WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A004800050001-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 33
• Document Creation Date: December 21, 2016
• Sequence Number: 1
• Content Type: SUMMARY

Now
INTELLIGIENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
State Dept. review completed
GROUP 1 Excluded from automatic
downgrading and declassification
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(Information as of 1200 EST, 11 March 1965)
THE VIETNAM SITUATION
Political maneuvering continues in Saigon, and the Bud-
dhists may be preparing to put the Quat government to a
test. The Communists meanwhile are making steady gains
in the coastal areas of northern and central South Viet-
nam, and,over-all Viet Cong troop strength is rising.
Pacification efforts in the I and II Corps have all but
ceased. The II Corps commander expects Saigon to enter
into negotiations eventually, but the public and private
actions of. both Hanoi and the Viet Cong belie repeated
rumors of a desire on their part for peace talks. Yugo-
slavia's Tito nonetheless is trying to organize an appeal
by nonaligned countries for a conference to seek a Viet-
nam settlement. Peiping still displays arrogant cer-
tainty of Communist victory and, with Hanoi and Moscow,
has reiterated warnings of dangers inherent in escala-
tion of the war.
MOSCOW MEETING SIDESTEPS SINO-SOVIET RIFT
The communique following last week's "consultative meet-
ing" of 19 Communist parties in Moscow reflects the in-
conclusive results of the session and Moscow's retreat on
the question of a world Communist conference in the face
of opposition from several key parties.
MOSCOW APPEARS RELUCTANT TO RESUME GENEVA DISARMAMENT TALKS 6
Soviet officials are taking the line privately that the
Vietnam crisis poses obstacles to reconvening the 18-
nation conference.
SOVIETS REORGANIZE DEFENSE INDUSTRIES AND AGRICULTURE
The return of the defense industries to the ministerial
system does not appear of itself to foreshadow an in-
crease in the influence of the military establishment.
Neither does it necessarily portend similar changes in
all branches of industry. Other decisions by the new
regime suggest increased local direction of consumer-
oriented industries, and the question of just where to
draw the line may still be under debate.
HOOF-AND-MOUTH DISEASE SPREADS IN CENTRAL EUROPE
The vaccine available in Hungary--the prinicpal country
affected--is reportedly not effective against the cur-
rent strain of the disease. Quarantine restrictions
are limiting movement in infected areas.
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THE COMMUNIST WORLD (continued)
Page
ULBRICIIT'S HEALTH LIMITS HIS ACTIVITIES
The 71-year-old East German party leader, who in recent
years has been absent from his duties with increasing
frequency, did not make his customary visit to the annual
Leipzig Trade Fair.
COMMUNIST CHINA'S FOREIGN TRADE
The total may well increase moderately again this year,
although the increase in exchanges with free world coun-
tries is expected to be partially offset by a decline in
trade with the USSR.
ASIA-AFRICA
INDONESIAN COMMUNISTS MOVE TOWARD MILITARY CAPABILITY 12
The government has been induced to undertake paramili-
tary training programs for workers, peasants, and stu-
dents which seem certain to be used ultimately by the
Communists for their own purposes.
OUTCOME OF KERALA STATE ELECTION IN INDIA
Since no party won enough seats in the legislature to
form a government, New Delhi will probably continue its
direct rule until the 1967 general elections.
RIFT AMONG AFRICAN STATES OVER CONGO ISSUE DEEPENS
The OAU conference in Nairobi ended this week without
any decision, as moderate leaders were unable to put
through a resolution backing the Leopoldville government.
The problem has been passed to the next OAU meeting,
scheduled for September.
FOOD AND MONEY PROBLEMS DIVIDE REGIME IN MALI
Popular discontent over shortages and the need for more
foreign financial help are contributing to a new strug-
gle between moderates and leftists in Bamako.
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ASIA-AFRICA (continued)
Page
EUROPE
AUSTRIAN PRESIDENTIAL ELECTION MAY STRAIN COALITION
The election was called to replace deceased President
Schaerf, whose fellow Socialist, Vienna Mayor Franz
Jonas, is favored to defeat the People's Party's Alfons
Gorbach. Animosity between the two coalition parties
has increased over the past ten years.
NATO INFRASTRUCTURE NEGOTIATIONS
Discussions in the North Atlantic Council next week of
a proposal by the US to reduce its payments to the NATO
infrastructure program may produce a sharp exchange if
not a deadlock.
EXECUTIVES OF THE THREE EUROPEAN COMMUNITIES MERGED
While officials in all the EEC capitals are stressing
the political and psychological significance of this
move in furthering integration, the merger agreement
is more an important first step than a definitive re-
organization.
TEMPORARY TRUCE AMONG ITALIAN COALITION PARTIES
The undeclared cabinet crisis which had immobilized the
government since the December presidential election has
been resolved, but the Christian Democrats remain badly
split among themselves over basic policies and have yet
to achieve agreement with their coalition partners on
several important issues.
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SE G.RE T
WESTERN HEMISPHERE
RECENT ACTIVITIES OF LATIN AMERICAN COMMUNISTS
They appear to be trying to implement measures agreed
on at a highly secret meeting in Havana last November.
Their main purposes seem to be to achieve greater co-
ordination and unity, to give new impetus to Communist
activity in the hemisphere, and to promote "solidarity
with Cuba."
Page
UNREST IN HONDURAS 23
Political and military unrest is mounting with the ap-
proach of the convening date (16 March) for a constituent
assembly at which the regime seems intent on seeking rapid
action to name Chief of Government Lopez "constitutional
president" for a regular six-year term.
CHRISTIAN DEMOCRATS SWEEP CONGRESS:[ONAL ELECTIONS IN CHILE 24
Despite his party's unprecedented majority in the Chamber
of Deputies, President Frei may find enactment of his re-
form program impeded by factionalism within the party and
the inexperience of many of its newly elected legislators.
Moreover, the rightist-centrist: losses which benefited
the Christian Democrats also helped the Socialist-Commu-
nist coalition, which remains a major political force.
