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June 11, 1958
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/ < /////////////////r/I /// f Approved for Release: 2019/08/20 CO2985835 �MP 5RT IE 11 June 1958 3.5(c) 3.3(h)(2) Copy No. 14 0 CENTRAL INTELLIGENCE BULLETIN DOCUMENT NO . C IN C!.A.J. NEXT REVIEW DATE: topt I-fAED TO: TS ) Oh /4114.� ,D,11 TOP SECRET REVIEWER: _ Approved for Release: 2019/08/20 CO2985835 Aproved for Release: 2019/08/20 CO2985835 _ _ 0114 4-0-121-&EGRET Approved for Release: 2019/08/20 CO2985835 � Approved for Release: 2019/08/20 CO2985835 " 11 JUNE 1958 I. THE COMMUNIST BLOC USSR willing to earmark some gold reserves as backing for Indonesian �currency. II. ASIA-AFRICA Rebels resume offensive in Lebanon; government still expects major attack on Tripoli. Indonesia - Central government announces its troops have landed. near Menado. Arab Union - Nun i Said, ,in offer- ing resignation, urges American aid and adherence of Kuwait to Union. United Arab Republic - Renewed attacks on Syrian leader Hawrani indicate he may be purged shortly by Nasir. -,� Cyprus - Uneasy calm exists on island; Turks seen going all-out to force partition. 0 Japanese Socialists planning cam- paign to force Kishi into closer re- lations with Communist China. 0 Burma - Premier Nu's parliamentary victory with aid of pro-Communist votes raises possibility of elections and further Communist gains. TOP SECRET III. THE WEST Adenauer and De Gaulle may meet soon with French seeking financial aid and West Germans trying to tie Paris more closely to European community. Approved for Release: 2019/08/20 CO2985835 4�'Z :4\ \ , Approved_ for Release: 2019/08/20 CO2985835 �r11 mioof LI (74,0 CENTRAL INTELLIGENCE BULLETIN 11 June 1958 DAILY BRIEF I. THE COMMUNIST BLOC USSR-Indonesia: The Soviet Union, at the request of Indonesia, is willing to earmark gold reserves in Moscow for use by the Bank of Indonesia as backing for its cur- rency. (Page 1) II. ASIA-AFRICA *Lebanon: Rebel forces have resumed the offensive in northern and southern Lebanon. Government sources continue to expect a major attack on Tripoli soon. Army Commander General Shihab claims that a call for West- ern intervention is becoming more imminent. The Brit- ish ambassador in Beirut has warned that his country's new Cyprus policy may tie up forces "earmarked for possible deployment in Lebanon." (Page 3) (Map) *Indonesia,: Central government forces landed on 9 Tune at Bitung, the principal port for the dissident capi- tal of Menado, and met no rebel resistance, according to a Djakarta announcement. 7 itung is about 35 miles from Menado. Arab Union: Prime Minister Nun i Said has submitted his resignation because of the financial difficulties facing the Arab Union government. Nun i contends that additional TOP SECRET \ Approved for Release: 2019/08/20 CO2985835 3- \ \ \ 11 June 58 X Approved for Release: 201.9/08/20 CO2985835 *a, 1U1 LCi'Li � Western aid and the adherence of oil-rich Kuwait are essential conditions for the Union's future existence. His action is aimed at spurring American considera- tion of the aid question as well as British action in trying to force the Ruler of Kuwait to join the Union. (Page 5) United Arab Republic: Press attacks are again be- ing made on Akram Hawrani, UAR vice president and leader of the Arab Socialist party. This may indicate that Nasir is preparing to purge him. Damascus news- papers are denouncing Hawrani's followers among the Syrian regional ministers for their handling of a petro- leum shortage caused by Lebanese developments and are criticizing new customs tariffs. At the same time, the press is praising Minister of Interior Sarraj, Nasir's hatchet man in Syria, and suggesting that exper s f o Evnt may be needed to govern Syria 'directly. (Page 6) Cyprus: Except for isolated incidents, an uneasy calm exists on the island after four days of communal violence. The Turkish Cypriots, who apparently staged the Nicosia bombing incident on 7 June, are probably forcing the issue in an all-out bid to force partition. London still intends to announce its 'new proposals on 17 June, but under present conditions, this effort to promote a settlement also seems destined to fail. As a last resort, the British may reach the conclusion that partition of the island is the only Plausible solu- tion. DAILY BRIEF ii TOP SECRET L�A. � LN.