CURRENT INTELLIGENCE WEEKLY SUMMARY

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• Document Creation Date: December 20, 2016
• Document Release Date: December 13, 2005
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• Publication Date: October 28, 1999
• Content Type: SUMMARY

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CONFIDENTIAL
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
COPY NO. 50
OCI NO. 5644/58
20 November 1958
DOCUMENT NN!O. --I--
No CHANGE IN CLASS. 0
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DATE;
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
CONFIDENTIAL
ARCHIVES & RECDRDS CENTER
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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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Ef 7- n r'
ow-
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CONFIDENTIAL
Khrushchev's "document"
probably will seek to justify
a subsequent transfer of Soviet
control of Allied access to
Berlin to the East Germans.
Khrushchev hinted in his 14 No-
vember speech that his new pro-
posals would be addressed to all
CURRENT INTELLIGENCE WEEKLY SUMMARY
20 November 1958
OF IMMEDIATE INTEREST
BERLIN SITUATION
The USSR last week appeared
to be preparing new diplomatic
maneuvers on Berlin. Soviet
Ambassador Smirnov presumably
disclosed the nature of Soviet
plans to Chancellor Adenauer on
20 November. These probably
will include official proposals
to the Western powers calling
on them to withdraw their forces
from Berlin, to meet on a high
level to revise Berlin's status
and probably to recognize East
German "sovereignty" over the
city. Khrushchev declared on
14 November that the "Soviet
Government is preparing an ap-
propriate document on the status
of Berlin."
Moscow is seeking to bol-
ster its claim that the Western
powers have nullified the legal
basis for their presence in West
Berlin by a long series of vio-
lations of the Potsdam Agree-
ments. The Soviet Embassy in
East Berlin on 18 November
staged a press conference de-
signed to dramatize long-stand-
ing Soviet allegations that the
West has been using West Berlin
as a base for "subversive activ-
ity" against East Germany and
the satellites.
In articles on 17 and 18
November Pravda attempted to
refute themes' position that
their right to remain in Berlin
rests on Germany's uncondition-
al surrender rather than the
Potsdam agreements and called
for a "radical" solution of the
Berlin problem.
ER ANY
Vorsfelde
BERLIN
WEST GERMANY- BERLIN
COMMUNICATION ROUTES
West German = Autobahn - Highway East German
checkpoints: --Railroad checkpoints:
L Railroad ? Railroad
0 Highway M,- ,oo ^ Highway
the countries that fought against
Germany and Italy, thus raising
the possibility that the USSR
will call for a general peace
conference to discuss a revision
of Berlin's status as part of
a broader German settlement.
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c uth
,~ tenfuerst
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Autobahn
Highway
__ _ Railroad
Roil road (elevated)
Subway
CURRENT INTELLIGENCE WEEKLY SUMMARY
Golm
o rkenwerder
Hohen
uendorf
Ut
~111 railr
Further hints as to the
general nature of new Soviet
proposals appeared in the Pei-
ping People's Daily on 15 No-
vember. An ditoal declared
that a withdrawal of foreign
troops from Berlin "would be a
good start toward the withdrawal
of foreign troops from the whole
of Germany." It also stated
that "unification" of Berlin
would improve relations between
East and West Germany and fa-
cilitate solution of the unifi-
cation problem by the German
people themselves.
The Soviet leaders prob-
ably expect the Western powers
to reject any proposals which
abandon the principle of four-
power responsibility for either
Berlin or German reunification.
They may believe that Western
rejection would serve as a pre-
text for subsequent unilateral
action bythe USSR with respect
to Berlin. Khrushchev's plan
reportedly is to give an aura
of legality to its granting full
sovereignty to East Germany by
offering to conclude a German
peace treaty. If the treaty
offer is rejected and negotia-
tions fail, Khrushchev would
then unilaterally turn over So-
viet functions in Berlin, thus
forcing the West to deal with
the East German regime.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
The East Germans are strong-
ly echoing Soviet demands that
Berlin be turned over to them,
although they are making some
effort to appear reasonable.
The release by East Germany of
an American citizen held since
17 October was probably intended
as a conciliatory gesture.
Moscow-appears determined
to push ahead with plans to
transfer certain functions to
the East Germans, and Soviet -
East German negotiations to this
effect may soon take place.
Premier Grotewohl's statement
on 14 November that'.he would be
"abroad" on 11 and 13 December
backs up reports that a meeting
will take place in Moscow in
December. The legal transfer
may take the form of a new agree-
ment revising or abrogating the
Bolz-Zorin exhange of letters
of 20 September 1955. Under
these documents, the USSR re-
tained control "for the time
being" over the transit through
East Germany of personnel and
vehicles of Allied garrisons in
West Berlin. The cessation of
East German payments in support
of Soviet occupation troops, set
for January, might afford an ap-
propriate occasion for some bi-
lateral transaction underlining
East German "sovereignty."
Moscow's first move to
transfer its functions may be
the withdrawal of the Soviet
Kommandatura from Berlin and the
transfer to East Germany of ac-
tual control of check points on
access routes to West Berlin.
This might be accompanied by ef-
forts to replace Soviet repre-
sentatives by East Germans at
the Berlin Air Safety Center.
An East German international
lawyer has already alleged that
the West is using the air cor-
ridors illegally and has as-
serted the West would have to
negotiate with East Germany to
enter the city by ground or air.
Although the USSR has not
yet handed over any of its func-
tions, US officials report that
East German railway police stood
by while Soviet officials ex-
amined Allied documents at the
Marienborn check point, possi-
bly indicating that the USSR
will soon transfer these func-
tions to East Germany. More-
over, although Soviet officials
permitted American Army person-
nel and vehicles held on 14 No-
vember to return to West Berlin,
the political adviser: of the
Soviet commander in chief on
this occasion declared that So-
viet authorities intend to ex-
ercise their "right" to inspect
covered vehicles belonging to
the Allied garrisons. The im-
mediate prospect therefore ap-
pears to be further harassment
of Allied access.
West European Reaction
West German officials, fear-
ful that East German harassment
of West Berlin will again threat-
en the city's economic welfare,
point out that continued pros-
perity may have sapped the Ber-
liners' will to resist. They
also are concerned that the
gradual introduction of a "slow
blockade"--each step appearing
inconsequential--may not evoke
sufficient Western reaction to
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CURRENT INTELLIGENCE WEEKLY SUMMARY
20 November 1958
halt it. To date, however,
Berliners have remained calm
and there has been no panic
buying.
The NATO members, in agree-
ing on 17 November on a firm
Western stand in the, face of
Soviet threats to Berlin,
stressed the need for caution
with respect to possible Soviet
probing tactics designed to pro-
voke incidents. The British and
French are willing to undertake
an airlift if necessary, but the
British Foreign Office doubts
the effectiveness of such action
in the long run. French willing-
ness to participate in an air-
lift to a greater extent than
in 1948 implies a preference for
a technical demonstration rather
than a military reaction. Chan-
cellor Adenauer has implied Bonn
would apply economic countermeas-
ures, but the German Foreign
Ministry feels that Bonn's ca-
pacity for such measures is
limited.
Bonn would probably react
strongly to even de facto deal-
ings with East Germany, as they
would undermine Chancellor Ade-
nauer's entire foreign policy,
which is based on Bonn's claim
to represent all of Germany.
Western contacts with East Ger-
many would also increase senti-
ment within all West German
political parties favoring direct
political talks with East Ger-
many. Full diplomatic recogni-
tion of East Germany by any of
the Western powers would isolate
Adenauer and could force a modi-
fication of Bonn's whole Euro-
pean policy.
