CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A000700130001-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 35
• Document Creation Date: December 16, 2016
• Document Release Date: January 21, 2005
• Sequence Number: 1
• Publication Date: February 9, 1956
• Content Type: SUMMARY

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CONg:iDENTI
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
NEX
NO CHANGE IN CLASS.
DECLASSIFIED
CLASS. CHANGED TO: TS S
COPY NO. 19
OCI NO. 0057/56
9 February 1956
DOCUMENT NO.
DATC* "zw REVIEWER:
CENTRAL INTELLIGENCE AGENCY
i I I OFFICE OF CURRENT INTELLIGENCE
DIA and DOS
review(s) completed. T1A
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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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CURRENT INTELLI NCE WEEKLY SUMMARY
9 February 1956
OF IMMEDIATE. INTEREST
ARAB-ISRAELI SITUATION
1A
. . . Page 1
The Arabs and Israelis continue to concentrate on
training and building up their military strength. Israel
has said that it intends to continue its own Jordan water
development plans--involving work at Banat Yacov in the
.demilitarized zone between Israel. and Syria--if the Arab
states do not show'signs by 1 March that they will agree
to, the.regional Jordan development plan proposed by the
United States. Syria threatens to use force if Israel
is not restrained by the UN within a "few hours" after
work is resumed,
SINO-SOVIET BLOC PROTESTS
AIR-SPACE VIOLATIONS . . . . . . . . . Page 2
The Sino-Soviet bloc is making an international
issue of its charges that American balloons have
violated Soviet and Satellite air-space. Last week,
nine diplomatic protests were delivered by the USSR
and its Satellites to the American, Turkish, and West
German governments and to the secretary general of the
United Nations; Peiping broadcast a Foreign Ministry
protest statement on 7 February. Moscow may plan to
carry the case to the UN.
USSR CONTINUES TO URGE
TREATY OF FRIENDSHIP . . . . . . . . . . . . . . . . Page 3
Premier Bulganin's reply to President Eisenhower's
letter of 28 January apparently was intended to prolong
the public dialogue about the Soviet-American friendship
treaty proposed in the original Bulganin letter of
January. Soviet leaders are trying, by means of Bulganin's
letters and supporting. propaganda, to persuade the world
that the United States' negative attitude toward a friend-
ship treaty is the major barrier to settlement of out-
standing East-West issues such as disarmament and the
unification. of Germany,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
9 February 1956
FRENCH PREMIER ATTEMPTS
NORTH AFRICAN SETTLEMENT . . . . . . . . . . . . . . . Page 3
French premier Mollet appears to have won a respite
from the National Assembly on the Algerian problem.
Unless he can recover the prestige he lost as a result
of General Catroux's resignation, however, his govern-
ment may be too weakened to carry out its announced
policies and may eventually lose the majority support
it now has for its Algerian program.
NOTES AND COMMENTS
Israel's Banat Yacov Water Project: Part of Israel's
plan for use o the Jordan waters calls for
diverting the flow of the Jordan River to Lake
Tiberias through a new canal starting from a point
just south of Banat Yacov. Israel contends that
the project is aimed only at generating electric
power and that the water, after being used for power,
would be returned to Lake Tiberias. The Arabs sus-
pect that the diverted water would also be used for
irrigation in Israel and that Syrians and Jordanians
on the eastern side of the river would be deprived
Pakistan: Soviet premier Bulganin's statement on 6 Feb-
ruary that Pakistani-Soviet relations could be
improved by a trade pact presents the Pakistani
government with a new and touchy problem. Foreign
Minister Chudhury's initial response, which leaves
the door open for closer ties with the USSR, may be
the result of the government's shaky position in
the face of a pending internal crisis on constitu-
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CURRENT INTELLIGENCE WEEKLY SUMMARY
9 February 1956
USSR Promotes India as Sixth Great Power: Moscow took
advantage o the recent celebration of Indian
Republic Day to re-emphasize the ties between India
and the USSR and to stress again the importance of
India as the foremost of the neutral states and as
the "sixth great power" in world affairs. Moscow
has consistently pointed to the effectiveness of
the Indian role in the Korean and Indochinese settle-
ments, and the USSR undoubtedly expects that India
will play a?similarly prominent role if and when a
great-power conference is held on Far Eastern
questions. . . . . . . . . . Page 3
USSR Stresses Ideological Discipliner The Soviet party
press a$ recent y placed more than routine em-
phasis on the maintenance of ideological discipline.
This stress suggests that the regime is concerned
lest the party rank and file fail to grasp the in-
tent of "peaceful coexistence" policies and confuse
a shift in tactics with a change in long-term
objectives. The 20th Party Congress, convening on
14 February, may demand renewed emphasis on ideo-
logical discipline.
Japanese-Soviet Negotiations: The Soviet Union is
continuing its efforts to induce Japan to agree
to an early settlement of at least some of the
issues under negotiation at London. The Soviet
representative in London has suggested that the
USSR may issue a "unilateral" declaration termi-
nating the state of war with Japan.
Page 4
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USSR Enters Field of Marine Nuclear Propulsion: Direc-
tives for the Soviet Sixth Five-Year Plan, an-
nounced on 15 January, stated that the USSR will
build an atomic-powered icebreaker before 1960.
Production of such a vessel would indicate that
the USSR also is technologically capable of pro-
ducing atomic-powered combat ships;.such a program
could, in fact, be under way. I . . Page 6
Chinese Communist Activities in Hong Kong: Invitations
Co visit t e inese Mainland are being extended
to prominent residents of Hong Kong as part of
Peiping's effort to build up Communist prestige
and influence in the British colony at the expense
of the Nationalists. The Communists are cultivating
European as well as Chinese residents of the colony.
They are refraining from immoderate criticism of the
Hong Kong government authorities.
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9 February 1956
Peiping's Defection Campaign Against Taiwan: The Chinese
Communists have recently stepped up t eir campaign
to lower morale in Chiang Kai-shek's government and
armed forces and to induce defections at all levels.
They apparently hope to attain these goals by re-
newed promises of amnesty even to top-level Chinese
Nationalists, by appeals stressing lenient treat-
ment to all "compatriots" who return to the mainland,
and by placing emphasis on the hopelessness of
holding out on Taiwan. I I . . . Page 7 25X1
Cambodia: Prince Sihanouk of Cambodia, who has just
returned to his capital from a state visit to the
Philippines, is scheduled to leave for Peiping on
13 February. His aides insist that the trip will
not lead to recognition of Communist China.
Sihanouk has thus far avoided the issue by stating
that so long as there are two Chinas, Cambodia will
recognize neither. However, it is quite possible
that he will decide to recd nize Peiping as a result
of his visit. . . . . . . . . . . Page 9
Malaya: The London talks on Malayan self-government,
which began 18 January, concluded on 8 February
with agreement on a plan for full independence by
approximately August 1957. The agreement also
provides for an accelerated interim transfer of
.internal government to Malayan authority. Malayan
chief minister Rahman, who says he is "completely
satisfied" with the conference results, will now
try to win nationwide co-operation in the fight
against the Communists. I I. . . . . Page 10 25X1
Bulgaria Moves to Improve Relations With the West: As part
of the Soviet bloc campaign to improve re a ions
with the West, Bulgaria has proposed to the United
States that diplomatic relations be re-established,
and has offered Greece goods valued at $2.000,000
as an advance payment on reparations. Page 14 25X1
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9 February 1956
PATTERNS AND PERSPECTIVES
THE ECONOMIC BASIS OF THE SOVIET BLOC CREDIT PROGRAM IN
. . . . .
UNDERDEVELOPED-COUNTRIES . . . . . . . . . Page 1
As a result of rapidly increasing industrial power,
it has become advantageous for the Soviet bloc to provide
capital goods to non-Communist countries in return for
raw materials and agricultural products. This situation
provides the economic basis for the bloc credit program
in underdeveloped countries.
