CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A001300050001-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 34
• Document Creation Date: December 20, 2016
• Document Release Date: November 10, 2005
• Sequence Number: 1
• Publication Date: June 27, 1957
• Content Type: SUMMARY

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CONFIDENTIAL
SST
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
COPY NO. 17
OCI NO?059/57
27 June 1957
NC HA NTN.
NO CHANGE IN 05$, p
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CLASS. GHANGEO TO:
NeXT REVIEW LATE:
AUTH: I,HA 7.6?"+~~ eA
CATE:- -- REVIEWER: 25X1
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
CONFIDENTI~A.L
1, :W
State Department review 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
OF IMMEDIATE INTEREST
NATIONAL PEOPLE'S CONGRESS OPENS IN PEIPING
Chou's Speech
Chou En-iai, in his 30,000-
word address to the opening
session of the twice-delayed
National People's Congress on
26 June, reaffirmed established
positions on questions of f or-
eign and domestic policy. Chou
spoke before 1,062 deputies,
foreign guests and Mao Tse-tung
and Liu Shao-chi, who presided
over the opening session.
Chou, according to the of-
ficial Chinese Communist sum-
mary of his speech, declared
that during the past year the
international situation has
been developing along lines
."beneficial to peace" despite
constant threats posed by Ameri-
can "imperialist policy." As
major factors in this develop-
ment, he cited "reasonable"
Soviet proposals for arms limi-
tation, the growing importance
of the Asian-African countries,
the increasing Japanese demands
for "independence," and the
Taiwan riots.
In line with Peiping's
continuing emphasis on Sino-
Soviet bloc unity, Chou asserted
that solidarity had grown, not
weakened, following the Hun-
garian rebellion. Facts, he
said, prove that unity based on
"proletarian internationalism
and equality" cannot be destroyed
by provocations. He praised
Soviet economic assistance for
Communist China, declaring that
Peiping's achievements were
"inseparable" from Soviet help
and "expert guidance." He ex-
pressed "heartfelt thanks" for
Russian aid and promised that
Communist China would continue
Soviet Union and all other So-
cialist countries.
On the economic side, Chou
revealed that overspending in
1956 and a poor agricultural
showing, which he blamed on
the "worst weather in several
decades," had resulted in a
budget deficit of $750,000,000
at the end of that year. Sur-
pluses left over from previous
years covered only a part of
the deficit, forcing the re-
gime to borrow and issue cur-
rency to cover the remainder.
This is the first year since
1950 that the regime has ad-
mitted the need of a currency
issue to cover a deficit. Chou
said that the Chinese Communists
plan to achieve a balance in
the 1957 budget by increasing
revenues and reducing expendi-
tures, including a cut of 20
percent for investment in fixed
assets.
On domestic political mat-
ters, Chou admitted that the
Communists had executed about
one in six "counterrevolution-
aries" arrested before 1952.
Communist statements at the
time indicated a much higher
ratio than this and a total
greater than the 800,000 execu-
tions reported in unofficial
versions of Mao's "secret"
speech. Chou defended the "few
cases" which had been mishandled
by claiming that Communist
achievements were "fundamental,"
while errors were "individual."
Chou repeated last year's
promise of a government decen-
tralization program which would
encourage local initiative
"under central leadership."
to "learn seriously" from the king specifically to
~ lt
Cap
IN-
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 June 1957
"democratic" party leaders who
had been accused of overstepping
the bounds of legitimate criti-
cism, Chou reaffirmed the funda-
mental principle that the United
Front is led by the Chinese Com-
munist Party and based on a
foundation of "socialism." He
warned that departure from this
principle would lead to the ex-
pulsion of "democratic" parties
from the front.
Later sessions of the con-
gress may decide the fate of
these non-Communist leaders,
several of whom are cabinet min-
isters. It seems likely that
they will not receive severe
punishment in view of Mao's
policy of resolving "contradic-
tions" through persuasion and
education. However, they may
be replaced by less outspoken
non-Communist officials.
Invitation to Criticism
Early in May, the Chinese
Communist Party had invited the
"democratic" or puppet parties to
participate in the regime's ef-
forts to improve its work
through criticism and self-
criticism. Top "democratic"
leaders such as Lo Lung-chi,
the minister of timber industry,
Chang Po-chun, the minister of
communications, Chang Nai-chi,
the minister of food, Lung Yun,
a vice chairman of the National
Defense Council, and others,
responded almost immediately.
Their criticism attacked the
regime at its core; that is,
they challenged the leadership
of the Communist Party and the
need for "socialism" in China.
able question concerning their
motivation. One strong pos-
sibility is that they received
initial encouragement from the
Communists, but went too far,
either because they misjudged
the limits laid down by Peiping
or were carried away by a genuine
sense of frustration with the
regime.
Another, and perhaps more
likely, possibility is that
they are being sacrificed by the
Communists in order to discourage
others from following them.
This reasoning is supported by
editorials calling for the separa-
tion of "antisocialist" criti-
cism from constructive criti-
cism.
In the past several weeks
there has been a rash of edito-
rials in the official People's
Daily branding these critics as
"rightists" and calling for
strong countercriticism of their
"antisocialist" views. The pup-
pet parties have responded by
violently attacking their own
leaders, and one party at least
has called for the expulsion of
two of its top leaders.
The publication on 18 June
of the edited version of Mao's
secret speech should have removed
any doubts among intellectuals
about the extent of approved
criticism. His six standards
for distinguishing right and
wrong narrowly limit criticism
to that which is directed toward
strengthening the people's demo-
cratic dictatorship, the unity
of the party and people, and
"socialism."
Since the most outspoken
of these critics are among the
top leaders of their respective
parties--men who during many
years of co-operation with the
Communists have presumably
learned about Communism and its
restrictions--there is consider-
The present National People's
Congress session may provide the
first major public demonstration
of Peiping's method of resoly-
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CURRENT INTELLIGENCE WEEKLY SUMMARY
REACTION TO PLAN FOR KOREAN ARMS MODERNIZATION
The Communist bloc, and
Peiping in particular, has
sharply condemned the American
decision to give UN forces in
South Korea modern weapons. In
general, reactions have ex-
pressed grave concern over al-
leged American attempts to ab-
rogate the Korean armistice
unilaterally "in preparation
for war."
The first and most out-
spoken Chinese Communist com-
ment came on 21 June. It as-
serted that "this American ac-
tion has destroyed the Korean
truce agreement as a whole,
seriously threatened. the state
of the Korean truce and the
peace in the Far East." By 23
June, Peiping had somewhat modi-
fied its stand, and rather than
stating that the truce agree-
ment had been destroyed, limited
its observations to "this Ameri-
can action has seriously threat-
ened the armistice agreement."
At the same time, the Chi-
nese Communists pledged that
the "Korean-Chinese side would
fight to defend the armistice
agreement," a pronouncement
probably aimed at South Korean
leaders who have called for the
nullification of the entire
truce agreement.
milder than those made in Pei-'
ping; Pyongyang, however, may
well have been waiting for the
line to set before taking a
strong stand. Stressing the
familiar theme of unification,
Premier Kim Il-sung on 21 June
called for the withdrawal of
all foreign troops and the con-
vocation of an international
conference of those states con-
cerned in the settlement of the
Korean question. By 24 June,
protests had become more bel-
ligerent, with North Korean
generals asserting to mass
gatherings to commemorate the
seventh anniversary of the
Korean war their ability to
"smash the military adventures
of the United States."
On 26 June the North Ko-
reans called a meeting of the
Joint Military Armistice Com-
mission to reject the American
decision and formally present
Kim Il-sung's demands as made
in his 21 June speech. The
Communist objections were propa-
gandistic in nature and did not
resemble an ultimatum. At the
opening session of the National
People's Congress on 26 June,
Premier Chou En-lai emphasized
that China would give its full
support to North Korean proposals
for reunification.
The Soviet Union has also
assailed the American decision,
although the intensity of Mos-
cow's reaction falls short of
Peiping's. Moscow has charged
that American attempts to justi-
fy new arms for South Korea
are linked to a general Ameri-
can campaign to block an agree-
ment on disarmament.
The first objections raised
by the regime most directly
concerned, North Korea, were
Pyongyang's propaganda cam-
paign depicting the moderniza-
tion as illegal and picturing
North Korea as the faithful de-
fender of international treaties
is likely to maintain its pres-
ent high pitch for some time.
