CURRENT INTELLIGENCE BULLETIN - 1957/12/20

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 03184086
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 17
• Document Creation Date: December 12, 2019
• Document Release Date: December 20, 2019
• Publication Date: December 20, 1957

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CURRENT
INTELLIGENCE
BULLETIN
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Copy No. 1 3S
OFFICE OF CURRENT INTELLIGENCE
CENTRAL INTELLIGENCE AGENCY
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CONTENTS
1. 1958 SOVIET ECONOMIC ND BUDGET ANNOUNCED
C--
(page 3).
2, SOVIET PRESIDIUM MEMBER ASSIGNED TO IMPORTANT
GOVERNMENT POST ) (page 5).
3. SITUATION IN INDONESIA
(page 6).
4. DUTCH VIEWS ON THE INDONESIAN SITUATION
(page 8).
5. BONN OFFERS USSR TRADE AGREEMENT IN EXCHANGE
FOR REPATRIATION (page 9).
R-12� 6. USSR MA 7- EXPLOIT MAJOR AMERICAN OIL DISCOVERY
IN SYRIA (page 10).
7. PROBABLE CONTENTS OF EGYPT'S ARMS SHIPMENT
TO TUNISIA (page .12).
8. ANTI-COMMUNIST POSITION STRENGTHENED IN
GUATEMALA (page 13).
9. PREPARATIONS FOR TRIAL OF NAGY MAY BE UNDER
11-0 10.
WAY IN HUNGARY (page 14).
CEYLONESE PRIME MINISTER WEATHERS NO-CONFIDENCE
VOTE (page 15).
ANNEX--Conclusions of the Watch Report of the Intelligence
Advisory Committee (Top Secret) (Noforn Except
(page 16).
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1. 1958 SOVIET ECONOMIC PLAN AND BUDGET ANNOUNCED
Comment on:
The speeches on 19 December to the
Supreme Soviet by First Deputy Pre-
mier Iosef Kuzmin, chairman of the
USSR State Planning Commission, on
the 1958 economic plan, and by Finance
in s er rsen verev on the state budget, as summarized
by TASS indicate that the Soviet leaders continue to be pre-
occupied with those problems which last year forced a reduc-
tion in the earlier planned rates of growth. Both reports em-
phasized measures intended to increase fuel, energy, and raw
materials output, agricultural production, housing construc-
tion, and labor productivity. Explicit budget defense expend-
itures are planned at 96.3 billion rubles, virtually the same
as the planned 1957 figure. Unstated defense expenditures in-
cluded in other budget categories may have increased, however.
The TASS reports of the messages reflect
the traditional Soviet concern with industrial growth--the pri-
ority development of heavy industry as the basis for "catch-
ing up with the US" in per capita industrial output and for in-
suring "the security of the state."
According to Kuzmin, the "main trends" of the
1958 economic plan are "determined by the goals of the seven-
year plan (1959-1965), a draft of which is already being prepared."
Industrial output is planned to increase during 1958 by 7. 6 per-
cent, only slightly above Pervulthints modest 1957 planned in-
crease of 7.1 percent. Kuzmin asserted the 1957 output increase
was about 10 percent and attributed the overfulfillment to Khru-
shchev's reorganization of the management of industry and con-
struction. Improved labor productivity is to account for the bulk
of the 1958 output increase.
Soviet investments, necessary for future
economic growth, are planned to increase by 7 percent during
1958, the same rate of increase planned for 1957. Actual in-
vestments, for 1957, however, were about 10 percent above the
previous year's Kuzmin stated.
Although no great changes in the level of budget
revenues or expenditures are scheduled, the reorganization of
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industry has resulted in a planned increase in the share of
total expenditures channeled through republic and local budgets
from approximately one-third in 1957 to about half in 1958�
Expenditures for the national economy
from both budget and enterprise funds (mostly profits retained
by the plant)are planned to increase by 36.6 billion rubles, or
roughly 10 percent over the 1957 plan. Of the increase in
budget funds for the national economy, 85 percent will go to
industry, reaffirming its high priority. Allocations to state
agriculture will rise 6 percent over the planned 1957 level.
