CENTRAL INTELLIGENCE BULLETIN - 1958/12/20

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 03000008
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 21
• Document Creation Date: January 27, 2020
• Document Release Date: January 30, 2020
• Publication Date: December 20, 1958

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3.3(h)(2)
20 December 1958 3.5(c)
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ENTRAL
INTELLIGENCE
BULLETIN
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20 DECEMBER 1958
I. THE COMMUNIST BLOC
Chinese Communist foreign minis-
ter's comment to foreign envoys on
Mao resignation; Indian ambassador
struck by his defensive tone.
Peiping apparently planning to join
other bloc members in_supplying
arms to Middle East.
II. ASIA-AFRICA
Tension rising again in Lebanon.
UAR expanding its propaganda at-
tack on Communist influence in
Arab states.
Philippines - Garcia's popularity de-
clining; he plans major cabinet and
defense post changes.
Indonesia - Sukarno moving to re-
duce Nasution's influence.
III. THE WEST
� Italy seeks to expand trade with bloc.
0 Cyprus - Easing of tension may be
short-lived.
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CENTRAL INTELLIGENCE BULLETIN
20 December 1958
DAILY BRIEF
I. THE COMMUNIST BLOC
Communist China: The Burmese ambassador in Peiping
has reported that Foreign Minister Chen Yi, in briefing for-
eign diplomats on Mao Tse-tung's resignation, denied that the
failure to attack Chinmen was a factor in Mao's decision. He
stated that "the policy of the Chinese government ia either to
liberate Taiwan as a whole, that is, for the United States to
get out, or to sustain the present situation" by meeting tension
with tension. Chen Yi added that Defense Secretary Peng Te-
huai may decide "to deluge Chinmen with another barrage" in
order to demonstrate that Peiping has not been defeated.
(Page 1)
The Indian ambassador in Peiping, who was struck by
Chen Yi's "defensive tone;' has heard "rumblings of dissatis-
faction with Mao." He had also heard rumors that Premier
Chou En-lai has been criticized and that he may follow Mao
in resigning his government position. While there has un-
doubtedly been some criticism of both leaders in the past two
years' it is unlikely that this criticism could have brought
about Mao's decision or would impel any similar decision by
Chou. (Page 3)
Communist China - Middle East: Peiping apparently will
join the USSR, Czechoslovakia, and Poland in providing arms
to the Middle East. China offered arms to Egypt at the time
of the Suez affair in 1956, and last April Cairo sent an arms
mission to China. The UAR representative in Peiping is now
discussing the possibility of purchasing heavy guns and per-
haps other weapons from Peiping. Egypt has been under pres-
sure from Peiping to purchase more Chinese goods to balance
WA
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its trade with China, which has been paying hard currency for
Egyptian cotton. China probably also sees arms deals as an
effective means for expanding its influence in Middle Eastern
and Asian countries. It is interested in providing weapons and
financial assistance to the Algerian rebels with Egypt acting as
intermediary. (Page 5)
IL ASIA-AFRICA
Lebanon: Political tension is increasing again. The Pop-
jular Mil:gal-ice, a pro-UAR organization, has warned the
/0 Lgovernment that it will set up armed camps "all over the coun-
try" unless training camps of the anti-UAR Syrian Socialist
National party are eliminated. Page 7)
UAR: UAR propaganda against local Communist influence
in the Arab states appears to be taking on larger proportions.
The Damascus press and radio have warned against a "new"
kind of danger to Arab nationalism from a "worse enemy of
democracy and freedom" than the "imperialists."
(Page 8)
Philippines: President Garcia's popularity has declined
with the continued failure of his administration to deal with the
worsening economic situation. Garcia reportedly plans to con-
solidate political control over the armed forces by replacing
Defense Secretary Vargas in a major cabinet shake-up at the
beginning of the new year. The administration may hope to
bolster its declining prestige by an increasingly uncompromis-
ing attitude in the present exploratory talks on American bases.