Free world comment, which
has been sparse to date, al-
though factual and moderate in
tone has generally approved the
American action. The British,
Australian, Canadian and Dutch
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CURRENT INTELLIGENCE WEEKLY SUMMARY
press all mentioned the need to
redress the Korean balance of
power and considered the de-
cision justified. Both the
London Times and Manchester
Guardian reported the necessity
of the decision but viewed it
as regrettable at a time when
East and West were talking of
reducing their armed strength.
The French press reported
Paris' official support.
Indian prime minister
Nehru, when queried for his
opinion, foresaw "trouble, dis-
cord and violence" resulting
from such weapons being "spread
out in all kinds of countries."
In Japan, Mainichi Shimbun
printed a factual e3itbrrial
and cautioned that the UN ac-
tion could touch off a dangerous
armament race in Korea which
would have an adverse effect on
the London disarmament talks.
Taipei and Seoul hailed
the decision as long overdue.
President Rhee called the "move
indispensable but far from
enough." Seoul press reaction
was equally approving, only
lamenting that the whole armi-
stice agreement had not been
abrogated, a long-standing de-
sire of President Rhee. South
Korea's initial elation was
subsequently deflated by re-
ports that its military forces 25X1
would not receive e
nuclear capability.
MILITARY DEVELOPMENTS IN SOUTHEAST CHINA
Chinese Communist artil-
lery on 24 June fired 9,000
rounds on the Quemoy Islands,
the heaviest artillery barrage
against the Nationalist-held
islands to date. There is no
information indicat-
ing a Communist in-
tention for an early
invasion of the Que-
moys.
The heavy Com-
munist shelling on
24 June probably
stems from one or
more of the follow-
ing factors: re-
taliation against in-
creased Chinese Na-
tionalist fire and
aggressive National-
ist naval activity
in the area; a Pei-
ping decision to con-
test Nationalist as-
sertions that forces
on Quemoy will main-
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tain closure of the port of
Amoy; and reaction to the Ameri-
can decision to modernize UN
forces in Korea.
The Chinese Nationalists
have recently warned all ships
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CURRENT INTELLIGENCE WEEKLY SUMMARY
to steer clear of Amoy and have
indicated that ships approach-
ing during the day will be
warned but those plying the
channel at night will be fired
on without warning.
officials in Hong Kong
There are about 89,000
Chinese Communist troops in
the Amoy area and 84,000 Chi-
nese Nationalists on the Que-
moy Islands. The Communists
would probably not launch an
all-out offensive against the
islands without building up
their troop strength to at
least a three-to-one numerical
advantage, although they do
have the capability to attack
the lightly defended islands of
Tatan or Ehrtan. There is no
evidence of a Co muniat build-
up at present.
are reported to have advised
shipping companies against
sailing to Amoy. Chinese Com-
munist shore batteries can be
expected to provide covering
fire for any vessel attempting
to enter the port, and this
may result in future shooting
incidents.
Syria
Syrian president Quwatly's
decision to forego his trip to
Europe at this time appears to
have reduced prospects of a po-
litical power play by the left-
ist military group which is ex-
ercising de facto control.
Syrian leftists, following King
Hussain's successes in Jordan
during April, apparently feared
they might be the next target
of Western-backed moves. These
misgivings were accentuated by
internal developments during
late May and early June which
threatened to alter the balance
of power. These included the
abortive scheme of moderate
legislators to resign and pre-
cipitate a cabinet crisis,
President Quwatly's "illness"
and plans to leave the country,
and reports that dispirited
Prime Minister Asali wanted to
resign.
Since none of these moves
has materialized, the leftists
at this time appear to be with-
out an opportunity to make a
bid for full, open control.
The absence of any effective
pro-Western military leader in
command of a major unit in the
Damascus area, however, empha-
sizes the weakness of the op-
position.
Tension has increased on
the Syrian-Israeli frontier,
and Israel has sent a warning
to Syria through the Israeli-
Syrian Mixed Armistice Commis-
sion against a repetition of
recent killings.
Increasing attacks on King
Saud in the Syrian press have
provoked Saud to the point where
he has threatened to close his
embassy in Syria unless the at-
tacks stop. Saud's ambassador
has already left Syria.
Israeli Reactions
Israel has expressed "seri-
ous concern" that the emergence
of a relatively pro-Western
Arab group under King Saud might
result in diminished Western
support for Israel, and. "fore-
tells a difficult political
struggle for Israel." Foreign
Minister Meir has said she fears
that each bloc in the divided
Arab world "would attempt to
prove itself the leading protag-
onist of hatred and war against
Israel." She also expressed
concern that the emphasis which
Saud placed on the religious
character of his leadership was
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 June 1957
contributing to a heightening
of Arab-Israeli tension. Mrs.
Meir stated that if this situa-
tion continued, Saud could in
the long run prove more danger-
ous to Israel than Nasr.
Nasr's Reaction
Nasr's reaction to the
recent decline in his prestige
has been to attack his Arab
rivals by accusing them of
softness toward Israel and sub-
servience to the West. Mount-
ing Egyptian press accusations
against alleged United States
political intrigue in the Middle
East reflect his belief that
the United States is responsible
for his troubles and is "out to
get him." Egyptian and Syrian
propaganda has sought to link
Saudi Arabia, Jordan, Iraq and
Lebanon in alleged negotiations
with Israel to settle the Arab
refugee problem on Israel's
terms--all under American pres-
sure.
Jordan's Prime Minister
Rifai is represented as having
conducted recent negotiations
for a peace treaty with Israeli
premier Ben-Gurion. Egypt has
also attempted to discredit the
candidacy in Lebanon of George
Malik, long-time friend of the
United States, by publicizing
a forged letter allegedly ex-
changed by him with Israel's
ambassador in Washington. A
composite photograph is reported
to have been prepared portraying
Jordan's King Hussain in "rock
and roll" antics.
The Egyptian press has al-
so moved to enhance Nasr's pres-
tige by reporting plans to iffake
his long-deferred visit to the
Soviet Union in August. Other
press reports mention a
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CURRENT INTELLIGENCE WEEKLY SUMMARY
forthcoming visit to Syria dur-
ing which an Egyptian-Syrian
union would be concluded. The
union proposal has been viewed
in the past primarily as a
propaganda talking point by the
two countries'leaders, and
should a "union" now be pro-
claimed, it would be unlikely
to bring Egypt and Syria sig-
nificantly closer than at
present.
In Lebanon, the third
round of the four-stage parlia-
mentary election held on 23
June resulted in six more seats
for progovernment candidates
and four victories for the op-
position. Progovernment candi-
dates now have won 40 out of
52 seats contested thus far.
The final balloting, for 14
seats in north Lebanon, will be
held on 30 June. The relatively
good showing by opposition
candidates in the 23 June elec-
tions may mitigate the bitter-
ness toward the government
which has dominated the elec-
tions thus far. Nevertheless,
new violence is possible during
the voting in the northern cit
Jordan Developments
King Hussain returned to
Amman on 24 June after a two-
day visit to Baghdad without
the hoped-for promises of in-
creased economic aid. The
timing of the visit was inop-
portune, since the new govern-
ment of Ali Jawdat had been in
office but a few days.
Jordan, meanwhile, is on
the verge of an economic crisis.
According to a joint British-
American local assessment, ap-
proximately $39,000,000 annual
aid would be required to main-
tain Jordan. London has not
yet made a decision on continu-
ing development loans, and Brit-
ish officials in Amman are be-
lieved by the American embassy
there to be interested only in
maintaining Jordan's economy
on a minimum level, apparently
believing that any effort to
make Jordan's economy more
viable would be
Egypt's first National
Assembly elections since the
revolution of 1952 are scheduled
for 3 July. Rule by executive
decree presumably will end with
the first session of the 350-
member assembly on 22 July, but
the Nasr regime is not likely
to let the initiative pass from
its small inner circle to the
new body.
The regime prepared for
the elections early this spring,
confident that opposition would
be almost negligible and that
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27 June 1957
the result would be overwhelming
approval of its policies. r
As a result, it has had
to resort to an arbitrary use
of constitutional provisions,
backed when necessary by intim-
idation and suppression.
The constitution of Egypt,
adopted in 1956 after being
tailor-made by the revolution-
ary clique, does not provide for
conventional political parties.
