will probab y try to impose a revised
constitution in the face of African o osition.
THE COMMON MARKED AND AI'RICA . . Page 25
Considerable progress has been made in recent weeks
toward. establishing a basis for reyn~gotfation of the `1'957
convention which associates the former French, Belgian,
and Italian territories in Africa with the Common Market
(EEC). Provided their independence is fully respected,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
13 July 1961
most of these countries appear willing to accept close
institutional and economic ties with the EEC after the
present convention expires next year. Negotiation of
this partnership will be complicated, however, by un-
certainty over Britain's future relationship to the EEC.
Moreover, continuation of African-EEC tariff preferences
will hurt producers of tropical products elsewhere, no-
tably in Latin America.
BRITAIN TO CUT OVERSEAS SPENDING Page 26
The Macmillan government is planning to trim spend-
ing abroad as a consequence of its balance-of -payments
difficulties. This will revive London's efforts to se-
cure West German payments to defray the foreign exchange
costs of the British Army of the Phine--the principal
drain on Britain's nonsterling military spending. The
growth of Britain's economic aid to underdevelo ed coun-
tries is also threatened.
MORALE IN COMMUNr'"I' C:?7'~T~ Page 1
Peiping's economic setbacks have resulted in a gen-
eral erosion of public confidence in the regime. Working-
level Communist officials, on whom the party depends for
the execution of its programs, have been confused by
shifts in policy. In addition, there is widespread in-
difference to appeals for greater work efforts. The
party leadership has made limited concessions in an
effort to increase incentives. The regime appears
irresolute, however, and to be making only makeshift
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CURRENT INTELLIGENCE j'VEEKLY SUMMARY
Khrushchev's speech ors 8
July and the Soviet Aviation
Day air show on the following
day underscored Moscow's cur-
rent dual line which combines
a show of reasonableness and
readiness to negotiate on Ber-
lin and Germany with measures
to impress the West with Soviet
military power. His announce-
ment of a suspension of force.
reductions planned for 1961 anti
an increase of over three bil-
lion rubles in defense alloca-
tions was intended as a warning
that the USSR will not be de-.
terred from carrying out ~,~$
declared intentions ~'t~n $er;li:n
by any military measu~es;`'~he
Western powers may oaks ~odemon-
strate their firmness on this
issue.
Khrushchev sought.tp-wain-
tain the politicalntiati~e
in the present maneuvering on
Berlin by renewing his call for
a negotiated settlement which
would protect West Berlin's
freedom and communications.
These political and;,nil~ta.ry
moves are designed, to rr~ake it
difficult for the ~'e~te~rn powers
to agree on measures to strength-
en their bargaining position
and to induce them o'cansent
to negotiations under terms
favorable to the USSR,,
In his speech''~'~KYar~ushdl~w'' ,
again stated, on the on,+~~ ha~t~
that the Soviet Umtan 'has no
desire to interfere ~n i~he~ i.n-
ternal affairs of West,$~rl-ink
to obstruct Weste~h` a~cets~, d
to damage the prestige of the
US, Britain, and France. He
expressed agreement?'~iirla, : Prey,=~ ,., .'.
ident Kennedy's rec.er~~`'~'~at+e-,
went that West Berl~ne~s must''
have the right of an.inde-~ ,
pendent choice as a free pepple
and claimed that Sovi:~t7 prpp~Qs-,>?
als, "fully meet this demand."
Khrushchev appealed to Pres-
ident Kennedy and De Gaulle and
Prime Minister Macmillan to
"display wisdom" in settling
the German problem and to agree
to negotiations along with "other
peace-loving states" to conclude
a ,peace treaty. This formula-
tion stops short of an explicit
bid for a four-power summit
meeting and apparently was in-
tended as a restatement of the
proposal in the 4 June aide-
memoire Khrushchev gave the
President at Vienna calling for
a peace conference "without de-
lay."
Khrushchev's efforts to
.appear flexible and constructive,
on the other hand, were coupled
with criticism of the "threat-
ening notes" in recent speeches
by x'estern leaders and by a re-
newal of previous warnings that
the USSR cannot allow the Ber-
lin question to "drag on for
years." He attempted to increase
the West's incentive to agree
to early negotiations by warn-
ing that the present Western
attitude does not contribute
f'o a "businesslike atmosphere
for negotiations" and that,
under these circumstances, the
conclusion of a separate treaty
with, East Germany "may prove to
be the only way out of the pres-
ent' situation."
High Soviet Foreign Min-
i~t,ry officials have pressed this
~1:fne, in recent private talks
with Western diplomats. Deputy
;Foreign Minister Sobolev indi-
~eated 25X1
y t at if the US
reply to Khrushchev9s 4 June
aide-memoirs is quite negative,
;the USSR might advance its dead-
line for a settlement. The
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CURRENT INTELLIGENCE WEEKLY ~I~RY
Italian ambassador informed
the US Embassy that Foreign
Minister Gromyko was "alarming-
ly complacent" on Berlin in a
recent conversation. Gromyko
disagreed with the ambassador''s
remark that Soviet policy is
bound to stir up Western reac-
tion and that the situation
could become dangerous; on
the contrary, he said there would
be no important reaction., and
that, if there are no negotia-
tions, the USSR would simply
sign a separate treaty which
would end Allied rights in
Berlin.
Military Budget
Khrushchev made it clear
in his speech that the increase
in the Soviet military budget
and the suspension of force
reductions were designed to
counter measures by the US and
its NAT? allies to build up
their forces. He noted that
President Kennedy had proposed
a $3.5~billion increase in US
military expenditures and prob-
ably anticipated that his fig-
ure of a 3,144,000,000 ruble
increase in Soviet military
allocations would be reported
in the Western press as equiva-
lent--as indeed it is according
Rio the official rate.
Khrushchev's announcement
conveys the impression that the
increase is to be a net addition.
It is unlikely, however, that
such a large increase in mili-
tary spending, equal to ~5 per-
cent of the original 1961 total,
could actually be used over the
next six months. The real dollar
equivalent to the claimed ruble
increase depends heavily on
which specific military goods
or services the Soviets might
procure, but could be well in
excess of _the valuation at
the official rate.
The additional funds need-
ed to pay military forces now
to be kept on active duty,
rather than demobilized, is
about half a billion rubles.
The remaining: 2.6 billion
would represent about a 60-per-
cent addition to Soviet outlays
for military procurement and
construction as estimated for
all of 1961.
A long lead time is need-
ed for the sharp expansion of
sophisticated weapons systems,
such as the ICBM, and Khrushchev
was referring to the additional
expenditures in the context of
a cash outlay, i:e., money to
be spent during the budget peri-
od~d. Khrushchev could, of course,
step up the procurement of con-
ventional weapons, such as tanks
and fighter aircraft, currently 25X1
being produced in Soviet muni-
tions plants operating far below
capacity.
23
Ify as seems likely, the
announcement wad made primarily
for political effect, certain
budget items would be reclassi-
fied as "military," a relatively
simple matter. For example, most
spending for military research
and development now is concealed
in other parts of the budget,
and by itself amounts to about
~.8 billion rub7.cs.
New military expenditures
in 1961 on the order reported
by Khrushchev would have a
significant impact on invest-
ment and/or consumption goals.
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CURRENT INTELLIGENCE WEEKLY SUgMARY
If the impact were to fall on
investment, the over-all rate
of Soviet economic growth would
decline sharply, thereby push-
ing off into the future Khru-
shchev's much-vaunted program
of catching up with the US.
birth rate was evident in the
slow growth of the working-age
population. Since last year,.
however, the number of persons
reaching working age is .again
rising and the relative impor-
tance of demobilization as a
source of civilian labor is
diminishing.
Suspension of Force. Reduction
Khrushchev?s statement
merely publicizes a step prob-
ably taken several months ago.
There have been several public
hints that the program to re-
duce Soviet armed manpower from
3,623,000 to 2,423,000 in 1960
and 1961 might have to be cur-
tailed. It is believed that
the reductions a~e~about half
completed and that Soviet armed
manpower, excluding internal
security forces, now totals
about 3,000,000?
Suspension of demobiliza-
tion, which could reduce the
expected net additions to the
civilian Labor force this -year
by one fifth, will probably re-
quire Moscow to find alternative
sources of labor. Planned ex-
pansion of high school enroll-
ment may be delayed to make
more teen-e.gers available for
work, and further steps may be
takento induce a greater per-
centage of women to enter the
labor force.
Probably the most direct
and immediate effect of the
suspension will be felt in the
frontier areas of the USSR
where labor shortages are a
perennial problem, It was to
these areas t~ia~t last year's
demobilized soldiers were
strongly urged to go.
Aviation Day Air Shgw
During the Aviation Day
air show of 9 July, the first
significant air show since 1956,
a number of aircraft were pub-
licly displayed for the first
time, as well as air-to-air
missiles (AAgs) and air-to-sur-
face-missiles (ASMs). Despite
Khrushchev's disparaging remarks
about aircraft in recent years,
Marshal of Aviation Sergey
Rudenko, deputy .commander in
chief of the Soviet Air Force,
said the main ob~sct of the
display was to "demonstrate the
might of Soviet aviation;."
Similar saeasures, to-
gether with reductions ~n the
armed forces, since. 1955 have
enabled civilian employment to
rise rapidly during a period
Yn which the lbw World War'II
The existence 'of most of
these aircraft has been known
for some time. Among those
shown for the first time :were:
a four-het, modified delta-wing
aircraft of heavy bomber size
and weight designated Bounder
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and first seen on the ground
at Moscow/Fili in 1958; a
supersonic dash swept-wing
medium bomber with twin--jet
engines mounted in the rear,
now believed to be the Blinder
and first seen at Kazan in
early 1960; a supersonic dash
twin-jet light bomber believed
to be a development of the
Backfin and first seen in 1957.