SUCCESS OF MOSCOW'S AND PEIPING'S POLICIES IN SOUTH AND
SOUTHEAST ASIA . . . . . . . . . . . . . Page 2
Soviet and Chinese Communist activities in South
and Southeast Asia, supported by offers of trade op-
portunities and economic assistance, have scored some
notable successes, particularly in Afghanistan and
Burma. Moreover, there are signs of growing neutralist
sentiment in Thailand and Pakistan--the only countries
on the mainland of Asia affiliated with SEATO.
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REHABILITATION OF NORTH KOREA WITH SINO-SOVIET BLOC
AID.. . . . . . . . . . . . . . . . . . . . .
The Sino-Soviet bloc's extensive aid to North
Korea in 1954-55 will probably enable most industries
to restore production to the 1949 level.. The primary.
aim of the bloc is to make North Korea economically
viable and a source of raw materials and electric
power.
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9 February 1956
RELEASE AND REHABILITATION OF POLITICAL FIGURES IN THE
SATELLITES . . . . . . . . . . . . . . . . . . . Page 9
The Communist regimes in Eastern Europe during
1955 maintained, and in some cases expanded, their
programs for the release of political prisoners and
the rehabilitation of purged officials. The program,
which coincides with the campaign for the return of
Satellite nationals, reflects a major tactical change
in the campaign to reduce opposition to the regimes.
Both the releases and "redefection" campaign are
attempts by the Satellite governments to create for
themselves an aura of international respectability.
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9 February 1956
PART I
OF IMMEDIATE INTEREST
ARAB-ISRAELI SITUATION
The Arabs and Israelis
continue to concentrate on
training and building up their
military strength.
Israel is still pressing
the West for arms, and Israeli
naval crews have been sent to
Britain for destroyer training.
Egypt may have tested some of
its new Soviet equipment in ma-
neuvers in the Sinai Peninsula.
An intensification in Egyptian
paratroop training has been re-
ported.
The American army attache
in Cairo reports that Egyptian
troops are psychologically pre-
pared for war, their morale is
high as a result of the receipt
of Soviet arms, and some ele-
ments may be "chafing at the
bit."
The issue on which Arab
attention is currently focused
is whether Israel will resume
its Jordan River water diversion
project at Banat Yacov?in the
demilitarized zone between Is-
rael and. Syria. (See Part II,
page 1.)
Israel has given notice
that it intends to continue its
Jordan water development plans
if the Arab states do not show
signs by 1 March that they will
agree to the regional Jordan
Valley development plan spon-
sored by the United States.
Syria has threatened to use
force if Israel is not restrained
by the UN within a "few hours"
after work is resumed.
Egypt and Iraq have taken
a strong stand against a
resumption of work on this proj-
ect. The American embassy in
Cairo believes Egypt would rap-
idly come to the aid of the
Syrians if necessary, but notes
that Premier Nasr is unhappy
over the prospect of war with
Israel now and hopes the United
States and the UN will take
steps to prevent any Israeli
action.
Israeli ministers have as-
sured Ambassador Johnston that
if there was ,a possibility of
Arab agreement to the plan
during March, resumption of
work might be deferred for an-
other short period. Emphasis
was placed, however, on Israel's
intention to proceed with its
water program.
In the opinion of American
observers in Tel Aviv, the 1
March "deadline" does not neces-
sarily mean that Israel would
resume work on or immediately
after that date. The Israelis
would probably take such action
only after first seeking a re-
view Of the problem by the UN
truce supervision organization.
However, Israel is not likely
to accept a long delay in its
development plans.
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9 February 1956
UN secretary general
Hammarskjold, however, noti-
fied the Western tripartite
powers that there is no need
for any quick action on the
Palestine problem and believes
it is vital to take the neces-
sary time for careful consid-
eration of the problem,
SINO-SOVIET BLOC PROTESTS
AIR-SPACE VIOLATIONS
The Sino-Soviet bloc is
making a major international
issue of its charges that Amer-
ican balloons have violated So-
viet and Satellite air space.
Last week, no less than nine
diplomatic protests were de-
livered by the USSR and its Sat-
ellites to the US, Turkish and
West German governments, and to
the secretary general of the
United Nations; Peiping broad-
cast a Foreign Ministry protest
on 7 February. These protests
are intended to support Mos-
cow's claims that the United
States is determined to renew
the cold war by deliberate acts
of provocation, while the USSR
is patiently and persistently
trying to improve Soviet-
American relations.
Bulgaria requested the
Swiss legation in Sofia on 3
February to transmit a note
protesting to the United States
against the "brutal violation"
of both Bulgaria's air space
Area reactions to the Eden-
Eisenhower communique' have been
critical, though with a "wait and
see" attitude in some cases. Both
Arab and Israeli spokesmen have
denounced the suggestion that for-
eign troops might be stationed in
the area to forestall incidents
which might lead to hostilities.
and international air transport
conventions. Sofia also sent
a copy of this note to the UN
secretary general with the
request that it be circulated
to member states as an official
document.
The Soviet government sent
almost identical notes to the
United States and Turkey on 4
February and to West Germany
on 6 February. Rumania and
Hungary sent protests to the
United States on 8 February.
Budapest charged that American
balloons were responsible for
three Hungarian air crashes. On
7 -and 8 February, _. Albania and
Czechoslovakia also dispatched
protests-to the. UN secretary
general..,
The Czech, Bulgarian, and
Albanian actions in addressing
notes to the United Nations sug-
gest that Moscow may plan to
carry the bloc's case to the UN.
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9 February 1956
USSR CONTINUES TO URGE
TREATY OF FRIENDSHIP
Premier Bulganin's reply
on 1 February to President
Eisenhower's letter of 28 Jan-
uary apparently was intended to
prolong discussion of a friend-
ship treaty proposed in the
original Bulganin letter of 23
January. The Soviet regime
evidently wants to keep world
attention focused on this pro-
posal as a Soviet demonstration
of the Geneva spirit in action.
The Soviet Union, accord-
ing to Foreign Minister Molotov,
will continue trying to per-
suade the United States to
accept a, friendship treaty
since "the step would be a use-
ful one" in improving Soviet-
America.n relations and relaxing
international tensions.
FRENCH PREMIER ATTEMPTS
NORTH AFRICAN SETTLEMENT
French premier Mollet ap-
pears to have won a respite
from the National Assembly on
the Algerian problem, and has
tried in Algeria to mollify
French settler elements. Unless
he can recover the prestige he
lost as a. result of General
Catroux's resignation on 6 Feb-
ruary, however, his government
may be too weakened to carry
out its announced policies and
may eventually lose the majority
support it now has for its
Algerian program.
Mollet's submission to
French settler pressures de-
creases the possibility that
he can retain the confidence
of Algerian Moslems. While
Mollet's program for Algeria
Soviet leaders are trying,
by means of Bulganin's letters
and supporting propaganda., to
persuade the world that American
refusal to sign a treaty is the
major barrier to settlement of
outstanding East-West issues
such as disarmament and German
unification.
posal.
Bulganin's reference to
Soviet readiness to conclude
bilateral friendship treaties
with other countries suggests
that Khrushchev and Bulganin may
press the British government to
agree to such a. treaty during
their visit to England this
spring. They may also renew
their invitation to French
leaders to visit Moscow, where
they could make a. similar pro-
probably would be acceptable to
the more moderate Moslems, his
failure to resist settler pres-
sures will discourage the
Moslems who have been inclined
to support him and will en-
courage the extremist French
elements to exert new pressures.
Settler reaction to the
appointment of Robert Lacoste,
a Socialist deputy, to replace
Cat.r.oux may be less violent.
Nevertheless, having won an
early and substantial victory
over Paris, the settlers can
be expected to continue their
obstructionist tactics.
Mollet is striving for a,
quick solution of all France's
North African problems. Despite
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CURRENT INTELLIGENCE WEEKLY SUMMARY
9 February 1956
the sharp setback he encoun"
tered on his arrival in Algiers
on 6 February, he has persisted
in his fact-finding discussions
with local groups. In the mean-
time, the Foreign Ministry has
announced that Paris will dis-
cuss a revision of the Tunisian
conventions signed last June.
Talks with the Moroccan gov-
ernment are already scheduled
to begin on 15 February.
