CURRENT INTELLIGENCE WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A000400060001-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 17
• Document Creation Date: December 15, 2016
• Document Release Date: May 17, 2004
• Sequence Number: 1
• Publication Date: November 19, 1954
• Content Type: REPORT

CONFIDENTIAL
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OCI NO. 1746
19 November 1954
CURRENT
INTELLIGENCE
WEEKLY
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
,~.NTTLAL
MVPE
State Dept. review completed
DOCUMENT NO. `0
NO CHANGE IN CLASS. 1
Q DECLASSIFIED
CLASS. CHANGED TO:
25X1
25X1
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THIS MATERIAL CONTAINS INFORMATION AFFECT-
ING THE NATIONAL DEFENSE OF THE UNITED STATES
WITHIN THE MEANING OF THE ESPIONAGE LAWS,
TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS-
SION OR REVELATION OF WHICH IN ANY MANNER TO
AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
The Current Intelligence Weekly has been prepared prima-
rily for the internal use of the Central Intelligence Agency.
It does not represent a complete coverage of all current
situations. Comments and conclusions represent the im-
mediate appraisal of the Office of Current Intelligence.
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 CONFIDENTIAL
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SUMMARY OF CONTENTS
THE SOVIET WORLD . . . . . . . . . . . . . . . . . . Page 4
The 13 November Soviet note--Nationalism in the
Satellites.
SOVIET FOREIGN POLICY AND "PEACEFUL COEXISTENCE" . . Page 6
The current Communist emphasis on "peaceful co-
existence" does not appear to foreshadow any major
change in the USSR's public attitude toward the United
States. The particularly heavy play given this theme
in recent weeks is probably timed to influence forth-
coming parliamentary decisions in the West on the Paris
accords on West German rearmament.
THE STABILITY OF THE MENDES-FRANCE GOVERNMENT . . . . Page 8
Mendes-France has probably strengthened his posi-
tion temporarily by refusing to accept the Socialists'
conditions for cabinet participation, but by so doing
he has emphasized the paradox of a cabinet largely right-
ist in composition, yet dependent on leftist support.
Many deputies who have supported the premier on foreign
policy are showing signs of increasing dissatisfaction
with his domestic program.
REHABILITATION OF PURGED LEADERS IN THE SATELLITES . Page 12
During the past 18 months, several European Satel-
lites have politically rehabilitated selected Communist
and non-Communist leaders purged prior to 1953. These
men are now being used on a carefully controlled basis
to support the rejuvenated national front policy.
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COMMUNISTS GET TOE HOLD ON OIL-RICH KUWAIT . . . . . . Page 15
The impact of the oil industry on the British pro-
tectorate of Kuwait has been accompanied by the develop-
ment of Communist activity there. The Communists are
still engaged in preliminary organizational work, but
they have opportunities to exploit mounting radical
opposition to the Arabian sheikhdo 25X1
and to add to labor disorders throughout the Persian
Gulf oil industry.
THE STATUS OF DAIREN HARBOR . . . . . . . . . . . . . Page 17
The Sino-Soviet communique of 11 October and
subsequent Communist statements on Port Arthur have
left obscure the status of the harbor of Dairen, the
only major port in Manchuria.
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By renewing on 13 November its proposal of 24 July for
an all-European security conference without any change except
specifying a date, the Soviet Union showed its continuing
unwillingness to make significant new offers in an attempt to
head off West German rearmament. Although the USSR may be
holding in reserve some ostensible concessions on the issue
of all-German elections, its position appears rigid. In
addition, the Soviet hints of a reduction of occupation troops
in Austria have not been followed by proposals acceptable to
the West.
The Soviet note of 13 November contained the standard
denunciation of the Paris agreements. It charged that rati-
fication would greatly complicate the European situation and
undermine the possibility of settling outstanding European
problems, particularly that of Germany. The implied threat
to counter West German rearmament with increased Orbit arma-
ment was made officially for the first time, with the state-
ment that West German rearmament would increase the arms race
and "it will be absolutely natural if peace-loving European
people are forced to take new measures for ensuring their
security."
This was the first such note sent to all European
countries, including the Satellites, and it contained a unique
reference to consultation with Poland and Czechoslovakia and
their support of the conference proposal. These consultations
with Poland and Czechoslovakia reflect the increased role
the USSR is attributing to the Satellites in foreign affairs.
This policy is partially designed to encourage the belief
that the Satellites are sovereign.
The USSR has also adopted a policy of encouraging the
Satellites to permit expressions of nationalist sentiment in
order to gain greater popular support for the regimes and
their new course policies. The new Soviet textbook, Political
Economy, gives guidance for such an approach, emphasizing
+ie economic policy of each Satellite country should be
based on its individual historical development, the level of
its production forces, and the special characteristics of its
class relations.