Others newly displayed
inaludede a twin-jet flying
boat; a large "convertiplane"
apparently designed for both
normal and vertical take.~offs;
one, possibly two, large inter-
ceptors with single very high
thrust engines; a fighter Simi+;
lar to the Fishpot with rocket.
assist; a jet light trainer; and
three new helicopters. Pro-
totypes displayed in previous
shows have not always been
selected for production and
operational use.
The show also highlighted
modern airbornb missiles. The
Bear turboprop heavy bombers
carried an ASM, probably the
350-nautical-mile Cherub. The
Badger jet medium bombers
carried an ASM which may have
been .either the 55-n.m. Cracker
or the 300-n.m. Truckle. Fish-
bed, Fishpot, and Fitter fighter-.
aircraft carried AAMs-which have
not yet been specifically iden-
tified.
East German tittitudes
In a speech to the East
German People's. Chamber on 6
July, Walter Ulbricht echoed
Khrushchev's emphasis on the
possibility of a negotiated
settlement of the German and
Berlin issues. He did not pre-
clude, however, "Certain tem-
porary sacrifices" by the East
Germans in the event that a
separate treaty is signed--a
reference to the threat of
WestA?~ierman economic counter-
measures.
Apparently anticipating
a summer of heightened tension,
-the regime reportedly has is-
sued an order canceling summer
leave plans of party function-
ar ms in East Berlin through
August on grounds that the
present political situation
requires that all officials
remain at their posts in the
next weeks.- Concurrently the
regime instituted harsher poli-
cies to deter East Berliners
from working in West Berlin by
threatening them with severe
economic sanctions, and took
steps to reduce attendance by
East Germans at the forthcoming
Evangelical Church congress in
West Berlin.
West German Views
Mayor Brandt's suggestion
on 7 July that the West con-
. Sider calling a peace confer-
ence of the 52 "anti-Hitler
coalition'" nations has evoked
sharp criticism by Chancellor
Adenauer. Addressing a politi-
'i cal rally in Munich on 9 July,
Adenauer scoffed at Brandt's
support of a "super conference"
with the comment: "For heavens
sake, what would come of that?"
The chancellor stated that men-
tion of an "arm-free" zone in
central Europe recalled the
Rapacki Plan, "which we have
discussed and which does not
provide security for anyone
and only makes us a second-rate
nation."
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Adenauer also rejected
Khrushchev?s statement that con-
clusion of a peace treaty with
both parts of Germany is the
most important problem, and
asserted once again that con-
trolled disarmament should come
first. Using much stronger
language, Defense Minister
Strauss on 8 July scornfully
dismissed all plans, ideas,
and concepts for a solution of
the German problem as "hacus-
pocus" and asserted that con-
ferences with the Soviets had
proved detrimental or worthless,
Brandt believes that a
large-scale conference could
be one way for the West to
seize the initiative from Khru-
shchev and confront the USSR
with the self-determination
issue, He also favors prepara-
tion of a peace treaty draft
to be presented as a positive
alternative to the Soviet pro-
posals and suggests that the
questions of armament reduction
and an atom-free zone are nego-
tiable if accepted by both sides
and not injurious to the securi-
ty of either.
Brandt also endorses the
statement of Bundestag Presix~ent
Eugene Gerstenmaier favoring
any negotiations which: might
lead to a peace treaty on the
basis of German self-determx-
nation. Gerstenmaier presented
a formal bipartisan declaration
of the Bundestag on 30 June
which, while flatly rejecting
Moscow?s proposal for direct
talks between best and East
Germany, celled for peace
treaty negotiations which would
predetermine the military and
political status of a reunited
Germany. The statement also
pledged West German readiness
to give any reasonable guaran-
tee that a reunified Germany
would be "a reliable partner
of all their neighbors."
Adenauer disapproved the
Gerstenmaier statement, espe~
cially the inplication that
it represented a common foreign
policy between the Christian
Democratic Union (CDU) and the
Socialists. Subsequently, the
CDU executive committee adopted
a formal proposal advocating "a
reunited Germany with a free
democratic constitution, inte-
grated in the European commu-
nity.,'
Although Brandt has fre-
quently expressed privately his
desire that the West seize the
initiative by making its own
proposals rather than merely
concentrating exclusively on re-
butting Soviet arguments, his
proposals are probably partly
motivated by a desire to embar-
rass Adenauer--his opponent in
the September national elections
--who continues to take a pessi-
mistic view of new negotiations
on Berlin, Meanwhile, in a
reply to the 1? February Soviet
note on Berlin, Bonn declared
on 12 July that a German peace
treaty must depend on the readi-
ness of the USSR to allow free
elections in East Germany, and
asserted that a separate Soviet
treaty with East Germany "would
violate the right of self-
determination of peoples." The
note stated that a peace treaty
with a single German government
resulting from free elections
would settle problems concerning
Germany, including Berlin and
the German frontier uestions
o n y w
25X1
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Communist bloc delegates to
the Geneva conference on Laos
continue to press for a discus-
sion of neutrality drafts and to
denounce as "a device~to break
up the conference" Western de-
mands for prior consideration of
control mechanisms.
Soviet delegate Pushkin was
adamant on this point during an
S July meeting with the chief
British representative, who had
proposed that "neutrality" and
"controls" be discussed on al-
ternate days. Rejecting this
compromise, Pushkin launched in-
to an hour-long tirade against
Western-backed proposals for
strengthening the International
Control Commission (ICC) and
gave no indication that he would
accept even an Indian proposal
which would incorporate in one
document a declaration on neu-
trality and articles on control.
Political developments in.
Laos continue to await agree-
ment on the site and timing of
coalition talks between the
three princes. In reply to Vien-
tiane's invitation to Souvanna
and ~ouphannouvong to resume
talks in Luang Prabang, Souphan-
nouvong has suggested that the
three leaders assemble in Namone;
Vientiane is expected to propose
that the meetings be held in
Phnom Penh,
General Phoumi has been
gradually pushing his program
designed to influence the forma-
tion of a new government. His
address to the National Assembly
on 11 July outlining the govern-
ment's position was the first
step in a plan by which he hopes
the assembly will endorse a
turnover of full powers to the
King, avoiding a formal disso-
lution of the assembly which
would require early elections.
The Communists seem deter-
mined to drag out the conference
deliberations on this procedural
issue, while Souvanna Phouma and
the Pathet Lao continue to
strengthen their political posi-
tion preparatory to the next
round of talks between the three
princes in Laos.
In a conversation with Am-
bassador Harriman in Rome prior
to his return to Phnom Penh,
Cambodian Premier Sihanouk ap-
peared discouraged over events
in Geneva and Zurich and offended
that his draft compromise on the
ICC had been turned down by both
sides at Geneva. Commenting
that he could "no longer be of
value, " Sihanouk expressed the
opinion that the Pathet Lao
vrould never accept a subordinate
position in a Laotian government
or agree to integrate their
forces. He said that Chinese
Communist Foreign Minister Chen
Yi had stated that under no cir-
cumstances would the Chinese
agree to a control commission
with real authority, even if the
Laotians themselves accepted
such controls.
Both Phoumi and Premier
Boon Oum have implied publicly
that Souvanna would be unac-
ceptable as head of a new gov-
ernment, but it is doubtful that
Phoumi has persuaded the King to
assume this role himself. Phoumi
this week is touring southern
Laos and later will go to Luang
Prabang to build up support for
his plan.
mince his return from Eu-
rope, Premier Boun Oum's mood
has been described as one of
discouragement over his en-
counters with Souvanna and 5ou-
phannouvong. He too is in
southern Laos--on personal mat-
ters--and may be absent from
Vientiane for an extended period.
A top Vientiane official told
Ambassador Brown that Boun Oum
seemed to be washing his hands
of state affairs and to want no
part in a future government.
According to Indian Ambas-
sador Ratnam, Boun Oum recently
told him that if negotiations
at Geneva or between the three
princes break down, the best
~~~~E~'
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CURRENT INTELLIGENCE WEEKLY SUNtMAR.Y
solution would be to partition
Laos, either across the narrow
neck of the country or down the
middle along the approximate
boundary separating areas under
government and Kong Le - Pathet
Lao control. Ratnam claims that
Souphannouvlong told him last
month that partition was the one
thing he would fight to prevent.
There are recent reports
that partition is being increas-
ingly discussed as a possit,le
solution among lower echelon of-
ficials in V3+entiane and that
25X1 many high-banking figures con-
sider it virtually impossible
to prevent Pathet Lao domination
of any coalition ~oyernment.~
Talks at Namone have con-
tinued to be inconclusive on
the issue of ICC inspection
sites. Although ICC representa-
tives were permitted to attend
a 10 July meeting, Pathet Lao -
25X1 Souvanna delegates again rejected
their participation on 12 July.
13 July 61
I,,U~~A,N..v((RRA9A NG
Mek~~,:~raban~
aa~u~r ~S~a
dTKTCITt Milt.
25X1CAMBODIA
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XIENG XHGU4NG
Ploine des
NORTH
VIETNAM
7HAILANC?
25X1
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CURRENT INTELLIGENCE WEEKLY 3UMIdARY
FRANCE-ALGERIA
De Gaulle's 12 July address
added little detail to his pre-
vious statements on Algeria.
His intent seemed to be to im-
press the PAG and world opinion.
as well as the French public
with the urgency he attaches to
an early termination of France's
commitments there, by one means
or another, in light of the dan-
ger for the free world as the
Berlin crisis intensifies.
There are other indications,
however, that the French negoti-
ating position will be somewhat
more flexible whenever talks
with the PAG are resumed at Evian.
