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August 22, 1958
PDF icon CENTRAL INTELLIGENCE BULL[15777426].pdf632.26 KB
Approved for Release: 2020/01/23 C03169518 WP SLKLI- 22 August 3.5(c) 3.3(h)(2) 1958 Copy No, C 57 CENTRAL INTELLIGENCE BULLETIN 261 c) -TOP-SECRET- iApproved for Release: 2020/01/23 Approved for Release: 2020/01/23 C03169518 . WU� 40111.. Approved for Release: 1313/0-1723 C03169518 Approved for Release: 2020/01/23 C03169518 %.� I kJ 1-416.e %Li 22 AUGUST 1958 I. THE COMMUNIST BLOC USSR offers to barter oil for unsold Greek tobacco. II. ASIA-AFRICA Responsible Chinese Nationalist lead- ers and business circles reveal no panic over current situation in Taiwan Strait. 0 Iraq- Pro-Nasir elements call for full union with UAR; Communists favor looser ties. Tunisian defense secretary concedes to Algerian rebel viewpoint in rela- tions with France on arms and Sa- haran oil transit. De Gaulle may face violence in Al- geria and Dakar on present African tour. � /11 0 Turkey - Menderes' party may in- tensify repression of political op- position. ()Indonesian Government officials try- ing to draft plan to combat economic deterioration. III. THE WEST �Britain intends to go ahead with parts of modified plan without cooperation of Greek Cypriots. TOP SECRET Approved for Release: 2020/01/23 C03169518 / , .AApproved for Release: 2020/01/23 CO3169518 /, , A� /A �../z 41110 0 IL CENTRAL INTELLIGENCE BULLETIN 22 August 1958 DAILY BRIEF I. THE COMMUNIST BLOC USSR-Greece: The Soviet Union may try to exploit criticism�led by leftist press and politicians�arising out of Greek inflationary problems by pressing for acceptance of an attractive offer to barter oil for unsold Greek torcco. (Page 1) II. ASIA-AFRICA *Taiwan: Beneath the present surface manifestations of official alarm, responsible leaders seem fairly calm. A sampling of opinion in Taipei business circles discloses "business as usual" with no panic, hoarding, or rapid infla- tion. Government declarations of intent to disperse agencies, build air raid shelters, and take other emergency measures have not gone beyond the talking stage. Additional food sue plies, however, are being sent to the offshore islands. Iraq: A struggle for influence between the Communists-- who have resumed activity under the new regime �and radical Arab nationalists appears to be developing over the future re- lationship between Iraq and the UAR. Pro-Nasir elements in Iraq are calling for full union with the UAR. The Communists favor some form of looser ties. (Page 2) 7./ TOP SECRET AApproved for Release: 2020/01/23 C03169518v � �wo Approved for Release: 2020/01/23 C03169518 1 (Jr Tunisia: Defense Secretary Ladgham said on 21 August that the Algerian rebel leaders have been assured that Tunisia will not accept French arms at this time. As a further reflec- tion of concern over relations with the Algerian rebels inside Tunisia, Ladgham also said that the rebels have been promised that until Algeria becomes independent no oil from the Sahara will be allowed to floW through the pipeline crossing Tunisia iincipr a enneession recently granted to a French company. De Gaulle's African trip: De Gaulle may face violent demonstrations in French West Africa and in Algeria during his present African tour. French authorities expect demon- strations--which may include the throwing of Molotov cock- tails--in Dakar on 26 August by groups favoring independence. Turkey: Pressure is building up within the ruling Demo- crat party to intensify repressive measures against the princi- pal opposition group, the Republican People's party. The op- position's criticisms of the government have been particularly telling recently and are a source of annoyance to Menderes. (Page 5) Indonesia: Recent developments have seriously affected the Indonesian economy, and government officials are trying to devise an economic stabilization program. Indonesia will require extensive additional foreign aid in the near future to pay for essential imports. (Page 6) 22 Aug 58 DAILY BRIEF ii TOP SECRET ,Approved for Release: 2020/01/23 CO3169518% 'Approved for Release: 2020/01/23 C03169518 A IOtLCtLII Nrsof , ,11 -# TOP SEC4ET AApproved for Release:1E6/01/23 C031/69518 z III. THE WEST Britain--Cyprus: London intends to implement Nhat it can of its modified Cyprus plan by holding elections for the Turkish communal assembly even if the Greek Cypriots refuse to participate. The British hope the Greek refusal to cooperate is not final, but are prepared to continue di- rect rule of the Greek Cypriots if necessary. (Page 7) IV. SIGNIFICANT INTELLIGENCE REPORTS AND ESTIMATES (Available during the preceding week) Special National Intelligence Estimate No. 65-58. The Outlook in Indonesia. 12 August 1958. 