CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80R01443R000400180009-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 88
• Document Creation Date: December 9, 2016
• Document Release Date: April 27, 2000
• Sequence Number: 9
• Publication Date: October 27, 1955
• Content Type: SUMMARY

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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 October 1955
NEAR EAST SITUATION
Egypt is continuing efforts
to strengthen its position in
the Arab world. Within the past
week, Egypt has announced a
bilateral military alliance with
Syria and a, military agreement ;.
with Saudi Arabia. Israel has
reacted to these events by-in-
tensifying its efforts to
obtain arms and by dispatching
Prime Minister Sharett to Paris
and Geneva to call Israel's
concern to the attention of the
Big Four foreign ministers.
Pact With Syria
The initialing on 20 Octo-
ber of a draft military pact
between Egypt and Syria was
enthusiastically received in
Syria and was approved by Saudi
Arabia. According to the Amer-
ican embassy in Damascus, the
pact has an excellent chance
ofbeing promptly approved by
the Syrian Chamber of Deputies.
The Egyptian-Syrian pact
is formally aimed at Israel but
also blocks any Iraqi attempts
for union with Syria. Apparent-
ly in an effort to mollify Iraq
and possibly to balance Egyp-
tian influence, Syria's chief
of staff on 24 October informal-
ly suggested a Syrian-Iraqi
pact to the Iraqi foreign min-
ister.
Rumors that Syria is con-
sidering bilateral'pacts with
Lebanon and Jordan may be a
reflection of Syria's desire to
lessen its dependence on Egypt.
The military capabilities
of Egypt and Syria would not
increase `mmediately as a result
of the pact, though greater co-
ordination of activities against
Israel would be likely.
Israeli Reaction
Israel's concern over
Soviet arms reaching Egypt is
heightened by the military pact
Egypt has negotiated with Syria.
'Tel Aviv, pressing for new
security guarantees, is making
a major bid for big-power atten-
tion by sending Prime Minister
Sharett to Paris and Geneva.
The Western powers have been
approached repeatedly during
the past weeks on the subject
of arms aid and security
guarantees.
While pursuing its campaign
for Western guarantees, Israel
is also engaged in a large ef-
fort to build up its war machine.
An international loan drive for.
arms is reportedly being launch-
ed throughout world Zionist
circles. In Israel, the gov-
ernment's appeal for contribu-
tions for arms purchases is
meeting an enthusiastic re,
sponse.
Israeli public opinion is
being prepared for a period of
great tension and sacrifice.
Chief of Staff Dayan has been
recalled from a European holi-
day to participate in drawing
up a new arms purchasing pro-
gram, while the cabinet is en-
gaged in trimming other budget
allocations. Dayan's return
may also be followed by a re-
view of Israeli military tac-
tics, possibly including plans
for sabotaging future Soviet-
bloc arms shipments to Egypt.
The Israelis may even consider
making approaches to the USSR
for military aid.
New incidents are inevita-.
ble as border forces are aug-
mented. The Israeli army's
raid into Syria on 22 October
was retaliatory, but it
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evidently also had the objective
of highlighting the threat
of war as Sharett arrived in
Paris to promote international
consideration of the Middle
S FOR EARLY ELECTIONS
remier Faure's proposal
to ho National Assembly elec-
tions i December was precipi-
tated by ressure from conserva-
tive leade in his cabinet,
who see an rly date as favor-
ing their par es, The opposi-
tion is determ ed to block this
move and has man uvered Faure
into calling for vote of con-
fidence for 28 Oct er.
Elections must i any case
be held by June 1956. ure
maintains that a new man to is
necessary now to assure c
tinuity in making vital dec
sions on foreign policy, but
his opponents charge him with
wanting to evade responsibility
for unpopular decisions on in-
creased taxes, additional call-
ups of reservists, and renewed
unrest in North Africa.
Most of Faure's supp rters
believe that time favorendes--
France's effort to or afiize a
left-center majorityE They are
also apprehensive l~t new
rightist movement,y~such as the
Poujade antitax-I volt and
renascent ex-Vhyite combina-
tions seriously cut into the
support of t4 a traditional
right-wing parties.
T ''re is general fear,
moreo r, of an upsurge in Commu-
nis electoral strength, aided
by.-an increase in labor unrest
d Socialist-Communist co-opera-
East problem. A minor Syrian
raid into Israel on 24 October
was followed by two Egyptian
attacks on Israeli police
posts in the El Auja area on
26 October.
Popular Republicans believee
that early elections would,-give
them their optimum chance of
profiting from the disi tegra-
tion of the Gaullist political
organization and also of pre-
venting Mendes-Frac;e from
excluding them from his pro-
jected left-center alliance.
On the 'then hand, while
few deputiQ/dare oppose early
elections publicly because of
the low.,;public esteem in which
parliament is held, many are
not gger to shorten their
ter's in office. They point
opt that more time is needed to
thieve a more coherent majority.
ske "
The public in general is
cal that elections now
could
ernmen
mprove the unstable gov-
stitutio
accomplis
the next el
Mendes-Franc
trols the Radi
political machi
succeeded in putt
on record as oppos
-not Faure--con-
1 Socialist
and has
before the electora
changed.
aw is
Faure demanded prio
his bill to permit early
tions, and is reported to Yi
cabinet approval to pose a
JT
ituation, or that con-
1 reform could be
d in time to affect
tion. Moreover,
g the party
g elections
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 October 1955
J
NOTES AND COMMENTS
Chinese Communist Activities
m the Middle East
Peiping, like Moscow, ap-
parently sees in the present
situation in the Near East
an opportunity for a co-ordi-
nated effort to establish closer
contacts between the Arab na-
tions and the Sino-Soviet bloc.
Although less spectacular
than the shipment of Czech arms,
the Chinese policy of conclud-
ing trade pacts and pushing for
recognition is meeting with
encouraging response from the
Near East countries. Trade and
cultural agreements with Egypt
have recently been concluded,
a trade pact with Syria is
pending, and some progress
seems to have been made in
winning recognition from these
and other Near East states.
If Chou En-lai's reportedly
planned visit to Egypt should
materialize in the near future,
it would be the strongest indi-
cation thus far of Peiping:'s
interest in winning Arab sympa-
thies.
The Sino-Egyptian trade
pact is the first Peiping has
concluded with a country which
does not recognize Communist
China. In previous cases, Pei-
ping has had to conclude such
agreements with private busi-
nessmen or other groups acting
unofficially.
Opportunity for expanding
Sino-Egyptian contacts, paving
the way perhaps for full dip-
lomatic relations, is provided
in the exchange of trade mis-
sions under the terms of the
agreement. The exchange of other
personnel, under the terms of
a cultural agreement, is also
under way.
The Lebanese foreign
minister is reported to have
told the Chinese Nationalist
envoy recently that the whole
question of recognition of Pei-
ping by the Arab states depends
on whether or not the United
States will move to conciliate
Egyptian opinion. He implied
that other Arab League states
would probably follow Egyptian
policy in the matter.
Aside from Egypt, Chinese
Communist activities are being
directed mainly at Syria. Trade
negotiations between the two
countries were recently con-
cluded and an agreement report-
edly now awaits signature by
Damascus. It is probable that
Chinese Communist trade repre-
sentatives visiting Syria this
month have been in communication
with Syrian officials and mem-
bers of parliament on the ques-
tion of recognition.
In conversation with the
American ambassador on 8 Oc-
tober, the acting prime minister
of Syria observed that the cur-
rent of opinion was running in
favor of the Communists and that
it would be difficult to oppose
those pressing for recognition.
The opinions of other Arab League
members will probably influence
Syrian action on Chinese rec-
ognition. (Concurred
in by ORR)
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 October 1955
French North Africa
The turnabout of El Glaoui,
Moroccan pasha who was largely
responsible for the deposition
of ex-sultan Ben Youssef in
1953, and who is now demanding
Ben Youssef's return to Morocco,
indicates. the futility of the
present French timetable for
that protectorate in the face
of a new Moroccan unity. Both
the nationalist'Istiglal organ-
ization and the main settlers'
organization, the Presence Fran-
caise, have refused to partici-
pate.in the Moroccan government
being organized by Premier-des-
ignate Ben Slimane.
El Glaoui's action suggests
he believes the French will
eventually accede to nationalist
demands for the restoration of
Ben Youssef. The improved
chances of Ben Youssef's res-
toration are likely to en-
courage the Presence Francaise
to greater violence, and this
in turn may lead to new nation-
alist-terrorism.
Istiglal's refusal to co-
operate with Ben Slimane has
won increasing Moroccan support
and French efforts to separate
the organization from the peo-
ple have failed. The agreement
of the small nationalist Demo-
cratic Party of Independence to
participate in the government
is based on Ben Youssef's
alleged approval of the Council
of the Throne.
A split within the Istiqlal
is reported developing, however,
and a moderate faction of the
organization may later agree to
participate in the government,
especially if Paris carries out
its plans to bring Ben Youssef
to France on 29 October.
The nationalist ranks in
North Africa are increasingly
divided over whether to pursue
a political, moderate policy or
a revolutionary one. Moderates
are still generally pre-eminent
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 October 1955
r BEN YOUSSEF
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in Morocco and Tunisia, but ex-
tremists are in control in a
few areas.
The nationalist Islah
leader in Spanish Morocco re-
ports that moderate leaders are
trying to form a political gen-
eral staff of prominent Moroccan
nationalists in an effort to
control the extremists fighting
in the Riff area. Meanwhile, a
reports
that an outbreak in another moun.
tainous area of French Morocco
is scheduled for about 10 No-
vember.
French-Spanish tensions
remain high over charges of
Spanish aid to the rebels.
New Saar Negotiations
Likely Soon
The Referendum Commission
of the Western European Union
probably will continue to super-
vise the Saar territory.pbnd-
Ing agreement on a substitute
for the European statute rejected
by the Saarlanders on 23 October.
Both France and West Germany
seem inclined to undertake new
negotiations, and opinion in the
Saar territory will probably
be given considerable weight in
any decision that is made.
French foreign minister
Pinay took a highly conciliatory
line in discussions with the
other WEU representatives on 24
October. While the French press
contained some caustic comment
on West Germany's role in the
referendum, several papers rec-
ognized the need for a more
objective reappraisal of the
Saar problem, particularly in
view of the large margin by which
the statute was defeated. This
relatively restrained reaction
suggests that only a few extreme
nationalists in the French as-
sembly will maintain an intransi-
gent attitude. In West Germany,
the Bundestag is adopting an
equally restrained attitude to-
ward the plebiscite's results.
American embassy officials
in Paris have found the Quai
d'Orsay outi
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 October 1955
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One official
commented that the referendum
may be a "blessing in disguise"
since "it cures by a drastic
surgical operation a sore which
would have otherwise continued
to trouble French-German rela-
tions for a long time."
The Saarlanders themselves
have accepted the referendum
results in matter-of-fact fash-
ion. Saar premier Johannes
Hoffmann's formal resignation
is expected to be accepted by
a special Landtag session on
28 October.
The American consul at
Strasbourg suggests that elec-
tions will not be held until
mid-January as a result of the
"universal desire" to allow
things to settle down. The
absence of violence during and
since the referendum and the ap-
parent French restraint may,
however, permit the holding of
elections early in December-;.
Some of the many pro-German
parties which were organized
South Vietnam
In the Bao Dai-Diem popu-
larity contest on 23 October,
Diem won approximately 98 per-
cent of the votes. Of the 2
percent, a little more than half
were for Bao Dai and the rest
were invalid. On 26 October
Diem proclaimed Vietnam a re-
public and designated the chief
of state, himself, as president.
In view of Bao Dai's un-
popularity and the government's
complete control of the pre-
referendum campaign, the sig-
nificance of Diem's triumph lies
more in the voter turnout
during the referendum campaign
are already reported to be dis-
integrating now that their goal
has been reached. There are
hints that the rival pro- and
anti-statute Catholic parties
and similar rival Socialist
units are already negotiating
to coalesce ',their groups in
preparation' for the electoral
campaign.
Prospects for the peace-
able working out of Saar in-
ternal politics under the new
conditions of freedom for pro-
German groups will depend
primarily on whether moderate
pro-German leaders can wrest
control from extremists such as
Dr. Heinrich Schneider, the ex-
Nazi head of the Democratic
Party of the Saar. His claim
of "victory for Germany" has
already been rebuked publicly
by a prominent West German op-
ponent of the Saar statute.
(over 90 percent of those regis-
tered) and the orderliness of the
voting than in the overwhelming
plurality he won. Bao Dai's
poor showing seems to destroy
his value for any future role in
Vietnam either on his own initia-
tive or as a tool of the Viet
Minh.
In an interview on 25 Octo-
ber,Diem interpreted his victory
as a popular mandate not to pro-
ceed with unification elections
until "true liberty" is estab-
lished in the north. The refer-
endum results set the stage for
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CURRENT INTELLIGENCE WEEKLY SUMMARY
the adoption of a South Vietnam
constitution and the establish-
ment of a representative as-
sembly which will enable Diem
to speak from a more solid po-
litical base'.
The Viet Minh denounced the
referendum in the strongest
terms from the time plans for
it were first announced. It
charged that Diem was imitat-
ing Hitler and Mussolini and
asserted the Vietnamese would
not be present at the polls
and the results would be made
in Washington.
The fact that the turnout
was impressive and that invalid
ballots numbered less than one
percent of the total suggest
that the Viet Minh did not
desire to reveal its strength
in a contest in which Diem's
e Laotian government is
prepar to hold elections on
25 Decemb in the ten provinces
under its c rol. Unless the
government rea es an agreement
with the Pathet prior to the
elections, the two thern prov-
will be excluded from th
elections.
A total of 235 candidates
have filed for 39 parliamenta
tain that few if any of e
candidates are Pathet mpa-
thizers. The two Best po-
litical parties ve an agree-
ment to work intly to bring
about the feat of any candi-
date s ected of such leanings.
The deadline for candi-
victory was assured, possibly
preferring to keep it secret
until the forthcoming elections
for provincial councils and for
a South Vietnam national
assembly.
The Communists may have
abandoned any hope of getting
early South Vietnam participa-
tion in a conference on all-
Vietnam elections as called for
in the 1954 Geneva agreement.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 O
Japanese Conservative Merger
May Be ear
Japan's conservative Demo-
cratic and Liberal Parties are
making progress toward unifica-
tion, and top Democratic lead-
ers have confidently told Amer-
ican officials that the merger
will take place in early Novem-
ber.
The formation on 27 Octo-
ber of a New Party Preparatory
Committee may in effect have
accomplished the merger "at
least in form" as suggested
by Prime Minister Hatoyama,
since Democratic and Liberal
policy-makers will jointly com-
pile the government budget and
formulate government policies.
The desire of large num-
bers of rank-and-file members
of both parties for a unified
conservative party, as well as
pressure from influential busi-
ness interests, are strong
forces for unification. The
unity sponsors appear to be
using the strategy of agreeing
on noncontroversial issues to
accomplish a de facto merger,
thus making it difficult for
any opponents to refuse to go
along. In addition, Democratic
leaders may hope to use their
"commitment" to US officials'
that the merger is virtually
assumed as further pressure on
the Liberals to come to terms.
Policy differences in
respect.to the negotiations
with the Soviet Union and
reparations to the Philippines
are being left for the new
party or a preparatory organiza-
tion to resolve.
APakistani Dispute
Pakistani
Karachi and Lahore are
Ing to American of
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The success of the merger
will be primarily contingent
on the settlement of the ques-
tion of the head of the new
party. Prior to agreeing to
participate in the New Party
Preparatory Committee,. the
Liberals strongly insisted on
a dissolution of both parties
and an open election of the
new party head. If, as the
Democrats have implied, the
Liberals have tacitly agreed
to accept Hatoyama as the new
party chief, they probably in-
sisted at the same time on a
commitment' for his eventual
retirement and replacement by
Liberal Party president Ogata.
A successful unification
would assure the conservatives
a working majority in the Diet.
Should the sponsors of the
merger be unable to make good
on their promises with respect
to the head of the new party,
however, sizable defections
might cause any unity program
to founder. The Democrats
probably hope that even if the
merger plans collapse, their
maneuvers'will gain them their
minimum objective of compelling
the Liberals to support the
Hatoyama cabinet outside the
government in the forthcoming
Diet.
es these al-
Pakistan's an-
noune~tion to retaliate
has increase on the
border.
NOTES AND COMMENTS
ctober 1955
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CURRENT INTELLIGENCE WEEKLY SUMMARY
has gal ed a new significance
in Commu st tactics as a result
of Geneva. It must prevent,
according t oster, "atom war
crises." Lea 'ng Western Com-
munists assert at unique con-
ditions now exist o influence
Western peoples an overnments
through regimented m opinion,
for which-the World Pe Move-
ment is the main vehicle This
belief was pithily express by
French Communist Pierre Cou de
who observed, "A hundred mill
Americans have seen Ike smile a
Bulganin. They can no longer
hear with the same ear the p, ph
ets of destruction who ann nce
the 'red invasion' every ay.
Peace activity also
being directed at cific inter-
national negotia ns, such as
those of the fo. ign ministers
and the UN Di-Armament Subcom-
mittee.
ommunist ideology sets a
2 !it on how far party members
v ao in practicing the spirit
of Geneva. Authoritative par
leaders in France and the U ted
States--Marcel Servin and . Z.
Foster--have reminded C unists
that the differences ween
capitalism and soei sm remain.
Servin warned on 3 August that
"the capitalist gime, which is
a reality in t United States,
England, Fra e, and elsewhere,
represents y its very nature a
perpetua danger of war."
add ition, Communist
smen nave insisted on free-
of action forenon-Orbit Com-
unists and have refused to ad-
mit that their activities are
ubject to international diplo-
he foreign .ministers' con-
fere e. Courtade, the French
Commu t foreign affairs author-
ity, ar d in L'Humanite on 30
September at "the action of
Communists capitalist coun-
tries for the efense and eman-
cipation of the orking class,
colonial peoples, ha o connec-
and the support munists give
to the movement of 'beration of
tion with the problems used by
peaceful coexistence, th is
to say, with establishmen - f
peaceful relations between States,
whatever their regime." 1J
BRAZIL'S ECONOMIC SITUATION
Brazil's critical economic
problems, largely overshadowed
in the last six months by polit-
ical maneuvering in connection
with the 3 October presidential
election, have again come to
prominence.
President Cafe Filho's
refusal to accept the responsi-
bility for immediately carrying
out Finance Minister Whitaker's
sweeping reform of Brazil's tan-
gled foreign exchange regula-
tions led to Whitaker's
tic bargaining in a forum such
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CURRENT INTELLIGENCE WEEKLY SUMMARY
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resignation on 10 October.
This was the fourth resignation
of a competent financial expert
from that post in the past two
and one half years. The new
finance minister, again a compe-
tent economist, is expected to
propose no major reforms for
the remaining three months of
the current administration.
Since Brazil's twin problems
of foreign exchange shortages
and rising inflation are acute,
the preparations president-elect
Juscelino Kubitschek is making
for action after he is inaugu-
rated on 31 January 1956 are
being give,l prominent play.
Kubitschek's program apparently
will contrast sharply with the
austerity measures suggested by
the finance ministers of his
predecessor. Kubitschek has
repeatedly, indicated his belief
that the stimulation of economic
development will be his chief
line of approach.
He clearly hopes and
apparently believes that his
program, which will require
considerable quantities of
capital equipment, can be
Unanced in large part through
financial aid from the United
States, perhaps amounting to as
much as half a billion dollars.
Unclassified
BRAZILIAN
INDUSTRIAL PRODUCTION
Unclassified B R A Z I L
COST OF LIVING INDEX: JAN 48=100
375
350
325
1954
1955
300
275
250 J
F
M A M J J
A 5
O N
D J
F M
A M
J J
Background of the Crisis
The present inflationary
trend began just prior to World
War II and has accompanied
Brazil's rapid economic ex-
pansion since that time. During
the war period the trend was
stimulated by the accumulation
of substantial foreign exchange
surpluses, which Brazil was
unable to convert into consumer
goods. After 1947, domestic
factors such as government
deficits and the expansion of
credit fostered inflation.
Illustrative of this continuing
inflation is the rise in the
cost-of-living index, which has
more than trebled since 1948.
The late president Vargas
tried to offset this situation
by decreeing the doubling of
the minimum wage scale in July
1954, This led to a redistri-
bution of income, which helped
create additional demand. The
continuing rise in living costs
has,in some occupations, more
than wiped out the gain, how-
ever, and strikes are now re-
ported looming throughout Brazil
unless wages are again raised.
With Brazil's population
increasing by over one million
a year, an expansion of production
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CURRENT INTELLIGENCE WEEKLY SUMMARY
is clearly necessary if even
present standards of living are
to be maintained. The consider-
able expansion achieved since
the war has been insufficient
to keep pace with growing needs.
Since foreign loans and
voluntary savings at home did
not cover the capital require-
ments of the country, the Vargas
government undertook to finance
investment by credit expansion
and paper currency issues. The
government also sought to en-
courage a trend toward self-
sufficiency by entering the
field of public investment. As
a result, the government's share
of total investment rose from
8.2 percent in 1948 to 25.6 per-
cent in 1953.
Although Brazil can produce
nearly all its present food
needs except wheat, scarcities
and high prices are still the
rule in most large Brazilian
cities because of woefully in-
adequate storage, transportation
and distribution facilities.
Better soil management and im-
proved agricultural techniques
would also help reduce the cost
of foodstuffs and help supply
keep pace with demand.
The Cafe Filho government
attempted to stem the tide of
inflation by imposing economic
austerity measures when it as-
sumed power after Vargas' sui-
cide in August 1954. During the
eight-month term of office of
Cafe's first finance minister
Eugenio Gudin, a strong effort
to restrict credit was partially
successful. Gudin's successor,
Jose Whitaker, loosened credit
restrictions to some extent but
maintained severe import re-
strictions and abandoned the
inflationary price support pro-
gram for coffee which had been
instituted under Vargas.
Foreign Exchange Difficulties
Brazil's economy is to a
great extent conditioned by its
capacity to import necessary
capital goods and raw materials.
This capacity is limited by the
volume of exports, which has
not expanded in proportion to
the increase in population.
Domestic industry is therefore
turning to the manufacture of
many goods which are now im-
ported.
- IMPORTS
- EXPORTS
1953 1954 1955
UNCLASSIFIED 51024-3A
Brazil's effort to maintain
its rate of industrial expansion,
even at the cost of severe in-
flation, is reflected in the
fall of the cruzeiro on the
free market and in recurrent
foreign exchange shortages.
In order to permit domestic in-
dustry to purchase its needed
imports cheaply, the official
rate for the cruzeiro has been
maintained at an artificially
high level. This overvaluation
of the cruzeiro weakened the
competitive position of Bra-
zilian exports and contributed
to a concurrent loss of foreign
exchange.
The net deficit on invest-
ments has also added to Brazil's
foreign exchange problem. New
capital entering the country in
1954 totaled $69,000,000 and
capital withdrawals $76,000,000,
according to the Bank of Brazil.
In addition, remittances of in-
come on investments were $141,-
000,000 while income remittances
to Brazil were somewhat over
$6,000,000. The total deficit
on investment account, therefore,
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27 October 1955
Unclassified
BRAZILIAN EXCHANGE RATES
(Cruzeiros per US dollar)
Free Rate
was about $141,000,000. This
fact has served as the basis
of charges by xenophobic editors
and congressmen that foreign
investors bleed more out of the
Brazilian economy than they
transfuse into it.