12 Mar 65 CURRENT INTEL IGW WEEKLY SUMMARY Page iv
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SOUTH VIETNAM
MILITARY BOUNDARIES
As of 8 March 1965
mmumm Corps boundary
Special zone boundary
Division boundary
Hop Tac area
46993
15 50 75 100 Miles
0 25 50 75 100 Kllamolo
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Naw,
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Bloc response to the Viet-
namese crisis continues to cen-
ter on political action. Mos-
cow, Hanoi, and Peiping have re-
iterated their warnings of the
dangers inherent in escalation
of the war. At the same time,
Peiping and Hanoi stress the
Viet Cong's growing strength and
expanded control in South Viet-
nam which they apparently believe
is seriously undercutting US ef-
forts to pressure Hanoi into
terminating its material support
of the Communist insurgents in
the South.
Viet Cong Military Action
The Communists are continu-
ing to make steady and signifi-
cant gains in the coastal areas
of the northern and central prov-
inces of South Vietnam. Govern-
ment forces in some rural areas
north of Saigon are abandoning
their areas to the Viet Cong and
withdrawing into district and
provincial capitals. General
Nguyen Huu Co, the commander of
the South Vietnamese II Corps
area, recently told US officials
that he is considering a. general
retrenchment and consolidation
of counterinsurgency efforts in
his area. in the expectation of
eventual negotiations on ending
the war.
Co stated that although he
personally did not favor neu-
tralism, he expected his govern-
ment to enter into negotiations
eventually, possibly this year.
Co has recommended that because
its capital is threatened, the
province of Binh Tuy be dis-
solved "so that the Viet Cong
will be unable to claim that
they have captured a provincial
capital. "
The Viet Cong's strength-
ened posture in the northern and
central provinces is due in
large part to the steady growth
of their military force. Gen-
eral Co claimed that eight new,
heavily armed Viet Cong,bntta.l-
i.ons had recently appeared in
his area.
Over-all Viet Cong troop
strength throughout the country
also continues to rise. Recent
analysis of Viet Cong prisoner
reports and captured documents
has resulted in an upward read-
justment of COMUS MACV's order-
of-battle holdings for Viet Cong
regular forces. The new esti-
mate puts total Viet Cong main
force strength at 37,270, with
five regimental headquarters,
50 battalions, and 145 separate
companies.
Pacification Program Stalled
In the I and II Corps, the
pacification programs designed
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to eliminate the Viet Cong from
a planned sector and bring it
under firm government control
have all but ceased. In the
rest of the country only a few
widely scattered areas report
advances in the program. It is
anticipated by the US authori-
ties in Saigon that the role of
the US aid mission officers in
the I Corps area, and probably
in parts of the II Corps as
well, now will change from as-
sisting in pacification to ref-
ugee relief.
The flow into refugee cen-
ters in I Corps has increased
markedly. In the 2nd Division
area alone refugees total some
73,000. The influx is a reflec-
tion of the extensive territo-
rial gains being scored by the
Communists in northern and cen-
tral Vietnam.
South Vietnamese
Political Developments
In Saigon, political ma-
neuvering continues among the
various parties and military
factions. Although Premier Quat
is showing interest in programs
to increase government effec-
tiveness in Saigon and in the
provinces, he has observed that
much of his time and energy is
taken up by the political in-
trigues of the military and the
problem of relations among the
Catholics and Buddhists. Quat
is evidently considering ways
to bring the generals, at least,
Under government control al-
though such a course runs the
risk of provoking countermoves
against his government.
There are indications in
recent Buddhist requests for
satisfaction on past grievances
that the Buddhists may be pre-
paring to put the Quat govern-
ment to a test. Buddhist leader
Tarn Chou now has publicly dis-
avowed the peace movement headed
by monk Quang Lien, which the
senior ranking monks agree in-
vites Communist exploitation,
but there is no real sign that
the Buddhist leadership is
abandoning its interest in the
theme of peace itself.
Possibility of Negotiations
both the pu is an
private actions of Hanoi and
the Viet Cong continue to sug-
gest that they intend for the
present to keep up a heavy pace
of military action in South
Vietnam and currently have no
interest in international dis-
cussions on a settlement of in-
surgency.
The Viet Cong Liberation
Front in a broadcast on 8 March
flatly rejected the notion that
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CURRENT INTELLIGENCE WEEKLY SUMMARY
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NwoS,E CRET
the US can successfully exert
military pressure to gain a
strong position "in the final
round" for a political solution
in South Vietnam. The broadcast
described the landing of US
marines as a "planned" expansion
of the war but "no threat to
the heroic Vietnamese people."
The presence of the marines,
according to the Front, will
merely "increase the resentment
of all the Vietnamese people
and intensify their will to
unite and knock them out." A
Front spokesman, at a press
conference in Peiping on 8
March, ruled out any negotia-
tions "so long as there is one
single shadow of US imperialism
in Vietnam."
Hanoi gave implicit sup-
port to this stand by broadcast-
ing on 10 March a statement by
the Front's central committee
reiterating that the situation
can stabilize only when the US
has been "driven out of Viet-
namese territory," a national
democratic coalition government
formed, and the "stooge" gov-
ernment in Saigon abolished.
The statement called on the
"people and the Liberation Army"
to continue to "deal deadly
blows at the US aggressors" in
South Vietnam.
The only public statement
by a high-ranking North Viet-
namese official on the subject
of negotiations since the air
strikes began was contained in
Defense Minister Giap's reply
to a question on this subject
by a Japanese television dele-
gation. The interview was pub-
lished by Hanoi on 10 March.
Giap stated that the "only way
out" for the US lies in the
withdrawal of US forces from
South Vietnam and the cessation
of attacks on North Vietnam.
