CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A000500120003-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 35
• Document Creation Date: December 15, 2016
• Document Release Date: June 1, 2004
• Sequence Number: 3
• Publication Date: June 30, 1955
• Content Type: SUMMARY

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CONFIDENTIAL
G66~wt-
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
COPY NO
-}OCI NO.
5576/55
30 June 1955
NO CHANGE IN CLASS. D
C3 DECLASSIFIED
CLASS. CHANGED TO: TS~ S
NEXT REVIEW DATE:
AUTH: H f vc
DAT REVIEWER:
CENTRAL INTELLIGENCE AGENCY
III OFFICE OF CURRENT INTELLIGENCE
CONFIDENTIAL
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State Department review completed
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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 Summary has been prepared
primarily 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 immediate appraisal of the Office of Current Intelligence.
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 16 flDLNTIAL
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 June 1955
T H E W E E K I N B R I E F
OF IMMEDIATE INTEREST
SUMMIT CONFERENCE DEVELOPMENTS . . . . . . . . . . . . . Page 1
Foreign Minister Molotov, in public and private state-
ments at Sam Francisco, emphasized that the summit confer-
ence should, in addition to considering closely-linked
issues of European security and disarmament, arrange for
a. world economic conference and a conference on Far Eastern
matters. He did nothing to counteract the growing impres-
sion that the USSR would avoid the German issue at Geneva.
Another Soviet official, however, privately claimed that
Moscow now was prepared to agree to free all-German elec-
tions.
AFGHAN-PAKISTANI SITUATION . . .
. . . Page 2
Afghan prime minister Daud's abrupt rejection of
Pakistan's latest conciliatory communication regarding
settlement of the dispute over the Kabul riots seems to
have touched off another effort on the part of the Afghan
royal family to remove Daud from office.
IPakistan has released infor-
mation to the press t a.t is preparing to close the
Afghan border and break off diplomatic relations.
INDONESIAN CRISIS . . . . . . . . . . . . . . . . . . . . Page 3
A political-military crisis in Indonesia has resulted
from army opposition to the installation on 27 June of Gen-
eral Utoyo as the new chief of staff. The motion of no
.confidence directed against the pro-Communist defense min-
ister which was introduced in parliament on 29 June may
lead to a cabinet reshuffle or a cabinet collapse. In
the latter event, President Sukarno, who for the first
time finds himself challenged by the army and parliament,
might appoint a. caretaker cabinet, responsible to him
rather than to parliament, to govern until a new cabinet
could be formed after the elections in September.
ONNIFIDLNTIAL
&Peffrffir
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30 June 1955
NOTES AND COMMENTS
The Formosa, Straits--Military and Political: Two Nation-
alist p a.nes were Intercepted by patrblli.pg.-Commurii4t
jets on 27 June. The Communists, in their military
operations, however, have been careful not to preju-
dice the prospects of Sino-American negotiations.
Peiping, periodically announcing that the "question
now rests with the United States," appears still to
be a.waiting.reports from intermediaries.
. Page I
Soviet-Japanese Talks: The position taken by Soviet dele-
gate ma,lik in the Soviet-Japanese negotiations in
London suggests that the USSR is still withholding
concessions in the hope that Japan will make pro-
posals which can be used as a. basis for bargaining.
Moscow has'consistently indicated that it desires to
normalize relations, but has so fa.r refused to agree
even to the return of Japanese prisoners of war.
Page, 2
West German Arms Debate: The Bundestag debate on 27 and
25 June on the bill for calling up 6,000 volunteers
for a German army nucleus makes it uncertain whether
any Germans will be in uniform before fall. The
tenor of the debate on this interim legislation sug-
gests that the government's permanent legislative
program for rearmament is headed toward further de-
lays. . . . . . . ... . . Page 4
The Western Ambassadors', Conference With.the Yugoslavs:
The converses ons held In Belgrade rom 24 to 27
June between the Yugoslav under secretary for foreign
affairs and the American, British a.nd French amba.ssa-
dors revealed no fundamental changes in Belgrade's
interpretation of the international situation or its
foreign policy. The talks revealed that Yugoslavia
may be willing to hold limited high-level discussions
on strategic and tactical questions. Page 4
Soviet and Rumanian Petroleum Exports to the West: The
USSR and Rumania have maintained the rate o petro-
leum exports to the West reached during the Soviet
export drive begun in the last half of 1954, Al-
though petroleum products are an important item
in balancing Soviet trading accounts with Western
nations, these exports are only 8.8 percent of
total Soviet and Rumanian production. Page 6
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30 June 1955
South Vietnam: Premier Diem a.ppa.rently has no intention
of ent ering pre-election talks with the Viet Minh.
The Vietnamese government's campaign against the
Hoa. Ha.o has entered a. new ha.se with strong attacks
against Ba, Cut's forces. . . . . . Page 7
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Egypt Gaining Influence in Libyan Affairs: King Idriss'
marriage four weeks ago to a.n gyp ia.n and the sub-
sequent ca.ncella.tion of his state visit to Turkey
are attributed to Prime Minister Ben Halim's efforts
to stren then Egyptian influence in Libya.
s . . ? . . . . . . . . ? . ? . . . . . . . . Page 9
The Situation in Cyprus: The situation on Cyprus continues
to deteriorate a.n terrorist activity shows no signs
of abating. The British may offer the Cypriots-some
type of gradual self-determination. This might lead
the Papa.gos government to moderate its tone, but the
Cypriots would maintain their extremist position.
. . . . . . . . ? Pa.ge10
French North Africa: It is evident that Paris is still
temporizing with regard to Morocca.n policy despite the
initial promotion of Resident General Gra.ndva,l a.s "a,
new ma.n for a. new program." Violence continues and
many arrests have been made. The bombing of the USIS
office in Tunis on 28 June was probably the work of
French extremists. The situation in Algeria, shows
no signs of improvement, and anti-Amerr c~ica m is grow-
ing among the French settlers. . . . Pa.ge it
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30 June 1955
The Italian Cabinet Crisis: The airing of Christian Demo-
cra c ac ona. ism w ich accompanied Premier Scelba's
fall on 22 June has pointed up the difficulty of
forming a. new Italian government. The outlook remains
one of cabinet instability, probably lasting until new
elections are held. F_ I . . . . . . . . . Page 3.2
New Labor Agitation Developing in France: A general strike
of 1,00U,000 French government wor ers, scheduled for
1 July, underlines the growing restiveness and dissat-
isfaction of French labor over its lack of effective
bargaining power. Even if the government succeeds in
preventing a general walkout, nuisance strikes of rail
and communications workers are likely.
Page 13
Power Balance in Argentina. Still Uncertain: The military
revolt of June has altered the power structure of
the Argentine government at least temporarily by re-
turning the army to a dominant position over labor.
The forthcoming announcement of new cabinet ministers
will shed light on the durability of this change.
I. . . . . . . . . . . . . . . . . . Page 14
Labor Unrest Mounts in Chile: Labor unrest in Chile is
mounting as a result o continuing inflation. Public
employees are scheduled to strike on 1 July, and the
directorate of Chile's largest labor confederation;
has voted for a general strike to begin on 6 July.
. , . . . . . a . . . . Page 15
PATTERNS AND PERSPECTIVES
THE SOVIET LEADERSHIP TODAY . . . . . .
. Page 1
Party secretary Khrushchev has been the chief benefici-
ary of Malenkov's decline and is today undoubtedly the single
most powerful Soviet leader. He does not have a. monopoly of
power, however, and may have neither the ambition nor the
ability to assume Stalin's mantle. Premier Bulganin does not
have Khrushchev's authority, but he is probably a force in
Soviet policy-making and an important factor in the intricate
balance which exists in the Presidium. As Soviet representa-
tive at the four-power talks, he will not have a completely
free hand, but there is no reason to doubt his ability to
speak with authority for the Soviet regime or to pursue a.
policy which he undoubtedly helped to formulate.
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30 June 1955
REORGANIZATION OF THE SOVIET PLANNING AND CONTROL
APPARATUV . . . . . . . . . . . . . . . . . ? . ?
. . . Page 5
In recent months the Soviet government has reorganized
its economic planning and control apparatus. This reorgani-
zation reflects a major effort to solve internal problems
stemming from the lack of integrated long-range planning,
lagging growth of labor productivity, wage inequalities, over-
expenditure of wage funds, and difficulties in allocating re-
sources in an increasingly complex economy.
CHINESE COMMUNIST PARTY PURGE CONTINUES . . . . . . . . . . Page 7
The four-year-old purge of the Chinese Communist Party
apparently did not end with the public disgrace of Kao Yang
and Jao Shu-shih last March. The party has established new
control committees and has marked the party rank and file as
the principal object of their activity.