The exchange deficit is
further aggravated by the de-
mand of existing industries for
imported equipment and supplies,
particularly fuels. The out-
standing example of this is the
petroleum problem.
The ever-increasing demand
for petroleum is one of Brazil's
major economic problems. Con-
sumption in 1954 averaged nearly
160,000 barrels a day, an 84-
percent rise over 1950. Domes-
tic output, however, met less
than 2 percent of demand. Bra-
zil therefore had to spend a-
round a quarter of a billion
dollars for oil imports in 1954,
or about one third of its dollar
exchange earnings.
It is estimated that at
least $1 billion would be needed
to develop Brazil's potential
petroleum resources to meet
present demands. Of this, over
$700,000,000 would have to be
spent abroad. Brazil alone can-
not afford such an expense, and
even if foreign investment cap-
ital participated, volume output
would probably not be reached
for another five to ten years.
At present, however, for-
eign petroleum companies are
restricted to distribution and
.marketing operations. Petroleum
exploration and development
are by law the monopoly of a
mixed government-private capi-
tal corporation known as Petro-
bras, in which native Brazilians
alone--not even Brazilians mar-
ried to foreigners--may invest
as minority stockholders. State-
ments by Kubitschek have implied
that he will resort to other
means to develop Brazil's petro-
leum if Petrobras has not proved
itself in another year's time.
Some of Kubitschek's sup-
porters, however, are nation-
alists and Communists violently
opposed to any foreign partici-
pation in Brazilian petroleum
development. This view is shared
by an important segment of the
military. It is thus believed
that Kubitschek would have great
difficulty in pushing any such
measures through Congress, and
that he would be running the
grave risk of providing the
military with a popular pretext
for ousting him.
To a considerable degree
because of Brazil's unrealistic
petroleum policy, total exchange
obligations rose to about $2
billion dollars by the end of
1954. Dollar loans, particularly
those from the US Export-Import
Bank in 1953 and 1955, coupled
with a program by the Cafe ad-
ministration to raise exports
and reduce imports, have averted
further crises for the present.
Service of these obligations,
however, adds yet another burden
to Brazil's strained economy.
Kubitschek's Economic Approach
Kubitschek's long-range
solution to the problem of in-
flation is likely to be a step-
ped-up expansion of production
rather than any program of eco-
nomic austerity. His tenure as
governor of Minas Gerais from
1951-1954 was marked by extensive
construction of power facilities
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 25X6
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CURRENT INTELLIGENCE WEEKLY SUMMMLY
25X6
COMMUNIST CHINA'S UNEMPLOYMENT PROBLEM
t1
the
One of the problems facing
Chinese Communist regime is
portu
labor,
ly attrad
ich has been increasing-
for the un
force.
to the cities, and
filled urban labor
Although maK visitors to
China. return with he impression
that there is virt,ly full
employment--the absents of
beggars is commonly cited as
evidence--Communist popul`~gtlon
and labor policies indicate:,,,that
unemployment is nearly as se
ous as ever.
Reduction of Urban Popula.tio
Since 1952, Peiping s
periodically issued dir tives
that the millions of employed
peasants in the cit' s return to
their farms. Thes directives
have been relati ly ineffective,;
however, and tjregime recently
began taking coercive measures
to accompli 1 this objective.
F' Wires released by Peiping
disc1fo ee that from April through
August 1955 more than 425,000
peasants were forced to leave
Shanghai, where the unemployment
ortage of employment op
ties, both for rural
problem is exceptionally acu
because of the depressed in
dustrial and commercial a ivity
there. In addition, "t sands"
of skilled workers a.re eing
sent to inland areas uch as
Sinkiang. The pre nt popula-
tion of Shanghai s over
6,000,000 and a regime plans
"gradua.11y" move out of the
city the 1, 0,000 persons,
80 percen of them peasants,
said to ave moved in since
the b inning of 1950, according
to Shanghai newspaper.
Nevertheless, the tendency
of destitute farmers to migrate
to the cities will grow as the
omparative standard of living
state workers rises follow-
in-pfficial efforts to improve
theimorale and efficiency.
This t' dency is apparently to
be combated. not only by forcible
movements''? ut also by the new
food ration" system which will
go into effec d~,i~n all cities by
the end of NoveriWer .
Rural Unemployment
Some unemployed farrnm work-
ers have found work in age
government projects such a4
those for water *conservatio, and
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 October 1955
nd highways in line with his
e ort to stimulate industrial
gro h in the state.
In ccepting the presi-
dential n ination of his party
in February 955, he pledged
himself "to s uggle against
inflation not o for the
strengthening of a currency
but also for the im ovement of
productivity." His s equent
statements have stresse the
need for rapid expansion o the
whole Brazilian economy with
emphasis on industrialization,
a program which in his view
calls for large-scale highw
construction'and electrif' ation
in order to create con ' ions
attractive for priva invest-
ment. Kubitschek s indicated
that he will see foreign fi-
nancing for su a program,
coupling thi effort with an
attempt to onsolidate Brazil's
short-te debts and amortize
them o. r a longer period.
His economic expansion
Cpl ans were outlined on 21 October
in an interview with visiti
newsmen from the United S tes,
for whom he mapped out broad
program of building r ds, im-
proving Brazil's in equate
railway system an producing
more electricit , steel, alu-
minum, and fe ilizer. This
program, he said, will require
the purc se of $500,000,000
worth machinery and equip-
ment ver the next five years,
mo y from the United States.
said he is confident that
if Brazil "presents to the
United States a realistic ex-
planation of our problems and
he solutions we plan, we will
g the necessary financial and
ical aid."
SOVIET BLOC PROGRESS IN PEACEFUL USES OF NUCLEAR ENERGY
On the basis of impressive
results already achieved in nu-
clear research and in experi-
ments with practical applica-
tion, the Soviet Union is push-
ing rapidly forward with its
own "atoms for peace" program.
The Soviet press and radio, as
well as the contributions of
Soviet scientists to the Inter-
national Conference on Peaceful
Uses pf Atomic Energy held in
Geneva.]ast August, have pro-
vided considerable details on
the progress in developing im-
portant industrial and biologi-
cal applications of the atom
in the USSR.
The Soviet Union has, more-
over, negotiated agreements to
.fu-nish assistance in the peace-
ful uses of atomic energy to
Communist China and all of the
European Satellites except Al-
bania. Yugoslavia has agreed
to accept a'Soviet aid proposal
more limited in scope. Soviet
assistance offers have also been
made to India, Egypt, and Iran,
though none of these has as yet
been accepted. In addition,
25X6
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the USSR has indicated that it
will consider requests for as-
sistance from other non-Com-
munist countries, and it has
permitted scientists from a
number of Western countries to
visit certain Soviet nuclear
research installations.
The program inside the So-
viet Union promises to be of
extreme importance to long-range
economic development. The aid
to China and the Satellites
will, over the next few years,
markedly increase their nuclear
research capabilities. As a
part of the larger Soviet pro-
gram of scientific, technical,
and economic assistance, the
USSR's atomic aid offers.to non-
bloc nations will strengthen its
political relationship with
those countries, increase its
scientific prestige, and pro-
vide persuasive support for its
general "peace" propaganda.
Accomplishments in USSR
Soviet propaganda has par-
ticularly emphasized the USSR's
"pioneering" success in the con-
struction of the world's first
industrial atomic power plant.
This 5,000-kilowatt plant has
been in operation since June
1954, providing current for
industrial and agricultural use.
Located at Obninskoye, about
70 miles southwest of Moscow,
it is fueled with enriched
uranium ad uses a graphite mod-
erator. Work is reportedly now
under way on the construction
of a plant with an output of
50,000 to 100,000 kilowatts.
In addition to develop-
mental work in harnessing the
atom for producing industrial
and transportation power, Soviet
scientists are advancing swiftly
in developing a whole gamut of
uses of radioactive isotopes.
These uses range from new auto-
matic control devices for a
number of industries to a method
of treating yeast so that beer
can be produced twice as quickly
as before. Soviet experiments
have been taking place in in-
dustrial plants as well as
laboratories on the use of
"tracer atoms" for studying
the properties of alloys, for
determining wear on machine
parts, and for quality-con-
trol and counting, sorting, and
synchronizing techniques on as-
sembly lines.
Radioactive isotopes are
also being utilized for ex-
tensive basic and applied bio-
logical research. Agricultural
experiments are under way which
indicate that tiny quantities
of radioactive substances used
in conjunction with standard
soil-enrichers can substantially
increase the yield of grain
and vegetable crops. In paral-
lel experiments, "tracer atoms"
are. used to aid the study of
the nonroot method of soil nu-
trition and its applications in
various climates and soils.
Isotopes are also used on
a significant scale for medical
treatment of various types.
According to a Soviet claim,
some 1,500 packages containing
artificial radioactive isotopes
are sent out monthly from the
Soviet atomic industry to hospi-
tals and other medical facili-
ties all over the USSR.
Soviet Research Capabilities
Even more important than
such achievements in applied
research is the continuing
rapid growth in the Soviet nu-
clear research capability it-
self. Papers presented by So-
viet scientists at the Geneva
conference indicated that the
USSR has a broad research base
capable of supporting both an
intensive weapons program and
peaceful uses projects. They
also showed a high level of
competence among top-level So-
viet scientists and technicians
and suggested that the Soviet
government fully appreciates
the value of a wide basic re-
search program.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 October 1955
25X1X
Soviet scientists have
developed excellent e
with which to work.
reports have indicated that
several atomic reactors of dif-
ferent types are in operation
and that several particle ac-
celerators are now available.
Soviet scientists stated at
Geneva in August that a bigger
and better accelerator would
soon be completed. This would
be a 10 -billion-electron-volt
(10-B ev);article accelerator for
high energy nuclear physics re-
search--the largest accelerator
in the world.
While the Soviet Union's
research program on peaceful
applications of nuclear energy
has made rapid progress, large-
scale industrial and agricultur-
al utilization still lie far in
the future.
Satellite and Chinese Programs
Over the next two years
the USSR is scheduled to supply
Communist China and each of the
European Satellites except Al-
bania with an atomic reactor
suitable for research, a 25-
million-electron-volt (25-Mev)
cyclotron, radioactive isotopes,
and technical training. China
is to get a 6,500-kilowatt re-
actor, and a 2,000-kilowatt re-
actor is to go to each of the
European Satellites except Al-
bania.
Even with such aid, the
Satellites and China will have
no more than an improved re-
search capability for gradually
developing industrial and bio-
logical applications of nuclear
energy. None of these countries
has accomplished very much in
nuclear research thus far, and
none can be expected to have the
capability for production of nu-
clear weapons in the next five
years because of deficiencies
in research, in the number and
caliber of nuclear scientists,
in equipment, and in the stage
of development of supporting
industries.
It is doubtful that the
Soviet leadership wants to en-
courage any rapid development
of nuclear weapons programs in
the other bloc countries. Sat-
ellite and Chinese scientists
have been denied access to the
Soviet nuclear weapons program
in the past, and the scale and
type of aid offered this year
by the USSR seem designed to
support basic research and
peaceful applications.
The European Satellites
are estimated to be producing
and shipping to the Soviet Union
uranium ore and ore products
containing far more than half
the total amount of uranium
metal obtained by the USSR from
all sources including its own
mines. Of the estimated 3,000
tons of recoverable uranium
metal furnished by the Satellites
in the year ending in April 1955,
East Germany accounted for 71
percent, Czechoslovakia 17 per-
cent, Bulgaria 7 percent, Po-
land 2 percent, and Rumania 3
percent.
East Germany
East Germany is undoubted-
ly more advanced than China or
any of the other Satellites in
terms of qualified personnel
and research facilities. A
number of capable East German
scientists who were sent to the
Soviet Union at the end of World
War II have recently returned
and now hold important positions
in the East German research pro-
gram. One of these, Dr. Gustav
Hertz, has received both NobQ1
and Stalin prizes; two others
are also Stalin prize winners.
In addition, East Germany
has other well-qualified men
working in the field, utiliz-
ing limited but reasonably ade-
quate research facilities. As
early as November 1952, a com-
mission of nuclear scientists
was reportedly given the re-
sponsibility for organizing
and equipping a research in-
stitute.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
With the Soviet aid to be
received in the coming year, a
nucleus of good scientists, and
excellent potential industrial
support, East Germany should
make significant progress to-
ward the industrial use of a-
tomic energy within the next
five years. It is doubtful
whether any attempt at military
use will be made other than pos-
sible research in propulsion.
the Czechs have set up a govern-
mental directing committee and
established an Institute of Nu-
clear Physics at Prague to per-
form basic ana applied research
in nuclear physics, radium chem-
istry and nuclear power, to en-
sure speedy application of the
research results, to produce
isotopes and radioactive com-
pounds for science and industru,
and to give postgraduate training.
ESTIMATED 3000 TONS OF URA .IUM METAL
FURNISHED USSR BY EAST EUROPEAN SATELLITES
(year ending April 1955)
Prior to the Soviet assist-
ance pledge early this year,
Czech nuclear research was con-
fined to the university level
and was not controlled or co-
ordinated except through the
normal function of the Czech
Academy of Sciences. Since then,
A "large group" of Czech
postgraduate students went to
Moscow in September to attend
courses on nuclear research,
and training courses were also
begun in Prague at a new Indus-
trial school for Nuclear Tech-
nology.
On 18 September Prague
radio announced that during the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 October 1955
second Five-Year Plan (1956-60)
Czechoslovakia plans to build
with Soviet help an atomic power
station. Additional Soviet aid
beyond that already announced
for 1956 will be required if
this project is to be successful,
since the lack of well-qualified
scientists will make general
Czech progress in industrial
uses of atomic energy very slow.
Until very recently, Poland
had no real organized program
directed toward the use of nu-
clear energy, and even the uni-
versity research in basic nu-
clear physics was hampered by
lack of adequate equipment and
qualified personnel. This year,
however, a Polish State Commis-
sion for Atomic Energy has re-
portedly been formed, and con-
struction on a special institute
for nuclear research was begun
in August. The first contingent
of a group of 50 Polish tech-
nicians was scheduled to go to
the Soviet Union this fall to
receive training in nuclear
physics, radio-chemistry and
isotope applications.
Even with the Soviet as-
sistance pledged for 1956, Po-
land will require two or three
years to build the group of
capable scientists and acquire
the equipment needed for an ef-
fective research program. It
is unlikely that any significant
Polish advances in industrial
or biological uses will be a-
chieved within the next five
years.
None of the other European
Satellites has a program that
amounts to much. Hungary has
little more than research at
the university level.. Rumania
has established a Nuclear Energy
Committee responsible to the
Council of Ministers. Albania
has virtually no capability
and was not even included in
the Soviet aid promise.
Because of the lack of
trained personnel, research
facilities, and industrial
support, Hungary, Bulgaria, and
Rumania may require as many as
five years to get effective re-
search programs going, even
with the equipment and materials
to be delivered by the USSR in
1957.
Aside from the control
over university research which
is exercised by the Academy of
Sciences, Communist China had
until very recently no.organ-
ized effort directed toward
the development of atomic energy.
In February of this year, fol-
lowing the Soviet assistance
offer, a committee of seven
leading scientists of the Chi-
nese Academy was formed to plan
the utilization of nuclear en-
ergy, which is a "key" task in
scientific research during the
first Five-Year Plan period of
1953-1957. An experimental
center is currently being es-
tablished to develop uses of
radioactive isotopes and the
application of atomic energy
to industry.
China's research capability
is still very limited but there
are a small number of highly
trained nuclear scientists,
several of whom received their
advanced education in American
universities.
25X1X6
Several months ago, Pavel
Yudin, the Soviet ambassador
to China, told
that the USSR was giving
ina scientific and technical
know-how in the atomic field
which would eventually enable
the Chinese to produce nuclear
weapons. He said, however,
that China had not been given
25X1X6
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either the bomb itself or fa-
cilities for its manufacture.
With the aid to be received
from the USSR in 1956, Chinese
nuclear research capabilities
will develop considerably over
the next five years. There is
no evidence, however, that the
Chinese plan by 1960 even to
begin developing the capability
for producing nuclear weapons,
and it is believed that little
of China's limited investment
funds will be diverted from its
ambitious military moderniza-
tion and industrialization pro-
grams to an atomic energy pro-
gram.
Sinkiang in Northwestern
China may be a Soviet source of
some uranium and other metal
ores important to atomic energy
development. Deposits of such
ores are known to exist in parts
of Sinkiang, and the Soviet
Union has provided extensive
technical assistance and large
amounts of equipment for mining
operations there. Sinkiang
will also be a potential source
of raw materials to China's
own program as it develops.
Within the past year, the
Soviet Union has made offers of
nuclear assistance to Yugosla-
via, Egypt, India, and Iran and
has indicated a willingness to
consider applications by other
economically underdeveloped
countries for such aid. These
Soviet approaches have been in
direct competition with the US-
sponsored atoms-for-peace pro-
gram.
The Yugoslavs have accepted
a Soviet offer to assist them
with their nuclear research
program, but the project is only
tentative and unclear. Present
plans call for the USSR to pro-
vide uranium 235, graphite, and
technical assistance. The So-
viet Union apparently will not
be providing a complete reactor
or parts for assembly. Instead,
parts for a single reactor are
to be built in Yugoslavia and
assembled by Yugoslav technicians
with some Soviet technical ad-
vice. While this limited a-
mount of aid will permit ac-
celeration of the Yugoslav
training and research effort,
any Yugoslav program for in-
dustrial or military uses of
atomic energy is still several
years in the future.
While still considering
the Soviet aid offer, the govern-
ment of India decided to accept
Canada's offer of an atomic re-
actor as part of Canada's Co-
lombo Plan contribution. Prime
Minister Nehru has indicated,
moreover, that India will per-
mit accredited foreign scien-
tists, including those from
other Colombo Plan countries,
to use the reactor's facilities.
The Indian government is likely,
however, to accept supplementary
aid from the USSR later on.
Egypt has not yet indicated
whether it intends to accept
Soviet nuclear assistance, and
there is no evidence that the
Iranian government seriously
considered the Soviet offer
which was made in a roundabout
fashion through an Iranian
scientist participating in an
international conference in
Moscow.
Although the USSR has not
found many takers in the West,
the offers themselves are an
appealing part of the bloc's
larger program of technical
and economic aid to underde-
veloped non-Communist countries.
As some of these nations begin
to develop a real nuclear re-
search capability, they may be-
come more responsive to Soviet
approaches. (Pre-
pared in co-operation with OSI)
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CURRENT INTELLIGENCE WEEKLY SUMMARY
20 October 1955
bjective of the security plan
the withdrawal of all for-
ig's,troops from Europe.
T USSR later in the con-
ference fered a proposal under
which most f the features of
the first st a would be adopted
without any co itment to the
second stage or y change in
the status of NATO nd the.
Warsaw pact. This s p would
serve the minimum Sovi ob-
jective of deepening the ,reeze
on the split of Europe.
More is likely to be he
about these Soviet plans, a
Moscow seeks to get agree
on the principles of it
as a step toward an a
ing security plan.
sharply to re
West is pla
antees a
a unite
in N
25X1C8b
EGYPT
European z
would be kep
e where troops
within agreed
limitations an
international in
The USSR might off
plan limited to East
German forces, or perk
a similar
nd West
cluding all'troops in Ge
s in-
any.
25X1C8b 1!
Egypt last week appeared
to be well on the way to re-
gaining its dominant position
among the Arab powers which it
lost last spring as a result
of the Turkish-Iraqi pact and
its own subsequent failure to
secure a military alignment
with Saudi Arabia. The Nasr
government, moreover, continued
to exploit the arms agreement
with the Soviet bloc not only
to strengthen Egypt's position
among the other Arab powers,
but also to establish Egypt
as a key neutral between East
and West.
Among developments during
the past week were: (1) The
Arab foreign ministers, con-
cluding a conference in Cairo,
for the most part expressed
themselves in:..favor.:of. doing
business with the USSR; (2) the
USSR and Egypt announced a So-
viet offer of assistance in
building the Aswan dam; and (3)
quasi-official Egyptian sources
encouraged rumors that a second
PART I OF IMMEDIATE INTEREST
reacted
25X1C8b
At the ummit conference,
however, a USSR did express
interes in Eden's proposal
for a ive-power security
pac , suggesting that some
o er European powers should
e included at the start with
still others added gradually
thereafter.
put
The USSR can be expected
adopt gradually some of
eatures of security plans
ward by the West. One
might
tion for
the British sugges-
e creation of a
its that the
ing to offer guar-
nst any attack by
erhaps under
ection.
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Asian-African conference would
be held during the coming year
in Cairo. (See also Part III,
p. 1.)
Aswan High Dam
For some time it has been
apparent that the USSR was
interested in participating in
at least some phases of Egypt's
TVA-like 1.3-billion-dollar
Sadd-el-Asli Project.
Following the public an-
nouncement of the Soviet offer
to build the Aswan high dam,
the Egyptian ambassador in
Washington said that the USSR
had suggested a 30-year loan
for an unspecified amount at
2-percent interest payable in
Egyptian cotton and rice. The
estimated cost of the dam is
approximately $480,000,000.
Equipment worth $275,000,000
would have to be imported and
Egypt therefore would need this
amount in foreign currency. By
providing equipment and tech-
nical assistance the Soviet
Union can create at Aswan an
enormous monument to Soviet
industry in the Middle East.
The driving ambition of
the Nasr regime to construct
this project, and the frustra-
tions it has experienced in
trying to obtain Western fi-
nancing, provide an ideal op-
portunity for Soviet exploita-
tion. From the Egyptian point
of view, it would be difficult
to refuse an attractive Soviet
offer, especially since it
would be the result of earlier
Egyptian initiative.
In the past two weeks
both Radio Cairo and the Egyp-
tian newspaper Al Ahram have
Existing Aswan dam
wan
As
Proposed Aswan high dam ~+-
P1 Op
14910
stated that most of the 29
countries which met at Bandung
consider Cairo the appropriate
location for another Asian-
African conference. Both the
Cairo and Arab Jerusalem radios
have referred to the "coming
conference," and the Egyptian
cabinet has reportedly agreed
to convoke the next meeting
in Cairo in November 1956.
However, of the five
Colombo powers--Burma, Ceylon,
India, Indonesia, and Pakistan
--which sponsored the confer-
ence in Bandung last April and
which were made responsible for
arranging subsequent meetings,
only Ceylon is reported to have
shown interest in another meet-
ing. The Indonesian foreign
minister said last week that
Ceylon's Prime Minister Kotela-
wala had written Nasr suggest-
ing a conference in Cairo in
19 56 .
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Chinese Communists Continue Work
n Airfie ds in Southeast China
25X1X7 The Chinese have continued
construction of extensive mil-
itary facilities in areas op-
posite Formosa and the offshore
islands. Three more airfields
have been detected since 3 Oc-
tober
ringing
to nine the number of fields in
the Formosa Straits area which
have been worked on this year.
While only three of these can yet
be rated as serviceable, the
expanding ring of bases in the
coastal area will permit Peiping
to undertake military action
on a massive scale, if it so
chooses.
25X1X7
20 OCTOBER 1955 SECRET NOFOW
AIRFIELD LEGEND
Operational Non-Operational
jet Q Jet
Conventional ? Conventional
U Construction
-- Primary Road
Secondary Road
Haut. ? -
0
iANO
Lu'hiao
Nets all weather road
Under.Constructio~n
One of the three new bases
is located on the east coast
about 55 miles northeast of
Amoy. Another is in south-
western Fukien, near Liencheng,
about 175 miles from Foochow.
