CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A001700080001-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 51
• Document Creation Date: December 16, 2016
• Document Release Date: February 9, 2005
• Sequence Number: 1
• Publication Date: May 1, 1958
• Content Type: SUMMARY

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CONFIDENTIAL
li
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
COPY NO. 50
OCI NO. 1787/58
1 May 1958
DOCUMENT NO.
NO CHANGE IN 1 6
:StFDC TO CT
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et~
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AU,Tliw - 1G
CENTRAL INTELLIGENCE AGENCY
CONFIDENTIAL
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THIS MATERIAL CONTAINS INFORMATION AFFECT-
ING THE NATIONAL DEFENSE OF THE UNITED STATES
WITHIN THE MEANING OF THE ESPIONAGE LAWS,
TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS-
SION OR REVELATION OF WHICH IN ANY MANNER TO
AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
The Current Intelligence Weekly Summary has been prepared
primarily for the internal use of the Central Intelligence
Agency. It does not represent a complete coverage of all
current situations. Comments and conclusions represent
the immediate appraisal of the Office of Current Intelligence.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
1 May 1958
T H E W E E K I N B R I E F
OF IMMEDIATE INTEREST
SOVIET SUMMIT TACTICS . . . . . . . . . . . . . . . . . . Page
Premier Khrushchev and Foreign Minister Gromyko have
denied that Soviet charges of threatening American bomber
flights indicated any lessening in Moscow's desires for a
summit conference. Despite the UN Security Council's sup-
port of the American plan for Arctic inspection and Secre-
tary General Hammarskjold's endorsement of this position,
Moscow still believes its ~omber charge will impel a sense
of popular urgency concerAing a summit meeting and under-
cut Western effort -1 ensure adequate preparation for the
summit. The 's new willingness to discuss with Western
ambassadors in Moscow what issues are ripe for settlement
further indicates a desire to expedite summit talks but does
not mean that the USSR has yielded to the Western demand for
detailed substantive negotiations at the ambassadorial level.
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MOSCOW AND BELGRADE SEEK TO MINIMIZE POLEMICS . . . . . . Page 2
The Soviet and Yugoslav parties are maintaining
their irreconcilable ideological positions, but both
appear determined to prevent an outbreak of bitter po-
lemics and a breakdown in governmental relations com-
parable to that in 1948. The Yugoslav party congress
has led to serious difficulties in the Yugoslav-Soviet
detente, and the situation will be difficult to control.
The Kremlin is chronically hostile toward any challenge,
particularly strong as the Yugoslavs presented
last week. 25X1
FRENCH GOVERNMENT CRISIS . . . . . . . . . . . . . . . . . Page 3
Former Premier Rene Pleven, leader of the small
center Democratic Resistance Union party, at this"time
has scarcely an even chance to succeed in his attempt at
investiture on 5 or 6 May. Even if he fails, his nego-
tiations will have served to isolate the issues on
which party compromises are necessary and thereby to
speed up the "ripening" of the crisis.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
1 May 1958
PART I (contunued)
INDONESIA a . . . . . a . . . 0 . . a . . . . . . . . . . Page 4
With the occupation of Bukittinggi9 Sumatra, on 28
April9 by government forces, the center of dissident
military activity has shifted to North Celebes, where
Lt. Col. S ual is in command, Sumual9s troops invaded
and occupied the island of Morotai on 28 April, and
dissident aircraft, singly and in pairs, have carried
but a series of successful strikes against government
targets on Borneo and East Indonesian islands. Govern-
ment operations in Celebes are continuing from the al-
ready established beachhead in the Donggala area 9 and
new landings may soon be launched from Balikpapan9
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NOTES AND COMMENTS
LEBANESE PROBLEMS COMPLICATE MIDDLE EAST SITUATION . . . . Page 1
There are some indications that President Chamoun is
near a decision on whether to risk internal disorders by
announcing his candidacy for a second term. Other Middle
Eastern states have begun to look on Chamoun as a symbol
of pro-Western policy and to support or oppose him on
this basis. Nasir is receiving full ?tred carpet" treat-
ment in Moscow. British efforts to counter Yemeni-in-
spired subversion in the Aden Protectorates have produced
new military action there. Iraqi parliamentary elections
on 5 May are heavily weighted in favor of the Nuri regime;
they are a necessary step toward giving effect to Iraqi-
Jordanian union plans. 25X1
GAZA AND THE UNITED ARAB REPUBLIC . . . . . . . . . . . . Page 3
The United Arab Republic (UAR) is using the newly re-
constituted government in the Gaza strip in an anti-Israeli,
anti-Jordanian propaganda campaign, but does not appear
ready to grant Gaza independence or incorporate it into the
UAR. Egypt is unlikely to relax its military control as
long as the original Gaza inhabitants resent the unrepre-
sentativ character of the Gaza government hand-picked by
Cairo. I I- 25X1
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CURRENT INTELLIGENCE WEEKLY SUMMARY
1 May 1958
PART II (continued)
CYPRUS . . . . . . . Page 4
New EOKA threats of an all-out offensive on Cyprus
unless the British initiate negotiations for a settlement
and cease "torturing" political detainees have led the
British on Cyprus to take additional protective measures.
NORTH AFRICA . . . . . . . . . . . . . . . . . . . . . . . Page 5
The conference of Moroccan Istiglal, Tunisian Neo-
Destour, and Algerian National Liberation Front leaders
in Tangier from 27 through 30 April will probably imme-
diately result in an increase in Moroccan support for
the Algerian rebellion. In the long run, the conference
probably will come to be regarded as the first significant
step toward creating a North African federation. In its
final communiqud, the conference recommended the eventual
formation of an independent Algerian government and the
creation of a North African consultative assembly. A
permanent secretariat for the three North African parties
was established.
MIKOYAN VISIT TO WEST GERMANY . . . . , . .
The four-day visit of Soviet First Deputy Premier
Mikoyan to West Germany to sign the Soviet West German
trade agreement provided the occasion for Moscow to re-
affirm its "hard line" on the German problem while pro-
fessing to favor increased contacts and a broadening of
friendship and trust between his government and that of
West Germany. Although the Bonn leaders achieved their
goal of sounding out Mikoyan on a wide range of political
topics, they were generally disappointed by his uncompro-
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SOVIET ATLANTIC FISHING FLEET MAY BE AIDING SUBMARINE
OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . Page 7
The large, modern Soviet fishing trawlers off New-
foundland may have been deployed to this area for more
than fishing activity. While there is no firm evidence
of covert activities on the part of these trawlers, this
fleet could be used to support long-range submarines
on patrol, and to carry out surveys which would aid
future submarine operations in the area. These ships
are equipped with extensive antennae arrays and radio
facilities which would permit electronic surveillance,
including monitorin of North American communications.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
1 May 1958
PART II (continued)
EXPANDED SOVIET MERCHANT FLEET OPERATIONS . . . . . . . . Page 9
The USSR is using larger numbers of its merchant
vessels in its trade with the free world in order to
reduce its dependence on chartered Western ships, to
conserve foreign exchange, and to extend the Soviet
economic offensive to ocean shipping. The growth in
the number of Soviet, as well as satellite, vessels
Operating on free-world trade routes at a time when
the world charter market is depressed is creating in-
creasing difficulties for Western shipowners. The bloc,
however, is not likely to be successful in eliminating
its reliance on West is to carry bloc cargoes
in the near future.
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USSR PLANS BALTIC OIL DEPOT TO SUPPLY NORTHERN EUROPE Page 10
The USSR plans to build a major oil depot, includ-
ing storage and shipping facilities, at an ice-free port
on the Baltic Sea in the Lithuanian SSR. This would en-
able the USSR to supply the petroleum-deficient coun-
triess=of.,,nortbern Europe-:expeditiously and at low cost
from the oil-rich Ural-Volga area. The proposed base and
its associated ref.neri6s and pipelines, which are not ex-
pected to be completed before 1962, would put the USSR in
a competitive position with free world oil producers for
a share in the growing market in northern Europe. 25X1
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SOVIET STRENGTH IN EASTERN EUROPE . . . . . . . . . . . . Page 12
At least 28 Soviet ground line divisions and 50 air
regiments remain in Eastern Europe following the recent
reduction of troop strength in East Germany and Hungary.
Any adverse effect of the reductions on the capabilities
of Soviet forces has been largely offset by a recent re-
organization of these forces and the redistribution of
modern equipment and some personnel from departing units
among remaining forces. Soviet strength in Poland and
Rumania remains s able and in Hungary is twice its prere-
bellion level.
SOVIET LEGAL DEVELOPMENTS . . . . . . . . . . . . . . . . Page 13
A recently completed draft of basic principles for
Soviet criminal procedural codes apparently fails to
provide for any genuine liberalization of Soviet law.
The principles seem merely to formalize the limited legal
concessions approved at the 20th party congress, rejecting
many proposals which if adopted would have been of great
importance in establishing and safe rding the basic
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CURRENT INTELLIGENCE WEEKLY SUMMARY
1 May 1958
PART II (continued)
NEW SOVIET DECREE ON THE SEVEN-HOUR WORKDAY . . . . . . . Page 14
The central committee of the Soviet Communist par-
ty has set the schedule for the adoption of a seven-hour
workday in heavy industry. The party decree, issued on
21 April, is in line with the decision announced at the
20th party congress to introduce a basic seven-hour work-
day throughout Soviet industry by 1960, resulting in a
41-hour week. This and the related program of wage re-
form initiated in 1955 are designed to increase workers'
welfare and eventually their productivity. 25X1
PROBLEM OF DISSIDENT BULGARIAN WRITERS UNRESOLVED . Page 15
The Bulgarian regime continues to be plagued by
literary dissidence. In the past month, considerable
public attention and criticism has been paid the re-
bellious writers, with the aim of forcing conformity
without the use of police terror. The--regime may have
,refrained from adopting the harsh measures it used re-
cently in resolving troubles with youths and economic
profiteers because of the current Soviet line favoring
"comradely persuasion" of recalcitrant intellectuals.
It may also have been swayed by the need of support from
the writers in stimulating enthusiastic -artici-at on in
the Third Five-Year Plan.
NORTH VIETNAMESE INTELLECTUALS ARRESTED . . . . .?. . . . Page 16
Eighteen months of coercion, exhortation, and re-edu-
cation have failed to silence the critics of the Hanoi re-
gime among the North'Vietnamese intelligentgia. At least
three dissenters accused of counterrevolutionary activi-
ties were arrested last week, and unconfirmed reports state
that 14 others have also been?arrested.:Hanoi will use the
forthcoming treason trials of the three to document its
case against other dissenters, and the renewed effort at
intimidation will probably silence the critics for a time.
It is also likely, however, to cost the regime the co-
operation of many talented and well-educated individuals
in a society which has few to spare.
LAOTIAN ELECTIONS . .
. Page 17
Conservative control of the Laotian National Assembly
is not threatened in the supplementary elections on 4 May
which will add 21 seats to bring the total to 59. The Com-
munist Neo Lao Hak Zat1party (NLHZ) is expected to make a
strong showing, which would result in increased pressure
on the government for closer relations with the bloc and
pave the way for the NLHZ to become a leading contender in
the 1959 national elections. Regardless of the outcome of
the present elections, continued Communist representation
in the cabinet is likely.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
1 May 1958
PART II (continued)
NEW CAMBODIAN GOVERNMENT . . . . . . . . . . . . . . . . . Page 18
The new Sim Var government in Cambodia is expected
to provide a more capable administration and to combat
Communist subversion more vigorously than its predeces-
sors, while continuing to follow a foreign policy of
strict neutrality. Sim Var is Cambodia's most prominent
anti-Communist leader and has the confidence of Crown
Prince Sihanouk, who continues to show an awareness of
the Communist danger to Cambodia.
STRIKES RENEWED IN CEYLON . . . . . . . . . . . . . . Page 19
The recent flare-up of strikes involving some 150,.-
000 workers in Ceylon, which has been plagued by labor
discord since last November, is increasing the political
and economic strain on Prime Minister Bandaranaike's gov
ernment. Colombo port and transportation facilities are
partially tied up, and the tea market is virtually para-
lyzed. Since Ceylon must import about two thirds of its
food, continuation of the strikes will again cause island-
wide food shortages.
PROSPECTS FOR THE ECHANDI ADMINISTRATION IN COSTA RICA . . Page 20
The inauguration on 8 May of Mario Echandi as presi-
dent of Costa Rica for four years will initiate a period
of improved relations with neighboring countries and more
conservative economic policies at home. Some difficul-
ties are likely to develop in Echandi's relations with
the legislature, where his partisans will be in the minor-
ity and where the Communists will apparently exercise some
influence in one of the other parties. However, Costa Rica's
democratic tradition is believed sufficiently strong to
withstand these strains.
GROWING LEFTIST SENTIMENT IN CHILE . . . . . . . . . . . . Page 21
Irritation at the United States over the copper
question has brought a rise in sentiment favorable to
the leftists in Chile, and President Ibanez has al-
ready secured lower house approval of a bill restoring
Communist voting rights. Ibanez may also support the
proposals of left-wing presidential candidate Allende
to increase the tax burden on the US-owned copper com-
panies and to divest them of control over sale of their
products.
