Document Type: 
Document Number (FOIA) /ESDN (CREST): 
Release Decision: 
Original Classification: 
Document Page Count: 
Document Creation Date: 
December 16, 2016
Document Release Date: 
January 25, 2005
Sequence Number: 
Case Number: 
Publication Date: 
May 31, 1956
Content Type: 
PDF icon CIA-RDP79-00927A000800120001-2.pdf3.16 MB
Approved For Release 2005/02/10 : CIA-RDP79-00927A000800120001-2 CONFIDENTIAL co/[-a CURRENT INTELLIGENCE WEEKLY SUMMARY Document No. ------"Z -------------------- No Change In Class. ^ ^ Declassified Class. Changed to: TS S it) COPY NO. 17 OCf NO. 3260/56 31 May 1956 ext Review Date: --J_f --------- h.: HR 70-3 I I I CENTRAL INTELLIGENCE AGENCY OFFICE OF CURRENT INTELLIGENCE ARMY and DOS review(s) completed. 25X1 25X1 CONFIDENTIAL 25X1 Approved For Release 2005/02/10 : CIA-RDP79-00927A000800120001-2 Approved For ReWase 2005/02/10 : CIA-RDP79-00927AQW800120001-2 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. Approved For Release 2005/02/10 : CIA-RDP79-00927A000800120001-2 Approved For Rg ase 2005/02Y .WRIC7 - 27 NFu NTIAL CURRENT INTELLIGENCE WEEKLY SUMMARY 31 May 1956 T H E W E E K I N B R I E F OF IMMEDIATE INTEREST TITO'S POSITION ON THE EVE OF HIS MOSCOW VISIT . . . . . . . . . . . . Page, A 1 On 2 June, just one year after the Khrushchev- Bulganin visit to Belgrade, President Tito, Vice President Kardelj and Foreign Minister Popovic are scheduled to arrive in Moscow for a three-week state visit. Tito will probably not change his position on world questions during his visit, but may press his complaints against some of the Satellites, particularly Albania. 25X1 IMPENDING CONFIDENCE DEBATE IN FRENCH ASSEMBLY . . , . . , . , . . . , . . , . Page 2 In the confidence debate opening on 31 the French assembly, Premier Mollet has made all the policies of his government the issue, thus hoping to split his potential opponents, most of whom favor some of his policies but object to others. Mollet's position has been little affected by the resignation of Vice Premier Mendes-France on 23 May over Algerian policy. NOTES AND, COMMENTS ARAB-ISRAELI SITUATION . . . . . . . . . . . . . . . . . Pagel The attention of Arab and Israeli diplomats is focused on the resolution introduced in the United Nations on 29 May by Britain. The Arabs apparently contemplated no action if the resolution merely noted Secretary General Hammarskjold's report, but planned to oppose any new attempts to bring them together with -I CONFIDENTIAL Approved For Release 2005/02/10 : CIA-RDP79-00927A000800120001-2 THE WEEK IN BRIEF Approved For Rase 2005/02I &.RdP79-00927AQQQ800120001-2 25X1 25X1 25X1 CURRENT INTELLIGENCE WEEKLY SUMMARY 31 May 1956 CAIRO SEEKS FURTHER ARAB RECOGNITION OF PEIPING Cairo's decision on 16 May to recognize Communist China has raised Peiping's international prestige at the expense of the Chinese Nationalists and increased the likelihood for further Communist diplomatic gains in the Near East. Cairo is putting diplomatic pressure on the other Arab states to recognize Peiping. Premier Nasr and an Egyptian military delegation have accepted an invitation to visit Communist China, but no date has been set. Page JAPAN MOVES TOWARD CLOSER RELATIONS WITH COMMUNIST CHINA . . . . . . . . . . . . . Page 2 Japanese moves to exchange unofficial trade repre- sentatives with Communist China have been spurred by domestic demands for more trade and the prospects of restored relations with the Soviet Union. Tokyo is willing to elevate the trade missions to official status at a later date but will try to delay granting diplomatic recognition to Peiping. The Japanese believe that'expansion of their trade with China is contingent on their meeting Communist demands for goods now em- bargoed by CHINCOM regulations. PEIPING ENLARGES INVESTMENT IN AGRICULTURE . . . . . . . . . . . . . . . . . Page 3 Following last winter's all-out drive to bring the Chinese peasantry into collective farms, Communist China for the first time in its history has earmarked a significant amount of foreign exchange and investment funds for agriculture. Peiping, anxious to forestall resentment of collectivization by providing tangible evidence of the benefits it will bring, has increased its imports of chemical fertilizer and has advanced the schedule for construction of tractor factories. A major increase in small farm machinery production also is USSR ESTABLISHING BOARDING SCHOOLS FOR THE ELITE . . . . . . . . . . . . . Page 4 The USSR is rapidly establishing a large number of boarding schools, as called for in Khrushchev's speech at the 20th Party Congress. These schools will probably be largely restricted to children of high-level govern- ment and party officials and will offer a higher caliber of instruction than provided by the general school system. F777 I SECRET ii Approved For Release 2005/02/10 : CIA-RDP79-00927A000800120001-2 THE WEEK IN BRIEF 25X1 Approved For Reyaase 2005/02/If! i~ iff79-00927A0Q600120001-2 CURRENT INTELLIGENCE WEEKLY SUMMARY 31 May 1956 USSR STEPS UP CAMPAIGN FOR RETURN OF NATIONALS 0 . . 0 . . . . . . . 0 . In recent weeks, the USSR has intensified its efforts to induce the return of former Soviet citizens living abroad. The campaign, which appears to be well organized and co-ordinated, has been carried into the western hemisphere, but it is focused on Western Europe. Measured in numbers, the effort has had limited results, but the USSR probably regards it as a success in terms of the psychological effects. PUBLIC CRITICISM SUBSIDES IN POLAND . . . . . . . . . . Page Open criticism of the Polish government, which was vehement in late April, has almost disappeared from the Polish press and radio in recent weeks. This is probably a result of First Secretary Ochab's warning against criticism which undermines party unity or party policies. While the lull will give the regime time to institute some of its promised reforms, these probably will not be extensive enough to satisfy the more liberal groups. USSR SLOWING GROWTH OF LARGE CITIES . . . . . . . . . . . . . . . . . . . Page The Soviet government is attempting to slow the growth of large Soviet cities. This program is designed to ease a tight housing situation and to channel labor eastward to new areas under development. Page 9 25X1 25X1 President Rhee's statements and appointments since the 15 May elections indicate that he plans no major changes in government policy and that he will attempt to isolate and discredit Chang Myon, the vice-president- elect from the opposition Democratic Party. Certain of his appointments, notably that of "Tiger" Kim as director of the national police point a more ruthless __4 use of police controls. 25X1 VIET MINH MILITARY ACTIVITY . . . . . . . . . . . . . . Page 10 While several recent reports suggested an increase of Viet Minh military activity near the 17th parallel, there has been no indication of a major manpower and logistical build-up in the vicinity of the parallel.. SECRET iii Approved For Release 205/02/10: CIA-RDP79-00927A000800120001-2 THE WEEK IN BRIEF Page 6 Approved ForDlease 2005/( CR! 'DP79-0092754 0800120001-2 CURRENT INTELLIGENCE WEEKLY SUMMARY 31 May 1956 SOUTH VIETNAM . . . . . . . . . Page 11 South Vietnam's political stability will be further bolstered by the adoption shortly of a constitution. The virtual elimination of hostile sect units permits greater flexibility in the deployment of the armed forces and makes possible concentration on the task of un- covering Viet Minh clandestine operations. The government is now turning its attention to economic and social problems, which,if left unresolved, might afford the Viet Minh a convenient basis for long-term subversion. BURMA . . . . . . . . . . . . . . . . . . . . . . . . . Page 12 The Burmese government has moved to hold to a minimum Communist gains in the elections for the upper house, the Chamber of Nationalities. These elections are now in progress and will continue through July. Despite the government's maneuvering, the Communists are expected to gain, for the first time, at least token representation in the Chamber of Nationalities, Burma's most important forum for the expression of minority discontent. PAKISTAN . . . . . . . . . . . . . . . . . . . . . . . . Near-famine conditions in East Pakistan and the beginning of a food shortage in West Pakistan present President Mirza and Prime Minister Chaudhri Mohammad All with complex problems in the eighth week of Pakistan's political crisis. FRENCH NORTH AFRICA . Page 13 . . . Page 14 An agreement permitting Morocco to exchange diplomatic representatives with other states was signed in Paris on 28 May. Despite the lack of an equivalent agreement between France and Tunisia, Tunisian prime minister Bourghiba has appointed a minister to Saudi Arabia. In Algeria, France continues its military pressure while making contacts with Algerian nationalist leaders. GREEK POLITICAL SITUATION . . . . . . Page 14 The resignation of Greek foreign minister Theotokis after the Karamanlis government had won a parliamentary vote of confidence is evidence of heavy opposition pressure for a firmer approach on Cyprus. The opposition is not satisfied with Theotokis' departure, and Karamanlis may find it necess r to take a firmer stand in relation to the British. SECRET iv Approved For Release 2005/02/10 : CIA-RDP79-00927A000800120001-2 THE WEEK IN BRIEF elease 2005/, CMKIkDP79-00927q+900800120001-2 Approved For ,,P CURRENT INTELLIGENCE WEEKLY SUMMARY 31 May 1956 TENSION RISING IN HONDURAS . . . . . . . . . . . . . . . Page 15 Political tension in Honduras between the de facto regime of Chief of State Julio Lozano and his opponents of the right and the left is mounting as maneuvering begins for control of the constituent assembly, which is tentatively scheduled to be elected in October. D PATTERNS AND PERSPECTIVES SOVIET BLOC ACTIVITIES -- LATIN AMERICA . . . . . . . . Page 1 During 1956, several Latin American countries have responded favorably to Soviet bloc economic overtures, and further economic contacts between the bloc and such countries as Argentina, Brazil, Colombia, Cuba and Uruguay are likely. Response to Soviet efforts to establish diplomatic relations in the area were generally negative. It is possible that A. I, Mikovan will make a tour of Latin American countries soon. SOVIET CONTRIBUTIONS TO UN TECHNICAL ASSISTANCE FUNDS Page 4 25X1 In addition to its political and economic activities in Asian areas, the Soviet Union has succeeded in using the United Nations' technical assistance program to further its aims in such countries as India. The Soviet financial contribution to the program has been in nonconvertible rubles. The recipient countries have therefore been forced to spend the funds in the USSR on Soviet goods or services. As a result, the Soviet Union has been able to obtain political and economic influence in the Asian countries disproportionate.tq its small financial contribution to the UN program. 