CURRENT INTELIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A001700040001-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 42
• Document Creation Date: December 20, 2016
• Document Release Date: August 16, 2005
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• Publication Date: October 19, 1999
• Content Type: SUMMARY

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C L)
COPY NO. 14
OCI NO. 1783/58
3 April 1958
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
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CENTRAL INTELLIGENCE AGENCY
I I I OFFICE OF CURRENT INTELLIGENCE
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THIS MATERIAL CONTAINS INFORMATION AFFECT-
ING THE NATIONAL DEFENSE OF THE UNITED STATES
WITHIN THE MEANING OF THE ESPIONAGE LAWS,
TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS-
SION OR REVELATION OF WHICH IN ANY MANNER TO
AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
The Current Intelligence Weekly Summary has been prepared
primarily for the internal use of the Central Intelligence
Agency. It does not represent a complete coverage of all
current situations. Comments and conclusions represent
the immediate appraisal of the Office of Current Intelligence.
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V
CO FIOENTIAL
3 April 1958
OF IMMEDIATE INTEREST
Premier Khrushchev has re-
tained virtually intact the pre-
vious Soviet Council of Minis-
ters, reinforcing earlier indi-
cations that Nikolai Bulganin's
demotion from premier to chair-
man of the State Bank stemmed
from his disloyalty to Khru-
shchev during last June's lead-
ership crisis. Refurbishing of
the "inner cabinet" by the ap-
pointment of party presidium
members Frol Kozlov and Anasta
Mikoyan as first deputy chair-
men and Iosif Kuzmin, Dmitry
Ustinov, Aleksandr Zasyadko,
and Alexei Kosygin as deputy
chairmen of the Council of Min-
isters indicates that Khrushchev,
while reserving for himself full
powers in formulating policies,
intends to delegate responsibil-
ity for their day-to-day imple-
mentation. Bulganin had only
four deputies and no first depu-
ties.
The elevation of Mikoya.n
from deputy to first deputy
premier places him in a key
position of government respon-
sibility where he will continue
to provide.much of the behind-
the-scenes brain work for Khru-
shchev. Mikoyan, the cautious
Armenian, whose ability for
survival in the Soviet leader-
ship is unmatched among the pres-
ent top leaders, probably would
not be considered. for a front-
man position.
There are some indications
that Kozlov, who was transferred
from party boss of Leningrad to
chairman of the Russian Republic
Council of Ministers last Decem-
ber, was being groomed to replace
Bulga.nin as premier, but was
designated first deputy when
Khrushchev himself decided to
assume the top government job.
He nevertheless has clearly
been promoted and is presumably
in line for the premiership
should Khrushchev decide to re-
linquish it. D. S. Polyansky,
former first secretary of the
Krasnodar Krai whose career has
been spent almost entirely in
the party apparatus, replaced
Kozlov as premier of the Russian
Republic.
Of the four deputy chair-
men, apparently only Kuzmin,
chairman of Gosplan, will re-
tain a specific ministerial po-
sition. Zasyadko, judging by
his background as a coal produc-
tion expert, will probably super-
vise the heavy industry sector.
Kosygin will most likely bear
primary responsibility for light
industry, while Ustinov will
oversee the defense industries,
All ministers have been reap-
pointed including Foreign Min-
ister Gromyko, Defense Minister
Malinovsky, Agriculture Minister
Matskevich, Culture Minister
Mikhailov, and MVD chief Dudorov.
The replacement of Aleksandr
Domrachev by Konstantin Rudnev
as chairman of the State Com-
mittee for Defense Technology
and the substitution of Bulganin
for Vasiliy Popov as chairman
of Gosbank constitute the only
changes among State committee
chairmen. General Serov remains
as head of the KGB. There were
no structural changes in the
19 ministries and the 13 state
committees.
The State Planning Commit-
tee, the single most important
economic agency in the USSR, has
had some personnel readjustments
r
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3 April 1958
following general press criti-
cism of its failure to adapt
to new conditions resulting from
last year's industrial reorgan-
ization. Georgy Perov has re-
cently been promoted from depu-
ty to first deputy chairman of
Gosplan and Aleksandr Zasyadko
was apparently relieved as a
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CURRENT INTELLIGENCE WEEKLY SUMMARY
department head in connection
with his promotion to a deputy
chairman of the Council of Min-
isters. Three deputy chairmen
and three department heads of
Gosplan were given ministerial
rank. The position of two other
earlier identified deputy chair-
men is unclear.
Soviet Premier Khrushchev
probably expected the unilateral
suspension of all nuclear tests
announced by Foreign Minister
Gromyko to cause confusion,
friction, and indecision through-
out the Western world. The So=
viet move was intended not only
to place further American and
British tests in the worst pos-
sible propaganda light, but also
to thwart efforts to strengthen
NATO's defenses.
Gromyko made it clear that
the suspension of Soviet tests
would not be permanent unless
Britain and the United States
also suspend their tests. Al-
though he did not set any time
limit on the suspension, he
warned that disarmament would
not "continue to be carried out
unilaterally by the Soviet Union
alone, while the Western powers
meanwhile accumulate their arma-
ments." A massive Soviet prop-
aganda attack, already fore-
shadowed by the note delivered
on 28 March protesting the Amer-
ican establishment of a danger
zone in the Pacific for testing,
can be expected on the American
tests to be conducted this
spring and summer.
The USSR hopes that in
Britain the test suspension will
help left-wingers in the Labor
party force the party to take
a firm stand against nuclear
weapons tests and production in-
stead of merely advocating a
temporary test suspension.
In West Germany, Soviet
propaganda and diplomacy will
seek to strengthen efforts of
the Social Democrats to over-
turn the Bundestag's decision
on 25 March to equip West German
forces with modern weapons.
Gromyko launched a severe at-
tack on the "suicidal policy"
of the Adenauer government,
which he warned was creating a
new obstacle not only to German
unification but also to disarma-
ment. Gromyko's words fore-
shadow an intensified bloc prop-
aganda. campaign on this issue.
In France, the Soviet move
will give much-needed impetus
to the French Communists' cam-
paign against nuclear weapons
and missile launching sites.
For the last two years,
Moscow has tried to make the
test suspension issue the cen-
tral and overriding problem in
all disarmament discussions.
This tactic is part of the con-
tinuing Soviet effort to estab-
lish a distinction between con-
ventiona.l and nuclear weapons
in an effort to neutralize the
West's nuclear retaliatory capa-
bilities. It is an issue with
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 April 1958
wide public appeal, which will
be increased now that the USSR
has suspended tests.
The announcement of test
suspension and Gromyko's empha-
sis on the ease with which nu-
clear explosions can be detect-
ed suggest that if the issue
becomes a subject of negotia-
tion the USSR will put pressure
on the United States to scale
down its inspection requirements.
Moscow is likely to urge that
no inspection agreement is nec-
essary if Britain and the United
States follow the Soviet ex-
ample. In the case of nuclear
test suspension, as in other
areas of disarmament, the USSR
appears to prefer to take uni-
lateral steps that may force the
West to follow suit, rather than
to sign agreements that would
require any inspection.
The USSR has previously
announced troop cutbacks and
withdrawals from Germany and
might in the future announce a
unilateral pledge, contingent
on Western willingness to as-
sume a similar obligation, not
to use nuclear weapons or not
to deploy them`and build missile
bases in Europe. Gromyko, how-
ever, hinted that military coun-
termeasures would be taken in
Eastern Europe if West Germany
is armed with modern weapons.
Most Western European com-
mentators have pointed out the
propagandistic nature of the
Soviet statement, the absence
of provisions for controls, and
its timing. Government offi-
cials received the announcement
with a mixture of caution and
skepticism, while opposition
parties and press and, in gen-
eral, the governments and press
in the Afro-Asian world were
much more willing to accept the
Russian move as a sincere step
toward relaxation of tensions.
In Britain the Laborites called
on the government and the United
States to follow the Russian
lead. The Times, however, de-
clared both nations should first
conduct their scheduled series
of tests. Prime Minister Mac-
millan, pointing out the need
for tight controls, said he was
eager to secure agreement on
disarmament but not at the price
of endangering British security.
In West Germany the govern-
ment and virtually all segments
of the press welcomed the Soviet
announcement provided it is more
than a propaganda move. The
progovernment press questioned
Soviet motives while pro-Socia.l-
iqt rapers tended to interpret
the announceivio it as a Soviet con-
cession on the disarmament is-
sue, and called on the US and
Britian to renounce testing.
Chancellor .Adenauer, expressing
the government's hope that the
proposals would lead to world-
wide controlled disarmament, said
that, in such a case, implemen-
tation of the Bundestag decision
to equip the West German Army
with atomic weapons would not be
necessary.
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3 April 1958
In France, where most peo-
ple are favorably disposed to-
ward the idea of French acqui-
sition and testing of weapons,
the announcement was received
with a good deal of skepticism.
The United Arab Republic
welcomed the Soviet decision
in an official statement as in
harmony with the Bandung con-
ference resolutions and hoped
that it might lead to general
agreement on ending nuclear
tests and the.use of nuclear
weapons. Newspapers played up
Gromyko's call for a similar
step by the US and Britain and
the West's "suspicion" of the
Russian move.
Australian reaction followed
the Western European pattern.
Foreign Minister Casey publicly
advised caution but declared
the announcement to be a move
in the right direction if Mos-
cow intends to negotiate a
practical disarmament agreement
with the West. Opposition lead-
er Evatt warned that the offer
should not be distrusted as
mere propaganda.
In general, Japanese re-
action to the Soviet announce-
ment was enthusiastic. Foreign
Minister Fujiyama said the So-
viet declaration was "very wel-
come" and some Japanese offi-
cials pointed out that though
the proposal had obvious polit-
ical aims, the US and Britain
would lose the support of world
opinion if they do not follow
the Soviet lead in halting nu-
clear experiments.
Indian officials called
the Soviet move a step toward
relaxation of world tension,
and Nehru is understood to have
welcomed the news. The Ameri-
can arguments in favor of hold-
ing nuclear tests as scheduled
were denounced and the comment
made that though the Russians
may be somewhat ahead as a re-
sult of their recent tests, the
bomb, whether ".clean" or
"dirty," is unlikely to be used
unless a nation faces extinc-
tion anyhow.