Yugoslavia's President Tito
is trying to organize a joint
appeal by the nonaligned coun-
tries for an immediate inter-
national conference to seek a
peaceful settlement of the Viet-
nam situation. He undoubtedly
hopes, by taking the initiative
in convening a conference on
such an important international
-oroblem as Vietnam, to bolster
the lagging international in-
fluence of the nonaligned na-
tions as well as his own lead-
ing position among them.
Peiping's Response
Recent Chinese Communist
:statements continue to display
arrogant certainty of Communist
victory in South Vietnam. Ac-
cording to a 4 March Peiping
commentary, the US now faces
a choice between ultimate mili-
tary defeat and unconditional
withdrawal.
While Peiping's latest
propaganda statements reiterate
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standard formulations on US "ag-
gression," they still omit spe-
cific threats of Communist coun-
teraction. This line was fol-
lowed in the treatment of the ar-
rival of US marines at Da Nang,
which Peiping condemned as a
further step by the US to widen
the war and as representing the
entry of the US as an "open bel-
ligerent."
A Peiping People's Daily
editorial of 9 March, hailing
the recent visit of Pakistani
President Ayub, implied that he
had concurred in the Chinese
charge that the US is trying to
"extend its aggressive venture
and thereby retrieve defeat."
Actually the joint communique
signed at the conclusion of his
visit omitted mention of Vietnam.
Moscow in another govern-
ment statement again warned of
the far-reaching consequences
for Soviet-US relations if the
US continued its "planned aggres-
sion" against North Vietnam.
The statement, which pro-
tested the 2 March US air action
against the DRV, asserted that
US policymakers are "deeply mis-
taken" if they think they will
"frighten anyone by their bomb-
ings of DRV territory."
A number of low-ranking S
viet officials
have stressed to West-
ern representatives the dilemma
which now confronts the Soviet
Union. They have argued that
Moscow is under heavy pressure
to assist the DRV with military
equipment, but have also ex-
pressed the hope that such aid
will not jeopardize relations
with the US.
These sources have empha-
sized Soviet frustrations with
the Vietnam crisis and attempted
to place most of the blame on
the Chinese Communists. One
Soviet official claimed that the
4 March demonstration against
the US Embassy. took place against
the wishes of the Soviet Govern-
ment and caused it "acute embar-
rassment." He intimated that the
demonstration was whipped up by
Chinese students and accurately
predicted that Peiping would ex-
ploit the affair for its own ad-
vantage (see next article).
Bloc Military Action
No North Vietnamese troop
deployments have been detected
within the past week, although
naval units were alerted on 9
March apparently in anticipa-
tion of another air strike. No
Chinese Communist military de-
ployments directly related to
Vietnam have been detected.
There is as yet no firm
evidence that bloc military 25X1
equipment has arrived in the
DRV since the US air strikes
began.
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MOSCOW MEETING SIDESTEPS SINO-SOVIET RIFT
The communique following last
week's "consultative meeting" of
19 Communist parties in Moscow re-
flects the inconclusive results of
this session. The conditions pro-
posed for steps leading to a new
conference make any such meeting
highly unlikely in the foreseeable
future.
Despite this setback on the
conference issue, Moscow can gain
some satisfaction from the communi-
que's call for a cessation of "un-
friendly and degrading" polemics
and its opposition to the "inter-
ference by any party in the inter-
nal affairs of other parties."
The communique proposes that
the 81 parties which attended the
1960 conference hold a "prelimi-
nary consultative conference" to
discuss a new world meeting. No
dates are suggested, however, and
the proviso that "all fraternal
parties" participate in prepara-
tions in effect gives the Chinese
Communists a veto.
The treatment given the re-
newed conference proposal is an
attempt to cover up what is actu-
ally a Soviet retreat in the face
of opposition from several key
parties. In view of Moscow's past
support of conference proposals,
however, and the vitriolic denun-
ciation generally given them by
Peiping, the Russian leaders can
hardly be expected to refrain from
all further talk and agitation on
this issue.
In a further reflection of
Moscow's effort to avoid contro-
versy, the communique avoids any
treatment of substantive issues,
thereby denying Peiping ammuni-
tion for its propaganda machine.
The statement concludes rather
caustically with the hope that
"all fraternal parties will re-
spond favorably to this con-
sultative meeting."
Peiping's press has not
mentioned the Moscow meeting,
but People's Daily chose the
day the communiqu was published
to reprint a blistering anti-
Soviet attack from the Japanese
Communist paper Akahata which
charged that "mo rT n revisionist
support for Johnson is an open
act of betrayal of the princi-
ples of Marxism-Leninism."
The Chinese have also added
a formal protest to their ini-
tial propaganda alleging Soviet
police brutality in putting down25X1
last week's student demonstra-
tion against the US Embassy in
Moscow.
On 6 March the Chinese staged
an unprecedented demonstration
against the Soviet Embassy in
Peiping. Several hundred Chinese
and foreign students protested the
actions of the Moscow police, but
apparently contented themselves
with shouting slogans.
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MOSCOW APPEARS RELUCTANT TO RESUME GENEVA DISARMAMENT TALKS
Moscow has not yet offi-
cially responded to the US pro-
posal to resume the Geneva dis-
armament talks this month or
early in April. However, Soviet
officials have been privately
taking the line that the Vietnam
crisis has created new obstacles
to reconvening the 18-nation
conference.
Last month a So-
viet UN de.egate told a US offi-
cial that the "present situation"
in Vietnam was "not propitious"
for disarmament talks. He noted
that "many people in Moscow"
wonder how such talks can take
place when "one side" works for
relaxation of tensions and arms
limitations with one hand and
contributes to tensions and the
danger of war with the other
hand.
Soviet leaders may fear
that Peiping would use a resump-
tion of the disarmament talks
to castigate Moscow for "soft-
ness" in sitting down with the
US at a time when the US is al- 25X1
].egedly committing "aggression"
against a member of the "social-
ist camp."
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SOVIETS REORGANIZE DEFENSE INDUSTRIES AND AGRICULTURE
The USSR has restored the
ministerial form of organiza-
tion for its defense industries
and expanded the powers of the
central Ministry of Agriculture.
