WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A004500050001-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 34
• Document Creation Date: December 21, 2016
• Sequence Number: 1
• Content Type: SUMMARY

Approved For Release 2008/04/21: CIA-RDP79-00927A004500050001-9
State Dept. review completed
26 June 1964
GROUP I Excluded from outornatic
downgrading and declassification
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SECRET
(Information as of 1200 EDT, 25 June 1964)
THE COMMUNIST WORLD Page
COMMUNIST CHINA TAKES CAUTIOUS LINE ON LAOS
Peiping has launched a major propaganda campaign cen-
tered on alleged US intervention, but has carefully
avoided any stated commitment to military countermoves.
MOSCOW MODIFIES TACTICS IN DRIVE FOR COMMUNIST CONFERENCE 2
To break the impasse on this issue in the Communist
movement, Moscow has apparently adopted a compromise
formula stressing its earlier proposal for a prepara-
tory commission rather than a full-fledged conference.
RECENT TRENDS IN SOVIET AIRCRAFT PRODUCTION
Combat-type aircraft will probably make up 55 percent
of total production and account for 45 percent of ex-
penditures in 1964, with emphasis on supersonic fight-
ers. Noncombat aircraft spending is shifting to cost-
lier, higher performance models.
AREA NOTE
On Chinese Communist Trade
PEIPING STEPS UP ACTIVITIES IN THE MIDDLE EAST
The $28-million long-term credit to Yemen is China's
latest move to compete with the USSR for influence.
Peiping has warned that Soviet aid will make recipi-
ent nations dependent on Moscow.
THE FOURTH POLISH PARTY CONGRESS
The proceedings demonstrated that Gomulka has reassert-
ed his control and that his conservative policy will
remain essentially unchanged. The purge of his oppo-
nents in the central committee strengthens it but at
the cost of imagination and flexibility.
RUMANIAN-YUGOSLAV-SOVIET RELATIONS
Although Yugoslavia views Rumania's independence within
the Soviet bloc favorably, it has probably urged Ruma-
nian leaders to be more cautious in proclaiming their
position. The Yugoslavs fear disruption of both Euro-
pean stability and the improving East-West relations.
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26 June 64 CURRENT INTELLIGENCE WEEKLY SUMMARY Page i
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THE COMMUNIST WORLD (continued)
YUGOSLAV - WEST GERMAN RELATIONS
Prospects for improved relations seem brighter now than
at any time in the past year. Both countries are trying
to minimize their political and economic differences in
preparation for new discussions on 26 June.
THE SITUATION IN,LAOS
Premier Souvanna has called for stronger military ac-
tion against the Pathet Lao. There has been no prog-
ress toward new talks among the factions.
Page
8
The heads of government met long enough to agree on fur-
ther talks at "some future date," but Malaysia first wants
all Indonesian guerrillas withdrawn from Borneo, and Su-
karno still calls for a new survey of opinion in the area.
The Shastri government apparently plans tighter controls
over food distribution to check the rise in food prices
caused by hoarding, poor harvests, and middleman specula-
tion.
INDIA CONTENDS WITH SOARING FOOD PRICES
DEVELOPMENTS IN THE CYPRUS DISPUTE
Turkish Prime Minister Inonu may face serious opposi-
tion if he tries to moderate his government"s policies
toward Cyprus. Athens is increasing its military sup-
port for the Greek Cypriots.
MOROCCAN-ALGERIAN BORDER INFILTRATIONS
Despite recent mutual gestures of amity, King Hassan
believes Moroccan dissident border infiltrations are
part of Ben Bella's plan eventually to unseat him..
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26 June 64 CURRENT INTELLIGENCE WEEKLY SUMMARY Page ii
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ASIA-AFRICA (continued)
Page
CONGO REBELLIONS STILL SPREADING 14
TANGANYIKA MOVES SLOWLY TO CURB ZANZIBAR PRO-COMMUNISTS 15
President Nyerere, still determined to avoid using
force, is confident that the situation is improving
but feels it will take six months to establish full
control over the island.
EUROPE
FRENCH INTEREST IN EASTERN EUROPE
President de Gaulle is re-establishing cultural and
economic ties with Communist bloc nations to make
France's presence felt in Eastern Europe and to en-
courage nationalism he feels will spoil bloc unity.
THE ITALIAN GOVERNMENT'S ECONOMIC PROBLEMS
The Moro government's stabilization program has shown
some success thus far, additional measures are expect-
ed to be announced soon, and a large EEC "credit pack-
age" may be extended. A new rash of strikes, however,
could lead to wage increases that would accelerate in-
flationary trends.
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26 June 64 CURRENT INTELLIGENCE WEEKLY SUMMARY Page iii
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EUROPE (continued)
AREA NOTE
On Sweden
WESTERN HEMISPHERE
NEW TERROR IN BRITISH GUIANA
Almost all the victims in the new outbreaks are Negro,
and there is a serious possibility of large-scale Negro
retaliation against East Indians.
DETERIORATING SUPPORT FOR ECUADOR'S GOVERNING JUNTA
After nearly a year of power, the junta's prestige is
at a new low because of popular disenchantment and
military dissatisfaction over conditions in the armed
forces and with individual junta members.
ARGENTINE POLITICAL TENSION
President Illia's indecision and ineffective approach
to the nation's severe economic problems have created
strong public opposition to his government. While
pressures are mounting to change his cabinet, there
seems to be no immediate danger of a coup, although
rumors are prevalent.
Page
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26 June 64 CURRENT INTELLIGENCE WEEKLY SUMMARY Page iv
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COMMUNIST CHINA TAKES CAUTIOUS LINE ON LAOS
Peiping's fundamentally
cautious policy in Southeast
Asia is reflected in its response
to current developments in Laos.
About ten days ago the Chinese
launched a major propaganda cam-
paign centered on charges of US
intervention, but all their offi-
cial statements have carefully
avoided any commitment to mili-
tary countermoves in Laos. Even
Foreign Minister Chen Yi's omi-
nous remarks concerning Laos on
24 June, the toughest statement
to date by a Chinese Communist
leader, are deliberately vague
concerning specific Chinese ac-
tions, although they hint at the
possibility of escalation.
