Document Type: 
Document Number (FOIA) /ESDN (CREST): 
Release Decision: 
Original Classification: 
Document Page Count: 
Document Creation Date: 
December 16, 2016
Document Release Date: 
February 7, 2005
Sequence Number: 
Case Number: 
Publication Date: 
November 7, 1957
Content Type: 
PDF icon CIA-RDP79-00927A001500040001-3.pdf4.16 MB
Approved For Release 2005/02/17 : CIA-RDP79-00927A00'1500040004-A- CONFIDENTIAL T CURRENT INTELLIGENCE WEEKLY SUMMARY COPY NO. i; OCR NO. 6412/57 DATE EVIEWER: ^ DECLASSIFIED CLASS. CHANGED TD NEXT REVIEW DATE: AUTH? HR 7n 2 7 November 1957 DOCUMENT NO. NO CHANGE IN CLASS ^ CENTRAL INTELLIGENCE AGENCY OFFICE OF CURRENT INTELLIGENCE On file USDA release instructions apply. DIA and DOS review(s) completed. CONFIDENTIAL 25X1 25X1 0 Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500040001-3 Approved FoRr-Release 2005/02/17 : CIA-RDP79-00927A001500040001-3 THIS MATERIAL CONTAINS INFORMATION AFFECT- ING THE NATIONAL DEFENSE OF THE UNITED STATES WITHIN THE MEANING OF THE ESPIONAGE LAWS, TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS- SION OR REVELATION OF WHICH IN ANY MANNER TO AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW. The Current Intelligence Weekly Summary has been prepared primarily for the internal use of the Central Intelligence Agency. It does not represent a complete coverage of all current situations. Comments and conclusions represent the immediate appraisal of the Office of Current Intelligence. Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500040001-3 CONFDENTIAL CURRENT INTELLIGENCE WEEKLY SUMMARY 7 November 1957 T H E W E E K I N B R I E F OF IMMEDIATE INTEREST SOVIET 40TH ANNIVERSARY CELEBRATIONS . . . . . . . . . . Page 1 Khrushchev's three-hour opening speech has domi- nated the 40th anniversary celebrations in Moscow. He touched lightly on domestic political problems and spoke frequently of the principles of party unity and of the supremacy of the party in all spheres of Soviet life. Referring briefly to recent conflicts in the party's top ranks, he asserted that the central com- mittee had upheld these principles in ousting the "an- tiparty" group in June and Zhukov in October. On the economic side, he reaffirmed the policies and programs announced last September and gave pre- liminary production figures for 1972 for certain key industrial items in support of his assertion that catch- ing up with the United States is an achievable goal. In foreign relations, Kbrushchev emphasized the impor- tance of an understanding between the United States and the USSR and called for a high-level East-West meet- ing. Approved For Release 2005/ DP79-00927AU01500040001-3 THE SECOND SOVIET EARTH SATELLITE . . . . . . . . . . . . Page 3 Sino-Soviet propagandists are hailing the launch- ing of the 1,120-pound second Soviet earth satellite to a maximum of 930 miles on 3 November as an "out- standing victory of Soviet science and vivid testi- mony to the gigantic success of the first Socialist state." This follows the same pattern of propaganda exploitation used after the first launching. The military applications of sputnik II have already been implied in Soviet bloc comment. Free world reaction ranged from praise for the achievement to calls for a greater exchan a of scientific knowledge among the Western allies. iDL;T1Mt i Approved For Release T /EM: VA-MM-00927A001500040001-3 Approved For-Release 2005/02/17: CIA-RDP79-00927A001500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 7 November 1957 PART I (continued) MIDDLE EAST DEVELOPMENTS . . . . . . . . . . . . . . . . . Page 6 The UN debate on Syria's complaint against Turkey has ended inconclusively. Syria continues to make propa- ganda charges against Turkey. Turkish military strength near the Syrian border remains substantially unchanged. The nalitical isituatinn in Jordan continues unstable 25X1 25X1 NOTES AND COMMENTS PROBLEMS OF THE NEW FRENCH GOVERNMENT . . . . . . . . . . Page 1 France's new premier, 38-year-old Felix Gaillard, presides over a tenuous alliance which faces immediate decisions on the Algerian and other highly controver- sial problems. Gaillard has reiterated Mollet's offer to the Algerian rebels for a cease-fire and negotia- tions. Despite the large majority vote for his investi- ture, both major supporting parties--tbe Socialists and the Independents--remain at odds over economic policy and seem in agreement only on the need for a government. The serious divisions in both groups over participating in his government make doubtful their continued support. ALGERIAN REBELLION . . . . . . . . . . . . . . . . Page 2 The Algerian rebel high command recently met in Tunis and reiterated its demand that France recognize Algeria's independence before cease-fire negotiations are held. The rebels have substantially improved their military capabilities and may concentrate on isolated French positions, such as those protecting Saharan areas under oil development. COMMUNISTS TIGHTEN CONTROLS ON BERLIN SECTOR BORDER . . . Page 3 The Communists have established new stringent customs and currency controls on the East-West Berlin border, but apparently do not contemplate closing this border entirely in the near future. Although the new controls violate quadripartite agreements on freedom of movement within Berlin, they do not necessarily affect Allied access to East Berlin, as they appear to be directed primarily against Germans. SECRET ii 25X1 25X1 Approved For Release 2'/O1*g C-R%W-00927A001500040001-3 Approved For Release 2005/02/17 : CIA-RDP79-00927AQQ1500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY PART II (continued) SOVIET INDUSTRIAL OUTPUT CONTINUES HIGH FOLLOWING REORGANIZATION Page 5 For the three months following the 1 July 1957 reorganization of Soviet industrial administration, production in the Russian republic, which accounts for roughly two thirds of the USSR's industrial out- put, was 12 percent above that for the same period a year ago. This total figure, which is somewhat higher than is implied in Khrushchev's anniversary speech, suggests that to date at least the results of the reorganization scheme have at the minimum offset any initial disruption of supply and person- nel. Nevertheless, some modification of the new system may be made if 1957 performance figures re- veal specific weaknesses in its operation. 1 -1 YUGOSLAV REACTION TO ZHUKOV DISMISSAL . . . . . . . . . . Page 6 President Tito's absence from the Moscow cele- bration of the 40th anniversary of the Bolshevik revolution suggests that as a result of the ouster of Marshal Zhukov the Yugoslav leader is having second thoughts about his alignment with the USSR. Belgrade is unlikely to take any steps which would further its alignment with Moscow until the inten- tions of the new Soviet. leadership are clarified. RUMANIAN OVERTURES TO THE WEST . . . . . . . . . . . . . . Page 7 In an effort to enhance the appearance of Ru- manian independence of the Kremlin and to bolster foreign trade, the Bucharest government is making another serious effort to 'improve relations with ENLARGED SCOPE OF STATE FARMS IN SOVIET AGRICULTURE . . . Page 8 The recent Soviet emphasis on state farms in agri- culture has resulted in the formation of 674 new state farms in the USSR in the first half of 1957. This trend has been closely related to the development of the New Lands and, more recently, to increasing pasturage in the new areas to enhance the meat and milk production drive. SECRET iii 25X1 Approved For Re1easd51 :RNA 9-00927A001500040001-3 Approved For Release 2005/03 7C I DP79-00927A901500040001-3 CURRENT INTELLIGENCE WEEKLY SUMMARY 7 November 1957 PART II (continued) DI VITTORIO'S DEATH WEAKENS ITALIAN COMMUNISTS' HOLD ON LABOR . . . . . . . . . . . . . . . . . . . . . . . . Page 9 The Italian Communist party leadership is faced with a difficult problem in finding a successor to Giuseppe Di Vittorio, who died on 3 November after a ten-year term as secretary general of the party-dom- inated Italian General Labor Confederation. Likely successors would not have Di Vittorio's stature and popularity, and must be acceptable to the Communists, the Nenni Socialists, and the rank and file. The Com- munists' hold on labor is threatened by weakening morale in the labor organization and an increasing divergence of interests between Communist and Nenni Socialist members. MACMILLAN GOVERNMENT FORCING SHOWDOWN ON WAGES ISSUE . . . Page 10 Industrial strife is probable in Britain this winter as a result of the trade unions' conflict with the Macmillan government over general wage in- creases. The government insists that the pound sterling would be weakened by further wage increases unaccompanied by rises in productivity. The show- down may come in mid-December, when the government is expected to reject the demands of 500,000 rail- way men to whom it has yielded in previous years. YEMENI CROWN PRINCE BADR'S VISIT TO LONDON . . . . . . . . Page 11 The ten-day official visit to London of Yemeni Crown Prince Badr, which begins on 9 November, may provide a start toward a limited settlement of the Aden-Yemen border dispute. The Yemenis view the trip as strengthening the prospects of Badr to suc- ceed to the throne. The British view the crown prince with suspicion because of his Soviet connections, but presumably hope his visit will facilitate future deal- ings with him should he succeed the present Imam. RETURN TO CIVILIAN GOVERNMENT IMPERILED IN COLOMBIA . . . Page 11 A factional struggle within the Conservative party in Colombia imperils the prospects of an orderly transi- tion of power from the military junta to civilian con- trol. The repudiation by the right-wing Conservatives of the joint Conservative-Liberal presidential candidate may be seized by the military as a pretext to remain in control. SECRET 25X1 Approved For ReleaseTl5 :A3-00927A001500040001-3 Approved For-Release 2005/02( C IS,-7DP79-00927AOD1500040001-3 CURRENT INTELLIGENCE WEEKLY SUMMARY 7 November 1957 PART II (continued) THE SITUATION IN GUATEMALA . . . . . . . . . . . . . . . . Page 12 Little if any progress is being made by the di- verse and antagonistic anti-Communist political groups in Guatemala toward agreeing on a coalition candidate for the presidential election, which will probably be set for January. If the impasse continues and the government remains neutral as it has promised, the Com- munist-infiltrated Revolutionary party might win. Gov- ernment support for any candidate would probably set off renewed violence. DEVELOPMENTS IN INDIAN ECONOMIC SITUATION . . . . . . . . Page 13 The Indian government took action on 31 October to make available nearly all of its dwindling foreign exchange reserves to meet commitments under its Second Five-Year Plan, as widespread crop failures tightened the squeeze on its financial resources. New Delhi ap- parently is counting heavily on American authorization of additional surplus food shipments to ease the new drain on its foreign exchange necessitated by emer- gency food imports. PHILIPPINE ELECTION CAMPAIGN . . . . . . . . . . . . . . . Page 14 In the last week of intensive campaigning for the 12 November Philippine election, President Garcia is still widely believed to have an edge over his op- ponents, although an upset by either Liberal party candidate Yulo or Progressive party candidate Manahan cannot be ruled out. Despite local expectations of widespread electoral frauds, and numerous reports of terrorism, government agencies responsible for the conduct of the elections appear to be making an ef- fort to ensure free elections. INDONESIA . . The Indonesian government has postponed the second national conference from 15 to 25 November, apparently to give its "Regain West Irian Drive" more opportunity to stimulate national unity before the meeting opens. The second phase of this anti-Dutch drive is to start on 10 November, and a third phase is set to coincide with the UN General Assembly debate on Indonesia's claim to the area later this month. Antagonism be- tween Sukarno and Hatta may be intensifying, with Hatta reportedly prepared to take active leadership of anti- Communist elements against the President. F_ I SECRET . . Page 15 25X1 25X1 Approved For Release 51D 7 :CIA- 9-00927A001500040001-3 Approved For Release 2005/02/17 : CIA-RDP79-00927AQQ1500040001-3 SECRET PART II (continued) THAILAND . . . . . . . . . . . . . . . . . . . . . . . . Page 15 Marshal Sarit is seeking to give the impression that he fully controls the situation in Thailand. Earlier reports that he was "losing his grip" may have been exaggerated by ambitious colleagues, such as In- terior Minister Prapat, who probably hope to succeed Sarit as Thailand's de facto ruler. SITUATION IN LAOS . . . . . . . . . . . : . . . . . . . . Page 16 The Laotian government and the Pathet Lao have concluded negotiations on the terms of a settlement, and Prime Minister Souvanna Phouma plans shortly to request National Assembly approval for a coalition gov- ernment. Influential conservative leaders are opposed to the manner in which Souvanna pushed through the set- tlement. However, there is widespread sentiment for national reunification, and it is probable that Nation- al Assembly approval will be forthcoming. CHINESE TO PRESS FOR FURTHER SCIENTIFIC COOPERATION WITH USSR . . . . . . . . . . . . . . . . . . . . . . . . Page 17 Mao Tse-tung's entourage in Moscow includes two scientific and technical delegations which will ne- gotiate a Sino-Soviet agreement for joint research and cooperation. Soviet missile and earth-satellite development and nuclear advances are viewed by the Chinese as impressive examples of Soviet supremacy in science and undoubtedly have prompted the Chinese to press for agreements which would give them a larger share in the benefits of the Soviet successes. DROUGHT THREATENS WINTER CROPS IN COMMUNIST CHINA . . . . Page 18 Drought lasting more than 100 days threatens the winter wheat and rape crops in most of North China, large areas of the central provinces, and some of South China. Crop failures would aggravate serious problems already facing the regime in the countryside. SECRET vi 25X1 25X1 Approved For ReleaseZOU5/UZ1TT IEI46FY9-00927A001500040001-3 Approved ForFTe-lease 2005/02/17 : CIA-RDP79-00927AY01500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 7 November 1957 PATTERNS AND PERSPECTIVES THE ZHUKOV OUSTER: BACKGROUND. AND IMPLICATIONS . . Page 1 POLICY TRENDS-IN THE NEW WEST GERMAN GOVERNMENT . . . . . Page 8 During Chancellor Adenauer's third term, West Ger- many is likely to demonstrate an increasingly self-as- sertive role within the framework of the Western alliance. Unwilling to leave its fate in the hands of other major powers, Bonn will probably seek a gradual extension of its political influence to a point commensurate with its already important world economic position. In the mili- tary field, Defense Minister Strauss is likely to con- centrate on equipping existing forces with modern weap- ons.; In foreign policy, an early effort toward improv- ing relations with the Eastern European satellites, principally Poland, seems likely, although Tito's re- cent recognition of East Germany may delay this step. F_ I NEW PAKISTANI GOVERNMENT'S GROWING ECONOMIC PROBLEMS . . . Page 11 The, new Pakistani government, while retaining the pro-Western foreign policy outlook of its predecessors, seems unlikely to pursue strong domestic. economic poli- cies. This refusal to face up to economic realities may result in serious deterioration of the country's economy. Growing economic instability and continuing political confusion may neutralize the effectiveness of American military aid and make Pakistan increasin ly dependent on foreign economic assistance. 