CURRENT INTELLIGENCE WEEKLY SUMMARY

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SECRET
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
COPY NO. ~"
OCR NO. 0305/61
9 November 1961
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
SECRET
State Dept. 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
T H E W E E K I N B R I E F
(Information as of 1200 EDT 8 Nov)
EAST-WEST RELATIONS . . . . . . . . . . . . . . . . . . . Page 1
Soviet moves following the 22nd party congress have
maintained the pattern the USSR has pursued since the
Vienna talks last June: pressure and intimidation tactics,
combined with hints of flexibility in negotiations for a
compromise settlement on Berlin. The TASS statement of
5 November which implied that the USSR will conduct fur-
ther nuclear tests if the Western powers continue testing,
particularly if the US undertakes atmospheric tests, sug-
gests that Khrushchev feels he must maintain the war of
nerves to achieve his objectives in Berlin. At the same
time, however, statements by Khrushchev and Ulbricht on
Berlin and Germany reflect Moscow's desire to hold out the
prospect of a negotiated settlement.
The Finnish Government, in response to the Soviet note
of 30 October calling for consultations on the "military
threat" from West Germany, has announced that Foreign
Minister Karjalainen will go to Moscow to discuss the note.
Karjalainen's mission is to seek clarification, not to
negotiate.
SOVIET BLOC REACTION TO THE RENEWED DE-STALINIZATION
CAMPAIGN . . . . . . . . . . . . . . . . . . . . . . . . . Page 4
The new attacks on Stalin at the recently concluded
Soviet party congress have provoked widespread debate and
apparently caused considerable shock among Soviet citizens.
Ambassador Thompson believes the people now will expect
further democratization of the system. It is unlikely,
however, that the regime will feel compelled by any public
expression to relax controls further. In Eastern Europe,
indications of official concern range from fear of public
pressure for more liberalization in Poland to a defensive
attitude on the part of the leaders in East Germany.
CHINESE RESPONSE TO KHRUSHCHEV'S CHALLENGE .
. Page 6
No authoritative party statement of Peiping's position
on the Albanian issue has been forthcoming; Chinese prop-
aganda continues to be indirectly critical of the Soviets,
but it falls short of the denunciation that the Albanians
may desire. The People's Daily editorial on the 44th anni-
versary of the Oc o ear evolution specifically alluded to
Stalin's role in carrying forward Lenin's work and to the
"12 socialist countries"--a reminder to the Soviets that
as far as the Chinese are concerned, the Albanians are still
members of the bloc. Peiping's message of greeting to the
Albanian party on its 20th anniversary--endorsing the "cor-
rect" leadership of Enver Hoxha and praising Tirana's role
in "preserving the purity of Marxism-Leninism"--suggests
that the Chinese will continue to support Hoxha in the face
of Soviet efforts to undermine his leadership.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
CONGO . . . . . . . . . . . . . . . . . . . . . . . . . . Page 7
The Adoula government, routed in its initial military
foray against Tshombd, may try to recoup by moving eastward
from Kasai into northern Katanga in support of a "shadow
regime" it is trying to develop there. Leopoldville's ef-
forts, however, may be undercut by Gizenga, who has refused
Adoula's requests that he return to Leopoldville and who
is moving troops south in an apparent attempt at an attack
of his own on Katanga from Kivu Province. Tshombd returned
from Switzerland on 6 November; he says he is still willing
to meet Adoula on neutral ground.
SOUTH VIETNAM . . . . . . . . . . . . . . . . . . . . . . Page 9
Viet Cong pressure on the Diem government is continuing
to increase throughout South Vietnam; the Communists appear
capable of mounting large-scale attacks at almost any time
or place. Communist activity registered a new high in Oc-
tober, and heavy - 24 - ghting has again occurred in the past
two weeks. Propaganda from Moscow, Peiping, and Hanoi has
strongly denounced alleged intentions of the US to increase
its military commitment in South Vietnam.
LAOS . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 11
Souvanna, in the face of Vientiane's refusal to agree
to a meeting at the Plaine des Jarres, now is reported will-
ing to have further talks on neutral territory. The Inter-
national Control Commission has sent a message to the three
princes urging a meeting "without delay." The most signif-
icant military action of the week was the enemy attack
on a Meo post near Xiena Khouang town. Hard bargaining con-
tinues at Geneva.
FRANCE-ALGERIA . . . . . . . . . . . . . . . . . . . . . . Page 11
Indications are that talks between the French and the
Algerian rebel government are in progress. General Salan's
Secret Army Organization is reportedly continuing preparations
to seize power in at least part of Algeria, and may attempt
to do so if Paris seems about to reach an understanding with
the rebels. 25X1
Page 13
Following new outbreaks of rioting in several Ecuado-
rean cities, President Velasco was forced to resign late on
7 November, but his successor remains in doubt. Vice Pres-
ident Arosemena, a leftist who had rounded up considerable
congressional support for his move to impeach Velasco, has
reportedly been recognized as President by Congress. Mil-
itary leaders, however, have asserted that the constitutional
order has been broken and have named a right-wing social-
ist, Supreme Court Justice Camilo Gallegos, as acting pres-
ident. A possible compromise figure is Reinaldo Varea Dono -
so, who as vice president of the Senate ranks third in the
constitutional succession and is also a professional mil-
itary man. 25X1
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Page 14
Labor delegations from several bloc countries are en
route to Havana for labor rallies later this month. There
have been some recent instances of sabotage and other anti-
Castro activities on the island, despite a steady increase
in the number and efficiency of the regime's security forces.
Other Latin American governments are still split over the
question of joint action on the Cuban problem; Venezuela
is considering an early break in diplomatic relations with
Cuba.
Page 15
President Frondizi's efforts to reorganize the Argen-
tine railway system, including a one-third reduction in per-
sonnel, have been countered by a rail strike and a support-
ing general strike on 7-9 November observed mainly by indus-
trial and port unions.
Fronc z
as taken strong security precautions, including a military
alert.
25X1
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THE UN SECRETARIAT UNDER U THANT . . . . . . . . . . . . . Page 17
U Thant's appointment as interim UN secretary general
by consensus in the Security Council and the unanimous en-
dorsement of the General Assembly will be interpreted as
giving him considerable latitude to act as the sole execu-
tive of the Secretariat. Thant will probably lean over
backward in an effort to be impartial and insist on specif-
ic authorization for UN operations. He is unlikely to
exhibit the strong executive leadership frequently exercised
by Hammarskjold.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
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ALBANIAN PARTY BOSS ENVER HOXHA . . . . . . . . . . . . . Page 18
Enver Hoxha over the years has eliminated all opposi-
tion to his rule in the party and has used Stalinist meth-
ods to perpetuate the party's domination in Albania. Since
he is so well entrenched and, in addition, enjoys some
popular support, Soviet efforts to unseat him appear to
have little chance of success. (Confidential)
EAST GERMAN ECONOMIC DEVELOPMENTS . . . . . . . . . . . . Page 20
Agricultural production in 1961 is probably less than
in 1960. The pace of industrial development has slowed
down, and the planned growth rate is not being met. The
regime has admitted that production is below plan in key
industries such as metal processing. Industrial manpower
requirements appear to have been given priority over recruit-
SEVERE DROUGHT IN YUGOSLAVIA . . . . . . . . . . . . . . . Page 21
A severe drought in Yugoslavia threatens the regime's
economic plans. Several important industries have had to
cut back production because of hydroelectric power short-
ages, river transport has almost come to a halt, and a
poor harvest is in prospect. These reverses, which will
adversely affect Yugoslavia's foreign trade and exchange
positions, come at a particularly bad time; at the first
of the year, the country began an economic reform program
ing for the military services.
designed to enhance domestic competition and make the
Yugoslav economy more responsive to foreign markets.
BLOC ACTIVITY IN WORLD RUBBER MARKET . . . . . . . . . . . Page 22
After a sharp decline in 1960, Soviet imports of
natural rubber this year are approaching a record level.
Rubber is one of the few critical commodities Moscow must
procure from non-bloc sources. The step-up appears to
result from economic rather than military factors. East
European satellite purchases are also rising, but not so
sharply. Communist China's foreign exchange troubles and
curtailed production have reduced its rubber imports to
BLOC ECONOMIC ASSISTANCE TO THE SOMALI REPUBLIC . . . . . Page 23
The USSR and Czechoslovakia have provided almost 65
percent of the approximately $90,000,000 in foreign grants
and credits now available to the Somali Republic. The USSR
has provided credits of $44,000,000 for agricultural and
industrial development and $7,700,000 to finance the pur-
chase of Soviet commodities. Czechoslovakia has extended
less than half the level of recent years.
$5,600,000 in economic aid.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
SPECIAL ARTICLES
ECONOMIC PROSPECTS IN NORTH KOREA . . . . . . . . . . . .