On 13 June, two days after
the first air attack on Khang
Khay, propaganda broadcasts con-
cerning Laos jumped to 25 per-
cent of Peiping's total radio
output and remained at about
this level for eight days. As
the volume of the outcry in-
creased, it took on a harsher
tone, and the language seemed
calculated to convey an impres-
sion of mounting wrath.
There was angry talk about
a new US "blood debt" and vague
warnings that continued inter-
vention in Laos could set off a
"new civil war" which might
spread further. Such statements
appeared designed to project a
threatening image which would
generate political pressure in
the free world for negotiations
on Chinese terms--the full Geneva-
type conference with an expand-
able agenda for which Peiping has
The Communist World
repeatedly called. These blasts
produced little reaction any-
where, however, and on 20 June
the Chinese sharply reduced the
volume of their propaganda--
probably to permit a reassess-
ment and possible shift of line.
This blend of militancy and
caution was demonstrated by the
Chinese announcement on 18 June
of a major military review in
Peiping attended by Mao Tse-tung
and other top leaders. Such
demonstrations of military
strength have been rare in re-
cent years, and the timing of
this one suggests it was designed
to remind neighbors in Southeast
Asia--and potential enemies--of
Peiping's military strength.
However, the New China News
Agency commentary, which claimed
that the review "fully demon-
strated" Chinese military pre-
paredness, carefully avoided
any suggestion that this strength
might be used outside China's
borders.
Peiping's reluctance to
stiffen its propaganda line with
anything approaching a firm pub-
lic commitment has been matched
by its failure to use its formid-
able military striking force in
South China to support its prop-
aganda. If the Chinese wished
to raise tension in the area they
could do so easily by making ob-
vious changes in deployment or
initiating new activities, since
units now in place near the bor-
der could launch a devastating
round attack into Laos. ~
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26 June 64 CURRENT INTELLIGENCE WEEKLY SUMMARY
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MOSCOW MODIFIES TACTICS IN DRIVE FOR COMMUNIST CONFERENCE
Although the Soviet leaders
continue to insist that a world con-
ference is imperative, they appear
to have modified their tactics in
an effort to break the impasse on
this issue within the Communist
movement. There are indications
that extensive consultations with
foreign Communist leaders in the
first part of June resulted in a
compromise formula which stresses
Moscow's earlier proposal for a
preparatory commission rather than
a. full-fledged conference of all
parties.
This formula was advanced pub-
licly in Gomulka's report on 15 June
to the Polish Party Congress in
which he vigorously denounced
Chinese "delaying tactics." He
cautioned that a world conference
"requires patient and good prepa-
rations" and rejected Peiping's
right to veto such preparations.
Gomulka. urged that a, committee com-
posed of parties representing the
"most important areas of the world"
begin preparations in the'Very near
future." This committee would con-
duct preliminary discussions on a
conference agenda., prepare draft
documents, and fix the date for the
international conference. Gomulka
declared that the opposition of
"one party or a. few parties" should
not be an "impassable barrier" to
a. conference, but he deleted a,
highly charged sentence from his
advance text which asserted that
parties refusing to participate in
such a meeting "will prove that
they have placed themselves outside
the international movement."
Soviet party secretary Podgorny,
who headed the Soviet delegation,
welcomed Gomulka's speech, which
was more forthright than Poland's
earlier equivocal statements sup-
porting the USSR's position.
Podgorny underlined the "identity"
of the Soviet and Polish parties on
the question of Chinese "splitting
activities" and agreed that confer-
ence preparations should begin "as
soon as possible."
The Soviet leaders clearly be-
lieve it will be easier to rally an
impressive majority in favor of
preparatory talks than to get sup-
port for a, formal conference. This
tactic would place the Chinese, who
want to postpone such talks until
next year, in a vulnerable position.
Several key foreign parties, which
have been unwilling to endorse an
early conference, have indicated
approval of preparatory discussion.
resolve itself."
Although the Soviet leaders
are determined to maintain pressure
for a, conference as a. means of
checking the disarray in the
Communist world, they are trying
to overcome foreign reluctance by
constant assurances that the pur-
pose of such a meeting will be to
"strengthen the unity and cohesion"
of the movement, not to excommuni-
cate the Chinese and their allies.
Khrushchev, however, could not
conceal his impatience with for-
eign Communist "neutralists" in
his 12 June speech when he declared
"it would be unpardonable for Com-
munists to sit with folded arms
and wait for the disagreement to
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CURRENT INTELLIGENCE WEEKLY SUMMARY
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14W V40
FIGURE 1
ESTIMATED PRODUCTION OF AIRCRAFT IN THE USSR
1955-1964
'2575 2660
12525
FIGURE 2
ESTIMATED EXPENDITURES FOR
PROCUREMENT OF AIRCRAFT IN THE USSR
1955 -1964
2385 ;2405 1
HELICOPTERS, 190 230 210
I TRAINERS, I
1959 1960 1961 1962 1963
RECONNAISSANCE AIRCRAFT
TRANSPORTS
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RECENT TRENDS IN SOVIET AIRCRAFT PRODUCTION
The number of aircraft pro-
duced in the USSR has declined
steadily since 1955. Expendi-
tures decreased from 1955 to 1960
but have since remained rela
tively stable. Current trends are
expected to continue through
1964.
The percentage of combat
aircraft dropped from 70 percent
of the total production in 1955
to 15 percent in 1959, then be-
gan to rise, and will probably
level off by the end of this year
at 55 percent. This increase is
occurring as supersonic aircraft,
primarily fighters, are built to
replace subsonic aircraft pro-
duced in the early and mid-1950s
when Soviet production of mili-
tary planes was at its height.
Combat types, which accounted
for nearly 90 percent of all ex-
penditures for aircraft in 1955,
have accounted for a stable 30-
45 percent since 1959 and are
expected to absorb 45 percent of
the total in 1964.
The disparity between this
relatively steady rate of expendi-
The Communist World
tures for military aircraft and
the rising portion of total num-
bers of aircraft that are combat
models can be attributed to two
principal factors: more money
for combat aircraft is being di-
rected to fighters and less to
bombers; spending for noncombat
aircraft is shifting to more
costly, higher performance models.
