CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A003700080001-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 45
• Document Creation Date: December 21, 2016
• Document Release Date: May 13, 2008
• Sequence Number: 1
• Publication Date: August 17, 1962
• Content Type: SUMMARY

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CENTRAL INTELLIGENCE AGENCY
III OFFICE OF CURRENT INTELLIGENCE
State Dept. review completed
GROUP II
Excluded from autolnotic
downgrading a,d
dedassificationi
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ARMY review(s) completed.
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T H E W E E K I N B R I E F
(Information as of 1200 EDT 16 Aug)
SOVIET FOREIGN POLICY DEVELOPMENTS ? ?
Moscow's heavy coverage of the manned space flights
d the Berlin and German questions
Page 1
completely overshadowe a generally
last week. The USSR and East Germany adopted
defensive posture in connection with the first anniversary it-
of the Berlin wall on 13 August. There Were no major polit-
ical pronouncements and no military demdnstrations. The
Communists attempted through diplomatic protests and prop-
aganda to place the blame for the wall And attendant ten-
sions on the West. Despite the continuing war of nerves
over the possibility of early action on 4 separate peace
treaty, the Soviets and East Germans reiterated their pref-
erence for a negotiated settlement and hinted at flexibility
on the crucial issue of the presence of Western forces in
West Berlin. At Geneva, the Soviet dele ate for mall re
jected the new US test-ban proposals.
CURRENT INTELLIGENCE WEEKL' SUMMARY
17 August 1962
page 3
Souvanna has proposed nine sites for the International
Control Commission inspection teams that are to be "in
place" by 6 September, but he has not yet obtained Pathet
Souvanna and Pathet
Lao acquiescence. Friction between
Lao leader Souphannouvong appears to be increasing over
a variety of issues.
WEST NEW GUINEA . . .
Page 5
The signing on 15 August of a Dutch-Indonesian agree-
ment on West New Guinea removes the danger of major hostili-
ties. Small-scale Indonesian infiltrations may continue,
however, and major assault forces continue to stand by in
East Indonesia. Recent infiltrations have boosted Indonesian
forces in New Guinea to about 1,000 men., Djakarta is anxious
to increase its military presence in Ne'w Guinea before an
interim UN administration takes over this October. Authority
is to be transferred to Indonesia next may.
CONGO . . . ? ? . .
? Page 6
Western European nations are lukewarm toward the plan
to induce Tshomb6--if necessary by economic sanctions--to
rejoin the Congo. While the Europeans agree with the plan's
objectives, they are not prepared to use economic coercion
to ensure its success. Press reports of these reservations
have probably encouraged Tshombd to resist. Official Katangan
reaction to the sanctions already applied by Adoula has
been mild, and Tshombd continues to stress his readiness
to discuss-'"reasonable solutions." Sporadic fighting
has apparently broken out in Northern Iatanga.
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17 August 1962
Attempts by Ben Bella's political bureau to select
candidates for the 2 September elections and to assert
civilian control over the Algerian National Army are being
resisted by the commanders of the military regions. Although
a showdown with army leaders appears inevitable, Ben Bella
will probably seek to avoid bringing the issue to a head until
KHRUSHCHEV PROMOTES MODERN APARTMENT CONSTRUCTION Page 3
Khrushchev is stepping up modern apartment construction
as the most economical and ideologically desirable way to
alleviate the Soviet housing shortage. A decree published
on 7 August cuts off single-unit housing construction in
major cities and advances multi-story cooperative apartments
which make maximum use of scarce land and facilitate social
control. For some time Khrushchev has urged Soviet design-
ers to adopt a simpler, more functional style along Western
lines and has tried to modernize the population's taste for
THE INDIAN-CHINESE BORDER DISPUTE. . . . . . . . . . . Page
dietary and health standards on death rates.
The reappearance of propaganda endorsing birth control
underscores Peiping's anxiety about its long-term economic
problems, in particular the failure of production to keep
pace with population growth. Even though an earlier birth
control campaign was abandoned in 1958 during the "leap
forward," the population is probably increasing less rapidly
than in the past because of the effect of deteriorating
The Indian Government is apparently re-examining its
policies regarding its border dispute with Communist China. It
has already retreated from its aggressive military posture in
Ladakh
ehru is still demand-
ing, however, that Chinese forces withdraw from the territory
they occupy in Ladakh before formal negotiations begin.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
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? . CURRENT INTELLIGENCE WEEKLY SUMMARY
17 August 1962
DEVELOPMENTS IN FINLAND
Finland's four-month-old coalition cabinet is having
difficulties as a result of differences over domestic poli-
cies and the dissatisfaction of the smaller coalition
parties with the actions of the dominant Agrarian party.
A number of controversial. internil issues, together with
the growing restiveness of labor; will test the ability of
the governing parties to hold toiether in the coming weeks.
Foreign policy issues have not figured prominently in intra-
cabinet bickering, and President:Kekkonen apparently continues
to handle in person the more sensitive roblems arising in
Soviet-Finnish relations.
The overthrow of the Guido government by a group of
military officers headed by General Federico Toranzo Montero
appears to be imminent. Key factors in the success or
failure of this group will be Toranzo Montero's ability to
assume command of the First Army Corps and the amount of
support he is able to command within the military,. The
plotters may feel encouraged to carry out their plans by
press reports that the US will relcognize the militar
junta of Peru which came to power, four weeks ado. 25X1
Intense political maneuvering is continuing in Brasilia
as the leftist Goulart regime attempts to increase its power
vis-a-vis the conservative congress. Many moderates in
political and military circles dislike the parliamentary
system but are uneasy over moves to restore a strong presi-
dency because of the leftist tendencies of President Goulart,
Preoccupation with domestic politics is preventing any sub-
stantial criti
i
c
sm of several new moves in Brazil's "in-
dependent" foreign policy,. Meanwhile, the country's finan-
cial situati
h
on
as deteriorated
HAITIAN DICTATOR ACTS TO PREVENT FITS OUSTER.
Haitian President Duvalier has for the moment staved
off the threat to his dictatorship' presented by plotting
in the regular armed forces. Militia units loyal to him
have been concentrated at key points throughout the capital,
and appear to be i,,
MEXICAN GOVERNMENT CONCERN OVER COMMUNIST ACTIVITIES Page 20
The Mexican Government is becoming more sensitive
to Communist activ=ties and has is la ed increasad ever
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I AP.ugu.s v 1962;
the investigation of Com-
munist activities brought to light during preparations for
President Kennedy's visit is evidently cpntinuing. The
government has also encouraged the removal of influential
Communist-controlled labor leaders and has confiscated Com-
munist propaganda from Latin Americans passing through
Mexico en route home from Cuba
PANAMA ST7KS INTERNATIONAL SUPPOIRT FOR CANAL ZONE DEMANDS. Page 21
The foreign ministers of two other. Latin American
countries have issued public statements supporting Panama's
claims of sovereignty in the Canal Zone., This apparently
reflects efforts by Panama to obtain Latin American back-
ing, in its current discussionswith the US, and may be
followed by similar expressions of solidarity from other
governments. Panama is expected to raise the issue at
the UN.
The political and economic situation in Surinam is
deteriorating. The three-party coalition government func-
tions poorly under irresponsible leadership, racial tension
heteen the Creoles and the East Indians is growing, Com-
munist influence is on the increase, and' the country ap-
pears to be on the verge of an economic recession. The
political unrest is reflected in the rapid multiplication
of parties over the past year. Surinam `,wants considerably
more financial and technical assistance than is available
from the Netherlands or other sources at the moment, and
frustration in realizing the country's development potential
could provoke dangerous anti-Western attitudes, especially
in view of the heterogeneous character of the population
BRITAIN A 417) THE COMMON MARKET, A STATUS, REPORT , , , . , `gage
When the talks on Britain's application for Common Mar-
ket (EEC) membership adjourned on 5 August for approximately
two months, detailed agreements were still lacking on a
number of major issues--including aspects of the difficult
Commonwealth and agricultural problems.' Other problems,
such as institutional adjustments, had scarcely been dis-
cussed. Nevertheless, the past nine months of hard bargain-
ing have largely established the feasibility of Britain's
EEC membership and produced a broad understanding on the
adjustments which will be required. Although formal
accession remains many months away, neither side would
now lightly accept responsibility for blocking a final
agreement.
The Austrian political scene is currently dominated
by the Common Market issue. The EEC Council on 20 July
heard Vienna's case for an associative tie; formal negotia-
tions will not begin before late fa.l' and are expected to
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CURRENT INTELLIGENCE WEEKLY SUMMARY
17 August 1962
tions have been moved up from May to November.
interparty friction has increased as a result of labor un-
rest and other economic difficulties, and parliamentary elec-
be long and difficult. Chancellor Gorbach and Foreign
Minister Kreisky believe their recent visits to Moscow and
Paris have improved the prospects for obtaining such an
EEC tie. While there is as yet no significant disagreement
between the two coalition parties on the Common Market question,
BLOC AID AND TRADE PROGRAM IN AFRICA o , , , , , , , . Page 9
Despite occasional setbacks--notably in the Congo and
in Guinea--the Sino-Soviet bloc's aid and trade program
in Africa continues to expand. Its greatest successes
have been in the field of civil aviation, but agricultural
aid has been stressed and some priority is given to develop-
ment of transportation facilities. Preliminary surveys
on a number of projects are nearing com letion, and the
next six months should see an acceleration in delivery of
materials as construction begins. Trade continues to
rise, because the bloc takes raw materials which face stiff
competition in free markets and provides equipment and materi-
als needed in African development programs.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
SOVIET FOREIGN POLICY DEVELOPMENTS
Vostok Flights
Moscow's voluminous cover-
: ;e of the Vostok III and IV
ilights completely overshadowed
Berlin, Germany, and all other
foreign policy issues last week.
Although the USSR did not at-
tempt to define the political
and military implications of its
latest space achievements, an
East German commentator said
they "give an inkling" of the
power facing the "cold warriors"
if they should take the "ulti-
mate risk." The Soviet army
newspaper Red Star claimed that
the orbiting owo cosmonauts
shows that "no matter what ef-
forts the US makes," the gap
between it and the USSR, "far
from being narrowed, is widen-
ing."
