CURRENT INTELLIGENCE WEEKLY SUMMARY

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COPY NO
OCI NO.5489/60
17 November 1960
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
DOCUMENT NO. NO CHANGE IN CLASS.
Li
I i DECLASSI iED
CLASS. CHANGED" 1;7:
-i'5
NEXT REVIEW VA's E:
DATEZ(_! REVIEWER
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
ARMY review(s) completed.
State Dept. review completed
,~o -aa as
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THIS MATERIAL CONTAINS INFORMATION AFFECT-
:LNG THE NATIONAL DEFENSE OF THE UNITED STATES
WITHIN THE MEANING OF THE ESPIONAGE LAWS,
TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS-
"'ION OR REVELATION OF WHICH IN ANY MANNER TO
AN UNAUTHORIZED PERSON IS :PROHIBITED BY LAW.
The Current Intelligence Weekly Summary has been prepared
primarily 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
immediate appraisal of the Office of Current Intelligence.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
T H E : ,W :E E IK I N B R I E F
OF IMMEDIATE INTEREST
interests.
lAL
BLOC REACTION TO US ELECTION.... Page 1
The main themes conveyed in Moscow's reaction to the
US election are that Senator Kennedy's victory opens the
way for a new era in US-Soviet relations and that the
Soviet Government will respond favorably,- to any new Ameri-
can initiatives to improve the international situation.
Moscow's reaction strongly suggests that the Soviet
premier's present aim is to reduce the post-summit hos-
tility and create a favorable atmosphere for a return to
high-level negotiations. Khrushchev's desire to resume
negotiations takes on added significance in view of the
current discussions among world Communist leaders over
Sino-Soviet differences. These arise in part from Pei--
ping':s, apprehensions that the USSR's detente strategy might
lead to East-West agreements at the expense of Chinese
CUBA AND THE CENTRAL AMERICAN OUTBREAKS . . . , . . . . . Page 2
Recent outbreaks in three Central American republics
are symptomatic of the acute political and social unrest
in Latin America which is being effectively exploited by
the Castro regime. The Cuban Government regards itself
as the vanguard of the "anti-imperialist revolution" that
will "inevitably" sweep all Latin American. Cuban propa-
ganda and subversion have played a part in contributing
to the unrest that led to the outbreaks in El Salvador,
Nicaragua, and Guatemala, but there is as yet no reliable
evidence that these developments are being closely
directed from Cuba. These outbreaks, however, make
these countries more vulnerable to further Cuban sub-
version.
FRANCE-ALGERIA . . . . . . . . . . . . . . . . . . .
De Gaulle's announcement that by mid-December he
will set a date for a nationwide referendum to approve
his Algerian policy indicates both his intention':to move
decisively toward a solution and his recognition of the
need for a demonstration of massive public support to
counter anticipated attacks on his regime. Paris is
reinforcing security forces in Algiers, where European
settlers are described as bitter and "'spoiling for
trouble." The rebel government, however, is likely to
reject any further overtures prior to the UN debate on
Algeria in December.
. Page 5
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CURRENT INTELLIGENCE WEEKLY SUMMARY
PART I (cont inued)
SITUATION IN LAOS . . . . . . . . . . . . . . . . . . . . Page 6
The 10 November takeover of Luang Prabang by a group
of officers sympathetic to General Phoumi's Savannakhet
Revolutionary Committee has seriously weakened Premier
Souvanna Phouma's poeition and given rise to increased
tension which could lead to military clashes between the
groups struggling for control. Souvanna shows no sign
of being ready to resign or to contribute to formation
of a new government including Phoumi elements. The
agreement between the Souvanna government and the Pathet
Lao announced on 16 November for the dispatch of a govern-
ment good-will mission to Communist China and North
Vietnam and the establishment of "friendly relations"
with Peiping may reflect Souvanna's lessening ability
to resist pressures from the left in the face of the
erosion of his support from the right.
REPUBLIC OF THE CONGO . . . . . . . . . . . . . . . . . . Page 9
The past week brought some improvement in the posi-
tion of Colonel Mobutu's interim Congolese Government?with
respect to pro-Lumumba elements in Leopoldville,.. New
moves toward. a political settlement, however, are in
abeyance pending a UN decision in New York concerning
the seating of President Kasavubu's de?legat?ion andl:the
dispatch of the 15-nation conciliation commission to
the Congo. Supporters of Lumumba continue active in
Orientale Province, and are attempting to gain the al-
legiance of anti-Tshombe'tribesmen in Katanga.
PART II
NOTES AND COMMENTS
BLOC ARMS AID TO THE ALGERIAN REBELS . . . . . . . . . . Page 1
The Algerian rebels continue to assert that they
have been assured of new military assistance from the
bloc, particularly from Communist China. Since rebel
Premier Abbas' visit to Moscow and Peiping in September,
there has been increasing evidence that the rebels are
expecting new deliveries of bloc arms through a third
country.. Although Moscow and Peiping appear reluctant
to state publicly their willingness to provide further
arms aid, they are likely to attempt to supply at
least light weapons and possibly some "technical per-
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CURRENT INTELLIGENCE WEEKLY SUMMARY
PART II (continued)
USSR ANNOUNCES NEW GOLD VALUE FOR RUBLE . . . . . . . . . Page 2
The gold content of the new ruble--hitherto the only
major unannounced feature of the pending general price
and currency reform--was revealed by the Soviet Government
on 14 November. The new ruble to be issued on 1 January
1961 will have a gold content of 0.987 gram, compared to
the US dollar's 0.888 gram, and will thus theoretically
have a foreign exchange value slightly higher than that
of the dollar. The USSR is describing the reform as en-
hancing the international prestige of its currency. The
revaluation will have no direct bearing on domestic
prices and will have no immediate practical effect on
the USSR's trade and aid programs outside the bloc.
BELGRADE MOVES TO ENHANCE ITS PRESTIGE:: WITH UNCOMMITTED
.STATES . . . . . . . . . . . . . . . . . . . . . . . -. ' . . Page 3
Since President Tito's recent visit to the UN, Yugo-
slavia has increasingly demonstrated its independence of
Soviet foreign policies. It has opposed Khrushchev's UN
reorganization scheme, bloc proposals for Balkan accord,
and Soviet plans for the convocation of a summit con-
ference in the near future. Belgrade probably regards
the emphasis on "neutralism" in its foreign policies--
hitherto in almost complete support of Soviet initia-
tives--as a necessary adjunct to its efforts to increase
its influence in the uncommitted countries.
TURKISH POLITICS . . . . . . . . . . . . . . . . . . . . . Page 4
The elimination of the more radical members of the
ruling Committee of National Union in Turkey re-emphasizes
President Gursel's intention to return the government to
civilian control. Col. Turkes, spokesman for the younger,
more politically minded officers dismissed from the com-
mittee, will probably remain asia..political figure and is
likely to have the support of many of the more than 3,500
officers recently forced to retire.
Page 5
In his efforts to remove any threats to his regime,
Qasim has arrested a dozen or so Iraqi Communistr.includ-
ing two central committee members, and several nationalist
army officers. Qasim's sweeping demands for revisions in
Iraq's concession agreement with the Iraq Petroleum Company
have led to an impasse in their negotiations,.. New anti-
government demonstrations took place in the Sudan on the
eve of Nasir's arrival on 15 November for a ten-da visit:
extraordinary security precautions will continue.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
17 November 1960
PART II (continued)
MAURITANIA . . . . . . . . . . . . . . . . . . . . . Page 6
Mauritania obtains its formal independence on 28
November, in the face of Moroccan claims to this Saharan
territory and threats of "national mobilization" to en-
force them. Mauritanian Premier Ould Daddah, anticipat-
ing Moroccan-inspired subversion and military adventures
such as occurred in late 1957 and early 1958, is reported
to have asked for and received France?s commitment to
maintain present defense arrangements in Mauritania.
Morocco's efforts to obtain diplomatic support within
the UN seem likely to fail.
JAPANESE ELECTION . .
. Page 8
In the Japanese general election on 20 November,
Prime Minister Ikeda will be seeking both to confirm
his leadership of the conservatives and to regain for
the government the public support lost during the demon-
strations last spring against the US-Japanese security
treaty and former Prime Minister Kishi. The opposition
Socialists are attempting to overcome adverse public
reaction to their violent tactics last spring, and the
moderate Democratic Socialists are trying to attract
enough votes to survive as a political party. The
Communists, with only one seat in the last Diet, are
unlikely to win more than one or two additional seats.
SOUTH VIETNAM . .
. Page 9
President Diem is under pressure to punish the insti-
gators of the abortive coup of 10-11 November staged by
paratroop elements concerned over his ineffectiveness in
dealing with Communist guerrilla warfare. It remains un-
certaii whether he will now take the necessary steps to
liberalize his regime s;llfffc-feit1q to rally popular
support. The creation of a committee to ferret out "reb-
els and communists" suggests that reprisals will be
carried out against persons syppatheticto the coup.
The attempted revolt apparently took the Vietnamese
Communists by surprise; Communist propaganda has por-
trayed it as a conflict between pro-American groups.
AFRICAN MOVES FOR ADDITIONAL SEATS IN UN BODIES . . . . . Page 10
The African UN members, supported by the rest of the
Afro-Asian bloc, have apparently decided on a major ef-
fort to reallocate the existing elective seats on the UN
Security Council and the Economic and Social Council.
This African effortto gain seats now held by other
regions--notably Western Europe and Latin American--prob-
ably results from the rejection by the USSR of any attempt
to increase the number of elective seats. The Africans,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
17 November 1960
PART II (continued)
with this end in mind, succeeded in postponing the elec-
PRO-CASTRO PARTY ELIMINATED FROM VENEZUELAN COALITION . . Page 11
By excluding the pro-Castro Democratic Republican
Union (URD) from his three-party coalition, Venezuelan
President Betancourt has probably consolidated his sup-
port; among moderates and in the armed forces. The .URD
now can be expected to ally openly with the Communists
and other leftist opposition elementswhich provoked
the antigovernment violence during late October. These
groups will probably attempt to exploit Betancourt's
critical economic difficulties and the widening rift in
Cuban-Venezuelan relations.
Recent actions by British Guiana's government leader
Cheddi Jagan reflect the continued Communist orientation
of the top leaders of the colony's governing People's
Progressive party. In view of the continuing fragmenta-
tion of the opposition, Jagan's remains the strongest
political party, and he is expected to win the August
1961 elections which will be held under the new constitu-
tion providing for full internal self-government.
ITALIAN LOCAL ELECTIONS . . . . . . . . . . . . . . . . Page 13
As a result of the local elections held throughout
Italy on 6 and 7 November, the Christian Democrats in
many municipalities will be under pressure to form alli-
ances outside the pattern of the national coalition--in
particular, with the Nenni Socialists. The Nenni
Socialists' party directorate has hinted a willingness
to form alliances with the Christian Democrats in some
150 city councils where the national coalition parties
failed to win a Majority. Acceptance of such an offer
in any sizable number of municipalities, however, would
antagonize the Liberal party and other conservative ele-
ments among Premier Fanfani's parliamentary supporters
and thus risk disrupting his government.
PATTERNS AND PERSPECTIVES
THE UNITED NATIONS SECRETARIAT . . . . . . . . . . . . . Page 1
The questions of the authority of the UN secretary
general and the personnel and functions of the Secretariat
were brought into the foreground this fall by Khrushchev's
bitter attacks on Hammarskjtld and proposals for reorganiz-
ing the Secretariat. The Soviet leaders have long been
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CURRENT INTELLIGENCE WEEKLY SUMMARY
PART III (continued)
dissatisfied with the Secretariat's personnel setup and
procedures and want more bloc nationals in key positions.
The increasingly powerful Afro-Asian bloc, believing
that equitable geographic distribution should be paramount
in hiring UN civil servants, contends that the Western
powers have too large a share in the UN administration.
The Soviet bloc now holds only 84 of an assigned quota
of 216 professional positions. In his efforts to correct
this imbalance, Hammarskjold is hindered by a lack of
qualified personnel in the bloc and underdeveloped coun-
tries',and the refusal of bloc personnel to accept the
lower professional positions.
RECENT CHANGES IN SOVIET INDUSTRIAL ADMINISTRATION AND
PLANNING . . . . . . . . . . . . . . . . . . . . . . . Page 5
Changes being made in the system of industrial ad-
ministration in the USSR reflect the regime's continued
concern over the problem of how best to encourage much-
needed local initiative while at the same time directing
it toward achieving national economic,-and political goals.
These changes, involving both organizations and planning
techniques, are designed to provide some operational lee-
way at the local level within a system of central control.
SOUTH KOREANS LOOK TO CHANG GOVERNMENT FOR ECONOMIC
PROGRESS . . . . . . . . . . . . . . . . . . . . . . . Page 9
The South Koreans look to Prime Minister Chang for
progress under democracy, but he is faced with acute prob-
lems of inflation and corruption; the burden of supporting
a 600,000-man defense establishment carries in train grave
economic ills. Moreover, the country suffers from poverty
of natural resources, overpopulation, and a shortage of
managerial and technical skills. Following the fall of
the Rhee government, North Korea has urgently propagandized
the economic benefits of unification and disparaged
foreign aid as incapable of bringing prosperity to South
Korea.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
PART I
OF IMMEDIATE INTEREST
The main themes conveyed
in Moscow's reaction to the USP
election are that Senator Ken-
nedy's victory opens the way to
a new era in US-Soviet relations
and that the' Soviet-Government
will respond favorably to any
new American initiatives to
improve the international sit-
uation. Khrushchev lost no
time in sending President-elect
Kennedy a congratulatory mes-
sage which set the Soviet line,
since echoed by virtually all
Soviet commentators, by express-
ing the hope that US-Soviet re-
lations "will again follow the
line along which they were de-
veloping in Franklin Roosevelt's
time."
