CENTRAL INTELLIGENCE BULLETIN - 1958/04/03

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 03177790
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 16
• Document Creation Date: January 27, 2020
• Document Release Date: January 30, 2020
• Publication Date: April 3, 1958

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3 April 1958
Copy No. 140
CENTRAL
INTELLIGENCE
BULLETIN
DOCUMENT NO.
NO ClIANGF. IN CI ASS.
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DATE2SR' REVIEWER
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3 APRIL 1958
I. THE COMMUNIST BLOC
Czechs arrange for flight of at least
11 Soviet IL-14 transport aircraft to
Djakarta.
Three more long-range Soviet sub-
marines arrive in Egypt.
USSR balks in trade, repatriation
talks with Bonn to increase pressure
against West German nuclear missile
plans.
Tito's proposed visit to Poland marks
continued Yugoslav effort to extend
influence in Eastern Europe.
II. ASIA-AFRICA
Nasir may nationalize Shell Oil
Company properties in Egypt.
Nasir may discuss Palestine problem,
general Soviet Middle East policy dur-
ing Moscow visit at end of April.
�Israelis reinforce Lake Hula troops;
both sides maintain defensive readiness.
�Indonesia - Djakarta forces land in
Celebes to relieve pressure on loyal
garrison; advance in Central Sumatra
slows down in mountains.
Taiwan unwilling to defer showdown
over flag rights of Peiping trade mis-
sion in Tokyo until after Japanese elec-
tions.
Kashmir - Graham's report to UN
Security Council today likely to renew
recriminations between India and
Pakistan with little prospect for any
progress.
III. THE WEST.
@Bonn preparing request to WEU to
waive restrictions on West German
production of missiles, aircraft, and
larger warships, possibly with nuclear
propulsion.
@Spanish strikes spread, show some
political overtones.
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CENTRAL INTELLIGENCE BULLETIN
3 April 1958
DAILY BRIEF
J.1,e45
I. THE COMMUNIST BLOC
*Bloc aircraft for Indonesia; Arrangements with
Czechoslovakia for the delivery of at least eleven Soviet
IL-14 transport aircraft flown by Czech pilots to Indo-
nesia via Moscow-Irkutsk-Peiping- Rangoon-Medan-
Djakarta have been completed.
preparations were too far advanced to allow changes
in the Czech insignia on the planes. These planes will in-
crease the central government's airlift capacity by 30
percent and will almost certainly be pressed into service
a ainst the dissidents as soon as possible.
USSR-Egypt: Three Soviet W-class submarines and
a minesweeper that departed the Baltic on 19 March ar-
rived at Alexandria, Egypt, on 2 April. The submarines
will probably be transferred to Egypt, providing the United
Arab Republic with five W-class long-range units and one
M-class short-range unit. This would give Egypt more
modern long-range submarines than any of the European
satellites.
USSR-West Germany: As part of its campaign against
the equipment of West German forces with modern weap-
ons, Soviet officials have stated informally that the recent
Bundestag decision to acquire nuclear armaments makes
completion of the trade and repatriation agreement with
Bonn virtually impossible. The presence of Khrushchev,
TOP CRET
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A* "OP � RE1'
Kozlov, and Gromyko in Budapest for the ceremonies com-
memorating the "liberation" of Hungary from the Nazis
suggests that the bloc may take this occasion to issue a
strong statement warning against the threat to European
security arising from the nuclear armament of West
Germany. (Page 1)
Yugoslavia: The announcement that Tito will visit
Gomulka late this spring--the result of a long-standing
invitation--comes only five days after his talks with
Hungary's Kadar and is a continuation of his efforts to
extend his influence in Eastern Europe. Tito probably
hopes this announcement will elicit a stand from the still
silent Sino-Soviet bloc on the Yugoslav Communist party
congress this month and its controversial program.
