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May 29, 1958
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IZZ/ZZ/ZW7/////////// 'Approved for Release: 2019/08/20 C03192933 �}013-5EC�REIT� 3.3(h)(2) 3.5(c) 0 TOP SECRET 29 May 1958 Copy No.140 CENTRAL INTELLIGENCE BULLETIN' DOCUMENT NO. NO CHANGE IN CLASS. I 1 DEC.:LAS:SPED CLV.;S. CHANGED TO: TA a 6 NEKI kEVIEW DATE: for AUTH- IHR � RAT 2 ,REVIEWER Approved for Release: 2019/08/20 C03192933 Approved for Release: 2019/08/20 C03192933 41114 TOP SECRET Approved for Release: 2019/08/20 C03192933 Approved for Release: 2019/08/20 C03192933 29 MAY 1958 L THE .00MMUNIST BLOC USSR cancels credits to Yugoslavia worth about $278,000,000. Peiping makes strongest attack on Belgrade in the current dispute. IL ASIA-AFRICA Lebanon - Efforts to reach political compromise fall. Army commander continues hesitant to commit forces against rebels, who, with UAR sup- port, control much of rural area and parts of some cities. Taiwan - Chiang Kai-shek's son states Indonesian dissident leader has asked for Chinese Nationalist air support; Taiwan has not reached a decision. Greek prime minister warns he may be forced to take tougher line on Cyprus to forestall Communist exploitation. 0 Secret Turkish-Soviet talks reportedly 0 concerned large Soviet aid offer if Tur- key turned down US bases. 0 Morocco accedes to Soviet request to open permanent commercial mission in Casablanca. CI Tension between Tunisians and French rises, with Tunis willing to avoid show- down in the United Nations for the time being. IIL THE WEST France - Socialist party refusal to acquiesce in De Gaulle's investiture accentuates threat of military coup and civil disorder. Venezuela - Military dissatisfaction with Junta president's inaction against leftists increasing. Approved for Release: 2019/08/20 C03192933 - Approved for Release: 2019/08/20 C03192933\ VIS SECRET Nue CENTRAL INTELLIGENCE BULLETIN 29 May 1958 DAILY BRIEF I. THE COMMUNIST BLOC Soviet-Yugoslav dispute: The USSR's suspension for five years of two large economic development credits to Yugoslavia--worth about $278,000,000-- marks a new stage in the deteriorating bloc-Belgrade relations. Moscow is evidently willing to risk the un- favorable effects its action might have in India and other uncommitted states through making it apparent that the Soviet ec9n0mic aid was not without "strings." (Page 1) Communist China: A resolution passed by the Chinese Communist party congress is the strongest attack by Peiping against Belgrade in the current dis- pute. Peiping repeats its earlier attacks and now charges that Belgrade played a "provocateur and in- terventionist" role in Hungary. Peiping's castigation could serve to keep the Yugoslav dispute alive and may discourage any sentiment in the Fonr. which favors soft- pedaling the issue. (Page 2) IL ASIA-AFRICA Lebanon: Government efforts to reach a political settlement with the opposition have failed. Government leaders are showing increasing pessimism over the capability of the security forces, numbering some 13,000 to 14,000, to maintain control in the face of opposition -\\ Approved for Release: 2019/08/20 C03192933 N Approved for Release: 2019/08/20 C03192933 %Nor SECRET Niue from an estimated 6,000 to 7,000 armed rebels who remain entrenched in some urban quarters and who control much of the countryside. Extensive UAR sup- port to the rebels continues and may be intensified. Army commander General Shihab continues hesitant to commit the army in an all-out drive against the rebels. (Page 3) (Map) Taiwan: Generalissimo Chiang Kai-shek's son, Chiang Ching-kuo, stated recently that Col. Warouw, acting premier of the Indonesian dissident movement, had arrived in Taipei and had requested Chinese Na- tionalist air support for the dissidents. Chiang stated that the Chinese Nationalists had not reached a decision to give aid to the dissidents. Greece: Prime Minister Karamanlis has warned the American ambassador that if the British proposals on Cyprus, which are expected in the near future, are unsatisfactory, the government will be forced to take a harder line on Cyprus to prevent the Communists from exploiting this issue. Karamanlis probably wants to line up more American support on the Cyprus issue, but in any case he has_lo_facea, more vocal and deter- mined opposition. (Page 5) Turkey-USSR: Discussions covering Tur- key's major financial problems are scheduled for early June between Ankara officials and representatives