CURRENT INTELLIGENCE WEEKLY SUMMARY

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• Document Creation Date: December 16, 2016
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• Sequence Number: 1
• Publication Date: May 14, 1959
• Content Type: SUMMARY

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CONFIDENT AL
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
COPY NO.9f
OCI No. 2327/59
14 May 1959
~~i EVIEWEH
DATE: /''
AUTH: t~R 70-2
NO CHANGE IN CLASS-
0 DECLASSIFIED
CLASS. CHANGED TO: T?
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DOCUMENT NO. --
CENTRAL INTELLIGENCE: AGENCY
I I I OFFICE OF CURRENT INTELLIGENCE
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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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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 May 1959
T H E W E E K I N B R I E F
OF IMMEDIATE INTEREST
EAST-WEST NEGOTIATIONS . . . . . . . . . . . . . . . . Page 1
The USSR, in seeking to enlarge the foreign ministers'
conference at Geneva, has been trying to break down the
postwar pattern of four-power authority and negotiations
regarding the German problem. By calling for "full partic-
ipation" by the two German delegations as well as Poland
and Czechoslovakia, Moscow also attempted to advance the
major Soviet conference objectives of enhancing the pres-
tige of the East German regime and maneuvering the West
toward formal recognition of the status quo in Eastern
25X1 Europe.
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. . . . . . . . . . . Page 4
The Iraqi Communists are stepping tip pressure on
Prime Minister Qasim to allow freedom for party activity
and to admit Communist representatives to the cabinet.
Present cabinet members have indicated Communists might
be admitted on "individual merit."
Yemen's Crown Prince Bad
has reversed his pro-Soviet position and is anx-
iously requesting American economic aid. Political maneu-
vering continues in Jordan over appointments to army
commands following the change in the cabinet last week..
25X1 Soviet and clandestine broadcasts are
capable o inciting a "spirit of rebelliLon" among the lower
income groups, and "rejuvenated" the Tudeh y have 25X1 (Communist) party. ~ " I
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 CURRENT INTELLIGENCE WEEKLY SUMMARY
14 May 1959
NOTES AND COMMENTS
SOVIET CENTRAL COMMITTEE MEETING . . . . . . . . . . . . . Page 1
A Soviet party central committee plenum has been
scheduled for 24 June to discuss mechanization and auto-
mation in Soviet industry, and the program for expanding
the chemical industry. Announcement of the meeting and
of its main agenda topics in advance is a further step
in stripping some of the secrecy from central committee-
sessions in order to make greater propaganda use of them.
Although not on the agenda, the case of the "antiparty
group," left undecided at the 21st party congress, may
again be taken up.
PRELIMINARY USSR CENSUS RESULTS . . . . . . . . . . . . . Page 2
The USSR announced on 9 May the preliminary results of
the general census taken in January. The announced popu-
lation total of 208,800,000 is an increase of 9.5 percent
since the last census taken in 1939. There are 94,000,000
males and 114, 800, 000 females in the USSR--about 5, 000, 000
fewer males than had been estimated by the US. This indi-
cates that war losses may have been higher than previously
estimated and that women may comprise a larger proportion
of the labor force than had been assumed, particularly in
agriculture.
. Page 3
The Chinese Communists are moving rapidly to bring
Tibet into line with the rest of China through the intro-
duction of drastic reforms, probably to include the forma-
tion of communes. The bitter Chinese press attacks on
"Indian expansionists" virtually ceased following the 6
May People's Daily editorial calling fo,r an end to the
exchange of recriminations. The present hiatus seems
intended to give the Indians an bpportunity to disengage
by dropping their own accusations against Communist China
Indian officials say 12,200 Tibetan refugees have reached
India; they anticipate that the number eventually will
total 20,000.
BLOC PURCHASES IN THE RUBBER MARKET . . . . . . . . . Page 4
During early 1959, the USSR has maintained the in-
creased volume of rubber purchases begun last year. The
satellites, however, appear to be buying only usual quan-
tities, and the Chinese somewhat less than usual. Mos-
cow's current moves are linked to its trade offensive,
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14 May 1959
PART II (continued)
BLOC ECONOMIC RELATIONS WITH THE UAR A1D IRAQ . . . . . . Page 5
In the past few weeks Moscow has sought to demon-
strate to Cairo and the West that the bloc intends to
continue its economic and military support of the UAR
despite the quarrel with Nasir over Communism in the
Middle East. A UAR delegation led by the Egyptian minis-
ter of public works is in Moscow discussing the final
Soviet plans for the UAR's Aswan High I)am project. The
USSR is pushing rapidly ahead with its military and 25X1
economic aid to Iraq.
BRITISH-YEMENI RELATIONS . . . . . . . . . . . . . . . . Page 6
Relations between Britain and Yemen remain poor,
despite agreement to hold discussions beginning 18 May on
border incidents and subversion across the Aden Protector-
ate frontier.
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ALGERIA . . . . . . . . . . . . . . . . . . . . . . . . Page 7
Reports are again circulating of an impending cease-
fire in the Algerian rebellion, but extremists in both
French and rebel camps may still be strong enough to block
an early solution. Meanwhile, increasingly vigorous opera-
tions by the French Army along the Algerian-Tunisian border
could touch off another serious crisis in Tunisian-French
relations. Friction also appears to be mountin between
Tunisian authorities and the Algerian rebels. 25X1
TURKEY MAY CURB OPPOSITION FURTHER . . . . . . . . . . . . Page 9
The Menderes regime in Turkey appears to be taking
further steps to curb the opposition and the press follow-
ing its unsuccessful attempts to prevent opposition leader
Ismet Inonu from gaining political advantage from his tour
of the Aegean region.
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PART II (continued)
Page 9
SPLIT PROBABLE IN SOMALIA'S GOVERNING PARTY . . . . . .
The resignation on 8 May of Minister of Interior
Bogor, an influential tribal leader, may lead to a split
along tribal lines in the moderate governing party in
Somalia. The political instability resulting from such
a split would create an atmosphere conducive to further
foreign meddling--especially by the UAR--and might result
in the formation of a new government composed of extremist
elements less willing than previous regimes to cooperate
with the West.
ANTI-SOVIET FEELING GROWING IN BURMA . . . . . . . . . . . Page 12
Soviet prestige in Burma has suffered a setback
because of publicity concerning the heavy-handed tactics
of the Soviet Embassy in preventing its military attache
from defecting and a libel suit filed against a TASS
representative by an influential Rangoon editor. In an
apparent move to stem the decline of its prestige, the
USSR has already decided to replace its ambassador. The
anti-Communist Ne Win regime will offer the USS few
opportunities to regain its loss of influence.
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PART II (continued)
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THE POSTELECTION OUTLOOK IN AUSTRIA . . . . . . . . . . . Page 14
Austria's 10 May elections, which were highlighted
by Socialist gains and the total elimination of the Com-
munists from Parliament, seem to have given the 13-year-
old coalition a new lease on life. A major cabinet
reshuffle is in prospect and may take several weeks to
negotiate, but the Socialists will probably succeed in
defeating any People's party maneuvers to revise the
coalition pact. Basic foreign and domestic policies are
unlikely to be changed.
ICELANDIC-BRITISH FISHING DISPUTE . . . . . . . . . . . . Page 16
A series of recent "violations" by British trawlers
of Iceland's unilaterally extended fishing limits has
aggravated Icelandic opinion. Both sides are becoming
increasingly aggressive in the eight-month-old dispute.
With Icelandic attention focused on the parliamentary
elections on 28 June, all political parties have united
to support a parliamentary resolution protesting British
infringements.
BRITISH TRADE MISSION TO MOSCOW . . . . . . . . . . . . . Page 17
The Macmillan government hopes modest increases in
Anglo-Soviet trade will result from efforts of the official
British trade mission which arrived in Moscow on 12 May.
The chief difficulty is financing. The, government is
meeting this by guaranteeing private credits to the USSR
for periods up to five years, despite he alarm of some
NATO members.
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CHILEAN PRESIDENT'S ECONOMIC PROGRAM . . . . . . . . . . . Page 18
Chilean Finance Minister Vergara's visit to the
United States starting 15 May to complete negotiations for
a sizable loan is part of President A lessandri's effort
to overcome his country's persistent economic instability.
In his first six months, the new President's prospects for
carrying out his economic program have been aided by a
rise in copper prices and by his success in obtaining pas-
sage of his omnibus economic bill. He is faced, however,
with a disquieting rise in the rate of inflation. 25X1
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PART III
PATTERNS AND PERSPECTIVES
SOVIET EFFORTS TO IMPROVE ECONOMIC PLANNING . . . . . . . Page 1
With the Seven-Year Plan launched, Soviet economic
planners are devoting their attention to improving
planning techniques, a chronic problem in the "command
economy" of the Soviet Union, and of special importance
under the new territorial administrative system. Effec-
tiveness of economic planning is an increasingly signif-
icant factor in the Soviet drive to "catch up with the
United States," and articles and lectures on this subject
are serious in content and less propagandistic than here-
tofore. They occasion lively responses and general par-
to a degree unknown in earlier years.
ticipation 25X1
THE SUEZ CANAL TODAY . . . . . . . . . . . . . . . . . . ? Page 6
Since Egypt nationalized the Suez Canal Company
nearly three years ago, Cairo's Suez Canal Authority has
canal al asceffec-
demonstrated its ability to operavolume te the
tively as the old company. has
increased, and, without a rise in tolls, revenues in
1958 reached $120,872,000 compared with only $92,414,000
in 1955--the last full year of operation under the old
company. The canal authority, however, faces some diffi-
culties. Plans for securing a to maneu-
vers, the canal have been hampered by
vers, and pilots have considered actions short of a
strike to regain the status they enjoyed under the old
company.
PROBLEMS OF ITALY'S CHRISTIAN DEMOCRATIC PARTY . . . . . . Page 11
Factionalism and personal rivalries among the leaders
of Italy's dominant Christian Democratic party are plaguing
the three-month-old minority government of Premier Antonio
Segni. Lack of cooperation among the center parties
obliges the Christian Democrats to rely on rightist parlia-
mentary support, and a stronger nationalistic attitude on
foreign affairs has already resulted. Former Premier
Amintore Fanfani, who has favored left-of-center party
policies and who was overthrown last January because of
internal rivalries, is working to regain control of the
party.
