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August 14, 2020
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August 27, 2020
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May 9, 1961
f ZWZMWM. WZMZ/ZZZZ/7/Z 4////////7/MIVIZZ/Z/f eApproved for Release: 2020/08/11 CO2049783 I NOV 40111%�11l11. 3.3(h)(2) 3.5(c) 9 May 1961 Copy No. C CENTRAL INTELLIGENCE BULLETIN -TOP-SECRET- Approved for Release: 2020/08/11 CO2049783 pproved for Release: 2020/08/11 CO2049783 �r171'"-3tVITM- -T010-SEC-RU-- Approved for Release: 2020/08/11 CO2049783 'Approved for Release: 2020/08/11 CO2049783 L IJEA...,EtE.4 4 9 May 1961 CENTRAL INTELLIGENCE BULLETIN CONTENTS 1. Laos: (Page t) 2. Angola: South Africa giving Portugal increased arms aid. (Page ii) 3. Congo: Spaak says Belgian advisers should be re- moved from Congo. (Page it) 4. USSR: Helicopters conduct night anti-submarine warfare operation. (Page tit) 5. Iran: New prime minister lifts press control; plans to punish several officials for corruption. (Page tit) 6. Morocco: I4assan II criticized both by supporters and by left-wing opposition. (Page itt) 7. Jordan: Adverse domestic reaction to Husayn's en- gagement. (iv) 8. Great Britain: Two key trade unions express sup- port for Labor leader Gaitskell's pro-NATO policy. (Page iv) 9. Venezuela: President Betancourt calls for economic austerity program. (Page iv) 10. De Gaulle attempts to put Algerian situation in perspective. (Page v) TOP SECRET z Approved for Release: 2020/08/11 CO2049783 Aclproved for Release: 2020/08/11 CO204974 BURMA Nom Bac V) Sa\rnNeual j LUANG' PRA Arj-z--- 1 _t .... Muong Houn .... AM NEUA . Luang Prabang'. i 4/..."? \...",., ...,,-.-......-k-r--..-. -./..r"....� / , -,r;.........-' X I E N G ArL ... ..4'-s.." SAYABOURY .r.t,KHOU N M B ANG an Ban .. 7 S ou Khoun r Muon Kasv ....) 8c-in ph.k Xieng Khouang s \i�. IN -.,....n-...... ) Ban Ta Viag /, .1 / I. ;,.......eTha Thorn / .amone Vang Vreng \ / ' L Y E N T IA NE 4 Borikhonec / Ban to Heup Pak Sane ; �-.1 Kam Keu / % Vienna KHAMMAUANE Nhommargt NORTHERN LAOS GOVERNMENT Forces in 411 KONG LE - PATHET LAO I Coroct KONG LE - PATHET LAO AREAS 0 50 ,109 -- TRAIL' " STATUTE MILES C) ROUTE NUM 6105o6 Thakhek Mahaxay van nakhe Pha Lane - Tchepone L1011,9 SAVANN:AKH ET Alt.VIETNAM 9 May 61 CENTRAL INTELLIGENCE BULLETIN Map Page Approved for Release: 2020/08/11 CO2049783 'Approved for Release: 2020/08/11 CO2049783 ihkid s 14./1 ...,,LJ4.-.1AL:.� 1 CENTRAL INTELLIGENCE BULLETIN 9 May 1961 DAILY BRIEF Laos: No agreement was reached in negotiations held on 8 May in the Nam Lik area. The government delegation of (pied fered to go to enemy-held Namone village for military, talks jp3 if the other side would come to government territory for po- litical discussions, but the enemy delegation insisted that the r- a,.s talks be held at the same place, presumably Namone.Mhoumi j40je"io now plans to ask the ICC to intercede to make the cease-fire more effective and to take other steps to circumscribe enemy freedom of action. He also says he will request the ICC to spon- sor tripartite political talks in Vientiane between Souvanna, Souphannouvong, and himself. While the presence of ICC representatives in both Vientiane and Xieng Khouang should � help to facilitate a settlement between the two sides, the ICC is not empowered to play the direct role envisaged by Phoumg a.Jittle action is reported from the main fronts, although fighting continues in the area south and east of the Plaine des Jarres between Meo guerrillas and enemy forces. Scattered skirmishing is reported elsewhere. The continuing redeploy- ment to better positions of both government and enemy forces. howe e increases chances of more serious fighting. orations were scheduled through 8 May. (Backup, Page 1) (Map) / TOP SECRET Approved for Release: 2020/08/11 CO2049783 Aproved for Release: 2020/08/11 CO204974 Pointe Noire Brazzaville Banana�.