CURRENT INTELLIGENCE WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A000100060001-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 14
• Document Creation Date: December 14, 2016
• Document Release Date: February 4, 2003
• Sequence Number: 1
• Publication Date: July 10, 1953
• Content Type: REPORT

25X1
OCI NO. 5012
10 July 1953
CURRENT
INTELLIGENCE
WEEKLY
G
NC CHANGE !N CLASS. L]
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CCLAS. CHANGED TO: TS S
DATE,? .! RE:V!EWE J
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
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SUMMARY .CONTENTS
Page 3
THE GENERAL LIMITS OF SOVIET INTERNAL CONCESSIONS . . . Page 5
Internal concessions by the new Soviet leaders seem
to indicate that they are attempting to reduce the strains
of dictatorship, without, however, limiting the regime's
dictatorial control.
HIGHWAY CONSTRUCTION IN SOUTHERN CHINA . . . . . . . . Page 8
The Chinese Communists have been steadily building
new highways in the southern border area since 1950,
thus enhancing their capabilities for supplying the Viet
Minh and threatening Burma. (SEE MAP)
COLONEL NASR CONSOLIDATES HIS POWER. IN EGYPT . . . . . Page 9
Colonel Nasr and his immediate supporters assumed
overt control of the Egyptian government following the
18 June proclamation of a republic. As a result, pros-
pects for a settlement of the Suez question satisfactory
to Britain may have worsened.
CURRENT POSITION OF COMMUNISM IN PAKISTAN . . . . . . . Page 11
The Pakistani Communists have been unable to win
broad popular support.
BRAZIL'S ANTI-FOREIGN OIL POLICY BEGINS TO CHANGE . . . Page 13
Passage of legislation in Brazil permitting foreign
exploitation of Brazilian petroleum, which now seems
possible, would be a major defeat for the anti-US forces
and would go far toward solving the critical foreign
exchange problem.
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The nature and extent of recent changes in Hungary appear
to reflect the Kremlin's decision, to adopt more moderate
policies in the Eastern European Satellites and to install
leaders capable of instituting these policies.
The sweeping reorganization of the Hungarian government
and top party leadership, accompanied by the announced intent
of the new regime to slow the tempo of socialization and relax
its harsh coercive policies, is unparalleled in the Satellites.
This may be indicative of further sharp changes in tactics
throughout the Orbit. Failure of the Hungarian parliament to
meet on 17 June as prescribed by the constitution suggests
that the changes were being formulated prior to the outbreak
of the East German riots.
The new Hungarian government has pledged a slowdown in
collectivization and industrialization, a partial return to
private trade, the abolition of internment camps, amnesty
for "wrongdoers," and a rise in living standards.
In Rumania, some limited concessions have been made to
the peasants, and the government has announced plans to re-
lease food supplies to alleviate a severe shortage of basic
foodstuffs.
In Czechoslovakia, the sudden repeal on 7 July of a week-
old decree specifying stringent. steps to combat labor indisci-
pline may also presage a softer policy toward the population,
which had been virtually placed in the status of forced labor
by this decree and other recent government measures.
Western missions in Warsaw had observed nothing as of
7 July to substantiate rumors of Soviet troop movements from.
East Germany into Poland to quell alleged Polish uprisings.
On 5 July the Polish press agency flatly denied that any
security measures had been taken in Poland and stated that
conditions were calm. Soviet troops were observed moving out
of East Berlin and other German cities beginning in the after-
noon of 27 June, apparently to return to home stations. The
dispatching of troop trains toward the East German-Polish
border, although not yet confirmed, might be in preparation
for the normal rotation of troops between the USSR and East
Germany which usually begins about this time of year.
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Inside the USSR, the Georgian party congress which was
scheduled for 25 May continues to be postponed. Its scheduled
convocation was first announced on 14 April at the time of the
sweeping reorganization of the Georgian party and government,
presumably for the primary purpose of confirming the changes
in the Central Committee.
Preparations for the congress in the form of meetings of
provincial and city party conferences to elect delegates con-
cluded on 23-25 May with the Tbilisi City Conference. The
proceedings were not reported until 30 May, and since then
there has been no press attention to the congress itself or
to the mistakes of the former Georgian leadership, so widely
discussed at the party meetings in May.