Expenditures for health, education, and social welfare benefits
will rise 13 percent, continuing the high rate of increase begun
in 1956. Expenditures to finance scientific research establish-
ments will increase 10 percent over 1957, reaching a total of
18.2 billion rubles in 1958.
Revenues lost by such recent concessions
to the population as the abolition of the compulsory mass loan
and a reduction in personal income taxes have been more than
made up by the growth of the turnover tax, levied primarily on
consumer goods, and the profits tax, levied on state enterprises.
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2. SOVIET PRESIDIUM MEMBER ASSIGNED TO IMPORTANT
GOVERNMENT POST
Comment on:
Frol R. Kozlov, a full member of the
Soviet party presidium and till now the
Leningrad party boss, has been appointed
chairman of the Council of Ministers of
the Russian Republic (RSFSR), according
to a 19 December Moscow radio announcement. The decision
to effect the change was presumably reached at the central
committee plenum which met on 16 and 17 December. M. A.
Yasnov, the previous incumbent, will serve as deputy to
Kozlov.
Kozlov, a long-time party official, was
raised to candidate membership in the party presidium in
February 1957 and to full membership at last June's party
plenum. His new appointment brings a top party man to one
of the most important government positions in the USSR. It
also brings another Khrushchev supporter from the provinces
to Moscow in addition to the three appointments to the party
secretariat announced on 18 December.
Appointment of a man of Kozlov's stature to
leadership of the Council of Millisters of the most important
republic of the USSR may reflect its large and vital role in over-
seeing and coordinating the activities of the 68 regional economic
councils (sovnarkhozy) set up within its territory under the new
industrial reorganization scheme.
Yasnov� unlike Kozlov, has made his
career on the governmental rather than the party side. He
worked for a number of years under Premier Bulganin and his
demotion may signify a decline in the latterts influence.
As a result of the latest shift, the key post
of party first secretary is now vacant in the Ukrainian and Uzbek
Republics and in the Leningrad and Gorkiy �blasts. Appoint-
ments to these important "steppingstbner positions will indi-
cate how free a hand Khrushchev has in making such selections.
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3. SITUATION IN INDONESIA
both the army and mod-
erate political groups, concerned over
the steady drift toward political and
economic chaos, are groping for means
to promote their own power and influence
after President Sukarno goes on "sick
leave" early next month.
the Masjumi
and the National party are trying to establish a working rela-
tionship as a first step toward a new cabinet; on the other
hand, the military is planning to take over the government and
rule by junta. Some credibility is lent to these reports by the
time extension granted, over Communist objections, to a par-
liamentary committee which is trying to re-establish the
Sukarno-Hatta partnership. The committee is to give its re-
port during the period Sukarno is expected to be away. To
date, however, no effective leadership has emerged to co-
ordinate and direct the divergent activities of these groups.
The Indonesian parliament, with the Masjumi
abstaining, on 18 December passed the dual nationality treaty
which deals with the status of the Overseas Chinese and was
negotiated with Communist China over two years ago. This ac-
tion was probably prompted by Peiping's strong support of Indo-
nesia's Irian claim. It may also foreshadow similar action on
the long-pending Soviet aid agreement.
Workers' committees apparently
are strongly entrenched in former Dutch firms. The "workers'
committee" at Djakarta's principle travel agency, for instance,
must approve all applications for plane and ship reservations.
The first major development in the anti-
Dutch campaign outside Java has occurred in government-controlled
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North Sumatra, where three large Dutch companies have
decided to abandon their interests and have instructed all
personnel and their families, numbering 4,000, to leave
Indonesia. Wholesale abandonment of Dutch holdings in
East Java is also under way,
the local military authorities have
ordered all Western businessmen, including Americans, to
give up 25 percent of their houses without compensation.
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4. DUTCH VIEWS ON THE INDONESIAN SITUATION
Comment on:
The three-week campaign against
Dutch commercial interests in Indo-
nesia has thus far failed to shake
Dutch determination not to negotiate
on New Guinea. The Netherlands is
evidently committed in principle to a complete evacua-
tion of all Dutch citizens from Indonesia if this becomes
necessary. Hopes of salvaging any of the Dutch invest-
ments hinge on moderate elements gaining control over
either the Djakarta government or the outlying islands.