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A Pravda editorial of 13 November, which further clari-
fied the USSR's views in regard to. Satellite independence,
stated that a new relationship between the USSR and the
People's Democracies has been developed based "on the full
and real equality of all peoples" and on "the preservation
of national independence and noninterference in the internal
affairs of other states,"
Other recent gestures designed to give the impression
that the Satellite regimes are independent have included the
sale to Bulgaria, Hungary, and Rumania of Soviet interests
in most of the joint companies established in these countries
after World War II, and some reduction in the number of
Soviet advisers and technicians in the Satellites.
The reappearance in some of the Satellites of a number
of former Communist officials purged following widespread
"national deviation" trials during the Stalin era may be
partly intended to show that Soviet and Satellite national
interests are of equal importance.
Despite apparent Soviet approval of emphasis on nation-
alism in the Satellites, only Hungary appears to have relaxed
its policy in regard to nationalism. Hungarian politburo
member Bela Szalai made On 7 November the first Satellite
reference to Political Economy. He characterized it as one
of the most impor an Sov-e creations" of the past year,
and pointed out that it would be useful to the Communists in
teaching the workers and the youth. His statements came
just a few days after party secretary Farkas publicly condemned
the mechanical copying of Soviet policies by the Satellites.
In other Satellites, propaganda media and addresses by
prominent officials have referred only infrequently to
national historical events. Moreover, all the Satellites
have continued to pay homage to the USSR for its assistance
and guidance in their development andfor its aid in their
technological growth. This type of adulation was apparent
most recently in the speeches of Satellite leaders on the
anniversary of the October Revolution.
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SOVIET FOREIGN POLICY AND "PEACEFUL COEXISTENCE"
The current Communist emphasis on "peaceful coexistence"
does not appear to foreshadow any major change in the USSR's
public attitude toward the United States. The particularly
heavy play given this theme in recent weeks is probably
timed to influence forthcoming parliamentary decisions in
the West on the Paris accords on West German rearmament.
Long-standing Soviet foreign policy objectives are clearly
manifest in the sharp distinction Soviet leaders are making
between their application of the coexistence line to the
United States on the one hand, and to its major allies in
Europe and the Far East on the other.
Moscow is seeking in a variety of ways to dramatize
the distinction the Kremlin attempts to make between the
policy of the United States, which the USSR charges is
aggressive and rejects coexistence, and the desires of Euro-
pean and Asian countries for a further reduction of tension
and better relations with the Communist bloc. A recent Hun-
garian commentary on coexistence asserted that the past year
has witnessed the emergence of two trends in the capitalist
camp concerning relations with the Communist bloc: one rep-
resented by "aggressive American and German militarists bent
on a war," the other by more sober elements of the bourgeoi-
sie, "more realistic in their assessment of the prevailing
balance of power," who favor an expansion of trade relations.
Soviet propaganda continues to depict the "aggressive poli-
cies of American monopolies" as the main obstacle to co-
existence, and has singled out Churchill and Nehru as ex-
amples of "the more farsighted capitalist leaders" who are
"beginning to lean toward the idea of coexistence."
The attempt to make this distinction between "two
trends" in the capitalist world is also evident in many areas
of bloc action: the harassment of American diplomatic per-
sonnel in the USSR; the contrast between Soviet treatment of
the 4 September American patrol bomber incident off Siberia
and the prompt regrets expressed by Peiping over the shooting
down of the British transport off Hainan in July; and the
marked difference between the current Viet Minh attitude
toward American representatives in North Vietnam, on the
one hand, and British and French officials on the other.
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The impression that the bloc leaders are seeking to
convey to America's major allies by their emphasis on co-
existence and the Chou-Nehru "five principles" is that the
Communists would be content with an indefinite continuation
of the status quo in Europe and Asia, that there are no
grounds for fearing even local Communist bids to seize
power, and that they sincerely desire more cordial and
mutually beneficial relations with these countries.
The Soviet leaders have, however, been careful to
remind the capitalist world that their desire for a pro-
longed period of coexistence is not a "symptom of weakness."
Saburov's speech on 7 November warned that a "policy of
strength" has never led to success with the Soviet Union
and is "all the more out of place at the present time when
the USSR ... has multiplied its forces still further." The
authoritative Soviet theoretical journal, Kommunist, asserted
in a recent article on coexistence that the Soviet Union and
the other countries of the socialist camp "will never allow
the aggressive imperialist circles to impose their will upon
them." Neither will the socialist camp agree to any condi-
tions "which are incompatible with their state sovereignty
or with the interests of the peace and security of the
peoples."