De Gaulle and other French of-
ficials have pointedly avoided
the word "partition" in their re-
cent references to last-resort
solutions. His 12 July defini-
tion of "regroupment" bears out
earlier references to concentra-
tion of Europeans pending evac-
uation of all who care to leave.
"France's chief negotiator,
Minister of State for Algerian
Affairs Louis Joxe, told an
American Embassy official in
Paris on 6 July that negotiations
would be renewed "shortly," and
reportedly was positive in his
view that most of the issues on
which the Evian talks appeared
stalled were in fact negotiable.
He suggested that a private con-
versation with the top PAG ne-
gotiator, Belkacem Krim, might
be a means of breaking the ice.
Joxe's statement that he
would first take up the .~ahara
issue and that he felt the rebels
were more interested in a
"moral victory" on this point in
the form of political sovereignty
rather than in the "material"
side suggests that the French
are preparing to discuss the
PAG's Saharan claims as a means
of getting negotiations under way
again. He considered that ar-
rangements are possible which
would not deprive France of oil
and gas revenues.
Joxe made no reference, how-
ever, to the difficulties which
would arise over the Sahara if--
as press and political observers
speculate--he insists on retain-
ing the French missile test range
at Colomb-Bechar and perhaps
other facilities including nuclear
weapons test sites. Joxe also
said the PAG is prepared to work
out means for French retention
of the naval base at Mers-el-
Kebir. In view of the PAG's
declared intention of adopting
a "non-alignment" foreign policy
once independenoeis achieved,
Joxe's optimism as to prospects
for base negotiations seems
premature.:
PAG leaders, though dis-
appointed that De Gaulle in his
12 July speech failed to signal
any French concessions, will
nevertheless persist in their
opposition to a settlement on
the basis of present French pro-
posals. Despite De Gaulle's re-
peated threat to regroup the
Algerian population failing an
agreement on Algerian associa-
tion with France, the rebels will
continue to insist that France
reverse its position enunciated
at Evian that the disposition of
the Sahara is a question apart
from an Algerian settlement.
They will also continue their
efforts to undercut the French
position by mustering North
African and other African support
for PAG demands.
PAG leaders at the same
time have continued to emphasize
that once talks are resumed the
PAG is prepared to make conces-
sions on the issues of guarantees
for the European settler community,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
French retention of military
bases, and preferential economdc
cooperation with France, in re-
turn for French recognition of
Algerian territorial integrity
and sower inclu n the
25X1 Sahara.
ope o ma a proposa s
on these issues "sufficiently
concrete and attractive" to en-
able France to recognize Algeri-
~.n sovereignty over the Sahara.
llhile voicing adamant op-
position to partition of Algeria
and amputation of the Sahara,
PAG Deputy Premier Belkacem
Krim said twice publicly in Libya
that the PAG was. prepared to
grant the French community in
Algeria "full rights in accord=
ante with the sovereignty and
dignity of the Algerian. people."
PAG leaders continue to insist
that once the Sahara problem is
solved, they see no other major
obstacles to a rapid settlement.
The PAG, is an effort to
continue pressure on the French,
has reportedly called a full-
scale meeting of the 62-member
National Council of the Algerian
Revolution for some time in Au-
gust. They say the meeting will
probably result in a new and
tougher PAG leadership. While
such a meeting is certain in the
event of a breakdown of negotia-
tions, the -~ebels have indicated
the meeting can be deferred if
talks resume.
Strained PAG-Tunisian rela-
tions were apparently at the root
o~ several reports that the PAG
intended to move its headq~~arters
from Tunis to Rabat. PAG Min-
ister of Information Yazid pub-
licly characterized these reports
as "ridiculous," saying that the
PAG was not going to move any-
where but into Algeria.
In contrast to the apparently
unproductive talks the PAG held
with Tunisian leaders on 1 July
regarding Tunis' Saharan claims,
a delegation headed by PAG Pre-
mier Ferhat Abbas worked out at
least a tactical arrangement
with Morocco. The PAG-Moroccan
communique of 7 July noted Moroc-
co's "unconditional" support for
PAG efforts to maintain the
integrity of Algerian territory,
its opposition to any attempts
to "partition or amputate"
Algeria, and--skirting the is-
sue of Morocco's claims to
Saharan areas--declared tha t
boundary problems were the con-
cern of the two states alone.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Indian and Tunisian
offi-
protocol from the
PAG recogniz-
cials in Rabat expressed
the
ing in general terms Morocco's
25X1
v~Yew to US officials that
Hassan II had extracted a
King
secret
claims to the Sahara and some
support of Morocco's claims to
Mauritania.
The Arab League Council
meeting in Cairo on 12 July
reached a temporary impasse on
Kuwait's membership in the
League. Kuwait's insistence
that its independence be guaran-
teed by the League may be re-
solved by the stationing of Arab
troops-excluding those of the
UAR and Iraq--in Kuwait in place
of British forces now there.
However, Iraq has charged this
would be tantamount to occupa-
tion of part of Iraq by Arab
forces.
Publicity on the Kuwait
issue has been largely supplanted
on Baghdad x adio by details of
the preparations for the cele-
brations on 14 July of the third
anniversary of the Iraqi Revolu-
tion. While maintaining its
claim to Kuwait as Iraqi terri-
tory, the Baghdad regime has re-
iterated that recovery of the
"lost province" will be carried
out by peaceful means. Press
stories that British technical
employees of,the Iraq. Petroleum
Company (IPC) will be replaced
by Italians have been formally
denied by the Iraqi oil min-
ister. It is improbable that
6~asim intends to nationalize the
IPC, because nationalization
would halt oil revenuds. Iraq
would be unable to market
the petroleum without the
company's distribution channels.
The British have begun
reducing their forces in Kuwait
uhder a plan of phased with-
drawal agreed with the Ruler.
Defense minister Watkinson
announced on 11 July th~.t all
British forces would be with-
drawn as soon as the situation
is assured. Unless requested
by the Ruler to effect an
immediate departure, London
apparently wants to retain at
least token forces in Kuwait
until the sheikdom's security
is protected by an Arab force
or some form of UN authority.
Meanwhile, British-Iraqi re-
lations have remained on a
business-as-.usual hncic
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CURRENT INTELLIGENCE WEEKLY SUMMARY
CONGO
Negotiations centering an
the composition of a new govern-
ment are continuing between rep-
resentatives of the Leopoldville
government and the Stanleyville
regime. Recent actions by the
central government, however,
indicate that it is attempting
to accommodate Gizenga where
possible. On 7 July,the cen-
tral government acceded to one
of his long-standing demands by
returning to Stanleyville seven
pro-Gizenga deputies who had
been under detention in Leopold-
ville.
The current pace of nego-
tiations makes it unlikely that
parliament will open on 1? July,
the date for which the Chamber
of Deputies has been called into
session by its presiding officer.
Army chief Mobutu has re-
iterated his support for a meet-
ing of parliament, and has
stated that he desires to keep
the army out of politics. Mem-
ories of ~Cobutu's 1960 coup--
which was prompted by annoyance
with the inability of Congolese
politicians to establish a stable
government--nevertheless have
inspired some uneasiness in Leo-
poldville. One pro-Gizenga
spokesman has expressed the fear
that "army elements" might at-
tempt a coup should parliament
approve a government not accept-~
able to them. Tshomb~'s ap-
parent intent to boycott parlia-
ment poses the threat that pro-
Gizenga forces will be able to
control parliament.
Mobutu appears to have been
balked in his campaign to re-
unite the Congolese Army under
his own authority. Kasavubu on
6 July repeated Mobutu's assur-
ances of amnesty for pro-Gizenga
forces in return for their rec-
ognition of the authority of the
central government; however,
General Lundula in Stanleyville
in a statement of 11 July said
merely that he would place his
forces at the disposal of what-
ever government emerges from the
forthcoming session of parlia-
ment.
In Elisabethville, Tshomb~
used the occasion of Katanga's
11 July "Independence Day" to
qualify his recent attacks on
the Leopoldville government.
He stated that Katanga favored
"association" with the Congo,
but implied that future "cooper-
ation" did not extend to Katanga's
subsidizing the Congo treasury.
On 9 July, he told a UN official
that he would not send a dele-
gation to parliament without
first attending a "summit"
meeting of Congolese politicans,
to be held outside the country.
Such remarks suggest that he is
returning to the delaying tactics
with which he sought to neutral-
ize moves toward utlity prior to
his incarceration in Leopold-
ville.
25X1
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CURRENT INTTLLIGENCE WEEKLY SU1RIdARY
Tshomb~'s return to Elisa-
bethville has tended to stimu-
late rather than to diminish
rivalries among Katangan leaders,
and has coincided with new fric-
tion between the Katangan gov-
ernment and the UN. The arrest
on 6 July of a Belgian consular
official by the Katanga govern-
ment--on the grounds that he was
unsympathetic to Katangan inde-
pendence--prompted the UN to
deport by force a Belgian ad-
The Castro regime's con-
tinuing silence on the recent
arrival of about 30 or 40 MI
aircraft in Cuba
celebrations scheduled for 26
July would provide an ideal
occasion to demonstrate some
of the new aircraft.
wiser whom it considered re-
sponsible for the arrest of the
consul. Tshombd reportedly has
rescinded an order by his sub-
ordinates closing the Belgian
~:onsulate. A U31 official has
quoted TshombE as complaining
that he was receiving bad advice
from his lieutenants, and that
even Vice President Kibwe "had
begun to lie to him."
Ambassador MacArthur in
Brussels notes that Foreign Min-
ister Spaak's efforts to cooper-
ate with the UN have already
aroused the animosity of Katan-
gan leaders, and believes that
Spaak will continue reluctant
to withdraw all Belgian offi-
cers from Katanga until he can
be reasonably certain that disor-
der will not ensue. Spaak con-
cedes that representatives of
Belgian firms in Katanga may be
encouraging Katangan separatism
to protect their economic inter-
ests.