North Korea, which has most of Korea's natural re-
sources and industrial assets, has made greater economic
progress than South Korea and has substantially reduced its
dependence on other members of the Communist bloc. Pros-
pects under Pyongyang's new seven-year plan (1961-67) are
for further industrial expansion, although at lower rates
of growth, and for continued low priority for agricultural
and consumer-goods production. The consumer in North Korea,
as in most Communist countries, has an adequate but unvaried
diet and must be content with generally drab conditions and
consumer goods, of poor quality. Living standards in South
Korea are approximately the same.
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IT :SIT ITNTIELJ"IG:NC 11 ; :,Y SUMMARY
WEEKLY REVIL'W
EAST-WEST RELATIONS
Soviet moves following the
22nd party congress have main-
tained the pattern the USSR has
pursued since the Vienna talks
last June, combining pressure
and intimidation tactics with
hints of flexibility in nego-
tiations for a compromise settle-
ment on Berlin. The TASS state-
ment of 5 November which implied
that the USSR will conduct fur-
ther nuclear tests if the Western
powers continue testing, particu-
larly if the U undertakes at-
mospheric tests, strongly sug-
gests that Khrushchev feels he
must maintain the war of nerves
to achieve his objectives in
Berlin. At the same time, how-
ever, statements by Khrushchev
and Ulbricht on Berlin and Ger-
many reflect Moscow's desire to
hold open the option of a nego-
tiated settlement.
Nuclear Testing
In reaction to President
Kennedy's 2 November statement
on US testing plans, the 5 No-
vember TASS statement argued
that the USSR might have to con-
tinue its tests if Western test-
ing, particularly US testing in
the atmosphere, placed the Soviet
Union at a military disadvantage.
The TASS statement was more cau-
tious than the position Khru-
shchev is reported to have taken
in talks with Italian Minister
Codacci Pisanelli on 3 November;
that the Soviet Union would con-
tinue its nuclear tests if the
"Uni't^d States" resumed "atmos-
pheric" explosions.
with the newsmen, but TASS trans-
mitted his formal toast. In the
toast he acknowledged the dangers
to human health from testing but
said nuclear war would be more
dangerous,
The TASS statements, quoting
"leading circles in the USSR,"
charged the President's statement
shows that the US is seeking an
"illusory superiority in nuclear
armament." Noting that the USSR
has conducted fewer tests than
the combined total of the US,
Britain, and France, the TASS
statement asserted that the Soviet
Union h.-is a "full moral right
to equalize the situation and
not to allow a discrepancy" be-
tween the number of Western and
Soviet tests, It ignored the
President's offer to conclude
a test ban treaty with adequate
inspections and controls, and
repeated the standard Soviet
proposal to sign immediately a
treaty on general and total dis-
armament which would discontinue
tests permanently.
In the UN debates on the six-
power resolution calling for an
end to testing, Soviet delegate
Tsarapkin insisted that suspen-
sion of tests could not be di-
vorced from the question of com-
plete and general disarmament.
After failing to defeat an amend-
ment omitting a reference to com-
plete and general disarmament, the
Soviet bloc voted against the reso-
lution, Tsarapkin also adopted an
adamant stand against the US-UK
resolution calling for renewed
test ban negotiations. He relied
heavily on the arguments in the
TASS statement, claiming that the
U3 was seeking to prevent further
Soviet tests and gain a military
preponderance through a test ban
treaty,
Speaking with newsmen at
a 7 November Kremlin reception,
Khrushchev asserted that "we
will stop nuclear tests when
other powers stop." He was also
quoted as saying "there will be
more Soviet tests if the West
goes on testing." He also ap-
peared to deny that there would
be another 50-megaton explosion.
He parried a question as to
whether the current test series
is completed. Moscow did not
report his impromptu remarks SEC.
Berlin and Germany
In impromtu remarks at a
Kremlin reception on 7 November,
Khrushchev said he was willing
to be patient and wait for the
k t to take the initiative on
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CURRENT INTELLIGENCE WEEKLY SUMMARY
negotiations on Berlin and Ger-
many. He reiterated that the
date was not important, but
warned that the Soviet Govern-
ment could not wait forever.
According to Western press
reports, Khrushchev on 3 Novem-
ber told Pisanelli that the
Soviet Union wanted a "proper
settlement" of the Berlin dis-
pute and therefore did not in-
tend to act hastily. Khrushchev
was said to have made the remark
in explaining his statement to
the congress that the USSR would
not hold to its year-end dead-
line for a German peace treaty
if the Western powers displayed
readiness to negotiate. Khru-
shchev reportedly agreed with
the Italian minister's assertion
that "we must have negotiations
and negotiations mean not only
to receive concessions but to
make concessions." Pisanelli
said that Khrushchev expressed
the view that negotiations were
necessary and the only way out
of what he described as the
present "difficult international
situation." There is no Soviet
version of the conversation.
Speaking at the East Berlin
airport on his 3 November return
from Moscow, East German party
chief Ulbricht put primary em-
phasis on a Berlin solution
separate from a German peace
treaty and endorsed further
Soviet-US talks or four-power
negotiations, without mention-
ing East or West German partici-
pation. He also supported a
"phased reduction" of troops
in Berlin and a settlement of
access either through an agree-
ment between the "interested
parties" and East Germany or
between "an independent and
neutral" city of West Berlin
and the East German regime.
While Ulbricht reaffirmed that
a peace treaty was necessary,
he did not present this with a
sense of urgency.
Pravda published an account
of Ul richt's speech, emphasiz-
ing his endorsement of US-Soviet
discussions on Berlin, but omit-
ting his statements relating a
peace treaty to resolution of
the West Berlin problem.
The separation of a Berlin
solution from the standard Ger-
man peace treaty context was
also reflected in the final reso-
lution of the Soviet party con-
gress, which dropped the usual
language calling for a Berlin
solution on the basis of a peace
treaty and merely referred to
the Soviet proposal to normalize
the situation of West Berlin.
According to the US Embassy in
Rome, the pro-Communist newspaper
Paese, in a 2 November article
commenting on the conclusion
of the congress, played up the
omission of the idea of "solving
the Berlin problem on the basis
of a German peace treaty" and
described it in a sub-headline
as "an important concession to
the West." The Italian Commu-
nists have frequently used Paese
to float trial balloons for
Soviet policy.
During the last week the
Soviets have set the stage for
further encroachments against
Allied travel with the objective
of converting the East Berlin sec-
tor border to an international
frontier. On 3 and 4 November,
the East German police refused to
accept from members of the Danish
and Norwegian military missions
in West Berlin accreditation
documents issued by the Allied
Control Commission. They have
also refused to accept as suf-
ficient the identification cards
issued by the Allied military
mission for civilian personnel,
and have demanded passports in-
stead. For several days the
East German police also harassed
US army vehicles making routine
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patrols in East Berlin. In
addition, the USSR again pro-
tested Allied flights over East
Berlin, asserting that this was
East German territory.
Ambassador Thompson feels,
on the basis of his conversa-
tions with Gromyko and Deputy
Foreign Minister Kuznetsov, that
eventually the East Germans will
demand identification from mili-
tary personnel. In this connec-
tion there are some indications
that the checkpoint for Allied
personnel will be shifted from
Friedrichstrasse to an entrance
point in the British sector.
The USSR has indicated it will
accept West Berlin police con-
trols over Soviet military per-
sonnel entering West Berlin.
The Finnish Government, in
response to the Soviet note of
30 October proposing talks on
defense measures, has announced
that Foreign Minister Karjalainen,
accompanied by three officials
of the Foreign Ministry, will
meet with Soviet Foreign Minister
Gromyko on 11 November in Moscow
for "exploratory" talks on the
Soviet note. According to a
Finnish Foreign Ministry spokes-
man, the meeting is not to be
regarded as "consultation"
under the terms of the 1948
treaty of friendship and mutual
assistance. Karjalainen has not
been authorized to negotiate
but only to seek clarification.
The Finns apparently are
trying to determine exactly what
the USSR has in mind before open-
ing formal talks. The Finns want
to avoid any implication that
they accept the Soviet contention
that there is any threat posed
by West Germany and its allies
to the security of Finland or to
the USSR via Finnish territory.
President Kekkonen, follow-
ing his return from the United
States on 3 November, sought in
a radio and television broadcast
to reassure the Finnish public
that the nation's independence
and neutrality are not threat-
ened by the Soviet move. He dis-
counted the idea of an attack on
the USSR through Finland, al-
though he conceded that the ou125X1
break of a general war could 25X1
lead to violations Of Finnish
land, sea or air space.
