CENTRAL INTELLIGENCE BULLETIN - 1958/08/22

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 03169518
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 15
• Document Creation Date: January 27, 2020
• Document Release Date: January 30, 2020
• Publication Date: August 22, 1958

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WP SLKLI-
22 August
3.5(c)
3.3(h)(2)
1958
Copy No, C 57
CENTRAL
INTELLIGENCE
BULLETIN
261 c)
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22 AUGUST 1958
I. THE COMMUNIST BLOC
USSR offers to barter oil for unsold
Greek tobacco.
II. ASIA-AFRICA
Responsible Chinese Nationalist lead-
ers and business circles reveal no
panic over current situation in Taiwan
Strait. 0
Iraq- Pro-Nasir elements call for
full union with UAR; Communists
favor looser ties.
Tunisian defense secretary concedes
to Algerian rebel viewpoint in rela-
tions with France on arms and Sa-
haran oil transit.
De Gaulle may face violence in Al-
geria and Dakar on present African
tour.
�
/11
0 Turkey - Menderes' party may in-
tensify repression of political op-
position.
()Indonesian Government officials try-
ing to draft plan to combat economic
deterioration.
III. THE WEST
�Britain intends to go ahead with parts
of modified plan without cooperation
of Greek Cypriots.
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CENTRAL INTELLIGENCE BULLETIN
22 August 1958
DAILY BRIEF
I. THE COMMUNIST BLOC
USSR-Greece: The Soviet Union may try to exploit
criticism�led by leftist press and politicians�arising out
of Greek inflationary problems by pressing for acceptance
of an attractive offer to barter oil for unsold Greek torcco.
(Page 1)
II. ASIA-AFRICA
*Taiwan: Beneath the present surface manifestations of
official alarm, responsible leaders seem fairly calm. A
sampling of opinion in Taipei business circles discloses
"business as usual" with no panic, hoarding, or rapid infla-
tion. Government declarations of intent to disperse agencies,
build air raid shelters, and take other emergency measures
have not gone beyond the talking stage. Additional food sue
plies, however, are being sent to the offshore islands.
Iraq: A struggle for influence between the Communists--
who have resumed activity under the new regime �and radical
Arab nationalists appears to be developing over the future re-
lationship between Iraq and the UAR. Pro-Nasir elements in
Iraq are calling for full union with the UAR. The Communists
favor some form of looser ties. (Page 2)
7./
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Tunisia: Defense Secretary Ladgham said on 21 August
that the Algerian rebel leaders have been assured that Tunisia
will not accept French arms at this time. As a further reflec-
tion of concern over relations with the Algerian rebels inside
Tunisia, Ladgham also said that the rebels have been promised
that until Algeria becomes independent no oil from the Sahara
will be allowed to floW through the pipeline crossing Tunisia
iincipr a enneession recently granted to a French company.
De Gaulle's African trip: De Gaulle may face violent
demonstrations in French West Africa and in Algeria during
his present African tour. French authorities expect demon-
strations--which may include the throwing of Molotov cock-
tails--in Dakar on 26 August by groups favoring independence.
Turkey: Pressure is building up within the ruling Demo-
crat party to intensify repressive measures against the princi-
pal opposition group, the Republican People's party. The op-
position's criticisms of the government have been particularly
telling recently and are a source of annoyance to Menderes.
(Page 5)
Indonesia: Recent developments have seriously affected
the Indonesian economy, and government officials are trying
to devise an economic stabilization program. Indonesia will
require extensive additional foreign aid in the near future to
pay for essential imports. (Page 6)
22 Aug 58
DAILY BRIEF ii
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III. THE WEST
Britain--Cyprus: London intends to implement Nhat
it can of its modified Cyprus plan by holding elections for
the Turkish communal assembly even if the Greek Cypriots
refuse to participate. The British hope the Greek refusal
to cooperate is not final, but are prepared to continue di-
rect rule of the Greek Cypriots if necessary.
(Page 7)
IV. SIGNIFICANT INTELLIGENCE
REPORTS AND ESTIMATES
(Available during the preceding week)
Special National Intelligence Estimate No. 65-58. The
Outlook in Indonesia. 12 August 1958.
