CENTRAL INTELLIGENCE BULLETIN - 1958/06/02

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 03192935
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 19
• Document Creation Date: January 27, 2020
• Document Release Date: January 30, 2020
• Publication Date: June 2, 1958

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3.3(h)(2)
2 June 1958
Copy No. 140
CENTRAL
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INTELLIGENCE
BULLETIN
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2 JUNE 1958
L THE COMMUNIST BLOC
Khrushchev accepts early talks on nu-
clear test ban controls but proposes
inclusion of Poland and Czechoslovakia.
USSR official remarks "things might not
be too bad" with De Gaulle regime. 0
Poles claim Moscow CEMA meetings
placed no restrictions on their trade
with West.
II. ASIA-AFRICA
Lebanon - Political maneuvering con-
tinues during military impasse.
Incidents increase on Israeli borders
with Syria and Jordan. �
Burma - Premier Nu determined to
call general elections.
Ceylon airlifts troops to meet new
communal rioting.
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0 India faces further curtailment of
Second Five-Year Plan.
0 Moroccans concerned over possible
moves by French troops in Algeria.
Algerian junta leaders dissatisfied
with new De Gaulle government.
IIL THE WEST
France - De Gaulle installed as premier;
cabinet contains only two ultrarightists,
no military.
Finland gets $125,000,000 credit and
Saimaa Canal transit rights from USSR.
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-149
2 June 1958
DAILY BRIEF
I. THE COMMUNIST BLOC
USSR - Nuclear ban talks: Premier Khrushchev's
letter of 30 May accepts President Eisenhower's proposal
that technical talks on nuclear test ban controls begin with-
in three weeks, but seeks to maintain the parity principle
as a precedent for summit talks by proposing that Poland
and Czechoslovakia participate if Britain and France do.
The letter also suggests the inclusion of India and pos-
sibly other countries, not named. Khrushchev seeks to
maintain pressure on the West for a rapid halt in testing
by insisting that the final report of the experts be made in
three or four weeks, rather than the 60 days, the President
suggested as a goal
USSR - France: The'counselor of the Soviet Embassy
in Paris, perhaps 'voicing Moscow's real sentiments, has
told an American official that "things might not be too bad"
if De Gaulle came to power with the support of most of
the assembly. His other remarks suggest that Moscow sees
no advantage in violent Communist resistance to De Gaulle
and does not believe the time is yet ripe for a popular front.
Soviet bloc Moscow meetings: Despite the USSR's ef-
forts to tighten the bloc's economic structure at the recent
meetings in Moscow, no restrictions were placed on Polish
freedom of action to expand trade relations with the West,
according to a high Polish Foreign Ministry official. The
Poles also intend, he said, to continue developing closer
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economic ties with Belgrade, and the committees already
established for this purpose will meet soon. He claimed
that the Polish delegation to the-Warsaw Pact political com-
mittee meeting had found several points to criticize in the
communiqu�nd had worked, for moderation in its drafting.
II. ASIA-AFRICA
Lebanon: Political maneuvering continues against the
background of a military impasse. The UAR apparently is
making increased efforts to regroup and reinforce the dis-
organized indigenous opposition forces, now weakened by
factional bickering. The most serious military problem re-
mains in southern Lebanon, where a UAR-supported force,
estimated at up to 4,000 men, is reported gathering. Pend-
ing a major opposition victory or fragmentation of the Leba-
nese Army, the UAR-supported opposition appears willing
to settle for any "compromise" proposals which would re-
place pro-Western government in Lebanon in stages over the
next few months. (Page 2)
Israeli border incidents: A recent increase in the number
of relatively serious incidents on the Israeli-Syrian and Israeli-
jordanian borders may be in large part a product of the general
heightening of area tensions as a result of developments in Leba-
non. The Israelis still do not appear to be contemplating any
direct intervention of their own at this time. They might, how-
ever, adopt a more aggressive posture along their borders
with Syria and Jordan in the hope of easing UAR pressure on
the pro-Western Lebanese Government, whose preservation
the Israelis believe is very much in their own interests.,
Burma: Prithe Anister U Nu is determined to call for
early general elections, which would probably be accompanied
2 June 58
DAILY BRIEF ii
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by widespread violence in rural areas and which in any case
would lead to Communist parliamentary gains. Nu says he
will take this action since he seems likely not to obtain a
workable majority in the 5 June parliamentary vote to de-
cide which of the warring factions of the ruling party will
form a new government. There is a chance the army might
Intervene to prevent elections.
