CURRENT INTELLIGENCE BULLETIN - 1956/07/18

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 03185122
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 10
• Document Creation Date: October 25, 2019
• Document Release Date: October 31, 2019
• Publication Date: July 18, 1956

Approved ORP7E01104 ";5;/12 1031714
3.3(h)(2)
CURRENT
INTELLIGENCE
BULLETIN
18 July
1956
Copy No. 105
DOCUMENT NO.
NC) CHANGE IN CLASS.
DECLASSIFIED
CLASS CHANGED TO: TS S C
NEXT REVIEW DATE:
AUTH: H 70-ioa
DAT grj_ REVIEWER: 1
OFFICE OF CURRENT INTELLIGENCE
CENTRAL INTELLIGENCE AGENCY
TOP SECRET
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SECRET
CONTENTS
1. KING SAUD SETS 23 JULY DEADLINE FOR NEW DHAHRAN
AIRFIELD AGREEMENT (page 3).
2. USSR REPORTEDLY BACKS DOWN ON ASWAN DAM OFFER
(page 4).
�
(page D).
4, WET MI SES PERSONAL TALKS WITH LAOTIAN
LEADERS (page 6).
5. EXILED LAOTIAN LEADER RETURNING TO BRING ABOUT
SETTLEMENT WITH COMMUNISTS (page 7).
6. SOVIET-EAST GERMAN NEGOTIATIONS
(page 8).
18 July 56
� THE ARAB-ISRAELI SITUATION
(page 9)
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1. KING SAUD SETS 23 JULY DEADLINE FOR NEW
DHAHRAN AIRFIELD AGREEMENT
King Saud has informed Ambassador
Wadsworth that if by 23 July Saudi
Arabia's terms for extension of the
agreement for American use of the
Dhahran air ield are not accepted, or an equally accept-
able offer proposed, negotiations will be considered ended
and the agreement not extended.
The five-year agreement on the use of
the airfield expired on 18 June, but was extended for one
month to allow time for further negotiations. The Saudis
have asked $50,000,000 a year--or the equivalent in arms--
for a new five-year agreement.
Saud's note to the ambassador added that
the question of Dhahran airfield and continuance of the Amer-
ican training mission "would not, under any condition, affect
the friendship existing between the Saudi and American gov-
ernments."
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Nome
2. USSR REPORTEDLY BACKS DOWN ON ASWAN
The USSR has quietly implied to the
Egyptian government that it finds
itself unable to carry through on its
offer to finance the Aswan High Dam
and that the offer will have to be withdrawn,
Comment
While it has been rumored in the press
that the USSR has grown cool to the idea
of building the dam, this is the only report that Moscow may
withdraw its previous offer.
If the report is true, Moscow may have
decided that such an extensive investment runs too great a
risk of bogging down along the way and that shorter-range
projects would offer more immediate returns in prestige and
propaganda value for the USSR.
A threatened withdrawal of the Soviet
offer might account for Nazis's recently expressed desire to
hasten an agreement with the West.
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Nod
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SE-GRE-T
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4. WET MINH PROPOSES PERSONAL TALKS WITH
LAOTIAN LEADERS
In a note to Laotian premier Souvanna
Phouma received on 11 July, Viet Minh
premier Pham Van Dong proposed per-
sonal talks with Laotian government
leaders to remove "all sources of friction:' He also pro-
posed the formation of a joint team to investigate disputed
areas on the Lao-North Vietnam frontier.
The Viet Minh premier reiterated his
previous statements that North Vietnam has-not aided and
does not intend to aid the Pathet Lao and offered all possible
assistance toward settlement of the dispute'. At the same time
he expressed the wish that Laos would follow a policy of neu-
tralism.
The Laotian premier indicated to the
American ambassador his willingness to send a team for a
joint border investigation, but stated flatly that Pham Van
Dong had lied concerning Viet Minh aid to the Pathet Lao.
Comment Although the message--the first direct
proposal for a meeting�was couched in
ingratiating terms, it hinted strongly that Communist terms
for settlement of the Pathet Lao problem continue to be Lao-
tian adoption of a policy of nonalignment with the West concur-
rently with closer relations with the Sino-Soviet bloc.
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Nue' -.sof
5. EXILED LAOTIAN LEADER RETURNING TO BRING
ABOUT SETTLEMENT WITH COMMUNISTS
Prince Petsarath, a "free Lao" leader
who has been in voluntary exile in
Thailand for over ten years, has told
the American embassy in Bangkok he
in en's o re urn to Vientiane to "lend his influence" in
settling the Pathet Lao problem. Petsarath, half-brother
to both the Laotian premier and the Pathet Lao chief, re-
portedly favors a coalition government in Laos to include
the Pathets and is confident he can promote an accord if
both sides "yield slightly!' He believes the Viet Minh will
not interfere.
Laotian premier Souvanna Phouma has
sponsored Petsarath's return in the belief that he is a
stanch nationalist_ who will help to wean the bulk of the
Pathets from their Viet Minh mentors. Crown Prince Savang
and Deputy Premier Katay, however, have opposed his re-
turn, viewing him as a dangerous and ambitious element
likely to stir up trouble in both palace and political circles.
Petsarath's agreement to return and
Hanoi's offer to assist in an "internal" settlement of the
Pathet Lao question will undoubtedly revive Souvanna's opti-
mism over an early solution, and may encourage him to
make concessions to further this end. Recently Souvanna
had shown irritation at Prince Souphannouvong's intransi-
gence and had issued a final offer to meet the Pathet Lao
leader in Luang Prabang on 20 July, failing which he planned
intensification of the government's guerrilla operations a-
gainst the Pathets.
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SECRE F-
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Nure Neiti
6. SOVIET-EAST GERMAN NEGOTIATIONS
In the joint Soviet-East German com-
muniqu�f 17 July it was announced
that the USSR had agreed to give con-
siderable economic assistance to East
Germany. The proposals advanced concerning German
unification and troop withdrawal from the two parts of
Germany contained nothing new.
The USSR is to grant East Germany free
currency for purchases in the world market and new long-
term credits in an unspecified amount. There will also be
an increase in exchanges of goods under existing trade agree-
ments. As further economic assistance the USSR agreed,
effective 1 January 19579 to reduce by one half the annual
payments made by East Germany toward Soviet occupation
costs.
The Soviet grant of free currency suggests
that East Germany has a pressing need for foreign exchange.
The probable purpose of the long-term credits is to bolster
East Germany's competitive position vis-a-vis West Germany.
According to press reports, Ithrushchev
in a blunt statement at a banquet for the East German leaders
called for the building of a strong East Germany capable of
waiting for West Germany to ask for reunification. Khrushchev
stated, "Do not hurry. The time will come when they (the West
Germans) will come knocking at your door,"
Khrushchev's speech is added evidence that
a major purpose of the visit of the East German leaders to
Moscow is to strengthen the position of their government, both
internally and externally. The remarks he directed at West
Germany, together with the recent recall of the Soviet ambas-
sador to Bonn, indicate a hardening of the Soviet attitude toward
the Adenauer government, which faces elections next year.
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CONFIDENTIAL
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CUINIPME-1411-1-2440�__
Nikori *4�10
� THE ARAB-ISRAELI SITUATION
(Information as of 1700, 17 July)
Nothing of significance to report.
18 July 56
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-CONFIDENTIAL-
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