�11Z7 Matadi \Kitona 6111504 2 Luanda .Gemena Scattered Force MOBUTU LIBERIA 200 TUNISIA NIGERIA MOB UTU Scattered Forces Leopoldv� ysville 0 C of the Conao Bangassou L' � Boende IroT'lga Bondo GIZENGA 7,000 MALAYA 470 Francqui KALONJI 1,500 uluabourg � Bak anga GHANA 1600 Approximate area nominally contra led by: Kasavubu-Mobutu 1-1 Clizenga Kalonji Tshombe El United Nations Forces (Service Forces � Selected road not included) Selected railroad Selected airfield STATUTE MU ..EC 400 LIBERIA Luputa,_ pmin ETHIOPIA an eyville ETHIOPIA INDIA Bukav Albertville NIGERIA 900 �Manono TSHOMBE 7,000 FlisabthvilIe / NIGERIA Usurnbura IRELAND 650 SWEDEN 650 9 May 61 CENTRAL INTELLIGENCE BULLETIN Map Page Approved for Release: 2020/08/11 CO2049783 II 'Approved for Release: 2020/08/11 CO2049783 %./.1 I -110 Portugal - South Africa: The continuing unrest in Angola 0K apparently has led South Africa to reconsider its refusal to provide Portugal with substantial military assistance. 41, the South Africans have agreed to furnish z,Uuu twenty-pound bombs and are assisting the Portuguese in ob- taining 5,000 rifles. As recently as 21 April, the Verwoerd government declined to provide assistance beyond the 500 bombs already furnished pleading internal security needs. neintorcement oI rortuguese forces in Angola is continu- ing. Between 1,200 and 1,500 troops arrived in Luanda by ship on 2 May; 2,200 additional troops embarked at Lisbon on 5 May, and are scheduled to arrive in Angola about 13 May. With these reinforcements, the security forces in the prov- ince will number about 14,000, of whom approximately 6,000 are white. Contrary to recent Portuguese press reports, there is no reliable information that the back of the rebellion has been broken. (Backup, Page 3) \ Congo: 4 JUN does not plan to use its forces to disarm Katangais armed e forces. the UN does not 4, consider tnat its manctate goes oeyona nuerposing its troops in case of civil war or tribal conflicts, and does not intend to take the initiative in disarming troops anywhere in the Congo. Tension continues high in Elisabethville, however, and Katan- ga's forces reportedly have been alerted to repel any "raid" by UN force17 aelgian Foreign Minister Spaak told Ambassador Mac- Arthur on 5 May that Belgium was ready to cooperate with the UN and that Belgian "political advisers" should be with- drawn from the Congo as rapidly as possible. He also en- dorsed a withdrawal of Belgian military personnel, but ob- served that these should not be withdrawn precipitously 15...s..9 9 May 61 DAILY BRIEF ii TOP SECRET A Approved for Release: 2020/08/11 CO2049783 Approved for Release: 2020//08/11 CO2049783 4 �."1 (,-.1.L.A.,111.4-4 Iffbeir departure lead to chaos in the Congolese armed forces-7 begrifVfat known night anti-submarine warfare (ASW) ia-5-ration by Soviet helicopters was conducted in late April by eleven Hounds (1E-4s) of the Black Sea Air Force. A submarine and a surface ship participated in the activity. Helicopters are assigned to Soviet fleets to augment BE-6 seaplanes which have the primary airborne ASW role. Heli- copters configured for ASW carry depth charges, radar, and magnetic anomaly devices (MAD) in addition to sonobouys. Some Soviet destroyers are equipped to carry helicopters, thus Increasing the seaward range of these aircraft. The recent activity in the Black Sea is a further reflection of the continuing Soviet emphasis on incireasince ASW ranahili- ties. Iran; Trime Minister Ali Amini believes his main task in the immediate future is to produce some concrete benefits for the public to forestall a "red revolution." Meanwhile, he has lifted press control, and instructed the various security organizations to limit their activities to their proper spheres of responsibilities. Amini hopes to prosecute and punish sev- eral highly placed officials, including military, for corruption, and the special courts being formed for this purpose will be established in about two weeks. Radio Moscow has reported factually on the situation but the Soviet-controlled clandestine radio National Voice of Iran continues its attacks, insisting that a change of cabinet is meaningless and that the Shah's re- gime must be overthrow_9 (Backup, Page 5) Morocco: The delegation by King Hassan II of his powers as president of the council of ministers to the chief of his per- sonal cabinet, Ahmed Reda Guedira, is another indication that the King intends to continue his personal and absolute rule for some time. Both the Istiqlal party, the major political organ- ization supporting the King, and the left-wing opposition Na- tional Union of Popular Forces have criticized the King's action. 