The main theme of Soviet
the USSR's program for "peaceful
exploration of space" with US
explosions" of nuclear weapons
in space, the launching of "spy
satellites," and alleged plans
to establish military bases in
space. Moscow radio also re-
the Vostok flights provide new
proof of the superiority of the
socialist system over capital-
ism. Soviet propaganda has
contended that the USSR is doing
everything to establish cooper-
ation with the US in exploring
space for peaceful purposes and
has expressed regret that this
cooperation has not been a-
chieved, implying that the US
is solely to blame.
Berlin and Germany
The USSR and East Germany
adopted a generally defensive
posture in connection with the
first anniversary of the Berlin
wall on 13 August. There were
no major political pronouncements
and'. no military parades or dem-
onstrations in the Berlin area.
There was a sharp increase, how-
ever, in East German security
forces and patrols along the
Berlin sector and zonal border.
These forces were held in a high
state of readiness as a pre-
caution against any antiregime
demonstrations or any disturb-
ances emanating from West Berlin.
3loc diplomatic and propa-
gand& treatment of the anniver-
sarywas intended primarily to
underline the Communists' con-
tentton that the West is solely
responsible for the tensions
and threats to peace which made
the wall necessary and which
point up the urgency of a Berlin
settlement. Moscow sent notes
to the three Western powers on
10 August which repeated propa-
gandacharges that West Berlin
authorities, in collusion with
the W st Germans, were preparing
new provocations against the GDR
timed, to coincide with the 13
August anniversary. The notes
contended that the Western "oc-
cupation powers" in West Berlin
not only sanctioned but en-
coura4ed these provocations and
concluded with the standard
warning that the USSR will hold
the West fully responsible for
the consequences. The East
Germans also made public notes
addressed to the three Western
powers,, via Prague, protesting
West German President Luebke's
appearance in West Berlin for
anniversary ceremonies.
The persistent buildup of
CommunIst diplomatic and propa-
ganda harges that the "occupa-
tion forces" in West Berlin are
responsible for the increasing
"acts of aggression" against
the GDR could provide the back-
ground for new Soviet or East
German moves in reaction to
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ems and contrasts with the im-
preL~ion of i-r:ipending crisis being
generated by the Western press.
In his addres Before the 17-
naltion disarma:;ient conference on
l ! August , Virst Deputy ore ign
biir inter Kuznct sov, who has re-
1p1 iced Zorin as the chief of the
Soviet delegation, formally re-
je~,ted the new US proposals and
a:s.~erted that the eight-nation
ne atralist ?-~emoranduu:i should be
the basis for further discussion.
At the G August .,meeting of the
Big-Three test-b. a subcommittee
Zox'in had charged that the US
wad, engaged in a tactical maneuver
and that its alleged concessions
merely concealed an intention to
hold further atomic tests. Zorin
concluded that the nett task of
the, nuclear power:; was to get
agre?uuent "on a basis for negotia-
tioAZs" and then go on to a con-
sid~ration of practical details.
As the ti-.ie for recessing the
the ',Soviets are mainly interested
is Undercutting any buildup of
support for the new US position
and ;are apparently concentrating
on convincing neutral opinion
that' the US initiatives do not
r;o f 4'r enough, hoping thereby to
place the TJSSR in the best pos-
;si'blo position for the antici-
pated discussions on testing and
di:~a ;1ar.~ent at the 17th UN General
.issse bly sessions . They probably
are ware of an Indian draft
"comapro:mise" test-ban treaty being
circulated among the neutral
iele{lates and will probably post-
pone any move until they can
deter;iine what support it receives.
Is an' earlier discussion on the
first; stage of a disarmament
treaty, Zorin attempted to give
some
.rnpresscion of movement by
asoerting that the US position on
the problems of verification of
agreed arms cuts and the limi-
tatio4 of arms production was
now c]oser to the Soviet proposal.
He reiterated Mcscow's demand for
complel,te destruction for all means
of delivery of nuclear weapons
during' the first stage, however,
and ma;,? ntained that the US con-
cept oaf zonal inspection would
pave the way toward a disclosure
of the entire military potential
of the Soviet Union.
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WEEKLY REVIEW
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CURRENT INTELLIGENCE WEEKLY SUMMARY
the incidents in West Berlin on 13
August. These included the ston-
ing and harassment of Soviet vehi-
cles carrying soldiers to the So-
viet war memorial in West Berlin.
New measures could go beyond diplo-
matic protests and night include
threats to close all or 'Dart of the
East-West Berlin sector border to
Allied military traffic.
Separate Treaty Threats
The Soviets and Last Germans
are maintaining their war of nerves
over the possibility of early action
on a separate peace treaty. The
Soviet charge in Sofia told a US
Legation officer on 9 August that
unless the US is willing to make
concessions, the Soviet Union will
not delay signing a treaty much
longer. Izvestia published an
article ley GDR First Deputy Premier
Stoph on 9 August which -sated that
the "events of the last few wec'_:
and months" made it clear that the
conclusion, of a treaty "must not
be further postponed." In a speech
on the anniversary of the Berlin
Wall, cast German Deputy Foreign
Minister Winzer warned that the
West would have to realize that
negotiations "cannot be protracted
endlessly" and that the "day is
approaching when the peace treaty
will be concluded." However, he
reaffirmed the GDR's interest in
a negotiated settlement and re-
called bloc proposals to replace
the occupation troops in West Ber-
lin with forces of ;'our ;>maller
Warsaw Pact and NATO countries under'
UN auspices, or !kith troops of
neutral countries.
Despite these continuing
threats of imminent unilateral
action, the Soviet pre and radio
continue to stress P~ osco ;':.; :ire ,_
erence for a negotiated settlement.
Pravda on 10 August reiterated the
staz and formula that a peace treaty!
would be signed only after "all
possibilities of agreement on this
question with the West have been
exhausted." The visit of the com-
mander of Soviet force:; in East
Germany, General Yalkubovsky, to
General Freeman in Heidelberg and
Ambassador Dobrynin's recent talks
with Secretary Rusk have been re-
ported in a positive fashion, but
without comment. The US Embassy
in Moscow observes that this treat-
ment bolsters the "quiescent im-
pression" being given Soviet read-
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Souvanna has proposed that
International Control Commission
(ICC) inspection teams be placed
at nine points along key routes
leading out of Laos in order to
supervise the withdrawal of for-
eign forces. Pathet Lao leader
Souphannouvong has yet to ap-
Kna; h
prove the location of such teams
in Pathet Lao - controlled terri-
tory.. The Geneva accords stipu-
late that the ICC teams are to
be "in place" by 6 September.
Foreign troops--with the excep-
tion of a French training mis-
sion--must be withdrawn within
the following thirty days.
Khav 0Raa o},,
Phoi; W .N. mg Het
fMu lg4
MKng'l >6oii YadgNnna
a Pa Dong ,alha ?hold
7
Kcal
~- Kaut_Nape.
40 Konq LejPath'i LaojNortn
viCt riilncS(' 1 rea;
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Withdrawal of North Vietnamese
troops, if carried out, would
probably occur before the place-
ment of ICC inspection teams.
On the domestic political
scene there is increasing evi-
Souvanna and Souphannouvong.
Souvanna's relations with
Phoumi, on the other hand, ap-
pear to be considerably im-
proved. Phoumi on 11 August
told Ambassador Unger that in
recent conversations with
Souvanna there had emerged
"large areas" of agreement.
Phovmi cited specifically
Souvanna's willingness to sup-
port. his new political organiza-
tio--a movement designed to
unite all non-Communist factions--
andto permit the continuation
of airdrops of nonmilitary
supplies to Phoumi guerrilla
units scattered throughout
northeastern Laos.
The military situation
remains generally quiet. A
Phoumi military post in Saya-
boury Province west of Luang
Prabang was attacked and over-
run by an undetermined number
of Pathet Lao troops on 9-
10 August. A Lao aircraft
which attempted to locate
the company-size garrison
was lit twice by ground fire
on 10 August. Although
sporaldic skirmishing is the
present pattern in Laos, this
action occurred in Vientiane-
controlled territory which
had previously been quiet.
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WEST NEW GUINEA
Despite threatened last-min-
ute hitches, a formal agreement
on West New Guinea was signed by
Indonesian and Dutch representa-
The agreement calls for an~imme-
diate cease-fire in the territory.
An interim UN administration, to
be established in October, is to
lead to a transfer of authority
to Indonesia on 1 May 1963.
Provision has been made for the
symbolic flying of the Indonesian
flag along with the UN standard,
beginning 31 December. During
the interim administration, a
UN force of about 1,000 men
will provide security.
While the settlement re-
moves the danger of large-scale
hostilities, Indonesian infil-
trations seem likely to continue
Djakarta's intention has been
to introduce as many troops
as possible on the assumption
that they will be used by the
UN.
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Indonesian airborne and am-
phibious landings last week at
scattered points on West New
Guinea have probably more than
doubled the estimated 300 to 500
troops still at large from ear-
lier infiltrations. Although
these new operations have
resulted in some clashes with
Dutci security forces, Indonesian
troops Zpparently are under or-
ders. to avoid engagement. Their
mission appears to be simply to
await the change of administration.
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NEW GUINEA
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CURRENT INTELLIGENCE WEEKLY SUMMARY
CONGO
Western European nations
have been lukewarm toward the
UN-US plan to promote Congo uni-
fication by resorting to eco-
nomic boycott and sanctions
against Katanga if President
Tshombe's regime continues its
secessionist stand. Brussels
has indicated that it agrees
with the plan's objectives,
but Foreign Minister Spaak has
demanded adequate UN protection
for the Union Miniere's Katanga
properties before cooperating
in economic sanctions. His gov-
ernment is under fire from the
Belgian press for its reported
participation in the plan.