(Page 4)
Ceylon: The Bandaranaike government on 30-31 May
airlifted strong military reinforcements to Tamil districts
In the north and east to control fresh outbreaks of communal
violence directed against government forces. The governor
general and the inspector general of the police are convinced
that Communists instigated some of the riots. The emergency
powers invoked on 27 May appear to have restored order in
the Colombo area. Bandaranaike will fare heavy attacks dur-
ing a special parliamentary session on 4 June from opposition
groups for his failure to maintain order and from Singhalese
extremists in his own coalition because he has ordered the
surforession of Sinhalese as well as Tamil extremists.
Indian financial crisis: The Itidian Government is faced
(ri_o with a major financial crisis which may force it to further cur-
tail its Second* Five-Year Plan (1956-61), this time even more.
sharply. The government now estimates that there will be a
$617,000,000 deficit in India's balance of payments during the
fiscal year ending 31 March 1959, after taking account of all
assured foreign aid. India had only $561,000,000 in foreign
exchange on 1 April 1958, and must keep a minimum of about
$200,000,000 for working capital.
5-z-0
Morocco: No serious incidents involving French forces
and Moroccan troops or civilians have yet occurred in Morocco,
but tension remains high as a result of the recent developments
in Algeria, and such incidents are a continuing possibility,
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especially in the northeastern province bordering Algeria.
Moroccan authorities are deeply concerned that the French
Army, even with De Gaulle in power, may undertake rash
action leading to a reoccupation of Morocco.
(Page 6)
Algeria: Junta leaders in Algeria are apparently un-
-74A9 happy that De Gaulle's return to power was not accompanied
by a more complete break with the "regime of parties" they
have condemned. They probably intend to maintain pressure,
at least through further organized demonstrations, for ac-
ceptance in Paris of their program to integrate Algeria's
Moslems within a centralized French state. Local army
leaders, who have recently tightened their control through-
out the area, are unlikely openly to oppose any of De Gaulle's
policies for the present.
III. THE WEST
,*France: Premier De Gaulle's 15-man cabinet contains
no military representatives and only two "Gaullists." Four
key leaders�Socialist Guy Mollet, Popular Republican Pierre
flimlin, Independent Louis Jacquinot, and Democratic Re-
sistance Union leader Felix Houphouet-Boigny, a native
est African�who were named ministers without portfolio,
may constitute an "inner cabinet." The nomination as foreign
minister of Maurice Couve de Murville, ambassador to Bonn
and formerly to Washington, may be intended to reassure
both capitals as to De Gaulle's foreign policy. De Gaulle is
reliably reported deferring the selection of a minister for
Algeria until he can investigate the situation there personally,
and he may have postponed naming a minister of natipnal de-
fense for the same reason. De Gaulle may face early dif-
ficulties holding his 329 supporters together when he presents
the specifics of his program, particularly on constitutional
reform and Algeria, since at least some extreme rightists
are already concerned lest he be too liberal.
(Page 8)
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DAILY BRIEF
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Finland-USSR: The USSR, according to the communiqu�
issued on the conclusion of President Kekkonen's recent state
visit to the Soviet Union, has agreed in principle to give Fin-
land a credit of $100-125,000,000 and to grant Finland transit
rights on the lower half of the Saimaa Canal for 50 years.
The two countries have also agreed to early negotiations
for another five-year trade agreement for the period 1961-
65. The Finns are apparently trying to convince the USSR
that recent indications of Finnish interest in OEEC and
liberalization of trade with the West do not indicate any in-
rtent7 � to jeopardize Soviet-Finnish trade relations.
