CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A003200030001-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 51
• Document Creation Date: December 20, 2016
• Document Release Date: May 1, 2006
• Sequence Number: 1
• Publication Date: October 19, 1999
• Content Type: SUMMARY

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COPY NO.
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
OCI NO.0279/61
11 May 1961
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
CONFIDENTIAL
N J__
State Dept. review completed
4 NO CHANGE IN CLASS. G
CLASS CHANGED TO: TS S
..rrr.
AUTH: HR 70-2
DATE: [gQ
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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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CURRENT INTELLIGENCE WEEKLY SUMMARY
11 May 1961
LAOS . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 1
Fighting has tapered off, but rebel forces continue
operations against Meo guerrillas. Cease-fire talks among
the Laotian parties have been unproductive to date. On
11 May the three members of the International Control Com-
mission returned from a visit to Xieng Khouang, where they
.had "cooperative" talks with Souvanna Phouma and Souphan-
nouvong, The rebel authorities probably intend to hold
military activities to a level that will enable the ICC
to declare that a cease-fire exists and permit the
conference at Geneva to open on schedule with full partic-
ipation. Three separate Laotian delegations--representing
Souvanna Phouma, the Pathet Lao, and the royal government--
are expected at Geneva.
SOVIET FOREIGN POLICY DEVELOPMENTS . . . . . . . . . . . . Page 4
In the course of his speech on 6 May at Yerevan,
Khrushchev indicated that he does not intend to pursue
his exploitation of events in Cuba to the point of
interfering with his efforts to negotiate on such issues
as disarmament and Berlin. He adopted a moderate line
on Cuba and Laos and confirmed Moscow's readiness to
proceed with disarmament talks with the United States
in June, stressing that these discussions should not
deal merely with procedural matters. Although Khrushchev
mentioned Berlin only in passing, a Soviet greeting to
East Germany on the anniversary of V- Day said that the
"struggle" for a peace treaty and a free-city status
for West Berlin would "soon lead to positive results."
CUBA . . . . . . . . . . . . . . . . . . . . . . . . . . . Page
Castro is moving to strengthen the loyalty of the
armed services by the creation of a corps of instructors
to emphasize "political and revolutionary awareness."
No major Latin American country appears disposed to
support multilateral action against the Castro regime,
although most countries seem willing to participate in
a meeting of OAS ambassadors on the subject. Soviet
propaganda on Cuba sharply diminished in volume last
week, and Moscow has continued its reserved attitude
toward Castro's claim that Cuba is a "socialist" state.
CONGO . . . . . . . . . . . . . . . . . . . . . . . . . . Page 7
The fate of Tshombd and a possible reopening of
parliament are the most immediate political issues in
the Congo. The Leopoldville government's announcement
on 9 May that Tshombd will be detained for an indefinite
period without trial probably stemmed from concern over
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11 May 1961
international reactions. His followers are still ap-
prehensive over possible moves by the UN or Leopold-
ville to disarm Katangan forces, although the UN
FRANCE-ALGERIA . . . . . . . . . . . . . . . . . . . . . . Page 9
While the government continues its arrests of those
involved in last month's military insurrection, De Gaulle
now is trying to focus public attention on the prospect
of an Algerian settlement. His 8 May speech, in which
he said France would honor its Algerian policy, was
followed shortly by an announcement that negotiations
with the Algerian rebels would begin on 20 May. ever,
both French and rebe]:i ,leaders have expressed pessimism
about the possibility of reaching an early agreement.
The
Soviet decree of 6 May providing the
death
penalty
for large-scale embezzlement and other
"es-
pecially
dangerous crimes" is the most drastic
punitive
measure
yet adopted by the Khrushchev regime.
Pro-
mulgation of the law indicates that defrauding of the
state is a considerably more dangerous problem than
the Kremlin had realized when it launched its drive
against corruption earlier this year.
SOVIET FOREIGN TRADE IN 1960 .
Page 10
. . . . . . . . . . . . . . Page 10
The USSR's foreign trade in 1960 totaled about $11.2
billion, 6.4 percent more than in 1959. The increase
resulted mainly from a substantial growth in imports
of industrial machinery from West European countries.
The unprecedentedly large Soviet trade deficit with the
West--$330,000,000--has worsened the USSR's usually
difficult balance-of-payments position and probably
has been the major reason for the recent heavy sales
of Soviet gold on the international market.
IRAN . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 12
The most serious demonstrations in Iran in eight
years brought about the collapse of Sharif-Emani's
government and the appointment of reform-minded All
Amini as prime minister. The new cabinet contains four
holdovers from the previous government, including the
ministers of war and interior. Two of the new ap-
pointees have histories of association with the Tudeh
(Communist) party. With parliament dissolved, Amini
apparently will be able to rule by decree--subject
to the Shah's approval--until new elections are held.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
11 May 1961
ARAB-ISRAELI TENSION . . . . . . . . . . . . . . . . . . . Page 13
An increase in Arab-Israeli tension may occur in the
near future. This could result from the military exercise
now under way in the UAR, which has probably caused Israel
to take limited military precautions. Tension could also
increase if the adverse reaction in Jordan to King Husayn's
marriage plans should be followed by the King's overthrow
or abdication;
SPECIAL ARTICLES
NOTE:
A series of articles on various aspects of Berlin
and the two Germanys is presented here as a special
issue in order to give a fuller view of the subject
than the usual limitation of space would allow.
THE POLITICAL SITUATION IN EAST AND WEST GERMANY . . . . . Page
Since the founding of the Federal Republic of Ger-
many and the German Democratic Republic (GDR) in 1949,
two Germanys with radically different political structures
have emerged under two strong leaders. Each claims to
represent the legitimate German state. Konrad Adenauer
has worked for West Germany's integration into the
Western alliance; his counterpart, Walter Ulbricht, has
been able to keep East Germany securely in the Communist
bloc only because of the presence of the Soviet army.
ECONOMIC CONDITIONS IN EAST AND WEST GERMANY . . . . . . . Page 8
The economies of both East and West Germany are
highly industrialized. Both import large amounts of
raw materials, but East Germany is more dependent on
its imports, especially of bituminous coal. Although
industrial production has increased at about the same
average rate in the two areas since 1950, West Germany
has maintained a lead in labor productivity. The
westward flow of emigrants has created a chronic labor
shortage in East Germany, but there is also a labor
shortage in West Germany, despite the influx from East
Germany. The share of gross national product devoted
to investment is more than 20 percent in both econ-
omies. As for living standards, the West German con-
sumer has a greater variety of choice and generally
better quality, especially in durable goods; however,
the basic diet now is much the same in both areas.
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11 May 1961
THE POLITICAL AND ECONOMIC SITUATION IN BERLIN . . . . . . Page 18
The division of Greater Berlin in 1948 into the
separate cities of East and West Berlin and their subse-
quent de facto integration into East Germany and West
Germany respectively have not altered the four-power
responsibility for Greater Berlin or the city's status
in international law as an occupied area. West Berlin
has made remarkable economic progress since the Com-
munist blockade of 1948-49, but its recovery and pres-
ent prosperity have been possible only with extensive
US and West German financial aid. Although West Ber-
lin has stockpiled about $200,000,000 worth of food,
fuel, and raw materials against the possibility of
another blockade, it would be far more difficult with
a new airlift to supply the city's booming industries,
keep its workers employed, and maintain morale.
WESTERN POLICY ON BERLIN . . . . . . . . . . . . . . . . . Page 23
Since the failure at Geneva in 1959 to conclude an
agreement with the USSR for an "interim solution" in Ber-
lin, West German, French, and British leaders have tended
to agree that Western legal rights in Berlin are unim-
peachable and that the maintenance of the status quo is
the best realizable situation. The West Germans have
shown the least interest in new negotiations. The British
have generally been willing to explore ways of easing
points of friction. During periods of Communist pres-
sure, however, Bonn and Paris--as well as London--have
shown an inclination to investigate compromises and to
consider possible concessions in order to avert a show-
down with the USSR.
SOVIET POLICY ON BERLIN AND GERMANY . . . . . . . . . . . Page
The crisis over Berlin precipitated by Khrushchev on
10 November 1958 was the logical extension of the policies
developed by Moscow since 1955 aimed at gaining Western
acceptance of the permanent division of Germany and con-
firmation of the status quo in Eastern Europe. Khru-
shchev's aim has been to confront the Western powers
with the dilemma of risking war to maintain their legal
rights in Berlin or making concessions which would
erode their position not only in Berlin but on the ques-
tion of German unification. He has committed himself
to finding a solution of the Berlin and German ques-
tions during 1961, and it appears that a formal de-
marche to renew negotiations will be made in the near
future. Moscow may concentrate on an interim solution
rather than press its maximum demands for a peace
treaty with both German states and a "free city" in West
Berlin. The main purpose of an interim solution would
be to obtain formal acceptance by the West of Khrushchev's
contention that the status of Berlin must be revised
or at least to establish a presumption that further steps
will be taken in this direction.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
The cease-fire discussions
in Laos have to far been unpro-
ductive, but fighting has tapered
off on the main fronts. The only
active fighting is in the area
south of the Plaine des 'Jarres
where Kong Le - Pathet Lao forces
are still conducting mopping-up
operations against Meo guerrilla
bases.
The chief enemy target is
the base camp of Meo leader
Colonel Vang Pao at Pa Dong, 20
miles southwest of Xieng Khouang;
the camp has been under artillery
fire for several days. Govern-
ment forces are also concerned
over a build-up of enemy forces
along the northern and eastern
approaches to Luang Prabang;
the town of Muong Houn, about
50 miles west of Luang Prabang,
has been abandoned by the gov-
ernment garrison and now is in
enemy hands.
Both sides are taking ad-
vantage of the lull to redeploy
their forces; enemy troops now
are in a better position to
threaten Luang Prabang and Vien-
tiane, should the fighting break
out again.
Although Pathet Lao offi-
cials have welcomed the arrival
of the International Control
Commission in Laos and have re-
ceived an ICC delegation in Xieng
Khouang, they have so far kept
the commission at arms length,
stressing that its function can
be fulfilled only after the three
Laotian parties have agreed on
all questions concerning a cease-
fire. ICC officials accompanying
the government delegation to the
site near the Nam Lik for talks
on 9 May were snubbed by the
enemy delegation, which claimed
to have no instructions for deal-
ing with the ICC.
On 11 May the three ICC
representatives returned to
Vientiane from Xieng Khouang
where they had "cooperative"
talks with Souvanna Phouma and
Souphannouvong. It appears
likely that the rebel author-
ities will hold military activ-
ities to a level that will en-
able the ICC to declare that a
cease-fire exists, thus per-
mitting the Geneva Conference
to open on schedule on 12 May
with full participation.
Meanwhile, bloc propaganda
portraying Phoumi's forces as
in repeated violation of the pro-
claimed cease-fire could be
used to justify a renewed Pathet
Lao offensive if the Communists
feel such action warranted by
international developments.
Expanded Communist activity
in southern Laos in recent weeks
has alarmed the government in
Saigon, which regards it as a
direct threat to South Vietnam's
northern defenses. . An emer-
gency cabinet meeting on 2 May
apparently determined that South
Vietnam must take emergency
countermeasures as result of the
overrunning of the Tchepone area
along Route 9 by Pathet Lao and
North Vietnamese forces. A
South Vietnamese infantry bat-
talion has been moved to the
Laotian border where Route 9
enters South Vietnam, and on 4
May a 150-man special forces
group, in civilian clothes, pene-
trated about six miles into Laos
to aid Laotian government troops
withdrawing eastward from Tchepone
toward the border.
In Saigon, Foreign Minister
Mau has told Ambassador Nolting
that the Diem government con-
siders it vital that the Boun
Oum government be seated as the
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11 May 61
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INDONESIA
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11 May 61
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11 MAY 1961
STATUTE MILES 200
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official Laotian delegation at
Geneva.
Vientiane maintains that
the primary objective of the
Geneva Conference should be to
work out an internationally guar-
anteed status of neutrality for
Laos. It holds that the forma-
tion of a government of na-
tional unity is an internal
affair. Separate delegations
representing the Souvanna Phouma
"government" and the Neo Lao
Hak Sat--the Pathet Lao's po-
litical arm--already are en
route to Geneva; a Vientiane
delegation was expected to
leave by 11 May.
