CURRENT INTELLIGENCE WEEKLY SUMMARY

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• Document Creation Date: December 20, 2016
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• Publication Date: October 27, 1999
• Content Type: SUMMARY

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CONFIDENTIAL
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CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
COPY NO. 56
OCI NO. 1012/60
17 March 1960
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
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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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SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
MMaTgh-.,,964
OF IMMEDIATE INTEREST
EAST-WEST RELATIONS
Moscow's effort to main-
tain a conciliatory attitude
prior to the summit was evident
in its handling of the issue of
passes for the Allied military
liaison missions accredited to
Soviet forces in East Germany.
The announcement on 14 March,
which rescinded the passes con-
taining references to registra-
tion with the "German Democratic
Republic," appears designed to
portray the move as a pre-sum-
mit concession, in order not to
"worsen the atmosphere between
the great powers."
Moscow probably considered
that the highly publicized dis-
pute had become counterproduc-
tive, particularly in the light
of Khrushchev's public statement
of 5 March calling on all states
to refrain from any action which
could endanger the favorable
pre-summit Atmosphere. The So-
viet leadership probably con-
cluded that the American an-
nouncement that there would be
no high-altitude flights to
Berlin at this time and the
Western statement on 12 March
recalling Khrushchev's state-
ment placed the USSR in an in-
creasingly unfavorable position
on this issue.
Privately, Moscow has at-
tempted to gain some advantage
from the dispute by linking the
duration of the validity of the
original passes to the over-all
solution of the questions at
the summit. General Vorontsov
informed the Western military
officials of this on 14 March.
Moscow apparently intends to
retain this issue as an element
of pressure on the West.
Soviet efforts to appear
conciliatory were also appar-
ent in the prompt rescheduling
of the Khrushchev visit to
France in order to forestall
speculation of a possible "dip-
lomatic illness." Khrushchev's
illness appears to be genuine.
Foreign Minister Gromyko in-
formed a Western ambassador that
the Soviet leader was indisposed,
and a Soviet doctor told an-
other member of the diplomatic
corps that Khrushchev has had
a severe case of the grippe.
French Foreign Minister
Couve de Murville feels that
Germany and Berlin will be the
main items in Khrushchev's talks
with De Gaulle, He also believes
that the Algerian question will
be raised by Khrushchev and not
the French, but that this will
lead to a general discussion of
Africa--particularly Guinea.
Disarmament will also be on the
agenda, according to the for-
eign minister.
Soviet bloc officials are
also continuing their efforts
privately to encourage Western
apprehension over some definite
Soviet action on a separate
peace treaty after the summit
conference. An East German of-
ficial spelled out the detailed
"consequences of such action,"
listing specifically road
tolls and rail transit fees
among the measures that East
Germany would undertake to
isolate West Berlin.
Disarmament Conference
In his opening statement
on 15 March, Soviet delegate
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Zorin portrayed the Soviet plan
as "a radical solution" which
has gained world-wide support
and a unanimous UN endorsement.
While indicating that the Soviet
Government would consider amend-
ments to Khrushchev's plan as
well as other proposals, Zorin's
strong criticism of the Western
plan suggests that Moscow will-
reject it as the basis for nego-
tiation on the grounds that it
is an inadequate response to
the conference's objective of
negotiating a treaty for "gen-
eral and complete disarmament."
Zorin's call for "an under-
standing, first of all, on the
basic provisions of a general
treaty" indicates that his im-
mediate objective is to estab-
lish the Soviet proposal as the
first agenda item by obtaining
Western agreement "in principle"
to general and complete dis-
armament as the main task.of
the conference. In his greeting
to the conference, Khrushchev
emphasized this approach by
stressing the "earliest draft-
ing" of practical methods for
"total and universal disarma-
ment" as the purpose for con-
vening the conference.
The Soviet delegate to the
nuclear test talks last week
hinted broadly that the USSR
would accept the American pro-
posal of 11 February for a lim-
ited treaty if the United States
would agree to a moratorium on
small underground tests below
the threshold set by the Ameri-
can plan. Such an arrangement
in effect would result in the
comprehensive treaty banning
all tests which Moscow has long
advocated.
Soviet delegate Tsarapkin
sought to increase pressure on
the United States to accept such
a moratorium by attempting to
demonstrate that a split exists
between the two Western powers
on this issue. He observed that
an agreement could be quickly
reached if the United States
would make it clear that the
threshold proposal is designed
only to bring about a gradual
extension of control measures
to cover all testing. Tsarap-
kin pressed the Western dele-
gates either to confirm this
interpretation of the American
plan or to acknowledge that the
plan was intended to legalize
small underground tests.
This question drew a state-
ment from the British delegate
reserving his position on what
Britain's attitude would be to-
ward tests below the threshold.
In contrast, the American dele-
gate declared there would be
no legal prohibition on such
tests. A British delegation
spokesman subsequently inter-
preted Tsarapkin's statement
as a hint that Moscow would
accept a treaty based on the
American threshold proposal if
this were combined with a
moratorium on tests below the
threshold.
The Soviet delegation pre-
sumably will be encouraged to
continue these tactics by the
British delegate's statement
in the 14 March meeting which
described Tsarapkin's statement
as "important, significant,
and potentially encouraging."
The Soviet leaders have
been holding a proposal for a
moratorium on small underground
explosions in reserve for some
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CURRENT INTELLIGENCE WEEKLY SUMMARY
17 March 1960
Moscow may feel that, in
view
of a possible
Easter re-
cess,
the time has
come for
some move to isolate the main
issues at the conference and
to set the stage for a com-
Iraq
promise proposal which Khru-
shchev can press at the sum-
mit. Any Soviet proposal would
probably tie acceptance of the
American plan, accompanied by
a moratorium on the tests be-
low the threshold, to Western
agreement on a small fixed
quota of on-site inspections.
in by OSI)
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pendulum continues to swing
against the Iraqi Communists,
albeit slowly. There are in-
dications that the Communist-
front Republican party's ap-
plication for legalization is
running into difficulties with
the anti-Communist Interior Min-
istry. No word has been forth-
coming about the results of the
orthodox Communists' appeal to
Qasim for reconsideration of
their application for status.
Qasim may side-step this thorny
problem by referring their case
to the Court of Cassation, Iraq's
highest appeal court, which is
unlikely to issue a verdict
against Qasim's wishes.
A new sign that the Qasim
government is seeking a more
truly neutral policy between
the Soviet bloc and the West is
a request sent to the American
Embassy seeking assistance to
fill 230 teaching positions at
Baghdad University, as an al-
ternative to hiring more Soviet
bloc personnel.
Jordan-UAR-Iraq
With military tensions
further relaxed between the UAR
and Israel, attention in the
area has been increasingly fo-
cused on the acrimonious inter-
Arab quarrel over the Palestine
issue. The UAR and Iraq have
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CURRENT INTELLIGENCE WEEKLY SUMMARY
fib. ,]$60
each made independent proposals
for creation of a separate Pal-
estinian ! 4tate." Jordan -hta
vigorously opposed these pro-
posals because, by encouraging
separatist tendencies, they
tend to jeopardize Jordanian
control of the Palestinian West
Bank, which was annexed in 1950.
King Husayn, as a means
of undercutting the persistent
UAR and Iraqi -propaganda,
now has anudnced willingness
to hold a West Bank plebiscite.
He would offer Jordan's Pales-
tinians the choice of a separate
Palestine state, affiliation
with another Arab state, or
continued association with Jor-
dan. According to his plan,
a "large and representative"
assembly of people from the
West Bank is to be convened in
Jerusalem. If this assembly
elects to have a plebiscite,
Husayn has said he would call
on the Arab League, and pos-
sibly the UN, to conduct and
supervise it.
UAR Deputy Foreign Minis-
ter Dhu al-'Figar Sabri began
the first leg of his two-month
good-will tour of Latin America
with a stop in Havana last week.
The Cuban visit ended on 15
March with a press conference
in which Sabri is reported to
have proclaimed that Cairo is
prepared to "discuss" the pos-
sible dispatch of men and arms
to Cuba in the event of a for-
eign invasion. In another re-
mark calculated to curry Cuban
favor, he announced that the
UAR will vote for Cuba's nom-
ination to a Security Council
seat. Cairo has already con-
cluded a sizable cotton-sugar
barter deal with Havana.
The UAR Government has
shown somewhat more restraint
in other dealings with the
Castro regime. Cairo also ap-
pears to be giving cautious
treatment to Castro's plans for
a highly publicized Havana con-
ference of underdeveloped na-
tions.
Sabri's tour, which will
include 14 countries, was pre-
ceded by an intensive effort by
Cairo to strengthen its diplo-
matic representation in Latin
America. UAR missions have been
established in nine countries,
and eight more are under nego-
tiation. Cairo hopes to gain
Latin American sympathy for its
neutralist. policies and support
in the various controversies in
which it is involved in the
United Nations.
Cairo's Al Akhbar, respond-
ing to a New York Times article
expressing some concern over Sab-
ri's trip, stated on 14 March
that "there is nothing of an un-
friendly nature directed against
the United States or any other
state in a rapprochement between
the Arabs and Latin America."
Most of the UAR's missions, how-
ever, have leaned rather heavily
on an anti-imperialist line,
which has a spec al anti-US con-
notation in Latin America.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
. 17, mjtroh ,1.960
The official visit to Cairo of
Panamanian Foreign Minister Mi-
guel Moreno during his current
ten-nation world tour: and
the recent appointment-of 'a
Panamanian: minister to the UAR
are further indications 1.0f-
':in-creasingly close UAR-Panamanian
ties.
The UAR has made less not-
able progress in courting other
Latin American states, but there
is no sign of a letup in its ef-
forts. Large Arab minorities
throughout the area are a special
target of UAR propaganda, and
the various missions continue
to expand cultural activities
aimed at these groups. Anti-
Zionist propaganda is also a
prominent weapon of the UAR dip-
lomats. Sabri probably will also
seek to encourage exchanges of
high-level personages.
COMMUNIST ACTIVITY IN CUBA
Cuba is becoming the cen-
ter of Communist activity in
Latin America. A hemisphere
peace conference under the
auspices of the Communist-front
World Peace Council is being
planned for Havana in May or
June, and the Communist hand is
also evident in the "Friends
of Cuba" societies being formed
in most Latin American countries.
Communist bloc propaganda con-
tinues its active support of
Castro,, and Cuba's economic,
labor, and cultural contacts
with the bloc are increasing.
