CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A001600040001-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 37
• Document Creation Date: December 20, 2016
• Document Release Date: December 1, 2005
• Sequence Number: 1
• Publication Date: January 16, 1958
• Content Type: SUMMARY

Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
TIAL
D
COPY NO. 1 f
OCR NO. 0028/58
16 January 1958
CURRENT
NTELLIGENCE
WEEKLY
SUMMARY
AUTF"HR 70-2
NEXT REVIEW DATE:
E DECLASSIE!E7
CLASS, CHANGED T?,;
DOCUMENT NO. ._...
NO CHANGE IN CLASS. 0
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
State Department review completed
CONFIDENTIAL
t-f =~2ff
r U
Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927A001600040001-1
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 2007/10/23: CIA-RDP79-00927A001600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
Next 6 Page(s) In Document Denied
Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927A001600040001-1
CONFIDENTIAL
CURRENT INTELLIGENCE WEEKLY SUMMARY
16 January 1958
OF IMMEDIATE INTEREST
KREMLIN STEPS UP DIPLOMATIC OFFENSIVE
In a new series of notes
and diplomatic moves, the So-
viet Union has stepped up the
pace of its political offensive
against the West. It has made
a strong bid to disrupt NATO
unity with its proposals for a
heads-of-government meeting
and a "nuclear-free zone" in
Europe. Soviet leaders appear
increasingly confident that if
East-West negotiations are not
forthcoming, domestic political
pressures and world-wide opin-
ion will eventually force the
West European members of NATO
to make independent moves to-
ward understandings with the
USSR. (For an analysis of
Western reactions to the USSR's
proposals, see page 1, Part
III.)
Premier Bulganin's latest
round of letters to the heads
of 19 governments, including
the 15 NATO powers, seeks to
maintain Soviet pressure on the
West for a heads-of-government
conference. Attached to the
letters was a set of '.'proposals"
--sent to all UN members plus
Switzerland. The proposals
suggest that a summit meeting
be held in Geneva during the
next two or three months. Mos-
cow apparently intends that the
heads of government try to
achieve generalized agreements,
with a meeting of foreign minis-
ters to follow "for further ex-
amination. .of corresponding
problems and for preparing the
necessary agreements."
Several possibilities as
to the composition of the con-
ference were outlined. Moscow's
first choice would include all
NATO and Warsaw Pact powers,
plus such "uncommitted" states
as India, Afghanistan, Egypt,
Yugoslavia, Sweden, and Austria
--at least some of which were
urged to help summon the meet-
ing.
However, a "more narrow"
conference would be acceptable
to the Soviet Union, particular-
ly if it comprised "representa-
tive" states from the NATO,
Warsaw and neutralist rou -
ings.
either
Nehru or Burmese Premier U Nu
would be acceptable to the USSR
in the event a third party were
added to American-Soviet dis-
cussions. India is obviously
interested and apparently is
already exploring the possibil-
ity of participating in or bring-
ing about a summit conference.
Communist China was not
listed in the notes as a possi-
ble participant in a heads-of-
government meeting, but Bulganin
warned that Peiping has the
right to take part in any dis-
cussions "directly relating" to
Chinese interests. Gromyko's
recent charge that it is "ridic-
ulous" to exclude Communist
China from disarmament talks
suggests that Moscow may try to
inject Peiping into any future
negotiations on disarmament.
Moscow might insist on Chinese
participation in such negotia-
tions as a bargaining counter
which could later be "sacrificed"
as an ostensible concession to
the West.
Although a wide range of
standard Soviet proposals on
ways of reducing international
PART I O$ 41b, 'kA k QIEST Page 1 of 4
Approved For Release 2007/10/23: CIA-RDP79-00927A001600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927A001600040001-1
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
16 January 1958
tension were suggested as pos-
sible agenda topics for a heads-
of-government meeting, the Krem-
lin, in all the notes and at-
tending propaganda, appears to
be concentrating on the Rapacki
plan for a "nuclear-free zone"
in Europe. The letters to Nor-
way and Denmark urge that the
zone, which was initially lim-
ited to East and West Germany,
Poland, and Czechoslovakia, be
extended to include Scandina-
via and Finland, and that "all
types" of guided missiles, as
well as nuclear weapons, be
prohibited. On 11 January, For-
eign Minister Gromyko also sug-
gested to an Italian "peace
partisan" delegation visiting
Moscow that Italy and apparent-
ly Albania be added to the zone.
Ambassador Thompson in
Moscow finds little in the cur-
rent Soviet proposals which
Moscow could expect the United
States to accept as a basis
for a summit discussion--with
the possible exception of the
Rapacki plan. He looks for-
ward, therefore, to the possi-
bility of some new "concession"
on disarmament by Moscow as an
additional inducement to such
talks.
Ambassador Thompson be-
lieves the Kremlin has been
encouraged by recent signs of
Western disunity over its pro-
posals. Moscow's repeated re-
jections of Western suggestions
for a foreign ministers' con-
ference suggest that the Krem-
lin feels that Western offers
can be rebuffed without damag-
ing the USSR's posture as the
leading proponent of reducing
East-West tension.
The initial Soviet reac-
tion to President Eisenhower's
reply to Bulganin's letter of
10 December--a brief dispatch
from the TASS correspondent in
Washington--charges that the
President "blamed" the USSR for
international tensions and im-
plies that the United States
Government stands alone in op-
posing a summit meeting. When
Indonesia's dissident lead-
ers are proceeding with plans
for the early establishment of
a rival Indonesian government,
but appear undecided as to when
to act. Reports predicting the
date of their action vary from
the next few days to late Febru-
ary or early March, immediately
prior to the return of Presi-
dent Sukarno to Indonesia. A
former foreign minister, Anak
Agung,who is in sympathy with'the
dissidents, :has told an American
official that the central gov-
ernment's acquisition of Soviet
arms, even through Egypt, could
be the signal for the declara-
tion of a provisional govern-
ment and the severence of all
ties with Djakarta. Activists
among the dissidents, however,
SECRET
PART I OF IMMEDIATE INTEREST Page 2 of 4
Approved For Release 2007/10/23: CIA-RDP79-00927A001600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
16 January 1958
feel that the government's pur-
chase of Soviet arms would place
them on the defensive and that
an earlier showdown is desir-
able.
The Djakarta government is
aware of much of this planning
and has threatened economic and
military reprisals. It has or-
dered the outer islands to stop
barter trade with foreign ports
or face the loss of government
financial support, and has hint-
ed at the use of force to stop
such trade. Prime Minister
Djuanda has announced orders
are being prepared to discharge
several dissident leaders from
the army.
The government's economic
situation continues to deterio-
rate as a result of the inde-
pendent commercial activity of
the outer islands and the take-
over of Dutch firms, which has
resulted in serious economic
dislocations and decreased pro-
duction. Among remedial efforts
is the government's decision to
push parliamentary consideration
of the $100,000,000 Soviet loan,
negotiated 18 months ago, which
may begin on 18 January. Under
the loan agreement, credit may
be used any time within eight
years with interest at 2.5 per-
cent and repayment in 12 years,
in convertible foreign exchange
or Indonesian goods. A cabinet
explanation to Parliament, which
accompanied the draft bill for
acceptance of the loan, stated
the Soviet credit would stimu-
late the Indonesian economy and
would be in line with Indonesia's
independent foreign policy. It
stated that the government would
take measures to ensure that the
presence of Soviet exploratory
teams would not "prejudice In-
donesia's own interests." The
cabinet statement noted, how-
ever, that Soviet technicians
and skilled workers would be
indispensable, especially in
the first phases o1 projects.
The government continues
its efforts to replace Dutch
shipping. Efforts to acquire
ships from Japan have encoun-
tered difficulties since In-
donesia does not want to pay
the charter rates demanded by
private Japanese companies.
The government is investigating
shipping offers from West Ger-
many, Norway, and Denmark and
bloc offers from Poland and the
Soviet Union.
The Indonesian arms pur-
chasing mission has recentgy
left Yugoslavia, is now in
Czechoslovakia, and will proceed
shortly to Poland before re-
turning to Belgrade. No agree-
ment was signed in Belgrade,
possibly because President Su-
karno is following the arms
mission to Belgrade and also
because Indonesia may hope to
get a fairly complete pic-
ture of the availability of
arms elsewhere before making
a final decision.
ELECTION VIOLENCE LIKELY IN GUATEMALA
The presidential and con-
gressional elections scheduled
for 19 January in Guatemala, re-
gardless of the outcome, seem
almost certain to be followed
by violence. If, as seems
likely, rightist presidential
candidate Miguel Ydigoras
Fuentes has concluded a
deal with elements of the
SECRET
25X1
25X1
PART I OF IMMEDIATE INTEREST Page 3 of 4
Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927A001600040001-1
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
16 January 1958
Communist-infiltrated Revolu-
tionary party (PR), his elec-
tion chances would be consider-
ably improved. However, the
centrist presidential candidate,
37-year-old Lt. Col. Jose Luis
Cruz Salazar, is steadily gain-
ing strength despite his politi-
cal handicaps, which include
his youth, the fact that he is
not well known in Guatemala,
and a widespread belief that
he is the US candidate.
If Cruz wins the election,
Ydigoras and the PR are likely
to charge fraud and resort to
mob violence, as they did three
months ago when they forced
the ouster of the interim Gon-
zalez government and the nulli-
fication of the 20 October
elections. Ydigoras says "civil
war" will follow any attempt to
steal the election from him,
and he has already taken the
public position that victory
by Cruz would in itself be evi-
dence of fraud. The PR is also
prepared for violence, which
may have serious anti-American
manifestations.
If, on the other hand,
Ydigoras wins with PR support,
the army may refuse to permit
him to take office. Such ac-
tion would be sure to provoke
the street mobs into violent
action.
Interim President Flores
Avendano speaks confidently of
SECRET
the army's ability and readi-
ness to guarantee the installa-
tion of the elected candidate,
who he believes will be Cruz.
The army's willingness to use
force against the mobs is open
to question, however, as a re-
sult of its refusal to act de-
cisively in similar circum-
stances last October.