These two are in very early
stages of construction. The
third, about 25-percent com-
plete,. is in the Huiyang area,
midway between Canton and Swatow.
Improvement of military
supply routes also has continued.
An overland road northward from
Foochow to positions on the Pei-
ling Peninsula overlooking the
Matsu group has been complet-
ed. Some 32 field artillery
e I
1.40 Lishui
i,- WEN CHOW
CHIENOU w
KIANG
positions on the pen-
insula now can be sup-
plied easily. Some of
these positions were
used during the first
Communist shelling of
an island in the Matsu
group on 7 October and
in subsequent shell-
ings on 12 and 14 Oc-
tober.
Another road,
running north from
Foochow to the coast-
al port of Wenchow,
is now under construc-
tion.
Two more military
railway construction
divisions have recently
been identified in Fu-
kien Province working
on the rail line to
Amoy. At least eight
of 11 such divisions
in the Chinese Com-
munist armed forces
are now assigned to
the project. The as-
signment of so many
units to this line may
indicate a ch...nge in
priority, and may make
PART II NOTES AND COMMENTS Page 6 of 12
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20 October 1955
it possible for the Communists
to complete the entire 400-mile
route by the end of 1957. Ac-
cording to Five-Year Plan goals
Sov
conference
mittee for th
Geophysical Yea.
held in Brussels
(1957-1958),
om 8 to 14
ma.lly re-
September 1955, in
vealed plans to estab
ish two
routes for regular flig
the Soviet Antarctic base
s to
Knox Coast. One route woul
run over the African continen
the other via India and Aus-
tralia.
Diplomatic negoti ons
are under way to ob n rights
to operate Soviet our engine
aircraft of us'ecified types
over Turkey gypt, Kenya, the
Union of uth Africa, India
and Au' ralia, and to land at
Sin ore. No other firiate layover points have
en indicated.
announced in February, only
270 miles of this line were to
be completed by the end of
1957. W-1 /
The entire air operation
will be under I. T. Spiro;
the leading Soviet Arc ,1c navi-
gator, whose experrfces in
polar navigation to back to
the Papanin ex dition of 1937,
and who is professor of
polar nay gation in the Voro-
shilov,,:- ilitary Air Academy.
Flights to the Antarctic
ould permit the USSR to com-
p 'Iqment polar flying experi-
enc ained in the Arctic and
give viet air crews their
first t soceanic experience.
endeavor in e Antarctic
would afford trkQ USSR an op-
portunity to con ct inter-
continental flight ith-
out inviting criticis of
war-gaming. It is expe ed
that the aircraft used wo 4,d
SECRET.
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delegates to a,
the Special Com-
International
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CURRENT INTELLIGENCE WEEKLY SUMMARY
20 October 1955
PATTERNS AND PERSPECTIVES
IMPLICATIONS OF RECENT'SOVIET POLICIES IN THE MIDDLE EAST
Recent events have made the
Middle East of foremost impor-
tance in East-West relations and
a subject for discussion at the
foreign ministers' conference..
Moscow's decision to supply
Middle East states with arms
and Iran's adherence to the
Western-sponsored "northern
tier" defense arrangement will
alter the balance of power in
the area. Shipment of Commu-
nist arms to the area undercuts
the "nest's tripartite agreement
of 1950. Iran's adherence to
the Baghdad pact closes the
gap in the "northern tier"
arrangement and finalizes a
Western defense scheme that the
USSR has repeatedly protested
against as a threat to its
security.
Reaction to Turkish-Iraqi Pact
Moscow's recent steps in
the Middle East may have re-
sulted from the conclusion of
the Western-sponsored Turkish-
Iraqi pact last February.
There are indications that
the USSR shortly thereafter
made offers of aid to Syria.
Approaches to Saudi Arabia,
Libya, possibly Yemen, and espe-
cially. Egypt, for closer ties
with the Soviet bloc indicated
that Moscow was approaching the
most anti-Western of the Arab
League states as candidates for
a neutralist bloc in which Egypt,
with Soviet bloc aid, would be
the dominant force. Since then,
the Soviet ambassador is relic-
ably reported to have asked
Nasr's opinion concerning Soviet
aid to the Sudan and Syria.
By thus hurdling the north-
ern tier, the USSR apparently
hoped to preserve opportunities
for expanding its influence
to the south.
The Soviet Union will
probably make every effort to
prevent the participants in
the Baghdad pact from becoming
effective links in the northern
tier chain. Thus, despite its
immediate reaction against Iran's
adherence to the pact, the USSR
probably will avoid a long-term
hostile policy lest it push
Tehran even closer to the West.
Moscow probably will try to
convince Iran--the weakest and
most strategically located of
the northern tier states--that
the Communist threat has disap-
peared and that added expendi-
tures for protection against a
nonexistent enemy would be
wasted.
Afghanistan, which has re-
cently reiterated its willing-
ness to participate in Middle
East defense planning, may re-
ceive offers from the USSR in
addition to the economic aid
it is already receiving. The
American embassy in Kabul be-
lieves the Egyptians, with or
without the connivance of the
USSR, may be using the prospect
of receiving Communist arms to
dissuade Afghanistan from join-
ing the northern tier states.
A favorable climate for further
Soviet penetration exists in
view of Kabul's continuing bad
feeling toward Karachi and its
dissatisfaction with the nature
of American aid.
Effect on Tripartite Agreement
The introduction of Com-
munist arms into Arab arsenals
nullifies the objectives of the
tripartite agreement of 1950
between Great Britain, France
and the United States. The
agreement, which was aimed at
promoting peace and stability
in the area, includes a
VIM mo
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CURRENT INTELLIGENCE WEEKLY SUMMARY
declaration of opposition to
an arms race between the Arab
states and Israel.
25X1X6
25X6
25X1X6
25X1X6
in view of the Soviet arms of-
fer, France now is willing to
relax the arms embargo against
Syria and Egypt if the United
States and the United Kingdom
will do the same. Israel has
already begun to press the
United States to match the So-
viet arms offers to the Arabs.
Great Britain, which has
specific military commitments
with Egypt, Jordan and Iraq,
as well as general obligations
under the Baghdad pact, regards
Soviet moves--especially the
offer of arms--as a serious
threat to its own position.
Prime Minister Eden stated on 9
September that the risk of war
in the area has been intensi-
fied, and intimated that the
Western powers should seek an
agreement with the USSR to halt
the arms race.
Britain's recent encourage-
ment of Iraq's Prime Minister
Nuri Said to adopt "a more for-
ward policy" in Syria suggests
that the Foreign Office now
intends to strengthen its sup-
port of Iraq as a counterbalance
to Egyptian and Soviet influ-
ence among the Arab nations.
may be preparing to give Libya
more arms assistance than it
has in the past.
In the case of the French,
the present Soviet policy will
have unfavorable implications.
French policy in the area has
been motivated by a desire to
preserve weak disunited states
amenable to French pressures.
France is particularly sensitive
to any changes affecting the
status of Syria. Its policy
toward the other Arab states,
particularly Egypt, is primarily
conditioned by its attitudes to-
ward North African affairs.
Paris will have to face the pos-
sibility that Soviet arms ship-
ments, especially to Egypt, will
result in additional arms be-
coming available to North African
nationalists.
Foreign Ministers' Meeting
There have been several
indications that the USSR may
broach the subject of the Mid-
dle East with the Western powers,
possibly at the foreign min-
isters' meeting this month.
Bulganin and Molotov have
publicly indicated the impor-
tance the USSR attaches to main-
taining neutrality in the area
and have stated that Moscow not
only will respect such a course
but is prepared, in conjunction
with other countries, to partic-
ipate in a guarantee of this
neutrality. The Soviet ambas-
sador to Tehran has made direct
approaches to Iranian and Saudi
Arabian officials which reflect
Moscow's concern in this con-
nection.
If Moscow does elect to
broach the subject at this time,
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it may offer the West the al-
ternative of participating in
an agreement with the USSR which
would guarantee the neutrality
of the area, or of facing a con-
tinuation of the Soviet offensive
in competition with the Western
powers.
Moscow probably believes
that it stands to -ain in either
case.
4TELLITES ACT TO IMPROVE RELA TIONS WITH UNITED STATES
Si ce the Geneva confer-
ence, th European Satellites
have demon trated a strong in-
terest in i roving diplomatic,
cultural, an economic rela-
tions with the West, and par-
ticularly with a United States.
At the same time, they have
publicly taken they osition
that the United Stas should
reciprocate these gestures by
moderating its "antago stic"
policy toward the Soviet\blcc.
the American charge d'affa'res
in Bucharest on 23 Sept er
that the Rumanian goverement
was considering grant' g long-
denied visas to a nu er of the
371 American citiz s and dual
nationals in Ruma a.
25X1X6
These actions undoubt ly
stem from a desire to impresrk
the West with the Soviet blocXxs
adherence to the "Geneva spir
it," and are intended to re-
duce Western opposition to the
Eastern European regimes. The
Satellites probably also hope
that "normalizing" relations/
with the United States wit
permit them to increase t ade
with the West, obtain A rican
trade credits, and ben it from
American technical a economic
experience by devel- ing an
exchange of techn al delega-
tions and informion with the
United States.,
Moves on Outstanding Problems
Rumania is apparently pre-
paring tai take steps to settle
some 1,?ng-standing problems
whit 'have been a major factor
in s poor relations with the
Un- ted States. Rumanian deputy
oreign minister Preoteasa told
25X1X6
Professor Thai Rosianu,
deputy minis t r of culture and
a member of _ he Workers Party
central cojmittee, mentioned
that a United States Informa-
tion ervice reading room,
cl ed by Rumanian action in
1 0, might be reopened. He
dmitted that Rumania and the
nited States might be "equally
fault" for the poor rela-
ti\ns between the two countries,
and *aid his government would
welt a visits by prominent
Americ s in all fields. This
latter sture apparently was
made in h es of sharing Amer-
ican techn al experience.
Hungary, 'oland, and Czecho-
slovakia have AJ1so proposed nego-
tiating outstan ng problems.
Hungary's suggest,on that each
side submit a list's,of questions
it wished to negotia` a was ap-
parently made to faci tate
obtaining long-term cr its for
the purchase of America food-
stuffs and consumer goods.
Hungarian trade officials Ive
unofficially approached Amer"i;-
can businessmen on this subject
in recent months.
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ARAB STATES RESPOND FAVORABLY
TO EGYPT-SOVIET BLOC ARMS DEAL
The reaction of other Arab
states to Egypt's arms agree-
ment with the Soviet bloc has
been overwhelmingly favorable.
Although credit for the deal
has redounded so far much more
to Egypt than the Soviet bloc,
Moscow's public reiteration of
its eagerness to provide all
the assistance the Arabs may
ask, economic as well as mili-
tary, may focus Arab attention
more directly on Soviet gen-
erosity and friendship.
Egypt's gains in prestige
from the arms deal have been
reflected in favorable press
comment and in official state-
ments from all the Arab states
except Iraq. Even the Iraqis
have felt constrained to con-
fine their criticism to private
talks. The Arabs generally see
the deal as a major move in
their emancipation from Western
dominance. Egypt reportedly
has been quick to capitalize on
this sentiment by. offering
itself as a channel through
which Syria, Lebanon, and
Libya also can acquire arms.
The Arab reaction has
emphasized Egypt's heroic role
in breaking with the West on
the arms issue, rather than
any policy change in the Arabs'
favor by the USSR. However,
Moscow's gains, though slower
in coming, are likely to be
nonetheless real.
Indicative of the kinds
of gain the Soviet bloc may
make is a report from Syria
that local Communist leader
Khalid Bakhdash is now listener'
to much more seriously than he
was a few months ago and a
report that the Sudan on its
own initiative has asked for
Soviet arms. In addition, a
14-man contingent of Czech and
Soviet arms experts arrived in
Cairo on 2 October.
Not only have the Czechs
started implementation of the
agreement with Egypt quickly,
but Moscow has followed up
promptly with a public` announce-
ment of its willingness to pro-
vide economic assistance, specif-
ically for Egypt's Aswan high
dam project. Soviet ambassador
Solod told the press in Cairo
on 10 October that the USSR
could assist with equipment,
though not with cash.
25X1C On political issues Solod
reportedly told
that the
USSR will do all in its power
to see that "justice" is done
in the Arab-Israeli question
and other area problems.
Developments along these lines
are likely to bring the USSR
more local gains than the arms
deal itself.
In Arab international
politics, as distinct from
Arab public opinion, the arms
deal has had a disturbing effect.
The increase in Egypt's pres-
tige and the possibility that
Syria may also deal with the
bloc have aroused Iraqi and
Lebanese fears that Egypt may
use its new supplies of arms
to secure the dominant influ-
ence among the Arabs that it
failed to obtain through the
abortive Egyptian-Syrian-Saudi
Arabian defense pact.
Both Prime Minister Nuri
Said of Iraq and President
Chamoun of Lebanon have indi-
cated that they feel-something
should be done about Syria.
PART I OF IMMEDIATE INTEREST Page 2 of 3
25X1 C
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CURRENT INTELLIGENCE WEEKLY SUMMARY
13 October 1955
Nuri apparently has in mind a
coup to be followed by some
form of Iraqi-Syrian. union.
While he has prdmised,to take
no precipitate acti'on, he ' can
be expected to return to this
subject if a Syrian-Soviet deal
appears to be in the offing or
if Egyptian influence appears to
be making significant new gains
in Damascus.
~H ASSEMBLY
D ES ALGERIA
Ii its debates on Morocco
and Alge a, the French National
Assembly h succeeded neither
in settling ese issues nor
in clarifying attitude
toward the Faur overnment.
The debate on Alkgeria got
off to an apathetic s rt on
11 October, but as the ?b' me
for a vote approached, tI
outlook appeared less favor'a it
.to Faure than immediately
following the Moroccan debate.
The premier must play foe'
time to work out a long-r e
program for Algeria, T1 Social-
ists reject as unreal4 tic a
program aimed at iq.-t grating
Algeria fully within the French
republic, and rightist extrem-
ists demand'rong repressive
measures to' nip budding national-
ism. A ale'mbly opinion on
AlgerI 's relationship to France
is olving fast, however, and
? pport is growing for a fed-
A major influence in th~.~'e``
direction is the fact that. 5om-
plete integration of Algeria
would mean 140 Moslem-deputies
in the French National Assembly.
In the meantime,,,the immediate
reform measurep-sponsored by
Governor Gene1al Soustelle are
sufficien ly supple to be backed
by dispa ate elements in Paris.
P-,"The final 477-140 vote of
was not an indication of Faure's
parliamentary strength. It was
re of a warning to Faure to
pussyfooting and begin
imm 'ately to implement the
Aix-1 drq,-B agreement with
the Mor can nationalists.
Disgruntl rightists who de-
serted Faur on the Moroccan
issue but are till nominally
in the governme coalition are
determined to blo such a pro-
gram, however, and "the Socialists,
despite their strongppport of
Faure on the Moroccan issue, are
still basically an opposition
party.
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13 October 1955
ready
he German press has al-
orted French threats
of the sd
that reject
ous consequences
would have on
of the statute
e French at-
an reunifica-
titude toward Ge
tion efforts.
With National Assembly
elec''! ons imminent, the French
govern t would find it diffi-
cult to m e concessions. Pre-
occupation 4h domestic and
North African oblems, however,
might encourage French to
accept another "tem o ary solu-
tion" to the Saar prolem.
V/ COMMUNIST PROPAGANDA TREATMENT OF THE UNITED STATES
A moderate and restrained
attitude toward the West, par-
ticularly the United States,
remains a dominant feature of
Soviet propaganda supporting
the Kremlin's current foreign
policy efforts. Nonetheless,
there is no evidence of any
change in Moscow's long-range
strategic objectives.
East-West Negotiations
Perhaps the best evidence
for this.can be found in the
sustained domestic propaganda
preparing the Russian people
,for a period of East-West nego-
tiations. This material is
characterized by an absence of
distorted pictures of American
life and invective against Amer-
ican personalities, by more
objective treatment of American
affairs, by daily reports on
friendly exchanges of visitors
between the USSR and the West,
and by avoidance of comment on
sensitive issues.
Soviet propagandists are
developing the technique of
clothing standard criticisms
of American foreign policy in
new dress. For instance, some
are presented as "logical"
discussions. Many others mere-
ly quote well-known American
news analysts' criticisms of
United States policy.
This pattern is vividly
depicted in the Russian "humor"
magazine, Krokodil. Before
July, every issue was filled
with such anti-American car-
toons as the one below.
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13 October 1955
The change which took
place in the 28 July issue was
the more pointed because dis-
tribution was held up eight
days--presumably for a reprint
and such an about-face "in the
spirit of Geneva" as in the
cartoon above.
Soviet Cautions
But Moscow limits
this type of propa-
ganda so as to avoid
any hint of Soviet
weakness or capitula-
tion, to ensure con-
tinued progress to-
ward the achievement
of domestic goals,
and to accommodate any
tactical reversal
should the situation
demand it.
Thus, Moscow em-
phasizes favorably
foreign reaction to
its efforts to pro-
mote the "Geneva
spirit," demands re-
ciprocal American
deeds, discusses the
advantages of neu-
tralism and conversely
the dangers inherent
in the existence of
foreign bases. It
warns that the settle-
ment of many problems
depends on the estab-
lishment of mutual
trust and this 'is' a.
time-consuming process..
- WHATS HAPPENED TO THE OLD GIRL2
4
- SHE GOT SICK AT GENEVA. / /,
STOCKS "GKS
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There are also persistent
reminders that "certain circles"
in the United States refuse to
enter into the spirit of the
times. Soviet officials,'on
the other hand, it is stated,
will never submit to dictation
or threats but will patiently
weigh all proposals in search
for common grounds for negotia-
tion since they believe Presi-
dent Eisenhower and, to some
extent Secretary Dulles, are
sincere in their endeavors to-
ward world peace.
Krokodil interprets this
line as in-We cartoon below.
Other Communist Efforts
Elsewhere in the Sino-
Soviet bloc a modified version
of Moscow's propaganda pattern
is being'carried out--with East-
ern European media only slowly
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CURRENT INTELLIGENCE WEEKLY SUMMARY
13 October 1955
picking up the Soviet line, and
Far Eastern Communist propa-
gandists making only a token
contribution to the new effort.
Satellite anti-American
propaganda was sharply reduced
after the "successful conclu-
sion" of the summit talks
and has since remained at a
low level. Favorable commen-
taries dealing with the United
States, particularly with the
President, have recently ap-
peared in Satellite output.
At the same time, however, the
Satellites have continued to
criticize some aspects of
American foreign policy.
Peiping's failure to
accord the "Geneva spirit"
theme as much emphasis and
significance as Moscowreflects
the difference between the pres-
sures and problems confronting
the two governments. The conflict
between Chinese Communist and
American interests, particularly
in the Formosa area, is ex-
pressed in sharper and simpler
issues than the more general
and complex conflict between
the Soviet Union and the United
States. This difference in the
nature and intensity of Soviet
and Chinese collisions with
American power and interests
requires different postures
toward the United States and
different. approaches to for-
eign and domestic policies.
PEIPING'S CONCILIATORY APPROACH TO FAR EASTERN PROBLEMS
Peiping's professed adher-
ence to the "Geneva spirit" has
emerged in such recent gestures
as the announced decision to
evacuate six divisions from
Korea and the continuing calm
in the Formosa area. Without
renouncing its objective of
"liberating" Formosa, Communist
China is apparently deferring
major attacks in the offshore
island area, while it sees some
prospect of political gains in
direct talks with the United
States, Elsewhere in Asia,
the Chinese Communists maintain
the conciliatory tone adopted
at the Bandung conference last
April and seek to weaken Ameri-
can prestige and influence by
intensifying appeals to neutral-
ist sentiment.
The capture of several Na-
tionalist-held offshore islands
in early 1955 was announced by
the Communists as preliminary
to the "liberation" of Formosa
itself. The "liberate Formosa"
propaganda campaign, however,
diminished sharply just before
the Bandung conference in April
at which Chou En-lai declared
Communist China's readiness to
negotiate with the United States.
Since then, no assaults have
been made on the offshore is-
lands.
Communist China. appears to
be impatient to get from the
current ambassadorial talks at
Geneva to higher-level discus-
sions on the Formosa issue.
Charges by Peiping radio that
the United States is obstruct-
ing progress in the talks show
that China is anxious to give
the appearance of adhering to
the "Geneva spirit."
The "Geneva spirit," as
statements on Communist China's
national day, 1 October, make
clear, does not entail renuncia-
tion of the "liberate Formosa"
goal. Peiping acknowledges the
possibility of "peaceful libera-
tion" but does not reject the
use of military force if "peace-
ful" methods fail. Through
negotiations with the United
States, it sees the possibility
of a withdrawal of American
forces from the Formosa area
and a consequent erosion of the
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13 October 1955
Nationalist position. But it
insists that the status of
Formosa and the offshore is-
lands is a purely domestic is-
sue.
The Chinese Communists
have tried to contrast the
"military threat" of the United
States in Asia with their own
"peaceful moves" in other ways.
For example, Peiping has as-
serted that the alleged demobi-
lization of 4,500,000 Chinese
troops and the forthcoming
withdrawal of six more Chinese
divisions from Korea are in
keeping with the regime's ef-
forts "to ease the Far Eastern
and world situation." In fact,
however, the reduction of Chi-
nese strength in Korea has been
accompanied by a strengthening
of North Korean military forces,
to some extent in violation of
the terms of the Korean armi-
stice.
Professions of the "Geneva,
spirit" also emerge in Peiping's
appeals for peaceful unifica-
tion of Vietnam and for compli-
ance with the provisions of the
1954 Geneva settlement on coun-
try-wide elections. But mili-
tary aid is still extended to
the Viet Minh, and the Viet
Minh in turn promotes subver-
sion in South Vietnam and small-
scale warfare in Laos.
Lifting the Bamboo Curtain
To support-its Far East
peace campaign, Communist China
seeks to associate itself with
the rest of the Asian community
and to demonstrate that the
bamboo curtain is an American
fiction. To this end, the in-
vitation to visit China has be-
come a standard tactic. At
Bandung, Chou En-lai invited
even such staunch anti-Com-
munists as Carlos Romulo of
the Philippines and Prince Wan
of Thailand to visit Communist
China.
The response to these in-
vitations has been quickest
where neutralist sentiment is
strongest. Former Indonesian
premier All undertook a good-
will mission to Peiping shortly
after the conclusion of the
Bandung conference. The Bur-
mese have responded to Peiping's
invitations by sending three
top-level groups to China--a
cultural mission headed by a
cabinet officer, a religious
mission led by the chief justice,
and a military mission under
the commander in chief. On 1
October, some 300 Japanese
visitors were said to be in
Peiping.
Asian Peace Pact
In further support of its
effort to identify China with
other Asian--particularly
neutralist--countries, Peiping
on 30 July proposed a "collec-
tive peace pact" for Asia.
Such a pact is intended to sup-
plant the American-sponsored
Manila pact which has been un-
popular with neutralists and
under attack in Communist
propaganda as a military bloc
organized to have "Asians fight
Asians." Peiping also proposed
a general Far Eastern confer-
ence to discuss a wide range of
Asian issues. Most neutral na-
tions are believed to favor such
a conference.