25X1 MODERNIZATION OF SOVIET INDUSTRY . . . . . . . . . . . Page As part of the Sixth Five-Year Plan (1956-1960), the USSR has launched a major drive to modernize its industry and achieve American standards of production efficiency and labor productivity. The goals for replacement of obsolete machinery and for eventual mechanization and autom io re feasible and can probably be achieved. SECRET V Approved For Release 2005/02/10 : CIA-RDP79-00927A000800120001-2 THE WEEK IN BRIEF Approved For Relase 2005/02h4'~4AlkiFP79-00927AO9 00120001-2 CURRENT INTELLIGENCE WEEKLY SUMMARY 31 May 1956 PEIPING'S VIEWS ON THE TAIWAN PROBLEM . . . . . . . . . Page 10 The Chinese Communists, while building up their military capabilities for an assault on Taiwan, continue to assert that they will "liberate" the island by peace- ful means "if possible." Communist leaders have ex- pressed confidence privately that the Nationalist govern- ment will fall through subversion, and there are indi- cations that Nationalist morale has deteriorated to snma extent during the past year. 25X1 25X1 SECRET vi Approved For Release 2005/02/10 : CIA-RDP79-00927A000800120001-2 THE WEEK IN BRIEF Approved For Release 2005/02S fi i R79-00927A 800120001-2 CURRENT INTELLIGENCE WEEKLY SUM 31 May 1956 OF IMMEDIATE INTEREST TITO'S POSITION ON THE EVE OF HIS MOSCOW VISIT On 2 June, one year after the Khrushchev-Bulganin visit to Belgrade, President Tito and a delegation including his wife, Vice President Kardelj and Foreign Minister Popovic are scheduled to arrive in Moscow for a three-week state visit. Yugoslav leaders have been work- ing hard to strengthen their ties with both the Soviet bloc and the West. Contacts With West' Tito has been engaged in numerous diplomatic visits this spring. In April he received the Belgian and Norwegian foreign ministers and succeeded in reassuring them about Yugo- slavia's position. His visit to Paris early in May impressed the French favorably. He tried to convince the French leaders that Yugoslavia desired firm political relations regardless of the French decision on economic aid. In March,, Yugoslavia reached settlements with,two of its:.- principal trading partners,., West Germany and Italy, un long- standing economic issues that had been politically irritating. In recent weeks, the Yugoslavs have indicated they still desire American military aid. On 16 May, Yugoslavia reversed its earlier stand and agreed to allow additions to be made immediately to the US Military Aid Staff. This reaffirms the agreement worked out last October by Tito and Deputy Under Secretary of State Murphy. Along with its increasing reliance on the USSR for econom- ic assistance, Yugoslavia continues to express interest in Western economic aid, partic- ularlyr American surplus wheat, and is negotiating for French and American financing of the Majdanpek copper development. Relations With Soviet Bloc Yugoslavia has expressed general satisfaction with the development of its relations with the Soviet bloc. Belgrade has scheduled 12 percent of its total foreign trade this year with the USSR and about an equal amount with the Satellites and Communist China. It has con- cluded credit agreements with the USSR totaling $204,000,000, and arrangements with the Satellites give it another $95,000,000. It has also started to buy wheat from the USSR and had an observer at the 18-25 May meeting of the Council for Mutual-Economio Assistance. The problem of World War II reparations payments owed by Hungary appears to be on the verge of a satisfactory solution.. In the political area, party contacts with the USSR are progressing at the gradual pace Belgrade apparently desires, At the Moscow meeting, Tito may press his complaints against some of the Satellites, partic- u3'a'r ;T Albania, which have been reluctant to make any significant concessions to Yugoslavia. Tito will probably not change his position on world questions during his visit. SECRET PART I Approved For Release 2005/02/10 : CIA-RDP79-00927A000800120001-2 OF IMMEDIATE INTEREST Page 1 of 3 Approved For RaI ase 2005/02g & 79-00927AQW800120001-2 CURRENT INTELLIGENCE WEEKLY SUMMARY 31 May 1956 On both the German re-unifica- tion and disarmament questions, his position is already similar to that of the USSR. He is unlikely to abandon his personal belief in the necessity of NATO, even in private talks. The Soviet leaders may not make,any spectacular proposals for.improved Yugoslav-Soviet IMPENDING CONFIDENCE DEBATE IN FRENCH ASSEMBLY Premier Mollet faces the assembly debate on all the policies of his government-- beginning 31 May--with most parliamentary groups favoring one part of his program but opposing another. Molletrs position has been little affected by Vice Premier Mendes-France's resignation on 23 May over the Algerian policy. Mollet evidently chose the comprehensive issue of confidence in his policies in the expectation that attacks from the left and right would cancel each other out. Despite a stepped-up Com- munist campaign for immediate peace in Algeria, the Communist Party supports Mollet's domestic reform program and may be reluc- tant at present to impair chances of closer Communist and Social- ist co-operation. The Communist Party has moved up its central committee meeting to 4 June, and this is seen as an indica- tion that the party is planning to abstain or vote against the government. The rightist and center Popular Republicans, while states and parties. relations, probably because they are satisfied with their present development. They prob- ably look on Tito's visit as valuable in itself and believe the non-Communist world will regard the visit as evidence of still closer relations between the two countries and of Moscow's eagerness for increased con- tacts with other Socialist increasingly dissatisfied with the Moroccan convention and the Tunisian negotiations as too far-reaching, generally approve his military measures in Algeria and are hesitant to make Mollet a prisoner of Communist votes. There is considerable re- luctance in the assembly generally to precipitate a cabinet crisis before the results of Mollet's Algerian measures are apparent, partic- ularly , since.:any., newl.'.govern--. ment would require Socialist support, if not participation. Mollet's and Pineau's conduct in Moscow, moreover, seems to have been generally satisfactory to the assembly. The government may use its interest in an Indian offer to mediate the Algerian dispute in order to appeal to the Com- munists as well as to the Socialists and Radicals to maintain solid support on the left. It can, moreover, cite progress in negotiations with Algerian leaders in Geneva to appease those who favor nego- tiations and fear the results of an all-out military cam- paign. SECRET Approved For Releby ?f%M1A0 . CINTEREST 927A000800120001-2 TE Page 2 of 3 25X1 Approved For Raase 2005/0? Mwt P79-00927AW0800120001-2 31 May '1956 So far Mendes-France is the only minister to withdraw from the government, and he has emphasized the personal nature of his resignation and has told his Radical Socialist Party that the present coalition is the best obtainable. While Mollet's coalition thus appears to have avoided an immediate crisis, some prominent Socialists in the cabinet are sympathetic to Mendes-France's demands for a more liberal Algerian policy. Many Socialists resent Mollet's willingness to bear the respon- sibility for an Algerian policy acceptable to the right, and they are increasingly prone to be influenced by Communist agita- tion against the military meas- ures in Algeria. 25X1 SECRET PART I Approved For Release 2005/02/10 : CIA-RDP79-00927A000800120001-2 OF IMMEDIATE INTEREST P*.ge 3 of 3 Approved For W ease 2005/c ftEF DP79-00927P,OO0800120001-2 CURRENT INTELLIGENCE WEEKLY SUMMARY 31 May 1956 NOTES AND COMMENTS ARAB-ISRAELI SITUATION The attention of Arab and Israeli diplomats is,focused on the resolution introduced in the United Nations on 29 May by Britain. The Arab attitude to- ward the resolution was fore- cast by a Syrian Foreign Minis- try officials statement.that the Arabs contemplated no action if the resolution merely noted Secretary General Hammarskjold's report. If, however, the UN adopted his report or suggested further moves, the Arab states could be expected to "clarify" their position and to oppose any new attempts to bring the parties together. CAIRO SEEKS FURTHER ARAB RECOGNITION OF PEIPING Cairo's decision on 16 May to recognize Communist China has raised Peiping's interna- tional prestige at the expense of the Chinese Nationalists, stirred up favorable comment in other Near East countries, and has increased the likelihood of further Communist diplomatic gains in that area. Peiping is seeking to exploit its success in Egypt, and may be recognized by,some additional Arab states before the fall meeting of the UN General Assembly in November, but Chinese Communist efforts appear unlikely to produce a general. response at this time,,, Chinese Communist propa- gandists have been jubilant over Peiping's success in Egypt. Communist broadcasts have cele- brated Egyptian recognition as a great victory over "colonialism" which has "opened the gate" for This attitude seems con- sistent with the relative calm that has settled over the area since Hammarskjold returned to New York. The Arabs appear to be more confident that time is 'on their. side, at least as long as.-they are reasonably confident of support from the Soviet bloc. The Israelis, who have repeat- edly stated that only arms can give them real security, appear to feel less isolated since some Western arms shipments to them have been resumed. similar moves by other Arab states. Peiping's propaganda, shrewdly pitched to play on Middle East nationalism, has been echoed by the Egyptians. Cairo is also putting diplomatic pressure on the other Arab states to encourage recognition of Communist China, according to the Libyan prime minister. Press reports say diplo- matic missions exchanged by Cairo and Peiping are to be on the ambassadorial level. Ac- cording to a report broadcast from Peiping on 31 May, Briga- dier General Hasan Raghib, now Egyptian under secretary of state for war and navy, will be Cairo's representative in Peiping. Raghib is generally given credit for working out details of the Soviet-Egyptian arms deal. SECRET ,Approved For Releas 2Q~~/02 IA-RDP79-00927A000800120001-2 PART IpNO'I'ES ANI~ ~OMMENTS Page 1 of 16 25X1 Approved For Re4pse 2005/02 9 P79-00927AOQp800120001-2 31 May 1956 JAPAN MOVES TOWARD CLOSER RELATIONS WITH COMMUNIST CHINA Japanese government ap- proval on 22 May for the ex- change of unofficial trade rep- resentatives with Communist China is a response to rapidly rising pressures within Japan for the normalization of rela- tions with a prospective major trading partner. It was proba- bly accelerated by Agriculture Minister Kono's agreement with the USSR on fishing and on the resumption of diplomatic talks. Foreign Minister Shigemitsu told Ambassador Allison on 23 May that the Japanese government would do little to reverse the trend toward relations with Peiping. The Japanese decision to exchange trade representatives at this time apparently stems from a strong reaction within Japan to several. international developments which the Japanese feel threaten to isolate them from the China mainland market: France's plan to establish a permanent trade mission in Peiping; Britain's use of the