IL ASIA-AFRICA
Egypt: Nasir is considering nationalization of the
Shell Oil properties in Egypt. Nationalization of these
properties, which have been under Egyptian Government
sequestration since November 1956, probably would upset
Anglo-Egyptian financial negotiations because of British
interest in the company. Should Nasir take this step, he
would have presumably weighed its consequences in terms
of his international relations and be prepared for adverse
Western reaction. (Page 2)
Nasir trip to USSR: During his visit to Moscow, Nasir
wishes to raise the Palestine question and to discuss the
basic Soviet stand on Middle Eastern issues in addition to
seeking some form of economic concessions. The visit is
now scheduled to begin the last week of April and last about
two weeks.
*Israel-UAR: The Israelis have moved small reinforce-
ments of tanks, field artillery, and infantry into the area of
3 Apr 58
DAILY BRIEF
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recent border clashess and probably now have sufficient
troops there to launch a limited reprisal raid. Israel's
over-all posture remains one of preparedness. UN offi-
cials have observed no offensive maneuvers on the Syrian
side.
Indonesia: The Indonesian Army landings on the west
coast of Celebes appear to be aimed primarily at reliev-
ing pressure on the local garrison. In Sumatra, the initia-
tive remains with the central government, although the
forward progress of its forces has been slowed as they
enter the rugged Barisan Mountains. Djakarta shows no
signs of compromising and
that the revolt would be
settlea on tne "neia ix battle." A Polish offer to provide
30 personnel to assist in the operation of the Indonesian
shipbuilding industry has been accepted by Shipping Min-
istry officials in Djakarta.
(Page 3) (Map)
Japan-Taiwan: Nationalist China has apparently re-
jected a Japanese proposal which would have deferred a
showdown on the Communist flag issue until after the Jap-
anese national elections which are expected this spring.
While both sides remain willing to discuss a solution,
Taipei continues to demand Tokyo's early assurance that
the Chinese Communist flag will not fly over a projected
trade mission in Japan. Peiping has accused Japan of
blocking enforcement of the recent private trade agree-
ment. (Page 4)
Kashmir: UN representative Graham's latest report
on Kashmir, scheduled for release today, will probably
stimulate mutual recriminations by both Pakistan and India,
3 Apr 58
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DAILY BRIEF iii
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Alet, I (Jr tAtt
but is unlikely to result in any material change in the sit-
uation. Indian officials, including Nehru and Krishna
Menon, have been unusually firm of late in stating that
Kashmir is an integral part of India. Pakistan is in no
position seriously to threaten India's hold on most of the
state. Each side may also use recently publicized shoot-
ing incidents on the East Pakistan-Indian frnntipr to chow
the "aggressive" intentions of the other.
(Page 5)
III. THE WEST
West Germany - modern weapons: Bonn is apparently
planning to request WEU to waive treaty restrictions
against West German production of larger naval ships
and submarines�possibly including nuclear-propelled
ships--and all types of missiles and aircraft. Although
this request would not extend to restrictions on produc-
tion of atomic, biological,and chemical weapons, it may
revive fears in some European capitals about Germany's
future military role and hence arouse opposition from WEU
countries. Up to now, Bonn's only formal request to WEU
has been to ask permission to produce a small antitank
missile. (Page 6)
Spain: Strikes, which are primarily economic but
appear to have some anti-Franco political overtones, have
been resumed in some of the Asturias coal mines, and there
are signs that the walkouts may be spreading. Extension of
strikes to key sectors of the economy would probably inten-
sify the present inflation and aggravate political tensions
within the regime. (Page 7)
3 Apr 58
DAILY BRIEF
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I. THE COMMUNIST BLOC
Soviet Campaign Against West German Armament Policy
An intensified Soviet campaign against the equipment of
West German forces with modern weapons appears to be de-
veloping in the wake of Foreign Minister Gromyko's speech
to the Supreme Soviet which included a strong attack on Bonn's
policy. The Bonn Foreign Ministry reports that the Soviet
position has stiffened considerably during the last week in
the trade and repatriation negotiations, and that the Rus-
sians have stated informally that the Adenauer government's
denunciation of the USSR during the recent Bundestag debate
and the decision to arm West German forces with atomic
weapons make agreement virtually impossible.