Mollet rejects, a military
solution for Algeria and ba.ses
his approach on'the premise
that French opinion is resigned
to some change in Algeria's
relationship with Paris, pro-
vided the area, is not lost to
France. In his investiture
speech on 31 January, he pro-
posed elections in which French
colonials and Moslems would
participate on an equal footing.
Since reaching Algeria.,
Mollet has ma.de several state-
ments designed to appease
French settler opposition and
now appears less certain about
his policy.- Ex-premier Faure
had eu.riie:.? flirted for a while
with a "federative" solution
which would implicitly rec-
ognize an Algerian nationality,
as advocated by Moslem nation-
alists. Former governor general
Soustelle had propaganaized for
"integration," or a. tightening
of ties between France and
Algeria, which could imply as
many as 150 Algerian Moslem.
deputies on the French National
Assembly.
Mollet's difficulty is that
French public opinion is ready
for neither "federation" nor
"integration." Public opinion
also begrudges the cost in
money and draftees of continu-
ing the war in North Africa.
North Africa. as a, whole now
absorbs one half of the combat
strength of the French army.
Mollet's government had no
difficulty turning aside a
Pouja.dist move on 7 February
for an immediate assembly de-
bate on Algeria. The American
embassy in Paris reports a
"supercharged atmosphere" on
the Algerian problem, however,
and many right-center deputies
may be swayed to join the of-
fensive against Mollet if the
government wavers again. An
Algerian debate would not only
harden the lines between the
"integrationists" and "federa-
tionists" but also widen the
split between pro-Mollet and
pro-Mendes-France factions with-
in the Republican Front.
center support.
The American embassy notes
that there is considerable dis-
satisfaction among MMendes-
France's supporters because he
was sidetracked from the
Foreign Ministry. The Popular
Republicans, on the other hand,
are likely to be offended by a
]Mollet statement on the church
school issue. A melting of
support on the Algerian issue
could therefore leave Mollet's
narrowly based government at
the mercy of the Communists,
who avowedly want to pave the
way for a. popular front but may
be even more interested in dis-
crediting a left-center gov-
ernment which relies on right-
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CURRENT INTELLIGENCE WEEKLY SUMMARY
9 February 1956
PART I I
NOTES AND COMMENTS
Israel's Banat Yacov
.Water Project
Part of Israel's hydro-
electric and irrigation develop-
ment plan is to divert the flow
of the Jordan River to Lake
Tiberias through a new canal
starting from a point just south
of the bridge at Banat Yacov.
The canal would pass through
about 1.4 miles of the demili-
tarized zone between Israel and
Syria and would then run south-
ward for about seven miles
through Israeli territory to
Lake Tiberias. A reservoir
would be constructed in Israeli
territory at about 40 meters
above sea level, and a power
station would be erected west
of the mouth of the Jordan at
200 meters below sea level.
Israel had completed about
60 percent of the excavation
work in the demilitarized zone
when it stopped work there on
29 October 1953 as a result of
Western pressure and a UN
Security Council resolution
calling for suspension of work
until the council reached a
decision on a'complaint set
before it by Syria. In late
January 1954 the USSR vetoed a
proposed resolution before the
council which called for the
UN truce supervisor to attempt
a reconciliation of Israel and
Syria over this dispute. The
issue, therefore, is theoreti-
cally still under consideration
by the Security Council.
Israel contends that the
project is aimed only at gener-
ating electric power and that
the water, after being used
for power, would be returned
to Lake Tiberias. The Arabs
suspect that the diverted water
would also be used for irriga-
tion in Israel and that Syrians
and Jordanians on the eastern
side of the river would be de-
prived of water. UN truce
supervisor Bennike stated in
1953 that the canal would alter
the flow of the Jordan perma-
nently and, unless Israel made
a specific commitment about the
amount of water withdrawn, the
canal would probably damage the
livelihood of the people depend-
ing on the river waters, par-
ticularly during he dry season.
Since 1953, Ambassador
Johnston has conducted a long
series of negotiations with the
Arabs and the Israelis on a plan
Proposed Diversion Canal
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HULA
International
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---Armistice line
Proposed canal
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9 February 1956
for developing the Jordan Val-
ley. Last October the Arab
states and Israel informally
agreed to the technical aspects
of this plan, but the Arabs,
particularly Syria, balked at
concurrence on political grounds.
Israel took the position that
because agreement had been
reached with Johnston and be-
cause two years had elapsed
since negotiations started, it
Soviet premier Bulganin's
statement on 6 February that
Pakistani-Soviet relations could
be improved by a trade pact pre-
sents the Pakistani government
with a new and touchy problem.
Foreign Minister Chudhury's
initial response, which left the
door open for closer ties with
the USSR, may be the result of
the government's shaky position
in the face of a pending in-
ternal crisis on constitutional
issues.
Bulganin's statement rec-
ommended acceptance of the
"five principles" as a basis
for friendly relations and ex-
pressed opposition to Pakistan's
membership in SEATO and the
Baghdad pact. It did not, how-
ever, insist on withdrawal from
Western alignments as the price
of trade and technical assist-
ance ties with the USSR. The
trade pact, under which Pakistan
would exchange agricultural
surpluses for Soviet machinery..
and manufactured goods is es-
pecially appealing. According
to an unconfirmed press report
of 8 February, the Pakistani
cabinet has approved the begin-
ning of negotiations for it.
The Soviet overture, which
followed friendly approaches to
was free to proceed with its
work on the diversion canal.
Tel Aviv, advised that
Egyptian prime minister Nasr and
other Arab leaders had assured
Johnston that the Arab states
would agree to the plan within
two or three months, agreed to
defer resumption of work on the
canal within the demilitarized
zone until 1 March.
two other "northern tier" coun-
tries--Turkey and Iran--takes
advantage of growing neutralist
sentiment in Pakistani press
and public circles, and coin-
cides with conclusion of a Paki-
stani-Polish trade agreement.
Although Karachi could use
Soviet support of India and
Afghanistan in its quarrels with
Pakistan as an excuse to reject
Bulganin's approach, it is
doubtful if the present govern-
meat will be able to do so in
the face of popular sentiment
that Pakistan's present policy
of complete commitment to the
West has not been productive.
Meanwhile, the Karachi
government is being challenged
on domestic issues. The opposi-
tion, which comes primarily
from East Pakistan, attacked
the draft of the new constitu-
tion which had its first read-
ing in the Constituent Assembly
on 1 February. The government
overrode objections by a vote
of 45 to 13, but faces a harder
fight when the draft is consid-
ered clause by clause during its
second reading..
Governor General Mirza has
also indicated his fear of the
effects of the United Front's
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abandoning its coalition with
the Moslem League and uniting
with the opposition Awami League
in a concerted drive against
the constitution. He has done
this by stating that he is corf-
templating the imposition of
martial law in East Pakistan.
Martial law would probably
be invoked in East Pakistan only
in the event of a breakdown of
law and order or of an East
Pakistani'attempt to gain con-
trol of the central government.
East Pakistani politicians are
aware of the probability that
any effort on their part to take
over control of the national
assembly would be met by firm
measures on the part of Mirza.
Since these might include rein-
stitution of arbitrary rule by
Mirza and a small group of
Moslem League leaders, the East
Pakistani politicians probably
would not force an issue except
as a last resort.
USSR Promotes India
As Six Great P76-wer
Moscow took advantage of
the recent celebration of Indian
Republic Day to re-emphasize
the ties between India and the
USSR and to stress again the
importance of India as the fore-
most of the neutral'-states and
as the "sixth great power" in
world affairs.
Typifying the Soviet ap-
proach to the occasion, Khru-
shchev said at the Indian
-reception in Moscow, "India is
our special love." Moscow has
been claiming for some time that
the USSR gave the first acknowl-
edgment in history to "India's
rights as a great power."
The Indian celebration in
Moscow shared the spotlight in
the Soviet press with Bulganin's
proposal for a friendship treaty
Th6'~politically Volatile
situation in East Pakistan is
further complicated by skyrock-
eting food prices and reports
of a threatened famine. These
have resulted in the prime min-
ister's requesting a gift of
175,000 tons of American rice.
