CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A001300040001-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 49
• Document Creation Date: December 16, 2016
• Document Release Date: February 4, 2005
• Sequence Number: 1
• Publication Date: June 20, 1957
• Content Type: SUMMARY

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(CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
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COPY N0.
OC ~ N Q, 3058/57
20 June 1957
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CENTRAL INTELLIGENCE AGENCY
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 Approved For-Release 2005/02/14 :CIA-RDP79-00927A001300040001-5
THIS MATERIAL CONTAINS INFORMATION AFFECT-
ING THE NATIONAL DEFENSE OF THE UNITED STATES
WITHIN THE MEANING OF THE ESPIONAGE LAWS,
TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS-
SION OR REVELATION OF WHICH IN ANY MANNER TO
AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
The Current Intelligence Weekly Summary has been prepared
primarily for the internal use of the Central Intelligence
Agency. It does not represent a complete coverage of all
current situations. Comments and conclusions represent
the immediate appraisal of the Office of Current Intelligence.
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OF IRREDIATE INTEREST
USSR ROVES TOWARD SHOWDOWN ON NUCLEAR TESTS IN LONDON
TALKS Page 1
The USSR's proposal for a two- or three-yeas sus-
pension of nuclear tests combined with international in-
spection, formally placed before the UN Disarmament Sub-
committee by Soviet delegate Zorin on 14 June, probably
was envisaged by the Soviet leaders as their climactic
move in this session of the subcommittee. Britain evi-
dently believes that the Soviet acceptance of inspection
on a nuclear test suspension considerably increases the
possibilities of reaching a limited agreement. The Brit-
ish fear that nuclear disarmament would leave the USSR
in an advantageous position because of its superior con-
ventional forces. The French have shown caution in re-
sponding to the Soviet proposal, apparently desiring to
retain freedom to manufacture nuclear weapons of their
own in the event the disarmament talks take a turn
deemed unfavorable to their interests.
THE OFFICIAL TEXT OF RAO'S "SECRET" SPEECH Page 3
The official text of Mao?s "secret" speech of 12
February released this week was apparently edited with
a view to minimizing differences in doctrinal viewpoints
between the Chinese and other Communists. While the
promise of liberalization still emerges as the main em-
phasis of the speech, the edited text shows an effort to
define the boundaries of permissible debate. Peiping's
decision to release an official text may have been
prompted by the anti-Soviet overtones wbich appeared in
the unofficial excerpts circulating in East Europe and
the free world. The speech, which was reprinted in
Pravda., will add appreciably to Peiping's growing im-
ortance as a source of Communist doctrine.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
MIDDLE EAST DEVELOPMENTS Page 5
The emergence of an Arab bloc estranged from Egypt
and Syria.--composed initially of Saudi Arabia, Jordan,
Iraq and possibly Lebanon--continues to dominate the
Arab political scene.. In Lebanon, the pro-Western gov-
ernment s election success threatens virtually to ex-
clude the opposition from the legislature; the anti-
government forces may then seek other means to fight
the government. In Syria., the Egyptian-supported left-
ists a.re reported to be putting aside their differences
and to be drawing together as anti-Nasr forces show
signs of concentrating on Syria. Three Soviet subma-
rines have arrived in Egypt.
NOTES AND COMMENTS
POLISH ATTITUDE TOWARD RESUMING CONTACT
WITH UNITED STATES Page 1
Recent Polish comment on Polish-American rela=
tions has reflected official and unofficial enthusi-
asm for the resumption of contacts with the United
States. On 7 June, the first half of a $95,000,000
economic agreement was signed in Washington; on 9
June, the Poznan Fair opened at which the United States
was represented for the first time9 and on 12 June,
the Cleveland Symphony Orchestra presented its first
Warsaw concert. Press a.nd public comment on all
three occasions was notably favorable.
EAST GERMAN LOCAL ELECTIONS TO BE HELD ON 23 JUNE Page 1
East German local elections, the first since Oc-
tober 1950, will be held on Sunday 23 June. Few peo-
ple are responding to the regime?s efforts to whip up
popular enthusiasm. The single election list of Com-
munist-picked candidates gives the voter no opportunity
to express a choice, and everyone realizes the elec-
tion outcome is a foregone conclusion. The regime
has taken full measures to prevent any disturbances
during the election period and has put all military;.
and ~a.ramilitar forces on an alert until 24 June.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
ITALIAN GOVERNMENT CRISIS Page 3
Amintore Fanfani, secretary general of the Chris-
tian Democratic Party, faces serious difficulties in his
attempt to end Italy's seven-week-old cabinet crisis by
reconstituting the center coalition which governed Italy
from February 1954 until early this May. Even if fear
of early elections induces the three small center par-
ties to support his investiture, interparty bickering
virtuall rules out any effective program.
USSR SHOWS NEW INTEREST IN CULTURAL EXCHANGES WITH
UNITED STATES Page 3
There are signs of growing Soviet interest in a
cultural exchange program with the United States as an
important part of Moscow's effort to restore the atmos-
phere of international detente existing prior to the
events of last 1Vovember . This might even extend to a
regulax exchange of radio and television broadcasts, al-
though Soviet propaganda has been cool to this idea.
Perhaps to reduce the susceptibility of the Soviet
people to Western ideas in preparation for an expanded
exchange program, Soviet leaders have undertaken a cam-
pa:~gn to maintain a high level of vigilance.
SOVIET PARTY CRACKS DOWN ON REVISIONIST HISTORIANS Page 4
Most of the members of the editorial board of
Problems of History, the official organ of the USSR's
pr-o~es'sional historians, have been dismissed. This
is a severe setback for this comparatively liberal
group, which has been engaged since the 20th party
congress in revising Soviet history along the lines
of de-Stalinization. The regime may adopt adminis-
trative discipline in preference to "persuasion" in
other areas of Soviet intellectual life where there
have been signs of dissidence and where some intel-
lectuals have taken the regime's move away from
Stalinism to mean release from party guidance.
SOVIET JET MEDIUM BOMBERS DISPLAY REFUELING CAPABILITY Page
Two BADGER (TU-16) jet medium bombers demonstrated
aerial refueling in rehearsal fly-bys on 13 and 18
June for the Moscow air show. The range increase re-
sulting from one in-flight refueling substantially en-
larges the area in the continental United States which
the TU-16 could reach on a one-way mission.
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SOVIET BLOC-EGYPTIAN ECONOMIC RELATIONS Page 6
Continuing Egyptian difficulties in commercial deal-
ings with Soviet bloc countries have given rise to uncon-
firmed press reports of a rift between Moscow and Cairo
over trade problems. However, Egyptian trade policy to-
ward the bloc remains unchanged. Meanwhile, the exten-
sive increase in Egypt's total trade with the bloc ap-
parently has become a serious cause for concern, primari-
ly in Egyptian trade and financial circles.
SAUDI FINANCIAL SITUATION WORSENING ~ Page 8
Saudi currency has depreciated sharplq on the free
market as a result of Saudi Arabia's loss of income dur-
ing the closure of the Suez Canal as well as its
capricious financial practices. Saudi imports now are
curtailed and the government will probabl tr to in-
crease its oil revenues.
SUHRAWARDY VISIT TO KABUL IMPROVES AFGHAN-PAKISTANI
RELATIONS . Page 8
Prime Minister Suhrawardy's visit to Kabul from 8
to 11 June was an important step in furthering the trend
toward better relations between Pakistan and Afghanistan.
In addition to agreeing to normalize diplomatic rela-
tions by again exchanging ambassadors, the two countries
decided to conduct trade negotiations and discuss trans-
it arrangements in the near future.
SUHRAWARDY DEFEATS PRO-COMMUNIST OPPONENTS IN EAST
PAKISTAN Page 9
Pakistani prime minister Suhrawardy has emerged
from a major test of strength with Maulana Bhashani,
his pro-Communist rival for leadership of the Awami
League in East Pakistan, with an overwhelming endorse-
ment of his foreign policy and apparently firm control
over the provincial party organization. Bhashani,
however, still remains a threat to the government as
a potential rallying point for a new party made up of
all extreme leftist groups in Pakistan.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
INDONESIA Page 11
The Indonesian cabinet's unanimous acceptance of
President Sukarno's candidates for his national ad-
visory council is another step toward Sukarno's con-
cept of "guided democracy" and a defeat for moderate
political. elements in the central government. The
president's method of forcing approval of the council
through the cabinet, however, is likely to aggravate
provincial unrest, particularly in Sumatra, where dis-
affected elements are reportedly planning further ac-
tion against the central government.
KATAY DEFEATED IN BID ~'OR LAOTIAN PRIME MINISTERSHIP Page 11
Premier-designate Kata.y was defeated in his bid
for investiture on 2D June. His proposed government,
based on an alliance of the two leading Laotian par-
ties and committed to a firm policy towaxd the Pathet
Lao, missed confirmation by one vote. This is ex-
pected to lead to a period of extreme political un-
certainty from which the Pathet Laois likel to
emerge as the chief beneficiary.
THAI LEGISLATIVE SESSION MAY BE CRUCIAL FOR GOVERNMENT Page 12
The Thai government faces a. larger and more ar-
ticulate opposition in the assembly which convenes
on 24 June. Supporters of Defense Minister Sarit
may attempt a no-confidence motion against Premier
Phibun,although there are a number of factors which
may deter such action.
CHOU EN-LAI CALLS HONG KONG "OBSTACLE" TO PEACE Page 13
Chou has told a visiting member of the British
Parliament that, because of American activities in
Hong Kong, the colony, like Taiwan, constitutes an
"obstacle" to peace in Asia. Chows comments, how-
ever, contained no threat of an early Communist move
to recover the colony, a.nd such a move is unlikely,
since Hong Kong in British hands provides the Chinese
Communists with a source for foreign exchange earn-
ings and is a valuable intermediary for the spread
of Communist influence into Southeast Asia.
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PEIPING RELEASES TWO FORE AMERICAN PRISONERS Page 15
Peiping's release of two more American prisoners
on 14 June leaves six American citizens still in Chi-
nese Communist jails. Two of these men axe scheduled
to finish their sentences in June 1958 and will prob-
ably be released at that time. The other four face
much longer terms and Peiping evidently intends to use
them as political hostages. The Chinese have indi-
Gated that they regard retention of the prisoners as
a guarantee that the meetings between Ambassador John-
son and Wang Ping-nan a Geneva will not be broken:.
off by the United States.
OVERSEAS CHINESE IN SOUTH VIETNAM Page 16
The demand by about 50,000 Chinese in South Viet-
nam for expatriation to Taiwan appears to be a tactic
inspired by the Chinese Nationalists to force Presi-
dent Diem to modify his decree imposing Vietnamese
citizenship on all locally born Chinese. Diem will
probably treat the Nationalist proposals as a diplo-
matic maneuver, and maintain pressure for a settle-
ment of the citizenship question on his own terms.
THE NEW MILITARY REGIME IN HAITI Page 16
The military regime which took over in Haiti on
14 June probably has a better chance of mainta fining
control than any preceding government in the past
six months. At present no group appears to be strong
enough' to overthrow the junta., but the conditions
which have led to political upheaval in the past con-
tinue to exist.
DISSENSION WITHIN BOLIVIAN GOVERNMENT Page 17
A general strike ma.y occur in Bolivia on 1 July
because of differences over the economic stabiliza-
tion program. Speeches of President Siles and key
leftist labor leader Juan Lechin at the recent Bo-
livian worxers? congress accentuated differences over
the program, which ha.s the backing of the United
States. Failure to find early agreement would threat-
en both the economic program and the government's
stability.
