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January 17, 1958
PDF icon CENTRAL INTELLIGENCE BULL[15772430].pdf804.78 KB
� Zir Zd ,Z7Z/Zi WZrZ/Z/Zi WrZ/ZZZMZI WZZ/9 Approved for Release: 2019/08/20 C03015196 3.3(h)(2) IF *we *IS I3.5(c) 17 January 1958 Copy No. 137 CEN' RAL IVIELLIGENCE BULLETIN' G c� � v-sit. taw:). fly Nirrosclist f.E1 V IA: NI eGAT N. f: 1.1 ECLASSINEtt Tw e. 0: 745 c uHNEN cuiss. A H NG D /OJT � .2. AT � � u 2 OAT REVIEWER: -TOP-SEC-R-ET- h WZZAWWWW,Z, Approved for Release: 2019/08/20 C03015196/ WI "Mf Mfrm _Approved for Release: 2019/08/20 C03015196 _ _ 4 Approved for lVeleas172717/08/20 C03015196 Approved for Release: 2019/08/20 C03015196 vorif CENTRAL INTELLIGENCE BULLETIN 17 January 1958 DAILY BRIEF I. THE COMMUNIST BLOC The USSR, as well as certain Western nations includ- ing the US, will probably be approached by Ceylon for a total of $60,000,000 in loans at 2-percent interest to re- habilitate flood-damaged areas. Moscow normally grants loans at this low interest rate and currently has a large economic mission visiting Ceylon. The USSR has already offered to aid the Ceylonese rubber industry and to pur- chase rubber at premium prices. iv The Czech regime is having increasing difficulty in controlling opposition among local party and government c,10 officials in the Slovak region. Slovak nationalists are at- tempting to use Prague's economic decentralization pro- gram for their own local benefit at the expense of nation- wide goals. (Page 1) (MAP) The initial Sino-Soviet bloc reaction to President Eisenhower's reply to Bulganin% letter of 10 December repeats the Soviet line that the United States Government is not interested in negotiations and stands alore in op- posing a summit meeting. The USSR has refused an Afghan request for aid on a grant basis. Moscow insists that the $15,000,000 al- lotted to Afghanistan for oil exploration and development be treated as a loan, due in five annual installments starting in 1962. (Page 2) (MAP) AA:27N Approved for Release: 2019/08/20 C03015196 ks. t\k-1 \\N Ii '1:\M ii 4 / 0 \Approved for Release: 2019/08/20 C03015196 '441 - Approved for Release: 2019/08/20 C03015196 �41.- Omar riff/ I el.Nof II. ASIA-AFRICA A showdown between the Indonesian central govern- ment and dissident leaders may be precipitated if Dja- karta agrees to deliveries of extensive military equip- ment from the Soviet bloc. An Indonesian military pur- chasing mission is now seeking arms in Eastern Europe. Debate on the $100,000,000 Soviet economic loan agree- ment, including a provision for cooperation on peaceful uses of nuclear energy, is about to commence in the In- donesian parliament. (Page 3) � Political tension in Syria remains high. Foreign Minister Bitar, a leader of the civilian socialist-na- tionalist;group, has gone to Cairo, probably to counter arguments for a military coup advanced by the group headed by Syrian Chief of Staff Bizri, who talked to Nasir on 15 January. Vice Premier Azm, the leading pro-Com- munist civilian, has been meeting with Deputy Chief of Staff Nafuri and chief of army intelligence, Sarraj. Azm has announced a new "progressive?' party will be formed. Syria appears to be expanding its support of the Al- gerian rebels. Damascus has apparently agreed to fur- nish military instructors and will probably agree to a rebel request for Syrian passports to facilitate the trans- it of Algerian scientific students to bloc countries. (Page 4) Turkey's rejection of the latest British proposals for a Cyprus solution demonstrates that Turkey's Cyprus policy has hardened. Greek Turkish tension on Cyprus has increased and any misstep might result in outbreaks. (Page 5) DAILY BRIEF ii --rap-SECRET- ch 17 Jan 58 N'\\ The Shah has reiterated to both the British ambas- sador and General Maxwell Taylor that� Iran's future policy toward the West will be dependent on decisions taken at the Baghdad Pact Ministerial Meeting on 27-31 January. The Shah's warning is in line with his repeated attempts to ob- tain more American military aid and his recent threats to leave the pact. � The appointment of a provisional Cambodian govern- ment headed by conservative Penn Nouth on 16 January has ended the administrative crisis following Prince Sihanouk's dissolution of the national assembly on 8 Janu.ary. The po- litical orientation of this cabinet, which presumably is in- tended to last until new general elections are hbld within two months, is consistAnt with Sihanolkt recent anti-Com- munist statements� III. THE WEST Guatemalan President Flores seems determined to pre- serve order during and after the bitterly contested elections of 19 January, and has announced that army leaders are pre- paring to back him up with force if necessary. There is some question, however, of the army's willingness to use force against the sustained mob violence threatened by both the rightist presidential candidate Ydigoras and by extreme left- ist leaders if Cruz Salazar is declared the winner. It re- fused to act decisively in similar circumstances last October. � The French, German, and Italian defense ministers are to meet on 21 January to work out details of a tripartite agree- ment for the production of jet planes, missiles, and nuclear warheadss--the last to be manufactured in France with German t, and Italian tedmical assistance. Earlier details of such an c9 /5 agreement, which will be extended to the Benelux countries but exclude Britain, omitted the nuclear warhead proposal. (Page 6) 17 Jan 58 _Approved for Release: 2019/08/20 C03015196 *IS I WI e..71.