Israeli-Syrian Border
Incidents on the Israeli-
Syrian border in the vicinity
of partially drained Lake Hula
seem likely to continue as long
as the Israelis insist on con-
ducting construction operations
under heavy guard near or in-
side the Israeli-Syrian demil-
itarized zone. The area has
been the scene of serious in-
cidents on several occasions
in the past because of this
kind of Israeli activity; the
Arab reaction is the more vio-
lent inasmuch as a substantial
portion of the land in the Is-
raeli-controlled demilitarized
zone is claimed to be Arab prop-
erty.
While the Israelis are in
a sense testing the reaction of
the United Arab Republic, they
are probably reluctant to push
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 April 1958
F`
Gazia to
- - Armistice Line
Demilitarized Zone
Oil pipeline
Main motor road
0 MILES to
I I
matters very far at this time, The Nasir regime's reaction
since prolonged violence might to these incidents has been to
frighten away the tourists the take a strong propaganda line
Israeli Government expects dur- domestically, exaggerating the
ing the country's celebration number of Israeli casualties,
of its tenth anniversary of to let other governments know
independence. Israeli forces that it takes a "very serious
in the area nevertheless have view" of the developments, and
been reinforced, and the gov- to make an appeal to the UN.
ernment has stated it is de- Cairo has withheld for the
termined to maintain its moment, however, the request
"right" to conduct civilian op- j for a meeting of the UN
erations of this kind. Security Council which it
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 April 1958
publicly announced it would
make.
A recrudescence of activ-
ity on the Arab-Israeli border
seems likely to have an impact
on the situation in Saudi
Arabia. So far, Crown Prince
Faysal appears to be moving
cautiously in exercising his
powers, but his bitterness to-
ward Israel remains intense
and this could lead the Saudi
Government to play a more ac-
tive role in the Arabs' anti-
Israeli activity. The 30-to-31
vote of the Geneva Law of the
Sea Conference, which in effect
supported Israel's contention
that it has a right to use the
Gulf of Aqaba even though the
whole gulf might be claimed as
Arab territorial waters, might
also stir the Saudis into some
gesture of defiance. Nasir
has long sought to encourage
the Saudis into an act of this
kind, which presumably would
help bring them under his own
influence by leading them to
seek his help.
Lebanese President Chamoun
has not yet announced his in-
tentions on running for the
presidency again, but is inten-
sifying his maneuvers to feel
out the opposition and assess
the strength of his support.
He apparently is assured of suf-
ficient strength in the Lebanese
Parliament to be able to change
the constitution to permit him
self to be re-elected. However,
the opposition is relying more
heavily on force, particularly
the instigation of civil dis-
order with its implied threat
of civil war, to intimidate
the President's supporters and
press him to abandon the idea
of a second term.
in 1952.
Clashes between demonstra-
tors and police in the heavily
Moslem town of Tyre this week
have been taken as the kind of
manifestation Chamoun's oppo-
nents,: with Egyptian and Syrian
help, may be prepared to incite.
Lebanese security chiefs con-
tinue to take a gloomy view of
the chances of maintaining order
if Chamoun decides to run, and
the President apparently has
not yet obtained clear assur-
ances from General Shihab, com-
mander of the army, that the
military would step in force-
fully in order to support Cha-
moun. The opposition seems to
be counting on Shihab's playing
a more neutral role, and, in
the event of widespread dis-
order, stepping in to maintain 25X1
an interim government as he did
in somewhat similar circumstances
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 April 1958
The westward overland drive
of the Indonesian Government
forces in Central Sumatra to-
ward the rebel centers of Padang
and Bukittinggi has slowed some-
what because of supply difficult-
ties, rugged terrain, and the in-
creased dissident resistance.
The furthest points reached at
last report were Bangkinang on
the Pakanbaru-Bukittinggi road,
which was occupied on 28 March,
and Sungai Langsat on the road
linking Padang and South Sumatra,
about 29 March. The lull in
activity may also have been im-
posed to give the Indonesian Air
Force an opportunity for air-
craft maintenance and for pre-
paring paratroops for further
action.
Indications of activity on
the Tapanuli border in North
Sumatra have been reported.
Government troops are reported
grouping in and around Prapat
and dissidents around Balige.
The local commander in Tapanuli
has so far insisted that he is
neutral. He has, however, per-
mitted dissident troops to enter
his command and apparently to
recruit additional forces there.
In Padang and Bukittinggi,
dissident leaders are dealing
with a counterrevolution within
their own ranks and have arrest-
ed several officials and fired
The revolutionary
government is also encountering
some reluctance among officers
of the local Mobile Brigade;
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 April 1958
they are willing to perform po-
lice duties but refuse to de-
fend positions against an attack
by Djakarta. forces.
The American army attachd
has been informed that an all-
out offensive against Padang and
Bukittinggi, including air
drops, will begin about 8 April.
Djakarta forces, on the
west-central coast of Celebes,
reinforced by sea with two bat-
talions, on 2 April reoccupied
two towns in North Celebes--
Donggala and Palu.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 April 1958
NOTES AND COMMENTS
UAR President Nasir is to
visit the USSR the last week in
April for about two weeks. His
trip may set the stage for a
return visit to Cairo by Khru-
shchev.
While Nasir is in the So-
viet Union--he is scheduled to
attend the May Day parade and
to tour places as far afield
as Tashkent--the Soviet leaders
can be expected to use the visit
to demonstrate the USSR's strong
support for Nasir's brand of
Arab nationalism and neutralism.
Khrushchev probably will also
take great pains to try to re-
move Nasir's suspicions of ul-
timata Soviet aims in the Mid-
dle East. Nasir himself is
reported to desire a discussion
of the basic Soviet stand on
the area and to talk about the
Palestine problem in particular.
aid offers of high propaganda
value even if they contain noth-
ing essentially new. While
Nasir presumably does not want
to increase Egypt's already
heavy dependence on Soviet aid,
economic pressures, especially
Egypt's critical foreign ex-
change shortage, are likely to
lead him to try to make some
kind of deal to obtain hard cur-
rencies for Egyptian cotton.
Nasir will be vulnerable
to Soviet persuasion and pres-
sure in that he apparently feels
he must balance the suppression
of Communist elements in Syria--
a "pro-Western" move in his vo-
cabulary--with a pro-Soviet ges-
ture. He probably also feels
under some pressure in his new
position as head of the UAR, and
may well wish to come home with
some seemingly spectacular suc-
cess for the UAR in its first
The Soviet leaders may seek
to send Nasir home with various
major foreign policy venture
The USSR is beginning to
implement the program called
for by the economic aid agree-
ments signed with Egypt and
Syria in late 1957. Teams of
Soviet specialists and techni-
cians began arriving in these
areas during March.
The agreements, which pro-
vide for the first Soviet eco-
nomic assistance loans to Syria
and Egypt, may be adjusted and
coordinated in the name of the
United Arab Republic during
Nasir's forthcoming visit to
Moscow. The USSR probably would
be willing to make the neces-
sary readjustments.
The head of the Soviet
Directorate for Manpower and
Technical Instruction arrived
in Cairo on 26 March with eight
assistants to discuss implemen-
tation of an instruction pro-
gram to be set up under the So-
viet-Egyptian economic and tech-
nical cooperation agreement.
This agreement, concluded in
November 1957, established a
$175,000,000 low-interest line
of credit repayable over a 12-
year period.
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3 April 1958
Some 40 contracts have al-
ready been signed under this
agreement for construction of
spinning mills, delivery of
machinery and equipment, and
other projects essential to
the Egyptian Five-Year Plan.
The agreement specified that
Soviet technicians were not
mandatory, but some specialists
have already arrived in Egypt.
The first of the Soviet
missions provided for under
the Soviet-Syrian $168,000,000
aid agreement concluded in
October 1957 began arriving in
Syria on 23 March. At least
50 Soviet economic specialists
have arrived since that time.
A topographical mission of 22
experts with four aircraft
will conduct a mineral and oil
survey. Another mission con-
sisting of irrigation, power,
and dam experts arrived shortly
thereafter. Additional Soviet
experts are expected to in-
vestigate transportation
facilities, another major
economic area to be de-
veloped with Soviet assist-
PEIPING'S m'FOREIGN AID ACTIVITIES .IN SOUTH AND SOUTHEAST ASIA
Communist China's latest
venture in the foreign aid
field is a $20,000,000 loan to
Indonesia. Under the loan Pei-
ping is shipping rice and tex-
tiles worth $15,000,000 for
sale in Indonesia, the proceeds
to be used to finance the local
construction costs of a textile
factory. With the remainder
of the loan, the Chinese have
agreed to supply textile ma-
chinery to equip this plant.
Indonesia will repay the loan
by exports to China over a ten-
year period. If this arrange-
ment proves successful, it may
prompt other Asian countries
to arrange for similar loans
from China, as this program
largely overcomes the underde-
veloped areas' lack of domestic
funds for economic development
projects.
The Indonesian loan meets
China's short- and long-range
goals of quickly introducing
Chinese goods into local mar-
kets, and, through repayment
provisions, assures the develop-
ment of future trade relations.
During 1957 Peiping's f or-
eign aid program cost about
$185,000,000, and a similar
amount--equivalent to 3.7 per-
cent of China's total planned
expenditures--has been budgeted
for 1958. At least 25 percent
of this will be used to fulfill
China's agreements with South
and Southeast Asian countries.
This year for the first time
China's economic aid to free-
world nations will include
shipments of Chinese equipment.
Under its new loan program,
initiated in December 1957,
China has already concluded
four agreements,including the
loan to Indonesia. Burma is
to receive $4,200,000 worth of
machinery for a textile factory,
and Ceylon is to get economic
assistance worth $10,500,000
for flood rehabilitation. In
its first moves to support the
bloc's economic offensive out-
side its own area of major in-
terest in South and Southeast
Asia, Peiping gave Egypt $5,-
000,000 in foreign exchange fol-
lowing the Suez crisis and con-
cluded a $16,300,000 interest-
free loan with Yemen in January
1958 for Chinese steel and heavy
machinery and technical assist-
ance.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 April 1958
CHINESE COMMUNIST AID TO FREE WORLD COUNTRIES
(in millions of dollars)
24952 3 APRIL 1958
90 120 150
China's first aid offers
to the free world in 1956 were
limited to grants. Both Cam-
bodia and Nepal received gifts
of $22,400,000 and $12,600,000
respectively. Cambodia is re-
ceiving this aid in the form of
Chinese goods worth $13,000,000
to create counterpart funds for
Cambodian construction projects.
