CENTRAL INTELLIGENCE BULLETIN - 1959/02/13

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03023215
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RIPPUB
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U
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17
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February 25, 2020
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February 27, 2020
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February 13, 1959
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Approveill:Wes. aya lliC03023215 � 3.5(c) 3.3( h)(2) 13 February 1959 Copy No. C 63 CENTRAL INTELLIGENCE BULLETIN -MID-SECRET DOC.UMENT NO. �17#4 NO Ci!AN'SiE. C`L .�.... NLX-F 2 b Approved for Release: 2020/02/21 C03023215 MP Ark Mk /ft Em Approved for Release: 2020/02/21 C03023215 tIPPN TOP SECRET Approved for Release: 2020/02/21 C03023215 Approved for Release: 2020/02/21 C03023215 13 FEBRUARY 1959 I. THE COMMUNIST BLOC Soviet economic aid delegation arrives In Nepal. II. ASIA-AFRICA Middle East oil price cuts may be im- minent; will increase Arab pressures for more participation in foreign oil operations. Tunisia may follow up its exposure of French espionage by abrogating tech- nical aid agreement. Cambodia - Plot against Sihanouk re- ceives material support from Saigon. okk III. THE WEST France may remove naval units from NATO's Mediterranean command. 0 Portugal - Salazar reported ill; retire- ment rumored as imminent. SECRET LATE ITEM Moscow charges breakdown of talks in Tehran is "turning point" in Soviet- Iranian relations. Approved for Release: 2020/02/21 C03023215 � "Approved for Release: 2020/02/21 C03023215 ;km1, %Ipiv oK-Th CENTRAL INTELLIGENCE BULLETIN 13 February 1959 DAILY BRIEF I. THE COMMUNIST BLOC USSR-Nepal: A Soviet delegation arrived in Nepal on 13 February for talks on economic and technical assistance. King Mahendra committed himself to accept Soviet aid dur- ing his visit to Moscow in June 1958, but he has since lost enthusiasm for Soviet assistance and will probably be cau- tious in accepting Soviet aid offers. (Page 1) IL ASIA-AFRICA Middle East oil: Price cuts in Middle East oil may be Imminent. This development, following the recent cut in the Venezuelan crude price resulting from the current world-wide oversupply of oil, is likely to dismay Arab government offi- cials. The Arab governments have actually planned on larger oil revenues. Arab pressure for more favorable profit-split- ting will increase, and forces favoring greater participation in oil company operations will be strengthened. (Page 2) Tunisia-France:CTunisia's disclosure of a French es- pionage network in Tunis probably will result in a substantial deterioration of its relations with France. Tunisia has dis- missed all French employees in its Postal, Telephone, and Telegraph system and may abrogate the technical aid agree- ment concluded last August to modernize Tunisia's telecommu- nications, (Page 3) TOP SECRET. //////,,117/1/// 0,4 Approved for Release: 2020/02/21 C03023215 Approved for Release: 2620/02/21 C03023215 v , Sire 61 *CambodiaCtieneral Dap Chhuon of northwestern Cambodia is being given material support by South Vietnam in his plans to move against the Sihanouk regime. He has set a tentative date of mid-March for his move and now is coordinating his plans with those of other plotters who have been assisted by both South Viet- nam and Thailand. The Phnom Penh government reportedly is afraid of breaking with Dap Chhuon, but is strengthening its secu- rity measures. Meanwhile, Sihanouk has been visiting Indonesia:) (Page 4) III. THE WEST France: CParis intends to propose to the North Atlantic Council that the NATO area of responsibility be extended to in- clude the Sahara. France's future relations with NATO may largely be determined by the council's reactions to the proposal Premier Debre recently emphasized that unless France obtains NATO backing for its Algerian policies it would be compelled to maintain its NATO-committed Mediterranean naval units "sep- arately." De Gaulle, however, explained that such units would "rush" to join NATO forces in case of war (Page 5) Portugal: Cportuguese Premier Salazar, as a result of a cardiac complication developed during an attack of pneumonia on 27 January, is in serious condition, It has been rumored that he would announe- ment on or about 20 February because of poor health (Page 7) LATE ITEM *USSR-Iran: Moscow has acted quickly to establish a record designed to justify retaliatory moves against the Shah's regime by broadcasting a Soviet memorandum handed to the Iranian for- (' eign minister in Tehran on 10 February, following the breakdown of negotiations for a nonaggression pact. The lengthy memorandum 13 Feb 59 DAILY BRIEF ii -TOP-SECRET // Approved for Release: 2020/02/21 C03023215 y Approyed for Release: 20201/02/21 C03023215 � Nrmi 'tool