CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A001500060001-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 36
• Document Creation Date: December 20, 2016
• Document Release Date: November 30, 2005
• Sequence Number: 1
• Publication Date: November 21, 1957
• Content Type: SUMMARY

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CONFIDENTIAL
&KORET
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
COPY NO. 17
OCI NO-6414/57
21 November 1957
DOCUMENT NO. --- -!:~
NO CHANGE IN CLASS. 0
0 DECLASSIFIED `
CLASS. CHANGED T O: T
NEXT REVFE'i. DATE
AUTI4?.. WR 7n_Q L
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT
INTELLIGENCE r,t,i b
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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-- CUNHDLN I IAL
CURRENT INTELLIGENCE WEEKLY SUMMARY
KHRUSHCHEV EXPLOITS SOVIET TECHNOLOGICAL GAINS
Soviet party chief Khru-
shchev, in recent interviews and
public statements, has attempted
to translate Soviet technolog-
ical advances into political
gains. By emphasizing the
USSR's enhanced military poten-
tial, asserting its devotion to
peace, and bidding for new East-
West talks, Khrushchev is trying
to exert pressure on the non-
Communist world--particularly
on Western Europe prior'.to the
forthcoming NATO conference in
Paris. Moscow may be planning
to send formal notes to the
United States and other NATO
powers prior to the Paris meet-
ing proposing a broadly repre-
sentative conference.
Intensified exploitation
of Soviet technological advances
began with the announcement on
26 August of successful testing
of an ICBM, when Air Marshal
Vershinin in a Pravda interview
disparaged the vat-of aircraft
carriers; and foreign bases and
declared, "The Soviet Union
can defeat any aggressor."
Soviet commentaries on the
launching of the first earth
satellite on 4 October dwelled
on the superiority of science
under the socialist system.
Moscow quoted Western reactions
in drawing attention to the
military implications.
Since the launching, Khru-
shchev, as chief Soviet foreign
policy spokesman, has developed
the theme in interviews and
statements that the balance of
power has shif ted away from
the West in favor of the Com-
munist bloc and the "neutrals"
in the so-called peace camp.
He has emphasized that Soviet
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missiles could now be used to
"dispose of bases in Europe,
Asia, and Africa"--a threat
directed at countries where
American bases are located.
In an interview on 14 November,
he specifically cited the Euro-
pean members of NATO as Soviet
targets in a future war and
asserted that sentiment in those
countries would turn against
NATO and the American bases.
Such remarks--which will
probably be reiterated by Soviet
spokesmen as the NATO conference
draws nearer--combined with
Moscow's call for a high-level
East-West meeting are calculated
to bring pressure on NATO gov-
ernments to postpone major de-
cisions on measures to strength-
en the Atlantic alliance until
Soviet intentions can be ex-
plored in a new round of talks.
In his 6 November speech
at the 40th anniversary cele-
bration, Khrushchev made the
first of a series of bids for
a new East-West conference.
Disparaging the meeting of Pres-
ident Eisenhower and Prime Min-
ister Macmillan as an effort
to continue the Western "posi-
tion of strength" policy, he
called for a "high-level meeting
of representatives of socialist
and capitalist" states to settle
outstanding international prob-
lems. Khrushchev has since re-
peated this bid, '. .; has also
hinted that Moscow would wel-
come direct talks with the
United States or a big-power
conference.
According to the TASS
version of his 14 November in-
terview, Khrushchev admitted
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CURRENT INTELLIGENCE WEEKLY SUMMARY
it was doubtful such a meeting
could be held, and his actual
statement to his interlocutor
on this subject was even more
pessimistic. Khrushchev as-
serted that a conference of
this type would be pointless
unless the parties concerned
mean to achieve agreement. The
basis for such agreement, in
his views, would have to be
recognition of "the actual bal-
ance of forces," noninterfer-
ence in other countries' in-
ternal affairs, and acceptance
of the Bandung principles of
peaceful coexistence.
In commenting on the ef-
fects of the USSR's campaign
to exploit '.its, scientific
achievements, Ambassador Thomp-
son in Moscow points to the
possibility that Soviet leaders
now believe that prospects have
improved for forcing the West
to discuss disarmament on So-
viet terms and to acknowledge
the Soviet position in the Mid-
dle East.
Premier Bulganin's tan-
nouncement on 19 November that
the USSR has agreed to "aid
Egypt in building up its na-
tional economy" suggests that
Moscow has offered Cairo exten-
sive economic aid which, if ac-
cepted, would fill a major gap
in the Soviet-Egyptian relation-
ship. Although the USSR over
the last two years has consid-
ered Egypt the principal lever
of Soviet policy in the Middle
East, it has not previously of-
fered any large-scale economic
assistance. According to Egyp-
tian press reports, the USSR
has offered Egypt a credit
equivalent to $175,000,000. The
timing of the offer indicates
that it is designed to exploit
Nasir's concern over internal
problems, and to forestall re-
establishment of Egyptian com-
mercial ties with the West.
Syria
Syrian propaganda against
the alleged menace of Turkish
military activities has become
desultory, although-':the Syrians
are not yet ready to let the
subject die. The Turks are
withdrawing about half of the
50,000 men they had deployed
in the vicinity of the Syrian
border during the past three
months. Turkey in December will
seek NATO authorization for an
additional armored brigade, in-
cluding M-48 tanks, to augment
forces remaining near the bor-
der.
An Egyptian parliamentary
delegation's visit to Damascus
has provided the occasion for
another emotional outburst in
favor of Egyptian-Syrian union.
However, there is still no sign
that Nasir wishes to add Syria's
internal problems to his own,
or that the present military
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CURRENT INTELLIGENCE WEEKLY SUMMARY
cooperation between the two
countries will in fact be ex-
panded into any real economic
or political "union."
Syria's civilian politi-
cians are having trouble main-
taining even the usual semblance
of unity among themselves. There
are signs that the radical na-
tionalist leadership of the
Baath is having new twinges of
discomfort in its association
with the Communists.
Baath chief Hawrani discovered
last week that while his party
had been concentrating on prep-
arations for the 1958 parlia-
mentary elections, the Commu-
nists had mounted a well-organ-
ized campaign for more imminent
municipal balloting. The Com-
munists demanded that within
the "national front" coalition
they be permitted to run as
many candidates as any other
party. Rather than accede,
Hawrani and more moderate ele-
ments succeeded in having the
municipal elections put off un-
til the non-Communists are bet-
ter organized.
To balance the score, how-
ever, Hawrani's archrival, De-
fense Minister Azm, assumed two
additional posts. Now acting
finance minister in lieu of
Prime Minister Asali and head
of the Economic Development
Board, Azm holds in his hands
all the lines of contact with
the Soviet Union except the
formal diplomatic links. In
his defense role, he oversees
the arms deals with the bloc;
on the development board he
presumably will have the major
say as to what projects Soviet
funds and technicians partici-
pate in; and as finance minis-
ter he will have the job of
raising the money to pay off
the USSR. Azm, a tool of the
French wnen they were the domi-
nant influence in Syria, has
clearly cast his lot with the
Russians, probably in the be-
lief that this will lead him
to the presidency of'.the re-
public.
The Egyptian-Jordanian
propaganda war quieted somewhat
for a day or two last week end.
The campaign had resumed by mid-
week, however, concentrating
on personal aspersions and
general assaults on King Hus-
sayn's policies rather than on
fabricated news of "riots" in
Jordan. Cairo's Voice of the
Arabs" broadcasts now seem di-
rected particularly at the Jor-
danian Bedouin tribes who form
the core of Hussayn's military
support.
The impact of the Egyptian
campaign appears to have been
minimal; no disorders occurred
in Jordan as a result, and the
security situation there seems
relatively good for the moment.
The problem of parliamentary
by-elections, which had been
scheduled for 23 and 30 Novem-
ber, has been solved by "per-
suading" all candidates save
one for each of five of the
six seats to withdraw. Similar
government success is antici-
pated for the sixth seat.
New trouble can come at
any time for King Hussayn's
government, however, since there
is no sign that Egypt and Syria
have relented in their hostile
attitude toward his pro-Western
orientation. An Egyptian diplo-
mat in Damascus indicated
clearly last week that his gov-
ernment regards Jordan's in-
ternational position as a con-
stant threat to the success of
the Egyptian policy.
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The Jordanians also feel
menaced again by new Israeli
activity in the Jerusalem area.
On 20 November, the Israelis
included a quantity of gasoline
in the material which they send
once every two weeks by truck
convoy to Mount Scopus, the
Israeli-held enclave in Jor-
danian territory. The Jorda-
nians have insisted that this
material is "contraband," but
the Israelis have refused to
remove it from the convoy. The
Jordanians' attitude stems
from what they believe to be
the need for a tough public
posture toward Israel to count-
eract Egyptian propaganda which
alleges Hussayn is secretely
negotiating with Tel Aviv.
the Aden frontier area.