Khrushchev declared that
the USSR is ready to "develop
the most friendly relations be-
tween the Soviet and the Ameri-
can peoples, between the govern-
ments of the USSR and the
United States." Although he
did not call for a new summit
meeting, Khrushchev reaffirmed
the USSR's readiness to continue
efforts to solve such a "press-
ing problem as disarmament, to
settle the German issue through
the earliest conclusion of a
peace treaty, and to reach
agreement on other questions
whose solution could bring
about the easing and improve-
ment of the entire international
situation." He added, "Any
steps in this direction will
always meet with the understand-
ing and support of the Soviet
Government." The Soviet
press prominently published
Kennedy's reply on 11 Novem-
ber.
Soviet propaganda sees the
election results as a repudia-
tion of the present administra-
tion's policies. Izvestia con-
tended on 11 Novem ear that there
now are real prospects for
changes in US foreign policy.
This commentary said the results
showed that the American people
want an improvement in US-So-
viet relations, that Khrushchev's
message to the President-elect
underscores a similar Soviet de-
sire, and that "certain circles"
in countries allied to the United
States favor revisions in US
policy but want Washington to
take the initiative.
Moscow refrained from pre-
dicting the course the new ad-
ministration will follow, but
the tone and text of Khrushchev's
message, together with the fre-
quent invocation of Roosevelt's
name, provide Soviet readers
with a generally hopeful note.
Moscow radio on 12 November
noted that the Soviet people
"were more or less satisfied"
to learn that Senator Kennedy
was elected and observed that
any change in US policy would be
greeted by "Russians in the
street as the promise of good
times." Moscow recalled Soviet
indignation over the U-2 incident
and subsequent events and assert-
ed that these actions made it
impossible to "have any dealings
with the Americans." It noted
that the new administration will
not be committed to "the old
policy of brinkmanship."
Moscow's reaction strongly
suggests that Khrushchev's present
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CURRENT INTELLIGENCE WEEKLY SUMMARY
intention is to reduce the
post-summit level of hostility
toward the West and create a
favorable atmosphere for a re-
turn to high-level negotiations
after the new administration
is installed. Khrushchev's
desire to resume negotiations
takes on added significance,
in view of the current discus-
sions among world Communist
leaders over Sino-Soviet dif-
ferences. These arise in part
from Peiping's apprehensions
that the USSR's detente strategy
might lead to East-West agree-
ments at the expense of Chinese
interests.
Moscow's treatment of the
election further underscores
Khrushchev's determination to
defend and maintain his "peace-
ful coexistence" strategy and
to reject any concessions to
Chinese Communist demands which
would imply even a partial re-
pudiation of his policy toward
the West over the past three
years.
Bloc Reaction
Peiping agrees with Moscow
that the election results sig-
nified a popular rejection of
past "cold war" policies, but,
unlike Moscow, the Chinese see
no possibility that the new
administration will bring any
slackening of US "aggressive
policies." Chinese propaganda
immediately branded the Presi-
dent-elect as just another "tool
of monopoly capital," and pre-
dicted that he would continue
the "aggressive and reactionary"
policies of the present admin-
istration while making greater
use of taxation to "increase
military spending and extend
war preparations."
North Korea and North Viet-
nam have closely followed the
Chinese lead. Mongolia, on
the other hand, "warmly greets"
Khrushchev's message to Kennedy
and has endorsed Moscow's wait-
and-see approach to the new
administration.
East European propagandists
are less reluctant than Moscow
to criticize Kennedy and ex-
press doubts regarding future
policy changes. Only Albania, 25X1
however, seems to side fully
with Peiping's uncompromising
position.
CUBA AND THE CENTRAL AMERICAN OUTBREAKS
Recent outbreaks in Central
America are symptomatic of the
acute political and social un-
rest in Latin America which is
being effectively exploited by
the Castro regime. The Cuban
Government regards itself as
the vanguard of the "anti-im-
perialist" revolution that will
"inevitably" sweep all Latin
America.
Cuban subversion ranges
from intensive propaganda, sup-
ported by a Castro-subsidized
world news agency having close
working ties with Sino-Soviet
bloc propaganda agencies, to
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financial support
tendered Communist-
oriented student and
labor groups by Cuban
diplomatic missions.
When, as in the case
of the unsuccessful
Cuban-backed revolu-
tion in the Dominican.
Republic in mid-1959,
the Cuban leaders
consider a country
ripe for revolution,
they provide covert
military aid and
direction to Commu-
nist or Communist-
controlled revolu-
tionary groups.
17 November 1960
While Cuban
progaganda and sub-
version have %.clearly
played a part in con-
tributing to the un-
rest that led to the
recent outbreaks in
El Salvador, Guate-
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I BRITIS
HONDI, AS
Puerto Barr
i~`~~
``Managua
mala, and Nicaragua, it does
not appear that these develop-
ments are being closely di-
rected from Cuba. These out-
breaks, however, increase the
vulnerability of these coun-
tries to further Cuban subver-
sion.
Leftists continue to en-
trench themselves in the gov-
ernment since the 26 October
coup in El Salvador. The three
civilians in the six-man junta
and several cabinet members
suspected of being Communist
sympathizers have been filling
government posts at all levels
with suspected Communists, par-
ticularly in the ministries of
labor and ,justice. The re-
gime's information and prop-
aganda network appears to have
been largely taken over by this
COSTA
`'l` ?San Jose
'v'; R I C A
element. Communist-front labor
and political organizations are
calling for a purge of the army
and reportedly are planning the
distribution of arms so "the
people" can resist any attempt
by the military to seize full
control of the government.
Although Castro agents are
not known to have been involved
in the coup, it is clear that
the cultivation of Salvadoran
leftists earlier this year by
the Cuban Embassy contributed
to the present leftist resur-
gence.
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Although there is no evi-
dence available to support gov-
ernment claims of direct Cuban
involvement in the revolt,
Cuban propaganda and subversion
probably contributed to the
unrest that helped prompt it.
Guatemalan Government charges
of a Cuban-Communist conspiracy
tend to help ensure the loyalty
of Guatemalan military lead-
ers, on whom Ydigoras depends
for the survival of his re-
gime.
CURRENT INTELLIGENCE WEEKLY .SUMMARY
Nicaragua
The
rebel
attacks
of
11
November
bloodier
were
than
stronger
most of
and
the
nu-
merous rebel actions against
the Somoza government of Nic-
aragua in the past 18 months.
The government declared martial
law. The rebels apparently
included conservatives as well
as some leftists who had been
in Cuba earlier this year.
However, the chief of the US
Army mission in Costa Rica, who
was present at the Nicaraguan
border area during the fighting,
found no evidence that Cubans
were involved or that Cuban
weapons were used.
The revolt launched on 13
November by disaffected Guate-
malan Army officers apparently
took the Communists by surprise.
However, by 15 November they
were actively seeking to cap-
italize on it. Demonstrations
against the government in the
capital that evening, apparent-
ly organized by the Communists,
were dispersed by the police,
but new manifestations were
promised nightly "until the
government falls."
Communists are also re-
ported infiltrating insurgent
ranks and, in the city of
Puerto Barrios, where Commu-
nists are relatively strong,
they may be among the civilians
to whom arms were distributed
during the three days the city
was held by insurgents. The
government's position in the
capital is weakened by the with-
drawal of troops to' fight else-
where.
Honduras was not in-
volved in the early November
outbreaks,: but the Cuban Em-
bassy there is assiduously
cultivating Communist-'oriented
student and labor groups, and
President Villeda Morales is
faced with strong leftist
influence within his own
Liberal party.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
De Gaulle seems to be pre-
paring, under increasing domes-
tic and international pressures,
to move decisively regarding the
Algerian problem. His announce-
ment that by mid-December he will
set a date for a nationwide ref-
erendum to approve his policy
indicates both his intention to
offset mounting opposition and
his recognition of the need for
a demonstration of massive pub-
lic support. Paris is reinforc-
ing security forces in Algiers,
where European settlers are dew
scribed as bitter and "spoiling
for trouble." The rebel gov-
ernment, however, is likely to
reject any further overtures
prior to the UN debate on Al-
geria in December.
Time limitations call for
adroitness. The constitution
requires that a referendum be
formally proposed by the govern-
ment or parliament and author-
ized by the President while
parliament is in session; the
present session closes 16 Decem-
ber. A parliamentary debate on
Algeria is scheduled for 6 De-
cember. The UN will take up
the problem early in December.
De Gaulle must also cope with
the rightists' war of nerves:
extreme leader Tixier-Vignan-
court has publicly announced
that a "government of the French
Province of Algeria" is being
formed and will start function-
ing as soon as De Gaulle installs
an "Algerian executive."
In the meantime, De Gaulle
is attempting to neutralize
possible fomenters of unrest.
He has been calling in cabinet
ministers individually, re-
portedly to ask them to state
unequivocally whether they will
back him and to resign if they 25X1
disapprove.. What appear to be
pulse-taking missions to the
army in Algeria have been com-
pleted by Minister of Armed
Forces Messmer and Chief of the
National Defense Staff General
Ely.
The army has reportedly
been most concerned over indica-
tions that De Gaulle might de-
clare a unilateral cease-fire--
an action he hinted at on 4 No-
vember--at least in selected
areas. De Gaulle's efforts to
calm army fears are further com-
plicated by the attitude of
France's ranking soldier, Marshal
Juin, who has publicly dissoci-
ated himself from De Gaulle's Al-
gerian policy following the 4
November speech. Support for
Juin has been publicly expressed
by retired Generals Saian and'.
Guillaume.
The government's continuing
reinforcement of security po-
lice in Algiers and a few
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CURRENT INTELLIGENCE WEEKLY SUMMARY
other centers, together with
the sudden expulsion of several
extreme rightists, suggests that
Paris may be planning some move
which the settlers can be ex-
pected to meet with violence.
The European community is re-
ported to be "bitter and de-
pressed." Some journalists now
add it "seems full of insurrec-
tionary ginger and spoiling for
trouble" with or without backing
from sympathetic army and metro-
politan rightist elements. How-
ever, the major settler organi--
zation, the French Algerian Front
(FAF), has urged its followers
to "clench fists and wait"; it
took no part in the Armistice
Day rioting by young toughs in
Algiers over De Gaulle's 4 No-
vember address,
The Provisional Algerian
Government (PGAR), whose plenary
session in Tunis ended on 10 No-
vember, has rejected the propos-
als made in De Gaulle's speech.
The rebel minister of informa-
tion has told the American Em-
bassy in Tunis that Although the
speech was "intelligent," it was
not specific on the guarantees
The takeover on 10 November
of the royal capital of Luang
Prabang by a group of officers
sympathetic to General Phoumi's
Savannakhet Revolutionary Com-
mittee has seriously weakened
Premier Souvanna Phouma's posi-
tion and given rise to increased
tension which could lead to mili-
tary clashes between the groups
struggling for control of Laos.
The officers, led by Third In-
fantry Battalion commander Major
Bountheng, took advantage of
concerning the implementation of
self-determination. The PGAR,
he said, has lost confidence in
bilateral. negotiations, and re-
quires UN supervision of any
settlement. It now appears vir-
tually certain that the PGAR will
reject any French overtures, at
least until after the UN General
Assembly takes a stand.
Current efforts by French
Community states to mediate
are not likely to be successful.
De Gaulle received Presidents
Senghor of Senegal, Houphouet-
Boigny of the Ivory Coast, and
Youlou of the Congo Republic
cordially, but these emissaries
reportedly made no specific pro-
posals.
"dangerous."
Another Community delegation
headed by Senegalese Premier Dia
met in Tunis on 16 November with
rebel premier Ferhat Abbas and
several "ministers" of the PGAR.
However, a rebel spokesman had
previously indicated that this
group would be received for "fra- 25X1
ternal discussion," but not for
mediation, which he described as
the absence from Luang Prabang
of Armed Forces Commander Gen-
eral Ouane and First Military
Region Commander Col. Houmpany
to stage their coup. With the
subsequent capitulation to the
Phoumi group of both Ouane and
Houmpany, the First Military
Region now appears to be fairly
solidly in the Phoumi camp.
This development reduces
Souvanna's military backing to
essentially the Fifth Military
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Region, with headquarters in
Vientiane. Even this command
is badly split over such issues
as whether to collaborate with
the Communist-dominated Pathet
Lao in measures against Phoumi
and the degree of support to
give Souvanna in his efforts to
hang on. The key to the situ-
ation in Vientiane is probably
Col. Kouprasith, the Fifth Mili-
tary Region commander, who has
given some indication that he
might move to secure the city
against the Pathet Lao and those
paratroop and other elements
still responsive to Captain
Kong Le. Whether he
has the temerity to
undertake such action
or the military power
to be successful is
questionable, however.
Despite the Luang
Prabang reverse,
Souvanna shows no sign ;BURMA,/
pared to give in by
resigning or lending
himself to maneuvers
for a new government
of national union
which would include
the Phoumi group. He
has announced that his
government will no
longer recognize as
valid the acts of the
King on the ground
that he is the capitve
of the Phoumi forces.
He has also warned
that his forces will
attempt to retake
Luang Prabang so as
"to free the King."
Although staff
officers in Vietiane
are alleged to be en-
gaged in preliminary
planning for such a
venture, Souvanna's
threat probably does not have
much substance, inasmuch as he
lacks: the forces to attack Luang
Prabang and at the same time
maintain the security of Vien-
tiane against either the Pathet
Lao or Phoumi's forces.