THE WARSAW PACT . . . . . . . . . . .. . . . . . . . . . . Page
A brief review of the history and present status of
the activities of the USSR and the Eastern European
satellites under the terms of the 1955 Warsaw Pact.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 May 1959
PART I
OF IMMEDIATE INTEREST
EAST WEST NEGOTIATIONS
Geneva
Soviet Foreign Minister
Gromyko's first move at the
Geneva foreign ministers' con-
ference was an indirect attack
on the West's basic position
that the four great powers have
the major responsibility for
the German question. By using
the procedural issues of a
round rather than a square table
and the participation of the
two German delegations, Poland
and Czechoslovakia, Gromyko has
been seeking to enlarge the
conference in a belief this
would mark a definitive break
with the. postwar pattern of
four-power authority and nego-
tiations on Germany. Gromyko's
moves were also aimed at ad-
vancing major Soviet conference
objectives of enhancing the
prestige and authority of East
Germany and maneuvering the
West toward formal recognition
of the status quo .in'. Eastern Europe.
Gromyko almost certainly
did not expect to win Western
agreement to accord full status
to the German delegations. The
compromise arrangement whereby
the German representatives were
.seated at two small tables ad-
j`rce4t to the main conference
table has been hailed by Soviet
propaganda as a "great victory"
for Soviet diplomacy. As part
of its effort to appear as the
champion of the right of the
Germans to a full voice at the
conference, Moscow is charging
the West with attempting to
"restrict or even completely
preclude" German participation
and relegate the German dele-
gates to "the status of second-
rank advisers or just dummies."
Even before the conference
opened, East German party boss
Ulbricht claimed that East Ger-
man participation constituted
de facto recognition of the
German Democratic Republic.
Neues Deutschland asserted that
the Wes has finally abandoned
Bonn's "absurd thesis that only
the Federal Republic could le-
gitimately speak in the name
of Germany." East German of-
ficial statements are asserting
that the Ulbricht regime repre-
sents all Germany, in contrast
to ;Bonn, which is equated with
"imperialism.", Another aspect
of the Communist line is an
attempt to contrast East
Germany's vocal advocacy of
an equal voice for the Germans
at Geneva with Bonn's alleged
indifference and willingness
to allow its allies to speak
for Germany.
In a private talk with
British Foreign Secretary
Lloyd, Gromyko insisted that
the right of the two German
delegations to speak be un-
restricted. The East Germans
can be expected to take full
advantage of the private agree-
ment among the four foreign
ministers that there will be
no objection to requests by
the German representatives to
speak unless the privilege is
being abused. Should the Western
ministers complain that the
East Germans are misusing this
privilege, Gromyko probably
will charge the West with
attempting to suppress the
legitimate expression of'German
views.
In his opening substantive
staatementr,on.13 May, Gromyko
termed the presence of the two
German delegations a "realistic
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CURRENT INTELLIGENCE WEEKLY SUMMARY
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step in the right direction"
and noted that for the first
tine in postwar discussions of
the German problem the two Ger-
man governments will be heard.
Foreshadowing Soviet conference
tactics, Gromyko rejected in
advance the Western "pabkage"
proposal, contending that it
would be "completely unrealistic
to attempt to examine all these
questions at once." He insisted
that the agenda should be con-
fined to a German peace treaty,
Berlin, and arrangements for
a summit meeting. The Soviet
foreign minister's unusually
warm references to Prime Min-
ister Macmillan provide further
evidence of Moscow's interest
in encouraging independent Brit-
ish initiatives in the talks.
Khrushchev Statements
Since his return from va-
cation on 26 April, Khrushchev
has made a series of statements
combining assurances of Soviet
reasonableness in negotiations
with claims of military pre-
dominance. Calling the foreign
ministers' conference the first
step in the cause of easing in-
ternational tesion, he ex-
pressed confidence in a speech
in Kiev on 11 May that a summit
meeting will be held regardless
of the outcome and hinted that
he favors a series of heads-of-
government meetings.
He also asserted that the
USSR's international situation
is "better than ever before"
and remarked that the Soviet
Union has good rockets "in the
required number" and "perhaps"
before long will "curtail" their
production. He warned that al-
though in a war the West could
inflict "no little destruction"
on the USSR, the Western powers
would be threatened with "in-
evitable catastrophe."
Earlier he had told a
::e k political leader that he
is not worried that a war might
begin over Berlin as a result
of a. deliberate decision, but
that, he is concerned that an
incident might precipitate
hostilities. He delared that
England and France could be ef-
fectively destroyed with only
five rockets each and West Ger-
many with four. In an interview
with West German Socialist
editors on 5 May, he said the
Soviet Union has "enough rockets
for America too."
Khrushchev's boasts regard-
ing Soviet missile capabilities
probably were designed to rein-
force his claim that the inter-
national balance of power has
shifted in the bloc's favor.
While it is probable that the
Soviet Union now has what it
regards as a sufficient number
of short- to medium-range bal-
listic missiles--i.e., in the
100- to 350-nautical-mile range
--it is extremely doubtful that
sufficient quantities of the
longer range missiles exist or
that production would be cur-
tailed.
Apart from Berlin, the main
items for discussion at the
foreign ministers' conference,
according to the Soviet diplo-
mat, should be a German peace
treaty and force reductions in
Central Europe, taking into ac-
count the 1954 Paris agreements
forbidding German development
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and possession of atomic weap-
ons. He remarked that German
reunification can be discussed
even though the chances of
agreement are not good at pres-
ent. He indicated that the
USSR will insist on recognition
of the Oder-Neisse boundary by
all parties to a German peace
treaty.
In the same vein, a high
Soviet official ,s
em-
phasized
ministers' conference, according
to this official, will bring
about an immediate summit meet-
ing at which some progress can
be made.
He gave as examples a per-
manent ban on atomic testing,
prohibition of atomic weapons
for West Germany, an atom-free
zone or disengagement in Central
Europe, and a readiness to dis-
cuss a peace treaty with the
Germans. These questions, he
said, could be discussed in gen-
eral at the summit, and agreement
could be reached to continue
such discussions in the future.
anger of war over Berlin. The
expected failure of the foreign
WlA
East German delegation will ar-
rive in Moscow on 15 May for
the talks which were mentioned
in the final communique issued
at the conclusion of Khrushchev's
visit to East Germany.in March.
While there is no information
as to the subject of the talks,
they may be preliminary conver-
sations concerning a separate
peace treaty which the USSR
has threatened to conclude with
East Germany if the West "re-
fuses" to sign a treaty.with
the two Germanys.
Western Views
Despite a favorable reac-
tion to Chancellor Adenauer's
preconference discussions with
French Premier Debie and with
Secretary Herter, Bca:i: officials,
including Adenauer, are con-
cerned over possible British
attitudes during the second
phase at the conference. Bonn
fears that following Soviet
rejection of the Western "pack-
age," the British may use this
opportunity to discuss separate
European security elements of
the Western proposals. Bonn
would prefer to direct the talks
toward the problem of Berlin
aiming at an agreement to con-
tinue the status quo.
Many West German and some
West: Berlin political leaders
who had opposed East German con-
trol, over Berlin access appear
to be reconciled to the "agent"
theory, in which the East Ger-
mans would take over access con-
trols in the capacity of agents
of the USSR. However, West
Germans are more than ever de-
termined to maintain the status
of West Berlin and four-power
responsibility for the entire
city. Mayor Willy Brandt in-
dicated privately on 6 May he
would consider East German con-
trol as a satisfactory solution,
provilded the West obtained firm
and detailed Soviet and East
German guarantees on Allied as
well as East German access.
While British Prime Minis-
ter Macmillan and Foreign Secre-
tary Lloyd have spoken in pri-
vate of the dangers of the Ber-
lin situation, their public
statements have stressed that
Macmillan secured Khrushchev's
agreement during the Moscow visit
that the dispute would be set-
tled 'by negotiation.
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France may try to introduce
President de Gaulle's proposal
for a joint East-West aid pro-
gram for underdeveloped coun-
triesoat-the foreign ministers'
meeting as well as at any sub-
sequent summit conference. At
his 25 March press conference,
De Gaulle' said he would welcome
a summit discussion aimed at
attacking the basic human-prob-
lems of disease, hunger, and
shelter and at forestalling the
upsurge of nationalism among
ncn-European peoples. During
his recent speaking tours through
France, he first mentioned this
as a topic for the foreign min-
isters.
Geneva. Nuclear Talks
On 12 May the three dele-
gations to the nuclear test
cessation talks agreed to recess
until "not later than 8 June."
The Soviet delegation apparently
based its agreement to the West-
ern-proposed recess on the belief
that the foreign ministers would
discuss the test-cessation issue
either formally or informally
while in Geneva. Soviet lead-
ers may believe they can obtain
agreement "in principle" at
the ministerial level for their
present proposal for a predeter-
mined quota of annual on-site
inspections of phenomena sus-
pected of having been nuclear
explosions. They may calculate
that they could then success-.
fully maintain that the ac-
tual number of inspections
to be made annually would be
a suitable subject for dis-
cussion and agreement at the
summit. Con-- 25X1
tributions by ORR; Concurred
in by OSI)
MIDDLE EAST HIGHLIGHTS
Iraq
A breach has become appar-
ent between Prime Minister Qasim
and the leadership of the Iraqi
Communist party. The issue is
Communist demands for the legal-
ization of political parties and
for the appointment of avowed
Communist party representatives
to the revised 18-post cabinet.
These demands began to ap-
pear in the Communist-controlled
press in the early part of April.
In a speech on 30 April, however,
Qasim declared that Iraq was in
a "stage of transition" and that
the time had not yet come for
the return of political parties.
Subsequently, according to non-
Communist Foreign Minister Jawad,
Qasim said privately that new
cabinet appointments would be
made on the basis of "individual
merit," and that no one would
be selected as the representa-
tive of "any particular group."
The Communist newspapers
were initially very cautious in
their reaction to Qasim's speech.
In the past week, however, their
commentaries have become steadi-
ly sharper and they are now
vigorously attacking Qasim's
policy on this issue. Reminding
Qasim of the services the Com-
munists have rendered, editori-
als state that a return to par-
ty activity is essential for
making Iraq "a true democracy."
While avoiding personal attacks
on Qasim, the press has dis-
carded its practice of calling
hint "sole leader" and now re-
fers to him as "prime minister"
or "dutiful son of the people."
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Two pro-Communist cabinet
members--Minister of Economy
Kubba and Minister of Health
Shawwas--have publicly backed
the party's-demands, and the
leading Communist newspaper is
seeking additional endorsements
from other cabinet members.
