NSC BRIEFING

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80R01443R000400190002-7
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 48
• Document Creation Date: December 16, 2016
• Document Release Date: January 10, 2005
• Sequence Number: 2
• Content Type: NOTES

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~5 NOVEMBER 1955
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State Department review
completed
1. Last week's elections were a definite
victory for Magsaysay and for his forth-
right pro-American policies.
A. Recto, only candidate elected 'on
opposition slate, came in sixth out of
eight instead of first as some had
feared; his chances for successful
presidential bid in'57'severely dimmed.
B. Nacionalistas also won all but a handful
of 52 provincial governorships.
II. While president's popularity reestablished,
his reform program still faces rough going.
A. Veteran Nacionalist Senator Jose Laurel,
who is close to Recto, has announced he
will lead senate opposition.
B. Prospect is for some party realignments
and reforms owing to ultra-conservatism
of most Filipino politicans.
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 NSC BRIEFING I
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L5 NOVEMBER 1955
80R01 443R000400190002-7
I. Further complications expected today;
A. Upper hoOse will probably reject govt
proposaltfor electoral system.
B. This will rule out elections this year:
1. February then likely, although
January date possible.
2. Further delay favors Mendes-France
who needs time to consolidate
support.
C. Faure govt in untenable position if it
cannot force early dissolution of
Assembly:
1. Anticipating early elections, it
depended on Communist votes on
election bill.
2. Govt so intent on immediate elec-
tions, it backed voting system most
favorable to Communists when non-
Communist-parties could hot reach
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15 NOVEMBER 1955
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ARGENTINE SOLVENCY AND STABILITY
1. Provisional Argentine president Gen. Lonardi
dep coup by armed
ers
forces le
A. New president, Gen. Pedro Aramburu, Army
Chief of Staff under Lonardi, reported
to have democratic and moderate leanings;
well-disposed toward US.
B. Vice-president, army, navy, air mini-
avvtd cain~of 4f ;,S _. jwnr
sters to remain on job, but extensive
cabinet changes being made.
C. Removal of ultranationalists from such
key posts as foreign ministry may
improve Argentine cooperation with US;
even though Lonardi himself was pro-US.
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D. Lonardi highly respected despite his
controversial appointments. Abrupt
ouster likely handicap new regime's
efforts to maintain a peaceful atmos-
phere in face pressing labor and
Aka LO-Aah i you
economic problems..
eiQa~~Ar~c w~ ayr,v nq vv p6stA,l,ry I +LUM IAJ
II. Peron left legacy of crippled productive (o
capacity and financial stress.
A. Peron reportedly filched substantial
sums from treasury. No evidence that
his thefts large enough to upset
country's balance sheet.
1. Much of it came from private sources,
such as "friends" who gave Evita
such gifts as villa in Biarritz and
jewels; also royalties from Evita's
book, which was required reading.
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2. Rumors of Peron accounts in Switzer-
land revived last week with Pick's
report (Franz Pick, publisher of
World Currency Report) that
$2,700,000 of gold coins arrived in
Switzerland in October for Peron.
a. Pick estimates Peron's holdings
abroad less than $5,000,000.
B. Peron's postwar policy of trying to
promote rapid industrialization at
expense of agriculture which earns 93%
of foreign exchange.
C. Under Peron farm earnings dropped to
about one-third of prewar purchasing
power.
1. When world prices for agricultural
products high, Peron paid farmers
only part of the high export price.
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2. By system of multiple rates, farmers
were taxed further; they received
5 pesos per dollar for exports but
had to pay from 7.5 to 14 pesos for
necessary imports--if govt would
give an exchange permit.
D. Decline in farm production reduced
Argentina's ability to buy essential
imports for economic recovery.
III. 1955 trade deficit_ymay reach $250,000,000.
government survey in October lists total
outstanding foreign debts at $757,000,000.
A. In Jan 55 govt claimed holdings of
$371,000,000 in gold and about
$120,000,000 in dollars and sterling.
tatter represents minimum necessary to
finance essential trade with US and UK.