S~GRET
25X1
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The Castro-controlled
press and radio are increasing
their build-up of the 26 July
celebrations. Foreign guests
coming to Havana for the festiv-
ities will include government
officials and prominent personal-
ities from Sino-Soviet bloc
countries, Latin American nations,
and other areas.
Soviet space man Yuri
Gagarin, who is scheduled to
arrive in Cuba on 24 July, is
the most widely publicized guest
to be invited. He is expected
to play a prominent part in the
proceedings. Many leftists
and Communists froAi other Latin
American countries are expected
to receive expenses-paid trips
to Cuba. Some of those invited
probably will remain in Cuba
for several weeks or months for
training in subversion, as has
been the case with many previous
visitors.
An AFP dispatch from Havana
on 3 July alluded to the recent
creation of an interim revolu-
tionary political organization
composed of the Popular Socialist
(Communist) party and the rem-
nants of Fidel Castro's 26th
of July movement. Described
as an organ to hasten the transi-
tion to a single "party of the
revolution," the new body is
referred to as the "Integrated
.evolutionary Organizations"
(OBI) and is alleged to be in
charge of the preparations for
the 26 July celebrations. The
report further suggested that
the establishment of ORI secre-
tariats, sections, and "revo-
lutionary nuclei" was already
an "accomplished fact."
Such a development would
constitute an important step
in formalizing the dominant
role of the Communist apparatus
in the Castro regime. Castro
and other regime leaders have
frequently stated that such a
union is necessary for the
"building of socialism" in Cuba.
Latin American Communist
leaders reportedly plan to hold
a meeting of labor leaders in
Havana at the time of the 26
July celebrations in an attempt
to prepare an organizational con-
gress for a new hemisphere labor
confederation. Communist leaders
are scheduled to meet separately
in Havana but will also devote
their attention to planning
the new labor body. The meet-
ings reflect a two-year Communist
drive to promote a new regional
labor organization which would
replace the ineffective CTAL,re -
gional affiliate of the Communist
WFTU and which would exclude the
participation of US labor rep-
resentatives.
The prospects for the
success of the Communist pro-
posal appear poorer now than
in 1959, partly because of in-
creased awareness of Castro's
ties with the bloc and the de-
cline of his prestige among or-
ganized labor groups since that
25X1
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CURIIENT INTELLIGENCE WEEKLY 3U~dHARY
DOMINICAN REPUBLIC
Mobs incited b the pro-
Castro Dominican Popular Move-
ment (MPD) staged violent dem-
onstrations in Ciudad Trujillo
on 7 July in the first signifi-
cant political action since the
Trujillo assassination. The
mobs, provided with incendiary
materials, sacked and burned
the studios of Radio Caribe,
which prior to its recent re-
organization had been closely
identif iec~ with the most f anat-
ical element backing the late
dictator.
Although the B~iPD is prob-
ably still small iri membership,
its aggressive agitation last
week--as well as during a brief
period of activity permitted it
by the late dictator last summer
--undoubtedly appeals to Domini-
cans anxious for the immediate
elimination of all traces of
Trujilloism and impatient with
the extreme caution thus far
shown by other opposition groups.
A Dominican student is reported
to have said last month that
students are so anxious for the
overthrow of the regime that
they would support a Castro-
sponsared invasion if they had
a chance and would "worry about
the consec~uenees later."
Also, by taking the lead in
anti-Tr~illo opposi.tiah and by
exhibitYng a potential for mob
action, the Mp1'has strengthened
its bargaining position for sig-
nificant influence in any coali-
tion of apposition groups. It
is already seeming to ally it-
self with the clandestine "14th
of June Movement," a. group b
undetermined pt~litical orienta-
tion with at least some member-
~hip in the middle class.
The ? July violence com-
pletely overshadowed the initial
efforts by three leaders of the
Dominican Revolutionary party
(PRA) to form an brganizatiori
within the Dominican Republic.
The P1tD, a party of Dominican
exiles with branches in the
United states, Venezuela, and
elsewhere in the Caribbean area,
has close ties with such reform-
ist Latin American leaders as
V;,~neztxelan President Betancourt
and former Costa ~tican President
Figueres.
The three le~.de~s returned,
after decades in exile, on 5
July after secu~^ing guarantees
from Balaguer th~.t they d-ould be
permitted tb campaign freely fcr
the promised electit5ris next day.
Public gatherings addressed by
the PRD leaders were org~,rized
by the MPD, which t~uick~.y stole
the Show . A 'radio program from
Cuba-~-the f fret of # series ens
titled "Patria Libre' sCl~eduled
to be broadcast three times a
week--strongly attacked the $RD
leaders, and described them as
"notorious agents" of the US
M ate Department and the FBI.
The potentially strong,
basically moderate,,dpposition
elements among the nbnliriican
middle class--the principal
victims of past '~rujillo terror
--will remain 'wary of playing
an active political role as long
as the police state structure
remains intact.
The American consul, however,
was informed on 10 July "in the
strictest confidence," that a
~rou> of moderate professional
and busif~es~ people plans Shortly
L-o form a "Civic Front for ~a~
tional Unity." The group, dedi-
cated to encouraging reforms
that would make free elections
~~o;~sible,would be ~xnti~Castro as
well as anti-Truj3.lto. It would
not become a nol~tti~al party br
~?articipatc in tlic election un~
:Less or ~.xnt i 1 convinced that
free elections are pos3ible. The
American consul believes tha.~
tZie formation cf this group would
mean a marked ir:~proveme~it in the
political situation:
Cri the day following the
riots, President Balaguer told
the American consul th~.t he was
contemplating actidii against biPD
leaders . lie .said ri2~D ).eader
Maximo Loped Moliti~. haft announced
to the pres:3 tYiat 14 members bf
the organisation would shot~tl~
arrive in the 17o~tinic~.n lepublic
from Cuba. B~.lagtier prdpoaes to
deny entry to these persons as
well as to any person coming from
Cuba "or other Communist-dominated
countries . " ~n addition, l~alag~r
said he intends to deport to Cuba
Lopez Molina, other Mf~~ 1''aders
who had come from C{ibaf a~d those
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CUR~tENT INTELLIGENCE WEEKLY SIIMMARY
responsible for the Radio
Caribe fire . He :repeatedly
stressed that he intended to
act "within the law" and that
the responsible opposition, in
which he specifically incYuded
the ~RD, would "enjoy coristitu-
tional rights."
In attempting to deal with
the MPD threat w~.thout reversing
his cautious efforts to create
a more democratic climate in the
country, Balaguer faces a deli-
cafe task. Undoubtedly, the ?
July riots increased pressure
within the regime for a return
to past repressive tactics
against ali opposition. The
violent reprisals on 7 and 8
July against the Mpb by the po-
lice and by mobs organized by
the government-GOntrolled Do-
minican party were reminiscent
of tactics employed by the late
dictator and revealed that the
old police mechanism remains
basically unchanged.
The American consul noted
on 3 July that the steps taken
by the regime. up to that point
to reform the Trujillo system
were. "encouraging," but he
warned that their .net effect.
should 'not be exaggerated. The
most important reforms have been
in the economic fie id and a~pe$r
to~ reflect at .east a temporary
reversal of -the late dictator's
concerted effort during the last
year of his life to destroy the
economic base of the riiddle
class.. Trujillo family monopo-
lies in coffee., and cocoa exports
have been broken up. Price's
have been cut on certain food-
stuffs and utilities,"and con-
aumers are commenting that the
reductions are by the same
amounts that formerly went to
Trujillo.
Until the violence of 7
July,no new polit~ioal arrests
or tortures had been reported
for two weeks and activities by
the secret police had been much
less evident. General Arturo
,Espaillat, one of the most brutal
and corrupt Trujillo henchmen,
has been stripped of all mili-
tary and government posts.
The new cabinet appointed
by Balaguer on 5 Juiy replaced
the one installed by the late
dictator and appears to be made
up of men of Balaguer's choice.
None of the new appointees ex-
cept the armed forces secretary
is believed intimately linked
t o the Trujillo family . The ne~v
foreign minister, Ambrosio
Alvarez, is a lawyer and former
member of the Dominican UN dele-
gation who has had many years
of experience in the Foreign
Ministry. American officials have
found. him friendly and coopera-
tive in the past. The appointees
include no leading anti-Trujillo
figures, but at least two of
them are close relatives of dis-
sidents implicated in opposition
plotting last year.
Although President-Balaguer
has assured American officials
that he intends to be President
in fact as well as in name, it
is still unknown how much lib-
eration wi 11 be perr~iitted by
General R~~.mf is Trujillo,
who retains the dominant posi-
~ion of power in the regime.
General Marte, who as secretary
for the armed forces is first
in line of succession to
,the presidency, is described
as a "semiliterate strong-
armed thug" completely
trusted by the Trujillo
family.
SCVIE'P INDUSTRTAL CONSTRUCTION LAGS
Problems of industrial con-
struction, particularly in the
chemical industry, have evident-
ly become serious enough in at
least three major areas of the
Soviet Union to require the di-
;rect intervention of one of Mos-
cow's top economic troui~le shoot-
ors, A. N. Kosygin. Kosygin's
trip last rionth to construction
sites and factories in Kuybyshev,
Saratov, and Kemerovo oblasts
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CURRENT INTELLIGENCE WEEKLY SUMMARY
was probably intended to give
him a chance to investigate at
first hand the inefficiencies
and shortages of building ma-
terials and equipment which have
plagued the construction pro-
gram at various locations
throughout the country.