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PATTERNS AND PERSPECTIVES
THE COMMONWEALTH PRIME MINISTERS' CONFERENCE Page 1
At the Commonwealth prime ministers' conference
opening in London on 26 June, Britain faces a major
job of re-establishing confidence in its leadership.
Most members have displayed concern over Britain's
reduced power position and the changes in its tradi-
tional economic and military policies, and the Asian
members are believed to be reassessing the value of
continued Commonwealth participation. Ghana's acces-
sion, as the first Black African member,.. is likely
to accentuate the growing division between the "old
Commonwealth" of white nations and the newer members
of non-European stock.
JAPAN'S DETERIORATING BALANCE OF PAYMENTS .
Japan's balance of payments difficulties have
become serious. A deficit of $285,000,000 during
the first five months of 1957 was accompanied by a
drain of $400,000,000 on foreign exchange reserves.
The primary cause is a steady increase in imports
for the expansion of industrial facilities. The
government hopes that a new program, adopted on 14
June, will restore a favorable monthly balance by
the end of December, but concedes that a payments
deficit, the second since 194?, is likely for this
year. Modernization of industrial facilities and
the development of stable supplies of raw materials
closer to home wily gradually improve Japan's trade
position.
CHINESE COMMUNIST CAMPAIGN FOR "PEACEFUL LIBERATION" OF
TAIWAN Page 6
The Chinese Communists during the-past two year s
have carried on a major psychological warfare campaign
designed to bring down the Chinese Nationalist govern-
ment and to enable them to gain control of Taiwan.
Chinese Communist efforts have thus far achieved few
visible results, but Peiping will probably be encour-
aged to step up its efforts for "peaceful liberation"
by the recent anti-American riots in Taipei.
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SIMONOV: SOVIET CAREER INTELLECTUAL Page 9
The twists and turns of thought about the role of
literature in Soviet society voiced by Konstantin Simonov,
prominent Soviet writer and editor of the literary month-
ly NovY Mir, illustrate the difficulties Soviet career in-
tellectuals face in a countxy where "'creative" writing is
a political art and must conform with government policy.
Liberal interpretations by increasing numbers of Soviet
intellectuals of the relaxation in cultural policy fol-
lowing Stalin's death have led the regime to narrow the
boundaries of permissible expression. It is doubtful,
however, that the leadership can devise a formula which
will meet its contradictory demands for maximum intel-
lectual roductivity and political conformity.
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The USSR`s proposal for a
two- or three-year suspension
of nuclear tests combined with
international inspection, for-
mally placed before the UN Dis-
armament Subcommittee by Soviet
delegate Zorin on 14 June, prob-
ably was envisaged by the Sq,Yiet
leaders as their climactic ~ve
in this session of the subcom-
mittee.
Moscow's move to focus the
London talks on the issue of a
suspension of nuclear tests was
foreshadowed by Khrushchev's
strong attack in his 13 June
Helsinki statement on the West's
insistence on control "as a con-
dition for disarmament" and his
assertion that "all objective
possibilities" now exist for an
agreement limited to a test sus-
pension. He implied that the
Western powers were not serious
in advocating ironclad controls
over disarmament measures, that
the United States is retreating
from its own aerial inspection
proposals, and he ridiculed sug-
gestions that aerial inspection
might be limited to the Arctic
x?egions as "utterly comical."
In a note to the American
delegate on 16 June, Zorin ex-
pressed "perplexity" over the
American letter of 12 June de-
claring the memorandum which
the American delegate had handed
to Zorin on 31 May to be "non-
existent" as a communication
between governments. Zorin
pointed out that "this is not
the first instance where the
United States has either re-
nounced its own proposals or
declared them nonexistent as
soon as...the possibility of
coming closer together on cer-
tain important questions was
in prospect>"
Moscow is now developing
the thesis that the Western
powers' retreat from their own
proposals has precluded even a
partial agreement on disarmament
and that, in this situation,
only an agreement to suspend
nuclear tests is possible. In
presenting the new proposal to
the subcommittee, Zorin con-
tended that it would create fa-
vorable conditions for future
progress on other aspects of
disarmament, inhibit further
development of "weapons of mass
destruction," and facilitate
relaxation of international
tension.
Soviet propaganda is now
referring to the test suspen-
sion proposal as a "first step"
which would improve chances for
future agreement on "more com-
plicated questions." Khrushchev
followed this line in stating
on 13 June that the present de-
gree of "trust among nations"
is sufficient to reach an a-
greement limited to a suspensio n
of tests. He implied, however,
that a solution of broader dis-
armament problems requires a
larger measure of trust, es-
pecially among the nuclear
powers.
Zorin has already made
clear that the USSR would re-
ject Western attempts to make
a test suspension contingent
on Soviet agreement to halt
production of nuclear weapons.
He told the subcommittee on
14 June that such conditions
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raised the danger of fencing in
the simple Soviet proposal with
so many other questions as to
preclude agreement. He called
on the western delegates to give
a simple answer as to whether
or not theq desire to suspend
tests on the basis of the Sovi-
et proposal. If they would
agree in principle, he said,
the details could be worked out
later .
Zorin expressed alarm in
the 17 June meeting regarding
the west`s heavy emphasis on
control, saying that past ex-
perience shows thst this is a
storm warning indicative of an
approaching breach in the nego-
tiations or a failure to reach
agreement. He restated the
Soviet position that agreement
in principle on a test suspen-
sion must be reached before
controls can be discussed, and
cited Khrushchev's 13 June Hel-
sinki statement that the west's
insistence on control actually
serves as a "camouflage" for
plans to continue the arms race.
Zorin welcomed. the presence
of the British foreign minister
at the 17 June meeting, and re-
called Moscow's earlier propos-
als that this session of the
subcommittee be raised to the
foreign-minister level. The
USSR may be planning to renew
its call for a foreign minis-
ters' meeting and may simultane-
ously move to publicize the
conf licting Soviet and western
positions on such issues as
nuclear tests and aerial in-
spection zones.
British Views
Britain evidently believes
that the Soviet acceptance of
inspection on a nuclear test
suspension considerably in-
creases the possibilities of
reaching a limited agreement,
but one that might harm British
interests. The British fear
nuclear disarmament might im-
peril their country's policy of
relying on the nuclear deter-
rent.
Britain appears to consider
that the Soviet move on test
suspension makes more likely a
first-step agreement tbat would
also stop production of fission-
able materials for weapons pur-
poses, and is pressing its de-
mands for the United States to
supply such materials in this
event to help offset Britain's
present deficiency. Foreign
Secretary Lloyd stressed this
point in talking with American
delegate Stassen on 15 June.
The seriousness with which
Britain views the disarmament
talks has been underlined by
Lloyd's personal participation
in meetings both of the full
UN subcommittee and of the four
western delegations beginning
on 1? June, Lloyd told Stassen
on 18 June that the UK is ac-
tively reviewing its entire
disarmament policy, particularly
the nuclear provisions.
French Position
The French have shown cau-
tion in responding to the Soviet
proposal, apparently desiring to
retain freedom to manufacture
nuclear weapons of their own in
the event the disarmament talks
take a turn deemed unfavorable
to their interests.
Disarmament delegate Moch
has privately stressed the
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CURRENT INTELLIGENCE WEEKLY SUI1lMMARY
urgency with which he views the
West's need to tie-the test
cessation to other, preferably
nuclear, dis~.rmament measures
lest the West be forced to
accept the test suspension
alone. In the subcommittee
meeting on 1? June, he empha-
sized that ironclad controls
must be set up, -and should
cover seven general categories,
including ground and aerial
control, mobile inspection
teams, and cessation of pro-
duction of nuclear weapons.
Such controls, by opening
up prospects for complete nu-
clear disarmament, might yet
forestall nationalist pressures
in France to begin the manu-
facture of nuclear weapons.
Other European Views
Several other NATO members
have stressed their caution
toward disarmament developments.
Italy has sent a note to the
North Atlantic Council express-
ing a preference for reduction
in conventional armaments first.
The Dutch government, commenting
on inspection zones, has stated
it prefers that a start be made
on a non-European zone. On the
possibility of an Arctic zone,
the Norwegian government has
approved in principle the inclu-
sion of its territory. A formal
Canadian response awaits forma-
tion of the new Conservative
government.
Apart from a statement by
British Labor Party leader Gait-
skell urging the West to accept
the proposals--"to test the
Russians, not the bombs"--the
latest Soviet moves have so far
had little evident impact on
European public opinion. Gait-
skell told the American embassy
in London, however, that his
call for acceptance of the Soviet
plan would be fully supported
by the German Socialists. He
stated that Social Democratic
leader Ollenhauer had recently
indicated that the party favored
a di sarmairue~nt agreement with
no political strings whatever--
evidently includin German uni-
fication,
Peiping's decision to re-
lease an official version of
Mao's speech of 12 February may
bave been prompted by the anti-
Soviet overtones wbich appeared
in the unofficial excerpts cir-
culating in Eastern Europe and
the free world. European Satel-
lite liberals drew on reported
statements in Mao's speech to
claim Chinese ideological sup-
port for their own convictions.
Khrushchev himself lent some
importance to these implications
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during his American television
interview when he flatly denied
that Maas view on contradictions
between the masses and the Com-
munist leadership was applicable
to the USSR .
This use of Mao's speech
was probably embarrassing to
the Chinese, who have stressed
in recent statements that differ-
ences in Communist viewpoints
are best muted in the interests
of intrabloc harmony. In the
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official version of his speech
now released, Mao appears to
have made certain deletions and
additions, with a view to mini-
mizing differences in doctrinal
viewpoints between the Chinese
and other Communists. Peiping
has frankly admitted that the
official text is an edited one,
not the verbatim transcript.
The official text corrob-
orates earlier reports that Mao
stressed the nonantagonistic
character of the so-called con-
tradictions in present-day China
and urged that these could be
resolved by education and per-
ua i n rather than b terror,
In conformity
with this emphasis on persuasion
and education, Mao reaffirmed
his faith in the policy of let-
ting diverse schools of thought
contend.
There have been recent in-
dications, however, that Peiping
feels some intellectuals in
China are interpreting this pol-
icy too boldly, and the edited
text of Mao's speech warns a-
gainst exceeding the boundaries
of permissible debate. Criti-
cism is acceptable only if it
comes from quarters not hostile
to the regime; it will not be
tolerated from those who "de-
liberately put forward unrea-
sonable demands...or spread
rumors to create trouble."
Mao set forth six tenta-
tive criteria of permissible
criticism, stressing above all
the importance of recognizing
Communist Party leadership and
the impossibility of turning
back from the "socialist path."
He indicated that the regime
would also frown on debate which
tended to divide the national
minorities in China, to weaken
the regime, to undermine the
principle of central control,
or to disrupt intrabloc harmony,
Mao's reflections on the
so-called contradictions in
Chinese society were probably
stimulated by last fall's East
European disorders; he alluded
several times to Hungary. Evi-
dently he saw certain parallels
between the situations in East
Europe and in China, admitting
for example that some Chinese
intellectuals are reluctant to
accept Marxism-Leninism.
In a reference to cynicism
among Chinese students, Mao
made the observation that "Marx=
ism, once all the rage, is not
so much the fashion now . " He
discussed popular complaints of
the peasants' hard lot and felt
constrained to promise that the
amount of grain taxes and state
grain purchases would be stabi-
lized over the next few years.
He confessed that student and
worker strikes had taken place
in China during 1956 and that
there had also been some "dis-
turbances" among the peasants.