B. Sterling credits expected to be drawn
down by end of year. Net trade deficits'
expected on various bilateral trade
agreement accounts--except with Soviet
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C. Argentina obligated to pay this year
about $28,700,000 in dollars and
$31,100,000 in other currencies to
service various overseas debts, includ-n
ing payments on Export-Import Bank
credit of 1950.
D. Prospects for immediate future uncertain
in view of unfavorable trend in terms of_
trade for grain and declining grain
markets.
1. Marketing difficulties led Argentina
to turn to Soviet Bloc as important
outlet for agricultural surplus.
2. Payments deficit by end of 1955 may
severe enough to force politically
unpalatable policy of sharp economic
retrenchment.
IV. Provisional government'sjapproach to these
problems was to order analysis of economic
and financial position. It has commenced
steps along lines recommended.
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A. Peso devalued on 27 Oct to 18 pesos to
dollar (had varied from 5 to 14 pesos).
B. State trading institute abolished, and
govt. stressing encouragement of private.
initiative.
B. Farmers benefitted by. these steps and
by higher domestic prices fixed by govt..
D. Officials stressing need for foreign
investment, even mentioning desirability
of private and public capital in
expanding oil production.
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V. Strong Argentine interest in US aid sug-
gest by:
A. Special economic counselor for embassy
in Washington.
B. Argentine officials have indicated
they would like to discuss economic
problems informally with US Embassy.
C. "Informed sources" in Buenos Aires
report Argentina. wants $100,000,000
credit to shore up foreign exchange
position.
D. Officials believed interested in re-
viving Eximbank loan of $60,000,000
for steel plant--signature delayed
pending review by new govt.
E. US Ambassador believes US economic
help needed if Argentina. to recover
from present upheaval within reason-
able time.
F ~n sttirti OaavCt ecON~DW1LG, pro w~f
nl
l
a
6e -7 lha Us Gc~ a~at
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1. Political:
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Population: 850,000 - 1,000,000.
Area: 650,000 sq. miles.
Government completely controlled by USSR
personnel in all offices.
Mongolian Peoples Republic established
(10 June 1921)
18 Aimaks (provinces) - Subdivided into
Somons (pastoral
communities).
Great Peoples Hural - Principal repre-
sentative body.
Little Peoples Hural - Elected by Great
Hural - member/
10,000 people
Presidium of Little Hural- Highest organ of
state authority.
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H. Economic:
90% of population gains livelihood from
animal husbandry which is principal asset
to USSR. Economy controlled by USSR through
joint-stock enterprises operated by Soviet
nationals; first country in which joint
stock companies operated (1929). As of
1 Jan 1955, companies still there and only
ones left in bloc.
Almost all foreign trade with USSR - only
insignificant exchange with China. Principal
exports: wool, pelts, livestock, meat,
butter, animal products.
1955 Budget: Currency:
US $126,750,000 Tugrik, equals US.25
Industry: Petroleum- Sayn Shanda and Choi
Balsan (reserves potentially ten
times that of China's largest
field, Yumen)
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Transport: Trans-Mongol Railroad - 2,700,00
tons each way per annum - doubles
China's rail connection capacity
with Bloc; 750 miles shorter
than Manchurian route. Opens
up Sayn Shandy which is now in
commercial production.
III. Sociological:
Apalling standards of hygiene results in
lowest recorded life expectancy in world -
20 years, comparable to worst 19th-century
Indian conditions. Epidemics wisespread.
Enormous problem of venereal disease result-
ing in tendency for population to decline.
red of Chinese - continuing cones
flirt with Chinese in the Chinese Communist
"Inner-Mongolian Autonomous Region".
Primarily due to past role of Chinese as
usaiirers and political admistrators.
Dislike communism for pepression of buddhist
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causing government to emphasize need for
anti-religion campaign during past year.
Oppostion to communists resulted in disaster
to economy during 1930's when millions of
cattle were privately slaughtered as protest
to collectivization.
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 APp eivRP'iFlk"4ldase 2d Q5O2I17 ? C'" ?d I?MMOUT ~02-7
COMMUNIST CAMPAIGN AGAINST U E ELOPED AREAS
1. Communists have launched major economic
effort in support of their political ob-
jective to intervene openly in world
affairs.