Meanwhile, Souvanna Phouma
has returned to Xieng Khouang
from Phnom Penh, apparently to
play a more direct role in nego-
tiations with the Boun Oum gov-
ernment. He may eventually turn
up in Geneva.
in Phnom Penh, Souvanna expounded
on the desirability of forming a
government of national unity be-
fore the conference. He main-
tained that any government he
headed must include Pathet Lao
representatives, but expressed
confidence that he could keep
key ministries out of "leftist"
hands. Souvanna stated in a con-
versation with Ambassador Trimble
that he would have to contend
with a well-organized, highly
trained leadership core of "per-
haps 200" Communists in the
Pathet Lao, but insisted that
he could impose his will.
Indications are that Siha-
nouk would like some face-sav-
ing pleas from other partici-
pants in the Geneva Conference
that would permit him to join
them gracefully. However, he
has sent a negative reply to
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11 May 61
Chou En-lai's note of 6 May
urging him to reconsider his
decision not to attend. Sihanouk
told Chou that the Cambodian
delegation would attend "only
upon the unlikely request" of
King Savang, or upon the re-
quest of Souvanna, Souphan-
nouvong, and Boun Oum, "who to-
gether effectively represent
the Laotian people." It seems
likely, however, that Sihanouk
will finally agree to attend.
Chou's appeal to Sihanouk
that the conference "cannot be
held without participation of
your royal highness" was coupled
with an attack on the US--"con-
tinually trying to sabotage the
convening of such a conference."
On 3 May, the day Chou's letter
to Sihanouk was published in
Phnom Penh, the Chinese Commu-
nist premier also implied con-
cern lest Peiping be denied its
first major diplomatic confronta-
tion with the United States
since 1954. Speaking at a Pei-
ping banquet for the Geneva
delegations of North Vietnam,
the Pathet Lao, and Souvanna's
"lawful government," Chou em-
phasized Peiping's support for
the conference and complained,
"But no one really knows whether
the US will in fact participate."
The Hanoi Foreign Ministry
has charged that US aircraft
violated North Vietnamese air
space four times on 6 May. The
alleged overflights are reported
to have occurred in the south-
ernmost provinces of Ha Tinh
and Quang Bihh. Hanoi's pro-
test was similar to one issued
by Peiping on an alleged viola-
tion of Chinese Communist air
space near Laos on 2 May. The
Communists, however, have not
attempted to build a propaganda
campaign around these charges.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
In his speech in Yerevan
on 6 May, Khrushchev dealt'pub-
licly with foreign policy for
the first time in several months
and took a relatively moderate
line on Cuba and Laos. While
proclaiming that the position
of the USSR in the internation-
al arena was "excellent," he
acknowledged that the world sit-
uation had deteriorated and re-
mained "rather tense." He
blamed this on events in Cuba
and Laos and on the failure of
the United States to live up to
earlier expectations of a "wiser
approach to the settlement of
international questions."
Khrushchev asserted, how-
ever, that the USSR was still
making efforts to improve re-
lations with the Western coun-
tries, including the United
States. He characterized such
efforts as "most important for
the settlement of vital interna-
tional problems." This attitude
his emphasis on disarmament and
peaceful coexistence, and the
minimal attention given to Ber-
lin suggest that Khrushchev's
aim was to provide some sign
that the 'USSR will not allow
its exploitation of events in
Cuba to jeopardize efforts to
negotiate on broader East-West
questions, such as disarmament
and Berlin.
ment under control" rather than
control over armament. The USSR,
he stated, was preparing for the
talks with the US with "complete
seriousness."
Last March, Gromyko agreed
that the composition of a new
negotiating forum would be dis-
cussed with the US during June
and July but also indicated that
the USSR was interested in ob-
taining some statement of princi-
ples to govern any future dis-
armament negotiations. Khru-
shchev's remarks suggest that
the USSR sees substantive nego-
tiations with the US as the main
aspect of the bilateral talks.
Khrushchev made only a
passing reference to Berlin,
listing it along with disarma-
ment as a problem which obstructs
the "normalization" of relations.
In the Soviet message of con-
gratulations to the East Germans
on the anniversary of V-E Day,
however, Khrushchev predicted
that the "struggle" for a peace
treaty and the creation of a
free city in West Berlin would
"soon lead to positive results."
While probably hoping to
confirm that scheduled US-Soviet
talks on disarmament would not
be affected, Khrushchev also
served notice that the USSR
will seek to expand the agenda
to include substantive aspects;
these discussions, he said,
should not be reduced to a mere
formality dealing only with pro-
cedural questions. He declared
that "the-peoples are waiting
for the disarmament talks to
come out of the stage of endless
discussion" and expect "disarma-
In his speech, Khrushchev
avoided any direct reference to
the President and blamed the
landings in Cuba on "aggressive
forces" in the US. His restraint
in not prolonging his sharp ex-
ploitation of the Cuban affair
was also reflected in recent
Soviet press treatment of US
policy. The Soviet press has
used a number of articles by
American journalists in order to
suggest that a general reapprais-
al of US policy is under way.
In addition to republishing
columns by Walter Lippmann, Mos-
cow on 5 May reprinted excerpts
from the Kansas City Star's
interview w its y_' rus Eaton, who
was quoted as saying that he
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CURRENT INTELLIGENCE WEEKLY SUMMARY
still "believed" in President
Kennedy and that the "Cuban de-
feat" should be blamed on "agents
and diplomats" who kept the
United States badly informed.
Since the Soviet press has often
described Eaton as a "realistic
capitalist" and a stanch ad-
vocate of peaceful coexistence,
the publication of his remarks
was probably intended to create
the impression that there is
still a prospect for improving
East-West relations.
Pravda on 7 May also pub-
lished on its front page the
telegram from Khrushchev to the
President congratulating the
US on the manned space flight.
Last week, when Pravda was bit-
terly criticizing the US, Khru-
shchev's reply to the Presi-
dent's congratulations on the So-
viet space flight was not published.
Khrushchevis failure to
mention the nuclear test ban
negotiations in his speech re-
flects the gradual Soviet ef-
fort to down-grade the impor-
tance of this issue. Although
{hrushchev referred to previous
Soviet proposals for partial
disarmament, he did not elab-
orate or mention the test ban
as an initial step toward dis-
armament. At the conference
session on t: May, the Soviet
delegate said that Ambassador
Dean's statements reviewing the
results of his consultations
in Washington "disappointed us
very, very much." He claimed
that the Soviet delegation had
expected the US to return to
Geneva with agreement to Soviet
compromise proposals on the out-
standing questions.
CUBA
The Castro regime is appar-
ently increasing its efforts to
ensure the loyalty of its armed
forces and improve their organ-
ization and efficiency, In an
address on 7 May to the 1,000
prospective members of a new
corps of "revolutionary instruct-
ors," Castro said that "polit-
ical and revolutionary aware-
ness" is "the most important
thing" in the new armed forces.
He referred to Havana as the
primary target of a possible
invasion by "US troops," and
declared that combat units
must be prepared and fortifi-
cations made "impregnable"
so that the Cuban capital could
be defended "in the same manner
in which Soviet soldiers de-
fended Leningrad and Stalin-
grad" in World War II.
The government is rapidly
implementing its announced de-
cisions to expel "counterrevolu-
tionary" foreign clergy and to
nationalize all private schools.
The Cuban radio and press re-
port that some 300 Roman Catho-
lic priests and nuns will leave
the island shortly on a Spanish
passenger ship, and many more
of Cuba's estimated 500 Spanish-
born priests are reported pre-
paring to leave. According to
a Havana radio report on 5 May,
many private schools in Oriente
Province have already been
taken over, and others are
"under the immediate vigilance
of the militia,"
While no further changes
have been made in the economic
structure, there are new
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CURRENT INTELLIGENCE WEEKLY SUMMARY
indications tbati:tb+ ggvernment
intends to reduce and eventual-
ly eliminate the small private
holdings of those Cuban business-
men who have thus far been per-
mitted to continue operating.
Castro said on May Day that the
revolution would "coexist" with
such enterprises, but on 4 May
the Cuban Communist newspaper
Hoy warned that "socialism will
not be complete until not only
the exploitation of one man by
another, but the possibility of
this exploitation, is elimi-
nated." Small businessmen "can
and must" collaborate with the
revolution in its present stage,
the paper added, but "tomorrow
they must gradually integrate
themselves into the socialist
system."
The volume of unfavorable
Latin American comment on Cas-
tro's definition of his regime
as "socialist" continues to
grow. None of the major Latin
American countries, however,
appears willing to support imr-
mediate anti-Castro 'action by
the American republics, although
several governments--like the
conservative Prado regime in
Peru--have consistently appeared
ready to countenance unilateral
anti-Castro action by another
country. A fairly widespread
willingness to consent to a meet-
ing of ambassadors to the Organi-
zation of American States (OAS)
for discussion of the Cuban
problem may indicate a desire
to delay action until a general
Latin American consensus devel'
ops on the problem.
Colombian-Government memo-
randum of 5 May delivered to the
US Embassy in Bogota proposed,
that an OAS foreign ministers'
meeting be convoked to define
and list specific actions which
--if they were to occur in the
future--could serve as absolute
identification of Cuba as a
Communist country and at the
same time be construed as aggres-
sion. The meeting, according
to the embassy's interpretation
of the plan, would also designate
sanctions which could be auto-
matically applied in the event
of such aggression without the
necessity of OAS consultations.
Such a procedure, the Colombians
apparently believe, would reduce
the possibility of a serious
split among OAS members--a sit-
uation considered likely if vig-
orous action against Castro
were considered on the basis of
his regime's past actions.
The volume of Soviet prop-
aganda on Cuba diminished sharp-
ly last week, 4nd Khrushchev's
speeches on 6 and 7 May took a
generally moderate line on US-
Cuban relations. Khrushchev
said that although the "aggres-
sion against Cuba" has exacer-
bated the international situa-
tion, the USSR "would like. to
look optimistically upon the
further development of events"
in Cuba; he avoided any direct
references to President Kennedy
and did not repeat his previous
promise to give Cuba "all nec-
essary assistance" to repel at-
tacks. The Soviet leaders appar-
ently viewed the 17 April land-
ings as a situation that offered
obvious advantages for short-
term exploitation, but not at
the cost of jeopardizing higher
priority aims in the USSR's re-
lations with the US.
Moscow maintains its cir-
cumspect attitude toward Castro's
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CURRENT INTELLIGENCE WEEKLY SUMMARY
claim that Cuba has entered the
"era of socialist construction.".
The USSR is apparently reluc-
tant to repudiate Castro's claim
but unwilling to assume the ob-
ligations that would follow
from embracing his regime as a
full-fledged member of the bloc..
In a speech on 7 May, Khrushchev
attributed US hostility to Cuba
to the fact that "Cuba has de-
clared that it has entered the
path of constructing socialism,"
but he stopped short of identify-
ing Cuba as a member of the
"socialist camp." Soviet propa-
ganda portrays Cuba not as a
Communist state but as the fore-
runner of the "profound revolu-
tionary process which all of
Latin America now is undergoing."
The ideological and prac-
tical problems that Castro's
proclamation of a socialist
state have created for the USSR
were illustrated by the remarks
of the counselor of the Soviet
Embassy in Vienna to an American
official on 8 May.. The Soviet
diplomat expressed regret that
Castro had taken this step be-
cause this "imposes a far greater
obligation on us than we en-
V-isaged." He added, "Now we
are committed to the protection
of Cuba to a far greater degree
than-we intended."
In talks with a US journa].-
ist, Soviet diplomats in Washing-
ton rejected the idea that Cuba
might be taken into the Warsaw
Pact, pointing out that the pact
is composed exclusively of Euro
pean states.. They also noted
that Castro has not created a
"classless society" and added,
"Why antagonize the United States?"
Although the Soviet Govern-
ment probably will move to in-
crease economic and military
assistance to Castro, it does
not appear likely that Khrushchev
will attempt to convert Cuba into
a Soviet military outpost. The
establishment of Soviet military
bases in Cuba, in Moscow's view,
would hand the US a pretext for
direct intervention to overthrow
the Castro regime. In his letter
of 22 April to President Kennedy,
Khrushchev said, "We do riot have
any bases in Cuba, and we do not
intend to establish any."
CONGO
The political scene in
the Congo was dominated this
week by problems resulting
from Tshombe's arrest at
Coquilhatvil;le. His initial
detention on 28 April was
inspired by a general desire
to remove a divisive influence
from the conference; subsequently,
however, his detention has
proved an embarrassment to the
.conferees, and deliberations
have come to a virtual stand-
11 May 61
still while his fate has been
discussed.
Early statements by Leo-
poldville spokesmen indicated
that Tshomb6'would be tried for
treason, on charges ranging from
the execution of Lumuba CO is-
suance of a separate Kata;agan
currency. The announcement by
the Leopoldville government on
9 May that Tshombe will. he de-
tained indefinitely without trial
probably stemmed from concern
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CURRENT INTELLIGENCE WEEKLY SUMMARY
about anticipated international
reactions to any trial.
