CURRENT INTELLIGENCE WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A000100180001-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 20
• Document Creation Date: December 15, 2016
• Document Release Date: April 14, 2004
• Sequence Number: 1
• Publication Date: October 2, 1953
• Content Type: REPORT

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2 October 1953
CURRENT
INTELLIGENCE
WEEKLY
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
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This material contains information affecting the
National Defense of the United States within the
meaning of the espionage laws, Title 18, USG,
Secs. 793 and 794, the transmission or mission or
revelation of which in any manner to an author-
ized person is prohibited by law.
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THE SOVIET WORLD . . . . . . . . . . . . . . . . . . Page 4
PROSPECTS FOR THE LANIEL GOVERNMENT . . . . . . . . . . Page 6
Despite increasing cabinet dissension over European
integration policies, the Laniel government now seems to
have a good chance of remaining in power until the Decem-
ber presidential election. (SEE DIAGRAM)
POLITICAL TENSION RISING IN CUBA . . . . . . . . . . . Page 9
Reports of impending revolt in Cuba and strong
indications of disaffection in the armed forces, suggest
that President Batista's position may now be shakier
than at any time since March 1952.
ECONOMIC NEGOTIATIONS MAY STRAIN US-JAPANESE RELATIONS. Page 11
Differences likely to arise in the current bilateral
economic negotiations may impose severe strains on US-
Japanese relations.
CONGRESS PARTY CONTROL IN SOUTH INDIA WEAKENS . . . . . Page 13
Congress Party rule in South India is being weakened
by intra-party strife and the party's failure to attract
the support necessary for the formation of stable govern-
ments. (SEE MAP)
COCOM'S EFFECTIVENESS SEEN FURTHER WEAKENED BY NEW
BELGIAN ATTITUDE . . . . . . . . . . . . . . . . . . . Page 16
As a result of attractive Soviet offers and shrink-
ing Western export markets, Belgium, which previously
had been a leading supporter of existing COCOM regula-
tions, now seeks a more liberal interpretation of
controls.
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SPECIAL ARTICLE. SOVIET NATIONALITIES POLICY . . . . . Page 17
Shortly after Stalin's death, Soviet propaganda
began to display increased solicitude for the minority
peoples of the USSR. Following the purge of Beria,
however, the new trend faltered, and the regime has
not yet made concessions to alleviate this longstand-
ing source of dissatisfaction.
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THE SOVIET WORLD
The Soviet note of 28 September elaborated on the 4
August note by agreeing to consider the German problem
at a four-power conference and the lessening of interna-
tional tensions at a five-power conference including
Communist China. The Soviet plan for discussing "all
proposals introduced in the course of preparing the con-
ference" on Germany remains in conflict with Western in-
sistence that free elections be the first item on the
agenda. The Soviet desire to leave the Austrian problem
to discussions in "normal diplomatic channels" suggests
further attempts to gain Western acceptance of the exact
terms desired by the USSR prior to negotiating a treaty.
The Soviet Union has not yet responded to the challenge
made by French undersecretary for foreign affairs Maurice
Schumann in his 25 September UN speech calling for evidence
of a Soviet desire for a detente in Europe. A possible
answer to Chancellor Adenauer's suggestion for a Soviet-
EDC nonaggression pact was an editorial in Kommunist
attacking the idea of an "Eastern Locarno. "'- It declared
that a Locarno policy would revive German imperialism,
and that European security must be based on a "united,
peace-loving and democratic Germany." This suggests that,
for the present, the Kremlin prefers to repeat its familiar
demands for German unity on its own terms, counting on
Western procrastination to postpone German rearmament.
In East Germany, Walter Ulbricht in his 17 September
speech gave indications of a return to the policy of soviet-
ization including the establishment of new collective farms,
an increase in work norms, and greater production from
existing industrial capacity. At the same time he called
for an increase of consumer goods and suggested that private
retail trade will be permitted better opportunities for
business, particularly in areas not served by state-owned
retail outlets. He also revealed plans for stepping up
housing construction and increasing trade with the West.
Ulbricht apparently believes that with some easing of living
conditions the population, despite prevalent unrest and dis-
content, will accept the reintroduction of some of the previous
oppressive measures.
