CENTRAL INTELLIGENCE BULLETIN - 1959/09/02

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 03148920
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 14
• Document Creation Date: February 25, 2020
• Document Release Date: February 27, 2020
• Publication Date: September 2, 1959

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2 September 1959
Copy No. C 63
CENTRAL
INTELLIGENCE
BULLETIN
DOCUMENT NO. -
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2 SEPTEMBER 1959
I. THE COMMUNIST BLOC
Peiping remains silent on Indian
charges of border incursions; Indian
ambassador instructed to explain
New Delhi's position to IChrushchev
"personally."
Soviet vessel carrying arms expected
to arrive in Indonesia about 6 Septem-
ber.
IL ASIA-AFRICA
Iranian intelligence chief favors Brit-
ish role in CENTO limited to observer
status.
Moroccan King angered by left-wing
criticism of army and security forces;
may effect change in Ibrahim govern-
ment.
Cambodian populace aroused by assas-
sination attempt against royal family;
repercussions may affect relations with
South Vietnam and Thailand.
Indonesia�New monetary reforms of-
fer Communists further opportunity to
discredit army-influenced cabinet.
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CENTRAL INTELLIGENCE BULLETIN
2 September 1959
DAILY BRIEF
L THE COMMUNIST BLOC
Sino-Indian border situation: Press reports of the mass-
ing of Chinese troops along the Assam frontier remain uncon-
firmed, The Chinese, however, may have been increasing
their strength in southeastern Tibet during the past few months
in connection with operations against Tibetan rebels. Reports
of major Chinese penetrations into Bhutan were denied by the
Bhutanese prime minister on 1 September. Peiping has made
no public comment on Indian charges of Chinese incursions.
New Delhi told its diplomatic mis-
si&--6 that India must "resist such illegal intrusions into its
territory" and that the Chinese would have to bear the respon-
sibility for "any unfortunate consequences resulting from our
defensive measures." Missions in neutralist countries were in-
structed to refute Peiping's "insidious propaganda against India."
The Indian ambassador in Moscow was directed to explain the
Indian position to Khrushchev per sonally:s\
(Page 1)
Soviet bloc - Indonesia: The Soviet merchant ship Irkutsk,
with a cargo of about 1,200 tons of military equipment, is en
route to Indonesia and is expected to arrive at Djakarta about
6 September. This shipment is presumed to be the first deliv-
ery of Soviet materiel arranged for by the Indonesian military
mission which spent three months, in the USSR this past spring
and summer. The group also spent three weeks in Communist
China in July while en route home. (Page 3)
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II. ASIA-AFRICA
Iran-CENTO:(_deneral Bakhtiar, chief of the Iranian in-
telligence organization,SAVAK., stated recently that CENTO
(the Baghdad Pact) would become a more realistic force for
regional cooperation if the UK were to withdraw to observer
status comparable to that of the US. He feels that such a move
would destroy the effectiveness of Soviet propaganda against
the organization, open the door for other regional members,
and enhance the opportunity for Iranian leadership. This would
be in line with the "little entente"--Iran, Pakistan, and Turkey
--recently discussed by an Iranian delegation visiting Pakistan.
Bakhtiar's views on US and UK membership will probably be
further developed by the Iranian delegation, to include Bakhtiar,
at the forthcoming rEwro rounrii mepting in Washington.)
(Page 4)
Morocco: (King Mohamed V may move toward a change in
the Ibrahim government after the conclusion--probably about
10 September--of the Arab League meeting in Casablanca. The
King, who usually temporizes and maneuvers behind the scenes,
is reported to have been angered by strong criticism of the
Royal Moroccan Army and security forces by the left-wing
Moroccan students' group. Right-wing supporters of the King
also are reported to be discussing the advisability of forcing
a showdown with left-wing members of the government)
(Page 5)
Cambodia: (The attempt to assassinate Queen Kossamak
with a bomb disguised as a gift has aroused strong emotions
among the monarchy-worshiping populace and could have inter-
national repercussions. Cambodian expatriates Sam Sary and
Son Ngoc Thanh, remnants of the abortive Dap Chhuon plot .V�tt
against the Sihanouk government last spring, will probably be
prime suspects. South Vietnam and Thailand, which have sup-
ported the Cambodian dissident movement in varying degrees,
may by extension be implicated. It is possible that the attempt
was engineered by the Communists in order to further embroil
Cambodia with these neighbors. The extent of the consequences
of the attack will be largely determined by Premier Sihanouk's re-
a &inns:\
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Indonesia: Devaluation and other monetary measures an-
nounced on 24 August will be largely ineffective in coping with
the problem of mounting inflation in Indonesia unless comple-
mented by more far-reaching reforms. Although follow-up
measures such as increased taxes and enforced savings re-
portedly are planned for the near future, the government's
ability, to implement them is dubious. While the Communist
party has thus far given qualified approval of devaluation, it
has admonished the government to take more extensive steps
and will probably intensify its efforts to discredit the army-
influenced cabinet. New reports of army corruption are also
likely targets for Communist exploitation. (Page 6)
2 Sept 59
DAILY BRIEF iii
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L THE COMMUNIST BLOC
Sino-Indian Border Situation
Late Indian press reports that Chinese troops are massing
along the Tibet-Assam border remain unconfirmed. Peiping;
however, may have increased troop strength in southeastern
Tibet during operations against the rebels.