(Page 9)
Indonesia: There are additional suggestions that Pres-
ident Sukarno and Premier Djuanda intend to reduce Nasution's
excessive influence in government affairs. Sukarno has al-
ready diluted Nasution's authority over the important regional
barter trade and he is said to have told Nasution and other top
military leaders to concentrate on security and "to leave civil-
ian affairs to the civil governments." (Page 11)
20 Dec 58
DAILY BRIEF
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III. THE WEST
Italy: The current visit to Peiping of Enricp Mattei, the
politically powerful head of Italy's oil and gas monopoly, fur-
ther underscores Rome's intention to expand economic rela-
tions with the Sino-Soviet bloc as well as with the Middle East
and other areas. Mattei, who apparently has government ap-
proval for his Peiping trade talks; had made a Atopover in
Moscow to participate in Italo-Soviet trade-agreement talks
and had recently announced conclusion of a contract to purchase
800,000 tons of Russian crude petroleum.
(Page 12)
Cyprus: Following the recent private discussions between
he Greek and Turkish foreign ministers; diplomatic efforts
behind the scenes are continuing in search of a compromise so-
ution to the Cyprus dispute. Meanwhile; tension on the island
has eased somewhat as a result of the eleventh-hour commu-
ation of death sentences for two condemned Greek Cypriots
and the governor's "Christmas gesture" in releasing sixty po-
itical detainees.
20 Dec 58
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L THE COMMUNIST BLOC
Peiping's Foreign Minister Comments on Taiwan
Strait Situation
Communist China's Foreign Minister Chen Yi denied to
a group of foreign diplomats in Peiping on 16 December that
the Communists' failure to attack Chinmen had been a factor
in Mao Tse-tung's decision to relinquish his government post,
Chen claimed
that it would be "easy" to take over Chinmen through nego-
tiations with the US at Warsaw but that Peiping has not done
so because the price would have been acceptance of the "two
Chinas" concept. He termed the presence of Nationalist
troops on Chinmen and American forces on Taiwan as "very
good" since it focused world attention on "aggression" there.
Obviously sensitive to the non-Communist press, Chen
stated that the Communists "control the situation," and claimed
that they hold the initiative to shell "when they feel like doing
so"--a clear sign of "victory, not defeat." He also stated that
tension would be met with tension "for a long time" and that
Defense Minister Peng Te-huai "may" give another order "to
deluge Chinmen with another barrage" in order to offset claims
that the Communists have suffered a defeat.
Recent increases in the intensity of Communist artillery
fire on the Chinmens may have been in response to such impli-
cations of a defeat, On 9 and 11 December� the Communists
fired more than 4,000 rounds on the Cliinme4,,a substantial
increase over the usual number of shells fired in one day.
The Communists have also improved their over-all mil-
itary posture in the strait area. They have particularly con-
centrated in improving their air combat capability by extensive
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retraining of their pilots, by adding new equipment, by in-
creasing their fighter strength in the strait area, and pos-
sibly by bringing in advanced types of fighter aircraft.
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Reported Criticism of Mao Tse-tung and Chou En-lai
The Indian ambassador in Peiping is
to have been impressed by Chen Yi's "defensive" attitude in
his 16 December briefing. Chen denied that Mao's decision
was impelled by the failure of any of Mao's policies, or by
any kind of dissatisfaction with Mao on the part of other par-
ty leaders. Chen noted that Mao had mentioned to several
visitors his interest in resigning, and that Khrushchev had
approved.
The ambassador is reported to have heard "rumblings
of dissatisfaction" with Mao. He also cited a rumor that
Chou En-lai might resign as premier, on the ground that he
had been criticized in some party quarters as a "rightist"
and for being shielded by Mao. The ambassador forecast
that Liu Shao-chi would succeed Mao as government chair-
man.
Although Chen Yi's briefing, like the central committee
communiqu�he following day, was defensive in tone, his ac-
count of Mao's personal position seems essentially accurate.
Mao was almost certainly subjected to criticism in 1957,
following the failure of certain of his personal policies, and
there has presumably been some criticism of his recentpol-
idles. However, Mao took the lead in correcting his mistakes,
and his prestige has seemed largely restored by successes to
date in the "leap forward" campaign and the communes pro-
gram.
Moreover, those party leaders who might conceivably be
able to dislodge Mao if they acted together�Liu Shao-chi,Teng
Hsiao-ping�,andother directors of the party machine--have
helped Mao to correct his earlier mistakes and have been em-
phatically associated with Mao's recent policies. Mao has
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several times since mid-1957 said he would like to reduce
his burden; he has done so in giving up the tiring ceremoni-
al post of government chairman. He presumably told Ithru-
shchev of his decision during the latter's visit last July.