describes in detail Soviet efforts to meet the Shah's initiative by accepting Iran's initial draft and by conceding that Iran could remain in the Baghdad Pact. Moscow charges, however, that the decision of the Shah's government to renounce its own pro- posals was "prompted by the Americans," and marks a "turning point" in Soviet-Iranian relations. In reminding Tehran that the 1921 Treaty of Friendship obligates Iran "not to permit the con- version of its territory into a base for military action against the USSR," the memorandum suggests that Moscow is prepared to denounce a US-Iranian bilateral defense agreement as a vio- lation of the treaty. (Page 8) IV. SIGNIFICANT INTELLIGENCE REPORTS AND ESTIMATES (Available during the preceding week) Implications for the Free World and the Communist Bloc of Growing Nuclear Capabilities. ME 100-5-59. 3 February 1959. Consequences of a Soviet-Iranian Nonaggression Pact. SNIE 34-2-59. 3 February 1959. 13 Feb 59 DAILY BRIEF iii TOP SECRET vi Approved for Release: 2020/02/21 C03023215 Approved for Release: 2020/02/21 C03023215 ftwie I. THE COMMUNIST BLOC Soviet Delegation to Begin Economic Assistance Talks in Nepal Moscow has announced that a Soviet delegation arrived in Nepal on 12 February to open talks on economic and technical assistance. King Mahendra had committed himself to accept Soviet aid during his visit to the USSR in June 1958 and had agreed that, after study of specific assistance projects, his government would negotiate final details with a team of Soviet experts. How- ever, Mahendra a arentl had be n Soviet delegation Ian �vernm as cautioned him par ticularly against accepting projects which require the extended presence of Soviet technicians;) The Soviet offers, renewed during a visit to Katmandu by the Soviet ambassador in early December, reportedly involve a variety of projects, including roads and road-building equip- ment, a hydroelectric plant, and civil air assistance. Moscow would lend Nepal up to $7,500,000 to finance the cost of the projects. The Soviet announcement of the delegation did not refer to the subject of a visit to Nepal by President Voroshilov,- $s/loscow has reportedly exerted heavy pressure on Katmandu for the long- planned visit following Voroshilov's trip to India starting 24 Febru- ary, but Katmandu has attempted to put it off until next fall, using as an excuse the parliamentary elections scheduled to be held be- tween 18 February and 3 April under the new constitution,1 13 Feb 59 -SECRET CENTRAL INTELLIGENCE BULLETIN Page 1 Approved for Release: 2020/02/21 C03023215 Approved for Release: 2020/02/21 C03023215 II. ASIA-AFRICA Impending Price Cuts in Middle East Oil Plans of Western oil companies to cut prices of Middle East crude 5 to 10 percent within the next few days probably will set off a round of demands by area governments for a larger share of the profits in an effort to stave off revenue losses. The threat of price cuts, the first since 1953, comes at a time when Arab governments are demanding continued substan- tial production increases and a larger say in company operations. The reaction probably will be most severe in Saudi Arabia, which has experienced only moderate increases in revenues during the past two years in comparison with other Middle Eastern countries. Saudi Arabia's anti-American director of petroleum affairs last week indicated that his government was considering ways to put pressure on the Arabian-American Oil Company (Aramco) to assure a continually rising income. Cuts in the posted prices of Middle East crudes would be in reaction to cuts in Venezuela last week and reflect the world oversupply of crude oil. In recent years, Middle East output has been increasing at a faster rate than world demand, causing pro- duction declines or relatively slower rates of growth in other parts of the free world. This pattern, however, apparently now is due for a change. Petroleum consumption in the free world is expected to grow be- tween 5 and 10 percent annually over the next few years. Since the remainder of the free world's oil producers are seeking a larger share of this increase, expansion of Middle East output presumably will have to be curtailed. Coupled with lower rev- enues from lower prices, this condition is likely to increase ten- sions between the companies and the local governments in the area. CONFIDENTIAL 13 Feb 59 CENTRAL INTELLIGENCE BULLETIN Page 2 Approved for Release: 2020/02/21 C03023215 Approved for Release: 2020/02/21 C03023215 Noe Tunisia's 1elations W thFi�e Again Deteriorate [Disclosures regarding the operations in Tunisia of a French espicinage network�together with President Bourguiba's claim to a portion of the Sahara and the French shelling on 9 February of a Tunisian village�probably will result in a substantial deteriora- tion in Tunisia's relations with France. The espionage network involved some Tunisians as well as French telephone and embassy employees. It is reported to have been directed by an assistant French military attache, and to have sought information on Alge- rian rebel activities and contacts with high Tunisian officials by tapping telephone lines, including Bourguiba's telephone-.1 &he Tunisian secretary of interior claims that the network operated under cover of a French technical assistance program concluded in August. Under this program, France was to expend $1,640,000 toward the replacement of the Tunisian telephone sys- tem. This project and a contract let to a French firm in Novem- ber may both be terminated.