NEW SOVIET SEVEN-YEAR PLAN
The theses on the Soviet
Seven-Year Plan (1959-65) pre-
sented by Premier Khrushchev to
a meeting of the party central
committee in Moscow on 12 No-
vember reaffirm the priority
schedule adopted by the leader-
ship during the past several
years.
agricultural goals for 1965,
while still overly ambitious,
are more reasonable than before
and are generally the same as
those projected for 1960 by the
Sixth Five-Year Plan. This ex-
tension of goals is a consider-
able step toward more realistic
agricultural planning.
The proposals show the new
plan to be more realistic than
its predecessor, the abandoned
Sixth Five-Year Plan. The
planned average annual indus-
trial growth rate of 8,7 percent
is believed feasible. The new
Khrushchev claims that with-
in five years after the Seven-
Year Plan period, the USSR will
lead the world in per capita
industrial output. In making
this prediction he apparently
is assuming, as have recent
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CURRENT INTELLIGENCE WEEKLY SUM RY
20 November 1958
articles in Soviet journals,,
that in 1958 Soviet industrial
production will be 50 percent
of that of the United States;
that American industrial produc-
tion will grow at about 2 per-
cent per year, the rate for the
period 1953-57; and that Soviet
industrial growth will proceed
through 1970 at the proposed
rate for the Seven-Year Plan.
Actually Soviet industrial
production will probably be
somewhat less than 40 percent
of American output in 1958.
Furthermore, a longer and per-
haps more representative base
period for the United
States--for example,
1948-56--would show
a rate slightly above
4 percent. Using
this rate and accept-
ing the Soviet sched-
ule for its own in-
dustry, Soviet in-
dustrial production
would be only about
60 percent of that
of the United States
by 1970.
Industry
For the most
part, the industrial
goals presented in
LOWER PLANNED GROWTH RATES
1952 -1958 (ANNUAL AVERAGES) 1959.1965
(ACTUAL) ( PLAN )
11.5 GROSS INDUSTRIAL OUTPUT 8.7
12.2 PRODUCER GOODS 9.3
9.9 CONSUMER GOODS 7.3
15.2
8.5
9.6
8.5
12.2
cases exceed that in the United
States and will provide the
basis for a-major propaganda
campaign.
The new plan anticipates
a shift from coal toward great-
er use of crude oil and natural
gas. These fuels, which pro-
vided less than a third of the
energy consumed in the USSR
this year, will provide more
than half in 1965.
The pig-iron and crude-
steel targets are ambitious, al-
though probably feasible. How-
ever, problems which have har-
SOVIET SEVEN-YEAR PLAN
- CRUDE OIL
COAL
METAL CUTTING TOOLS
STEEL
- ELECTRIC POWER -
-11.0
- 2.6
- 5.4
- 7.0
-11.8
20 NOVEMBER 1958
assed the ferrous metallurgical
industry for the last several
years--inadequate supplies of
iron ore, insufficient produc-
tion of metallurgical equipment,
and unduly long periods for mine
and plant construction--must be
solved if the crude-steel goal
of 86,000,000 to 91,000,000 tons
in 1965 is to be achieved. The
planned increase in the share
of investment going to ferrous
metallurgy confirms the leader-
ship's determination to solve
these problems. While the plan
calls for a lower annual rate
of growth of crude-steel output
Khrushchev's theses confirm that
Soviet industry is scheduled to
grow at a rate below that
achieved in the previous seven
years. Even if the regime hopes
that the presently announced in-
dustrial goals are overfulfilled,
as they were in the past three
years, the 11-percent rate of
growth believed to have been
achieved in the 1950-55 period
will probably not be realized.
The new program,nevertheless,
is an impressive one; by 1965
the output of many basic raw
materials and industrial prod-
ucts will approach and in some
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CURRENT INTELLIGENCE WEEKLY SUMMARY
20 November 1958
than that achieved during the
last seven years, the required
average annual increment to out-
put is 4,500,000 to 5,100,000
tons compared with an annual
3,400,000 over the last seven
years. During the period 1952-
As a whole the output of
the machinery and metalworking
industries is to grow at an
annual rate of about 10 percent,
as compared with over 15 per-
cent claimed during the previous
seven years. Reflecting the
USSR: STRUCTURE OF STATE CAPITAL INVESTMENT,
(Figures in parentheses are estimates)
952
58
Seven-Year Plan
-
1
(1959-65)
Billion
Percent
Billion
Percent
"Productive" Investments
1955
of
1955
of
Rubles
Total
Rubles
Total
Ferrous Metallurgy
42
3.9
100
5.1
Chemical Industry
(28)
2.6
100-105
5.2
011 and Gas
73
6.8
170-173
8.8
Coal
62
5.8
75-80
4.0
Power and Transmission
75
7.0
125-129
6.5
Lumber, Paper, and Wood
Processing
29
2.7
58-60
3.0
Construction and Construction
Materials Industries
62
5.8
110-112
5.7
Light and Food Industries
40
3.7
80-85
4.2
Other Industry, including
Machine Construction, Non-
ferrous Metallurgy, Defense
Industries
(169)
15.8
(282)
14.4
Total Industrial
(580)
54.1
(1,100-1,126)
56.9
State Agriculture*
(125)
11.7
150
7.7
Rail Transport
60
5.6
110-116
5.7
Other "Productive;' including
Other Transport, Communi-
cations, Science, Trade, and
Government
(56)
5.2
(128-122)
6.4
"Nonproductive" Investments
Housing and Communal Projects
208
19.4
375-380
19.3
Education
29
2.7
52
2.7
Culture and Health
14
1.3
25
1.3
TOTAL
1,072
100.0
1,940-1,970
100.0
*Total agriculture investment, including Investment of collect iw fauns, will
be 495 bill ton rubles under the Seven-Year Plan, compared with 260 bill ion
over the last seven years.
58, the capacity of the American
steel industry increased by
about 34,500,000 metric tons
compared with the Soviet out-
put goal for the next . seven
years of 31,000,000 to 34,000,-
000 tons.
emphasis on fuels and
raw materials, however,
the rates of growth
of power-generating,
chemical, and rolling-
mill equipment are
scheduled to increase
substantially.
Production of
metalworking machinery
will increase at half
the previous rate, but
heavy emphasis on spe-
cialized machine tools
will provide a growth
rate for these items
double that for metal-
working machinery as
a whole. The 1965
level of machine tool
production, which is
the same as the origi-
nal 1960 goal, will
provide a surplus for
export.
The share of in-
vestment going to
chemicals is approxi-
mately double that of
the past seven-year
period. Heavy emphasis
is placed on the pro-
duction of artificial
fertilizers and of
synthetic materials.
Fertilizer output is
scheduled to approach
37,000,000 metric tons
annually, well above
current American levels, and may
significantly improve agricul-
tural yields. Fulfillment of
the chemicals plan will depend
in large measure on the success
in developing the petrochemical
industry. This is an area in
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CURRENT INTELLIGENCE WEEKLY SUMMARY
20 November 1958
which the USSR has traditionally
lagged, and achievement of the
target seems improbable unless
substantial assistance in the
form of petrochemical technology
and equipment is procured from
the West.
Despite promises in the
proposed plan that per capita
output of textiles, clothing,
footwear, an' ,-I, food products
will reach or even surpass West-
ern levels by 1965, the output
of consumer goods as a whole
will remain far below Western
levels and will grow more slow-
ly--7.5 percent annually--than
during the past seven years--
9.7 percent. The prospect in
agriculture partly accounts
for this slowdown.
