CURRENT INTELLIGENCE WEEKLY SUMMARY

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• Collection: General CIA Records
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• Document Creation Date: December 20, 2016
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• Publication Date: October 18, 1999
• Content Type: SUMMARY

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CONFIDEiJTIAL
(CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
CENTRAL
COPY NO. 54
OCI NO.1681/59
2 April 1959
AUTH: H/~R,470-
DATE/t/ REVIEWER:
CLASS. CHANGED To~
NEXT RE ViE W DATE:
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0 DECLASSIRMI)
DOCUMENT NO.
INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
State Department review completed
CONFI
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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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2 April 1959
In agreeing to a foreign
ministers' conference on 11 May
in Geneva, the Soviet notes re-
plying to the Western notes of
26 March sought to strengthen
the impression that the three
Western powers have already
accepted a summit meeting this
summer.
Khrushchev's decision not
to obstruct the convening of the
ministerial conference by in-
sisting on the participation at
the outset of Poland and Czech-
oslovakia was evident in Mos-
cow's agreement to leave this
question for the conference it-
self to decide. The Soviet
notes, however, leave the USSR
free to raise this issue as soon
as the meeting convenes.
While the Soviet reply indi-
cated agreement to Western pro-
posals on the date, place, and
agenda of the proposed confer-
ence, its emphasis on a German
peace treaty and Berlin as "con-
crete issues.. .long awaiting
decisions" suggests that Moscow
will insist that substantive
discussions be confined to these
issues and maintain its refusal
to discuss German reunification.
Soviet propaganda has as-
serted that a summit meeting
will be needed regardless of
progress made by the ministers
and that lack of success at the
lower level would make summit
talks all the more necessary.
Soviet propaganda is charging
that the Western position link-
ing a summit meeting to progress
at the foreign ministers' con-
ference reflects either a de-
sire to block the path to the
summit or to "avoid it alto-
gether."
Khrushchev.in his press con-
ference. on 19 March assumed that
both the foreign ministers and
heads of government would meet
and said he was certain reason
would prevail and they will be
able to overcome the obstacles
to agreement.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
2 April 1959
.In line with its professed
optimism over the prospects for
agreement at the summit on Ber-
lin and a German peace treaty,
Moscow has made consistent ef-
forts since November to reas-
sure the Soviet people that no
grave risk of war over Berlin
exists. While there have been
scattered articles in the Soviet
press conveying the impression
of hysteria and bellicosity in
the United States, there has
been no campaign charging the
existence of an American "war
psychosis." The American Embas-
sy believes the Soviet public
now is more concerned over a war
threat than before Khrushchev's
Berlin moves, but less than
during the Suez and Taiwan
Strait crises. There have been
no rumors of hoarding which
were prevalent during the ear-
lier crisis.
On the eve of the tenth
anniversary meeting of the NATO
foreign ministers, Moscow pub-
lished its customary diatribe
against this Western "instru-
ment for aggression." The So-
viet Government statement con-
trasted NATO's preparations
for war with the constant striv-
ings of the USSR and the "so-
cialist camp" for peace and,
in this connection, repeated
Soviet proposals for a free
city of West Berlin, a German
peace treaty, a nonaggression
pact, disarmament, and disen-
gagement.
A TASS statement, three
days after De Gaulle's 25 March
press conference, reflected
Moscow's hope that despite the
French leader's firm stand on
Berlin, his views on other Ger-
man questions could be exploit-
ed. There have been indications
that the Soviet leaders have
been uncertain of De Gaulle's
attitude on the German ques-
tion.
Moscow now may see its
first opportunity in the pres-
ent crisis to play up the French
leader's independent approach
to world politics. TASS endorsed
De Gaulle's suggestion for in-
creased East - West German con-
tacts and termed his statement
that Germany's present frontiers
should not be changed "a cor-
rect and realistic approach."
Moscow will probably attempt
further to exploit these state-
ments in its effort to gain
Western recognition of East
Germany with its eastern fron-
tier at the Oder-Neisse.
On the other hand, the TASS
statement professed "more than
amazement" at the "allegation"
in the French note of 26 March
that the USSR had created the
crisis over Berlin and at De
Gaulle's declaration of inten-
tion to maintain Western access
to Berlin--attributing his "bel-
licose utterances" to pressure
from Washington and Bonn.
'East Germany
East Germany is making
preparations to send, reported-
ly for three or four weeks, a
delegation headed by Foreign
Minister Lothar Bolz to the min-
isterial conference in Geneva.
The East Germans are accom-
modating themselves with some
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CURRENT INTELLIGENCE WEEKLY SUMMARY
2 April 1959
difficulty to the less strident
Soviet line on Berlin, East
German spokesmen have performed
an about-face on the 27 May
"deadline." When asked what
will happen on that date, East
Berlin party boss Paul Verner
replied,"May 27 is followed by
May 28, and it has exactly 24
hours," The East Berlin party
organization, which has the
duty of conducting pro-Ulbricht
propaganda in West Berlin, is
reportedly experiencing major
difficulties in soft-pedaling
its former hard-line approach,
although the.local party or-
ganization was completely
shaken up last month in an ef-
fort to strengthen its effective-
ness.
Soviet, troops belonging to
the Berlin headquarters at Karls-
horst have not been reduced in
strength.
Corridor Incident
Following a high-altitude
flight to 'Berlin by an American
Air Force transport aircraft on
27 March, the Russians have
warned that "complications"
might result from a repetition
of flights above 10,000 feet by
Allied aircraft in the Berlin
air corridors. A Soviet offi-
cial in East Berlin charged that
the United States was attempting
to alter unilaterally flight
regulations of long standing
without negotiating the matter
with Soviet authorities.
When the plan for the 27
March flight was filed with the
Berlin Air Safety Center approx-
ihiate ly one hour before the air-
craft was scheduled to enter the
corridor, the Soviet member re-
fused to givee a guarantee of
flight safety on the grounds
that altitudes above 10,000 feet
are reserved for Soviet and East
German aircraft, Soviet officials
in Berlin promptly protested the
flight, and warned that the
United States would be responsi-
ble for any "undesirable con-
sequences." The Allied position
is that there is no ceiling for
flights in the corridor, even
though Allied aircraft have not
regularly flown above 10,000
feet,
Soviet fighter planes har-
assed the American aircraft on
both the inbound and outbound
flights, flying.at times within
five to ten feet and making in-
tercept passes. Ambassador
Bruce in. Bonn filed a protest
against the harassment: with So-
viet authorities in Berlin, with
the request that they take ac-
tion to prevent a recurrence of
such interference with any fu-
ture flights through the cor-
ridors under rights established
by quadripartite agreements.
West. Germany
On the eve of the NATO for-
eign, ministers' discussions,
West German Foreign Minister
Brentano took a stronger public
stand against possible conces-
sions by Bonn on unification
and the eastern boundary ques-
tion. Ie termed a phased uni-
fication plan without prior free
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CURRENT INTELLIGENCE WEEKLY SUMMARY
2 April 1959
elections as "unthinkable" and
reiterated Bonn's position that
the Polish-German boundary could
only be negotiated by an all
German government. In private
Western discussions, Bonn had
previously indicated that the
Oder-Neisse boundary might be
accepted as part of an effort
to normalize relations with War-
saw, but only as a last-stage
negotiating position. West Ger-
man officials had also introduced
a phased unification plan which
postponed free elections until
the final stage,
Brentano's renewed empha-
sis on free elections may re-
flect the government's concern
over the increasingly bitter
political campaign of the op-
position Social Democratic
party (SPD). The SPD's unifi-
cation and European security
proposal is being supported by
?a vigorous propaganda effort
along the lines of its 1958
campaign against atomic weap-
ons. Some SPD officials are
already disenchanted with the
party's program, but feel that
there is no retreating from
it.
Brentano's remarks on the
Oder-Neisse border are an ob-
vious effort to offset De
Gaulle's 25 March press con-
ference statement favoring
German unification within the
"present boundaries." This ap-
parent acceptance of the Oder-
Neisse line was sharply attacked
by all political parties as a
"rotten Easter egg from Paris,"
and the opposition has demanded
clarification of the government's
position and whether or not De
Gaulle's remarks were made with
Adenauer's approval.
Bonn's renewed emphasis
on its traditional policies--
unification beginning with
free elections and a return to
the borders of 1937--coincides
with the gradual shift in Ger-
man opinion in favor of an
isolated Berlin settlement, prob-
ably involving some de facto
recognition of the East Ger-
man Government. The majority
opinion, according to Amer-
ican observers, now favors
some contractual arrangement
with Moscow and East Germany
regulating access and guar-
anteeing the status quo in
Berlin, rather than the risk
of broad negotiations involv-
ing concessions on unifica-
tion and European security.
West Berlin
Deputy Mayor Amrehn told
American officials that the
Berlin government was grave-
ly concerned over what it
feels is the developing in-
tention in the West to save
Berlin at the expense of an
all-German settlement, thus
creating "three Germanys."
