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Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 CONFIDENTIAL f~'QT CURRENT INTELLIGENCE WEEKLY SUMMARY COPY NO. 50 OCI NO- 1798/58 17 July 1958 Q (DECLASSIFIED CLASS. CHANGED TO: DOCUMENT NO. ,T NO OHMt6E IN CLASS. 11 NEXT REVIEW DATE: AUTH: 70- CENTRAL INTELLIGENCE AGENCY OFFICE OF CURRENT INTELLIGENCE CONFIDENTIAL ~Rf T N TO ARCHIVES fr RECORDS CENTER DtATFLY AFTFB IMF 25X1 State Department review completed Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927A001800070001-6 THIS MATERIAL CONTAINS INFORMATION AFFECT- ING THE NATIONAL DEFENSE OF THE UNITED STATES WITHIN THE MEANING OF THE ESPIONAGE LAWS, TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS- SION OR REVELATION OF WHICH IN ANY MANNER TO AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW. The Current Intelligence Weekly Summary has been prepared primarily for the internal use of the Central Intelligence Agency. It does not represent a complete coverage of all current situations. Comments and conclusions represent the immediate appraisal of the Office of Current Intelligence. --- Approved For Release 2007/10/23: CIA-RDP79-00927A001800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Next 6 Page(s) In Document Denied Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 CONFIDENTIAL. 17 July 1958 Jordan The landing of British forces in Jordan on 17 July may forestall a coup attempt, against King Husayn by UAR-supported opposition elements. The UAR operations may have been post- poned. The Baghdad radio on 17 July was still forecasting a revoliition in Jordan "Tomor- row." Acutely aware of the danger to his government, Husayn has instituted extensive security precautions. Demonstrations in West Jordan favoring the Iraqi coup were suppressed, and additional army officers and others suspected of disloyalty have been arrested. The Iraqi troops which Husayn had once hoped might assist him in main- taining order in Jordan were allowed to return to Iraq after their officers threatened to shoot their way out of the coun- try. These troops have now joined other Iraqi forces at pumping station H-3, some 50 miles inside Iraq, and probably will remain there for the time being as a barrier to Husayn's stated intention of using his own army against the Iraqi re- gime. In time these Iraqi forces may well be used by Baghdad to exert pressure on Husayn, and presumably would be available if called on to support a pro- UAR coup in Amman. cians are finding it inadvisable to favor the move, and the rebels are issuing propaganda state- ments that they will oppose it. General Shihab, the Lebanese Army commander, is continuing to obstruct the operations of the American forces. There is no indication so far that the UAR intends to op- pose the American action direct- ly. However, UAR assistance to the rebels, already~omuch in evidence during the previous week, is likely to be stepped up. The landing of the marines plus other area developments puts; an end for the moment to the political compromise moves which were being talked of last week. Iraq The new quasi-military re- gime in Baghdad is gradually extending its authority to all parts of the country. The re- gime has eliminated most, if not all, the potential leaders of any countermove. Not only have King Faysal, Crown Prince Abd al-Illah, and Prime Minis- ter Nuri Said been killed, but a substantial number of other personalities in the Nuri gov- ernment appear to have suffered the same fate. Massive trans- fers of high officers have been made to extend the coup lead- ers' hold over the army. Although the American land- ing force in Beirut met an ini- tially friendly reception, sentiment hostile to the move now appears to be building up. Even moderate Lebanese politi- The formal head of the new republic is General Rubai, most recently Iraqi ambassador to Saudi Arabia. However, neither Rubai nor Brigadier Qasim, the new prime minister, may be the actual leader of rb -CPR CONFIDENTIAL Page 1 of 6 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 25X1 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927A001800070001-6 - S E C R E T the coup group. CURRENT INTELLIGENCE WEEKLY SUMMARY 17 July 1958 sugges a Brigadier Abd al-Salaam Arif, who has been named vice premier and has assumed charge of the strategically placed Ministry of Interior, is the real lead- er of the new regime. Several of the civilians nandd to the cabinet are exiles; others are persons who had long been banned from politics of who had been forced out of the army because of political activity. While the military leaders have assumed a superficially friendly attitude in talks with the American and British ambas- sadors, the new regime appears basically radical, Arab nation- alist, and anti-Western. Should Kamil Chadirchi, Iraq's most prominent leftist front man, be called on to participate in the new government, this would al- most certainly be an indication of pro-Communist influence. The Baghdad regime has been assured of UAR assistance in whatever form it desires. Na- sir's government has also for.-. mally announced that it would regard an attack on Iraq as an attack on the UAR. Impact of Coup in Area The threat the Iraqi devel- opments pose to Jordan and pos- sibly to oil-rich Kuwait have been the aspects of most con- cern to other states in the area. Turkey has been particu- larly vehement in its insistence that Jordan's government be given all the support possible from the Western camp, and the Turks have taken various meas- ures to strengthen their mili- tary position in areas border- ing Syria and Iraq. Israel has been especially concerned over Jordan; the Is- raelis almost certainly feel they would have to take mili- tary action, probably to seize West Jordan, should the Jor- danian Government be overthrown. The British troop support for King Husayn has probably less- ened their fears temporarily. Israel militarily remains alert, but there have been no indica- tions of mobilization as yet. The Israelis are capable, how- ever, of full