London has accepted the
"Proposal for National Recon-
ciliation," but has so many
reservations about the accompany-
ing "Course of Action" that it
has refused even to join in pre-
senting the latter document to
Adoula. Britain remains opposed
to any actions which imply the
use of force. London has stated,
however, that if economic sanc-
tions were applied against Ka-
tanga by other countries, it
would not oppose them and would
probably limit imports of Ka-
tangan copper to the average of
the last three years in order to
"preserve the stability of the
London metal market." Paris
similarly is not prepared to
participate in the plan, but
will not oppose it and appears
willing to limit copper imports
to present levels. Press re-
ports of the European reserva-
tions, as well as Adoula's at-
tempt to apply such sanctions
as the closing of Elisabethville
airport and the suspension of
Katanga's telecommunications
with foreign countries, have
lessened the chances of Tshombe's
acceptance.
Belgium has urged Adoula
to suspend application of these
sanctions, which actually are
having little effect on Katanga.
Sabena is flying to Ndola, with-
in easy reach of Elisabethville,
17 Aug 62
and. the Belgian telecommuni-
cat.ons agency is still handling
Elisabethville traffic. Adoula
has told the US ambassador that
he yiould have preferred acting
in line with a Western program
for;reintegrating Katanga, but
felt that he had to move quickly
to bolster his political posi-
tion.
Official Katangan reaction
to he Adoula decrees has been
relatively mild. Tshomb6's
government continues to stress
its readiness to discuss "rea-
sonable solutions" despite the
central government's latest
pressure tactics. At the same
time:, however, it has intro-
duced a new diversionary pro-
posal for the establishment
of a,"tripartite" commission
of experts designated by Leo-
poldville, Elisabethville and
the VN to develop a federal
constitution. This proposal
ignored Adoula's recent re-
quest for UN assistance in
drafting such a new constitu-
tion,
'There are increasing indi-
cations that the central govern-
mentmay soon attempt to force
Tshoimb6's troops to withdraw from
I:ongolo, a strategic transport
center in northern Katanga, where
they are isolated. Within the
past few weeks Congolese army
units in northern Katanga were
reinforced with a battalion flown
in fr::om Stanleyville,and Air Congo
made 'frequent flights carrying
equipment from the Leopoldville
supply area to Albertville. Leo-
poldville Vice Premier Sendwe has
informed the US Embassy that he
is goa.ng to Albertville on 18
August "to put an end to the
Kongolo problem." He said he did
not w~sh to "make war," but is de-
termifed to resolve the problem
and restore transport and communi-
catiois lines linking northern Ka-
tangawith the rest of the Congo.
:sporadic and inconclusive fighting
has apparently broken out in some
other areas of northern Katanga.
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Attempts by the political
bureau controlled by Ben Bella
to select candidates for the
2 September elections and to

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CURRENT INTELLIGENCE WEEKLY SUMMARY
25X1
Nehru also spoke generally
of changing India's diplomatic
tactics on the border issue. He
felt that once a military dis-
engagement had been achieved,
it would be possible to engage
the Chinese in talks, possibly
for as long as "five or six
years." His subsequent remarks
in answer to parliamentary
criticism suggest that such talks
would merely explore further
ways to reduce tensions and to
cjeate a climate conducive to
fruitful negotiations. He
again drew India's time-worn
distinction between "talks" on
matters of procedure and formal
"negotiations" on matters of
substance, indicating that while
India favors "talks" at any time,
"negotiations" aimed at con-
ciuding an overall border
sOttlement would still be
conditional on the Chinese
"Vacating their aggression."
The Chinese will probably
w6lcame the kind of de facto
truce outlined by Nehru. They
have long sought to bring the
Indians into negotiations on
tIe basis of the status quo,
add they seized eagerly on India's
suggestion on 26 July that further
talks be held. However, the
Chinese will undoubtedly continue
to reject Indian conditions for
formal boundary negotiations
just as they have twice rejected
Nehru's proposal to reduce ten-
sions by a mutual withdrawal
from the disputed area in Ladakh.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
DEVELOPMENTS IN FINLAND
Finland's four-month-old
coalition cabinet faces a
period of internal tensions as
a result of differences over
domestic policies and the dis-
satisfaction of the smaller
coalition members with the
actions of the dominant Agrarian
party. Controversial issues
such as agricultural income
legislation and the language
law, along with the growing
restiveness of labor, will test
the ability of the governing
parties to hold together in the
coming weeks. Foreign policy
issues have not figured prom-
inently in this intracabinet
bickering, and President Kekkonen
apparently continues to handle
in person the more sensitive
problems arising in Soviet-
Finnish relations.
At the root of much of the
tension is the dissatisfaction
of the three smaller "bourgeois"
parties and the representatives
of labor in the cabinet with
their Agrarian partners. The
Agrarians, who enjoy the direct
support and confidence of Pres-
ident Kekkonen--a former Agrarian
party leader himself--have
been accused of acting in a
highhanded manner by seeking
to force cabinet members belong-
ing to the smaller parties to
support legislation which may
be unpopular with their follow-
ers. These parties largely
represent urban dwellers un-
sympathetic to the Agrarian
party's objectives, which are
centered on furthering the in-
SECRET
17 Aug 62
terpsts of proprietors of small
and; middle-size farms. Earlier
this summer a government bill
on agricultural income was de-
feated. Since early August,
parliament has been in special ses-
siod to consider a compromise
bili worked out by the Agrarians
and'the opposition Communists.
The Agrarians, however, again
face the possibility of de-
fections from the ranks of the
coalition parties once the bill
comas up for consideration in
parliament. Even the deputy
minister of agriculture--a non-
Agrarian--has publicly announced
his ;opposition. If the Agrarians
are unable to obtain passage
because of these defections, a
furt er strain will be placed
on the already shaky coalition.
Another major issue con-
fronting the government is the
long debated language law es-
tablishing permanent bilingual-
ity n certain cities with
relak:ively large Swedish-speak-
ing minorities. When parliament,
on 13 June, rejected an amend-
ment'to the Language Law of 1922
proposed by the Swedish Peoples
Party, the Swedes threatened to
withdraw t?h.tir two mini ters
from.the government if their
coalition partners did not sup-
port them. Subsequently, the
government indicated its willing-
nessIto meet some of the demands
of the Swedes on this question,
but thereis uncertainty about
whether the amended bill will
receive the necessary parlia-
mentary support.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
On the labor scene, the
government must try to persuade
the trade unions to hold their
demends to a minimum in the wage
contracts to be negotiated during
the next five months. Repre-
sentatives of the labor unions
have clearly indicated restive-
ness over the rising price level
and, in addition, feel them-
selves in a stronger position
than usual due to the full employ-
ment situation. Government lead-
ers may find it difficult to per-
suade the three representatives
of the central labor federation
in the coalition to accept a
moderate wage formula in view
of the continuing rivalry be-
tween the two national labor
federations. Confronted by a
choice of supporting the position
of the government or the trade
unions, the labor representa-
tives in all likelihood would
resign, thus freeing their fol-
lowers to take strike action or
any other measures the union
leadership decides upon.
In foreign relations the
government faces a period of
lively diplomatic activity with
Moscow in the coming months.
Soviet Army Chief of staff General
Zakharov is currently visiting
Finland and the occasion may
be used to conclude an arms pur-
chase agreement which has been
under consideration. Negotiations
also have been resumed on leasing
the Soviet portion of the Saimaa
Canal and an agreement is ex-
petted shortly. Although there
isno firm evidence that Moscow
is;pressuring Finland to recognize
Ealt Germany, Finnish officials
probably expect such pressure if
the Soviet Union decides to call
for a general peace conference
onGermany. This period of
diplomatic activity will reach
a high point with President
Kelkonen's 10-17 October visit
to the Soviet Union.
In its relations with
the West, the most pressing
prdblem confronting Finland
is;the need to work out an ar-
ran',gement with the Common Mar-
ket. Unlike the neutrals,
Finland has not applied for
association with the EEC and
it is expected to continue to
pla a passive role in this
matter until the results of
the.3wedish, Austrian, and
Jwi;5s negotiations are known.
Although.there are no indica-
tions yet that President Kekkonen
int6nds to raise this matter
during his visit to the So-
viet Union, he probably is
under pressure from Finnish
indi.strial and business groups
to feel out the Russians in
orddr to determine the kind
of Finnish arrangement with
the',EEC which Moscow would
toldrate.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
The overthrow of the
Guido government by a group
of military officers, headed
by General Federico Tcranzo
Montero appears to be imminent.
The key to the success or
failure of this group depends
on whether or not rebel leader
Toranzo Montero is able to take
commandof the First Army Corp:;
located at Palermo on the out-
skirts of t,__,enos Aires, and
the amount of sup,)ort he is
able tocormand within the
military. According to press
reports, a number of officers
at ;;alta--headquarters of the
Fourth Army Corps which the
rebel general still commands--
have rejected the authority of
the rebel faction. This group
may attempt to prevent Toranzo
blontero from returning, to
Buenos Aires and assuming com-
mand of the First Army Corps .
General Carlos Caro, former
commander of the Campo de Mayo
garrison which ,`supported the
government in last week's crisis;,
told Ambassador McClintock on
15 August that he doubts whether
supporters of Toranzo Montero
who have been appointed to itey
garrisons and divisions will
be able to muster the :support
of field grade officers should
they attempt a coup.
General Toranzo Montero and
his group of "golpistas" may,
as a result of recent press re-
ports that the U3 is about to
recognize the military junta in
Peru, feel that they have nothing
to lose in ousting the Guido
Iregie in favor of a military
just, which would proclaim it-
selfanti-Communist and pro-West.
:Involvement of high-ranking
navy officers in the pfanned
rebellion was revealed by re-
tirec Admiral Rojas, who told
A,:ibas!sador McClintock on 14
Augut that the plot to over-
threw; the government had naval
approval.
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President Guido is at-
tempting to hold his cabinet
together in the face of pres-
sure to force the resignation
of a number of key cabinet
officials. Guido accepted the
resignation of Defense Minister
Cantilo on 15 August. Cantilo
had been attacked for "inept
handling" of last week's crisis.
Interior Minister Adrogud has
"provisionally" accepted the
defense portfolio but his hold
on both his positions is weak.
Foreign Minister Bonaficio Del
Carril has submitted his res-
ignation but President Guido
reruses to accept it. Minister
of Economy Alsogaray has in-
curred the wrath of many military
officers for his attacks on
their actions in last week's
revolt, and he may tender his
resignation if a solution to
the political and military
crisis is not reached in the
near future.