22 Aug 58 DAILY BRIEF iii C. I", in rl Tv rr Approved for Release: 2020/01/23 C03169518 Nu, I. THE COMMUNIST BLOC USSR Offers Barter Deal on Greek Tobacco Surplus The USSR, capitalizing on the problem Greece will face within the next few days in financing large stocks of unsold tobacco, has offered to exchange crude oil for some of the surplus. The offer is likely to be accepted, despite the adverse effect on Greek arrangements with Western countries, because of the probable reaction from leftist papers and politicians if the government pays hard currency for Western petroleum while it fails to sell its burdensome tobacco surplus. Acceptance would increase Greece's al- ready substantial trade dependence on the Communist world. In order to finance the tobacco, in case it should not accept the Soviet offer, Greece would be forced to increase the currency in circulation. This would threaten the deli- cately balanced economy and could lead to a loss of faith in the drachma, a return to gold hoarding, and a flight of cap- ital such as characterized the early postwar years. Since January ic&57 the Greek Government has increased drachma notes in circulation by about 45 percent while gold and foreign- exchange holdings have been declining. Thus far, confidence in the drachma has been maintained and the cost of living has increased only slightly, largely because of marked increases in savings deposits. The increased money supply, however, has resulted in a sharp increase in imports--without a con- comitant increase in exports--and a consequent substantial deterioration of the balance-of-payments position. -SECRET 22 Aug 58 CENTRAL INTELLIGENCE BULLETIN Page 1 Approved for Release: 2020/01/23 C03169518 Approved for Release: 2020/01/23 C03169518 NINO II. ASIA-AFRICA Communist and Nationalists Struggle for Influence in Iraq A struggle for influence between the Communists and radical nationalists over the future of Iraq's relationship with the UAR is developing. The Communist party, hitherto sup- pressed, has been allowed free rein since the coup. In moves reminiscent of the Baathist-Communist contest in Syria last fall, the Communists are attempting to oppose Baathist pres- sure for immediate full Iraqi union with the UAR,. Realizing that they cannot appear as opponents of Arab unity, the Com- munists are seeking to ward off complete union by proposing only federation with the UAR and close relations with the USSR. The intensification of this power struggle will put severe pressures on the solid front so far presented by the regime. Having decided that Vice Premier Arif is "Nasir's man," the Communists are reported to be throwing their support to the less pro-Nasir and more moderate Prime Minister Qasim. A split between Arif and Qasim would probably divide the army into factions. The Communists will probably receive support in their efforts from the leftist nationalist National Democratic Farty of which Minister of Finance Muhammad Hadid is a leader, while the rightist and strongly nationalistic Istiqlal (independ- ence) party led by Minister of Guidance and Information and Acting Foreign Minister Sidiq Shanshal and Councilor of State Muhammad Mandi Kubba is likely to throw its support to the Baath. Nasir may begin a campaign of hints to the West that Iraqi union with the UAR is the only way to prevent a Commu- nist take-over. a "Board of Revolution" is to be es- tablished, from which leftists will be barred. Presumably this board would be modeled along the lines of the Revolutionary Command Councils which emerged after the 1952 coup in Egypt. a "decision" to nationalize oil 22 Aug 58 CENTRAL INTELLIGENCE BULLETIN Page 2 Approved for Release: 2020/01/23 C03169518 Approved for Release: 2020/01/23 C03169518 companies in Iraq will be implementedif� the UN meetings on the Middle East "turn out favorably" for the new Iraqi Gov- ernment. However, it seems doubtful that the government would carry out such a move at this time, except as a des- perate bid for popular support. 22 Aug Aug 58 ITN, � V 1k 1.1.V.1 I I ���� 1��� up. I I II I r..r.11. IPage 3 Approved for Release: 2020/01/23 C03169518 Approved for Release: 2020/01/23 C03169518 1 �11 OLLis.....1%La Anti-De Gaulle Demonstrations Expected in Africa French security forces at Dakar expect demonstrations on 26 August during Premier de Gaulle's visit to rally sup- port for his proposed constitution. Leftist political groups, labor, and students' organizations are planning to demon- strate against the premier and in favor of independence. The government plans to have available the full police force-- which is inexperienced in riot duty--and to have paratroopers on the alert. The police have information that the leftists, who are being advised by a French Communist contact, are making Molotov cocktails and are determined to have political mar- tyrs. - In Algeria, National Liberation Front (FLN) rebels were instructed to plan sabotage of "communal works of economic and social inter- est" likely to be visited by De Gaulle during his three-day tour of that territory starting on 27 August. The sabotage was or- dered to take place "at the time he passes through." Rebel capabilities for such action are likely to be limited, however, by the elaborate security precautions which the French can be expected to take along the route of the general's as yet unan- nounced itinerary. Meanwhile, the announcement on 19 August by French mil- itary headquarters in Algiers of the execution early last month by the rebels of another French officer may have been designed, in part, to incite rightist European elements into making some public manifestation during De Gaulle's visit of their demand for the complete "integration" of Algeria with France. Similar ex- ecutions of Frengh military personnel by the FLN in early May contributed significantly to the climate which permitted the suc- cessful army-settler coup of 13 May. TOP SECRE71 22 Aug 58 CENTRAL INTELLIGENCE BULLETIN Page 4 Approved for Release: 2020/01/23 C03169518 .