These decisions probably are
part of a reorganization of the
economic system that has been
warmly debated since the ouster
of Khrushchev. The need for re-
organization has been explicitly
recognized by both Brezhnev and
Kosygin. The fact that decisions
affecting at least two major
parts of the economy now have
been made could indicate that a
policy stalemate in the top lead-
ership has been broken, but it
is too early to be certain that
all differences have been fully
resolved.
The major defense indus-
tries--aviation, shipbuilding,
defense (largely ground arma-
ments), radio, electronics, and
medium machine building (mili-
tary uses of atomic energy)--
have been returned to ministe-
rial direction at the Moscow
level. Under Khrushchev's sys-
tem of state committees insti-
tuted in the late 1950s, the
responsibilities for plant man-
agement and control of supplies
in most branches of industry
were vested in the regional eco-
nomic councils, with the role
of state committees in Moscow
limited to research, development,
and education in their respec-
tive spheres. It is true that
even under Khrushchev's system
defense industries were gen-
orally exempt from decentralized
control--control being retained
in Moscow by state committees.
But the new ministries will prob-
ably effect a tightening of di-
rect central authority over the
Industries involved.
A new ministry of general
machine building has also been
created with unspecified func-
tions. Its head, S. A. Afanasyev,
was previously the chairman of
the economic council of the
RSFSR. A ministry with this name
existed from 1955 to 1957, when
it was incorporated in the state
committee for defense technology.
Among the various possibilities
for the production responsibility
of the new ministry are munitions
and solid propellants or missile
production.
The return of the defense
industries to the ministerial
system does not appear of itself
to foreshadow an increase in the
influence of the military estab-
lishment. Neither does it neces-
sarily foreshadow similar changes
in all branches of industry.
Other decisions by the new regime
suggest increased local direction
of consumer-oriented industries
and the question of just where to
draw the line may still be under
debate.
In a concomitant administra-
tive reorganization, the USSR
Ministry of Agriculture has been
strengthened by subordinating
tie republic agricultural ministries
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SOWIV ONO
and adjacent
HUNGARY border areas Extent of Hoof-and-Mouth Disease Outbreak
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NWO-0 %00
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The Communist World
to it as well as to their re-
public Councils of Ministers.
This action will probably re-
store the responsibilities of
management and over-all control
of agriculture to the central
ministry, which in recent years
has been charged only with re-
search, extension work, and
agricultural education. Such
HOOF-AND-MOUTH DISEASE SPREADS IN
An outbreak of hoof-and-
mouth disease (aphthous fever)
in Central Europe has reached
epidemic proportions in Hungary.
The Hungarians reportedly have
no effective vaccine for this
strain of the disease, which
threatens to cause significant
losses to the livestock in-
dustry.
Quarantine measures have
already interfered with the reg-
ular procurement and distribu-
tion of livestock products. An
upward trend in livestock num-
bers, which began in 1964, is
being restricted and may be re-
versed.
While the disease is con-
sidered endemic to Hungary, the
current outbreak is by far the
most serious in years. At least
15 of the 19 counties are cur-
rently affected. The Hungarians,
however, have failed to report
the disease, which has been
spreading through the country
since last fall, and left it
to the Czechoslovak Government
an increase in the central min-
istry's powers was indicated by
the reappointment on 18 February
of Vladimir Matskevich to the
post of minister. When he held
this post from 1955 to 1960,
Matskevich was known to be a
proponent of strong central con-
trol over the agricultural sector.
to make the first announcement
of the closing of the Czech-
Hungarian border to tourist
travel.
The Czechoslovaks have de-
scribed the outbreak in south-
ern Slovakia, which started in
January, as the most serious
epidemic of the past decade.
Isolated outbreaks have
recently occurred also in sev-
eral areas of Bohemia, in East
Germany, and in Rumania on the
Hungarian border. There have
been several occurrences in
Yugoslavia since last fall, in
the interior of the country as
well as along the Hungarian
boarder. Yugoslavs believe in-
fection was brought in from
Italy, Hungary, or Czechoslova-
kia by travelers and wildlife.
Apart from the economic ef-
fects of the disease, quarantine
restrictions have seriously
limited movement in infected
areas.
SECRET'
CURRENT INTELLIGENCE WEEKLY SUMMARY
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"'m' SECRET
ULBRICHT'S HEALTH LIMITS HIS ACTIVITIES
Age and failing health have
apparently begun to take their
toll of East German party leader
Walter Ulbricht. The 71-year-
old first secretary and state
council chairman failed to at-
tend the annual Leipzig Trade
Fair as announced, despite the
presence at the exhibition of
a high-level Soviet delegation.
On past visits to the fair, Ul-
bricht has toured all of the
exhibits and talked with other
visitors. Such a routine might
have proved too taxing for Ul-
bricht, who has been observed
to tire during recent public
appearances. Arrangements sub-
sequently were made for the So-
viet delegation to confer with
Ulbricht in East Berlin on 9
March.
Apart from the infirmities
of age, the nature of Ulbricht's
ailment is uncertain. In recent
years he has been absent from
his duties more frequently and
for longer periods of time. In
June 1964, he was accompanied
on a 14-day tour of the USSR by
one of East Germany's foremost
respiratory and cancer special-
t
4
s
If the first secretary
should be disabled or forced
12 Mar 65
The Communist World
to follow a more restricted reg-
imen, politburo member and
party security chief Erich
Honecker probably will assume
,additional party duties for him.
:Honecker has been second to U1-
ibricht in the party leadership
for two years. Recently he has
begun to play a role in govern-
ment affairs as well, at the
expense of Premier Willi Stoph,
who has been ill.
