CURRENT INTELLIGENCE WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A000300090001-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 20
• Document Creation Date: December 15, 2016
• Document Release Date: May 11, 2004
• Sequence Number: 1
• Publication Date: June 25, 1954
• Content Type: REPORT

r R se 2004/06/24: CIA-RDP79-00927A01 00M '1-gyp. 5
CONFIDENTIAL
OCI NO.7106
25 Dune 1954
CURRENT
INTELLIGENCE
WEEKLY
DOCUMENT NO. --
NO CHANGS IN CLASS.
i [CLAS' :f!ED
CLASS. C IANGED TO: i"S S
UT
A
DATE, nEVIEWF-R;
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
ET
25X1
25X1
XMIDENTIAk
State Dept. review completed
Approved For Release 2004/06/24: CIA-RDP79-00927A000300090001-1
 Approved For Reirdse 2004/06/24: CIA-RDP79-00927AOQ000090001-1
THIS MATERIAL CONTAINS INFORMATION AFFECT-
ING THE NATIONAL DEFENSE OF THE UNITED STATES
WITHIN THE MEANING OF THE ESPIONAGE LAWS,
TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS-
SION OR REVELATION OF WHICH IN ANY MANNER TO
AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
The Current Intelligence Weekly has been prepared prima-
rily for the internal use of the Central Intelligence Agency.
It does not represent a complete coverage of all current
situations. Comments and conclusions represent the im-
mediate appraisal of the Office of Current Intelligence.
Approved For Release 2004/06/24: CIA-RDP79-00927A000300090001-1
 Approved For Rel fe 2004/06/ OP."r # #Df'79-00927A00( 0090001-1
25 June 54
CONFIDIENTIALSUMMARY OF CONTENTS
THE SOVIET WORLD . . . . . . . . . . . Page 4
THE INITIAL UN SECURITY COUNCIL ACTION ON GUATEMALA . . Page 6
Initial Security Council action on the Guatemalan
crisis has caused serious repercussions among UN members
with strong neutralist and anticolonial sentiments.
Comment on the United States' position in the matter
has been adverse.
THE MENDES-FRANCE GOVERNMENT . . . . . . . . . . . . . Page 8
Mendes-France's public promise to end the Indochina
fighting by 20 July or resign will almost certainly keep
him in power until then. Should he obtain an armistice,
he will be in a strong position to press the National
Assembly for the program of economic reforms which is
his major long-term interest.
US-SOUTH KOREAN RELATIONS FACE CRITICAL PERIOD . . . . Page 11
American relations with South Korea are entering a
critical period with the end of the Korean talks at
Geneva. President Rhee is likely to renew his demands
for American aid in unifying Korea by force.
ITALIAN CHRISTIAN DEMOCRATIC PARTY CONGRESS MAY
DETERMINE GOVERNMENT POLICIES . . . . . . . . . . . . . Page 13
The Italian Christian Democratic Party's national
congress may determine not only the fate of the Scelba
coalition but the course any successor government might
follow. The party's present leadership now appears
likely to retain control.
USSR STRENGTHENS ECONOMIC TIES WITH AFGHANISTAN . . . . Page 15
The reported agreement between the USSR and
Afghanistan to build a gasoline pipeline connecting
the two countries and negotiations for constructing a
hard-surfaced road across the border are in line with
Moscow's increasingly successful efforts to expand its
economic influence in Afghanistan. Coinciding with
Western successes in promoting a Middle East military
alignment, these efforts are probably directed at fore-
stalling any Afghan move to participate in Western plans.
'IN " SEL72E7'
TIAL
Approved For Release 2004/06/24: CIA-RDP79-00927A000300090001-1
 Approved Forclease 2004&4RgA-RDP79-009274,D00300090001-1
GROWING INDIAN INFLUENCE A DISTURBING FACTOR IN AFRICA. Page 18
Growing Indian political support of African nation-
alism is an irritant to white governments of East and
Central Africa and the Union of South Africa. While the
Indians give impetus to native movements, they are un-
likely to secure a firm political position locally be-
cause of widespread dislike and suspicion by the African
masses.
SECRET
Approved For Release 2004/06/24: CIA-RDP79-00927A000300090001-1
 Approved For lease 2004/O Icc TRDP79-00927@0300090001-1
25 June 54
THE SOVIET WORLD
The Geneva conference has entered a new phase following
the termination of negotiations on Korea, the departure of
the chief delegates of the principal powers and the investi-
ture of a new French premier pledged to seek an end to the
Indochina war before 20 July.