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SUMMIT CONFERENCE DEVELOPMENTS
Soviet foreign minister
Molotov, in his public and pri-
vate statements at San Fran-
cisco, provided most of the new
hints of the position the USSR
will take at Geneva, although
he remained evasive on many
points.
At his press conference,
Molotov argued that it is up
to the heads of government to
decide whether to seek any sub-
stantive agreements or merely
plan procedures for future
talks, On the same ground, he
avoided questions on which
topics would be on the agenda
and how long the conference
would last.
He told Macmillan that
the heads, of state should
"identify" . problems of..
common concern and refer them
to the foreign ministers for
attempts at "progress toward
settlement," but that any is-
sue which was "undesirable"
.to any one of the heads of
government should be "avoided."
In talks with the British
foreign minister, Molotov clar-
ified, the issues which the
USSR is likely to raise. He
spoke of the need for a con-
ference,.including Communist
China, on Far Eastern matters.
He emphasized the important
role economic issues would
play at the summit talks, re-
ferring to his public sugges-
tion for a world trade con-
ference. He also emphasized
the importance of the disarma-
ment problem.
The Indian daily States-
mat printed an article last
week which may reflect Nehru's..-
views and shed some light-on
Soviet intentions. It said
that the Soviet disarma-
ment plan would be the princi-
pal proposal at the summit
talks. It also suggested that
the USSR might avoid raising
the Far Eastern issue because
of current efforts to find a
solution to the problem, pre-
sumably those being undertaken
by Menon, and added that Mos-
cow would probably not raise
the Indochina issue either.
It seems clear that a
main Soviet aim at Geneva will
be to get agreement on some
general principles, as in the
communiques with the Indians
and Yugoslavs, and on a series
of future conferences which
would serve Soviet purposes.
These would probably include
a Far East meeting including
Peiping, a world trade con-
ference, a collective security
meeting of European states such
as Moscow has sought in the
past, and new talks on disarma-
ment either in the UN subcom-
mittee or in some larger and
more public forum.
Molotov gave a very slight
hint of interest in French for-
eign minister Pinay's sugges-
tion for an arrangement between
the two existing European se-
curity blocs, telling his press
conference that the difference
between the Pinay plan and the
Soviet security proposal "needs
study."
Molotov stressed to Brit-
ish foreign minister Macmillan
the interrelation of the...:
European security. and the.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
disarmament questions. This
may have been a hint that he
could not accept a European
arms limitation-agreement
separate from general agree-
ment on disarmament and the
abolition of foreign bases.
He had little to say
about the German issue in ei-
ther public or private state-
ments.
Molotov did nothing to
destroy the growing impression
that the USSR will try to avoid
the German unification issue
at Geneva., subordinating it
to the European security ques-
tion and trying to shift the
detailed negotiations to all-
German meetings or to later
talks with Adenauer in Moscow.
The first statement by
a responsible Soviet official
in recent weeks predicting a
German unification offer came
from Ambassador Vinogradov
in Paris. He told the American
ambassador flatly that Moscow
is now prepared to accept free
all-.German elections subject
to strict international control,
provided only that foreign
troops be first withdrawn.
Vinogradov's statement
runs counter to the bulk of
evidence that the Soviet Union
will seek to avoid the issue.
It probably only indicates that
Moscow must make an occasional
effort to demonstrate its de-
sire for unification with free
elections, in order to main-
tain neutralist hopes and
pressures on the United States
to meet the USSR halfway, with
concessions. It could, however,
indicate that the USSR is pre-
paring a free elections and
neutralization package for a
united Germany which it is will-
ing to risk offering eventually--
on the assumption that Western
rejection will save it from hav-
ing to carr out or disown the
proposal.
(A roundup of information
relating to the "summit con-
ference" is contained in a
special SUMMIT CONFERENCE SUP-
PLEMENT being distributed to
recipients of this publication.)
AFGHAN-PAKISTANI SITUATION
Afghan prime minister
Daud's abrupt rejection of
Pakistan's latest proposal
for settlement of the Afghan-
Pakistani dispute seems to
have inspired a new effort
within the Afghan royal family
to remove Da.ud from office.
agreement to the point where
settlement seemed likely.
Prime Minister Daud's rejec-
tion of it caused the Egyptian
and Saudi Arabian mediators to
announce failure of their
efforts.
Pakistan's reply on 25
June to Afghan king Zahir
Shah's compromise proposal for
the reopening of Pakistani con-
sulates in Jalalab.ad and,Kanda-
har was conciliatory in tone
and narrowed the area of dis-
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 June 1955
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ble for Pakistan's announcement
on 28 and 29 June that it is
preparing to close the Afghan
border and break off diplomatic
relations.
If the combination of Paki-
stani pressure and royal family
activities is successful in
INDONESIAN CRISIS
A political-military
crisis in Indonesia has re
suited from army opposition to
the installation on 27 June of
General Utoyo as the new chief
of staff.
The motion of no confi-
dence directed against the
pro-Communist defense minister
which was introduced in parlia-
ment on 29 June may lead to a
cabinet reshuffle or a cabinet
collapse.
In the latter event,
President Sukarno, who for the
first time finds himself
challenged by the army and
parliament, might appoint a
caretaker cabinet, responsible
to him rather than to parlia-
ment, to govern until a .new
cabinet could be formed after
the elections in September.
Sukarno and Defense
Minister Iwa had been warned
bringing about the removal of
Daud, settlement of the quarrel
between the two nations on the
basis of "Islamic brotherhood"
would be relatively simple.
The Moscow press reported
on 29 June that a five-year
Soviet Afghan agreement on re-
ciprocal extension of rights
for free transit of goods over
each other's territory had been
signed in Moscow. Geographic
and physical difficulties, how-
ever, make it unlikely that the
agreement could counter the ef-
fect of a Pakistani blockade in
time to relieve.the pressure
on Daud.
of army opposition to the ap-
pointment of Utoyo, who was
previously territorial com-
mander in South Sumatra.
Utoyo's installation ceremony
was boycotted by the country's
other six territorial command-
ers and by the acting chief of
staff, Colonel Lubis, who has
held this post since the resig-
nation of anti-Communist Gen-
eral Sugeng in early May.
Lubis has since announced
to the press that he will not
relinquish his duties and
claimed that he has the sup-
port of the territorial com-
manders. He has thus far
refused to recognize his for-
mal suspension from office.
The territorial command-
ers claim that the appointment
of Utoyo violated a February
1955 agreement between the
army and the government that
politics would not figure in
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CURRENT INTELLIGENCE WEEKLY SUMMARY
future army appointments.
Utoyo, although a. neutral so
far as army factions are con-
cerned, leans politically to-
ward the National Party, which
heads the government.
The real target of the
territorial commanders, four
of whom are strongly anti-
Communist, is Defense Minister
Iwa, and the present situation
has served to unite them against
him. Should the army remain
firm in its opposition, the
cabinet, which is eager to re-
main in office until the Sep-
tember elections, may compro-
mise by dropping Iwa before
the no-confidence motion comes
to a vote.
The no-confidence motion
could not pass without support
from parties which are repre-
sented in the coalition gov-
ernment. A sudden switch of
votes is not unusual in Indo-
nesia, however, and, particu-
larly in view of the National
Party's deteriorating prestige,
the motion might pass if
brought to a vote.
A significant aspect of
the situation has been the
role of the National Police,
which for the first time has
abandoned its neutral status
and supported the army. The
police, which are directly
under the prime minister and
which include the best-trained
security organization in Indo-
nesia, on 27 June refused an
order to strengthen the
residential: guard,
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30 J-ine 1955
NOTES AND COMMENTS
The Formosa Straits--
Military and Political
Two HAtionalist planes
were intercepted by patrolling
Communist jets on 27 June.
The Communists have been care-
ful in their military opera-
tions, however, not to preju-
dice the prosper.tt; for Sino-
American negotiations.
In one of the attacks of
27 June, Communist jet fighters
made their first appearance
near the Matsus.
In the first attack, a
Nationalist jet
trainer
was
shot down
about
65
miles
north
of Matsu.
In the
second,
a
PBY of a Nationalist
civil airline was
slightly damaged and
forced down 10 miles
south of Matsu.
The Chinese
Communist navy has
apparently increased
its amphibious
training activity
and logistic support
in and around the
Peiling_Peninsula
north of the Matsus.
The training has in-
volved minor naval
vessels, and the
logistic activity
has involved chiefly
junks and steamers
escorted by small
patrol craft.
There are indi-
cations that the
Chinese Communist
naval strength will
soon be increased.
A convoy of two So-
viet destroyers and
four submarines is
en route to Tsingtaoy
presumably for transfer to the
Chinese; this would raise Chi-
nese destroyer strength to
four and increase the number of
submarines to 11.
