CENTRAL INTELLIGENCE BULLETIN - 1958/12/23

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 03000009
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 14
• Document Creation Date: January 27, 2020
• Document Release Date: January 30, 2020
• Publication Date: December 23, 1958

././//17////////////////7
Approved for Release. 2020/01/23 C03000009
3.5(c)
--1-U1'11-13rMerr-7
3.3(h)(2)
23 December 1958
Copy No. C
CENTRAL
INTELLIGENCE
BULLETIN
DocumFN7 No.
No cHANEitsi:-.),
Cf: Ut.AS3IFI:
''40/40
T- Vbgto
TOP SECRETif ZApProved for Release: 2020/01/23 C03000009W
. . ..
Approved for Release: 2020/01/23 C03000009
� ...� *ay iiva,r IX K. II
Approved for Release: 2020/01/23 C03000009
-rnr# errnrrr
Approved for Release: 2020/01/23 C03000009
e.
23 DECEMBER 1958
I. THE COMMUNIST BLOC
Published Soviet budget figures call
for increase in revenue and spending
of 12 percent over last year.
Flow of East German refugees to Ber-
lin at record low, with one exception,
since 1949.
Communist China agrees to supply US-
made arms to Algerian rebels.
II. ASIA-AFRICA
South Korea - Rhee government moving
police into Seoul to cope with opposi-
tion to legislation further restricting
civil liberties.
III. THE WEST
0 Venezuelan junta announces increased
tax rates to yield government more
than 50-percent share of profits of
foreign companies.
Approved for Release: 2020/01/23 C03000009
Approved for Release: 2020/01/23 C03000009
446�4 TOP SECRET
CENTRAL INTELLIGENCE BULLETIN
K
23 December 1958
DAILY BRIEF
I. THE COMMUNIST BLOC
Soviet budget: The summary of the Soviet 1959 budget,
as publicized by the USSR, calls for a sharp rise in revenues
and expenditures--about 12 percent over last year as com-
pared with an average increase of 4 percent annually in the
previous years since 1953. Over two thirds of this total in-
crease will go toward financing the national economy, pri-
marily into investment for further rapid industrial expansion
as the new Seven-Year Plan gets under way. Explicit defense
spending of 96.1 billion rubles maintains such spending at the
level of the last 3 years. However, unstated defense expend-
itures included in other budget categories may have increased.
(Page 1)
Berlin: The flow of East German refugees into West
Berlin�rig-reached the lowest weekly rate, with one excep-
tion,since 1949. Although refugee figures normally decline
during the holiday season, American officials in Berlin attrir-
bute the present sharp drop in part to more effective East
German controls over the approaches to East Berlin and un-
certainty among potential refugees, many of whom would
normally remain in West Berlin, over the future status of
the city. (Page 3)
Communist China - Algerian rebels:� Chou En-lai has as-
sured a visiting Algerian rebel (FLN) delegation in response
to its request for American-made arms that Peiping would
supply a "limited number of light weapons" provided the FLN
would arrange transportation through the UAR,
Peiping has access to US-
made materiel acquired during the Chinese civil war and the
Korean conflict. Supplying weapons will enhance Peiping%
prestige with the FLN leaders.
(Page 4)
TOP SECRET
AApproved for Release: 2020/01/23 C03000009/
Approved for Release: 2020/01/23 C03000009
TOP SECRET
*41.0
II. ASIA-AFRICA
South Korea: The Rhee administration is secretly mov-
ing large numbers of selected provincial police to Seoul to
reinforce National Assembly guards in overcoming a sit-down
by opposition Democrats, which is blocking action on a revi-
sion of the National Security Law. Despite possible adverse
effects the further restriction of civil liberties will have on
Korea's international position, the governmkant has adopted an
uncompromising stand on the bill and is prepared to use an
strong-arm tactics necessary to secure its enactment.