Capital Investment
State capital investment
during 1959-65 is planned to
total 1,940 td 1,970 billion
rubles. When inves tr.e. by the
collective farms--almost 350
b..llion--and other investments
outside the plan are added,
total capital investment may
approximate 2,500 billion rubles
billion if converted at
an :.;vestment rate of 6.5 to 1,
based on 1956 rubles and dol-
lars.
The proposed rate of in-
vestment growth averages 8
percent per year, as compared
with a 10-percent average dur-
ing the last seven years. The
volume of investment in construc-
tion work, which was unusually
high in 1957 and 1958, will in-
crease at a rate lower than 8
percent, while investment in
plant equipment will proceed
at a rate higher than 8 percent.
The ratio of "nonproduc-
tive" investment (housing, com-
munal projects, and social-cul-
tural expenditures) to "produc-
tive" investment remains ap-
proximately the same as in the
preceding period, although the
share of industry will increase
from 54 percent to 56 percent.
Shares will increase for ferrous
metallurgy, chemicals, oil and
gas, and will drop for the coal
industry and the machine con-
struction industries. Over-all
investment in housing and agri-
culture will remain about the
same share of total investment
as in recent years when con-
ic erable emphasis was placed
on their development.
SOVIET SEVEN -YEAR PLAN: PRODUCTION COMPARISONS OF SELECTED ITEMS
STEEL
102
TONSON _~
91
JUSSR(EST) MUSSR(PLAN) E:Jus
CRUDE OIL NATURAL GAS
MILLION 596-609 MILLION B;io;ON
TONS ONS 355 306
GRAIN MEAT
MILLION MI LION
Tn.1 164-180 16
29.5
ELECTRIC POWER
BILLION 760
KILOWATT-
HOURS
MOTOR VEHICLES REFRIGERATORS
UNITS OUSAND 7221 THOUSAND 3350
TH
r1 UNITS r5
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CURRENT INTELLIGENCE WEEKLY SUU EY
20 November 1958
The proposed plan calls
for an increase of about 11,-
500,000 in the number of work-
ers and employees,in the Soviet
economy, bringing the total in
1965 to over 66,000,000. Dur-
ing the past seven years the
number of workers and employees
increased by 13,900,000. Popu-
lation growth and a continua-
tion of past school programs
would provide an increase of
about 7,000,000 men in the total
civilian labor force over the
next seven years, compared with
an increase of 9,800;000 during
the last seven years.
The regime is heavily com-
mitted to a promise to reduce
hours of work and has reaffirmed
such an intention in its Seven-
Year Plan announcement. Recent
and prospective changes in the
educational system are in part
designed to free additional
young people for employment in
industry. The net effects of
these changes are as yet un-
clear, but they will probably
provide an additional ..1,000,
000 workers and perhaps more to
the labor force.
This implies that :,some
transfer of workers, possibly
as many as 3,000,000, from agri-
culture to nonagriculture will
take place. One of the aims
of present programs in agricul-
ture is clearly to increase
productivity in this area so as
to permit the release of workers
to industry. The regime may
also find it expedient to re-
duce further the size of the
armed forces.
Agriculture
The plan for agriculture,
which calls for lower rates of
growth than those of the Sixth
Five-Year Plan, calls for in-
creases in production which gen-
erally will be difficult or
impossible to achieve--assuming
average weather conditions--
under the agricultural programs
adopted to date. The major new-
lands expansion has been com-
pleted and much of the gain pos-
sible from the corn program has
been achieved. Incentive meas-
ures and organizational changes
may have some further effect on
output, but not of the magnitude
of the new-lands and corn pro-
grams.
Khrushchev's theses suggest
that the Soviet leaders may have
further agricultural programs
in mind, particularly with re-
spect to increasing yields.
Khrushchev referred, for example,
to the "better utilization of
the highly fertile lands in the
zone of reliable and stable rain-
fall." Taken together With
planned high investment and the
very large planned increase in
the output of mineral ferti-
lizers, this statement suggests
that new programs may be con-
templated for the European USSR.
Even though the performance
in agriculture will probably
fall short of plan, some in-
crease in consumption of high-
protein foods will be possible.
Nevertheless, in terms of both
consumer goods output and pro-
spective increases in real wages,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
the Soviet citizen will experi-
ence a slower rate of improve-
ment through 1965 than in the
preceding seven years. The out-
put of light industry--textiles,
clothing, and footwear--is to
increase at an annual rate of
6 percent for the next seven
years in contrast with an 8.7-
percent increase claimed for
1952-58, and quality will re-
main below American standards.
probably has underestimated the
investment resources required
for housing construction as it
did in the Fifth and Sixth Five-
Year Plans. Underestimation--
believed to be at least 15 per-
cent--could necessitate either
a reduction of the housing goal
or an increase in investment
in this area.
Transport
Although large percentage
increases are planned in the
production of durable consumer
goods, especially household ap-
pliances, the output of most
such items at present is so low
that 1965 production will still
be far below that of the United
States both on an absolute and
a per capita basis.
The brightest outlook for
the consumer lies in housing,
where the volume of urban
housing construction is sched-
uled to nearly double that
achieved during 1952-58. This
goal is aimed at providing a
minimum of 100 square feet of
living space per person by 1970,
still below Western European
levels. The regime, however,
Railroad transport continues
to be emphasized in the USSR,
and in 1965 Soviet railroads
will still move over 80 percent
of intercity freight. The am-
bitious program of electrifica-
tion and dieselization will con-
tinue. Although the Soviet
civil air fleet continues to be
publicized and the new civil
air plans include the construc-
tion and improvement of 90 air-
fields, presumably to accommo-
date jet aircraft, the planned
target for passengers carried
for 1965 is only about one third
as great as the number Ameri-
can airlines may be expected to
carry that year. Motor vehicle
transport will remain at a low
level as will water transport.
Prepared by ORR)
25X1
The military coup staged
under the leadership of Lieu-
tenant General Ibrahim Abboud
has encountered no opposition.
ou - 25X1
Fthe South-----
ern u an, ra a tonally sus-
picious of domination by Moslem
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CURRENT INTELLIGENCE WEEKLY SUMMARY
20 November 1958
northerners and the scene of a
rebellion three years ago, is
normally slow to react. While
the regime has included one
southern representative among
the five civilians in the new
cabinet, the southerners may
well feel they have lost influ-
ence by the abolition of the
parliament in which they often
swung the balance.
The structure of the gov-
ernment now has been outlined.
It consists of two bodies: a
13-man supreme council and a
12-member cabinet. The seven
most senior army officers are
members of both bodies. Abboud
himself is head of the supreme
council, prime minister, and
FR. EQ
AFRICA
UAR
(EGYPT
minister of defense. The mem-
bership of the council is round-
ed out with other army officers,
and the cabinet was completed
with the appointment of five
civilian "technicians."
General Abboud justified
the coup by claiming the gov-
ernment needed to be purged of
self-seeking politicians.
Members of former Prime Minister
Khalil's Umma party, and the
Ansar sect's leader al-Mahdi,
publicly indicated support for
the new regime
They nonetheless are hoping for
the best in the belief that
Abboud and his associates are
"loyal Sudanese" first.
There is no indication
that the UAR played a role in
the coup,
One of Abboud's first statements,
however, promised that the new
regime would seek to improve
relations between the Sudan and
"sister UAR.'"