Completion of the Litang-
Fort Bayard railway line west
of Canton has made available
additional railway engineer
divisions, which could move to
Fukien to speed work on the
Kueichi-Foochow railway and its
branch to Amoy.
I
t e Chinese
Communists are nearing comple-
tion of a network of roads
EAST CHINA (incl. FORMOSA)
Available Airfield (jet)
Available Airfield (cony.)
* Airfield Site
30 JUNE 1955
- Primary Road -Selected Railroad
Secondary Road -. -- Proposed Railroad
Naut. 0 S0 100 "'Miles
0 50 100 150
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iF \
UNDE} CONS
Chingya
CHINHUA `~
I)ANG
J Luchiao,
.. PBY forced
X'fMATSUS down sa
Nantai
',i"llaitan Straits
-.--Haitan I.
is ngtien
yzj'o TA El,
}
Machian
"QUEMOY
aochi ?
4 o drFO(( MO S
0O PESCAUORFS
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30 June 1955
providing the Lungtien airfield
with heavy-duty road connec-
tions to the coastal highway
to Foochow, and with feeder
roads from two deep-water piers
on the peninsula south of Lung-
tien. There is considerable
road and military construction
activity around Haitan Island,
including roads leading to
possible artillery positions
on the peninsula opposite this
island. Such artillery em-
placements could protect the
southern entrance to the Hai-
tan Straits, a favorable
staging area for amphibious
operations against the Matsus.
Soviet and Chinese Commu-
nist spokesmen have continued
to endorse Chou En-lai's bid
for Sino-American talks.
Peiping, periodically announc-
ing that "the question now
rests with the United States,"
appears still to be awaiting
reports from intermediaries.
Soviet-Japanese Talks
The position taken by
Soviet delegate Malik in the
Soviet-Japanese negotiations in
London suggests that the USSR
is still withholding signifi-
cant concessions in the hope
that Japan will make proposals
which can be used as a basis
for bargaining.
Moscow has consistently
indicated that it desires a
normalization of relations,
but has refused up to now to
agree even to the return of
Japanese prisoners of war in
order to gain this end.
On territorial questions,
Malik on 24 June expressed
"disappointment" that Japan
could not accept the Soviet
view that the status of
India's Krishna Menon and
Burmese premier U Nu are both
expected to report in detail to
Chou on their conversations in
Washington. Both will presum-
ably tell the Chinese that the
United States attaches great
importance to the question of
Americans detained in Communist
China.
Chou has indicated-both to
Menon and to UN secretary gen-
eral Hammarskjold that he would
be willing to release at least
some of those detained, in-
cluding the 11 airmen of the
"spy" case, if the United States
would permit their relatives
to visit them and thus give
him a face-saving occasion for
commuting their sentences.
Under pressure from his inter-
mediaries, Chou would be ex-
pected to forego the propaganda
advantages of the visits in the
interest of advancing Sino-
Soviet international strategy.
Habomai, Shikotan, the Kurils
and South Sakhalin had been
settled.
In answer to Matsumoto's
outline of Japan's historical
and geographical claims, Malik
said on 24 June that territorial
claims had already been disposed
of, citing Yalta, Potsdam, the
Japanese surrender document, and
SCAP directives. He stated
categorically that further dis-
cussion of Japanese territorial
claims was "futile," and ob-
jected even to including in the
communique the fact that terri-
torial claims had been discussed.
Malik's reluctance to in-
clude such a reference probably
resulted from the public revela-
tion earlier this month by
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30 June 1955
Foreign Minister
Shigemitsu of the
extensive demands
made by the Soviet
Union on 14 June.
These demands evoked
much unfavorable
comment in Japanese
official circles and
the press. Malik
apparently is at-
tempting to avoid a
clash between the
hard line in private
talks and Soviet
propaganda stress-
ing the benefits
which will accrue to
both nations through
normalized relations.
Following the
meeting on 24 June,
a senior official of
the Japanese embassy
in London told the
American embassy
that Japanese public opinion
was hardening toward the USSR.
He then said that before rela-
tions could be normalized,
Japan would insist on (1) So-
viet recognition of Japanese
sovereignty over Habomai and
Shikotan--both of which have
been an integral part of Japan.
since 1634; (2) withdrawal of
the Soviet thesis that the Sea
of Japan must be closed to war
vessels of all but riparian
powers; and (3) repatriation
of Japanese prisoners of war.
While the USSR could, at
little cost to itself, meet
these Japanese demands, it has
given no indication that it is
ready to make a "package" con-
cession of this size to the
Japanese this early in the ne-
gotiations. Moscow probably
believes that Prime Minister
Hatoyama personally feels a
sense of urgency in normaliz-
ing relations with the USSR
and that time is on the Soviet
side.
Since Hatoyama continues
to stake his position on the
success of the talks, his dif-
ferences with Shigemitsu on
policy could again come into
the open. This would seriously
damage the ability of the Jap-
anese delegation at London to
sustain the above conditions
for a settlement.
The Japanese Foreign Min-
istry is not anxious to hurry
the talks, since it believes
that the forthcoming summit
conference will favorably af-
fect Japan's negotiations with
the USSR. The public disclo-
sure of Moscow's stiff terms
and uncompromising attitude is
having a salutary effect on the
Japanese public, which had been
misled by Hatoyama into expect-
ing a quick favorable settle-
ment. A continued hardening
of opinion against the Soviet
Union could strengthen the For-
eign Ministry position suffici-
ently to permit either prolonged
negotiations, or, if necessary,
a suspension of the talks.
D
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30 June 1955
West German Arms Debate
The bitter debatetin the
West German Bundestag on 27
and 28 June on the bill for
calling up 5,000 volunteerk,
for a German army nucleus has
made it uncertain whether any
Germans will be in uniform be-
fore fall.
Chancellor Adenauer had
rallied sufficient support for
this interim legislation to
pass it on the first reading
on 27 June, but additional
changes in the text have left
little time for the Bundestag
to pass the bill in final form
before the present Bundestag's
adjournment deadline of 15 July.
Opposition to the bill
within the. government coalition
parties stemmed from its loose-
ly drawn provisions which cbn-
flicted with the general', 'demand
of the Bundestag that civilian
control of rearmament be sharp-
ly defined. The tenor of this
week's debate also suggested
that the government's permanent
rearmament legislation is
headed for difficulties.
During the debate the minor
coalition parties and even the
Bavarian affiliate of Adenauer's
own Christian Democratic Union
forced a promise from the gov-
ernment that several aspects
of the defense program would
be covered by subsequent con-
stitutional amendments. Be-
cause of the increasing unrelia-
bility of the coalition Refugee
Party, it is doubtful that
Adenauer can muster the two-,
The Western Ambassadors'
preference Wl e -ugoslavs
The conversations held in
Belgrade from 24 to 27 June be-
tween YuCoslav under secretary
thirds parliamentary majority
necessary to ratify such
amendments.
It is there-&: re likely
that the government will even-
tually renege on its promise
.to seek constitutional amend-
ments relating to armament
matters. From a strictly legal
point of view, West German
rearmament probably does not
require further changes in the
constitution.
Political controversies
over constitutional issues,
however, will probably cause
considerable friction within
the coalition when the govern-
ment presents some 20 planned
permanent arms bills to the
parliament during the next
six months. Many of these
bills will be hotly contested
and progress on them will prob-
ably be slow.
It also seems likely that
many Bundestag members will be
disposed to postpone enacting
a general conscription law,
probably until after the 1957
federal elections.
There are no indications
that Adenauer's current defense
legislation difficulties stem
from any decrease in his pop-
ularity with the West German
electorate. The situation has
derived, rather, from a lack
of co-ordination of the govern-
ment ministries. with the par-
liament in the formation of this
interim legislation.
for foreign affairs Prica and
the American, British, and
French ambassadors revealed no
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 June 1955
fundamental changes in Belgrade's
interpretation of the inter-
national situation or in its
foreign policy. The talks
served to define Yugoslav views
somewhat more accurately, and
disclosed areas where Belgrade
may have become slightly more
amenable to Western desires.
This was particularly true
regarding Yugoslav willingness
to hold high-level discussions
on strategic and tactical ques-
tions related to American mili-
tary aid. While in the past
Belgrade has consistently ad-
vocated continued Western mili-
tary aid, and has suggested
"technical talks" on that ques-
tion, it has been chary of dis-
cussing its strategic plans,
even those affecting Yugoslav
troops receiving the equipment.
Tentative agreement has
been reached to hold preliminary
discussions early in July on an
agenda for the future talks.
These discussions will indicate
whether Yugoslavia is actually
willing ?to discuss plans for
forces in the northern area a-
round Ljubljana which have
received almost all past aid
materiel.