Despite these disturbances,
Mao professed confidence that
the situation of the peasants
is "basically sound" and re-
jected the view that "something
has gone wrong" with the system
of agricultural co-operatives
in China. Recognizing the
strains on the nation entailed
in the past overemphasis on
building large-scale modern in-
dustries, Mao promised to give
greater attention in the future
to building small- and medium-
sized enterprises. He implied
that agriculture and light in-
dustry would be favored with
more attention in the future,
although he did not say directly
that they would be allocated a
greater share of investment
funds .
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While the promise of lib-
eralization and of a softer hand
in dealing with popular opinion
still emerges as the main empha-
sis of Mao's speech, the edited
text will prove much more ac-
ceptable to the orthodox Com-
munist regimes than the unau-
thorized versions that have been
giving comfort to the European
Satellite liberals. These or-
thodox regimes may feel freer
than they have till now to com-
ment on the Chinese doctrines.
In an oblique reproof of the
Satellite liberals, Mao branded
revisionism a greater danger
than doctrinairism.
By and large, he supported
Moscow's viewpoint on Hungary,
laying the major blame for last
fall's events on "domestic and
foreign counterrevolutionaries."
He took strong exception to the
inference some Chinese drew from
the Hungarian crisis that West-
ern parliamentarianism offered
more freedom than "people's de-
mocracy." He justified past
terrors employed by the Chinese
Communists as necessary to the
times. While urging that the
Chinese learn from all countries,
"socialist" and capitalist, he
declared that the "main thing
is still to learn from the
Soviet Union."
The publication of Mao's
speech will add appreciably to
Peiping's growing importance
as a source of Communist doc-
trine, Last December, the Chi-
nese put forward their views
on the proper course for state
and party relations within the
bloc in the most extensive dis-
sertation on the subject to
appear in any Communist capital.
Mao's published views on the key
question of contradictions within
"socialist society" constitute
an even more extensive pronounce-
ment on matters of doctrine re-
lating to internal policy.
Although Mao declared that his
formulations do not necessarily
apply to all Communist states,
the impact of Chinese theory
will be felt increasingly
throughout the bloc.
(Concurred in by OftR)
25X1
In Lebanon, the anti-Nasr
government extended its recent
success by winning 19 out of
20 seats contested in the sec-
ond stage of the parliamentary
election being held on four
successive Sundays in June.
Government supporters have
gained 34 out of 42 seats con-
tested in the two elections
held thus far. The remaining
24 seats will be contested on
23 and 30 June. The predomi-
nantly Moslem northern city of
Tripoli may be the scene of
violence in elections scheduled
for 30 June,
Meanwhile, the resignation
of two ministers without port-
folio who, in a move to appease
the pro-Egyptian opposition,
had recently been appointed to
hear election complaints, may
presage trouble for pro-Western
President Chamoun and the gov-
ernment of Premier Sami Solh.
The resignations were said to
be in protest against the "gen-
eral atmosphere" in which the
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elections had been conducted.
The opposition may feel it no
longer has any legal channel
for opposing the government and
may turn to other means.
Saud?s Growing Influence
The most significant de-
velopment in the Arab world
continues to be the emergence
of an Arab bloc estranged from
Nasr and Syria, composed ini-
tially of Saudi Arabia, Jordan
Ira and Lebanon. Sau
!'aas-
movedwith increasing firmness
to reduce Egyptian influence in
his country and to support sim-
ilar efforts in Jordan, Lebanon
and Syria.
Jordan continues to press
the break with Egypt most open-
ly and has closed its embassy
in Cairo, although Foreign
Minister Rifai declared that
this action did not constitute
a break in diplomatic relations.
Cairo's ambassador-designate
to Jordan has delayed his move
to Amman for over a month, and
Egypt is reported considering
closin? its embassv in Amman--
Nuri?s policy of co_
New Government in Iraq
In Iraq, King Faisal has
appointed Ali Jawdat al-Ayyubi
as premier, succeeding Nuri
Said,who is said to be ill.
Ali Jawdat has been minister to
Washington and London, has been
premier several times, and is
expected generally to follow
Removal of the controver-
sial Nuri, a long-time close
collaborator with the British
and target of latter-day Arab
nationalists, will facilitate
closer association-among anti-
Nasr Arabs. Nuri opposed any
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more than limited Iraqi aid to
Jordan, which he did not appear
to consider a viable entity.
In Syria, there are re-
ports of new maneuverings by
Egyptian-supported leftists to
remove moderate officers from
the army, dissolve the legis-
lature and establish rule by a
military junta on the Egyptian
model.
Fear that anti-Nasr forces
might concentrate next on wean-
ing Syria from Egypt has pro-
moted unity among feuding left-
ist groups. The impending de-
parture of Syrian president
Quwatly for medical treatment
in Europe, and Premier Asali's
desire to evade responsibility
by resigning, may present an
opportunity for a leftist
takeover.
Nasr's Countermoves
Nasr, now on the defensive,
must attempt to regain the in-
itiative by dramatic action, or
alternatively, make conciliatory
gestures while awaiting a new
opportunity to strike at his
Arab enemies. In the latter
case, however, he risks losing
even further ground. Although
rigged elections on 3 July prom-
ise to install an overwhelmingly
pro-Nasr majority in Egypt's
first postrevolution legisla-
ture, Nasr has been compelled
to restrict severely Communist
candidacies as well as those
of the right-wing Moslem Broth-
erhood and prerevolution polit-
ical parties.
Nasr?s counterattack against
his Arab enemies is attempting
to identify them with Western
"imperialist" interests, and
shows signs of becoming in-
creasingly anti-American. He
will probably attack the mon-
archies in Jordan, Saudi Arabia
and Iraq by appealing to their
restive populations, will un-
doubtedly increase his efforts
in the Sudan with an eye to the
legislative elections in the
fall, and will step up support
of anti-Western dissidents in
North Africa and the Persian
Gu 1 f .
Two Soviet long-range
submarines and one coastal
submarine, which left the Baltic
on 30 May, arrived in Alexandria
on 1& June accompanied by a
Soviet mine sweeper. The Egyp-
tian press has stated that the
three submarines had "joined
the Egyptian fleet."
Yemen
At least two Soviet vessels
have unloaded Soviet arms in
Yemen in the last month. The arms
delivered thus far consist most-
ly of small arms, but a15o include
antiaircraft guns, artillery and
reportedly armor.. Delivery~of ad-
ditional Soviet arms to~Yemen will
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further increase tension with
Britain in the neighboring
Aden Protectorate, and in the
long-run with King Saud.
The number of incidents
along Yemen's frontier with
Aden Protectorate has dropped
off .
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POLISH ATTITUDE TOWARD RESU1dING CONTACT WITH UNITED STATES
Recent Polish comment on
Polish-American relations iias
reflected official and unoffi-
cial enthusiasm for the resump-
tion of contacts with the
United States. On 7 June,the
first half of a $95,000,000
economic agreement was signed
in Washington; on 9 June,the
Poznan Fair opened at which
the United States was reprer-
sented for the first time; and
on 12 June,the Cleveland Sym-
phony Orchestra presented its
first Warsaw concert. Press
and public comment on all three
occasions was notably favorable.
The economic agreement was
greeted by the press as a step
toward the relaxation of inter-
national tensions. Trybuna
Ludu and Zycie Warszawy,-Iead-
ing party ate-government dailies,
expressed the belief that the
foundation had been laid for
future economic and trade ne-
gotiations between the two
countries. Warsaw papers
stressed that the agreement was
fundamentally nonpolitical and--
as Trybuna Ludu stated--was
"exactly as we wished it to be
and as we from the first moment
suggested it to be to our Am-
erican partners."
More than 50,000 Poles vis-
ite d the American pavilion at
the Poznan Fair in a five-hour
period on opening day--undoubt-
edly curious to inspect several
195? automobiles, an American
worker's home, television sets
in assorted sizes and types,
and a deep freeze stocked with
commercially packaged frozen
foods.
Despite complaints in the
Poznan press that the American
exhibit's emphasis on the dif-
ferential in living standards
was an irritant to the Polish
worker, envious of his American
counterpart, popular acclaim
appears to have guaranteed a
successful American reception
at Poznan.
The Cleveland Symphony de-
but in Warsaw drew lavish and
unstinting praise from the
Polish press and radio. The
Warsaw concert was notable in
several respects. The occasion
marked the first visit by a
major American orchestra since
World War II. Conductor George
Szell included two works barred
during the Stalin era in Poland,
and, as an encore, the orchestra
quite fabulous,"
played Berlioz? "Hungarian
March." Zycie Warszawy com-
mented, "app ause~y arsaw
'melomaniacs' undoubtedly ex-
ceeded anything encountered in
other cities." One of Warsaw's
leading music critics described
the performance as "wonderful...
East German local elections,
the first since October 1950,
will be held on Sunday 23 June.
Few people are,.thking the cam-
paign seriously, despite the
regime's efforts to whip up
popular enthusiasm. The single
election list of Communist-
picked candidates gives the
voter no opportunity to express
a choice, and everyone realizes
the election .outcome is a
foregone conclusion.
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Major objectives of the
intensive election campaign are
to bring East German citizens
into closer contact with their
local governments and to gen-
erate some feeling of identifi-
cation with the regime and its
policies. The West German elec-
tions set for next September
also provide a reason for the
Communists to make a show of
their "democracy" and obtain an
overwhelming "endorsement" from
the East German people.
In the balloting super-
vised by the National Front,
comprising all political parties
and mass organizations, voters
will "elect" approximately
215,000 deputies to district,
municipal, county and communal
assemblies throughout East Ger-
many and East Berlin. To en-
sure that no undesirable per-
sons are placed on the ballot,
all potential candidates have
been carefully screened by Com-
munist-dominated election com-
mittees. Eaeh organization in
the National Front is represen-
ted, with the Socialist Unity
(Communist) Party (SED) getting
30 percent of the candidates,
the Christian Democratic Union
(CDU), Liberal Democratic Party
(LDP), National Democratic Party
(NDP) and the Democratic Peas-
ant Party (DBP} getting 10 per-
cent each, and the remaining
30 percent being divided among
the mass organizations.
The Communists have run in-
to difficulties in their camp-
aign to present the election as
an opportunity for a true ex-
pression of prevailing political
sentiments.
Party and government offi-
cials in many instances have
been unable to hold political
rallies within the bounds marked
out by the Ulbricht regime.
Not only has ~.ttendance at dis-
cussion meetings been sparse,
but the voters have persistently
asked embarrassing questions
about the lack of an opposition
slate, the reasons for the low
standard of living, and the ab-
sence of real freedom and dem-
ocracy in East Germany.
Determined to suppress any
popular unrest or demonstrations,
the regime has continued the se-
curity precautions begun just
prior to the anniversary of the
17 June riots. The leaders are
probably apprehensive that any
demonstrations just prior to
the elections would serve to
point up the fraudulent charac-
ter of the Ulbricht leadership.
All East German armed, security
and police forces, including
the Quasi-military Kampfgruppen
(armed workers' militia), have
been put on alert status until
24 June. Security details
guarding government and party
offices have been strengthened,
and sector crossing points in
Berlin have been reinforced by
Kampfgruppen members and police
in civilian clothes. Additional
police patrols have been put on
duty in East Berlin and other
cities.
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CURRENT INTELLIGENCE WEEKLY RU)I~)~IIARY
Amintore Fanfani, secre-
tary general of the Christian
Democratic Party, faces serious
difficulties in his attempt to
end Italy?s seven-week-old
cabinet crisis. by'reconstitut-
ing the center coalition which
governed Italy from February
1954 to early this May. Even
if fear of early elections in-
duces the three small center
parties to support his investi-
ture, interparty bickering
virtually rules out any eff ec-
tive program..
