CURRENT INTELLIGENCE BULLETIN - 1955/12/04

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 03019101
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 11
• Document Creation Date: September 20, 2019
• Document Release Date: September 26, 2019
• Publication Date: December 4, 1955

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4 December 1955
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CURRENT INTELLIGENCE BULLETIN
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CONTENTS
1, THE BERLIN SITUATION (page 3).
2, AFGHANISTAN THREATENS TO DROP AMERICAN
DEVELOPMENT PROJECT (page 4).
3. SUPREME SOVIET SESSION CALLED FOR LATE
DECEMBER (page 5).
4. RUMANIAN LEADER PROMISES CO-OPERATION TO
IMPROVE RELATIONS WITH US (page 6).
5. USSR OFFERS LOAN TO LOWER AUSTRIA (page 7).
6. ARMY MAY SEIZE CONTROL IN PERU (page 8).
* * * *
THE ARAB-ISRAELI SITUATION
(page 9)
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1. THE BERLIN SITUATION
Recent East German actions and
propaganda statements indicate that
the detention of two American congress-
men on 27 November was the first of a
series of new Communist harassments
designed to force Western recognition
of East Germany and its authority over
the Soviet sector of Berlin. While Al-
lied access to East Berlin will probably not be cut off, the
German Democratic Republic (GDR) will try to make access
subject to its laws. Western acceptance of this situation
would imply recognition of East German authority over East
Berlin.
According to the Western press, the
Communists have now informed Bonn that the East and West
German traffic ministries must negotiate on the future of
canal traffic through the GDR to Berlin. The East German
regime in October refused to renew yearly shipping permits
for barges bringing supplies to the Western sector, but barge
traffic has continued.
New measures to restrict the movements
of Berliners are foreshadowed by a "particularly bitter"
speech on 30 November by the East sector's Mayor Ebert,
according to the American mission in Berlin. The threat of
such restrictions was implied in Ebert's statement that the
West Berlin administration must bear responsibility for all
difficulties for the West Berliners arising from its policy of
"sabotage and disruptive activities" against East Germany.
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2. AFGHANISTAN THREATENS TO DROP AMERICAN
DEVELOPMENT PROJECT
Foreign Minister Naim has "forcefully"
told Export-Import Bank representa-
tives now in Kabul that the American-
constructed Helmand Valley power and
irrigation project is such a drain on Afghanistan's limited
financial resources and has such poor prospects for suc-
cess that the Daud government has serious doubts on whether
to continue the project. According to Nairn, both the gov-
ernment and the people are becoming increasingly critical
of Morrison-Knudsen, the American construction company,
as well as of the project itself.
Finance Minister Malik expressed simi-
lar views and bluntly stated that Afghanistan would invest
no additional funds in the Helmand project. He asserted
that the United States would have to supply more financial
assistance to complete it.
Ambassador Ward comments that these
interviews strengthen earlier suspicions that Afghanistan
is attempting to provoke the American company into cancel-
ing its contract. Ward also fears that these moves may be
part of a larger scheme, encouraged by the USSR, to re-
move American influence from Afghanistan.
Comment .Naim and Malik may have overstated
Afghan disillusionment in order to press
for American financial assistance. However, their views
reflect the sharply critical attitude Afghan officials have
had this past year toward the Helmand Valley project--which
was begun at Kabul's desire and is financed to a considerable
extent by Export-Import Bank loans amounting to $39,200,000.
The blunt Afghan criticism may also be
in part inspired by the recently reported Soviet offer to pay
off the American loan and take over the Helmand project on
very favorable terms. (Concurred in by ORR)
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3. SUPREME SOVIET SESSION CALLED FOR LATE
DECEMBER
The USSR Supreme Soviet meeting
scheduled for 23 December has most
probably been called to hear a report
on the current trip of Bulganin and Khrushchev to India,
Burma, and Afghanistan. The recent foreign ministers'
conference at Geneva may also be discussed. Discussion
and ratification of other problems at this time appears
extremely unlikely.
The report to the Supreme Soviet, as
a follow-up to the August report on the summit meeting,
will probably emphasize--as propaganda has--that while
the foreign ministers' meeting reached no agreements it
made progress in publicizing and clarifying the issues.
While the West will be blamed for the lack of immediate
agreement, major emphasis is likely to be placed on the
long-run prospects for agreement because of growing pub-
lic support for the conciliatory proposals of the USSR.
Most attention during the session will
presumably be devoted to the success of the South Asian
trip, as a means of demonstrating Moscow's continuing
devotion to the spirit of Geneva and Bandung. Thus stress
will be placed on the common interests of the USSR, India,
Burma, and Afghanistan and other Afro-Asian powers in
the "five principles," their mutual opposition to colonialism
and military blocs, and the progress the Asian countries
can make with Soviet economic and technical assistance.
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4. RUMANIAN LEADER PROMISES CO-OPERATION TO
IMPROVE RELATIONS WITH US
Party First Secretary Gheorghiu-Dej,
in an unprecedented conversation at
the Yugoslav national day reception in
Bucharest on 29 November, stressed
to American minister Thayer the need to build up close
cultural and economic relations between Rumania and the
United States. Dej expressed great interest in arranging
for increased trade and promised Rumanian co-operation
in removing the retaliatory measures which have been set
up in the past.