A decision is expected soon
on at least a few new cabinet
appointments. The government
announced in early May that the
cabinet had been revised and
expanded to include a total of
18 portfolios in addition to
that of the prime minister.
Qasim is likely to succumb to
Communist pressure to the point
of naming two or three known
Communists to the cabinet, but
he is less likely to give le-
gal recognition to political
parties. There is a faint pos-
sibility that the Communists
have pushed too far too fast
and that Qasim may react with
positive efforts to reduce their
power. Such moves would have
to come soon-while his popu-
larity is still widespread with
civilians and probably with
the army.
Troubles with the Kurdish
tribes persist in northeastern
Iraq, but may taper off fur-
ther after partially snowbound
passes between Iraq and Turkey
are opened by the spring thaw
and larger groups can escape
the pressure on them in Iraq.
Relations between Moscow
and Baghdad continue to be close.
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According to the British
Foreign Office, Nasir received
with "understanding" the news
of the British decision to sell
heavy equipment to Iraq. The
UAR press, however, has cited
it as confirmation of the thesis
that the Qasim regime is sup-
ported by a conspiracy among
the Communists, imperialists,
and Zionists. Although this is
a propaganda line for public con-
sumption, it reflects the persist-
ence of an anti-Western outlook
and a determination on the part
of top UAR circles to maintain
a strictly neutralist position.
UAR propaganda has asserted
that an internal struggle be-
tween Qasim and the Communists
is imminent but, again probably
reflecting official thinking,
it has discounted the possibili-
ty that Qasim will come out on
top.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 May ,1959
25X6
25X1
Earlier signs that Yemen
might be ready to follow the
lead of the UAR and cut back
its extensive relations with the
Sino-Soviet bloc were followed
last week by two separate ap-
proaches which asked, in effect,
that the United States assume
the direction--and, necessarily,
the bulk of the cost--of Yemen's
economic development.
25X1 Yemen is
inclined to terminate its exten-
sive economic commitments to
the bloc if the United States
and the West generally will
complete current work on a new
port and new roads, and pro-
vide funds to pay for work al-
ready done by the bloc on these
projects.
In Yemen, Crown Prince
Badr, in reversing his previous
pro-Soviet attitude, made a
fervent plea to the American
charge for generally improved
relations and economic assist-
ance. He subsequently made a
mosque speech on the same themes.
Badr, who appeared to the charge
to be a badly "frightened" man,
may feel that a pro-Western
course is the only one left open
to him, since Cairo, his prin-
cipal supporter up to now, has
undertaken an anti-Communist
campaign, and since his father's
departure for Italy increased
the possibility of internal
revolt.
Yemen has received $25,-
009,000 in Soviet economic cred-
its And a $16,000,000 interest-
free loan from Communist China.
About $25,000,000 of the total
is believed to have been actual-
ly allocated. In addition, the
Yemenis have obtained Soviet
materiel worth over $30,000,-
000. More than 400 bloc per-
sonnel are believed to be in
Yemen, including as many as 50
military specialists. About
300 Chinese Communists ar
working on a road ro?ect~25X1
25X1
Jordan
The reaction in Jordan to 25X6
glum
Intense political maneuver-
ing is continuing over the
choice of new commanders for
the army, following the dismis-
sal of former chief of staff 25X1
Sadiq Shara. Few of the candi-
dates appear to be men of
ability
Jealous
produced during the process
could further. weaken the cohe-
sion of the army; non-Bedouin
officers are already reported
to be throughly intimidated
by the "coup" accomplished
29
X1
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 May 1959
by the Bedouin faction in getting
rid of both Shara and Rifai.
The Shah of Iran fears the
growing Communist influence in
Iraq and the Soviet activity
in Afghanistan, which he views
as leading to the gradual en-
circlement of Iran.
road- 25X1
casts of Radio Moscow and
clandestine radios are deepen-
ing the antiregime feelings of
the lower income class, junior-
grade and noncommissioned of=ficers in the army, students,
Judges, and the lower clergy.
he propaganda 25X1
is capable of En-citing a "spirit 25X1
of rebellion" among these groups,
I r'rejuvenated"
the Tudeh (Communist)party.
25X1
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14 May 1959
SOVIET CENTRAL COMMITTEE MEETING
A Soviet party central com-
mittee plenum has been scheduled
for 24 June. According to the
9 May announcement, it will dis-
cuss implementation of the de-
cisions of the 21st party con-
gress to increase mechanization
and automation in Soviet industry
and the program for expanding'the
chemical industry, which is to
receive an investment of 15-20
billion dollars under the Seven-
Year Plan,
The advance public announce-
ment of the June meeting and its
main agenda topics is a further
step in stripping some of the
secrecy from central committee
sessions so that greater propa-
ganda use can be made of them.
In the present instance, fuller
publicity will help goad economic
officials to maximum performance.
The quality of Soviet in-
dustrial technology varies widely
among and within industries. In
addition, because of their rigid
production quotas, Soviet plant
managers have frequently delayed
the introduction of new technol-
ogy-, if doing so would jeopardize
current output goals.
__ The goal of "catching up"
with the West,owever, is com-
pelling the USSR to reduce the
time lag between scientific de-
velopment and industrial appli-
cation, especially in view of
the decreasing availability of
labor for industry and the rapid
depletion of easily developed
natural resources. In March a
new State Committee for Automa-
tion and Machine Building was
established, a move which indi-
cated recognition of the impor-
tance of mechanization and auto-
mation in meeting the Seven-
Year Plan goals.
Although Soviet chemical
output reportedly increased 13
percent in 1958, the rates of in-
crease.for the few products list-
edwas generally below that re-
quired for Seven-Year Plan ful-
fillment. The plan for construc-
.tion of chemical plants fell
short of fulfillment by a con-
siderable margin because of a
lack of equipment, the tardy
receipt of technological data,
and unsatisfactory work by con-
tractors.
In order to mitigate the
strain on domestic producers
of chemical equipment and to
save time required to develop
new processes, the USSR has
been attempting for the last
few years to purchase equipment
from the West.
Fulfillment of Seven-Year
Plan goals is unlikely without
substantial imports of equip-
ment and technology. Under
existing trade pacts with West-
ern countries, Moscow already
has planned to import $100,000-
000 worth of chemical plants
and equipment, but its recent
drive to secure credits in the
West indicates that its require-
ment is greater than its abili-
ty to finance through current
Soviet exports. The plenum
undoubtedly will attempt to
deal with this situation.
The central committee may
again take up the case of the
"anitiparty group," although
such was not announced on the
agenda. This topic was left
undecided despite considerable
discussion at the central com-
mittee plenum in December 1958
and the party congress in Jan-
uary 1959.
CONFIDENTIAL
i9emr- 7-
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14 May 1959
Khrushchev, however, may
have been referring to the "anti
party group" when he announced
at the close of the congress
that appeals had been received
"on decisions concerning re-
movals from the party, imposi-
tions of party punishment, and
other personal party matters."
The congress charged the central
committee with answering these
appeals. Khrushchev may feel
that further moves against mem-
bers of the group and others
linked with its activities
are now desirable.
Although the central com-
mittee has little or no substan-
tive role in the formulation of
foreign policy, the meeting in
June will provide the Soviet
leaders with an opportunity to 25X1
review the results of the Geneva
conference and explain the USSR's
pos meet-
ing,f7 I
I 25X1
PRELIMINARY USSR CENSUS RESULTS
The USSR announced on 9
May the preliminary results of
the general census taken in
January. The announced popula-
tion total of 208,800,000 is an
increase of 9.5 percent since
the last census, taken in 1939,
and is only about 800,000 fewer
than the American estimate,which
was based essentially on Soviet
1956 figures and the rates of
natural increase in subsequent
years. Nearly 48 percent of the
population lives in urban areas,
compared with about 32 percent
before World War II.
If the census was conducted
as planned, the results should
be quite reliable. The actual
enumeration, which took place
the week of 15-22 January, was
carried out as a house-to-house
canvass of the entire country
by a staff of more than 500,000
persons. The results were to
be tabulated in 57 machine-proc-
essing: centers located through-
out the country.
The last previous Soviet
announcement concerning the popu-
lation, made in 1956, stated
that the total was 200,200,000
as of April of that year. The
new census figure suggests that
this total may have been some-
what high, if Soviet claims of
a natural increase of more than
3,500,000 annually "in recent
years" are accepted.
There are 94,000,000 males
and 114,800,000 females in the
USSR; this is about five million
fewer males than estimated by the
US. The number of males of mili-
tary age may thus be smaller
and war losses may have been
greater than were thought, but
an accurate assessment cannot
be made until data are released
giving population breakdowns by
age. The information suggests
that; women may make up a larger
proportion of the labor force
than had been assumed, particu-
larly in agriculture. The USSR
also will have to place greater
reliance on women as a source
of additional labor during the
years of the Seven-Year Plan
(1959-65), which probably ex-
plains the vigorous efforts now
under way to induce housewives
to work outside the home.
The urban population is
now given as 99,800,000,compared
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 May 1959
with 87,000,000 as of April
1956. Some part of this in-
crease is attributable to the
reclassification of large num-
bers of small settlements and
fringe areas formerly considered
rural; the number of cities--
places with 1,000 or more adult
inhabitants--increased from 923
to 1,594, and the number of ur-
ban-type and workers' settle-
ments--with 400 or more adult
inhabitants--increased from
1,454 to 2,922.
In the past several years the
population of the USSR has been
increasing at about 1.7 percent
annually and is expected to be
about 266,000,000 by 1975. The
population in the United States
is expected to grow at a some-
what faster rate. The popula-
tion, of the Urals region in-
creased 32 percent between 1939
and 1959; West Siberia gained
24 percent; East Siberia, 34 per- 25X1
cent; Central Asia and Kazakhstan,
38 percent; and the Far East,
70 percent.
The Chinese Communists are
moving rapidly to bring Tibet
into line with socialist de-
velopments in the rest of China.
In an effort to win over the
population, Peiping has declared
a moratorium on agricultural
taxes for this year and is per-
mitting Tibetan peasants to
work land seized from rebel
leaders. At the same time, the
regime's propaganda machine is
claiming that most of the popu-
lV. 4 ion has a "tremendous de-
s.Lre" for drastic reforms.