In 1964, up to four new
models of transport aircraft will
be introduced, while production
of the current four turboprop
models will be continued at a
reduced level.
The number of fighters and
bombers to be produced this year
will not differ enough from 1963
to cause major changes in costs
or resources used. No heavy bomb-
ors are either in production or
anticipated. No major changes
are anticipated for medium or
light bombers; the single model
of each now in production will
be continued. There may be a 25X1
slight increase in the continued
output of four models of fighters. 25X1
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26 June 64 CURRENT INTELLIGENCE WEEKLY SUMMARY
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SECRET The Communist World
Chinese Communist Trade:
Peiping 's trade with the non-
Communist world continues at a
record pace, with China buying
large amounts of agricultural
goods as well as increased
quantities of industrial prod-
ucts that it formerly bought in
large part from the Soviet bloc.
This trade last year rose about
20 percent to an estimated $1.5
billion--accounting for nearly
55 percent of China's foreign
commerce. Trade in 1964 may be
even larger.
Trade with the Far East ac-
counts for the largest part of
this
upsurge. Sino-Japanese
trade
is
expected to
increase
over
40
percent this
year to
about
$200 million.
Peiping's
exports to Hong Kong, its main
source of foreign exchange, are
running well above last year
when they earned China a record
$250-million trade surplus.
In Western Europe, the
Chinese have purchased at
least $50 million worth of com-
plete plants since mid-1963.
A spokesman for a Dutch trade
group recently reported addi-
tional sales of fertilizer
plants, ships and other heavy
industrial equipment to China.
Peiping has already or-
dered about 5 million tons of
grain in the West this year com-
pared with a total of 5.7 mil-
lion tons in 1963, and is buy-
ing cotton at'a rate that will
roughly double last year's pur-
chases of about 300,000 bales.
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26 June 64 CURRENT INTELLIGENCE WEEKLY SUMMARY
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PEIPING STEPS UP ACTIVITIES IN MIDDLE
Peiping's $28-million long-
term credit to Yemen is the lat-
est Chinese move to compete with
the Soviet Union for influence in
the Middle East. Peiping has never
had any significant influence with
the Communist parties in this area
and is therefore concentrating
its main effort on fostering con-
tacts with nationalist government
leaders.
Under the terms of the 20-
year, interest-free arrangement
concluded during President Sallal's
visit to Peiping early this month,
the Chinese will build a new road
through rebel-held territory from
Sana to Sada, repair the Sana-
Hudaydah road, and construct a
hospital and textile factory.
Original construction of the Sana-
Hudaydah road, completed in 1961,
was financed by a Chinese credit
of $16 million extended six years
ago. About 1,000 Chinese came to
Yemen to build that road, and the
latest agreement will probably
bring a new wave of Chinese tech-
nicians and laborers.
After announcing the assist-
ance to Yemen, Peiping opened a
bitter attack on Soviet aid to
underdeveloped areas. At the
Second Afro-Asian Economic Seminar
in Pyongyang on 20 June, the chief
Chinese delegate warned that ac-
ceptance of Soviet aid will wreck
a country's economy and make it
dependent on Moscow. Citing Pei-
ping's own experience, he charged
that Soviet foreign aid serves
only Moscow's "great-power chauvin-
ism and national egotism."
In its competition with the
Soviet Union, Peiping is forced to
rely on polemical attacks to make
up for the modest quantity and
relatively primitive character of
its own aid programs, which achieve
greatest success in backward areas
like Yemen.
Syria has recently become a
center for China's stepped-up prop-
aganda efforts. Baath Party sec-
retary general Aflaq has termed the
Chinese Communist envoy the most
active in Damascus. New China
News Agency publishes a daily bul- 25X1
letin which is distributed to vari-
ous political and commercial groups.
Central to Peiping's propaganda
campaign has been renewed emphasis on
the emotion-charged Palestinian prob-
lem. The Chinese hope to curry Arab
favor by contrasting Peiping's whole-
hearted support for militancy against
Israel to Soviet endorsements of a
peaceful settlement. Liu Shao-chi
at a mid-June banquet for visiting
Sudanese President Abboud, for ex-
ample, pledged Chinese support for
the Arabs' efforts to regain their
"proper rights" in Palestine. Polit-
buro member Peng Chen at a rally for
Yemeni President Sallal, pointedly
hailed the Arabs' efforts to achieve
unity "in their own methods"--in an
obvious effort to capitalize on
Khrushchev's gratuitous advice to
the Egyptians during his recent 25X1
Cairo visit that Arab unity should
be based on proletarian solidarity,
transcending ethnic boundaries.
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CHANGES IN THE POLISH PARTY LEADERSHIP
AFTER THIRD CONGRESS
(March 1959)
Cyrankiewicz
Gomulka
Gierek
Jedrychowski
Kl iszko
Logo-Saw i nski
Morawski ('Resigned
November 1959)
Ochab
Rapacki
Spychalski
Zambrowski (Removed July 1963)
AFTER, FOURTH CON GRESS
(June 1964)
POLITBURO
Cyrankiewicz
Gomulka
Gierek
Jedrychowski
KI iszko
Loga-Sowinski
Zawadzki *
Ochab
Rapacki
Spychalski"
Szyr * (Deputy Premier - Investments;
Waniolka (Deputy Premier - Industry)
CANDIDATE
POLITBURO
(Created at 4th Congress)
Jagielski (Minister of Agriculture)
Jaroszewi cz (CEMA Representative
Strzelecki
SECRETARIAT
Albrecht (Removed January 1961)
Gomulka Gomulka
Gierek,(Dropped at 4th Congress)
Jarosinski Jarosinski
Jaszczuk (Co-opted July 1963) Jaszczuk
Kliszko Kliszko
Matwin ("Resignation Accepted"
November 1963)
Morawski (Replaced Ochab from May
1957 to January 1960)
Ochab (Ca-opted January 1960) Ochab
Starewicz (Co-opted July 1963) Starewicz
Strzelecki (Coopted January 1960) Strzelecki
Tejchma **
Zambrowski (Removed July 1963)
* Ex - Stalinists
**May assume Ochab's agricultural responsibilities
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The Communist World
The Polish party congress
from 15 to 20 June demonstrated
that Gomulka. has reasserted his
dominance over dissident party
factions. His keynote address
suggested that his present con-
servative policies will continue
essentially unchanged, although
he moved slightly closer to Mos-
cow's side in the Sino-Soviet
dispute.