Representatives of seven
Latin American affiliates of
the Communist-front World Peace
Council (WPC) met with Soviet
and French WPC members in Ha-
vana from 9 to 12 March to plan
a hemispheric, peace conference
there in May or June. Such a
conference would implement
plans made by Latin American
Communists meeting in Moscow at
the time of the Soviet 21st
party congress in early 1959
to strengthen the "peace move-
ment" and to promote a "peo-
ples' congress."
countries attended the plenary
session of the Cuban Communist
party (PSP) in early March.
During the meeting, the PSP an-
nounced its support for the
"week of solidarity with the
struggles of the Latin American
peoples" which the Communist-
infiltrated Cuban Labor Confed-
eration has called for later
this month.
Cultural and propaganda
activities by the "Friends of
Cuba" societies being formed
in most Latin American coun-
tries are promoted through the
Cuban Casa de las Americas, run
by the pro-Communist wife of
the minister of education.
Castro's subsidized press agency,
Prensa Latina, cooperates in
these efforts. The societies
attract leftist, non-Communist
groups who still see Castro as
a hopeful example, but they
are in effect Communist fronts.
The Sino-Soviet bloc con-
tinues its active support of
Castro, particularly in the
propaganda and economic fields.
The New China News Agency, TASS,
and other bloc news sources
Communist leaders from promptly report Castro's anti-
several other Latin American SECRET charges, reflecting the close
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CURRENT INTELLIGENCE WEEKLY SUMMARY
ties established with Prensa
Latina during Februar
East Germany
has signed a trade agreement
with the Cuban National Bank,
and the Czechs are already ac-
tive commercially in Cuba.
The charges made by Cuban
workers on 14 March of abuse
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PART I OF IMMEDIATE INTEREST
and bad working conditions at
the US naval base at Guantanamo
Bay followed a marked increase
in reports that Castro plans a
formal demand for evacuation
of the base. The training and
arming of student, worker, and
peasant militia units and the
organization of youth brigades
seem to have been speeded up,
and the US Embassy reports that
the Castro- government has re-
ceived at least 20 shipments of
arms and ammunition.
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CURRENT INTELLIGENCE WEEKLY 8MMARY
17 March 1960
NOTES AND COMMENTS
New terrorist bombings
have contributed to the atmos-
phere of unrest in Argentina
prior to the 27 March elections
for some municipal offices and
one half of the Chamber of Dep-
uties; these elections will be
the first national vote on
President Frondizi's policies.
As on a number of other occa-
sions since he took office in
May 1958, Frondizi is faced
with reports of plotting by
several groups, vitriolic crit-
icism by opposition political
parties, and strong economic
complaints by both business and
labor.
Emergency security measures
subjecting saboteurs and ter-
rorists to military tribunals
were instituted on 14 March,
immediately after a bomb de-
stroyed an army intelligence
officer's home, killing one
child. Within the week, ter-
rorists also killed a family of
three living near an army arse-
nal which was bombed; they also
caused an eight-hour fire in the
state gas company and damaged
a major rail line.
The President ordered the
armed forces on alert on 15
March and warned that military
courts could impose a death sen-
tence--a drastic step in the
light of Argentina's strong op-
position to capital punishment.
An executive decree effective
16 March declaring a "situation
of serious emergency"formalized
these steps, which were to be
limited to terrorism and to ex-
clude normal political and labor
activities.
The decree and extensive
raids on Peronista strongholds
also probably reflect extreme
caution in view of reports of
Peronista and Communist revo-
lutionary plotting, including
possible attacks by Peronista
"guerrillas" centered in north-
western Argentina. There are
only vague reports on the
strength of the "guerrillas,"
who are said to be mainly youths
belonging to the "Peronista Na-
tional Liberating Movement," but
the recent rise in the theft of
arms may have increased concern
over this group.
Peronista leaders have con-
tinued to exploit labor. for
political purposes and have
stressed that the'"Justicia-
lista party" is synonymous with
the outlawed Peronista party
and "recognizes the same chief."
This defiance has resulted in
constant military pressure on
Frondizi to curtail Peronista
activities, thus prejudicing ef-
forts to attract the Peronistas
into his Intransigent Radical
party.
The Peronistas and Commu-
nists, reacting to Frondizi's
call for proscription of their
candidates, have been campaign-
ing for a heavy protest blank
vote to exceed the vote received
by Frondizi's party. Peronista
strength has declined to about
25 to 30 percent of the electo-
rate since Peron was ousted. The
blank vote, however, is not en-
tirely Peronista, since a few
other parties have advocated
this means of protest in some
of the 1959 and 1960 provincial
elections.
Frondizi sees the blank
vote as reducing competition for
the 32 seats his party must win
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CURRENT INTELLIGENCE WEEKLY SUMMARY
to retain control of the Chamber
--newly increased to a total
of 192 seats. At stake are
97 seats. Frondizi admits a
loss of popularity because of
discontent, particularly over
austerity measures under the
US-backed stabilization pro-
gram. While the impact of the
program has been more severe
than Frondizi anticipated, he
hopes its benefits will become
evident before the Senate elec-
tions next year.
ALGERIAN CEASE-FIRE PROSPECTS
The Algerian rebel attitude
toward a cease-fire appears to
have hardened in the wake of
De Gaulle's implicit rejection
of rebel peace proposals call-
ing for joint French-rebel ad-
ministration of an Algerian
referendum. The rebels will
probably now step up their ef-
forts to "internationalize"
the war and to improve their
diplomatic contacts, including
those with Communist China
and the USSR. Despite their
recent rebuff, the Algerians
probably plan to make new ap-
proaches to De Gaulle whenever
they feel conditions are more
favorable, perhaps after weigh-
ing the results of the summit
conference.
Premier Ferhat Abbas, in
a statement issued on 14 March,
stated that De Gaulle's recent
pronouncements had "closed the
door to negotiations and peace
in Algeria," and reiterated
rebel demands that guarantees
of the fair application of
self-determination must pre-
cede any cease-fire. De Gaulle,
in statements to the French
Army between 3 and 5 March,
called for continued pacifica-
tion and endorsed Algeria's
continued association with
France. Charging that De
Gaulle "fears the popular ver-
dict" in Algeria, Abbas pledged
a continuation of the war "un-
til the attainment of our in-
dependence."
The rebels probably view
De Gaulle's recent public state
ments as his reply to their
overtures concerning a cease-
fire made in late February.
The rebels are believed to have
proposed
a ere be an
imme a e cease-fire based on
a withdrawal of rebel forces
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to areas near the Tunisian and
Moroccan borders. Within a
year of the cease-fire, a
referendum to determine Algeria's
future relationship with France
would be held, supervised by
the French, the Algerians, and
a third party to be designated.
The rebels probably view
this offer--which reportedly
was acceptable to rebel mili-
tary-commanders as well as
political leaders--as the most
reasonable which they could
reconcile with their own in-
terests. In view of De Gaulle's
continued refusal to discuss
such terms, however, the rebels
probably will renew their ef-
forts to "internationalize"
the war through anti-French
resolutions in the United Na-
tions and demonstrations of
Arab unity such as the proposed
Arab Legion of "volunteers" for
the Algerian fighting. Rebel
spokesmen have also stated their
intention of broadening diplo-
matic contacts and have in-
dicated that the rebels were
considering the appointment
of an ambassador to Communist
China, with which they desire
the "closest possible relations."
Peiping probably would
welcome rebel diplomatic
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increased, while farm prices
have lagged behind and peasant
indebtedness has been intensi-
fied by two bad crop years.
CURRENT INTELLIGENCE WEEKLY 9UYYABY
17 March 1960
representatives. The Chinese,
who have taken every opportu-
nity to encourage continued
Algerian resistance, would be
likely to try to use a perma-
nent Algerian representative
to increase their influence
with more extreme elements in
the rebel movement and to ex-
ploit his presence in propa-
ganda implying official Algerian
recognition of Peiping as a cham-
pion for nationalist movements.
Despite the tough tone of
their recent statements, rebel
leaders probably continue to
believe that their best hope lies
in a negotiated Algerian settle-
not changed.
meat. One rebel official
"clarified" Abbas' 14 March
statement by remarking that
fundamental rebel policy had
DE GAULLE'S FARM PROBLEM
In France, 300, ?00 peopl.o
have demonstrated in recent
months against the Debre gov-
ernment's refusal to tie the
price of farm products to a
general cost-of-living index.
The government's stand has
sparked a demand by a majori-
ty of the deputies in the
National Assembly for a special
session. President de Gaulle is
opposed to this and may seek
to delay convening parliament
until its scheduled opening
on 26 April, but his political
opponents are trying to use
the farm issue to embarrass
the government on unrelated
questions such as Algeria, the
Khrushchev visit, and the role
of parliament under the Fifth
Republic.
The aggressive National
Federation of Farmers' Unions
(FNSEA) has been increasingly
effective in making French
peasants aware of agricultural
economics and in propagandizing
farm woes. Agricultural in-
terests had secured in 1957 a
system of guaranteed minimum
prices for farm products based
on the price of goods used in
agriculture, on the cost of
living, and on general wage
rates. De Gaulle abolished this
in December 1958.
Since then industrial prices
and urban prosperity have
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FRANCE: PRICE INDEX
-Fun PROS i01=7~ItEf
Farmers reportedly have come
to believe they are the victims
of a deliberate policy to push
financial stabilization, in-
dustrial expansion, and even
African development, at their
expense.
The government is pre-
paring a bill which would in-
crease assistance for agricul-
tural modernization, education,
marketing, and distribution,
but would relate farm commod-
ity prices to farm costs, not
to general price levels. Premier
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Debre has expressly ruled out
any "general and automatic mech-
anism" as inflationary, and De
Gaulle told the farmers in
February they must modernize
their production and cut costs.
The government's program is
unsatisfactory to the FNSEA.
The farm organizations also
criticize the inadequacy of
short-term credit facilities
and the policy of importing
goods to block price rises.
Individual farm leaders, exas-
perated with Paris' delay in
coming to grips with agricultur-
al problems, have proposed a boy-
cott of the purchase of farm
machinery or even a general
strike by the peasants. FNSEA,
however, has been able to channel
farm discontent into a demand for
a special session of parliament
and has secured the signatures of
the majority of the deputies.