The central government is
not in a strong position to
achieve its aims by democratic
means either on constitutional
or policy issues, and Karachi
will probably find it necessary
to temporize both with the Soviet
overture and with East Pakistani
demands for a greater role in
government affairs. While un-
likely to attempt to modify its
commitments to the West, the
government will, under these
circumstances, find it difficult
to pursue the determined course
necessary to re-establish its
stability and its prestige at
home and abroad.
with the United States. Moscow
probably considers that such
"peace" moves as Bulganin's note
are particularly effective with
the South Asians, who are much
more inclined than the West
to accept the "five principles"
as a cure-all for international
disputes. The American embassy
in New Delhi has reported a
considerable minority feeling
in India that "peace maneuver-
ing" by the USSR is preferable
to its former militant approach
and should not be dismissed
out of hand.
The USSR's propaganda on
the "sixth great power" theme
has helped to push India to
the forefront as a broker be-
tween Communists and non
Communists. A striking indi-
cation of the prestige India
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9 February 1956
has acquired was the proposal
in late January of two West
German leaders--one of them
Foreign Minister Von Brentano--
that Prime Minister Nehru might
act as mediator to end the
division of Germany.
Moscow has consistently
pointed to the effectiveness
of the Indian role in the
Korean and Indochinese settle-
ments, and the USSR undoubtedly
expects that India will play a
similarly prominent role if and
when a great-power conference
is held on Far Eastern questions.
On such matters as the Formosa
question, Moscow and Peiping
could almost certainly depend
on Indian support and willing-
ness to act as a mediator.
Moscow may be planning to
promote India for a. Security
Council seat along with Com-
munist China.. It is unlikely,
of course,that the USSR will
give India preference over Com-
munist China for a Security
Council seat. The Indians
themselves have already in-
dicated that they regard the
Chinese seat as belonging to
Peiping.
Implicit in all Moscow's
statements to and about India
has been the idea originating
with Lenin that a Moscow-New
Delhi-Peiping bloc would be
invincible on the Eurasian
continent. But as realistic
strategists, the Soviet leaders
probably also will guard against
the formation of~ a.n Indian-
Chinese axis that might promote
policies diverging from their
own. Most Indian leaders have
been more inclined to co-operate
with China than with the USSR.
25X1
USSR Stresses
ideological Discipline
The Soviet party press
has recently placed more than
routine emphasis on the main-
tenance of ideological disci-
pline. While articles reaffirm-
ing the Communist Party's dedi-
cation to its theoretical prin-
ciples and calling for improved
propagation of those principles
have appeared routinely at regu-
lar intervals, recent material
of this type suggests that the
party senses an undesirable
slackening in ideological in-
terest in a period of "peace-
ful coexistence" and a confusion
of purpose as to fundamental
long-term objectives.
The lead editorial in the
October issue of the central
committee journal, Party Life,
reminds its readers at soon
after World War II, when "a
weakening of attention to ques-
tions of ideology created the
danger of the penetration into
our midst of alien, bourgeois
views," the central committee
undertook a series of important
resolutions on the questions
of ideological work. This, it
claimed, set party policy in
this sphere for many years to
come and played "a historic
role in raising the ideological
level of Soviet literature,
art, and of the entire educa.-
tiona.l work of party orga.niza-
tions."
Recalling that these so-
called "Zhda.nov decrees" were
passed in a period of intensive
industrial activity, the edito-
rial implies a parallel with
the present period, which faces
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9 February 1956
the tasks of the Sixth Five-
Year Plan, and warns against a
spirit of "narrow practicality,"
that is, the failure to relate
immediate tasks to their even-
tual objectives.
The Soviet people have
nothing to fear from peaceful
coexistence, the editorial con-
tinues.
Acceptance
of this
principle
should not
lead,
however,
to lessened
concern
for the "ideological
tempering"
of, the Soviet people,
of "con-
cern that behind the outward
manifestations of bourgeois
culture they should be able to
see its real content and under-
stand those subtle ways of
corrupting the masses through
literature, art, films and
radio, to which the ruling
classes in capitalist countries
resort."
Tolerance of capitalist
states should not, in other
words, be confused with accept-
ance of non-Communist principles,
and the editorial warns against
a softening of the attack on
Japanese-Soviet Negotiations
The Soviet Union is con-
tinuing its efforts to induce
Japan to agree to an early set-
tlement of at least some of
the more controversial issues
under negotiation at London.
During the negotiations,
various Soviet spokesmen,
those principles in the in-
terests of "peaceful coexist-
ence."
Party instructions should
attempt, the editorial empha-
sizes, to close the gap between
theory and practice, to point
out how the problems and poli-
cies of the moment fit into the
Communist scheme of the future.
Implicit in the Party Life
appeal, subsequently r&pea e . `
in Pravda and Kommunist, is the
fear t at the Soviet people
themselves have failed to grasp
the intent of current policies,
and have begun to confuse means
with ends. The danger which
such a tendency would represent
for the party in the long run
is clear. Ideology is a neces-
sary adjunct of Communist policy,
if not its foundation, and the
current discussion may be ad-
vance word that the 20th Party
Congress, convening on 14 Feb-
ruary, will authoratively demand
renewed emphasis on ideological
discipline.
including Communist Party chief
Khrushchev, have expressed much
interest in the question of end-
ing the state of war. Khru-'
shchev has called,it a necessary
starting point for any concrete
developments. From the Soviet
point of view, these develop-
ments would consist of an ex-
change of diplomatic relations
and the repatriation of Japanese
war prisoners. Following this,
the USSR would hope to negotiate
substantive questions and the
peace treaty through diplomatic
channels.
Tokyo is rife with rumors
as to how the Hatoyama govern-
ment will ultimately respond to
the Soviet proposal of late Jan-
uary to terminate unilaterally
the state of war and immediately
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9 February 1956
establish diplomatic
relations. Adverse
popular reaction to
the Soviet proposal
impelled Prime Minis-
ter Hatoyama, and
others favoring a
quick settlement, to
commit themselves pub-
licly to the tough
policy advocated by
the Foreign Ministry.
50 ?---
pre- at
boun ary
\SA HALIN
ara{uto
(under US R
administr lion)
1'\ de facto
\ bounderie
_ (~' OO oM ATSU\^rA
~{. yam` D.
O~ !7 _....IaHIRU
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ae~l/
Jle-'- RUF
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ISLANDS
25X1
to bolster Japan's bid for the
southern Kurils.
The government's desire to
discuss the territorial problem
with Dulles raises the possibil-
ity that Tokyo will seek an
American commitment to return
t:ha Ryukyus to Japan in order
Last summer when Malik of-
fered to return the Shikotan a.ad
the Habomai Islands, he contrasted
this Soviet generosity with Amer-
ican retention of the Ryukyus.
This suggests that Moscow, if it
so desired, could attempt a proapa--
~;anda coup by making an offer to
return the southern Kurils con-
tingent on the return of US-held
Sakhalin
and
The Kurils
MILES
islands to Japan.
iusa Enters Field of Marine
iilt cc ear Propu" sion
Directives for the Soviet
Sixth Five-Year Plan, announced
on 15 January, stated that the
USSR will build an atomic-
powered icebreaker before 1960.
A Soviet atomic expert, Profes-
sor Samarin, speaking at an
international conference. in Oslo,
said that the first vessel of
this type would be completed
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9 February 1956
SOVIET ATOMIC-POWERED PASSENGER SUBMARINE
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sonalities in the Min-
istry of Shipbuilding
were among the USSR's
delegation to the
Geneva "Atoms for
Peace" conference in
July 1955. These two
men, V.P. Terentyev
and G. M. Chuykov, are
believed to have
played an important
part in the develop-
within the next five years and
would go into service along the
coast near Murmansk on the Bar-
ents Sea. Production of such a
vessel may indicate that the
USSR also is technologically
capable of producing atomic-
powered combat ships; such a
program could, in fact, be under
way.
An article which first
mentioned an atomic icebreaker,
published in August 1955, also
discussed a nuclear-powered
submarine for use as a'Tishing
boat" under the ice of the So-
viet Arctic. Torpedo tubes
would be installed, allegedly
to fire explosives to break up
ice formations. Another craft
described was a pas-
senger-carrying, atom-
powered submarine for
operation under ice
fields. The article
stated that such craft
"can even now be built
in a sufficiently per-
fected form," and "they
ought to be built in
the near future."