The government is also
faced with a serious electric
power shortage and a potentially
serious labor conflict. A fire
SECRE'
CURRENT INTELLIGENCE
at the Dock ,cud Power Plant has
resulted in a power shortage
affecting approximately half
of the southern Buenos Aires -
La Plata urban area. In-
habitants in a 60-kilometer area
are; without lights, refrigera-
tioti, and an adequate water
supply. Schools are closed
and:industrial plants employing
approximately 250,000 workers
are idle.
penal sentences.
Labor contract negotiations
involving seven meat pack-
ingcompanies are deadlocked
anda complete shutdown of
Argentina's meat packing plants
may come next week. The meat
packers' union has begun a
series of daily strikes, to
increase one hour each day
witli complete stoppage scheduled
for, 16 August. The strikes
are to be followed by a take-
over of the plants by the
workers. The government has
swarm ed labor leaders in the
past. that any attempt by the
workers to occupy industrial
plants would result in harsh
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Intense political maneuver-
ing is continuing in Brasilia as
the leftist Goulart regime at-
tempts to increase its power
x,is-a-vis the conservative con-
gress. Many moderates in polit-
ical and military circles dis-
like the parliamentary system
but are uneasy over moves to
restore a strong presidency be-
cause of the leftist tendencies
of President Goulart and Prime
Minister Francisco Brochado da
Rocha. Both supporters and op-
ponents of the administration
are continuing to line up mil-
itary support for their respec-
tive positions.
Brochado da Rocha--who acts
as an agent of Goulart rather
than as an independent execu-
tive--is threatening to resign
in a clash with congress over
his request for a delegation of
substantial legislative power
to the executive and for a pleb-
iscite on the parliamentary sys-
tem. Most observers in Brazil
believe that such a plebiscite
would result in a return to a
strong presidency.
Governors of 21 Brazilian
states, who are meeting in Bra-
silia this week, may help work
out some compromise between
Goulart and congress.
The congressmen are intent
on returning to their home dis-
tricts to campaign for the Oc-
tober elections. They may accept
some compromise, particularly
in regard to the plebiscite, to
avoid a new government crisis,
but they will probably attempt
to limit the scope of any dele-
gation of legislative powers.
The Brazilian Communist
party may shortly be declared
legal by the Supreme Electoral
Court. Such a decision would
increase apprehension in Bra-
zil; over the orientation of the
govvernmen t .
Preoccupation with domes-
tic; politics appears to be pre-
venting any substantial crit-
icism of several new moves in
Brazil's "independent" foreign
policy. East German Foreign
Trade Minister Balkow--the
first high East German offi-
cial to visit the American con-
tinent--recently visited Bra-
zil,to open a three-week East
Ger-ian industrial exhibition
in *ao Paulo. Poland in late
July opened a new consulate
in 1korto Alegre, capital of
Rio Grande do Sul State where
Goul1art's brother-in-law Leonel
Bri~ola is governor.
!Meanwhile, Goulart--who
has little knowledge or inter-
est in economics--is said to be
cone rned over Brazil's criti-
cal inancial situation. In
rece t weeks the gap has widened
rapily and substantially be-
tween; the official exchange
rate of about 355 cruzeiros
to the dollar and the freely
fluctpating tourist rate which
is no~v almost 600. Recent re-
ports?indicate that the cost
of living, which rose 18 per-
cent In Rio de Janeiro in the
firstsix months of 1962, was
up 37:percent for the same peri-
od in Salvador, capital of
Bahia and a key city in Brazil's
impoverished northeast.
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SECRET.
CURRENT INTELLIGENCE WEEKLY SUMMARY
HAITIAN DICTATOR ACTS TO PREVENT HIS OUSTER
Haitian President Duvalier's
dictatorship has for the moment
averted a serious threat aris-
ing from the conflicts between
the President and the regular
armed forces, but military plot-
ting probably continues. J
Du-
valier, since he came to power
in 1957, has been organizing
the civil militia as a loyal
group to serve his own purposes.
,Support for the Duvalier
regime is now reduced to the
militia, a few hundred armed
retainers, possibly the regu-
lar army presidential guard
battalion, and a small group
of advisers made up of spiritual
cultists, opportunists, and
extreme leftists. Opposition
permeates the regular officer
corps of the armed forces,
much of the civil officialdom,
and virtually all of the bus-
iness class.
*t the moment Duvalier
appea>s to have the upper hand.
Local units of militia occupy
the palace, and provincial
militia units are situated on
the outskirts of the capital.
A final government move to
destroy the regular forces
or to!integrate the enlisted
men into the militia might be
attempEted at any time with
little`; if any warning.
In order to complete the
arming of his militia, Duvalier
may recently have obtained some
arms f}'om abroad, possibly from
the Soviet bloc. According to
US military observers in Port-
au-Prince, civil militiamen on
3 Auguot were maintaining un-
usually strict guard on the wharf
there to protect packing cases
bearin~, Czech markings. The ap-
pearance of the cases coincides
with a remark reportedly made
by an army officer in good stand-
ing wits Duvalier that he was
training militiamen in the use
of new pubmachine guns.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
MEXICAN GOVERNMENT CONCERN OVER COMMUNIST ACTIVITIES
The Mexican Government is
investigation of
Communist
still concerned over pro-Commu-
activities, the planning chief
nist activities brought to light
of '.the Ministry
of Public Works
during the investigations of
reportedly was arrested last
25X1
groups that were planning to
week on charges
of involvement
disturb President Kennedy's re
in publishing an
inflammatory
cent trip to Mexico.
In a move apparently related
to the government's continuing
anti administration, anti-US
pan?phlet which has been circu-
lating for some months. In
addition, the government is
believed to have actively en-
couraged the recent replacement
of Communist-controlled leaders
in important teachers' and tele-
phone workers' unions.
In early August, :Y1exi-
canpolice seized more than
150pounds of Communist
propaganda material from
students returning from 26th
of duly celebrations in Cuba
to their homes in Chile,
Arge;ntina, Brazil, Guate-
mala:, Bolivia, and Venezuela.
Mexilco is an important
transit point for most Latin
American travelers to Cuba,
but until recently the gov-
ernmOnt scrupulously ad-
hereci to its policy of not
interfering with anyone
whose activities were not
an obvious threat to Mexi-
can law and order.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
PANAMA SEEKS INTERNATIONAL SUPPORT 'OR CANAL ZONE DEMANDS
The Panamanian Government
apparently is seeking public
support from other Latin Ameri-
can countries for its claim to
sovereignty over the Canal Zone.
On 10 August Costa Rican Foreign
Minister Oduber told a press
conference in Panama City that
his country would give immediate
support to any Panamanian demand
for complete sovereignty. He
also was quoted as saying "re-
garding problems of the Zone, it
is Panama which decides...."
Oduber's statement apparently
was part of an effort to con-
vince Panama that its political
interest can be served best by
closer cooperation with the Cen-
tral American countries. A sim-
ilar stand was taken two days
later by the Chilean foreign
minister, also at a press con-
ference in Panama, when he reaf-
firmed what he termed Chile's
policy of full solidarity with
Panama's aspirations.
The US Embassy in Panama
City notes that this is the first
time high officials of other
Latin American governments have
made such statements. It antici-
pates further efforts by Panama
to obtain international support,
both in individual countries
and at inter-American and inter-
national meetings. Strong of-
forts have been made to obtain
support for the Panamanian posi-
tion from delegates to an inter-
American journalists' conference
now' meeting in Panama City.
The issue may be pressed
at the UN by delegate Aquilino
Boyd, the former foreign minister
who; led a group which destroyed
a US flag during the riots near
the borders of the Zone in No-
vemper 1959. While ho was chair-
manof the National Assembly's
foreign relations committee in
thej fall of 1961, Boyd started
a c npaign among other Latin
American legislators for support
of Panamanian demands for re-
vision of the canal treaty.
Boyd is politically ambitious
and; may plan to use the UN as
a means of enhancing his posi-
tioai as a Panamanian nationalist
and, presidential candidate.
On 10 August President
Chiari told newsmen that Panama
is 'not progressing as fast as it
wishes in meetings of the commis-
sion set up during his visit to
Washington in June to discuss
Panamanian-US relations in the
Zone. The Panamanian Government
probably feels that support from
other governments will strengthen
its position in the discussions.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
TILE SITUATION IN SURINAM
The political and economic
situation in Surinam is beginning
to deteriorate at an increasing
rate. Interparty and intra-
party bickering has reached
such proportions that the normal
day-to-day operations of the
three-party coalition government
are seriously impaired. Parlia-
mentary and cabinet meetings are
taken up with quarrels between
irresponsible leaders whose
constant maneuvers foi personal
and political advantage are
stimulating unrest and under-
mining confidence in the gov-
ernment. Antagonism between
the dominant Creole and Hindustani
elements is stiffening and the
possibility of maintaining a
harmonious political relation-
ship between the two races is
becoming more remote.
The government's financial
position is steadily weakening.
Exports are shrinking,capit'.l is
beginning to move out of the coun-
try, and the stability of the guilder,
the Surinam monetary unit, is
declining. External aid is
urgently needed, and much of the
C O L O M B I A
Dutch arises from the belief
thaat Dutch officials have not
been sufficiently active in
procuring outside funds for
development.
Political divisions in
Surinam are drawn along racial,
ant to some extent, religious
lies. The Creoles (Negro and
European mixture) and the East
Indians are the most Politically
conscious groups. The third
largest group, the Indonesians
(mainly Moslems), is relatively
in ctive politically. Of the
total registered voting popula-
tion of 177,000 the Creoles
constitute 40 percent, the
Hindustani 35 percent, and the
Javjanese 20 percent. Although
the Creoles are the dominant
force, they are divided by
factionalism, and their power
position is threatened by the
mor energetic and more
pro perous Hindustanis. In
time the East Indians will be-
come the predominant group
politically as well as numerically,
in the meantime the Creoles are
using every means available to
maintain their predominance.
SORINAM
(Neth.)