(Page 5)
III. THE WEST
Venezuela: The junta has announced a change in tax
laws applicable to 1958 income, which will in effect modify
the 50-50 division of profits between the government and for-
eign oil and mining companies. The step, which was not ex-
pected until after the inauguration of President-elect Betan-
court early next year, was taken without consulting the com-
panies. This change could provide the government with as
much as 65 percent of some oil company profits.
Page 6)
23 Dec 58
DAILY BRIEF ii
VA
TOP SECRET
/Approved for Release: 2020/01/23 CO3000009
 e-urvikrrtyrsrlarrni A 1
Approved for Release: 2020/01/23 C03000009
NEW kno*
I. THE COMMUNIST BLOC
Soviet Budget for 1959
The summary of the Soviet 1959 budget, aspublicized
by the USSR, indicates a sharp rise in revenues and expend-
itures--about 12 percent over last year's planned budget as
compared with an average increase of 4 percent annually
since 1953. Over two thirds of this total increase will go
to financing the national economy, primarily into investment
for further rapid industrial expansion.
Explicit defense spending, planned at 96.1 billion rubles,
is at virtually the same level as it has been since 1956; how-
ever, unstated defense expenditures appear in other budget
categories. The general growth of planned expenditures is
sufficiently large to permit continuation of the rapid growth
of those military programs financed under other budgetary
categories. Scientific research establishments are allocated
about 27 billion rubles as compared with approximately 18
billion rubles announced for 1958. However, this increase
may result in part from changes in accounting categories.
Centrally planned capital investment is to grow 11 per-
cent as compared to a planned growth of 7.4 percent in 1958
and an expected actual increase of 9.2 percent. In specific
industries, capital investment is to increase 32 percent in
ferrous metallurgy, 72 percent in chemicals, 23 percent in
oil and gas, and 35 percent in engineering. This effort is
being Made to implement the priorities of the Seven-Year
Plan in the face of underfulfillments during 1958. During
the first nine months of 1958, the plan was underfulfilled12
percent in ferrous metallurgy and 22 percent in the chemical
industry, chiefly because of shortfalls in equipment procure-
ment. This may account in part for the 1959 plan's notably
higher emphasis on investment in the engineering industries.
Capital investment in housing is to increase nearly 5 billion
rubles, or 14 percent, over last year, thus continuing the em-
hasis on housing.
CONFIDENTIAL
23 Dec 58 CENTRAL INTELLIGENCE BULLETIN Page
Approved for Release: 2020/01/23 C03000009
ArNeNAL 'my I 7
Approved for Release: 2020/01/23 C03000009
%we
Industrial output in 1959 is scheduled to increase 7.7
percent, almost the same rates (7 and 7.6 percent) planned
for 1957 and 1958. In 1957, the plan was substantially over-
fulfilled, a pattern which apparently will be repeated again
for 1958. Soviet leaders may expect :overfulfillment again in
1959; the average annual rate of increase necessary to f7lfill
the Seven-Year Plan is 8.7 percent.
CONFIDENTIAL
23 Dec 58
f"=Is.1TD A I IKITFI I irtrtorp RI II PTIKI
Approved for Release: 2020/01/23 C03000009
Page 2
Approved for Release: 2020/01/23 C03000009
Name 'rime
East German Refugee Flow Drops to New Low
The refugee exodus to West Berlin dropped last week to
the lowest figure since Christmas week, 1954. Some 1,163
were registered in the week ending 16 December compared
with 1,341 and 1,723 in the preceding two weeks. Intellectuals,
however, are arriving at roughly the same rate as in recent
months. The 1954 Christmas week figure was 1,092, the low-
est since registration was begun in 1949.
Although the flow of refugees normally declines during the
holiday season, American officials in Berlin attribute the pres-
ent sharp drop in part to more effective East German controls
over the approaches to Berlin and uncertainty among potential
defectors over the future status of the city. East German
authorities are now requiring special passes to travel to any
point within 50 kilometers of Berlin. While many refugees
customarily remain as permanent residents of West Berlin,
fears of future Communist control of West Berlin as a result
of the new Soviet initiatives may have contributed to the de-
crease.