CHINCOM "exception" clause to ship embargoed goods to still lacking. The Chinese Communists have invited Premier Nasr and an Egyptian military delegation to visit Peiping. On 24 May, Cairo announced acceptance of these invitations. No date has been set for Nasr's visit, but the military delegation will re- portedly leave for China soon. A Cairo press report says Chou En-lai has accepted an invita- tion from Nasr to visit Egypt, but official confirmation is Communist China; and Egypt's recognition of Peiping, which Japan expects other Middle Eastern nations to follow. Perhaps most important of all, the Japanese inclination to normalize relations with Peiping was influenced by the recent Moscow agreements on fishing and the prospect of restored relations with the USSR. The Japanese see little reason to differentiate between the USSR and China in this matter. Foreign Minister Shigemit- su, who is uncertain of retain- ing his post, appears to have exercised a positive and lead- ing role in the decision to ex- change trade representatives. Heretofore, he has advocated a "go-slow" policy concerning re- lations with the Communist bloc, and particularly has been op- posed to concessions to the USSR unless Japanese territo- rial demands were met. Amid re- ports that his policy has been discredited by Kono's concessions SECRET PART i I Approved For ReleaseNfff02A: ~1&&K~9500927A000800120001-2 Page 2 of 16 25X1 25X1 Approved For Rase 2005/0299 Ji.Iffl 79-00927A(#4p800120001-2 CURRENT INTELLIGENCE WEEKLY SUMMARY 31 May 1956 to the USSR in return for a fishing agreement, Shigemitsu may be trying to.row with the current. Sino-Japanese trade is limited by Communist unwilling- ness to supply iron ore and coking coal unless Japan in re- turn supplies embargoed goods, such as steel products and wood- en ships. To test American reaction and possibly as a step toward meeting Communist wishes, Japan plans to exhibit embar- goed goods in Peiping and Shang- hai trade fairs this autumn. Japan reportedly is will- ing to conclude a payments agreement with Peiping before granting official status to trade representatives. The Japanese government then proba- bly would seek to delay diplo- matic recognition of Communist China, if only to prevent com- plications with the United States and Nationalist China. Peiping, however, can be ex- pected. to continue to press for full diplomatic relations. (Concurred 25X1 in by ORR) PEIPING ENLARGES INVESTMENT IN AGRICULTURE Following last winter's all-out drive to bring Chinese peasants into collective farms, Communist China for the first time in its history has ear- marked a significant amount of foreign exchange and investment funds for agriculture. Peiping, anxious to forestall widespread resentment of collectivization by providing tangible evidence of the benefits it will bring, has increased imports of chemi- cal fertilizer and has advanced the schedule for construction of tractor factories. A major increase in small farm machinery production also is planned for 1956. The diversion of investment funds probably will not appre- ciably retard the industrial program at this time because its principal difficulties ap- pear to be technical and plan- ning problems, rather than a shortage of capital. In any case, many important elements of the industrial program are well ahead of schedule. Recent contracts signed with non-Communist countries have indicated to the American consul general in Hong Kong that Peiping's imports of chemi- cal fertilizer over the next year may total 2,000,000 tons. The original schedule for the entire First Five-Year Plan period, 1953-1957, called for the import of only 3,000,000 tons. The import of 2,000,000 tons would cost about $150,000,- 000--one third of the value of China's imports from the non- Communist world and 8 percent of its total imports. The supply of chemical fertilizer, including a small amount from domestic production, was 130,000 tons in 1936, 500,- 000 tons in 1953, and 1,100,000 in 1955. The 2,500,000 tons which may be available for the 1957 crops are still far below China's needs,, which Peiping has estimated to be 20,000,000 tons annually. Tractors and Plows The USSR has helped push construction of tractor fac- tories in China more rapidly than scheduled under the First Five-Year Plan. Construction has been accelerated on the one SECRET Approved For Release 2005/02/10 : CIA-RDP79-00927A000800120001-2 PART II NOTES AND COMMENTS Page 3 of 16 SECRET Approved For Re?gase 2005/02/10 : CIA-RDP79-00927A04D800120001-2 CURRENT-INTELLIGENCE WEEKLY SUMMARY 31 May 1956 factory to have been started by 1957 under the plan, and two additional factories are being built. The largest, at Loyang in central China, is to produce 15,000 54-hp tractors annually. Two smaller ones, at Tientsin and Nanking, are to produce 24- hp and 37-hp tractors. These plants should meet a substantial part of China's agricultura.l?re- quirements after 1958. Because of their lightness, the tractors produced at these plants would have little use other than for agriculture. To meet its tractor needs,, Peiping continues to import from bloc countries, while attempting to secure agricultural tractors from nonbloc countries. Licenses for the export to China of a total of 175 sample tractors USSR ESTABLISHING BOARDING SCHOOLS FOR THE ELITE The USSR is rapidly estab- lishing a large number of board- ing schools, as called for in Khrushchev's speech at the 20th Party Congress. These schools will probably be largely re- stricted to children of high- level government and party of- ficials and will offer a higher caliber of instruction than pro- vided by the general school system. According to Khrushchev, the schools are to be modeled after have been granted by Britain and West Germany and an Austrian firm has an. order for up to 1,000. Many small machinery facto- ries in Shanghai and other cities were converted in recent months to the production of agricultur- al equipment, and a large Soviet- equipped farm machinery factory has been established at Peiping. The 1957 production plan for two- wheeled, animal-drawn plows, on which the industry is concentrat- ing, was doubled in January to 4,000,000. This is eight times the number produced in 1955. The value of 4,000,000 plows alone would represent from 15 to 20 percent of the planned output for the machine-building industry in 1956. (Prepared by ORR) aristocratic schools of tsarist times such as those "for the corps of pages, the cadet corps, and institutes for daughters of the gentry." The schools, Khrushchev pointed out, should be placed in "the suburbs, in holiday resorts and in forest surroundings." Fee for admis- sion would depend on the ability of the parents to pay and no ef- fort or money would be spared in providing the best facilities and teachers. SECRET 25X1 PART I I Approved For Release 8211%, C&--SQ0927A000800120001V ge 4 of 16 NOTE D SECRET Approved For Rekwtse 2005/02/10 : CIA-RDP79-00927A0 Q OQ 00120001-2 CURRENT INTELLIGENCE WEEKLY SUMMARY 31 May 1956 While Khrushchev gave the impression that the selection of students would be on a com- pletely egalitarian basis, there is little doubt that, as is now the case with such exclusive schools as the Suvorov Military academy, only those with suf- ficient influence and money will ordinarily be able to enter their children. The establishment of board- ing schools may have been prompt- ed in part by the recent major changes in the 10-year school system. With the rapid advance in the last several years to- ward attainment of universal secondary schooling, changes have been introduced to make the system more suitable for mass education. Manual and practical training is being em- phasized more in the curriculum, and tuition fees for the last three school years--once an ob- stacle for low-income families-- have been abolished. The establishment of a spe- cial school network would enable children of the Soviet elite to continue to receive a privileged education and thereby retain the same status as their parents. The problem of growing juvenile delinquency, apathy, and re- jection of Soviet mores among the children of this class may also have been a factor in the decision to set up boarding schools. The aristocratic schools to which Khrushchev re- ferred were known for instilling in their graduates a. feeling of school pride, duty toward the regime, and identification with the established order. References to the boarding schools as facilities for the children of widows and families where both parents work, ap- pear calculated primarily to disguise from the general pub- lic another special privilege for the upper party and govern- ment hierarchy. Even this camou- flage would appear insufficient to offset the characteristic bluntness with which Khrushchev chose to cite aristocratic tsar- ist schools as their models. Plans for implementation of Khrmshthev's proposal were drawn up almost immediately after the party congress. In early May a meeting, attended by secretaries of the Communist Party central committee, in- cluding Khrushchev, was held to discuss a, draft statute on boarding schools. The meeting was followed by a RSFSR education conference which called for the establish- ment of boarding schools in every oblast by the next school year. Enthusiastic support from the upper strata of Soviet so- ciety-pay expla.i:n the speed with which measures to set these schools up are being taken by the regime despite the strain such measures will place on the already overtaxed school ex- pansion plan. SECRET 25X1 PART II Approved For ReleNWW5 j1 fiLW,79-00927A000800120001-2 Page 5 of 16 SECRET Approved For R&,Iase 2005/02/10 : CIA-RDP79-00927AG,Q,p800120001-2 CURRENT INTELLIGENCE WEEKLY SUMMARY 31 May 1956 USSR STEPS UP CAMPAIGN FOR RETURN OF NATIONALS In recent weeks, the USSR has intensified its efforts to induce the return of former So- viet citizens living abroad. The campaign, which appears to be well organized and co- ordinated, has been carried into the western hemisphere, but is focused on emigres residing in Western Europe. Measured in' numbers, the effort had has limit- ed results, but the USSR prob- ably regards it as a success in terms of the psychological effects. Propaganda Appeal Refugees are being flooded with propaganda urging them to return to the homeland. The appeal emphasizes the improve- ment in the conditions of life in the postwar'Soviet Union, and offers good jobs and homes to a:11 those who elect to re- turn. The amnesty of September 1955, which removed from crimi- nal responsiblity those who were deported or who fled from the USSR during the war, con- tinues to provide a further attraction. Much of the propaganda di- rected at emigres is intended to undermine their morale and their will to resist Communism. Individual refugees receive, through the mail and via broad- casts, emotional appeals from relatives and friends inside the Soviet Union. The Committee for Return to the Homeland, which spearheads the campaign from East Berlin, regularly publishes articles by "repatriates" de- scribing their happy existence in the Soviet motherland. Such propaganda is designed to in- fluence especially those refugees who, 11 years after the war, are still sustained by charity in the displaced-person camps of Europe. Attempts to discredit emigre political organizations continue. The leaders of anti-Communist groups are incessantly portrayed as agents of Western intelli- gence services and vilified by charges of using terrorism and repression against former Soviet citizens who wish to be repatriat- ed. The USSR hopes by such meth- ods to sow dissension among the rank-and-file emigres and to dis- courage their participation in anti-Communist activities. More important, it seeks to destroy the effectiveness of those or- ganizations whose very existence is a constant reminder of the possibility of defection and resistance. Results The blandishments have yielded few returnees. Diplomat- ic requests by Moscow for a com- plete list of former Soviet cit- izens in Germany, handed to the Bonn government in March and May of this year, were refused with the statement that only 31 ref- ugees in Germany had expressed a desire to be repatriated. The recent arrival in Odessa of a claimed 800 returnees from South America-provided the USSR with a propaganda bonus, but was not fol- lowed by the wave of.repatria- tions apparently expected. Pres- sures on emigres living in North America have served only to in- dicate that the USSR-is aware of the identities of many per- sons living under assumed names. Soviet government instruc- tions on the handling of re- turnees are likely to prove detrimental to the campaign for the 4'eturn of nationals as soon as SECRET PART I I Approved For ReleassM?