9 May 61 DAILY BRIEF iii i< Approved for Release: 2020/08/11 CO2049783 1 VI t31.Lik.II. IL 'Approved for Release: 2020/08/11 CO2049783 The press is speculating that a cabinet reshuffle may be im- minent. A new flare-up of violence involving the left-wing Moroccan Labor Union and its Istiqlal-created rival, the Gen- eral Union of Moroccan Workers, has also contributed to the growing instability in Morocco. (Backup, Page 6) Jordan: (eaction in Jordan to King Husayn's announcement on 1 May of his engagement to a British girl has ranged from dismay to anger, with a number of Jordanians predicting that this "ill-advised" step will lead to the King's "finish." Husayn's authority is such that he probably can proceed with his marriage 6 k. plans in the face of a sullen but not openly rebellious people. The American ambassador nevertheless believes the danger to the King's position is real and that as the depth of adverse feel- ings become more annarent to hi7 he may possibly consider abdicatioig (Backup, Page 7) Britain: he American Embassy in London sees in two separate trade union votes last week a strong trend of support for Labor party leader Hugh Gaitskell's pro-NATO policy, and against the position of last year's Labor party conference call- ing for British unilateral nuclear disarmament. The votes of these two unions should be more than enough to bring the an- nual party conference this fall back into line with the party's leadership on defense issues and should help repair the party's popular standing. Some trade union elements who support Gaitskell's pro-NATO policy, however, continue to oppose US air and naval nuclear bases in Brits...J.237 (Backup, Page 9) /< � Venezuela: The economic austerity program presented to 0 k Congress on 5 May is a comprehensive effort by President Betancourt to restore business confidence and halt the deterio-zt-J-tit) ration in Venezuela's financial situation. The government, cite�i. which has been under strong pressure from both rightist an Communist-leftist elements, had thus far generally resorted to financial expedients instead of politically unpopular remedial measures. The new program calls for a 10-percent reduction 9 May 61 DAILY BRIEF iv TOP SECRET e' , Approved for Release: 2020/08/11 CO2049783 Approved for Release: 2020/08/11 CO2049783 %is ur- ont,nti � in salaries of public employees, increased taxes which do not affect the key foreign-owned oil industry, and a reduction in expenditures of the government-owned economic enterprises now operating at a substantial loss. (Back- up, Page 10) *France-Algeria: De Gaulle's 8 May speech, which was partly an effort to set the April military insurrection in per- spective and turn French public attention to the possibilities of future progress, contained a hint of French official appre- hension over tension among the European settlers in Algeria. He appealed to the settlers to "renounce absurd and agitated dreams." To reinforce De Gaulle's appeal, units of the French Mediterranean fleet appeared off Algiers, and the Algiers po- lice repeatedly broadcast warnings that settlers should not play the game of the extremists on both sides." asench of- icials close to De Gaulle have expressed consider- ble anxiety over the possibility of more trouble with the settlers and the army De Gaulle's renewed offer to negotiate the future of Algeria with "Algerian elements, primarily those fighting us," was made against a background of frequent reports that the rebel government in Tunis is ready to begin whenever the French set a date. Presumably for tactical reasons, he coupled this with the usual reminder that France would build a "new Algeria without the rebels if no agreemcnt can be negotiated. 