CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A004700490001-6
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 10
• Document Creation Date: December 15, 2016
• Document Release Date: January 2, 2003
• Sequence Number: 1
• Publication Date: October 27, 1959
• Content Type: REPORT

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27 October 1959
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CENTRAL INTELLIGENCE BULLETIN
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27 October 1959
DAILY BRIEF
I, THE COMMUNIST BLOC
USSR-Iran: j rushchev, in a talk with the Iranian ambas-
sador on 16 October, expressed interest in the Shah's proposal--
made on 23 September to the Soviet ambassador in Tehran--to
give the USSR a written guarantee that Iran would not allow mis-
sile bases on its territory, but said he must "consider the matter
with his government." Khrushchev, who probably regards the
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offer as a sign of weakness, may have delayed a formal response
in the hope of drawing further concessions from Tehran j 25X1
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11. ASIA-AFRICA
Iran: The Shah may push for a change in the 50/50 profit-
sharing formula of Western oil companies in Iran. The Shah
recently told the American ambassador that a cut in American
aid plus the drop in expected oil revenues, due in part to price
C cuts earlier this year, will present a critical budget situation.
If tentative plans by one oil company to cut prices of Iranian oil
still further and hence reduce Iranian profits become known,.
government pressure on the Western oil companies is likely,
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Indonesia: (Foreign Minister Subandrio has told the American
ambassador that Indonesia will have to review its foreign policy in
view of Chinese Communist threats and abuse during his recent trip
to Peiping. Subandrio, who was outraged and terrified by Peiping's
attitude, added, however, that China was a "big powerful neighbor";
he did not see how at present Indonesia could abandon its independ-
ent foreign policy, but adjustments in degree and attitude would cer-
tainly be made. Subandrio claimed he has the support of President
Sukarno, who has been reported shocked over the Chinese attitude.
Subandrio pleaded for US support and backing during the coming
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Republic will be renewed shortly., but all indications point to an
atmosphere in which negotiations will be difficult. Communal re-
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Cyprus: (London officials believe the suspended work of the
commission charged with drawing up a constitution for the Cypriot
lations on Cyprus remain strained despite the action of Archbishop
Makarios and Turkish Cypriot leader Kuchuk in issuing a joint
appeal to their followers for the surrender of illegally held arms.!
conversation with Indian Communists, the statement /restates Pei- 25X1
ping's willingness to negotiate the border dispute in a "favorable
*Smno=lndian Border Dispute: A Chinese Communist Foreign
Ministry statement of 26 October stiffly insists responsibility for
the latest clash with Indian troops in Ladakh rests with the Indians,
but the statement concludes on a moderate note. Apparently con-
cerned about the effect of the incident on Indian official and public
opinion, Peiping expresses the hope that New Delhi will "refrain
from any words and deeds further harming relations between the
two countries:' As a demonstration of their "traditional friendship;"
the Chinese offer to release Indian personnel captured in the inci-
dent. In words lsimilar to those recently used by Mao Tse-tung in
atmosphere."
27 Oct 59
DAILY BRIEF ii
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I. THE COMMUNIST BLOC
Khrushchev Defers Action on Shah's Proposal
Premier Khrushchev, in a talk with Iranian Ambassador
Masud-Ansari on 16 October, expressed interest in the Shah's
proposal to give the USSR a written guarantee that Iran would
not allow missile bases on its territory, but deferred giving a
formal response, saying he wanted to take the matter up with
"his government." According to several Iranian accounts of the
talk- -none of which came directly from Ansari--Khrushchev
also criticized Prime Minister Eqbal for his "anti-Soviet" state-
ments while attending the recent CENTO meeting in Washington?
[The proposal, which was broached by the Shah to Soviet
Ambassador Pegov in. late September, is intended to restore
Soviet-Iranian relations to the "'normal" status which existed
prior to the breakdown last February of talks for a nonaggression
pact. Khrushchev's delay in responding to Ansari, who reiterated
the offer, may reflect caution induced by the Shah's behavior in
causing the failure of the talks in February and confidence that
Moscow can draw further concessions from Tehran
The Soviet premier probably regards the offer as evidence
of the effectiveness of the prolonged Communist-bloc radio prop-
aganda campaign against the Shah's regime. These radio attacks
were temporarily relaxed in September concurrent with Pegov's
return to his post after an extended absence. Iranian officials
are less concerned now with the propaganda attacks, apparently
because public interest in them has diminished]
The Shah, who discussed the Khrushchev-Ansari talk with
Ambassador Wailes on 23 October, noted that Khrushchev had.