UN officials, following
Tshomb6ls incarceration, indi-
cated that they had no plans to
intervene on his behalf. The
most outspoken support for
Tshomb6 came from the former
French Congo, where President
Youlou temporarily suspended
ferry service to Leopoldville
in protest and closed the
Brazzaville airport to UN air-
craft.
The new Belgian Government,
through Foreign Minister Spaak,
has indicated its willingness
to strengthen the Leopoldville
government at Tshomb6ls expense
and to cooperate with the UN in
securing a withdrawal of Belgian
"political advisers" from the
Congo. Spaak has also endorsed
a withdrawal of Belgian military
advisers, but not so rapidly as
to disrupt the Congolese armed
forces and threaten a new break-
down of discipline.
The Belgians continue dis-
turbed over the alleged failure
of their NATO allies to under-
stand and support the Belgian
position in the Congo, At the
NATO ministerial meeting from 8
to 10 May, Spaak voiced concern
over the possibility of action
by UN and Leopoldville forces
against Katanga. He said that
such questions should be dis-
cussed in NATO and that consul-
tation should not be confined to
fact-finding. He warned that
otherwise Belgium would have to
seek a firmer basis for consul-
tation in some other interna-
11 May 61
tional organization--presumably
a reference to the six-nation
Common Market.
The action against Tshombd
at Coquilhatville has coincided
with indications that political
discussions between the Leopold-
ville and Stanleyville regimes
may be in the offing.
Economic problems facing
the Stanleyville,regime may make
Gizenga receptive to talks con-
cerning a reunited Congo. Al-
though expanded trade, together
with the lifting by the Leopold-
ville government of its eco-
nomic blockade, have alleviated
serious shortages in Orien-
tale Province, the situation
is still serious.
Tshomb6ls arrest and possi-
ble trial have stimulated new ap-
prehension in Katanga, Where UN
troops have sought to arrest a
number of Tshomb6ls white mer-
cenaries. This action has
stirred fears that the UN plans
to disarm all of Tshomb6ls
forces, although the UN insists
that it does not intend to do so.
Katangan Interior Minister
Munongo, who since Tshombe's
detention has been disposed to
cooperate with the UN, has said
he will forcibly resist any UN
or Leopoldville "invasion."
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CURRENT INTELLIGENCE WEEKLY SUMMARY
FRANCE-ALGERIA
The French Government is
continuing its arrests of sus-
pected participants in last
month's attempted coup and its
preparations, for their trial.
De Gaulle referred to these
measures in his 8 May televi-
sion speech and then went on
to focus public attention on
the prospect of an Algerian
settlement. In this connection,
he urged the European settlers
to give up their old ideas and
"absurd dreams" of holding Al-
geria in a colonial status.
He also reiterated his assur-
ances that France would not
abandon them when Algeria be-
comes independent.
Although early reports in-
dicate that De Gaulle's speech
was well received in many
quarters in Algeria, tension
remains high. Extraordinary
security measures and a system-
atic search for weapons are,
still in effect, but these have
not prevented circulation of
inflammatory pamphlets calling
for "death to all` Gaulli5ts"
or the recurrence of bombings
in Algiers and Oran ., ? On 0 May,
a. large Moslem group armed with
hatchets reportedly staged a
pro-FLN demonstration in the,
town of Marengo.
In his speech De Gaulle
said that France would honor its
Algerian policy already "chosen
by the government, adopted by
the parliament, and approved by
the nation," and he stressed that
it now is up to the Algerian
population to make its decision.
He renewed his offer to nego-
tiate the future of Algeria
with "Algerian elements, pri-
marily those that are fighting
us," and also repeated his
admonition that, if such talks
failed, he was prepared to move
ahead without regard for the
rebels.
De.Gaulle spoke against a
background of frequent reports
that'the rebel Provisional Al-
gerian Government (PAG) was
ready to begin negotiations.
On 10 May both sides publicly
announced that a first meeting
would be held in Evian on
20 May. Working sessions are
expected to commence on 23
May. Most observers--including
French officials--stress that
the negotiations are likely
to be long and difficult. The
talks are expected to cover
such complex issues as guar-
antees for the settlers, con-
trol of the, Sahara, and the
future status of French mil-
itary bases in the area.
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CURRENT INTELLIGENCE WEEKLY S
NEW SOVIET DECREE ON CORRUPTION AND CRIME
Moscow's current drive
against corruption of all kinds
has reached a new high with the
promulgation of a catch-all de-
cree providing the death penalty
for large-scale embezzlement
and other "especially dangerous
crimes." The law is' the harsh-
est punitive measure yet adopted
by the Khrushchev regime. Here-
tofore, capital ptInishmen ;has`.
been applicable only in cas,'es
of treason, espionage, sabotage,
and premeditated murder.
The decree is aimed pri-
marily at embezzlers of state
property. The Kremlin evident-
ly uncovered widespread,embez-
zlement during its investiga-
tions of managerial "hoodwinkers"
who pad their production reports.
In an angrily worded com-
mentary "mm the decree, Soviet
Prosecutor; General Rudenklo re-
vealed in Izvestia that numerous
cases had "recently come to
light" in which the state had
been bilked of hundreds of thou-
sands of rubles. Asserting that
current punishment for. such of-
fenses is insufficient, he de-
manded that "these plunderers
be mercilessly punished, to the
extent of the firing squad."
Habitual criminals and counter-
feiters may also be executed
under the new law.
The decree contains broad
hints that all is not well in
the Soviet prison camp system,
despite frequent propaganda
claims that "places of confine-
ment" have become model institu-
tions of rehabilitation. Execu-
tion now may be ordered for pris-
gpsr5.> who "terrorize other in-
mates" or organize into gangs for:
"attacking camp administrations."
According to Rudenko, those who
"upset" normal prison life are
no longer eligible for parole
and may have their sentences ex-
tended by two to three years.
During the heyday. of Stalin
and Beria, life in Soviet forced
labor camps was often dominated
by gangs of hardened criminals,
called "blatnoy," who made their
own lives easier by terrorizing
other convicts and sometimes
even the camp administrators.
Some recent reports have claimed
that the blatnoy continue to ex-
ist.
The Soviet secret police
(KGB) have the responsibility
fpr investigating "especially
dangerous crimes" against the
state.
SOVIET FORE?GN TRADE IN 1960
According to recently pub-
lished data,, they USSR'.s foreign'
trade in 1960 totaled about
$11.2 billion, or 6.4 percent
more than in 1959. The increase
resulted mainly from a substan-
tial $599,000,000 rise in trade
with non-Communist countries.
There was only a slight increase
in trade with the other members
of the Sino-Soviet bloc; a rise
in trade with Eastern Europe ap-
parently was almost completely
offset by a decline in trade
with Communist China.
Soviet imports from the
West rose $475,000,000, chiefly
because of accelerated purchases
of capital goods. Exports to
the West, however, registered a
gain of only $117,000,000, resulting
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in an unprecedented $330,000-
000 trade deficit with the non-
CQmmunist world. This undoubt-
edly aggravated the USSR's nor-
mally hard-pressed balance-of-
payments position in its trade
with the West.
The USSR's foreign exchange
reserves are not believed to be
large. In the past, it has re-
lied on foreign exchange earned
from trade with Britain and oth-
er industrial countries in the
West to help finance raw material
purchases from overseas sterling
areas and other underdeveloped
areas with which it has usually
incurred large trade deficits..
The recent figures provide no
breakdown of Soviet trade with
countries outside the bloc. How-
ever, if it is assumed that the
1960 deficit with underdeveloped
countries was no larger than in
1959, there would have been a
deficit of about $150,000,000
with the industrial West, com-
pared with a surplus of $99,-
000,000 in 1959. Thus a signif-
icant source of foreign exchange
for the USSR was presumably
eliminated in 1960.
Deficits in the Soviet
balance of payments normally
require sales of gold in inter-
national bullion markets. Such
sales have approximated $200,-
000,000 annually in recent years
and reached a. high of about
$300,000,000 in 1959. During
1960, however, despite its
mounting trade deficit, the
USSR sold only $125,000,000 in
gold and then abruptly withdrew
from the market during the in-
ternational "gold rush" in the
fall. The deficit was appar-
ently financed through long-term
credits from several West Euro-
pean countries, short-term bor-
rowing on the European money
market, and foreign exchange
holdings obtained from the ex-
ceptionally large gold sales in
1959,
USSR FOREIGN TRADE,1959-1960
(MILLIONS OF US DOLLARS)
EXPORTS IMPORTS EXPORTS IMPORTS
Balance Balance
Total 5,441 5,073 +368 5,562 5,630 - 68
I +342
1 +264
1-332
Gold sales apparently were
resumed in March 1961; according
to the London Times, sales in
March and April totaled some
$120,000,000. This resumption--
the timing of which was moti-
vated by the stabilization of
the gold market after it became
clear that the United States
was not going to devalue the
dollar--reflects the continuing
high level of Soviet demand for
Western machinery and equipment.
Mpscow's apparent inability to
finance an increased volume of
imports from the industrial West
through a commensurate increase
in exports and by means of long-
term Western credits probably
explains the large volume of
gold sales and may presage sales
in excess of the record high of
1959.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
The three days of demon-
strations in Tehran which led
to the collapse of Sharif-
Emami's government on 4 May con-
stituted the most extensive
manifestation of popular dissat-
isfaction in Iran since 1953.
Similar protests led to the
voiding of the results of the
rigged elections last August;
student demonstrations in Janu-
ary and February protested the
rigging of the second elections.
Starting as a public pro-
test by teachers over low wages,
last week's demonstrations at
one point involved an estimated
30,000 people. The fervor of
the demonstrations increased
when one of them wa killed by
a police officer, since impris-
oned. The crowd s demand for
the resignation of the govern-
ment was reinforced by attacks
in the Majlis (parliament) on
the prime minister,
The Shah's choice of the
reform-minded Ali Amini to head
the government reflects the seri-
ousness with which the monarch
viewed his situation.
Amini has been recognized
as an opponent of the hah since
he was recalled as ambassador
to the United States in 1958 un-
der suspicion of being involved
in a plot against the regime.
The alleged Leader of the plot,
former G-2 General Qarani,
served two years in prison for
"exceeding his authority," but
Amini's role in the case is not
clear.
11 May 61
Amini claims to have de-
manded and received from the
Shah a free hand to tun the-govern-
ment , choose cabinet Tmtnisters,
and reorganize the government.
Nevertheless, at the insistence
of the Shah, Amini compromised
by agreeing to retain Minister
of War General All Asghar Naqdi
and Minister of the Interior
General Amir-Azizi. However,
the two probably were personally
acceptable to Amini in any case.
Minister of Foreign Affairs
Hossein Qods-Nakhai and Minister
of Commerce Ali Asghar Pur-
Homayun were also retained.
The key to Amini's success
will be his relationship with
the Shah, who may revert to his
old maneuvers of playing his of-
ficials against each other. In
such circumstances, Amini would
have the choice of resigning or
of giving in to the Shah and
becoming another figurehead.
The new cabinet selections
appear to reflect an attempt
by Amini to maintain a balance
between the political left and
right. Two of the new ministers
have histories of association
with the Tudeh (Communist)party.
All have held relatively minor
positions in the government or
have served in the Majlis.
again meets.
The Shah's decree of 9
May dissolving parliament and
calling for elections under a
new electoral law was issued
despite denials by Amini as late
as that same day that such a
move would be taken. If Amini
is in fact able to rule by de-
cree, as suggested in the press,
he exercises more power than any
prime minister since Mossadeq.
He could thus circumvent the
constitutional provision that
new elections must start within
a month after parliament is dis-
solved, and he would also have
a free hand in implementing his
financial and economic reform
programs and rooting out corrup-
tion. However, any laws passed 25X1
by decree will be subject to
ratification when parliament.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
ARAB-ISRAELI TENSION
An abrupt increase in Arab-
Israeli tension may result from
either of two disparate develop-
ments in the Middle East. One
is a military exercise which
now is under way in the UAR.
Although the locale and magni-
tude of the exercise are unclear,
it may involve UAR forces in
Syria as well as Egypt.
The Israelis, whose mili-
tary intelligence on the UAR has
always been excellent, presum-
ably are well informed about the
UAR exercise and probably have
instituted precautionary alerts
among key Israeli units. With
the state of military readiness
stepped up to some extent on
both sides, there is increased
danger thata minor incident
would lead to serious consequences.