Although Cambodian consumers
have shown reluctance to pur-
chase some of these goods, the
Cambodian Government, eager to
secure revenues, has engaged in
a campaign to increase their
consumption.
Nepal in 1957 and 1958
has received $4,200,000 in
rupees which China secured
from its favorable trade balance
with India, and during the
next two years China will
deliver the remainder in goods...
In 1958, China will also make
its first delivery of"consumer
goods to Ceylon under a $15,-
750,000 five-year grant to
assist in the financing of
Ceylon's rubber replanting
program. (Prepared 25X1
by ORR)
SOVIET PROGRAM FOR CONSUMER WIDENED
A Soviet decree on 19 March and footwear within two years
calling for an increase in the is the first step in carrying
output and improvement in the out tiie goal, announced by
quality of children's clothing Khrushchev inhis 40th
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3 April 1958
anniversary speech, of provid-
ing "sufficient" clothing and
footwear for the Soviet popula-
tion within five to seven years.
A larger program for reaching
this goal may follow, placing
the clothing program in step
with the meat and milk. and
housing programs.
Judging from his 15-year
forecast of footwear output in
the above speech, however, any
effort to match the United
States in per capita output
must extend well beyond seven
years. Khrushchev stated that,
according to preliminary esti-
mates, Soviet output of leather
footwear will reach a level of
from 600,000,000 to 700,000,000
pairs in 15 years. On the
basis of the present rate of
population increase, this would
amount to 2.5 pairs per person,
still below the 1957 American
output of three pairs per
capita.
The five- to seven-year
program was announced at a time
when output of clothing and
footwear was falling well below
the increases required to meet
the original 1960 goals. Out-
put of clothing in 1957 may
even have declined from the 1956
level. Announcement of both
this program and the decree on
children's clothing therefore
serves also to divert public at-
tention from the present situa-
tion,
The three programs--meat
and milk, housing, and clothing
and footwear--were being dis-
cussed at the time of the 20th
party congress early in 1956.
At that time Soviet planner
Saburov said informally that
the USSR could match the United
States in food consumption in
three years and clothing in
seven years. He added that the
housing shortage could be over-
come in ten years. Although
these claims were not presented
as goals for the Sixth Five-Year
Plan (1956-60), steps have since
been taken to carry out certain
features of them. The meat and
milk program was launched in
the spring of 1957 and the 10-
12 year housing program initiated
in the fall of 1957.
Official statements on the
forthcoming Seven-Year Plan
(1959-65) emphasize clothing,
and it is likely that the plan,
when announced, will place more
emphasis on light industry. This
may already have been decided
on, and a two-phase program
worked out with children's cloth-
ing to be improved first--pos-
sibly at the expense of adult
clothing. This would be fol-
lowed by the second phase aimed
at "satisfying" the demands of
the entire population by the
end of the Seventh Five-Year
Plan (1961-1965).
The long-range success of
the clothing and footwear program
will depend on the measure of
success achieved in the expan-
sion of agriculture and of the
artificial and synthetic fiber
and leather branches of the
chemical industry, marked for
expansion under the 1958 and
1959-65 plans, and on the avail-
ability ' of new, modern produc-
tion equipment. Further aid
may also come from increased
imports of raw materials from
underdeveloped countries.
(Prepared by ORR) 25X1
Four underground detona-
tions of large amounts of high
explosives have been announced
by the Soviet press
The first three
Foccurre n China during 1956
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 April 1958
In August 1957, a Soviet
publication reported the use
of 1,640, 4,000,and 9,200 tons
of high explosives to open a
large pit mine near Lanchou in
Kansu Province,. Communist China,
in July, November, and December
1956. The work was carried out
by engineers of the All-Union
Office for Explosions The
publication noted that other
explosions had been set off to
open a deep cut for a rail line
being built between Paochi and
Chengtu and that a mountain
ridge had been cut through twice
by "gigantic blasts" on the
course of the same railroad.
25X1 USAF
Between 22 December 1957
and 9 February 1958, four sepa-
rate Soviet news media reported
the "recent" underground detona-
tion of 1,000 tons of high ex-
plosives in a cell or chamber
140 feet underground near Tagan-.
sai, northwest of Tashkent, in
the Uzbek SSRO It was alleged
to have been the latest of a
series of such experiments con-
ducted by the Soviet Academy of
Sciences,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 April 1958
of even greater amounts of high
explosives. They referred
specifically to a detonation of
30,000 tons of explosives in
1959 to widen the bed of the
Angara River and thus increase
the flow of water into the Bratsk
hydroelectric project reservoir.
25X1
25X1
USAF
pared
(Prc-
n by ORR) 25X1
SOVIET TROOP WITHDRAWALS IN EASTERN EUROPE
The USSR has announced it
will continue using high-ex-
plosive underground charges.
The report of the blasting
operations in China stated
that still more powerful ex-
plosions would open a large
ore mine in Kazakhstan, and
all the articles on the Tag-
ansai explosion claimed that
the information gained there
would be applied to the use
The USSR apparently has
almost completed the troop
withdrawals from East Germany
and Hungary that it announced
in January. Completion of the
announced withdrawals would
leave 20 line division in East
Germany, and more than twice as
many Soviet troops in Hungary
as were there prior to the 1956
revolt.
In East Germany, all but one
of the ten departure ceremonies
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3 April 1958
scheduled between 27 February
and 10 April have taken place.
Only a few hundred troops and
small quantities of equipment
have been involved in these
ceremonies, but the number of
trains which have departed has
been more than sufficient to
transport the 41,000 men the
USSR announced would be with-
drawn. An uneven loading of the
trains with men, equipment, and
personal effects and a redistri-
bution of equipment within the
Group of Soviet Forces in Ger-
many (GSFG) make an accurate
survey impossible. No complete
tactical unit has-been withdrawn
from Germany.
A reorganization of Soviet
forces in Germany in the past
year reduces the impact of the
withdrawals. Also, only trained
Soviet personnel will be sent
to Germany in the future whereas
formerly one third of the per-
sonnel in the GSFG at any one
time consisted of raw recruits.
The withdrawal, moreover, would
still leave-over 300,000 Soviet
troops in Germany.
In Hungary, Soviet troops
have been withdrawn from at
least two towns and departure
ceremonies have taken place in
five others. Western observers
have stated that complete with-
drawal from all of these towns
would account for most of the
announced 17,000 reduction in
Soviet forces. Prior to the 25X1
revolt in the fall of 1956, two
Soviet line divisions were lo-
cated in Hungary.
BELGRADE SHOWS INCREASING PARTIALITY TO BLOC FOREIGN POLICIES
The Yugoslav press, for
the present at least, has aban-
doned its position of imparti-
ality on questions of East-West
negotiations, even though Yugo-
slav officials may still attempt
to define Belgrade's interna-
tional position as uncommitted.
Belgrade may be responding to the
friendly treatment accorded it
by the Soviet press and radio
after virtual silence since No-
vember which had annoyed the
Yugoslavs. Tito may hope that
if he increases his support, the
bloc will be less inclined to
condemn his ideological differ-
ences with the Soviet camp which
perhaps prompted his talks with
Hungary's Kadar last week.
Moscow's treatment of Yugo-
slavia possibly resulted from
Tito's complaint in a speech on
16 March that Soviet propaganda
was ignoring Yugoslavia, Moscow
has since emphasized Yugoslavia's
devotion to peace and agreement
with Soviet policy on interna-
tional issues such as disarma-
ment and a summit conference.
It summarized the foreign-policy
aspects of Tito's speech approv-
ingly and commented favorably
on the Yugoslav elections--even
congratulating Belgrade on the
results.
In supporting Soviet poli-
cy, Belgrade has been vitupera-
tive on the subject of the estab-
lishment of rocket bases in
NATO countries and nuclear arma-
ment for West Germany. Almost
the only comment on the possible
establishment of Soviet rocket
bases in the Warsaw Pact area,
however, has been a notation
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 April 1958
that the USSR would probably
abandon this idea if the West
canceled its plans.
The West Germans are now
the chief Yugoslav target. Most
editorials depict German mili-
tarism as again threatening the
world. The American Embassy
in Belgrade believes the Yugo-
slavs may plan to take the is-
sue of West Germany's nuclear
armament before the UN. In ad-
dition to genuine anxiety re-
garding resurgent German mili-
tary strength, the Yugoslavs
would probably regard their move
as more likely to gain them in-
creased international prestige
than the issue of rocket bases
in Italy which they nevertheless
continue to emphasize in their
press, Likewise, Tito may hope
that his involvement with Bonn
on this issue will lead to an
invitation to a summit meeting.
While the Yugoslavs may feel
some concern over the centrali-
zation of Khrushchev's power,
Tito lost no time in congratu-
lating him on his election. At
the same time, he alluded to
Yugoslav independence from the
Soviet bloc by calling for con-
OPPOSITION TO POLAND'S NEW
After protracted indecision
and some compromise with the
Polish regime's more conserva-
tive economists, party leader
Gomulka has given the go-ahead
to the liberal economists who
favor a radical reorganization
of the country's economy. The
first stage of the reorganiza-
tion plan was approved by the
11th party plenum in February
and parliament moved quickly to
implement it; the party now has
announced it intends to proceed
in 1959 with further liberal
economic measures. While some
leaders who remain opposed to
tinuing cooperation between Yugo-
slavia and the USSR. The Yugo-
slavs also promptly supported
Gromyko's announcement that the
USSR was discontinuing nuclear
testing. A Yugoslav spokesman
declared that "a negative reac-
tion to this decision or refusal
for motives of distrust would
not be in the interest of peace."
Tito undoubtedly is con-
cerned over how the Sino-Soviet
bloc will treat Yugoslavia's
forthcoming party congress and
its controversial program. He
may have hoped to gain some in-
dication of the bloc's inten-
tions by accepting Hungarian
party leader Kadar's long-stand-
ing invitation for a meeting.
