CENTRAL INTELLIGENCE BULLETIN - 1959/02/13

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 03023215
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 17
• Document Creation Date: February 25, 2020
• Document Release Date: February 27, 2020
• Publication Date: February 13, 1959

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CENTRAL
INTELLIGENCE
BULLETIN
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DOC.UMENT NO. �17#4
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13 FEBRUARY 1959
I. THE COMMUNIST BLOC
Soviet economic aid delegation arrives
In Nepal.
II. ASIA-AFRICA
Middle East oil price cuts may be im-
minent; will increase Arab pressures
for more participation in foreign oil
operations.
Tunisia may follow up its exposure of
French espionage by abrogating tech-
nical aid agreement.
Cambodia - Plot against Sihanouk re-
ceives material support from Saigon.
okk
III. THE WEST
France may remove naval units from
NATO's Mediterranean command.
0 Portugal - Salazar reported ill; retire-
ment rumored as imminent.
SECRET
LATE ITEM
Moscow charges breakdown of talks
in Tehran is "turning point" in Soviet-
Iranian relations.
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CENTRAL INTELLIGENCE BULLETIN
13 February 1959
DAILY BRIEF
I. THE COMMUNIST BLOC
USSR-Nepal: A Soviet delegation arrived in Nepal on
13 February for talks on economic and technical assistance.
King Mahendra committed himself to accept Soviet aid dur-
ing his visit to Moscow in June 1958, but he has since lost
enthusiasm for Soviet assistance and will probably be cau-
tious in accepting Soviet aid offers.
(Page 1)
IL ASIA-AFRICA
Middle East oil: Price cuts in Middle East oil may be
Imminent. This development, following the recent cut in the
Venezuelan crude price resulting from the current world-wide
oversupply of oil, is likely to dismay Arab government offi-
cials. The Arab governments have actually planned on larger
oil revenues. Arab pressure for more favorable profit-split-
ting will increase, and forces favoring greater participation in
oil company operations will be strengthened.
(Page 2)
Tunisia-France:CTunisia's disclosure of a French es-
pionage network in Tunis probably will result in a substantial
deterioration of its relations with France. Tunisia has dis-
missed all French employees in its Postal, Telephone, and
Telegraph system and may abrogate the technical aid agree-
ment concluded last August to modernize Tunisia's telecommu-
nications, (Page 3)
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*CambodiaCtieneral Dap Chhuon of northwestern Cambodia
is being given material support by South Vietnam in his plans to
move against the Sihanouk regime. He has set a tentative date of
mid-March for his move and now is coordinating his plans with
those of other plotters who have been assisted by both South Viet-
nam and Thailand. The Phnom Penh government reportedly is
afraid of breaking with Dap Chhuon, but is strengthening its secu-
rity measures. Meanwhile, Sihanouk has been visiting Indonesia:)
(Page 4)
III. THE WEST
France: CParis intends to propose to the North Atlantic
Council that the NATO area of responsibility be extended to in-
clude the Sahara. France's future relations with NATO may
largely be determined by the council's reactions to the proposal
Premier Debre recently emphasized that unless France obtains
NATO backing for its Algerian policies it would be compelled to
maintain its NATO-committed Mediterranean naval units "sep-
arately." De Gaulle, however, explained that such units would
"rush" to join NATO forces in case of war
(Page 5)
Portugal: Cportuguese Premier Salazar, as a result of a
cardiac complication developed during an attack of pneumonia
on 27 January, is in serious condition,
It has been rumored that he would announe-
ment on or about 20 February because of poor health
(Page 7)
LATE ITEM
*USSR-Iran: Moscow has acted quickly to establish a record
designed to justify retaliatory moves against the Shah's regime
by broadcasting a Soviet memorandum handed to the Iranian for-
(' eign minister in Tehran on 10 February, following the breakdown
of negotiations for a nonaggression pact. The lengthy memorandum
13 Feb 59
DAILY BRIEF ii
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describes in detail Soviet efforts to meet the Shah's initiative
by accepting Iran's initial draft and by conceding that Iran could
remain in the Baghdad Pact. Moscow charges, however, that
the decision of the Shah's government to renounce its own pro-
posals was "prompted by the Americans," and marks a "turning
point" in Soviet-Iranian relations. In reminding Tehran that the
1921 Treaty of Friendship obligates Iran "not to permit the con-
version of its territory into a base for military action against
the USSR," the memorandum suggests that Moscow is prepared
to denounce a US-Iranian bilateral defense agreement as a vio-
lation of the treaty. (Page 8)
IV. SIGNIFICANT INTELLIGENCE
REPORTS AND ESTIMATES
(Available during the preceding week)
Implications for the Free World and the Communist Bloc of
Growing Nuclear Capabilities. ME 100-5-59. 3 February 1959.