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CURRENT INTELLGENCE WEEKLY SUMMARY
1 May 1958
PART II (continued)
FRANCE DOWNGRADES NATO PRIORITIES . . . . . . . . . . . . Page 22
Defense Minister Chaban-Delmas' public reversal
on 17 April of the order of priority of the French
armed forces` missions formalizes the de facto emphasis
Paris has given its efforts to maintain its overseas
holdings at the expense of its NATO commitments. Chief
of Staff General Ely, who is firmly pro-NATO, is sched-
uled to retire this summer, and his successor might push
the armed forces reorganization along the lines suggested
by Chaban-Delmas.
SPAIN'S OIL PROBLEM . . . . . . . . . . . . . . . . . . . Page 23
Steadily rising oil imports--now costing over $100,-
000,000 a year and increasing at an accelerating rate--
are one important cause of Spain's deteriorating foreign
exchange position. Domestic pressure groups, however,
have blocked cabinet action on new legislation that would
encourage foreign companies to prospect for oil in Spain.
Meanwhile, dollar reserves have fallen to a new low of
about $15,000,000, and stringent import restrictions with
consequent oil rationing are threatened within the next
few months. 25X1
PATTERNS AND PERSPECTIVES
THE RETREAT FROM DE-STALINIZATION . . . . . . . . . . . . Page 1
The new official Soviet biography of Joseph Stalin,
recently published after a long delay, puts the Khru-
shchev regime on middle ground in its attitude toward the
Stalinist record. Khrushchev's assumption of an in-
creasingly large share of Stalin's power and prestige,
the crackdown on domestic nonconformity in the USSR,
the reassertion of Soviet primacy in the Communist bloc,
and the sharp deterioration of Soviet-Yugoslav relations
recall the Stalin era, although present political, cul-
tural, and economic policies continue to show a disavowal
of extreme Stalinism. Since the spring of 1956, when the
anti-Stalin campaign was only a little more than a month
old, the regime has retreated from its nearly total con-
demnation of Stalin at the 20th party congress.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
1 May 1958
PART III (continued)
TURKEY SEEKS MULTILATERAL HELP IN STABILIZING ITS
ECONOMY , , . . . . ? . , ? ? ? ? . ? . . . . ? ? ? . . Page 4
The modest efforts of the Turkish Government have
failed to halt the country's economic deterioration.
Wholesale prices and the cost of living have reached an
all-time high, and runaway inflation, always possible
in a rapidly developing country,. seems closer than at
any time in recent years. Unless the Menderes govern-
ment is willing to make substantial changes in its eco-
nomic policy as the price of multilateral Western aid,
the situation will steadily worsen,
THE ELECTRIC POWER PROBLEM IN LATIN AMERICA o . . . . . . Page 7
The drive to expand electric power facilities has
great political as well as economic importance in Latin
America 9 Where industrialization is regarded as the key
tc`an enhanced international standing. Installed capac-
ityincreased more than 50 percent from 1951 to 1956,
but is still less than 10 percent of US capacity, and
power rationing is still common. Most countries are seek-
ing foreign capital for further expansion. The recent in-
auguration of small nuclear. reactors in Brazil and Argen-
tina for training personnel in their use highlights'Latin
American interest in the ultimate use of nuclear power.
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CONFIDENTIAL
1 May 1958
OF'IMMEDIATE INTEREST
Premier Khrushchev and
Foreign Minister Gromyko have
denied that Soviet charges. of
threatening US bomber flights
indicated any lessening in Mos-
cow's desires for a summit con-
ference. The Soviet charges
appear instead intended in part
to increase the pressure on
the United States for a summit
meeting by demonstrating that
the danger of war has seriously
increased. The USSR's new
willingness to discuss with
Western ambassadors in Moscow
what issues are ripe for settle-
ment further indicates a desire
to expedite summit talks, but
does not mean that the USSR has
yielded to the Western demand
for detailed substantive nego-
tiations at the ambassadors'
The USSR is still trying
to transfer the negotiations
as quickly as possible to the
foreign ministers' level by
claiming that the ambassadors
are unable to make progress.
Insistence on separate meetings
is one device for handicapping
preparatory talks. Moreover,
in the meetings on 17 and 18
April, Gromyko raised substan-
tive issues with the three am-
bassadors before they had in-
structions for negotiations.
Khrushchev said at Kiev
on 26 April that the ambassa-
dors "could not say anything
intelligible" to Gromyko. The
Soviet aide-memoire of 26 April
also pointed out that the am-
bassadors had failed to shed
any light on the issues that
might profitably be discussed
at the summit. When talks with
the ambassadors are resumed,
Gromyko will probably continue
trying to discredit them and
to prove that they lack the au-
thority for productive substan-
tive negotiations.
Gromyko and UN delegate
Sobolev used the American pro-
posal for Arctic inspection as
an excuse for renewing the
charge that American bomber
flights carry a serious threat
of war. Despite the Security
Council's support of the Ameri-
can position for Arctic inspec-
tion and Secretary General Ham-
marskjold's endorsement of this
plan, Moscow still believes its
bomber charges will impel a sense
of popular urgency concerning a
summit meeting and embarrass
Western efforts to ensure ade-
quate preparation for the summit.
The Soviet tactic with re-
gard to the Arctic inspection
proposal was to deride it with-
out detailed examination and
to insist that measures to pre-
vent surprise attack must be
discussed along with other dis-
armament questions at the sum-
mit rather than in the UN. The
USSR has been trying to avoid
UN disarmament talks and has
consistently subordinated the
question of surprise attack to
other disarmament issues that 25X1
it considers more urgent, such
as banning the testing and use
of nuclear.wea ans.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
1 May 1958
MOSCOW AND BELGRADE SEEK TO MINIMIZE POLEMICS
The Soviet and Yugoslav
parties are maintaining their
irreconcilable ideological
positions, but both appear de-
termined to prevent an outbreak
of bitter polemics and a break-
down in governmental relations
comparable to that in 1948. The
Yugoslav party congress has led
to serious difficulties in the
Yugoslav-Soviet detente, and the
situation will be difficult to
control. One of the obstacles
to maintaining such a delicate
balance is the Yugoslav desire
to extend its influence in
Eastern Europe and particularly
to increase contacts with Po-
land.
Mme. Furtseva, a member
of the Soviet party presidium,
denied to reporters in Warsaw
that there would be a repetition
of the Soviet-Yugoslav break
of 1948 and insisted that Mar-
shal Voroshilov's visit to Yugo-
slavia in May would take place
as scheduled. First Deputy.
Premier Mikoyan said on his
visit in Bonn that state rela-
tions with Belgrade were "ex-
cellent" and that only ideo-
logical problems existed, which
he hoped would soon be resolved.
The restraint shown in re-
cent propaganda emanating from
Moscow is a further sign that
the USSR is trying to avoid po-
lemics. Moscow has quoted
criticisms of the Yugoslavs
voiced by Communist parties
in other countries but has not
launched independent attacks
on Belgrade since the Kommunist
article published before t
.Yugoslav party congress began.
Pravda, however, in an article
on 28 April, denounced "re-
visionism" without explicitly
naming the Yugoslavs as prac-
titioners of that heresy--a
device Moscow may use increas-
ingly in regard to Yugoslavia.
A TASS correspondent in
Belgrade, however, has pre-
dicted that a Pravda attack on
the Yugoslav congress can be
anticipated within two weeks..
Another TASS correspondent in
Belgrade spread the rumor that,
even after the Kommunist article
appeared, Khrus c ev held out
the hope of Soviet attendance
at the congress if it were
postponed a few days--presumably
while negotiations continued.
It is possible Moscow and
Belgrade are still working be-
hind the scenes in an attempt
to effect a compromise. It
seems doubtful, however, that
any further negotiations could
achieve a compromise between
the two ideological extremes,
The Yugoslav party congress ap-
proved the party program but
left a commission free to work
out "final editing" of the docu-
ment.
The sharp attacks which
Yugoslav speakers hurled at the
USSR during the party congress
for the Soviet boycott and its
"ideological interference" in
Yugoslav affairs were generally
accompanied by expressions of
hope that the dispute would
not spill over into government-
al relations, President Tito,
in his closing remarks at the
congress warning the USSR that
polemics will gain nothing, de-
clared that the Yugoslavs would
like to solve disagreements in
a "different way- more through
comradely understanding." He
added that it would be tragic
if the USSR adopted the tactics
of 1948 in its relations with
Belgrade. He stated that Bel-
grade will not, for it does not
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CURRENT INTELLIGENCE WEEKLY SUMMARY
1 May 1958
want to be reproached for weak-
ening the "international work-
ers' movement."
Despite their efforts to
check the further deterioration
of their tense relations with
Moscow, the Yugoslavs are not
optimistic. Tito declared that
in view of the tactics adopted
to date---"negative and incor-
rect writing in the press and
biased speeches about Yugoslavia
in some socialist countries"--
the future for good relations
looked dim. He may be correct,
for, despite the present ef-
forts to limit the dispute,
both Moscow and Belgrade are
emphatically committed to op-
posing positions, and the Krem-
lin has been consistently hostile
toward any challenge, particular-
ly one as strong as the Yugo-
slavs presented last week.
The Yugoslavs may be re-
considering their time-worn ra-
tionalization that difficulties
with the USSR are a product of
"Stalinist opposition" to Khru-
shchev, forcing him to take up
the cudgel. Some Yugoslav of-
ficials are taking the line
that while Khrushchev has some
good qualities, he nevertheless
is imbued with the Stalinist
legacy. Such an attitude would
bar any resumption of a close
Soviet-Yugoslav rapprochement.
FRENCH GOVERNMENT CRISIS
Former Premier Rene Pleven,
leader of the small center
Democratic Resistance Union
party, a.t this time has scarce-
ly an even chance to succeed in
his attempt at investiture on
5 or 6 May. Even if he fails,
his negotiations will have At
least served to isolate the is-
sues on which party compromises
are necessary and thereby to
speed up the "ripening" of the
crisis.
Although Pleven's declara-
tion on North Africa--which in-
cludes a new call for a cease-
fire in Algeria, direct talks
with Tunisia, and a warning
against foreign "interference"
--has been endorsed by almost
all the nonextremist parties,
it is so vaguely worded that
the real difficulties in get-
ting agreement on Algeria are
still to be meta
The Socialist party, which
holds the key to Pleven's suc-
cess or failure, has been tend-
ing toward a more liberal ap-
proach to the North African prob-
lem. The Socialists blocked
Popular Republican Georges Bi-
dault's effort last week to re-
solve the crisis on the basis
of a rightist solution and
their leader, Guy Mollet, hopes
to see Socialist Robert Lacoste
removed from his post as min-
ister for Algeria. Pleven
would reportedly shift Lacoste
to the Ministry of Defense, to
take the place of ex-Gaullist
Chaban-Delmas, if the Socialists
agree to participate in his gov-
ernment.
Independent Senator Duchet,
leader of the other large party
whose opposition could upset
Pleven's try for a government
majority, told an American Em-
bassy official on 29 April that
his Independent party will join
a Pleven coalition if it also
includes the Socialists. To
placate the- right, Pleven
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CURRENT INTELLIGENCE WEEKLY SUMMARY
1 May 1958
apparently is planning a shake-
up of the army in Algeria, in
line with the ideas of the
discontented younger officers,
which would permit a step-up,
in antiguerrila operations.
Economic problems aggra-
vate the split between the
With the military campaign
in Sumatra largely completed,
the center of dissident mili-
tary activity has shifted to
North Celebes, where Lt. Col.
Sumual is in command. A North
Celebes task force, supported
by two fighter planes, invaded
Morotai Island on 28 April and
dissident planes, singly and in
,CAMBODIA f
OUTH
JA VA
DJAKARTA
ti
Bukittinggi Pakanbaru
;^ \? J~ -u Riau Is.
S
?~ VIETNAM
~" vJ
INDONESIA
Socialists and Independents and
may hinder a rapid solution
of the political crisis. Infla
tion and foreign exchange'
difficulties are mounting,
and labor's demands for wage
increases have .merely been
stoned by the crisis.
25X1
pairs, have carried out a series
of successful strikes against
government targets on Borneo
and East Indonesian islands.
They have inflicted significant
damage, particularly against
shipping. In addition to'sev-
eral Indonesian vessels sunk
or damaged, several ships un-
der foreign flags were bombed;
Pa/u Bay Ojgilolo\ ~,~ MOROTAI P A C I F I C
/f'-c__ Mena do -K Q HALMAHERA C) C F A AT
_ _-
Gorontalo c?