The Arab states as a whole
have recently manifested in-
creased concern about Israel.
In Jordan, meanwhile, a
second potentially disruptive
situation has developed. King
Husayn's announcement on 1 May
of his engagement to an English
girl has caused an almost univer-
sally adverse and indignant re-
action among Jordanians. Efforts
by Jordanian cabinet members and
other high-level officials to
persuade the King to change his
mind have been unsuccessful,
and it has been officially an-
nounced that the wedding will
take place about 25 May. Should
most cabinet members continue
to press their oppositon to
the marriage, or should the
King become convinced the Jor-
danian people are solidly against
it, he might abdicate--a pos-
sibility he reportedly has al-
ready raised.
Husayn thus has pre-
sented his opponents inside
and outside Jordan with a new
issue to exploit.
As yet, the UAR has under-
taken no major propaganda cam-
paign against Husayn. The King,
apparently eager to bolster
his sagging popularity, has an-
nounced his receipt of a
"brotherly" reply to the second
of his conciliatory letters to
Nasir. Nasir has endorsed
Husayn's suggestion that
a meeting be held between
the two leaders.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
THE POLITICAL SITUATION IN EAST AND WEST GERMANY
Since the founding of the
Federal Republic of Germany and
the German Democratic Republic
(GDR) in 1949, two Germanys
with radically different polit-
ical structures have emerged
under two strong leaders. Each
claims to represent the legit-
imate German state. Konrad Ade-
nauer has worked for West Ger-
many's integration into the
Western Alliance; his counter-
part, Walter Ulbricht, has been
able to keep East Germany se-
curely in the Communist bloc
only because of the presence of
the Soviet army.
Leadership
Ulbricht, after long years
of residence in the USSR and
prolonged service to Soviet
causes, is totally committed to
Moscow. His continued rule,
hated as it is by the East Ger-
man populace, is dependent on
strong Soviet support. He has
shifted from "soft" to "hard"
approaches as Soviet policy and
East German internal interests
required, but he prefers authori
tarian methods, leans toward
"dogmatic" interpretations of
Communist ideology, and, by train-
ing and character, is a "sec-
tarian." These tendencies have
led him to make several major
politico-economic errors--nota-
bly the all-out collectiviza-
tion campaign of 1960 which
again set off mass flights of
East Germans to West Berlin
after the flow had shown signs
of steady diminution.
In earlier years, Ulbricht's
hard-line propensities were bal-
anced by a group of Westernized
and more realistic leaders, such
as Premier Otto Grotewohl, For-
eign Trade Minister Heinrich
Rau, and Karl 3chirdewan, for-
merly the second-ranking party
leader. Rau now is dead, Grote-
wohl is in virtual retirement,
and Schirdewan is in disgrace.
The Ulbricht henchmen who re-
placed them are, for the most
part, Soviet trained and as
harsh and authoritarian as Ul-
bricht himself. Ulbricht ap-
pears to be impatient with So-
viet temporizing on the Berlin
issue but has had to defer to
Khrushchev's desire for an
abatement of tension.
Like Ulbricht in East Ger-
many, Adenauer has become the
symbol of West Germany. His
policies have been guided by a
firm determination to see the
Bonn republic closely tied to
the West, by his thorough op-
position to Communism, and by
his consistent attempts to break
down national barriers in West-
ern Europe and bring the Euro-
pean states into closer cooper-
ation.
Under Adenauer, West Ger-
many's development in the past
twelve years has been marked by
stability and moderation. A
"slightly authoritarian democracy"
in the view of a British observer,
the Federal Republic has been
protected from the threat of po-
litical extremism by the firm
leadership of Adenauer and by
a spectacular economic recovery.
Although in September 1949
Adenauer was elected chancellor
by the Bundestag by only one
vote--his own--there never has
been a serious threat to unseat
him, and his three cabinets have
been relatively stable. Most of
his ministers have been willing
to bend to his often autocratic
rule. Only a few--like Defense
Minister Strauss and Economics
Minister Erhard--have emerged
into front rank.
Adenauer, still forceful
and shrewd at C5, has r~. not
only his cabinet but also his
party, the Christian Democratic
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EAST GERMANY
PARTY AND GOVERNMENT ORGANIZATION
MARCH 1961
PARTY* (APPROXIMATELY 1,500,000 MEMBERS AS
OF JANUARY 1961)
POLITBURO
(11MEMBERS)
(9 CANDIDATE MEMBERS)
WALTER ULBRICHT - First - -
Secretary
ALFRED NEUMANN- - - -
ERICH HONECKER - - - -7
_-
ALBERT NORDEN -
WALTER ULBRICHT - First --
Secretary
OTTO GROTEWOHL-
WILLI STOPH- --- -
VACANCY - -- - -
ALFRED NEUMANN
-- ERICH HONECKER
ALBERT NORDEN
HERMANN MATERN
HERBERT WARNKE
FRIEDRICH EBERT - - - - -
ERICH MUECKENBERGER
Store, doubtful
CANDIDATE MEMBERS
PAUL VERNER - - - - - - - - PAUL VERNER
GERHARD GRUENEBERG - - - - GERHARD GRUENEBERG
KURT HAGER - - - - - - - KURT HAGER
KARL MEWIS -------
ALFRED KURELLA
PAUL FROEHLICH
ALOIS PISNIK
EDITH BAUMANN
LUISE ERMISCH - - - - -
CENTRAL COMMITTEE
(109 MEMBERS)
(45 CANDIDATE MEMBERS)
COUNCIL OF STATE
(22 MEMBERS AND
DEPUTY CHAIRMEN)
OTTO GROTEWOHL - Depury
Chairman
LUISE ERMISCH
ARROWS INDICATE THEORETICAL DIRECTION OF AUTHORITY.
Union (CDU), with a stern dis- The Communists in 1952
cipline that carries over into abolished the historic states
the deliberations of the Bundes- (Laender) and divided East Ger-
tag
East German Party and State
Since the Soviet Union
formalized its control of the
Soviet zone by establishing the
GDR, the Ulbricht regime has
"socialized" and centralized
most aspects of East German
life, partly to ensure its own
control and partly to eradicate
remaining ties with West Ger-
many.
COUNCIL OF MINISTERS
(27 MINISTERS AND
STATE SECRETARIES)
PRESIDIUM
VACANCY - Deputy Premier and
Minister for Foreign and Internal
German Trade
BRUNO LEUSCHNER - Deputy Premier t
and Chairman, Stare Planning
Commission
LOTHAR BOLZ - Deputy Premier and
Minister of Foreign Affairs
MAX SEFRIN - Deputy Premier and
Minister of Public Health
MARGARETE WITTKOWSKI - Deputy
Premier, Trade, Supply and
Agriculture
ALEXANDER ABUSCH - Deputy
Premier for Culture and Education
PAUL SCHOLZ Deputy Premie,
and Chairman, Commission for
Questions of Agriculture
MAX SUHRBIER - Deputy
Premier and Deputy Minister
of Finance
many into fourteen administra-
tive districts (Bezirke) based
on urban and geographical con-
figurations. They emasculated
the 1949 constitution which had
established parliamentary forms
and guaranteed human rights. By
the "decentralization" of 1958,
they reduced the power of the
central governmental apparatus
and correspondingly increased
the importance of their Socialist
Unity party (SED), while con-
centrating economic power in
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the State Planning Commission,
directly responsible to U1-
bricht. Other countervailing
forces such as the collaborating
political parties and the inde-
pendent judiciary were debased
and brought under control, while
church influence was systemati-
cally undermined.
Ulbricht dominates both
the party and state apparatus
in his dual capacity as SED
first secretary and chairman of
the Council of State. Under his
supervision the SED politburo
and the central committee sec-
retaries formulate policies, ap-
point key personnel, and oversee
the execution of their dircc-
tives, while the obedient Peo-
ple's Chamber, completely con-
trolled by the SED, enacts par-
ty directives into law.
A bureaucracy estimated at
more than 200,000 party and gov-
ernment officials of high or
medium levels and thousands of
minor officials, teachers, and
other functionaries administers
the affairs of the GDR. Local
government is organized on a
descending level of district,
county, and community councils,
in theory responsible for for-
mulating and executing policies
for their own areas but in prac-
tice directed by the SED, the
State Planning Office, and the
governmental agencies.
To oversee this bureaucracy
and control the restive East
German populace, the regime has
built up a security system on
the Soviet model directly sub-
ordinate to the SED central com-
mittee's security department.
The Ministry of Interior has
approximately 35,000 frontier
police, among other uniformed
forces, whose main purpose is
to prevent flights to the West.
MILITARY FORCES SECURITY TROOPS
SOVIET over 300,000 5,500
EAST GERMAN 75,000 53,500
fit .1 2
The dreaded Ministry for State
Security (MfS) has established
an elaborate network of informers
believed to number at least 100,-
000 persons responsive to the
direction of some 20,000 MfS of-
ficers. Local party units also
serve as an informers' network,
reporting to the central commit-
tee on public morale and behavior.
West German States and Parties
In West Germany, on the oth-
er hand, the power of the central
government is limited by the pow-
ers and functions of ten states
(Laender) comprising the federa-
tion, each with a government and
elected legislature of its own.
Their functions largely comple-
ment those of the central govern-
ment, in which their interests are
guarded by the upper house (Bun-
desrat), and they, rather than
Bonn, execute federal laws in
their area; they have exclusive
jurisdiction in key fields such
as education. In addition, the
states are largely autonomous
financially, mainly through the
direct collection of most taxes.
While state politics have
been progressively overshadowed
by national issues, the states--
as well as local governments--
do provide a reservoir of polit-
ical leaders for the national
scene, and the states' minister-
presidents are able to exert
considerable influence on the
central government.
Within this framework, the
West German political parties
remain effective, moving toward
moderation and away from extrem-
ism. There has been a great
strengthening of the major par-
ties at the expense of the splin-
ter--and often noisily national-
ist--parties. Whereas, in 1949 ten
parties were represented in the
Bundestag, today there are four,
and next fall there may be only
three. The two largest parties,
the CDU and the Social Democratic
party (SPD), have won increasing-
ly large shares of the vote, and
the Free Democratic party
(FDP) trails as a weak
third.
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CURRENT INTELLIGENCE WEEKLY SUMNARy
One observer notes that the
West German voter wants "con-
sistency, predictability, and
respectability." This has
benefited the CDU in winning
the vital independent.vote.
WEST GERMAN PARLIAMENT
497 VOTING MEMBERS
22 NONVOTING MEMBERS FROM WEST BERLIN
DP/BHE
6
CDU Christian Democratic Union CSU Christian Social Union, the CDU's Bavarian affiliate
SPD Social Democratic Party DPS German Party of the Saar, the FDP's affiliate in that state
FDP Free Democratic Party DP/BHE All-German Party, formed on 16 April 1961 from the former
German Party (Deutsche Partei) and the All-German Bloc.
HAMBURG
d BREMEN
LOWER SAXONY
Generally
Pro-Government
3
HAMBURG
SPD- FDP
3
BREMEN
SPD-FDP
4
HESSE
SPD-DP/BHE
5
LOWER SAXONY
SPD-FDP
DP/BHE
NORTH RHINE
CDU
WESTPHALI A
5
BAVARIA
C5U-FLIP-
DP/BHE
5
BADEN-
CDU-FDP-
WUERTTEMBERG
DP/BHE
4
RHINELAND-
CDU-FDP
PALATINATE
SCHLESWIG-
CDU-FL}P
HOLSTEIN
3
SAAR
CDU-DPS
4*
WEST BERLIN
SPD-CDU
* Non voting
The BUNDESRAT is made up of delegations from each of the West German states
plus a nonvoting delegation of four members from West Berlin. Each delegation
must vote as a bloc as directed by the state government; most states are governed
by coalitions. The size of the delegation is set by the federal constitution on the
basis of population,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
The East German People
Popular resistance in East
Germany--the regime's major
problem--appears to be at a low
ebb. Potential leaders, nota-
bly professional men and in-
tellectuals, have fled to the
West or are in prison. The bit-
ter memory of the Soviet re-
pression of the 17 June 1953
uprising in East Germany and
of the Hungarian revolution in
1956 has discouraged any thought
of trying again.
Passive resistance and the
ability to flee to West Berlin
impose some checks on the re-
gime. Ulbricht is well aware
of the dilemma this poses: if
he reverts to harsh policies to
strengthen his control, the ref-
ugee flow will rise sharply;
if he is successful in gaining
Khrushchev's support for a move
to close off the West Berlin
escape hatch, popular tensions
in East Germany might well rise
to the explosion point, pro-
vided the international situa-
tion gave some prospect of suc-
cessful defiance of the regime.