Oman - Yemen
The British and the Sultan
of Muscat continue to contend
unsuccessfully with the surviv-
ing Omani rebels. The latest
attempt by the Sultan's forces
to capture the village headquar-
ters of the rebels has failed,
Regarding the other side of
the Arabian peninsula, Yemeni-
British talks in London have bro-
ken off, and Crown Prince Badr
has gone on a visit to Paris.
Yemeni's radio attacks on the
British have been resumed and
more rifles have been distribut-
_t.
s- 25X1
A
-4-4 .4 AA-4a
e
s
to
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CON, DENTIAL
CURRENT INTELLIGENCE WEEKLY SUMMARY
SOVIET DISARMAMENT MOVES IN THE UN GENERAL ASSEMBLY
The abrupt rejection on 19
November by Soviet Deputy For-
eign Minister Kuznetsov of the
compromise measure to enlarge
the UN disarmament machinery
has stalemated efforts by neu-
tralist countries to achieve a
solution acceptable to both the
West and the Communist bloc.
Moscow apparently believes it
can exploit concern over its
threat not to participate in
future disarmament talks to ex-
tract further concessions from
the West.
The Soviet delegation had
apparently promised at least
India and Yugoslavia--the prin-
cipal mediators of a compromise
--that their proposal to add
14 new members to the 12-nation
Disarmament Commission would
be acceptable. Just prior to
the voting, Soviet United Na-
tions delegate Kuznetsov warned
that unless the General Assem-
bly adopted a hastily contrived
Albanian amendment to raise the
commission to 32 members--16
Western and 16 Communist or neu-
tralist states--the USSR would
boycott further UN disarmament
negotiations. This about-face
placed India in "an awkward po-
sition,"
,and caused
ugos avia o withdraw its par-
ticipation in the compromise
enlargement plan in "disgust"
at the Soviet tactics.
The USSR's confidence in
the strength of its position is
indicated by its willingness
to risk alienation of neutral-
ist: powers by these methods.
Chief Soviet delegate Sobolev,
when asked why the USSR adopted
tactics which turned a US de-
.2eat into victory, replied:
"Where will the American vic-
tory be when we do not attend
meetings?"
Soviet party chief Khru
shchev;explained the Soviet at-
titude toward further disarma-
ment talks in a 14 November in-
terview with an American jour-
nalist. He repeated the Soviet
assertion that the United States
does not want a disarmament
agreement and has used the "be-
hind-the-scenes" negotiations
in the present subcommittee as
a screen for continuing the
arms race. He pointed out that
the USSR, since it has been in
opposition to the four NATO mem-
bers of :the Disarmament Subcom-
mittee, opposes further closed
negotiations in that body.
Khrushchev repeated Soviet de-
mands for a new disarmament
body composed of all 82 UN mem-
ber nations and stated that its
establishment would not prevent
the use of other "forms and
methods" of talks such as direct
US-Soviet negotiations.
There has been speculation
among non-Western delegations
that the Soviet Union is bluff-
ing on its threat not to partic-
ipate: and that creation of a
modestly enlarged commission
would remove any basis for So-
viet unwillingness to engage in
further arms talks. Adoption
on 19 November by an overwhelm-
ing majority of the General As-
sembly of the compromise .en-
largement proposal reflected
this expectation.
25X1
supporting or abstaining, sug-
gests that the nuclear test is-
sue will gain more adherents
among UN members in the future.
Although the Indian pro-
posal for immediate cessation
of nuclear tests was rejected
by the General Assembly on 19
November, the inclusion of many
pro-Western nations among those
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CURRENT INTELLIGENCE WEEKLY .8BEY
GAILLARD WOOING RIGHTISTS WITH TUNISIAN ISSUE
The diversion created by
Premier Gaillard's strong stand
on the delivery of arms to
Tunisia., by the United States
and Britain helped his broad
coalition survive its first
confidence test on economic
and financial policy. He prob-
ably hopes that this firm at-
titude in relation to his West-
ern allies will help to ensure
passage of the basic statute
for Algeria.
Mounting rightist reluc-
tance to accept the new taxes
and pricing restrictions pro-
posed by Gaillard in his re-
quest to the assembly for sweep-
ing economic powers was tempered
by his position toward the
United States and Britain on
the arms issue. His national-
istic stand, along with some
concessions to the Independents
on tax policy, was largely re-
sponsible for the relatively
small outright opposition re-
corded in the 256-182 confidence
vote on 19 November. The res-
pite thus gained from political
difficulties over economic
policy may be short-lived, how-
ever, as the threat of new gas
and electricity strikes con-
tinues the pressure for wage
hikes and the Socialists' ap-
prehension over the effect on
)their position of Gaillard's
virtual wage freeze increases.
A slightly amended version
of the Algerian statute which
toppled Bourges-Maunoury's gov-
ernment on 30 September has
been placed before the assembly
in the hope of obtaining pas-
sage before the UN General As-
sembly debate. The modifica-
tions tend further to safeguard
the position of the French mi-
nority in Algeria and are ex-
pected to favor the statute's
chances. There is some con-
cern, however, that rightist,
deputies will take the oppor-
tunity to register their bit-
terness over Tunisia and force
the government to elaborate
the somewhat innocuous provi-
sions of the bill itself with
stronger supplementary policy
statements. An Independent
spokesman has indicated that
before committing" itself on'.the
basic statute, his group will
be particularly anxious to
have the government make clear
to its allies France's pre-
eminent position in North Africa.
Gaillard, himself, probably
hopes his position on the arms
question will limit the criti-
cism and block any pressure for
extensive changes. At the same
time, he is banking on the in-
terest of Washington and London
in healing the rift in the At-
lantic alliance over Tunisia,
to assure their support in the
UN. Foreign Minister Pineau
has already played up the pos-
bility of a disastrous reaction
in France if Paris is not backed
Assembly.
by its allies in the General
MOROCCAN KING TO VISIT THE UNITED STATES
When King Mohamed V J Mo-
rocco visits tue United States
beginning on 25 November, his
primary objective will be to
obtain a commitment of military
and economic aid in exchange
for an understanding on the
terms for continuing American
use of the air base complex--
five air bases and auxiliary
radar installations--in Morocco.
These bases Were built. by the
UAi L . e d States under a 1950 bi
lateral agreement with France
which Morocco contends is il-
legal because the Moroccans
were not consulted. The King
may also plan to set forth a
moderate Moroccan position sup-
porting eventual Algerian inde-
pendence during his address to
the United Nations in December.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
A widely popular absolute
ruler, the King is the only
force uniting the disparate
elements of Moroccan society.
By backing the moderate wing of
the Istiqlal party--the domi-
nant political group in the
country--he has managed to hold
down the demands of the more
extreme factions. His fear
that some Istiglal leaders
might seek to establish a Moroc-
can republic may be a principal
reason he has taken few steps
in the two years since his re-
turn from exile toward estab-
lishing a constitutional mon-
archy. {
Air base negotiations
which began in May have pro-
gressed slowly largely because
of inexperience on the part of
the Moroccan negotiators and
their inability or unwilling-
ness to define their objectives.
In order that something tangible
might emerge from the King's
trip, Rabat has proposed that
a joint declaration be issued
which, among other things,
would appoint a joint commis-
sion to work out a provisional
base agreement.
Anticipating that France
and Spain will want to model
their military agreements with
Morocco on the American formula,
the Moroccans prefer a short-
term--possibly a three-year--
agreement. American forces in
Morocco are popularly associated
with French and Spanish troops
as "occupying forces," and
Rabat does not wish to =_ncur
public indignation at this time
by agreeing to a long-term ar-
rangement.
The Moroccans probably will
ask for American military and
expanded economic aid, both to
reduce Moroccan dependence on
France and because France is
increasingly reluctant to ex-
tend such aid. They undoubtedly
are encouraged by the success
of Tunisian President Bourguiba
in obtaining arms from the
United States and Britain.
settlement.
achieve a negotiated Algerian
The King recently conferred
with Algerian rebel leaders and
with Bourguiba, who visited Rabat
on 20 November. Although he has
endorsed independence for Algeria,
he probably looks with favor on
Bourguiba's efforts to induce the
rebels to be more conciliatory
toward France as a means to
IRANIAN SHAH SEEKS ECONOMIC AID TO STRENGTHEN REGIME
The Shah of Iran is step-
ping up his campaign to obtain
additional economic and mili-
tary aid from the United States.
He asserts that his firm pro-
Western orientation and Bagh-
dad pact membership are not
paying off in aid commensurate
to Iran's needs and strategic
location.
The USSR is continuing to
press for expanded economic re-
lations with Iran so as to
loosen Tehran's economic and
political ties with the West.
The Iranian government, which
has rejected various informal
offers of large-scale Soviet
aid, has been slow to negotiate
and implement agreements
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CURRENT INTELLIGENCE WEEKLY SAY
concluded in several restricted
economic fields, but the Shah
has indicated to American of-
ficials that in the absence of
increased American assistance,
the attractive Soviet offers
cannot be rejected forever.