mobilization with- in 48 hours with very few ad- vance Indications. In the Arabian and Persian Gulf oil areas, the news from Iraq was hailed po ularly with Anm4a Open manifestations of ap- proval have also been reported from Kuwait, where the acting ruler put on a show of force to curb paraders who were shouting "Long live the Iraqi Army," and from Bahrein, where there is an American-owned refinery. Britain is sending additional troops to Bahrein and to Aden, and the chief British diplomat in Kuwait has been authorized by London to call in British troops if local security forces cannot control disturbances. Further afield, the Sudanese and Libyan 25X1 governments fear that pro-Egyp- tian elements may take some ac- tion. SECRET PART I OF IMMEDIATE INTEREST Page 3 of 6 Approved For Release 2007/10/23: CIA-RDP79-00927A001800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927A001800070001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 17 July 1958 Communist Reaction The Soviet Government state- ment calling for the immediate withdrawal of American troops is Moscow's strongest official pronouncement on the Lebanese crisis, but falls considerably short of Soviet statements dur- ing the Suez crisis in 1956 and the Syrian-Turkish dispute of last fall. Terming the situa- tion a "threat to the peace," Moscow employed the classic Soviet formula of noncommitment, stating that the USSR "cannot remain indifferent to events creating a grave menace in an area abutting on its frontiers." Bloc propaganda reaction to the landings was immediate and voluminous and reflected confidence that the interven- tion would boomerang when faced with the pressure of world opinion. Peiping and the East- ern European satellite capitals closely paralleled Moscow charges that the move, labeled "open military aggression," was the first stage in comprehensive Western plans for suppressing the Arab national movement and for re-establishing colonial dominance of the Middle East. The Pravda editorial on 17 July calleor "hands off Lebanon, hands off Iraq, hands off all Arab countries!" The Soviet announcement that air and ground force maneuvers in the Transcaucasus and Turkmen Military Districts will begin on 18 July is an effort by the USSR to inhibit any Turkish or Iranian military action against Iraq or Western military action through Turkey or Iran. Prompt action by both Mos- cow and Peiping in recognizing the new Iraqi regime indicates bloc interest in preserving the revolutionary government and inhibiting any Western counter- action in Iraq. Moscow's harried recognition will lead to the re-establishment of diplomatic relations broken in January 1955 by the Nuri government; Peiping's recognition paves the way for the opening of Pei- ping-Baghdad ties which would replace the diplomatic relations formerly existing between the Nuri government and Nationalist China. Communist China: At a mass rally in Pe ping on the night of 16 July, called to protest the US move in Lebanon and to proclaim Chinese support for the new republic of Iraq, there were calls for the defeat of American "aggression" in Korea and Taiwan. There are no signs, however, that Peiping is pre- paring to launch a diversionary: military effort in the Far East to counter the US move in the Middle East. Yugoslavia: Belgrade, while noting he "legitimate interests" Westerners have in the area, has condemned the American landing of troops and has announced its recognition of the new Iraqi republic. Vice President Kardelj gained the impression during Nasir's visit to Yugoslavia that the Egyptian President had not expected the Iraqi coup. SECRET PART I OF IMMEDIATE INTEREST Page 4 of 6 Approved For Release 2007/10/23: CIA-RDP79-00927A001800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927A001800070001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 17 July 1958 Free World Reaction Initial free world reaction to the Iraqi coup and the Amer- ican landings in Lebanon is for the most part along expected lines. Western European re- action has been mixed, although many countries, concerned over the rising Arab nationalism, have supported the American moves. A growing number of Latin American governments are indicating approval of the landings. Asian countries al- lied to the Baghdad Pact or otherwise closely associated with the United States seem willing to back the American actions. The "neutralist" and small nations in general are concerned mainly with the pos- sibility of World War III, and hope that the United Nations can take over from the United States as soon as possible. Little reaction has developed yet in Africa. Western Europe:, opin- ion is split over, whether the United States''inter- vention in Lebanon' will help stem the rise of Arab nationalism ~ ,high= lighted by., the,, Iraqi coup. Conservative opinion tends to support the action, socialist opinion,,to criticize it, while independent views straddle the fence. Only in France, among the major coun- tries, do all shades of non- Communist opinion support the landing, albeit with caustic comments that if the 1956 Suez intervention had succeeded the Arab nationalist tide might have been halted then. Strongest governmental op- position has come from Sweden, which believes the landing was not justified by the UN Charter and prejudices the usefulness of the UN Observer Group. Neu- tral Austria, through Foreign Minister Figl, has expressed complete approval of the Amer- ican action. Among NATO mem- bers, support has come from Britain, France, Turkey, Canada, Italy, Belgium, Netherlands, and Portugal, but others have not spoken or have been equivo- cal. In a North Atlantic Coun- cil meeting on 16 July, repre- sentatives of West Germany, Denmark, and Norway evaded any direct expression of approval or disapproval, with the Danes and Norwegians supporting the Italian emphasis on the need for a solution through the United Nations. The Greek delegate was uninstructed, and the Ice- landic and Luxembourg repre- sentatives did not speak. Sharp criticism of the ac- tion has come from the official