A. Most drama-tic move is swift shift of
attention to Middle East and the sale
of arms.
1. Even as Moscow was smiling at
West last spring, it was making
arms offers to the Ara.bs.
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A coordinated Bloc effort has also been;"
launched against the belt of needy
nations stretching across southern
Asia.--a.n area with more than 700
million people, about 30 percent of
the world's population.
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1. The major target is India, which
is being offered the lion's share
of Communist largess.
2. The most immediate objective may
be Afghanistan, which, because of
its troubles with Pakistan, is
in the throes of a. basic policy
re-appraisal.
C. Communists enjoying success in other
areas which have resisted them before.
1. 1954 Latin American trade with
bloc increased by 400 percent over
1953. Bloc pressing to expand
this trade.
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II. Proposed Bhila.i steel mill for India with
one million ton capacity is most ambitious
Bloc project in free world to date.
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A. This deal seems virtually certain.
1. Both sides have large propaganda.
stake.
2. Both sides using top personnel
and plans.
C. Moscow is to submit detailed plans to
New Delhi for approval next month.
1. Krishna.macha.ri, Indian minister of
commerce and industry, says Soviet
steel plant will be built.
D. On 10 November, high-level Czech dele-
gation in India. offered to build a.
separate steel works.
III. The Bloc is already actively engaged in
other projects in India..
A. USSR is building diamond mining plant
for Panna. Diamond Syndica.te.
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B. Substantial and genuine Soviet offers
began in spring 1954.
1. USSR offered to supply a. cement
plant., help build a. soda, ash plant
and a. coal-washing plant.
2. In May 1955, Moscow agreed to give
technical aid, including tools and
materials, for Tra.nvancore-Cochin
tunnel (ra.ilwa.y or hydro-electric).'
3. In July, the USSR offered to supply)
generators for Bahkra.-Na.nga.l hydro-
electric project.
a.. Cost estimated between $16 and
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to gain economic foothold in India..
A. On 6 November, Czech delegation headed
by Foreign trade minister Dvorak
arrived in India, with proposals for
India's second five-year plan.
(Begins 1 April 1956).
1. Dvorak said Prague considered capi-`
ta.l investment tantamount to eco-
nomic interference. He suggested
Czechs would rather offer aid and
equipment and retain no hold over
parts of Indian economy.
2. Czechs have given Nehru a twin-
engined sports plan (Aero 45).
B. Hungary is building copper wire plant
at Patiala with a, capacity of 170,000
_pounds.
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2. Budapest mW also offering to
build a cement plant, caustic soda
plant, and soda. ash plant.
3. All these above activities are in
addition to regular trade pact.
1. In response Indian request, USSR
sent team of high-level economists
and mathematicians, including one
former GOSPLAN member, to Indian
Statistical Institute in November
1954.
2. Poland sent Oscar Lange, a top-
economic plannerh 1t4. 4.UA '
3. (US sent one junior statistician.)
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4. Latest Soviet offers include the
arrival, expected soon, of 7 ex-
perts to advise on exploration and
development of Indian oil industry.
a.. USSR has offered technical aid
and equipment in mineral de-
velopment program.
b. Has offered to build plant to
make oil-prospecting equipment.
D. (In contgt foregoing,, any cha.nre in
Congr ss-a.pproved oa.n of $ million
w ld evoke sh p reactis.. )
Scene now being set for even closer Soviet-
Afgha.n ties. Growing economic links with
Bloc and Prime Minister Daud's anti-
Pa.kista.n policy make Afghanistan most im-
mediately susceptible to Soviet blandish-
ments.
A. During 1954 Czechs extended $5 million
credit and USSR $6.2 million credit.
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Under zec cre i , cement p an,
is being built.
a. Following are being negotiated:
cannery, glass factory, and
briquette plant.
b. Czechs have reportedly given
another credit of $10 million;
may offer a. further $5 million.
B. Under Soviet credit, gasoline and grain
storage facilities, flour mill and
bakery, and road building projects all
completed.