East German authorities are continuing to show concern
over the flow of medical men to the West, which, despite some
drop in number, now includes a larger percentage of highly
qualified personnel,
The regime reportedly plans at
the forthcoming fourth central committee plenum to introduce
further concessions to doctors in an effort to deter the exodus
and even to attract West German practitioners.
SECRET
23 Dec 58 CENTRAL ItsiTFI I InFNCF RI II I FTIKI Page 3
Approved for Release: 2020/01/23 C03000009
TCD CPCTATT
Approved for Release: 2020/01/23 C03000009
vgro,
Peiping Pledges Arms Support to Algerian Rebels
The Chinese Communists have assured a delegation from
the Algerian National Liberation Front's (FLN) provisional
Algerian government�which ended a much-publicized, "official"
visit to Communist China on 21 December�that they would _s
play the rebels with a "limited number of light weapons
Nasies ambassador in
Peiping, follow-
ing an interview with Premier Chou En-lai, indicated that the
rebels had specified the arms be "of American manufacture"
and had agreed to a Chinese stipulation that they be channeled
through the UAR. Shipment as far as Egypt would apparently
be handled by the Chinese,who are also exploring the possibil-
ity of aiding the Algerians financially.
The rebels' expressed preference for American weapons
was probably inspired primarily by practical, but to some ex-
tent also by political, considerations. The rebels are experi-
enced in the use of American weapons which have always formed
an important part of �their heterogeneous armament. Further-
more, when the rebels concluded an arms deal with the Czechs
in 1957--the only other arms deal they are known definitely to
have signed with a bloc country--the weapons were to be not
readily identifiable as Of bloc origin. Peiping can presumably
satisfy the Algerians by drawing on stocks of US-made materiel
of World War II vintage acquired during the Chinese civil war
and the Korean conflict.
Delivery to the UAR of the arms would not solve the rebels'
most pressing supply problem,which is the infiltration of materiel
past increasingly effective French border fortifications. If some
of the weapons should be captured along the border, this would
probably be regardedby some French elements as proof that Am-
erican arms shipped to Tunisia are reaching the rebels.
Peiping, wishing to impress Arab-African states with the
value Of its military viding artil-
lery to the UAR.
TOP SECRET
23 Dec 58
CENTRAL INTELLIGENCE BULLETIN
Approved for Release: 2020/01/23 C03000009
Page 4
TrIP CFC'DFT
Approved for Release: 2020/01/23 C03000009
IL ASIA-AFRICA
South Korean Government Augments Assembly Guard
The South Korean Government has secretly augmented
the National Assembly guard with approximately 275 plain-
clothes men from the provincial police forces. The goverm-
ment apparently intends to use force if necessary to over-
come a sit-down strike by opposition Democrats in the as-
sembly building.
The Democrats, who have barricaded themselves in the
building since 19 December, are preventing passage of a re-
vision to the national security law. They are opposed to the
loose definitibn of espionage in the revision which would
make possible severe curtailment of political and press free-
dams. The Democrats' chances for obtaining a compromise
on the bill appear dim as the government party seems deter-
mined to pass the bill unchanged in order to prevent an ad-
ministration defeat in the 1960 presidential election.
government con-
cern a incidents may occur outside the capital and warns
police chiefs to exercise vigilance. The government's tactics
will contribute to the growing sense of futility among the South
Korean.pople, who are already demoralized by inflation, a
deceleration'in industrial pro rp.RR nri A n rpa co in politi-
cally motivated bank loans.