Likewise the announcement
at this time that Tito will
make: a return visit to Pol-
ish party leader Gomulka this
spring appears to be a fur-
ther attempt to elicit a fav-
orable reaction from the bloc
to the Yugoslav congress.,Tito
is aware of continuing So-
viet suspicions regarding
Yugoslav influence in Poland.
ECONOMIC PATTERN OVERCOME
the moves have lost their posts,
other former critics have pub-
licly declared their support.
Although the basic reor-
ganization was forecast at the
party's eighth plenum in Octo-
ber 1956,. it was not acted on
until the 11th plenum at the
end of February 1958. Conser-
vative regime economists had
blocked earlier adoption of the
program, which they considered
ideological deviation as well
as a dangerous experiment at a
time of extreme economic strain.
Liberal economists, however,
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3 April 1958
argued that the only cure for
Poland's economic ills was a
drastic overhaul, an argument
that became more convincing as
stopgap measures failed to im-
prove the situation.
The details of the indus-
trial decentralization plan
were published on 11 February
in Trybuna Ludu, the party news-
paper. Although there was evi-
dence that the plan was an ac-
commodation in part to the con-
servatives, it nonetheless pro-
vided for significant decentral-
ization and liberalization in
industrial management. The
structural reorganization, which
is to be completed during 1958,
will grant greater powers to
the industrial enterprises them-
selves.
One of the steps already
taken in the reorganization--
the reduction of overstaffing
in industry--was launched with
considerable propaganda at the
party's 11th plenum. The cam-
paign to justify this step was
necessary to combat both fear
of the resultant unemployment
and an anticipated tendency on
the part of enterprises to un-
dermine the move.
The party theoretical jour-
nal, Nowe Drogi, explained in
March t the 11th plenum dis-
cussed only the tasks to be com-
pleted in 1958 and did not take
up the second and third stages
of the economic reorganization.
The second stage--price and
wage reform--is to be accom-
plished in 1959. The third
step to be taken envisages the
promotion of economic competi-
tion among state and private
enterprises, which would force
weak economic units to make
profits or go out of business.
The long delay in carrying
out this basic economic reor-
ganization indicates the in-
tensity of the controversy over
the plan within the party. Go-
mulka not only has secured cen-
tral committee approval for the
first stage, which was the most
unpopular, but he has placed
the party on notice that its ap-
proval for later stages will be
expected. The rapid implementa-
tion of the first stage of the
plan, as well as the support
publicly accorded it by its
former critics, constitutes a
victory for Gomulka in achieving
unity within his faction-ridden
party. The thoroughness with
which the regime is able to car-
ry out the dismissal of surplus
workers, a potential source of
industrial unrest, will be a
measure of Gomulka's ability
to command the support of medi-
um-level functionaries on whom
he must depend for the execu-
tion of his programs.
(Concurred in by ORR
The Mongolian People's
Revolutionary (Communist) party.
held its first congress since
November 1954 in Ulan Bator be-
tween 17 and 22 March. First
Secretary Dashin Damba dominated
the proceedings and showed him-
self to be in control of the
party's organization. Premier
Tsedenbal outlined a new three-
year state plan (1958-1960) di-
rected at halting a serious drop
in the number of livestock and
increasing centralized control
over the herds. Certain seg-
ments of the Mongolian intelli-
gentsia were sharply warned
against revisionism and told
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SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
3 April 1958
that steps would be taken to
eradicate such tendencies.
The high-level character
of the delegations from other
Communist countries attending
the congress reflects a plan
to enhance Outer Mongolia's in-
ternational standing
as a sovereign state.
In contrast to the
low-level party of-
ficial who headed
successes, but their figures
on livestock herding, the basic
element in the Mongolian econ-
omy, disclose another picture.
The number of cattle declined
by 1,100,000 in 1956-57, and
the regime failed to reach its
goal for 1953-57 by almost
OUTER MONGOLIAN POLITBURO
MARCH 1958
the Soviet delega- POLITBURO
tion in 1954, this
year's chief Soviet
delegate was Nikolai
Ignatov, a full mem-
ber of the Soviet.par-
ty presidium..Ignatov
termed Mongolia an
equal member of the
commonwealth of Com-
munist countries and
hailed it as an ex-
ample to Asia and
Africa of a backward
state which, with
the aid of more ad-
vanced countries,
was bypassing capi-
talism in progress-
Damba, First Secretary
Surunjab, Second Secretary
Tsedenbal
Damdin
GOVERNMENT
POSITION
Chairman, Presidium
Chairman, Council of Ministers (Premier)
Dugersurun Deputy Chairman, Council of Ministers;
Minister of industry
Sambu
Baljinyam
Lhamzhin
Tsende -
CANDIDATE MEMBERS
Sam dan
Tumur-Ochir
Balgan
Zhagvaral
ing toward socialism.
Damba outlined the party's
goals for the future. He at-
tacked Choibalsan, Stalin-like
leader of Outer Mongolia from
1932 until his death in 1952,
as having been an object of
exaggerated praise, adding that
the personality cult surround-
ing him had led to flagrant
violations of "revolutionary
legality" and a downgrading of
the role of the party. This
was the first time Choibalsan
had been attacked by name, and,
while Damba advocated collec-
tive leadership, the attack in
itself reflects his own author-
ity and stature.
Both Damba and Tsedenbal
praised the country's economic
Deputy Chairman, Presidium
First Deputy Chairman, Council of Ministers;
Chairman, State Planning Commission
Deputy Chairman, Council of Ministers;
Minister of Agriculture
Deputy Chairman, Council of Ministers
4,000,000. Damba urged indi-
vidual stockbreeders, who com-
prise 65 percent of the herders,
to join agriculture unions, but
maintained that cooperative herd-
ing would be established "on a
purely voluntary basis."
Damba accused certain ele-
ments of the intelligentsia of
expressing opinions alien to
party policy, questioning the
benefits of economic relations
with the Soviet Union, and under-
valuing the role of the working
class in a people's democracy.
Damba declared that revisionism is
the main deviation threatening
the Communist movement and as-
serted that all such tendencies
in Mongolia would be eradicated.
ORR)
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 April 1958
CYPRUS
Explosions and armed at-
tacks marked 1 April, anniver-
sary date of the campaign of
violence by EOKA, the Greek un-
derground organization, which
began in 1955 and ended in
March 1957. The renewed vio-
lence which began four weeks
ago continues to be restricted
to government installations-
however, and British personnel
apparently remain immune.
The renewed sabotage coin-
cided with initiation of a pas-
sive resistance campaign among
Greek Cypriots. Despite EOKA
threats that it would enforce a
boycott of British goods, this
campaign has not been particu-
larly successful except in a
few nationalist centers.
Growing tension in the
Greek Cypriot community over
failure to advance toward a
Cyprus settlement was somewhat
dissipated by Governor Foot's
decision to permit processions
on Greek Independence Day--25
March. No serious incidents
were reported in the separate
demonstrations held by'left-
and right-wing Greek Cypriots.
In Greece, where national
elections are now scheduled for
11 May, the handling of the
Cyprus problem during the past
two years by the government of
former Premier Karamanlis will
certainly be a major campaign
issue. Archbishop Makarios,
still in exile in Athens, re-
cently renewed his demand that
Britain negotiate a settlement
directly with the Cypriots and
warned that unless resolved
soon, the Cyprus issue would
again be placed on the agenda
of the General Assembly.
Both London and the colo-
nial government in Nicosia appar-
ently feel the Cyprus problem
must be solved soon because of
the desire of the British peo-
ple to rid themselves of the
issue, the relatively concili-
atory attitude of the Greek
Government at this time, and
the danger that relations with
the Turks will deteriorate
further.
Turkish Cyrpiots and much
of the press in Turkey have
grown increasingly hostile to
Governor Foot since British
security forces killed several
Turkish Cypriots in suppressing
Turkish riots in January. Foot's
action in permitting the 25
March processions has given
further impetus to this hos-
tility.
AFRICAN NATIONALISTS STRENGTHEN POSITION IN KENYA
The sweeping electoral vic-
tories won in March by African
Nationalists in Kenya pledged
to the revision of the recently
imposed constitution foreshadow
an increase in political and
racial tension in this British
crown colony. Although the
leadership of Tom Mboya, the
most prominent African leader,
has recently been repudiated by
other African politicians, the
unity of the Africans in dealing
with the Kenya Government is
probably not endangered.
The eight African legisla-
tors, who received an impressive
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SECRET %me
CURRENT INTELLIGENCE WEEKLY SUMMARY
3 April 1958
vote of confidence from the
African electorate when candi-
dates supported by them won the
six new African seats, refused
to participate in the government
last year because the African
community had not been given
enough legislative seats. The two
leading candidates, one of whom
is an American-educated instruc-
tor at the local Royal Technical
College, scored overwhelming
victories despite the opposition
of the Kenya administration.
Both men promised to help
"smash" the recently imposed
Lennox-Boyd constitution which
does not satisfy African polit-
ical demands and continues
European control in Kenya.
They demand universal suffrage,
strictly limited immigration,
and removal of European privi-
RU)i
lelg.7
*%%Nairohi"V;
T A NGANYI KA
(UK)
leges, including exclusive rights
in the fertile "White Highlands"
agricultural area.
The victory of the nation-
alists is likely to intensify
their opposition to Kenya's
present form of government which
gives the 60,000 Europeans a
disproportionate influence to
that of the African population
of about six million, but prob-
ably does not presage a return
to the violence of the Mau Mau
period.
The African campaign for
further political advancement
will almost certainly not find
widespread support in Britain.
The Conservative. government
supports the constitution which
it imposed last fall, and Labor
party representatives have told
the Africans to cooperate with
the government if they expect
any redress of grievances.
Tom Mboya, secretary of the
Kenya Federation of Labor and
leading African spokesman since
March 1957, was recently suc-
cessfully challenged by other
African leaders while he was out
of the country in Ghana. They
ousted him from his position as
leader of the elected African
members of the legislative council.
There does not appear to be any
split, however, in the Africans'
ranks over their noncooperation
with the Kenya
Government.
Mboya, who
still appears to
be the most prom-
ising of the Af-
rican leaders, is
planning to start
an independent
African newspaper
and to assume open
leadership of the
People's Conven-
tion party (PCP).