-T. Manokwari
n
b I oso _ _ on. ~ u
SEA. ` Makassar
&ndari /
S a
AMBON
Surabaya . "'
i~~~ FL[~RES -
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gyNETHERLAND$I
NEW GUINEA
(Status in Dispute) /
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CURRENT INTELLIGENCE WEEKLY SUMMARY
1 May 19 58
one British tanker was destroyed
at Balikpapan, Borneo. Dja-
karta has confirmed that a
freighter recently purchased
from the Soviet Union was hit
in Makassar Strait. As a re-
sult of dissident air strikes on
Balikpapan9 a Shell subsidiary
--BPM--has ord4red the tempo-
rary closure of its Borneo oil
fields and refinery.
The dissident air. strikes
apparently are chiefly responsi-
ble for the strong public state-
ment by Prime Minister Djuanda
on 30 April accusing foreign in-
terests of involvement with the
dissidents. He said the govern-
ment had proof of foreign sup-
ply of arms and aircraft to the
insurgents, said the dissidents
were employing Amer'ican and
Chinese Nationalist pilots,
warned that such intervention
could have "very wide conse-
quences," and called for de-
nunciatiorh of this intervention
by Asian and African nations.
I
Djakarta is continuing its
preparations for new landings
in North Celebes, although dis-
sident air strikes may retard
government plans.
25X1
25X1
25X1
In the meantime, governmen
forces are continuing to ex-
pand, the area 'under their
control in the Donggala region.
In the dissident areas of Su-
matra, the last significant ur-
ban centers have been occupied
by the government--Tarutung in
Tapanuli on 27 April and Bukit-
tinggi, the, dissident capital,
on 28 April. Government oc-
cupation moves include the ban-
ning of political activity,
the appointment of military ad-
ministrators, and the screening
of police, military, and civil
service officials.
Djakarta has sent a deputy
chief of staff to South. Sumatra,
which has professed-neutrality,
to investigate the entire com-
mand and suspend officers dis-
loyal to the central government.
Thus far Lt. Col. Barlian, the
district commander, has been
placed on "leave," and Major
Nawawi, the former Palembang
town commander, has been sus-
Further military equipment
from th Soviet bloc is expected 25X1
Political maneuvering involving
President Sukarno, the Communist
party, and army headquarters
officers is likely to intensify
in the near future. Sukarno is
reported planning another
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1 May 19 58
interregional conference and
can be expected to make every
effort to ensure his own person-
al power by insisting on his
system of "guided democracy"
and by attempting to maintain a
balance between the army and
the Communist party. In this
policy, Sukarno will have the
strong support of the Commu-
nists. Brigadier General
Djatikusumo, a deputy chief of
staff, has publicly stated that
SECRET
the "Communists are getting too
strong and we must stop them."
He has strongly suggested that
Indonesia look to the army
for leadership and has pro-
posed that national elec-
tions--scheduled f or 1959--
be postponed for five years.
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 CURRENT INTELLIGENCE WEEKLY SUMMARY
1 May 1958
NOTES AND COMMENTS
Lebanese President Chamoun
may be nearing a decision on
whether to risk internal dis-
orders by'announcing he intends
to seek a second term. A group
of parliamentary deputies in
Beirut last week announced they
would soon introduce the con-
stitutional amendment which is
the necessary prelude to Cha-.
moun's re-election for another
six years in office. The actu-
al timing of Chamoun's decision
is likely to depend on his es-
timate of both domestic and
foreign support.
Pro-Western leaders in the
Middle East have developed con-
siderable interest in supporting
FRENCH
SOMALI LAND
U L F O F
EASTERN ADEN
PROTECTORATE
CQ~t TIAL
Approved For Fse 2CO911 J D9L0092700080001-7
OWN.
Chamoun, whom they tend to re-
gard as a symbol of their com-
mon antipathy toward Nasir.
Turkey and Iraq have urged the
25X1
West to give Chamoun as much
support as Possible
The UAR President arrived
in Moscow'on schedule on 29
April, flying from Cairo in a
Soviet TV-104 Jet transport.
Moscow has turned on the
expected flood of propaganda on
/ ----.
YE MEN
Baidha.
WESTERN ADEN PROTECTORATE
anel. I
.SULTANATE OF ?~ LAHEJ `AX8EN COLONY (UK)
[// T
EM [RATE
OFOHALA ? F'LOWER'
!r? Dhala SULTANATE
(`` ~
25X1
25X1
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LEBANESE PROBLEMS COMPLICATE MIDDLE EAST SITUATION
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CURRENT INTELLIGENCE WEEKLY SUMMARY
the Nasir visit, flattering both
Nasir and Egyptian-Syrian feel-
ings of self-importance. The
visit is interpreted by Soviet
spokesmen as demonstrating the
importance with which Moscow
views growing Soviet-UAR coop-
eration in political as well as
economic and cultural fields,
and every occasion is used to
allege Soviet-UAR agreement on
the issues of Arab unity, anti-
imperialism, and anticolonialism.
Long-standing Yemeni ef-
forts `to subvert the border
states of the Aden Protector-
ates produced a new flare-up
of military activity last week.
A rebellion has broken out in
the Emirate of Dhala, where a
contingent of native troops and
a British political officer
were besieged by the rebels in
the classical Arabian manner.
A relief column of three com-
panies of British troops drawn
in part from the contingents
recently flown to Aden from
the strategic reserve in East
Africa, moved to the rescue,
while ' RAF.'' :. f ighter'-bombers
sought to keep the enemy at
bay,
This ' iAcident. (followed
hard on the heels of the arri-
val in neighboring Lahej of a
British column which sought to
arrest three subversive leaders,
the most important of whom es-
caped to Yemen. This is only
part of the wider problem which
May 1958
the British authorities face
in trying to develop some firm-
er political structure among
the hodgepodge of sultanates,
emirates, and just plain states
north, west, and east of their
strategic base in Aden Colony.
Yemen's acquisition of Soviet
arms and Egyptian military ex-
perts, plus the local prestige
it has gained from affiliation
with Nasir, the Arab hero, can
be expected to generate contin-
uing trouble in this area.
.Iraq-Jordan Union
Iraq will take a major
step on 5 May toward implement-
ing its union with Jordan when
it holds new parliamentary elec-
tions. The ill-organized op-
position to the Nuri Said re-
gime has indicated it will boy-
cott the contest, and more than
80 of the 145 seats have al-
ready been filled by unopposed
candidates. In what is prob-
ably a typical case of the way
this election is being run in
rural Iraq, a local Kurdish
notable informed the American
consul in Mosul, whom he asked
to favor'his cause, that he
hoped to run but was awaiting
word from "Baghdad" before even
putting up his deposit money.
The elections are necessary be-
fore the Iraqi Parliament can
approve the constitutional
changes which will make way for
the establishment of a union
parliament,
In Jordai,, new elections
are not .. constit .tio.na1ly
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CURRENT INTELLIGENCE WEEKLY SUMMARY
1 May 1958
required; members of the future
union legislature will simply
be appointed from the ex-
isting Jordanian Parliament.
GAZA AND THE UNITED ARAB REPUBLIC
25X1
The United Arab Republic
(UAR) is using the newly re-
constituted government in the
Gaza strip in,an anti-Israeli,
anti-Jordanian propaganda cam-
paign, but does not appear ready
to grant Gaza independence or
incorporate it into the UAR.
The Gaza area of the former
state of Palestine has been
under Egyptian military gover-
norship since 1949. The un-
representative character of the
present Gaza government and the
opposition to Egyptian rule
among Gaza's nonrefugee ele-
ments are complicating Cairo's
problems there.
!.,"The revival of constitu-
tional government under Egyp-
tian supervision on 14 March,
followed by the appointment of
a legislative council, stimu-
lated widespread speculation
that Gaza would be declared
"independent" and then choose
union with the UAR. In its
first session on 3 April, the
Gaza legislative council re-
solved that the people of "Pal-
estine" were determined to
Join the UAR at a time
chosen by the "proper au-
thorities." Another resolu-
tion asserted the equality
of "Palestine Arabs" residing
in Gaza, i.e., refugees, with
the "inhabitants" of the Gaza
district. There are 220,000
refugees and about 95,000 na-
tives in the area.
The implication that Gaza
would become a new Palestine
and a haven for the refugees
was calculated to harass the
government of Jordan, with its
nearly half-million refugees,
and at the same time: sound like
a potential political threat
to Israel. However, the actual
practice of Egyptian rule
in Gaza, and even the legal
terms under- which the Gaza
government operates, are such
that Cairo would have consider-
able difficulty in even creat-
ing a facade of independence
preparatory to bringing the
area into the UARO
The hand-picked officials
of the present governing legis-
lative and executive councils
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are subservient to Cairo, and
Egyptian control is resented by
some of the older inhabitants
of Gaza. The Egyptian governor
general in mid-April requested
urgent reinforcement by Egyptian
troops following public demon-
strations protesting rumors of
UAR intent to "annex" the area.
To intimidate this opposition,
Cairo is staging a treason Cria'l
in Gaza. A prominent resident,
not a refugee, is charged with
25X1
An EOKA campaign of sabo-
tage and assassination--mostly
of Greek Cypriot "traitors"--
continues. Recently, EOKA has
sent two demands to the British.
The first, issued on 21 April,
threatened an all-out EOKA of-
fensive unless Britain immedi-
ately began negotiations for a
settlement of the Cyprus ques-
tion. The second, issued on 26
April with a 48-hour time limit,
warned that attacks on British
personnel would begin unless
the "inhuman tortures" of polit-
ical detainees were stopped.
However, no attacks on British
personnel have yet been reported.
In response to EOKA activ-
ity, Governor Foot again called
for an end to violence and prom-
having contacted Jordanian au-
thorities in connection with an
alleged plot to reach an agree-
ment with Israel.
Until the divisions among
Gaza's inhabitants, some of
which go back to pre-1947 Pales-
tine politics, become less acute,
the Egyptians probably would be
reluctant to loosen'their mili-
tary administration 'even for a
very short time.
25X1
ised to lift the emergency regu-
lations if order is restored.
He said he intends to go to
London for conversations on
Cyprus early in May, but warned
of the consequences if violence
continues. His relatively con-
ciliatory policy is opposed by
almost his entire staff, and
British officials have said they 25X1
are ready to take stricter and
more effective countermeasures
London can do little to ad-
vance a settlement while a care-
taker government in Athens waits
for elections scheduled for 11
May. In addition, any British
statement which might placate
EOKA and the Greeks would cause
a violent reaction in Turkey
and among the Turkish Cypriots.
Speculation has been grow-
ing in London, Nicosia, and Ath-
ens that Britain may offer a
plan calling for immediate self-
government, self-determination
in ten years, and a Turkish mil-
itary base under NATO in the
northeastern part of the island.
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1 May 1958
The increasing belligerency
of EOKA may indicate that a dif-
ference of opinion on tactics
is developing between EOKA lead-
er George Grivas and the moder-
ate Greek Cypriots, including
Archbishop Makarios. Grivas is
reportedly ready to plunge Cy-
prus into what he has termed
a "heroic holocaust." 25X1
25X1
The conference of Moroccan
Istigial, Tunisian Neo-Destour,
and Algerian National Liberation
Front (FLN) leaders, who met in
Tangier from 27 through 30 April,
will probably immediately result
in increased Moroccan support
for the Algerian rebellion.C
in both Tunis and Rabat. Its
main function probably will be
public relations.
The conferees demanded the
evacuation of French troops from
Tunisia and Morocco. They al-
so asked that France end. its
aggression against Algeria, and
that NATO and other powers cease
prolonging the colonial war by
providing "political and material
aid" to France. As a sop to
Istiglal's expansionist policy
and to Mauritanian observers at-
tending the conference, the fi-
nal communique pledged "active
support" to the Moroccan-spon-
sored group from Mauritania which
wants to unite that French West
African territory to Morocco.
In the long run, the con-
ference is likely to be regarded
as the first significant step
toward the creation of a federa-
tion of Maghrebian (North Afri-
can) governments. Toward this
end, the conference, in its fi-
nal communique issued on 30
April, recommended that an in-
dependent Algerian government
be formed by the FLN after con-
sultation with the Moroccan and
Tunisian governments and that
a North African consultative as-
sembly be created to include
representatives from the Moroc-
can and Tunisian national as-
semblies and FLN delegates.
Meanwhile, two representatives
from each of the three parties
meeting in Tangier will estab-
lish a permanent North African
secretariat with headquarters
Although the Libyan Govern-
ment had been invited to send
an observer, no Libyans attended
the conference. Bourguiba will
continue, however, to press for
Libyan participation in future
North African meetings.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
1 May 1958
The er-
ican consul general in Tangier
comments that the delegations
generally gave the impression
of caring little whether France 25X1
reacted adversely to their de-
cisions.
MIKOYAN VISIT TO WEST GERMANY
The visit of Soviet First
Deputy Premier Mikoyan to West
Germany from 25 to 28 April to
sign the Soviet - West German
trade agreement provided the oc-
casion for Moscow to reaffirm
its "hard line" on the German
problem. While professing to
favor increased contacts and a.
broadening of friendship and
trust between his government
and that of West Germany,
Mikoyan--the highest ranking So-
viet official ever to visit the
West German Republic--made it
clear that Moscow takes a dim
view of Bonn's military policy.
