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November 14, 1957
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Approved For Release 2005/02/17: CIA-RDP79-00927AO0150005009 :-2p j j bA j f} Z CONFIDENTIAL CURRENT INTELLIGENCE WEEKLY COPY NO. 1-j OCI NO.6413/57 14 November 1957 DOCUMENT NO. - NO CHANGE IN CLASS. 0 0 DECLASSIFIED CLASS. OA NCXT REVIEW IEW DATT To. dtAD E: DATE & / REV!EWER:II CENTRAL INTELLIGENCE AGENCY CONFIDENTIAL 25X1 25X1 State Department review completed 2 j/.3!/ Approved For Release 2005/02/17: CIA-RDP79-00927A0015Q65b~1-2 Approved For Release 2005/02/17 : CIA-RDP79-00927A001500050001-2 THIS MATERIAL CONTAINS INFORMATION AFFECT- ING THE NATIONAL DEFENSE OF THE UNITED STATES WITHIN THE MEANING OF THE ESPIONAGE LAWS, TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS- SION OR REVELATION OF WHICH IN ANY MANNER TO AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW. The Current Intelligence Weekly Summary has been prepared primarily for the internal use of the Central Intelligence Agency. It does not represent a complete coverage of all current situations. Comments and conclusions represent the immediate appraisal of the Office of Current Intelligence. Approved For Release 2005/02/17 : CIA-RDP79-00927A001500050001-2 Approved For Release 2 NFtD?LN~d ;00927A001500050001-2 CURRENT INTELLIGENCE WEEKLY SUMMARY 14 November 1957 MIDDLE EAST DEVELOPMENTS . . . . . . . . . . . . . . . . . Page 1 The beginning of Turkish military maneuvers on 11 No- vember has resulted in renewed Syrian propaganda charges that a Turkish attack is imminent. The Syrian charges ap- pear designed primarily for internal political purposes. The Turks are expected to withdraw some of the forces not regularly assigned to the Syrian border area on comple- tion of the maneuvers, but these probably could be re- turned quickly. In Jordan, the Egyptian and Syrian cam- paign against King Hussayn may mark an all-out effort to bring down the King and his pro-Western government. ECONOMIC PROBLEMS SHAK" NEW FRENCH GOVERNMENT . . . . . . Page 2 Rightist opposition to Premier Gaillard's proposed tax increases has raised a serious threat to his ten-day- old coalition. Even if he obtains National Assembly ap- proval this week end for his request for sweeping econom- ic powers, the prospect of labor pressure for wage hikes and the revival of basic policy differences within his cabinet make its life expectancy doubtful. NOTES AND COMMENTS INDONESIA . . . . . . . . . . . . . . . . . . . . . . . . Page 1 Djakarta's anti-Dutch drive claiming Netherlands New Guinea has had no apparent effect on official Dutch policy. The Netherlands not only will refuse to negotiate Indone- sia's claim but also appears willing to accept the loss of Dutch commercial interests in Indonesia should Djakarta seize them. Meanwhile the Communists have won a substan- tial plurality in the 7 November local elections in the sultanate of Jogjakarta, thereby continuing their elec- toral gains in earlier contests in Java. Indonesia's second national conference, which will make a further effort to return the non-Javanese areas to direct Dja- karta control, is scheduled to convene on 25 November under the joint chairmanship of President Sukarno and former Vice President Hatta. CO TIAL 25X1 25X1 25X1 THE WEEK IN BRIEF Approved For Release 2005/0 17 : CIA-RD 9-00927A001500050001-2 Approved For-Release 2005/02/17 : CIA-RDP79-00927AO01500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 November 1957 PART II (continued) SITUATION IN LAOS . . . . . . . . . . . . . . . . . . . . Page 1 Prime Minister Souvanna Phouma hopes to present a coalition government for investiture on 16 or 17 November. He will propose a cabinet headed by him- self in' which his half-brother Prince Souphannouvong, the chief Pathet negotiator, will have charge of im- plementing the government's agreement with the Pathet Lao. The transformation of the Pathet Lao into a po- litical party and its participation in the government will enhance its influence as well as its ability to carry on subversive activities throughout the whole country. PHILIPPINE ELECTIONS . . . . . . . . . . . . . . . . . . . Page 2 Philippine President Carlos Garcia's election on 12 November, the victory of pro-American vice-presi- dential candidate Diosdado Macapagal of the Liberal party over Jose Laurel,.Jr., and the poor showing of ultranationalist Senator Claro Recto indicate that anti-American sentiment was not an important con- sideration among the voters. Growing nationalism may soon come to the surface, as one of Garcia's first major undertakings is expected to be a review of US-Philippine relations, including negotiations for the "modernization" of the 1947 American mil- itary bases agreement. SOVIET DISARMAMENT TACTICS . . Page 3 Soviet tactics in the UN disarmament debates dur- ing the past two weeks have concentrated an bringing pressure to bear on the Western powers to enlarge the present UN disarmament machinery. Despite its threat to boycott future talks of the present commission and subcommittee, the USSR will probably participate in further disarmament negotiations if the General Assem- bly adopts a compromise measure enlarging the disarma- ment machinery, PLANS FOR NATO SCIENTIFIC COOPERATION . . . . . . . . . . Page 4 European hopes for progress at the NATO summit meeting of 16-18 December are centered on prospects for more scientific and technical cooperation, partic- ularly the fuller use of West German talents and fa- cilities and greater American participation. SECRET ii Approved For Release 21/Q : (EM-I$RIi 00927A001500050001-2 25X1 Approved For-Release 2005/02/17 : CIA-RDP79-009274001500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 November 1957 PART II (continued) WEST GERMAN MISSILE AND ROCKET ACTIVITIES . . . . . . . . Page 5 Reflecting a growing Western European interest in West German participation in joint development of mod- ern weapons, Bonn has already requested a revision of the WEU treaty to permit production of an antitank mis- sile and has set up within the Ministry of Defense a research o aanization concentrating on a surface-to-air missile. KHRUSHCHEV'S ECONOMIC FORECASTS . . . . . . . . . . . . . Page 6 The figures for future production of selected items mentioned by Khrushchev in his 6 November speech imply a moderation of the headlong pace of Soviet growth dur- ing the next 15 years, although he made no forecast of total Soviet industrial output for 1972. The prelimi- nary 1957 output data given by Khrushchev seem to have made him conservative in his long-range forecasts. Khrushchev's statement on consumer goods goals indi- cates that pushing rapidly on all fronts simultaneously is apparently now an accepted regime policy. SOVIET ANNIVERSARY SPEECHES STRESS BLOC UNITY . . . In his anniversary speech to the Supreme Soviet, Khrushchev attempted to state his policy toward the satellites in such a way as to circumvent the prob- lem posed for Soviet policy by the principle of "dif- ferent roads to socialism." The views expressed on this occasion by party leaders from Communist China, Poland, and Yugoslavia on the nature of the USSR's relationships with bloc countries and the "different roads" concept underscore the difficulties Khru- shchev faces in the matter. . Page 7 NEW DEVELOPMENTS IN CHINA TRADE SHIPPING . . . . . . . . . Page 8 Peiping's first regularly scheduled internation- al shipping line will begin operations soon, using a new Polish-built cargo ship. This line initially will provide service between Canton, Hong Kong, and Haiphong and may be expanded to include major South- east Asian ports now primarily served by free world vessels. At present more than one third of China's trade with the non-Communist world is with South and Southeast Asia. During the past two years, several free world nations, Australia most recently, have as- signed ships to newly inaugurated regular service to the Chinese Communist mainland. SECRET iii- 25X1 25X1 25X1 Approved For Release 21=4904* CAN- 00927A001500050001-2 Approved For-Release 2005/02/17 : CIA-RDP79-00927AO01500050001-2 SECRET PART II (continued) NEW BRIDGE EASES CHINESE COMMUNIST TRANSPORT BOTTLENECK . Page 10 The two-decked rail and highway bridge over the Yangtze River at Wuhan is now open to traffic. While the mile-long structure will not be required to handle its planned capacity of 120 trains a day until late in the Second Five-Year Plan (1958-1962), it has already served to ease the major bottleneck to north-south transportation. Its completion well ahead of schedule was made possible through the use of-an unusual system of pier construction. PEIPING UNDERSCORES OPPOSITION TO "TWO CHINAS" CONCEPT . . Page 12 Peiping's withdrawal from the International Red Cross Conference in New Delhi was designed to under- score its adamant opposition to a "two Chinas" solu- tion for the Taiwan problem. Rather than participate with the Chinese Nationalists, Peiping has also with- drawn from other international events, including the International Geophysical Year. Chou En-lai has stated that in the future, Peiping will not establish diplomatic relations with nations that-continue dip- lomatic ties with Taipei. ASIAN SOLIDARITY COMMITTEE PREPARES FOR CAIRO CONFERENCE . Page 13 The Communist-dominated, nongovernmental Afro- Asian Solidarity Conference, sponsored by the Asian Solidarity Committee, is to be held in Cairo from 26 December to 1 January. Preparations indicate that the Sino-Soviet bloc and Egyptian nationalists will try to define a "popular" anti-Western posture for Asian-African countries on subjects such as anti-im- perialism, national liberation, and racial discrimi- nat ion. KISHI'S SECOND ASIAN TOUR . . . . . . . . . . . . . . . . Page 14 Japanese Prime Minister Kishi will visit seven Asian countries--South Vietnam, Laos, Cambodia, In- donesia, Australia, New Zealand, and the Philippines-- between 18 November and 8 December. While his second tour of Asia is designed in general to promote good will and economic cooperation with the area, Kisbi will give particular attention to Japan's remaining reparations obligations and he will seek reactions to a revised scheme for an Asian development fund. SECRET iv THE WEEK IN BRIEF Approved For Release 2005/02/17 CIA-RDP79-00927AO01500050001-2 25X1 Approved For-Release 2005/02/17 CIA-RDP79=00927A001500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 November 1957 PART II (continued) DIEM'S VISIT TO INDIA . . . . . . . . . . . . . . . . . . Page 14 South Vietnamese President Diem's visit to India in early November was a success in promoting cordial relations between the two countries despite their di- vergent foreign policies. While defending South Viet- nam's anti-Communist posture, Diem apparently tried to play down the differences between his policies and Indian neutralism. MOROCCAN PARTY SEEKS GREATER POWER . . . . . . . . . . . . Page 15 Morocco's Istiglal party appears to be renewing its drive to establish a one-party government. It ap- parently has set its sights on the post of premier and wants to replace the King's son as chief of staff of the Moroccan royal army. Heretofore the King, who shares his theoretically absolute power with the Isti- glal, has opposed a single-party system. 0 DEVELOPMENTS IN THE NENNI SOCIALIST PARTY . . . . . . . . Page 16 Peitro Nenni's Italian Socialist party has de- cided to campaign independently in the 1958 national elections. With Socialist reunification ruled out at least until after the elections, Nenni's evident hope is to hold his own party together and increase its popular attraction by alternating appeals to pro- and anti-Communist elements both inside and outside the party. 25X1 COMMUNISTS EXPANDING LABOR ACTIVITY IN SOUTH AMERICA . . . Page 17 A proposed expansion of activities of the Com- munist Confederation of Latin American Workers (CTAL) includes the establishment of an office in Chile re- sponsible for all South America except Venezuela and Colombia. At present only three influential national labor confederations--in Brazil, Uruguay, and Ecuador-- are affiliated with CTAL. The Chilean Communist par- ty has trained leaders capable of giving considerable assistance to the confederation. 