Soviet diplomatic and propaganda tactics in West Germany
are designed to encourage the opposition parties in their stand
against the government's armaments policy. To this end, So-
viet Ambassador Smirnov and his staff have held numerous
talks with leaders of opposition parties in Bonn, hinting at a
more flexible Soviet policy on unification and, in the case of
the 19 March aide-memoire concerning peace treaty negotia-
tions, leaking the text to the Free Democratic party.
The presence of Premier Ithrushchev, First Deputy Pre-
mier Kozlov, and Foreign Minister Gromyko in Budapest for
ceremonies commemorating the "liberation" of Hungary from
Germany in World War II suggests that the bloc may issue a
strong statement warning against the threat to European secu-
rity arising from Bonn's policy. Czechoslovakia sent such a
warning in a memorandum to the United States and various
European countries on 1 April. Another possible move would
be a Warsaw Pact conference to threaten countermeasures in
Eastern Europe.
SEC
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II. ASIA-AFRICA
Nasir Reported Planning to Nationalize Shell Oil Properties in Egypt
President Nasir has decided to go through with his long-threatened
nationalization of the properties in Egypt of the Shell Oil Company,____Nasir's actionwou
be based largely on his own assessment of his international relations,
with particular reference to his financial negotiations with Britain.
Since the Sinai hostilities, all British oil properties in Egypt have
been under sequestration, operated by the Egyptian Government pend-
ing a final settlement of claims between the UK and Egypt, but none
have been nationalized as was the case with many other French and
British commercial enterprises. Egyptian officials previously have
believed that the oil properties would be returned to their British own-
ers as part of a general settlement.
Shell properties in Egypt are extensive. The company owns or
operates oil fields, the largest refinery in Egypt, and widespread dis-
tribution facilities through the Anglo-Egyptian Oilfields, Ltd., and
other subsidiary companies. Before the Suez crisis the Shell group
accounted for over 70 percent of Egyptian refining capacity and con-
trolled the bulk of the country's distribution network.
It is not yet clear whether Nasir would limit nationalization to prop-
erties owned outright by Shell or properties owned by other British
elements but operated by the company. In the latter case, the Egyptian
action would include properties owned by the British Government, by
the British Petroleum Company, in which the British Government owns
the controlling interest, and by a number of lesser companies.
Nationalization of all the United Arab Republic's oil facilities,
including the Syrian pipelines, is probably one of Nasir's eventual ob-
jectives.
3 Apr 58
S ET
CENTRAL INTELLIGENCE BULLETIN
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Nur" NW.
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190
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TOP RET
Situation in Indonesi.
The Indonesian Government claims to have recaptured the towns of
Donggala and Palu, located on the western neck of Celebes Island, af-
ter waterlifting about two battalions to the area. This operation appar-
ently is intended to relieve pressure on the local garrison. In Central
Sumatra, the army's overland advance continues, although it appears
to have slowed as the result of supply difficulties, rougher terrain,
and increased dissident resistance. The slowdown in military activity
may also have been imposed to give the Indonesian Air Force time for
aircraft maintenance and for the preparation of paratroops for further
action,
a prodissident officer told a US Embassy
official that the army command in West Java can no longer be consid-
ered a bulwark against the Communist party. He stated that personnel
changes in the area during the past two years had been so executed that
anti-Communist officers were balanced by officers under Communist
influence. This policy had been deliberately carried out by the army
chief of staff to reduce the danger of a coup d'etat by anti-Communists.
any
anti-Djakarta action in West Java would be supported by "perhaps" 50
percent of two of the four regiments in the command, but their action
would be isolated and uncoordinated and could easily be suppressed by
progovernment forces. Djakarta's continued determination not to com-
promise in its stand against the dissidents was shown
settled on the "field of battle."
stating that the revolt would be
In Djakarta, Shipping Ministry officials have accepted a Polish of-
fer to provide 30 shipbuilding specialists to assist in the operation of the
Indonesian shipbuilding industry. These officers will be in addition to
Soviet personnel who reportedly will help operate ten merchant ships re-
cently purchased from the USSR, teach in the merchant marine school,
and possibly assist the Shipping Ministry.
