CENTRAL INTELLIGENCE BULLETIN - 1958/05/29

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 03192933
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 18
• Document Creation Date: January 27, 2020
• Document Release Date: January 30, 2020
• Publication Date: May 29, 1958

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29 May 1958
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CENTRAL
INTELLIGENCE
BULLETIN'
DOCUMENT NO.
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29 MAY 1958
L THE .00MMUNIST BLOC
USSR cancels credits to Yugoslavia
worth about $278,000,000.
Peiping makes strongest attack on
Belgrade in the current dispute.
IL ASIA-AFRICA
Lebanon - Efforts to reach political
compromise fall. Army commander
continues hesitant to commit forces
against rebels, who, with UAR sup-
port, control much of rural area and
parts of some cities.
Taiwan - Chiang Kai-shek's son states
Indonesian dissident leader has asked
for Chinese Nationalist air support;
Taiwan has not reached a decision.
Greek prime minister warns he may
be forced to take tougher line on Cyprus
to forestall Communist exploitation. 0
Secret Turkish-Soviet talks reportedly 0
concerned large Soviet aid offer if Tur-
key turned down US bases.
0 Morocco accedes to Soviet request to
open permanent commercial mission
in Casablanca.
CI Tension between Tunisians and French
rises, with Tunis willing to avoid show-
down in the United Nations for the time
being.
IIL THE WEST
France - Socialist party refusal to
acquiesce in De Gaulle's investiture
accentuates threat of military coup
and civil disorder.
Venezuela - Military dissatisfaction
with Junta president's inaction against
leftists increasing.
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CENTRAL INTELLIGENCE BULLETIN
29 May 1958
DAILY BRIEF
I. THE COMMUNIST BLOC
Soviet-Yugoslav dispute: The USSR's suspension
for five years of two large economic development
credits to Yugoslavia--worth about $278,000,000--
marks a new stage in the deteriorating bloc-Belgrade
relations. Moscow is evidently willing to risk the un-
favorable effects its action might have in India and
other uncommitted states through making it apparent
that the Soviet ec9n0mic aid was not without "strings."
(Page 1)
Communist China: A resolution passed by the
Chinese Communist party congress is the strongest
attack by Peiping against Belgrade in the current dis-
pute. Peiping repeats its earlier attacks and now
charges that Belgrade played a "provocateur and in-
terventionist" role in Hungary. Peiping's castigation
could serve to keep the Yugoslav dispute alive and may
discourage any sentiment in the Fonr. which favors soft-
pedaling the issue. (Page 2)
IL ASIA-AFRICA
Lebanon: Government efforts to reach a political
settlement with the opposition have failed. Government
leaders are showing increasing pessimism over the
capability of the security forces, numbering some 13,000
to 14,000, to maintain control in the face of opposition
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Niue
from an estimated 6,000 to 7,000 armed rebels who
remain entrenched in some urban quarters and who
control much of the countryside. Extensive UAR sup-
port to the rebels continues and may be intensified.
Army commander General Shihab continues hesitant
to commit the army in an all-out drive against the
rebels. (Page 3) (Map)
Taiwan: Generalissimo Chiang Kai-shek's son,
Chiang Ching-kuo, stated recently that Col. Warouw,
acting premier of the Indonesian dissident movement,
had arrived in Taipei and had requested Chinese Na-
tionalist air support for the dissidents. Chiang stated
that the Chinese Nationalists had not reached a decision
to give aid to the dissidents.
Greece: Prime Minister Karamanlis has warned
the American ambassador that if the British proposals
on Cyprus, which are expected in the near future, are
unsatisfactory, the government will be forced to take
a harder line on Cyprus to prevent the Communists
from exploiting this issue. Karamanlis probably wants
to line up more American support on the Cyprus issue,
but in any case he has_lo_facea, more vocal and deter-
mined opposition. (Page 5)
Turkey-USSR:
Discussions covering Tur-
key's major financial problems are scheduled for early
June between Ankara officials and representatives of
the International Monetary Fund and the Organization
for European Economic Cooperation.
(Page 6)
29 May 58 DAILY BRIEF
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Morocco-USSR: The Moroccan Government approved
on 22 May a Soviet request to establish a permanent com-
mercial mission in Casablanca. On 20 April, a trade
agreement between Morocco and the USSR was concluded
calling for an exchange of goods valued at $14,200,000,
more than double the amount provided for in the 1957
agreement. In the past Morocco has been cool to Soviet
approaches, but this new development opens the way for
the Soviet Union to press for expanded relations.
(Page 7)
Tunisia: New roadblocks are being erected, and
French forces may no longer leave their bases even in
civilian clothes. A mob tore down the flag at the French
gendarmerie headquarters in Tunis on 26 May, but was
prevented by Tunisian police from entering the building.