Despite
Kenya's law a-
gainst colony-
wide African
parties, Mboya
apparently hopes to transform
the PCP, a relatively strong
political organization restrict-
ed to the Nairobi area, into
a national organization. For
the present he will probably
avoid any overt organic ties be-
tween district branches and
thus avoid violating the Kenya
law. Mboya is likely to use
weapons such as strikes, boy-
cotts, and passive resistance,
but will probably avoid, at
least for the foreseeable
future, the use of violence to 25X1
secure concessions from the
European settlers and Kenya
administration.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 April 1958
WEST INDIES FEDERATION FACES INSTABILITY
The narrow margin of vic-
tory gained by the Federal La-
bor party (FLP) on 25 March
will slow development of the
new West Indies Federation's
cohesiveness and may result in
new elections soon after the
formal inauguration of the fed-
eration on 22 April, which will
be attended by Princess Margaret.
The FLP has 23 seats plus
one additional supporter, com-
pared with 21 for the Democratic
Labor party (DLP) following the
tentative switch to the DLP of
two Grenada representatives
elected under the FLP. Further
hard bargaining by the small af-
filiates of the major parties
could alter this margin even be-
f ore the inauguration.
If the present line-up is
maintained, Barbados' Sir Grant-
ley Adams will become prime min-
ATLANTIC OCEAN
CAYMAN
ISLANDS
JAMAICA
Caribbean
T RAGUA
ister. The FLP's prospects for
running a strong or stable
government are dimmed by its
defeat on the two major islands
of Jamaica and Trinidad. The
unexpected majority gained by
the DLP in Trinidad reflects
the increasing political in-
fluence of the East Indians
in an area of Negro dominance
and suggests that racialism
may develop into a cause for
dissension.
The defeat of the party of
Trinidad's Chief Minister Eric
Williams, who had demanded that
the United States release its
naval base at Chaguaramas for
use as the federal capital
site,`will probably diminish
pressure on this issue. Con-
troversy may be revived, how-
ever, by the publication in
late April of the joint US -
UK - West Indies Commission
Sea
Antigua
St. Christopher' I
MontserratGuadeloupe
,Dominica
Martinique
4St: Lucia
St. Vincents
''
Grenada a
=
Chaguaramas Tobago
? Waller Airfield
TRINIDAD
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 April 1958
report, which is expected to
recommend against either relo-
cation or partition of the
Chaguaramas base.
The British appear to have
been encouraging West Indian
leaders to seek partition of
the base, which would practical-
ly destroy its military useful-
ness. The FLP might adopt this
line, but the opposition DLP
advocates using the deactivated
air base of Waller Field, which
the United States has previous-
ly offered to release.
The new House of Repre-
sentatives is expected to con-
centrate on finding a site for
the federal capital and obtain-
ing foreign development aid,, and
will work cautiously toward a
customs union and freedom of
movement for individuals among
the islands. The federation
needs to supplement its meager
economic resources and small
federal budget of $5,600,000.
Adams has estimated it will
take five years to attain a
customs union, partly because
of opposition from prosperous
Jamaica, which also objects to
freedom of movement for fear of
an influx from the poorer
overpopulated islands.
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SIGNS OF INSTABILITY IN PARAGUAY
Paraguayan President
Stroessner, the last remaining
South American dictator, faces
more political opposition than
at any time since he took over
in 1954, and he appears to have
weakened his vital military sup-
port. Economic conditions, im-
proved in part by a US-backed
stabilization program, have
played no significant part in
the popular disaffection, but
dissidence within the ruling
Colorado party has increased
and the Catholic church for
the first time has criticized
the regime.
The loyalty of the army,
bulwark of Stroessner's regime,
may have been substantially
weakened this week by the ad-
ministration's decision to rely
on the Colorado party's armed
Guardia Urbana, rather than the
army, in heading off a coup
threatened for just before
Easter. The army is reported
"tense and strongly opposed" to
calling out the party guard.
Such a coup, reportedly planned
by three opposition groups
SECRET
aided by unidentified army ele-
ments, would seem less of a
danger to the regime than are
the new signs of army disaffec-
tion. An attack by 15-40 per-
sons on military outposts near
the border town of Encarnacion
on 31 March has been termed a
according to the Ameri- 25X1
can Embassy in Asuncion.
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3 April 1958
Democracy has received in-
creasing lip service in Para-
guay since Perez Jimenez' oust-
er from Venezuela on 23 January.
Stroessner still went through
with his own plebiscite-type
re-election on 9 February,,but
he has "promised" free munici-
pal elections soon, and his
government has shown unusual
leniency toward antigovernment
demonstrations in the past few
weeks.
The Catholic Church has now
spoken out against political un-
rest. The Archbishop of Asun-
cion issued a pastoral letter
on 19 March which was concilia-
tory in tone but spoke of wide-
spread unrest and a crisis of
power in government. A parish
priest, speaking without church
authority, has made a series of
highly critical speeches calling25X1
for a general amnesty, freedom
of speech, and more attention to
the people's needs.
The unity policy endorsed
by the three major Venezuelan
parties and the Communists when
the Perez dictatorship was over-
thrown in January is likely to
be tested shortly as the gov-
erning junta seeks their cooper-
ation on such issues as the
nature and date of elections for
restoring constitutional govern-
ment.
The leaders of the three
major parties--the leftist
Democratic Action (AD), the
leftist Democratic Republican
Union (URD), and the moderate
COPEI--hold divergent views on
the election question. Romulo
Betancourt, leader of the AD,
which is probably the majority
party, has indicated his opposi-
tion to a single state. The
URD has formally approved this
arrangement, and COPEI leader
Rafael Caldera has granted at
least conditional approval of
this solution to the electoral
problem.
Opinion similarly conflicts
on whether the presidential can-
didate should be nonpartisan,
on the date of elections, and
on the extent of participation
of the Venezuelan Communist
party (PCV).
Party cooperation with the
junta may be rendered more dif-
ficult by the fact that pres-
ent party leaders and their
SECRET
policies have not been endorsed
and ratified by national conven-
tions, scheduled for April or
May. Both Betancourt and Jovito
Villalba, URD secretary general,
seem to face considerable com-
petition as spokesmen and lead-
ers of their respective parties.
The armed forces, divided
into factions, are suspicious
of growing civilian--particularly
leftist--influence in the govern-
ment. They are not likely to
attempt a coup, however, or enter
into an open struggle with ci-
vilian groups because of their
own division and especially be-
cause the spirit of the civilian
elements that overthrew Perez
is still so high that widespread
violence would probably result.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 April 1958
STRAINS ON ICELAND'S LEFTIST COALITION GOVERNMENT
Iceland's 20-month-old
coalition government is suffer-
ing from internal dissension
over the country's increasing
financial difficulties.
The government intends to
present to parliament early in
April plans for meeting an es-
timated $19,500,000 deficit in
the regular budget and the ex-
port fund. If its stabiliza-
tion program fails, the govern-
ment may be forced to curtail
its elaborate subsidy system,
as well as the economic develop-
ment program on which it;is stak-
ing its political future. Al-
though the Communist-front Labor
Alliance appears willing to ac-
cept some of the required defla-
tionary measures, it firmly op-
poses an outright devaluation
ICELANDIC PARLIAMENT
P C L Z L O N 1~
24 JUNE 1956 ELECTIONS
SOCIAL PROGRESSIVES 9
DEMOCRATS
9 LABOR ALLIANCE CONSERVATIVES
(COMMUNISTS)
in 1960, which they hope to win
on the basis of the government's
economic development programs.
To arrest the upswing in Con-
servative party influence, they
are supporting the Communists in
the trade union elections. The
Social Democrats, disheartened
by their losses in the January
municipal election, apparently
fear that general elections now
would jeopardize their existence
as a party.
The Labor Alliance seems
to have even less intention of
bringing about the fall of a
government through which it is
influencing domestic economic
policy and pursuing its long-
range objective of building up
a single leftist party under its
exclusive control. The Communist
newspaper in recent weeks has
strongly supported the govern-
ment's record on economic policy
and minimized the country's eco-
nomic problems.
Under the circumstances,
the government may be tempted to
seek further foreign economic
assistance and may find enticing
the Soviet offer of last year
to make the equivalent of up to
$24,500,000 available to Iceland.
Evidently seeking an American
alternative, a high bank offi-
cial has already informed
American officials that Ice-
land requires a foreign loan
to pay the approximately
$7, 500, 000 cost of some eight 25X1
fishing trawlers which are
being contracted for in West-
of the currency. With the black
market krona now less than half
the official rate, the prime
minister still will not under-
take devaluation without the al-
liance's cooperation.
A unanimous desire to re-
main in office has thus far en-
abled the cumbersome coalition
to overcome severe internal
strains. The Progressive lead-
ers are determined to retain pow-
er until the scheduled election
ern Europe.
THE STRIKES IN SPAIN
Strong measures taken by
Spanish officials to curb the
present extensive strikes are
probably aimed as much at check-
ing political agitation as at
reducing economic losses from a
spread of the walkouts. Govern-
ment charges that the strikes
are Communist-inspired are not
likely to block further public
protests against rising living
costs.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 April 1958
The government on 15 March
suspended three articles of the
Bill of Rights "to prevent fur-
ther damage to the nation's
economy" as a result of strikes
for highor-.?pay in the Asturias
coal fields in northern Spain.
Following walkouts on 25 March
at Barcelona, the local governor
closed five factories and the
police detained 80 workers. Ma-
drid has announced the arrest
of 11 persons on charges of
being Communists and causing
the Asturias coal strikes. In
addition, workers arrested in
the strikes around Bilbao in
April and May 1956 were report-
edly again detained as a-precau-
tionary measure.
These are the strongest
measures the government has tak-
en since March 1957. At that
time the interior minister mili-
tarized mines and conscripted
miners because a combination
of slowdown and walkout tactics
by some 5,000 miners in protest
over wage rates drastically cut
coal production for three weeks.
Nevertheless, in both Barcelona
and the Asturias region, new
incidents followed the govern-
ment's repressive measures, and
work stoppages were reported to
have spread to San Sebastian
and Valencia. On 31 March the
police were said to be antici-
pating labor outbreaks". in
Pamplona.
The Spanish finance minis-
ter on 20 March expressed to
Ambassador Lodge apprehension
that the coal strike might cause
rail tie-ups and industrial shut-
downs. He also stated that
Spain's dollar reserves would
reach bottom in about three
months.