25X1 SECRET Approved For Release /0'IA*K Cd,-W&W00927A001500050001-2 Approved ForRelease 2005/02/17 : CIA-RDP79-00927A001500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 November 1957 PART II (continued) MEXICO'S PROBABLE NEXT PRESIDENT . . . . . . . . . . . . . Page 17 Adolfo Lopez Mateos, capable minister of labor, is expected to be nominated as candidate for presi- dent of Mexico at the 15 November convention of the dominant Institutional Revolutionary party (PRI), vir- tually assuring his election in July 1958. His out- standing labor mediation record has won the confidence of the leftist and nationalist PRI wing led by ex- President Cardenas and of the conservative business wing whose spokesman is ex-President Aleman. Lopez has also received support from local Marxist groups, although he is not known to be sympathetic toward Com- munists. PATTERNS AND PERSPECTIVES ECONOMIC DEVELOPMENT IN SOUTH AND SOUTHEAST ASIA . . . . . Page 1 Economic cooperation on a multinational basis is receiving increased attention as a promising method of raising living standards in South and Southeast Asia. Although practical achievements to date have been lim- ited, impetus for regional development schemes has been generated recently by the wide interest shown at the meeting in Saigon last month of the Colombo plan powers and by the Japanese desire to establish a regional de- velopment fund. The Communist bloc may attempt to rival present efforts among the free nations of Asia to achieve greater economic cooperation by offering competing proj- ects of its own. GOMULKA' S PARTY REFORMS . . . . . . . . . . . . . . . . . Page 5 Poland's Wladyslaw Gomulka--faced with a fragmented and discredited party--has launched a campaign to change the party's composition. He wants to cut it down to ap- proximately half its size to facilitate the development of a united and effective group. Gomulka believes the success of his policies depends on the development of what he calls "numanism" in party practice so that the party can gain some degree of confidence and loyalty from the Polish people. SECRET vi Approved For Release 2OWOR31 c CTM- 0927A001500050001-2 Approved For Release 2005/02/17 CIA-RDP79-00927AD01500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 November 1957 PART III (continued) FRANCE'S ADMINISTRATIVE OFFICIALS . . . . . . . . . . . . Page 8 France's ability to survive cabinet crises like the recent 36-day interregnum between the Bourges-Maunoury and Gaillard governments depends largely on a well-trained and cohesive bureaucracy.. Continuity is maintained de- spite changes in government by permanent administrative officials who often exercise considerable influence on policy. ECONOMY OF TAIWAN . . . . . . . . . . . . . . . . . . . . Page 10 Economic conditions were favorable in Taiwan through- out the past year, and industry on the island continued its steady expansion. If American aid is continued at present levels, the economy should continue to progress and the present level of the armed forces can be main- tained. Population growth and limited agricultural re- sources, however, will ultimately require development of light industry based on export markets if economic via- bility is to be achieved. 25X1 25X1 SECRET vii Approved For Release /0! CI1N-00927A001500050001-2 Approved For Release 2=F1 ffN i FAL00927AD01500050001-2 CURRENT INTELLIGENCE WEEKLY SUMMARY PART I OF.' IMMEDIATE INTEREST' Syrian-Turkish Crisis Arab world, the United States, 25X1 Britain,and Turkey." The beginning of Turkish military maneuvers on 11 No- vember has resulted in renewed Syrian charges that a Turkish attack is imminent. The ma- neuvers appear to be on a rela- tively limited scale. Air participation has been reduced below the level originally planned, and one F-86 fighter- interceptor squadron, deployed near the Syrian border in Sep- tember, has already returned to its home base in northern Tur- key. Following the maneuvers, which are scheduled to end about 15 November, the Turks are ex- pected to withdraw to per- manent duty stations all forces not regularly assigned to the Syrian border area. Syrian charges of Turkish military provocations will probably con- tinue for the duration of the maneuvers, and appear designed primarily for internal and in- ter-Arab political purposes. Jordan- In Jordan, the Egyptian and Syrian campaign against King Hussayn may mark an all-out ef- fort to bring down the King and his pro-Western government. The current Egyptian campaign, which incites Jordan's Pales- Parliamentary by-elections tinian Arab population to act have been scheduled for 23 and against the monarchy and the 30 November to replace six op- government, is similar to that position deputies who resigned which preceded the assassina- in mid-October. Three "inde- tion of Hussayn's grandfather, pendents;" approved by the gov- King Abdullah, in 1951. Mean- ernment, have already been de- hile, Moscow Arab-language clared elected unopposed. The broadcasts have joined Cairo filling of the remaining three and Damascus in denouncing Hus- seats will again permit conven- sayn as an "ally and friend of ing a quorum in the legislature, the bitterest enemies of ~ e whi y th en take action to T tONFLDENIAl V9 _r7c, "'I I- 0WWMft*_ PART I Ap proved For Relea?125l %b ? lAINaNgO3'927AO015000501?& M 1 of e3' Approved For Release 2005/02/17 : CIA-RDP79-00927A001500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 25X1 hold elections to replace eight other opposition deputies who have fled or are under ar- rest. Ultimately, the govern- ment desires to promulgate a new election law which would add 15 or 20 seats to the 40- man legislature and ensure a docile parliament. Egyptian discussions during the past week with Britain, France, and the head of the In- ternational Bank reflect prog- ress toward settlement of some of the financial problems aris- ing out of last year's national- ization of the Suez Canal. The Egyptians now appear willing to make some concessions in order to gain a return to normal eco- nomic relations. Talks with the French have been resumed in Geneva in what has been described as a friendly atmosphere, and a British official has again ex- pressed optimism over the cur- rent economic discussions in Rome. In a 10 November interview between Nasir and IBRD President Black, it was agreed that the bank would act as a mediator be- tween the Egyptian government and the shareholders of the f or- mer Suez Canal Company. Nasir urged Black to expedite the mat- ter, but remained insistent on the point that Egypt would deal 25X1 only with chosen representatives of the shareholders and not with company officials. ECONOMIC PROBLEMS SHAKE NEW FRENCH GOVERNMENT Rightist opposition to Premier Gaillard's proposed tax increases has raised a serious threat to his ten-day-old coali- tion. Even if he obtains early National Assembly approval of his request for sweeping eco- nomic powers, the prospect of labor pressure for wage hikes and the revival of basic policy differences within his cabinet make its life expectancy doubt- ful. The adverse reaction of the right wing of Gaillard's cabinet to his emergency auster- ity program for new taxes, a price freeze, and stringent disciplinary control over mar- keting activities has quickly underscored the shaky position of the new coalition. The new taxes and special powers of en- forcement he wants are anathema to many supporters of the Inde- pendents and Peasants, who have SECRET PART I O F IMMEDIATE IAFt[W-%0927A001500050 t i n 2 of 4 Approved For Release 2005/02/17 C Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY indicated they may abstain in the National Assembly vote this week end on special powers to implement this program. Such a move would make it increasingly difficult for the Socialists to justify their participation in the government. Many Socialists doubted the wisdom of backing Gaillard,and their leaders are fearful lest austerity include a wage freeze, which would alienate their la- bor support and thereby strengthen the appeal of the Communists. The need for tight fi- nancial policies has received wider public recognition--part- ly as a result of the pessimis- tic OEEC report on French fi- nances--and Gaillard's position vis-a-vis the deputies may be strengthened by this develop- ment. The slump in the value of the franc on 14 November to 507 to the dollar (the legal rate is 420) may also increase his support in the special-pow- ers vote. Moreover, his re- fusal to be rushed into supply- ing arms to Tunisia may re-es- SECRET tablish some of his credit with the right. Even if the new government survives the immediate threat, it faces a series of extremely touchy problems over the next two months. New labor agita- tion for wage increases seems inevitable; prices have in- creased again this week and are expected to climb further as the extension of devaluation pushes import costs upward. In addition to the Communist-led labor union's call for a "peace- in-Algeria strike" on 15 Novem- ber, the teachers and postmen are going out on 19 November, and further widespread demon- strations are likely if labor demands are not met. In any event, latent left- right differences will come to the surface when pending re- form proposals involving the constitution, education, elec- toral laws, and medical sub- sidies emerge from the spe- cial study groups where they have been temporarily pigeon- holed. 25X1 PART I Approved For Release 20MU2/17TtlA-RTMS00927A00150005000~-~e 3 of 3 Approved For-Releas= UEN t fAL79-00927AO01500050001-2 CURRENT INTELLIGENCE WEEKLY SUMMARY 14 November 1957 NOTES AND COMMENTS Djakarta's continuing anti- Dutch drive supporting its claim to Netherlands New Guinea has had no apparent effect on offi- cial Dutch policy. The Nether- lands' government plans to con- tinue its refusal to negotiate Indonesia's claim to that area and is willing to sacrifice Dutch commercial interests in Indonesia should Djakarta's re- taliation make that necessary. President Sukarno has added his voice to those calling for the severance of trade relations with the Netherlands and the confiscation of all Dutch prop- erty in Indonesia if the area is not "returned" to Indonesia. Meanwhile, in the sultanate of Jogjakarta the Communist party has a commanding two-to- one lead over its closest oppo- nent in the 7 November local elections. The major non-Com- munist parties--the National party, Masjumi, and Nahdlatul Ulama--follow in that order. A breakdown of the vote gives the Communists 143,000, the Nationalists 72,000, the Mas- jumi 50,000, Gerinda--a minor party--41,000, and the Nahdlatul Ulama 35,000. The Jogjakarta poll is the last of the local elections throughout Java, and the results continue Communist gains in the earlier Java elec- tions, giving the Communist party a larger electoral base than any other political organ- ization in Java. Indonesia's second nation- al conference is scheduled to convene in Djakarta on 25 Novem- ber for one week with a possible three-day extension. Joint chairmanship by President Sukar- no and former Vice President Hatta now appears likely despite Prime Minister Djuanda's orig- inal desire to give Hatta sole responsibility for directing the meeting. Djuanda has announced that working papers will be presented at the conference on a variety of subjects related to economic development. Presumably this conference will function much as the September one did. This will involve the division of the delegates into a number of working groups which will ap- prove predetermined and vague resolutions calling for coop- eration, unity, and social jus- tice. In addition to civil and military representatives of both the Djakarta and the provincial governments, the conference will also include representatives of "functional groups" and polit- ical parties, experts in various economic matters, and "pioneers of Indonesian independence." Included in the last group are Semaun, a leading "national Communist" figure, and Commu- nist party Secretary General D-. N. Aidit. Prime Minister Souvanna Phouma is planning to present a coalition government for in- vestiture on 16 November. His timetable calls for the opening of a special session of the National Assembly on 15 Novem- ber. at which time the Pathet Lao would formally turn over control of the two northern CONFIDENTIAL 25X1 PART II Approved For Release ZDO /021TAND T-: C1A 3PT9S00927A001500050001 e 1 of 18 Approved For-Release 2005/02/17 : CIA-RDP79-00927AO01500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 November 1957 provinces to the government. Souvanna in turn will propose for investiture a cabinet headed by himself in which Pathet leaders Prince Souphannouvong, his half-brother, and Phoumi Vongvichit will head the Minis- tries of Reconstruction and Re- ligion. In addition, Souphan- nouvong may be named minister of integration. This would be a major concession by the royal government, since he would have charge of implementing the gov- ernment's agreement with the Pathet Lao, for which he was the chief negotiator. Conservative opposition to the present accords is rapidly crumbling. Interior Minister Katay has on several occasions embarrassed Western officials publicly in what appears to be an effort to belie charges that he is a Western "lackey." The other leading conservative poli- tician, Phoui Sananikone, also seems to be preparing to re- treat from a position he con- siders politically untenable. Souvanna reportedly claims that Phoui's Independent party, Laos' second largest, has agreed to his timetable calling for in- vestiture of a coalition govern- ment on 16 November. The Pathet Lao appears eager for a settlement on the present terms. Its transforma- tion into a political party and its participation in the gov- ernment will greatly enhance its influence as well as its ability to carry on subversive activities throughout the whole country. Souphannouvong re- portedly signed both the polit- ical and military accords on 8 November, and the Pathets are preparing the centers in which their troops will be regrouped for integration or demobiliza- tion. Pathet Lao soldiers re- portedly are surrendering daily to the royal government in groups of two and three, claim- ing they hope this will assure them better treatment than if they wait for integration. 