CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A001500070001-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 39
• Document Creation Date: December 20, 2016
• Document Release Date: November 30, 2005
• Sequence Number: 1
• Publication Date: November 27, 1957
• Content Type: SUMMARY

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CONFIDENTIAL
CURRENT
I NTEL !:,. IGENCE
WEEKLY
SUMMARY
COPY NO. 1 -
OCI NO. 6415/57
27 November 1957
AUTH:, W 70
NET REVIEW DATE:
E] DECLASSIFIED
CLASS. CHANGED TOE
No CHANGE IN CLASS. 0
DOCUMENT NO. 11
CENTRAL INTELLIGENCE AGENCY
CFHC ~F CURRENT INTELLIGENCE
CONFIDENTIAL
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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CUNr1Ut11 - UAL
CURRENT INTELLIGENCE WEEKLY SUMMARY
OF IMMEDIATE INTEREST
THE COMMUNIST POLICY COMMUNIQUE AND PEACE MANIFESTO
The declaration issued on
21 November by the 1.2 Communist
parties of the Sino--Joviet bloc
emphasizes the "strength and
unity" of the bloc and attempts
to capitalize on the view--pro-
pounded recently on numerous
occasions by Khrushchev--that
the world "balance of forces"
has shifted decisively in favor
of the "socialist camp." The
Moscow meeting which produced
this declaration and the "peace
manifesto" the next day--sequels
to the Soviet 40th anniversary
celebrations--was the most au-
thoritative assembly of Commu-
nist notables since the Seventh
World Congress of the Comintern
in 1935.
As a bloc-wide foreign
policy statement, the 12-nation
declaration seeks to exploit
the USSR's recent technological
achievements with its claims
that the "peace camp" is capable
of asserting "ever-increasing
influence" on the international
scene. Disparaging the Western
"Positions-of-strength" policy
as a mask to "enslave" other
countries, the announcement im-
plies throughout that the West
will be forced sooner or later
to accommodate its policies to
bloc positions on international
questions. The peaceful desires
of the Communist world are con-
trasted with the "aggressive
designs" of the NATO countries
and it is declared that the War-
saw pact must be "preserved and
strengthened." A call is issued
for a "united front" of "pro-
gressive, bourgeois, and patri-
otic democratic" elements
against colonialism and the
forces of "aggression and reac-
tion."
PART 1
Both the policy declara-
tion and the peace appeal con-
tinue Communist attempts to pre-
pare the groundwork for moves
to discount any strengthening
of NATO unity and military pre-
paredness at the NATO meeting
in December.
The two pronouncements con-
stitute a blueprint of mutually
acceptable tactics for the in-
ternational Communist movement.
The policy declaration culmi-
nates at least a year's effort
by the Kremlin to formulate a
definitive statement on intra-
bloc relations. In working out
such a statement, Moscow appar-
ently found it necessary to com-
promise on certain ideological
questions. The declaration ap-
pears to be sufficiently flex-
ible and broadly worded to en-
compass the different points of
view held by the various bloc
parties on controversial ques-
tions. It clearly sets limits--
as Khrushchev did in his 40th
anniversary speech--on the de-
gree of autonomy to be exercised
by individual bloc countries,
a move designed primarily to
prevent any repetition of such
events as the Polish crisis or
the Hungarian outbreak in the
fall of 1956.
From the ambiguity of many
of the statements, however, it
is equally clear that no full
return to a policy demanding
outright imitation of the USSR
is contemplated. To ensure that
these limits are understood,
nine basic laws governing the
behavior of Communist states
ai?e set forth with the admoni-
tion that in their application
CONFbMtAUation must be given to
OF IMMEDIATE INTEREST Page 1 of 5
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SOVIET VIEW OF WORLD COMMUNISM
DERIVED FROM NOVEMBER 1957 DECLARATION
THE CAPITALISTIC NATIONS
SOCIALIST FORCES MUST BE UNITED IN A POPULAR FRONT,
. PEACE CAMP
INNER CIRCLES PLUS NAITRAL,UNCOIOQTTED, AND THOSE
NATIONS STRUGGLING FOR FREEDOM FROM "COLONIAL"
STATUS. INDIA, EGYPT, SYRIA, ETC.
COUNTRIES EXCLUDED FROM INNER CIRCLES, PARTICULARLY
NATO AND SEATO LEADERS, LATIN AMERICAN NATIONS, AND
BRITISH COMMONWEALTH
NINE BASIC PRINCIPLES OF COMMUNISM
O GUIDANCE OF WORKING MASSES BY WORKING-CLASS MARXIST PART', UNDER PROLETARIAN DICTATORSHIP.
DALLIANCE OF WORKING CLASS AND PEASANTRY.
@ABOLITION OF CAPITALIST OWNERSHIP.
O GRADUAL SOCIALIST RECONSTRUCTION OF AGRICULTURE.
OPLANNED DEVELOPMENT OF NATIONAL ECONOMY.
OSOCIALIST REVOLUTION OF IDEOLOGY, CREATION OF INTELLIGENTSIA DEVOTED TO WORKING CLASS.
OABOLITION OF NATIONAL OPPRESSION, ESTABLISHMENT OF EQUALITY AND FRIENDSHIP BETWEEN PEOPLES.
( DEFENSE OF ACHIEVEMENTS OF SOCIALISM AGAINST ATTACKS BY INTERNAL AND EXTERNAL ENEMIES.
OPROLETARIAN INTERNATIONALISM.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 November 1957
"historic national peculiarities
and traditions." "Revisionism"
--a euphemism for national Com-
munism--is presented as a great-
er danger than Stalinist-like
"dogmatism," but it is left to
the individual Communist parties
to determine which heresy is
the greater threat at any par-
ticular time.
By gaining recognition
from Poland and such formal ac-
knowledgment from Communist
China that the USSR is the lead-
er of the Communist world, Khru-
shchev has strengthened his
position within the Soviet hier-
archy and throughout the bloc.
The Chinese have always given
allegiance to Moscow's leader-
ship of the bloc, but such for-
mulations have become more fre-
quent since Mao's attendance
at the 40th anniversary celebra-
tions. The Chinese have not,
however, given up their "right"
to innovate "Socialist develop-
ment" at home and to guide and
influence other Communist move-
ments in Asia. Soviet state-
ments imply that China remains
the best model for such move-
ments. (See page 10, Part II
for further discussion of Sino-
Soviet relations.)
The Viet Minh views the
joint declaration as a reaffir-
mation of Soviet primacy in the
bloc. Recent Viet Minh com-
ment on this point has been
marked by praise for Soviet
leadership--a departure from
Hanoi's previous practice of
citing Moscow and Peiping as
coleaders..
An accommodation between
Polish party leader Gomulka
and Khrushchev is implicit in
the declaration's reiteration
of the principal points made
by Gomulka in his 5 November
Pravda article, and a change
in the formulation of the "basic
principle" on agriculture to
allow for Poland's present pro-
gram. Both Soviet and Polish
leaders have been quick to ex-
press their complete agreement
on the matters dealt with in
the declaration, and much of
its contents will be considered
by Polish officials as endorse-
ment of their policies intro-
duced in October 1956. Those
portions of the declaration de-
claring the pre-eminence of
the Soviet Union and condemning
the West will not be well re-
ceived by many Poles, but they
will probably be silenced by
official explanations that "rea-
sons of state" made '.t necessary
to accept these points.
Although Yugoslavia
signed the peace appeal of the
64 Communist parties, it is
the only Communist state which
failed to adhere to the policy
declaration--the only flaw in
the picture of unity within
the Communist camp. This flaw
may prove to be of considerable
long-term significance, since
the Yugoslavs are free to con-
tinue expression of ideologi-
cal views at variance with
Moscow. In so doing Belgrade
would keep alive whatever hopes
remain among dissident Commu-
nists in the satellites for
attaining a status for their
country similar to that now
held by Yugoslavia. {See
page 11, Part II for further
discussion, of Soviet-Yugoslav
relations.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Egyptian leaders have fol-
lowed up the announcement of the
Egyptian-Soviet economic agree-
ment with a campaign to reassure
the West that Cairo's door is
still open to Western proposals
and aid of''rs . The Cairo press
this week played up American as
well as the future Soviet as-
sistance, and even gave "sympa-
thetic" treatment to visiting
American congressmen. However,
besides the ";375,000,000 credit
which the Egyptians calculate--
on the basis of the official
Soviet exchange rate--they have
obtained from the USSR, the
press has leaked news of an
agreement reached last September
with Czechoslovakia for addi-
tional "industrial aid" worth
$56,000,000.
Egypt and Britain have so
far been unable to conclude
their economic bargaining in
Rome despite some narrowing of
differences. The negotiators
are still haggling over the ex-
act compensation Egypt will pay
for seized British property in
return for substantial unblock-
ing of Egyptian funds, but both
London and Cairo continue to
profess that an agreement is
imminent.
The Jordanian government
has welcomed UN secretary Gen-
eral Hammarskjold's offer to
come to Jordan and Israel to
talk about Israeli-Arab border
problems. At this point, the
Jordanians, having assumed an
unyielding posture on a number
of seemingly minor technical
issues involving the rights of
the parties and the authority
of the UN truce personnel in
the Jerusalem area, are anxious
to find some means of relieving
tensions but still be able to
counter Egyptian-Syrian prop-
aganda that Jordan is "betray-
ing" Arab Jerusalem to the Is-
raelis.
Israel was relatively slow
to react to the latest spate of
incidents and disputes--Foreign
Minister Meir said the Israelis
were "praying for King Hussayn,
even though we do not like him."