There is at present no clear explanation for the indefinite
postponement of the congress, but it is possible that the re-
sults of the purge in April and the "official" explanation
offered at that time have caused uneasiness among some members
of the new leadership in Moscow. In this case Beria and his
supporters may have moved arbitrarily without the full agree-
ment of other members of the collegial regime. This possi-
bility is in contrast to the apparent agreement of the top
leaders as evidenced in the consistency of their new tactics
since Stalin's death.
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THE GENERAL LIMITS OF SOVIET INTERNAL CONCESSIONS
Since Stalin's death, the Soviet regime has followed a
policy of conciliation and minor concessions at home as well
as abroad. The pattern of internal concessions seems to in-
dicate that the new leaders are attempting to reduce the
strains and stresses of dictatorship, without, however, al-
tering the fundamental character of the regime.
So far internal concessions, mostly in the economic field,
have been calculated to have wide popular appeal but relatively
minor political significance. They include the lowering of
prices, the reduction in the size of the state loan and the
introduction of bargain sales.
The amnesty decree of 27 March and the promise to rewrite
the criminal code to give more emphasis to civil rights seemed
to point toward a limitation of the government's coercive
power. However, the fact that the amnesty did not apply to
persons sentenced to terms of over five years for counterrevolu-
tionary crimes, major thefts of sociaLlist property, or banditry,
indicates that the new government has not abandoned coercion
as its. basic method of control. The extent of future con-
cessions is still unclear, but any abandonment of the collective
farms or the adoption of a more liberal electoral system appears
out of the question.
A good measure of the general limits of the reforms will
be provided by the prospective revisions of the criminal codes
which were promised in the amnesty decree. The criminal codes
of the several union republics are the legal basis for judgments
on crimes which specifically include crimes of a political and
economic character and of maladministration by officials. Although
the codes set the tone of the formal legal structure of the Soviet
system, they are only one of many coercive mechanisms. For example,
the "special conference" of the MVD can try and sentence indivi-
duals without regard to the established legal system.
The amnesty decree predicted two types of change in the
codes. The first would be the designation as administrative
of certain crimes of an economic nature or committed in an
official capacity. Withdrawal of such offenses from the
criminal code would limit the severity of punishment, and
reduce the pressure on factory managers to falsify production
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figures. This would probably improve industrial efficiency, a
basic government goal. However, it would not actually reduce
the centralized control over the managerial class. Any serious
delinquencies could always be punished under such general arti-
cles in the criminal code as those dealing with the "undermining
of state industry," which is presently defined as a counter-
revolutionary crime.
The second type of reform,the reduction of punishments
authorized by the code for certain crimes, would have great
propaganda.value. Its actual effect would be limited since
the code lists only the minimum punishment for more serious
crimes and leaves the length of sentence above the minimum to
the discretion of the court. Thus any real easing of punish-
ments would be better accomplished by a change in the trend of
recent years toward more and more severe sentences.
Another example of this propagandistic type of reform
might be the strengthening and expanding of the articles which
deal with transgression of the judicial rights of the people.
At present, penalties are provided for rendering an unjust sentence,
for the extraction of,evidence by compulsion, and for illegal
arrest. Any further guarantees would still be purely formal,
however, and would not necessarily prevent state action.
If the regime actually wanted basic changes in the relations
between government and people, it might abandon the concept of
counterrevolutionary crimes. These are presently defined as
any acts aimed at the weakening of the "fundamental economic,
political, and national conquests of the proletarian revolution."
A rejection of this concept, which has been used to cover a wide
variety of crimes otherwise falling under less serious cate-
gories, would be a salutary reform. Yet it seems improbable,
for the Kremlin is unlikely to risk limiting its coercive power.
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SOUTH CHINA BORDER HIGHWAYS
Hui-tse
railroads built since 1950
6 M other railroads
highways built or restored since 1950
other highways
trails and motor roads in unknown condition
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HIGHWAY CONSTRUCTION IN SOUTHERN CHINA
The Chinese Communists have been steadily building new
highways in the southern border area since'1950, thus enhancing
their capabilities for supplying the Viet Minh and threatening
Burma.