Moscow's treatment of this subject suggests that the
Soviet leaders' terms for peaceful coexistence include the
requirements that the West must abandon any plans to force
a general retreat from the present frontiers of the Soviet
Orbit, and that East-West relations in this period of co-
existence must rest on the understanding that these fron-
tiers are not even open to negotiation..
The general approach and tone of Soviet discussions of
coexistence imply that the Kremlin regards it as a temporary
phenomenon which will last only until the inevitable disin-
tegration of the capitalist system and its replacement by
a "new, higher, socialist system," and that it will enable
the Communist states to build up their economies and expand
their armed forces to a degree where they would be able to
"ensure peace," presumably on their own, terms.
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THE STABILITY OF THE MENDES-FRANCE GOVERNMENT
Premier Mendel-France has probably strengthened his
position temporarily by refusing to accept the Socialists'
conditions for cabinet participation, but by so doing he
has emphasized the paradox of a cabinet largely rightist
in composition, yet dependent on leftist support. In any
event, as the premier concentrates more on internal matters
he faces essentially the same problems as overthrew his
predecessors, with many of his supporters showing signs of
increasing dissatisfaction over his program for the domestic
issues which are their primary concern.
The premier's basic position in the National Assembly
remains unchanged, since the Socialist Party Congress of 10-
11 November assured him of continued parliamentary support,
By once again refusing to follow the practice of former
premiers, who dealt with political parties rather than with
individual deputies in picking cabinet members, Mendes-France
has served notice on the party organizations that he will
continue to appeal over their heads to parliament and to the
nation. Furthermore, he has avoided for the time being the
danger that rightist members of his government might with-
draw because of Socialist participation.
If the Socialists had accepted cabinet posts, the
opposition of the, Popular Republicans would have weakened,
but the premier's basic problem of adequate parliamentary
support would still remain. He has thus far been able to
appeal to the right by holding out the hope of a rigorous
monetary policy, to the left by the promise of greater social
justice, and to nationalist elements by a show of independ-
ence in foreign relations. Nevertheless, his consistent
supporters are about 25 votes short of the required 314
majority.
Furthermore, most of the major decisions he has made
so far have merely postponed dangerous issues, and the
domestic problems to be taken up in the next few months will
put the severest strain yet on the coalition. He may be
able to continue putting off the realization of Tunisian
desires for full independence and the question of France's
relations with the two governments in Vietnam. He will also
probably succeed in standing off opposition on the issue of
German rearmament. Even within his coalition, however, the
ex-Gaullist Social Republicans have already indicated that
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they think his Indochina policy too dependent on the United
States. They fear., moreover, the effect of trouble in
Algeria on. the French Union, and they are critical of
recent nominations for overseas governors.
The premier s most likely to run into trouble on the
budget, which is lentral to his own main concern of economic
reform. At one-point or another it affects the special in-
terests of all the deputies, who have already shown resent-
ment at his efforts to speed up its parliamentary considera-
tion in order to get it through by the end of the year.
Criticism has been voiced from the left that the provisions
for new capital investment do not go far enough in the
direction of Mendes-France's earlier economic reform pro-
posals. As the debate progresses, moreover, opponents of the
premier are likely to raise various emotionally loaded issues.
Appropriations for agricultural education, for example,
could give the Popular Republicans a chance to-revive the
old divisive question of government aid to Catholic schools.
Meanwhile, rightist opponents are laying the ground
for attacking any radical budget proposals by stressing,
through statements by the sepretary general of the Independ-
ents, that France is now reaping the dividends of monetary
stability realized, not by Mendes-France's program, but
by that of Pinay in 1952. If, however, the debate on the
budget develops government proposals more acceptable to the
Socialists, Mendes-France-could hope to gain compensating
support from the Popular Republicans, who have long sought
closer ties with the Socialists.
Despite the opportunities provided.by the budget
for Mendes-France's many prominent individual opponents--
who, the American embassy has noted, are now apparently pre-
paring to "cut him down to size"--they still seem to lack
any single issue important enough for a showdown. The
premier's popularity, unparalleled since De Gaulle's hey-
day, remains high and most of the non-Communist press has
rallied to his support as the man with the dynamic approach
needed to put France on its feet.
Another serious outbreak in North Africa might, how-
ever, destroy the myth of his magic touch and give his
opponents their needed issue. After 21 November, moreover,
they could try to oust the premier without risking immediate
dissolution of the assembly; that date marks the end of the
constitutional 18-month period since a premier was over-
thrown on a vote of confidence.