Prolonged or extensive
stoppages in either the trans-
portation or industrial sector
would probably intensify the
present inflationary pressures.
Labor now has lost practically
all the gains from the November
1956 wage boosts and it may be
more readily brought to demon-
strations on a nationwide scale
forceful enough to present a
distinct threat to the Franco
regime.
FIFTH CONGRESS OF THE INDIAN COMMUNIST PARTY
The fifth congress of the
Communist Party of India will
be held in northern India from
6 to 13 April in an atmosphere
reflecting continuing Communist
gains at the expense of Nehru's
ruling Congress party. Despite
factional differences, the Com-
munists will probably present
an appearance of unity and a
program with strong voter appeal.
The major business of the
congress will be to ratify sug-
gested alterations in the party's
constitution and organizational
structure. The party goal, for
instance, will be redefined as
"socialism by peaceful means."
Though the Indian party'adopted
constitutional tactics some
years ago, now it is emphasizing
that it is possibly the first
Communist party to declare in
its constitution that it has,
in effect, forsworn violence as
a party policy.
Approval will ..also be.
granted for sweeping changes in
the party leadership structure
and membership regulations. These
changes, some of which have al-
ready gone into effect, are de-
signed to make the Communist par-
ty resemble the Congress and
Praja Socialist parties in or-
ganization and to give it the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 April 1958
appearance of a party with broad
popular support rather than one
with a tightly knit hard core.
Expansion of party membership
from 125,000 to 218,000 during
the past year has been part of
this program.
The aim of the Communists
in making these changes is to
draw on their experience in the
national election of 1957 when
they discovered that the Con-
gress party can be defeated
through the ballot box by a par-
ty championing local causes and
campaigning intensively at the
village level. By presenting
itself as a respectable, peace-
ful organization, the Communist
party apparently hopes to at-
tract voters who are becoming
increasingly disillusioned with
the ruling Congress party.
Further Communist election
gains and Congress losses in the
year since the national election
suggests that the Communist pro-
gram will be fairly successful.
The Communists, already play an
important role in the municipal
governments of Bombay and Delhi,
which the Congress party no long-
er controls, and of Calcutta,
which Congress rules by a mar-
gin of only one seat. Indian
SECRET
labor is also turning toward
the dynamic, Communist-controlled
All-India Trade Union Congress
for aid in obtaining higher
wages and better working condi-
tions.
There continue to be strong
differences among Communist lead-
ers regarding party policies
of militancy or peacefulness.
In some areas the party is le-
thargic, and in most regions --U_3
funds are insufficient. Fac-
tional strife in the West Bengal
branch forced the temporary sue-
pension of one of the party's
leading members, and the Commu-
nist government of Kerala State
still has not solved any of the
state's pressing economic prob-
lems.
The woes of the Communist
party in many instances, how-
ever, are fewer than those of
corresponding Congress units,
and the Communists continue to
gain strength by default if not
as a result of direct action.
Communist General Secretary Ajoy
Ghosh recently remarked that
Congress party deterioration is
occurring faster than the Com-
munist organization can take
advantage of it.
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25X1
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 April 1955
PATTERNS AND PERSPECTIVES
CENTRAL PLANNING IN KHRUSHCHEV'S INDUSTRIAL REORGANIZATION
The new State Planning Com-
mittee (USSR Gosplan) emerged
from Khrushchev's reorganiza-
tion of industrial administra-
tion in 1957 as the most impor-
tant economic organ of the USSR,
although central planning con-
siderations were not the primary
reasons for the reorganization.
Gosplan now has full responsi-
bility for specifying in detail
the economic plans for current
operations and for determining
the proper balance for future
economic development programs
as decreed by the top leader-
ship. It is also responsible
for marshaling and directing
the economy toward these goals.
Certain measures embodied in
the reorganization were intended
to correct faulty aspects of
planning criticized by Khru-
shchev and others. Although
some aspects of the reorganiza-
tion evidently are already
successful, the possibility
exists that Gosplan will bog
down in current problems such
as breaking supply bottlenecks.
Gosplan's Operations
Often described as the
"economic general staff" of the
Soviet state, Gosplan has the
responsibility for preparing
integrated national economic
plans. Though it is the apex
of a, planning apparatus which
reaches into every enterprise
in the USSR, Gosplan, in one
sense, is "in the middle." It
must resolve the conflicts be-
tween the demands of the leader-
ship on the economy and the
supply capabilities of the econ-
omy reflected in technical and
practical production considera-
tions.
Gosplan translates the
broad directives it receives
from the top leadership, the
USSR: ORGANIZATION OF INDUSTRIAL PLANNING 1958
USSR COUNCIL
OF MINISTERS
I _T
REMAINING USSR
ECONOMIC
MINISTRIES
REPUBLIC COUNCILS
OF MINISTERS
REMAINING RE-
PUBLIC ECONOMIC
MINISTRIES
COUNCILS OF
NATIONAL ECONOMY
71
-PARTY j
PRESIDIUM
I- REPUBLIC
PARTY
PRESIDIUMS I
REPUBLIC
GOSPLANS
PRODUCING
ENTERPRISES
CONFIDENTIAL
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 April 1958
PLANNING DEPARTMENTS OF USSR GOSPLAN AFTER
1957 INDUSTRIAL REORGANIZATION
GENERAL ECONOMIC DEPARTMENTS (9)
General Long-Range Plans and Development of
Union Republics
Over-all Current Economic Plans of Union
Republics
Labor and Wages
Prices and Cost of Production
Material Balances and Over-all Distribution Plans
Finance
Commodity Turnover
Capital Investment
Foreign Economic Relations
There are, in addition, appropriate staffs and
support units, a Council of Technical and
Economic Expertise, and, "temporarily,"
about 17 consolidated sales and marketing
organs formerly part of the abolished indus-
trial ministries.
INDUSTRIAL DEPARTMENTS (23)
Ferrous Metallurgy
Nonferrous Metallurgy
Coal, Peat, and Shale Industry
Oil and Gas Industry
Electrification
Lumber, Paper, and Wood-Processing Industry
Chemical Industry
General Machine Building
Heavy Machine Building
Automobile, Tractor, and Farm Machine
Building
Electrical Equipment and Instrument Manufacturing
Industry
Defense Industry
Building Materials Industry
Light Industry
Food Industry
Fishing Industry
Agriculture and Procurements
Transport and Communications
Construction Industry
Culture and Public Health
Geology
(Two departments not yet identified)
presidium of the party central
committee, into specific economic
plans. It prepares plans covering
a number of years, such as a
draft five-year plan. or opera-
tional annual plans, which have
the force of law when approved
by the USSR Council of Minis-
ters, Gosplan's parent body.
Gosplan also monitors implemen-
tation of the plans.
Gosplan is organized into
general economic departments
and industrial departments. The
former are responsible for econ-
omy-wide planning problems such
as aggregate investment, finance,
and current economic plans. The
industrial departments plan for
specific production branches or
activities such as ferrous met-
allurgy, transport and communi-
cations, and geology. Also
"temporarily" merged into Gos -
plan are the consolidated cen-
tral marketing and supply organs
formerly belonging to the in-
dustrial ministries. These con-
tinue for the present the di-
rect allocation of important ma-
terials within the economy pend-
ing the overhaul of the, supply
system, one of the major goals
of the reorganization,
In the attempt to achieve
balance and consistency among
detailed plan goals, Gosplan
technicians draw up balance
sheets for important products
showing the economy's planned
resources and requirements, in-
cluding data on production, con-
sumption, inventory changes,
foreign trade, and similar fac-
tors; These balances are "jug-
gled" by the planners until
particular production plans are
consistent among themselves and
with other elements of the plan.
At the same time, the plans
must satisfy the demands of the
leadership and be deemed feasi-
ble.
In addition, monetary re-
sources and expenditures for
various parts of the economy
are computed to assist determina-
tion of important over-all "pro-
portions" within the economy.
These also provide the basis for
planning the state budget--a
separately stated, though in-
tegral, part of the state eco-
nomic plan--as well as for check-
ing the consistency among impor-
tant goals.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 April 1958
Planning Inconsistencies
During early postwar re-
construction, plans followed
prewar Soviet economic patterns.
Breaking existing production
bottlenecks was more pressing
than fixing long-term develop-
ment proportions. As the Fourth
Five-Year Plan progressed and
industry after industry recov-
ered to prewar output levels,
the problem of planning growth
proportions became more complex
and critical. Problems of cur-
rent supply allocation persisted,
PRIOR TO
USSR COUNCIL OF MINISTERS
1948
STATE PLANNING COMMISSION
(GOSPLAN)
USSR COUNCIL OF MINISTERS
1948
STATE COMMITTEE FOR
STATE COMMISSION
STATE COMMITTEE FOR
NEW TECHNOLOGY
FOR PLANNING
MATERIAL TECHNICAL SUPPLY
(GOSTEKHNIKA)
(GOSPLAN)
(GOSSNAB)
Material-technical balance
New techniques
Long-range planning
and the distribution of
and equipment
material and capital
equipment to the economy
USSR COUNCIL OF MINISTERS
STATE COMMITTEE FOR FOOD
1951
AND INDUSTRIAL SUPPLY
(GOSPRODSNAB)
Distribution of foodstuffs,
semifinished and finished
GOSPLAN
E
I GOSSNAB
products to the population
`r4~_
and economy
USSR COUNCIL OF MINISTERS
Z
1953
GOSPLAN
USSR COUNCIL OF MINISTERS
1955
STATE COMMITTEE FOR
STATE COMMISSION FOR STATE COMMISSION FOR
STATE COMMITTEE FOR
NEW TECHNOLOGY
LONG-RANGE PLANNING CURRENT PLANNING
LABOR AND WAGES
(GOSTEKHNIKA)
(GOSPLAN) (GOSEKONOMKOMISSIYA)
New techniques
5- to 15-year plans Current plans of
Functions performed by
and equipment
one year and less
GOSPLAN prior to 1955
- _
USSR COUNCIL OF MINISTERS
1957
SCIENTIFIC-TECHNICAL
STATE COMMITTEE FOR
COMMITTEE
GOSPLAN
LABOR AND WAGES
80331 2A
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 April 1958
and many. of Stalin's organiza-
tional changes were directed
toward their solution. Neither
Stalin nor the "collective lead-
ership" after him was notably
successful in improving either
the current or long-term plan..
ning..Situation.