R R A 7 1 L
--Q
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17 Aug 62
;rowing bitterness against the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
The present government is a
coalition of two Creole factions,
'he Catholic party and the
National Party of Surinam, and
the Hindustani party. The
coalition holds 17 of the 21 seats
in parliament, and though it
functions poorly, is likely
to continue until the 1963
elections as the politicians
prefer to cling to office.
The political unrest is
reflected in the rapid multiplica-
tion of parties ever the past
year. Last November there were
eight political parties, today
there are thirteen. While many
of these are splinter groups,
such as the United Indian Party
organized last July from the
nomadic and scanty survivors
of the original Indian population,
their disgruntled following may
be large enough to shift a
significant amount of support
away from the major political
groups in the 1963 elections to
the disadvantage of the coalition.
If present efforts to raise
the number of parliamentary
seats from 21 to 43 succeed,
some of the splinter parties
as well as the Communists will
probably gain representation.
While there is no overt
Communist activity in Surinam,
the number of front organizations
has been growing in size and
influence. Small groups on
the extreme left, mostly darker
Creoles and younger people,
especially students, form the
nucleus of a pro-Communist
anti-Western movement. Last
winter the Nationalistic
Republic Party was organized
by E. Bruma, a prominent lawyer
and crypto Communist. This party
consists of a small group of
intellectuals at the top sup-
ported by a mass of under-
privileged dark Creoles with
a strong racial bias against
the more prosperous Hindustanis.
According to the consulate
general, it is becoming an im-
portant Communist-front organ-
ization with a sizable body
of support and a wide mass
appeal. Its members could be
easily incited to mob action
should the occasion offer.
After years of indifference,
Surinam's interest in British
Guiana has become very lively.
.Japan's election last August
deeply stirred the Surinam East
Indians, who are seeking to
;establish their own regime free
of Creole and Dutch control.
In this event, Surinam would
be likely to move closer to
British Guiana and adopt a
neutralist position in the
East-West struggle. The East
Indians are less loyal to
;Western concepts thah the
,Creoles, who remain basically
pro-Western.
Dutch influence in Surinam
is waning rapidly. The population
Yio longer looks to Holland for
guidance and especially in
gconomic matters is displaying
qn attitude of independence.
The productive sector of the
economy is based on one com-
i4odity--bauxite--which provides
40 percent of exports and ex-
change earnings. Even slight
fluctuations in the world market
are immediately felt, and a
marked downturn would have
serious consequences. Bauxite
earnings for the first six
months of 1962 are estimated
to have declined $1.5 million.
Surinam wants considerably more
financial and technical as-
sistance than is available from
Holland, particularly for "social"
development and diversification
ok economic activity. Frustra-
tion in efforts to realize the
country's development potential
could provoke dangerous anti-
Wqpstern attitudes, especially
in view of the heterogeneous
character of the population.
Astrong upsurge of nationalism
swept the previous Surinam gov-
ernment out of office in 1958,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
SPECIAL ARTICLES
BRITAIN AND THE COMMON MARKET:' A STATUS REPORT
When the talks on Britain's
application for Common Market
(EEC) membership adjourned on
5 August for approximately two
months, detailed agreements
were still lacking on a number
of major issues. Among these
were various facets of the Com-
monwealth agricultural problem,
financial aspects of the EEC's
common agricultural policy, and
Britain's request for no
duties on certain key import
items. Still other problems,
such as institutional adjust-
ments, had scarcely been dis-
cussed. Nevertheless, the past
nine months of hard bargaining
have largely established the
feasibility of Britain's EEC
membership and produced a
general understanding of the
arrangements which would be
required. While formal ac-
cession is still many months
away, the negotiations have
now reached a point where neither
side would lightly accept the
responsibility for failure to
conclude an agreement.
The General Blueprint
In broad outline, the pros-
pective accessdon agreement is
based on Britain's acceptance
of all the major features of
the Common Market. In return,
London has received EEC coin-
mitments, more or less firm,
to a broad range of special pro-
visions regarding Britain's
future commercial relations
with the other members of the
Commonwealth. London has also
persuaded the EEC to modify
somewhat the administration of
its common agricultural policy.
London, which had originally
viewed EEC arrangements as in-
volving too many limitations on
British sovereignty, in effect
conceded its acceptance of the
EEC treaty a year ago when it
applied for membership under
the relevant treaty provision.
This was subsequently confirmed
in tbei.nitial presentation of
Britain s case last October when
Lord. Privy Seal Heath declared
that:London was "ready to sub-
scribe full1" to the Common
Market's aims, to play its full
part. in the EEC's institutions,
and--assuming "some adjustments"
consequent to the admission of
a new member--to accept the
"structure" of the EEC's common
external tariff.
.With respect to the customs
union aspects of the EEC, London
will therefore ultimately align
its tariff practices with those
of the Common Market. Beyond
that, Heath has committed
Brit.in on entering the EEC to
"catch up" with the tariff ad-
justnents already effected by
the present members. Should
entry occur after 1 July 1963--
whicli is likely--this will mean
an inimediate 60-percent reduc-
tionin Britain's tariffs to-
ward the other Common Market
countries. It will also mean
that with respect to non-EEC
countries, excepting those be-
longing to the Commonwealth,
Britain will eliminate 60 per-
cent of the difference between
its present national tariff
rates' and those projected by
the EjEC in its common external
tariff .
','E
,C E&onomic and Social Provisions
London has also accepted
the sp-called economic and social
provisions of the EEC treaty.
These:are the articles which
look toward full economic union
of the member countries, provid-
ing for example for the regulation
of cartels and monopolies; free
movement of labor, capital, and
entrepreneurs; coordination of
economic and fiscal policies;
and the institution of a common
commercial policy. In his
October statement, Heath requested
joint examination of the numerous
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CURRENT INTELLIGENCE WEKLY SUMMARY
decisions which have already
been taken pursuant to these
articles. While some technical
problems have been turned up--
e.g., concerning social security
for migrant workers--Heath never-
theless affirmed at the min-
isterial session on 29-30 May
that London would encounter no
major difficulties in making
the necessary adaptations in
its present practices.
Britain's Domestic Agriculture
London's acceptance of EEC
internal policy includes also
the common agricultural policy
which was adopted by the Com-
mon Market last January only
after prolonged debate.
The common agricultural
policy'relies heavily on the
device of variable import levies
to keep EEC farm prices above
the world price and to protect
the community producer. This
approach is sharply at vari-
ance with London's present
policy of retaining relatively
unrestricted access to the world
food market while supporting
farmers' incomes with deficiency
payments. In consequence,
Britain's food prices have re-
mained substantially below the
Continent's, and an essential
feature of its farm program is
the annual review to determine
the needed level of farm income
support.
While accepting the ob-
jectives of the common agri-
culturalpolicy London initially
requested a lengthy transitional
period in moving toward. its
application in Britain and bar-
gained hard for introduction of
the concept of the annual review.
It contended not only that the
EEC's system would involve
difficult adjustments for the
British farmer, but also
questioned whether the common
policy--relyii-' on the restric-
tion of imports--would guarantee
farm incomes if, through the
addition of new members such
as Denmark, the EEC should in-
crease its self-sufficiency in
farm; products. In the latter
event, the British held, mem-
ber states would need to retain
the possibility of providing
dire t income support.
Provision for Annual Agricul tupal
Review
The compromise eventually
work d out on this issue appears
to c recede more to the form than
to tie substance of the British
posi ion. No provision has been
made;for an extended transitional
peri d, and the review system
adop ed has been placed in a
firm ;community framework. On
the basis of review$conducted
by the national governments,
the GEC's independent executive
commission has been directed to
report annually to the EEC
Council on the general agricul-
tural situation in the community.
Should this review disclose
that farmers are not receiving
a "fair standard of living,"
thenlit would be the' commission's
resp nsibility to propose
remedial action to the council,
the latter making its decision
in accordance with the voting
rules, set forth in the EEC treaty.
Ayr cultural Program Financing
LAn important aspect of farm
policy not yet settled is Britain's
acceptance of the regulations
regarding the EEC's agricultural
fund.; In question is the
provision of the common agri-
cultural policy that income from
the variable import levies--
potentially an immense sum--will
ultim tely become a part of the
commu ity's revenues. Even among
the present EEC members, the
interpretation of this provision
is somewhat in question because
an EE treaty article also pro-
vides:for a proportional scale
of na ional contributions to
the community budget. Since
West Germany and the UK are the
major European importers of
foodstuffs, the prospect arises
that their support of the com-
munity budget would exceed the
ceiling set forth in the treaty.
France, on the other hand, is
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CURRENT INTELLIGENCE WEEKLY SUMMARY
potentially the largest recipient
of EEC support in financing the
disposal of farm surpluses.
It was French attempts to
confirm UK (and EEC) acceptance
of this provision which led
to the 5 August recess of the
accession talks. Heath declined
to commit himself, whereupon
France entered a reservation
regarding agricultural arrange-
ments in general.
By far the larger part of
the negotiations to date, how-
ever, has been concerned with
the reconciliation of Britain's
commercial relationships with
its dependent territories and
other Commonwealth countries
with the obligations it will
assume as an EEC member. The
arrangements, insofar as they
have been agreed to, are al-
ready.exceedingly complex,
combining provisions for
specific products with formulas
applicable to groups of products
or to one or more territories.
Reduction of EEC Tartf s
In some cases, the dif-
ficulty Britain would have in
applying the EEC's tariffs
to imports of Commonwealth
products has been resolved by
EEC agreement to abolish tar-
iffs on such items. The aboli-
tion of tariffs on tea--a major
export of Ceylon and India--is
a notable example. In other
cases, where the EEC has felt
it impossible to eliminate
tariffs entirely because of
producing interests of its
own, Britain has been granted
tariff quotas--i.e., been
authorized to import specific
quantities of goods at low or
zero tariff rates from tradi-
tional suppliers. Several
British requests for tariff
adjustments, however, remain
outstanding.
With respect to imports of
manufactured items from the
developed Commonwealth coun-
tries, Canada, Australia, and
New Zealand, London has been
obliged to agree to apply the
EEC's common external tariff,
but has been given a transitional
period in which to do so. On
entering the EEC, Britain
will apply 30 percent of the
EEC's tariff to such.Imports;
an additional 30 percent will
be imposed in 1965; and full
EEC'rates will become applicable
by 1970. Roughly similar 'ar-
rangements have been made for
phased application by Britain
of the EEC tariffs to imports
of manufactured items from
India, Pakistan, and Ceylon.