Official public reaction in
Scandinavia has been restrained,
but Scandinavian leaders have
privately expressed their deep
concern over the possible conse-
quences of the Soviet move for
Finland and Scandinavia. For-
eign Minister Lange of Norway
appears to be unusually disturbed.
The periodic meeting of the Nor-
dic prime minister:; in Finland on
11 and 12 November will provide
these officials with an oppor-
tunity for a first-hand exchange
of views.
Soviet propaganda following
up the note seems designed to
play down any suggestion of a
crisis in Soviet-Finnish re-
lations. The first indication
to Soviet readers of any re-
action appeared in a 3 November
Izvestia article which carried
an account of Kekkonen's state-
ment in Los Angeles that the
Soviet proposal for consulta-
tions is a legitimate request
based on the Soviet-Finnish
treaty. Pravda on the following
day noted Kekkonen's return to
Finland and reported a meet-
ing of the Soviet-Finnish So-
ciety in Helsinki at which the
Soviet ambassador delivered a
message of greetings from Khru-
shchev. Moscow also publicized
a lengthy summary of Kekkonen's
5 November speech. Soviet broad-
casts have commented extensively
on the situation but with primary
emphasis on the threat of German
influence in Northern Europe.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
SOVIET BLOC REACTION TO THE RENEWED DE-STALINIZATION CAMPAIGN
The new attacks against
Stalin at the recently conclud-
ed Soviet 22nd party congress
have provoked widespread de-
bate and apparently caused con-
siderable shock among Soviet
citizens. Ambassador Thompson
believes the people now will
expect further democratization
of the system. It is unlikely,
however, that the regime will
feel compelled by any public
expression to relax controls
further.
In Eastern Europe, indi-
cations of official concern
range from fear of public
pressure for more liberali-
zation in Poland to a de-
fensive attitude on the part
of the leaders in East Ger-
many.
Reaction in USSR
According to the US Em-
bassy in Moscow, the Soviet
public appears to be in a
state of agitation over the
new charges leveled against
Stalin and the dramatic re-
moval of his body from its
place beside Lenin in the mau-
soleum. The most striking
manifestation is the extent
of relatively open public
discussion.
Younger people who grew
up under Stalin and were taught
to deify him appear to be most
disoriented, while older
citizens who remember the ter-
ror in that period seem more
inclined to approve. Anger
at having been seriously misled
for so long as to the true
nature of Stalin's rule is
apparently widespread.
Khrushchev's first attack
on Stalin, his speech to the
20th party congress in 1956,
was circulated only among the
party elite. Rumors of it
spread throughout the Soviet
Union, however, and for a while
caused considerable confusion
and some outbreaks, as in
Georgia, Stalin's birthplace.
Public concern soon died away
in the face of the official
line in the press--that Stalin
committed "errors" as a re-
sult of the cult of personality
but was deserving of respect
for his great contribution
to the building of the Soviet
state.
Speeches at the 22nd
congress were the first
charges to reach the general
public that Stalin was guilty
of murder and mass repressions.
The decision to bring these
charges into the open was pre-
sumably based in part on Khru-
schev's belief that the public
was sufficiently prepared and
politically mature to hear
the full story.
Satellite Reaction
Indicative of the con-
cern in Eastern Europe was the
recent statement by a Polish
politburo member
that he foresees new
and uncontrollable public
pressures within Poland for
greater freedom. He feels,
moreover, that within the
party these pressures will
be bolstered by the vigorous
reappearance of "revisionism"
--i.e., advocacy of more
liberal policies. Reflecting
such a tendency, an article by
party secretary Zambrowski in
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the 31 October issue of the
official party daily called
for a higher degree of inner
party democracy--a formulation
reminiscent of 1955-56, when
the Polish party was strug-
gling to overcome its own
brand of Stalinism.
Warsaw's leaders are con-
cerned with maintaining the
political stability which they
have gradually, and without
resort to terror, created in
the country since 1957, and are
fearful that the middle course
steered by Gomulka will be
upset by the outspoken liberals
in the party.
The de-Stalinization cam-
paign is likely to have even
greater, although quite dif-
ferent, repercussions in East
Germany, since party boss U1-
bricht appears to have gone
further than any other satel-
lite leader in recent years to
promote his personal leader-
ship.
Typical of the convolu-
tions party spokesmen are going
through was the performance of
Hermann Axen, chief editor of
Neues Deutschland, on a tele-
vission program on 1 November.
In discussing the lessons to
be drawn from the Soviet con-
gress, he admitted that some
East Germans "had perhaps not
fully grasped the difference
between the concept of the
personality cult and that of
appreciation of the role of
personality." Axen claimed
that Ulbricht, "like Khrushchev,"
merely represents the party's
"collective leadership," and
that when he speaks, "with his
great ability to analyze the
situation, it is not just his
opinion but the opinion of the
politburo and the central com-
mittee."
A regime spokesman re-
portedly has stated that East
Germany will gradually re-
move memorials to Stalin. Pos-
sibly reflecting a similar con-
cern, the Bulgarian Government
on 4 November decreed that all
projects and locations bearing
the name of Stalin shall be re-
named in honor of Lenin.
The anxiety and uncertain-
ty among Polish and East Ger-
man party leaders may also exist
to a lesser or greater degree
elsewhere in Eastern Europe.
In those satellite parties
where they exist, revisionist
party elements have largely
remained quiescent in recent
years, but they now may see
a new opportunity to push their
views. Nevertheless, they will
find it difficult to challenge
the party leaderships because,
in contrast to 1955 and 1956,
emotions among the East Europe-
ans are no longer as strained
as they were under Stalinist
repression and the revisionist
elements probably do not have
much backing within their re-
spective parties.
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%we 1.80,
SECRET
CHINESE RESPONSE TO KHRUSCHEV'S CHALLENGE
Peiping's official response
to Khrushchev's challenge on the
Albanian issue may come in the
Chinese Communist party's theo-
retical journal, Red Flag; the
issue due to appear on r- No-
vember has been delayed. The
Chinese propaganda line is in-
directly critical of the Soviets
but short of the denunciation
the Albanians may desire.
While not criticizing Khru-
shchev directly, the Chinese
Communist party's message of
greeting to the Albanian party
on its 20th anniversary takes
implicit issue with Soviet
charges that Albanian policy is
"incompatible with Marxism-
Leninism." Broadcast by Peiping
on 7 November, the message lauds
Albania's role in "preserving
the purity of Marxism-Leninism"
and alludes to the "profound
comradeship-in-arms" between
Peiping and Tirana. It specif-
ically endorses the "correct"
leadership of Enver Hoxha, de-
scribing him as the "long-
tested" leader of the Albanian
people. The message suggests
that the Chinese will continue
to support Hoxha in the face of
Soviet efforts to undermine his
leadership.
The Soviet ambassador's at-
tacks on the Albanian leaders
at the reception in Peiping
reportedly provoked the Albanian
guests to walk out, while Chi-
nese officials there refused to
applaud the Soviet remarks. The
People's Daily editorial on the
anniversary, moreover, specifi-
cally referred to Stalin's role
in carrying forward Lenin's
work and alluded to the "12 so-
cialist countries"--a count
which includes Albania--as a
reminder to the USSR that as
far as the Chinese are con-
cerned, the Albanians are still
members of the bloc.
In keeping with Soviet at-
tendance at recent Chinese func-
tions, Peiping sent only a low-
level delegation representing
the Sino-Soviet friendship as-
sociation to the celebrations
of the 44th anniversary of the
October Revolution in Moscow
on 7 November. While Peiping
and Moscow have exchanged the
customary affirmations of
friendship and unity during
these celebrations, the cere-
monies also served to expose
the continuing frictions.
The Chinese press has
printed the texts of attacks
on the Hoxha leadership by So-
viet and other Communist speak-
ers at the Soviet party congress.
In covering the Albanian side,
People's Daily on 6 November
published tie caustic editorial
from the 1 November issue of
the official Albanian paper,
which called Khrushchev a
liar, slanderer, bully, anti-
Marxist intriguer, and dis-
rupter of bloc unity. The
head of the New China News
Agency in Paris recently
made many of the same accu-
sations against Khrushchev,
although it is not certain
to what extent he was reflect-
ing established Peiping pol-
icy. The Soviets have
denounced such state-
ments as hypocritical and
slanderous, and Peiping's
move to print Tirana's
invective is indicative
of Chinese refusal to
be intimidated by Soviet
rancor.
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SECRET 1400
Adoula's "police action"
to end Katanga's secession
collapsed on 4 November fol-
lowing the defeat of Congolese
Army (ANC) incursions into
Katanga from Kasai Province.
Leopoldville had used three
battalions for the main "thrust"
aimed at taking Kaniama and
its airstrip. Although the
UK command declared Katanga's
defense action a violation of
the cease-fire and ordered UN
ground and air patrols, no Ka-
tangan aircraft were destroyed
by UN forces, nor was there
any fighting between UN and
Katangan forces.