The three parties whose
support is necessary--Democratic
Socialist, Republican, and
Liberal--are divided over wheth-
er or not they should partici-
pate and on what terms. Their
demands for cabinet posts for
their leaders probably will be
disproportionately high and
Huey are particularly reluc-
tant to compromise their basic
party programs as. national
elections draw nearer. If they
do agree to .form a quadripartite
or tripartite coalition with
the Christian Democrats, the
new government will be subject
to the same difficulties in
getting agreement on measures
such as the bill for regula-
tion of farm contracts which
undermined the Scelba and Segni
coalitions.
The ..center. parties may,
however, reconsider their
negative approach to a coalition
government, since the most like-
ly alternative now is an all-
Christian Democratic caretaker
government to prepare for fall
elections. Recent electoral
trends in Italy have shown a
decline in popular support for
the small center parties, and a
number of their deputies, who
are faced with almost certain de-
f eat at the polls, may push for
participation in a government
that will assure their tenure
until June 1958 when general
elections are mandatory.
There are signs of growing
Soviet interest in a cultural
exchange program with the United
States which might possibly in-
clude regular radio and tele-
vision speeches by American and
Soviet leaders.
Soviet first deputy premier
Mikoyan told Western reporters
at a reception on 13 June that
the suggestion made by the
United States in 19 55 for month-
ly half -hour exchanges of un-
censored broadcasts between the
Soviet Union and the Western
powers was a good idea, adding,
"We are not afraid of a competi-
tion of ideas. We are for any
kind of cultural relations."
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CURRENT INTELLIGENCE WEEKLY SUMMARY
American correspondents in Mos-
cow told the embassy that their
stories on this interview passed
the censor "like a shot."
Pravda and Moscow radio
have reacted coolly to the idea
of an exchange of broadcasts,
warning that it was originally
advanced by the Western powers
"not to weaken the cold war
but to intensify it."
However cautious Soviet
leaders may prove to be about
radio or television exchanges,
they are eager to revive the
program of delegation exchanges
with the United States, as well
as other countries, ~.s an im-
portant part of their effort to
restore the atmosphere of in-
ternational detente existing
before the Hungarian and Suez
crises. Last month a State
Committee for Cultural Ties
with Foreign Countries was
established. Soviet ambassador
Zaroubin recently discussed with
American representatives Soviet
proposals for a wide variety
of technical, scientific and
cultural exchanges, and both
Khrushchev and Mikoyan recent-
ly urged expanded programs.
Perhaps to reduce the
susceptibility of the Soviet
people to Western ideas in
preparation for an expanded ex-
change program, Soviet leaders
have issued two scathing de-
nunciations of alleged American
espionage in the USSR, and have
urged the people to maintain a
high level of vigilance. The
June issue of the youth journal
Molodoi Kommunist contains an
artic a purport ng to describe
the intelligence activities of
personnel at the American em-
bassy in Moscow. It asserts
that embassy officers "pass them-
selves off as Ba.lts or don So-
viet clothing in order to gather
information or make acquaintances
useful to them."
The Soviet government has
taken the unusual step of pub-
lishing a handbook "designed to
alert the people against the
thousands of spies, diversionists,
provocateurs and murderers of
the American intelligence ap-
paratus." The 104-page booklet
provides details of how to
catch "dangerous enemy agents."
The accusations of espionage
coincide with the appearance of
a spate of press articles vehe-
mently attacking the imperialists
and monopolists of the United
States and their alleged prepa-
rations for war against the
camp of socialism. Anti-Ameri-
can propaganda is careful, how-
ever, to distinguish between the
people of the United States and
the "imperialist ruling circles."
SOVIET PARTY C:~ACKS DOWN ON REVISIONIST HISTORIANS
Most of the members of the
editorial board of Problems of
History, the officia organ
e U R's professional histo-
rians, have been dismissed.
This is a severe setback for
this comparatively liberal
group, which has been engaged
since the 20th party congress in
revising Soviet history along
the lines of de-Stalinization.
The regime may adopt administra-
tive discipline in preference to
"persuasion" in other areas of
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Soviet intellectual life where
there have been signs of dis-
sidence.
In the latest edition of
Problems of History, the new
editor~l boar~~rges that
the dismissed editors failed to
condemn the ideas which produced
last fall's eruptions in East-
ern Europe and have been lag-
gard in exposing "the aggres-
sive essence of American im-
perialism." It further cites
against them their persistence
in dwelling on Stalin`s vices
to the neglect of his virtues.
After the 20th party con-
gress, Problems of History, led
by its ep~uty editor N.
Burdzhalov, was in the forefront
of the movement to rewrite So-
viet history in the light of
the implications of the attack
on Stalin. For several months
the magazine appeared to have
official sanction, Numerous
revisions of long-standing his-
torical dogmas were undertaken
in its pages. Some of these
points obviously disturbed the
more conservative elements
within the historical fraternity
and were never accepted as valid
elsewhere in the Soviet press,
e.g., the contention that Stalin
had joined frith the anathematized
Kamenev in opposing Lenin's
191? program for seizing power,
and the suggestion that the
postwar Soviet Union was not
entirely innocent of anti-
Semitism.
been continued from many sides
ever since.
Besides taking issue with
the historical journal on specific
points of interpretation, this
criticism produced numerous
general charges with plainly
political overtones: Problems
of History was said to be guilty
o~ a~i ste and sensationalism;'
of wanting to "revise every-
thing," of sowing intellectual
confusion and overlooking the
danger of "ideological disarma-
ment." Burdzhalov was accused
of arrogance in setting himself
and his journal up as the supreme
interpreter under the new dis-
pensation in history writing,
and, perhaps most seriously, of
having said, "We historians have
no one to give us directives of
principle and instructions."
The indictment against the
historian-editors was summed up
recently by F. V. Konstantinov,
a top-ranking propaganda and
agitation official of the cen-
tral committee`s apparatus. On
14 June he asserted: "Serious
mistakes have recently been
uncovered in the teaching of
the history of the party. Un-
der the banner of the struggle
against the cult of the per-
sonality of Stalin, the Lenin
principles of pasty-mindedness
in the science of history were
violated."
Faced with continuing
ideological ferment within the
Sino-Soviet bloc and evidence
On 30 June 1956, respond- ~ of "unhealthy" tendencies among
ing to the Poznan riots and the its own intellectuals, the So-
dislocations among foreign Com- ~ viet regime has, in this in-
munist parties, the Soviet party ! stance, abandoned "persuasion"
central committee issued a reso- ~ in favor of an emphatic gesture
lution which attempted to re- I of authority. Similar though
store safe limits to the de-
Stalinization process. In the
following month, the party
journals Kommunist and Party
Life began a criticism of
ProT~lems of History which has
less extreme measures have been
taken recently against Soviet
writers, some of whom had also
understood the moving away from
Stalinism to mean release from
party guidance.
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SOVIET JET MEDIUM BOMBERS. DISPLAY REFUELING CAPABILITY
Two BADGER (TU-16) jet
medium bombers demonstrated
aerial refueling in rehearsal
fly-bys on 13 and 18 June for
the Moscow air show.
In the 13 June demonstra-
tion, a flexible hose was al-
ready connected between the
wingtips of the tanker and re-
ceiver aircraft ~~hen they. ap-
proached Tushino airfield.
There was a cone-like fitting
which trailed about 10 feet
aft of the receiver port wing.
The hose was disconnected and
reeled into the tanker during
the demonstration. In the 18
June demonstration, the hose
became disconnected and fell
to the ground.
BISON jet heavy bombers
demonstrated aerial refueling
in a rehearsal on 1 June but
used the probe-and-drogue sys-
tem.
The hook-up--which was not
demonstrated in the rehearsals--
was probably that described in
the 7 April 1957 issue of So-
viet Aviation. The tanker air-
c~t lets out a cable which
is secured by a contact ring
in the wing surface of the re-
ceiving aircraft. The cable,
which is attached to the re-
fueling hose, is then reeled in
by a winch until the hose en-
ters the receiving chamber of the
aircraft being refueled. Fol-
lowing refueling, the hose is
uncoupled and reeled back into
the tanker aircraft, apparently
as demonstrated.
The 31 May 1955 issue of
Red Star, which contained a dis-
cuss~-of in-f light refueling
for a 154,000-pound aircraft--
the approximate weight of the
TU-16--describing this system,
stated that it was "considered
obsolete even though it is still
in operation." An earlier ar-
ticle indicated that the sys-
tem was in use in the USSR by
the end of .1954. It is likely
that the more satisfactory
probe-and-drogue system which
has been successfully used by
BI5ONS will eventually be
adapted to the TU-16.
Although one in-flight re-
fueling could increase the TU-
16's range capability by as
much as 35 percent, it would
not permit two-way missions
against the continental United
States from Soviet bases. On a
one-way mission with one in-
flight refueling, a TU-16 fly-
ing from the Chukotsk area
could cover about 65 percent of
the United States with a 10,000-
ponnd bomb load.and nearly all
of the United States with a
3,500-pound bomb load. Without
in-flight refueling on a one-
way mission, the TU-16 could
cover only 40 percent of the
United States with a 10,000-
pound bomb load and about ?0
percent with a 3,500-pound bomb
load.
jointly with OSI)
Continuing Egyptian diffi-
culties in commercial dealings
with Soviet bloc countries have
given rise to unconfirmed press
reports of a rift between Mos-
cow and Cairo over trade prob-
lems. However, Egyptian trade
policy toward the bloc remains
unchanged. Meanwhile, the ex-
tensive increase in Egypt's
total trade with the bloc ap-
parently has become a serious
cause for concern in some Egyp-
tian circles.
According to trade sources,
rising prices of Soviet goods
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CURRENT INTELLIGENCE WEEKLY SUNNARY
have more than offset the bene-
fits of the high prices which
the bloc is paying for Egyptian
cotton. Egyptian officials re-
portedly are dissatisfied with
the quality of wheat and petro-
leum from the USSR and delays
in their delivery, as well as
with the Soviet tactic of buy-
ing Egyptian cotton at artifi-
cially high prices, which they
feel have eliminated traditional
Western customers from the mar-
ket. Another cause of dissen-
EGYPT+S
TRADE WITH
USSR
iu~wur - ~
~uoMS .~ oouuts
UNCLASSIFIED
3.3 3~9
__
ocrotT w~oRT Exrom uMra~tT
1956 1957
sion cited by the press is that
Satellite countries with which
Egypt has sizable credit bal-
ances are reportedly behind in
deliveries of industrial and
manufactured goods badly needed
by Egypt.
Egypt?s difficulties in
marketing this year's cotton
crop have probably been aggra-
vated by Soviet bloc sales of
this commodity to Egypt's cus-
tomary buyers at prices lower
than Egyptian prices, In early
June, the German ambassador in
Cairo informed American embassy
officials that West Germany was
purchasing 50 percent of its
Egyptian cotton imports from
the Soviet bloc and Trieste.
Egypt's total trade with
the Soviet bloc has increased
tremendously in recent months.
During the first two months
of 195?, this trade reached a
total value of 23,508,000 Egyp-
tian pounds ($65,422,000)--
twice that for the same period
in 1956--and accounted for 50
percent of total Egyptian trade.
Trade with the USSR alone dur-
ing the first four months of
1957 rose ten times in value
over the comparable period of
1956. Egyptian exports amounted
to $35,100,000 compared to $3,-
360,000 for the same period
of 1956. Imports from the
USSR were valued at $32, 631, 823,
while 1956 imports during the
same period were only worth
$3,920,000.