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.. SECRET
REHABILITATION OF PURGED LEADERS IN THE SATELLITES
During the past 18 months, several European Satellites
have politically rehabilitated selected Communist and non-
Communist leaders purged prior to 1953. These men are now
being used on a carefully controlled basis to support the
rejuvenated national front policy.
By these moves the Satellite regimes probably hope to
create enthusiasm for their over-all programs and to over-
come the economic and political impasse in which they now
find themselves. The releases are also probably intended to
convince the politically minded that the promises of the new
course are sincere and that an era of "legality" has begun,
Most of the rehabilitated leaders were purged between
1950 and 1952, either because they were no longer useful or
because of potential deviationist tendencies. They fall
generally into three categories: (1) former Social Demo-
cratic leaders of the extreme left wing who led their parties
into fusion with the Communists in the immediate postwar
years, (2) long-standing Communists who were more closely
identified with their own countries than with the USSR, and
(3) leaders of former non-Communist puppet parties.
The process of release and rehabilitation has been most
conspicuous in Rumania and in Hungary, where the government
has now announced the release from prison of .Noel and Herta
Field,whose testimony was used in both the Hajk and Slansky
trials. Recent publicity on the Hermann Field case in
Czechoslovakia suggests there may be additional releases
there. Hungary and Poland have officially announced that
reviews of security police activities prior to the new course
are under way.
Most of those known to have been released to date have
been former prominent Social Democratic leaders. Among these
are former Hungarian foreign minister Gyula Kallai, purged
in 1951, and three ex-politburo members from Rumania, who
were dropped in the reshuffle at the time of the Pauker-Luca
purge in May 1952. These four have been given positions in
local governments in recent months.
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This return of Social Democratic leaders is consonant
with the concern of Communist leaders on the question of
loyalty among rank-and-file party members and implies a
realistic appraisal of the composition of the Satellite Com-
munist-parties., which contain many former Social Democrats.
The position of the Social Democrats who have remained in
office was strengthened earlier this year in some of the
-Satellites when many of them were re-elected or promoted to
important party posts.
Individual Communists have also been returned to
political or public life in Hungary,. Rumania, and Bulgaria.
Although they fit no general pattern, a number of them had
reputations as "national" Communists or were wartime resist-
ance leaders. Like the Social Democrats., they are being
used to bolster national fronts, and their rehabilitation
is apparently intended to encourage initiative and create
a greater feeling of security within the parties and to
dramatize the difference between the present "liberal"
policies and the harsh Stalinist policies of the past.
The Communists rehabilitated thus far include Gheorghe
Vasilichi and Vasile Vaida, former members of the Rumanian
politburo dropped at the time of the Luca-Pauker purge;
Janos Kadar, once a member of the Hungarian politburo and
minister of interior; and Janos Donath., who headed Ma.tyas
Rakosi's personal secretariat until 1948. Four members of
the central committee of the Bu,lgarian.Communist Party who
were expelled in 1950 were brought back into the fold at the
sixth party congress last March.
Several leaders of the puppet Smallholders' Party in
Hungary, including its former leader Lajos Dinnyes, have
been brought back and incorporated into the Patriotic
People's Front. Asen Pavlov, a leader of the old Bulgarian
Agrarian Union, who was tried and jailed in February 1952,
is now free and has publicly endorsed the Fatherland Front.
Discarded generals have also been utilized in public
ceremonies this year in Rumania and Czechoslovakia. Ludvik
Svoboda, former Czech minister of national defense, who was
dropped in 1950, reappeared last month, and 13 royalist,
generals of the Rumanian army participated in ceremonies on
the tenth anniversary of liberation. There is also evidence
that some sidetracked generals of the Bulgarian army are
being restored to active commands,
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The rehabilitations have led to speculation that those
directly concerned in the great Stalinist purges of Rajk,
Kostov, Slansky, and Gomulka may be liberated. A few in-
dividuals indirectly implicated in these cases have already
been released. None of the persons directly involved has
been freed, however, and as recently as 9 November the
Czech press attacked Slansky as a Western spy and criminal.
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COMMUNISTS GET TOE HOLD IN OIL-RICH KUWAIT
25X1
The impact of the oil industry in the British protector-
ate of Kuwait has been accompanied by the development of Com-
munist activity there. The Communists are still engaged in
preliminary organizational work, but they have opportunities
to ex loit mount dical opposition to the Arabian sheikh-
dom nd to add to labor disorders throughout
the FEMME u o industry
Communist activity in Kuwait first reached noticeable
proportions in the fall of 1953. This was roughly one year
after the full impact of the oil industry--the American-British
Kuwait Oil Company, with investments totaling $195009000,000--
began to be felt in the feudal sheikhdom, The rapid social
changes of the past two years have dazed the 200,000 illiterate
Kuwaiti, and the oil boom is attracting into the sheikhdom--
which lacks visa controls and an effective security system--
thousands of opportunistic Iranians, Iraqis and Palestinians,-
including many Communists, Arab nationalists, and extremists
of various other allegiances.