In place of the parties, there
is a National Union, for the
purpose of nominating all'can-
?didates from among whom the
representatives are elected by
popular vote. The actual ap-
proval of applicants for candi-
dacy is done by the National
Union's executive committee,
which is appointed by Egypt's
president. Its decisions are
not subject to appeal, and, in
the hands of the regime, it has
proved to be an effective weapon
for eliminating individuals
whose election is not desired.
The stated criterion for judg-
ing an applicant's qualifica.-
tions is whether or not he may
be counted on to "carry for-
ward the aims of the revolu-
tion."
The executive committee an-
nounced completion of screening
of applicants on 17 June. Out
of more than 2,500 applicants,
approximately 1,300 candidates
were accepted. Of these, over
60 will be unopposed in their
campaigns--including 16 members
of the Nasr cabinet.
With regard to Communist
opposition, the election prepar-
tions have hastened an overt
settlement of their status.
Nasr reportedly had been con-
fident that no significant Com-
munist effort would be made in
the elections and was accord-
ingly alarmed when informed in
early May that nearly 150 mem-
bers of the party were submit-
ting applications. The result
was his decree of 10 May dis-
qualifying as candidate any
individual ever subjected to the
regime's "administrative cus-
tody." The broad interpretation
given this decree eliminated any-
one who had been arrested, con-
fined to residence, or even
held under police surveillance.
The Communists have de-
cided to back leftists and
fellow travelers, and it is un-
likely that the regime has been
able to weed out such elements
entirely, or to tag all the
lesser-known Communists not
affected by the decree.
A long-time enemy, the
extreme rightist Moslem Brother-
hood, has renewed its terrorist
activities, exploiting the grow-
ing discontent of the Egyptian
public with Nasr's highhanded
tactics. However, aside from
its nuisance value, the Brother-
hood is not. likely to give the
regime any serious difficulty.
Its methods and history are now
distasteful to too many Egypt-
ians for it to regain much pop-
ular support.
The only other organized
opposition in Egypt today is
the remnant of the once dominant
Wafdist party. The regime has
done an effective jot over the
years of destroying the party
by both propaganda and more
stringent techniques, including
arrests early this year. Many
leaders of this former grass-
roots party have been discred-
ited as enemies of the revolu-
tion and therefore of the people.
A victory at the polls thus
seems assured for the regime,
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but its prestige has been harmed
by the manner in which all op-
position has been suppressed.
On the other hand, the election
has brought many enemies into
the open where the regime can
deal with them, perhaps per-
manently, and the security
gained by the elimination of
these sources of danger may
outweigh and outlast the loss
of prestige.
A number of public state-
ments by Soviet authorities
concerning earth satellites
suggest that the USSR intends
to launch an earth satellite
soon, possibly in the early
phases of the International
Geophysical Year (IGY) which
begins on 1 July. This program,
though it is of major propor-
tions, probably will not inter-
fere seriously with the long-
range ballistic missile effort.
A. N. Nesmeyanov, presi-
dent of the Soviet Academy of
Sciences, reported in Komsomol
Pravda on 9 June that the USSR
wouldrlaunch its first earth
satellite "within the next few
months." He was reported in the
Soviet press a week earlier to
have stated that the USSR now
has the "necessary instruments
and equipment to aid in solving
the problem." However, official
Soviet announcements at the
Brussels conference (15-20 June)
regarding IGY rocket and earth
satellite plans revealed nothing
new.
In September 1955, Khru-
shchev openly boasted that the
USSR was ahead of the United
States in preparations for space
satellites. Soviet scientists,
on the other hand, have char-
acteristically been cautious
about giving information or mak-
ing official claims of leader-
ship in the race to produce the
first successful satellite.
Knowing that the probabili-
ty of failure of a particular
launching is approximately 50
percent, it is possible that
the USSR will announce a launch-
ing only after it has taken
place. Timing of the announce-
ment may be influenced by a de-
sire not to reveal prematurely
any information from which de-
ductions might be made regarding
military missile capabilities..
Since the USSR has committed
itself publicly to launching an
earth satellite within the next
few months and is well aware
of the psychological and politi-
cal advantages of a "first" in
this field, a major effort on
its part toward this end is ex-
The USSR probably has the
capability of orbiting an earth
satellite in 1957. It would
be desirable though not manda-
tory to orbit a satellite with-
in a week before or after the
solstice period, about 21 June
or 21 December, to enable bet-
ter observation of th atel-
lite at dawn and dusk.
(Prepared by OSI)
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CURRENT INTELLIGENCE WEEKLY SUMMARY
More Soviet naval units
were active in the Mediterra-
nean last week than ever before.
Three submarines and one mine
sweeper arrived in Alexandria,
Egypt, on 16 June, and one
cruiser, two destroyer escorts
and three destroyers entered
the Mediterranean from the
Black Sea on 21 June. Major
Soviet warships have previously
left the Black Sea through the
Turkish Straits only to make
good-will visits which have
been announced in advance.
Two long-range "W-class"
submarines, one coastal type
submarine, and a Soviet mine
sweeper arrived in Alexandria
on 16 June from the Baltic Sea.
announced on 21 June that the
USSR had sold three submarines
to Egypt to enable the latter
"to safeguard its security."
These submarines probably will
be operated by predominantly
Soviet crews for some time to
come.
As Egypt's naval require-
ments could be satisfied by
older submarines, it is possible
the modern units were transferred
to boost Egypt's prestige. The
USSR has not furnished any of
these modern submarines to Satel-
lite navies. The new Egyptian
units constitute a potential
threat to Israeli shipping, in-
asmuch as Israel's navy has an
extremely low capability for 25X1
warfare against submarines.
All units flew Soviet colors
and the submarines apparently
remained on the surface through-
out the voyage. Moscow radio
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 June 1957
SOVIET IRON AND STEEL BUILD-UP BEHIND SCHEDULE
A recent Pravda editorial
reported unsatisfactory prog-
ress in carrying out the modest
1957 plan for adding productive
capacity to the Soviet ferrous
metallurgy industry and re-
vealed that construction of
new capacity was well behind
the Sixth Five-Year Plan (1956-
1960) schedules
The 1957 targets for new
capacity, announced for the
first time in this Pravda
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CURRENT INTELLIGENCE WEEKLY SUIU T
editorial, are almost identi-
cal to those for 1956 and con-
sequently will not be suffi-
cient to make up for the 1956
failures and provide the addi-
tions to new capacity origi-
nally programmed for 1957.
Even if the 1957 construction
plan is fulfilled, only about
28 percent of the additions to
crude steel capacity scheduled
in the five-year plan will be
completed at the end of the
first two years of the plan.
For pig iron and rolled metal,
only 18 and 16 percent will
be completed, respectively.
This slowdown in expand-
ing the ferrous metallurgy in-
dustryisanother strong indi-
cation that the original Sixth
Five-Year Plan over-all indus-
trial production goals will
not be fulfilled. The con-
tinuing lag in this key in-
dustry also constitutes a ma-
jor pressure on the regime
to lower the industrial out-
put goals of the sixth plan.
Prepared by ORR)
CONSTRUCTION OF NEW
PRODUCTIVE CAPACITY: USSR
(MILLIONS OF METRIC TONS)
PIG IRON 4.6
2.1
2.4 10
1956 1956 1957 ANNUAL
PLAN ACTUAL PLAN REQUIREMENT
STEEL
2.8 1.4 3.04 3.8
1956
ACTUAL
ROLLED METAL 4.6
11 .7 I 1.8 F
1956
PLAN
1957 ANNUAL *
PLAN REQUIItT
1957
PLAN
PRODUCTION stan
( MYLIONS OF METRIC TONS )
2.3
U
3.3
Q
ANNUAL *
REQUIREMENT
1957 ANNUAL*
PLAN
1.7
assuming fulfillment of 1957 plan.
22 JUNE -7
9 P~ ANNUAL *
AM WOLIFSAIEW
Average annual requirement (1958-1960) to meet 1960 goal,
The Hungarian Socialist
Workers (Communist) Party ap-
parently continues to be rent
by dissension over future poli-
cies and control of key party
and government positions. The
ruling clique headed by party
first secretary Janos Kadar,
however, still serves as an
effective puppet of the Kremlin
and probably will receive the
endorsement of party delegates
at the first party conference
which opened on 27 June.