The probability that an
alliance has been concluded be-
tween Ydigoras and the PR is
supported by numerous reports
from a variety of sources that
leftist leaders are urging
their followers to vote for
Ydigoras rather than PR presi-
dential candidate Mario Mendez
Montenegro. The PR is believed
to have asked in return four
cabinet posts, including the
key Ministry of Interior, which
controls the police. Ydigoras
may have promised these posts
to PR leaders.
full power.
tion before making a bid for
The reported deal was ap-
parently dictated by the reali-
zation that no candidate is
likely to win a majority in a
three-way race and that the
election would then be referred
to congress, which has a pro-
Cruz majority. The alliance
would be consistent with the
objectives of Ydigoras, who
wants to be president at virtual-
ly any cost, and with those of
the Communist minority in the
PR, which feels it necessary to
consolidate its political posi-
PART I OF IMMEDIATE INTEREST Page 4 of 4
Approved For Release 2007/10/23: CIA-RDP79-00927A001600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927A001600040001-1
CURRENT ,cO N F D NT L AL
G NCE WEEKLY SUMMARY
16 January 1958
NOTES AND COMMENTS
MIDDLE EAST DEVELOPMENTS
Syria
The Syrian political situa-
tion again seems to be coming
to a crisis. A delegation of
ten Syrian officers, headed by
Chief of Staff Bizri, has been
in Cairo since 12 January, os-
tensibly to confer with Egyptian
Army chief Amir and President
Nasir about proposals for Egyp-
tian-Syrian union. The reasons
for this action at this time
are still obscure. One is
probably the fact that influen-
tial officers have recently re-
turned to Damascus from train-
ing in Moscow and Cairo only to
find that promised military as-
signments are unavailable.
From the standpoint of
Chief of Staff Bizri, the situ-
ation constitutes an opportunity
to mend his reputation with the
Nasir regime or, possibly, to
force the Egyptians to come out
openly against him and the Com-
munists before Cairo is ready.
Nasir previously has refused
similar requests from Syrian
military groups, and may well
do so again if the organization
or the participants in the plan
do not meet his approval.
In any case, the arrival
of the mission in Cairo has been
followed by what appears to be
almost frantic activity by the
civilian politicians in Damas-
cus. President Quwatli has been
seeing visitors frequently from
his sickbed. Foreign Minister
Bitar is reported to have been
authorized by the cabinet to
talk to Nasir, possibly to
counter the arguments of the
military delegation.
The central committee of
the Communist party of Syria
and Lebanon, which met in formal
session from 11 to 13 January,
announced a resolution in favor
of Syrian-Egyptian union. This
move, probably taken in an ef-
fort to steal some thunder from
the radical nationalists who
have made the union the main
theme of their propaganda, was
accompanied by another call for
internal unity. The radical
nationalists spurned the latter
call, however, and accused the
Communists of being less than
wholehearted in their support
of the idea of union.
The effectiveness of the
appeals for union is also il-
lustrated by an interview pro-
Communist Defense Minister Azm
gave the official Egyptian news
agency last week. Azm said he
is for "unity" rather than "un-
ion," and defined "unity" as
being a total amalgamation rath-
er than simply two states acting
closely together. This gambit
is similar to the line taken
by the Communists in that it
seeks to appear favorable to
the union idea while in fact
evading the immediate issue.
Azm again came under some
indirect fire last week when
the head of the Syrian economic
working group negotiating in
Moscow returned to Damascus and
made his report. Whereas Azm
had claimed a specific offer
of a large amount of aid from
PART II NOTES AND COMMENTS -- ,
Approved For Release 2007/10/23: CIA-RDP79-00927A001600040001-1 Of 17
 Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
16 January 1958
Czechoslovakia as well as from
the USSR, the head of the mis-
sion stated that only a vaguely
worded general offer had been
made by the Czechs. He also
said he intends to follow up a
similarly worded offer from
East Germany.
Iraq
The Iraqi cabinet headed
by Prime Minister Mirjan, whose
fall had been forecast as pos-
sible last week, may now remain
in office at least until after
the Baghdad Pact meetings sched-
uled to be held in Ankara at
the end of this month. Mirjan,
who has made an almost unique
effort to build some popularity
by visiting areas of Iraq out-
side Baghdad, has not had con-
trol over his cabinet since its
formation last month. His posi-
tion has now been further under-
mined by the announcement that
former Prime Minister Nuri Said
will lead the Iraqi delegation
to Ankara; Mirjan apparently
will not participate.
Jordan's security situation
appears to be quiet on the eve
of the 20 January by-elections
to replace members of parliament
who fled the country following
King Hussayn's semi-coup last
spring.
Jordan and Israel continue
meanwhile to contend over dis-
puted Israeli activity in the
Jerusalem area. The Jordanian
Government insists that it is
still under serious internal
pressure to have the UN Securi-
ty Council discuss Israeli tree-
planting southeast of the city,
while the UN secretary general's
special emissary on the Mt.
Scopus problem is becoming fur-
ther entangled in diplomatic
maneuvers by both sides. While
the borders are relatively quiet,
the tensions surrounding these
situations may still produce
serious incidents.
NEW SINO-SOVIET CREDIT OFFERS TO YEMEN
Two recent credit offers
raise to at least $61,000,000
the Sino-Soviet bloc's bid for
control of Yemen, on the Middle
East oil tanker route and facing
East Africa.
Yemen's limited ability
to repay loans presumably is
known to the bloc. Yemen's an-
nual exports are estimated at
only about $10,000,000. The
Imam probably is not seriously
concerned with these obligations,
although he complains regularly
about the cost of the 75 bloc
technicians in Yemen who must
be paid on a monthly basis.
Crown Prince Badr's trip to
the bloc was climaxed on 12 Jan-
uary by the first Chinese Commu-
nist contribution to the mount-
ing bloc offensive in Yemen.
SECRET
25X1
25X1
PART II NOTES AND COMMENTS Page 2 of 17
Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
16 January 1958
......??? Protectorate boundary
- - Indefinite boundary
Snibam
EASTERN ADEN PROTECTORATE
KAMA
AN L"D e
(U.KJ alif SANA Haribp
Hodeida
' FRENCH 11
OMALILAND
Mukalla
7ADEN COLONY
(U.K.)
+de6
GULF 01' ADEN
---BRITISH SOMALILAND
Several . political and , eco-
nomic agreements were reached in
Peiping, including one which
calls for China to make avail-
able an interest-free credit of
about $16,500,000 for the pro-
curement in China of goods to be
used in road construction and
the building of several facto-
ries to produce sugar, glass,
leather goods, cigarettes, and
cooking utensils. The Chinese
also agreed to supply technical
assistance in the form of "ex-
perts, technicians, and skilled
workers" and to train Yemeni
students in Chinese institutes.
Following the lead of the USSR
in Egypt and Syria, the terms
of the credit call for repayment
in ten annual installments fol-
lowing completion of each proj-
ect.
On 13 January, 11 Soviet
economic specialists arrived in
Yemen with the Soviet ambassa-
dor. This group apparently will
negotiate with Yemeni officials
concerning the use of a Soviet
credit of at least $35,000,000
--as yet uncommitted--for eco-
FR. $0
ETHIOPIA
nomic development projects over
a five-year period.
Actually, Soviet teams have
been engaged in a harbor survey
near Hodeida since early 1957.
Other projects which may already
have been surveyed by the USSR
include petroleum storage facil-
ities and seven airfields, and
additional projects are undoubt-
edly under consideration.
Soviet recommendations for
projects apparently are aimed at
enabling Yemen to realize its
long-range plan of freeing itself
from dependence on British-
controlled Aden. Construction
of a modern port and fuel stor-
age facilities would help ter-
minate Yemen's economic depend-
ence on the port of Aden, while
reconstruction of Yemen's air-
fields would permit efficient
use of the 35 to 40 piston air-
craft Yemen has obtained from
the Soviet bloc, posing a mili-
tary threat to British positions
in Aden.
SECRET
SAUDIA ARABIA SULTANATE OF MUSCA7-1
.0 AND OMAN ( 4
PART II NOTES AND COMMENTS Page 3 of 17
Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927A001600040001-1
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
16 January 1958
Yemen has actually ob-
tained little from the bloc
other than military equipment.
Tito's reappraisal of Bel-
grade's international position
following political and tech-
nical developments in the USSR
last fall has apparently re-
sulted in the revival of his
policy of promoting a closer
grouping of uncommitted states.
He is stressing the role such
states can play in easing inter-
national tensions, but he un-
doubtedly also sees a way of
reducing Yugoslavia's isolation
from both East and West.
primarily from Yugoslavia's
recognition of East Germany, and
from its refusal to subscribe
to the 12-nation Moscow declara-
tion last November, steps which
disturbed its relations with
both Washington and Moscow. Dur-
ing November and December, the
Yugoslavs were seeking a policy
whereby they could reassert
their influence in international
affairs. At the same time they
were declaring that the balance
of power between East and West
had not been disturbed by Soviet
technical gains. Belgrade's
current re-emphasis on the use-
fulness of a more active role
for uncommitted states suggests
Tito actually considers that the
USSR has gained an advantage
which must be offset by an ef-
fective third force.
Although Belgrade has al-
ways been interested in further-
ing relations with uncommitted
states, its efforts toward de-
veloping a third force have been
sporadic. The Tito-Nehru-Nasir
meeting in Yugoslavia in July
1956 was the last major attempt.
Subsequent events--developments
in Poland and Hungary and the
Yugoslav rapprochement last sum-
mer with the USSR--diverted
Tito's attention from cultivat-
ing closer relations with the
uncommitted states and promot-
ing an active third force.
In a New Year's statement,
Yugoslav Foreign Under Secre-
tary Bebler emphasized the posi-
tive role that "countries not
included in blocs" can play in
solving controversial interna-
tional issues, and declared that
the great powers should study
carefully the views proposed by
the uncommitted states.
