CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A003700060001-4
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 15
• Document Creation Date: December 12, 2016
• Document Release Date: May 31, 2002
• Sequence Number: 1
• Publication Date: May 7, 1958
• Content Type: REPORT

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CENTRAL INTELLIGENCE BULLETIN
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7 May 1958
DAILY BRIEF
I. THE COMMUNIST BLOC
ters.
*Soviet summit tactics: The 12-point agenda for a sum-
mit meeting which Foreign Minister Gromyko gave to the
three Western ambassadors on 5 May was a detailed repeti-
tion of virtually all Soviet proposals since 10 December with-
out any major modifications. In his separate talks with the
three ambassadors, Gromyko is unlikely to elaborate much
further on the 12 points and will probably press instead for
detailed Western responses to the Soviet proposals. If such
a response is not forthcoming at an early date, the USSR will
probably contend that further ambassadorial talks would be
fruitless and demand an early convening of the foreign minis-
view that government-to-government negotiations are the
Berlin: Western barge traffic through East Germany
stopped on 5 May when bargemen refused to pay higher tolls
imposed by East Germany. The Bonn and West Berlin gov-
ernments are discussing the question of paying the new
charges. They consider the East German reasons for the
tax to be fraudulent and are looking for ways to retaliate.
The East Germans hope that the continued use of such tactics
will serve to remind the West Germans of the Communist
way to solve German issues.
(Map)
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year development program.
ment, it might feel compelled to appease the opposition by
repudiating the Eisenhower doctrine. Foreign Minister
Malik has suggested the United States grant
Lebanon $25,000,000 a year or a "initial years" of a six-
India: The public announcement by the National Devel-
opment Council, India's highest planning body, that several
important segments of India's Second Five-Year Plan (1956-
1961) are behind schedule, and that other important aspects
of the plan are to be curtailed will create further problems
for the Nehru government at a time when the Indian.public
is becoming increasingly aware of weaknesses in the Con-
gress party. The cuts are necessitated by a shortage of
domestic and foreign capital as well as rising costs. Agri-
cultural and industrial development programs have lagged
7 May 58 DAILY BRIEF ii
25
quests for aid.
Middle East: The worst drought in over 20 years ac-
companied byte heaviest locust infestation in more than
10 years threatens to bring about near-famine conditions
in several Middle Eastern countries by this summer. Crop
failures will lead to severe economic and possibly political
problems, especially in the United Arab Republic and Jor-
dan. The United States can expect to. receive numerous re-
Lebanon: Public statements by the minister of public
works a his government will ask the United States for
about $170,000,000 in aid over the next six years probably
place the Lebanese Government in a position from which it
will be difficult to retreat without serious loss of face. If
the Lebanese cabinet does not repudiate the minister's state-
INIVINEMENE,
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III. THE WEST
*France: The Popular Republicans' decision on 6 May
to inin a government formed by Pleven gives him a. fair
during the first two full years of the plan, and government
spending for the first three years will probably come to only
about half of the total projected outlay.
(Page 5)
Iran-Pakistan: The Shah of Iran plans to discuss the
possibility of a federation involving Iran, Pakistan, and
possibly Afghanistan when he sees Pakistani President Mirza
in Karachi on 13 May. The subject of some form of union
has been broached several times during the past month by
top Iranian and Pakistani officials. Iran has previously dis-
cussed the idea with Turkey, but the Ankara government's
attitude was cool. While the creation of a new alliance in
the near future is unlikely, the discussions reflect continuing
concern in the area over the future of the Baghdad Pact. The
Shah is motivated partly by a desire to share the advantages
of Pakistan's relatively modern armed forces, and hopes
that Pakistan may be interested in the possibility of access
to Iran's oil revenues.
cnance oz oeing investea, out the asntuae of the lnaepenaents
remains in doubt. Their position will probably be determined
\ on the basis of Pleven's selection of ministers. The Social
ists have agreed to support Pleven, but not to participate.
25X1 centrist coalition representing directly only about 150 of
the DuD deputies in the National Assembly.
Brazil: The agreement with Poland on 2 May to barter
coffee for 14 small cargo ships is a reflection of Brazil's
continuing foreign exchange crisis and its disappointment
over its failure to obtain ships from the US reserve mer-
chant fleet. The government may also be receptive to a
reported Rumanian offer to furnish drilling equipment for
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the government oil monopoly in exchange for agricultural
commodities. Limited agreements of this nature, however,
do not constitute a change in Brazil's over-all trade policy,
which is oriented- essentially toward trade with free world
countries.
DAILY BRIEF iv
U
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USSR Proposes Comprehensive Summit Agenda
Foreign Minister Gromyko's 12-point summit agenda
is a comprehensive restatement of virtually all Soviet pro-
posals since 10 December for discussions at a summit con-
ference. It does contain some minor changes, but no major
modifications, In his separate talks with the Western am-
bassadors, Gromyko will probably press for detailed re-
sponses. If such a response is not forthcoming at an early
date, the USSR will probably demand an earlier convening
of the foreign ministers, contending that the ambassadorial
talks have been valueless.