Only mutual aid teams--the
first step in the collectivi-
zation process--have been in-
troduced thus far, but Chinese
authorities will probably pass
quickly over the intervening
stages of collectivization to
communalization, just as they
did in Tibetan areas of western
China late in 1958. The com-
mune system would ensure maxi-
mum control over the population,
its movement, and food supplies,
Socialization of Tibet will be
aided by the expected influx
of large numbers of cadres and
settlers from China proper.
The "democratic reforms"
in store for Tibet will be a far
cry from the full autonomy de-
manded by Indian critics of Pei-
pingg's policies. Communist
China has made no compromises
in response to Indian pressure
and is unlikely to do so. While
Peiping has not abandoned the
possibility of the Dalai Lama's
return, Chinese press statements
belligerently maintain that
Tibetan "autonomy" is not a
matter for negotiation. There
are, in fact, some indications
which suggest the Dalai Lama
may be jettisoned when it be-
comes obvious his value to Pei-
ping is gone.
The bitter press attacks on
"Indian expansionists" virtual-
ly ceased following an editorial
in PPeople's Daily on 6 May call-
ing for an end to the exchange
of recriminations. Peiping has
stated that it will reply to
criticism, but the present
hiatus seems intended to give
the Indians an opportunity to
disengage by dropping their own
accusations against Communist
China. In the past few days
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14 May 1959
Chinese comment has been large-
ly confined to welcoming Nehru's
conciliatory remarks on the need
for Sino-Indian friendship.
In his statement on 8 May,
Nehru again refuted Chinese al-
legations but made conciliatory
gestures. He cautioned Chinese
leaders against trying to in-
timidate India through "war-
like" statements. At'the same
time, he said Sino-Indian prob-
lems must be settled peaceably
and declared that the 1954 Sino-
Indian treaty remains' in full
force.
Officials in the Indian
Ministry of External Affairs
expect the Tibet, issue to sub-
side, now that Parliament has
adjourned. Praja Socialist
leaders, who have spearheaded
the attacks on Peiping's Tibetan
policy, attempted to keep the
protest sentiment at a high
pitch, however, by announcing
plans for a national "Tibet
Convention" in Calcutta on 30-
31 May, to be attended by prom-
inent Indian personalities and
by delegates from a number of
Asian and African countries.
Nehru criticized the sponsors'
stated purpose of arousing Asian
opinion against Chinese actions
in Tibet, but he apparently
made no move to obstruct them.
Indian officials state
that 12,200 Tibetan refugees
have reached India; they
anticipate that the number
eventually will total 20,000.
BLOC PURCHASES IN THE RUBBER MARKET
During early 1959 the USSR
continued the larger volume of
rubber purchases begun last year.
In the first four months of this
year Moscow bought 86,000 tons;
total purchases last year were
215,000 tons. As rubber is
widely re-exported within the
Sino-Soviet bloc, particularly
from Communist China, Soviet
purchases must be considered
only as part of total bloc buy-
ing activity, and bloc rubber
purchases are erratic, both
over the long run and during
.each year.
It is not yet possible to
estimate procurement for 1959.
Thus far the satellites appear
to be purchasing usual quanti-
ties, and Chinese purchases seem
to have fallen off. Buying ac-
tivity during the first quarter
suggests that the USSR is buy-
ing to meet its own needs, while
the Chinese apparently have been
relying on imports from Indonesia
for current consumption.
Peiping's first purchase
from Malaya in seven months--
only 6,000-9,000 tons for de-
livery from Singapore in May
and June--suggests that Peiping
has reduced its total purchases
and consequently its re-exports
to the bloc. Furthermore, Pei-
ping has evidenced little in-
terEast in completing negotia-
tions for its annual rice-rubber
exchange agreement with Ceylon.
Ceylon and Singapore last year
accounted for about one half
of Chinese purchases.
Excessive Chinese purchases
during the past few years--in-
spired originally by a desire to
undermine Western trade controls,
which have since been reduced--
have largely been re-exported to
the satellites and the USSR.
Between 1953 and 1955 the USSR
kept out of the world rubber
market and met its requirements
--some 200,000 tons--by with-
drawals from its own stockpile.
Bloc purchases in excess .Of
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14 May. 1959,
demand since 1956
re-established this
stockpile and pro-
vided additional a-
mounts needed for
normal working re-
serves,
SINO-SOVIET BLOC RUBBER PURCHASES
THOUSAND TONS
SATELLITES
CHINA
USSR
ESTIMATED BLOC
195 REQUIREMENT-\
7 172
Ito
138
1952 1953 1954 1955 1956 1957 1958
25X1
BLOC ECONOMIC RELATIONS
WITH THE UAI AND IRAQ
relations with the Soviet Union,
and recent developments concern-
ing Soviet participation in the
construction of the Aswan High
Dam have been given major at-
tention.
In the past few weeks Mos-
cow has sought to demonstrate
to Cairo and the West that the
bloc intends to continue its
economic and military support
of the UAR despite the quarrel
with Nasir over Communism in
the Middle East.
Moscow is increasingly pub-
licizing its economic relations
with the UAR, presumably in an
attempt to counterbalance the
unfavorable propaganda result-
ing from recent Soviet-UAft fric-
tions, as well as to divert pub-
lic attention from the bloc aid
program to leftist Iraq. The
UA1, for its part, has recorded
in its press--almost on a daily
basis--its continuing economic
PART II
A VAR delegation led by
the Egyptian minister of public
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14 May 1959'
works is in Moscow discussing
the final Soviet plans for the
UAR's Aswan High Dam project.
In December the Soviet Union
agreed to extend a $100,000,000
credit for the construction of
the first stage of the dam, but
Moscow subsequently suggested
amendments designed to reduce
the costs and time of construc-
tion The USSR, apparently
attaching unusual importance
to the successful conclusion
of the talks, has designated
both the minister of electric
power and the chairman of the
State Committee for Foreign
Economic Relations to present
the Soviet position. The Rus-
sians may use this occasion to
propose further Soviet aid for
the construction of the High
Dam beyond the presently planned
first stage.
The USSR is also pushing
ahead rapidly with its economic
and military aid programs in
Iraq. Regular merchant ship-
ping runs have been established
between Black Sea ports and
Basra for the supply of Soviet
grain, timber, automobiles,
and other goods, The Soviet
Union has speeded implementation
of the projects called for under
its economic aid agreement with
Baghdad. Moscow apparently is
more than willing to meet Iraqi
requirements for technical as-
sistance even in fields outside
the said agreements; it has al-
ready agreed to a Baghdad re-
quest; for more than 40 physicians
to practice in Iraqi hospitals,
Shipments of Soviet arms
and military equipment to Ir
BRITISH-YEMENI RELATIONS
Local British and Yemeni
representatives will begin dis-
cussion on 18 May in Aden con-
cerning border incidents and
subversion across the Aden Pro-
tectorate frontier, but these
talks are unlikely to improve
the chronically poor British-
Yemeni relations.
While neither side expects
significant results, both see
advantages in holding the dis-
cussions. The British agreed
to the Yemeni proposal for
talks--a plan they had advanced
earlier--as a gesture of good
will and may take the opportu-
nity to try to refute the Yemeni
allegations that the federation
of protectorate rulers--the
Federation of the Arab Amirates
of the South--inaugurated in
February is a move against
Yemen. London plans to propose
cessation of hostile propaganda
and subversion, and creation of
a permanent border investigating
commission. Regardless of what
agreements are reached, the
British suspect that the Yemenis
will continue periodically to
instigate border clashes and
sabotage and to bribe protec-
torate tribesmen.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 May 1959
TURKEY
JORDAN l..
ETHIOPIA
SAUDI
ARABIA
P,ROT ECTORATE
USSR
AFGH.
WAIT
f K.
S
_SRJO~O
HI:KO 10 ~~
roM:~l.
NAMES IN RED INDICATE MEM3ERS
OF THE FEDERATION OF TH3
ARAB AMIRATES OF THE SOUTH
Yemeni Crown Prince Badr
ecenfiy reversed
is pro- oviet position and is
requesting American aid (see
Part I, page 6 ) I In the
talks, the Yemenis can be ex-
pected to press their claim to
"South Yemen"--i/e., Aden Pro-
tectorate and Colony--and to
protest against the federation,
although that grouping has made
00
30311
scant progress toward formation
of a working entity.
25X1
25X1
Reports are again circulat-
ing of an impending cease-fire
in the Algerian rebellion, but
extremists in both French and
rebel camps may still be strong
enough to block an early solu-
tion. Meanwhile, increasingly
vigorous operations by the
French Army along the Algerian-
Tunisian border could touch
off another serious crisis in
Tunisian-French relations. Fric-
tion also appears to be mounting
between Tunisian authorities
and the Algerian rebels.
Cease-fire Rumors
Press reports from Paris
that an Algerian war settlement
would include face-saving con-
cessions to the rebels may
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 May 1959
encourage the hard-pressed rebel
high command, now meeting in
Tunis, to approach De Gaulle
concerning terms for a settle-
ment.
De Gaulle is unlikely to
offer the rebels any major con-
cessions. There are indica-
tions, however, that he is will-
ing to discuss more than a
cease-fire, and his recent pub-
lic utterances profess both a
belief that peace is in sight
and hopes for a relatively
liberal political future for
Algeria, to be determined by
25X1 the Algerians themselves. I
Tunisian Border Tensions
Increasingly vigorous op-
erations by the French Army
along the Algerian-Tunisian bor-
der appear to be leading to more
frequent and graver incidents
involving violations of Tunisian
territory. In the northern
sector, pressure on the frontier
has increased appreciably as
French forces have pushed rebel
soldiers operating east of the
Morice Line closer to their
bases in Tunisia. French com-
manders are thus more and more
tempted to pursue the Algerians
across the frontier.
Farther south, tensions are
growing as a result of Tunisia's
determination and increasing
capability to oppose the French
Army's aggressive defense of the
alleged "rights" of nomadic Al-
gerian tribesmen who have tra-
ditionally moved freely in the
arid, largely undemarcated bor-
der area. Tunis believes French
authorities encourage the tribes-
men's incursions, which are fre-
quently followed by similar move-
ments on the part of French
Army units.
Should a major incident oc-
cur, especially one affecting
Tunisian military or civilian
personnel, Tunisian President
Bourguiba would almost certainly
feel compelled to make a sharp.
diplomatic countermove. This
would probably include an ap-
peal to the UN Security Council
and a renewed demand for the
evacuation of the French naval
base at Bizerte.
