CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A002800080001-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 42
• Document Creation Date: December 16, 2016
• Document Release Date: March 1, 2005
• Sequence Number: 1
• Publication Date: August 4, 1960
• Content Type: SUMMARY

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COPY NO. 70
OCR NO. 3817/60
4 August 1960
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
NO E HA H
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CENTRAL INTELLIGENCE AGENCY
I i I OFFICE OF CURRENT INTELLIGENCE
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State Department review completed
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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
4 August 1960
T H E W E E K I N B R I E
OF IMMEDIATE INTEREST
REPUBLIC OF THE CONGO . . . . . . . . . . . . . . . . . . Page 1
Brussels, in agreeing to withdraw its forces in Katanga
Province to one base there, appears to be moving slowly
toward a total military evacuation of the Congo. Brussels'
criticism of Hammarskjold's announcement that UN troops
will enter Katanga on 6 August and its characterization of
the Katanga question as subject to negotiation by the
Congolese appear designed to support Katanga Premier
Tshombd without committing Belgium to his defense. Dr.
Bunche has flown to Elisabethville to seek to overcome
Tshombd's refusal to permit the entry of UN troops. With
Brussels unwilling to risk UN censure by retaining its
troops in Katanga, Tshombd may seek UN support for a
compromise in which Katanga would rejoin the Congo in re-
turn for the reorganization of the Congo into a federation
of semi-autonomous provinces. The USSR continues highly
critical of the UN's failure to occupy Katanga.
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DEVELOPMENTS IN SOVIET FOREIGN RELATIONS . . . . . . . . . Page 3
After weeks of denouncing primarily the United States,
Moscow has broadened its diplomatic and propaganda campaign
to include notably sharp criticism of French and British
policy. A TASS statement on 30 July strongly criticized
Premier Debrd's recent statements on foreign policy and
singled out French policy toward Bonn and in Algeria for
attack. London was accused of adopting a new position of
"informed participation in American provocations." The
anti-American offensive was maintained through new notes
on the RB-47, allegations of continued espionage activities,
and charges that the US request for a UN Disarmament Com-
mission meeting was an attempt to "conceal" an unwilling-
ness to negotiate on disarmament. Moscow's counterproposal
that the heads of government attend a disarmament discus-
sion in the UN General Assembly was probably intended not
only to encourage opposition to the US request, but also
to create an impression of Soviet readiness to resume
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CUBAN DEVELOPMENTS . . . . . . . . . . . . . . . . . . . . Page 6
Fidel Castro has evidently put aside his official
duties while under the care of doctors, but the extent
of his illness is uncertain. His brother Raul--who has
cut short his foreign tour--may become nominal head of
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CURRENT INTELLIGENCE WEEKLY SUMMARY
4 August 1960
PART I: (continued)
any caretaker regime. There are some indications that the
pro-Communist clique headed by "Che" Guevara has won in-
creased power in the government. An OAS foreign ministers'
meeting later this month will consider the dangers to the
inter-American system posed by Cuba's ties with the Soviet
bloc. Argentina, Peru, Colombia, and Central America ap-
pear to agree that the Cuban problem is more than a dispute
between Havana and Washington and that it requires hemisphere-
wide action.
NOTES AND COMMENTS
MIDDLE EAST DEVELOPMENTS . . . . . . . . . . . . . . . . . Page 1
A sharp drop which appears imminent in the posted
prices of Persian Gulf crude oil will further strain re-
lations between Arab governments and Western-owned oil
companies. A controversy between the UAR and the Trans-
Arabian Pipeline Company may lead to closure of the pipe-
line. In Libya, King Idris may soon replace Prime Minister
Kubar and other ministers, but no major policy shift seems
likely. In Yemen, the Imam has raised new obstacles to the
American aid program. British authorities in Aden are con-
fident they can contain trouble expected to follow their
crackdown on pro-Nasir labor unions. The UAR's violent
campaign against Iran's reiteration of its de facto recog-
nition of Israel is being echobd somewhat reluctantly by
other Arab states. Iran has officially denied that any
new step is involved beyond the reaffirmation of a ten-year-
old policy.
BRITISH PREPARE FOR AFRICAN TROUBLES . . . . . . . . . . . Page 4
Britain's airlift of an additional battalion of troops
to its strategic reserve in Kenya indicates that London in-
tends to make an effort to control fast-moving develop-
ments in British East and Central Africa. Disturbances
in Southern Rhodesia and a resurgence of Mau Mau activity
in Kenya raised the immediate alarm, but London is also
preparing against disorders in Nyasaland if current con-
stitutional talks fail to satisfy African demands.
EAST GERMANY AND WEST BERLIN . . . . . . . . . . . . . . . Page 5
The Ulbricht regime, backed by Moscow, continues to
try to assert some degree of control over West Berlin's
affairs and to weaken the links between the city and the
Federal Republic. While these moves are essentially
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CURRENT INTELLIGENCE WEEKLY SUMMARY
4 August 1960
PART II (continued)
probing actions, the succession of notes, declarations, and
press conferences of recent weeks are intended to document
the regime's charges that West Berlin is an international
trouble spot and to establish a legal foundation upon which
East Germany can eventually base claims to sovereignty over
the city.
CONTINUING ECONOMIC TROUBLES IN KAZAKHSTAN . . . . . . Page 7
Continuing economic troubles in Kazakhstan, the USSR's
second largest republic, have led to the arrest and im-
prisonment of several collective farm managers for falsi-
fication of statistics to conceal the loss of cattle
during a fodder shortage last winter. The republic's
central committee, at its plenum in June, scored party and
government officials for the "alarming situation" in capi-
tal construction and animal husbandry and warned them that
they must take measures to fulfill plans set for the re-
public.
PEIPING' S FARM POLICIES . . . . . . . . . . . . . . . . Page 8
The Chinese Communists have in the past few weeks
mounted a major campaign to speed up agricultural de-
velopment. Party functionaries are being sent to live
and work on the farms, while industrial workers, the armed
forces, and urban dwellers are being asked to step up their
efforts to help. Persistent food shortages are slowly forc-
ing the regime's leaders to recognize that the farm policies
followed during the leap forward have failed to solve the
problem of feeding the growing population. They appear
prepared to allocate to agriculture more in the way of man-
power, materials, and money and to accept at least some
reduction of industry's growth rate.
PEIPING ENCOURAGES JAPANESE CAMPAIGN AGAINST SECURITY
TREATY . . . . . . . . . . . . . . . . . . . . . . . . . . Page 9
A high-level Chinese Communist labor delegation,
the first mainland group to visit Japan in over two
years, is attending the Sohyo labor federation conven-
tion and the Sixth World Conference Against Atomic and
Hydrogen Bombs. It will encourage renewed efforts to under-
cut the Japanese security alliance with the US. Chou
En-lai's revival on 1 August of Peiping's call for an
atom-free zone in Asia and the Western Pacific is also
an effort to appeal to neutralist sentiment in Japan
on the eve of the anti-bomb congress.
SOUTH KOREAN ELECTIONS . . . . . . . . . . . . . . . . . . Page 11
UN and other observers are agreed that the South
Korean parliamentary elections of 29 July were free and
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CURRENT INTELLIGENCE WEEKLY SUMMARY
4 August 1960
PART II (continued)
conducted fairly despite isolated disorders and violence.
The conservative Democratic party won an overwhelming
victory, but two factions within the party are struggling
for control of the government. An open break between the
factions, however, may be avoided by dividing the major
offices between them.
TURKEY . . . . . . . . . . . . . . . . . . . . . . . . . . Page 12
The military regime that seized power in late May from
the Bayar-Menderes government appears to have become more
confident but is sensitive to continuing expressions of
discontent. There are signs of some growth of popular
dissatisfaction partly on religious and economic as well
as on political grounds. Economic stagnation in the
larger cities could present a serious security problem if
new political instability should develop.
NEW INDIAN STATE OF NAGALAND . . . . . . . . . . . . . .
New Delhi's decision to accede to the demand of
moderate tribal leaders for the creation of a Naga state
within the Indian Union is aimed at ending the seven-
year-old rebellion in the northeastern frontier of
India. The creation of a new political subdivision goes
counter to the Nehru government's general policy, but
New Delhi presumably hopes that its action will undercut
extremist demands for full independence of the Naga area.
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. Page 13
LEFTIST PRESSURES IN MEXICO . . . . . . . . . . . . . . . Page 14
The Lopez Mateos administration is concerned over
mounting leftist pressure on the government, particularly
from a pro-Castro minority which wants to associate Mexico
with the Cuban cause. Recent statements by government
leaders defining Mexico's political orientation as "left-
ist" probably were made in an effort to quiet these critics.
Further public statements of the same type can be expected,
and Mexico probably will continue its policy of equivoca-
tion on the Cuban question.
TRUJILLO MANEUVERING TO AVERT OAS SANCTIONS . . . . . . . Page 15
The resignation of President Hector Trujillo--brother
of the dictator--and the elevation of Vice President
Joaquin Balaguer to the presidency, as well as reported
changes in the military high command, are probably addi-
tional steps by the dictator to create a more favorable
attitude toward the Dominican Government before the OAS
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CURRENT INTELLIGENCE WEEKLY SUMMARY
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PART II (continued)
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ICELANDIC-BRITISH FISHERIES DISPUTE . . . . . . . . . . . Page 16
Iceland seems unwilling to begin negotiations with
Britain, despite the fact that the three-month "truce" in
their dispute over fishing limits expires on 13 August.
Prime Minister Thors probably feels that with the Commu-
nists and other extremists continuing to arouse public
opinion over the issue, his government cannot afford to
enter into negotiations at this time. If British trawlers
and naval escort vessels return to the disputed waters
after the deadline, Reykjavik will be under increasing
ressure to raise the issue in NATO or the United Nations.
PART III
PATTERNS AND PERSPECTIVES
EUROPEAN UNITY: PROBLEMS AND PROSPECTS . . . . . . . . . Page 1
The mutual tariff discrimination which began between
the European Economic Community (EEC or Common Market) and
the European Free Trade Association (EFTA or Outer Seven)
on 1 July was a decisive development affecting the evolu-
tion of an integrated Europe. By failing to persuade the
EEC to water down its economic and political objectives
for the sake of a broader and looser European association
which would avoid such discrimination, the EFTA was de-
feated in its major purpose. Despite palliative measures,
the resulting economic division of free Europe threatens
to widen in the next few years, and any move to close the
breach would require a significant revision of British
foreign policy.
SOVIET BLOC OIL EXPORTS TO THE FREE WORLD . . . . . . . . Page 6
The current rate of oil exports from the Soviet bloc
to the free world--amounting to about 3.5 percent of the
market--is about four times greater than in 1955, when such
exports first attained commercial importance. The rise
in bloc exports, most of which come from the USSR, has
been possible because of increased production in the bloc
and willingness to accept from underdeveloped countries
payment in soft currencies and in commodities for which
there is limited demand on the world market. As for the
industrial countries, the Soviet Union has emphasized the
development of markets there in order to obtain capital
equipment needed for fulfillment of its Seven-Year Plan.