Some Egyptians both inside
and outside the government are
becoming alarmed over Egypt's
increased dependence on bloc
trade, and, according to the
American embassy in Cairo, many
hope that the economic orienta-
tion toward the Soviet bloc will
be substantially slowed, if not
reversed, President Nasr has
repeatedly stated that only
economic necessity has compelled
him to deal with the Soviet
bloc, and he recently reiterated
to Ambassador Hare his desire
not to become "too closely
identified with the Russians."
A return to a more normal
trade pattern would not neces-
sarily reflect a deliberate
Egyptian policy to reduce
trade with 'the bloc. The
clearing of the Suez Canal has
reopened access to ~;gypt's tra-
ditional Asian markets and will
provide Egypt with increased
foreign exchange. In addition,
the suspended British-Egyptian
financial talks are expected
to resume and will probably
result in the eventual release
of some funds from Egyptian
sterling accounts for purchases
from free world countries, thus
reducing reliance on trade
with the bloc. 25X1
(Prepared by O
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CURRENT INTSLLIGSNCS WSSKLY SUMIiARY
Saudi Arabia is facing a
financial crisis. Its rial was
quoted in early June at the low-
est rate in the memory of free
market traders in Beirut. Of-
ficially, the rial is worth about
26 cents. However, since the
shutdown of the Suez Canal and
the subsequent sharp reduction
in Saudi crude oil production,
the rial fell to about 22 cents
in April and to about 19 cents
in early June.
Recognizing the seriousness
of the situation, King Saud in-
tervened personally on 31 May by
scheduling an economic-f inancial
conference for the first week of
June to discuss the serious
shortage of hard currency--es-
peciallq dollars--and the lack
of domestic investment. On the
latter issue, King Saud emp~a-
sized that Saudi citizens should
invest their money in local pro~-
ects rather than abroad.
The Saudi government bas
already resorted to extraordinary
borrowing--a $44,000,000 loan
guaranteed by Aramco--in order to
merge up for the sharply rdduced
oil revenues. Despite this loan,
government finances continue to
be critical.
The Saudi import ban im-
posed in early April continues
and all imports must be covered
by an import license. In antic-
ipation of increased demand,
Saudi wholesalers--especially of
foodstuffs--are bolding their
stocks, as they expect sharp
price rises in the nest few
weeks. This action alone is al-
most certain to result in higher
prices. The government, which
often spends its funds capric- 25X1
iously and extravagantly., is try-
ing to find a culprit for the
25X
The actual total revenue
loss caused by the Suez crisis
will probably exceed $100,000,000.
This loss can be expected to give
impetus to Saudi requests that
Aramco and other foreign firms
participate in developing the
country's economy.
The Saudis reportedly
have suggested that Arab capital
be used in the construction of
new pipelines in the area. A
Japanese petroleum mission which
visited Saudi Arabia this spring
is reported to have interested
Japanese business groups in
exploring for oil in four areas
of Saudi Arabia outside of the
Aramco concession.
25X1
Prime Minister Subrawardy's
visit to Kabul from 8 to 11 June
furthered the trend toward better
relations between Pakistan and
Afghanistan. The wisit began in
a rather cool atmosphere but by
its close both countries had
made concessions. They agreed
to exchange ambassadors again to
replace the ones withdrawn fol-
lowing the mob attacks on the
Pakistani embassy in Habul and
the Afghan consulate in Pes~a-
war in early 1955. This move,
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following the reopening of the
Pakistani consulate in Jalala-
bad in March 195?, was the fi-
nal action necessary to restore
normal diplomatic relations.
The two nations also
agreed to hold trade talks fol-
lowing the completion of Indian-
Afghan trade negotiations on
14 June, and a group of Paki-
stani officials arrived in
Kabul on 13 June to negotiate
a bilateral air agreement. In
addition, Karachi and Kabul
are preparing to co-operate
with a group of American trans-
portation specialists who are
to conduct a survey on means
of improving transportation
between the two countries.
The official communiqud stated
that the two nations will co-
operate in the United Nations,
a statement which both sides
interpret as Afghan support
for Pakistan on Kashmir,.
Suhrawardy believes he was
successful in inducing the Af-
ghans to continue to play down
the Pushtoonistan issue. He
pointed out that no Pakistani
government could deal with the
issue until after the general
elections scheduled for March
1958.
Suhrawardy conceded that
Afghanistan's policy of neutrali-
ty enables it to draw assist-
ance from both the Soviet and
the free world, but he feels
that this is the best the free
world can do for the present.
Daud took the unusual step of
making a radio speech from
Kabul stating that he .was
pleased with the progress of
Afghan-Pakistani relations.
The series of official visits,
which
began
with President Mir-
za's
visit
to
Kabul in August
25X1
of 1956, is
to
be continued when
King Zahir
Shah
visits Karachi
Pakistani prime minister
Suhrawardy emerged from a mayor
test of strength with Maulana
Bhashani, his pro-Communist
rival for leadership of the
Awami League in East Pakistan,
with an overwhelming endorse-
ment of his pro-American for-
eign policy and solid control
over the provincial party or-
ganization. The nearly unani-
mous support accorded by the
council of the East Pakistan
Awami League (EPAL) at its
meeting in Dacca on 13 and 14
June will do much to consoli-
date the prime minister's po-
litical base in the eastern
province.
Bhashani's future role,
either within the Awami League
or as leader of a new opposi-
tion party, is not finally re-
solved. While Suhrawardy has
gained the upper hand over
Bhashani and his followers in-
side the EPAL, Bhashani's fac-
tion will probably continue
to have the capability for sub-
verting the authority of the
national government in East
Pakistan by co-operating with
leftist elements outside the
Awami League.
Capitalizing on Bhashani 's
proffer last March to resign
as president of the EPAL, Suh-
rawardy's supporters during the
past two months had succeeded
in forcing the suspension of
10 prominent leaders of the
pro-Bhashani group and had re-
placed them on the working com-
mittee with pro-Suhrawardy mem-
bers. Bhashani's efforts dur-
ing this period to attract sup-
port by appeals for a neutral
foreign policy, for increased
regional autonomy, and for
drastic action by the govern-
ment to solve the food problem
evidently met with little suc-
cess.
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CURRENT INTELLIGENCE .WEEKLY SUMktARY
As the recent meeting of
the 800-man council of the EPAL
convened to act on the party
crisis, a Suhrawardy bandwagon
apparently began to roll.
Only 46 of the roughly 800
present opposed the resolution
endorsing Suhrawardy's foreign
policy. Action by a similar
tally was taken to ratify the
expulsion from the provincial
party of the IO pro-Bhashani
members. With regard to the
popular Bengali leader himself,
however, the council authorized
the working committee to ap-
proach Bhashani to withdraw
his resignation.
Suhrawardy would prefer
to keep Bhashani within the
party framework if feasible,
since Bhashani's mass following
in East Pakistan is far greater
than his own. In this way the
prime minister probably feels
that the Awami League could
continue to profit from
Bhashani's reputation as a
champion of the down-trodden
while forestalling any attempt
on his part to unite extreme
leftist groups on a nationwide
basis into a powerful opposi-
tion party. Suhrawardy report-
edly also fears that the Bha-
shani faction would be capable
of preventing orderly admini-
stration by the government in
East Pakistan.
Bhashani, on his part,
probably will be unwilling to
remain for long in the Awami
League under conditions which
make him a captive of the Suhra-
wardy faction. He apparently
intends to make no immediate
move, but may launch a new
opposition movement once his
reported negotiations with
leftist leaders from West Paki-
stan are completed and the time
is considered right to open a
joint attack against the gov-
S~~G'~ET
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CURRENT INTELLIGENCE WEEKLY SUII(MARY
The Indonesian cabinet's
weak resistance before accepting
President Sukarno's list of
candidates for his national ad-
visory council has resulted in
another step toward Sukarno's
"guided democracy" and a defeat
for moderate elements in the
central government. The member-
ship, which is largely composed
of leftists-and followers of
Sukarno, has been criticized
by two major non-Communist po-
litical parties, which are re-
ported contemplating obstruc-
tive action. The resources of
anti-Sukarno forces in Java are
limited, however, and barring
army intervention in support
of these parties against
Sukarno, no effective action
is likely.
25X1
The direction of army
loyalties in East Indonesia re-
mains unclear, but it appears
certain that army chief of
staff General Nasution will
proceed with the reorganization
of the area into four commands
without resistance from the
officer corps there. The for-
mer commander of East Indonesia,
Lt. Col. Sumual, is still in
Makassar, however, although
Nasution apparently plans,
when such a move appears pos-
sible without aggravating dis-
affection in the area, to trans-
fer him to Djakarta or perhaps
out of the country.
Local elections in Djakarta
for a 45-seat city council on
22 June will be the first in a
series of nationwide pro-
vincial elections planned for
this year and the early months
of 1958. The Communist Party
has been working hard to im-
prove its showing since the
national elections of 1955,
when it ran a poor fourth in
Djakarta, and some sources are
predicting it will win a plur-
ality of the votes, Its cam-
paign has undoubtedly received
impetus from Sukarno's encour-
agement of extensive Communist
activity in support of his con-
ce t of uided democrac ."
25X1
KATAY DEFEATED IN BID FOR LAOTIAN PRIME MINISTERSHIP
The proposed government
of Nationalist Party leader
Ratay failed, by one vote, to
win the necessary two-third's
approval in the Laotisn as-
sembly on 20 June, according
to a late and incomplete press
report. The government was
based on an alliance of the
Nationalist and Independent
Parties--the two leading par-
ties in Laos--and had proposed
a firm policy in future negotia-
tions with the Pathet Lao.
~EC~ 1
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CURRENT INTELLIGENCE WEEKLY SUMMARY
20 June 1957
Katay's defeat is expected to
lead to a period of extreme
political uncertainty.
Independent Party leader
Phoui Sananikone will probably
be designated by the crown
prince as the next cabinet form-
ateur. His prospects for at-
tracting the necessary addition-
al support to the Independent
Nationalist alliance are not
bright. In the event Phoui
fails, there is a distinct pos-
sibility that the vacillating
Souvanna Phouma will succeed
himself as prime minister.
Katay's defeat is a victory
for the Pathet Lao, which had
launched an intimidation and
prdpaganda campaign to block
his efforts. The Pathets will
now continue to work for the
return of Souvanna.
25X1
THAI LEGISLATIVE SESSION MAY BE CRUCIAL FOR GOVERNMENT
As the Thai National As-
sembly prepares to convene on
24 June for its annual session,
there are reports that elements
supporting Marshal Sarit, the
powerful defense minister and
army chief, may try to unseat
Premier Phibun by means of a
no-confidence vote.
Despite Phibun's protesta-
tions to the press recently that
relations between Sarit, In~-
terior Minister Phao, and him-
self "were perfect," there are
indications pointing to a con-
tinuation of the split in the
ruling triumvirate, with the
premier siding with Phao in an
effort to check the growing
power. and popularity of Sarit.
Phibun's remark dua~ing the same
press conference that Sarit
"hates politics" is belied,
moreover, by the increasingly
active political role the de-
f ense minister has played ever
since the postelectoral crisis
in early March.
Should Sarit decide to pro-
mote a no-confidence motion in
the assembly, it would be spear-
headed by ~, new opposition po-
litical party whose formation
he encouraged and which has an-
nounced its intention to regis-
ter under the Political Parties
Act prior to convocation of the
assembly. .Its nominal leader
claims that 10 or 12 members
of the ruling Seri Manangkhasila
Party will support his group.