9 May 61 DAILY BRIEF TOP SECRET UI Approved for Release: 2020/08/11 CO2049783 Approved for Release: 2020/08/11 CO2049783 arA...rtr. Niue' Situation in Laos aouvanna Phouma, who claims he will not attend the Geneva Conference, has returned to Xieng Khouang from Phnom Penh, possibly to assume a more direct role in negotiations with the Boun Oum government. He recently told Ambassador Trimble in Phnom Penh that he would have to contend with a well-organ- ized and highly trained leadership core of "perhaps 200" Com- munists in the Pathet Lao, but expressed confidence that he could impose his will. He insisted he could keep major cabinet portfolios�such as defense, interior, and foreign affairs�out of Communist hands by holding these positions himself if nec- essary. He felt that new general elections could not be held for seven or eight months at the earlie!9 Outlining his program in some detail to Ambassador Triin le, Souvanna said his government would maintain close contact with the people and strive to meet their needs while setting an example of sacrifice and hard work. He held that the abandonment by present Laotian leaders of the country's traditional socialism, based on simple small holdings, was the root of much of Laos' difficulties. Souvanna felt that for- eign economic aid, to be accepted unconditionally from both East and West, should be on a bilateral basis but that there would be no need for military aid, since the army would be reduced to two battalions. In addition to a police force, he envisaged a universal military training program in which all young men would receive ten months' instruction in military matters, manual trades, and good c1tizensh27 /he Boun Oum government, meanwhile, plans to submit its recommendations to King Savang today on the composition of the government delegation to Geneva. Phoumi still holds the view, apparently shared by the King, that initially at least the delegation's role should be purely consultative. He feels there can be no serious negotiations with the other side until an international framework is established and foreign influence excluded from Laos The Communists, foreseeing protracted negotiations over formation of a new Laotian government, are publicizing the SECRET 9 May 61 CENTRAL INTELLIGENCE BULLETIN Page 1 Approved for Release: 2020/08/11 CO2049783 Approved for Release: 2020/08/11 CO2049783 vare 'NS possibility that the three forces in Laos will have to be indi- vidually represented at the Geneva Conference. On 8 May, Moscow rebroadcast a statement by IChamsouk Keola, the "acting premier" of Souvanna Phouma's Xieng Ithouang "gov- ernment,*1 which insisted that Vientiane, the Pathet Lao, and the "lawful government" in Xieng Khouang each would have to send a delegation to Geneva if a coalition was not formed by the opening of the conference. a new training school for instruction in "new weapons and heavy weapons" will open in the Plaine des Jarres area on 8 May. troops are to be sent to Hanoi for communications training. There have been previous references to such training being conducted at Hanoi. -SECRET_ 9 May 61 CENTRAL INTELLIGENCE BULLETIN Page 2 Approved for Release: 2020/08/11 CO2049783 Approved for Release: 2020/08/11 CO2049783 I %Jr .3E.alAIXL.1 I Noe Portugal Obtains Military Assistance in South Africa The Union of South Africa has been attempting to expand its armaments industry and has expressed an interest in sup- plying the Federation of ..hodesia and Nyasaland as well as Portugal with munitions. the Union will begin producing �the Belgian FN rifle in August and will be manufacturing its own bombs next year. In the meantime, however, South African officials told the Portu- guese that they plan to purchase 40, 000 rifles in Belgium. They indicated a willingness to supply Portugal with 5,000 rifles out of their present stock, provided the Belgian factory could replace them within a short time. The efforts of the Portuguese to bolster their military forces and materiel in Angola were reflected in a speech by the new overseas minister, to the Angolan legislative council on 2 May. He indicated that Lisbon was determined at all costs to crush the rebellion in the province and maintain its sovereignty in Portuguese Africa, He also implied that what was good for Portugal in the past would be good for it in the future. Political and socio-economic reforms in the overseas provinces were, he said, of secondary importance for the moment. The American Embassy in Lisbon feels that the speech failed to consider the question of Portugal's ability to carry out such a policy. It cites the opinion of responsible officials that within a year or year and a half the nation's resources would be exhausted. The embassy feels that at that point a political evolution or revolution of some kind would be in- evitable. A prolongation of Portugal's military effort in Angola might have repercussions on its ties with Western defense. Lisbon would temporarily sus- pend its NATO commitments in order to have all its troops available for Africa. 