Even before the ANC re-
treat back into Kasai, Adoula
complained over UN failure to
neutralize Katanga's aircraft
and control its mercenaries,
and threatened to obtain his
own planes and pilots. Adoula's
next political objective would
appear to be a new UN mandate.
Ethiopia, Nigeria, and
the Sudan have requested a
meeting of the Security Coun-
cil, presided over this month
by the Soviet representative,
to clarify the directives to
the UN forces and to seek means
of exerting pressure on Tshom-
be's foreign supporters. How-
ever, Sture Linner, the top
UN cilivian representative in
the Congo, told the American
ambassador on 4 November that
he found little sentiment in
the Security Council for a new
mandate and that he felt de-
velopments could be handled
under the existing one. Linner
said the UN Secretariat does
not interpret the Adoula-Tshom-
be fighting as civil war, and
that UN forces will not inter-
vene. He said he had informed
Adoula that Leopoldville could
not expect UN military support,
although the UN forces were
in effect giving the ANC im-
portant air support by main-
taining patrols over the Ka-
tanga border. Linner said that
in the event that the cease-
fire were broken or that UN
forces were attacked, the UN
would not resort to "operations
on a grand scale."
Adoula apparently hopes,
in cooperation with the UN, to
set up a "shadow regime" in
northern Katanga to counter a
move by Gizenga to the south
and to exert further pressure
on Tshombe. Jason Sendwe, the
anti-Tshombe Baluba leader and
one of Adoula's two deputy pre-
miers, was scheduled to arrive
in the area on 5 November, and
food and medical supplies were
being sent to the Balubas. UN
representatives are aware of this
"peaceful penetration" of north-
ern Katanga and are apparently
supporting it. Adoula, foiled
in his invasion from Kasai, may
now move his forces eastward
to reinforce Sendwe.
On 2 November, General
Mobutu planned to bring 800
reinforcements into Kasai Prov-
ince from Leopoldville and Co-
quilhatville, and UN sources
report that he planned to move
eastward to join General Lundula's
ANC forces sent down to Kindu
and Kasongo from Stanleyville
to open a new "front" toward
Kongola, Kabalo, and Nyunzu in
northern Katanga. Adoula may,
however, run into conflict with
Gizenga, who has been in Stanley-
ville since 4 October.
Minister of Interior Chris-
tophe Gbenye, sent to Stanley-
ville by Adoula to bring Gizenga
back to Leopoldville, returned
on 3 November without him. Lun-
dula's loyalties have continued
to shift, and Adoula's efforts
to woo him away from Gizenga may
also have failed. Gizenga may
be attempting a military move
against Katanga, independent of
Leopoldville, hoping that he can
undermine the Adoula government
by achieving victory on his own
over Tshombe. Adoula threatened
on 4 November to bring Gizenga
back to Leopoldville-by force and
said that the time had come
for a showdown.
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Republic of the Congo
CURRENT INTELLIGENCE WEEKLY SUMMARY
rw Tshombe's Forces
United Nations Forces*
- Selected road
i-1- Selected railroad
Selected airfield
Tshombe gave no indication
to Ambassador Harriman, who
talked with him on 5 November,
that he was in Geneva for any-
thing other than medical treat-
merit. He stuck to his proposals
for a Congo federation, but re-
iterated he would meet Adoula
any place outside the Congo
without pre-conditions. Tshombd,
returned to Elisabethville
on 6 November,
Union Miniere are partially sub-
stantiated by reports from Elisa-
bethville. Plans are reported
under way to reorganize the Ka- 25X1
tanga National Bank in order to
reduce Belgium's financial hold
on the Katanga economy.
25X1
a new law would require 25X1
all foreign companies operating 25X1
in Katanga, including Union
Miniere, to incorporate locally.
The aim,
is to retain in Katanga 25X1
Press rumors that Tsh.ombe
was seeking ways to lessen his
dependence on Brussels-controlled
foreign exchange now sent
abroad in the form of profits
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ftwVMOV
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
Viet Cong pressure contin-
ues to increase throughout
South Vietnam. Reported acts
of sabotage, attacks on govern-
ment outposts, and political
demonstrations mounted during
the last week in October and
registered another all-time
high for the month as a whole.
The US Embassy Task Force in
Saigon believes that the Com-
munists will at least maintain
and may increase their present
rate of activity, and that they
have the capability to launch
large-scale attacks at almost
any time or place.
The largest clash reported
in several weeks occurred on
1 November north of Saigon in
Phuoc Thanh Province, where
the Viet Cong in September
had temporarily seized Phuoc
Vinh, the provincial capital.,
and where a Communist base used
during the Indochina war is
being re-established. Part
of a government force of two
paratroop battalions, engaged
in an operation launched on
28 October to seek out a large
guerrilla concentration in
the area, was ambushed by a
Viet i;or.ag force estimated at
up to 1, 000, Both sides re-
portedly suffered heavy casual-
ties before the Viet Cong with-
drew.
Fighting has also been
reported in some of the less-
flooded delta provinces south
of Saigon and in the central
coastal area, where a govern-
meat sweep was carried out
near. Nha Trang,
Moscow, Peiping, and Hanoi,
in an effort to forestall any
substantial increase by the US
in its military commitment in
South Vietnam following the
fact-finding mission of General
Taylor, have alleged that US
plans for "intervention create
a threat to peace and security
in Southeast Asia." In a For-
eign Ministry statement of 3
November, the USSR rejected a
British proposal calling upon
the Geneva co-chairmen to pro--
test North Vietnamese subversive
actions in South Vietnam. In-
stead, the Soviet Union drew
attention to a Hanoi warning
of 14 October, which called US
actions "a gross violation of
the Geneva agreements."
However, there has been
no mention in bloc propaganda
of specific retaliatory meas-
ures in the area. At the 22nd
party congress, Khrushchev
touched only on the Laotian
issue, citing it as an example
r^s SECRET
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SECRET ?"'
Communist Guerrilla Activity in South Vietnam
%,,NORtH VIETNAM
7 Major areas of Viet
r \ ~.? ?~;~i Cong concentration
l 1 Quan~ Tn ~-~-+- Railroad
L A 0 S t ?`~) Tarn
C I ~ A I L A N D Jr QGang Nam
~Loc Ninh
where the "Western forces of war
and aggression" were effectively
frustrated by a national liber-
ation movement. The Soviet
representative at the Geneva
conference on Laos has gone to
some lengths to assure US
delegates that a "most rapid
solution" at Geneva would not
only reduce tension in Laos but
in all Southeast Asia as well.
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N SECRET "We
Vientiane, in an exchange
of notes with Xieng Khouang,
has persisted in its rejection
of the Plaine des Jarres as
the site for a meeting of Boun
Oum, Souvanna Phouma, and Sou-
phannouvong as proposed by
Souvanna. General Phoumi, ob-
serving that the formation of
a coalition government would
be "very difficult," has indi-
cated to American officials
that his failure to support
another meeting stemmed from
his belief that Souvanna would
be adamant in his demand for
a "neutralist" center group
drawn entirely from his Xieng
Khouang followers.
On 7 November Souvanna
indicated his willingness to
meet at Hin Heup, the site of
the previous meeting, rather
than the Plaine des Jarres.
This concession, however, was
accompanied by the observation
that unless agreement on a
coalition government was
achieved, there "certainly would
be a resumption of war."
yoked vigorous counteraction,
and combined Kong Le and Pathet
Lao forces have launched a deter-
mined attack on the nearby Meo
outpost at Pou Khe. Pathet Lao
units in the Vientiane area
harassed the strategic supply
town of Tha Deua with small-arms
fire during the past week. In
Khammouane Province, Vientiane
forces are continuing clearing
operations against enemy units.
Hard bargaining continues
at Geneva on the ICC's role in
Laos. While Soviet delegate
Pushkin, in talks with the UK
representative on 4 November,
came closer to the Western posi-
tion on the critical points of
voting procedure and investiga-
tions, he remained adamant that
any "supply depots" for the ICC
would have to be manned by
Laotian authorities. Pushkin
indicated that if the West dropped
its demand for these supply
centers throughout Laos, he
would not oppose an arrangement
between the ICC and the Laotian
Government on this question.
The International Control
Commission (ICC), disturbed by
the continued political stale-
mate and the recent shelling
incident at Xieng Khouang, has
sent a message to the princes
noting that "in the last few
weeks the military situation in
Laos has deteriorated consider-
ably, " and calling on the princes
to meet "without further delay."
The recent Meo mortar at-
tack on Xieng Khouang town pro-
Pushkin insisted that spe-
cific mention of SEATO be in-
cluded in any neutrality decla-
ration and demanded assurances
that the four non-conference
SEATO members would respond to
a Laotian declaration of neu-
trality in the same manner as
those attending the conference.