Chou En-lai too was open to criticism in 1957, as he
was more closely associated than were other party leaders
with those of Mao's policies which failed. However, he has
also been associated with Mao's more successful recent pol-
Ides. Chou would probably be most reluctant to resign as
premier; the key government post and the principal source
of his prestige and power in the party. If he did so, it would
probably be on grounds of failing health. His health has been
In question for more than two years, and illness may have
forced him to cancel the trip to Egypt scheduled for last month.
The leading candidate for Mao's government chairman-.
ship is Chu .Te, a comparatively unimportant but esteemed
party senior. However, there seems an outside chance that
Liu Shao-chi will bid for the job, in the interest of adding
the prestige of that post to his real power as the second-rank-
ing leader--behind Mao--in the key central organs of the par-
ty.
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Chinese Communist - Middle East Arms Deal
Communist China, like the Soviet Union, Czechoslovakia,
and Poland, apparently will provide arms to the Middle East-
ern countries. The UAR ambassador in Peiping,
dis-
cussion of a draft agreement was to begin on 18 December, and
he asked to be informed of what weapons the UAR desired. He
also said that UAR officials in Peiping recently witnessed a
"practical demonstration" of 122-mm and 152-mm0 self-pro-
pelled guns.
Peiping first expressed a willingness to supply arms to
Egypt in the spring of 1956,prior to Egypt's decision to recog-
nize Communist China, when President Nasir solicited arms
aid from the Chinese. Cairo's motivation at that time was to
secure an additional source of arms in the event the USSR and
its satellites would abide by a possible UN resolution to place
a general ban on arms shipments to the Middle East. In Decem-
ber of 1956, following the Israeli-Egyptian war and Cairo's rec-
ognition of Peiping, the Chinese Communist defense minister af-
firmed Peiping's readiness to supply Egypt with "all possible aid"
and equipment. Early in 1957, Cairo asked its embassy in Pei-
ping to obtain "further details" on the performance and price of
certain Chinese-produced weapons.
A UAR military mission visited Communist China in April
1958, and Premier Chou En-lai then encouraged them to inspect
Chinese armament factories and military installations. Egypt
recently has been under pressure from Peiping to purchase more
Chinese goods to balance its trade with China, which has been
paying hard currency for Egyptian cotton.
It is not known whether the assault guns referred to by the
UAR ambassador in his report to Cairo are of Chinese Commu-
nist or Soviet origin. There are at present, however, at least
six Chinese plants involved in the production of armored fighting
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vehicles, and it is believed that China is now producing the
T-54 medium tank. Communist China also produces artillery
up through the 152-mm. gun-howitzer, which, along with the
122-mm. gun, is the type of armament used on the SU-152
and the SU-122 respectively.
early in December, Chinese
Premier Chou En-lai and the UAR ambassador discussed arms
aid and financial assistance for the Algerian rebels. Chou En-
lai specified that Cairo would have to act as intermediary for
any Chinese Communist arms aid to Algeria. An Algerian
mission, including the rebels' minister of armaments and sup-
ply, has been in Communist China and would probably be re-
ceptive to an attractive arms offer. Furthermore, Cairo has
acted in the vast as middleman in Czech arms aid to the Algerian
rebels.
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II. ASIA-AFRICA
Lebanese Political Tension Increasing
Political tension in Lebanon is increasing following the
Lebanese Army's punitive measures against the pro-UAR
Sunni Moslem village of Arsal last week end. Since anti-
UAR Social National Party (SNP) paramilitary units were
involved in repulsing Arsali attackers, the pro-UAR Popu-
lar Resistance has issued an ultimatum to the government
demanding the abolition of all SNP paramilitary training
camps throughout Lebanon. Otherwise, the Popular Resist-
ance declares it will set up camps of its own and wipe out
the SNP camps.
Ambassador McClintock believes that Prime Minister
Karami may attempt to shift the blame for the incident on the
SNP. Since the SNP supported the Chamoun government dur-
ing last summer's rebellion, Karami has an added incentive
for destroying SNP power.
Karami may decree the deportation of all foreign mem-
bers of the SNP, most of whom are refugees from Syria.