In addition, these three
countries will be offered com-
prehensive trade agreements
with the enlarged-EEC designed
to contribute to their foreign
exchange earnings.
With respect to the African
and': Caribbean members of the
Commonwealth and to practically
all; the British colonies, total-
ing' in all 34 territories, the
formula of direct EEC association
has been chosen. The type of
assOciation envisaged will be
patterned after the arrangements
emerging from the current nego-
tiations between the EEC and
the18 African states linked
to the EEC in 1957 by the con-
vention which expires this year.
The terms will include tariff-
free access to the enlarged
Comion Market, but the questions
of institutional links and
economic development assistance
have been left open. Association
wil'. not be offered to Hong Kong,
which is considered a special
case, nor to Cyprus, Gibraltar,
and'Malta, respecting which
London will make proposals
"in'due course." For both
political and economic reasons,
moreover, association has not
been offered the Federation of
Rhodesia and Nyasaland.
The Temperate-Zone Farm Products Issue
The Commonwealth package
is least precise with respect
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CURRENT INTELLIGENCE. WEEKLY SUMMARY
to prospective arrangements for
the future exports of temperatc-
zone farm products of Canada,
Australia, and New Zealand.
London initially requested EEC
assurances that these countries
would retain "comparable export
outlets"--in effect receive
quantitative guarantees. The
Common Market steadfastly
opposed this approach, however,
on the grounds that the Common-
wealth could not reasonably
expect to receive assurances
not enjoyed by EEC farmers them-
selves nor by other major
exporters of farm products--
e.g., the US and Argentina.
Moreover, the EEC held, quota
guarantees could not be rec-
onciled with the EEC's common
agricultural policy.
Shortly before the adjourn-
ment of the Brussels talks, how-
ever, the EEC did offer the i1K
an omnibus proposal which it
believes goes far toward meeting
London's needs. For an initial.
period ending no later than
1970, Britain would be author-
ized-by adjusting the EEC's
import levies--to share with
the Commonwealth the preferences
which the EEC will accord its
own farmers. While this privi-
leged position would gradually
be pnased out, the EEC would
consult the Commonwealth re-
garding remedial measures
should a sudden and consider-
able reduction of Commonwealth
exports occur.
.FTC Farm Price 1'oI icjj
The EEC formula takes a
dual approach to the longer
term problems of the Common-
wealth farmer. The enlarged
community would commit itself
to follow "reasonable" price
policies in implementing its
common agricultural program.
It would discuss those policies
with other countries, and would
"do its utmost" to contribute
to a "satisfactory level" of
world trade. Although vague,
this commitment is designed to
reassure the Commonwealth that
EE~ farm prices will not be
pe mitted to rise to such levels
that resulting increases in
do4estic production would convert
the EEC from a deficit to a
suiplus food area.
tong-Tema Commodity Agreements
Beyond this commitment,
thci EEC formula also proposes
that by 1963, if possible, inter-
national conferences should be
called to negotiate multilateral
stabilization agreements for
many of the major farm commodi-
tids. These conferences would
seek to regulate price and
prddurc.tion policies, stockpil-
ind, and the levels of world
traide. Should such agreements
not be reached by 1970, then
the; EEC would seek alternative
arrangements, consulting major
agrlicultural producers, in-.
c 1 nkti ng those in the Common-
weailth .
Major details are obviously
misl;ing in the EEC proposals,
andl their ultimate acceptabil-
ity! i ? far from certain. Al-
thorgh they were advanced in
the name of the Six, France sub-
seq~ently reserved its position
in the wake of the dispute over
the agricultural fund. Since
thelapproach varies so much
frorh Rritain's initial demands,
Heath has simply "taken note"
of It, pending further cabinet
andlCommonwealth consultations.
Nev4r.theless, given the hard
bargaining which has already
occirred on the entire issue,
it seems unlikely that a new
departure will be proposed when
negotiations resume.
The Untouched Problems
The heavy concentration so
farlon Commonwealth and agricul-
tural) problems has virtually
preclluded consideration of other
prot~lems, some of which are
serious ones. Among these are
Britlain's commitments to its
EFTA; partners, its role in com-
munilty institutions, it ap-
pli.c4tions for EURATOM and CSC
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INTELLIGENCE WEEKLY SUMMARY
membership, its participation in
the European political union proj-
ect, and finally, the future of
sterling.
The EFTA problem has both legal
and political aspects. The EEC
treaty requires the members to re-
nounce prior conflicting obliga-
tions, which at some point Britain
will have to do with respect to
the EFTA treaty. London, however,
feels itself bound by the June 1961
decision of the EFTA council that
the association would be maintained
"until satisfactory arrangements
have been worked out...to meet the
various legitimate interests of all
members of EFTA and thus enable
them all to participate from the
same date in an integrated European
market." Of the other EFTA mem-
bers, Denmark and Norway have ap-
plied for EEC membership, but the
negotiations are in their earliest
stages; the EEC has not yet decided
whether to accept the candidacies
of Austria, Switzerland, and Sweden
for Common Market association.
Portugal has yet to indicate what
sort of arrangement it will seek
with the EEC.
The consequent uncertainty
over the eventual size of the com-
munity will complicate the adjust-
ment of EEC institutions to ac-
commodate Britain's membership.
Britain will no doubt obtain parity
of representation with the larger
EEC members in the various
community institutions, but the
major problem will be the revision
of the voting rules applicable
to council decisions when less
than unanimity is required. The
necessary recalculation of what
constitutes a majority--especially
in those instances where the EEC
treaty provides for weighted votes
--may accordingly become an im-
portant test of London's attitude
toward the supranational. aspects
of the EEC.
3,' i to i n's CSC and 3'U iATOM
1'embership
The processing of Britain's
applications for CSC and EURATOM
membership has been slow in getting
under way. With respect to EURATOM,
the potentially most difficult prob-
lem is the delineation of EURATOM's
jurisdiction in matters of security
control and inspection. There
is already a. long history of fric-
tion between EURATOM and France
in drawing a line between the mili-
tar~. and nonmilitary aspects of
the French nuclear program--only
the latter being subject to EURATOM's
controls. With respect to the CSC,
both West Germany and France are
showing concern over prospective
competition from Britain's huge, na-
tionalized coal industry. Moreover,
Britain's CSC entry will further
complicate the community's effort
to p ~oduce a common energy policy--
on which the present members have
been deadlocked since 1958.
aDzropean Political Union
.The maneuvering among the
EEC Countries in recent months
over;~the political union treaty
is a}so a potential source of
trouble for Britain's Common Market
accession. The Macmillan govern-
menthas repeatedly made it clear
thatit could not now support a
federalist European structure, and
it remains highly unlikely that
the dix either can or will agree
within the next few months to a
political treaty not acceptable to
London. Nevertheless, how to
bring Britain into the political
talks without giving London a "veto"
over the final treaty remains a
delicate issue among the Six.
Moreover, early agreement on such
a treaty would underscore the
political as well as the economic
aspects of Britaift's entry into
Europe--an enphas is which London
would prefer to avoid.
The Sterling Problem
Finally, it is highly question-
able 'Whether both sides can continue
to evade serious consideration of
the potential impact on the pound of
Britain's Common Market entry. Only
cursory attention has been given to
,the
the balance of payments problems
may face, the EEC's financial
and monetary experts are deeply di-
videdin their estimates, and there
has been a tendency to consider the
problem too sensitive to raise. Be-
yond that is the question of the
futur' of sterling as an interna-
tional currency, which is subsumed
in pat in the even bigger problem
of international liquidity. Specula-
tion in EEC circles on the possible
need for an eventual pooling of EEC
reserves--now roughly equal to those
of the, US--is indicative of the im-
portance and the difficulty of the
issues; which could be raised 25X1
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CURRENT INTELLIGENCE: WEEKLY SUMMARY
The Austrian political
scene is currently dominated by
the Common Market issue. The
EEC Council on 28 July heard
Vienna's case for an associative
tie; formal negotiations will
not begin before late fall and
are expected to be long and
difficult. Chancellor Gorbach
and Foreign Minister Kreisky
believe their rrecent. vi s i ;.s to
Moscow and Paris have improved
the prospects for obtaining such
an EEC tie. While there is as
yet no significant disagreement
between the two coa?itinn nariiu.s
on the Common Market: question.
interparty friction has increased
as a result of labor unrest. and
other economic diffictilt.tes, and
parliamentary elections have been
moved up from May to November.
Austria's meet i r,cr with the
EEC Council on 28 .tr,'li was in
the nature of a prc- i - sr. r to z ;,
hearing. Its spokesr,ien, Krce l sk v
and Trade Minister flc i'k , em-
phasized Austria's d"nendence
on trade with the six EEC
countries--which accw;:,t for-
over half of Austria oxr,,..a
and some 60 per-cent res
imports--and said t wry: wi l i nq
to abide by ma.jorit.v decisions
in those institutions-, t o he
set up to regu l-a t:e I?F C-neu t ra i
state relat ionshi 7s . Then
insisted, however, ti:.-if A?ist ria "
neutral status necks- .; i 1 i i r ft if-c;
retaining the right- to .suspend
or cancel its EEC at = a?=;em nts
in certain circumstances-
On their 28 June - 5 July
visit to the USSR Gorbach and
Kr~isky were primarily interested
i.n les-;sening Soviet opposition
tolan Austrian-EEC tie. They
returned cautiously optimistic
that they had been successful.
Khfushchev did express strong
opjosition to full adherence
tolthe EEC by Vienna, but he
didli not rule out the possibility
nfisome special relationship
de*i.~,ned to protect Austrian
trade with Western Europe.