Kadar and his followers,
who are trying to adhere at
least ostensibly to a center
position, are faced with pres-
sures from two other factions.
The "neo-Stalinists"--those ele-
ments in the party closely as-
sociated in the past with Ra-
kosi--favor Kadar's doctrinaire
pro-Soviet policies. The "re-
visionists" still maintain
some of the liberalistic and
"national Communist" attitudes
advocated by Nagy. Certain
worker elements in the party
also apparently display "social
democratic" tendencies.
The extent of factionalism
within the party was indicated
by a member of the Kadar group,
politburo member and Budapest
party boss Gyorgy Marosan, on
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CURRENT INTELLIGENCE WEEKLY SUMMARY
8 June when he declared at an
activists' meeting that the
party reorganization was being
hampered by intrigues and per-
sonal strife in many places.
Obviously responding to com-
plaints from party members who
fear implementation of a harsher
line, Marosan denied that a
"neo-Stalinist putsch" was
under way within the party. He
admitted, however, that some
functionaries who were high
officials in the prerevolution-
ary party and government were
not satisfied with their present
positions, but he denied that
their dissatisfaction involved
any ideological differences.
Further warnings against
"personal quarrels" were voiced
in a 23 June article by old-
line Communist Karoly Kiss,
politburo member and party sec-
retary. Kiss, who may represent
the neo-Stalinist wing of the
party at the politburo level,
revealed that unjustified accu-
sations by minor functionaries
against "honest and devoted
comrades" are causing concern
among party leaders.
A major dispute appears to
be raging over the treatment
of intellectuals. Marosan,
modifying his earlier attitude
toward writers and journalists,
on 8 June denied that the party
was anti-intellectual but admit-
ted that "on a few occasions we
have dealt rather summarily
with intellectuals." This ap-
parent change of position--
reportedly the result of the
urging of a visiting French
Communist delegation--has earned-
for Marosan the enmity of hard-
line party members who rebutted
his position on intellectuals
in a parliamentary address and
lampooned his change of heart
in a cartoon in the party daily
on 11 June.
In any case, on the eve
of the national conference, the
hard line toward intellectuals
was in the ascendant. The party
organization in Hungary's
leading law faculty was dis-
solved on 14 June and a purge
appears to be under way in the
country's educational system.
Regime spokesmen, however, are
still making gestures toward
the so-called technical intel-
ligentsia, on whom the regime
depends for the implementation
of its economic program.
The party may also be in-
volved in a dispute over the
proper way to handle Nagyists
and minority party figures who
were active during the revolu-
tion.
The regime in late
May arrested Zoltan Tildy,
former Smallholders Party leader
and a Nagy cohort, but now re-
portedly has released him; on
the other hand, it recently
arrested another revolutionary,
Peasant Party leader Istvan
Bibo, who apparently is to be
brought to trial. The final
decision concerning such trials,
however, will undoubtedly come
from the Kremlin.
Kadar appears to have
little control over the provin-
cial organization of the party
in which old-line Communists
who disappeared during the
revolution are re-emerging as
local party officials. In
addition, other Rakosi regime
Communists have recently been
appointed to parliamentary
committees and presumably have
high hopes of regaining top-
level party jobs.
Kadar is increasingly
forced to rely on the neo-Stalin-
ists--despite their threat to
his continued retention of power
--because he cannot afford to
risk co-operation with remain-
ing "revisionists," whose more
liberalistic tendencies threaten
his basic policies. The Kremlin
probably is sympathetic to in-
creased participation of the
neo-Stalinists in the ruling
circle.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
GOMULKA'S VIEWS DOMINATE POLISH-EAST GERMAN COMMUNIQUES
The views of Polish party
leader Gomulka on proper rela-
tions between Communist states
dominated the communiques
issued in East Berlin on 21 June
at the conclusion of Gomulka's
visit to East Germany. Although
an East German-Polish inodus
vivendi was reached in which
the Germans recognize many Pol-
ish ideas on relations within
the "commonwealth" of Communist
nations, basic differences be-
tween Gomulka's party and the
East German leaders remain un-
resolved.
The party communique de-
clared that party relations must
be based on equal rights and
mutual respect of sovereignty,
and the East German Socialist
Unity Party (SED) endorsed the
effective efforts of the Polish
United Workers' Party (PZPR) in
Poland's program since October.
Although adherence to basic
principles of Communism was
pledged, the two parties recog-
nized that historic conditions
and national characteristics
may determine various forms and
methods of approach in different
countries.
Going even further, the
East German leaders agreed to
the equality of the Soviet Com-
munist Party, the Communist
Party of China--"whose signifi-
cance goes far beyond the con-
tinent of Asia"--and all Com-
munist and workers' parties
in constituting a common pool
of thought and experience for
the working class movement.
Although somewhat more
restrained in tone than the
party pronouncement, the gov-
ernment communique was more
typical of Satellite documents,
agreeing to major points of
Soviet foreign policy, and
particularly emphasizing mat-
ters of primary interest to East
Germany and Poland, such as the
Oder-Neisse line and nuclear
armaments in West Germany.
The agreement supported
the creation of a zone of re-
duced armament in Europe to in-
clude both Germanies and the
territory of several of their
neighbors. It favored the es-
tablishment of an understanding
with the Baltic states for a
"Baltic sea of peace," declared
a readiness to strengthen the
Warsaw pact, and announced that
consular and customs agreements
would be concluded. A reference
to Poland's desire for better
relations with West Germany was
also included.
Gomulka, in his first trip
to any Satellite, and the Polish
delegation received a distinctly
cool reception in East Germany.
No mass greeting committee was
organized, and none of the top
East German leaders accompanied
the Polish leaders in their ex-
cursions to the countryside.
The controlled East German press
distorted much of the content
of the meetings by eliminating
Polish references to the desire
for friendship with the West
Germans and to the equality of
China with the USSR.
East German workers, how-
ever, proved more friendly than
those in Czechoslovakia, accord-
ing to a reported comment of
Polish premier Cyrankiewicz, a
fact which he privately ascribed
to the unpopularity of Ulbricht's
regime rather than genuine friend-
liness toward Poland.
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The Communist regime in
Czechoslovakia, in a resolution
at the 13-14 June central com-
mittee meeting on ideological
problems, reaffirmed Czecho-
slovakia's conservative posi-
tion on Communist interrela-
tionships and internal politi-
cal questions.
The Czech regime used this
occasion to make its first of-
ficial party statement on the
Mao "many flowers'- thesis.
The Czech resolution stated
that while the Chinese theory
was valid for the Chinese situ-
ation and the anti-imperialist
struggles in Africa and Asia,
the strategy was inapplicable
to Czechoslovakia,where the
regime is engaged in combating
full-scale imperialist espion-
age and subversion. Subse-
quently the authorized version
of Mao's February speech treat-
ing in detail the "many flowers"
thesis was published in the
official Czech press on 21 June,
the first such appearance in
any European Satellite news-
paper. The Czechs have issued
no new internal comment on the
meaning of the speech for
Czechoslovakia.
Perhaps the most signifi-
cant part of the Czech resolu-
tion was a call for "multipar-
tite discussion of important
political and ideological ques
tions" and for a new interna-
tional Communist theoretical
and political journal. The re-
establishment of a Cominform-
type journal has often been
rumored,and the American em-
bassy believes it may be an-
nounced during Khrushchev's
visit to Prague, reportedly
scheduled for early July. The
resolution did not specify
what organization might sponsor
the journal, but the Czechs
may contemplate sponsorship
through international Communist
Party conferences, as they have
suggested, rather than by a for-
mal Cominform-type organization.
In discussing internal
ideological and party problems,
the resolution admitted that
some revisionist tendencies
existed and recommended that
ideological weaknesses among
workers, students, and literary
elements be corrected. Party
Secretary Jiri Hendrych in a
major policy speech at the cen-
tral committee meeting noted
that important strata among the
Czech intelligentsia and even
workers are susceptible to
Western-sponsored subversive
concepts, notably revisionism,
"national Communism" and "peo-
ple's capitalism." Revisionism,
hitherto underestimated, was
singled out as the main danger
to the international Communist
movement.
In its references to the
repressive measures to be taken
against the intelligentsia, the
regime revealed the difficulty
it had experienced in attempt-
ing to enforce ideological con-
formity. Henceforth, "Socialist
realism" is to be unquestioned,
erroneous ideas are to be curbed,
and speeches or articles which
advocate an opposing policy to
that of the regime are to be
forbidden.