He hopes~he will have mustered
about 30 members in the assembly
by the time the legislative ses-
sion begins. Sarit probably
could also count on the. votes
of a large percentage of the 111
appointive members of the 271-
member assembly, in addition to a
substantial number of votes from
other opposition members.
Although Sarit appears to
be in a good position to over-
throw Phibun, there are a number
of factors, including his poor
health, which would tend to
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CURRENT INTELLIGENCE WEEKLY SU:M~IARY
restrain him from making such
a move. He would probably have
to take preparatory steps which
would be tantamount to a blood-
less coup in order to guard
against possible violent coun-
termeasures on the part of Phao,
who would scarcely submit to
political extinction without a
fight. Sarit would also expose
himself to charges of treachery
in view of his constant reitera-
tion of personal loyalty to
Phibun. Finally, Sarit undoubt-
edly fears the political agility
of Phibun, who on more than one
occasion has extricated himself
from seemingly impossible situa-
tions.
Regardless of what course
Sarit takes, the impending Na-
tional Assembly session promises
to be lively, with the govern-
ment facing a considerably
larger and more articulate op-
position as a result of the 26
February elections.
CHOU EN-LAI CALLS HONG KONG "OBSTACLE" TO PEACE
Chou En-lai recently com-
plained to a visiting member
of the British Parliament that
Taiwan and Hong Kong constitute
the two greatest "obstacles"
to peace in Asia. Chows re-
marks contained no threats,
but he implied that American
activities in the colony are
jeopardizing Sino-British re-
lations. Chou apparently
hoped to leave the impression
that British authorities would
have to curb American representa-
tion and activities in ?t he
colony if the status of Hong
Kong were to be preserved,
In its charges of American
air violations off the south-
east China coast near Swatow
on 12 June, Peiping said the
alleged intrusions took place
just after the American carrier
Hornet had left Hong Kong en
route to the Taiwan area.
Peiping will probably also
make capital of the disclosure
in Hong Kong last week that the
British had permitted the re-
turn to Taiwan of a Chinese Na-
tionalist pilot who had taken
refuge in Hong Kong after being
attacked by Communist fighters
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CURRENT INTELLIGENCE WEEKLY SUMMARY
over the mainland in January
1956. At the time Peiping
heatedly demanded that the
British intern the American-
built aircraft and the pilot.
In deference to Peiping's de-
mands, the British held the
plane for more than a year, but
Hong Kong officials announced
last week that the plane was
shipped back to Taiwan in March.
Peiping is not likely to
demand early recovery of the
colony. Peiping has little to
gain economically in the re-
covery of Hong Kong. To Com-
munist China, a Hong Kong in
British hands is an important
source of foreign exchange
earnings. In 1356, Communist
China had a favorable trade
balance with Hong Kong of
$157,800,000.
The Chinese Communists
view Hong Kong as a valuable
link with the Overseas Chi-
nese in Southeast Asia. Ap-
SFK KC:^+'G
n lrfl.,~d
f`1 c'~ ~l ~.. Railroad -Selected road
.-'/~ ro ro~ c.a~. Spur bdgAe: are ~~ ket
O MILES 8
SECRET'
preciating that movie films and
other publications produced in
Hong Kong are widely distributed
throughout Southeast Asia and of- 25X1
f er an excellent channel for
propaganda aimed at the Over-
seas Chinese,
Peiping is moving ahead,
meanwhile, with its efforts to
publicize its accomplishments
and attract greater numbers of
1 ~d? t5' 114?80
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visitors from the Chinese resi-
dents of Hong Kong and Macao.
Chinese Communist civil avia-
tion representatives in Hong
Kong, who had long been inactive
in the colony, recently began
to advertise flights from Can-
ton to other mainland cities.
Peiping continues to offer at-
tractive mainland tours for
Overseas Chinese in Hong Kong
and Macao, and new facilities
have been completed in Canton
for accommodating larger num-
tiers of visitors.
25X1
Concurred in by ORR)
25X1
PEI PING RELEASES TWO MORE AMERICAN PRISONERS
Two American priests jailed
as "spies" by the Chinese Com-
munists four years ago were set
free on 14 June after serving
their full sentences. This
leaves six American citizens
still in Chinese Communist
prisons. Two whose terms ex-
pire in June 1958 will pre-
sumably be released at that
time. The four other Americans
have received sentences ranging
from 15 years to life, however,
and the Chinese evidently in-
tend to use them as political
hostages.
The repatriation agree-
went reached by Ambassador John-
son and Communist negotiator
Wang Ping-nan at Geneva in Sep-
tember 1955 provided for the
"expeditious" release of all
nationals. Peiping has insisted
that American "criminals" are
not covered by the agreement,
however, and must serve out
their terms "in accordance with
Chinese law." Since late 1955,
the only prisoners released
have served their entire sen-
tences. Chinese Communist
spokesmen have repeatedly in-
dicated that Peiping would con-
sider commuting prison sentences
for "good behavior," but only
if concessions were forthcoming
from the United States,
Peiping wants American
agreement to a meeting of for-
eign ministers, relaxation of
US controls on China trade,
and acceptance of Chinese Com-
munist proposals for a "cul-
tural interchange" with the US.
Last February, when reporters
brought up the prisoner issue
during a press conf erence, Chou
En-lai commented angrily that
the nations of Asia should
bring pressure on Washington
to change its attitude toward
Communist China.
In addition to their po-
tential usefulness in future
bargaining, the prisoners ap-
parently are being retained in 25X1
order to assure continuation
of the Johnson-Wan talks at
Geneva.
25X1
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CURRENT INTELLIGENCE WEEKLY SUM)I~ARY
20 June 1957
The demand by about 50,000
Chinese in South Vietnam for ex-
patriation to Taiwan appears to
be a tactic inspired by the
Chinese Nationalists to force
President Diem to modify his de-
tree imposing Vietnamese citizen-
ship an a11~1ocally born Chinese.
The Chinese legation has insisted
that each expatriate be allowed
to take with him up to $2,000
and has stated that no more than
2,000 persons per month could be
absorbed on Taiwan. The pros-
pect of a large drain on Saigon's
limited foreign exchange as well
as the threat of a diplomatic
rupture seem to be levers by
which Taipei hopes to achieve a
solution to the citizenship prob-
lem on its own terms.
Taipei is concerned that any
repatriation of Chinese in South
Vietnam would serve as a prece-
dent and encourage other South-
east Asian countries to follow
I?iem's example in dealing with
their Chinese minorities.
South Vietnam will probably
recognize the Nationalist repa-
triation conditions as a diplo-
matic maneuver and reject them
as such. Diem will almost cer-
tainly maintain pressure on
Taiwan for a speedy settlement
of the citizenship question on
his terms. Procrastination by
the Nationalists in implementing
repatriation of local Chinese may
therefore further embitter the
strained relations between the
two countries and prolong an
atmosphere conducive to fresh
outbreaks of violence. Local
observers have repeatedly pointed
out that such a situation is bene-
ficial only to the Chinese Com-
munists, who are already conduct-
ing a propaganda campaign accus~-. ,
ing the United States of sponsor-
ing Saigon's policies and accus-
ing Taipei of "selling out" the
interests of the Overseas Chi-
nese.
25X1
THE NEW MILITARY REGIME IN HAITI
The military regime of army ~ tivity has become apparent dur-
chief of staff Bra madier G-; neral
Antoine i{ebreau, wio ousted pro-
visional president Daniel Fignole
on I4 June, probably has a better
cizance of maintaining control
than any preceding government in
the past six months. No group
now appears strong enough to
overthrow the military govern-
tnent, and Kebreau demonstrated
in the riots of 15 and 1G June
iris willipgness to use strong-
arm methods to stamp out poten-
tial threats to his regime.
T~Tevertheless, the conditions
~rhich have led to political up-
heaval in the past continue to
exist and some opposition ac-
ing the last few days.
The army, which divided in-
to warring factions during the
disturbances preceding Fignole's
seizure of power on 26 May, ap-
pears to have reunited under Ke-
breau, and most officers appar-
ently support the r~ew regime.
Fignole's open attempt to divide
and control the army just prior
to his ouster may have been in-
strumental in sparking a reuni-
fication. Although press re-
ports indicate the existence of
dissident officer elements, no
opposition activity on their part
has been noted, and iCebreau
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CUIZRENT INT.~LLIGENCL 1'JEEIi~LY SUMMARY
reportedly has warned them ) ate threats to the new regime is
against divisive attempts, ~'ig- ~ the possibility of renewed poli~_'__.
nole supporters among enlisted tical maneuvering by ambitious
men do not have access to arms presidential candidates. The
and presumably can be controlled, government has implied it will
~ support one of the two remaining
The till-military government- leading candidates, Dr. Francois
consisting of a three-member ~ Du~ralier. Supporters of the
junta and a seven-man cabinet-- ~ other, Luis Dejoie, may~accord-
will probably draw support from ingly attempt retaliatory action.
diverse elements. The junta ~ Dejoie's group, which was re-
brings together men representing sponsible for sparking the gen-
the three most important geograph- oral strikes which ousted pre-
ic areas and may thus reduce vious governments, is at present
the bitter regionalism which the greatest potential threat to
weakened previous governments. ~ the government, t~ignole's street
Antagonism over the traditionally; mobs, who continue to clamor for
bitter race issue may also have '; his return, are at present leader-
been lessened by the appointment less and probably could not
of four mulattoes to posts in thel create more than temporary dis-
idegro-led government, i orders.
One of the principal immedi-
DISSENSIQN 1wITiiIN 130LIVIAN Gt3VERNME,NT
Speeches by moderate presi-
dent Siles and key leftist la-
bor leader Juan L::chin at the
workers congress ending 15 June
accentuated differences over the
US-backed economic stabilization
program and may result in a genes-.! ing..that it had caused economic
al strike on 1 July. Support of I stagnation and low worker com-
the labor confederation--which ~ pensation.
controls the national congress
and four cabinet ministers
as
During the
last
well as organized labor--is
es~-
congress,
Lechin
led
sential to the government's
,,..osi-
faction in
passing a
tion, and failure to find ea~.1 J,
agreement would threaten both the
government's economic program and
its stability.
:and to reduce social security
contributions, which now amount
to 30 percent of the wage bill.
Lechin, on the other hand, made
a primarily political attack on
the stabilization program, say-
days of the
a majority
resolution
threatening a general strike on
1 July if agreement is not -~
reached on "just compensation"
for the workers. A minority fac-
tion in opposition to the general
Siles and Lechin agreed that !strike resolution and in support
economic stabilization must be iof wiles was led by a former
continued and that the govern- ~ Trotskyite whose previous record
went must respond to sortie e~:ient jof agitation against the economic
to ~iorker demands for increased '; program suggests that he is mo-
wages. Siles, however, empha- ~tivated by rivalry with Lechin
sized the relationship between rather than loyalty to Siles.
productivity and wa;`;es and ad-
vocated that employers be per- Gn 15 June, Lechin was re-
r~iitted to dismiss exce:;s c=aorl~ers elected to the top post in the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
labor confederation. Prior to
the congress, Siles was reported
by the US embassy as saying
that Lechin had agreed to con-
tinue in the job only after ex-
president Paz Estenssoro, Bo-
livia's most adept politician, .
had refused to replace him.
This report may show that Lechin
was willing to be replaced by
the more moderate Paz--but not
by any rivals within the labor
confederation--and that his ex-
treme-position on the stabiliza-
tion program was thus designed
primarily to ensure his re-elec-
tion rather than as a frontal
attack on Siles.