To implement the third
force concept in his foreign
policy, Tito has proposed sum-
mit negotiations including not
only the leaders of the world
powers, but those of smaller na-
tions as well. He no doubt con-
templates a major role for the
heads of the unattached states
as well as an opportunity to
exert personal influence on the
SECRET
PART II NOTES AND COMMENTS Page 4 of 17
Approved For Release 2007/10/23: CIA-RDP79-00927A001600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927A001600040001-1
SECRET
16 January 1958
course of world affairs. He
has emphatically agreed with
Nehru's recent proposals for
cessation of nuclear testing
and the resumption of East-
West negotiations and has writ-
ten a letter to the Indian lead-
er giving his views on some
current international problems.
Tito is scheduled to meet
with Indonesian leader Sukarno
on 17 January for two days.
He will probably discuss his
concept of a third force and
may also warn Sukarno against
becoming too closely associated
with the USSR. Viewing with
some concern Soviet penetration
into Egypt, the Yugoslavs have
privately alerted Nasir to the
dangers inherent in overdepend-
ence on the USSR.
Tito's desire to see an
independent third force and to
exercise his influence among
the uncommitted nations has un-
doubtedly been frustrated by
Soviet initiatives in the un-
attached states. Although the
Yugoslav press has commented
favorably on the Asian-African
conference in Cairo, it has
refrained from comment on the
establishment of a permanent
council in Cairo with Soviet
and Chinese representation on
the directorate. The American
Embassy in Belgrade observes
that the Yugoslavs "can hardly
view with equanimity the crea-
tion of a 'little Cominform' in
Cairo directed at the Asian-
African countries," which Bel-
grade presumably envisions as
playing a prominent role in a
third force.
Tito's efforts to develop
a positive force among the un-
committed states are unlikely
to lessen his attempts to main-
tain active ties with both Mos-
cow and Washington. The chief
aim of his foreign policy re-
mains the elimination of "blocs,"
which he maintains can be real-
ized only through a policy of
"peaceful active coexistence."
The election on 11 January
of Foreign Minister Ion Gheorghe
Maurer as titular head of state
of Rumania suggests that the
Bucharest regime is attaching
new importance to the hitherto
titular office, perhaps with a
view to pressing for closer re-
lations with the West. Maurer
is the third man to hold the of-
fice since the establishment of
the Rumanian People's Republic
in December 1947, and is the
first central committee member
elected to the post. Neither
of his predecessors was a Com-
munist.
Although Maurer has been
a Communist party member since
1927, his appointment as foreign
minister in July 1957 marked the
end of nine years of comparative
political obscurity. A lawyer
and economist who served as de-
fense counsel during the prewar
trials of such party leaders as
Gheorghiu-Dej and Ana Pauker,
Maurer was imprisoned in 1941,
and again in 1943, for leftist
activities. In 1944 he helped
Emil Bodnaras--now a vice pre-
mier and politburo member--to
arrange Gheorghiu-DeJ's escape
from prison.
Maurer was elected to the
central committee of the Ru-
manian Communist party immedi-
ately after the war, and held
SECRET
PART II NOTES AND COMMENTS Page 5 of 17
Approved For Release 2007/10/23: CIA-RDP79-00927A001600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
SECRET
CURRENT. INTELLIGENCE WEEKLY SUMMARY
16 January 1958
responsible subcabinet posts
in the fields of economics tand-
communications during the over, In 1947 he was regarded
as Gheorghiu-Dej's "right-hand
man" and was described by ex-
perienced observers as "one of
the ablest and most imporn
tat
men in Rumania from a p
domestic point of view." At
the unity congress of the Com-
munist and Social Democratic
parties in 1948, he was elected
to the central committee of
the amalgamated Rumanian Work-
ers' party.
in August 1948, Maurer was
relieved of his post in the
Ministry of Industry and for
six years occupied only minor
jobs, his name appearing less
and less frequently in the
regime-controlled press. He
was dropped as a delegate to
the National Assembly in 1952.
Maurer's first step back to
in 1954
prominence occurred
Ru-
with his appointment juridical section In April 1957
manian Academy.
he helped negotiate the "status
of forces" agreement between
the USSR and Rumania. In July
1957 Maurer became foreign min-
ister, and in late August he
conferred with Yugoslav Presi-
dent Tito in Belgrade.
After his return from the
United Nations last fall, Maurer
told the American minister in
Bucharest he was convinced of
the importance which greatly
increased US-Rumanian
culturiti
cal, economic, and
relations could have for both
countries. He admitted that
American public opinion would
have to be mollified, however,
and agreed to discuss with
First Secretary Gheorghiu-Dej
the domestic possibility concessions.
dSince that time, there
has been a marked increase in
the number of exit visas grant-
ed. The regime has also agreed
to sponsor a USIA architectural
exhibit, is considering an
American request to open a
reading room in Bucharest, and
has agreed to admit an American
political scientist, educator,
and engineer into Rumania in
return for American permission
granted Rumania to send observ-
ers
tion
t
h
.
elec
presidential
the last
POLAND'S PARTY PURGE
Gomulka's purge of the
Polish communist party, initi-
ated last October and scheduled
for completion in mid-December,
is only about one third com-
pleted. Progress thus far,
however, suggests that Gomulka's
estimate of almost a 50--percent
cut in membership from its high
of 1,400,000 in late 1954 may
be realized. Those removed have
been drawn primarily from the
SECRET
Page 6 of 17
NOTES AND COMMENTS
PAR'" Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
SECRET
16 January 1958
politically less important
groups of apathetic and corrupt
elements. Gomulka apparently
has not made a strong effort to
purge his principal opponents
in the liberal and Stalinist
factions.
By 8 January, a total of
32,296 apathetic members had
been merely "crossed off" par-
ty lists, while another 5,234
were "purged" for corruption
in a small proportion of the
basic party units, according to
official figures. These fig-
ures suggest that from 350,000
to 450,000 will eventually be
affected, leaving a party mem-
bership between 800,000 and
900,000--a figure frequently
reported as Gomulka's goal,
There has been nearly 100-
percent attendance of active
members at the "verification"
meetings dealing with the purge.
However, Trybuna Ludu, the par-
ty journal,has complained that
the discussions were "drowsy,
anemic, and colorless" and that
too little attention was being
paid to political and ideologi-
cal attitudes, i.e., factional-
ism. One writer in Gomulka's
own Polityka admitted that
"...the campaign we are novi
carrying on will not bring the
expected ideological unity."
Although major emphasis
has ostensibly been on uproot-
ing Stalinist "dogmatism" and
liberal "revisionism"--the two
factional extremes Gomulka is
most anxious to eliminate, only
a small though important group
of revisionist journalists has
voluntarily left the party and
no specific factional elements
have been reported purged. The
issues of anti-intellectualism
and anticlericalism have instead
been fought out at party meet-
ings and have caused the with-
drawal or purge of what the
party leadership considers too
many religious believers. The
party has repeatedly disavowed
any intention to purge church-
goers, maintaining its position
as the only Communist party in
the bloc that welcomes reli-
gious believers to its ranks.
In the final phases of the
"verification" campaign, Gomulka
may personally direct the re-
moval of some of his more in-
fluential factional opponents.
He may rely on making examples
of a few to intimidate the oth-
ers who constitute important
elements of the party hierarchy.
Since the purge has not pro-
ceeded on schedule, it may be
necessary to postpone the party
congress beyond the April date
suggested at the tenth central
committee plenum.
Despite 13 years of ortho-
dox Communist rule in Bulgaria
and the object lesson offered
by the fate of rebellious Hun-
garian intellectuals, a group
of vocal dissident writers con-
tinues to defy Communist con-
trol. Although censured at a
regime-oriented Writers' Union
meeting in early December, the
union's leadership finds the
group incapable of realizing
the "hafmful ` acnd nonparty re-
sults of their errors."
Since the death of Stalin,
the group, whose literary ef-
forts and professional growth
have been frustrated by the vac-
illating demands of the party
line, has claimed the right to
remain outside party supervi-
sion. The party in turn has
claimed the right to supervise
SECRET
PART II NOTES AND COMMENTS Page 7 of 17
Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
16 January 1958
writers to assure that they.-
write in support of the regime.
Since Moscow. has backed a
hard line toward literary devia-
tionists, disciplinary measures
against the rebels seem inevi-
table. Indeed, the firing of
certain journalistic figures in
early January has been rumored,
although this group has not been
under as severe fire as the
writers.
The demotion of the Stalin-
ist Chervenkov:in April 1956,
following the denigration of
Stalin by Khrushchev in February,
provided the dissidents with an
issue--"the cult of the person-
ality"--which they could exploit
in their campaign for liberali-
zation. The period of criticism
of the "cult" produced such
works as Genov's "Fear" and L.
Stanev's "Laskov's Family" in
which the evils of the Stalin-
ist era were portrayed too ef-
fectively for the party's taste.
Previous party attacks on these
writers were always on an in-
dividual basis and seemed to
be aimed at their re-education.
The Writers' Union came out
with a blanket statement on 27
December, however, that all
writers must take a clear pro-
party stand.
Bulgarian liberal writers
appear to have no broad popular
support on which to call. Sym-
pathetic Bulgarian students re-
vealed their feelings at the
time of the Hungarian revolution
and hundreds subsequently were
exnelled from the universities.
The power struggle in prog-
ress among the Venezuelan armed
forces for control of the gov-
ernment has apparently roused
the civilian opposition and may
lead to serious violence. Presi-
dent Perez has at least tempo-
rarily regained ascendancy among
his military supporters, but he
may be obliged to make some con-
cessions to the civilians.
Perez seems to have suc-
ceeded in reasserting his con-
trol over the military, who had
taken all the important posts
in the cabinet inaugurated on
10 January. By 13 January,. Perez
was able to take charge of the
key Ministry of Defense, replac-
ing General Fernandez, the for-
mer armed forces chief of staff
who had been in the ministerial
post only three days and was
allegedly plotting to seize pow-
er. Perez also announced the
replacement of the new military
incumbent in the Ministry of In-
terior--which controls the po-
lice--with one of his civilian.
relatives who is believed to
be a stanch supporter.