Communist China's flattery
of India affords the most con-
spicuous illustration of the
effort to enlist neutralist
sympathies. India, which used
to be treated in Peiping's
propaganda as only semi-inde-
pendent.is now acknowledged to
be fully independent and is as-
sociated with China as a charter
subscriber to the "five prin-
ciples of coexistence." India
invariably is China's announced
preference for membership on
international armistice commis-
sions and has been chosen to
represent Peiping's interests
in the repatriation of Chinese
desiring to leave the United
States.
Trade Agreements
The trade agreement is
another tactic used by Peiping
to exploit neutralist sentiment.
Peaceful trade is offered as an
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CURRENT INTELLIGENCE WEEKLY SUMMARY
13 October 1955
alternative to the economic
warfare fostered by American
policies. Perhaps to dramatize
its own "peaceful reconstruc-
tion," Communist China, evidently
intends to offer quantities of
machinery and iron and steel
products in forthcoming agree-
ments.
The precedent for such of-
fers has been set in recently
concluded trade pacts with Burma,
Indonesia, and Egypt. In China's
present primitive stage of in-
dustrial development, the ex-
port of industrial products
probably is not warranted on
economic grounds, and the ex-
ports reflect the fact that
political rather than economic
factors constitute for Peiping
the overriding. consideration in
the negotiaeion of trade agree-
ments.
Peiping's appeal for
"peaceful" trade has been ad-
dressed particularly to Japan.
Communist China's political
overtures to Tokyo--the latest
was Chou En-lai's reported offer
to restore diplomatic relations.
"without conditions"--have thus
far failed to evoke a clear af-
firmative response from the
Japanese government. But in
the matter of trade, Peiping
has been able to address itself
to unofficial or semiofficial
levels in Japan, and has suc-
ceeded in concluding agreements
with Japanese businessmen.
The result of these eco-
nomic overtures and the Chinese
Communist practice of. offering
to barter industrial raw ma-
terials for strategic goods has
increased pressure in Japan
for a relaxation of trade con-
trols and for recognition of
Communist China. In this con-
nection, Peiping may feel it
is forcing Washington to choose
between reducing its efforts to
apply strict trade controls on
strategic items for China or
perpetuating American-Japanese
differences on trade with
Peiping. (Concurred in
by ORR)
TROUBLE IN INDIAN-HELD KASHMIR
rong Communist influence
in the'vernment of Indian-
held Kashmir and continuing
popular oppo?,ition to the ad-
ministration a nc anger the in-
ternal stability.: this area,
which remained inf ia.n hands
at the time the filth g with
a
_1949.
Pakistan ended in Ja.nu
While Pakistan continues
press its claims to Kashmir;
most of the immediate local
difficulties are caused by in-r
digenous opposition to the,-:
ent government. The 40. O$O
Indian troops in Kas fr prob-
ably could handle a, y~sudden
crisis, but New?lhi appears
uncertain how., o resolve the
long-range eternal political
problemfaces in Kashmir.
Just after the partition
India in October 1947, Pathan
tribal raiders from Pakis
entered Kashmir in ana)empt
to join the state, w ch has a
majority of Mosle to Pakistan.
The Hindu mahar a, who until
then had ref d to attach his
state to e_ er India or Pak-
istan,,,, cided for union with
India,a Regular Indian army
es entered the state to
ttle with the raiders and
occupied the most important
areas.
United Nations interven-
tion rought a cease-fire agree-
ment it-January 1949. Pakistan
and India ave continued their
quarrel ove -.the state on the
diplomatic le ever since,
without any solu &;on being in
sight. Last July, Ii dian prime
"
minister Nehru even
Daplied he
no longer felt bound by
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CURRENT INTELLIGENCE WEEKLY SUMMARY
orocco on the pattern es-
t lished in Algeria last No-,
vem r. This thesis is support-
ed by he distribution in Mo-
rocco o what purports to be
the "fir communique of the
liberation rmy of Morocco."
This leaflet tates that long-
planned joint erations are
commencing in Mo cco and
Algeria and will tinue un-
til independence is on for all
North Africa and form sultan
Mohamed ben Youssef is turned
to the Moroccan throne.
A similar announcement
a combined nationalist militar
direction was broadcast by the
Cairo radio on 4 October. Wle
these claims are almost ce
tainly exaggerated, they ay
portend a trend toward. oser
collaboration by dis -dent
forces in Morocco d Algeria.
Algeria: rebel activi-
ties con nu n eastern
Algeria, a minor terrorist
attacks w e reported on 1
October long the Moroccan
borde near the port of Nemours.
The ithdrawal of three battal-
i s of French troops to re-
inforce units in Morocco may
GREEK PRIME MINISTER'S DEATH
PRECIPITATES POLITICAL CRISIS
The Greek government re-
signed on 5 October, following
the death of Prime Minister
Papagos, and King Paul asked
the former minister of public
works, Constantine Karamanlis,
to form a new cabinet. Papagos
was the unifying force in the
Greek Rally coalition, which
will now probably disintegrate.
A period of political insta-
bility is in prospect and, if
elections are held soon, an
encourage the rebels to commence'
attacks in western Algeria.
In Paris, officials i the
Ministry of the Interio 4`are
o
vernor
pessimistic regarding
General Soustelle's odest re-
form program,for ;-geria. They
,for
ely that the
consider it
Faure governme will last long
enough to ac mplish anything
in Algeri nd expect that the
restorat n of order there will
be a 1 g and discouraging task.
Al rian problem is more diffi-
They ave reiterated that the
It than either the Tunisian
or Moroccan, principally be-
cause of the absence of national
tionalist reaction to
inscrip on of the Algerian
item on t agenda of the UN
General Ass bly and France's
subsequent w drawal from that
body is not ye nown. Both
Algerian and Mor can nation-
alist positions wi presumably
become firmer, as wi those of
the settler groups in th areas,
thus contributing to lo
disturbances.
unstable coalition government
with strong leftist and neutral-
ist influence is likely to
result.
The king, who had been
seriously concerned for months
over the. government's lack of
leadership dt'ring the prolonged
illness of Papagos, recently
insisted that the prime minister
resign. Papagos' refusal, re-
flecting long-standing friction
PART I OF IMMEDIATE INTEREST
aditions and a coherent group
lgerian spokesmen.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
6 October 1955
between himself and the palace,
was partially overcome shortly
before his death and Foreign
Minister Stephanopoulos was
named temporary prime minister
during Paga.gos' illness.
Apparently fearful of a
bitter struggle within the Rally
over the succession to leader-
ship of the party, the king has
dramatically cleared the way
for the popular and able Kara-
manlis to try to form a new
government. Karamanlis had, al-
ready organized the nucleus of
a new center party and he and
the king apparently believe
that enough Rally deputies will
switch to his party to keep a.?
Karama.nlis government in office
until national elections are
held.
Karamanlis' cabinet, which
was sworn in on 6 October, is
comprised entirely of Rally mem-
bers, including several of the
outgoing cabinet officers..
Karamanlis probably intends this
to be a temporary arrangement,
and he plans to expand his gov-
ernment to take in some politi-
cians of the center groups. The
"old guard" of the Rally, how-
ever, is excluded, and its re-
sentment may force a parliamen-
tary fight over voting confi-
dence in the Karamanlis govern-
ment.
Members of the parliamen-
tary opposition have recently
been clamoring for elections
and threatening to resign en
masse--to force by-elections
and thus a, display of popular
sentiment--if they are delayed.
The king will probably delay
holding any new elections at
least for several months in or-
der to allow Greek anger.and
frustrations relating to the
Cyprus issue to subside and to
give Karamanlis and his party
time to gain public confidence
and build an effective organ-
ization.
Since Karamanlis is closely
connected in the public mind
with the United States, he'will
have to contend with the strong
anti-NATO and neutralist trend
of Greek opinion. He can be
expected, therefore, to make
strong efforts to establish his
independence of American influ-
ence during the current anti-
American clamor. Meanwhile,
Turkish prime minister Menderes'
message to Papagos of 29 Sep-
tember will probably serve to
re-establish formal Greek-Turk-
ish co-operation and may have a
calming effect on Greek popular
passions.
The Greek parliament, which
legally must convene on 15 Oc-
tober, will probably soon re-
vise the electoral law and then
devote itself to preparing for
national elections which were
scheduled for November 1956 but
which may now be held earlier.
The present majority electoral
system, which favored any party
receiving a majority of popular
votes, is almost certain to be
abandoned and some modification
of the proportional system adopt-
ed. Since with the death of
Papagos no party will expect to
gain an electoral majority, the
various factions in parliament
will probably agree on a new
election law which will seat
more splinter groups. This may
enable Communist-front candidates
to regain a voice in parliament.
Early elections are likely
to result in an unstable coali-
tion government which, because
of general disillusionment with
Rally conservatism and popular
feeling against NATO and the
r% V4 r"
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CURRENT INTELLIGENCE WEEKLY SUMMARY
United States, might be domi-
nated by a leftist bloc led by
Liberal Democratic Union chief
Sophocles Venizelos. The power-
ful ultraconservative secret
military society IDEA, which
enjoyed a, unique position of
to
The National Party continues
ain its lead in the In-
donesi
basis o
counting
n elections.. On the
unofficial returns ac-
estimated
percent of
ter it has won 27
constitutes a:
three other la
Moslem Masjumi,
votes, which
lurality. The
e parties--the
tive Moslem Nahdl
conserva.-
ul Ulama
(NU), and the Commu
are closely grouped
st Party--
that
turns
order. Inconclusive rii
how
the Masjumi leading and kye
revived Masjumi leaders' h` hoes
of further diminishing the
National Party's lead.
The central Java election
committee "is~ reported to
have ordered new elections
in five cities in central JJ a
because of irregularities And
illegal activities. Bot the
National and Communist /Parties
have polled well in tiis area.
Returns are s1fficiently
advanced, however=, to indicate
that no party i$ likely to win
a. majority ani that a new coa-
lition goverment will be nec-
essary. Ai Sastroamidjojo,
former pr.dmier and National
Party spokesman, has refused to
discu 4 parties with which the
Nati alists might co-operate.
A o-National Party daily has
ggested co-operation with
ither the Masjumi or the NU,
influence under Papagos, would
probably attempt a coup only if
a. clearly leftist election trend
was established and support
from other rightist groups
seemed probable. fir
"Dow"
advocating a triple coalition
of the largest non-Communist
parties. The NU has stlted
specifically that it x~'111 not
participate in a. gov"rnment in
which the Communis_jParty is
represented.
The possIility of a Na-
tional Party, coalition with the
Communists: however, cannot be
disregarded, and the Communists
have alr. ady indicated their
eager ass for inclusion. The
last tionalist government
accepted Communist support.
Prime Minister Haxahap has
stated that his Masjumi-led
cabinet will remain in office
until the new parliament is
ated some three months or
e hence. Harahap may wish
to tay in power in order to
pres} a over the 15 December
elects which will choose 520
members f a constituent assem-
bly to dr a permanent con-
stitution.
There is`'rto assurance, how-
ever, that Hara1a.p will be able
to remain in office. The Na-
tional Party has ready called
for his resignation', and sev-
eral small parties ale consid-
ering withdrawing them min-
isters from the coalition cabi-
net. The reassembled provi-
sional parliament, depending on
Masjumi placement in election
or 90 percent of the
as up"
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25X1X41
IV PART II
NOTES AND COMMENTS
Soviet Arms to Middle East
The first shipment of arms
under the Soviet agreement to
arm Egypt through Czechoslo-
vakia has apparently already
reached Egypt. The USSR is
taking advantage of general
Arab approval of the agreement
with Egypt to push a similar
offer to Syria, which,accord-
ing to one report, has accepted.
Israel meanwhile is engaged in
a major diplomatic maneuver to
forestall its loss of military
superiority in the area.
the first
Soviet bloc shipment of small
arms and machine guns arrived
in Alexandria harbor on 27
September. The next load,
expected shortly, is said to
include 60 "Stalin" heavy tanks.
The Soviet minister in
Damascus is reported to have
made an arms offer to Syria
on 27 September which may be
a follow-up of an offer made
last March. American officials
when questioning Syrian of-
ficials on the alleged Soviet
offer received evasive re-
While the new Syrian gov-
ernment is friendly toward the
Western powers, it may be in-
clined to follow Egypt's lead,
especially if it were offered
atms on advantageous barter
terms. SUch terms reportedly
were indicated in the Soviet
offer. The Damascus stopover
of the Egyptian delegation on
its way to Prague suggests that
Egypt may be trying to promote
Syrian\interest in obtaining
Soviet equipment, possibly
through Egyptian representations.
25X1X6 25X1X6
The first Soviet statement
on the arms sales was expressed
in a TASS communication dated
2 October which stated that each
goverpment has the right'to buy
weapons for its defense require-
ments on "usual commercial..
terms," and that "no foreign
state has the right to intervene
and to present any one-sided
claims which would infringe'. the'
rights or interests of other
states."
The political 'aspect of the
Czech arms deal was virtually'
admitted in a 30 September Czech
army newspaper editorial which
stated that the arms agreement
was motivated by Czech respect.
for Egypt's sovereignty -and its
.increasing contributions 'to the
cause of peace.
The USSR's deal with Egypt
and other offers are designed
to weaken Western ties with the
Middle Eastern states and draw
them toward a neutral position
in international affairs.. This,
would serve Soviet interests by
undermining the "northern tier"
defense system.,
In the longer run, the
long-term barter agreements
involved in Soviet bloc arms
deals.and associated economic
assistance offers would make
the Middle East states vulner-
able to Soviet bloc. economic
penetration. Once having es-
tablished a steady market in
the Soviet bloc for vital ex-
ports, countries such as-Egypt
and' Syria will be under. pres-
sure to hold on to this marked.:;.,
Israel, which views any
arms shipment to the Arabs as a,
direct threat to its existence,
is making a major diplomatic
effort to counter the Egyptian
arms deal. In the press, the
UN, and representations to the
Western powers, Tel Aviv's
_An, V1 Irv Flu F"
25X1 X4?
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6 October 1955
25X6
25X6
spokesmen have emphasized the
arms deal as a threat to Middle,
East peace. Tel Aviv believes
the situation requires new
Western guarantees to maintain
the status quo of the area and
wants the West, particularly the
United States, to supply Israel
with additional military equip-
Meanwhile, Israel will al-
most certainly step up its pur-
The necessity of preparing
for a national elections
schedu d for 25 December has
led the otian government to
set a 10, Ober deadline for
agreement wi the Pathet Lao
in the negotia ions which have
been under way i ermittently
since last January N,, If no
settlement is reached, .by 10
October, the last date ands-
dates may file for the n ional
assembly elections, the grn-
ment plans to hold election,
only in the 10 provinces unde
its control.
There may be a brie"de-
ferral of the deadling as the
result of a last-migrate agree-
ment by the Pathett Lao chief,
Prince Soup.hanir'uvong, to meet
with Premier stay. Souphann-
euvong has greed to a meeting
in Burma, n 9 October. He had
earlie refused to attend a
sche led meeting in Laos on
ti
grounds that the site was
nsecure" because of "aggres-
sive" actions by the government.
chases of military equipment in
other ,parts of Europe. The
intemperate press campaign
now being conducted is likely
to promote public 'sentiment in
favor 4f aggressive action, and
the government will, as a re.-
sult, probably adopt a tougher,
border policy aimed at warning
the Arabs;., If Soviet equipment
begins to pour into the Arab
states in quantity, Israel is
likely to give serious consid-
eration to launching a full
scale war before the Arabs over-
take it in military strength.
25X1X6
25X1X6
termed, this ex tfs'e
"ridiculous.." They Apre not
optimistic of anyesults,from
the meeting in F}urma, which the
commission w1Jd sit in on, and
believe it 11 not last more
than two ,,dys. They think the
poor sing made-by the Commu-
nist ??in'Cambodia's recent elec-
tiptls have probably convinced
e Pathets that it would be
unwise to test their popularity
at The ' polls.
If the government-Pathet
negotiations end in complete
fa pre; there is a' strong
pose lity that the Pathet Lao
will r' ort to intensified
military ctivity..
Meanwhil' interrogation of
the secretary ZV& the Pathet
negotiating team, who defected
last month, provid: some in-
teresting,observatio'ft
He
stated that all import t posts
in the Pathet organizati are
held by the Viet Minh and tat
hat
Souphannouvong and his ministers
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Chinese Communists to Withdraw
Two Armies from Nor orea
Peiping is expected to
withdraw six divisions from
Korea in October as announced
on 29 September. These with-
drawals would reduce Communist
numerical strength in Korea
below that of the UN Command.
In September 1954 and March
1955, the Chinese made similar
public announcements and with-
drew troops shortly afterwards.
On the basis of present
information, departure of six
divisions, which presumably
comprise two armies, would
reduce the number of Chinese
Communist armies in Korea to
five and lower troop strength
from 449,000 to approximately
350,000--augmented by about
329,000 in the North Korean
army. The present strength
of the UN Command in Korea is
slightly over 750,000.
When the withdrawals are
carried out, the Chinese will
have removed at least 13 of
the 19 armies which were de-
ployed in Korea in July 1953
when the armistice was signed.
The fact that even with the
announcement of the October
withdrawals Peiping will have
publicly acknowledged the de-
parture of only six of these
armies may reflect an unwill-
ingness to reveal the magnitude
of the effort the Chinese were
compelled to make against UN
forces in Korea. On the basis
of past performance, the public
announcement of the divisions'
departure suggests that they
C s in Rumanian Regime
Rea r -m pence o arty
On 1 October, so
months after he had belatedly
adhered to the. collect
ership r
sItion as leader of the
..may be checked on by Neutral
Nations Inspection Teams, al-
though this has not yet been
stated by Peiping.
The announced departures.
appear motivated primarily
by propaganda rather than
military considerations, and
are likely to be publicized as
being in keeping with the
"spirit of Geneva!' during the
month of the foreign ministers'
conference. The Chinese
Communists have offered to
withdraw all their forces from
Korea if the United States does
the same. Chinese withdrawals
of troops would strengthen
Peiping's propaganda and polit-
ical' . position and bring pres-
sure on the United States to
withdraw its forces from Asia.
The newly announced Chi-
nese withdrawals would not
basically weaken the Communist
strategic position in North
Korea, since large-scale rein-
forcements would be available
from Manchuria on short notice.
Moreover, the effectiveness of
North Korea's military forces
has been improved through in-
tensive training, reorganization,
and re-equipment programs, which
have to a certain extent been
carried out in,violation of
the terms of the Korean ar-
mistice. The withdrawals would,
however, further diminish the
prospect of any sudden resump-
tion of hostilities by the
Communist. forces in Korea. .
party secret ar RtT an Com-
heorghiu-Dej re-
as he post of party first
secretary. rder to main-
tain the facade bt'`oQ_ective
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/New Argentine Government,
Marks Time
The Argentine provisional
government headed by Maj. Gen.
Eduardo Lonardi continues to
consolidate its position with
a gradual purge of personnel.
Lonardi has announced that
he will not deprive labor of
any gains achieved under Peron,
and, according to press reports,
he appears to be winning a
victory over the pro-Peron
General Confederation of Labor
(CGT) in that a number of unions
have ousted their pro-Peron
leaders, possibly with assist-
ance from the new government.
All of the secretaries of the
CGT have now reportedly resigned
with-new elections'.to beheld
in four months.
Lonardi's dealings with
labor may be complicated by the
reported decision of the Commu-
nist Party to fight the new
government by supporting the
Peronistas. Communist Party
members were instructed to
agitate for new elections in the
unions in the hope of electing
Communists to key positions.
The Argentine public is in
general wary of the new regime.
The government has had plans to
set up a consultative junta, as
an interim body in the absence
of a congress, composed of rep-
resentatives of labor and all
political parties except the
Peronista and Communist. The
plan now appears doomed, how-
ever, inasmuch as the Radicals,
the only anti-Peron party of
any consequence, have reportedly
refused as a matter of principle
to participate in the junta.
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Growing Labor Unrest in France
Recent agitation for wage
rises by the Communist-dominated
General Labor Confederation
(CGT) is probably aimed in part
at weakening the free labor
unions and ensuring worker sup-
port for the Communist Party in
the 1956 parliamentary elections.
The strikes and work stoppages
pose a real threat to Faure's
economic program as well as
to the stability of his govern-
ment.
Despite a 15-percent in-
crease in real wages during
the past three years, French
workers are convinced they have
not kept pace with the economy,
and in recent months they have
shown new willingness to strike.
They have been encouraged to
resort to violence by the suc-
cess of the shipyard workers
at St. Nazaire who in August
won wage hikes as high as 22
percent as a result of strong-
arm union action.
The CGT effort to exploit
this discontent has in recent
weeks been directed at the pub-
lic utilities, railroads, and
the civil service. Although
strikes called have been of
short duration thus far and
only moderately effective, non-
Communist labor spokesmen main-
tain that workers in these na-
tionalized industries and
services are particularly
sensitive to the wage issue.
Free labor spokesmen fear
that CGT tactics are aimed at
eliminating the non-Communist
unions, particularly the So-
cialist-orientated Force
Ouvriere (FO). The atmosphere
of detente is reducing the
effectiveness of the FO, which
based its opposition to the
CGT campaign for "unity of
action" on anti-Communism. The
CGT has been careful to keep
its current campaign nonpoliti-
cal, and free unions fear they
may "give the appearance of
denying the authenticity of the
labor unrest and the virtue of
worker demands." The serious
inroads made by these CGT
tactics on the loyalty of FO
members, including some of the
local leaders, have forced the
FO civil servants' union to
second the CGT demand for a
revision of the accord on wages
of 30 June.
Officials of both the
Technicians " Union and the FO
believe the CGT has an eye on
the 1956 elections, and that
by undermining free union
strength and prestige, the
Communists expect to weaken the
Socialists and Popular Repub-
licans. By this tactic and
their pressure for a united
front, it is believed they
might swing enough votes to
Communist and co-operative So-
cialist candidates to elect up
to 150 Communists and party
sympathizers to the National
Assembly.
Recurring strikes threaten
the price stability which has
been the key factor in the French
prosperity of the past two years.
Premier Faure made it clear in
a radio speech on 21 September
that the government will brook
no adjustment in price controls,
and added that he would "accept
no public disorder while the
North African situation is so
disturbed."
The inflationary effect
of wage increases in conjuction
with a general loss of confi-
dence in economic circles is
already reflected in the rise in
the black-market rate for the
dollar from 364 to 388 francs
in the past month. A break in
the current economic prosperity
or an all-out strike effort might
well be exploited as a con-
venient issue to bring down the
Faure government.
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SINO-SOVIET BLOC PROMOTES UNOFFICIAL CONTACTS WITH JAPAN
While Soviet-Japanese re-
lations have been highlighted
by stalemates on several major
issues in London, a number of
exchanges between the countries
of theSino-Soviet bloc and
Tokyo on lower. levels-,-in
volving cultural, economic and
political contacts--have been
taking place on an active.and
friendly basis.
The Communists, by encour-
aging such contacts, apparently
are trying to dispel Japanese
reservations with respect to
normalizing relations with bloc
countries. While'Tokyo has
avoided actions implying of-
ficial recognition of Peiping
and adopted a cautious approach
in the negotiations with the
USSR in London, it has openly
encouraged informal contacts.
One of the chief induce-
ments which Peiping and Moscow
have offered Japan--even before
relations are normalized--is
the promise of expanded trade.