paper of Norway's governing Labor party, and from two major Conservative press supporters of the Diefenbaker government in Canada. Otherwise criticism in Europe has come principally from socialist opposition forces in Britain, West Germany, and Italy. In Britain the Labor party, while not voting against the government for endorsing the US move, concentrated on warnings against the consequences of any extension of the Western intervention. The initial reaction of the entire Greek press to the coup in Iraq was that it con- stituted a new victory for Pan- Arabism and a new and probably fatal blow to the Baghdad Pact and Eisenhower doctrine. For- eign Minister Averoff believes Greek public reaction to Amer- ican intervention in Lebanon will be unfavorable, but he has promised that his govern- ment will attempt to influence SECRET PART I OF IMMEDIATE INTEREST Page 5 of 6 -- Approved For Release 2007/10/23: CIA-RDP79-00927A001800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 17 July 19 58 press reaction along more fa- vorable lines. Latin America: A growing number of Latin American govern- ments are indicating approval of the US landings. Chile has publicly expressed its full support, and private statements of support have come from Bra- zil, Nicaragua, and the Domin- ican Republic. Argentina, Bo- livia, and Peru have privately stated their satisfaction and approval, and Mexico and Costa Rica have privately expressed their sympathetic understanding. In Buenos Aires, however, on the night of 16 July a small mob of 200 to 300 persons, tentatively identified, as iCom- munists and sympathizers, at- tacked the US chancery, inflict- ing small property damage. Far East - Southeast Asia: Indonesian Foreign M n s ter Subandrio stated on 15 July that the Iraqi situation must be decided.~.completely by the Iraqi people. He hoped it would be settled in the "Bandung spirit." On the other hand, Merdeka, a non-Communist nation- alist paper which often acts as the government mouthpiece, de- clared on 16 July that the "fla- grant American intervention" could not be tolerated, and that it would "cal 1? f_or inter- vention from other circles," thus increasing the possibility that hostilities would spread to other areas. The Japanese Government has indicated that developments in Lebanon and Iraq are domestic affairs which made outside in- tervention undesirable. This view apparently has led Prime Minister Kishi to state that Japan would express disap- proval in the UN Security Council of the American move in Lebanon. He also asserted that any intervention in Iraq would be "undesirable," even if called for by the United Nations. Government spokesmen in South Korea and Taiwan have stanchly supported the US troop landings. Chen Cheng, the new Chinese Nationalist prime min- ister, said Nasir must be over- thrown in order to solve the problems of the Middle East. Nationalist Chinese military forces have been placed on a special alert, and daylight air patrols are being made along the mainland coast. the leaves of or ore military personnel have been canceled have been confirmed by Pyongyang radio. There is no indication, however, that Seoul or Taipei is considering any unilateral action as a result of the Mid- dle East crisis. South Asia: Indian Prime Minister Nehru is reacting cau- tiously and confining himself to generalized; ;etatementS, say- ing merely that intervention by "outside" powers in Lebanon could create a "great danger of world war." Most Indian newspapers, however, have re- acted violently, describing the landings as "political insanity," "a flagrant breach of interna- tional law," and as reducing the UN Charter to a "mockery." Pakistani reaction has been limited as a result of the ab- sence of President Mirza and Army Commander in Chief Ayub, who are in Turkey. SECRET PART I OF IMMEDIATE INTEREST Page 6 of 6 25X1 25X1 25X1 25X1 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927A001800070001-6 UUN11I ntt' I IHL ,, T CURRENT INTELLIGENCE WEEKLY SUMMARY 17 July 1958 PART II NOTES AND COMMENTS SOVIET SUMMIT AND DISARMAMENT TACTICS Soviet tactics at the Gene- va technical conference on nu- clear test controls and Khru- shchev's speech of 12 July at a Czech-Soviet "friendship ral- ly" suggest that the USSR is trying to minimize the need for disarmament inspection measures, but they do not indicate how extensive an inspection system-- if any--the USSR might agree to. Khrushchev apparently considers the presummit ambassadors' talks in Moscow deadlocked and prefers to follow other courses in order to limit negotiations with the Western powers to topics ac- ceptable to the USSR. Khrushchev on 12 July again expressed an interest in a sum- mit conference but denied tak- ing this position because of either internal problems or difficulties in the satellites. He left the impression, however, that Soviet interest in a sum- mit meeting derived partly from a desire to gain some form of Western recognition of the status quo in the satellites. He said the West was blocking a summit conference because it did not want to recognize the existence of the Eastern Euro- pean states. Once again, Khru- shchev criticized only one agenda topic proposed by the West--the Eastern European situation. Since the chances for hold- ing an early summit conference are dim, the USSR is following other avenues of negotiation to publicize its disarmament position and press for Western agreement. The European friend- ship and cooperation treaty it proposed on 15 June includes disarmament and security plans for Europe previously suggested by Moscow. Moscow has adopted the conciliatory pose of accept- ing the Western plan for talks by experts on various phases of disarmament. If technical talks are held on methods of prevent- ing surprise attack, as the USSR suggested on 2 July, Moscow would probably try to make its pro- posals appear valid without com- mitting itself to elaborate in- spection systems. In his 12 July speech, Khrushchev emphasized that the USSR still stood by its propos- als for control measures to pre- vent surprise attack, but he made no reference to the ques- tion of control measures to en- sure a ban on nuclear tests. He scored the West for insisting on giving priority to the in- spection aspects of disarmament, specifically the idea of under- taking any comprehensive inspec- tion system before mutual trust among nations had been estab- lished. Whether or not the apparent Soviet vacillation over attending the Geneva con- ference reflects internal dif- ferences, Moscow's caution with regard to inspection continues to be evident. While Khrushchev has been publicly arguing that a large- scale inspection .system is CONE DUX S&Qiera PART II NOTES AND COMMENTS Page 1 of 16 ?