Perez and the military may
now be forced to make conces-
sions to the civilian opposi-
tion in order to avoid further
violence. Large-scale public
demonstrations against the dic-
tatorship took place in Caracas
on 10, 13, and 14 January. A
portion of the press has also
openly defied the government,
and the Catholic Church has be-
come increasingly hostile to
the regime. Former President
Betancourt, exiled leader of the
outlawed Democratic Action par-
ty, which was ejected from pow-
er by a military coup in 1948,
has announced that the three
principal opposition parties
have agreed to unite to rid the
country of Perez.
The growing civilian threat
to military supremacy could help
realign a majority of the armed
SECRET
PART II NOTES AND COMMENTS Page 8 of 17
Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
SECRET
16 January 1958
forces behind him, but dissident
military elements, including
the followers of discredited
officers like Fernandez, may
join with the civilian groups
in the struggle for power.
Perez' present influence
over the military and his tenure
ARGENTINA
BOLIVIA
BRAZIL
CHILE
COLOMBIA
COSTA RICA
CUBA
DOMINICAN
REPUBLIC
ECUADOR
EL SALVADOR
GUATEMALA
HAITI
HONDURAS
MEXICO
NICARAGUA
PANAMA
PARAGUAY
PERU
URUGUAY
VENEZUELA
UNITED STATES
NATO Secretary General
Spaak's exploration of some
form of liaison with free-world
regional organizations in other
areas is expected to be favor-
ably received by the Baghdad
Pact and SEATO countries and
to meet a mixed reaction from
the Organization of American
States (OAS). It is recognized
that interlocking memberships
do not provide the
closer coordination
desired, but there is
widespread dislike of
any formal linkage
INTERLOCKING MEMBERSHIPS IN: R i ?N ORf A NIZATIONS
that verges on ante- S OAS
gration.
Spaak was au-
thorized at the De-
cember NATO heads-
of-government meeting
to sound out the
three other groups,
but he will probably
wait until after the
Baghdad Pact Council
meeting in Ankara on
27-31 January before
writing the other
secretaries general.
P.on aneil woticttig committees ailst had o~serkat~ 5#aS s A?a~ ?a 3 L~`eetl[ g ',
are uncertain, although he ap-
pears determined to retain of-
fice with his former author-
itarian methods. A top national
guard officer has commented to
an American Embassy official in
Caracas that the power struggle
will not end until Perez is
ousted.
beyond the terms of reference
into coordinated military plan-
ning and division of command.
The Pakistani foreign
minister has suggested that each
group might send a representa-
tive to the other's headquarters
to participate in the daily
proceedings. Liaison with
NATO in the scientific field
The Baghdad
council had in June 1957 author-
ized exploratory contacts with
both NATO and SEATO, looking
toward eventual delimitation,. of
areas of military responsibility,
and NATO officials have already
been approached informally. The
Turks appear ready to move even
was proposed last November by
the Baghdad Pact secretary
general.
SEATO council representa-
tives responded to the NATO
heads-of-government meeting with
unanimous approval of closer
SECRET
PART II NOTES AND COMMENTS Page 9 of 17
Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
16 January 1958
association between the collec-
tive security organizations,
and they may have firm propos-
als to submit at their March
meeting. A mid-December memo-
randum from the Philippine Gov-
ernment suggested rather formal
ties, while Australian Foreign
Minister Casey, according to
the press, favor more coordi-
nation but not full integration.
The preliminary reaction
from the OAS has been one of
cautious reserve, reflecting
its long-standing isolationist
tradition. Many Latin Ameri-
cans believe the proposals for
closer ties were inspired by
Peruvian President Prado's late
November speech on coopera-
tion against the Soviet men-
ace, Even such supporters of
cooperation with NATO as Brazil,
Colombia, and Peru probably
would not want initially to
go beyond exchanges of infor-
mation and opinion with NATO.
Mexico and Chile, on the other
hand, seem to oppose any
political or military link,
while most Latin American
governments appear to be un-
decided.
EURATOM AND THE COMMON MARKET
The appointment of the
commissioners to direct EURATOM
and the European Common Mar-
ket, both of which came into
force on 1 January, has re-
solved a principal difficulty
concerning these institutions.
Although the dispute over the
location of the headquarters
of the European institutions
Member Countries of= THE COAL-STEEL COMMUNITY,
l1RATiJv1 AND ' THE EUROPEAN COMMON MARKET
VI/
may be prolonged, serious or-
ganizational delays seem un-
likely, and the commissions
seem ready to deal with the
jurisdictional and other ptob-
lems immediately confronting
them.
The president of the
EURATOM commission is French
transportation and energy ex-
pert Louis Armand, who played
a leading part in writing the
EURATOM treaty. He was one of
the "three wise men" who drew
up the draft nuclear-power pro-
gram for EURATOM. West German
State Secretary for Foreign
Affairs Walter Hallstein heads
the Common Market commission,
which also has such strongly
"pro-European" members-as the
former Dutch agriculture min-
ister, S. L. Mansholt, the
former Belgian economics af-
fairs minister, Jean Rey, and
the former secretary general
of the OEEC, Robert Marjolin.
National and even partisan
interests were carefully bal-
anced in distributing the com-
mission posts. Neither Bonn
nor Rome would accept a Social-
ist as president of the Common
Market, and Belgium was reluc-
tant to press Rey's candidacy
at the risk of decreasing Brus-
sels' prospects of being the
"capital of Europe." To, main-
tain political balance among
the six-nation organizations,
Paul Finet, a Belgian Socialist,
was made president of the al-
ready functioning Coal-Steel
Community (CSC).
SECRET
PART II NOTES AND COMMENTS Page 10 of 17
Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
16 January 1958
The dispute over the loca-
tion of the EURATOM, Common Mar-
ket, and CSC institutions may
not be easily resolved, and lack
of adequate facilities may prove
a problem. Belgium is bitter
because France supported Luxem-
bourg's candidacy with the in-
tention of eliminating Brussels
as the top contender. The six
governments are committed in prin-
ciple to a single capital, how-
ever, and the community institu-
tions themselves have been given
a. leading role in selecting it.
The agendas of both commis-
sions will be full in the coming
months. Armand is expected to
move rapidly in setting up EURATOM's
research operations and in as-
serting jurisdiction over the
supply of fissionable materials--
matters in which he faces pos-
sible conflicts with the national
atomic energy establishments.
He will probably also soon seek
negotiations with Britain and
the United States on material
and technical support for EURATOM.
In the Common Market, one of the
most urgent problems is to get
the Monetary Committee to work on 25X1
the serious fiscal obstacles to
the first tariff reduction, sched-
uled for next January
ITALIAN ELECTIONS MAY BE HELD IN APRIL
The Italian Government is
maneuvering to dissolve the
Senate a year before its term
expires in order to hold nation-
al elections in April for both
houses of Parliament. Chris-
tian Democratic party Secretary
General Fanfani sees maximum
political advantages in holding
spring elections, since he ap-
parently now feels his party's
electoral position will be dam-
aged if the weak Zoli govern-
ment is continued in office. If
the Chamber of Deputies remains
in session for its full term,
elections could be delayed un-
til August.
The Chamber of Deputies is
expected to finish work soon on
the only major legislation re-
maining on its agenda, the con-
troversial bill for the regula-
tion of agrarian contracts. If
Parliament is dissolved soon,
the Senate may not have time to
consider the bill, but Fanfani
may have decided that the cham-
ber's action would be enough to
assure the electorate of the
government's good intentions.
A deadlock between the two
houses over a bill to reduce the
Senate's term from six to five
years may be the pretext for
dissolving Parliament. The
Senate voted down a similar
provision in November, and is
expected to reject the chamber's
present version. If an impasse
occurs, President Gronchi ap-
parently has agreed to use his
authority to dissolve both
houses of Parliament.
There appears to be general
agreement on the need to enlarge
the Senate in order to expedite
legislation. Fanfani is anxious
to shorten the Senate's term of
office to conform to that of
the chamber. He is willing,
however, to sacrifice the pend-
ing bill which calls for these
changes because early dissolu-
tion would benefit the Chris-
tian Democratic party. The
electoral law for the upper house
favors the larger parties, and
the Christian Democrats consider
their chances particularly good
at the moment because the smaller
parties are not expected to
benefit from electoral alliances
as they did in 1953.
Since elections must be
held within 70 days of dis-
solution, the decision on
the fate of the Senate will
have to be made by the end of
February if elections are to
be scheduled for Apri
SECRET
25X1
25X1
PART II NOTES AND COMMENTS Page 11 of 17
Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
16 January 1958
The anti-inflation program
of Spanish Commerce Minister
Ullastres may be seriously set
back by the outcome of the an-
nual meeting on 14 December of
the Spanish Syndicate Economic
Council. In its recommenda
tions for long-range economic
policies, the council failed
to consider adequately the in-
flationary pressures which are
sharpening public opposition
to the Franco regime.
The 800-man council, which
brings together representatives
of the various segments of the
national economy, advised an
intensification of economic de-
velopment to raise living stand-
ards,. It took note of the in-
flation problem only to the ex-
tent that it recommended re-
strictions on' the rate of
growth of consumption, and a
maximum increase in exports.
Emphasizing modernization of
productive methods, the council
favored seeking external cred-
its and called for a 5-percent
annual increase in the gross
national product, of which 24
percent would be invested.
The American Embassy in
Madrid considers the assumption
of such economic growth "grandi-
ose and unrealistic." The pres-
ent investment rate of about
19 percent of the gross nation-
al product was achieved only
at the expense of a sizable
budgetary deficit and has con-
tributed heavily to Spain's
inflationary difficulties.
The council ignored Ullas-
tres' appeal to consider the
need for attaining short-term
price stability and the elimi-
nation of inflation. Under
pressure from Catalan represent-
ativesrr who claimed Spain was
already experiencing deflation,
the council rejected a working-
group report calling for strong
anti-inflationary measures.