This urgent attitude re-
flects the Shah's concern over
the preservation of his regime
in the face of growing politi-.
cal dissatisfaction caused pri-
marily by the slowness of prom-
ised economic improvements
which directly benefit the peo-
ple. Although aware that dis-
satisfaction is focusing in-
creasingly on his one-man rule,
he feels he must maintain his
hold or uncontrollable Mossadeq-
like forces will again be re-
leased and lead Iran to foreign
occupation or control. Fear of
foreign occupation and internal
opposition accounts for his
persistent requests for more
military aid.
Recently, the Shah. has
made many moves designed to
bolster his regime. During the
last two months, his security
organization arrested over 70
Nationalists, a fraction Of a
group which advocates the es-
tablishment of a republic.
These arrests may backfire by
driving the Nationalists to ac-
cept control by extremists.
Earlier this year, the Shah
established a home-guard organ-
ization which he hopes will at-
tract the youth of the country
and arouse a nationalistic
spirit in his support.
To provide an outlet for
political energies which the re-
gime can control, the Shah has
sponsored the creation of both
the opposition Mardom party and
the progovernment Social Demo-
cratic party. He has moved ag-
gressively to implement the oil
law passed in July by making an
agreement with the Italians for
the joint development of three
locations outside the Consortium
area. Even though it faces seri-
ous implementation problems, an
agreement in principle has also
been reached to construct a pipe-
line from Qum to Iskenderun in
Turkey, and a new concession
area on the Persian;Gulf was
opened in November to foreign
bidders.
In another activity to en-
hance his domestic popularity,
the Shah is trying to expand
Iranian influence in the Persian
Gulf. Without power to enforce
his statement, he has announced
that British-protected Bahrein
is to be a province of Iran with
representation in the Majlis.
He is holding on to the mid-
gulf island of Farsi, claimed
by Kuwait, and has tried to woo
the Trucial sheikdoms.
COALITION..GOVERNMENT ,FORMED IN LAOS
A coalition government
headed by Prime Minister Souvan-
na Phouma and including two
Pathet Lao representatives was
unanimously approved by a spe3
cial session of the Laotian
National Assembly on 19 Novem-
ber. Iii a ceremony one day
prior to the investiture, Pathet
chief Souphannouvong symbolical-
ly turned over the administra-,
tion of the two disputed pro-
vinces to the King. These were
the first acts in the implemen=
tation of a unification settle-
ment that has been under negoti-
ation,.for nearly three years.
The settlement, in effect, opens
all Laos to widespread subver-
sive activities and probably
will be followed by an expansion
of diplomatic contacts between
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CURRENT INTELLIGENCE WEEKLY SUIKARY
Laos and the Communist bloc.
(See Part III, page 1 for rami-
fications in Southeast Asia.)
Prince Souphannouvong,
Souvanna's half-brother, is
minister of planning, recon-
struction, and town planning;.
and second-ranking Pathet lead-
er Phoumi Vongvichit will be
minister of public instruction
and arts. Their influence will
extend beyond the scope of their
substantive posts, and they will
be in a position to build resist-
ante to any moves considered
disadvantageous to the Pathets
during the implementation of
the agreement.
The 16-man cabinet is
based on an alliance of Laos'
leading moderate parties--the
Nationalists and Independents.
Souvanna has emerged as the
ranking Laotian political figure
partly as a result of a serious
stroke suffered by his closest
rival, Interior Minister Katay,
but also because he will ride
the crest of popular acclaim for
the reunification of Laos. He
has said he will move aggres-
sively to extend government con-
trol over the Patnets, but his
past performance suggests he
will not take any action that
would jeopardize the settlement.
Souvanna, moreover, has
reiterated to the National As-
sembly his intention to pursue
a neutralist policy and to cul-
tivate friendly relations with
all of Laos' neighbors, wnich
include North Vietnam and Com-
munist China. While other mem-
bers of the Laotian elite have
expressed a skeptical view of
Pathet intentions, there is the
danger they will be lulled in-
to passivity by the general
good feeling that will accompany
unification.
The Pathets have only for:-
mally surrendered authority in
the two provinces. The actual
imposition of government con-
trol and integration of 1,500
Pathets into the army may take
two to three months. The Path-
ets will doubtless seize on
loopholes in the accords in an
effort to maintain paramount
influence in the provinces and
to integrate their most effec-
tive cadres into the army and
the civil administration.
The Pathets, moreover, can
be expected to launch a vigor-
ous political campaign immedi-
ately to ensure a good showing
in the supplementary elections
to be held in March to expand
the National Assembly from 39
to 59 seats,
SARIT MAY BE PREPARING TO SUPPRESS OPPOSITION ELEMENTS IN THAILAND
The recent four-day semi-
alert of the Thai armed forces
points to the continuing uneasi-
ness of the ruling military
clique of field Marshal Sarit
Thanarat. The alert is one of
several indications that Sarit
may be laying the groundwork
for a police roundup of both pro-
Communist elements and suspected
adherents of ex-Premier Phibun
and former Police Director
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CURRENT INTELLIGENCE WEEKLY SUIYIIARY
General Phao. By claiming that
such action is necessary to
thwart a "plot" to overthrow
the government, Sarit might
hope to quell two potential
sources of opposition, as well
as justify the continued en-
forcement of martial law and
possibly the postponement of
next month's parliamentary
elections.
Sarit, provisional Premier
Pote, and the King have all in-
dicated growing concern over
the activities of pro-Communist
elements in'Thailand. The Bang-
k6 k press is full of statements
from leaders of the military
group about accelerated Com-
munist activity. The ruling
clique is also claiming pub-
licly that it has indications
of plotting by Phibun-Phao ele-
ments. The atmosphere in Bang-
kok is strongly reminiscent of
the period preceding a police
crackdown on the Communists in
November 1952. That action put
an effective damper on overt
Communist activities until
Phibun relaxed the reins in
pursuit of his "democratization"
program in 1955.
Since that time, while
still lacking a mass base, the
Communists have been increasing-
ly successful in stimulating
anti-Western, pro-Peiping, and
proneutralist propaganda by sub-
sidizing the press and leftist
politicians who have few other
sources of funds. There are also
signs that the Communists have
increased their influence among
students and laborers.
While leftists did not fare
well in the national elections
last February, Sarit may not be
willing to take any chances, in
view of the growing stridency
of pro-Communist propaganda.
The parliamentary elections in
December will determine what
civilian elements the military
group will have to work with
during the coming years. Sarit
is aware that substantial left-
ist gains would be a serious em-
barrassment domestically and
would hamper his efforts to
maintain good rel s with
the United States
In the two years since the
1955 parliamentary elections,
the Communist party 'has' in-
creased its electoral base in
Java from approximately 5,500,-
000 to 6,500,000 voters, and
has replaced the National party
both as the major party in In-
donesia's most densely populated
island and as President "Su-~
karno's strongest political as-
set. Its present estimated
membership of 700,000 makes it
by far the largest Communist
party in free Asia.
The Communists also hold
seats in the National Advisory
Council, which strongly influ-
ences government policies. They
have direct influence in the
cabinet through one minister
and probable influence through
at least three others. Commu-
nist Secretary General D. N.
Aidit will be included in the
national development conference
scheduled to open on 25 Novem-
ber. The Communists have dom-
inated Indonesia's large labor
movement, and they are capable
of paralyzing Java and North
Sumatra through strikes and
slowdowns. Recently the Com-
munists have achieved some pene-
tration of the army, which has
heretofore generally been re-
garded as the chief bulwark
against a Communist takeover
in Indonesia.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 November 1957
President Sukarno's grow-
ing reliance on the Communists
and the increasing identity of
his views with their avowed
aims has been perhaps the great-
est boon to the party. Another
advantage of the Communists is
the continuing disunity among
non-Communist parties. Former
Vice President Hatta has not
taker.. a firm public stand
against either the Communists
or Sukarno despite some urging
by non-Communist leaders.
With a view to winning the
1960 national elections, the
Indonesian Communist party's
strategy appears to be contin-
ued reliance on the peaceful
methods that have thus far been
so successful. A more immediate
objective may be the replace-
ment of the present Djuanda
cabinet with a cabinet of "na-
tional unity" that has been ad-
vocated by Sukarno, in which
they would be represented.
Aidit stated on 8 November
that the Communists believe in
parliamentary methods but would
resort to "other methods" if
the party should be banned. The
possibility that the Communists
will move faster and use more
"revolutionary" tactics to gain
power if the opportunity pre-
sents itself, however should
not be overlooked.
FISHING BOAT INCIDENTS
The North Korean navy on
9 November seized eight South
Korean fishing boats and 48
crewmen on the high seas south
of the area of the demarcation
line, and as a result Seoul is
threatening to send warships
into the east coast fishing
areas. The increase in ten-
sions could touch off naval
clashes.