Consequences of a Soviet-Iranian Nonaggression Pact.
SNIE 34-2-59. 3 February 1959.
13 Feb 59
DAILY BRIEF iii
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I. THE COMMUNIST BLOC
Soviet Delegation to Begin Economic Assistance Talks in Nepal
Moscow has announced that a Soviet delegation arrived in
Nepal on 12 February to open talks on economic and technical
assistance. King Mahendra had committed himself to accept
Soviet aid during his visit to the USSR in June 1958 and had agreed
that, after study of specific assistance projects, his government
would negotiate final details with a team of Soviet experts. How-
ever, Mahendra a arentl had be n
Soviet delegation
Ian �vernm as cautioned him par
ticularly against accepting projects which require the extended
presence of Soviet technicians;)
The Soviet offers, renewed during a visit to Katmandu by
the Soviet ambassador in early December, reportedly involve
a variety of projects, including roads and road-building equip-
ment, a hydroelectric plant, and civil air assistance. Moscow
would lend Nepal up to $7,500,000 to finance the cost of the projects.
The Soviet announcement of the delegation did not refer to
the subject of a visit to Nepal by President Voroshilov,- $s/loscow
has reportedly exerted heavy pressure on Katmandu for the long-
planned visit following Voroshilov's trip to India starting 24 Febru-
ary, but Katmandu has attempted to put it off until next fall, using
as an excuse the parliamentary elections scheduled to be held be-
tween 18 February and 3 April under the new constitution,1
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II. ASIA-AFRICA
Impending Price Cuts in Middle East Oil
Plans of Western oil companies to cut prices of Middle East
crude 5 to 10 percent within the next few days probably will set
off a round of demands by area governments for a larger share of
the profits in an effort to stave off revenue losses.
The threat of price cuts, the first since 1953, comes at a
time when Arab governments are demanding continued substan-
tial production increases and a larger say in company operations.
The reaction probably will be most severe in Saudi Arabia, which
has experienced only moderate increases in revenues during the
past two years in comparison with other Middle Eastern countries.
Saudi Arabia's anti-American director of petroleum affairs last
week indicated that his government was considering ways to put
pressure on the Arabian-American Oil Company (Aramco) to
assure a continually rising income.
Cuts in the posted prices of Middle East crudes would be in
reaction to cuts in Venezuela last week and reflect the world
oversupply of crude oil. In recent years, Middle East output has
been increasing at a faster rate than world demand, causing pro-
duction declines or relatively slower rates of growth in other
parts of the free world.
This pattern, however, apparently now is due for a change.
Petroleum consumption in the free world is expected to grow be-
tween 5 and 10 percent annually over the next few years. Since
the remainder of the free world's oil producers are seeking a
larger share of this increase, expansion of Middle East output
presumably will have to be curtailed. Coupled with lower rev-
enues from lower prices, this condition is likely to increase ten-
sions between the companies and the local governments in the
area.