/0A4 : 7O-00927A000800120Paf r 6 of 16 Approved For Rgase 2005/02/10: CIA-RDP79-00927p800120001-2 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 31 May 1956 .they are publicized throughout the emigre community. The directives clearly indicate that returnees will receive those jobs least desirable to Soviet citizens--work in coal and iron wines and in lumbering enterprises. The campaign, which will probably be intensified, aims not only to destroy bases of opposition abroad by returning PUBLIC CRITICISM SUBSIDES IN POLAND Open criticism of public affairs in Poland, which was vehement in late April, has almost disappeared froti, tile Polish press and radio in recent weeks. This is prob- ably a result of First Secre- tary Ochab's warning against criticism which undermines party unity or party policies. The lull will give the regime time to institute some of its promised. reforms, but these probably will not be extensive enough to satisfy the more liberal groups. The last outbreak was the publication in the Warsaw daily Zycie Warszawy on 6 May of a Better y Over a dozen Warsaw architects protesting the re- moval of the chief architect. of Warsaw. Tire letter claime that the party and government leaders should be blamed, as well as the chief architect, for errors in the rebuilding of Warsaw since they directed his work. Since then, accord- ing to the American embassy in Warsaw, almost all criticism has disappeared from the news- papers, except for a few. mild articles in the youth paper Poprostu. system. as many people as possible to Communist control, but also to discredit the West as a haven for those who have fled or de- sire to flee froia Coitimunism. The presence of repatriates in the Soviet Union will act as a deterrent to further defection, and their propaganda descriptions of the misery of life abroad will help furtner to convince the Russian citizens of tie superiority of the Soviet Ochab's early warnings, which were not widely publicized, had little effect, and the intensity of the criticism,: mounted until some groups were demanding the rei,oval of those high officials responsible for Stalinist practices of the past. His public warnings late in April that the attempts of "ideologically unstable" groups to take advantage of the in- creased freedom would not be tolerated apparently have had more effect. The reported removal of Roman Werfel, editor in chief of the party paper Trybuna Ludu, for failing to eek the de-Stalinization campaign within permitted limits, probably has served to emphasize the determination of the re- gime to reassert its control. the "liberals" in the party, who have been pressing for greater freedom, have in the past retreated under regime pressure, only to renew their campaign as soon as the pres- sure was eased. They probably again have decided that they have made all the progress possible for the present, and SECRET Approved For Release 2005/02/10 : CIA-RDP79-00927A000800120001-2 PART II NOTES AND COMMENTS Page 7 of 16 25X1 25X1 Approved Forj~elease 200RwftftRDP79-0092W00800120001-2 CURRENT INTELLIGENCE WEEKLY SUMMARY 31 May 1956 that it would be wise to await the outcome of the regime's promise of reforms. In the past three weeks, the government has at least started a reform program by announcing changes designed to eliminate some controls USSR SLOWING GROWTH OF LARGE CITIES The USSR is attempting to slow the growth of large So- viet cities. This program is designed to ease a tight hous- ing situation and to channel labor eastward to new areas under development. over university faculties. The draft of a new and more enlightened penal code rzas been presented and the regime has asked for suggestions to im- prove the code further before its adoption. The government has also promised judicial re- forms. The Minsk city council received a recommendation fro+. the Byelorussian central co..- mittee on 6 May to forbid the eiaploylm.ent of new workers, within the city unless they work in new factories or are already USSR REGIONAL DISTRIBUTION OF POPULATION 1938 AND 1953 (6i percent of total population) SECRET 25X1 25X1 Approved For Release 2005/02/10 : CIA-RDP79-00927A0008001200 1-2 PART II NOTES AND COMMENTS Page .9 of 16 SECRET Approved For Release 2005/02/10 : CIA-RDP79-00927A000800120001-2 CURRENT INTELLIGENCE WEEKLY SUMMARY 31 May 1956 registered as residents. A housing shortage was cited as the reason for the recommenda- tion. It also called for a ban on organized recruiting of vil- lage labor for work in Minsk and for strict observance of the decreed norm of nine square meters of housing per person in. registering new residents, as well as for tightening internal passport requirements. Khrushchev played up this program in his speech at the 20th Party Congress. He stressed its importance in improving ur- ban housing, which remained at its low level in Moscow because large-scale housing construction was nullified by population growth. Khrushchev noted that there had been 300,000 arrivals in the city during the past five years, and said that the practice of drawing manpower to the cities from other places could be stopped easily since "new industrial construction in large cities is no longer done." Besides stopping the SOUTH KOREA President Rhee's new cabi- net appointments, together with his statements since the 15 May election, indicate that he does not intend to change his policies or methods of control because of the show of opposition strength at the polls. Rhee has been outwardly cordial to his Democratic vice- president-elect, Chang Myon, but has stated that he will influx from outside, Khrushchev expressed the desirability of thinning the population of large cities by suburban de- velgpment. Besides improving urban housing conditions, restricted entry to urban, areas helps chan- nel labor and demobilized per- sonnel to the areas in which the government wants them to work. Since late 1953, 1,300,- 000 workers, including at least 350,000 members of the Komsomol Communist youth organization, have been sent into the "new lands" of Kazakhstan and Siberia. Now upward of half a million Komsomol members are to be recruited and sent to develop industry in the eastern regions during 1956 and 1957. According to Soviet writers, a total of 3,000,000 additional workers will be needed in the eastern areas. to carry out the industrial and agricultural program of the Sixth Five-Year Plan. (Prepared by ORR) brook no interference by Chang With the affairs of the govern- ment. In a press conference, Rhee called attention to the fact that Chang received a minority of the total vote vice president. Rhee's recent cabinet changes appear to have been prompted primarily by a desire SECRET 25X1 25X1 PART I I Approved For Rg;?0AfM2,IQ?Mft*fIPP79-00927A00080012pgae 29 of 16 Approved For Release 2005/02/ SoJf 79-00927AO 800120001-2 CURRENT INTELLIGENCE WEEKLY SUMMARY 31 May 1956 to meet the objections of Lib- eral Party Assemblymen. Two of the new ministers are members of the assembly, whose leaders have long called for represen- tation in the cabinet,, while two of the officials replaced-- Defense Minister Son Won-il and Economic Co-ordinator Paek Tu-chin-'have been. the targets of assembly crititisn: Rhee's action may have forestalled a bipartisan move in the direction of'parliamentary government for South Korea. The Democratic Party has called for such a change, but will be unable to press in this direction with- out considerable support from Rhee's Liberal Party. Appointment of the ruth- less Kim Chong-won ("Tiger" Kim) as director of the national police suggests that Rhee con- templates no change in his meth- ods of control, and it may even VIET MINH MILITARY ACTIVITY While several recent re- ports suggested an increase of Viet Minh military activity near the 17th parallel, there has been no indication of a ' major manpower and logistical build-up in the vicinity of the parallel. The Viet Minh has decided to evacuate all children and older men and women from the area just north of the 17th par- allel by the end of June, accord- ing to an unconfirmed US army report. PART II foreshadow a tightening of po- lice authority. Kim's appoint- ment follows his delivery of a sizable election majority for Rhee and Yi Ki-pung in an opposition stronghold South Cholla Provincel The American embassy ob- serves that the promotion of Kim and other police officials disregards popular sentiment and is likely to bring a strong adverse reaction. Antiadminis- tration sentiment, which ma- terialized in the election de- spite Police-:efforts to "educate" the , populace,would probably. -increase:should the administra- tion attempt to restrict .oppo- ' sition ctiviti s. Two regiments of the Viet Minh 304th Division have re- portedly moved into the vicinity of Dong Hoi about 40 miles north of the 17th parallel. Reports have also been received of com- bined infantry-artillery exer- cises conducted by elements of the 325th Division near the parallel, as well as the con- struction of field fortifications, roadblocks and antiaircraft em- placements, and the surveying of artillery. positions. These reports of Communist military activity are lent more credi- bility by the existence of Viet SECRET Approved For Release 2005/02/10 : CIA-RDP79-00927A000800120001-2 NOTES AND COMMENTS Page 10 of 16 Approved For Release 2005/c y .. IEr-IDP79-009274000800120001-2 CURRENT INTELLIGENCE WEEKLY SUMMARY 31 May 1956 Minh regulations that French aircraft fly- ing for the Interna- tio.nal Control Com- mission must fly 16 miles off the Viet Minh coast when crossing the 17th` par- allel. These Viet Minh activities may re- flect