Economic indicators avail-
able during the past two
weeks show a substantial up-
turn following the January
slump. Berlin business circles
now feel that although new
orders had been declining,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
2 April 1959
the situation now has taken a
more favorable turn, Indus-
trial production indices for
February show a strong rebound
from January, except for ma-
chinery production. Berlin
stock market prices have risen,
with some shares gaining
5 to 8 points.
MIDDLE EAST DEVELOPMENTS
Situation in Baghdad
The situation in Iraq con-
tinues to develop favorably for
the expansion of Communist in-
fluence. The American Embassy
in Baghdad has concluded that
the Communists have achieved
such dominance In the propaganda
field and are penetrating the
bureaucracy and army to such an
extent that Prime Minister Qasim
might not be able to turn against
them successfully even if he
wished to do so. The embassy
believes it is the "year of the
bear" in Iraq, and the atmos-
phere in Baghdad, it says, is
reminiscent of that in the
European satellites.
Qasim last week forecast
that another "big new revolu-
tion" in Iraq would occur this
month. Qasim's previous "revo-
lutions" have turned out to be
major policy announcements,such
as the withdrawal from the
Baghdad Pact and the announce-
ment of Soviet economic aid;
The new "revolution" is the
subject of widespread specula-
tion--it may turn out to be a
constitutional change or a
shift in large-scale develop-
ment plans, or even some move
to nationalize the oil industry.
A regime spokesman this
week said political parties
would "soon" be permitted to
function, although he qualified
the statement by saying that
" f course" those which sought
0
This presumably excludes the
pro--UAR "nationalist" groups,
-like the Baath, which have been
accused of sympathizing with
the Mosul revolt.
Executions Resumed
The first official execu-
tions since the July revolution
also occurred in Baghdad last
week, when four air force offi-
cers who had participated in
the Mosul revolt were shot.
Two senior officers under arrest
for plotting--although they did
not join the revolt--are reported
to have attempted suicide. Bagh-
dad radio has been broadcasting
lookout notices for other sus-
pects, including a chief of the
Shammar tribe.
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British Withdrawal
London, meanwhile, has
agreed to withdraw the remaining
300-odd British military person-
nel from the Habbaniya air base.
The British have not decided
whether to accept Qasim's offer
to retain limited staging rights
at the base or to seek full fa-
cilities elsewhere. Cairo has
already sought to portray this
as an indication of British "im-
perialist" support for Qasim.
The final withdrawal from Habani-
ya involves a large quantity of
equipment and may take as long
as four months.
to use arms to enforce their Arab League Meeting
views would not be'permitted.
The UAR-Iraq dispute was
to be the main item on the
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CURRENT INTELLIGENCE WEEKLY'SUMM!1RY
2 April 1959
agenda of the Arab League foreign
ministers' meeting held in Bei-
rut on 2 April. None of the
participants appears to have
believed that much good could
come of the meeting, which re-
sulted from the desire of the
Sudanese and others to make
some gesture toward restoring
Arab unity.
Diplomatic Efforts
Communist bloc diplomats
for their part are continuing
efforts to smooth over bloc dif-
ferences with Nasir and tone
down the UAR-Iraq dispute. The
Chinese Communist ambassador
in Cairo is said to have made
representations along this line,
and Peiping's vice foreign min-
ister may have made a similar
approach during his recent visit
to Egypt. Peiping has taken
much the same propaganda posi-
tion toward Nasir as has Moscow,
although its press attacks have
been less frequent and no Chinese
leader has publicly criticized
the UAR.
Nasir Responds
Nevertheless, Nasir on 30
March broke a week-long silence
and again strongly criticized
the USSR for its interference
in Arab affairs. The Soviet
press and radio have in the past
been unwilling to let Nasir'$
public charges go unanswered.
Bloc Propaganda
Soviet propaganda media,
while continuing to describe
the UAR-.Iraqi dispute as harm-
ful to both peoples, earlier
refuted at length Nasir's charges
that he received no effective
support from the USSR during
the Suez crisis. A Pravda
article on 30 March contrasted
the "rapid improvement" in the
Iraqi living standard with "in-
ternal difficulties" in the
UAR. Pravda criticized "some
leaders the Near East" for
attempting to use Arab nation-
alism as a means of uniting
"all Arab states with one of
them,, irrespective of whether
they wish it or not."
UAR Communists Act
In addition to propaganda
ripostes from Moscow, there is
some evidence of local Egyptian
Communist efforts to campaign
against Nasir. Antiregime slo-
gans are appearing on walls in
Cairo, Communist anti-Nasir
tracts are again reported circulat-
ing, and demonstrations led by
Communist-infiltrated labor ele-
ments on 26 March resulted in
some property. damage; the police
finally had to intervene. More
Communists have been arrested
in Egypt
Israeli Reserve Call-up
The Israeli radiobroadcast
on 1 April calling up reserves
for three units created nervous-
ness and apprehension not only
in the UAR, which ordered the
reserves of the First (Syrian)
Army called up on 2 April, but
inside Israel as well. The of-
ficial Israeli explanation has
been that the call-up was for
routine training. However, the
procedure used was new, and the
phrasing of the first Israeli
announcement suggested the pos-
sibility that "all" reserves,
rather than a limited number,
were being mobilized.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
2 April 1959
Opposition political groups
in Israel will probably seek to
make capital out of the govern-
ment's "mistake" in making the
call-up in this way, and the
move was quickly criticized by
a Progressive party member of
the Mapai-dominated cabinet as
merely another instance of Prime
Minister Ben-Gurion's failure
to consult his colleagues. The
actual motives behind the move--
if indeed it does go beyond
training--remain unclear, but
its is possible that the Israe-
li wished by this device to
call attention to their security
situation in the midst of po-
tentially disturbing develop-
ments in UAR-Iraqi relations,
in Jordan, or elsewhere on their
borders.
TIBETAN REVOLT STRAINS SINO-INDIAN RELATIONS
The Tibetan revolt has put
new strains on Sino-Indian re-
lations and is damaging Peiping's
prestige among the Afro-Asian
countries, where Communist China
and India are competing for
influence. Peiping is well
aware that the official Indian
statements on the revolt and
Nehru's willingness to permit
extensive reporting by foreign
press services have contributed
directly to the damage to its
reputation. While Prime Min-
ister Nehru has adhered official-
ly to his general policy of non-
interference, he has publicly
expressed sympathy for the Ti-
betan rebels.
Peiping's strong irrita-
tion and its intention to keep
the Indians on the defensive
were conveyed in the first of-
ficial Chinese communique on
28 March. Tlie commentary
stated that Kalimpong in the
Indian state of West Bengal was
the "central headquarters" for
the revolt, thereby suggesting
Indian connivance. The commen-
tary also implied further dis-
cussion of Tibet in the Indian
Parliament would be "impolite
and improper."
Should Nehru make represen-
tations on behalf of the Ti-
betans, the Chinese will prob-
ably reply that Tibet is con-
sidered "autonomous" and empha-
size that the matter is con-
sidered "internal." But the
Chinese, however.strong their
public and private reaction to
Indian "interference," do not
wish a serious rift in relations
with the Asian power which had
previously supported them on
certain international issues.
That Peiping now seems to be
treating Indian sensitivities
with more regard is suggested
in the 31 March editorial in
People's Daily which, although
Contains the Kalimpong charge,
avoids mention of what the In-
dian Parliament may or may not
discuss.
Peiping's handling of the
Tibetan developments has caused
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2 April 1959
LOCATIONS WHERE
PEIPING CLAIMS
TO BE IN FIRM
CONTROL SHOWN
IN RED.
AREAS CURRENTLY
UNDER REBEL
CONTROL SHOWN
IN GREEN.
considerable irritation in In-
dian official quarters, thus
making it increasingly diffi-
cult for New Delhi to maintain
its conciliatory position. More-
over, public pressure on the
government to take a less equiv-
ocal stand against Chinese re-
pression in Tibet has sharply
intensified following Peiping's
charges against India. Various
opposition groups have added to
the agitation in the press by,
staging anti-Chinese demonstra-
tions in several Indian cities.
Nehru in his statement
before a tense Parliament on
30 March sharply rejected Pei-
ping's complaints, commenting
that his government would not
"submit to any kind of dicta-
SINKIANG UIGHUR
AUTONOMOUS REGION
T I B El
Nagchhu bzong
i i~D nc
gp Tanghswng sTaichpo
tion from any country, however
great or big it may be.,, His
statement was balanced, however,
with a plea for restraint and
a reaffirmation of friendship
for China. Peiping's repeti-
tion, of charges that Kalimpong
is a rebel base provoked further
uproars in Parliament on 1 and
2 April, causing Nehru and his
deputy external affairs minis-
ter to criticize Peiping for mak-
ing improper allegations.
The Indian prime minister
reluctantly agreed to meet a
large delegation of Tibetan
leaders led by a former prime
minister of Tibet. Nehru pub-
licly expressed his sympathy,
but pointed out that India was
not in a position to intervene
and counseled patience.
