CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A003900080001-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 45
• Document Creation Date: December 22, 2016
• Document Release Date: May 11, 2009
• Sequence Number: 1
• Publication Date: February 15, 1963
• Content Type: SUMMARY

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CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
State Dept. review
completed
NGA review(s)
completed.
COPY NO. 75
OCI NO. 0267/63
15 February 1963
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
SECRET
GROUP 1
Excluded from automatic
downgrading and
declassification
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CURRENT INTELLIGENCE WEEKLY SUMMARY
15 February 1963
T H E W E E K I N B R I E F
(Information as of 1200 EST 14 Feb)
IMPACT OF THE IRAQI COUP ON THE NEAR EAST . . . . . . . . Page 1
The coup in Iraq on 8 February has reverberated through-
out the Arab world and has encouraged various proponents of
a pan-Arab state, especially in Syria. Cairo realizes that
the new regime in Baghdad will be an independent one and
is promoting friendly relations with it. At the same time,
the UAR is trying to capitalize on the uncertainty engendered
by the coup by stepping up its call for the overthrow of
"reactionary" regimes in Syria and Jordan. The new Iraqi
Government, meanwhile, is consolidating its control by ar-
resting local Communists and suppressing all pro-Nasir activi-
ties.
THE CUBAN SITUATION . . . . . . . . . . . . . . . . . . . Page 2
The 1963 protocol to
the Cuban-Soviet trade agreement was signed on 7 February
after lengthy and probably difficult negotiations. It
involved a Soviet credit of undisclosed size, probably
largel to finance Cuban imports of needed consumer
goods.
Insurgent activity in Cuba by smal re-
sistance ban s s continuing as regime officials try to make
the most of what will probably be another poor sugar harvest
this year.
SOVIET FOREIGN POLICY DEVELOPMENTS . . . . . . . . . . . . Page 5
Moscow has continued to probe for ways to exploit dif-
ferences within the Western alliance. Khrushchev sought to
stimulate British interest in expanding trade relations
with the Soviet Union. At Geneva, the Soviet delegate at-
tempted to gain the initiative at the outset of the new
round of disarmament talks by introducing a proposal to
prohibit the stationing of strategic nuclear delivery systems
on foreign territory. A Soviet official renewed private hints
that Moscow is ready to compromise on the number of on-site
inspections to enforce a test-ban treaty.
SINO-SOVIET RELATIONS . . . . . . . . . . . . . . . . . . Page 9
Both the Soviet Union and Communist China are attempt-
ing to gain a tactical advantage in their continuing con-
flict. Moscow's latest maneuver to portray itself as the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
15 February 1963
champion of bloc unity and to blame Peiping for any continua-
tion of the dispute appeared in Pravda's assertion on 10
February that the Soviet leaders are ready for a bilateral
meeting with the Chinese "at any level and at any time."
Peiping, for its part, is relying on reprints of other Com-
"
to
munist parties' condemnation of Titoist "revisionism
maintain the essence of its position, while carrying for-
ward its challenge to Soviet leadership in international
front meetings like the recently concluded Afro-Asian Soli-
darity coniex?ence.
SINO-SOVIET TRADE DROPS FURTHER . . . . . . . . . . . . . Page 12
Chinese Communist trade with the USSR in 1962 reflected
continuing Sino-Soviet political strains and the stagnant
condition of the Chinese economy. Recently published Soviet
trade figures suggest that the total for the year was $600
to $700 million, a third less than in 1961 and a two-thirds
drop from the peak of $2 billion in 1959.
SOVIET CRACKDOWN ON THE ARTS MEETS CONTINUED RESISTANCE. . Page 13
Soviet intellectuals, undeterred by a massive press
campaign against "formalism" and "modernism" or by extensive
pressure from the party, continue to resist the hard line on
culture imposed on them at their 17 December meeting with
top party leaders. It reportedly is widely believed in
Moscow that the crackdown was engineered by party ideological
officials who were concerned that toleration of freedom in
the arts, coming at a time when the party apparatus is being
reorganized, would cause widespread confusion. Many Soviet
intellectuals also believe that the real target of the crack-
down is not art, but literature, which is of far greater
political significance than art.
COMMON MARKET DEVELOPMENTS . . . . . . . . . . . . . . . . Page 15
A search for formulas. to deal with De Gaulle's ex-
clusion of Britain from the Common Market has begun in earnest
in Western Europe, but there continue to be major obstacles
to early agreement on ways of strengthening Britain's ties
with the Continent. There is considerable evidence of sympathy
with De Gaulle's call for a united Europe "equal" to the US
in influence, but little support of his bid for European
leadership. In any case, the French bargaining position will
continue to be enhanced by the desire of all the EEC countries
to keep the community basicall intact.
GERMAN VIEWS OF THE FRANCO-GERMAN TREATY . . . . . . . . . Page 17
Adenauer views the treaty of cooperation he and De Gaulle
signed in Paris last month as the culmination of his lifelong
effort to promote Franco-German reconciliation and as the
essential first step toward an enduring European unity.
Although many West Germans are disturbed over the treaty's
timing and fear that ties with the US will be impaired, it
will probably be ratified eventually. Rapprochement with
France commands wide support, and the chancellor's backing of
continued efforts to get Britain into the EEC and his reaffirma-
tion of loyalty to NATO have undercut his opposition.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
15 February 1963
BRITISH DEFENSE POLICY UNDER REVIEW . . . . . . . . . . . Page 19
An unusual degree of high-level attention has been given
to the preparation of this year's White Paper on defense,
which is due for presentation to Parliament on 18 February.
Final decisions on major changes in defense policy are not
likely to have been reached in the eight weeks since the
Nassau conference, but the White Paper will probably reflect
some preliminary decisions--for example, provision for a
gradual shift of responsibility for the nuclear deterrent
from the air force to the navy. 25X1
FRANCE'S ROLE IN THE MIDDLE EAST . . . . . . . . . . . . . Page 21
France has recently renewed diplomatic relations with
most of the Arab countries and appears to be stepping up
its activity in the Middle East. French officials have
hinted at the possibility of sizable French economic invest-
ment in the region
De
Gaulle plans a state visit o Iran n Octo er, an ere
are rumors of possible visits to other Middle East countries.
France's close military ties with Israel however, will
limit the role it can play in the area.
CHINESE COMMUNIST DIPLOMATIC PRESSURE ON HONG KONG . . . . Page 22
Peiping has sent the British a series of diplomatic
protests over developments in Hong Kong, and authorities
in the colony foresee a period of difficult relations with
Communist China. The Chinese can exert heavy pressures,
but the colony's economic importance to the mainland will
probably deter them from promoting a major crisis now.
The protest campaign is probably for propaganda purposes.
THE SITUATION IN LAOS . . . . . . . . . . . . . . . . . . Page 23
The assassination on 12 February of Kong Le's commander
on the Plaine des Jarres apparently is part of the Pathet
Lao campaign to eliminate the neutralist military position in
this key area. Meanwhile, King Savang, Premier Souvanna, and
several other leaders have begun a "good-will" tour to
countries which signed the Geneva accords on Laos.
POLITICAL MANEUVERING IN THE CONGO . . . . . . . . . . . . Page 24
With Katangan integration well under way, Adoula plans
to reshuffle his government and to reconvene the Congo Par-
liament in early March. He will seek its approval of a new
constitution and then intends to call general elections.
His plans have revived intense political maneuvering.
Tshombd, now in Europe for medical attention, has recently
been cooperative and apparently plans to return to Elisabeth-
ville.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
15 February 1963
COMMUNAL DISPUTE ON CYPRUS . . . . . . . . . . . . . . . . Page 25
Relations between the Greek and Turkish communities
on Cyprus have become more embittered as their opposing
positions on the integration of municipal governments have
hardened.
Gree Cypriot leaders may be examin-
25X1 ing drastic new moves to force Turkish Cypriot capitulation.
Athens and Ankara are apprehensive over the drift of events
on the island, and the Greek Government has lost most of
its influence with Cypriot President Makarios.
COMMUNIST VIOLENCE IN VENEZUELA . . . . . . . . . . . . . Page
Political tension is increasing in Venezuela as a re-
sult of growing Communist-led violence. The Communists are
seeking to discredit President Betancourt's regime and
force him to cancel his trip to the US now scheduled for
19 February.
the majority of the military probably remain loyal to Betan-
court and are believed capable of preventing the disorders
from reaching proportions that would threaten the government.
SPECIAL ARTICLES
DE GAULLE'S FOREIGN POLICY OBJECTIVES...........
set of circumstances.
free to decide where its best interests lie in any given
. Page 1
Charles de Gaulle is a profound theorist and a skilled
practitioner of the adage that politics is the art of the
possible. His overriding objective is to return France to
a position of first rank in international affairs. He is
intent on developing an independent European power complex
EUROPE AND THE US TRADE EXPANSION ACT . . . . . . . . . . Page
Most of the Common Market countries have professed to
welcome the US Trade Expansion Act, but they have doubts
about the United States' willingness to limit its own
protectionist practices, and reservations about giving
outsiders substantially improved access to the EEC market.
Hence the actual reduction of trade barriers will probably
be less than the maximum allowed by the US legislation..
There is also some feeling--not limited wholly to De Gaulle--
that a major reduction of the EEC's common external tariff
would tend to deprive the Common Market of its cohesiveness.
In Great Britain, the collapse of the British - Common
Market talks has focused attention on the possibility that
the Act may offer the lagging British economy a partial
alternative to membership in the EEC.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
15 February 1963
CHANGING POWER RELATIONSHIPS IN INDONESIA . . . . . . Page 9
For the past five years, President Sukarno has retained
his pre-eminent position by maintaining a delicate balance
between the anti-Communist army and the Communist Party.
Now, however, this power relationship is changing at the
expense of the army. The army's political role, already
eroded, probably will be further reduced by the abrogation
of martial law on 1 May and by a pending cabinet reshuffle.
Meanwhile the Communist Party is making its strongest bid
for cabinet participation since the country attained
independence. Sukarno's policy of expansionism directed
at British Borneo and Portuguese Timor may be intended in
part to help him channel army and Communist energies toward
a common goal.
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CURRENT INTELLIGENCE WFEKLY SUMMARY
WEEKLY REVIEW
IMPACT OF THE IRAQI COUP ON THE NEAR EAST
The coup in Iraq on 8 Feb-
ruary has reverberated through-
out the Arab world.
Its greatest repercussions
have come in syria where the
struggle for power has intensi-
fied. Syrian socialist Baathists,
including both feuding factions,
are greatly encouraged by the
sudden success of their fellow
ideologists in Baghdad and now
are pushing for a change of
regime in Damascus. Their
objective is to gain power either
peaceably or by coup, and then
to negotiate for union with Iraq.
