CURRENT INTELLIGENCE WEEKLY SUMMARY

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COPY NO. 74
OCI 23 Nnn.c,~eaz
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY State Department review
completed
OSD & DIA review(s) completed.
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
SECRET
OSD & DIA review(s) completed.
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THIS MATERIAL CONTAINS INFORMATION AFFECT-
ING THE NATIONAL DEFENSE OF THE UNITED STATES
WITHIN THE MEANING OF THE ESPIONAGE LAWS,
TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS-
SION OR REVELATION OF WHICH IN ANY MANNER TO
AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
The Current Intelligence Weekly Summary has been prepared
primarily for the internal use of the Central Intelligence
Agency. It does not represent a complete coverage of all
current situations. Comments and conclusions represent the
immediate appraisal of the Office of Current Intelligence.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
23 March 1962
T H E W E E K I N B R I E F
(Information as of 1200 EST 22 Mar)
SOVIET FOREIGN POLICY DEVELOPMENTS . . . . . . . . , . , . Page 1
Moscow appears to view the Gromyko-Rusk talks in Geneva
as a point of departure for more comprehensive negotiations
on Berlin which could culminate in a.heads-of-government..
meeting. The moderate tone of Khrushchev's remarks on Ber-
lin and Germany in his 16 March speech was intended to re-
assu.r the West that Moscow is still interested in a nego-
tiated settlement. The Soviets have indicated that their
future actions in the Berlin air corridors will be in-
fluenced by developments in the US-Soviet talks and have
relaxed pressures in the corridors somewhat since 17 March
by conducting transport flights below the altitudes nor=
mally used by Western commercial aircraft. Gromyko's rel-
atively mild presentation of the USSR's disarmament pro-
posals in the 17-nation Geneva conference and Soviet ac-
ceptance of the proposal by the US and Britain for three-
power talks on a nuclear test ban were also calculated to
improve the atmosphere for bilateral discussions with the
us.
FRANCE-ALGERIA . . . . . . . . . . . . . . . . . . . . . Page 6
French officials still expect serious trouble in Algeria,
despite the absence of major OAS-inspired violence immedi-
ately following the announcement of a cease-fire. These of-
ficials hope, however, that Moslem restraint will continue
and that the gradual resignation of the Europeans to the
new situation will reduce OAS capabilities. The OAS may
be delaying action until the provisional executive is in-
stalled or until some other step is taken in connection with
implementation of the accords. De Gaulle is seeking massive
public approval for the agreements in the national refer-
endum scheduled for 8 April, and his public statements fur-
ther emphasize his desire to undercut claims by the OAS that
it is resisting his "dictatorship."
ARGENTINA , . . . . . . , , , Page 8
The victories of the pro-Peronista slates in Argentina's
18 March provincial and congressional elections prompted
precipitate military pressure on President Frondizi. Coup-
minded military.elements have been temporarily restrained
by various anti-Peronista measures, such as federal inter-
vention in five provinces where Peronistas won, and by Frondizi's
agreement to form a new cabinet partly selected by the mil-
itary.
CONGO
. . . . . . . . . . . . . . . . . . . . . . . . . . Page 9
The meetings between Adoula and Tshombe finally got
under way on 18 March; their positions and attitudes still
appear to be far apart. Tshombe meanwhile is trying to woo
pro-Leopoldville Baluba leaders in northern Katanga and
to weaken Adoula's parliamentary support. Adoula, under
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CURRENT INTELLIGENCE WEEKLY SUMMARY
23 March 1962
increasing pressure from radical members of his cabinet to
work out a solution of the Katanga problem, has threatened
to expel the UN by late April if no progress is made and to
seek aid outside the UN framework.
LAOS . . . . . . Page 11
. . . . . . . . . . . . . . . . . . . .
Phoumi's resistance to a coalition government on Souvanna
Phouma's terms has reached the point where he has refused
even to consult with Secretary Harriman in Bangkok. Prospects
for progress toward a settlement have also been dimmed by
the insistence of Souvanna and Souphannouvong on another
meeting of the three princes. With the exception of brief
heavy shelling of Nam Tha by enemy forces, military action
SOUTH VIETNAM . . . . . . . . . . . . . . . . . . . . . . Page 12
Government forces conducted the first major helicopter
troop movements yin the northern..part _.of,,the -country
t week, but failed to trap sizable Viet Cong forces.
:lei; Cong military action continued at a highlevel, and there
are tentative indications that bloc :a.irdrop, support may
have begun. North Vietnam continues to call for an inter-
national conference on Vietnam. The USSR, however, in its
statement of 17 March and its covering note to the UK as
1954 Geneva cochairman, stopped short of calling for a con-
ference, requesting a joint appeal for an end to US "inter-
ference" in South Vietnam.
GUATEMALA . .
President Ydigoras, just entering the fifth year of his
six-year-:torm,faced the most serious crisis of his admin-
istration during the week beginning 13 March. Communist-
led students clashed repeatedly with the police, and there
were more than 20 deaths and several hundred wounded be-
fore the army was called in to restore order on 16 March.
Public demands that Ydigoras resign led key army leaders to
give serious consideration to forcing him to do so. By 20
March, order had been-restored in the capital and the im-
mediate crisis appeared to be passing. Ydigoras, however,
still faces a difficult situation, including continuing
guerrilla activity in the mountains north of the capital.
.ii'GOD PROBLEMS IN CUBA .
Page 13
. . . . . . . . . . . . . . . . . Page 15
Stringent rationing became effective in most parts of
Cuba on 19 March. Cuba must import about 30 percent of its
basic foods, and although the bloc now provides most of
these imports, the amounts are smaller than formerly supplied
by the US. Cuba's 1958 level of per capita food consumption
was considerably higher than the Latin American average and
there is still no immediate prospect of widespread hunger or
malnutrition, but further disruptions of its normal con-
sumption patterns are likely. The 1962 sugar harvest' is ex-
pected to be no more than 4,500,000 tons, or about two thirds
of the 6,800,000 tons harvested in 1961.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
23 March 1962
Page 16
The Syrian-Israeli border clashes of the past two weeks
probably mark the beginning of a period of sharply height-
ened Arab-Israeli tensions. Both Syria and Israel seem ready
for further action, and Damascus appears to believe that
"the battle of the Jordan waters" has already begun. The
Dawalibi cabinet in Syria has made some political gains from
what it describes as its "victory" over Israeli units, but
it is under increasing domestic criticism on other counts
and may soon fall or be reshuffled. In Saudi Arabia, last
week's drastic cabinet revision returned Crown Prince Faysal
to a key position of power in the government.
STALINISTS REMOVED FROM BULGARIAN CABINET . . . , . . . . Page 19
The newly elected Bulgarian National Assembly at its
first meeting approved changes in the Council of Ministers
which were another victory for the pro-Khrushchev leader-
ship of party First Secretary Zhivkov over the powerful
Stalinist segment in the party and government. With his
control of the party leadership nowrmore solidly assured,
Zhivkov stands a better chance to avert a Stalinist
challenge at the next party congress, scheduled to begin,:
in late August,
MONGOLIA: KHRUSHCHEV'S ADVOCATE IN ASIA . , . . . . . . . Page 20
Mongolia has made it clear that it is solidly behind
the Soviet Union in its controversy with the Chinese Com-
munists. After denouncing the Albanians and openly criti-
cizing Peiping's support for Tirana, the Mongolians em-
barked on their own version of de-Stalinization yy attacking
Marshall Choybalsan, who ruled the Mongolian party and state
from the 1930s until his death In 1952. A similar effort
to follow Moscow's lead in the de-Stalinization campaign
of 1956 had severe repercussions within the Mongolian
party before the pro-Moscow faction asserted its control.
Page 21
A protest vote against the Macmillan government has
been registered in four recent by-elections,-'in one of which
the Liberal party captured a "safe" Conservative seat by
nearly 8,000 votes. The Conservatives, in office since
1951, have appeared unsure in dealing with a wide range
of foreign and domestic issues. Although the Labor party
has failed to capitalize on the government's shortcomings
and general elections need not be called for another two
and a half years, five more by-elections are due this
spring, and the government may be unusually sensitive to
popular pressures during this time on such issues as dis-
armament.
COMMON MARKET RELATIONS WITH AFRICA e o e . . . . . . . . Page 21
The six European Common Market (EEC) countries are
agreed that the 1957 convention associating 16 African
states with the EEC should be renewed when it expires at
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CURRENT INTELLIGENCE WEEKLY SUMMARY
23 March 1962
the end of this year, but they differ on the exact terms
to be offered the Africans. This issue is expected to
come to a head in the next few weeks. Present prospects
are that the EEC will offer closer institutional ties,
an expanded aid program, and some arrangement on a free
trade area. Continued preferential access for African ex-
ports to the European market will hurt competing under-
developed areas.
B d/! :IL' S SIX MONTHS UNDER GOULAItT . . . . , . . . . . . . Page I
President Joao Goulart, who is scheduled to visit Wash-
inton on 3 April, has ret :,,ined most of the authority the-
oretically transferred tc the prime minister by the con-
stitutional amendment passed last September, when he suc-
ceeded to the presidency after Quadros' resignation. Goulart's
position now is challenged, however, by the return of Quadros,
who is expected to seek the prime ministry unless Goulart
.succeeds in his current move to restore chief executive
authority to the president through a national referendum. Gou-
lart, like Quadros, has tried to appeal to Brazilian nation-
alism by pursuing a foreign policy clearly independent of
that of the United States. He has thus far taken little action
on Brazil's economic and social problems--such as the politi-
cally explosive land reform issue, the rising cost of living,
and the serious foreign exchange shortage.
TURKEY'S ECONOMIC PROSPECTS . . . . . . . . . . . . . . . Page 6
The Turkish Government has adopted a record budget
for the 1962 fiscal year in order to establish a base for
continued economic growth during a Five-Year Plan (1963-68).
To accomplish their objectives in the preparatory phase and
during the plan period, Turkish planners must count heavily
on continued foreign aid. Efforts to make the country self-
sufficient will depend largely on Turkey's success in in-
creasing exports of minerals and agricultural products.