If De Gaulle makes the farm
issue a test of political loyal-
ty, the outcome will be question-
able, inasmuch as there is much
sympathy for the farmers' de-
mands--particularly among the
Independents and Popular Repub-
licans, who draw much of their
support from rural areas. If,
on the other hand, the govern-
ment makes concessions on farm
prices, this will stimulate new
wage demands by already restless
labor groups.
PRELIMINARY MOVES TOWARD URBAN COMMUNES IN CHINA
When the Chinese Communist
leaders decided in December
1958 to postpone large-scale
formation of urban communes,
they made it plain that such
communes in "suitable forms"
would eventually come and that
the search for the "suitable
forms" would continue. The
search has intensified in re-
cent weeks, and has concentrated
on the promotion of collective
working and living arrangements.
City housewives have been en-
couraged to take jobs at neigh-
boring workshops.
Although these workshops
do not add greatly to total
production, they do serve as a
device to free women from house-
hold tasks which are being as-
sumed by a growing number of
collective welfare facilities--
mess halls,, tailor brigades,
laundries, nurseries, and homes
for the aged. The Chinese press
claims that personnel in these
establishments are already "per-
forming the functions of moth-
ers." Some 7U percent of the
residents of Chungking reported-
ly are taking their meals in
mess halls. The regime wants to
see more such facilities. It
also urges the "rearrangement"
of housing to permit those who
work together to live and study
together. Such arrangements,
Peiping says, will promote a
collective spirit and permit
party officials to conduct po-
litical education "expeditious-
ly." Workers at the Anshan steel-
works and the Yangchuan coal-
mining center have already been
relocated, but Peiping, while
approving their initiative,
warns that relocation elsewhere
should be "gradual."
State control over financial
and commercial organs is being
used to regulate the "economic
life" of urban dwellers. In
Chungking--a leader in the field--
single distribution outlets have
been formed on the basis of res-
idential or factory areas, and
these "manage" the residents'
consumption of food, clothing,
and other items.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
The changes now being made,
although apparently widespread
in China's urban areas, have
not been publicly linked with
the promised coming of urban
communes. They do, however,
appear well designed to fulfill
many of the requirements set
down in December 1958. The
party central committee said
that urban communes would be-
come "unified organizers" of
production, exchange, and the
people's livelihood; that they
would combine industry, agri-
culture, trade, education, and
military affairs; and that they
would integrate government, ad-
ministration, and commune man-
agement.
The present efforts, .which
extend into the nearby country-
side, seem to be the first steps.
The party journal Red Flag re-
cently noted a gracTa`l-al
for neighborhood offices, which
formerly performed only admin-
istrative functions, to become
"basic-level, politico-economic
organizations".which unify pro-
duction, exchange, and welfare.
Reluctance to employ the
term "urban commune" may simply
reflect a desire to avoid the
alarm created In the cities
during the 1958 attempt to set
them up. Urban communes are
almost certainly still in the
cards for China's cities, how-
ever, and present efforts to
popularize the collective life
are clearly a step in this
direction.
(Prepared by ORR)
SINO-SOVIET TRADE RISE BOOSTS TOTAL CHINESE TRADE
Despite evidence of polit-
ical friction, the USSR and
Communist China are continuing:
to expand their economic ties.
A recent announcement by Soviet
Minister of Foreign Trade
Patolichev indicates that Sino-
Soviet trade in 1959 rose 35
percent, to more than $2 bil-
lion--$250,000,000 more than
originally planned. About 50
percent of China's foreign
trade is now with' the Soviet
Union, and Peiping has replaced
East Germany as the largest
trading partner of the USSR.
Chinese commercial activities
in the free world declined in
1959, but as a result of in-
creased exchanges with the bloc,
total Chinese trade probably
rose from $3.8 billion to about
$4 billion.
Disruption of the Chinese
economy during the "leap for-
ward" campaign, and the politi-
cal setbacks of the past year
contributed to the greatly re-
duced scale of Chinese economic
activity in Asia. While the
decline is not uniform, major
reductions in Chinese trade with
Japan, Hong Kong, Malaya, and
Singapore have reduced China's
over-all trade with Asian coun-
tries well below the 1957 and
1958 levels. The economic im-
plications of these setbacks
are relatively unimportant to
China's development, but Pei-
ping's failure--or at best un-
willingness--to follow up its
promising commercial achieve-
ments in Asian markets has con-
tributed to the decline in its
influence in South and South-
east Asia.
In Western Europe, the
Chinese have resumed placing
large import contracts, after
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CURRENT INTELLIGENCE WEEKLY SUIN M'
coasting during most of 1959
on the strength of the huge
orders placed during the "leap
forward." While trade with
the area has not returned to
the high levels of late 1958,
Peiping diligently seeks to
preserve its commercial repu-
tation and to maintain con-
tacts for future exploitation.
Chinese purchases of in-
dustrial raw materials and semi-
finished goods from Western .
Europe--particularly steel and
fertilizers--are neither regular
nor dependable, but they do play
an important role in supple-
menting shipment of machinery
and equipment from the bloc.
China still has a large import
surplus with Western Europe, but
the higher level of exports to
that area 1kat year, plus re-
duced purchases, helped lessen
China's trade imbalance and
eased the pressure on foreign
exchange reserves.
The general increase in
Chinese trade with the bloc
during 1959 apparently was more
than sufficient to offset the
decline in free-world trade,
and the bloc's share of China's
total trade rose above the 62
percent of 1958. In 1960 the
USSR expects to supply more
machinery and equipment, in-
cluding complete plants, to
China than it has before. In
order to continue debt repay-
ments, however, Peiping prob-
ably will maintain an export
surplus in this trade.
As China's economy moves
forward, the commodity composi-
tj.on.of Sino-Soviet trade is
undergoing a gradual change.
The main items exchanged remain
chiefly Chinese agricultural
products for Soviet capital
equipment, but shipments of
Chinese light industrial prod-
ucts, particularly textiles,
are becoming increasingly im-
portant. Trade negotiations
being carried on in Moscow prob-
ably will result in a long-term
trade agreement similar to those
Peiping has signed with all
the East European satellites.
Prepared by ORR) 25X1
Private housing, planned
to account for 41 percent of
this year's urban housing con-
struction in the USSR, was
criticized by Khrushchev on two
recent occasions. In February
he told an American official
that the construction of pri-
vate, single-family dwellings
was "wasteful of materials, ex-
pensive to maintain...and ir-
rational." He indicated that
if persons having enough funds
wished to build such homes, it
would be tolerated for the time
being, but that in the long run
all such homes would be razed
and replaced with apartment
buildings.
Private housing has been
a frequent cause of conflict of
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CURRENT INTELLIGENCE WEEKLY SUMMARY
opinion in the USSR. It is
difficult to plan for and con-
trol, it contradicts Soviet
ideas for city planning, and
it requires higher expenditures
ADDITIONS TO URBAN HOUSING IN THE USSR 1953-1965
( BASED ON 1959 URBAN POPULATION )
1953-
19S9
PERCENTAGE OF
URBAN POPULATION
RECEIVING NEW QUARTERS
1960-
1965
over the long term for utilities,
roads, and communal facilities.
Furthermore, private housing
is considered "of poor psychology
for socialism," according to a
member of the recent delegation
of Soviet builders to the United
States. Western observers have
noted the difference between
the energetic work of private
builders and the lackadaisical
approach of some workers on
state housing.
On the other hand, the
pressure of the severe housing
shortage in recent years has
required the regime to depend
more and more on construction
by private individuals, usually
with government assistance.
Between 1956 and 1960, the
volume of such construction has
increased more than threefold,
and it is counted on for about
a third of the total to be built
in 1961-65. Recently official
efforts were made to reassure
homeowners that the results of
the housing census carried out
this January would not be used
for confiscatory action. In
view of the importance of
private housing, it seems un-
likely that Khrushchev could
safely carry out his implied
threat to curtail its construc-
tion.
The yearly pace of total
construction--state and private--
during the remaining years of
the Seven-Year Plan (1959-65)
is scheduled to remain almost
constant through 1962 and then
decline slightly from the volume
of 101,000,000 square meters
planned in 1960. It is thus
possible that the USSR could
exceed the present plan for both
state and private housing by a
comfortable margin. Resources
used in private construction
differ from those used in state
construction and could not be
readily transferred to the
state sector. Hence state
housing could not be increased
COMPARISON OF SOVIET AND WESTERN
HOUSING AVAILABILITY
UNITED KINGDOM
1951
ITALY
1951
WEST GERMANY
1954
USSR
1954
1960
17 MARCH 1.W
in an amount sufficient to make
up for any substantial reduction
in the planned volume of private
construction.
(Prepared by ORR)
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PART II NOTES AND COMMENTS
O
SQUARE PEET
PER PERSON
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CURRENT INTELLIGENCE WEEKLY SUMMARY
17 March 1960
BLOC INTERNATIONAL CIVIL AIR DEVELOPMENTS
Since 1955, the USSR and
several of the satellites have
concluded civil air transport
agreements with most of the
countries of Western Europe.
The bloc now is shifting empha-
sis to Asia and Africa. Antici-
pating increased flight capabil-
ities through the use of more
modern equipment, the bloc coun-
tries are negotiating new air
agreements with Iraq, Lebanon,
and other Middle Eastern coun-
tries.
Aeroflot, the Soviet civil
airline, while primarily con-
cerned with domestic expansion,
is preparing for future major
additions and extensions to
its international network. Pos-
sible Soviet agreements with
the United States and Japan are
frequently mentioned in the So-
viet press, but such agreements
appear to be slated for later,
inasmuch as Moscow itself is
stalling the proceedings with
the United States and is insist-
SECRET.
ing on conditions unacceptable
to Japan.
Moscow frequently encourages
the satellites--particularly
Czechoslovakia--to take the lead
in establishing new routes. The
Czechoslovak airline has re-
ceived some new Soviet long-
range turboprop equipment and
has announced it would like to
use IL-18s on the new Prague-
Rome route. The new equipment
already is being used on Czech
nonscheduled flights to Guinea,
with which Prague apparently
plans to conclude a bilateral
agreement, perhaps hoping later
to extend this route to Latin
America.
The USSR now has flights
to India. and the Czechs hope to
extend their Bombay flight to
Peiping, via Rangoon and Djakarta.
Czechoslovakia already flies to
the UAR and, together with the
Soviet Union, is negotiating
with Lebanon for an air agreement;
Soviet route
Chinese Communist route
European Satellite route
All terminal points, unless otherwise
noted, are capital cities.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
the Czechs also will
soon conclude an a-
greement with Iraqi
airline officials
now, ,tin. Prague .