The coup in Iraq has created
such a bandwagon atmosphere in
Syria for union with Iraq that
Syrian Foreign Minister Asad
Mahasin confided to the American
ambassador on 12 February that
even President Qudsi is toying
with the idea. Mahasin said
the Azm cabinet had "fallen
apart" and that there was no
Syrian government.
Political alignments among
Syria's politicians and army
officers are likely to change
with great rapidity during the
days ahead as the various blocs
align their forces.
The new Iraqi regime, headed
by figurehead president Abd al-
Salam Arif, is moving rapidly
to normalize the situation. The
21-man cabinet is dominated by
members of the Baath party. It
also includes a few representa-
tives from other nationalist
parties and two Kurds. Arif
was appointed in an effort to
attract nationalist support for
the regime, and he is under
strict wraps imposed by the
Baathist leaders. The leaders
emphasize that they intend to
return to civilian government
soon.
The coup may lead to a settle-
ment of the 20-month-old Kurdish
revolt. The new regime is likely
to respond eagerly to any over-
ture from rebel leader Barzani.
Large numbers of Communists
are being rounded up throughout
the country. Armed Communist
resistance was particularly
bitter in al-Kazemain, an old and
traditionally troublesome Baghdad
suburb.
Iraqi authorities are dis-
couraging pro-UAR activities and
have banned the distribution of
pictures of Nasir and even of
Arif.
Nasir is attempting to cap-
italize on the Iraqi coup as
an expression of his brand of
Arab nationalism, but Cairo
realizes that the Iraqi regime
desires to be independent of
his influence. Meanwhile, the
clandestine UAR radio is calling
for the overthrow of the Syrian,
Jordanian, and Saudi regimes.
The Jordanian Government,
at first alarmed by the Iraqi
coup, now has canceled a state
of alert ordered for its army
and air force. The government
also had considered establishing
martial law but finally decided
against it.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
The new surface-to-air
missile (SAM) site at Managua
ing completion.
25X1
25X1
re- 25X1
vetment of five of the six
launch positions had been fin- 25X1
ished and that trucks and equip-
ment were in the area.
25X1
other SAM-
sites does not provide evidence
that equipment from one of them
is being transferred to the new
site, but this is still a
possibility. Three other SAM
sites have recently been moved,
evidently to provide better
protection to important mili-
tary installations.
Construction of additional
aircraft parking facilities
at the major Cuban military
airfield near Holguin in north-
ern Oriente Province probably
presages greater use of the
airfield by jet aircraft in
the near future. A large number
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CURRENT INTELLIGENCE WEFKLY SUMMARY
of prefabricated concrete
arches were observed at the
airfield
and there were in-
dications that construction
activity was under way. The
25X1 arches have been used since
late 1961 in building a total
of some 63 earth-covered re-
vetments at Holguin and three
other military airfields in
Cuba. Eighteen of the revet-
ments, each large enough to
contain one MIG fighter, had
been completed or were under
construction at Holguin air-
field by last December. The
8,000-foot runway at Holguin
is longer than that of any
other Cuban military airfield.
On 7 February it was an-
nounced in Moscow that the 1963
protocol to the Cuban-Soviet
trade agreement had finally
been signed. Cuban Foreign
Trade Minister Mora had been
negotiating in Moscow since
10 December.
The protocol included a
Soviet long-term credit to Cuba
to cover its deficit in trade
with the USSR. Neither Moscow
nor Havana has announced the
size of the credit or its
terms. The US Embassy in Mos-
cow comments that the brevity
of the announcement, the ab-
sence of the usual laudatory
comments in the Soviet press,
and the long period of nego-
tiations suggest that there
were difficulties.
A Cuban broadcast of 8
February expressed gratitude
for the assistance Cuba will
receive under the new protocol.
The broadcast implied that
this will be the third year
for Cuba to go into debt in
its trade with the USSR. Al-
though the broadcast emphasized
that the agreements will per-
mit Cuba to proceed with its
vast developmental programs,
a good portion of the Soviet
credits are probably for food-
stuffs and other consumer goods.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Internal Developments
Anti-Castro activity by
scattered small bands of in-
surgents and saboteurs con-
tinues.
A French news agency item
datelined Havana reported on 9
February that a series of "public
order operations" had been
launched by the Cuban military
against insurgents in the
provinces of Matanzas, Las Villas,
and Camaguey.
Cuban efforts to make the
most of what will probably be
another poor sugar harvest
again this year are reflected
in continued exhortations to
the harvesters, who include
many groups of "permanent
volunteer" cane cutters. Che
Guevera has been particularly
active during the past week
in this effort, having spent
most of his time performing
"volunteer labor" in the cane-
fields of Camaguey Province.
In a 10 February pep talk
in the city of Camaguey,
Guevara was critical of the
results of the harvest thus
far in the province, Stress-
ing the importance of the
harvest for Cuba, Guevara
stated that sugar is "the
absolute dictator of the en-
tire economy" and that the
entire apparatus of the Cuban
Government must be geared to
overcoming the problems hamper-
ing sugar production. He noted
that the long-term Soviet
credits just announced had
been necessary only because
Cuba was not producing enough
sugar.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
SOVIET FOREIGN POLICY DEVELOPMENTS
Moscow continues to hammer
away at charges that the French
-West German cooperation treaty
opens the way for West German
acquisition of nuclear weapons
and that it is aimed at prepar-
ing an aggressive war. The So-
viet press now has broadened
its attack to include allegations
that De Gaulle and Adenauer ad-
amantly oppose a negotiated set-
tlement of the Berlin and German
quuestions.
The USSR has attempted to
maximize the effects of its 5
February protest notes to Bonn
and Paris by presenting copies
to other governments. In hand-
ing copies to the British, Am-
bassador Soldatov said Moscow
regards the treaty as a potential
threat to peace in Europe be-
cause it could be a vehicle
for equipping West German forces
with nuclear weapons and because
it reduced chances of a peace-
ful Berlin and German settlement.
Soldatov took the occasion to
inquire if the Western powers
had developed any new ideas on
Berlin.
The Soviet ambassador to
Turkey adopted a grim attitude
with Foreign Minister Erkin,
warning that the treaty means
nuclear war. He charged that
its real purpose is to give
Bonn access to nuclear weapons.
Moscow apparently also passed
copies of the notes to a number
of uncommitted countries, in-
cluding the UAR, India, and
Indonesia.
The change in the USSR's
previous attitude of restraint
toward De Gaulle was evident
in further sharp denunciations
of his policy toward West Ger-
many. A Pravda editorial on
9 February charged that the
treaty "casts aside" tile re-
strictions on West German re-
armament contained in the 1954
Paris agreements and "harnesses
France to Bonn's militarist
chariot." Pravda alleged that
Paris, in violation of its post-
war commitments, is "encouraging
the West German militarists in
their determination to acquire
nuclear weapons."
Moscow described as an un-
friendly act the French refusal
to release an interview Khru -
shchev and Malinovsky gave to a
French radio and TV correspond-
ent on the 20th anniversary of
the Battle of Stalingrad.
Izvestia denounced the ban as
a bid by the French to "please
their present friends, the Bonn
revanchists." In this interview,
Khrushchev obliquely criticized
the French-German treaty by say-
ing the USSR opposes any treaties
"which contribute to renewing
old hotbeds of war danger."
He added that those who want
peace in Europe must not help
provide thermonuclear weapons
to "the forces of revanchism
and aggression." Malinovsky
recalled De Gaulle's statement
in December 1944 that the French
people know "it was Soviet
Russia and no one else who has
played the main part in their
liberation."
In an interview with Brit-
ish publisher Roy Thomson on 9
February, Khrushchev--without
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naming De Gaulle--ridiculed his
concept of an independent "third
force" in Western Europe under
French leadership. He asserted
that the USSR is stronger than-
"first, second, and third forces
together."
Moscow's attempts to find
openings for exploiting the dis-
array in the Western alliance
were reflected in Khrushchev's
reported statement to Thomson--
promptly publicized by TASS--that
he considers it possible to dou-
ble or treble Soviet-British
trade in the near future.
Khrushchev's desire to
protect his position that he
has fulfilled his Cuban com-
mitments to President Kennedy
was evident in his remark to
the British publisher that the
US need not be concerned about
a Soviet arms build-up in Cuba.
He said Soviet military personnel
are there only to instruct the
Cubans in the use of Soviet-
supplied weapons. He denied
there are any Soviet nuclear
weapons on the island and re-
peated his post-crisis line
that "we can reach anyone we
want with our own weapons from
our own territory." Khrushchev
professed not to know how many
Soviet troops are in Cuba but
pointed out that many have left
and that departures are con-
tinuing.
Moscow promptly reported
Secretary McNamara's 7 February
press conference on the Soviet
military presence in Cuba as
confirmation that the USSR has
"scrupulously" removed its of-
fensive weapons from the island.
Soviet media continue to de-
nounce congressional "hotheads"
in the US debate over Cuba.
Disarmament and
Nuclear e-s Talks
At the 18-nation disarma-
ment conference which reconvened
in Geneva on 12 February, the
USSR adopted familiar tactics
aimed at gaining the initiative
at the outset of the talks.
Moscow's vehicle this time was
a draft declaration prohibiting
the stationing of strategic
nuclear delivery systems on
foreign territory. The pro-
posal was clearly designed to
take advantage of the with-
drawal of Soviet missiles from
Cuba as well as the US decision
to replace missiles in Italy,
Turkey, and Britain with Polaris
submarines in the eastern At-
lantic and Mediterranean. The
proposed ban would apply to
missile-firing submarines, air-
craft carriers, missiles with
a range of 1,500 kilometers and
over, and strategic bombers.
Soviet chief delegate
Kuznetsov presented this dec-
laration as a step toward
reducing the danger of nuclear
war without waiting for agreement
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CURRENT INTELLIGENCE WEEKLY SUMMARY
on general disarmament. He
said the conference should
discuss other measures for
reducing tension such as a
NATO - Warsaw Pact nonaggres-
sion treaty and nuclear-free
zones throughout the world.
He did not mention an agree-
ment prohibiting the transfer
of nuclear weapons to non-nu-
clear powers, having earlier
agreed with the US delegate
that this question should not
be raised at the conference
while it is being explored
"elsewhere," i.e., in bilat-
eral US-Soviet exchanges.'
The Soviet delegates lost
no time in trying to enlist
the support of the eight non-
aligned nations in pressing
the US to reduce its require-
ments for a nuclear test ban
agreement. They are attempting
to exploit the issue of US
underground tests for this
purpose.
Although Kuznetsov re-
peated Khrushchev's offer of
two or three on-site inspec-
tionsin his formal statement
to the conference, the Russians
continued to convey private
assurances of willingness to
compromise on this issue.,
on 8 February,
Ambassador Dobrynin told Secretary
Rusk that he felt the two sides
had reached a "promising stage"
in the test-ban negotiations.