While the personnel changes
made at the conclave do not af-
fect the continuity of top party
leadership, Gomulka, neverthe-
less did allow several appoint-
ments which give the hard-liners
an increased role in party af-
fairs. He apparently was trying
to focus the party's attention
on certain of the country's basic
problems: agriculture, trade,
and security.
Those elevated to more
responsible party positions are
men experienced in the economic-
administrative apparatus. The
politburo was increased from
10 to 12 by the addition of
deputy premiers responsible for
investment planning and indus-
trial technology. Two of the
three candidate members of the
politburo--a. new organizational
category--hold high government
economic posts. The third is
hard-line security boss Ryszard
Strzelecki.
Gomulka.'s purge from the
central committee of "ideologi-
cally alien" elements of both
right and left indicates a.
strengthening of the party's
center group, but at the cost
of flexibility and imagination
in party policies. Men who have
opposed Gomulka's rigidity in
the past were dropped from the
new 85-member central committee,
while its 27 new members are
predominantly colorless but
competent functionaries.
The renewed emphasis on
ideological commitment and
vigilance against "alien ideo-
logical influences" suggests
that there will be little lib-
eralizing of domestic policies
in the immediate future
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The Communist World
RUMANIAN - YUGOSLAV - SOVIET RELATIONS
Rumania's increasingly out-
spoken defense of its independ-
ent position in the Soviet bloc
appears to have given rise to
the hastily arranged border
meeting between the Rumanian
and Yugoslav leaders on 22 June.
The Yugoslavs probably urged
Rumanian Party first secretary
Dej to proceed with caution in
his campaign for independence,
and Dej, for his part, probably
tried to capture Tito's support.
After his meeting with Khru-
shchev in Leningrad on 8 June,
Tito told the US ambassador to
Belgrade he thought Dej was mov-
ing too far in criticizing and
attacking the USSR
The Yugoslavs favor Ruma-
nia's drive for independence,
and do not appear worried about
its economic contacts with the
West. They seem, however, to
be concerned that Rumanian be-
havior may have repercussions
which would endanger European
stability and the trend toward
improved East-West relations.
They also fear that Bucharest's
continued open attacks on the
Soviet Union will undermine Khru-
shchev in his dispute with the
Chinese Communists.
Rumania's long-standing,
uncommitted position in the
Sino-Soviet dispute--at odds
with that of other countries
in Eastern Europe--emerged again
during the recent Polish party
congress. The Rumanian dele-
gate, politburo member Emil
Bodnaras, did not even mention
the Chinese in his speech and
did not back the Polish pro-
posal for a Communist prepara-
tory conference as soon as 7~~
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SECRET The Communist World
YUGOSLAV - WEST GERMAN RELATIONS
The prospects for improved
Yugoslav-West German relations
seem considerably brighter than
at any time in the past year.
In "friendly" talks on 12
June, contrasting sharply with
the coolness of previous infor-
ma.l meetings, Bonn proposed
renewing formal negotiations on
economic issues and offered to
grant some of the economic con-
cessions Yugoslavia had earlier
demanded. On 26 June the two
countries will begin negotia.-
tions on this offer and on a
new trade protocol to replace
the one expiring at the end of
this month.
Yugoslavia, has considerably
toned down its criticism of the
Bonn government, which in turn
quashed charges that ha.d been
brought in West Germany against
Yugoslav Vice President Rankovic
for alleged war crimes.
Yugoslavia also appears
to be adopting a conciliatory
attitude on some of the politi-
cal issues which divide the two
countries, such as West German
indemnification for Yugoslav
World War II losses. At the
12 June meeting, Yugoslav nego-
tiator Drndic indicated that
his government might settle
temporarily for a Bonn state-
ment recognizing a, moral obli-
gation to take up the indemnifi-
cation question when circum-
stances permit.
If the economic talks are
successful, Drndic hopes for
political discussions which might
lead to restoring the "missions"
withdrawn in 1957 when West Ger-
many broke relations because
Yugoslavia. recognized East Ger-
many.
Drndic further stated that
even if high-level talks stale-
mated, Yugoslavia would welcome
discussions along the lines of
a. "Trieste-type solution"--an
idea. which has appeared frequently
in Belgrade commentaries in re-
cent weeks but has not been
spelled out. Presumably, this
would involve some form of third-
party mediation.
In spite of these concilia.-
tory gestures, however, the divi-
sive issues which remain could
disrupt the coming talks. Yugo-
slavia still is sensitive about
Bonn's failure to control the
activities of the Ustashi ter-
rorist elements in West Germany.
Bonn suspects that Yugoslavia
might be campaigning for recogni-
tion of East Germany among the
unaligned nations,a.nd on 8 June
officially accused the Yugoslav
Government of preparing such a
campaign for the coming unaligned
conference. Yugoslavia continues
to deny these accusations but
has not yet responded to the
protest.
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V.MW SECRET *me
Laotian Premier Souvanna
has called for a sharp step-up
in military action against the
Pathet Lao. In a meeting with
US officials on 23 June, he out-
lined plans for an attack against
Pathet Lao positions in the
Phou Khoun area. The plans
call for about ten battalions
of rightist.and neutralist
troops-supported by Laotian
Air Force T-28s--to move against
an estimated three Pathet Lao
battalions. Souvanna emphasized
that the success of the attack
would depend heavily on large-
scale US logistical support.
The proposed attack is
designed to forestall an ex-
pected enemy move against the
neutralist stronghold at Muong
Soui.
Souvanna also pressed for
increased interdiction operations
against Route 7 east of the
Plaine des Jarres as well as
for continued strikes against
Pathet Lao depots on the Plaine.
He urged maximum US support of
these operations.
On 20 June, a spokesman
for the pro - Pathet Lao dis-
sident neutralists under Col.