25X1 25X1 SECRET vii THE -WEEK Approved For Re1ease 51U2TT7 :CIA=RDP79-00927A001500040001-3 Approved For-Release 2005/02/17 : CIA-RDP79-00927A001500040001-3 ql~ReRer COWIDENT1AL CURRENT INTELLIGENCE WEEKLY HU A1Y 7 November 1957 OF IMMEDIATE INTEREST SOVIET 40TH ANNIVERSARY CELEBRATIONS Khrushchev opened the 40th anniversary celebrations in Mos- cow on 6 November with a three- hour speech to a gathering of over 15,000 officials of the Communist world, including 61 foreign delegations and deposed leaders Malenkov, Kaganovich, and Shepilov. Khrushchev re- viewed in glowing colors 40 years of Soviet achievement and made confident predictions for the future. He touched lightly on domestic political problems, and spoke frequently--in general and conventional terms--of the principles of party unity and of the supremacy of the party in all spheres of Soviet life. Referring briefly to recent con- flicts in the party's top ranks, he asserted that the central committee had upheld these prin- ciples in ousting the "antiparty group" in June and Zhukov in October. In his first formal pro- nouncement on Stalin since the attack at the 20th party con- gress, Khrushchev struck the now-familiar pose of balancing Stalin's vices against his mer- its. He asserted piously that Communists had the strength to admit mistakes, but rejected at- tempts to attribute Stalin's mistakes to the Soviet system. Attacking the concept of "na- tional Communism," he damned Djilas and Nagy as revisionists whom the West described as "lib- eral Communists." Although he condemned the two ideological extremes of "revisionism" and "dogmatism," Khrushchev avoided entirely any discussion of the problem of nonconformity in So- viet intellectual life. In the field of foreign re- lations, Khrushchev emphasized the importance of an understand- ing between the United States and the USSR and called for a "high-level meeting of repre- sentatives of capitalist and socialist countries to exclude war as a means of solving polit- ical questions," to end the arms race, and to establish re- lations between states on the basis of peaceful coexistence. Khrushchev sought to por- tray the Soviet Union as the champion of peace, in contrast to the West's alleged desire to "keep the world on the brink of war." He declared that "wars are not needed for the victory of socialism" and that the USSR would never "use any means of destruction" except in retalia- tion against an attack by "im- perialist states." The confidence which marked Khrushchev's speech suggests that the Soviet leaders believe their technological achievements have given them a strong polit- ical initiative which will in- crease pressure on the West to make concessions, particularly in the disarmament field. The Russians apparently believe they can, from their new "posi- tion of strength," isolate the United States and persuade Amer- ica's allies that their inter- ests dictate a more independent policy. Khrushchev cited the eco- nomic "victories" of the past 40 years of Soviet rule and forecast Soviet production 15 years from now for certain key CO F DE N PART I Approved For Rele.Qs4 2b#YAAt/ :ThIAI d 927A0015000400bq-1 of 8 Approved For Release 2005/02/17 : CIA-RDP79-00927A001500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY 5J4 industrial items. His prelim- inary 1957 output figures were considerably less impressive then his image of the victorious past and they seem to have made him conservative in his vision of the promising future. Only the most moderate overfulfill- ment of the modest 1957 plan for total industrial production seems implied by Khrushchev's figures. At the same time, the 1972 "goals," while impressive, imply growth rates considerably below both reported 1950-1956 indus- trial growth and the increases originally planned for the now- defunct Sixth Five-Year Plan. tempt to "do everything at once"--though apparently at a somewhat less headlong pace. From the statements in his speech, it would appear that Khrushchev intends to continue to implement policies toward the satellites which are based on the decisions of the 20th party congress and which were reaffirmed in the declaration of 30 October 1956, i.e., "the countries of the great common- wealth of socialist nations can build their relations only on the principle of full equality, respect of territorial integ- rity, state independence and sovereignty, and noninterference 25X1 Khrushchev claimed, however, that the USSR "can in the next 15 years not only catch up with the present volume of out- put ...of the United States but also outstrip it." Besides the theme of "catching up" with the United States, Khrushchev also dwelt at varying length upon those other economic policies and programs of the regime which will go into the long-term plan announced as under preparation for the 1959-1965 period. His discussion of agriculture, hous- ing, sputnik, education, and de- fense suggests a continued at- in the domestic affairs of one another." This is further in- dicated by the front-paging in Pravda on 5 November of a de- tailed restatement by Polish party leader Gomulka of his well-known "separate roads to socialism" doctrine. Khrushchev was followed to the rostrum during the ten-and- a-half hour session by a parade of Communist leaders, headed by Mao Tse-tung. Mao went out of his way to endorse Khru- shchev's major domestic poli- cies, which would have the ef- fect of strengthening the lat- ter's hand in any further party SECRET PART I OF IMMEDIATE INTEREST Page 2 of 8 Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500040001-3 Approved For Release 2005/02/17: CIA-RDP79-00927A001500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY struggles. There are some in- dications that Khrushchev has not completely eliminated his opposition within the party (see page 1, Part III). Mao described as "wise steps" Khrushchev's plans to decentralize management of industry and construction, the agricultural development pro- gram, and actions taken against "antiparty groups" and toward "improvement of political in- doctrination in the army." Mao's support may make Khru- shchev more receptive to any Chinese requests for additional .Soviet economic, military, and scientific aid. 25X1 The launching of the sec- ond Soviet earth satellite was announced by Moscow radio on 3 November after the satellite had completed at least one or- bit. The official announcement stated that the new vehicle weighs 1,120 pounds, is some 930 nautical miles above the earth at the farthest point The orbits of both satellites are constant in relation to the axis of the earth- -65* to the equatorial plane. Orbits are shown schematically. in its eliptical orbit, and is carrying a dog, together with instrumentation for transmit- ting data. The announced weight of the new satellite is by far its most significant military char- acteristic. The propulsion ca- pability demonstrated by placing 560 nautical miles SECRET PART I Approved For ReleM 2;?/II#TEIAl-927AO0150004008$I?e 3 of 8 Approved ForRelease 2005/02/17 : CIA-RDP79-00927AW1500040001-3 SECRET such a weight in orbit is read- ily adaptable to an ICBM or a reconnaissance vehicle. Soviet statements continue to imply that the Russians will launch several more such satel- lites during the coming year and that they intend to attempt a launching to the moon. Communist Exploitation Following the same pattern of propaganda exploitation used after the launching of the first earth satellite, Soviet prop- agandists again are concentrat- ing on hailing the second launching as "an outstanding victory of Soviet science and vivid testimony to the gigantic success of the first socialist state." Considerable attention is being given to foreign reac- tions, particularly American. Pravda assessed US reaction to th-e-lunching of the second satellite as ranging from "sin- cere admiration to panic, hys- teria, and malicious rage." TASS reported "considerable confusion" among Washington political circles and quoted American press sources as say- ing the Soviet accomplishment leaves no doubt in Washington that the Russians are able to launch an ICBM'against'points in the United States. One Eastern European radio commentator told his domestic listeners on 4 November that just as the October Revolution opened "Chapter II of the world's history," so the sec- ond earth satellite began "Chap- ter III entitled 'Man is Begin- ning to Conquer the Cosmos'." The Bulgarian press commented that the two satellites have ended a "long and carefully nurtured" American delusion of technical and scientific suprem- acy, and said that nothing can dim the Soviet star. The Yugoslav radio, taking the humanitarian tack it fol- lowed a few weeks ago, commented, "If one side is able to do this today, the other side will be able to do the same thing to- morrow. What sense does it make then to continue the race and the launching of new arms?" Peiping is symbolizing the second satellite as the "Red Moon" which "deals a heavy blow to the saber-rattlers." The theme of "socialist superiority" and the "failure of Western capitalism" which was developed gradually in publicizing the first satellite is now foremost in every Chinese Communist com- muniqud. While direct military implications are avoided in favor of scientific claims, pointed references are made to new Soviet achievements in So- viet launching techniques. Non-Communist comment, less voluminous than that on the first earth satellite, general- ly follows the same line. Sev- eral newspapers have said that the new satellite was launched to divert attention from the ouster of Marshal Zhukov. Western European press and official circles stressed the scientific achievement, and the SECRET PART I Approved For Relea9e 200~IUZ/T~TEI WDP7N=UD927A0015000400v =~e 4 of 8 Approved For Release 2005/02/17: CIA-RDP79-00927A001500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY need for greater coordination of Western scientific programs. Bonn government supporters said that the December NATO meeting must come up with a tangible program. The second launching set off speculation in "in- formed quarters" in Bonn that West German participation in rocket development, now pro- hibited by the Paris treaties, was necessary in catching up with the USSR, and the question was raised of a possible Euro- pean rocket production pool and of rocket production by Ger- many itself or with the United States and France. The European press gener- ally expressed alarm over the lead assumed by the USSR over the West, said by the British press to be two years. The launching has received a big play in the Middle East press as an additional demon- stration of Soviet scientific superiority, a further loss for American prestige, and another reason for spreading neutralism throughout Asia and Africa. Both the leading English daily Times of Tndia and the nationalist Tndian Express ex- pressed confidence inntthe United States' ability shortly to pro- duce its own sputnik and the Times added that there is there- o-no question of the USSR bargaining from the position of comparative advantage. Both papers see this Soviet achieve- ment as carrying the promise of a new and better future, and the Times adds that the realiza- tion of the promise will depend on the measure in which the two power blocs are prepared to co- operate. Political and press circles in Ceylon saw the launching of the second satellite as prob- ably science's most notable achievement. It was generally agreed that a satellite race between East and West could become as bitterly contested as arms races and might finally be settled only by war. Japan seems impressed with the size of the new earth satel- lite. Kyodo News Agency noted that it "might well be" imagined that the USSR already possesses transcontinental ballistic rockets that could deliver hydrogen bombs to any part of the world. Prime Minister Kishi on 6 November asked Ambassador MacArthur when the United States would launch its earth satel- lite. He said that not only were the Socialists using the Soviet success to criticize his government's security and foreign policy, particularly. as it related to close coopera- tion with the United States, but that some of his own Lib- eral Democrats were concerned as well. When informed by MacArthur that an American pilot satellite would be launched in December and a more instrumented IGY satel- lite in March 1958, Kishi commented, "From our point of view, the sooner, the better." SECRET 25X1 25X1 PART I Approved For ReIeM 2 M MT.FeIA- 0927A001500040 y 5 of 8 Approved For Release 2005/02/17 : CIA-RDP79-00927A001500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 7 November 1957 Turkey and Syria International concern over Turkish-Syrian tensions has diminished markedly following the close of the UN debate on the problem last week, but the Syrian regime has continued its propaganda barrage charging Turkey with overflights and asserting the Turks have not made any move to ease the bor- der situation between the two countries. Even more than pre- viously, this Syrian activity appears to be inspired by do- mestic political considerations, especially the regime's need to maintain an atmosphere of crisis in order to hold itself to- gether and prevent any rally of potential opposition. The Turkish maneuvers originally scheduled for 30 October have been delayed, at least until 15 November Reports that Turkish group orces have withdrawn from the border area have not been confirmed. The Turks recently prohibited the American air attache from en- tering an area about 65 miles from the frontier where they have a major air base. The rig- orous restrictions the Turks have placed on the movement of foreign, including American, newspapermen who have sought to report on conditions in the border area may well give An- kara a bad press which will hin- der efforts to counter Soviet and Syrian propaganda. culties are likely to loom larger than they have for the past several months. The un- interrupted development of closer military and economic relations between Syria and the Soviet Union, plus the ap- parent Syrian responsiveness to Soviet diplomacy during the UN debates, is leading Tel Aviv to step up its own diplomatic efforts. The Israelis have in- dicated they intend to make a new request to the United States for heavy weapons, probably the latest jet fighters and possibly some submarines. Israel is already scheduled to receive antisubmarine war- fare equipment from Britain. These moves suggest that the Israelis anticipate a new build-up in tensions with the Arabs in general and Syria in particular during the coming