The Tunisian delegation at the United Nations is expected
to ask soon for a Security Council meeting on Tunisia's
complaints against France. For the time being, Tunis
Is still trying to avoid a showdown in order not to em-
barrass the United States and Britain.
III. THE WEST
*France: Socialist opposition to De Gaulle, despite
a "strong and pathetic plea" by party leader Mollet to
Socialist deputies to reconsider, was apparently the basis
of Coty's decision to ask the presidents of the two parlia-
mentary houses to work out with De Gaulle the conditions
under which the government would be formed. Continued
Socialist opposition and maneuvering will encourage the
Communists in their last-ditch efforts to fashion a pop-
ular front government, and could set off the threatened
military coup to install De Gaulle and result in serious
29 May 58 DAILY BRIEF iii
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civil disorders, the
general wants to maintain legal procedures, but extralegal
methods have not been ruled out. (Page 8)
Venezuela: New tensions may be aroused by the Vene-
zuelan :junta's new cabinet appo1ntment-3, and the chances of
an attempted take-over by Defense Minister Castro and
general staff chief Perez Morales could be increased. The
officer corps has for some time been concerned by junta
President Larrazabars passivity in the face of a rapid
rise in leftist influence. (Page 10)
29 May 58
DAILY BRIEF iv
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L THE COMMUNIST BLOC
Moscow Suspends Economic Credits to Belgrade
The USSR advised Yugoslavia on 27 May of its inten-
tion to suspend for five years the two big development-loans
it had extended Belgrade two years ago. This move marks
a new stage in the deterioration of interstate relations which
has followed the bloc-Belgrade ideological rupture. Since
the Soviet credits are to be used chiefly to provide equip-
ment for industrial construction now in the planning stage,
their cancellation will not cause an economic crisis in Yugo-
slavia.
Approximately $278,000,000 in credits are involved,
including the joint East German - Soviet $175,000,000 credit
for the construction of an aluminum plant. The Yugoslav
announcement of the Soviet decision did not mention, how-
ever, a $54,000,000 commodity credit extended during Feb-
ruary 1956, of which about $28,000,000 remains to be drawn.
The USSR noted, in suspending the credits, that the possibil-
ity existed "for some compensation on the basis of current
goods exchanges." As yet, there has been no mention that
Czechoslovakia and Poland intend- to follow Moscow's lead
and cancel approximately $90,0009000 in credits they have
extended to Yugoslavia.
The hint of a possibility of some compensatory arrange-
ment suggests that no immediate complete economic boycott--
such as ensued after the 1948 break--is contemplated.
The Soviet decision, which was probably discussed at
the recent CEMA meeting in Moscow, suggests that the USSR
does not contemplate any resolution of the current dispute in
the foreseeable future. Moscow apparently is willing to risk
any unfavorable effects its obviously political action may have
in India and other uncommitted states where the USSR has
been careful to avoid attaching political strings to its aid.
CONFIDENTIAL
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vire
Peiping Renews Attack on Belgrade
The 23 May resolution of the Chinese Communist party
congress exceeds in harshness Peiping's 5 May blast against
Belgrade, and charges the Yugoslav leaders played a "pro-
vocateur and interventionist" role in Hungary.
In language resembling the 1948 Cominform resolution
which expelled Yugoslavia, Peiping declares that the Yugo-
slav leaders have "alienated themselves" from the interna-
tional Communist movement. The resolution pointedly
distinguishes between Yugoslav leaders and the populace.
The resolution reflects the tone of the entire proceed-
ings of the Chinese party congress, which reaffirmed hard
lines in domestic and foreign policy. Mao Tse-tung and his
most influential lieutenants in the past year have increasingly
stood for ideological orthodoxy, tighter organizational con-
trols, and greater pressures on the populace for rapid eco-
nomic development. The Chinese resolution charges that
the Yugoslav program "betrays" Marxism and that the Yugo-
slays have "completely forsaken" the concept of Communist
party power monopoly.
In order to counter any speculation that the Chinese
are supporting Stalinist opponents of Ithrushchev, Peiping
for the second time in a week makes a special point of its
support for Khrushchev personally. The resolution endorses
the measures taken since 1954 toward Yugoslavia by the So-
viet central committee, "headed by Comrade N. S. Khru-
shchev."
Yugoslavia's Borba regards the Chinese resolution as
the death knell for the pleas for "well-meaning criticism"
which have been voiced by some East European spokesmen.
The paper comments that the old methods Of the Cominform
havv�in been put into practice.