This restatement of Prague's
ideological position probably
was motivated by a desire to
publicize this "model Satel-
lite's" rigidly orthodox posi-
tion prior to Khrushchev's forth-
coming visit. Since it was just
a year ago that the Czech "hard"
line was first detailed, the
regime may have felt that a re-
statement of its intention to
hold the line at the present
pression. was necessary.
limits, or even resort to re-
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CURRENT INTELLIGENCE WEEKLY .SUMMARY
27 June 1957
POLES REVISE FIVE-YEAR PLAN
A revised five-year plan
for 1956-60 was presented to
the Polish parliament on 18
June. Circumstances under
which the revisions were made
suggest that the new plan is
intended mainly to preserve
the appearance of bloc unanim-
ity rather than provide a firm
framework for Poland's economic
future. Although more realis-
tic than the original plan,
its lack of detail shows clear-
ly that it is not sacrosanct
and may be revised or ignored
when expedient.
The major tenets of the
new five-year plan are a real
improvement in the standard of
living and a restoration of the
balance between the branches
of the economy. To accomplish
these aims, industrial produc-
tion now is scheduled to rise
49 percent over 1955 instead
of the 53-57 percent originally
planned. Investments are be-
ing further cut back and lesser
sums are allocated to capital
goods, the production of which
is to increase 50 percent.
Consumer goods output is to
rise 47 percent, not including
the output of small and pri-
vate producers which has re-
cently been given a renewed
impetus. The original plan
did not state the goals for an
increase in consumer goods pro-
duction.
The new plan promises much
less improvement in living con-
ditions than the Polish people
are demanding. The projected
30-percent rise in living
standards over the five-year
period is a modest goal,
although even this will prob-
ably be very difficult to real-
ize. A 27-percent rise in
workers' wages during 1956 has
been negated in large part by
inflation. Increased imports
and production of consumer goods
are not likely to bring about
appreciable improvement soon.
The provisions in the
draft five-year plan presented
at the seventh party plenum
following the Poznan riots were
so little related to Polish
economic capabilities and the
real needs of the Polish people
that, after Gomulka came to
power, the plan was withdrawn
and abandonment of the five-
year plan system was considered.
The official party paper ex-
plained in mid-November that
the plan had been prepared un-
der conditions of "undue opti-
mism" and contained a number of
provisions which were not suited
to the Gomulka program; it added
that a five-year plan for 1956-
60 was of "dubious importance"
anyway.
Adoption of a new five-
year plan at this time despite
these reservations preserves
Poland's conformity with stand-
ard practice among bloc coun-
tries. Its tentative nature,
however, is readily admitted
by the regime: "In our present
situation... the five-year plan
bill has a schematic, character.
In current production and in
investments, it is of a transi-
tory nature and adaptable to
+he current mic program."
(Prepared by 25X1
Premier Zoli's agreement
to withdraw his 10 June resig-
nation probably provides only
a temporary solution to the
Italian government crisis.
New difficulties are expected
when controversial parts of his
original program come up for
parliamentary approval. Pres-
sident Gronchi may be obliged
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to dissolve the Chamber of De-
puties and call national elec-
tions, probably for October.
Developments over the past
few weeks have indicated that
no parliamentary majority ex-
ists for Zoli's program as a
whole. Although he was origi-
nally confirmed with the votes
of rightist parties seeking to
end their political isolation,
these parties are unlikely to
vote for the proposed laws to
regulate farm contracts and to
set up regional assemblies.
Moreover, the attempt last week
by Christian Democratic Party
secretary Fanfani to reconsti-
tute the old coalition failed
because the small center par-
ties balked at his repetition
of Zoli's program.
Zoli probably will not en-
counter much opposition to a
measure for provisional exten-
sion of government appropria-
tions which would otherwise ex-
pire on 30 June. A majority
also seems to exist for ratifi-
cation of the Common Market and
EURATOM treaties. The first
controversial legislative pro-
posal to come up, however, is
likely to lead to a new impasse.
President Gronchi reportedly is
still reluctant to use his power
to dissolve the Chamber of Depu-
ties before the expiration of
its legal term next spring, but
he would probably give in to
strong pressure for October
elections from the Christian
Democratic Party if parliamen-
tary developments seemed to
nffA-r no
ier solution.
j
The French National Assem-
bly's approval of fiscal meas-
ures it had earlier refused
former premier Mollet.makes it
possible for Premier Bourges-
Maunoury to seek ratification
of the EURATOM and Common Mar-
ket treaties before the summer
recess. Since major financial
difficulties are still ahead
and division is growing in
France over Algerian policy,
there is no assurance that his
government will long survive.
Bourges-Maunoury still
has to deal with France's
chronic balance-of-trade defi-
cit and depleted gold and for-
eign exchange holdings. On 17
June, the government reimposed
quantitative restrictions on
imports to counter the trade
imbalance and will probably
have to tap the Bank of France's
gold reserves next month. An-
ticipated further steps include
requests for loans from the
International Monetary Fund, the
West German government and the
United States, as well as re-
newed efforts to hold down the
cost of living.
Growing domestic opposi-
tion to the Lacoste pacifica-
tion program in Algeria may be-
come a major problem for the
cabinet. Bourges-Maunoury has
promised to speed legislation
establishing a new Algerian
political framework and prob-
ably hopes by such an approach
to mollify opponents of pacifi-
cation without incurring the
wrath of die-hard French na-
tionalists. All French politi-
cal parties, save the Communists
and Poujadists, are divided in
some measure on Algerian policy,
but as yet most French politi-
cal leaders still fear to op-
pose openly the Lacoste thesis
that Algeria can be held mainly
by military means.
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The press is becoming more
critical, however, and the
Socialist Party's national
congress which opened on 27 June
may reveal increasing pressure
for a federal relationship be-
tween France and Algeria. Press
reports that the Algerian nation-
alists now are willing to con-
sider a cease-fire without de-
manding independence as a pre-
condition may encourage defeat-
ism in France and emharracs
the government.
Bong Souvannavong, left-
wing leader and Pathet Lao sym-
pathizer, has been designated
to form a cabinet in the month-
old Laotian political crisis.
His appointment follows Nation-
alist Party leader Katay's un-
successful bid for investiture
and Independent Party chief
Phoui Sananikone's refusal to
try to form a cabinet.
visive tactics in an effort to
split the present alliance be-
tween the former political
enemies, Katay and Phoui. These
two leaders only recently sub-
merged their differences to
unite in favoring a firm policy
toward the Pathet Lao, and there
have already been several in-
dications that their rapproche-
ment is subject to severe strain.
Bong's chances of winning
the necessary two-third's assem-
bly approval appear slim, al-
though he can be expected to
make a persuasive appeal for a
neutralist foreign policy and
an immediate settlement with
the Pathet Lao. While Bong
will presumably be supported
by the small National Union and
Democrat Parties, he is unlike-
ly to win support from the lead-
ing Nationalist and Independent
Parties, either of which has
sufficient representation in
the assembly to block him.
An effective demagogue and
adept at political intrigue,
Bong; will undoubtedly use di-
If Bong is defeated, as
appears probable, the crown
prince may designate either
Katay, Phoui or outgoing prime
minister Souvanna Phouma as
cabinet formateur. The latter's
prospects have materially im-
proved with the defeat of
Katay last week, and the presi-
dent of the National Assembly
has indicated that the assembly
would be disposed to accept a
Souvanna Phouma government with
Katay and Phoui as principal
lieutenants. Such a government
would probably suffer from
serious internal stresses be-
cause of the dissimilarity of
views of its leaders on the
Pathet Lao issue.
Municipal elections in
Djakarta on 22 June revealed
a substantial growth of Commun-
ist strength. Although the
anti-Communist Masjumi won a
plurality as it did in the na-
tional elections of 1955, it ran
only 19,000 votes ahead of the
Communists, who in 1955 had run
a poor fourth. The National
Party and the Nahdlatul Ulama
(NU) fell from second and third
places, respectively, in 1955
to third and fourth.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 June 1957
Elections throughout the
remainder of Java are scheduled
for the near future. The Com-
munists polled a strong second
place in both East and Central
Java in 1955 and probably will
do'at least as well again this
year. Provincial leaders of
the National Party and the NU
have voiced more concern over
the Communist threat than their
national leaders in Djakarta,
but there is little indication
they have undertaken effective
action to counter the vigorous
and well-financed campaigning
of the Communists.