Long-term prospects for doing this appear generally good,
but serious economic and social problems must first be
solved.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
WEEKLY REVIEW
SOVIET FOREIGN POLICY DEVELOPMENTS
Moscow appears to view
the Gromyko-Rusk talks in Geneva
as a point of departure for more
comprehensive negotiations on
Berlin which could culminate
in a heads-of-government meet-
ing. The moderate tone of Khru-
shchev's remarks on Berlin and
Germany in his 16 March speech
was intended to reassure the
West that Moscow is still
interested in a negotiated
settlement. The Soviets have
indicated that their future
actions in the Berlin air cor-
ridors will be influenced by
developments in the US-Soviet
talks and have relaxed pressures
in the corridors somewhat since
17 March. Gromyko's relatively
mild presentation of the USSR's
disarmament proposals in the
17-nation Geneva conference
and Soviet acceptance of the
proposal by the US and Britain
for three-power talks on a
nuclear test ban were also cal-
culated to improve the atmos-
phere for bilateral discussions
with the US.
Berlin and Germany
In Khrushchev's 16 March
speech--a pre-election address
delivered at the Kremlin to his
Kalinin constituents and his
first major speech on foreign
policy since the party congress
last fall--he again indicated a
willingness to work out an agree-
ment with the West on the status
of West Berlin and Allied access
which would be incorporated in
a separate peace treaty with
East Germany. He also reiter-
ated that there is no "fatal
deadline" for the conclusion
of such a treaty and sought to
convey an impression of restraint
by declining to comment on the
current US-Soviet talks. He em-
phasized, however, that a Ber-
lin settlement must include not
only guarantees for Allied ac-
cess but also "recognition and
respect for the sovereign rights
of the German Democratic Repub-
lic." The Soviet press continues
to give increased prominence to
Soviet determination to conclude
a peace treaty with East Germany
while accusing the West of stall-
ing on serious negotiations.
In letters to President
De Gaulle and Prime Minister
Macmillan, delivered on 14 March,
Khrushchev also reaffirmed his
proposal for a prior four-power
agreement for inclusion in a sub-
sequent Soviet peace treaty with
East Germany. It would cover
the status of West Berlin, free
access, and other "important
postwar problems"--such as for-
malizing existing German fron-
tiers and prohibiting nuclear
weapons in both German states.
Here again, he emphasized that
access arrangements must respect
East German "sovereignty." He
warned that if the West rejects
an agreement, the USSR will
proceed with a separate treaty.
Air Corridors
As part of their effort to
maintain the sense of urgency
for negotiating a Berlin settle-
ment, the Soviets have continued
their harassing tactics in the
Berlin air corridors. On 15
March, shortly after six Soviet
transport flights in the south-
ern corridor had been completed
as scheduled, the USSR protested
that Western aircraft had "de-
liberately violated established
flight procedures" and "endan-
gered air safety in the corri-
dors." The protest reflected
Moscow's immediate intention
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to demonstrate further that
present procedures in the Ber-
lin Air Safety Center (BASC)
are inadequate for air safety.
The Soviets apparently hope
thereby
to gradually build
a
case for
demanding
changes
in
the BASC
operations
which
would
increase
Communist
control
over
Western
flights.
The Soviets have again
tried to persuade the US chief
controller in the BASC of the
necessity to provide the Soviet
representative with the esti-
mated time of Western flights
over the Mansbach radio beacon,
a navigational aid in the south-
ern corridor located just out-.
side the East German border.
They could interpret Western
compliance with this request
as conforming with their demand
of 15 February that estimated
time of crossing the East Ger-
man "national" border be pro-
vided with Allied flight plans
and as implicit recognition of
the East German law of 1 August
1961, which required aircraft
entering East German territory
to give notification by radio.
Stromov, the chief Soviet
controller in the BASC, has
frankly acknowledged that So-
viet moves in the corridors are
linked to the US-Soviet talks
at Geneva. He remarked to his
US counterpart on 16 March that
if the Geneva conversations were
successful, the situation in the
corridors would change for the
better. On the following day,
the Soviets discontinued trans-
port flights at altitudes from
7,500 to 10,000 feet--normally
used by Western commercial air-
craft. Soviet flights since
17 March have been conducted be-
low 7,500 feet.
Moscow may also be employ-
ing a new device in order to
achieve Western recognition of
the USSR's right to use the cor-
ridors for local flights. On
19 March, Stromov formally re-
quested of the chief US con-
troller in BASC the installa-
tion of a low-power radio link
between the BASC and Karlshorst,
which would be added to exist-
ing communications facilities.
He alleged that the present
telephone circuit had been
faulty on occasions and that
the new link was necessary to
ensure contact with Soviet
headquarters, particularly at
times when Soviet aircraft were
operating in the corridors.
Karlshorst does call the
BASC constantly to check the
time and location of Soviet
and Western flights, to dictate
protests to the West, and to
obtain detailed reactions of
Western BASC representatives
to Soviet flights. The sharp
increase in telephonic communi-
cations between Soviet repre-
sentatives in BASC and their
headquarters in Karlshorst dur-
ing periods of Soviet corri-
dor flights is a further re-
flection of Moscow's intention
to maintain tight control over
these operations.
Moscow is apparently in-
creasing its harassment of West-
ern ground access routes to
Berlin in its continuing ef-
forts to demonstrate that all
forms of access to the city are
contingent on Communist suffer-
ance. On 20 March, Soviet con-
trollers at Babelsberg refused
for a time to clear an outbound
US Army convoy of five vehicles
on the grounds that they had
not received advance notification
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CURRENT INTELLIGENCE WEEKLY SUMMARY
of its movement across the
Helmstedt-Berlin Autobahn and
lacked personnel to complete
the processing. The same day,
the Soviet controllers at Marien-
born, at the opposite end of the
autobahn, cleared an inbound con-
voy of the same size after an
hour's delay, with the warning
that in the future they would
insist on advance written noti-
fication.
The practice of notifying
the Soviets of Western military
movements was begun on an ad hoc
basis last August to facilitate
the transfer of a special US
Army battle group from West
Germany to West Berlin. Since
that time, local US military
authorities have continued to
alert Soviet officials to the
movement of convoys of eight or
more vehicles. The Soviets ap-
parently are seeking to extend
this practice to all military
movements on the autobahn.
Disarmament and Test Ban
In his 15 March speech at
the Geneva disarmament confer-
ence Gromyko tabled a plan for
general and complete disarma-
ment in the form of a draft
treaty. The plan is largely
a rehash of the September 1960
Soviet proposals presented to
the UN by Khrushchev. The only
significant new element is the
point that there should be no
veto in the control organiza-
tion. Soviet leaders probably
calculate that their ostensible
renunciation of the veto will
have a favorable impact, par-
ticularly on the nonaligned
powers.
Gromyko also formally ex-
pressed Soviet willingness to
discuss the USSR's 26 Septem-
ber "partial" disarmament meas-
ures, implementation of which
allegedly would decrease inter-
national tensions, strengthen
confidence between states, and
promote final agreement on gen-
eral and complete disarmament.
He singled out the "partial"
proposals calling for creation
of a nuclear free zone in Cen-
tral Europe and a nonaggression
treaty between the NATO and
Warsaw Pact powers--proposals
more related to the German and
European security issues than
to disarmament.
In a 20 March private con-
versation with a US delegate,
a prominent member of the Soviet
delegation said that the "main
areas of possible agreement" at
the conference are on these is-
sues: nontransfer of nuclear
weapons, a NATO - Warsaw Pact
nonaggression treaty, an Afri-
can nuclear-free zone, a test
ban, and outer space.
The Soviet press has given
little publicity to Secretary
Rusk's presentation of the US
disarmament program. A 19 March
Pravda article, however, dis-
torted the US proposal for a
30-percent reduction in the
number of vehicles capable of
delivering nuclear weapons and
of major conventional armaments
in the first three years.
Pravda claimed that it was ac-
companied by a demand for cre-
ation of a 100-percent far-flung
system of international control.
The Soviet press line has been
that while the USSR presented
concrete proposals to achieve
general and complete disarma-
ment, the US advanced "only"
an unclear outline.
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In an obvious attempt to
impress the nonbloc powers
represented at the conference
with Soviet flexibility and de-
sire for agreement, the USSR
has formally agreed to the US-
British proposal of last January
that a Big Three subcommittee be
established to discuss the test
ban issue. Soviet delegate Zorin
announced the decision at a 19
March press conference in Geneva.
He made clear, however, that the
subcommittee discussion should
be on the Soviet draft proposals
of 28 November 1961.
In a 15 March private talk
with US and British delegates,
Soviet delegate Tsarapkin firmly
rejected such modifications of
the US test ban proposal as
making the treaty cover all tests
from the beginning, allocating
an agreed limited number of in-
spections in zones where there
is little seismic activity, pro-
viding safeguards against prep-
arations for testing, and short-
ening the time before the begin-
ning of inspections. Tsarapkin
stated that "the idea of inter-
national control is completely
unacceptable" to the USSR, un-
der the situation existing now.
He maintained that "the only
basis for agreement possible is
national control." He reiterat-
ed his views publicly at a press
conference on 16 March.
Moscow has so far not com-
mented on neutralist calls for
a moratorium on atmospheric test-
ing while the conference is seek-
ing the basis for agreement. Nor
has there been any Soviet com-
ment on India's proposal that
the national inspection systems
of the Soviet Union and the West
be supplemented by a test-detec-
tion system to be set up in neu-
tral countries.
Khrushchev denounced the
US decision to resume atmos-
pheric testing in his 16 March
speech, terming it a "severe
blow" to the 17-nation disarma-
ment committee. He again warned
that the USSR would respond to
US nuclear testing in the atmos-
phere by "staging its own tests,"
and contended that Soviet tests
would preclude any possibility
that the US might achieve a
"military advantage."
Khrushchev made it clear
that the USSR will continue to
reject Western proposals for in-
ternational controls over a test
ban agreement and will insist
that national detection systems
provide a "sound foundation" for
an agreement. In the first pub-
lic Soviet reference to the
USSR's 2 February underground
test, be said that this test,
promptly announced by the US
Atomic Energy Commission, was
staged deliberately to disprove
the West's contention that it
is impossible to detect some
underground tests.
Two days earlier in Geneva,
Soviet delegate Usatchev had
discussed the 2 February
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?inderground test with a US del-
egation officer. He cited the
US announcement of the test as
evidence that "national systems
are improving all the time." Al-
though they are not yet perfect,
he remarked, each nation must
assume some risks and not ex-
pect perfection.