In both public and private talks,
Mikoyan, wa=rd of the consequences
of the Bundestag decision to
arm the German Army With nu-
clear weapons. In addition to
his warning of a "castatrophe"
in case of armed conflict, the
Soviet leader'emphasized that
the atomic armament of West Ger-
many was irreconcilable with
ultimate German reunification.
Mikoyan declared his gov-
ernment's willingness to refrain
from using nuclear and rocket
weapons on any West German tar-
gets even in the event of a mil-
itary conflict if the territory
of the Federal Republic is kept
free of atomic and rocket weap-
ons. This offer would go fur-
ther than limiting West German
atomic armament, since it would
require removal of allied nu-
clear and missile weapons on
West German soil. This "uni-
lateral offer" was intended to
encourage those factions in
West Germany opposed to'atomic
armament, a major aim of the
visit.
Mikoyan repeated the old
formula that "the Gerthans must
confer around one table and come
to terms." He visited East Ber-
lin after leaving Bonn to empha
size the Soviet policy of af-
fording the two German states
"equal treatment." ..He reiter-
ated in Bonn that Soviet agree-
ment at the 1955 summit to
a German reunification plan
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.CURRENT INTELLIGENCE WEEKLY SUMMARY
1 May 1958
involving free elections was
no longer binding on his govern-
ment and that any reunification
work must be begun anew. He
then encouraged summit discus-
sion of a German peace treaty
with a "confederation or repre-
sentation" competent to repre-
sent both East and West Germany.
West German Reaction
West German official reac-
tion to the Mikoyan visit has
been largely negative. While
in its announcements Bonn spoke
of "coming closer together" with
Mikoyan, Foreign Minister Von
Brentano called the visit "dis-
appointing."
One of Bonn's primary goals
was to sound out Mikoyan pri-
vately on a comprehensive range
of political topics. Adenauer's
and Mikoyan's personal talks
dragged on for five hours; at
one point an impatient Soviet
diplomat remarked, "The two
foxes in the hole refuse to let
go of each other."
Mikoyan's attempts to ex-
ploit internal West German dif-
ferences on nuclear arms may
be largely offset by Adenauer's
current stress on the need for
controlled disarmament and the
implication that Bonn would
then no longer need nuclear
weapons. In addition, Mikoyan's
repetition of the Soviet "hard
line" on reunification disil-
lusioned even German opposition
circles.
The visit also led to
agreement with Bundestag
President Gerstenmaier that
the long-postponed visit of
a Bundestag delegation to
Moscow would take place in
September. 25X1
SOVIET ATLANTIC FISHING FLEET MAY BE AIDING SUBMARINE OPERATIONS
Soviet fishing trawlers,
appearing in increasing numbers
off Newfoundland, may have been
deployed to the area for more
than fishing activity and could
be associated with Soviet sub-
marine operations in the area.
There is no firm evidence of
covert activities on the part
of these fishing ships, however.
The Soviet trawlers in the
Newfoundland area are engaged
in fishing operations, but re-
cent observation indicates that
a fair proportion of their time
is spent stopped or cruising at
very slow speed in water be-
lieved too deep for fishing or
in areas known to be unproduc-
tive. Commercial fishermen of
Western countries have repeated-
ly expressed opinions that the
Soviet ships continue to work
areas and use techniques un-
profitable for customary fish-
ing practices.
Most of the Soviet high-
seas fishing fleet operating
in the North Atlantic area con-
centrate in a triangle formed
by Iceland, Jan Mayen Island,
and the Faeroe Islands. During
the past two years, however, a
number of larger and more modern
trawlers have operated in the
Grand Banks area off Newfound-
land in the vicinity of the
North Atlantic shipping lanes,.
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1 May 1958
Type of Soviet trawler operating in North Atlantic
25X1
This provides opportunities for
using these ships for clandes='
tine military purposes in con-
junction with and under the
cover of legitimate fishing,
and intelligence collection is
probably a continuing objective.
The trawlers may be carry-
ing out special hydrographic and
oceanographic surveys which
would aid future Soviet subma-
I
Nautical Miles
i
Statute Miles
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rive operations in the area, and
.could provide support to subma-
long-range patrols.
The position of the Soviet
fishing fleet off Newfoundland
25X1
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CURRENT INTELLIGENCE WEEKLY SUMMARY
1 May 1958
and its length of stay in the
25X1 area would permit
monitoring of-
No th Amer communications.
Extensive antenna arrays and
radio facilities have been
noted on these ships.
25X1
EXPANDED SOVIET MERCHANT FLEET OPERATIONS
The USSR is using larger
numbers of its merchant vessels
in its trade with the free
world in order to reduce its
dependence on chartered Western
ships, to conserve foreign ex-
change, and to extend the So-
viet economic offensive to
ocean shipping. The growth in
the number of Soviet, as well
as satellite, vessels operating
on free-world trade routes at
a time when the world charter
market is depressed is creat-
ing increasing difficulties
for Western shipowners. The
attempts by the bloc to elimi-
nate its reliance on Western
vessels to carry bloc cargoes
are not likely to be success-
ful, however, in the near fu-
ture.
In a recent speech, the
deputy minister of the Soviet
Merchant Marine reported on
the great strides during 1957
in carrying foreign trade car-
goes and stated that "during
1958 the greatest emphasis in
the work of the maritime fleet
should be to increase the vol-
ume of cargoes carried for the
Ministry of Foreign Trade." He
also noted that domestic produc-
tion of large tankers and vari-
ous types of cargo ships with
the latest technological re-
finements will make it possi-
ble to end Soviet dependence
on capitalist steamship com-
panies and to save foreign ex-
change. As a start, Soviet
plans call for eventually car-
rying all.export petroleum in=
Soviet bottoms.
The Soviet intent is clear-
ly discernible in the use of its
tanker fleet. The USSR had
seldom carried oil to nonbloc
destinations until the closure
of the Suez Canal from November
1956 to May 19 57. During the
past year, however, the USSR
has made permanent arrangements
for the use of its tankers in
oil deals with the West. Fin-
land until early 1957 had been
supplying transportation for oil
purchased from the bloc. In
February of that year, in a
supplemental petroleum agreement,
the USSR indicated it would use
Soviet tankers for the delivery
of additional oil.
The USSR-Iceland agree-
ment calls for half the de-
liveries to be made by Soviet
vessels. In 1957, Italy not
only began to receive much of
the crude oil it buys from the
USSR in Soviet tankers, but the
USSR also loaded refined products
in Italy for delivery to nonbloc
countries in northern Europe.
Soviet cargo ships are
also now servicing trade with
the West. At the present time
only Soviet cargo ships are en-
gaged in carrying sugar to the
USSR under a 150,000-ton Soviet-
Cuban contract. During 1957
only one third of Cuba's sugar
cargoes were carried in Soviet
vessels, and in 1956 no Soviet
ships were used. Soviet vessels
now on this run also deliver
Polish coal to South America,
reducing the need for Poland
to charter western tonnage for
this purpose.
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1 May 1958
SOVIET MERCHANT FLEET
CARGO SHIPS
JAN 1956 JAN 1957
I MAY 1958
The USSR is now carrying
in its own ships the 400,000
tons of wheat it agreed to pur-
chase annually from Canada. In
1956 over 60 percent of this
wheat was carried by chartered
Western vessels. Similar situa-
tions have developed in Western
Europe. Danish shipping of-
ficials complain that the in-
creasing proportion of Soviet
vessels being used in Soviet-
Danish trade is intensifying
the shortage of cargoes avail-
able for Danish ships.
Soviet bloc economic and
military aid agreements in the
Middle East and South and South-
east Asia have stimulated bloc
shipping to these areas. Large
numbers of tankers and cargo
vessels have been calling regular-
ly at Egyptian and Syrian ports
for the past two years, and more
recently the bloc has stepped
up its shipping to India, Ceylon,
and Indonesia under the terms
of trade agreements.
Poland, the major East Euro-
pean satellite engaged in over-
seas shipping, also is expanding
its routes to the West. In 1957
the Polish Ocean Lines advertised
large numbers of -regularly sched-
uled calls at ports in the Far
East and Southeast Asia. Polish
experts are now in Indonesia
proposing a Polish-Indonesian
shipping agency.
(Prepared by ORR)
25X1
USSR PLANS BALTIC OIL DEPOT TO SUPPLY NORTHERN EUROPE
The USSR plans to build a
major oil depot, including
storage and shipping facilities,
at an ice-free port on the Bal-
tic Sea in the Lithuanian SSR.
This would enable the USSR to
supply the petroleum-deficient
countries of northern Europe
expeditiously and at low cost
from the oil-rich Ural-Volga
area. The proposed base, near
the Kurskiy Lagoon, and its as-
sociated refineries and pipe-
lines are not expected to be
completed before 1962.
Construction of a large
oil refinery has been started
at Polotsk in the USSR about
300 miles east of the proposed
Baltic depot. Oil pipelines
to Polotsk from the Ural-Volga
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CURRENT INTELLIGENCE WEEKLY SUMMARY
1 May 1958
area, which by 1960 will pro-
duce 75 percent of Soviet crude
oil, are under construction or
planned. No plans have been an-
nounced for connecting the re-
finery at Polotsk with the pro-
posed Baltic depot, but such a
pipeline system could forward
crude from the producing fields
as well as petroleum products
from the refinery.
In 1957 Soviet bloc pe-
troleum sales to nonbloc north-
ern European countries--Finland,
Sweden, Norway, Iceland, Brit-
ain, Belgium, the Netherlands,
Denmark, and West Germany--were
about 3,400,000 tons, delivered
by tankers from Black Sea ports,
Shipment from the proposed Bal-
tic Sea base would reduce the
average tanker haul to about
one fourth the distance and
thus cut total transport costs
considerably.
Present demand for petrole-
um in the nonbloc northern Euro-
pean countries is about 85,000,-
000 metric tons annually and is
expected to increase to about
145,000,000 tons per year by
1965, Most of this must be met
by imports. A new Soviet oil
depot on the Baltic Sea would
LAND
be in a strategic position to
enable the USSR to compete with
free world oil producers for a
share in this market. The USSR
has announced a production goal
of 350,000,000 to 400,000,000
tons of crude oil in 1972. Pro-
duction approaching this mag-
nitude would permit the USSR to
supply a substantial part of
the increased northern European
demand by 1965.
The proposed oil depot
could also serve the bloc coun-
tries of northern Europe to
advantage. Poland plans to
build a refinery at Konin, 150
miles inland from the Gulf of
Danzig, with an annual capacity
of 2,000,000 metric tons of
crude oil. Crude oil for this
refinery is to be supplied by
the USSR and could come from
the new oil base. There is
also a coordinated European
satellite plan to build a pipe-
line from the port of Stettin
(Szczecin) near the mouth of
the Oder River to supply oil
to western Poland, East Ger-
many, and Czechoslovakia;
this pipeline could also be
served fro the new oil
base.
-SELECTED OIL PIPELINES IN CENTRAL EUROPEi
1 L TIC
~` t r.n r.a urti
Kenin,
EAST
GSRM+NY
Warsaw
., P o L A N D
l1
Possible
Klaipedo planned pipeline
Proposed
oil base ??. I
Bryansk
Oil pipeline under construction (original Sixth Five-Year Plan
Oil pipeline planned (original Sixth Five-Year Plan)
1 MAY 1958
O MILES
~ Krennenchag
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CURRENT INTELLIGENCE WEEKLY SUMMARY
1 May 1958
Soviet military strength
in Eastern Europe continues to
be formidable; at least 28
ground line divisions and 50
air regiments remain after re-
cent withdrawals from East Ger-
many and Hungary. Any adverse
effect of the personnel reduc-
tions on the capabilities of
Soviet forces has been largely
offset by a recent reorganiza-
tion of these forces and the
redistribution of modern equip-
ment and some personnel from
departing units among the re-
maining forces. Soviet strength
remains stable in Poland and
Rumania and is twice its pre-
rebellion level in Hungary.
In January, the USSR an-
nounced that those troops with-
drawn from East Germany and
Hungary would be demobilized.
The USSR has taken
pains to 'demonstrate
the fulfillment of
its announced with-
drawal plans, but it
will be difficult to
ascertain whether the
troops will in fact
be demobilized.
East Germany
The bulk of So-
viet strength in
Eastern Europe is
concentrated in East
Germany, where ground
forces recently im-
proved their capabil-
ity by an extensive
reorganization which
increased the ratio
of armor and trans-
port to infantry.
Some 345,000 troops
are organized into
20 combat-ready line
divisions and an air
army of 22 air regi-
ments equipped with
955 late-model air-
craft.
WEST
GERMANY
The training cycle for
ground troops this year has de-
parted from that of previous
years to achieve an improved
year-round combat capability.
The 24th Air Army in East
Germany is the largest and best
balanced of the Soviet tactical
air armies and is well inte-
grated with ground units which
it supports. A network of
first-class airfields facili-
tates, along with good ground
support equipment, the mainte-
nanceof a high level of training.
POLAND
2 Divisions USSR
14 Air Regiments 47 Divisions
(western USSR only)
155 Air Regiments
ADRIA TIC
SEA
HUNGARY
4 + Divisions
9 Air Regiments
Figures cover line divisions only.