By making one minor concession and dropping several hints
of a future compromise, the Communists succeeded in keeping
the Indochina phase of the conference alive. Their proposals
to date, however, have not committed them to any withdrawal
from their maximum demands.
On the question of armistice supervision, Molotov pro-
posed that an Asian neutral--he suggested Indonesia--be the
fifth power on a five-nation international commission which
would include two Communist states, or that it be the third
power on a three-power commission with one Communist state.
Previously the Communists had insisted on a four-power com-
mission with two Communist states. However, the major de-
cisions before such a commission would still require unanimity.
Chou En-lai made a proposal on 16 June for a military
settlement in Laos and Cambodia which implied the possibility
of a withdrawal of Viet Minh forces from those states. In
addition, the Viet Minh delegate proposed that the conference
work out a political settlement for Vietnam alone and postpone
settlements in Laos and Cambodia. These moves have aroused
speculation that the Communists might eventually settle for
a partition of Vietnam and a neutral Laos and Cambodia. De-
spite such hints, the Communists are still in a position from
which they can easily return to their maximum demands.
Tho Communists' next moves regarding an Indochina settle-
ment may well be strongly influenced by Moscow's attitude
toward the Mendes-France government, the outcome of the
Churchill-Eden visit to Washington, and the results of the
military staff committees' talks in Geneva. In this connection,
the departure from Geneva of both Molotov and Gromyko suggests
that Moscow does not contemplate any major developments at
the conference in the next three weeks.
Peiping's initial editorial comment on the breaking off
of the Korean talks reiterated that the Communists have not
written off future negotiations and noted Chou's proposal at
Geneva for a resumption of talks. Pravda on 19 June charged
SECRET
Approved For Release 2004/06/24: CIA-RDP79-00927A000300090001-1
 SECRET
Approved For'$slease 2004/06/24: CIA-RDP79-009270300090001-1
the West with attempting to exclude China from participation
in a Korean solution by transferring the question to the United
Nations and warned that it will be impossible to resolve this
question without the Chinese Communists. Communist propaganda
pictured the Churchill-Eden visit to Washington as an attempt
to cover up fundamental Western differences and appeared to
reflect apprehension that the Washington talks might increase
the risk of Anglo-American intervention in Indochina.
Soviet comment on the investiture of Premier Mendes-France
shows cautious optimism and restrained approval of the new
government. A 20 June commentary declared that the replace-
ment of Laniel by Mendes-France constitutes a condemnation of
the "US-led coalition" and signifies recognition of the need
for a change in French policy. Pravda observed on 19 June
that this was not just another change of cabinets pursuing
the same policy, but "a definite political shift" caused by
"the failure of the foreign policy" pursued by every cabinet
since 1947. Ambassador Dillon reported that the French Com-
munists apparently estimate that they will have a better chance
to bring about the rejection of EDC if Mendes-France succeeds
in obtaining a cease-fire in Indochina.
All of the presidium members except Molotov and Pervukhin
attended the Soviet air force show on 20 June. Soviet reports
of the show again listed presidium members and alternates alpha-
betically following the precedent set at the recent Trade Union
Congress. The inclusion of P. K. Ponomarenko with the alternate
members of the presidium apparently negates earlier indications
that he lost this position when assigned to Kazakhstan in Feb-
ruary.
This practice of alphabetical listing deprives Malenkov
of one of his few remaining attributes of prominence within
the presidium. While such a practice could be designed merely
to emphasize collectivity, it may also indicate that stresses
within the ruling group have now resulted in an inability to
agree on precedence in listing.
SECRET
Approved For Release 2004/06/24: CIA-RDP79-00927A000300090001-1
 SECRET
Approved Forlease 2004/06/24: CIA-RDP79-0092703000901Fdne 54
THE INITIAL UN SECURITY COUNCIL ACTION ON GUATEMALA
The UN Security Council meeting of 20 June on Guatemala--
the end product of which was a mild resolution deprecating
bloodshed and calling for members to.refrain from giving
assistance to either side--has already caused serious reper-
cussions among UN members with strong neutralist and anti-
colonial sentiments. The resolution to refer Guatemala's
complaint to the Organization of American States was vetoed
by the USSR, and the heavy Communist propaganda on the issue
is evidently designed to further a recognized Soviet objective:
the moral isolation of the United States.
Following the action on its initial appeal to the UN on
19 June,,Guatemala requested another Security Council meeting
for 23 June. The initial Guatemalan move appears to have been
an attempt to circumvent the inter-American machinery provided
for by the 1947 Reciprocal Assistance Treaty and to gain
the widest possible propaganda opportunities. Action by the
General Assembly would also be possible under the 1950 "Uniting
for Peace" resolution, but no move to seek such action has
been initiated.