22 Aug 58
DAILY BRIEF iii
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Nu,
I. THE COMMUNIST BLOC
USSR Offers Barter Deal on Greek Tobacco Surplus
The USSR, capitalizing on the problem Greece will
face within the next few days in financing large stocks of
unsold tobacco, has offered to exchange crude oil for some
of the surplus. The offer is likely to be accepted, despite
the adverse effect on Greek arrangements with Western
countries, because of the probable reaction from leftist
papers and politicians if the government pays hard currency
for Western petroleum while it fails to sell its burdensome
tobacco surplus. Acceptance would increase Greece's al-
ready substantial trade dependence on the Communist world.
In order to finance the tobacco, in case it should not
accept the Soviet offer, Greece would be forced to increase
the currency in circulation. This would threaten the deli-
cately balanced economy and could lead to a loss of faith in
the drachma, a return to gold hoarding, and a flight of cap-
ital such as characterized the early postwar years. Since
January ic&57 the Greek Government has increased drachma
notes in circulation by about 45 percent while gold and foreign-
exchange holdings have been declining. Thus far, confidence
in the drachma has been maintained and the cost of living has
increased only slightly, largely because of marked increases
in savings deposits. The increased money supply, however,
has resulted in a sharp increase in imports--without a con-
comitant increase in exports--and a consequent substantial
deterioration of the balance-of-payments position.
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NINO
II. ASIA-AFRICA
Communist and Nationalists Struggle for Influence in Iraq
A struggle for influence between the Communists and
radical nationalists over the future of Iraq's relationship with
the UAR is developing. The Communist party, hitherto sup-
pressed, has been allowed free rein since the coup. In moves
reminiscent of the Baathist-Communist contest in Syria last
fall, the Communists are attempting to oppose Baathist pres-
sure for immediate full Iraqi union with the UAR,. Realizing
that they cannot appear as opponents of Arab unity, the Com-
munists are seeking to ward off complete union by proposing
only federation with the UAR and close relations with the
USSR.
The intensification of this power struggle will put severe
pressures on the solid front so far presented by the regime.
Having decided that Vice Premier Arif is "Nasir's man," the
Communists are reported to be throwing their support to the
less pro-Nasir and more moderate Prime Minister Qasim.
A split between Arif and Qasim would probably divide the army
into factions.
The Communists will probably receive support in their
efforts from the leftist nationalist National Democratic Farty
of which Minister of Finance Muhammad Hadid is a leader,
while the rightist and strongly nationalistic Istiqlal (independ-
ence) party led by Minister of Guidance and Information and
Acting Foreign Minister Sidiq Shanshal and Councilor of State
Muhammad Mandi Kubba is likely to throw its support to the
Baath. Nasir may begin a campaign of hints to the West that
Iraqi union with the UAR is the only way to prevent a Commu-
nist take-over.
a "Board of Revolution" is to be es-
tablished, from which leftists will be barred. Presumably this
board would be modeled along the lines of the Revolutionary
Command Councils which emerged after the 1952 coup in Egypt.
a "decision" to nationalize oil
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companies in Iraq will be implementedif� the UN meetings on
the Middle East "turn out favorably" for the new Iraqi Gov-
ernment. However, it seems doubtful that the government
would carry out such a move at this time, except as a des-
perate bid for popular support.
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Anti-De Gaulle Demonstrations Expected in Africa
French security forces at Dakar expect demonstrations
on 26 August during Premier de Gaulle's visit to rally sup-
port for his proposed constitution. Leftist political groups,
labor, and students' organizations are planning to demon-
strate against the premier and in favor of independence. The
government plans to have available the full police force--
which is inexperienced in riot duty--and to have paratroopers
on the alert. The police have information that the leftists, who
are being advised by a French Communist contact, are making
Molotov cocktails and are determined to have political mar-
tyrs. -
In Algeria, National Liberation Front (FLN) rebels were
instructed to plan
sabotage of "communal works of economic and social inter-
est" likely to be visited by De Gaulle during his three-day tour
of that territory starting on 27 August. The sabotage was or-
dered to take place "at the time he passes through." Rebel
capabilities for such action are likely to be limited, however,
by the elaborate security precautions which the French can be
expected to take along the route of the general's as yet unan-
nounced itinerary.
Meanwhile, the announcement on 19 August by French mil-
itary headquarters in Algiers of the execution early last month
by the rebels of another French officer may have been designed,
in part, to incite rightist European elements into making some
public manifestation during De Gaulle's visit of their demand for
the complete "integration" of Algeria with France. Similar ex-
ecutions of Frengh military personnel by the FLN in early May
contributed significantly to the climate which permitted the suc-
cessful army-settler coup of 13 May.