Numerous rumors of impending
military action are current in
Vientiane as the result of the
Luang Prabang coup. Reports
of an imminent attack on Vien-
tiane by Phoumi can probably be
discounted and may have been
deliberately circulated by
Savannakhet in order to tie down
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Vientiane forces and thus help
to prevent any attempt to liber-
ate Luang Prabang. There is
some indication that the Second
Paratroop Battalion and associ-
ated Vientiane and Pathet Lao
forces may resume their offen-
sive against Phoumi elements on
the road between Pak Sane and
Thakhek, The American Embassy
in Vientiane is concerned over
yet another possibility: that
the Pathet Lao, which is re-
ported in some strength in
Vietiane Province, will move to
take over control of the capital.
Former Premier Phoui
Sananikone has held several
talks with King Savang in Luang
Prabang on ways to break the po-
litical. logjam and permit forma-
tion of a new government to re-
place the narrowly based Souvanna
government. Phoui has indicated
two possible approaches to the
problem. One would involve a
summons by the King to Souvanna,
Phoumi, and Phoui to come to
Luang Prabang to work out a
new government. Under this
formula, Phoui would retain
Souvanna temporarily but would
strengthen his government by
taking over the Interior Minis-
try himself and allotting the
Defense Ministry to Phoumi.
An alternative approach
suggested to Phoui would be to
stimulate an assembly no-confi-
dence vote against Souvanna.
The King indicated to Phoui that
he had little hope that further
talks with Souvanna would be pro-
ductive, but on the other hand
made it clear that he would not
step in to resolve the crisis
until Souvanna had been removed
by other means.
General Phoumi went to
Luang Prabang on 14 November.
and tried to persuade the King
to approve a new government
based on the Savannakhet group,
The King refused to sanction
this move, claiming he could
only act within the limits of
the constitution. The political
impasse thus continues, with
Souvanna refusing to step down,
with Phoumi clearly holding out
for a rightist government he
can dominate, and with Phoui
jockeying for some middle-of-
the-road solution in which he
would stand a good chance of re-
turning to power.
Vientiane radio announced
on 16 November that agreement
has been reached between the
Souvanna government and the
Pathet Lao on the dispatch of
a government good-will mission
to Communist China and North
Vietnam, the establishment of
postal relations with North
Vietnam, and the establishment
of "friendly relations" with
Communist China. Souvanna had
previously insisted that re-
lations with Peiping must await
Communist China's admission to
the United Nations; his apparent
agreement to drop this condi-
tion may reflect his lessening
ability to resist pressure from
the left in the face of the
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right.
CURRENT INTELLIGENCE WEEKLY SUMMARY
There is some possibility,
however, that he has deliberate-
ly advanced the timetable in
~.r SECRET
The past week brought
some improvement in the position
of Congolese Army chief Mobutu's
interim government with respect
to pro-Lumumba elements in Leo-
poldville. New moves toward a
political settlement, however,
are in abeyance pending a UN
decision in New York concerning
the seating of President Kasavu-
bu's delegation and the dispatch
of the 15-nation conciliation
commission to the Congo.
The departure for
New York of senior UN
representative Dayal
on 3 November appears
to have led to a thaw
in relations between
Mobutu and the UN Com-
mand. In contrast to
Dayal, who made no ef-
fort to disguise his
dislike
for Mobutu,
acting
UN
chief Rikhye
appears
to
have suc-
ceeded
in
maintaining
correct
relations with
all major political
factions.
The UN Command
secured the release
of the pro-Lumumba
president of Leopold-
ville Province on 13
November, three days
after his arrest by
Mobutu in a dispute
over security respon-
sibilities in the capi-
=: L~cBol1
Lobito
implementing his concept of
neutrality as a means of elicit- 25X1
ing bloc diplomatic and propa-
ganda support in his struggle
to stay in power.
tal. Although this incident re-
flects Mobutu's vacillation,
there are indications that he has
lately consolidated his control
over the army.
The loyalty of the army re-
mains ephemeral, but this group
is unlikely to turn against Mo-
butu as long as he is able to
obtain money from the government
to meet payroll and other re-
quirements. UN officials have
expressed apprehension at the
THE CONUU
gran
i
qu
opbia~;iie
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SECRET
17 November 1960
army's fiscal practices, which
have included the reissue of
worn bank notes retired from
circulation and the use of
threats to force local banks to
issue drafts to meet its needs.
Lumumba, although still un-
der house arrest, has urged in
a letter to the President of the
UN General Assembly that a
referendum be held in the Congo
concerning the adoption of
"presidential" government, with
such a referendum to be followed
by the direct election of a
president. Lumumba's proposal
suggests that he regards his
status as the Congo's best
known politician as his princi-
pal political asset. Although
he is rumored to be purchasing
the loyalty of various Congo
legislators, the Chamber of
Deputies is regarded at present
as almost evenly divided between
pro- and anti-Lumumba elements.
In Katanga, President
Tshombd continues threatened
by tribal warfare in the northern
part of his domain, and has
lately been criticized within
his government for his policies.
Pro-Lumumba elements contin-
ue active in Orientale Province
and have attempted to capitalize
on Tshombe's difficulties by se-
curing the allegiance of the dis-
sident Baluba tribesmen in Katan-
ga. In late October, in an effort
to split Tshombe's political
domain, Baluba spokesmen in
Orientale Province announced
the creation of a "Baluba Prov-
ince'' in northern Katanga.
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17 November 1960
NOTES AND COMMENTS
BLOC ARMSTAID TO THE.ALGERIAN REBELS
Since the visit to Mos-
cow and Peiping in September
by Ferhat Abbas, premier of the
Algerian rebel government, there
has been increasing evidence
that the rebels are expecting
new deliveries of bloc arms. An
announcement by Tunisian Presi-
dent Bourguiba and semiofficial
leaks in Morocco and the UAR
during recent weeks reveal the
intention of those governments
to allow transshipments through
their territories. However, be-
cause of improved French secu- .,
rity including electrified bar-
riers along both the eastern
and Western frontiers, it would
be extremely difficult to smug-
gle the arms. into Algeria. Ab-
bas said that, although the
rebels want arms, they have no
need for volunteers.
1 The bloc is
likely to supply at least small
quantities of light arms and
ammunition and possibly some
"technical personnel," and Mos-
cow is also expected to give
strong diplomatic and propagan-
da support to the rebels' pro-
posal for a UN-supervised ref-
erendum in Algeria. Iraqi Pre-
mier Qasim earlier this month
publicly thanked the Peiping
government for the $12,000,000
in aid it has thus far given
the FLN and claimed such assist-
ance was continuing.
,SECRET
Soviet Foreign Minister
Gromyko, in a talk with French
Ambassador Dejean on 5 November,
maintained that France, rather
than the USSR, has shifted its
policy on Algeria. Gromyko re-
peated Khrushchev's observation
in New York that the USSR, in
extending de facto recogniton
to the rebel regime, had only
gone as far ad De Gaulle on the
question of recognizing the pro-
visional Algerian government.
Soviet assurances of this type
appear primarily designed to
mollify the French and to avoid
provoking an open break with
Paris while retaining for the
USSR a 'free hand to aid the
rebels.
The Soviet Union, in col-
lusion with Czechoslovakia, is
believed to have supplied sizable
amounts of arms to the FLN in 25X1
1957 and 1958. The weapons--
largely WOrld War II models of
Czech origin--apparently were
purchased by Egypt and Syria
and then transshipped to the
rebels via Libya and Tunisia
through supply channels main-
tained by Cairo. The total
amount of this aid is unknown.
The first Chinese offers
were made in late 1958 and early
1959, but it is not known whether
d.11 the aid promised reached the
rebels. An Algerian.rebel mis-
sion visiting China in April
1960, presumably discussed new
shipments of arms.
Czechoslovakia has on oc-
casion dealt directly with the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
rebels. Rebel delegations have
discussed relatively small pur-
chases of arms in Prague, and
Czech representatives have met
with FLN members in Morocco
to negotiate arms sales. Some
Czech Shipments of arms have
been intercepted en route to
Morocco by the French, the
most recent in April 1959.
The gold content of the
ruble--hitherto the only major
unannounced feature of the
general price and currency re-
form planned for 1 January 1961
--was revealed by the Soviet
Government early this week.
The new ruble, to be issued on
that date, will theoretically
have a foreign exchange value
of slightly more than one US
dollar.
The new, "heavy" ruble is
to be assigned a gold content
of 0.987 gram. This contrasts
with the present ruble gold
content of 0.222 gram and the
US dollar gold content of 0.888;
thus, on the basis of gold pari-
ties, one new ruble will be
the equivalent of $1.11.
On 1 January 1961 prices
and wages within the USSR ar
to be cut to one tenth of their
present levels and rubles ex-
changed at the rate of ten old
for one new, thus maintaining
the same relative domestic price
structure and the same relative
consumer purchasing power.
value to ten times its present
level, the regime will establish
a more realistic average ruble-
dollar ratio which in effect
depreciates the ruble in terms
of Western currencies. The
artificiality of the present
official exchange rate (4 to 1)
has been implied by the existing
ratio,?of 'ten rubles to one dollar
for tourists. As of 1 January,
the separate tourist rate will
be eliminated, and tourist
travel to the USSR will thus
become somewhat more expensive.
The USSR is describing the
reform as enhancing the inter-
national prestige of its currency.
The gold content assigned to the
ruble indicates that the USSR
will try to gain whatever
propaganda advantage it can
from issuing a currency with a
greater unit value than that of
the US dollar. There will be,
however, no immediate practical
effect on the USSR's trade and
aid programs outside the Soviet
bloc, which will be simply re-
computed on the basis of the
new gold valuation.
The assignment of a higher
gold content for the ruble has
no direct bearing on domestic
prices, which for the most part
are politically determined.
However, by raising the official
value of the ruble to nearly five
times the present level in com-
parison to the dollar but at the
same time increasing the internal
The new, more realistic
measure of the relative pur-
chasing power of the ruble in
terms of the dollar and other
Western currencies may lead the
European satellites to revalue
their own currencies accordingly,
as part of a long-term effort to
create a foreign trade pattern
which makes an optimum contribu-
tion to economic growth.
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BELGRADE MOVES TO ENHANCE ITS PRESTIGE WITH UNCOMMITTED STATES
Since President Tito's
recent visit to the UN, Yugo-
slavia has increasingly dem-
onstrated its independence of
Soviet foreign policies, appar-
ently to benefit its relations
with the uncommitted states.
For the two years prior to the
UN session, Belgrade has de+
scribed almost every Soviet
initiative in international af-
fairs as likely to ease world.
tensions.
Yugoslavia's new tactic is
probably intended in part to
counter any impression gained
from Khrushchev's remarks in
New York that Belgrade slavish-
ly adheres to Soviet policies.
In his homecoming speech at
Belgrade on 12 October, Tito
specifically denied that Yugo-
slavia was "riding the tail" of
the USSR and voiced his oppo
sition to Khrushchev's plan to
reorganize the-UN., While Tito
was en routehome`from New York,
Vice President Kardelj in effect
backed away a step further from
support for bloc schemes for a
Balkan accord by linking them
with broader international prob-
lems. On 29 October, Tito ex-
pressed his opposition to any
summit conference in the near
future, even with neutralist
participation.
Although Yugoslavia still
supports Moscow on certain im-
portant issues, such as coloni-
alism and disarmament, the USSR
has been annoyed by the dissi-
pation of over-all Yugoslav
support. In mid-October, Moscow
publicly attacked Belgrade for
not voting with the bloc in the
UN on a procedural resolution
concerning disarmament. Soviet
diplomats in Belgrade have also
privately expressed disappoint-
ment at Tito's failure to support
Khrushchev's UN reorganization
scheme.
ly.. strengthened Tito's deter-
minAtion to adhere to an uncom-
mitted course. Khrushchev prob-
ably intended to use Tito to
enlist neutral support for the
bloc's maneuvers, but a Yugoslav
official reported that the meet-
ing was "not as friendly and
agreeable" as Khrushchev later
indicated, and that Khrushchev
viewed Tito as a competitor for
the uncommitted countries.. Tito
apparently refused to collaborate
with Khrushchev, realizing that
the Soviet leader, mindful of the
Sino-Soviet dispute, would be
loath to make any meaningful con-
cessions to Yugoslav views or
interests.
Probably the greatest sin-
gle factor responsible for Yugo-
slavia's new emphasis on "neu-
tralism" was Tito's extensive
collaboration in New York with
the Leaders of uncommitted coun-
tries. Tito regarded the com-
bined efforts of the neutralists
to "ease international tensions"
as the one bright spot in a
generally depressing UN session.
Although he denied on 29 October
that the uncommitted countries
would form a third bloc, he
claimed that "there is a new
force in the world ...which has
more united views on inter-
national problems" than either
the Western or Eastern alliances.
A guide to future Yugoslav in-
tentions is Tito's urging that
uncommitted states confer more
often, cooperate more closely,
and act in concert more fre-
quently.
The West remains the chief
villain in Yugoslav propaganda,
but to a lesser degree than in
the past. The West was accused
of being the major precipitator
of tension at the General Assem-
bly session. The USSR shared the
blame, however, and the Belgrade 25X1
press gave its readers a reason-
ably clear picture of Khrushchev's
Tito's meetings with
Khrushchev in New York apparent-
excesses,
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The reorganization of the
ruling Committee of National
Union (CNU) in Turkey to elimi-
nate the more extremist members
emphasizes the new political
alignments being formed, as
well as the problems the CNU
faces in providing a transition
to civilian government.