The Hague has not rule out the possi-
bility of eventual bilateral negotiations, with or without
third-party mediation, but insists that these must start
with economic and financial relationships. The Indone-
sian government insiSts that the Dutch must relinquish
New Guinea before it will even discuss compensation for
seized assets.
Prime Minister Drees raised the Indo-
nesian question at the NATO meeting and warned that fi-
nancial losses might curtail Dutch defense expenditures.
He did not press for specific NATO action but subsequently
hinted that an appeal may be made to the UN.
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5. BONN OFFERS USSR TRADE AGREEMENT IN
EXCHANGE FOR REPATRIATION
Comment on:
Conclusion of a trade and repatriation
agreement between West Germany and
the USSR is expected soon after the
talks reconvene in mid-January, ac-
cording to West German Ambassador to the USSR Lahr.
In a draft proposal now being considered by the Soviet nego-
tiators, the Germans appear to be prepared to accept most
of Moscow's demands in exchange for an agreement for the
return of German "treaty resettlers" in the ITSsR The
term "treaty resettlers" would apply to abOut 132000.persons
who were transferred from the Baltic area under a wartime
agreement, and would cover only 10 percent of Bonn's orig-
inal repatriation demands.
Bonn would accept Soviet demands for a
three-year trade agreement providing for total trade of
$936,000,000, an increase over the present $200,000,000
annual rate. As an annex to the trade and payments agree-
ment, Bonn may sign a treaty of commerce and navigation,
including a most-favored-nation clause. The West Germans
had hoped to avoid a long-term agreement and a full-scale
commerce and navigation treaty.
Bonn would also accept the Soviet proposal
for a broad consular agreement providing in principle for the
opening of consulates. Bonn, however, would require further
negotiationL in each case. The West Germans originally ad-
vocated consular functions only for the embassies.
The Foreign Ministry is considering sep-
arate talks with the USSR in Bonn on the subject of a liberal-
ized cultural exchange program. Such talks were suggested
by Premier Bulganin, but Bonn has refused to include them in
the present trade and repatriation negotiations.
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*IIMS
6. USSR MAY EXPLOIT MAJOR AMERICAN OIL
DISCOVERY IN SYRIA
Comment on:
The first major discovery of oil in the
Qara Shuk area of northeastern Syria,
by the At/antic Refining Company in
November, may be exploited by the
USSR under the terms of the Soviet-Syrian economic agree-
ment signed last August instead of by n. American explora-
tion firm. Knowledgeable American sources state that the
6,500-foot well brought in and capped by Atlantic, which
tested at about 2,000 barrels a day and is probably capable
of a much higher output, suggests a field of major proportions.
The new field is only about 75 miles from the great oil fields
20 DECEMBER 1957
20 Dec 57
QARA SHUR
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of northern Iraq, but preliminary estimates indicate the
two are not related.
Syrian desire to have Soviet personnel
exploit the new field is indicated by the fact that, after
regular visits to the American well site by Soviet techni-
cians and Syrian army officers, all but two Americans
working there were ordered to leave Syria immediately.
Both Syrians and Russians gave a clear impression that
the USSR would soon take over drilling in the area. A new
drilling rig, operated by Soviet technicians, is reported to
have been set up near the American discovery site.
A Syrian economic mission, led by pro-
Soviet Defense Minister Azm, is now in Moscow to imple-
ment the economic agreement and may conclude
ment for Soviet exploitation of Syrian oil deposits.
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7. PROBABLE CONTENTS OF EGYPT'S ARMS
_sitimitrisTp_m_n_TimusTA
Comment on:
The probable contents of Egypt's
gift arms shipment which arrived
in Tunisia by truck from Libya on
10 December are indicated
Two thousand 7.92-Mm. semi-
automatic rifles (all apparently of Egyptian manufacture;
300 9-mm. heavy machine guns (Egyptian); 100 7.92-mm.
light machine guns (Spanish); 24 81-mm. mortars (Span-
ish); 24 3.5-inch antitank rocket launchers (British); 12
antitank artillery pieces (British; and 2,000 antitank mines
(British).
All of these items may not have been
included in the recent shipment from Egypt which Tunisian
President Bourguiba publicly described as consisting of
"2,000 rifles and some mortars."