One objective of Kosygin's
trip may have been to head off
the possibility of a disturb-
ance similar to that which oc-
curred in Karaganda in 1959 when
military action was required to
end a strike over poor working
and living conditions. This is
suggested by a letter published
on 16 June in an official So-
viet construction newspaper.
The letter, signed by 19
construction workers and offi-
cials, spoke bitterly of "mad-
house" conditions at Kuybyshev
construction sites. It com-
plained about shortcomings in
planning work schedules, about
supply failures whidh caused
illegal requisitioning, and
about lack of coordination be-
tween local and national organ-
izations. It blamed primarily
the local construction directo-
rate and asked whether there
were such conditions elsewhere.
Kosygin's stay in Kemerovo
was accompanied by a press ar-
ticle reporting nonfulfillment
of the 1960 coristructiori plan
in that area and lags in the
42 "especially important proj-
ects" them. Poor working and
living conditions were suggested
by the statement that last year,
in one construction trust in
Stalinsk, 3,348 workers were
hired but 1,91$ quit.
There have alsb been spe-
cific reports of lagging con-
struction in Saratov Oblast.
All three areas are undergoing
rapid industrial expansion, and
each has several installations
with substantial military as-
signments.
While Kosygin visited sev-
eral types of industrial con-
struction sites in each area, he
seemed to concentrate on the
chemical industry, in which con-
struction difficulties have been
pronounced. Just prior to
Kosygin's trip the chairman of
the State Committee of Chemistry
warned that only ten of 68 proj-
ects slated for top-priority
effort this year were on sched-
ule at the end of April.
Large investments in the
chemical industry in the first
two years of the Seven-Year Plan
have resulted in significant
production increases, but these
are still short of the 15-16 per-
cent rate of increase needed an-
nually to meet the plan. The in-
dustry has been harassed by a
continual lag in development of
new technological processes,
sporadic shortages of skilled
labor and electric power, short-
comings in planning, and short-
ages of chemical equipment.
An early repercussion of
Kosygin's trip was the firing of
a secretary of the party committee
for the city of Kuybyshev for
allowing his brother to build a
personal dacha with state build-
ing materials and labor. Before
it has run its course, the purge
there will probably involve
party and government leaders of
both the city and oblast, in-
cluding the sovnarkhoz and the
police. Similar purges will
probably take p
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CURRENT INTELLIGENCE ; NEEKL`Y" ~'~J'1~fARY
The late play issue of the
authoritative party journal Kom-
munist came out against the
wholesale conversion of collec-
tive farms into state farms, ap-
parently setting the official
line in the high-level contro-
versy over the development of
the Soviet farm system. As a
result, the pace of conversions
--except possibly in the crucial
New Lands and in areas around
large cities--will probably slow
down .from the high rate reported
fan 1960. Pressures to tailor
the collective farm (kolkhoz)
more closely to the state farm
(sovkhoz) pattern may also les-
sen for the time being.
Communist ideology has us-
ually maintained that state farms
are more efficient than collec-
tive farms and closer to the
ideal "aIl-national" property.
come economists have been arguing
that because the USSR has en-
tered the "transition to commu-
nism," it is time to speed the
rate of conversions to the "high-
er" state farm model, and that
this will solve the chronic prob-
lem of unprosperous 1{olkhozes.
come officials began pushing con-
versions,with the result that the
number of state farms jumped from
6,500 to ?,400 in 1960. Fir.st-
quarter reports for 1961 indi-
cate that conversions in the New
Lands have continued at a high
rate.
Dmitry Polyansky, party
presidium member and premier of
the RaFSR, attacked mass conver-
sions in his speech to the cen-
tral committee plenum in January,
but the issue apparently was not
resolved at that time. Other high
officials have recently condemned
the practice of converting weak
kolkhozes into state farms in
order to shift to the state the
burden of improving their economy.
Pre~:~:~ articles are again pointing
out the comparatively high costs
and low yields of state farms in?
important agricultural areas.
In May, :communist threw its
weight to the side of those offi-
cials and economists who support
vigox?ous development of collec-
tive farms--along with the state
farms--for some: time to come.
Kommunist declared the tend-
ency toward "indiscriminate"
conversions to be "deeply in-
correct" and ax?gued that its
proponents ignore the great
potentialities which the kolkhoz
system still has for increasing
agriculture output. These
people also were said to ignore
"the h;_gh state expenditures
necessary fox? such a reoganiza-
tion." The journal cited Khru-
shchev's speech to the 21st
party congress to the effect
that collective and state farms
would eventually be merged by
gradually transforming the col-
lective fax?ms into a new, still
undefined, organizational form
through interkolkhoz coopera-
tion and larger allocations of
farm income to capital invest-
ments.
Kommunist even argued that
the time or eliminating kolkhoz
private plots--a definite Commu-
nist goal--"has not yet come and
will not come as soon as some
people imagine." At present,
when many kolkhozes cannot guar-
antee theif~ farmers sufficient-
ly high incomes from the communal
sector and when many towns still
depend on private plots for food
supplies, some overly zealous
officials have added to agri-
cultural difficulties by ar-
bitrarily cixtting back private
farming.
Kommunist, along with Party
Life, has also rejected as pre-
mature the drive--which gained
momentum in 1959--to make
ko1L-:~ozes resemble sovkhozes
by paying collective farmers
the guaranteed monthly cash
wages of state farm workers.
Kommunist attacked the "incor-
rect view" that the distribution
of collective farm income on
the basis of "labor days" im-
pedes growth and that high
monthly cash payments--as yet
accomplished on only relatively
few farms--are a universal cure.
It argued that the introduction
of monthly cash wages has led
to losses on weak kolkhozes
which lack steady cash reserves.
Many of these farms have had
to return to the "labor-day"
system. (Con-
curred in y .~
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CURRENT INTELLIGENCE WEEKLY SUMMARY
EAST GERMAN MOVES TO COUNTER EVANGELICAL CHURCH CONGRESS
East Germany is stepping
up its moves against the Evan-
gelical Church's all-German con-
gress (Kirchentag) scheduled
to meet in West Berlin from 19
to 23 July. In an effort to~
reduce attendance by East and
West Germans, with the ultimate
aim of weakening the ties be-
tween church congregations in
East and West Germany, the re-
gime has opened a campaign of
threats and "persuasion" against
church officials and laymen to
induce them to boycott the con-
gress on grounds that the meet-
ing is a "cold war" tactic of
"militaristic" West German cler-
gymen. It has also refused
to run special trains for West
German participants; no measures
barring bus or air travel have
been announced to date. However,
West Berlin officials are making
tentative plans for some 50
special flights to Berlin in the
event East Germany stops buses
chartered for Kirchentag dele-
gates.
On 8 July, the East Berlin
police president formally banned
sessions of the Kirchentag in
the Soviet sector--a move de-
signed to silence claims of
church members that no East Ger-
man law forbids them to attend.
The new measure does not, how-
ever, indicate whether the re-
gime will forbid religious serv-
ices in the Evangelical cathedral
in East Berlin, a step it has
been reluctant to take. Church
officials have canceled all but
religious services in East Berlin.
On 11 July, apparently pur-
suant to the new order, East Ger-
man police in Rostock District
halted Bishop Friedrich Krum-
macher of Greifswald and seized
his identity card, on grounds
that he was en route to Berlin
to attend a pre-Kirchentag meet-
ing, which was prohibited. Krum-
macher was actually going to a
meeting of the East German bish-
ops' conference, of which he is
chairman,
Instead of intimidating the
East German clergy, the move may
have had the opposite effect:
Bishop Moritz Mitzenheim, gen-
erally considered pro-regime,
reportedly sent a letter to
Premier Grotewohl, "in the name
of all the representatives of
the church" in East Germany,
protesting against "this meas-
ure restricting a bishop in his
duty, .even though the measure
has meantime been withdrawn"--
presumably by returning his
identity card. Nevertheless,
the authorities will probably
attempt to confiscate laymen's
identity documents to keep them
from traveling to Berlin.
In its efforts to undercut
the congress, the regime is
handicapped by a desire to pre-
sent an image of tolerance and
reasonableness in support of
the Soviet campaign for a nego-
tiated settlement on West Berlin.
There is even a possibility that
the reversal of the police
measures against Krummacher
stemmed from Soviet action.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25X1
Pastors are said to have com-
plained to Soviet Embassy of-
ficials investigating worker
unrest at the Hennigsdorf plant
near Berlin that the campaign
against the Kirchentag was con-
tributing to unrest. The Soviet
diplomats reportedly said
Hennigsdorf woxkers would not
be molested if they attended the
Kirchentag.
Under other circumstances,
the East German government prob-
ably would use the congress as
an occasion for a showdown with
the Evangelical Church--the only
significant remaining all-German
institution. In the absence of
specific Soviet assent to harsher
measures, however, the regime
may limit its harassments to co-
ercion of its own population,
barring selected nest Germans
from traveling by road or rail
to West Berlin, and imposing
stronger controls at the Berlin
sectors borders to reduce at-
tendance at Kirchentag meetings.
SINO-SOVIET RIVALRY IN ASIA
Heightened activity by
Moscow and Peiping in relation
to the Asian Communist parties
during the past few months re-
flects the continued strain in
Sino-Soviet relations, now ex-
pressed in increased political
and economic rivalry rather than
in the doctrinal debates which
characterized the peak of the
dispute last year. Both powers
apparently recognized the dan-
gers to the international Com-
munist movement inherent in the
intemperate and open exchanges
of last year and seem to have
agreed at the Moscow conference
in November to keep direct at-
tacks at a minimum. Since then
the two countries have carried
their difference forward by vy-
ing for support from individual
Communist parties and regimes.