In an apparent attempt to rebut possible charges that
it was ignoring its legal obligations to seek regional reme-
dies, Guatemala on 19 June filed a complaint with the Inter-
American Peace Commission, semiautonomous five-member subsid-
iary of the OAS. It later asked the Peace Commission to defer
any action. Finally Guatemala withdrew the charge entirely on
22 June, possibly in the belief that it had more to gain by
restricting consideration of the case to the Security Council,
where the USSR can support the Arbenz case more effectively--
by the veto among other things. Guatemala's move was countered
by a Honduran appeal to the Peace Commission on 22 June.
Honduras' action probably reflected a desire to block full-
scale OAS and UN debate on the Guatemalan complaint.
Britain appears unwilling to propose any action with
regard to Guatemala that might. cause unfavorable repercussions
in adjacent British Honduras or involve London directly in a
situation likely to cause further friction in Western relations
with the Soviet Union. There is reason to believe that London
is not seriously concerned over Communist influence in the
Guatemalan government and that it does not believe the Guate-
malan army represents a threat to neighboring territories,
Foreign Secretary Eden's 21 June speech.in parliament,' firmly
supporting the attempt to refer the Guatemalan issue to the
OAS,reflects the British desire to keep the controversial
subject within the confines of a regional body.
6
SECRET
Approved For Release 2004/06/24: CIA-RDP79-00927A000300090001-1
 SECRET
Approved For9please 2004/06/24: CIA-RDP79-00927A #0300090001-1
In Scandinavia, the press has been highly critical of
the United States' position in the crisis. No official
Scandinavian reaction is available; but these countries nor-
mally follow the British lead on such issues in the UN.
France, though also supporting. the attempted referral of
the case to the OAS, is evidently trying to avoid getting too
firmly aligned with the United States on this issue. Contrary
to previous practice, the French did not give the American
delegation the usual opportunity to work out a mutually
satisfactory text before introducing the resolution that was
finally adopted by the Security Council.
Practically the only forthright Western European support
for the attitude of the United States toward the Guatemalan
hostilities came from West German chancellor Adenauer, whose
country is not a member of the UN.
The Arab-Asian bloc reflected its usual anticolonial
attitude. An Egyptian home service radio broadcast called the
situation "a warning to the Western countries regarding the
zones which they believe are subjected to them or to their
complete influence." In India, even conservative papers have
equated the "intervention" of the United States in Central
America with Chinese Communist intervention in Southeast Asia.
Communist propaganda has continued to exploit the situa-
tion as a prime example of American imperialism. Moscow before
and since the Security Council meeting has sought to support
the charge made then by Soviet delegate Tsarapkin that the
invasion was long planned and sponsored by the ruling circles
of the United States.
Official Latin American reaction has been scattered,
with most governments withholding comment. Only Honduras has
denounced the Guatemalan charges as unfounded, while the
Ecuadoran government and the Uruguayan Chamber of Deputies
have expressed concern over the "intervention now occurring
in Guatemalan affairs," Popular reaction thus far reported
has been divided,with the demonstrations against the United
States tending to be the more intense.
Several governments have applauded Lodge's speech in the
UN and have deplored Soviet use of the veto to block referral
of the dispute to the OAS. However, increased opposition to
Washington's plan for a full-scale OAS meeting at which Guate-
mala would be named as a threat to the hemisphere now seems
likely. Latin Americans would probably insist on considering
the "invasion" at any such meeting, unless it was called os-
tensibly to consider Communist infiltration in the hemisphere
rather than the specific question of Guatemala.
7
SECRET
Approved For Release 2004/06/24: CIA-RDP79-00927A000300090001-1
 SECRET
Approved For ,lease 2004/06/24: CIA-RDP79-00927 p03000 0Mne 54
THE MENDES-FRANCE GOVERNMENT
Pierre Mendes-France, who won investiture by the National
Assembly on his promise to end the Indochina war by 20 July
or resign, will almost certainly remain in power until then.
despite certain incompatibilities within his cabinet. Should
he reach an agreement on Indochina, he will be in a strong
position to press the assembly for action on the EDC treaty
and for special,: powers to carry out the economic reform
program which is his major long-term interest.
The new cabinet represents a sharper break with previous
cabinets than even Mend.es-France may have expected, since it
does not contain any of the prominent "men of continuity" who
have been in one after another of France's postwar cabinets.
It .is in effect a minority government, since the Socialists
are not represented, and it includes only minority Popular
Republican, Independent and dissident Gaullist members.