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2 April 1959
The Dalai Lama, who fled
southward from Lhasa on 17
March, arrived in India on the
31st. Peiping, still claiming
he is held under "duress" by
the rebels, probably will de-
mand his return. New Delhi
probably will try to ease the
diplomatic problem posed by
the Dalai Lama's presence by
restricting--at least overtly
--Tibetan activities to non-
political affairs. The Indians
may also withhold permission for
the Tibetans to establish a
government-in-exile.
Reaction Elsewhere in Asia
The Tibetan revolt has em-
barrassed the Chinese National-
ists, who are pledged to aid
any large-scale uprising on the
China mainland but have no ca-
pability to give effective sup-
port to the Tibetans. The Na-
tionalists may, however, at-
tempt to develop a capability
for token support by means of
air drops staged through north-
ern Burma and for smuggling
small arms through India. Pres-
ident Chiang Kai-shek probably
has gone as far as he can to-
ward encouraging the Tibetans
by promising them future '`self-
determination" if the National-
ists recover the mainland.
The strongest Asian react -
tian outside India has come
from Malaya, where the foreign
minister officially condemned
the Chinese use of force in
Tibet and likened it to Soviet
repression in Hungary. Similar
protests have been voiced by
sections of the press in Indo-
nesia, Burma, Pakistan, the
Philippines, Japan, and the
United Arab Republic.
Situation Inside Tibet
Peiping admits that rebel
forces numbering "only about
20,000" continue to occupy parts
of southern Tibet and other ''very
remote places,,. in Tibet and west-
ern China. The actual strength
of the rebels probably exceeds
Peiping's estimate, but except
for the Khamba tribesmen these
forces appear scattered and
largely undirected.
No serious unrest has been
reported since Chinese Communist
forces drove the Tibetan rebels
out of Lhasa on 22 March after
two days of intense fighting.
The battle for Lhasa resulted
in considerable damage to mon-
asteries, the Dalai Lama's
palace and summer home, public
buildings, and power lines. Pei-
ping claims that 4,000 rebels
were taken prisoner during the
fighting and that large amounts
of arms and ammunition were
captured. The Chinese say that
order is rapidly being restored
in Lhasa.
Peiping's recent statements
indicate that the regime has
abandoned its cautious policy
in Tibet in favor of force to
assimilate the Tibetans. Pre-
mier Chou En-lei's 28 March
order enjoins the Chinese and
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2 April 1959
armed forces in Tibet to "thor-
oughly stamp out" the rebellion
and in affect places Tibet under
martial law. Although the re-
gime has dealt sternly with out-
breaks of unrest in the past,
it has never before attempted
all-out suppression. Such an
effort will be long and costly
for the Chinese, since it is
likely that small guerrilla
bands will continue to operate
successfully for some time in
the rough terrain of Tibet and
western China,
The Chinese Communist de-
cree of 28 March dissolves the
local Tibetan government and
replaces it with the Communist-
sponsored Preparatory Committee
for the Tibet Autonomous Region
which was set up in April 1956
but never accepted by the Tibet-
ans. It reverses Peiping's
policy since 1951 which has
been to move slowly in Tibet,
delaying reforms, and working
as much as possible through
local institutions while at-
tempting to undermine their au-
thority and gradually replace
them with Chinese Communist or-
ganizations. Chinese statements
now indicate that Tibet will
"carry out reform early and take
the socialist road.
The 28 March order names
Peiping's puppet, the Panchen
Lama, acting chairman of the
preparatory committee in place
of the Dalai Lama "during the
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time" the latter is "held by the
rebels." The Chinese have been
grooming the Panchen Lama for
just such a role in the event
the ])alai Lama refused to co-
operate with them. By having
the :Panchen Lama act four the
Dalai Lama on an ostensibly
temporary basis, the Chinese
are evidently hoping to make him
more acceptable to the Tibetans.
It seems likely that the Com-
munists will continue to use
the Panchen Lama for the time
being but will increase their
efforts to destroy Lamaism in
Tibet.
The Dalai Lama is spiritual
head of the Lamaistic branch of
Buddhism and receives allegiance
from Nepal, Bhutan, parts of
northern India, northwest China,
and Mongolia. Non-Lamaistic
Buddhists:in Burma, India, Cey-
long;, Thailand, and Japan will
be stirred by the fate of their
co-,religionists in Tibet.
The Communists, :apparent-
ly anxious to keep the door
open for future use of the
Dalai Lama as a puppet, are
claiming that his attitude con-
tinues to favor Peiping against
Tibetan "reactionaries.'" On
29 March, Peiping radio broad-
cast the text of letters alleg-
edly exchanged between the
Dalai Lama and the Chinese po-
litical commissar in Tibet sup-
porting this theme and attempt-
"provocations . ""
ink; to document Chinese re-
straint in the face of rebel
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CURRENT INTELLIGENCE WEEKLY SUMMARY
2 April 1959
MAJOR SHAKE-UP IN MONGOLIAN COMMUNIST PARTY
At a central committee ple-
num on 30 March, four of the
nine members of the Mongolian
People's Revolutionary (Commu-
nist) party politburo, includ-
ing former party First Secre-
tary D. Damba, were removed
from their posts on charges of
misconduct. The shake-up, which
has also had repercussions in
the cabinet structure, appears
to be a victory for Premier
Tsedenbal in his dispute with
Damba. The rivalry between the
two dates back at least to 1954,
when Tsedenbal relinquished the
top party position to Damba in
a show of "collective leader-
ship." Last November Tsedenbal
replaced Damba, who was demoted
to second secretary.
The number of individuals
involved in the purge, which
included two candidate members
of the politburo and the chair-
man of the party control com-
mission, suggests that Tseden-
bal's leadership has been under
sharp attack and may even indi-
cate an attempted coup on the
part of the defeated faction.
The central committee com-
munique announcing the changes
accused Damba of "profound ideo-
logical and political backward-
ness, conservatism, per:.onal
conceit, lack of principles, in-
sincerity, distortion of party
policies," and other offenses.
The emphasis in the communique
on "political backwardness"
TSEDENSAL
suggests that the politburo may
have been split on policy, per-
haps over the recent drive for
rapid collectivization of live-
stock herders--a program which
the Communist regime had hesi-
tated to push "since the"failure
of a similar campaign in 1931.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
2 April 1959
Tsedenbal has placed his
strongest supporter, L. Tsende,
in the secretariat post vacated
by Damba, and promoted the head
of the party research institute,
Tumir-Ochir, to full politburo
membership. Tsende has resigned
as first deputy premier and as
chairman of the State Planning
Commission in order to devote
full time to party affairs. Re-
cent reports have spoken of a
'.'Tsedenbal-Tsende" team, which
now seems to be emerging. First
Deputy Premier Surenjab, ex-
pelled after 12 years, of serv-
ice on the politburo, has also
lost his position as chairman
of the Mongolian legislature.
In announcing the plenum's
decision to reduce the size of
the politburo from nine to seven
full members and from five to
two alternates, Tsedenbal is
probably hoping to create a
body which is easier to control.
The move may also indicate a
lack of competent top-level
leaders in the party as a result
of the present purge.
Tsedenbal, a doctrinaire
and strongly pro-Soviet Commu-
nist, has been opposed by
more nationalistic party circles
in Mongolia? His marriage to
a Russian national reportedly
has caused considerable grum-
bling, but he now has consoli-
dated his position as top leader.
To date there has been no ques-
tion of a pro - Chinese Commu-
nist bias within the top leader-
ship of the Mongolian party,
and it appears that the recent
changes in Moscow's oldest sat-
ellite will reinforce its con-
tinued pro-Soviet orientation.
USSR ATTEMPTING TO PURCHASE EMBARGOED COMMUNICATIONS CABLE
The USSR is seeking to
purchase from six countries
outside the bloc a large amount
of shielded multiple-conductor
cable for delivery between May
and August 1959,. This type of
cable, which is on the COCOM em-
bargo list,. is said by Moscow
to be needed on the Trans-
Siberian Railway between Moscow
and Vladivostok to overcome in-
terference to existing landline
communications resulting from
electrification of the railroad.
A little over one third of the
railway is already electrified.
The specified capacity of
the cable far exceeds the needs
of all Trans-Siberian Railroad
operations and would probably
PAST II
be used for civil and military
communications as well. This
would greatly improve existing
communications facilities be-
tween, the Urals and the Pacific,
which are inadequate and lack
security. The entire bloc is
generally short of multicon-
ductor cable, however, and the
USSR may actually plan to use
the cable elsewhere,
The USSR requested bids for
a total of some 3,725 miles of
cable from Belgium, France,
Italy, Japan, Britain, and West
Germany. It may be, however,
that the actual amount of cable
the USSR intends to buy is con-
siderably less, since tenders
are not firm contracts. France
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CURRENT INTELLIGENCE WEEKLY SUMMARY
2 April 1959
decided in late February to
sell and contended at a COCOM
meeting in Paris on 23 March
that the cable is not covered
under the embargo list on the
grounds that it is merely rail-
road-signaling equipment. The
other countries involved feel
they must either get France to
reverse its position or else
permit their own companies to
sell.