Khrushchev did not mention
in his formal speech the latest
Soviet launching of an earth
satellite, although he had ear
lier interrupted another speaker
to report the launching. He did
claim in his speech, however,
that the USSR has developed a
"global rocket" which cannot
be detected and is invulnerable
to "anti-missile weapons." He
said the new global rocket "can
fly around the world in any di-
rection and deal a blow at any
set target" and cited the flights
of space vehicles Vostok I and
II as "proof" of the accuracy
of Soviet calculations. The
timing of the launching of the
latest Soviet earth satellite
suggests that Khrushchev ex-
pected that it would be con-
sidered abroad as a prototype
of the "new" weapon. The timing
was also probably linked with
the opening of the disarmament
conference. Soviet propaganda
promptly pointed out that the
new "invulnerable" weapon would
be destroyed if the Soviet dis-
armament proposals were accepted.
Khrushchev used his speech
to reply to Communist critics
of the Soviet disarmament posi-
tion. Obviously pointing to his
Peiping and Tirana adversaries,
he noted that "there are people
who either incorrectly explain
or deliberately distort" the So-
viet proposals on disarmament.
In an awkward attempt to rebut
their "allegations" that Soviet
championing of disarmament is
"harmful and even dangerous" to
peoples struggling for libera-
tion, Khrushchev asserted that
the Soviet Union renders substan-
tial economic assistance "includ-
ing assistance in armaments" to
states which ask for support
"in the struggle against the
imperialists and colonizers."
Mikoyan's pre-election speech
two days before Khrushchev's,
while making the same points,
specifically took issue with
"Albanian theoreticians who
have a confused knowledge of
Marxism."
Peiping has given consid-
erable publicity to the Geneva
disarmament conference; Gromyko's
15 March speech has been re-
ported, and the full text of
the Soviet draft treaty has been
published in People's Daily.
Outer Space
Moscow on 21 March re-
leased Khrushchev's response
to President Kennedy's letter
of 7 March urging joint US-
Soviet cooperation in outer
space projects. Khrushchev
welcomed the President's
attitude toward his proposal
to pool the efforts of the
Soviet Union and the US in
space exploration--a proposal
contained in Khrushchev's 21
February letter to the President
congratulating the US on the
success of Glenn's space flight.
The 21 March letter, however,
revived a standard point--
omitted on the earlier occasion--
linking outer space cooperation
with agreement on disarmament.
Khrushchev said it was "obvious"
that the "scope of our coopera-
tion" in the peaceful explora-
tion of space depends "in some
degree" on solution of the dis-
armament problem. He concluded
that "much greater prospects"
for cooperation and the pooling
of scientific and technical
achievements "up to and includ-
ing joint creation of space-
ships for reaching other plan-
ets--the moon, Venus, Mars--
will appear only when agreement
on disarmament is achieved."
Following Ambassador Plimp-
ton's presentation of the US
outer space statement at the 19
March meeting of the UN outer
space committee, bloc spokesmen
praised his speech. Czech del-
egates went out of the way to
state to an Australian delegate
that they were pleased with the
speech. A Moscow radio correspond-
ent said privately that the Soviet
attitude in the outer space com-
mittee will be "much more construc-
tive than in Geneva."
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CURRENT INTELLIGENCE WEEKLY SUMMARY
French officials still
expect serious trouble in
Algeria, despite the absence
immediately following the
announcement of a cease-fire
of any major violence inspired
by the Secret Army Organization
(OAS). These officials hope,
however,'that Moslem restraint
will continue and that the
gradual resignation of the
Europeans of Algeria to the
new situation will reduce OAS
capabilities. The OAS may be
delaying action until the pro-
visional executive is installed
or some other step is taken
in connection with implementa-
tion of the accords.
The organization appears
to have adopted a strategy of
harassment of the French Gov-
ernment and provocation of the
Moslem population rather than
risk' a 'coup attempt or a mass-
settler uprising which could ex-
pose it to destruction by the
French Army and security forces.
The army had notyet been faced
with massive violence that would
test its willingness to enforce
the terms of the cease-fire
agreement in the face of OAS
opposition.
In Paris, the
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director of De Gaulle's personal
cabinet told a US Embassy officer
on 18 March that if serious
trouble could be avoided for
about a week, the French would
be "out of the woods," but
various other officials told
the officer they felt that
many trials still lie ahead.
Premier Ben Khedda of the
rebels' provisional Algerian
government (PAG) has publicly
insisted that the French must
control the OAS,
Ben Khedda, who greeted
vice premier Ben Bella and
other liberated ministers in
Rabat on 21 March, will probably
attempt to keep his visit as
short as possible, as there are
indications that both he and
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Ben Bella are irritated over
Moroccan efforts to capitialize
on the release of Ben Bella.
Meanwhile, De Gaulle is
proceeding with steps to im-
plement the accords. The new
post of French high commissioner
got off to a bad start last week
when De Gaulle's first nominee,
retired general Pierre Billotte
--a long-time "leftist Social-
ist"--refused to accept the
position. Christian Fouchet
was appointed shortly after
the cease-fire took effect
on 1;~ March, and the French
cabinet has approved--although
not announced--the composition
of the provisional executive.
Fouchet will presumably give
loyal support to De Gaulle's
Algerian policy, even though
he personally opposed the policy
which resulted in relinquishment
of French control over Tunisia
and Morocco. The risk of
assassination by the OAS will
be great for all individuals
accepting responsible positions
during the transitional period.
In France, complete calm
prevailed following announcement
of the cease-fire. Public
opinion from extreme left to
center right welcomed the
agreements. In parliament--
which the government permitted
to debate but not to vote on
the accords--rightists stig-
matized them as "abandonment"
and "capitulation."
De Gaulle, both in his
cease-fire address and in his
subsequent 'grief message to
parliament, stressed his desire
for massive public approval
of the agreements in a national
referendum scheduled for 8
April. He made it clear it
would be held not only to ap-
prove the accords but also to
authorize him to take all neces-
sary measures, while applying
them, to preserve public order
and the security of the state.
He thus hopes to avoid again
invoking Article 16 of the
constitution--the much-criti-
cized emergency powers he as-
sumed during the April 1961
mutiny--and thus to counter
charges by the OAS and other
critics that he has usurped
power and should be resisted
as a dictator.
The prompt Soviet extension
of de jure recognition to the PAG
and the declared willingness of
Khrushchev to establish diplomatic
relations mark the end of Moscow's
ambivalent attitude toward the Al-
gerian rebellion. Whereas Commu-
nist China gave the PAG formal dip-
lomatic recognition shortly after
its formation in 1958, Moscow re-
fused to extend even de facto recog-
nition until after France opened
talks with the rebels. However,
even after this recognition in
the autumn of 1960, and Khru-
shchev's remarks shortly there-
after characterizing the rebellion
as a "just" war of national libera-
tion, the PAG up to now had never
received full Soviet support.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
The victories of the pro-
Peronista slates in Argentina's
18 March provincial and con-
gressional elections prompted
precipitate military pressure
on President Frondizi. Coup-
minded military elements have
been temporarily restrained by
various anti-Peronista measures,
such as federal intervention
in provinces where Peronistas
won and by Frondizi's agreement
to form a new cabinet partly
selected by the military.
The Peronista victories
surprised the military and
the Peronistas themselves as
well as the government. Much
of their strong showing is to
be attributed to the unpopu-
larity of the austerity meas-
ures in Frondi'zi's economic
stabilization program--such as
his program for drastic cuts
in the payroll of Argentina's
government-owned railroads.
There were also probably a con-
siderable number of political
deals giving Peronista candi-
dates the support of other par-
ties: normally the(Peronistas
have been able to count on
about a fifth of the total
vote; in these elections they
polled almost a third.
In the confusion resulting
from the election upset, the
military reacted by forcing
Frondizi to impose federal
control over five provinces
in which Peronista guberna-
torial candidates won, and
some military elements wanted
to oust Frondizi himself.
Some Peronistas, on the other
hand, sought to call a general
strike to protest Frondizi's
anti-Peronista measures.
Disagreements, within the
Peronista ranks and among mili-
tary leaders have helped Fron-
dizi maintain an uneasy balance,
but he is still under strong
pressure. A tentative agree-
ment with the military report-
edly calls for formation of a
coalition cabinet including
military representatives, con-
tinuing strong measures against
the Peronistas and Communists,
and the rapid ouster from gov-
ernment posts of supporters of
Rogelio Frigerio, Frondizi's
close adviser whom the military
hold responsible for the situa-
tion.
It was announced on 21
March that the cabinet minis-
ters who resigned to permit
the. organization of the joint
eight-man military and civil-
ian cabinet would continue in
office until the new one is
chosen. Frondizi condoned the
military takeover of the prov-
inces when the pro-Peronistas
won, since this is permitted
by the constitution under the
state of siege. He is reject-
ing,however, military demands
that the 43 Peronistas elected
to the Chamber of Deputies be
barred from taking their seats
on 1 May as scheduled, on the
grounds that this would be
illegal.
Although the military cur-
rently accepts Frondizi's con-
tinuance in office, neither the
navy nor a large part of the
army is satisfied with the ex-
isting compromise. The threat
of Peronista violence has not yet
been removed, but instead of going
on strike Peronista labor leaders
agreed to issue a statement sup-
porting constitutional government.
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Adoula and Tshombe on 18
March held an initial meeting
devoted to "identi-
ying the problems" and then
got together for a short pri-
vate
showe no
resentment over Adoula's
absence from Leopoldville on
his arrival, is in a good mood,
and has apparently settled him-
self and his 30-member entou-
rage for a long bargaining
period.
Adoula's 15 March trip to
Coquilhatville, in Equateur
Province, was required for
political reasons. Adoula,
who is of course interested
in trying to impress on Tshombe
that he is only a provincial
leader, claims he had no of-
ficial word that Tshombe was
coming.
The two sides have ap-
parently worked out a schedule
of daily meetings, but there
is as yet no information on
the substantive content of
the talks held so far. Adoula,
pessimistic and sensitive to
charges that he let Tshombe
"off the hook" at Kitona last
December, is trying to play
the meetings in as low a key
as possible. The prime min-
ister appears less flexible,
probably reflecting the mount-
ing pressure on him to demon-
strate to his followers some
progress on the Katanga problem
and a growing awareness that
he may be in serious political
trouble unless he can do so.