Deuane issued a statement strongly
condemning Souvanna as respon-
sible for the continuing Lao-
tian Air Force attacks against
Communist positions. Branding
him "the new lackey of US im-
perialism" the statement warned
that if Souvanna continues his
present course the "Laotian
population will surely over-
throw him."
On the diplomatic front,
Souvanna and Pathet Lao chief
Souphannouvong have remained
at odds over arrangements for
renewed tripartite talks. Sou-
vanna, although agreeable to a
meeting at Luang Prabang, has
refused to yield to the Pathet
Lao demand that the town be de-
militarized. Souphannouvong
has not responded to Souvanna's
suggestion that talks be held
in a neutral city outside Laos.
Probably anticipating an
eventual acceptance, the Polish
Foreign Ministry, working with
the British ambassador in War-
saw, now has proposed tripar-
tite talks outside Laos to de-
termine whether conditions ex-
ist for reconvening the Geneva
conference. Representatives
of both the Geneva co-chairmen
and the governments participat-
ing in the International Con-
trol Commission would attend.
The co-chairmen would then re-
port to ICC members with a rec-
ommendation to reconvene the
Geneva conference "should the
results so warrant." Communist
China has also called for tri-
partite meetings.
SECRET
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%ftle ,SL (JRET
SUMMIT MEETING ON MALAYSIA-INDONESIA DISPUTE BREAKS DOWN
The dispute between Indo-
nesia and Malaysia now may in-
tensify following the failure
of the Tokyo summit meeting last
week. Although the two agreed
in principle to a Philippine
proposal that a four-nation Afro-
Asian conciliation commission
consider the dispute, Malaysian
Premier Rahman said he would not
act on this proposal until all
Indonesian guerrillas are with-
drawn from Malaysian Borneo. In-
donesia's Sukarno in turn con-
tinued to insist on a "return
to the Manila agreements" which
Djakarta alleges called for a
"new" survey to determine opin-
ion on Malaysia in the Malaysian
Borneo states and for the elimina-
tion of all British bases in
Malaysia.
The heads of government
agreed at Tokyo that their for-
SECRET
26 June 64
CURRENT INTELLIGENCE WEEKLY SUMMARY Page 10
eign ministers would meet for
further talks, "at some future
date," and the Philippines con-
tinues to try to mediate the con-
flict. Both adversaries have
heightened their propaganda at-
tacks, however. Djakarta has
charged Malaysia with being "iso-
lated before Afro-Asian opinion,"
while Kuala Lumpur, citing In-
donesia's clear and obvious ag-
gression, says it is consider-
ing taking the dispute to the
United Nations.
The Indonesians have never
ceased planning further guer-
rilla and subversive operations
against Malaysia. On 21 June--
the day after the talks broke
down--approximately 100 Indo-
nesian guerrillas attacked Ma-
laysian security forces about
two miles inside Sarawak, kill-
ing five Gurkhas and wounding
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NW
INDIA
WHOLESALE FOOD PRICE INDEX
(1952/1453100)
i`5
1 5? ;
1964
ESTIMATE)
NOTE: Prices generally decline Iate in the year
--and remain low for several months. However,
? last year's seasonal decline was unusually small.
i4?
3'5-
.;`
130
:
125"
1963
I962
15 .
x
,
1.00
L
.1AU FEB
NN!q M
MAR APR MAY JUN JUL AUG SEP 40T I~OY tEC. ;;
640623 -4
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SECRET
The new Indian Government
is considering tighter controls
on food distribution as part of
its effort to solve what Prime
Minister Shastri has termed In-
dia's "most formidable" problem
--rising prices.
Food prices have been the
main factor in a 7-percent in-
crease in over-all living costs
for the working-class consumer
during the past year. The In-
dian Government estimates that
prices of principal food grains
have risen 17 percent since June
1963--as high as 100 percent in
some localities. Comparable in-
creases have occurred in other
food prices. Although the pinch
felt by the already undernour-
ished consumer has not yet led
to major unrest, tension is
mounting, and labor union pro-
tests may soon shatter the new
Shastri government's "honeymoon."
Wheat prices reached un-
seasonably high levels late
last year as a result of the
decline in wheat production dur-
ing 1962-63--a shortfall typical
of India's general lag behind
planned agricultural output.
The problem was compounded in
January, when unusually cold
and dry weather in the north
presaged a poor spring wheat har-
vest this year. Hoarding and grain
speculation added to the normal
upward pressure on prices caused
by local shortages. Hoarding
has also recently pushed up the
price of rice, India's major
food crop. Despite a record
high in rice production last year,
deliveries to the market are more
than 15 percent below normal.
Having staked much of its
prestige on. curbing inflation,
the Shastri government has de-
voted a major portion of its
early policy deliberations to
the food price problem. An ur-
gent three-day conference between
the central government ministers
involved and the chief ministers
of the states--begun on 24 June--
may lead to additional state trad-
ing and control over retail dis-
tribution. Such a program would
be costly to administer, however,
and could aggravate the malady
by causing an inflationary in-
crease in government deficits.
A political obstacle to
any solution is likely to
arise from local Congress
Party leaders in many of the
afflicted areas. Grain mid-
dlemen are often allowed to
reap windfall profits from
price imbalances in nonelec-
tion years while the political
bosses look the other way. In
return for this the middlemen
are tapped, in election years,
to contribute heavily to party
coffers.
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NWIF SECRET Iwo
The present Turkish Govern- stepping up its military support
ment may be willing to make some for the Greek Cypriots. Large
concessions to solve the Cyprus numbers of Greek Cypriot stu- 25X1
problem, but recent developments dents, who have received mili-
indicate that Prime Minister tary training in Greece, landed
Inonu might have difficulty in in Cyprus during the past week
carrying through a less rigid
policy.
Inonu won a vote of confi-
dence on 19 June by only a very
slim margin and could face even
more serious opposition from
the Justice Party and possibly
the military if his Washington
talks this week fail to show
some advance for Turkey's posi-
tion on Cyprus. Inonu has been
a moderating influence, and a,
government dominated by either
the Justice Party or the a.rmy
would be less inclined to heed
warnings against military in-
tervention.