*Four additional divisions from Hungary and East
Germany may have been relocated in the USSR.
SECRET
RUMANIA
2 Divisions
5 Air Regiments
BLACK
SEA
0 1 TURKEY
AEGEAN
eg SEA
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CURRENT INTELLIGENCE WEEKLY S
1 May 1958
Hungary
In Hungary at least 60,000
troops are organized into four
or more line divisions and nine
air regiments equipped with 305
late-model aircraft. Ground
troops have been receiving the
normal cycle of intensive train-
ing for the past year. As pres-
ently deployed, these troops
would be better able to deal
with civil disturbances than
were the prerebellion divisions.
During the past year, Soviet
air strength in Hungary was aug-
mented by three fighter regi-
ments.
Other Satellites
In Poland and Rumania,
where the USSR did not announce
plans for withdrawing troops,
strengths have remained relative-
ly stable. The 35,000 ground
troops stationed in each coun-
try are organized into two line
divisions and support elements.
In Poland, 14 Soviet air regi-
ments having 445 aircraft and,
in Rumania, five air regiments
with 190 aircraft serve in an
air defense role as well as pro-
vide tactical air support for
ground units.
Although there are no So-
viet line units in Czechoslova-
kia, Bulgaria, and Albania, So-
viet advisory groups are main-
tained in these countries. So-
viet forces in Eastern Europe
can be readily reinforced by the
886,000 ground troops--47 line
divisions--and 155 air regiments
located in the wes.prn USSR.
F__ I 25X1
SOVIET LEGAL DEVELOPMENTS
A recently completed draft
of basic principles for Soviet
criminal procedural codes ap-
parently fails to provide for
any genuine liberalization of
Soviet law. As described in the
March 1958 issue of Socialist
Legality, the princip e~ s seem
merely to formalize the limited
legal concessions approved at
the 20th party congress, reject-
ing many proposals which if
adopted would have been of great
importance in establishing and
safeguarding the basic rights
of the Soviet individual.
Designed as a model for all
republic criminal procedural
codes, the principles have been
in preparation for over a year.
Along with similar drafts for
civil and criminal codes, they
are the regime's substitute
for the USSR code of laws recom-
mended by Lenin. After many
false starts, plans to draft a
nationwide code were dropped
at the February 1957 session
of the Supreme Soviet. Since
that time, leading Soviet ju-
rists have written many articles
recommending reforms of the out-
moded legislative guide which
has been in use since October
1924.
The new draft rejects the
principle of presumption of in-
nocence until guilt is proved
on the grounds that no legal
case is initiated on the sole
basis of suspicion. To presume
innocence, the article stated,
would be to undermine confi-
dence in the Soviet investiga-
tive organs--the police and the
prosecutor general's office.
A proposal that the number of
people's judges be increased
was also dropped because such a
move would have been a step
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CURRENT INTELLIGENCE WEEKLYSU
1 May 1958
toward trial by jury. It was
explained that socialist society
does not need a jury system
since democratic rights and pro-
cedures are guaranteed by the
Soviet constitution.
A middle course was steered
on the question of the role of
confessions. They will be
treated in the same. manner as
any other evidence, and neither
as overriding proof of guilt,
as was done by Andrei Vyshinsky,
nor as inferior evidence, as the
liberal school of Soviet jurid-
ical thought had proposed.
The law relating to the role
of the defense attorney was some-
what liberalized. While accused
persons in the past were entitled
to a defense attorney only at
the point when a case came to
trial, the defense counsel can
now begin preparing his case as
soon as the state's evidence
against the accused is presented
to him. A proposal that the de-
fense be allowed to participate
in the preliminary investigation
of cases was turned down on the
grounds that a suitable defense
could not be prepared until all
the evidence had been athered. 25X1
The central committee of
the Soviet Communist party on
21 April set a schedule for
shortening the workday in heavy
industry, in line with the deci-
sion announced at the 20th party
congress to introduce a basic
seven-hour workday throughout
Soviet industry by 1960, result-
ing in a 41-hour week. This and
the related program of wage re-
form initiated in 1955 are de-
signed to improve workers' wel-
fare and eventually to increase
their productivity.
The first step toward uni-
versal shorter hours was taken
shortly after the 20th party
congress in March 1956 when the
workweek for all workers and
employees was reduced from 48
to 46 hours by reducing the
Saturday-working day from eight
to six hours. Following this
was .a general reduction in work-
ing hours for persons under 18
from eight per day to six, ef-
fective 1 July 1956.
After experimental intro-
duction of the shorter workday
in several plants and mines dur-
ing 1956, the Council of Min-
isters decreed a seven-hour day
for aboveground workers and a
six-hour day for underground
workers in the Ukrainian coal
industry. This change was com-
pleted by 1 January 1957 and
was followed by an announcement
that other industries would
make the same move in the course
of the year. In May,Khrushchev
announced that the workday would
be shortened during 1957 "in
mines and metallurgical and coke-
chemical enterprises in the
iron and steel industry" and
that measures were being taken
to do so in all other indus-
tries.
In detailing timetables for
the changeover, the new decree
demonstrates a firm recommit-
ment to the program, which may
have been thrown off schedule
by the industrial reorganization.
Issuance of the decree probably
indicates that the seven-hour
day, where it has been instituted,
has thus far been successful..
The cement industry, for ex-
ample, is scheduled to change
over to the new hours be-
tween July and December 1958,
while the nonferrous metallurgy
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CURRENT INTELLIGENCE WEEKLY SUMMARY
1 May 1958
industry will be phased over
between July 1958 and September
1959. The regime hopes to com-
plete the changeover of heavy
industry and to begin the trans-
fer of other branches of in-
dustry in 1959. By the end of
1958, some 8,000,000 Soviet
workers will be on the six- or
seven-hour day.
The shorter hours may pro-
mote productivity in the long
run by reducing absenteeism and
by providing the worker with
added incentive to maintain his
output. Most Soviet sources
have claimed that the reductions
in hours carried out so far,
notably in the coal mining in-
dustry, have not adversely af-
fected production, productivity,
or wage level, An early April
report published in Trud, how-
ever, implies that wage costs
for ferrous metal production
have increased as:a result of
the reduction. Nevertheless,
increased labor productivity
which apparently resulted from
the measure has kept the need
for new employees below that
anticipated.
The new decree also mentions
the progress of the wage reform,
an effort to correct the in-
equities of varying wage rates
for different industries, and
the illogical bonus system. In
addition to correcting these dis-
proportions, the wage reform
program is aimed at raising the
wages of low-paid workers by
"closing the gap between the
maximum and the minimum wages"
and at assurin a rise in labor
productivity.
(Prepared by ORR
PROBLEM OF DISSIDENT BULGARIAN WRITERS UNRESOLVED
The Bulgarian regime con-
tinues to be plagued by literary
dissidence. In the past month
considerable public attention
and criticism have been paid
the rebellious writers, with
the aim of forcing conformity
without the use of police ter-
ror. Party Leader Todoz Zhivkov
said in a speech at the annual
"accountability meeting" of the
Writers' Union on 7 and 8 April
that the writers had neglected
their most important responsi~-
bility, that of raising the
people's social consciousness
to the level of their material
progress.
Zhivkov censured the chief
rebellious writers--Emil Manov
and Todor Genov--but indicated
that the dissidents, several of
whom recently were removed from
their posts on regime publica-
tions, have neither been ex-
pelled from the party or the
Writers' Union nor denied per-
mission to write, He expressed
concern, however, that young
writers were being won over to
the cause of these rebellious
writers. At the close of the
meeting, the Writers' Union in-
dicated how firmly it was under
regime control by issuing a mes-
sage to the party central com-
mittee pledging complete con-
formity with the party's wishes.
On 16 April, the new pre-
sidium of the Writers' Union
elected Georgi Karaslavov, can-
didate central committee member
and regime favorite, as its
secretary general. The other
new secretaries were almost all
moderates, although all of them
have backed the regime complete-
ly in recent months. Although
the secretaries are not likely
to be overindulgent of the dis-
sidents' behavior, the fact
that the regime chose any
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CURRENT INTELLIGENCE WEEKLY SUMMARY
1 May 1958
moderates for the leadership of
the union is another example of
its willingness to make conces-
sions without compromising on
the basic issues.
The main point at issue be-
tween the dissident writers and
the regime has been the latter's
right to control literary af-
fairs. After a protracted crit-
ical press campaign during the
latter part of 1957, the regime
tried to force the rebels to
indulge in self-criticism at
the November meeting of the
Writers' Union party bureau.
After this failed, at least 15
of the dissidents were removed
in February from responsible
editorial posts.
The regime may not have
adopted the same harsh measures
with the dissidents that It used
recently in resolving. troubles
with youth and economic profit-
eers because of the current So-
viet line favoring "comradely
persuasion" of recalcitrant in-
tellectuals. Party chief Zhiv-
kov's speech may, be an indica-
tion that the regime is trying
not to antagonize the writers
since it requires their posi-
tive assistance if it is to
make the claim that Bulgaria is
moving toward socialism in all
areas. More practically, it
needs their favorable literary
comment to convince the people
that they should accept their
lot and to exhort them to
willing participation in
and enthusiasm for the Third
Five-Year Plan.
NORTH VIETNAMESE INTELLECTUALS ARRESTED
Eighteen months of coer-
cion, exhortation, and re-edu-
cation have failed to silence
the critics of the Hanoi regime
among the North Vietnamese in-
telligentsia. At least three
dissenters accused of counter-
revolutionary activities were
arrested last week, and uncon-
firmed reports state that 14
others have been arrested.
Those jailed are Nguyen Huu
Dang, a, well-known writer and
political analyst; Thuy An, a
woman novelist; and Tran Thieu
Bao, publisher of magazines
which were suspended by the
Communist authorities. Roughly
coinciding with the arrests was
a wave of self-criticism.by
figures who had been extremely
vocal in their censure of the
regime.
Signs of impending trouble
became apparent in January when
the regime suspended Van, the
organ of the Vietnamese Writers'
Association, for publishing
articles critical of the status
quo in North Vietnam, The maga-
zine was bitterly assailed in
the party press for aping the
attitudes and opinions of a
periodical which had been sus-
pended a year before--Nhan Van.
Nhan Van had appeared been
S`eptemer and December 1956 dur-
ing a short-lived liberalization
experiment in Hanoi. Embar-
rassed by the periodical's crit-
icism and demands for more free-
dom, the regime forced its clo-
sure and regrouped the intel-
lectuals into a new cultural
association whose organization
was designed to facilitate the
suppression of criticism.
In February this year,
Hanoi postponed its spring
theatrical festival because the
new plays were "worthless and
politically underdeveloped,"
At the beginning of March, the
regime called a meeting of over
300 writers and artists, osten-
sibly to study the declaration
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CURRENT INTELLIGENCE WEEKLY SUMMARY
1 May 1958
made at the conference of Com-
munist parties held last Novem-
ber in Moscow, but the length
of the meeting--40 days-.4sug-
gests that it was principally
a re-education and indoctrina-
tion session.
Concurrently, the party
press published long, bitter
articles attacking revisionism
in literary circles, the brunt
of the criticism falling on
the so-called Nhan Van clique.
Thirty-two of oar h Vietnam's
most prominent writers, poets,
artists;, and composers were
named as having fallen into
the revisionist trap. They
were accused of opportunism,
bourgeois idealism, cynicism,
anarchism, and, perhaps most
ominously, of fighting the par-
ty's leadership.
When the conference closed
on 17 April, Hanoi announced
that writers and artists had
reached a unanimity of views
and that they had expressed
absolute confidence in-,the par -
ty's leadership. The Communist
victory, however, seems to have
been considerably short of com-
plete. The recantations of sev-
eral literary figures published
in the press were not groveling;
they evaded answering the party's
major criticisms. Two days
later, it was revealed that
three persons, all well-known
cultural figures, had been ar-
rested for using literary ac-
tivities as a front to sabotage
the regime. The Minh Due pub-
lishing house which had printed
Nhan Van was accused of being
the cenTer of an espionage ring.
Hanoi will use the forth-
coming treason trials of the
three arrested to document its
case against other dissenters,
and the renewed effort at intim-
idation will probably si-
lence the critics for a time.
It is also likely, however,
to cost the regime the co-
operation of many talented
and well-educated individuals
in a societ which has few to
spare.
LAOTIAN ELECTIONS
Informed observers esti-
mate that the Communist Neo Lao
Hak Zat party (NLHZ), successor
to the Pathet Lao movement,
will capture between four and
ten seats in the Laotian Nation-
al Assembly elections on 4 May.
A total of 21 seats are at
stake, and the elections will
increase the number of deputies
to 59. The NLHZ has been con-
ducting a disciplined and ef-
fective campaign. in contrast
to the conservative parties,
which have failed to consolidate
their resources and agree on a
limited list of candidates.
A strong showing by the
Communists would pave the way
for the NLHZ to become a lead-
ing contender in the 1959 na-
tional elections, when all as-
sembly seats will be at stake.