25X1 The election of Carlos Garcia to the Philippine presi- dency in the 12 November ballot- ing is primarily due to the ad- vantages he held as incumbent and to the well-entrenched ma- chinery of the Nacionalista par- ty. HiE~ comfortable margin of victory over his nearest rival, Liberal candidate Jose Yulo, may also reflect his success in identifying himself with the foreign and domestic policies of his predecessor in office, the late Ramon Magsaysay. An- other factor may have been the election day typhoon which struck hardest in opposition strongholds in the northern Philippines. Garcia apparently will have as his vice president the Liber- al party's Diosdado Macapagal, who is leading Nacionalista candidate Jose Laurel, Jr. As a congressman, Macapagal has been regarded as able, pro- American, and experienced in international affairs. As vice president, however, he could have little voice in the ad- ministration if denied the customary appointment to a cabi- net post. In the congressional elec- tions, the Nacionalistas will retain control of both houses of congress. They apparently are winning at least 80 of the 102 congressional districts and six of the eight contested senatorial seats, giving them control of at least 20 members of the 24-man senate. The expected defeat of Laurel together 'with the SECRET PART II NOTES AND COMMENTS Page 2 of 18 Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500050001-2 Approved For Release 2005/02/17 : CIA-RDP79-00927A001500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY fourth-place showing in the presidential race of ultrana- tionalist Senator Claro Recto indicate that anti-American sentiment played only a minor role in the campaign. Growing nationalist sentiment may again be apparent when the Garcia ad- ministration undertakes in the near future to review US-Philip- pine relations and to resume negotiations for the "moderniza- tion" of the 1947 American mili- tary bases agreement. An uncertain force in the Philippine political future will be the new Progressive party, whose standard-bearer, Manuel Manahan, placed a relative- ly close third in the presi- dential contest. The Progres- sives were handicapped by their lack of finances and an established organization in attempting to turn Manahan's considerable popularity into votes. As the effectiveness of their claim to being the preservers of the "spirit of Magsaysay" fades, they may throw in their lot with the opposition Liberals. SOVIET DISARMAMENT TACTICS Soviet tactics in the UN disarmament debates during the past two weeks have concentrated on bringing pressure to bear on the Western powers to enlarge the present UN disarmament ma- chinery. Despite its threat to boycott future talks of the present commission and subcom- mittee, the USSR will probably participate in further disarma- ment negotiations if the General Assembly adopts a compromise measure enlarging the disarma- ment machinery. On 27 October the USSR pre- sented a resolution which would replace the present 12-power Disarmament Commission and its five-nation subcommittee with a permanent commission composed of all 82 UN member nations. Deputy Foreign Minister Kuznets- ov on 4 November threatened that the USSR would not take part in further negotiations in the com- mission and subcommittee "with their present membership," a qualification hinting that a limited expansion of the dis- armament machinery might be ac- ceptable to Moscow. In comment- ing on passage of the Western 24-nation resolution two days later, Kuznetsov did not repeat his threat of Soviet nonpartici- pation. India has consistently pressed for enlargement of the disarmament machinery, and, with Canada, has been active in working out an posal acceptable to the West and the Soviet Union. An Indian delegate stated on 12 No- vember that the Soviet delega- tion does not favor enlargement of the subcommittee "at present," a hint apparently designed to help gain Western agreement on additions to the Disarmament Commission which the USSR would accept, before raising the ques- tion of enlarging the subcommit- tee. On 13 November the Soviet delegation publicly promised to give "serious thought" to such a limited expansion plan. SECRET 25X1 PART II NOTES AND COMMENTS Page 3 of 18 Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500050001-2 Approved For.Release 2005/02/17 : CIA-RDP79-00927A001500050001-2 SECRET Efforts by the Soviet UN delegation to translate the effect of Soviet technological achievements into political gains on the disarmament issue have not met with consistent success. There are indications that the heavy majority in favor of the Western 24-nation reso- lution in the Political Commit- tee of the General Assembly on 6 November was facilitated to some extent by announcement of the launching of asecond Soviet earth satellite on 4 November. In addition to attempts to create a sense of emer- gency and frustration among other delegations, Soviet dele- gates have emphasized the desirability of direct talks with the United States on disarmament. Kuznetsov pointed on 5 November to the pros- pect of conducting private bilateral US-Soviet talks under the aegis of an en- larged disarmament commission. European hopes for prog- ress at the NATO summit meeting of 16-18 December are centered on prospects for more scientific and technical cooperation, par- ticularly the fuller use of West German talents and facili- ties, and greater American par- ticipation. Speeches during the past ten days by Secretary General Spaak and Prime Minister Mac- millan have contributed to high expectations for the meeting. Macmillan's reference to the "turning point in history" and the need to contribute "some national sovereignty" reflect his government's determination that the meetings bring more than declaration of good inten- tions. In seeking an adequate response to increased Soviet missile capabilities, many Eu- ropean governments are more open-minded on German missile production than ever before. British Foreign Secretary Lloyd has publicly implied that he might favor easing of the WEU restrictions on Germany to al- low Bonn to participate in a joint NATO program for modern weapons production. While Bonn hopes for a relaxation of treaty restric- tions; it probably would not initiate a request without def- inite assurances of support from at least the UK and France. Foreign Minister Brentano's non- committal statements to the press on 4 November stimulated a burst of press speculation which the American embassy in Bonn suggests may have been in- tended to test opinion through- out NATO countries. A number of the preliminary ideas on how to achieve greater cooperation reflect continuing doubt regarding the extent of the United States' willingness SECRET 25X1 PART I I Approved For ReleaKPT 5/mil c 9-00927A001500050Ag 4 of 18 Approved For-Release 2005/02/17 : CIA-RDP79-00927AO01500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY SUfARY to participate in new arrange- ments. Tne chief French NATO representative has suggested that NATO's European members should plan allocation of pro- duction of new weapons. Bonn has suggested'that manufactur- ing be allocated by the WEU standing armaments committee augmented by American and Ca- nadian observers. For reasons of prestige, the British appear the most anxious that the United States make some token contribution to the common effort by relin- quishing its across-the-board production. A high Defense Ministry official has told the American embassy that the Mac- millan government's de-emphasis of reliance on the nuclear de- terrent would be politically more palatable if the United States would turn over to vari- ous NATO allies the "right" to make such weapons as antitank missiles or heav tanks. 25X1 WEST GERMAN MISSILE AND ROCKET ACTIVITIES Reflecting a growing West- ern European interest in West German participation in joint development of modern weapons, Bonn has already requested a minor revision of the WEU treaty to permit production of an anti- tank missile and has set up within the Ministry of Defense a research organization concen- trating primarily on a surface- to-air missile. Although the Foreign Minis- try has denied that Bonn would seek any general revision of the treaty limitations on modern weapons production, there is a willingness to participate in research and development proj- ects within NATO which are per- mitted by the WEU treaty. As early as 1955, the Ministry of Defense formed a section to co- operate with private industry in various phases of missile work, and the press reported that the defense budget for 1958 will include about $2,500,- 000 for missile research. 25X1 The Kobra, a small ant itank mis- sile, has been de velop ed by the German firm of Bo elkow in Stutt- gart, and a proto type was pro- duced by the Swis s fir m of Oerlikon in Octoo er 19 56. Bonn requested in Sept ember 1957 that the WEU treaty be revised 2 to permit Kobra p roduc tion in Germany, and a favorable deci- about 30 miles. Private organizations such as the Working Association for Rocket Techniques in Bremen have token the lead in the field of experimental rockets, and sev- eral rockets have been launched for meteorological research. The association has announced ambitious plans for developing an 11-stage rocket to launch an earth satellite during the In- ternational Geophysical Year. The designers, former members of the V-weapons group, are not optimistic about completing the .project during the IGY, but the first stage was fired in Septem- ber and is reported to be capa- ble of reaching an altitude of SECRET 5X1 25X 25 X1 PART I I Approved For Relea&D/(WP7 cO -00927A001500050i'gg 5 of 18 Approved For Release 2005/02/17 : CIA-RDP79-0092ZA001500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY SUI[MART In his speech to the Su- preme Soviet on 6 November, Khrushchev made no forecast of total Soviet industrial output for 1972, but his figures for future production of selected items imply a moderation of the headlong pace of Soviet growth during the next 15 years. Energy availability is a case in point. Analysis of the projected growth of output of fuels suggests an average an- nual increase through 1972 of about 6.5 percent, as compared with an average annual increase of some 7.8 percent from 1950 to 1955. The importance of petroleum, including the mas- sive natural gas increases, in total fuel supply will perhaps double by 1972, while that of coal will diminish. Electric power production is to increase at an annual rate of about 9.8 percent. Despite the evident modera- tion of industrial growth, Khrushchev contended that "it is a quite real and feasible task to outstrip the United States in a very short period." He drew attention to the "chron- ic crises" of capitalism, the depressions that make capital- ist economic growth "intermit- tent," contrasting this to the "uninterrupted development" of planned socialist states. Tak- ing into account his relatively feasible forecasts for the USSR in 1972 and an assist from a hoped-for Western depression, Khrushchev stated, "The level of output in the United States is no longer inaccessible... as it might have seemed to some people 25 or 30 years ago." Khrushchev forecast 1972 output for 11 items, covering a considerably broader spectrum than the four items--coal, pe- troleum, pig iron and steel-- SECRET listed in 1946 by Stalin in a somewhat similar "15-year fore- cast." Besides additional pro- ducer goods items--iron ore, gas, electric power, and cement --Khrushchev included consumer GROWTH RATES OF SELECTED SOVIET INDUSTRIAL PRODUCTS SEMILOGARITHMIC SCALE (MILLION METRIC TONS) STALIN'S FORECASTS ACTUAL PRODUCTION ORIGINAL SIXTH FIVE-YEAR PLAN KHRUSHCHEV'S FORECASTS 650.750 75-R5 100-120 350-400 G 1955 1957 1960 1965 1972 71113 25X1 PART I I Approved For Release ZUU5/021 f 81ARDP79-00927A00150005000"*1 6 of 18 Approved ForRelease 2005/02/17 : CIA-RDP79-009279001500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY S*MYARY GROWTH A! (MEASURED IN TW1$ goods--sugar, woolen fabric, and leather footwear--which, with his statements on housing and agriculture confirming the existing stepped-up programs, served to notify the Soviet people that their material well- being is not being ignored. For the consumer items cited, rates of growth are not marked- ly lower than those of the cited producer items--despite the continuing preferential growth of heavy industry. The preliminary 1957 out- put data given by Khrushchev, presaging only a slight overful- fillment of the mod- est 1957 plan for total industrial pro- duction, seem to have made him conservative in his long-range forecasts. In agri- culture, 1957 was disappointing compared with 1956, a bumper crop year; less fa- vorable weather re- sulted in a harvest much lower than last year, and grain pro- curement by the state is apparently less than three quarters of last year's record take. Khrushchev of- fered no further pan- aceas for agriculture, but spoke of the possible future expansion of the "New Lands" program in Siberia and the Far East. The course of pushing rap- idly on all fronts simultaneously is apparently now an accepted re- gime policy. Future growth can- nto be maintained without bal- anced attention to the various interdependent activities of the increasingly complex and maturing Soviet economy, with increased reliance on the "carrot" of in- centives rather than the "stick" of coercion, 25X1 25X1 In his anniversary speech to the Supreme Soviet, Khru- shchev attempted to state his policy toward the satellites in such a way as to circumvent the problem posed for Soviet policy by the principle