Communists in particular have begun to exploit the inabil-
ity and unwillingness of Sheikh Sabah and his followers to con-
trol and give direction to the changes that are taking place.
The Kuwait Democratic League, which is reported to have
been organized by Communists last November, appears to be the
main center of 10C&1 Cotnt'i uni.st activity and the fountainhead
of much propaganda hostile to the regime and to the West. Its
hard core consists of Palestinian Communists, who receive Com-
munist literature from the Syrian and Lebanese parties. Several
reports indicate that the league has attracted conservatives who
are disgusted with the free-spending sheikhs and the recent col-
lapse.of the government's program, begun in 1952, for the over-
all social and economic development of the country.
Other Communist groups, such as the "National Committee of
the Partisans of Peace in Kuwait," also exist in the sheikhdom.
Various individuals have been labeled Comiwnist'cell leaderb,
and "cultural clubs" are popular centers of discontent. There
also appear to be two Communist bookshops--the Kuwait Office
and the Gulf Library, Groups of .Iraqi and Iranian Communists,
driven from their homelands;, are probably centers of subversive
activity.
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New radical organizations have, moreover, sprung up in
the past six months as a result of the worsening economic con-
ditions caused by suspension of the development program. Typi-
cal of these are the "Free Democrats" and "The Patriots." If
not Communist-controlled already, these groups are easy targets
for Communist infiltration.
Common to all the radical programs are opposition to the
sheikh's rule, hostility to British influence, and a demand
for seizure of the oil company, which now yields the regime
an annual income of $150,000,000.
The Communists seem to be concentrating on basic recruit-
ing and propagandizing. Their immediate aims appear to be to
infiltrate schools and industry, to promote local class antago-
nism and anti-Western sentiment, and to gain sufficient control
of labor to make possible the co-ordination of labor disturb-
ances in Kuwait with others in the Persian Gulf. The Communists'
efforts are facilitated by the political naivetd among the
sheikhs andthe population as a whole, by failure of the author-
ities to organize an adequate security system and carry out the
development program, and by the absence of British and American
information centers.
It is unlikely that the regime could be overthrown in the
near future, but these circumstances give the Communists a po-
tential for fomenting and channeling the mounting unrest.
Development of a strong Communist position and good regional
communications in strategically located Kuwait would enhance
the general Communist potential for plaguing the oil industry
in Iraq, Iran, Saudi Arabia, and Bahrein. In general, the
growth of Communism in Kuwait is one of the most significant
advances registered by Middle Eastern Communists in the past
year.
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THE STATUS OF DAIREN HARBOR
The Sino-Soviet communique of 11 October and subsequent
Communist statements on Port Arthur have left obscure the
status of the harbor of Dairen, the only major port in
Manchuria.
The Sino-Soviet treaty of February 1950 left the status
of the port of Dairen for "examination following the conclu-
sion of a peace treaty with Japan." As regards the city of
Dairen, the agreement stated that the administration "fully
belongs" to Peiping and that Soviet property in Dairen would
be transferred to the Chinese.
Prior to February 1950, the city was under joint Soviet-
Chinese administration, while the USSR controlled all impor-
tant industrial enterprises as well as the port. 125X1
the USSR duri
e new two years
appeared in fact to turn over the administration of the city
and control of the port to the Chinese. Nothing was said
publicly, however, about the question of port control.
In 1952 it was announced that, at China's request,
Soviet troops would remain in Port Arthur, but nothing was
said about Dairen. In 1953 Port Arthur and Dairen came
under a single administration, headed by a Chinese mayor,
but there was still-,no mention of the port.
The Sino-Soviet communique of 11 October stated that
Soviet troops were to be evacuated from the "area of the
port Arthur naval base"--which has been generally regarded
as including Dairen--and that the USSR would.withdraw.'from
the Sino-Soviet shipyard, the last major economic enterprise
in Dairen controlled by Moscow.
The 11 October communique thus gives the impression that
Moscow has now relinquished the last of its special positions
in Dairen. If this were so, however, Moscow and Peiping
might reasonably have been expected to-publicize the Soviet
magnanimity, and there has been no such publicity. The ques-
tion of Dairen's status, therefore, particularly as regards
control of the port, remains open.
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