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sW
CURRENT INTELLIGENCE WEEKLY SUMMARY
20 November 1958
NOTES AND COMMENTS
SOVIET TACTICS IN GENEVA NEGOTIATIONS
Both Geneva conferences
remain deadlocked over agenda
issues. At the ninth meeting
of the conference on a nuclear
test cessation agreement, Soviet
representative Tsarapkin intro-
duced a second revision of his
draft agenda. Essentially the
same as the draft presented on
11 November, the new proposal
calls for agreement by the dele-
gations to prepare two documents,
one a treaty to stop tests and
the other a "protocol" on a con-
trol system. The Soviet dele-
gation has evaded the question
of the precise relationship be-
tween these documents.
The USSR's insistence that
an agreement on test cessation
and the provisions of a control
system be embodied in separate
documents reflects Moscow's
principal aims in the Geneva
talks. First, the USSR appar-
ently believes this approach
will facilitate its efforts to
sharpen the contrast between
its demand for a permanent and
unconditional cessation and the
Western proposals for a condi-
tional suspension stressing the
necessity of prior agreement
on a control system. Moscow
is maneuvering to place itself
in the strongest possible posi-
tion so that in the event of a
breakoff, it can charge that
Western insistence on the pri-
ority of the control issue is
an artificial device to evade
an agreement to end testing.
The Soviet demand for two
separate documents also is in-
tended as a safeguard against
any unexpected Western conces-
sions which would seriously em-
barrass the Soviet leaders.
Moscow has shown considerable
caution on the nuclear test is-
sue since the United States and
Britain proposed a conditional
one-year suspension last August.
The Soviet leaders recognized
this proposal as a major chal-
lenge to their whole strategy.
The refusal of the Soviet
delegate to discuss controls
until a basic agreement on a
permanent cessation of tests
has been reached is a reversion
to the position taken by Moscow
prior to its agreement last May
to attend the Geneva talks on
test detection which held that
negotiations on the control of
any aspect of disarmament could
come only after agreements have
been concluded in principle.
The USSR's performance in
Geneva to date suggests that
its fundamental aim there,as
at last year's London subcom-
mittee talks, is to force a
clear-cut showdown with the
West on the issue of an uncon-
ditional test ban separate from
all other aspects of disarmament.
The Soviet attack continues to
be aimed at what Moscow consid-
ers the most vulnerable points
of the Western position--making
a test cessation conditional on
the implementation of other
measures such as a control sys-
tem, limitation and reduction
of production of fissionable
materials for weapons purposes,
and reduction of conventional
armed forces.
The Soviet news agency
TASS on 15 November carried the
full text of the original five-
part Soviet draft agreement
calling for cessation of tests,
with only vague language on a
control system. Despite this
violation of the agreement to
keep the talks secret, Moscow
~Nmftpr
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CURRENT ' INTELLIGENCE ; WEEKLY SUMMARY
20 November 1958
has not indicated any desire
to break off negotiations.
Surprise Attack
The Soviet delegation at
the talks on measures to pre-
vent surprise attack continues
its efforts to focus debate on
broad political issues. In the
17 November meeting Kuznetsov
reasserted Soviet objections to
the Western working paper, again
charging the West with inten-
tions of using any inspection
system for intelligence gather-
ing.
Kuznetsov reiterated past
Soviet charges against United
States SAC bomber flights in
the direction of frontiers of
other states. He introduced a
draft proposal recommending
that the participating govern-
ments prohibit flights of air-
craft carrying nuclear weapons
over the territories of other
countries and over open seas.
The draft declares this practice
increases the danger of surprise
attack.
Both on 17 and 18 November
the Communist delegation in
sited that any joint communiqud
include a reference to the So-
viet proposal. Kuznetsov threat-
ened that if no agreement were
reached, each side would have
to publish its own version.
Both sides have made conces-
sions on the communiqud but
this wrangling may develop into
an almost daily problem.
It seems likely that after
the subject of aircraft flights
is exhausted, the Communists
will give similar treatment
to other standard Soviet pro-
posals, such as elimination
of foreign bases, banning of
nuclear tests, and reduc-
tion of armed forces. Thus,
Moscow has begun its battle
to present proposals of a
political nature to blur the
focus of the talks, there-
by avoiding serious dis-
cussion and conclusions on
the practical aspects of
an inspection system.
SOVIET CENTRAL COMMITTEE PLENUMS
Khrushchev's firm control
over the Soviet party and state
was again forcefully demon-
strated at the 12 November cen-
tral committee plenum which
approved his draft Seven-Year
Plan and his reforms of the
educational system. In his
speech to the plenum, Khru-
shchev for the first time
branded Bulganin a member of
the "antiparty group." This
came almost 18 months after the
group's original members---Ma len-
kov, Molotov, Kaganovich, and
Shepilov =had been demoted and
banished, and at a time when
Bulganin was no longer a polit-
ical factor. Khrushchev's
castigation of the former pre-
mier is probably his way of re-
emphasizing, as he launches a
vast new economic plan, the
hazards of foot-dragging and
"conservatism."
There also seemed to be
overtones of political revenge,
however. On 17 November Pravda
claimed that the "antiparty-
group," including Bulganin, had
tried to delay the development
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CURRENT INTELLIGENCE WEEKLY SUMMARY
20 November 1958
of the Soviet state and to
steer it away from the "Lenin-
ist path" adopted at the 20th
party congress in 1956. A day
later, Western press sources
reported from Moscow that Bul-
ganin had been removed from the
chairmanship of the economic
council in Stavropol Kray, a
minor post to which he was rele-
gated last August. If this
report is true, Bulganin has
probably already lost his mem-
bership on the central committee,
his last remaining party post.
The other members of the "anti-
party group" were deprived of
central committee seats at the
time of their ouster from the
party presidium.
The announcement that pre-
sidium member Nikolay Belyayev
has been removed from the party
secretariat regularizes a situa-
tion which has apparently exist-
ed since December 1957, when he
was transferred from Moscow to
become first secretary in
Kazakhstan. It now appears
that Belyayev was sent by the
Kremlin to central Asia on a
trouble-shooting mission; his
successes, particularly in ag-
riculture, were probably major
factors in the decision to as-
sign him permanently to his
position.
While the announcement
does not appear to presage any
further change in Belyayev's
status, its timing suggests that
Khrushchev has begun the politi-
cal maneuvering which inevitably
precedes a party congress and
may even be the first hint of
impending personnel changes.
Another central committee
plenum is scheduled to meet next
month to discuss agriculture.
This meeting will probably set
the line for the forthcoming
all-union collective farm con-
gress--the first since 1935.
Problems of collective and state
farm organization may be on
the agenda, and a program to
increase yields in the tradi-
tional Soviet farming areas may
also be initiated.
mittee secretary to fill the
vacancy caused by Belyayev's
The December meeting may
also consider other matters.
While there are as yet no hints
as to what other subjects might
be discussed, any last-minute
changes in the program to be
presented to the party congress
would likely be made at this
time. Bulganin's removal from
the central committee might be
announced; less likely, although
still a possibility, is the ap-
pointment of a new central com-
transfer.
Except for minor variations,
the report on the planned reor-
ganization of the Soviet educa-
tional system published on 16
November follows the lines laid
down by Khrushchev in his memo-
randum of 21 September. After
a "nationwide discussion," the
proposals will be adopted by the
Supreme Soviet, probably early
next year. The change-over to
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NOTES AND COMMENTS
Page 3 of 17
the new system will begin with
the 1959-1960 school year and
will be completed in four to
five years.
It will be 10 months from
the time Khrushchev proposed the
scheme last March to the probable
time of its adoption early in
1959. This lengthy discussion
period is in sharp contrast to
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CURRENT INTELLIGENCE WEEKLY SUMMARY
the brief discussion periods
allowed for Khrushchev's other
major reorganizations.