of the International Monetary Fund and the Organization for European Economic Cooperation. (Page 6) 29 May 58 DAILY BRIEF skWk 11 Approved for Release: 2019/08/20 C03192933 1\ *or Approved for Release: 2019/08/20 C03192933' -SECRET-- Morocco-USSR: The Moroccan Government approved on 22 May a Soviet request to establish a permanent com- mercial mission in Casablanca. On 20 April, a trade agreement between Morocco and the USSR was concluded calling for an exchange of goods valued at $14,200,000, more than double the amount provided for in the 1957 agreement. In the past Morocco has been cool to Soviet approaches, but this new development opens the way for the Soviet Union to press for expanded relations. (Page 7) Tunisia: New roadblocks are being erected, and French forces may no longer leave their bases even in civilian clothes. A mob tore down the flag at the French gendarmerie headquarters in Tunis on 26 May, but was prevented by Tunisian police from entering the building. The Tunisian delegation at the United Nations is expected to ask soon for a Security Council meeting on Tunisia's complaints against France. For the time being, Tunis Is still trying to avoid a showdown in order not to em- barrass the United States and Britain. III. THE WEST *France: Socialist opposition to De Gaulle, despite a "strong and pathetic plea" by party leader Mollet to Socialist deputies to reconsider, was apparently the basis of Coty's decision to ask the presidents of the two parlia- mentary houses to work out with De Gaulle the conditions under which the government would be formed. Continued Socialist opposition and maneuvering will encourage the Communists in their last-ditch efforts to fashion a pop- ular front government, and could set off the threatened military coup to install De Gaulle and result in serious 29 May 58 DAILY BRIEF iii Approved for Release: 2019/08/20 C03192933 civil disorders, the general wants to maintain legal procedures, but extralegal methods have not been ruled out. (Page 8) Venezuela: New tensions may be aroused by the Vene- zuelan :junta's new cabinet appo1ntment-3, and the chances of an attempted take-over by Defense Minister Castro and general staff chief Perez Morales could be increased. The officer corps has for some time been concerned by junta President Larrazabars passivity in the face of a rapid rise in leftist influence. (Page 10) 29 May 58 DAILY BRIEF iv Approved for Release: 2019/08/20 C03192933 Approved for Release: 2019/08/20 C03192933 Nur' vgige L THE COMMUNIST BLOC Moscow Suspends Economic Credits to Belgrade The USSR advised Yugoslavia on 27 May of its inten- tion to suspend for five years the two big development-loans it had extended Belgrade two years ago. This move marks a new stage in the deterioration of interstate relations which has followed the bloc-Belgrade ideological rupture. Since the Soviet credits are to be used chiefly to provide equip- ment for industrial construction now in the planning stage, their cancellation will not cause an economic crisis in Yugo- slavia. Approximately $278,000,000 in credits are involved, including the joint East German - Soviet $175,000,000 credit for the construction of an aluminum plant. The Yugoslav announcement of the Soviet decision did not mention, how- ever, a $54,000,000 commodity credit extended during Feb- ruary 1956, of which about $28,000,000 remains to be drawn. The USSR noted, in suspending the credits, that the possibil- ity existed "for some compensation on the basis of current goods exchanges." As yet, there has been no mention that Czechoslovakia and Poland intend- to follow Moscow's lead and cancel approximately $90,0009000 in credits they have extended to Yugoslavia. The hint of a possibility of some compensatory arrange- ment suggests that no immediate complete economic boycott-- such as ensued after the 1948 break--is contemplated. The Soviet decision, which was probably discussed at the recent CEMA meeting in Moscow, suggests that the USSR does not contemplate any resolution of the current dispute in the foreseeable future. Moscow apparently is willing to risk any unfavorable effects its obviously political action may have in India and other uncommitted states where the USSR has been careful to avoid attaching political strings to its aid. CONFIDENTIAL 29 May 58 CENTRAL INTELLIGENCE BULLETIN page 1 Approved for Release: 2019/08/20 C03192933 Approved for Release: 2019/08/20 C03192933 vire Peiping Renews Attack on Belgrade