While the vote for Mendes-France represents a distinct
shift to the left, his disavowal of Communist support and the
Socialists' refusal to participate in his cabinet obliged him
to select more rightist members than he probably desired.
Members of the center parties, however, hold a number of key
positions,and a slight majority of all posts., Finance Minister
Edgar Faure, whose views closely parallel the premier's, is
the only prominent holdover from Laniel's government. Several
of the new ministers, though relatively young, have had
previous cabinet experience. Some. have worked'closely wlth''.
Mendes-France since June 1953 when he made his unsuccessful
bid, for the premiership.
The most important newcomers are probably Pierre Koenig,
close friend of De Gaulle, in the Defense Ministry; another
Gaullist, Christian Fouchet, in the newly created Ministry
of Moroccan and Tunisian affairs; and the Independent Guerin
de Beaumont, new deputy foreign minister. Koenig will be in
a position to voice army opposition to EDC. Pleven kept
this opposition under control.
Fouchet's appointment is apparently in conflict with
the moderate policy Mendes-France has proposed for North
Africa. Fouchet may have been forced on the premier by the
Gaullists in order to block new reforms. Guerin de Beaumont
will probably concentrate on EDC, his specialty. He still
seems to consider EDC the least undesirable, form of German
SECRET
Approved For Release 2004/06/24: CIA-RDP79-00927A000300090001-1
 SECRET
Approved Forlease 2004/06/24: CIA-RDP79-0092700300090001-1
rearmament, but his proposals of last January to revise the
treaty would destroy its supranational character.
Mendes-France reiterated to Under Secretary Smith on 20
June that an Indochina settlement is essential. It is not
clear just what terms he will offer or accept as a basis for
peace, but he assured Smith that he would not accept con-
ditions that constituted a surrender to the Viet Minh or even
a "disguised capitulation." He has. also expressed the hope
that the nine-power technical discussions on a cease-fire now
going on at Geneva will make sufficient progress to justify re-
convening the foreign ministers before 12 July. The pro-
fessed willingness of the Viet Minh representative at Geneva
to withdraw any remaining Viet Minh "volunteers" from
Cambodia and Laos will increase pressure on Mendes-France to
achieve an armistice.
As?regards EDC, Mendes-France insisted to Smith on 20
June that he continued strongly and solidly in favor of the
movement for European unity in every field. Nevertheless, he
was unwilling to seek assembly action on the EDC treaty before
attempting to find a compromise acceptable to all the deputies
who believe German rearmament necessary. He said he plans a
vote on ratification before the summer recess if a settle-
ment on the Indochina question can be reached first. The
premier told Smith that he would then ask for ratification of
the treaty with the understanding that France's EDC partners
would. be asked to accept the changes. He made no mention to
the under secretary, however, of concessions reportedly made
to pro-EDC deputies to win investiture. There is, moreover,
some reason to believe that his proposed EDC modifications
will be unacceptable to the treaty's supporters in France
and the five other countries.
Mendes-France's economic policy, from which his whole
program stems, is aimed at putting France in a competitive
position internationally. He favors increased production and
temporary restrictions on domestic consumption, and calls
for an increase in investments and retrenchment in non-
productive governmental expenditures, notably in the military
budget. He stated, publicly in October 1953, and in a letter
he is reported to have written Laniel in May 1954, that EDC.
should be delayed until such a policy is in force. It is
probable, however, that he would not advocate cutting military
expenditures in Europe if the Indochina question were solved.
SECRET
Approved For Release 2004/06/24: CIA-RDP79-00927A000300090001-1
 SECRET
Approved Folease 2004/06/24: CIA-RDP79-00927F,p,R00300090001-1
Mendes-France may face a crisis as soon as the results
of the new Indochina policy are clarified. The French poli-
tical writer Servan-Schreiber told Ambassador Dillon early
in May that Mendes-France would head a government which would
set forth a program covering all important issues, and would
call for dissolution of the assembly and new elections unless
it were accepted.
Mendes-France now is saddled with the responsiblity of
acting on his previous charges that preceding governments have
failed to deal with France's allies on a realistic basis. He
has consistently maintained that France can expect to be treated
on an equal footing only when it has frankly defined its capa-
bilities and has limited its commitments to those it can be sure
of fulfilling.
SECRET
Approved For Release 2004/06/24: CIA-RDP79-00927A000300090001-1
 Approved For lease 2004/OSf2'V.U-RDP79-00927A,10030002'o0Ju 1-1
ne 54
US-SOUTH KOREAN RELATIONS FACE CRITICAL PERIOD
American relations with South Korea are entering a critical
period with the end of the Korean talks at Geneva. President
.Rhee is likely to renew demands for American aid in unifying
Korea by force.