3 Apr 58
TOP SECRET
CENTRAL INTELLIGENCE BULLETIN
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CUP .LYiiiTl1AL
Japanese Fail to Placate Nationalist China
Nationalist China apparently has rejected a proposed
Japanese solution of the Communist flag issue. Peiping's
simultaneous criticism of Tokyo's failure to accept the
trade agreement has clearly increased the dilemma of the
Kishi government, which is expected to face elections this
spring.
Chinese Nationalist Foreign Minister Yeh on 1 April in-
formed the Japanese that his government could not accept
postponement until after the Japanese elections of a show-
down on whether Peiping's projected trade mission can fly
the Communist flag in Tokyo. Yeh said his government
wanted unequivocal assurance that the Japanese would pre-
vent the flag from flying. He added that Taipei is prepared
to sever diplomatic relations if necessary.
Peiping, irritated by Tokyo's indecision on the flag issue,
broke its silence at the opening of a Japanese trade fair in
Wuhan on 1 April when the vice chairman of Communist Chi-
na's International Trade Promotion Association accused
Tokyo of blocking implementation of the recent private trade
agreement between Communist China and Japanese trade
representatives.
Kishi may attempt to obtain Peiping's agreement to put
off flying the flag, but Communist China hopes to drive as
wide a wedge as possible between Tokyo and Taipei and prob-
ably would reject such a proposal.
CC111
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L'UNIA"/N1 '1AL
Increased Indo-Pakistani Friction Over Kashmir Likely
In Immediate Future
The latest report on the Kashmir situation submitted
to the Security Council by UN representative Graham
stresses the need for direct negotiations between India
and Pakistan to reaffirm the integrity of the cease-fire
line, prepare an atmosphere favorable to further talks,
consider the stationing of UN troops in Pakistani-held
Kashmir, and reach some agreement regarding a plebi-
scite in the state. :Pakistan has accepted all these points
in principle, while India has rejected all but one on the
grounds that they evade the issue and tacitly condone
Pakistani aggression in Kashmir. Pakistan will almost
certainly call the attention of the Security Council to this
record.
The attitudes of the two countries toward Graham's mis-
sion indicate that renewed bitterness over Kashmir Iwill
arise as soon as Graham's report is published on 3 April.
Probably in preparation for this event, Indian officials, in -
eluding Nehru and Krishna Menon, have during the past sev-
eral months taken an unusually firm stand on the Kashmir
question. They have made it abundantly clear that India
has no intention whatever of giving up any territory it now
holds or of abandoning the very considerable investment it
has made in Kashmir. Pakistan, which holds no high cards
in the game, has little recourse except to threaten a solu-
tion by "other means"--a threat usually interpreted as imply-
ing the use of force,
Other existing points of friction between the two countries
include recent border clashes, the canal waters dispute,
India's 30 March announcement that it had begun to construct
a large new canal system which would eventually draw off even
more water from Pakistan, and the controversy over arms
build-ups in both countries.
3 Apr 58
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4 1--4 A
III. THE WEST
Bonn May Request Extensive Revision of
Armaments Restriction
The West German Defense Ministry has drawn up
plans requesting amendment of WEU restrictions on Ger-
man armament production to permit manufacture of larger
warships and submarines, influence mines, nuclear ship
propulsion devices, and all types of missiles, according
to a British official who was given a copy of the document
by a German Defense Ministry official. The German plan,
which does not include nuclear weapons, is still an "in-
ternal document" but cast in the form of a request to the
WEU Council. Approval of the WEU Council would require
a two-thirds vote and a recommendation of approval from
the NATO supreme commander.