The Soviet delegate also
maintained that, allowing for
a very short transition period,
the French would have to give
up their installations in Laos.
There is growing evidence
that a fourth round of formal
negotiations may soon take
place between France and the
provisional Algerian government
(PAG). Officials of both sides
have recently made public state-
ments indicating broad areas of
agreement and a willingness to
make further concessions. In-
dications are that secret talks
are already in progress, al-
though both sides deny it publicly.
"Self-determination" pre-
sumably will be the formula for
the transfer of sovereignty.
PAG premier Ben Khedda in his
24 October speech mentioned it
as a second choice to an im-
mediate joint proclamation of
independence, and President de
Gaulle on 7 November again
stated his preference for it,
with partition as a "last
resort" solution.
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A3.M u 1
The US consul general in
Algiers feels that the arrest
of Abdurrahman Fares by the
French on 4 November is an
important event in the devel-
opment of the Algerian affair.
Fares, a highly regarded Moslem
who was formerly president of
the Algerian .Assembly, had long
been considered completely
loyal to France. His arrest
on charges of having directed
the rebel "tax" collections
among the nearly 400,000
Algerians in'France will, the
consul general thinks, alarm
the dwindling group of Moslems
who still place their confidence
in France--and it will certainly
shake French confidence in them.
The Secret Army Organiza-
tion (OAS) is-reportedly con-
tinuing preparations to seize
power in at least part of
Algeria in order to frustrate
any agreement Paris might make
the Oran region is
practically under the control
of-the OAS and its sympathizers
among the military. Although
public manifestations to demon-
strate settler support for the
OAS have not always been suc-
cessful, the organization has
issued a new call for a mass
"flag-showing"on 10 and 11
November.
the OAS is generally
believed to be capable of pro-
ducing another crisis;in Algeria.
Whether the army generally would
support the government under
such conditions is not clear,
but recent reports indicate
that military loyalty to the
government is increasingly
assured.
ciples.
Both De Gaulle and Premier
Debr6 are taking action this
month to "mend fences" between
the government and the armed
forces. Debr6 is addressing
cadets at the army and air force
academies on current interna- 25X1
tional developments and the
need to adhere to high prin-
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N"' SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
Following new outbreaks of
rioting in several Ecuadorean
cities, President Velasco was
forced to resign late on 7 No-
vember, but his successor re-
mains in doubt. Vice President
Arosemena, a leftist who had
rounded up considerable congres-
sional support for his move to
impeach Velasco, has reportedly
been recognized as President
by Congress. Military leaders,
however, have asserted that the
constitutional order has been
broken and have named a right-
wing socialist, Supreme Court
Justice Camilo Gallegos, as
acting president. A possible
compromise figure is Reinaldo
Varea Donoso, who as vice presi-
dent of the Senate ranks third
in the constitutional succes-
sion and is also a professional
military man.
Velasco's political support
had declined in recent weeks,
partly because of his govern-
ment's failure to remedy the
deteriorating economic situa-
tion and carry out its promises
of social reform. A Communist-
leftist attempt at a general
strike occasioned rioting in
three northern provincial cities
in early October, and one mid-
October session of Congress
ended in a stone-throwing and
shooting fracas between Velasco
supporters and those of Arosemena.
The present round of violent out-
breaks began on 3 November with
Velasco's visit to the southern
provincial city of Cuenca.
Leaders of the armed forces,
who strongly distrust Arosemena
for his leftist tendencies, had
earlier on. 7 November supported
Velasco in ousting and arresting
Arosemena. Their sudden with-
drawal of support probablystemmed
from a belief that Arosemena
had been disposed of and from
the widespread breakdown of law
and order under Velasco's rule.
They have also resented his
earlier pro-Cuban policy and
his failure to crack down on
leftist agitation.
The 42-year-old Arosemena,
who as vice president and ex
officio president of the Senate
is first in the constitutional
line of succession to the presi-
dency, was an ally of Velasco
until a few months ago. Arose-
mena's indebtedness to leftists
and his favorable accounts of
his trip to the USSR last summer
outline his probable policies
if he comes to power. He could
be more pro-Cuban than Velasco
was, and his administration more
open to Cuban subversive activity.
Gallegos, who is not in the
constitutional line of succession,
was apparently named by the mili-
tary as an interim figure because
he had not been involved in the
recent power struggle and because
of his ostensibly impartial po-
sition. Now 66 and a Supreme
Court justice since 1947, he
is a moderate who would presumably
accede to any solution worked out
between the military and responsi-
ble political groups.
Lt. Col. Varea Donoso, al-
'though outranked by the presi-
dent of deputies in the consti-
tutional line of succession, is
probably a more acceptable com-
promise candidate because of
his military connections and
his experience as defense minis-
ter during Velasco's 1952-56
term. Now 45, he has been 25X6
closely linked with Velasco but
has on occasion intrigued against
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SECRET N..~
CURRENT INTELLIGENCE WEEKLY SUMMARY
Several Cuban economic
and "friendship" missions are
traveling in bloc countries.
Trade union delegations from
North Korea, North Vietnam,
and other bloc nations are en
route to Havana,. along with
representatives of various Latin
American leftist labor organi-
zations, for labor rallies be-
ginning on 22 November.
The meetings are expected
to extend automatic approval
of the regime's new labor
program consolidating 33
national trade unions into
25 and formally installing
new officers--most of whom
were "elected" unanimously--
for each union. Regime of-
ficials have promised that
the labor program will in-
clude "the most democratic
trade union laws ever dictated
in Cuba."
Scattered incidents of
sabotage and evidence of occa-
sional skirmishes between small
bands of anti-Castro guerrillas
and government troops demon-
strate that active opposition
to the regime is continuing,
despite a steady increase in
the numbers and efficiency of
the government security forces.
Castro movement within Cuba
is not believed to pose a serious
threat to the regime at this
time, however, in view of the
strength of the forces loyal
to Castro.
Other Latin American coun-
tries are still split in their
attitudes toward possible OAS
action on the Cuban question,
although several governments
have demonstrated increasing
irritation over recent Cuban
moves. Venezuelan President
Bentancourt told US Ambassador
Moscoso on 6 November that
his government would break
relations with Cuba "within
48 hours," provided arrange-
ments could be made to relocate
the 47 political refugees presently
sheltered in its embassy in
Havana. This problem could
remain unresolved for a con-
siderable period of time,
however, in view of Cuba's
continuing refusal to grant
safe conduct to many refugees.
The present position of
Ecuador regarding the Cuban prob-
lem is not known, but immediately
prior to its ouster on 7 No-
vember the Velasco regime was
reported under strong pressure
from the Ecuadorean military to
break relations with Cuba over
Havana's meddling in its internal
affairs.
Latin American diplomats in
Havana are protesting new Cuban
restrictions on diplomatic asylum
to political refugees there, and
Mexico has criticized as inadequate
the Cuban Government's investiga-
tion of the mysterious death in
Havana of a Mexican diplomat last
August.
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SECRET %'
CURRENT INTELLIGENCE WEEKLY SUMMARY
President Frondizi's extend-
ed efforts to reorganize the
Argentine railroad system have
been met with a railroad strike
starting 30 October, a general
strike on 7-9 November, support-
ed mainly by the Peronista Unions,
and a general rise in political
tension. Labor leaders protest
'Frondizi's plan to dismiss or
retire 75,000 of the some 200,000
employees of the state-owned
railroads and to turn over to
private hands various auxiliary
services, such as restaurants
and repair shops. These steps
are prerequisite to receipt of
a World Bank loan needed to
modernize the railroads. Fron-
dizi insists that the rail
deficit--estimated at $180,000,-
000 next year--is a disproportion-
ate burden on the economic sta-
bilization program, soon to
begin its fourth year.
Declaring a "serious state
of emergency," Frondizi on 5
November issued three decrees
establishing police control over
the transport system within a
radius of 36 miles of Buenos
Aires and over the petroleum
industry. He said the general
strike call "aimed at adding
the threat of chaos," and he
reiterated his resolve to carry
out the transportation reorgan-
ization plan.
A security command has been
established under the chief of
federal police--reflecting the
army's reluctance to repeat its
extremely unpopular mobilization
of the railway workers. Marines
have been ordered to Buenos Aires
to reinforce the police. All
the armed forces are cooperating
in guard duty at strategic in-
stallations and are on alert to 25X1
combat any terrorist acts.