President Gursel's dismiss-
al of 14 CNU members was the
culmination of several weeks of
growing dissent within the com-
mittee. The officers dismissed
have been proponents of pro-
longed military control of the
government and a wider range of
reform activities. At least
some of them favored a more
neutral foreign policy and per-
haps an eventual rapprochement
with the USSR.
The most prominent is Col.
Alpaslan Turkes, spokesman for
the younger, more politically
minded officers in the CNU. He
apparently had arranged to have
his followers appointed to
posts in the Istanbul police
department; all of them now
have been removed. Although
press reports indicate that
Turkes and his followers are
being scattered among Turkish
diplomatic missions abroad, he
will probably remain as a po-
litical figure, and is likely
to have the support of some of
the 3,500-4,000 officers who
were retired earlier.
Gursel, in announcing the
dismissals, repeated his pledge
to hold elections in October
1961 and announced that a con-
stituent :assembly would be
formed shortly to function as
a lower house until the elec-
tions, with the CNU acting as
a senate.. The reorganization
is generally seen also as im-
proving relations between the
CNU and the former opposition
Republican Peoples party
(RPP).
The suppression of the for-
mer ruling Democratic party (DP),
however, has created a vacuum
in the Turkish political struc-
ture that cannot adequately be
filled by either the RPP or the
Republican Peoples Nation party
(RPNP). The DP during its few
years in power drew a wide fol-
lowing, especially in the prov-
inces. Although now leaderless,
the DP organization still. pro-
vides the backbone of a potential-
ly powerful party.
There is considerable senti-
ment in political circles to al-
low the party rank and file to
reorganize under another name in
order to avoid the formation of
splinter parties--a situation
which could lead to political
stagnation under the system of
proportional representation pro-
posed for the next election. Fail-
ing this, however, many former DP
members would probably be attracted
to any new party that promised ef-
fective opposition to the RPP.
Another complicating factor
is the ambition of Kasim Gulek,
once secretary general of the
RPP, who is bitterly opposing
the party's long-time leader,Ismet
Inonu. Any move by Gulek to un-
seat Inonu could split the RPP
and add to the confusion in the
elections. Turkes probably would
consider joining forces with
Gulek if the latter controlled
the RPP. Turkes' strong dislike
for Inonu, however, would rule
out any collaboration with the
RPP as long as Inonu is in charge.
Although the military com-
mittee at present is committed
to return the government to
civilian control, it may feel
forced to extend its tenure if
the political alignments become
too chaotic to assure a sta
civilian government.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Iraq
Iraqi Communists have suf-
fered additional, blows. following
the -harsh ,repression--of the Com-
munist-inspired demonstrations
of 5-7 November. Apparently in
reaction to criticism of the gov-
ernment in the Communist press,
the Qasim regime has jailed 11
prominent Communists, including
one central committee member.
Included in the roundup were
publishers and editors of four
Communist-line papers, tWvo judges
of the infamous "People's Court,"
and several lawyers. Several
other Communists have been
placed under house arrest, in-
cluding another central commit-
tee member, Abd al-Qadir Ismail
al-Bustani.
A cabinet shake-up on 15 No-
vember has resulted in a further
Communist loss of face; pro-Com-
munist Naziha Dulaymi, some time
ago demoted to the position of
minister of state, now has been
ousted entirely. Additlnms'to
the cabinet appear to be civilian
technicians--possibly a further
sign that many nationalist po-
litical leaders are unwilling to
associate themselves with a re-
gime they regard as slipping.
Qasim's policy still ap-
pears to be to strike out at any
group which might threaten his
position as "sole leader." While
moving against the Communists
last week, his regime also ar-
rested a number of nationalist
army officers.. Fourteen other
nationalist officers were re-
tired on 8 November.
Protracted negotiations
between the Iraqi Government and
the Western-owned Iraq Petroleum
Company (TPC) have reached an
impasse. Earlier this month the
company reluctantly agreed to
meet Qasim's harsh terms for
surrendering much of its con-
cession area. Qasim, however,
now has sharply increased his
demands, and the IPC doubts the
government is interested in any
agreement.
Qasim may even go so far as
to try to secure his terms by
legislation, including "nation-
alizing" more than 90 percent of
the company's present concession
area. He has led the Iraqi pub-
lic to believe that the IPC would
soon have to accede to the gov-
ernment's position. In a speech
on 12 November, Qasim declared
that he had entered into "violent"
negotiations with the company
and would announce the results
in a few days' time, along with
his plans for future demands.
Sudan
Extraordinary security pre-
cautions are in effect in Khar-
toum and other parts of the Sudan
where UAR President Nasir is to
go during his 15-25 November
state visit. The Abboud mili-
tary regime is trying to prevent
new demonstrations by strong
political opposition groups, as
well as to protect Nasir against
a possible assassination at-
tempt, either by disgruntled
Sudanese nationals or by agents
slipped in from other Arab
states.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Public manifestations of
opposition to the military re-
gime have occurred sporadically
for more than three weeks. Siz-
able demonstrations took place
in Khartoum and other Sudanese
towns the day before Nasir ar-
rived. Led by Sudanese students,
these latest displays of opposi-
tion apparently had the support
of the Sudanese Communist party
as well as the larger Umma and
National Unionist parties.
In the field of foreign re-
lations, the Abboud government,
for the first time in its two
years of rule, appears receptive
to offers of aid from the Sino-
Soviet bloc countries. A Soviet
gift of five armored personnel
carriers has already been deliv-
ered; the regime is expected to
display them in the 17 November
anniversary parade.
Sudanese officials, despite
a comprehensive US program to
assist the Sudan in radio commu-
nications, have accepted in prin-
ciple a Chinese Communist offer
of two 50-kilowatt, short-wave
radio transmitters. The Chinese
have demonstrated a capability
to furnish effective aid in this
field.
Private Sudanese buyers are
negotiating with a Soviet mis-
sion for the purchase, on govern-
ment account, of 100,000 tons of
wheat. This, however, is within 25X1
the framework of the Soviet-
Sudanese trade agreement ~~
Morocco's attempt to find
support within the United Nations
for its claims to Mauritania,
the French West African republic
which formally celebrates its
independence on 28 November, ap-
pears doomed to failure. Even
the last-ditch effort of dis-
patching four high-level diplo-
matic teams to world capitals
seems futile. While most Arab
League members back Morocco
halfheartedly, Tunisia and the
newly independent African states
will recognize Mauritanian in-
dependence and probably will
support Mauritania's application
for UN membership.
The Islamic Republic of
Mauritania will be the last of
11 French-administered African
territories to achieve independ-
ence within the French Community
this year. Some 600,000 persons
--500,000 of whom are nomadic
Maures ethnically kin to the
tribes of southern Morocco--pop-
ulate the new state's 418,000
square miles of Sahara Desert.
The government of Premier Mokhtar
Ould Daddah at present is large-
ly dependent on French financial
sudsidies, but hopes to be able
to balance its budget by 1964,
when completion of railway and
port facilities will enable the
area to begin exporting iron and
other mineral ores.
Some Mauritanian officials
dream of as-yet-undiscovered
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subsoil riches in such
vast quantities that
Mauritania will become
a new Kuwait. Dissat-
isfaction with the
Ould Daddah regime
seems to be centered
in the northern, Mo-
roccan-oriented area,
where rich iron ore
deposits are located,
while Senegal and
Mali provide other
poles of economic and
ethnic attraction.
Immediately after
Morocco achieved in-
dependence in March
1956, right-wing na-
tionalist leader
Allal el-Fassi began
a largely one-man
campaign to reincor-
SPANISH
SAHARA
MAURITANIA
uakchott
porate into Morocco Saharan areas
including western Algeria, Span-
ish Sahara, Ifni, and Mauritania.
The King assumed leadership of
this effort early in 1958 when
he declared recovery of Mauri-
tania a national policy objective.
The issue has since proved use-
ful as a means of diverting pop-
ular attention from more critical
local Moroccan problems, but
finds little support among the
leftist opposition.
In 1957 a group of 254
Mauritanian leaders formally
pledged loyalty to King Mohamed
V. Some of them now occupy
prominent Moroccan diplomatic
and governmental posts. This
group of emigres maintains con-
tact with political groups in
Mauritania, particularly the re-
cently suppressed pro-Moroccan
Nahda party, whose strength is
centered in the important trad-
ing oasis of Atar.
Moroccan leaders have hinted
that if Rabat does not obtain
satisfaction at the UN it will
resort to more drastic action
and will retaliate against gov-
ernments which fail to support
Morocco. Allal el-Fassi on 1
November threatened war, and on
3 November the King declared
that Morocco had "entered into
a phase of national mobilization
for the return of Mauritania
to its country of origin."
Anticipating Moroccan-in-
spired subversion and military
adventures--such as occurred in
late 1957 and early 1958--Pre-
mier Ould Daddah is reported
to have asked and received
France's commitment to maintain
its present defense arrange-
ments In Mauritania after in-
dependenceThe Mauritanian
Government has implicitly
accused Morocco of assas-
sinating the mayor of Atar
on 8 November and antici-
pates other incidents of
terrorism and sabotage.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
17 November 1960
JAPANESE ELECTION
In the Japanese general
election on 20 November, Prime
Minister Hayato Ikeda will be
seeking a popular mandate for
his conservative government to
end the chaotic period marked
by the ratification of the US-
Japanese security treaty and
the violent fall of the Kishi
government last spring. At
stake are all 467 seats in the
House of Representatives, the
lower and more powerful chamber
of the Diet. Leaders of the
ruling Liberal-Democratic party
(LDP) hope to halt the gradual
decline in conservative repre-
sentation since 1952 by winning
about 300 seats. A decline be-
low the present level of 283
seats would dim Ikeda's pros-
pects for long tenure as prime
minister.
An LDP victory would prob-
ably be interpreted as a vote
for Ikeda's program of continued
prosperity and economic growth,
improved welfare benefits, and
tax reductions rather than as
overwhelming popular support
for continuation of Japan's
alliance with the United States.
Ikeda, pressed by the Japanese
Socialist party (JSP) after the
mid-October assassination of
its chairman, Inejiro Asanuma,
into making neutralism rather
than domestic economic issues
the major subject of campaign
debate, has forthrightly ex-
plained and defended Japan's
dependence on the United States
for defense and on the non-
Communist world for trade.
He has rejected the "ide-
alistic neutralism" of the So-
cialists as an "idle dream"
leading to a disruption of the
balance of power in the Far
East which would be contrary
to Japan's national interest.
However, local questions and
personalities and domestic eco-
nomic issues are expected to be
more decisive factors in influ-
encing voters than foreign pol-
icy.
Almost as important as an
LDP victory for the future
stability of the government and
for Ikeda's tenure is the com-
petition among factions within
the LDP itself. A substantial
increase in conservative rep-
resentation will enhance Ikeda's
prestige and discourage dis-
sident faction leaders from at-
tacking, the prime minister and
his program. However, faction
leaders are attempting in the
election to increase the size
of their Diet following for the
eventual struggle to succeed
Ikeda as party president and
prime minister.
Even if Ikeda emerges from
the election with the strongest
single faction, he will have to
form an alliance with other
faction leaders to control the
LDP and the Diet. Observers
see three party leaders emerging
as major contenders to succeed
PARTY STRENGTHS IN THE JAPANESE DIET
'VACANCIES 19
INDEPENDENTS 2_
HOUSE QE. ET'11.E$ENTATIYES
LOWER HOUSE
Ikeda--Kishi's brother, former
Finance Minister Eisaku Sato,
who now is probably the leading
contender; Takeo Miki, state
minister for economic planning
in the second Kishi cabinet, who
represents the "liberal" wing of
the party; and former Foreign
Minister Aiichiro Fujiyama, a
new major contender.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
An important underlying is-
sue may be the public's reaction
to the JSP's reliance on mass
tactics of violence last spring,
although the influence of this
will be difficult to determine
unless there is a major in-
crease in the conservative
vote. The ability of the moder-
ate Democratic Socialist party
to maintain its present Diet
strength may determine whether
it can continue as a separate
political party. The Communists,
with only one seat in the last
Diet, are concentrating their
efforts in campaigning for
five seats representing dis-
tricts where they have run well
in the past, but Japanese com-
mentators consider it unlikely
that the Communists will win
more than one or two additional
seats.
South Vietnamese President
Diem continues to face serious
political problems following
suppression of the 10-11 Novem-
ber coup attempt by paratroop
elements. He may feel an in-
creased need to reorganize and
liberalize his government, pos-
sibily with some urging from
loyal military officers who
came to his rescue. These of-
ficers undoubtedly share the
concern of the coup leaders
over the spread of Communist
guerrilla warfare and the ad-
verse effect of Diem's harsh
political, social, and economic
measures on popular resistance
to the Communists.
Committee Against Rebels and
Communists" to ferret out
traitorous elements, together
with reports of civilian ar-
rests and the temporary suspen-
sion of newspapers which printed
rebel communiques, may foreshadow
a campaign of repression which
could lead to further unrest in
Saigon. No retribution is planned
against the paratroop ranks,
which are considered by Diem
to have been "duped"; the re-
,sponsible paratroop... lead-
ers haver , sought . asylera. in
Cambodia, and this may bring
about a flare-up in South Viet-
nam's already strained relations
with its neutralist neighbor.
An official spokesman has
announced that government changes
will be made. There remains,
however, considerable uncertainty
over Diem's willingness to carry
out sweeping reforms or to relax
his authoritarian rule, which
now operates through a clique
of family and political favorites
in the pervasive Can Lao organi-
zation.
Diem is reported under
pressure from the latter group
to punish the coup instigators
severely and to crush all known
and potential political opponents.