-3 Part of the emphasis Tunisia is placing on these disclosures may The the result of France's refusal last month to transfer Tunisia's franc zone holdings to Xunisian control and to under- write Tunisian financial losses incurred by the devaluation of the French franc. The incident will be used to reduce still further France's influence and control in Tunisia. The dismissal of all French employees in the postal, telephone, and telegraph system-- all of whom were under contract--was such a move, and will win popular acclaim because of widespread unemployment among Tunisians. Etourguiba probably will also demand a substantial reduction in the 650-man French Embassy staff. CONFIDENTIAL 13 Feb 59 CENTRAL INTELLIGENCE BULLETIN Page 3 Approved for Release: 2020/02/21 C03023215 Approved for Release: 2020)02/21 C03023215 Noe Plots Against Cambodian Regime Proceeding ..ieneral Dap Chhuon is proceeding with preparations for a move against the Cambodian Government and now has the strong backing of South Vietnam. The Vietnamese have recently supplied him with a considerable sum of money, as well as radio operators and broadcasting equipment, to launch the coup.3 CChhuon's decision to postpone a unilateral move originally planned for 8 to 10 February apparently was prompted by his desire to coordinate action with dissident forces under former Cambodian Premier Son Ngoc 'Thanh and with former royal coun- cilor Sam Sary, who have been assisted by both South Vietnam and Thailand. Chhuon is wanting to "start work" on the same day as these forces so as to be "sure of winning." He has set mid-March as the tentative date for his move-.-) Echhuon seems undeterred by awareness that Sihanouk, who is winding up a state visit to Indonesia, has become suspicious. There are indications that the Phnom Penh regime is fearful of precipitating an open break with Chhuon, probably because of his strongly entrenched position in northwestern Cambodia and the allegiance he may command among the military elsewhere. The government, however, is urgently strengthening its military de- fenses in the Phnom Penh area and has also set up checkpoints on roads leading to the capital 13 Feb 59 CENTRAL INTELLIGENCE BULLETIN Page 4 Approved for Release: 2020/02/21 C03023215 Approved for Release: 2020/02/21 C03023215 :me III. THE WEST France to`Propose Extension of NATO Area to Include Sahara iThe French Foreign and Defense ministries have drafted a proposal to extend the NATO area of responsibility to include the "whole of the Sahara," Paris reportedly intends to present this proposal initially to the United States and Britain, and then to the North Atlantic Council sometime after the 2-4 April meeting of NATO foreign ministers:3 he French definition of "Sahara" appears to be in geograph- ical terms, in view of De Gaulle's previous private allusions to extending the NATO area to the Sahara "as far as the Red Sea." The new proposal stems from official French views that NATO is being outflanked to the south and that NATO support of France in North Africa, particularly in Algeria, is vital not only to France but to the whole Western world. French attitudes toward Egyptian President Nasir suggest that the proposal is also con- ceived in part as blocking further Egyptian influence-T.) (Premier Debre bluntly told Secretary Dulles on 6 February that Unless France was backed in its Algerian policy it would re- tain its Mediterranean naval units "separately." De Gaulle as- sured Dulles, however, that the French fleet would "rush" to NATO and become part of NATO forces in case of war. Algeria was removed from NATO military jurisdiction in 1954 at France's requesC) De Gaulle has previously criticized the "inadequacy" of pre ent NATO naval command arrangements covering the Med- iterranean and Atlantic communications between France and North Africa� and has indicated his desire that a new naval com- mand be established combining these areas under a French of- ficer. Debrd told General Norstad in late January that France'sA SECRET- 13 Feb 59 CENTRAL INTELLIGENCE BULLETIN Page 5 Approved for Release: 2020/02/21 C03023215 Approved for Release: 2020/02/21 C03023215 Noe' Nor' Lallies did not fully appreciate the contribution France was mak- ing to