months. Local frictions, any of which could easily devel- op into major problems, re- main on all of Israel's frontiers, but particularly at present on the borders with Syria and with Jordan, where the problem of the Jerusalem neutral area and Israeli tree-planting and digging continue to fester. Behind Jordan's insist- ence that the West publicly espouse its cause in discus- sions with Israel lies the pro-Western government's ever more pressing need for 25X1 support in its domestic dif- Israel As Turkish-Syrian tensions subside, Syrian-Israeli diffi- SECRET X1 23 PART I Approved For Release 2~~1TECfANRDP79-00927A001500040001gT 6 of 8 Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY S U&RY 25X1 It is not clear whether the flare-up last week end in the propaganda war between Cairo and Amman is related to a possible move by the "free officers" group. Cairo charged that King Hussayn's government had been negotiating with Is- rael, "selling out" the Arab refugees for $30,000,000 of American aid, and implied that Hussayn should share the fate of King Abdullah, who was as- sassinated in 1951 by anti- Israeli fanatics. Amman re- plied with a venomous personal assault on the "little colonel of low birth and lower manners." The Egyptian leaders are very probably considerably re- lieved to see the Syrian-Turkish question calming down. Egyp- tian Foreign Minister Fawzi played a major role in leading the Syrians to accept an incon- clusive finale to the UN dis- cussions. The easing of the international situation ap- parently has given Nasir an op- portunity finally to do some- thing about cabinet changes which have been rumored for the past several months. Three shifts were an- nounced on 3 November, but the nature of the changes is not indicative of a major reshuf- fle. Nasir for some time has been dissatisfied with some of his ministers, particularly with the unpopular reception some of them received during the parliamentary elections last July. The director of Libera- tion Province, accused of in- efficiency and corruption, is to be thrown as a sop to the public, to give the tame Egyp- tian parliament an opportunity to stage an "investigation." The Nasir regime also an- nounced this week the consti- tution of the "National Union," the latest attempt to provide some link between the regime and the public. The new Na- tional Union has little more chance than its predecessor, the Liberation Rally, of be- coming more than a convenient device for organizing parades and other political demonstra- tions. SE CRET PART I OF IMMEDIATE INTEREST Page 7 of 8 Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500040001-3 Approved For Release 2005/02/17 : CIA-RDP79-00927A001500040001-3 SECRET Soviet treatment of the Syrian question this week was Sr_ CRET designed to counter the feeling that the "war threat" in the Middle East is over. Soviet propaganda charges against Turkey have been continuous although the tone has become more moderate and the volume has declined during the past week. Moscow will probably con- tinue to emphasize the dangers in the area for the benefit of numerous African and Asian dele- gates who arrived in the USSR to witness the cele- brations. 25X1 PART I Approved For ReWas; 9'bM: UfX -00927A00150004 @ -38 of 8 Approved For Release 2005/02/17 : CIA-RDP79-00927AW1500040001-3 CONFIDENTIAL CURRENT INTELLIGENCE WEEKLY VZMIT NOTES AND COMMENTS France's new premier, 38- year-old Felix Gaillard, pre- sides over a tenuous alliance which faces immediate decisions on the Algerian and other high- ly controversial problems. De- spite his investiture vote of 337 to 173, both major support- ing parties--the Socialists and the Independents--remain at odds over his economic policy and seem in agreement only on the need for a government. The serious divisions in both groups over participating in his gov- ernment make doubtful their continued support. Gaillard's cabinet is one of the smallest in recent years, but it includes a wider range of political views than any government since the 1951 elec- tions. Despite its breadth, however, there is no sign of planned coordination among par- ty leaders. The Socialists have some assurance of continuity on party policy, since such key posts as the Foreign Ministry under Pineau and the Ministry for Algeria under Lacoste are in the same hands as they were under Mollet and Bourges-Maunou- ry. Popular Republican desires to regain control of the For- eign Ministry have been partial- ly met by the appointment of one of their leaders, Pierre Pflimlin, as finance minister. Gaillard has avoided a com- mitment on Socialist-backed so- cial welfare legislation, how- ever, by a plan to refer it to round-table conferences. The Independents, who are repre- sented in the cabinet by com- parative unknowns, seem less firmly committed to Gaillard and are already threatening difficulties if the Socialists refuse to yield on this issue. Gaillard has tried to head off any early internal dissension by threatening to resign if any party bolts the coalition. Gaillard has put Algeria at the top of his legislative program and will probably get early assembly approval of an amended basic statute. He has reiterated Mollet's offer of a cease-fire and negotiations, but he has also indicated a willingness to make further con- cessions to the right, thus prob- ably increasing the restiveness CpENTIAI PART II Approved For Relea M/0 :(MI( J-00927A0015000400l'I ?. - of 19 Approved For Release 2005/02/17 : CIA-RDP79-00927A01500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY of the Socialist rank and file, who want a more liberal Alge- rian policy. Antiregime senti- ment in the army in Algeria, meanwhile, is said to have in- creased during the prolonged government crisis, and the French press in Algiers is wag- ing a violent campaign against the basic statute. Further clashes over basic policies are in prospect when the cabinet takes up the prob- lems of internal inflation and the exhaustion of the financial resources required for govern- ment operations and for foreign trade. Gaillard is anxious to have France make an effort to put its financial affairs in shape by drastic economies and new taxes before he asks for foreign aid, but the American embassy in Paris sees "precious little" recognition by French leaders, the mass of deputies, and public opinion of the need for belt-tightening. There are already signs that labor will lose no time in renewing strike activity for new wage hikes. F__ I While military developments in Algeria do not bear out the contention of some rebel spokes- men that a new offensive has been launched, the Algerian re- bellion--which entered its fourth year on 1 November--gives no indication of subsiding. The rebels in fact are believed to have substantially improved their military capabilities during the past few months. At the same time they have concentrated on enlisting support abroad pre- paratory to the forthcoming United Nations debate on the Al- gerian question. Divergences of opinion within the nine-man executive committee of the Algerian Na- tional Liberation Front (FLN)-- believed to be the rebel high command--seem to have been elim- inated at a five-day strategy conference held from 25 to 30 October in Tunis. The committee reiterated its demand that France recognize Algeria's in- dependence before cease-fire negotiations are held, in effect repudiating the more moderate position of the FLN's representa- tive at the United Nations in September. 25X1 Tunisian President Bourgui- ba, who has urged the FLN to be conciliatory and whose UN emis- sary had espoused the earlier FLN proposal for a conference of France, Morocco, Tunisia, and FLN representatives in an attempt to solve the Algerian dilemma, rebuked the FLN for its negative stand. He has sent an emissary to Morocco in an apparent attempt to enlist the support cf King Mohamed V for a possible joint Moroccan- Tunisian effort to influence the FLN or perhaps to make a new 25X1 attempt to mediate between France and the Algerian nationalists. The rebels appear to be biding their time militarily. They claim to be prepared to SECRET PART II NOTES AND COMMENTS Page 2 of 19 Approved For Release 2005/02/17 : CIA-RDP79-00927A001500040001-3 Approved For Release 2005/02/17 : CIA-RDP79-00927A 01500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SU kARY Tunis 1 . --ggourt ? 1 L O~l 1 Hassi Messar, i A L G E R I A\\\\\\\~\ MAURITANIA '?` Oilfields under development ?~~,? N I G E R put 100,000 men in the field. An Italian journalist who has visited FLN camps rates these forces as "highly mobile, well trained, adequately armed, and unbeatable in the back country." Conceding defeat in the urban areas, where French security forces are largely concentrated, the FLN probably will concentrate on isolated French military positions in Algeria, such as those protecting Saharan areas under oil development. It- Toward this end, rebel forces have for some months been moving southward, and a small concentration of rebels is reported to be in the Fezzan Province of Libya. The French expect these groups in Libya to make an attack on the oil field at Edjele, near the Libyan border, and have rein- forced some of the desert garrisons. COMMUNISTS TIGHTEN CONTROLS ON BERLIN SECTOR BORDER lished new stringent customs and currency controls at the East-West Berlin border, but apparently do not contemplate closing this border entirely ing with Allied access to East Berlin. The ostensible reason for tighter controls is to check the flow of goods and the new currency between the two parts SECRET FEZZAN 25X1 PART II Approved For Release ZOD5T02W: CIA P79=00927AO01500040001--e 3 of 19 Approved For Release 2005/02/17 : CIA-RDP79-00927A001500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUUARY of the city, and to cut down the number of refugees fleeing to the West. The East German regime undoubtedly also wel- comes the opportunity to assert more control over East Berlin. Although the new controls vio- late quadripartite agreements on freedom of movement within Berlin, they do not affect Al- lied access to East Berlin as they appear to be directed pri- marily against Germans. The renovation of tempo- rary elevated stations near the sector border in East Berlin which were built about three years ago,for the purpose of customs control, together with the reported plan to reroute traffic between Potsdam and East Berlin to eliminate the necessity for traversing West Berlin, suggests that elevated traffic is to be greatly restricted in order to fa- 25X1 SECRET cilitate customs and cur- rency checks. Since the currency con- version on 13 October, the new East German marks appear to have moved to the West in such quan- tities as to render the conver- sion ineffective without more drastic controls. As part of one reported over-all plan, the Communists may operate the ele- vated trains in separate sys- tems within each sector. During the past few days, the East Ger- mans have intermittently chosen one car of the trains leaving and entering East Berlin and subjected the occupants to rig- orous searches. All foot traffic crossing the sector borders is being closely controlled. Persons going to West Berlin are forced at least to show the contents of their briefcases and wallets and to leave East marks with Autobahn Highway r'21 'At'l - Railroad PART II Approved For Releas4 ?/A :c9--' %-00927A0015000400 '--3e 4 of 19 Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMEARY the guards. Many persons carry- ing goods to West Berlin have been arrested for smuggling, while those going to East Ber- lin have had Western goods and currency confiscated. The num- ber of police at vehicle cross- ing points allegedly has been quadrupled, and all cars are thoroughly searched. Rather than attempt to close the border completely, the regime will probably continue to use random, though severe, spot checks, in the belief that the very unpredictability of such SOVIET INDUSTRIAL OUTPUT CONTINUES HIGH FOLLOWING REORGANIZATION For the three months fol- lowing the 1 July 1957 reor- ganization of Soviet industrial administration, output in the Russian republic (RSFSR) was 12 percent above that for the same period a year ago, accord- ing to N. Baibakov, chief plan- ner and first deputy premier of the RSFSR. Linking the new regional administration to this increase, Baibakov implies that the new form of administration has been markedly successful. The Russian republic is the largest in the USSR and ac- counts for roughly two thirds of Soviet industrial output. In 1955, the RSFSR accounted for the following percentages of total USSR output: steel, 59 percent; oil, 70 percent; automobiles, 92 percent; cotton cloth, 89 percent; cement, 65 percent; and coal, 58 percent.. For the first half of 1957 industrial output in the RSFSR reportedly increased 9 percent over the comparable 1956 period. For the year 1956, the report- ed increase over 1955 was al- most 10 percent. If, in the new control measures will act as a deterrent to currency and goods smuggling. The controls have led to widespread dissatis- faction and increased tension. In some instances, strikes and passive resistance have been threatened if there is not some relaxation. The present prac- tices will probably be contin- ued, however, as the East Ger- man regime seems determined to minimize the currency leakage to the West and to assert its authority. conditions resulting from the reorganization, the 12-percent figure for the third-quarter increase is comparable to that used in arriving at a figure for 1956, it would suggest con- siderable success -for Khru- shchev's reorganization scheme in at least offsetting the initial disruptions in supply and per- sonnel accompanying the changes. Some modification of the new system may occur if the de- tailed forecasts of plan ful- fillment for the full year in- dicate specific weaknesses not now apparent. For example, changes might be necessary in the pattern of interregional supply of raw and semifinished goods, if press statements stressing the priority of in- terregional above intraregional deliveries actually reflect mal- functioning of the system of supply. Such problems could prompt consolidation of certain of the 105 councils of national economy and redefinition of the economic regions administered by them. (Pre- pared by ORR) SECRET 25X1 25X1 PART I I Approved For ReleasdN02W.: T?00927AO01500040o $e 5 of 19 Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY YUGOSLAV REACTION TO ZHUKOV DISMISSAL President Tito's absence from the Moscow celebration of the 40th anniversary of the Bolshevik revolution suggests that, as a result of the ouster of Marshal Zhukov, the Yugoslav leader is having second thoughts about his alignment with the USSR. Although Belgrade prob- ably will not for the present significantly alter any of its policies which generally paral- el those of Moscow, the Yugo- slavs appear genuinely disturbed over the possible ramifications of Zhukov's removal and are un- likely to take any steps which would further their alignment with Moscow until the inten- tions of the new Soviet leader- ship are clarified. On 29 October Belgrade an- nounced