Even in this event, however,
the precarious status of the
economy indicates difficulty for
the labor-government negotiations
on a wage rise. The cumulative
SECRET
drain on the $25,000,000 stabil-
ization fund had reached $4, 115, -
000 by 13 June. While agricultur-
al production has increased sub-
stantially, productivity at the
mines, chief source of Bolivia's
foreign exchange, is 50 per-
cent below that of five years
ago. Furthermore, the in-
creased tension--exemplified by
neax riots in La Paz durinJ the
past week--has reportedly raised
fear that outbreaks of violence
may be provoked by extremists
of the right or left.
The determination of the
labor confederation to exert its
influence was shown on 18 June
when one of Bolivia's four "la-
bor" ministers resigned and two
others threatened resignations
in reported compliance with a
confederation decision.
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PATTERNS. AND PERSPECTIVES
At the Commonwealth prime
ministers' conference beginning
26 June in London--the first
since Britain's Suez adventure--
Britain faces a major job of
reviving confidence in its
leadership. Most members are.
concerned over the impact of
Britain's reduced power posi-
tion and the changes in its
traditional economic and mili-
tary policies on their own
interests.
PoliticallJy, there is a
rapidly advancing division of
the membership between the
"old" Commonwealth--Australia;
New Zealand,, and Canada--wand
the "new"--India, Pakistan,
Ceylon, and Ghana--a develop-
ment likely to be further ac-
celerated by the forthcoming
admission of Malaya and addi-
tional African territories.
Also attending the Londoa con-
ference are representatives of
the Federation of Rhodesia and
Nyasaland and of the Union of
South Africa. Britain;Rs mili-
tary strength no longer serves
to bind the Commonwealth, de-
spite the persistence of formal
arrangements for defense co-
operation.
In the economic sphere, the
advantages afforded to the
other members by participation
in the sterling area have been
reduced. As a result of these
trends, which have accelerated
with the relative contraction
of Britain's economic and
military capacities, Britain's
position as "first among equals"
within the Commonwealth has been
severely weakened.
Many observers agree with
the view expressed by a Common-
wealth Relations Office official
at the height of the Suez
crisis that the Commonwealth
may eventually break up "in
substance, if not in form."
The regional interests of manq
of the members increasingly
compete with their obligations
to the Commonwealth, and
nationalism and neutralism are
weakening the appeal of the
Commonwealth ideal for the
Asian members. Britain itself,
under the pressure of its con-
tinuing economic crisis, is
abandoning its traditional
attitude that its Commonwealth
position precludes political
and economic commitments to
Western Europe, and now argues
that such ties would comple-
ment, and,in the long run,
strengthen. the Commonwealth.
Economic questions there-
fore bulk large among issues
for general discussion;.~by the
ten countries participating.
There is general concern on
the part of the other members
as to the effect on their
interests of Britain's plan
for a free trade area linkigg
the United Kingdom to the pro-
jected European Common Market.
India in particular has
.already complained about the
Common Market to the treaty
signatories as, among other
things, raising a threat to
its export position, especially
in the African colonial terri-
tories. It may raise a similar
objection at the London con-
ference. Australia and New
Zealand also evidently intend
to insist that any final
arrangements made by Britain
must not conflict with their
long-standing interests in
the United Kingdom market.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
20 June 195?
Britain will also be sub-
jected to questioning of its
new defense policy of relying
principally on the nucle~.r de-
terrent. There has been public
speculation in Australia and
New Zealand that Prime Ministers
Menzies and Holland will seek
assurances that Britain will
continue to ma3~e pxov~Lsion for
its obligation t4 SEATO and
they .will wish to discuss the
strategic situation of Malaya
after independence. India,
Ceylon, and probably Ghana, may
be expected to press Britain
to seek agreement on an im-
mediate end. to nuclear tests,
and India and Ceylon will pre-
sumably canvass once again
their arguments against Brit-
ain's involvement in the Bagh-
dad pact and SEATO.
Among subjects to be dis-
cussed bilaterally outside the
main conference, the Kashmir
question reportedly will be
raised with Prime Minister Nehru
by Pakistani prime minister
Suhrawardy. Possibly as a
bargaining device, Suhrawardy
has apparently let it be re-
ported that he may wAlk out of
the conference if he does not
receive the backing he expects
from Britain and other members.
As in past Commonwealth con-
ferences, Canada and Australia
will probably attempt tc5 get
some agreement on a method by
which a Kashmir solution could
be sought.
Ghana's Role
Ghana's participation is
apparently regarded in London
as presenting special problems.
The American embassy in Accra
reports that prime Minister
Nkrumah has not revealed what
role he intends to play, but
will presumably wish to raise
the question of financing the
huge Volta River hydroelectric
and bauxite mining project in
bilateral talks with the Brit-
ish.
London is apparently con-
sidering making an offer con-
siderably less thaw would be
necessary for Ghana to proceed
with the full project, although
British officials in the past
have warned that Nkrumah might
eventually try to emulate Nasr
in seeking Soviet aid.. In any
case, Britain will presumably
urge other memher~ to .find
occasion to approach Nkrumah
informally on the question of
relations with the Soviet
Union and the nature of world
Communism. .
Ghana's presence at the
conference as the first of a
number of native African
territories such as Nigeria
which will eventually accede
to membership also casts a
further strain on South Africa's
participation. As a symptom
of South Africa's attitude,
Prime Minister Strijdom is
sending a deputy, Foreign Secre-
tary Louw, to represent him.
To a much lesser degree, the
representative of the Federation
of Rhodesia and Nyasaland,
where some resentment exists
because of Ghana's success in
obtaining its independence, may
also display some reserve to-
ward Nkrumah.
Britain's Approach
Macmillan's first task
will be to restore the confi-
dence in Britain's judgment
and good intentions which was
shaken by London's action last
October in ignoring the inter-
ests of its Commonwealth part-
ners. The prime minister's
recent public statements suggest
that he will seek to quiet
their fears of radical revisions
in British policy being under-
taken without consultations,
and to convince them that the
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SECRET
constructive possibilities for
the Commonwealth have not been
essentially altered by the
changes in Britain's circum-
stances.
Macmillan may be expected
also to emphasize the importance
of the economic interests still
shared among the Commonwealth,
and may follow the line taken
earlier by President of~the
Board of Trade Eccles in calling
for Commonwealth support of
Britain's free trade area pro-
posals as a means of heading
off-.the potential threat of
West German domination of the
European Common Market.
As in the past, Britain
will probably pay special at -
tention to the attitude of
Nehru. The American embassy
in New Delhi reports that the
doubts Nehru publicly expressed
about the Commonwealth last
winte::? may have revived, and
that he may be approaching the
conference in a spirit of re-
assessment of the value to
India of the Commonwealth con-
nection. Despite recent fric-
tion, however, London still
attaches importance to Iudia's
membership.
One gesture Macmillan
might make is to respond :to
some recent semiofficial urging
in the United Kingdom and sug-
gest that the prime ministerfi
consider the possibility of
25X1
Japan'`s balance of pay-
ments difficulties have become
serious. The drain on foreign
exchange reserves has been ap-
preciable this. year as a result
of an increase of imports to ex-
pand industrial facilities.
Government countermeasures,
primarily credit restrictions,
have not controlled the import
and expansion boom which has.
persisted despite a ti ht money
market. T'he head of t~e gov-
ernment's Economic Planning
Board has warned that unless
effective steps are taken, the
deficit will reach $420,000,000
this fiscal year. On 14 June,
the cabinet adopted a new pro-
gram which it hopes will re-
store small monthly surpluses
by the end of December.
From January through Ma,y,
international payments exceeded
receipts by $235,000,000; let-
ters of credit already opened
indicate that an additional
$200,000,000 to $300,000,000
will be added to this deficit
in the next few months. For-
eign exchange holdings have
been reduced by $400,000,000
during this period and net
spendable reserves are ex-
pected to be down to $150,000,-
000 by September.
With the exception of
1953, Japan has had a favorable
balance of payments each year
since 194?. Special dollar
purchases by the American gov-
ernment and military personnel
in Japan were largely respon-
sible for converting the
country's perennial trade
deficit to a favorable over-all
balance of payments. These
purchases have been reduced
since the end of the Korean
war, but still have exceeded
$500,000,000 annually since
1954 and are continuing at the
same rate in 1957. The reversal
in Japan's payments position,
therefore, is caused mainly by
a large increase in imports
S~'G'RET
holding their future meetings
in other Commonwealth capitals
as a: symbol of Commonweal h
equality and unity. 5X1
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CURRENT INTELLIGENCE WEEKLY S Z?l
20 June 1957
without a correspond-
ing expansion of ex-
ports.
In 1956, Japan
set all-time records
for imports, $3 .2
billion, and for ex-
ports, $2.5 billion.
During the first five
months of 195?, im-
ports again increased
by 24 percent while
exports were only 11
percent higher. The
May trade deficit,
$97,000,000, set a
new monthly high.
Many of Japan's
industrial facilities
are antiquated and
inefficient and do
JAPAN'S BALANCE OF PAYMENTS
(MILLIONS OF DOLLARS )
not give it a truly 20 JUNE 1957
competitive position. Former
prime minister Ishibashi advo-
cated using the receipts earned
during prosperity to modernize
equipment and production tech-
niques, thereby enabling Japan
to compete in a period of
lower prices as well. Govern-
ment economists and finance
officials, however, alarmed by
the rapid loss of foreign ex-
change and by-the flow of in-
vestment funds into unessential
and~nonexport industries, are
TOTAL JAPANESE TRADE
(MILLIONS OF DOLLARS)
461
(38~4~
1135
(94.50)
T
(64
i
3230
7~9
(6076)
sECRJ~T
494
70617-2
anxious to curtail the size of
industrial investment.
Uncertainty with regard to
the continued availability of
ample supplies of raw materials,
particularly of minerals and
metals for heavy industry, has
caused speculative purchasing.
This is especially true of
Japanese scrap iron purchases
from the United States, which
are limited by the scarcity of
amounts available for export.
1957
157 FIVE
MONTHS
Since Japanese
industrial expansion
has not been balanced,
bottlenecks have de-
veloped in rail trans-
port, electric power
generation, and the
iron and steel in=
dustry. The govern-
ment is attempting to
channel both public
and private funds into
these critical areas
and hopes to finance
power projects by ob-
taining loans from
the World Ba,.axk and
from proceeds of
American surplus com-
modities sales in
Japan.
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SECRET
CURRENT 'INTELLIGENCE WEEKLY BDMtI ~ ~
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a sosT"rUrc MDOFS t ++++ Under construcTion or projected Secondary roads
25X1
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the President to employ military
forces in the Taiwan area at
his discretion. These politi-
cal moves were underscored in
February when the largest Ameri-
can naval talk force assembled
in Far Eastern waters since the
Korean war covered the National-
ist evacuation of the Tachen
Islands.
Shift to Psychological Warfare
The Chinese Communists al-
most certainly regard American
power as the only effective
obstacle to their plans for the
conquest of .Taiwan. Lacking
military means to eject the
United States, Peiping turned
to psychological warfare in an
effort to bring about the even-
tual withdrawal of American
.support for Chiang Kai-shek.
For the past two years,the
Chinese Communists have worked
to encourage Nationalist de-
fections, to depress morale
on Taiwan, and to drive a wedge
between Taipei and Washington
by arousing suspicions and
ill feeling on both sides--
using the "peaceful" weapons
of propaganda and subversion.
The Communists, at the
same time, have continued to
improve their military capa-
bilities opposite Taiwan against
the day when they believe them-
selves free to dispose of the
Nationalists without interfer-
ence. Chinese Communist forces
now in position opposite Taiwan
could be used to assault the
Nationalist-held offshore is=.
lands with little or no warn-
ing. Peiping might come to be-
lieve that such a move would
place additional strain on re-
lations between Taipei and
Washington without involving
substantial risk of American
military retaliation. The Chi-
nese Communists have avoided
linking the offshore islands
with Taiwan in their "libera-
tion" statements and have peri-
odically harassed Nationalist
island garrisons with artillery
fire.