Ambassador Thompson in Mos-
cow is inclined to believe that
the adoption of these changes
is likely to engender more op-
position to Khrushchev person-
ally than any other step he has
so far undertaken since his as-
sumption of power. Thompson
comments, however, that this op-
position is likely to be inef-
fective, since it will be large-
ly confined to some factory
managers, intellectuals, and
members of the bureaucratic
elite, while the changes will
be supported by a large propor-
tion of the masses as well as
by the party.
The distaste many secondiw:ryr-
school graduates feel for physi-
cal labor is again cited in the
theses: as evidence of the in-
adequacies of the existing school
system. The Soviet public is
reminded it is a "very far-
reaching error" to believe that
automation will mean the end of
manual labor, or that Communism
will mean "a gentleman's life
in which laziness and idleness
reign." The need for physical
labor will remain regardless of
the degree of progress achieved.
The theses add another reason
for the reorganization, hereto-
fore only hinted at--the "in-
creasing difficulties" in find-
ing jobs for secondary-school
graduates and the resultant dis-
satisfaction among a considerable
number of young people and their
parents.
The theses outline the
changes in greater detail. For
most 15-'to 16-year-olds, com-
pulsory eight-year schooling is
to be followed by "socially use-
ful work in production." How-
ever, those with the will and
stamina can continue their edu-
cation in evening or correspond-
ence courses. Shorter workdays
or days off during the workweek
are proposed for those students
who can successfully combine
work and study. The special
schools for children gifted in
music, choreography, and the
visual arts are to be retained,
and similar schools are being
considered for gifted students
of mathematics, physics, chemis-
try, and biology. Graduates of
these special schools are to
go directly into appropriate
higher educational institutions
without being detoured into
production work.
Both polytechnical schools
and boarding schools are also
to be retained. The latter,
established only recently, re-
ceived especially high praise
in the theses, being described
as creating "the most favorable
conditions for the education and
Communist upbringing of the ris-
ing generation."
Higher educational institu-
tions receive greater attention
in the theses than Khrushchev
gave them in his September memo-
randum. Despite the emphasis on
"productive work," universities
are called on to increase "con-
siderably" in the next few years
the number of graduates in
mathematics, biology, biophysics,
biochemistry, physiology, genet-
ics, chemistry, and physics.
The number of well-qualified
graduates in these fields will
not be permitted to be lowered.
Not only are the students
of higher institutions to devote
time to production work, but it
is recommended that qualified
professionals in industry and
agriculture be released part time
from their jobs to teach, while
teachers are periodically to
leave their teaching to work in
"the national economy." Col-
lective farms are urged to al-
locate funds for the education
of their youth in vocational
schools; sovnarkhozy, fac-
tories, and other organiza-
tions are directed to allo-
cate paid posts for working
students.
(Concurred in by OSI)
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CURRENT INTELLIGENCE WEEKLY SUMMARY
20 November 1958
POLAND'S POSITION WITHIN THE SOVIET BLOC
Polish party leader Gomul-
ka's statements during his visit
to the USSR from 24 October to
12 November convey the impres-
sion that he and Khrushchev
reached complete understanding
of each ':other"s.. pbesitions.
Gomulka apparently has no in-
tention at this time, however,
of changing those ushocts of
his internal policies which set
Poland apart from the other
satellites. He reportedly re-
marked prior to his departure
for Moscow that the major aim
of his trip was to allay Soviet
suspicions of the Polish "road
to socialism."
Gomulka appears to have
made a serious effort to accom-
modate himself to'Khrushchev's
foreign and ideological poli-
cies, but at the same time he
apparently convinced Khrushchev
of the need to tolerate, if not
approve, Poland's internal pro-
gram. Gomulka made no public
concessions on basic aspects of
his domestic plans. Although
little was said about economic
aid, Khrushchev may have held
out the prospect of increased
assistance for Poland if Gomul-
ka would adopt a line more em-
phatically in opposition to the
West and in accord with Moscow.
During the trip, Gomulka
repeatedly stressed that the
unity of the Soviet bloc and the
fraternal relations with the
USSR are the bases of Polish
policy. His speeches exhibited
an anti-American and anti - West
German attitude which exceeded
in bitterness anything he had
said before. In contrast to
the many "peace.' initiatives" of
the USSR and the "socialist
camp," Gomulka alleged that
there was danger in the "ag
gressive tendencies of interna-
tional imperialist circles,"
particularly the United States.
In addition, he specifically
endorsed I'~hrushchev's position
on e %.i_sing the status of Berlin.
SECRET
Taking a very tough line
toward West Germany--which
until quite recently was con-
sidering the establishment of
closer relations with Poland--
Gomulka vehemently assailed
Bonn's "militaristic and re-
vanchist" policies. He clearly
reflected Polish fear of Ger-
many in warning that any at-
tempt to alter Poland's west-
ern border would threaten the
peace of Europe and the entire
world. Poland now has in the
Soviet Union "an infallible
friend and ally" against West-
ern aggression, Gomulka as-
serted. In the same vein, the
Polish first secretary condemned
American Far Eastern policy and
charged the United States with
armed interference in Chinese
internal affairs.
Gomulka also took a strong
line in support of Khrushchev's
position on Yugoslavia, terming
Belgrade's present course "re-
visionist." While admitting
the possibility that Yugoslavia
might some day abandon itopr.es-
ent 'I.falce road" and again take
its place in the family of
"socialist",.countries, he
stressed that the initiative
for change must come from Bel-
grade.
Reacting sharply to Gomul-
ka's attack, Belgrade's Borba .
charged that the Poles have as-
sumed the role of a "distin-
guished fighter against Yugo-
slav revisionism." The Yugo-
slavs::undoubtedly see Gomulka's.
behavior in Moscow as a seri-
ous blow to the-effort to main-
tain some-.influence in the bloc.
While Belgrade's relations with
Warsaw are not likely to sink
in ;,the near future to the.
level of its relations with
the rest of the bloc, Yixgoslav
disenchantment with Gomulka,
which began with his entry in- 25X1
to the anti-Yugoslav -:cam-
paign in June, is now virtually
complete.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
20 November 1958
SOVIET-IRANIAN RELATIONS
Relations between the USSR
and Iran, which cooled notice-
ably after the coup in Iraq on
14 July, have recently deterio-
rated further as a result of
Moscow's efforts to forestall
the conclusion, or at least to
limit the scope, of an Iranian-
American defense agreement.
Moscow, increasingly displeased
with Iranian policies, appears
ready to switch from its three-
year "friendship" policy to
open hostility to the present
regime.
Premier Khrushchev's at-
tacks on Iran in two speeches
this month indicated Soviet dis-
pleasure over Tehran's rejection
on 8 November of the allegations
contained in Moscow's 31 October
note on the defense agreement.
Speaking on 10 November at the
Soviet-Polish friendship meet-
ing in Moscow, Khrushchev warned
Iran that by placing its terri-
tory at the disposal of an "ag-
gressor group," it "virtually"
committed an ..L aggressive act
against the USSR. The 31 Octo-
ber note had warned Iran against
"courting misfortune" and, using
a now-standard formula, stated
that the USSR "will not remain
indifferent to the conclusion of
an American-Iranian military
agreement which will place the
southern frontiers of the Soviet
Union in direct danger."
