CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A003500380001-1
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 17
• Document Creation Date: December 15, 2016
• Document Release Date: March 22, 2004
• Sequence Number: 1
• Publication Date: January 17, 1958
• Content Type: REPORT

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17 January 1958
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I, THE COMMUNIST BLOC
The USSR, as well as certain Western nations includ-
ing the US, will probably be approached by Ceylon for a
total of $60,000,000 in loans at 2-percent interest to re-
habilitate flood-damaged areas o Moscow normally grants
loans at this low interest rate and currently has a large
economic mission visiting Ceylon. The USSR has already
offered to aid the Ceylonese rubber industry and to pur-
chase rubber at premium prices.
The_ Czech regime is having increasing difficulty in
controlling opposition among local party and government
officials in the Slovak region. Slovak nationalists are at-
tempting to use Prague's economic decentralization pro-
gram for their own local benefit at the expense of nation-
wide goals.
The initial Sino-Soviet bloc reaction to President
Eisenhower's reply to Bulganin''s letter of 10 December
repeats the Soviet line that the United States Government
is not interested in negotiations and stands alone in op-
posing a summit meeting.
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II. ASIA-AFRICA
donesian parliament.
Debate on the $100,000,000 Soviet economic loan agree-
ment, including a provision for cooperation on peaceful
uses of nuclear energis about to commence in the In-
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A showdown between the Indonesian central govern-
ment and dissident leaders may be precipitated if Dja-
karta agrees to deliveries of extensive military equip-
ment from the Soviet bloc, An Indonesian military pur-
chasing mission is now seeking arms in Eastern Europe
Political tension in. Syria remains high. Foreign
Minister Bitar, a leader of the civilian socialist.na-
tionalist?;group, has gone to Cairo,
has announced a new "progressive" party will be formed.
Vice Premier Azm, the leading pro-Com-
munist civilian, has been meeting with Deputy Chief of
Staff Nafuri and chief of army intelligence, Sarraj . Azm
Turkey's rejection of the latest British proposals
for a Cyprus solution demonstrates that Turkey's Cyprus
policy has hardened. Greek-Turkish tension onCyprus
has increased, and any misstep might result in outbreaks.
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The Shah has reiterated to both the British ambas-
sador and General. Maxwell Taylor that Iran's future policy
toward the West will be dependent on decisions taken at the
Baghdad Pact' Ministerial Meeting on 27-31 January. The
Shah's warning is in line with his repeated attempts to ob-
tain more American military aid and his recent threats to
leave the pact.
munist statements
`The appointment of a provisional Cambodian govern-
ment headed by conservative Penn Nouth on 16 January has
ended the administratipe crisis following Prince.Sihanouk's
dissolution of the national assembly on 8 January. The po-
litical orientation of this cabinet, which presumably is in-
tended to last until new general elections are h'hld within
two months, is consistent with Sihanouk's recent anti-Com-
III. THE WEST
question, however, of the army's willingness to use force
against the sustained mob violence threatened by both the
rightist presidential candidate. Ydigo ras and by extreme left-
ist leaders if Cruz Salazar is declared the winner. It re-
fused to act decisively in similar circumstances last October.
Guatemalan President Flores seems determined to pre-
serve order during and after the bitterly contested elections
of 19 January, and has announced that army leaders are pre-
paring to back him up with force if necessary. There is some
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 West German Foreign Ministry officials favor of-
fering India new credits of $72,000,000 for economic de-
velopment programs, besides postponing payments on the
principal of India's $144,000,000 debt. For political rea,-
sons-Bnn?would like to encourage further private invest-
ment in India by German firms. Bonn states that German
firms are short of funds, and urges joint Western financial
aid.
100
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IV. SIGNIFICANT INTELLIGENCE
REPORTS AND ESTIMATES
Watch Committee Conclusions. I
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I. 71';~E COMMUNIST BLOC
Slovak Nationalism Increasing Problem for
Czechoslovak Regime
Nationalist elements in Slovakia apparently are at-
tempting to use the Czechoslovak regime's economic
decentralization program to benefit their own regional
interests at the expense of nationwide goals,
In a strongly worded speech to the Slovak party cen-
tral committee plenum meeting of 9-10 January; Slovak
Party First Secretary Bacilek complained that there were
separatist tendencies in various sectors of cultural, po-
litical, and scientific life, and even in some of the central
offices. The dismissal on 13 January of Slovak Deputy
Premier Stefan. Sebesta, responsible for industrial and
urban construction, probably is the first step to remove
officials with nationalistic tendencies, who, according to
Bacilek, have appeared at the highest levels of the Slovak
government.