It has recently
been established that
two important per-
ment of electronic
fire-control equipment for
the Soviet navy in the
postwar period.
At the Geneva conference,
they were identified as
"engineers." They did not
present any scientific papers
and apparently were pres-
ent only in the capacity
of observers. Their pres-
ence at Geneva suggests
that electronics research
institutes and plants of the
Ministry of Shipbuilding
are involved in some phase of
the Soviet atomic energy
program. Pre-
pared jointly with OSI.
Concurred in by ORR)
Peiping's Defection Campaign
Against Taiwan
The Chinese;Communists
have recently stepped up their
campaign to lower morale in
Chiang Kai-shek's government
and armed forces and to induce
defections at all .levels. They
apparently hope to attain these
goals by renewed promises of
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9 February 1956
amnesty even to top-level Chi-
nese Nationalists, by'appeals
stressing lenient treatment to
all "compatriots" who return
to the mainland, and by placing
emphasis on the hopelessness
of holding out on Taiwan.
On 30 January, Premier Chou
En-lai promised amnesty and jobs
to all defectors, "no matter
who they may be, or how serious
their past crimes were." The
premier has further stated that
even during the last years of
the civil war, the Chinese
Communist Party "never once
suspended its efforts for
peaceful negotiations."
During a recent audience
in Peiping granted professors
from Hong Kong University, Chou
argued that American interfer-
ence continues to prevent such
negotiations. He stated that
differences between the Chinese
Communists and Nationalists
would be easily resolved if the
United States were to permit
the Nationalists to negotiate
as "free agents," since he and
Chiang had worked together be-
Chinese Communist Activities
In-H-on-g Kong
Invitations to visit the
Chinese mainland are being
extended to prominent residents
of Hong Kong as part of Peiping's
effort to build up Communist
prestige and influence.in the
British colony at the expense
of the Nationalists. The Com-
munists are cultivating European
as well as Chinese residents
of the colony but are refraining
from immoderate criticism of
the Hong Kong government
authorities.
The recent visit to Pei-
ping of professors from Hong
Kong University is apparently
fore and there was "no reason"
they could not do so again.
Chinese Communist propaganda
continues. to reflect the hope
that the stressing of Taiwan's
weakness and Peiping's strength
will make disillusionment a
problem of considerable impor_
tance'to Chiang Kai-shek. Thus,
former Nationalist general Fu
Tso-yi, who peacefully sur-
rendered Peiping to the Commu-
nists and became Communist
China's minister of water con-
servancy, has said the National-
ists "cannot attack" and Taiwan
cannot "defend itself."
Despite occasional hints
that Taiwan will be "liberated"
soon, Peiping's defection propa-
ganda is apparently long range
and designed to achieve on Tai-
wan a cumulative effect of dis-
trust for the Taipei govern-
ment and confidence in Peiping.
This is demonstrated by Com-
munist statements that "in
the long run" liberation is as-
sured, and that Taiwan will
be "returned to the father-
land eventually."
the beginning of a "tourist
trade" under Communist sponsor-
ship. Groups of lawyers and
doctors in the British colony
have also reportedly received
invitations to visit the main-
land, and invitations to other
professional groups are expected
to follow.
An indication of the
importance which the Chinese
Communists attach to the
"tourist trade" is the audience
granted the Hong Kong professors
by Premier Chou En-lai. Chou
apparently tried to lend credi-
bility to recent rumors of
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9 February 1956
negotiations between the Com-
munists and top-level National-
ists by observing at the meeting
that he had worked together with
Chiang Kai-shek before and that
there was no reason he could
not do so again.
Chinese efforts to damage
the Nationalist position in
Hong Kong may have been the
cause of a recent run on the
colony's Shanghai Commercial
Bank, which is controlled by
the Chinese Nationalists,
according to the American consul
general. The Communists appar-
ently hoped to prevent the
development of competition with
their own Bank of China opera-
tions and to frustrate any Nation-
alist plans for expanding finan-
cial operations into areas with
Overseas Chinese communities.
In their efforts to cul-
tivate Hong Kong residents, the
Communists seem at some pains
not to antagonize the British
authorities in the colony.
In commenting on the
British government's statement
of 11 January on its investi-
gations into the sabotage of
an Indian airliner carrying
Chinese Communist delegates
to the Bandung conference,
Peiping's People's Daily
refrained from criticizing the
British for lax security
measures and "welcomed" the
findings. Thus far Peiping
has merely "asked" rather than
"demanded" that the British
detain the Chinese Nationalist
pilot and plane that landed at
Hong Kong on 2 February after
having engine trouble over the
mainland.
Commenting on the extent
of Communist subversion in
Hong Kong, Governor Grantham
recently told American officials
that the security situation was
"under control and generally
satisfactory." 25X1
Prince Sihanouk of Cam-
bodia, who has just returned
to his capital from a state
visit to the Philippines, is
scheduled to leave for Peiping
on 13 February. His aides in-
sist the trip will not lead to
recognition of Communist China,
but it is quite possible that
Sihanouk will decide to recog-
nize Peiping as a result of his
visit.
In the Philippines, Sihan-
ouk took care not to embarrass
his hosts but at the same time
veered little from his profes-
sion of neutrality. He avoided
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9 February 1956
public discussion of SEATO and
stated he thought peace would
best be obtained by "disinter-
ested countries," an apparent
reference to the Asian neutrals.
In a conversation with President
Magsaysay, he expressed consid-
erable dissatisfaction with
American aid.
Sihanouk received an infor-
mal invitation from Chou En-lai
to visit China at the Bandung
conference last spring. At a
press conference in Tokyo in
December he, in effect, requested
a formal invitation. According
to the Indian chargd:.in'-Phnom
Penh, the visit was arranged
through the Indian legation.
One of Sihanouk's aides
has assured the American em-
bassy that the prince would
resist any Chinese Communist
efforts to win diplomatic recog-
Malaya
The talks.,-in,-London on
Malayan self-government which
began on 18 Januarys coAeluded::-.
on. 8 February _ with agreement;
that,. Malaya =should, be ;granted''
independence by: August..-l957", ",if-...,
possible. In .the-`.interim,:-there
is'.to be a gradual'.transfer of
internal ,government affairs :to
Malayan authority. The agree-
ment is the first tangible re-
sult.of Britain's decision. to
support non-Communist Malayan
elements in an adva'.lce toward
nition from Cambodia. To date,
Sihanouk has avoided the issue
by stating that so long as
there are two Chinas, Cambodia
would recognize neither. He
has appeared to be aware. of the
danger inherent in giving Chi-
nese Communist diplomats access
to the considerable Chinese pop-
ulation in Cambodia. A closer
relationship between Cambodia
and China will, however, almost
certainly result from this trip.
Meanwhile, Sihanouk is
expected to form a new govern-
ment, putting himself again at
its head. Governmental activ-
ity has been virtually at a
standstill during his absence--
a three-week holiday on the
Riviera preceded the Philip-
pine visit. Bickering among
party leaders was such that
Sihanouk was constrained to
deplore it publicly.
independence as rapidly as pos-
sible in the hope of undercut-
.ting Communism.
Malayan chief minister Rah-
man says he is "completely
satisfied" with the conference
results, and hopes the conces-
sions made by Britain will help
him win nationwide co-operation
in the fight against the Com-
munists.
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The agreement gives the Ma-
layans a considerable degree of
control over the security forces.
Authority over financial affairs
and public services is to be
gradually transferred to the
Malayans, and a Commonwealth
Commission has been Set up to
reframe the Malayan constitu-
tion.
Malayan chief minister
Rahman, who says he is "com-
pletely satisfied" with the
conference results, now returns
to Malaya to try, on the basis
of his achievements, to win na-
tionwide co-operation in the
fight against the Communists.