The request is for 61-wire
cable, which could carry over
3,000 telegraph circuits of 60
words per minute, or over 200
two-way telephone conversations,
or various combinations of the
two. This is over 30 times the
capacity of cables used for
Ametican railway communications.
The cable would be suitable
for use in Soviet air-defense
systems, such as a digital data- 25X1
transmission system, and for
use with a railway-based mobile
missile system.
(Prepared by ORR-,
in by OS I )
NEW SOVIET LABOR BRIGADE MOVEMENT FACES DIFFICULTIES
Recent criticism. by a sec-
retary.of the all-union Komso-
mol gives the impresoion that
the labor , brigade. movement,
only 'recently launched, encoun-
tered difficulties almostfrom
its outset., The movement?said
to have originated among young
workers in a Moscow factory,
was given strong. official : back-
ing in No and quick-
ly promoted thr6ughout,the
USSR.
Basically. it 'entails a.l::l
the workers in ,,a given shop 'car
work unit collectively, taking
a pledge to "work and live in
a Communist, mahner"and compet-
ing with other brigades for, the
title of "C6mmutltgt Labor grid
Bade.'' Designed pkimarily to
spur maximum productivity:for
fulfilitne.ilt of the Seven-rear
Plan, the movement differs from
its predecessor., Q'socialist
competition," in that it stress-
es.: exemplary personal behavior
and a "socialist outlook" as
well as.labor productivity.
The brigades have been, referred
to as "cells of the future Com-
munist society" and every ef-
fort has been made to give the
movement idealistic appeal by
presenting it as a link with
the coming Communist utopia.
The criticism appearing in
Komsomol.skaya Pravda indicates
thaETie spontaneity'.and lofty
ideals which were supposed to
give the movement its momentum
have quickly been subverted by
a formalistic approach and an
obsession for overfulfillment.
The author complains that in
some cases Komsomol committees
juggle the members of shops or
work units and thus artificial-
ly create "show" brigades. In
other instances "privileged con-
ditions" are created for the
competing brigades. The title
of "Communist Brigade" is fre-
quently awarded almost automat-
ically to certain groups of 25X1
workers whether they have
lived up to their lofty
pledges or not.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 April 1959
EAST GERMANY PLANS LABOR SPEED-UP
Under the pressure of an
accelerated economic program,
the East German regime is once
again taking cautious steps to
raise the work norms of indus-
trial laborers. Wage increases
recently granted to miners and
employees of the chemical, food,
and paper industries are being
accompanied by a reclassifica-
tion of industrial jobs requir-
ing higher qualifications and
increased performance.
The introduction of the
Seifert method--a form of in-
dustrial speed-up--into a num-
ber of plants such as the Elec-
tra-chemical Combine in Bitter-
fold is regarded by the workers
as a means of increasing output
to demonstrate the feasibility
of an increase in norms. This
method is used to promote "so-
cialist competition" and to
fix wages pegged to work norms.
The workers realize this and,
according to the East German
press,"...the Seifert method is
meeting great difficulty at the
Maxhuette foundry and has de-
veloped very slowly at the Wema
plant."
Moves to increase work norms
were defeated by the worker re-
volts of June 1953 and by the
outspoken hostility of the work-
ers in mid-1958. The East Ger-
man workers are particularly
sensitive to this type of ex-
ploitation.
Party First Secretary Ui-
bricht retreated in a public
speech in July when he called
for an increase in labor pro-
ductivity by use of the brigade
system, a method which relies
most heavily on the party faith-
ful among the workers, as an
interim means of increasing la-
bor productivity. His cautious
tactics are a recognition of
the fact that he is steering
a difficult course between the
needs for increased productivity
imposed by his regime's ambi-
tious economic goals and the re-
sentment of East German workers.
(Prepared by ORR)
NORTH AFRICA
The Algerian rebels, work--
ing in concert with the Tunisian
and Moroccan governments, hope
to exact a compromise from
French President de Gaulle for
a settlement of the Algerian
rebellion. At Tunisian Presi-
dent Bourguiba's initiative,
the North Africans may propose
that an independent Maghrebian
federation, including Algeria,
associate with the French Com-
munity, guarantee the rights of
the French minority, and adopt
a favorable attitude toward
foreign military bases. At the
same t-'.me, the Algerians are
contirr?,..ing their efforts to es-
tablish discreet contacts direct-
ly with the French.
While De Gaulle in turn
has been -reported still seeking
contacts with the rebels, he
has not moved appreciably from
his public offer made last fall
for a safe-conduct to rebel lead-
ers to come to Paris to arrange
a cease-fire. Meanwhile, the
French press is playing up the
defection of a minor rebel lead-
er and the reported death in am-
bush of two commanders of the
Algerian Army of Liberation in
an effort to prove that the
back of the rebellion is broken.
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~Wilil
CURRENT INTELLIGENCE WEEKLY SUMMARY
2 April 1959
Should the diplomatic gam-
bit fail, Tunisia and Morocco
may be prepared to insist on the
early and complete evacuation
of all foreign troops. The Al-
gerians apparently hope Morocco
can persuade the United States--
by holding out the prospect of
an agreement on the five Ameri-
can air bases--to use its in-
fluence on behalf of the Al.-
gerians for a settlement with
Paris.
Despite their preference
for a compromise settlement with
France and close ties with the
West, the Algerians are pursuing
their contacts with the Sirio-
Soviet bloc. An Algerian mili-
UNREST IN FRENCH TROPICAL AFRICA
Political tension will
probably increase and may be-
come critical within the next
few months in:several of the
autonomous republics of the
former federations of French
West and Equatorial Africa.
FRENCH TROPICAL AFRICA
SPANISH SAHARA
COAST
0 Proposed Federation of Mali
......???.? Republic boundary
2 APRIL 1959
tary group is in Peiping
Rebel Premier
Abbas is visiting Asian'and
Middle Eastern capitals.
Tunisia is seeking Amer-
ican military equipment to mod-
ernize and strengthen its armed
forces. It is prompted in this
effort in part by fear of French
incursion into its territory if
no agreement is reached with
Paris, as well as by the po-
tential threat to its internal
stability of a more powerful
bloc.supported Algerian rebel
army.
Pro-federation leaders
from five of the seven West Af-
rican republics met in Dakar on
24 March and formed the African
Federal party to support the
Mali Federation--a proposed new
grouping of territories of the
CONGO
GABON
~S ??'??:9rezzaville~
Le apoldviii,
SECRET
UGANDA
Entebbe
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Aww;
SECRET
2 April 1959
former federation of French
West Africa. They elected Leo-
pold Senghor, political boss of
Senegal, president. The party
leaders, who consider the Mali
Federation a first stage in cre-
ating a federal republic of West
Africa, reportedly envisage in-
dependence from France as a
long-range goal.
Formation of this party
may end some of the political
confusion arising from the
splits within the two leading
regional parties on the federa-
tion issue. However, active
agitation may result in con-
siderable tension and bloodshed
when entrenched pro-French na-
tive leaders like Houphouet-
Boigny in the Ivory Coast react
to this new challenge.
The federalists have de-
cided to proceed with the Mali
Federation, which Paris views
unsympathetically and which is
supported only by Senegal and
Soudan, following the defection
of the Voltaic Republic and Da-
homey. It will be formed on
4 April and will seek to
join the French Community as
a single entity.
In three of the four auton-
omous; republics of former
French Equatorial Africa--Congo,
Chad, and Central Africa--po-
litical tension may soon become
critical because of their basic
instability and lack of readi-
ness for self-government.
In the Congo, politicalop-
position to Fulbert Youlou de-
generated to savage tribal war-
fare in February; the situation
remains tense in anticipation
of a referendum and new elections.
In the Chad, four govern-
ments have held power since Oc-
tober; because of the republic's
socio-racial make-up--Arabic
north and Negroid south--insta-
bili7ty is likely to increase.
The Central African Repub-
lic, which had been politically
stable under the leadership of
federalist Barthelemy Boganda, 25X1
may face a political crisis fol-
lowing his death in a plane accident
on 30 March.
THAILAND PRESSING FOR SOLUTION
Thailand, apparently aban-
doning as infeasible plans to
relocate some 50,000 Vietnamese
refugees residing in the north-
eastern frontier provinces, is
redoubling efforts to arrange
for their mass repatriation.
The Sarit government has sent
a new note to South Vietnam
asking its reasons for refusiig
to accept the 10,000 refugees.
the Thais estimate would choose
to go there. The note pointed
in contrast to Communist North
Vietnam's long-standing "agree-
ment in principle" to accept
those refugees, estimated to
number at least 40,000, who
would opt for the north if
forced to leave Thailand.
Bangkok has also formally
called the refugee, problem to
the attention of its SEATO part-
ners, asking them at least to be
prepared to help with funds and
transportation if Thailand can
arrange for repatriation.
The ideal solution in Thai
eyes would be the mass transfer
of refugees to South Vietnam.
However, Saigon has consistent-
ly refused to take more than a
token number 'of carefully
screened families, and is un-
willing to become party to
forced repatriation.
The Diem government would
clearly prefer' that, 'mass
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CURRENT INTELLIGENCE WEEKLY SUMMARY
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%kv~ 1"0
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
2'April 1959
Provinces where Vietnamese
refugees are concentrated.