_ Approved For Release 2007/10/23: CIA-RDP79-00927A001800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927A001800070001-6 SECRET 17 July. 1958 infeasible at the start, the Soviet scientists in Geneva have been trying to demonstrate that relatively modest systems would be adequate to detect nuclear tests. Western dele- gates have felt that in the discussions to date, Soviet scientists have made exaggerated claims for the accuracy of various acoustic and seismic techniques for detecting nu- clear explosions. The Russians also claim that the use of air- craft to collect nuclear debris is unnecessary and that ground stations would suffice. Until the control system itself is discussed, however, it will not be evident how realistic and extensive a system the USSR is willing to discuss. Whether or not the USSR is willing to implement some limited system of controls in order to gain an end to testing, the present Soviet tactic is to demonstrate that there is a wide measure of agreement among the scientists on control measures. If the talks fail, Moscow wants it to appear that the West is to blame either because it makes extravagant demands for in- spection systems or because it refuses to halt tests despite a wide measure of agreement on inspection. (Con- 25X1 curred in by OSI) The latest move of the Soviet regime to impose ideo- logical conformity in the lit- erary sphere is the removal of Konstantin Simonov as chief editor of the literary journal Novy Mir. The Soviet Writers' n on announced on 28 June that Simonov was released at his own request and that his predeces- sor, Alexander Tvardovsky, had been renamed editor. Since mid-1954, when Simonov replaced Tvardovsky, Novy Mir has been the subject oo eased controversy centering on the journal's publication of such politically questionable works as Vladimir Dudintsev's Not By Bread Alone, Daniel Granins- sshiorE -story "Personal Opinion," Semyon Kirsanov's poem "Seven Days of the Week," and poems by Margarita Aliger, Olga Berg- golts, and Yevgeniy Yevtushenko. Simonov has been held per- sonally responsible for Novy Mir's mistakes and has been criticized on a number of occa- sions for its editorial poli- cies. Khrushchev made unfavor- able reference to the journal at a joint meeting of leading writers and party central com- mittee officials in May 1957, saying, "We cannot allow the organs of the press to fall in- to unreliable hands." Simonov apparently failed to heed this warning. The March 1958 issue of Novy Mir featured a new play by VaIenUn Ovechkin, "Facing the Wind," which has been sharply attacked in the press and which probably marks Ovechkin's final estrangement from service to the regime. Ovechkin has long been known for his ability to anticipate the party line on "sensitive" SECRET PART II NOTES AND COMMENTS Page 2 of 16 Approved For Release 2007/10/23: CIA-RDP79-00927A001800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 SECRET- CURRENT INTELLIGENCE WEEKLY SUIMARY 17 July 1958 topics, notably agricultural policy, but since the 20th par- ty congress his public state- ments and writings have increas- ingly diverged from official pronouncements. He was quietly dropped from membership on the editorial board of the authori- tative newspaper Literaturnaya Gazeta in September. Soviet leaders could not fail to be seriously concerned when Novy Mir featured his new play---whicFalthough ostensibly justifying the agricultural re- organization, emerges as an eloquent critique of the Soviet system and party control of agriculture. Although Simonov has suf- fered a decided loss of prestige in being removed from the edi- torship of Novy Mir, the regime evidently regards Fim as a use- ful writer and international figure who can be relied on in positions not involving policy decisions. He has played a leading role in the prepara- tions for the heavily propagan- dized Second Afro-Asian Writers' Conference to be held this fall in Tashkent, Uzbekistan. Probably he will gather materia for a new novel in some remote part of the Soviet Union. The poet Tvardovsky, who was himself bitterly attacked and fired for publishing "ideal- ist" and "nihilist" articles in Novy Mir during the "thaw" followin talin's death, has evidently satisfied the party leadership that he is a reformed man. At the May central com- mittee meeting Khrushchev said that "friendly" talks with Com- rade Tvardovsky have given rea- son to hope that this master of the written word will "draw the necessary conclusions." Al- though it is unclear whether Tvardovsky has become ideo- logically reformed or merely more realistic politically, the regime is apparently confident that he will not again abuse a very influ- ential position. USSR FURTHER DECENTRALIZING ECONOMIC PLANNING A speech by Khrushchev in April, delayed over two months in publication, contained an economic proposal which may have engendered policy differ- ences. He mentioned that the regional economic councils (sovnarkhozy) should be given the authority, now exercised by Gosplan, to determine where investment funds allotted them would be spent to meet pre- scribed production goals. They would be allocated funds for five-year periods, and would distribute them by project and by year. The justification for de- centralizing control over in- vestment is that regional of- ficials in the field would be better able to judge local con- ditions and