On 14 November, in a speech
to Soviet military academy
graduates, Khrushchev launched
a thinly veiled attack on the
Shah of Iran, alleging that
"kings and rulers" of countries
in partnership with the West
"have begun to tremble; it is
not Communism that frightens
them, nor the Soviet Union, but
their own people." Khrushchev's
remarks appear to augur a great-
er degree of open Soviet encour-
agement of activity against
the Shah.
Since initiating its
"friendship" campaign toward
Iran early in 1956, Moscow has
occasionally criticized Iranian
policies but has persistently
courted the Shah. In July 1958,
however, after Soviet-Iranian
relations became cool, an East
German radio station began to
beam to Iran anti-Shah broad-
casts favoring the outlawed
Tudeh (Communist) party. Recent
Communist overtures to the Kurds,
a substantial number of whom
live in northwestern Iran, have
also heightened psychological
pressures on the Shah.
The departure from Tehran
of Soviet Ambassador Pegov, who
left to attend the 12 November
central committee, plenum was
Tepiresented locally as being ,'a
sign of Soviet dis leasure with
Iranian policies.
Moscow's war of nerves
against Iran may be broadened
to include a propaganda campaign
inciting domestic fears of Soviet
atomic reprisals, similar to
those campaigns carried out
against NATO countries a year
ago. Khrushchev, in his 14
November speech, warned that one
can "press a button and whole
cities will be blown sky-high;
whole countries can be de-
stroyed."
Moscow claimed that Secre-
tary McElroy's visit to Tehran
was linked with American plans
to establish bases,, in Iran from
which an atomic attack could be
launched on the USSR. The Soviet
effort to increase economic
ties with Tehran has been stalled
by lgck of Iranian i interest ,'
in Soviet economic assistance
overtures and by Iranian
failure to implement economic
agreements already concluded.
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20 November 1958
Recently published details
for the first stage of the UAR's
Aswan High Darn project indicate
that it should produce on its
scheduled completion in four
years a substantial portion of
the benefits to be derived from
the entire 12-year project.
Soviet aid will cover virtually
all of the foreign exchange
costs--$100,000,000 of a total
of about $116,640,000--of the
first construction phase of
the project. Completion of
this phase will result in an
addition to Egyptian agriculture
of up to a million acres of
perenn.ly irrigated land and
al
the conversion of about 700,000
acres from flood to perennial
irrigation. The first phase,
however, will not provide for
ASWAN HIGH DAM CROSS SECTION
'IGURES IN FEET
storage from year to year, and
a large portion of the newly
irrigated areas would be with-
out adequate water in years of
low Nile flood.
While the first phase will
result in a small addition to
electric power generated by the
existing Aswan Dam, the major
power increases will not come
about until the High Darn itself
is complete. In the first phase,
two cofferdams will be built--
one upstream and one downstream
--close to the construction
site of the main dam--and seven
diversion tunnels will be con-
structed. Both cofferdams will
ultimately be incorporated in
the High Dam proper. The up-
stream cofferdam will hold back
about eight billion cubic meters
of water--the existing Aswan
Dam stores 5.3 billion cubic
meters of water. Ultimately
the. High Dam will hold 130
billion cubic meters--three
times the volume of the Hoover
Dam's Lake Meade--and create
a reservoir about 340 miles
long. The last 100 miles of
this reservoir would extend
into the Sudan, making rela-
tively urgent a settlement of
the UAR-Sudanese dispute over
the distribution of Nile waters
and compensation for the flooded
area.
25X1
ported in southern Egypt t
study the project. F
By constructing the first
phase, which will yield the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
greatest impact the soonest,
Moscow will receive the maximum
propaganda, regardless of who
finances the High Dam proper.
The area newly irrigated by this
phase should provide farm land
for up to 150,000 new landowning
families-totaling over a mil-
lion persons-under the Cairo gov-
ernment's land-distribution
schemes. This would be a third
more than the total acreage
distributed under Nasir's`
widely propagandized land-reform
program instituted in 1952.
UN DEBATE ON CYPRUS QUESTION
In the UN General Assembly
debate on Cyprus, scheduled to
begin around 24 November, Greece
will seek passage of a resolu-
tion guaranteeing independence
for Cyprus without a specified
time limit. Greek Foreign Min-
ister Averoff stated on 15 No-
vember that if the UN endorsed--
however vaguely--this principle,
Athens would anticipate renewed
discussions in NATO in December.
Greece seems confident of ob-
taining majority support for
its proposal if the United
States does not actively oppose
it either in meetings or "in the
corridors."
Britain hopes a compromise
resolution develops which would
set the stage for a conference
among interested parties. It
plans to initiate a strong
draft proposal of its own,
calling for an end to terror-
ism and endorsing its recent
efforts toward a resolution.
By introducing a strong resolu-
tion at the outset of debate,
London hopes to generate sup-
port for a compromise which
would merely have the United
Nations endorse a conference.
Turkey is publicly com-
mitted to the partition idea.
Ankara is adamant in its oppo-
sition to the independence con-
cept because it suspects that
in Greek strategy "independence"
is a mere guise for eventual
union of Cyprus with Greece.
Moreover, Turkish Cypriots pro-
fess to fear that their minority
rights would not be recognized
in an "independent" Cyprus.
Since this is Greece's
fifth attempt to obtain a defini-
tive UN statement on the future
of Cyprus, some UN members be-
lieve further debates on the
subject in the United Nations
would only "prolong the agony,
stir up more hatred, promote
violence, and, if left to con-
tinue as at present, come no
closer to solution." Some UN
members, particularly other NATO
members, feel a solution might
be achieved if some country, un-
committed to any of the three
and important enough to be able
to push the three parties to an
agreement, now "took a firm
hand." German Chancellor Ade-
nauer has been suggested as a
moderator, particularly after
his November talks in Bonn with
Greek Prime Minister Karamanlis
at which Cyprus was reportedly dis-
cussed. On the island,despite re-
cent successes by the security 25X1
violence may occur
forces against EOKA increased
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President Bourguiba's dec-
laration of 13 November that he
had sought arms from Czechoslo-
vakia, Yugoslavia, and Sweden
apparently was a tactical ma-
neuver designed to demonstrate
his freedom from Western domina-
tion and to express his personal
irritation over press reports
that France had been consulted
on the Anglo-American sale of
weapons.
Nevertheless, Bourguiba's
irritation may be the beginning
of a drift by Tunisia away from
the West and at least a nod to-
ward the Soviet bloc, because
it will strengthen those advis-
ers who have long urged that he
abandon his pro-Western orienta-
tion for a policy of noncommit-
ment. Bourguiba prefers Western
arms--primarily American--and
standardized military equipment,
but he probably will make at
least some purchases from other
sources. Bourguiba told a news
correspondent that he has al-
ready approached the Yugoslav
and Czech governments for arms.
Although Tunisia has a favorable
balance amounting to $300,000
in its trade with Yugoslavia,
the Yugoslav chargd claims his
government would not be interest-
ed in selling arms to the Tuni-
sians.
Last May, Tunisia sought
to buy light weapons from the
United States for four battal-
ions--4,800 men. The Tunisian
Army, equipped mainly with
weapons airlifted by Britain
and the United States a year
ago, is estimated at 4,300 men,
about a third the 12,500 which
Defense Secretary Ladgham
claimed in September. Bour-
guiba declared publicly on 13
November
that his 25X1
immediate goal is an army of
20,000 men--a figure which
Ladgham implied was a long-
term objective.
Bourguiba considers the
equipping and training of a
sizable army loyal to him
essential both for prestige
purposes and to counter the
threat to Tunisian security
implicit in the presence in
western Tunisia of several
thousand well-armed Algerian
Since the coup in the
Sudan, however, Bourguiba is
convinced that an even greater
menace may be developing on
the Libyan frontier, where UAR
agents cross to contact dis-
25X1
25X1
gruntled Tunisians and Algerian
rebel elements.