D .TATUTE M
SAKON NAKHON
\ l l NAKHON PHANOM1
Moulvrei 1
deportation of the refugees not
be attempted at all.,. Since
Saigon does not want the refu-
gees, it fears their movement
to North Vietnam would provide
Hanoi with a signal prop-
aganda triumph which might
undermine Saigon's prestige as
claimant to the loyalties of
the people in'both South and
North Vietnam.
In recent months, Hanoi
has been stepping up its propa-
ganda in support of the refu-
gees' cause, protesting against
the Sarit regime's arrest of
some 260 suspected pro-Commu-
nist ringleaders and reaffirm-
ing its readiness to negotiate
on the refugees' return to
North Vietnam. Hanoi insists,
however, on direct talks be-
tween the Thai and North Viet-
namese chapters of the Red
Cross, a proposal which the
Thais have hitherto rejected
because "Thailand does not recog-
nize North Vietnam.
SINGAPORE ELECTION CAMPAIGN
Chief Minister Lim Yew
Hock has so far been unsuccess-
ful in his. efforts to obtain
cooperation among Singapore's
moderate parties for the Legis-
lative Assembly elections now
planned for 30 May. The Brit-
ish, who seem reconciled to
an election victory by the
Communist-infiltrated People.'s
Action (PAP) party, appear to
be giving little if any
support to Lim's Singapore
People's Alliance (SPA). They
apparently desire to avoid
any action which might impair
their chances of working with
PAP's moderate wing led by
Secretary General Lee Kuan
Yew.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
2 April 1959
Last week Lim's govern-
ment, in an effort to divert
attention from the SPA's 'dif-
ficulties and to discredit PAP,
took over the administrative
functions of the PAP-dominated
Singapore city council. The
British are fearful that this
action, and possibly future
provocations against PAP which
Lim might plan, could lead to
violence by extremist elements,
even though PAP is trying to
avoid its good election pros-
pects. Disorders, which could
be blamed on PAP, would provide
the Singapore Government with
the opportunity to proscribe
the party or might force the
British to postpone the elec-
tions.
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SOCIAL "'
DEMOCRATS
2 April 1959
After three months in of-
fice, Iceland's minority Social
Democratic government has man-
aged to halt the inflation
which threatened to set off a
new round of price and wage in-
creases. As part of its stabi-
lization program, the government
recently secured parliamentary
approval of a 5,4-percent roll-
back for both prices and wages,
but it faces greater difficulty
CURRENT INTELLIGENCE WEEKLY SUMMARY
LABOR ALLIANCE CONSERVATIVES
(COMMUNISTS)
dominated Labor Alli-
ance. It remains de-
pendent on Conservative
parliamentary support,
which is conditioned on
the understanding that
the government will
introduce legislation
to revise the exist-
ing electoral law.
The Conservative,
Social Democratic, and
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in putting through the 1959 state
budget, which contemplates a
lower level of investment in
rural areas,
Prime Minister Emil Jons:-
son's; government came to power
on 23; December after a dispute,
over economic stabilization
measures had broken up the coali-
tion of Social Democrats, Pro-
gressives, and the Communist-
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SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
2 April 1959
Communist--dominated Labor Al-'
li.ance parties all desire a re-
determination of constituencies
in order to correct the existing
overrepresentation of rural areas
which gives the Progressive party
its strength in Parliament. Such
a change requires an amendment
to the constitution and two sepa-
rate parliamentary elections.
One will probably be in late
spring and the other in the
summer. The Conservatives, al-
ready the largest party, are cer-
tain to improve their position,
although they seem unlikely to
gain a majority even under the
parliamentary redistricting.
The Social Democrats and the
Communists also stand to gain.
The Communists will be aided
in the election through continued
control of the labor movement
and their probable use of the
seven-month-old fishing-limits
dispute with Britain as the major
campaign issue. British vessels
have continued to fish within
the 12-mile limit, but except for
scattered incidents the situation
has been quiet, and the present
Icelandic Government apparently
wants it to remain so. Electoral
considerations, however, will
prevent the government from favor-
ing any formal agreement that
could be attacked as a surrender
of Iceland's rights.
COMMUNISM, IN CUBA
Communists in Cuba continue
to operate with little restraint
and have succeeded in making in-
roads in the organized labor
movement, the armed forces, and
probably the press.
The Popular Socialist (Com-
munist) party (PSP), which under
Batista had an estimated member-
ship of 8,000 to 15,000, has'
opened offices in various re-
gions and is conducting fund-
raising and recruitment drives.
It publishes two editions of
its daily newspaper,, Hoy, and
has sympathizers on tITe staffs
of other papers. It reportedly
broadcasts daily over a Havana
station..
Even more disturbing is the
influence of pro-Communists in
high official positions. The
Argentine-born rebel leader
Ernesto "Che" Guevara, placed
in charge of the Cabana fortress
in Havana, has permitted Commu-
nist, activities within his com-
mand. The creation of a new
section of the General Staff,
known as G-6 or "direction of
culture," has provided another
opening for Communist penetra-
tion in the armed forces. Head-
ed by the pro-Communist brother
of the army chief of staff, G-6
is reportedly engaged in re-
writing 'textbooks for military
personnel. Raul Castro, com-
mander in chief of the armed
forces, has shown extreme anti-
US sentiments.
Although Fidel Castro has
stated he will not allow Com-
munists to "steal the revolu-
tion" from him, the potential
for Communist penetration exists,
partly because of the Communists`'
ski]Ll. at identifying their aspi-
rations- with his program. His
espousal of a "neutralist" po
Sition for Cuba in world affairs
and his increasingly anti-Ameri-
can statements, as well as his
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CURRENT INTELLIGENCE WEEKLY SUMMARY
2 April 1959
social and economic reform pro-
grams, lend themselves to such
identification.
Communists are believed to
control a few unions and to
exert influence in others; aside
from a move in January to oust
them from labor leadership, the
government has made no serious
effort to proscribe their activi-
ties. In Santiago, a group of
citizens found it advisable to
disband their anti-Communist
civic committee, since anti-
Communists are being equated
with counterrevolutionaries--
who are considered close to being
traitors in Cuba today.
Ex-President Figueres of
Costa Rica returned from his
visit to Cuba last week serious-
ly disturbed over the extent of
Communist influence there and
fearful that the United States
may eventually be faced with a
choice of either intervening
outright or else accepting Com-
munist domination of the govern-
ment. In any event, it seems
clear that Castro will probably
allow the Communists to continue
operating freely as long as they 25X1
do not threaten the dominant
position of his "26 of,July"
movement.
PERONISTA STRIKE PRESSURE ON THE ARGENTINE GOVERNMENT
The Argentine Government,
threatened with a general strike
on 3 April, will be under heavy
pressure from the Peronistas
and Communists during the next
few weeks. The Peronistas, in
their effort to regain control
of organized labor, apparently
feel they now have a tactical
advantage and are exploiting
widespread discontent over the
steep price rises since the
US-backed austerity plan was
begun on 1 January.
While living costs have
averaged almost 40 percent
higher this year, the prices
of the two staples in the Ar-
gentine diet, bread and meat,
have doubled and tripled. The
rise in electricity rates aided
the Communists' organization
of neighborhood protest com-
mittees,?whi-ch are urging non-
payment of taxes as well as
light bills. During March,
prices leveled off, but demon-
strations and bombings--usually
harmless--are daily events.
The basically political
purpose of the strikes is ap-
parent, as it was in the Peron-
istas' and Communists' previous
major efforts: the petroleum
workers' strike which resulted
in the government's declaration
of a state of siege on 11 No-
vember and 'the '.mid-January
general strike begun on the eve
of President Frondizi's departure
for the United States. These
strikes. prompted Frondizi to
close the Communists' headquar-
ters and to modify his previous
plan of trying to win over the
more moderate Peronista labor
leaders. He had also noted that
the "hard-line" pro-Peron leaders
won a number of the union elec-
tions held last year.
Peronista labor leaders in-
clude in their "minimum demands"
the immediate completion of
union elections, release of all
jailed labor leaders, an end to
the state of siege and to mobi-
lization of various workers, and
the return of union control to
"duly elected leaders." These
leaders do not appear immediate-
ly capable of starting a "civil
war" as they threaten, but they
can promote costly strikes by
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CURRENT INTELLIGENCE WEEKLY SUMMARY
2 April 1959
exploiting public anger over
price rises.
The anti-Peronista "32-
Group" unions, nominally'as?
strong as the Peronista unions,
have thus far condemned the
Peronista initiatives as po-
litically inspired. It is not
ITALIAN LABOR ELECTIONS
The Communist-dominated
Italian General Labor Confed-
eration (CGIL) in recent months
has gained support in a number
of shop steward elections
throughout the country, revers-
ing the trend of the last few
years. With the rate'of eco-
nomic growth lagging and in-
dustry trying to cut produc-
tion costs, the CGIL is in a
good position to expand Commu-
nist influence in Italy.
clear, however, how long they
can resist their unions' pres-
sure for token wage protests.