The council's failure to
emphasize the need to check in-
flation will weaken the posi-
tion of Ullastres, who is al-
ready encountering cabinet op-
position to his program? While
the council has only an ad-
visory capacity, its recommenda-
tions will strengthen the hand
of those cabinet ministers who
advocate an unrealistic rate of
expansion, which would prevent
Spain from meeting the finan-
cial requirements for full mem-
bership in the OEEC. Meanwhile,
the steadily mounting cost of
living threatens to wipe out
the present modest margin be-
tween the price level and the
wage level, brought about by
the 1956 wage increases
25X1
25X1
The Afghan Government is
devoting a sizable part of its
Soviet military assistance to
the development of a modern
jet air force. Progress is
being made in the Soviet-in-
structed air training program,
and Kabul is expanding its 96-
man air force to a figure of
several hundred.
About 20 Soviet instruc-
tors have been training approxi-
mately 150 Afghan students, in-
cluding both pilots and ground
crew, at the main training cen-
ter at Mazar-i-Sharif.
SECRET
PART II NOTES AND COMMENTS Page 12 of 17
Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
SECRET=`
CURRENT INTELLIGENCE WEEKLY SUMMARY
16 January 1958
India
has trained about g an pi-
lots in piston planes but, be-
cause of their frequent acci-
dents, has not given them jet
training.
In addition, up to 500
military students are reported
being examined in Kabul for air
force training. Part of this
training will probably be given
at a new air school in the Ka-
bul area which is apparently
intended eventually to be
staffed by Afghan.. instructors
Part of the training may also
take place in the USSR.
Some of the 40 to 45 jet
fighters, mostly MIG-15's, re-
ceived under the Soviet mili-
tary assistance program are '
presumably being used for train-
ing. All of these planes are
All-weather road
Broad-gauge railroad
Narrow-gauge railroad
16 JANUARY 1958
MILES 756
New
apparently to be flown and main-
tained by Afghan pilots and
ground crews after completion
of training.
The newly trained jet air
force will presumably operate
from four airfields which are
to be improved or constructed
in northern and central Afghan-
istan. The Deh Dadi military
airfield at Mazar-i-Sharif is
now being used by the Soviet-
made jets, although it has not
yet been hard-surfaced. When
the proposed airfield is built
at Bagram, 30 miles north of
Kabul, however, it may become
the principal base of the Afghan
Air Force. Two other airfields
are believed to be little be-
yond the preliminary survey
stage at present.
The Afghan Air Force will
probably require several years
SECRET
PART II NOTES AND COMMENTS Page 13 of 17
Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927A001600040001-1
SECRET %NW
CURRENT INTELLIGENCE WEEKLY SUMMARY
16 January 1958
to develop a significant com-
bat capability. Even a jet
air force of very low combat
capability, however, would help
satisfy the Afghan Government's
aspirations for national prog-
ress and serve to maintain the
government's authority. The
development by Afghanistan of
such an air force would proba--
bly increase Pakistan's concern.
Afghanistan will probably
continue to depend on Soviet
cooperation for the maintenance
of its Soviet-made jets. If
it wishes to continue develop-
ing its air force, it may also
have to add to its already
overextended credit by securing
additional So ' oans.
CAMBODIAN POLITICAL SITUATION
The Cambodian political
picture has been further con-
fused by Crown Prince ?ihanouk,
who recently returned from a
four-month European vacation.
Sihanouk discovered that in
his absence the government of
Premier Sim Var had become
virtually paralyzed by intra-
party strife and was deeply in-
volved in a bitter feud with
the National Assembly. After
a brief attempt at arbitration,
Sihanouk dissolved the National
Assembly on 8 January and, in
accordance with the constitu-
tion, the premier automatically
resigned. The constitution al-
so provides that new elections
must be held within two months
of assembly dissolution, but
this provision previously has
been ignored by Sihanouk. Pend-
ing clarification of his inten-
tions, a provisional govern-
ment has been formed under Penn
Nouth, an old-time conservative
who is considered Cambodia's
top statesman.
Since returning, Sihanouk
has also violently attacked the
Cambodian Communist party. Si-
hanouk linked the local Commu-
nists with the Viet Minh, and
accused them of seeking to over-
throw the monarchy and to de-
stroy Cambodia's traditional
Buddhist way of life. This
denunciation virtually elimi-
nates Communist chances in any
new elections.
Although Sihanouk has con-
tinued to emphasize Cambodia's
adherence to a strictly neutral
foreign policy, his recent state-
ments have been increasingly
critical of the Communist bloc.
This is probably due to his
growing awareness of the danger
of Communist subversion. He
appears particularly concerned
over the infiltration of left-
ist elements into the govern-
ment's Information Ministry.
Communist subversion among the
large Overseas Chinese and Viet-
namese communities in Cambodia
has also become an increasingly
serious problem as a result of
the contacts with the Sino-,So-
vietbloc which Sihanouk origi-
nally promoted.
A mass demonstration has
already been organized in sup-
port of his stand, and the pres-
ent condemnation of Communism
by some Cambodian officials is
unprecedented. The possibility
exists, however, that moderate
forces in the government may
seize this opportunity to at-
tempt to push popular resentment
against the Communists beyond
Sihanouk's original intention,
and thus antagonize him.
In addition, Sihanouk may
feel forced to "trim his sails"
SECRET
PART II NOTES AND COMMENTS n- -,
Approved For Release 2007/10/23: CIA-RDP79-00927A001600040001-1 of 1?
 Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
16 January 1958
as a result of bloc pressures.
Peiping, for instance, has al-
ready expressed concern at the
turn of events in Cambodia by
quoting a Communist newspaper
in Phnom Penh which warned that
"imperialist intervention" in
the current tense situation
could result in "very bad
consequences" for Cambodia's
peace, in endence and neu-
trality.
DISSENSION IN CHINESE NATIONALIST GOVERNMENT
Continued criticism of the
Chinese Nationalist administra-
tion by the Control Yuan, the
inspectorate branch of the gov-
ernment, may. ultimately lessen
popular confidence in the Chiang
Kai-shek government. A decision
by the Control Yuan on 11 January
to conduct an investigation into
alleged corruption in the han-
dling of imports will also in-
crease pressures for ministerial
changes, for higher standards in
government, and for modification
of certain unpopular policies.
Both the Legislative Yuan
and the Control Yuan have become
increasingly critical of the ad-
ministration during the past
year. A basic source of dis-
content is frustration at their
lack of influence in determining
national policy. The Kuomintang
members of the two Yuans--who
comprise more than 90 percent of
the total combined membership--
have demonstrated an. increasing
reluctance to obey party in-
structions. Matters came to a
head on 23 December when, with
a maximum of publicity and a-
gainst the wishes of top Kuo-
mintang leaders, the Control
Yuan took the unprecedented step
of indicting Premier Yui on
charges of dereliction of duty.
Alleged withholding of the rec-
ords of the Central Bank, of
which Yui is the director, has
been a major complaint of the
Control Yuan. Yui will probably
either escape punishment or re-
ceive only a mild rebuke, but
the adverse press publicity is
embarrassing the Chiang regime.
Chiang Kai-shek has as-
signed his top party leaders
the task of smoothing over the
rift between the Control.Yuan
and Yui with the admonition that
unspebified "drastic changes"
will follow if they fail. Chiang
personally requested the Control
Yuan's cooperation on 25 Decem-
ber and emphasized the problem
of military and popular morale
on Taiwan.
The Control Yuan's deci-
sion to investigate alleged
corruption in the handling of
foreign exchange earned on im-
port transactions was prompted
by press reports that, although
instances of corruption were
known to administration offi-
cials, action would not be taken
because of "important influ-
ences:' Six officials were sus-
pended on 2 December on a charge
of illegal handling of foreign
exchange transactions earned on
drug imports. The Control Yua.n's
decision to press this investi-
gation will add to pressures for
a shake-up in the personnel and
organization of the economic
organs of the government. Yui's
position at the moment seems
relatively secure, for Chiang
has assured him he has no cause
for concern and allegedly has
refused to accept his offer of
resignation.
The regime has already
been forced to alter two unpop-
ular policies. It has abandoned
its stand against pay raises for
civil and military officials
even though it believes such
SECRET
PART II NOTES AND COMMENTS Page 15 of 17
Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
16 January 1958
raises will prove inflationary.
Also, on 14 January, Premier
Yui informed the Legislative
Yuan that a private American
organization has agreed to sell
its shares in a shipbuilding
company which has leased Tai-
wan's largest shipyard. The
Legislative Yuan has been bit-
terly critical of this contract
Increasing discontent with
the American administration on
Okinawa and its policies is in-
dicated by the election as mayor
of Naha of the candidate who
campaigned on a promise to "fight
against American pressures."
He professes not to favor imme-
diate withdrawal of American
forces from Okinawa, however,
and has moderated his public de-
mands for the early reversion of
the Ryukyu Islands to Japan be-
cause of the "present interna-
tional situation."
The new mayor, Saichi Kane-
shi, defeated his more conserva-
tive Socialist rival, Tatsuo
Taira, by a margin of less than
a thousand votes among the 70,-
000 cast. Kaneshi is the second
leftist to be elected mayor of
Naha in 13 months, and his vic-
tory marked the third consecu-
tive gain for leftist forces in
city elections.
Both candidates strongly
criticized the American adminis-
tration of the Ryukyu Islands
and American land policies.
Both also called for reversion
of Okinawa to Japan. Under these
circumstances, victory went to
the candidate who was more vo-
ciferous in his criticism.
Kaneshi's campaign was well
organized and had dynamic appeal.
Although not considered a Com-
munist, he had the support of
ousted pro-Communist Mayor Kame-
jiro Senaga and extreme Social-
ists. He had 200,000 campaign
posters and leaflets from the
General Council of Trade Unions,
Japan's largest labor federation.
By contrast, Taira was un-
able to obtain unified support
from the Socialists and conserv-
ative. groups. The conserva-
tives were reluctant to organize
effectively for him because they
feared that support for a So-
cialist candidate in the mayoral
election would endanger their
own chances in the Ryukyu Islands
legislative elections in March.
The vote of the Socialist party,
for which Taira was the official
candidate, also was split.
A no-confidence vote a-
gainst Kaneshi by the Naha city
assembly similar to that which
caused Senaga's ouster appears
improbable, because leftist mem-
bers have sufficient votes to
block its passage. An initial
motion of no-confidence still
requires a two-thirds vote of
those members present.