Iraq
Moscow's prompt recogni-
tion of the new Iraqi Govern-
ment is probably the first of
a number of efforts to maintain
as much as possible of the
highly favorable position the
Soviet Union had enjoyed under
Qasim. While Moscow must have
calculated on the contingency
of an anti-Qasim coup, the loss
of such a consistent supporter
of a wide range of Soviet policy
objectives is a harsh blow.
Much of the Soviet position
under Qasim's rule had been es-
tablished through the provision
of modern and highly complex
weapons and the extension of
large industrial credits, and
Moscow will almost certainly
seek to preserve as much of this
program as possible. The Iraqi
military is highly dependent
on Soviet equipment and parts,
and a large percentage of So-
viet industrial credits have
yet to be drawn upon, giving
Moscow the opportunity to hold
out ?-.ll manner of promises for
cooperation in military and
economic development.
Although Moscow hopes by
these means to preserve good
relations with Iraq, a reflec-
tion of the Communists' concern
about the regime's crackdown
on Iraqi Communists has appeared
in clandestine broadcasts by
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the Iranian Communist radio
located in East Germany which
have implied that the revolt
was organized by Washington
and Cairo and have appealed
to the Kurds in the name of
the Iraqi Communist Party to
join in revolt against the
government. This station, Peyk-
e Iran, has taken positions
in the past which have been
far more extreme than Moscow's
official policy, notably in
its support of the Kurdish
uprising, while the Soviet Union
maintained excellent relations
with Qasim.
Moscow's first public re-
action to the jailing of Iraqi
Communist Party members ap-
peared in the publication in
Pravda on 14 February of a
statement by the French Com-
munist Party protesting the
new government's "bloody re-
pressions" of Iraqi Communists.
Taking advantage of the
Laotian Government's pressure
on the United States to trans-
fer aircraft to its control
and suspend Air America opera-
tions, Moscow broadcasts in
late January made their first
public criticism of US policy
in Laos in several months.
Citing 'the operations of both
Air America and the US Operations
Mission, which they claimed
are furnishing arms and other
supplies to American officers
and the Savannakhet faction,
the broadcasts accused the
United States of actions which
grossly violate the Geneva
agreements.
The Polish International
Control Commission represent-
ative in Vientiane began press-
ing on 21 January for an investi-
gation of Air America's opera-
tions, claiming that it was a
"paramilitary organization."
He staLed that he would not
agree to proposed inspections
of foreign troop presence in
Laos unless an investigation
of Air America was included.
While the question of the
rescheduling of Indonesia's
debt repayments to the USSR is
confused, it appears that Mos-
cow rather than Djakarta is
stalling. Negotiations have
not yet begun. The fact that
a rescheduling of this debt
is one of the preconditions
to further US assistance may
be known to the Soviets.
Djakarta is still
waiting for the Soviet economic
team which was to have arrived
in December and then was re-
scheduled for January. J
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CURRENT INTELLIGENCE WEEKLY SUMMARY
SINO-SOVIET RELATIONS
Both the Soviet Union and
Communist China are attempting
to gain a tactical advantage in
their continuing conflict. Mos-
cow'slatest maneuver to portray
itself as the champion of bloc
unity and to blame Peiping for
any continuation of the dispute
appeared in Pravda's assertion
on 10 February that the Soviet
leaders are ready for a bilateral
meeting with the Chinese "at any
level and at any time." Pei-
ping, for its part, is relying
on reprints of other Communist
parties' condemnations of Titoist
"revisionism" to maintain the
essence of its position, while
carrying forward its challenge
to Soviet leadership in interna-
tional front meetings like the
recently concluded Afro-Asian
solidarity conference.
Without directly naming
the Chinese, Pravda denounced
their demands that Yugoslavia
be excommunicated and claimed
that the Soviet party is leaving
the door open for a settlement
with Albania if its leaders
"renounce their erroneous views."
Moscow's continuing effort
to project an image of restraint
and patience was evident in
Pravda's renewal of Khrushchev's
bid at the East German party
congress last month for an end
to polemics. It contended that
"all necessary conditions exist"
to resolve differences and bluntly
rejected the People's Daily
warning that the Communist move-
ment is "on the brink of a preci-
pice."
The Soviet Maneuver
The 10 February Pravda ed-
itorial was a direct response
to Peiping's People's-Daily
editorial on anuary which
made Khrushchev's policy toward
Yugoslavia the cardinal issue'
in the dispute. Moscow made it
clear it will not abandon its
policy of rapprochement with
Tito despite Peiping's insist-
ence that this is the precon-
dition for restoring Communist
unity. After stating disingen-
uously that the Soviet leaders
would like to believe that the
People's Daily editorial does
not reflect a "desire to continue
the polemic" with other parties,
Pravda rejected Peiping's con-
tention that Khrushchev's policy
toward Yugoslavia is the basic
source of the "difficulties
that have arisen in the Communist
world."
In a move to counter the
Chinese line that the party which
"launched the first attack"
should take the initiative in
establishing "interparty con-
sultations," Pravda reaffirmed
Moscow's interest in a new in-
ternational Communist meeting
"if the fraternal parties deem
it expedient." It contended,
however, that the success of such
a meeting requires "preparatory
work" and indicated the Soviet
leaders' willingness to meet
bilaterally with any party, "re-
gardless of how substantial the
differences between us may be{'
The Chinese have not yet
responded directly to the Soviet
proposal for preparatory talks.
An outright rejection, however,
does not appear likely, since
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CURRENT INTELLIGENCE WEEKLY SUMMARY
this would stamp them as the Inese as "warmongers," and who
recalcitrants in the dialogue on !booed them at party congresses.
the necessity for unity and thus 10n 9 v'ebruary, the Peiping radio
offend many parties which Peiping
is cultivating. Illustrative
of the position of these parties
was the North Vietnamese polit-
buro statement urging careful
but speedy preparations for con-
vening a world conference of
Communist parties to settle the
"divergence of views" that has
developed.
Prospects for the success
of any preparatory talks between
the Soviet and Chinese parties,
however, do not appear very
bright. The Chinese have made
it clear that they still reject
any "sham unity" if it is to be
based on a rapprochement with
Tito. The day following the 10
February Pravda article, People's
Daily reprinted a report given
byy an Indonesian Communist under
the headline, "There can be no
reversing the verdict repudiating
the modern revisionists of
Yugoslavia."
Both to avoid attacking
the Soviet Union directly and
to demonstrate that they are not
isolated in their views, the
Chinese have been relying on
reprints of material from other
Communist parties to maintain
the essence of their positions.
On 31 January, People's Daily
prominently displayed a North
Korean editorial that condemned
efforts to "isolate the Chinese
Communist Party." On 3 February,
People's Daily reprinted a vit-
riolic denunciation by a Malayan
Communist publication of those
who derided the paper tiger
thesis, who slandered the Chi-
featured a Japanese Communist
article repudiating "revision-
ist" positions.
Sino-Soviet Treaty Anniversary
The hollow nature of the
current "truce" between Moscow
and Peiping was reflected in
their observance of the anni-
versary cf the :ino-Soviet
treaty of alliance on 14 February.
This year the occasion was
accorded the least ceremony in
the 13 years of the treaty's
history. For the first time,
no Chinese politburo member at-
tended the rally in Peiping,
and for the first time, People's
Daily let the occasion pass
witTout editorial comment. Chi-
nese speeches, while paying
lip service to the "undying
friendship" with the Soviet
Union, reaffirmed many of Pei-
ping's most offensive positions
in its dispute with its ally.
The Soviet Union treated
the event with somewhat more
generosity. Its comments on
the anniversary, however, seemed
calculated to remind the Chinese
of the benefits they derived in
the past from the alliance and
to warn them that they would be
isolated on the international
scene without the treaty. Moscow
noted that "an attack upon China
would be considered an attack on
the Soviet Union," but this pro
forma pronouncement was robbed
of much of its weight by the
half-hearted nature of the entire
performance.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Afro-Asian
Solidarity Conference
Peiping's continued will-
ingness to assert its view force-
fully reflects its confidence
that there are significant num-
bers of Communists and revolu-
tionists, particularly in the
underdeveloped countries, to
whom these views have more of
an appeal than Moscow's line of
"peaceful coexistence." This
confidence was probably rein-
forced its success at the Com-
munist-dominated Third Afro-
Asian Peoples Solidarity Organi-
zation (AAPSO) conference in
Tanganyika from 4 to 11 February.
Judging from the contrast
between the voluminous ;iublicity
Peiping has given the conference
and the moderate coverage by
Moscow, both sides feel that
the Chinese scored a propaganda
victory on the question of the
precedence of armed struggle
against colonialism over the
role of peaceful coexistence
and disarmament as anticolonial
weapons. The Chinese delegate
to the conference openly derided
as "deceitful nonsense" the
Soviet claim that disarmament
would result in significantly
increased amounts of aid for
the underdeveloped countries.
The majority of the delegations
showed that they favored the
Chinese view by issuing a/decla-
ration which placed far greater
emphasis on active struggle than
on a need for disarmament and
peace.
Beginning about six months
ago, votes taken in the Secre-
tariat of AAPSO suggested that
Chinese views had gained ground
in this body, and the direction
taken by the present conference
indicates that they now are domi-
nant in the entire organization.
Indicative of the increased Chi-
nese voice in the AAPSO was the
resolution which established
a preparatory committee for a
"three-continent conference"
in response to a proposal by
Castro that African, Asian, and
Latin American representatives
meet in Havana. No role appears
to have been allotted to the
Soviet-controlled World Peace
Council (WPC), which Soviet
delegates had previously in-
sisted act as a co-sponsor of
such a conference. Castro, who
has been showing more and more
signs of agreeing with Peiping's
more militant line, will prob-
ably select the delegates from
Latin America.
The tactical success,sym-
bolized by the conference's resolu-
tions, provides Peiping with a
vehicle it can use to propagate
its revolutionary line through-
out the underdeveloped world.
China's role in these areas, how-
ever, is unlikely to be signif-
icantly enhanced until revolution-
ary fervor can be supplemented
with material support to newly
independent states and to those
fighting to attain independence.
Given present conditions, Moscow
will remain the major bloc spokes-
man in the underdeveloped areas.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
SING-SOVIET TRADE DROPS FURTHER,
MILLION
DOLLARS
4500 r-
3000 i-
Chinese Commun'.t trade
with the USSR in 1S.2 reflected
continuing Sino-Soviet politi-
cal strains and the stagnant
condition of the Chinese econ-
omy. Recently published Soviet
trade figures suggest that the
total for the year was no more
than $600 to $700 million, a
third less than in 1961 and a
two-thirds drop from the peak
of $2 billion in 1959.