North Korea's seizure of
the eight fishing boats had
all the characteristics of a
carefully planned raid. The
three North Korean twin-motored
patrol boats involved flew no
flag and moved at high speed
with the apparent idea of pre-
venting identification. The
boats were seized about seven
miles off the east coast and
1,000 yards south of the de-
militarized zone. This is the
first time the North Koreans
have entered southern waters
to carry out a large-scale raid
against fishermen. A 12-ton
southern vessel captured by an
armed North Korean patrol boat
last May was operating in north-
ern waters, 60 miles northwest
of Inchon.
In addition to blocking
future incursions of South Ko-
rean fishing vessels into
northern waters, Pyongyang ap-
parently hopes to secure intel-
ligence information or poten-
tial espionage agents for use
against the South.
Since last spring, the
South Korean navy has strength-
ened its patrols near the-armi-
stice line. Seoul announced
on 19 November that if Pyong-
yang refused to return.-the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
fishermen, South Korea would
send every available warship in-
to east coast fishing areas to
meet further seizures "with all
the force at our command." The
possibility ,of clash is
heightened by the recent dec-
laration of the South Korean
chief of naval operations that
,he permissible area of opera-
;ions for South Korean fishing
boats is to be extended north-
ward. The fishing line off the
east coast, which was set by
the South Korean navy nine miles
south of the armistice line,
is to be moved northward ap-
proximately to the ;southern
boundary of the demilitarized
zone.
Actually, the old line was
never a strong deterrent ';to
South Korean fishermen, whose
arclusion from the better fish-
ing grounds in the north, cost
them large sums of money. They,
ccontinued to go north of ' it
and enter waters inside ;the
Commu k.ct 12-mile limit in or-
der to obtain better catches.
The est-ablishment of the.-new
line probably will act as an
au di.t iona 1 encouragement to
South Korean fishermen to ven-
ture into northern 7 rs.
COMMUNIST CHINA DECREES LIMITED ECONOMIC REORGANIZATION
The State Council in Pei-
ping has issued new: regulations
designed to achieve a partial
decentralization of industry,
commerce, and finance, and to
encourage excess urban labor to
settle in rural areas. Peiping
has long paid lip service to
the need for stimulating local
initiative by permitting local
officials more authority, but
has found it difficult to rec-
oncile this need with the de-
mands of a planned economy for
strong centralized control.
Peiping says the new decentral-
ization regulations were draft-
ed with "extreme circumspection"
and took a year to complete.
According to the regula-
tions, local authorities in
provinces, autonomous regions,
and special municipalities will
assume a measure of control
over a limited range of indus-
trial enterprises--mostly in
light industry--as well as cer-
tain financial and commercial
activities. The chief heavy
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CURRENT INTELLIGENCE WEEKLY SMARY
industry installations, includ-
ing defense industries, remain
firmly under the direct control
of the central authorities.
The regional authorities will
be given increased responsibil-
ity in the allocation of mate-
rials to enterprises in their
area and in managing the per-
sonnel of such establishments.
They are also encouraged to
draw up their own budgets, but
must cover spending from their
own sources of revenue.
Present local revenues are
to be supplemented, when :re-
quired, and with the approval
of central authorities, by a
20-percent share in the profits
of specified industrial and com-
mercial enterprises. The cen-
tral authorities retain control
over investment in all key con-
struction projects.
Top managerial personnel
in industrial enterprises will
be accorded a greater degree
of responsibility in the opera-
tion of their own plants. They
are to be allowed more "flexi-
bility" to invest in construc-
tion projects in their plants,
provided, always, that the es-
sential targets of the state
are first fulfilled. The cen-
tral authorities say that plant
officials can now draw up their
own quarterly and monthly plans.
Annual and five-year plans will
still be drawn up by the cen-
tral government, but these will
not be as rigidly drafted as
in the past.
These regulations appear
similar to the economic reor-
ganization now taking place in
the Eastern European satellites,
(see Part III)1 but do not in
their present form appear as
far-reaching as the Soviet mod-
el.... For example, Peiping is
not in this instance abolish-
ing any central industrial
ministries, although it may be
tending in this direction. A
commentator in Peiping last
May said that, while there were
similarities and differences be-
tween China and the USSR, an
"attentive study" of the So-
viet:.model was of ?"imports At
practical significance" to
China.
pared by ORR
The regulations on man-
power and wages are intended
to make urban employment less
attractive and to stimulate the
movement of excess urban popu-
lation to the rural areas,
where it costs only about half
as much in terms of money to
support an individual. The
movement of city dwellers to
the countryside has in fact
been under way for ,several
months. High- and medium-level
party and government officials,
students, teachers, workers,
and all personnel made surplus
through the simplification of
organizations in the current
rectification movement have
been urged to go to the country-
side to engage in "production."
The number involved in this
movement is expected to run in-
to the millions. The arrival
of large numbers of city dwell-
ers in the provinces cannot be
viewed with much enthusiasm,
however, by the food-short peas-
ants. (Pre- 25X1
The resignation of Nepal's ment in this Himalayan country
Prime Minister K. I. Singh and which has seen six cabinets in
the promulgation of direct rule the seven years since the over-
by King Mahendra on 14 November throw of the Rana autocracy.
opens a new round in the search The weaker leadership which is
for stable democratic govern- likely '.to succeed Singh's
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SECRET
government may increase the op-
portunities for Communist China
to expand its influence, al-
though India can be expected
to exert what pressure it can
to protect its special position
in Nepal.
Following his entry into
office on 26 July, Singh moved
swiftly to consolidate his powrr-
er. The autocratic measures he
imposed to curb the opposition
parties and secure control of
the administration provoked bit-
ter protests in the few urban
areas of Nepal, and reportedly
aroused growing concern in the
palace and in the Indian em-
bassy. In recent weeks Singh
had stepped up his demands for
changes in administrative per-
sonnel and for removal of cer-
tain royal appointees in an ap-
parent bid to test his strength
with the King. While he and
the King had appeared previous-
ly to be cooperating, Mahendra
probably came to the conclusion
that the ambitious prime minis-
ter had overstepped his author-
ity and had to be removed.
During his three and a
half months in office, Singh's
statements and policies indi-
cated a marked pro-Indian orien-
tation, and he showed an intent
to limit Nepal's ties with Pei-
ping. The Chinese now may re-
new the attempts they made un-
der the former government of
Tanka Prasad Acharya to expand
cultural and economic relations.
New Delhi apparently en-
dorsed Singh's leadership, at
least until recently, and may
even have been instrumental in
his coming to power. With Singh
out of the picture for the pres-
ent, the Indian gov-
ernment can be ex-
pected to throw its
support to a new gov-
ernment favorable to
Indian interests. As
an alternative to
another unstable coa-
lition in Katmandu,
however, New Delhi
might advise contin-
ued direct rule by the
King, believing it
can control more ef-
fectively the politi-
cal situation through
influence and econom-
ic i pressure on Mahen-
dra.
Despite the King's
announced intention
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CURRENT INTELLIGENCE WEEKLY StJM &RY
to make "other arrangements"
and his apparent reluctance to
assume sole leadership of the
country, he may find it advis-
able to prolong royal rule for
an indefinite period, perhaps
until elections can be held.
Competition for power among
Nepal's rival political fac-
tions may prevent the formation
of the "national" coalition he
has previously sought.
Leaflets purportedly print-
ed by the Greek Cypriot under-
ground organization EOKA and
distributed on 17 November warn
that a new anti-British cam-
paign on an "unprecedented"
scale will be launched if "the
British and Americans torpedo
a settlement of the Cyprus dis-
pute" by the United Nations.
The Cyprus issue is expected
to be debated by the General
Assembly in early December.
Recent murders, sabotage
of government installations,
and riots on Cyprus testify to
the continued power of EOKA,
both to take violent action and
to incite the Greek Cypriot pop-
ulation. It is becoming in-
creasingly difficult for the
Greek Orthodox Ethnarchy Coun-
cil of Cyprus to restrain EOKA
from starting a new campaign of
terrorism.
lution must call for continuing
negotiations toward a settle-
ment and must instruct the UN
Secretary general to ensure
that action is taken. If such
a resolution were passed, Aver-
off has indicated that Greece
would be willing to attend a
tripartite conference on the
future of Cyprus.
The replacement of General
Sir John Harding by Sir Hugh
Foot, a civilian, as governor
of Cyprus on 21 October is not
expected to alter significantly
Britain's policy toward its
crown colony. Foot is sched-
uled to arrive in Nicosia about
1 December. The Cyprus govern-
ment has reacted to increased
EOKA activity with only mild
restrictions and has not reim-
posed the emergency regulations
revoked in the period since the
truce with EOKA began last March.