Austrian authorities realize
that the failure of Soviet
leaders to be more explicit
..;Id mean that further Soviet
>rs i?rc,s may be forthcoming,
hritl t. hey feel that for the
rdsent they have received
tadiit annrovaI from Moscow to
pureed with negotiations with
the n}:n
I
The Austrian delegation
Bade a particular effort to
prdmote in Moscow an appreciation
of lAastr i a ' s "good will" toward
hd Soviet bloc. The genial
Gntlhach? as did his predecessor
attempted to ingratiate
hilt!*-'' f with Soviet leaders and
asslure them of Austria's in-
!(tions to abide fully by
its! neutrality. Two days of
ihel. visit, were devoted to a tour
of ;Sihe -.ian industrial installa-
tiolns. During the substantive
talks such topics of secondary
interest as the long stalled
neghtiations over Soviet
purk'hase of the revolutionary
Auslt.rian "LD" steelmaking
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CURRENT INTELLIGENCE WEAKLY SUMMARY
process received only minimal
attention.
Immediately prior to their
Moscow visit, Gorbach and
Kreisky spent three days in
Paris seeking understanding
for the Austrian position with
regard to the Common Market.
In talks with De Gaulle, the
Austrian leaders claim they
received a definite commitment
of French support, but Foreign
Ministry officials in Paris
remain doubtful thatDe Gaulle
made any pledge beyond the
"hope" expressed in the final
communique that a satisfactory
solution to Austrian-EEC re-
lationships might be found.
In view of restrictions on
Austrian ties with Nest
Germany and continuing diffi-
culties with Italy over the
South Tirol, Vienna has been
eager to gain French sponsorship
for its EEC application.
Although encouraged by the
Paris and Moscow talks, Austrian
officials appear increasingly
aware that negotiations for
associative status with the
Common Market will be long and
difficult. Of the three neutral
applicants for such status--
Austria, Sweden and Switzerland--
Austria is receiving the most
sympathetic consideration.
This circumstance, however,
poses difficulties for Austrian
leaders who have committed them-
selves to a common approach to
the EEC with the other two
neutrals.
An aura of calm has re-
placed the violence of a year
the Common
Market had replaced the South
Tirol'as the chief Austrian
foreign policy pr)blem. Never-
theless, Austria appears little
closely to its goal of winning
autonomy for the German-speaking
residents of the Italian prov-
ince of Bolzano.
Lhst summer's violence has
discredited those Austrian
groups advocating violence as
a Tnean81 to solve the deadlock.
Austrian authorities have an-
nounced that the prosecution
of persons implicated in acts
of violence will continue. Public
suspicion is growing, however,
following the acquittal of the
defendant in the first such
trial,;: that such prosecutions
will not be overly zealous
because, certain high level govern-
ment officials have been sympa-
tietic !toward the activist cause.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
The Common Market question
thus far has not been subject
to close partisan scrutiny
within Austria, though there
is pressure from some domestic
agricultural and labor groups
for special concessions from
the Six in connection with any
agreement which Austria concludes
with the EEC. These pressures
will probably center on the
study commission which is now
formulating a detailed program
for the anticipated fall
negotiations.
The principal frictions
between the two coalition
parties, the People's Party
and the Socialists, center on
a mounting wave of strikes,
provoked in part by rising
prices. Police and customs
officials, following warning
strikes and slowdowns, have
forced the government to grant
wage increases for the remainder
of the year. Metalworkers,
miners, postal employees and
doctors also have recently won
financial concessions, and
professional government personnel
are currently negotiating for
pay raises. Strong dic;satis-
faction among farmers over price
ceilings on agricultural products
has forced Agriculture Minister
Hartmann to submit his resigna-
tion. In June 1962 the Austrian
cost-of -living index was about
seven percent higher than in
June 1961.
Gorbach's People's party,
which is strongly in favor of
the conservative monetary
policy of Finance Minister Klaus,
has flatly opposed labor's
demands. In early July Socialist
Minister of Transport Naldbrunner
granted postal employees a bonus
without interparty consultation,
whi~h provoked some People's
party groups to demand the
immediate dissolution of the
govel.rnment. Gorbach has pre-
fered to let tempers abate,
however, and neither party
appears ready to assume respon-
sibility for a government.
collapse at this time.
Both parties have agreed
to advance parliamentary
elections to 18 November from
the' constitutional deadline of
May 1963. Political observers
haveconceded the likelihood of
a "rough" campaign, but expect
little change from the present
repr';esentation in the Nationalrat
in Which the People's party holds
79 and the Socialists 78 of a
total of 165 seats. Such a
result would virtually assure
continuance of the coalition,
to which the two major parties
appear fundamentally committed.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
BLOC AID AND TRADE PROGRAM IN AFRICA*
Despite occasional set-
backs--notably in the Congo and
in Guinea--the Sino-Soviet bloc's
aid and trade program in Africa
continues to expand. Since late
1958 the bloc has extended over
$&i70 million in economic credits
to eight African countries and
has provided military assistance
to Ghana, Guinea, Mali, Morocco,
and Algeria.
Almost two thirds of the
economic aid has been provided
by the USSR to be used in de-
velopment of agriculture, trans-
portation, communications, light
industry, education, and social
welfare. Most of it is in the
form of general lines of credit
ranging from $35 million to
$100 million, to be repaid over
12-year periods at 2.5-percent
interest. The satellites have
extended smaller credits, repay-
able in five to eight years. A
large portion of the satellite
credits is for financing-construc-
tion of small-scale light indus-
trial plants. China so far has
extended only three credits--to
Guinea, Ghana, and Mali--largely
for agriculture and small indus-
trial enterprises.
Africa needs a rapid ex-
pansion of agricultural produc-
tion as well as crop diversifi-
cation. In deference to this
need, bloc assistance includes
agricultural machinery and equip-
ment, technicians to advise on
agricultural policies or to sur-
vey resources and needs, and
agricultural training both in
the bloc and in the recipient
countries.
In Ghana, the USSR and
Bulgaria are aiding in the es-
tablishment of state farms for
the cultivation of rice, corn,
legumes and pulses, vegetables,
and cotton. Machine and tractor
repair workshops are to be set
up on two of these farms. In
*The UAR is not inclf-,ded in this
survey.
Guinea the USSR has agreed to
provide assistance for two rice
farms and several dairy farms,
and ommunist China, despite
its Own severe agricultural dif-
ficulties, has offered to assist
in establishing state enterprises
for the production of rice and
tea. Chinese rice and irriga-
tionexperts are also to be used
in M.li. In the Somali Repub-
lic,,Mali, and Ethiopia, the
bloc' has agreed to set up gov-
ernmgnt farms for raising cot-
ton,'oil-bearing seeds, cereal
grains, and livestock.
.The extent to which the
bloc's agricultural techniques
are adopted will depend on the
success of these ventures, which
offer, a potential field for
considerable bloc influence.
The bloc also appears to
be giving some priority to the
development of transportation
facilities. Moscow is'assisting
in the modernization and expan-
sionfof railroad facilities in
Guinea, and Soviet personnel
havecompleted surveys on the
railroad which is to run from
Conakry in Guinea to Bamako
in Mali. Soviet technicians
also have been working on port
improvements and modernization
of the airport at Conakry. A
major;- project under the USSR's
aid algreement with the Somali
Republic may be the construc-
tion pf a deepwater port at
Berbera, approval of which
awaitis completion of surveys
by Solviet experts.
The area in which the bloc
aid program has achieved the
most success is civil aviation.
Soviet-and Czechoslovak-made
aircraft--both piston and high-
perfotrmance turboprop--now
constitute the major aircraft
operated on airlines in Guinea
and Mali, and Guinea has ac-
quired Coot (IL-18) turboprops
from the USSR. All three coun-
tries'use bloc flight and main-
tenance crews, which will be
replaced eventually by local
personnel now being trained by
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CURRENT INTELLIGENCE WEEKLY SUMMARY
African Countries Rdceiving Bloc Economic Aid
Ethiopia
Somali
Republic
USSR I Europeaih Satellites
the bloc. Concomitantly,
the USSR and Czechoslovakia have
expanded their international air
routes to include Africa. Czech-
oslovakia began flying to West
Africa in early 1961. The Soviet
airline, Aeroflot, began weekly
service on its Moscow-Khartoum
route in July, and regular air
service from Moscow to Morocco,
Mali, Guinea, and Ghana is sched-
uled to start this month.
Technical assistance--an
integral part of the bloc's aid
17 Aug 62
program--is being provided to
the African countries on an in-
creasting scale. Bloc specialists
are conducting surveys of various
types, acting as advisers to
various governmental departments,
and assisting in the construction
of industrial plants. In addi-
tion,`the bloc is providing
training--both academic and tech-
nical--to an increased number
of African students and build-
ing tdchnical and vocational
schoo's in a number of African
countries.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Military assistance to
African countries thus far has
been small in comparison with
similar bloc efforts elsewhere
in the underdeveloped areas.
Moscow has been reluctant to
deliver large amounts of modern
weapons and equipment because
of low standards of technical
competence of native military
personnel, and has promoted
long-range training programs
designed to prepare the local
troops to operate first the less
complicated land armaments and
eventually the more complex
naval and air force equipment.
Thus, while bloc arms aid to
Guinea and Mali has until now
consisted largely of land ar-
maments, naval equipment and
military aircraft probably will
be supplied as the various train-
ing courses are completed.[
Ghana has accepted very
few Soviet arms, although it has
sent some trainees from all three
services to the USSR.
The bloc also has used
gifts of arms to gain entree
in Morocco and the Sudan A
gift of MIG Jet fighters to
Morocco in 1.960 apparently paved
the wav for conclusion of a con-
tract early this year for addi-
tionat soviet. arms, including
tanks. Sudan received a few
arms in 1960, and a recent mis-
sion lo Moscow probably discussed
additional acquisitions,
Offers of arms aid to other
countries, particularly the
Congo, have thus far gone un-
accepted.
The bloc's military assist-
ance to the Algerian rc'hels was
cautious at. first.---largely in the
form of .Yorld Nar 11 weapons of
German origin delivered through
Egypt and Syr to .