Stoph, long considered a
force in the East German regime,
assumed the premiership follow-
ing the death of Otto Grotewohl
in September 1964. His influ-
ence seems to have begun to
wane almost immediately. As
far as can be determined, Stoph
played no role in the last two
plenary meetings of the East
German party central committee
or the Volkskammer, the national
legislature. In January, Neues
Deutschland published a photo-
g`rap o oph and other dele-
gates to the Volkskammer on its
front page but failed to iden-
tify the premier.
Honecker appears to be the
most likely--though by no means
the only--candidate to succeed
Ulbricht as first secretary. It
is unlikely, however, that any
successor will inherit the power
exercised by Ulbricht. At least
initially, power will probably
pass to a Soviet-style collec-
tive leadership made up of sev-
eral politburo members, in, which
Honecker may be pre-eminent,
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SECRET
COMMUNIST CHINA'S FOREIGN TRADE
China's foreign trade may
well increase moderately again
this year thanks to its burgeon-
ing free world trade. Peiping's
trade, which has edged up
steadily after bottoming-out in
1962, reached about $3 billion
last year--roughly the same
amount of foreign trade as Nor-
way. This figure, however, is
still well below the "leap for-
ward" high of $4.2 billion re-
corded in 1959.
Chinese Communist trade
with the free world reached
about $1.9 billion last year,
over 60 percent of the total,
and could account for an even
larger share this year. Pei-
ping is pushing its exports--
textiles, manufactured goods,
and foodstuffs--to pay for in-
creasing imports of industrial
equipment, grain, and ferti-
lizer. Purchases of grain last
year accounted for about 45 per-
cent of Peiping's $975 million
worth of imports from the free
world. Fertilizer imports ac-
counted for over 5 percent,
while industrial equipment to-
taled less than 15 percent.
Since mid-1963, Peiping is
known to have purchased about
$120 million worth of free world
industrial plants for construc-
tion in China over the next few
years. Work will begin this
year on a number of plants,in-
eluding a Dutch fertilizer plant
and an associated British syn-
thetic ammonia installation, a
Japanese synthetic fiber plant,
and a West German petroleum re-
finery. An Italian refinery
and a British plastics plant
may also be started.
China already has ordered 25X1
about 2.6 million tons of grain,
worth about $170 million, for
delivery this year.
Total purchases
may match or exceed last year's
$440 million worth of Western
grain.
In addition to the grain 25X1
deals, fertilizer purchases may
reach a record $100 million this
year,
This expanding commerce
with the free world is expected
to be partially offset by China's
sagging trade with Communist
countries. The heavy export
surplus which enabled China to
pay off its major debts to the
USSR will no longer be necessary,
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Now, SE GRLT -moo
and the Soviets have already be-
gun placing small orders in the
West for some goods formerly de-
livered by China. Sino-Soviet
trade, which totaled less than
$500 million last year, is ex-
pected to drop further in 1965.
Press reports suggest, however,
that more trade is planned with
Eastern Europe and Cuba.
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SECRET
INDONESIAN COMMUNISTS MOVE TOWARD MILITARY CAPABILITY
The Indonesian Communist
Party (PKI), which is steadily
increasing its political influ-
ence, appears also to be making
progress toward developing a
military potential. The party
already has considerable capa-
bility for disruptive mass ac-
tion, but heretofore has been
unable to obtain enough arms
or training to permit it to ex-
ert direct military pressure.
In response to repeated
Communist demands since mid-
January, Sukarno now has ordered
the top commander in Sumatra to
arm workers and peasants there.
it
seems inevita.bl a, tTie orce
will soon include Communists
either through infiltration or
through Communist political'
pressure for a "representative"
force. The arming of "workers
and peasants" in any number any-
where in Indonesia, establishes
a precedent which the Communists
will use to justify the exten-
sion of the program.
The Communists' main strong-
hold is in Java..
University students are be-
ing given limited military in-
struction, and most of their
units are presumed to include
Communists.
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SECRET
The PKI presumably hopes
ultimately either to neutralize
the armed forces through infil-
tration or to develop an effec-
tive military arm of its own.
Despite the pro-Communist trend
in Indonesia, the party still
seems apprehensive that event-
ually it may have to resort to
force either to defend itself
or to make a final bid for
power. In the meantime, even
the limited capabilities likely
to grow out of the present train-
ing programs should assist Com-
munist front groups in their
mass action activities, and the
total training effort will fur- 25X1
ther Communist infiltration
throughout Indonesian government
and society.
OUTCOME OF KERALA STATE ELECTION IN INDIA
The election on 4 March in
India's Kerala state failed to
give any party enough votes to
form a government. The state,
will probably continue to be
ruled directly from New Delhi
for at least the next few months,
and probably until the 1967
general elections.
The official Congress Party,
with 36 of 67 seats necessary
for a majority in the state leg-
islature, is now attempting to
organize a coalition. In the
unlikely event that such a
coalition is formed, it will be
very unstable. There is also a
slim chance that new elections
will be called.
Although the Peiping-or-
iented Communists won 40 seats--
the largest number of any party
--the over-all Communist showing
in terms of seats was not sub-
s-'tantially better than in the
most recent election of 1960 and
was inferior to the 1957 election
when the Communists--then united-_
secured power. This year, the
pro-Moscow Communists won only
three seats, which will severely
limit their influence in the
state and will also damage the
pro-Moscow party's national
standing. In terms of the per-
centage of votes cast, the two
Communist parties together fared
worse than in any previous Ke-
rala election.
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RIFT AMONG AFRICAN STATES OVER CONGO I SUE DEEPENS
African moderates and ra.di-
cals fought each other to a stand-
off over the Congo at the Organi-
zation of African Unity foreign
ministers' meeting in Nairobi
which ended on 9 March. Al-
though both sides are claiming a
victory, the OAU itself has
clearly been weakened by the
participants' inability even to
paper over the deep rift.
Five days of acrimonious
wrangling in, closed sessions
resulted in no new Congo reso-
lution at all. Instead, the
ministers bucked the problem
to the African heads of state,
who are not scheduled to meet
until September in Accra. How-
ever, some African diplomats in
Nairobi expect an extraordinary
summit conference to be convened
much sooner.