Although the
other satellites have
been less active in
the bloc's interna-
tional civil air ex-
pansion program, their
roles are increasing,
and their capabili-
ties will be enhanced
by the new equipment
now on order from the
Soviet Union. Hun-
gary is the only bloc
country with landing
rights in West Ger-
many, Budapest re-
cently concluded a
bilateral agreement
YUGOSLAVIA
FINLAND
AUSTRIA
DENMARK
NORWAY
SWEDEN
BRITAIN
INDIA
AFGHANISTAN
BELGIUM
NETHERLANDS
FRANCE
SWITZERLAND
ITALY
GREECE
UAR
IRAQ
LIBYA
LEBANON
IRAN
JAPAN
USA
MEXICO
BURMA
INDONESIA
GUINEA
CEYLON
with Baghdad, and plans to im-
plement its agreement with the
UAR when it receives Soviet
IL-18s.
East Germany, which has
had little success in estab-
lishing air routes outside the
bloc, has nevertheless managed
USSR
CZECHO
POLAND
HUNGARY
BULGARIA
RUMANIA
COMMUNIST
CHINA
X 1955
X 1956
X 1955
X 1956
X 1955
X 1956
X 55
X 49
X 55
X 52 *
X 56
X 58
X 58
X S8
X 56
X 47
X 57
X S8
X 58
X S8
X S6
X 48
X S8
X 58
X S6
X 57
X 56
X 57
X 57
X S7
X 57
X 57
X 57
X 57
X 60
P
N
X 56
X 58
X 56
X 56
X 57
X S7
X 56
X 58
X 47
X 56E
X 57
X 58
X S7
X 58
X 54
X WW n
P
X 47
X 59
X 59
P
N
P
X 56 *
N
X 58
X 57
X 58
X 59
X 58
X 60
X 60
P
N
N
P
P
P
P
P
X 55
P
N
X 59
X Agreement exists (with date) * Temporary rights,
P Agreement has been proposed not a permanent
N Agreement is under negotiation bilateral agreement. 17 MARCH 1960
to gain some concessions. The
government airline, Interf lug,
has been participating in spe-
cial flights from the Scandina-
vian countries and Austria
during the Leipzig fairs, and
it has acquired landing privi-
leges at Athens for the tourist
flights it makes to the Middle
East. (Prepared by ORR)
Communist terrorism in
South Vietnam, a chronic
problem for the Diem govern-
ment, has assumed serious pro-
portions in recent months in the
southern and southwestern prov-
inces. The growing aggressive-
ness of well-armed Communist
guerrilla bands is pointed up
by recent depredations in the
Saigon area, including the pil-
laging of a hospital and the
overrunning of a Vietnamese
militia post. President Diem is
convinced that the Communists,
bolstered by additional person-
nel infiltrated from North Viet-
nam, have begun a phase of all-
out guerrilla war which will
last a long time.
In contrast to the former
pattern of small-scale terrorist
action against remote villages
and other undefended targets,
Communist guerrillas since last
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CURRENT INTELLIGENCE WEEKLY SIIMYARY
fall have been operating in
bands of up to several hundred
strong and have concentrated
attacks on Vietnamese securit
patrols and installations.
regime retains firm control in
the larger towns, however.
The tacit cooperation of
the local populace has been a
factor in recent Communist guer-
rilla successes. A persistent
Communist campaign of subver-
sion and intimidation over the
past several years, including
the assassination of several
hundred local officials, has
undermined the confidence of the
peasants in the government's
ability to protect them. Present
Communist tactics, particularly
the attacks on security forces,
appear aimed at accelerating
this trend and lowering the mil-
itary's morale.
In addition, the
arbitrary police-state
measures of many pro-
vincial authorities
have strained the lop-
alty Of the people.
A case in point is the
forced-draft approach
by overzealous pro-
vincial chiefs in im-
plementing the govern-
ment's new program in
the southern provinces
of regrouping farmers
from outlying areas
in centralized settle-
ments, known as "agro-
villes," for greater
protection against
terrorists. This has
engendered so much
popular resentment
that the government
has ordered a slow-
down in the program.
SECRET
PART II NOTES AND COMMENTS
Many highly placed offi-
cials in Saigon acknowlege that
political reforms are a prereq-
uisite for real improvement in
internal security. Vice Presi-
dent Tho, for example, years ago
forecast the steady growth of
Communist influence among the
populace unless the government
took steps to broaden its popu-
lar support. Tho reportedly now
fears that the Communists. will
have completed their subversive
work "at the roots" within the
next six months unless effective
countermeasures are immediately
taken.
President Diem, however,
apparently is still thinking
more in terms of military con-
solidation to meet the present
emergency. He is urging a
20,000-man increase in the pres-
ent support level of 150,000 for
the armed forces, the creation
of an elite commando force of
10,000 to 20,000 men, and addi-
tional military equipment partic-
ularly suited for waging counter-
guerrilla operations.
Tay Ninh
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Unless security in the af-
fected provinces is stabilized,
the continued erosion of the
people's confidence in the gov-
ernment will pave the way for
the kind of shadow control exer-
cised by the Communists over
broad areas of the countryside
under French rule between 1946
and 1954.
AFRICAN STATES INCREASE PRESSURE ON SOUTH AFRICA
South Africa may face a
campaign by other African states
to bring the question of its
administration of South-West
Africa before the International
Courtof Justice (ICJ). Since
the native riots in Windhoek
last December, may independent
African states have shown in-
creasing interest in South-West
Africa, which was made a man-
date of the Union of South Af-
rica by the League of Nations
in 1920.
Liberia may bring a test
case before the ICJ, charging
that the introduction of apart-
hbid policies into the terri-
tory violates the spirit of
the mandate. Since South Af-
rica previously had committed
itself to accept ICJ jurisdic-
tion, the Liberians could ask
the court to require compliance
with its decision. Continued
South African intransigence
could lead to an African ap-
peal to the UN Security Coun-
cil.
it refuses to permit UN super-
vision of its administration.
The 66,000 Europeans in
South-West Africa are repre-
sented in the South African
Parliament, and most of the ter-
ritory's 473,000 non-Europeans
are controlled according to
SOUTH AFRICA
In 1950 the ICJ delivered
an advisory opinion, which is
not binding on South Africa,
that the Union continues to
have international obligations
in the administration of the
territory, and that South-West
Africa's status cannot be
changed without the concurrence
of the UN General Assembly.
South Africa maintains that
the mandate lapsed with the
demise of the League of Nations;
South Africa's policies of
racial separation. The stated
aim of the Nationalist party,
which controls the gover ffinents
in both the Union and South-
West Africa, is to achieve the
territory's integration with
South Africa.
An adverse court decision
might cause South Africa to
reduce the scope of its UN
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CURRENT INTELLIGENCE WEEKLY SUMMARY
17 March 1960
activities and to withdraw its
commitment to accept the court's
compulsory jurisdiction. How-
ever, South African Nationalists
have shown no inclination to
bow to external pressure in
the implementation of their
racial policies. The Nation-
alists' determination to imple-
ment their doctrines has re-
cently been stiffened by Brit-
ish Prime Minister Macmillan's
criticism of apartheid, by the
Union's growing isolation in
the General Assembly, and by the
highly publicized international
consumer boycott of South African
products. The South-West Africa
issue will serve to keep the
Union under growing internation-
al attack, particularly from the
increasingly articulate states
of Black Africa.
EUROPEAN LABOR UNREST
The varied labor difficul-
ties which have recently devel-
oped in five northern European
countries have important polit-
ical implications.
In Belgium and the Nether-
lands, strikes and threats of
strikes continue to mount pres-
sure on conservative coalitions
susceptible to splitting on
economic issues. Opposition to
the accelerated program of clos-
ing coal mines in the Borinage
area of Belgium has resulted
in a strike of a thousand miners,
supported by middle-class ele-
ments dependent on the coal in-
dustry. The Eyskens government
is striving with some success
to stave off a recurrence of the
major stoppage and disturbances
which occurred last year, but it
appears ill equipped to placate
the more general labor unrest.
In the Netherlands, the
biggest strike since World War
II--a walkout of construction
workers--threatens the govern-
ment's prestige, for it involves
major aspects of the "free wage"
policy on which Prime Minister
De Quay has staked his reputa-
tion.
In Iceland the Communists,
because of their control over
the Federation of Labor (IFL)
as well as a number of key lo-
cals, are in a strong position
to obstruct implementation of
the economic reform program
recently enacted by the Con-
servative - Social Democratic
government. At a party congress
opening on 18 March, the Commu-
nists are expected to reveal
their strategy regarding the
government's program. If suffi-
cient rank-and-file support
materializes, a general strike
may be called; otherwise, they
will probably focus for the
present on strikes in selected
industries.
In Finland, the Communists
recently joined with dissident
Social Democrats in a working
coalition that puts them in
position for an eventual take-
over, or at least a disruption
of the Finnish Federation of
Labor.
In West Germany and West
Berlin, the possibility of a
paralyzing strike of public
utility and transport workers
apparently hinges on the outcome
of talks which resumed on 15
March between the union and
employers. Should negotiations
break down--as they did earlier
this year--a strike vote would
follow. A protracted stoppage
could have serious consequences
in West Berlin, as the East
Germans have announced they
would halt all service on the
elevated railway to West Berlin
as a gesture of solidarity--as
they did during a one-day strike
of transport workers a year ago.
Mayor Brandt hopes that in the
event of a nationwide walkout,
the West Berliners would be con-
tent with a symbolic 24-hour
"demonstration."
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CURRENT INTELLIGENCE WEEKLY SUMMARY
17 March 1960
PATTERNS AND PERSPECTIVES
During a press conference
at the National Press Club in
Washington last September,
Khrushchev was asked why he
was going to Peiping after his
visit to the United States. The
Soviet premier, who had been re-
laxed and in full command of
the situation up to that point,
said without apparent considera-
tion that this "was the most
complicated question there can
be'." Then, flustered, he ad-
dressed the assembled newsmen
as "comrades." After a clumsy
attempt to explain this error,
he tried to.joke the question
away, noting that newsmen must
read as well as write and there-
fore should know that 1 October
was the tenth anniversary of
the "winning of power by the
American...", caught himself,
and with another long aside to
rationalize this slip, finished,
"by the'Chinese working class."