China's imports from the
USSR probably were quite small
for two reasons. Peiping would
have needed an export surplus
of about $180 million to finance
loan repayments. In addition,
it has been redirecting trade
1950 1953 1959 1960 1961 1962
(ESTIMATED)
to eliminate its dependence on
the USSR for items essential to
Chinese growth.
China still buys some petro-
leum products and a few basic
heavy industrial items from the
USSR. However, imports in
these categories have been dras-
tically reduced because of low-
ered transport requirements and
the reorientation of heavy in-
dustry toward support of agri-
culture. Chinese imports of
investment goods also have
dwindled because of the need to
purchase foodstuffs and raw
materials in response to food
shortages and the depressed state
of the economy.
The lower level of Sino-
Soviet trade results, as well,
from declines in Chinese exports
of mineral and metal products,
textiles, and agricultural items.
The ideological dispute
with the USSR is significantly
influencing China's economic
relations. the
activity of Chinese in Western
Europe in the past year indi-
cate that when Peiping again
steps up purchases of heavy
industrial items, Western Europe
is likely to be the source of
a much larger share than here-
tofore.
been completed.
There have been no offi-
cial Chinese or Soviet statements
concerning 1963 trade, but no
increase is likely. Negotia-
tions for a pact covering this
year's trade began in Moscow
last November and have not yet
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CURRENT INTELLIGENCE WEEKLY SUMMARY
SOVIET CRACKDOWN ON THE ARTS MEETS CONTINUED RESISTANCE
Soviet intellectuals, ac-
cording to US Embassy reports,
have continued to put up an
impressive show of opposition
to the unexpectedly hard line
on culture laid down at their
17 December meeting with top
party leaders, despite a massive
campaign against "formalism"
and "modernism" in the press
and extensive pressure from
the party.
Dmitri Shostakovich's 13th
Symphony had been criticized
at the 17 December meeting.
Although he was obviously ex-
pected to cancel the premiere
on the 18th, he insisted--
successfully--that it be held.
At its annual meeting on
18 December the party organ-
ization of the Moscow writers
union--usually a stronghold of
orthodoxy--failed to elect a
single conservative to its
bureau. The election of the
new bureau, which includes
several writers who have sup-
ported the liberal position in
the current controversy, was
apparently interpreted by
cultural officials as an open
revolt against party policy.
A leading artist is re-
ported to have resigned his
membership in the USSR Academy
of Arts in protest against the
cultural crackdown. He further
threatened to remove all his
paintings from the Manege art
exhibit if the works criticized
by Khrushchev on 1 December
were removed.
The depth of opposition,
particularly among the younger
artists and writers, apparently
prompted party officials hastily
to convene another meeting to
bring intellectuals into line.
Party Secretary Ilichev and mem-
bers of the Central Committee
Ideological Commission met with
140 younger members of the creative
intelligentsia from 24 to 26 De-
cember. The young "liberals"
were allowed to defend their
position in moderate terms, but
the party policy as laid down by
Ilichev was virtually identical
to that enunciated on 17 December.
Following the 24-26 December
meeting, the party began increas-
ingly to take concrete measures
against the liberal opposition.
The head of the "liberal" literary
newspaper, Literary Gazette,was
replaced by a hard-liner, and it
was made quite clear that "a
whole series of serious political
errors" on the part of the out-
going editor was responsible for
the change. Eli Belyutin, the
leader and teacher of the group
of modern artists whose pictures
had been shown to Khrushchev on
1 December, was removed from his
teaching position. Poet Yesenin-
Volpin, who had been attacked by
Ilichev for letting his anti-
Soviet poetry be published abroad,
was once again confined to a
mental hospital--this time a
military one. Film director
Mikhail Romm was reported to be
in difficulty because of his
public criticism of the party
line.
Meanwhile, a crackdown on
creative artists was also taking
place in the provinces and mi-
nority republics, and, as is
usually the case, regional party
officials applied an even heavier
hand than their Moscow counter-
parts. In Gorky, according to re-
ports reaching the embassy, two
people were arrested.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
At the same time, conserva-
tive writers and artists, whose
authority had been undermined
by the liberalization of the
past year, moved quickly to
take advantage of the cultural
crackdown, obviously hoping to
regain their position of dom-
inance. In early January, they
began increasingly to indulge
in name-calling and to press
openly for a purge of the
creative artists' unions.
However, the party sched-
uled another meeting with the
intellectuals for some time in
February, refused to give the
conservatives carte blanche in
crushing the liberals, and, as
of mid-January, even seemed to
be declaring a temporary truce
with the artists. The conserv-
atives were not reinstated in
control of the unions. One
hard-line artist was sharply
rebuked by Izvestia for his
"Stalinist" name-calling, while
one of the young painters crit-
icized by Khrushchev on 1 De-
cember was allowed to publish
a half-hearted recantation in
Pravda, in which he devoted
far more time to defending the
artistic searchings of his con-
temporaries than to the neces-
sary self-criticism.
The embassy reports, how-
ever, a widespread belief in
Moscow intellectual circles
that the campaign against modern
art is merely a smokescreen
for repressive measures against
literature; it was felt that
party officials had concentrat-
ed initially on attacking mod-
ern art as being more vulner-
able than literature, which
basically they consider to be
of greater political signif-
icance. There is a certain
amount of evidence to support
this view. In January writers
were increasingly implicated--
by name--in the antimodernist
campaign. The editorial board
of the leading liberal news-
paper was purged of its six
most liberal members and the
two leading liberal journals
were attacked by Izvestia.
Veteran novelist Ilya Ehrenburg
has been increasingly criticized
--mostly for his views on mod-
ern art, but more recently for
having played an unethical role
during the purges.
There is also widespread
speculation on the reasons for
the abrupt shift in policy,
which intellectuals believe is
attributable to factors besides
Khrushchev's dislike of modern
art. One explanation offered
the embassy by a Soviet writer
is that the cultural relaxation
of last fall.aroused intense
opposition among officials in
the party apparatus, particularly
those responsible for ideologi-
cal purity. This concern was
intensified by the prospect of
the party administrative reorgan-
ization called for by Khrushchev
at the November plenum. The
combination of the two, they
felt, would lead to a period of
great confusion in the party
and might weaken its ideologi-
cal work. Moreover, these
officials knew that they, and
not Khrushchev, are held respon-
ible for the reliability of the
creative intelligentsia, even
though Khrushchev is responsible
for the liberalization. 25X1
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CURRENT INTELLIGENCE WEEKLY SUMMARY
A search for formulas to
deal with De Gaulle's exclusion
of Britain from the Common Mar-
ket has begun in earnest in
Western Europe, but there con-
tinue to be major obstacles to
early agreement on ways of
strengthening Britain's,ties
with the Continent. There is
considerable evidence of sym-
pathy with De Gaulle's call
for a United Europe "equal" to
the US in influence, but little
support of his bid for European
leadership. In any case, the
French bargaining position will
continue to be enhanced by the
desire of all the EEC countries
to keep the community basically
intact.
While De Gaulle is publicly
on record in favor of UK "as-
sociation" with the EEC and
London has retreated somewhat
from its initial rejection of
this formula, it is doubtful
that the two capitals view as-
sociation in the same light.
De Gaulle probably sees it as
a way of keeping Britain--and
his EEC partners--relatively
content while he proceeds to
tighten his Continental bloc:..
London, however, would approach
any association offer from the
standpoint of whether it would
extend Britain's political in-
fluence within the EEC until
such time as full membership
could be effected.
Moreover, in his 12 Feb-
ruary statement to Parliament,
Britain's chief delegate to
the Brussels talks made it clear
that London could consider an
association offer only if made
by the EEC as a whole and there-
fore backed by France and if the
necessary negotiations could be
completed in short order. In
addition, it is doubtful that
London could entirely ignore
the problems of its EFTA
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partners, with whom it is
scheduled to meet on 18 Feb-
ruary.
Other proposals have been
made concurrently to strengthen
political and military ties
between Britain and the Conti-
nent. Most of these proposals
still center on possible re-
vitalization of the seven-
nation Western European Union
(wEU), or the negotiation of
a multilateral treaty for po-
litical and military cooperation
similar to the bilateral French-
German accord. Regarding mili-
tary cooperation, some consider-
ation is apparently being given
to the possibility of "European"
defense arrangements within
NATO, covering both the con-
ventional and nuclear fields.
If the French refuse to co-
operate, some of the advocates
of such measures evidently
believe that Britain and "the
friendly five" should proceed
alone.
Although this idea is di-
rected toward giving Britain
"a more European look" in sec-
tors of apparently vital inter-
est to De Gaulle, there is noth-
ing in the general's past
views regarding France's na-
tional nuclear weapons or NATO
to suggest his interest in any
such program. Moveover, while
the other five may still be
prepared to exhort the French
to take a more cooperative at-
titude, there is ample evidence
of their continuing reluctance
to pursue their disagreement
with De Gaulle to the point of
jeopardizing the EEC. Presi-
dent Halistein, in response to
an EEC Assembly request, is ex-
pected to complete in about two
weeks a study of the UK-EEC ac-
cession problems, but is other-
wise directing his influence to-
ward preserving the community
institutions. Bonn officials
continue to defend the French-
German accord as an instrument
for "moving" De Gaulle, and even
the strongly pro-British Dutch
have carefully circumscribed
the lengths to which they are
prepared to go in "obstructing"
the EEC.
Moreover, there is at least
some preliminary evidence that
De Gaulle--in order to facil-
itate restoration of unity
within the EEC--will make con-
ciliatory gestures toward the
rest of the Six. According to
the US mission to the EEC, the
French have recently taken a
"careful initiative" to pro-
pose that progress now be made
toward fusing the executives
of the EEC, EURATOM, and the
Coal-Steel Community. The
European federalists have
long and ardently advocated
just such a step as a way of
strengthening the supranational
aspects of the European move-
ment, but Gaullist France has
not -heretofore been interested.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
GERMAN VIEWS OF THE FRANCO-GERMAN TREATY
Adenauer views the treaty
of cooperation he and De Gaulle
signed in Paris last month as
the culmination of his lifelong
effort to promote Franco-German
reconciliation and as the es-
sential first step toward an
enduring European unity. Al-
though many West Germans are
disturbed over the treaty's
timing and fear that Bonn's
ties with the US will be im-
paired, it will probably be
ratified eventually. Rap-
prochement with France commands
wide support, and the chancellor's
backing of continued efforts to
get Britain into the EEC and
his reaffirmation of loyalty to
NATO have undercut his opposi-
tion.
Adenauer's awareness of
the overwhelming German senti-
ment in favor of including
Britain in the EEC has caused
him to support continued efforts
to find some means for eventual
British participation. This
support, however, stops short
of any course that would chal-
lenge De Gaulle directly such
as witholding ratification of
the treaty. Adenauer argues
that the treaty provides Bonn
with a lever for exercising a
moderating influence on De Gaulle.