defensive prep- arations.. South Vietnamese troops in the vicinity of the-parallel are be- lieved to outnumber the Viet Minh forces at the present time, although over-all Viet Minh military strength is superior. The success of the present Communist political campaign to court neutralist opinion in Southeast Asia further suggests a disinclination to attack the south at this time. Viet Minh propaganda, although acknowledging the pos- sibility of war, is stressing appeals for "peaceful unification." SOUTH VIETNAM vIET(lAf r``'te VIETNAM I~~I DVISION The government of South Vietnam continues to make steady though, unspectacular progress. Despite an undercurrent of crit- icism against President Diem?s "authoritarianism," the govern- ment is slowly broadening its base and has begun to attack its most pressing economic problems. As long as the Viet Minh refuses to accept the indefinite parti- tioning of the country at the 17th parallel, however, the threat of Communist subversion remains. Two recent developments have especially contributed to rising self-confidence. These are the withdrawal of the French Expeditionary Corps and the de- ferment of the scheduled July SECRET 25X1 Approved For Release 2005/02/10 : CIA-RDP79-00927A000800120001-2 PART II NOTES AND COMMENTS Page 11 of 16 Approved Foelease 200Glt.DP79-0092000800120001-2 CURRENT INTELLIGENCE WEEKLY SUMMARY 31 May 1956 unification elections as a re- sult of the recent talks in London between representatives of the Geneva co-chairmen. On the latter point, the Diem gov- ernment has reiterated its view that reunification is desirable on the basis of "genuinely free elections," but that such elec- tions are impossible as long as the north is under Communist control. New Constitution South Vietnam's viability will be further bolstered by the adoption of a constitution some time before the end of June. The constitution will undoubt- edly reflect the government's close study of the American and Philippine models and will pro- vide for a separation of powers and a guarantee of individual rights. Effective control will remain with the presidency, how- ever, and certain limitations will be placed on the people as a result of Diem's conviction that full democracy must be withheld until the danger of Viet Minh subversion subsides and an enlightened electorate develops. DissidentActivity In the military field, the capture on 13 April of the boa The Burmese government, shaken by the Communist-led National United Front's (NUF) good showing in the lower house elections on 27 April, has moved to hold to a minimum Communist gains in the elections for the upper house, the Chamber of Na- tionalities. The Chamber of Nationali- ties has 125 seats, as compared to 250 in the lower house. Half of these seats are allocated to Hao rebel leader, Ba Cut, sig- nified the virtual elimination of effective armed opposition to Saigon's authority by dissi- dent sect forces. The marked improvement in South Vietnam's internal security will give its armed forces greater flexibil- ity and permit full concentra- tion on the elimination of clandestine Viet Minh forces. South Vietnam's preoccupa- tion with political and secu- Pity ;ratters has heretofore permitted little progress in solving serious econowic and social problems. Diem is ex- tremely conscious of the danger of Viet Minh exploitation of economic and social discontent, and has recently initiated cor- rective action in these fields. A start has been made in implementing long-planned agrarian reforms. The govern- ment's program for permanently integrating more than 600,000 northern refugees into South Vietnam's economy is beginning to move smoothly, with impres- sive results apparent at the huge Cai San resettlement camp in the western region. Finally, in an effort to increase and broaden the country's produc- tion, the government is taking steps ddsigned to attract a significant influx of foreign investment. the Burman majority; the other half to Burma's major ethnic minority groups. Although much less important than the Chamber of Deputies, the upper house can initiate legislation other than money bills and can amend lower house bills subject to approval by a majority of both houses. Its most signifi- cant function, however, is to serve as a forum for the airing of complaints by the minorities. 25X1 SECRET Approved For Releasem.J,Q2/A1 D q100927A00080012000ige 12 of 16 PART I I Approved Fo Release 200510 iJ ,CJ/i,Q,DP79-00927 00800120001-2 CURRENT INTELLIGENCE WEEKLY SUNMRY 31 May 1956 After the lower house elec- tions, the government for a time considered postponing the upper house elections indefi- nitely, citing alleged "insur- gent intimidation." It finally decided to permit the polling for 45--presumably safe--seats to go off as scheduled on 22 May. In 11 other districts, government candidates were unop- posed,, and the 28 members repre- senting the Shan and Kayah States are appointed by their local chieftains and will automatically support the government. In densely populated areas where the Communists are expect- ed to make their best showing, the government has postponed the elections--until 31 May in the Rangoon constituencies and un- til 22 July in the others. The NUF has vigorously protested these postponements, charging the government with conniving to delay elections until the Near-famine conditions in East Pakistan and the beginning of a food shortage in West Paki- stan present President Mirza.. and Prime Minister Chaudhri Mo- hammad All with complex problems in the eighth week of Pakistan's political crisis. The Karachi government has attempted to meet the food prob- lem, as it-has in the past, by increased requests for emergency assistance from the United States. On 23 May it also "gratefully accepted" a free gift of 40,000 tons of grain from the USSR. A political free-for- all is now centered in East Pakistan, whicn has been under monsoon rains are of sufficient force to keep down an expected protest vote. In another move to help its own candidates, the government has taken advantage of its con- trol over the electoral machin- ery to relax sanctions against the stuffing of ballot boxes. Despite these maneuvers, observers anticipate that enough voters will seize this chance to protest the contin- ued insurrections and an in- creasingly serious inflationary situation to return some Commu- nist candidates to the Chamber of Nationalities. Unrepresent- ed in the outgoing membership, the Communists would thus be provided not only with a new forum in which to attack the government, but also with an excellent opportunity to pro- fess their sympathy for minority group aspirations. "direct rule" of the national government since 26 May. The various political factions in the province are trying to organize a majority in order to claim control of the government when direct rule ends. Some weeks of confusion appear cer- tain, during which Karachi's efforts to solve the food prob- lem will probably be hampered by the competing politicians' attempts to make political capi- tal out of it. Meanwhile, Prime Minister Chaudhri Mohammad Ali's trip to Communist China sched- uled for 2 June has been post- poned indefinitely--apparently as the result of a real rather than "di lomatic" illness. SECRET Approved For Release 2005/02/10 : CIA-RDP79-00927A000800120001-2 PART II NOTES AND COMMENTS Page 13 of 16 25X1 25X1 SECRET Approved For Tease 2005/02/10 : CIA-RDP79-00927AO00800120001-2 CURRENT INTELLIGENCE WEEKLY SUMMARY 31 May 1956 Morocco The tension which has pre- vailed in Rabat may diminish) following the signing of an agreement in Paris on 28 May permitting Morocco to exchange diplomatic missions with other states. Actual exchanges will probably not take place, how- ever, until after the conclu- sion of the debate in the French National Assembly, now expected to end about 5 June. The agreement paves the way for a direct Moroccan ap- proach to the United States on American air bases in Morocco. Many Moroccan leaders hope for an agreement providing annual payments large enough':to enable Morocco to be less dependent"on its French subsidy. Esti- mates of probable Moroccan de- mands for compensation range ,from $88,000,000 to $430,000,- 000 annually. Tunisia Despite the lack of an agreement with France specifi- cally permitting Tunisia to ex- change diplomatic representa- tives, Prime Minister Bourghiba has obtained agreement from Saudi Arabia to the appointment of Neo-Destour leader Taieb Annabi as minister to Jidda. This appointment was considered urgent because of the imminence of the season for pilgrimages to Mecca. Exchanges of ambas- sadors with other states, including France, probably will follow the negotiation of a diplomatic convention with France after the National As- sembly debate. Tunisia has maintained a high commissioner in France since 23 April.. Algeria While France continues its military pressure in Algeria, it is also. making contacts with nationalist.. ' leaders,. reportedly both in Cairo and Geneva. Pre- mier Mollet is preparing to make a somewhat optimistic. prog- ress report to the National Assembly on 31 May. The mili- tary situation, however, has not changed and the mayor of Algiers and other liberal French leaders in Algeria have indi- cated.their pessimism about the situation. 25X1 resent efforts By ra League states to obtain United Nations action on Al- geria or to impose an economic boycott on France are not 1 k tb be effective. 25X1 25X1 GREEK POLITICAL SITUATION Greek prime minister Kar- amanlis on 24 May won a vote of confidence on the Cyprus is- sue along straight party lines, In spite of this victory, Karamanlis, as had been gener- ally predicted, accepted the resignation of foreign Minister Theotokis, who had for several months been a special target SECRET PART. I I Approved For Relea ?