However, Tel Aviv has begun to
make threatening hints that if
the Jordanians persist in their
attitude, it may try to force
a convoy with gasoline supplies
through to the Israeli "police"
on Mt. Scopus. The Israelis
may also try to use this issue
to force Jordanian "compliance"
with the terms of other agree-
ments. Both sides apparently
intend to present Hammarskjold
with the whole catalogue of
their grievances rather than
limit their complaints to the
immediate issue.
To obtain support in the
crisis with Israel and, more
importantly, to reinforce Jor-
dan's internal security, King
Hussayn has asked that Iraq be
ready to send troops into his
country should he make a request.
Iraqi leaders had already indi-
cated they would respond affirm-
atively to such a request, al-
though they foresee logistic
and air support problems in con-
nection with the move. In a
public demonstration of solidar-
ity with Jordan, the Saudis have
placed their forces in that
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CURRENT INTELLIGENCE WEEKLY SUMMARY
country on an alert and have an-
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CONFIDENTIAL
sir
CURRENT INTELLIGENCE WEEKLY SUMMARY
27 November 1957
NOTES AND COMMENTS
NATO MILITARY TRENDS
A general uncertainty re-
garding the defense of the Con-
tinent which has developed, since
the launching of sputnik is re-
flected in Britain's proposal
that the 16-18 December NATO
meeting initiate a new, broad
strategy review. While France
and Germany are pushing devel-
opment of new weapons, the gen-'
eral picture of NATO-committed
forces is one of further lags,
withdrawals, and cutbacks.
Renewed interest in mili-
tary integration is evident in
Italy, Germany, and the Bene-
lux countries. European mem-
bers generally applaud American
proposals to build up American
striking power in Europe--by
stationing IRBM's there, for
instance--and are pressing their
campaign to gain a share in the
control of nuclear warheads.
this reduction, which would
leave 55,000 troops, down from
78,000 last winter.
Belgium, Denmark, Luxem-
bourg, and Norway all antici-
pate making force reductions,
and the Gaillard government may
apply some of its planned budg-
et cuts to defense forces--still
principally committed in Algeria.
Ambassador Houghton in Paris
has pointed out the weakness,
because of obsolescence of equip-
ment, of the French army units
remaining on the Continent.
felling 15 of its new- 25X1
est Vautour jet planes to Isra-
el, while production for the
French air force is endangered
by defense budget cuts, and with-
drawal of obsolescent aircraft
from service in Europe is re-
ducing the number of French
NATO-committed squadrons by two.
France and West Germany
are energetically developing
their own new weapons, individ-
ually and under cooperative ar-
rangements begun last winter.
France may already have decided
to proceed with making nuclear
weapons and it is possible Ger-
many will collaborate in their
production.
Britain, which shook the
alliance last winter with its
plans to cut its army in Ger-
many by one third, will soon
make formal approaches for ap-
proval of the second half of
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PART II NOTES AND COMMENTS Page 1 of 18
While West Germany pro-
ceeds with its general arms
build-up, a tendency to trim NATO
commitments is evident in the
cutback of its April 1959, goal
from 220,000 to 203,000 men.
Chancellor Adenauer was so
shocked by the requirements for
tax increases involved in the
projected build-up that he
blocked the West German submis-
sion to NATO's Annual Review un-
til assured the estimates could
not bind the government. At the
same time non-NATO home defense
forces are receiving increased
favor in Bonn.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 November 1957
WEST GERMANY'S GROWING INTEREST IN THE MIDDLE EAST
West Germany's rising eco-
nomic interest in the Middle
East is reflected in the tour
of a private delegation to Syr-
ia. Egypt has approached Bonn
on the possibilities for econom-
ic aid, and German diplomats be-
lieve there is a good chance of
furthering Bonn's good rela-
tions with Nasir and exploiting
the Federal Republic's economic
position in the area.
The five-man, unofficial
German delegation, representing
Germany's largest banking insti-
tution, offered to participate
in the financing of joint Syr-
ian-German companies to develop
Syrian oil resources. A German
official in Syria expects fur-
ther negotiations to follow on
a governmental level. American
officials in Damascus believe
some exaggerated press reports
on the negotiations may have
been inspired by businessmen
who wish to improve Bonn's pres-
tige and encourage the idea of
German competition with the
Soviet Union.
The delegation will proceed
to Iran and then visit India and
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 November 1957
Pakistan. West German firms are
in a favorable position for eco-
nomic competition in the Middle
East, since Germany has large
foreign exchange surpluses and
therefore can offer long-term
credit. The success of German
firms in exploiting Middle East-
ern markets is demonstrated by
an $18,000,000 increase in ex-
ports to the area during the
first six months of 1957 over
the same period in 1956.
Although Economics Minis-
ter Erhard prefers to encourage
private investors, an Egyptian
request for economic aid may be
favorably received for political
reasons. Since the Suez crisis,
West Germany has become Egypt's
leading trading partner in West-
ern Europe and, during the first
six months of 1957, West German
imports from Egypt increased by
$1,200,000 over the same period
in 1956. Bonn was favorably im-
pressed when Egypt and Syria
refused to follow Tito's lead
in recognizing East Germany,
and it was generally believed
in Bonn that this was because
of the economic benefits West
Germany has to offer. Bonn
probably envisages an increased
role for Germany as a "bridge"
between the West and the Arab
League, and its good relations
with Nasir will probably
be exploited for this pur-
pose.
A joint meeting of the
Syrian Chamber of Deputies and
40 members of the Egyptian Na-
tional Assembly held in Damascus
on 18 November reasserted Egyp-
tian-Syrian "solidarity" and
pledged support of federal union.
The joint session passed a reso-
lution calling on the two gov-
ernments "to enter into immedi-
ate discussions for the comple-
tion of this union." Since
adoption of the resolution, of-
ficial and unofficial sources
in both countries have been
vigorously praising the ideal
of unity. In a follow-up meet-
ing on 23 November, the Syrian
cabinet instructed the ministers
of finance, foreign affairs, and
defense to prepare preliminary
drafts in their respective
fields. These are to be incor-
porated into the final Syrian
"bill for the union."
Akram Hawrani, speaker of
the Syrian Chamber of Deputies,
stated on 24 November that prac-
tical steps for completing the
union will be accomplished
"within one month." The lead-
ing proponent of the union with-
in Syria is Hawrani's Baathist
party, which has achieved its
success by advocating a Nasir-
type nationalism along with
Arab unity.
Egyptian official comment
has been somewhat more reserved
than the Syrian. Anwar al-
Sadaat, vice president of the
National Assembly in Cairo and
leader of the Egyptian parlia-
mentary delegation to Syria,
reaped a propaganda harvest from
the show of Arab solidarity,
but since his return to Cairo
on 22 November, there has been
no sign that Egypt desires to
follow up with substantive moves.
Throughout the course of
discussion of the projected
union, which received a similar
short-lived play in 1956, the
Egyptians have displayed a tend-
ency to drag their feet when
the point of action was reached.
Although Nasir has repeatedly
stated his approval of the idea
of union and encouraged prelimi-
nary steps, these statements
have been made under evident
Syrian pressure. A detailed
Syrian proposal of federation
made in August 1956 was formally
approved but actually pigeon-
holed by Nasir, ostensibly be-
cause of the Suez crisis.
Importunities from Syria
in July of this year wrung pub-
lic approval out of Nasir once
again, and an agreement for Egyptian-
Syrian economic union was signed
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CURRENT INTELLIGENCE WEEKLY SUMMARY
in Damascus on 3 September.
The agreement stated the ob-
jectives of economic union and
provided for "the formation of
a joint committee to be charged
with the studies of the pro-
posals and to suggest practical
means of putting the economic
union into effect." The joint
committee was ordered to sub-
mit its report before 3 Decem-
ber. A trade and payments
agreement was effected on 13
November, but no other progress
has been reported.
The mutual advantages to
be gained from a political and
economic merger could be sub-
stantial. A well-integrated,
over-all administration could
effect a significant saving
in manpower and material by
cutting into oversized bureauc-
racies and coordinating al-
ready complementary economies.
However, this could be realized
only by sacrificing autonomy
and immediate self-interest,
and, despite public avowals to
the contrary, neither Egypt
nor Syria appears willing to
make such sacrifices in the
near future.
The possibility of a seri-
ous deterioration of Greek ties
with the West as a result of the
continuing Cyprus dispute has
been highlighted recently by
an anti-Western and anti-NATO
orientation which appears to be
developing among Greek Cypriot
leaders. Both Archbishop Makar-
ios and Colonel Grivas, leader
of the Cypriot underground or-
ganization EOKA, appear deter-
mined to continue the struggle
for the freedom of Cyprus re-
gardless of its effect on re-
lations between Greece and its
Western allies.
The United States has been
increasingly criticized during
recent weeks in leaflets dis-
tributed by EOKA and its polit-
ical arm, PEKA. Washington's
attitude toward a solution of
the Cyprus issue has been de-
nounced and Americans have been
referred to as "neofascist
colonialists" in league with
British Tories. In occasional
pamphlets, PEKA has gone beyond
the Cyprus problem to denounce
the activities of the Voice of
America and the American arms
airlift to Jordan.
In a recent leaflet, EOKA
denied any responsibility for
the disruption of NATO unity in
the eastern Mediterranean or
for a "probable" Greek-Turkish
war. In an apparent reference
to Greece's membership in NATO,
the leaflet proclaimed that
EOKA was not interested "in
alliances, especially when
these serve plans for conquest."
While denouncing the Ameri-
can and British "colonialists,"
EOKA has continued its avowed
anti-Communist posture. Mem-
bers of the Communist-front
organizations on Cyprus have
been denounced as "traitors,
deserters, and opportunists,"
and members of the left-wing
trade union have been attacked
physically by EOKA elements.
There is little likelihood that
Communists have penetrated the
higher levels of EOKA and PEKA
at this time; however, they
may have infiltrated the lower
ranks of these primarily national-
ist organizations.