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4MV, 1"W
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
U Thant's appointment as
interim UN secretary general by
consensus in the Security Council
and
the unanimous endorsement
of
the General Assembly give
him
considerable latitude to
act
as
the sole executive of
the
UN
Secretariat. Thant, one
of
the
first candidates sug-
gested to succeed Dag Hammar-
skjold, had made it clear that
the Burmese Government would
not permit him to accept if
there were any form of "veto
or compulsory consultations
with advisers" involved. He
has since pledged himself to
preserve the impartiality and
effectiveness of the Secretariat.
tions, and had appointed personal
representatives who served to
bolster Jordan in its dispute
with the UAR.
Thant is more likely to
insist on specific mandates and
to seek more active participation
of representatives of UN member-
states in the conduct of UN
operations in crisis situations.
The implied commitment to con-
sult with the under secretaries
will also tend to deprive him of
the opportunities Hammarskjold
sometimes used to confront the
USSR with a fait accompli.
Thant will act as secretary
general until April 1963--the
date on which Hammarskjold's
second term would have expired.
He has retained Ralph Bunche
of the United States and Georgy
Arkadyev of the USSR as under
secretaries, and Narasimhan of
India as chef de cabinet. He
said that he would also invite
a "limited number" of persons
to act as "principal advisers
on important... functions en-
trusted to the secretary general!'
Thant will probably lean
over backward in his efforts
to be completely impartial.
He is unlikely to exhibit the
strong executive leadership
frequently exercised by Hammar-
skjold, who sometimes went be-
yond a strict interpretation of
the UN Charter. In addition to
the active role he played in
the Congo, Hammarskjold had
set up--without a specific man-
date from the UN and despite
strong Soviet objections--a
UN operation in Laos which
included diplomatic as well as
well as economic advisory func-
Generally recognized as one
of his country's ablest public
servants, the 52-year-old Burman
gained the respect of all polit-
ical factions as Prime Minister
U Nu's chief adviser in both
domestic and foreign affairs.
At the UN, where he has been
Burma's permanent representative
since 1957, Thant is highly
regarded for his quiet and effi-
cient promotion of Burmese
objectives. A Buddhist of great
personal integrity, Thant is
also a hard worker.
Thant is in accord
with Burma's neutralist
objectives, but within this
pattern he is broadly pro-
Western in outlook and,
according to the American
Embassy in Rangoon, a strong
anti-Communist. He vigorously
defends the right of newly
emerging nations to occupy
a neutral position between
East and West, and has been
a persistent advocate of
Communist China's admission
to the UN.
SECRET
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"Wool SECRET e
Enver Hoxha, Albania 's
dictator, at 53 is one of the
youngest of the East European
Communist leaders. Over the
years, he has eliminated all
opposition to his rule. The
only East European leader with
a Western college education,
Hoxha is considered intelli-
gent and cosmopolitan, but
ruthless.
Hoxha's father was a middle-
class textile merchant in the
southern Albanian town of Gjino-
kaster who at the beginning of,
the century had worked in a
textile mill in New England.
Enver attended grammar school
in Gjinokaster, the French
Lycee in Korce, and reportedly
the American Technical School
in Tirana. In 1930 he went
to Montpelier University in
France on an Albanian Govern-
ment scholarship but never
completed his course of study.
It apparently was in this
period that he became inter-
ested in Communism--a common
phenomenon among young Albanian
intellectuals of the period.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
When Italy seized Albania
in 1939, Hoxha apparently was
already one of the influential
members of the Communist study
group in Korce, probably the
most important of several such
groups in Albania. He fled
to the hills to organize re-
sistance to the Italians, but
returned to Tirana in November
1941 as representative of the
Korce group at the founding
of the Albanian Communist
party. The Yugoslav organiz-
ers appointed him provision-
al secretary general.
Hoxha helped organize the
1942 conference which founded
the Communist-dominated Nation-
al Liberation Movement, and he
was confirmed in his party
posts at the party's first
national conference in 1943.
He was appointed premier in
the provisional government
elected at the Berat conference
in 1944, when the war was al-
most over and the other in-
ternal liberation forces had
been eliminated.
During this period, the
Yugoslavs viewed Hoxha as only
one of several leading Albani-
an Communists. Some evidence
suggests Belgrade held party
secretary Koci Xoxe in higher
esteem. Hoxha was little
known in Moscow and practical-
ly unheard of in Communist
parties elsewhere in Eastern
Europe. According to Vladimir
Dedijer--once a high official
in the Belgrade regime--Stalin
asked Yugoslav Communist leader
Kardelj about Hoxha at a
meeting in 1947. Kardelj re-
sponded: "Our opinion is that
he is good and honest on the
whole, although he has certain
characteristics of a petit
bourgeois intellectual. He
has a good war record and the
people love him, but he lacks
Marxist-Leninist training.
Still, we think that he will
hold on."
In the same conversation,
Molotov chimed in: "I think
that the opinion of the Yugo-
slays is right. I saw Hoxha in
Paris. He is very handsome and
leaves a good impression. He
is quite cultured, but you feel
Western influence in his up-
bringing."
Most characterizations
of Hoxha agree that he dis-
plays considerable personality
and a driving ambition. Al-
though he is a general in the
Albanian Army, he is seldom seen
in uniform and is never identi-
fied by rank. He has retained
a great deal of the popular
following he won for himself
during the war, and much of
the regime's brutality is at-
tributed by the people to Pre-
mier Mehmet Shehu. On the
other hand, Hoxha has also been
described as egotistical, un-
reliable, temperamental and
illogical, cunning and sincere,
and merciless in political in-
fighting.
Hoxha has weathered every
political storm in the Albanian
party, which at various times has
undergone anti-Yugoslav, pro-
Yugoslav, anti-Soviet, and
pro-Soviet purges. Of the 11
members of the provisional
central committee of 1941,
only Hoxha remains. Yugosla-
via has claimed that of the 13
members in addition to Hoxha
when the central committee
was formally elected in 1943,
three have been shot, one
committed suicide, five are in
prison, three are without
public office, and one was
killed in the war. Hoxha's
closest collaborator in re-
cent years, despite reports to
the contrary, has been Shehu.
The Soviet and Yugoslav
Communists may be correct
when they label Hoxha more
of a nationalist than Com-
munist. It can certainly be
said that he has used
Communism to gain power, and
found Stalin's brand of rule a
good means of perpetuating his
position and of defending what
he feels to be Albania's national
interests. (CONFIDENTIAL)
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`"' SECRET
EAST GERMAN ECONOMIC DEVELOPMENTS
The standard of living in
East Germany apparently has not
suffered to date from the seal-
ing of the Berlin sector last
August. Since then, however,
purchases of some foods and con-
sumer goods have been well above
normal--panic buying probably
motivated by fear of scarcities,
of new prices rises,, or of a
currency reform. Commodities
being hoarded include coffee,
cocoa, canned goods, linens,
hardware, matches, and other
"sundry items."
Control of hitter and pota-
to supplies was tightened last
July when rationing was reintro-
duced for these foods. Although
butter is frequently available
in quantities exceeding the ra-
tion, the shortage of potatoes
is more acute. The potato sup-
ply in East Berlin may become
increasingly tight as a result
of transportation delays.
This year's poor harvest
of grains and row crops will
make it increasingly difficult
to maintain existing food sup-
plies. Grain production is
estimated to be approximately
10 percent less than in 1960,
and the outlook for potatoes,
an important feed and food crop,
is for a below-average year.
As feed supplies directly
affect production of meat and
livestock products, supplies of
:meat, milk, and butter will
reach their low point in the
annual production cycle earlier
than in past years. Early
spring may be a critical period.
The East, Germans are negotiating
for livestock products from Den-
mark, additional supplies of
butter from the USSR, and fruits
and vegetables from Poland.
East German economic offi-
,dials reviewed the progress of
the economy at a conference
called by the party central com-
mittee on 10 and 11 October. The
pace of industrial development is
slow; the planned growth rate of paring for exams, and employees
goals of
the
Seven-Year
Plan be-
ginning
with
the
year
1963"--i.e.,
a growth
rate
of 9
percent. The
loss of manpower, the unsettling
effects of the Berlin crisis, and
preparation for a possible West
German embargo are blamed for the
failure to reach the plan rate in
1961 and for the inability to re-
turn to the Seven-Year-Plan rate
in 1962.
Alfred Neumann, chairman of
the new National Economic Council,
reported to the conference that
industrial production in the first
nine months of 1961 was higher by
3 billion East marks (about $750,-
000,000) than in the same period
of 1960--implying an increase of
somewhat less than 6 percent,
about the same rate as in the
first half-year. The change in
labor productivity over the peri-
od suggests that industrial em-
ployment has declined at a rate
of about 1 percent a year, re-
flecting both the loss through
:'efugee flights during the first
eight months of the year and the
unfavorable age structure of the
population.