/0,gf4D : 11 7@-00927A000800120 Qk- 14 of -16 Approved For Rlease 2005/0Wckff P79-00927,x,60800120001-2 CURRENT INTELLIGENCE WEEKLY SUBd W 31 May 1956 of opposition charges of not being firm in his approach on the Cyprus issue. The new for- eign minister,Evangelos Averoff, will be immediately subjected to heavy opposition pressure to take a stronger line on Cyprus. The Greek government has reiterated its terms for a set- tlement of the Cyprus dispute, which include the return of the exiled Archbishop Makarios, and a fixed date for the ap- plication of self-determination. Political tension in Hon- duras between the de facto regime of Chief of State Julio Lozano and his opponents of both the right and the left is mounting, as maneuvering begins for control of the constituent assembly which is tentatively scheduled to be elected in October. The assembly will probably be empowered to choose a constitutional chief execu- tive and convert itself into the nation's legislature, thus restoring constitutional govern- ment, which has been in abeyance since December 1954. The 71-year-old Lozano be- lieves the only way to elimi- nate the violent political par- tisanship of the past and create the conditions necessary for orderly, democratic government is to establish a "national union" government with the sup- port and participation of the three major political parties. He apparently is convinced he is the man to head such an ad- ministration. His "National Union Move- ment" began with the Reformist Party, the smallest of the three, and has since gained the Under present conditions it will not be in a position to moderate its line. Karamanlis will prob- ably step up his attempts to win UN consideration of the dispute and renew his efforts to win world support. The opposition will make another attempt to uqseat the government when the opportunity arises, and Karamanlis may find it necessary to take a less moderate stand in relation to the British. adherence of a significant por- tion of the Nationalist Party and a few important members of the Liberal Party. Lozano, however, probably lacks wide popular support. Lozanoas Opposition Lozano is meeting increas- ingly bitter opposition from hard-core Nationalists still loyal to ex-dictator Carias and from the radical, Communist- influenced faction of the Lib- eral Party, led by Ramon Villeda Morales. There are persistent rumors of an alliance between Cariistas and Villedistas. Though such an alliance between traditional enemies would not be stable or lasting, its crea- tion might be a,serious chal- lenge to Lozano's plans. In an effort to reduce the effectiveness of opposition propaganda, which has been de- manding immediate elections, Lozano announced on 21 May that elections for the constituent assembly will be held on.7 Octo- ber "or earlier," unless public disturbances force a postpone- ment. He has promised that the elections will be free. The SECRET Approved For Release 2005/02/10 : CIA-RDP79-00927A000800120001-2 PART II NOTES AND COMMENTS Page 15 of 16 25X1 SECRET Approved For lease 2005/02/10 : CIA-RDP79-00927-400800120001-2 CURRENT INTELLIGENCE WEEKLY SUMMARY 31 May 1956 timing and procedures of the elections, however, will be de- termined solely by him, and his control of the electoral machin- ery permits him to influence the results. , Rumors of a Villedista- Cariista coup have been frequent during the past week. Though a spontaneous outbreak is al- ways possible, an organized effort to seize the government is unlikely at this time. Lozano enjoys the loyalty of the army and has ordered strict security precautions during the Villedista convention of 25 to 28 May. If, however, the opposition becomes con- vinced Lozano has no intention of permitting free elections, it may decide its only hope lies in the use of force. SECRET 25X1 PART I I Approved For Release_PW8216 C - j, ~p0927A00080012000Page 16 of 16 Approved For Rglease 2005/02/,1,Q,; 79-00927,40 0800120001-2 d L711 CURRENT INTELLIGENCE WEEKLY SUMMARY 31 May 1956 PATTERNS AND PERSPECTIVES During 1956 the Soviet bloc has intensified its eco- nomic overtures to Latin Ameri- ca and has sought to establish diplomatic relations with an increasing number of Latin Ameri- can countries. Several coun- tries--including Argentina, Brazil, Colombia, Cuba and Uru- guay--have responded favorably to the commercial overtures, and further bloc success along these lines seems likely. How- ever, the response in the dip- lomatic field has been generally negative. Bloc Policy The Communist countries began to step up their campaign for closer relations with Latin America in 1952 by expanding the staffs of diplo- matic missions and increasing their trade and cultural offen- sive. Since Premier Bulganin's announce- ment this January of the USSR's desire to establish diplomatic and economic relations and to extend techni- cal assistance to any Latin American coun- try, the Soviet bloc has apparently at- tached a high prior- ity to the area, and approaches are being made at high diplo- matic levels. Al- though accent has been placed on offers for diplomatic exchanges, the bloc has had more success with trade approaches calculated to play on serious economic difficulties. Soviet propaganda directed to the area 4RltAAL continues to inveigh against the "injustices" of US monopo- lies which are said to build "economic dependence" and empha- sizes the "obvious advantages" of trade with the Soviet bloc. In addition Moscow points out that its own "trade, not aid" program does not carry with it all the military and political obligations which it claims accompany economic dealings with the United States. Czechoslovakia and East Germany appear to be particularly active. Czechoslovakia is in an advantageous position because it has diplomatic representatives in seven countries, and a record of commercial activity in the area from before-.the war. Guadalajara Mexico City LATIN AMERICAN REPUBLICS L. Paz I BOLIVIA A Tucuman V. ^ SOVIET BLOC TRADE AGREEMENTS AND ARRANGEMENTS SOVIET BLOC CULTURAL SOCIETIES Pre Cordob[aZSOnFe ROSLfIa idente Roque Soenz Pena Men 1@.ue Ai vBudu dons L. Ai Platlataa. Montevideo A Tandil' wA G 0 c_c 91 MAY 19 60118-5 SECRET Approved For Release 2005/02/10 : CIA-RDP79-00927A000800120001-2 PART III PATTERNS AND PERSPECTIVES Page 1 of 13 25X1 Approved For.$oelease 2005/og&.RLT #DP79-009274990800120001-2 31 May 1956 The bloc appears to be exploring Latin American recep- tivity in preparation for laumh- ing a more concentrated overt program. Persistent rumors have stated that A. I. Mikoyan, a first deputy premier and re- sponsible for Russia's foreign trade, will make a tour of La- tin American countries soon. It seems likely that these ru- mors have been encouraged by the USSR as a means of testing Latin American receptivity to such a visit. A majority of the Latin American nations view bloc trade simply as a matter of economic expediency, and a number are actively exploring the oppor- tunities for its expansion. Some, notably Argentina, Brazil and Uruguay, are faced with the disposition of surplus agricul- tural commodities and accompany- ing balance-of-payments prob- lems and dollar shortages. At the same time, they are seeking heavy industrial equipment and --in the case of Argentina and Ecuador--arms and aircraft not available to them in the free world on terms which they de- sire. In various trade proposals, bloc countries have agreed to import Latin American agricul- tural products and to export manufactured goods on generous cause world prices for Latin American raw materials to rise. Argentina Argentina has had active trade with most bloc nations for several years and the re- placement of Peron by Aramburu apparently has made no signifi- cant difference in those rela- tions. Czechoslovakia's sale of Aero-45's to Argentina in February was the first sale of aircraft by a Communist coun- try in Latin America. A Soviet bid in April to sell Argentina substantial quan- tities of oil equipment on long- term, low-interest credit ap- parently was in response to Argentina's announcement on 7. March that its state oil monop- oly would call for bids on $250,- 000,000 worth of petroleum equip- ment on "both sides of the iron curtain." The USSR has also offered generous conditions for the sale of other items, re- portedly including the barter of MIG's for wheat or other agricultural commodities. Brazil, whose total trade with the Soviet bloc almost doubled in 1955, has had trade agreements with Poland, Hungary and Czechoslovakia, and is willing to increase trade with the bloc provided advantageous credit terms and, in some cases, payments agreements can be con- at lower prices than those of cluded. Last year Brazil's ex- American and British competitors.j ports to the USSR amounted to Many Latin Americans see trade with the bloc as one way to broaden and diversify foreign trade--a long-time objective-- and to gain bargaining leverage with the United States. Some, such as Costa. Rican president Figueres, who favors limited exports to the USSR, probably hope Soviet bloc purchases will about $697,000. The Brazilian government, eager to sell sur- plus coffee and cotton and to obtain nondollar machinery, is negotiating with a newly ar- rived trade delegation from East Germany. The excess of world pro- duction of coffee, Colombia's principal source of revenue, SECRET Approved For Release 2005/02/10 : CIA-RDP79-00927A000800120001-2 PART III PATTERNS AND PERSPECTIVES Page 2 of 13 Approved For,.pIease 2005102 1E~f~1p- P79-00927 0800120001-2 CURRENT INTELLIGENCE WEEKLY SUMMARY 31 May 1956 has caused the latter to seek new markets in Eastern Europe and the USSR. Czechoslovakia has been attempting to expand its Colom- bian market for some time and has offered to buy Colombian coffee in exchange for indus- trial equipment. A Czech trade mission re- portedly was expected in Bogota in May to~sell aircraft, trucks, and automobiles and to negoti- ate a $20,000,000 arms deal initiated by a private Colom- bian firm. The Colombian for= eign minister has stated that no government-to-government ne- gotiations are contemplated. Cuba Cuba, which sold $32,000,- 000 worth of sugar to the USSR in 1955, is the object of an intensified sales effort by sev- eral Eastern European nations. Uruguay Since the large Soviet pur- chases in Uruguay in 1954, this country has looked to the bloc as a market for agricultural surpluses. This is largely responsible for the naming of an "ambassador" to head its mis- sion in Moscow and the renego-. tiation of commercial agree- ments with Czechoslovakia and the USSR. Uruguay is the only Latin American country which has appointed a commercial agent to Communist China. Bolivia and Chile have both been approached with economic offers. While Bolivia's re- sponse is unknown, Chilean pres- ident Ibanez apparently favors increased trade ties with East- ern Europe, although he is a- gainst formal relations with the USSR. Paraguay is now question- ing the value of existing agreements with Czechoslovakia, Hungary, and Poland, although a Czech flour mill is to be installed soon. Mexico, which has trade and dipomatic rela- tions with the bloc, has re- fused to take any official steps to further trade con- tacts. Most of the remaining countries, not yet principal targets in the campaign, do- not have the problem of dispos- ing of surplus products and thus would not be so suscepti- ble to bloc offers. Their com=ments on the Bulganin state- ment generally have been nega- tive. Diplomatic Overtures The reaction of the Latin American countries to bloc bids to establish diplomatic rela- tions has been negative for the most part. While many La- tin American officials probably consider the Soviet threat over- played, they are reluctant to expand relations with the bloc for fear of disapproval by the United States and, in some cases, are apprehensive about the ac- tivities of resident bloc mis- sions. The USSR, which has diplo- matic relations with Mexico, Uruguay and Argentina, is known to have made since January ad- vances for diplomatic relations to the Dominican Republic, Bo- livia., Brazil and Peru. The Dominicans, despite the So-. viet assurance of goods "at bottom prices," have flatly refused the Soviet offer. SECRET Approved For Release 2005/02/10 : CIA-RDP79-00927A000800120001-2 PART III PATTERNS AND. PERSPECTIVES Page 3 of 13 Approved For,&lease 20051021.EP79-009270800120001-2 31 May 1956 The others have made no formal response. Peru has responded. by taking steps to discourage the travel of Soviet officials. Venezuela