Sponsors of private trade and
fishing agreements between
Japanese firms and the Chi-
nese Communists last spring
failed to obtain official
participation by the Japanese
government but laid the ground-
work for a renewed effort next
year. The Communist refusal
to accept more than a limited
quantity of nonembargoed items
has led influential Japanese
businessmen to support the
campaign for a reduction of
China trade controls.
Efforts to Expand.Trade
Moscow has had a trade
mission in Tokyo for more than
a year negotiating contracts
which exaggerated press reports
have set at $94,000,000 each
way. Only an insignificant
portion has been realized,
however, because of high Soviet
prices, financing difficulties
and uncertainties over the
quantity of Soviet products.
Khrushchev told a Japanese
parliamentary delegation last
month that the Soviet Union
would place "large" orders for
Japanese.ships and ship repairs
in exchange for Russian oil,
gasoline, coal and timber.
Beginning with the UN-
sponsored ECAFE conference in
Tokyo earlier this year, when
a Czech delegate contacted
Japanese businessmen, the Eu-
ropean Satellites have exchanged
unofficial trade delegations,
negotiated contracts and in-
vited Japanese businessmen to
attend sample fairs with all
expenses paid. Even North
Korea and North Vietnam have
participated in the Communist
trade offensive.
While there has not been
a major rise in Japanese trade
with the bloc, the continuing
exchange has served to keep
Japanese interest alive. A
former conservative Diet member
was asked by the Japanese Agri-
culture and Forestry Ministry
to negotiate with Moscow for
the purchase of wheat, ferti-
lizer, and soybeans. The USSR
agreed to treat his delegation
as a "civil group with the proxy
of the Japanese government."
Japan's main interest,
however, is in Communist China,,
which possesses the iron ore,
coal, soybeans and oilseeds
Japan hopes to import in return
for Japanese finished goods.' The
Hatoyama government has already
announced its'intentio n to seek
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6 October 1955
a, reduction of the embargo to
accomplish this objective.
In addition to trade,
"good-will" missions shuttling
back and forth between Japan
and the Communist bloc have es-
tablished ties between politi-
cians, journalists, farm and
labor leaders, and prominent
figures in the arts, sciences,
and professions. Sport teams,
musicians and ballet troupes
have added their weight to the
Communist propaganda, campaign.
Liao Cheng-chih, a member
of the Chinese Communist Party
central committee, reportedly
told a. Japanese delegation that
Japan and China should first
establish commercial and cul-
tural relations, with diplo-
matic relations to follow.
Liao stated that Peiping wished
to invite more Japanese to
visit China, particularly writ-
ers and others who wield influ-
ence over segments of the Jap-
anese population. He specifi-
cally mentioned former prime
minister Katayama. and former
foreign minister Arita, both
prominent in the antirearmament
movement.
Japanese visitors to the
Sino-Soviet bloc are often flat-
tered by being given interviews
with top Communists. Last
month, Buiganin and Khrushchev
met for two hours with Japanese
Diet members and used the oc-
casion to belabor the Japanese
government for "artificially
drawing out the London talks,"
in contrast with the five days
of negotiations with Chancellor
Adenauer. The Japanese were
told to follow an "independent"
policy and establish closer
ties with the Orbit, or be
drawn into an armaments race.
Khrushchev's exposition of the
Russian position drew an en-
thusiastic response from several
Diet members who indicated they
would press for Japan's accept-
ance of the Soviet position on
their return.
The USSR and Japan have
had an especially spirited ex-
change on matters involving
nuclear subjects. Moscow has
often exploited Japanese anti-
Western sentiments in this
regard, and has regularly sent
delegations to Japanese scien-
tific congresses and to cere-
monies commemorating the bomb-
ing of Hiroshima. and Nagasaki.
As a result, Moscow has been
successful in getting wide Jap-
anese support for its demand
for a. ban on nuclear weapons.
Numerous Communist fronts
in Japan support the "peace
offensive" in its various forms
and promote visits to and from
the bloc. They are normally
headed by respected Japanese,
such as Fusanosuke Kuhara, pre-
war conservative party president
and one of the lesser Zaiba.tsu--
prewa.r industrial--leaders, who
is presently visiting Peiping.
Most fronts are organized by
covert Communists in close co-
ordination with the unofficial
Soviet mission in Tokyo. Overt
relationships with the Japanese
Communist Party are avoided.
Effects on Japan
Unofficial contacts between
Japan and the Communist bloc
have on the whole been a propa.-
ganda success for the Communists,
despite an undercurrent of cau-
tious criticism voiced by recent
Japanese visitors. Most Jap-
anese tours of the bloc have
produced a rich harvest of com-
plimentary articles, interviews,
books and speeches. Some Jap-
anese try to justify their
highly biased public views by
claiming that any other stand
would be "unpopular," therefore
commercially unsalable. Cer-
tainly, there has been much
wishful thinking in Japan,
based on a, universal desire for
trade and diplomatic relations
with the mainland.
These contacts have given
a strong impetus to neutralism
in Japan. They have weakened
public support for a~favora.ble
WN 10-% V% W9
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6 October 1955
settlement of Japanese claims
advanced at the London talks.
They have increased pressure
for recognition of Communist
China and the reduction of trade
controls, and by convincing
many Japanese of the.sincerity
of the Communist "peace offen-
sive," they have weakened sup-
port for rearmament and Japanese
participation in an Asian de-
fense system.
Moscow probably considers
that the success of its unof-
ficial contacts with Japan will
eventually force the Japanese
negotiators in London to nor-
malize relations with the USSR
substantially on:Soviet terms.
NEW SOVIET POLICY ON TOURISM
T. add luster to its cam-
paign "peaceful coexistence,"
the Sovi Union in the last
few months as been promoting
"People's Democracies."
fact, TASS reported on Sep-
tember that a group o oviet
managers, engineers: workers
an exchange tourists with
other countrie For the first
time in Soviet h tory, a small
number of tourist ithout of-
ficial status are g 'ng abroad,
and for the first tim since
the 1930's, unofficial reign
tourists are being admit to
the Soviet Union in conside ble
numbers.
In August, a group of
about 250 Soviet tourists>is-
ited Warsaw and other P~ ppish
cities. A short time, a.ter,
the Soviet press a unced that
a. group of tourist had left
Moscow for a. 12(ay trip to
Stockholm, Go,eborg and other
Swedish cites- s. The press also
reported -i.at Finnish tourist
agencie - ha.d agreed to arrange
a sin;,- ar trip to Finland. Tours
ofoviet citizens "in the near-
es future" are being arranged
to Communist China and the other
Budapest for a 7X to 10-day
trip through gary.
Ther Aare indications that
other c tries will be included
in Soy' t tours. According to
unv fied Soviet reports,
Pr' es for tours to Norway
,
rubles), Poland (1,200 rubles),
and France (6,000 rubles) have
,500 rubles), Italy
(3,000
een posted on factory bulletin
rds. One of these sources
all` edly said that no one in
his ht mind would express
in ere in a trip to Paris,
and that 'n any case, only hand-
picked per ns would be allowed
to travel th e.
B. S. Rzha
Soviet officials
program, has expres
that Soviet tourists
invited to the United
He estimated that a, tota
2,000 Soviet tourists willNtravel
abroad this year.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
6 October 1955
Platform
The p form for the
unified party s incorporated
ambiguously phra policy
statements which glover
sharply differing view The
compromises appear to have
been made largely at the ex-
pense of the more moderate
Right Socialist policies, alE.
though a Left Socialist Party
convention has criticizes the
platform for failing to state
the "peace princ.pes" of the
party. The platform asserts
that Japan i,9 oppressed by the
United Mates for military
reas f , and that Japan should
s p the security treaty and
e administrative agreement
AUSTRIA SINCE THE
In the two months since
the Austrian state treaty came
into effect on 27 July, Austria
has cautiously adjusted to new
conditions within the general
pattern of neutrality formed
by ten years of occupation, and
on the whole has fared a little
better than anticipated.
The two governing coali-
tion parties--the People's
Party and the Socialists?
have reached compromises on
the procedure for forming the
new Austrian army and on the
disposition of the formerly
Soviet-held industries. The
latter have generally proved to
be in better economic shape
than had been expected. The
government has made minor prog-
ress in eliminating local
Communists from influential
positions in these industries
and has removed the remaining
Communist police chiefs in
Vienna.
with the United States and
seek a neutral position with-
out dependence on either the
Communist or the free world.
The-S&cialists' prospects
for altAining power in the near
fuure are limited, but could
b4', improved by the continued
political instability of the
to
nservatives and their failure
solve Japan's vital eco-
nomic
of a Sod
oblems. The policies
because of
ist
attitudes of
Left Socialist 1
emphasize neutralis
ers, would
relations with the Com
bloc.
ist
STATE TREATY
The Austrian government
is making every effort to
appear neutral, not only in
foreign policy, but also in
domestic affairs having possi-
ble international implications.
This caution is well illustrated
by the recent removal of its
appointee as personnel director
of the newly acquired oil
administration after a. Communist
press campaign had unearthed
his former connection with the
American embassy in Vienna.
Creation of the Army
Current plans for the
armed forces are relatively
modest. The army will be
brought to a strength of about
30,000 in the next 18 months.
Plans for the development of an
air force have been shelved as
too expensive to be considered
at present. A large share of
the army's equipment is expected
to come from the United States
government,
anti-American
more extreme
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6 October 1955
and France. Under pressure of
a rebuke from the Soviet ambas-
sador on this score, however,
Vienna announced a "request"
for Soviet military equipment
on 15 September and has since
described to an American offi-
cial the small arms, artillery,
tanks, and other equipment
that the USSR has arranged to
transfer to Austria.
A political struggle be-
tween the coalition parties
for control of the army had
been anticipated, but a work-
able compromise was reached in
a law passed in September.
Under this, the army is admin-
istered under the chancellery,
where the People's Party is
represented by Chancellor Raab
and the Socialists by Vice
Chancellor Schaerf. The army
organization itself is headed
by a member of the People's
Party with a Socialist deputy,
and a similarly dual distri-
bution of the top positions is
to prevail throughout the
military hierarchy.
Former Soviet Enterprises
The two parties have been
even more at odds over the
ultimate disposition of the
oil fields and varied indus-
trial plants formerly operated
by the USSR. The Socialists
want to absorb these assets
into their nationalization
program under the Ministry of
Nationalized Industries, which
they control. The conserva-
tive People's Party wants to
return the individual plants
to their original owners or
sell them to private capital.
Both parties, however, are
in full agreement on the
urgency of continuing the opera-
tion of former Soviet enter-
prises, which are of great
importance to Vienna and lower
Austria, and a resolution of
the more immediate problems
has already been achieved.
The government will operate as
nationalized enterprises about
15 large firms which were
originally included under the
nationalization laws passed in
1946 and 1947. All other firms.
will be held by the Finance
Ministry, which is controlled
by the People's Party, for
ultimate disposition. Both
parties will be represented in
the administration of these
properties.
It now appears probable
that this compromise will go
even further. Under the pro-
jected arrangement, the Finance
Ministry would have to obtain
Socialist approval of the sale
or return to private owners of
any plants it administers,
while People's Party represent-
ativ e s would continue to be
included in the management of
the state-owned plants.
So far at least, the
purely economic problems of
administering the former Soviet
enterprises have proved less
difficult than expected. Aus-
trian technicians have expressed
surprise at how well a num-
ber of the factories have been
maintained, and it now appears
that the oil reserves are over
30,000,000 tons greater than
the amount Austria had counted
on to make the deliveries to
the USSR which are specified in
the treaty. Production is
handicapped, however, by a
severe shortage of technical
personnel.
Eliminating Communist Influence
More serious difficulties
are posed by the problem of
removing Austrian Communists
from their entrenched positions
in the formerly Soviet-held
enterprises. The Austrian-
Soviet agreement of 15 April
specified that no worker can
be dismissed solely for Com-
munist affiliation. It is not
always possible to shift work-
ers to less responsible posi-
tions or dismiss them because
their jobs have been abolished.
Communist control of the labor
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CURRENT INTELLIGENCE WEEKLY SUMMARY
6 October 1955
organizations in formerly
Soviet-controlled plants will
be even harder to overcome.
In Vienna, where the
police in the Soviet sectors
were heavily Communist infil-
trated, the government has
removed all the remaining
Communist police chiefs. The
Austrian Communist Party,
which has never polled more
than five percent of the popu-
lar vote except in a few areas
under Soviet occupation, will
be further weakened by such
moves, but it must be assumed
that there are still numerous
penetrations by Communist
agents of the police and other
government agencies both in
Vienna and the provinces.
International Communist
organizations, such as the
World Federation of Trade
Unions and the World Peace
Council, which maintain their
headquarters in Vienna, will
not be seriously harassed by
the Austrians. The government
has stated it intends to deport
any of their officials living
in Vienna without proper
documentation, but it has been
scrupulously legal in its
treatment of the organizations
and has allowed them to remain
there despite the objections
of some Western powers.
Foreign Policy
The government has thus
far made no indicative moves
in international affairs, but
some hint of the kind of neu-
trality it will pursue in the
future is found in its current
position on the Danube question.
There is already consid-
erable pressure from business-
men and numerous government
officials for immediate Aus-
trian adherence to the Soviet-
dominated 1948 Danube Conven-
tion, and such a move is gen-
erally expected within the
next year. The Foreign Minis-
try, however, thus far has
avoided any move in this direc-
tion and is presumably waiting
for the opportunity to balance
such action with a correspond-
ing move toward association
with some Western international
organization such as the Coal-
Steel Community.
SECRET
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29 September 1955
EGYPTIAN ARMS DEAL
WITH SOVIET BLOC
Prime Minister Nasr's
announcement on 27 September
confirmed reports that Egypt
had concluded an arms deal with
a member of the Soviet bloc on
or about 21 September 1955.
Deliveries are to begin in late
October.
Conclusion of this deal
with Egypt increases the likeli-
hood of similar Soviet bloc
agreements with other Arab
states, such as Saudi Arabia
and Syria. The sustained high
level of arms production in
the USSR during the postwar
period and the USSR's armed
forces modernization program
have resulted in large surpluses
of serviceable military equip-
ment of good quality by Middle
Eastern standards. The USSR
therefore can provide war
materiel to non-Orbit states
in such quantities as its
political interests warrant.
In the Middle East, Soviet
arms offers serve to encourage
a reduction of dependence on
the West and the formation of
closer ties with the Sino-
Soviet bloc. In the specific
instance of Egypt, Moscow may
also intend to make it possible
for Egypt to supply North
African nationalists with ad-
ditional light weapons.
Nasr's public statement
claimed that the deal had been
made with Czechoslovakia. The
Egyptian prime minister how-
ever, told
that the
"Soviets" were to provide him
with jet fighters, medium jet
bombers, tanks, artillery, Y.
boats, and other heavy equip-
ment under the terms of an
agreement. Other reports have
claimed that Egypt was"dealing
directly with the USSR.
25X1 C /_1j^'
If fully carried out, the
agreement would give Egypt
marked superiority over
Israel in aircraft and tanks.
In terms of actual military
capabilities, however, the im-
pact of the agreement would be
slow and uncertain. Egypt
is having difficulty in keeping
even its present small air force
operational.
Egypt lacks competent per-
sonnel all along the line and
is apparently unable to develop
the various skills needed in
a modern' military establish-
ment. Nasr has stated that
Soviet. technicians would remain
in Egypt only three months,
which is too short a period
for them to make any real con-
tributjon to Egyptian military
efficiency.
Nasr is taking a strong
line in response to Western
expressions of concern Over
the arms agreement. He told
the American ambassador on 26
September that he would watch
intently to see if the United
States--now gave arms to Israel,
and that if it did he could
only conclude that the US bad
nothing but hostile intentions
toward Egypt. Nevertheless,
Nast is still inclined to be
friendly to the United States,
and his position may be strength-
ened internally by the arms
agreement. Nasr hag always
insisted, and he repeated this
on 26 September to Ambassador
Byroade, that he did not want
war with Israel and would not
start such a war.
Israel can be expected
to make maximum representations
to the United States, Britain
and France, demanding new
guarantees and arms for itself,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
29 September 1955
chirdewan, like Ulbricht,
is an N erienced cadre and
organizat man. He has also
handled SED ations with the
West German Co nist Party--a
qualification whi appears to
have particular sign 'cance
at the present time. A 8, he
is 16 years younger than t
aging Ulbricht. Arrogant an
ambitious, he reportedly ham.'`
challenged Ulbricht's po,4bies
on several occasions though he'
has been generally---in agreement
with them. 4,1ough Schirdewan
spent the ewar and war years
in Germe concentration camps--
anO?noot, like Ulbricht, in
1`oscow, this fact may not be con-
The New Argentine Government
The efforts of the Argen-
tine government to solidify
its position continue to meet
obstacles. The pro-Peron Gen-
eral Confederation of Labor
has withheld any announcement
of allegiance to the new regime,
and among provisional President
Lonardi's supporters the army
and navy are already reported
at odds on the timing of new
elections. While some key of-
ficials have expressed a. desire
for close relations with the
?Jnited States, there are also
indications of extreme nation-
alism in the government.
The General Confederation
of Labor (CGT), perhaps the
;greatest potential source of
trouble for the new government,
has made no public profession
of allegiance, while the govern-
ment seems to have made a, move
toward appeasing the CGT. Hugo
di Pietro, secretary general of
the confederation, stated in a
radio speech on 25 September
that Lonardi had agreed to guar-
antee Peron's safety and all of
labor's social gains, as well
as to.refrain from intervening
in the CGT and member organiza-
tions and from "modifying" the
status of the newspaper, La
sidered prejudicial under pres
Willi Stoph may- be" slated
eventually to ogeipy the post
of premier the meantime,
he is p ,o1ia.bly scheduled to take
ove he post of defense min-
..~i~s er, now that an East German
army is to be formed (see Part
III, p.3). Like Schirdewan,
is a longtime German Com-
mu
in Ge
t who spent the war years
,ny. He worked closely
with Soy
building up
authorities in
e East German ammed
forces and sec
prior to his appd
ty services
tment as min-
ister of the interior
n 1952.
Prensa,"through executive
a~ ction."
This statement, however,
leaves the possibility of ju-
dicial action for the recovery
of La. Prensa, confiscated by
Peron in 1951 and then "sold"
to the CGT. Final decision
as to ownership has been pend-
ing in the courts. It is within
the power of the.courts to
return the paper to former owner
Gainza Paz.
Lonardi is already encoun-
tering disputes among his own
supporters over his stated de-
sire to hold elections--pre-
sumably for president, vice
president, and congress--in
six or seven months. The Per-
onista Party is the only one
with any organization and it
would possibly poll a strong
plurality, if not a majority,
if elections were held soon.
25X1 C
the army maintains that 25X1C
18 months are needed to pacify
the country, while the navy
wants elections in six months.
Vice President Admiral Rojas
has stated that the navy will
leave the government if its
demands are not met.
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29 September 1955
25X1X6
Service rivalries on other
questions also could threaten
the stability of the government,
particularly since Lonardi has
been reported to have little
support in the army. Accord-
ing to one report, he was chosen
president through the inter-
vention of his brother,a rear
admiral.
Extreme nationalist in-
fluences may be strong in the
new government despite the ex-
pressed desire of key officials
for close relations with the
Peron-sponsored contract for 25X1X60
a US oil company to develop
Argentina's petroleum resources
will be dropped. Lonardi has
stated that the contract is
not "advantageous" to his coun-
try and has said that he would
do "whatever is necessary to
acquire the technical equip-
ment required for us to drill
on our own." (SECRET)
r% 711 rim
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22 September 1955
,munists have a firm grasp on
the ?ch organization. Be-
cause of absence of close
ties with Wes churches, the
whole problem is acute than
in the western Satelli nd
long-range program of strength-
ening their controls over..a11LL
areas of life. Key poiihies such
as absorption of the churches
into the.na"t-ional front organiza-
tlons'and detachment from their
Western connections, notably the
East Germany. Relative quie
also prevails in Albania, where
the population is _argety Moslem
with a sizablpw odox minority.
he East European regimes
will continue to pursue their
atican, remain unchanged. While
ma some gestures toward the
churchehe regimes have not
abandoned t e sic Communist
goal of destroyi ligion as a
dangerous competitor
Marxist-Leninist faith.
THE PUSHTOONISTAN PROBLEM
The Pushtoonistan problem
arises from the campaign waged
by Afghanistan for the past
eight years for the creation
of a. new independent state made
up of the Pushtu-speaking areas
of West Pakistan. The new
state would inevitably be an
Afghan satellite. The campaign
is based in large part on Af-
ghanistan's claim'that British
India. in 1893 forced acceptance
of what is now the Afghan-Pak-
istani border.
There is no political or
economic basis for the state
envisaged by Kabul's Pushtoon-
istan movement. The tribes in
the area in dispute have vir-
tually no economic assets, and
many of them have never had a
common ethnic allegiance.
Although most Pushtoons
are satisfied with the role
played by the Pakistani govern-
ment in regard to them, the
Pushtoonistan movement tends to
intensify and perpetuate unset-
tled conditions on the border.
It also is a constant source
of friction between Kabul and
Karachi, and as such poses a
continuing threat to stability
on the northwest frontier of
South Asia.
Land and People
The area. claimed for Push-
toonista.n comprises more than
half of the total territory of
West Pakistan. All of it was
under Afghan rule in the 18th
and 19th centuries. Its popu-
lation is about 7,000,000, of
which about 5,000,000 are Push-
toons (also called Pathans).
There are an additional 5,000,-
000 to 7,000,000 Pushtoons in
Afghanis I,a.n, out these would
not be included in the proposed
state.
The political and cultural
heartland of the Pushtoons is
the Tribal Area, a narrow strip
on the Pakistani side of the
Afghan border. The 2,500,000
well-armed tribesmen who live
here have always considered
themselves exempt from Pakistani
law. They have almost no eco-
nomic resources, and the rulers
of the more fertile plains have
had to pay them subsidies to
keep open the vital communica-
tion routes through the area,
the most noted of which is the
Khyber Pass.
The various Pushtoon clans
on both sides of the border, the
most important of which are the
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Mohmands, Afridis, Wazirs, and
Mahsuds, constantly feud among
themselves, and there is prac-
tically no support among them
for Pushtoonistan as a political
entity. Few feel national al-
legiance toward either Pakistan
or Afghanistan.
HE PUSHTOONISTAN PROBLEM
As the British prepared
to leave India in 1947, Kabul
raised the question of dispo-
sition of the Pushtu-speaking
areas. When Pakistan refused
to consider any adjustment of
the Durand boundary, Afghanistan
launched its Pushtoonistan
movement.
~Pushtu-speaking area
- i Tribal area (Pakistan)
AFRIDIMajor Pushtoon tribes
0 too 200
MILES
22 SEPTEMBER 1955
UNCLASSIFIED
The. Pushtoonistan
Movement
The consistency
of Afghanistan's eth-
no-linguistic argu-
ments on behalf of
the movement is com-
promised by the pro-
posed exclusion from
Pushtoonistan of those
Pushtoons who are Af-
ghan nationals. More-
over, Kabul's insist-
ence on inclusion of
the sparsely populated
non-Pushtoon areas of
southern Baluchistan
suggests that its cam-
paign is at least
partly motivated by a
desire for an outlet
to the sea via the
new satellite.