Rebel-Tunisian Relations
The confinement in Tunisia
of increasing numbers of frus-
trated Algerian rebel troops
has heightened friction between
the Algerians and the Bourguiba
regime. Reports have been re-
ceived of new skirmishing in-
volving rebels and Tunisian
forces in northwestern Tunisia
and also of a recent verbal
clash in Tunis between Bourguiba
and Ferhat Abbas. Last week
Bourguiba stated publicly that
he was holding "conversations"
with "responsible Algerians"
with a view to forestalling ac-
tions giving French troops a pre-
text for "invading" Tunisian
territory.
The embattled rebels are
pressing Tunis for more ag-
gressive support. Some Al-
gerians are reportedly urg-
ing-'.outright eo=belligerency.
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14 May 1959
TURKEY MAY CURB OPPOSITION
The efforts of the Menderes
government to prevent former
President Ismet Inonu--the lead-
er of Turkey's opposition Re-
publican People's party (RPP)--
from meeting his supporters dur-
ing his recent tour of the Ae-
gean region have increased the
popularity of the 74-year-old
hero of the Turkish War of In-
dependence, Inonu, who was
slightly injured during one of
the disorders along his route,
shows no signs of being dis-
couraged from further travel
around the country. The gov-
ernment is likely to tighten its
restrictions on the opposition
and on the press.
Interior Minister Namik
Gedik, who closely supervised
the extensive security measures
taken during Inonu's tour, has
warned the RPP against a recur-
rence of the disorders which
took place along Inonu's route.
He charged that the RPP's actions
were trampling on the law of
the land and leading the nation
to anarchy. The government
limited news coverage of,the
incidents and reportedly plans
to restrict independent newsmen
from accompanying political fig-
ures on their trips throughout
the country. The government
may also restrict the number of
political conventions.
sition.
25X1
25X1
measures against the oppo-
The well-disciplined
Turkish Army has a strong
tradition of subordination to
civil authority. Therefore,
chances of military inter-
vention in politics appear
slight unless Inonu should
be seriously injured in fur-
ther disorders, or unless
the government should apply
blatantly illegal repressive
SPLIT PROBABLE IN SOMALIA'S GOVERNING PARTY
A split along tribal lines
in the Somali Youth League (SYL)
--the moderate governing party
in the Italian trust territory
of Somalia in East Africa--may
follow the government's accept-
ante on 8 May of the resigna-
tion of Minister of Interior
Bogor. Such a split would
create political instability
conducive to further foreign
meddling, especially by the UAR.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 May 1959
Since Bogor has controlled the
security forces--a large number
of whom are members of his Darot
tribe, the country's Second ]arg-
est tribal group--maintenance
of order may become a problem.
Bogor is the leader of the
Darots, who, together with the
storing political rights to two
small parties accused of in-
citing violence preceding the
March parliamentary elections.
As a result of his resigna-
tion, Bogor probably will either
leave the SYL voluntarily or be
expelled from the party at its
forthcoming party con-
gress. This congress,
scheduled to begin on
A y, is t
SOMALI TRIBAL PATTERN th
eMcompositionoof lthe
government for the next
five years. Bogor may.
join the UAR-oriented
Greater Somalia League
--one of the two
parties banned by the
government on 25 Feb-
ruary--or form a new
party composed large-
ly of Darots.
Hawiyas, constitute the uneasy
SYL coalition. The Darots have
frequently criticized the Hawiyas
for using government positions
to increase both their control
over the SYL and their prestige
in the government. Antagonism
between the two tribes caused
a less serious government crisis
in December 1957. The present
government crisis, touched off
by the surprise resignation,
resulted from Bogor's order--
against the will of Prime
Minister Issa, a Hawiya--re-
The Somali Youth
League, hoping to con-
ceal the high-handed
tactics it used in the
recent parliamentary
elections to maintain
its power, has sought
to preserve a semblance
of political unity be-
fore the world and the
United Nations--at
least until the coun-
try achieves the inde-
pendence scheduled for
December 1960. A
split along tribal
lines would destroy this
facade of unity, and might
threaten the political life of
the Hawiya-controlled government,
which is friendly toward the
West. Should the present gov-
ernment be deposed or be forced
to accept more nationalistic
elements in a new coalition
government, another regime could
be expected to adopt a more ex-
tremist attitude and be less 25X1
willing to cooperate with the
West. F777 I
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 May '1959,
under the army-dominated Ne Win
regime, are giving heavy play to,
the Stryguine incident. The
press is concentrating especially
on the rough handling they claim
to have received from Soviet
personnel in trying to cover
Stryguine's forced departure
for the USSR at Mingaladon Air-
port after his defection attempt.
Stryguine's earlier abortive
attempt to escape from his So-
viet colleagues by jumping out
of a hospital window had caused
a sensation in Rangoon.
According to the Burmese
radio's home service on 12 May,
seven reporters are taking "le-
gal action," possibly a demand
for damages against the Sovi
Embassy staff.
A Burmese court has issued
two warrants for the arrest of
the TASS correspondent, who has
been charged by U Law Yone, the
editor of the influential Ran-
goon Nation, with criminal libel.
Law Yons ire was :aroused by
a TASS release alleging th.t he
had received $34,000 from the
SECRET
25X1
25X1
American Embassy in Rangoon.
Rangoon police have been unable
to locate the TASS representa-
tive, who failed to appear in
court on 8 May for his first
day of trial. His failure to
appear will almost certainly
lead the Burmese public to pre-
sume that he is in hiding at
the Soviet Embassy.
25X1
The case puts Moscow 25X1
in a dilemma: flight from
Burma by the defendant, who has
no diplomatic status, would in-
vite strong Burmese censure;
should he face trial, he is
likely to be convicted.
While the damage to So-
viet prestige in Burma is
by no means irreparable, the
position of the USSR now is
probably weaker than it has
been at any time since the
two countries : established
relations in 1951. Moreover,
as long as the Ne Win gov-
ernment is in power, Moscow's
opportunities to regain its
lost influence will be min-
imized. C
NOTES AND COMMENTS
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 May 1959
The election outcome close-
ly parallels that of 1953 and
contrasts with the elections in
May 1956, when Chancellor Raab
of the People's party nearly won
a parliamentary majority by ex-
ploiting his role in the State
Treaty negotiations with the
occupying powers. The Social-
ists now have restored the bal-
ance by gains from both the
People's party and the Commu--
fists. The latter lost nearly
AUSTRIAN PARLIAMENTARY ELECTIONS
1953
1956
1959"
PEOPLE'S PARTY
1 781777
1 999 9
86
1932 690
SOCIALIST PARTY
1818577
1 8732
95
1953566
LIBERAL PARTY
472 886
283 7
49
335 699
COMMUNIST PARTY
228 159
192 4
38
142 608
905124 14 MAY 1959
one fourth of their 1956 vote
and failed to obtain even their
so-called "basic mandate" in
Vienna. These losses reflect
not only the relative content-
ment of the Austrian worker but
lingering public resentment over
the suppression of the Hungarian
revolt.
Raab seems to have little
alternative to reconstituting
the coalition approximately on
Socialist terms. Conceivably,
he might--as he did in 1953--
seek support from the extreme
right-wing Liberals, who gained
two parliamentary seats, but
this is unlikely in view of the
electorate's clear preference
for continuation of the coali-
tion and the probable opposition
of President Schaerf, who is a
Socialist. The Socialists are
also in a good position to re-
sist any revival of Raab's pre-
election demand for revising
the coalition pact to his own
party's advantage.
There is likely to be
greater difficulty over the re-
distribution of ministerial
posts, a slight majority of
which now are controlled by the
People's party. A Socialist
bid to head the Foreign Ministry,
held by the People's party since
1945, seems most likely. Bruno
Kreisky, the present state sec-
retary for foreign affairs and
an influential Socialist intel-
lectual, is known to aspire to
the top position, and Foreign
Minister Figl may be urged to
accept the governorship of
Lower Austria.
Minister of Interior Helmer,
a Socialist with an internation-
al reputation for fearless anti-
Communist actions during the
occupation, has already announced
his retirement. Incumbents in
the Ministries of Justice, Trade,
Agriculture, and Communications
and Power--as well as several
state secretaries in these min-
istries--may lose their jobs
or be shifted elsewhere. Such
a drastic reshuffle would be
unusual in Austria, but major
innovations in either domestic
or foreign policies would
probabl not be involved. 71
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 May 1959
ICELANDIC-BRITISH
After several weeks of
relative quiet, Iceland's eight-
month-old fishing dispute With
Britain has flared up again as
a result of the more aggressive
tactics adopted by both Ice-
landic coast guard paffol craft
and British fishery protection
vessels. Clashes occurred on
29 and 30 April when a British
destroyer prevented Icelandic
patrol vessels from arresting
Teen land
d
ea
9 BEINSEY
trawler operators observed fish-
ing within the 12-mile fishing
limit unilaterally declared by
Iceland last September as well
as within the older four-mile
belt which Britain has not rec-
ognized-but has tacitly accept-
ed. The American Embassy in
Reykjavik expects an "intensi-
fied wave of public indignation"
in Iceland when the government
releases photographs of the
latest incidents and the results
of a court hearing on the case.
British trawler owners
reportedly are particularly
concerned over the possibility
of casualties in the dispute,
which on three separate occasions
--the last on 30 April--involved
the firing of warning shots.
London has delivered two notes
to the Icelandic Government pro-
testing these incidents, but
Reykjavik has already dismissed
the British version of one of
them as fabrication.
The Icelandic Govern-
ment has also refused
to assure British trawl-
er owners that it will
not bring charges against
trawlers submitting to
arrest within the four-
mile belt for also vio-
lating Iceland's uni-
laterally extended 12-
mile fishing limit. The
owners evidently now
will order the trawlers
to avoid arrest.
The present politi-
cal situation in Iceland
offers little hope that
the government will be
able to follow a more
conciliatory line in the
weeks ahead. With at-
tention focused on the
parliamentary elections scheduled
for 18 June, all parties have
united to support a parliamentary
resolution protesting British
infringements. In order to pre-
vent the Communists from running
away with the issue in the elec-
tion campaign, the minority So-
cial Democratic government may
be increasingly tempted ,. to.
25X1
curry public favor with more
radical measures.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 May 1959
The Macmillan government
is moderately optimistic over
prospects that increased Anglo-
Soviet trade will result from
efforts of the official British
trade mission which arrived in
Moscow on 12 May. It also sees
the mission as .-part 'of the.- ,1.argL
er "effort to Ifromotc contacts
with the USSR.