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8. ANTI-COMMUNIST POSITION STRENGTHENED
IN GUATEMALA
Comment on:
The anti-Communist position in Guate-
mala was strengthened on 16 December
by the decision of the Christian Demo-
cratic party to join the centrist coal-
ition backing Lt. Col. Jose Luis Cruz Salazar for the pres-
idency in the 19 January elections. Other small parties,
heretofore undecided, are jumping on the Cruz bandwagon.
Cruz' chief rival for their support, Col. Enrique Peralta,
has withdrawn from the race.
Strongest member of the coalition is the
� National Democratic Movement, the party of the late Pres-
ident Castillo Armas, which apparently still retains effec-
tively organized vote-getting power in rural areas'. Cruz,
who has been ambassador in Washington for the past three
.years, is not well known to the general public and is depend-
ent on this organization. He will be opposed by the rightist
� General Ircligoras and by Mario Mendez Montenegro, candi-
date of the Communist-infiltrated Revolutionary party.
The election will be close, and none of
the three may receive the required absolute majority. In
such an event, the constitution requires congress to decide
between the two highest candidates. The congress is heavily
weighted with adherents of the center parties who could be ex-
pected to support Cruz.
Several rightist groups continue to plot a
pre-election revolt, but the majority of army officers are be-
lieved desirous of awaiting the election results.
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9. PREPARATIONS FOR TRIAL OF NAGY MAY BE
UNDER WAY IN HUNGARY
Comment on:
The Hungarian government appears to
be setting the stage for the trial of
former Premier Nagy and other high-
level revolutionary leaders.
Nagy and some 20 high officers are in the same
prison with General Maleter and corroborates earlier in-
formation that Maleter's trial started last week.
friends of Istvan Bibo,
a close associate of Nagy in the revolutionary government
who was arrested this spring, are undergoing questioning.
A wave of trials of armed participants
in the revolution is now in full swing. Included are work-
ers from Csepel Island--the last stronghold of the revolu-
tion--the former secretary of Cardinal Mindszenty, and 16
young seminarians or priests. In at least one of these trials,
it was charged that the defendants "followed the orders of
Imre Nagy and General Maleter."
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10. CEYLONESE PRIME MINISTER WEATHERS
NO-CONFIDENCE VOTE
Comment on:
Ceylonese Prime Minister Bandar-
anaike on 19 December demonstrated
his continued firm control of the gov-
ernment when the lower house of par-
liament rejected a no-confidence motion by 54 to 23.
The no-confidence motion, based on
the government's recent dissolution of the Colombo munici-
pal council for "incompetence," was made by No M. Perera,
leader of the opposition and of the Trotskyite Nava Lanka
Sama Samaja party. The motion was supported by the Fed-
eral party, which is composed of Ceylonese Tamils of
Indian descent, and by the United National party, which
held a majority in the municipal council.
Perera, whose labor unions were mainly
responsible for the series of strikes which paralyzed Colombo
in late November and early December, may have hoped to turn
the no-confidence vote into a further display of his strength.
If so, he failed. Some 14 out of 40 opposition members ab-
stained or were absentwhile the three Communists in the op-
position supported the government. Bandaranaike normally
controls approximately 58 seats in the 98-man house.
The vote demonstrates the difficulty still
faced by any group which hopes to oust Bandaranaike by par-
liamentary means.
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ANNEX
Watch Report 385, 19 December 1957
of the
Intelligence Advisory Committee
Conclusions on Indications of Hostilities
On the basis of findings by its Watch Committee, the
Intelligence Advisory Committee concludes that:
A. No Sino-Soviet bloc country intends to initiate hostilities
against the continental US or its possessions in the imme-
diate future.
B. No Sino-Soviet bloc country intends to initiate hostilities
against US forces abroad, US allies or areas peripheral to
the orbit in the immediate future.
C. 1. A deliberate initiation of hostilities in the Middle East
is unlikely in the immediate future. However, tensions
in the Middle East continue to create possibilities for
serious incidents.
2. There is no evidence of Sino-Soviet intention to become
militarily involved in the Indonesian situation. However,
the Communists are exploiting political instability, grow-
ing economic chaos, and prospective food shortages. De-
veloping conditions continue to provide opportunities for
a Communist take-over of government on Java.
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