In Hungary, there have been recent signs that the
regime overreached itself in its original promises of
sweeping concessions in agriculture. The minister of
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agriculture announced on 19 September that peasants who
take advantage of the promise that they may leave collec-
tives on 31 October will forfeit all the concessions re-
cently made to. them and incur drastic financial obligations.
They will be charged with their share of the outstanding
debts and obligations of the collective and will have to
pay the high free-market price to regain any implements
and animals which they brought into the collective. This
warning was repeated by party agitators in the rural areas
and reflects the government's concern that the collectives
will be crippled by numerous desertions.
Inside the USSR, the choice of V, P. Mzhavanadze as
first secretary of the Georgian republic's party organiza-
tion is apparently a move by Moscow to terminate the con-
flicts in the Georgian leadership. During the past two
years Georgian politics have been characterized by purges
and counterpurges of seemingly pro- and anti-Beria elements.
Mzhavanadze, though of Georgian extraction, is an
outsider to the Georgian political scene. He gained his
political experience in the Ukraine when Khrushchev was
that republic's party leader. }[e attained the rank of
lieutenant general in 1944 and was the top political officer
for the Kiev Military District from 1946 until at least
1950.' In April 1950 he was elected to the Ukrainian party's
Organizational Buro.
Party leaders in Georgia are now probably controlled
directly by Khrushchev, who has no native ties and is not
likely to intervene in Georgian affairs for sentimental
motives as did Stalin and Beria.
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PROSPECTS FOR THE LA!IEL GOVERNMENT
Despite increasing French cabinet dissension over
European integration policies, the Laniel government now
seems to have a good chance of remaining in power until
the December presidential election. Premier Laniel faces
the reconvening of the National Assembly on 6 October with
a positive program to forestall new labor unrest, definite
measures to balance the budget, and, the Navarre plan for
ending the Indochina conflict.
The scheduled election of a new national president by
parliament in December is a stabilizing force for the
government. While Laniel, a leading contender for the presi-
dency, can afford some defections without risking overthrow,
(see diagram, p;,.8), rival candidates are well aware that
they would jeopardize their own political fortunes by at-
tempting to force a new cabinet crisis at this time.
Moreover, all of the non-Communist parties have good
reasons.for maintaining the status quo temporarily. The
Socialists are apparently reluctant to share governmental
responsibility for the present unpopular measures they ad-
mit are necessary. They are reportedly'willing to dicker
with the Popular Republicans and the Radical Socialists,
but their aim is new elections rather than membership in
the government. Until the Popular Republicans can have some
hope of such Socialist participation, they are resigned to
support Laniel. On the other hand, fear of a. left-center
successor makes the rightist groups hesitant to provoke a
crisis.
Laniel's position was strengthened by his success in
weathering the August strikes without a. special session of
the National Assembly. He will face his fellow deputies on
6 October with a long-range policy to attain a. viable economy--
essentially the radical proposals made by Mendes-France in
his effort last June to form a left-center coalition.
Using the broad powers granted him by the Assembly just
before it adjourned in July, Laniel has already promulgated
reform decrees cutting subsidies to agriculture and forcing
retail price reductions. The winegrowers and distillers,
however, are expected to spearhead a drive to revise the
decree powers as soon as the Assembly reconvenes, and the
government's fate may depend on this issue.
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Although Laniel's campaign against tax evaders has
been more spectacular than practical, his price reduction
program, coinciding with excellent crop forecasts and meat
surpluses, will almost certainly result in a. substantial
reduction in the September cost-of-living index. This
is the government's main hope to stall off expected labor
pressure for a general wage increase. Meanwhile the govern-
ment-sponsored Collective Agreements Committee has recom-
mended a 15-percent increase in the minimum wage, but the
unions will not be satisfied until a proportional raise. is
granted the higher-paid workers.
The proposed reduction of the budget may be Laniel's
most successful domestic accomplishment. Substantial cuts
are envisaged in defense spending, particularly for Indo-
china, and new agreements are to be sought with the United
States on military aid. The cabinet has reportedly already
agreed to a $3.14 billion ceiling; for the 1954 military
budget--$410,000,000 less than previously planned and over
ten percent less than this year's figure. The announce-
ment that France is to receive a total of $785,000,000
from the United States for the Indochina. war has bolstered
the government's prestige as well as its financial position
and will enable it to proceed with the Navarre plan.