Rahman hopes to achieve
the unconditional surrender of
the leaders of the Malayan Com-
munist Party and Communist mili-
tary elements. His most diffi-
cult task in this effort will
be to gain support from the
Chinese, who comprise 38 percent
of the country's population,
against the Malayan Communist
Party, which is 95 percent
Chinese. With Communists re-
portedly planning to "phase
out" their military operations
and to increase emphasis on
political tactics, the competi-
tion between the government and
the Communists for Chinese sup-
port may be expected to become
more intense.
Rahman's chief instrument
in his fight for Chinese sup-
port is the Malayan Chinese As-
sociation (MCA), his principal
Bulgaria Moves to Improve
Relations With the West
Bulgaria has recently taken
two important steps in line with
the accelerated Soviet campaign
to improve relations with the
West.
The counselor of the Bul-
garian legation in Paris ap-
partner in the Alliance, the
interracial organization which
won a sweeping victory in Ma-
laya's first national elections
last year. Both Rahman and Tan
Chang Lock, chairman of the MCA,
are looking to concessions made
in London and to the nationalist
movement as a whole to under-
cut the appeal of Communism.
The Communists until re-
cently have demanded and re-
ceived considerable support
from Malaya's Chinese largely
through coercion. An incipient,
but very obvious, overt effort
is now under way to coax the
willing adherence of the Chinese
to Communist doctrine and con-
trol. Some success in this
effort is evident, particularly
in Chinese schools and in the
so-called "new villages"--areas
where former Chinese squatters
were resettled by the govern-
ment between 1950 and .1953.
Rahman expects an early
appeal for new "peace talks"
from Chin Peng, the secretary
general of the Communist Party,
who is likely to claim credit
for having forced the concessions
made at London. Rahman's own de-
sire to end the emergency, com-
bined with public pressure to
do so, virtually guarantee his
qualified acceptance of any
Communist bid for talks. Despite
his present desire for an uncon-
ditional Communist surrender,
he may believe it necessary
to retreat from this position at
a later date.
proached American representatives
to arrange a meeting to discuss
re-establishing diplomatic re-
lations; and Bulgaria has offered
Greece goods valued at $2,000,-
000 as an advance payment
on reparations.
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9 February 1956
Bulgarian officials have
periodically reiterated a de-
sire to re-establish relations
with the United States. But
the approach in Paris on 3
February is the first direct one
to an American representative
since the United States with-
drew its mission from Bulgaria
in February 1950. The Bulgarian
representative declared that
his legation has been instructed
officially to explore the matter
of establishing diplomatic
relations.
The Bulgarian government
has made repeated attempts to
establish normal diplomatic re-
lations with Greece, but the
Greeks have been adamant in
their refusal to exchange am-
bassadors until after settle-
ment of the $45,000,000 in
World War II reparations owed
Greece. Athens rejected a Bul-
garian offer made last December
to resolve the reparations issue
and to make an advance payment
as a token of intent. Greece
criticized especially Bulgaria's
proposal to exchange ambassadors
before settlement of the repara-
tions question, and its failure
to specify the amount of the
advance payment.
In view of these criti-
cisms, Sofia, on 2 February,
stated in a note to Athens that
it is prepared to supply as
a token of good will goods
valued at $2,000,000, while
the definite amount of repara-
tions owed Greece would be
established in subsequent nego-
tiations. The note also called
for the immediate exchange of
"ministers plenipotentiary,"
and the opening of negotiations
concerning the ultimate improve-
ment of Greek-Bulgarian rela-
tions. The official Greek radio
announced on 4 February that the
Bulgarian offer is considered
insufficient and stressed that
at least $5,000,000 should be
paid in advance.
Bulgaria's new declaration
of a desire to go further in
meeting Greek demands will un-
doubtedly serve to strengthen
Athens' insistence that a
sizable sum be paid before talk
on establishing normal diplomatic
relations begin. Greece, which
is not anxious to improve rela-
tions with Bulgaria, is unlikely
to agree to an exchange of min-
isters until the reparation
question is definitely settled.
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PART III
PATTERNS AND PERSPECTIVES
THE ECONOMIC BASIS OF THE SOVIET BLOC CREDIT
PROGRAM IN UNDERDEVELOPED COUNTRIES
As a result of rapidly
increasing industrial power,
it has become advantageous for
the Soviet bloc to provide capi-
tal goods to free world coun-
tries in return forraw mate-
rials and agricultural products.
This situation provides the
economic basis for the bloc
credit program in underdeveloped
countries.
Industrialization of USSR
In 1952, Stalin predicted
that because of the rapid in-
dustrialization of the Commu-
nist world "...things, will soon
reach the stage where these
(Communist) countries will not
only have no need to import
goods from capitalistic coun-
tries but will... experience
the need to dispose of surplus
goods of their own production."
Three years later, Khrushchev,
in his speech to the Supreme
Soviet on 29 December, predicted
confidently that "...peaceful
competition of the two economic
systems will lead to the victory
of the Socialist system."
Since 1928, the USSR has
undergone the process of eco-
nomic development experienced
earlier by most Western in-
dustrial countries. The time
span, however, has been greatly
reduced. by the high rate of
investment made possible'by
forcing low living standards
on the Soviet people.
In about 30 years the USSR
has moved from a simple agri-
cultural economy to a highly
industrial one. As the world's
second industrial power, the
USSR now produces a wide range
of capital goods in large quan-
tities. For example, Soviet
machine tool production is com-
parable in quantity and quality
to that of the US.
Lag in Agriculture
Although Soviet industry
generally has been pushing
ahead rapidly, the extractive
industries and agriculture
have progressed much more slowly
and face increasingly serious
resource limitations. For dec-
ades agriculture was relatively
neglected and increases in
production barely kept pace
with population growth. In-
creasing agricultural output
now is very costly since the
USSR must make up for long
periods of neglect and over-
come natural barriers such
as unfavorable climate. Be-
cause of these developments.,
it is now becoming relatively
cheaper for the USSR to produce
some capital goods and rela-
tively more expensive to ex-
tract many of its own resources.
Favorable Competitive Position
Moscow is now able to
meet some of the requirements
for plant and equipment of un-
derdeveloped countries in ex-
change for agricultural and in-
dustrial. raw materials. Thus,-
because it deals on a govern-
ment-to-government basis, the
bloc, unlike the West, is able
to accept payment for industrial
equipment in exportable sur-
pluses rather than in foreign,
exchange. Typical cases in
point are Egyptian cotton and
Burmese rice. This is certainly
a major reason for the successes
to date of the Communist credit
program.
Kremlin propagandists
have successfully conveyed the
impression that the current
Soviet economic activities in
the Arab-Asian countries amount
to a Communist counterpart of
Western aid programs. Quite
the contrary is actually the
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case, however. All Soviet eco-
nomic assistance, excepting
token disaster aid and negligi-
ble aid given through the
United Nations, is to be paid
for in full. In fact, the
Communist bloc, by obtaining
needed agricultural products
and industrial raw materials,
views this exchange as advan-
tageous.
Effect on Soviet Economy
Generally, the new program
is still too small to affect
appreciably the bloc's rate of
economic growth. For example,
the close scheduling adhered
to in machine building plants
producing ferrous metallurgical
facilities indicates that some
temporary adjustment may have
to be made to provide equipment
for the steel mill in India,
particularly in view of the
short delivery dates. However,
planned expansion of equipment,
manufacturing plants should
rapidly overtake this increase
in demand.
The Soviet bloc credit
program in the free world may
total one billion dollars in-
cluding arms equipment, the
offer on the Aswan High Dam,
and credits to Yugoslavia and
Finland. Firm economic commit-
ments to Arab-Asian countries
amount to about $250,000,000
thus far, of which $75,000,000
will probably be spent this
year. While it is impossible
to determine from these totals
the future annual expenditure
planned, the Soviet bloc can
readily export several times
$75,000,000. (Pre-
pared by ORR)
SUCCESS OF MOSCOW'S AND PEIPING'S POLICIES
SOUTH ANDS t7 HEAT ASTX
Soviet and Chinese Commu-
nist activities in South and
Southeast Asia, supported by
offers of trade opportunities
and economic assistance, have
scored some notable successes,
particularly in Burma and
Afghanistan. There are signs
of growing neutralist sentiment
in such pro-Western nations as
Thailand and Pakistan--the only
countries on the mainland of
Asia affiliated with SEATO.