9 May 61 CENTRAL INTELLIGENCE BULLETIN Page 3 Approved for Release: 2020/08/11 CO2049783 Approved for Release: 2020/08/11 CO2049783 '41�V The Situation in the Congo The UN is moving to apprehend white mercenaries in the Katanga armed forces. According to press reports, seven South Africans have been taken into custody by UN forces in northern Katanga, while another group of South Africans has surrendered to the UN in Elisabethville. These developments, together with the continued silence of UN officials with regard to Tshombe's arrest, have probably heightened concern re- garding a possible UN move to disarm all Katangan forces. The UN attitude toward an effort to bring Tshombe to trial remains unclear. During the period when Tshombe was under detention at Coquilhatville, UN officials indicated that they had no plans to intervene on his behalf. However, the widespread criticism that would be stimulated by a new po- litical execution in the Congo might lead Bornboko to dismiss charges against Tshombe in return for his concession of Leo- poldville's sovereignty over Katanga. Reports from Coquilhat- ville indicate that Bomboko--who has dominated the political conference there and who appears to have instigated Tshombd's arrest--is closely supported by Congo Army chief Joseph Mobutu. the financial situation in Orientale Province "grows daily more and more alarming," "all the parties of the nationalist bloc are going to unite soon and fuse into one... party which will be called... the Lumumba African National Party." Such a move might be designed to mobilize leftist deputies with a view to- ward an reconvening of the Congo parliament. lir �cil9P�SEGRE-T 9 May 61 CENTRAL INTELLIGENCE BULLETIN Page 4 Approved for Release: 2020/08/11 CO2049783 Approved for Release: 2020/08/11 CO2049783 NOW Plans of New Iranian Prime Minister Amini hopes that the "drastic and spectacular" gestures which he is planning will impress the public sufficiently to con- vince them that he is "different" from the other prime ministers. However, he needs the Shah's cooperation and feels he must work carefully to prevent the return of the Shah's old suspicions of prime ministers who try to goverV (Amini claims he won the Shah's permission to exercise com- plete freedom in choosing his cabinet and in dissolving the Majlis whenever he considers it desirable. The Shah insisted on re- taining control of the army, however, and on retention of Gen- eral Amir-Azizi as minister of the interior. Amini conceded these points but insisted in turn that he must have a greater voice In determining the effectiveness of military spending. Amini be- lieves he has persuaded the Shah that all cabinet ministers will report to the Shah only through the prime minister. The minis- ters of war and interior and the chief of the national police were specifically singled out by Amini in this regarli) CAJnini has described the government institutions as "so packed with incompetents and so ineffective" that major reor- ganization is required practically everywhere. His problem is to assemble a capable group to put the ministries on a proper working basis without losing the Shah's confidenc.7. g_mini's assessment of his country's situation and require- ments is similar to that of most preceding prime ministers . All have been undercut, however, by the intrigues of the Shah, who attempts to keep any official from becoming too powerful by constantly playing one against the other. Aminits success will depend on his ability to isolate the Shah from such private contacts and, perhaps more importantly, eliminate the cour- tiers around the Shah who use their relationship with the court for their own private advantai9 9 May 61 CENTRAL INTELLIGENCE BULLETIN Page 5 Approved for Release: 2020/08/11 CO2049783 Approved for Release: 2020/08/11 CO2049783 Nue Moroccan King Delegates Certain Powers ..ven prior to the publication on 4 May of the decree dele- gating certain of the King's powers, Guedira was reported to be the most powerful man in Morocco after King Hassan IL Guedira was said in effect to be running the Moroccan Govern- ment