The only other major problem facing the government is
the newly revived issue of EDC ratification. Important
elements within the government parties are likely to main-
tain their opposition to the treaty, despite the more
favorable atmosphere of the past few weeks. If Laniel
can push through ratification of EDC, the resultant pres-
tige could give him the help he will need on domestic matters.
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POLITICAL TENSION RIS:[NG IN CUBA
President Batista's
pusxci.on may now De shakier than at any time since he ousted
the Prio regime by force in March 1952. It therefore seems
likely that Batista will feel forced to prolong and intensify
the emergency repressive measures now scheduled to expire on
4 November.
Immediately after the abortive revolt in July in Santiago
de Cuba, Batista ordered a 90-day suspension of civil liberties
and issued the broadly phrased Public Order Law providing
penalties for political offenses. These moves were followed
by widespread arrests, including leaders of Cuba's largest
political parties.
Although the campaign appeared to slacken in the latter
part of August, the arrest of more than 50 military personnel
since 20 September and the unprecedented 23 September police
raid on the campus of the University of Havana reflect the
administration's increasing uneasiness.
Meanwhile, the repressive measures have further under-
mined the regime's popularity, already weakened by the post-
ponement of elections, occasional detention of opposition
leaders, and news censorship.
The anti-Communist aspects of his control measures reveal
Batista's sensitivity to criticism of his policies toward Com-
munism rather than a real fear of a Communist threat, Reports
of Communist infiltration in government and Batista political
organizations increased in early 1933, and in June and July
his apparent rapprochement with Communist union officials
brought a storm of popular protest. The party newspaper Hoy
was closed immediately after the Santiago incident, however,
and Communists possessing copies of 13 were arrested for com-
plicity. The charges against Communists have effectively
driven the party underground, and most high-level members
indicted have not yet been apprehended.
Since the Santiago incident, Batista has claimed
repeatedly that he has the complete ]'.oyalty of the armed
forces, whose support has heretofore been considered sufficient
to bar any successful revolutionary attempt,
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Known opposition factions do not appear to have effective
liaison or to be capable of immediate concerted violence.
There has been near unanimity, however, in the demand for free
elections under the constitution of 1940 and the electoral code
of 1943, both replaced by Batista's statutes. Batista's
attempts to avoid the election issue plus the continuation of
his repressive tactics may be sufficient to bring about the co-
operation among revolutionary groups necessary to accomplish
a successful coup.
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ECONOMIC NEGOTIATIONS MAY STRAIN US-J` `ANESE RELATIONS
In its current economic negotiations with the United States,
Japan is expected to stress its economic difficulties and the
need for political stability in an effort to gain a favorable
settlement. The differences likely to arise would impose strains
on US-Japanese relations.
Hayato Ikeda, former minister of finance, is expected to
discuss in Washington such topics as defense, reparations, trade,
and a settlement for American aid furnished during the occupation.
The US embassy in Tokyo expects him to emphasize Japan's economic
straits and its inability to carry simultaneously and without help
the burdens of increased defense, debt repayment, and industrial
rehabilitation. He may also stress the enhanced prospects for
political stability in Japan if the desired economic support
were to be granted.
Ikeda is expected to propose a five-year Japanese defense
program calling for annual increases of 20,000 men in the present
defense forces, in contrast to General Clark's belief that an
annual increase of 50,000 men should be the minimum increment.
The limited nature of the plan is indicative of Japan's desire
not to overburden its economy with defense expenditures. The
27 September Liberal Party accord with the Progressive Party on
defense policy probably means that Ikeda can set forth Japan's
defense plan with a reasonable assurance of its passage in the
Diet.
On the issue of a settlement of Japanese debts for American
aid rece?ved during the occupation, Japan's proposals are ex-
pected to be equally limited. The belief is widely held in
Japan that the major portion of this aid was a grant rather
than a loan and current drafts of the Japanese budget for next
year contain no provision for repayment. Ikeda may propose
postponement of a settlement until after reparations payments
to Southeast Asian countries have been concluded. He may also
seek American assistance to expand exports and a major target
will probably be to secure loans for the lowering of production
costs in Japanese industry. Nationalistic sentiment, however,
is likely to limit Japan's willingness to commit itself to the
conditions which would be necessary to insure the effectiveness
of such loans.