In a talk with Ambassador
Gullion on 14 March, Adoula
insisted that the Loi Funda-
mentale--the draft constitution
which establishes the primacy
of Leopoldville over the
provinces---could not be sus-
pended by agreement between him
and Tshombe and must remain in
effect until revised. Adoula
said bluntly that "it was time
to find out whether Tshombe
would or would not integrate."
Other remarks by Adoula suggested
that he continuesto believe that
only force will bring Tshombe
around.
Adoula's frustrations are
evident in a letter he sent on
15 March to UN chief Gardiner
to the effect that unless the
Katanga problem were settled
by late April, he would have
to withdraw from UN forces the
facilities and authority pre-
viously given. Adoula crit-
icized the UN Command for its
lack of support for Leopoldville's
efforts to quash Tshombe, accused
the UN of not carrying out its
mandate, and charged that as a
consequence Tshombe's gendarmerie
had increased its effectiveness
and firepower. While UN of-
ficials tend to discount Adoula's
resolve for a showdown with the
UN, his remarks are in line
with his reported new interest
in direct bilateral aid out-
side the UN framework. The
letter may have been designed
to set the stage for some move
in that direction if his talks
with Tshombe: f ai l .
Tshombe gives every indica-
tion that he will hold to his
long-standing position of
autonomy for Katanga within
a loose Congo federation.
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iation with Baluba leaders from
northern Katanga to form a
"united Katanga" and undercut
Leopoldville's attempts to split
LLIANDA
ANGOLA
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
Kongolo~
Kibalo. Albertville
While he negotiates with
Adoula, Tshombd is also attempt-
ing political maneuvers designed
to weaken the prime minister's
position. Tshombe's main effort
appears to be toward a reconcil-
While a Conakat-Baluba
reconciliation appears to be at
the core of Tshombe's maneuvers,
there is evidence that Tshomb6
is trying to convert other present
and potential anti-Adoula support
within the Congolese parliament
and in the provinces. He has
reportedly asked Joseph Kasongo,
former Congo Assembly president
and a leader of Lumumba's old
National Congolese Movemen' (MNC),
to send a delegation to Elisabeth-
ville, and he has also agreed to
send a Conakat delegation to an
MNC-sponsored congress of anti=
Leopoldville groups in Stanley-
ville in late April or early May.
The embassy believes that the
principal Baluba leader, Jason
Sendwe, one of Adoula's vice
premiers, will oppose the scheme,
but notes that other lesser Baluba
leaders are tempted, and an
alignment between Tshombe's
Conakat party and other parties
may develop. The Katangan
youth group's call for the
release of Gizenga may be part
of an attempt to make a line-up
of radicals with Tshombe's
Conakat more palatable.
Gizenga, although still out
of circulation, may produce still
another problem for Adoula. He
is reported to be threatening a
hunger strike unless he is
released or tried soon. Should
he follow through on this threat,
the propaganda campaign such
a move could generate might
force Adoula to take further
steps against him and thereby
create more strains between
moderate and radical forces.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
General Phoumi, by his re-
fusal to meet with Secretary
Harriman in Bangkok this week,
has underscored his opposition
to US policy in Laos. Phoumi,
who earlier had "welcomed the
opportunity" to confer with the
Secretary, now claims that his
cabinet has ruled against such
a "clandestine mission."
Western efforts to reach
agreement with Souvanna and
Souphannouvong at Khang Khay
on a suitable cabinet slate
have been hampered by their in-
sistence that coalition terms
must be settled at another meet-
ing of the three princes. While
Souvanna claims that this cur-
tailment of talks with the West
is designed merely to allow "a
certain flexibility" in bargain-
ing with Vientiane, it probably
resulted from Souphannouvong's
fear that Souvanna might reach
a unilateral accommodation with
the West.
tinues to absent himself from
Geneva, and Moliakov, acting
bead of the Soviet delegation
(now comprising himself and a
secretary), has informed his
British counterpart that Gromyko
confirmed he had no intention
of interfering in the Laotian
situation while in Geneva. This
indicates that Moscow does not
expect an early resumption of
formal Laos conference activity
and has no desire to work ac-
tively to resolve the present
impasse.
This view is supported by
remarks made by Soviet Ambassa-
dor Abramov on his return to
Vientiane after an absence of
about a month. He said that a
solution in Laos now depends on
US actions, and told the British
ambassador he is planning a
three-month vacation beginning
in April and will not return un-
til August.
Souvanna and Souphannou-
vong say that their future bar-
gaining will be based on the
principles that the posts of
defense, interior, and foreign
affairs must go to the neutral-
ist center and that posts given
to the two wings, Vientiane and
Pathet Lao, must correspond in
number and importance,
The USSR apparently regards
Phoumi's intransigence and the
present stalemate in the Geneva
conference and in Laos as devel-
opments which can only accrue
to Soviet advantage. Deputy
Foreign Minister Pushkin con-
Heavy enemy shelling of
the Nam Tha airstrip in north-
western Laos resumed on 18 March
but has tapered off to only
sporadic firing. This action
presumably was triggered by the
recent reinforcement of the
government garrison with several
105-mm. howitzers and elements
of a paratroop battalion from
southern Laos, The Nam Tha area
had been relatively quiet since
the end of February. Elsewhere,
government forces have continued
to move slowly north in the Nam
Beng valley to the west of Luang
Prabang, while other activity has
been limited to minor probes and
ambushes by the two sides.
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Government operations in
South Vietnam during the past
'week inflicted some casualties
on the Viet Cong by strafing
and bombing but failed to trap
.sizable forces. In Quang Ngai
Province, where two Viet Cong
groups totaling more than
1,800 had been reported,the
first major helicopter troop
movements in the northern part
of the country were conducted
last weekend; government ground
forces made contact with only one
enemy company northwest of the
town of Quang Ngai. In the south-
err. provinces, Viet Cong military
action continued at its normally
high level. Throughout the
country, however, Communist
activity of all types dropped
during the week ending 12 March
to 406 incidents from the pre-
vious week's high of 552.
Hanoi continues to show a
desire for an' international
conference on Vietnam and to
exhibit some impatience with
the USSR's failure to move in
that direction. In a letter
to the Geneva cochairmen on
16 March, North Vietnam's
foreign minister called on them
to hold consultations among the
countries concerned. North
Vietnamese editorial comment
on the letter pointed out that
it was nearly the twentieth
time that Hanoi had found it
necessary to report to the
cochairmen on TJS activities in
the Smith.
Quan Long.
Ca Maru)
..~~ Railroad
Road
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Communist Guerrilla Activity
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Although the Soviet Foreign
Ministry statement on 17 March
charging that US actions in
South Vietnam are a serious
threat to the peace and security
of the area is the strongest
Soviet diplomatic move yet on
South Vietnam, it falls short
of calling for the international
conference which both Hanoi and
Peiping have indicated they
prefer. In a covering note to
the UK as a cochairman of the
1954 Geneva conference on Indo-
china, the USSR merely asked the
British to join in demanding
that the US immediately stop
its interference in the internal
affairs of South Vietnam.
The Soviet reluctance to
call for a conference at this
President Ydigoras, just
entering the fifth year of his
six-year term, faced the most
serious crisis of his adminis-
tration during the week begin-
ning 13 March. Communist-led
students clashed repeatedly
with the police, whose inept-
ness and brutality led to more
than 20 deaths and several
hundred wounded before the army
was called in to restore order
on 16 March.
Widespread public repudi-
ation of Ydigoras for permitting
time is probably related to Khru-
shchev's expectation that a summit
meeting is in the offing and his
desire to deal now with what he
considers to be higher priority
problems, such as Berlin and Ger-
many. Moscow may fear that
insisting on a conference to
take up alleged US interven-
tion in Vietnamese affairs
might lead to a refusal by
the President to take part
in the more important confer-
ence. The North Vietnamese
and the Chinese are not re-
strained by this consideration;
the Chinese, in fact, fear So-
viet-Western meetings which
do not include them and would
prefer, if possible, to sabo-
tage such meetings.
the police excesses led to
strong demands for his resigna-
tion--supported by some business
and professional groups--and
strikes by a number of labor
unions
The unqualified support
for Ydigoras offered by such
officers as Colonel Jose Luis
Lemus, chief of the air force,
overcame the wavering of certain
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CURRENT INTELLIGENCE WEEKLY SUMMARY
highly placed army officers who
feared that Ydigoras' continua-
tion in power in the face of
public hostility would lead to
an extremist takeover of the
government
Mar n
ch, when the worst of the
crisis had abated, Ydgoras ap-
parently ordered the replacement
of Army Chief of Staff Ponciano
and the commander of one of the
capital's two key garrisons.
There are some indications he
may have had to reverse the
order.
The American army and air
attaches expect further high-
level military reassignments of
officers who wavered during the
crisis. The minister of defense,
Colonel Enrique Peralta, may be
among those replaced in the near
future.
The acute crisis had abated
by 20 March, but Ydigoras ex-
tended the state of siege to 22
April. He still faces a diffi-
cult situation, and a new series
of incidents could quickly cause
a new deterioration of his posi-
tion. Student groups are still
on strike, although they have
called off their demonstrations.
Communist-supported guerrilla
activity continues in the moun-
tains north of the capital, but
this by itself does not consti-
tute an immediate threat to the
regime.
The deep wounds and rancors
aroused during the crisis will
complicate Ydigoras' already
difficult job of developing
workable relations with the
non-Communist opposition par-
ties--the moderate leftist
Revolutionary party, which has
significant popular support,
the rightist National Liberation
Movement, and the small Christian
Democratic party. These parties
formed a loose alliance during
the crisis and formally demanded
his resignation. Although the
progovernment coalition has at
least 48 seats in the 66-member
unicameral Congress, there have
been defections from this coali-
tion and Ydigoras may have diffi-
culty working with Congress.
A continuing problem of
considerable importance is the
strong opposition in rightist
circles to the candidacy of the
popular ex-President Juan Jose
Arevalo in the elections sched-
uled for December 1963. Even
his enemies concede that Arevalo
would win in a free election.
He will not be constitutionally
eligible for the presidency, how-
ever, until March 1963, when he
will have been out of office for
the required 12 years. During
the course of this year, there-
fore, opponents of Arevalo will
continue to press for Ydigoras'
removal, since this would require
new elections within four months
--while Arevalo is still ineli-
gible. Arevalo is opposed not
only by rightists because of
his socio-economic reform pro-
gram but also by certain mod-
erate leftist leaders who are
personally antagonistic to him.