With the approach of the
23 November first round of
French ,parliamentary elections,
practically all the non-Com-
munist parties have pro-
claimed support for De Gaulle.
There are few indications of
how voter sentiment will
crystallize in the week pre-
ceding the decisive 30 November
runoff. Key party leaders are
watching the electoral situation
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CURRENT INTELLIGENCE WEEKLY SUMMARY
in Algeria, where the failure
of liberal European and nation-
alist Moslem candidates to file
could result in the election of
a rightist-oriented bloc. hold-
ing the balance in the next
National Assembly.
The campaigning has aroused
little public enthusiasm, but
heavy registration of new voters
suggests that the voter turnout
may still approach the normal
level of over 80 percent. Al-
though the strength of the new
Gaullist groups--particularly
Information Minister Soustelle's
Union for the New Republic--
cannot be closely predicted,
most of the responsible French
political commentators foresee
the Socialist and rightist
Independent parties mainly
benefiting from the elections,
and the Communist party as the
primary loser. Guy Mollet has
reportedly said that De Gaulle
hopes for a large Socialist
group in the assembly, pre-
sumably to facilitate "arbitra-
tion" by the first President
of the Fifth Republic. Should
the 71 deputies to be elected
in the Algerian and Saharan elec-
tions from 28 to 30 November
The stability of the Ital-
ian Government is increasingly
threatened by opposition from
the right wing of Premier Fan-
fani's Christian Democratic
party and growing restiveness
in two of the minor center
parties on which his coalition
depends. The possibility of
new parliamentary support from
the autonomists in the Nenni
Socialist party--those advocat-
ing greater independence from
the Italian Communist party--
was raised by the increased
strength shown by this faction
following the 1958 national
prove predominantly rightist,
however, the left-right balance
might be seriously upset.
Guy Mollet also said he is
receiving campaign funds from
elements of the powerful and
highly conservative Patronat
(employers' association) which
reportedly feels that a power-
ful Socialist bloc in the
assembly would facilitate an
early solution of the economi-
cally costly Algerian war.
Mollet is nevertheless reported
"very worried" over the politi-
cal make-up of the Algerian
candidates, particularly at
the absence of any who differ
from the army-settler line
that the only possible Algerian
solution is the integration of
Algeria into France.
Independent leader Roger
Duchet, however, is reported
pleased with the prospect that
most, if not all, the Algerian
deputies will vote with the
right. He says his party is
taking measures to keep the
new Moslem deputies, on their
arrival in Paris, from "getting
lost in shady hotels and coming
under bad influences." P
elections. This prospect is
now jeopardized by the campaign
of the pro-Communist wing to
gain control in the January
party congress.
A public squabble in the
Christian Democratic party has
arisen over the recent formation
of a new regional government in
Sicily by a renegade Christian
Democrat, Silvio Milazzo, with
the support of both Communists
and neo-Fascists. Following
Milazzo's refusal to disband
this coalition, Fanfani, as
secretary general of the party,
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20 November 1958
announced Milazzo's expulsion.
Thus far the Milazzo government
remains in power, and Fanfani's
left-wing party supporters are
urging him to avoid similar
measures against Milazzo's.'
Christian Democratic colleagues
pending regional elections in
June. Despite the recent vote
of confidence in Fanfani by
the Christian Democratic Na-
ITALIAN PARLIAMENT
^' ^-- COMMUNITY MOVEMENT
CURRENT INTELLIGENCE WEEKLY SUMMARY
596 SEATS
'GOVERNMENT MAJORITY DEPENDS ON PRI ABSTENTION
81119
are apprehensive lest the Jan-
uary congress of the Nenni So-
cialist party permit Fanfani to
accomplish reform legislation
in Parliament by providing him
with either additional votes
or reliable abstentions on key
issues. This Socialist con-
gress may see a showdown be-
tween Nonni and his pro-Commu-
nist opponents on the issue of
Socialist cooperation
with the Communist
party or support for
Fanfani's center-left
government.
14-POPULAR MONARCHISTS(PMP)
NEO-FASCISTS(MSI)
tional Council, his government
remains in jeopardy. The Si-
cilian revolt is believed to
have been engineered by such
right-wing leaders as Mario
Scelba and Don Sturzo. In the
national Parliament, several
Christian Democratic deputies
voted against the government in
recent secret ballots.
Like the Communists, the
right-wing Christian Democrats
An additional
threat .to Fanfani
has arisen in some
strengthening of the
groups within, the
Democratic Socialist
party which opposes
the party's continu-
ance in a Christian
Democratic government.
is also increasing pres-
sure within the Republican
party to decide at its
November congress not to
join the government. It will
probably continue to abstain,
however, on critical votes
where it could bring Fanfani
down. Both parties are likely
awaiting the results of
the Nonni Socialist con ress.
BRITISH-ICELANDIC FISHING DISPUTE RENEWED
Public anger in Iceland
over a new trawler incident on
12 November has wiped out for
the time being any progress
which may have been made toward
a settlement of the British-
Icelandic dispute over Iceland's
attempt to enforce a 12-mile
fishing limit.
The incident, which Ice-
landic Prime Minister Jonasson
describes as the most serious
since the dispute began two and
a half months ago, involved a
British trawler which the Ice-
landers allege was within three
miles of the coast. The trawler
was apprehended by an Icelandic
coast guard vessel, but was sub-
sequently "rescued" by a
British frigate, which report-
edly threatened to sink the
policing Icelandic gunboat if
it repeated warning shots at
the trawler.
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CURRENT INTELLIGENCE WEEKLY =SUMMARY
20 November 1958
Prior to the incident,,Ice-
landic Government officials had
hinted they might accept a rul-
ing of the International Court
of Justice on the question, and
had abandoned their efforts to
seek a substantive decision in
the UN General Assembly. This
incident will, however, cause
the government to adopt a more
unyielding attitude and post-
pone any further moves toward
a compromise solution. Ice-
land has sent a strong protest
to Britain, is considering re-
questing a top-level NATO con-
ference on the dispute, and may
refer the incident to the UN
Security Council.
The Communists, who are
determined to prevent an amic-
able settlement of the issue
in order to maintain tension
between Iceland and its NATO
allies, have demanded that Ice-
land withdraw its ambassador
from London and place formal
charges against Britain in the
UN. The Labor Alliance (Com-
munist) is able to exert con-
siderable influence in the gov-
ernment through its two cabinet
posts, which include the Fish-
eries Ministry.
There is some danger, how-
ever, that all the parties will
be tempted to curry public opin-
ion by advocating extreme meas-
ures and an inflexible negotiat-
ing position in the dispute.
Confronted by serious economic
problems and uncertainty regard-
ing the outcome of the struggle
between the Communist and non-
Communist factions in the im-
pending Icelandic Federation of
Labor (IFL) congress, the gov-
ernment parties may use the
recent incident to distract
public attention from the grave
domestic economic problems
facing the country.
Many Icelanders continue
to expect the. United States to
take the initiative to break
the deadlock with Britain,
but are themselves unwilling
to consider any compromise
which does not recognize the
legality of the 12-mile fishing
limit which Iceland began en-
forcing on 1 September. A
continuation of the deadlock
increases the risk of their
resentment being turned to-
ward the United States and NATO
as well, with the possibil-
ity of renewed agitation for
the withdrawal of American
forces from the NATO base
at Keflavik.