The East German leaders
periodically voice a desire for
German reunification, but their
actions make clear that they
are actually intent on achiev-
ing Western recognition of the
GDR as a legitimate German
state. The regime has long
publicized the view that "peace-
ful coexistence with Vest German
militarism is impossible." U1-
bricht suddenly reversed this
view last December on his re-
turn from the Moscow Communist
conference, declaring instead
that the GDR would have to co-
exist with West Germany for a
long time.
Adenauer has always adhered
to the practical principle that
German reunification is out of
the question as an immediate po-
litical goal, and that it is in
the long run feasible only if
West Germany provides a strong
and stable Western base on which
to build a new, unified Germany.
He has strongly resisted
the idea of recognition of the
GDR regime, stressing instead
the right of the East German
people to self-determination
through free elections. Under
the "Hallstein doctrine"--refus-
ing diplomatic relations with
any countries, except the USSR, 25X1
which recognize the GDR--he has
effectively countered East German
attempts to gain prestige through rec-
ognition by nonbloc countries. Never-
theless Adenauer has
considered the possibility
of extending de facto recognition
if this could Achieve an effective
status quo agreement on Berlin.
In recent months, the East
German regime has sought to in-
crease contacts with West Ger-
mans in hopes of enlisting sup-
port for "all-German" neutralism.
Simultaneously, East German of-
ficials intensified their efforts
to travel to West Germany to
conduct political activities,
in a series of provocations de-
signed to show that Bonn was
barring East Germans from West
Germany.
SED leaders have also in-
tensified their divisive tactics
against the West German Social
Democratic party, in an effort--
thus far notably unsuccessful--
to split the rank and file from their
leaders and "capture" the party
for neutralism, if not for Com-
munism. The SED also continues to
campaign for Bonn's legalization
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CURRENT INTELLIGENCE WEEKLY SUMMARY
of the German Communist party
(KPD)--outlawed in 1956--and
eventual merger of the KPD and
left-wing elements of the SPD,
as was done in East Germany in
1946 to form the SED. Because
of its desire to split the SPD
while supporting the KPD, the
SED leaders have avoided endors-
ing third parties in West Ger-
many--a policy not always palat-
able to fellow-traveling lead-
ers in the Federal Republic who
would not be averse to support
from East Germany.
Bonn, on the other hand,
has tried to limit contacts with
East Germany to those technical-
level meetings required to main-
tain normal interzonal activi-
ties--such as transportation and
communications. Some Bonn of-
ficials, notably Interior Min-
ister Schroeder, have succeeded
in cutting down contacts between
the two Germanys, particularly
with political parties and sports
groups.
Ulbricht has no obvious
successor. Only once has he
designated an acting party first
secretary--Karl Schirdewan, whom
he purged in 1958 for opposing
his policies. Among possible
contenders for party leadership
are Alfred Neumann, who handles
party cadre matters; Erich
Honecker, Moscow-trained party
security chief; and Paul Verner,
East Berlin's party boss. MM.em-
bers of the older party leader-
ship are dying; while the 67-
year-old Ulbricht appears to be
in excellent health, his death
in the near future would cause
serious dislocations in the re-
gime.
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CURRENT INTELLIGENCE WEEKLY SUMARY
Control Points for Allied Traffic:
AL Soviet AL Allied
East
Road
Canal
0 West
Autobahn
Railroad
Air Corridor
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SPECIAL AR's ICLES
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CURRENT INTELLIGENCE WEEKLY SPRY
ECONOMIC CONDITIONS IN EAST AND WEST GERMANY
The areas of present East
and West Germany were already
heavily industrialized before
World War II, and about to the
same extent. West Germany had
a large iron and steel industry
based on natural resources which
East Germany lacked, and East
Germany was the more efficient
agricultural producer.
The East German economy
recovered more slowly from the
effects of World War II. Gross
national product (GNP) reached
the 1939 level by 1951 in West
Germany, but only by 1957 in
East Germany. East German GNP per
capita is still only about four
fifths of that of West Germany.
East German industry,
smaller and more dependent on
imported raw materials, was af-
TOTAL
(billion 1955 dollars)
SECRET
fected more by the postwar par-
tition. This disadvantage was
intensified by the contrasting
occupation policies of the USSR
and the Western powers. The
contrast between the low level
of foreign trade permitted by
the autarkic institutions of
the Soviet bloc and the high
level encouraged by the free
world tended to perpetuate the
difference in efficiency between
the two economies.
The dissimilarity of en-
vironment would alone be enough
to account for the marked lag
in East German postwar recovery
and growth. In addition, how-
ever, economic efficiency in
East Germany--especially in ag-
riculture--was depressed by
politically motivated policies
and by the rigidity of economic
planning and administration.
GROSS NATIONAL PRODUCT
= East Germany ? West Germany
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CURRENT INTELLIGENCE WEEKLY SUMMARY
PER CAPITA OUTPUT AND CONSUMPTION OF SELECTED COMMODITIES, 1959
WEST GERMAN CONSUMPTION = 100
Electric power
40 petroleum products
34
51
75 Finished steel
Sulfuric acid
67
100
Human consumption
610428 B
Output
Cement
Housing units
Food grains
East Germany's objective
is to "overtake And surpass"
West Germany in production per
worker and consumption per capi-
ta by 1965--a goal well beyond
the capabilities of its economy.
Plans have already been modified
to take account of lags in pro-
duction, foreign trade, and in-
vestment in 1960. A general re-
vision of the Seven-Year Plan
(1959-65) may become necessary.
Both East and West Germany
depend heavily on imported agri-
97
100
112
100
W 116
100
1 97
100
1103
100
1100
10c*
86
= Consumption
cultural products. Vest Ger-
many has considerable iron ore
and abundant bituminous coal,
including coking coal, all of
which East Germany must import
in large amounts, along with
iron and steel, to supplement
domestic output. The most im-
portant East German mineral
resources are brown coal and
uranium. East German deliveries
of uranium ore and concen-
trates to the USSR, which
have been running at about
5,000 metric tons of recov-
erable uranium metal per
year, represent about 30
percent of total Soviet bloc
output.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
*Estimates
East Germany Q West Germany
11 MAY 1961
Population and Manpower
Before World War II, popu-
lation was divided between pres-
ent East Germany (including
East Berlin) and-present West
Germany approximately in pro-
portion to area. The influx
of refugees from Eastern Europe
immediately after World War II
added to the population of both
areas. Since the late 1940s,
however, the East German popu-
lation has declined, while that
of West Germany has continued
to increase rapidly, largely
because of the uninterrupted
emigration from East to West
Germany.
More than 3,000,000 people
went from East to West Germany
during 1949-60, and only about
650,000 went in the opposite
direction. The westward flow
diminished sharply in 1958,
after the enactment of an East
German law forbidding "flight
from the republic," but rose
again in 1960 to almost 200,000
because of the collectiviza-
tion of agriculture and the
growing fear that the border
would be closed. Emigration in
the first quarter of 1961 con-
tinued at about the same rate
as in 1960.
The emigrants have included
every element of the East Ger-
man population, but proportion-
ately there have been more from
managerial and professional
groups and fewer peasants.. The
westward flow is the result.main-
ly of encroachment by the East
German regime on the personal
and property rights of individ-'
uals, the intrusion of the par-
ty into economic affairs and
private life, and the drabness
and inconvenience of existence
under Communist rule. The pros-
perity of West Germany has also
been influential, although the
contrast between economic con-
ditions in East and West Germany
has become less sharp.
In both East and West Ger-
many there has been a signifi-
cant increase in the proportion
of older age groups in the popu-
lation since 1950, and the pro-
portion is somewhat greater in
East Germany because the aver-
age age of the emigrants has
been less than that of the
population as a whole. An in-
sufficient supply of labor
has become a deterrent to eco-
nomic expansion in both areas,
although more so in East Ger-
many, where employment has de-
clined.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
EAST GERMAN REFUGEES TO WEST GERMANY AND WEST BERLIN
Note: Figures include only those entering through normal West German refugee channels.
U,
0
z
200
0
1959
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
1960
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
1961
JAN
FEB
MAR
APR
1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961
MONTHLY BREAKDOWN
5,000 10,000 15,000
DOCTORS AND
DENTISTS
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PHARMACISTS
PROFESSORS
OTHER
TEACHERS
ENGINEERS AND
TECHNICIANS
PROFESSIONAL CLASS
1 732
788
56
,730
901
171
596
000
(TOTALS)
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CURRENT INTELLIGENCE WEEKLY SUMMARY
AGE STRUCTURE OF POPULATION AT END OF 1958
MALES
10
I
40
30 _
2
L I AGE ---- I I AG[
600 500 400 300 200 100 0 100 200 300 400 500 200 100 0 100 200
(THOUSANDS) (THOUSANDS)
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CURRENT INTELLIGENCE WEEKLY SUMMARY
EAST GERMANY'S POPULATION STRUCTURE FOR 1960, COMPARING ACTUAL POPULATION AND
HYPOTHETICAL POPULATION ASSUMING NO MIGRATION AFTER 1950
MALE FEMALE
70-74
65-69
60-64
50-54
45-49
40-44
30-34
25-29
1,000 800 600 400 200 0 200 400 600 800 1,000
(Population in thousands)
15-19
1014
0-4
If emigration from East
Germany were to continue at the
1960 rate, the total decline
since 1958 in the population of
working age would be about 1,-
400,000 by 1965. This decline
would require further cuts in
production goals, although not
necessarily in goals for out-
put per worker and consumption
per capita.
Production
East and West Germany are
much alike in economic struc-
ture. Industry and industrial
handicrafts account for well
over half the national product.
West Germany has a substantial
advantage in output per worker--
about 50 percent greater in in-
dustry and 25 percent greater
in the economy as a whole.
East Germany has been able
to eliminate only part of the
very large lag in output per
worker in industry that devel-
oped after World War II. Since
1950, industrial production in
East and West Germany has in-
creased at about the same aver-
age rate, although the growth
of industrial employment has been
somewhat faster in West Germany.
As a result of the parti-
tion of Germany and the autarkic
organization and outlook of the
Soviet bloc, East Germany was
forced to develop some relatively
inefficient basic industries and
could not make efficient use of
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CURRENT INTELLIGENCE WEEKLY SUMMARY
its highly specialized plant
and its experience in manufac-
turing. The solution of this
basic problem was made more
costly by Soviet exploitation,
the limitations of centralized
planning and distribution, the
inexperience of the East Ger-
man top management, and the
hostility of plant managers and
engineers, many of whom have
defected.
Before World War II, out-
put per worker in West German
agriculture was about two thirds
that in East Germany, but the
differences in the postwar peri-
od have been much less. Output
per agricultural worker in West
Germany was slightly greater
than that in East Germany during
the early 1950s,but now is prob-
ably slightly less.
Agri culture, Forestry,
and Fisheries
Industry, including
Handicrafts
Transport and
Communications
Other Services
Lion, police, and
East German agriculture has
been depressed by the breaking
66.0
1952 1953 1954 1955
= East Germany
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defense)
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CURRENT INTELLIGENCE WEEKLY SUMMARY
GEOGRAPHIC DISTRIBUTION OF FOREIGN TRADE,1958
Other*
Other NATO
West Germany
* US and Canada negligible
up of the great estates, the
shift from field crops to animal
husbandry, state control of most
agricultural machinery, and pres-
sure on the peasant to accept
collectivization.
Foreign Trade
East Germany has not been
able to'replace the markets and
raw-materials sources it had in
the West before World War II.
West Germany, on the other hand,
had ample opportunities to ex-
pand foreign trade in free world
markets. By 1960, total West
German external trade (includ-
ing interzonal trade) was al-
most 2.5 times the 1936 level
(taking account of trade be-
tween the regions at that time),
whereas East German external
trade had declined by one
third.
Dependence on trade with
West Germany has been a subject
of concern for the Ulbricht re-
gime since Bonn last September
denounced the 1961 interzonal
trade agreement. Although a new
agreement was reached, the East
WEST GERMANY
Sino-Soviet Bloc
Other
26%
Other
NATO
36%
US and Canada
German Government has continued
to study ways of minimizing its
dependence. Apparently, however,
neither East Germany nor the
other bloc countries are prepared
to incur any significant costs
for this purpose, and it is un-
likely that dependence will be
greatly reduced in the near
future.