The 23 May resolution of the Chinese Communist party congress exceeds in harshness Peiping's 5 May blast against Belgrade, and charges the Yugoslav leaders played a "pro- vocateur and interventionist" role in Hungary. In language resembling the 1948 Cominform resolution which expelled Yugoslavia, Peiping declares that the Yugo- slav leaders have "alienated themselves" from the interna- tional Communist movement. The resolution pointedly distinguishes between Yugoslav leaders and the populace. The resolution reflects the tone of the entire proceed- ings of the Chinese party congress, which reaffirmed hard lines in domestic and foreign policy. Mao Tse-tung and his most influential lieutenants in the past year have increasingly stood for ideological orthodoxy, tighter organizational con- trols, and greater pressures on the populace for rapid eco- nomic development. The Chinese resolution charges that the Yugoslav program "betrays" Marxism and that the Yugo- slays have "completely forsaken" the concept of Communist party power monopoly. In order to counter any speculation that the Chinese are supporting Stalinist opponents of Ithrushchev, Peiping for the second time in a week makes a special point of its support for Khrushchev personally. The resolution endorses the measures taken since 1954 toward Yugoslavia by the So- viet central committee, "headed by Comrade N. S. Khru- shchev." Yugoslavia's Borba regards the Chinese resolution as the death knell for the pleas for "well-meaning criticism" which have been voiced by some East European spokesmen. The paper comments that the old methods Of the Cominform havv�in been put into practice. CONFIDENTIAL 29 May 58 CENTRAL INTELLIGENCE BULLETIN Page 2 Approved for Release: 2019/08/20 C03192933 Approved for Release: 2019/08/20 C03192933 II. ASIA-AFRICA Lebanese Situation Efforts for a negotiated settlement between the Leba- nese Government and opposition leaders have broken down completely. Prime Minister Sulh's statement on the presi- dential second-term issue has been rejected outright by ex- tremist leaders who demand Chamoun's resignation. Gov- ernment leaders are increasingly pessimistic that security forces can cope with the rebels, who now control most of the countryside. Prime Minister Sulh declared on 26 May that if Gen- eral Shihab failed to take effective action against the rebels, Sulh saw no alternative but to bring in foreign troops if Lebanon were to be saved. President Chamoun also stated on 27 May that the situation had become more critical and that General Shihab questions his own ability to deal with the increasingly difficult situation. He said that the gen- eral did not, as he had on previous occasions, object when Chamoun suggested that foreign intervention might be the only solution. Shihab is reported to have told Foreign Minister Malik on 26 May that "it was not his policy to engage the opposi- tion forces directly," and that he expected more terrorist bombings in Beirut, since "neither Beirut nor the other large cities were presently priority targets for the army." Claiming that the rebels now numbered between 6,000 and 7,000 men, Shihab declared that if the army were attacked on all fronts, he would have to give up two thirds of the coun- try and retire to the main cities. Shihab concluded by stat- ing that Nasirism was a tremendous movement with which Lebanon would have to accommodate itself gracefully. The general belie'ved, however, that foreign intervention was in- evitable since the West would not let the UAR take over the country. Buttressing the gloomy predictions of government lead- ers is the severe deterioration of the military situation. The ---SECRE'F 29 May 58 CENTRAL INTELLIGENCE BULLETIN Page 3 Approved for Release: 2019/08/20 C03192933 043proved for Release: 2019/08/20 C03192933 40, MEDITERRANEAN SEA Approved for Release: 2019/08/20 C03192933 - Approved for Release: 2019/08/20 d03192933 4,01 army has withdrawn from Balabakk and left it to the opposi- tion. Renewed fighting is going on in Tripoli, and, in the rest of the north, government forces hold only two small towns. The areas of greatest military danger are the Biqa Valley and the region around Bayt ad-Din. A force of rebels reported to total 3,000, including Syrians and Egyptians, is concentrating in the Biqa Valley mid is equipped with light arms, mortars, and transportation. In the Bayt ad-Din region, Druze opposition leader Jumblattis force of 600 men is stated to have received 500-600 reinforcements from Syria, as well as an estimated 20 howitzers with ammunition, and antitank grenades, Lebanese forces to combat hese tivzD threats are stated to number less than 600 men. Iraqi rein- forcements in Lebanese uniforms arrived in northern Lebanon on 26 May. au- thorities in Damascus to "remove the Arabic markings" from antitank grenade launchers being sent to antigovern- ment forces in Lebanon. 