Both Makarios and Athens
are under continual pressure to
maintain intransigent positions
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27 November 1957
on the Cyprus issue. Makarios,
often described as a moderate,
is threatened by revolt within
the ethnarchy led by Bishop
Kyprianos of Kyrenia, an uncom-
promising advocate of immediate
"enosis." Meanwhile, the Greek
government must placate Makar-
ios, other ethnarchy leaders,
and EOKA, or run the risk of
being denounced by the Cypriot
leaders, an action which would
probably cause the fall of the
the present government.. When.
Athens recently issued a
statement reproving EOKA for
interfering in Greek foreign
relations, the popular reac-
tion was so intense that the
Greek government hastened to
reassure the people of Greece
and Cyprus of its continued
admiration of EOKA as a fight-
ing organization and charged
the British press with willful
misinterpretation of the origi-
nal statement.
MOROCCAN IRREGULARS ATTACK IFNI
Recent attacks by elements
of the irregular Moroccan Army
of Liberation on Spanish instal-
lations in Ifni, Spain's en-
clave on Morocco's Atlantic
coast, are presumably designed
to strengthen the hand of Moroc-
can negotiators who have been
seeking the early return of
both Ifni--over which Spain
claims sovereignty under an
1860 treaty--and Southern Moroc-
co--which Spain obtained in
1912 as part of its Moroccan
protectorate. Madrid, however,
has recently sent major rein-
forcements to the area and ap-
pears determined to retain its
present holdings.
The latest and most seri-
ous flare-up in the area began
on 23 November when an esti-
mated 1,000 to 1,200 Army of
Liberation guerrillas launched
a coordinated dawn attack
against Sidi Ifni, the en-
clave's capital, and a number
of Spanish frontier posts.
Moroccan nationalists have
claimed that the capital and
several of the posts fell to
the attackers and that a full-
scale tribal uprising against
Spanish authority was under
way, but it appears that, what-
ever initial successes the in-
vaders may have had, the assault
was repulsed by Spanish forces
which have re-established their
control.
Elements of the royal Moroccan-
army located near Ifni have
TLANTIC OCEANi ""ATeCiI[
II/
O t T f i f
MOnoccro i ALGERIA
SPANISH
SAHARA
remained strictly aloof from
the episode.
Apparently anticipating
such trouble, Spain earlier
this month added approximately
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MOROCCO
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1,500 troops to its West Afri-
can garrison, which now stands
at an estimated 5,000 to 6,000
troops, most of whom are prob-
ably stationed in Ifni. The
American embassy in Rabat be-
lieves these forces, which have
tactical air support, are capa-
ble of defending the area
against any unassisted offensive
by the poorly equipped 1,500
to 2,000 Army of Liberation
troops believed deployed in
Morocco's southern border areas.
The precise relationship
between these irregulars and
the authorities in Rabat--where
Crown Prince Moulay Hassan is
in charge during King Mohamed
V's state visit to the United
States--is not clear. The
embassy believes the Moroccan
government almost certainly
maintains contact with the
loosely organized guerrillas
through the dominant Istiqlal
party and is capable of employ-
ing them as a convenient unof-
ficial instrument of official
policy.
Spain, which is extremely
concerned about the expansive
territorial claims of ultra-
nationalist Moroccan leaders,
apparently believes the guer-
rilla bands engaged in the lat-
est Ifni operation are not under
royal control.
CRISIS IN PAKISTAN'S GOVERNMENT COALITION
The problem of the split
in Pakistan's six-week-old gov-
ernment coalition has been re-
ferred to President Mirza, who
returned to Karachi on 24 Novem-
ber from his European tour.
The President apparently intends
to force his rebellious Republi-
can party followers to honor
their commitments to Prime
Minister Chundrigar's Moslem
League in order to avoid an-
other collapse of the govern-
ment. However, the conflicting
positions of the two parties on
the major internal issues are
not likely to be reconciled
easily and may cause an open
rift in the coalition during
the special National Assembly
session called for 28 November.
to discuss electoral legislation.
The split between the co-
alition partners came to the
surface during Republican party
conferences attended by over 60
leaders in Lahore from 17 to 19
November. The meetings were
held to thrash out differences
within the party over a commit-
ment made by top Republican
leaders to the Moslem League
in mid-October. They committed
the party to support the league's
demand that in preparation for
elections promised for November
1958, the new government restore
the separate electorate system
in place of the "joint" system
passed by the assembly under
the former Suhrawardy govern-
ment.
The Republican councilors
decided their parliamentary
leaders had gone against party
policy in making this commit-
ment and unanimously called on
the prime minister to postpone
introduction of any electoral
legislation at the special par-
liamentary session. Assert-
ing that East Pakistan favored
joint electorates, a resolution
declared that no action should
be taken until a special sub-
committee could assess public
opinion in both provinces.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 November 1957
The decision taken in La-
hore is in effect a challenge
by provincial Republicans of
the leadership exercised by
Mirza and the party hierarch
question further with his Re-
publican partners until Mirza's
return.
Unless Mirza decides to
throw over the Moslem League
and revive the Republican - Awami
League coalition under Suhra-
wardy, the only way he can pre-
serve parliamentary government
appears to be to force his par-
ty back into line. Should he
be unsuccessful in this effort,
however, Mirza may conclude
that the time has come for a
more "controlled" form of gov-
ernment and resort
executive rule.
Prime Minister Chundrigar
had refused to discuss the
Rising prices, growing un-
employment, and apparent per-
sonal rivalry between Trotsky-
ite labor union leaders result-
ed in extensive strikes by 80,-
000 urban workers in Colombo
and elsewhere in Ceylon start-
ing on 20 November.
Beginning with electrical
workers, who cut off power and
light in Colombo on 20 November,
strikes soon included railway
men, up to 5,000 government fac-
tory workers, and some port
laborers. By 21 November, elec-
trical workers had received
some of their demands and gone
back to work. The other groups
continued to strike, however,
and were joined by more port
workers and newspaper unions.
By 23 November, the railway men
had returned to work, but 6,500
post and telegraph employees
had struck. By 25 November,
more strikes had ended, follow-
ing promises by the government
that consideration would be
given to workers' demands for
a basic wage increase from 29
to 49 cents an hour.
By that date, however, new
strikes by hospital workers
and railway stationmasters had
been planned. On 26 November,
about 5,000 dock workers went
on strike, and 3,000 more were
expected to strike the next day.
Strikes were also threatened
by about 20 other government
and industrial unions. This
suggests that additional unions,
noting the government's concil-
iatory attitude, desired to go
on record in the hope of par-
ticipating in any wage raises
or other compensations eventual-
ly granted.
The government is in a poor
position to promise extensive
wage raises to urban workers.
Ceylon's 1957 balance of trade
and balance of payments are ex-
pected to be adverse. The gov-
ernment's external financial
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CURRENT INTELLIGENCE WEEKLY SUMMARY
assets showed a decline for the
fiscal year ending last June,
the cost of living probably rose
by about 5 percent in the year
ending last September, unemploy-
ment continues to rise, and a
drought still plagues most of
the island. Furthermore, gov-
ernment acquiescence to urban
labor's demands might spark new
requests by the large number of
tea and rubber estate workers.
There is some evidence that
the recent strikes were in part
an effort by N.. M. Perera, lead-
er of the Trotskyite Nava Lanka
Sama Samaja party, to prove that
labor unions controlled by him
are the dominant force in Cey-
lon. Having suffered recent
setbacks in unsuccessful port
and newspaper strikes, he may
be attempting to regain pres-
tige.
Perera may also have no-
ticed the increasing attacks on
efforts by Food and Agriculture
Minister Philip Gunewardena,
leader of the Trotskyite Vip-
lavikara Lanka Sama Samaja par-
ty and associated labor unions,
to gain dictatorial control
over Ceylon's agriculture and
to challenge Bandaranaike's
authority over his cabinet.
Should Perera feel that addi-
tional agitation by his own
unions would further undercut
Gunawardena's influence, he may
sanction further strikes, whether
or not the government takes a
favorable attitude toward wage
increases.
INI?ONESIA
Indonesia's second nation-
al conference has opened in Dja-
karta with several hundred dele-
gates in attendance but with
representatives from Central
Wares'
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BORNEO r': (~ti ?d~ e
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IND0 IA
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JAVA s?OL?
SECRET'
Sumatra conspicuously absent.
The conference, a sequel to
last September's meeting, is in-
tended to promote national
unity through discussions of
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CURRENT INTELLIGENCE WEEKLY SUMMARY
nationwide economic development.
Prospects for success, however,
appear dim. The agenda is both
lengthy and vague, and a work-
able program is unlikely to be
formulated.
The failure of the Central
Sumatran delegates to appear
shows their continued lack of
faith in Djakarta's promises
and their belief that the con-
ference will serve no useful
purpose. Lt. Col. Hussein, the
local military commander, has
asserted that further discusr
sions with Djakarta are useless
as long as "fundamental ques-
tions" remain unsolved. These
matters include increased local
autonomy, the restoration of
former Vice President Hatta to
an influential post in the
government, and the adoption
of a national policy of anti-
Communism.
The anti-Communist Masjumi
party is exploring means of re-
entering the government or at
least increasing its official
influence. Its considerations
are based on rumors that Pres-
dent Sukarno is contemplating
deserting the Communists in
favor of other political ele-
ments. There are no firm in-
dications, however, that
Sukarno is either willing or
able to abandon his Communist
supporters. On the contrary,
he is unlikely to admit the
Masjumi into the cabinet unless
the party reverses its stand
against serving with Communists.
The Indonesian government
continues to develop its anti-
Dutch campaign on the premise
that the Indonesian claim to
West Irian (Netherlands New
Guinea) will be defeated in the
UN General Assembly next month.
