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January 30, 2020
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December 23, 1958
PDF icon CENTRAL INTELLIGENCE BULL[15777449].pdf542.01 KB
././//17////////////////7 Approved for Release. 2020/01/23 C03000009 3.5(c) --1-U1'11-13rMerr-7 3.3(h)(2) 23 December 1958 Copy No. C CENTRAL INTELLIGENCE BULLETIN DocumFN7 No. No cHANEitsi:-.), Cf: Ut.AS3IFI: ''40/40 T- Vbgto TOP SECRETif ZApProved for Release: 2020/01/23 C03000009W . . .. Approved for Release: 2020/01/23 C03000009 � ...� *ay iiva,r IX K. II Approved for Release: 2020/01/23 C03000009 -rnr# errnrrr Approved for Release: 2020/01/23 C03000009 e. 23 DECEMBER 1958 I. THE COMMUNIST BLOC Published Soviet budget figures call for increase in revenue and spending of 12 percent over last year. Flow of East German refugees to Ber- lin at record low, with one exception, since 1949. Communist China agrees to supply US- made arms to Algerian rebels. II. ASIA-AFRICA South Korea - Rhee government moving police into Seoul to cope with opposi- tion to legislation further restricting civil liberties. III. THE WEST 0 Venezuelan junta announces increased tax rates to yield government more than 50-percent share of profits of foreign companies. Approved for Release: 2020/01/23 C03000009 Approved for Release: 2020/01/23 C03000009 446�4 TOP SECRET CENTRAL INTELLIGENCE BULLETIN K 23 December 1958 DAILY BRIEF I. THE COMMUNIST BLOC Soviet budget: The summary of the Soviet 1959 budget, as publicized by the USSR, calls for a sharp rise in revenues and expenditures--about 12 percent over last year as com- pared with an average increase of 4 percent annually in the previous years since 1953. Over two thirds of this total in- crease will go toward financing the national economy, pri- marily into investment for further rapid industrial expansion as the new Seven-Year Plan gets under way. Explicit defense spending of 96.1 billion rubles maintains such spending at the level of the last 3 years. However, unstated defense expend- itures included in other budget categories may have increased. (Page 1) Berlin: The flow of East German refugees into West Berlin�rig-reached the lowest weekly rate, with one excep- tion,since 1949. Although refugee figures normally decline during the holiday season, American officials in Berlin attrir- bute the present sharp drop in part to more effective East German controls over the approaches to East Berlin and un- certainty among potential refugees, many of whom would normally remain in West Berlin, over the future status of the city. (Page 3) Communist China - Algerian rebels:� Chou En-lai has as- sured a visiting Algerian rebel (FLN) delegation in response to its request for American-made arms that Peiping would supply a "limited number of light weapons" provided the FLN would arrange transportation through the UAR, Peiping has access to US- made materiel acquired during the Chinese civil war and the Korean conflict. Supplying weapons will enhance Peiping% prestige with the FLN leaders. (Page 4) TOP SECRET AApproved for Release: 2020/01/23 C03000009/ Approved for Release: 2020/01/23 C03000009 TOP SECRET *41.0 II. ASIA-AFRICA South Korea: The Rhee administration is secretly mov- ing large numbers of selected provincial police to Seoul to reinforce National Assembly guards in overcoming a sit-down by opposition Democrats, which is blocking action on a revi- sion of the National Security Law. Despite possible adverse effects the further restriction of civil liberties will have on Korea's international position, the governmkant has adopted an uncompromising stand on the bill and is prepared to use an strong-arm tactics necessary to secure its enactment. (Page 5) III. THE WEST Venezuela: The junta has announced a change in tax laws applicable to 1958 income, which will in effect modify the 50-50 division of profits between the government and for- eign oil and mining companies. The step, which was not ex- pected until after the inauguration of President-elect Betan- court early next year, was taken without consulting the com- panies. This change could provide the government with as much as 65 percent of some oil company profits. Page 6) 23 Dec 58 DAILY BRIEF ii VA TOP SECRET /Approved for Release: 2020/01/23 CO3000009 e-urvikrrtyrsrlarrni A 1 Approved for Release: 2020/01/23 C03000009 NEW kno* I. THE COMMUNIST BLOC Soviet Budget for 1959 The summary of the Soviet 1959 budget, aspublicized by the USSR, indicates a sharp rise in revenues and expend- itures--about 12 percent over last year's planned budget as compared with an average increase of 4 percent annually since 1953. Over two thirds of this total increase will go to financing the national economy, primarily into investment for further rapid industrial expansion. Explicit defense spending, planned at 96.1 billion rubles, is at virtually the same level as it has been since 1956; how- ever, unstated defense expenditures