29 May 58 SECRET CENTRAL INTELLIGENCE BULLETIN Approved for Release: 2019/08/20 C03192933 Page 4 Approved for Release: 2019/08/20 C03192933 Nier, Greek Premier Warns Against Unacceptable Cyprus Proposals Premier Karamanlis told the American ambassador to Greece on 26 May that a solution to the Cyprus problem is now urgent. �The premier attributed sizable Communist gains in the recent Greek national elections, along with the decline of his own pro-Western party, to the resentment felt by the Greek people toward Britain, Turkey, and the United States for their attitudes on Cyprus. Karamanlis warned that to prevent further exploita- tion of this bitterness he would be forced to adopt a more unyielding attitude toward the Cyprus problem unless the forthcoming British proposals are acceptable. He denied that the Greek Government has any contact with, or influ- ence over, the Greek Cypriot underground organization EOKA, but predicted that "great violence" would follow an- nouncement of any unacceptable British plan. This in turn, he warned, could lead to communal clashes on the island and a possible rupture in Greek-Turkish relations. Kara- manlis concluded with an urgent plea that the United States use its influence to convince Britain and Turkey that they must act to bring about an acceptable solution. Domestic problems were probably as much respon- sible as foreign issues for the recent display of leftist strength in Greece. The proven vote-getting power of the Communists is now large enough, however, to influence the conduct of Greek foreign policy for the indefinite fu- ture. If Britain's new plan for Cyprus is unacceptable to Archbishop Makarios and the Greek Cypriots, Karamanlis will be forced to take a firm stand favoring Cypriot self- determination or risk further left-wing gains in Greek municipal elections next October. .CONFIDENTIAL 29 May 58 CENTRAL INTELLIGENCE BULLETIN Approved for Release: 2019/08/20 C03192933 Page 5 Approved for Release: 2019/08/20 C03192933 Name Turkey May Be Considering Soviet Economic Aid Top Turkish leaders held _w_it_h_soviet_AInhqs_s_adorAivzhoy_ discussions discussed a proposed Sovietloan to rirey ox $300,000,000 in gold in installments, a type of loan the USSR has never granted a country outside the bloc. Ry- zhov allegedly triedto tie such aid to an agreement not to permit rocket bases in Turkey, but Foreign Minister Zorlu is said to have refused to discuss this issue "at this time." Despite Turkish denials that anything of major sig- nificance was discussed, American representatives in Ankara are watching the situation closely, and believe the presence in Ankara of the Turkish ambassador to Moscow may be significant. While such reports may be designed to worry Amer- ican officials studying the question of aid to Turkey, it is possible that the Turks may feel forced to seek Soviet aid to solve their critical financial problems, which include servicing a foreign debt estimated to be as high as $1.5 billion. President Bayar is reported to have told Ryzhov in early April that Turkey might respond fa- vorably to Soviet aid offers. Turkey is seeking multilateral help through the facil- ities of the International Monetary Fund and the Organiza- tion for European Economic Cooperation. Officials from these organizations are scheduled to make a survey of Turkey's economic troubles in early June. Meanwhile the Turks are seeking immediate interim economic assistance from the United States and West Germany. SECRET 29 May 58 CENTRAL INTELLIGENCE BULLETIN Page ,6 Approved for Release: 2019/08/20 C03192933 Noe Approved for Release: 2019/08/20 C03192933 Name Moroccan Government Approves Establishment of Soviet Commercial Mission The Moroccan Government is reported to have approved unanimously on 22 May a Soviet request for permission to establish a permanent commercial mission in Casablanca. The conclusion in Moscow on 20 April of a new trade agree- ment with the USSR, providing for an exchange of goods valued at $14,200,000 and the establishment of clearing ac- counts in Rabat and Moscow, in