Interzonal trade accounts
for about 1.1 percent of East
1936 1950 1960
East Germany West Germany
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2% Non-NATO Europe
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CURRENT INTELLIGENCE WEEKLY SUMMARY
FOREIGN TRADE COMPOSITION, 1958
IMPORTS
Food,drink and tobacco
Mineral fuels and petroleum
products
Metallic ores and base metals
Metal manufactures (including
instruments and watches)
Chemicals
Textile manufactures and
clothing
Paper and paper products
All other
Germany's external trade. It
imports frpm West Germany a sig-
nificant fraction of its total
supply of rolled steel (7 percent
in 1959) and coking coal, to-
gether with numerous chemicals
and valuable machinery and equip-
ment.
Although interruption of
interzonal trade would not cause
a general disruption of the
East German economy, a complete
cessation of trade with West
Germany and the rest of the
NATO countries might result in
a net loss equivalent to about
two thirds the normal increase
in industrial output for per-
haps six months, with a rapidly
diminishing effect thereafter.
The magnitude and duration of
EXPORTS
Food, drink and tobacco
Mineral fuels and petroleum
products
Metallic ores and base metals
Metal products, machinery,
and equipment
Textile manufactures and
clothing
Paper and paper products
All other
the effect would depend great-
ly on the speed and extent to
which the other bloc countries
readjusted their plans.
Consumption and Investment
Differences in the supply
of consumer goods and services
beteween East and West Germany,
striking in the early 1950s,
are much less evident to-
day. Consumption per capita
in East Germany has risen
from about 60 percent to
nearly 75 percent of that in
West Germany, and the differ-
ence has become less impor-
tant as the absolute level
of consumption passed the pre-
war level.
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The diets now are basical-
ly similar, but there is less
diversification in East Germany.
The amount of meat, cereal,
fats, and sugar in the two diets
is about the same, but in East
Germany the grades of meat are
inferior and the supply of
tropical fruits, coffee, and
cocoa is much smaller.
The West German consumer
still has an advantage in the
supply, quality, and style of
shoes and textiles, although
this advantage has declined.
Consumer durables, many of which
have become commonplace in West
Germany, are still scarce in
East Germany.
The West German has better
housing. Although the heavier
wartime destruction of housing
in West Germany and the greater
postwar increase in the West
German population presented a
major problem, Bonn responded
by subsidizing a very large
building program. West Germany
built more dwelling units in
every year during the 1950s
than were built by East Germany
during the entire decade.
During the early 1950s the
share of the national product
devoted to investment was much
greater in West Germany than
SECRET
in East Germany; investment per
capita was roughly twice as
great. West German investment
was stimulated initially by
the large volume of US aid and
later by favorable public pol-
icies. The requirements of
reconstruction and moderniza-.
tion and the rapid increase in
population have kept the demand
for investments high.
In East Germany, invest-
ments were kept low through 1955
to pay reparations to the USSR,
reduce the large gap between
East and West German consump-
tion, set up a military estab-
lishment, and support a large
party and state apparatus. Fur-
thermore, because of limited
foreign trade opportunities,
East Germany could not even use
the manufacturing capacity it
had.
Since 1955, East German in-
vestments have increased rapid-
ly because of diminishing So-
viet exploitation, the narrow-
ing of the gap between East
and West German personal con-
sumption, and the urgent need
to expand and modernize pro-
ductive capacity. The share
of GNP devoted to investments,
more than 20 percent, is now
about the same as in West Ger-
many. E:= I
25X1
25X1
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CURRENT INTELLIGENCE WEEKLY SUMMARY
The four-power status of
Berlin and Western occupation
rights in the city derive from
agreements concluded in 1944 and
1945 by the United States,
Britain, and the USSR. These
agreements established Greater
Berlin as a separate and special
occupied area under three-power
controls (France was added in
July 1945) and provided for a
governing authority (kommanda-
tura) to direct the city's ad-
ministration. Western rights
were reiterated on 5 June 1945,
by a four-power statement in
which Soviet Marshal Zhukov con-
curred that "the area of'Greater
Berlin' will be occupied by
forces of each of the four
powers"; and on 2 August 1945
by the Potsdam agreement.
Although there is no spe-
cific document signed by all
four powers providing for free
and unrestricted access to Ber-
lin, an exchange of letters be-
tween President Truman and
Stalin, other statements by and
agreements among the military
commanders, and documents ap-
proved by the Allied Control
Council provided for air, rail,
and road traffic between Berlin
and West Germany,
The unilateral division of
the city by the Soviet authori-
ties in 1948 suspended the four-
power administration and left
West Berlin under tripartite
Western administration, but it
did not change four-power re-
sponsibility for Berlin. Khru-
shchev tried to justify his No-
vember 1958 ultimatum on Berlin
by claiming that Allied viola-
tions had voided the 1944-45
agreements. Later he admitted
the legitimacy of the Allied
presence in the city, but he
argued that the passage of time
had rendered the occupation
status of Berlin "abnormal" and
therefore in need of change.
Present Legal Situation
The East German regime
since its establishment in Oc-
tober 1949 has treated East Ber-
lin as a part of the German
Democratic Republic (GDR). The
East German constitution states
that Berlin is the capital of
the GDR, but the regime has not
taken the step of formally in-
corporating it into the GDR.
East Berlin delegates to the
Volkskammer do not have voting
rights, and East German laws--
with few exceptions--have been
re-enacted by East Berlin's
city government before becoming
effective there.
Western authorities still
insist that the entire city is
under four-power occupation,
and make regular trips to East
Berlin in order to assert their
right to travel anywhere within
Greater Berlin at any time with-
out obtaining permission from
any other authority. They also
insist that German civilians
have the right to travel freely
in the city.
Tn November 1958 the Soviet
Union clearly indicated that it
considered East Berlin to be a
part of East Germany and no
longer under four-power control.
Soon thereafter the Soviets be-
gan referring to their Berlin
commandant as only the commander
of Soviet troops in the city,
indicating that he no longer
had any administrative respon-
sibilities for East Berlin.
The East Germans announced
on 8 September 1960 that all
West Germans henceforth would
have to obtain special perthits
to enter East Berlin, thereby
forcing them to meet the same
requirements as to travel in
East Germany and making the
sector border a de facto GDR
frontier. This was an important
step toward making the Soviet
sector legally a part of the
GDR, but it clearly violated
four-power agreements guarantee-
ing freedom of movement within
the city.
In mid-February 1961 East
Germany revised its sector border
control procedures to make cross-
ing much easier, but it pointedly
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CURRENT INTELLIGENCE WEEKLY SUMMARY
did not rescind the 8 Septem-
ber decree. Travel between
East and West Berlin for resi-
dents of the city is still rel-
atively free, although all ve-
hicular traffic is checked at
the crossing points. Pedestrians
and passengers on the subway and
elevated railway trains which
operate through both sectors
usually are subjected only to
spot checks.
West Berlin's Status
Since 1949, West Berlin has
gradually become integrated with
West Germany in matters of econ-
omy, law, administration, and
politics. West Berlin's rela-
tionbhip with the Federal Re-
public now is governed by the
Western Allies' 1955 Declaration
on Berlin, which provides'for a
large measure of self-government
by the Berliners and extensive
economic and political integra-
tion with West Germany but re-
serves certain key areas of re-
sponsibility to Allied control.
The declaration did not change
Berlin's status in international
law as an occupied area, and
Note: West Stoaken or o o! West Berlin e
turned o r to Soviet control in 1945 by the
Bnersh in return for Gross Giienicke oreo needed
to expand Goton oagorr.
Railroad
Autobahn
Main highway
Canal
Soviet sector of Berlin
neither the unilateral division
of Greater Berlin by the Commu-
nists in 1948 nor the establish-
ment of West German sovereignty
in 1955 altered this status.
To avoid any action that
might be interpreted by the USSR
as nullifying the four-power re-
sponsibility for Berlin agreed
on in 1944, Allied statements
and declarations have consist-
ently maintained that Greater
Berlin has not become a state
of the Federal Republic. The
West Germans, on the other hand,
consider Berlin legally one of
their states and limited only by
such powers as the Allies spe-
cifically reserved to themselves
--security and disarmament, for
example.
The Allies have generally
encouraged the development of
political and economic relations
between West Berlin and the
Federal Republic. While insist-
ing that any West German law
be adopted separately by the
Berlin legislature before having
effect in West Berlin, the Allies
in 1951 approved a simplified
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system in which Berlin may use
"cover laws" to enact federal
laws and regulations merely by
declaring the provisions of the
federal law also valid in Ber-
lin, rather than requiring re-
enactment of the entire law.
As a result of a continu-
ing Allied responsibility for
Berlin's security, West German
defense legislation does not
apply to Berlin, Berliners can-
not be drafted into the West
German armed forces'(although
they may volunteer), and West
German military units are not
stationed in Berlin.
Despite legal restrictions
insisted on by the Allies, West
Berlin takes an active and in-
fluential part in the West Ger-
man Government. Berlin sends
representatives to the Bundes-
tag in Bonn, and although
their votes are not allowed to
determine the passage or rejec-
tion of bills, Berlin delegates
participate in debates, intro-
duce bills, and have full voting
rights in committees.
Berliners have held, or
now hold, high positions in the
federal government and legis-
lature. Mayor Willy Brandt has
served as president of the Bun-
destrat; Heinrich Krone of Ber-
lin is majority leader of the
Bundestag; and another Berliner,
Ernst Lemmer, holds the impor
tart position of minister of
all-German affairs in the fed-
eral cabinet. Brandt, further-
more, is the chancellor candi-
date of his Social Democratic
party (SPD) in the West German
elections in September.
Berlin is governed by a
coalition of the SPD and the
Christian Democratic Union (CDU).
As a result of the December 1958
city election, in which the SPD
and CDU received 52.6 percent
and 37.7 percent of the vote
respectively, the West Berlin
House of Delegates consists of
78 SPD representatives and 55
CDU members. The Communists
received only 1.9 percent of
the vote and failed to win rep-
resentation, despite consider-
able effort and expenditure.
West Berlin's Economy
In spite of the handicaps
of its unique geopolitical posi-
tion and the fact that recovery
did not begin until after the
blockade of 1948-49, West Berlin
has made remarkable economic
progress during the past decade.
Its economy is booming, and its
rate of growth between 1950 and
1960 exceeded even that of West
Germany. In 1960 the city's
gross product totaled nearly
$3 billion--more than three
times that of 1950--and indus-
trial production was 53 percent
above prewar levels. At the
beginning of the decade there
were more than 300,000 unemployed
in West Berlin, but in the peak
month of September 1960 only
19,200 were unemployed and there
were 14,600 unfilled job openings.
West Berlin's recovery
and present prosperity has been
made possible only with exten-
sive US and West German financial
aid. For many years Bonn has
made good the city's annual
budget deficit and also has made
large payments for social and in-
surance pensions. In 1959 the
total West Germany contribution
was about $375,000,000. This
transfer of purchasing power en-
ables West Berlin to cover its
large balance-of-payments def-
icit, which in 1959 totaled
$345,000,000. West Germany also
assists Berlin through tax pref-
erences and preferential shipping
rates and by promoting the place-
ment of industrial orders in the
city.
In recent years about 65
percent of Berlin's output has
been exported to West Germany,
including 73 percent of the pro-
duction of the electrical equip-
ment plants--the city's leading
industry--and 70 percent of that
of the clothing industry. West
Berlin's trade with East Germany
and the bloc is very small, and
the bulk of its food, coal, and
raw materials are transported
across the access routes through
East Germany from West Germany
and other free world sources.
Almost six times as much cargo
moves into the city from the west
as in the opposite direction,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
with railway and road traffic
accounting for 68.3 percent of
the total volume, barge 31.6
percent, and air only 0.1 per-
cent.
East Germany supplies the
city small amounts of fresh foods
and agricultural products and a
major portion of the brown-coal
briquettes used extensively for
heating Berlin's private dwell-
ings--a vital import inasmuch
as West Germany does not pro-
duce enough brown coal to meet
its own and Berlin's needs.
East Berlin's Situation
As part of its Seven-Year
Plan, the East German regime is
aiming to transform East Berlin
into a showplace that will demon-
strate the progress made under
Communism and eventually rival
West Berlin. East Germany's
development program is also de-
signed to show that it will not
permit the Soviet sector of the
city to become a part of any
"free city" of Berlin.