By late 1956 the. situation
had become acute. The minis
tries complained. that the
planners", unrelenting demands
for output increases and un,
reasoning niggardliness in al-
locating resources were jeop-
ardizing attainment of impor-
tant goals of the Sixth Five-
Year Plan. In December, top
planner Saburov was ousted and
Pervukhin, his presidium-mem-
ber successor, spoke out against
"excessive strains"--the unre-
lenting output demands placed
on the economy by the leader-
ship and blamed on the planners.
Pervukhin's 1057 state economic
plan reflected more reasonable
demands by the party presidium.
Detailed charges against
the,planners accompanied Khru-
shchev's theses on the reorgan-
ization of industry and con-
struction and the ensuing "pop-
ular discussion" during the
first. half of 1957. The planners
were.roundiy castigated for
their alleged "mechanical ap-
proach" to planning, for neglect
of regionally integrated plan-
ning, for "unrealistic" plan-
ning, for "isolated" and "dis-
connected" planning, and for
other "errors" leading to major
disproportions and looming bot-
tlenecks. An example cited for
lack of regional coordination
was the construction of a rail
line down the Angara river
valley just before it was to
be inundated by the Bratsk
hydroelectric project.
Central Planning Revamped
Khrushchev's doctrinal
formulation of his 1957 reor-
ganization in terms of strength-
ening "democratic centralism"
implied that the effectiveness
of central planning and control
must be enhanced in order to
assure direction of the economy
toward the goals desired by
the.Soviet leadership. At the
same time, it implied the need
for greater scope for local
initiative to increase produc-
tivity for further surges of
economic gx.owth. Improved cen-
tral planning and control was
to provide the counter to "local-
ist tendencies," which were
feared as a possible result of
the added responsibility and
authority given republic and
regional economic organs.
Not all the top leaders
were reassured, however. A
rear that perhaps irreversible
forces might be let loose ap-
pears to have been a. common bond
ofi the so-called "antiparty
group" in June 1957.
Kirushchev, nevertheless,
pushed ahead with his plan to
abolish most industrial and con-
struction ministries, replacing
the technically specialized min-
isterial linkage between the
controlling "center" and the
producing "periphery" with a new
regional linkage through the
republics and the new regional
"councils of national economy"
(sovnarkhozy). He merged the
central planning organs and re-
shuffled personnel.
Where before had existed
neither effective mechanisms
nor responsible agencies to
assure regional coordination of
planning, the new sovnarkhozy,
together with the revitalized
republic Gosplans, were to per-
form integrated regional plan-
ning, as well as administration.
Investment, construction, and
development of resources could
better be viewed in relation
to the regional economy and its
balanced development rather than
almost solely in terms of nation-
wide branch-of-industry develop-
ment.
Merging the central plan-
ning organs into a single USSR
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 April 1958
Gosplan was intended to pro-
mote continuity in planning
and consistency between suc-
cessive annual plans" and ' the
longer range plans. In draft-
ing the 1958 plan, the plan-
ners had available to them
the guidelines for the 1959-
1965 plan and had simultane-
ously drawn up a rough pre-
liminary 1959 annual plan.
Presumably these, as well as
preliminary 1957 plan fulfill-
ment data, were taken .'.into
account in the detailed draft-
ing'of the 1958 plan. Not=
withstanding the seeming com-
plexity of these procedures,
the 1958 plan was promulgated
prior to the beginning of the
new year--an unusual achieve-
ment. This timely planning
may.well have been facilitated
by the fact that some impor-
tant Gosplan department heads
under the new system held seats
on the USSR Council of Minis-
ters.
Branch-of-industry plan-
ning was unequivocally fixed
in Gosplan, with the determin-
ation of "correct proportions"
for branch development improved
by the transfer to appropriate
departments in Gosplan of for-
mer ministerial leaders *ho
could provide a cadre of knowl-
edgeable:specialists to assure
more "realistic" and less "me-
chanical" planning. Gosplan
itself was responsible for-de-
velopment planning of indus-
tries and had to resolve mat-
ters without recourse to blus-
ter.
Central Planning Appraised
The early operation of
the new.organs pointed up the
neglect of regional coordina-
tion that had existed. Though
the abolition of most indus-
trial ministries eliminated the
traditional wrangling between
the ministries and the central
planning organs, new difficul-
ties became apparent almost at
once between the central plan-
ners and the regional planners
and administrators. The con-
flict about a particular planned
action tended to involve their
varying viewpoints--branch-of-
industry integration versus
regional integration of eco-
noiimio activity. Final say,
neyertheless, rested with Gos-
plan.
Despite the reported in-
creases in economic output
claimed under the first months
of operation of the new system,
the long-term effectiveness of
the new Gosplan in coping with
the increasing complexity of
the economy remains to be dem-
onstrated. Gosplan must still
present an acceptable draft
plan for the 1959-1965 period
and follow through its imple-
mentation.
The timeliness and seem-
ing realism of the 1958 annual
plan are not necessarily at-
tributable solely to improve-
ments in Gosplan technique or
organization. They could well
result from the fact that plan-
ning now is in the hands of
men with recent close ties with
the producing elements of the
economy. The test will come
when their practical experience
becomes obsolete, less and less
relevant to newly emergent
planning problems sure to de-
velop. Will Soviet central
planning then be able to avoid
becoming once again "unrealis-
tic" and "mechanical?"
If Gosplan can avoid bog-
ging down in current opera-
tional problems--if long-term
disproportions can be skirted
in the search for solutions to
current supply bottlenecks--
the reorganized structure of
Soviet central planning may
well, for a time at least, pro-
vide improved planning in sup-
port of further Soviet eco-
nomic growth.
(Prepared by ORR
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COMMUNIST CHINA LAUNCHES PROGRAM TO MODERNIZE AGRICULTURE
Communist China is in the
early stages of an effort to
modernize its traditional agri-
culture. Its ability to feed
its tremendous population--
estimated at about 643,000,000
and growing at a rate of about
15,000,000 a year--and at the
same time to pursue a program
to become a modern industrial
nation hinges on the success
of this undertaking. In the
final analysis China's indus-
trialization program, includ-
ing the importation of needed
machinery, is paid for primar-
ily by agriculture.
CURRENT INTELLIGENCE-WEEKLY SUMMARY
3 April 1958
The leaders are modifying
their policy of giving overwhelm-
ing priority to industrial devel-
opment. During the First Five-
Year Plan (1953-57), state in-
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vestment for industry and agri-
culture was at a ratio of seven
to one. During this period the
regime. concentrated on rela-
tively inexpensive programs,
such as small-scale irrigation
projects, the use of improved
seed, and double-cropping.
The ratio between indus-
try and agriculture for 1958,
the first year of the Second
Five-Year Plan (1958-62), is
approximately four to one. Di-
rect state investment in agri-
culture increased by 40 per-
cent this year over last, and
additional funds are being
channeled into those industries
which support agriculture. Yet
even with this shift in empha-
sis, the amounts being spent
on agriculture are small when
PATTERNS AND PERSPECTIVES Page 6 of 13
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CURRENT:' INTELLIGENCE' WEEKLY SUMMARY
3 April 1958
China.
Most of these are
lo-
cated on
large state farms
in
northern
Manchuria and in
Sin-
kiang.
The first China-made
tractor
is to be turned out
this year in Tientsin. A large
tractor factory in Loyang with
a capacity of 15,000 tractors
a year is to go into operation
in 1959, a year ahead of sched-
ule. A plant to build small
ten-horsepower tractors will be
finished at Nanchang in 1959.
Various machinery plants will
start this year turning out
large numbers of small, garden-
type tractors similar to those
used by America's suburban
farmers, appropriate in a coun-
try where much of the land is
hilly and where paddy farm-
ing is important.
Provincial and local gov-
ernments have been given the
major responsibility for step-
ping up the supply of improved
farm implements and tools.
Peiping says that agricultural
output might increase by as
much as 20 percent through wide-
spread use of moldboard-type
plows which plow deeply and
turn the soil properly. Ma-
chinery factories, many of
them built and operated by lo-
cal enterprises, are sched-
uled to turn out various types
of powered implements, such as
pumps for irrigation purposes,
to add 590,000 horsepower to the
Chinese countryside during 1958--
roughly double the output of
power equipment now in use.
The regime plans to raise
yields also by increasing the
acreage of irrigated land, by
extending the double-cropped
areas farther north, and by ex-
panding the acreage planted to
high-yield crops. Ac-
cording to a deputy
minister of water con-
servancy, irrigated
acreage is to be dou-
bled by 1962, to the
point where two thirds
of the nation's culti-
vated land would be
irrigated. Millions
of hands will be at
work on millions of
small water conser-
vancy projects, while
the state will con-
tinue work on major
conservancy measures
such as the Huai River
Project. Plans are .
being drawn up to car-
ry out basin-wide con-
servancy projects on
both the Yangtze and
Yellow rivers.
In connection with its
plans for double-cropping and
high-yield planting, Peiping
will experiment with improved
strains of seeds. The author-
ities are encouraging every lo-
cality to set aside experimental
plots in which better seeds and
farming methods may be tested
for applicability to local con-
ditions. More attention to con-
trol of crop diseases and in-
sects is being urged, and the
regime has taken steps to pro-
vide more insecticides and
equipment for their applica-
tion.
Almost all of China's
277,000,000 cultivated acres
are farmed intensively by tradi-
tional methods. The human be-
ing is still the primary source
of all power. The number of
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CURRENT INTELLIGENCE WEEKLY SUMMARY
3 April 1958
Dike construction at Tungting Lake in Hunan Province
draft animals is inadequate,
and there is practically no
mechanical power. The possi-
bilities for opening up new
lands are limited by geography,
climate, and the heavy costs
involved. Furthermore, efforts
to introduce modern techniques
have encountered the backward-
ness of a largely illiterate
peasantry. In 1956, for ex-
ample, Peiping unloaded on
the peasants more than a mil-
lion and a half
steel plows. Most
of these plows found
no market at all.
Those which reached
the countryside
were quickly dubbed
"wall plows" in tes-
timony of a strong
peasant tendency
to hang them on pegs
in the wall rather
than use them in the
fields.