He told the Bundestag on 7
February that the French leader
had "promised" to make UK entry
into the EEC the first item of
consultation under the new
treaty when ratified.
Despite the treaty obliga-
tions that the two governments
"consult" before taking any
important decisions on foreign
and defense questions, and
that they concert their poli-
cies to the greatest extent
possible, Bonn officials deny
that there is any intention
of aligning German positions
with those of the French where
important differences now
exist. They cite their sup-
port--in contrast to De Gaulle's
position--for the NATO multi-
lateral force and their efforts
at Brussels to keep the British
accession talks going. There
also appears to be little
chance in the near future of
any significant effort--as
called for in the treaty--to
increase the teaching of French
in West Germany, where education
is controlled by the individual
states and English has long been
the preferred foreign language.
The government is consider-
ing some form of explicit re-
affirmation--perhaps a Bundestag
resolution--of Bonn's existing
policies supporting NATO,
British EEC membership, and
European and Atlantic unity.
Emphasis on these themes by
Adenauer in recent public
statements has already gone
far to undercut the inclina-
tions of some German leaders
to hamstring the treaty.
?)e Gaulle is undoubtedly
counting on Adenauer to steer
the treaty through the Bundestag
before his next visit to Ger-
many--now tentatively planned
for May or June. In the mean-
time French officials will
probably press ahead with imple-
mentation of specific treaty
provisions.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
The military section of
the treaty contains no refer-
ence to NATO. The hard facts
of Germany's security position,
however, would probably preclude
its acquiescence in any French-
proposed military policy prej-
udicial to broader NATO inter-
ests. Nevertheless, this will
not necessarily prevent the
French from trying to draw the
Germans into military activities
which would be at least poten-
tially competitive with NATO
interests. The treaty's pro-
visions are sufficiently broad
to permit much closer coop-
eration than exists between
West Germany and other countries,
particularly if strategic
planning functions should be
integrated.
Another potential source
of difficulty could be devel-
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opment of a system of logistic
cooperation affecting German
purchases in the United States
and Britain. The French are
expected to put considerable
pressure on the Germans to buy
many military items from France.
Any major shift away from pur-
chases from the US would aggra-
vate the US balance-of-payments
problem, and increase the finan-
cial burden of maintaining US
forces in Europe.
Although the treaty fails
specifically to exclude nuclear
cooperation, Bonn and Paris both
firmly deny any plans for coop-
eration in this field. Soviet
attacks on the treaty have
emphasized charges of nuclear
collaboration. The strong
Soviet denunciations are viewed
in West Germany primarily as
propaganda having almost no
impact on official or public
attitudes to the treaty.F
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CURRENT INTELLIGENCE WEEKLY SUMMARY
The impact of the Nassau
accords on Britain's defense
program is likely to be evi-
dent in a preliminary way in
the annual White Paper on
defense scheduled for presen-
tation to Parliament on 18
February. An unusual degree
of high-level attention was
given to its preparation when
Prime Minister Macmillan called
together his top ministers and
military officials on 8 Febru-
ary for a "working week-end"
study of defense problems. Al-
though the press has been re-
peating its frequent appeals
for a reappraisal of Britain's
entire strategic doctrine,
decisions on major policy
changes are unlikely to have
been reached in the eight weeks
since the Kennedy-Macmillan
talks.
It is probable that the
White Paper will take up more
immediate requirements enabling
the three services to revise
their programs in the light of
the Nassau obligations. These
would include planning for the
gradual shift of responsibility
for the nuclear deterrent from
the Royal Air Force (RAF) to
the Royal Navy occasioned by
the projected acquisition of
Polaris missiles, assignment of
the RAF's Bomber Command to
NATO, and procurement of modern-
ized equipment to increase the
effectiveness of conventional
forces.
Defense Minister Thorney-
croft has assured the Conserv-
ative Party defense committee
of an improved version of a
British air-to-ground missile--
probably Blue Steel--to bridge
the gap left by the Skybolt
cancellation and to strengthen
the deterrent capability of the
V-bomber force in the period
before Polaris. There seems
to be some foundation to press
reports of another air-to-ground
missile the British are develop-
ing for use in the low-level
T.S.R.2 tactical strike recon-
naissance aircraft now under
development and due to become
operational in three or four
years. Such a system would not
only fill the remaining gap
before Polaris, but would also
provide a long-term insurance
in case Polaris is never de-
livered.
According to press specu-
lation, the government will
proceed with construction of a
55,000-ton aircraft carrier--
now in the design stage--and
other ships in spite of the new
commitment to build submarines
for Polaris.
Under present government
policy holding defense expendi-
tures to seven percent of the GNP,
funds for these and other under-
takings could be found only at
the expense of drastic changes
in overseas commitments. The
current situations in Yemen,
Iraq, and North Borneo would
appear to rule out any ap-
preciable reductions in British
forces at Aden and Singapore,
especially in view of the
recent alerting of part of the
strategic reserve for possible
deployment to the Far East.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
The only alternative would
be an increase in the defense
budget, which was strongly
hinted by Thorneycroft on 30
January in answer to a parlia-
mentary question. His forecast
at that time that actual defense
expenditures for 1962-63 would
run higher than the original
estimate of $4.8 billion would
indicate that the 7-percent
limit has already been exceeded.
A higher budget would permit
increased personnel ceilings
to enable the navy to man its
new submarines and the army to
strengthen its forces in West
Germany.
The special study ordered
in mid-January of possible
changes in the higher defense
organization gave rise to so
many rumors that Thorneycroft
felt compelled to assure
Parliament that he is not
contemplating an amalgamation
of the three services. Some
formula for strengthening the
Ministry of Defense can be
expected, however, partly
aimed at containing troublesome
interservice rivalries which
have been intensified by the
effects of the Nassau agree-
ments. Lord Mountbatten, Chief
of the Defense Staff, is known
to be a powerful advocate of a
strong central control. It has
been suggested that before he
retires--he will be 63 in June--
Mountbatten might replace
Thorneycroft as minister of
defense long enough to carry
through whatever changes are
adopted.
The British have already
taken steps to implement their
party of the Nassau pact. Pre-
liminary bilateral discussions
between US and UK technical
teams on contractual arrange-
ments for the acquisition of
Polaris system have taken
place, and negotiations are
scheduled on the actual agree-
ment, which the British are
eager to conclude. On the NATO
side, Macmillan has announced
his willingness to assign
Britain's entire V-bomber force
to the proposed NATO nuclear
forces as soon as terms can be
worked out.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
FRANCE'S ROLE IN THE MIDDLE EAST
France has recently renewed
diplomatic relations with most
of the Arab countries and appears
to be stepping up its activity
in the Middle East. French of-
ficials have hinted at the possi-
bility of sizable French economic
investment in the region and re-
portedly are negotiating for the
sale of military aircraft to
Saudi Arabia and Lebanon. De
Gaulle plans a state visit
to Iran in October, and there are
rumors of possible visits to other
Middle East countries. France's
close military ties with Israel,
however, will limit the role it
can play in the area.
The new interest in the Mid-
dle East appears to emanate from
General de Gaulle and his circle
at the Elysee Palace, rather than
the Foreign Ministry.
Prior to the fall of the
Qasim regime in Iraq, French
officials intimated that France
would favorably consider Iraqi
requests for economic aid. The
French probably will be similarly
disposed toward the new govern-
ment, and might try to move
quickly to gain an edge over the
US and the UK. France might
also hope that the establishment
of close ties with Iraq--now
dominated by the Baathist party--
will provide them with oppor-
tunities to influence the Syrian
Government should the Baathist
party achieve power there. 25X1
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CURRENT INTELLIGENCE WEEKLY SUMMARY
CHINESE COMMUNIST DIPLOMATIC PRESSURE ON HONG KONG
A series of Chinese Communist the Chinese. Although London re-
protests to the British over Hong jected Chinese claims to sover-
Kong brings to an end a period of eignty over the "walled city," it
about three years during which af- indicated that the Hong Kong gov-
fairs in the crown colony received ernment would halt urban renewal
little attention from Peiping. activities in the area.
Hong Kong officials are con-
cerned that the rapid succession
of protests may portend a period
of difficult relations with Peiping,
and they have acted to conciliate
In addition, the announce-
ment in the Hong Kong press of
the British answer to Peiping
was accompanied by officially
inspired publicity describing
efforts to curb Chinese National-
ist use of the colony as a base
for sabotage operations against
the mainland. A relaxation of
restrictions on students from
mainland schools entering the
colony over the Chinese New Year
was also announced.
Although the Chinese Com-
munists are in a position to exert
heavy pressure on the colony in
a number of ways--Hong Kong gets
a substantial percentage of its
water supply from mainland sources,
for example--they are restrained
by economic considerations.
Communist China's foreign ex-
change earnings from trade with
Hong Kong come to approximately
$200 million annually. Further-
more, Hong Kong's banking facil-
ities channel foreign exchange to
the mainland by handling remit-
tances from Overseas Chinese. Hong
Kong thus plays a significant role
in helping Peiping meet its finan-
cial obligations for such current
purchases as grain--now costing
China over $300 million annually
in hard currency.
The indications are that the .
Chinese Communists will not promote
a major crisis over Hong Kong at the
present time. The official protests
by Peiping have not been accompanied
by undue attention to the subject in
the mainland or Hong Kong Communist
press.
Peiping's principal motive ap-
pears to be to publicize its role
as supporter and protector of Chi-
nese rights everywhere. It probably
also wishes to remind the British
that their presence in Hong Kong
continues only on Peiping's suffer-
ance.
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The assassination on 12
February of Kong Le's commander
on the Plaine des Jarres appar-
ently is part of the Pathet Lao
campaign to eliminate the
neutralist military position in
this key area. The victim,
Colonel Ketsana, had been blocking
Pathet Lao efforts to infiltrate
and control neutralist forces.
Even before Ketsana's
assassination, Kong Le's posi-
tion on the Plaine des Jarres
was seriously threatened. There
are indications that his forces
control only a portion of the
plain, and that outlying neu-
25X1 tralist units at Tha Thom, Vang
Vieng, Nhommarath,,and Khang
Khay are of doubtful reliability.
NORTH
V I E T N A M
T H A I L A N D
Road
Trnd
Ruu.e nu >er
Road under
pans lr a dlion
3302"
ILLEGIB
The military situation has
been marked by reports of a
Chinese Communist battalion
located near Muong Sing close
to the Chinese border and Pathet
Lao mop-up efforts against Yao
tribesmen in that region. The
Pathet Lao have also continued
to press for the cessation of
US-chartered flights to isolate
tribal units in the northern
provinces. Premier Souvanna
Phouma appears to have been
won over to the view that all
resupply activities must come
under Laotian control.