of "different roads to socialism." The views expressed on this oc- casion by party leaders from Communist China, Poland, and Yugoslavia on the nature of the USSR's relationships with bloc countries and the "differ- ent roads" concept underscore the difficulties Khrushchev faces in the matter. In an attempt to limit the principle's divisive effects on the Communist world, Khrushchev directed that more attention be given to the similarities that exist among the countries of the Communist bloc rather than to national differences. Bloc SECRET PART II Approved For Releas*CWESIOANI : PDS-00927A0015000500P$ e 7 of 18 Approved For_,Release 2005/02/17 : CIA-RDP79-00927AO01500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY unity, he said, can be main- tained only if all socialist states recognize and adhere to the basic principles of Marx- ism-Leninism and proletarian internationalism, i.e, recogni- tion that the USSR is the most powerful of the Communist states and that what is good for the USSR is also good for them. In an apparent effort to re- assure the Poles and Yugoslavs, Khrushchev'added that "all countries of socialism, large or small...have fully equal rights." Yugoslav Vice President Kardelj described his country's relations with the Soviet Union as based on the "great idea of proletarian internationalism" --defined by the Yugoslavs as support for the Kremlin in for- eign policy matters--and on "equality of independent peo- ples." Polish Party First Sec- retary Gomulka, as quoted in Pravda on 5 November, listed as the conditions of bloc unity: national independence and recog- nition of national peculiari- ties, and the independence of Communist parties. Mao Tse-tung, while ac- cepting as a "sacred interna- tional obligation" the need to strengthen bloc solidarity under Soviet leadership, nonethless observed that "we firmly main- tain that all nations should practice... principles of mutual respect for sovereignty .... non- interference in each other's internal affairs, equality, and mutual benefit," the principles enunciated in the 30 October 1956 declaration. Gomulka, too in his 6 No- vember speech, acknowledged that the Soviet Union occupied the "first place in the family of all socialist countries," which he described, however, as having equal rights. In contrast to the restraint ex- pressed in the Yugoslav, Polish, and Chinese comments, the ortho- dox satellites described the hap- piness of their peoples under Moscow's benevolent guidance. The need to combat "dogmat- ism and revisionism"--the latter designated by Mao as the greater danger--was alluded to in the majority of the anniversary speeches, indicating that the threat represented by the devia- tions of Djilas and Nagy, spec- ifically named by Khrushchev, and the Polish liberals is a 25X1 matter of serious concern among bloc leaders. Peiping's first regularly scheduled international ship- ping line will begin operations soon, using a new Polish-built cargo ship. This line initially will provide service between Canton, Hong Kong, and Haiphong and may be expanded to include major Southeast Asian ports now primarily served by free world vessels. Peiping for some time has indicated an interest in estab- lishing its own regular shipping service to South and Southeast Asia, since more than one third of China's total trade with the non-Communist world is with these areas. The Chinese also probably expect that a shipping line will boost their prestige in Southeast Asia. SECRET PART I I Approved For Relea/Q#PT f i g-00927A0015000502a 8 of 18 Approved For (Release 2005/02/17 : CIA-RDP79-00927AO01500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 November 1957 erating range of vessels based at Taiwan. Earlier additions to China's merchant fleet have for the most part served the needs of North China, but vessels which have recently arrived from Eastern Europe have been assigned to the southern coast. China is expecting delivery of addition- al cargo ships well suited for operations in Southeast Asian waters. Trained Chinese sea- men now employed on Polish vessels operating in the China trade are available for Pei- ping's growing mer- chant fleet. Peiping has long been sensitive to po- tential threats to its shipping in the South China Sea. It still does not run vessels between North and South China, as the routes are sub- ject to Chinese Na- tionalist naval in- tervention, but this new international shipping route is be- yond the normal op- As early as mid- 1955, the Chinese Com- munists began the development of port facilities at Fort Bayard for the promo- tion of China's com- merce with Southeast Asian countries. This port is now equipped with modern cargo- handling machinery and is capable of ac- commodating five ocean-going vessels at one time. In May of this year, the Chi- nese Communists began to rebuild a pier in Hong Kong for their own use. The pier probably will play an important role in any expan- sion of Chinese shipping into the Southeast Asian area, as well as serve the new Canton Hong Kong?--. Haiphon. -run. In the past two years, a number of countries have started shipping services to Commu- nist China. Just recently an Australian-steainship company. assigned four vessels to a SECRET PART I I Approved For ReleasHQUM02M: CQURM -00927A0015000500ftge 9 of 18 Approved For-Release 2005/02/17 : CIA-RDP79-00927AO01500050001-2 SECRET regular passenger and cargo service between Australia and Shanghai. Last month Canada began cargo service between Vancouver-and 'Tientsin. Ear- lier Yugoslavia and West Ger- many had assigned ships to the, while the USSR, 25X1 Czechoslovakia, and Poland have maintained their regular serv- ice with Chinese ports. (Prepared by ORR) NEW BRIDGE EASES CHINESE COMMUNIST TRANSPORT BOTTLENECK It now appears that the new two-decked rail and highway bridge over the Yangtze River at the central China metropolis of Wuhan, opened to traffic last month, will be the only major railroad construction project to be completed this year. Com- munist China is not diverging widely from its plan to lay only 334 miles of new track this year--as against 1,747 miles in 1956--and is concentrating instead on increasing the capac- Hsiatung, in western Kansu, al- most a year after rail-laying had reached this point, and a program for "rebuilding" the Tienshiu-Lanchow line, finished in 1952, is now under way. The completion of the new bridge at Wuhan well ahead of schedule is, however, a signif- icant achievement. The bridge is 5,446 feet long and has nine spans, each 415 feet long. Its superstructure is 52.5 feet high and 75 feet wide. The upper deck has two pedestrian walk- ways eight feet wide and a six-lane high- way. The lower deck carries pedestrian walkways and a double- track railway, only '%,* one track of which has been installed ity of overworked older lines through a program of double- tracking and on improving freight-handling'capacity in stations and yards. In addition, Peiping has found it expedient to better the standards on some of the lines built with such notable dispatch in the immediate past. 1'or example, the Trans-Sinkiang line has only recently been opened to passenger traffic to so far. Costing $30-33,- 000,000, the bridge s only part of a $67,000, 000 project to make Wuhan a major rail center. The entire project, which includes new stations, track, and marshal- ing,yards--as well as the rail and highway bridges over the Han River completed earlier--is ex- pected to be finished in 1958. Construction of the bridge was greatly speeded through use of an unusual: method of pier- sinking said to have been sug- gested by the chief Soviet ex- pert on the bridge. It involved sinking to bedrock a series of hollow tubes of reinforced SECRET PART II NOTES AND COMMENTS Page 10 of 18 Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500050001-2 Approved For Release 2005/02/17 : CIA-RDP79-00927AQ01500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY SUriARY YUTAIMEN STATION SRUYO.FC,bI.,RAILROAD BRIDGE OPENED NOV.195. STATION Wuhan Rail Development FACILITIES NERLY CONSTRUCTED OR UNDER CONSTRUCTION (ALIGNMENT AND LOCATION UNCERTAIN( 14 NOVEMBER 1957 24788 0 MILES 4 CHIANGAN STATION MARSHALING YARD IDGE 195 WV concrete five feet in diameter. These formed a basis for one pier. Through these tubes 30- 36 cores, 4.5 inches in diameter, were drilled into the bedrock to a depth of at least 20 feet. Steel rods were then driven into the cores and the tubes filled with concrete, firmly fixing the whole to the bedrock. Thereupon a steel coffer- dam was lowered around the con- crete columns and filled with concrete, thus completing the pier. Use of this method en- abled the bridge builders, who numbered about 15,000, to avoid practically all underwater work and to continue operations throughout the year. ?UCHANG EAST UIOd ARARSHALI YARD HSUCHIAPENG TAT ION 11\11 _/ ~ ~ r ~ KVO CHA ~ HU( CHENG \ Rf-14R9*D AND HI OH11Av ,BRIDGE The bridge is one of the outstanding engineering achieve- ments of the First Five-Year Plan. It will not, however, begin at once to operate at its planned capacity of 120 trains a day since the lines leading onto the bridge will not be able to handle such a number un- til they are double-tracked. The Peiping-Canton railroad is scheduled to be double-tracked as far south as Hengyang by 1962. The bridge will free the rail ferries formerly used there for use elsewhere, perhaps at the Nanking crossing. It will cut two hours or more from the running time on through trains between Peiping and Canton. SECRET Prepared by 25X1 PART II Approved For Release902M : T DP79-00927AO0150005000-te 11 of 18 Approved For -Release 2005/02/17 : CIA-RDP79-00927A001500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY SWIkARY 14 November 1957 PEIPING UNDERSCORES OPPOSITION TO "TWO CHINAS" CONCEPT Communist China is giving increasingly wide publicity to its unyielding opposition to a "two Chinas" solution for the Taiwan problem. On 7 November it dramatically walked out of the International Red Cross Con- ference in New Delhi after the conference voted to seat the Chinese Nationalist delegation as well as the Chinese Commu- nists. Before their withdrawal, the Communists had exerted heavy pressure on the Indian government to prevent the seat- ing of the Nationalist delega- tion. Other participants were warned that their support of the Nationalists would be construed as a "hostile act." Chinese Communist editorial comment since the withdrawal reflects Peiping's position that it will not compromise on issues of this kind even if they impede the re- gime's campaign to win broader international recognition. The propaganda pictures Peiping as "not eager" for American recog- nition and describes "two Chinas" as an "illusion" indicating an impasse in America's China pol- icy. Anti-American invective has accompanied similar with- drawals by Peiping in the past year from other international occasions, such as the Olympic games, film festivals, and scientific and technical events. After months of preliminary plan- ning for participation, Peiping withdrew at the last moment from the activities of the Interna- tional Geophysical Year. The visits to Taiwan by Prime Minis- ter Kishi of Japan and former Premier Pinay of France provided occasions for further vociferous protests by Peiping against the "two Chinas" formulation. Peiping charges that Great Britain, Japan, and France are the countries most guilty of following the American lead and developing closer ties with Tai- wan. Under no circumstances, the regime's leaders say, will Peiping enter the UN if the Na- tionalists remain. The Chinese declare they will patiently await admission to the UN and that in the mean- time the UN will remain stymied in its efforts to-solve major international problems. Communist China's pro- fessions on the "two Chinas" concept harmonize with its prop- aganda campaign to "liberate" Taiwan. Proclaiming that Tai- wan is Chinese territory and that the Taiwan issue is an in- ternal affair, the Communists insist that only their regime can be represented in interna- tional forums. American "in- trigues" are held to be respon- sible for continued Nationalist accreditation to the UN and other international bodies. Chou En-lai has stated that in the future Peiping will not establish diplomatic relations with nations that con- tinue diplomatic ties with Taipei. Apparently Peiping's relations with Britain are not to serve as a precedent for other coun- tries. In 1954, Peiping recip- rocated British recognition-- which had been extended in 1950 --without requiring the UK to withdraw its consulate on Tai- wan. This consulate, however,' is accredited to the Taiwan pro- vincial authorities rather than to the Nationalist government. 25X1 SECRET PART II N 95/~2T17 . 