In Japan, Socialist ex-
ploitation of the reversion
issue may stimulate greater
criticism of the United States
and force Prime Minister Kishi
to press a Japanese request for
participation in Okinawan af-
fairs.
SECRET
PA` II NOTES AND COMMENTS Pave 16 of 17
Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927A001600040001-1
SECRET
16 January 1958
FRENCH PREMIER FACES SEVERE TESTS
The next few weeks will be
extremely dangerous for Premier
Gaillard, who faces increasing
opposition on his firm austerity
program. The right wing of his
coalition may topple him if he
presses for complete consti-
tutional and electoral reform.
Opponents of the basic statute
for Algerian, encouraged by re-
cent deterioration in French-
Tunisian relations, are renew-
ing their assaults on his gov-
ernment.
The confidence vote on.the
issue of scheduling payments to
war veterans is only the first
test Gaillard faces on his
ability to make good commitments
to hold 1958 expenditures to
the ceiling the National As-
sembly accepted in December.
Despite the personal interest
the majority of French families
have in this question, Gaillard
was determined to postpone dis-
cussing it in order to avoid
a deluge of similar measures
which would tend to negate the
austerity program. When the
budget is again taken up, prob-
ably in February, many deputies
can be expected to press their
pet pork-barrel issues, regard-
less of official party programs.
Gaillard has cabinet ap-
proval to make constitutional
reforms a question of confidence,
but the center and right have
already raised sharp objec-
tions to his proposal, and
his plan to introduce elec.
toral changes at the same
time presents an additional
complication.
Meanwhile, the outlook
for an Algerian settlement has
been dimmed somewhat by the
rapid deterioration in French-
Tunisian relations in the past
few days. Even though the strong
opposition anticipated in the
Council of the Republic has
not materialized, rightist ele-
ments will capitalize on the
Tunisian border incident to
demand delay in implementation
of the basic statute for Al-
geria.
power much longer.
his "youthful authority" suf-
ficiently to maintain himself in
The assembly situation may
also be exacerbated by Gail-
lard's practice of resorting
too frequently to votes of
confidence to force the issue.
Although the press .was gen-
erally sympathetic toward his
recent appeal for unity, "if
only for a few months," to ex-
tricate France from its financial
plight, commentators have ques-
tioned his ability to exercise 25X1
SECRET
PART II NOTES AND COMMENTS Page 17 of 17
Approved For Release 2007/10/23: CIA-RDP79-00927A001600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927A001600040001-1
CONFLDENTIA
CURRENT INTELLIGENCE WEEKLY SUMMARY
16 January 1958
EUROPEAN PRESSURE FOR EAST-WEST TALKS
Pressure for high-level
East-West :talks continues
in :We$tetf .',Europe, and-
many government leaders are re-
acting in a manner similar to
that which led to the Berlin
and Geneva conferences of 1954
and 1955. A disarmament agree-
ment is the prime objective,
but interest is,. increasing in the
possibility of a European demil-
itarized zone. While most ad-
vocates of talks assume that
the United States, Britain, and._
France would again repreae-nt`Fthe
West, .Some support exists.' for
bilateral-US-Soviet meetings.
Recent public opinion polls
in Western Europe show increas-
ing support for renewed discus-
sions with Moscow. Strong and
persistent pressure for talks
has developed in the Danish and
Norwegian governments, and even
more so in the strong opposition
Socialist parties in Britain
and West Germany. This pressure
is encouraged by the absence of
any dramatic new Western pro-
posals to break the impasse
since the Geneva summit meeting
of 1955,:`by trouble in meeting
mounting defense costs, and by
widespread uneasiness over the
introduction into Europe of nu-
clear weapons and intermediate
range-missiles.
Government Sensitivity
Government leaders, even
those cool to the idea of talks,
increasingly tend to bend to
these demands. Prime Minister
Macmillan's cautious endorsement
of talks by heads of government,
the first really positive offi-
cial statement from London, fol-
lowed months of generally nega-
tive responses to Labor's per-
sistent prodding.
French Foreign
Minister Pineau has publicly
supported launching a new appeal
to the USSR, and a Foreign Min-
istry official who does not usu-
-aTly agree with Pineau feels
that Gaillard's essentially nega-
tive position is too intransigent
for French opinion. Firm opposi-
tion to talks usually appears
only in private, and then from
nonpolitical officials
who deplores public pressures
for talks with the Russians
when it is clear that Moscow does
"not wish to negotiate what we
consider key subjects."
Topics for Talks
Few of the strongest par-
tisans of talks appear optimistic
about real progress on any spe-
cific issues.
Disarmament is mentioned
most frequently as a subject re-
quiring top-level negotiation.
In a recent speech in Rome,
Pineau complained, "We shall be
obliged to adapt our armament
continually to new techniques
unless we obtain a disarmament
agreement." The tendency to
support "one last effort" at a
disarmament agreement before ac-
ceding to the establishment of
missile bases is particularly
noticeable in Scaodi.navia, but
it is also evidea. elsewhere.
The desire to break the
stalemate over'-German reunifica-
tion is a strong factor, and what
faint hope remains for progress
on this issue is increasingly
pegged to plans for neutraliza-
tion of a wide area of central
ET
CC~IIDENTIAL
PART III PATTERNS AND PERSPECTIVES Page 1 of 12
Approved For Release 2007/10/23: CIA-RDP79-00927A001600040001-1
25X1
25X1
 Approved For Release 2007/10/23: CIA-RDP79-00927A001600040001-1
SECRET
that his government suffered
from no illusions regarding the
efficacy of a nonaggression pact,
nevertheless was pleased that
Macmillan had "kept the ball
rolling."
CURRENT INTELLIGENCE WEEKLY SUMMARY
'16 January 1,958
Europe. The British Laborites
and the German Social Democrats
support a neutral zone; and the
possibility of thus removing
Russian troops from central Eu-
rope has brought expressions of
positive interest from influen-
tial independent sources, such
as the London Economist. Most
recently attent on a focused
on Polish Foreign Minister Ra-
packi's proposal for a nuclear-
free zone comprising Germany,
Poland, and Czechoslovakia.
Several governments which
for months had refused to con-
sider either complete demilita-
rization or special arms limita-
tions for a relatively small
area in Europe now deem it nec-
essary to appear more flexible.
Participants
It seems generally assumed
that the United States, Britain,
and France would meet with. the.',
Soviet Union as dh iprevious postwar
meetings. West Germany, how-
ever, with its improving power
position, would not relish a
summit conference in which it
did not participate, and Italy
insists on being included in
any discussions broader than
bilateral US-Soviet talks.
Some support for bilateral
talks between the United States
and the Soviet Union has devel-
oped recently. The Danish and
Norwegian prime ministers both
favor this approach. A British
diplomat whose "personal ideas"
sometimes foreshadow his govern-
ment's position told an American
Embassy representative on 6 Jan-
uary he believes such bilateral
negotiations offer the best hope
of -breaking "the cold-war im- 25X1
se."
Both 25X1
Macmillan's suggestion in
his 4 January speech that a non-
aggression pact might be the
place to start in bridging the
East-West gap has not been en-
dorsed by any other government
leader, and private comments in-
dicate considerable annoyance
because he offered it without
consulting Britain's NATO allies.
Press comment on this aspect of
Macmillan's speech approved it
mainly as an effort to gain the
initiative from the Russians.
A Portuguese official, who noted
France and Germany have 'always 25X1
opposed bilateral talks, but
influential French commentator
Raymond Aron proposed in early
January that the United States
sound out Soviet intentions;
reaction to this may show the
full extent to which French
opinion now favors renewed East-
West talks.
European opinion which
favors talks evidently holds
that the higher the level the
better. In line with the NATO
communique's mention of the for-
eign-minister level, most
SECRET
PART III PATTERNS AND PERSPECTIVES Page 2 of 12
Approved For Release 2007/10/23: CIA-RDP79-00927A001600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
16 January 1958
government leaders--Macmillan
a notable exception--still avoid
the mention of the "summit,"
and all stress the nedd for ade-
quate preparation. On the other
hand Aneurin Bevan, among the
Following the removal of
Defense Minister Zhukov last
October, the Soviet regime moved
rapidly to prevent any adverse
effects in the armed forces.
Political indoctrination was
intensified, discipline in the
ranks was apparently tightened,
and some senior commanders were
shifted. The latest important
personnel change to come to
light was on 10 January when
Colonel General F. I. Golikov,
former commander of the Armored
Forces Academy, was identified
as chief of the Main Political
Administration of the Armed
Forces in place of Colonel Gen-
eral A. S. Zheltov. Although
Zhukov's downfall touched off
some unrest in the ranks, no in-
cidents of open mutiny and no
purge of the military establish-
ment have been reported.
Political Training Intensified
Political indoctrination
in the armed forces was inten-
sified immediately after the an-
nouncement on 2 November of
Zhukov's removal from his seat
on the party presidium. Teams
of political officers and high-
ranking party dignitaries ex-
plained the central committee's
decision at meetings in all com-
mands, and some political of-
ficers were given intensive re-
training designed to improve
their "ideological leadership
capabilities." Since early No-
vember, the Soviet military
press has echoed the party line
against Zhukov and has charged
"other commanding officers" with
shortcomings similar to those
of which he was accused.
As recently as 7 January,
the army paper Red Star attacked
"armchair general" of the Trans-
caucasus Military District for
their failure to follow up the
decisions of the October central
committee plenum which ousted
Zhukov. The Defense Ministry
has also announced recently that
all officers would henceforth
be required to attend a" minimum
of 50 hours of political lectures
each year.
political o -
f icers will again be assigned
at the company level and will
be retained in battalions and
regiments. Political officers
have not been assigned to com-
pany units since 1954 or 1955.
The status of senior of-
ficers who were regarded as
supporters of Zhukov may have
come under review by the Defense
Ministry in late October.
SECRET
most ardent advocates of talks,
in early January called for
setting a date for a meeting
of heads of governments as a
means of "diciplining" the
preparations.