CONFIDENTIAL
13 Feb 59
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Tunisia's 1elations W thFi�e Again Deteriorate
[Disclosures regarding the operations in Tunisia of a French
espicinage network�together with President Bourguiba's claim to
a portion of the Sahara and the French shelling on 9 February of
a Tunisian village�probably will result in a substantial deteriora-
tion in Tunisia's relations with France. The espionage network
involved some Tunisians as well as French telephone and embassy
employees. It is reported to have been directed by an assistant
French military attache, and to have sought information on Alge-
rian rebel activities and contacts with high Tunisian officials by
tapping telephone lines, including Bourguiba's telephone-.1
&he Tunisian secretary of interior claims that the network
operated under cover of a French technical assistance program
concluded in August. Under this program, France was to expend
$1,640,000 toward the replacement of the Tunisian telephone sys-
tem. This project and a contract let to a French firm in Novem-
ber may both be terminated.-3
Part of the emphasis Tunisia is placing on these disclosures
may The the result of France's refusal last month to transfer
Tunisia's franc zone holdings to Xunisian control and to under-
write Tunisian financial losses incurred by the devaluation of the
French franc. The incident will be used to reduce still further
France's influence and control in Tunisia. The dismissal of all
French employees in the postal, telephone, and telegraph system--
all of whom were under contract--was such a move, and will win
popular acclaim because of widespread unemployment among
Tunisians. Etourguiba probably will also demand a substantial
reduction in the 650-man French Embassy staff.
CONFIDENTIAL
13 Feb 59
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Plots Against Cambodian Regime Proceeding
..ieneral Dap Chhuon is proceeding with preparations for a
move against the Cambodian Government and now has the strong
backing of South Vietnam. The Vietnamese have recently supplied
him with a considerable sum of money, as well as radio operators
and broadcasting equipment, to launch the coup.3
CChhuon's decision to postpone a unilateral move originally
planned for 8 to 10 February apparently was prompted by his
desire to coordinate action with dissident forces under former
Cambodian Premier Son Ngoc 'Thanh and with former royal coun-
cilor Sam Sary, who have been assisted by both South Vietnam
and Thailand. Chhuon is
wanting to "start work" on the same day as these forces so as
to be "sure of winning." He has set mid-March as the tentative
date for his move-.-)
Echhuon seems undeterred by awareness that Sihanouk, who
is winding up a state visit to Indonesia, has become suspicious.
There are indications that the Phnom Penh regime is fearful of
precipitating an open break with Chhuon, probably because of his
strongly entrenched position in northwestern Cambodia and the
allegiance he may command among the military elsewhere. The
government, however, is urgently strengthening its military de-
fenses in the Phnom Penh area and has also set up checkpoints on
roads leading to the capital
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III. THE WEST
France to`Propose Extension of NATO Area to Include Sahara
iThe French Foreign and Defense ministries have drafted a
proposal to extend the NATO area of responsibility to include
the "whole of the Sahara,"
Paris reportedly intends to present this proposal
initially to the United States and Britain, and then to the North
Atlantic Council sometime after the 2-4 April meeting of NATO
foreign ministers:3
he French definition of "Sahara" appears to be in geograph-
ical terms, in view of De Gaulle's previous private allusions to
extending the NATO area to the Sahara "as far as the Red Sea."
The new proposal stems from official French views that NATO
is being outflanked to the south and that NATO support of France
in North Africa, particularly in Algeria, is vital not only to
France but to the whole Western world. French attitudes toward
Egyptian President Nasir suggest that the proposal is also con-
ceived in part as blocking further Egyptian influence-T.)