'CU -RD 9-00927A001500050OU~P-e1 12 of 18 Approved For Release Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500050001-2 SECRET The Communist-dominated nongovernmental Afro-Asian Sol- idarity Conference, sponsored by the Asian Solidarity Commit- tee, is to be held in Cairo from 26 December to 1 January. Prep- arations indicate that the Sino- Soviet bloc and Egyptian nation- alists will try to define a "popular" anti-Western posture for Asian-African countries on subjects such as anti-imperial- ism, national liberation, and racial discrimination. Sino- Soviet bloc delegates will push the international Communist line in dealing with such agenda issues as the Algerian war, the Syrian question, and a ban on testing and use of nuclear weapons. The agenda also includes discussion of "support of eco- nomic and technical cooperation among the Afro-Asian peoples," and conference propaganda may call for an economic aid re- lationship which would by def- inition exclude the West but include the USSR and Communist China. Conference officials expect delegates from 50 na- tions. Delegates from 21 Asian- African countries and the Sino- Soviet bloc attended a prepara- tory meeting in Cairo in Octo- ber. They included exiles and opposition leaders from Jordan, Iraq, and Lebanon, and left Populist politicians from Syria. "Freedom Fighters"--presumably leaders of nationalist move- ments--attended from the Camer- oons and Algeria. Foreign Ministries in countries where no national solidarity commit- tees exist were asked to act as intermediaries in arranging nongovernmental delegations to the preparatory meeting. President Nasi-' has emphat- ically identified himself with the conference through press interviews and press releases, and the preparatory committee is headed by one of his close personal advisers who also heads the Islamic Congress. The Egyptian Finance Ministry has furnished quarters for the preparatory committee and fi- nanced it. This direct sup- port by the Egyptian government has tended to confuse the non- governmental nature of the con- ference. Communist control of the committee has been disguised by the slow and discreet organ- izational development and a policy of delegating responsi- bility to non-Communist Asians. Its origin can be traced to the Communist-front World Peace Council which was never success- ful in establishing itself in Asia. At an unpublicized meet- ing in December 1956, the com- mittee decided to expand its activities to include Africa and, in connection with the preparatory meeting, a commit- tee representative said the establishment of new national committees in Asia and Africa then had priority. The com- mittee's emphasis on nation- alism and national independence in Asia is reflected in its pattern of organization, which places primary importance on the national solidarity com- mittees rather than on the ap- parently weak secretariat. Fellow-traveling members of the committee maintain con- nections with other Communist- influenced or Communist-front movements in Asia. Committee leaders figured prominently in the Afro-Asian Lawyers' Confer- ence, the World Peace Council meeting in June in Colombo, and the Tokyo antinuclear weapons meeting in August. 25X1 F__ I 25X1 SECRET PART 11 Approved For Relea#PT16OS5/ CB 9-00927A00150005&&1e2 13 of 18 Approved For Release 2005/02/17 : CIA-RDP79-00927AQOt500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY Japanese Prime Minister Nobusuke Kishi will make a sec- ond tour of Asian countries be- tween 18 November and 8 Decem- ber, visiting seven nations-- South Vietnam, Laos, Cambodia, Indonesia, Australia, New Zea- land, and the Philippines--which were not included in his tour last May. Kishi views this trip, as he did the earlier one, as an opportunity to use high-level, personal diplomacy to allay latent suspicion of Japan and to promote increased economic cooperation. He will give major consideration to outstanding reparations obligations and he will seek reactions to a revised scheme for an Asian development fund. The prime minister expects to pave the way for greater ac- ceptance of Japan in the Asian community and hopes that on particular problems he will find a sounder basis for cooperation than he did in May. At that time Kishi encountered a general reluctance to accept his Asian development fund idea as well as a division of opinion with regard to Tokyo's policy toward Communist China. The Japanese government has been unable to reach reparations settlements with Indonesia and Routh Vietnam prior to Kishi's visits to these countries. Since Japan recognizes that reparations settlements are a major factor in its attempt to develop closer economic relations with South- east Asia, Kishi may be prepared to break the deadlocks with new offers. In addition, Kishi may have revised his thinking on the Asian development fund. It has been coolly received in Asia, particularly with regard to joint US-Japanese sponsorship; the United States prefers a bilater- al, project-by-project approach; and Kishi's own roving ambassa- dor in Asia has made recommenda- tions which essentially reflect the American position. Although no official announcements have been made, there are indications that Kishi now believes a lim- ited program including so-called neutral or all-Asian funds and excluding outside assistance may have more appeal. The forth- coming trip willgive Kishi an op- portunity to test reaction to a revised schme of this type. 25X1 South Vietnamese President Diem's visit to India in early November was a success in pro- moting cordial relations between the two countries despite their widely divergent foreign poli- cies. The friendly reception accorded Diem by Indian offi- cials and the local press indi- cates India's growing sympathy for South Vietnam and is in sharp contrast to New Delhi's attitude of only 4 few years ago. This development is sig- nificant in view of India's role of arbiter between North and South Vietnam as chairman of the International Control Com- mission. In recognition of India's special position, Diem had at- tached great importance to his New Delhi visit, although he continues privately to express disdain for Indian neutralism. In his public statements in In- dia, Diem emphasized the SECRET PART 11 Approved For ReleasLg4'O?'0 : @1 Pg-00927A00150005018# 14 of 18 Approved For Release 2005/02/17 : CIA-RDP79-00927A0,Q1500050001-2 ` ECRET CURRENT INTELLIGENCE WEEKLY SUMMARY historical, cultural, and eco- nomic ties linking India and South Vietnam, cited common po- litical and economic aspirations, and made liberal references to well-known Indian philosophical teachings. While minimizing foreign policy differences, Diem de- fended South Vietnam's strongly anti-Communist position and bluntly denounced the "Commu- nist despotism" in North Viet- nam as hindering national unifi- cation. On the controversial topic of SEATO, Diem praised the organization's "purely de- fensive" role against Communist subversive maneuvers, but em- phasized that South Vietnam was not a member and was not active- ly considering adherence to any military alliance. The joint communiqud is- sued on 8 November by Nehru and Diem reflected the desire of both to find common grounds. Specifically, the two leaders noted that "the terrible ad- vances in the development of weapons of mass destruction" made most urgent the maintenance of world peace. It also stated that "continued and increased cooperation" between India and South Vietnam was desirable "in common pursuit of the economic and social advancement of their people." With an eye to the future, Diem apparently intended his New Delhi visit to establish rapport with India's neutralists. He has frequently indicated con- cern that South Vietnam is threatened with isolation as a result of growing neutralism in neighboring countries, and prob- ably considers that Indian sym- pathy may prove an indispensable asset in the future. 25X1 Morocco's Istiglal party, frustrated last year in its initial attempt to obtain a monopoly of power when King Mohamed V conceded it only ma- jority representation in the government, appears to be renew- ing its drive to establish a one-party government. With the recent nomination of an Istiglal leader to head the Ministry of Defense, the party now holds 11 of 18 cabinet portfolios and has set its sights on the post of premier, occupied by Si Mbarek el Bekkai, a close friend of the King, and the position of chief of staff of the Moroc- can royal army, occupied by the King's eldest son, Crown Prince Moulay Hassan. Although the King theoret- ically remains an absolute mon- arch, in practice he shares his power with the Istiglal. Fear- ing the prorepublic tendencies of one wing of the party, he has encouraged potential oppo- sition parties as a counter- weight to Istiqlal's efforts to eliminate political opposition. He is presumed to have at least tacitly approved the formation in September of the Popular Movement, led by Mahjoubi Ahar- dane, then governor of the Prov- ince of Rabat, and Minister of State Lahcen el Lyoussi, both close to the King. Istiqlal succeeded in having the party banned on 24 October and sub- sequently Ahardane was removed from office. Premier Bekkai's alleged association with the new group presumably will be the basis for the Istiglal campaign to force the premier to resign. Although the King approved the ouster of Ahardane, Bekkai's SECRET 25X1 PART II Approved For Releas Q 0f/ M: ? IM T 00927A0015000500 15 of 18 Approved For Release 2005/02/17 : CIA-RDP79-00927AO.Q1500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY SUYYARY long service on the King's be- half may save the premier. Istigial is reported planning to propose as premier Abdelkrim Benjelloun, able minister of justice toward whom the King is favorably disposed. Should the Istiqlal succeed in convincing the King of its point of view, the change-over probably would not occur until after the King returns in mid-December from his visit to the United States. Istigial tactics. Meanwhile, Istigial, which controls all organized labor through its affiliate, the Moroc- can Union of Labor, is continu- ing to maneuver to obtain closer control over the army and pre- sumably to strengthen its links with the irregular Moroccan Army of Liberation. The party may also attempt to strengthen its organization in rural areas, where Berber tribes have recent- ly expressed dissatisfaction with DEVELOPMENTS IN THE NENNI SOCIALIST PARTY The sending of a Nenni So- cialist delegation to Moscow for the 40th anniversary cele- brations, almost simultaneously with the issuance of Nenni state- ments criticizing the Communists and the Social Democrats, serves to illustrate the problem fac- ing the Italian Socialist party (PSI) as a result of its an- nounced decision to campaign independently in the 1958 Ital- ian national elections. With Socialist reunification ruled out at least until after the elections, Nenni's evident hope is to hold his own party togeth- er and increase its popular at- traction by alternating appeals to pro- and anti-Communist ele- ments both inside and outside the party. Party delegates sent to Moscow included only one from the wing favoring independence from the,.Communists, three oth-- ers from this group having begged off at the last minute on grounds of "illness" and "visa delays." An apparent balancing gesture to right-wing elements appeared on 7 November when the party daily Avanti re- iterated earlier sharp criti- cisms of the Soviet system and said that the popular sovereign- ty guaranteed by socialism has not yet been achieved in the USSR. Shortly before, however, Nenni had attacked the Democrat- ic Socialists for putting the "tombstone" on reunification when their late October party congress made a sharper PSI break with the Communists a pre- condition for reunion. Avanti returned to the other tack on 10 November with a new call for Socialist unity, for friendly discussions with the Christian Democrats, and for further clari- fication of the PSI's relation- ship with the Communists. A further problem is posed by the death on 3 November of Giuseppe Di Vittorio, the Com- munist chief of the Italian General Labor Confederation (CGIL), whose secretariat in- cludes a number of PSI officials. This event raises the tempting possibility of replacing Di Vit- torio by a Socialist, but at a time when Nenni might prefer not to have another point of dispute with the Communists and with certain elements in his own party. SECRET 25X1 25X1 PART II Approved For Rele TM5MA7CQMXMM9-00927A0015000500g1-216 of 18 Approved For Re ease 2005/02/17 : CIA-RDP79-00927AO01500050001-2 SECRET COMMUNISTS EXPANDING LABOR ACTIVITY IN SOUTH AMERICA A proposed expansion of the activities of the Commu- nist Confederation of Latin American Workers (CTAL) in- cludes the establishment of an office in Chile responsible for all South America except Vene- zuela and Colombia. The establishment of the new office is likely to be ac- companied by a stepped-up of- fensive against US business in- terests in Latin America which may include mass strikes, pro- test demonstrations, and other militant actions. More ef- ficient reporting for the WFTU on agricultural and other eco- nomic subjects is expected to be another result of the planned expansion. Only three influential na- tional labor confederations--in Brazil, Uruguay, and Ecuador-- are formally affiliated with the CTAL. In Chile, however, CTAL has extremely cordial rela- tions with the powerful Commu- nist-dominated Single Labor Cen- tral of Chile (CUTCH). Oscar Astudillo, the head of the na- tional labor commission of the Chilean Communist party and member of the CUTCH directorate, is a CTAL executive board mem- ber. CUTCH has offered to help in setting up the new CTAL office, thus mobilizing support for the project among large segments of Chile's organized labor. The new office, which will publish the official WFTU pub- lication, will include two mem- bers of CTAL's present Mexico City staff but will be staffed primarily by Chileans. The local Communist party is in an excellent position to provide the center with well-trained workers, as has been evidenced by the party's participation in recent meetings in various South American countries and in particular by the role some of its members have played in the labor unrest in southern Peru which led to the declaration of a state of siege on 5 November. The proposed CTAL center probably will not be strongly opposed by non-Communist Chilean political leaders, who are now campaigning for the 1958 presi- dential elections and will try not to offend the labor vote. President Ibanez in particular is indebted to the extreme left- ist parties for their support of two of his cabinet ministers recently impeached by congress, and he may accordingly try to avoid any appearance of crackin down m the leftists. 