The military not only sup-
ports but insists on firm con-
trol of labui agitation, but--
as Frondizi has publicly ad-
mitted--his popularity is at a
low ebb.
SHOW PRO-COMMUNIST TREND
This upsurge of CGIL
strength results primarily from
its exploitation of the workers'
main grievance--layoffs carried
out or threatened in order to
cut production costs and put
Italian industry on a more com-
petitive level as European eco-
nomic integration takes effect.
In its campaign to publicize
both dismissals and civil serv-
ants' pay demands, the CGIL
has-sponsored a number of pro-
test:strikes which the free
unions have felt obliged to
join. Although these strikes
have been.on the whole unsuc-
cessful, they have tended to
persuade many workers that the
CGIL is their only real cham_-
pion.
Since about 1955, the
Christian Democratic - oriented
Italian Confederation of Free
Trade Unions (CISL) and the
Democratic Socialist Italian
Labor Union had.,been cutting..
into CGIL strength in the bal-
loting for workers' representa-
tives. In the past few months,
however, the CGIL has registered
gains at the expense of the free
unions in the Ansaldo shipyards
in Genoa, the Michelin (tires)
and RIV '(ball-bearing) plants
in Turin, and the engineering
sector of the huge government-
controlled IRI:complex. At the
Ravenna rubber plant of. the
state hydrocarbons agency IENI,
the CGIL last month ran 'for the
first time and won 45_?percent
of the votes, cutting the CISL
from 68 to 35 percent.
CGIL prospects for further
gains appear good, particularly
if the rate of economic growth
continues to lag and progress
in closing the gap in average
income in the north and south
remains slow. Unemployment--
still almost one tenth of the
total labor force--would become
an even more serious issue if
business interests induced the
government to accelerate the
closing of unproductive plants
that heretofore survived only
by government assistance.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
2 April 1959
COMMUNIST CHINA SET FOR ANOTHER "GIANT LEAP"
The stimulus provided last
year by the programs associated
with the "giant leap forward" in
Communist China produced the
most rapid annual rate of eco-
nomic growth yet achieved by
Peiping. This year the regime
will concentrate on "four great
targets"--18,000,000 tons of
steel, 380,000,000 tons of coal,
525,000,000 tons of food grains,
and 5,000,000 tons of cotton.
The "leap forward" in eco-
nomic development last year
probably grew out of the re-
gime's dissatisfaction--already
evident in late 1957--with the
rate of growth achieved during
the First Five-Year Plan (1953-
57). The regime, believing
that heavy concentration on
large-scale, modern industry
failed to make optimum use of
China's resources, especially
its huge reservoir of underem-
ployed manpower, departed sharp-
ly from its previous complete
reliance.-on the Soviet model.-
In the giant leap, a series
of programs designed to bring
this manpower into fuller use
was launched. These
took the form of im-
mense corvees in wat-
er conservancy and
other agricultural
projects and the es-
tablishment of large
numbers of small-
and medium-size in-
dustrial enterprises.
Since labor was
the chief ingredient
of the leap, it was
necessary for the re-
gime to whip up pop-
ular fervor. All
weapons in Peiping's
armory of mass per-
suasion were brought
to bear, and the re-
sponse was a testi-
monial to the hold
the party has over the people's
minds and lives. China's labor
surplus was not only absorbed,
but a manpower shortage devel-
oped. As the year wore on, the
program gathered steam and the
official plan for 1958, which
had been set before the public
in February, was all but aban-
doned. Production targets set
under the impetus of the leap
spiraled higher and higher.
The Leap in 1958
Peiping claims that the
1958 leap was a resounding suc-
cess. Published figures main-
tain that China doubled its pro-
duction of steel, coal, machine
tools, grain, and cotton--an
achievement without precedent.
The stimulus provided by
the leap produced the most rap-
id annual rate of economic
growth yet achieved by the Chi-
nese Communists. Production
rose to record heights in both
industry and agriculture, and
efforts to improve techniques
and diversify the economy met
with considerable success. It
COMMUNIST CHINAS SPIRALING'LEAP-FORWARD'TARGETS
MILLION TONS
CONFIDENTIAL
3801(
MAR MAY AUG DEC 1959
RASR TARGET
GOAL FDRYRAR__ _ __J OLIRMi
1958 A50F CLAIM
CONFIDENTIAL
FEB AUG
GOAI FOR YEAR
1950 AS Of
DEC
1958
CLAIM
OWN
CLAIM
1959
TARGET
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CURRENT INTELLIGENCE WEEKLY SUMMARY
2 April 1959
is likely that the physical vol-
ume of industrial output was
very close to its alleged level,
but that agricultural output
probably fell far short of Pei-
ping's claims.
The regime's statistical
services, which until last year
had been reasonably accurate in
most respects, probably deterio-
One writer complained that ex-
aggeration "adds a false tint to
the fruits of the people's labor
and taints the original hue so
they cannot tell the genuine
from the false."
Strains in the Economy
Peiping has admitted that
there were "defects" in the 1958
EXAMPLE OF CHINESE COMMUNIST "LEAP FORWARD" PLANNING
Target: To raise the annual capacity of the No. 1 Automobile Plant
in Changchun from 30,000 trucks and cars to 150,000.
FORMER BUDGET "LEAP FORWARD" 011DGE11
$ 122,000,000 from government....... COST....... $15,850,000 absorbed by Plant,
budget at no cost to government
EO1!I PMENT
3,700 pieces of machinery........... TO BE ADDED"'* ......... 800 Pieces of machinery
358,800 square yards ....................FLOOR SPACE 167,640 square yards
TO BE ADDED ?????????
rated under the tremendous pres-
sures to meet the spiraling
targets. Peiping insisted that
its statistical service play a
political role in "stimulating"
the leap, a euphonism for en-
couraging production by exag-
gerating claims of success. In
addition, the slapdash. nature
of some of the leap's campaigns
and the sweeping administrative
changes introduced during the
year, notably the communes, led
to the use of new and untested
statistical practices as well
as of numbers of inexperienced
personnels Reporting, for ex-
ample, from the thousands of
primitive iron and steel fa-
cilities could not have been
very accurate..
The Soviet Union appar-
ently has found the extrava-
gance of the Chinese claims
embarrassing--taken at face
value they mean that the Chi-
nese have outstripped the USSR
in rate of growth--and they are
seldom aired in the Soviet press.
There were signs late last year
that Peiping was concerned about
statistical "exaggeration" and
"concealment of shortcomings,"
leap, "the time being
short, the task urgent,
and experience inade-
quate." Shortages of
raw materials began to
be felt early, as users
committed to high lev-
els of output competed
for them. The attend-
ant problems were ac-
centuated because the
transportation system
was not equal to the
demands put on it. Es-
pecially in the second
half of the year, con-
gestion was pronounced on the na-
tion's railroads, in its ports,
and along its waterways. Indi-
vidual plants had to cut back
or suspend operations because
of it lack of raw materials.
The pursuit of certain pro-
grams led inevitably to the ne-
glect of others. Heavy emphasis
on the fall iron-and-steel drive
and the headlong formation of
communes for a time "squeezed
out" other things such as the
production and distribution of
secondary farm products? The
result was an embarrassing
shortage of meat, poultry, fish,
eggs,, vegetables, and the like
in the cities. The regime's
farm procurement programs,
geared to unrealistic output
figures, have been in trouble,
and there have been reports of
food shortages in rural areas
as well. There was "unevenness"
in the iron and steel industry.
More pig iron was made than
could be turned into steel, and
more steel than could be rolled
into usable shapes.
The labor force, in addi-
tion to being taken from its
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CURRENT INTELLIGENCE WEEKLY SUMMARY
2 April 1959
normal and necessary pursuits,
was badly overworked. For ex-
ample, the iron and steel drive
occupied some 25 percent of the
rural labor force at the height
of the fall harvest season.
Crops stood unharvested or were
harvested hastily and poorly.
There were complaints near
the end of 1958 that China
was failing to meet its export
commitments on time or in suf-
ficient quantity. These fail-
ures reflected transportation
and distribution difficulties
as well as a rapidly growing
domestic demand for items such
as cement, iron ore, and in-
dustrial chemicals--items
China formerly exported with-
out strain,
Certain agricultural pro-
grams were given heavy publicity
during last year's leap--more
irrigation, deep plowing, close
planting, and heavy manuring,
There is merit in some of them,
but it is likely they were
pushed too far and too fast,
being adopted for fairly wide
use before adequate considera-
tion was given to the physical
and engineering problems in-
volved 4
In any irrigation system,
for example, there are consid-
erable problems in allocating
water, and with silting and
drainage; plowing below a
depth of one foot in some soils
is useless and sometimes harm-
ful; the nutrient content of
the immense amounts of pond
mud and manure used is low. In-
creased seeding rates without
large increases in fertilizer
and water may actually reduce
yields.
While marked progress was
made last year in the regime's
continuing efforts to diversify
the rural economy, there were
still "weak spots." Peiping
identifies some of them as
oil-bearing crops, other in-
dustrial crops, and secondary
items like meat, poultry, eggs,,
fish, and vegetables.