TOP SECRET
23 Dec 58
CENTRAL INTELLIGENCE BULLETIN
Approved for Release: 2020/01/23 C03000009
Page 5
crw171flrTJT1AL
Approved for Release: 2020/01/23 C03000009
Nevi
III. THE WEST
Venezuelan Junta Modifies Tax Policy Toward Foreign Oil
Industry
By a change in tax laws the Venezuelan junta has in ef-
fect altered the application of the 50-50 profit-sharing for-
mula between the government and the foreign oil and mining
companies in a manner which may provide an estimated 60
to 65 percent of the profits for the government. The practi-
cal effect of this change, which is in the ordinary income tax
law and not in the "additional tax law" ensuring the govern-
ment at least 50 percent of net profits of the extractive in-
dustries, can only be estimated at present. Applicable to
1958 incomes, the tax change was publicly announced on 20
December without consultation with the oil companies--the
principal corporations affected. No change was expected
until after the inauguration of President-elect Romulo Bet-
ancourt early next year.
The unilateral adoption of this measure could set a prec-
edent for similar government action in the future and, ac-
cording to the American Embassy in Caracas, could touch
off an adverse chain reaction against American investments
in other parts of the world. In any case the move will prob-
ably have an adverse effect, at least for several months, on
the rate of foreign investment in Venezuela.
All major parties and their leaders were committed pri-
or to the 7 December national elections to seek a higher share
of company profits for the government. Betancourt had stated,
however, that he would carry out this policy only after careful
study and negotiation with the companies. Although he appar-
ently knew in general terms of the action being planned by the
interim government, Betancourt was not informed of details
nor did he collaborate in the tax law change.
He may lose some of the domestic political benefits he would
have derived from obtaining the change during his presidency,
-CONFIDENTIAL
23 Dec 58 CPINJTDAI !MITI I itzrkirr RI III FTIkl
Approved for Release: 2020/01/23 C03000009
Page 6
Approved f-c;ri.Raelz-z7. 701707071/1 C03000009
*we
but may also avoid being tagged with any onus attached to such
unilateral action. Moreover, his government will presumably
benefit immediately from any increased revenues without the
delays caused by study and bilateral negotiation. He may also
seek to modify the "additional tax law," and thus make further
inroads on the net profits of the oil companies.
CONFIDENTIAL
23 Dec 58 CFNTRAI INTFI I inFtsrF RIII I FTIN
Approved for Release: 2020/01/23 C03000009
Page 7
,
rinhreinvmpr A I
Approved for Release: 2020/01/23 C03000009
Nap) Nind
THE PRESIDENT
The Vice President
Executive Offices of the White House
Special Assistant for National Security Affairs
Scientific Adviser to the President
Director of the Budget
Office of Defense and Civilian Mobilization
Special Assistant for Security Operations Coordination
Board of Consultants on Foreign Intelligence Activities
Special Assistant for Foreign Economic Policy
Special Adviser to the President
The Treasury Department
The Secretary of the Treasury
The Department of State
The Secretary of State
The Under Secretary of State
The Under Secretary of State for Economic Affairs
The Deputy Under Secretary for Political Affairs
The Deputy Under Secretary for Administration
The Counselor
Director, International Cooperation Administration
The Director of Intelligence and Research
The Department of Defense
The Secretary of Defense
The Deputy Secretary of Defense
The Secretary of the Army
The Secretary of the Navy
The Secretary of the Air Force
The Chairman, The Joint Chiefs of Staff
Commandant, United States Marine Corps
The Director, The Joint Staff
Chief of Staff, United States Army
Chief of Naval Operations, United States Navy
Chief of Staff, United States Air Force
Assistant to Secretary of Defense for Special Operations
Director for Intelligence, The Joint Staff
Assistant Chief of Staff for Intelligence, Department of the Army
Director of Naval Intelligence, Department of the Navy
Assistant Chief of Staff, Intelligence, Department of the Air Force
Supreme Allied Commander, Europe
Commander in Chief, Pacific
The Department of the Interior
The Secretary of the Interior
Federal Bureau of Investigation
The Director
Atomic Energy Commission
The Chairman
National Security Agency
The Director
National Indications Center
The Director
United States Information Agency
The Director
CONFIDENTIAL
Approved for Release: 2020/01/23 C03000009
1#/
�TOP�SECRET�
myrzzzAApproved for Release: 2020/01/23 C03000009-iwzmwmmZ