25X1 MEXICO'S PROBABLE NEXT PRESIDENT Election of Adolfo Lopez Mateos, capable minister of la- bor, as president of Mexico in July 1958 is already accepted as virtually certain. The 15 November convention of the In- stitutional Revolutionary party (PRI)--which under various names has governed Mexico for 40 years --will probably nominate him by acclamation SECRET PART II NOTES AND COMMENTS Pa V 17 of 18 Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500050001 2 Approved For RWease 2005/02/17 : CIA-RDP79-00927AO01500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY Lopez has already received enthusiastic public support from all the diverse components of the PRI. On 7 November, President Ruiz Cortines, who would like to see the moderate policies of his administration continued, told the American ambassador that Lopez is his personal choice. The Presi- dent's wide powers traditional- ly include the choice of a suc- cessor, but in practice a candi- date must be acceptable to the somewhat divergent interests represented by two powerful for- mer presidents--Lazaro Cardenas and Miguel Aleman. The popular Cardenas, who expropriated foreign oil hold- ings during his 1934-40 admin- istration, leads the PRI's left- ist wing and represents the na- tionalist, neutralist sentiments strongly held by many Mexicans and sometimes expressed in anti- US attitudes. Cardenas' in- fluence over Lopez Mateos, how- ever, is unlikely to be any greater than it was over Ruiz Cortines. Aleman, who gave indus- trial development first priority during his 1946-52 term, speaks for the more conservative busi- ness interests which have re- cently been gaining influence in PRI and government circles. In order to overcome the pres- ent leveling off of Mexico's remarkable economic progress of the past ten years, this group wants a favorable climate for private investment and an administration responsive to its concepts of stability. Lopez has pleased labor with consistent negotiation of SECRET wage increases and with his emergency program in the un- stable period following the 1954 peso devaluation. He earned the confidence of management by avoiding major strikes, thereby helping maintain high industrial production. The approval of Lopez by usually divergent lo- cal Marxist groups may indicate they expect even more opportunity for action under his presidency than Mexico's traditional in- dulgence of political leftists has previously provided, although he is not known to have shown sympathy for Communists. Now 48, Lopez Mateos was a lawyer and teacher before be- coming a senator in 1946. As secretary general of the per- manent central committee of the PRI, he was active in the presi- 25X1 dential campaign of Ruiz Cortines and became minister of labor in 25X1 PART I I Approved For Releas gU?/0~19 : W -00927A0015000500 @e 18 of 18 Approved For Release 2005/02/17: CIA- 27A0Q1500050001-2 COW & CURRENT INTELLIGENCE WEEKLY SUMMARY PATTERNS AND PERSPECTIVES ECONOMIC DEVELOPMENT IN SOUTH AND SOUTHEAST ASIA Economic cooperation on a multinational basis is receiving increased attention as a promis- ing method of raising living standards in South and South- east Asia. Although practical achievements to date have been limited, impetus for regional development schemes has been generated recently by the wide interest shown at the meeting in Saigon last month of the Colombo plan powers and by the Japanese desire to establish a regional development fund. The Communist bloc may attempt to rival present efforts among the free nations of Asia to achieve greater economic cooperation by offering competing projects of its own. Obstacles to Cooperation Regional economic coopera- tion has often been advocated as a method of achieving higher living standards and greater stability in the underdeveloped countries in South and South- east Asia. A number of formida- ble political and economic ob- stacles, however, have hereto- fore discouraged any move to- ward area-wide cooperation. Chief among these has been the intense nationalism of the newly independent countries in the area. This sentiment, developed during the period of Western colonialism, and the antagonisms toward the Japanese growing out of World War II have created suspicions that there are ul- terior motives behind any pro- posals for regional development emanating from these sources. Japan's continuing efforts to promote regional economic co- operation as one alternative to deeper entanglement with Com- munist China and the rest of the Soviet bloc has been handi- capped by these fears. Equally important is the traditional distrust and con- flict of interest among neigh- boring South and Southeast Asian countries. As a result, these states hesitate to par- ticipate in any multilateral development scheme which might benefit a rival. The economies of most of the countries in the area, es- pecially in Southeast Asia, are competitive rather than comple- mentary. Each state is depend- ent on similar exports, such as rice, rubber, tin, and lum- ber. Geographically, trade and communications have devel- oped in a generally north-south pattern following the valleys of the main rivers and outward to Europe rather than laterally across high mountains and Asian national boundaries. Finally, there is a cer- tain amount of competition as well as lack of coordination be- tween the various organizations interested in promoting regional development. The Colombo plan, for instance, has been criti- cized for favoring members of the Commonwealth, and some spon- sors of the plan are reluctant to see the development of SEATO as a vehicle for economic aid. In addition, various UN agen- cies, such as ECAFE, are back- ing regional projects and tend to operate independently of other organizations. Factors for Cooperation Despite these obstacles, there has been some progress toward regional economic coop- eration. The United States in fiscal 1957 committed almost $1.126 billion for nonmilitary aid to South and Southeast Asia. This aid is divided among every country in the area, except Malaya, and at least indirectly promotes regional cooperation. An example of this was the Ameri- can purchase of Burmese rice to ~ TIAL Approved For Release . - -0p927A001500050001-2 PART III PATTERN ND P RSP Page 1 of 12 Approved For Release 2005/02/17 : CIA-RDP79-00927A0.01500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY NONMILITARY AID TO SOUTH AND SOUTHEAST ASIA JULY 1956 ? JUNE 1957 Countries in red i aid. receive mil tary a* Except in Afghanistan, Ceylon, India, Indonesia, and Nepal, ICA allotments have been primarily for defense support and nonmilitary projects closely allied to the military program. **Public Law 480 authorized the sale and transfer of surplus agricultural commodities. These figures do not include barter agreements and dona- tions which in fiscal 1957 amounted to approximately 20 percent of the total commitments. NOTE: Requests for additional aid have been received from all countries except Malaya. Estimated figures for 1958 indicate an over-all reduction of approximately 20 percent, with variations for each country. 14 NOVEMBER 1957 meet a food shortage in Paki- stan. The proceeds are being used for technical assistance and training of Burmese. The countries in South and South- east Asia also belong to various interna- tional organizations such as the Interna- tional Bank of Recon- struction and Devel- opment, the Interna- tional Monetary Fund, and the Food and Agri- culture Organization. All of these organi- zations have an in- terest in encouraging regional as well as purely national eco- nomic advancement. In addition, there are friendship and de- fense treaties between various countries which are also a posi- tive force for the achievement of mutual objectives through cooperation. There is an in- creasing awareness among indigenous of- ficials of the desir- ability of wider co- operation. Hereto- fore, these officials, recognizing their countries' severe eco- nomic limitations, have insisted that the best way to achieve their goals of in- dustrialization and econom-, ic diversification--with or without bilateral foreign MEMBERSHIP IN INTERNATIONAL ORG IIEIMEMBERS MEMBERSHIP APPLIED FOR 4 NONMEMBERS UNDER THE P*OTI{ O UN ECAFE IRRD IMF SECRET ICA TOTAL* PL-480** AFGHANISTAN $ 14,407,000 $7,200,000 BURMA 1,000,000 CAMBODIA 35, 500,000 400,000 CEYLON 6,088,000 2,200,000 INDIA 69,500,000 398, 500,000 INDONESIA 11,722,000 LAOS 44,552,000 MALAYA NEPAL 4,600,000 PAKISTAN 99,010,000 68, 500,000 PHILIPPINES 33,913,000 27, 200,000 THAILAND 34,500,000 2,600,000 VIETNAM 259, 500,000 11,800,0001 25X1 P ;2T TI P proved For Re d v!A9A/01 :pC - Cj T 7A0015000500$age 2 of 12 Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 November 1957 assistance--was by individual national effort. At the re- cently concluded Colombo plan conference in Saigon, however, a new note was sounded. Numer- ous delegates expressed con- siderable interest in the Japa- nese idea of an Asian Develop- ment Fund to finance projects on a regional scale. There have also been increasing in- ruiries about the availability SOME EXAMPLES OF TREATIES AMONG NATIONS Of SOUTH AND SOUTHEAST ASIA TREATIES SPONSOR PARTICIPANTS CAMBODIA ? LAOS ? PAKISTAN MUTUAL ASSISTANCE UNRED STATES -NKIPPIIM-TTNAWIND-VISTNAM W INN AOlEEATFNTS .. UNITED _ KINGDOM MALAYA TREATY OP RRIENOSHP 6uRMA NDA ? INDONESIA THAILAND ? PAKISTAN COMMONWEALTH UNITED KINGDOM NYLON A PAKISTAN MALAYA ANZAM AUSTRALIA ANO MEW ZEALAND MALAYA of assistance through the Ameri- can Asian Development Fund, now administered by the President's office. In addition to the demon- strable material benefits to be obtained from regional co- operation, there appears to be a growing concern over the threat of Communist China. This is probably best illustrated by the increasing anxiety of the Burmese government over the problems of border demarcation and Chinese infiltration and the Cambodian government's fear of Communist subversion of the local Chinese. While this fear has not yet been expressed to any great extent in many coun- tries, it may well become a major factor favorable to the growth of regional-mindedness in the area. Progress to Date Practical achievements thus far have been modest. ECAFE is promoting international ex- ploitation and control of the Mekong River, which either bor- ders on, or flows through, five of the countries in Southeast Asia. The riparian powers are represented on a Mekong River Commission, which has made sur- veys and project proposals pre- liminary to an ambitious scheme of river valley development. "Operation Brotherhood," under which Philippine medical teams are active in the hinterland of Laos and Vietnam, is jointly sponsored by the Philippine and local Junior Chambers of Commerce. Financed by the In- ternational Junior Chambers of Commerce, it has been widely acclaimed both for its humani- tarian aspects and as an out- standing example of interregion- al cooperation. There have been a number of recent proposals for the future. The Japanese have in- dicated that they are willing to take the initiative in set- ting up regional centers to train various types of techni- cians. The Colombo plan organi- zation is studying the possi- bility of broadening its stu- dent exchange program to give greater emphasis to regional cooperation. Burmese officials have suggested that annual con- sultative meetings of regional planners could be useful. Con- sideration is also being given to such specific undertakings as an interregional telecom- munications network and joint Thai-Burmese utilization of the power to be generated from the Yan Hee hydroelectric project in northwestern Thailand spon- sored by the International Bank for Reconstruction and Develop- ment. Sino-Soviet Bloc Efforts Sino-Soviet bloc bilateral economic aid programs have proved their appeal in the area. The bloc, particularly the USSR, is now carrying out aid pro- grams in India, Afghanistan, and Burma. Communist China has an effective aid mission at work in Cambodia, and East Germany is setting up a sugar mill and Czechoslovakia a tire factory in Indonesia. SECRET PART I I IApproved For R8 &-25/0 :lRf5 1Q7A001500050qg 3 of 12 Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 November 1957 Of at least equal signifi- cance are the bloc's efforts to expand its trade with the area. The best known of these efforts has been the triangular trade involving Ceylonese rubber sent to Communist China which is paid for,"in part, with rice ob- tained from Burma. The Soviet Union and its European satellites also took