appear in other budget categories. The general growth of planned expenditures is sufficiently large to permit continuation of the rapid growth of those military programs financed under other budgetary categories. Scientific research establishments are allocated about 27 billion rubles as compared with approximately 18 billion rubles announced for 1958. However, this increase may result in part from changes in accounting categories. Centrally planned capital investment is to grow 11 per- cent as compared to a planned growth of 7.4 percent in 1958 and an expected actual increase of 9.2 percent. In specific industries, capital investment is to increase 32 percent in ferrous metallurgy, 72 percent in chemicals, 23 percent in oil and gas, and 35 percent in engineering. This effort is being Made to implement the priorities of the Seven-Year Plan in the face of underfulfillments during 1958. During the first nine months of 1958, the plan was underfulfilled12 percent in ferrous metallurgy and 22 percent in the chemical industry, chiefly because of shortfalls in equipment procure- ment. This may account in part for the 1959 plan's notably higher emphasis on investment in the engineering industries. Capital investment in housing is to increase nearly 5 billion rubles, or 14 percent, over last year, thus continuing the em- hasis on housing. CONFIDENTIAL 23 Dec 58 CENTRAL INTELLIGENCE BULLETIN Page Approved for Release: 2020/01/23 C03000009 ArNeNAL 'my I 7 Approved for Release: 2020/01/23 C03000009 %we Industrial output in 1959 is scheduled to increase 7.7 percent, almost the same rates (7 and 7.6 percent) planned for 1957 and 1958. In 1957, the plan was substantially over- fulfilled, a pattern which apparently will be repeated again for 1958. Soviet leaders may expect :overfulfillment again in 1959; the average annual rate of increase necessary to f7lfill the Seven-Year Plan is 8.7 percent. CONFIDENTIAL 23 Dec 58 f"=Is.1TD A I IKITFI I irtrtorp RI II PTIKI Approved for Release: 2020/01/23 C03000009 Page 2 Approved for Release: 2020/01/23 C03000009 Name 'rime East German Refugee Flow Drops to New Low The refugee exodus to West Berlin dropped last week to the lowest figure since Christmas week, 1954. Some 1,163 were registered in the week ending 16 December compared with 1,341 and 1,723 in the preceding two weeks. Intellectuals, however, are arriving at roughly the same rate as in recent months. The 1954 Christmas week figure was 1,092, the low- est since registration was begun in 1949. Although the flow of refugees normally declines during the holiday season, American officials in Berlin attribute the pres- ent sharp drop in part to more effective East German controls over the approaches to Berlin and uncertainty among potential defectors over the future status of the city. East German authorities are now requiring special passes to travel to any point within 50 kilometers of Berlin. While many refugees customarily remain as permanent residents of West Berlin, fears of future Communist control of West Berlin as a result of the new Soviet initiatives may have contributed to the de- crease. East German authorities are continuing to show concern over the flow of medical men to the West, which, despite some drop in number, now includes a larger percentage of highly qualified personnel, The regime reportedly plans at the forthcoming fourth central committee plenum to introduce further concessions to doctors in an effort to deter the exodus and even to attract West German practitioners. SECRET 23 Dec 58 CENTRAL ItsiTFI I InFNCF RI II I FTIKI Page 3 Approved for Release: 2020/01/23 C03000009 TCD CPCTATT Approved for Release: 2020/01/23 C03000009 vgro, Peiping Pledges Arms Support to Algerian Rebels The Chinese Communists have assured a delegation from the Algerian National Liberation Front's (FLN) provisional Algerian government�which ended a much-publicized, "official" visit to Communist China on 21 December�that they would _s play the rebels with a "limited number of light weapons Nasies ambassador in Peiping, follow- ing an interview with Premier Chou En-lai, indicated that the rebels had specified the arms be "of American manufacture" and had agreed to a Chinese stipulation that they be channeled through the UAR. Shipment as far as Egypt would apparently be handled by the Chinese,who are also exploring the possibil- ity of aiding the Algerians financially. The rebels' expressed preference for American weapons was probably inspired primarily by practical, but to some ex- tent also by political, considerations. The rebels are experi- enced in the use of American weapons which have always formed an important part of �their heterogeneous armament. Further- more, when the rebels concluded an arms deal with the Czechs in 1957--the only other arms deal they are known definitely to have signed with a bloc country--the weapons were to be not readily identifiable as Of bloc origin. Peiping can