make detailed in- vestment decisions than central planners who have often made costly errors in investment al- location. The danger arises, however, that Moscow's capabil- ity to control the direction of economic development might be considerably reduced under such a scheme. Regional officials, under the pressure to improve the living conditions of the SECRET Page 3 of 16 25X1 25X1 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 17 July 1958 local population, would be tempted to divert funds when- ever possible to consumer- oriented industries. While Khrushchev in his speech ac- knowledged this difficulty and would probably move to offset it by putting greater reliance on the party apparatus, there are indications that more orthodox officials are skepti- cal of this further decentral- ization. Judging from the numerous press articles during May and June playing up the mishandling of investment funds by the sov- narkhozy, some Moscow adminis- trators apparently have deep misgivings about endowing the sovnarkhozy with more power, particularly if it results in any diminution of their own authority. The delay in the publication of the speech in- dicates that Khrushchev may be encountering some high-level resistance to this attempt to carry last year's industrial reorganization a long step for- ward. In his April speech, given at a construction con- ference which was attended by nearly all members of the party presidium, Khrushchev is re- ported to have criticized severely a number of prominent officials, although these re- marks were expurgated in the published version. The cir- cumstances surrounding the re- moval of N. K. Baybakov as chairman of RSFSR Gosplan in early May suggest that he may have been one of the officials involved. The problem was presumably aired at an all-union confer- ence on investment efficiency held in Moscow in mid-June, and since then some steps in line with Khrushchev's proposal have been taken. According to recent Soviet articles, the duties of sovnarkhozy have been broadened and central planning will hence- forth be concerned with details in only eight major branches of industry--ferrous and nonferrous metallurgy, petroleum, gas, chem- icals, coal, electric power sta- tions, and agriculture. Further- more the number of items whose production is specified by cen- tral planning is to be drastic- ally reduced. It fell from 1,640 in 1957 to 1,042 in 1958, and will fall again to only a third of the present figure in the forthcoming Seven-Year Plan. These steps may represent a compromise falling short of Khrushchev's proposal, or they may be only initial steps. In any case, a definitive policy statement on the handling of investment funds has not yet been publicized. The ultimate division of planning responsi- bility between Gosplan and the sovnarkhozy could result in further limiting Gosplan's duties. The central authori- tiet will certainly preserve, however, basic principles and goals concerning, for instance, the predominance of heavy indus- try and Khrushchev's 15-year economic forecasts. (DreDared by ORR) POLES FEAR CHANGE IN GOMULKA POLICIES Poles who played prominent parts in setting the stage for Gomulka's experiment in "na- tional Communism" are increas- ingly pessimistic about the chances for the Polish "road to socialism" to survive. As a direct consequence of the increased state control over cultural policy, liberal writers, intellectuals, and pro- fessional men are withdrawing from or are being forced out of political life. "Revisionist" SECRET PART II NOTES AND COMMENTS Page 4' of 16 - Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927A001800070001-6 SECRET CURRENVINTELLIGENCE WEEKLY SUMMARY 17 July 19 58 writers who found themselves jobless have generally been able to find employment else- where but only by refraining from writing about topics in- imicable to the regime. The installment of Minister of High- er Education Zolkiewski as ed- itor in chief of the heretofore liberal journal Nowa Kultura was marked by the resigns ion of three of its editors, among them the philosopher Leszek Kolakowski. The party's agitprop chief, Andrzej Werblan, in a speech condemning the "errors" of Nowa Kultura, singled out Kolakowski for criticism. Kolakowski had written brilliant essays on the evils of Stalinism, a topic the party leadership feels is being used to masquerade criticism of the present regime. The Pol- ish press now is engaging in bitter criticism of a once- favorite son, Marek Hlasko, the prize-winning novelist who has powerfully depicted the demoral- ization of life under Stalinism. Werblan, in an earlier speech, had warned that works not con- tributing to the building of socialism would not be pub- lished, and books by Hiasko and Leopold Tyrmand, who re- signed from the party last fall, have already been rejected. The tendency toward non- involvement in politics is also strong among professional per- sons other than writers and among armed forces personnel who have not been victimized by the restrictive cultural pol- icy. Their attitude derives from a sense of futility, fear of increased repression, and continued revulsion to Marxism- Leninism. Students have con- sistently refused to join the Socialist Youth Union, and the most popular courses in the universities are nonpoliti- cal. In the past week, articles in the party press indicate that the party is moving to counter the marked unreceptivity to Marxism-Leninism. Although the party maintains that free scientific research will be continued, the "Marxist charac- ter" of lectures in the univer- sities will be guaranteed by a prescribed general outline and an obligatory reading list. Measures will also be taken to export Marxist-trained scholars to provincial university centers, since "appeals and suggestions" have so far proved fruitless. Two-year courses for "per- fecting political officers" are planned for the unpopular eve- ning sessions of the army schools of Marxism-Leninism. Gradua- tion from these courses is re- quired for promotion to a high- er officer rank. Soviet pressures on Poland implicit in the Yugoslav dis- pute and the Hungarian execu- tions, while designed to bring conformity in foreign policy matters, may be used by Gomulka to justify his efforts to re- instate greater party control over the nation. The two poli- cies most closely linked with the Gomulka experiment--abandon- ment of forced collectivization of agriculture and a truce with the church--remain unchanged and are in part, responsible for his continued popularity. Should Soviet pressure be extended to include internal affairs, it would most likely be applied first in agricultural matters. The Polish regime-- through the puppet Peasant par- ty leader Stefan Ignar--on 18 June strongly reaffirmed its intentions of pursuing the pres- ent policy of support for the middle peasant and voluntary 25X1 cooperation of all types. 