that a sudden attack of lumbago would prevent Tito from traveling abroad for the next few months. The American embassy reports, however, that high Yugoslav officials at a Turkish embassy reception on 29 October made no attempt to maintain the position that Ti- 'to's illness was anything but political. This is further borne out by Tito's refusal to grant an audience to the Soviet ambassador on the latter's re- turn from Moscow on 1 November. Neither Belgrade's announce- ment of Tito's "illness" nor the curt Soviet acknowledgment three days later was accompanied by any statements of regret concerning his absence from the Moscow celebrations. Tito apparently had con- siderable personal confidence in Zhukov and regarded him as a stabilizing influence in the Soviet hierarchy. High Yugo- slav officials had indicated previously their antipathy to "one-man rule" in the USSR and their support for the Khru- shchev-Zhukov "team." On 1 November Jose Vilfan, a confi- dant of Tito's, told the Ameri- can chargd in Belgrade that there had been no prior indica- tions that Khrushchev intended to upset the balance of power within the Kremlin. Vilfan in- timated further that a "reap- praisal of the Yugoslav analy- sis" of Yugoslav policy toward the USSR is now required. The fact that the Soviet leadership was maneuvering to unseat Zhukov while the latter was allegedly representing the USSR on a good- will visit to Yugoslavia has undoubtedly contributed to Ti- to's irritation. Zhukov were disgraced, it worrr- uld be evidence of a very serious situation. Press reports from Belgrade state that the prev- alent view within the Yugoslav Foreign Ministry--despite Vil- fan's implication of a Khru- shchev-Zhukov fight--is that Khrushchev, because of his pre- carious hold on the Soviet cen- tral committee, was forced to cooperate with the so-called Stalinists who initiated Zhukov's removal. This explanation is of course consistent with the view long held in Belgrade that the Khrushchev-Zhukov "team" faced serious opposition in the party and required all possible sup- port for its policies if the opposition were to be overcome. The Yugoslav radio announced on 2 November that Soviet party secretary Mikhail Suslov--a Stalinist in Yugoslav eyes--de- livered the final report before the Soviet central committee on Zhukov's ouster. Yugoslav Vice President Kardelj is heading the SECRET 25X1 PART II NOTES AND COMMENTS pa 0 of 19 Approved For Release 2005/02/17 : CIA-RDP79-00927A00150004gU-3 Approved For Release 2005/02/17: CIA-RDP79-00927A901500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 7 November 1957 "party-state" delegation--prob- ably the same that would have accompanied Tito--now in Mos- cow. While the other Communist delegations are of a higher level, Belgrade, by sending its most prominent delegation since the 1948 break to attend the Moscow celebration, has clearly indicated its desire to continue its contacts with the Communist world despite any displeasure over recent developments in Moscow. 25X1 RUMANIAN OVERTURES TO THE WEST In an effort to enhance the appearance of Rumanian in- dependence of the Kremlin and to bolster foreign trade, the Bucharest government is making another serious effort to im- prove relations with Western countries and to re-create the relatively favorable diplomatic climate which existed prior to the Hungarian revolt. It has reopened negotia- tions with Bonn to facilitate the repatriation of Germans in Rumania, liberalized the grant- ing of exit visas to Israel, eased tourist and emigration controls generally, permitted the French to open a library in Bucharest, promised to lift the ban on American visitors, and agreed to sponsor a tour of the USIA's architectural exhibit "Made in USA." Final- ly, a Foreign Ministry spokes- man intimated during a state banquet for Senator Ellender on 2 November that US Minis- ter Thayer's long-blocked re- quest for a public reading room and permission to distribute an American magazine would re- ceive the favorable treatment accorded similar French re- quests. Presumably, these initia- tives were made after consulta- tion with Moscow. When Foreign Minister Ion Maurer returned to Bucharest from his meeting with the Yugoslavs, he summoned many of his ambassadors home for consultation before flying to the United Nations. In New York he unsuccessfully at- tempted to secure a seat for Rumania on the Political Af- fairs Committee of the General Assembly. In keeping with their idea that such diplomatic moves en- hance their prestige, the Ru- manians are seeking to play down their subservience to the Kremlin. When Senator Ellender and Minister Thayer met with top government officials last week, politburo member Emil Bodnaras complained that Ameri- can officials refer publicly to Rumania as a "satellite" and "captive nation." Minister Thayer noted the obvious ap- probation with which Premier Stoics and politburo member Mogioros, who were also present, accorded Bodnaras' rather emo- tional outburst. The Rumanians can be ex- pected to capitalize on the propaganda benefits which may accrue from a relaxation of emigration and tourist controls and to attempt to convince the free world of their sovereignty and independence. Domestically, they may hope that closer con- tact with Western countries will persuade the Rumanian people that their government is ac- cepted on equal footing by the rest of the world. SECRET 25X1 PART II NOTES AND COMMENTS Page 7 of 19 Approved For Release 2005/02/17 : CIA-RDP79-00927A001500040001-3 Approved For Release 2005/02/17 : CIA-RDP79-00927A001500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY 'SUMMARY ENLARGED SCOPE OF STATE FARMS IN SOVIET AGRICULTURE The recent Soviet emphasis on state farms in agriculture has resulted in the formation of 674 new state farms in the USSR in the first half of 1957. State farms have been increas- ing in importance since the in- itiation of the "New Lands" pro- gram in 1954, and now account for more than a quarter of the total sown area, as compared with approximately 12 percent in 1953. Conversely, the role of collective farms, still the largest and most important sec- tor of agriculture, has been somewhat de-emphasized. TOTAL SOWN AREA AREA SOWN TO GRAIN N.A. CATTLE, SWINE SHEEP 4 GOATS TRACTORS (IN AG ICULTUMAL USE) N.A. COMBINES N.A. TRUCKS IN AGRICULTUM AL USE) N.A. -,.- -7 II ,.0-3 Although state farms are proclaimed by Soviet leaders to be the highest form of organiza- tion in socialist agriculture, the current emphasis on the role of state farms does not appear to be based primarily on ideo- logical grounds. Instead the trend is apparently explained largely in terms of the present programs in Soviet agriculture. Most of the state farms organ- ized during 1957 were in the remote steppe areas of Kazakh- stan and the Volga areas where the vast natural pasture lands could be exploited as part of the widely publicized program for increasing meat and milk output. This appears to be an extension of the policy of rely- ing heavily on state farms for the development of virgin lands. In these areas, as well as in more highly developed regions, state farms were also formed to supplant existing farming units which had proved uneconomical, including "backward" collective farms with excessive land re- sources, and small farms under the jurisdiction of various in- dustrial ministries. Other state farms were es- tablished to implement the Sixth Five-Year Plan directive to create specialized dairy and vegetable state farms for urban supply, for developing the Golod- naya Steppe and other irrigation schemes in central Asia, and for increasing production of citrus, tea, and other specialty crops. Although the establishment of 674 state farms in a six- month period is without parallel in Soviet agriculture, the re- sulting institutional structure should not be viewed as fixed. Soviet agriculture has been modified repeatedly in the past, and experimentation will con- tinue. From 1951 through 1956, 1,053 new state farms were formed, including the 425 grain farms organized in the "New Lands," but during the same period, 942 state farms were liquidated. Changes over the next few years may result in a similar pattern. In any event SECRET STATE FARM PARTICIPATION IN SOVIET AGRICULTURE (PERCENT OF TOTAL) 1953 1956 1957 O 5 10 1s 20 25 PART II NOTES AND COMMENTS Page 8 of 19 Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500040001-3 Approved For Re-lease 2005/02/17 : CIA-RDP79-00927AA01500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY Soviet leaders apparently do not intend to convert the bulk of collective farms into state farms by 1960, as has been re- 25X1 25X1 (Prepared by ORR) DI VITTORIO'S DEATH WEAKENS ITALIAN COMMUNISTS' HOLD ON LABOR The Italian Communist par- ty leadership is faced with a difficult problem in finding a successor to Giuseppe Di Vit- torio, who died on 3 November after a ten-year term as sec- retary general of the Italian General Labor Confederation (CGIL). Likely successors would not have Di Vittorio's stature and popularity and must be acceptable to the Communists, the Nenni Socialists, and the rank and file. The Communists' hold on labor is threatened by weakening morale in the labor organization and an increasing divergence of interests between Communist and Nenni Socialist members. The CGIL's decline since 1952 has been evident in a con- tinuing drop in membership and its falling strength in shop steward elections. It is now believed to have about 3,000,- 000 members, compared with 4,- 000,000 in 1952, and this year, for the first time, it has won less than 50 percent of the shop stewardships decided thus far. A major factor in this decline has been the subordination of CGIL policies to the Communist party's political ends. Di Vittorio had made some efforts to resist this exploita- tion, and in August 1956 said the CGIL should become independ- ent of all political parties. His reputation as an unorthodox Communist may have been one reason for talk at the 1956 CGIL congress about creating a new position of "president" for him, but his strong personal influence over the organization and the lack of a suitable suc- cessor as secretary general en- abled him to remain in his posi- tion. From the Communist point of view, this is not a propi- tious time to pick a successor. The CGIL rank and file is un- enthusiastic about the candidate the Communists had favored in 1956, CGIL Secretary and Commu- nist Deputy Secondo Pessi. A Nenni Socialist such as CGIL Secretary Fernando Santi would probably seem undependable to the Communists. A likely compromise candi-. date is Communist Senator Renaldo Bitossi, who is also a CGIL sec- retary and has a reasonably strong following but is less trusted than Pessi by the party leadership. Another likely candidate is Communist Deputy Agostino Novella, a former CGIL secretary. Oreste Lizzadri, the fourth CGIL secretary, is a Nenni Socialist considered to have close ties with the Commu- nists, but his tendency to put his personal interests first is likely to make him unacceptable to the Communist party leader- ship. In any case, it will prob- ably become increasingly diffi- cult for the Communists to allow the CGIL to bridge the gap be- tween them and the Nenni Social- ists, as occurred in July 1957 when the CGIL took a position half way between the :two parties SECRET ported, and Soviet officials have denied there is to be a big switch to state farms. C PART I I Approved For ReleasdO 29 Mk 00927A0015000400CJR&y'e 9 of 19 Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY on the European Common Market torio's successor. The CGIL and EURATOM treaty issues. and WFTU have differed on the issues of the European Common The CGIL's relations with Market and Soviet policy toward the World Federation of Trade Hungary, even though Di Vit- Unions (WFTU) may also be af- torio was also the WFTU presi- fected by the choice of Di Vit- dent. 25X1 MACMILLAN GOVERNMENT FORCING SHOWDOWN ON WAGES ISSUE Industrial strife is prob- able in Britain this winter as a result of the trade unions' conflict with the Macmillan government over general wage in- creases. The government insists that the pound sterling would be weakened by further increases unaccompanied by rises in pro- ductivity. On 1 November the government rejected an independ- ent tribunal's recommendation of a 3-percent pay raise for workers in the National Health Service. Wage demands have already been submitted by over half of Britain's 9,000,000 trade union members. The decisive test may come in mid-December when the government is expected to reject the demands of some 500,000 railway men. Action on these demands usually sets the pattern throughout British industry, and the railway men have forced pre- vious Conservative governments to yield by going on strike. The government seems ready for drastic measures. In the past year prices have risen about 4 percent, 1 percent more than the previous year. Govern- ment spokesmen maintain that, despite any temporary gain in Britain',s gold and dollar re- serve position resulting from the increased bank rate and other credit restrictions, the drain on reserves will continue unless inflation is checked. Trade unionists show no signs of accepting the govern- ment's argument on wages. They are fully backed by the Labor party, which has charged the government with penalizing work- ers for the results of a defec- tive fiscal policy. Some inde- pendent newspapers have made sim- ilar charges. Labor leaders probably hope to increase their normal trade union support with some of the 3,000,000 unionist votes that usually go to the Conservatives. Chancellor of the Exchequer Thorneycroft indicated to the American ambassador on 3 Novem- ber that the government is ready to accept this political risk, believing that it has consider- able popular support on the wage issue. Under the present condi- tions of growing inflation, how- ever, the Conservatives are steadily losing their grip on the electorate, as shown by their loss of an average 7 per- cent of the vote in the 13 by- elections held since Macmillan took office in January. They evidently feel that success in halting inflation would change the political outlook by the time a general election must be called--May 1960 at the latest. 