-A-ALia.... r k\\\ \\*-' N �NNN '4* DAILY BRIEF 111 \\N TOP SECRET Nkpproved for : 2016)08/20 C03015198k Approved for Release: 2019/08/20 C03015196 = 1 kJ 1.1-1 db West German Foreign Ministry officials favor of- fering India new credits of $72,000,000 for economic de- velopment programs, besides postponing payments on the principal of India's $144,000,000 debt. For political rea,.;.: sonslionnwould like to encourage further private invest- ment in India by German firms. Bonn states that German firms are short of funds, and urges joint Western financial aid. (Page 7) Britain will resume financial negotiations with Egypt on 30 January in Rome. Although the British representa- tives have considerable flexibility in their proposals, the negotiations will take some time, and the British are going to insist on prior concessions. Egypt appears ready for an agreement, and the British are looking forward to an even- tual resumption of diplomatic relations with Cairo, which they believe will improve their relations with other Arab states. (Page 8) IV, SIGNIFICANT INTELLIGENCE REPORTS AND ESTIMATES Watch Committee Conclusions. 17 Jan 58 (Page 9) DAILY BRIEF iN TOP SECRET imApproved for Release: 2019/08/20 C03015196 AnimA 80115 Approved for Release: 2019/08/20 C03015196 Approved for Release: 2019/08/20 C03015196 N. M.A....ill AL MAW VW, L 1�E COMMUNIST BLOC Slovak Nationalism Increasing Pr,oblem for Czechoslovak Regime ' Nationalist elements in Slovakia apparently are at- tempting to use the Czechoslovak regime's economic decentralization program to benefit their own regional interests at the expense of nationwide goals. In a strongly worded speech to the Slovak party cen- tral committee plenum meeting of 9-10 January, Slovak Party First Secretary Bacilek complained that there were separatist tendencies in various sectors of cultural, po- litical, and scientific life, and even in some of the central offices. The dismissal on 13 January of Slovak Deputy Premier Stefan Sebesta, responsible for industrial and urban construction, probably is the first step to remove officials with nationalistic tendencies, who, according to Bacilek, have appeared at the highest levels of the Slovak government. The resurgence of separatism within Slovakia since the Soviet 20th party congress in February 1956 has been of mounting concern to the Prague regime, and since the Slovak party congress in April 1957 has been condemned in increasingly stronger terms by Czech party boss Antonin Novotny. The tone of Bacileles speech indicates that the situation now demands the ruthless stamping out of "bour- geois nationalist" elements promised by Novotny last April when he first publicly warned the Slovak dissidents to con- form or suffer the consequences. CONFIDENTIAL 17 Jan 58 CENTRAL INTELLIGENCE BULLETIN Page 1 Approved for Release: 2019/08/20 003015196 Approved for Release: 2019/08/20 C03015196 ei'mak Approved for Release: 2019/08/20 C03015196 Approved for Release: 2019/08/20 C03015196 .11 & 1..0 LAL L4 I No' USSR Refuses to Change Payment Terms of Afghan Oil Exploration Agreement The USSR has turned down an Afghan request that financing of the joint Soviet-Afghan agreement for ex- ploration and development of oil resources be changed from a loan to a grant basis, The Afghan Embassy in Moscow reported on January that in accordance with the original proposal the $15,000,000 cost of the project must be treated as a loan repayable in five annual installments starting in 1962, probably at 2.5-percent interest. The agreement, announced last summer and signed in Kabul on 7 January 1958, stipulates that Moscow is to furnish technicians and equipment from the USSR, Czecho- slovakia, and Rumania to explore oil resources in northern Afghanistan. Afghanistan had informed the USSR and the US in Decem- ber that economic difficulties forced it to seek grant aid in- stead of loans, excepting projects already agreed upon. 17 Jan 58 CENTRAL INTELLIGENCE BULLETIN Page 2 Approved for Release: 2019/08/20 C03015196 Approved for Release: 2019/08/20 C03015196 A, A., AAR./ "Ai If AL "A 411.4.0 'Nor" II. ASIA-AFRICA Indonesia A final break between Indonesia's