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Japan's economic dilemma is due to a considerable degree to
its unwillingness to forego a modest amount of current consumer
goods production in favor of increased defense, investment, and
debt'repayment With additional expenditures of around
$250,000,000 yearly, involving drains on foreign exchange of
perhaps $50,000,000, the American embassy estimates that the
necessary expenditures for defense, debt, and reparations could
be met.
This increment represents less than ten percent of the
current Japanese budget and less than two percent of the
national income. The sum could be provided without increasing
taxes if economies were made in pensions, welfare, and similar
expenditures. Foreign exchange could be saved by restricting
luxury imports. Failure of the Japanese to take more vigorous
austerity measures now or in the near future will invite an
economic crisis of such severity that Japan's present pro-Western
orientation might be threatened.
On the other hand, widespread insistence by the Japanese
that "stabilization of the people's livelihood" is the most
important economic task cannot be ignored. They argue that
only by this means will the "listlessness of the national
spirit" be overcome, that this is a prerequisite to popular
support for a stronger defense,-and that this is the only tenable
domestic policy in the light of the present political instability.
It is in this context that US-Japanese relations may be sub-
jected to strain.
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CONGRESS PARTY CONTROL IN SOUTH INDIA WEAKENS
Congress Party rule in the four contiguous areas of Ma-
dras, Travancore-Cochin, Mysore, and Andhra is being weakened
by intraparty strife, differences over linguistic issues, and
the party's failure to attract the support necessary for the
formation of stable governments in Travancore-Cochin and Andhra
(see map, p.15). This presents a long-range threat to the
party's control over a large portion of south India and offers
possibilities to Communist-led opposition groups, which hold a
large proportion of the seats in two state legislative assem-
blies. Though political unrest in the area seems certain, it
is doubtful that the, Communists can profit materially from
this situation in the immediate future.
In Madras, where after 1 October the Congress Party will
hold 123 of the 231 assembly seats as opposed to the Commu-
nists' 20, the president of the state Congress Committee, a
local "kingmaker," is seeking to oust Chief Minister Rajagopal-
achari, one of India's outstanding statesmen. Rajagopalachari's
vigorous action since he took office has been largely responsi-
ble for suppressing the previously strong Communist movement
in the state, and none of the individuals suggested as his suc-
cessor is likely to be equally successful. In Mysore, where
the Congress Party is strongly entrenched 'with.. 74 out of 99 seats
in the assembly, rivalry between the two Congress groups led
by the chief minister and the president of the state Congress
Committee recently led to a government crisis.
Despite Congress' firm hold on these two states, its
failure to display unanimity and imaginative leadership will
necessarily have an adverse effect on public opinion, espe-
cially in view of events in Travancore-Cochin and Andhra.
In Travancore-Cochin, the Congress Party coalition govern-
ment, which had had a hard struggle to maintain a simple major-
ity in the 109-seat state assembly, was reduced to a minority
status on 13 September, when a group of Tamil-speaking support-
ers withdrew because of their failure to win special linguistic
recognition by the establishment of a separate Tamil Congress
Committee. On 23 September, these individuals joined the Praja
Socialist Party and the Communist-led bloc in a vote of no-
confidence against the government. This was followed by disso-
lution of the assembly and an orde:r for new elections.
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Congress and opposition groups are. now almost equally
divided. Congress' failure during the next six months to re-
gain its losses or to make an alliance with the anti-Communist
Praja Socialist Party, which holds 12 seats, could lead to a
situation after the elections in which no party could form a
government and President's Rule, or direct administration of
the state from New Delhi, would become necessary. This rule
would certainly be invoked by Nehru as an alternative to asking
the Communists to form a government.
In the new Andhra state, scheduled to be separated from
Madras on 1 October, Congress and Communist strength in the
legislature will be almost equally divided at 46 and 42 seats
respectively. Congress needs the support of at least the Praja
Socialist members to form a working majority, but there is as
yet no indication that full support will be forthcoming. How-
ever, Andhra Socialist leader Prakasam on 27 September resigned
from his party to take over chief ministership of the state
and to head a coalition cabinet containing both Congressmen
and Socialists. If Prakasam's local following is insufficient
to ensure an effective majority, President's Rule, as the only
acceptable alternative to Communism, seems likely here as well.