(Page 10) (Map)
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I. THE COMMUNIST BLOC
Soviet Official Comments on French Situation
Counselor Rogov of the Soviet Embassy in Paris, al-
though critical of De Gaulle,told an American ,official on 29
May he thought "things might not be too bad" if De Gaulle
were to come to power legally with the support of most of
the assembly. This statement and his remarks about the
"disastrous results" if De Gaulle should gain power forceful-
ly and a civil war break out suggest that Moscow lacks con-
fidence in the willingness of rank-and-file French Commu-
nists to fight, does not want the party to become isolated
from the Socialists, and does not desire violent Communist
resistance to De Gaulle under the present circumstances.
Rogov said even the Communists do not really want a popu-
lar front because they realize the time is not yet ripe for it.
Moscow probably believes the groundwork for a popular-front
government can only be laid slowly, through joint political ac-
tion with some or all of the Socialists under a De Gaulle gov-
ernment.
Another Soviet Embassy official has pointed out the neces-
sity of distinguishing between Soviet global policies and the ac-
tivities of a local Communist party, which must "protect its
own position." Moscow has been careful not to jeopardize the
chances of good relations with De Gaulle by rash statements.
The Soviet Foreign Ministry's public statement on 30 May af-
firming noninterference in French internal affairs is the only
prudent course the USSR could take after Vorbshilov had been
qu,e.cl as making critical remarks about De Gaulle,
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II. ASIA-AFRICA
Crisis in Lebanon
Political maneuvering continues against the background
of a military impasse.
Factional bickering has weakened the disorganized in-
digenous opposition forces in several key centers of the Biqa
Valley. Meanwhile, the initiative in regrouping, supplying,
and directing opposition forces appears to be passing increas-
inglyto the UAR--to the consternation of local opposition chiefs
in southeastern Lebanon, some of whom now would negotiate
with the government.
While sporadic action continues in the north, the most
serious military problem remains in southern Lebanon, where
a UAR-supported force estimated at up to 4,000 men is reported
gathering. Rebel seizure of control in this area, including the
ports of Tyre and Sidon, could inspire new rebel initiatives
elsewhere and possibly set the stage for-a local secession
movement. The Syrian nationalist press has called for recovery
of areas in northern, eastern, and southern Lebanon annexed
from Syria by the French after World War I.
Pending a significant opposition military victory, or fac-
tional disintegration of the Lebanese Army, the UAR-supported
opposition appears willing to settle for any "compromise" where-
by pro-Western government in Lebanon would be replaced in
stages over the next few months. One such "compromise" would
involve installation of a "neutral" Moslem prime minister, ap-
proved by UAR and opposition leaders, while President Chamoun
would be allowed to complete his term ending 23 September as a
figurehead. The pro-VAR president of Lebanon's Chamber of
Deputies, Adel Osseiran, claims support from opposition lead-
ers for this purpose. Designation of army commander General
Shihab to form a government might be approved by many opposi-
tion leaders, since the general is known to oppose Chamoun's
re-election and to favor reaching an accommodation with Nasir.
Chamoun, meanwhile, still appears determined to stand fast,
and new cabinet developments are unlikely pending the outcome
of the UN Security Council's consideration on 3 june of Lebanon's
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complaint against the UAR. Press reports from the Arab
League meeting in Benghazi suggest that the UAR is at-
tempting to have the problem referred to an Arab League
committee if Lebanon will withdraw its complaint at the UN.
A major UAR-opposition goal, now that Chamoun's re-
election appears forestalled, is to install a government com-
mitted to electing a legislature which would choose a succes-
sor to Chamoun favorable to the UAR. The opposition is in
a position to threaten further rebellion unless the government
accepts such, "peaceful" transition. UAR success with these
methods in Lebanon would probably lead to their intensification
elsewhere, particularly in jordan and the Sudan.
The Egyptian Embassy in Beirut, meanwhile, on 31 May
asked Cairo for authority to destroy the embassy's secret in-
telligence files, which presumably incliiric.
terial on UAR subversion in Lebanon.
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Possibility of Early General Elections in Burma
Apparently unswayed by a threat from Deputy Prime
Minister Kyaw Nyein that the army would move to prevent
new national elections at this time, Prime Minister U Nu is
reliably reported determined to call for early elections, re.
gardless of the outcome of the 5 June parliamentary vote to
decide whether his or Kyaw Nyein's faction of the Anti-Fascist
People's Freedom League will form a new government. Nu
anticipates winning a narrow victory in parliament, in which
case he will take his time in calling for elections; if he loses,
he will call for elections immediately.