In general, Prica empha-
sized that his country would
continue and even expand its
defense efforts but had no in-
tention of branching out along
new lines. He said Yugoslavia's
co-operation with its Balkan
allies guaranteed that its in-
terests coincided in matters of
defense with those of the West,
but he re-emphasized that Bel-
grade has no desire to join
NATO.. Prica did state, however,
that NATO is still necessary,
as its abandonment would strength-
en the other side which has not
given up a "bloc" policy.
Prica expanded the usual
Belgrade line regarding Soviet
intentions, disclosing that his
government believes that the
"Soviets are ready to solve
questions on the basis of the
status quo" by trying to keep
all they have gained while find-
ing a modus vivendi. He em-
phasized that the Yugoslavs do
not support this position but
feel the West should examine it
as a "starting point" for ne-
gotiations without trying to
balance the concessions made to
the USSR in 1945.
Belgrade continues to feel
that the West should exploit
Soviet initiatives, but without
relaxing its defense efforts.
The Yugoslavs believe that in-
ternal difficulties, which have
compelled the post-Stalin changes
in the USSR, will force further
changes if the USSR is left a-
lone. They also believe, how-
ever, that the Soviet Union, if
faced by an adamant Western
policy, could revert to its old
course for a long period of
time despite these internal
difficulties.
Prica re-emphasized his
government's previous position
that the German problem is the
central one in Europe and that
its solution lies in the rap-
prochement of the two Germanys.
He felt that the Soviet leaders
do not foresee the early uni-
fication of Germany.
Tito, at his 27 June lunch-
eon for the three Western ambas-
sadors, expressed the belief
that the USSR would not consider
a solution to the German ques-
tion at Geneva, and probably
not until after the anticipated
West German-Soviet talks.
In regard to Satellite-
Soviet relations, the Yugoslavs
feel that some change in rela-
tionship is developing, and
that considerable impetus for
such a change was provided by
the recent Soviet-Yugoslav
talks. They believe that Soviet
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 June 1955
control over the Satellites
will be "smoother" than in
Stalin's time, but apparently
have no clear idea of the pre-
cise character of these new
relations.
Belgrade's stand in these
conversations is in general
consistent with the policy of
"active coexistence" which
Yugoslavia has pursued for the
Soviet and Rumanian
Petroleum Exports to the West
Tanker shipments of pe-
troleum'to the West from the
USSR and Rumania have main-
tained the rate reached during
the Soviet export drive begun
in the last half of 1954. In
the first five months of 1955
the USSR and Rumania exported
to the West almost 2,000,000
metric tons, valued at nearly
$40,000,000. This represents
an increase in volume of 62
percent over the same period
in 1954.
Petroleum has been a
readily marketable commod-
ity with which to balance
Soviet trading accounts
with Western nations, but
these exports are only 8.8
percent of total Soviet
and Rumanian production.
On the basis of com-
mitments as of January 1955,
it was reported that 1955
petroleum exports to the
past six months. It apparently
has no".present intention of
changing its course, but the
recent Yugoslav-Soviet discus-
sions may have engendered some
suspicions of Soviet motives
among Yugoslav leaders which
will make them eventually more
amenable to Western efforts to
promote increased mutual mili-
tary co-operation.
Exports of petroleum to
the West from the USSR continue.
to exceed those from Rumania.
In the first five months of
1955, Soviet shipments accounted
for over 60 percent of the ex-
ports. Most of the 1955 in-
crease was shipped from the
Black Sea ports of the USSR.
Fuel oil continues to be the
main item, followed by gas oil,
crude oil, gasoline, kerosene,
and lubricants.
SOVIET AND RUMANIAN PETROLEUM EXPORTS
THOUSANDS TO THE WEST BY TANKER
METRIC TONS
West from the USSR and Ru- 1 O
mania might reach 6,000,000
tons, in contrast with
4,500,000 tons in 1954.
Protocols added since the
first of the year to sev-
eral trade agreements--includ-
ing those with Sweden, Egypt,
and Israel--involve over a
million tons of crude petrol-
eum and products.
TOTAL 1955 1,915
TOTAL 1954 1,178
Finland remains the largest
recipient of the exports, with
Sweden receiving an almost
equal amount. Four countries'--
Finland, Sweden, Italy, and
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Argentina--receive 60 percent
of the petroleum. No new West-
ern markets are known to have
been added this year, but ship-
ments to Yugoslavia from the
Premier Diem apparently
has no intention of entering
pre-elections talks with the
Viet Minh. Thus far, he has
not replied to the British
demarche of 22 June urging his
government to take the initia-
tive in offering the Communists
concrete proposals for these
talks.
ILE OE
PHU QUOC
BA CUT a''
CONCENTRATION
charge that the United
States was trying to
prevent peaceful uni-
fication and both en-
dorsed the Nehru-
Bulganin statement
urging fulfillment of
the Geneva agreement.
Ho's visit to Moscow
will provide an ad-
ditional occasion to
publicize the Com-
munist position.
Diem is still
preoccupied with two
issues--the title and
function of Henri
Hoppenot as France's
new chief representa-
tive in Saigon, and
the future status of
the French Expedition-
ary Corps in Vietnam.
Diem has set the ne-
gotiation of 'a new
relationship with the
French. as a precon-
dition to becoming
The Vietnamese foreign
minister has indicated, how-
ever, that the British pro-
posal will be rejected. The
Diem government, instead, will
make a general statement de-
claring itself in favor of
unification by means of free,
democratic elections but will
involved in election discussions,
and he may use this issue as a
convenient excuse for delaying
action on the election problem.
The expeditionary corps
itself has been phasing out
more rapidly than was originally.,
planned, according to indications
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USSR during the first five
months of 1955 have already ex-
ceeded the total shipments in
_.1954. (Prepared
by ORR)
specifically dissociate its
declaration from the Geneva
agreement.
The Viet Minh is continu-
ing its strong propaganda play,
insisting that talks must be-
gin on 20 July. In Peiping,
Ho Chi Minh and Chou En-lai
joined in reiterating the
30 JUNE 1955
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CURRENT INTELLIGENCE WEEKLY SUMMARY
received from General Guillaume,
French armed forces chief of
staff. Guillaume, who ismaldng
an inspection tour of Vietnam
to formulate recommendations
on the retention of a French
military establishment there,
states that the expeditionary
corps now totals 55,000--a
figure considerably below the
announced 1 July goal of 75,000.
Guillaume appears to favor a
ceiling of 50,000 over the
next 18 months.
Meanwhile, the Diem govern-
ment's campaign against the Hoa
Hao has entered a new phase,
with strong attacks against the
major concentration of Ba Cut's
forces near the Cambodian border.
The Vietnamese army, victorious
in previous operations against
General Soai and a brief skir-
mish with a small Ba Cut force,
anticipates a short campaign.
Although ultimate victory seems
assured, the elimination of Ba
Cut's troops may prove the most
difficult task undertaken to
date, owing to their superior
mobility and guerrilla tactics
in terrain which favors such
warfare.
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30 June 1955
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Egypt Gaining Influence
In Libyan Affairs
With the apparent conniv-
ance of Libyan prime minister
Ben Halim, Egypt seems to be
gaining a dominant position in
Libyan affairs.
King Idriss' marriage
four weeks ago to an Egyptian
as a second wife and the subse-
quent cancellation of his state
visit to Turkey are attributed
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 June 1955
to Ben Halim's efforts to in-
crease Egyptian influence over
the palace.
Ben Halim and the Egyptian
ambassador in Tripoli are be-
lieved to have arranged the
king's marriage on 5 June to
an Egyptian.
One of the primary motives
of the marriage is apparently
the hope that the new wife will
produce a male heir. None of
67-year-old Idriss' four pre-
vious marriages has provided
a living heir and there is,
accordingly, considerable un-
certainty regarding the future
of the dynasty.
.If the king's Egyptian
wife should give birth to a
son who survives, her influence
as well as that of Egypt would
be immeasurably increased.
The effect of the new mar-
riage on the future position of
Queen Fatima and her family is
unclear. The queen belongs to
the Sharif branch of the royal
family And its leading members
are commercial and political
opponents of the prime minister.
Although the queen is re-
ported to have agreed to the
second marriage, the threat it
poses to the future, of the
Sharif branch may precipitate
a dynastic struggle, with the
question of Egyptian domination
of the palace a primary issue.
Former prime minister Mah-
mud Muntasser recently expressed
The Situation in Cyprus
The situation on Cyprus
continues to deteriorate and
terrorist activity shows no
signs of abating.
his concern to Ambassador Tappin
over the threat to Libya's in-
dependence as a result of in-
creasing Egyptian penetration
and indicated that he considered
Ben Halim`. ilresponsibl6 for
the situation. Muntasser said
he feared that the large number
of Egyptian teachers and lawyers
now employed in Libya would
gradually reduce Libya to the
role of an Egyptian satellite.