CONFIDENTIAL
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II. ASIA-AFRICA
Lebanese Situation
Efforts for a negotiated settlement between the Leba-
nese Government and opposition leaders have broken down
completely. Prime Minister Sulh's statement on the presi-
dential second-term issue has been rejected outright by ex-
tremist leaders who demand Chamoun's resignation. Gov-
ernment leaders are increasingly pessimistic that security
forces can cope with the rebels, who now control most of
the countryside.
Prime Minister Sulh declared on 26 May that if Gen-
eral Shihab failed to take effective action against the rebels,
Sulh saw no alternative but to bring in foreign troops if
Lebanon were to be saved. President Chamoun also stated
on 27 May that the situation had become more critical and
that General Shihab questions his own ability to deal with
the increasingly difficult situation. He said that the gen-
eral did not, as he had on previous occasions, object when
Chamoun suggested that foreign intervention might be the
only solution.
Shihab is reported to have told Foreign Minister Malik
on 26 May that "it was not his policy to engage the opposi-
tion forces directly," and that he expected more terrorist
bombings in Beirut, since "neither Beirut nor the other
large cities were presently priority targets for the army."
Claiming that the rebels now numbered between 6,000 and
7,000 men, Shihab declared that if the army were attacked
on all fronts, he would have to give up two thirds of the coun-
try and retire to the main cities. Shihab concluded by stat-
ing that Nasirism was a tremendous movement with which
Lebanon would have to accommodate itself gracefully. The
general belie'ved, however, that foreign intervention was in-
evitable since the West would not let the UAR take over the
country.
Buttressing the gloomy predictions of government lead-
ers is the severe deterioration of the military situation. The
---SECRE'F
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MEDITERRANEAN
SEA
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army has withdrawn from Balabakk and left it to the opposi-
tion. Renewed fighting is going on in Tripoli, and, in the
rest of the north, government forces hold only two small
towns. The areas of greatest military danger are the Biqa
Valley and the region around Bayt ad-Din. A force of rebels
reported to total 3,000, including Syrians and Egyptians, is
concentrating in the Biqa Valley mid is equipped with light
arms, mortars, and transportation. In the Bayt ad-Din
region, Druze opposition leader Jumblattis force of 600 men
is stated to have received 500-600 reinforcements from
Syria, as well as an estimated 20 howitzers with ammunition,
and antitank grenades,
Lebanese forces to combat hese tivzD threats are stated to
number less than 600 men.
Iraqi rein-
forcements in Lebanese uniforms arrived in northern
Lebanon on 26 May. au-
thorities in Damascus to "remove the Arabic markings"
from antitank grenade launchers being sent to antigovern-
ment forces in Lebanon.
29 May 58
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CENTRAL INTELLIGENCE BULLETIN
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Greek Premier Warns Against Unacceptable
Cyprus Proposals
Premier Karamanlis told the American ambassador to
Greece on 26 May that a solution to the Cyprus problem is
now urgent. �The premier attributed sizable Communist
gains in the recent Greek national elections, along with the
decline of his own pro-Western party, to the resentment
felt by the Greek people toward Britain, Turkey, and the
United States for their attitudes on Cyprus.
Karamanlis warned that to prevent further exploita-
tion of this bitterness he would be forced to adopt a more
unyielding attitude toward the Cyprus problem unless the
forthcoming British proposals are acceptable. He denied
that the Greek Government has any contact with, or influ-
ence over, the Greek Cypriot underground organization
EOKA, but predicted that "great violence" would follow an-
nouncement of any unacceptable British plan. This in turn,
he warned, could lead to communal clashes on the island
and a possible rupture in Greek-Turkish relations. Kara-
manlis concluded with an urgent plea that the United States
use its influence to convince Britain and Turkey that they
must act to bring about an acceptable solution.
Domestic problems were probably as much respon-
sible as foreign issues for the recent display of leftist
strength in Greece. The proven vote-getting power of the
Communists is now large enough, however, to influence
the conduct of Greek foreign policy for the indefinite fu-
ture. If Britain's new plan for Cyprus is unacceptable to
Archbishop Makarios and the Greek Cypriots, Karamanlis
will be forced to take a firm stand favoring Cypriot self-
determination or risk further left-wing gains in Greek
municipal elections next October.
.CONFIDENTIAL
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Turkey May Be Considering Soviet Economic Aid
Top Turkish leaders held
_w_it_h_soviet_AInhqs_s_adorAivzhoy_
discussions
discussed a proposed Sovietloan to rirey ox
$300,000,000 in gold in installments, a type of loan the
USSR has never granted a country outside the bloc. Ry-
zhov allegedly triedto tie such aid to an agreement not to
permit rocket bases in Turkey, but Foreign Minister
Zorlu is said to have refused to discuss this issue "at
this time."
