CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A003000020001-5
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 12
• Document Creation Date: December 15, 2016
• Document Release Date: September 17, 2002
• Sequence Number: 1
• Publication Date: February 22, 1957
• Content Type: REPORT

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2002/ 0/2 C A-t / 1 :CI "RETRDP79T"
22 February 1957
Copy No. .131
CURRENT DOCUMENT NO.
INTELLIGENCE I : DELLGE 1^; C+_/;s5.
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CLASS. CHANGED TO: i
NEXT REVIE."dDti,
AU-111-1- ATO-2 DA
7 BULLETIN
rE. _ REVIEWER: C
OFFICE OF CURRENT INTELLIGENCE
CENTRAL INTELLIGENCE AGENCY
004,
j
State Dept. review completed
2002/10/21 : CIA-RDP79T~
TOP SECRET / XVOOZ/0//XZXX/`//~~~
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CONTENTS
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2. COMMUNIST INFILTRATION OF INDONESIAN ARMY
J)
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IV6. INDIA MAY ENCOURAGE MORE PRIVATE FOREIGN
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1. FRENCH MAY TAKE DRASTIC STEPS TO AVERT ECO-
NOMIC CRISIS
3. SUKARNO ANNOUNCES "CONCEPT" INDO-
NESIAN GOVERNMENT
INVESTMENT
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. HANOI ADMITS CONTINUED POPULAR DISCONTENT
(page 11).
ANNEX- -Conclusions of the 'Watch Re ort of the Intelligence
Advisor Committee
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1z FRENCH MAY TAKE DRASTIC STEPS TO AVERT
ECONOMIC CRISIS
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French finance minister Paul Ramadier's
plan to cut the 1957 budget by $744,300,000
may be the beginning of a serious effort
to stave off an economic crisis. Ramadier
is reported to have proposed that$286,000, -
000 be cut from military expenses by an
immediate demobilization of 100,000 troops
from the forces now in Algeria. Such a cut,
however, would be strongly opposed by the
minister of defense and Resident Minister
in Algeria Lacoste on the grounds that it
would endanger France's pacification ef-
fort in Algeria.
The Mollet government has attempted to
cope with inflation by substantial increases in imports, but at
the costof bringing France's gold and dollar reserves down to
a minimum working level. France's trade deficit for January
was about $174,000,000 and the director of the Treasury be-
lieves the French economy faces a,, complete collapse" if this
rate of loss continues. A reduction of imports, which might
rectify this situation, would at the same time be contrary to
the proposed liberalization of trade under the Common Market.
Stringent economies in expenditures would
also force a cutback in proposed plans for revamping the army
and development of North Africa. Moreover, an airing of
France's financial difficulties may offer the right center an op-
portunity to launch an attack on the Mollet government.
While the French disclaim any intention of
launching aid discussions during Mollet's visit to Washington
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on 26-27 February, Ramadier may be trying to underline
France's problem and to dramatize its willingness to econo-
mize in the hope that serious aid discussions will arise in
the course of talks on European defense, the Middle East
and Eurafrican investments.
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2. COMMUNIST INFILTRATION OF INDONESIAN ARMY
Indonesian Communists appear to be
making progress in penetrating army
units in Java, particularly in the highly
strategic Djakarta and West Java com-
mands. the chief of staff 25X1 C
in the Djakarta command is pro-Communist, and a Commu-
nist regimental commander in West Java is said to be exert-
ing considerable influence on the territorial commander.
Although right-wing officers in West Java still outnumber
the Communists, the daily arrest or reassignment of anti-
Communist officers for involvement in the "Lubis plot" is
giving the Communists additional opportunities.
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Control of the army has been a priority
Communist goal in Indonesia having equal importance with the
subversion of the peasant and laboring classes. Until 1956,
the army- -and particularly the West Java and North Sumatra
commands- -provided the principal brake on Communist influ-
ence in Indonesia.
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3. SUKARNO ANNOUNCES "CONCEPT" OF NEW
INDONESIAN GOVERNMENT
President Sukarno's 21 February an-
nouncement of his "concept" for more
effective government in Indonesia is a
blow to parliamentary government and
an important gain for the Communists.
Sukarno, calling for an entirely new system of government,
said that Indonesia's problems were the result of its adher-
ence to Western-style democracy and its toleration of oppo-
sition.