Page 3 of 12
25X1
25X1
25X1
Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927A001600040001-1
SECRET
16 January 1958
censured at that time, and it
was later rumored that certain
officers might be charged with
"Zhukovism" in a forthcoming
revised history of World War II.
There have been reports of
some shifts of general officers,
suggesting that a few Zhukov
associates have been removed
and that those who support Mali-
novsky and Khrushchev have
reaped their rewards. On 4 No-
vember, Lieutenant General D.
T. Matveyev was publicly identi-
fied as chief of the political
department of the army general
staff; it is possible that he
is new in the position. The de-
partment chief had not previously
been identified publicly for
several years and Moscow some-
times uses this device to show
changes in less frequently men-
tioned posts.
While the 23 October trans-
fer of Marshal Konstantin Rok-
ossovsky from Moscow to command
the Transcaucasian Military Dis-
trict was probably intended
primarily as a threat to Turkey
during the Syrian crisis, it had
the added advantage of removing
a possible supporter of Zhukov
to the hinterlands. His resto-
ration to duty as deputy defense
minister on 2 January indicates
that his career did not suffer
despite past association with
Zhukov, and that the recent
criticism of certain generals
in the Transcaucasus was prob-
ably not applicable to him.
The latest shift, Golikov's
replacement of Zheltov as head
of the main political a.dminis-
tration, may not be a direct
consequence of the Zhukov ouster..
Zheltov was on the right side
In the post-Zhukov period,
however, there has been special
stress on political training
and there are good indications
that this training is still con-
sidered inadequate. Thus, Zhel-
tov's inability to cope with
the new importance of his job
may account for his removal.
Zheltov had held the political
administration job since 1953;
no new position for him has been
announced,
Golikov is considered a
specialist in mechanized warfare,
but has also held staff, field,
and diplomatic posts. He has
no discernible connections with
any members of the top leader-
ship. Although Golikov's back-
ground does not give him special
qualifications for his new job,
his past experience with cadres
and training may have played a
part in his selection.
The wholesale replacement
of officers in the Group of
Soviet Forces in Germany (GSFG)
rumored in mid-November has not
materialized. The appointment
of Marshal Andrey Grechko, a
long-time Khrushchev protegd,
as deputy minister of defense,
and his replacement as commander
in Germany by Army General M.
B. Zakharov, the former commander
in Leningrad, is a promotion
No other major shifts in
the GSFG have taken place, but
SECRET
Page 4 of 12
25X1
25X1
Approved For Release 2007/10/23: CIA-RDP79-00927A001600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
..r
IVAW
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
16 Januaryi1958
transfers persist among junior-
grade officers
The dismissal of Zhukov
evidently lowered morale and
touched off barracks-room grous-
ing among the enlisted ranks.
troops in East Germany have
been confined to base under
tightened discipline tend to
support rumors of fairly wide-
spread dissatisfaction in the
GSFG. Recent reports of anti-
Soviet policy appears to
be aimed at developing a high
degree of coordination between
the satellite and Soviet air
forces and integrating elements
of their air defense systems
into the Soviet system.
The combined satellite air
strength now is over 3,300 air-
craft of all types, including
2,100 jet fighters and 155 jet
Communist rioting by troops at
Falkenberg have not been con-
firmed, however.
While the removal of Zhukov
was unpopular in the army, the
regime's precautionary measures
appear to have been sufficient
to prevent any major repercus-
sions. The navy organ Soviet
Fleet admitted on 10 December
bathe anti-Zhukov move had
not solved the problem of
strengthening discipline in the
service, but its call to polit-
ical officers to exercise great-
er ideological pressure to this
end indicates that more serious
measures have been unnecessary.
The recently announced intention
to demobilize 300,000 men could
screen out adherents of Zhukov
among the junior officers dur-
ing the course of demobiliza-
tion.
light bombers. Personnel
strength is estimated at about
100,000 men.
The great number of air-
fields developed in Eastern
Europe during the last ten years
provides the USSR with a formida-
ble air base structure well
suited for defense of the west-
ern approaches of the USSR.
These airfields bring most of
SECRET
PART III PATTERNS AND PERSPECTIVES Page 5 of 12
Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
HERS
CURRENT INTELLIGENCE WEEKLY SUMMARY
16 January 1958
Western Europe, including the
United Kindgom, within striking
range of Soviet jet light and
medium bombers.
Defensive Capabilities
Air defense and air support
of ground forces are the pri-
mary missions of the'satellite
air forces. Ground attack units
equipped with BEAST (IL-10)
piston aircraft are being con-
verted to jet fighters, follow-
ing the Soviet pattern of com-
SECRET
SATELLITE AIR GROWTH
EAST GERMANY
POLAND
CZECHOSLOVAKIA
HUNGARY
RUMANIA
BULGARIA
ALBANIA
1951
1953
1955
1956
1957
^
?
1
0
o
N
^
S
ao
^
Soo
^
^
S
S
^
oM
a
JET FIGHTERS JET BOMBERS
^MIG-15,YAK-23
0 MIG-17 MIG-17 (With
-intercept radar)
latter are the "MIG-17-D"
equipped with air-borne aids to
intercept, and considered to
have a limited all-weather capa-
bility. No satellite force is
known to have received the FARM-
ER (MIG-19), a supersonic day
fighter, or the FLASHLIGHT (YAK-
25), a Soviet all-weather fight-
er. Only four Soviet units
based in Eastern Europe are
known to have the FLASHLIGHT
(YAK-25). When Soviet re-equip-
ment is well under way, the
satellites will probably re-
ceive some of these higher per-
formance aircraft.
ESTIMATED TOTAL
AIRCRAFT STRENGTH
340
_.4. i
1951
pletely re-equipping its units
with jets and reducing the num-
ber of ground attack units.
Jet fighters assigned to the
air defense mission are believed
to have a ground support role
as well.
The approximately 2,100
jet fighters in operational
units of the satellites are
FAGOT (MIG-15) and FRESCO
(MIG-17) types. Some of the
The capabilities
of Polish and Czech-
oslovakian fighter
units are probably
close to the profi-
ciency of Soviet units.
Rumanian, Bulgarian,
and Albanian capa-
bilities are limited.
Offensive Capabilities
The USSR provided
Poland with jet light
bombers in 1953. Two
years later, Czecho-
slovakia, Hungary,
Rumania, and Bulgaria began re-
ceiving a few of the BEAGLES (IL-
28's) which were introduced in-
to Soviet units in 1950 and re-
main the operational jet light
bomber of the USSR today.
The three Polish jet light
bomber regiments of approximate-
ly 80 aircraft are probably ap-
proaching a proficiency compara-
ble to Soviet units.
SECRET
PART III PATTERNS AND PERSPECTIVES Page 6 of 12
Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
Now
SECRET
16 January 1958
AIRFIELD STATUS
AS OF I OCT 1957
CURRENT INTELLIGENCE WEEKLY SUMMARY
Hard-surfaced runway 6000 ft.
or more
? Completed
Q Under construction
Tirana 1
ALBANIA
Major airfields with long
hard-surfaced runways and mod-
ern support installations now
total 134 in Eastern Europe. Ten
others are under contruction.
Approximately two thirds of
the major airfields are of jet
fighter standard; the remainder
are bomber bases with runways
at least 8,000 feet long and
adequate for jet light and pos-
sibly medium bomber operations.
Exceptionally large air-
fields have been constructed
in East Germany at Gross Dolln
and in Poland at Powidz. The
concrete 'runways measure
SECRET
AIRFIELDS OF THE
EUROPEAN SATELLITES
PART III PATTERNS AND PERSPECTIVES Page 7 of 12
Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
16 January 1958
approximately 11,500 feet. Both
airfields are believed capable
of handling the heaviest types
of aircraft. The construction
of similar airfields is also
in progress in Czechoslovakia
and Hungary. These four large
airfields have been reported
as part of a plan under the
terms of the Warsaw Pact to
construct a "very large" air-
field in each European satel-
lite.
THE SITUATION IN CEYLON
Prime Minister Bandara-
naike of Ceylon is facing in-
creasingly difficult political
and economic problems, which
have been aggravated by recent
floods and crippling strikes.
His ability to overcome these
problems is doubtful, but he
probably has more popular sup-
port than any other prospective
leader or group commands at
this time.
Prime Minister's Views
Prime Minister Bandara-
naike came into office in April
1956 with a nationalist-social-
ist reform program envisaging
domination of the public sector
of the economy over the private
but stressing the necessity of
harmony between "collective
freedoms" and "individual free-
doms." He founded the Sri Lan-
ka Freedom party, which holds
41 of the 101 seats in the
lower house of Parliament, to
provide a middle ground between
the discredited United National
party and Ceylon's far-left
Communist and Trotskyite par-
ties.
In the nearly two years he
has been in power, Bandaranaike,
like Indian Prime Minister Nehru,
has learned he cannot move as
rapidly as he would like toward
socialist goals without dis-
rupting the national economy
and the local political struc-
ture. In practice, therefore,
Bandaranaike has moved rela-
tively slowly and has tolerated
a mixed economy much as did the
predecessor United National par-
ty government which he defeated
in 1956.
Domestic Policy
Bandaranaike has initiated
few major socialistic moves, the
most important, the nationaliza-
tion of bus lines--which took
effect on 1 January 1958. The
Paddy Lands Bill passed by
Parliament on 19 December 1957
increases government control
over agriculture. Talk of na-
tionalizing life insurance and
shipping lines has not yet pro-
duced action. On 11 November
1957, the Ceylonese cabinet re-
jected a proposal for national-
ization of tea estates.
SECRET
PART ITT PATTERNS AND PERSPECTIVES Page 8 of 12
Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927A001600040001-1
SECRET
w
CURRENT INTELLIGENCE WEEKLY SUMMARY
16 January 1958
Other dramatic moves made
by Bandaranaike, such as taking
over British naval and air bases
in the fall of 1957 and estab-
lishing in November 1957 a com-
mittee to study the advisability
of Ceylon's changing its domin-
ion status to become a, republic,
were nationalistic rather than
socialistic.