Syrian authorities for some Wile have been pressing Lebanon
to turn Syrian members of the SNP over to UAR security
authorities. However, it is believed that President Shihab
and Interior Minister Edde would resist such a move to in-
terfere with Lebanon's role as a haven for political refugees.
CONFIDENTIAL
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Nasir's Campaign Against Communist Activities
Nasir has taken another step in the UAR propaganda
campaign against Communist activity in the Arab states.
He may at the same time be moving to reduce his eco-
nomic dependence on the USSR,
There has been unprecedentedly sharp Criticism of Com-
munism in the UAR-controlled press and radio in Damascus.
Damascus radio has warned of dangers in a drift to the left,
which it called a worse enemy of democracy and freedom than
the "traditional enemy"--imperialism. Damascus newspapers,
referring again to the new kind of danger, claim some "factions"
--Communists--are exploiting the revolution in an effort to es-
trange Iraq from the Arab "caravan." Previously UAR-subsi-
dized newspapers in Beirut and at least two Cairo newspapers
had taken the same line.
These propaganda moves follow closely Nasir's request for
PL-480 wheat from the United States and the signing of a con-
tract with an American oil company to supply a large part of
the UAR's crude oil imports, 75 percent of which were from:
the USSR this year. In addition, within the past few days Cairo
has announced progress in settling economic differences with
French and Anglo-Egyptian oil companies. There is also an
indication that through unofficial contacts Nasir is attempting
to convey the impression to the US that he is adopting a stiffer
line in dealing with the USSR.
CONFIDENTIAL
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Philippine Domestic Outlook
Signs of serious popular disaffection with Philippine
President Garcia have become apparent as a result of his
administration's failure to stem economic deterioration and
administrative corruption. During his recent goodwill trip
to Japan, there was much criticism that his party was being
"taken in" by lavish treatment, and an effort to stage a tri-
umphant demonstration on his return to Manila was greatly
overshadowed by the popular reception given four days later
to Nacionalista party head and Senate President Rodriguez
following his visit to Europe and the United States. More re-
cently, Garcia was booed by spectators at a large sports event
in Manila.
Despite an improvement in the production of key crops,
the Garcia administration still is in serious financial straits.
The budget commissioner recently told a congressional hear-
ing that the country was on the verge of bankruptcy; he has
met little success in trying to curtail government expenditures
or to increase revenues, Exchange reserves declined to a new
low in November before showing some slight rise from seasonal
sugar exports in December.
Plans to replace armed forces leaders with persons loyal
to Garcia are proceeding. Garcia is said to have decided upon
a successor to Defense Secretary Vargas, who will probably be
removed in a broader cabinet reshuffle early in 1959. The sched-
uled retirement of Chief of Staff Arellano on 31 December will
pave the way for further changes in the army and constabulary
commands.
The Philippine Government has hardened its demands for
greater American military aid and for revision of the agreement
on American bases. A concerted press campaign on behalf of
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the uncompromising Philippine stand in present exploratory
talks on the bases may be designed to force Armerican conces-
ns which, could bolster Garcia 's prestige.
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loW
Moves to Curb Indonesian Army's Role in Government
Further reports on the recent Indonesian cabinet meeting
with President Sukarno and on the subsequent conference of mil-
itary administrators provide additional evidence that President
Sukarno is seeking to reduce army influence in government af-
fairs. Sukarno and the cabinet de-
cided to transfer authority over regional barter trade from
army chief Nasution to the cabinet itself.
The cabinet reportedly agreed on the need to extend martial
law. Parliament approved the extension on 13 December after
Premier Djuancla assured the members that martial law might
be lifted in some areas after six months and that military abuses
would not be tolerated.
President Sukarno is said to have cautioned the Bandung
conference of military "war administrators" chaired by Nasu-
tion to concentrate on security matters and "leave civilian af-
fairs to the civil government."
Sukarno's advice was a concession to Djuanda, who
had told the cabinet meeting he would resign as premier unless
restrictive measures were taken against military interference.
Nasution reportedly instructed military commanders to
proceed with administrative programs under martial law and
to establish local military-labor cooperation organizations,
for which he plans to call a national conference sometime in
January. These groups are intended to counter growing Com-
munist influence in the labor movement.