A declaration by the Brit-
ish Labor party in early Octo-
ber favoring Cypriot self-deter-
mination makes acceptance by
the Greek government of any so-
lution short of self-determi-
nation virtually impossible;
but officials in Athens, eager
to avoid the inevitable further
deterioriation in Greek-Turkish
relations if EOKA resumes a
full-scale campaign of violence,
appear willing to discuss other
solutions.
According to Greek Foreign
Minister Averoff, a minimum ac-
ceptable General Assembly reso-
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PART II NOTES AND COMMENTS Page 11 of 18
The British have conferred
with NATO Secretary General
Spaak in new attempts to find
a solution to the Cyprus prob-
lem acceptable to all interested
par-cies .
ritant in relations with Greece.
Turkish Prime Minister
Menderes may find it easier to
work for a compromise solution
on Cyprus now t -a his party
has obtained an election man-
date. Although there has been
no apparent softening of Tur-
key's demand for partition, the
Menderes regime may adopt a
more flexible policy in an at-
tempt to remove this major ir-
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:CURRENT INTELLIGENCE. WEEKLY S;A$Y
BERLIN HARASSMENT LINKED TO EAST GERMAN QUEST FOR RECOGNITION
The East German regime,
with Soviet support, has em-
barked on a program of harass-
ment of West Berlin with the
dual objective of establishing
the concept of two sovereign,
independent German states, and
eroding the legal position of
the Western powers in the city.
The Kremlin, however, probably
does not desire a major-:crisis
over Berlin and will restrain
the East Germans from taking
extreme actions which would
affect the Western powers.
In an effort to enhance
its appearance of sovereignty
the German Democratic Republic
(GDR)--East Germany--has been
especially persistent in ef-
forts to establish authority
over its air space. The East
Germans several times recently
have reiterated their conten-
tion that the 20 September 1955
Soviet grant of "sovereignty"
to the GDR terminated the 1945
agreement on Allied use of the
Berlin air corridors and gave
the GDR complete control of
the air over its territory.
Supporting East German claims,
the Russians have refused to
permit American courier flights
between Berlin and Warsaw on
the grounds that permission for
such overflights of East Ger-
man territory can only be
granted by the GDR. In less
than a month the Russians have
tried twice to obtain Western
clearance for East German
flights in the Berlin-Frankfurt
air corridor used by Western
aircraft flying to Berlin.
The GDR regime will prob-
ably impose additional customs
controls on passengers travel-
ing between East and West Ber-
lin on the elevated trains in
an effort to reduce the flow
of new currency to the West
and curtail the serious loss
of manpower. It is also
considering the possibility of
requiring passes for inter-
sector travel, and a further
tightening of customs and cur-
rency controls in general.
While such measures would be
directed primarily toward
control of Germans, they could
also disturb Berlin's communi-
cations, both internally and
with the Federal Republic, and
thus lower the prestige of the
Western powers in Berlin by
MAIN COMMUNICATION ROUTES
WEST GERMANY-BERLIN
21 NOVEMBER 1957
N,~Ea loo
making apparent their inability
to retaliate.
The ultimate decision on
any important actions involving
West Berlin and the enforcement
of East German sovereignty
rests with the Russians. There
are, however, many opportunities
for East German leaders to
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 November 1957
demonstrate greater autonomy
as they attempt to compel the
West to negotiate with the
East Germans many matters
which are now handled by the
Russians.
Russian Deputy Foreign
Minister Zorin reportedly
arrived in East Berlin on 18
November to discuss visa
sovereignty for East Germany.
The East Germans hope to gain
from these talks the broad
control powers over all Western
traffic in the GDR now exer-
cised by the Russians. The
Soviet officials would continue
to control trips of diplomatic
and military personnel of the
Western powers between West
Germany and West Berlin.
East Germany's desire to
profit from the interzonal
trade agreement signed last
week, however, may temper the
+aegree of interference with
West Berlin's communications
lines, since the Federal Repub-
lic could retaliate by halting
delivery of promised goods.
While the Federal Republic has
strong economic retaliatory
capabilities, it has in the
past shown reluctance to impose
them, fearing they would bring
increased hardship for the
East German people and widen
the gulf between Germans in
the two parts of the divided
country. West German reluc-
tance to exercise any economic
retaliation against the GDR
probably stems from the fact
that the East Germans could
also counter with economic
sanctions.
EAST GERMANS PRESS HARBOR AND CANAL PROGRAM
The program to enlarge
East German harbors has been
given renewed impetus by Party
Secretary Ulbricht's recent
announcement that the develop-
ment of the port of Rostock
into the largest East German
shipping center is one of the
main tasks of the remaining
three years of the Five-Year
Plan (1956-60). This harbor
program, along with scheduled
canal construction, indicates
that the Communists plan to
divert satellite shipping
from the West German port of
Ham'surg. The program will re-
duce East Germany's vulnerabil-
ity to West German retalia-
tion against harassment as well
as provide strategic and logis-
tic advantages to East Germany.
The East German Council
of Ministers is reported to
have decided to increase the
transshipment capacities of
all East German ocean ports
from the present 3-4,000,000
tons per year to about 7,500,-
000 tons by 1960. This expan-
sion is to be effected by
deepening and extending the
sea approaches to the harbors
and builaiing modern loading
installations, warehouses, and
additional railway facilities
to connect the ports with the
existing rail networks.
Rostock harbor is to be
expanded to receive greater
amounts of grain, ore, and
general cargo. It is to accom-
modate 10,000-ton vessels by
1958. East Germany is now
producing these ships and will
be adding them to its own mer-
chant marine. The water ap-
proaches to Rostock are to be
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CURRENT INTELLIGENCE WEEKLY SUMMARY
improved, possibly by digging
a canal from the Breitling
Inlet to the Baltic Sea. A
canal is also to be dug from
Rostock to the Saaler Bodden
so that shipping can proceed
inland from Rostock to Stral-
sund and perhaps from there
to the Oder by inland waters.
At Petersdorf, a dock
area is being developed which
Existing canal
-6-6 .6 New canal link to be constructed
Luba,L,
Wismar
Elbe -Trace
Canal
FEDERAL
REPUBLIC
OF
GERMANY
AL TIC
SEA
will ultimately have a total
annual transloading capacity
of 1,500,000 tons. The harbor
of Warnemuende is also to be
expanded.
Wismar, the largest East
German port at present, has
been expanded and has handled
a sharp increase in westbound
shipping during the past year.
The construction of oil storage
tanks and pipelines has enabled
Wismar to handle increasing
petroleum shipments from the
Soviet Union for the Soviet
forces in East Germany and for
East German industry.
Stralsund, a smaller har-
bor than Rostock or Wismar,
is to be expanded to accommodate
ships of 3,000 tons and is to
receive the bulk of the Baltic
traffic.
A canal, a major factor
in East Germany's plans to
avoid shipping through West
Gerfiany,: is. to' extend: froth
Kumlosen on the Elbe to Grabow,
completing the water link be-
tween Wismar and the Elbe.
Construction on this canal be--
gan in May 1956.
Political and strategic
considerations outweigh the
purely economic advantages of
this program, although Ulbricht
stated that the reason for en-
larging Rostock harbor was to
save "large sums in foreign
currency otherwise spent by
having to use foreign ports."
Nevertheless it will take many
years of operation to pay for
the cost of construction. Ex-
penditures for construction of
the Kumlosen-Grabow canal alone
were estimated at about 4 per-
cent of the total planned cost
of construction during the
Second Five-Year Plan. By using
petroleum storage and trans-
loa~ing facilities which have
been installed at Wismar, the
Baltic Sea route can be used
as a petroleum supply line,
reducing dependence on Polish
rail facilities for shipments
of petroleum to East Germany.
The construction of a
waterway from Kumlosen to Grabow
which will duplicate the West
German Elbe-Trove canal, and
will permit the bypassing of
Hamburg, is a further indica-
tion that East Germany and the
Soviet Union do not envisage an
earl reunif' on of Germany.
(Prepared by
ORR) 25X1
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CURRENT INTELLIGENCE WEEKLY SUDARY
21 November 1957
THE POSITION OF THE POLISH REGIME
Polish Minister of Educa-
tion Wladyslaw Bienkowski, a
"liberal" Communist and confi-
dant of party leader Gomulka,
in commenting recently on
Gomulka's policies made it
clear that Gomulka had thrown
his full support behind Khru -.
shchev and remained distrustful
of the West. In internal pol-
icies, Gomulka., apparently in
his intense desire to reassert
the authority of the party, is
turning to a somewhat harder
line insofar as the church,
freedom of expression, and
party discipline are concerned.
Bienkowski says Gomulka's sup-
port of the Soviet party leader
stems from his belief that
Khrushchev is more liberal than
other possible Soviet leaders.
Gomulka fears that loans
which Poland needs from the
West will come only with
"strings attached." Bienkowski
observed that the Czech loan
for development of Polish mining
industries had been insufficient
He went to London in an attempt
to get additional funds for
the mines and to determine the
possibilities for increasing
trade with Commonwealth coun-
tries, particularly Australia
and New Zealand.