as a result of Ha,ssan's ineffectiveness in performing his official duties and to be the only person from whom ministers could obtain decisions. He is believed to have antagonized the ministers of foreign affairs and interior by making ambassa- dorial and internal appointments without consulting them. He is also widely believed to have "sold out" to the French and to have extensive financial holdings outside Morocco] The Istiqlal daily newspaper Al Alam characterized the delegation of powers as incompatible With the popular will, which wanted a government organized on sounder foundations. At Tahrir, published by the left-wing National Union of Popular Forces (UNFP), called for a government based on popular will and stated that Morocco lives "a year after the great experiment began, in constitutional anarchy under the dictatorship of an ir- responsible and corrupt administration which is submitted to neither ministerial nor governmental control." The Istiqlal-sponsored General Union of Moroccan Workers (UGTM) has the avowed purpose of liquidating the left-wing Moroccan Labor Union (UMT), which is aligned with and forms the base of the UNFP. The far superior strength of the UMT, however, was evident during the separate parades staged by the two groups in Casablanca and Rabat on May Day. Just prior to May Day the Rabat regional chief of the UMT informed an em- bassy official that his organization was "ready for a test of strength." The King, while apparently unwilling either to en- dorse the,UGTM or challenge the strength of the UMT, publicly deplored the division in the ranks of labor and expressed a hope that next year would see a "rediscovery of unity and harmony." �SEeRE-T 9 May 61 CENTRAL INTELLIGENCE BULLETIN Page 6 Approved for Release: 2020/08/11 CO2049783 Approved for Release: 2020/08/11 CO2049783 1 %PO JordanicL11 euuuiis LV zung IlUbctyll Engagement n g Husayn is not yet aware of the depth of adverse feeling among the Jordanian people about his betrothal to Antoinette Gardiner, the daughter of a British military ad- viser in Jordan. American Embassy personnel have hardly been able to locate a single Jordanian who approves or is even neutral regarding the King's decision. Even the simu- lated public display of well-wishing has fallen short of the minimum that might be expected as rudimentary courtesy to the Monarch. Instead, the ambassador reports "there has been a relative and pointed silence in the land. Elusayn's supporters within the government, including Cabinet ministers, are making no particular effort to hide their feelings that the King has betrayed them and violated his trust as ruler of the country. Foreign Minister Musa Nasir has indicated incomprehension that Husayn could have made such an unwise and "dangerous" decision--an act, he said, of a "spoiled child." These supporters feel that if the King were not going to marry an Arab or Moslem, at least he should marry someone whose station in life is comparable to his own; and the fact that 1Vliss Gardiner is a British com- moner is viewed as almost the ultimate of insults. Among typical comments heard is one that is heavy with sarcasm: "Now they (the British) are all our relative..0 nongovernment circles there is strong criticism of the government for not having prevented the engagement or re- signed when the announcement was made. In addition, there is a general feeling that the King's efforts toward a rapproche- ment with the UAR were patently deceitful�an attempt to win favor with the people before announcing his controversial wed- ding planjg be US ambassador believes that as the present state of shock passes, opposition to Husayn's decision may take more concrete and collective form. A member of the Baath par!V 9 May 61 CENTRAL INTELLIGENCE BULLETIN Page 7 Approved for Release: 2020/08/11 CO2049783 Approved for Release: 2020/08/11 CO2049783 IJEAsINEd I 'Naafi Ex Jordan has said that he knows of no present Baath plans to exploit the situation, but that "of course" the party eventu- ally will, and the first occasion might be at the time of the wedding itself. On 8 May it was announced officially that the wedding probably will be on or about 25 May, Jordan's Inde- pendence Dazj �SEERET 9 May 61 CENTRAL INTELLIGENCE BULLETIN Page 8 Approved for Release: 2020/08/11 