Both Egypt and Ben Halim
reportedly wanted to prevent
Idriss from paying a state vis-
it to Turkey which has been
scheduled for the past year.
The Turkish ambassador in Trip-
oli told Ambassador Tappin of
his extreme concern over can-
cellation of the visit and the
implicit setback to Turkey's
position in Libya. He suggested
that interested chiefs of mis-
sions in Libya should meet to
discuss the growing Egyptian
domination of the Libyan govern-
ment.
The American embassy in
Tripoli during the past months
has been disturbed by the ex-
tent of Egyptian penetration
of the Libyan courts, schools,
and royal family.
The embassy reports that
Egyptian judges have been re-
sponsible for many of'the de-
lays and difficulties experi-
enced in implementing the
American base agreement in Libya.
Ben Halim in the past has been
generally co-operative in deal-
ings with the embassy.
The Greek government has
gone so far in advocating the
union of the island with Greece
that it cannot easily withdraw
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from that position. Almost all
Greek political parties and
affiliations support the move-
ment, which has become a na-
tional crusade. The government-
controlled Greek radio recently
called on Cypriots to "arise
and liberate your fatherland."
Athens has decided to appeal
again to the UN for considera-
tion of self-determination for
the islanders.
On Cyprus, terrorist activ-
ities continue at a high fre-
quency. In the past week, three
persons have been reported
killed and 20 wounded. Arch-
bishop Makarios, who leads the
movement against Britain, claims
to have advised his people
against violence. He added,
however, that he opposed even
more "policies which have driven
them to it." Apparently the
British police on Cyprus are
beginning to feel that they can
no longer depend on the loyalty
of Greek elements in the Cyprus
police force.
There are indications that
Britain may, offer the Cypriots
a formula providing for some
type of gradual self-determina-
tion. With the present temper
of the Cypriots, however, such
a solution is not likely to be
acceptable either to them or
to pro-union elements in Greece.
Such an offer might lead the
Papagos government to moderate
its tone.
Although there is a report
that Makarios might support a
liberal constitution, he may no
longer be free to make compro-
mises, as important segments.
in the island clergy are now be-
lieved to be even more rabid
than he.
Premeditated attacks on
American installations and per-
sonnel: are not likely unless
the United States comes to be
identified with British poli-
cies. There is, however, the
risk that through misunder-
standing, miscalculation, or
irresponsibility, American
lives and propert might be
jeopardized.
It is evident that Paris
is still temporizing with re-
gard to Moroccan policy, de-
spite the initial promotion of
Gilbert Grandval as a "new man
for a new program."
Grandval is expected to
assume his new duties as French
resident general about 7 July.
He probably will limit himself
to maintaining order as well as
possible until the French-'
Tunisian agreements are ap-
proved by both houses of the
French parliament. Thereafter,
Moroccan problems are to be
tackled.
Violence continues in
spite of widespread arrests.
Some 12 French counterterrorists,
including a number of police,
have been arrested as a result
of the'investigation of the mur-
der on 11 June of the wealthy
Maroc-Presse publisher,
Lema gre- u reuil.
The bombing in Tunis on 28
June of the US Informs ion Serv-
ice and the attempt to bomb
the residence of an American
vice consul are the first at-
tacks against American in-
stallations in French North
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Africa. These bombings may be
an isolated expression of the
mushrooming anti-Americanism
among French settlers in North
Africa.
The USIS in Tunis has con-
ducted an exceptionally success-
ful program among Tunisians for
several years, and thus is sus-
pect to many French settlers.
The vice consul maintains
official contacts with Tunisian
labor leaders. The bombings
were therefore more likely the
work of French extremists than
of ultranationalists.
Paris is hopeful that the
National Assembly will approve
the agreement with Tunisia
before 14 July. There are in-
dications, however, that de-
spite Premier Faure's inten-
tion to press for complete
ratification, the Council of
the Republic may not consider
the agreement before the sum-
mer recess on 15 August. Such
a delay might lead to a re-
sumption of disorders in Tunisia,
where the principal nationalist
party, the Neo-Destour, is
actively working for ratifibbtiori,
while French extremists, fanat
ical nationalists and the small
Communist Party oppose the agree-
ment.
The situation in Algeria
shows no signs of improvement.
Violent terrorism has broken
out in the coastal city of
Philippeville, and assassina-
tions and economic sabotage
continue.
The reforms now being
drafted by the governor general
have aroused no response among
the Moslems and little enthusi-
asm among the French settlers.
National Assembly debate on
the Algerian situation is
scheduled for 5 July.
Meanwhile, anti Americanism
is growing among French settlers
and officials in Algeria. This
attitude is the result of rumors
propagated by minor officials
and bolstered by press reports
of American failure to support
France in its efforts to deal
with the Algerian situation.
The airing of Christian
Democratic factionalism which
accompanied Premier Scelba's
fall on 22 June has further
pointed up the difficulty of
forming a new Italian govern-
ment. The outlook remains one
of cabinet instability, proba-
bly extending until new elec-
tions are held.
The early attempts are
expected to center on recon-
stituting the four-party center
coalition, but are unlikely to
succeed, according to the Amer-
quadripartite formula on the
part of both President Gronchi
and the Christian Democratic
right wing, which was directly
responsible for the overthrow
of Scelba.
Other obstacles are the
conflicting policy demands of
the small center parties and
the bids of the Nenni Socialists
for an all-Christian Democratic
cabinet which would be based on
their support or abstention on
critical votes.
ican embassy in Rome. The Should the center coali
obstacles to this solution in- tion prove unworkable, other
clude the aversion to the formulas may be tried, possibly
leading to a single party
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Christian Democratic govern-
ment depending on the 75 Nenni
Socialist deputies for support
on domestic issues and on the
40 Monarchists on foreign
policy questions. This would,
however, risk an open break in
the Christian Democratic Party,
and none of the Christian
Democratic factions wants that.
New Labor Agitation
Developing in France
French labor has recently
begun to show restiveness over
its lack of effective bargain-
ing power by peaceful means
and resentment over political
exploitation by the dominant
labor confederation.
A flurry of spontaneous
strikes in key industries has
been accompanied by outbursts
of violence which recall the
semi-insurrectional general
strikes of 1947 and 1948. The
government has acted quickly
to satisfy some wage demands,
and has taken steps to avert
a general strike of govern-
ment workers scheduled for
1 July. The French civil serv-
ants" union had taken the
position that earlier wage
increase proposals were in-
adequate.
Unlike the situation in
August 1953, when an explo-
sive labor outburst caught
the Communist-led General
Labor Confederation (CGT) by
surprise, the CGT is now ac-
tively pushing the class-
warfare theme, and will be
ready to exploit to the full-
est any strike movement, even
if sparked by the free unions.
At the national congress
of the CTG held from 12 to
The problem of political
instability in Italy probably
can be resolved only by new
elections. These are now
scheduled for 1958, but may
be moved up to 1956 by the
Christian Democrats if their
party does well in upcoming
local elections.
17 June, Secretary General
Benoit Frachon demanded a
complete return to the old
line that the "pauperization"
of the working class is in-
evitable under a capitalist
regime. In an unprecedented
exhibition of independence,
however, several of the most
prosperous unions rejected
this Communist attempt to sub-
ordinate labor aims completely
to political ends, and insisted
that the working class could
progress toward limited objec-
tives.
This was the first time
since the Workers Force (FO)
broke away from the CGT in
1947 that Communist Party con-
trol of the CGT-was openly
questioned, and party leaders
recognized the threat of a
dangerous dissident movement
which would jeopardize their
control at a time when pro-
Mendes-France groups in the
CGT, FO and the Christian
Workers Confederation were
discussing prospects for a
new mass labor movement.
The strong Communist
stand on the'inevitable pauper-
ization of the working class
was probably motivated by`the
desire to block the Mendes-
France appeal for working-class
support.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 June 1955
Despite Faure's success
in satisfying the civil serv-
ants, politically slanted maneu-
vers are anticipated from union
leaders sympathetic to the "new
left" movement. Short nuisance
strikes are in prospect, in-
cluding a one-hour strike of
10,000 railroad ticket agents.
There is apparently no
co-ordination in most of the
current and projected strike
activity, but if the rail and
communications unionsfollow
up their strike threats by a
walkout stretching into sev-
eral weeks, a situation more
serious than in 1953 could
result.