Despite Turkish denials that anything of major sig-
nificance was discussed, American representatives in
Ankara are watching the situation closely, and believe
the presence in Ankara of the Turkish ambassador to
Moscow may be significant.
While such reports may be designed to worry Amer-
ican officials studying the question of aid to Turkey, it is
possible that the Turks may feel forced to seek Soviet aid
to solve their critical financial problems, which include
servicing a foreign debt estimated to be as high as
$1.5 billion. President Bayar is reported to have
told Ryzhov in early April that Turkey might respond fa-
vorably to Soviet aid offers.
Turkey is seeking multilateral help through the facil-
ities of the International Monetary Fund and the Organiza-
tion for European Economic Cooperation. Officials from
these organizations are scheduled to make a survey of
Turkey's economic troubles in early June. Meanwhile the
Turks are seeking immediate interim economic assistance
from the United States and West Germany.
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Moroccan Government Approves Establishment of Soviet
Commercial Mission
The Moroccan Government is reported to have approved
unanimously on 22 May a Soviet request for permission to
establish a permanent commercial mission in Casablanca.
The conclusion in Moscow on 20 April of a new trade agree-
ment with the USSR, providing for an exchange of goods
valued at $14,200,000 and the establishment of clearing ac-
counts in Rabat and Moscow, in Moroccan eyes has invali-
dated the standing argument that a trade mission was not
needed because trade was inconsequential. Under the 1957
agreement, Moroccan trade with the USSR expanded rapidly.
During the first nine months of 1957, trade was valued at
$3,672,000, in contrast to $204,000 during the same period
of 1956. Despite this expansion, Soviet trade amounted to
only slightly more than one percent of Morocco's total trade.
While Morocco has been cool to Soviet approaches, and
Premier. Balafrej and the King personally oppose closer rela-
tions, the government since March has been seriously con-
sidering an exchange of diplomatic representatives with the
USSR. Establishment of a commercial mission now provides
a new contact and opportunity for the USSR to press for ex-
panded relations.
The reporting officer expects the unanimous decision
of 22 May to be used to exert pressure on the United States
for increased aid on more favorable terms.
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III. THE WEST
French Crisis
Further efforts by President Coty to give maximum
legality to General de Gaulle's assumption of power have
delayed the expected direct presidential request that the
general form a new government. Coty's designation of
the presidents of the two houses of Parliament late 28 May
to negotiate with De Gaulle has brought heavy pressure to
bear on the recalcitrant Socialist party--the main stum-
bling block to a legal investiture,.
There are indications that the pro-De Gaulle forces
may have underestimated the depth of Socialist opposi-
tion to any form of De Gaulle regime and the willingness
of at least a segment of the party to make good the threat,
privately advanced by several leaders, to "go underground"
regardless of how De Gaulle takes power. According to
the press, even a "pathetic plea" by Socialist leader Mol-
let to Socialist deputies on 28 May failed to sway a majority
of them.
Continued Socialist opposition, by encouraging the
Communists and probably other anti Gaullist elements,
enhances the possibility of momentary military interven-
tion which had seemed slightly less imminent following
De Gaulle's 27 May announcement that he was preparing
to form a government and his request for the maintenance
of public order. The prospects for a violent leftist oppo-
sition movement also are increased by prolonged resist-
ance of "republican" elements in the Assembly.
The Swiss Government is so concerned over what it
considers the "strong possibility" of civil war in France
that, it has
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directed troops in western Switzerland to be ready to
man border controls and to guard against extension of
the conflict to Swiss soil. In the event of war, Bern
expects large numbers of refugees from the extreme left
or right, and will grant asylum.
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Venezuelan Junta Appoints New Cabinet
New tensions may be created in Venezuela by the
governing junta's new cabinet appointments. Finance
Minister Mayobre, a banker and former governor of the
International Monetary Fund, is reported to have been at
one time closely connected with Communist party affairs; he
was exiled by the Perez Jimenez dictatorship in 1952.
Foreign Minister de Sola� formerly minister of justice,
was active in the overthrow of the Perez regime and is
said to be popular with Caracas' leftist-inclined, anti-
militarist students. Education Minister Rafael Pizani,
exiled by the Perez Jimenez regime, was the leading pro-
ponent under conservative President Medina in 1943 of the
provision for a 50-50 return to the government on petro-
leum revenues. Agriculture Minister Hernandez, an agron-
omist, and Justice Minister Aguilar, who was secretary of
the Caracas bar association in 1954, appear to have been in-
active politically.
The new appointments may precipitate an attempt at
a take-over by Defense Minister Castro and general staff
chief Perez Morales. The officer corps has for some time
been concerned over junta President Larrazabal's assiv-
itv in the face of the rapid rise of leftist influence.
CONFIDENTIAL
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