Peiping's basic tool in
the campaign for "peaceful
liberation," however, is a mas-
sive propaganda effort aimed
primarily at middle- and lower-
level officials in the National-
ist government. Mainland radio
stations now broadcast approxi-
mately 13 hours per day to Tai-
wan. Nationalists at all levels
have received letters from rela-
tives and former friends still
in Communist China urging them
to come "home."
Fundamental Communist
propaganda themes are "patri-
otic" appeals to Chinese na-
tionalism through accounts of
achievements by the "new China"
and anti-Americanism. Offers
of amnesty and good treatment
have been periodically extended
to all Nationalists, including
Chiang Kai-shek himself --who
was publicly referred to last
February by Chou En-lai as "my
old friend."
Early in 1956 Peiping be-
gan to make extensive use of
rumors about alleged negotia-
tions between the Communists
and high-level Nationalists.
Peiping apparently wished. to
stimulate fears of a "sellout"
both among the Nationalist rank
and file and officials in Wash-
ington. The most popular tar-
get has been Chiang Kai-shek's
powerful elder son Chiang Ching-
kuo, long an object of suspicion
in some quarters because of
his Russian wife and early So-
viet training. In a major
policy statement last June,
Chou En-lai, declared Peiping's
willingness to discuss specific
terms for a settlement with the
"Taiwan authorities" and~inv~i~ed
them to send representatives
to Peiping "or other appropriate
place" at a time "convenient
to them."
Talk about negotiations
has been kept alive by hints
? dropped to foreign visitors in
Peiping and by reports planted
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in the press--some outlining
specific terms for an alleged
settlement. A fresh spate of
such stories appeared in Feb-
ruary this year. Mao Tse-
tung's public comments about
the possibility of a "third
co-operation" between the Com-
munists and the Kuomintang in
conversations with Voroshilov
in April appear calculated to
give them a semblance of truth.
In February, Peiping be-
gan to place increasing em-
phasis on anti-American themes
and has been attempting to
foster doubts in the minds of
Nationalist leaders by portray-
ing the United States as an
unreliable and self-serving
ally. In a major speech on 5
March, Chou En-lai charged that
the United States was seeking
to overthrow Chiang Kai-shek
and turn Taiwan into an Ameri-
can colony "like Honolulu" by
supporting pro-American ele-
ments on the island.
This theme was reiterated
during May in propaganda con-
cerning the decision to sta-
tion a Matador missile unit on
Taiwan, which Peiping labeled
a move to "stiffen the backs"
of pro-US cliques and thus to
obstruct negotiations leading
to unification of Taiwan with
the mainland. Since the Tai-
pei riots on 24 May, anti-
American themes have been the
staple in Peiping's propaganda.
The Chinese Communists
have no doubt taken heart from
newspaper accounts of a Chi-
nese mob sacking the American
embassy with the alleged con-
aivance of at least some Na-
tionalist: officials. and re-
ports that students jailed
during the riots were given a
"hero's welcome" when they re-
turned to their classes. Pei-
ping will almost certainly in-
terpret the incident as evi-
dence that an exploitable base
of anti-American f eel~;ng is
developing on Taiwan and that
desperation and irresponsible
factionalism are growing in
the Nationalist leadership.
Chou En-lai stated in
March that "more and more mili-
tary and administrative person-
nel in Taiwan are willing to
bring about peaceful libera-
tion," and Peiping probably
regards the recent disorders
as confirmation that its cam-
paign is making progress. The
Chinese Communists will be
encouraged to redouble their
efforts for "peaceful libera-
tion"--the volume of Chinese
Communist propaganda on this
The twists and turns of
thought about. the :role of
literature in Soviet society
voiced by Konstantin Simonov,
prominent Soviet writer and
editor of the literary monthly
Novy Mir, illustrate the dif-
ficulties Soviet career intel-
lectuals face in a country
where "creative" writing is a
political art and must conform
with government policy.
After Stalin's death, in-
creasing numbers of Soviet in-
tellectuals began to interpret
rather liberally the relaxation
in the regime's control of
literature, music and arts which
was part of the general "thaw"
of 1953. By mid-1954 the regime
had begun again to restrict the
limits of permissible freedom
of expression for creative art-
ist~, particularly writers, while
SECRET
issue has already increased.
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CURRENT I NTELLIGENCE WEEKLY SUb[MARY?
continuing to demand maximum
intellectual productivity and
creative imagination.
The situation has been
confused ever since, xnd loyal
career intellectuals like Sim-
onov have had a hard time
keeping pace with the shifting
party line. The more recent
trend has been toward tight
party control and political
conformity, usually linked by
regime spokesmen with the
Stalin-era formula of "social-
ist realism."
Simonov as Stalin's Spokesman
"We must not move a
single step aside from
the path marked out by
the Party. The people
demand that our drama-
turgy think in the state
style based on Party ad-
herence." (Simonov in
1949)
During Stalin's lifetime,
Simonov went from triumph to
triumph as novelist, poet,
dramatist, critic, sycophant
and spokesman for the regime,
Born in 1915, Simonov was
educated at the Gorky Literary
Institute. A member of the
Communist Party since the age
of 27, he is a product of the
Soviet era. Simonov apparent-
ly came to the attention of
the Soviet leaders during the
war through his front-line
propaganda sketches for Kras-
naya Zvezda and Pravda and rose
to prominence asyan instrument
of the regime in its postwar
attempt t.o reimpose literary
orthodoxy.
on all important questions at
any given moment was so well de-
fined that the only requisite
equipment for intellectual sur-
vival was adroit adherence to
the party line. Simonov was~so
able at expounding the shifts
in cultural policy that he was
frequently selected to represent
the Soviet Union abroad in cul-
tural and peace delegations.
Simonov Cools the Thaw
"Noble images of the
heroic building of Commu-
nism always will stand
at the center of the
best productions of So-
viet literature." (Sim-
onov in July 1954)
In the year following
Stalin's death, a number of
prominent Soviet literary fig-
ures exploited the general re-
laxation to press for greater
freedom of expression. Simonov
remained cautiously silent for
He was appointed a deputy
secretary general of the Union
of Soviet Writers in 1946 in a
shake-up of that organization,
ahd in addition served succes-
sively as editor iri chief of
Navy Mir (1947-50) and Litera-
turnaya Gazeta (1950-535,
During the Stalinist
period, the official position
over a year and
was rewarded
in August
1954,
after the signal
had been given for
strengthening
party controls over
literature,
by being named to replace the
chief editor of the literary
journal Novy Mir, who had been
dropped for publishing "ideal-
ist" and "nihilist" articles.
Simonov's task was clearly
to restrain the "liberal"
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CURRENT INTELLIGENCE WEEKLY SUMMARY
movement among intellectuals
which had its focal point in
Novy Mir, and this he managed ~
to do satisfactorily from the
Second Soviet Writers' Congress
in December 1954 until after
the condemnation of the "gilt
of the individual" at the 20th
party congress in 1956.
"Much of what I
have said .may seem
controversial. Prob-
lems concerning an en-
tire period in the de-
velopment of literature
can be solved correctly
only through broad,
collective discussions,
It is time to start
such discussions."
(Simonov in December
1956)
The rapid pace of de-
Stalinization in 1956 evident-
ly confused Simonov. Under
pressure from above to main-
tain order among intellectuals
and from below to publish.. the
works of rebellious young
authors, Simonov misread the
trend of events for a brief
period and permitted the pub-
lication of a whole series of
stories in _No~v~ Mir dangerous-
ly critical of tFie Soviet way
of life--and therefore by re-
. ..AND AS THEY APPEAR IN THEIR SONGS.
..FROM KROKODIL , 20 APRIL 1957
regime definition not "socialist
realism." Simonov himself
later described his comparative-
ly liberal position in 1956 as
an "honest blunder."
His greatest error was
writing his own views in an
article, "Literary Notes,,'}
published in-the December 1956
Novy A4ir. In it he set forth
~c~e~l the evil effect of
the "cult of the individual"
on Soviet literature as he saw
it. Simonov made no attempt
to hide his own and other
writers' "grievous errors" in
distorting reality to fit Stalin-
ist formulas during the post-
war years, although he described
the Russian literary community
as "honest Soviet patriots" who,
though mistaken and cowardly,
did not act in bad faith.
He denounced the theory
that Soviet critics should not
find fault with Russian litera-
ture until they had annihilated
non-Communist or "alien" criti-
cisms. He maintained that the
principle of "criticism and
self -criticism" requires Soviet
critics to attack Soviet liter-
ary defects simultaneously with
their broadsides against "alien"
non-Communist criticism. He
deplored the Stalinist policy
of generalizing any specific
criticism in a work of fiction
SF,CRET
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CURRENT INTELLIGENCE WEEKLY SUM1IdARY
into an attack on the whole of
Soviet society.
Unf ortun$tely, Soviet mis-
fortunes at home and abroad in
the summer and fall of 1956 bad
caused the regime to renege
partially on its own de-Stalini-
zation campaign. A series of
attacks on Simonov and Novy Mir
were published by Litera~naya
Gazeta and Kommunist, which
enumerated fiis~ns as follows:
publication in~Novy Mir of-such
unpalatable works -as lludintsev's
novel Not B~ Bread~Alone, cast-
ing doubt on Apr n~3ple of
party spirit in literature,
revising some of the party
central committee?s theses
regarding literature, and de-
fining socialist realism as
only one of several permissible
"outlooks on the world."
The Soviet position, after
some wavering, was reaffirmed
as being that "socialist real
ism" is the only. permissible
philosophical basis of litera-
ture as well as the specific
stylistic method which must
permeate every Soviet literary
creation.
Return to Orthodoxy?
"We have no inten-
tion of permitting any
revision tb be made of
the historically devel-
oped principles of so-
cialist realism." (Sim-
onov in March 1957)
There is a more orthodox
ring to Simonov?s latest
article ("Concerning Socialist
Realism," Novy Mir #3, 19 57).
He now desc~bes socialist real-
ism as the only valid method
for Soviet writers and charges
that the pages of the Polish
literary press have become the
instrument of bourgeois propa-
Banda because they criticize
Soviet literature. He asserts
that Soviet literature must
root out all manifestations of
"neutralism" and "nihilism"
(i.e., the failure to campaign
for the party line), which act
as Tbojan horses for alien
bourgeois concepts.
At the plenum of the Mos-
cow board of the Writers' Union
in March, Simonov was among the
minority supporting the official
attack on Dudintsev for his
novel Not By Bread Alone, sharply
censures fi~m~or -immodestly
failing to benefit from the
criticism of other writers and
official journals.
Simonov?s partial retreat
indicates that the literary
discussions of the past six
months have clarified the party
line to the point where there
is less confusion on where.
creative writing leaves off
and heresy begins. This clarifi-
cation has been achieved mainly
by delimii;i~-g. successively
narrower circles of permissible
intellectual activity.
The leadership and its
captive intellectuals still face
a basic dilemmao how to stim-
ulate fruitful creative in-
dividuality and "positive dis-
cussion" without permitting
criticism of the regime of
ideological he-reSy. "'The Soviet
intellectual, in his drive for
honest self-expression, is still
caught between the demands for
doctrinal orthodoxy and maximum
intellectual creativity. The
regime, having to settle for more
of one and less of the other,
will probably continue to stress
orthodoxy. C
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