It would also result in in-
creased pressure on the govern-
ment for closer relations with
the bloc.
25X1
The campaign has been marked
by some irregularities and in-
cidents of violence. The Laotian
Government has assembled a
dossier of NLHZ electoral vio-
lations, and the NLHZ has filed
a formal protest with the tri-
partite International Control
Commission against army and gov-
ernment activities. Murder,
abduction, bribery, false arrest,
and voter intimidation have been
freely charged by members of all
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 contending parties and various
unaffiliated candidates. The
NLHZ complaints and additional
charges of American intervention
in Laotian affairs have been
exploited by Hanoi radio in a
manner designed to play on Lao-
tian fears that the Communist
insurrection might be renewed.
P79-009271700080001-7
CURRENT INTELLIGENCE WEEKLY SUMMARY
1 May 1958
The conservative parties
of Laos will have a comfortable
majority in the assembly for
the coming year. The premier-
ship will probably remain with
the Nationalist party, currently
the assembly's largest, and will
be held by:: Premier Souvanna
Phouma or former Premier Katay.
Regardless of the outcome of
ase 2005/02117; -
this election, the Communists
probably will continue to be
represented in the cabinet.
Throughout the campaign,
the Laotian Army has been the
conservatives' most effective
agency, and it will have the
responsibility for policing the
voting. While the army appears
to be in a position to ensure
the election of government-
selected candidates in most
areas, too blatant, interfer-
ence will run the risk of cen-
sure by the International Con-
trol Commission and consequent
international. pressure for the
retention of that supervisory
body.
The investiture of the con-
servative Sim Var government in
Cambodia on 24 April foreshadows
a more effective government and
greater efforts to counter.Com-
munist subversion, although
without abandoning Cambodia's
neutral foreign policy. Sim Var
is Cambodia's most prominent
anti-Communist leader. He be-
came "caretaker" premier last
summer during Crown Prince
Sihanouk's absence abroad,but
resigned in January when the Na-
tional Assembly was dissolved.
He has announced specific steps
to fight "subversive maneuvers
and antirational activities"
and has recommended long-range
reforms to ward off political
and economic deterioration.
The new government enjoys
the full support of Sihanouk,
who continues to show an aware-
ness of the Communist threat to
Cambodia. He has admonished the
recently elected assembly to co-
operate with : the- : executive
branch and has indicated he
would like to see the present
government remain in office at
least one year. To bolster
further the prestige of the Sim
Var administration, Penn Nouth,
the senior political adviser to
the throne, has also been de-
signated official adviser to
the government.
In addition to the problem
of subversion, Sim Var has list-
ed as primary targets for gov-
ernment action corruption, clan-
destine 'immigration, illegal
25X1
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Now w
1 May 1958
nationalization--presumably
largely involving Chinese--and
rising rural:insecurity. He' has
called for immediate reorganiza-
tion . of '.?thp police, .a more en-
lightened information program,
and general-efforts to. restore
state authority "at'=all echelons."
Despite the good intentions
of the Sim Var government, im-
plementation of the announced
programs will be hampered by
traditional Cambodian lethargy
and the dearth of trained per-
sonnel. An upcoming test of the
new government's ability involves
taking over direct administra='.
tion of the nation's 250,000
Overseas Chinese, whose affairs
formerly were handled by semi-
autonomous regional Chinese as-
sociations recently abolished
by the government. Although
this step was taken with the ap-
parent aim of curtailing pro-
Peiping influence in the Chinese
community, the confusion which
has resulted stands to facili-
tate Communist subversion
25X1
The recent flare-up of
strikes involving some 150,000
workers in Ceylon, which has
been plagued by labor discord
since last November, is increas-
ing the political and economic
strain on Prime Minister Ban-
daranaike's government. The
strikers include groups who dis-
ruped Colombo port, rail, and
communications facilities last
fall, indicating that labor
leaders and workers are still
dissatisfied with wage increases
granted by the government and
private employers.
Since Ceylon must -import
about two thirds of its' food,
continuation of the strikes will
again cause island-wide food
shortages and serious, losses to
private industry and trade. The-
Bandaranaike government, already
troubled by communal tension,
once more must find a solution
to the problem of labor's wide-
spread lack of discipline which
has damaged the island's econ-
omy for the past five and a
half months.
The present strikes were
begun on 22 April by railway
and postal workers belonging to
the leftist Public Service Work-
ers' Union Federation, which
claims the allegiance of about
two thirds of the island's pub-
lic service workers. On 24
April, some 25,000 nongovernment
members of the Communist Ceylon
Trade Union Federationjoined
the strikes, disrupting work
in Colombo port and in printing,
engineering, tea, and rubber
trading firms. The strikers de-
manded more political rights
and a cut in the cost of living.
Governor General Goonetil-
leke immediately ordered the
military to run essential serv-
ices, and the police patrolled
Colombo to hold down violence
and to protect the skeleton
staffs working in government of-
fices. On about 26 April, Prime
Minister Bandaranaike called the
troops off the streets and re-
laxed security controls in re-
sponse to union protests against
the government's antistrike ac-
tivities. The strikes and bomb-
throwing incidents continued.
On 28 April the government
issued a communique promising
no disciplinary action if the
strikers returned to work and
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stating that their demands would
receive attention once work was
resumed. On 29 April, one un-
ion reportedly directed its
workers to return, but the larg-
est federation announced plans
to intensify the strike until
its demands are met. As of 1
May, neither side appeared will-
ing to negotiate.
The Colombo tea market, on
which the Ceylonese economy de-
pends heavily, reportedly is
paralyzed, and the movement of
cargo is slow in the commercial
section of Colombo port, where
the Communist harbor union is on
strike. Six ships left last
week end, abandoning some 10,000
tons of unloaded zood
PROSPECTS FOR THE ECHANDI ADMINISTRATION IN'COSTA RICA
The inauguration on 8 May
of Mario Echandias president of
Costa Rica for four years will
initiate a period of improved
relations with neighboring coun-
tries and more conservative eco-
nomic policies at home.
Echandi, a former foreign
minister and ambassador in Wash-
ington, will adopt more orthodox
methods in his foreign policy
than those of his predecessor
and bitter political foe, Jose
Figueres. The latter's aggres-
sive championship of democracy
and his tacit encouragement of
exiles from "dictatorial" re-
gimes of the area to plot
against their governments in-
volved Costa Rica in serious
trouble with Nicaragua and other
rightist regimes. Echandi, on
the other hand, is on close per-
sonal terms with the Nicaraguan
President, and relations with all
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neighboring countries are likely
to improve.
On the domestic scene,
Echandi's freedom of action will
be reduced by the probable pro-
Figueres majority in the new
Legislative Assembly. The Fi-
gueres bloc, which lost the 3
February presidential election
by a narrow margin, is sure to
fight aggressively with a view
to the elections four years
hence.
Another assembly opponent
of'Echandi will be former Presi-
dent Calderon Guardia, whose
alliance with the Communists
and roughshod political tactics
a decade ago led to the 1948
revolution and his exile. His
Republican party made a notable
political comeback in the legis-
lative elections and clearly
retains significant support from
the lower classes, who remember
Calderon's social and labor re-
forms. Calderon has publicly
rejected a new Communist alli-
ance, but most of the party's
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1 May 1958
other deputies-elect gratefully
accepted Communist campaign as-
sistance, and the small Commu-
nist party hopes to benefit
from Calderonista contacts in
the assembly. Communist chances
of major gains are dimmed, how-
ever, by Echandi's open anti-
Communist stand.
Economic policy is likely
to become a major issue.-
Echandi is a conservative while
Figueres and Calderon are some-
what left of center and not
above exploiting latent class
divisions for political ends.
Any alliance between Figueres
and Calderon, however, is un-
likely to be more than a tempo-
rary expedient, since Figueres
led the 1948 revolution against
Calderon and the two men are
bitter personal enemies.
GROWING LEFTIST SENTIMENT IN CHILE
Irritation at the United
States over the copper ques-
tion has brought a rise in
sentiment favorable to the
leftists :in Chile, and President
Ibanez has already secured low-
er house approval of a bill re-
storing Communist voting rights.
Ibanez may also support the
proposals of left-wing presi-
dential candidate Allende to
increase the tax burden on the
US-owned copper companies and
to divest them of control over
sale of their products.
Ibanez' decision to can-
cel his state visit to the
United States, in apparent irri-
tation over proposed US legis-
lation raising copper tariffs,
received virtually unanimous
popular approval and found fer-
tile ground in the anti-US feel-
ing that has grown as Chile's
economic situation has worsened.
Chile receives 65 percent of
its foreign exchange from cop-
per, and has been hard hit by
the drop in the price of copper
from 46 cents in early 1956 to
its present 25 cents a pound.
This means a serious balance-
of-payments problem for 1958
and new difficulties for the US-
backed economic stabilization
program.
A newly formed left and
center congressional bloc, which
dominates both houses of Con-
gress, took action on 28 April
in the Chamber of Deputies, in
accordance with a proposal by
Ibanez, to approve restoration
of Communists' voting rights,
and similar action is expected
in the Senate. These actions,
which have been taken to con-
solidate Ibanez' popular sup-
port, particularly with the left;
are expected to strengthen
greatly the candidacy of Social-
ist Senator Allende, one of the
two principal candidates for
president in the 4 September
elections.
While Allende does not ad-
vocate nationalization of the
US-owned copper companies--val-
ued at over $500,000,000--and
has admitted the benefits of
foreign capital for develop-
mental purposes, his proposed
modification of the basic cop-
per law would cut deeply into
company profits and would raise
the threat of "creeping expro-
priation." For political pur-
poses, and with some success,
Senator Allende is playing the
role of the defender of Chile's
interests with respect to the
United States.
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1 May 1958
Despite the growing left-
ist trend, a too rapid move to
restore privileges to the Com-
munists might still arouse de-
termined opposition from the
right and center parties. Short
of this development, Allende's
campaign is expected to prosper
with the deterioration of the
Chilean economic situation and
the further softening of the
copper market.
FRANCE DOWNGRADES NATO PRIORITIES
Defense Minister Chaban-
Delmas' public reversal on 17
April of the order of priority
of the French armed forces'
missions formalizes the de facto
emphasis Paris has given its
efforts to maintain its over-
seas holdings at the expense
of its NATO commitments.
In discussing the reorgan-
ization of the French military
establishment with the Associa-
tion of Graduates and Faculty
of the Institute of Higher Na-
tional Defense Studies, Chaban-
Delmas defined the missions in
order of urgency as:
(1) to assure "the French
pressence overseas for a
long period";
(2) to equip France "near-
ly simultaneously" with
"total" weapons;
(3) to assure the interior
defense of French territory
and to combat "subversive
warfare',
(4) "to respect our inter-
national engagements, be-
cause it is desirable that
France preserve its posi-
tion in the European thea-
ter."
Heretofore, policy statements
by ranking French officials have
always placed primary emphasis
on fulfilment of France's NATO
commitments, even though the
French NATO contribution has
sharply deteriorated since 1954
because of Algerian operations.
Chaban-Delmas' views may
particularly be felt through
the four-year armed forces re-
organization plan which he is
instituting. Many French mili-
tary and civil officials have
ascribed the Algerian rebels'
continued resistance to the de-
velopment of a new type of "sub-
versive" or "revolutionary" war
which they believe cannot be
combated successfully by conven-
tional large military units.
Doubts have also been expressed
whether major combat units can
be developed which can cope with
"subversive war" and at the same
time be used effectively in sup-
port of NATO forces in Europe.
Current limitations on the
defense budget severely curtail
the French heavy arms program
and have added weight to the
prospect that a choice mv:t be
made between the two types of'
ground forces.
Should Chaban-Delmas' views
prevail, France may become in-
creasingly dependent on West-
ern nuclear capability to deter
Soviet aggression and on for-
eign military aid to support
French forces primarily designed
for NATO ground defense" in
Europe.
Chief of Staff General Ely,
who is firmly pro-NATO, is
scheduled to retire this summer,
and his successor might push
the armed forces reorganization
along the lines suggested by
Chaban-Delmas, particularly if
the Algerian operations seem
likely to continue indefinitely.
F_ I
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1 May 1958
unproductive to date. The par-
ticipation of foreign capital
has been effectively discouraged
by the law limiting such partic-
ipation in most cases to 25
percent.
A new oil bill was recent-
ly drafted in the Ministry of
Industry, with the help of Am-
erican firms, to allow foreign
interests 100-percent partici-
pation in companies exploring
and exploiting Spain's petro-
leum resources. The American
Embassy in Madrid reports that
cabinet approval was withheld
early in April largely because
of the desire of the National
Institute of Industry to con-
tinue with government-controlled
explorations and to stake out the
largest possible claims for it-
self for future operations.
The bill's obstruction is
a defeat for those forces in the
cabinet which are trying to
Steadily rising oil im-
ports--now costing over $100,
000,000 a year and increasing
at an accelerating rate--are
one important cause of Spain's
deteriorating foreign exchange
position. Domestic pressure
groups, however, have blocked
cabinet action on new legisla-
tion that would encourage for-
eign companies to prospect for
oil in Spain.