presumably satisfy the Algerians by drawing on stocks of US-made materiel of World War II vintage acquired during the Chinese civil war and the Korean conflict. Delivery to the UAR of the arms would not solve the rebels' most pressing supply problem,which is the infiltration of materiel past increasingly effective French border fortifications. If some of the weapons should be captured along the border, this would probably be regardedby some French elements as proof that Am- erican arms shipped to Tunisia are reaching the rebels. Peiping, wishing to impress Arab-African states with the value Of its military viding artil- lery to the UAR. TOP SECRET 23 Dec 58 CENTRAL INTELLIGENCE BULLETIN Approved for Release: 2020/01/23 C03000009 Page 4 TrIP CFC'DFT Approved for Release: 2020/01/23 C03000009 IL ASIA-AFRICA South Korean Government Augments Assembly Guard The South Korean Government has secretly augmented the National Assembly guard with approximately 275 plain- clothes men from the provincial police forces. The goverm- ment apparently intends to use force if necessary to over- come a sit-down strike by opposition Democrats in the as- sembly building. The Democrats, who have barricaded themselves in the building since 19 December, are preventing passage of a re- vision to the national security law. They are opposed to the loose definitibn of espionage in the revision which would make possible severe curtailment of political and press free- dams. The Democrats' chances for obtaining a compromise on the bill appear dim as the government party seems deter- mined to pass the bill unchanged in order to prevent an ad- ministration defeat in the 1960 presidential election. government con- cern a incidents may occur outside the capital and warns police chiefs to exercise vigilance. The government's tactics will contribute to the growing sense of futility among the South Korean.pople, who are already demoralized by inflation, a deceleration'in industrial pro rp.RR nri A n rpa co in politi- cally motivated bank loans. TOP SECRET 23 Dec 58 CENTRAL INTELLIGENCE BULLETIN Approved for Release: 2020/01/23 C03000009 Page 5 crw171flrTJT1AL Approved for Release: 2020/01/23 C03000009 Nevi III. THE WEST Venezuelan Junta Modifies Tax Policy Toward Foreign Oil Industry By a change in tax laws the Venezuelan junta has in ef- fect altered the application of the 50-50 profit-sharing for- mula between the government and the foreign oil and mining companies in a manner which may provide an estimated 60 to 65 percent of the profits for the government. The practi- cal effect of this change, which is in the ordinary income tax law and not in the "additional tax law" ensuring the govern- ment at least 50 percent of net profits of the extractive in- dustries, can only be estimated at present. Applicable to 1958 incomes, the tax change was publicly announced on 20 December without consultation with the oil companies--the principal corporations affected. No change was expected until after the inauguration of President-elect Romulo Bet- ancourt early next year. The unilateral adoption of this measure could set a prec- edent for similar government action in the future and, ac- cording to the American Embassy in Caracas, could touch off an adverse chain reaction against American investments in other parts of the world. In any case the move will prob- ably have an adverse effect, at least for several months, on the rate of foreign investment in Venezuela. All major parties and their leaders were committed pri- or to the 7 December national elections to seek a higher share of company profits for the government. Betancourt had stated, however, that he would carry out this policy only after careful study and negotiation with the companies. Although he appar- ently knew in general terms of the action being planned by the interim government, Betancourt was not informed of details nor did he collaborate in the tax law change. He may lose some of the domestic political benefits he would have derived from obtaining the change during his presidency, -CONFIDENTIAL 23 Dec 58 CPINJTDAI !MITI I itzrkirr RI III FTIkl Approved for Release: 2020/01/23 C03000009 Page 6 Approved f-c;ri.Raelz-z7. 701707071/1 C03000009 *we but may also avoid being tagged with any onus attached to such unilateral action. Moreover, his government will presumably benefit immediately from any increased revenues without the delays caused by study and bilateral negotiation. He may also seek to modify the "additional tax law," and thus make further inroads on the net profits of the oil companies. CONFIDENTIAL 23 Dec 58 CFNTRAI INTFI I inFtsrF RIII I FTIN Approved for Release: 2020/01/23 C03000009 Page 7 , rinhreinvmpr A I Approved for Release: 2020/01/23 C03000009 Nap) Nind 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 CONFIDENTIAL Approved for Release: 2020/01/23 C03000009 1#/ �TOP�SECRET� myrzzzAApproved for Release: 2020/01/23 C03000009-iwzmwmmZ