\ Approved for Release: 2019/08/20 CO2985835 \ � � Approved for Release: 2019/08/20 CO2985835 Japan-Communist China: The Japan Socialist party is planning to undertake action in an effort to force the Liberal Democratic administration to recognize Communist China. Socialist efforts probably will gain support among many con- servative elements and will put added pressure on Prime Minister Kishi to resolve the impasse on Japanese,Commu- nist Chinese trade. Peiping's interference in the recent Japanese election campaign temporarily dampened hopes for a satisfactory settlement. (Page 7) Burma: Premier Nu's 127-119 parliamentary victory over I3a Swe and Kyaw Nyein was achieved with the help of 46 votes from the Communist-dominated National Unity Front, and adds to peculation among Burmese leaders that Nu may grant the insurgent Burmese Communist party legal status. If national elections are held in October, as now seems likely, and the Communists make gains, there may be disruptive tribal secessibnist movements � (Page 8) III. THE WEST France-West Germany: In view, of France's financial plight, De Gaulle can be expected to be receptive to West German proposals for an early meeting with Chancellor Adenauer in order to push for German financial assistance. Bonn may try to use any loan to the French in an effort to tie Paris more closry to European economic organizations. (Page 9) 11 June 58 DAILY BRIEF lii TOP SECRET LI Approved for Release: 2019/08/20 CO2985835 Approved for Release: 2019/08/20 CO2985835 WA �-11...L.41111:4 Nave 4 L THE COMMUNIST BLOC1401 USSR Backs Indonesian Currency The USSR has complied with an Indonesian request of early June to earmark gold reserves in Moscow to raise do- mestic confidence in Indonesia's currency, The value of this gold loan may be $25, - 000,000, the amount the USSR reportedly was offering Indo- nesia in April. In late May, Foreign Minister Suba,ndrio suggested to the American ambassador in Djakarta that the United States should establish a gold reserve of $25,000,000 to Support Indonesian currency. Indonesia's gold and foreign exchange reserves have dwindled to such a criti cal point :that Prirne Minister Djuanda has publicly mentioned the seriousness of the coun- try's economic condition. Indonesia's chronic difficulties have been aggravated during the past 18 months by decreased production, the disruption of normal trade channels, and the Increased government expenditures imposed by the Sumatran and Celebes revolts. This loan could make it possible for Indonesia to use Its dwindling gold and hard currency resources in trade with the West. Anticipating this, the Soviet deputy foreign minister reminded the ambassador that the Soviet Union is ready to supply "vital goods to Indonesia on the basis of a credit agreement," which would eliminate any need to use these resources in free-world markets. The USSR, by re- taining physical possession of the earmarked gold reserves, will be in a position to exert additional pressure on Indonesia. While Indonesia's trade remains largely oriented to free- world markets, the Sino-Soviet bloc is increasing the impact of its relatively small rubber purchases by dealing directly with Indonesian producers rather than with brokers in West Europe, and has met Indonesian food shortages by emergency rice shipments on long-term credits. The bloc also is sup- plying military equipment anct under a $100,000,000 credit, ves� necessary for interisland shipping on credit. �-F9P-SECREF 11 June 58 CENTRAL INTELLIGENCE BULLETIN Page 1 Approved for Release: 2019/08/20 CO2985835 Approved for Release: 2019/08/20 CO2985835 Arose MAP ON REVERSE OF PAGE 11 June 58 CENTRAL itinurogNcE BULLETIN Page 2 Approved for Release: 2019/08/20 CO2985835 Approved for Release: 2019/08/20 CO2985835 AN% LEBANESE SITUATION AS OF 9 JUNE 1958 Army Organization and Strengths uminn � Horns Infantry Battalions 6 Tall Kal Artillery Battalions 3 ������� Reconnaissance Battalions �� 2 Tank Battalions 1 Total Army Strength 9800 "' � Hawn( 400 NORTH Gendarmerie Total Strength 2800 Tripoli LEBANON SECTOR / / / Loyalist Partisans Approx. 3500 600 Air Force Total Aircraft 38(inc1.10 jets) Total Personnel 332 Lebanese Armed Opposition (Estimated) Total Strength Approx. 