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Some current road building, especially toward northwestern
Tonkin and Laos, may be in preparation for a Viet Minh fall of-
offensive. This objective has already been suggested by the in-
crease in Soviet trucks allocated to southern China this spring,
and the sharp rise in June of Chinese truck shipments into Vietnam.
At present the routes into Indochina, (2) and (4) on the
adjoining map, and the Burma Road (8) are the only important
ones known to be in use. The routes marked (1) and (3) in
Kwangsi Province were restored by the Chinese in 1951, but
following the extension in November 1951 of the Kwangsi rail-
road to Pinghsiang (R) neither of the other Kwangsi routes has
been very active.
The roads marked (5) and (6) toward northwestern Tonkin and
northeastern Burma, respectively, are those on which the Chinese
appear to be working most energetically. The road from Mengtzu
through Chinho (5) was first noted under construction in August
1952. This spring, according to subsequent reports, the Chinese
completed the road as far as the Red River, using coal-burning
steam rollers. Many recent reports have stated that the road
numbered (6) was open to motor vehicles to Ssumao by early 1953.
Low level reports indicate that work has been slow on the
road networks in western Yunnan near the Burmese border, des-
ignated as (7) and (9).
Much of the road-building activity in Yunnan Province, par-
ticularly near the Burmese border,i.s designed to improve internal
Chinese communications. Similar improvements have been noted in
all large backward and isolated areas of China. While increasing
military capabilities, they are also aimed at combating bandits
and dissidents and encouraging domestic trade.
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COLONEL NASR CONSOLIDATES HIS POWER IN EGYPT
Colonel Nasr and his immediate! supporters have assumed
open control of the. Egyptian government following the cabinet
changes which accompanied the 18 June proclamation of a repub-
lic. As a result, prospects for a settlement of the Suez ques-
tion satisfactory to Britain may have worsened.
In recent months, Colonel Nasr, the real power behind the
army group and the leader of the less moderate faction within
the 12-man Revolutionary Command Council, has come increasingly
to the fore as spokesman for the military regime. He is now
vice premier and minister of interior with control of the police.
Two of his supporters, Major Salah Salam and Wing Commander
Baghdadi, have taken over the key ministries of National Guid-
ance and War and Marine, respectively. Another close associate,
33-year-old Major General Hakim Amir, is commander in chief of
the Egyptian armed forces. The police, propaganda, and military
are thus brought directly under the control of the Nasr faction.
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An unconfirmed report from Cairo states that Nasr intends
to strengthen his position further by taking over the premiership,
now held by Nagib, within two months, leaving the latter in the
ill-defined post of president of the republic. 25X1
asr a so wants e office o vice
president, which would formally designate him as Nagib's successor.
Whether General Nagib will accept the unclarified role now
assigned to him is not yet apparent. Nagib, who reportedly was
chosen just prior to the 23 July coup last year as a figurehead
rather than as leader of the group of officers organized by
Colonel Nasr, has become very popular with the masses, who regard
him as a symbol of the ideals declared by the army revolution.
Thus he has achieved a position in his own right, and has been
able to act as a modifying influence over the group of younger 25X1
and more radical officers.
However, despite reported differences
between Nagib and Nasr within the Revolutionary Command Council,
neither may wish to force an open break at this time.
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Colonel Nasr's assumption of they control has serious impli-
cations for the future in both the domestic and international
field. The regime's social and economic reform program re-
quires the fullest cooperation from such civilian experts as
exist. The effectiveness of the army group will ultimately de-
pend on an ability to retain their support. The appointment
three young, inexperienced army officers to cabinet posts can
be expected to increase military interference in the govern-
ment, resulting in a further decline in administrative efficiency.