While the Chinese were not
able to move the larger Eastern
European Communist parties away
from close support for the So-
viet Union-, they can consider
Albania`s opposition to Khru-
shchev?s general policiea a
signal success. In addition,
China has significantly increased
its influence over the past few
years among the Asian satellites.
Now Moscow, with the example of
Albania fresh in mind, has ap-
parently turned its attention
to the task of consolidating
its position with the important
Communist parties of Asia.
The current attendance by
party presidium member M. A.
Suslov at the Mongolian Com-
munist party's 14th party con-
gress and the 40th anniversary
of the Mongolian People's Re-
public is merely the .latest
in a series of bilateral visits
between the Soviet party and
various Asian Communist parties.
Suslov also attended the Indian
Communist party congress last
April; Deputy Premier Kosygin
made a surprise visit to North
Korea in early June, which
North Korea's Premier Kim I1-
sung and an unusually strong
delegation returned in early
July; both Indonesian Communist
party leader Aidit and North
Vietnamese Premier Pham Van Dong
were made much of by all top
Soviet leaders when they visited
Moscow in June; and presidium
member N. A. Mukhitdinov is
scheduled to be present at the
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CURRENT INTELLIGENCE WEESLY SUMMARY
Japanese Communist party congress patty and support. The conclu-
at the end of this month. ~ sion of the mutual defense treaty
Suslov was the only im-
portant foreign Communist to
attend the Indian party con-
gress, and he apparently played
an important role. Moderate
elements backed by Moscow made
important gains, which they con-
solidated in the elections to
the party's two top committees
later in June. The results of
the congress and the make-up
of the new leading bodies could
hardly be looked upon with favor
by Peiping.
Moscow next turned its at-
tention to North Korea, and the
rapid .exchange of high-level
delegations resulted in the an-
nouncement on 6 July of a mutual
defense treaty formally commit-
ting the USSR to defend North
Korea in the event of attack.
Pyongyang has long desired a
stronger Soviet commitment than
Moscow has heretofore seemed -:.
willing to give. During his
visit to North Korea, Kosygin
had set the new tone by empha-
sizing Moscow's unwavering
support for North Korea's re-
unification programo
Kim-Il-lung's earlier dis-
satisfaction with Moscow was
possibly reflected in his fail-
ure to attend the Moscow con-
ference last November. During
the public Sino-Soviet dispute
preceding the conference, North
Korean editorial comment ap-
peared sympathetic to the Chi-
nese Communist viewpoint on a
variety of issues, and at the
conference the North Korean
delegate reportedly provided
valuable support for China on
these issues.
Peiping's extension of a
$105,000,000 loan to Pyongyang
in early October was still fur-
ther evidence of its intention
to stimulate North Korean sym-
between the USSR and North Korea
clearly reflects Moscow's de-
sire to counter Peiping's influ-
ence there as well as Moscow's
intention to appear responsive
to Pyongyang's desire for great-
er Soviet support.
The formal treaty, which
included a pledge to consult on
all important international
questions and to refrain from
"participating in any coalitions
or actin ns or measures directed"
against the other party, also
agreed to "develop and strengthen"
economic ties between the two
countries. On his trip to North
Korea, Kosygin was accompanied by
Moscow's top negotiator for long-
term economic programs with bloc
countries, and recent announce-
ments have indicated that an
agreement has been concluded on
the granting of new Soviet cred-
its to North Korea,.
Currently Moscow is de-
voting much attention to the
40th anniversary of the Mongo-
lien People's Republic. Not
only is Suslov lending his
prestige to the occasion but
Poland's Gomulka, a stanch sup-
porter of the Soviet Union, is
also in attendance. The material
being presented by Moscow on the
celebration stands in sharp con-
trast to the paucity of its
coverage of the recent 40th an-
niversary of the Chinese party,
and the message of the Soviet
party to the Mongolian central
committee. provides an equally
sharp contrast to the carefully
phrased, formal message to the
Chinese party.
An analysis of the messages
serif by bloc parties to the Chi-
nese party on its 40th anniver-
sary gives an accurate index of
their positions in the dispute,
The range is from Albania, which
adopted the Chinese line on many
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CURRENT INTELLIGENCE WEEKLY 3ITltIlARY
points in a manner . ~ctiff~fisi:v~ .-~,
to the USSR; through North Korea
and North Vietnam, which were
warm toward China but not in the
Albanian manner; to the remain'= ~~
ing East European satellites, :~~~
which were di~sti~netly cool toward
China. Mongolia carefully re-
served its position by sending
a very short innocuous telegram.
Peiping's actions during
this game period indicate that
it has no intention of standing
idly by while the USSR tries
to bolster its position among
the Asian parties at Chinese
expense. Pham Van Dong was
warmly received when he made
Peiping the first stop on his
current bldc tour. A group of
Japanese Communist leaders fol-
lowed shortly and were given
red-carpet treatment by Chinese
leaders. The Chinese very like-
ly took advantage of this op-
portunity to press their view
of the proper program the Jap-
anese party should adopt at
its congress later this month.
The Chinese are reportedly plan-
ning to send the highest ranking.
delegation Peiping has ever sent
to a Communist gathering outside
the bloc.
Earlier Peiping went to
considerable lengths to impress
the leader of the Indonesian
party, Aidit, who had just
visited Moscow. Like the Japa--~
nese, Aidit was honored with an
audience with Mao Tse-tung, and
the Chinese did not even scruple
at displaying Aidit prominently
at functions in Peiping honor-
ing Sukarno. According to cane
report, the Chinese treated the
Indonesian Communist leader as
through he ranked just below
Sukarno.
The most dramatic Chinese
move was the quick reaction to
the 6 July Soviet - North Korean
,,.
mutual defense pact. Chinese
Foreign Minister Chen Yi was
in Moscow en route home from
the Geneva conference when the
Soviet-Korean treaty was an-
nounced. He conferred with Kim
I1-sung the day of the signing
and, on the following day, it
was announced that Kim would
pay a visit to Peiping, al-
though that capital was not on
his original intinerary. When
Kim arrived in Peiping on 10
July, the Chinese turned out
all their top leaders except
Mao to give him a warm welcome,
and half a million flag-waving
Chinese cheered him on his way
from the airport to the city.
On 11 July the Chinese signed
a mutual defense pact with~North
Korea which is virtually identi-
cal with the one Kim had just
signed in Moscow.
Like the Soviet pact, the
Chinese treaty ,with North Korea
mentions economic assistance,
and it is possible that the
Chinese, despite acute economic
problems at home, may try to
match the new aid Kim got in
Moscow. Soviet aid to North
Korea has amounted to at least
$700,000,000, mostly for eco-
nomic construd~tion. Chinese
economic aid has totaled about
$400,000,000, including the
$1O5,000,000 credit extenlSed
last fall.
Whicle both the Chinese and
the Soviets seem to be at pains
to counter Western speculations
of Sino-Soviet competition in
this area, no protestations of
"unity" can submerge the clear
signs of their rivalry. A set-
back to Khrushchev on the Berlin
issue or the content of the new
party program which Khrushchev
intends to present to the Soviet 25X1
party congress in October might 25X1
lead Peiping to bring the dispute
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The official silence sur-
rounding economic developments
in Communist China since last
year continues to obscure the
serious difficulties that grip
both industry and agriculture.
The regime apparently is still
taking stock of industry, ad-
justing to its changed economic
relationship with the USSR,
and awaiting the results of
the 1961 harvest before moving on
to plans for further develop-
ment.
In industry, indications
are that recovery from the ex-
cesses of the "leap foward"
period is not proving easy. Re-
ports of production slowdowns
and stoppages at individual
plants began to appear in 1960
and have been more numerous in
1961. Official statements con-
tinue to reflect problems with
raw material shortages, labor,
and equipment. Production at
the Tangshan cement plant,
China's largest, is reported
to have dropped in 1961 to a
"small proportion" of normal.
Machinery breakdowns and raw
material shortages reportedly
caused the closing of two large
paper mills, and several rayon
plants and tine factories ear-
lier this year. Numerous pro-
duction stoppages, sometimes of
extensive duration, have been
reported from the textile cen-
ter of Shanghai.
There is little information
on the situation in heavy in-
dustry, but statements from Pei-
ping concerning a "large-scale"
campaign to overhaul equipment
in the iron and steel industry,
together with a switch to empha-
sis on quality rather than quanti-
ty, are interpreted to mean that
steel production is down compared
with the same period in 1960.
Peiping has also complained of a
lag in the extractive industries,
especially for coal and iron ore,
and warned of the possibility 25X1
that these industries might fall
"further behind" the demands of
nrocessin~ industries-
Peiping has also curtailed
new construction in industry.
Imports of machinery from the
bloc--usually an important source
of capital equipment--probably
will fall more than 50 percent
below the 1959 level in 1961.
The current retrenchment
program in industry--beyond an
outright suspension of production
at certain plants--probably en-
tails significant slowdowns through-
out industry in order to rebuild
stockpiles of fuel and raw ma-
terials and make major equipment
overhauls. This program and the
continuing shortages of raw materi
als, parts, and manpower--includ-
ing the depressive effect of food
shortages on labor productivity--
appear to characterize the sit-
uationin industry so far in 1961.
Peiping has not yet announced its
industrial goals for this year,
but there will probably be little
or no increase in heavy indus-
trial production and significant
declines in light industrial out-
put, with total industrial output
in 1961 probabl below that in 1960.
25X1
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Approval of the new Turk-
ish constitution in a national
referendum on 9 July is a major
step toward an eventual return
to representative government.
General Gursel--Chief of State
and leader of the ruling mili-
tary junta, the Committee of
National Union (CNU), since
last year's military coup--
again promised parliamentary
elections by mid-October in a
statement issued on 7 July,
According to present plans, the
government will revert to civil-
ian control immediately follow-
ing elections.