The basic material indus-
tries, specifically steel and
chemicals, are reported to be
meeting production goals. The
finished-goods industries, partic-
ularly metal-processing, contin-
ue to lag, not only because of
the loss of labor but also be-
cause of shortages of materials
and lack of capacity. Invest-
ment continues to run well behind
plan, and Neumann's report implies
that investments are not expected
"to increase over those of last
year.
The regime appears to be
giving industrial manpower re-
quirements priority over re-
cruiting for the military serv-
ices. A greater number of "volun-
teers" in the 18-23 age group
are being rejected for military
service. Rejectees include per-
sons who bad formerly worked
in West Berlin, craftsmen pre-
7.2 percent is not being met. A of plants or agricultural enter-
higher rate is planned for 1962 prises short of labor. In- 25X6
and a still higher one for 1963, creased deferments are also
although planning chief Mewis being granted for.production
admitted recently that the 1962 workers.
plan was hastily worked out with
a view to "again reaching the
SRET
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*Moe SECRET %%r
CURRENT INTELLIGENCE WEEKLY SUMMARY
Yugoslavia is beset by a
severe drought which threatens
to interfere seriously with the
regime's economic plans. The
economy remained generally
healthy through the third quar-
ter, but several important in-
dustries have had to cut back
production because of the hydro-
electric power shortages; river
transport has virtually halted;
and agriculture has suffered a
sharp setback.
These reverses will adverse-
ly affect Yugoslavia's foreign
trade and exchange positions,
particularly by sharp reductions
in the surpluses of corn and
tobacco available for export.
Belgrade can ill afford to lose
these sources of foreign ex-
change, for at the first of the
year the country began an econom-
ic reform program designed to
enhance domestic competition
and make the Yugoslav economy
more responsive to foreign mar-
kets. Foreign exchange is partic-
ularly needed. for imports to
force down the cost of certain
domestic products.
Agriculture has been hard-
est hit. Belgrade has been
forced to seek 800,000 tons of
wheat from the US, and corn,
which brought in almost $11,-
000,000 in foreign exchange last
year, fell a third below last
year's production. The tobacco
crop, which earned almost $8,-
000,000 last year, was 50 per-
cent below last year's crop.
An embargo on potato exports
will probably be ordered.
The poor corn crop--and
resulting shortage of cattle
feed--has led many peasants to
slaughter or sell their animals
too early in the year. The
SECRET
government is making available
$1,200,000 in low-cost credits
for fodder imports, buying cat-
tle to ensure a meat supply in
February and March, and loaning
money to state and cooperative
farms. Even so, regulations
may be enacted against slaughter-
ing.
State and cooperative farms
are preparing for around-the-
clock plowing and seeding opera-
tions when the rains come, but
fall seeding may be so long de-
layed that the 1962 spring har-
vest will also be small.
The US Embassy in Belgrade
believes that higher food prices
are in prospect. Eggs already
have gone up, and meat and wine
prices will probably also rise
shortly.
The embassy also notes that
the peasants on privately owned
land will be the hardest hit
by the drought. In order to
recoup, they may be forced to
enter contract arrangements
with the state and cooperative
farms. While there is no evi-
dence that the regime plans to
change current policy, the Yugo-
slav press is placing primary
blame on the private peasants
for the lower production this
year; the government could use
this as justification for further
pressures on the private farmers.
shut down.
The drought has reduced
hydroelectric power production
to a mimimum. Although Yugo-
slavia is importing electricity
from Austria and Italy and has
stepped up thermal electric pro-
duction, power shortages have
been reported in some cities, and
some electrolysis-processing in-
dustries have been forced to
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After a sharp decline in
1960, Soviet imports of rubber
this year are approaching a rec-
ord level. Natural rubber is
one of the USSR's chief imports
and one of the few critical
commodities Moscow must procure
exclusively from non bloc
sources. Soviet imports of
natural rubber rose to an esti-
mated 220,000,tons during the
first eight months of 1961,
and the year's total probably
will exceed 300,000 tons. The
previous peak of about 250,000
tons was recorded in 1958 and
maintained in 1959, when rubber
purchases accounted for more
than 3 percent of the USSR's
total imports and about one-
fourth of all Soviet purchases
in,underdeveloped countries.
Soviet purchases have been
concentrated in Malaya and Singa-
pore, but Moscow is taking in-
creasing amounts from Ceylon,
Indonesia, Thailand, and Cam-
bodia. As part of the bloc's
trade offensive, the USSR has
sought to buy rubber directly
from producing countries rather
than through West European
middlemen, but last year Moscow
doubled its purchases in the UK
while curtailing its imports
elsewhere.
Soviet rubber import:., fluc-
tuate widely frorz year to year,
but a general upward trend has
resulted from lags in Soviet
synthetic rubber production.
To some extent the volume of
Soviet rubber imports reflects
world price changes and stock-
pile requirements. Political
considerations have affected
the source of Soviet imports,
but not the volume. The USSR's
record imports this year are
basically prompted by an in-
crease in demand not matched
by a corresponding risein domes-
tic production, but they are
also a result of the heavy
drawings on stockpiles last
year when Moscow reduced its
purchasing during a period of
high world rubber prices. Since
late 1960, rubber prices have
dropped and the Soviet Union has
bought large quantities, appar-
ently to replenish its stock-
piles. There is no indication
that the USSR's rubber buying
this year is directly linked to
increased military preparedness.
Moscow's desire to reduce
its dependence on natural rubber
imports and simultaneously to
meet sharply increased Soviet
needs for rubber is reflected
in the Seven-Year Plan goal of
increasing synthetic rubber
production from about 300,000
tons in 1958 to 800,000 tons in
1965. The failure of the syn-
thetic rubber industry to main-
tain the required pace, however,
probably will require continued
large-scale rubber imports at
least through 1965.
Communist China's natural
rubber imports dropped to only
40,000 tons in the first 8 months
of 1961--less than half the level
of recent years--reflecting
Peiping's stringent foreign ex-
change position and curtailed
Chinese economic activity. In
the past, a sizable share of
China's rubber imports from
South,,, ; L Asia has been re-ex-
ported to the USSR and European
satellites. This year, however,
Peiping is relying on its rice-
rubber barter agreement with
Ceylon and reduced imports from Indo-
nesia to cover domestic require-
ments and probably has little
or nothing for re-export. China's
exports of tires to other bloc
countries have probably also
been curtailed.
Rubber imports by the Euro-
pean satellites are rising, but
not as sharply as those of the
USSR. The satellites imported
about 125,000 tons directly in
1960, plus additional quantities
re-exported by the USSR. F_
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SECRET %ow
TRRENT INTELLIGENCE WEEKLY SUMMARY
The USSR and Czechoslovakia
are the major sources of external
economic assistance to the Somali
Republic, having already provided
almost 65 percent of the approxi-
mately $90,000,000 in foreign
grants and credits now available
to Mogadiscio.
in recent speech before the
National Assembly, Prime Minis-
ter Abdirascid outlined the
government's plans for develop-
ment projects in the fields of
agriculture, industry, communi-
cations, education, and housing.
He referred specifically to
some 37 major projects which
the government hoped to under-
take. Of the projects mentioned,
fourteen are included in the So-
viet and Czech aid agreements
and four in a Soviet grant offer.
Although it is by no means cer-
tain that all of the projects
will be undertaken, the USSR
and Czechoslovakia will. be pro-
viding assistance in a number
of important fields which will
allow for considerable bloc
participation in Somalia's de-
velopment program.
Since the republic`.re_.,
ceived independence.,-in July .1960,
the bloc has sought to develop
and strengthen its economic re-,
lations with the country. The
general framework for an in-
crease in economic ties was
established in June of this year
when the USSR and Czechoslovakia
agreed to extend about $56,000,-
000 in economic credits. The
USSR provided credit in the
amount of $44,000,000 and Czech-
oslovakia in the amount of $4,-
200,000 for agricultural and
industrial development. In
addition the USSR extended a
$7,700,000 credit to finance
the purchase of unspecified So-
viet commodities.
be given for the establishment
of four government farms for
raising cotton, oil-bearing
seeds, cereal grains, and live-
stock. The USSR also will con-
struct an agricultural school,
three food-processing plants,
a dam and power station on the
Juba River, and a maritime port.
Soviet technicians will carry
out geological explorations and
drill for water. In addition
to those projects, the USSR has
offered to build on a grant
basis a 50-kilowatt short-wave
radio station, a printing plant,
two hospitals, and a secondary
school.
The Czech agreement lists
six alternative projects--a
power plant, a cement factory,
a flour mill, a tractor assembly
plant, an ice-making plant, and
a cold-storage plant--from which
projects to be financed will be
chosen. Prague also is provid-
ing $1,400,000 in grant assist-
ance for the construction of a
technical training school.