President Sukarno has an-
nounced that his national ad-
visory council will be installed
as soon as all 45 seats are
filled. A certain amount of
reshuffling is under way, since
several individuals have re-
jected their appointments, sev-
eral have accepted condition-
ally, and some have been with-
drawn by sponsoring organiza-
tions. Such changes will, if
anything, strengthen the coun-
cil's leftist orientation.
In an effort to remedy the
central government's deteriorat-
ing economic situation, the
prime minister on 20 June an-
nounced adjustments in import-
export regulations which permit
the sale of foreign exchange ac-
cording to prevailing market
rates rather than at an official
fixed rate. The regulations
amount to a devaluation of the
rupiah and will chiefly benefit
exporters. Many Indonesians in
non-Javanese areas have avoided
paying government revenues by
setting up an advantageous bar-
ter trade, and the new regula-
tions will probably offer little
inducement for them to re ume
official trade channels.
The field of candidates
for the November Philippine
presidential election is nar-
rowing as both major parties
prepare to hold nominating con-
ventions in July. Several
ranking aspirants in the ruling
Nacionalista Party have an-
nounced their intentions to
withdraw from the race and back
the re-election of President
Garcia. The failure of all con-
tenders to withdraw, however,
has left open the possibility
that such pledges may not be
honored at the party's conven-
tion, now scheduled for 27-28
July.
A move to abandon Garcia
could develop if Manila's Mayor
Lacson, a vice-presidential
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hopeful, carries out a threat
to present on the convention
floor a documented "expose" of
President Garcia's involvement
in corruption.
Nacionalista Party presi-
dent Rodriguez' comment that
Lacson's charges would have
little effect on Garcia's pros-
pects suggests that Garcia may
have agreed to concessions to
gain the support of party lead-
ers. Currently, there are pros-
pects that a Garcia-Laurel Jr.
slate may be presented to the
convention as the considered
choice of the party leadership.
The Nacionalistas, however,
have not only failed to resolve
fully the internal conflicts
among rival presidential and
vice-presidential nominees, but
remain divided over selection
of candidates for the Senate
and the House of Representatives.
Furthermore, the continued in-
dependent presidential candidacy
of Senator Claro Recto offers
a threat to the Nacionalistas,
as it provides a haven for those
who lose out in the nominating
procedure. In this connection,
both Lacson and "sugar bloc"
politician Senator Fernando
Lopez--as a result of Garcia's
last-minute veto of legislation
favorable to export interests--
are reported making gestures
of support to Recto.
The opposition Liberal Par-
ty continues to express optimism
over the election prospects of
its probable presidential and
vice-presidential candidates,
prewar Speaker of the House
Jose Yulo and Congressman
Diosdado Macapagal. The Liber-
als are concerned, however, over
the congressional race, since
they hold at present no seats
in the Senate and only 35 of the
104 seats in the House.
The party is reluctant to
run several of its ranking mem-
bers, who are popularly identi-
fied with the corruption of the
former Quirino administration,
and hopes to include on its
senatorial slate members of the
new Progressive Party, formed
by politicians close to the late
president Magsaysay. The Liber-
als' convention, originally
planned for June, has been post-
poned to mid-July so that nego-
tiations with the Progressives
might continue.
The Progressives have lost
considerable bargaining power
by the failure of their most
likely presidential candidate,
Manual Manahan, to attract popu-
lar support. Furthermore, sev-
eral officials close to Magsaysay
have remained loyal to President
Garcia and the Nacionalista
Party. Indications are that
the Progressive Party will be
unable to arrange a favorable
coalition and may gradually fade
out of the political picture.
Some prominent Progressives are
reportedly already prepared to
abandon the new party and af-
filiate individually with the
Liberals.
The possibility of wide-
spread violence in Ceylon is
increasing as the Hindu Tamil-
speaking population of northern
Ceylon is planning a civil dis-
obedience campaign for late
August. The Tamils will be op-
posed by Buddhist Sinhalese-
speaking extremist elements from
other parts of the island. Gov-
ernment forces are preparing to
suppress the campaign.
The Tamil Federalist Party,
spearhead of the movement by
Hindu inhabitants of Indian
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CURRENT INTELLIGENCE WEEKLY SUMMARY
descent to achieve Ceylonese
citizenship and recognition of
their Tamil tongue as a Ceylon-
ese national language, has ad-
vanced four demands which it
says must be met if the civil
disobedience program is to be
canceled. These are a federal
autonomous state in northern
Ceylon, citizenship rights for
all residents of Indian descent,
parity of Tamil with Sinhalese
as a national language, and a
promise that the Tamil area will
not be colonized by Sinhalese.
Prime Minister Bandaranaike
is seriously perturbed over the
possibility of violence created
by the Tamils, who comprise 2,-
000,000 of the island's 8,500,-
000 population. He plans to
mobilize all police and active
reserve units of the armed forces
by early August. He has also
considered formation of a volun-
teer force of 100,000 members
of his Sri Lanka Freedom Party
to help keep the peace, but this
idea has met violent opposition
from all sides. In addition,
the government has banned the
sale of firearms and forbidden
foreign travel, without special
clearance.
On the other hand, Bandara-
naike has attempted to pacify
the Tamils by offering them con-
cessions, including the right
of Tamil children to be educated
in their mother tongue, estab-
lishment of a reasonable period
for Tamil-speaking public serv-
Ceylonese Basic Linguistic Divisions
ants to learn Sinhalese,
and the right of local
administrations to
conduct business in the
Tamil language if they
wish.
The Tamils remain
unsatisfied. In early
June, Federal Party
demonstrators stoned
government ministers
touring northern Ceylon
in an effort to explain
the government's posi-
tion. On 13 June,
Federal Party members
walked out of the open-
ing meeting of parlia-
ment when the governor
general began an ad-
dress in Sinhalese.
SECRET
Simultaneously,
Buddhist extremist
elements have indulged
in violence in protest
against Bandaranaike's
proposals for the use
of Tamil in Ceylon.
Buddhist efforts to
hold a mass meeting
in Colombo on 11 June,
which were thwarted
by the police, were
followed by a march
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on the prime minister's home,`
during which several persons
were wounded. There have been
reports that Buddhists are also
forming a "private army" to op-
pose the Tamils next August.
most effective pro-Communist
leaders in Pakistan, an alliance
of leftist parties is taking
shape which could emerge as a
distinct threat to Pakistan's
present leadership during the
national elections scheduled
for next spring. The Communist-
dominated Pakistan National
Party (PNP), in the forefront
of this movement, has been fast
developing as a mass organiza-,
tion in sections of West Paki-
stan. Recent political develop-
ments in East Pakistan indicate
the PNP soon may emerge as the
instrument for unifying pro-
Communist groups in both prov-
inces into a single opposition.
The Communist Party of
Pakistan, small in numbers and
weakened by chronic factional-
ism, has been outlawed since
July 1954 and operates primarily
through front parties and
through infiltration of estab-
lished political organizations.
The most effective service in
the Communist cause has long
been performed by pro-Communist
Mian Iftikhar-ud-Din, wealthy
publisher of the Pakistan Times
papers which regularly follow
the Communist line. Late in
1956, Iftikhar-ud-Din's Commu-
nist-front Azad Pakistan Party,
never a real force in Pakistani
politics, merged with five
other small provincially ori-
ented parties in West Pakistan
to form the PNP.
During the past five months,
the new party reportedly has
been gaining strength rapidly
in the Northwest Frontier area.
The success of its program de-
rives largely from the popular
appeal of Abdul Ghaffar Khan,
widely known for his pro-Push-
toonistan activities, who has
assumed nominal leadership of
the Frontier PNP. The main
themes stressed by the PNP in
West Pakistan are abolition of
the one-unit system, the arrange-
ment under which West Pakistan's
six provinces were merged in
1955 into a single administrative
unit, and "the new American im-
perialism."