The formation of a "People's
Most of the loyal units
sent to Saigon from the First,
Fourth, and Fifth Military Re-
gions have returned to antiguer-
rilla operations. There has
been no significant Vietnamese
Communist exploitation of the
coup incident, either in Saigon
or in areas of guerrilla con-
centration from which troops
were diverted. Although the
Communist regime in North Viet-
nam has been urging stepped-up
guerrilla terrorism in the South,
the attempted revolt apparently
took the Communists by surprise.
The revolt, however, will en-
courage Hanoi in its assessment
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CURRENT INTELLIGENCE WEEKLY SUMMARY
bS ' II
~Ple~ku ^\
ul Nhon
~,~, ?~OfIR Cau
17 NOVEMBER 1960
ioo
that unsettled conditions in
South Vietnam are favorable to
its strategy of eventually top-
pling Diem through a combination
of guerrilla terrorism and po-
litical support to anti-Diem
elements.
Communist bloc
propaganda attributes
failure of the coup
to the insurgents'
inability to "win sup-
port of the people"
and to exploit the
"tremendous dissatis-
faction" with Diem.
North Vietnam has
depicted the coup as
merely a conflict be-
tween pro-US groups;
Moscow has charged
that Diem was saved
by "active US inter-
vention," but ~ sug-
gests that during'
the initial " stages,
American officials'
hoped :to use the
insurgents to force
Diem to liberalize
his government. In
portraying the coup
as pro-US, the Communists
may hope to play on Presi- 25X1
dent Diem's suspicions and
reservations about US atti-
tudes.
AFRICAN MOVES FOR ADDITIONAL SEATS IN UN BODIES
The African UN members,
supported by the rest of the
Afro-Asian bloc, have apparently
decided on a major effort to
reallocate the elective seats
on the UN Security Council and
the Economic and Social Council
so as to permit election of one
of their number.
Resolutions to enlarge
these bodies now are before the
Special Political Committee, and
the Africans will probably seek
amendments reallocating the
seats until such time as the
membership of the two councils
can be increased. Since it is
unlikely that these amendments
will get the necessary two-
thirds majority in the assembly,
the Africans will then support
their own candidates for the
elective seats despite the gen-
eral practice of supporting the
candidates informally designated
by their respective regions. It
is for this reason that the Afri-
cans engineered the postponement
of the elections, which had been
scheduled for 11 November.
The consensus of assembly
discussions over the years has
clearly favored increasing the
elective membership of the two
UN councils. Adamant Soviet
opposition to any enlargement
until Peiping is given China's
UN seat has, however, prevented
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CURRENT INTELLIGENCE WEEKLY SUMMARY
any definitive action during the
past four sessions. During the
current discussions in the as-~
sembly's Special Political Com-
mittee, the USSR's opposition
led to another impasse and re-
sulted in the African move for
reallocation.
The present regional as-
signment of the six elective
seats on the Security Council
reflect the power distribution
in the UN as it was in 1945.
One seat each is, by "gentler
men's agreement," assigned to
the Middle East, Western Europe,
Eastern Europe, and the Common-
wealth; two are assigned to
Latin America. Elections are
held for three vacancies each
year for a two-year term.
Portugal is the Western
European candidate this year,
Chile the Latin American, and
the UAR the Middle Eastern.
Portugal is already in serious
trouble because of strong Afro-
Asian objections to Lisbon's
colonial policies. The Latin
American seat is also a target
because the area is already
represented on the council. The_!
UAR's candidacy seems to be the
only assured one at this time.
PRO-CASTRO PARTY ELIMINATED FROM VENEZUELAN COALITION
By excluding the pro-Castro
Democratic Republican Union
(URD) from his three-party coa-
lition, Venezuelan President
Betancourt has probably consol-
idated' his support among mod-
erates and in the armed forces.
The URD now can be expected to
ally openly with the Communists
and the leftist opposition which
provoked the antigovernment vio-
lence of 19-28 October--the
major test of Betancourt's sta-
bility thus far. The breakup
of the coalition, which had
ruled since Betancourt's inau-
guration in February 1959, was
foreshadowed by the URD's crit-
icism of the regime and demands
for its leftist reorientation
following the recent unrest.
Top URD leaders even seemed to
condone expressions of discontent.
.The new cabinet to be ap-
pointed shortly will be composed
of representatives of Betancourt's
Democratic Action party, the
moderate Christian Democratic
COPEI, and independents. With
The 18-member Economic and
Social Council (ECOSOC) has 13
elective seats, since by tradi-
tion the five permanent members
of the Security Council are re-
elected to ECOSOC when their
three-year terms expire. The
elective seats are presently
distributed as follows: four
to Latin America, one to the
Commonwealth, three to Western
Europe, two to Eastern Europe,
and three to the Afro-Asian area.
Six seats are up for election
this year; France's and China's
"permanent" seats, two Latin
American seats, and one each for
Western Europe and the Afro-Asian
area.
The African drive for real-
located seats jeopardizes Taipei's
chances for re-election because
of the Chiang regime's tenuous
position in the UN. Belgium,
the Western European candidate,
may lose votes because of its
recent actions in the Congo and
the ;.widespread anticolonial
feeling. The Latin American
seats are vulnerable because
there are two of them u
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the cooperation of COPEI,
}3etancourt will retain control
of the Congress and be freed
from the pressures of the ul-
tranationalistic URD on his
moderate leftist policies.
Although the new government may
face increased subversive activ-
ity and political obstructionism,
its programs presumably can be
more clearly and decisively de-
fined, a factor which could
serve to restore the c,-)nfidence
of businessmen and the public
in its stability and intentions.
The reinforced political
opposition can be expected to
concentrate its attacks on the
government's serious economic
difficulties. These include
depressed business conditions,
an unbalanced budget, ineffective
implementation of social reforms,
high unemployment, and a long--
range decline of foreign ex-
change reserves which forced the
imposition of exchange controls
on 8 November and could lead
shortly to a devaluation of the
bolivar, the nation's monetary
unit.
The opposition, which has
maintained close liaison with
Havana
may also attempt to exploit
the widening rift in Venezuela's
relations with the regime of
Fidel Castro, who apparently
still holds considerable appeal
rally of an estimated 125,000
to 150,000 people in Caracas on
1 November, at which the crowd
jeered references to the Cuban
Government and its leaders and
once called for the "firing
squad" for Castro. Moreover,
recent sharp attacks on
Betancourt by the controlled
Cuban press and radio, in
which he has been variously
styled as "a lackey,{ "a
cheap politician," and "a
stupid fool," may prove
counterproductive for the
promoters of the Castro
cause in Venezuela.
Iecent actions by British
Guinana's government leader
Cheddi Jagan and his wife Janet
reflect the continued Communist
orientation of the colony's
governing People's Progressive
party (PPP). In view of the
continued fragmentation of
for Venezuela's influential
radical groups.
The pro-Castro elements
suffered a setback, however,
from a massive progovernment
opposition groups, the PPP is
expected to win the August 1961
election--the first under the
new constitution providing for
full internal self-government.
Both Jagans have visited
Cuba in recent months. In August
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Cheddi Jagan received a Cuban
offer of a $5,000,000 loan at
2-percent interest for develop-
ment of timber resources, plus
an additional sum for future
hydroelectric development.
Cheddi Jagan now is in the' US
on a private trip seeking funds
both for his party and the Gui-
anese economy and may revisit
Cuba on his way home. The PPP
has maintained contacts by vis-
its and correspondence with
foreign Communist parties, and
East Germany is providing six
technical scholarships for Gui-
anese students.
As minister of trade and
industry, Jagan is seeking for-
eign experts, including Commu-
nists,for the civil service;
he would like to increase So-
viet bloc trade and has threat-
ened repeatedly to seek a So-
viet development loan if unsat-
isfied with Western finan-
cial offers. While publicly
disclaiming the Communist label,
the PPP's weekly newspaper
follows a standard Communist
line.
Local concern over Commun-
ism has increased, but has not
yet coalesced into an effective
opposition movement. The PPP
remains the strongest political
party but faces a serious poten-
tial threat in indications that
its principal financial backers,
the East Indian businessmen,
now may support a new "third
force" in the process of forma-
tion because of dissatisfaction
with Jagan's equivocal position
on business.
The British, knowing that
only the top PPP leaders are
Communists, are not greatly
concerned and are prepared to
proceed with their plan for re-
moving their control after Au-
gust 1961 except for defense,
foreign affairs, and possibly
the police. Full independence
would be constitutionally possi-
ble as early as the end of 1962.
London, nevertheless, views Ja-
gan as a "woolly-minded Marxist
idealist" naively taken in by
the Castro line, and is con-
cerned that, with greater au
thority after August 1961,he
might facilitate Castro's ef-
forts for Communist intrusion
into Latin America.
The British are, however,
not exercising their constitu-
tional powers to require Jagan
to refuse the Cuban loan; they
are skeptical that it will ever
be implemented because of tech-
nical difficulties. They pre-
fer not to antagonize him and
to rely on the influence of the
governor to ensure reasonably
good government. Jagan, in an
effort to ensure funds for
economic development and the
grant of wider constitutional
powers, has maintained coopera-
tive relationships with both
American and British officials.
The local elections held
throughout Italy on 6 and 7
November gave a slim vote of
confidence to Premier Fanfani's
Christian Democratic (CD) minor-
ity government and its four
center party supporters. The
Christian Democrats, however,
now are confronted with choosing
partners in municipal adminin-
istrations, and this may pre-
cipitate a national cabinet
crisis.
The Nenni Socialist party's
central committee, meeting on
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CURRENT INTELLIGENCE WEEKLY SUMMARY
17 November 1960
24 November, may ap-
prove the party di-
rectorate's suggestion
that the party collab-
orate with the Chris-
tian Democrats, Social
Democrats, and Repub-
licans; in some 150
city councils where
the government coa-
lition failed to win
a majority. Accept-
ance of such an offer
in any sizable number
of municipalities,
however, would antag-
onize the Liberal par-
ty and other conserva-
tive elements among
DISTRIBUTION OF VOTE IN ITALIAN ELECTIONS
(PERCENT OF TOTAL VOTE)
1956
PROVINCIAL
1958
PARLIAMENTARY
1960
PROVINCIAL
Christian Democrats
38.9
42.3
40.3
Democratic Socialists
7.5
4.7
5.7
.Liberals
4.2
3.4
4.0
Republicans
1.3
1.4
1.3
Total Center
51.9
51.8
51.3
Communists
23.1
24.5
Nenni Socialists
35.2*
14.7
14.4
Total Left
35.2
37.8
38.9
Neo-Fascists
4.6
5
9
Monarchists
10.9**
4.7
.
2.9
9.3
8.8
1.1
1.0
*Communists and Nenni Socialists ran together.
**Neo-Fascists and Monarchists ran together.
Premier Fanfani's parliamentary
supporters and thus risk dis-
rupting his government. Fanfani
would prefer to draw the So-
cialists'further away from the
ITALY
NEW DISTRIBUTION OF SEATS ON KEY CITY COUNCIL
CHRISTIAN DEMOCRATIC
DEMOCRATS SOCIALISTS LIBERALS REPUBLICANS COMMUNISTS
RORIe (AS .e.te) 26 3 3 19
D31Lin (80 Beata) 25 a 8 - - 17
?arinn 71'0 eeat.l 27 a 6 1 20
Oemoa (SO .eats) 27 6 2 1 22
Veen (80 ..ate) 23 4 2 -- 14
Treace (66 Beat.) 12 4 3 -- 20
N.p1e lib e..te) 21 1 1 19
PaleOnso (60 .onto) 24 2 2.. 9
NEN NI
SOCIALISTS NEO - FASCISTS
11 12
17 5
12 2
17 4
13 3
8 3
5 3
4 5
Communists by means of local
alliances--all the more because
Communist electoral gains in
November brought the combined
Socialist-Communist vote to
nearly 39 percent.
The Democratic Socialists
and the Republicans have already
approved the Socialist director-
ate's proposal. Fanfani,,however,
must keep in mind the attitude
of his party's third partner, the
conservative Liberal party, which
might threaten to withdraw from
the national coalition in pro-
test and in any event would ex-
ert strong pressure on the Chris-
tian Democratic right wing. The
right wing, in turn, will urge
further local alliances with the
neo-Fascists, who are already
allied with the Christian Demo-
crats in the Sicilian regional
government and in Rome and oth-
er cities on the mainland.
The implications
of these maneuvers .
MONARCHISTS OTHERS for r the stability of
the national govern-
2 may not become
-- 1'
apparent before the
Nenni Socialists hold
their congress, ex-
pected in January or
February 1961. The
Socialists made a strong show-
ing in major cities, and Nenni
may hope to be able to point to
widespread local alliances with
the Christian Democrats to coun-
ter. criticism of his failure to
match the Communists"' over-all
electoral gains. His party's
left wing will argue for a re-
turn to a close rapprochement
with the Communists, although
resentment over Socialist losses
to the Communists may have some-
what reduced the influence of
the left wing within the party.
Whether or not a broad
pattern of Nenni Socialist -
Christian Democratic local al-
liances does evolve, Fanfani
may have to deal with a more
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independent attitude on the
part of the Democratic Social-
ists. This party may exploit
its slight but unexpected elec-
toral gains over 1958 to urge
local alliances with the Nenni
Socialists, while at the same
time pressing Nenni for a more
forthright national stand
against the Communists.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
17 November 1960
PATTERNS AND PERSPECTIVES
THE UNITED NATIONS SECRETARIAT
The questions of the au-
thority of the UN secretary:
general and the personnel and
functions of the Secretariat
were brought into the fore-
ground this fall by Khrushchev's
bitter attacks on Hammarskjold
and by his demand that the
secretary general's office be
replaced by a three-man "collec-
tive executive body" composed
of representatives of the West,
the Communist bloc, and the neu-
tral nations. Soviet leaders
have long been dissatisfied
with the Secretariat's person-
nel setup and procedures; they
feel the Western powers, par-
ticularly the US, have a pre-
dominant voice in the UN admin-
istration.