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*if
Pressure on Turkish Opposition
The Turkish official radio continues to give wide pub-
licity to the communiqu�ssued by the ruling Democrat
party on 11 August which made thinly veiled threats to out-
law the Republican People's party, the major opposition group.
If the government permits members of the Republican People's
party to speak in the special Grand National Assembly session,
which began on 21 August and is expected to last a week, they
are likely to continue their vigorous and increasingly effective
attacks on the government. This may cause Prime Minister
Menderes to impose further restrictions on legislative im-
munities and other freedoms.
The Republican People's party has centered its attack on
inflation, shortages, and dislocations, which result, in part,
from Menderes' economic program. It has also won support
by protesting restrictions on freedom. After the Iraqi coup,
it extended its criticism to Turkey's foreign policy but reit-
erated its support for Turkey's US and NATO ties. It is even
considering raising the question of American use of the Adana
air base, as part of its general argument that the government
should keep the opposition informed concerning foreign policy
matters.
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Nue
Indonesia's Economic Difficulties
Indonesia's economy has been forced to a new low by
the expulsion of badly needed Dutch technicians and the sei-
zure of Dutch enterprises, the rebellions on Sumatra and
Celebes, illegal barter trade, and the world-wide business
recession. These factors have led to reduced foreign ex-
change earnings at a time when domestic inflation has height-
ened the demand for imported consumer goods. Inflationary
pressures are intensified by a materially increased budg-
etary deficit, which is due in part to the drain on central gov-
ernment resources caused by the continuing military campaign
against the dissidents.
Indonesia's gold and foreign exchange reserves--never at
a satisfactory level--dropped from $220,000,000 at the end of
October 1957 to $144,000,000 at the end of June 1958. There
is every indication that the decline is continuing. Unless this
trend is reversed, Djakarta may be disposed to turn to the
Sino-Soviet bloc for additional help in bridging the exchange gap.
There has been a flight of foreign capital, particularly Dutch
and Chinese. The government, moreover, has failed to pro-
vide any encouragement to new foreign capital; the oil com-
panies in particular have cut back new investment programs
sharply.
The Djuanda cabinet has devised a coordinated stabiliza-
tion program which was recently announced to parliament.
Exceptionally comprehensive, it was worked out with the help
of an International Monetary Fund adviser; however, the Amer-
ican Embassy in Djakarta sees little of the administrative dis-
cipline required to make it successful in Indonesia's over-
staffed but inefficient government. It seems particularly doubt-
ful that the government, despite the army's promise of coopera-
tion, will succeed in limiting the illegal barter trade of the
outer islands. Local army commanders in these areas have
themselves profited from this trade, which denies the central
government both essential revenue and control over the use of
an important share of foreign exchange receipts.
-SEC-REZ
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III. THE WEST
Britain to Implement Cyprus Plan Despite
Greek Noncooperation
Britain intends to begin implementation of the modified
Cyprus plan it announced on 15 August. London hopes that
Athens' refusal on 19 August to cooperate is not final and
may anticipate that the Greeks will grudgingly participate
later rather than be left out when the plan is in operation.
In any case, the British intend to go ahead with elections
for the Turkish communal assembly even if the Greek Cyp-
riots refuse to elect their assembly. Britain will continue
direct rule of the Greek Cypriots if necessary.
Setting up the Governor's Council--the semiexecutive
body to be composed of two Turkish Cypriots and four Greek
Cypriots chosen by the communal assemblies--may prove im-
possible without Greek cooperation, however. London's spg-
gestion of appointing British officials to present the Greek
view appears unworkable.
London still expects Ankara to accept the plan. Prime
Minister Menderes was shown a draft before publication; he
described it as "not so bad." At Turkey's request, the British
have offered to confirm in writing their 1956 promise to in-
clude partition among the options if the fate of the island is
ever put to a vote.
Evidently anticipating wide public backing for the govern-
ment's policy of going ahead, a Foreign Office official said on
20 August that the British public just wants a settlement--rather
than any particular solution�and that the Labor party had been
consulted on the modified plan.
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�tirifftrIDENTVIV
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
Deputy 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
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