In contrast with West Berlin,
however, East Berlin presents a
shabby appearance. Even govern-
ment buildings have a down-at-
the-heel look, and the recon-
struction of several years ago
along famed Stalinallee not only
is ugly but fails to hide the
bombed-out areas behind the new
buildings. Much of the postwar
construction is shoddy, and even
relatively new buildings are al-
ready showing considerable de-
terioration. Housing is still
ECONOMY OF WEST BERLIN
1958 1960
1954 1957 1959 TRADE DISTRIB
TI
1^C^
U
ON
GROSS
PRODUCT
BILLION DOLLARS
EMPLOYMENT
THOUSANDS
INDUSTRIAL
PRODUCTION
1936:100
EXPORTS-
MDSE. ONLY
BILLION DOLLARS
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FREE WORLD SOVIET BLOC 1.3%
16.4% EAST GERMANY
1.1%
WEST GERMANY
81.2%
FREE SOVIET BLOC 1.3%
WORLD EAST GERMANY
9.3% 2.3%
WEST GERMANY
87.1%
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CURRENT INTELLIGENCE WEEKLY SUMMARY
inadequate for the dwindling
population. Automobile traffic
is scanty, and streets are in
need of repair and modernization.
Living standards in East
Berlin are substantially below
those in West Berlin and West
Germany, despite the fact that
East Berlin residents are a
favored element of the GDR popu-
lace. The contrast is particu-
larly sharp in Berlin, although
the difference in consumer wel-
fare between East and West for
Germany as a whole is mainly one
of quality rather than quantity..
However, West Berlin is a show-
case, and many East Berliners
make frequent shopping trips
there to purchase the more at-
tractive--though more expensive
--goods available.
West Berlin Stockpiling
As a result of the stock-
piling program undertaken after
the 1948 blockade, West Berlin
has on hand about $200,000,000
worth of food, fuel, and raw
materials, It has sufficient
basic foods to provide a year's
supply at an estimated rate of
consumption of 2,950 calories
per person per day. Berlin of-
ficials estimate that enough
bricks, cement, and lumber have
been stored to last the city an
entire building season and
enough hard coal for about 12
months.
Stocks also include a six-
month supply of brown-coal bri-
quettes, dry milk, dehydrated
vegetables, clothing, and medical
supplies. West Berlin has its
own water, electricity, and tele-
phone system, but its sewage is
processed in East Berlin dis-
posal plants.
The problems of supplying
Berlin by another airlift are
far greater than in 1948-49 when,
with industry producing at only
19 percent of 1936 levels, the
city was kept alive by an air-
lift supplying about 5,000 tons
of food and coal a day. Today
the city's booming industries
use about 20,000 tons of food,
coal, and raw materials a day,
and the population has become
accustomed to the comforts of
prosperity.
Furthermore, difficulties
could also arise from intermit-
tent slowdowns in shipments rather
than a complete halting of traf-
fic--such as "administrative
delay" by the East German trans-
port personnel. Even with stock-
pile materials, such harassments
over a period of time could act
to undermine the city's stability
and morale.
Past experience has shown,
however, that the often-threatened
Berliners do not panic easily,
and they continue to have a basic
confidence that the West will
stand by them. Although some
anxiety was noted in the Berlin
business community last fall when
East German attempts to restrict
the free access of West Germans
to and within Berlin led to Bonn's
suspension of its interzonal
trade agreement with East Germany,
the uneasiness was not translated
into decisions having a basic im-
pact on the economy. Business
activity remained generally
normal, industrial orders were
high, and several firms went
ahead with plans to expand their
production facilities.
West Berlin leaders note with
satisfaction that in recent months
--and especially since the rein-
statement of the interzonal
trade agreement in December--
traffic has proceeded more freely
and with less interference by
East German transport personnel
than at virtually any other time,
and access has been improved by
East German? agreement to the
sealing of truck cargoes and the
removal of the tolls on waterway
traffic imposed by the Communists
since 1958. These leaders'cite
these developments as hopeful
signs that East Germany's de-
pendence on West German sources
for key industrial goods will
serve to restrain harassment of
civilian access in the future.
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CURRENT INTELLIGENCE WEEKLY 9U ARyi
Since the failure at Geneva
in 1959 to conclude an agreement
with the USSR for an "interim
solution" in Berlin, West German,
French, and British leaders have
tended to agree that Western
legal rights in Berlin are un-
impeachable and that the mainte-
nance of the status quo is the
best realizable situation. The
West Germans have shown the
least interest in new negotia-
tions and have sought to employ
delaying tactics to ward off
major decisions as long as pos-
sible. The British have general-
ly been more willing to explore
ways of easing points of friction.
During periods of intense Com-
munist pressure, however, Bonn
and Paris--as well as London--
have shown an inclination to
investigate compromises and to
consider possible concessions
in order to avert a showdown
with the USSR.
The West German Position
West German leaders are
convinced that their country's
interests would be damaged by
any significant reduction of
Allied rights in Berlin or change
in West Berlin's economic and
political ties with West Germany.
Fearful that the Allies are
basically unwilling to take any
real risks to defend Berlin and
may eventually agree to a "status
-quo minus" solution, they have
sought to'employ delaying tac-
tics in an effort to ward off
major decisions as long as pos-
sible.
Adenauer generally takes a
highly skeptical view of summit
negotiations on Berlin, maintain-
ing that Berlin is but one of the
many problems in East-West rela-
tions and that there should be a
reduction of tensions through an
agreement on disarmament before
tackling the Berlin and German
problems. He tends to feel
that the USSR cannot be trusted
in any new agreement on Berlin
and to insist that the Allies
continue to maintain a strong
stand in defending their rights.
The chancellor has strongly
and consistently opposed all
proposals suggesting any form
of disengagement of Allied forces
from Germany and the withdrawal
of the Federal Republic from
NATO. If another round of talks
with the USSR on Berlin becomes
unavoidable, however, he will
insist that Bonn must, as in the
past, have a say in the prepara-
tion of the Western position,
and he will probably seek to
exercise a veto over any signif-
icant Western concessions.
There have been numerous
indications that Adenauer has
considered inviting Khrushchev
to Bonn some time in 1961 in
order to explore Soviet inten-
tions on Berlin and try to get
any four-power negotiations post-
poned until after the German
elections in September. Ade-
nauer has given assurances that
he has no intention of negotiat-
ing unilaterally with the So-
viets about Berlin's future and
has frequently stressed that the
Berlin problem remains the re-
sponsibility of the four occu-
pation powers. He is, however,
anxious to appear flexible and
to avoid any action in Berlin
which could give Soviet propa-
ganda a pretext for depicting
him as an obstacle to an inter- 25X1
national detente.
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Jr-k-nn I
Willy Brandt goes further
than Adenauer in insisting that
all ties between West Berlin and
the Federal Republic be main-
tained. He has criticized the
chancellor for not being vigor-
ous enough in maintaining this
relationship, arguing that it
is harmful to abandon such sym-
bols of Bonn-Berlin ties as the
annual Bundestag meetings in
West Berlin,
Furthermore, pending the
reunification of Germany, the
West Berlin mayor feels that the
essentials of status quo in Ber-
lin must be preserved, since any
alteration of the legal basis of
Allied presence would curtail
the "primary rights" of the West-
ern powers in Berlin. Although
he recognizes that Allied forces
in Berlin have a largely symbolic
character, he has repeatedly
stated that Allied garrisons
cannot safely be reduced below
present strength without affect-
ing Berlin morale.
Brandt has strongly repudi-
ated the USSR's "free city" pro-
posal, but has stressed the need
for continuously probing Soviet
intentions in order to search
for any possible change of views
regarding ties to be maintained
between the proposed "free city"
and West Germany.
11 May 61
Although he would prefer
that any negotiations on Berlin
be part of a larger framework
of East-West discussions, Brandt
realizes that the West may be
forced to talk about the Berlin
issue only. He has frequently
stated that any future negoti-
ations on Berlin should feature
a re-examination of the 1959
Western proposal calling for the
reunification of Greater Berlin
as a first step toward German
reunification. Brandt insists
that West Berlin's interests must
be considered in any negotiations
on the city's future and will
continue to reserve the right to
approve any future solution.
Extremely conscious of
Britain's vulnerability to nu-
clear warfare and still hoping
for an evolutionary improvement
in East-West relations, the Mac-
millan government is inclined to
investigate compromises and to
consider possible concessions in
the event of severe Communist
pressure on the Western position
in Berlin. This tendency is
strongest at times of high pres-
sure, and weakest when the threat
of military action subsides or
when the British place a premium
on close identification with
Allied views--as in establishing
firm links with the new American
administration.
London agrees with Paris
and Washington that the three
nations' legal rights in West
Berlin, including access to the
city, are absolute, based on
wartime and immediate postwar
agreements, and holds that Mos-
cow could not legally modify them
by a separate peace treaty with
East Germany. The Macmillan
government has repeatedly stated
in public its intention to honor
Britain's obligations to Berlin,
both legal and moral, and affirms
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the impossibility of yielding
to any Communist threats.
Now maintaining a military
force of some 3,000 men in West
Berlin, Britain has agreed to
join in a review of Allied con-
tingency plans in view of the
fear that Khrushchev will take
some initiative regarding Berlin
before the 22nd party congress
meets in October.
Nevertheless, London is un-
happy that the Western enclave
within East Germany provides a
source of frequent East-West
friction. When negotiations
have been in prospect in recent
years, the British have done
much thinking aloud about ways
in which the West might ease
some of the points of friction.
This tendency reached its height
under the pressure of Khrushchev's
six-month deadline in the winter
of 1959.
At times of tension, the
British stress the importance of
employing only those measures
which would not appear provoca-
tive to the East Germans or
Russians, which would impose
greater inconvenience on the
East than the West, and which
are carefully tailored to fit
the specific problems at hand
with maximum psychological ef-
fect on the Communists. In
keeping with these principles,
the British last summer opposed
the West German Bundestag's meet-
ing in Berlin as unnecessarily
provocative, have often argued
against the West's imposing a
"self-blockade" by refusing to
accept East German stamping of
transit documents, and last fall
insisted that tightening restric-
tions on East German travel not
have the effect of cutting off
trade with East Germany in the
absence of a policy decision to
do that.
In line with its hope that
frequent friction will not bar
a long-term improvement of rela-
tions with the Soviet bloc, Lon-
don wants to increase contacts
and so is anxious to minimize
restrictions on trade and travel
between East Germany and the
West. Domestic British interests
strongly support the government
in this respect. London opposes
measures more restrictive than
those imposed by West Germany,
the ally most concerned. Past
periods of strained London-Bonn
relations have found the Brit-
ish particularly averse to in-
conveniencing themselves to
harass the East Germans.
While Britain considers the
recognition of East Germany a
diplomatic impossibility--to
avoid infuriating Bonn as well
as for implications regarding
West Berlin--it is more con-
cerned with practical consider-
ations and long-term goals than
with opposing steps that might
lead to de facto recognition.
Some parliamentary sentiment in
the Conservative as well as Labor
party favors considering the
eventual recognition of East
Germany as part of some package
settlement of the German problem.
Even the lip service previously
paid to German reunification is
fading to a faint whisper.
French Policy
The basic French policy on
Berlin and Germany is to main-
tain the status quo as the best
realizable condition. This policy
is founded on the need, clearly
recognized in Paris, to prevent
further Soviet encroachment in
Europe, but it also reflects the
continuing fear that a unified
Germany acceptable to the Soviet
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Union could not be tied to
France in the existing European
and Atlantic organizations, and
might again pose a threat to
French interests.
Since the aims of the Paris
and Bonn governments coincide
with respect to maintaining the
security of Western Europe, the
French have supported West Ger-
many in most cases where there
has been a clear and direct
challenge from the Soviet bloc.
Thus France has firmly resisted
Soviet or East German attempts
to disrupt Allied access to
West Berlin and on several oc-
casions has actually taken the
lead among the Western powers
in denying travel documents to
East German nationals.
Recently increased concern,
especially in the Foreign Minis-
try, that the Soviet Union will
sign a separate peace treaty with
East Germany perhaps as early
as this summer has led Paris to
cooperate in stepping up three-
power contingency planning to
cover Western countermeasures in
the event access to Berlin is
threatened. Of the 49,000 army
troops France has in Germany,
1,700 are in West Berlin,
On the other hand, French
concern to preserve the status
quo has been manifested in some
criticism of Bonn whenever Paris
felt that West- Germany might take
provocative action. De Gaulle
himself has publicly accepted
the Oder-Neisse line as Germany's
eastern frontier, but there have
been several indications that
:France would prefer to see the
issue kept open as a possible
Western concession in future
negotiations. The French public
has been generally critical of
irredentist statements by refugee
spokesmen in West Germany. Bonn's
attempts to portray these state-
ments as merely election cam-
paign slogans have not been
fully convincing.