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CURRENT INTELLIGENCE WEEKLY SII.MIdARY
FOOD PROBLEMS IN CUBA
The stringent rationing
which became effective in most
parts of Cuba on 19 March
reflects Cuba's continuing need
to import about 30 percent of
its basic foods because most
of its cropland is planted to
sugar cane. Although the bloc
now provides most of these
imports, many foodstuffs are
received in smaller amounts
than were formerly supplied by
the US. The US used to take
two thirds of Cuba's agricultural
exports, but its trade break
with Cuba and Havana's involve-
ment in barter trade.with the
bloc have sharply reduced
Cuban sales of agricultural
products for hard currency,
thereby impairing Havana's
ability to pay cash for food-
stuffs from Western markets.
The bloc has not supplied
enough of such foods as lard,
vegetable oils, rice, beans,
and pork, all of which formerly
came from the US.
The rationing will in-
clude rice, beans, beet, butter,
lard, and cooking oils in
quantities ranging roughly from
one third to two thirds of -
average consumption levels in
1958. Also rationed are fish,
poultry, eggs, milk, fresh
produce, soap, and detergents,
some of which are rationed at
levels higher than 1958 con-
sumption levels. Each adult
is to receive one and a half
pounds of beans per month,
three quarters of a pound of
beef per week, and one cake of
soap per month.
Cuba ranked among the best
fed nations in Latin America in
1958, with an estimated per
capita caloric intake of 2,870--
well above the minimum require-
ment of 2,500 calories to sus-
tain good health. While
domestic food production has
not fallen greatly since Castro
came to power, there have been
widespread shortages caused by
a reduction in imports, inade-
quate storgge, increased de-
mand, and mismanagement of
transport, marketing, and dis-
tribution facilities. Recent
shortages of meat and other
livestock products are attribu-
table mainly to excessive
slaughtering--precipitated
largely by fear by expropriation--
in 1959 and 1960.
Although there is no evi-
dence of serious hunger or
malnutrition, Cuba faces further
inconveniences and disruptions
in its normal consumption pat-
terns. Dissatisfaction over
the quality and variety of the
diet and resentment over dis-
tributional failings are ex-
pected to continue. However,
per capita consumption could
fall 20 percent from the 1958
level and still exceed that in
most countries of South America.
Cuba's sugar harvest in
1962 is expected to be no more
than 4,500,000 tons, or about
two thirds of the 6,800,000
tons harvested in 1961. This
drop in production can be
attributed to the following:
rainfall has been below normal;
little new cane was planted
in 1959 and 1960; cultivation
of the cane was neglected in
the-last three years; some cane
land was plowed up in the crop
diversification effort; inex-
perienced cutters damaged the
perennial root stock in 1961;
and finally, all standing cane
was cut in 1961, leaving no
carry-over for 1962.
Beyond these factors, the
most important single problem
in harvesting has been the
difficulty in obtaining labor
to cut the cane and transport
it to the mills. Many of the
experienced cane cutters, dis-
appointed by low wages last
year, have found other employ-
ment and are not volunteering
their services in spite of re-
peated exhortations from the
government. Volunteers are
apparently less willing to co-
operate this year because
grandiose promises made last
year were not fulfilled. The
sugar content of the cane,
which reaches a maximum con-
centration during late March
and early April, falls off
rapidly if the harvest is
prolonged or if transportation
from fields to grinding mills
is delayed. Furthermore,
cutting and hauling would be
handicapped by the rainy
season beginning in May.
(Prepared by ORR)
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Israeli-Syrian Hostilities
The heaviest fighting along
the Israeli-Syrian border in
two years broke out on the
night of 16-17 March when Israel
launched a "reprisal" raid along
the eastern shore of Lake Ti-
berias in the area from which
the Syrians had fired on Israeli
fishing craft and patrol boats
on 8, 15, and 16 March. The
Israelis attacked two villages
--Al-Nuqayb, in the demilita-
rized zone, and Al-Kursi--and
claim they killed 30 Syrians
at a cost of only five Israeli
dead; the raid was followed
by an artillery duel and Israeli
air attacks. The UN Mixed '
Armistice Commission negotiated
a cease-fire after seven hours
of fighting.
There continue to be
sporadic exchanges of fire,
however. On 20 March the
Syrians on two separate oc-
casions again fired on Israeli
patrol boats that approached
Tiberias' eastern shore, main-
taining that the patrol boats
opened fire first. On 21
March,Foreign Minister Meir
said Israel's cabinet had de-
cided that, to permit a relaxa-
tion of tension, patrol boats
would be kept off the lake
during the next few days and
Israel would not "at this time"
initiate further retaliatory
action. Later that day an air
battle took place in which
the Syrians claim to have shot
down an Israeli Super-Mystere
jet and the Israelis charge
that the Syrians fired on two
villages north of Lake Tiberias.
It accordingly seems likely
that additional and possibly
more serious hostilities will
occur.
The Syrian regime evidently
initiated the incidents, probably
hoping that it could divert both
ISRAELI -SYRIAN
BORDER AREA
Site of Israeli reprisal raids
Canal or conduit,
proposed or under construction
XNW Demilitarized Zone
LEBANON
NEGEV
\I DESERT
UAR
COY P1
Tel Aviv - Jaffa
GAZA
STRIP /
/ NEGEV
oe DESERT
i
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Haifa
1
O STATUTE MILES
32326
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CURRENT INTELLIGENCE WEEKLY SUMMARY
the fractious army and the
public from their dissatisfac-
tion with internal policies, as
well'asgive the lie to Nasir's
recent accusations that revo-
lutionary Syria, the defector
from the UAR, is. not effectively
opposing the, Israelis. The
promptness and vigor of Israel's
reaction reflect not only an
immediate grievance but also
its sensitivity to disturbances
which might jeopardize its
Jordan River diversion project.
Syria's Premier Dawalibi
emphasized the primacy of the
Jordan waters issue in the pres-
ent crisis during a conversa-
tion with Ambassador Knight on
19 March. He stressed the Arab
view that it is not a "tech-,
nical" question of how much
water Israel should take but a
political one. The Arab states,
which refuse even to recognize
Israel's existence, deny that
the-Israelis have any right at
all to exploit an "Arab" re-
source. Ambassador Knight
came away with the impression
that the Syrian regime believes
the "battle of the water" has
already begun and that Dawalibi
is under severe pressure.- The
ambassador suspects the Syrians
may be gambling that the UN
will step in and force Israel
to stop work on the diversion
project before the situation
deteriorates to outright war.
Both Syria and, Israel have
protested to the UN Security
Council and have requested a
meeting to consider their com-
plaints.
Damascus, in an apparently
premeditated attempt to place
the US in an unfavorable light,
is displaying captured Israeli
half-tracks which speakers point
out are of American manufacture.
As a result, anti-American feel-
ing reportedly is running high.
Syrian Internal Developments
Although the Dawalibi cabi-
net may have scored some political
gain from the border clashes, it
is under increasing criticism
and may soon fall or be reshuffled.
Conservatives and leftists both
are dissatisfied with the cabinet's
handling of land reform, indus-
try, and denationalization of
banking.
Supreme Arab Army Command (SARC),
which leads the army and exerts
considerable influence over the
government, appears temporarily
to have settled its internal
differences, but is likely to
be subjected to new internal
strains. Its membership probably
will be changed from time to
time as factions strive for
control.
The government's announce-
ment of a military and economic
cooperation agreement with the
Qasim regime in Iraq may tend
to solidify opposition to it. on
the part of such diverse
elements as the Socialist Baath,
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pro-Nasirites, many army of-
ficers, and certain conserva-
tive politicians. Since Syria's
independence following World
War Ij,one of the country's
most controversial political
questions has been its relation-
ship with Iraq. The army's
fear of union between the two
countries precipitated a coup
in December 1949 and brought
on the Shishakli dictatorship
which lasted until early 1954.
While the present agreement is
a limited one which does not
contemplate union, it is likely
to heighten such fears.
Although rightists have
controlled the government since
last September's coup, and
rightist military and civilian
elements may continue to score
tactical successes in the near
future, an eventual shift to
the left appears likely as
left-wing elements increase
their influence over the SARC
and, hence, the government.
Even the present government
has had to compromise to a
certain extent with radical
sentiment.
Saudi Arabia
An almost total change
of cabinet made by King Saud
eight days after his return to
Saudi Arabia makes Crown Prince
Faysal again a key figure. He
was named assistant prime
minister.and foreign minister,
and the fact that many of the
ministers, particularly in
the economic field, are known
as "'Faysal men" indicates that
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he will have considerable control
over the rest of the cabinet.
Although Saud retained his son
Muhammad and his nephew Faysal
Bin Turki, eleven ministers have
been replaced, including Oil
Minister Tariki, who had been
feuding with Faysal. Most of 25X6
the newcomers are commoners with
some administrative experience.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
AL]*NIST3 REMOVED ROM BULGARIAN CABINET
At its first mee>?ng on this post last December. This
15 and 16 March, the newly elect -- suggests that Tsankov and Mikhai-
ed Bulgarian National Assembly by will not be included in the
approved changes in the. Council propaganda drive against Cherven-
of Ministers which represent 1 kov and the Stalinist 'influences
another victory for the pro- I in Bulgaria.
Khrushchev leadership of party
Iirst Secretary Todor Zhivkov
over then powerful ;Stalinist seg-
ment in the party ft,*d govern-
ment. With his control now more
solidly assured, Zhivkov stands
a better chance to avert a Stal-
inist challenge at the next par-
ty congress, scheduled to begin
in late August.
The most important change
was the ouster of Georgi Tsankov
as minister of interior, a move
which probably portends his ous-
ter also from the party polit-
buro. A powerful and feared in-
dividual who had held his min-
isterial post since 1951, Tsankov
was perhaps the most hard-line
Stalinist in Bulgaria after ex-
party boss Vulko Chervenkov,
who was dropped from the polit-
buro last November at the onset
of the new de-Stalinization
campaign.
The next most important
change was the removal of Gen.