Greece has now reacted to
the Turkish invasion threats by
Turkish Cypriot reaction to
the return of former EKOA leader
George Griva.s has been relatively
mild. The Turks evidently feel
that Grivas' presence does not
significantly alter the situation.
His activities will strengthen
anti-Communist Greek Cypriot ele-
ments.
SECRET
26 June 64 CURRENT INTELLIGENCE WEEKLY SUMMARY
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MOROCCAN-ALGERIAN BORDER INFILTRATIONS
Although Morocco's King
Hassan is taking positive steps
to avoid open conflict with Al-
geria, recent events have
strengthened his conviction that
President Ben Bella seeks even-
tually to unseat him.
On 9 June, Moroccan secu-
rity forces "eliminated" a band
of Moroccan dissidents attempt-
ing to infiltrate from Algeria.
Hassan sent emissaries to talk
with Ben Bella on 13 June, but
was careful not to imply that
the Algerian President was per-
sonally responsible for the dis-
sidents' activity.
Ben Bella in turn has de-
nied flatly that Algiers knew
about or was in any way involved
in the incident, or that it sup-
plied Moroccan dissidents with
arms, money, or training. Ben
Bella promised to investigate.
King Hassan has also or-
dered his army command to clean
up the Moroccan frontier area
with a minimum of fanfare and
bloodshed.
A Moroccan Foreign Ministry
official speculated to the Ameri-
can Embassy last week that Ben
Bella, if given enough Soviet
materiel and despite his denials,
might create an anti-Moroccan
diversion to distract attention
from his internal security prob-
lems. Algiers itself seems to
be taking a serious view of these
problems; it has "suggested"
that several foreign dignitaries
cancel visits they were scheduled
to make in the next few weeks.
The Moroccans draw the conclu-
sion that the West should sup-
port them "as the remaining
stable element in northwest Af-
rica." They imply that this sup-
port should include the arms
that Morocco has been trying to
get from Western sources.
Nonetheless, a facade of
improving relations between Al-
geria and Morocco is being
erected. By mid-May, Rabat and
Algiers apparently decided to
resume full diplomatic relations
and to seize the initiative from
the arbitration commission which
the Organization of African Unity
had appointed last November to
recommend means of settling their
border dispute.
On 25 May, they revived
the mixed Moroccan-Algerian com-
mission set up just prior to the
clashes last October. Although
the two negotiating sessions held
have been described as a "dialogue
of the deaf," the commission will 25X1
meet again in Algiers on 8 July
to maintain appearances of amity.
SECRET
26 June 64 CURRENT INTELLIGENCE WEEKLY SUMMARY
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fIw-
REPUBLIC
OF THE
CONGO
-??- International boundary
Province boundary
National capital
* Province capital
0 100 200 Mlles
oI
0 100 200 Kilometers
GABON ! /F
N
~UBANGi
"' rameno*
MOYEN-CONGO
f tayuiihaivllle
)
I CUVETTE-CENTRALE
.1 - MAI-NUUMBE
{LAC LEOPOLIII III
BRAZZAVILLE f KWII_U
r...J' LEUPtlLJYILLE r 3
?, Kongo
- ~'
KQN 30-CFNTRAR_ Kikwi
~~6 mo u - ?% MULLLE
Rebellion
KWANGo J
Gama -. `??
WANDAI
Gasknvu p/ .-
) -
KIBALI-.ITURI f,
Guain*~,/
('UGANDA
NORD-
KIVU
,
KIVII Rebellion Q~,.BURUND13
MANIIEMA Uvir lr.,.UWUMBURA
Ladin CENTR2At
Lu: u~~ y aaawaagn*Kabindn
Z..-.)` Rr,y t)I
`L...UAL.A$A
'-- SPnnfeyvilIn
'-qtr
HAUT- ONCO
\1,
TANGANYIKA
KATANGA-
J .~.,Kalweai ORRIENTAL
Provincial boundaries have been interpolated from ex
45411 - maps and inlelligenee reports,. and are not definitive
Area of
ne\v outbreak
01
N9RD-
K. A- A N A
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SECRET Nwo~
The Congo National Army
(ANC), unable to cope with new
outbreaks of dissidence, appears
to be near collapse in several
areas, and Leopoldville seems
unsure what to do.
In Stanleyville, once the
seat of Antoine Gizenga's left-
wing regime, the ANC detachment
still controls the city even
though there was an arms-gather-
ing raid on 20 June by dissidents
--possibly from the newly formed
antigovernment "Popular Libera-
tion Army "
In Kivu Central Province,
the ANC appears to be making lit-25X1
tle new progress against the in-
surgents.
Political maneuvering in Leo-
poldville continues and the com-
position of the new government
which President Kasavubu must ap-
point by 30 June, when the mandate
for the present government runs 25X1
out, has not been determined.
Tshomb6
announced on 24 June he wou d re-
turn at once "at the invitation"
of the Leopoldville government.
If the former Katangan presi-
dent is unable to gain a dominant
position in Leopoldville or one
which would facilitate his ultimate
ascendancy, he may well use his
force of 3,,000 gendarmes in Angola.
to re-establish himself in Katanga.
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TANGANYIKA MOVES SLOWLY TO CURB ZANZIBAR PRO-COMMUNISTS
Tanganyikans and pro-
Communist Zanzibaris continue
to maneuver in what promises
to be a long struggle for con-
trol of Zanzibar. President
Nyerere is confident that the
situation is improving but be-
lieves that establishing full
control may take up to six
months. He is determined to
avoid force until all political
means have been exhausted.
Nyerere's most significant
move was the removal two weeks
ago of Salim Rashid from Zanzi-
bar to Dar es Salaam, where he
will be junior minister of
finance. Rashid, a Communist
who was secretary of Zanzibar's
Revolutionary Council, wielded
considerable power through his
influence on Vice President
Karume. His successor as council
secretary is a mild-mannered
admirer of the Soviets who spent
six years studying in Moscow.
The unpredictable Karume
remains the key to Zanzibar P
e seems a-
trac e o e ideal of African
unity but is unwilling to give
up the assistance that the Com-
munists have promised him.