The USSR may argue that its comprehensive list of
agenda items should be used as the basis for negotiation,
because it contains all the major categories of legitimate
issues raised so far by either side. Moscow will continue
to refuse to discuss Eastern Europe on the ground that it
is outside the competence of a summit conference.
The USSR still seeks to avoid a discussion of German
unification by placing a German peace treaty on the agenda
instead. It has, modified its previous proposal that the sum-
mit conference conclude such a treaty and now suggests that
it only agree on the basic principles of a treaty.
Moscow continues to give great emphasis to the termi-
nation of nuclear tests, the first item on the agenda. It says
that British and American suspension of tests would make
possible an agreement at the summit "consolidating these
decisions" which could be followed by discussion of control
arrangements.
One new feature designed to increase public support for
the proposals is the emphasis on mutual assistance to under-
I. THE COMMUNIST BLOC
developed areas, particularly the Middle East.
7 May 58
CENTRAL INTELLIGENCE BULLETIN
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~BAI. 'IC
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MAIN COMMUNICATION ROUTES
WEST GERMANY-BERLIN
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Berlin Mayor Brandt Seeking Retaliation for New
Barge Taxes
West Berlin's Mayor Brandt, who went to Bonn on 5
May to discuss with the West German cabinet the new
higher taxes on barge traffic to Berlin imposed by the East
Germans, believes that Bonn might retaliate by levying
similar taxes on East German barges moving to Hamburg.
Such retaliation probably would be ineffective, however, be-
cause East Germany's Baltic ports have been handling increas-
ing amounts of its ocean cargo, as well as satellite transit
trade. Brandt described as "phony" the East German argu-
ment that the new barge taxes were justified on the grounds
that an Elbe River dam, now under construction at Geesthacht
near Hamburg, will cause a flood problem in East Germany.
The canals through East Germany carry about 2, 500,000
tons of goods into West Berlin each year, including nearly
all of West Berlin's bulk imports, such as coal and building
materials.
In 1955, the East German regime drastically raised the
tolls on West German truck traffic to Berlin, ostensibly for
road repair.. Since that time, the Bonn government has paid
the truckers a subsidy to cover the increase in tolls. The
last dispute over barge traffic occurred in 1955-56, when the
USSR refused to renew barge permits. The matter was even-
tually worked out on a "semiofficial" basis between East and
West German waterways technicians. The Berlin Senate
will discuss with Bonn a possible budget subsidy for the new
barge taxes, estimated by the press at $7,000,000 annually
and by the American Mission in Berlin at $4,200,000.
The East German regimehopes by the use of such tactics
to remind the West Germans that government-to-government
negotiations are the way to resolve German problems.
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II. ASIA-AFRICA
Situation in Indonesia
Djakarta forces in the Palu area include two bat-
talions and one company brought in from Java and Bor-
neo in early April and one battalion of North Celebes
troops which has defected to the government. The North
Celebes battalion has few weapons.
The Indonesian Army on 6 May arrested a number
of persons in Djakarta, reported to be chiefly Chinese
Nationalists, on charges of having engaged in "foreign
subversive activity." The arrests presumably are con-
nected with government threats of action against Chi-
nese in Indonesia if alleged Chinese Nationalist aid to
the dissidents did not stop.
The American ait attache in Djakarta has been in-
formed that four Russian instructors on board an Indo-
nesian merchant ship recently purchased from the So-
viet Union were killed late in April when the ship was
bombed by dissident aircraft in Makassar Strait.
7 May 58 CENTRAL INTELLIGENCE BULLETIN Page 3
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Drought and Locusts Menace Middle East
. Near-famine conditions are threatened in some Near
Eastern countries as the result of severe drought and heavy
locust infestation. In Israel, exceptionally dry hot weather
has caused a complete crop failure in the Negeb and poor
crops elsewhere. Famine conditions are predicted in Jor-
dan this summer--45 percent of the population have already
been affected by the drought, and the value of the expected
crop loss is estimated at one third of the regular national
budget. Growing unemployment among agricultural work-
ers will have serious political repercussions if the govern-
ment is unable to furnish them work.
Iraq's agriculture has been struck a double blow by locusts
and drought. While Iraq has about 50,000 tons of wheat on hand
which might be exported, this may be reserved for internal
consumption in light of the crop losses. Syria, normally a
wheat exporter, will have only a small quantity for export
this year--a surplus which will be reserved to meet Egypt's
requirements. In the eastern desert, 800,000 sheep are re-
ported threatened by the drying up of watering places and
sparseness of grass. President Nasir is said to be serious-
ly concerned that the Syrian crop situation will engender po-
litical difficulties as well as put a strain on Egypt's economy
by cutting off an anticipated source of wheat imports.