25X1 SECRET PART II NOTES AND COMMENTS Page 5 of 16 Approved For Release 2007/10/23: CIA-RDP79-00927A001800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 17 July 1958 ULBRICHT TRIUMPHANT AT EAST GERMAN PARTY CONGRESS East German party boss Walter Ulbricht, supported by Khrushchev, placed his own hard-line stamp on the fifth Socialist Unity (Communist) party (SED) congress held in East Berlin from 10 through 16 July and emerged as the un- questioned leader of the East German party. Dealing a crush- ing bloc to the opposition, the Ulbricht-dominated congress eliminated his opponents from high party posts while raising several loyal henchmen to top jobs in the SED hierarchy. Un- compromising condemnation of "revisionism" and a call for rigid orthodoxy at home and abroad, intensification of the campaign against West German pert Fritz Selbmann, a deputy premier and deputy chairman of the Planning Commission who had opposed Ulbricht on economic matters; East German Ambassador to China Paul Wandel, a former party secretary; former polit- buro member Fred Oelssner, who was once the SED's leading theoretician; and Grete Witt- kowski, a onetime deputy chair- man of the Planning Commission. Education Minister Fritz Lange, who came under fire at the con- gress for shortcomings in the East German educational system, was dropped as a candidate mem- ber of the central committee. The politburo was packed with Ulbricht adherents, its EAST GERMAN PARTY LEADERSHIP SECRETARIAT POUTSURO Walter Ulbricht, 1st Secretary Albert Norden Kurt Hager Erich Mueckenberger Alfred Neumann Erich Honecker Gerhardt Grueneberg Paul Verner Friedrich Ebert Otto Grotewohl Hermann Matern Alfred Neumann Wilhelm Pieck Heinrich Rau Willi Stoph Walter Ulbricht Former Politburo members Former candidate members Herbert Warnke Erich Honecker Bruno Leuschner Erich Mueckenberger Edith Baumann Luise Ermisch Paul Froelich Kurt Hager Alfred Kurella Karl Mewis Alois Pisnik Paul Verner "imperialism," and promises of great economic accomplishments in the future were the themes set by Ulbricht on opening day and reiterated by speaker after speaker throughout the congress. The most important of those purged from the central committee included economic ex- New . candidate members membership being in- creased from eight to thirteen full members. Four candidates were upgraded to full mem- bership and one new member was elected, while eight new can- didate members were chosen. The entire secretariat, headed by Ulbricht as first secretary, was re- elected with the ex- ception of Paul Froehlich, who be- came a politburo can- didate member. In his opening speech, Ulbricht charged that "revision- ists" tried to exploit the complicated and difficult problems of the "transition to socialism" and termed modern revisionism a dangerous reflection of bourgeois ideology. "National Communism," he asserted, is aimed at undermining the unity of the socialist camp and can serve only "to smooth the path to counterrevolution." Ulbricht pointed out that only exceptional SECRET NOTES AND COMMENTS Page 6 of 16 -- Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 SECRET CURRENT INTELLIGENCE WEEKLY SIIII&RY 17 July 1958 vigilance had prevented great damage being done to the party by the revisionist Schirdewan- Wollweber faction and the "coun- terrevolutionary" Harich group. To combat revisionism, Ulbricht urged "an atmosphere of intol- erance toward mistakes and shortcomings," meanwhile remind- ing his audience of party mem- bers who had already been purged. Ulbricht stressed that the objective of "socialist" educa- tion is to prepare individuals for life in "socialist" society and to inculcate in them the "socialist" approach to all problems. Fritz Lange admitted in his self-criticism that a "dogmatic petrification of the process of instruction" had con- tributed to the program's fail- ure to achieve its objective. He announced that, in September, "polytechnical instruction"-- school instruction interspersed with periods devoted to pro- ductive work in industry or agriculture--would start in the upper six classes of all schools. Although the stated aim of this educational innova- tion is to enable students to combine theory and practice, its major purpose is to utilize students in the labor force to alleviate the critical manpower shortage in East Germany. In the economic sphere, the East Germans were promised that their "socialist" system would soon bring them a better life and enable them to surpass the West German standard of living. thereby proving the superiority of "socialism" over capitalism. It was emphasized repeatedly that this goal can only be achieved through higher labor productivity--meaning tighter labor discipline and probably higher work norms, which are certain to heighten worker dis- content. Khrushchev promised to help East Germany by stepping up aid. East Germany's grandiose plans for higher economic pro- duction appear to be highly colored with propaganda, how- ever, and it is doubtful that appreciable increases in con- sumer goods can be made avail- able--even with Soviet aid-- if the planned increases in heavy industrial capacity are carried out. (Concurred in by ORR) BLOC EMPHASIZES ANTI-TITO STAND AT