Economic Approaches
Communist offers of econo m-
i.c. assistance and co-operation
have been the most effective of
several approaches. These
offers are attractive because
they permit the profitable
disposal of local surplus coin-
modities, cater to the strong
Asian desire for rapid indus-
trialization, offer extended
credit at only token interest
rates, and are ostensibly devoid
of red tape and "political
strings."
Burma and Afghanistan have
been particularly susceptible
to Communist economic overtures;
Burma because of its inability
otherwise to dispose. of its
surplus rice, and Afghanistan
because the USSR was able to
offer it transport facilities
when regular Afghan routes were
cut off as a result of the dis-
pute with Pakistan.
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The Communist bloc has
already procured large quanti-
ties of Burmese rice. In
return, Moscow has promised
to assist Burma, in.:its agricul-
tural development, the construc-
tion of irrigation works, and
the establishment of various
technical and industrial enter-
prises.
In addition to the Soviet
effort, Chinese Communist tech-
nicians are planning .the instal-
lation of, a textile mill;
Peiping and practically all the
European Satellites have barter
agreements with Burma under
which they are committed to pro-
vide both goods and services.
Afghanistan
Of the $100,000,000 credit
which the USSR extended to
Afghanistan during the Bulganin-
Khrushchev visit, a portion will
reportedly be divided between
the army, police, and health
and educational services. The
credit is for 30 years at 2 per-
cent interest, with repayment to
begin only after the first eight
years of the agreement. The
USSR has also offered to develop
Afghan natural resources. If
this offer is accepted, Soviet
personnel would obtain access to
areas of Afghanistan from which
they have been excluded in the
past. Moreover, the Afghans
have taken the unprecedented
step of agreeing to accept
economic consultants from the
bloc on a long-term basis.
Moscow and Peiping may be
expected to exploit their ad-
vantage with discretion, main-
taining a display of "correct"
behavior while conducting a
long-range program intended to
result in Communist hegemony.
India, Pakistan, Thailand,._ Nepal
India has accepted a Soviet
offer to build a steel mill on
an easy-payment plan and has
used Russian statisticians in
itt planning efforts. In addi-
tion, Bulganin and Khrushchev
promised to provide India with
1,000,000 tons of steel in the
next three years, and there is
some reason to suspect that
Indian officials are counting
on Soviet aid to close the gap
between resources at hand and
planned economic goals. The USSR
thus appears to be gradually
achieving a leverage in New Delhi
which it never had before.
Meanwhile, Communist China has
offered Nepal "friendly co-
operation and assistance" in
its development program,
This Communist campaign is
also having an effect in Paki-
stan and Thailand, where offi-
cials as well as the people
have begun to express the thought
that perhaps policies of neu-
trality pay better than defense
agreements with the West. They
have also recognized the possi-
bility of obtaining more Western
aid by threatening to deal with
the Communists and, in any case,
probably are ready to accept
any attractive Communist offers
of trade and aid.
Political Efforts
Simultaneously with this
economic campaign, the Communists
have continued their political
efforts to draw Asian countries
into their sphere of influence.
The Bulganin-Khrushchev trip is
a conspicuous example in this
drive. In addition to the im-
pact in Burma, India, and
Afghanistan, there have been
several indications that the
trip of the Soviet leaders pro-
duced favorable reactions in
neighboring countries, especially
Pakistan and Thailand.
There have been a number
of other Communist economic
and political moves in the area
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9 February 1956
since the Bulga.nin-Khrushchev
tour. Bulgaria has opened dip-
lomatic relations with Burma,
and the Czech consulate general
in Rangoon has been raised to
a legation.
Political overtures are
having their effect elsewhere,
if only as a, cause of pressure
on the US for more aid. Paki-
stan, for instance, recently
invited Madame Sun Yat-sen to
visit Karachi, where she was
accorded a, lavish official re-
ception. Sir John Kotelawala
of Ceylon, one of the most out-
spokehly anti-Communist person-
alities at the Bandung confer-
ence, has indicated that he
can no longer refuse an invita-
tion to visit Peiping since
other chiefs of state have
made the trip. The Pakistani
premier and foreign minister
have also accepted invitations
to Peiping.
.Cambodia
The Communists are currently
attempting, with some success,
to promote Cambodian neutrality
by political and diplomatic
methods. The Soviet Union has
offered to establish diplomatic
relations with Phnom Penh, Com-
munist China has invited Prince
Sihanouk to visit Peiping, and
the Viet Minh has not only
softened anti-Cambodian broa.d-
casts but requested an exchange
of representatives. Indications
are that most, if not all, of
these proposals for closer rela-
tions will be accepted. rI
In Indonesia., the Commu-
nists won over 20 percent of
the votes in the country's first
election last September, and
President Sukarno advocates
Moslem-Nationalist-Communist
PART III
unity. The moderately pro-
Western government of Premier
Harahap has been reduced to
near-impotence and will, in any
case, soon be replaced when the
new parliament convenes in
March or April. The outlook is
for a return to. the type of
government led by All Sa.stro-
amidjojo which depended on Com-
munist support and under which
Communist influence prospered.
Under the circumstances,
it appears that the next Indo-
nesian government, while pro-
fessing "active neutrality,"
will be open to Sino-Soviet bloc
approaches for closer political
and economic ties, especially
if Indonesia should have diffi-
culty selling its major exports.
Easing of Armed Struggle
Another important techni-
que the Communists appear to be
using is the liquidation of
"armed struggles," notably in
Burma, and Mala a
insurgent Burma CONMunist Party
may soon emerge above ground as
a legal political party, possi-
bly in time to compete in the
April elections. Indicative of
the Communist viewpoint is the
line now being propagated by
the pro-Communist Burmese Workers
and Peasants Party, which claims
that although the Burmese gov-
ernment has a long way to go, it
is now on the right track as far
as foreign policy is concerned.
Malaya
In Malaya, prospects for
settlement of the Communist
rebellion are at least fair.
Although Chief Minister Rahman
of the Federation firmly rejected
Communist terms at his meeting
with terrorist chief Chin Peng
last December, pressure for new
talks is mounting and Rahman is
anxious to gain credit for
ending the "emergency." It is
anticipated that the Communists
will soften their demands and
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that the nationalist leaders
will.find Communist proposals
hard to resist. Meanwhile,
Communist subversion of the
Chinese in Singapore, who con-
stitute 80 percent of the popu-
lation, is well advanced, and
increasing efforts to win over
the Chinese in the Federation
are apparently under way.
The Communists have by no
means given up forceful methods
to achieve their objectives, as
is indicated by their activi-
ties in Laos and South Vietnam.
The Viet Minh continues to give
full support to the.Pathet.+.1Lao
which,.in turn,. continues:to
hold,on to the two northern
provinces of Laos by force of
arms. Meanwhile, in South
Vietnam the Communists report-
edly are attempting to build
up covert forces, independently
and in alliance with local
dissidents, in order to prevent
the consolidation of the Diem
government's authority.
The Communists have also
sought to exploit the recent
Indian riots in Bombay over
the linguistic states issue.
Finally, the Viet Minh and
Chinese Communist armies, as
well as the Thai Autonomous
Area in Yunnan--contiguous to
both the autonomous Thai-Meo
area of North Vietnam and the
Pathet Lao territory in Laos--
are a constant source of pres-
sure on the free areas of
Southeast Asia.
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9 February 1956
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REHABILITATION OF NORTH KOREA WITH SINO-SOVIET BLOC AID
Large-scale Sino-Soviet
bloc aid to North Korea. between
January 1954 and November 1955,
as reflected by aid deliveries
totaling $460,000,000 at the
official ruble.?ratQ, . will. prob-
ably enable most North Korean
industries to restore produc-
tion to the 1949 level during
1956. This sum, possibly in-
cluding some Soviet military
aid, is about 60 percent of the
total publicly committed by
bloc countries to rebuild North
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9 February 1956
Korean industries
and communications.