the alliance by its effort in Algeria:) CThe vehemence with which the French are presenting these views suggests that Allied reaction will be a major determinant in France's attitudes toward future relations with NATO.") SECRET 13 Feb 59 CENTRAL INTELLIGENCE BULLETIN Page 6 Approved for Release: 2020/02/21 C03023215 Approved for Release: F0F0762/21 C03023215 Nor,' :ad Portuguee Premier Salazar Seriously Ill d'ortuguese Premier Salazar was stricken with virus pneu- monia two weeks ago and has developed myocarditis, which may lead to coronary thrombosis. He is slowly responding to treat- ment, but he will be 70 year old in April and his health has not been good during the past year;:\ cit was rumored late in January that Salazar would announce his retirement on or about 20 February and would be succeeded by Minister of the Presidency Theotonio Pereira. Pereira was formerly ambassador in Washington and represented Lisbon in London until August 1958. He may not, however, have full sup- port of the armed forces, probably the determining factor. Many junior officers are said to favor a military take-over with some- one like former President General Craveiro Lopes to run the gov- ernment, pending selection of a suitable civilian. Lopes is ap- parently above the factious disputes in Portugal's only legal party, the National Union. Former Defense Minister Colonel Santos Costa is another possible candidate to head an interim govern- ment. He has enjoyed strong support in army circles. CA temporary take-over by the military would probably not reduce the widespread unrest and the discontent of opposition groups which are demanding basic political and socio-economic reforms: 13 Feb 59 CENTRAL INTELLIGENCE BULLETIN Page 7 Approved for Release: 2020/02/21 C03023215 Approved for Release: 2020/02/21 C03023215 Near LATE ITEM Soviet reaction to breakdown of talks with Iran The USSR's initial reaction to the breakdown of negotiations with Iran for a nonaggression pact attempts to establish a record designed to justify retaliatory moves against the Shah's regime. On 12 February Moscow broadcast to Iranian listeners and its home audience a Soviet memorandum handed to the Iranian for- eign minister in Tehran which sets forth a step-by-step account of the negotiations. After describing Soviet efforts to meet the Shah's initiative for a pact, the memorandum charges his govern- ment with following "an evil game" in order to mislead public opin- ion, particularly in Iran. The memorandum points out that the USSR not only accepted Iran's initial draft of a treaty, but also conceded that Iran might remain in the Baghdad Pact and was even willing to discuss revi- sion of the Soviet-Iranian 1921 Treaty of Friendship. Moscow claims that the decision of the Shah's government to renounce its own proposals--a point repeated several times--was "prompted by the Americans," and marks a "turning point" in Tehran's relations with the USSR. According to the memorandum, this decision is proof of a "hypocritical and insincere policy" toward the USSR which will lead to "serious consequences." The memorandum foreshadows other bloc moves aimed at dis- crediting the Shah and stimulating apprehension and discord within Iran. The broadcast renews Soviet accusations that the Shah's re- gime does not represent either the national interests of Iran or the aspirations of the Iranian people. The memorandum also reminds the Iranian Government that it is obligated under the 1921 Treaty of Friendship "not to permit the conversion of its territory into a base for military action against the USSR." This suggests that Moscow is prepared to con- demn a US-Iranian bilateral defense agreement as a violation of the treaty. CONFIDENTIAL 13 Feb 59 CENTRAL INTELLIGENCE BULLETIN Page 8 Approved for Release: 2020/02/21 C03023215 Approved for Release: 2020/02/21 C03023215 Nine" CCORRECTION: In the Central Intelligence Bulletin of 12 February 1959, the last sentence of Item 1, Page 2, should have read: Moscow furthermore could cause some disruption of the Iranian economy by cutting off trade; in 1958 bloc countries received 25 percent of Iran's exports and pro- vided 11 percent of its imports exclusive of oil. 13 Feb 59 SECRET CENTRAL INTELLIGENCE BULLETIN Page 9 Approved for Release: 2020/02/21 C03023215 Approved for Release: 2020/02/21 C03023215 Noir 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 Executive Secretary, National Security Council 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 Assistant Secretary of Defense for International Security Affairs 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 The Department of Commerce The Secretary of Commerce 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: 2020/02/21 C03023215 VZZI. WZ 41,44 A,ZZ? W21 7/7/17 /17: Approved for Release 2020/02/21 C03023215 o� 0,4 -TOP-SEC-R-E-T- Approved for Release: 2020/02/21 C03023215