Unemployment and strikes
are increasing in Poland, and
the population is becoming
restless over the regime's
failure to improve the economic
situation. The party has no
following among the peasants,
and the workers are hesitant
to take an active role in-the
workers' councils, which the
regime has been encouraging,
particularly since Gomulka's
visit to Belgrade in September.
Gomulka considers the
church to be the most serious
threat to the regime's power,
believing it would not help
the Communists in any real
emergency, and he will grant
no further concessions to the
Catholics, who have been nego-
tiating with the regime through
Bienkowski.
The party purge called for
at the party's tenth plenum
will be directed first against
the liberal revisionists and
second against the Stalinists.
Gomulka's advisers--including
Bienkowski--are quite concerned
that elimination of all the ele-
ments attacked at the plenum
would leave too limited a res-
ervoir of capable and qualified
personnel for party and govern-
ment offices.
Suppression of the liberal
student journal Po Prostu was
only the first of a se it es of
measures to be taken against
the expression of revisionist
ideas, according to Bienkowski,
and was prompted by Moscow. A
similar magazine, Nowa. Kultura,
will be the next tote "purged,"
and the youth newspaper Szta.nda.r
Mlodych will be slowly ink -
-
tra ted. He also stated, however,
that copies of articles banned
as too liberal are freely circu-
lated in Poland and that Na.tolin
leaflets have reappeared since
the banning of Po Prostu. The
party has already often prom-
inent journalists who resigned
over the proscription of a new
magazine devoted to Poland's
cultural tips wi West.
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PART II NOTES AND COMMENTS
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CURRENT INTELLIGENCE WEEKLY SUMMARY
THE COMMUNIST OPPORTUNITY IN GUATEMALA
Political insta.bilty in
Guatemala is likely to continue
for some time, and there are
mounting indications tha.ta.mili-
tary coup may be imminent. The
Communists are likely to win a
significant victory if present
political trends continue
through the 19 January national
elections.
Army officers, most of whom
oppose the extremes of right and
left, are becoming increasingly
alarmed at the evident inability
of the divided center forces to
agree on a single candidate to
oppose both rightist Miguel
Ydigoras Fuentes and the prob-
able candidate of the Communist-
infiltrated Revolutionary party
(PR), Mario Mendez Montenegro,
in the presidential race. Army
leaders themselves are divided
between two leading contenders:
Lt. Col. Jose Luis Cruz Salazar,
the young and ambitious ambas-
sador to Washington, and Colonel
Enrique Peralta, a 49-year-old
officer who has spent the last
12 years at various posts abroad.
Neither Cruz nor Peralta
is widely known to the public
and neither could win the re-
quired absolute majority of
votes against both Ydigoras and
the Revolutionary party without
fraud or government favoritism.
Such fraud or favoritism would
probably spark renewed popular
disorders such as those which
led to the annulment of the 20
October elections.
The government of Interim
President Guillermo Flores
Avendano, though basically anti-
Communist, is more liberal to-
ward leftist activity than its
predecessor. Many adherents of
the former leftist Arevalo and
pro-Communist Arbenz regimes who
support the PR have returned from
exile or plan to return soon.
The PR, which is influenced
by Communists entrenched in its
lower echelons, is the country's
strongest single party. Its
chief source of strength comes
from its embodiment of the still
widely popular democratic nation-
alist, socialist objectives of
the 1944 revolution which ousted
the 137ear Ubico dictatorship 25X1
I If denied
th rig o par icipate in the
coming elections, it is capable
of causing serious disturbances.
NEW CRISIS IN HONDURAS
A new crisis of serious
proportions is developing in
Honduras, just as the country
seemed about to return to con-
stitutional government for the
first time in three years. Colo-
nel"Oswa.ldo Lopez, the ambitious
and venal defense minister who
became a member of the governing
military junta on 17 November,
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CURRENT INTELLIGENCE WEEKLY SUIIARY
is making an all-out bid for a
constitutional provision that
would give the armed forces
dominant power. Lopez himself
obviously wants the proposed
new post of armed forces ;chief ,
whose powers are so defined as
to make its incumbent in effect
more powerful than the President.
The able and moderate Ro-
berto Galvez, whose resignation
from the junta on 17 Novem'.aer
was motivated by Lopez' maneuver-
ing, believes Lopez would create
a "monster" of the armed forces.
The foreign minister has also
resigned and other cabinet min-
isters may follow suit.
By qualifiedly "accepting"
the constituent assembly's elec-
tion on 15 November of the pop-
ular Liberal leader, Dr. Ramon
Villeda Morales, as constitu-
tional president, Lopez clearly
hoped to put the liberal-domi-
nated assembly in his debt.
Without armed forces support,
Villeda cannot expect to be in-
augurated president before the
end of January as planned.
If denied Liberal sup-
port, Lopez may align himself
with Villeda's uncompromising
opponents in the minority Na-
tionalist and Reformist parties,
who apparently prefer continued
army rule to Villeda's in-
auguration as constitutional
president.
planning a revolution.
The Liberals who won wide
popular endorsement in the un-
precedentedly free constitutent
assembly election on 22 Septem-
ber, attempted without success
to reach an agreement for minor-
ity party participation in their
government. Villeda even bucked
strong opposition in his own
party to offer the Nationalists
three cabinet posts. The Nation-
alist chief, the aged ex-dictator
Tiburcio Carias, however, flatly
refused any agreement that would
recognize Villeda's right to
the presidency. Carias' atti-
tude suggests either that he
believes the armed forces will
prevent Villeda's inauguration
or, possibly, that Ca.rias is
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CURRENT INTELLIGENCE WEEKLY 3UNKARY
An intensified campaign of
terrorism and sabotage is being
directed against the regime of
Cuban President Fulgencio Batis-
ta, and the principal political
opposition groups are trying to
form a coalition against him.
Batista is tightening his grip
over the armed forces, and his
control of the situation does
not seem to be in danger at this
time.
A campaign of burning sug-
ar-cane fields, launched by the
followers of rebel leader Fidel
Castro in Oriente Province, is
expected to fall short of its
announced goal of undermining
Cuba's sugar-dependent economy,
The rebels would have to enlist
the active support of field
workers and mill owners to de-
stroy enough of the anticipated
record crop ".. effect- the econ-
omy; self-ir-.;orest probably will
prevent collaboration by mem-
bers of the sugar industry. A
general strike which the rebels
hope to call when the sugar
harvest begins late in December
is likely to be relatively in-
effective for the same reason.
However, revolutionary elements
have also threatened a new cam-
paign of assassinations, and
this appears to be potentially
the most serious threat to the
regime.
Representatives of Cuba.'s
main opposition groups meeting
in Miami during last October
and early November formed a
"Council of Cuban Liberation"
to depose Batista. This "coun-
cil" so far has appeared more
determined than past opposition
SECRET
PART II NOTES AND COMMENTS
movements--it has gone as far
as to designate a "provisional
government"--but there is little
reason to believe that faction-
a.lism among these groups can
be overcome. For example, they
have so far failed to achieve
electoral unity in preparation
for the 1958 presidential cam-
paign. The opposition is also
handicapped by the absence from
Cuba of many of its leaders, who
have recently been forced to
seek political asylum abroad.
Popular discontent arising
from the government's harsh re-
pressive measures and its re-
peated suspension of constitu-
tiona.l guarantees has encouraged
the growth of the Civic Resist-
ance Movement, which is com-
posed of respected business and
civic leaders and ,supports
Fidel Castro's rho{c1:.
Bastista, meanwhile, bene-
fits from control of a, well-or-
ganized political machine and
the country's military forces.
The armed forces were purged of
dissident elements following
the 5 September naval revolt at
Cienfuegos, and the government
is proposing the unification of
all the armed forces under a
central five-member junta. to
be headed by a "genera.l in
chief," who probably will be
completely subservient to Ba-
tista. This new establishment
will probably be the vehicle
through which Batista will at-
tempt to retain effective con-
trol of the country after the
expiration of his presidential
term in February 1959.
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CONFIDENTIAL
CURRENT INTELLIGENCE WEEKLY SUMMAR"
PATTERNS AND PERSPECTIVES
The establishment on 19
November of a coalition govern-
ment in Laos including the Com-
munist-dominated Pathet Lao will
have serious repercussions far
beyond the Laotian borders.
Specifically, it will arouse
the apprehensions of'those South-
east Asian nations most closely
identified with the West--Thai-
land and South Vietnam--and in-
crease internal pressures for
the adoption of policies of
neutrality. Throughout South-
east Asia, moreover, the Laotian
coalition will contribute to
raising the prestige of the Com-
munist movement.