Ivan Mikhailov as minister of
defense. Mikhailov, who is at
retirement age, saw service in
the Soviet Army in World War II
and had been Bulgarian defense
minister since 1958. His role
in the factional problems of
the Bulgarian leadership is not
Tsankov was appointed, and
Mikhailov reappointed, deputy
chairmen of the Council of Minis-
ters--less influential positions
than ministerial posts--whereas
Chervenkov was removed even from
The regime appointed as
Tsankov's successor Diko Dikov,
a former deputy defense minister
and most recently the head of a
party central committee depart
ment, thus bypassing the Ministry
of Interior. Deputy defense
minister Dobri Dzhurov was named
to replace Mikhailov. There were
a number of other ministerial
changes and appointments which
probably have political overtones
as well as being moves to im-
prove administration.
Even though he probably has
weakened the Stalinists by de-
moting Chervenkov, Tsankov, and
members of the lower party ap-
paratus, Zhivkov still faces
major problems in trying to erad-
icate Stalinist influence. A
large part of the membership of
the party organization--built up
under Chervenkov--remains ori-
ented toward policies enunciated
under him and now labeled Stalin-
ist. Regime theoretical journals,
moreover, have reported that at 25X1
the November central committee
meeting Chervenkov did not re-
cant his "erroneous" views.
Because he cannot purge
all suspected Stalinists from
public life without crippling
the party and government appara-
tus, Zhivkov at present is re-
lying mainly on propaganda in
an attempt to discredit Cherven-25X1
kov and his policies.
however, party
members are not being dissuaded,
and the people profess to see
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CURRENT INTELLIGENCE WEEKLY SUMMARY
little difference between the
Stalinists and the regime. Thus
the Stalinists may still be able
to mount an effective campaign
of resistance within the party
apparatus which could affect the
August party congress.
Zhivkov's de-Stalinization
drive is also faced with other
potential problems. De-Stalini-
zation was discussed in December
and January in the Writers' Un-
ion, a source of dissidence from
1956 to 1958. At these meetings,
Without so much as an ideo-
logical nod toward Peiping, Ulan
Bator has aligned itself solidly
behind the Soviet position in
Moscow's feud with Communist Chi-
na: Mongolia is the only Asian
Communist state to do so; North
Vietnam equivocates, while North
Korea's Stalinist Kim Il-sung
cautiously shows a preference
for Peiping. Over the past few
months, Mongolia has displayed
its pro-Soviet stand by attack-
ing the Albanians, openly criti-
cizing the Chinese, and launch-
ing an imitation de-Staliniza-
tion campaign against Marshal
Choybalsan, who headed the Mon-
golian state and party from the
1930's until his death in 1952.
Addressing the party's cen-
tral committee in late January,
Yumjaagiyn Tsedenbal, Mongolia's
premier and party first secre-
tary who himself was a Choybal-
san protege, charged that the
cult of personality had led to
unjustified mass repressions
against "honest" party, state,
and military officials and "even
against ordinary citizens." The
plenum adopted a resolution for
"complete liquidation" of Choy-
balsan's harmful influences, and
in late February the marshal's
name was removed by decree from
the industrial combine in Ulan
Bator and from the national uni-
in an unfavorable light.
would also cast the regime
several prominent writers who
had figured in the earlier dissi-
dence appeared to be again call-
ing into question the role of
party direction in literature.
The regime appears for the time
being to have squelched pres-
sures by some union members to
review policy since 1956; al-
though such a review would re-
dound against Chervenkov, it
versity. Mount Choybalsan also
will be renamed..
The attack on personality
cultism is not without hazard
for Tsedenbal. Several years
ago the Mongolian politburo
was torn by a power struggle
during which Tsedenbal found
denigration of Choybalsan being
turned into criticism of his
own policies. This struggle
culminated in 1959; the more
nationalistic members in the
politburo were purged, and Tseden-
bal emerged in firm control.
Mindful of those events, Tseden-
bal took pains to warn the cen-
tral committee last January that
close watch would be kept for
anyone who might try to use
the attack on Choybalsan as an
excuse "to throw doubt on the
correctness of party policy."
22nd party congress."
In his role of Asian advo-
cate for Khrushchev, Tsedenbal
charged the Albanians with "mali-
cious, slanderous attacks" on
the Soviet party. Announcing
that criticism of the Albanians
was "absolutely correct," Tseden-
bal stated, "We cannot agree with
the reservations on this ques-
tion which, for instance, the 25X1
delegation of the Chinese Com-
munist party made at the Soviet
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CURRENT INTELLIGENCE WEEKLY SUMMARY
THE MACMILLAN GOVERNMENT'S POLITICAL PROBLEMS
Gains by Britain's small
Liberal party in recent by-
elections point up the. public's
disappointment with the Mac-
millan government's performance
on a wide range of issues dur-
ing the past six months. In
four by-elections between 8
and 14 March, the Liberals cap-
tured by nearly 8,000 votes a
seat the Conservatives had
carried by over 14,000 in 1959,
nearly won another equally
"safe" seat, and relegated the
Conservative candidate to third
place in one of the two seats
the Labor party retained.
The Macmillan government
has been suffering less from
any single issue than from a
failure to radiate self-confi-
dence and vitality. The
American Embassy in London notes
an appearance of "reticence,
muddle, and inadequacy":
reticence on the case for
Britain's entry into the Common
Market and on its policy re-
garding the Rhodesian Federa-
tion; muddle in fighting infla-
tion and stimulating the near-
stagnant economy; and inadequacy
of top cabinet members, in-
cluding Macmillan, to cope with
pressing domestic and overseas
problems.
With Labor candidates
barely holding their own, the
by-elections provide further
evidence that even with Hugh
Gaitskell's moderates again
in control of defense and
foreign policy issues, the
Labor party is failing to ex-
ploit the government's short-
comings. A party official
recently admitted privately
that Labor had not found a
winning issue. On the momentous
question of Britain's entry
into the Common Market, the
Labor party remains noncommit-
tal.
The Liberals, however,
benefited-only from the protest
vote against the government--
much as they did in 1958--and
party officials recognize the
vast organizational and finan-
cial improvement needed before
they can threaten the major
parties when control of the
government is at stake in a
national election. While the
government can take heart that
the Liberals rather than Labor-
ites have been gaining and that
it need not hold a general
election for another twa and a
half years, in the coming weeks
it will be examining its stand
on all issues partly with a view
to reversing the voting trend
in the five more by-elections
due this spring, and it will be
especially sensitive to popular
pressures during this time.
The six Common Market (EEC)
countries are agreed that the
1957 convention which associates
16 African states with the EEC
should be renewed when it ex-
pires at the end of this year,
but they still differ on the
exact terms to be offered the
Africans. This issue is ex-
pected to come to a head in
the next few weeks.
Discussion of the new con-
vention has been under way for
more than a year, with the major
area of contention the advisa-
bility of continuing the present
arrangement for an EEC-African
free trade area. France, sup-
ported by the Africans, has
taken the lead in insisting that
exporters in the associated
states continue to enjoy tariff
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CURRENT INTELLIGENCE WEEKLY SUMMARY
preferences in the EEC. On the
other hand, West Germany and
the Netherlands--supported by
the United States--contend that
the preferential system is out-
moded, distorts the economic
development of Africa, and
raises major problems for
competing areas, such as Latin
America, which lack equal
access to the European market.
Although this gap has in
the past appeared unbridgeable,
a compromise now may be taking
shape. In meetings since early
March, France has agreed to a
reduction in the level of pref-
erence accorded the associated
states, provided they are com-
pensated by increased develop-
mental aid. West Germany and
the Netherlands have in turn
agreed to a "transitional"
system with reduced preferences,
provided it is terminated as
soon as alternative arrangements
can be agreed on. Among these
alternatives would be the US
proposals for global agreements
to eliminate tariffs on certain
tropical products, stabilize
their prices, and provide pro-
ducers with compensating aid.
Other major problems still
to be solved are joint EEC-
African institutional arrange-
ments, the future level of
developmental aid to the
Africans, and the apportionment
of the burden among the EEC
countries. All six present
members are committed to continue
EEC aid at least at the previous
level--i.e., $581,000,000 over
a five-year period. Some in-
crease in this aid is anticipated
by all the member countries,
but France, perhaps with the
future needs of Algeria in mind,
reportedly contemplates an in-
crease to $1.1 billion for the
next five years. Agreement on
any amount close to this appears
doubtful--especially if France
appears to hh asking its EEC
partners to pick-up part of the
tab for the French-Algerian
settlement.
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SENEGAL
PO RG UINEAS
SPANISH
SAHARA
D- IIK',
NET
_0 E
ERtfAyNN
NEST
,HOMEY
NIGERIA
SOUTH
WEST
AFRICA
B ONGO UGANDA
O CRi P REPUBLIC
N r OF THE
RHODES
AND
CASH LA
SAUDI ARABIA
Further consideration of
these issues is expected at a
ministerial meeting on 2 April.
Most observers agree that the
present association arrangements
have important advantages for
the Africans and that further
development of the Eurafrican
partnership would be a major
gain for the West. However,
there will be serious reserva-
tions over the contemplated
continuation of preferential
trading arrangements between the
two areas--especially so since
the area of preference will prob-
ably be extended. Britain has
repeatedly stated that it can
enter the EEC only if African
Commonwealth members get the
same treatment as other African
states.
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CURRENT INTELLIGENCE WEEKLY SU1IMARY
SPECIAL ARTICLES
Joao Goulart, who is
scheduled to visit Washington
on 3 April, has retained most
of the authority theoretically
transferred to a prime minister
by the constitutional amendment
passed last September when he
succeeded to the presidency af-
ter Quadros resigned. Tancredo
Neves, who became prime minis-
ter after the Brazilian con-
gress adopted a parliamentary
system of government to con-
ciliate military opposition to
Goulart's leftist tendencies,
has not exercised the power
conferred on this office.
At the same time, however,
Goulart appears to have had no
clear idea of what to attempt
as president, beyond taking of-
fice and maintaining as much
political patronage as possi-
ble. In his many years as
political protege of former
dictator Getulio Vargas and as
vice president under Kubitschek
and Quadros, he had never really
concerned himself with questions
of national policy. In Goulart'6
first months in the presidency,
the Chamber of Deputies passed
a profits-remittance bill in ef-
fect excluding new foreign in-
vestment from the country, and
the Senate initiated action to
emasculate SUDENE, the organiza-
tion established for the eco-
nomic development of the poten-
tially explosive northeast.
Goulart, possibly because of
his uncertain political posi-
tion, took no action. In De-
cember he gave his active sup-
port to the pro-Communist slate
which won the national labor
confederation elections.