It is unlikely, how-
ever, that North
Korean industrial
production will be
restored in the near
future to levels
reached under the
Japanese.
The primary aim
of the bloc is prob-
ably to make North
Korea economically
viable: and a source
of industrial raw
REPORTED VALUE OF SINO-SOVIET BLOC AID TO NORTH KOREA
(millions of US dollars)
COUNTRY
PERIOD
OF GRANT
TOTAL
GRANT
AID DELIVERED
1955 (11 mos.) 1954 (12 mos.)
CHINA
1954-57
325.0
88.0
125.0
USSR
1954-56
250.0
77.5
105.0
SATELLITES'
185.8
28.3
36.0
EAST GERMANY
1954-64
136.5
4.3
20.6
CZECHOSLOVAKIA
1954-60
28.3
2.8
RUMANIA
1954-56
16.0
2.8
BULGARIA
1954-55
5.0
3.3
15.4
POLAND
1954.57
-
11.3
HUNGARY
1954-57
-
3.8
TOTAL
760.8
193.8
266.0
materials and electric power.
Although the volume of aid to
North Korea is still far below
that of American aid to South
Korea, its magnitude neverthe-
less suggests a strong desire.
to create a favorable contrast
with rehabilitation efforts in
the south. The standard of
living in South Korea, however,
is substantially higher.
Chemical and mining equip-
ment and industrial equipment
for the rehabilitation of power
plants, transportation and
communications facilities have
been steadily arriving from
the USSR and Eastern European
Satellites. The USSR appar-
ently directs the rehabilita-
tion program and in many cases
individual Satellites have as-
sumed responsibility for speci.?f
is projects. While the USSR
is rebuilding the Supung elec-
tric power project, East Ger-
many is co-operating w;th the
Soviet Union in the rehabilita-
tion of the large Hamhung-
Hungnam industrial complex
and is rebuilding the nearby
Pukchang machine tractor factory.
Czechoslovakia is restoring
electric power stations at
Chongjin, Pujin and Hochon.
Poland is primarily responsible
for reviving plants construct-
ing railroad rolling stock at
Pyongyang and Wonson.
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Chinese aid in 1954 and
1955 consisted largely of food
and consumer goods. Better
North Korean crops as a result
of favorable weather in 1955
probably were partly responsible
for the decrease in Chinese
aid deliveries from $82,000,000
in the first half of 1955 to
only $6,000,000 between July
and November. Chinese aid
in 1955 included 160,000 tons
of grain, 940,000 tons of coal,
10,000 tons of pig iron and
36,000,000 meters of cotton
cloth. The large Chinese
deliveries of food and con-
sumer goods have permitted
North Korea to concentrate on
industrial development.
Laws enacted by the People's
Assembly in late December in-
dicate that increasing atten-
tion is now to be devoted to
boosting the agrarian economy,
a step which may reduce North
Korea's dependence on food im-
ports from China.
The recent dismissal of
four cabinet ministers--of metal-
lurgical industry,. light in-
dustry, state inspection, and
communications--suggests an at-
tempt by the regime to bolster
key economic ministries prior
to the final year of-the present
three-year economic plan.
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9 February 1956
RELEASE AND REHABILITATION OF POLITICAL FIGURES
IN THE A T LL I TE
The Communist regimes in
Eastern Europe during 1955
maintained, and in some cases
expanded, their program for the
release and/or rehabilitation
of political prisoners and
purged officials. This program
coincides with the campaign for
the voluntary return of Satel-
lite nationals.
The number of confirmed or
reliably reported releases and
rehabilitations since 1953 had
reached approximately 140 by
the end of last year, and the
release of an additional 600
individuals has been less re-
liably reported. Approximately
635 Satellite emigres:, returned
to their _,homelands during . ~ ,
the first ten months of 1955,
the number increasing almost
constantly over each preceding
month.
Major Objectives
The release and rehabilita-
tion program reflects a major
tactical change in the long-
standing campaign to lessen
opposition to the regime both
at home and abroad. Accompa-
nied by Satellite general am-
nesties, which apparently have
included pardons for some of
the relatively high-level polit-
ical releasee'e,the program is
designed to improve the general
morale of both the ordinary
citizen and the rank-and-file
party member by reducing the
atmosphere of oppression. In
addition, certain aspects,
particularly the reinstatement
of "national" Communists and
increased emphasis on national
traditions, serve to increase
appearances of Satellite auton-
omy.
The major objectives, how-
ever, at least in Rumania and
Bulgaria, appear to be to under-
mine or to discredit the rem-
nants of the former opposition
and to instill in the people
the conviction that even pas-
sive resistance is either
futile or is actually contrary
to their own interests. Such
a conviction presumably could
be fostered by the public re-
cantations of former opposition
leaders. These statements
might convince some of the more
gullible elements of the popu-
lation of the regime's sincer-
ity, and might disillusion the
more sophisticated anti-Com-
munists, whose morale in many
areas reportedly is already at
a low point.
By emphasizing releases as
a part of the liberalized
political climate, the regimes
also hope to improve their
international reputations and
receive favorable attention
from certain quarters in non-
Communist countries. They pre-
sumably expect better relations
with Yugoslavia to result from
the rehabilitation of those
accused of Titoist deviations.
Developments Under the Program
One notable prisoner re-
leased during the past year was
the former Rumanian Socialist
Party leader, Titel Petrescu,
who was well known for his op-
position to the Communists.
Rumania also freed more than 40
other onetime-~membbrs of the,
opposition, most of whom had
been members of the Liberal and
National Peasant Parties.
Bulgaria, a pioneer in the
release and rehabilitation pro-
gram, stepped up the tempo of
release by freeing more than 20
imprisoned Agrarian Party of-
ficials, all of whom publicly
recanted their former "misdeeds"
and called for support of the
regime. In. addition., Bulgaria
reportedly has continued to re-
lease former Communist officials
who had been jailed in connec='.
tion with the Rostov trial for
Titoist deviations.
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Despite the ouster of
Premier Nagy and the reimposi-
tion of a tougher policy by
Matyas Rakosi, Hungary appar-
ently continued last year to
free former minority party of-
ficials, principally onetiinee
Social Democratic opposition-
ists.
Czechoslovakia was the
only Satellite which failed to
maintain a release program in
1955 on or above the level of
the preceding year, although
the regime apparently freed a
Slanksy trial principal--Artur
London--late in the year.
Reports of the release of
several on.etime. Commuai_St'..
leaders in Poland have not as
yet been confirmed. Neither
Albania nor East Germany ever
inaugurated an extensive pro-
gram
Typical Case History
The case of Gheorghe
Tatarescu, Rumanian non-Com-
munist political party leader,
is indicative of the general
pattern.
On the nights of 6 and 7
May 1950, the Communist regime
in Rumania arrested without
prior warning, and imprisoned,
without any form of trial, ap-
proximately 150 former members
of the Rumanian Liberal Party.
Among those who disappeared was
Tatarescu, the leader of a wing
of the Liberal Party, a man who
twice, under King Carol, had
been prewar premier of the
state and who had served under
the Communists as a minister of
foreign affairs.
Neither his political op-
portunism nor his years of
prudent inactivity following
his removal from the government
in 1947 had saved him, and it
was thought at the time that
Tatarescu would never be seen
again. But in July 1955
Tatarescu was set free. And
in the fall of 1955, he joined
those who are attempting to
persuade Rumanians abroad that
all is forgiven and that the
homeland awaits them with open
arms.
Once described as "having
made a career of perfecting the
chameleon-like qualities of the
Balkan politician;' the 68-year-
old,still vigorous,Tatarescu
may have been persuaded, with-
out any need for Communist
coercion- or even pressure, to
collaborate with the regime in
this manner. As a puppet, he
can claim to be free of any
political ties; his Liberal
Party is long dead and, although
hailing the regime's "epochal"
economic achievements, he de-
clared publicly last fall that
his ideas concerning individual
freedom do not coincide with
the basic concept of Communism.
As one of the most color-
ful and prominent, albeit un-
savory, non-Communist political
leaders in the Satellites, M.
Tatarescu may still wield some
influence among:. his political
associates in exile.
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