There also were "weak spots"
in industry. Production of
electric power, chemicals, pe-
troleum, transportation equip-
ment, and certain raw materials
did not keep pace with the
rapidly expanding demand. Some
of the leap programs were not
as noteworthy as was the heavily
publicized iron and steel drive.
Peiping has been relatively
quiet on the results of its ef-
forts in small-scale production
of copper--the announced
goal!. at one time was to in-
crease production thirtyfold--
aluniinum, chemical fertilizer,
and synthetic petroleum.
The regime has acknowledged
indirectly the impermanence of
many of the primitive iron- and
steel-making facilities erected
during the drive. The process
of weeding out the less effi-
cient producers had begun by
last October, and Peiping now
insists that where materials
and fuels are difficult to ob-
tain, operations should be
stopped immediately.
The hurry-up programs of
the leap often drove one of
China's scarcest economic re-
sources--its modern industrial
plant--at rates or for purposes
beyond that for which it was
designed, hastening the depre-
ciation of the equipment. In
addition, Peiping's demands
that construction projects be
speeded up resulted in instances
of corner-cutting and shoddy
building.
Another Leap for 1959
Despite these nagging prob-
lems--which Peiping professes
to welcome as tangible evidence
of the nation's rapid economic
progress--the regime obviously
intends to pursue virtually the
same economic techniques this
year. It argues that the
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CURRENT' INTELLIGENCE' WEEKLY SUMMARY
2 April 1959
Cartoon from Shansi Daily pictures the effect on village life of this year's bumper harvest,
advance in rural mechanization, and development of small-scale local industry.
economic gains made last year
far outweigh the problems, and
that the nation began 1959 in
a far stronger position mate-
rially than it began 1958, that
it had a greatly augmented
technical force, and that the
party had a vastly "enriched"
knowledge of how to promote
mass labor campaigns.
The leap this year will,
the regime believes, be "big-
ger and better" than last
year's, but it will also be
"more balanced," To achieve
this better balance, Peiping
has ordered a number of adjust-
ments in its leap programs and
further adjustments can be ex-
pected. It hopes these will
result in a more realistic ap-
proach--one which pays closer
attention to a national plan
and the "objective laws of pro-
portionate development." In
general the adjustments, striv-
ing to avoid last year's shot-
gun approach, provide for a
greater concentration of forces
on key production targets and
construction projects. Peiping
is still in the process of de-
fining these reassessed eco-''
nozt.-ic ` .prior i t i es ,
Steel is described as the
key link in industrialization,
and Peiping is directing its ef-
forts to improve the relative
position within the steel-making
industry of iron ore extraction,
coke making, and steel rolling.
The machinery industry is to
speed up the supply of equip-
ment to these facilities.
Efforts are also being made
to step up the production of
electric power, chemicals, pe-
troleum, and transportation and
communication equipment--items
which fell short last year.
Large-scale heavy industry will
probably have first call on
scarce materials. In agricul-
ture, attention is being shifted
from mass irrigation, from deep
plowing, and from backyard iron
and steel activities to subsid-
iary, farm work, fertilizer
gathering, and actual field
work.
More marked adjustments
are being made in the construc-
tion field, Peiping says that
the construction "battlefront
must be shortened" by cutting
out projects which are adjudged
less important for the moment,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
2 April 1959
Money and manpower are to be
concentrated on projects near
raw materials, fuels, and mar-
kets in order to gain the great-
est economic results in the
shortest time with the smallest
investment. This does not mean
the program to build small-scale
industries is being dropped,
however. Chen Yun, a top eco-
nomic policy-maker now special-
izing in construction matters,
has urged that the "greater
proportion" of construction ef-
forts be directed toward medium-
and small-scale industries.
Peiping continues to warn
against too prodigal a use of
intensive labor techniques, and
the party central committee has
ruled that, in general, farm la-
borers should work only eight
hours a day, with longer hours
permitted during "busy seasons."
While recognizing that the suc-
cess of the 1959 leap will de-
pend largely on a tremendous
outpouring of labor similar to
that in 1958, the regime evi-
dently hopes to increase labor
productivity through better
tools and equipment and organ-
ization, as well as through the
effective mass methods used last
year.
The Leadership and the Leap
Chinese Communist leaders,
from Chairman Mao down, are
deeply committed to the success
of the leap. No public voice
is raised against it. Through-
out the leap, however, there
have been frequent references
to the existence of a persist-
ent group, most likely within
the party, which shies away
from the hazards involved. This
"gloomy clique" was pictured at
midyear. as feeling that the
year's final statistics would
bear out its misgivings. Thus
alerted, the leaders at year's
end fired a salvo of figures
at the doubting elements show-
ing how the leap had brought
"unprecedented" success.
Apparently, however, these
unidentified elements are not
convinced, Tan Chen-lin, the
leading propagandist for the
leap;, said in February there
were still calloused doubt-
ers who felt that the leap pro-
grams were "not reliable" and
who asked: "Why is there no
flour if there was a bumper
wheat crop?" and "Why do we
have to eat sweet potatoes if
grain output increased so much?"
Tan predicted that this year's
leap would deal a crushing blow
to such persons, adding darkly,
"If the ideological problems of
these comrades are not solved
quickly, damage will be done to
this year's leap.,,
Outlook
Peiping gives no hint that
it will drop either its highly
suspect 1958 production claims
or lower its ambitious 1959 tar-
gets. The four great targets
for steel, coal, grain, and cot-
ton Eppear to have been based on
the 1.958 figures and are, the
regime candidly acknowledges,
"by no means easy." Their ful-
fillment will require "heroic
efforts."
The central question facing
Peiping at present appears to be
whether the working people will
put out the "heroic efforts" re-
quire!d without roughly commen-
surate material rewards. There
is some evidence that Peiping
has reason to be concerned on
this score. The current food
shortages, substitute rations,
and the tight lid the regime is
keeping on all consumption is
evidently making it difficult
to whip up the desired degree
of labor "enthusiasm." It is
doubtful that the available de-
vices to raise labor productiv-
ity will take up all the slack.
The strains and difficulties
encountered in the leap to date
have prodded the regime to make
minor adjustments in its leap
programs. If the present course
is continued, however, these
strains and difficulties are apt
to break out in a more virulent
form. (Prepared 25X1
by ORR)
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level of more than 3,000,000
b/d--about 600,000 barrels more
than the combined daily output
of Kuwait and Saudi Arabia, the
leading Middle Eastern producers.
The average throughout the year,
however, is likely to be little
above 1958's 2,600,000 b/d.
CURRENT INTELLIGENCE WEEKLY SUMMARY
2 April 1959
RECENT PETROLEUM DEVELOPMENTS IN LATIN AMERICA
Latin America's share of
the world's production of crude
oil fell from 19.3 percent in
1957 to 18 percent in 1958 and
will probably continue falling
in 1959, although the amount
of oil produced in the area may
be somewhat higher than in 1958.
A production drop of about 175,-
000 barrels a day (b/d) in 1958
in Venezuela--the world's lead-
ing exporter and second-ranking
producer after the United States
--was only partially offset by
gains in Brazil, Mexico, Co-
lombia, and Trinidad. The larg-
est percentage gain in crude
production was registered by
Brazil, but Argentina may win
this position in 1959
as a result of its re-
cent contracts with
foreign oil companies
for more rapid devel-
opment of its oil re-
sources.
Major Caribbean
Producers
In view of the
present world surplus
of oil, the outlook
for the petroleum in-
dustry in Venezuela,
which accounted for
about 78 percent of
Latin American produc-
tion in 1958, depends
in part on the effects
Last December's retroactive
increase in the Venezuelan in-
come tax in effect altered the
50-50 profit-sharing arrange-
ments between the government
and the foreign oil companies
to give the government 60 per-
cent or more. This change,
which in part reflects the ris-
ing tide of nationalism in Vene-
LATIN AMERICAN
CRUDE OIL PRODUCTION
PRODUCTION CHANGES
1956- 1958 DAILY AVERAGE IN PERCENT)
(THOUSAND BARRELS) 1957 1958
OVER 56 1957
1956 1957 1958 EST. 19
SECRET
MEXICO
COLOMBIA
TRINIDAD
ARGENTINA
PERU
BRAZIL
CHILE
BOLIVIA
ECUADOR
CUBA
TOTAL LATIN AMERICAN PROD'N
TOTAL WORLD PRODUCTION
LATIN AMERICAN PRODUCTION
AS PERCENT OF WORLD TOTAL
of the competition from cheaper
Middle Eastern oil and in part
on the' mandatory oil import
control system'adopted by the..
United States in March to replace
the "voluntary" program. It is
not yet clear how any necessary
reductions in oil imports into
the United States will be al-
located by the large internation-
al oil companies between their
Venezuelan and their Middle East-
ern affiliates, but the immediate
Venezuelan political reaction
was unusually moderate and re-
flected official understanding.