25X1 SECRET PART II NOTES AND COMMENTS Page 10 of 19 Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500040001-3 Approved For Release 2005/02/17: CIA-RDP79-00927A001500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY The ten-day official visit to London of Yemeni Crown Prince Badr, which begins on 9 Novem- ber, will encourage a continua- tion of the present lull in skirmishes on the Aden-Yemen border, and may provide a start toward a limited settlement. The Yemenis regard the visit as so desirable that they have met significant British preconditions, including with- drawal from the disputed plain of Shukair, and have retracted their own demand for extensive preliminary substantive talks which they hoped Badr would formally conclude in London. The Imam appears to believe that the trip will greatly en- hance the prestige of the crown prince, whose right to succes- sion is opposed by many tribes supporting the Imam's brother, Prince Hassan. Badr's trip to London is probably also intended to offset his trip to the So- viet Union and Eastern Europe in the summer of 1956, and thus make him less suspect in the West. At most, the Yemenis hope for an agreement on establish- ing a joint border patrol or machinery for joint investiga- tion of incidents. There ap- pears to be good reason to be- lieve, however, that the Imam might maneuver his way out of any commitments, as the pro- Western Yemeni ambassador-des- ignate to Moscow charges. The British government ap- pears to share such misgivings. It hopes the talks may help to do something toward reducing the difficulties to be expected from Yemen as a recipient of Soviet equipment and Egyptian counsel, but it is apparently not inviting any of the native rulers of the Aden Protectorate to London now, as it had indi- cated it would do if serious negotiations were in prospect. The British want to do nothing to contribute to the prestige of Badr, whom they view with suspicion, partly be- cause of his key role in ar- ranging the supply of Soviet arms. They presumably hope, however, that his visit will facilitate future dealings with him should he succeed the pres- ent Imam. RETURN TO CIVILIAN GOVERNMENT IMPERILED IN COLOMBIA A factional struggle with- in the Conservative party in Colombia imperils the prospects of an orderly transition of power from the military junta to civilian control. The re- pudiation by the right-wing Conservatives of the joint Con- servative-Liberal presidential candidate may be seized by the military as a pretext to re- main in control. The interim military junta promised to restore civil gov- ernment when it ousted dictator Rojas last May. It has sched- uled a plebiscite on constitu- tional amendments for 1 Decem- ber, presidential elections next May, and its own withdraw- al from government by August. In an effort to avoid a resur- gence of the traditionally bit- ter and violent struggle be- tween Liberals and Conservatives in two-party Colombia, leaders of both have reached agreement on the bipartisan presidential candidacy of Leon Valencia SECRET 25X1 PART I I Approved For ReleaN9Tt /0?7 Ce M9-00927A00150004 e3 11 of 19 Approved For... elease 2005/02/17 : CIA-RDP79-00927AO01500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY and political parity in the government for the next 12 years. The return to constitutional government is threatened by the actions of the autocratic, ul- traconservative ex-president of Colombia, Laureano Gomez, who is determined to dominate the Conservative party at any cost and is prepared to carry his fight for control to the elector- ate, where he may have majority support. He now demands that legislative elections be held before the presidential elec- tion--a move opposed by the moderate Valencia faction, which believes it can obtain a larger share of the Conservative vote once Valencia is securely in of- fice. Liberal leader Alberto Lleras has reaffirmed his par- ty's original support of the Valencia candidacy but has im- plied he will accept as the au- thentic Conservative party the faction which emerges strongest from the elections for congress. The question of when these elec- tions are to be held is now be- fore the junta and cabinet for decision. The Valencia wing, repre- senting the industrial interests which have been politically dominant for decades, thus finds itself in a precarious position. Should the supporters of Gomez emerge from the legislative elections as the dominant fac- tion of the Conservative party, the prospects of the Valencia wing will be dim once Liberal support is withdrawn. In addi- tion the present cooperation between the two parties would become much more difficult. Any marked revival of interparty strife may be used by the mili- tary as an excuse to back down on the proposed transfer of pow- er to civilian control. Little if any progress is being made by the diverse and antagonistic anti-Communist po- litical groups in Guatemala to- ward agreeing on a coalition candidate for the presidential election, which will probably be set for January. If the im- passe continues and the govern- ment remains neutral as it has promised, the Communist-infil- trated Revolutionary party (PR) might win. Government support for any candidate would probably set off renewed violence. tial candidate, the leftist but non-Communist Mario Mendez Montenegro, would win the elec- tion. Communists are active in the lower ranks of the party despite repeated assurances from its leaders that Communists would be kept out. The president of the pro-Communist law students' association was recently added to the party directorate after Communists had demanded more voice in policy makin The PR, which emerged from owever, a the late October violence as a ommunis s oppose the party's probably the strongest single attempt to gain power now, be- party, is actively organizing lieving that an economic col- for the coming election. Many lapse, which they expect after Guatemalans of diverse political a year or so of rightist rule, convictions are convinced that will permit the PR and the Com- the party's probable presiden- munists to take control in SECRET 25X1 25X1 PART II NOTES AND COMMENTS ~a 12 of 19 Approved For Release 2005/02/17 : CIA-RDP79-00927A001500040 0 Approved For_R Iease 2005/02/17 : CIA-RDP79-0092 X01500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY STMA the wake of a strong wave of popular discontent. The principal obstacle to an anti-Communist coalition is the determination of rightist Miguel Ydigoras Fuentes, lead- ing opposition contender in the 20 October election, to run again. A group of army offi- cers who distrust Ydigoras and remnants of the moderate par- ties which backed the late pres- ident Castillo Armas are at- tempting to agree on a candi- date to oppose both the PR and Ydigoras. Even in this narrowed po- litical spectrum, however, there are bitter divisions and con- flicting ambitions. Leading presidential contenders of this group are Lt. Col. Jose Luis Cruz Salazar, young and ambi- tious ambassador in Washington, and the 49-year-old Col. Enrique Peralta. Both have enemies in the faction-ridden army and neither is widely known to the public. It is unlikely that any anti-Ydigoras, anti-PR coalition candidate could win the required absolute majority of votes in the election unless he had ob- vious support from the govern- ment. Such official favoritism would almost certainly provoke renewed popular disturbances. DEVELOPMENTS IN INDIAN ECONOMIC SITUATION The Indian government took action on 31 October to make available nearly all of its dwindling foreign exchange re- serves to meet commitments un-, der its second Five-Year Plan, as widespread crop failures tightened the squeeze on its financial resources. New Del- hi apparently is counting heav- ily on American authorization of additional surplus food ship- ments to ease the new drain on its foreign exchange necessitat- ed by emergency food imports. Since India's reserves were expected to dip below the statutory minimum prior to the mid-November session of Parlia- ment, a presidential ordinance was issued on 31 October author- izing reduction of the legal reserve requirement from $630,- 000,000--the level of sterling balances required since August as backing for the currency-- to a new minimum of $179,000,- 000. This balance as well may he drawn on for a limited peri- od, but a gold reserve of $241,- 000,000 must be retained. On the same day, the government an- nounced that it would not con- sider any new applications for the purchase of capital goods abroad--except for maintenance and replacement purposes--which required initial payments before April 1961. These financial measures followed within a few days the return of Finance Minister Krish- namachari, who reported to the cabinet on his trip to the United States, Britain, and West Germany is search of long-term loans. Krishnamachari reportedly ex- pressed "cautious optimism," mainly because he felt India's economic situation was now better understood abroad, but he re- turned with no firm commitments. The "sympathetic" consideration given his appeals in Western capitals will be followed by more detailed study by each government and further negotia- tions. As a result of the severe drought in northern and central India, Indian officials estimate SECRET 25X1 PART II NOTES AND COMMENTS Page 13 of 19 Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500040001-3 Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY that the government will have to increase its imports of food grains by at least 2,000,000 tons. The' minister of food and agriculture told Secretary Ben- son on 1 November that available stocks of imported grain, in- cluding reserves and expected shipments, stood at not more than 2,500,000 tons, little more than eight months' supply at the current rate of use. The Indian off i vial expressed fear of a break in the supply next spring, and was concerned that the pub- lic's lack of confidence in the government's ability to supply famine areas would have disrupt- ing effects. The main question on the mind of Indian officials and reporters who talked to Sec- retary Benson was how much ad- ditional American surplus food might be available and how soon it could arrive. PHILIPPINE ELECTION CAMPAIGN The final phase of the Philippine election campaign has been marked by charges and countercharges and some out- bursts of violence. President Garcia is still widely believed to be maintaining an edge over his opponents, but if elections are free, the possibility of an upset in the presidential race cannot be ruled out. In central Luzon, where an American embassy observer re- ports that Garcia is trailing both opposition Liberal candi- date Yulo and Progressive candi- date Manahan, the President is now stressing a "land for the landless" theme. In the past week, he has ordered the expro- priation of five haciendas and promised to help even the work- ers on Yulo's sugar estate to acquire the land they work. Yulo and Manahan are charging that Garcia is leading the country to economic ruin, and Senator `tecto of the Nationalist-Citi- zens party is accusing the three other parties of "political a- nachronism" in the Asian strug- gle for "economic equality" with the West. Although Garcia has pledged the "cleanest, freest and most orderly elections" on 12 Novem- ber, there has been some ter- rorism, including the slaying 25X1 of four Liberals on 1 November by Nacionalista followers of Garcia in his native province of Bohol. The American embassy also reports that local observers in many Philippine provinces continue to expect widespread fraud and intimidation on elec- tion day, The agencies responsible for the conduct of the elections appear, however, to be making an effort to ensure free elec- tions. The Commission on Elec- tions, which supervises the actual balloting, has been actively in- vestigating the financial state- ments of all party treasurers and reports of political distri- bution of government relief funds. About 11,000 constabulary and army troops have been de- ployed throughout the country for election duty. Although con- stabulary chief Cabal has desig- nated at least 20 of the 53 prov- inces as "potential trouble spots," his assertion that "the atmosphere is a lot calmer than that which preceded previous national elections" appears to be borne out by a comparison of reported pre-election incidents with those preceding the 1953 and 1955 elections. 25X1 SECRET 25X1 PART I I Approved For Release X 02/4 'TDC?P- %0927A0015000400( ffe 14 of 19 Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SVWRY 7 November 1957 The Indonesian government has postponed the second na- tional conference from 15 to 25 November. The postponement apparently is intended both to permit more time for conference preparations and to give the government-inspired campaign to "regain" Netherlands New Guinea greater opportunity to penetrate the provinces and stimulate national unity be- fore the meeting opens. Prime Minister Djuanda is making no progress in his ef- forts to restore an effective partnership between President Sukarno and former vice presi- dent Hatta, a development which he feels is the only course which can forestall Indonesian fragmentation and prevent Com- munist control of Java. Sukar- no will not accept Hatta as prime minister, and Hatta re- portedly is ready to announce his support of those elements opposing the President and his political concepts. This newly reaffirmed antagonism between the two men and their supporters is unlikely to be relieved by either the national conference or the campaign for the ac- cession of New Guinea. The second phase of the government's "Regain West Irian Drive," which is to be "executed more fiercely," is scheduled to begin on 10 November. A third phase, the details of which have not been revealed, will be car- ried out at the time of the UN General Assembly debate on the subject, probably sometime after 18 November. Probably serving to increase the intensity of the campaign is a joint state- ment issued on 6 November by Australia and the Netherlands reiterating their intention to 25X1 resist Indonesian demands. A major objective of the Irian campaign continues to be the distraction of the Indo- nesian public from its genuine domestic problems and to raise national sentiment to such a pitch that it will reduce the appeal of provincial demands. So far, however, only provincial, elements in Makassar, the major city geographically closest to New Guinea, have shown any sup- port for the campaign. The situation in North Sumatra, where an abortive coup 25X1 in mid-October temporarily threatened local violence, is quiet for the moment. Marshal Sarit, Thailand's much better condition than a few armed forces chief, has returned months ago and is seeking to to Bangkok after having spent give the impression he is in most of October at a seaside full control of the situation resort. While not in perfect in Thailand. health, he appears to be in SECRET PART II Approved For Release ZD0 i2M1 S -V9S 0927A00150004000'fage 15 of 19 Approved For-Release 2005/02/17 : CIA-RDP79-009274001500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY There are growing signs that conflicting interests among Sarit's military subordi- nates will become his most ser- ious domestic problem. The provisional govern- ment under Premier Pote Sarasin and the Sarit military group have as yet shown no intention of altering Thailand's pro- Western foreign policy, which, for domestic consumption, is now labeled an "independent" policy. During a 40-minute talk with New York Times correspond- ent Suzbergerrit insisted that he personally would make sure that only a pro-Western and anti-Communist premier would be appointed after the Decem- ber elections. He also ex- pressed his admiration for Pote, which seems to confirm reports that Sarit is urging Pote to stay on as premier after the elections. Pote, however, has indicated a preference to re- turn to his former position as SEATO secretary general. The election campaign re- mains