Psychological and Political
The impact of the Laotian
settlement for the region will,
21 NOVEMBER 1957
O M11E5 ?00
Mandalay
BURMA
l I
cess to the border
regions of Burma and
South Vietnam. Al-
though geographically
remote, economically
backward, and possess -
ing negligible military
forces, Laos has never-
theless served as an
important territorial
buffer between Commu-
nist China and North
Vietnam and the various
countries of Southeast
Asia. Any shift by
Laos toward the Com-
munist bloc will pro-
vide the Communists
excellent opportuni-
ties to increase their
political and pycholog-
ical pressure on these
countries, particular-
ly Thailand, South
Vietnam, and Cambodia..
?Kaneing
in fact, be twofold. The most
immediate will be psychological,
followed by long-term political
repercussions. The psycholog-
ical impact will stem from rec-
ognition that the Communists
will have made a. notable advance
in terms of operational freedom
and of respectability. For the
first time since World War II,
a. Communist-dominated party not
only has emerged from insurgency
as a, legal political party but
has been incorporated into.the
national government. As a. re-
sult, all other Southeast Asian
governments facing Communist-
dominated insurgents will find
it more difficult to insist on
unconditional surrender.
The Communists will also
have increased their direct ac-
Although South
Vietnam is likely to
feel the strongest re-
action to the settle-
ment in Laos, Thailand
in the long run will
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CURRENT INTELLIGENCE WEEKLY SUMMARY
find the pressures most severe,
If the Pathet Lao successfully
operates within the parliamen-
tary framework and if Laos
broadens its diplomatic rela-
tions with and receives large-
scale economic aid from the
Sino-Soviet bloc, the neutralist
appeals of the Laotian program
will be very difficult for the
Thais to combat.
All along the Mekong River
boundary between the two coun-
tries the predominant population
group is Thai-Laotian, with
linguistic and historic bonds
linking it more closely with the
Laotian government than with
Bangkok. Moreover, the north-
east plateau of Thailand, tra-
ditionallythe more economically
depressed portion of the country,
would provide especially fertile
ground for Communist propaganda
through the Pathet Lao. The
border area even today is to
some extent competing ground
for the propaganda agents of
the Thais, the Laotians, and
the Viet Minh.
Thai sensitivity to devel-
opments in Laos was indicated
even before the settlement
with.the Pa.thets was. reached.
In October, Acting Foreign Min-
ister Visiutr called for the
abolition of the 15-mile demil-
itarized zone along the Thai-
Laotian border and an adjustment
of the border itself to give
Thailand control of islands'in
the Mekong. He declared that
the entry of the Pathet Lao in-
to the Vientiane government
would set the stage for a. Czech-
type coup and the spread of Com-
munist control over Laos. While
these views were later disavowed
by Prime Minister Pote Sa.rasin,
they probably constitute a con-
siderable body of opinion in
Thailand.
In South Vietnam, President
Diem's views coincide with those
of the former Indian commis
sioner of the International Con-
trol Commissiog--that the inclu-
sion of the Pathet Lao in the
Laotian government will isolate
South Vietnam. Diem's interna-
tional position will be made
more difficult because the Lao-
tian settlement will leave South
Vietnam the only Indochinese
government which has failed to
carry out the political terms
of the Geneva agreements for
the settlement of the French
Indochinese problem.
Moreover, South Vietnam's
security problems will be in-
tensified. The mountain range
along the border between Laos
and Vietnam has long served as
a communications route for Viet
Minh agents operating in and
out of South Vietnam, and the
legalization of the Pathet Lao
would facilitate the travel of
Communist agents from the North.
This threat to South Vietnam is
emphasized by Diem's assignment
of top priority to the rapid
political, economic, and mili-
tary build-up of the remote high
plateau region bordering on
Laos and North Vietnam.
The direct impact on Burma
of the Laotian settlement will
be almost entirely psychological.
The border area, between Burma
and Laos is rugged and inacces-
sible, and effective control by
either government is almost non-
existent. In fact, the area.
currently appears to be the
last stronghold of the fading
Kuomintang forces under pressure
from the Burmese army. Psycho-
logically, however, the forma.-
tion of the coalition in Laos
will augment the pressure on the
Burmese government to negotiate
a settlement granting the Burma
Communist party legal status as
a means of restoring law and
order in the country.
In the offshore countries
of the Philippines and Indonesia,
the impact of the Laotian settle-
ment will be considerably less
than on Laos' . immediate neighbors.;.
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The Huk movement in the Philip-
pines is quite thoroughly under
control, but the Communist par-
ty in Indonesia is already op-
erating legally with a strong
influence in the government.
However, the settlement in Laos,
especially if the Pathet Lao is
capable of operating success-
fully within the parliamentary
SECRET
system, will bring increased
respectability to Communist
parties throughout South and
Southeast Asia--even those as
far removed from Laos as Malaya,
India, and Ceylon--and will
constitute a major breakthrough
for the Communists in the area..
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 November 1957
ECONOMIC CONDITIONS IN SYRIA
Syria's economy is rela-
tively stable by Middle Eastern
standards, despite some weak-
nesses resulting from: last,
year's Suez crisis and continu-
ing heavy defense expenditures.
Although the Central Bank's
holdings of foreign exchange
reserves were somewhat lower at
the end of June than they were
a year ago, recent successes
in marketing this year's bump-
er cotton, wheat, and barley
crops--Syria's major exports
and mainstay of its agricultu-
ral economy--seem to assure a
record season. The Syrian
pound,;weakened slightly on'-the
Beirut free money market follow-
ing the Sinai invasion, has
since remained relatively stable
at only 3 percent below the pre-
crisis high.
Agricultural Outlook
Over 70 percent of Syria's
4,000,000 inhabitants are di-
rectly dependent on agriculture;
the fortunes of the remaining
30 percent are indirectly tied
to agricultural production.
Most of the country's industry
is based on agricultural raw
materials. Exports of agricul-
tural products--cotton, wheat,
and barley, in particular--ac-
count for 75 to 80 percent of
total foreign exchange earnings.
Despite military expendi-
tures of at least $50,000,000
last year--about half of total
ordinary budget expenditures--
and market dislocations caused
by the Suez crisis, the country
by 31 December had increased
its foreign exchange holdings
to an all-time high of about
$80,000,000, largely in gold
and dollars. The increase came
primarily from exports and oil
pipeline revenues. Foreign ex-
change holdings were running
about 17 percent lower as of
the end of June 1957 but were
still about 100 percent higher
than for the same period in
1955. The present export sea-
son began slowly, but recent
deals with the Sino-Soviet bloc
and with Western nations seem
to assure that most of this
year's record crop will be sold.
If so, foreign exchange earn-
ings may surpass the 1956 high.
Development Plans
Unlike many other under-
developed countries, Syria does
not have a substantial foreign
debt and has managed to finance
a.modest economic development
program through :'.its own re-
sources. Its only major debt
is the $90,000,000 Soviet-bloc
COTTON
THOUSANDS OF
BALES (480 LM)
42 6Q
358 367
1955/56
TOTAL 400
BARUY
Mtu1O14S OF
9.3 9.2?,
16 13.8
6.3
1955 3956
TOTAL 6.3 25.3
WHEAT
195.6/ 57
21.2
11 12
16.1
1955
TOTAL 16.1
21 NOVEMBER 1957
19'
t2
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this source are now included in
the $168,000,000 Soviet-Syrian
economic aid agreement.
CURRENT INTELLIGENCE WEEKLY SUMMARY
arms credit. From 1945 to 1955,
the Syrian government spent
about $120,000,000 for develop-
ment schemes, all of which were
financed either by tax receipts
or borrowings from the Central
Bank. The current development
plan calls for an expenditure
of about $191,620,000 during
the period 1955-1961. About
$50,000,000 worth of projects
were to have been financed by
public borrowing and by the
International Bank for Recon-
struction and Development (IBRD),
and the rest by tax receipts.
However, negotiations with the
IBRD broke off in the summer of
1956 because of the Suez crisis,
and many of the projects which
were to have been financed from
A
The dark spot in the Syrian
economic picture is industry,
largely textile, which suffered
widespread shutdowns this sum-
mer caused in part by the Asian
flu and part by the constriction
of Syria's markets in Saudi.Ara-
bia, Jordan, and Lebanon. Syria's
generally pro-Western business
community attributes this de-
cline to the economic policies
of the present Soviet bloc - ori-
ented government and fears that
its influence will be further
diminished if trade with the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 November 1957
bloc increases. It is also
feeling the pinch of the gov-
ernment's anti-inflationary
policies.
SYRIA:
ORDINA
MMMY OF
DOOM
MINISTRY OF
MRERIOR
MINISTRY OF
EDUCATION
MINISTRIES
Prospects
In an effort to assure a
balanced budget and to protect
the country's foreign exchange
ECONOMIC ADMINISTRATION REORGANIZED IN EUROPEAN SATELLITES
Like the USSR, the East
European satellites are reorgan-
izing their economic adminis-
tration to stimulate production
and reduce costs. The general
trend is toward reduction of
central bureaucracy and dele-
gation of operating responsi-
bilities to lower levels of the
economy. Ultimate central con-
trol is assured through reten-
tion of over-all planning re-
sponsibility in the central gov-
ernment. The reforms differ
from those in the USSR in that
a functional rather than a re-
gional organization is retained.