Nehru, who is scheduled to tour south India in October,
apparently recognizes the developing dangers. He has person-
ally intervened in support of Rajagopalachari in Madras. The
Congress Party Working Committee also indicated its awareness
of the problem by passing resolutions revising the administra-
.tion of state and district Congress Party organizations and by
condemning further political agitation along linguistic lines.
The government of India is presumably prepared, as on past
occasions, to rule autocratically or to resort to mass arrest
of Communists when necessary.
The Communists have steadily lost popularity in south
India throughout 1953, and it is doubtful that they can capi-
talize on future developments. In the near future, therefore,
the Congress will probably maintain an uneasy hold over the
situation. Over the long run, however, Congress presumably
will continue to lose popular support.
There are indications that the Socialists, as in Andhra,
may profit from their position as the balance of power by in-
creasing their representation in state governments. If they
achieve a legislative strength equal to that of the Congress
and the Communists, a three-way split would develop, producing
political confusion and making it increasingly difficult for
the central government to maintain control over south India
through democratic processes.
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COCOM'S EFFECTIVENESS SEEN FURTHER WEAKENED BY NEW
BELGIAN ATTITUDE
Belgium's relations with COCOM are reaching a turning
point as a result of shrinking Weste:rn export markets and
attractive Soviet offers in the recent negotiations for ex-
tension of the bilateral trade paste Although the Belgians
have previously been leading supporters of COCOM regulations,
there are indications that they will now join other members
in seeking broader interpretations of controls or in re-
laxing their enforcement.
Belgium's success in securing COCOM's approval in
September of a Soviet order for 10 ":refrigerator ships"
as part of the trade agreement was watched with keen interest
by other COCOM members as a possible precedent for the
"necessity" of more East-West trade, The Belgian case has
exposed the relatively lax nature of COCOM controls over
shipbuilding and opens up the possibility of an increase
in the over-all tonnage built for the Orbit.
The Soviet ship order was defended by the Belgian COCOM
delegate as a Soviet sine qua non for a trade agreement and
also as necessary to prevent unemployment. East German ship-
yards are known to have defaulted recently on a large Russian
order for similar refrigerator vessels, so that Belgium's
action in effect is a. step toward filling this gap and
enabling Satellite shipyards to concentrate on naval
auxiliary draft,
Underlying Belgium's current attitude in COCOM are
increased difficulties in finding markets for the 35 percent
of its industrial production which it normally exports.
For the first time since the war, strategic Belgian metal and
chemical industries face serious export difficulties, and
textile markets also have shrunk.
With Belgian businessmen already looking primarily to
international trade policy changes as the only real cure
for their difficulties, Soviet trade offers early this year
stimulated agitation to push East-West trade above its 1952
level of approximately three percent of all Belgian trade,
Increasing irritation at other COCOM members' lax interpre-
tation of controls, plus the feeling that Belgium is not
getting a fair share of new East-West trade, has given impetus
to the formation of business groups to promote trade with the
Orbit. The Belgian government probably cannot long resist
this growing pressure.
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Shortly after Stalin's death, Soviet propaganda began to
display increased solicitude for the minority peoples of the
USSR. This new trend in the Kremlin's nationalities policy
faltered following the purge of Beria, however, and the regime
has as yet made no concessions comparable to those in economic
and agricultural policy designed to alleviate this longstanding
source of minority dissatisfaction.
While shifts in nationalities policy following Stalin's
death in March were largely confined to the field of propaganda,
they were at least great enough to suggest a difference of
opinion within the Kremlin over the best way to deal with the
problem.
Prior to that time, a policy of Russification was in
force, especially in the cultural field. `Press articles
stressed the dangers of local "bourgeois" nationalism and the
virtues of the Great Russian language and culture. Pledges of
eternal gratitude of minority peoples toward their "elder
brother," the Great Russian people, frequently appeared in the
central and local press. Histories were rewritten to show that
the incorporation of various minorities into tsarist Russia
was a "progressive" event, and the Great Russian people's
"directing force" in the life of the USSR was widely praised.
Following Stalin's death, this policy began to change.