Within the Afghan
government there is an
Background of Dispute
Under the Durand Agree-
ment of 1893, Afghanistan and
British India agreed on an in-
ternational boundary which
placed the Khyber and other
strategic access routes to
India in British territory.
Afghanistan has always insisted
the agreement was made under
duress and continued to claim
the right to interest itself in
the affairs of the Pushtoon
population beyond its boundary
on the grounds of kinship and
former suzerainty. There are
also practical reasons for this
interest. In 1929, these tribes
were responsible for the over-
throw of King Amanullah and the
establishment of the present
dynastic line in Kabul.
extensive apparatus which car-
ries on propaganda at home and
abroad, pays subsidies to tribal
leaders, maintains an excellent
free school for several hundred
Pushtoonistani youths, and pro-
duces maps, official documents,
and other trappings of inde-
pendence:for the Pushtoonistan
area. In addition to keeping
Kabul's claims alive, these
activities also help to keep
the Pushtoon tribe from again
menacing the Afghan capital.
The most extreme advocate
of Pushtoonistan in Afghanistan
is Prime Minister Daud, but al-
most all of the ruling group--
who are themselves Pushtoons--
are publicly committed to it.
Shooting incidents are a
continuing occurrence on the
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22 September 1955
border. They have not increased
significantly in recent years
and many routine disturbances
are attributed by Kabul to a
nonexistent agitation for in-
dependence.
A few influential tribal
chiefs are in exile in Kabul,
and one of them was able in
December 1952 to raise 5,000
men who set out to plant the
Pushtoonistan flag on the banks
of the Indus River. This force
was driven back by Royal Pak-
istan Air Force bombing. Sever-
al similar incidents on a smaller
scale have taken place since.
The Latest Flare-up
In March 1955, the Pak-
istani government began to im-
plement a plan to merge all the
subunits of West Pakistan into
a. single province, thus elimi-
nating all distinctive status
for the Pushtoon areas. This
occasioned a violent speech by
Afghan prime minister Daud,
which was followed on 30 March
by mob attacks on Pakistani
diplomatic establishments in
Afghanistan.
The resulting quarrel be-
tween Kabul and Karachi dragged
on for over five months, chiefly
because both sides tried to use
it to promote their views on
Pushtoonistan. The settlement
reached on 7 September left the
basic Pushtoonistan issue un-
resolved.
The "one-unit" plan for
West Pakistan also occasioned
the revival of a quiescent
movement within Pakistan for
Pushtoon autonomy under the
leadership of Abdul Ghaffar
Khan, a former Congress Party
leader.
Since 1947, India. has sup-
ported the Pushtoonistan move-
ment for two basic reasons:
(1) it has traditional eco-
nomic and political interests
in Afghanistan, and (2) unrest
on Pakistan's western border
relieves pressure on the east-
ern border with India over
quarrels which developed out
of partition.
Britain has taken no active
role in the controversy and has
steadfastly refused to comply
with Afghanistan's request for
denunciation of.the Durand Line
as an international boundary.
The USSR carefully avoided
involvement in the Pushtoonistan
matter until the past year, when
it began to manifest interest in
the proposed state. Should Mos-
cow decide to lend its support
to Pushtoon autonomy, it prob-
ably would be directed at in-
creasing difficulties for Paki-
stan. Soviet propaganda, has
claimed that Pakistan plans to
use the Pushtoons as cannon
fodder in Western-sponsored mil-
itary arrangements.
Most of the Middle Eastern
countries have deplored the
"squabbling between Moslem
brothers," and several have
urged Afghanistan to abandon
its position.
In 1950, the United States
offered its good offices in an
attempt to promote a settlement.
Prospects for Future
Since the Pushtoonistan
movement serves both to express
Kabul's irredentist feelings for
the area and to divert the
tribes from threatening the Af-
ghan government, it is unlikely
to be abandoned permanently.
Afghanistan's promise in its
recent settlement with Pakistan
to moderate its propaganda prob-
ably means only a short lull in
the Pushtoonistan dispute.
Pakistan is equally ada-
mant. Karachi has given priority
to economic and social develop-
ment of the Pushtoon areas, which
has to date more than offset Af-
ghan efforts to promote agitation
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22 September 1955
for independence. However,
little success has been achieved
in extending government control
into the more remote areas.
Recent increases in Amer-
ican ties with Pakistan and
Soviet contacts with Afghan-
istan tend to make the Pushtoon
area of greater interest in
world politics. The potential
key to control of eastern Afghan-
istan and northwestern Pakistan
lies with the fierce and unre-
liable tribes. Consequently,
the Pushtoonistan movement
serves to perpetuate a volatile
situation in an area which would
be of major importance in any
struggle for control of the
frontier of South Asia. d"NPRON"
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15 September 1955
11 facilitate the return of
C nese who feel they are being
pre nted from departing.
I s doubtful that all of
the rema ng 19 or 20 Americans
will be fr d in the near future.
Peiping has nsistently indi-
cated it will retinue to hold
some of them in finitely in
order to save fac to ensure
satisfactory action n Chinese
in the United States, nd to
secure concessions as e
11 Geneva talks develop. g has
informed Ambassador Johnso
that the remaining cases wi
be considered individually,
thus suggesting that there will
be no further mass releases.
Apparently the Chinese
wish to minimize discussion at
Geneva on implementation the
repatriation agreement. ftang
has told Johnson that ogress
on the remaining cas will be
reported to the Uni d States
through the Briti mission in
Peiping. This s ggests a
Chinese hope f early dis-
cussion of t second agenda
item, "othe practical matters
at issue.':
the principle of renunciatio
of force. Peiping's lates
comment on this concept s1 ports
previous indications th any
Chinese formula will based
on a withdrawal of `rica.n
forces from the Formosa Straits
area.
Previous emarks by Chou
En-lai sugg , that Peiping
will endea r to include among
the "pra ical matters" the
questio of military and intelli-
gence perations in the China
ions against China be resolved.
fting Western trade restric-
are Wang asked on 14 Sep-
te er that the question of
Nina by Americans might be
cussed. Peiping may also
tr o bring up for discussion
the lusion of Peiping from
the Un ed Nations, American
nonrecog tion of Communist
China, an he American commit-
Peiping a st certainly
calculates, howe , that major
questions cannot b ,resolved
under the limited te" s of the
Geneva talks. The Ch se can
thus be expected to pre for
A arently in anticipation
of d elopments in the Wang-
Jo son talks, the Chinese
C munists last month seemed
be preparinga position on
Soviet-Japanese Negotiations
In the Soviet-Japanese
discussions in London, the USSR
has made minor concessions on
the issues of returning prison-
chds of war and res:x.ing Soviet-
helu island territory to Japan.
On the third major point at
issue, however, the USSR has
continued to argue that naviga-
tion on the Sea of Japan must
be regulated by.the riparian
powers,' a demand the Japanese
a higher-level meeting to
discuss the whole question
of "relaxing tensions."
~!!Sl~Al1~lf )
have insisted they cannot accept
since it involves an interna-
tional body of water.
Soviet delegate Malik had
told Japanese delegate Matsumoto
repeatedly that the prisoner
issue would be solved when rela-
tions were normalized. On 5
September, however, Malik gave
Matsumoto a list of prisoners
on whom the USSR would declare a
496sATi.T
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CURRENT INTELLIGENCE WEEKLY SUMMARY
15 September 1955
"special amnesty,"
effective only when
an agreement was
reached on the nor-
malization of rela-
tions. The list con-
tained 1,365 names--
a number smaller by
several thousand than
Japanese estimates,
but described" - by
Malik as the total
number held by the
USSR.
On territorial
issues, the USSR had
insisted that this
question was solved
once and for all by
the Yalta and Pots-
dam agreements. Ma-
lik originally re-
fused to consider
the possibility of
returning any Soviet-
held territory pre.-
viously belonging to Japan,
which included southern Sakha-
lin and the Kuril Island chain.
At the 30 August meeting, how-
ever, he offered the return of
Shikotan and the Habomais, very
small islands just north of
Hokkaido. On this occasion,
Malik did not attach conditions
to the offer.
On 6 September, however,
Malik announced that the USSR
was ready to discuss the "tech-
nical details" of handing over
the islands and stated that in
view of the present situation
in the Pacific and its bearing
on the security of the USSR,
the transfer of the islands
would be conditioned on Japan's
agreement not to use them for
military purposes. He said the
USSR would not accept the pros-
pect of two additional bases in
the area.
It is possible that Malik's
original offer on 30 August was
designed to influence Japanese-
American discussions then in
progress in Washington by giv-
ing the Japanese encouragement
to press for the return of
islands occupied by the United
States.
The USSR's demand that
navigation in the Sea of Japan
be controlled by the riparian
powers is probably regarded by
Moscow mainly as a bargaining
point to obtain concessions on
other issues. In Moscow's view,
a "closed" Sea of Japan would
allow free navigation for com-
mercial vessels of all nations,
but would restrict warships of
nonriparian powers.
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15 September 1955
The Japanese have insisted
that the Sea of Japan is an
international body of water, and
navigation on it must be unre-
stricted. The Japanese will
probably insist that the prob-
lem has no connection with a
peace treaty between the two
countries, and that it has a
bearing on Japan's future and
its current arrangements with
other countries, rather-than
problems evolving from World
War II. Tokyo's final position
in the negotiations will be
largely determined by domestic
political considerations.
Refugee Influx from East Germany
Rea es wo-year Pea
Th
tarp sere
nomic condi
despair of pd
East Germany ha
ons, and rising
tical reform in
number of refugee
Germany during rec
brought the
from East
weeks to
Prime Minister Hatoyama might
decide that the only way to
strengthen his government, which
has been weakened by criticism
of his foreign minister's talks
in Washington, is to reach a
quick agreement with the USSR.
Although Moscow's willingness
to return Shikotan and the Habo-
mai Islands has received little
publicity and aroused no favor-
able comment, if Hatoyama de-
cided to make a deal--as has
been rumored--he could play up
the Soviet offer as a major con-
cession with good prospects that
it would have considerable pub-
lic appeal.
the highest point since June
1953, the month of the ;anti-
Communist riots.
During the Welk ending 3
September, 4,17r refugees ar-
rived in We~,t Berlin, the major
cape center. Of
EAST GERMAN REFUGEES FLE
these,1,064 were men
of military age. Dur-
ing the first half of
1955, a total of some
124,665 East Germans
escaped, compared with
194,080 for all 1954.
Since mid April,
approximately 13,000
potential recruits
or an East German
y have fled to West
area flow was set
off by stepped-up
recruits drive for
the Garris ed Peo-
ples Police KVP) and
the threat of tighter
internal security:
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desire to escape mili-
e and depressed eco-
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15 September 1955
SIGNS OF SHIFT IN INDIAN POLICY TOWARD THE UNITED STATES
Indian prime minister Neh-
ru, his political adviser V. K.
Krishna Menon, and Indian repre-
sentatives at the United Nations
and on the International Control
Commission in Indochina have re-
cently made statements which
were unusually sympathetic to-
ward the United States and hint-
ed at an imminent change in
India's foreign policy. These
statements, together with other
information from New Delhi that
Nehru has been reviewing foreign
policy problems since his re-
turn from the USSR, suggest that
Nehru has decided to abandon his
policy of strict neutrality and
to adopt a more friendly atti-
tude toward the United States.
This would be a major
change in Indian thinking. Any
change would probably not be
expressed in dramatic actions,
and Nehru would probably con-
tinue to stress his country's
independence of thought. There
may, however, be less criticism
of the United States, greater
co-operation on the part of
Indian officials, and a relax-
ation of restrictions on Amer-
ican business interests, India's
policy on multinational problems
such as international air agree-
ments.would not necessarily be
affected.
Political and Economic Motives
Nehru's apparent change in
attitude may spring partly from
his recent visits to the USSR
and Communist China, during
which he was impressed by the
political and economic might
of these countries. Nehru is
reportedly also concerned over
the inroads the USSR has made
into Afghanistan and the in-
creasing pressure China has
exerted on Nepal. With Afghan-
istan as an example, he may
suspect the motives behind So-
viet economic aid to India.
Viewing India's world position,
therefore, Nehru may have con-
cluded that India needs Western
friends to balance the combined
power in Asia of the Soviet
Union and China.
As a result of his trips
to Communist countries, Nehru
seems convinced of the need for
India to make rapid economic
progress to keep pace with
China, to discourage the growth
of Communism, and to ensure the
continuation of a Congress Party
government in India.
Nehru knows that India's
second Five-Year Plan, which
goes into effect in 1956, con-
tains a large gap between fi-
nancing available from Indian
resources and -what is actually
required and must be obtained
through foreign aid. Being
aware of the current trend on
the part of the United States
to cut down foreign aid allot-
ments to certain areas, Nehru
may feel that India must be
assured of the continued flow
of large quantities of economic
assistance from the United
States to make the new plan a
success and achieve his aims.
Finally, Nehru may be chaf-
ing under the restrictions of
the neutrality policy which pre-
vent him from freely expressing
his views or making positive
moves in any direction without
exposing himself to criticism
either from the West or the
Sino-Soviet bloc,
Evidence of New Attitude
The evidence supporting
the possibility of a new Indian
attitude is as follows:
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15 September 1955
25X1X4
25X1X4
25X1 C
25X1A
Among oth-
er things, Indian officials
noted Nehru's markedly more
friendly attitude toward the
United States and the apparently
favorable impression Ambassador
Cooper made on him.
On 30 August. the American
consul general in Madras report-
ed that V. K'. Krishna Menon,
during a week's stay in Madras,
had vehemently defended the
American government both pub-
licly and privately, emphasiz-
ing the United States' peaceful
intentions and essential good
will,
consul general also reported
on 31 August, the American
sioned" and convinced that India
must "unobtrusively but surely"
bring its foreign policy closer
to that of the United States.
Nehru felt this would be easier
now that "America for the first
time since Indian independence"
was beginning to understand that
"Indian hobnobbing with the
Chinese and Russians" was-dic-
tated by security interests
alone.
Nehru. had
returned
from the Soviet Union "disillu-
On 1 September, the Ameri-
can ambassador in Cambodia
reported that the Indian chair-
man of the International Con-
trol Commission there had stated
that India would inevitably have
to take a position "on one side
or another" rather than maintain
its neutralist attitude.
On 6 September, Nehru crit-
icized in parliament a Chinese
Communist claim that the United
States was involved in the crash
last April of an Indian airliner
carrying Chinese officials to
the Bandung conference. Nehru
said he had not seen the "re-
motest proof" that the United
States was involved and that
unsupported charges merely
"vitiate the atmosphere4"
Nehru's statement in par-
liament on 6 September clearly
indicating that he intended to
prevent both mass marches and
individual penetrations into
the Portuguese territory of
Goa in the future may also be
indirectly connected with a
decision not to antagonize West-
ern nations. 25X1X6
25X1X6
On 11 September,
in brief -
ing the UN delegation before its
departure Nehru had said that
relations with the United States
had grown closer. Nehru said
that India must feel closer to
the United States and the West-
ern powers than to the Sino-
Soviet bloc although it was not
in India's interest to alter
its nonalignment policy at pres-
ent. He added that India must
not press the anticolonial issue
to the embarrassment of the
United States and Britain.
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15 September 1955
ltural contacts are now being
op ly promoted by Paris as an
admi ted "'first step" toward
ultim \tolderica on.
gn minister
Spaak n officials
in Breptember that
"the to recognize
the Cese regime."
Althosince agreed
to delay taking thNan'; step,
Belgian political ublic
opinion favors early a ion in
this direction.
25X6
andung conference
While recognition of Peiping
ar and in other
and economic contacts
the year, Peiping has
a special effort to im-
e relations with the Afro-
an nations. Peiping's
for Egyptian recognition, ld
then using Egyptian influence
to induce other Near Etern
governments--primarily Saudi
Arabia and Syria--t``follow
Egypt's lead.
To this ed, Chou En-lai
is allegedlysalanning to visit
Egypt befo the end of this
year. Hrmay succeed in es-
tablisYl:ng diplomatic relations.
Cai ? a,nd Peiping have recently
concuded agreements providing
f the barter of Egyptian
,cotton for Chinese rolled steel.
Both Saudi Arabia and Syria
have received friendly'over-
tures from Communist China.
does" of necessarily carry with
So.
rt for Peiping's ad-
it su
mission o the UN, it does por-
tend an e',ntual showdown in the
UN on the stantive issue of
Chinese reps' ntation. More-
over, UN membe which recognize
or are consider recognition
of Peiping wouldb+ likely to
view the establishmt of a UN
study commission as a" important
step toward Peiping's a4mission
to the UN.
trategy apparently calls first
POST-GENEVA PROSPECTS FOR EAST-WEST TRADE CONTROLS
One of the major conse-
quences of the "Geneva spirit"
seems likely to be a further
relaxation of Western controls
on exports of the Sino-Soviet
bloc. The pace and extent of
this deterioration may depend
largely on the outcome of the
Big Four foreign ministers'
meeting in October, where an
important topic will be
"measures to being about a pro-
gressive elimi;iation of barriers
which interfere with free com-
munications and peaceful trade
between peoples."
Many COCOM members have
made it clear they now feel more
strongly than ever that the
present system of export con-
trols is too stringent, and
that the differential between
the China list and other con-
trol lists should in particular
be eliminated.
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15 September 1955
The Western Big Three have
accepted the view that, given a
general East-West detente,
"peaceful trade" is an issue on
which some concessions can be
made, "even to the extent of
accepting some risk." They also
agreed before Geneva that al-
though the export control sys-
tem was not to be discussed as
such, Moscow should be given to
understand that the system would
be re-examined if "substantial"
Soviet concessions were forth-
coming in "other fields."
Many COCOM members, how-
ever, are eager to offer con-
cessions for the mere promise
of future benefit. Their long-
standing aversion to "economic
warfare," their desire to re-
sume "normal" trade relations
with the Communist bloc, and
their doubts about the efficacy
of the present control system
have all intensified recently.
If the Soviet Union main-
tains its conciliatory attitude
through October, these nations
will probably be encouraged to
(1) expand East-West trade in
nonstrategic goods, (2) continue
their opposition to measures
aimed at tightening the present
control system,and (3) intensi-
fy their efforts to abolish the
"China differential" and lower
the level of controls on trade
with the whole Sino-Soviet bloc.
Nonstrategic East-West Trade
From 1949 until mid-1953,
trade in nonstrategic items
between the West and the Sino-
Soviet bloc declined generally.
Western trade with Communist
China in 1954 was below that
for 1953. In trade with the
USSR and its European Satellites
in 1954, Western exports in-
creased 35 percent and imports
rose 22 percent; the value of
this trade was still only 2.9
billion dollars, however, a
tiny fraction of the free world's
total trade.
Within the framework of
this rather limited commerce,
TOTAL TRADE : SINO-SOVIET BLOC WITH FREE WORLD
(MILLIONS OF U S DOLLARS)
WMIROWERM-E
Li
1947 1948 1949 1950 1951 1952
1954 FIGURES BASED ON PRELIMINARY DATA FROM DEPT. OF COMMERCE, JUNE '55
EUROPEAN
SATELLITES
r
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COMMUNIST
CHINA
U.S.S.R.
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DISTRIBUTION OF SINO-SOVIET BLOC TRADE
THROUGHOUT THE FREE WORLD-1954
(Millions of US dollars)
OEEC Countries:
Austria
Benelux
Denmark
France
Germany
Greece
Iceland
OEEC
COUNTRIES
ties with the East,
and urging the view
put forth by Churchill
that increased trade
is a positive force
for peace.
LATIN Insofar as the
AMERICA
Ireland
Italy
Norway
Portugal
Communist countries have con-
centrated on purchases which
contribute most to their econom-
ic potential, and have paid for
them in a manner which does not
portend a development of lasting
two-way trade. Soviet and Sat-
ellite purchases have been
largely limited to transporta-
tion equipment, heavy machinery,
manufactured goods and raw ma-
terials vital to industrial
development. Payment difficul-
ties have been frequent, and
declining traditional exports
such as grain and timber have
been supplemented by exports of
petroleum, gold, and other met-
als.
Nonetheless, many non-
Communist countries are exert-
ing strong efforts to exploit
the Communist trade potential
for whatever it is worth. Ja-
pan's efforts to develop trade
with Communist China continue
unabated. West Germany was
barely dissuaded from sending
a trade mission to China shortly
after ratification of the Bonn
and Paris agreements. France
has a similar mission.in mind,
to either Peiping or Moscow.
As the Soviet Union renews
its trade overtures, most West-
ern nations seem amenable, argu-
ing that they have certain ex-
port problems in Western markets,
citing their historic economic
Sweden
Switzerland
Turkey
United Kingdom
Soviet Union actively
pursues trade in non-
strategic goods, it
must in general be
assumed that this
trade is at least as
advantageous econom-
ically to the Sino-
Soviet bloc as it is
to the West. More-
over, such trade may
well carry with it
political advantages for the
USSR, particularly in countries
like Finland, Austria, and Ice-
land, where the level of East-
West trade is already high, and
in underdeveloped areas where
the Communists apparently fore-
see political penetration
through technical assistance.
Strategic Trade
Since at least autumn 1953,
the United States has been
fighting an almost solitary,
reax-guard action to preserve
the COCOM export control system.
The major revision of August
1954 reduced these controls be-
low what the United States re-
garded as minimum security
standards. The coincidental
improvements in COCOM machinery
agreed on at best only mitigated
the effects of this revision.
egeeffr TOTAL TRADE
FREE WORLD WITH SINO-SOVIET BLOC
(Millions of US Dollars)
COCOM countries
Other free world countri
1954*
*Preliminary figures
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CURRENT INTELLIGENCE WEEKLY SUMMARY
15 September 1955
These effects are reflected
in part in the development of
recorded trade in items on the
three International Lists--em-
bargo, quota, and watch. COCOM
statistics show that COCOM-
country exports of such items
to the Soviet bloc more than
doubled last year, rising from
$76,000,000 in 1953 to $168,-
000,000 in 1954. Such items
accounted for about 25 percent
of total COCOM-country exports
to the Soviet bloc in 1954 as
against 15 percent in 1953.
Since the 1954 revision,
efforts to solve remaining is-
sues and to introduce further
improvements have been largely
unsuccessful. For example, by
the end of 1954, copper wire
and cable, which were removed
from the embargo list in August,
were being imported into the
bloc at an annual rate of 100,
000 tons--an amount which Amer-
ican officials believe is enough
to frustrate COCOM's embargo on
copper in other forms. Although
such copper shipments are con-
tinuing at a high rate, Amer-
ican efforts to obtain tighter
controls'have resulted only in
reinstatement of the embargo on
certain copper communications
items.
No acceptable formula has
been devised to institute more
effective controls on exports
of ships to the bloc. Deliv-
eries of ships last year totaled
80,400 gross tons, an increase
of 25 percent over 1953. A
substantial increase in deliv-
eries is expected during the
1955-57 period. As a result
of Britain's refusal to accept
a special dispensation for Den-
mark, ships have not been placed
under agreed quotas, and dry-
cargo vessels continue to be
exported to the Soviet bloc on
a quid pro quo basis.
The negative attitude in
COCOM extends beyond strong com-
mercial interests in particular
commodities. Improvements in
certain COCOM administrative
procedures advanced by the
United States have been held in
abeyance since early this year.
According to one delegate, there
is no point in retaining or
adding rules which will be vio-
lated in practice.