The assassination of Ketsana
occurred only one day after King
Savang, Souvanna, and several
other government leaders left
on a "good-will" tour to coun-
tries which signed the Geneva
agreements designed to ensure
Laotian neutrality. On the
eve of their departure, a tri-
partite communique reaffirmed
the coalition government's
intent to start demobilization
of the rival military forces and
to establish in their place a
30,000-man army and a 6,000-man
police force to be drawn equally
from each of the three factions,
as agreed to last November.
The persistent mutual suspicions
will probably prevent any signif-
icant reductions in the factions'
military strength, however,
especially in the wake of the
Ketsana assassination and at a
time when key figures are abroad.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
POLITICAL MANEUVERING IN THE CONGO
With Katangan integration
well under way, Premier Adoula
plans to reshuffle his govern-
ment and to reconvene the Congo
Parliament in early March.
Intensive political maneu-
vering has revived in Leopold-
ville. Members of the opposi-
tion who were calling for Adoula's
scalp in December now are bidding
for positions in his next cabinet.
Even though the ending of Katan-
ga's secession has increased his
stature and attracted new support,
he will have to juggle appoint-
ments carefully in order to
avoid precipitating a resumption
of his struggle with the members
of Parliament. Before Adoula
sent them on vacation in early
January, less than half supported
his government.
Adoula hopes to have Parlia-
ment deal exclusively with the
new draft constitution and
then to call new general elec-
tions. President Kasavubu has
told US officials, however, that
the legislators will probably
reconvene "in full flower" with-
out any restrictions on their
agenda. If they do not "behave,"
he said, he will send them home
again.
The reintegration of Ka-
tanga is moving ahead smoothly,
even to the satisfaction of
Adoula's minister resident there,
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Joseph Ileo.
Sur-
render and registration of
Katangan gendarmes is proceeding,
but only slowly.
Ileo has been conferring
with Adoula on "next steps,"
probably concerning Moise
Tshombe's future role and the
possible reunification of North
and South Katanga. Leopoldville
is still trying to persuade the
UN to allow three more Congo
army battalions to enter Katanga.
Il.eo says this is necessary for
a "psychological shock" to any
Katangans thinking of seceding
again.
Tshombd and his associates,
however, are exuding cooperation
and moderation and still insist
that secession is definitely
over. He has made conciliatory
overtures to US and UN officials,
and has notified Adoula he is
ready to nominate Katangan min-
isters to the central government
as called for by the UN inte-
gration plan. Before he went
to Europe on 9 February for eye
treatment, Tshombe gave every
indication to the US consul
in Elisabethville that he planned
to return.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Relations between the Greek
and Turkish communities on Cy-
prus have become more embittered
as their opposing positions on
the integration of municipal
governments have hardened.
moves could lead to serious
intercommunal riots.
Until 1 January 1963, the
island's five largest cities
have been governed since inde-
pendence by both Greek Cypriot
and Turkish Cypriot councils
having separate jurisdiction
over their respective communi-
ties. This arrangement, in-
tended to last only six months,
had been prolonged by succes-
sive extensions, the latest of
which expired on 31 December.
Just prior to that date,
the Turkish Communal Chamber
moved unilaterally to extend
the arrangement once again.
The Greek-dominated cabinet,
however, eliminated the sepa-
rate municipal administrations
and replaced them with unified
"improvement boards" under pro-
visions of an old British colo-
nial law--a solution proposed
by the island's Greek Cypriot
President, Archbishop Makarios.
Both sides have challenged the
legality of the other's actions
before the Constitutional Court.
Greek Cypriot leaders have
recently expressed the intention
of increasing pressure on the
Turks to force them to accept
the Makarios solution. To this
end, they may refuse to imple-
ment a constitutional provision
calling for a 70:30 ratio be-
tween Greek and Turkish Cypriots
-in the civil service, or they
may withhold part or all of
the $1.12 million annual subsidy
to the Turkish Communal Chamber.
The possibility of more drastic
action--such as cutting off
utilities to Turkish areas,
seizing Turkish municipal coun-
cil buildings, or expelling
Turkish Cypriots from municipal
property--is also rumored.. Such
Communists are not influential
in either of the Greek groups nor
in the Turkish organization.
The spokesmen for the far left
have not yet taken an active
role in the communal dispute
but have called for eventual
integrated governments.
New contacts between
Makarios and Vice President
Kuchuk, a Turkish Cypriot, will
not be possible until Kuchuk
returns on about 20 February from
his official visit to West
Germany.
In both Athens and Ankara
there are indications that the
situation on Cyprus is regarded
with increasing apprehension.
The Greek Government appears
to have little influence over
the Greek Cypriots, and Foreign
Minister Averoff recently stated
that relations with Makarios
had never been worse.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Political tension is in-
creasing in Venezuela as a re-
sult of growing Communist-led
violence. The Communists are
seeking to discredit President
Betancourt's government and
force him to cancel his trip to
the US now scheduled for 19
February.
The terrorist activities in
Caracas are being carried out
mainly by the Armed Forces of
National Liberation (FALN)--a
paramilitary organization formed
by the Communists in late 1962.
While the FALN purports to rep-
resent all opposition groups,
most of its leaders are PCV 25X1
members.
In a speech on 13 February,
Betancourt accused Cuba of sup-
plying money and arms to sub-
versive groups in Venezuela and
other Latin American countries.
He also stated that the "con-
tinent-wide subversion is di-
rected from Moscow and Peiping."
The US Embassy in Caracas
has reported growing anxiety
among local residents, who are
concerned about both their per-
sonal safety and the safety of
their property. Communist ter-
torist groups have focused
their attacks on US-owned busi-
nesses and Venezuelan security
personnel in Caracas.
Terrorists set fire to a
Firestone Tire Company ware-
house in Caracas on 13 February
after other extremists had
attempted to sabotage a US-owned
oil refinery north of the cap-
ital. On the same day, members
of a Communist front group
seized a freighter of the gov-
ernment-owned Venezuelan Navi-
gation Company en route to
New Orleans.
Government officials have
expressed confidence that the
terrorists will be eliminated. 25X1
The majority of the armed forces
are believed loyal to Betancourt
and capable of preventing the
Communist-incited disorders
from reaching proportions that
would threaten the government.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Charles de Gaulle is a pro-
found theorist and a skilled
practitioner of the adage that
politics is the art of the possi-
ble. While his political phi-
losophy is deeply colored by a
romantic conception of France's
global mission and his own
historic role, his basic ap-
proach to all problems is prag-
matic. His view of the use of
power is Machiavellian in the
best sense--i.e., he rejects
the view that power is a corrupt-
ing influence, and believes
that power per se is neither
moral nor immoral.
The vitality of the nation-
state is the starting point in
his analysis of power. In his
Memoires he insists that the
state is more enduring than
any ideology. His view of his-
tory reduces Communism to a
transitory phenomenon which
only incidentally influences the
international role of the coun-
tries controlled by Communists.
He believes, for example, that
forces of nationalism in both
China and the USSR will !inevi
tablysplit the Sino-Soviet bloc.
De Gaulle's views on the
power relations between states
are classic. He believes that
no state ever grants a favor to
another without receiving some-
thing in return. Friendship of
one state for another is never
disinterested; generosity has
no meaning between states. It
follows from this line of rea-
soning that one nation cannot
rely on another for its defense.
Security is the essential prob-
lem, and no country- is really
sovereign if it does not control
its own defense. International
agreements are of little value,
he wrote in The Edge of the Sword
in 1932, unless there are troops
to enforce their implementation.
The world, he added, "will never
be able to do without the final
arbitrament of arms."
In The Edge of the Sword,
De Gaulle devotes almost ten
pages to the essential qualities
of leadership. He envisages the
leader as one-with great self-
confidence who maintains a
position of prestige by re-
maining aloof, thus creating
something of a mystique about
himself which endows him with
an aura of secret power. He
must exercise the power to dom-
inate events, and must assume
responsibility for the conse-
quences of his actions.
Long-Range Aims
De Gaulle's overriding
objective has long been to re-
turn France to a position of
first rank in international
affairs. This means the ac-
ceptance by the most powerful
countries in the world of a
position of equality for France.
Since this status is obviously
not attainable solely on the
basis of the economic and mil-
itary potential of 47 million
Frenchmen, it must be achieved
by the imposition of French
leadership on a European bloc
supported to some degree by
African and perhaps some Middle
East States. This aim was de-
lineated as early as 18 March
1944 in his speech to the Pro-
visional Consultative Assembly
at Algiers.
This concept of a powerful
France guiding a strong Eurafrican
bloc is a critical element in De
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Gaulle's global conception of
the evolving nation-state sys-
tem. He envisages the eventual
division of global power among
four blocs; the US (possibly
with the adherence of the UK),
the USSR, China, and Western
Europe. Since the early 1950s
his speeches have increasingly
stressed the need for develop-
ment of such a Western European
bloc as the instrument by which
France could obtain the strength
to play a more independent role
in world affairs.
His insistence on independ-
ence, however, does not necessar-
ily imply a desire to "reverse"
alliances. Although relentlessly
critical of France's subordinate
position in NATO, he would see
the same disadvantages in an
alliance with the Soviet bloc,
or in any other grouping in
which France would be dependent
on decisions over which it had
little or no control.
Nevertheless, his cryptic
statement'in June 1958 that,
while France is part of the
West, it is not confined to
the West, implies his insistence
on a voice in policy decisions
affecting broad areas of the
globe. It also implies a will-
ingness to consider political
ties outside France's current
alliances. He clearly intends
to be free at some future date
to make any alliances that would
appear desirable for France--even
an alliance with the USSR. This
is the "third-force" concept,
not in the sense of a deliberate
anti-American bloc, but of an
independent European power com-
plex free to decide where its
best interests lie in a given
set of circumstances.
Recent developments in
Sino-Soviet relations probably
appear to him as substantiating
the views on power blocs he has
long propounded. Since 1959
he has predicted that Chinese
expansionist pressure would
inexorably force Moscow to look
westward for help. He has con-
cocted the notion of Russian
susceptibility to Western in-
fluence by emphasizing Russia's
geographic division from Asia.
He is also confident that
the middle class will eventually
be strong enough to discard
Marxist ideology and find a
more natural alliance in the
West. From these threads he
has woven the much-discussed
concept of "Europe to the Urals."
When Moscow is ready to
reach an understanding on Central
Europe, De Gaulle is determined
to play a dominant role. Further-
more, he hopes to be strong
enough to confine a settlement
to Moscow and Paris.
He believes the British
decision to accept the Polaris
offer enhanced France's posi-
tion. By his reasoning, Brit-
ain forfeited its claim to
major-power status because it
subordinated its nuclear deter-
rent to a US-controlled alliance.