Last week, while four of
the island's most ardent pro-
Communists were absent, a team
of Tanganyikan civil servants
started work in Zanzibar and
two tough, able Tanganyikans
took up ministerial posts chosen
to keep them close to Karume.
Karume has removed two of the
three pro-Communist commissioners
on Pemba Island following com- 25X1
plaints about their brutal tac-
tics.
The Communist aid program
on Zanzibar continues to expand.
Equipment for an East German
medical clinic has arrived. The
latest count of advisers and
technicians lists some 37 Soviets,
29 East Germans,and 67 Chinese
plus an East German trade mis-
sion which arrived last week.
Eight Zanzibari civil servants
are due to go to East Germany
next week for training in finance.
A new $14-million Chinese devel-
opment loan,which Karume and the
Chinese ambassador signed on 16
June, is in addition to the $28-
million interest-free credit
and $3-million grant for the 25X1
United Republic signed in Peiping
the same day by Vice President
Kawawa.
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SECRET
It has always been a tenet
of French President de Gaulle
that Communist bloc unity even-
tually would suffer from resur-
gent nationalism and that West-
ern initiatives should promote
this as it developed. The cur-
rent Soviet-Rumanian rift has
probably deepened De Gaulle's
conviction, and he may have de-
cided that France now should
step up its efforts to make its
presence felt in Eastern Europe.
Minister of State Louis
Joxe's visit to Yugoslavia from
18 to 23 June, the first by a
high-level French official since
World War II, appears to be an-
other step by Paris to develop
its contacts in that area. Paris'
principal efforts in Eastern
Europe are likely to center on
promoting cultural exchanges com-
parable to the agreement Joxe
signed in Belgrade. A notable
feature of this agreement is a
provision to increase the teach-
ing of French in Yugoslav schools
and universities.
The French already have
re-established good cultural
ties with Poland and Hungary,
and to a lesser extent, with
Bulgaria. Last December Paris
raised its diplomatic missions
in Budapest, Sofia, and Bucharest
to embassy rank. The French For-
eign Ministry has also succeeded
in getting broader circulation
for the French press in Eastern
Europe
On 1 June, France signed a
bilateral technical agreement
with Rumania providing for ex-
changes of scientific documents
and of research scientists. Two
similar agreements have already
been concluded with Yugoslavia
and the USSR. The director of
the French Atomic Energy Commis-
sion has visited Bucharest and
toured scientific installations.
He may have tried to interest
the Rumanians in a French nuclear
power plant.
Paris feels satellite ties
with Moscow can be further weak-
ened by easing certain trade
credit terms to bloc countries
demonstrating independent tenden-
cies. Recently, a leading Paris
financial paper reported that
current Franco-German talks to
ease commercial credits to the
satellites could be concluded
on the occasion of De Gaulle's
July visit to Bonn.
De Gaulle probably would
like also to dispel the notion
that the US is doing more than
other Western countries in evolv-
ing new relations with the East-
ern European states. In this
regard, Paris would particularly
like to increase its contacts
with Eastern bloc intellectuals
in the hope that they could be
converted to what the French term
a more "European" approach.
While De Gaulle probably
has no blueprint for bringing
the satellites into the confed-
eral Europe he envisions, he
seems to look on the Eastern
European nations as an added
weight to maintain the balance
against resurgent German power.
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NOW ~ftw
SECRET
THE ITALIAN GOVERNMENT'S ECONOMIC PROBLEMS
Italy's current economic
difficulties continue to be the
chief worry of the Moro govern-
ment. The anti-inflationary
measures it has taken show signs
of proving effective, but addi-
tional stabilization measures
are in prospect, partly to sat-
isfy EEC requirements for credit
assistance. However, a new
rash of strikes threatens to
accelerate inflationary trends.
The economy has shown a
number of encouraging signs
this year, Small balance-of-
payments surpluses appeared in
April and May--the first in
about a year and a half--and
price rises have moderated some-
what. Unemployment, although
still under control, could pre-
sent the most critical problem.
The situation in Turin Province
--the area hardest hit by the
stabilization measures--is po-
tentially serious; reportedly
there are about 150,000 em-
ployees working reduced hours
and layoffs are increasing.
The Italians reportedly
are seeking to postpone for a
week the EEC Finance Ministers'
planned 29-30 June meeting--to
review the Italian program.
They hope this added time would
allow them to overcome differ-
ences within the cabinet over
the proposed new anti-infla-
tionary measures. These are
expected to be mainly fiscal,
upping some luxury taxes and
public service rates. A progres-
sively increased income tax
rate on incomes of over $20,000
is also being considered. Three
additional tax measures contem-
plated are designed to reduce
the trade deficit and will de-
pend on EEC approval of increas-
ing taxes on imports while per-
mitting larger tax rebates on
exports.
EEC Vice President Marjolin
was in Rome last week to dis-
cuss the stabilization effort
and was said to be satisfied
with the effectiveness of Ital-
ian credit restrictions. Ac-
cording to an EEC official, the
proposed EEC "credit package"
may involve the equivalent of
$1 billion in long-term credits
--mainly from Germany--plus
"several hundred million" for
use by the Bank of Italy to
counteract speculation against
the lira.
Labor unrest has been in-
creasingly severe in recent
weeks, with 24-hour walkouts
called in several important in-
dustries. In the building in-
dustry, hard hit-by the anti-
inflation measures, unemployment
reportedly is high and there
is apprehension that the na-
tionwide strike held this week,
if repeated, might lead to a
repetition of the violent demon-
strations which occurred between
construction workers and police
last fall.
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SECRET
Europe
The two major non-Communist
trade confederations did not
participate in the recent rail-
road and building industry
strikes and have often denounced
the Communist confederations'
strike motives as an attempt to
embarrass the center-left gov-
ernment. They have, however,
joined with the Communist con-
Sweden: At its quadrennial
congress earlier this month,
Sweden's governing Social Demo-
cratic party deferred until 1968
a decision on the controversial
issue of whether to authorize
the defense forces to acquire
nuclear weapons.
Defense Minister Andersson,
in a speech urging support for
a resolution by the party exec-
utive postponing a decision,
declared that Sweden "would not
federation in some recent dis-
putes over contract renewals.