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THE WEEK IN BRIEF
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CURRENT INTELLIGENCE WEEKLY SUMMARY
4 August 1960
OF IMMEDIATE INTEREST
REPUBLIC OF THE CONGO
Belgium, in agreeing to
withdraw its forces in Katanga
Province to one base there, ap-
pears to be moving slowly to-
ward a total military evacuation
of the Congo. Brussels' criti-
cism of UN Secretary General
Hammarskjold's announcement that
UN troops will enter Katanga on
6 August and its characteriza-
tion of the Katanga question as
an "internal" matter subject to
discussion among the Congolese
appear designed to support Katan-
ga Premier Tshomb6 without com-
mitting Belgium to his defense.
Tshomb6, in his conversa-
tions with UN Under Secretary
Dr. Bunche, may seek UN support
for a compromise in which Katanga
would rejoin the Congo in return
for a reorganization of the Con-
go into a federation of semi-
autonomous provinces. The UN
will almost certainly attempt
to avoid becoming further in-
volved as mediator of an inter-
nal Congo;dispute, however, and
will probably seek merely to
dissuade Tshomb6 from forcibly
opposing the entry of UN troops.
Tshomb6's angry opposition to
the UN occupation may force a
delay in the entry; he probably
has no more than 500 trained
non-Belgian troops at his dis-
posal, however, and would be
unable to offer effective re-
sistance to the UN forces, which
now number over 11,000 men.
the Lumumba government. Belgian
officials have declared that UN
entry does not entail the im-
mediate evacuation of Belgian
troops from Kamina. In Brussels,
the Congo crisis has led to dis-
cussions among government lead-
ers of a possible cabinet re-
shuffle. Social Christian and
Liberal coalition partners, al-
though agreeing to share re-
sponsibility for the Congo de-
bacle, have urged the replace-
ment of Congo Ministers de
Schri j ver and Scheyven.
Meanwhile, the major effort
being made by Ghana's Nkrumah
and Guinea's Sekou Tour6 to in-
fluence Premier Lumumba and
other members of the Congolese
Government may presage an early
announcement of some form of
association among the three
states.
Guinean political represent-
atives, brought into Leopold-
ville under military cover, have
been observed along with Soviet
representatives denouncing the
UN to Congolese officials. The
Guineans--who appear to be work-
ing closely with the Russians
in Leopoldville--reportedly also
have urged theLumumba regime to
take strong measures against
domestic opponents and against
Belgians. At'least some Congo-
lese officials are concerned
about Guinean activities in the
rnnanF_
Brussels appears determined
to retain its two Congo bases--
Kamina in Katanga and Kitona in
Leopoldville Province--until such
time as it can negotiate terms
for a complete withdrawal with
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hat efforts be made
to bring in advisers from the
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Federation of Mali as a counter-
weight to the Guineans.
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A N' G O L A
Lumumba's departure from
New York on 2 August apparently
frustrated Soviet plans to request
a Security Council meeting on
the issue of Belgian withdrawal
from Katanga. The TASS chief
at the UN told correspondents
on 1 August that the USSR would
ask for a meeting while Lumumba
was in New York, and a Soviet
AND NYASALAND
FEDERATION OF RHODESIA /--
UN delegate, after conferring
with the Congolese premier, met
with the UN Secretariat regard-
ing the need for a Security
Council session. TASS announced
on 2 August that 20 Soviet medi-
cal workers, including experienced
doctors and surgeons, would leave
for the Congo iii a few days--pre-
sumably the medical aid promised
on 31 July.
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Moscow has stepped up its
efforts to discredit the UN role
in the Congo, and Soviet offi-
cials in Leopoldville and in the
UN are actively encouraging
Congolese authorities in their
demands for total Belgian with-
drawal. Soviet moves appear
aimed at stimulating hostility
among the Congolese toward UN
efforts and at dividing the
Afro-Asian states from Western
members of the organization.
Moscow propaganda has been
especially critical of Hammar-
skjold, charging that he is
supporting the NATO colonial
powers by his "more than con-
ciliatory position" and aggra-
vating the situation with his
"demagoguery." Dr. Bunche has
been accused of "directly par-
ticipating" in Belgian attempts
to bring about an economic
crisis in the Congo in order to
discredit the Lumumba government,
and UN troops have been charged
with acting as a shield to cover
Western military aggression.
Moscow continues to stress
the USSR's support for the Congo-
lese Government and its readi-
ness to "take resolute measures
to rebuff the aggressors"--re-
iterated in a Soviet statement
of 31 July--but there is no in-
dication in recent statements
that dispatch of Soviet forces
is contemplated. Citing the
NATO countries as a group, the
Soviet statement also accused
the "aggressors and their ac-
complices" of trying to strangle
the Congolese Republic economical-
ly and smother its .independence
by armed force. A TASS report
of Lumumba's 28 July Washington
press conference noted his re-
marks concerning a possible
appeal for US military aid, and
referred to "provocative" ques-
tions from US reporters regarding
a request for Soviet help--ap-
parently to play down the sub-
ject of unilateral intervention
by the USSR.
Moscow announced on 1 Au-
gust the appointment of M. K.
Yakolev, former foreign minister
of the Russian Republic (RSFSR),
as ambassador to the Congo. A.
Fomin, who arrived in Leopold-
ville with a small party of of-
ficials on 21 July aboard a Soviet
food plane, has been named charge
d'Affaires.
UN Technical Assistance
Hammarskjold is formulating
plans for UN technical assistance
to the Congo. Implementation de-
pends on the UN's success in se-
curing its recognition as the
controlling channel for assist-
ance from various governments
and private groups and in per- 25X1
suading the Lumumba govern-
ment to make its requests for
aid to the UN.
DEVELOPMENTS IN SOVIET FOREIGN RELATIONS
After weeks of denouncing
primarily the United States, Mos-
cow broadened its propaganda and
diplomatic campaign to include
sharp criticism of French and
British policy. In a long TASS
statement quoting the views of
"Soviet leading quarters, It French
Premier Debre was charged with
"whitewashing the revanchist-
militarist policy of the Adenauer
government" in his foreign policy
address of 25 July. Timed to
coincide with the meeting between
De Gaulle and Adenauer on 29 and
30 July, the TASS statement
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claimed that Debre's remarks
strongly resembled the pronounce-
ments of certain French leaders
on the eve of World War II.
Soviet willingness to crit-
icize the De Gaulle government
more freely since the summit was
also reflected in the TASS ref-
erence to "those French circles
who stand for the continuation
of the bloody war in Algeria."
This new phase of Soviet tactics
was underscored by Khrushchev's
appeal to De Gaulle to spare
the life of an Algerian rebel
sentenced to death. Following
the execution and De Gaulle's
biting reply, Soviet propaganda
claimed to find a steady in-
crease in crimes by the French
military against the Algerian
people.
The American-British talks
on US bases in the UK also drew
a Soviet charge that as a re-
sult of the discussions, British
policy was turning from invol-
untary participation in Ameri-
can "provocations" to one of
informed participation. Moscow
also continued a steady stream
of ridicule and abuse of Ameri-
can policy.
a "strange position" on these
matters.
The emphasis in Soviet
propaganda on alleged US espio-
nage activities was carried
forward by an announcement that
an American spy was apprehended
while attempting to escape from
the USSR to Iran with secret in-
formation.
Germany and Berlin
The 15th anniversary of
the Potsdam agreements provided
new impetus for bloc-wide agi-
tation on the German peace
treaty issue. East German Dep-
uty Foreign Minister Winzer held
a press conference on 1 August
to review the contents of a long
memorandum to the four powers
appealing for a peace treaty
with both German states and
charging that repeated violations
of the Potsdam agreements had
caused all Allied occupation
rights to be void. On 2 August
both Pravda and Izvestia edito-
rialize -aong the same lines,
warning that failure to reach
agreement on a peace treaty
would result in a separate treaty
with East Germany.
In a reply to the US note
of 18 July on the RB-47 incident,
Moscow repeated all the accu-
sations and claims made by
Kuznetsov before the UN Security
Council. The new note, delivered
on 2 August, summed up the So-
viet attitude by charging that
both the U-2 and RB-47 flights
were in essence the same and
stemmed from an "unprecedented
policy of premeditated provoca-
tions." In a similar note to
London Moscow claimed that the
Disarmament
British Government was adopting In a further maneuver to
I counter the US request for a
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Moscow took a more moderate
tack in a protest note to the
Western powers on 28 July a-
gainst West German Bundestag
legislation to establish the
offices of a West German radio
station in Berlin, however, de-
claring that the USSR "has always
been and is in favor of an
agreed settlement" of the Berlin
and German treaty question.
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meeting of the UN Disarmament
Commission, Moscow on 1 August
formally objected to the meet-
ing and proposed instead that the
heads of government attend a
UN General Assembly debate on
the issue. The move, obviously
designed to draw a Western re-,
jection, was also probably aimed
at encouraging the view that the
General Assembly is the proper
forum and encouraging neutralist
opposition to the US request.
The Soviet letter called for
some states and the UN secre-
tary general to invite the
heads of government, especial-
ly of those states "possessing
the greatest military power."
The letter also was designed
to appeal to world opinion as
a peaceful initiative by hint-
ing that not only disarmament
but other important political
issues might be successfully
considered. Soviet officials
at the UN hinted privately that
the bloc would boycott any
Disarmament Commission meeting.
The USSR is also making an in-
tensive effort in New York and
various capitals to gain support
among neutralist states for its
position.
Bloc Policy
Pravda's publication of a
long speech by Italian-party
chief Togliatti reflects pos-
sible Soviet concern over the
uncertainty in the Communist
movement over the new phase of
Soviet policy. Admitting con-
fusion within the Italian party
as to future Communist policies
after the collapse of the sum-
mit, Togliatti declared the "aim
of our struggle" not only has
remained unchanged but has ac-
quired a new urgency. He de-
fined the current international
phase as requiring a new struggle
for creating conditions for con-
vening a summit conference.
Togliatti said "new public pres-
sures" would be an essential
element to force governments to
condemn the US, refrain from
making common cause with the
US, display independent initia-
tive, and, foremost, to reconvene
a summit conference.
In strong terms Togliatti
also defended the Soviet doctrine
on the preventability of war and
went far beyond Moscow in em-
phasizing the destructiveness of
a nuclear conflict. He claimed
there was no contradiction be-
tween a renewed "struggle for
peace" and the "realistic aims"
of relaxing tensions, peaceful
coexistence, and disarmament.
In an implicit rebuke to
the Chinese Communists, Togliatti
characterized their opposition
views as those of persons "at
least a generation behind in
their views on war and peace."
He stated that to abandon
the idea that war could be
prevented while professing
the aim of peaceful co-
existence would be hypo-
critical.
The main purpose of To-
gliatti's speech and the Soviet
endorsement probably was to use
his prestige in the international
Communist movement to provide a
guide to Moscow's current position
on East-West relations and in the
continuing Sino-Soviet dispute.