London considers: the... Soviet
shortage .of sterling-and its own
refusal to -rant government
I
British industrial and
commercial banking interests
nevertheless appear convinced
that; the Soviet Government is
prepared to buy capital equip-
ment; from the West for its
seven-year economic program.
Industrialists were impressed
last; March with the Soviet par-
liamentary delegation's show of
interest in buying electronic
equipment and plants for manu-
facturing chemicals, fibers, and
plastics, Commercial banking
.
,, RE-EXPORTS
EXPORTS
credits or to guarantee long-
term private credits major stum-
bling blocks to any appreciable
trade expansion. Premier Khru-
shchev insisted during Prime
Minister Macmillan's visit to
Moscow that trade between the
two countries could be doubled,
provided satisfactory financial
arrangements could be made.
However, British officials pri-
vately compare the present So-
viet proposal for five-year
credits worth a tota:i of 70O,-
000,000 to KhrushcheYv' 7:ignly
publicized 1956 "shopping" list."
They point out that there has
been no significant trade in-
crease since 1956 and that
British trade with the entire
Sino-Soviet bloc has remained
only about 3 percent of Brit-
ain's total trade.
While the govern-
ment is aware of the strong op-
position among some NATO coun-
tries to granting credits to
facilitate Soviet trading ar-
rangements, it has publicly
stated its willingness to guar-
antee private medium-term credits
--from six months to five years.
It revealed in Parliament re-
cently that several government-
guaranteed contracts have al-
ready been negotiated. The
American Embassy considers it
extremely unlikely that the
Macmillan government will re-
verse this policy, since not only
Labor--which in the past has pushed
for. closer...- relations with the 25X1
USSR--backs,*it,. but.also.Conserva-
tive memoers of Parliament,
by ORi )
firms are supporting
the industrialists by
claiming that unused
resources of British
commercial financing
are large enough to
give government-guar-
anteed private credits
to the USSR and still
maintain the ability
to assist less devel-
oped countries.
(Concurred in
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 May 1959
CHILEAN PRESIDENT'S
Chilean Finance Minister
Vergara's visit to the United
States starting 15 May to com-
plete negotiations for a siz-
able loan is part of President
Alessandri's efforts to over-
come his country's persistent
economic instability.
In his first six months,
the new President's prospects
for carrying out his economic
program have been aided by a
rise in copper prices from 25
cents to 31 cents per pound.
This is a considerable asset
for the Alessandri program,
since copper accounts for a
major portion of both export
earnings and government reve-
nues. A one-cent change in the
copper price is the equivalent
of $6,000,000 in government tax
revenues.
Alessandri, whose conserv-
ative. supporters do not con-
trol Congress, has scored a
major victory in obtaining pas-
sage of an omnibus economic
bill which included a grant to
the President of extraordinary
powers for one year. The bill
had been repeatedly modified
by each congressional chamber,
thus necessitating repassage
by the other house, but in the
version finally ratified on 6
April only eight of 313 articles
represented congressional sug-
gestions which the President
opposed.
Alessandri's program., how-
ever,'faces a disturbing rise
in the rate of 'Chile's inflation.
With inflation for the first
quarter of 1959 at 12.9 percent,
ECONOMIC PROGRAM
a marked increase over the 9.5
percent of the first quarter of
1955 and almost three times
higher than the rate in neigh-
boring Bolivia, the government
has been forced to abandon its
goal of keeping inflation for
1959 to 20 percent. Unemploy-
ment of 9 percent in the coun-
try as a whole is another factor
for unrest, but it lessens the
inflationary force of the govern-
ment's program of increasing
production.
This is particularly true
of the program--already under
way--to combat the housing
shortage, which Alessandri terms
the "most serious of all" Chile's
problems. The planned construc-
tion of between 40,000 and 50,-
000 houses annually is unlikely
to cause serious wage inflation,
at least initially, since un-
employment is especially high
among construction workers.
Alessandri believes that
increased production is the
only way to combat inflation
and is seeking foreign capital
to further this aim. The nearly
completed loans of about $130, -
000,000 from public and private
sources in the United States
are designed in part for debt
payment and in part for the
economic development program.
The Alessandri regime appears
to have completed the prepara-
tory phase of its economic
program and to be enter-
ing the second phase of
real accomplishments.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 May 1959
PATTERNS AND PERSPECTIVES
SOVIET EFFORTS TO IMPROVE ECONOMIC PLANNING
With the Seven-Year Plan
launched, Soviet economic plan-
ners are devoting their atten-
tion to improving planning tech-
niques, a chronic problem in
the "command economy" of the
Soviet Union, and one now as-
suming special importance un-
der the new territorial system
of economic administration.
A. N. Kosygin, speaking at
the 21st party Congress two
months before he replaced I. I.
Kuzmin as head of the State
Planning Committee (USSR Gos-
plan), identified several prob-
lems under study: setting cri-
teria for making decisions on
investments, reducing anomalies
in pricing, and narrowing the
very wide differences in prof-
itability, of enterprises.
The effective-
ness of economic plan-
ning is conceived by
the Soviet leaders
and population alike
as an increasingly
significant factor in
the drive to "catch
up with the United
States" in per-cap-
ita output.
Since at least
1956, and particu-
larly in recent
months, broad in-
terest has been shown
by Soviet planners
and economists, po-
litical leaders, and
even the general pub-
lic, in technical
problems of economic
planning. Discus-
sions, lectures, and
academic defenses of
dissertations con-
cerning technical
planning have occa-
sioned lively re-
sponses and general
participation to a
degree unknown in earlier years.
Articles and books on these
topics are serious in content
and less propagandistic than
heretofore. Even Western econ-
omists visiting the USSR have
been drawn into these discus-
sions.
Decisions by the party cen-
tral committee and the USSR Coun-
cil of Ministers--both now
chaired by Khrushchev--must be
translated into detailed eco-
nomic plans. At each level of
economic administration, direc-
tives must be prepared and is-
sued by appropriate planning
staffs.
The Soviet planners' task
is complicated by Khrushchev's
desire to accomplish "every-
thing at once." Under Stalin
a
ROLES PLAYED BY SELECTED SOVIET BODIES IN THE PROGRAM
TO DEVELOP AND REFINE ECONOMIC PLANNING METHODS
USSR Gosplan (State Planning Committee)
Responsible for economic planning operations at the all-union level; has
its own economic research institute; with the USSR Academy of Sciences
and the USSR Ministry of Higher Education, initiated in November 1958
a program of coordinated research on problems related to planning meth-
ods. Chaired by Kosygin.
USSR Academy of Sciences
Responsible for scientific research; recently set up a separate econom-
ics department; supervises a number of important economic research
institutes; deals with interindustry relationships at the new Siberian
scientific center at Novosibirsk; Academy President Nesmeyanov
criticized "lagging economic ;science" in his speech to the 21st party
congress.
USSR Ministry of Higher Education
Responsible for graduate training, including the work of faculties and
institutes of economics under its jurisdiction; in order to bring educa-
tion "closer to life," the ministry and its institutions have become more
active recently in research and consultative work supporting the econ-
omy and its planners; probably will play a major role in disseminating
new economic planning techniques, but only a minor one in their devel-
opment.
State Scientific-Economic Council of the USSR Council of Ministers
Responsibilities of this new body have not been published; it may have
over-all responsibility for directing and coordinating the program to
develop and refine economic planning techniques; in this connection its
principal functions would be to coordinate research, and to review and
recommend to the USSR Council of Ministers suggested changes in plan-
ning policies and methods; Kuamin, former chairman of USSR Gosplan
and strong critic of economists' support of planning, was named to head
this body in mid-March, shortly after its formation.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 May 1959
TIME PERIOD
LONG-RANGE
PLANNING
CURRENT PLANNING
SUPPLY ALLOCATION
LABOR AND
TECHNICAL
WAGE MATTERS
INNOVATIONS
PRIOR TO 1948
USSR Gosplan
USSR Gosplan
USSR Gosplan;
USSR Gosplan
USSR Gosplan;
Ministries
Ministries
USSR Gosplan
USSR Gosplan
State Committee for
USSR Gosplan
State Committee for
1948
Material-Technical
New Technology
Supply (Gossnab);
(Gostekhnika);
Ministries
Ministries
USSR Gosplan
USSR Gosplan
Gossnab
USSR Gosplan
USSR Gosplan;
State Committee for
Ministries
1951
Food and Industrial
Supply
(Gosprodsnab);
Ministries
1953
(AFTER STALIN'S
USSR Gosplan
USSR Gosplan
USSR Gosplan;
USSR Gosplan
USSR Gosplan;
DEATH)
Ministries
Ministries
USSR Gosplan
State Commission for
Gosekonomkomissiya;
State Committee for
State Committee for
1955
Current Planning
Ministries
Labor and Wages;
New Technology
(Gosekonom -
USSR Gos Ian
(Gostekhnika);
komissiya)
Ya)
Ministries
USSR Gosplan
USSR Gosplan
USSR Gosplan;
State Committee for
USSR Gosplan;
1957
Directorates of
Labor and Wages;
State Scientific-
(AFTER THE
REORGANIZATION)
Supply and Sales
USSR Gosplan
Technical
of the abolished
Committee;
ministries merged
Retained ministries
into USSR Gosplan
USSR Gosplan
USSR Gosplan
USSR Gosplcin;
State Committee for
USSR Gosplan;
Main Administra-
Labor and Wages;
State Scientific-
tions of Inter-
USSR Gosplan
Technical
republic Supply
Committee;
1959
State committees for
specialized technol-
ogies replacing the
temporarily
retained ministries
EVOLUTION OF THE SOVIET CENTRAL PLANNING APPARATUS
ASSIGNMENT OF SELECTED PLANNING FUNCTIONS AMONG THE PRINCIPALLY RESPONSIBLE ORGANIZATIONS
NOTE: USSR Gosplan (now the State Planning Committee) has been officially called by other names
at different times since World War II, but it has always been popularly referred to as "Gosplan."
the planners were confronted
with a relatively simple array
of priority programs; now, how-
ever, additional tasks must be
assigned their proper places in
a broad, more detailed pattern
of priorities. Techniques must
be refined for preparing and
checking plan drafts prior to
their issuance, as well as for
monitoring, adjusting, and con-
trolling plan fulfillment. As
part of the renewed attack on
these problems, a number of new
agencies have been created
which may have important func-
tions in the development of
planning techniques.