The resurgence of separatism within Slovakia since
the Soviet 20th party congress in February 1956 has been
of mounting concern to the Prague regime, and since the
Slovak party congress in April 1957 has been condemned in
increasingly stronger terms by Czech party boss Antonin
Novotny. The tone of Bacilek?s speech indicates that the
situation now demands the ruthless stamping out of "bour-
geois nationalist" elements promised by. Novotny last April
when he first publicly warned the Slovak dissidents to con-
form or suffer the consequences,
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II. ASIA-AFRICA
Indonesia
A final break between Indonesia's dissident leaders. and
the central government may be precipitated if Djakarta con-
cludes an arms from the So-
viet bloc.
the dissidents fee that the arrival o
Soviet arms would upset the existing "balance of forces" be-
tween Djakarta and the regions and that a showdown should
be precipitated before the dissidents are placed on the de-
fensive. The Indonesian arms purchasing mission has just
arrived in Prague, after talks in Belgrade, and will proceed
next to Warsaw.
A further factor in this situation may be the Indonesian
parliamentary debate, beginning about 18 January, on ratifi-
cation of the $100,000,000 Soviet economic loan agreement,
which includes a provision for cooperation on peaceful uses
of nuclear energy. Ratification would open the way for the
arrival of Soviet technicians and probably would be viewed
by the dissidents in much the same light as an arms deal.
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Turks Reject British Proposal for Cyprus Solution
Turkey's abrupt rejection of Britain's latest proposals
for a. Cyprus solution, emphasizes the stiffening of the gov-
ernment's Cyprus policy since the return of Fatin Rustu
Zorlu as foreign minister.
Ankara insists that the offer of self-determination "on
absolutely equal terms" for both Greek and Turkish Cypriots
be implemented immediately.
The British offer, delivered to the Turkish Foreign Min-
istry for its informal comments, had provided for a seven-
year period of self-government, after which the Greek and
Turkish Cypriots could determine separately their own future
status.
On Cyprus, Turkish Cypriot support has solidified around
Fazil Kutchuk, who plays on the fears and prejudices of his
followers and who appears to have the full support of Ankara.
Increasing tension has heightened the probability that the Turk-
ish Cypriots now will develop an efficient underground. organi-
zation, thus increasing the seriousness of any outbreak of vio-
lence. Seventy-nine percent of the local police are Turkish
Cypriots whose loyalty to the British Government might quickly
vanish in the face of serious intercommunal warfare. F_
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Bonn to Offer Additional economic Ai- to India
The West German Foreign Ministry, in negotiations
with India scheduled to begin on 20 January in Bonn, is
prepared. to offer new credits up to $72,000,000 to finance
the purchases of priority items for India's five-year plan.
Bonn will also grant India's previous request to defer un-
til after 1961 payments on the principal of its present
$144,000,000 loan. The new credits would be handled by
a special organization or trust fund, with 10 percent of
the burden carried by private German firms and the rest
by the government.
West German Foreign Ministry officials emphasize
the political importance of providing assistance to India,
and would like even further investments by private German
firms in India. They stress Germany's shortage of invest-
ment capital, however, and suggest association with the
United States in a joint economic aid program for India.
The new German financial offers would strengthen the
political prestige of Indian Finance Minister Krishnamachari,
who toured Western Europe and the United States last fall
seeking foreign aid.
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IV. SIGNIFICANT INTELLIGENCE
REPORTS AND ESTIMATES
Watch Report 389, 16 January 1958
of the
Intelligence Advisory Committee
Conclusions on Indications of Hostilities
On the basis of findings by its Watch Committee, the In-
telligence Advisory Committee concludes that:
A. No Sino-Soviet bloc country intends to initiate hostilities
against the continental US or its possessions in the im-
mediate future.
B. No Sino-Soviet bloc country intends to initiate hostilities
against US forces abroad, US allies or areas peripheral
to the orbit in the immediate future.
C. 1. A deliberate initiation of hostilities in the Middle East
is unlikely in the immediate future. However, ten-
sions in the Middle East continue to create possibil-
ities for serious incidents.
2. There is no evidence of Sino-Soviet intention to become
militarily involved in the Indonesian situation. How-
ever, there are continuing opportunities for an expan-
sion of Sino-Soviet bloc influence in Indonesia as evi-
denced by Indonesian purchasing missions still nego-
tiating for bloc military equipment. Although Indo-
nesian Communists are exploiting political instability
and economic deterioration, which continue to provide
opportunities for a Communist take-over on Java, there
is no evidence that this is likely to take place in the im-
mediate future.
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