The forces spearheaded by
French-speaking West African
moderates, which favored a. clear-
cut endorsement of the Leopold-
ville government were evidently
in the majority at Nairobi.
Nevertheless, they again failed
by one vote--as they had last
September in Addis Ababa--to
push through a resolution author-
izing African support, including
troops, for Tshombd. This time
three moderate states were ab-
sent from the final crucial
session. A compromise resolu-
tion sponsored by Ethiopia and
Tunisia, which would merely have
continued the OAU's special 10-
member Congo commission, fell
three votes short.
In view of the latter vote,
the commission seems unlikely
to be convened again until a.
new mandate is obtained, espe-
cially as its chairman, Kenyan
President Kenyatta., has been
weary of his role for some time.
Ethiopian officials connected
with the commission have said
it has no further mission at
this time, and on 10 March
Tshombe said it "no longer exists."
However, Kenya's foreign minister
has stated that the commission
will continue unchanged.
The radicals' main positive
thrust was an unsuccessful ef-
fort early in the Congo debate
to admit spokesmen for the
Congolese rebels to the confer-
ence. Otherwise, this group of
nine strongly anti-Tshombe'
countries--Algeria., Egypt, Mali,
Guinea., Ghana, Sudan. Congo
(Bra,zzaville) , Uganda, and
Tanzania--concentrated on vilify-
ing Tshombcf and sometimes the
US and on blocking the moderates.
Meanwhile, leaders of sev-
eral feuding rebel factions have
recently been assembling in
Cairo, presumably in response
to efforts of their radical
backers--especially Egypt, Ghana,
and Algeria--to prod them into
some sort of united front.
In the Congo, the govern-
ment's military position con-
tinues to improve.
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SE CRE''T
A showdown may be shaping
up between moderate elements in
the Malian regime and radical
leftist supporters of President
Keita. The focus of the prob-
lem is rising popular discon-
tent over food shortages, to-
gether with the need for new
foreign economic support to
keep the government going.
Shortages of basic foods
appear to be widespread, de-
spitegovernment efforts to as-
sure supplies. French and Amer-
ican officials who have visited
outlying areas have been told
that government representatives
have recently traveled great
distances attempting to find
millet and rice for Bamako and
other urban centers. These
agents are said to have been
generally unsuccessful unless
they were willing to pay black
market prices. In Bamako, there
are rumors that rationing may
be instituted. Keita recently
acknowledged publicly that the
state trading organizations were
partially at fault, but he said
that most of the shortages were
due to "sabotage" by private
traders.
In addition to its food
supply problem, the Malian Gov-
ernment is near bankruptcy. On
22 February, it opened wide-rang-
ing negotiations with France,
dealing with Mali's foreign
debts, its shaky currency, and
its financial requirements.
Paris reportedly is laying down
stiff terms, including reform
of Mali's state enterprises, as
conditions for further aid.
Meanwhile, Bamako apparently is
:Looking elsewhere--notably to-
ward Peiping--for offers with
which to counter French pressures.
Since mid-January, there
has been
dissension within t e par y 25X1
politburo, involving both clashes
between personalities and sub-
stantive disputes. A relatively
moderate faction, including Min-
ister of State Kone, party polit-
ical secretary Diarra, Interior
Minister Bocoum, and National
Assembly President Haidara now
appears to be advocating changes
in Mali's policy. They are per-
sonally vulnerable, however,
since Kone has long been consid-
ered a French favorite, while
Flocoum and Haidara are closely
associated with the old elites
of their respective home baili-
wicks. Moreover, Bocoum is be-
lieved to be personally involved
in black marketing and smuggling.
Pro-Chinese leftists in
the cabinet, who have few ties
to traditional Malian society,
are emerging as Keita's chief
allies in the present maneuver-
ing. The eventual outcome of
the conflicting pressures is not
yet discernible. However, it
appears possible that further
anti-US outbursts, such as press
attacks or the carefully con-
trolled demonstration at the US
Embassy on 8 March, will occur
as by-products of the internal
struggle.
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vwp~
SECRET
AUSTRIAN PRESIDENTIAL ELECTION MAY
The campaign for election
of a successor to President
Schaerf on 23 May may be marked
by an upsurge of political hard
feeling. Although Austria's two
major political parties--Schaerf's
Socialists and the Catholic Peo-
ple's Party of Chancellor Klaus--
are partners in the coalition
government that has ruled Austria
for twenty years, animosity be-
tween them has increased since
the end of the Allied occupation
in 1955.
The People's Party on 9
March nominated former Chancellor
Alfons Gorbach as its candidate.
The 66-year-old Gorbach is well
known throughout Austria and has
support in the provinces although
he appears weak in Vienna.
The Socialist Party seems
inclined to nominate Vienna
Mayor Franz Jonas. Jonas, 65,
has been an active Socialist
leader for more than 40 years
and was twice arrested as a mem-
ber of his party's underground
when it was outlawed during the
1930s.
The Socialists have held
the presidency and the People's
Party has dominated the chancel-
lorship since 1945, and the So-
cialist Party is again favored
to capture the presidency. The
partisan campaigning which ac-
companied the last presidential
election in 1963 was heated and
put considerable strain on the
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SECRET
Europe
Discussions in the North
Atlantic Council next week of
a proposal by the US to reduce
its payments to the NATO infra-
structure program may produce a
sharp exchange if not a dead-
lock. Preliminary soundings
have produced a negative reac-
tion, and members have said
flatly that "under no circum-
stances" will they accept "uni-
lateral dictation" of what the
US share should be.