advantage of the slump in the rice market in 1955-56 to make barter agreements with Burma. Much of this rice was di- verted to North Viet- nam and undoubtedly played a large part in averting a major economic catastrophe there in 'view of the series of crop failures. Wnile the Burmese have been largely disillusioned with their barter ar- rangements and are seeking to disengage in favor of cash cus- tomers, their expe- rience reveals the vulnerability of the countries in the area to Communist trade offers. of their past and present co- lonial policies. In addition, the Soviet Union and,. more re- cently, Communist China,have the advantage of appearing to Asians as examples of how back- ward countries can make a quick transition to become modern industrial powers. The national governments of free Asia are all under sim- SINO-SOVIET BLOC ECONOMIC AID TO SOUTH AND SOUTHEAST ASIA ECONOMIC AID (JAN1954.OR1957) TECHNICIANS PRESENT (APflOX. AS OF 1957) AFGHANISTAN $145,100,000 380 BURMA 25,000,000* 35 CAMBODIA 22,400,000*** 30 CEYLON 15,750,000*** 1-2 INDIA 269,800,000 345 INDONESIA 100,000,000** 65 NEPAL 12,600,000 *** - * Burma has accepted credit only on the assumption that it will be repaid in Burmese produce. ** Loan not ratified by the Indonesian government. * * * Gifts from Communist China. NOTE: Laos, Pakistan, and Thailand have been offered aid, but have not accepted. Burma and Cambodia were offered larger grants than they accepted. Nepal has announced after using a portion of the Chinese grant, that it will use no more. 14 NOVEMBER 1957 The bloc probably will be able to continue such deals as its industrial capacity increases and as long as its need for raw materials remains high. More- over, a comparison of the eco- nomic and technical assistance programs of the free world and the Sino-Soviet bloc does not necessarily provide an accurate gauge of the political impact they have on South and South- east Asia. The Soviet Union has long been credited for its support of Asian nationalism and oppo- sition to imperialism, whereas western nations, no matter how significant their long-range programs may be, bear the burden ilar pressures to improve the economic conditions of their countries at a rate sufficient to meet the expectation of their peoples, and their tenure of office is dependent on their effectiveness. Whether closely aligned with the West or neu- tralist in character, in most cases they speak for the domi- nant political factions on the national scenes that are least influenced by the Sino-Soviet bloc. If they fail to satisfy their peoples, the opposition parties which are most likely to take over from them are of the far left--left-wing social- ist or outright Communist in orientation. Con- curred in by ORR) SECRET 25X1 PART I I I Approved For Release AND PE S RECTI-OEs27A001500050Pag1-2 e 4 of 12 Approved For Release 2005/02/17 : CIA-RDP79-00927AQQ1500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY GOMULKA'S PARTY REFORMS Poland's Wladyslaw Gomulka --faced with a fragmented and discredited party--has launched a campaign to change the party's composition. At the tenth cen- tral committee plenum of the Polish United Workers' party in late October, he came to grips with the fact that the party had become a powerless instrument in the countryside and commands little support or respect among industrial work- ers. Gomulka wants to cut the party down to approximately half its size to facilitate the de- velopment of a united and ef- fective group. A complicating factor for Gomulka is that the remaining skeleton of the once- powerful party is composed of full-time functionaries, many of whom are Stalinist elements COMPOSITION OF POLISH UNM WORKERS' P (FIGURES IN PERCENTAGES) Gomulka has been hamstrung chiefly by the apathy and lack of discipline of party workers on the local level. The party's prohibition of "administrative methods"--i.e,, interference by direct orders in the administra- tion of government--has im- mobilized local leaders. Many of them have not adjusted to the new methods of persuasion without force. Since there has been no threat of punishment for a do-nothing attitude, many local functionaries have failed to implement new party policies, and others have not accommodated themselves to the abandonment of policies they had come to identify with orthodox Communism. As a result, the contempt of the populace for party official- dom has been compounded. The party thus faces dif- 1951 1953 1953 1954 1955 1956 1957 JAN-AUG WORKERS INCL. AGRICULTURAL) 49.3 48.2 47.7 48.1 45.1 44.6 37.0 PEASANTS 13.3 13.4 13.0 13.8 13.0 12.8 7.6 INTELLECTUALS 35.2 36.2 37.0 36.2 39.2 39.5 50.0 (INTO OFFICIALS (19.5) (19.3) (19.1) (17.7) (15.6) (16.0) (23.0) OTHERS 2.2 2.2 2.2 2.0 2.6 3.1 5.4 and bureaucrats who are thor- oughly compromised in the eyes of the Polish populace. Go- mulka believes the success of his policies depends on the de- velopment of what he calls "humanism" in party practices so that the party can appeal for the confidence and loyal- ties of the majority of Poles. Weak Party Control In his efforts to assert his power over the party and get his programs implemented, ficult problems in its control over key social and political elements in the coun- try. Although "en- lightened" methods of controlling the Sejm have been adopted, tight party control over Sejm activities continues, a situa- tion causing growing consternation among non-Communist deputies. The party has relin- quished its detailed control over politi- cal parties and mass organizations. Now it is only necessary for these elements to "cooperate" with the party, with the result that an opposi- tion espousing Western ideas has infiltrated the most important of these groups and is fighting for control of them. Gomulka's attempts to handle youth problems have been almost totally unsuccessful. The Com- munist youth organization is disunited and unpopular and prob- ably numbers no more than 65,- 000 members, in contrast to its SECRET PART I I I Approved For Rim im 2 S 5/A02/1 p PERSPECTIVES 27A001500050pa00ge 5 of 12 Approved For Release 2005/02/17 : CIA-RDP79-00927A001500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY INTERNATIONAL RELATIONS (Intar atlonal workers' movement, satellites USSR, ProPag da and WORKERS' COUNCILS AND MANAGEMENT OF NATIONAL ECONOMY FOREIGN AFFAIRS (Relatto00 wlth Inro,gn governments) PEOPLE'S COUNCILS Relallons be[w een people's nc ils ana workers' councils, agrlculN ral predecessor, which in 1955 had a membership of 2,000,000. A separate youth organization af- filiated with the Peasant party has outdistanced the Communist youth group and now numbers over 100,000, Changes in Composition In an effort to gain unity and a core of reliable party workers, Gomulka has estab- lished procedures for eliminat- ing non-Communists, opportun- ists, and the morally corrupt within the party, as well as his opposition factions--the liberal revisionists and the dogmatic Stalinists. The ex- treme liberals constitute only a small group which is demand- ing greater democratization and criticizing relations with the USSR. Although they do not hold key party rank or posi- tion, they are highly vocal and their ideas have infected many party members. The Stalinists, who are in opposition to Go- mulka's policies, will be dif- ficult to remove because a large majority of the bureau- crats on whom Gomulka depends SOCIAL (Health, tabor, social weIare, aM soc tat problems) for organizational work are Stalinists. Gomulka has moved against the liberals with his recent crackdown on the student weekly Po Prostu and the expulsion of Ifs--st-a-ff members from the party. He has also sidetracked Poland's most renowned liberal revisionist, Leszek Kolakowski, by arranging for him to study in Western Europe for six months. In moves against the Stalinists, Gomulka has dispatched two prominent party Stalinists to diplomatic posts in Prague, re- cently removed three provincial secretaries in Koszalin, and cleaned Stalinist opposition out of the principal Warsaw party organization. Gomulka has also declared war on apathetic elements of the party membership. A recent article in Gomulka's weekly Polityka stated: "Two thirds of the party members are pas- sive and are in the party only as a result of the incorrect enlistment methods of previous times; many of them now part gladly with their membership SECRET PART I I IApproved For RePASTI Q 0 D: 9V9BMTWZUA0015000500Q&Re 6 of 12 RUILDING AND RUILDING MATERIALS INDUSTRY Approved For Release 2005/02/17 : CIA-RDP79-00927A0a1500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY cards.... The activists with a few exceptions... have to be taken by the hand. In situa- tions of crisis they are ut- terly helpless." According to an official announcement, the total party membership is down to 1,283,- 761 from a high of 1,400,000 in 1954. A reduction of about 100,000 has occurred this year through resignations and dis- missals. goal is a membership of 800,000. The party has failed to attract and keep the majority of work- ing-class members. Gomulka's attack on cor- rupt elements is aimed in part at achievement of popular re- spect for his discredited party. Fully cognizant of the harm done by the past excesses of. the party, Gomulka wants to in- still into party practices a new code of ethics which he calls "humanism" and thereby gain the confidence of the Pol- ish populace. Furthermore, in a move apparently designed to highlight the changes in the party, it has been proposed that the organization be re- named the Polish Communist party. To carry out the necessary purges, Gomulka has decided to depend on the party control com- mission, the composition of which has not been altered since he took over party leadership. Changes in Organization Gomulka's plan for organi- zational reform is designed to achieve a reinvigorated role for the party in Polish politi- cal life. Changes have been made in the organization of the central committee staff in the past year which tend to eliminate the party's detailed administra- tive control of all phases of government operations and sub- stitute in its place a function of policy formulation and con- trol over all major political decisions. In place of the old de- partments using large numbers of full-time party functionaries, commissions are being established composed largely of experts drawn from government ministries and agencies, to meet at speci- fied periods to formulate poli- cies. Only small secretariats of the commissions now appear to be in the central committee's full-time employ. Implementation of policies formulated by the party now appears to depend largely on commission members working in their government capacities. In the process of this re- organization, the party has dropped 8,669, or approximately half, Of its full-time party functionaries this year. Of this number 1,700 were from central and provincial commit- tees, and 6,950 were from dis- trict, urban, and area commit- tees. The trade union paper Glos Pracy has complained that further cuts must be delayed until provision for other em- ployment can be made, and /i 25X1 a total reduction of 70 percent is envisaged. Prospects Effective control from the center will probably not have been re-established by April 1958, the new date set for the third party congress, at which Gomulka will endeavor to complete his reforms and elect a new cen- tral committee. Nevertheless, it is very unlikely that his leadership of the party would be jeopardized at that time. Even with the withdrawal or expulsion of those elements apathetic and unsympathetic to the party, a long time will be required to restore to the party membership a sense of real value which in turn would engender greater party discipline. The eliminate corruption probably will not succeed in doing more SECRET PART I I I Approved For Re fMWO : ~ INI A7A0015000500 -g2e 7 of 12 Approved For Release 2005/02/17 : CIA-RDP79-00927A001500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY than eliminate the most notori- ous offenders. Some 80 percent of party punishments in 1954 were based on charges of cor- ruption, a tendency defined by a prominent defector as inher- ent in all responsible party jobs in Poland today. Rather than eliminate all of extremist opposition, Gomulka will prob- ably attempt to intimidate ele- ments over which he wishes to gain control by making examples of some of the more infamous Stalinists and extreme liberals. Neither group, however, could be entirely eliminated without grave consequences for the par- ty. FRANCE'S ADMINISTRATIVE OFFICIALS France's ability to sur- vive cabinet crises like the recent 36-day interregnum be- tween the Bourges-Maunoury and Gaillard governments depends largely on a well-trained and cohesive bureaucracy. Conti- nuity is maintained despite changes in government by per- manent administrative officials who often exercise considerable influence on policy. Various factors are respon- sible for the unusual power of the top civil servant in France. One is a long tradition of high- ly centralized administration which goes back to Napoleon and even the absolute monarchy of the 17th century. In its mod- ern form this tradition is famil- iarly illustrated in the pro- vincial chief executive appoint- ed by Paris, the prefect. His powers in his own domain are broad enough, however, to ob- struct the policies of the gov- ernment