Bonn has already formally requested waiving of restric-
tion on production of a small antitank missile, but the WEU
Council has postponed a decision. In public statements De-
fense Minister Strauss has also indicated his interest in a
relaxation of other restrictions.
Bonn is not likely to proceed with any over-all request
without sounding out the political reaction in London, and
the passing of such a document to the British may be the
first move. The British official has already taken ".a dim
view" of German plans, and feels that WEU approval of
such extensive revisions is doubtful, but Bonn may expect
French and Italian approval in light of the present tripartite
weapons arrangements.
3 Apr 58
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4101
Spanish Coal Mine Strikes Assuming Some
Political Overtones
The strike of 6,000 workers reported on 28 March in
a new area of the Asturias coal mines, and the two-week
walkout earlier in March which affected up to 30,000
miners in the same region, are motivated basically by
the rising cost of living but seem to some extent attrib-
utable to hostility to the Franco regime. The Madrid po-
lice on 30 March announced the arrest of 11 persons on
charges of being Communists and fomenting the Asturias
strikes.
According to syndicate stewards, the men walked out
because they were "sick and tired of 20 years of Franco."
Reports that the workers were using anti-Franco slogans
are said to have led local army headquarters to recommend
, the use of force and spurred officials to search houses for
firearms and dynamite.
About 30,000 workers are currently on strike in Bar-
celona, and the San Sebastian area is experiencing walk-
outs involving several thousand more. Seville shipyard
workers are restive, the police are expecting labor trouble
in Pamplona, and a general strike is rumored planned for
Bilbao this month. Prolonged or widespread stoppages in
either the transportation or industrial sector would probably
intensify present inflationary pressures as well as, the pcilit-
ical tensions among the various factions of the Franco regime.
3 Apr 58
SEC
CENTRAL INTELLIGENCE BULLETIN
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CENTRAL INTELLIGENCE BULLETIN
3 April 1958
DAILY BRIEF
I. THE COMMUNIST BLOC
*Bloc aircraft for Indonesia; Arrangements with
Czechoslovakia for the delivery of at least eleven Soviet
IL-14 transport aircraft flown by Czech pilots to Indo-
nesia via Moscow-Irkutsk-Peiping- Rangoon- Medan-
Djakarta have been completed.
preparations were too far advanced to allow changes
in the Czech insignia on the planes. These planes will in-
crease the central government's airlift capacity by 30
percent and will almost certainly be pressed into service
aa:inst the dissidents as soon as possible.
USSR-Egypt; Three Soviet W-class submarines and
a mine'sweeper that departed the Baltic on 19 March ar-
rived at Alexandria, Egypt, on 2 April. The submarines
will probably be transferred to Egypt, providing the United
Arab Republic with five W-class long-range units and one
M-class short-range unit. This would give Egypt more
modern long-range submarines than any of the European
satellites.
Yugoslavia: The announcement that Tito will visit
Gomulka late this spring--the result of a long-standing
invitation--comes only five days after his talks with
Hungary's Kadar and is a continuation of his efforts to
extend his influence in Eastern Europe. Tito probably
hopes this announcement will elicit a stand from the still
silent Sino-Soviet bloc on the Yugoslav Communist party
congress this month and its controversial program.
=Kashmir: UN representative Graham's latest report
on Kashmir, scheduled for release today, will probably
stimulate mutual recriminations by both Pakistan and India,
but is unlikely to result in any material change in the sit-
uation. Indian officials, including Nehru and Krishna
Menon, have been unusually firm of late in stating that
Kashmir is an integral part of India. Pakistan is in no
position seriously to threaten India's hold on most of the
state. Each side may also use recently publicized shoot-
ing incidents on the East Pakistan-Indian frontier to show
the "aggressftre," '
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