( New Delhi, told its diplomatic
missions that India must "resist such illegal intrusions into its
territory" and that the Chinese would have to bear the respon-
sibility for "any unfortunate consequences resulting from our
defensive measures." Missions in neutralist countries were in-
structed to refute Peiping's "insidious propaganda against India."
Apparently in the hope that Khrushchev would restrain the Chi-
nese, the Indian ambassador in Moscow was instructed to bring
the Indian case to the Soviet premier's personal attention. In
view of Moscow's hands-off attitude toward Tibet and the Sino-
Indian border dispute, Ithrushchev is likely to take a noncom-
mittal position.)
Chou
En-rai tom Nehru in 19bb that Peiping would respect the McMahon
Line as the boundary between Tibet and Assam even though the
Chinese could not accept it as legally valid. Peiping's willingness
to disregard this pledge may be due to irritation with growing anti-
Chinese sentiment in India and to conviction that Indian outposts
activated on the border last spring represent a challenge to Chi-
nese territorial claims.)
Referring to the spate of press reports that new Chinese pene-
trations have taken place, the Indian Government on 1 September
said it had no official information of fresh Chinese incursions or
engagements with Indian troops.
Meanwhile, the chiefs of India's armed services, certain
members of Parliament, and probably some other key cabinet
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ministers appear to be engaged in an effort to oust leftist-
minded Defense Minister Krishna Menon. Nehru is sched-
uled to make a statement in Parliament on 2 September
regarding the resignations reportedly prof erred by the three
service chiefs and Krishna Menon. There is little likelihood
that Nehru can resolve the situation merely by rotating Menon
to another cabinet position. In order to satisfy military and
public opinion, he may have to dismiss Menon from the cab-
inet, while giving him some other important post.
2 Sept 59
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More Bloc Arms for Indonesia
A Soviet merchant ship, the Irkutsk, carrying a cargo of
about 1,200 tons of military equipment for Indonesia is expected
to arrive in Djakarta about 6 September. This shipment presum-
ably is the -Brat under contracts concluded: in the Soviet Union
by an Indonesian military mission which spent three months
there this past spring and summer. With the exception of a
comparatively small contract for jeeps in early 1957, this is
the first direct military equipment transaction between Indo-
nesia and the USSR. Although much of the materiel procured
by Djakarta has come directly from the Soviet Union, previous
contracts have actually been with Poland and Czechoslovakia.
Practically all of the $175,000,000 in bloc military aid con-
tracted for by Indonesia prior to last spring has been delivered.
The final deliveries of major equipment under these contracts
are believed to have been made when two W-class submarines
arrived at Surabaya from the Soviet Far East in late August.
The Indonesian Army mission ended its three-month visit
to the Soviet Union in July and then spent three weeks touring
Chinese Communist military sites on its way home. While in
Peiping the mission presented a list of arms requests. These
requests were favorably received, and arrangements to conduct
negotiations concerning Chinese Communist military aid to Indo-
nesia were to be held in Djakarta in late August. Subsequent in-
tercepted Indonesian messages suggest, however, that these
talks were not held.
Early this year, another Indonesian Army mission visited
Western Europe: Czechoslovakia, and Poland on an arms-pur-
chasing tour. A relatively small quantity of military eauinrient
was purchased from the bloc at that time.