The campaign by Moscow to
get Soviet bloc nationals into
key policy-making positions in
the Secretariat has been based
on the premise that equitable
geographic distribution should be
the paramount consideration in
hiring UN civil servants. It
has had the support of the Asian,
and more recently. African mem-
bers, which have long held the
view that they were inadequately
represented. These members tend
to subordinate all other criteria
for employment on the Secretari-
at.
Khrushchev's original pro-
posal of 23 September to replace
the secretary general with a
triumvirate is regarded by prac-
tically all UN members as un-
realistic because it would re-
quire an amendment to the
Charter--which in turn is sub-
ject to approval by the Security
Council and to parliamentary
ratification by a majority of
member states. However, the
USSR's suggestion may have led
to Ghana's proposal of 30 Sep-
tember urging the creation of
an advisory group of under
secretaries representing the
current distribution of power
in the General Assembly. The
Afro-Asian bloc would probably
be susceptible to the argument
that the USSR must be given
some concession to its point
of view and may regard Ghana's
proposal as a practical solu-
tion.
Creation of such an ad-
visory group would, however,
give the Russians power to
hamper--if not actually to con-
trol--the Secretariat's opera-
tions. It would also introduce
political considerations on a
level just under the secretary
general and thus prejudice the
independent mediation functions
of the office as they have e-
volved during the seven years
under Hammarskjo~d.
Office of Secretary General
Since he assumed office in
April 1953, Hammarskjold has in-
creased the powers and prestige
of the office of the secretary
general beyond those contemplat-
ed in the UN Charter. His skill
as a negotiator and mediator
has led UN members increasingly
to call on him to help settle
international disputes;
standing as something approach-
ing an independent force in
world affairs has risen stead-
ily.
Hammarskjold has further
expanded the power of his of-
fice by stationing high-ranking
UN officials responsible only
to him in various trouble spots.
The three "UN ambassadors" to
date are all Western Europeans:
Pier Spinelli (Italian) Ln Jordan,
Adrian Pelt (Dutch) in Guinea,
and Eduard Zeliweger (Swiss) in
Laos. There are 21 Swiss em-
ployed at the professional lev-
el, although Switzerland is not
a member of the UN. However,
Hammarskjold has employed other
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CURRENT INTELLIGENCE WEEKLY SUMMARY
nationalities on his ad hoc
investigatory commissions, no-
tably Rajeshwar Dayal of India,
who now is chief of UN opera-
tions in the Congo and was also
one of three chiefs of the UN
observer group in Lebanon in
1958.
In making these appoint-
ments, Hammarskjold has avoided
naming nationals from countries
directly involved in
the specific dispute
and has picked indi-
viduals dedicated to
the principle of
"quiet diplomacy."
The precedent that
no national of the
five permanent mem-
bers of the UN Secu-
rity Council be ap-
pointed to these ad
hoc commissions has
long been established.
Two of Hammar-
skjo:ld's closest ad-
visers are American
citizens: Dr. Ralph
Bunche, under secre-
tary for special political af-
fairs, and Andrew Cordier, ex-
ecutive assistant to the secre-
tary general. Both men have
been with Hammarskjold since
1953 and have often been as-
signed to complete negotiations
which the Secretary general be-
gan. Their most recent assign-
ment outside New York was in
the Congo this summer? Cordier,
in addition, has at times been
Hammarskjold's chief contact
with the American UN
delegation,
A third long-
standing adviser of
Hammarskjold's is
Philippe de Seynes
of France, under sec-
retary in charge of
the Department of
Economic and Social
Affairs. De Seynes
has recently been ne-
gotiating with Brus-
sels about the Congo's
frozen assets.
The highest-rank-
ing Soviet national in
the Secretariat is
Georgy Petrovich Arkadyev, un-
der secretary in charge of the
Department of Political and
Security Affairs. Arkadyev's
assistant is H. A. Wieschoff of
the United States. Wieschoff--
who formerly handled trustee-
ship and dependent-area affairs
--is apparently involved with
UN planning for the Congo at
this time and has also been
used as a contact with the
American delegation regarding
Congo affairs,
IT
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CURRENT INTELLIGENCE WEEKLY SU
17 November 1960
In addition to the New
York headquarters, there is a
European office at Geneva, di-
rected by Italy's Spinelli.
Geneva is also the headquarters
for the Economic Commission for
Europe, headed by Sakari Tuo-
mioja (Finnish), and the offices
of the High Commissioner for
Refugees, of which Auguste Lindt
OFFICE OF
CONFERENCE
SERVICES
Hoo (China)
THE UNITED NATIONS SECRETARIAT
SECRETARY GENERAL
Hammarskjold (Sweden)
r 1 L
EXECUTIVE DIRECTOR
UN CHILDREN'S FUND
DIRECTOR, UN RELIEF AND WORKS
AGENCY FOR PALESTINE
REFUGEES IN THE NEAR EAST
LIQUIDATOR, UN
KOREAN RECONSTRUCTION
AGENCY
COMMANDER, UN
EMERGENCY FORCE
DEPARTMENT OF
POLITICAL AND
SECURITYCOUNCIL
AFFAIRS
Arkadyev (USSR)
OFFICE OF LEGAL
AFFAIRS
Stavropoulos (Greece)
DEPARTMENT OF
TRUSTEESHIP AND
INFORMATION FROM
NON-SELF-GOVERNING
TERRITORIES
Protitch (Yugoslavia)
OFFICE OF PUBLIC
INFORMATION
Katzin (South Africa)
OFFICE OF GENERAL
SERVICES
Vaughan (US)
Accra
Athens
Belgrade
Bogota
Buenos Aires
Cairo
Copenhagen
D(akarta
The Hague
Kabul
Karachi
London
Manila
Mexico City
Moscow
New Delhi
Paris
Prague
Rangoon
Rio de Janeiro
Rome
Sydney
Tehran
Tokyo
Washington
~t tttoS~d'v'3 rii to t" ?"s'uc'h `e 'tha?`
:ip elIJ lop lent tt n Nunpa /. _..
SECRET
MARY
(Swiss) is the chief. The sec-
retary general has also set up
small field offices for the
Economic Commission for Asia
and the Far East (ECAFE), the
Economic Commission for Latin
America (ECLA), and the Eco-
nomic Commission for Africa
(ECA)--none of which is headed
by a Soviet national.
OFFICE OF THE
CONTROLLER
Turner (New Zealand)
DEPARTMENT OF
ECONOMIC AND
SOCIAL AFFAIRS
De Scynes (France)
COMMISSIONER
FOR TECHNICAL
ASSISTANCE
Heurtematte (Panama)
SECRETARIAT OF ECONOMIC
COMMISSION FOR AFRICA
SECRETARIAT OF ECONOMIC
COMMISSION FOR ASIA AND
THE FAR EAST
SECRETARIAT OF THE UN
PENSION COMMITTEE AND
THE JOINT STAFF PENSION
BOARD
STAFFS OF SPECIAL MISSIONS ESTABLISHED
BY THE UN GENERAL ASSEMBLY OR SECURITY
COUNCIL'
Conciliation Commission for Palestine
Truce Supervision Organization for Palestine
Representative for India and Pakistan
Military Observer Group for India and
Pakistan
Advisory Council for Somaliland
Commission for the Unification and
Rehabilitation of Korea
OFFICE OF
PERSONNEL
Hamilton (Britain)
UNDER SECRETARIES
FOR SPECIAL
POLITICAL AFFAIRS
Bunche (US)
Narasimhan (India)
EXECUTIVE OFFICE
OF THE SECRETARY
GENERAL
Cordier (US)
EUROPEAN OFFICE
AT GENEVA
SECRETARIAT OF ECONOMIC
COMMISSION FOR EUROPE
SECRETARIAT OF ECONOMIC
COMMISSION FOR LATIN
AMERICA
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fessional people for long-term
UN assignments.
17 November 1960
Geographic Distribution
According to the UN Char-
ter, "the paramount considera-
tion" in employing the staff of
the UN Secretariat is to secure
the highest standards of effi-
ciency, competence, and integ-
DESIRABLE
DISTRIBUTION
NUMBER ON STAFF
31 AUG. S9
NUMBER ON STAFF
31 AUG. '60
AFRICA
27
35
43
ASIA AND FAR EAST
177
201
211
EASTERN EUROPE
216
68
84
WESTERN EUROPE
299
355
380
LATIN AMERICA
77
101
108
MIDDLE EAST
24
39
41
NORTH AMERICA
388
291
294
CURRENT INTELLIGENCE WEEKLY SUMMARY
The conduct of Soviet na-
tionals on the Secretariat has
been one factor making it diffi-
cult for Hammarskjold to cor-
rect the imbalance,
RATIO TO
DESIRABLE NUMBER
1959 1960
130%
114%
31%
118%
131%
163%
75%
159%
119%
39%
120%
140%
171%
76%
Soviet nationals
who are hired often
delay their arrival
at UN headquarters
for more than two
weeks by reporting
first to the Soviet
UN mission in New
York. UN employees
from the USSR do not
stay in their jobs
for more than three
the admission of 17 new Afro-lstan members this fait.
17.NOVEMBER 1960
rity,. Due regard must, however,
be paid to the importance of re-
cruiting on a wide geographical
basis. The General Assembly ex-
ercises control over and gives
direction to the administrative
and financial processes of the
Secretariat through its Fifth
(Administrative and Budgetary)
Committee,
Western Europe and Latin
America have more professional
positions within the Secretariat
than their assigned quotas al-
low, while the Soviet bloc is
underrepresented, The Asian
and African members as a bloc
were over the UN quotas as of
August 1960, but many countries
within this grouping are not
represented. The Afro-Asians
point out, moreover, that the
quotas, although revised peri-
odically, do not reflect the
present power distribution in
the General Assembly. .Revision
along these lines would give
them many more UN staff posi-
tions.
The present imbalance--a
result of the unavailability
of qualified applicants from
some areas at the time the UN
was founded--has been aggravated
as the newly independent states
have joined the international
body. These same states, how-
ever, can seldom spare their
relatively few educated pro-
SECRET
years, and they often resign
without notice while on home
leave. There have also been
cases in which Soviet nation-
als have used UN assignments
as a cover for espionage. Many
Soviet bloc applicants cannot
meet minimum language require-
ments for higher UN jobs, but
they refuse to accept positions
at the lower professional lev-
els,
Remedial Measures
.Hammarskjold has made some
progress in his program to re-
organize the Secretariat to meet
some of the demands of the Asian,
Guillaume Georges-Picot - Former UNrepresenta-
tive of France; former UN under secretary for
social affairs.
Francisco Urrutia - Former UN representative of
Colombia.
A. A. Fomin - USSR Foreign Ministry; former UN
representative of the USSR.
Omar Loutfi - UN representative of the UAR.
Sir Harold Parker - Member, International Civil
Service Advisory Board; former chief civil serv-
ant in the British Defense Ministry.
Alex Quaison-Sackey - UN representative of Ghana.
C. S. Venkatachar - India's chief representative to
Canada.
Dr. Herman B. Wells - President, University of
Indiana; former member of the US delegation at
the UN.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
African, and Communist states
for more professional positions.
The number of Soviet bloc per-
sonnel in such positions in-
creased from 68 to 84 in one
year--although it is still far
below the assigned quota of 216.
To aid the secretary general,
the 1959 General Assembly ses-
sion recommended that he ap-
point a "committee of experts"
to advise him on ways and means
of revamping the Secretariat.
An eight-member body was ap-
pointed by Hammarskjold in
August 1960 and is expected
to submit a report to the 1961
General Assembly session.
The USSR--presumably to
offset the antagonism of many
Afro-Asian members to its at-
tacks on the secretary gener-
al--announced on 4 November
that it would leave to the com-
mittee of, experts its demands
for a :'broad. . reorganization
of the Secretariat.
Hammarskjold and his com-
mittee will probably continue
the reorganization program,
and the secretary general will
probably retain his present
personal "cabinet" until the
end of his term in April 1963.
RECENT CHANGES IN SOVIET INDUSTRIAL ADMINISTRATION AND PLANNING
Changes being made in the
system of industrial adminis-
tration in the USSR reflect the
regime's continued concern over
the problem of finding the most
effective way of achieving its
economic goals and at the same
time encouraging local initia-
tive. These changes, involv-
ing both organizations and
planning techniques, are de-
signed to provide some opera-
tional leeway at the local
level within a system of cen-
tral control.
Since the industrial re-
organization of 1957, the
boundaries of the territories
administered by some of the
original 105 Councils of Na-
tional Economy (sovnarkhozy)
have been realigned. Some
sovnarkhozy have been merged
and others divided, but the
present system of 102 sov-
narkhozy preserves the orig-
inal pattern of a large num-
ber of economic-administrative
units covering all but about
one fifth of the total Soviet
industrial activity. The for-
mal line of command for opera-
tional decisions continues to
flow from the USSR Council of
Ministers through the republic
councils of ministers to the
sovnarkhozy, although an addi-
tional line of command for cer-
tain activities has been added
with the creation of super-sov-
narkhozy in three republics.
Various other organization-
al changes affect the planning,
coordination, and control of
industrial activity. At this
point the regime appears rea-
sonably satisfied with the ter-
ritorial economic structure as
a workable, basic administra-
tive arrangement, but its in-
herent shortcomings, as in the
past, will probably continue to
call for innovations and refine-
ments.