MALAYA PLANS TO CLOSE COMMUNIST BANK OF CHINA BRANCHES
The government of the Fed-
eration of Malaya plans to in-
troduce banking legislation at
the December meeting of the
legislative council which will
make it virtually impossible
for Malaya's two branches of
the Communist-controlled Bank
of China to operate. This step
is designed to isolate Malaya's
large Chinese minority from
Peiping's influence and to cur-
tail Communist economic penetra-
tion of the federation. It will
be the strongest yet taken in
the government's antisubversive
campaign. Passage of the leg-
islation is virtually.certain.
The Bank of China will be
the only institution affected
by the legislation, which will
outlaw all banks controlled by
foreign states. The law will
probably allow the bank six
months to terminate its business.
The government is anxious for
the action to be interpreted as
legislation regulating banking
and not as anyanti-Communist
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' 'SECRET` '
CURRENT INTELLIGENCE WEEKLY SAY
move, probably because it has
no firm evidence of subversive
activities.
The Bank of China, Pei-
ping's only official institu-
tional front in Malaya, has ap-
parently sought to avoid giving
the government any pretext for
moving against it. Peiping is
expected to protest strongly in
propaganda and perhaps formally
through British channels.
Closing of the Malayan
branches will hamper, but not
stifle, Chinese economic activ-
ities in Malaya, since more
than two thirds of Sino-Malayan
trade is handled outside Malaya
by the Singapore branch of the
Bank of China. The action,
however, is likely to increase
Malay-Chinese racial tensions
and may undermine the Malayan
Chinese Association (MCA), the
Chinese element in the ruling
Alliance party. MCA identifi-
cation with this and other "anti-
Chinese" government policies
may hurt the party in predomi-
nantly Chinese districts in the
general elections next August.
Any substantial weakening of
the already shaky MCA could
seriously endanger the princi-
ple of Chinese-Malay political
cooperation on which political
stability in Malaya depends.
The government's action is
apparently timed to avoid up-
setting the Chinese community
until after the holding of sev-
eral key municipal elections on
6 December. Thereafter, the
government probably hopes to
placate the Chinese prior to
the general elections in Au-
gust. It is not yet known wheth-
er rumors concerning the gov-
ernment's forthcoming action
have acquired enough credence
in the Chinese community to
hurt the Alliance party in De-
cember.
INDONESIAN ARMY EXPANDING ROLE IN GOVERNMENT
The Indonesian Army is
planning to expand its role in
government by placing more army
personnel :'.in key executive,
legislative, and diplomatic
posts.
expected to react to the pros-
pect of increased army power by
intensifying their efforts to
undermine Nasution and arouse
popular resentment against the
army.
Both Nasution and Djuanda,
apparently anticipating charges
of an army coup, have empha-
sized publicly that there is
complete understanding and co-
operation between military and
civilian officials under pres-
ent martial law, and they deny
that a military dictatorship
is imminent. Djuanda said that
lack of such military-civilian
understanding had led to army
coups in neighboring countries.
Nasution, in an address on 10
November, asserted that Presi-
dent Sukarno approved all ac-
tions taken by the military.
The Indonesian Army has
operated under emergency powers
since March 1957 and during
this period has gradually in-
creased its authority. During
the past year, Sukarno has in-
creasingly trusted and supported
the army while at the same time
displaying a growing distrust
of the Communists. In addition
to the broad power which it
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CURRENT INTELLIGENCE WEEKLY SUMMARY
exercises under martial law,
the army holds one cabinet
post, has representatives in
the National Council, and has
recently assigned a high-rank-
ing officer as consul general
in Singapore, Indonesia's
largest foreign mission and one
of its most significant. Al-
though army powers stem from
presidential decrees, its
present broad authority points
up the extent to which it
is in fact already govern-
ing Indonesia.
PEIPING DISPATCHING FISHING FLEET TO ISLANDS IN SOUTH CHINA SEA
Over 200 Chinese Communist
fishing vessels manned by 1,000
fishermen will sail "shortly"
from Hainan Island ports to
"develop fishing grounds" in
the Paracel and Spratly island
groups, according to a 10 No-
vember report in a Communist-
controlled Hong Kong newspaper.
The fleet will be furnished with
radios and "other safety equip-
ment," the article said. Ad-
ministrative, supply, and navi-
gation facilities will be estab-
lished on the islands. The Chi-
nese Communists have not men-'
tioned any naval escort for the
fishing fleet.
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CURRENT INTELLIGENCE WEEKLY IMMARY
20 November 1958
In its declaration of 4
September announcing the 12-mile
limit, Peiping reiterated its
claims to the Paracels and
Spratlys, as well as to other
island groups in the South
China Sea. Nationalist China
and South Vietnam also lay claim
to both groups, while France has
asserted sovereignty over the
Spratlys. A Philippine national,
Tomas Cloma, has claimed several
islands of the Spratly group on
behalf of his government.
At present there is a re-
inforced platoon of Chinese
Nationalist marines numbering
less than 100 men on Itu Aba,
largest of the Spratlys. They
are believed to be armed with
heavy machine guns and light
arillery. South Vietnam has a
token garrison of some 30 men
on Prattle Island in the Para-
eels, and has augmented this
force in past crises.. The
Chinese Communists have main-
tained a group of guano gather-
ers on Woody Island, largest
of the Paracels, since Decem-
ber 1955. In January 1957
the Vietnamese fired on a Chi-
nese Communist fishing boat,
thereby: drawing a protest from
Peiping.
The islands occupy a stra-
tegic position in the central
South China Sea, but they have
no significant economic value,
and none is large enough to
permit construction of an air-
field or other sizable instal-
lation. The largest island in
each group--Itu Aba and Woody--
is less than a mile long and
only about a half mile in width.
While the Japanese did maintain
a small naval base on Itu Aba
during World War II, the pri-
mary value of the islands would
be for observation and metero-
logical uses.
Peiping's announcement
of its intention to dispatch
the fishing fleet could be a
challenge to the other claimants,
who may be expected to react
sharply. The Chinese National-
ists may respond, as in the
past, by sending warships to
protect the Itu Aba garrison
and contest the Chinese Commu-
nist manuever. Vietnamese
President Diem, who firmly
believes the Communists respect
only force, has been alert to
any Chinese Communist probing
operations against South Viet-
nam since the Taiwan Strait
crisis developed.
If the Chinese Communists
actually conduct the operation,
their action could result in
clashes with South Vietnamese
or Chinese Nationalist naval
units.
Argentine President Fron-
dizi's position has been strength-
ened by firm endorsement from
the military in the face of
attacks on his petroleum and la-
bor policies and on his declara-
tion of a 30-day state of siege
on 11 November aimed at suppress-
ing Communist and Peronista
manipulation of labor unrest.
With this tactical advantage,
the administration is trying to
smooth over internal stresses,
as seen in its handling of Vice
President Gomez' resignation on
18 November, and to mollify
various opposition complaints
which could undermine the regime.
Living costs, which have
risen some 40 percent during the
past year, have caused increasing
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CURRENT INTELLIGENCE WEEKLY S
20 November 1958
unrest among all labor elements.
Moves toward a general strike
have seemed inhibited mainly by
political factors involving com-
petition between pro- and anti-
Peronista labor factions for con-
trol of the trade union move-
ment. The three-week strike by
Peronista oil workers in Mendoza,
an attempt to force cancellation
of government petroleum develop-
ment contracts with American
firms, failed to win nationwide
support mainly because its
emphasis was political.
On the other hand, a Peron-
ista-initiated general strike
effort on 10 October based
purely on wage demands was so