1. Gasoline pipeline from Soviet
border still under discussion.
C. Czech interest rate 3 percent. Soviet
rate unknown.
1. (US Export-Import Bank loans for
ip*
Helmand Valley project at 3J and
41 percent.)
D. 127 Soviet technicians reported in
Afghanistan in August.
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1. Reports persist of more Soviet
offers.
a. These include hospital, uni-
versity.teachers and equipment,
and water systems.
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(USSR ha.s offered
take over this large irrigation and
power project, finish construction,
and pay off US loan.
1. Morrison-Knudsen (US contractor)
has been asked bring all equipment
in through USSR.
2. This may be beginning harassing
campaign and American companies
and personnel.
3. However, since Afghans themselves
deeply committed in Helmand Valley
project, they may not turn it over
to anyone.
F. Other ties with Bloc are direct result
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1. Improvement of roads leading to
USSR being rushed.
2. Oxus river entry port being
developed.
3. West German-Afghan trade passing.
both ways transiting USSR.
a.. Cost same or less than old
route through Pakistan.
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-.7TH i _____
Harvester to send trucks through
USSR.
5. Bloc arms--probably under $3
million cash deal with Czechs--
reportedly being delivered.
G. Major or policy decision now pending in
Afghan government.
1. Grand Assembly of Tribes (Loe
Jirga)--first since 1941--meeting
to endorse Da.ud's Pushtoonista.n
policy.
2. King Za.hir Shah's recent letters
to President Eisenhower, Turkish
president, and Queen Elizabeth
point up effort to elicit Western
intentions.
3. Even formal approval Da.ud's policy
entails need more military strength
and less dependence on Pakistan
trade routes.
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H. Daud is more pro-Soviet a.nd an
Pakistani than other Afghan elements,
but he is in control.
1. Moslem pressures against ties with
USSR vitiated by Arab deals with
Bloc.
2. Bulganin-Khrushchev stop-over end
of November in Kabul now scheduled
to be three-four day visit.
VI. Size and technique of Communist campaign
suggest high-level coordination as well
as skill and speed in countering Western
influence.
A. Czechs evidently chosen--possibly at
April meeting in Prague--to spearhead
campaign in Arab world.
1. Immediate aims are to:
a.. Nullify Western-sponsored mutual
defense planning.
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b. Encourage mergence o neutral-
ist bloc which would give Bloc,
as well as West, voice in area
affairs.
B. Penetration of India--and to lesser ex-
tent of Indonesia. and Burma--appears
to be Sino-Soviet-bloc-wide effort.
Some competition at lower levels evi-
dently ordered among Satellites.
1. Receptivity by underdeveloped
nations has grown as a result of
recent series of tours of bloc.
2. Experts as well as diplomats are
impressed by "sincerity" of Bloc
technicians to help with local
development plans.
3. Major General Sokehy, Indian
scientist recently returned from
three-month tour of Czechoslovakia,
and USSR with plan to make
India. self-sufficient--with Soviet
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advanced and developed
countries 300 years to reach
their present state under the
capitalist system. Russia,
through a different pattern of
society, has come up to their
level in 36 years. Under a.
similar pattern, China is mak-
ing very rapid progress."
C. Soviet leader
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nations.
1. Confirmed by Khrushchev
it would not be long before
Soviet industry was strong enough to
contribute to development of Asian
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in July 1955.
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2. Scope of effort forecast by Soviet
ambassador to Cairo in October 1955.
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a.. He said: "We will send eco-
nomic missions, scientific
missions, agricultural mis-
sions...and any other kind of
mission you can imagine to
help these countries."
D. Soviet offers are attractive because
of their easy terms, because recipi-
ents ca.n see no visible strings, and
because other sources of aid seem to
be drying up or less suited to local
conditions.
1. Most Bloc offers are at nominal
interest rates (2-2k percent) with
easy payments in local currencies
or traditional exports.
2. Governments are not asked for
political or military commitments.
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3. Countries burdened with ambitious
development programs and unsalable
surpluses see a. ready market in
the Bloc to get capital equipment
and arms.