According to nearly complete
official returns, approximately
80 percent of the eligible voters
went to the polls, and the con-
stitution was approved by about
60 percent of the votes cast--
far below the percentage desired
by the CNU, which had hoped to
use the referendum as a vote of
confidence. Reports immediately
prior to the referendum, however,
indicated concern within the
government about getting approv-
al by even a bare majority.
The CNU and most political
parties had made an intensive
effort to secure a large affirma-
tive vote. CNU members visited
various parts of the country
speaking in support of the new
constitution. The largest po~-
litical party, the Republican
People's Party (RPP), organized
public meetings to acquaint the
people with provisions of the
constitution, and its leaders
called for an overt~vhelming "yes"
vote. Leaders of several smaller
parties which will participate
in the forthcoming elections
also called for approval by
the electorate.
Only the new Justice party
(JP) gave less than full support to
the constitution; its leaders
charged that the document con-
tained faults but emphasized
that the final decision was
up to the people. However,
the party's General Adminis-
trative Board announced that it
favored acceptance.
The results of the refer-
endum reflect both general voter
apathy and, apparently, consid-
erable disillusionment with the
handling of government affairs
during the past year by the
CNU. They can also be taken
as indicating continued opposi-
tion to the RPP and its antic-
ipated return to power following
the elections. The RPP was the
ruling party after the Turkish
revolution until 1950.
Many of those opposed to
both the CNU and the RPP are
former supporters of the
Democratic party (DP) of Adnah
Menderes and Celal Bayar,
ousted by the military coup in
1960, The largest number of
negative votes in the referen-
dum--in 11 of Turkey's 67
districts a majority of the
vote--came from former DP strong-
holds. The DP was outlawed
following the coup and many of
its supporters are believed to
have joined the Justice Party.
Trials of the DP leaders
continue but it now appears
probable that they will end
within a .few weeks. Death
sentences for many of the former
leaders have been anticipated,
and there is a continuing
possibility of serious disorders
if executions are carried out.
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POLITICAL STRIFE LIKELY IN NORTHERN RHODESIA
African nationalists in
Northern Rhodesia have called
for a program of "immediate
positive action" to protest
recent British proposals. for a
constitution for the protector-
ate. The program is likely to
involve strikes and boycotts.
Kenneth Kaunda, leader of the
United National Independence
party (UNIP), and his associates
have urged their followers to
refrain from violence. However,
influential extremists within
the party, although they have
subordinated ther~~selves to
Hondura's program in public,
continue to press in private for
a more active campaign.
Kaunda, moreover, is in-
censed at his recent detention
by Federation of Rhodesia and
Nyasaland officials at Salisbury
airport on his return from an
African nationalist meeting in
Accra. He may, therefore, be
less willing than in the ast
to advocate moderation.
white-dominated United Federal
Party (UFP) and conservative
Africans whose following among
members of their own race is
minimal.
Since the protectorate's
other white-led parties have
shown little vote-getting abl-
ity, the UFP is likely to domi-
nate the European sector of the
electorate. UNIP, however,
faces a strong challenge within
the African community from the
African National Congress, which
demonstrated its continuing
strength at a recent by-election,
and possibly from extremists in
its own ranks. Since the con-
stitutional proposals hold out
the possibility that the UFP
may pick up a few African seats
in addition to those represent-
ing its European membership,
the UNIP is faced with the
possibility of running a poor
second in any elections. The
"positive action" campaign is
an attempt to persuade the
British to shift the balance.
again.
The British constitutional
proposals envisage an extremely
complicated electoral system--
a Labor party spokesman termed
it a "dog's breakfast"--which
is designed to paper over racial
differences and to give the
balance of power to moderates
of both races. The implications
of these proposals hinge on
several unknowns, notably the
final delimination of constit-
uencies. However, it appears
that, while the constitution
as originally outlined gave a
slight edge to the UNIP and to
Africans sympathizing with it,
the revisions are shaded in
favor of Sir Roy Welensky's
American officials estima-
ted that the UNIP has between
300,000 and 400,000 dues-paying
members and that nearly a million
additional Africans would follow
its lead. It has extended its
influence deep into the rich
copperbelt area and dominates
the African mine workers' union.
It probably could disrupt much
of the Northern Rhodesian econ-
omy for a short period, par-
ticularly if it can mobilize
the mine workers behind its
political aims. Nevertheless,
Britain probably will try to
impose the revised constitution,
even if the arrangements cannot
last lon without African support.
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CURRENT INTELLIGENCE WEEKLYr9UMMARY
THE COMMON MARKET AND AFRICA
Considerable progress has
been made in the last few weeks
in preparation for the renegotia-
tion of the 1957 convention which
links the former French, Italian,
and Belgian territories of Af-
rica with the European Common
Market (EEC). Sixteen of these
seventeen countries--all of
which have acquired full inde-
pendence in the last four years--
seem interested in extending
their ties with the EEC after
the present convention expires
next year. They are, however,
demanding full political equal-
ity with their EEC partners, and
they may insist on continued
preferential access to the EEC,
despite the major disadvantages
this may involve for competitors,
notably ir. Latin America.
THE EUROPEAN COMMON MARKET
AND ASSOCIATED AREAS
- European Common Market (EE CI
? EEC Association Treaty signed 30 March 1961
African areas associated with EEC in 1957
Exocr EEC sror~s of Alger;o ho: in prn trice
been unclear. EEC treaty provides for
assonorion negoriariors "lore." wrth
Morocco, T~nisra, and Libya.
Sterling area in Africa
25X1
MAURITANIA
to UT O.REP,~
Of the various recent EEC-
African contacts looking toward
formal talks later this year,
the most significant appears
to have been the joint parlia-
mentary meeting in Strasbourg
late last month. It was attended
by representatives of the EEC
assembly and by more than 100
members of African parliaments,
and was characterized by unusual
unity among the Africans in
presenting their demands and by
eagerness on the part of the
Europeans to satisfy them. As
a result, a five-point resolution
was unanimously approved ca11-
ing for negotiation of a series
of new associative conventions,
creation of new EEC-African
institutions, and intensification
of economic, technical, and
cultural cooperation.
Most observers consider
this a hopeful outcome, but it
was achieved at least in part
by skipping rather lightly over
some problems. The Africans
endorsed the idea, for example,
that the association should be
open to all African states, but
--possibly with French coaching--
added the proviso that no asso=
ciate could also belong to
another economic grouping having
"incompatible objectives." In
effect, this would permit Ethio-
pia or Liberia to seek EEC asso-
ciation, but would exclude Ni-
geria as long as it is a member
of the Commonwealth, It is
apparently still assumed that,
in the event Britain joins the
Common Market, EEC and Common-
wealth preferences enjoyed by
the Africans will somehow be
merged.
Moreover, the conference
left vague how deeply committed
to retention of tariff prefer-
ences the Africans themselves
may feel. Although the final
resolution declared that the
"principle of preferential tar-
iffs cannot be placed in ques--
tion," it also urged that eco-
nomic cooperation be promoted
through stabilization of prices
of tropical products and estab-
lishment of systems of minimum
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market guarantees--which might
be alternatives to the prefer-
ence system. One African dele-
gate suggested that preferential
arrangements implied "economic
dependence" and should the~e-
fore be dropped.
The Africans, therefore, may
not be as wedded to .preferences
as the French have claimed, but
it remains questionable whether
substitutes will be given ,seri-
ous ,consideration. Paris is
already reacting negatively to
the US proposal that a study
group be established to consider
a "resources stabilization fund"
which would make compensatory
payments to countries producing
five major tropical products in
lieu of preferences on these com-
modities.
BRITAIN TO CUT OVERSEAS SPENDING
Because of an increasingly
adverse balance-of-payments po-
sition, Lorr3on is planning to
trim spending overseas at the
risk of jeopardizing established
military and economic aid pol-
icies. In the first quarter of
1961 the estimated balance-of-
payments deficit reached an an-
nual rate of $'750, 000, 000 and in
the year's first half--normally
a favorable time--Britain's
gold and dollar reserves fell.
by $50,000,000.
The Macmillan government
has been no more successful than
its predecessors in stimulating
the slow-growing British econ-
omy. It has apparently concluded
that entry into the Common Mar-
I~et would help. As an immediate
palliative, new measures to re-
strict domestic consumer demand
will probably be introduced this
month. Chancellor of the Ex-
chequer Lloyd in late June called
for reducing government spend-
ing overseas, especially mili-
tart' spending in areas where for-
eign exchange problems are in-
volved.
That half of Britain's
overseas forces stationed in
Germany accounts for almost all
of the $220, 000, 000 'spent an-
nu~.lly for military ~ zieeds out-
side the sterling area. The
Ang1o-German arms purchase agree-
rient concluded in late May ap-
parently has done little to re-
duce the urgency London attaches
to the problem; Bonn's announce-
ment on 5 July that it would
spend $7,500,000 annually for
five years on a European space
project based on Britain'v Blue
I Streak missile will not fully
satisfy London's needs.
The Macmillan government
may be expected to press new re-
quests for Bonn to offset the
costs of maintaining the British
Army of the Rhine; it will warn,
despite agreement in principle
on the desirability of building
up NATO's conventional forces,
that it may withdraw some of
its 55,000 men if such aid is
not forthcoming.
Britain's intention to pro-
vide increasing amounts of
,economic aid to underdeveloped
countries, especially in the
Commonwealth, is also threatened.
A British discussion with OECD
experts in Paris on 3 July
brought general agreement that
London should slow down the in-
crease in aid. Although in
his April budget speech Lloyd
anticipated an increase in the
$420,000,000 provided in grants
and loans for underdeveloped
areas last year-, it now is
evident that new aid proposals
will come under extremely close
scrutiny.