17 Aug 62
Bloc trade with the African
countries continues to rise. In
1961; it amounted to $269 million,
compared with $248 million in
1960;. The bloc exported petroleum,
cement, lumber, machinery and
equiipment, and consumer durables,
in exchange for cocoa beans,
cotton, wool, peanuts, bananas,
bauxite and iron ore. Bloc ex-
porth in 1961 increased to $158
million from $129 million in
1960;, more than compensating
for slight decline in imports
caus d primarily by greatly
redu.ed Soviet purchases of
coco from Ghana. Trade with
four countries--Ghana, Guinea,
Moroco, and Tunisia--accounted
for ver half the total last year.
The African countries are
particularly vulnerable to
bloc overtures for expanded
tradd. The bloc not only has
bought sizable quantities of
their, raw materials--which
face stiff competition in free
markets--but, in return,
is exporting machinery, equip-
ment,1and materials needed in
their! development programs.
Lacking the foreign exchange to
finance such imports from the
Nest,; these. countries probably
will ontinue to depend on the
bloc or a large share of their
capita l goods imports. For
the b oc in turn, the advantage
will e more than political as
long Is it can obtain needed
raw materials.
`]he upward trend in trade
can b~ expected to continue
this ylear, Recently negotiated
protocols renewing agreements
with CChana, Morocco, and Mali
call fbr increased levels of
trade ? and the bloc has concluded
its fi
severa
county
st trade agreements with
additional African
es.
I line with an expanding
Africa trade, Poland and East
German formed a Joint shipping
line 1 st October to service
Nest A rica. The line, called
Uniafr ka, now has 15 ships
calling at Nest African ports,
Three I}ound trips are made each
month, and the schedule probably
will b4 expanded now that Czech-
osloval~ia has Joined the line.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Deputy Premier Mikoyan's
visit to Guinea at the beginning
of the year, aimed primarily at
smoothing relations following
the expulsion of the Soviet am-
bassador, underscored the im-
portance Moscow attached to main-
taining close relations. One
of the results was the extension
of additional economic credits.
Following his visit to Guinea,
Mikoyan stopped off at both
Ghana and Mali, probably to
ensure that Moscow's difficul-
ties with Guinea would not affect
relations with these countries.
Although officials in all three
countries continue to express
some disappointment and dis-
illusionment with the effective-
ness of bloc economic aid, they
will probably continue to look
to the bloc as a major source
of support for the realization
of their economic goals. Ghana,
Guinea, and Mali have received
over $418 million in bloc eco-
nomic credits--more than 60
percent of total bloc economic
aid to Africa.
The bloc's aid program is
similar in all three countries,
with assistance being provided
for the expansion of agriculture
and the development of transpor-
tation, communications, and min-
eral resources. In addition,
the bloc is scheduled to build
a number of small plants such
as flour and rice mills, shoe
factories, and paper mills.
In Ghana, implementation
of the aid program has moved
slowly, because many of the pro-
posed projects require detailed
surveys or feasibility studies.
Surveys for a tractor assembly
plant, a plant for production of
reinforced concrete panels, a
complex fishing enterprise, and
several small plants for wood-
working, ceramics, milk process-
ing, and sugar refineries are
nearing completion. The next
six months should see an accel-
eration in the delivery of bloc
machinery and equipment as actual
construction begins. Preliminary
BLOC TRADE WITH SELECTED AFRICAN COUNTRIES
(IN MILLION DOLLARS)
3. 35; 3 0
1958 1960 1 61
ETHIOPIA:
5%
1958 1960 1961
GHANA
1958 1960 1161
MOROCCO
1958 1960 1961
SUDAN
1958 1960 1961
GUINEA
1958 1960 1961
TUNISIA
work hasstarted on the first
stage of;a complete Soviet ge-
ological!survey. Sixty-four
Soviet e perts now are present,
and 230 Ghanaians have been
assigned 'to the project.
In i4ali, as in Ghana, most
of the bhoc activity has been
confined to surveys, but an
acceleration of activity is
likely sopn. President Keita,
during his recent visit to Mos-
cow, to have the entire
1961 Sovit credit of $44 mil-
lion allocated for specific
projects.: A credit of $11 mil-
lion extended during his visit
was also Earmarked for specific
projects. The new credit, as
well as aportion of the old
one, evidently has been allo-
cated forthe purchase of agri-
cultural equipment and the serv-
ices of agricultural experts.
Faced with failure to obtain
the equipment from Allis-Chalmers
because of, repayment require-
ments, Mali probably felt its
only recourse was to accept the
bloc's offjer, which permitted
repayment in French African
francs. Discussions by Keita
in Prague resulted in the imme-
diate dispatch of a Czech dele-
gation to i3amako to discuss the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
allocation of a $12.5 million
economic credit extended in
June 1961.
The aid program in Guinea
has moved more rapidly. Some
projects have been completed
and construction is under way
on a number of others. These
projects, however, have been
mainly impact schemes designed
largely for prestige purposes
such as the sports stadium,
broadcasting station, and the
hotel. With the completion of
the preliminary survey, actual
work on the Kouroussa-P-mako
railway--the major Soviet proj-
ects--will probably begin after
the rainy season.
The bloc continues to send
trade and cultural delegations
to Sierra Leone, Liberia, and
Nigeria, but only in Nigeria
have there been any visible
results. Czechoslovak and Pol-
ish agreements signed with Lagos
establish a basis for bloc
economic assistance. This aid
is likely to be in the range
of $5 million to $10 million
and probably will be used to
build small factories.
Brazzaville Group
Bloc efforts to establish
closer economic relations with
the 12 African countries com-
prising the so-called Brazza-
ville group have already met
with success.in Senegal, Dahomey,
and Niger. The first two have
exchanged good-will delegations
with the bloc and agreed to
establish diplomatic relations--
the first of the Brazzaville
group to agree to this. In
addition, trade, cultural, and
scientific and technical co-
operation agreements were in-
itialed and the bloc expressed
its readiness to extend economic
assistance. Niger also has
received various bloc delega-
tions and has signed trade
agreements with the USSR, Po-
land, and Czechoslovakia. These
countries are beginning to ex-
press their disillusionment with
the amount of Western aid and
are becoming more receptive to
blandishments by the bloc.
Bloc economic activity in
North Africa has been confined
largely to Morocco and Tunisia.
The bloc has had an aid program
in''Tunisia since 1961, but little
prdgress has been made. The
US$R signed contracts last Feb-
ru'ry for the construction of
a technological institute and
for a dam at Kassab--the first
of five dams proposed--under
its $28 million credit,,.nd
Soviet experts are preparing
surveys. Discussions between
Polish and Tunisian officials
early in the year resulted in
the allocation of the $10 mil-
lion Polish credit. Priority
projects include the construc-
tion of a sugar beet plant, a
shipyard for the construction
of fishing craft, a concrete-
block factory, and a phosphate
enrichment plant.
Morocco, accepting its
first bloc economic aid last
Jan,4ary, awarded Poland a con-
tract for the construction of
a $48 million sugar refinery.
An agreement providing for the
supply of $380,000 worth of
Cze h mining equipment for a
copper development project fol-
lowed. Soviet assistance to
date has been confined almost
exclusively to arms and military
equipment. A few Soviet eco-
nomic technicians have been con-
ducting preliminary surveys in
Tan ter for the construction of
a shipyard, and several Moroccan
officials have claimed that
Mosgow has indicated a willing-
nes$ to finance it at an esti-
mat1d cost of about $31 million.
Although the bloc is moving
cautiously in Algeria, it is
probably ready to provide eco-
nom>(,technical, and military
assitstance should the political
siti}ation become propitious.
Besiydes supporting the Algerian
rebols since 1y57 with arms and
military equipment, the bloc has
provided medical and relief
shipments through the Soviet
Red Crescent to Algerian refu-
gees; in Morocco and Tunisia.
In addition, wounded Algerians
have: been treated in bloc coun-
tries and given vocational train-
ing.
;In Ethiopia--the first
African country to receive sub..
stant,ial bloc economic-assist-
ance---the aid program remains
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CURRENT INTELLIGENCE WEEKLY SUMMARY
at a virtual standstill. Con-
struction of the Soviet as-
sisted techAcal school is pro-
gressing very slowly. The much-
negotiated contract for the
construction of an oil refinery
by the USSR under its $100 mil-
lion development credit finally
was concluded in late 1961, but
there are indications that dif-
ficulties are being encountered
and it may be some months before
there is any progress. The Czechs
are building a shoe factory--
the only project contracted
for under the $10 million credit
extended in 1959.
In the Somali Republic and
the Sudan, the bloc is making an
effort to get its aid program
under way. In March the Somali
Republic and the USSR signed
supplementary agreements listing
specific projects, with proposed
completion dates, to be under-
taken under the Soviet credit'of
$44 million. Moscow will as-
sist in geological exploration
and in establishing state farms,
food-processing plants, a second-
ary school, a broadcasting
station, hospitals, and an agri-
cultural school, providing a well-
balanced aid program. Soviet
exports--presumably provided
under the USSR's short-term
$7.7 million commodity credit--
are to be sold on the local
market to generate the local
currency needed for Soviet
development projects. Although
the USSR has agreed to this
type of arrangement with
Afghanistan and Indonesia, it
is the first such agreement with
an African country. The USSR
normally prefers to provide
credits covering only the foreign
exchange costs of developmental
projects; however, Moscow may
agree to similar arrangements
with other African countries
it it feels such assistance
will further its program.
In the Sudan, Soviet experts
are preparing preliminary surveys
far projects to be undertaken
uder a development credit of
$Z4.4 million extended in
November 1961. Surveys for
a fish cannery have been com-
pl1;eted and are under study by
the Sudanese Government. Con-
struction has begun on grain
storage facilities as well as
on the dairy farm project at
Kolydofan.
Despite the setback suf-
fered by the bloc in the Congo
with the collapse of the Lumumba
re ime, the bloc appears to be
making an effort to improve its
position with the present gov-
erhment. Diplomatic missions
h%e been established by the
US,R, Poland, and Czechoslovakia,
and an increasing number of
bloc trade delegations are
visiting Leopoldville. Moscow
has reiterated its willing-
ne~s to provide economic and
technical assistance. To date
its offers have not been
ac4epted because of the Congo
Go.rernment's insistence that
all aid be channeled through the
UN however, if Leopoldville
beomes impatient with the lack
ofprogress under UN auspices
it'may become more receptive to
direct Soviet assistance.
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