EAST GERMAN CONGRESS Delegates to the East German fifth party congress, held from 10 to 16 July, used the occasion to demonstrate that the experiments in liberal- ism which led to the "events of 1956" had come to an end and that unity of the Communist movement under Moscow's leader- ship is the common goal. Rang- ing from Soviet Premier Khru- shchev's long, scathing attack on Belgrade to Polish Party Secretary Morawski's moderate slap of Tito's wrist, the principal speeches at the Com- munist meeting in East Berlin condemned opportunism and "re- visionism." Khrushchev termed "revisionism" the Yugoslav "Trojan horse" which has the purpose of first undermining the Kremlin's power and then isolating and bringing down the satellites. Khrushchev held out hope, however, that Yugoslavia and the other Communist countries would, "despite current circum- stances,... carry on a common struggle in the future against" their "common enemy." Even the Stalinist Ulbricht hoped that SECRET PART II NOTES AND COMMENTS Page 7 of 16 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927A001800070001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 17 July 19 58 "over a prolonged period" it would be possible to convince the Yugoslav comrades that they were in error; in the meantime, he said, normal state relations were to be cultivated. Khrushchev asserted that the rift was "no earthquake" and that Moscow does not propose to overemphasize the polemics with the Yugoslavs. He declared that the methods used against Belgrade in 1948, and not the Cominform resolution charges, were wrong. Nevertheless, the major portion of his address was devoted to a violent attack on the Yugoslav leaders, and Belgrade's response indicates that it regards Khrushchev's more conciliatory words as hol- low. The delegates reaffirmed the bloc position on the Nagy executions, noting, as Ulbricht said, that the Hungarian revolu- tion showed "that in our coun- tries revisionism is the peace- maker of the counterrevolution." Ulbricht drew some pointed parallels between the Petoefi Circle's revisionist influence in Hungary and the "vacillating elements" in his own party which have brought to East Ger- many the most serious factional strife in the Communist regime's history. Both Morawski--a liberal Gomulka adherent--and Hungary's party leader Kadar were rela- tively subdued in their com- ments on the Nagy and Yugoslav questions. Morawski, in con- trast to the other major speak- ers, said nothing at all about Nagy or the Hungarian revolu- tion. Kadar's speech as it was first broadcast by the Ber- lin radio contained nothing about Yugoslavia, though in a later broadcast a paragraph was added that criticized the Yugo- slav program. The congress speeches con- tained veiled warnings that Go- mulka's deviations from accepted practice will not be tolerated. Such a warning appears implicit in Khrushchev's statement that Moscow will not interfere in party or state matters but will criticize in a comradely way those leaders "who make mis- takes, but are capable of appreciating them...." Khru- shchev's attacks on Yugoslavia's collectivization policies may al- so have been intended for Polish ears. 25X1 DE GAULLE'S POLICIES AND PROBLEMS Premier de Gaulle has ordered the committee on con- stitutional reform to step up its schedule to permit a joint government-parliamentary con- sultative committee to consider its proposals early in August, and has hinted officially that the revision may open the way for a federal union of France and its overseas possessions, presumably including Algeria. No firm decisions have yet been indicated on details of the new constitutional proposals, but it appears certain that the president of the republic will be given increased powers. For example, he apparently will have the right to appeal to the country in a referendum. Jus- tice Minister Debre, in charge of the revisions, has said that cabinet ministers should not be members of the National Assembly, and that assembly powers should be reduced. In a radio address on 13 July, De Gaulle called for new SECRET NOTES AND COMMENTS Page 8 of 16 Approved For Release 2007/10/23: CIA-RDP79-00927A001800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 17 July 1958 institutions, established on a federal model, to link France with its overseas possessions, and said Algeria would have a "choice place" in this ensemble. Like his previous pronounce- ments on Algeria, this state- ment seems deliberately vague, since he still has to reckon with extremist French settlers who want Algeria integrated into France. De Gaulle's promo- tion of Jacques Massu to three- star_general and his award of France's highest military medal to General Salan appear to be part of a "carrot and stick" policy toward the military to wean them from the ultranation- alist settlers. Some of the troublesome "parachute colonels" are being reassigned. De Gaulle's scheduled monthly re- turn visits to Algeria are pre- sumably designed in part to impress both Moslems and French settlers with the importance of the referendum. Emerging signs of discon- tent suggest that the honeymoon period is ending for some polit- ical and economic elements which had heretofore tacitly supported De Gaulle. The So- cialist party has called on the government to dissolve the Pub- lic Safety Committees, voiced opposition to "freezing" . sal- aries and social benefits, and requested that the October ref- erendum also include a question as to whether the present con- stitution needs any revision. Agricultural producers, the first major economic group to refuse a De Gaulle request, have indicated their opposition to voluntary renunciation of part of a prospective increase in agricultural prices. Labor unions are also pressing their demands for wage increases. The Communists are re- ported to be having.' difficulties in rallying opposition to the De Gaulle program. Party ef- forts to form "committees for defense of the republic" are reported going badly, and a Com- munist party section leader has stated that, from the party