The US Embassy in London
notes, however, that the British
payments picture changes quick-
ly and that British policy
could be altered by evidence
of higher productivity as a
result of recent investment,
by better prices for sterling
area commodities, and by im-
proved markets in the United
States and Euro e.
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CURRENT INTELLIGENCE WEEKLY SU&IMARY
SPECIAL ARTICLES
MORALE IN COMMUNIST CHINA
Peiping's economic set-
backs of the past two years
have resulted in a general
erosion of public confidence
in the regime. The promises
made in 1958 for a better fu-
ture after "three years of
bitter struggle" are unful-
filled. The food shortages
of the past year have made the
people realize that living
standards are falling, not
rising. The constant shifts
in policy--although officially
justified as the "dialectic"
in action--confuse minor offi-
cials. The armed forces re-
ceive preferential treatment
in the form of better rations
and are almost certainly de-
pendable,but there have been
several reports of sympathy
shown by soldiers for the
plight of civilians.
discouraged by unrelenting pres-
sure to put forth exhausting
efforts which produced no real
gains, and a general apathy and
sullenness pervaded the coun-
tryside.
The food situation deteri-
orated to such a point by early
1961 that many peasants--as well
as many urban dwellers--were re-
duced to rations insufficient to
maintain health. At this point
discipline in rural areas appar-
ently began to break down. Many
refugees reported a sharp rise
in the incidence of petty theft--
mainly of food--as well as sit-
down and go-slow strikes. There 25X1
was much open grumbling and gen-
eral defiance of the local author-
ities.
The Peasantry
Despite the regime's at-
tempt to put the whole blame
for the food shortages on "na-
tural calamities," it is obvi-
ous to the peasant that much
of the difficulty stems from
official mismanagement. The
communes were bureaucratically
top-heavy, agricultural labor
was diverted to pretentious
but economically unsound proj-
ects, and farmers were given
little authority or incentive.
There are many reports that the
implementation of Mao Tse-tung's
"eight-point charter" for agri-
culture--which called for such
labor-intensive practices as
deeper plowing and closer
planting--decreased crop yields
in many localities despite the
additional work required of the
farmers. The farmers became
Peiping's present inclina-
tion is to take a conciliatory
attitude toward the peasants,
realizing that persistence of
their present attitudes would
defeat all measures to improve
the food situation. Last Sep-
tember a 12-point directive was
issued which ordered ''readjust-
ments" in the commune system.
The reforms include prohibitions
against the use of force by of-
ficials, insistence that the
peasants be allowed eight hours
of sleep a night, compensation
for property confiscated when
the communes were established,
and permission to cultivate pri-
vate plots. The peasants wel-
come the reforms but remain
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CURF~FNT INTF.:,LLIGENCE WEEKLY SUMMARY
skeptical of whether they will
actually be implemented in light
of previous experience with
fluctuations in the party line.
Intelligentsia and Students
In 1956-57, during the
b.ri.ef period- of. liberalization
--under the slogan "let a
hundred flowers bloom, let a~
hundred schools of thought con-
tend"--criticism of the regime
and party was condoned. The
slogan let loose a deluge of
antiregime commentary which
appalled the leadership. The
result was an abrupt halt. to
liberalization in the summer
of 1957 and a ruthless "anti-
rightist" repression during
which many intellectuals were
imprisoned.
Since then Chinese Intel-
lectuals have been careful to
conceal their antiz~egime senti~
menu. The regime, for its part,
retains a certain wariness of
the intellectuals for not hav-
ing "surrendered their hearts
to the party." The National
Congress of Writers and Artists
held last August emphasized the
urgent need to eliminate rem
nants of bourgeois influence
among the intelligentsia and
in general to promote strict
conformity with official views.
Peiping's current policy
is to ease restraints slightly
but to guide debate carefully.
The 1 March issue of Red Flag
revealed that the party was
reviving its ill-fated "hun-
dred flowers" slogan. Con-
scious of the cynicism which
attaches to that slogan, how-
ever, Peiping, has added a
new catch-phrase--the "meeting
of immortals."
Leading academic figures
are invited to informal sem-
inars of several days' duration
designed to bring out a general
endorsement of "correct" stand-
; points in the arts and sciences.
i To this end the meetings are
presided over by trusted party
officials who are enjoined to
avoid coercive techniques and
rather to allow an atmosphere
~ of "gentle breeze and mild
rain." Peiping claims that
much fruitful work has been ac-
complished in this manner. The
indications, nevertheless, are
that the intelligentsia remains
~ suspect and circumspect.
There is only scattered
evidence on the attitude of the
students. Compared with the
population as a whole, students
are in a favored position and
receive better rations
tent. here was apparen y wi e-
spread antipathy among students
to the slogan "let politics take
command," which discounted pro-
fessional aptitude and learning
in favor of political reliabil-
ity. Partly for this reason
and partly to conserve the stu-
dents' strength while rations
were exceptionally short, the
authorities dropped after-hours
political indoctrination courses
from the curriculum last winter,
In one of several known in-
stances of antiregime activity
on the part of students, a slo-
gan was found posted on the wall
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of a high school in Kwangtung.
It compared Mao Tse-tung to
Emperor Chin, who unified the
country for the first time un-
der a tyranny that ruthlessly
redistributed the population,
opened up virgin lands, burned
books, and executed scholars.
Party and Security Forces
Important as are attitudes
in the country at large, morale
in the party and army is the
crucial factor in any assess-
ment of the stability of pres-
ent leadership. The basic com-
mitment of these two key groups
to the regime still appears
strong, but there is some evi-
dence of declining elan among
enlisted men and members of
party cadres, many of whom are
sympathetic to the plight of the
population.
Members of both the army
and party cadres receive higher
food rations than the ordinary
citizen. Nonetheless both
groups had their rations re-
duced last winter, and in some
areas cadres were asked to set
an example to the citizenry in
volunteering to "save" grain.
This move was probably predicated
as much on the official desire
to curb popular resentment as
on the need to save food, but
to a certain degree it back-
fired by stirring up discon-
tent within the army and party.
Public security personnel
in Canton reportedly complained
of inability to do their work
well after ration cuts, and mil-
itary guards stationed near the
Hong Kong border on occasion
professed to be too tired and
too hungry to chase villagers
trying to escape to the Crown
Colony. There are numerous
reports that low-level offi-
cials looked the other way when
cases of petty theft came to
their attention.
Such officials have al-
ways occupied an uncomfort-
able seat within the power
structure. In case of trou-
ble, they are blamed for "de-
viating" from the party line;
when things are going well,
Peiping takes the credit. Peri-
odically the party launches
rectification campaigns to "pu-
rify?' its organization and make
certain that policy is being
correctly implemented.
Such a rectification pro-
gram has been carried out dur-
ing the last six months, aimed
principally at those "well-
intentioned" cadre members who
had implemented directives in
an overly zealous fashion--i.e.,
deviated to the "left." Inves-
tigation and objectivity have
been the keynotes of the cam-
paign. As a May issue of a
Peiping newspaper says in ad-
vising the '"cadre"--i.e., a
reliable dynamic activist ele-
ment in the party's program--
he must "neither fabricate
facts nor conceal them...in
the process of reporting on
the situation he must avoid
taking imagination for truth,
possibility for reality, parts
for the whole, trees for the
forest. Reporting false con-
ditions...will certainly mis-
lead the leadership and make
it impossible to arrive at a
correct judgment."
This line is difficult to
reconcile with the pressure to
falsify reports and statistics
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25X1
during the "great leap forward"
in 1958 and 1959. Anyone, who
reported actual conditions then
and did not "take possibility
for reality," would have risked
condemnation for deviating to
the "right . "
The Leadership
Peiping's shift toward
pragmatic policies has been
reluctant. The decision to
retrench was apparently made
at an unannounced high-level
meeting last July. An article
by the regime's leading eco-
nomic planner, Li Fu-chun, in
the 15 August issue o.f Red Flag
promulgated the new conserva-
five line. "Readjustments" in
the communes began shortly aft-
erward, but the hard decision
to import grain from the Nest
was presumably not male until
November, when the fall har-
vest was in.
The delay in official
recognition of realities may
reflect in part some diver-
gencies among the top Chinese
leaders, but the evidence is
inferential or speculative.
received the general impres-
sion that the leaders are "all
greatly worried by current
problems and are beginning to
get on each other's nerves."
Teng Tzu-hui, head of the
party's rural affairs com-
mittee, may also have been
implying difficulty in get-
ting agreement in top coun-
cils when he told a journal-
ist last fall that the regime
had had to scrap its agricul-
tural plan and would operate
on an ad hoc basis until 1962.
The postponement of the
National People's Congress un-
til fall also suggests that the
leaders have not yet been able
to work out longer range plans.
The Congress--Communist China's
legislature--has served as the
regime's annual public forum for
announcing new programs.
There are ot}ier intima-
tions of disagreements in the
party in an ideological debate
running through the theoretical
journals during the past year
between the pragmatists and the
radicals. Couched in Communist
jargon on the nature and role
of "subjective activity, " the
controversy in essence is over
recent propensities of the re-
gime to disregard material lim-
itations in its efforts to trans-
form the Chinese economy. In the
course of the debate the pendu-
lum has swung back and .f.orth
several times; in the spring a
temporary compromise was reached
under the slogan "combine rev-
olutionary zeal and the scien-
tific spirit," but the most re-
cent articles on the subject give
the edge to the conservatives.
Whatever the differences
among them, the debate sug-
gests that the Chinese Com-
munist leaders have been af-
fected by the mood of the coun-
try, realize the population
can be pushed no further for
the moment, and are advancing
a theoretical justification
for the concessions they deem
necessary.
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