Since its adoption by NATO
in 1951, the infrastructure
program has spent about $3 bil-
lion on the construction of over
160 jet-capable airfields; a
communications network of thou-
sands of miles of cable, radio
links, and land lines; and al-
most 5,600 miles of pipeline
and mammoth fuel storage facil-
ities. These installations
constitute an enormous capital
investment in the' host coun-
tries, and a considerable part
of total expenditures have gone
to European firms for construc-
tion. Under the annual cost-
sharing agreements which have
financed the program, however,
the US contributed almost 44
percent of the costs until 1957
and at present it is paying al-
most a third. The US share in
utilization of the infrastruc-
ture facilities is only on the
order of one fifth. Because
of the imbalance between con-
tributions and utilization and
Europe's growing prosperity,
the US now is asking that its
contribution be reduced in 1965
to 25 percent, and thereafter
to 20 percent.
The only suggestion for
avoiding a clash made so far is
a Canadian proposal to integrate
infrastructure programing with
the work of the NATO Force Plan-
ning Exercise (NFPE). The NFPE
staff is expected to be seriously
overburdened with its primary
problems until some time in 1966,
however, and in the opinion of
the US ambassador to NATO could
not handle the additional burdens
of infrastructure screening and
cost negotiations.
Until this cost-sharing dis-
pute is settled the current an-
nual infrastructure program can-
not get under way and no con-
tracts can be let. The 1965 con-
struction season is almost be-
ginning. Many national construc-
tion and spending programs, geared
to annual infrastructure projects,
stand to be hard hit if a lag
develops in what was formerly an
orderly process. In addition to
these economic consequences and
the ultimate effect on NATO's
military strength, lack of agree-
ment on infrastructure cost-shar-
ing could have important political
implications. The program has
been frequently held up as a model
of effective Alliance "integra-
tion." A donnybrook now probably
would be interpreted widely as
signifying a further weakening
in the fabric of the Alliance.
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SECRET
EXECUTIVES OF THE THREE EUROPEAN COMMUNITIES MERGED
The agreement to merge the
executives of the three European
communities reached at last
week's EEC Council meeting will
contribute to efficiency by elim-
inating the overlapping juris-
dictions of the EEC and EURATOM
commissions and the Coal-Steel
Community's High Authority. Of-
ficials in all the EEC capitals
are also stressing the political
and psychological significance
of the move in furthering inte-
gration. According to a French
Foreign Ministry official, the
recent progress on a common ag-
ricultural policy followed now
by the fusion agreement may be
more important in the long run
to Europe's unity than "prema-
ture" discussions on a political
organization as such.
Nevertheless, the merger
agreement is more an important
first step than a definitive re-
organization. Although it will
establish Brussels more firmly
as the community's administra-
tive center, it leaves open the
long-standing issue of creating
a single "capital," for Luxem-
bourg will retain several im-
portant offices and Strasbourg
will remain the seat of the Eu-
ropean Parliament. Moreover, if
any political organization
emerges, Paris is expected to
lay vigorous claim to its seat.
Major problems are also
expected to arise in conjunction
with the merger of the three ex-
isting treaties, for which the
executive fusion has set the
stage. Although fusion almost
certainly means a de facto
strengthening of the new com-
Europe
mission vis-a-vis the EEC Coun-
cil, the essential question re-
mains the extent to which supra-
national features of the Coal-
Steel and EURATOM treaties will
be retained in a single community
largely reflecting the EEC. In
addition, an increase of the
powers of the European Parlia-
ment will be at issue, and sev-
eral states may side with France
in its desire to water down the
majority voting provisions due
to come into effect in 1966.
The council's mandate call-
ing for "exploratory negotia-
tions" on EEC-Austrian ties is
an important step in the evolu-
tion of the Six's foreign policy,
but the negotiations themselves
could drag on for two years or
more because of the complex po-
litical, economic, and institu-
tional issues involved. These
include the questions of Aus-
tria's continued membership in
EFTA and the extent of EEC in-
volvement to which Vienna could
commit itself without violating
its neutrality. Austria's EFTA
partners have shown in the past
their sensitivity to the conse-
quences of an Austrian-EEC
agreement, and the Soviet Union
still maintains its strong op-
position to any such deal. On
the EEC side, procedural prob-
lems involving the rights of mem-
ber countries and the European
Parliament are at stake, as well
as the over-all political issue
of framing a common policy on
association arrangements ~
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SE CRUET
Europe
TEMPORARY TRUCE AMONG ITALIAN COALITION PARTIES
The undeclared cabinet
crisis which had immobilized
the Italian Government since
the December presidential elec-
tion has finally been resolved,
and Premier Moro is expected to
obtain a parliamentary vote of
confidence shortly. The urgent
need for antirecession measures
and the lack of a viable demo-
cratic alternative to the pres-
ent center-left coalition forced
the government parties into an
accommodation which is little
more than a, modus vivendi. It
will be extremely difficult to
avoid a new crisis in coming
months because the Christian
Democrats are still badly split
on basic party policies, and
no coalition consensus has been
reached on several important
differences.
Rising unemployment, result-
ing from lagging activity in key
economic sectors, has increased
labor unrest. Fear that reces-
sionary pressures might spread
encouraged the coalition to
reach agreement on corrective
measures, and prompt implementa-
tion is expected. The antire-
cession program features expanded
public works and housing con-
struction, with special incen-
-tives aimed at increasing indus-
"trial production and exports.
Despite readily available funds
for public construction projects,
action has been hampered by anti-
quated, time-consuming, bureau-
cratic procedures, reform of
which is a, major plank of the
center-left program. Presumably
the government intends to cut
through this red tape.
Ex-Premier Amintore Fan-
f.'a.ni's appointment as foreign
minister should temporarily
neutralize a dangerous critic
of the Moro government. Fa.n-
fa.ni holds Moro largely respon-
sible for his ouster from the
premiership after the April 1963
national elections, however,
and he has never ceased striving
to regain the post.
The most dynamic man in the
cabinet, Fa.nfani will be a. force-
ful foreign minister. Although
it seems unlikely that he would
want to engineer any important
shift in major Italian foreign
policies, he will probably clash
with Moro and President Sara.gat
over tactics. He may eventually
be tempted to undertake foreign
policy initiatives as a way to
disrupt the delicate domestic
political balance to his per-
sonal advantage.