A Soviet technical dele-
gation has been in Mogadiscio
since mid-September drawing up
plans for specific projects in
the implementation of Moscow's
agreement.
feel this is the time to step in
with an offer of military aid to
demonstrate its responsiveness
Under the terms of the So-
viet aid agreement, economic
and technical assistance will
to the Somali Republic's needs as
well as to assuage any apprehen-
sions
regarding Soviet assistance,
SECRET
The USSR may
25X1
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NWO,
SECRET
CURRENT INTELLIGENCE WEEKLY S
ECONOMIC PROSPECTS IN NORTH KOREA
Since the end of the Ko-
rean war, North Korea has made
considerable progress toward
stabilizing its economy and
freeing itself of economic de-
pendence on the USSR and Com-
munist China. Production of
many major industrial and con-
sumer goods has surpassed pre-
Communist levels, and further
expansion is planned.
North Korea's basic eco-
nomic position is more favor-
able than South Korea's. With
a population of about 10,000,000,
the North has only about half as
many people as the South but most
of the peninsula's major natural
resources. The area north of
the 38th parallel has 97 percent
of the iron ore, 68 percent of
the coal, 85 'percent of the hy-
droelectric power potential, and
most of the forest resources.
In addition, the North in-
herited an estimated two thirds
of the heavy industrial assets
left in Korea by the Japanese
in 1945, including 94 percent
of the power generating facil-
ities, 87 percent of the iron
and steel capacity, and 90 per-
cent of the chemical industry.
By Far East standards,
moreover, North Korea has a
large area of cultivated land
for the size of its population;
about 0.6 acre per capita, as
compared with 0.4 acre in Com-
munist China and 0.25 in Japan.
Industry
Since the end of the
Korean war in 1953, nearly
one-third of North Korea's
gross national product (GNP)
has been reinvested in the
economy to restore and expand
productive capacity. This pro-
gram, together with substantial
assistance from its bloc part-
ners, has enabled Pyongyang to
build an industrialized econ-
omy. By 1960, an estimated 34
percent of GNP came from mining
and manufacturing, 13 percent
from trade and finance, and 16
percent from construction, trans-
portation, and communication--
as against 23 percent from agri-
culture, forestry, and fishing
and 14 percent from services,
North Korea's economic
policy, modeled closely after
that of the USSR, has given top
priority to industrial develop-
ment, with initial emphasis on
machinery and metalworking. High
investment and large imports of
heavy machinery and equipment
have made this industry, which
consisted only of small handi-
craft shops up to 1954, the
largest and fastest growing in
North Korea, Production in
1960 reportedly included gen-
erators totaling 30 megavolt-
amperes in output, transform-
ers of a total capacity of 640
megavolt-amperes, the equiva-
lent of 33,000 twenty-horsepower
electric motors, 300 freight
cars, and 3,100 trucks.
Progress has been steady
although less rapid in other
parts of heavy industry. The
9 billion kilowatt-hours of
electricity produced in 1960
constituted recovery to the pre-
Communist peak year of 1944,
coal output of 10,600,000 metric
tons was substantially more than
in 1944, and production of crude
and finished steel was about
four times that in 1944. Output
of iron ore, ammonium sulfate,
and basic chemicals has not yet
recovered to peak levels achieved
in 1944. North Korea exports
annually to Communist China about
one fifth of the electric power
produced and about 400,000 tons
of iron ore.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
- A
TUA
C
L
1944
(prewar peak)
1960
(end of 1st
5-yr plon)
1961
Gross value Industrial production
(billion won)
2.08
2.45
Coat (million tons)
5.7
10.8
----
Iron ore (1,000 tons)
3,100
486
----
Pig i=on (1,000 tons)
564
752
----
steel (1,000 tons)
147
641
-
---Finished steel (1,000 tons)
105
474
---
Electric power (billion kwh)
8. 1
9. 1
----
Cement (1, 000 tons)
958
2, 285
----
Chemicalfertilizer (1,000tons)
512
650
----
Cotton and silk fabric (million meters)
1.4
190
----
Grain and soy beans (million tons)
2.4
3.8
4.8
Fish (1,000 tons)
----
690
----
Another factor behind the
rapid expansion in industry has
been the composition of North
Korea's total imports--concen-
trating heavily on industrial
equipment and raw materials.
Agriculture
North Korea increased grain
output by about 25 percent be-
tween 1949 and 1960 to about 750
pounds per capita; 1960 output
was about 406 pounds per capita
in South Korea, where domestic
production is supplemented with
sizable grain imports. A col-
lectivization program has been
carried out without major dis-
ruption of normal farm work,
and,more important, concerted
efforts have been made to in-
crease supplies of chemical
fertilizer, mechanize agricul-
ture, expand irrigation, and
shift acreage to higher-yield
crops.
The number of tractors in
North Korea--which Pyongyang's
statistics report in terms of
15-horsepower units--reached
10,400 in 1960, or one for every
357 acres of cultivated land.
The USSR had achieved roughly
the same ratio in 1955.
GOAL
1962 1967`-"
3.06
15.02
250
5
800
6.7-
23-25
2,200-2,500
2, 200-2,506
1;600-1,800
17
4,000-4,500
1,500-1,700
400-500
6.7
1,000-2,000
Bloc Assistance
Foreign grants and credits
have played an important part
in North Korea's economic prog-
ress to date. Bloc assistance
between 1950 and 1960 came to
a minimum of $1.3 billion, or
$130 per capita. These grants
and credits, which amounted to
about 33 percent of GNP in 1954,
have since been gradually sup-
planted by normal commercial
trade and in 1960 amounted to
only 3 percent of GNP.
Foreign Trade
Another measure of the in--
creasing viability of the North
Korean economy is the steadily
improving balance of trade. In
1954, exports were only about 13
percent of total imports (in-
cluding economic aid) but by
1960 had risen to 45 percent.
North Korea is completely de-
pendent on imports for its cok-
ing coal, POL, and rubber and
is deficient in raw cotton and
in machinery and equipment. In-
dustrial raw materials, heavy
machinery, and equipment have
made up almost two thirds of
total imports since 1958, with
foodstuffs, drugs, and other
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lftwoNftw
CURRENT INTELLIGENCE WEEKLY SUMMARY
consumer goods comprising only
about one third.
Living Standards
In contrast to the priority
given to investment and indus-
trial expansion, consumption in
North Korea has made only small
advances. The average North
Corean has adequate amo"rnts of
basic food and clothing, but he is
subject to rationing, queueing,
and other unfavorable features
that face consumers throughout
the bloc. The North Korean
populace appears better off
than the people of Communist
China, where serious food short-
ages have led to widespread
malnutrition and weakened re-
sistance to disease, but the
diet in North Korea, as com-
pared with that in Japan, Tai-
wan, South Korea,and most other
non-bloc countries of the Pa-
cific area, is poor, especially
in quality.
As heavy industry recovered,
North Korea's economic planners
shifted emphasis to over-
coming deficiencies in light in-
dustry. In 1954, North Korea
produced only 0.16 yards of
cloth per capita. However, by
1960, when production of tex-
tiles comprised roughly half of
all light industrial production,
per capita output was about 21
yards. Tn make up for its de-
deficiency in raw cotton, North
Korea tas started an ambitious
program for the manufacture of
synthetic fibers. A new viny-
Ion plant is expected to produce
10,000 tons next year.
Housing remains a problem,
but gains have been registered
despite industry's priority on
construction materials and man-
power, In 1960, per capita
residential floor space was
about 56.7 square feet in ur-
ban areas and 83.5 square feet
in rural areas, an over-al].
average of about 69.5 square
feet and an increase of 16
over 1956. This level com-
pares favorably with the esti-
mated 64.6 square feet per
capita in South Korea.
Prospects
North Korea started this
year on a new seven-year plan
(1961-67). Except for grain,
no specific goals for 1961 have
been announced, but "six peaks"
for 1963 were mentioned in the
press recently. The plan en-
visages increases by 1967 in
gross value of industrial out-
put of 18 percent annually, and
significant increases in the
output of major industrial and
consumer goods. Announced in
August 1960, this plan involves
substantial modernization of
the economy and per capita out-
puts of major commodities com-
mensurate with an industrially
developed economy. Until 1963,
the emphasis will be on agri-
culture and light industry.
From 1964 to 1967 emphasis will
shift back to chemical, machine-
building, mining, and power in-
dustries.
Prospects for achievement
of this ambitious program are
fairly good, although the rates
of growth probably are over-
stated. High rates of growth
in the immediate past reflect
large gains in the production
of basic industrial products
and are attributable in sub-
stantial measure to loans and
grants from other bloc countries.
These factors will be less im-
portant in the future, and
rates of growth henceforth will.
not be as great. Although the
consumer will continue to re-
ceive low priority, he will
benefit from some increases,
particularly in non-food goods,
and he will remain at least
as well off as the consumer in
South Korea.
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