The National Council has set up
a committee to plan further
steps in the struggle for West
Irian. Although no details have
been announced, the council's
vice chairman has stated that
the basis for the propo:,ed steps
will be "retaliation against
Dutch interests in Indonesia"--
increasing evidence that Indo-
nesia is planning a progressive
program of nationalization of
Dutch enterprises, posses
without compensation.
The government of Prime
Minister Kishi is questioning
the adequacy of Japan's defense
establishment in the light of
recent missile developments and
is giving serious consideration
to equipping its forces with
missiles, while still excluding
nuclear weapons. Tokyo may be
moving from a policy purely of
defense of the home islands to
one with a deterrent retali-
atory capability in cooperation
with free world defense programs.
Such a change considerably in
advance of what is now politi-
cally acceptable in Japan, would
have to be brought about very
gradually.
Publicly, Kishi has de-
fended present defense policy
and opposed any major change
as premature. The government
plans to retain its defense
program for fiscal 1958, the
major item of which is a 10,000
man build-up of the Ground
Self-Defense Force to an au-
thorized strength of 170,000.
Emphasis on missiles would
be delayed until fiscal 1959
and probably would not involve
a significant increase in over-
all defense expenditures.
At Kishi's direction, how-
ever, the Defense Agency has
established a committee to
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CURRENT INTELLIGENCE WEEKLY SUMMARY
reassess defense policy, and
the agency is preparing to ac-
celerate the guided-missile re-
search program. The Foreign
Ministry has advised American
officials that Japan is prepared
to participate in appropriate
NATO programs--presumably mean-
ing an exchange of information
on missile research--but must
move cautiously because of pos-
sible political consequences
in Japan. Air defense officials
on 13 November asked the United
States to make available air-
to-air missiles for Japanese
F-86F aircraft, and the govern-
ment is anxious to acquire
ground-to-air missiles as well.
These actions mark a crucial
turn in the official Japanese
attitude toward military pro-
graming.
The Japanese people are
not enthusiastic about rearma-
ment, although opposition to
it has been diminishing grad-
ually. The opposition Social-
ist party has denounced rearm-
ament as unconstitutional, and
maintains that the Japanese de-
fense forces are obsolescent
and would only invite attack in
case of war. In the face of
possible elections early next
year, the government is striv-
ing to avoid controversy over
the defense question.
Kishi has consistently op-
posed the introduction of nu-
clear weapons into Japan for
use by either Japanese or Ameri-
can forces. He has promoted
efforts within the United Na-
tions to reach agreement on the
cessation of nuclear tests and
has given no indication that
his government's consideration
of modern weapons includes nu-
clear types.
(Concurred in by OSI)
Soviet treatment of Commu-
nist China at the celebrations
of the 40th anniversary of the
Bolshevik revolution confirms
Communist China's unique posi-
tion within the bloc. The So-
viet leadership now appears to
be committed--probably on
Khrushchev's initiative--to
greater public recognition of
Peiping's domestic innovations
and its growing influence in
the international Communist
movement.
Moscow has acknowledged
that Chinese doctrines are
valid guides for international
Communism. Pravda printed on
30 October, and Moscow broad-
cast to Southeast Asia, an
article by Indonesian Communist
leader D. N. Aidit asserting
the special claim of China to
leadership of the Communist
parties of the East. Basing
his argument on a declaration
by Lenin that Communists in
Asia must accommodate them-
selves to conditions not found
in Europe, Aidit indicated that
Chinese Communist experience
was the immediate controlling
factor for Asian Communists in
assessing their own domestic
tactics.
Mao, in turn, went out of
his way to endorse Khrushchev's
domestic policies before the
Supreme Soviet. On 18 November
he told Chinese students in
Moscow that "the socialist camp
must have a leader and that
leader is the Soviet Union....
The Communist and workers'
parties of all countries must
also have a leader and the
leader is the Soviet Communist
party." With Soviet party
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CURRENT INTELLIGENCE WEEKLY SUIOIARY
27 November 1957
leadership is implied by Soviet
state leadership, the Chinese
had not previously used this
formula of dual Soviet leader-
ship of the bloc--a formula re-
peated in the People's Daily
on 25 November.
In terms of the practical im-
plication of these ideological
affirmations, new Sino-Soviet
collaboration in the military
and scientific fields is expect-
ed. Mao apparently quickly
reached broad understanding with
Khrushchev in Moscow. Mao's top
military and scientific special-
ists have remained in the USSR,
apparently to work out the de-
tails for closer military and
scientific Sino-Soviet ties.
Peiping's two scientific
delegations, totaling 85 rank-
ing scientists, came to Moscow
with the stated purpose of
reaching an agreement on "sci-
entific and technical research
and cooperation between China
and the Soviet Union." Since
their arrival, very little
mention has been made of these
and detailed.
delegations. The size of the
scientific representation and
its prolonged stay in Moscow
indicate that the agreement
to be reached, will be lengthy
YUGOSLAV-SOVIET RELATIONS
The results of the recent-
ly concluded meetings between
the world's top Communist lead-
ers in Moscow appear to have
reinforced Yugoslav suspicions
regarding the course of Soviet
policy since the Zhukov ouster
in October. The terms of the
12-nation declaration of 21
November are such as to lead
Belgrade to continue its month-
old go-slow policy toward the
USSR. Yugoslavia does not seem
likely, however, to take a more
pro-Western tack in its policies
at this time.
Yugoslav officials in Bel-
grade have avoided comment on
the proceedings in Moscow, and
the press has carried only fac=
ual excerpts from the 12-nation
declaration. The Yugoslav am-
bassador in Moscow, however,
regards the declaration as "de-
plorable." He told American
Ambassador Thompson on 22 No-
vember that while "it had not
been easy," Tito's represent-
atives had not taken part in
the 14 to 16 November meeting
which formulated the document.
The role which the Yugoslav
delegation expected to play in
any top-level meetings in con-
junction with the Moscow an-
niversary festivities remains
unclear, but Tito's decision
not to attend demonstrates that
he regarded the proceedings with
so,ie reservations. However,
Vice President Kardelj, who head-
ed the Yugoslav delegation in
place of Tito, thanked the Soviet
party and government upon his
departure for the opportunity
to take part in the "festivities"
and went on to forecast contin-
uing friendly relations between
the USSR and Yugoslavia.
For the first time since
the ebb in Yugoslav-Soviet re-
lations last.spring, Belgrade
has risked its accord with
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 November 1957
Moscow by challenging the USSR
to a public exchange of views
on the development of socialism.
On 7 November, the Yugoslav Com-
munist party's weekly Komunist
restated in positive terms the
Yugoslav position on "separate
roads to socialism," which con-
trasts sharply to that expressed
by Soviet party boss Khrushchev
in his anniversary speech and
later by the 12-nation declara-
tion. The Komunist article re-
flected Belgrade's desire to
make its independent position
clear in anticipation of any
Soviet statement made in con-
junction with the Moscow cele-
bration and might now be re-
garded as the Yugoslav dissent
to the bloc declaration.
In contrast to Moscow's
emphasis on the basic principles
and laws which govern socialist
development, Komunist declared
that socialist forces are so
varied that it is incorrect "to
supply universal recipes pre-
scribing how the rule of the
working class should be achieved
...what should be the forms of
authority, which are the com-
pulsory forms of social owner-
ship, and so forth." Komunist
maintained that social sus
developing everywhere, not just
within certain individual coun-
tries, and it is incorrect to
measure its progress in terms
"of the number of Communist par-
ties." Rather than resume a
major polemical exchange, Moscow
will probably ignore the Yugo-
slav exposition and consider
the 21 November communiqud a
sufficient rejoinder.
Recent diplomatic conversa-
tions between Western repre-
sentatives and Yugoslav offi-
cials suggest that for the pres-
ent Belgrade does not intend
to offset its differences with
the USSR by seeking closer ties
with the West. Instead, the
Yugoslavs appear to be entering
a period of re-emphasizing their
policy of "independence" and
support for "peace," as shown
by their signature on the peace
manifesto signed by 64 Commu-
nist parties.
The Yugoslav ambassador in
Moscow told his American counter-
part on 22 November that his
government's position was not
an easy one, "since both the
East and West appeared to find
it difficult to believe in the
independence of Yugoslav policy
and Belgrade's determination
to oppose a policy of the divi-
sion of the world into blocs."
Reflecting this view, Belgrade's
Politika in an editorial on 22
November deplored those who
"erroneously view Yugoslav ac-
tions without regard for its
independent, principled policy."
COLLECTIVE LEADERSHIP ENDS IN CZECHOSLOVAKIA
The selection of Communist
party First Secretary Antonin
Novotny as President of Czech-
oslovakia apparently marks the
end of collective leadership
in the country. Under the ad-
ministration of President Zapo-
tocky, who died on 13 November,
party and state powers were
evenly distributed between
Novotny and Premier Siroky, with
Zapotocky believed to be serving
as arbiter of high-level policy
differences in the regime.
Novotny, now holding simultane-
ously two of the three most in-
fluential posts in the regime,
controls the balance of power.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
in both party and government af-
fairs and is in a position to
quell all opposition to his
orthodox Communist policies.
Novotny, born in 1904,
worked as a locksmith as a youth
and at 17 was a member of the
Communist party of Czechoslova-
kia.in its first year of exist-
ence, Novotny may have been a
As upper level party offi-
cials were purged, Novotny came
to occupy a series of responsible
party posts. In 1951 he became
the only Czech Communist to hold
a seat on both the organizational
and political secretariats of
the central committee. In March
1953, following the death of
Gottwald, Novotny--the only orig-
inal member of the organization-
member of the party's central
committee in the early 30's.