4. Western offers for labor-saving
machinery in hard currencies are
not as attractive to nations with
great numbers of unemployed and
little cash.
E. While underdeveloped nations save
foreign exchange, the USSR builds up
credits in soft currencies,
1. This war chest may be used as the
Communists see fit within the
country.
VII. Besides arms deals with Arabs and strong
push against India. and Afghanistan, Commu-
nist effort can be seen throughout Middle
East, Asia., and Latin America..
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A. Egypt. USSR is known to have made
offers of goods and services on credit
to help with Aswan high dam.
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2. Cairo press report of 17 October
names figure of $300 million, which'
is about wha.t Egypt would need in
foreign exchange or goods.
2. More than 10 percent of Turkish
trade now with USSR--an increase of
85 percent in first half 1955 over
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C. Iran. Budapest stated in May it would,
be interested in building a, bridge.
1. Czech press said in June Czechs
had "established" sugar refinery
in Iran. No other reports.
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Prague's
plans for economic activity projected
recently to 1960. Czechs want to
build railroads, cardboard mill, tex-
tile plant, possibly dam on Euphrates
L river. ;
1. In May Czechs ordered market survey
of such projects as airports,
La.tta.kia seaport, government
buildings, gasoline storage tanks,
oil refinery, railways, port in-
stallations.
Poland wants to aid in railroad
building under new trade agreement.
3. Hungarians reportedly now building
roads.
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4. Bulgaria. offered o supply water
turbine and generator in August.
E. Lebanon. Czechs now negotiating to
supply 7 factories--procelain, crystal,
glass, sugar, and electrical materials.
1. Payments in kind over 7 years.
2. Hungary negotiating for cement
factory.
F. Burma.. Under three-year trade agree-
(13 c S) technicians are to study industrial
'`',,~G 1 development in Burma. USSR offered
f A" machinery, rice mill equipment, textile
factories, hydro-electric plants, and
agricultural aid.
1. Bloc is committed this year to buy
E~ ds one-half Burmese export rice sur-
plus. Only new market available
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2. Rumanian mission to visit Burma,
this month. Rumanians have
offered sympathetic consideration
any Burmese request petroleum and
mining exports.
3. Burmese purchasing mission touring
USSR.
4. Peiping has offered large loa.n
and/or aid.
a.. Chinese Communists to offer
Burmese agricultural training
in China..
b. Peiping has offered textile
mill equipment. Chinese
technicians now in Burma, on
survey.
G. Indonesia.. East Germans have contract-
ed to build sugar mill. Estimated cost
between $3.5 and $4.5 million.
1. Payment in kind over six years.
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3. Rumanians to build cement plant,
drill for oil and exploit minerals.
4. Czechs to build radio factory,
pharmaceutical plant, agricultural
machinery factory, and establish
food research la.b in Djakarta..
Czechs to give technical a.id and
equip canvas plant.
5. Hungary to build hydro-electric
and diesel plants.
6. Rumanians and East Germans now
drilling for oil at Atjeh.
H. Latin America.. Bloc meeting consider-
able success expanding both diplomatic
and commercial relations.
1. Latin American trade with bloc in
1954 increased by 400 percent over
1953.
2. Hungary seeking to open network
commercial agencies.
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3. Poland wants to expand trade with
Brazil to $25 million each wa.y.
4. Poland reported making favorable
offers to Ecuador.
5. Soviet export drive aimed at
Argentina. to reduce Moscow's
large deficit.
I. Czech Technical Directorate represents-:
tives have been touring Near East and
Southeast Asia.. This organization
handles exports military equipment.
1. This outfit behind Gua,tema.la.n
deal and in Egyptian arms deal.
2. To date, arms merchants have
visited India., Iraq, Burma., Egypt,
and Afghanistan.
VIII. Since 1946 to date the USSR has extended
almost $1.7 billion in economic (non-
military) credits to other Sino-Soviet
bloc countries.
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A. Europea.n satellites have received
about $1.3 billion.
B. Communist China, has received about
$430 million.