10,200 lunyah MEDITERRANEAN cc 80609-2 80610-6 Beiru Sidon 500 SOUTH LEBANON SECTOR ISRAEL MT. --------S. 4 05(-) 2,200 BIQA SECTOR Arsaal. IBalabakke egv., � PR g / eAblah 1"Riyacr" 11,0001 Qatana., Chebaali le:;) Qunaytirah Damascus 000 1 � C.: YR I A Lebanese Army Lebanese Gendarmerie Syrian Army Lebanese Armed Opposition Main Rebel Supply Point Military Sector. Pipeline Selected Road This is a tentative statement as of 9 June and is based on reports of varying reliability. SECRET Approved for Release: 2019/08/20 CO2985835 Approved for Release: 2019/08/20 CO2985835 a Oaf LIVA Uri Neel II. ASIA -AFRICA Situation in Lebanon Rebel units have resumed the offensive against govern- ment security forces in both northern and southern Lebanon, according to reports reaching Beirut. In Tripoli, security forces utilizing artillery claim to have destroyed the citadel which has been used by rebel forces as a command post, and the opposing forces have clashed outside the city. Govern- ment sources continue to expect a major rebel attack on the city in the near future. Druze forces estimated at 400 men led by Kamal Xiimblatt have attacked gendarmerie and pro- government partisans in the Mount Lebanon sector and are proceeding northward in a move to cut the main Beirut- Damascus highway. The harassment of rebel bands by the Lebanese Air Force brought about a night attack on the Riyaq air base by rebels on the night of 9-10 Sune, which was re- pulsed. it is beyond the ar- my b capability to prevent increasing infiltration of armed bands from Syria and that policing of the Lebanese frontier by a UN-type police force would not be effective. the possibility of a call for foreign interven- tion is becoming more imminent, then predicted that foreign troops could not be withdrawn "for 25 years." On the other hand, the gendarmerie commandant has stated that the gen- eral will prolong the Lebahese' Army's vacillating .posture until the political situation has deteriorated to the point where Shihab, "a la General de Gaulle," would be sum- moned unanimously -to take control of the country. Britain's forthcoming new Cyprus policy would probably tie up forces "earmarked for possi- ment in Lebanon." However, LJ the British Mediterranean fleet could provide about 2,000 troops for such a venture. The political crisis shows some additional signs of be- ing transformed into a confessional struggle. In an unprece- dented action, the Grand Mufti of Lebanon--the nation's highest -TOP SECRET- 11 rune 58 CENTRAL INTELLIGENCE BULLETIN Page 3 Approved for Release: 2019/08/20 CO2985835 Approved for Release: 2019/08/20 CO2985835 L v1 ac.t.nr. I Neve Noe Moslem dignitary--and the �Ulemas:-the juridical, leaders of the Sunni Moslem faith--"excot.ximunicated" Prime Min- ister Sulh from their sect. Deyaring "May the-curse of Allalffall upon him," the Ulenlotsc.a.11edupon Moslems to ostracize and disown Sulh. lof retaliation, the government has suspended four of the Ages of the supreme Moslem religious court who signed the decree, charging them with engaging in political matters and demonstrating against the government, This action will be interpreted by the Moslem masses as meaning that the struggle in Lebanon has assumed religious proportions, and will lessen Sulhis influence in Moslem circles, while increasing his popu- larity among the Christians. The Christian Maronite community meanwhile is hav- ing second thoughts concerning the pro-opposition attitude of its Patriarch, who has openly criticized the government and praised the opposition during a recent press conference. His statement that many of his bishops had been bribed by the government has aroused the'ire of the higher clergy, who are reported to have petitioned the Vatican against the Patri- arch's stand. A majority of th to be fur us at the Patriarch. TOP SECRET 11 lune 58 CENTRAL INTELLIGENCE BULLETIN Page 4 Approved for Release: 2019/08/20 CO2985835 Approved for Release: 2019/08/20 CO2985835 (1.4 1 NW' Arab Union Prime Minister Submits Resignation Arab Union (AU) Prime Minister Nun i Said is attempt- ing to increase pressure for a larger amount of Western financial aid to the new union and for stronger action by Britain to bring oil-rich Kuwait into the AU. The AU