Wage rates have risen about 11
percent so far this year. The
government is on record as say-
ing that 13 percent is the
maximum increase which could
be permitted if inflation is
to be brought under control.
have access to sufficent quanti-
ties of plutonium until the late
1960s or early 1970s."
This decision of the con-
gress is a victory for the mode-
rate faction led by Prime Minis-
ter Erlander. He skillfully out-
maneuvered the Social Democratic
left wing which, ever since the
partial test ban agreement last
year, has urged the party form-
ally to renounce acquisition of
these weapons.
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26 June 64 CURRENT INTELLIGENCE WEEKLY SUMMARY
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MOW 1%0
SECRET
A new wave of terrorist at-
tacks in British Guiana this
week seems to be the work of ac-
tivists belonging to Cheddi
Jagan's Progressive Youth Organ-
ization. In the most recent in-
cident, the attackers used auto=
matic weapons for the first time
In the last two days at least
six persons have been killed,
mostly from ambush or by masked
terrorists. Almost all the vic-
tims are Negro, and there is a
serious possibility of large-
scale Negro retaliation against
East Indians, particularly in
the capital.
The Jagan organization is
apparently seeking to demonstrate
that those of its top leaders who
were recently jailed are not re-
sponsible for directing the grow-
ing violence. It may also be
trying to show that the governor
cannot control the colony despite
his sweeping security powers.
Another motive may be to promote
such widespread racial conflict
SECRET
26 June 64 CURRENT INTELLIGENCE WEEKLY SUMMARY
Western Hemisphere
as to force postponement of the
elections planned for later this
year or to promote UN interven-
tion. The UN Decolonization
Committee voted on 23 June to
send a mission to British Guiana,
despite Britain's express re-
fusal to allow such a group to
enter the colony.
Meanwhile, Jagan's govern-
ment has decided against re-
signing for the time being de-
spite loss of its legislative
majority. To a certain extent,
the Negro attacks on East In-
dians at Wismar at the end of
May.reportedly have solidified
East Indian support behind Jagan.
Harassment by the Jaganites of
the Guyana All-Indian League,
a semipolitical anti-Jagan group,
has probably reduced chances
that this group will develop into 25X1
an organization capable of at-
tracting East Indian voters away
from Jagan.
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Western Hemisphere
DETERIORATING SUPPORT FOR ECUADOR'S GOVERNING JUNTA
After nearly a year in
power, the prestige of the rul-
ing junta of Ecuador has de-
clined to a new low. This is
due both to popular disenchant-
ment and to military dissatis-
faction over conditions in the
armed forces and disillusion-
ment with individual junta, mem-
bers.
The political parties now
are openly critical of the gov-
ernment. However, they are
weak and poorly organized and
are presently incapable of pro-
viding strong civilian leader-
ship. The general public re-
mains apathetic to the politi-
cians' attacks on the government.
There is some indication
that municipal elections will
soon be announced for November.
This could be the first tenta-
tive step toward restoration of
constitutional government. A
new election law is being de-
layed, however, and several
junta members have rejected the
idea of handing power over to
the civilians until political
processes are reformed and the
political parties manifest a.
greater sense of responsibility.
Efforts have been made to
reactivate an antigovernment
"popular front" called the Ecua.-
dorea.n Democratic Alliance (ADE)
which overthrew the Arroyo del
Rio regime in 1944. So far,
however, neither ADE nor any of
several other "movements" have
been able to pick up much sup-
port for antigovernment activity.
More serious for the junta.
in any case is its dwindling
support within the armed forces,
which are increasingly dissatis-
fied with their pay and living
conditions. While there is no
evidence of organized military
opposition, a, spirit of disloy-
alty is widespread, and many
officers seem to think that a.
major personnel change in the
government is needed. Even the
popular air force junta. member
Colonel Freile has lost much of
his support, as has junta presi-
dent Admiral Castro Jijon.
There are rumors that De-
fense Minister General Naranjo,
Government Minister General Mora25X1
Bowen, Freile, and other offi-
cers might be included in a new
executive.
There also are persistent
rumors of a cabinet shake-up,
possibly around the anniversary
of the junta's assumption of
power on 11 July. Freile has 25X1
implied that certain inefficient
cabinet officers will soon be
replaced.
SECRET
26 June 64 CURRENT INTELLIGENCE WEEKLY SUMMARY
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MW L_ a
SECRET
ARGENTINE POLITICAL TENSION
Argentina, is entering a
new phase of political turmoil,
as public patience with Presi-
dent Illia's vacillation has
given way to strong opposition
to the government's economic
policies. Nearly all vocal
segments of society have been
alienated and are trying to
bring pressure on Illia to
change his cabinet and modify
his policies.
According to the American
Embassy, most political parties
are pessimistic regarding the
future of the government. They
believe the internal difficul-
ties of Illia's People's Radical
Party (UCRP) severely inhibit
his regime's capacity to deal
with Argentina's severe economic
problems.
The catalyst releasing this
antigovernment sentiment has
been the "Battle Plan" of the
General Confederation of Labor
(CGT), which is designed to
wring wide-ranging economic and
political concessions from the
government.
The government's steps to
meet labor's economic demands
have been self-defeating. These
include a minimum wage tied to
living costs, price controls
on certain essential commodities,
new exchange regulations, and
Western Hemisphere
stringent regulation of the
beef trade. All have failed
to halt the rise in living costs,
and in the case of beef, have
caused shortages and a black
market. The government's actions
also have heightened fears in
business circles that the UCRP
may impose further economic
controls.
Business interests also
fear that extreme nationalists
within the UCRP may undercut
Illia's efforts to conclude
satisfactory settlements with
US and other foreign companies
regarding their annulled petro-
leum contracts. Illia's con-
tinuing efforts are a matter
of great concern of the mili-
tary who, along with him,realize
that the foreign companies are
necessary to attain self-suffi-
ciency in oil.
The military leaders do not
wish to become involved directly
in matters of primary civilian
responsibility and will inter-
vene only if conditions should
deteriorate to the point where
government policies lead to
complete discrediting of the re-
gime and o ular demand
removal.
SECRET
26 June 64 CURRENT INTELLIGENCE WEEKLY SUMMARY
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