Togliatti's exaggerated support
for the Soviet position follows
a concerted barrage from East
European leaders since the meet-
ing in Bucharest at the end of
June which was to have resolved
the disagreement.
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During July, party bosses proposal that nuclear devices
Gomulka of Poland, Novotny of to be used in any research
Czechoslovakia, and Yugov of program be subject to inspection
Bulgaria all made vigorous by all three powers. On the
statements along the lines of issue of whether there would
Togliatti's speech, and the be reciprocal privileges to
central committees of the Bul- examine Soviet devices, which
garian, Hungarian, East would be deposited in a common
German, and Rumanian parties is- pool along with UK and US de-
sued resolutions on the Bucha- vices, the USSR again refused to
rest meeting which did the same. participate. The Soviet statement
The results have been to demon- did not, however, object to a
strate that any "disunity" in US-UK pool of nuclear devices,
the ranks of the major elements provided that the West would
of international Communism stems agree to full participation by
wholly from the Chinese Commu- Soviet scientists in all aspects
nists and to isolate and pin- of the program.
point the "errors" in their po-
sitions. Soviet tactics suggest that
Moscow is mainly interested in
Nuclear Test Talks prolonging the talks, on the as-
sumption that the US may decide
In the nuclear test ban to proceed unilaterally with re-
negotiations, the Soviet dele- search tests employing nuclear
gation continues to advance devices--a move which Khrushchev
proposals on major questions has repeatedly warned would free
in an apparent attempt to fill the USSR to resume any type of
in the Soviet position on all weapons testing. The Soviet
unresolved issues prior to a leaders may believe that uni-
probable recess in mid-August. lateral American action would
provide an issue which Moscow
On 2 August the Soviet could exploit as part of its
chief delegate presented a So- current efforts to indict US
viet Government statement re- policy as provocative. They may
plying to the US proposals on also feel that any US decision
the means of providing safe- not to proceed unilaterally
guards against misuse of re- would be an indication that the
search tests for weapons devel- USSR could extend the negotiations,
opment. Moscow welcomed as a and thereby the current de facto 25X1
"positive step" the American ban, wittioui any major concessions
until a new administration takes
office in Washington.
25X1
CUBAN DEVELOPMENTS
Fidel Castro is evidently upon whom the regime has come
under the care of doctors, but increasingly to depend, and should
the extent of his illness is his health " dictate that he
uncertain. He remains the sym- step down, any likely interregnum
bolic embodiment of the Cuban or immediate successor would
revolution to the Cuban masses, continue to rule in his name.
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4 August 1960
Raul Castro--who has cut short
his foreign tour--would be at
least the nominal head of any
immediate successor or care-
taker regime.
There are indications that
Fidel Castro's authority in the
government may have been signif-
icantly reduced in recent weeks
and that the pro-Communist clique
headed by the ambitious and hard-
driving "Che" Guevara may have
gained correspondingly in power.
Guevara, whose administrative
abilities contrast sharply with
Castro's own disorganized meth-
ods of government, has become the
virtual tsar of Cuba's state-
directed economy and exerts con-
siderable influence in other
areas of government,
President Dorticos, a for-
mer Communist who has never re-
canted, has shown himself to be
a stronger personality than his
figurehead status would imply,
and he would become an even more
influential figure if Fidel
Castro should temporarily or
permanently leave power.
Meanwhile, the Castro regime
is faced with growing problems
on a number of fronts. Though
serious petroleum shortages do
not appear imminent, early prob-
lems could come from a shortage
of refinery spare parts and spe-
cial lubricants. Soviet oil de-
liveries to date have not been
sufficient to meet normal Cuban
demand, but, with careful alloca-
tion, supplies should be ade-
quate to prevent a serious oil
shortage.
Bombings and shootings are
on the rise in Havana
On the internationalfront,
the virulent attacks on other
hemisphere governments delivered
by "Che" Guevara and others
during the Communist-dominated
Latin American Youth Congress
have further aroused other Latin
American governments against the
Cuban regime. Venezuela, for
instance, is formally protesting
Guevara's description of Presi-
dent Betancourt as the "prisoner
of his government's forces of
repression." The Cuban charges
may have repercussions at the
forthcoming meeting of the OAS
foreign ministers in Costa Rica.
After convening on 16 August to
discuss Venezuela's charges a-
gainst the Trujillo dictatorship,
the foreign ministers are to
consider the dangers to the
inter-American system posed by
Cuba's increasingly close ties
with the Sino-Soviet bloc.
Argentina, Colombia, and
Peru and most of the Central
American countries appear to
support the United States' view
that OAS action is necessary
to deal with the Cuban problem,
since it is more than a Cuban-
US dispute and involves a di-
rect challenge to the inter-
American system, for which all
OAS members are responsible.
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4 August 1960
MIDDLE EAST DEVELOPMENTS
Arab States - Oil
New and severe strains are
to be expected in relations be-
tween several of the Arab gov-
ernments and the Western-owned
oil companies. In a situation
where world oil-producing capac-,
ity is far ahead of demand, most
companies operating in the Mid-
dle East have been granting sub-
stantial discounts for several
months. Now imminent is a sharp
drop in the posted prices of
LEBANON
BEIRUTO
$140,000,000 in expected 1959
revenues. Reaction to another
drop.will probably be even
stronger than in 1959 and is
almost certain to include in-
creased pressure by Arab govern-
ments for a greater voice in the
management of the Western-owned
oil concerns.
This new irritant is in
prospect at a time when major
disagreements between the Ara--
bian American Oil Company and the
Persian Gulf crude oil--on which
the profit share for the oil-
producing states is calculated.
The drop is expected to be
somewhat larger than the cut of
18 cents per barrel early in
1959. That reduction--the first
in the history of the Persian
Gulf--cost the oil-producing
states there an'estimated
Saudi: Government re-
main unresolved, when
the Iraqi Government
is insisting on a very
large increase in port
dues on oil exported
through the Persian
Gulf by the Iraq Petro-
leum Company, and
when sharp controversy
between the UAR and
the Trans-Arabian
Pipeline Company (Tap-
line) may lead the UAR
to force a shutdown
of the line.
The UAR-Tapline
dispute involves two
issues. The more im-
portant is the UAR
demand for a new for-
mula of oil transit
payments which, at
Tapline's present
level of operations,
would yield Syria about two and
one half times its present rev-
enue. Tapline refuses, pointing
out that if the same formula
were applied--as it would have
to be--to Lebanon, Jordan, and
Saudi Arabia, total payments
would exceed the company's
profits.
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4 August 1960
The other issue is Tap
line's refusal to continue fur-
nishing crude oil to Syria's
refinery on credit. Syria al-
ready owes Tapline more than
$4,000,000 for past deliveries.
The company has offered to
spread payment for this accumu-
lated debt over several years,
but further deliveries must be
on a current payment basis. In
the face of this firm stand,
Nasir may make a dramatic move
to force the company to cease
operations, thus creating a _
popular "anti-imperialist" issue
in Syria, where political unrest
has accompanied the steady eco-
nomic deterioration.
Lebanon
The furor over Lebanese
President Shihab's one-day res-
ignation on 20 July has subsided,
and he appears':to have increased
his prestige and influence at
home. The move apparently was
largely motivated by difficul-
ties 'inherent in forming a new
cabinet under the leadership of
Saib Salam, leader of the Moslem
rebels in the Basta quarter of
Beirut during the 1958 rebellion.
Salam's new 18-man cabinet,
which was announced on 2 August,
is composed of representatives
of nearly every political fac-
tion. Included are several
strongly pro-UAR personalities,
as well as one supporter of anti-
Nasir former Premier Sami al-
Sulh. With such a wide disparity
of views the new cabinet is
likely to be subject to dissen-
sions which could result in its
early demise. Should this occur,
the probability of a drift to-
ward military control will be
increased.
Libya
King Idris may soon replace
Prime Minister Kubar and other
cabinet members, although no
significant policy shift seems
likely. Kubar has become in-
creasingly frustrated during the
past few months over the King's
refusal to delegate to him suf-
ficient power to run the govern-
ment effectively. He is re-
ported to have formally sub-
mitted his resignation within
the past few days.
An official of the Libyan
Ministry of Health reports that
the USSR has sent the govern-
ment a revised version of its
long-standing offer to build two
hospitals in Libya. This pro-
posal is said to have eliminated
the earlier provision that
Soviet specialists must be sent
to run the hospital staffs;
Moscow offers instead to train
Libyan personnel.
Imam Ahmad of Yemen is
posing obstacles to the con-
struction of the US-financed
road from Mocha to Taiz and Sana.
He has objected to aerial photog-
raphy of the route, pointing
out that the "Chinese do the
work on the ground," and is crit-
ical of plans to erect build-
ings for the American engineers,
believing they should live in
tents. Anti-Western and pro-
Communist bloc advisers of the
Imam have charged the US with
"insincerity" regarding the road
project and with collaboration
with the British in plots against
Yemen.
Delays in implementing the
project work to the advantage of
the Russian and Chinese sup--
porters of these advisers. Al-
though the majority of Yemenis
are believed to be favorably
inclined toward the US, the Imam
seems to be falling further under
the influencer-'caf probloc ' parti-
-sans : Within 'the ? past few days
a Yemeni delegation has been sent
to Communist China to negotiate
for additional economic aid.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
4 August 1960
The British colonial gov-
ernment of Aden is planning to
obtain legislation which will
enable it to crack down on Nasir-
controlled unions, whose activ-
ities are disrupting the colo-
ny's economy and threaten even-
tually to challenge British
control there. The proposed
legislation will outlaw strikes,
make arbitration compulsory,
and provide for unusually severe
penalties for strike leaders.
The British move, however, is
likely to close the ranks of the
Aden Trade Union Congress and
increase the possibility of vio-
lence; a general strike and vio-
lent demonstrations could par-
alyze all port activity. The
British apparently believe the
extra security precautions they
have taken can contain the
situation.
Arab-Iranian Dispute on Israel
The Arab states were quick
in denouncing Iran, following
the Shah's statement to a news-
paper reporter on 23 July which
they interpreted as de jure
recognition of Israel. Despite
Tehran's subsequent explanation
that the statement merely reit-
erated a ten-year-old policy of
de facto recognition, the Arab
political and press campaign
continues.
Nasir, who spearheaded the
campaign by,expelling all Iranian
diplomats from the UAR, has
publicly called for the Iranian
people to overthrow the Shah and
is trying to arrange an emergency
meeting of the Arab League to
work out a joint Arab position.
Libya, following Nasir's lead,
has suspended negotiations for
establishing diplomatic rela-
tions with Iran.
Iraq, however, is taking
a more moderate stand and is
claiming that it successfully
upheld Arab rights by persuading
Irani not to grant de jure rec-
ognition of Israel. The Jor-
danian Government also appears
inclined to accept the Iranian
explanation. The Saudi Arabian
ambassador has been called home
for "consultations," but a Saudi
spokesman denied that relations
with Iran had been terminated.
Pakistan; which wants to im-
prove relations between the Cen-
tral Treaty Organization (CENTO)
and the Arab countries, is con-
cerned that CENTO's position will
be weakened by the incident.