Communist Party workers
previously concentrated on pene-
trating the Awami League
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 June 1957
organization of Prime Minister
Suhrawardy, but in recent months
have shifted their efforts to-
ward the PNP. Most of the lead-
ing Communist workers have now
established themselves in key
posts in various PNP provincial
units, though some remain with-
in the Awami League. Suhra-
wardy's success in mid-June in
defeating the pro-Communist
Bhashani faction of the East
Pakistan Awami League and es-
tablishing his control over the
party will probably accelerate
this shift to the PNP::
Leaders of the PNP for
some time have indicated an
eagerness to join with Maulana
Bhashani and develop his wide
following in East Pakistan as
the nucleus of a leftist mass
movement opposing Pakistan's
present leadership. Talks be-
tween Bhashani and Iftikhar-
ud-Din in Dacca on 15-17 June
resulted in an announcement that
an all-party convention would
meet on 25 July to consider
mutual problems and the possible
formation of a new national
leftist party,
The PNP in West Pakistan
and Communist-front elements in
East Pakistan agree on the prime
issues of regional autonomy and
anti-Western foreign policy.
An election campaign sparked by
Ghaffar Khan and Bhashani,two
of the most effective mass lead-
ers in Pakistan, would be like-
ly to attract considerable sup-
port from the electorate if
leftist politicians in both
provinces submerge their dif-
ferences and personal rivalries
and agree on a national program.
Pro-Communist Mayor Kame-
jiro Senaga of Naha, Okinawa,
has begun a vigorous campaign
on behalf of leftist candidates
for the city assembly which is
designed to forestall his ul-
timate removal from office.
His conservative opponents must
win at least 20 of the 30 seats
in the election scheduled for
4 August to assure a second no-
confidence vote against the
mayor by the new assembly.
Senaga dissolved the city
assembly on 18 June and opened
his campaign the next day in a
speech to a captive audience
of city workers in which he
threatened strong action against
any employee supporting the
conservative opposition. In
addition to using the city or-
ganization in the campaign, the
mayor can be expected to ex-
ploit appointments to lucrative
posts in city-operated busies
nesses.
Senaga will pose as the
champion of Okinawan grievances
against the United States, em-
phasizing such popular issues
as reversion to Japan and op-
position to the acquisition of
land by American forces. To
cover his vulnerability on the
present inactivity in city con-
struction, caused by refusal
of banks to loan money to the
pro-Communist administration,
he is seeking funds to resume
the building of a port terminal
building.
The initial elation of the
anti-Senaga forces over their
success in passing a no-confi-
dence motion on 17 June is fad-
ing. Their campaign is being
hampered by the decision of at
least three conservative as-
semblymen not to run for re-
election and by the tenuousness
of conservative co-operation.
The opposition, however,
still appears to have a good
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CURRENT INTELLIGENCE WEEKLY SUMMARY
chance of winning 20 assembly
seats and then of carrying a
second vote of no confidence
against Senaga, possibly in
September. This would force
a new election for mayor in
which Senaga has declared he
will be a candidate.4nd which
he miaht still win.
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PART II NOTES AND COMMENTS
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V,/UM IL/L_1'11 111 11W
The biennial congress of
the Socialist Internationals-_meeting at Vienna on 1-5 July,
is expected to pass strong reso-
lutions condemning Soviet actions
in Hungary and nuclear weapon's
testing; it will face internal
differences on colonialism and
various other international
questions. The congress, whose
constituent parties represent
a substantial proportion of the
Western European electorate,
will also be attended by Japa-
nese and other Asian delegations.
Conference Issues
The International has re-
peatedly gone on record as re-
buffing Communist overtures
for unity of action
on either the inter-
national or local
level, and the fifth
congress is expected
to reaffirm this
stand. Virtual un-
animity is antici-
pated on a resolution
condemning Soviet ac-
tions in Hungary.
ing issue will arouse
strong feelings.
European Socialist
parties have paid
AUSTRIA
?DENMAM
FINLAND
FRANCE
W. GERMANY
'ICELAND
ITALY
LUXEMBOURG
? NETHERLANDS
'NORWAY
SWEDEN
SWITZERLAND
UNITED
KINGDOM
special attention to this ques-
tion in recent months, particu-
larly since Dr. Schweitzer's
appeal for a ban on testing. A
number of them, such as the
powerful West German and Brit-
ish parties, have used the sub-
ject in one way or another as
a domestic political issue.
The congress may also be further
influenced by the Japanese par-
ty, which reportedly is sending
an unusually large delegation.
It is expected that the
congress will pass a strong
.,-further nuclear weapons tests
and institution of strict con-
trols over nuclear armament.
There may also be a tendency to
give added emphasis to the is-
sue as providing an area of
agreement between parties split
on other issues and as a bridge
between European and Asian
opinion.
Divisions are likely on
the question of Western Europe's
relations with other parts of
the world. Asian socialists
will seek recognition of colonial
problems and will try to obtain
the International's support for
ultimate liberation of the re-
maining colonies. On the other
hand, French Socialists are
WEST EUROPEAN PARTIES AFFILIATED
WITH SOCIALIST INTERNATIONAL
ELECTORAL STRENGTHS AS SHOWN IN MOST
RECENT PARLIAMENTARY ELECTIONS
(PERCENTAGE OF TOTAL VOTE)
20 30 40 50 60 0 80 90 100%
'Participates in present government.
ranged almost as solidly in de-
fense of their country's colonial
policy, and some other parties,
such as the Belgian and Dutch,
will seek to play down the is-
sue. Efforts will be made to
heal a serious schism between
the French and British parties
over the latter's condemnation
of the Suez intervention. There
are also reports that the North
African question will be brought
up at the congress, thus fur-
ther estranging the French
from the other parties.
resolution demanding an inter- West German Socialist
national agreement for a ban on leader Ollenhauer is scheduled
CONFlDENTI
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to make a major address on Ger-
man unification, reiterating
his standard attack on Bonn's
military alliance with the West
and proposing his own plan for
a collective European security
system to include all of Ger-
many, along with its neighbors
to the East and West, under
a mutual nonaggression pact.
There will be considerable
sentiment at the congress for
such a plan as well as for
establishing a central European
neutral area. Hugh Gaitskell,
leader of the British Labor
Party, will probably reiterate
his recent proposal for such a
belt.
The establishment of party
relations with Poland and Yugo-
slavia will reportedly be rec-
commended by the Norwegian,
Labor Party. Feelers from War-
saw to a Dutch Socialist leader
were reported last fall and
the question of ties with Tito's
party has been raised on various
occasions. A number of Social-
ist party delegations have
visited Yugoslavia since the
1955 congress and the consensus
appears to oppose establishing
permanent relations.
The importance of the con-
gress lies largely in the in-
fluence its discussions will
have on the views, held by the
member parties and, through
them, on European public opinion
generally. Most of the European
parties are either present mem-
bers of coalition governments
or, like the British and West
German parties, strong con-
tenders for power.
The International has no
mandatory powers over the na-
tional parties; its purpose is
officially defined as merely
"to strengthen relations between
the affiliated parties and to
co-ordinate their political at-
titudes by consent." It does,
nevertheless, have considerable
prestige in socialist circles.
Considering itself a lineal
descendent of the Second Inter-
national of 1889, it received
its present organizational form
at a July 1951 congress in Frank-
furt when the Western European
socialists finally gave up
their hope that it might prove
possible to co-operate with the
Communist and Socialist parties
of the Eastern European states.
It has given general guidance
to the development of postwar
democratic socialism, particu-
larly to the weaker parties,
and has focused international
attention on the achievements
of individual parties.
Within limits, moreover,
the International can exercise
a direct influence on socialists
in a particular country through
its power of deciding which of
two rival parties it will admit
to membership. In the past
decade this leverage has been
used to smooth over rivalries
between factions in several
countries, and within the past
year the International has made
various efforts toward bridging
the long-standing gap between its
Italian member party, the Demo-
cratic Socialists, and the
Nenni Socialists. A commission
of the International is to re-
port on this question at the
congress, but no definitive ac-
tion is expected--in part be-
cause of strong reservations
within the International re-
garding the Nenni party's rela-
tions with the Communists and
to an even greater extent be-
cause of recent developments in
Italy.
Some thought may also be
given to reconciling the two
factions within the Finnish
Social Democratic Party, whose
rivalry forced the party's with-
drawal from the government in
mid-May. The split could lead
to the Finnish Communists' ob-
taining some support from dis-
gruntled radical Social Democrats.
Besides its close associa-
tion with the various socialist
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CURRENT INTELLIGENCE WEEKLY SUMMARY
organizations of Western Europe,
the International also has ties
with similarly minded bodies in
the rest of the world. It
maintains close liaison with
the Asian Socialist Conference.