of the moment in Paris. On the national level, a similar situation obtains. The power of the National Assembly to determine new policy is un- questioned, but the need for continuity of administration results in many opportunities for permanent officials to in- fluence government policy, par- ticularly in the case of new and short-lived cabinets. The French system is such as to en- sure that these top civil serv- ants:.. are exceptionally well trained. The Bureaucratic Elite Within the bureaucracy, an. elite of several hundred among the million-odd civil servants holds the top advisory posts in the key Ministries of National Defense, Interior, Finance, and Foreign Affairs and fills the personal staffs of the President of the re- public and the premier. Made up of individuals who have weathered a rigorous system of competitive education, this elite maintains a considerable degree of cohesion which ex- tends across political, min- isterial, and industrial lines. A "super-elite" is composed of top graduates who have suc- cessfully passed a stiff exam- ination to become inspectors of finance. This group--which includes Premier Felix Gaillard-- is particularly influential in major public and private financial circles. The state professional schools have an annual enroll- ment of approximately 15,000. SECRET 25X1 PART I II Approved For Rjgq /(&b7 i1 ej" 27A0015000509 8 of 12 Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500050001-2 SECRET CURRENT' INTELLIGENCE WEEKLY SUMMARY 14 November 1957 Most of France's top public administrators are likely, how- ever, to be alumni of a select group of graduate schools--in- cliding the Polytechnic School, $2 percent of whose graduates are in the government service, the "Graduate Normal School, and the National School of Adminis- tration. The last is an in- stitution set up in 1954 to train specifically for public service a rigorously selected group of students. The influence of the top administrative elite is par- ticularly important in such key assignments as the personal staffs of the President of the republic and the premier. The two top men serving President Coty--Charles Merveilleux du Vignaux and Henri Friol--have had distinguished careers, in- cluding service in the cabinets of other French political lead- ers. His military adviser, General Ganeval, has figured prominently in reports of Coty's political contacts with General de Gaulle. The influence of the grad- uates of the specialized schools in public administration is heightened by the large number of their fellows who have built up successful political careers. Mendes-France's performance in the field of finance led direct- ly to his political prominence, and Gaillard's standing as an inspector of finance was an obvious asset 4n his investi- ture on 5 Noveber. A number of former premiers and present first-rank polit- ical leaders such as Edgar Faure, Robert Schuman, Guy Mollet, and Bourges-Maunoury are graduates of the top professional schools, as are Coty and Finance Minister Pflimlin. Strategic diplomatic posts are usually filled by alumni of these schools. Herve Alphand, ambassador to Washing- ton, Jean Chauvel, ambassador to London, and Maurice Couve de Murville, ambassador to Bonn, are examples. The frequency of political crises because of financial and economic issues has given spe- cialists in these fields quasi- political influence. Directors of the budget, taxes, foreign exchange, and the treasury are inspectors of finance, as is the governor of the Bank of France, Wilfrid Baumgartner. Since most recent governments have felt the pinch of finan- cial necessity, Baumgartner has had ,a major voice in determining whether or not a bank advance would be granted. Public loans require the approval of Treasury Director Pierre-Paul Schweitzer, and Budget Director Gilbert De- vaux occupies a strategic posi- tion in governments chronically in financial difficulties. The national importance of the bureaucratic elite is further enhanced by the number of key industrial and business firms controlled by members of the same educational fraternity. Aircraft manufacturer Marcel Dassault, whose company makes the Mystere, Jean Marie, presi- dent of the Companie Generale Transatlantique, and automobile manufacturers Jean-Pierre Peugeot and Pierre Dreyfus of the Renault Company all bear the "elite" stamp. Control Over Government Policy With permanent officials of this stature, a minister's powers within his own ministry are limited. Should he move too far or too fast, the career staff can usually slow him down by strict adherence to regula- tions which immobilize him in red tape. This check on'policy is strengthened by the tradi- tional political complexion taken on by individual minis- tries despite the merit system. The political right, for example, is strong in the armed services and the Paris Prefecture of SECRET Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500050001-2 PART III PATTERNS AND PERSPECTIVES Page 9 of 12 Approved For Release 2005/02/17 : CIA-RDP79-00927A001500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 November '1957 Police, while the center strong- ly influences the Interior and Foreign Affairs Ministries. Mendes-France, when pre- mier, soon ran afoul of a num- ber of these limitations on his power. Initially scornful of the expertise of the Foreign Ministry's career staff, which he regarded as too much under the influence of the Popular Republicans who had controlled the ministry for a decade, he was forced to follow their guid- ance before his tenure vnded. Meanwhile, his reshuffling of its personnel to,promote those who favoredhis policies aroused a 'violent campaign against him which shook the confidence of his supporters and France's allies. In the early days of the Mollet government, career of- ficials in the Quai d'Orsay were successful in resisting French disarmament delegate Jules Moch's tendency to exceed his instructions in East-West disarmament talks and in toning down the repercussions in French policy of ideas for increasing 'East-West. eontae'ts launc.hed `by :Foreign Minster Pineau without consultation with the ministry. French government admin- istration, despite its capable elite, suffers, however, from bureaucratic sluggishness in responding to-new requirements. A wave of political strikes led the Ministry of the Interior to create the rank of "super- prefect" to ensure unity of command in the internal security forces under civil authority. Reforms of long-range importance are now being undertaken by the Foreign Ministry, which is still organized along outdated lines, with more consulates in Italy than the United States. It is overloaded with top grades, whose incumbents'have the privilege of refusing to serve in undesirable. posts, and it -deceives only a trickle of new blood from the National 'School of Administration. Secretary General Louis Joxe has begun to make changes, -however, and an extensive reorganization is inprospect. Agriculture and Industry Economic conditions were favorable in Taiwan throughout the past year, and industry an the island continued its steady expansion. The agricultural crop year 1956-57 was a record, one, and the high price of sugar on the world market brought the Nationalist govern- ment much-needed foreign ex-, change. Two new fertilizer plants began production, and expansion of the transportation, chemical, fertilizer, and min- ing industries continued at a rate of from 5 to 10. percent per year. The gross national product continued to increase at a more rapid rate than the population, 'now around 10,000,000. The limited amount of available arable land will, however, force Taiwan--already a net importer of grain--to develop in the relatively near future light in- dustries based on export markets SECRET 25X1 PART I I I Approved For R~jjcyg"/03 1d' SPECTIVE3 7A001500050 Page 10 of 12 Approved For Re.Lease 2005/02/17 : CIA-RDP79-00927AQ01500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14.November 1957 in order to earn for- eign exchange now gained by agricultural exports. A new Four-Year Plan, ap- proved by the Executive Yuan on 9 May, envisions a total capi- tal investment of approximately $800,000,000 and an increase in national income of 25 percent by 1960. American officials believe the plan is based on un- realistic assumptions, however, and feel it will be difficult to fulfill. The government is apparently not prepared to hold down rising military expendi- tures and to economize enough to fully implement the plan. TAIWAN P CAPITA wad l (DOLLARS) WHOLESALE PRICE INDEX (1951=loo) 1951 1952 14 NOVEMBER 1957 Inflation 1956 1957 M122 Inflation has continued despite economic growth, and the cost-of-living index--based on 1952 levels--rose nearly 10 percent between October 1956 and October 1957. This increase, which has been slow and steady, has generated considerable pres- sure from underpaid military and government officials for wage raises. Some relief for these individuals will probably be forthcoming, but this in it- '~wierc self will create additional in- flationary pressure. This creeping inflation stems largely from the govern- ment's failure to budget re- sources realistically and its attempt to expand simultaneously its military forces, private consumption, and investment. The budgetary imbalance for fis- cal 1957 will be about $25,000,- 000 if planned expenditures are not reduced. Defense expendi- tures will total more that.50 percent of the national budget. Foreign Trade and Investment In 1956'the Chinese Nation- alist government, with American support, began a much-publicized campaign to increase foreign trade with Southeast Asia and to promote foreign investments on Taiwan. It was hoped that Nationalist prestige could be boosted and export markets ex- panded to help reduce the is- land's deficit in international transactions, which since 1951 has remained substantially un- changed at approximately $75,- 000,000 per year. Committees were established within the gov- ernment and some tentative steps SECRET PART I I I Approved For RV1n %RNU 5/(Any ARSNERM; 7A00150005 Page 1211 of 12 Approved For Re4ease 2005/02/17 : CIA-RDP79-00927AW1500050001-2 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 November 1957 were taken to simplify entry and exit regulations, but the principal motive of the Nation- alists was propagandistic rather than economic. Officials have admitted that the measure of Nationalist interest in specific trade proj- ects is usually the extent to which the United States will underwrite them. The National- ists have indicated reluctance to allocate their own resources to the Southeast Asian program and permit a diversion of exist- ing American aid. They do not accept the American view that each project must be economical- ly feasible. They also have been reluc- tant to consider seriously sug- gestions to abolish Taiwan's complicated system of multiple exchange rates, which must be altered before extensive trade and foreign investment projects can begin. They argue that the differential in the rates fur- nishes an important segment of government revenue, and that inflationary pressure would be heightened if the artificially high rates were reduced to lev- els which would make buying and selling on international mar- kets possible. A basic hostility to for- eign investment exists among some members of the government, particularly in the legislature. Repeated demands have been made to investigate the circumstances of a contract leasing the facil- ities of the government-owned Taiwan Shipbuilding Company to an American syndicate to build two 36,000-ton supertankers. Although the contract appears to be sound from a financial viewpoint and successful com- pletion of the project would greatly aid the economy and pres- tige of Nationalist China, so much xenophobic opposition has appeared that it is problemati- cal whether the venture can be carried out. Preparation for construction of the tankers has already fallen behind sched- ule. Foreign Minister George Yeh has stated that the Chinese fear exploitation by "rich for- eigners" and are reluctant to offer "even partial ownership of companies to foreign invest- ment." Future Prospects Little progress can thus be made in expanding foreign trade and increasing foreign investments in.the foreseeable future. A basic change in at- titude on the part of the gov- ernment and Chiang Kai-shek is necessary before progress can be made in reducing Taiwan's balance-of-payments deficit. Conversely, the island will con- tinue to require American aid to make good the imbalance. Given present levels of American aid, the prospects are good for the next few years for continued progress and relative stability in the Taiwan economy. It should be possible to hold inflation within bounds and maintain the armed forces at their present strengths. In the future, however, as the population increases, the de- velopment of additional export industries will be necessary, requiring a revision of the present attitudes of government officials. Development of an economy capable of functioning without American aid would be virtually impossible unless 25X1 the size of the armed forces were reduced. SECRET PART III Approved For RV4/ VF MRM1?T3V 7A001500050Qft:b 12 of 12 25X1 Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500050001-2 Approved For Release 2005/02/17 : CIA-RDP79-00927AO01500050001-2