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III. THE WEST
Italian Oil Czar Seeking Trade Deal With Communist China
Enrico Mattei, the politically powerful president of the
Italian state petroleum and gas agency,ENI� is in Peiping for
talks with Chinese foreign trade officials. According to the
press, he intends to sell chemical fertilizer from the petro-
chemical plant at Ravenna. However, he brought with him
officials from ENI's subsidiaries engaged in the manufacture
of oil rigs and pipelines. Mattel., who apparently has Pre-
mier and Foreign Minister Amintore Fanfani's approval for
this trip, had made a stopover in Moscow where he report-
edly participated in Italo-Soviet trade-agreements talks.
Mattel had recently announced the conclusion of two con-
tracts with the USSR--one for the purchase next year of 800,-
000 tons of Russian crude petroleum for EM'S refineries, the
other for the sale in 1959 of 8,000 tons of synthetic rubber
from ENI's Ravenna plant.
EM contracted for the crude because it was quoted a price
lower than the standard offering.
The Peiping trip and deal with Moscow are indicative of
Mattei's and Fanfani's desire to develop closer economic rela-
tions with the Sino-Soviet bloc in addition to Italy's expanding
contacts in the Middle East. There is some doubt, however:
whether commodities offered by the Chinese for export will
really interest the Italians. Peiping may press at this time
for the exchange of permanent trade delegations between the
two countries.
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Cyprus
A new conciliatory attitude has been noted in both Athens
and Ankara since the close of the UN General Assembly debate
on Cyprus in early December.
Recent conversations among the Greek, Turkish, and Brit-
ish Foreign Ministers at the NATO meetings in Paris may indi-
cate new moves to settle the Cyprus dispute are in the offing. A
conference of the three powers�possibly under NATO aegis
and with such observers as the United States present--was prob-
ably discussed. A stumbling block to such talks remains, how-
ever, in Athens' insistence on only a final--not an interim--
solution for the island. In London, Prime Minister Macmillan
has apparently gone as far as he can to pacify critics in the
Labor party and to reassure Athens, without simultaneously
alienating the Turks, by declaring partition to be the "worst pos-
sible solution" but one that might be adopted if no other were
found.
On Cyprus, the good will accruing to the British as a re-
sult of the "last minute" commutation of the death sentences
of two Greek Cypriots on 18 December was largely expended the
following day when British troops fired on rioting Greek Cypriot
women. EOKA continues to maintain a relative truce with only
occasional acts of arson, primarily directed at British automo-
biles. However, forthcoming moves by Britain in implementa-
tion of its interim "partnership" plan for Cyprus, including
publication of a commission report recommending that the Turks
be granted their own municipal council in five major cities,
will probably spark a serious outbreak of violence.
There is a possibility of attacks against Americans on Cyprus.
A recent EOKA leaflet violently denounced "neo-fascist Anglo-
Americans" and condemned the US for voting with Turkey and
Britain in the UN debate.
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THE PRESIDENT
The Vice President
Executive Offices of the White House
Special Assistant for National Security Affairs
Scientific Adviser to the President
Director of the Budget
Office of Defense and Civilian Mobilization
Special Assistant for Security Operations Coordination
Board of Consultants on Foreign Intelligence Activities
Special Assistant for Foreign Economic Policy
Special Adviser to the President
The Treasury Department
The Secretary of the Treasury
The Department of State
The Secretary of State
The Under Secretary of State
The Under Secretary of State for Economic Affairs
The Deputy Under Secretary for Political Affairs
The Deputy Under Secretary for Administration
The Counselor
Director, International Cooperation Administration
The Director of Intelligence and Research
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 Chairman, The Joint Chiefs of Staff
Commandant, United States Marine Corps
The Director, The Joint Staff
Chief of Staff, United States Army
Chief of Naval Operations, United States Navy
Chief of Staff, United States Air Force
Assistant to Secretary of Defense for Special Operations
Director for Intelligence, The Joint Staff
Assistant Chief of Staff for Intelligence, Department of the Army
Director of Naval Intelligence, Department of the Navy
Assistant Chief of Staff, Intelligence, Department of the Air Force
Supreme Allied Commander, Europe
Commander in Chief, Pacific
The Department of the Interior
The Secretary of the Interior
Federal Bureau of Investigation
The Director
Atomic Energy Commission
The Chairman
National Security Agency
The Director
National Indications Center
The Director
United States Information Agency
The Director
OrINTETITIVNT'T'l A T
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