in low gear, although voting is now only about a month away. This situation is probably attributable both to the martial law which still prevails in many parts of the country and to the difficulties many candidates for the 160 National Assembly seats at stake are having in gaining backers on such short notice. The Laotian government and the Pathet Lao have concluded negotiations on the terms of a settlement, and Prime Minister Souvanna Phouma plans shortly to request National Assembly approval for a coalition govern- ment. In view of the widespread popular desire for an early settlement, assembly approval will probably be forthcoming. Influential leaders such as Crown Prince Savang and Foreign Minister Phoui Sananilaxie have expressed dissatisfaction with the lack of safeguards in the accords and resentment at the high-handed tactics Souvanna has used in his attempts to drive through a final settlement. However, their capability to delay or significantly alter the form of a settlement appears to have been undermined as a result of the recent equivocal behavior of Interior Minister Katay, formerly the leader of elements working to restrain Souvanna. The windup of the negotia- tions came on 31 October when Pathet chief Souphannouvong re- portedly announced to leading deputies of Laos' two major po- litical parties in Souvanna's office that the Pathets had ap- proved the political agreement as revised by the Laotian cab- inet and would sign a military agreement later the same day. SECRET 25X1 PART II Approved For Release LOM2/ CIA%DI ? -00927A001500040001-e 16 of 19 Approved Fo!elease 2005/02/17 : CIA-RDP79-0092 01500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SMMRY 7 November 1957 Under these agreements, Pathet Lao representatives will enter a coalition government prior to the actual take-over of the two Pathet-controlled northern provinces and the Path- et 'forces.. Even when the government extends its authority over the provinces, the Pathets will be in a position to frus- trate its control at the grass- roots level, since present Path- et functionaries will remain at their posts at the village and town level, while at county level 'the administrators will be appointed on a 50-50 basis. The military agreement ap- pears to be more stringent in that it stipulates that no more than 1,500 Pathets will be inte- grated into the royal army and that all Pathet arms are to be surrendered. The remainder of the Pathet soldiers will be enrolled in reserve status and transported to their villages. Implementa- tion of the military agreement is to be com leted within 60 days. 25X1 CHINESE TO PRESS FOR FURTHER SCIENTIFIC COOPERATION WITH USSR During Mao Tse-tung's visit ! Details of the plan have never to Moscow for the 40th anniver- sary celebrations the Chinese plan to request considerable aid and cooperation in scientif - ic and technical matters and press for agreements which would give them a larger share in the benefits of Soviet successes. Missile and earth-satellite de- velopment and nuclear advances may be among subjects the Chi- nese will discuss. Two scientific and techni- cal delegations, led by Kuo Mo- jo, president of the Chinese Academy of Sciences, were in- cluded in Mao's entourage. One group of 77, Peiping says, will push for an agreement on joint research and cooperation. The "problems" of such cooperation are to be discussed by a second delegation of eight. The larger delegation is also intent on soliciting So- viet opinions on Peiping's 12- year scientific development program drafted early in 1956. been published, but the Chinese have declared they hope to raise their scientific competence to Western levels by 1967. Chou En-lai urged China's scientists last year to study good points of "capitalist" science and technology, but spokesmen for the regime have repeatedly em- phasized that China must place primary reliance on the "so- cialist" bloc. Nine of Communist China's top military leaders, including the armed forces' chief of staff, and the commanders of the air force, navy, and armored forces, suddenly left Peiping for Mos- cow on 6 November. They pre- sumably were summoned by Mao Tse-tung and Defense Minister Peng Te-huai to join in high- level talks with Soviet leaders. The deputy leader of the Chi- nese military delegation de- clared recently that Soviet mis- 25X1 sile successes are "priceless assets of all the countries of the socialist camp." (Concurred in by 051 and 25X1 SECRET PART II NOTES AND COMMENTS Page 17 of 19 Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500040001-3 Approved For_Release 2005/02/17: CIA-RDP79-0092ZA 01500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY ?g-RY 7 November 1957 DROUGHT THREATENS WINTER CROPS IN COMMUNIST CHINA Dry weather affecting most of North China, large areas in the central provinces, and parts of South China has lasted over 100 days. The drought threat- ens serious damage to next spring's crop of winter wheat-- which normally accounts for 13 percent,of food crop produc- tion--and the rape crop--source of 20 percent of the country's edible oil needs. Peiping has ordered local party cadres to devote their time to combating the drought, and the official People's Daily observed on 27 October that it has been "im- possible for many localities to fulfill their autumn plant- ing assignments." Meteorological reports in- dicate that a high-pressure area has dominated the region for weeks, confirming the drought reports. Weather maps as of 4 November showed that the high remained over the area. Local showers over the past two weeks may have afforded some relief. It is still too early to predict with any certainty the extent of the damage. A moder- ate amount of rainfall in the next two weeks would go far to- ward saving the crops, as only enough moisture to permit ger- mination of the seed is neces- sary this time of year. A West- ern observer was told by a pro- vincial authority in Hupeh that HUNAN Drought-stricken provinces HUNAN Provinces where drought poses more serious SECRET 25X1 PART I I Approved For Release 'S 12MP c i-WffA%- 0927A00150004009VP 18 of 19 Approved For-Release 2005/02/17 : CIA-RDP79-0092ZA401500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY S1 ARY if there were no rain by early November there would be "diffi culties with the wheat." Areas in Honan, Shantung, and Anhwei, all traditionally grain-deficit provinces, seem to be in the gravest danger. All suffered heavily from floods earlier in the year. Peiping radio reports that in Honan, 15,000,000 peasants are fight- ing the drought and have sunk 150,000 emergency wells. A , youth brigade, working day and night for five days, dug a 28- mile canal to bring water from the Yellow River to the parched fields. The regime is having trou- bles enough with its agricultu- ral programs and has undertaken a campaign to persuade the peas- ants, to comply with state tax- ation, procurement, and collec- tivization policies. China's economic planners have already revised the long-range plan for agriculture and have prom- ised more investment to that sector in an effort to raise farm output. Grain reserves have been reduced to danger- ously low levels, and Peiping has warned that food-short areas cannot expect to receive relief supplies in the amounts 25X1 that tided them over natural disasters in 1956. SECRET (Prepared by ORR) 25X1 PART II NOTES AND COMMENTS Page 19 of 19 Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500040001-3 Approved For-RP-lease 2005/02/17 : CIA-RDP79-0092ZA0.01500040001-3 CONFIDENTIAL PATTERNS AND PERSPECTIVES The ouster of Marshal Zhu- kov, just four months after his elevation to full membership on the party presidium and the dis- missal of Malenkov, Molotov, and Kaganovich, once again under- lines the dynamics of change in the leadership of the Soviet Union. In the known facts, re- ports, and rumors re- lating to Zhukov's downfall, there is enough reasonably re- liable information to make possible a ten- tative reconstruction of the actual events. Rise of Zhukov. and the Army Khrushchev's rise to power after Stalin's death in 1953 was facilitated by close cooperation between the Communist party and the Soviet army. Un- til last month, each major Khru- shchev victory in the party presidium was accompanied by a step upward by Zhukov in party and government. Four years of this alliance resulted in the increased independence of the armed forces from the political controls of Stalin's day. Evidence that Stalin's suc- cessors intended to use the army and Zhukov as a prop for the regime Appeared the day af- ter Stalin died, when Zhbkbv. emerged from four years of vir- tual exile as a first deputy minister of defense. Zhukov and the army played a major role in the purge of secret po- lice chief Beria in July 1953. Zhukov's reward was promotion from candidate to full member- ship on the party central com- mittee. During 1953-55, Soviet military leaders apparently be- came fearful that Malen- kov's program of increased con- sumer goods production would result in cutbacks in defense production and perhaps in the military budget. They accord- inv_ly side' with Khrushchev in favor of the contin- ued primacy of heavy industry. Their re- ward came in February and March 1955: Ma- lenkov was ousted as premier, Zhukov was promoted to replace Bulganin as defense minister, and a num- ber of top military officers received promotions. Khrushchev con- tinued to woo the military at the 20th party congress in February 1956. In his secret speech de- nouncing Stalin, he praised Zhukov's qualities as a military leader and suggested that he had often defended the marshal against Stalin. Follow- ing the congress, Zhukov was made a candidate member of the party presidium. Zhukov was called on to support Khrushchev for the last time in June 1957, when,accord- ing to most reports, he lined up against Molotov, Malenkov, and Kaganovich. In the realign- ment.which followed the purge, he was named to full membership on the presidium, a promotion which for the first time in.So- viet history. placed a career soldier in a position to exert the full weight of the army on the formulation of policy. Other less spectacular con- cessions were made to the army during this period. One of these appears to have been the admission of professional mili- tary officers into the ranks of Approved For Release 0~ONF(~?flAL 02/17: 90-RDP7g-p0g~7A0015000400 1-3 PART III PATTERNS AND P-RSnECTIVES Pa?e 1 of 13 Approved For Release 2005/02/17 : CIA-RDP79-00927A001500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 25X1 - the secret police. Army influ- ence may have played a major role in the decision to split Beria's secret police empire in 1954 and assign all secret po- lice and intelligence functions to the Committee of State Secu- rity (KGB). The party also ap- proved the concept of unity of command which considerably re- duced the powers of political officers in the army. Politi- cal deputy commanders below the regimental level were removed, and those at higher levels are no longer able to countermand the orders of 'the unit commander.. The result of this enhance- ment of Zhukov's authority, coupled with the gradual reduc- tion of the party control mech anism in the armed forces, was the creation of a power center which was gradually becoming more independent of the party and potentially inimical to its leader. The Developing Crisis The point at which Khru- shchev decided to move against Zhukov is not known. 25X1 Crimea, returned to Moscow by 5 October. He faced a number of serious problems if he was suc- cessfully to cut Zhukov down to size,. He had first to sell the idea to the party presidium and then, at the very least, to neutralize the military estab- lishment. The dominance Khrushchev had achieved in the party presid- ium in June made the first task easier. Nevertheless, he needed some issue on which to base his argument other than his desire to eliminate a potential rival. He seized on the role of the party in the armed forces, part- ly because there was some evi dence that Zhukov had curtailed party control in the army and partially because the party lead- ers are particularly sensitive to the question of party control over any and all sectors of So- viet society. There are also some suggestions that Zhukov had taken his political role more seriously than appeared seemly to the other members of the presidium, who may have be- come apprehensive concerning his political intentions. 25X1 25X1 Yugoslav General Gosnjak, when visiting the Soviet Union in June, had presumably invited Zhukov to visit Yugoslavia. Zhukov's trip ..may therefore have been only a coincidence. of which Khrushchev took advantage. Zhukov, who is believed to have returned from his vacation in late September, left Moscow 25X1 for Yugoslavia on 4 October 1; 1,11, rus c ev, who had been vacationing in the By mid-October Khrushchev had made considerable progress. He had apparently secured ap- proval to issue a secret letter in the name of the central com- mittee to party organizations in military districts, armies, formations, and units, and may have received provisional ap- proval for Zhukov's ouster pend- ing reaction of military per- sonnel to the letter. SECRET PART III Approved For R pp]M?/0 : p1C 7A0015000400iSi,& 2 of 13 Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY The letter, dated 19 Octo- ber, charged that party politi- cal work in the armed forces had fallen behind in recent years, that the political ap- paratus had been shoved aside, and that commanders had not properly. evaluated political work in the army. Basic blame was placed on the leadership of the Defense Ministry, but nei- ther Zhukov nor anyone else was named specifically,,possibly to leave an avenue for retreat if there was adverse reaction to the charges. The traditionally apoliti- cal attitude of the Russian soldier and the legacy of the drastic purges of the Red Army high command in the 1930's may have deterred any hostile re- action by top military leaders. However, it is possible that Zhukov simply did not command the respect, admiration, and support in military circles popularly attributed to him. Otherwise, it is inconceivable that greater security precau- tions would not have been noted in and around Moscow when news of his demotion became known. There is, in fact, a sug- gestion that Zhukov's new polit- ical role was resented by other military leaders, that he may have tended to lord it over them and treat them as part of his personal retinue. These charges, at least, figure strongly in the official communiquds and editorials. First Deputy De- fense Minister Ivan Konev, for example, writing in Pravda on 3 November, said thatukov strove to decide on his own all questions relating to the lead- ership of the armed forces,,with- out listening to the opinions of others and fully ignoring their views." Such charges may have been largely fictitious, but the heavy play given them in offi- cial propaganda suggests that they have a strong appeal. On 22 October, the presid- ium again met and voted to oust Zhukov as minister of defense. At the same meeting, the trans- fer of Marshal Konstantin Rokossovsky from Moscow to head the Transcaucasian Military District was decided. Rokos- sovsky's transfer may have been intended solely to add to Soviet pressure on Turkey in the Turk- ish-Syrian crisis, but it is conceivable that he was a strong Zhukov supporter and was moved in order to minimize his influ- ence on the other top military leaders and to serve as an ex- ample to anyone who might be inclined to waver from the par- ty line. The presidium's decision and the reasons for the ouster were explained to party members in the armed forces at meetings in military units all over the Soviet Union. The meetings in the Moscow Military District were held on 24 and 25 October with Khrushchev, speaking both days, detailing the charges against Zhukov. Marshal Zhukov returned from his trip on 26 October. There is a possibility that Khru- shchev had ordered Zhukov's stay in Albania prolonged in order to complete the action against him. Certainly there is no 25X1 obvious reason in Soviet-Albanian relations why he should spend days the F"no- EtE 2 X1 Zhukov did not learn o his re- moval until his return. The 25X1 Zhukov, however, may have 25X1 learned of the Rokossovsky trans- fer and resented that it was made in his absence. 