The minister of
agriculture recently
launched a campaign
to overcome what he
termed the "ideo-
logical problem"
which make these
plows unpopular.
In addition, Peiping
has plans to expand agricul-
tural extension work so that
a scientific and technical in-
formation office will be es-
tablished in every hsiang (an
area smaller than a county,
composed of several villages).
Regional and provincial agricul-
tural institutes and experi-
mental centers will be set up,
and an attempt made to have at
least one primary school in
every cooperative. In its
Instruction in use of double-share plow
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2 April 1958
deteriorating; the equipment
and materiel they are using in
North Africa is rapidly wear-
ing out, and reserve stocks are
being exhausted. After more
than a decade of fruitless over-
seas warfare on top of the hu-
miliation of 1940, the army's
core of regulars is fatigued
and its morale is declining.
Only 32 :'of 42 ,French front-
line air force squadrons prom-
ised in the 1957 NATO force
goals are available-in Europe.
Algerian requirements and pre-
vious budgetary cuts have se-
verely curtailed operational
training and flying in the
French Air Force and reduced
its standards below minimum
SHAPE readiness requirements.
Air force budget cuts have re-
sulted'in a 50-percent reduc-
tion in the monthly production
of bombers, fighters, transports,
and helicopters and in a se-
vere restriction of research
and development. The transfer
of 10,000 men frorh the air force
to shore up army units in Al-
geria has dealt a severe blow
to air force morale.
The navy has been obliged
to abandon its major-unit con-
struction program, which in-
cluded a proposed third aircraft
carrier. Naval air budgetary
cuts mean further delay in ob-
taining modern jet fighters.
Military Reappraisal
The latest attempts to
juggle the military budget are
bringing to a head a number of
festering problems involving
both interservicefriction and
civilian-military disagreement.
General Paul Ely, chief of the
Armed Forces Staff, has served
notice on Defense 'Minister
Chaban-Delmas that he will re-
sign unless an additional $186,-
000,000 is added to the $3.15
billion defense budget to help
maintain France's NATO contri-
bution, continue the pacifica-
tion of Algeria, and restore
the gutted arms construction
programs.. The air force chief
of staff and two air force gen-
orals in charge of aircraft pro-
duction have already quit, and
the Defense Ministry is reported
"fighting off" numerous other
threatened-resignations.
The French commander in
chief in Algeria wants more re-
inforcements, but there is evi-
dence of increasing discontent
among younger officers over the
question of whether resources
already in Algeria have been
properly utilized. A prominent
paratrooper, Lt. Col. Marcel
Bigeard, has openly criticized
the government and the army
high command. He charged that
the bulk of the French ground
forces in Algeria is tied up
in guard and patrol duty, leav-
ing only 10 percent for offen-
sive operations against the
rebels. Bigeard was reassigned
at Chaban-Delmas' request to
train special cadres of young
officers in techniques of com-
bating "revolutionary war," and
his transfer has been given un-
usual publicity by the govern-
ment. This move is probably
indicative of the government's
sensitivity to the political
implications of public criticism
from the military at this time.
The continuous pressure
from rightist elements for an
expanded Algerian offensive has
recently aroused concern in
France over the nation's weak-
ened European defense posture.
The press has aired the issue,
and an authoritative military
correspondent for the influen-
tial Paris daily Le Monde ques-
tions whether. ?France- wwill prac-
tically cease furnishing any
military contribution to NATO."
He points out that French air-
craft plants are releasing many
engineers and technicians, in-
cluding some Germans who will
presumably be taken on by the
expanding West German plane in-
dustry. In an obvious effort
to stir public opinion, he
raises the possibility of Ger-
man squadrons manning some NATO
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 SECRET Naw
CURRENT INTELLIGENCE WEEKLY SUMMARY
3 April 1958
attempts to inform and educate
the peasants, Peiping intends
to make use of the large number
of surplus cadres and office
workers--more than 1,300,000
at last count-,who have been
sent back to the countryside
to "engage in production."
A shortage of petroleum
is a serious handicap in China's
program to mechanize agriculture.
Wide use of . farm . machinery
powered by gasoline,is=inap=
'propriate in a country where
regular highway transport is
curtailed because of a shot-
age of petroleum products, and
Peiping has made provision:to
develop machinery using alter
.native sources of power such
as coal. But at best this -
provides only a partial solu-
tion of the problem.
The problem of supplying
highly technical equi ifibnt to.
the fertilizer industry appears
to be 'a: critical point in the
regime's program to expand fer-
tilizer output. Its. acquisi-.
tion from abroad would be cost-
ly and difficult. Although
China has produced prototypes
of certain important'pieces_
of equipment; the Cl}inese.
will have difficulty in pro-
ducing such machinery in.large
quantities.
Repair and maintenance Of
equipment once it reaches the
countryside present other
problems. Spare parts for im-
ported equipment are in chronic
Short supply and mechanical
skills and machine facilities
are lacking. A high government
official closely connected with
this .,.problem has . remarl~ed,
"When the peasants won't work,
we preach Marxism-Leninism',
when the draft animals won't
work, we whip them; but when
the machines won't work, we are
at our wit's end."
Prospects
Peiping's program for mod-
ernizing Chinese agriculture is
a long-range one. Mao Tse-tung
has indicated that the country
would be doing well to accom,
plish the technical reform of
its agriculture by 19766. Even
then, judging by the outlines
of the present program, the
regime does not appear to vis-
ualize 4n agriculture which
uses large mechanized equip-
ment on, a scale approaching
that of the United States or
the Soviet Union, China's
problem is, in fact, almost
the opposite-of that faced by
the Soviet Union. China, with
its immense reservoir of man-
power, feels no pressing need
to release rural labor for
employment 'in industry. Its
industry does not, and will
not'for the foreseeable` future,
be able to absorb a significant
fraction.of the annual addi-
tions to the labor force.
The regime has shown an
increased awarenes that it
can learn much from Japanese
experience: Several delega-
tions have gone, from Peiping
in the past several months to
study Japanese farm technology.
and the chemical fertilizer
industry. The result will
probably be a widening use in
China of chemical fertilizers,
farm implements adapted for
local conditions, and small
powered machinery.
There is littla doubt
that the modernization program
beginning to emerge in China
will result in substantial ad-
ditions to agr.culturalloutput.
Just how far and how fast the
regime will be willing and able
to go depends on the ultimate
cost of the program. It is
certain that the program will
be expensive and that it will
have an impact on other detie]op-
ment schemes. Peiping will
strive to minimize this impact
because, fond as it is of agri-
culture, it is even fonder of
industry,and has shown no signs
of a''willingness to give indus-
try a back seat. If the pro-
gram is implemented along the
general lines now emerging;
however, it will make more
reasonable some of Peiping's
.long-range agricultural goals,
which have in the past seemed
well out of reach.
(Prepared by-ORR)
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CURRENT INTELLIGENCE WEEKLY SUMMARY
2 April ],958
FRANCE'S MILITARY PROBLEMS
Premier Gaillard's insist-
ence on maintaining his ceiling
on 1958 military expenses de-
spite increased Algerian war
costs has forced a reallocation
of defense budget funds which
has further weakened French
NATO commitments and has aroused
violent reactions among France's
armed forces chiefs`. The cuts
in arms production funds jeop-
ardizes the maintenance of a
balanced defense establishment,
and the developing civilian-
military friction may stimulate
military participation in French
politics.
The Budgetary Dispute
The inevitable collision
between Gaillard's austerity
program and the growing costs
.of the Algerian war finally oc-
curred in early March. The
premier's stringent budget re-
trenchment program--which held
defense expenditures to $3.15
billion had been accepted by
the National Assembly in late
1957 because most deputies re-
alized its inadequacies would
soon be apparent. By early
1958, the armed services faced
the prospect of cutting their
consumption of goods and serv-
ices approximately 25 percent
because of budgetary reductions
and price increases as compared
with 1957. This, plus the sub-
sequent deterioration of the
military situation in Algeria,
obliged Gaillard to agree to
find an additional $225,000,-
000 for the Algerian war.
New taxes were violently,
opposed by the proponents of
strong measures in Algeria,
however, and they insisted on
economies within the budgetary
framework. The armed forces
felt the extra funds could easi-
ly be found in the budgets of
the civilian ministries, but
since many Socialists and a
growing minority in the center
parties were convinced that ad-
ditional defense appropriations
would be pointless if they were
to be swallowed up in Algeria,
Gaillarq was in no position to
further `limit the funds of the
civilian ministries.
The right was able to in-
sist on reallocation of mili-
tary expenditures without di-
rectly affecting nonmilitary
commitments, because in 1958,
.for the.first time, the mili-
tary budget includes the Alger-
ian pacification costs, the
bulk of which was formerly cov-
ered by special appropriations
separate from the "ordinary"
military budget. The arms pro-
duction programs have borne the
brunt of this redistribution
to date. Other military activ-
ities are in danger. of curtail-
ment, however, since Gaillard's
expressed hope of securing $43,-
000,000 in support costs from
West Germany is hardly likely
to be realized.
The Algerian Drain
The shuffling of defense
programs is focusing increasing
attention on the incongruity
of instituting a policy of budg-
etary austerity in the face of
the expanding requirements. of
an active military campaign.
A disproportionate share-of
France's armed manpower resources
is now concentrated in North
Africa, mostly, Algeria: ap-
proximately half of all French
ground forces and a third of
the air force and navy.
Ten of the 13 French NATO-
committed divisions are mired
in the North African operations
and could not conceivably meet
SHAPE'S requirements for avail-
able effective units in Europe.
within 30 days after M-day. Most
of the troops in North Africa,
regardless of special skills
and training, are serving as
infantrymen and would require
considerable retraining for mod-
ern war operations. The heavy
equipment they left in Europe is
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CURRENT INTELLIGENCE WEEKLY SUMMARY
2 April 1958
airfields in France because
there may not be enough French
units available.
The Gaillard government
and the National Assembly will
soon be obliged to take steps
to meet both the increasing
military dissatisfaction over
budgetary restrictions and
developing military-civilian
SECRET
differences over defense re-
quirements. The basic decisions
are political in nature and in
view of the personal stakes
involved, the outlook is for
increased political activity
on the part of the armed serv-
ices, which heretofore have
avoided overtly identifying
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