Treasury Ministry has drawn up a budget for presentation to the AU Parliament On 12 June showing an estimated deficit of $18,592,000 for the nine months ending 31 March 1959, and the prime minister has submitted his resignation rather than present such a budget. He is reported to have told King Faysal that he would insist that the question of Kuwait's joining the AU also be resolved at once. Faysal has not ac- cepted the resignation, however, and Nun i probably does not expect him to do so. AU financial officials envisage that the union will normal- ly have a deficit of about $21,000,000 annually. According to the American Embassy in Baghdad, the Iraqis clearly expect this shortfall to be made up,by Kuwait. Nun i stated on 9 June that he had recently given the British ambassador in Baghdad a "memorandum" asserting that only two courses of action were open to Iraq: either demarcation of the Iraq-Kuwait boundary so that a considerable part of � Kuwaiti oil-pro- ducing area would become Iraqi territory, or incorporation of Kuwait in the AU. Since Britain probably cannot bring Kuwait to accept either of these courses, Nun i can be ex- pected to make even stronger appeals for direct American a7 British assistance. SECRET 11 June 58 CENTRAL INTELLIGENCE BULLETIN Page 5 Approved for Release: 2019/08/20 CO2985835 Approved for Release: 2019/08/20 CO2985835 AJL:A.�1VILA I Igoe Nasir May Institute Purge in Syrian Region of UAR Resumption of attacks on UAR Vice President Hawrani and his followers by the semicontrolled Damascus press may presage a purge by Nasir of the Syrian regional gov- ernment. The attacks are accompanied by a suggestion that Egyptians--"statesmen from the southern :region"-- be brought in. Similar attacks, centering on an agrarian labor reform which Hawrani was sponsoring, occurred during Nasir's visit to the USSR. In the present instance, Hawrani's sup- porters among the regional government ministers are be- ing criticized for their handling of the petroleum shortage which has developed since the fighting in Lebanon cut the normal supply routes for refined POL. A recent change in the Syrian customs tariff, which had been interpreted as aimed at bringing Syria's customs duties into line with those of Egypt, has also been criticized in Damascus and cited in press reports from Cairo as having irritated Nasir. At the same time, Nasir's hatchet man in Syria, In- terior Minister Sarraj, is being praised by the Damascus press for his statements urging further efforts to solve the POL situation. Sarraj and Hawrani, a demagogic po- litical leader and theorist, have not gotten on well to- gether in the Syrian regional government. Hawrani has been especially suspect since it appears that his Arab Socialist ()Math) party has not dissolved itself as was agreed when the UAR was formed last winter. Nasir almost certainly would like to eliminate any vestiges of independent followings which Syrian politicians have car- ried over into the UAR, and there have been several re- ports that he is concerned about the situation in Syria and has intended to take action since his return from Mos- cow. In addition to the political situation, Nasir may be concerned by reports of friction--possibly involving a s shooting affray�between E7ptian and Syrian army of- fic, SECRET 11 June 58 CENTRAL INTELLIGENCE BULLETIN Page 6 Approved for Release: 2019/08/20 CO2985835 Approved for Release: 2019/08/20 CO2985835 Niue' Noe Japanese Socialists Plan Campaign for Recognition of Communist aria - The Japan Socialist party has adopted a new policy designed to revitalize Japanese elements advocating re- lations with Communist China and to force the ruling Liberal-Democratic administration into early recogni. tion of the Peiping regime, The Socialists will hold nationwide rallies to gain support for their policy and are planning to send a dele- gation to Peiping to sound out the attitude of Chinese Communist leaders toward Japan. � Although Peiping's efforts to influence the recent Diet elections in Japan caused considerable resentment among the Japanese and its suspension of trade rela- tions dampened Japanese business hopes for expanded trade, there remains widespread sentiment for closer relations with the China mainland, both for trade and cultural development. The Socialist campaign, there- fore, probably will gain support among many conserva- tives and result in pressure on the Kishi government to solve at least the trade impasse. The mandate which Kishi received in the recent elections, however, should enable him for the present to resist Peiping's demands for rapid political concessions. 