dissident leaders and the central government may be precipitated if Djakarta con- cludes an agreement for the delivery of arms from the So- viet bloc. such an acquisition, even through Egypt, could be the signal for the declaration of a rival Indonesian government by the dissidents. I the dissidents feel that the arrival of Soviet arms would upset the existing "balance of forces" be- tween Djakarta and the regions and that a showdown should be precipitated before the dissidents are placed on the de- fensive. The Indonesian arms purchasing mission has just arrived in Prague, after talks in Belgrade, and will proceed next to Warsaw. A further factor in this situation may be the Indonesian parliamentary debate, beginning about 18 January, on ratifi- cation of the $100,000,000 Soviet economic loan agreement, which includes a provision for cooperation on peaceful uses of nuclear energy. Ratification would open the way for the arrival of Soviet technicians and probably would be viewed by the dissidents in much the same light as an arms deal. CONFIDENTIAL 17 Jan 58 CENTRAL INTELLIGENCE BULLETIN Page 3 Approved for Release: 2019/08/20 C03015196 Approved for Release: 2019/08/20 C03015196 Niro Nog, New Syrian Support for Algerian Rebels Indicated Syria appears to be furnishing increased support to the Algerian rebels in their struggle against France. the Syrian Embassy was expecting the arrival of three Syrian officer-instructors Damascus had agreed to send to Tunis�presumably to train rebel troops at bases in Tunisia or Algeria. the instructors were ur- gently needed and asked that they be sent as soon as pos- sible. appreciation "for all Syria was doing to further the cause of Algerian liberation," also requested twenty Syrian passports to enable Algerian students to go to scientific institutes "in Czechoslovakia, China, or some other country." Syria, which has in the past been an important source of military, financial, and diplomatic assistance to the Al- gerians, is also reported to have made new supplies of arms available, the first of two shipments of good quality heavy weapons, including mortars and bazookas, was due to reach Alexandria by ship this week en route to Algeria via Tunisia TOP SECRET 17 Jan 58 CENTRAL INTELLIGENCE BULLETIN Page 4 Approved for Release: 2019/08/20 C03015196 Approved for Release: 2019/08/20 C03015196 Nuoi .Now' Turks Reject British Proposal for Cyprus Solution Turkey's abrupt rejection of Britain's latest proposals for a Cyprus solution, emphasizes the stiffening of the gov- ernment's Cyprus policy since the return of Fatin Rustu Zorlu as foreign minister. Ankara insists that the offer of self-determination "on absolutely equal terms" for both Greek and Turkish Cypriots be implemented immediately. The British offer, delivered to the Turkish Foreign Min- istry for its informal comments, had provided for a seven- year period of self-government, after which the Greek and Turkish Cypriots could determine separately their own future status. On Cyprus, Turkish Cypriot support has solidified around Fazil Kutchuk, who plays on the fears and prejudices of his followers and who appears to have the full support of Ankara. Increasing tension has heightened the probability that the Turk- ish. Cypriots now will develop an efficient underground organi- zation, thus increasing the seriousness of any outbreak of vio- lence. Seventy-nine percent of the local police are Turkish Cypriots whose loyalty to the British Government mighLciuickiv i e face of serious intercommunal warfare. 17 Jan Jan 58 CENTRAL INTELLIGENCE BULLETIN Approved for Release: 2019/08/20 C03015196 Page 5 Approved for Release: 2019/08/20 C03015196 *gate III. THE WEST Italy. France, and, Germany May Produce Nuclear Warheads Jointly The French, German, and Italian defense ministers will meet on 21 January to work out details of the tri- partite arrangement for production of jet planes, missiles, and nuclear warheads to which they agreed during the Paris NATO meeting. According to Italian Defense Minister Taviani, the agreement calls for all three countries to produce jet planes and one type of missile body under an American license. Nuclear warheads, however, are to be manu- factured only in France, with German and Italian techni- cal assistance, and tested in the Colomb-Bechar proving ground in the Sahara. Early December reports of such an agreement failed to mention the nuclear warhead proposal, which was apparently added on French initiative during the NATO talks. Present plans call for the tripartite agreement to be extended eventually to the Benelux countries, but to exclude Britain. It therefore appears that Western European think- ing on common defense production has not been clarified, as the Netherlands still supports NATO sponsorship of such a program and the British favor proposals "in a WEU context." -SECRET_ 