He represented the Prague party
organization at the 7th Comin-
tern congress in Moscow in 1935.
He worked three years in the
Communist underground in Prague,
was arrested by the Gestapo in
1941, and spent the balance of
World War II in Nazi prisons
and concentration camps, return-
ing to Czechoslovakia in 1945.
Immediately after the war,
as leader of a clique of veteran,
hard-core Communists, Novotny
was named secretary of the
Prague party, and after 1946
his rise was meteoric. As an
adherent of Klement Gottwald,
president and party chairman,
he survived the widespread
purges of 1949-53, which cen-
tered about the former secre-
tary general of the Czech par-
ty, Rudolf Slansky, and his
Zionist and "Titoist" followers.
al secretariat to have
escaped the purge--
was assigned "to di-
rect the work of the
central committee," a
position equivalent
to Gottwald's vacated
party post. In Sep-
tember 1953 he was
elected first secre-
tary of the central
committee, the con-
trolling political
position in the coun-
try. Like the Soviet
party boss, Novotny
is a member of the
presidium of the na-
tional legislative
body, and speaks for
the regime on both
party and government policy.
Novotny has never deviated
from orthodox policies. At the
Czech party conference convened
in June 1956 to ratify the de-
cisions of the Soviet 20th party
congress, he paid lip service
to the principles of peaceful
coexistence and collective lead-
ership but ignored the Soviet
thesis of the possibility of
"different roads to socialism."
In Czechoslovakia, in contrast
with the other satellites, Stalin
himself has suffered only mild
criticism, and the 150-foot
Stalin statue in Prague was il-
luminated the night of 19 No-
vember to celebrate Novotny's
election.
As President, Novotny will
probably continue to make half-
hearted gestures of reconcilia-
tion toward Yugoslavia, but re-
lations between the two countries
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will not improve rapidly. The
Czechs have not forgotten Tito's
ideological criticism of their
party in 1948 for compromising
too much with "bourgeois ele-
ments," or his statement in July
1955 that the Czechoslovak Com-
munists found it difficult "to
admit their mistakes before
their own people, as the dead
cannot be resuscitated." Pre-
mier Siroky, first scheduled to
visit Yugoslavia in June, has
postponed the trip repeatedly,
and relations between Prague
and Belgrade remain cool.
Novotny was in Moscow with
other high-level figures of the
Czechoslovak party and govern-
ment at the time of Zapotocky's
death. There is a strong pos-
sibility that Khrushchev in-
fluenced the choice of his re-
placement, having lavished
praise on Novotny during the
Soviet delegation's tour of
Czechoslovakia in July.
Czechoslovakia will prob-
ably continue as a model satel-
lite. Novotny stands for gov-
ernmental decentralization,
emphasis on heavy industry and
forced-draft collectivization,
and a stern line of "socialist
realism" in all fields of art
and culture. The office of
president carries with it powers
of appointment of ministers,
ambassadors, and commanders of
the armed forces. Thus the role
of the Communist party in the
national life of Czechoslovakia
has been strengthened and a new
era of "proletarian dictator-
ship" by one-man rule is
in the offing.
Political training in the
Soviet armed forces-has been
intensified in the four weeks
since Marshal Zhukov was re-
moved as defense minister. Teams
of political officers are re-
ported engaged in indoctrina-
tion of the troops, but there
is no apparent effort to under-
mine the military authority of
unit commanders, and a purge
in the armed forces does not
seem to be under way. Attacks
in the military press on of-
ficers who have neglected polit-
ical training responsibilities,
however, suggest that there may
25X1 be some replacements.
The official newspapers
of the Soviet army, navy, and
air force have recently carried
items echoing the central com-
mittee's indictment of Marshal
Zhukov, and have charged "other
commanding officers" with the
same shortcomings. The officers
are condemned for a lack of
party spirit? failure to provide
adequate political training in
the armed forces, and development
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CURRENT INTELLIGENCE WEEKLY SUNYARY
of "pride, arrogance, boast-
ing, and infatuation." Soviet
Aviation cited one colonel by
name but no Soviet officer of
higher rank has yet been singled
out for criticism.
A spectacular project ap-
parently to be begun in the So-
viet Seven-Year Plan period
(1959-1965) is the diversion of
the Pechora and Vychegda Rivers
southward into the Kama and
Volga Rivers. The project,
which would take approximately
ten years to complete at an
estimated cost of $1 billion,
would raise the level of the
Caspian Sea, increase the pow-
er output of hydro-
electric stations
along the Kama and
Volga, and provide
cheap transportation
for coal and timber
from the northern
areas to the Urals
and other industrial
areas.
Early this year,
the Ministry of Elec-
tric Power Stations
announced proj ected
increases in the
capacities of the
Kuybyshev and Nizhne
Kamsk hydroelectric
stations which would
be economically feasi-
ble only if the water
flow were increased.
Detailed articles
have since been writ-
ten describing plans
for achieving the
diversion scheme, and
the National Economic
Council at Perm, one
of the major areas
effected, is said to
to have the project under con-
sideration.
As for the project itself,
three earth filled dams will
cut off the flow of water on
the upper reaches of the Pechora
and Vychegda Rivers, backing up
the water into a Kama-Vychegda-
Pechora reservoir. This reser-
voir, in reality three reser-
voirs joined by canals, is to
\_ < Arkhangelsk
6.00
Saran
SECRET
5.84
I ZHf
UST KUL01
DAM
(earthenl)
NORTHERN RIVER
DIVERSION PROJECT
AVERAGE ANNUAL OUTPUT
OF HYDROELECTRIC POWER
IN BILLIONS OF KWH:
1.500 in operation
1.50Q planned
1.50 planned after river
diversion
12L40
Sohkamsk
Page 15 of 18
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CURRENT INTELLIGENCE WEEKLY SU1[YARY
27 November 1957
have a total area of about
7,000 square miles.
The water level in the
reservoir will be raised to a
height sufficient to send the
flow down the Kama. A dam to
be built on the upper Kama,
near Solikamsk, will regulate
the flow from the reservoir
and will supply a large elec-
tric power development. Con-
struction will require an es-
timated 952,000,000 cubic yards
of earth-moving and 5,800,000
cubic yards of concrete work.
Although other projects, such
as Grand Coulee Dam, have in-
volved more earthwork and con-
crete, this scheme is of tre-
mendous scope and is unique in
its concept and geographical
coverage.
The increased f low of water
down the Volga would do more
than merely halt the drop in
the level of the Caspian Sea;
it would actually raise it. The
level of the Caspian has dropped
over eight feet since the 1930's.
If the Caspian level is raised,
it would stimulate the fishing
industry, cut down on dredging
expenses in port areas, and de-
crease costs in water trans-
port of petroleum. The economic
problems attendant on the dry-
ing up of the Caspian Sea have
been of growing concern to So-
viet officials. (See Weekly of
17 January 1957, Part III.)
After completion of the
project, production of electric
power by stations along the
Kama and Volga would increase
by as much as 11.4 billion kilo-
watt-hours a year, approximately
the output of the Kuybyshev sta-
tion, one of the world's largest.
Completion of the project
would also permit some 8,500,000
tons of coal from the Pechora
Basin and 1,600,000 tons of tim-
ber from these northern regions
to move by cheap water routes to
industrial centers. The inef-
ficient transport available to
move the high-grade Pechora coal
southward has long been criti-
cized, and this new water route
would also be an important ad-
junct to whatever railroad will
be constructed from the Urals
to the Pechora Basin.
After this project is com-
pleted, plans call for the con-
struction of a dam, reservoir,
and power plant on the shrunken
Pechora and Vychegda Rivers,
thus restoring navigability and
developing a power base for this
region and eventually providing
a continuous water route from
the Volga to the Barents and
White Seas.
(Prepared by ORR)
SOVIET BLOC EXPANDS EFFORTS TO INCREASE INFLUENCE IN BRAZIL
The Soviet bloc is trying
to exploit Brazil's internal
situation by moving to increase
diplomatic ties, expand trade,
and further cultural contacts.
Soviet party chief Khrushchev,
in a recent interview with Bra-
zilian journalists, urged in-
creased trade and contacts be-
tween the USSR and Brazil, and
said he foresees "a new era in
Soviet-Brazilian relations."
In early November a high
official of the Brazilian For-
eign Ministry expressed grave
concern over the simultaneous
development of bloc moves to
restore diplomatic contacts and
Brazilian Communist party ef-
forts to regain legal status.
Brazil has been approached by
the USSR, Bulgaria, and probably
by Rumania concerning renewal
of diplomatic ties and expan-
sion of trade.
Although President Kubit-
schek says he opposes expanding
diplomatic relations beyond the
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CURRENT INTELLIGENCE WEEKLY SUMARY
present ties with Poland and
Czechoslovakia, the Foreign Min-
istry fears that powerful na-
tionalist groups may join the
Communist campaign for new ties.
A group of federal deputies has
already called for an explana-
tion of the government's unwill-
ingness to expand relations
with the bloc. The outlawed
Communist party is seeking 100,-
000 signatures for a petition
to support such a move.
Brazil's foreign exchange
shortage is critical as a re-
sult of limited coffee and co-
coa sales and of expanding im-
ports. Recent bloc trade of-
fers appear aimed at exploit-
ing Brazil's vulnerabilities,
and a high Brazilian official
has stated that Brazil "may not
be able to avoid" responding
to them. President Kubitschek
recently announced that an of-
ficial trade mission soon to be
sent on a world tour will visit
a number of satellite countries
and possibly the USSR.
Bloc interest in Brazil's
five-year development program
is evidenced by offers of Ru-
manian and Hungarian economic
delegations now in Rio de Janeiro
to exchange heavy equipment for
coffee and cocoa. Poland has
offered substantial credit for
equipment for an inland steel
mill a railroad and a seaport,
and, 25X1
has volunteered
its good offices to solicit ad-
ditional aid from the USSR.