Sentiment now appears to
be developing in favor of an-
other downward revision of the
COCOM controls. 25X6
There are a number of in-
dications that Paris is of sim-
ilar mind. Without consulting
the United States, the French
government in early August asked
the chairman of COCOM's Consul-
tative Group to call a meeting
for 27 September. This meeting
of the Consultative Group, the
policy-making body for which
COCOM ,.s the executive committee,
would include a discussion of
a "further shortening of the
COCOM lists." Subsequent dis-
cussions among the Western Big
Three have left the date of the
meeting open, but the French
have made it clear that they
iIL
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tir viva %V f
15 September 1955
want it as soon as possible aft-
er the October meeting of for-
eign ministers.
The "China Differential"
A primary objective of the
British and the French is a re-
vision of controls on trade with
China. These controls will al-
most certainly be reviewed at
the next Consultative Group
meeting. The United States has
been committed for a year to
such a discussion, and sentiment
among the other Consultative
Group members is virtually unan-
imous for elimination of the
so-called "China differential."
COMMUNIST CHINA TOTAL TRADE*
(Billions of U 5 Dollars)
With Free World
1950 19$1 1952 1953 1954
?8Y ESTIMATED ORIGIN AND FINAL DESTINATION
This differential, which
began with the UN resolution
in May 1951 embargoing trade
with Communist China and North
Korea, has been progressively
increased. Apart from an em-
bargo on nuclear energy and
munitions items to the entire
Sino-Soviet bloc and the uni-
lateral embargo on all trade
with China by the United States,
Western nations now prohibit
the shipment of about 500 items
to Communist China, as compared
with about 170 items embargoed
to the Soviet Union and-its
European Satellites.
These more stringent con-
trols have been justified in
the past on the grounds that
they were directed against an
aggressor and were actually a
burden to the Peiping government.
Now, however, most Western na-
tions maintain that China can
obtain what it wants either in
or through the USSR. They also
argue that the China controls
at best impose a slight cost
burden on the Chinese economy,
and that meanwhile they increase
Peiping's dependence on Moscow,
raise tensions in the Far East,
and deprive Western nations of
a potential market.
As in the case of controls
on trade with the Soviet bloc,
the "China differential" is be-
ing treated as a question of
overriding political signifi-
cance. The Japanese government
continues to lead the fight for
elimination of the differential
primarily for domestic political
reasons and in full awareness of
its disappointing efforts to
revive trade with the Chinese
mainland during the past year.
France, which is now taking the
initiative for revision, has
never had any sizable commerce
with China. Britain's interest
in China trade can, because of
its recent experience with busi-
ness interests left in China,
be regarded as primarily polit-
ical.
These political aspects may
well be decisive. Given the
present lack of concern in Eu-
rope over the Formosan situation
and the Communist Chinese will-
ingness to enter into negotia-'
tions, the prestige of the United
States, which has sustained the
China list during the past year,
may no longer prevail.
Some Broader Implications
A period of even limited
economic coexistence appears
certain to create serious strains
on the unity on which any West-
ern economic defense program
must be based. Present indica-
tions are that an American re-
fusal to countenance further
relaxations of controls may well
disrupt the voluntary, multi-
lateral system on which the
present COCOM structure is based.
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2 2.2 25%
1.8 32%
39%
33%
1.1
74% 61% 67% 68% 75%
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15 September 1955
Any efforts to make con-
trols more effective appear to
depend on the very argument
that most Western nations now
prefer not to accept--namely,
that East-West relations still
require a posture of economic
defense. In the present mood
of virtually all of the Western
allies, it may take a relatively
small show of conciliation on
the part of the Soviet Union
to unite the Western European
countries and Japan in a demand
for drastic reduction of con-
trols on trade with the Sino-
Soviet bloc. ) (Con-
curred in by 4RR)
Moscow is showing increased
inte st in economic exploita-
tion Kazakhstan,,the largest
Soviet public in central Asia,
which co rs an area one-third
that of th United States but
with a popu tion of only 5,5.00 -
principal site or N, S. Khru-
000. \ statements Was lecte4 .as the
shchev's virgin it agricul-
tural program. F thermore,
recent statements i the Soviet
press have strongly gested
that the Soviet governn nt will
begin the construction ct a
heavy industrial base the
as part of the sixth Sovie
Five-Year Plan (1956-60).
Extensive personnel change
over the past year and a half
not only reflect the growing
importance of this area in
Soviet thinking but reveal the
failure of native Kazakoli-
ticians to measure up t_iithe
regime's exacting re rements
XC7
for leadership in a area
undergoing rapid a bnomic de-
velopment.
In a bong article in the
3 July E9, Pravda,
the pr i en of the Kazakh
Acadpjny of Science, Satpaev,
.sta-Bed that the republic's
p en deposits of iron ore,
m inly at Kustanai and in the
Karaganda region, were the
largest in the USSR. Kustan
is on a rail line within 30
miles of the existing Ura
steel centers of Magnito)rsk,
Chelyabinsk and Zlatou g . Dis-
covery of iron deposers in the
vicinity of the Kar Banda coal
fields, which sup y good coking
coal, for the f '' st time gives
the USSR both -al and iron in
the same are
Satpeev placed great
emphasi -on these developments,
declarg that "such an ex-
ceptjbonally fortunate geographi-
cacombination of ore and
1 predestines the creation
n the republic in the near
role in Soviet production 'N
nonferrous metals. The follw-
ing tabulation shows the
It already plays a key
diversified economy.
They azakh republic is one
of the So et Union's wealthiest
areas in to s of mineral re-
sources, but t is at present
principally de oted to the
production of r materials and
foodstuffs. Cons uction of a
heavy industrial b e there
would give the area ` strong,
rgy and of heavy industry in
Indus y
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future of a most powerful coal-
metallurgical base, one of the
asic centers of ferrous metal-
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CURRENT INTELLIGENCE WEEKLY MT A.Y.
8 September 1955
OF IMMEDIATE INTEREST
ADENAUER'S VISIT TO MOSCOW
West Germans expect that
Chancellor Adenauer's visit to
Moscow will have few tangible
results other than the release
of some German citizens who have
been held in Soviet custody
since World War II. (For a
detailed discussion, see Part
III, P.1.)
West German expectations
about the gains which Adenauer
might attain during the visit
have been modified considerably
since the Geneva conference.
Soviet firmness in opposing Ger-
man reunification at Geneva has
disillusioned many West Germans
as to the possibility of real
progress on this subject in
the near future. According to
German officials, Chancellor
Adenauer anticipates that the
conference will only define the
issues between the two govern-
ments and consider some princi-
ples for their eventual solu-
tion, with specific agreement
to be reached possibly in the
case of detained German citi-
zens.
Many Bonn politicians be-
lieve that Moscow's willingness
to recognize the Federal Repub-
lic is merely a device to gain
eventual recognition of the
East German government by non-
Soviet bloc countries--a devel-
Failure of the London
conference to find agreement on
the Cyprus question has resulted
in severe tension between Greece
opment which ',would formalize
the division of the nation.
To avoid jeopardizing Ger-
man unification, Bonn govern-
ment spokesmen have indicated
that an exchange of represen-
tatives will'not occur unless
Moscow gives some assurance on
unity, accepts Bonn's policy
of nonrecognition of East Ger-
many and the postwar German
boundaries, and consents to
release German citizens. Should
sufficient progress occur dur-
ing the meeting, Adenauer may
consent to exchange diplomatic
representatives immediately.
Most West German observers
expect the Soviet Union to free
many of the estimated 17,000
German prisoners of war. The
chancellor has referred in pub-
lic statements, however, only
to "Germans," a term which
would also apply to an estimated
115,000 civilian internees who,
according to the German Red .
Cross, are still believed to be
in the Soviet Union.
If Adenauer returns from
Moscow without a concrete under-
standing with the Soviet Union
on reunification, this would
not be accounted a great personal
failure in West Germany, since
most West Germans continue to
believe that reunification can-
not be realized now. a(dWHffiWWk0
and Turkey. Co-operation on de-
fense planning in the eastern
Mediterranean will probably suf-
fer, and for the first time
OF IMMEDIATE INTEREST Page 1 of 4
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CURRENT INTELLIGENCE WEEKLY SUMMARY
8 September 1955
25X6
25X6
violence on Cyprus is likely
to be directed against the Tur-
kish minority as well as the
British colonial government.
The conference of Britain,
Greece and Turkey was "sus-
pended" indefinitely on 7 Sep-
tember after British foreign
secretary Macmillan offered
Cyprus limited self-government,
together with the creation of
a tripartite committee to ex-
amine details of the proposed
new constitution for Cyprus.
The Greek reaction to the
proposal. was noncommittal, but
Athens will almost certainly re-
ject it because of the omission
of any assurance regarding self-
determination for the island's
predominantly Greek population.
Turkey's immediate reaction
was "very negative." Ankara,
however, will probably accept
on condition that the self-
government proposal be amended
to provide for equal representa-
tion of the Greek and Turkish
populations of Cyprus.
The rebuff to Greece in
London will probably weaken the
Rally government still further
and increase maneuvering among
the Rally's disparate factions.
King Paul, who has been con-
cerned over the government's
lack of an effective leader
during the prolonged illness of
Prime Minister Papagos, may
appoint a provisional prime
minister and call for new gen-
eral elections.
Turkish delegate Zorlu's
"intolerable" press statements
in London had deeply wounded
Greek national honor. If Greece
were forced to accept Turkish
views on Cyprus, Kanellopoulos
said, his'government would have
to resign and might be replaced
by one less well disposed to-
ward the West.
Any Greek government will
be.committed in advance to
pressing the appeal regarding
Cyprus in the UN General Assem-
bly. Greek anger at the anti-
Greek outbreaks in Istanbul and
Izmir on 6 September will prob-
ably be vented in intensified
preparations for a bitter UN
debate with Britain and Turkey
over the Cyprus issue and in
more open encouragement to the
Cypriot Nationalists.
As a result of the Turkish
riots, which revealed a deep
religious antagonism toward
the Greek Orthodox Church, the
NATO Council was summoned to an
unprecedented meeting on 8 Sep-
tember. Also, the Turkish Grand
National Assembly has been called
into a spQcial session on 12
September.
Like the Greeks since the
beginning of the London con-
ference, the Turks appear willing
to sacrifice the short-lived
friendship between their two
countries over the Cyprus issue.
Both may now give free rein to
the many divisive issues which
have lately been submerged.
NATO will have increased diffi-
culty co-ordinating Greek and
Turkish contributions to Euro-
pean defense, and the Balkan
alliance will probably atrophy
or be replaced by a Greek-
Yugoslav entente.
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CURRENT INTELLIGENCE. WEEKLY SUMMARY
8 September 1955
Vietna .
f lowing applicants: Cambodia,
Ce on, Japan, Jordan, Laos,
Liby Nepal , and "unified
ndorsed UN membership for the
ding to the American
Acc T
embassy in olombo, Prime Mini-
ster Kotela la of Ceylon re-
ceived a le-,t from Indian
prime minister ehru in July
stating that the SSR had ex-
pressed willingne to support
the admission of "a, countries
which are qualified.'' Nehru
added that the USSR ha men-
tioned other countries a ,well
as those which were endor d at
the Bandung conference. Th
Soviet ambassador in Cairo h
informed the Libyan ambassado
that the USSR would support
Libya for UN membership this
fall, according to a 3 Septe
ber report from the Americal
25X6 embassy in Cairo.
USSR has abandoned its insisten
on a quid pro quo from the Wes
At the UN commemorative meet
in San Francisco, Molotov
to a typical package play
proposing admission of ix "peace
treaty states"--Austr , Finland,
Italy, Bulgaria, Hun a.ry, and
Rumania.
The Peruvian chairman, of
the UN Commit ee of Good Offices
on the Admi4iion of New Members
has been promoting, apparently
with somy~^'success, a compromise
plan dgAgned to meet both the
West','insistence that each coun-
try: ust be judged on its own
me/its and the USSR's adamant
?tana in favor of a pa.cxage.
Jtinder this plan, the Security
Council would vote on each
membership application separately,
ut the voting would be preceded
b a "gentlemen's agreement"
am the Big Four on which
Wh the Security Council
consider the membership ques-
tion this 11, the increased
pressure of sian.applicants
may lead to s e arrangement
whereby the de lock on
membership might a broken.
Some Western UN m bers, in-
the USSR's various
offe s of support for individual
co tries' admission to the UN,
Soiet representatives have
given no indication that the
Yugoslav-Soviet Relations
The Yugoslav-Soviet agree-
ments announced this week are
the most concrete steps yet
taken in the improvement of re-
cluding Britain, ha argued
that the UN would be etter
able to exert moral pr sure
on the Satellites if th
were members of the organ
tion.
lations between Belgrade and
Moscow. The agreements call
for Soviet credits and a marked
expansion in trade, Soviet
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8 September 1955
delivery of nuclear equipment,
and the opening of a joint Bel-
grade-Moscow direct air ser-
vice.
The economic agreements
with the USSR go a long way in
the direction of the pre-1948
pattern of Yugoslav trade, when
half was with the East. Soviet-
Yugoslav trade is to more than
double to a total of $70,000,000
annually for the three years
starting next January. 'This
would give the USSR approximate-
ly 12 percent of Yugoslav trade
as compared to 18 percent in
1947, the last full trading year
before Tito's expulsion from
the Cominform.
Similar increases in Yugo-
slav-Satellite trade,. however,
will probably take longer. The
Satellites cannot as readily
as the USSR more than double
their trade with Yugoslavia,
since their over-all foreign
trade is more limited. For its
part, Belgrade has only a
limited quantity of uncommitted
exports. Hence Yugoslavia's
trade with the East is not
likely to go above 30 percent
of all its foreign trade in
1956.
The Yugoslavs appear well
satisfied with the 10-year, 2-
percent credits they received
from the USSR. Up to a third
of the credit for $54,000,000
can be drawn in each of the
three years starting in 1956
for purchase of certain Soviet
raw materials, apparently mainly
coking coal and cotton. Another
Llttary Significance
01 a to 'droop Reductions
Five of the Ea t ,ropean
Satellites now have anno
plans for reductions in their,~:,_`
armed forces commens ate"` vith
the S ovietn r a 640, 000-
maro_.redt:" ion announced on 13
credit for $30,000,000 in gold
or convertible currency will
greatly increase Yugoslavia's
depleted currency reserves.
Vice President Vukmanovic-Tempo
claims these loans will keep
Yugoslavia from being forced to
obtain short-term loans else-
where at high interest rates.
Yugoslavia also obtained
Soviet credits for planning,
building, and equipping two ar-
tificial fertilizer plant com-
plexes, and rehabilitating three
small mines. Vukmanovic indi-
cated the Yugoslavs might later
take up Soviet offers for par-
tial financing of other plants.
The American embassy in
Moscow speculates that there
may have been some discussion
of the idea of -Yugoslav pro-
duction of Soviet aircraft under
a licensing arrangement, al-
though there has been no spe-
cific reference to such.
The air agreement permit-
ting Yugoslav flights to Moscow
and the agreement enabling Yugo-
slavia to purchase an atomic
reactor, a cyclotron, and other
nuclear research equipment are
the first such Soviet agreements
with a non-Orbit nation. Noth-
ing indicates that Belgrade
agreed to ship atomic raw ma-
terials to the USSR in exchange
for this assistance. The Yugo-
slavs probably do not have suf-
ficient quantities of such ma-
terials to export them and still
develop a domestic research pro-
gram. (Concurred in
by OSI and ORR)
August. Onl ,,, Bul dl? a has yet
to -heale rom. These re-
su
ce to the USSR's disarma-
ment cam
nist military
Over-all Commu-
likely to be materia
aired.
ILJVJI~T
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lity. is not
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CURRENT INTELLIGENCE WEEKLY SUMMARY
-8 September 1955
NENNI SOCIALISTS IMPROVING POSITION IN ITALY
The steady gains in power
and prestige of Pietro Nenni's
Italian Socialist Party are
arousing increasing speculation
among leading Italians as to
the possibility of an eventual
genuine split between Nenni and
the Communists. Communist
leaders, aware that their own
party is in a period of rela-
tive decline, seem somewhat
uneasy over the prospect that
they may lose control of their
old Socialist allies.
Leading Christian Demo-
crats, while firmly rejecting
collaboration with any party
connected with the Communists,
now are weighing the attrac-
tions of an eventual govern-
ment "opening to the left"--
that is, a working alliance
with Nenni which would permit
a Christian Democratic govern-
ment to control parliament with
the support of the Socialists.
The fall of premier Scelba in
June 1955 and the difficulties
encountered in forming the
Segni cabinet demonstrated the
weakness of a government formula
which requires the Christian
Democrats to rely for support
on the steadily declining smaller
center parties. Many observers
believe that in the next general
elections,which may be held in
1956, the small center parties
will virtually disappear.
There are a number of in-
dications that the Communists
are losing ground in Italy.
In the important Sicilian elec-
tions in June, for example, the
Communists polled fewer votes
than in.1951. They have also
generally shown losses in shop
steward elections throughout
Italy over'the past year, partly
as a result of management's
switch from conciliating the
strong Communist labor .con-
.federationto bringing pressure
on Communist employees in firms
seeking offshore procurement
contracts. The circulation of
the Communists'. newspaper,
L'Unita, has fallen off by
about 25 percent since 1954.
The Communists' losses
probably result both from the
ITALIAN CHAMBER OF DEPUTIES
PARTICIPATING IN
110CDAIC G RNMfNT.
CHAMBER OF DEPUTIES - 590 SEATS
UNCLASSIFIED
80 R01443R0J 01,8QP,O .11
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 Approved For Rele to 2000/09/12: CIA-RDP80R01 4 8000400180009-1
", AILI.J"M
CURRENT INTELLIGENCE WEEKLY SUMMARY
8 September 1955
international detente and from
domestic developments. The
relaxation of tension may have
increased intraparty friction
between supporters of party
leader Togliatti's conciliatory
policies and the militant group
led by Secchia. In addition,
although the Communists are
trying to exploit it to win
-votes, the detente may have
influenced some who voted Com-
munist for fear of reprisals.
Meanwhile, as more voters are
beginning to benefit from Italy's
NENNI SOCIALIST
COMMUNIST
CHRISTIAN DEMOCRATS
OTHER
1948 (NATIONAL)
*No breakdown of total votes obtainable
economic improvement, fewer
are interested in Communism.
The Communists have suf-
fered further attrition from
the fact that even though they
and their Nenni Socialist
allies have polled more than
one third of the popular vote,
they have no voice in the govern-
ment and have even been unable
to block important government
legislation, such as ratifica-
tion of NATO and the Paris
agreements.
Evidence of the changing
balance of power on the left
was provided by the Sicilian
election results. The Nenni
Socialists, who contrary to
previous practice in Sicily ran
separate from the Communists in
this year's elections, gained
more than the Communists lost,
so that the left bloc's share
of the vote was higher than in
1951. Other elections since
1948 have shown a steady rise
in the Nenni Socialists' poll-
ing power. The current re-
laxation of world tension,
moreover, which Nenni has
championed, tends to boost
his prospects.
ITALIAN ELECTIONS
1948-53
It now appears that cer-
tain financial interests are
jumping off the Communists' 25X1X6
bandwagon and jumping on the
Nenni Socialists'.
The independent press, too,
appears increasingly interested
in the Nenni Socialists as a
possible anti-Communist force.
The director-of the influential
Milan newspaper Corriere told 25X1X6
an American official on 12
July that "Operation Neniii"--
that is, an. effort to achieve
a Nenni Socialist-Christian
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8 September 195
ANALYSIS OF SHOP STEWARD ELECTIONS
(257 PLANTS, 309,000 WORKERS INVOLVED)
UNCLASSIFIED
PERCENT OF VOTE
JAN - JUNE 1954
CGIL
65.8%
CISL and UIL
29.2%
Democratic rapprochement based
on moves by Nenni away from the
Communists--was "in full swing:
He predicted that Nenni,'who
"has no intention of sharing
the political starvation" of
the Communists, will either
vote for or abstain on the Segni
government's programs for about
a year, with the idea of secur-
ing a place in the government.
The director of Turin's
important Stampa told an Ameri-
can official on 16 July that
"the remaining danger is that
Nenni will not be helped to
divorce himself from the Com-
munists and will be driven
back, making possible a popu-
lar front."
Socialist-Communist Differences
Developing friction between
the Nenni Socialists and the
Communists is apparent in both
the political and labor fields.
According to a spokesman for
the Sicilian `Separatist move-
ment, the Socialists' decision
to run on a separate list in
the June elections had been
opposed by the Communists.
Another report quotes a member
of the Communist Party's central
committee as complaining that
the Socialists, by entering
PERCENT OF VOTE
JAN - JUNE 1955
CGIL
50.5%
CISL
37.7%
UIL 8.4%
34%
separate electoral lists, were
"disorienting the base."
Abstention of the Nenni
Socialists in the July ballot-
ing for the president of the
Sicilian regional assembly
permitted the Christian Demo-
cratic candidate to win despite
the opposition of the Communists,
Monarchists and neo Fascists.
Thus for the first time in
eight years the Christian Demo-
crats did not rely on the sup-
port of the rightist parties
in Sicily.
In the vote of confidence
for the Segni government on
18 July, some 20 of the Nenni
Socialist deputies reportedly
left the chamber in order to
provide the Christian Democrats
with a larger victory.
A long-standing source of
friction between Communists and
Nenni SSocialists has been the
Communists' emphasis on the
political rather than the labor
problems of the Italian General
Confederation of Labor. This
has had repercussions in shop
steward elections and in the
failure of such strike efforts
as the one in Genoa last
winter,
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8 September 1955
Within the Socialist Party,
sharp differences have emerged
between the pro-Communist and
"autonomous" factions. This
was particularly evident at
the Socialists' national con-
gress at Turin in March,, which
resulted in a decision by the
party leadership to seek an
"understanding" with the Chris-
tian Democratic leadership.
Various feelers have fol-
lowed.. In May the..NennSocialist
newspaper Avanti . published ;a
statement byy`fTe party direc-
torate and later one by.Nenni
himself which,. in contrast with
earlier and more general state-
ments, named specific socio-
economic reform measures on the
basis of which his party would
collaborate with the Christian
Democrats.
In July, the Nenni Social-
ists' central committee adopted
a resolution urging the party's
organizations "to widen'and
deepen their relations with
the Catholic masses." Nenni
is also reported to have-sent
emissaries at various times to
Christian Democratic Party
secretary Fanfani, as he had
in 1953 to De Gasperi.
Christian Democratic leaders
are openly expressing interest
in bringing the Nenni Socialists
into the democratic fold.
Gronchi is reported to feel
that the democratic forces must
make it possible for the Nenni
Socialists to differentiate them-
selves from the Communists, not
by "deals and bargaining," but
by carrying out a progressive
social and economic program
and by coupling an "opening to_
the left" with a "closing to
the right.'"
Gronchi believes that in
view of the deep disagreement
on economic policy within the
present government coalition,
only a single-party Christian
Democratic government could
agree on a sound economic pro-
gram such as Budget Minister
Vanoni's ten-year economic
plan, which Nenni has already
stated his party will back.
Gronchi believes the support
of the Nenni Socialists, who
hold 75 seats in the Chamber
of Deputies as compared to the
38 held by the Christian
Democrats' present three center
party allies, is necessary to
provide a government majority
strong enough to push through
needed reforms.