In the realm of future Anglo-Egyptian relations, the new
developments are equally ominous. Egyptian activities in the
Sudan will probably be increased. Major Salam has become minis-
ter of state for Sudanese affairs in addition to holding the
portfolio of National Guidance. Egyptian influence in the Sudan,
which reached a peak immediately following the Anglo-Egyptian
agreement last February, is now declining. Salam, who considers
the February agreement a personal triumph, will use every possi-
ble means to extend Egyptian interests in the Sudan without re-
gard for the possible political repercussions. This would fur-
ther irritate Anglo-Egyptian relations.
The Nasr group, despite reports to the contrary, is in-
clined to oppose a negotiated settlement with Britain on evacua-
tion of the Suez canal base. The group accordingly desires a
political victory based on British acceptance of "unconditional
evacuation" and has indicated its willingness to risk the future
of the regime to attain this goal.
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CURRENT POSITION OF COMMUNISM IN PAKISTAN
The Pakistani Communist Party, lacking capable leadership,
weakened by internal factionalism, and faced with determined
governmental suppression, has been unable to win broad popular
support and its membership has apparently never exceeded 8,000.
Two major problems have faced the Communists in Pakistan
since the partition of the Indian subcontinent on 15 August
1947. Firstly, the loss of many capable Hindu and Sikh Commu-
nists, who were forced to flee to India in the mass migrations
following independence, created major difficulties in develop-
ing strong leadership. The remaining, Moslem group was weakened
in its efforts to develop an effective national organization
by the struggle for power among its various factions. Secondly,
the division of Pakistan into two pa:rts separated by more than
1,000 miles of Indian territory posed the problem of maintain-
ing close liaison between these areas.
Despite these drawbacks, the Communist Party operated
openly as a political group and tried, though with little suc-
cess, to weld itself into an effective opposition to the govern-
ment. It also gained control of the Pakistan Trade Union Federa-
tion of about 25,000 members and established various writers',
students', theater, and "peace" fronts.
In March 1951, however, discovery of Communist implication
in the so-called "Rawalpindi Conspiracy" by high-ranking army
officers to overthrow the government led the regime to take
stringent anti-Communist measures. All important Communists were
jailed and the influx of Communist propaganda from abroad was
limited. These official measures were strongly supported by the
Pakistani public, which was shocked by'disclosure of the plot.
The assassination of Prime Minister Liaquat All Khan in October
1951 gave the government further excuse for repressive action,
though there was no firm indication that the Communists were con-
nected with the killing.
Since 1951, therefore, the Communist Party of Pakistan has
practically ceased to exist as an overt political organization,
and has operated almost exclusively through political and cul-
tural fronts. Chief of these is the Azad Pakistan Party, led by
the wealthy publisher and fellow-traveller Mian Iftikharuddin
whose newspapers and money have aided the Communist cause con-
siderably. This party, formed in November 1950 by Moslem League
dissidents intent on participating in the Punjab provincial
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elections of March 1951, has since become the mouthpiece of
Communism in West Pakistan, but has not developed a large
following. It is represented in parliament by three members,
who are outspoken in their efforts to create confusion and
delay.
Through student fronts, the Communists have exploited
public sentiment in East Pakistan for the establishment of
Bengali as one of two national languages. Severe rioting on
21 and 22 February 1952, in which Communists participated,
was widely backed by the East Bengali public. As a result,
the government's policy of promulgating Urdu as the sole
national language may now be altered in favor of a bilingual
state.
In January 1953, a Communist-.front student group in West
Pakistan opened a campaign of agitation for lower university
fees and other educational reforms. Following a period of
rioting and violence, the government capitulated to the stu-
dents' demands.
Still later in 1953, covert Communist support for ortho-
dox Moslem religious groups opposing the-proposed secular na-
ture of the new Pakistani constitution and demanding the oust-
ing of Foreign Minister Zafruliah Khan also reached a high
point. Agitation, in which Communists participated, against
Zafrullah Khan and the Moslem minority Ahmadiya sect to which
he belongs culminated in such extensive violence and bloodshed
that it led to the replacement of Prime Minister Nazimuddin by
Mohammad Ali, then ambassador to the United States.