Iran, in turn, has reacted
sharply against the UAR. Im-
mediately following Nasir's ini-
tial statement, Tehran ordered
the UAR's diplomatic mission to
leave Iran. The Iranian foreign
minister described Nasir as a
"feeble-minded pharaoh;' and an-
other Iranian diplomat commented
that Nasir ought to "bear in mind
that he is no lord protector of
the Middle East and Moslem coun-
tries."
The incident has revived
Iranian-Egyptian animosity--dor-
mant for several years--center-
ing primarily around Nasir's
claim to speak for all Arabs,
including those who form the
majority of the population in
southern Iran.
Iraq's mild reaction will
probably help improve relations
between Baghdad and Tehran.
Continued attacks by the UAR
may even force Iran and Iraq into
closer cooperation on questions
of mutual interest, such as UAR
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CURRENT INTELLIGENCE WEEKLY SUMMARY
4 August 1960
activities in the Persian
Gulf.
There has been no popular
reaction in Iran to Nasir's
call for the overthrow
Shah--an appeal echoed
Moscow. There is little
Islamic elements of the clergy
and among the Arabs in the south.
The press is sufficiently con-
trolled to assure that the Irani-
an, Government's position is
of the
by
fully presented,
security forces
an
are
d the
capable
of
25X1
pro-
handling any but
the
most wide-
Arab, anti-Israel feeling in
Iran except among.the pan-
spread disorders.
25X1
BRITISH PREPARE FOR AFRICAN TROUBLES
Reinforcement of Britain's
strategic reserve of troops in
Kenya indicates that London
intends to make an effort to
control fast-moving developments
in British territories of East
and Central Africa. The air-
lift begun on 27 July of an
additional battalion of about
600 troops will bring
the infantry brigade
there to full strength,
totaling about 4,800
including service ele-
ments.
The Congo situa-
tion combined with
disturbances in self-
governing Southern Rho-
desia and possible na-
tionalist disorders i
Nyasaland prompted the
move. Indications of
a resurgence of Mau
Mau activity in Kenya
have also caused con-
cern, but officials
in Nairobi deny that
they requested the
troop movement.
In Nyasaland,
where British author-
ities remain respon-
sible for internal
security, police of-
ficials expect trouble regard-
less of the outcome of the con-
stitutional talks begun in Lon-
don on 25 July. Britain is
willing to increase the number
of Africans in both the Legisla-
tive and Executive Councils but
is determined to retain decisive
powers for British officials.
CENTRAL
AFRICAN REPUBLIC
RUANDA-
.URUNDI
RHODESIA -
AND 0
NYASALAND
SECRET
.OUTHERN
RHODESIA
'par as Salaam
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4 August 1960
The Colonial Office expects
particular trouble over its un-
willingness to grant universal
suffrage, Nyasaland also seeks
secession from the white-settler-
dominated Federation of Rhodesia
and Nyasaland, but London will
not discuss this until the feder-
al constitutional review con-
ference, probably in February
1961.
Talks planned later this
fall on Southern Rhodesia's
demand for removal of residual
British controls over legis-
lation affecting Africans could
precipitate further disturbances
there.
London has also recently
decided to take a strong line
with nationalists in both Zan-
zibar and Aden. The British
Resident, London's top official
in Zanzibar, on 26 July publicly
warned that political activity
will be severely restricted if
political and racial animosity
does'not subside. Debate in
the Legislative Counbil has so
far been critical of the new
British constitutional proposals,
and local officials fear the
Zanzibaris would be very suscep-
tible to Communist propaganda.
The Resident stated earlier that
reinforcement of the police would
be necessary if disorders arose
over the planned establishment
of a US astronaut-tracking
station.
On 1 August, the British be-
gan a showdown with pro-Nasir
Arab nationalists in Aden's
labor unions by introducing
labor legislation which they ex-
pect will precipitate a long and
difficult struggle. (See also
preceding item.)
EAST GERMANY AND WEST BERLIN
The Ulbricht regime, backed
by Moscow, continues to try to
assert some degree of control
over West Berlin's affairs and
to weaken the links between the
city and the Federal Republic.
While these moves are essential-
ly probing actions, the suc-
cession of notes, declarations,
and press conferences of recent
weeks are intended to document
the regime's charges that West
Berlin is an international
trouble spot and to establish
a legal foundation on which
East Germany can eventually base
claims to sovereignty over the
city.
To point up West Berlin's
vulnerability, East German, po-
lice on 21 and 28 July seized
civilian trucks en route to
West Germany with building ma-
terials manufactured in West
Berlin. The regime now is pub-
licizing claims that use of
such materials by the West
German Army violates quadripar-
tite agreements calling for
demilitarization of Berlin--a
view set forth.in notes to the
Western powers on 6 June. Com-
menting on the seizure, First
Deputy Foreign Minister Otto
Winzer said, "We shall guarantee
free access to West Berlin,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
4 August 1960
provided these lines of com-
munication are not misused."
As of 1 August the East Germans
were still holding the trucks
and three of the drivers.
The regime has used the
15th anniversary of the Pots-
dam agreement to renew its de-
mandsfor a peace treaty and an
end to the occupation status of
West Berlin. This has included
bitter attacks on alleged West
German "provocations," such as
plans to hold a Bundestag ses-
sion in the city.
Moscow is backing East Ger-
man efforts to exclude West Ger-
man governmental agencies from
West Berlin. In a note to the
Western powers on 28 July, the
USSR protested for a second time
Bonn's plans to establish ad-
ministrative headquarters of
the West German radio in West
Berlin. The note reiterated
that the Western powers recog-
nized at the Geneva foreign min-
isters' conference that West
Berlin is not a part of the
Federal Republic but has a spe-
cial status.
Soviet authorities are also
supporting the Ulbricht regime's
claims to a degree of control
over movements of the Western
military liaison missions in
East Germany. In a meeting with
representatives of the three mis-
sions on 30 July, Soviet Chief
of Staff Vorontsov reasserted
that East German harassment of
the missions had resulted from
violations,of East German reg-
ulations by "certain individual
officers" of the missions, and
appealed for cooperation of the
missions in carrying out "their
duties as they properly should."
Vorontsov added, "We are in the
...territory of a sovereign
state, as guests"--a view at
sharp variance with the Western
position that the missions are
in East Germany by virtue of
their occupation rights. East
German police are continuing to
exercise close surveillance over
the missions, but recent inci-
dents have been relatively minor.
East Germany's aggressive
attitude on these issues may
in part be an effort to
distract attention from its
growing internal difficulties.
These have been revealed by
widespread shake-ups in the
local administrative and party
structure, increasing food short-
ages, and passive resistance by
newly collectivized farmers
which is holding up harvest work.
The regime's wholesale distri-
bution system is also exhibiting
grave shortcomings, according
to disclosures by East Berlin
boss Paul Verner at the Social-
ist Unity party central commit-
tee's ninth plenum. Although
these circumstances have not
seriously affected the regime's
stability, they may well be a
topic of discussion for party
boss Ulbricht during his current
vacation with Khrushchev on the
Black Sea coast.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
4 August 1960
CONTINUING ECONOMIC TROUBLES IN KAZAKHSTAN
The continuing economic
troubles of Kazakhstan, the
USSR's second largest re -ublic
and one of the major grain areas
of the Soviet Union, were high-
lighted recently by the imprison-
ment of several collective farm
managers for "criminal activity."
KAZAKH
SSR
fodder shortage. Kazakhstan's
problems, however, are not lim-
ited to agriculture. At the re-
public's central committee plenum
in June, party and government
leaders alike were scored for
the "alarming situation, in capi-
tal construction as well as ani-
KARAGANDA
METALLURGICAL
PLANT
At* TFMIR TAU'. KARAGANDA
ALMA-ATA
One of the charges was that they
had falsified statistics to
conceal the loss of many cattle
which died because of a winter
mal husbandry, and were warned
that unless specific measures are
taken, the republic may again
fail to fulfill plans set for it.
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CURRENT INTELLIGENCE 91ZZKLT SUMMARY
4 August 1960
Failure of the Kazakh: lead-
ership to meet agricultural prob-
lems last year led to the loss
of four million acres of grain
and, eventually, to dismissal
of Nikolay Belyayev as republic
party chief. There were also
strikes in 1959 at the construc-
tion site of the Huge Karaganda
metallugical plant near Temir
Tau, said to have been brought
on by intolerable living con-
ditions.
Evidently, neither pressure
from Moscow nor replacement of
local leaders has helped matters
much. It was reported at the
recent republic plenum, for ex-
ample, that during the first
five months of 1960 only 51 per-
cent of the plan for completing
housing was fulfilled, invest-
ment in the construction materi-
als and construction industries
fell short by 16 percent, and the
Kazakh Ministry of State Farms
fulfilled the plan for construc-
tion and installation work by
only 62 percent. In addition,
deliveries of animal products
are far below plan thus far this
year, and preparations for the
1960 harvest, including the
building of storage facilities
and the repair of agricultural
machinery, are lagging.
Kazakhstan, traditionally
a problem area, suffers from
insufficient rainfall and from
the usual problems of a frontier
area, including inadequate trans-
portand difficulty in attracting
workers because of miserable
living conditions. Construction
lags are caused by the inadequacy
of resources of manpower and
materials to fulfill the con-
struction plan laid out. In
addition, Soviet leaders blame
localism--investment in local
projects to the detriment of
all-union projects. In agricul-
ture, similarly, farmers are ac-
cused of attending to private
plots and livestock ahead of
the interests of state agricul-
ture. Other factors are said
to be the slow introduction of
modern industrial techniques
and the high cost of construc-
tion caused by dispersion of
materials and money among too
many projects.
(Prepared by ORR)
PEIPING'S FARM POLICIES
The Chinese Communist lead-
ers have in the past few weeks
mounted a major campaign aimed
at speeding up agricultural de-
velopment. The party's role in
the countryside, on the increase
since the leap forward began, is
being further enhanced as large
numbers of party functionaries
are sent down to the farms to
live with the peasants and super-
vise farm work. Industrial work-
ers, the armed forces, urbanites,
and scholars are being exhorted
to provide the peasants with more
labor, machinery, and technical
advice.
Factories are being urged
to enter into specific aid com-
pacts with individual communes,
and particular emphasis is being
put on construction projects
which will directly serve agri-
culture. Rural officials are
being told to assign 80 to 90
percent of all manpower to field
work. Most of these techniques
have been tried in the past, but
the authorities evidently hope
that by pushing them harder they
will prove "more fruitful" this
time.
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4 August 1960
While the decision to launch
such an effort stems in part from
the leadership's belief that lo-
cal officials and the peasants
need a sharper spur during the
busy season, the actual reasons
probably go deeper. The 1959
harvest was a disappointment to
the regime, and growing condi-
tions so far this year are said
to have been adverse. The re-
gime has shown little enthusiasm
over the early 1960 crop and has
even suggested that in view of
the prolonged drought, Chinese
agriculture would score a "great
victory" if those crops were
only a little smaller than last
year's.