Seoul's probable attitude on unification, for the near
future, was indicated by Foreign Minister Pyun's statement on
16 June that the armistice agreement is no longer valid, that
his country is "perfectly free to take any action" it desires,
and that the UN General Assembly no longer has authority to
concern itself with the problem of Korean unification.
In the period immediately following the Geneva conference,
Rhee may well stage some dramatic move designed to harass the
UN Command and to discredit American efforts to unify Korea
peacefully--a move which would, however, involve no risks for
him. Such actions might include ejecting the Neutral Nations
Supervisory Commission from South Korea, demanding the recall
of the United Nations Commission for the Unification and
Rehabilitation of Korea (UNCURK), or withdrawing South Korean
forces from the UN Command.
The Dulles-Rhee agreement of 8 August 1953 called for an
American-South Korean conference following the Korean political
conference. Rhee's previous statements suggest he will demand
at these talks that the United States join him fully in military
action, provide naval and air support for South Korean forces,
or build up the latter so they can unify Korea without outside
assistance.
There are indications. that prior to and during this confer-
ence,Rhee will threaten military action to bring pressure to bear
on the United States. According to the South Korean press, he
has already instructed his military advisers to prepare for
military action. Earlier this year he reorganized his high
command, giving himself greater command flexibility which would
press on 11 June that "if fight we must, let us get started
as soon as possible."
SECRET
25X1
Approved For Release 2004/06/24: CIA-RDP79-00927A000300090001-1
 Approved Forlease 2004/06I"Cf&(JRDP79-00927A,aO0300090001-1
Rhee is apparently convinced, however, that without help
he cannot defeat the North Korean and Chinese Communist forces;
he has been told flatly by most of his military commanders that
a unilateral attack would be hopeless. In several communica-
tions with American officials he has acknowledged South Korea's
dependence on United States logistical support.
While his fanatical determination to unify Korea during his
lifetime could cause him to disregard rational military factors,
the weight of evidence suggests that he will not adopt this
course of action.
Rhee may try to embroil the United States in renewed fight-
ing by promoting Sino-American conflicts. He probably believes
that American support for South Korea depends on such conflicts,
and that in the event of war with China, the United States would
be obliged to reinforce the Korean front. It follows that the
danger of unilateral South Korean military action would increase
if the United States moved toward closer relations with Peiping.
The recent South Korean-sponsored Chinhae conference
reflects Rhee's frustration at being excluded from participation
in American plans for a defense community in Southeast Asia. As
that area is the one where Sino-American conflicts are most
likely to occur, he probably views membership in such a community
as an indirect means of ensuring American support for South Korea.
Rhee may also attempt to undermine American efforts to
establish a strong, friendly Japan, economically integrated with
Southeast Asia. He may hope to press American congressional and
public opinion to accept his "league" of small Asian nations
established at Chinhae, rather than Japan, as the basis of the
United States' position in the Far East.
Rhee's determined efforts to pursue these aims are likely
to cause a serious deterioration in American-South Korean
relations over the next few months. Relations will be further
exacerbated by a number of other issues capable of inflaming
Rhee. These include: (1) his previous demands for a 35-division
army with naval and air supporting units, including jets; (2) the
revision of the American-South Korean mutual defense pact; (3)
the conclusion of a status of forces agreement; (4) a greater
South Korean voice in the disbursement of American aid funds;
(5) the retention of the present unrealistic exchange rate;
(6) the recall of American economic co-ordinator Tyler Wood;
and (7) the cessation of American aid purchases in Japan for
Korean recovery goods.
12
SECRET
Approved For Release 2004/06/24: CIA-RDP79-00927A000300090001-1
 Approved For RJ ase 2004/06/24: CIA-RDP79-00927W300090001-1
25 June 54
ITALIAN CHRISTIAN DEMOCRATIC PARTY CONGRESS MAY DETERMINE
GOVERNMENT POLICIES
The national congress of the Italian Christian Democratic
Party in Naples on 26-29 June may determine not only the fate
of the Scelba coalition but the course any successor govern-
ment might follow. The Christian Democrats are by far the
largest single party in parliament, and decisions made at the
congress will almost automatically be reflected in government
policy.
The party's present center and left-of-center leaders
now appear likely to retain control, and this'would assure
the continuation of the Scelba cabinet. Their margin of
support is small, however. Should there be an open break,
the price for party unity would probably be compromises on
economic and social reforms and postponement of decisions on
controversial issues like EDC.