(Premier Debre bluntly told Secretary Dulles on 6 February
that Unless France was backed in its Algerian policy it would re-
tain its Mediterranean naval units "separately." De Gaulle as-
sured Dulles, however, that the French fleet would "rush" to
NATO and become part of NATO forces in case of war. Algeria
was removed from NATO military jurisdiction in 1954 at France's
requesC)
De Gaulle has previously criticized the "inadequacy" of
pre ent NATO naval command arrangements covering the Med-
iterranean and Atlantic communications between France and
North Africa� and has indicated his desire that a new naval com-
mand be established combining these areas under a French of-
ficer. Debrd told General Norstad in late January that France'sA
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Noe' Nor'
Lallies did not fully appreciate the contribution France was mak-
ing to the alliance by its effort in Algeria:)
CThe vehemence with which the French are presenting these
views suggests that Allied reaction will be a major determinant
in France's attitudes toward future relations with NATO.")
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Nor,' :ad
Portuguee Premier Salazar Seriously Ill
d'ortuguese Premier Salazar was stricken with virus pneu-
monia two weeks ago and has developed myocarditis, which may
lead to coronary thrombosis. He is slowly responding to treat-
ment, but he will be 70 year old in April and his health has not
been good during the past year;:\
cit was rumored late in January that Salazar would announce
his retirement on or about 20 February and would be succeeded
by Minister of the Presidency Theotonio Pereira. Pereira was
formerly ambassador in Washington and represented Lisbon in
London until August 1958. He may not, however, have full sup-
port of the armed forces, probably the determining factor. Many
junior officers are said to favor a military take-over with some-
one like former President General Craveiro Lopes to run the gov-
ernment, pending selection of a suitable civilian. Lopes is ap-
parently above the factious disputes in Portugal's only legal party,
the National Union. Former Defense Minister Colonel Santos
Costa is another possible candidate to head an interim govern-
ment. He has enjoyed strong support in army circles.
CA temporary take-over by the military would probably not
reduce the widespread unrest and the discontent of opposition
groups which are demanding basic political and socio-economic
reforms:
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LATE ITEM
Soviet reaction to breakdown of talks with Iran
The USSR's initial reaction to the breakdown of negotiations
with Iran for a nonaggression pact attempts to establish a record
designed to justify retaliatory moves against the Shah's regime.
On 12 February Moscow broadcast to Iranian listeners and its
home audience a Soviet memorandum handed to the Iranian for-
eign minister in Tehran which sets forth a step-by-step account
of the negotiations. After describing Soviet efforts to meet the
Shah's initiative for a pact, the memorandum charges his govern-
ment with following "an evil game" in order to mislead public opin-
ion, particularly in Iran.
The memorandum points out that the USSR not only accepted
Iran's initial draft of a treaty, but also conceded that Iran might
remain in the Baghdad Pact and was even willing to discuss revi-
sion of the Soviet-Iranian 1921 Treaty of Friendship.
Moscow claims that the decision of the Shah's government to
renounce its own proposals--a point repeated several times--was
"prompted by the Americans," and marks a "turning point" in
Tehran's relations with the USSR. According to the memorandum,
this decision is proof of a "hypocritical and insincere policy"
toward the USSR which will lead to "serious consequences."
The memorandum foreshadows other bloc moves aimed at dis-
crediting the Shah and stimulating apprehension and discord within
Iran. The broadcast renews Soviet accusations that the Shah's re-
gime does not represent either the national interests of Iran or the
aspirations of the Iranian people.
The memorandum also reminds the Iranian Government that
it is obligated under the 1921 Treaty of Friendship "not to permit
the conversion of its territory into a base for military action
against the USSR." This suggests that Moscow is prepared to con-
demn a US-Iranian bilateral defense agreement as a violation of
the treaty.
CONFIDENTIAL
13 Feb 59
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Nine"
CCORRECTION: In the Central Intelligence Bulletin of 12 February
1959, the last sentence of Item 1, Page 2, should have read:
Moscow furthermore could cause some disruption
of the Iranian economy by cutting off trade; in 1958 bloc
countries received 25 percent of Iran's exports and pro-
vided 11 percent of its imports exclusive of oil.
13 Feb 59
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Noir
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
Executive Secretary, National Security Council
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
Assistant Secretary of Defense for International Security Affairs
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
The Department of Commerce
The Secretary of Commerce
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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