The previous United Nation-
al party governments headed by
Prime Ministers Senanayake and
Kotelawala, which some observers
consider to have been more "con-
servative" in their socialism,
established an island-wide net-
work of cooperative agricultural
organizations, began a number
of government-controlled devel-
opment projects, instituted reg-
ulations placing private business
and foreign trade primarily in
the hands of Ceylonese nationals,
and placed all trade with Sino-
Soviet bloc countries under gov-
ernment control. The Kotelawala
government in 1952 also signed
the first five-year rice-rubber
agreement with Communist China.
In continuing many of these
schemes, Bandaranaike has built
on a foundation laid , by his
predecessors.
Foreign Policy
Bandaranaike's major de-
parture from the practices of
earlier governments has been in
the field of foreign policy.
Kotelawala, particularly, though
willing to recognize and trade
with Sino-Soviet bloc countries,
had strongly discouraged estab-
lishment of bloc diplomatic mis-
sions in Ceylon, had prevented
most cultural, educational, and
propaganda contacts, and had
forcefully declared his anti-
Communism. He refused, however,
to join Western-supported re-
gional pacts.
Banda.rana.ike, on the other
hand, feels that Ceylon, in de-
veloping its domestic and inter-
national policies, should avoid
adherence to power blocs but
should draw on the best features
of both the free world and the
Communist bloc. The prime min-
ister has therefore permitted
the opening of bloc diplomatic
missions in Ceylon, and has
allowed a relatively free ex-
change of Ceylonese and bloc
economic and cultural groups.
This has led not only to an in-
crease of bloc personnel, prop-
aganda materials, and cultural
activity in Ceylon but also to
offers of economic and technical
assistance which are being fa-
vorably considered by the Cey-
lonese.
In advocating this policy,
Bandaranaike, like others, is
probably searching for recogni-
tion and equality with bigger
Western and Asian powers which
also exchange ambassadors and
trade with the USSR and Commu-
nist China.. There is no sign
that he is being "pushed" into
these relations by leftist
pressure. Bandaranaike has also
expanded Ceylon's relations
with non-Communist nations and
has shown no desire to loosen
ties with any nation but Britain.
His weakness on this score lies
not so much in his attitudes as
in his questionable ability to
cope with the dangers of increas-
ing Communist influence in Cey-
lon.
Bandaranaike's neutral for-
eign policy and his reliance
for parliamentary support on
five members of the Trotskyite
Viplavikara Lanka. Sama Samaja
party--two of whom are in his
cabinet--constitute the primary
basis for reports of Ceylon's
"drift to the left." Bandara-
naike is aware of at least some
of the dangers involved, however.
Present Position of Government
Bandaranaike has been under
fire from religious and linguis-
tic groups virtually ever since
he took office. Both the far
right and the far left have at-
tacked him on political, eco-
nomic, and social matters. To
date, he has met and at least
SECRET
'PART ITT PATTERNS AND PERSPECTIVES Page 9 of 12
Approved For Release 2007/10/23: CIA-RDP79-00927A001600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
16 January 1958
temporarily relieved each crit-
ical situation, although the
nature of his compromises has
been interpreted by some as
weakness. He pacified Ceylon's
Tamil-speaking population of
Indian racial origin, whose agi-
tation last August for linguis-
tic representation threatened
widespread bloodshed. In Octo-
ber he prevented another out-
break of violence when Sing-
halese-speaking groups demon-
strated against his agreement
with the Tamils.
On 19 September 1957, the
Ceylonese Government signed a
new rice-rubber agreement with
Communist China, which, despite
its much less favorable terms,
created no disappointment in
Ceylon. In December, the gov-
ernment's firm but sympathetic
action temporarily lessened--
through by no means ended--
serious labor grievances which
had been pointed up by numerous
crippling strikes. Bandara-
naike has also apparently suc-
cessfully walked a tightrope
between landowners and business
elements on the one hand and
leftists on the other in his
treatment of socialistic and
nationalistic issues. There
has been no major outcry from
the people of Ceylon regarding
the rate of socialistic prog-
ress.
Bandarana.ike's government
coalition, as well as his own
political party, has shown a
high degree of cohesion during
the past two years, with virtu-
ally no defections and some a.c-
tua.l gains in strength. In
view of the diverse elements
in the coalition and the prob-
able weakness of its political
organization, this cohesion is
noteworthy. No parliamentary
opposition group or combination
of groups even remotely capable
of voting out the Bandaranaike
coalition yet exists, and none
seems to be developing rapidly,
Political Opposition
Bandaranaike faces several
threats, however, which could
eventually lead to his downfall.
The first of these is within
his own government. Philip
Gunawardena, food and Agriculture
minister and leader of the na-
tionalist-Communist Viplavikara
Lanka Sama Samaja party, is ap-
parently seeking to seize con-
trol of the government. With-
out attempting to build wide-
spread popular support, Guna-
wardena is quietly placing his
men in key posts in the govern-
ment and in ancillary organiza-
tions where they can influence
considerable numbers of people.
Parliamentary bills introduced
by him also seek to enlarge his
personal influence. Gunawa.rdena,
as a Trotskyite, does not owe
allegiance to Moscow.
The threat from Guna,wa.rdena.
is now publicly recognized, how-
ever, and several cabinet and
parliamentary actions to curb
his rise to power have already
been taken. Gunawa.rdena is now
opposed by the press, by a. con-
siderable portion of the Buddhist
religious hierarchy, by land
and plantation owners who resent
his efforts to socialize agri-
culture, and by many members of
Parliament. He continues his
drive, nevertheless, and will
be dangerous as long as he is
in the government.
A second threat facing
Bandaranaike comes from N. M.
Perera, head of the nationalist-
Communist Nava Lanka Sama Sa.mja
party and leader of the opposi-
tion in Parliament. Fifteen
members of Perera's party, which
also owes no allegiance to Mos-
cow, are in Parliament. Perera,
with a larger popular following
than Gunewardena, poses more of
a political threat. He also
controls numerous unions of ur-
ban laborers, many of which were
responsible for the strikes of
last November and December,
Perera., like Gunawa.rdena.,
has no ability at present to
cause Bandaranaike to fall in
Parliament. He does have the
ability to disrupt the Ceylonese
economy almost completely
through control of port,
SECRET
PART III PATTERNS AND PERSPECTIVES Page 10 of 12
Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
16 January 1958
transportation, and municipal
unions in Colombo, Should he
try to do so, however, he would
probably lose much support
throughout the island from vil-
lagers whose income and food
supply would be adversely af-
fected by. any large-scale
strikes.
The Moscow-dominated Com-
munist party of Ceylon, under
Pieter Keuneman, numbers only
6,000, and now seems incapable
of making a major bid for power
either through its three members
in Parliament of through force.
Similarly, the United National
party of Sir John Kotelawala
and Dudley Senanayake has shown
no sign during the past two
years of serious organiational
or political activity and,
through its six members in Par-
liament, is incapable of rally-
ing sufficient conservative-
socialist or rightist support
for parliamentary action.
The inability of any single
opposition party or foreseeable
coalition of opposition parties
to shake Bandaranaike's hold
over Parliament as long as his
own party and its immediate de-
pendents remain united might
raise in some quarters thoughts
of achieving power through
force. There is as yet, how-
ever, no known group in Ceylon
which seems capable of conduct-
ing a successful coup or of re-
taining control of the govern-
ment for any length of time
should it come to power through
force.
Economic Stagnation
Probably the most serious
threat to Bandaranaike is the
deterioration in economic con-
ditions which Ceylon has ex-
perienced in the last two years.
During most of the postwar
period, world prices for Cey-
lon's major exports--tea, rub-
ber, and coconuts--were good.
This factor, plus unusually
good crop years in 1953 and
1954 and the first rice-rubber
deal with Communist China, en-
abled the United National par-
ty government to strengthen
Ceylon's financial and economic
position at the same time that
it was extending social services.
Since Bandaranaike came
into power, however, world
prices for Ceylon's exports have
declined and crops have been
only average. The United Na-
tional party, which had set up
several government economic
projects, never instituted an
island-wide economic plan. Al-
though the present government
wants to institute economic
planning, its inexperience has
to date forced it to concen-
trate on learning the routine
tasks of government. Since
Ceylon's population is growing
at the high rate of 2.5 percent
a year, the dangers involved in
allowing the economy to become
stagnant are considerable.
This basically unfavorable
situation has been aggravated
since last November by a com-
bination of floods and strikes,
which have placed the country
in an extremely difficult eco-
nomic position. Some 75 ships
are reportedly tied up in Co-
lombo harbor, while the island
has little more than a week's
supply of rice on hand. The
emergency aid Ceylon is receiv-
ing from other countries is of
only temporary assistance. Over
a longer period, Ceylon will
need considerable outside aid
to stimulate economic progress.
A Soviet economic mission is in
Colombo exploring means of help-
ing Ceylon. If large-scale aid
from either the West or the bloc
is not forthcoming, rising un-
employment, commodity shortages,
high prices, and political ma-
neuvering may create widespread
unrest throughout the island.
The far-left parties pre-
sumably would point to further
economic deterioration as a
major reason for getting rid of
Bandaranaike, who was elected
on his promises to raise living
SECRET
PART III PATTERNS AND PERSPECTIVES Page 11 of 12
Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
NwSECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
16 January 1958
standards rapidly. As a result,
dissatisfaction might become
so great that Bandarana.ike
would be under strong pressure
to make dramatic moves--such
as nationalizing plantations
--to prove that he was "doing
things" to improve the lot of
the people. If he were to adopt
an all-out socialist policy,
it would probably lead to fur-
ther economic deterioration.
party.
If, on the other hand, Bandara-
naike were to resist these pres-
sures, the people might con-
clude that moderate socialism
could not solve their problems
and might turn to the far left.
In this event, the most likely
beneficiaries would be the in-
dependent, nationalist, Trot- 25X1
skyite parties rather than the
Moscow-controlled Communist
SECRET
PART III PATTERNS AND PERSPECTIVES Page 12 of 12
Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
 Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1
Approved For Release 2007/10/23: CIA-RDP79-00927AO01600040001-1