CO2049783 Approved for Release: 2020/08/11 CO2049783 Nftiova fi...4111L IC%L.a Nair British Labor Party's Defense Policy kwo of Britain's largest trade unions, the 890,000-member Amalgamated Engineering Union (AEU) and the 354,000-member Union of Shop, Distributive, and Allied Workers (USDAW) voted last week� to support Gaitskell's policy of continued loyalty to NATO with the US supplying the nuclear deterrent. Both of these were among the four major trade unions which voted in favor of unilateral British nuclear disarmament at the party conference last October where the Gaitskell policy was defeated by 297,000 in a total vote of 6,381,09D rahe American Embassy in London considers it unlikely that these reversals will affect the unilateral stand of the Transport and General Workers Union (TGWU)--Britain's largest--but be- lieves it could influence the votes of the railwaymen whose "uni- lateralist" stand last year passed by an extremely narrow. mar- gin. Last week the union's executive voted to support the Gait- skell policy. Both the TGWU and the railwaymen will vote on the issue in July7 Even if all other unions, Labor party constituencies, and the allied Cooperative party reaffirm last year's stands, how- ever, the AEU and USDAW switch, involving more than a mil- lion votes, would be more than enough to reverse the votes to be taken by the Trades Union Congress and Labor party confer- ences this fall. This should greatly ease Gaitskell's problems of keeping the Labor party members in Parliament pledged to collective security, undercutting the dissident campaign against him as party leader, and presenting the party as a cohesive organizatioD l_lother resolution approved by the USDAW may presage new trouble for Gaitskell, however, and will furnish more am- munition to the neutralists. This calls for "an end to the need" for American nuclear bases in Europe and Britain and opposes the basing of Polaris missiles in British waters. The official position of the party leadership states that for the present British soil must be available for US and NATO bases, with- out mentioning whether nuclear weapons should be allowed on them7 CONFIDENTIAL 9 May 61 CENTRAL INTELLIGENCE BULLETIN Page 9 Approved for Release: 2020/08/11 CO2049783 Approved for Release: 2020/08/11 CO2049783 t.A...n lir I LILA 11 1 1 11. La - Nue vorre Venezuela's Economic Problems Venezuela has suffered four consecutive years of unbal- anced budgets totaling about $1 billion. The deficit for the fiscal year ending 30 June may amount to $300,000,000, or only about $20,000,000 less than the preceding year. The government has been largely ineffective in its efforts to halt the decline of foreign exchange reserves which began in early 1958, and there has been a considerable flight of capital from Venezuela. Reserves have fallenfrom $1.38 billion at the end of 1957 to about $600,000,000 at present, and the latter figure does not account for about $330,000,000 of medium- and short- term loans for which foreign exchange must eventually be pro- � vided. The previous minister of finance resigned in March after only four months in office, largely because he had failed to obtain cooperation from the rest of the cabinet in his economic program. he present minister, Andres Otero, who apparent- ly also has orthodox economic views, advised Ambassador Sparks last month that he was "alarmed" by the financial con- /ditions he discovered on taking office] Strong political considerations are the primary factor in the Betancourt regime's reluctance to apply austerity measures, lEuch as dismissing about 20,000 government employees whom the finance minister regards as exces_si The level of unem- ployment is dangerously high in Caracas--focal point of po- litical violence since the overthrow of the Perez Jimenez dic- tatorship in January 1958, Moreover, Betancourt's Democrat- ic Action party has a socialist program which makes political- ly inadvisable the application of purely economic remedial meas- ures in a number of public economic enterprises, including the petrochemical and steel institutes, the air, rail, shipping, and telephone lines, the hotel chain, and credit organizations. Most of these run large deficits, possibly exceeding a total of $100, - 000,000 annually. According to the