The possibility of reaching
this year's over-all farm goals
has been brought into question.
Food shortages persist, and the
severity with which the authori-
ties continue to press for the
strictest austerity in food con-
sumption shows that the funda-
mental problem of feeding the
growing population was not solved
by the policies followed in the
leap forward.
There are signs that an
awarene:-s of these unpalatable
fact-,;s slowly dispelling in
the leaders' minds the optimism
generated by past fraudulent
farm claims. Last winter the
top economic planners announced
that China's economic development
had reached a "new stage" in which
a new policy of regarding agricul-
ture as the "foundation" of the
economy would be followed, and
this year agriculture did get a
slightly bigger share of invest-
ment funds.
The party central committee
now is said to have "further ex-
pounded" this policy, perhaps at
an unpublicized meeting in early
July. The nature of the "further"
exposition has not yet been re-
vealed, but the official People's
Daily did recently reprin awn -
ar cle by a Kwangtung official
who argued that industry's devel-
opment has outrun agriculture's,
and that it would be necessary
for the next few years to give
agriculture first consideration
in the allocation of manpower,
materials, and money--even if
industrial investment suffered.
These remarks are limited to the
special circumstances of an in-
dividual province, but the daily
would scarcely have printed them
if the party did not wish to draw
attention to them.
The regime would, of course,
have to accept a further slow-
down in the rate of industrial
expansion if this were to be
adopted as nationwide policy.
Industry--and especially heavy
industry--has always been sacred
to Peiping, and
it
is
unlikely
that an action
will
be
taken
which
threatens
to m
ak
e big in-
25X1
roads
in the gr
owth
of
the key
industries controlled by the
central government.
(Prepared by ORR)
PEIPING ENCOURAGES JAPANESE CAMPAIGN AGAINST SECURITY TREATY
Communist China, encouraged
by recent demonstrations in
Japan, is stepping up efforts
to rally Japanese sentiment
against the US and increase pres-
sure for an accommodation be-
tween Tokyo and Peiping. A high-
level Chinese Communist labor
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4 August 1960
delegation, in Japan for two
weeks to attend the.leftist
Sohyo labor federation's conven-
tion and the Sixth World Confer-
ence Against Atomic and Hydrogen
Bombs, will try to encourage
Japanese neutralists, leftists,
and Communists to renew efforts
to undercut the security treaty
with the US.
The delegation, headed by
Chinese Communist party central
committee members Liu Ning-i
and Chen Yu, is the first main-
land group to visit Japan in
two years. The Chinese had
called off "people's diplomacy"
toward Japan in face of the
Kishi government's hostility,
but in the meantime they contin-
ued to invite friendly Japanese
to visit China.
In his address on 31 July
to the labor convention, Liu
congratulated Sohyo onits"bril-
liant victories" in driving the
Kishi government out of office
and forcing the cancellation of
President Eisenhower's visit.The
Chinese Communists have called
for the broadest possible united
front for a continuing struggle
against the security treaty, and
Liu will probably encourage this
line of action. He has already
boasted that the Chinese Commu-
nists contributed 14 million yen
(about $40,000) to Japanese labor
movements. Even the Japanese press,
which had strongly supported the
movement to oust Kishi, is criti-
cizing the Chinese delegation tr
such blatant statements and
warns that internal interference
will not lead1o improved:re
lations.
Chou En-lai's revival on 1
August of Peiping's call for a
peace pact--including the US--
setting up an atom-free zone in
Asia and the Western Pacific is
another effort to appeal to
neutralist sentiment in Japan
on the eve of the anti-bomb
congress. It was promptly dee-
scribed by the Chinese delegation
in Japan as an "honest" attempt
to end tensions in Asia.
The Chinese leaders report-
edly regard the Ikeda govern-
ment as no improvement over the
Kishi regime, but their propa-
gandists have not commented
publicly and may be waiting to
test Ikeda's press statement
that he favors resumption of
trade with China.
The crude remarks of the
Chinese labor delegation prob-
ably have dissuaded the Ikeda
government from any intentions
it may have had to probe the
delegation for signs of relax-
ation of Peiping's attitude to-
ward Japan.
The Chinese still contend
that improved relations with
Japan depend on a genuine move
by Tokyo toward closer govern-
ment-to-government contacts.
They now appear anxious, how-
ever, to provide the Socialist
party with the means for demon-
strating that a future Socialist
government would be well re-
ceived by Peiping, and on 21
July they signed a second a-
greement with the Socialists
on the shipment of "special
consideration'.' goods to small
Japanese industries hard hit
by the trade embargo imposed
by the Chinese Communists in
May 1958. The Socialists are
drawing up a list of items to be
presented to Liu Ning-i.
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4 ` g#t'9t-1,980
UN and other foreign ob-
servers are agreed that the
South Korean parliamentary elec-
tions of 29 July were free and
conducted fairly, despite iso-
lated outbreaks of large-scale
violence. Student-led attacks
on campaign personnel, assaults
on polling places, and the de-
struction of ballot boxes seem
SOUTH KOREA: NATIONAL ASSEMBLY
HOUSE OF REPRESENTATIVES (LOWER HOUSE)
LIBERAL
PARTY
37
INDEPENDENTS
110`
VACANCIES 15
29JULY 1960 PARLIAMENTARY ELECTION
(RETURNS AS OF 3 AUGUST 1960)
er which interfered with ballot-
ing.
The overwhelming victory
of former Vice President Chang
Myon's conservative Democratic
party has encouraged an intense
factional struggle for the
premiership and the presidency
which could result in a party
to have occurred in most in-
stances when it appeared that
candidates associated with the
discredited Rhee regime would
be elected. Election officials
have recommended that new elec-
tions be held in 13 of the
country's 233 lower-house elec-
tion districts because of the
disturbances or inclement weath-
split. With more than
a two-thirds majority
in the powerful lower
house of the National
Assembly, the Democrats
are about equally di-
vided between Chang's
supporters and oppo-
nents. The poor show-
ing of the new left-of-
center reformist par-
ties has removed a
strong impetus for con-
servative unity. Some
members of the anti-
Chang faction argue
that a Democratic party
split is essential if
there is to be a two-
party system instead
of a one-party "dicta-
torship" like that of
the Rhee regime.
There also is
evidence that Chang's
opponents may attempt
to form a government
with the support of
independent and former
Rhee elements. However,
there are strong ele-
ments in both factions
which favor party
unity, and a split uzxy':,~be
avoided by dividing the major
offices between the competing
factions.
Incomplete returns indicate
that the Democrats also will con-
trol the 58-seat upper house,
which elects the President, in
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4 August 1960
joint session with the lower
house. Under the new constitu-
tion, the post is intended to
be nonpartisan and largely
ceremonial. Acting chief of
state Huh Chung has emerged as
a likely presidential candidate
because of his national stat-
ure?~ and lack of official party
ties. Huh also is close to the
anti-Chang Democrats and would
be an attractive balance should
Chang receive the premiership.
The military regime that
seized power in late May from
the Bayar-Menderes government
in Turkey appears, after two
months, to have consolidated:its
authority and to be in firm con-
trol. Despite the country's
many political and economic prob-
lems and the earlier uneasiness
of the new regime, interim
Premier Gursel and other leaders
are apparently gaining confidence
as they adjust to running the
government. This makes it likely
that the young military officers,.
having enjoyed power and pres-
tige accompanying high political
authority, will be reluctant to
return to troop command.
There are signs, however,
that enthusiasm for the regime
is. diminishing as the realization
spreads that Turkey faces an in-
definite period of difficult
times nd austerity. Recent
prow it ial tours by members of
the ruling National Unity Com-
mittee (NUC), including General
Gursel, and by other government
officials, teachers, and students
to explain the reform movement
are probably designed to counter-
act this trend. The theme of
their pep talks has been the im-
portance of unity, morality,
education, and hard work.
Instances of individual and
some organized expressions of
antiregime sentiments continue
to be reported. There are also
reports of what appears to be an
organized campaign of clandestine
opposition in some areas. The
American Consulate in Iskenderun
has reported indications of in-
creasing. discontent in the
Antakya area of southern Turkey.
Anti-Gursel and pro-Menderes
slogans have been appearing on
walls and doorways throughout
the city, but no arrests have
yet been made for this reason.
These protests may have
been inspired more by religious
than political sentiments, in
fear of a return to the laicism
of the early days of the repub-
lic in contrast to the more
tolerant attitude of ousted Prime
Minister Menderes toward reli-
gious activity. Supporters of
the formerly predominant Demo-
cratic party may also be trying
under cover of religion to re-
vive pro-Menderes sentiment.
There is considerable un-
happiness in the business circles
of the larger cities over the
continuing business stagnation.
Lower income groups, feeling the
pinch of unemployment and high
prices, are losing hope that the
new regime will improve their
situation. Some businessmen
believe economic conditions may
ease by September, but they ap-
parently do not expect any sub-
stantial improvement until a new
permanent government is installed.
The problem is particularly
acute in Istanbul, where wide-
spread unemployment is fostering
the spread of hunger and hard-
ship among the poverty-stricken
who have migrated in recent years
from the provinces. Such areas
of discontent would present a
problem during any period of
political instability that might
develop.
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4 August 1960
Recent decisions of the
new regime demonstrate continu-
ing sensitivity tb the possibil-
ity of civil unrest. On 2 Au-
gust revolutionary courts were
established to deal with "ma-
licious persons" who are trying
to confuse public opinion by
means of lies and false rumors.
The official radio has also de-
NEW INDIAN STATE OF NAGALAND
New Delhi's decision to ac-
cede to the demand of moderate
tribal leaders for the creation
of a Naga state within the Indian
Union is aimed at ending the
seven-year-old rebellion in the
PROPOSED NAGA STATE
-t_-BrUhm,y,u fra
Punakha
BHUTAN
FgQN TIES
~~i ~orhat
Imphal
: a MANIPU
pnittal;ong
02,
4 AUGUST 1960
M1! ES SU
Glared that misuse of freedoms
brought about by the 27 May
reforms "will not be permitted
in any way," and, according to
one press report, the'Turkish
armed forces have been alerted
to "be vigilant lest certain mis-
guided 25X1
persons should stir up
others to provoke regrettable
incidents."
northeastern frontier area of
India. This decision is likely
to provoke repercussions among
other tribal, regional, and lin-
guistic groups like the Sikhs
and the MManipuris, .who,' also
l B U' R M A
~ln
,CEYLON
seek special recogni-
tion within, the union.
Indian Government
leaders presumably
feel, however, that
the need for stability
in the frontier area
takes priority over
other considerations.
The new state--
India's 16th--will be
called Nagaland and
will comprise the
roughlyr,? ?j000 square
miles now included in
the Naga Hills and
Tuensang district of
Assam State. The gov-
ernor of Assam will
be appointed, concur-
rently as governor of
Nagaland, and the new
state will share the
services of the,Assam
High Court. Tribal
representatives, meet-
ing as a constitutent
assembly, will advise
the governor during
the transitional peri-
od--probably about 3
years. Ultimately,
there will be a legis-
lative assembly to
which ministers will
be responsible.