Power Balance in Argentina
Still Uncertain
The military revolt of
16 June has at least temporari-
ly altered the power structure
of the Argentine government by
returning the army to a domi-
nant position over labor. The
forthcoming announcement of new
cabinet ministers will shed
light on the durability of this
change.
At present the military,
especially Minister of the
Army Lucero, probably controls
the government. The army is
reported to have taken great,
pains to conceal its power
over Peron, however, and govern-
ment communiquds claim that
the country has returned to
normal.
civil war might result from the
immediate removal of Peron,
whose party won almost 68 per-
cent of the total vote in the
congressional elections of
April 1954.
the ouster of Peron, as advo-
cated by naval and other mili-
tary elements, should not even
be considered until after the
General Confederation of Labor
(CGT) has been disarmed and
until the position of the non-
commissioned officers, who
have been favored by Peron,
has been ascertained.
The military junta formed
following the revolt was dis-
solved on 22 June after Peron
agreed to satisfy demands re-
sulting from army-navy ne o-
tiations
Army
officials, despite some distrust
of the president, reportedly
agreed to allow Peron time to
proceed alone in meeting these
demands.
The major reported demands
were for (1) the resignation
of all cabinet ministers, (2)
dropping of the conflict with
the church, (3) no punishment
for navy men, and (4) "purging"
of the CGT.
The announced resignation
of all cabinet members on 23
June "to give Peron a free hand,"
the actual resignation of the
head of the CGT on 27 June, and
the "irrevocable" resignation
of Angel Borlenghi, Peron's
minister of interior and jus-
tice, on 28 June suggest that
Peron is responding to army
pressure. High army officials
had long opposed Borlenghi's
position in the government.
Acceptance or rejection of most
of the cabinet resignations is
apparently still pending, with
the probability that a number
of the less controversial old
cabinet members will be retained.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 June 1955
Labor Unrest Mounts in Chile
Labor unrest in Chile is
mounting as a result of con-
tinuing inflation. Public
employees are scheduled to
strike on 1 July, and the di-
rectorate of Chile's largest
labor confederation, CUTCH, has
voted for a general strike to
begin on 6 July.
The labor unrest stems
mainly from the steady depreci-
ation of real wages over the
past few years. As of 1 April
1955 the cost of living had
risen about 155 percent in a
two-year period. Furthermore,
scarcely a day passes without
new disputes over working con-
ditions. According to govern-
ment statistics, some 1,470 la-
bor disputes were recorded
during 1954.
The Communists, whose or-
ganization is outlawed, re-
portedly do not favor strikes
at this time because they fear
repressive action by the.govern-
ment. The pro-Communist presi-
dent of CUTCH is reported to
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have stated that there will be
no general strike if the govern-
ment meets the wage demands at
the civil servants. The Ibanez
administration recently re-
quested urgent action on pay
raises.
The prospects for slowing
the inflationary spiral in the
near future are not bright.
President Ibanez never has
sponsored a consistent anti-
inflationary program; more-
over, he lacks majority sup-
port in either house of Congress.
Over the past several
months practically all wage
disputes have been settled
through government "mediation"--
that is, enforced government-
sponsored compromises. A
similar solution seems likely
in the present situation.
Labor unrest may be expected
to continue, however, as long
as inflation r mains unchecked.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
PATTERNS AND PERSPECTIVES
THE SOVIET LEADERSHIP TODAY
Party secretary Khrushchev
has been the chief beneficiary
of Malenkov's decline and is
today undoubtedly the single
most powerful Soviet leader.
He does not have a monopoly of
power, however, and may have
neither the ambition nor the
ability to assume Stalin's
mantle. The foundations of
group rule have been weakened
but not shattered by the elimi-
nation of Beria and the politi-
cal emasculation of Malenkov,
and a conscious effort is ap-
parently being made to maintain
collective leadership.
The personnel changes which
have taken place in the Soviet
party and government hierarchy
since Malenkov's resignation
have resulted in the removal
or demotion of some officials
closely connected with Malenkov
in the past. Their replace-
ments are, in some cases, prob-
ably Khrushchev choices, and
if such a trend continues,
Khrushchev's personal position
may become unshakable.
Some of the changes, how-
ever, appear to have been dic-
tated largely by a search for
competent management, and the
true picture of the present
situation may be distorted if
they are interpreted uniformly
in terms of factional align-
ments in a power struggle.
The changes so far effected
do not in any case amount to
a wholesale shake-up, and it
would seem that, if Khrushchev
aspires to supreme personal
power, he has either preferred
or been forced to move with
caution.
Khrushchev's role in the
Belgrade parleys, in which he
overshadowed Premier BUlganin,
is the clearest public sign
yet that he is the ranking
member of the Presidium.
However, his performance there
should not be misinterpreted.
His energetic and headlong tem-
perament and a fondness for the
center of the stage seem to
have caused some non-Soviet
observers both to underrate
his abilities and to exaggerate
his power.
Neither before nor since
the Belgrade conference has he
been given a patently artificial
publicity build-up by the Soviet
press. The various symbols of
public prestige have, instead,
been carefully manipulated to
indicate pre-eminence clearly
short of absolute dominance.
His numerous speeches
before party, agricultural and
industrial promotional con-
ferences have been duly but
not fulsomely reported by the
Soviet press. Allusions to
collective leadership, among
them Bulganin's assurance to
the Hearst party that the "prin-
ciple of collective leadership
with us is unshakable," still
appear regularly in the press,
and alphabetical listing of
Presidium members, the literal
symbol of collectivity, has
been continued.
Perhaps the most interesting
recent reference to collectivity
and reminder of the proper role
of the party's first. secretary
is found in an article by a
venerable Old Bolshevik, G.
Petrovsky, published in Pravda
on 20 April, "Lenin," Petrovs y
writes,'"taught us collectivity
in our work, often reminding us
that all members of the politburo
are equal, and that the secretary
is elected to fulfill the de-
cisions of the central committee
of the party."
In the months since Malen-
kov's demotion, Khrushchev'
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CURRENT INTELLIGENCE WEEKL\ SUMMARY
30 June 1955
seems to have obtained a freer
hand in guiding government
policy and to have become even
more firmly entrenched in the
party apparatus. There is
some reason to suppose, also,
that he has managed to strength-
en his ties within the police
apparatus and the armed forces,
and may be able to count on
greater support from that di-
rection than before. There are
almost certainly many men left
in important positions, how-
ever, who are indebted to
Malenkov and there is no sign
that open season has been de-
clared on them.
The search for effective
leadership of the current agri-
cultural and industrial pro-
gram is the most plausible
explanation of some of the
personnel changes which have
taken place recently. This
was probably somewhat of a
factor even in those cases
where the political motive is
most clear.
While Khrushchev has be-
come the spearhead of both
domestic and foreign policy,
he does not appear to have the
power to make unilateral de-
cisions either in respect to
policy or to personnel appoint-
ments. His authority is shared
with, and probably to some ex-
tent depends on, other members
of the Presidium, among whom
Bulganin, Kaganovich, Mikoyan
and perhaps Molotov appear to
be the most influential.
Bulganin's Status
There has been a tendency
to regard Bulganin from one of
two extremes--either as one who
assumed all of Malenkov's for-
mer power with his title and
therefore as a potential rival
of Khrushchev or. on the other
hand, as a front man and puppet.
His role is more complex and
less easily defined than either
of these alternatives would
suggest.
He does not have Khrush-
chev's authority, but he is
probably a force in Soviet
policy-making and an impor-
tant factor in the intricate
balance of personal relation-
ships which now exists within
the Presidium. He has a repu-
tation for executive ability
and, as chairman of the Coun-
cil of Ministers, presumably
exercises a direct and posi-
tive influence on the opera-
tions of the Soviet government,
As Soviet representative at
the four-power talks, he will
not have a completely free
hand, but there is no reason
to doubt his ability to speak
with authority for the Soviet
regime or to pursue a policy
which he undoubtedly helped to
formulate.
Kaganovich, Molotov, Mikoyan
The three durable Old
Bolsheviks, Kaganovich, Molo-
tov and Mikoyan, are men of
long experience in particular
areas of Soviet policy and none
of them, presumably, has pre-
tensions to supreme personal
power. For these reasons,
they may now be the pivotal
force within the "collective,"
the force which can tip the
scales in important delibera-
tions. Of the three, Kagano-
vich_appears to be closest to
Khrushchev personally and policy-
wise, and his behind-the-scenes
influence is probably consider-
able, particularly in questions
relating to industrial develop-
ment.
Molotov's dignity and pres-
tige appear to have suffered
from the regime's efforts to
produce a rapprochement with
Tito, and it is possible that
confidence in his judgment on
other questions of foreign rela-
tions has been impaired. It
seems fairly certain, in any
case, that Molotov does not
have a paramount voice in set-
ting the broad lines of Soviet
foreign policy. Both the
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larger decisions and those af-
fecting relations with Com-
munist states appear to be,
instead, subject to collective
discussion and agreement within
the Presidium.