He proposed the establishment of an
"advisory council" to direct the activities of a "mutual aid"
cabinet, and participation by the Communist Party in both
organizations. According to Sukarno, the council is to be
a "reflection of the community," representing such groups as
labor, women, youth and the armed forces, while the cabi-
net would be composed of representatives of all parties in
parliament. This system, Sukarno claims, would create
conditions in which all Indonesians could live as "one big
family" in an "atmosphere of national peace."
The successful implementation of Sukarno's
"concept" rests largely on the reaction of the army, the polit-
ical parties, and the non-Javanese areas. Chances of general
army support--at least in Java--seem good. Recent changes
in army leadership have rendered major elements more amen-
able to Sukarno's policies, and his offer of army representation
on the council may meet the objections of anti-Communist ele-
ments. The adherence of several important political parties,
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particularly the two largest Moslem parties, the Masjumi
and the Nahdlatul Ulama (NU), is in doubt. The Masjumi
has consistently refused to participate in a regime that
included Communists, and the NU is reportedly divided on
the issue of Communist participation in government. Un-
less it develops that former vice president Hatta is given
an important position and greater autonomy is guaranteed
to the provinces, the presently disaffected areas are not
likely to accept the president's proposals.
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6. INDIA MAY ENCOURAGE MORE PRIVATE
FOREIGN INVESTMENT
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Indian finance minister Krishnamachari
has admitted that the Second Five-Year
Plan (1956-61) may have to be extended
to seven years. Rather than extend the
period of the plan, India may modify its
policies in favor of private foreign invest-
ment.
Krishnamachari recently told Sir Jehangir
Ghandy, director of Tata Iron and Steel Co., that the Five-
Year Plan could be met only if approximately $2 billion were
made available from foreign sourbes. in the next four years,
and added that he doubted such funds would be made available
by foreign governments. Krishnamachari had tentatively
agreed that after the elections Tata and the Kaiser interests
would be permitted to construct a large jointly owned shipyard
despite the fact that shipbuilding is reserved for the public sec-
tor of the economy.
While Prime Minister Nehru and the Corn-
gress Party have committed their prestige to developing a
socialistic pattern of society as well as to the successful ful-
fillment of the plan in five years, they might be willing to re-
duce the emphasis on socialization if convinced that such a
policy would attract the foreign capital needed to fulfill the plan
goals.
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7. HANOI ADMITS CONTINUED POPULAR DISCONTENT
Although there have apparently been no
outbreaks in North Vietnam on a scale
comparable to last November's upris-
ings, which were suppressed by the ar-
my, the population continues restive in
certain areas. The party organ Nhan
Dan, in late January admitted hew.dem-
onstrations against the authorities in
some villages of Ha Tinh Province, not
tar from the scene of the 1956 disorders. The article states
that dissatisfied peasants, demanding return of their prop-
erty confiscated during land reform, rioted and surrounded
the homes of Communist cadres.
Hanoi has sought to conciliate the popu-
lation by pushing a "mistake-correction" campaign. Many
landlords have been "reclassified" and some of their prop-
erty has been restored. Hanoi is also reinstating party
personnel who had been purged and reorganizing party cells
which had been "wrongly dissolved."
The populace is impatient of delays in
implementing "mistake-correction;" and the Communists
are finding it necessary to appeal for calm and understand-
ing. Concurrently, the regime is giving notice of its determi-
nation to act forcefully against any new demonstrations. The
Nhan Dan article warns that "energetic measures" must be
taken against those "who aim to rise up against the party and
government. "
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ANNEX
Watch Report 342, 20 February
of the
Intelligence Advisory Committee
Conclusions. on Indications of Hostilities...
On the basis of findings by its Watch Committee the Intel-
ligence Advisory Committee concludes that:
A. No Sino-Soviet Bloc country intends to initiate hostilities
against the continental US or its possessions in the imme-
diate future.
B. No Sino-Soviet Bloc country intends to initiate hostilities
against US forces abroad, US allies or areas peripheral
to the Orbit in the immediate future.
C. A deliberate initiation of hostilities in the Middle East is
improbable in the immediate future. The crucial issues
of. Israeli withdrawal and Suez Canal control, as well as
continuing tensions in the area, constitute possibilities for
violence.
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