Background
The creation of the sov-
narkhozy to administer industry
along territorial lines was a
radical departure from the func-
tional ministerial pattern of
the Stalin period. Under that
system, industrial management
was plagued by departmental
barriers and a dearth of local
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CURRENT INTELLIGENCE WEEKLY SUMMARY
initiative, This led adjacent
enterprises of different minis-
tries to take circuitous routes
through channels to Moscow in
order to carry out the simplest
transactions with each other.
There were irrational transpor-
tation hauls between distant
plants of the same industrial
ministry and often duplication
of facilities among the vari-
ous ministries.
The sovnarkhoz system
eased many of these difficul-
ties but created problems of
its own--recognized by Khru-
shchev even prior to the reor-
ganizat:ions--which'havethus
far defied easy solution. From
the outset, the leaders were
confronted with the need to
counteract rrlocalist" inclina-
tions among regional administra-
tions. Some sovnarkhozy tended
to place regional interests
ahead of the national plan; they
failed, for example, to honor
deliveries outside their own
jurisdictions and sought to
develop areas of self-suffi-
ciency even when it was clearly
uneconomical to do so.
The regime also has been
faced with the problem that im-
position of institutional safe-
guards against such "distortions"
EVOLUTION OF THE SOVIET CENTRAL PLANNING APPARATUS
ASSIGNMENT OF SELECTED PLANNING FUNCTIONS AMONG THE PRINCIPALLY RESPONSIBLE ORGANIZATIONS
TIME PERIOD
LONG-RANGE
PLANNING
CURRENT PLANNING
SUPPLY ALLOCATION
LABOR AND
WAGE MATTERS
TECHNICAL
INNOVATIONS
PRIOR TO 1948
USSR Gosplan
USSR Gosplan
USSR Gosplan;
USSR Gosplan
USSR Gosplan;
Ministries
Ministries
USSR Gosplan
USSR Gosplan
State Committee for
USSR Gosplan
State Committee for
1948
Material-Technical
New Technology
Supply (Gossnab);
(Gostekhnika);
Ministries
Ministries
USSR Gosplan
USSR Gosplan
Gossnab
USSR Gosplan
USSR Gosplan;
State Committee for
Ministries
1951
Food and Industrial
Supply
(Gosprodsnab);
Ministries
1953
'
USSR Gosplan
USSR Gosplan
USSR Gosplan;
USSR Gosplan
USSR Gosplan;
S
(AFTER STALIN
Ministries
Ministries
DEATH)
USSR Gosplan
State Commission for
Gosekonomkomissiya;
State Committee for
State Committee for
Current Planning
Ministries
Labor and Wages;
New Technology
1955
(Gosekonom -
USSR Gosplan
(Gostekhnika);
komissiya)
Ministries
USSR Gosplan
USSR Gosplan
USSR Gosplan;
State Committee for
USSR Gosplan;
1957
Directorates of
Labor and Wages;
State Scientific-
(AFTER THE
Supply and Sales
USSR Gosplan
Technical
REORGANIZATION)
of the abolished
Committee;
ministries merged
Retained ministries
into USSR Gosplan
(BEFORE MID-APRIL 1960)
USSR Gosplan
USSR Gosplan
USSR Gosplan;
State Committee for
USSR Gosplan;
Main Administra-
Labor and Wages;
State Scientific-
(AFTER MID-APRIL 1960)
tions of Inter-
USSR Gosplan
Technical
USSR State Scientific
republic Supply
Committee;
1959-1960
Economic Council
State committees for
(Gosekonomsovet)
specialized technol-
ogies replacing the
temporarily
retained ministries
NOTE: USSR Gosplan (now the State Planning Committee) has been officially called by other names
at different times since World War II, but it has always been popularly referred to as "Gosplan."
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CURRENT INTELLIGENCE WEEKLY SUMMARY
of the national interests might
defeat one of the primary goals
of the reorganization itself--
the encouragement of local ini-
tiative. The regime has thus
sought in its subsequent altera-
tions of the structure to find
the best operational solution.
Republic Sovnarkhozy
Concern over localism, re-
inforced by a fear of disrupt-
ing the flow of supplies to
industrial enterprises, led to
a considerable expansion in the
duties of USSR Gosplan--the
State Planning Committee--at
the time of the reorganiza-
tion in 1957.
In 1958, the responsibil-
ity for coordinating intersov-
narkhoz supply and distribution
tasks within each republic was
transferred from USSR Gosplan
to the republic gosplans. This
move left the superior body
with the burden of interrepub-
lic supply and distribution
tasks and its traditional plan-
ning activities. Planning and
supply problems, however, con-
tinued to be the subject of
much criticism in the Soviet
press throughout 1959 and 1960.
coordinating the work of the
lesser sovnarkhozy, supervising
plan fulfillment and the ful-
fillment of delivery contracts,
and ensuring the proper use of
materials, monetary funds, and
labor.
The republic sovnarkhozy,
which can issue decrees and
directives themselves, may be
more effective than were the
republic gosplans which, as
staff organizations, could act
only through the republic coun-
cils of ministers. Nevertheless,
the preservation of a direct
line of command from the repub-
lic councils of ministers to
the regional sovnarkhozy, along-
side the new line of command
from republic to regional sov-
narkhozy, may create operational
confusion and uncertainty.
The staffing of the new
bodies has not been announced.
Appointment of RSFSR Deputy
Premier Vasily Ryabakov to the
chairmanship of the RSFSR super-
sovnarkhoz, and a similar ap-
pointment in Kazakh, however,
suggest that a high level of
skill and authority will be
sought in the new councils.
A new attack was made on
these problems in mid-1960 in
the four republics having more
than one sovnarkhozy." within
their boundaries--the Russian,
Kazakh, Ukrainian, and Uzbek--
where the burden of handling
intersovnarkhot relations was
overtaxing existing republic
organizations. In the Uzbek
Republic, the difficulties were
overcome by simply merging its
five sovnarkhozy into a single
republic sovnarkhoz, In the
remaining three republics,
super-sovnarkhozy were created
at the republic level under the
Council of Ministers.
By this move, the republic
gosplans were relieved of the
time-consuming tasks of monitor-
ing regional sovnarkhozy opera-
tions and were allowed to con-
centrate on their planning re-
sponsibilities. The republic
sovnarkhozy were charged with
In April of this year, long-
range planning functions were
taken from USSR Gosplan and
given to the State Scientific
Economic Council (Gosekonom-
sovet). This move stripped
USSR Gosplan of all its former
broad responsibilities except
for short-term planning at the
national level and for dealing
with operational questions which
arise in connection with plan
fulfillment.
Gosekonomsovet, together
with the union republic minis-
ters and departments, is to
elaborate long-range--15 to 20
year--economic plans, as well
as five-to-seven-year plans.
USSR Gosplan's "summary" sec-
tions (such as National Eco-
nomic Plan, Balances and Materi-
al-Technical Supply, and Labor
and Wages) are to be trans-
ferred to Gosekonomsovet, while
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CURRENT INTELLIGENCE WEEKLY SUMMARY
17 November 1960
revealed which would rearrange
the 13 basic economic zones for-
merly employed in regional plan-
ning into 16 new economic re-
gions, and would establish Eco-
nomic Councils for the Planning
and Coordination of the Work of
the Sovnarkhozy in 14 of these
regions. This plan was appar-
ently conceived about the same
time the republic-level sovnar-
khozy were created.
Although creation of the
republic sovnarkhozy, with their
territorial sections, may be as
far as the regime will go at
present toward meeting the need
for coordinating economic activ-
ity in the large regions, forma-
tion of the suggested additional
councils cannot be ruled out.
The plan stressed that creation
of the republic sovnarkhozy was
a step toward solving operation-
al problems,, but noted that
other organs were also needed to
Coordinate adjacent sovnarkhozy.
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Gosplan retains only those sec-
tions--primarily industrial
branches--needed for its short-
term planning functions.
Planning departments which
formerly dealt with only one
main planning agency at the
national level, Gosplan, now
must deal with two planning
agencies--an arrangement which
is likely to be more complicated
than the old one.
Planning, Coordination Councils
The possibility of achiev-
ing more effective planning and
coordination of economic activ-
ity by creating national eco-
nomic regions--each of which
would generally contain several
sovnarkhozy--was actively dis-
cussed at the time of the 1957
industrial reorganization and
has been a frequent topic in
the Soviet press since that
time. In mid-1960 a plan was
PROPOSED ECONOMIC-GEOGRAPHIC REGIONS
BoundaryLof area administered by Councils of National Economy
Boundary of proposed Economic-Geographic Region (16 regions)
BULB Underlining designates regions proposed to have Coordinating and
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CURRENT INTELLIGENCE WEEKLY `SvwR `.
17 November 1960
development. The republic sov-
na..rkhozy, oriented toward opera-
tional problems of impletaenting
current plans, probably are not
ideally suited to handling prob-
lems of long-term patterns of
industrial development.
The 14 coordinating and
planning councils would:-am-
ine in detail- for. Iann;j g .
organs--proposals such as those
for the development of comple-
rentary industries in adjacent
sovnarkhozy within each large
region and for the correct dis-
tribution of capital investment
to attain the desired patterns
of specialization. The coun-
cils presumably would work
closely with the long-term plan-
ning agency, Gosekonomsovet,
and an official of the latter
has indicated that the councils
will be subordinated to his or-
ganization.
Results
The changes made and con-
templated will make the indi-
vidual sovnarkhoz responsible
for administering programs de-
vised by a larger number of
staffs than-in the past. Such
operational decisions as are
made by the sovnarkhozy in the
implementation of these pro-
grams will be subject to addi-
tional review. Planning agen-
cies, now free to devote more
attention to basic planning
c'problems, may be more resistant
to, sovna;xkhoz deviations and
may even produce plans less
susceptible to improvisations
from below.
To the extent that greater
coordination of activity in ad-
jacent sovnarkhozy leads to more
specialized patterns of indus-
trial development, the opportuni-
ties for the individual sovnarkhoz
to influence its own course of
development are reduced. To the
extent that the planning and
monitoring of intersovnarkhoz
supply relationships are im-
proved,.default on intersovnar-
?' khoz+'dve?liiver,y contracts may be
reduced. Thus sovnarkhozy would
have fewer excuses for justify-
ing uneconomical development of
local sources, less reluctance
to shop around in adjacent sov-
narkhozy, and less reason for
maintaining stockpiles-as cush-
ions against erratic supply
flows.
The regime apparently is
gambling that these measures
will restrict the undesirable
exercise of local initiative.
in the pursuit of local inter-
ests without great sacrifice
ofcsuch gains as may have been
achieved in stimulating that 25X1
initiative in the Implementa-
tion of the national plan.
SOUTH KOREANS LOOK TO CHANG GOVERNMENT FOR ECONOMIC PROGRESS
"Today the South Korean
people are in an indescrib-
ably wretched plight.
Workers' wages are less
than one third their min-
imum living e,pensdg: ,
Millions of unemployed
and semi-unemployed are
on the verge of starva-
tion,.and hundreds of.
thousands of child beg-
gars are tramping the
streets."
So. Said North Korean Pre-
mier Kim Il-sung in a "Libera-
tion Day" address in Pyongyang
on 14 August in which he called.
for an interim North-South,fed
eration and a "supreme national
committee" of representatives
from both sides to work out a
program of economic and cultural
cooperation. Without such co-
operation, Kim asserted, talk
of overcoming South Korea's
"economic catastrophe', was only
"empty phrasemongering." The
North Korean premier told his
listeners that attempts to de-
velop the South Korean economy
through foreign aid would fur-
ther weaken the economy, ''!' kthd;Gh
has already been devastated
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17 November 1960
because of its subjugation by
American monopoly capital."
Kim's address repeats a
theme recurrent in North Korean
propaganda since the fall of
the Rhee government--the sug-
gestion that North Korean heavy
industry can be wedded to South
Korean light industry and agri-
culture to create a viable
economy, He claims that full-
scale economic cooperation be-
tween the North and South would
make it possible to achieve
economic independence at the
same levels of living as pre-
vail in the rest of Asia.
There is enough substance
to this North Korean propaganda
line to make it attractive to
some South Korean listeners.
Although the grievances which
drove the students into the
streets were political rather
than economic and the revolu-
tion a conservative rather than
a radical one, the South Korean
people clearly expect more of
the new government than an end
to despotism. Since April, the
Koreans have become more aware
of the efforts in other Asian
countries to raise living
standards, and their ambitions
are reinforced by the realiza-
tion that for the first time
since independence they may be
in a position to do something
about it.
The public's distrust of
Communism engendered by bitter
personal experiences during
the Korean war has provided
the Chang government with an
initially strong bulwark a-
gainst neutralist or leftist
pressures. Nevertheless, a
prolonged inability of con-
servative leaders to demon-
strate reasonable progress
toward a better life under the
democratic system could foster
neutralist or totalitarian
movements.
Immediate Background
The Chang government is
starting out in an atmosphere
charged with recriminations
against the supporters of for-
mer President Rhee, These un-
fortunately include most of the
influenatial businessmen on whom
the country must depend for a
large share of its economic de-
velopment.
It is widely acknowledged
by both foreigners and Koreans
that no Korean businessman could
make an honest living during
the Rhee era because of the mul-
tiplicity of economic controls
administered by corrupt offi-
cials and politicians. Prime
Minister Chang and other Rhee
foes are consequently inclined
to take a lenient attitude to-
ward businessmen and to settle
for payment of back taxes and
fines.