Four clearly recognizable factions, which basically agree
on foreign policy, are competing for control of the party;
(1) the right wing, within which former premier Pella and a
group of younger men seem to be taking over from Foreign
Minister Piccioni; (2) the "De Gasperi center"; (3) the left-
of-center Democratic Initiative, a reformist group more or
less under the leadership of former premier Fanfani; and (4) a
small group of leftists headed by Chamber of Deputies president
Gronchi, who advocated "conversations" with the Communist-
allied Nenni Socialists.
The biggest question facing the Christian Democrats since
the June 1953 election has been their relationship to the
Monarchists, whose 40 seats in the Chamber of Deputies seemed
to offer the prospect of a stable majority. The right-wing
leaders argue that a firm anti-Communist program requires a
lasting alliance with the Monarchists. Most Christian
Democratic leaders, however, fear that a move to the right
would jeopardize the party's reform program and its alliance
with the three small center parties, besides tending to
increase the popular vote of the extreme left.
More recently, the strength of the.right wing seems to
have been undermined by the center faction. This was ac-
complished when De Gasperi succeeded in causing Naples' Mayor
Lauro to split off from the National Monarchist Party, thus
decreasing the strength of the Monarchist bloc by about one
SECRET
Approved For Release 2004/06/24: CIA-RDP79-00927A000300090001-1
 Approved For$,Please 2004/0q/74C'SCg7 DP79-00927A,00300090001-1
fourth and correspondingly weakening the arguments of rightist
Christian Democrats. These right-wing leaders are now trying
to induce De Gasperi to reconsider his alliance with the
Democratic Initiative in the hope that he will prefer the
right-wing leaders to Fanfani as his partners for controlling
the party.
There also have been signs'of restlessness within the
Democratic Initiative, particularly in the trade union groups,
which is showing a tendency to pull away to the left. Fanfani's
personal prestige, which declined after his failure in January
to win the premiership, has recently shown some recovery. At
present, this faction remains the strongest and most compact
in the party.
Gronchi, chief of the party's left wing, is expected to
make a strong bid for prominence at the national congress.
He is reported to have drawn up a'declaration on policy which
is picking up support in other factions.
The moderate press in Italy is already predicting a
victory at the congress for a De Gasperi-Democratic Initiative
combination. This prediction is based largely on the decision
of the present National Council, the party's governing body,
to select its successor under new election rules which would
give complete control to the largest party group.
There was considerable opposition in the national council
to this decision, however, and it carried by only a small
vote. If the forthcoming congress likewise develops into a
closely matched contest, with the center and left-center united
to perpetuate the present leadership against the combined.
opposition of the left and right factions, the probable result
will be a "compromise council" and a party program watered down
enough to make it palatable to all elements.
In any event, some shifts in the roles of individual party
leaders after the congress seem certain, De Gasperi is con-
sidered likely to succeed Einaudi as president of the republic.
This would mean his withdrawal from the direction of party
affairs some time this.year. Fanfani is favored to succeed
De Gasperi as party secretary general, with Scelba remaining
as head of the government. Scelba's position as premier would
be somewhat weakened if Fanfani headed the party, but it would
not be seriously damaged.
14
SECRET
Approved For Release 2004/06/24: CIA-RDP79-00927A000300090001-1
 SECRET
Approved Forlease 2004/06/24: CIA-RDP79-00927W0300090001-1
25 June 54
USSR STRENGTHENS ECONOMIC TIES WITH AFGHANISTAN
The reported agreement between the USSR and Afghanistan
to build a gasoline pipeline connecting the two countries and
negotiations for constructing a hard-surfaced road are in line
with Moscow's increasingly successful efforts to expand its
economic influence in Afghanistan. Coinciding with Western
successes in promoting a Middle East military alignment, these
efforts are probably directed at convincing the Afghan govern-
ment that its economic interests can be served best by close
ties with the USSR and at forestalling any future Afghan move
to participate in Western plans.(see map, p. 17).
Until the renewal of negotiations for a Middle East de-
fense arrangement, the USSR displayed only routine concern over
Western assistance to the Afghan economy. The sole exception
was a strongly worded Soviet note in August 1952 protesting
French assistance in the development of oil resources in the
north.
In December 1953, following the resumption of Western
activities on behalf of Middle East defense, the annual Soviet-
Afghan barter agreement was renewed. It provided for an ex-
change estimated at approximately $25,000,000 in 1954--a
$9,000,000 increase over the estimated level of deliveries in
1953. In January, a $3,500,000 credit agreement was signed
for the construction of grain processing plants by Soviet
technicians.