The Soviet commercial at-
tache in Montevideo, whose im-
minent arrival in Rio is reported
by the Brazilian Foreign Ministry,
may extend a Soviet offer for
development of industrial and
port facilities in the Sao Fran-
cisco Valley.
Latin America--regarded by
Moscow as a colonial or semi-
colonial area--has to date oc-
cupied a relatively low priority
in Soviet bloc foreign policy
objectives. The expanded bloc
campaign in Brazil appears, how-
ever, not to be limited to at-
tempts to embarrass the United
States, but suggests that Moscow
now sees an opportunity to in-
crease its influence substan-
tially. Concurred
in by ORR)
RHODESIAN ECONOMY SUFFERS FROM LOW COPPER PRICE
Officials of the Federation
of Rhodesia and Nyasaland are
deeply disturbed over the rapid
deterioration in the federation's
balance-of-payments position--
the result of a fall in copper
prices from $1,220 a ton in
1956 to a record low of $599 in
June 1957. This situation will
result in a substantial cut in
capital development expenditures
and may have serious political
consequences.
Rhodesia's copper exports,
which normally account for bout
60 percent of total exports, are
expected to decline during 1957
by more than $76,000,000 com-
pared with the 1956 value--a
loss of about 24 percent. The
rising cost of imports in 1957--
estimated to be $42,000,000
higher than in 1956--is causing
the government to consider ad-
ditional import restrictions.
The resulting deficit of
perhaps $168,000,000 from trade
and services must be offset by
a larger capital inflow if the
present high rate of Rhodesian
economic expansion--9 percent
per year--is to be continued.
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CURRENT INTELLIGENCE WEEKLY-SUMMARY
RHODESIA AND NYASALAND
Since 1951, Rhodesia has modern-
ized its transportation and
communications system at con-
siderable cost, and embarked
on a $250,000,000 hydroelectric
power project on the Zambezi
River at Kariba. When completed,
the Kariba project will provide
enough electricity to assure
the copper industry of North-
ern Rhodesia sufficient operat-
ing power, as well as permit
the electrification of the Rho-
desian railways and the indus-
trialization of Southern
Rhodesia.
SECRET
PART II NOTES AND COMMENTS
The lower price
of copper may have
serious effects on
the federation's so-
cial and political
outlook. The depressed
prices and the end of
large bonus payments
to the well-paid Euro-
pean miners in North-
ern Rhodesia will prob-
ably lead to a general
feeling of economic in-
security in the cop-
per belt. In the past,
the Europeans have re-
sisted all attempts
to break down the re-
strictions against
African skilled la-
bor, and now they will
have even greater fear
of competition from
cheaper African labor.
Such an increase of
racial tension in a
vital area of the fed-
eration could have
serious repercussions
in the 1958 general
The governing party and its
policy of racial "partnership"
is already being attacked by a
segregationist-minded party. A
loss of popular support in the
copper belt, together with
widespread concern over a slow-
down in economic development such
as may arise from the announced
reduction of $8,000,000 in the
1957-58 development budget,
could endanger the political
control of the moderates.
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achieve the broad objectives
set forth in the WEU treaty.
CURRENT INTELLIGENCE WEEKLY SUMMARY
PATTERNS AND PERSPECTIVES
WESTERN EUROPEAN UNION AND NATO
The willingness of some mem-
bers of the Western European Un-
ion (WEU) to use WEU institutions
to strengthen the Western de-
fense alliance raises some im-
portant questions concerning the
future of this seven-nation or-
ganization which may be consid--
ered at the mid-December NATO
meeting. Some suggestions for
the role of WEU envisage it as
a second-best alternative'in the
event the United States is not
sufficiently "cooperative" with-
in the NATO framework; others
foresee a greater contribution
to NATO from WEU, particularly
in the related fields of arma-
ments production and control.
These suggestions again
pose the possibility of WEU's
emergence as a permanent "inner
circle" competing with NATO.
They also suggest that the WEU
nations might be prepared to
increase their own joint effort
in order to reduce their depend-
ence on the United States and
redress an imbalance which has
given the United
States not only the
predominant voice in
NATO but also the
preponderant burden.
The Development of WEU
From the time of
WEU's formation in
1954, there have been
two conflicting views
about the union. The
"negative" view holds
that, having accom-
plished its initial
objective of provid-
ing the necessary
controls to bring
West Germany into
NATO, WEU should be-
come dormant. The
"positive" view holds
that, within the
framework of NATO, the
WEU should try to
STANDING ARMAMENTS
COMMITTEE
Seat: Paris
Purpose: Encourages arms
standardization and cooperation
in weapons production
Named by or responsible to.
Makes recommendations to.
Approximately 90 representatives from membership of the
Consultative Assembly of the Council of Europe.
CON FI DF TIAL
ID T
PART III PATTERNS AND PERSPECTIVES
FIDENTIAL
Until mid-1956, the nega-
tive view predominated, but
events since then have tended
to reverse that trend. West
German Chancellor Adenauer's
decision to take up with the
WEU Council rumors of an imminent
reduction in Anglo-American
forces on the Continent was the
first vigorous assertion of the
idea that the WEU powers have a
special status within the Atlan-
tic alliance, that WEU's machin-
ery is appropriate for the mo-
bilization of a seven-nation
point of view on defense matters,
and that there are no real limits
on WEU in discussing Western
defense policies in the broad-
est terms..
This positive view was sup-
ported by those who saw WEU as
the direct heir of the European
Defense Community concept. They
stressed WEU's specific links
with NATO, its powers over the
Seat: London
Purpose* Over-all policy
determination
Seat: Strasbourg
Purpose: Debates council reports
and makes recommendations
Seat: Paris
Purpose: Controls level of
forces and armaments on
Continent
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CURRENT INTELLIGENCE WEEKLY SUMMARY
level of forces and armaments
on the Continent, and its vague
measures for cooperation in the
production of arms. This new
concept of WEU's jurisdiction
was reinforced early in 1957
when London requested WEU's
authorization to withdraw 27,-
000 British ground troops from
Germany. Britain, under the
treaty, is committed to abide by
the majority rule of the WEU
Council regarding the mainte-
nance of its forces there.
The violence of the Con-
tinental reaction to the British
proposal nit only persuaded.
London to delay a full with-
drawal, but also sparked a spa-
cial NATO review of the over-
all resources of the alliance
and its defense aims--a review
which is still in process. Even
this action, however, failed to
satisfy the WEU Assembly which,
in its May session, came close
to passing a vote of censure
against the WEU Council for hav-
ing relinquished its responsi-
bilities to NATO.
"Responsibilities" of WEU
WEU's supporters have con-
tended that, since NATO lacks
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CURRENT INTELLIGENCE WEEKLY :SUMMARY
a formal parliament, the WEU
Assembly is the only parlia-
mentary group which can effec-
tively debate military ques-
tions. They also point out
that WEUs clause providing for
automatic mutual assistance in
the event of aggression is a
tighter commitment than NATO's.
It is, however, through
its Arms Control Agency and its
Standing Armaments Committee--
which operates in the field of
production-that WEU has a bet-
ter claim to special respon-
sibilities. WEU has four spe-
cific control functions: to
ensure that force goals estab-
lished by NATO are not exceeded
by WEU members; to prescribe
the strength and armament of
Continental internal defense
and police forces not committed
to NATO; to enforce West Ger-
many's unilateral commitment
not to produce certain weapons;
and, by test checks and inspec-
tions of production and imports,
to control the level of stocks
of atomic, bacteriological,
chemical, and certain other
weapons.
During the first "control
year"--1956--the Arms Control
Agency exercised its functions
on an experimental basis only.
These operations represent the
West's only recent experience
in the kind of armaments in-
spection which an international
disarmament agreement would
involve and, in view of the
limitation of EURATOMys securi-
ty controls to the peaceful
uses of atomic energy, provide
the only means for policing
the production of nuclear weap-
ons by Continental WEU members.
Development and Production
The Standing Armaments
Committee has likewise been
slow in carrying out its gen-
eral mandate to ensure the
"best possible use of available
armament credits by means of
rational organization of pro-
duction." Largely in response
to a British initiative, how-
ever, there has been a tendency
since early this year to make
increased use of WEU`s machinery
for the avowed purpose of solv-
ing Europe's conventional weap-
ons replacement problem and
making Europe less dependent on
the United States for advanced
weapons.
Under WEU's aegis, Britain,
France, and West Germany have
concluded a series of bilateral
agreements envisaging a pooling
of resources in the fields of
pure research, completed weap-
ons, and advanced weapons devel-
opment. Moreover, several bi-
lateral steering committees have
been formed: on the French-
German side, in the broad gen-
eral fields of army, navy, air
force, electronics, and econom-
ics; on the Anglo-German side,
in the more specific fields of
air defense, guided missiles, 25X1
naval projects, and army weapons.
WEU`s future course will
depend on the further develop-
ment of NATO. As long as there
is no solution to the problem
of the impact of modern weapons
on budgets and strategy and as
long as there are basic diver-
gencies such as those provoked
by the Suez crisis, there will
be a tendency for "European"
opinion to coalesce in some
"European" forum--such as WEU.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
In the field of weapons
research and development, NATO
sponsorship of such a program
would render superfluous WEU's
Standing Armaments Committee
and make it theoretically pos-
sible for all NATO members to
participate. The WEU members,
however, are the NATO countries
most likely to make a contribu-
tion to research and develop-
ment, and in addition full par-
ticipation would probably lead
to a request for American
CHINESE COMMUNIST PROGRAM FOR HIGHER EDUCATION SUFFERS REVERSES
The Peiping regime has had
fair success in its efforts to
train a new generation of "in-
tellectuals" capable of handling
the technical work involved in
modernizing the Chinese economy.