Venezuelan production in
January 1959 reached a record
257.1 252.6 274.0 - 1.8 8.4
119.7 125.3 130.0 4.7 3.7
79.0 93.3 104.0 18.1 11.4
86.7 92.8 93.6 7.0 .9
50.2 52.7 51.0 4.8 -3.1
11.1 27.7 50.0 149.7 80.5
9.7 11.9 15.5 22.8 30.4
8.7 9.8 9.4 12.2 -4.0
9.3 8.7 9.0 - 5.7 2.9
1.5 1.1 .9 -31.4 - 1.7
3,089.8 3,455.1 3,341.4 11.8 - 3.3
6,671.6 17, 889.8 18,117.4 7.3 1.3
18.5 19.3 18.0 - -
zuela, will probably have reper-
cussions in other oil areas and
may reduce the rate of investment
in the Venezuelan oil industry,
as well as in other segments of
the Venezuelan economy.
Mexico, the second largest
area producer, averaged 274,000
b/d in 1958, a substantial in-
crease over 1957. The national
oil monopoly, Pemex, which by
the end of 1958 had almost elim-
inated the country's need to
import refined products, recent-
ly obtained about $75,000,000
in loans from private US and
European Common Market sources
for pipeline construction and
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%we
Latin. A
CURRENT INTELLIGENCE WEEKLY SUMMARY
2 April 1959
PRODUCTION:
(barrels per day)
over 2,500,000
100,000 to 300,000
50,000 to 100,000
S Venezuela British Guiana
French Guiana
olombia-- }
development of a petrochemical
industry. Pemex had not pre-
viously been able to obtain
sizable credit from official US
sources, and Mexico continues
to oppose direct foreign par-
ticipation in its oil industry.
Both Colombia and Trinidad,
the third and fourth largest
producers in the area, increased
production in 1958, continuing
their pattern of annual gains
in recent years. In Colombia,
where increased petroleum ex-
ports could eventually reduce
the country's heavy dependence
on coffee ,ales for foreign ex-
change, th~3 government is con-
sidering m-difying the oil code
to make 40 percent the maximum
tax on net company income--a
move which would make Colombia
more attractive, from a taxation
standpoint, for oil investment
than Venezuela.
Argentina and Brazil
The most striking modifi-
cation of official oil policy
in 1958 occurred in Argentina,
the fifth largest producer in
Latin America. Emphasizing
that accelerated petroleum de-
velopment was one of the steps
essential to economic and f?i-
nancial recovery, President
Frondizi announced last July a
policy of making oil develop-
ment contracts with private
firms on a nonconcession basis
and under the direction of the
State Oil Fields Administration.
To assuage nationalistic senti-
ment, he has nationalized all
petroleum and coal resources
not under private concession on
1 May 1958.
Contracts totaling more
than $500,000,000 have already
resulted from this policy and
others are under consideration.
The contracts vary as to type,
size, and duration. Some are
to provide only services and
equipment on credit, while others
require private firms to assume
a:large share of the risk. In
addition, the USSR, in an agree-
ment signed on 27 October, has
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eric Oil-Producing Areas
Dominican
.r' ritish Honduras' Haig v
Guatemala_ r. n
El Salvado '? Nicaragua
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CURRENT INTELLIGENCE WEEKLY SUMMARY
2 April 1959
offered to supply Argentina
$100,000,000 worth of petroleum
equipment--about a third of
which reportedly has been or-
dered.
The government believes
that its new petroleum policy
will help make Argentina self-
sufficient in oil within about
three years and may later pro-
vide a source of foreign ex-
change. Petroleum imports
cost Argentina about $271,000,-
000 in 1957, or about one fifth
of its total imports, and have
been an important factor in its
trade deficits over the past
decade. Work under contracts
already signed may rapidly in-
crease last year's average pro-
duction of about 93,600 b/d.
The Brazilian state oil
enterprise, Petrobras, which
has a legal monopoly on oil ex-
ploitation, has more than quad-
rupled production since 1956.
Production equals about 20 per-
cent of domestic demand, as
compared with about 3.5 per-
cent in 1955. Brazil's 50,000-
b/d production in 1958 was about
80 percent higher than in 1957
and the largest percentage in-
crease in the area. Petrobras'
increases have had little im-
pact on the nation's $250,000,-
000 annual oil deficit, however,
and may have been attained
through excessive pumping rates.
Since no wells were brought in
during the year, Brazilian pro-
duction may not continue to in-
crease at these rates.
Although the Brazilian pub-
lic displayed considerable in-
terest in Argentina's develop-
ment contracts with private
foreign companies, no influen-
tial elements have proposed sim-
ilar arrangements for Brazil,
and no perceptible change has
taken place in nationalistic
opposition to foreign participa-
tion in the oil industry. More-
over, the interest of foreign
companies in Brazil seems lim-
ited because there are no fully
proved, sizable reserves except
in areas now being exploited by
Petrobras.
Any re-examination of Brazil's
basic oil policy would have to
take into account a number of
factors, including possible Ar-
gentine success with foreign
contracts, Petrobras' demon-
strated inability to make in-
road;s on the national oil defi-
cit, and a change in the strong
army backing of Petrobras as an
exclusive monopoly.
New Concession Areas
In areas where new conces-
sions have been granted to
foreign companies during the
past five years--especially Par-
aguay, Bolivia, Ecuador, Guate-
mala, Costa Rica, and Panama--
exploratory and exploitation
work conducted thus far has
either been discouraging or is
in a preliminary stage. In Par-
aguay, the first two of four
exploratory wells planned by
the Pure Oil Company on its con-
cession have been dry holes..
Gulf Oil Corporation, which
has the largest foreign conces-
sion in Bolivia, is pessimistic
about its general prospects on
its holding after spending some
$2,500,000 in initial exploration
and exploitation. Although an
increase in Bolivian production
and exports would tend to al-
leviate the economic crisis,
partly caused by declining rev-
enues from foreign sales of tin,
such an increase in the near
future will depend largely on
the state oil enterprise, which
controls most of the fields with
proved reserves. Bolivian pro-
duction in 1958 dropped slightly,
to about 9,400 b/d, but drilling
activity in 1959 suggests that
production may increase substan-
tially.
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SECRET
CURRENT INTELLIGENCE wEE:KLY SUMMARY
2 April 1959
Ecuador, where produc-
tion during the past three
years of increased consumption
has remained constant, has be-
come a net importer of petro-
leum and granted new concessions
to US companies in 1958. The
controlled, below-cost prices
on domestic gasoline sales
imposed on certain foreign pro-
ducers in both Ecuador and
Peru, however, have been seri-
ous deterrents to needed ex-
pansion of facilities of com-
panies in both areas. Neither
the Ecuadoran nor the Peruvian
government has been willing to
face the strong pressures, es-
pecially from powerful union
groups, against any change in
the artificial prices.
There were no discoveries
in Central America or Panama in
1958. In Guatemala, where some
24 US companies have already
invested $18,000,000 in explora-
tory work, drilling operations
are just beginning. In Costa
Rica, the Union Oil Company of
California, former principal
operator there, has terminated
its activity. Although off-
shore drilling has been aban-
doned in Panama, where a number
of foreign oil companies have
concessions, other exploratory
work is in progress.
Bloc Activity in Area
The Soviet bloc in 1958
registered some successes in
its efforts to exploit trade
deficits resulting in part from
oil imports from hard-currency
areas. Prior to its $100,000,-
000 credit offer to Argentina,
the USSR made a successful low
bid in June to supply 7,266,000
barrels of crude oil, ~ Brazil
has also agreed to barter cacao
for Soviet crude oil, although
the amount of petroleum involved
--1,450,000 barrels--is less
than 1 percent of Brazil's
total requirements. Rumania
emphasized its ability to sup-
ply oil equipment during nego-
tiations for trade and payments
agreements with Argentina and
Brazil in 1958, and signed a
$4,000,000 contract with Ar-
gentina for oil equipment.
The Uruguayan Central Bank
instructed the state oil monopoly
to purchase $10,000,000 worth
of crude oil--about 30 percent
of Uruguay's annual import needs
--from the USSR, thus increas-
ing the bloc's already substan-
tial percentage of Uruguayan
total trade. In addition, the
Bolivian state oil enterprise
accepted a Czech offer to provide
geologists to assist in the
development of government-con-
trolled oil resources--a decision
which, however, has apparently
not yet been approved by Presi-
dent Siles.
Local Communist groups,
often supported by nationalistic
elements, have increased their
efforts to exploit public senti-
ment against foreign oil com-
panies, particularly in Argentina,
Venezuela, Colombia, Paraguay,
and Bolivia. In Colombia, the
Communists have recently expanded
their influence among the major
oil workers' unions and have
opened a propaganda campaign
calling for nationalization of
the foreign companies.
A concerted Bolivian Commu-
nist propaganda effort, alleging
that foreign concessionaires are
attempting to destroy the state
oil agency, apparently has had
considerable success even in top
government circles and has rein-
forced increasing pressure to re-
vise the petroleum code, which is25X1
favorable toward foreign partic--
sources.
ipation in Bolivia's oil re-
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tONF1DENT1% Ime.
CONFIDENTIA12
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