Moroccan eyes has invali- dated the standing argument that a trade mission was not needed because trade was inconsequential. Under the 1957 agreement, Moroccan trade with the USSR expanded rapidly. During the first nine months of 1957, trade was valued at $3,672,000, in contrast to $204,000 during the same period of 1956. Despite this expansion, Soviet trade amounted to only slightly more than one percent of Morocco's total trade. While Morocco has been cool to Soviet approaches, and Premier. Balafrej and the King personally oppose closer rela- tions, the government since March has been seriously con- sidering an exchange of diplomatic representatives with the USSR. Establishment of a commercial mission now provides a new contact and opportunity for the USSR to press for ex- panded relations. The reporting officer expects the unanimous decision of 22 May to be used to exert pressure on the United States for increased aid on more favorable terms. 29 May 58 CENTRAL INTELLIGENCE BULLETIN Page 7 Approved for Release: 2019/08/20 C03192933 Approved for Release: 2019/08/20 C03192933 Niro, III. THE WEST French Crisis Further efforts by President Coty to give maximum legality to General de Gaulle's assumption of power have delayed the expected direct presidential request that the general form a new government. Coty's designation of the presidents of the two houses of Parliament late 28 May to negotiate with De Gaulle has brought heavy pressure to bear on the recalcitrant Socialist party--the main stum- bling block to a legal investiture,. There are indications that the pro-De Gaulle forces may have underestimated the depth of Socialist opposi- tion to any form of De Gaulle regime and the willingness of at least a segment of the party to make good the threat, privately advanced by several leaders, to "go underground" regardless of how De Gaulle takes power. According to the press, even a "pathetic plea" by Socialist leader Mol- let to Socialist deputies on 28 May failed to sway a majority of them. Continued Socialist opposition, by encouraging the Communists and probably other anti Gaullist elements, enhances the possibility of momentary military interven- tion which had seemed slightly less imminent following De Gaulle's 27 May announcement that he was preparing to form a government and his request for the maintenance of public order. The prospects for a violent leftist oppo- sition movement also are increased by prolonged resist- ance of "republican" elements in the Assembly. The Swiss Government is so concerned over what it considers the "strong possibility" of civil war in France that, it has 29 May 58 CENTRAL INTELLIGENCE BULLETIN Page 8 Approved for Release: 2019/08/20 C03192933 Approved for Release: 2019/08/20 C03192933 ,quie directed troops in western Switzerland to be ready to man border controls and to guard against extension of the conflict to Swiss soil. In the event of war, Bern expects large numbers of refugees from the extreme left or right, and will grant asylum. SECRET 29 May 58 CENTRAL INTELLIGENCE BULLETIN Page 9 Approved for Release: 2019/08/20 C03192933 Approved for Release: 201RI8/2-0 C03192933 No, Venezuelan Junta Appoints New Cabinet New tensions may be created in Venezuela by the governing junta's new cabinet appointments. Finance Minister Mayobre, a banker and former governor of the International Monetary Fund, is reported to have been at one time closely connected with Communist party affairs; he was exiled by the Perez Jimenez dictatorship in 1952. Foreign Minister de Sola� formerly minister of justice, was active in the overthrow of the Perez regime and is said to be popular with Caracas' leftist-inclined, anti- militarist students. Education Minister Rafael Pizani, exiled by the Perez Jimenez regime, was the leading pro- ponent under conservative President Medina in 1943 of the provision for a 50-50 return to the government on petro- leum revenues. Agriculture Minister Hernandez, an agron- omist, and Justice Minister Aguilar, who was secretary of the Caracas bar association in 1954, appear to have been in- active politically. The new appointments may precipitate an attempt at a take-over by Defense Minister Castro and general staff chief Perez Morales. The officer corps has for some time been concerned over junta President Larrazabal's assiv- itv in the face of the rapid rise of leftist influence. CONFIDENTIAL 29 May 58 CENTRAL INTELLIGENCE BULLETIN Page 10 Approved for Release: 2019/08/20 C03192933