SE CRET
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SECRET
Western Hemisphere25X1
RECENT ACTIVITIES OF LATIN AMERICAN COMMUNISTS
Latin American Communist lead-
ers appear to be trying to imple-
ment measures agreed upon at a
highly secret meeting in Havana
last November. The main purposes
of that conference seem to have
been to seek greater coordination
and unity among the Communist par-
ties in Latin America,,to give
new impetus to Communist activity
in the hemisphere, and to promote
"solidarity with Cuba."
The traditional fractionaliza-
tion among the Latin American Com-
munists has become increasingly
evident in the past few years as
a new generation of Communist ac-
tivists--inspired by the Cuban
model and influenced by what they
believe to be Peiping's strategy
of "armed revolution"--has begun
to challenge the old-guard, pro-
Moscow leadership in a number of
parties. The Communists at the
Havana meeting apparently decided
to try to mollify their young ac-
tivist challengers by agreeing to
support, in certain instances,
more revolutionary tactics, which
they hope will draw the militants
back to the orthodox party fold.
This may have been behind the
Guatemalan Communist Party's (PGT)
recent marked change in policy.
The PGT appears to have dropped
its peaceful revolutionary efforts
and opted for "hard line" tactics
in opposing the Peralta government.
The Uruguayan Communists have
taken action very much in line with
,the recommendations of the Havana
conference by beginning prepara-
?ions for a Latin American "soli-
darity with Cuba" congress to be
convened in Montevideo. The con-
gress was first scheduled for early
April, but recent reports indi-
cate it will be postponed at least
until June. If held, this will b(25X1
the first such hemisphere-wide con-
gress since the March 1963 meeting
in Niteroi, Brazil.
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N%W~ *W0
SE CRUET
Western Hemisphere
Political and military un-
rest is mounting in Honduras as
the 16 March convening date for
the constituent assembly ap-
proaches. The government seems
intent on rapid action by the
assembly naming the present
chief of government, Colonel
Oswaldo Lopez, "constitutional
president" for a regular six-
year term.
The Liberals, smoldering
over the blatant rigging of the
16 February election, are split
on whether to send their 29
elected representatives to the
64-man assembly. The group in
favor of participation argues
that only in this way can the
party have any voice in the gov-
ernment and prepare for its
eventual legal return to power.
Other Liberal leaders, who are
apparently in the majority,
argue that this course of action
would simply legitimize the gov-
ernment's election farce. The
latter group, which has impor-
tant support among the strong
labor unions in the north coast
area, is inclined toward trying
to bring the government down
y force.
The explosiveness of the
political situation is height-
ened by growing unrest among
the military, where resentment
has long been rising over the
influence the civilian Ricardo
Z uniga exerts over Colonel Lopez.
The most recent demonstration
of Zuniga's power took place last
week when he engineered the dis-
nissal of the chief of the air
force, Colonel Armando Escalon,
along with a number of Escalon's
ranking subordinates. Escalon
is regarded sympathetically by
certain Liberal leaders. Al-
though he himself believes the
military should stay out of pol-
itics, he might find himself im-
pelled into an alliance with other 25X1
officers and Liberals against
the regime.
Although
Honduran security forces will be
able to control the situation
in the cities, past experience 25X1
indicates that they will find it
difficult to cope with disorders
in the outlying areas.
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Western Hemisphere
CHRISTIAN DEMOCRATS SWEEP CONGRESSIONAL ELECTIONS IN CHILE
Chilean President Eduardo
Frei's Christian Democrats (PDC)
rolled up a majority much larger
than even its leaders expected
in the 147-member Chamber of
Deputies in the congressional
elections on 7 March. With 43
percent of the popular vote, the
PDC exceeded the next three
parties combined and elected 82
deputies, the largest single
party block since 1841. It,
became the biggest party in the
Senate also, although it is
still a minority there since
only 21 of the 45 seats in the
upper house were in contention.
The far-left Communist-
Socialist FRAP coalition gained
a deputy and three senators, al-
though its vote percentage fell
to 26.5. Big losers were the
three traditional parties--Rad-
icals, Liberals, and Conserva-
tives--which collectively fell
from 53 percent in the last con-
gressional contest to only 26.7.
The Conservative Party, reduced
to 3 deputies, has been so weak-
ened as to foreshadow demise,
while the Liberals dropped 22
deputies and 3 senators. The
centrist Radicals, losing 3 sen-
ators and 18 deputies, ran a
feeble second behind the PDC, a
position which they will also
hold in the legislature.
The election confirms the
leftward swing of Chilean poli-
tics, now more or less polarized
between Marxist and non-Marxist
left. Frei now has sufficient
strength to carry his reform
program into law once the new
Congress convenes 21 May. Po-
tential obstacles which he may
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Page 24
encounter, however, include
possible factionalism within
his own party, political incom-
petence of many of the inexpe-
rienced new PDC legislators, and
a tendency toward haste and poor
drafting in submitting bills for
consideration.
The results in no wise in-
dicate the arrival of a millen-
ium in Chile. The non-Commu-
nists have won, but the anti-
Communists have been beaten and
the FRAP has strengthened it-
self in Congress. FRAP's per-
formance indicates that it re-
mains a major force in Chilean
politics and, with the support
it may receive from newly opened
bloc legations in Santiago, can
be expected to continue unabated
its efforts to gain power. The
relative strength shown by FRAP
and the poor performance of the
Radicals could lead the latter
eventually to reach an agreement
with FRAP for a new "popular
front" such as that which they
shared from 1938 to 1948, pos-
sibly to oppose the soaring PDC
for the presidency in 1970.
emulate.
The PDC's new mandate may
,serve to strengthen its tendency
toward economic nationalism at
home and toward an "independent,
third world" orientation in its
foreign economic policy--al-
-though in his victory statement
Frei cited the confidence which
Foreign investors' allegedly have
in Chile as an example which
Chilean industrialists should
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