Developing Differences
Khrushchev's fumbling on
this question reflected the
gradually increasing difficul-
ties which had been developing
in Sino-Soviet relations and
which had become more acute
.during 1958 and 1959. Khru-
shchev's visit to the.land of
an ally, which he had made
light of, was to prove more
difficult than the visit to
the United States. The Chi-
nese had made no elaborate ar-
rangements to greet him; no
bands played and no cannon
roared; no efforts were made
to publicize his trip or his
every move; and, despite many
hours of announced private con-
versations with Mao Tse-tung
and other Chinese leaders, no
apparent agreement was reached
and no communique was issued.
Instead, throughout his
stay, the Chinese continued to
POLICY DIFFERENCES
assert their own position on
ideological questions, refused
to follow the Soviet lead on
"peaceful coexistence" and West-
ern intentions, and treated the
Soviet leader with, at best,
cool formality. On his return
to the Soviet Union, Khrushchev
could claim with some validity
that his trip to the United
States had been a success, but
he drew a mantle of silence over
his apparent failure in Peiping.
Khrushchev's experiences
in Peiping apparently convinced
him that Mao and China's lead-
ers were not going to meet So-
viet policies more than half way.
In his speech there, he had
warned the Chinese Communists
against "testing the stability
of the capitalist system by
force" and, on departing, said
pointedly, "We Communists of
the Soviet Union consider it our
sacred duty" to end the cold
A decision apparently was
made to inform bloc audiences
that Moscow disapproved of Pei-
ping's attitude and to exhort
the Chinese to fall into'line.
In major speeches on 31 October
at the Supreme Soviet in Moscow
and on 1 December before the
Hungarian party congress, Khru-
shchev made oblique attacks on
some Chinese positions. On at
least two occasions Soviet lec-
turers sharply criticized the
Chinese by name, attacking the
commune program, Chinese be-
havior in the Sino-Indian. bor-
der dispute, and the "cold and
incorrect reception" given Khru-
shchev in Peiping.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
17 March 1960
In the address on 31 Octo-
ber, Khrushchev defended his
policy of detente by stressing
the Leninist thesis of flexibil-
ity and, in what appeared to be
a clear reference to the Chi-
nese leadership, attacked the
heretical Trotskyist concept of
"neither peace nor war." On
1 December, Khrushchev noted
that imperialists were striving
to disrupt bloc unity, and he
called on all Communist coun-
tries to "synchronize our
watches." "If the leadership
of this or that country becomes
conceited," he warned, "this
can only play into the hands
of the enemy." The Chinese
used the anniversary of Stalin's
birth on 21 December to counter
with praise for Stalin's un-
compromising enmity to imperi-
alism and his "relentless strug-
gle for peace."
Until Khrushchev accepted
President Eisenhower's invita-
tion to visit the United States,
and thus set into motion the
latest stage of his policy of,
detente, Chinese Communist for-
eign policy showed little vari-
ance from that of the Soviet
Union. To force Western par-
ticipation in a summit meeting
on Soviet terms, Moscow had de-
veloped an atmosphere of pres-
sure and threats during 1958 and
early 1959. Charges of alleged
flights by nuclear-armed Amer-
ican bombers toward Soviet
frontiers were followed by the
attempt to discredit US policy
toward the revolutionary Iraqi
regime and the subsequent land-
ing of American forces in Leb-
anon.
Moscow gave vigorous sup-
port to the Chinese Communists
in their offensive in the Tai-
wan Strait in September and
October 1958. This period cul-
rainated in the precipitation of
a new Berlin crisis in Novem-
ber. Khrushchev apparently re-
garded his actions as tactical
maneuvers designed to attain a
limited end--top-level talks on
his own terms.
Foreign Policy Aims
Khrushchev's immediate
foreign policy objectives re-
main Western acceptance of the
status quo in Eastern Europe,
recognition of the East German
regime, and the freezing of the
partition of Germany. While
retaining in the background the
threat of unilateral Soviet ac-
tion to sign a separate peace
treaty with East Germany, Khru-
shchev now is concentrating on
drawing the West into protracted
negotiations which, in his view,
will enable the USSR to exploit
what Moscow believes is a major
shift in the balance of power
in favor of the Soviet bloc.
The Chinese Communists had
no difficulty with Khrushchev's
foreign policy during the period
when it depended on harsh de-
nunciations of the United States
and combined threat and bluster
with propaganda blasts, but
Peiping strongly opposed Khru-
shchev's shift to a concilia-
tory posture which followed
President Eisenhower's proposal
for an exchange of visits.
The Chinese are not in-
terested in attaining a status
quo arrangement with the United
States, because the existing
cold-war boundaries in the Far
East--particularly in the Tai-
wan Strait--are not acceptable
to them. The Chinese leaders,
apparently convinced that the
United States will not change
its policy of nonrecognition
of their regime and support for
Taipei, intend to maintain
their hostility toward the US
while they press on toward their
goals of international recogni-
tion of their regime, admission
to the UN, and an eventual take-
over of Taiwan by "whatever
means necessary."
To maintain an atmosphere
in which talks with Western
leaders are assured, and in
hopes of playing these leaders
off against each other, Moscow
finds it desirable to subordinate
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CURRENT INTELLIGENCE WEEKLY SUMMARY
17 March 1960
some longer term objectives to
more immediate tactics. Thus
Khrushchev considered it more
important to give qualified
support to De Gaulle's Algerian
proposals than all-out support
to the Algerian provisional
government, thereby forcing the
French Communist party into a
sudden shift in its position.
The Chinese, whose policies are
in the main concerned with Asia
and who see little gain in talks
from which they are excluded,
condemned De Gaulle's proposals
as a sop.
Underlying Factors
The wino-Soviet divergences
on foreign policy tactics re-
flect different interests and
aims which flow, in turn, from
certain ideological and polit-
ical differences and from the
difference in phase and pace
of the economic and social de-
velopment in the two countries.
The Soviet Union is in a phase
of economic development which
makes it possible to assure its
people that they can enrich
their personal lives without
a constant fear of war or threat
of attack. The Soviet Union,
with a highly industrialized
economy and full international
recognition, can now afford the
luxury of easing internal pres-
sures and can take a more prag-
matic approach to foreign pol-
icy problems.
The Chinese Communists,
on the other hand, with an
agrarian country and an embry-
onic industry, rely heavily on
doctrinal extremism and a tense
internal atmosphere in their
headlong drive for economic de-
velopment and social transforma-
tion. While probably as unwill-
ing as the Soviet Union to pro-
voke a major war, Chinese lead-
ers feel the need for an atmos-
phere of "struggle" to force
their people to the efforts
necessary to achieve the goals
of the "great leap." While
Khrushchev sees clear advan-
tages in a relaxation of East-
West tensions, Mao feels an ur-
gent need to maintain an active
ly hostile attitude toward the
SECRET
non-Communist world, the United
States in particular.
The Chinese apparently
feel that the world balance has
already shifted so drastically
in favor of the bloc that Mos-
cow's present tactics are un-
necessary and that constant
pressure on the West will force
concessions. They certainly
believe that political power
and control grow out of military
power--as Mao put it long ago,
"Political power grows out of
the barrel of a gun; anything
can grow out of the barrel of
a gun.
The Chinese may feel that
the Soviet Union is misjudging
the world situation now, just
as Stalin misjudged the situa-
tion in China during the 1940s
when Mao, by disregarding
Stalin's advice to bide his
time and seek a period of "peace-
ful coexistence" with Chiang Kai-
shek, led his Communist forces
to victory.
Present Positions
Out of these differences
has grown China's disagreement
with Khrushchev's detente pol-
icies. In the past few months
its strictures against the West
have become, if anything, more
violent. Even while proclaim-
ing the undying unity of the
bloc on the occasion of the
tenth anniversary of the Sino-
Soviet Treaty of Peace and
Friendship on 14 February, Pei-
ping spokesmen reiterated that
President Eisenhower merely
wears "the mask of an envoy of
peace," whereas Pravda was de-
veloping a mildly favorable
impression of the President.
China's position was pre-
sented in capsule form on 4 Feb-
ruary by politburo member Kang
Sheng, its representative to
the Warsaw Pact.Political Con-
sultative Committee meeting in
Moscow. The declaration issued
after the meeting set forth
Khrushchev's current foreign
policy tactics, mixing threats
of signing a separate peace
treaty with East Germany with
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CURRENT INTELLIGENCE WEEKLY SUMMARY
17 .AfArch,_ 1960
blandishments designed to dem-
onstrate the Communist world's
determination to facilitate
the coming talks.
Except for the unyielding
position on Germany and some
innocuous generalities concern-
ing peace and bloc unity, Kang
Sheng could find nothing that
pleased him in the declaration.
While it welcomed the improve-
ment in Soviet-American rela-
tions and expressed the hope
that President Eisenhower's
visit to Russia would mark a
further improvement and pro-
vide "an important guarantee
of the inviolability of peace
throughout the world," Kang
Sheng flatly stated, "The ac-
tions of the United States
fully prove that its imperial-
ist nature cannot be changed."
While the declaration saw
an increasing possibility of a
disarmament agreement, Kang
Sheng asserted, "The United
States' moves prove that it
will not give up the policy of
the arms race," and noted that
Peiping would not be bound by
any international agreement to
which it was not a party. Where
the declaration hailed Moscow's
unilateral reduction of troop
strength and called on other
nations to follow suit, Kang
Sheng noted that China cannot
now afford to reduce its mil-
itary power.
China's Disputes
The Chinese, through their
aggressive pursuit of their
country's national interests
in its disputes with India and
Indonesia, have demonstrated
they are not willing to sub-
ordinate these interests to
the Soviet Union's foreign
policy. When, in the course
of Chinese Communist suppres-
sion of the Tibetan revolt,
India decided to pay more at-
tention to its lengthy frontiers
with China, China reacted sharp-
ly and immediately to maintain
the positions in this area
that it had been gradually de-
veloping over many years with
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no previous opposition from
India. Khrushchev, however,
unwilling to jeopardize either
Moscow's relations with New
Delhi or his renewed policy of
detente, took the unprecedented
step of remaining neutral in a
dispute between a Communist
and non-Communist nation.
In sharp contrast to So-
viet support of Chinese aggres-
sive action in the Taiwan Strait
in 1958, when such support ac-
corded with Soviet tactics,
Khrushchev refuses to back
China in the dispute with India.