Christian Democratic Party
secretary Fanfani, at the party's
national council meeting in
August, is reported to have
stated that the Christian
Democrats would not collaborate
with any party "connected with
the Communists," but at the
same time to have expressed the
hope that the Nenni Socialists'
gains in the Sicilian elections
would encourage them to "move
toward the center."
The government-controlled
news agency, ANSA, which has for
years maintained that the Com-
munists and Nenni Socialists
are one and the same thing,
came out on 27 July with a
commentary headlined, "Gulf
between Communists and Nenni
widens." ANSA said that
the meeting of the Communist
Party's central committee in
Rome several days before had
left the impression that the
Communists were trying to
appropriate the "'opening to
the left" slogan. It added
that the Communists "obviously
fear that should 'Operation
Nenni' succeed, the Communist
Party would find itself even
more isolated."
Communist deputy chief
Longo had declared at the cen-
tral committee meeting that the
formula for the move to the
left was not a recent one, but
had been suggested by Togliatti
in 1954. Longo said there could
be "no differences between
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8 September 1955
Communists and Socialists," and
that the Socialist Party is too
closely tied up "with the broad
masses of the working people
to renounce its political ori-
gins" and "commit suicide" by
breaking with the Communists-
The question of Nenni's
price for co-operation-with the
government is being widely dis-
cussed. Some Italians continue
to believe that Nenni's over-
tures to the Christian Democrats
are part of a Communist plan to
control the government through
him. Some of these, however,
feel the Communists are showing
signs of unease over the pos-
sibility that Nenni's pseudo
independence might increase his
popular prestige to such an
extent that he would eventually
feel strong enough to make a
genuine break away from theme
Many Italians feel it has been
politically necessary for Nenni
to continue his public insistence
that he is maintaining the unity-
of-action pact with the Commu-
nists until he is sure the
bulk of his present supporters
will follow him into a new
alignment.
To the question of whether
Nenni would be acting in good
faith or as a Communist stooge,
they cite his desire to be on
the winning side, apparently
the basis of his successive
switches from the Fascist to
the Republican Party, and then
to the Socialist Party. They
also point to the practical
success.of his postwar associa-
tion with the Communists, as
contrasted with the fate of the
Social Democrats, who left his
party in protest against
Communist domination and have
steadily lost ground because
of their subservience to the 25X1X4
Christian Democrats.
With re- 25X1X40
gard to foreign policy, Nenni
announced on 30 June that "the
existence of the Atlantic and
European military pacts does
not prevent the Italian
Socialist Party from supporting
a government which fundamentally
obligates itself to a policy
of lessening international
tensions."
Many Italians feel that
the real test of the Nenni
Socialists' intentions will be
their performance in parliament
over the'next year. In any
case the outcome of the next
general elections, in which
both the Socialists and the
Christian Democrats are expected
to gain, should determine the
direction both parties will
take.
il 110' N I"
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1 September 1955
PART I I I
PATTERNS AND PERSPECTIVES
SOVIET DISARMAMENT POSITION
In the crowded schedule
of international negotiations
set for the next few months,
the USSR seems likely to give
high priority to disarmament.
Concrete achievements in this
field could demonstrate to the
NATO nations the political and
financial advantages of "peace-
ful coexistence"--without
materially reducing Soviet mili-
tary strength in the process.
The USSR's disarmament
position undoubtedly will be
based on its 10 May omnibus
proposal for relaxing inter-
national tension. The disarma-
ment section of the 10 May
pronouncement seems to be a
serious counterproposal to the
plans previously advanced by
the West. The USSR probably
hopes that if it appears
reasonable and offers dramatic
"deeds" like the recent demobi-
lization of part of its armed
personnel, Western resolve to
maintain the strength of the
Atlantic coalition will gradu-
ally diminish.
Moscow may seek to avoid
the complex questions at issue
by pressing for specific
numerical limitations of armed
personnel, which it probably
regards as reasonable, mutually
advantageous, and possible to
effect. Moscow may be willing
to make substantial reductions
in its conventional military
strength in order to achieve
political objectives, but
probably intends to maintain its
nuclear strength. The diver-
gence of views on the crucial
matter of inspection and con-
trol makes an early agreement
on this issue unlikely.
Basically, the-Soviet pro-
posal of 10 May would establish
limitations on the troop strength
of the five major powers, reduce
overt military expenditures, and
prohibit the use of nuclear
weapons. The principal loop-
holes appear to be the lack
of provisions for an adequate
system of inspection and con-
trol and the lack of a specific
limitation on conventional
armaments.
Conventional Arms and Expendi-
tures
The two-year disarmament
plan would first freeze the
PROPOSED REDUCTION OF MILITARY MANPOWER
Present
Strength
United States
3,304,001
(Unofficial)
USSR
3,991,000
China
2,624,000
France
810,000
United Kingdom
834,000
Interim Level
2,152,000-2,402,000
2,496,000-2,746,000
1,812,000 -2,062,000
730,000
742,000
1,000,000-1,500,000
1,000,000-1,500,000
1,000,000 -1,500,000
650,000
650,000
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1 September 1955
military manpower of each of
the major powers at its 1954
level and then reduce this fig-
ure during the first year by
half the amount required to
reach the proposed ultimate
level. Military expenditures
would be reduced accordingly.
Reduction of manpower and ex-
penditures would be completed
during the second year of the
plan.
The apparent balance of
armed personnel strength which
would result from the proposal
may be misleading. The develop-
ment of nuclear weapons, togeth-
er with the ability to deliver
such weapons, probably will
continue to be the most
decisive factor
determining relative
military strengths.
The Soviet switch
to a willingness to
abandon some of the
USSR's conventional
strength as a first
step in the disarma-
ment schedule may
represent no more
than a recognition
of the realities of
nuclear warfare.
Furthermore, aside
from the gap that
may exist between
overt and covert
military expenditures
there remains the
important question
of conventional
equipment and materi-
el. The Soviet pro-
posal calls for a re-
duction of armaments
paralleling personnel
and expenditure cuts,
but nothing is said
with regard to the
number of such items
as jet bombers, sub-
marines or tanks.
Moscow has stipu-
lated that a world
disarmament confer-
ence should beheld to
fix arms and manpower
limitations for the other
nations of the world--at levels
to be determined by economic
and political factors, but not
to exceed 200,000 men for each
nation. This figure was enun-
ciated by Bulganin at Geneva.
The recent Soviet and
Satellite announcements on re-
duction of military manpower
probably are intended, in
part, to give additional prop-
aganda: impetus to the man-
power aspect of the Soviet
proposal.
Nuclear Weapons
With respect to nuclear
weapons, during the first year
SOVIET DISARMAMENT PROPOSAL
444444444
Achieve half of
planned reduction
during first year
Completed reduction
of forces and expenditures
by end of second year
Freeze manpower
at 1954 level
Manpower to be
equalized in 2 years
UNCLASSIFIED 50826
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USA
USSR*
CHINA
FRANCE
1954 DEFENSE EXPENDITURES
(BILLIONS OF DOLLARS)
* An approximation. Value data do
not necessarily reflect the volume
of armaments production.
the Soviet proposal calls for
a moratorium on test explosions
and agreement by the five major
powers not to be the first to
employ nuclear weapons. At
the beginning of the second
year,the production of nuclear
weapons would be stopped and
there would be a complete pro-
hibition of their use after
the armed forces were reduced
by 75 percent of the total
reduction. By this proposal,
Moscow reiterates its earlier
insistence that the disarmament
program must be completed in
such a way that conventional
and nuclear disarmament are
completed simultaneously.
Control and Inspection
The Soviet disarmament
plan substantially follows
Western proposals, but the
Soviet provision for control
and inspection moves away
from the framework within
which control usually has
been discussed. The Soviet
statement asserted that under
current conditions of inter-
national distrust the types of
disarmament control hitherto pro-
posed would be unreliable and un-
realistic. The proposal urged
that conditions of trust must
first be created among nations
by means of a broad political
settlement and a system of
warnings and guarantees against
sudden aggression.
The Soviet plan contained
a provision for setting up a
permanent control organiza-
tion, which would be allowed
during the first phase of the
plan to establish control posts
at "big ports, railway junctions,
motor roads, and airdromes."
i
USE OF NUC LEAEAPONS
~cr~~Tn
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It would be entitled to "de-
mand and receive" information
from states regarding implemen-
tation of the cuts in armed
forces and armaments, although
there is no provision for
verifying this information.
The control organization
would, when the second phase of
the plan came into effect, have
a staff of inspectors who "with-
in the bounds of the control
functions they exercise would
have unhindered access at any
time to all objects of control."
This phrasing suggests that
the 'USSR still adheres to its
position of strictly limiting
inspection to specifically
designated establishments.
The Soviet proposal dis-
misses the crucial matter of
nuclear inspection, saying it
is an insoluble problem because
of the difficulty in detecting
whether atomic energy installa-
tions permitted for peaceful
purposes were in fact'being
used for the production of
stocks of fissionable material
for weapons. It asserts that
there are "possibilities beyond
the reach of international con-
trol" for "organizing the secret
manufacturing of atomic and hy-
drogen weapons."
Physical inspection of
plants producing fissionable
materials, however, and a close
audit of the records of these
plants, if this were allowed,
would of course make more diffi-
cult the clandestine accumula-
tion of a large stockpile of
fissionable material for nuclear
weapons.
While there could not be
complete confidence that the
inventory of Soviet nuclear
weapons or the clandestine pro-
duction of fissionable material
could be determined, there could
be fairly effective inspection
of weapons delivery systems.
The preparation necessary for
launching a co-ordinated air
attack on the United States
would, at the present time,
be difficult to conceal from
inspection agents, given
facilities for unhindered
travel. Similarly, the devel-
opment and production of long-
rangetguided missiles-would prob-
ably be impossible to hide from
inspectors because of the scale
and extreme complexity of the
undertaking required for such
projects.
Under the broad terms of
the current Soviet disarmament
proposals, however, the possi-
bilities for evasion of inspec-
tion of disarmament measures
are almost unlimited.. The
USSR's reluctance to commit
itself to an effective inspec-
tion system is suggested by
the fact that the USSR has so
far temporized with the recip-
rocal aerial inspection plan
advanced by President. Eisenhower
at Geneva.
Related Aspects of the Omnibus
Proposal
The disarmament plan was
a major part of the Soviet
proposal of 10 May. Also in-
cluded were proposals for the
discontinuation of war propa-
ganda, the withdrawal of forces
from Germany, the dismantling of
extraterritorial bases, the
settlement of Far Eastern prob-
lems, and economic and cultural
exchanges. It was not clear
from the language of the pro-
posal whether Western acceptance
of some or all of these other
provisions was expected to pre-
cede agreement on the disarma-
ment plan.
While the Soviet Union will
probably continue to publicize
these issues for propaganda pur-
poses during forthcoming dis-
armament discussions, the issues
themselves are not likely to
become major bones of contention
in the discussions.
Soviet propaganda on dis-
armament has continued to em-
phasize the 10 May proposals
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I September 1955
suggesting that they would pro-
vide a realistic basis for UN
discussions. A recent Pravda
article stressed that the pos-
sibilities for an agreement
are infinitely better since the
Geneva conference and main-
tained that a new "vital force"
is apparent in the current move
for disarmament.
25X6
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25X6 1 September 1955
NEW LEADERSHIP GROUP IN SOUTH KOREA
A new and growing cohesion
among top South Korean leaders
manifests their desire to
stabilize the present political
balance of power in order to
assure an orderly transfer of
authority to them in the event
of President Rhee's death or
incapacitation.
The group, whose members
are friendly to the United
States, is composed of Defense
Minister Son Won-il, Liberal
Party leader Yi Ki-pung and
the three military service
chiefs. Son appears to be in
an advantageous position of
balance between the military
leaders and the government's
Liberal Party. Yi's domination
of the party machinery provides
the mechanism through which the
group hopes to perpetuate itself
by selecting the adminstration's
vice presidential candidate in
r% r" MR
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.FILJ
CURRENT INTELLIGENCE WEEKLY SUMMARY
1 September 1955
next year's elections. Under-
lying the group's power is Chief
of Staff Chong's domination of
the Korean army.
The members of the group
appear to have as.their.objec-
tive the preservation of their
status in key government posi-
tions and the gradual extension
of their authority while the
aging president's capacity for
direction falters.
President Rhee continues
to manifest unusual confidence
in Yi Ki-pung by permitting him
unprecedented control over the
administration's Liberal Party
and its auxiliary mass organiza-
tions. Of 15 individuals elect-
ed to the Liberal Party policy
committee in early August, 14
were supporters of Yi.
Army chief of staff Chong
I1-kwon is credited with the
support of the majority of corps
and division commanders, and the
commander of the Second Army,
the logistical command which
covers all of Korea to the rear
of the combat zone. The mili-
tary's potential for influencing
politics has been further en-
hanced by inactivation of the
militia and absorption of its
personnel into the ten new
army reserve divisions.
The extent of co-operation
among the top Korean leaders is
suggested by recent statements
of General Chong to American
officials that he, Defense
Minister Son, and Yi Ki-pung
had developed plans to promote
the selection of Son or possibly
Yi as vice president in the 1956
elections. It was generally
agreed that if Rhee were alive
he would be re-elected presi-
dent. Chong expressed a desire
to remain as army chief of staff
because he considered that this
position made him the most pow-
erful man in Korea. The military
leaders were reported to believe
that Yi Ki-pung, "while not
brilliant," would be an accept-
able political leader while the
military provided control
from behind the scenes.
The common cause of Yi
Ki-pung, Son and the service
heads was demonstrated on 12
August, the day before the
expiration of Rhee's ultimatum
to the truce teams. That
evening Yi hastily convened a
dinner for UN commander General
Lemnitzer and Ambassador Lacy
which was attended by Son and
Generals Chong and Kim, pre-
senting American officials
with an unprecedented demonstra-
tion of solidarity at the risk
of Rhee's displeasure.
President Rhee is almost
certainly aware of this poten-
tial for opposition among his
top leaders, since the group
is opposed by ambitious and
conflicting factions, both with-
in and outside the Liberal Party,
which are anxious to discredit
it. If Rhee decided that the
group is a threat to his author-
ity, he would probably attempt
to subvert individual members
and manipulate its internal
rivalries. Through his control
of the police, the president
would probably be able to
dominate any internal situation
unless challenged by the army.
Chong 11-kwon has the
capability of employing military
units against the government
in co-operation with the re-
mainder of the group. For the
present, however, the group
will probably attempt to con-
solidate its position, while
avoiding Rhee's ire. The young
Korean military leaders, who
are privately critical of
inefficiency and corruption in
the government, and of Rhee's
determination to bar trade with
Japan, consider that their future
is tied to continued American
confidence and support. The
trend toward increasing military
involvement in politics is thus
under way and is unlikely to be
reversed. (SECRET NOFORN)
SECRET
pA1pp -eyed For Releasili/1 bC ff 43R00040~agee0fl9-1f 12
 25X6
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25 August 1955
e hydroelectric potential
being loped under these
programs i tremely important
to Chinese in rial expansion
plans in Central, th and
Northwest China. The inese
k 3,gwatts
plan to have 1,000,000
of, generating capacity at t
Sanmen Dam and part of ano ef'
1,,000,000-kilowatt plaptar
`
iy 1967.
Lanchow in operati
Low water flow nHnng winter
will limit. tt a year-round gen-
eratingapacity of these plants
tobout 280,000 and 400,000
,-kilowatts respectively, but even
ch American surveys recom-
men a 10,000,000-kilowatt
plant. ost of this capacity
is availa all year. Capac-
ity of electr over plants.
in all,of China ow only
.? {
3,000,000 kilowatts
r2lh1L.L--Prepared by `ORR)
TURKEY'S ECONOMIC DIFFICULTIES COMPLICATE RELATIONS WITH US
. Turkey's economic diffi-
culties and related domestic
political problems have led its
government to adopt a cooler
attitude toward the United
States. Nevertheless, Turkey's
co-operation with the Western
powers in defense matters almost
certainly will continue.
The Turkish Democratic
Party administration, which
started its second four-year
term in May 1954 with an over-
whelming majority in parliament,
aims to expand the country's
production and to develop rap-
idly its retarded economy. The
government's program, however,
has been overly ambitious and
poorly executed. It apparently
has not understood the relation-
ship between the physical and
financial aspects of development
and the importance of economic-
stability for orderly economic
development. Inflation has been
allowed to get out of hand and
the external payments deficit
has reached unmanageable propor-
tions.
Although the government
is now giving some indication
that it may be getting-readp,
to tackle its economic problems
realistically, it has in the
past shown a marked hostility
toward a realistic appraisal
of these problems and toward
any suggestions for correcting
them.
When Ankara failed in the
spring of 1955 to obtain a
$300,000,000 credit from the
United States to support its
program, an apparently govern-
ment-inspired campaign designed
to force the American hand in
connection with the loan was
launched in the Turkish press.
The press takes the line that
Turkey is entitled to American
aid because of its unique con-
tribution to the free world and
that any American suggestions
concerning Turkey's economic
policies are presumptuous.
Progovernment newspapers
reported that rejection of the
credit "exploded like a bomb"
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these figures exceed by arty
times the power capa~ 1 y of
thermal plants n?v"'3n these
two areas. -
~,By 1967, the Chinese prob-
,ftbT'y will have installed part
of the power plant at the.Io-
hang Dam on the Yangtze, for
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25 August 1955
and called the American action
"lamentable." Other papers re-
marked that Turkey could not
accept "economic and financial
tutelage" from any nation, no
matter how friendly. The press
gave little publicity to the
$30,000,000 in aid which was
granted. As a result, a con-
siderable public reaction has
developed.
Acting Foreign Minister
Zorlu, commenting in mid August
to Ambassador Warren on the
deterioration in the cordial
relations between Turkey and
the United States, pointed to
speculation in the press that
the United States was no longer
as interested in Turkey as pre-
viously because of the Soviet
peace offensive. Zorlu said
Prime Minister Menderes was
very nervous about the economic
situation, commenting bitterly:
"Your people are all theoretical.
They do not understand the
practical aspects."
Zorlu insisted that the
government is trying to allay
press speculation on American
intentions, but that it is im-
possible at present to explain
the extent of aid to be expected
from the military and economic
conversations which are now go-
ing on.
The government's economic
policies have become a domestic
political issue. The opposi-
tion Republican People's Party
has accused the government of
inept handling of the negotia-
tions. Recent reshuffling of
a few top leaders also suggests
that some behind-the-scene
differences have developed.
The government leaders
and politicans are concerned
over the opposition's activity.
There is no indication, however,
that the Democratic Party?s con-
trol is now threatened or that
a serious change in relations
with the United States is oc-
curring. Any reduction in over-
all aid to Turkey automatically
creates certain dissatisfactions
and problems, but long-range
American security interests
in the area should not be seri-
ously affected. American use
of certain Turkish facilities
is secured by a treaty which
is not apt to be abrogated.
Turkey needs a strong ally as
a counter to the Soviet Union,
and American and Turkish of -
jectives remain basically the
same.
PROSPECTS FOR LONDON TALKS ON CYPRUS ISSUE
The th governments
meeting in on - on 29 August
to discuss Cyprus a firmly
committed to their res ive
positions concerning the u
of Cyprus with Greece. There
is no room for compromise be, --=-
tween the British and T k
on the one side and, Greeks
on the other.
ece intends to be "mod-
e and reasonable," accord-
ing to Foreign Minister?,5 a-
nopoulos, who neveess will
almost certair=emand early
applicat noif the principle
of if=determination to Cyprus.
.&Ytuce the majority of the
riots are clamoring for
en --the union of Cyprus
with G e--"self-determination"
means Gree - nexation of the
island. The c ssions which
Athens is willing ake are
all based on the assum n that
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PART III PATTERNS AND PERSPECTIVES Page 6 of 8
 Approved F "? 'asV7G001M1FL7r* G 1 P88RQU43R000400180009-1
25 August 1955
PATTERNS AND PERSPECTIVES
The Soviet Communist Party
central committee, formally the
party's top policy body, but
actually in Stalin's time a
rubber-stamp institution, has
gradually increased in power
and prestige during the past
two years. It may now play a
deciding role in at least some
high-level policy decisions.
The central committee .
elected in October 1952 at the
19th Party Congress consisted
of 125 full members having vot-
ing privileges. Although there
has been some attrition since
then through death and politi-
cal discrediting, the committee
is still a large body composed
of leading provincial party
secretaries, important military
leaders and government execu-
tives, as well as the all-union
party leaders.
Whereas the individual
members of the central commit-
tee have been important and
relatively powerful, the com-
mittee as a body has, until
recently, done little more than
give automatic approval to the
party presidium's decisions
and act as a transmission belt
between the top leaders and
local party officials.
The most recent evidence
of a change in this role is 25X1
the report
of a party cen-
25X1Csure incurred by Foreign Min-
ister Molotov at the July
plenum of the central committee
for his stand on Yugoslavia.
Molotov allegedly opposed send-
ing the high-level Soviet dele-
gation to Belgrade and, at a
plenum held shortly before its
departure, had violently criti-
cized Yugoslavia and suggested
that it be dealt with like any
other capitalist country.
Molotov apparently had used this
earlier plenum as a forum for
presenting his disagreement.
with other.party presidium
members, which suggests that
the central committee was called
upon to witness a disagree-
ment within the presidium and
to choose between the alterna-
tives posed.
This report of the central
committee's actions lends credi-
bility to an earlier story by
Ralph Parker, Moscow corre-
spondent of the London Daily
Worker. According to Parker,
G. walked out of
the January central committee
plenum during its debate over
economic problems, and it was
only after this that the de-
cision was made to relieve him
as chairman of the Council of
Ministers. Parker also re-
ported that some 2,000-selected
economic and party workers
participated in the meeting to
help decide the future course
of the Soviet economy.
There has been considerable
earlier evidence that the cen-
tral committee has been gain-
ing in stature since Stalin's
death. Nine announced plenary
meetings of the central com-
mittee have been held since
March 1953, although the rules
passed at the 1952 party con-
gress called for a minimum of
only two a year.
Furthermore, the central
committee has not been expected
simply to rubber-stamp the
presidium's.proposals as pre-
sented by the top leaders.
Khrushchev himself stated that
he expected discussion of the
reports and even implied that
they might be amended, and he
`"'specifically mentioned an 'an-
ticipated "exchange of opinions"
on one of his proposals. The
decrees emanating from some of
the central committee's plenums
veal differences, albeit
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 ECCT
Approved For F Jg, T2gW2 ff1 E -g 000400180009-1
GOVERNMENT AND MILITARY
(2 HAtS) 3%
CPSU
25 August 1955
MILITARY
1%
CENTRAL COMMITTEE
MEMBERSHIP
125 FULL VOTING MEMBERS
ELECTED OCTOBER 1952
11 MEMBERS
SECRETARIAT
5 MEMBERS
GOVERNMENT
slight, frbm the proposals pre-
sented by Khrushchev at the
meeting, suggesting that dis-
cussion and emendation did in
fact take place.
This extension of more
decision-making power to the
central committee, which repre-
sents a more inclusive balance
of forces than the party
presidium, will tap points of
view and talents hitherto
slighted in the Soviet Union.
If continued and expanded, the
process will bring forth a re-
juvenated central committee
and make a return to one-man
rule as a method of leadership
increasingly difficult.
OITS DIFFERENCES BETWEEN WE
During recent ,
cow has ,d -t,d pitalize on
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P80 R01443 R000400180009-1
connection with defense
 25X1 B
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