has delayed in its reply to the offer of a treaty of friendship and commerce. Of the Satellites, Czecho- slovakia has strengthened its already well-established diplo- matic position in Latin America by exchanging consuls with Co- lombia and sending a new repre- eentative to Peru. "Bolivia reportedly has named a minister to Prague. Czechoslovakia has been turned down in its diplo- matic overtures to Honduras, Haiti and Paraguay. Formal diplomatic relations between Latin American coun- tries and the bloc probably will not be greatly expanded in the near future, but growing com- mercial relations will increase Soviet influence in the area. (Concurred in by ORR) SOVIET CONTRIBUTIONS TO UN TECHNICAL ASSISTANCE FUNDS The Soviet Union,capitaliz- ing on the widespread prefer- ence of recipient countries for aid under international, rather than national sponsorship, has succeeded in using the United Nations technical assistance program to strengthen its po-- litical and economic position in India and other Asian areas. Its success has been out of pro- portion to its contribution of funds to the program. Operation Technical assistance activ- ities have been part of the regular work of the United Na- tions,.arid its specialized agen- cies since 1946. In 1949, the General Assembly expanded and combined the technical assist- ance activities of the UN and the specialized agencies, and the resulting Expanded Program of Technical Assistance for Economic Development of Under- developed Areas (UNETAP) began operations in.1950. This pro- gram is directed by the Techni- cal Assistance Board (TAB), but actual operations are car- ried out by seven of the UN specialized agencies--in such fields as health, agriculture and education--plus the UN Technical Assistance Adminis- tration (UNTAA), a catch-all organization covering such ad- ditional fields as transport, mining, and community develop- ment. The program is financed from a special account to which governments contribute volun- tarily on a yearly basis. For 25X1 SECRET Approved For Release 2005/02/10 : CIA-RDP79-00927A000800120001-2 PART III PATTERNS AND PERSPECTIVES Page 4 of 13 Approved For Release 2005/0 ~, q P79-009= 1000800120001-2 CURRENT INTELLIGENCE WEEKLY SUMMARY 31 May 1956 ITED NATIONS'-EXPANDED PROGRAM TECHNICAL' ASSISTANCE (UN1aAP) r'r ETvI E'Ft Gi~V NIvIE2 Tea O THI UNI I ED NATIONS) TCONOMIC :< - ECOSOC) rs) (,SAME MEMBERS AS COUNCIL) -(TAC) TECHNICAL ASSISTANCE BOARD (TAB) (AGENCIES & EXECUTIVE CHAIRMAN) INTERNATIONAL CIVIL AVIATION ORGANIZATION (ICAO) INTERNATIONAL LABOR ORGANIZATION (ILO) UNITED NATIONS EDUCATIONAL, SCIENTIFIC & CULTURAL ORG. (UNESCO) WORLD HEALTH ORGANIZATION (WHO) ------------- UNITED NATIONS INTERNATIONAL I .. TECHNICAL BANK FOR I ASSISTANCE RECONSTRUCTIONI ADMINISTRATION & DEVELOPEMENTI (UNTAA) IBRD INTERNATIONAL TELECOMMUNICA- TIONS UNION (ITU) INTERNATIONAL I_ , _z! MONETARY FUND L~ (IMF) WORLD METEOROLOGICAL ORGANIZATION THE BANK & FUND PARTICIPATE IN THE TAB AS OBSERVERS. THEY DO NOT RECEIVE FUNDS FROM THE EXPANDED PROGRAM. (WMO) FOOD AND AGRICU LTURE ORGANIZATION (FAO) UNITED NATIONS OFFICIALS NATIONAL REPRESENTATIVES Like the con- tributions of some of the smaller free world countries, such as Argentina, Turkey and Denmark, the Soviet bloc contribu- tions are nonconvert- ible. Hence, there are only three pur- poses to which the contributions can be devoted: (1) the salaries of Soviet bloc experts; (2) training grants for UN fellowships with- in the Soviet bloc; and (3) Soviet bloc supplies and equip- ment for use in UN technical assistance projects. All three permit Soviet infil- tration and propa- ganda activities. The UN encoun- tered.some difficulty utilizing the Soviet bloc contributions because of their in- convertibility, but about $1,300,000 was expended in 1955, most of it for the purchase of equipment. Projects utilizing $3,253,500 of the Soviet bloc cur- the 1956 expanded technical as- sistance program, 72 countries have pledged the equivalent of $28,940,563. Over half of this comes from the United States. Soviet Contribution For four successive years, beginning in the summer of 1953, the USSR has pledged or- con- tributed 4,000,000 rubles (ap- proximately $1,000,000) per - year. Lesser amounts have been pledged or contributed by the Satellites. Including pledges for 1956, Soviet and Satellite sources have made available to the program. the equivalent of $5,033,332. rencies contributed since 1953 have been approved by TAB for implementation in 1956. The greatest share will be chan- neled through UNESCO, with smaller amounts being allotted to FAO, WMO- and WHO (see chart) projects. Over $2,000,000 in Soviet bloc contributions has been allotted to the 1956 UNETAP program for Arab, African and Asian areas, with $1,445,500 going to India alone. Four Latin American countries are scheduled to receive some $340,- 000 in aid, mostly in equipment, with Chile the largest recip- ient.. SECRET Approved For Release 2005/02/10 : CIA-RDP79-00927A000800120001-2page 5 of 13 PART III PATTERNS AND PERSPECTIVES Approved For,,lease 2005/s I ,,F#DP79-009274000800120001-2 CURRENT INTELLIGENCE WEEKLY SUMMARY 31 May 1956 This increased allocation of bloc funds is primarily the result of the USSR's protests to the UN against its failure to use past bloc contributions. The USSR has also approached a number of underdeveloped coun- tries, particularly in Asia, to encourage them to request such assistance as is available through the ruble account, accompanying such overtures with explicit criticism of the motives of the United States in offering aid to these coun- tries. TAB officials, while aware of the necessity of maintaining the multilateral nature of the UN program, have sanctioned discussions among donor and recipient countries and the particular UN organization concerned. Bombay Technological Institute One of the most ambitious projects involving the use of Soviet UN technical assistance funds is the UNESCO-sponsored Bombay Technological Institute scheduled to be completed in mid-1957. This project was worked out in Moscow in Septem- ber 1955 by a group consisting of representatives of the Indian government, members of the UNESCO secretariat and Soviet officials. Cost of the project was set at six million rubles ($1,500,000 at official rates). The USSR will provide 15 professors or lecturers and three translators to prepare English versions of Soviet technical literature, supply equipment for use at the insti- tute's laboratories, and award 20 fellowships to Indian teach- ers for study in the USSR. The first group of Indian fellows is scheduled to arrive in the USSR in September 1957. At a meeting on the subject last November, a member of the UNESCO secretariat indicated that, although it was hoped that not more than one third of the experts to be provided would be Soviet citizens, there was no financial provision anywhere in the 1956 program for pro- viding experts from any other country. The American repre- sentative at this meeting came to the conclusion that the Bombay project was'in fact developed bilaterally, "with UNESCO playing a more or less incidental and not clearly defined role." 1956 PLEDGED CONTRIBUTIONS TO UNETAP (72 Contributing Nations) US UK Canada France USSR Netherlands Sweden Denmark India Belgium Norway Brazil Australia W. Germany Switzerland Turkey New Zealand Pakistan Colombia Ukraine Uruguay Italy Chile Yugoslavia Egypt Argentina Other TOTAL $ 15,500,000 2,240,000 1,800,000 1,448,571 1,000,000 760,000 695,921 579,123 450,000 437,500 380,792 324,324 312,520 238,095 233,645 201,495 168,020 166,213 140,000 125,000 120,000 112,000 110,000 110,000 100,517 100,000 1,086,827 $ 28,940,563 It was revealed in April, moreover, that Moscow had agreed with the Indian government to provide a further 10,000,000 rubles for the Bombay Technologi- cal Institute. TAB refused to act as a channel for this bi- lateral move. A UNESCO mission SECRET Approved For Release 2005/02/10 : CIA-RDP79-00927A000800120001-2 PART III PATTERNS AND PERSPECTIVES Page 6 of 13 Approved For Release 2005/O'JCR1 6)P79-00927;00800120001-2 CURRENT INTELLIGENCE WEEKLY SUMMARY 31 May 1956 is now in Bombay to survey the institute. The director gener- al of UNESCO has assured Ameri- can representatives that the mission will attempt to bring the Bombay project more in line with normal UN technical assist- ance procedures. However, Soviet deputy minister of higher education Rumja.nzov is included among the Soviet members of the mission as a "UNESCO expert," a tenuous designation. UN officials are now con- sidering a Soviet offer to pro- vide India with 120 fellowships, valued at nearly $1,000,000, in connection with the steel plant in Bhila.i, being built by the USSR on a strictly bilateral basis.. Such use of Soviet UN contributions entire- ly in aid of a Soviet bilateral project would be a major devi- ation from normal UN technical assistance procedures. Various Soviet officials have intimated recently that the USSR's contributions to the UN technical assistance program might be increased in future years--a development which would compound the present problems. As things stand now, the USSR has succeeded both in getting maximum propaganda credit for its relatively small contribution to the UN technical assistance program and in using bilateral negotiations to set up projects which should be negotiated between the UN and the recipient country. The lack of centralized control over the UN projects permits the various partici- pating UN organizations to set up projects not fully in accord with previous UN prac- tices. TAB, in some cases, has been reduced to a mere role of rubber-stamping proj- ects set up bilaterally. Unless UN administrative pro- cedures are tightened, increased Soviet contributions would lead to a further breakdown of the multilateral nature of the UN program. (Concurred in by ORR) The Sixth Five-Year Plan (1956-1960) calls for the pro- duction of more and better machinery as a means to 'in- crease Soviet labor productiv- ity and maintain the USSR as the world's fastest growing country, economically speaking. Since the possibility of in- creasing output in the Sixth Five-Year Plan by adding to the labor force is limited (see Weekly of 26 April, Part III), the problem of labor productivity--the ratio be- tween total goods and services produced and the time worked in producing them--has assumed new importance. On 4 July 1955, in a speech before the party central committee which kicked off the present labor productivity drive, Premier Bulganin com- pared Soviet and American tech- nology as well as the wide dis- crepancies in efficiency among various Soviet plants producing similar products. He pointed out that during the First and Second Five-Year Plans, Soviet factories had "what was then the most perfect equipment," SECRET Approved For Release 2005/02/10 : CIA-RDP79-00927A000800120001-2 PART III PATTERNS AND PERSPECTIVES Page 7 of 13 25X1 Approved For Lelease 2005/0g/ ft" P79-00927400800120001-2 CURRENT INTELLIGENCE WEEKLY SUMMARY 31 May 1956 but that over 20,, years, had since passed. ,During the war, the equipping of. new. industrial plants was.carr'ied out only to an