On 31 October he said, "We
should be glad if the inci-
dents on the Sino-Indian fron-
tier were not repeated." In
an arranged press interview, a
Soviet newsman told correspond-
ents in Geneva that Chinese ac-
tion on the border dispute would
have been foolish at any time,
but was particularly foolish at
this time. Through these means
and through his widely publi-
cized visit to India, Khru-
shchev has, in effect, placed
himself on the Indian side while
posing as a disinterested party
attempting to bring the warring
sides together for talks.
In Indonesia, the Chinese
reacted to Djakarta's discrim-
ination against Overseas Chi-
nese without regard for world-
wide Soviet policy and the place
of Indonesia in it. Khrushchev's
anxiety over this aspect of Chi-
nese behavior is similar to his
concern over Peiping's policy
toward India. The Soviet Union
has remained carefully neutral
in the argument. During his
visit to Indonesia last month
Khrushchev sought to counter the
effects of Chinese actions and
to dissuade the Indonesians from
abandoning their independent
foreign policy, a course which
he seemed to assume they were
already seriously considering.
In the past few months
Communist China has made some
moves to resolve its disputes
with these countries and with
Burma as well. It has done so
not because of Soviet pressure
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CURRENT INTELLIGENCE WEEKLY SUMMARY
.17 March.1960
or influence, but in recogni-
tion that its own interests
would best be served by enter-
ing into negotiations with
these countries. In the cases
of India and Indonesia, China
could claim that its conditions
for talks had been met, and
that the settlement which has
IRAQ'S ECONOMY UNDER QASIM
Twenty months after the
revolution that brought Prime
Minister Qasim to power, Iraq's
economy, long one of the strong-
est in the Middle East, re-
mains basically sound, prin-
cipally because of a rapid in-
crease in oil revenues to a
record $242,360,000 in 1959.
Qasim's policies, however,
have led to severe economic
dislocations, especially in
agriculture. The virtual a-
bandonment of the development
program of former regimes has
also made substantial funds
available. Thus, although
rasim has been able to main-
tain or perhaps even raise
slightly the public's consump-
tion levels, there are signs of
growing discontent with the
government's failure to make
good on unrealistic economic
promises.
Qasim's Economic Inheritance
On the eve of the July
1958 revolution, Iraq had a
relatively sound economy based
on substantial and generally
increasing oil revenues and a
modest agricultural export
trade. The royal regime was
carrying out a development plan
aimed at providing a sound
basis for developing the econ-
omy rapidly. This program was
financed by a statutory 70-
percent share of the govern-
ment's annual oil revenues.
About 60 percent of total expend-
itures were allocated for irri-
gating and reclaiming land and
for building roads and bridges.
Industry accounted for less
than 7 percent of total ex-
penditures, and projects with
an immediate impact for the
urban centers received even
less.
Thus, with most develop-
ment activity taking place far
from cities and towns and with
a poor government public rela-
tions program, many Iraqis
knew little about the progress
of the development program and
were easily taken in by charges
that the government was siphon-
ing off development funds.
Nevertheless, progress was con-
siderable. A lack of techni-
cians, however, plagued the
Development Board, and expendi-
tures lagged substantially be-
hind plans. By March 1959,
after eight years of operation,
development expenditures totaled
$644,000,000, although the board's
revenues amounted to $879,200,-
000.
SECRET
been reached with Burma merely
accords with what Peiping has
been offering for years. There
will probably be little soften-
ing of Sino-Soviet differences
in policy toward the United
States until the tactics the
USSR pursues serve what the
Chinese believe to be their own
national interests.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
17 March 1960
881ST
CEYLON
JAPAN
STO
33
37
35
32
36
9
10
12
10
8
6
5
6
8
6
7
8
8
15
14
14
14
10
28
28
29
28
33
4496i 190
Iraq's Western-run oil in-
dustry is still operating nor-
mally after an initial period
of uncertainty. Although often
harassed by the Qasim govern-
ment since the revolution, tho
Iraq Petroleum Company now is
carrying on its business with
little interference. Govern-
ment officials seem to be keenly
aware that disruption of oil
production probably would un-
dermine the economy. Thus,
despite the confusion in othei,
sectors of ;the .economy, oil pro-
duction last year rose 14 per-
cent over 1958--reaching a
record average of 830,000 bar-
rels a day (b/d). A major ex-
pansion program now is well
under way, and export capacity
is expected to be nearly dou-
bled by the end of 1962. At
today's prices, revenues could
reach between $400,600,000 and
$450,000,000 in 1963.
The regime will probably
make a serious effort to mar-
ket some of its own crude oil
in 1960. Under the concession
terms, the government is en-
titled to about 116,000 b/d
this year. Marketing will be
especially difficult, however,
because of the present world
44
39
41
36
36
6
5
6
6
8
2
11
7
11
11
5
7
8
7
4
3
12
7
11
13
20
29
21
is
oversupply of crude oil, and
because of the small chance for
marketing a significant quan-
tity of this oil in the Sino-
Soviet bloc countries.
Agriculture
The major agricultural dif-
ficulties last year resulted
from the regime's agrarian re-
form law of September 1958 and
to some extent from inadequate
rainfall. Iraq normally ex-
ports about 250,000 tons of
barley annually. Last year
Baghdad halted barley exports,
however, because the crop was
officially estimated to be
300,000 tons below normal. The
wheat crop also suffered heavy
losses. Wheat imports averaged
about 50, 000 tons annually from 1956
to 1958, Last year's imports,
however, soared to between
450,000 and 500,000 tons.
The loss of earnings from
barley exports and payments for
wheat imports probably will cost
Iraq about $55,000,000 in for-
eign exchange. While some
wheat has been imported from
Turkey, most of it has come
from the USSR. Some of this
has already deteriorated, be-
cause Iraq is not equipped to
store and handle large grain
imports.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
17 March 1960
Prospects for the 1960
harvest are poor. Early re-
ports suggest that only a lit-
tle more than 50 percent of the
normal acreage has been planted.
The lack of planting stems
largely from the refusal of
landlords to provide their for-
mer peasants with seed, tools,
or irrigation for land in ex-
cess of the 620
acres the landlords
legally retain under
the Agrarian Reform
Program. In an ef-
fort to fill the gap
created by the land-
lords' refusal to
perform their tradi-
tional functions
without assurance of
receiving a share of
the crop, the gov-
ernment granted loans
of 110 pounds of seed
and $56 in cash to
many peasants. This
program was a fail-
ure and has been dis-
continued. Many
240
220
200
150
160
peasants spent the cash on
"frivolous luxuries" and ate
or sold the seed.
The Agrarian Reform Pro-
gram has failed dismally, and
thus far--of the 4,000,000
acres seized--only about
12,000 acres have been re-
distributed. This failure
was largely the fault of pro-
Communist Minister of Agrarian
Reform Dr. Ibrahim Kubba, who
met strong opposition both in-
side and outside the govern-
ment in his efforts to re-
place the landowners with a
Communist-type organization.
Kubba has been discharged,
however, and anti-Communist
Minister of Interior Brigadier
Yahya has taken his place.
Economic Development
The elimination of most
Western technicians and con-
tractors--the backbone of the
previous projects--has virtually
stopped new development work.
Many Western technicians were
initially replaced by Soviet and
other Communist bloc personnel,
and now these groups have been
reduced. As a result, economic
activity has declined, unemploy-
ment has increased, and workers
on development projects near=
IRAQ: ECONOMIC INDICATORS
(1953: 100)
~-- OIL PRODUCTION
GOLD: FOREIGN EXCHANGE
MONEY SUPPLY
R+~ FOREIGN ASSETS
1957 1955
(BY QUARTER)
1959 NOVEMBER
(BY QUARTER)
17 MARCH 1966,}j~')
ing completion face unemploy-
ment.
Qasim, in an effort to al-
lay growing disillusionment with
the regime's lack of accomplish-
ment in the economic field, has
announced a massive $1.12 bil-
lion four-year development pro-
gram for 1960 through 1963.
This plan, however, is largely
a figment of his imagination.
Government officials of all po-
litical persuasions involved in
its implementation openly dis-
credit it, and senior officials
consider it at least 50 percent
propaganda. This year, for ex-
ample, the plan calls for spend-
ing about $403,200,000, but ex-
penditures probably could not
exceed $140,000,000.
The regime has publicized
its welfare promises to provide
better housing, to eliminate
illiteracy, and to furnish med-
ical care and other social
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STATUS OF PROJECTS AND STUDIES LISTED IN ANNEX I OF THE SOVIET-IRAQI
AGREEMENT OF MARCH 1959
1. Steel mill
2. Fertilizer plant
3. Sulfur plant
4. Pharmaceutical
factory
5. Agricultural machinery
plant
6. Electrical equipment
factory
7. Electric light bulb
factory
8. Broadcasting station
(4 transmitters)
9. Glassware factory
10. Cotton textile mill a/
11. Woolen textile mill a/
12. Tricot knitting factory a/
13. Garment factory a/
14. Geological survey
15. Center for repair of
geological equipment
and a laboratory for
exploratory work
18. Technical aid for the
establishment of 5
government farms
(sugar beets, rice,
cotton, gra and
medicinal herbs)
19. Technical aid for 4
tractor stations
20. Drainage project in
southern Iraq
21. Tigris River basin
survey
22. Exploitation of Euphrates
River basin
23. Improvement of river
navigation on Tigris
and Euphrates and on
Shatt-al-Arab
24. Baghdad-Basra railroad
(improvement of exist-
ing narrow-gauge line
and construction of a
standard-gauge line)
Planning, 1960-62
Delivery of materials, 1961-63
Research, 1959-60
Planning, 1960-62
Delivery of materials, 1962-64
Research, 1959-60
Planning, 1960-62
Delivery of materials, 1962-64
Planning, 1959-60
Delivery of materials, 1960-61
Research, 1959-60
Planning, 1960.61
Delivery of materials, 1961-6Z
Research, 1959-60
Planning, 1960-62
Delivery of materials, 1961-62
Research, 1959-60
Planning, 1960-62
Delivery of materials, 1961 62
Research and planning,
1959-60
Research and planning,
1959-60
Delivery of materials, 1961.62
Research, 1959
Planning, 1960-61
Delivery of materials, 1961-62
Research and planning,
1959-60
Delivery of materials, 1961-62
Research and planning,
1959-60
Delivery of materials, 1960. 61
Research and planning,
1959 60
Delivery of materials, 1961
Research and planning,
1959-60
Delivery of materials, 1960-61
Research and planning,
1959-60
Delivery of materials, 1960-61
Research and planning,
1959-60
Research and planning,
1959-65
Research and planning,
1959 63
Research and planning,
1959 63
Research and planning,
1959-60
Research and planning,
1959-62
Delivery of materials, 1959-60
25. Kirkuk - As Sulaymaniyah Research and planning,
railroad 1960-62
Delivery of materials, 1960
Soviet specialists have started plan-
ning work. Mill to be built near
Baghdad.