Expanding industrial re-
quirements for petroleum are
forcing Spain to spend about
one sixth of its foreign ex-
change earnings on oil. This
rate is increasing by 15-20
percent each year, and Spain,
like Italy, apparently hopes to
reduce this drain by discov-
ering domestic oil deposits.
Drilling operations have been
carried out in 14 localities
since April 1956, mainly by
government-controlled companies,
but these operations have been
Saotarad
Location of oil wells drilled April 1968 -November 1957:
Drilled by CANPSA (government-controlled marketing
company)
Drilled by VALDEBRO (in which the Spanish Government
and an American o11 company have equal participation)
Drilled by private companies
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1 May 1958
remedy Spain's increasingly
serious foreign exchange dif-
ficulties. With Spain's dollar
reserves now approaching a new
low of $15,000,000, Finance
Minister Navarro Rubio has told
the American Embassy that he
fears severe limitations on
imports will be necessary with-
in the next'few months. Ration-
ing of oil and other key raw
materials would then have to
follow, with consequent plant
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CURRENT INTELLIGENCE WEEKLY SUMMARY
1 May 1958
PATTERNS AND PERSPECTIVES
Since the spring of 1956
when the Soviet party press
revealed that the anti-Stalin
campaign--only a little more
than a month old--had opened a
crack in the wall of political
and ideological discipline, the
regime has retreated from its
nearly total condemnation of
Stalin at the 20th party con-
gress.
Early Reverses
In April 1956, Pravda was
obliged to denounce "some
rotten elements" in the Soviet
party which, on the basis of
Khrushchev's attack on Stalin
at the February party congress,
were "trying to question the
correctness of the party's
policy." It became evident
that the official denunciation
of Stalin had quickly raised
questions about taboos which
the regime had every intention
of keeping intact. Although
the revision of certain Stalin-
ist dogmas and historical ca-
nards went ahead in a number
of professional journals, de-
Stalinization through the re-
moval.of Stalin busts and pic-
tures, the withdrawal of his
works from libraries and book-
stores, and the renaming of
places and institutions soon
slowed noticeably.
In June of that year, the
text of Khrushchev's denuncia-
tion of Stalin at the party
congress was published in the
West, causing dismay and con-
fusion in foreign Communist
parties, most of which had only
second-hand reports of its
contents. Party leaders issued
long statements calling on Mos-
cow for further clarification
and, in some cases, raising
highly embarrassing questions.
Togliatti, for expample, asked
whether the revelations about
Stalin's rule meant that Soviet
society had assumed "certain
forms of degeneration."
The Soviet reply to the
inquiries, in the form of a
central committee resolution
of 30 June, was evasive. It
insisted'that the Soviet sys-'
tem was sound and it retreated
from Khrushchev's February
position by calling attention
to Stalin's "positive achieve-
ments" and by arguing that some
of the worst features of his
rule had been justified by in-
ternational and domestic dif-
ficulties.
Intelligentsia's Indiscipline
The regime's iconoclastic
attack on Stalin put the intel-
ligentsia in a mood to question
long-standing dogmas. Taking
their cue from the June resolu-
tion, the new issues of the
party journal Kommunist at-
tacked as "revisions the
editors of the journal Prob-
lems of History. Kommu-nist
charged at a journal's
editors, "in posing certain
questions connected with over-
coming the cult of personality
...are drawing hasty and in-
valid conclusions" and were
"tainted by hysteria and sen-
sationalism."
Similarly a small but
remarkably vigorous group of
writers quickly set.out to ex-
tend the criticism of Stalin
and Stalinism into the area of
Soviet life generally.
These "rebels" exaggerated
the degree of relaxation which
the regime had intended its
anti-Stalin campaign to signify.
The decision to hand down a
somewhat broadened orthodoxy
from above had aroused false
belief that it might be rede-
fined from below. De-Stalin-
ization as an experiment in
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modified totalitarianism--which
the authorities expected four
decades of indoctrination and
enforced conformity to keep
under control--aroused serious
misgivings within the party
hierarchy even before the up-
heavals in Poland and Hungary
sent the process of de-Stalin-
ization into sharp retreat.
Impact of Hungary
In Eastern Europe, the de-
liberate destruction of the
Stalin myth was taken to mean
both domestic liberalization
and a relaxation of the Soviet
grip on national life. De-
Stalinization thus served as a
catalyst in the process which
led to the Polish and Hungarian
rebellions.
These uprisings made the
Soviet regime acutely conscious
that cultural and ideological
drift and restlessness with
party control of thought are
danger signs in a totalitarian
society. In the closing weeks
of 1956, the party press poured
a cascade of abuse on critics
of "socialist realism" and ad-
vocates of loosened party con-
trols in the arts.
The Chinese Communists
were the first to imply publicly
that the denigration of Stalin,
to which they had never warmed,
had played a big part in incit-
ing the turmoil in Communist
ranks. The leading article in
the People's Daily of 29 Decem-
ber r956, rimari y a manifesto
of support for Soviet actions
in Eastern Europe, asserted
that "if Stalin's mistakes are
compared with his achievements,
the mistakes will.be seen to
be only secondary."
The ink was hardly dry
on the Chinese statement before
Khrushchev--ten months after
the 20th party congress--de-
claimed at a Kremlin celebra-
tion of the New Year 1957 that:
"Stalin made mistakes, but we
should share responsibility
for these mistakes because we,
were associated with him. Sta-
lin did so much good that one
must overlook his mistakes."
At a reception for Chou En-lai
on 18 January, he declared that
Stalin's errors were not of a
fundamental kind. "God grant,"
he added, "that every Communist
should be able to fight like
Stalin."
During' the spring and
summer of 1957, the regime
turned nearly every weapon at
its command, short of outright
suppression, against its errant
intelligentsia. Among the writ-
ers, editorial censure and or-
ganizational pressure brought-
the submission of all but a
handful of the "sons of the wild
jackass" who were charged with
taking refuge in an irritating
but inarticulate "conspiracy of
silence." In early June the
"revisionist" historians were
purged from the editorial board
of Problems of History, amid
charges t-h-a-t--fh-e-y--h-a-U-persisted
in dwelling on Stalin's vices
while ignoring his virtues.
In his pronouncements on
literature published in August
1957, Khrushchev laid down
a stern party line for the
literary profession and warned
that submission to "comradely
persuasion" was an obligation.
Khrushc'iev's statement on
Stalin, in reviewing 40 years of
Soviet history at last November's
anniversary celebration, and the
new biography published in
volume 40 of the Large Soviet
Encyclopedia, presuma ly br n_g
to a hart, at least for a time,
the fitful re-evaluation of
.Stalin. In both cases, Stalin
is presented as a leader who
had serious failings but, on bal-
ance,'did more good than harm.
In the biography's fuller
treatment, some of the earlier
charges made against him are
repeated, some are softened,
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1 May 1958
and others are dropped--all in
the interest of the primary
argument: Stalin's cult and
his mistakes did their damage
and were disowned but they were
not a product of the Soviet
system nor did they basically
affect the character of that
system.
The biography sums up with,
a paraphrase of Khrushchev's
anniversary speech: "It would
be the crudest distortion of
historical truth to spread the
errors permitted by Stalin in
the last year of his life over
the whole of his many years of
party and government activity.
The campaign launched by re-
actionary imperialist circles
against 'Stalinism,'. which they
invented themselves, is in re-
ality a campaign against the
revolutionary workers' movement.
The revisionists' statement
-against so-called 'Stalinism'
are likewise in essence a form
of struggle against the basic
.propositions of Marxism-Lenin-
ism."
The Soviet regime's offi-
cial portrayal of Stalin has
been in many ways a gauge of
its estimate of domestic and
bloc attitudes. The 20th party
congress, besides producing the
attack on Stalin, was marked
by persistent criticism of the
elements of "dogmatic conserv-
atism" within the Communist
parties. It also brought forth
the doctrine of "varioi!.s roads .
to socialism," signifying broad-
er tolerance of diversity in
satellites and Yugoslavia. Soon
after the congress, the Comin-
form was dissolved. Develop-
ments in the intervening two
years, however, have.driven
Moscow-in the opposite direc-
tion.
The Moscow conference of
Communist parties last Novem-
ber firmly acknowledged Soviet
primacy within the bloc, heavi
'ly qualified the idea of "sepa-
rate roads to socialism," and
declared that "revisionism" was
a greater threat to Communist
unity than "dogmatism." The
conference also decided to re-
establish a joint party publi-
cation for the bloc, but did
not call for the creation of
another Cominform-like organi-
zation. Moscow's purpose at
the conference was to establish
stricter conformity within the
bloc without the threat of full-
scale Stalinist coercion.
The renewed clash of Soviet
and Yugoslav positions is,evi-
dently another expression of
this spirit: while it sends re-
lations between the two parties
to the lowest point since Sta-
lin's death, it seems unlikely
to produce the bitter extremes
of the 1948 break.
At home, de-Stalinization
in its original form has ended,
but the spirit and methods of
the Stalin era have not been
fully revived. Khrushchev has
assumed much of Stalin's person-
al power and seems.increasingly
to be taking on the attributes
of uniqueness which were part
of Stalin's "cult of personal-
ity." He is not, however, a
demigod. High-level opposition
to his leadership, although
obviously risky, remains a pos-
sibility; and, despite continu-
ing indications of resistance
to his policies at various
levels, the police are still
held in check.
Having discovered that its
youth and intellectuals are ca-
pable of "unhealthy manifesta-
tions" if givan any encourage-
ment to assert their independ-
ence, the regime has freely used
its administrative power and
its monopoly of the media
of expression, as well as
threats, to restore discipline,
but Stalin's postwar cultural
purge has not been repeated.
While most of its more nettle-
some critics have been forced
to recant, they appear to be
in no danger of being branded
"enemies of the people."
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Continuing its
search for
effective solutions to persist-
ent
economic problems, the pres-
ent
regime ranges widely
beyond
the
confines of Stalinist
forms
and
rigid dogma--notably
in its
recent reorganization of in-
dustry and agriculture. While
spurring rapid industrial ex-
pansion,. the regime is imple-
menting programs for shorter
working hours, improved worker
benefits, expanded housing,
and improved consumption, os-
tensibly to improve labor pro-
ductivity. This was an approach
largely. ignored by Stalin.
Khrushchev's intent in
launching the anti-Stalin cam-
paign was probably to "clear
the air," certainly not to fill
it with flying debris. It was
taken as a step in the moderniza-
tion of the Soviet dictatorship,
not its weakening. This seems
to be Khrushchev's goal still,
but a new outbreak of dissen-
sion at home or in Eastern
Europe or a serious threat to
his personal power could send
.him into further retreat from
de-Stalinization,and possibly
even reliance on Stalinist con-
trols to maintain himself.
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TURKEY SEEKS MULTILATERAL HELP IN STABILIZING ITS ECONOMY
Turkey's economy has de-
teriorated to such an extent
that the government of Prime
Minister Menderes has apparent-
ly decided to make major changes
in its economic policies in or-
der to obtain substantial West-
ern financial assistance. Dur-
ing the past month, Turkey has
been pressing its European
creditors--the United States,
the International Monetary Fund,
and the Organization for Euro-
pean Economic Cooperation--to
formulate quickly plans for a
fund which would stabilize the
sagging Turkish currency and
provide a means to consolidate
the country's staggering for-
eign debt. While Turkey's free
world partners have all. ex-
pressed an interest in helping,
they are not likely to proceed,
as fast as Turkey had hoped.
It now seems probable that an
over-all economic program for
Turkey cannot be formulated be-
fore midsummer at the earliest.
Turkish economic develop-
ment since 1950 has been sub-
stantial but purchased at the
price of serious monetary in-
stability. The government's
insistence on-proceeding with
economic development at a much
faster rate than warranted by
available resources has resulted
in a serious imbalance through-
out the economy. Domestic prices
are far out of line with world
prices, and exports of Turkish
goods generally are made pos-
sible only by substantial gov-
ernment subsidies. On the im-
port side, the government has
resorted to substantial short-
term borrowing to pay for in-
vestments with long-term econom-
ic returns. The Turkish foreign
debt has reached alarming pro-
portions and is estimated to be
as much as $1.5 billion. Credi-
tor nations are reluctant to ex-
tend further loans.
Turkey's ability to repay
its existing debt is extremely
limited and a number of defaults
are likely to occur. Al-.
ready behind in its obliga-
tions to the OEEC, Turkey
is the only country to
fail to honor its arrears
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in that organization's ten-
year history.
The Menderes government
has been attempting to improve
the situation by a series of
moves designed to cut imports
and step up' exports. Imports,
as a result of this policy, de-
clined last year,and, in fact,
were the lowest since 1951.