insignificant:extent. Al- though the economy received large amounts cif .new Machine tools and egUipment,In the post- war years of reconstruction, and expansion, Bulganin empha- sized that much antiquated machinery still remained. in use. ,To assist-the, 'drive.toward industrial mOdernization`and raising productivity, the. Stalinist postwar prohibition against praise And open.copying of Western technology and the Marxist doctrine..of obsoles- cence were abandoned at this central committee meeting. In his doctrine of obso- lescence?Marx asserted that. "wasteful" abandonment of pro- duction equipment was.unneces- sary under socialism, observing that machinery becomes obsoles- cent in capitalist economies, because an owner must replace machinery which is still pro- ductive to meet the prices of a competitor with a newer fac- tory. This dogma was accept- able so long as total indus trial production in the USSR was low and labor to operate both old and new machinery was plentiful. As a result, the same product was often turned out in plants which varied 20 or more years in technology, and production machinery, obso- lete by Western standards,-re- mained in production. Modernization In the past, most Soviet funds for industrial invest- ment have been devoted to the construction and equipping of new plants. Under the Sixth Five-Year Plan, however, only about half of the total invest- ment funds will be used for this purpose--primarily for the new industrial expansion in the eastern USSR.and the Urals,re- gion.. The'remaining investment funds scheduled for the next five years will. be spent for modernization, of. existing plants in the. older. established areas. These expenditures should be -a; major step toward overcoming the technical backwardness of many Soviet plants, particular- ly older goes in the European USSSR..` Labor productivity at the, , relatively. new blast fur- nace of the Magnitogorsk steel plant, for example, is 3.5 times as great as the average at all Soviet blast furnaces. Similarly, the open-hearth steelmaking furnaces at Mag- nitogorsk are as efficient as the best American steel fur- naces, but the general level of,labor productivity in Soviet steelmaking,-, is only about one half of that of Magnitogorsk. A selective modernization program has been announced for individual plants in a wide range of industries and is de- signed to raise industry to the level of its most efficient plants. Because the average age of Soviet capital equipment is low--less than that of equip- ment in the United States, and despite the 'fact that much of it is of prewar design, a good part of the modernization pro- gram will probably consist of minor changes--such as the ad-' dition of materials handling equipment--involving neither large-scale scrapping nor major additions to existing produc- tion lines. The Soviet Union should have no trouble supplying the equipment necessary for this phase of the modernization pro- gram. Temporary difficulties may arise, however, from faulty administration and opposition to change on the part of in- dividual ministries or plant managements long trained to resist any measure which re- duces output even temporarily. SECRET Approved For Release 2005/02/10 : CIA-RDP79-00927A000800120001-2 PART III . PATTERNS AND PERSPECTIVES Page 8 of 13 Approved Forte- elease 20059 6 jRDP79-0092ZA000800120001-2 CURRENT INTELLIGENCE WEEKLY SUMMARY 31 May 1956 Especially extensive re- equipment programs have been announced for a few industries, including producers of metal- working and foundry equipment, railroad rolling stock, tractor and agricultural equipment, and textile and food processing machinery. These industries appear to have been selected either because of an abnormally large lag in their technology, because extensive design changes are planned for their products, or because their 1960 production goals have been set so high as to require large-scale moderni- zation. Mechanization and Automation Publicity accorded the present Five-Year Plan's moder- nization program has stressed "further complex mechanization and automation." As in the West, these terms are without exact meaning in the Soviet Union and a neat line cannot be drawn between them. Mechani- zation,, however, refers to re- placing human labor with mechan- ical or electrl-c-al-devices, and automation, to replacing human control with mechanical or electrical devices. Qualified Western observ- ers uniformly report that Soviet plants use far more labor than similar plants in the West, especially in materials handling. Consequently, "complex mechani- zation" alone can still make major contributions to raising Soviet industry's technical level. In the Sixth Five-Year Plan, most new equipment will probably fall in this category. Between now and 1960, true "automatic production processes," some of which have already been used in the USSR for 20 years, will probably account for only a small portion of total indus- trial output: In the chemical and petroleum industries, more sophisticated systems are scheduled for installation. Furthermore, automatic systems are to be introduced widely in the USSR's communications network, in electric power production and transmission, and in the paper-making indus- try. In addition, from 200 to 250 automatic and semi- automatic pilot production lines will be installed in in- dustrial plants of Moscow Oblast by 1960. The USSR has the ability to design systems more complex than those now scheduled for installation. Analysis of Soviet theoretical literature on communications, physics, electronics and mathematics shows that the USSR's research on automation is on a par with that in the West. As for ap- plication, members of a highly qualified American industrial delegation to the USSR reported in December 1955 that they had seen automatic systems as good as any in the West. One factor which may retard the design and production of automated systems for industry may be the competition of modern weapons systems for the same type of personnel and basic component materiel. Among the most advanced and intricate systems of automation in use today are those in some missile weapons systems. Implementation of the Program. On 28 May 1955, a State Committee for New Technology was formed to formulate and co-ordinate the execution of plans for the modernization of Soviet industry. The importance of the c'o*nmittee is indicated by the rank of its chairman, V. A. Malyshev, who was the general supervisor of all Soviet machine building in the immediate post- Stalin period and the initial successor to Beria as controller of Soviet nuclear development. In July 1955, Malyshev.or- dered each economic ministry to name a deputy minister for SECRET Approved For Release 2005/02/10 : CIA-RDP79-00927A000800120001-2 PART III PATTERNS AND PERSPECTIVES Pave 9 of 13 Approved Forfaelease 2005/0 'L,6& ff P79-0092W00800120001-2 CURRENT INTELLIGENCE WEEKLY..5UMMARY 31 May 1956 new technology, to serve as a link with the committee and to supervise the technical plans of the ministry. Despite a trend to allow managerial personnel more uthority in the conduct of plant operations, the committee may tend to limit a manager's authority to decide how and when to install new equipment. At the same time, he will be under increasing pressure to see that his plant meets its schedule for technical improve- ment. In July 1955, Bulganin stated that managers who fail to fulfill plans for raising the technical level of industry ould be punished, just as are managers who fail to fulfill output plans. This long-neglected principle was applied to an important person for the first time in recent years on 22 January 1956, when the minister of Machine and Instrument Building was fired for failure to meet his ministry's plan for technological improvement. On the same date, this ministry was split up, and a new Ministry of Instruments and Means of Automation was established. Present Soviet plans for increasing the quantity and quality of machinery and other capital equipment by 1960 ap- pear feasible and should be fulfilled. By 1960, the amount of modern machinery per industrial worker in the USSR will approach the present level in advanced Western coun- tries, and will no longer be as significant a factor as in the past, hindering the Soviet -Union in its efforts to catch up with American industrial labor productivity. (Prepared by ORR) (Concurred in by OSI) PEIPING'S VIEWS ON THE TAIWAN PROBLEM The Chinese Communists, while building up their mili- tary capabilities for an as- sault on Taiwan, continue to ssert that. they will "liberate" the island by peaceful means "if possible." Communist leaders have expressed confi- dence privately that the Nationalist government will fall through subversion, and there are indications that Nationalist morale has deteri- orated to some extent over the past year. "Peaceful Liberation" Theme The Chinese Communists have never altered their position that Taiwan is rightfully Communist territory and that its "liberation" is an "internal matter" in which they will brook no interference. For more than a year, however, Peiping has been following a "peaceful" line toward the Nationalists. Short- ly before the Bandung conference in April 1955, Chinese Commu- nist propaganda muted its bellig- erent references to preparations for a conquest of Taiwan. At the conference itself, Chou En-lai struck a conciliatory pose, offering to negotiate with the United States on the ques- tion of Far Eastern tensions and asserting that Taiwan would be "liberated" by peaceful means SECRET Approved For Release 2005/02/10 : CIA-RDP79-00927A000800120001-2 PART III PATTERNS AND PERSPECTIVES Page 10 of 13 25X1 Approved For lease 2005/02c S 611 fn 79-00927"0800120001-2 CURRENT INTELLIGENCE-WEEKLY SUMMARY 31 May 1956 "so far as possible." Since then the Communists have made no effort to seize Nationalist- held territory by force. Several times in the past, year, Chou En-lai and spokesmen for Chou have expressed confi- dence privately that Taiwan would fall to Peiping through an internal collapse. In a major policy statement last Janu- ary, Chou claimed Communist ef- forts had already brought Chinese Nationalist political and.mili- tary officials to a "state of panic and hopeless pessimism." .: Subver(A1gn, 0Ampaign Chinese Communist propa- ganda is now beamed to Taiwan for about 11"hours a day has sought to erode Nationalist morale by a "soft" approach. Previous offers of amnesty and good treatment for all defectors have been underscored. Peiping has appealed to Chinese nationalism by relating Communist achievements in build- ing a "new China." Americans on Taiwan are villified as ""col?nialists," destroying Chi- nese culture and "oppressing" the Chinese people. At the same time, the Nationalist- situgtion on Taiwan is depicted as-hopeless, Chiang Kai-shek's forces are described as too feeble to defend Taiwan, let alone attack the mainland. Peiping's propaganda fea- tures personal appeals to promirr-? rent Nationalists by former col- leagues now working for the Communists. The visit to Peiping early this year of the Canadian ad- entu r? Morris "Two-Gun Co- hen, a former confidant of Sun Yat-sen and ondti;: