CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A001000090001-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 40
• Document Creation Date: December 22, 2016
• Document Release Date: June 19, 2012
• Sequence Number: 1
• Publication Date: November 21, 1956
• Content Type: SUMMARY

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CONFIDENTIAL
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
C, d //-: 5 /Q
COPY NO. 18
OCR NO. 7262/56
21 November 1956
DOCUMENT NO. _...r~
NO CI4ANGE IN CLASS, 0
0
DECLASSIFIED /~~
CLASS. CHANGED T
NEXT REVIEW DATE, / T 4 10
AUTH: HR 70
DATE: REVIEWER:
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
CONFIDENTIAL
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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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CONFIDENTIAL
OF IMMEDIATE INTEREST
THE MIDDLE EAST CRISIS . . . . . . . . . . . . . . . . . Page 1
Nasr has stepped up his efforts to force the British,
French, and Israelis from his country. Cairo still
threatens to accept Soviet "volunteers" and cites
promises of Soviet aid. The Israelis maintain their
forces in readiness along the Syrian and Jordanian
frontiers and continue to stress Soviet influence in
Syria.
Political stability in Syria, Iraq, Jordan, and
Lebanon is threatened by continuing struggles between pro-
Egyptian elements and forces favoring Western ties. A
purge of rightists in Syria, appointment of a less pro-
British premier in Iraq, and further upheavals in Lebanon
are all distinct possibilities. The Jordanian parlia-
ment has voted to abrogate the Anglo-Jordanian treaty
and establish diplomatic relations with Moscow and Peiping.
Britain and France still express determination to
stay in Port Said until international control of the canal
is assured. HammarskJold terms the British and French
withdrawal crucial to prevent renewed fighting, which
might lead to Soviet intervention, probably through
Syria and Jordan. Britain and France may be planning some
form of intervention in Syria in connection with a possible
partition of Jordan.
area.
The Soviet Union has virtually dropped its threats
to send "volunteers" to the Middle East. Moscow is con-
centrating on strong diplomatic support for the Egyptian
and general Arab point of view, and is sending economic
aid. Small arms have recently been delivered to Syria,
but no military aid is known to have arrived in Egypt since
29 October. The Soviet Union is seeking the withdrawal
of all foreign troops--including the UN force--so that
it may capitalize on Arab resentment toward Britain,
France, and Israel to increase Soviet influence in the
C IDENTIAL
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THE WEEK IN BRIEF
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 November 1956
THE SITUATION IN HUNGARY . . . . . . . . . . . . . . . Page 5
Although the general strike in Hungary is apparently
being broken by the regime's control of food supplies and
mass deportations, the workers continue to show a spirit
of resistance. Passive resistance in many forms will
probably plague the shaky Kadar regime--already committed
to a new deal for workers and peasants--for months to
NOTES AND COMMENTS
YUGOSLAV-SOVIET RELATIONS STRAINED . . . . . . . . . Page 1
President Tito's accusation that the Soviet leaders
are to blame for the troubles in Eastern Europe and
Pravda's sharp rejoinder bring the controversy between
Belgrade and Moscow to a critical stage. During his
exchanges with Soviet party boss Khrushchev last Sep-
tember, Tito reportedly threatened to make public the
controversy regarding the interpretation of the "inde-
pendent roads to socialism" concept unless some com-
THE SOVIET-POLISH COMMUNIQUE . . . . . . . . . . * . . Page 2
In signing the communique of 18 November with
Poland, the USSR has taken a long step forward in
meeting Poland's political, military and economic de-
mands. Poland in return has-reaffirmed its "alliance"
with the USSR and its membership in the socialist
camp, and has agreed to the "temporary" stationing of
Soviet troops in Poland. It is clear from the communique'
that the Kremlin has accepted Gomulka and his policies
and will probably continue to support a national
Communist Poland within the framework of the Soviet
RUMANIAN INTERNAL DEVELOPMENTS . . . . . . . . . . . . . Page 3
Faced with a tense internal situation and hostility
among the people, Rumanian leaders have reacted nervously
to the Hungarian uprising. The regime has responded to
the increasing domestic disaffection with limited measures
to improve economic conditions and with promises to
consider problems of the ethnic Hungarians in Transyl-
vania. It has maintained tight security measures and
party discipline and has summarily dealt with the few
overt expressions of discontent.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 November 1956
USSR OPENS NEW CAMPAIGN TO RECOUP PRESTIGE . . . . . . . Page 5
The USSR last week launched what appears to be a
major campaign to divert world attention from its set-
backs in Eastern Europe and to recapture the diplomatic
initiative. The USSR presents itself as the champion
of peaceful settlement and restraint in the Middle East
crisis while denouncing Britain and France for their
action in Egypt.
AFGHAN ARMS DEALS WITH THE SOVIET BLOC . . . . . . . . . Page 6
Afghanistan has concluded arms deals with the Soviet
bloc, totaling to date an estimated $25-30,000,000.
appears likely that the
will assume responsibility for development of a new
Afghan air force.
RUMORS OF CHANGES IN SOVIET LEADERSHIP . . . . . . . . . Page 7
The continuing ill effects of the Soviet liberali-
zation policy toward the Satellites have put Khrushchev
and his close supporters on the defensive and left
Khrushchev himself particularly vulnerable. Despite
rumors in Moscow of his possible removal as party first
secretary, he continues to appear to be the dominant
member of the Soviet collective leadership.
POPULAR DISSATISFACTION IN THE SOVIET UNION . . . . .
Evidences of dissatisfaction with the policies of
the Soviet leadership have appeared among segments of
the Soviet public during the past three weeks. The
incidents range from relatively mild expressions of
sympathy for Hungary to reported demonstrations and
rioting in the Lithuanian and Uzbek Republics.
Page 8
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DISORDERS IN NORTH VIETNAM . . . . . . . . . . . . . . . Page 9
Hanoi's recent admission of a "counterrevolutionary
uprising" in a predominantly Catholic area near Vinh,
as well as the existence of sabotage and "confusion" in
a number of other regions, is the frankest acknowledgment
to date of the extent of violence against the Viet Minh
regime. Hanoi's troops have probably restored order
as claimed, but there is little doubt that widespread
dissatisfaction continues in North Vietnam. The large
regular army, however, should be adequate to maintain
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Prime Minister Souvanna Phouma's attempt to win
cabinet approval for an immediate coalition government
with the Pathet Lao has brought the whole issue of a
settlement with the Pathet Lao to a critical stage.
Despite cabinet opposition, the national assembly seems
likely to agree to broadening the cabinet to include
Pathet Lao officials. Such a move would deprive the
government of its bargaining power and allow the Pathets
to oversee a final settlement on terms advantageous to
themselves.
The French government is increasingly concerned
over the possibility that the Suez venture may result in
a complete deterioration of its position in North
Africa. Little progress has been made in efforts to re-
establish relations with Tunisia and Morocco, and Paris
is divided on how to achieve an Algerian settlement.
Premier Mollet may offer a new proposal on Algeria in
the UN General Assembly debate to assuage Moslem opinion.
The Algerian rebels are continuing to maintain a
high level of guerrilla activity despite some French
military successes. Hostility toward French authority
seems to be stiffening among the more conservative
Moslems. In Morocco, the exodus of French citizens
foreshadows further economic deterioration.
Page 10
Page 10
GUATEMALA RENEWS CLAIMS TO BRITISH HONDURAS . . . . Page 12
Guatemala's campaign for the "recovery" of British
Honduras has been intensified to the point where some
Guatemalan officials are urging that the Colony be taken
by force. While it is unlikely President Castillo
Armas will launch precipitous action, he seems to cling
to the hope that the United States might be willing to
exert pressure on Britain in Guatemala's behalf.
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COMMUNIST GAINS IN URUGUAY, BOLIVIA AND PERU . . . . . . Page 13
Communists have registered considerable gains in
recent months in their efforts to control Uruguayan
labor, and their efforts to infiltrate the Bolivian
labor movement have prompted President Sites to under-
take a strong anti-Communist program. In Peru, the
Communist revival is evident not only on the labor front
but also in political activity.
PATTERNS AND PERSPECTIVES
IMPACT OF HUNGARIAN DEVELOPMENTS ON WESTERN
EUROPEAN COMMUNIST PARTIES . . . . . . . . . . . . . . . Page 1
Events in Hungary have severely strained Western
European Communist parties. The leadership and "hard
core" have continued to support and defend the Soviet
intervention, but the rank and file have been badly
shaken, there has been a sharp reduction in popular
followings, and the Communist hold on organized labor
has been weakened. The impact has been the greatest in
Italy, Austria, Britain, Switzerland and Denmark, with
the least effect apparent in France and in some of the
HUNGARIAN ECONOMIC PROBLEMS . . . . . . . . . . . . . . Page 3
Hungary has faced serious economic difficulties at
least since 1952, mainly because its plans called for
expansion of heavy industry for which the domestic
supply of raw materials was grossly inadequate. Scarcity
of consumer goods and lagging agricultural output have
resulted in depressed living standards. The almost com-
plete dislocation of the Hungarian economy since 23
October and the long-continued general strike will make
extremely difficult the efforts of any Soviet puppet
regime to increase output and reduce the discontent of
workers and peasants.
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THE YUGOSLAV ROAD TO SOCIALISM . . . . . . . . . . . . . Page 5
The Yugoslav practice of Communism is unique in
several ways. In foreign policy, the Yugoslav party
accepts collaboration with reformist as well as revo-
lutionary socialists. In domestic policy, it attempts
to avoid the rigid bureaucracy of the Soviet system
by a thorough decentralization. Workers, in theory
at least, manage their own factories, and collectiv-
ization has been abandoned in favor of an indirect
approach to the socialization of agriculture. These
measures have to some extent increased popular initi-
ative and participation in the government. The Yugoslav
Communist Party remains, however, in complete control
Page 10
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VV111 I JLIr I InL. ,
OF IMMEDIATE INTEREST
Egypt
Egypt during the past week
further stepped up pressure for
the immediate evacuation of
British, French and Israeli
forces from its territory.
Cairo's latest threat, accord-
ing to press reports, is that
Soviet "volunteers" will be
"admitted" unless evacuation
takes place within a week.
Nasr has told the American
ambassador, however, that he
intends to "go it alone" despite
full assurances of help from
the USSR. More direct, though
perhaps not so effective, pres-
sure has come from the Egyptian
military. Fusillades from the
Egyptian positions opposite
the British and French occupa-
tion forces in the canal zone
have become more frequent, and
the Israelis have asserted
that an Egyptian patrol sought
to probe their positions in
Sinai.
Beirut Meeting
This hardening attitude
in Cairo has encouraged similar
attitudes in other Arab capitals
and has put considerable pres-
sure on those Arab leaders who
have shown less than complete
devotion to the Egyptian cause.
The real object of the Arab
heads of state in their meeting
in Beirut last week was to try
to find a response which the
various Arab governments could
make collectively in the face
of this pressure. The split in
the meeting, with Egypt, Syria,
and Jordan supporting a dip-
lomatic and economic boycott
of Britain and France, while
Iraq, Lebanon and a lukewarm
Saudi Arabia opposed drastic
measures, demonstrated again
the Arabs' inability to act
together.
The failure at Beirut has in
turn intensified political crises
in Syria, where impatience with
Arab impotence is most marked,
and in Iraq, where most of the
population and some army ele-
ments suspect that the Nuri Said
government is acting as a tool
of Britain, and even possibly
of Israel.
Syria
25X1
In Syria, a purge of con- 25X1
servative elements appears to
be in the making.
parliament representing the
Druze area in southern Syria
have already been arrested by
the army for complicity in an
alleged British plot to stir
up a rebellion. Some other
rightist party leaders are
reported to have decamped
temporarily to Lebanon.
On 17 November the army
overawed parliament with a
show of force, gathering tanks
and personnel carriers near
Damascus, and the deputies did
not question the army's possible
violations of parliamentary
immunity. More drastic action
by the army to bring about a
cabinet change may have been
postponed by a promise from
President Quwatli that in two
weeks he would act to remedy
the situation. The leading
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 November 1956
candidate to head a new Syrian
cabinet is former prime minister
Khalid al-Azm. It was during
the period in 1955 when Azm
dominated the cabinet that
Syria's "drift to the left"
gathered most of its momentum.
Iraq
In Iraq, more and more
elements of all political
stripes are suggesting that
Nuri Said give way to a more
ostensibly anti-British prime
minister. The Iraqi chief of
staff has admitted that some
junior army officers have been
arrested for political agita-
tion, and a large number of
civilians are believed to have
been jailed during the sporadic
anti-British demonstrations of
the last three weeks.
Iraq's isolation from the
other Arab states, particularly
since the creation of the
Baghdad pact almost two years
ago, has been dramatized and
advertised by Nuri's reluctance
to make any specific move a-
gainst his British ally--no
oil pipelines have been sabo-
taged, no supplies denied to
Britain by Iraq. At the same
time, however, Baghdad is losing
some $23,000,000 a month in oil
royalties as a result of the
sabotage in Syria, and Nuri's
government thus receives neither
Arab credit for sabotaging the
oil nor Western cash for supply-
ing it. At least one Iraqi
politician has warned King
Faisal that he is the most
likely to be affected by the
growing unpopularity of Nuri's
government; the king's family
advisers have never been reluc-
tant to sacrifice prime minis-
ters when the going became rough.
Jordan-Lebanon
Repercussions of the Beirut
meeting have also appeared in
Jordan and Lebanon.
The Jordanian parliament
on 20 November signified its
wish to identify itself with
the West's enemies by approving
unanimously a recommendation
that Jordan abrogate the Anglo-
Jordanian treaty and establish
diplomatic relations with Mos-'
cow and Peiping.
In Lebanon, the Yafi
cabinet, which had been the
major avenue for Egyptian in-
fluence, resigned as a result
of President Chamoun's refusal
to agree to break relations with
Britain and France. Yafi's
successor, veteran premier Sami
Solh, presumably will seek to
follow a more pro-Western
policy, and has already an-
nounced that the Arabs should
put their faith in "the UN and
President Eisenhower.'"
Israel
Israel meanwhile has in-
dicated its terms for the prom-
ised withdrawal of its forces
from Sinai. In negotiations
which began on 20 November,
the Israelis stressed that
their withdrawal from Sinai
should be followed by UN forces
taking over key points on the
peninsula, with an Egypt-UN
agreement for the demilitariza-
tion of the peninsula as the
next step.
Regarding the Straits of
Tiran at the mouth of the Gulf
of Aqaba, Israel proposed either
that it be left in control, or
that the islands of Tiran and
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Sinafir be left empty, or that
a UN force occupy the islands.
The Israeli position on the
ultimate disposition of the
Gaza strip, which is not Egyp-
tian territory, is not yet firm,
but Israeli spokesmen have in-
dicated their government will
probably try to retain the
strip permanently. None of
these proposals is likely to
be acceptable to Egypt, which
continues to insist that the
role of the UN force is merely
to move to the Egyptian-Israeli
border with as much dispatch
as possible.
The Israelis are maintain-
ing their forces along the
Syrian and Jordanian borders
and their propaganda continues
to stress the dangers of Soviet
influence-in Syria.
Britain and France
Britain and France evi-
dently still intend to keep
their military forces at Port
Said until future international
control of the canal is as-
sured. They see Nasr's con-
ditional agreement to allow
the UN to clear wreckage from
the canal as the first step in
that direction. London hopes
that by continuing the occupa-
tion it may be able to promote
progress toward the long-range
objective of a general Palestine
settlement.
Both governments seem some-
what more inclined to avoid an
appearance of flouting UN res-
olutions. Prime Minister Eden
and French acting foreign min-
ister Gazier reportedly agreed
on 15 November to follow the
resolutions "strictly," while
giving them the most favorable
juridical interpretation from
the Anglo-French point of view.
London and Paris may never-
theless be contemplating ignor-
ing the UN by intervening in
Syria, outside the UN framework,
on the pretext of thwarting
Soviet influence there. The
Mollet government especially
has emphasized a build-up of
Soviet arms in Syria. Foreign
Minister Pineau told Ambassador
Lodge in New York on 14 Novem-
ber that France had two "solu-
tions" in mind. He spoke first
of an autonomous Syria under
former premier Shishakli, and
said that British and French
representatives were already in
touch with him. A second pos-
sibility, according to Pineau,
would be the annexation of Syria
and northern Jordan by Iraq, and
of southern Jordan by Israel.
For France, direct action
in Syria would be in keeping
with the prevailing despair
over the possibility of an
economic crisis from oil short-
ages, over apparent American
reluctance to supply European
petroleum needs, and over the
"disastrous failure" of the
Suez venture, which has re-
sulted only in deadlock.
Britain, for its part, is
expending considerable effort
on salvaging the Baghdad pact.
London was encouraged by the
inconclusive outcome of the
meeting of the heads of Arab
states on 13-15 November, and
shows no signs of abandoning
its long-standing efforts to
group the Arab states around
Iraq at the expense of Egypt.
Britain also shows signs of re-
viving its suspended campaign
to get the United States to as-
sume full membership in the pact.
Eden's illness elevates
R. A. Butler, lord privy seal
and leader of the House of
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Commons, who will now presumably
speak for the government on
public occasions. While he has
publicly defended recent govern-
ment policy, Butler has conveyed
the impression that he had mis-
givings about Britain's use
of force. Should Eden's illness
be protracted, Butler is more
likely to become prime minister
than Chancellor of the Exchequer
Macmillan.
Economic Impact
British officials now as-
sume that the Suez Canal and
the IPC pipeline will not be in
operation for at least six
months. London Treasury offi-
cials fear that dollar costs
of alternate western hemisphere
supplies will accelerate the
drain on the sagging gold and
dollar reserves. Hints are
being dropped that, for the
first time since the Conserva-
tives returned to power in 1951,
London may seek to defer the
approximately $180,000,000
annual payment on the American
and Canadian loans due in
:December.
UN Emergency Force
Units of the UN emergency
force have been ordered to Port
Said from their headquarters
area near Ismailia. UN secre-
tary general Hammarskjold be-
lieves that everything centers
around the situation at Port
Said. He fears that the British
and French will not withdraw,
thus precipitating rioting in
the area which would provide
the British with an excuse for
further intervention. Hammar-
skjold fears that in that event
the Soviet Union might inter-
vene through Syria and Jordan.
At present the UN emergency
force is composed of troops
from Colombia, Denmark, Finland,
India, Norway, Sweden, and Yugo-
slavia. Canadian forces are to
consist of headquarters and
service personnel only. Hammar-
skjold believes, however, that
Canadian troops could be used
later along the armistice lines,
but not in the canal zone.
Hammarskjold believes that
Egyptian consent to UN clearance
of the canal affords the op-
portunity to keep the UN emer-
gency force in the canal zone
rather than only along the
armistice lines. When the UN
clearance teams begin work,
Hammarskjold plans to request
Egypt to agree to having the
UN emergency force "police"
the clearance work.
Through notes to Britain,
France and Israel on 15 November
and a cessation of talk about
volunteers, Moscow has virtually
withdrawn its implied threats
of force for the time being and
returned to the area of diplo-
macy. Moscow's future tactics
probably will. be influenced
greatly by how quickly and
thoroughly the UN emergency
force carries out its mission.
The USSR has made it clear
that it is solidly behind Egypt's
demand that the UN force confine
itself to the Egyptian-Israeli
border and not the Suez Canal,
and that the international force
will no longer be necessary
after a British-French-Israeli
withdrawal.
With regard to Israel, the
USSR is insisting that Israeli
forces return to the status quo
ante, which would mean evacua-
tion of the Gaza strip. Soviet
propaganda already has reported
that Israel is taking "repres-
sive" measures against Gaza
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residents, and Bulganin, in
his note to Ben-Gurion on 15
November, cited Gaza as one of
the areas coveted by Israel
in its "regional expansionism."
Ambassador Bohlen believes
the "volunteer" threat was
primarily a propaganda weapon
to impress the Arabs and to
increase pressure on the Brit-
ish and French on the with-
drawal issue.. He believes
that if the British and French
withdraw, the UN police force
will then become the chief
target of the Soviet campaign.
The Arabs will be urged to re-
quest the withdrawal of UN
forces as an infringement of
sovereignty, and Moscow could
then, through military as-
sistance, including training
of Arabs, try to bring about
a conclusive settlement with
Israel, and increase its own
influence in the area.
In dropping references to
volunteers, the USSR probably
feels it has achieved full
propaganda returns but prob-
ably will let the offer stand.
Despite the difficulties the
USSR might have had in imple-
menting the volunteer offer in
substantial numbers, President
Nasr told Ambassador Hare that
the Soviet Union would have to
comply if Egypt asked for them
or "lose face." The amount and
types of Soviet equipment cap-
tured in Sinai indicate the
materiel was not intended as a
stockpile for Soviet use in a
major Middle East action.
Moscow may now feel that
as a result of its strong diplo-
matic battle on behalf of the
Arabs, it is under less pressure
to supply arms. No arms ship-
ments are believed to have ar-
rived in Egypt directly from
the USSR since 29 October. Bloc
ships have continued to deliver
arms contracted for earlier
this year to Syria.
TASS
on 17 November reported that
15,000,000 rubles worth of food,
medicines, and hospital equip-
ment is being shipped to Egypt
on a Soviet ship.
(Concurred in by ORR) 25X1
Although the general strike
in Hungary is apparently being
broken by mass deportations and
workers' fears of extreme priva-
tions caused by a complete
economic standstill; the
workers continue to show a spir-
it of resistance. Passive
resistance in many forms will
probably plague the shaky Kadar
regime--already committed to a
new deal for workers and peas-
ants--for months to come.
Soviet Military Moves
Although almost all or-
ganized armed resistance against
the Soviet military forces ap-
parently has ceased, the USSR
is reportedly sending large
numbers of reinforcements into
Hungary. These units, primarily
rifle (infantry) divisions, may
be intended to replace mecha-
nized and tank forces which
might be less effective than
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 November 1956
infantry units in combating
isolated resistance and pro-
viding Soviet control during a
military occupation.
This apparent reinforcement
of the at least eight Soviet
divisions suggests that a with-
drawal of Soviet forces is not
contemplated for some time to
come. The Soviet leaders must
be well aware that the restora-
tion of economic and civil
order by the Hungarian regime
will be a long, slow process.
Despite his promises of an
eventual Soviet troop with-
drawal, Premier Kadar will need
Soviet military support at
least until the central party
and state power have been
restored.
Popular Attitudes
Faced with cold and hunger
and lacking organization and
united leadership, the Hungar-
ian workers have reportedly
begun sullenly to return to
work. Their spirit, however,
apparently has not been broken.
Local workers' councils continue
to make demands on the regime,
and those who return to the
factories are reported operat-
ing, if at all, only under "slow-
down" conditions until their
demands--including the right to
strike--are met.
Appealing to the workers
to return to work, Kadar on 16
November succeeded in gaining
partial endorsement of his pro-
gram from some of their leaders.
At the same time, Kadar claimed
he was powerless to halt the
Soviet deportation program.
The mass of workers re-
portedly rejected the 16 No-
vember appeal from some Of their
leaders to end the general
strike--"firing" the union of-
ficials who made the appeal--
but Kadar may have anticipated
this reaction. The same day,
the regime severely tightened
restrictions on food delivery
and distribution in Budapest.
This move may have been de-
signed to limit food specula-
tion and may have also served
as an implied threat to starve
recalcitrant workers. Only
government food trucks were al-
lowed to enter Budapest, and,
according to press reports,
private visits to the country-
side by individuals were banned,
thus limiting the food avail-
able to government-controlled
outlets and fast-dwindling
private stocks.
Kadar's Program
Kadar continues to pledge
himself to a liberal and na-
tional Communist policy. To a
large extent duplicating the
early revolutionary promises
of ex-premier Nagy, he has con-
firmed the ouster of 12 leading
"Stalinists;" reasserted his
promises of wage increases and
greatly strengthened worker
autonomy, and declared himself
"in favor" of holding "free and
secret" elections in the "near
future." He has asked for the
participation of minority
parties which adhere to the
principles of socialism," and
reportedly has been negotiating
with Nagy, still in refuge in
the Yugoslav embassy in Buda-
pest, and with members of both
the Social Democratic and Small-
holders Parties.
Although he apparently has
failed to win support from these
quarters, he may do so if and
when some schedule for the with-
drawal of Soviet forces can be
worked out. Nagy reportedly
has dropped his earlier insist-
ence on an immediate withdrawal
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 November 1956
and has agreed to a three-stage
evacuation.
Whatever the outcome of the
talks with minority party leaders,
the regime will probably estab-
lish a new "popular-front". type
government, using, if necessary,
minority party figures who al-
ready have compromised them-
selves with the Communists.
Its domestic program--as dis-
tinct from the security policies
of the Soviet occupying forces--
will probably represent an at-
tempt to parallel many of the
policies of the Gomulka regime
in Poland. But, unlike the gov-
ernment and party in Poland, the
Kadar regime must implement its
policies with a shattered and
discredited apparatus, in the
face of a wrecked economy and
a bitter, uncowed population.
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YUGOSLAV-SOVIET RELATIONS STRAINL'D
President Tito's accusa-
tion published on 15 November
that the Soviet leaders are to
blame for the troubles in
Eastern Europe and Pravda's
sharp rejoinder bring the con-
troversy between Belgrade and
Moscow to a critical stage.
During his exchanges with Soviet
party boss Khrushchev last
September, Tito reportedly
threatened to make public the
controversy regarding the inter-
pretation of the "independent
roads to socialism" concept
unless some compromise was
reached.
Tito's decision to blast
the Soviet leaders probably
arose from his belief that they
were holding him responsible for
the events in Hungary. An
article on 8 November in Mos-
cow's Pravda by Yugoslavia's
archenemy, Albanian party boss
Enver tioxha, clearly implied
that Yugoslavia was to blame.
On 10 November a sharp retort
appeared in the leading Yugo-
slav paper Barba. Yugoslav
officials regarded the Pravda
piece as the views of Soviet
-
leaders themselves.
and make it prevail." This,
he declared, was the root of
their difficulties.
Tito said it was clear
from his September talks with
Khrushchev that the Stalinist
faction had "forced its atti-
tude" on the Soviet party boss
"to a certain degree." It also
had prevented the joint Soviet-
Yugoslav declarations of 1955-
1956 "guaranteeing" the right
of each state to develop its
own brand of socialism from
being adopted by the USSR in
its relations with all social-
ist countries. He feels, how-
ever, that it is still possible
for the "strong" elements in
the USSR which desire the aban-
donment of Stalinist methods
in favor of democratization and
the "creation of new relations
between the socialist states"
to triumph.
In: an article in Borba
on 15 November, Veljkoovic,
a top Yugoslav theoretician,
strongly supported Tito and,
possibly in an attempt to avoid
a crisis similar to that of
1948, concluded that mutual
criticism need not obstruct
Tito Speech
Tito denounced all attempts
to blame Yugoslavia for the
"terrible blow to socialism"
which had occurred in Hungary.
He laid the blame for this de-
velopment on the failure of
Soviet leaders to go beyond a
condemnation of the cult of
Stalin to condemn the system
which made Stalin possible.
Continuation of the system, which
Tito said ignores "the strivings
of the working masses," has
-permitted the existence in the
USSR and in other Communist
parties of elements that are
"endeavoring to revive Stalinism
Yugoslav-Soviet relations.
Moscow's initial reaction
to the Tito speech was a sharply
worded commentary interspersed
in a TASS report on the speech
that appeared in Pravda on 19
November. Pravda said Tito was
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CURRENT INTELLIGENCE WEEKLY SUMMARY
adopting the propaganda of the
"reactionaries" when he attacked
the Soviet system for producing
Stalinism. Tito was accused
of endangering international
proletarian solidarity by seek-
ing to classify Communist
parties as Stalinist or non-
Stalinist at a time when unity
was badly needed. He was ac-
cused of trying to establish
the Yugoslav road to socialism
as the only one to be followed
by other states, and of inter-
fering in the affairs of other
Communist parties.
The exchange has brought
Yugoslav-Soviet differences
sharply into public focus. In
view of the past stubborn re-
fusal of both Moscow and 3el-
grade to compromise their views,
relations between the two capi-
tals will no doubt become fur-
ther strained. However, the ar-
rival of a Soviet military mis-
sion in Yugoslavia and its re-
ception by Tito, and indications
that forthcoming Soviet-Yugoslav
economic talks will enlarge eco-
nomic ties, suggest that both
sides desire to avoid a break
in relations.
THE SOVIET-POLISH COMMUNIQUE
In signing the communique
of 18 November with Poland, the
USSR has taken a long step for-
ward in meeting Poland's polit-
ical, military and economic
demands. Poland in return has
reaffirmed its "alliance" with
the USSR and its membership in
the socialist camp, and has a-
greed to the "temporary" sta-
tioning of Soviet troops in
Poland.
It is clear from the com-
munique that the Kremlin has
accepted Gomulka and his poli-.
~cies and will probably continue
to support a national Communist
Poland within the framework of
the Soviet alliance. The con-
cessions won by Gomulka will
probably ensure his continued
popular support, although the
Polish people will be skeptical
about Soviet willingness to
live up to the agreement.
Military Provisions
The communique pointed
out that the Soviet-Polish
alliance is an important factor
strengthening the inviolability
of Poland's Oder-Neisse frontier.
It was agreed that the danger of
German militarism threatens
this frontier, and renders the
"temporary presence of Soviet
troops in Poland's territory
still expedient." The communi-
qu6 stressed, however, that the
presence of these Soviet troops
cannot affect Polish sovereignty
nor lead to interference in
internal Polish affairs.
The communique states that
the number, location and move-
ment of such troops are to be
determined by special agreement
between the two governments.
Since Gomulka reportedly is
obsessed with tho German danger
and believes Soviet support is
the only guarantee against
losing the former German ter-
ritories, he probably is satis-
fied that the placing of the
troops under a semblance of
joint jurisdiction will reduce
the irritation felt by the Poles
at having Soviet troops in
Poland.
The communique alluded to
the Soviet declaration of 30
October as being of great im-
portance for the development and
strengthening of friendship a-
mong socialist countries. It
stated that the principles of
that declaration are in accord
with the policies of the Polish
government and with the decisions
of the recent plenum of the
central committee of the Polish
United Workers (Communist)
Party. The two governments
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 November 1956
also expressed confidence that
their friendship would be
strengthened on the basis of
"complete equality and respect
for territorial integrity,
national independence and
sovereignty, and noninterference
in internal affairs."
Economic Provisions
On Poland's part, the
communique indicates that Warsaw
has obtained credits equal to
one half of those granted
Poland by the USSR between 1946
and 1955. A Soviet $175,000,000
long-term credit has been'agreed
on under which Poland will pre-
sumably import consumer goods
and raw materials, Warsaw ac-
cepted a similar loan for
$25,000,000 in September of
this year. Poland has also ap-
parently accepted a Soviet offer
to provide 1,400,000 tons of
wheat worth at least $100,000,000
for delivery during 1957.
In addition, on his return
to Warsaw, Gomulka stated that
the USSR had canceled the $600,-
000,000 debt Poland had accrued
between 1946 and 1950. This
cancellation was effected by
raising retroactively the price
on Polish coal exported to the
USSR. At the time of export,
much of this coal had been
priced as much as 95 percent
below the world market, and the
debt cancellation actually con-
stitutes a long-overdue conces-
sion.
The communique also states
that the USSR settled out-
standing obligations relating
to railway transportation and
noncommercial accounts. This
(suggests that Moscow may now be
planning additional payments
for services provided by Poland,
Prepared jointly 25X1
with ORR)
RUMANIAN INTERNAL DEVELOPMENTS
Faced with a tense internal
situation and mounting popular
hostility, Rumanian leaders have
reacted nervously to the Hun-
garian uprising. Discontent
among Rumanians, who were de-
scribed as happy about the
Polish developments and enthu-
siastic about the Hungarian
revolution, has apparently been
heightened by the Soviet inter-
vention in Hungary.
The regime has responded
to the rising disaffection with
limited measures to improve
economic conditions and with
promises to consider problems of
the ethnic Hungarians in Tran-
sylvania, particularly students.
At the same time it has main-
tained tight security measures
and rigid party discipline and
has summarily dealt with the
few overt expressions of dis-
content.
The American legation in
Bucharest does not believe open
revolt is imminent but has noted
a series of unusual precautions
apparently taken by the USSR to
lessen the possibility of anti-
Soviet demonstrations. Soviet
military personnel in Bucharest
have reportedly been ordered to
remain off the streets, lower-
echelon Rumanian personnel
employed at Soviet bases have
reportedly been fired,and base
areas have been declared off-
limits to all Rumanians. As
reported in Pravda on 10 No-
vember, Soviet party boss
Khrushchev has acknowledged
'there has been trouble in Ru-
mania, although he referred to
dissidence among Rumanian stu-
dents in a half-jocular manner,
asserting that it could be
easily assuaged.
has been shown chiefly by workers
Popular unrest in Rumania
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 November 1956
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and students--a large number of
whom reportedly have been ar-
rested--both in ethnic Hungarian-
areas and in Bucharest itself,
and feeling against the regime
has reportedly increased among
the peasants. No outdoor fes-
tivities were held in connec-
tion with the Soviet October
Revolution anniversary on 7
November, and teachers have
been urged to overload their
students with work to occupy
their time. Travel by Western
attachds has been severely re-
stricted, and frequent checking
of identity documents and in-
creased patrolling by police
have been noted in Bucharest
and other Rumanian cities.
The American legation notes
that the regime appears to be
operating under strict Soviet
supervision while the Rumanian
leaders publicly present a
united front.
At least some party ele-
ments, however, may not be in
sympathy with the public line.
A private statement to legation
officers on 25 October by two
Rumanian leaders indicated
clear sympathy for the events
in Poland and Hungary. An
American newspaperman who had
reported from Bucharest in early
November that some Rumanian
leaders favored the developments
in Poland and Hungary was im-
mediately requested to leave
the country.
Economic Problems
Aggravating the tension and
unrest are economic difficulties,
including serious food shortages.
A drought has curtailed agri-
cultural production, and,
according to the American lega-
tion, the poor harvest and
hoarding have created scarci-
ties which serve to aggravate
already mounting popular hostil-
ity. Complaints by the Ruma-
nians have been reported to the
effect that produce needed to
feed Rumanians was being sent
to Hungary for Soviet troops.
Peasants--also short of
food--are buying foodstuffs in
Bucharest. causing an added drain
on insufficient supplies and
forcing prices up. The state
is apparently making no attempt--
or is unable--to meet the
stepped-up demand for foodstuffs.
Consumer goods production re-
portedly has been cut back be-
cause of unsold stocks, and
trouble has been predicted from
workers who were subsequently
fired.
Some measures have been
taken by the regime. The Coun-
cil of Ministers on 30 October
published a decree providing
for an immediate increase in
minimum monthly wages and an
increase in old-age pensions,
and inaugurating a new wage
system to be extended in 1957 to
include all branches of the
economy.
Public reaction to these
announced wage and pension
raises was reportedly a "?mix-
ture of cynicism and pleasure."
Possibly as an additional
measure to gain popular good will,
an agreement was signed in
Bucharest on 22 October--and an-
nounced on 14 November--trans-
Iferring to the Rumanian govern-
ment the Soviet share in the
Sovromquartz Company, the last
jointly held Soviet-Rumanian
enterprise. This concern, which
handles Rumania's uranium, is 25X1
the first such.-company dealing
with uranium to be turned over
to Satellite management.
(Prepared jointly with ORR
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CURRENT INTELLIGENCE WEEKLY SUMMARY
.21 November.1956
USSR OPENS NEW CAMPAIGN TO RECOUP PRESTIGE
The USSR last week launched
what appears to be a major .
campaign to divert world atten-
tion from its setbacks in
Eastern Europe and to recap-
ture the diplomatic initiative.
Soviet leaders appear concerned
that the suppression of the
Hungarian uprising and the
USSR's threatening posture
in the Middle East crisis will
undermine the Soviet foreign
policy line stressing peaceful
coexistence and the reduction
of tension. They are con-
cerned that these actions will
generate fears abroad, par-
ticularly in neutralist
countries, that this line is
being abandoned in favor of a
return to a hard Stalinist
trend in foreign affairs.
The USSR presents itself
as the champion of peaceful
settlement and restraint in
the Middle East crisis while
bitterly denouncing Britain
and France for their action
in Egypt. This pattern was
evident both in the Soviet
statement of 17 November on
disarmament and the easing of
international tension and in
Khrushchev's speeches at two
diplomatic receptions in Mos-
cow on 17 and 18 November.
The disarmament state-
ment explained that the USSR
had chosen this "crucial mo-
ment" to appeal for an end to
the arms race and the prohibi-
tion of nuclear weapons and
nuclear tests, A call for a
new summit conference to con-
sider the Soviet omnibus dis-
armament plan and a reaffirma-
tion of the USSR's commitment
to the "Leninist policy of
peaceful coexistence of states"
were accompanied by a pointed
reminder of Western Europe's
vulnerability to Soviet.mili.T
tary power.
The statement contended
that if the USSR had in fact
been guided by the aggressive
intentions of which the West
accuses it, it could have usec'~
the present situation for "com-
ing out against the armed
forces of the Atlantic bloc
and could accomplish the
military aims with regard to
Western Europe ascribed to it,
even without the use of up-to-
date nuclear and rocket weap-
ons." The Soviet leaders
probably expect this reminder,
together with the announce-
ment on 17 November of another
nuclear weapon test, to have
an inhibiting effect on the
actions of Britain and France
in the Middle East and to pro-
mote neutralism in Europe.
Khrushchev's bitter ti-
rades against the British,
French and Israeli actions
in Egypt at recent diplomatic
receptions apparently were
deliberate acts of policy and
not merely emotional outbursts
by the volatile party first
secretary. Ambassador Bohlen
reports Khrushchev's insulting
speech on 17'November was not
impromptu but was read from a
prepared text.
At the Polish embassy re-
ception the following night,
Khrushchev balanced denuncia-
tions of Britain, France and
Israel with optimistic and
conciliatory remarks on the
situation in Egypt. Avoiding
any reference to Soviet "vol-
unteers," Khrushchev said the
USSR would work for a Middle
East settlement because it
realized that the situation
was serious and that the "fire
must be put out."
The only new feature in
the disarmament statement
was Moscow's expressed. readiness
to "examine" the question of
using aerial photography in
the "area of Europe where
forces of the Atlantic bloc
.and Warsaw pact member states
are stationed, to a depth of
up to 500 miles to the west
and east from the border line
of the above-mentioned forces."
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 November 1956
This shift on aerial inspection
was intended to create the im-
pression that the USSR had
made an important concession
to the West in an effort to
break the deadlock on disarma-
ment, whereas the proposed
500-mile range in fact would
cover much of Western Europe
but only an insignificant part
of the USSR.
The statement's seven-
point program was drawn from
various Soviet disarmament
plans of the past 18 months.
Unlike the proposals of 10 May
1955 and 27 March 1956, it
makes little pretense of offer-
ing a logical and coherent dis-
armament procedure. The seven
points selected were those cal-
culated to produce the most
favorable immediate impact on
world opinion.
AFGHAN ARMS DEALS WITH SOVIET BLOC
Afghanistan has concluded
arms deals with the Soviet bloc
totaling to date an estimated
$25-30,000,000.
It appears likely
Broad gauge railroad
' Narrow gauge roilroed
Ali-weather road
a MILES
Cilrjt
AKI ST AND
Jaf Iahad
(Stews m dt:;p.t. )
Rawalpindi
that the USSR will assume re-
sponsibility for development of
a new Afghan air force.
A considerable amount of
ground forces arms and ammuni-
25X1
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tion has arrived in Afghanistan25X1
Mazar-1
i-Sharif
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21 November 1956 25X1
over the past several months,
but the most significant build-
up has been in aircraft.
The continuing ill effects
of the Soviet liberalization
policy toward the Satellites
have put Khrushchev and his
close supporters on the de-
fensive and left Khrushchev
himself particularly vulner-
able to criticism. The Ameri-
can embassy in Moscow has
heard rumors that Khrushchev
is in trouble and may be re-
moved as party first secre-
tary,
Another rumor was
that Molotov would become
party first secretary, Khru-
shchev would take charge of
agricultural affairs, and
Malenkov would be reappointed
chairman of the Council of
Ministers, replacing Bulganin.
Khrushchev's crude be-
havior at the two Polish re-
ceptions of 17 and 18 November,
which caused Western diplomats
to walk out on him, suggests
some insecurity on his part
and a need to impress the other
"hard" members of the Soviet
leadership. There is no sub-
stantial evidence to support
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the rumors of Khrushchev's
possible removal, however, and
he continues to appear to be the
dominant leader of the Soviet
collective leadership, having
been identified as party first
secretary in the Soviet-Polish
communique on 18 November. At
the same time, Molotov's speech
at a recent meeting of Soviet
cultural figures indicates he
is still presidium-level over-
seer of cultural and education-
al affairs.
During their visit in
Moscow, the Polish leaders held
discussions with Khrushchev,
Iulganin, Voroshilov, Mikoyan
and Saburov. Kaganovich and
Molotov were conspicuously.ab-
sent from the initial 15 No
vember meeting and from the
negotiations, appearing only at
a luncheon given by Khrushchev,
Bulganin and Voroshilov, and
at the two final receptions.
Malenkov did not appear at any
of these functions.
Failure of the Stalinists
to participate in the Polish
discussions may indicate that
they boycotted the talks, that
the Khrushchev leadership forced
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21 November 1956
them--as possible obstruction-
ists--into the background in
order that the discussions could
proceed-smoothly, or that Go-
mulka was opposed to their
participation. In any case,
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
the.absence of the "Stalinists"
from these talks suggests that
they have not gained the upper
hand at this time.
POPULAR DISSATISF.1CTION IN THE SOVIET UNION
Evidences of dissatisfac-
tion with the policies of the
Soviet leadership have. appeared
among segments of the Soviet
public during the past three
weeks. The incidents range
from relatively mild expres-
sions of sympathy for Hungary
to reported demonstrations and
rioting in the Lithuanian and
Uzbek Republics.
Ambassador Bohlen, on the
basis of an informal survey
conducted by the.American em-
bassy in Moscow, believes that
the Ilungarian revolution and
Soviet intervention have made
a particularly strong impres-
sion on Soviet students and
young intelligentsia, of which
a substantial portion condemns
the Soviet intervention. Be-
fore the 4 November crackdown
on I3ungary took place,. students
at Moscow University had e.x-
pressed sympathy for Hungary
and-pleasure that the Hungarians
were asserting themselves.
At a recent lecture on
international events at the
Lenin Library in Moscow attended
predominantly by students, the
speaker solicited written ques-
tions and received queries, all
dealing with Hungary and Poland.
The speaker refused to discuss
them, whereupon a young man de-
manded to "hear the truth" about
Hungary.. When the speaker asked
"Does anyone in the audience
believe that. the Soviet press
does not print the truth?" the
audience rose, and when the
speaker continued to avoid die-
cussing requested subjects,
left the hail en masse.
Students and young intel-
lectuals are probably more per-
ceptive than the average Soviet
citizen and their actions more
daring, but there is little
doubt that Soviet propaganda
is failing to convince the
people in the freer intellec-
tual atmosphere which has de-
veloped since Stalin's death.
Soviet leaders have so far
shown no inclination to return
co repressive measures in
dealing with "intellectual
curiosity," and in fact sharply
criticize the propagandists for
failing to provide effective
answers.
In some cases popular
I dissatisfaction has reportedly
gone beyond the questioning
stage. Fighting touched off
by university students carrying
anti-Soviet slogans allegedly
broke out in Vilnyus, capital
of Soviet Lithuania, the latter
part of October. "Hundreds"
reportedly were killed. 7
25X1
25X1
anti-Communist demonstra-
tions occurred two weeks ago
in the Lithuanian city of "aunas,
involving up to 30,000 people.
The demonstrators carried plac-
ards saying "Russians rho home,
we want better living conditions
and open frontiers." There
were apparently some clashes
with the police, but it is not
known whether any casualties
resulted.
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There have also been un-
confirmed reports of other re-
cent disturbances, including
antiregime demonstrations in
the Uzbek Republic and a three-
day strike in a Moscow ball-
bearing plant.
In the "thaw" resulting
from the anti-Stalin campaign,
somewhat unorthodox activity
and expressions of opinion by
Soviet citizens are likely to
be tolerated. Demonstrations
against Soviet power, however,
will certainly be met with
strong repressive measures, as
was the case in Georgia last
March. Continuation of such
disturbances will strengthen
the hand of Stalinists in top
party circles in influencing
Soviet policy or bringing about
a shift in power within the
party presidium. 25X1
DISORDERS IN NORTH VIETNAM
Hanoi's recent admission
of a "counterrevolutionary up-
rising" in several predominantly
Catholic villages about 160
miles south of Hanoi, as well
as the existence of sabotage and
"confusion" in a number of other
regions, is the frankest ac-
knowledgment to date of the
extent of violence against the
Viet Minh regime. Hanoi's
troops have probably restored
order as claimed, but there is
little doubt that widespread
dissatisfaction continues in
North Vietnam.
According to. a Viet Minh
broadcast, young men from
several villages wounded 10 and
captured 28 soldiers and all
their arms on 5 November.
Hanoi apparently had to send in
regular troop reinforcements to
effect the release of the cap-
tured soldiers. Refugee reports
of wanton machine-gunning of
entire village populations are
unconfirmed. Hanoi admits that
troops remain in the area.
The approximately 1,000,-
000.Catholics remaining north
of the 17th parallel have long
constituted the most likely
center of resistance to Com-
munism in North Vietnai. Hanoi
broadcasts earlier this year
stated that Catholics had been
incited "to fight against the
regime" and to commit arson.
The Catholics, however, repre-
sent less than 10 percent of
the population, and their
potential resistance capabili-
ties were greatly reduced when
over a half million of the most
violent anti-Communists fled
to South Vietnam in 1954.
The most recent disorders
apparently occurred largely in
the rural areas and were inspired
mainly by peasant dissatisfac-
tion with Communist tactics in
the land reform program. The
head of the Canadian delega-
tion to the International
Control Commission found no
evidence in the city of Hanoi
to indicate that any large-
scale uprising had taken place.
The regular army is apparently
loyal to the regime and is
probably adequate,to the task
of suppressing future outbreaks.
Hanoi's admissions substan-
tiate reports of increasing pres-
sure for reform in North Vietnam.
Intellectuals and merchants were
recently reported to be demand-
ing intellectual freedom, democ-
ratization of the government,
and a slowdown in collectiviza-
tion. Reforms along these lines
were announced in an early No-
vember communique of the Council
of Ministers, and Hanoi now prom-
ises continuing efforts to "cor-
rect mistakes" and to "satisfy
the aspirations" of the people.
However, with an eye on
recent developments in Eastern
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 November 1956
Europe, the Viet Minh leaders
apparently intend to implement
these promises of democratiza-
tion with the greatest of cau-
tion. While paying lip service
to freedom of speech, they at the
same time warn against "any
word or deed which is harmful
to the people's unity," or
"which aims at separating the
people from the party and the
government...,.
Premier Souvanna Phouma's
attempt to win cabinet approval
for an immediate coalition gov-
ernment with the Pathet Lao has
brought the whole issue of a
settlement with the Pathets to
a critical stage.' He reportedly
told the cabinet on 15 November
that Pathet Lao chief Souphan-
nouvong would guarantee inte-
gration of the Pathet Lao army
and restoration of royal govern-
ment authority over the two
provinces in return for immediate
Pathet Lao participation in the
government. The cabinet, which
opposed this move since it would
deprive the government of all
bargaining power with the Pathet
Lao, is turning the issue over
to the national assembly.
Souvanna believes his pro-
posal is the key to a settlement,
and he can be expected to press
hard for assembly approval. He
has indicated he will resign if
it is.rejected. Faced with
this prospect, and the popular
demand for a settlement with
the Pathet Lao, the assembly
seems likely to approve the
formation of a coalition govern-
ment,; broadening the cabinet
to include several Pathet Lao
officials, probably including
Souphannouvong.
Souvanna's ultimate "act
of faith," based on his manifest
unwillingness to recognize that
the Pathets are Communists, or
are Communist-controlled, would
place the latter in a position
to oversee the conclusion of a
settlement on terms advantageous
to themselves.
The public would welcome
a settlement on Souvanna's
terms, and efforts on the part
of skeptical officials to secure
the government's basic objectives
would probably be dismissed as
obstructionist . 25X1
France is increasingly con-
cerned over its position in
North Africa, but the Paris
government is still groping for
a workable policy there. Little
progress has been made in ef-
forts to re-establish relations
with Tunisia and Morocco, but
Premier Mollet may offer a new
proposal on Algeria at the
General Assembly session.
The fear is now developing
that the net result of the Suez
crisis will be a further de-
terioration of the French posi-
tion throughout North Africa.
The need for an acceptable Al-
gerian solution is becoming in-
creasingly pressing if France
is to maintain even its present
tenuous position in Morocco
and Tunisia.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 November 1956
The French government is
divided on how to achieve an
Algerian settlement. The
acting under secretary for
Moroccan and Tunisian affairs
contends that the situation is
improving and that real prog-
ress toward a political solu-
tion will be possible in a few
weeks. The minister for Algeria
is still pushing for military
moves to force such a solution,
and sentiment in the cabinet
reportedly favors one more
strong campaign.
At the same time, however,,
some members of the cabinet
have criticized Mollet for not
having taken more positive
political steps toward a solu-
tion. A minority group.in the
premier's own Socialist Party
is pressing for a special
party congress to discuss
Algerian and Middle Eastern
policies.
Despite the difficulties
since the Suez crisis, Mollet
apparently still hopes to
arrange cease-fire talks with
Algerian nationalists through
indirect channels. The growing
belief in France that IIollet's
Algerian and Middle Eastern
policies have backfired may
impel him to try new moves to
facilitate such an approach.
Concrete results are not
likely, however, until after
the UN General Assembly debate
on the problem, which is ex-
pected after Christmas.
A government spokesman has
already indicated that Paris
hopes to offset UN criticism
by seeking immediate ratifica-
tion of the much-delayed
Libyan treaty and by accepting
inscription of the Algerian
question on the UN agenda--
an issue on which the French UN
delegation staged a dramatic
walkout a year ago.
Meanwhile, Paris has been
trying to reverse the sharp
deterioration in relations with
Morocco and Tunisia which fol-
lowed the French seizure of
the five Algerian leaders on
22 October. Paris continues
to rely largely on financial
pressure to bring about nego-
tiations, however, and the
American ambassador in Rabat
points out that France is not
in a position to apply economic
pressure without seriously
damaging French interests in
the area.
In Algeria the rebels
are in general continuing to
maintain a high level of
guerrilla activity despite
further French military suc-
cesses in certain areas.
Rural terrorism is apparently
leveling off in the Constantine 25X1
sector but remains undiminished
elsewhere. Urban terrorism has
increased. especially in Algiers.
There are signs that
hostility toward French author-
ity in Algeria is stiffening
among more conservative Moslems
who, while in basic sympathy
with the aims of the National
Liberation Front (FLN), have
hitherto given only cautious
support. On 15 November,
practically all Moslem shop-
keepers in Algiers responded
to an impromptu strike call
issued by the recently formed
Moslem Merchants Association
and apparently circulated en-
tirely by word of mouth. This
protest, which grew out of
the association's dissatisfac-
tion with punitive measures
being taken by the government
against shopkeepers who closed
during the 1 November FLN-staged
general strike, was the first
such collective action to be
taken by the Algiers merchants.
It may presage closer collabora-
tion with the FLN.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 November 1956
Algerian residents in Mo-
rocco, as far west as Rabat as
well as in the Oujda area, are
being pressed into providing
convalescent and rest facili-
ties to Algerian rebels. F_
Despite the Moroccan sul-
tan's objections and an Ameri-
can request for delay, the-
French army in Morocco has be-
gun to build storage facilities
on the American wharf at the
jointly operated French-American
naval air base at Port Lyautey.
The Moroccan government informed
the United States that it op-
posed French construction at
any American base. The French
army recently encountered some
difficulty in landing troops
GUATEMALA RENEWS CLAIMS TO BRITISH HONDURAS
ties. For Guatema-
lans, the "Belize
problem" has become
a popular symbol of
anticolonialism.
Guatemala's campaign for
the "recovery" of British Hon-
duras has been intensified to
the point where some Guatemalan
officials are urging that the
colony be taken by force. The
century-old Guatemalan claim
has been used by all recent
governments to divert public at-
tention from domestic difficul-
A statement of
Guatemalan sovereign-
ty over the territory
is included in the
constitution, and
Guatemala regularly
reasserts its claim
at UN and other inter-
national meetings.
It has gained the
support of the other
Central American re-
publics and Panama.
These moves, however,
have aroused much
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NOTES AND COMMENTS Page 12 of 15
and offloading supplies when
Moroccan port workers struck
in protest. It probably expects
to use the jointly operated
bases to avoid similar incidents
in the future, and this tactic
could provoke serious discord
in Moroccan-American relations.
Large numbers of French
settlers are leaving Morocco as
an aftermath of the recent mas-
sacre of some 50 French settlers
at Meknes. The exodus is es-
timated at about 30,000 this
month, and may total 100,000,
or one third of all French
settlers, within a year. The
loss of French skills and capi-
tal will cause further economic
deterioration in the already
unbalanced Moroccan economy.
resentment in Mexico, which
also claims part of British
Honduras.
The campaign was renewed
late last summer when a group
of British Honduran residents
of Guatemala petitioned the
Guatemalan-congress to "make
effective" Guatemalan
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 November 1956
sovereignty over British Hon-
duras and to grant the people
there representation in the
congress. The British charge
d'affaires believes the move
was instigated by President
Castillo Armas.
On 5 November, an of-
ficial close to the president
expressed serious concern to
the American ambassador over
the suecess'.he thought some
members of the government were
having in'hersuading Castillo
to seize the.colony in an air-
borne attack. Two days later
the ambassador spoke with
Castillo and, though he felt
he had discouraged precip-
itous action, he noted that
Castillo still hopes the
United States might be willing
to.exert pressure on Britain
in Guatemala's behalf.
Favorable. results in the
petroleum explorations now be-
ginning in Guatemala's large
but undeveloped Peten Department
would add. increased pressure to
the campaign. The natural out-
let for this area is through
British Honduras. The Guatema--
lans have not acted on an old
British. offer of free port
facilities at Belize, presum-
ably because they feel accept-
ance would prejudice their claim.
There is little sympathy
for the Guatemalan pretensions
in British Honduras, although
the largest party there wants
eventual independence. 25X1
COMMUNIST GAINS IN URUGUAY, BOLIVIA AND PERU
Marked increases in Com-
munist activities have occurred
in Uruguay, Bolivia.and Peru. In
Uruguay, the Communists have
focused primarily on increasing
control of labor. In Bolivia,
their attempts to infiltrate
the powerful labor confedera-
tion have sufficiently alarmed
President Siles to interest
him in developing a strong
anti-Communist program. In
Peru, the Communist revival
is evident not only on the
labor front but also in
political activity.
Uruguay
In Uruguay, the Communist
General Union of Workers (UGT)
and its affiliated "independent"
unions have outstripped the
socialist-controlled Syndical
Confederation of Uruguay (CSU)
and its satellites--the only
important anti-Communist labor
organization--in both influence
and numbers during the past
year. The UGT's gains, partic-
ularly in transportation and
the civil service, are likely
to continue unless government,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
business and the free labor
movement take strong counter-
measures.
The government, however,
is widely believed to have
condoned management deals with
Communist unions to "break"
troublesome non-Communist
unions and, as the country's
largest employer, is generally
regarded in labor circles as
blind to the economic plight
of the workers. Labor Depart-
ment and other high officials
repeatedly assert that Commu-
nism is no danger in Uruguay.
Such an attitude has contrib-
uted'greatly to the momentum
of the Communist-backed "unity"
or single-federation drive, and
the secretary general of the
CSU fears his once-dominant
organization might be subordi-
nated in a Communist-controlled
unified federation.
Communists may also have been
responsible for an attack on
24 October on an American-
sponsored group of agricultural
technicians.
President Siles is re-
ported deeply concerned over
Communist infiltration of
labor, and he believes no
Bolivian government agency is
effectively fighting the Com-
munists. Recently he has in-
dicated considerable interest
in establishing a strong anti-
Communist program. As a first
step, he has appointed his
personal secretary as liaison
officer with the US embassy in
La Paz on anti-Communism, thus
replacing an ineffective low-
level liaison official.
Communist gains are the
result in large part of the
new "soft" line, as well as of
infiltration and pirating.
The Communists established
industry-wide co-ordinating
committees in 1956 which.have
avoided politics and posed
successfully as defenders of
labor's economic interests.
These "disinterested" committees
have paved the way for the unity
movement and the further growth
of Communist influence.
Since 1952, organized
labor has had greater political
influence in Bolivia than in
any other Latin American
country, and its power has
reached a new peak during the
past year. Trotskyite Commu-
nists wield considerable in-
fluence among workers, although
they do not dominate the Boliv-
ian Labor Confederation.` Re-
cently, they have appeared to
be increasing their activity.
Peru's Communist Party,
which was badly fragmented by
police repression from 1948
to 1955, is successfully em-
phasizing political activity,
and the labor situation is
also unusually favorable to
party gains.
The Communists have ef-
fected a considerable infiltra-
tion of the leftist movement of
Fernando Belaunde, the runner-
up in the presidential election
of 17 June and leading advocate
of an agrarian reform program.
They are also trying to infil-
trate APRA, Peru's recently
legalized major leftist party.
Attacks on APRA leadership and
policy by self-styled APRA-
Communists are designed to
divide APRA prior to its third
congress in early 1957.
The party's revitalization
and apparent reorganization is
likely to lead to the return of
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CURRENT INTELLIGENCE WEEKLY SUMMARY
dissident Communists and pro-
Communists among the labor
leadership. Virtually all
Peruvian labor leaders not af-
filiated with APRA subscribe
to Communist ideology, but few
in recent years have claimed
party membership. At the labor
congress last spring, which
SECRET
re-established Peru's national
labor confederation, pro-Commu-
nist strength was evident.
The group was defeated in the
election of officers primarily
through APRA control of the
credentials committee.
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OLD ...TIA
CURRENT INTELLIGENCE WEEKLY SUMMARY
PATTERNS AND PERSPECTIVES
Events in Hungary have
strained Western European Com-
munist parties--already divided
over the Soviet Union's de-
Stalinization program--more than
any event since the Soviet-
German collusion of 1939. With
the possible exception of Norway,
the leadership and "hard core"
of the Communist parties have
stood firmly with the Soviet
Union in face of the wave of
indignation that has swept
Europe,
The use of Soviet troops
in Hungary has shocked the rank
and file and produced an up-
heaval among fellow travelers.
It has led in many instances
to wholesale resignations from
the party, shattered the pros-
pects for a united front with
the Socialists in several
countries, shaken the Communist
hold on organized labor, and in
almost every case left the Com-
munists politically isolated
and with a sharply reduced
popular following. In some
cases, the party leadership has
attempted to stem the demorali-
zation by staging a weak counter-
attack against the Anglo-French
aggression in the Middle East.
In the early stages of the
Hungarian uprising, there were
some expressions of support for
the Hungarian regime. When
Soviet troops moved into
Hungary on 4 November, however,
the party line began to swing
behind the USSR. The London
Daily Worker, which had been
publishing articles sympathetic
to the Hungarians, came out on
.'November with a statement de-
fending the Soviet military ac-
tion and denouncing "fascist
activities." Di Vittorio,
secretary general of the Italian
General Labor Confederation,
after previously condemning
Soviet military intervention,
was forced on 4 November by the
party hierarchy to recant pub-
licly in a speech supporting
the Soviet military action.
Only in Norway has the Commu-
nist leadership refused to en-
dorse the official Soviet line.
Elsewhere in Europe, the
Soviet action and its approval
by the local Communist parties
set off a wave of public dem-
onstrations against Communist
party headquarters and Soviet
diplomatic missions. The most
pronounced impact has been in
Italy, the country with the
largest Communist party, and in
the UK, while the effect has
been least apparent in France
and some of the smaller countries.
Italy
The peculiar political
situation in Italy has made the
Communist Party particularly
vulnerable to the Hungarian
events. It has widened the
ideological disagreement between
the party and its Nenni Social-
ist allies and seems likely to
result in breaking the alliance,
thereby isolating the party 25X1
completely.
Defections from the Commu-
nit ranks haves also haan
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 November 1956
reported, including 3,000 miiem-
bers of the Italian Labor Con-
federation who resigned and ap-
plied for membership in the
center parties. The party is
reported to be in a ferment,
with many high Communist offi-
cials urging a modification
of the support for the Soviet
line in order to avert further
splits,
Outlawing of.the Communist
Party is under consideration,
but legislation to close loop-
holes.in existing laws against
Communist activities seems more
likely, since drastic action
would only cause their disor-
ganized ranks to close.
Prance
The principal defectors
so far appear to be among the
influential intellectuals such
as Francois Mauriac and Jean-
Paul Sartre. The basic solidar-
ity of the party remains unaf-
fected, although four Communist
writers have invited party dis-
ciplinary action by attacking
Soviet intervention in Hungary.
The Communist-dominated General
Labor Confederation was forced
to back down on its support of
the party line on Hungary when
many of the unions refused to
followint. The confederation's
admission of the right of com-
ponent unions to hold different
opinions promises serious
organizational troubles in the
future. In an attempt to re-
gain some of its lost prestige
with the country at large, the
confederation has set up its
own relief campaign for Hungar-
ian workers.
Britain
The defection of several
of Britain's few Communist
trade union officials is a
serious blow to the British Com-
mnunist Party, Some of these
defectors are now advising the
30,000 party members to turn to
the Labor Party as the only
bastion of socialism. As a re-
sult of the bitter dissension,
a special national party con-
gress has been called, probably
for Easter time. Such con-
gresses are normally held every
three years, but the last was
in April.
Benelux and Switzerland
Public -reaction against
the USSR and the Communist
parties has been extremely
violent in the Benelux countries,
and the local organizations have
probably lost whatever popular
following they may have had.
The parties are small, the
leadership is fanatically Sta-
linist, and there have been no
reports of internal strife a-
mong the faithful.
Several prominent Swiss
Communists have quit the party,
and the party directorate in
Bases has denounced the USSR
for "violating the rights and
independence of socialist
states." The party press, how-
ever, continues to defend the
Soviet intervention.
Scandinavia
American officials in
Copenhagen believe the Communist
Party there has suffered a severe
blow.
The Swedish Communist Party
has so far faithfully supported
the Soviet action, with only
minor indications of dissidence.
Two relatively unimportant Com-
munists have left the party in
protest against events in Hun-
gary; otherwise there have been
no splits comparable to those
that have taken place in the
Norwegian and Danish Communist
parties.
In a foreign policy debate
in the Norwegian parliament on
9 November, the Communist Party
chairman said the party could
not defend the Soviet interven-
tion.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 November 1956
in Hungary. Three days later
the party issued a statement
calling for the withdrawal of
Soviet forces from Hungary and
the admission of United Nations
observers into that country.
The Icelandic Communist-
controlled labor federation,
without criticizing the USSR,
has yielded to public opinion
to the extent of authorizing
contributions to Hungarian re-
lief, but refused to partici-
pate in a general work stoppage
on 8 November. The party has
-attempted to utilize the situa-
tion in its campaign to oust
Americans from the Keflavik
air base by calling for a dis-
solution of such military pacts
as NATO and the Warsaw pact
and a withdrawal of troops from
all foreign bases.
West Germany and Austria
The West German Communist
Party was legally banned in
August and has apparently gone
HUNGARIAN ECONOMIC PROBLEMS
The almost complete dis-
location of the Hungarian
economy, since 23: October and the
long-continued general strike
will.make.extremely diffi-
cult the efforts of any Soviet
puppet regime to increase out-
put and reduce the discontent
of workers and peasants, one
of the major causes of the re-
volt against Communist and
Soviet domination.
If the program of more
liberal economic measures is
implemented after Soviet troops
restore order, economic con-
cessions would probably be
underground. Since it is
merely an extension of the
Communist Party in East Germany,
its fate depends largely on
developments in the Soviet
zone. The Austrian Communist
Party has been hard hit by Hun-
garian developments, and its
prospects are now bleaker than
ever. The party press has ac-
cused the government of un-
neutral acts in supporting the
Hungarian rebels with arms, but
the government promptly re-
pudiated these charges and
suppressed the major Communist
newspaper. There are no offi-
cial reports of defections, but
the press has reported dissen-
sion and "passionate debates"
at all levels of the party.
Tito's recent condemnation of
Soviet intervention may further
a threatened split between
Stalinist and Titoist elements,
and such a split would reduce
the party to insignificance.
granted as the least dangerous
method of meeting some of the
emphatic demands of the Hungar-
ian populace. These concessions
would probably take the form of
revision in the over-all econom-
ic plan, providing for more
consumer goods, higher wages,
greater worker autonomy and an end
to compulsory collectivization.
Scarcity of consumer goods
and lagging agricultural out-
put have resulted in depressed
living standards. Industrial
production, while it has re-
ceived high priority, is in-
efficient and costly.
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SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
21 November 1956
The Hungarian economy has
been engaged in a forced in-
dustrialization program im-
posed by the Soviet Union,and
by 1953 this overemphasis on
heavy industry had created a
serious strain on the economy.
By 1953 shortages of raw mate-
rials and power had become
chronic. Heavy industrial out-
put declined 3 or 4 percent
below the 1952 level in 1953
and 1954. In 1955 some re-
covery of industrial produc-
tion was achieved through im-
proved management and increased
imports of raw materials.
Hungary must import 85
percent of its iron ore and
nearly all of its metallurgi-
cal coke. Only bauxite--a-
mong the nonferrous ores--does
it have in sufficient quantity
to supply its industrial re-
quirements and provide a sur-
plus for export. Coal and
petroleum supplies are normal-
ly adequate for internal needs,
although temporary shortages
have occurred this year. Hun-
gary also lacks timber, pit
props, wood pulp, leather,
rubber, cotton, pyrites, and
many other industrial raw
materials.
No rapid improvement in
the efficiency of Hungarian
industrial production is
likely because of obsolete
machinery, poor technology, a
lack of some types of trained
specialists, low worker morale
and inexperienced management.
Agricultural Problems
The decline of agricul-
tural production in recent
years has added to Hungary's
industrial difficulties.
Foreign exchange needed for
the purchase of vital indus-
trial raw materials was spent
on imported grain. Hungary
exported grain prior to World
War II. Behind the decline in
Hungarian food output have .
been the low rate of invest-
ment in farm machinery and
fertilizer and the very un-
popular collectivization pro-
gram.
In 1955, production of
major foodstuffs was 92 per-
cent of the prewar average.
In 1956, output is expected to
be lower than last year because
of unfavorable weather condi-
tions, inadequate amounts of
chemical fertilizer, and the
disruption of farm work by the
October revolt.
Standard of Living
The standard of living in
Hungary is lower than in Czech-
oslovakia, East Germany or Po-
land. Consumer goods are scarce,
poor in quality and costly. To
reduce imports of raw materials,
the regime early this year an-
nounced plans to decrease con-
sumer goods production below
last year's.
Hungary's average dietary
level, in terms of calories,
during the past four years has
been higher than that of the
other Satellites, with the ex-
ception of Poland. A prelim-
inary estimate places average
per capita food availability
for the 1956-57 consumption
year '(1 July-30 June) at 2,500
calories per day, assuming no
appreciable losses from the re-
volt. This is 5 to.7 percent be-
low last year, the only year
that food availability reached
prewar (1933-37) levels. How-
ever, the quality of the diet
continues to be below prewar.
In the immediate wake of
the revolution, disruption of
the distribution system is
causing serious shortages of
foods and necessities, espe
cially in Budapest. However,
food stocks available from this
year's harvest, which was more
than three-fourths completed
before the revolt began, and re-
lief shipments of food should
1 be adequate to meet the minimum
needs of the population. Hun-
gary's original 1956-57 plans
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CURRENT INTELLIGENCE WEEKLY SUMMARY
apparently called for 6 to 8 per-
cent of its food to be imported,
principally breadgrains, which
accounted for 6 percent of food
availability in 1955-56. Also,
some sugar and rice were imported..
The shortage of housing
depresses the standard of liv-
ing even more than shortages
of food and consumer goods.
The present rate of construc-
tion is not adequate to main-
tain even the present number
of dwelling units.
Economic Relations With Bloc
After World War II, the
Soviet Union became the chief
market for Hungarian products
and by 1955 accounted for 22
percent of Hungary's total
trade. The bloc accounts for
about '70 percent of Hungary's
total foreign trade.
Each year since 1953 the
Soviet Union has granted Hungary
a loan to reduce the chronic
foreign exchange shortage. The
four loans total $64,000,000.
The most recent loan, for $25,-
000,000, was made in October.
These loans are not expected to
be more than a stopgap for the
foreign exchange shortage, which
arises from the inefficiency of
Hungarian industry.
Hungary is also heavily
indebted for the purchase of
the four Soviet-Hungarian joint
companies from the Soviet Union,
Soviet occupation costs and So-
viet credits for gold settlement
of Hungarian debts. Hungary has
agreed to pay Yugoslavia $85,-
000,000 in settlement of its rep-
arations debt. The first pay-
ment on account to the Soviet
Union, 250,000,000 forints ($20,-
000,000 at the official rate of
exchange), is due in December.
Payment is not likely to be made.
Altogether, since the ex-
tension of the first Sovlet
credit to Hungary in 1949, So-
viet loans have totaled $455,-
000,000, about 8 percent of all
Soviet loans to the bloc since
World War II.
(Prepared by OR
The Yugoslav practice of
socialism is unique in several
ways. In foreign policy, the
Yugoslavs believe in collabora-
tion with reformist as well as
revolutionary socialists. In
domestic policy, they are at-
tempting to avoid the rigid
bureaucracy of the Soviet system
by a thorough decentralization.
Workers, in theory at least,
manage their own factories, and
collectivization has been aban-
doned in favor of an indirect
approach to the socialization
of agriculture. These measures
have increased popular initiative
and participation in the govern-
ment to some extent. The Yugo-
slav Communist Party remains,
however, in complete control of
the state.
The regime abolished its
ministries and delegated their
functions to secretariats, com-
mittees, and to regional and
lower-level bodies. The na-
tional government is now run
primarily by a federal executive
council. Most legislative bodies
are now bicameral--a council of
deputies and a council of pro-
ducers to represent the workers'
collectives in industry. As a
result, functional control has
been replaced by administrative
control.
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SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
21 November 1956
While the role of the cen-
tral government in operating
economic and social enterprises
has narrowed, its ultimate
authority remains, in that its
laws take precedence over those
of all subordinate bodies. it
continues to have prime respon-
sibility for the conduct of
foreign relations and national
defense.