De Gaulle, however, still
considers--and has frequently
declared--that the Atlantic
alliance is necessary for France,
since Europe must rely on the
US until it has its own nuclear
weapons. In the meantime, So-
viet actions in the Cuban crisis
have strengthened his belief that
war is not imminent, and so he
believes Europe has more maneuver-
ability than its limited military
strength actually warrants.
Just as he opposes US con-
trol of Europe's nuclear weapons,
De Gaulle opposes what he con-
siders US domination of the NATO
military structure. Criticizing
NATO as far back as November 1949,
he said it was "unacceptable" that
the defense of French territory
should depend on the orders of a
foreign commander. On other
occasions, De Gaulle has insisted
that a clear distinction be made
between the Western alliance and
a "certain military organization
called NATO."
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CURRENT INTELLIGENCE WEEKLY SUMMARY
While he has complained
for years that NATO must be re-
organized, the only formal
structural change De Gaulle
has requested was his proposal
in 1958 for a tripartite directo-
rate.. De Gaulle will hence-
forth probably press his "two-
pillar" concept of the Western
alliance, one pillar being con-
tinental Europe and the other
the "Anglo-Saxons.,,,
Germany
De Gaulle's recent effort
to cement the French-German
rapprochement is a long step
in his plans for Continental
leadership. In 1961 he said
privately that France could
not exist without Germany. He
has also said that if Germany
became neutral, France would
be forced to do likewise. De
Gaulle believes a rapprochement
is desirable, not only in order
to end the traditional rivalry
between the two countries but
also because French-German rap-
port reduces the chances for
France's smaller neighbors to
exert pressure against De Gaulle's
drive for leadership.
De Gaulle tried for several
years to get agreement among all
six Common Market countries to
a form of political integration
which he believed would help
him in his goal of leading
Europe. He failed in this at-
tempt, but clearly hopes that
an ever stronger French-German
alliance will be an intermediate
step toward the same objective.
The smaller countries are wel-
come to join the new alliance,
but they cannot change its form
to any great extent against the
wishes of France and Germany.
De Gaulle's concept of a
French-German rapprochement
has from the beginning been
linked in his public statements
with expressions of concern for
British policy. In 1949 he said,
"British policy has at all times
thought of Europe as a Franco-
German rivalry with British
arbitration .... This ideology
had not completely disappeared,
and it is one of the reasons
that prevent a united Europe
from being established." He
stated in the same year that
the future of Europe depended
on an understanding between
Germans and Gauls independent
of British influence. He has
subsequently expressed the be-
lief that Britain will withdraw
from the Continent in favor of
closer attachment with the US.
In this context he has cited
Churchill's stated preference
for the open sea--which De
Gaulle equates with the US--
over the Continent.
Since De Gaulle's 14 January
press conference, French officials
have advanced the idea that the
Nassau accord sparked his op-
position to British accession
to the EEC. The officials
allege that De Gaulle inter-
preted the Nassau agreement as
meaning that the UK said "no"
to Europe and "yes" to the US.
In this view, Britain cannot
be integrated into the new
Europe if it has pretensions
of being "an insular bridge in
the middle of the Atlantic'."
It is possible that De
Gaulle expected Britain would
not accept the Common Market's
terms for admission. It is
also possible, however, that
he had resigned himself to
British membership, if Britain
were European enough to sign
the Rome Treaty without res-
ervation... The . bid to Prime
Minister Macmillan in December
1962 at Rambouillet to produce
missiles jointly may have been
a test of British intentions.
If so, Britain's subsequent ac-
ceptance of the Nassau Pact
would have seemed a clear re-
jection of cooperation with
France in the nuclear and missile
fields.
I De Gaulle's future inten-
itions toward the Common Market
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are unclear, despite his evident
willingness to risk splitting
the organization to keep Britain
out. He presumably will continue
supporting the EEC for the eco-
nomic benefits it gives France
and the increased bargaining power
it gives all its members in
their economic relations with
other countries. As in the past,
however, he will probably continue
his attempts to circumscribe
the powers of the supranational
executive bodies of the European
communities. He sees these bodies
as a threat to his own leadership
rrf Europe. In short, De Gaulle
will continue trying to mold the
EEC into an implement of his own
leadership.
De Gaulle has succeeded in
crystallizing in the minds of
many Europeans the idea that
Western Europe cannot continue
to rely for its defense on US
nuclear weapons under Washington's
control. Most supporters of this
view do not agree with De Gaulle
that France must have a national
nuclear force, but they do feel
that Europe cannot be sure of
America's determination to risk
nuclear war in order to defend
Europe. This growing insistence
on self-defense is related to
Europe's new economic strength,
which makes a broader defense
burden less formidable than in
the past. It is perhaps also
a manifestation of the psychology
of 1940, when Continental Europe,
many Europeans feel, was abandoned;
De Gaulle has played skillfully
on this point in recent public
statements.
De Gaulle is determined
to carry out the French nuclear
weapons program which was begun
by his predecessors, regardless
of the economic burden. He has
never ruled out the possibility
of assistance from other countries
in meeting this burden. He would
insist, however, that the French
share of any weapons jointly pro-
duced be exclusively controlled
by France.
De Gaulle's reported in-
itial interest in exploring the
US offer of Polaris missiles was
probably prompted by the hope
of assistance in the development
and production of nuclear war-
heads. He may have decided against
expressing his interest because
this offer was tied to a proposal
for a nuclear force under multilat-
eral (including US) control.
The possibility of an arrange-
ment with Britain was appealing
enough to De Gaulle for him to raise
the question of a European nuclear
deterrent with Macmillan in June
1962. His failure to obtain
agreement either on this issue
or on joint Anglo-French missile
production may have been a factor
in his decision to bar Britain
from the EEC.
West Germany is a more likely
source than Britain of both
technical and financial assistance
for France, and the terms of the
new Franco-German treaty are
sufficiently broad to allow
cooperation in the nuclear and
missile fields. Two problems
must be overcome, however, be-
fore such cooperation gets
under way. The West German
Parliament must ratify the treaty,
and De Gaulle must find a quid
pro quo for Bonn's assistance.
Treaty restrictions prevent the
Germans from possessing a national
nuclear weapons force, and even
if there were not restrictions,
De Gaulle might be reluctant to
hasten German possession of
nuclear arms.
As France's nuclear capa-
bility gradually increases
(with or without external aid),
Paris can be expected to press
for more explicit recognition
of this capability by the US.
While retaining ultimate control
over his national forces, De
Gaulle wants an increased voice
in the over-all planning, tar-
geting, and possible use of
Western nuclear forces.
In view of De Gaulle's desire
to secure international stature
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for France as a nuclear power
he can be expected to stand
pat on his opposition to piece-
meal disarmament proposals. He
rejects any solution which makes
no provision for destruction of
nuclear stockpiles. He opposes
any agreement which would permit
the USSR, the US, and Britain
to retain a military capability
substantially superior to that
of France.
The same reasoning explains
his refusal to participate in
discussions on a nuclear test
ban. Since current weapons
levels would presumably not be
affected by such a ban, he
would reject it as a blatant
attempt to consecrate the status
quo.
United Nations
De Gaulle's disdain for
the role and power of small
states is apparent in his
irritation over UN activities.
He considered as relatively
harmless the original concept
of the UN as an international
meeting place where differences
could be aired. He strenuously
objects, however, to the active
role the UN has assumed in
specific disputes. He feels
that the organization is assuming
the responsibilities of large
states without actually having
the requisite power. He believes
that the big increase in the
number of Afro-Asian UN members
without. real power has accentu-
ated thk. differences in policy
between the large states and
the UN itself, which he feels
is largely ineffectual. His
irritation against US foreign
policy is accentuated by this
situation,because he believes
the US has been largely respon-
sible for this state of affairs.
Despite his lack of re-
gard for the UN, De Gaulle is
unlikely to sever ties with the
world organization, particularly
since the permanent seat on the
Security Council affords France
the primacy he covets. France
is not expected to take an active
role in UN operations, however,
and it will exert its influence
on its African partners only
when French interests are clearly
involved.
De Gaulle prizes highly
the close ties France has main-
tained with the French African
states. Relations with both the
sub-Sahara and Mahgreb states
are excellent. The Black Africans
of French persuasion have shown
a stability and rate of progress
that have made some other new
African nations consider affili-
ation with this group. De Gaulle
knows he has a strong hand in
dealing with these states and
he is willing to turn them down
on occasion, but he will probably
continue to go far to meet their
requests in return for French
I "presence" there.
De Gaulle continues to feel
that residual French interests
in Southeast Asia entitle France
to a voice in Western councils
on that area. There is a
juridical basis for this attitude
in the internationally acknowl-
edged French presence in Laos.
In the long run De Gaulle prob-
ably favors neutrality for a
reunified Vietnam and he will
probably support covert French
efforts to improve relations
with those South Vietnamese who
might expect to be influential
in the eventual neutral govern-
ment.
He is content for the moment
not to rock the Western boat as
far as China is concerned. China
will ultimately have to be dealt
with on the basis of its eventual
great-power status, but in the
meantime De Gaulle sees no partic-
ular advantage for France in 25X1
granting diplomatic recognition
or in backing Peiping's claim to
UN membership.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Most of the Common Market
countries have professed to wel-
come the US Trade Expansion Act,
although they have doubts about
the United States' willingness
to limit its own protectionist
practices, and reservations about
giving outsiders substantially
improved access to the EEC market.
In Great Britain, the collapse
of the British - Common Market
talks has focused attention on
the possibility that the Act may
offer the British economy a par-
tial alternative to membership
in the EEC. Under the most-
favored-nation principle, the
United Kingdom and other third
countries would receive the bene-
fits from any reductions of trade
barriers negotiated between the
EEC and the US.
Common Market Views
Judging from the present
views of the Common Market coun-
tries, the actual reduction of
trade barriers under the Act will
be substantially less than the
maximum allowed by the US legis-
lation. The EEC Commission and
most of the member states support
a further reduction of trade
barriers, but they are disturbed
over recent examples of what they
consider US protectionism, and
feel that the US is already
damaging their trade before nego-
tiations begin. Especially
heavy criticism has been directed
at US moves to protect certain
domestic steel products by im-
posing high "anti-dumping" du-
ties, and at restrictions now
under consideration on wool tex-
tile imports.
The Trade Expansion Act
allows the US Government to nego-
tiate reciprocal tariff reductions
of up to 50 percent on almost all
goods. Tariffs now amounting to
less than five percent and tariffs
on tropical agricultural and
forestry products may be dropped
completely. Another provision
permits elimination of tariffs on
industrial products for which
the US and the EEC account for at
least 80 percent of total world
exports; with Britain's failure
to gain admittance to the Common
Market, however, the only products
to which this provision applies
are aircraft and vegetable oils.