In June, the ouster of L. G. Melni;kov, top party boss in the
Ukraine, was accompanied by accusations that he had paid too
little attention to Ukrainian autonomy and sensibilities. At
the same time, a mild anti-Russification propaganda campaign
was-launched, notably in the Ukrainian press, and the
"attempts of individual historians to embellish the reaction-
ary policy of tsarism" in the nationalities field were con-
demned. The populace was warned against "great power
chauvinism" rather than local "bourgeois nationalism," and
the use of native languages and native party cadres was
stressed more than previously.
This continued until July, when a Pravda editorial called
for a "determined struggle against all manifestations of
bourgeois nationalism," and this ambiguous tone has been main-
tained since. that time. At the Supreme Soviet meeting last
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August, delegates from those republics where Russification had
earlier been criticized all stressed their friendship and re-
spect for the Great Russian people. The desirability of study
of the Russian language, a theme which had been dropped after
Stalin's death, reappeared once more.
These shifts in line seemed to coincide with changes in
the status of L. P. Beria, giving rise to speculation that he
had been advocating a somewhat more liberal approach to the
minority problem. This speculation was reinforced.by the
treatment of his arrest in provincial propaganda, which
stressed that Beria had been attempting to destroy the friend-
ship of the local peoples for the Great Russians. This would
indicate that Beria at least felt that the nationalities
question was an important issue in the popular mind which could
be used to gain popularity for himself or the regime,
The USSR has long had difficulty handling the some 170
national minorities within its boundaries. In 1918?20, the
Ukrainian. Rada was one of the strongest centers of resistance
to Bolshevik rule, and in the early thirties opposition to
collectivization in Kazakhstan kept that area in confusion for
four years. Despite such drastic preventive measures as the
complete abolition of the Volga German Republic and resettle-
ment of its population in 1941, the friendly attitude of the
Ukrainian minority toward the German invader during World War
II made an extremely serious breach in the Soviet defenses.
Furthermore, organized armed resistance against the Bolsheviks
continued in that area until at least 1949.
Under Stalin, the nationalities problem in the Soviet
Union was characterized by the desire of a predominantly Great
Russian leadership to maintain the strictest degree of internal
security and. political control while paying lip service to the
idea of national autonomy. Although Stalin himself was of
Georgian origin, his legendary suspicion and cruelty set the
tone of his regime's approach to the non-Russian minorities.
Thus, while Soviet propaganda maintained that the Soviet
peoples lived together as happy siblings, the practice of rank
discrimination in favor of the elder Great Russian brother
was well established.
While the USSR, according'to the 1936 constitution, is a
federal union of equal national republics, each possessing
many rights of self-administration, Soviet practice has vir-
tually nullified the significance of these paper concessions.
In addition to the strict centralization of governmental
machinery, the position of the Communist Party enables
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leaders in-Moscow to keep a close check on national minorities
in every area of the USSR. The national composition of the
party is predominantly Great Russian: 72 percent of party
membership lies within the Great Russian republic, the popu-
lation of which is three fourths Great Russian, and about half
the upper and middle level party figures in the other republics
are Great Russians. All party functionaries, even if they are
of local origin, are primarily agents of Moscow's centralized
control apparatus.
Maintenance of this control is a fundamental policy, the
alteration of which the regime would consider inexpedient and
even dangerous. Thus there are only limited fields in which
the government has freedom of action. Such an area of maneuver
exists in the realm of policy towards local cultures and
languages, the greater use of local personnel in government,
and the treatment of the nationalities question in propaganda.
It was in this latter area that Beria apparently advocated
reform, and concessions here seem to be consistent with
Malenkov's over-all "liberalization" policy.
The propaganda compromises made during the "Beria" period
did not appear to cost the regime much, and they probably had
considerable popular appeal. Yet at present the Soviet leaders
appear to have repudiated these compromises, perhaps because
they feel that it is too soon for even minor concessions which
might tend to encourage sectionalism,
The Malenkov government has already made concessions in
the major areas of popular grievance which existed under the
Stalinist regime: it is raising the output of consumer goods,
it has increased the incentives in agricultural production,
and it declared an amnesty for some-criminal offenders.
Malenkov's failure to extend his "Liberalization" policy to
such a sensitive area may cause increasing problems as economic
and agricultural concessions take effect and more immediate
grievances are removed.
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