This arrangement may have
been in effect for some time,
however, and does not neces-
sarily signify a recent decline
in Molotov's authority. There
is no indication, furthermore,
that his customary role in the
practical implementation of
foreign policy or in the for-
mulation of domestic policy has
been circumscribed. Against
this background, his resigna-
tion from the Foreign Ministry,
which has been rumored since
the Belgrade conference, is
not inconceivable, but would
shed little light on the bal-
ance of power within the Presi-
dium, where he would probably
continue to serve.
Mikoyan, whose resigna-
tion as minister of trade was
announced on the eve of Malen.-
kov's demotion, accompanied
Khrushchev and Bulganin to
Belgrade, presumably to con-
duct trade negotiations. Since
February he has been promoted
from deputy to first deputy
chairman of the Council of
Ministers and apparently con-
tinues to act as the overlord
of Soviet domestic and foreign
trade. If Mikoyan was at one
time aligned with Malenkov in
favoring increased production
of consumers' goods, he does
not seem to have been seriously
injured by the de-emphasis of
that policy.
It has been suggested that
his promotion, like that of
Pervukhin and Saburov, who were
appointed first deputy chairmen
of the Council of Ministers at
the same time, was a political
reward for abandonment of Mal-
enkov. However, this interpre-
tation, which seems to pre-
suppose that the victory of one
of two clearly defined factions
was the prelude to Malenkov's
demotion, may oversimplify the
pattern of current relation-
ships within the Presidium and
the manner in which power has
shifted there. Some of the
Presidium members may have
favored the present line earlier
and more emphatically than
others, but Malenkov's defeat
seems to have been the conse-
quence of a gradual shift of opin-
ion which coalesced around Khru-
shchev, rather than of a sudden
showdown between unequal fac-
tions.
If this is the case, the
promotions of Mikoyan, Pervukhin
and Saburov may have been in-
tended, not as payment of a polit-
ical debt or as a peace offer-
ing to a defeated faction, but
as a sign that the Presidium's
ranks had not been sharply di-
vided by Malenkov's resignation.
Malenkov's Present Status
Malenkov's present status
resists clear-cut definition.
It is uncertain whether his
immediate and complete elimina-
tion from the top ranks of the
regime was considered impossible
or merely undesirable. Such
action may have been ruled out
on the grounds that it would
have disturbed a precarious polit-
ical balance or because it would
have presented an undesirable
picture of division and insta-
bility, thus undermining the
regime's prestige at home and
abroad.
Malenkov is still formally
a member of the USSR's topmost
ruling body and, as such, con-
tinues to take his place beside
other Presidium members at pub-
lic functions. He is, however,
the only member of the party
presidium who sits on the Council
of Ministers without being a mem-'
ber of its executive body. It
is possible that there is still
a considerable body of opinion
which favors his point of. view;
but it seems more likely that
his present influence is negli-
gible.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
The process of isolating
and discrediting him seems.
to have been halted for the
moment. It may be carried to
a conclusion at a later date,
of course, but it also is pos-
sible that the Soviet leader-
ship is genuinely interested
in finding an alternative to
the violence which marked
Stalin's rule.
Forces Outside the Presidium
As long as power remains
in flux, the forces outside
.the Presidium on which power
ultimately depends will prob-
ably play a more significant
part than they did under Stalin.
Efforts to maintain a balance
of power at the top and the
personal limitations of the
Presidium members are likely
to strengthen this tendency.
The central committee of
the party, a rubber-stamp body
under Stalin, appears now to
be playing a more central role
and may even be a key factor
in large policy matters. Its
influence, however, appears to
derive less from the fact that
it is the party's legal govern-
ing body than that its members
are influential leaders of
broad interest groups which be-
cause of the diffusion of power
since Stalin's death, are capa-
ble of exercising strong.pres-
sures in the making of top
policy. Among these interest
groups are the professional
party bureaucrats and the eco--
nomic administrators.'- The.
bureaucrats appear to have
gained from Khrushchev's as-
cendancy, while the economic
administrators may have suf-
fered as a result of Malenkov's
decline.
The military is another
of these forces. While it is
yet to be shown that military
leaders have begun to exercise
any overriding political in-
fluence, their good will doubt-
edly is something especially
to be sought and held at a time
when crucial policy decisions
must be made and power is still
in flux. They have therefore
recently been granted a number
of concessions and prerogatives.
The purely professional
judgments of leading military
figures probably have greater
weight now than at any time
since the end of World War II
and these judgments will color
political and economic decir
sions. The military, however,
is apparently not now, nor:is
it apt to become ? a cohesive
or independent; political force,
and speculation about a Bona-
partist solution to~.the--suc-
cession problem is unrealistic
at the present stage.
The Soviet leadership has
passed through its second major
readjustment since Stalin's
death. While-collective leader-
ship remains in force, its base
has been narrowed, as a pre-
dominance of power has tended
to pass more and more into the
hands of four oar 'five _.top
leaders. These men appear,
however, to recognize the danger
to themselvbs inherent in an
excessive concentration of
power and will probably attempt
to maintain something like a
balance of strength within the
Presidium,
The struggle for power is
muted for the moment, while the
leaders focus their main energies
on the direction of policy rath-
er than on jockeying for per-
sonal position. The present
pattern of leadership is basic-
ally an improvisation and an
experiment, and has yet to
prove that it can withstand
the stress of serious policy
differences. F_ I
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CURRENT INTELLIGENCE WEEKLY SUMMARY
REORGANIZATION OF THE SOVIET PLANNING AND CONTROL APPARATUS
In recent months the So-
viet government has reorganized
its economic planning and con-
trol apparatus. The reorgan-
ization reflects a major effort
to solve internal problems
stemming from the lack of in-
tegrated long-range planning,
lagging growth of labor produc-
tivity, wage inequalities,
overexpenditure of wage funds,
and difficulties in allocating
resources in an increasingly
complex economy.
Premier Bulganin and party
first secretary Khrushchev an-
nounced the most important ele-
ments of the reorganization in
speeches on 16 and 18 May.
Four new committees and com-
missions are now performing
the functions which for the
most part had been the respon-
sibility of the State Planning
Committee (GOSPLAN).
These four new bodies are
the State Commission for Long-
Range Planning, the State Com-
mission for Current Planning,
the State Committee on Labor
and Wages, and the State Com-
mittee for the Introduction of
New Technology into the Econ-
omy.
This division of functions
indicates that the Soviet lead-
ership has once again turned to
the concept of specialized
planning committees'which was
in effect from 1948 to 1953.
Soviet leaders now apparently
believe again that the task of
planning and supervising Rus-
sia's growing economy is too
large to be effectively admin-
istered by a single all-purpose
organization.
The new State Commission
for Long-Range Planning, under
the chairmanship of N.K. Bai-
bakov, former minister of the
oil industry, is responsible
for the formulation of five-
year plans and for long-run
economic policies. The choice
of Baibakov would suggest that
the first.task of this commis-
sion will be planning the ex-
pansion of the fuel and power
base.
The State Commission for
Current-Planning is to be
chaired by First Deputy Pre-
mier M.E. Saburov, former head
of the combined GOSPLAN. This
commission has responsibility
for drawing up the annual plans
and overseeing their division
into quarterly and monthly sec-
tions by both the all-Union
ministries and the various re-
public Councils of Ministers.
It is also responsible for as-
suring the even production and
distribution of materials and
equipment throughout the economy.
The State Committee for
Labor and Wages, under First
Deputy Premier L.M. Kaganovich,
the foremost economic trouble-
shooter in the USSR, will prob-
ably have as its major functions
the swift revision of existing
labor norms and wage scales to
conform with technological ad-
vances and a more rational dis-
tribution of manpower in in-
dustry and agriculture.
This committee apparently
will attempt to improve labor
productivity through direct
control measures, along with
the indirect incentives of pro-
viding more consumers' goods
for workers.
The State Committee for the
Introduction of New Technology
into the Economy is headed by
V.A. Malyshov, former minister
of medium machine building. As
its name implies, this committee
will control the introduction
into the economy of the latest
production equipment and methods.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
REORGANIZATION OF SOVIET
PLANNING APPARATUS
PRIOR T O
USSR
COUNCIL OF MINISTERS
r.~
STATE
PLANNING COMMISSION
47
GOSPLAN
111111111111P 111
1 9 4 8
USSR
COUNCIL OF MINISTERS
SATE COMMITTEE
SCAT[ COMMISSION STATE COMM TTEE FOR
-- ---'--' MATERIAL - TECHNICAL
SF4?IE CTJMMLTTEE FOR
FOOD AND INDUSTRIAL
TECHNOLOGY
FOR NEW
FOR PLANNING w4" SUPPLY
SUPFLY_
,.
GOSTEKHNIKA
__
GOSPLAN GOSSNAB
GOSPRODSNAB
Material-technical bal-
Distribution of food-
New techniques
Long-range planning =- ance and the distri-
stuffs, semi-finished
and equipment
..bution of material and
and finished products
capital equipment to
to the population and
the economy
economy
USSR
maw ;
COUNCIL OF MINISTERS
7~ 44 t,
GOSPLAN GOSSNAB [_GOSPRODSNJAB
53
-_
TJ SSR
COUNCIL OF MINISTERS
t
r_.? . ,.
GOSPLAN
g
USSR
aci
a r
COUNCIL OF MINISTERS
CATS COMMITTEE
STATE MMISSION FOR SPATE COMMISSION FOR
STATE C MMITTEE FOR
- r 1 ELF NEW TECHNOLOGY
LONG-RANGE PLANNING CURRENT PLANNING
LABOR AND WAGES
_
Functions performed
New techniques and
Current plans
5 to 15 year plans
by GOSPLAN prior
equipment
1 year and less
to 1955
30 JUNE 1955
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The initial tasks of the
committee will be to increase
the efficiency of the machine
tool industry and to push the
large-scale development of in-
dustrial automation.
In addition to these
changes in the planning appa-
ratus, Khrushchev recently
stated that the operation of
the Ministry of State Control
would have to be improved. The
expansion of financial control
functions of the State Bank in
mid-1954 indicates that the in-
spection and control authority
of the Soviet government has
been revised in order to attain
greater effectiveness.
Other State Control respon-
sibilities have probably been
CHINESE COMMUNIST PARTY PURGE CONTINUES
The four-year-old purge of
the Chinese Communist Party ap-
parently did not end with the
public disgrace of Kao Kang and
Jao Shu-shih last March. The
party has established new con-
trol committees and has marked
the party rank and file as the
principal object of their activ-
ities.
Peiping's first "reorgani-
zation" of the party began in
mid-1951, and was scheduled to
run through 1954. It was sup-
posed to enlarge the party and
improve its quality.
In the early stages of the
purge, about one in ten members
was found to be either politi-
cally unreliable or profession-
ally incompetent, although not
all of these were declared be-
yond redemption. The "reor-
ganization" was completed in
government and industry by mid-
1953 and was expected to end in
rural areas the following summer.
There was no clear indica-
tion that it would extend to
the top level of the party un-
til Liu Shao-chi, on behalf of
Mao Tse-tung and the politburo,
addressed the central commit-
tee in February 1954. Liu's
remarks launched a drive for
"unity" among the leadership,
aimed explicitly at those
"high-ranking cadres" who re-
garded their region or depart-
ment as their "independent
kingdom."
Although Peiping avoided
mentioning names, it became
apparent that Kao Kang, nomi-
nally the regime's chief plan-
ner and until 1953 genuinely
the boss of Manchuria, and Jao
Shu-shih, who directed the
party's organization department
and was the.leading official
in East China,.were the prin-
cipal targets of the "unity"
drive.
SECRET
assumed by the new State Com-
mission for Current Planning.
It is expected that in the fu-
ture, the Ministry of State Con-
trol will be concerned princi-
pally with the critical problem
areas of the economy, rather
than with all economic activity
as in the past.
The recent reforms are
the culmination of'administra-
tive changes designed to deal
with economic problems dating
from the Stalin period. The
appointment of leaders of the
highest rank to head these
committees underscores the
importance attached to the task
of increasing efficiency and of
developing an adequate base for
planning for future growth.
Prepared by ORR)
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30 June 1955
The national party confer-
ence which confirmed the fall
of Kao and Jao was not convened
until March 1955, although Liu
had specifically called for one
to be held in 1954. It is not
known whether the delay resulted
from the party's reluctance to
air publicly a continuing in-
ternal struggle, or from hope
of being able to announce Kao's
and Jao's confession.and re-
pentance.
Peiping has treated the
Kao-Jao case as primarily a
struggle for personal power.
The regime's propaganda has al-
so suggested, however, that a
top-level disagreement over
the rate of China's socializa-
tion may have been involved.
There is as yet no light on
the question of whether either
fell because of his relation-
ship--good or bad--with in-
dividual Soviet leaders.
Kao and Jao were found
guilty of attempting to over-
throw the established leader-
ship of the party in order to
seize the supreme power of the
party and the state. Peiping
asserted that they made over-
tures to high-ranking party
members in the army for sup-
port.
This charge is supported
by criticism directed at army
leaders at the February 1954
meeting and by measures under-
taken during 1954 to subordi-
nate the armed forces more di-
rectly to central authority.
No military leaders are known
to have been disgraced, but
several have apparently lost
power.
It seems reasonable to
believe that some military
leaders would have been at-
tracted by Kao's alleged plan
to divide power in the party
between old-time rural guer-
rilla leaders and those who
had been underground workers,
with guerrilla leaders receiv-
ing the larger share. The
military's resentment of "new
cadres" may present a continu-
ing problem for Peiping.
The fate of seven minor
officials accused of conspiring
with Kao and Jao has never been
announced. Their punishment
may be revealed later as a fur-
ther warning to possible dis-
sidents, and other conspirators
may be disclosed.
Peiping only hinted at
party policy differences, and
has not specifically charged
deviation. Jao was accused of
adopting a "rightist" policy of
surrender to bourgeois elements.
Subsequent editorials have
cited Lenin's warning about
bourgeois elements who pretend
to be "left," and references
have been made to the need to
air all future disputes "openly
and legitimately" within the
party.
Kao could have been either
"left" or "right." His poli-
cies in Manchuria, the regime's
pilot area, were certainly ad-
vanced, yet as an old guerrilla
leader he is said to have sought
support from other guerrilla
leaders who might be expected
to sympathize with peasant re-
sentment of rapid socialization.
In any case, neither he
nor Jao repented. Kao's sui-
cide is described as an act of
"ultimate betrayal" of the
party, and Jao--presumably in
prison--"persists in an atti-
tude of attacking the party."
The conference established
central and local control com-
mittees concerned with strength-
ening party discipline and with
guarding against future dis-
unity. The formation of these
committees in itself suggested
the continuation of the party
"reorganization."
Peiping's propaganda since
then has indicated that a cam-
paign to improve party "disci-
pline" and expose "antiparty"
members is under way. It has
also revealed that the party
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CONFIDENTIAL
is still dissatisfied with a-
bout 10 percent of its members,
which in this respect puts the
party back where it started
four years ago.
Peiping's criticism of
party "discipline" has been
closely linked with the class
struggle, which is expected to
be "sharper and more compli-
cated" during the course of So-
cialist construction. Cadres
are said to have only a super-
ficial understanding of the "in-
tensification" of class strug-
gles, and to suffer from bour-
geois ideology.
A campaign at this time,
when Peiping is pushing an aus-
terity program and consolidat-
ing agricultural co-operatives,
could be useful in whipping up
the cadres' energies for the
program. It could also supply
a ready-made excuse for any
failure of the program or for
a hostile peasant reaction.
On the other hand, a gen-
uine cleansing of the party
rolls may be necessary, partic-
ularly in rural areas where the
greatest expansion in member-
ship has occurred. The party
admitted 700,000 peasants in
1954, and is conducting a mem-
bership drive in rural areas
this year.
Peiping's criticism so far
has been directed primarily at
the party's rank and file. No
specific warning has been issued
to "high-ranking cadres" as in
the 1954 "unity" drive, and
Peiping continues to maintain
that the party at the central
committee level is united.
Nevertheless, certain
former party leaders may be
marked for discard. The status
of Mao's old rivals Li Li-san
and Chen Shao-yu, in particular,
remains obscure. Neither at-
tended the National People's
Congress in September 1954 nor
was elected to the new govern-
ment. Although Li was active
just before the congress, Chen
has not been reported by Com-
munist sources since January
1954, the same month in which
Kao and Jao disappeared.
Apart from the general
problem of Communist control
over all aspects of Chinese
life, there appears to be no
connection between the party
"reorganization" and the cur-
rent campaign against writer
Hu Feng and his sympathizers.
Peiping itself has stated that
the latter case represents
"counterrevolutionary" rather
than "antiparty" activity.
Hu Feng is accused of pub-
licly and privately questioning
the regime's. right and compe-
tence to impose a party line
on creative artists. Peiping
has widely publicized his case
in an effort to enforce both
adherence to and enthusiastic
support of the party line on
all questions by the Chinese
intelligentsia.
CONFIDENTIA
*Mvrr
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