For a time, it appeared that Pakistani Communists had re-
covered sufficient confidence in their own strength and in the
weakness of the government to challenge the latter with a dis-
play of open violence. Installation of the new Pakistani
government on 17 April 1953, however, effectively blocked the
Communists. This government, fully supported by high civil and
military officials, has demonstrated its intention to prevent
any recurrence of the earlier disturbances, both by strong po-
lice controls and by seriously attacking the country's politi-
cal and economic problems. Its tasks have been materially
eased by the recent grant of American wheat.
It therefore seems probable that the regime will regain
much of the public support which its predecessor had lost, and
that Pakistani Communists will in the immediate future have
greater difficulty than previously in finding individuals and
situations to exploit.
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BRAZIL'S ANTI-FOREIGN OIL POLICY BEGINS TO CHANGE
Brazil's attitude toward foreign exploitation of its
petroleum has taken a favorable turn over the past year de-
spite the bitter campaign waged by the Communist and nation-
alist opposition since 1947. Passage of legislation permit-
ting such exploitation would be a major defeat for the anti-
US forces, and would go far toward solving the critical
foreign exchange problem. It could also be expected sig-
nificantly to increase available western hemisphere petro-
leum reserves.
Brazilian opposition to foreign participation in the
development of the oil industry reached its height in June
1952. "The petroleum is ours,".t:he slogan of the Communists
and nationalists, was so effective that virtually no Bra-
zilian leader dared publicly take a contrary stand. Presi-
dent Vargas, in a June 1952 speech, defended the ultranation-
alistic proposed legislation, declaring that no one was go-
ing to be more nationalist than he.
The general agreement of both local and foreign oil
experts that foreign participation was essential to a suc-
cessful domestic petroleum industry was seldom mentioned.
The government-controlled industry produces only about two
percent of Brazil's requirements.
Within four months, however, the general attitude had
begun to change, perhaps as a result of the increasing drain
on foreign exchange resources caused by rising petroleum
imports. In mid-October, Vargas reportedly urged the
Brazilian Senate to delay passage of the petroleum bill then
under consideration.
The following month some of the more nationalistic
Brazilian businessmen and senators were reported to have
reversed their position and to have begun working for more
liberal legislation. Eventually the vice president, the
national chairman of the largest political party, and the
leading presidential aspirant all openly and strongly
advocated foreign participation in the Brazilian oil indus-
try. When the bill was finally brought out on the Senate
floor in April 1953, numerous liberalizing amendments were
promptly offered.
On 9 June the Senate passed a bill authorizing foreign
participation in exploration, drilling, and extraction of
petroleum. It rejected, however, by a vote of 27 to 24, an
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amendment which would have authorized foreign participation
in refining, without which foreign companies will not enter
Brazil's petroleum industry.
The proponents of more liberal legislation are now
re-forming their lines in. the hope of obtaining approval
of the Chamber of Deputies for permissive refinery provi-
sions as well as for the provisions approved by the Senate.
There is little prospect of immediate success, however, un-
less Vargas will openly and unequivocally support their
efforts.
Although Vargas is still unwilling to take the politi-
cal risks of publicly denouncing Ultranationalism, he now
recognizes that local production of oil sufficient to sat-
isfy domestic requirements would be of the greatest help
in solving the critical foreign exchange problem.
Petroleum imports last year cost Brazil the equivalent
of $240,000,000 and comprised about 12 percent of its total
imports. In an effort to minimize this expenditure, Brazil
recently acquired 12 ocean-going tankers, totaling over
135,000 gross tons, and a fleet of coastal tankers. It has
also made considerable progress on. construction of refineries
with projected capacity equal to domestic requirements for
the near future. Brazil's rising expenditures for oil, how-
ever, about 17 percent higher in 1.952 than in 1951, can be
expected to cut more and more into its imports of United
States manufactures--of which it was still the largest South
American purchaser in 1952--unless domestic sources of. oil
are developed.
If the advocates of foreign particpation achieve the
desired legislation, foreign companies could be expected
to begin activity within a relatively short time. Adequate
exploration in Brazil would be likely to result in a sig-
nificant increase in proved western hemisphere petroleum
reserves. Geophysical exploration has already revealed
two major areas, both reasonably accessible, in which
petroleum reserves are believed to be great.
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