American Em- bassy in Caracas, the government's agrarian credit bank alone lost $90,000,000 during the past two years. Nationalist feelings CONFIDENTIAL 9 May 61 CENTRAL INTELLIGENCE BULLETIN Page 10 Approved for Release: 2020/08/11 CO2049783 Approved for Release: 2020/08/11 CO2049783 --N.J1Nti'1l.J1.:�111 I 11-1 Li NOS9 about these corporations were indicated by the strong and ex- tended opposition to the Betancourt-supported contract with a private foreign firm which assists in management of the gov- ernment steel institute. According to the American Embassy in Caracas, the gov- ernment's restrictive policies toward the foreign-owned oil industry, which contributes the bulk of government revenues, have been partly responsible for the sharp decline in reinvest- ment in the industry each year since 1958 and have probably frightened away potential investors in other fields. Betancourt and his minister of mines and hydrocarbons have frequently said that no further private development of Venezuelan mineral and petroleum resources will be permitted. They have also in- dicated that the government's objective is to extend control over oil industry operations, including pricing and price discounts on crude oil sales, and to reach international governmental agreements on sharing markets and controlling prices with other major oil exporting countries. Betancourt's timing of the austerity program is probably attributable in part to a belief that his regime is in a stronger political position than previously after suppressing frequent leftist violence and rightist plotting during the past eight months. The program is also designed to obtain favorable consideration of a Venezuelan request for extensive US aid, which is under negotiation. Moreover, Betancourt may have almost exhausted the financial expedients which have been available to him, and further recourse to such action would probably have undercut his moderate and conservative political support, reduced his ability to apply corrective measures subsequently, and worsened adverse economic conditions. CONFIDENTIAL 9 May 61 CENTRAL INTELLIGENCE BULLETIN Page 11 Approved for Release: 2020/08/11 CO2049783 Approved for Release: 2020/08/11_CO2049783 ',WI V 1.L11:41Y 171 lune THE PRESIDENT The Vice President Executive Offices of the White House Special Counsel to the President The Special Assistant for National Security Affairs The Scientific Adviser to the President The Director of the Budget The Director, Office of Civil and Defense Mobilization The Director, National Aeronautics and Space Administration Chairman, Board of Consultants on Foreign Intelligence Activities The Department of State The Secretary of State The Under Secretary of State The Director, International Cooperation Administration The Deputy Under Secretary of State for Political Affairs The Deputy Under Secretary of State for Administration The Counselor and Chairman of the Policy Planning Council The Director of Intelligence and Research The Treasury Department The Secretary of the Treasury The Department of Defense The Secretary of Defense The Deputy Secretary of Defense The Secretary of the Army The Secretary of the Navy The Secretary of the Air Force The Assistant Secretary of Defense (International Security Affairs) The Assistant to Secretary of Defense (Special Operations) The Chairman, The Joint Chiefs of Staff Chief of Naval Operations, United States Navy Chief of Staff, United States Air Force Chief of Staff, United States Army Commandant, United States Marine Corps U.S. Rep., Military Committee and Standing Group, NATO Supreme Allied Commander, Europe Commander in Chief, Pacific The Director, The Joint Staff The Director for Intelligence, The Joint Staff The Assistant Chief of Staff for Intelligence, Department of Army The Director of Naval Intelligence, Department of Navy The Assistant Chief of Staff, Intelligence, Department of the Air Force The Department of Justice The Attorney General The Federal Bureau of Investigation The Director The Atomic Energy Commission The Chairman The National Security Agency The Director The United States Information Agency The Director The National Indications Center The Director CONFIDENTIAL Approved for Release: 2020/08/11 CO2049783 /4" Approved for Release: 2020/08/11 CO2049783