Under the Burmese constitution, a prime minister who
has been defeated on a question of confidence can either re-
sign or ask the President to dissolve the parliament and call
for new elections.
While Nu's decision to press for early electionssis un-
doubtedly inspired by the hope that his non-Communist parlia-
mentary support would be increased, it seems likely that the
Communists would be the principal beneficiaries. The two
warring factions of the AFPFL are themselves the major non-
Communist political forces in Burma; a bitter electoral struggle
between them, in which violence outside of Rangoon would be
probable, would materially enhance the Communists' prospects
for substantially increased representation in parliament.
Kyaw Nyein claims that General Ne Win, commander in
chief of the Burmese armed forces, authorized him to send a
message to Nu threatening that the army would step in if he
called for elections after being defeated in parliament. Kyaw
Nyein has apparently not yet succeeded in convincing Ne Win
that he should take similar action if Nu wins The; parlia-
mentary vote. In the latter case, Ne Win would probably move
only if convinced that to permit elections at this time would be
courting the danger of a Communist victory.
CONFIDENTIAL
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Nme vire
India Faces Major Foreign Exchange Crisis
The Indian Government is facing a major foreign ex-
change crisis which may force it to curtail the goals of the
Second Five-Year Plan (1956-61) even more sharply than
was done in 1957. The government now estimates there
will be a $617,000,000 deficit in the balance of payments
during the fiscal year ending 31 March 1959, and a $1. 317
billion deficit for the last three years of the plan after tak-
ing account of all assured foreign aid. The enlarged deficit
results chiefly from a lower and more realistic estimate of
export earnings, particularly in view of the American reces-
sion and the slowdown in European economic growth.
India had only $561,000,000 in foreign exchange re-
serves at the beginning of the present fiscal year on 1 April.
Indian officials think the reserves can be reduced as low as
$210,000,000 for a short time. They believe, however, that
the reserves must be at least $420,000,000 at the end of the
plan, as India must then allocate large sums for repayment
of foreign loans.
Since Prime Minister Nehru and other Congress party
leaders have committed their prestige on the successful ful-
fillment of the plan, any drastic cutbacks would place them
in a vulnerable position in the 1962 elections.
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Situation in Morocco
Although French forces in Morocco have not been in-
volved in any major incidents recently, tension has been
high since the upsurge in Algeria on 13 May, and incidents
could occur at any time. The situation is particularly dif-
ficult in the northeastern border province of Oujda, where
there are many Algerian refugees, military installations,
and sizable guerrilla bands controlled by the Algerian Na -
tional Liberation Front (FLN). Although there appears
little likelihood at present that the French would attempt
to again take control of Morocco, the Moroccans, like the
Tunisians, are obsessed by fears of a French reoccupation.
his govern-
ment was concerned whether even De Gaulle could control
the French military.
The Moroccan Government has formally requested and
will almost certainly continue to press for early evacuation
of all 46,000 French troops, and the immediate withdrawal of
elements deployed in the Algerian border area. Rabat, is
attempting to establish control over French military move-
ments in the Oujda region and has reportedly called for the "neu-
tralization" of French airfields near the frontier.
The French-Algerian crisis has forged strong new ties
between Morocco and Tunisia. The Tunisian ambassador in
Rabat is now in almost constant contact with Moroccan For-
eign Ministry officials, and Morocco's complete solidarity
with Tunisia at the UN can be anticipated.
Morocco may soon follow
Tunisia's lead and initiate a new request for American mili-
tary aid.
Recent developments have also persuaded the Rabat
government that the FLN must be provided with increased
financial and material support,
A pledge to this effect given FLN leaders at the
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Tangier conference of North African political parties in April,
however, has apparently not yet been implemented and fric-
tion continues between Moroccan authorities and irregular
elements on the one hand and FLN field units on the other in
the disputed Algerian-Moroccan border region.