441 - -SECRET-- 11 June 58 CENTRAL INTELLIGENCE BULLETIN Page 7 Approved for Release: 2019/08/20 CO2985835 Approved for Release: 2019/08/20 CO2985835 Nap, Burma The Communist-dominated National Unity Front, which provided Premier U Nu with 46 votes in his 12'7-to-119 par- liamentary victory on 9 Tune, and the insurgent Burma Com- munist party are probably the main beneficiaries of the po- litical crisis in Burma. U Nu has been in correspondence with insurgent lead- ers since January searching for an acceptable formula for their mass surrender. They speculate that Nu must have promised the legalization of the Communist party in re- turn for NUF parliamentary support. NUF leaders are already reported making substantial gains by urging war-weary rural voters that the combina- tion of ."Nu and NUF" would mean peace. Although U Nu is expected to disown both the NUF and the Burmese Com- munists prior to the general elections, it appears that the NUF hai. already established a firm grip on his political coattails. after the budgetary session of Parliament in August, Pre- mier Nu will call for general elections to_take place 60 days later. Primary interest will center on Communist gains,as there is fear that, if the Burma Communist party is legalized and the split between Nu and his former col- leagues continues, the Communists and their allies, who won about 34 percent of the vote in the last election, could win a parliamentary majority. Shan States nationalists, led by the secessionist Mahadevi of Yawnghwe, wife of Burma's first president, are already organizing a new Shan party which is prepared to secede if Communists make a strong election showing. As the govern- ment is pledged to fight to preserve the Union, this could lead to civil war. In addition, General Ne Win, army commander, has warned that the army will take action if Communists are included in the government. J-3 SECRET 11 June 58 CENTRAL INTELLIGENCE BULLETIN Page 8 Approved for Release: 2019/08/20 CO2985835 Approved for Release: 2019/08/20 CO2985835 II. L.1116.1111.4 Nei I I L THE WEST De Gaulle Pressing Bonn for Finaricial Assistance West German suggestions that Chancellor Adenauer would welcome an early meeting with French Premier de Gaulle will probably be taken up by De Gaulle in order to push negotiations for German financial assistance to France. French Foreign Minister Couve de Murville has continued, on De Gaulle's behalf, consultations started under the Gaillard government looking to a large West German credit to France, estimated by the source at $240-480,000,000. Further discussion concerning the credit, which would be covered by French Saharan oil production, is expected to be entrusted to "one of nr, pingpr rolleagues." unofficial talks between French and German nationals on the Com- mon-Market Commission on the possibility of a $100,000,- 000 German credit. The latter figure seems a more real- istic estimate of the amount which might be negotiated. Meanwhile, Paris has been pressing for German per- mission to draw on $34,0'00,000 in deutschmark credits in the International Monetary Fund, in advance of the scheduled release date and without satisfying the condi- tions under which the funds were earmarked for France last winter, in order to apply them to the French deficit in the European Payments Union for May. Thus far Bonn has been reluctant to accede to this request. � A 9 June statement by Couve de Murville reaffirming French treaty commitments noted that implementation of France's Common-Market obligations would depend on a rapid iffirrovemient in the deteriorating French economic picture. This suggests that De Gaulle, whose personal views on continued French participation in European eco- nomic integration are not known but have been reported as unfavorable, may play on Bonn's desire to ensure con- tinued French participation. 11 June 58 CENTRAL INTELLIGENCE BULLETIN Page 9 Approved for Release: 2019/08/20 CO2985835