Exports :increased' .but not
enough to avoid a deficit. In-
ternally, prices continue to
rise as the government pumps
money into various
development schemes
and urban reconstruc -
tion6 Wholesale
prices reached an all-
time high' ih', late
1957, following a 25-
percent increase in
less than a year,
and the cost of liv-
ing climbed to a rec-
ord level. The gov-
ernment's efforts to
hold down prices by
rigid enforcement of
price controls prob.
ably will result only
in slowing down the
price rise. As long
as money incomes con-
tinue to increase,
the pressure on the
central authorities
to allow exceptions
to its price program
is likely to result in
ment of its efforts to
price controls.
lack of $75,000 in foreign ex-
change to purchase raw materials.
Menderes Seeks Solution
Turkish officials apparent-
ly now are convinced that a
solution to Turkey's problems
is beyond the country's own re-
sources. However, the price
required for Western support of
a stabilization program has been
politically too high in the view
of the Menderes governments Be-
fore the recent elections, gov-
TURKEY : MONETARY INDICATORS
1800' -, - CLAIM ON ALL SECTORF
--- , CLAIMS ON GOVERNMENT
1600;" _; GOLD AND CONVERTIBLE FOREIGN EXCHANGE;
1950
80214
abandon-
enforce
The 1957 decline in im-
ports--down about 3 percent
from 1956--while desirable from
the point of view of reducing
the country's balance-of-pay-
ments deficit, has had a dele-
terious effect on industry. A
number of plants are idle for
want of parts, while other
factories are mere shells await-
ing imported machinery. In
some cases, plants are complete-
ly shut down for want of im-
ported raw materials. The Gen-
eral Electric light-bulb plant
in Istanbul was idle from August
1957 to early February 1958 for
1954 1 2 3 4 1 2 3 4 1 2 3 4
11--1955--, `-1956_1 \.-1957_/
ernment officials were reluctant
to discuss any moves to cut the
level of investment activity and
were thinking largely in terms
of new investment. Since the
elections, Prime Minister Men-
deres apparently has become con-
vinced that corrective measures
must be taken to get free world
help, but whether he now is will-
ing to make the drastic moves
required--such as some form of
devaluation--is still a matter
of conjecture.
No definitive program is
yet evident, but the Turks will
probably attempt to get by with
few changes in their economic
program. In the area of ex-
change rates, Ankara probably
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 CURRENT INTELLIGENCE WEEKLY SUMMARY
1 May 1958
25X1
will insist on only minimum
changes, although it is in this
field that perhaps the most
forceful measures are required.
Turkish currency is selling on
the free money markets at a
rate of 15 Turkish pounds to
.the dollar as compared with an
official rate of 2.80. The
membership of the recent Turk-
ish delegation to the OEEC,
which included two of.the most
able and ardent supporters of
sound economic policies, sug-
gests that some progress has
Approved For, elease 2005/0tlfRDP79-00927A` 00700080001-7
$S!NATIO AL PR MI Tj
crisis as requiring consolida-
tion of the country's debt posi-
tion, a task beyond the scope
and resources of the OEEC. That
organization, therefore, is not
likely to agree to hasty action
but will insist on careful
study. The International Mone-
tary Fund apparently will not
move until after consultations
with Turkish officials in Ankara
this June.
Turkish hopes that a pro-
gram could begin before the har-
vest this summer are
As the Turkish
Government becomes
aware of the relative-
ly slow pace its fi-
nancial negotiations
are likely to take, a
sense of frustration
may cause it to con-
sider aid from the
Soviet bloc. The re-
been made in Turkish government
circles toward a realistic ap-
praisal of the country's econom-
ic problems. This may be a
harbinger of a more forthright
and sound government approach.
A Possible Timetable
Ankara pressed for prompt
consideration of its payments
problem at the April meetings
of the OEEC. There is little
doubt, however, that Turkish
efforts to gain quick considera-
tion of its request for Western
aid have failed. The OEEC
views a solution to the Turkish
thus unlikely to be
met. Although Ankara
has not indicated the
amount it considers
necessary to solve its
economic problem, there
have been hints that
between $300,000,000
and $500,000,000 would
be required.
crisis, ror example,
could result in An-
kara's seeking an as-
sured source of petroleum prod-
ucts for which it could pay in
exports or soft currencies.
Turkey's political hostility
toward the Communist world is
not carried over into the econom-
ic sphere. In the first eight
months of 1957 the Soviet bloc
accounted for about 18 per-
cent ,.of 'Turkey's total trade.
In addition the bloc has
given Turkey some industrial
aid and. has offered to sup-
ply ..a number of additional
factories.
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?C I r
qmmw
IQW
CURRENT INTELLIGENCE WEEKLY SUMMARY
1 May 1958
Prospects
In the absence of a multi-
lateral solution to its economic
problems, Turkey faces a dis-
astrous economic crisis.. Now
that the Turks have about
reached the end of their credit,
it will be difficult for the
country to continue under pres-
ent conditions. A runaway in-
flation, always possible in a
rapidly developing underdevel-
oped country, seems closer than
at any time in recent years.
This could result in a collapse
of the internal price structure
with all the attendent conse-
quences
With the national elections
last October, the government
has nearly four years before
.it must face the electorate in
another general election and it
may feel more secure with re-
spect to taking unpopular eco-
nomic actions.. Whether the fi-
nancial program finally adopted
will solve the Turkish problem
will depend in large measure
on how willing the government is 25X1
to slow down, or drop, a number
of its economic development pro-
grams.
THE ELECTRIC :POWER PROBLEM IN LATIN AMERICA
The drive to expand elec-
tric power facilities has great
political as well as economic
importance in Latin America,
where industrialization is re-
garded as the- key to an enchanced
international standing. Al-
though installed capacity in
1956 was less than 10 percent
of US capacity and power ration-
ing was still common, this ca-
pacity had increased more than
50 percent in the preceding
five years, and. most countries
are seeking foreign capital for
further expansion.
Industrialization, coming
comparatively late to Latin
America., has been linked par-
ticularly to the development
of electric power facilities.
foal is scarce in the area, and
in all the larger Latin American
countries except Argentina the
hydroelectric potential is con-
siderable and is used more ex-
tensively than thermoelectric
plants in generating power,
Expansion of power facilities
sometimes symbolizes in the
popular mind a whole economic
development program and can be
made a potent issue for winning
elections, as Brazil's President
Kubitschek has demonstrated.
Electric power development
is also seen in a number of
countries as a way of gradually
counteracting the excessive con-
centration of population and
economic life around the capital,
which has been characteristic
of the Latin American countries
since colonial times, Typically,
in Peru, at least 80 percent of
electric power consumption is
in the immediate area of Lima.
In that country, however, as in
Venezuela, Colombia, and Brazil,
the example of the US Tennessee
Valley Authority has influenced
the government to construct
power facilities in an as yet
underdeveloped or less developed
part of the country. The cer-
tainty of power availability
is expected to attract new in-
dustry to such backward areas
and thereby establish new eco-
nomic and political centers.
In most countries, both the
government and foreign private
enterprise participate in power
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 1 May 1958
4imated Installed Electric Power Capacity
-_ ~...._ ~~-..Monterrey
Havana4?
MEXICO t`1 '
Mexlco Cl u A
z uo * h ~A~
Gda lajara ~'r,r~;: ... NAlfi"ta uc
a o -
Pol-auPrince
'91N-.r fJ Rcr UBLiul
A NO RA5 CARIBBEAN SEA
Managua
sr.uAV [8.000
^L:- 9!9,000
I.I/9.000
sawn JGR*\ Panama
!tA RIi;Al._/ ~\ --~.JdaC ~ellVa(d BR. GUINEA
`~?'6_ "\ VENEZUELA hk,-Par amari6
cj New projects outside
present industrial centers.
generation. Public power has
been expanding faster than pri-
vate power in recent years, how-
ever, because nationalist pres-
sures have in many cases imposed
rates on private companies which
do not permit the expansion of
facilities. In El Salvador,
the most nationalistic of the
Central American countries,
virtually all power generation
is now in the hands of the gov-
ernment. While Salvadoran plans
for power generation are more
complete than those of almost
any other Latin. American coun-
try, fulfillment of these plans
may be threatened by the weak-
ness of the international coffee
market, source of almost 90 per-
cent of Salvadoran foreign ex-
change.
The most serious problems
of electric power development
in Latin America. are seen in
its three largest countries--
Argentina, Brazil, and Mexico.
Each has installed capacity ex-
ceeding 1,600,000 kilowatts,
*Bogota Georgetown 'yenne
SURINAM
COLOMBIA FR. GUIANA
but inadequate power
is still a serious
bottleneck in indus-
trialization and each
of the three plans to
spend hundreds of mil-
lions of dollars in
foreign exchange on
expansion during the
next few years. Brazil
and Argentina are al-
so looking forward to
the eventual genera-
tion of electricity
by atomic power. Each
has in the past few
months begun the oper-
ation of small reactors
for training person-
nel in their use.
Brazil and Cuba have
recently been studying
texts of possible
atomic energy bilateral
treaties with the UK.
Brazil
_J Installed electric
capacity in Brazil is
about a third of the
total for all Latin America.
Power deficiencies--arising in
large part from a struggle over
rates between the government
and private power companies--
are nevertheless a serious hin-
drance to Brazil's economic
growth. Power expansion was
one of the major campaign prom-
ises of President Kubitschek,
who took office in 1956. Al-
though installed capacity at
that time equaled 3,000,000
kilowatts, power was sometimes
rationed in the principal indus-
trial centers. The relative
adequacy of power in Kubitschek's
home state at the end of his
term as governor had been of con-
siderable importance in drawing
business support to his campaign.
Kubitschek has promised
he will raise Brazil's power
capacity to 5,000,000 kilowatts
by January 1961, when he leaves
office. In terms of 1956 prices,
the cost has been estimated at
about $800,000,000, half of
which would be needed in foreign
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1 May 1958
exchange. The program, which
involves both public and private
power, thus far appears to be
on schedule. The financial re-
sources required are substantial
for Brazil, however, and pros-
pects there, particularly for
export earnings, are deteriorat-
ing.
The Kubitschek regime is
continuing work on the grandi-
ose Paulo Afonso project, which
was begun by the Vargas regime
and is already partly in opera-
tion. It is located in the
primitive backlands of northern
Brazil and is to serve an area
almost as big as western Europe.
Projects begun by Kubitschek,
however--such as the 1,000,000-
kilowatt Furnas installation--
are focused on Brazil's indus-
trial centers. Need for power
is greatest in the state of Sao
Paulo, where power capacity rose
30 percent between 1952 and 1956
but still meets little more than
half the demand.
Electric power capacity
in Mexico has almost tripled
during the past 15 years, the
fastest rate of increase among
the three largest Latin Ameri-
can countries. Promises of
presidential candidate Lopez
Ma.teos--who is virtually cer-
tain to become president in
December--to double capacity
during his term of office in-
dicate not only that demand
for power is increasing at an
accelerated rate but also that
provision of adequate power
continues to be good politics
in Mexico.
The recent expansion in
capacity to slightly over 2,-
000,000 kilowatts has almost
eliminated the electric power
shortage which originated in
the 1930's when the privately
owned power companies, beset
by nationalistic pressures and
labor difficulties, curtailed
their investments. A public
corporation, established to
fill the gap, had by 1957 an
installed capacity representing
about two fifths of Mexico's
total.
Most of the expansion now
planned is for the existing in-
dustrial centers of Monterrey,
Guadalajara, and Mexico City.
However, Mexico, like many
other Latin American countries,
is creating a substantial sur-
plus capacity in one. zone,
Puebla-Veracruz. The new 154,-
000-kilowatt plant there is
located far from consumption
centers and the power will be
used mainly to attract new in-
dustries, thus dispersing Mexi-
co's industrialization.
Argentina
The power problem is per-
haps more serious in Argentina
than in any other Latin American
country, and the government has
as yet found no popular solution
to the conflict between public,
and private power which has
slowed development. throughout
Latin America.
Installed capacity in Ar-
gentina came to 1,172,000 kilo-
watts in 1943--the year in which
Juan Peron began his climb to
power. It far exceeded Mexico's
and was about equal to Brazil's.
Since 1943, however, capacity
has expanded only about 40 per-
cent,, one of the slowest rates
in Latin America; While nation-
alism hampered the expansion of
foreign companies which domi-
nated Argentina's electric serv-
ice, the governments during this
period failed to provide by
other means the needed increase
in generating facilities.
President Frondizi, inau-
gurated on 1 May, has promised
"full guarantees" to foreign
private companies. Although
his political party has been a
strong advocate of government
operation of utilities, he rec-
ognizes that his financially
strained government' greatly
needs foreign capital for
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CURRENT INTELLIGENCE WEEKLY STJMMARY
1 May 1958
industry, including electric
power. Even before his inaugu-
ration, Frondizi started nego-
tiations with the subsidiary
of a large American power com-
pany regarding its long-stand-
ing claims for compensation
for that part of its properties
expropriated during the Peron
regime. Frondizi would like
the company to reinvest in Ar-
gentine electric power even more
funds than it may receive from
the sale of part or all of
its property. The company,
dissatisfied with insufficient
rate adjustments, would like
to sell all of its holdings but
is considering new investment.
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