In early April, the Afghan foreign minister stated that
Soviet ambassador Degtyar had called on him "practically every
day" since the announcement of the Turkish-Pakistani agreement
--on 2 April--and had pressed the Afghan government to accept
Soviet military, economic and technical aid. Late in April,
the USSR successfully concluded a second agreement providing for
a $600,000 Soviet loan to build gasoline storage facilities in
Kabul.
The proposed pipeline, which would cost Afghanistan the
equivalent of about $300,000, would extend south from the Soviet
border at Kaliv some 50 miles inside Afghanistan to Mazar-i-
Sharif, where there are gasoline storage facilities built b
Soviet technicians following World War. II.
Afghanistan imports more than half of its gasoline from the USSR,
and the proposed pipeline, in addition to the storage tanks at
Mazar-i-Sharif and the proposed installations at Kabul, would
increase Afghan reliance on Soviet imports.
15
SECRET
25X1
Approved For Release 2004/06/24: CIA-RDP79-00927A000300090001-1
 Approved For Release 2004/OFD/2 ''9I&(RDP79-00927AGg`0300090001-1
While the terminal points of the proposed hard-surfaced
road are unknown, it would probably extend south from Mazar-i-
Sharif, near the Soviet border, to Kabul, and would be of great
value in facilitating the flow of commerce between the two
countries. Such a road has long been the pet project of the
Afghan king. Soviet ambassador Degtyar recently told the Ameri-
can ambassador that the USSR is not at this time considering
the construction of a railroad in northern Afghanistan.
Moscow's decision to grant aid to Afghanistan is in line
with long-standing Soviet policy of encouraging its status as
a buffer state by keeping the country, particularly the northern
region, free of foreign influence--other than Soviet. The Soviet-
Afghan nonaggression treaty of 1931 binds each country to re-
frain from steps which might cause military injury to the other
and not to join any political or military alliance directed
against the other.
Moscow's interest in the northern region has been reflected
for several years in Soviet propaganda charging that the area
is being penetrated by American agents operating under the UN
and Point Four programs. Numerous reports have also indicated
that the Uzbek, Tadzhik and Turkmen tribes which have ethnic and
linguistic ties with Soviet peoples have been infiltrated by
Communist agents. Moscow's current increased economic activity
probably does not, however, presage an all-out effort to subvert
the Afghan government.
In the face of increased Soviet efforts to expand economic
ties, the Afghans are apparently attempting to hew to their
traditional line of playing off the USSR against the West. They
have repeatedly called the attention of the American embassy in
Kabul to the difficulties of their'position and to the Soviet
"pressures" being exerted on theme
Afghan willingness to negotiate a series of economic agree-
ments, has furthered Moscow's current policy-of maintaining a
buffer between Pakistan and the USSR's central Asian industrial
complex. Since the Afghan economy is, however, still primitive
and self-reliant in most of its aspects, it is unlikely to be-
come inextricably tied to the USSR through the kind of aid now
being proffered.
SECREt'
Approved For Release 2004/06/24: CIA-RDP79-00927A000300090001-1
 25X1
Approved For Tease 004/06/24: CIA-RD 9-00927AQ00300090001-1
6
64 Samarkand
6
72
U.
S. S.
CHINA
R.
?
Stalinabad ?~~
~_ `(
?
Mary
~n
P,.K/,horog ~~~//~~l
Fayza bds. / ~Y !
~'
Termez
?
/
??^\
j Aq Chah
Shib
h
?,
//
Khanabad
.
arg
an Mazar-i-S aril
36
36
Mai mane
~
?
~
Puhi-Khumri / ??
IAMMU
Kushka ?'
-
` AND
j
% :KASHMIR
Qala Nau
j
(Status in dispute)
Herat
KABUL
~%~
Peshawar Srinagar.
?
Pass
AFGHANISTAN
Thai
/
?
A
Jammu
?~
,
Farah
32
Wan 32'
Khwa 32
j
Kandahar ,~
s.
Lahore
// ~
j/ Qala-i-Hang
Spin Baldak
?
Chaman
/01
Quetta
Multan
INDIA
P A K I S
T A N
J
1..,
28
BIKANER 28
1
^.
AFGHANISTAN
IRAN
ECONOMIC TIES WITH U.S.S.R.
Oil storage (completed)
Q Grain processing
aTurbat
Oil storage -(agreed)
-'
? ?? Pipeline
Road--(presumed)
HYDERABAD
All-weather road
KARACHI
-i Railroad (selected)
ARABIA
N SEA
...