A Syrian ban on grain exports will directly affect Lebanon,
which imports about 75 percent of its wheat requirements. In
addition, agricultural production may have been reduced by
several locust swarms. Reports from Saudi Arabia in mid-
April stated that all agricultural and most garden crops in
central and eastern Arabia were threatened by the worst
locust infestation in 14 years. About 10,000 egg-infested
acres of land in Kuwait have produced swarms of locusts that
have flown into Iraq and Iran.
Many Middle Eastern governments can be expected to ap-
ply to the United States for eco:aumic assistance.
7 May 58
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India's Second Five-Year Plan to be Cut Back
The National Development Council, Indian's top economic
planning body, has just completed a review of progress thus
far under the five-year plan and has outlined future pros-
pects. Its findings indicate that important segments of the
plan are behind schedule and that a shortage of domestic and
foreign capital as well as rising costs will force major cuts
in the plan.
India's most important problem, increasing agricultural
production to keep pace with an annual population growth of
5,000,000 persons, is not yet being solved. Deficit financing
has been used to a greater extent than had been planned, and
alternate sources of financing will have to be developed in
1959-1961 if deficit financing is not to be carried beyond safe
limits. Government development expenditures at the end of
three years are expected to reach $5.,1,676 billion, or only
about half of the $10.08 billion set as the five-year goal. Pri-
vate investment is apparently keeping pace with planned tar-
gets.
In order to minimize adverse reactions, New Delhi has
decided to keep the government's development expenditure
goal at the original $10.08 billion. figure. Since costs have
risen considerably since the plan was first drafted, however,
the government recognizes it may get some 15 percent less
than anticipated for its money. A strenuous effort will be
made to keep high-priority targets involving agriculture,
steel mills, mining, and power. Among the projects to be
cut back is the popular community development program,
which is raising the standards of farming, health, and edu-
cation in India's villages.
Serious cutbacks or failures--especially in food produc-
tion--would produce unfavorable reactions from state gov-
ernments and local populations which have counted on bene-
fiting from much-publicized development programs, and
Nehru's piling Congress party would find it increasingly dif-
ficult justify its continuance in office.
7 May 58
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Talk of Pakistani-Iranian Confederation Continues
The subject of a confederation involving Pakistan,
Iran, and possibly Afghanistan has continued to be ac-
tively discussed by high Iranian and Pakistani officials,
including the chiefs of state. This talk is still in an ex-
ploratory stage, considering varying degrees of unity
and even varying combinations of states, and no seri-
ous negotiation or joint study of the problems involved
is known to have been proposed as yet.
The Shah of Iran has expressed the most interest
in a Pakistani-Iranian confederation, envisioning him-
self as chief of the new state. During a visit to Karachi
on 13 May, he is expected to discuss the advantages and
obstacles of confederation with Pakistani President Mirza,
No firm agreement involving a cession o
power y a government or leader in favor, for instance,
of a unified military command or a single foreign policy
seems likely in the near future.
The viability of the confederation idea, however,, re-
flects continued concern over the future of the Baghdad
Pact organization in relation to the UAR and the Jordanian-
Iraqi federation. Ankara, with which Tehran has discussed
the idea of confederation, has reacted coolly. I
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III. THE WEST
Brazilian-Polish Barter Agreement
A trade contract under which Poland is to supply Brazil
with 14 cargo vessels was.concluded on,2 May. The agreement
totaling about $25,000,000 each way, calls for Poland to be-
gin deliveries of these shipsin 1906 and to accept $18,000,000
worth of coffee over a three-year period. By expanding the
government-owned segment of the Brazilian merchant fleet,
the government hopes to save foreign exchange and improve
its bleak long-term payments outlook. Until recently, Bra-
zil had been unsuccessfully pressing a request for 24 mer-
chant vessels from the US reserve fleet.
The Brazilian Government has been under heavy politi-
cal pressure to expand trade ties with the Soviet bloc, es-
pecially in view of the continuing foreign exchange crisis and
the mounting stocks of government-held surplus coffee. The
Brazilian National Security Council has been dubious about
the value of expanding such trade, and most trade officials
have long opposed barter arrangements. The prospect of
new austerity measures under a proposed stabilization and
loan plan recently submitted to the International Monetary
Fund has apparently impelled the government to investigate
barter deals as a means of helping to finance its economic
development program. This situation may also make the gov-
ernment more receptive to repeated Rumanian barter offers
involving oil drilling equipment for the Brazilian national
monopoly.
Brazil has shown some interest in Polish and Czech of-
fers since mid-1956 of heavy equipment and "complete indus-
trial installations," and has.accepted short-term credits from
Poland of about $3Q, 000,000. Limited agreements of this type,
however, would not represent any change in Brazil's over-all
trade policy, which is essentially oriented toward multilateral
arraments with the West.
7 May 58
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