Plant to be built at Dibs near
Kirkuk.
Survey underway.
Plant to be'built at Samarra.
Survey underway.
No information.
No information.
Survey probably underway.
Installation completed.
Survey probably underway.
Project designing has begun Cost
of project to be $1. 5 million.
To be built at Karbala. Survey to
start shortly.
Reports submitted on beets, cereal
grains, cotton, and rice farms.
100 tractors and other equipment
for use on farms have been pur-
chased from USSR One station
to be set up in Abu Ghurayb area.
No information.
Survey underway.
Survey underway.
Team of experts have submitted re.
port on project.
Soviet experts have arrived to begin
survey work.
Soviet experts have arrived to be-
gin survey work.
No specific information is available on projects 10, 11, 12, and 13, although there has been mention
in press reports of the presence of Soviet experts in Iraq in connection with the establishment of textile
mills and garment factories.
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betterments. Such promises,
however, far exceed the re-
gime's ability to deliver, and
public disillusionment is cer-
tain to develop in coming
months.
Largely as a result of the
regime's recent recognition
that the country's standard of
living cannot be raised with-
out foreign assistance, the
government's attitudes toward
Western contractors and busi-
nessmen have gradually changed.
There has been a re-evaluation,
in both the private and public
sectoi of the role of the Com-
munist bloc and especially of
the Soviet Union. Awareness
is growing that the bloc's role
will necessarily be secondary
and that Iraq must look to the
West for much of its economic
development.
Unlike most underdeveloped
countries, Iraq has sufficient
revenues to finance an ambi
tious development program, and
Soviet-bloc, barter-type cred-
its are not especially attrac-
tive. Much of the economic
activity directed toward the
Communist world in recent
months reflects a reaction to
"Western imperialists," the ef-
fects of rampant nationalism,
and a rejection of all those
connected with the hated Nuri
regimes. Many of the trade
agreements with the bloc in
past months were made in an
effort to sell the country's
date crop. Qasim has been
propagandizing this accomplish-
ment heavily, for more than
30 percent of Iraqi farmers
depend on dates for some of
their income. Basically, how-
ever, there are not economic
pressures for increasing trade
with the Communist bloc.
The Soviet Union is imple-
menting its $137,500,000 line
of credit in accordance with
the general terms of the aid
agreement. Under the agreement,
the USSR is committed during
1959-60 to complete research
and planning on the first 25
projects listed under the agree-
ment. Most of the 300 Soviet
technicians in Iraq are doing
survey work. Research and
planning have begun on about
18 of these 25 projects.
Construction work on most
of the projects, however, has
not begun, and for the most
part the delivery of materials
is not scheduled before 1961.
On some projects, construction
is not scheduled to begin until
1962 or later. Because the
Soviet aid agreement has pro-
gramed most projects over a
number of years, Iraq cannot
expect for some time to get
tangible benefits from the So-
viet credit.
Under the terms of the
agreement, the USSR is to pro-
vide technical assistance for
another 18 projects, to be fi-
nanced outside the $137,500,000
credit. The Soviet Union is
to be reimbursed for this as-
sistance--~ under the credit
itself--with Iraqi exports or
with convertible currency.
Thus far contracts have been
concluded for about half of
these projects, including a
shipyard at Basra, improvement
of radio and broadcasting fa-
cilities throughout the country,
and some hydroelectric power
and irrigation projects involv-
ing the Tigris and Euphrates
river system.
Prospects
Iraq's long-term economic
prospects remain the brightest
of any Middle Eastern country,
but difficulties are likely to
plague the Qasim regime in
coming months.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Despite increasing oil rev-
enues and the Soviet aid pro-
gram, economic conditions are
not likely to improve markedly
over the next several months.
Most Soviet-sponsored develop-
ment, projects will not yield
benefits for at least two years.
Even if the present trend of
improved relations with Western
contractors continues and leads
to a substantial renewal of
Western development activities,
the benefits of any projects
would be slow in having their
effect.
Qasim has raised Iraqi
anticipation of short-run eco-
nomic improvements unrealistical-
ly high, and widespread disil-
lusionment will necessarily set
in. There are already reports
that the revolutionary regime's
economic "achievements" are be-
ing compared unfavorably with
the former royal government.
Widespread dissatisfaction
could upset Qasim's policy of
carefully balancing pro- and
anti-Communist factions within
the country. Economic disloca-
tion and unemployment are like-
ly to be exploited by antiregime
elements--Communists and nation-*
alists--to stir up trouble among
the urban masses, landowners
and peasants, tribesmen, and the
volatile politically conscious
white-collar intelligentsia.
This dissension, accompanying
present disgruntlement in army
officer circles, could provide
the atmosphere suitable for a
coup against the Qasim regime.
ORR)
Prepared jointly with 25X1
Disturbed by the growth
of nationalist and anti-imperi-
alist sentiment in the Arab
world, Britain is seeking new
relationships with the littoral
states of the Arabian peninsula
in the hope of maintaining its
influence there and ensuring
continued access to Middle East
oil. A policy of disengagement
both from inter-Arab quarrels
and from close alignment with
particular states was decided
on last summer. The British are
rapidly relinquishing various
prerogatives in the key state
of Kuwait--the source of about
42 percent of their crude-oil
imports in 1959 but have con-
currently achieved closer co-
operatiori, particularly in
military matters. They are
prepared to make modifications
in treaties with other princi-
palities as local conditions.
permit.
Rationale for Policy
London's purpose originally
in assuming responsibility for
the defense and foreign affairs
of these states was to secure
its routes to India and the Far
East. This has become a less
important factor, however, and
events of recent years have con-
vinced London that its continued
access to oil would be helped
by some revision of old relation-
ships. While the policy stated
as a warning to Khrushchev in
early 1956--that Britain would
fight to defend Kuwait--remains
the official position, London
is concentrating on modifying
its political ties with these
littoral states. The adverse
propaganda repercussions oc-
casioned by the Suez crisis in
1956, the campaigns against the
Omani rebels, and the sending
of British troops to Jordan in
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CURRENT INTELLIGENCE WEEKLY SUMMARY
17 March 1960
1958 promoted the view that a
policy utilizing military force
only eroded Britain's position.
London now cites its rela-
tions with Iraq and Lebanon as
models on which to pattern re-
lations with all Arab states:
agreements without "strings"
and toleration of nondependence
and neutrality. While diminish-
importance of traditional sources
east of Suez.
Imprdmed Military Capability
As the British withdraw
their direct influence in the
Middle East, they are simultane-
ously improving their capabili-
ty to return and defend their
remaining commitments with force
ing political ties, London is
anxious, however, to preserve
Western control of the manage-
ment of the international oil
companies,because British oil
needs are expected to continue.
to climb for many years to come.
Oil discoveries in Algeria and
Libya will reduce somewhat the
if necessary. A new type of
aircraft carrier will form part
of the "balanced, all-purpose
fleet" operating east of Suez
to discharge Britain's obliga-
tions to SEATO and CENTO and
to cope with local disturbances
in the Arabian peninsula and
East Africa.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
17 March 1960
This carrier, operating
out of Singapore, has been con-
verted to accommodate a 600-man
commando unit and a helicopter
group for troop-carrying or
antisubmarine roles. It will
conduct training exercises with
forces in Aden this summer af-
ter a familiarization cruise in
the Persian Gulf. The capabil-
ities of this fleet have been
further enhanced by the recent
assignment of a submarine and
a coastal minesweeping squadron.
The provision in the 1960-
61 defense budget for more
transport and cargo aircraft
will further increase Britain's
ability-to "deploy the maximum
hitting power at the shortest
possible notice" to distant
trouble spots. Airfields on
the Persian Gulf, in the Aden
Protectorate, and in East Afri-
ca are being improved. Kenya
is being more extensively de-
veloped as a regional base for
reserve forces, and permanent
army facilities outside Nairobi.
are scheduled for completion
in 1961.
Kuwait
London is giving up many
prerogatives in response to
the Ruler's request, and is
encouraging Kuwait to exercise
more of the incidental attri-
butes of sovereignty in the
belief that this is the best
means in the long run of keep-
ing Kuwait free of foreign
domination.
On 25 February, the British
began a progressive elimination
of their special legal juris-
diction over all resident for-
eigners except Arabs, Iranians,
and Indonesians. Kuwaiti au-
thority over traffic, labor,
port rules, and foreign resi-
dence has been established, and
London has signified its will-
ingness to cede jurisdiction in
other fields as soon as Kuwait
has promulgated the modern legal
codes now being drafted. F
Kuwait now has its own post-
al system and will shortly have
its own currency. It is also
being encouraged to join inter-
national organizations open to
territories not fully self-gov-
erning and, on these matters,
to deal directly with the parties
concerned rather than through
the British political agent.
Despite recommendations from
its.field officials, London is
reluctant, however, to authorize
foreign consulates other than
the American.
In return, the British have
been accorded more cordial co-
operation, especially in mili-
tary matters, than they have
received for many years. Kuwait
last July purchased 16 tanks
and 12 armored cars from the
British. The Kuwaitis remain
sensitive about any publicity
on their military cooperation
with Britain, but nevertheless
are developing close military
liaison. They have sent tank
crews for training in Britain,
and there are some British train-
ing personnel in Kuwait. These
arrangements have been negotiated
with the heir apparent, Abdulla
Mubarrak, whom the British have
cultivated.
Aden-Yemen
London's relations with
Yemen have become relatively
cordial after years of dissen-
sion and border warfare. The
British have managed with some
success to reassure Yemen of
their good intentions, thus
obtaining a period of relative
quiet on the frontiers in which
to build up the Federation of
Arab Amirates of the South in
the Western Aden Protectorate.