In reluctantly
agreeing to the Naga
demand, Nehru and his
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CUaRENT INTELLIGENCE WEEKLY SUMMARY
4 August 1960
government have once again re-
versed themselves and the ruling
Congress party on the question
of further political subdivision
of India. They have granted
statehood to one of India's most
backward regions, an area whose
administrative costs have been
80 times its revenues and some
of whose tribes gave up head-
hunting only during this century.
New Delhi built up moderate ele-
ments in the Naga leadership
and now has come to terms with
them in hopes of undercutting
extremists like A. Z. Phizo who
demand complete independence
from India.
Nehru has warned the extrem-
ists that he will not tolerate
continuing rebellion. He has said
that the governor will have "spe-
cial responsibility for law and
order during the transitional
period and for so long as the...
situation continues to be dis-
turbed..."; the governor will al-
so have special controls over
funds to be supplied to the state
by New Delhi. These special pow-
ers exceed those constitutionally
accorded India's other governors,
whose roles are largely ceremoni-
al, and should serve to protect
the nation's interest in this
strategic frontier area.
25X1
LEFTIST PRESSURES IN MEXICO
Mexican President Adolfo
Lopez Mateos and other leaders
of the long-dominant party of
Revolutionary Institutions (PRI)
are concerned over mounting left-
ist pressure on the government.
They are particularly disturbed
by an apparent rise in the pop-
ularity of leftist ex-President
Lazaro Cardenas, who has become
increa 1ngly critical of the
government's alleged lack of
progress toward goals of the
1910 revolution. On 6 June,
Cardenas indirectly attacked the
government's agrarian policies
and reportedly warned that "Mex-
ico is not immune to a revolu-
tion." It was reported on 27
June that consideration was being
given to the formation of a new
Mexican Socialist party, headed
by Cardenas and probably includ-
ing Mexico's three Communist and
Marxist parties.
Within the labor movement,
a small but active leftist group
recently organized a new trade
union coalition which--if it
succeeds--could threaten the
dominant position of the Mexi-
can Confederation of Workers,
long the backbone of the impor-
tant labor sector within the
PR.I. There is little evidence,
however, that Communist penetra-
tion of the administration is a
serious problem, or that any top
government leaders are Commu-
nists.
The administration has
sought to counter the rising
leftist challenge by assuming a
more radical appearance. In a
statement on 24 June, PRI chief
Alfonso Corona del Rosal defined
the government's policy as one
of the "moderate left," and the
President himself affirmed on 1
July that his government was,
"within the Constitution, one of
the extreme left."
There is considerable evi-
dence that Mexico's equivocation
on the Cuban question has been
largely due to the efforts of a
leftist minority to force the
government into a firmer pro-
Castro stand. Government spokes-
men have maintained that the
warm reception given visiting
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4 August 1960
Cuban President Dorticos in June
and the administration's refusal
to disclaim the pro-Cuban state-
ments of two Mexican congressmen
in July were'designed to prevent
increasing leftist activity from
threatening domestic stability.
While many government lead-
ers privately deplore the ex-
cesses of the Castro regime,
it is unlikely that they will
show open hostility to it,
since a large number of Mex-
icans--perhaps led by Lazaro
Cardenas--still find a close
parallel between the goals of
the Cuban and Mexican revolu-
tions.
TRUJILLO MANEUVERING TO AVERT OAS SANCTIONS
The resignation of Domini-
can President Hector Trujillo--
brother of the dictator--and
the elevation of Vice President
Joaquin Balaguer to the presi-
dency, as well as changes in
the military high command, are
probably additional steps by
Generalissimo Rafael Trujillo
to create a more favorable at-
titude toward the Dominican
Government before the meeting
on 16 August of the Organiza-
tion of American States (OAS)
foreign ministers. The meeting
is to consider Venezuela's
charges the the Trujillo dicta-
torship is guilty of aggression
and complicity in the assassina-
tion attempt against Venezuelan
President Betancourt on 24 June.
The Generalissimo probably
is convinced that the United
States and most other OAS mem-
bers will recommend some for of
multilateral action against the
Dominican Republic after their
foreign ministers meet. The ven-
ezuelan foreign minister told
Ambassador Sparks on 3 August
that Mexico will break diplo-
matic relations with Trujillo
before the meeting. Six Latin
American nations have severed
their diplomatic ties with Tru-
jillo since June 1959, and three
others maintain no diplomatic
representatives in Ciudad Tru-
jillo.
The Dominican Government
also is facing serious economic
problems that may be compounded
by a shipping boycott being
promoted by the AFL-CIO and
other western hemisphere unions.
The International Transport
Federation, meeting in a world
congress in Bern, passed a
resolution on 28 3 1y urging
all American governments to
break diplomatic relations with
Trujillo and to impose severe
economic sanctions against his
regime. The country already
faces oil shortages as a result
of Venezuelan pressure on normal
petroleum suppliers in the Nether-
land West Indies to refuse oil
shipments. Alternative sources
will be more expensive, and
there is some danger that sharp
cutbacks in electric power will
be necessary.
Trujillo reportedly is
confident that he can relieve
some of these pressures if he
removes evidence of his control
over the government. President
Balaguer already has replaced
two of the dictator's relatives
serving as secretary of state
for the armed forces and as
chief of staff of the armed
forces. The posts have been
filled by Major General Jose
Roman and Brigadier General
Fernando Sanchez respectively.
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4 August 1960
The anti-Trujillo under-
ground is known to associate
Balaguer and Sanchez with atroc-
ities carried out against ene-
mies of the regime and there
is little likelihood that mem-
bers of the underground will
remain satisfied with any gov-
ernment in which these men were
prominent. Only the removal of
the dictator, his family, and
close cohorts is likely to mol-
lify the hatred of the Trujillo
dictatorship inside the Domin-
ican Republic as well as else-
where in the hemisphere.
General "Ramfis" Trujillo,
son of the dictator, has left
for Europe, and on 31 July Min-
ister Without Portfolio de Moya
left the republic. One of his
secretaries, who is seeking
asylum in the Mexican Embassy,
says that De Moya will probably
not return. Sufficient prepara-
tions apparently have been made
so that the Trujillo family
could depart quickly if the
situation seriously worsened.
The Icelandic Government
has given no sign of readiness
to begin negotiations when the
three-month "truce"in its dis-
pute v,~-th Britain over fishing
limits expires on 13 August.
Recently Britain indicated will-
ingness to negotiate on the
basis of Iceland's 1958 proposal
providing for a 12-mile fisher-
ies limit, with a period of
three years for phasing out
historic rights and revising
certain base lines. Prime Min-
ister Thors, however, has taken
the position that Britain has
nothing to offer Iceland in '
these negotiations. He waved
aside the British threat to em-
bargo Iceland's fish, saying
the USSR would buy it.
Reykjavik's reluctance to
negotiate stems largely from
domestic political reasons. With
the Communists And other ex-
tremist groups exploiting the
issue and demanding uncondition-
al acceptance of the unilateral-
ly extended 12-mile fishing
limits, the strongly pro-Western
regime cannot afford to settle
for anything less. Thors may
feel that with opinion so deeply
aroused, the only practical so=
lution'is to ask NATO or the
United Nations for mediation.
Such a course would permit
Iceland to accept a moderate
solution to the problem--pro-
vided the 12-mile principle re-
mained intact--and would also
deprive the Communists of their
chief means of weakening Ice-
land's ties with NATO. Commu-
nist strategy has been to in-
sist that Iceland's NATO partners,
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4 August 1960
particularly the US and its
Keflavik-based defense force,
intervene and protect Ice-
4-mile Fishing limit
isince 1952)
12-mile fishing limit
(since 1959)
land from British
"aggression."
The Icelandic
Government-is prob-
ably hopeful that
the Western allies
will intercede with
Britain in order to
prevent active re-
sumption of the dis-
pute, which might
force the Thors gov-
ernment into extreme
measures. Iceland's
justice minister
told a member of
the US Embassy in
May that Iceland
would withdraw from
NATO if British
naval vessels again entered
the disputed waters.
25X1
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PATTERNS AND PERSPECTIVES
The mutual tariff discrim-
ination which began between the
European Economic Community
(EEC or Common Market) and the
European Free Trade Association
(EFTA or Outer Seven) on 1 July
was a decisive development af-
fecting the evolution of an in-
tegrated Europe. By failing to
persuade the EEC to water down
its economic and political ob-
jectives for the sake of a
broader and looser European as-
sociation which would avoid
such discrimination, the EFTA
was defeated in its major pur-
pose.
In consequence, most of
free Europe seems divided for
the foreseeable future between
the six Common Market countries,
whose ties daily become closer,
and the Outer Seven, whose pros-
pects for achieving a similar
degree of unity are remote. The
CURRENT INTELLIGENCE WEEKLY SUMMARY
4 August 1960
EUROPEAN: UNIT.Y': PROBLEMS AND PROSPECTS
economic repercussions are al-
most certain to be felt in the
political sphere if the breach
widens over the next few years,
and the possibility of closing
it will depend more and more on
fundamental decisions which
Britain, leader ,of the EFTA,
seems reluctant to take.
The Common Market--France,
West Germany, Italy, and the
Benelux countries--has evidently
emerged from the dispute with
major advantages over the rival
grouping. The member countries
have shown remarkable economic
strength in the period since
their :,association became ef-
fective in 1958, even with'sta-
tistical allowance for the re-
cession in that year. Intra-
Community trade, which increased
19 percent last year, exceeded
THE OUTER SEVEN, COMMON MARKET, AND UNITED STATES
SECRET
OUTER SEVEN
COMPARATIVE ECONOMIC DATA
1950
1958 I
PERCENT
NCREASE
POPULATION
million
85
88
4 %
GROSS NATIONAL PRODUCT
billion dollars
51
87
71
PER CAPITA G N P
dollars
600
989
65
6.3
11.6
84
TOTAL EXPORTS
billion dollars
10
16
60
PER CAPITA EXPORTS
dollars
117
183
56
TOTAL IMPORTS
billion dollars
12
19
58
PER CAPITA IMPORTS
dollars
139
214
54
.1957 FIGURES
PRODUCTION
STEEL
million metric tons
19
25
32 %
COAL
million metric tons
221
221
0
CEMENT
million metric tons
15
20
33
ELECTRICITY
billion kwh
96
190
98
MOTOR VEHICLES
millions
.8
1.4
75
CHEMICAL INDUSTRY
index: 1950=100
100
130
30
TEXTILE INDUSTRY
index: 1950=100
100
87
-13
ALL INDUSTRIES
index: 1950=100
100
126
26
PETROLEUM
CONSUMPTION
SECRET
COMMON MARKET
SIX
UNITED
STATES
1950
1958 I
PERCENT
NCREASE
1950
1958
PERCENT
INCREASE
155
167
8 %
152
174
15 %
75
156
108
261
402
54
483
934
93
1717
2310
35
11
24*
118
37
59*
59
9
23
156
60
136
127
11
23
109
73
137
89
217
246
13
508
381
-25
28
52
86
38
S2
37
118
227
92
389
720
85
.8
3
275
8
5.1
-36
100
227
127
100
145
45
100
127
27
100
88
-12
100
181
81
100
120
20
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CURRENT INTELLIGENCE WEEKLY SUMMARY
4 August 1960
the 1959 rate by 37
percent in the first
quarter of 1960. Ex-
ports are increasing
roughly twice as fast
to members as to non-
members, and in the
first quarter of this
year the Common Mar-
ket's industrial pro-
duction as a whole was
14 percent higher
than a year ago.