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II. ASIA-AFRICA
To Regional Members
CMajor General Teimur Bakhtiar, chief of the Iranian intel-
ligence organization, who will be a member of the Iranian del-
egation at the CENTO (former Baghdad Pact) Ministerial Council
meeting in Washington in October, recently stated that there
would be advantages to Iran if CENTO were limited to regional
members. Such a plan would involve the withdrawal of the UK
from the pact to become an "observer" similar to the US. The
organization would be primarily concerned with regional eco-
nomic development)
(Presumably Iran is considering making this proposal at the
October meeting. During a secret visit to Pakistan in early
August, Bakhtiar reportedly suggested the formation of such a
regional grouping to President Ayub and received encouragement.
Bakhtiar believes that a regrouping of CENTO would reduce the
effectiveness of Soviet propaganda against the organization, en-
courage other regional nations to join, and provide an opportunity
for Iran to assume leadership.)
(While Bakhtiarts exploration of such a plan almost certainly
has he backing of the Shah, it appears out of line with the Shah's
Insistence, since the formation of the pact, that the US should
join the organization. Tehran may believe the US will join CENTO
rather than risk any move toward retrenchment.
the US is in for a
"rough time" from CENTO for not becoming a full member. The
Shah probably realizes that British withdrawal might be interpreted
by the Iranian public as a sign of the final disintegration of the or-
ganization and failure of his policy.)
at CENTO be Limited
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Moroccan Cabinet Reshuffle Possible
( King Mohamed V may move toward a change or reshuffle
in the Ibrahim government at the conclusion--probably about
10 September--of the Arab League meeting in Casablanca. The
King is reported angered by criticism of the Royal Moroccan
Army and security forces, both of which are under his direct
command, at the recent congress of the left-wing National Union
of Moroccan Students which is loyal to Mehdi ben Barka, leader
of the Neo Istiqlal party set up last winter. A similar attack
was made by the 1958 students' congress. At that time Ben Barka
and student leaders were summoned and sternly reprimanded by
the King.)
(The King usually temporizes and maneuvers subtly to accom-
plish his ends but now has indicated to military leaders that he
considers a move to crush left-wing elements within and outside
the government unavoidable. The students' recent activities ap-
parently precipitated a meeting on 28 August of right-wing sup-
porters of the King at which the advisability of forcing a showdown
with the leftists was discussed. These rightists are reported to
believe it essential for the King to take a firm stand, appoint a
new government, and to concede the need to sus end political par-
ties to ease the task of such a new government.)
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Indonesia's Monetary Measures
Djakarta's remedial monetary measures, which included par-
tial devaluation and the freezing of 90 percent of all bank deposits,
will be largely ineffective in coping with Indonesia's problems of
mounting inflation and scarcity of goods unless complemented by
more far-reaching reforms. The measures, announced on
24 August, devalued by 90 percent the two highest denomination
banknotes of 500 and 1,000 rupiahs, reset the official rate of ex-
change from 11.4 rupiahs to the dollar to 45 to the dollar, and
froze 90 percent of all bank deposits over 25,000 rupiahs, for
which debentures are to be issued. Complicated export regula-
tions were abandoned, and import duties were revised to encour-
age essential imports and continue discouragement of luxury
items.
President Sukarno strongly implied in a 26 August radio ad-
dress that three follow-up measures would shortly be undertaken�
He enumerated them as stabilization of the budget by cutting or
postponing less urgent expenditures; an increase in taxes; and
compulsory savings. It is doubtful, however, that the government
has the capability to implement these measures. The resignation,
without explanation, of Lukman Hakim, governor of the Bank of
Indonesia, on 1 September is probably indicative of the uncertain
attitude of knowledgeable Indonesian officials over the reforms.
The freeze on bank deposits has not been lifted, although ma-
chinery is being set up to entertain applications for exemption.
The result is a near paralysis of business and foreign exchange
transactions owing to the lack of fluid capital. Devaluation will
have little effect on the upward pressure of prices.
The Indonesian Communist party has given qualified approval
to the government's measures although it has emphasized the finan-
cial losses inflicted on peasants, laborers, and small businesses
and has admonished the government that additional reforms are
necessary. Should government efforts to solve fiscal problems
falter noticeably, the Communists are likely to intensify their
criticism in an attempt to discredit the army-influenced cabinet.
New reports of army corru tion are also obvious targets for
Communist exploitation.
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CENTRAL INTELLIGENCE BULLETIN Page 6
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CONFIDENTIAL
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
Director, National Aeronautics and Space Administration
Special Assistant for Security Cperations 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 Army
Director of Naval Intelligence, Department of Navy
Assistant Chief of Staff, Intelligence, Department of the Air Force
Supreme Allied Commander, Europe
Commander in Chief, Pacific
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
CONFIDTWTIAL
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