Since "liberation" in 1949, its
colleges have turned out about
369,000 graduates, which Peiping
boasts is more than the total
graduated in the previous 50
years. There is a continuing
shortage of college-trained per-
sonnel, however, and recent de-
velopments have aggravated the
problem of winning and holding
the loyalty of the intelligent-
sia.
Recent speeches by two
high-ranking Chinese Communist
spokesmen highlight the regime's
growing dissatisfaction with
the progress of higher educa-
tion in Communist China--in par-
ticular with the failure to pro-
duce a politically reliable edu-
cated class. The secretary gen-
eral of the party stressed on
18 September that the formation
of a new "socialist intelligent-
sia" was one of the regime's
most vital tasks. Liu Shao-chi,
second-ranking official in Com-
munist China's hierarchy, de-
clared on 6 November that the
working class must develop its
own corps of scientific and
technical personnel--"a vast
force of intellectuals who are
both Red and expert."
Early Years
Immediately after "libera-
tion," the Chinese Communists
concentrated on mass education
and the training of primary-
level technicians who would be
of immediate usefulness. By
the middle of 1955, however,
Peiping had concluded that its
developing needs could not be
met by these mass techniques,
and it launched an intensive
campaign to raise educational
standards. Most short-term
study programs were abolished,
and the course for higher tech-
nical schools was extended from
four to five years. Of 50,000
college graduates in 1955, over
7,000 were assigned jobs as
university instructors, and
plans were made for construction
of 60 new colleges in the next
two years.
SECRET
financial assistance. The WEU
committee has thus far operated
without such aid.
Controls over arms produc-
tion may be relaxed as a result
of the forthcoming NATO meeting
in Paris. Should West Germany
be permitted, however, to pro-
duce advanced weapons or France
emerge as a "fourth nuclear
power," other countries might
then demand strengthening of
WEU's control system.
25X1
25X1
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 November 1957
In a special report to the
central committee of the party
on 14 January 1956, Chou En-lai
cited a need for more scientific
personnel and called for a sharp
increase in enrollment for in-
stitutes of higher learning.
Two weeks later, Peiping an-
nounced a 12-year education
program which included plans for
construction of 300 new colleges
and a goal of producing a mil-
lion "highly trained intellec-
tuals" by 1967
Educational Speed-up
SECRET
The following April, the
regime announced that 170,000
students would enroll in col-
leges in the 1956-57 school
year--a sharp increase over the
1955 enrollment of approximately
96,000 freshmen. Because of an
insufficiency of middle-school
graduates, the regime drafted
HIGHER LEARNING "nn`n?
A ? ~~ - SHOT
4n
? Comprehensive University
E College
? Institute of Medicine
Teacher Training Institute
Institute of Agriculture and Forestry
more than 94,000 cadres and
workers from their jobs to meet
the quota. In the end, 180,000
new students--nearly twice the
1955 figure--started college
work in September 1956. The
college enrollment target of
the Second Five-Year Plan was
850,000 students by 1962.
"Liberalization" in Colleges
Peiping moved at the same
time to relax pressures on stu-
dents to participate in extra-
curricular activities in col-
leges and universities. Forced
participation in "voluntary
labor" and physical culture was
abolished and emphasis taken
off party work. Students were
permitted to carry a lighter
work load and given a choice
of elective courses under the
slogan "educate according to
talents." These moves, which
n R ~~wA^~ 1 VIER~AM...
.,,..'G,. L A O S S
SECRET
anIr.t*S?r1- verb y.
3
4 /Q7KOREA
11-~ home,
81`JU
- "~ nchou , ~, gchon tMtang~ 1 ,, ,
n li E~
HLaannchung! 6, - -~ ~-ik hen i 1) IF-
SpUT P
KOR~ -
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CURRENT INTELLIGENCE WEEKLY-SUMMARY
27 November 1957
were in line with the then cur-
rent "liberalization" campaign,
ttwoa s of now=) 40t
1-w AD. ONS
259
2% 1
156 -11 -
F-iF] Li118
94 %
reflected concern expressed
earlier by the minister of high-
er education over the number of
students who failed courses, be-
came ill, or complained that
they had no time to digest their
studies.
By the spring of 1957 the
regime had decided that the ex-
panded education program was
overly ambitious, and retrench-
ment began. On 15 March the
vice min=, ter of higher educa-
tion acknowledged that the
rapid development of higher edu-
cation had gone beyond the ex-
isting capacity of both teaching
staffs and equipment. He an-
nounced that enrollment of new
college students for the 1957-
58 school year would be cut
back to 10'7, 000. Middle-school
graduates were told that
"for a long time" most of
them could not hope for fur-
ther education and were urged
to take up work on farms or
in factories.
As the school
year progressed, it
became evident that
the combination of a COMMUNIST CHINA:
relaxed atmosphere and 1957 RECRUITMENT
the pressures of over- PLAN FOR COLLEGES
crowding in the coun--
try's 221 institutes
of higher learning
had led to uninhibited
expressions of dis-
satisfaction, and low-
ered student morale
began to be reflected
in unruly behavior.
As early as 28
October, People's
Daily, in an e torial
on student laziness
and lack of discipline',
called for more polit-
ical and ideological
education. Press
treatment of this
theme was more frequent after
the Polish disorders and the
Hungarian rebellion--in which
students played an impor-
tant role.
TOTAL STUDENTS
107,000
Liberal Arts 4,970
Finance & Economics 2,300
Government & Law 1,300
Physical Culture 1,000
Fine Arts 730
The policy of r,:.;&1,.cing the
"political" content of the cur-
riculum which accompanied the
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CURRENT'INTELLIGENCE WEEKLY SUMMARY
27 November 1957
program for larger enrollment
was also reversed, following
student participation in stormy
criticism of the Communist party
during May and June. Spurred
on by instructors who demanded
that control of the universities
be taken away from "ignorant"
Communist cadres and political
committees and returned to the
professional staff, students
called for Western-style academ-
ic freedom and an open choice
of work after graduation. The
regime responded by making the
academic community one of the
principal targets in the cam-
paign against "rightists."
Rigorous political indoc-
trination was reinstituted in
all schools. Students in Pei-
ping University are now re-
quired to have eight hours of
"thought reform" every week,
and graduates must survive a
searching political investiga-
tion before they can take jobs.
Those who fail to "pass" are
placed on probation for periods
of up to three years and as-
signed menial tasks while un-
dergoing "ideological correc-
tion."
Tighter Controls Imposed
The regime's determination
to tighten controls over educa-
EXPANDING ACTIVITIES OF THE
Sino-Soviet bloc activities
in Ceylon have steadily in-
creased since April 1956, when
Ceylonese Prime Minister Ban-
daranaike's coalition govern-
ment took office. The bloc's
effort to develop its ties with
the island has been facilitated
by Bandaranaike's policy of ex-
panding the country's political
and economic relations with all
countries.
tion further is indicated by
the decision announced on
28 October to send a thousand
high-level cadres, including
two vice ministers, to key
positions in colleges and
universities. Peiping's latest
move in the campaign was
announced by People's Daily
on 10 Novemberr 'in an-- article
describing the transfer of
thousands of students and
teachers to rural areas for
a period of work on coopera-
tive farms, where they are
expected to develop a "working-
class stand."
It probably will be a
number of years before Pei-
ping can recoup the losses it
has sustained in the field
of higher education during
the past 12 months. De-
ficiencies in the educational
plant responsible for fail-
ure of the increased enroll-
ment program can be corrected
in a comparatively short time.
It will take longer, how-
ever, to restore esprit
among students and teachers.
The usefulness of older, West-
ern-trained scholars, who have
been more valuable to the re-
gime than the Communists admit,
will be permanently impaired.
(Concurred in by
SINO-SOVIET BLOC IN CEYLON
Diplomatic, Cultural Relations
Ceylon exchanged ambassa-
dors with the USSR and Commu-
nist China in May and June 1957
respectively, and subsequently
agreed to establish diplomatic
relations with Poland, Czech-
oslovakia, Rumania, and Yugo-
slavia. In addition, there has
been an increase in ex-
changes of visits by labor
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CURRENT INTELLIGENCE WEEKLY SUMMARY
leaders, teachers, trade and
youth delegations, and govern-
ment officials. An estimated
600 Ceylonese visited Commu-
nist China, the USSR, and the
satellites between January and
September 1957.
The Ceylon-Soviet Friend-
ship League, formed in 1956,
has campaigned for regular Mos-
cow radio broadcasts to Ceylon
and for Soviet film festivals
and entertainment programs.
The Ceylon Peace Council, al-
though it has been less con-
spicuous, publicized the Com-
munist-front World Peace Coun-
cil meeting in Ceylon in June
1957. A Ceylon-China Friend-
ship Association has existed
since 1952.
The circulation of Commu-
nist publications and the pub-
lication of Sino-Soviet bloc
propaganda releases in the
Ceylonese press have increased
since Bandaranaike abolished
the former government's ban
on the importation of Communist
literature; TASS began sending
items to the Ceylonese press in
July 19 57.
In August 1956, Ceylon and
Czechoslovakia signed their
first economic cooperation
agreement, providing long-term,
low-interest credit to Ceylon
for purchases of capital equip-
ment. In late December, the
Czechs opened the first perma-
nent Communist bloc trade mis-
sion in Colombo. Since then
Czechoslovakia has agreed to
supply $65,000 worth of equip-
ment to aid Ceylon's nationali-
zation of bus transportation,
and to build a $3,360,000
sugar factory which will help
the island cut sugar imports
and conserve foreign exchange.