23 JUNE 1954
z4
of
Rann
o too zoo
Kutch
Statute Md.,
0 loo 200
64
6
8'.':.>:'
Kimmeters
25X1
Approved For Release 2004/06/24: CIA-RDP79-00927A000300090001-1
 SECRET
Approved Forr?lease 2004/06/24: CIA-RDP79-0092700300090001-1
25 June 54
GROWING INDIAN INFLUENCE A DISTURBING FACTOR IN AFRICA
Growing Indian political support of African nationalism
is an irritant to white governments of East and Central Africa
and the Union of South Africa. While the Indians give impetus
to native movements, they are unlikely to secure a firm politi-
cal position locally because of widespread dislike and suspi-
cion by the African masses.
The million-strong Indian community, concentrated in the
Union of South Africa, Mauritius, and British East Africa, has
dominated small business for a generation. The Indian's emer-
gence as a political factor, however, is a relatively recent
development. Faced with racial discrimination similar to that
enforced against Africans, the Indian supports the African
nationalists and furnishes leadership in the campaign against
their governments.
The introduction of new political methods and leadership
by Indians is best demonstrated in the Union of South Africa,
where their aid to other non-European elements has greatly
strengthened the challenge to white supremacy. The traditional
Indian method of passive resistance was used successfully in
the recent "defiance campaign" against the Union government's
racial program. Another tactic, a boycott by Africans against
European shop owners, is achieving appreciable results in the
Cape Province.
The leftist Indian National Congress is working for co-
operation among the non-Europeans of South Africa, and Indian
leaders are very influential within the executive council of
the African National Congress.
In Kenya, there is widespread white criticism that the
Indian community has not done its share to combat the Mau Mau.
Some of the Indians have used commercial resources to aid ter-
rorists, and individual Indian traders are known to have sup-
plied the Mau Mau with arms and food. The former Indian
commissioner in Nairobi is widely believed to have furnished
financial aid to the terrorists.
The bitter and continued attacks by Indian leaders on the
Kenya government, charging European overrepresentation and dis-
criminatory social and economic practices, has encouraged the
African nationalists and subversive movements. Indian boycotts
of elections and reluctance to co-operate with government re-
forms have handicapped progress toward the multiracial state
envisaged by Britain for Kenya.
18
SECRET
Approved For Release 2004/06/24: CIA-RDP79-00927A000300090001-1
 Approved For RJtase 2004 4'iC1AlRDP79-00927AQW300090001-1
,/ CONEDENTIAL
Particularly significant to the problem of Indians in Afri-
ca is the increasing attention which Nehru's government is de-
voting to the continent. In the United Nations, India has led
Arab-Asian bloc attacks on colonialism and racial discrimination
and has reinforced its words with an economic boycott of the
Union of South Africa. even though efforts to have the UN con-
demn apartheid and the treatment of Indians in the Union of South
Africa have failed, India has kept these issues alive from ses-
sion to session and has furnished the investigating committees
with data.
An India-African-Council was formed in Bombay in 1953 with
official Indian funds to sponsor study by Africans in India and
to conduct propaganda in Africa. Many scholarships and free
trips to India have been given to African students and politi-
ni a noc i ni 1 iidi ncr these from areas in which there are few Indians.
Several of the Indian commissioners sent to African posts
have been very active politically and have interfered in local
situations. The commissioner recently recalled from Nairobi
was anti-British, was loudly critical of the Kenya government,
and widely suspected of financing African subversive movements.
In South Africa, the commissioner's office is known to have fi-
nanced and provided leadership for local antigovernment:organi-
zations. In Mauritius, the newly appointed commissioner is ex-
pected to improve the political organization of the local Indians,
and will probably continue anti-British activity.
Increased Indian political attention to other African areas,
where there are few Indians, is foreshadowed by a recent expan-
sion of Indian diplomatic service to include an embassy in Ethio-
pia, a commissioner in the Gold Coast, a consulate general in
Madagascar, and a high commissioner to the Federation of Rhode-
sia and Nyasaland.
The near stranglehold Indians have over small retail trade
and middleman activities has long frustrated Africans,and the
resultant dislike could easily jeopardize the Indians' position
if the Africans received political power. Friction in daily
'living between the two peoples is almost inevitable and liable
at any time to erupt into violence such as the Durban riots of.
1949, when over 100 persons were killed.
Despite the current co-operation between African and Indian
leaders and the Tatters' professions of sympathy for African
nationalism, the Africans' basic dislike of the local Indian is
likely to continue as a stumbling block to effective partner-
ship.
19
COMMENTIAL
Approved For Release 2004/06/24: CIA-RDP79-00927A000300090001-1