French stabiliza-
tion is an important
factor in these devel-
opments, and EEC of-
ficials themselves
have been cautious in
claiming direct re-
sults from the 20-per-
cent intra-Community
tariff reduction in-
stituted to date. In-
directly, however,
the stimulative ef-
fect of the EEC has
been clear--in busi-
ness planning for the
larger market, in the
high level of foreign
and domestic invest-
ment in the EEC, and
in the wave of busi-
ness reorganization.
Both direct and in-
direct effects of the
Common Market will be
sharply accelerated
under the revised
treaty schedule,
n
European Free Trade Association (Outer Seven)
European Economic Community (Common Market)
.AAftM,
Percent of imports ? from and exports to the European Free Trade Associaj?m`
Percent of imports ? from and exports to the European Economic Cor mun yt
Belgium-Luxembourg
14.5 % ? 16% 0
adopted last May, whiQ ids ex-
pected to result in a reduction
of from 40 to 50 percent in an-
tra-EEC tariffs by the,end of
next year.
It is generally-recognized
that many of the Common Market's
most difficult economic prob-
lems are still to be faced if
its full potential is to be real-
ized. Restrictions other than
tariff barriers on freer trade
are for the most part still to
be eliminated, the common agri-
cultural policy has not proceeded
beyond the negotiating stage,
and the coordination of nation-
al economic and fiscal policies
remains a serious challenge.
Nevertheless,,, rapid progress
is being made toward a full eco-
nomic union, and if current
rates of growth are maintained,
the Common Market is well on its
way to becoming--as EFTA spokes-
men nervously predicted--a "most
formidable combination of skill
and capital."
Economic Situation in EFTA
Retention of equal access
to the "economic heartland" of
Western Europe is the major ob-
jective of the Outer Seven--
Britain, Austria, Switzerland,
Portugal, and the Scandinavian
countries. Their own 20-percent
reduction of tariffs on 1 July--
which brought the EFTA abreast
of the EEC in internal tariff
reductions--was intended pri-
marily to preserve this pos-
sibility. As the prospect
of a broad association has
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CURRENT INTELLIGENCE WEEKLY SDMMA$Y
4 August 1960
progressively receded, however,
the Outer Seven has had to em-
phasize the alternative possi-
bility of encouraging economic
growth and efficiency through
freer trade among themselves.
The EFTA has not been in
existence ldng enough to. have
had a direct impact on the
economies of its members, but,
as in the case-,of the EEC, an-
ticipatory rea'ction to future
tariff adjustments is evident
in moves by producers to es-
tablish new marketing outlets
and by purchasers to shift to
EFTA suppliers. Swiss banks
have for some time refused
loans to 4EC firms and, with or
without official encouragement,
ties among EFTA financial in-
stitutions will ultimately be
strengthened. Evidence of ac-
tual trade diversion is thus
far equivocal: Austrian trade
has recently shown a slight
shift away from the EEC in fa-
vor of the EFTA, but Swiss
trade statistics in May ac-
tually showed a reverse tenden-
cy.
It seems unlikely in the
long run that the EFTA will
have an economic impact 'equiv-
alent to that of the EEC. Dan-
ish Foreign Minister Krag re-
cently observed that since tar-
iffs are already low in the
Scandinavian countries, the
initial percentage reductions
will have little: : signifi-
cance, He also cited dif-
ferences in tastes and the geo-
graphical dispersion of the
EFTA members as obstacles to
a major expansion of trade.
Moreover, Britain has
failed in the last decade to
demonstrate an economic vital-
ity equal to either France's or
West Germany's. From 1950 to
1959, industrial production in
Britain increased 29 percent,
as compared with 72 percent for
France and 125 percent for West
Germany. In contrast with the
4- to 5-percent annual increase
in gross national product which
the EEC expects to maintain,
British GNP is expected to in-
crease less than half as much
this year.
Political.Situation
The EEC also enjoys certain
political advantages providing
a compelling unifying force lack-
ing in the EFTA. Many of the
reasons for this are historical.
Britain's refusal to partici-
pate in the Coal-Steel Commu-
nity when it was proposed in
1950 cost London the leadership
of the integration movement.
While this leadership was mo-
mentarily retrieved when the
European Defense Community proj-
ect failed and the Western
European Union was substituted,
London failed to exploit its
opportunity. It stood aside
when the Common Market was pro-
posed in 1955, and its two other
major initiatives--Foreign Sec-
retary Lloyd's "Grand Design"
in 1957 and the abortive all-
European free trade project--
were both spurned on the Conti-
nent.
The EFTA thus suffers both
from the fact that it is out-
side the main stream of the
European movement and from the
essentially negative quality of
its political purposes--the
maintenance of a common front
against the EEC and a common
rejection of EEC institutions.
Although ostensibly apolitical,
the Outer Seven grouping has
recently tended 'to claim that
the "cooperative" approach will
eventually produce significant
political ties. How far this
can go is questionable, however,
in view of the political limi-
tations imposed by Swiss, Aus-
trian, and Swedish neutrality.
Moreover, although the EEC's
institutions have not operated
in the supranational way their
founders had hoped for, they
have given the EEC a kind of
direction and guidance which
the EFTA is almost certain to
miss.
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4 August 1960
GENERAL
PURPOSE
PARLIAMENTARY
CONTROL
EUROPEAN COMMUNITY INSTITUTIONS
EUR(?EAN ECONOMIC COMMUNITY (EEC) COAL-STEEL COMMUNITY (CSC) EURATOM
EUROPEAN PARIAMENTARY
ASSEMBLY
142 members chosen by national
parliaments of 6 member coun-
tries.
Reviews and debates annual re-
ports of the three communities.
May compel executive commissions
and CSC High Authority to re-
sign.
ORGANIZATIONAL CHANGES
IN PROSPECT
1. Pending draft convention
would increase membership to
426, two thirds to be elected
by universal popular suffrage.
2. New assembly would retain
present powers, but future re-
lationship to commissions and
councils under debate.
EEC COUNCIL CSC COUNCIL
OF MINISTERS OF MINISTEiS
1. France has proposed per-
manent "political secretariat"
Formulate general community po1-
to organizeperiodic meetings
esand harmonize related na-
of heads of state and their
EUItATOM COUNCIL
tional policies.
ministers:
OF MINISTERS
Majority principle tends to re-
2. New community council
place unanimity as treaties are
would assume over-all direc-
One cabinet-level representa-
implemented.
tion community affairs and
POLICY
tive of each state, usually
coordinate members' foreign
FORMATION,
foreign or economicministers.
policies.
COORDINATION,
& EXECUTION
EEC
CSC HIGH
1. Three executives would be
fused into single commission
COMMISSION
AUTHORITY
and enlarged.
Generally supervise application of
2. New commission would prob-
EURATOM COMMISSION
the three treaties.
ably retain existing powers of
Recommend community policies-- in
its predecessors.
some cases councils must be
3. France would reduce com-
unanimous to overrule.
mission to purely administra-
5-9 members appointed by agree-
tive tasks; federalists would
ment among member states or
increase its powers but sub-
co-opted.
ordinate it to Assembly.
COURT OF JUSTICE
Interprets and reviews legal ap-
plication of the three community
No early change in prospect.
7 judges and 2 advocates ap-
treaties
JUDICIAL
pointed by agreement among the
.
CONTROL
member states.
While the cohesion of the
European Community has by con-
trast been demonstrated in a
number of crises--notably, by
its survival of the rebirth of
French nationalism under De
Gaulle and in its resistance to
the attraction of the free trade
area--it is equally evident
that the political problems of
increasing maturity are approach-
ing.
The problem of all-European
unity, shelved in effect for
the time being, will impose in-
creasing strains as time goes on.
Major political uncertainties
in the three largest EEC coun-
tries--whether republican gov-
ernment survives in Italy and
who succeeds Adenauer and ,De
Gaulle--are obviously of criti-
cal importance to the Communi'.: '
ty's future. Moreover, the
rapid progress toward full eco-
nomic union is in itself bring-
ing to the fore the Community's
basic institutional problems.
These institutional ques-
tions involve both the unre-
solved conflict between the
Community and French national
aspirations, and the long-stand-
ing schism between those favor-
ing a federated community and
those who would settle for less.
In the next few months, deci-
sions will have to be taken
which may well determine wheth-
er these fundamental issues are
susceptible to compromise. For
example, strong support has re-
cently developed for early fu-
sion of the executive commis-
sions of the EEC and Euratom
and the High Authority of the
CSC. It seems increasingly
doubtful that this can be a-
chieved without reopening the
question as to what powers the
resulting single executive
would have.
The election by universal
suffrage of the European Par-
liamentary Assembly, a project
long advocated by the federal-
ists and now awaiting ministe-
rial approval, raises the .same
problem. A "European election"
would considerably enhance the
assembly's prestige, but the
extent to which real parliamen-
tary control over Community
policy can be developed depends
on the specific powers the as-
sembly is given vis-a-vis the
executives--and, more importantly,
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4 August 1960
the councils of ministers, which
now represent only the states.
An even more challenging
problem than these has been the
apparent disposition of Paris
to press for the creation of a
permanent "political secretari-
at" which, under the authority
of the six foreign ministers,
would coordinate the foreign
policies of the member coun-
tries. Touted by the French as
a major concession to the gen-
eral desire for increasing po-
litical solidarity, this con-
cept has in the past aroused
deepest suspicion, particularly
among the smaller EEC members.
As they and the federalists see
it, this is a Gaullist alterna-
tive to any further advances
toward a supranational union
and a device which would serve
the aspirations of Paris to
lead a bloc of Continental sat-
ellites.
The Outlook
The European movement has
probably approached a major
transitional stage,
The EEC as it now stands
is largely of French inspira-
tion, and its future course is
largely dependent on the French.
During the past two years the
idea of full economic union
seems to have gained general--
even enthusiastic--French ac-
ceptance, and no French govern-
ment is likely to discard it.
Hostility to the supranational
principle has persisted, how-
ever, even though De Gaulle has
recently made a reference to
"European grandeur" and to the
possibility of an "imposing con-
federation." Jean Monnet, the
Community's spiritual mentor,
is confident that economic un-
ion will ultimately and inev-
itably bring the requisite po-
litical institutions, but he has
seemed increasingly uncertain
of . the form they, will take.