C. Interest ra.te averages about 2 percent,
ra.nging from 1 percent in case of
China. to 3 percent in the case of
Rumania..
D. USSR is still owed about $600 million
on these credits which sould be pa.id
in full by 1965.
E. These credits are in addition to
Soviet gift of $100 million and
Chinese gift of $340 million to
North Korea..
F. None of the above includes further
military and economic aid from USSR
to Communist China. estimated at
between $500 million a.nd $1 billion.
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 AAP&eW se 2d
I. British expect resume talks with Archbishop
Makarios soon, but they are still not able
to offer major concessions.
A. Governor Harding continuing anti-
terrorist measures. Plans shortly
make some announcement about economic
development.
B. British want ad hoc arrangement to
quiet nationalists without breaking
down British control.
1. Foreign Office says "dominion
status" out of the question,
not being considered.
a.. Cyprus unready for Commonwealth
membership.
b. Commonwealth members would
object.
C. Neither Greeks or Cypriots
would take it as permanent
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so u ion.
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of steps toward internal self-government
and indefinite postponement of self-
determination.
A. British see little room to maneuver.
They cite belligerent Turkish atti-
tude.
B. London sceptical view that prospects
some agreement have improved.
1. British believe Ma.karios will
insist on time limit.
2. Greeks have become a little
easier on Cyprus issue.
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the
USSR had 235,000 agricultural experts, both
men and women with five years of a.gricul-
tura.l college.
A. They are swarming over Soviet Union,
not completely occupied.
25X1 B.
they may be stand
by reserve for Soviet Point Four pro-
gram in Asia.
C. USSR is swarming with construction
workers, many of them soldiers in
uniform.
1. A means of reducing armed forces
could be to transfer soldiers to
civilian contracts.
25X1 II.
Trans-Siberian
ra,ilroa.d at Petropavlovsk was crowded with
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``row a o s of ea. er a.
cent Chinese.
B. (In this connection, for period 1953-
1957, almost 11,000 Chinese students
are to study a.broa.d, mostly in USSR.)
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JAPANESE CONSERVATIVE MERGER
I. Merger
(Japan Democratic and Liberal) of -SIr
A. 10 November compromise providing for
collective leadership paved way.
1. Liberal president Oga.ta has ac-
cepted formula. leaving Ha.toya.ma
as prime minister.
2. Election new party chief put off
until next spring.
3. In meantime, committee of Hatoyama.,
Ogata., and maybe two others will
run new party.
B. Yoshida's faction will go along, but
Yoshida., himself, is holding out.
II. Hatoya.ma, has decided on following program:
A. Cabinet resignation 21 November.
Special Diet session tentatively set
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B. Re-election Hatoyama as premier for
22 November.
C. Formation his third cabinet.
III. New cabinet expected retain Shigemitsu as
foreign minister to stress friendship for US,,
firmness towards USSR.
New party expected take tougher Liberal
Party line on negotiations with USSR and,
reparations issue with Philippines.
Merger will give government working
majority
in parliament.
A. Lower house of 467 requires 234 for
majority.
? 1. New party will. have close to 300
seats,
B. Brawling over party head expected to
continue within new party.
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A. Gen. Anastasio ("Tacho") Somoza,
dictator since 1934.
B. Plans to be "re=elected" next November.
1. General citizenry apathetic and
intimidated.
2. Opposition Conservative Party
frightened and divided.
3. Exiles desparate and have been
plotting for years.
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a. Scattered throughout Central
America.
b. Last attempt to kill Somoza in
April 1954 almost succeeded.
III. Somoza's National Guard is crucial factor.
A. 3,500 well-trained men.
1. Somoza's chief prop
2. Directly controlled by Somoza.
C. Somoza takes elaborate precautions
against assassination.
IV. New outbreak might again endanger peace in
Central America.
A. Five Central American countries tradi-
tionally involved in each other's
affairs.
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B. Somoza would blame unsuccessful attempt
on Costa Rica.
1. Costa Rican president Figueres and
Somoza enemies since 1948.
2. Somoza tried to oust Figueres in
January 1955 "revolt."
3. Somoza convinced that Figueres is
out to get him.
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