directed his fire against the American-Iranian defense agree-
ment. The Iranian ruler said he interpreted Khrushchev's re-
action as evidence that Soviet leaders look on the agreement as
an obstacle to Soviet aggression, against Iran, either directly or
a "possible indirect attack by Afghanistan or Ira with Soviet
volunteers
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Shah May Push to Revise Oil Profit-sharing Formula
(The Shah, concerned over the 1960 Iranian budget, recently
told American Ambassador Wailes he was considering a new profit-
sharing formula for the consortium of Western companies operat-
ing nearly all of Iran's oil industry. The Shah anticipates a critical
budget situation, because $30,000,000 worth of American budget
support provided in 1959 is not expected for next year. In addition,
1959 saw a $25,000,000 bonus payment by the Pan American Oil
Company for an oil concession; similar bonus payments are not
likely in 1960
discussions for Iran's next budget beginning in March are al-
ready under way. Since most budget revenue sources are fairly
stable, Tehran can gain additional funds only from the US Govern-
ment or from the oil companies. The ambassador has already
told the Shah that American aid "would be less than last year and
probably considerably less:' It appears likely, ':.therefare,..that. the
Shah will press for additional oil revenues from either increased
production or from a change in the profit split from the present
50/50 arrangement to something closer to the Venezuelan pattern
of about 60/40 in favor of the government. The Shah asked whether
increased purchases of Iranian oil were possible at the expense of
Iraq and Kuwait
While Iranian oil production is likely to continue to increase
substantially, revenues may not increase proportionally. Price
cuts made on Iranian crude oil earlier this year reduced expected
revenues sharply; but total revenues are certain to exceed the
$245,000,000 received in 1958
[World crude prices continue to be soft, and at least one oil
company in the consortium has tentative plans to reduce the price
of Iranian crude oil even further in an effort to increase sales.
Such a price cut if implemented would also reduce Iran's share of
the profits and could signal the beginning of government-inspired
agitation against the consortium with the ultimate goal of substan-
tially changing the present government any relationship.
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Indonesia Will Review Foreign Policy but Foresees
No Drastic Change
Indonesian Foreign Minister Subandrio has told the American
ambassador that Djakarta must review its foreign policy in view
of his experiences in Peiping in early October. He characterized
Peiping's attitude as alternately patronizing and abusive over the
issue of Indonesia's treatment of the Overseas Chinese. Subandrio
said, however, he does not know what steps to take, because China
is a big and powerful neighbor. He did not see how at present
Indonesia could abandon its active, independent foreign policy,
although he felt "adjustments in degree and attitude" would cer-
tainly take place ]
;Apparently later in the conversation, Subandrio, long regarded
as a flexible proponent of an independent foreign policy for Indonesia,
told the American ambassador that if it were not for Indonesia's
claim to West Irian (Netherlands New Guinea), a drastic change
in foreign policy would certainly take place. He stated that, un-
fortunately, Indonesia continues to require the support of the
Soviet bloc on this question.']
?Subandrio said he has not retreated on Indonesia's program to
ban alien merchants in rural areas--the issue underlying present
Sino-Indonesian difficulties. In carrying out this program, he feels
he has the support of President Sukarno, who has been shocked by
the Chinese attitude.;
;Apparently the Indonesian Government plans to proceed with im-
plementation of the ban, which is to be completed by 1 January. Su-
bandrio may hope that Peiping's threat of economic retaliation--to be
waged through Overseas Chinese in Malaya, Singapore, and Indo-
nesia--either will not materialize or will be less effective than pic-
tured by Peiping. -/*'
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THE PRESIDENT
The Vice President
Executive Offices of the White House
Special Assistant for National Security Affairs
Scientific Adviser to the President
Director of the Budget
Office of Defense and Civilian Mobilization
Director, National Aeronautics and Space Administration
Special Assistant for Security Operations Coordination
Board of Consultants on Foreign Intelligence Activities
Special Assistant for Foreign Economic Policy
Executive Secretary, National Security Council
The Treasury Department
The Secretary of the Treasury
The Department of State
The Secretary of State
The Under Secretary of State
The Under Secretary of State for Economic Affairs
The Deputy Under Secretary for Political Affairs
The Deputy Under Secretary for Administration
The Counselor
Director, International Cooperation Administration
The Director of Intelligence and Research
The Department of Defense
The Secretary of Defense
The Deputy Secretary of Defense
Assistant Secretary of Defense for International Security Affairs
The Secretary of the Army
The Secretary of the Navy
The Secretary of the Air Force
The Chairman, The Joint Chiefs of Staff
Commandant, United States Marine Corps
The Director, The Joint Staff
Chief of Staff, United States Army
Chief of Naval Operations, United States Navy
Chief of Staff, United States Air Force
Assistant to Secretary of Defense for Special Operations
Director for Intelligence, The Joint Staff
Assistant Chief of Staff for Intelligence, Department of Army
Director of Naval Intelligence, Department of Navy
Assistant Chief of Staff, Intelligence, Department of the Air Force
Supreme Allied Commander, Europe
Commander in Chief, Pacific
The Department of Commerce
The Secretary of Commerce
Federal Bureau of Investigation
The Director
Atomic Energy Commission
The Chairman
National Security Agency
The Director
National Indications Center
The Director
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