Background
Even under Stalin--and be-
fore--regime responses to eco-
nomic problems usually resulted
in organizational changes af-
fecting the planning organs,
reflecting the central role of
the planning process. Such or-
ganizational changes have af-
fected not only USSR Gosplan,
the principal central planning
organ, but from. time to time
other bodies with important plan-
ning functions have been estab-
lished, abolished, merged, or
realigned in response to particu-
lar problems.
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14 May 1959
Material shortages experi-
enced during postwar reconstruc-
tion led to the establishment
in 1947 of a State Committee for
Material-Technical Supply (Gos,..
snab);at the same time, to fos-
ter technical innovation, a
State Committee for New Tech-
nology (Gostekhnika) was set up.
Gossnab itself was revamped
again in 1953, and following
Stalin's death that year was
merged into USSR Gosplan in a
general organizational consol-
idation.
Later, following maneuver-
ing on succession as persistent
economic problems again came to
the fore, a State Committee on
Labor and Wages was set up to
work out a new wage pattern
more in keeping with actual pro-
duction conditions; Gostekhnika
was re-established in the con-
tinuing drive to exploit tech-
nological advances for output
increases; and, in an attempt
to improve the efficiency of
current planning through spe-
cialization of short-term plan-
ning functions, the State Com-
mission for Short-Term Planning
(Gosekonomkomissiya) was estab-
lished as an entity separate
from USSR Gosplan. Apparently
these moves were not uniformly
successful.
1957 Reorganization
Khrushchev's reorganiza-
tion of industry and construc-
tion, with its stress on region-
al administration in place of
specialized administration
through ministries, which it
largely abolished, attempted
among other things to resolve
important planning problems.
To strengthen the coordination
and integration of long-term
and current plans and planning
methods, USSR Gosplan once
again absorbed the functions
of Gosekonomkomissiya, which was
abolished. On the other hand,
the State Committee on Labor
and Wages was retained, imply-
ing that the program for wage
reform required a separate or-
gan devoting full time to its
development and implementation.
The reorganization raised
new problems of its own, how-
ever. To forestall disruption
of supplies, as well as to im-
prove the consistency of supply
planning with production plan-
ning, the sales and supply or-
gans of abolished industrial
ministries were merged tempo-
rarily into USSR Gosplan with
evident success.
As the transition period
passed without significant dis-
ruption of industrial production,
the Long-range policies of the
reorganization aimed at improv-
ing economic efficiency were
followed more directly. To in-
crease the participation of re-
public, regional, and local or-
gans in the implementation of
centrally determined supply
programs and policies, the supply
departments of USSR Gosplan were
reorganized into "main administra-
tion,.; for interrepublican sup-
ply." These units were to es-
tr,bli.sh policy and monitor op-
erations, but it was left to
republic and sovnarkhoz author-
ities to spell out the specific
details for local implementa-
tion. This was expected to im-
prove economic efficiency through
better accommodation to local
conditions.
In order to promote tech-
nical innovation in production
of military goods and certain
other fields, some half-dozen
state committees replaced those
industrial ministries which had
been retained temporarily dur-
ing the initial transition peri-
od of Khrushchev's reorganiza-
tion.
Greater reliance has dome
to be placed on local initiative.
Recent economic plans have given
heavy consideration to initial
plan drafts prepared by each en-
terprise. Although these drafts
are based on informal guidance
given the enterprise about the
regime's main goals, they provide
important information about the
production capabilities of the
enterprises as seen by local of-
ficials. At each administrative
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 May 1959
level on the way tip, these sub-
missions are reviewed and melded
into a more general draft plan
for submission higher: u.p...
Each of these regional and
republic draft plans is intended
to be well integrated, reflect-
ing the production possibilities
of the area. Nevertheless, be-
cause the central authorities
thus far have retained a tight
rein on the allocation of in-
vestment resources, comprehen-
sive integration of economic de-
velopment and production plan-
ning ultimately depends on ac-
tion by USSR Gosplan.
The increased authority
and responsibility assigned the
republics and sovnarkhozy for
handling supply administration,
for maneuvering the resources--
especially labor--assigned them,
and for detailing output plans
for subordinate activities seem
to have induced an active spirit
of initiative and participation
among administrators and workers
at all levels. This present
mood may be an important if in-
tangible factor tending to im-
prove local adaptation and im-
plementation of central deci-
sions.
21st Party Congress
The main item on the agenda
of the Soviet 21st party con-
gress was ratification of the
control figures for the Seven-
Year Plan (1959-1965), and lead-
ing economic planners and scien-
tists as well as Soviet polit-
ical leaders discussed problems
of economic planning. A. N.
Nesmeyanov, president of the
USSR Academy of Sciences,
charged "lagging economic
science" in the Soviet Union
for failing to keep pace with
the requirements for more ad-
vanced economic planning tech-
niques. Kuzmin, at that time
still top Soviet planner, was
critical of the theoretical
support provided the long-term
planners by the economists in
working out the draft Seven-
Year Plan.
Deputy Premier Kosygin iden-
tified several important planning
problems. In hip review of the
seven-year plans` affecting con-
sumer-goods marketing and pro-
duction, he remarked on the
difficulty of deciding among
a number of investment alter-
natives in planning the expan-
sion of the sugar-refining in-
dustry.
The problem of choosing a
specific development program
had already received wide atten-
tion in connection with the pro-
gran, for expanding electric power
generation capacity. Here a de-
cision had to be made between
construction of hydroelectric
dams--involving larger capital
investments and longer delay be-
fore operation, but lower gen-
erating costs--and construction.
of thermal generating plants.
Despite their higher operating
costs, Khrushchev favored the
thermal plants because they
could begin producing elec-
tricity more quickly.
Kosygin also brought up
questions of accelerating tech-
nological innovation and,, in
reviewing retail trade plans,
he suggested that "the author-
ity must be vested in indus-
trial enterprises to make
necessary amendments to their
production plans in accord-
ance with changes in consumer
demand." Kosygin further spoke
of the need "to continue work
on regulating and eliminating
disproportions in prices...and
to abolish unjustified diversity
in profitability." He noted
that the profitability of pro-
ducing various coal-mining
machines ranged from a loss of
16 percent to a profit of 45
percent.
Proceedings at the con-
gress confirmed that Soviet
economists and planners are un-
der pressure to refine planning
techniques in order to improve
economic efficiency. At the
present time, the main criticism
centers on the economists for
their failure to supply planners
with technical support.
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14 May 1959
Plight of Economic Science
The lag in Soviet work in
theoretical economics is often
attributed by Western observers
to dependence on orthodox Marxian
economic dogma. One American
economist who recently returned
from the USSR noted that a major
aspect of the work of any Soviet
economist seemed to be to dis-
cover a Marxian "hook" on which
to hang any new theoretical de-
velopment he might wish to in-
troduce. This almost theologi-
cal approach to Marxism has
indeed colored theoretical work
by Soviet economists, but recent
economic policy has been remark-
ably flexible and pragmatic, and
the present regime will probably
not permit rigid theoretical dog-
matism to affect economic policy
adversely.
A number of recent moves
have been undertaken to improve
Soviet work in economics. USSR
Gosplan initiated a program in
late 1958 for improving the di-
rection and coordination of work
carried on by the principal
Soviet economic research agen-
cies. Participating With USSR
Gosplan were units of the USSR
Ministry of Higher Education
and various institutes of the
USSR Academy of Sciences. A
new economics division was sub-
sequently given independent
status under the USSR Academy
of Sciences; this division is
composed of personnel and or-
gans formerly under a more gen-
eral division which had also..
included philospohy and law......
Economic research closely
related to planning problems
seems to dominate present Soviet
research programs in the social
sciences. The newly estab-
lished Siberian Division of the
USSR Academy of Sciences report-
edly has been designated the
center for research on inter-
dependent relationships among
branches of the economy--in-
dustry, agriculture, and trade,
for example.
This center is to be sup-
ported by a major high-speed
electronic computer facility
which will permit it to do work
along the lines associated in the
United . States; with, the "in-
put-output" work of Harvard
economist W. Leontief. Leontief,
who visited Moscow several
months ago, was welcomed warmly
and reported that a concerted
program for exploring the plan-
ning application of techniques
similar to his work at Harvard
was now under way in the Soviet
Union, even though Soviet econ-
omists in the past have crit-
icized his work because it
ignored Marxian dogma.
The effort to accelerate
lagging Soviet economic study
extends beyond merely bolster-
ing research work relevant to
economic planning problems; it
includes an apparently serious
effort to "borrow" and exploit
from Western economic work any-
thing which might contribute to
better theoretical support of
planners.
The pressure on theoret-
ical economic circles in the
Soviet Union may be related to
the recent formation of a new
state scientific-economic coun-
cil of the USSR Council of Min-
isters. Kuzmin was selected to
head this new body, possibly
with the mission of spurring
development and refinement of
economic planning methodology.
If this is true, Kuzmin
uay take with him the program
for coordinating economic re-
search that he had initiated at
USSi, Gosplan. He would be con-
fronted with formulating theoret-
ical solutions to a range of
thorny problems, such as the
choice of investment programs,
and the problems of "balance"
among economic plans for pro-
duction and development. He
would also be concerned with
providing economic criteria to
subordinate officials to assure
consistency between local
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 May 1959
implementation and the regime's
central economic policies and
goals,
Serious study of economic
planning methodology--untram-
meled by rigid adherence to out-
moded, irrelevant aspects of
Marxist economic dogma-could
contribute to long-term improve-
ment of the effectiveness of
Soviet economic decision-making
and planning in implementing
the policies and programs de-
cided on by the regime. In
some measure at least, this
should offset the factors tend-
ing to slow the rate of
Soviet economic expansion.
(prepared by 25X1
ORR)
THE SUEZ CANAL TODAY
Since Egypt nationalized
the Suez Canal Company in July
1956, Cairo's Suez Canal Au-
thority has demonstrated its
ability to'operate the canal as
effectively as the old company
and to handle substantially more
volume without any major canal
improvements. Without an in-
crease in tolls, revenues in
1958 were $120,872,000 compared
with only $92,414,000 in 1955--
the last full year of operation
under the old company. The fu-
ture of the canal authority may
still be troubled, however.
Plans for securing a World Bank
loan.: to improve the canal have
been hampered by British finan-
dial maneuvers, and pilots have
considered actions short of a
strike to maintain their wages
and working conditions.