� Approved for Release: 2020/01/23 C03169518 *if Pressure on Turkish Opposition The Turkish official radio continues to give wide pub- licity to the communiqu�ssued by the ruling Democrat party on 11 August which made thinly veiled threats to out- law the Republican People's party, the major opposition group. If the government permits members of the Republican People's party to speak in the special Grand National Assembly session, which began on 21 August and is expected to last a week, they are likely to continue their vigorous and increasingly effective attacks on the government. This may cause Prime Minister Menderes to impose further restrictions on legislative im- munities and other freedoms. The Republican People's party has centered its attack on inflation, shortages, and dislocations, which result, in part, from Menderes' economic program. It has also won support by protesting restrictions on freedom. After the Iraqi coup, it extended its criticism to Turkey's foreign policy but reit- erated its support for Turkey's US and NATO ties. It is even considering raising the question of American use of the Adana air base, as part of its general argument that the government should keep the opposition informed concerning foreign policy matters. 22 Aug 58 e.r.b,. urn � I Ilk Ii".1\ 19II II I r� ik I Approved for Release: 2020/01/23 C03169518 Page 5 Approved for Release: 2020/01/23 C03169518 Nue Indonesia's Economic Difficulties Indonesia's economy has been forced to a new low by the expulsion of badly needed Dutch technicians and the sei- zure of Dutch enterprises, the rebellions on Sumatra and Celebes, illegal barter trade, and the world-wide business recession. These factors have led to reduced foreign ex- change earnings at a time when domestic inflation has height- ened the demand for imported consumer goods. Inflationary pressures are intensified by a materially increased budg- etary deficit, which is due in part to the drain on central gov- ernment resources caused by the continuing military campaign against the dissidents. Indonesia's gold and foreign exchange reserves--never at a satisfactory level--dropped from $220,000,000 at the end of October 1957 to $144,000,000 at the end of June 1958. There is every indication that the decline is continuing. Unless this trend is reversed, Djakarta may be disposed to turn to the Sino-Soviet bloc for additional help in bridging the exchange gap. There has been a flight of foreign capital, particularly Dutch and Chinese. The government, moreover, has failed to pro- vide any encouragement to new foreign capital; the oil com- panies in particular have cut back new investment programs sharply. The Djuanda cabinet has devised a coordinated stabiliza- tion program which was recently announced to parliament. Exceptionally comprehensive, it was worked out with the help of an International Monetary Fund adviser; however, the Amer- ican Embassy in Djakarta sees little of the administrative dis- cipline required to make it successful in Indonesia's over- staffed but inefficient government. It seems particularly doubt- ful that the government, despite the army's promise of coopera- tion, will succeed in limiting the illegal barter trade of the outer islands. Local army commanders in these areas have themselves profited from this trade, which denies the central government both essential revenue and control over the use of an important share of foreign exchange receipts. -SEC-REZ 22 Aug 58 f"CkITD A I 11�ITCI I irtckirc DI II I CTIkl Approved for Release: 2020/01/23 C03169518 Page 6 Approved for Release: 2020/01/23 C03169518 lair4 III. THE WEST Britain to Implement Cyprus Plan Despite Greek Noncooperation Britain intends to begin implementation of the modified Cyprus plan it announced on 15 August. London hopes that Athens' refusal on 19 August to cooperate is not final and may anticipate that the Greeks will grudgingly participate later rather than be left out when the plan is in operation. In any case, the British intend to go ahead with elections for the Turkish communal assembly even if the Greek Cyp- riots refuse to elect their assembly. Britain will continue direct rule of the Greek Cypriots if necessary. Setting up the Governor's Council--the semiexecutive body to be composed of two Turkish Cypriots and four Greek Cypriots chosen by the communal assemblies--may prove im- possible without Greek cooperation, however. London's spg- gestion of appointing British officials to present the Greek view appears unworkable. London still expects Ankara to accept the plan. Prime Minister Menderes was shown a draft before publication; he described it as "not so bad." At Turkey's request, the British have offered to confirm in writing their 1956 promise to in- clude partition among the options if the fate of the island is ever put to a vote. Evidently anticipating wide public backing for the govern- ment's policy of going ahead, a Foreign Office official said on 20 August that the British public just wants a settlement--rather than any particular solution�and that the Labor party had been consulted on the modified plan. 22 Aug 58 f^CkITD A I IkITCI I ielckir'c al II I CTIkl Page 7 Approved for Release: 2020/01/23 C03169518 Approved for Release: 2020/01/23 C03169518 �tirifftrIDENTVIV 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 Deputy 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 C03169518 zx