The 29-30 July meeting in
Paris between De Gaulle and
Adenauer was apparently taken
up with these problems, but
whether a workable institu-
tional formula has been devised
remains to be seen. Spokesmen
for both sides have professed
satisfaction with the "precise
steps" toward greater political
unity agreed upon, but there is
still a basic conflict between
the language of the French--
who continue to refer to inter-
governmental cooperation--and
Adenauer's traditional devotion
to a ,more organic union. More-
over, any such formula has yet
to be sold to the smaller EEC
countries, which will think
twice before trading the hope
of a supranational community
within a broader Atlantic frame-
work for a looser grouping a-
round Paris and Bonn which might
compete with NATO.
A community more confederal
than federal in inspiration would
place the problem of all-European
unity in a new context. It would
probably not, however, make any
easier the difficult decisions
Britain primarily must make.
Since the collapse of the sum-
mit conference there has been a
chorus of demands from influen-
tial sectors of the British press
and from some members of Parlia-
ment for a major reassessment of
policies, lest the United King-
dom become a "group of windy
islands off the Atlantic coast
of Europe."
A reassessment is in proc-
ess, but thus far it seems only
to have rediscovered the old ar-
guments against a "plunge into
Europe"--plus. a new one, Brit-
ain's obligations to the EFTA. 25X1
This is probably the beginning
of the rea raisal however, not
its end.
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4 August 1960
Oil exports from the So-
viet bloc to the free world
this year may reach A new high
of about 22,000,000 metric tons,
even though there has been a
world surplus of oil and the
free world's increase in oil
consumption during 1960 is ex-
pected to be less than 10 per-
cent. The rise in exports has
been possible because of in-
creased production in the bloc
and willingness to accept pay-
ment in soft durrencies and in
commodities for which there is
limited demand in the world
market.
The current rate of bloc
oil exports to the free world,
most of which come from the
USSR, is about four times
greater than in 1955, when such
exports first attained commer-
cial importance. Last year
bloc oil was imported by 25
countries, 13 of them--includ-
ing the European Common Market
countries--industrial nations.
Thus far this year, Cuba, India,
and Guinea have been added to
the list. The USSR supplied 79
percent of last year's total;
next was Rumania, which provided
13 percent.
The Soviet-Cuban trade
agreement concluded in February
provides for the supply of So-
viet crude oil and petroleum
products in return for sugar.
In April, Havana announced a
contract for the delivery of
600,000 tons of Soviet oil, and
later the three major foreign
oil refineries in Cuba were in-
formed that each would have to
process 300,000 tons of Soviet
crude this year. As a result
of Castro's recent expropria-
tion of these refineries, Cuba
now is almost entirely depend-
ent on the bloc for its oil re-
quirements--about 3,000,000 tons
a year.
India agreed in July to
purchase 1,500,000 tons of
Soviet petroleum products dur-
ing the next four years for
$42,000,000, with payment to
be made in rupees. The first
shipment is scheduled to arrive
this month.
Under the terms of a barter
agreement,, with the USSR:.Guinea
has.arranged for ' the.' .delivery of
petroleum products in exchange
for bananas. The total quan-
tities involved and the dura-
tion of this agreement are not
known. Petroleum shipments
thus far in 1960 have totaled
about 8,500 tons--a two-month
supply for Guinea.
Sales to Western Europe
still account for about two
thirds of all bloc petroleum
exports to the free world. The
Soviet Union has emphasized the
development of markets in the
industrial West--and lately in
The soviet oil tanker Peking, carrying 25, 693 tons of crude oil, arriving in Havana.
The tanker's bow was damaged by a collision with a Norwegian tanker en route.
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Japan--in order to
obtain capital equip-
ment needed for the
fulfillment of the
Seven-Year Plan. Bloc
exports to Italy,
Sweden, and Japan are
expected to increase
during the next few
years. In the long
run, however, the un-
derdeveloped countries
may assume greater
significance in the
bloc's over-all ac
tivity thbough the
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4 August 1960
acceptance of aid for the con-
sugar from Cuba, wool from
struction of refineries and
Uruguay, hides from Argentina
technical assistance for pe-
,
coffee and cocoa from Brazil
troleum surveys and drilling
,
and bananas from Guinea. Mos-
operations.
cow has even agreed not to re-
sell any of these bartered com-
The rapid increase in bloc
modities to the countries' usual
exports is due to a number of
customers.
factors. The USSR increased
its crude oil production from
The degree, if any, to
70,800,000 tons in 1955 to
which Moscow has undercut es-
129,500,000 tons in 1959, out-
tablished world prices for oil
stripping both internal con-
is impossible to define. In-
sumption and the construction
f
ternational. oil companies have
o
refineries. Thus the Soviet
granted discounts for several
Union has an increasing quantity
years,: and in India have reduced
of oil available for export.
prices to compete with the re-
Furthermore, this quantity will
cent Soviet oil offer
probably continue to increase,
sinc
dom
ti
e
es
c consumption is
l
aiscounts offered by
expected to lag behind rising
the USSR are similar to those
production during the 1959-65
plan period.
The continued growth of
'petroleum exports from the bloc
must be accompanied by improved
petroleum transportation facil-
ities. By 1965 the Soviet Un-
ion plans to complete pipelines
to the oil export terminal un-
der construction at Klaypeda on
the Baltic Sea and to the port
of Tuapse on the Black Sea.
Exports in 1959 amounted
to only 3 or 4 percent of the
petroleum moving in interna-
tional trade. Nevertheless,
bloc oil accounted for a sizable
part of the total supply in
seven free-world countries,
ranging from about 27 percent
of the total supply in Greece
to almost 80 percent in Finland.
Soviet Export Policy
Soviet export policy is
governed by both political and
economic considerations. The
USSR has expanded its market
among the underdeveloped nations
by demonstrating a willingness
to accept payment in soft cur-
rencies or in commodities for
which these countries have a lim-
ited market. The bloc has agreed
to barter various raw materials,
including oil for cottom,from, Egypt,
UNDERDEVELOPED
COUNTRIES
CrM IM
PRowaS
70TAL
AS BOB W
OIIDIIIN
ARGENTINA
201
282
483
3.4
AFGHANISTAN
42
42
BRAZIL
59
59
.5
EGYPT
976
1,180
2,156
45.0
SYRIA
453
453
56.6
GREECE
267
292
559
27.3
ICELAND
352
352
70.4
LEBANON
59
59
7.1
TUNISIA AND MOROCCO
64
55
119
4,2
URUGUAY
322
181
503
34.3
YUGOSLAVIA
332
71
403
33.3
TOTAL
2,221
2,967
5,188
INDUSTRIALIZED
COUNTRIES
AUSTRIA
448
346
794
32.0
BELGIUM/ LUXEMBOURG
17
602
620
8.7
DENMARK
84
84
1.9
FINLAND
914
927
1,841
78.0
FRANCE
41
908
949
3.8
WEST GERMANY
309
1,573
1,882
6.8
ITALY
2, 369
879
3,248
18.0
JAPAN
90
46
137
.8
NETHERLANDS
115
1,230
1,345
13.0
NORWAY
48
280
328
9.8
SWEDEN
90
1,375
1,465
13.4
SWITZERLAND
89
89
2.4
UNITED KINGDOM
22
91
113
.3
TOTAL
4,463
8,430
12,895
GRAND TOTAL
6,684
11,397
18,083
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granted by any new supplier who
wishes to gain entry into an es-
tablished market. The bloc has
capitalized on its ability and
willingness to provide oil on
such attractive terms that price
cuts are unnecessary.
Aid and Technical Assistance
The bloc has used offers
of credit and technical assist-
ance to underdeveloped countries
to foster closer ties and re-
duce their reliance on Western
suppliers. Credits of more than
$240,000,000 have been extended
to these countries for the de-
velopment of petroleum resources,
mainly for refinery construction
and technical assistance in ex-
ploration.
Czechoslovakia has com-
pleted construction of a re-
finery for Syria, and bloc aid
for construction of refineries
Major Bloc;Aid to Underdeveloped Countries
Drilling equipment
Exploration and surveys
X16 Refinery
is being provided to Egypt and
India and has been offered . to
Ethiopia. A similar offer pre-
sumably was made to Afghanistan
following the recent Soviet dis-
covery of oil there. Soviet
technicians may construct a re-
finery in Cuba as part of the
$100,000,000 credit granted by
the USSR, and Brazil is consid-
ering Soviet technical guidance
for the construction of a shale-
oil plant. Bloc aid for petro-
leum development is also being
extended to Argentina, Iraq,
Cambodia, and.Indonesia, and
assistance reportedly has been
offered Greece and Iran.
Such aid is attractive to
underdeveloped countries want-
ing to decrease expenditures of
scarce foreign exchange, and it
appeals to their nationalistic
aspirations for a domestically
owned industry. The development
of refining capacity not
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6 AUGUST 1960
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4 August 1960
controlled by Western companies
should create market conditions
more favorable for the sale of
bloc crude oil. Moreover, in-
stallation of equipment and
refineries by the bloc will
tend to create a continuing de-
pendence on it for Y'eplacement
equipment and spare parts.
Prospects for Bloc Exports
While continuing to expand
its oil exports to estab-
lished markets--especially in
the industrial countries--the
bloc will persist in its ef-
forts to find new outlets in
the underdeveloped areas. Bloc
crude may be imported into In-
dia when construction of. the
government-owned refineries is
completed in 1962.
Western oil companies have
declined to process Soviet crude
oil in India. It is unlikely
that India will insist, as Cuba
did, that the oil companies ac-
cede to such a proposal. India
could, however, import addition-
al quantities of products from
the USSR and, in effect, dis-
place a corresponding quantity
of Western petroleum in the ex-
panding Indian market. ` -83oer.,=
crude will probably.also find
a market in Ethiopia if Moscow
constructs a government-owned
refinery there.
In the years to come, the
bloc can be expected to attempt
to take advantage of opportuni-
ties such as occurred in Cuba
recently. Despite the restric-
tions inherent in the Soviet
economic system, Moscow moved
quickly to accommodate Cuba--
although this undoubtedly will
require some readjustments in
the Soviet oil industry's planned
operation for this year. The
Soviet Union has its limitations,
however, and it is unlikely that
Moscow could accept additional
large-scale commitments in the
near future.
In the past, ,a serious ob-
stacle to marketing of bloc oil
has stemmed from the scarcity
of distribution and storage fa-
cilities in the free world other
than those controlled by the in-
ternational oil companies. The
government-to-government sales
agreements which Moscow has fos-
tered are paying off now. Al-
though the owners of these fa-
cilities object, the host gov-
ernments have forced the com-
panies to handle bloc oil. in
Iceland, riniand, and Guinea,
and Ethiopia may soon do so as
well. The favorable position
which the.oil companies have
cultivated through substantial
investment in marketing facil-
ities over the years is no
longer a serious obstacle to
the USSR's marketing effort.
Long-range expansion of
Soviet exports to the free world
could be limited by rising in-
ternal bloc requirements. If
the European satellites achieve
the rate of industrial growth
apparently planned through 1965,
the USSR may be called on to
provide quantities of oil which
would substantially reduce its
ability to continue to increase
exports to the free world.I
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