The public, however, is
pressing for ex post facto
legislation covering irregu-
larities committed during the
Rhee era, and there are indi-
cations that jail sentences for
contributors to Rhee's political
machine may be stipulated. Ex-
cessive reprisals against busi-
nessmen would hamper the new
government's plans for economic
development.
The leading example of
"large-scale tax evaders" is
Yi Pyong-chol, who received a
bill for about $6,000,000 in
back taxes and fines. Yi's in-
terests include wine, tire, and
textile manufacturing, canning,
sugar refining, processing of
marine and mineral products,
banking, insurance,aand invest-
ments. Chong Jae-ho, a poor
second, was assessed $2,000,000
for taxes in connection with
his extensive activities in the
export-import and textile fields,
Immediate Problems
Prime Minister Chang's
budget address on 30 September
advocated increased farm cred-
its, diversification of crops,
livestock raising, and sericul-
ture; development of electric
power, public works, and marine
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CURRENT INTELLIGENCE WEEKLY SUMMARY
resources; plans to achieve
rapid economic growth with em-,?
phasis on small business enter-
prises; establishment of a
realistic exchange rate; and
a broad welfare program.
Multiple Exchange Rates
South Korea's most serious
immediate need is the replace-
ment of its complicated system
of multiple exchange rates by
a single realistic rate; the
present system has served more
to maximize dollar earnings
from US aid and UN forces' ex-
penditures than to promote in-
ternational trade. Beslides dis-
couraging exports and distort-
ing industrial development, tie
system has exerted a depressing
influence on the production of
cotton and certain types of
grain by making it cheaper to
import competing items.
Balance-of-Payments Deficit
A second problem.confront-
ing the Chang government is the
country's enormous balance-of-
payments deficit. While the
deficit is closely related to
the unrealistic exchange rate,
it is also caused by other fac-
tors. The shrinkage in rice
exports, for example, stems not
only from high prices but from
the fact that Koreans now are
eating more rice. Before World
War II one third of the caloric
intake of the Korean diet was
derived from rice. In recent
.years rice has provided nearly
half of the caloric intake.
Korea has been able to afford
more rice because of the avail-
ability of foreign
aid to cover its bal-
ance-of-payments def-
icit.
In 1959, export
receipts of $20,000,-
000 paid for less than
10 percent of Korea's
commodity imports--a
pattern which has ex-
nancod by US aid and earnings
'from the spending of UN ;forces
statio4ed in Korea.
Korea has always been a
deficit nation in international
trade, although its trade gaps
were smaller before World War II.
Prewar exports from both North
and South Korea averaged approx-
imately $236.,000,000 against
$303,'000,000 average imports,
leaving a trade gap of only
$67,000,000. Of these amounts,
however, what is now South Korea
accounted for only an estimated
20 percent of exports and 10 per-
cent of imports.
Rice, marine products, and
minerals were the chief prewar
exports, most of which went to
Japan; Japan in turn supplied
90 percent of Korea's imports.
After the war, the Rhee govern-
ment attempted to free Korea of
dependence on Japanese trade,
but it failed to develop ade-
quate substitutes because of
ill-considered trade practices
and inability to promote mar-
kets elsewhere. When Rhee in
1959 placed an embargo on trade
with Japan in an attempt to gain
political concessions, it was
South Korea which suffered most.
The Chang government has taken
its first step to revive trade
by seeking a reconciliation with
Japan, its only important pros-
pective customer for rice and
other products.
Another problem is the bur-
den of supporting a defense es-
tablishment of 600,000 men in
(MILLION DOLLARS)
COMMERCIAL
isted since 1945. The ESTIMATED
balance of Korean im- 1997.39 AVERAGE
01107 C
ports has been fi--
1956
19
13
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CURRENT INTELLIGENCE WEEKLY SUMMARY
17 November 1960
the ground, navy, and air forc-
es without resorting to currency
inflation. In recent years, de-
fense has averaged roughly one
third of the government's budg-
et. While the prime minister
would like to see a 100,000-man
SOUTH KOREAN BUDGET
000 EXPENDITURES
DEFICIT (BEFORE ADJUSTMENT
FOR U S. AID)
REVENUES
39
188
91
1954 1956 1959 1960
"AS APPROVED BY THE NATIONAL ASSEMBLY
reduction of the armed forces,
the Communist threat and the
problem of creating civilian
jobs in a depressed economy
has led Chang to settle for a
30,000-man decrease to be a-
chieved through normal attri-
tion.
The government must ac-
cordingly find some other way
of balancing the budget and
meeting popular demands for so-
cial and economic progress.
This problem has been eased by
the United States' contribution,
totaling $308 billion in eco-
nomic and. military aid from
1945 to mid-1960. In 1961
American-.financed imports are
expected to generate nearly
half of the national govern-
ment's revenues and a large
portion of South Korea's con-
sumer goods and capital re-
quirements.
Inflation
Despite such assistance,
the Korean Government has at
times resorted to inflation to
close the budgetary gap. The
result has been an inflation-
ary spiral, offset only partly
by bumper crops which caused
wholesale grain prices to plum-
met in 1958 and 1959 while other
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prices rose, Prices today are
about 70 percent higher than in
1955.
Money and credit have been
relatively better controlled
during the past year. Recently
the Seoul wholesale price index
showed a decline as the fall
harvest began to flow into the
market. On 14 October the in-
dex was only 10 percent above
the July-December 1959 average,
A battle inside the Chang gov-
ernment seems to be shaping up,
however, between Minister of
Commerce and Industry Chu Yo-
han, who advocates inflation
to speed economic development
if capital cannot be obtained
by other means, and Finance
Minister Kim Yong-son. Each
claims to be the top economic
minister in the government.
The usual effects of in-
flation, which discourages sav-
ings and stimulates consumption
and speculative activities, are
doubly severe in South Korea
with its essentially private-
enterprise economy. In 1959,
consumption amounted to nearly
93 percent of gross national
product (GNP) which, without US
aid in financing imports, would
have left little for investment.
Even allowing for the addi-
tional goods and services avail-
able through foreign aid, econ-
omists calculate that gross in-
vestment--investment before
depreciation--in South Korea in
1959 amounted to only 12 percent
of GNP. Net investment should
total at least 15 percent of
GNP for a nation to achieve an
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CURRENT INTELLIGENCE WEEKLY SUN
annual growth rate of 5 per-
cent. Without large-scale in-
jections of American aid, South
Korea's domestic investment is
insufficient to maintain even
the present level of living,
given the current annual popu-
lation increase of well over
2 percent.
Korea's
growth rate,
at
its
9,7 percent
in
1957,
economic
peak of
when Amer-
ican aid had maximum impact,
declined to 405 percent in 1959;
the slowing growth rate directly
reflects a decline in US aid.
Longer Term Problems
Whatever short-run efforts
are made to improve the economy,
South Korea's poverty of basic
resources remains a fundamental
hindrance. Most of Korea's pre-
war heavy industry lies in Com-
munist North Korea, and that in-
dustry which was in the South,
including light industry, was
mostly destroyed during the
Korean war o Aside from mod-
erate quantities of iron ore,
graphite, tungsten, bismuth,
and anthracite coal, there are
few known mineral reserves of
commercial importance. Forest
resources have been depleted,
Agriculture
Agriculture, which fur-
nishes a livelihood for about
70 percent of the population
and produces 83 percent of the
nation's food requirements, is
the mainstay of the economy.
South Korea has A higher percen-.
tage of arable land than most
of Asia, but it ranks fifth
among the nations of the world
in population density. More-
over crop yields can increase
significantly only if agricul-
ture is given vigorous govern-
ment encouragement, with im-
proved irrigation methods and
seeds, increased use of chemical
fertilizers and insecticides,
and more efficient farming tech-
niques.
Disease is a major threat
to Korean crops. Many farmers
SOUTH KOREAN EXPENDITURE
ON GROSS NATIONAL PRODUCT
(MILLION DOLLARS IN 1958 PRICES)
1955
1957
' 1958
1959 (EST)
TOTAL CONSUMPTION
GROSS INVESTMENT
NET IMPORTS
1,807
253
-160
1,961
334
-220
2,095
300
-170
2,330
313
-263
GROSS NATIONAL PRODUCT
1,900
2,075
2,225
2,380
PER CAPITA GNP (DOLLARS)
89
93
98
101
GNP GROWTH RATE
4%
10%
7%
5%
have lost as much as 30 percent
of their vegetable crops and 50
percent of their tomatoes because
of plant diseases. There are al-
most no trained Korean plant
pathologists, or, much official
interest in this field.
To lessen its balance-of-
payments deficit, South Korea
might be able to earn substan-
tial foreign exchange by re-
stricting domestic consumption
of high-priced rice and trad-
ing the surplus to other coun-
tries for cheaper grains, as it
was forced to do before World
War II. Foreign demand for the
type of rice raised in Korea is
declining, however, and the
country's export potential will
only be improved if the Chang
government succeeds in shifting
rice acreage to cotton, soybeans,
and oilseeds and emphasizes live-
stock raising for export. There
is also an export market for
Korean fish products, provided
present low production can be
raised through such means as
government extension of credit,
marketing assistance, and en-
couragement of joint ventures
with Japan,
Industry
The principal role of South
Korea's small industry to date
has been to supply scarce con-
sumer items to the domestic mar-
ket and thereby reduce imports.
Shortages of capital, managerial
talent,,and competent technicians
to staff even existing plants are
largely responsible for the feeble
gains scored by the industrial
sector in 1959. Moreover, poor
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17 November 1960
planning resulted in the appear-
ance of large excess capacity
in many areas--83 percent in
flour milling, 80 percent in
sugar refining, 72 percent in
raw-silk processing, 61 percent
in worsted-yarn manufacturing,
40 percent in electric power,
39 percent in cotton cloth, and
22 percent in cotton-yarn manu-
facturing.
A comprehensive long-range
industrial development plan is
being drawn up with American
assistance, and the Chang gov-
ernment has proposed capital
expenditures over an undeter-
mined period of $810,000,000 of
which the United States would
be asked to contribute more
than half. A more important
source of capital may prove to
be private investment, given
sound fiscal reforms and a
AMERICAN AID TO SOUTH KOREA
(ACTUAL DISBURSEMENTS IN MILLION DOLLARS)
CURRENT INTELLIGENCE WEEKLY SUMMARY
TOTAL AID,1945-1960 = ;3,803,000,000
US FISCAL YEARS IC11945.58VEI 1959
MILITARY ASSISTANCE
ECONOMIC ASSISTANCE
PL-480 SALES
TECHNICAL COOPERATION
OTHER
164
7
2,035
46
6
222
2,820
24
7
209
IN: ADDITION, DEVELOPMENT LOAN FUND COMMITMENTS, OF WHICH LITTLE HAS
MEN DISBURSED, TOTALED $7,000,000 IN 1959 AND $12,000,000 IN 1960.
01107 E 17 NOVEMBER 1960
reasonable application of the
Foreign Investment Law, which
Chang has promised. With en-
couragement, Korean light in-
dustrial products might become
competitive in the world mar-
ket.
The Koreans by and large
are hard working but they have
lacked dynamic and aggressive
leadership in the economic
field. There is some question
whether Prime Minister Chang
possesses sufficient drive to
propel his nation toward eco-
nomic viability, although he
is universally acknowledged to
be sincere, honest, and polit-
ically capable. Last month,
Chang weathered the first chal-
lenge to his leadership by the
"old guard" of his Democratic
party, and he now commands a
shaky majority in the National
Assembly. Chang's demonstrated
political skill in handling his
opponents enhances prospects
that his government may be able
to carry out its program.
North vs. South
How does South Korea's per-
formance compare with North
Korea's today? Making allow-
ances for exaggeration in North
Korea's statistical claims,
1959 per capita .,GNP-.is ,11Notth
Korea probably slightly exceeded
South Korea's $100. North Ko-
rea's smaller population--
9,000,000 against South Korea's
23,000,000, greater natural re-
sources per capita, emphasis on
heavy industry at the cost of
sharply reduced living stand-
ards, and greater Communist bloc
aid per capita to.North Korea
from 1954 to 1958 probably ac-
count for the higher per capita
GNP in North Korea today. If
standards of living alone are
compared, however, the South
Koreans are better off because
of their present high consump-
tion rate.
The Communist bloc's aid
to Pyongyang has apparently de-
clined greatly in recent years--
from 35 percent of North Korean
GNP in 1954 to about 3 percent
in 1959 and slightly less in
1960. The annual growth rate
of the North Korean economy has
only moderately declined, how-
ever, from about 18 percent im-
mediately after the Korean war
to about 15 percent today.
North Korea's ambitious
seven-year plan, which starts
next year, is reportedly aimed
at raising per capita output of
basic industrial commodities
substantially above 1959 Jap-
anese levels to approximately
the Soviet 1958 level, with em-
phasis also being placed on in-
creased consumption.
The challenge of the Com-
munist north is thus a formidable
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CURRENT INTELLIGENCE WEEKLY SUMMARY
one and, under present condi,
tions, will in time conspicu-
ously widen the gap in the rel-
ative economic'potentials of
the two Koreas. If South Korean
Government policies do not bring
about marked economic progress,
there may be renewed agitation
by revolutionary elements led
by university students, who
played a key role in overthrow-
ing the Rhee government.
While the Chang government
and its successors probably
cannot hope to overtake North
Korea economically on a per.,
capita basis, they may be able
to satisfy the South Korean peo-
ple to a reasonable degree if
they make efficient use of their
resources and if foreign aid
continues at substantial levels.
Fortunately, the present atmos-
phere in Seoul for a serious at-
tack on the nation's ills is
more favorable than at any time
since independence,
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