The Czechs are also considering
the construction of a fertiliz-
er plant and hydroelectric
plants.
In September 1957, Ceylon
and Communist China signed a
second five-year rice-rubber
contract which supplies Ceylon
with a much-needed food s:3urc e
and a rubber market, although
the terms are less favorable
for Ceylon than under the first
contract. The Chinese have
partially offset the less
favorable terms by extending
Ceylon $15,750,000 in economic
aid over the next five years.
The USSR has no formal aid
program in Ceylon but has in-
vited Colombo to prepare a list
of development prajects for
which foreign assistance is de-
sired. Moscow in July 19 57 ex-
pressed its willingness to aid
in the rehabilitation of Ceylon's
rubber plantations. In late
October, the USSR, having of-
fered to buy up to 10 percent
of Ceylon's tea, entered the
Ceylonese tea market for the
first time in 21 years. This
was probably a preliminary
step toward increased govern-
ment-to-government trade.
In early November, the
Ceylonese minister of indus-
tries asked for a team of So-
viet experts to make an oil ex-
ploration survey, suggesting
that present negotiations with
a British-American firm for
the establishment of an oil
refinery on the island might be
abandoned if the Soviet ex-
perts strike oil. A Soviet
mission is reportedly expected
soon in Colombo to discuss
economic and industrial coopera-
tion between the two countries.
The present Ceylonese gov-
ernment has also relaxed bunker-
ing controls applied by its
predecessor to bloc vessels.
Ceylonese Reactions
Ceylon has been fairly re-
ceptive to Communist overtures
and has demonstrated little
fear of the Communist infiltra-
tion that might result from in-
creased contacts. Ceylonese
visitors to the Soviet Union
and Comma_~ist China have gen-
erally been impressed by what
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CURRENT INTELLIGENCE WEEKLY SUMMARY
they have seen, and Chinese
Premier Chou En-lai made an
excellent impression when he
visited Ceylon in January 1957.
The island's economic prob-
lems, such as its perennial food
shortage--now accentuated by
drought--its rapidly rising
population, the flight of for-
eign capital, and the desire to
industrialize, have made it
willing to accept virtually any
proffered foreign assistance.
Ceylon continues to value
its friendship with the West,
particularly its Commonwealth
ties, but Colombo is not likely
under the Bandaranaike govern-
ment to favor the free world
over the bloc. Bloc activities
on the island can be expected
to grow with little government
restriction.
THE ARGENTINE PROVISIONAL GOVERNMENT'S DILEMMA
President Aramburu and the
majority of the Argentine mili-
tary consider it essential to
hold general elections on 23
February and to transfer power
to elected civilian authorities
on 1 May as scheduled, but they
also believe Argentina's seri-
ous economic situation requires
the prompt adoption of several
measures rejected by the two
political parties most likely
to win the elections. The most
controversial issue concerns
foreign private investment in
petroleum, which the regime
believes necessary to help im-
prove the country's payments
position and to speed economic
recovery. Unquestionably most
Argentines want a return to
constitutional government in ac-
cordance with Aramburu's polit-
ical calendar, and any deviation
from this program would cost the
regime the considerable popular
support it now enjoys.
In its two years of power,
the Aramburu regime has made a
strong effort to ensure a smooth
transition to a democratically
elected constitutional govern-
ment, Over the past year it
has attempted to avoid policies
which might clash with those of
a successor government--particu-
larly on the major controversial
economic issues. Personal am-
bitions have played little part
in the provisional government's
measures, since all officials
serving in the cabinet, in the
armed forces, or as provincial
governors have been declared
ineligible to stand for public
office,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
The overriding popular con-
cern with a return to an elected
civilian government--whether or
not pressing problems art re-
solved--was reflected in com-
ments among all groups immedi-
ately following the July elec-
tion of a constituent assembly
to revise the constitution.
ARGENTINA
URGENT HARD-CURRENCY
NEEDS FOR BASIC INDUSTRY
(MILLIONS OF DOLLARS)
The majority of the mili-
tary apparently also supports
Aramburu's plan for the trans-
fer of power, despite certain
misgivings occasioned particu-
larly by the economic situation.
Some are reported tired of hav-
ing to deal with the complex
problems of government and feel
they have failed to take ade-
quate steps to deal with eco-
nomic problems. They care a
great deal about the appearance
of "acting properly" and believe
an elected civilian government
should at least be given the
chance to take corrective eco?
nomi c Measures.
(MILLIONS OF DOLLARS) IMPORTS
M EXPORTS
WATER AND ELECTRIC POWER- 5 00
PETROLEUM DEVELOPMENT - 280
TRANSPORTATION 300
STATE GAS 10
STEEL 150
HIGHWAYS AND ROADS 4 0
COMMUNICATIONS 32
Argentine official estimate.
27 NOVEMBER 1957
It soon became evident, however,
that many political party lead-
ers were less interested in con-
stitutional revision as such
in staking out positions for the
presidential elections next Febru-
ary. Moreover, both the pro-
government People's Radical Civic
UNITED STATES
TRADE WITH
ARGENTINA
JANUARY - JULY
1957
SECRET
Union and the Ia.tran.si-
gent Radical Civic
Union, which respec-
tively won about one
fifth and one fourth
of the total vote in
the July elections, sup-
port similar platforms,
calling for the nation-
alization of power re-
sources, contrary to
the regime's recommen-
dations.
Argentina's
Economic Plight
The government's
emphasis on the need
for foreign investment
reflects the grave de-
terioration in Argen-
tina~s gold and dollar
position as well as
the need for general
economic development.
Gold sales of some
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$55,000,000 during September
and October reduced the gold
reserves to $126,000,000, and
official dollar balances had
declined to about $1`38,000,000
ARGENTINA
COST OF POL IMPORTS
(MILLIONS OF DOLLARS)
COST IN
DOLLARS
TOTAL COST
IN DOLLARS
EQUIVALENT
CURRENT INTELLIGENCE WEEKLY SUMMARY
1955 1956 1957
ESTIMATED
27 NOVEMBER 1957 711158
as of 1 l o'vember . Because of
new credits, including $75,000,-
000 from the International 11,10-_
etary Fund last April,
Argentina now antici-
pates that its bal-
ance--of--payments def-
icit for 1957 will be
reduced to about $75y-
000,000. Its trade
deficit with the dol-
lar area, however, is
continuing to rise,
amounting to $125,-
820,000 for
the
first
seven months
of
1957
as compared
with
only
$112,939,000
for
all
of 1956.
Fuel, especially
petroleum, is a con-
stantly expanding im-
port cost and drain
In 1956, petroleum accounted
for almost a fifth of total
imports. Small gains in petro-
leum production, which reached
31,717,305 barrels in 1956,
have been more than offset by in-
creased consumption, and local
production now provides only
about 39 percent of domestic
needs, as compared with about
65 percent in 1943. Some 1,-
497,000 long tons of coal, 85
percent from the United States,
had to be imported during 1956.
In 1957, nonde'.lar coal was
sought, and under an agreement
signed on 18 October, Poland
will again tl-.come a major sup-
plier of coal to Argentina.
The regime feels that to
encourage expanded foreign in-
vestment in oil would improve
the climate for other essential
investment and credits. In a
series of meetings of cabinet
and military officials called
by President Aramburu in late
August, the minister of commerce
and industry estimated the cost
of Argentina's immediate needs
for transportation and basic
industries at some 13 billion in
dollars and about $750,OOQ,000 in
additional peso expenditures.
The minister commented that
these and additional funds for
14.4.iVul1 i +.U...,..,1111 and 1111414. a )1 i
+ 1141
ARGENTINA: LIVING COSTS AND WAGES
1956-1957
LIVING TOTAL WAGE
itiAL *
COSTS PAYM89/TS
WAGIS
1955
July-Sept.(index)
100.0
January
105.5 105.4
100.0
1956
April-June
110.0 114.5
104.1
July-September
112.9 115.8
102.6
October-November
116.0 117.7
101.4
January
123.2 150.1
121.8
February
125.4 152.9
121.9
March
128.1 154.7
120.8
April
130.6 163.1
124.9
May
133.4 -
-
1957
June
135.9
July
139.6
August
143.0 -
-
September
146.6
% -
2
-
October
150.3
.5
REASE -
-
November
154.1
(EST) -
-
December
158.0
142.0(est )
90.0
on dollar exchange. 27 NOVEMBER 1957
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CURRENT INTELLIGENCE WEEKLY SUMMARC
rehabilitation would have to
come from foreign credits and
investments. He emphasized
that increased production was
essential to stem inflation and
growing labor concern over ris-
ing living costs, which have
offset the last general wage
raise in February 1956.
The constituent assembly
ended on 14 November without
passing projected constitutional
amendments nationalizing petro-
leum and other "natural" sources
of energy. Action on the con-
troversial economic amendments
was stalled for lack of a quorum
when the center bloc representa-
tives withdrew on 25 October,
following earlier withdrawals
by other groups for various
reasons. The assembly's im-
portant accomplishment was vot-
ing reinstatement of the con-
stitution of 1853 with its amend-
ments of 1860, 1866, and 1890,
SECRET
thus deleting the Peronista-
sponsored reforms of 1949.
Aramburu's decree of 15
November calling for general
elections on 23 February and
transfer of power on 1 May fur-
ther lessens the chances that
right-wing military elements
would attempt a coup to postpone
elections. As previously prom-
ised, the decree also provided
for the continued use of the
Saenz Pena electoral system,
under which two thirds of the
seats in the Chamber of Deputies
go to the leading party and the
other third to the runner-up.
This system could result in the
chamber being dominated by
Radicals, who oppose the gov-
ernment's economic policy, al-
though the unpredictable divi-
sion of the former Peronista
vote, which may comprise about
a quarter of the total, could
alter this.
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