25; 5X1 SECRET Approved For Rele 0 aff?R5/02/17 C A- 79-00927A001500040001-3 PART III PAE S AND P R P CTIVES Page 3 of 13 Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 7 November 1957 secret letter dated 1 November to the party membership giving some background details on Zhu- kov's removal as minister of defense and the other, the pub- lished resolution of 2 November. Zhukov was held guilty of (1) frustrating party control of the armed forces; (2) deliber- ately promoting hero worship of himself; (3) encouraging mis- representation of World War II history in his own favor and at the expense of others; (4) proneness to adventurism in for- eign policy and management of defense affairs. Even if it is assumed--as official Soviet treatment of the case and obvious'leaks would none can be disco viet public media. have it--that the main charges against Zhukov that he tried to weaken party control of the armed forces and to build him- self into a potential Bonaparte are the real basis for the ac- tion against him, there is still no satisfactory explanation as to why these issues became para- mount at this time. The avail- able evidence indicates that Zhukov has long sought to hold the party's interference in military command functions with- in limits determined by himself. And if Zhukov's urge for self- glorification was as overwhelm- ing as the party now alleges, it could hardly have been a well-kept secret. Ther.e'would. almost certainly.:have._been'vis ible signs.of.any concerted 25X1 build-up of a Zhukov "cult,:" :yet Only last June , barely three months before Zhukov left Mos- cow for Yugoslavia, he had been promoted to the party's highest body. Conceivably, a hot de- bate over political control of the military, of which there were no public manifestations,. broke out in the presidium after June. The only published explanation of this paradox by a Communist source is that offered by the Moscow correspondent of the London Daily Worker who wrote aImely: tfiThe appointment of Marshal Zhukov as a full member of the presidium of the party at the last session of the central committee, it was thought that his position would change. Instead, it was found that even greater difficulties were being placed in the way of the work of the Communist party organi- zations in the army and it was also said that Marshal Zhukov was getting himself boosted in every sort of way." The official charges against Zhukov seem to be primarily SECRET 5X1 Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500040001-3 PART III PATTERNS AND PERSPECTIVES Page 4 of 13 Approved For.Release 2005/02/17: CIA-RDP79-00927AQ01500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 7 November 1957 debating points which evade more fundamental causes of con- flict. Unquestionably, Zhukov's party position, his prestige, and his command of a powerful, organized force gave him at least the potential for inde- pendent political action. It can only be conjectured when and how Zhukov began to exer- cise his power in a-, way to arouse suspicion or fear in Khrushchev and his party col- leagues. As minister of defense and, later, as a full, voting member of the presidium, he would have had occasion to ex- press himself on a broad range of policy issues touching on the military interest. The 2 November central committee re- solution on Zhukov contained the accusation that he was "dis- posed to adventurism both in his understanding of the main tasks of the Soviet Union's foreign policy and in heading the Defense Ministry." Though purposefully vague, the state- ment points to issues of policy beyond the question of polit- ical control of the., armed forces. anecdote related by Khrushchev at the Turkish National Day re- ception on 29 October about the little Jew and the burly anarch- ist was intended as a hint of a divergence on the USSR's pol- the Turkish-Syrian dis- pute. In this story Khrushchev portrayed himself as following a bold policy while the pro- fessional soldier held back. Whatever may have been Khrushchev's purpose,. there is no evidence to support the thesis that Soviet actions in the Syrian crisis precipitated a showdown between Zhukov and the party leaders. Zhukov's strong statement in his Tirana speech on 24 October about So Viet readiness "to strike with determination at any military adventure near our southern borders" conformed closely to the official Soviet line as stated by Khrushchev, Bulganin, and Gromyko. Another possibility is that the issue goes back to the 1956 crisis in the satellites and the Middle East and that Khrushchev is accusing Zhukov of taking a tough line at that time which limited Khrushchev's freedom of action. There are some indications that another difficult and del- icate: issue may have arisen between Zhukov and the nonmili- tary members of the presidium-- the issue of control of the security apparatus. There is little doubt that Zhukov had used his influence to limit the powers of the police. It is not unlikely that one of his main political objectives was to ensure against a resurgent police organization. Khrushchev, in speeches to the party organization of the Mos- cow Military District on 24 and 25 October, alleged that Zhukov had sought the removal of I.A. Serov as security chief and SECRET. 25X1 -009 PART III Approved For Re41W/0'~I - ;PCVkRy 7A0?1500040~age 5 of 13 Approved For Release 2005/02/17 : CIA-RDP79-00927A001500040001-3 SECRET his replacement by a military man and had also recommended the appointment of Marshal Konev as minister of interior. It is conceivable also, though Soviet comments do not suggest this, that Zhukov was removed because he may have re- sisted economic allocation pol- icies which implied a reduction in military expenditures. Khru- shchev is publicly committed to increase foodstuffs, housing, and consumer goods, to main-... tain a high rate of industrial growth, and, of course, to main- tain a high rate of defense ex- penditures. The problem is how to do everything at once. The necessary decision on priorities is almost bound to arouse some further dissatisfaction and it is within the realm of possi- bilities that Zhukov was re- moved because he opposed a solution which would force the Soviet military machine to give up, for example, some part of its 175 divisions. On the face of it, Khru- shchev has again won the day and it seems entirely possible that he can parlay his winnings to achieve eventual one-man control. There certainly are strong signs that this is the goal, and it might be expected that having already gone so far in this direction, Khrushchev would feel compelled to complete the job quickly. In many ways the time is ripe. Certainly the power of most of the other presidium members is now only a shadow of what it was immediately follow- ing Stalin's death, and six of the ten veteran presidium mem- bers--the Stalin heirs--have been deposed. The party ap- paratus headed by Khrushchev has in turn beaten down the po- lice, the economic bureaucracy, and now the army. Some of the consequences of the latest move are quite obvious. Khrushchev's policy has consistently been to': strengthen the standard party organs at the expense of the special political organs. He may be expected to bring the armed forces more closely under the direct authority of the . party central committee, per- haps by dissolving the special political organs in the armed forces as he has eliminated them from agriculture and trans- port. The sole arm of the party in the military would then be the standard party organiza- tions, subordinate to the party apparatus which Khrushchev ap- parently controls, and the armed forces as an independent locus of power would be weakened con- siderably. Another important implica- tion is that with the possible exception of Mikoyan, the removal of Zhukov leaves no strong figure in the presidium who could be ex- pected-to exert an effective re- straining influence on Khru- shchev's impetuousness. As a result, Khrushchev's policy will probably more than ever be So- viet policy, and policy formula- tion may pass gradually from the hands of the presidium mem- bers to those of the central party apparatus. This latest move, of course, is bound to have undesired ef- fects. Among the populace, the apathy and cynicism noted after the June purge will probably in- crease, and the purge of Zhukov will add to the doubts and un- easiness of the public in gen- eral. The extent to which the leadership and propaganda ap- paratus has been employed in stating the regime's case in- dicates the seriousness with which the question of public opinion is regarded. Effect on Military Opposition within the So- viet military hierarchy is not expected to express itself open- ly in either violence or formal complaints. Surprise and some SECRET PART IIIApproved For Ry.My?/0 :Iqfif7A00150004000 6 of 13 Approved For F3elease 2005/02/17 : CIA-RDP79-0092ZA001500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 7 November 1957 resentment at the lower levels undoubtedly will be countered with effective political in- doctrination. Given the probable desire. on the part of the leadership to present a semblance of unity, the traditional nonpolitical role of most officers, and the opportunism of others, there is not likely to be a far-reaching purge resembling that of the thirties. There probably are strong pro-Zhukov elements in the military, however, who, in time, will feel the effects of his degradation. Retirements and reassignments are likely to occur, including some within the Defense Ministry. Party Reaction Khrushchev may find that his greatest obstacle lies with- in the apparatus of the party-- the very instrument of power which he has fought to strengthen since becoming first secretary it September 1953. There have already been suggestions that Khrushchev has not been able to exert full control over the central committee despite his success in adding his followers to its membership. The plenum of December 1956 and probably also that of June not have moved exactly as?Khru-Phchev Not all the changes that may occur will be politically motivated. It would be normal, for example, if Marshal Malin- ovsky should appoint some of his former associates or friends to key staff and command posi- tions which, in turn, could be reflected in the lower echelons. Some of the appointments may be a combination of this factor and political considerations. While Malinovsky may be expected to desire a chief of staff of his own choosing, the removal of Marshal Sokolovsky would also serve Khrushchev's political in- terests. There is little evidence on which to base political align ments within the Soviet military hierarchy, and the lines of cleavage, always obscure, may change with the political tides. It is generally assumed, how- ever, that Marshal Sokolovsky at least, and possibly Marshals Meretskov and Vasilevsky, are pro-Zhukov. had planned.l There have been some sug- gestions that the secretariat is not completely subservient to Khrushchev. Party Secretary Suslov be- longs to a Stalinist faction and cannot be considered in Khrushchev' These hints of continuing division within the leadership, plus the obvious- ly disquieting effects of two purges of the hierarchy within four months and the implication that Khrushchev is bent for to- tal power, could bring about a move against him while some chance of success still remains. There are other possible developments which would in- crease the opposition to Khru- shchev. A move on his part to make the secret police his 25X1 25X1 25X 25X1 25X1 25X1 SECRET PART I IIApproved For Re qh% j02/ ,b: yFjj 1Qa 7A0015000400Q1_--ge 7 of 13 Approved FonRelease 2005/02/17 : CIA-RDP79-00924001500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY personal tool would undoubtedly provoke the strongest reaction and he might therefore wish to avoid it. Yet personal control of the secret police is the next step in achieving a one-man dictatorship, and the temptation to seize this control and there- by prevent the development of another plot against him would be very powerful indeed. Foreign Policy There has been considerable speculation that the purge of Zhukov means the removal of an important restraining influence on an impetuous and unpredict- able Khrushchev. This inter- pretation, however, may rest on a superficial reading of Khru- shchev's character and his methods and tactics in the for- eign policy field. He has shown a high degree of skill in ex- tracting the maximum political advantage from such issues as the Suez conflict, the Turkish Syrian dispute, and disarmament POLICY TRENDS IN THE NEW WEST GERMAN GOVERNMENT West Germany is likely to demonstrate during Chancellor Adenauer's third term a more self-assertive role within the framework of the Western al- liance. Increasingly distrust- ful of leaving its fate in the hands of other major powers, Bonn will probably seek a grad- ual extension of its political influence to a point commensu- rate with its already impor- tant world economic position. In the military field, Defense Minister Strauss is likely to concentrate on equipping exist- ing forces with modern weapons. In foreign policy, an early ef- fort toward improving relations with the Eastern European satel- lites, particularly Poland, seems likely, although Tito's recogni- tion of East Germany may delay this step. These moves would be logical extensions of the accomplish- ments of the Adenauer govern- ments over the past eight years, in which stress had to be placed first on economic reconstruction and political rehabilitation. The altered emphasis to be ex- pected now is reflected in Ade- nauer's cabinet changes. While most of the cabinet remains in- tact, the prominent position given Ludwig Erhard as vice SECRET by assuming forceful, even threatening, postures. However, this public posture has thus far always been accompanied by careful avoidance of any action committing the USSR to a course which might lead to the involve- ment of Soviet forces in a mili- tary conflict. The principal device of Khrushchev's diplomacy in both the Suez conflict and the Turk- ish-Syrian dispute has been the use of calculated ambiguity in statements setting forth Soviet positions and intentions. This technique reflects, not a tend- ency toward impetuous and-reck- less action, but rather a cool and astute appraisal of oppor- tunities for scoring heavy po- litical gains against the West- ern powers. It is a technique which Khrushchev probably con- siders he can employ with ins creasing effectiveness as the military strength of the Soviet bloc grows. 