Paris has particularly op-
posed what it considers attempts
by Bonn to assume three-power
responsibilities in West Berlin
on the ground that they will
weaken the legal argument for
continued Allied presence. This
has led to several French sugges-
tions that the Allies exercise
more control over West German
legislation applied to West Ber-
lin, and to French opposition
to holding Bundestag and Bundes-
rat meetings in Berlin.
Because France sees its
broad national interests best
protected by a continuation of
the present division of Germany
and maintenance of Allied rights
in Berlin, there has been little
high-level discussion of alter-
native conditions for Germany.
However, France has opposed the
Soviet proposals to make West
Berlin a "free city." Although
willing to discuss the German
problem with Soviet representa-
tives, even at the foreign min-
isters' level, Paris would not
like to see such a discussion
limited to devising a new status
for Berlin. If faced with a
choice, however, France would
be even more unwilling to see a
united Germany not tied to the
West.
Since 1945, De Gaulle has
seen in close French-German re-
lations "a possibility of under-
standing..,which the past has
never offered." Now that much
of that possibility has already
been realized, De Gaulle will
not easily give up his objective
of a strong Europe based on
France and West Germany, and is
likely to continue to oppose po-
litical agreements which would
alter Germany's status.
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The crisis over Berlin pre-
cipitated by Khrushchev on 10
November 1958 was the logical ex-
tension of the policies developed
by the Soviet leaders f..llowing
the Western decision in 1955 to
accord full sovereignty to West
Germany and bring it into the
NATO alliance. Having failed to
block these developments, Moscow
adopted a new course aimed at
gaining Western acceptance of
the concept of two Germanys.
Its initial move-in this
direction was to establish dip-
lomatic relations with Bonn in
September 1955. The USSR then
concluded a state treaty with
Ulbricht's regime granting it
all the attributes of sovereignty
except control over Allied ac-
cess to West Berlin. Next, Molo-
tov at the Geneva foreign min-
isters' conference in November
1955 rejected reunification of
Germany by means of free elec-
tions and declared that unifica-
tion was possible only through
a rapprochement between the two
German states.
Thereafter the USSR took
the position that a peace treaty
should be negotiated with and
signed by the two German states.
Previously, the Soviets had said
a treaty would be concluded with
a reunified Germany. This new
approach still left two signifi-
cant issues unresolved: the
status of Berlin and the conclu-
sion of a final peace settlement.
Therefore the final step in this
policy was the crisis over Berlin
and the Soviet demands for a
peace treaty with East and West
Germany and a "free city" in
West Berlin.
Khrushchev's aim was to
confront the Western powers with
the apparent dilemma of risking
war to maintain their existing
rights in Berlin or making con-
cessions which would erode their
position not only in Berlin but
also on the question of German
unification. In addition to
using the Berlin threat as a
lever for overcoming Western re-
sistance to a summit meeting
under conditions favorable to
the USSR, Khrushchev's strategy
was to manipulate the Berlin is-
sue as a means of wringing con-
cessions from the West which
could lead eventually to some
form of recognition of the East
German regime and to acceptance
of the status quo in Eastern
Europe.
Since May 1959, when nego-
tiations opened at the Geneva
foreign ministers' conference,
Khrushchev's fundamental goal
has been not to drive Western
forces out of Berlin within some
brief period but to bring about
a basic change in the legal
status of the city. Such a
change, in Moscow's view, would
seriously undermine the Western
powers' long-standing insistence
that their rights in Berlin--
based on the unconditional sur-
render of Germany--continue un-
til Germany is reunified by
four-power agreement.
The Soviet position, there-
fore, has consisted of two main
elements: an offer to negotiate
a modification in Berlin's sta-
tus, and a threat to take unilat-
eral action if no agreement is
reached. Moscow's initial de-
mand for the creation of a free
city and all subsequent amend-
ments, including a compromise
solution for an interim period,
have aimed at liquidating Western
rights to remain in Berlin with-
out restrictions pending German
unification. Since the West has
no interest in negotiating away
its rights, Moscow has used dead-
lines, either explicit or im-
plicit, to guarantee continuing
Western interest in discussing
the issue in order to avoid a
crisis.
The breakdown of the summit
conference in Paris confronted
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Khrushchev with the choice of
carrying out his threat against
Berlin and accepting the high
risks involved or deferring ac-
tion until a further round of
negotiations could be attempted
with a new American administra-
tion. His choice of the latter
course reflected not only his
preference for a policy of
limited risks but also his con-
fidence that the forces which
brought about the Paris meeting
were still operative in the
West,
Soviet restraint; however,
did not preclude attempts by
the East Germans to undermine
the Western position in Berlin
by imposing arbitrary restric-
tions on the movements of West
Germans into East Berlin, In
the face of West German economic
retaliation, the Communists grad-
ually retreated and accepted a
compromise settlement of the
issue, partly because of the
potential economic disruption
which would result from a break
in trade but also because of
Khrushchev?s desire not to jeop-
ardize the chances for an early
meeting with the new President,
Khrushchev also used this
period between the summit con-
ference and the change of ad-
ministrations to spell out his
future course He began to lay
the groundwork for new high-
level negotiations on Berlin in
his discussion with Prime Min-
ister Macmillan in New York
last fall, He told the prime
minister that the heads of gov-
ernment would have to discuss
Germany and Berlin and that the
Soviet Union would sign a treaty
with East Germany if the West
refused to reach agreement. He
said that, in any case, the
question of Germany must be
settled during 1961, Khru-
shchev made this position public
on 20 October and informed West
German Ambassador Krell that
postponement of a solution be-
yond the West German elections,
scheduled for this September,
would be unacceptable,
In a recent conversation
with Kroll, Khrushchev modified
his earlier timetable. While
strongly emphasizing his de-
termination to achieve a solu-
tion during 1961, Khrushchev
stated that the bloc had set no
precise deadlines and would be
willing to wait until the West
German elections and "possibly"
until the Soviet party congress
in October before convening a
bloc peace conference to sign
a separate treaty with East
Germany. He said also that the
prospects of a showdown over
Berlin "need not affect nego-
tiations already begun with the
US" and that he was willing to
give the President more time.
This line and Khrushchev's
repeated assurances in his re-
cent interview with Walter
Lippmann that he recognized that
the President needed time to
consolidate his position sug-
gest that Khrushchev's future
course is still closely tied to
his desire to hold a high-level
meeting on Berlin, either bi-
laterally with the US or at an-
other four-power summit confer-
ence. At the same time, these
statements probably reflect the
Soviet leaders' awareness that
East-West. negotiations on Berlin
will require considerably more
time than Khrushchev anticipated
after the summit breakdown P7 25X1
The USSR's maximum demands
hate remained essentially un-
altered since first spelled out
in the notes of 27 November
1958 and 10 January 1959; they
were most recently restated in
Moscow's memorandum to Bonn on
17 February 1961. The USSR pro-
poses to conclude a peace treaty
with both German states and to
transform West Berlin into a
demilitarized free city. This
position was modified slightly
at the Geneva foreign ministers'
conference, when Gromyko proposed
that "symbolic" units of the four
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CURRENT INTELLIGENCE WEEKLY SUMMARY
powers could be stationed in the
free city. In his conversation
with Ambassador Thompson on 9 n
March, Khrushchev reiterated
this variation of the free city
scheme and also mentioned the
possibility of a joint police
force.
In that conversation, Khru-
shchev explained that the So-
viet Union did not want to
change anything in Germany but
only to establish juridically
what had happened after World
War It--i.e., the emergence of
two Germanys--and to provide a
legal foundation for postwar
borders in Europe. In almost
every major Soviet pronounce-
ment on the German question
there is a similar phrase. The
repeated references to the
necessity of confirming the
postwar situation in Europe,
although designed in part to
present Soviet demands in a
reasonable light, also reflect
the Soviet leaders' preoccupa-
tion with firmly establishing
the international position of
the East European regimes through
a treaty freezing the partition
of Germany and recognizing the.
East German boundaries.as per-
manent `internat'ional frontiers.
Khrushchev is well aware
that the growing strength of
West Germany poses a serious
political, economic, and mili-
tary challenge to the Ulbricht
regime and to the East European
governments bordering on Germany.
By demanding a peace treaty, a
free city, and complete East
German control over communica-
tions to Berlin, Khrushchev is
seeking to deal a decisive blow
to Bonn's aspirations for uni-
fication and to undermine its
confidence in the strength and
unity of the Western alliance.
In his. talks. *ith Lippm..nn,
however, Khrushchev indicated
that he does not hold any great
expectations for Western ac-
ceptance of a peace treaty with
both Germanys. Recent Soviet
statements provide strong evi-
dence that Moscow instead will
concentrate on obtaining a tem-
porary or interim solution for
Berlin. The memorandum to Bonn
stated as much, and Khrushchev
told Lippmann that such an in-
terim solution was a Soviet
"fallback'.'" position. Khru-
shchev made it clear, however,
that the USSR would press for
an agreement abolishing Western
occupation rights at the end of
the interim period. The revival
of the interim concept, well in
advance of any negotiations,
suggests that Moscow sees this
as the only proposal realistic
enough to gain Western agree-
ment.
The interim agreement as
originally outlined at the Ge-
neva foreign ministers' confer-
ence has three main advantages
for the USSR: 1) a strictly de-
fined time limit, which would
permit Moscow to reopen the
question with a stronger legal
and political position; 2Y the
implication that the Western
powers remained in Berlin at
the sufferance of the USSR; and
3) the link between an'.tnterim
agreement and the establishment
of an all-German negotiating
body. In effect, the Soviet
leaders hoped to induce the West
to accept a revision of Berlin's
status in the direction of the
free city proposals in return
for permission to maintain troops
in and to have free access to
Berlin for a limited period.
At Geneva, Foreign Minister
Gromyko refused to clarify the
status of Western rights at the
end of this period and proposed
only that negotiations be re-
sumed with "due regard" to the
situation prevailing at that
time. The interim agreement,
therefore, was intended as a
stage leading toward the ulti-
mate withdrawal of Western forc-
es from Berlin. This position
was made clear shortly before
the Paris summit meeting, when
Moscow proposed in a note to De
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Gaulle that the interim period
last for two years, but
that at the end of the period
the four powers would be com-
mitted to sign a peace treaty
and "take measures" to create
a free city in West Berlin.
A constant element in all
Soviet formulations for a tem-
porary solution of Berlin's
status has been the proposal to
convene an all-German commission
to negotiate on unification and
a peace treaty while the interim
agreement was in effect. Khru-
shchev has conceded
that he realized that such nego-
tiations would probably fail,
but the USSR has insisted on
this proposal as a means of gain-
iqg Western endorsement of the
thesis of two sovereign German
states and their exclusive
right to deal with unification.
The other points of an in-
terim agreement--duration, ab-
olition of propaganda activi-
ties, prohibition of nuclear
weapons in West Berlin, and
reduction of Western troops--
are essentially bargaining
counters. East German state-
ments have listed various terms
for "normalizing" the situation,
including cessation of recruit-
ment in West Berlin for the West
German forces, termination of
the West German Government's of-
ficial activities there, and a
"progressive reduction" of West-
ern forces. As to the duration,
Khrushchev is quoted by Lippmann
as mentioning "perhaps two to
three years," which could mean
an extension of the last formal
proposal--before the Paris sum=
mit --for a two-year agreement.
Despite Khrushchev's re-
peated expressions of skepticism
regarding the West's willing-
ness to resort to a nuclear war
over Berlin, his actions during
the past two and a half years
suggest that a margin of doubt
exists in his estimate of the
Western response in a crisis,
and that he still prefers a
negotiated solution. Recent So-
viet'; statements stressing the
urgency of the German question
suggest that a formal demarche
to renew negotiations may be
made in the relatively near fu-
ture. Khrushchev probably would
contend that the Western powers,
after the abortive summit con-
ference, committed themselves to
reconvene the meeting and would
cite his conversation with Mac-
millan as proof.
In any negotiations which
take place in the next few
months, Moscow might reduce
some of its demands for an in-
terim settlement rather than
allow the talks to collapse.
The main purpose of a limited
agreement, however, would still
be to document the Soviet con-
tention that existing Allied
rights are void and to estab-
lish the presumption that fur-
ther steps would be taken to
adjust the status of West Ber-
lin.
If the West refused to
negotiate, Khrushchev would
probably feel compelled to
conclude a separate treaty.
His long and continuing com-
mitments to take this action
probably act as a form of
pressure either to demonstrate
gains by negotiations or to
carry out his repeated
pledges to resolve the sit-
uation in Berlin by uni-
lateral action. At any rate,
Khrushchev has committed him-
self to a solution during
1961.
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CONFIDENTIAL
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