Soviet ambassador Yepishev's efforts
to break up the two-hour conversation were ignored by the
Rumanians.
Comment While lesser Rumanian officials have
expressed a willingness to take mutual
steps to improve relations, this is the first time that
Gheorghiu-Dej has discussed the subject with Western of-
Yepishev, like most of the other Soviet
ambassadors to the Satellites, is a career party official.
Although the Rumanians' apparent lack of respect for him
seems unusual, similar instances have been noted previously
by Western diplomats in conjunction with his predecessor.
Rumanian leaders have shown greater deference to M. B.
Mitin, the editor of the Cominform journal in Bucharest,
suggesting that he is the most important Soviet representa-
tive in Rumania.
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5. USSR OFFERS LOAN TO LOWER AUSTRIA
State Secretary Kreisky of the Austrian
Foreign Ministry has informed the
American embassy that negotiations
for a Soviet loan of 800 million schil-
lings about 00,000) to the Lower Austrian government
had been going on for some time. He said that apparently
the Austrian ambassador in Moscow and the People's Party
members of the Lower Austrian government had been in-
volved, with the Foreign Ministry not informed as far as
he knew.
The terms for the loan would be 20 years
at 3 percent, and the USSR insists on the loan being guaran-
teed by the Austrian government, but no further conditions
are known.
Kreisky was opposed to the loan and
thought it could be blocked, but he understood that Chancel-
lor Raab had told the People's Party in Lower Austria that
he would not oppose it.
Comment The loan is presumably to be used to
meet the financial needs of NIOGAS, an
oil company formed during October by the Austrian People's
Party in partnership with the government of Lower Austria,
which it dominates. NIOGAS was created to loosen the hold
of the Socialist-dominated Ministry of Nationalized Industry
on former Soviet-administered oil properties, and Socialist
members of the federal coalition would probably block govern-
ment agreement to the loan.
. In addition to gaining an economic toehold
in Austria, the Soviet Union would be interested in making it
unnecessary for NIOGAS to seek financial aid or technical
assistance from Western interests.
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6. ARMY MAY SEIZE CONTROL IN PERU
the military may be organming to force Odria to choose
a presidential candidate acceptable to them.
Comment
President Odria has been conducting
a large-scale campaign to ensure the
election on 3 June 1956 of a candidate selected by him, but
apparently has not been able to find a military figure both
amenable to him and able to command a substantial number
of votes. Odria's continued announcements that his succes-
sor should be a civilian have caused the Peruvian military
to fear that their privileged position might be endangered.
In any event, the military may feel that their interests would
be better protected by one of their own leaders than by a pup-
pet of President Odria.
The non-Communist but leftist APRA
party, claiming perhaps the largest number of adherents of
any Peruvian party, was the largest party in the coalition
administration of President Bustamante, who was ousted by
Odria's military coup in 1948.
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THE ARAB-ISRAELI SITUATION
Jformation as of 1700 r
he i army repor s a patrol clash on
the Gaza frontier. Otherwise there has been no military activity.
As the result of efforts by Colonel Cyril
Banks, member of the British Parliament and an economic ad-
viser to Egyptian prime minister Nasr, both Cairo and Tel Aviv
reportedly have agreed to refrain from all firing on the frontier.
According to information given to the Ainerican consul general
in Jerusalem, this new cease-fire is to go into effect after a pub- .
lic announcement concerning the arrangement is made in the British
Parliament, possibly on 5 December, The El Auja demilitarized
zone is apparently not included, since Nasr insisted that Israeli
settlers be removed from the area, and Israel reportedly did not
agree to this. Banks achieved this qualified arrangement after talks
with Nasr and top Israeli officials.
It is difficult to envisage a long-lasting cease-
fire on the Egyptian-Israeli border as a result of the present ef-
fort, but even a temporary lessening of tensions may furnish op-
portunity for further negotiations.
Syrian chief of staff Shuqayr informed the
American army attach& in Damascus on 3 December that he had
been "approached" on organizing terrorist Fedayeen operations
against Israel. After consulting with the Lebanese chief of staff
he had told the Egyptian military attach�hat neither Syria nor
Lebanon would permit terrorist operations from its territory, since
Israel would inevitably retaliate. In the event of full war, neither
Syria nor Lebanon would oppose the use of the Fedayeen.
The Arab states are intensifying their efforts
to cut off Israeli oil supplies as well as continuing other normal
boycott measures.
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According to to a 3 December Cairo radio re-
port, the Arab governments will request the Soviet Union to can-
cel its trade agreement with Tel Aviv under which it exports sub-
stantial quantities of oil to Israel. Another Cairo radio report
states that the Arab governments will ask Italy to suspend im-
plementation of the Italian-Israeli trade agreement which permits
Israel to import up to $1,500,000 worth of Italian oiL Italy has
already officially promised not to supply oil to Israel, accord-
ing to the director of Arab League petroleum affairs.
Although it is doubtful that the Soviet Union
and Italy will accede to Arab pressure, any cutting off of oil from
these sources would force Israel to revert to importing Venezue-
lan oil and paying higher transportation costs.
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