The Social Democratic Party of
Japan and Israel's labor party,
the Mapai, are full members of
the International as well as
of the Asian Socialist Confer-
ence. The Praja Socialists of
India and the Pan-Malayan Labor
Party have permanent observer
status at the International, and
a number of other Asian parties
are scheduled to send observers
to the Vienna congress.
Arab world are also quite limited.
Despite such efforts to
promote democratic socialism
in non-European areas, however,
the International's effective
influence on national policies
remains largely confined to
Western Europe. Its contacts.
with Eastern Europe are limited
largely to recognition of.the
Eastern European Socialist
parties in exile. With Africa,
it maintains only an indirect
link through the French So-
cialist Party's sponsorship of
the African Socialist Movement,
while its contacts with the
The Afghan government is
dissatisfied with the high
prices the USSR is charging for
economic development work under
the $100,000,000 Soviet credit.
Afghan leaders, while reluctant
to abandon their hopes for
rapid economic development
through the use of Soviet aid,
apparently are exploring alter-
native sources of funds. This
development comes at a time when
West Germany, Pakistan, and the
United States are moving to ex-
pand their roles in Afghanistan.
Afghan leaders may delay in-
definitely construction work on
some Soviet projects. Kabul
might even turn over to other
countries some of the projects,
or portions thereof, previously
alloted to the USSR, just as it
earlier turned over to the Rus-
sians responsibility for certain
projects previously surveyed by
West Germans.
When the USSR opened its
economic offensive in Afghanistan
in 1954, it undertook some proj-
ects which would have an im-
mediate, dramatic impact, as
well as some which had long-
range economic value. A bakery-
silo complex, petroleum storage
tanks, and street-paving in
Kabul all were built on terms
generally satisfactory to Afghan-
istan. Therefore, when Bulganin
and Khrushchev during their
December 1955 visit offered a
$100,000,000 loan at only 2-per-
cent interest and with deferred
payment terms, the Afghans pre-
sumably thought they were obtain-
ing another advantageous arrange-
ment.
Both countries quickly
reached agreement in principle
on 19 major projects the USSR
was to construct under the new
loan. The USSR Gent technicians
and equipment to survey most of
the projects in the summer of
1956, Although in a few cases
there is still no information
that surveys have been either
started or completed, in most
instances, both preliminary
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engineering and cost surveys
were finished by last fall or
winter. Little further work
was accomplished during the
winter months because of roads
blocked by snow or mud.
'High Costs :and Delays in .Work
Despite Afghan requests
that.the USSR proceed on .,the--
basis of-previous West German
surveys of some Hof the projects,
the Russians insisted on doing
new surveys before they would
undertake any work. The Afghans
reportedly are dismayed by the
prices charged by the Soviet
Union for survey and construc-
tion work, Soviet prices being
much higher than those charged
by the Germans. In one ex-
treme case, that of the Pul-i-
khumri hydroelectric project,
the USSR reportedly charged
$135,000 for a survey done
earlier by the Germans for $8,-
000.
cons ruc-
tion contracts on many projects
have not yet been signed and
the only actual construction
activity under way on 20 June
1957 was on the petroleum storage
depots at Pul-i-khumri and Pul-
i-matek in northern Arfghaniata-lp
and on certain parts of the port
of Qizil Qala and nearby road
systems, through which much
trade and bloc military aid
deliveries pass..
.w...--R.?- All.vreather road
-----rte-Broad gauge railroad
-Narrow gauge railroad
PAKISTAN
TENTATIVE SOVIET PROJECT SITES
-CONSTRUCTION BEGUN ! Petroleum storage tank
SURVEY UNDER WAY OR COMPLETED Hydroelectric project
UNDER CONSIDERATION / Irrigation dam
? Port
0VOW
Pass
. All"K rll ri
Kl1Sa 4Mt#?!
"tear J,r dr4priJi;
Caspian U S S R
/L/Sea _ ~~
ers ian~I
ICiulf ;,\
{' Motor repair shop Fertilizer plant
-Salang Pass road Laboratory
- Jalalabad-Torkham road * K Airfield
*Soviet construction reportedly rejected.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
The Afghans are concerned
that most of the $8,000,000 or
more expended by the end of 1956
has gone for surveys and serv-
ices rather than for construc-
tion. They have been especial-
ly concerned over the $6,200,-
000 price tag originally placed
on the reconstruction of the
Kabul airport. After long ne-
gotiations, the USSR agreed to
reduce the price to $5,700,000,
still almost twice the price
asked earlier by the Germans
for nearly the same work.
The Afghan Ministry of
Public Works now has been
ordered to obtain separate esti-
mates from the USSR for each
component of the project, and
to undertake those parts which
the ministry itself is competent
to handle. The ministry re-
portedly plans to award the
USSR a contract to build the
runway and to stall on the re-
mainder of the project in the
hope that later it can get a
different contractor to do the
buildings.
In addition, following
receipt of Soviet cost surveys,
the Afghans are said to have
decided to build the Jalalabad-
Torkham road without Soviet aid
and to reject the Kabul fertili-
zer plant as too large for Af-
ghan needs.
Afghan Reaction
Since the Afghans pride
themselves on their bargaining
skill, the gradual realization
that they are not receiving
the better part of the bargain
is apparently galling them.
They are reacting by seeking
alternative sources of funds
and technical aid from such
countries as the United States
and West Germany.
Recent Afghan requests for
American aid have included one
for US petroleum companies to
build storage facilities and to
retail oil supplies in Afghan-
istan. There has also been in-
tensified pressure on the United
States to begin a program of
railroad construction in the
country.
West German Offers
Siemens has had extensive ex-
perience there and recently com-
pleted the first portion of the
Sarobi hydroelectric project,
which has more than doubled
Afghanistan's generating capacity.
Credit terms for future contracts
between Afghanistan and Siemens
reportedly were discussed.dur-.
ing the visit of a West German
economic delegation to Kabul in
May. These terms provide for
Siemens to extend credit for an
eight-year period for 75 percent
of the cost of any project it
undertakes.
The West German delegation
had been sent by a government
committee newly organized in
Bonn to aid semideveloped areas.
The committee reportedly has
about $12,000,000 available for
technical assistance to Asian
nations, of which about $1,200,-
000 is earmarked for Afghanistan
if a satisfactory arrangement
can be achieved. Bonn is pre-
pared to establish an economic
advisory committee in Kabul and
supply teachers and equipment
for a West German technical
school as well as technicians in
a number of specific fields.
Although no definite agreement
has been signed, the Afghan
cabinet reportedly has approved
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CURRENT INTELLIGENCE WEEKLY SUMMARY
acceptance of the program in
principle.
In addition, a West German
economic commission reportedly
is to visit Kabul this summer
to offer a loan of approximately
$14,000,000. Although the loan
is ostensibly to be from private
German firms, 70 percent of it
is to be backed by the Bonn
government. No definite terms
have been decided on, but pre-
liminary information is that
it will be an eight-year credit
with the possibility of a five-
year extension.
Alternative Attractions
.Afghanistan originally ac-
cepted the Soviet $100,000,000
loan shortly after experiencing
an economic blockade by Pakistan
and at a time when there ap-
peared to be no other source
than the USSR for large-scale
economic assistance to build up
Afghanistan rapidly and make it
economically independent of
Pakistan. At present, Daud
would be reluctant to admit that
his policy of relying so heavily
on the USSR was mistaken. He
would be equally reluctant, how-
ever, to pay inflated prices
SECRET
for Soviet development projects
if he had West German or other
Western offers from which to
choose as well. Negotiations
now under way with West Germany,
the United States, and Pakistan
raise the possibility that in
the near future Daud may have
alternative attractions to use
in bargaining with Moscow.
Daud presumably would hesi-
tate to antagonize the USSR,
which is still his sole source
for the arms he feels are neces-
sary for modernizing Afghani-
stan's armed forces. If the
USSR continues to charge such
high prices, however, Daud might
seriously consider delaying
construction work on Soviet
projects until he had thoroughly
explored other possibilities.
This he could do, since Kabul
has signed few actual contracts
with the USSR and therefore has
not obligated the majority of
the $100,000,000 loan funds.
If other more attractive offers
are made, Daud might turn cer-
tain projects hitherto reserved
for the U R over other
on-
tractors.
(Concurre In by ORR)
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