25X1 Contributions by ORR) PART III Approved For R "J%6/%47 0J* ?J -fJ%27A001500040~1-3 8 of 13 Approved For_Rglease 2005/02/17 : CIA-RDP79-00927AO01500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY chancellor and economics min- ister is indicative of the forthcoming shift toward a more expansive foreign, military, and economic policy. In re- placing Fritz Schaeffer as fi- nance minister with Franz Etzel, Adenauer has done away with an ultraconservative financial influence which would, among other things, have blocked he desired new changes in mili- tary policy. Military Policy Defense Minister Strauss has already indicated that an increase in the defense budget will be necessary to support a continued build-up of the armed forces. He is still planning, however, a commitment to NATO of only 340,000 men by 1961 instead of the original German figure of 500,000. Strauss has placed some emphasis on the creation of home-defense forces, to be solely under Ger- man command, which on at least one occasion he indicated might eventually reach the goal of 200,000 men.: If this plan should be adopted, Strauss would have thus split the original 500,000-man NATO goal between NATO and non-NATO forces. The Defense Ministry has also shown growing interest in obtaining modern weapons. It has been opposed to any ac- celerated build-up of its NATO contingent before NATO has thoroughly considered the im- plications of modern weapons developments. In forthcoming NATO and WEU meetings, the Ger- man delegation is expected to raise the question of obtain- ing nuclear weapons, and also to argue in favor of a German contribution based on the smaller, more mobile pentomic- type divisions supported by modern weapons, including mis- siles. Bonn has already 'in- formed the United States, Brit- ain, and France of plans to ask for a revision of the WELL treaty in order to permit a German firm to produce a small antitank mis- sile which it has developed. Strauss' defense policies will encounter opposition in the Bundestag, since both the Social Democrats and Free Demo- crats continue to favor a small professional military force and have made a major issue of the atomic weapons question. The government's majority, however, should ensure the increased de- fense appropriations it seeks. Economic Policy Franz Etzel's appointment is regarded by political ob- servers as?a concession by Ade- nauer to industrialist circles, and his policies are expected to reinforce Erhard's continu- ing efforts to expand Germany's foreign trade. There are some indications that, with this aim in view, the government will initiate a more extensive program of technical assistance and other forms of economic aid to the underdeveloped countries. SECRET PART III Approved For ReQW5/02/17 PERSPECTIVES 7A001500040 Page 9 of 13 Approved Fop-Release 2005/02/17 : CIA-RDP79-00927A001500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 7 November 1957 Within the Federal Re- public, Etzel can be expected to promote policies designed to encourage private savings as a new source of capital for in- dustrial growth. In addition to extensive tax reforms, the trend toward deficit budgets will also continue, as well as some liberalization of corpora- tion profit taxes. The estab- lishment of a new ministry for state-owned property will fa- cilitate the new policy of selling stock in the govern- ment's industrial holdings-- such as the Volkswagen plant-- as an additional stimulant to investment by small shareholders.. Inflationary pressure can be expected from some of these programs, but the administra- tion has already taken some countermeasures, such as reduc- ing tariffs, increasing reserve requirements for foreign de- posits, and making an advance payment to the International Bank for Reconstruction and Development. Nevertheless, American officials in Bonn ex- pect prices to go up 2 to 3 percent in the next six months. Foreign Policy Adenauer's election victory was generally interpreted as an affirmation of the "policy of strength" through the NATO alliance, and the basic ele- ments of Bonn's foreign policy will continue unchanged. There is, however, an inclination for a more "active" policy toward the Soviet bloc. The opposition parties have long pressed for an ex- pansion of trade relations with the Eastern European satellites and even for the establishment of political relations. A com- prehensive review of Eastern European policy was being con- ducted by the Foreign Ministry when Tito's recognition of East Germany precipitated a crucial decision as to how far Bonn should go in creating a favor- able atmosphere for a rapproche- ment with Poland. The Social Democrats and Free Democrats will continue to prod the gov- ernment to improve relations with the East. Any action taken in this direction will be endorsed by the opposition parties, but anything short of the achievement of reunifica- tion will still be decried as insufficient. WEST GERMAN CABINET OCTOBER 1957 TITLE Chancellor Vice Chancellor and NAME AND AGE Konrad Adenauer - 81 Minister of Economics Ludwig Erhard - 60 Ministers of: Foreign Affairs Heinrich von Brentano - 53 Defense Franz Josef Strauss - 42 *Franz Etzel - 55 Interior Gerhard Schroeder - 47 Justice Fritz Schaeffer - 69 Atomic Affairs and Water Labor and Social Structure Transportation Hans-Christoph Seebohm - 54 Post and Telecommunications *Richard Stuecklen - 41 Refugee Affairs Theodor Oberlaender - 52 Food and Agriculture Heinrich Luebke - 63 Housing *Paul Luecke - 42 Family Affairs Franz-Josef Wuermeligg - 56 Bundesrat Affairs Hans-Joachim von Merkatz - 52 Federal Property ?Hermann Lindrath - 61 ? New Members 7 NOVEMBER 1957 71105 3 Although the Foreign Min- istry favored a break with Bel- grade for reasons of prestige and to discourage further rec- ognition of East Germany, the explanation of this policy was couched in such a manner as to allow an approach to Poland. Chancellor Adenauer, in his policy statement on 29 October, referred to West Germany's "de- termination to settle the ques- tions still in dispute" with the Soviet bloc countries in a peaceful manner. SECRET 25X1 PART III Approved For $IQA517p~~~pf~ g927A00150004Q00g1e 10 of 13 Approved For Release 2005/02/17 : CIA-RDP79-00927A001500040001-3 . SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY In planning closer rela- tions with the. satellites, Bonn's main political motivation is the hope that diplomatic re- lations would provide an oppor- tunity for weakening Polish support of East Germany and en- listing support for at least some of Bonn's unification terms. Increased trade and economic aid are seen as means of strengthening the Gomulka gov- ernment and encouraging a more independent Polish foreign policy. NEW PAKISTANI GOVERNMENT'S GROWING ECONOMIC PROBLEMS The new Pakistani govern- ment under Prime Minister Chund- rigar, though retaining the pro- Western foreign policy outlook of its predecessors, seems like- ly to reverse the trend started by former prime minister Suhra- wardy toward more rapid economic progress and to revert to drift- ing policies. This refusal to face up to economic realities may result in serious deteriora- tion of the country's economy. Increased economic instability, coupled with continuing politi- cal confusion, would neutralize the effectiveness of American military aid and probably make Pakistan increasingly dependent on foreign economic assistance. Pakistan has suffered from political instability throughout the ten years of its existence. Its national constitution was put into effect only in 1956, and it still has not held its first national election. Its economic development has been slow, and plans prepared by the government have not been effec- tively implemented. economic miracle, Suhrawardy, during his 13 months in office, performed no did, however, accomplish two important things. By close personal attention, he material- ly improved the efficiency and morale of government departments and gave their personnel for the first time in recent years a sense of "going somewhere." He also began a concerted at- tack on Pakistan's most press- ing economic problem--that of increasing food production. New Government Chundrigar, the new minister, cabinet represents mainly the landowning elite of West Paki- stan, a group which is not likely to take decisive action on such SECRET 25X1 25X1 5X1 25X1 5X1 Approved For 05 02/17 : CIA-RDP79-00927A001500040001-3 PART III 5XIM, ND PERSPECTIVES Page 11 of 13 Approved For-Release 2005/02/17 : CIA-RDP79-00921A001500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 7 November 1957 essential programs as land re- form and rural development for fear of losing its political and economic power. Cabinet members, during their tenure in office, will al- most certainly be more concerned with politicking than with eco- nomic development, a which most have neither train- ing nor special interest. Their positions are shaky at present and the existing government coa- lition may not last long. Since any successor government would take some time to consolidate its position politically, eco- nomic development seems virtual- ly certain to be retarded for a considerable period, and one or more of the country's econom- ic problems may in the meantime become critical. Food and Population In the last ten years, Pakistan's food production has not increased significantly, while the population has risen by about one million persons annually. Previously self-suf- ficient, Pakistan now must im- port 600,000 tons of grain each year to maintain its 1948-52 level of supply. Because of summer flood damage in 1957, it has recently requested 100,000 tons of additional emergency wheat shipments from the United States for this year. Trade and Payments Position Production of raw jute and cotton, Pakistan's two largest foreign exchange earners, has been relatively unsatisfactory this year. Exports of jute goods for the year ending in June were below the previous year in quantity' and,:, de- spite good prices, declined 15 percent in value. World demand for jute is dropping gradually, and the future of the industry is bleak. Exports of cotton declined during the year ending in July, and Pakistan seems to to be losing most of its markets other than France and Japan. Tea production showed a 21.8- percent decrease between April .and August 1957, as compared with the same period in 1956, while there was a 95.2-percent drop in tea exports. At the same time its for- eign exchange earnings have gone down, Pakistan has found the price of imports going up. Its balance of trade has been adversely affected, and was un- favorable by $56,000,000 for the year ending June 1957. Its balance of payments position also deteriorated, the present balance being $131,300,000 less than in June 1956. Most of the increase in payments was on behalf of the government, a large part for food grains, and this seriously limited exchange allocations to private business. Private pay- ments rose only slightly during the year. Foreign exchange re- serves were reduced by $40,800,- 000 during the year ending in June, and in that month stood at $252,105,000. By the end of August, they were still go- ing down and were reported as fast nearing the minimum safe level. Pakistan's money supply increased by $94,500,000 from July 1956 to June 1957, follow- ing an increase of $136,500,000 in the preceding year. The government's rate of deficit financing reportedly is running at twice the level anticipated in the budget, and inflation has become an increasingly seri- ous-problem. Since 1955, for example, inflation in East Paki- stan has caused an estimated 20- to 25-percent price rise in mass consumption goods. Development Plans Despite the fact that the development program seemed to be stimulated during the first half of 1957 under Prime Minis- ter Suhrawardy,' industrial SECRET PART III Approved For fthmg W5 17pp,1 -pl l?J9jW27AO0150004 e3 12 of 13 Approved For-Release 2005/02/17 : CIA-RDP79-00927A.001500040001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 7 November 1957 production leveled off somewhat during the year. Well-informed sources estimate that West Paki- stan manufacturing plants are operating at only about 50 per- cent of capacity. There has also been considerable bickering within the government on the nature and advisability of con- structing new steel and ferti- lizer plants. Pakistan's trans- poration system is overburdened, and no significant progress in improvement is being made. On 7 September, the Paki- stan Planning Board, on the in- structions of the finance minis- ter, recommended a 40-percent cut in development expenditure targets for fiscal 1959. This indicates that the Five-Year Plan (1955-60) will fall well short of its goals. Despite the cut in expenditures, Paki- stan will probably find it dif- ficult to increase exports to compensate for more expensive imports. Defense expenditures are still running high, and an all-out effort is needed to step up domestic production. Widespread labor unrest was evident during October. A nationwide strike of post and telegraph workers and a strike of government employees in East Pakistan were staved off by promises to review pay scales. SECRET A strike of. 20, 000 workers at the Adamjee Jute Mills in East Pakistan closed the mills. A strike of the Transport and Carriers Union swamped the rail- way and dockyards in Karachi. A strike at the Wah Ordnance Factory continued and the Paki- stan Petroleum Workers' Federa- tion served notice on all major oil companies of an impending strike. This unrest is the result of the steadily increas- ing cost of living. International Disputes In addition to these do- mestic matters, Pakistan faces such international issues as the disputes with India over Kashmir and the distribution of irrigation canal waters. The present government leaders seem less qualified than Suhrawardy to handle negotiations. As long as serious economic prob- lems plague this leadership, India will be disinclined to make any major concession to its smaller neighbor. Indian High Commissioner Desai in Ka- rachi recently indicated that anyone would make a better prime minister than Suhrawardy, ap- parently indicating that, from India's point of view, Suhra- wardy might eventually have strengthened Pakistan to India's disadvantage, while under Chund- rigar there'is no such danger. 25X1 PART III Approved For PA" q, 0 (j1,R?Wpp@ l ?927AO01500044a%1e313 of 13 25X1 Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500040001-3 Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500040001-3