Significant increases in pro-
ductivity will require more
extensive economic reorganiza-
tion than.is presently.planned.
The national conference
of the Czechoslovak Communist
party in June 1956 adopted a
program of economic reform.
This provided for simplifica-
tion of planning, abolition of
several ministries to be ac-
companied by a reduction in
the central administrative ap-
paratus, increased authority
for enterprise managers, and
enhancement of the economic
role of the Slovak national
council and tae national
SECRET
-UDE3 S FOR
C_ DEFENSE
1954 1958 1956
reserves, imports have been
curtailed sharply and import
duties increased substantially.
At the sane time, there has
ti
been a successful
drive to step up ex-
ports. For the first
six months of 1957,
exports increased by
about 20 percent over
the same period in
1956, and '.impor.ts
declined by about
23 percent If'.
this trend continues
through December,
which appears likely,
Syria will experience
a record export year.
However, a poor crop
at any time in the
future would strain
Syria's economy in
view of its many obligations
under the Soviet bloc arms and
economic agreements
(Concurred in by ORRt
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 November 1957
committees--the local organs of
government--at regional, dis-
trict, and municipal levels.
Little progress was made, how-
ever, in carrying out the re-
forms, and in September, Pre-
mier Siroky reiterated the ne-
cessity for increasing the ef-
fectiveness of management. He
said that a new organization
of industry would be discussed
at a meeting of the central
committee in January 1958 and
that "a new method of planning
and financing" would be used
in drawing up the plan for 1959.
Planning is to be extended
to cover a 10-, to 15-year peri-
od "in order to stabilize the
five-year plans." Detailed op-
erative decisions and specific
planning tasks are to be rele-
gated to lower levels "so that
the work of drawing up plans--
particularly annual plans--be-
comes a permanent part of the
work of each enterprise."
Under the new system, in-
dustry, according to Siroky, is
to be reorganized by setting up
combines capable of independent-
ly solving problems of techni"
cal development, increased pro-
duction, supply, and marketing.
Some enterprises will be merged
and, where production is -di-
vided among several enterprises,
industrial associations will
be formed. Certain activities
of the central ministries will
be curtailed or abolished.
East Germany
The reorganization in
East Germany is to be oriented
primarily toward changes in ad-
ministration of the industrial
sector of the economy and bears
a similarity to the proposed
Czechoslovak reorganization in
that it delegates greater op-
erating responsibility to en-
terprises, and provides for
formation of industrial asso-
ciations.
At the 33rd plenum of the
central committee of the Social-
ist Unity (Communist) party (SED)
in:.October,`Party Secretary and
First Deputy Premier Ulbricht
proposed that most of the in-
dustrial ministries be dissolved,
their planning tasks transferred
to the State Planning Commis-
sion, and their operating re-
sponsibility transferred to in-
dustrial associations (VVB's)
or to district economic coun-
cils. The planning commission
would also assume the policy-
making and coordinating func-:
tions previously discharged by
the superministerial economic
council.
Unlike the Soviet reorgani-
zation, which placed economic
administration on a regional
basis, the VVB's are to be
functionally organized, compris-
ing industries of national im-
portance. They would be com-
posed of enterprises engaged
either in similar or successive
stages of production or both.
Corresponding departments in
the planning commission would
draft both long-term and cur::
rent plans and assign production
tasks to the VVB's.
Economic councils--actual-
ly entities of the planning
commission--are to be set up in
each district to direct the
management of local industry.
Ulbricht has stated that the
VVB's and the district economic
councils would be responsible
for implementation of invest-
ment programs and procurement
of materials on the basis of
quotas laid down by the State
Planning Commission.
The need for a complete
reform of the highly centralized
administrative system in Ruma-
nia has long been stressed by
Rumanian Communist leaders, and
events in Hungary provided a
stimulus for action. In Jan-
uary 1957, it was announced
that "above-plan" profits of
local enterprises -..would. =be
placed at the disposal of the
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CURRENT INTELLIGENCE WEEKLY 'SUMMARY
21 November 1957
people's councils for develop-
ment of communal enterprises
and services. By this means,
it was hoped that former long
delays in securing ministerial
approval for local projects
would be overcome.
In March, the number of
ministries was reduced from 25
to 16, and local governmental
responsibilities were extended.
Some 50,000 to 60,000 adminis-
trative.. personnel are reported
to have been removed from the
central government apparatus as
a result. Local people's coun-
cils were accorded responsibil-
ity for management of local in-
dustries. When compulsory de-
livery quotas were abolished
for most agricultural products
on 1 January, the councils also
took over the supervision of
local procurement of agricultur-
al- commodities for the state.
There is some doubt that
administrative reform has ef-
fected the savings which the
regime hoped for. Budgetary
allocations for state adminis-
tration in 1957 are actually
higher than in 1956, indicating
that even though bureaucracy
is cut at the top it will prob-
ably expand at lower levels with
an increase in authority.
Bulgaria and Albania
Administrative reforms in
Bulgaria have extended princi-
pally to a ministerial reorgan-
ization and a strengthening of
local people's councils. A de-
cree in February 1957 merged
ten ministries into five and
called for a 30-percent reducT
tion,of staffs within three years.
The number of state employees
had already been reduced 20 per-
cent in 1956. Anton Yugov,
chairman of the Bulgarian Coun-
cil of Ministers.,., declared on
1 February 1957 before the Na-
tional Assembly that unnecessary
centralization "must be elimi-
nated," but this "does not mean
in the least that we are deviat-
ing from Lenin's principle of
democratic centralism."
In July 1957, a decentral-
ization decree expanded the
rights of the local people's
councils. Responsibilities
transferred to the councils in-
cluded distribution of some
local raw materials, such as
scrap, and management of retail
enterprises, machine-tractor r
stations, and other functions
of local significance. The
people's councils were author-
ized to work out their own budg-
ets;_w and were allowed to re-
tain a greater share of local
revenues. Ministries and de-
partments must now coordinate
measures and plans affecting
local situations with the local
councils concerned.
Even in Albania the prob-
lem of increasing the compe-
tence of local administrative
apparatus, i.e., the people's
councils and various commis-
sions under their jurisdiction,
to avoid too much centraliza-
tion has been aired in official
publications. Bureaucracy and
lack of trained personnel have
been deplored as having a detri-
mental effect on the economy,
but there has been no reorgani-
zation of government such as.
has occurred in the other satel-
lites,.
Hungary
After the national upris-
ing, the Kadar regime in late
December 1956 began function-
ing on a provisional basis with
a number of ministries merged
and a large number of offices
reorganized or abolished. About
30,000 employees were scheduled
to be dismissed in the course
of a gradual reorganization.
While the sweeping character of
this reorganization was largely
due to the revolution,.'- an.'.:un-
wieldly bureaucracy had long
plagued the country, and some
reduction in personnel was al-
ready under way.
Decentralization of respon-
sibilities, nevertheless, has
proceeded more slowly in Hungary
than in some other satellites
PART III PATTERNS AND PERSPECTIVES Page 9 of 10
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SECRET.
CURRENT INTELLIGENCE WEEKLY SUMMARY
21 November 1957
because of the tight control
which the Kadar regime finds nec-
essary to maintain and the pres-
enc.e. of Soviet "advisers" who
must be consulted before im-
portant policy decisions are
made. But there is some evi-
dence of delegation of new re-
sponsibility at the local level.
Deputy Premier Apro announced
on 29 September that bills
would soon be presented to the
National Assembly to increase
the administrative and econom-
ic scope of local councils.
These councils, he stated, are
to manage some important enter-
prises still run by the minis-
tries.
Workers' councils, first
set up during the :revolution
to provide increased partici-
pation by workers in manage-, ,
ment, have been abolished. Pres-
ent., policy calls for promotion
of factory councils- under con-
trol of the regime-dominated
trade unions.
In October 1956, a new
advisory economic council was
created to work out principles
for "a new economic model"
which would incorporate changes
designed to achieve greater ef-
ficiency in the Polish economy.
Important ministerial mergers
took place in February 1957.
A considerable delegation of
authority for short-term plan-
ning and operational decisions
has been given to the producing
levels, although the central
government continues to handle
over-all national economic plan-
ning.
Provincial and local peo-
ple's councils have an enlarged
role in management of small-
scale local industry. Workers'
councils resembling those in
Yugoslavia have been created in
about 70 percent of the country's
factories, but insufficient time
has elapsed to judge to what
extent they may ultimately be
successful
managerial decisions.
SECRET
(Prepared by
25X1
25X1
PART III PATTERNS AND PERSPECTIVES Page 10 of 10
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