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III. TEE WEST
Premier De Gaulle Forms New French Government
The composition of Premier Charles de Gaulle's
new cabinet reflects his efforts to ensure himself broad
support, particularly on the left, for his investiture vote.
The 15-member body contains no military representative,
and there is press speculation that De Gaulle himself
may head the Ministry of National Defense, a move which
would ensure healing of the breach between the govern-
ment and the army in Algeria, which otherwise would find
little comfort in the composition of the cabinet. Two cabi-
net appointees, Social Republican Senator Michel Debre,
minister of education, and rightist author Andre Malraux,
named to an unspecified ministerial or subministerial post,
are the only two Gaullists among the 15.
An "inner cabinet" will apparently consist of De Gaulle
and four nonextremist party leaders named as ministers of
state without portfolio�Socialist Guy Mollet, Popular Re-
publican Pierre Pflimlin, Independent Louis Jacquinot, and
Felix Houphouet-Boigny, a native of West Africa affiliated
with the center Democratic Resistance Union. According to
Independent leader Antoine Pinay, who was named minister
of finance and economic affairs, De Gaulle will govern dur-
ing the National Assembly's "vacation" of six months, pos-
sibly extendable, with five or six committees dealing with
such matters as finance, foreign affairs, and overseas ter-
ritories.
The surprise appointment as foreign minister of
Maurice Couve de Murville, ambassador to Bonn and formerly
to Washington, seems designed to reassure both capitals on
the score of France's alliances. According to Pinay, De Gaulle
feels he must accept NATO, but wants the French military to
Lave more say in NATO planning. He also favors the European
community, but, according to Pinay, "built around France"
rather than one in which France is an equal partner.
De Gaulle is expected to visit Algiers soon--possibly
this week--and for the moment is apparently delaying
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appointment of a minister for Algeria. Pinay described
De Gaulle's long-range views on Algeria as "rather ex-
treme" and therefore probably not to be publicized im-
mediately. These reportedly envision a federation of
African states--including Algeria and West and Equa-
torial Africa--with the seat of government in Algiers.
Rightists seem already disenchanted over his concession
to the party system, and many of the extremists in Algiers
are having second thoughts about his leadership.
De Gaulle may face early difficulties in holding to-
gether his 329-vote assembly majority when he demands
power to redefine France's relationship with its posses-
sions and when he asks for immediate revision of Article
90 of the constitution in order to expedite the reforms on
which he has always insisted. His proposal to submit his
reforms to a referendum will be popular with the public
but not with the deputies.
Despite sporadic Communist outbursts on 1 June in
Paris and several other cities, the loyalty of the security
troops to the De Gaulle regime seems assured. Commu-
nist efforts to spark a popular front at this time are further
handicapped by Moscow's cautious approach to the advent of
9e Gaulle.
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Finland-USSR
The communiqu�ssued at the end of President Kekkonents
recent state visit to Moscow suggests that the Finns are trying
to convince the USSR that Finland is determined to preserve its
trade .with. the 'Soviet Union and that Finnish interest in joining
OEEC does not imply any diminution in Sotiet-Finnish trade.
Indications of Finnish interest in OEEC and measures liberaliz-
ing trade with Western European countries have in recent months
aroused Soviet suspicions.
According to the communiqu�the Finnish and Soviet lead-
ers agreed that the two countries should soon start to negotiate
the basic over-all trade agreement for the period 1961-65. Cur-
rent trade is conducted on the basis of annual agreements negoti-
ated within the framework of the Second Five-Year Agreement
(1956-60).
The USSR has agreed in principle to make a long-term,
low-interest loan of some $100,000,0004125,000,000 to Fin-
land in Soviet equipment, to be used for industrial develop-
ment. Talks will begin after the Finnish Government makes
specific proposals. In addition, the USSR agreed in principle
to grant Finland transit rights on that portion of the Saimaa
Canal crossing Soviet territory and to lease Finland sites for
port facilities near Vyborg. Finnish interest in the Saimaa
Canal,has been more political than economic, since the Finns
have hoped the USSR might cede back to Finland the territory
to the west of the canal. During Kekkonen's visit, however,
Khrushchev, in a public address, rejected territorial changes.
The initative in both the loan and canal cases was taken by
the/inns.
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