By fostering this grouping of
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CURRENT INTELLIGENCE WEEKLY SUMMARY
17 March 1960
petty rulers, London hopes to
leave behind a friendly, rea-
sonably viable state if, as it
now anticipates, it gives up
its sovereignty over Aden
Colony in about ten years,
London apparently hopes
eventually to capitalize on
the improved relations to
settle outstanding issues, such
as demarcation of the border
between Aden and Yemen. It
is prepared to extend a small
amount of aid to demonstrate
its good will toward Yemen,
Problem of Saudi Arabia
Discussions through various
intermediaries--at present UN
Secretary General Hammarskjold--
have brought only slight progress
toward the restoration of dip-
lomatic relations with Saudi
Arabia and the amelioration of
feuds which hamper Britain's
relations elsewhere in the penin-
Saudi Arabia's reply to
Hammarskjold's suggestions for
an accommodation with London
in effect reiterated its long-
standing position that agree.-
ment must first be reached on
procedures for settlement of
the problem of Buraimi, the
oasis claimed by both the Saudis
and British-protected states but
occupied by British-supported
forces of Abu Dhabi and Muscat
since 1955. London has insisted
that Saudi Arabia restore dip-
lomatic relations before dis-
cussing Buraimiin view of the
complications of the problem
Abu Dhabi and claimed also by
Qatar provides another obstacle
to agreement, with the Saudis
insisting that the British
force Abu Dhabi to withdraw.
A Foreign office official said
on 19 February that London
would try to be flexible but
that giving up BUraimi might
result in a "crisis of confi-
dence" among British-protected
states, particularly Kuwait.
The Sultan of Muscat re-
fuses even to discuss negoti-
ating the Buraimi issue and
other problems with the Saudis
or to strengthen his own author-
ity, and London feels obliged
to continue its support of him.
Britain is trying both
to intimidate the rebels and
improve the capability of the
Sultan's forces by periodically
sending in small contingents
of special British troops for
joint exercises. Because of
Muscati apathy, Britain's
small economic development
program in the sultanate is
proceeding slowly.
Ultimately, the British
may try to negotiate a politi-
cal settlement with the rebels,
The disputed police post
at Khaawr-al-Uda'd occupied by
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Brussels' past policies
in the Belgian Congo have left
both the Belgians and the col-
ony itself ill equipped for
the establishment of an inde-
pendent Congolese state in
mid-1960. The recent Belgian-
Congolese round-table confer-
ence left most problems unre-
solved, including the new
state's political and economic
relations with Brussels.
For about half a century
Belgian colonial policy was
best characterized as '7enlight-
ened paternalism." Both the
Africans and the European set-
tlers were deprived of all po-
litical expression, while great
stress was laid on economic
development and social wel-
fare. A network of roads,
housing, schools, and the im-
provement of medical services
made the Congo seem far ahead
of the rest of Africa. Social-
ly, Belgian attention was
focused on integrating the Af-
ricans into an expanding econ-
omy, easing racial segraga-
tion, and restricting European
immigration to avoid a sizable
white-settler problem.
Political Developments
The :.political turning
point for the Congo came in
1957. Outside events such as
Gh'ana's independence and French
African elections resulted in
the emergence of politically
conscious Congolese groups
with a timetable for complete
emancipation. The Congo's
most urbanized tribal group
called for immediate independ-
ence. Political tensions
mounted in 1957-58,and seri-
ous anti-European disorders
occurred in Leopoldville and
Elizabethville.
These pressures led the
government to introduce popu-
larly elected municipal coun-
cils in the European and Afri-
BELGIUM'S FUTURE IN THE CONGO
can sectors of the Congolese
cities and to admit Africans to
the civil service on equal
terms with Belgians. Recog-
niting the need for training
future political leaders, more-
over, the government estab
lished state schools and founded
two universities to supplement
the Christian missionary
schools which had been mainly
on the primary and technical
level.
Opinion in Brussels was
slow in evolving, but by 1958
a high-level study group was
appointed to make recommenda-
tions for the political fu-
ture of the Congo. The impact
of the All-African People's
Conference at Accra in Decem-
ber 1958, however, and the po-
litical tensions which culmi-
nated in the Leopoldville riots
of early January 1959 influ-
enced Brussels to offer even-
tual independence and to call
municipal and territorial coun-
cil elections for December
1959. There was to be full
equality between Belgians and
Congolese.
Neither the settlers nor
the Congolese were satisfied
with the proposals. New Con-
golese political groups began
to demand the immediate estab-
lishment of a Congolese govern-
ment and a constituent assem-
bly. Fearing the December
local elections would be boy-
cotted, Belgium offered a defi-
nite timetable for independence
and the establishment of a
semiautonomous, national govern-
ment with two legislative as-
semblies in 1960. King Baudouin,
a popular figure with the Con-
golese, paid a hurried visit
during the December election
period in an attempt to de-
crease the tension.
Nationalist groups, how-
ever, demanded independence
and.;,-called.. for. comprehensive
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ATLANTIC
OCEAN
CURRENT INTELLIGENCE WEEKLY SUMMARY
round-table talks on the Con-
go's future. This conference
convened at Brussels in late
January in a surprisingly
amicable atmosphere.
w__....-Economic Ties
Possessing great mineral
wealth, concentrated in the
southern and eastern regions
called the Katanga, the Congo
SECRET
May 16 - June 6
June 15
June 30
supplies some 80 percent of
the world's cobalt and 65-70
percent of its industrial dia-
monds; it accounts for an es-
timated 4 percent of Belgium's
national income.
Large Belgian financial
combines hold about three
quarters of the capital of all
the companies operating in the
Congo, an investment estimated
UAR
(EGYPT)
Consideration of legislation in Belgian Parliament
Electoral campaign opens
Elections to Chamber of Deputies and Provincial Councils
Elections to Upper Chamber
Inauguration of Congolese Parliament and Proclamation
Independence of Congo
SECRET
t 6hville
INDIAN
OCEAN
Jan. 20 -
Feb. 20
March
Mid-April
FEDERATION OF
RHODESIA AND NYASALAND
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CURRENT INTELLIGENCE WEEKLY SUMMARY
17 March 1960
at $750,000,000. The Union
Miniere du Haut Katanga, the
country's principal mining
establishment, contributes 42
percent of the Congo's revenue
by exploiting such minerals as
copper and uranium. Other im-
portant enterprises include
Forminiere (diamonds), OTRACO
(transport), and Lever Broth-
ers (palm products).
While these firms did not
actively seek to influence the
course of political develop-
ments '.in.?.. 1958-09, - Union.
Miniere's director recently
indicated his support for a
federation that would preserve
the economic unity of the
Congo but give the Katanga con-
siderable autonomy. This move
suggests that the company and
other Belgian interests in the
Katanga--which are suspected
of separatist tendencies--may
become increasingly involved
in Congo politics in order to
preserve their privileged eco-
nomic position.
In 1959, for the first
time, the Belgian Government
had to give budgetary support
to the Congo, some $20,000,-
000. It plans to make annual
contributions to the second
Development Plan, which calls
for about $1 billion in new
investments from both internal
and external sources during
the ten-year period starting
in 1960. The principal goal
of the plan is to accelerate
the change from a subsistence
to a monetary economy, with
greater emphasis on the de-
velopment of farming by Afri-
cans. The plan also seeks
capital from other Western
sources, although little for-
eign money has thus far been
attracted to the Congo because
of the Belgian monopoly over
investments there.
Brussels has announced
plans for the development of
the Inga Rapids on the Lower
Congo River, where the poten-
tial hydroelectric output is
estimated at 25,000,000 kilo-
watts--the greatest in the
world. Development of this
huge potential is visualized
over a period of 26 years, the
first stage providing 1,500,-
000 kilowatts of power capac-
ity: within four years at a
total cost of $316,000,000.
The ,Round- TXble Conference
The Brussels conference
had to take account of consid-
erable separatist sentiment in
Leopoldville and the mineral-
rich KatangaProvince. It was
decided that the Congo's mines
would be controlled by the
central government, although
the provinces would have exten-
sive rights in the granting of
concessions. General agreement
was reached on the structure
of the unitary Congo state,
which on 30 June is to assume
responsibility for foreign af-
fairs and defense as well as
national policy, currency, cus-
toms, transportation, and com-
munications.
The Belgians succeeded in
maintaining amicable relations
with the Congolese at the con-
ference by granting concessions
on most points, even where
there is a good likelihood of
serious difficulty in imple-
menting the round-table deci-
sions. Several major problems,
moreover, were left entirely
unresolved: for example, the
future of the Europeans in the
new Congolese state, and the
political ties between Belgium
and the Congo. It is not
clear yet whether the King of
Belgium, who has been the
traditional link between the
Congo and Brussels, will have
any role.
Agreement is still to be
reached also on the disposition
of Belgium's investments in
Congo companies, and on the
status of the army-air bases
at Kamina and Kitona and the
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CURREN7tINTELLLGENCE:WEEKLY SUMMARY
17 March 1960
naval base at Banana. While
it has been agreed that the
Congolese constitution will
guarantee the right of persons
and properties, whether na-
tionals, Belgians, or foreign-
ers, there is much concern
among the Belgians as to the
ability of the Congolese gov-
ernment to assure these rights.
Congolese leaders, who are
aware of their dependence on
Belgian forces to maintain in-
ternal security, are expected
to welcome continuation of
this service to the Congo
state.
Out look
Solutions to these prob-
lems will be complicated as
the long-standing feuds between
the Congolese tribes and the
rivalries of the numerous po-
litical aspirants become aggra-
vated. Other difficulties in-
clude the paucity of trained
Congolese administrators to re-
place the 10,000 or more Bel-
gians in the civil service,
the disparity in the distribu-
tion of the Congo's wealth, and
the strong separatist senti-
ment in the rich Katang%Prov-
ince. There will also probably
be a sharp increase in external
influences ranging from inter-
national Communism to the pan-
African movement.
SECRET
Congolese candidates for
legislative office have re-
cently sought financial as-,
sistance from both Communist
and non-Communist sources
abroad. The resulting con-
filets will present a constant
threat to order and a tempta-
tion to the Belgians to inter-
vene, despite their contention
that responsibility for suc-
cessful political advances
rests on the Congolese them-
selves.
Still another unresolved
problem is to assure the flow
of new investment capital re-
quired for the Congo's eco-
nomic development. The Congo-
lese want to retain Belgium's
economic "presence" since they
recognize the importance of
its technical assistance and
the commercial and investment
advantages available through
Belgium's membership in the
European Common Market. it
is far less clear whether
Belgian financial interests
have sufficient confidence
in the new order to go through
with the investment program
envisaged in the ten-year
Development Plan. Further
light will be shed on this
question by the joint eco-
nomic conference which is to
be held in Brussels in mid-
April.
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