17 Jan 58 CENTRAL INTELLIGENCE BULLETIN Page 6 Approved for Release: 2019/08/20 C03015196 Approved for Release: 2019/08/20 C03015196 tjLPL LE. zzo.s.:a v .1 1-12.11.1 Bonn to Offer Additional Economic Aid to India The West German Foreign Ministry, in negotiations with India scheduled to begin on 20 January in Bonn, is prepared to offer new credits up to $72,000,000 to finance the purchases of priority items for India's five-year plan. Bonn will also grant India's previous request to defer un- til after 1961 payments on the principal of its present $144,000,000 loan. The new credits would be handled by a special organization or trust fund, with 10 percent of the burden carried by private German firms and the rest by the government. West German Foreign Ministry officials emphasize the political importance of providing assistance to India, and would like even further investments by private German firms in India. They stress Germany's shortage of invest- ment capital, however, and suggest association with the United States in a Joint economic aid program for India. The new German financial offers would strengthen the political prestige of Indian Finance Minister Krishnamachari, who toured Western Europe and the United States last fall seeking foreign aid. -CONFIDE:NMI- 17 Jan 58 CENTRAL INTELLIGENCE BULLETIN Page 7 Approved for Release: 2019/08/20 C03015196 Approved for Release: 2019/08/20 C03015196 111�01111 ������ liAlm�I Noe' vv.( Anglo-Egyptian Financial Talks to Resume 0n30 January Britain will resume negotiations with Egypt in Rome on 30 January on releasing blocked sterling funds in return for Egyptian compensation for property seized during the Suez hostilities. Although Egypt appears ready for a financial agree- ment now, negotiations will probably take some time. The British cabinet has authorized its negotiators to work out an agreement Egypt has agreed to begin negotiations in Febru- ary with a committee representing the company stockholders. Britain is probably motivated by the belief that resump- tion of diplomatic relations with Egypt will induce Saudi Arabia and Syria to restore relations also, thus permitting Britain to become more active politically in the Middle East. London's independent efforts for a rapprochement with King Saud have been unsuccessful so far. the absence of Anglo- Egyptian diplomatic relations makes it difficult for any Arab leaders to cooperate openly with Britain. 17 Jan 58 CENTRAL INTELLIGENCE BULLETIN Page 8 Approved for Release: 2019/08/20 C03015196 Approved for Release: 2019/08/20 C03015196 'Nap" 'Nosio W. SIGNIFICANT INTELLIGENCE REPORTS AND ESTIMATES Watch Report 389, 16 January 1958 of the Intelligence Advisory Committee Conclusions on Indications of Hostilities On the basis of findings by its Watch Committee, the In- telligence Advisory Committee concludes that: A. No Sino-Soviet bloc country intends to initiate hostilities against the continental US or its possessions in the im- mediate future. B. No Sino-Soviet bloc country intends to initiate hostilities against US forces abroad, US allies or areas peripheral to the orbit in the immediate future. C. 1. A deliberate initiation of hostilities in the Middle East is unlikely in the immediate future. However, ten- sions in the Middle East continue to create possibil- ities for serious incidents. 2. There is no evidence of Sino-Soviet intention to become militarily involved in the Indonesian situation. How- ever, there are continuing opportunities for an expan- sion of Sino-Soviet bloc influence in Indonesia as evi- denced by Indonesian purchasing missions still nego- tiating for bloc military equipment. Although Indo- nesian Communists are exploiting political instability and economic deterioration, which continue to provide opportunities for a Communist take-over on Java, there is no evidence that this is likely to take place in the im- mediate future. TOP SECRET 17 Jan 58 CENTRAL INTELLIGENCE BULLETIN Page 9 Approved for Release: 2019/08/20 C03015196 � - Approved for Release: 2019/08/20 C03015196 _ _ _ . DISTRIBUTION 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 Mobilization Operations Coordinating Board Board of Consultants on Foreign Intelligence Activities Special Assistant for Foreign Economic Policy The Treasury Department The Secretary of the Treasury The Department of State The Secretary of State The Under-Secretary of State The Counselor The Deputy Under-Secretary for Political Affairs The Deputy Under-Secretary for Economic Affairs The Deputy Under-Secretary for Administration 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 Deputy Director for Intelligence, The Joint Staff Assistant Chief of Staff, 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 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 I Ifiti ITAMMITT A Approved for Release: 2019/08/20 C03015196