Canal Settlement
The Suez Canal officially
opened u November 1869, and the
operating company's concession
was to have run to 1968. Egypt's
nationalization in 1956 was
widely attributed to the with-
drawal of a tentative Western
offer to finance the Aswan High
Dam. The Egyptian minister of
state, however, has stated that
as early as 1954 President Nasir
ordered him to study the legal
and practical problems of na-
tionalization. Apparently na-
tionalization was planned for
1959 or 1960; the Aswan High Dam
issue merely accelerated the
seizure.
Largely through the efforts
of the International Bank for
Reconstruction and Development,
an agreement was reached in June
1958 between the VAR and Suez
Canal Company shareholders--
principally the British Govern-
ment. Cairo agreed to pay a
total compensation of $81,221,--
000, of which the initial pay-
ment of $15,211,000 had been
collected by Paris and London
in transit tolls since the sei--
zure. The remaining $66,010,000
was to be paid in six annual in-
stallments by i January 1964.
Cairo paid the first in-
sta:Llment promptly on 1 January
1959 With funds especially re-
leased by Britain from Egypt's
blocked sterling accounts held
in London. The British release
resulted largely from the ef-
forts of the president of the
World Bank, who was then at-
tempting to bring about a Brit-
ist--Egyptian financial settle-
ment.
The agreement contains a
clause to the effect that if
Britain released Egypt's blocked
sterling, the UAR would immedi-
ately pay over the equivalent
of the next two maturing install-
ments--a sum of $22,960,000.
This clause apparently was to
provide the Suez Canal Company
with, some assurance that subse--
quen,t payments would be made.
London, impatient with
Cairo's delay in :resuming
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 May 1959
diplomatic relations, now has
used the clause to put pressure
on the Egyptians. The Bank of
England has removed all restric-
tions on Egypt's blocked ster-
ling account, and Georges-Picot,
head'of the old Suez Canal Com-
pany, has demanded immediate
payment of the $22,960,000 from
the UAR4
00' 32 30'
M E D I T E R R A N E A N S E I
El SAihicn
k1l
Dikirnis
EI Ma""
31?
00'
~ Rnma/ X31?
St. 00'
R
Abu Kehir
30?
30'
Sla C -~_ `~.
1
krn
~~- GULF %
OF
S U f Z
324,30' 30454
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 14 May 1959
Egyptian officials are re-
ported enraged by this action.
Foreign Minister Kaissouni in-
formed the World Bank mission
studying the possibility of a
substantial loan to improve the
canal that it would be prefer-
able for the mission to leave
before undertaking its economic
study if a subsequent loan ap-
plication would be denied on
the basis that Egypt is "in de-
fault." British officials have
pointed out that their country
would be "unable" to vote for
such a loan if Cairo fails to
honor the compensation agree-
ment with the Suez
Suez Pilot
About 180 ;.of
pilots have taken
Canal
Company.
Crisis
the
234
canal
to
the
Egyptian
courts their protest against the
administration of Colonel Mahmud
Yunis, director of the Suez Canal
Authority. The protest is aimed
at halting reductions in wages
and at maintaining present work-
ing conditions; it also attacks
the lowering of the previously
stiff standards for new appli-
cants. Complaints have also
been made to Nasir and to the
vice president, but the dispute
continues.
East German and. Polish
pilots reportedly have received
permission from their embassies
to join in the protest, and the
Soviet pilots' request to par-
ticipate apparently is still
pending. Despite various pres-
sures, including the canal au-
thority's threat to have Egyp-
tian pilots recalled to the
navy, no defections from the
ranks of the protesting pilots
have been reported. The pilots'
complaints seem directed chiefly
against the army engineers en-
gaged by Colonel Yunis. Some
specific protests may
result in an "expose"
involving these men.
Oil Shipments
a
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Transit of Middle
East oil. to European
markets continues to
be the major use of..
the canal. Last year
tankers carried an
amount probably equiv-
alent to 70 percent of
the canal's total north-
bound tonnage. About
45 percent of the crude
oil produced in the
Middle East is shipped
through Suez. In 1958
Kuwait shipped about
77 percent of its crude
oil output through the
canal; this was over
PATTERNS AND PERSPECTIVES Page 8 of 16
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CURRENT INTELLIGENCE WEEKLY ,~ SUMMARY
14 May 1959
shareholders of the old Suez
Canal Company. The situation
would have been substanially
worse without canal revenues.
Israeli Transits
The UAR has made some con-
cession in the dispute over
Israeli Suez Canal traffic. In
order to avoid UN Security Coun-
cil consideration of the recent
UAR seizures of cargoes from
two Israeli-chartered neutral
COMPARATIVE TANKER SIZES
Canal Expansion
Three American dredging
firms are working on the two-
year $21,525,000 Eighth Program
which calls for deepening the
canal by September 1959 to al-
low passage of ships of 37-foot
draft. Work on a so-called
Nasir Plan, estimated to cost
between $290,000,000 and $345,-
000,000,still awaits completion
of financial arrangements.
DRAFT: 30 FT LENGTH: 503 FT
THE WARTIME 'T-2'
DRAFT: 35-36FT LENGTH: 660.685 FT
LARGEST TANKER THAT CAN PASS
THROUGH SUEZ CANAL FULLY LOADED
DRAFT: 39 FT LENGTH: BOL FT
CAN PASS THROUGH SUEZ i:ANAL
PARTLY LOADED OR IN BAI LAST
DRAFT: 46 FT LENGTH: RI!; FT
CANNOT USE SUEZ CANAL
DRAFT: 48 FT LENGTH: 9511 FT
CANNOT USE SUEZ CANAL
ships, Cairo officials now say
Israeli+chartered ships outbound
from Israel under certain con-
ditions will be permitted to
pass through the canal with
cargoes intact. The cargoes
must contain nothing which
would endanger the canal's se-
curity, and the ships' manifests
must show third-party ownership
of the cargoes. Israeli-flag
vessels, however, continue to
be denied passage.
Reports of the
plan are vague, but the
first stage apparently
calls for deepening
to allow transit of ves-
sels of 40-foot draft--
about 55,000 tons. This
stage tentatively is
scheduled for comple-
tion by the end of 1970.
The remainder of the
plan, which has a com-
pletion date of 1973-
75, calls for modifica-
tions to allow passage
of supertankers of 45-
foot draft--about 70,-
000 tons. The plan
also calls for "doubling
the canal;' which could
either mean a new paral-
lel canal or a doubling
of the existing canal's
width.
Despite various
problems, canal traffic
probably will continue
to increase even in the
absence of any signif-
icant'; expansion pro-
gram such as the Nasir
Plan. Egypt is likely
to oppose the Saudi proposal to
construct an Arab-owned pipe-
line roughly paralleling
the existing TAPLINE from
Saudi Arabia to the''.Med-
it.e:rranean, ; since , Cairo
would ' stand ~ to lose' ,
the equivalent of ten
'Gents' on every-, barrel
which thus avoided the
canal.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
14 May 1'59
PROBLEMS OF ITALY'S CHRISTIAN DEMOCRATIC PARTY
Factionalism and personal
rivalries among the leaders of
Italy's dominant Christian Demo-
cratic party (CD) are plaguing
the three-month-old minority
government of Premier Antonio
Segni and prevent*ng the govern-
ment from carrying out effec-
tively its program of socio-
economic reform. Lack of coop-
eration among the center parties
obliges the Christian Democrats
to rely on rightist parliamentary
support, and a stronger national-
istie:-, attitude on foreign af-
fairs has already resulted.
Former Premier Amintore Fanfani,
who was overthrown last January
because of internal party rival-
ries, is campaigning to regain
control of the party in the hope
of orienting it more toward the
left.
Cleavages in Party
The Christian Democratic
party includes men of a wide
variety of political views and
has a long record of factional-
ism.. Its deep cleavages were
accentuated early in 1959 when
Fanfani quit both the premier-
ship and the party secretariat
because numerous Christian Demo-
cratic deputies torpedoed his
program in secret ballots. Three
weeks elapsed after the fall of
Fanfani's coalition with the
Democratic Socialists before
Segni was able to announce the
formation of a cabinet on 15
February.
In addition to right and
left wings, the CD party has
two center factions and a small
group of "notables"--including
former Premier Scelba, Foreign
Minister Pella, and Justice Min-
ister Gonella--who are constantly
maneuvering to increase their
personal influence. Fanfani's
center group is close to the
left-wing faction, while Pre-
mier ;Segni, Finance Minister
Tavia;ni, and Industry-Commerce
Minister Colombo control the
other tenter group, which now
depends on the right for support.
Party'?s Problem in Sicily.
The practical consequences
of intraparty bickering have
been highlighted by the anoma-
lous situation in Sicily. The
Sicilian regional government is
headed by a dissident Christian
Democrat, Silvio Milazzo, who
has been in power since last
October with a Communist-support-
ed coalition including Nenni
Socialists, monarchists, and
neofascists. Milazzo and three
other Christian `Democratic`
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14 May 1959
deputies in the regional as-
sembly were expelled from the
party for cooperating with the
extreme left. The Milazzo re-
volt has been attributed to
the machinations of Scelba as
a means of hampering Fanfani's
efforts'to consolidate party
control. National CD leaders
,now fear Milazzo's Sicilian
Christian Social Union could
grow into a second and compet-
ing Catholic party.
Fanfani's successor as
Christian Democratic party sec-
retary, Aldo Moro, opened the
campaign for the Sicilian re-
gional elections on 7 June with
a strong press attack on the
party dissidents and on the
rightist parties for creating
a situation favorable to the
extreme left. Both
Fanfani and Luigi
Gedda, president of
Catholic Action and
director of its mili-
tant civic committees,
reportedly believe the
Christian Democrats will
lose at least seven
of their 37 seats in
the 90-member region-
al assembly, and Gedda
feels the Communists
and Nenni Socialists
may pick up six.
Premier Segni's government,
a Christian Democratic cabinet
supported by the Liberals, mon-
archists, and .neofascists is
an alternative. It has a com-
fortable majority in Parliament,
but its orientation is counter
to the trend to the left evidenced
in the May 1958 national elec-
tions. Far-reaching socio-eco-
nomic; reforms are unlikely in
such a situation; this will prob-
ably benefit the electoral pros-
pects of the Communists and es-?
pecially the Nenni Socialists
at the expense of the Christian
Democrats.
Fanfani's Strategy
A Christian Democratic gov-
ernment relying on strong Social-
ist :support continues to be
NENNI ~
SOCIALISTS
N. (PSI)
CHRISTIAN DEMOCRATS
(CD)
CINAMBER
OP DEPUTIES
5