Foreign Policy
Yugoslav Communism, un-
like the Soviet doctrine, is
heretical, in that it accepts
the validity of both reformist
and revolutionary socialist
theories. The Yugoslavs be-
lieve that elements of social-
ism exist in every country and
that socialism of one sort or
another will eventually prove
the dominating force throughout
a world of independent states.
Their theoreticians
hold that in many
countries, particular-
ly advanced Western
nations, socialism
can be attained by slow
evolution,. through
legal methods and
without disrupting
the miltiparty sys-
tem. In backward
countries, they be-
lieve some type of
revolution is neces-
sary to overcome ret-
rogressive forces.
Thus, they believe
Communist countries
should develop con-
nections with social-
ist elements where-
ever they exist.
These views the
Yugoslav Communists
wrap up in the ex-
pression "active co-
existence." A na-
tion must coexist
and can, since the
coming of socialism
is inevitable. A
nation must be alert,
however., to. hasten
its advent and oppose
retarding influences--Stalinist
in the East or reactionary in
the West.
Domestic Policy
The key to domestic policy
has been devised by the leading
Yugoslav theorist, Vice Presi-
dent Edvard Kardelj. He says
"democratic centralism" is
necessary to complete the rev-
olution, as long as hostile
forces continue strong. When
reactionary forces have been
overpowered, however, the con-
tinuation of extreme centralist
control merely leads to the
stagnation of a socialist
society. A socialist state,
when it has become stabilized,
must therefore avoid this trap
by decentralizing authority,
developing initiative, and bring-
ing more and more persons into
the governing process.
DECENTRALIZATION YUGOSLAV GOVERNMENT
PRESIDENT OF
THE REPUBLIC
FEDERAL
EXCUTIVE COUNCIL
REPUBLIC
EXCUTIVE COUNCIL
PRESIDENT OF
THE PEOPLE'S
COMMITTEE
GENERAL
AGRICULTURAL
COOPERATIVE
FEDERAL
COUNCIL
COUN
ofCIL
NATIONAL
L_ ITI[S J
COUNCIL
OF
PRODUCERS
REPUBLIC
PEOPLE'[ ASSEMBLY
REPUBLIC COUNCIL
COUNCIL OF
PRODUCER
I DISTRICT (COUNTY)
PEOPLE'S COMMITTEE
IrDISTRICT 11 COUNCIL
COUNCIL OP
11PRODUCCRS
I COMMUNE
COUNCIL
COUNCIL
F
PROODUCERS
FEDERAL
SUPREME
COURT
4
NOMINAL ELECTION OR APPOINTMENT
LIMITED SUPERVISION
APPEAL
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Decentralization
Decentralization became
the watchword of the Yugoslavs'
attempt to discard the Soviet
models on which their institu-
tions had been based from 1944
to 1949. The Yugoslavs claim
they have rediscovered the true
Marxist doctrine.
In the economy, the regime
abandoned centralized control of
industry. It abolished the old
economic ministries (electrifi-
cation, mining, light industry,
heavy industry, agriculture,
etc.) and established an elabo-
rate system of policy-making
councils, administrative secre-
tariats and corresponding local
bodies. These councils sup-
posedly work with a series of
elected councils extending down
to the workers' council of the
individual enterprise. The
system's main function theoret-
ically is co-ordination, the
power flowing from the bottom
up. In practice, it is partially
used as a channel to disseminate
over-all federal planning goals
and economic policy, although
regional views are often able
to survive the regime's pressures
Belgrade still finds it neces-
sary to maintain numerous
"chambers," councils, and com-
mittees aimed at giving some
direction to economic activity.
Since practically all key of-
ficials throughout the system
are loyal Communists, the re-
gime is assured of ultimate
control.
This decentralization of
economic authority and the
establishment of workers'
councils have definitely in-
creased initiative and inde-
pendence of action, if at the
same time making the economy
somewhat more difficult to
control.
Workers' Councils
The most advertised aspect
of Yugoslavia's economic de-
centralization is the delega-
tion of control to the workers
within the factories, which,
in the Yugoslav Communists'
minds, is the key to the develop-
ment of a proletarian state.
Economic enterprises, being
"social property," are managed
autonomously by the workers'
collective--the workers of the
enterprise. This right to
manage is exercised indirectly
through the workers' council
as the elected organ of the
workers' collective, and the
council in turn elects a manage-
ment board which works with the
director of the enterprise. To
assure that reliable elements
are elected, the workers do
not vote for individuals, but
choose from among lists of
candidates which are drawn up
by the trade union organization
i.i the enterprise that sees to
it that each list contains party
members.
The regime also gave up
the five-year plans. Belgrade
now develops yearly "social
plans," essentially an estimate
of economic expectations and
goals for the year, based on
draft plans of individual enter-
prises. The social plan func-
tions as a mechanism for the
over-all distribution of income
and for the direction of the
flow of investment funds and
foreign trade. It does not,
however, impose the rigidity of
set physical production quotas,
budgets, and wages, as does
Satellite planning.
Having given up many of the
central administrative controls,
the regime has resorted to fis-
cal measures to direct the econ-
omy, thus keeping close control
over investment funds and credit.
The workers' council sup-
posedly makes decisions con-
cerning all the basic matters
of organization and management.
It draws up wage and salary
scales, approves the economic
program for the enterprise,
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SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
decides on the use of "surplus"
profits--profits above those
planned for the enterprise--
and supervises the work of the
management board.
The director of the enter-
prise theoretically represents
both the workers and the state.
He carries out the decisions of
the workers' council and manage-
ment board, organizes and di-
rects the functioning of the
plant, and represents the enter-
prise in its commercial trans-
actions. He must see that the
enterprise operates in accord-
ance with the laws of the state,
and may contest any decision
taken by the council or board
that contradicts those laws.
He must submit any such objec-
tion to the local commune
people's committee or the ap-
propriate governmental body
for final decision.
At best, the workers and
their council manage the plant
only in the most general sense.
Day-to-day decisions as well as
the organization and running of
the enterprise are the prerog-
ative of the director and his
technical assistants. The
workers do, however, have some
power and in a few instances
have dismissed unpopular direc-
tors. They have also played
an important role in the dis-
tribution of "surplus" profits,
sometimes to the discomfiture
of Belgrade or the republic
governments, which prefer that
the money go into capital in-
vestments.
Agriculture
Since 1953, when the re-
gime abandoned its efforts to
bring the peasants into col-
lective farms, it has emphasized
the development of the general
agricultural co-operative as a
device to increase production
and further agricultural social-
ization. The co-operatives
are concerned with the diversi-
fication of economic activities,
including trade in manufactured
goods and agricultural produce,
credit and saving operations for
its members, and even with some
production activities. Member-
ship is voluntary, but the re-
gime is using both "carrot and
stick" measures to increase
peasant participation. The
goal is to have most of a vil-
lage's economic activity, in-
cluding the sale of the peasant's
produce, dependent on the co-
operative. In effect, the peas-
ant would be "socialized" while
technically remaining in pos-
session of the land.
The agricultural co,-opera-
tive supposedly functions much
like an industrial enterprise,
is self-managed and subordinate
to the local commune. One im-
portant difference, however,
is that all of the co-opera-
tive's profits are to be used
for expanding its capital goods,
such as agricultural machinery
and the purchase of fertilizers,
rather than for increasing peas-
ant income..
The government's agri-
cultural program is still largely
in the planning stage, faced
with many problems, The regime
has not found any way to in
crease production or peasant
deliveries. After trying both,
it is uncertain whether high or
low taxes promote larger de-
liveries. It considered in-
creasing the amount of consumer
goods available in villages
in order to stimulate peasant
grain sales, but finally de-
cided.it was necessary to cur-
tail peasant incomes in order
to check inflation.
Belgrade has also de-
centralized the governing proc-
ess itself.. It has changed
the theoretical role of the
party, increased the use of
the popular front and other
mass organizations, and de-
centralized the governmental
structure. The final step in
this development was the creation
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CURRENT INTELLIGENCE WEEKLY SUMMARY
21 November 1956
in the last two years of the
local governmental unit known
as the commune.
Belgrade hailed the estab-
lishment of the commune system
as the second big step toward
socialism after the introduc
tion of workers' self-management.
In theory, the commune repre-
sents the "basic cell of social-
ist society" and gives the
worker the greatest opportunity
for direct participation in
government by achieving the
maximum decentralization pos-
sible in a modern state.
slav state--Serbia, Croatia,
Slovenia, Montenegro, Bosnia-
Hercegovina, and Macedonia.?
have passed some of their
authority to the districts,
which in turn have delegated
new functions to the communes.
The people in the communes
elect by direct vote their own
bicameral assembly which in
turn oversees various councils
for education, internal affairs
economy, banks and roads. The
commune's economic council,
with the help of the directors
and management boards of all
the enterprises within the
commune's jurisdiction, draw
up a social plan for the com-
mune, the first step in the
formulation of the national
social plan. At the same time,
the commune is responsible for
increasing its economic ef-
ficiency and "socialist con-
sciousness."
It will be some time be-
fore the commune has any real
significance as a unit of gov-
ernment, for the system, which
is technically in force through-
out the country, is plagued by
factors, such as economic in-
equalities, local ambitions and
a shortage of administrators.
Communism Intact
At the sixth party congress
in November 1952, the Yugoslav
Communists were told that their
party was to assume a guiding
rather than governing role in
the country. While there has
since been much confusion among
the cadres as to their actual
role, greater use has been made
of governmental, as opposed to
party institutions, in adminis-
tration.
in general, districts or
counties were cut from 341 to
107, and their "commune" sub-
units from 4,121 to 1,121,
ostensibly to allow the ma-
jority of the new districts and
the communes to meet their
basic needs out of their own
economic resources and to foster
stronger self-government. As a
result, the governments of the six
republics which make up the Yugo-
However, throughout the
period of experimental decentrali-
zation of the government and
economy there has been little
evidence that the power structure
of the League of Yugoslav Commu-
nists has been altered. The
party still reaches down to the
most backward commune. Likewise,
the Yugoslavs have not sacri-
ficed the basic idea of a Com-
munist.society. The Yugoslav
theory of-self-management still
sees the citizen as an integral
part of a social whole--so-
ciety--and not as an individ-
ual. His political, economic
and social rights exist mainly
through the organization of
which he is a part. L_ _] 25X1
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