A steady rise in public;
criticism of the leftist tend-
encies of his presidency appar-
ently caused Goulart to change
his tack later in the month and
throw his influence against a
threatened general strike in
Sao Paulo. Public opinion also
caused swift passage of SUDENE's
master plan and first-year ap-
propriations, despite the sen-
ators' opposition to the organ-
ization.
Goulart's efforts early
this year to reassure the more
conservative elements of the
country appear to have had con-
siderable success. In mid-
January he met with represent-
atives of the Commercial Asso-
ciation of Rio de Janeiro and
listened to a presentation of
their concern over Communist
infiltration throughout the
country. Subsequently, although
Goulart had apparently only lis-
tened, the association president
reported favorably on the meet-
ing, calling Goulart "a man of
the center."
Goulart also engaged in ap-
parently effective conciliation
talks with opposition governors
in the states of Sao Paulo,
Parana, and Rio Grande do Norte.
On 21 February he received what
was generally interpreted in
Brazil as a display of growing
military support for his admin-
istration when only about five
of 81 general officers failed
to appear at the celebration
of an armed forces holiday. In
recent weeks numerous influen-
tial Brazilians of pro-American
and anti-Communist stamp have
expressed the conviction that
Goulart is resolved to pursue
a domestic policy along moderate,
progressive lines and an in- 25X1
creasingly pro-American foreign
policy.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
During this same period,
however, Goulart insisted on
meeting with Cuban President
Dorticos immediately prior to
the Punta del Este conference,
gave no sign of breaking with
his pro-Communist labor allies,
and replaced an anti-Communist
with a neutralist as head of
Brazil's politically important
petroleum monopoly, Petrobras.
Moreover, Goulart has taken no
action against Communists in the
governmental structure.
The Return of Quadros
Quadros' return to Brazil
on 7 March has been generally
interpreted as a challenge to
Goulart. Quadros apparently
hopes next October to win elec-
tion to congress--or a key gov-
ernorship--and then to become
prime minister, but his long-
awaited television address on
15 March was widely appraised
as meaningless bombast and
evoked little favorable re-
sponse.
Quadros, however, has on
previous occasions recovered
completely from seeming polit-
ical oblivion, and for this
reason open opposition to him
in Brazil is likely to be re-
strained. In a campaign for
federal deputy--which he would
almost certainly win because of
the proportional representation
system--he may generate consid-
erable support from continuing
opponents of the regime and
from those who support the be-
lief--widely attributed to Qua-
dros--that Brazil needs a dic-
tatorship.
Status of Parliamentary System
The failure thus far of
parliamentary government to
take firm root was highlighted
on 15 March by President Gou-
lart's public request to congress
to hold a national plebiscite on
whether to continue the system.
Goulart almost certainly con-
ceived his request as an effort
to blunt Quadros' effort to be-
come prime minister.
If prospects appear favor-
able for continuing the parlia-
mentary system, the entire cab-
inet may resign soon, since,
according to the constitution,
cabinet ministers may not run
for congress unless they resign
at least three months prior to
elections. Most of the incum-
bent ministers were chosen be-
cause they held seats in the
Chamber of Deputies, and they
can be expected to seek re-
election even if their resig-
nations threaten the country's
political stability.
Under the parliamentary
system, elections to the lower
house will be harder fought than
previously, since this house is
the source from which ministers
are most likely to come and is
the body with power to oust the
Council of Ministers. Gains in
popularity made by leftist na-
tionalist forces in Brazil in
recent years could be reflected
in a substantial increase and
possible control by this element.
Foreign Relations
The Goulart government,
like that of Quadros, seeks to
appeal to Brazilian nationalism
by demonstrating that its for-
eign policy is independent of
US policy. Formulation of spe-
cific policies appears to be in
the hands of Foreign Minister
San Tiago Dantas--in the 1930s
a high official of Brazil's
fascist Integralista party and
more recently the intellectual
leader of the leftist Labor
party. The * regime: has not
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indulged in the petty sporadic
anti-USasctivities of the Quadros
government, but neither is it
interested in reasserting Bra-
zil's traditional claim to be
the best friend of the United
States in Latin America. At
the Punta del Este conference,
Foreign Minister Dantas took
the most pro-Castro position
of any chief delegate. Dantas
now is heading Brazil's delega-
tion to the 17-nation disarma
ment conference in Geneva and
appears inclined to take a more
neutralist position than Mex-
ico, the only other Latin
American country at the con-
ference.
The Goulart government has
continued Quadros' policy of
developing closer relations
with the Sino-Soviet bloc. Qua-
dros had added to Brazilian
representation in Eastern Eu-
rope--previously confined to,
Czechoslovakia and Poland--by
establishing relations with
Rumania, Bulgaria, Hungary,
and Albania. He had also ini-
tiated diplomatic negotiations
with the USSR and trade negotia-
tions with Communist China. The
Goulart regime re-established
relations with the USSR last
November and ratified a banking
and payments agreement with
Communist China in December.
A Soviet industrial exposition
is scheduled for Brazil in May,
and a Chinese Communist exposi-
tion is to take place in August.
Soviet First Deputy Premier
Mikoyan is reported planning
to attend the May exposition
and may offer Brazil large-
scale economic aid at that time.
Gubernatorial Autonomy
Individual Brazilian states
have considerable autonomy, and
recent activities of several
governors have further reflect-
ed the nationalist pressures
BRAZIL
3,288,050 square miles
pppuloIaion 70,528,625
s of 1961)
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,.e. 1. oes.
ari r
Estodo or terrimrio boundary
Estado or territorio Capitol
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affecting foreign policy in Bra-
zil. Governor Brizola of Rio
Grande do Sul, for example, on
27 February advocated the ex-
propriation of all foreign enter-
prises in Brazil, including banks.
He announced preparations for
seizing a local subsidiary of
an American-owned power company.
The governor took over a subsid-
iary of International Telephone
and Telegraph Corporation earlier
in February, and in May 1959 he
seized the American and Foreign
Power outlet in his state cap-
ital.
The governor may have timed
these moves to embarrass Pres-
ident Goulart, his political
rival and brother-in-law, prior
to Goulart's visit to the United
States. Brizola, however, is
also seeking to build his na-
tional political reputation by
exploiting widespread Brazilian
dislike for foreign ownership
of utilities. He hopes to win
election as federal deputy in
October and then to be chosen
prime.'.minister.
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The problem of foreign
utilities is highlighted by
the repeated suggestion of
Parana Governor Braga--a po-
litical moderate--to American
officials that one of the great-
est steps the US Government
could take to promote better
relations would be to facilitate
the sale of US privately owned
public utilities to local au-
Governors also show their
autonomy by negotiating inde-
pendently for economic aid from
foreign countries. Brizola, for
example, has been negotiating
with the East Germans for as-
sistance with the telephone
system of his state; Alves has
negotiated with Polish repre-
sentatives for industrial equip-
ment; and Governor Aurelio do
Carmo of Para visited Czech-
oslovakia in 1961 and appears
to have secured a credit of at
least $5,000,000.
The Land Reform Issue
The land reform problem
is becoming an increasingly
acute political issue, It has
already resulted in small-scale
violence and may cause serious
outbreaks, in view of reported
arms distribution to peasant
groups both in the northeast
and in Rio Grande do Sul. The
diversity of agricultural con-
ditions in Brazil seems likely
t.o delay enactment of any effec-
tive national agrarian reform
while stimulating action by in-
dividual states. Sao Paulo al-
ready has full-scale legislation
on the problem, and in several
other states some distribution
of state lands and colonization
is programed.
In a more demagogic ap-
proach to land reform, Brizola
has encouraged landless farmers
to seize two tracts of land--
one belonging to private
Uruguayans and one largely
state-owned. Brizola and Gou-
lart both own vast tracts of
land. In his political ex-
ploitation of the land question,
Brizola has encouraged the or-
ganization of peasant leagues
on the model of those formed
in the Brazilian northeast
over the past two years by pro-
Castro Francisco Juliao.
While peasant leagues now
exist in most Brazilian states,
most of them are in the key
northeastern state of Pernam-
buco, where they have a total
membership of about 20,000.
The most active league in the
northeast, however, and the
one reported most likely to
resort to violence is in Sape,
in the state of Paraiba. It
has a membership of 5,000 and
apparently forms a nucleus of
opposition to the local govern-
ment dominated by the National
Democratic Union.
Orthodox Communists have
expressed some disapproval of
Juliao because he advocates
more violence than the party
wants at this time when it is
seeking legality. The expul-
sion in late 1961 from the
Communist party of high-level
popular members who advocate
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CURRENT INTELLIGENCE; MEEKLY SUMMARY
PERCENTAGE
250
a more revolutionary line and
who, with Juliao, are sympathet-
ic to Chinese Communist methods
has resulted in the formation
of a dissident Communist group.
The dissidents may provide ideo-
logical and financial support
for peasant agitation.
Economic Disequilibrium
Brazil has for some years
faced fundamental economic dis-
equilibrium in its balance of
payments as well as an erratic
but rapid rise in the cost of
living which contributes to po-
litical tensions. The balance
of payments problem arises from
the failure of export revenues
to rise sufficiently over the
past ten years, while gross na-
tional production has increased
about 8 percent annually and has
been reflected in an increasing
demand for imports.
Under both Quadros and
Goulart, the Brazilian Govern-
ment has attempted to increase
exports, find substitutes for
imports, and expand net receipts
.from foreign loans. In all
three aspects of its effort to
improve its balance of payments,
Brazil under Quadros and now un-
der Goulart has sought help both
from free world and from Commu-
nist bloc countries.
Brazil's effort during 1961
to expand exports--which includ-
ed a slight rise in trade with
the bloc--resulted in an 8-per-
cent expansion of receipts. The
export products that showed
better than average increases
were sugar, iron ore, cotton,
tobacco, meat, castor-seed oil,
IAN - AUG I SEP - DEC
1961
VALUE OF BRAZILIAN EXPORTS
(MILLION DOLLARS F.O.B.(
1950- 1955- 1958
'54 '59
(AVG.) (AVG.)
1960 1961
(EST.)
menthol, and miscellaneous prod-
ucts (which include the rapidly
growing manufactured goods ex-
ports).
Petroleum is the single
commodity which figures largest
in Brazil's imports. The sub-
stitution of domestic produc-
tion for petroleum imports
would contribute greatly to-
ward a solution of the balance
of payments difficulty. Petro-
leum imports amount to $250,-
000,000 annually--one sixth of
the cost of Brazil's total com-
modity imports. Even at this
cost, the Brazilian military
reportedly found supplies of
petroleum inadequate for their
operations during the political-
military crisis of 1961. Some
high officials now are consid-
ering exploitation of the coun-
cry's large reserves of oil-
bearin: shale, possibly with
US or Soviet assistance. Such
a program, if it promised to be
successful, would have strong
support from political and mil-
itary leaders who have long op-
posed dependence on foreign
sources of oil.
Brazil's efforts to expand
its foreign borrowing met with
considerable success in 1961,
largely because of assistance
arranged in May 1961 and subse-
quently from the International
Monetary Fund, US agencies, and
European creditors. Despite
improvement in 1961 over 1960,
Brazil's foreign exchange short-
age is still critical, since ex-
port revenues barely equal the
cost of imports, and debt re-
payment in the next few years
may come to 15 or 20 percent
of exhort receipts.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
TURKEY'S ECONOMIC PROSPECTS
The Turkish Government,
with its prospects somewhat
improved by the weakening of
organized opposition at both
ends of the political spectrum,
is beginning its first fiscal
year in office (1 March 1962
to 28 February 1963) with a
one-year program designed to
prepare the national economy
for a period of growth during
the 1963-1968 Five-Year Plan.
As in the past, Turkey will
need to rely on outside assist-
ance to cover current deficits
as well as to finance long-term
development projects. Although
its strategic value as an ally
will be stressed in appeals for
aid to the US, West Germany,
and NATO, Turkey must also con-
vince potential sources of
foreign credit that its long-
term economic prospects make
the country a sound investment.
The obstacles are formid-
able. The country's failure to
put to good use the massive as-
sistance received during the
past decade, the legacy of waste
and mismanagement inherited
from the Menderes government,
and the generally poor showing
of the state enterprises which
dominate the most active sectors
of the economy tend to discour-
age investment in Turkey. In-
flation, which threatened na-
tional bankruptcy in the summer
of 1958, is not now a serious
threat, however, having been
checked by the fiscal austerity
of the Committee of National
Unity (CNU) government which
held office between the over-
throw of the Menderes regime
and the October 1961 elections.
The most pressing problems with
which Turkish economic planners
must cope during fiscal 1962 are
unemployment, which is growing
as surplus rural workers move to
the cities, and general economic
stagnation.
Short-term Outlook
The 1962 budget, approved
on 28 February, is of record
size (approximately $1 billion)
and calls for a deficit of
nearly $130 million. Aid from
the US and West Germany is ex-
pected to offset about $75 mil-
lion of this deficit. If addi-
tional foreign credits are not
obtained from NATO or from in-
ternational lending agencies,
the remainder will be met by
currency issue.
The "fixed" items of de-
fense and administrative costs
have been held at levels only
slightly higher than in 1961.
Roughly proportionate across-
the-board increases are planned
in government investment in hous-
ing, agriculture, electric power,
transport and communications,
education and public health,
and industry, but these also
appear set at reasonable levels.
Revenue estimates seem
somewhat optimistic, perhaps
in the expectation of a con-
tinuation of recent better than
average exports of certain com-
modities. The hope that Turkey
will be admitted to the European
Common Market may also have in-
fluenced some of the foreign
trade projections. Several new
sources of revenue not reflected
in the estimates may develop,
however, in the form of increased
transfer payments from Turks work-
ing abroad and direct tax rev-
enues from agricultural produc-
tion. These may help to offset
the expected decline in private
capital inflow.
Longer Term Prospects
Turkey's economic progress
toward self-sufficiency under
the coming Five-Year Plan will
depend on its success in raising
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CURRENT INTELLIGENCE WEEKLY SUMMARY
capital to finance industrial
expansion. This could be accom-
plished through increased ex-
ports of raw and semifinished
products during the 1963-68
period if a well-designed pro-
gram of resource allocation
were followed.
Metallic and other mate-
rials appear to offer the best
immediate prospects. Commer-
cially exploitable deposits of
iron ore, chrome, copper, mer-
cury, zinc, and boron are found
in many parts of Turkey, and
current exploration suggests
that large deposits of these
and other minerals still re-
main undiscovered. Nearly all
the mines now being worked are
fairly accessible to ports or
markets. It appears likely
therefore that the mining out-
put could expand rapidly to
meet increases in demand.
The fuel situation is
less promising. Although coal
production can probably keep
pace with growing domestic re-
quirements, oil production has
fallen far short of earlier
estimates and now shows little
promise of relieving the seri-
ous drain of foreign exchange
for imports of petroleum prod-
ucts. Some saving will be
realized by the planned expan-
sion of refining capacity, how-
ever.
Agricultural products will
remain an important source of
foreign exchange, but consid-
erable revision of present prac-
tices will be needed. Turkey's
agriculture was characterized
until the present decade by
vast areas devoted to produc-
tion of a few locally consumed
items. Specialized cash crops
which entered into international
trade were grown in several
places, but the amount of rev-
enue they produced was slight.
These crops included tobacco,
dried and fresh fruit, hazel-
nuts, pistachios, and cotton.
Tobacco and cotton are
usually good export items, but
Turkey's tobacco crop is de-
pendent on special conditions
of soil and climate found only
in a small area along the Black
Sea coast which is already in-
tensely cultivated. Production
of short-staple cotton couldbe
greatly expanded, however. Con-
siderable land suitable for cot-
ton growing is found along the
Syrian border, and water from
the Upper Euphrates system is
available for irrigation. If
Turkey were admitted to the
Common Market, increased demand
from this quarter could be met
by eastward expansion of the
present cotton-producing area.
Turkey's leading cereal
crop, wheat, appears to hold
little promise of becoming a
reliable export item. Its pro-
duction was artificially stimu-
lated under the Menderes gov-
ernment, and for a time Turkey
ranked as one of the leading
world exporters. A great deal
of marginal land was brought
into production, however; and
droughts of recent years cul-
minated in the disastrous crop
failure of 1961, which necessi-
tated a Turkish request for US
wheat. The government plans to
convert much of the marginal
wheat land in the eastern prov-
inces to livestock use, and to
increase intensive farming
practices in the Aegean and
Mediterranean regions. Both
of these schemes appear feasible
and could result in more effi-
cient land use, but they will
require heavy capital outlays
and extensive retraining of the
local populations.
Large areas of Turkey are
well suited for stock raising,
and a ready foreign market ex-
ists for meat and animal prod-
ucts, but although sales of live
animals and hides from the east-
ern provinces to neighboring
countries have increased in re-
cent years, Turkey's potential
as a meat-producing region of
international significance has
gone unrecognized. The scrub
stock raised on open pasture is
slaughtered and consumed lo-
cally, with finishing-off for
market practiced only in areas
near sugar refineries, where
the animals are fed beet pulp.
With adequate government invest-
ment in breed improvement, in
refrigerated storage and trans-
portation equipment, and in feed-
lot and slaughterhouse facilities,
the establishment of a good stock-
raising and meat-packing industry
in Turkey seems possible.
The development of inten-
sive agriculture in the western
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CURRENT INTELLIGENCE WEEKLY SUMMARY
regions would probably require
less initial investment than
the expansion of livestock pro-
duction. The mild climate and
cheap agricultural labor in the
Aegean and Mediterranean coastal
regions favor both expansion of
the truck farming already car-
ried out there and the estab-
lishment of a local food-proc-
essing industry to handle the
high-value food items which
the area can produce. Such lo-
cal items as peaches, artichokes,
peas, shrimp, and anchovies
could compete in quality and
price in any market, if proc-
essed, packaged, and delivered
according to market standards.
Another potential source
of foreign exchange now receiv-
ing great attention is tourism.
present plans call for large-
seale government support, in-
cluding promotional advertising,
low-interest loans for the con-
struction of modern tourist fa-
cilities, relaxation of many of
the petty customs regulations
which have irritated foreign
visitors, and the establish-
ment of a government-sponsored
training school in hotel manage-
ment.
It is too early to assess
the chances for developing an
important tourist industry in
Turkey, but, as a West German
adviser on tourism has recently
pointed out, the road distance
between Hamburg and Istanbul is
approximately the same as from
New York to Miami, the number
of potential tourists in Western
Europe is increasing rapidly,
and the roads across Yugoslavia
and Greece are being improved.
These factors, together with
the pleasant climate and scenery
of western Turkey and its prox-
imity to the. heavily traveled
Mediterranean cruise routes,
favor the expansion of tourism
and have made it an important
objective of the Five-Year Plan.
Drawbacks
Although Turkey's natural
endowments offer the prospect
of significant increases in
foreign exchange earnings, prog-
ress is threatened by a number
of institutional factors. The
peasant population, while docile
.and hard-working, is conserva-
tive and resistant to change.
There is also a serious short-
age of technically qualified
personnel to carry through
many of the government's planned
programs. The dead hand of
bureaucracy rests heavily on
enterprise, stifling initia-
tive and often imposing exor-
bitant administrative costs.
Despite widespread under-
employment and a low wage scale,
labor is expensive in Turkey
because of its low produc-
tivity. Private capital is
scarce, and tends to be in-
vested either in land or in
urban housing, Entrepreneu-
rial and managerial classes
are lacking, and young Turks
with better than average edu-
cation prefer to seek their
fortunes in government or the
professions rather than in
business.
Nevertheless, despite its
reliance on outside financing,
its weak currency, lack of know-
how, and poor past record, the
Turkish economy possesses an
essential vigor which could
project the nation into an
era of higher living stand-
ards. The country's natural
resources, if properly used,
are capable of providing the
base for a rate of capital
formation adequate to sustain
unaided economic growth. As
in the past, much will depend
on the integrity and ability
of the governing body.
The present regime appears
more willing to face reality
in economic planning than its
predecessor. Much of the re-
sponsibility for coordinating
governmental development pro-
grams is exercised by Minister
of State Turban Feyzioglu, an
able administrator with a repu-
tation for hard work. Feyzioglu
has brought together a group
of advisers, many of whom--hold-
overs from the CNU period--are
less subject to political pres-
sures than those whom they have
replaced. There are hopeful
signs that the present group
will carry out the government's
programs in a more coordinated
manner than was achieved by
the previous administration.
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