The actual negotiations
arising from the Trade Expansion
Act are scheduled to begin in
spring 1964 under GATT auspices
in Geneva, and will involve many
underdeveloped countries as well
as the EEC, Britain, and other
European nations. Preparations
for the negotiations, such as
US Special Ambassador Herter's
recent trip to Europe, are already
under way, and EEC and British
views on the Act are becoming
increasingly clear.
Some Europeans believe that
any tariff reduction under the
Act is likely to benefit the US
more than the EEC. The Common
Market lays external tariffs on
most goods, but these fall
largely within a relatively narrow
range of 10 to 20 percent. US
tariffs, on the other hand, have
a completely different structure:
many goods are subject to no duty
at all, whereas a large number
of others are subject to tariffs
as high as 100 percent. Some
EEC officials argue that a recip-
rocal percentage reduction
would therefore be meaningless
for some US imports, since tariffs
would still be at or near pro-
hibitive levels.
In conjunction with the Trade
Expansion Act, the US has been
revising and trying to simplify
the lengthy list of imports sub-
ject to customs control. The
EEC countries as well as others
fear that the switching of goods
from one category to another
which this process entails has
resulted in unilateral US tariff
increases. US pressure on the
EEC for quick acceptance of this
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Revised Tariff Schedule--so that
it can become the starting point
for negotiations under the Trade
Expansion Act--has thus become
another point of irritation. The
EEC countries are adamantly
refusing to accept the new list-
ings before they have time to
examine the revisions in detail.
These problems may be essen-
tially atmospheric, but they will
make bargaining in the forth-
coming negotiations more difficult.
They also encourage existing
protectionist sentiment in the
EEC itself. The president of
the French Patronat (roughly
equivalent to the US National
Association of Manufacturers)
recently said that the largersize
of American as compared with
European industries gives the
former a major advantage, and
really free competition between
the two continents is conceivable
only after the process of Euro-
pean integration "produces its
effect on the structure and size
of European industries." The
other EEC countries share this
view but attach lesser importance
to it than does France, where
industry has historically been
more protected than in most other
Common Market countries.
The EEC also believes that
discussions cannot be limited
solely to tariff reduction. The
"harmonizing" of economic policies
in such fields as monopoly legis-
lation has been increasingly put
forward as a necessary supplement
to negotiations under the Trade
Expansion Act. Some officials
have argued that con.,inuation of
EEC protective measures at present
levels may be justified, because
it is impossible to imagine a
"real harmonization" of production
conditions between the US and
Europe in the foreseeable future.
With this argument also France
again is generally in the lead,
and on this point it has quite
widespread, if less vocal, support
throughout the Common Market.
In addition to these economic
arguments, the present French
Government has reservations about
the Trade Expansion Act on the
political ground that it is
intended to help the US bring
into being an Atlantic Community
controlled by Washington. De
Gaulle, who normally does not
concern himself with technical
economic matters, has indicated
that reducing the EEC's common
external tariff wall would tend
to deprive the Common Market of
its cohesiveness and make it
become part of a limited but
broader free trade area which
the big US economy would dominate.
In pursuing this thesis, De
Gaulle has skillfully played on
existing protectionist sentiments
and irritations with recent US
tariff and commercial practices.
This political argument against
the whole concept of the US Trade
Expansion Act has also received
a degree of support elsewhere in
the EEC, but with less of the anti-
American twist given it by De
Gaulle.
Agriculture and the EEC
Trade barriers on farm goods
present a special problem for the
forthcoming negotiations. Both
the EEC countries and the United
States have historically given
their farmers a high degree of
protection, and have protected
their agricultural trade not pri-
marily by tariffs, but by complex
systems of domestic price and
production controls, import quotas,
and export subsidies. The US is
insisting that agriculture must
be included in the negotiations,
despite the difficulty of dealing
with subjects which are sometimes
considered internal political
affairs in both Europe and the
US.
Since agricultural products
account for a relatively large
share of US exports to Europe but
only a small portion of US imports
from Europe, it is felt that
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Europe would be the gainer if
the negotiations were limited
to industrial goods. EEC Com-
mission officials and some mem-
ber nations reportedly agree
that agriculture must be dis-
cussed, but the Common Market
as a whole has not yet reached
a decision.
In the agricultural field,
EEC pressure to block improved
US access to the Common Market
is limited mainly to those goods
which are also produced in
Europe. US agricultural exports
to the Six from mid-1961 to
mid-1962 were about $1.2 billion
--one quarter of total US ex-
ports to the EEC. About $700
million of this, however, con-
sists of cor.imodities on which
the EEC is adopting liberal
trade policies and on which
prospects are good for continued
expansion of trade. The cor:rnodi-
ties involved are not produced
in Europe in volume, and include
cotton, soybeans, hides and
skins, and some fruits and veg-
etables.
The EEC is showing protec-
tionist tendencies on the re-
maining $500 million of US
agricultural exports, including
wheat and flour exports ($121
million), feed grains ($271
million), and poultry and eggs
($67 million). Production of
these goods within the Common
Market is rapidly increasing,
and the EEC countries will
probably be unwilling to reduce
their import barriers on them.
The most that negotiations are
likely to achieve on these
products is a commitment by
the EEC not to increase present
.barriers.
The very mechanics of nego-
tiations on these products will
be difficult. Under its emerg-
ing Common Agricultural Policy,
the EEC controls imports of
these goodsby variable levies
--a system of duties which are
administratively raised or low-
ered from time to time to
assure continuing markets at
set prices for produce raised
domestically. The provisions
of the Trade Expansion Act for
negotiating reductions in fixed
tariffs cannot be applied to
these variable levies. Because
of this, and because the regula-
tion of agricultural markets
will involve not only Europe
and the US but other producing
and consuming countries as well,
attempts to reduce trade barriers
on these farm goods will probably
take the form of n--gotiations
for world co..noC i;,y agreements.
How closely the EEC will be
willing to mesh these negotiations
with those on industrial tariffs
remains unclear.
Great Britain is eager to
get negotiations on the Tr..4de
Expansion Act started for what-
ever benefits will eventually
accrue to its lagging economy.
British officials recognize,
however, that these benefits
will be less than those London
would have received from join-
ing the Common Market, especially
if trade barriers are not re-
duced as much as the US Act allows.
Moreover, in view of the antici-
pated length of the negotiations, 25X1
tariff reductions under the Act
will probably not begin to take
effect until 1965.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
CHANGING POWER RELATIONSHIPS IN INDONESIA
The power relationships
which have prevailed in Indo-
nesia for the last five years
are changing. Since 1957 Presi-
dent Sukarno has retained his
pre-eminent position in great
part by maintaining a delicate
balance between the anti-Com-
munist army and the Communist
Party (PKI). Duringthis period,
the army has played a strong
political role deriving from
the declared state of national
emergency and from its sub-
stantial representation in the
cabinet. The Communist Party,
which still functions largely
outside the official apparatus
and holds no significant post
at the national level, is
gradually increasing its in-
fluence in the government.
Decline of the Army's Role
The changes are at the
expense of the army. The army
has completed the political
task assigned to it by Sukarno--
assisting him to implement
"guided democracy"--and the im-
provement in internal security
reduces the need for martial
law. The army's power has al-
ready been eroded as the result
of maneuvers by Sukarno and the
increased influence of Foreign
Minister Subandrio, who, al-
though non-Communist, is strongly
opposed to the political in-
fluence of the military.
Subandrio, other ambitious
non-Communist civilians, and
the Communist Party together
have made the army the whipping
boy for Indonesia's deteriorat-
ing economic situation. The
basic causes of the economic
troubles are chronic under-
production, the vulnerability
of Indonesia's exports to
fluctuating world market prices,
and rash expenditures for a mas-
sive arms build-up. Aggravating
these factors are poor internal
distribution and lack of mid-
echelon officials who are trained
and experienced.
The army is especially
vulnerable to criticism, how-
ever, because of the wide powers
it has exercised from the na-
tional through the village
levels under the state of
emergency. The army also holds
directorships in large govern-
ment-owned import-export firms
and in a variety of production
enterprises. Officers untrained
for economic posts have some-
times proved to be poor adminis-
trators, and some officers and
men have yielded to corruption.
The army is already being re-
placed in many of these posts
by civilian, non-Communist
personnel, most of them equally
untrained for such jobs.
A further, sharp reduction
of army power is probable by
1 May, when the state of emer-
gency is scheduled to be lifted.
The army now holds
two posts in the 10-man "work-
ing" or "inner" cabinet, and
controls or influences 16 other
positions in the 53-post plenary
cabinet.
The Communist Drive
The Communist Party, in its
strongest bid since the country
attained independence, is trying
to acquire positions of respon-
sibility in the government. Two
Communist leaders--party chairman
Aidit and deputy chairman Lukman--
have ministerial status as members
of the plenary cabinet, but they
hold no portfolios, and the
plenary cabinet meets infre-
quently.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
The intensity of the Com-
munist bid for representation
appears to result not only from
the fact the party feels its
chances are better than they
have been at any time since
independence but also from a
shift in power relationships
within the party itself ._
Although no basic
change in line appears likely,
the party's tactics may be more
vigorous in the future.
Sukarno's Intentions
Sukarno's precise inten-
tions as 're.gards the cabinet
remain obscure. He has re-
peatedly said that he prefers
a cabinet reflecting the fusion
of nationalist, religious, and
Communist forces in Indonesia--
and has even coined the word
"nasakom" to denote this trend.
The army and its supporters
among civilian leaders (for ex-
ample, First Minister Djuanda)
have hitherto persuaded Sukarno
against appointing Communists
to the cabinet. The influence
of these anti-Communists, how-
ever, now is reduced.
During the past month
Sukarno is said to have ap-
peared less interested in
forming a "nasakom" cabinet
at this time. It is possible
that instead he will appoint
the Communists to high-level
posts outside the "inner"
cabinet as an interim move.
Probably a major element
in determining Sukarno's deci-
sion just now is the impact the
Communist representation in the
inner cabinet might have on
the continuation and possible
expansion of US economic as-
sistance to Indonesia. Other
than this, Sukarno's decision
will be based on his assessment
of power realities in Indonesia
and of his personal need for
the respective support of the
army, the PKI, and the various
non-Communist civilians whose
orientation toward the army
varies from strong support to
bitter opposition.
Sukarno may believe that
a policy of territorial aggrandize-
ment will permit him to cope
successfully with domestic
power problems and to divert
the nation generally from its
economic difficulties. Such
a policy appears already to be
under way in the guise of a
"decolonialization" campaign
aimed at Portuguese Timor and
British Borneo. By this means,
Sukarno may feel that he can
channel the energies and in-
terests of the army and the PKI
in the same direction, maintain
their support of him personally,
and preserve national unity.
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