standpoint, "the political situation has never been so grave as now." A national party conference may be called to establish more effective tactics. AMERICAN AIR BASES IN MOROCCO The Moroccan Government, responding to popular clamor for the evacuation of all for- eign troops, may soon press for an American declaration of willingness in principle to evacuate the five American air and naval air bases in Morocco. The King recently asked for a speed-up of the negotiations begun in May 1957,to regularize the status of these bases. They were built by the United States under a bilateral agreement with France negotiated in De- cember 1950 when Morocco was a French protectorate and are jointly operated with French forces. Moroccan nationalists strongly resent the fact that Morocco did not participate in the 1950 negotiations, and the government continues to insist that the agreement was illegal. The popular outcry against the United States, instigated in part. by the French Embassy's SECRET PART I I NOTES AND COMMENTS Page 9 of 16 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUUARY 17 July 1958 press officer, who may have been seeking to divert Moroccan atten- tion from French troop evacua- tion negotiations, stems from a routine change in command on 28 June at the American base at Nouaseur coincident with the termination of that base's func- tion as a supply de- pot for the air force's European opera- tions. The~Moroccan press, which favors Morocco's neutrality, charged that the base had become a NATO in- stallationand labeled the command change an "aggressive design of the United States to commit Morocco to side with the West." Lodging a formal pro- test on 30 June, the government insisted * U S Air Force base US naval air facility it should have been I o consulted and, in ef- fect, rejected ex- planations of the American Embassy. eil THE AUSTRIAN CHANCELLOR'S VISIT TO MOSCOW A major test of Austria's foreign policy may emerge from the 21-27 July visit to Moscow of Chancellor Julius Raab and other Austrian coalition leaders. The principal Austrian ob- jective is a reduction in the $150,000,000 reparations bill imposed by the 1955 state treaty. The Austrians also want trade concessions, including settle- ment in hard currencies of persistent Soviet deficits. Raab has described as "pure conjecture" numerous reports that he also hopes for a large loan, but there is a precedent in his endorsement in 1955 of the abortive Soviet loan offer SECRET PART II NOTES AND COMMENTS Page 10 of 16 - Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 17 July 1958 to the province of Lower Austria. rus ev probably views the meeting as an opportunity for further moves to dissipate the hostile West- ern reaction to the Hungarian executions, and hopes it will present to the world a picture of closer Austrian-Soviet rap- port. Comparatively generous eco- nomic concessions are therefore HONDURAN GOVERNMENT WEAKENING President Ramon Villeda Morales, whose inauguration last December ended a turbulent three-year lapse in constitu- tional government and brought his Liberal party to power after likely; the Soviet Union is in a good position to offer, as a minimum, a cut in Austrian oil reparations deliveries. Even if coupled with the requirement for replacement deliveries of other Austrian goods, this would still be an attractive offer to Vienna, which needs the oil but has difficulties in finding a market in the West for some other products--particularly those produced in the former Soviet-controlled factories of eastern Austria. Moscow will probably press in return for Austrian approval of such Soviet foreign policies as Chinese Communist representa- tion in the UN, the Rapacki plan, cessation of nuclear tests, and condemnation of West German atomic armament. The Austrians will probably be cautious about such overtures, but they have found it hard during the past year to refuse various conces- sions, such as permission to hold the 1959 World Youth Fes- tival in Vienna. None of these has involved an alarming depar- ture from a strongly pro-Western orientation. 25X1 for German reunification and his offer of Vienna as the site for a summit meeting were evidently motivated by such considerations. Raab's attitude has caused some concern, however, since he apparently yearns for a diplo- matic success to crown a career which,for health reasons, may be coming to an end. His plan 25 years as a persecuted op- position party, is rapidly losing his once broad and en- thusiastic popular support. He is now faced with a serious la- bor problem, and the politically SECRET NOTES AND COMMENTS Page 11 of 16 - Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 17 July 1958 decisive armed forces are be- coming increasingly disillu- sioned with constitutional civilian government. no un s ave been available n recent weeks to pay the salaries of military and civilian officials. The United Fruit Company, which dominates the economy in the important north coast area, has suffered serious setbacks in its operations in Honduras in recent years and is in no mood to grant labor demands in the present negotiations for a new labor contract to replace the one which expired on 15 July. The anti-Communist lead- ers of the dominant union, which is Honduras' largest and the virtual keystone of the coun- try's entire labor movement, are fighting a continual battle with a Communist minority for control of the union, and feel they cannot afford to back down on the union's wage and other demands. Although both sides have agreed to continue negotia- tions beyond the expiration of the contract, an impasse could arise at any time and result in a crippling strike which could threaten the government's stability. Most armed forces leaders, whose careers developed during the long period of Nationalist party rule, are not unhappy to see Villeda's position weakening. The armed forces managed the unprecedentedly free elections last year and subsequently ended the military.iunta's.15-month rule. Before doing so, however, they demanded and obtained con- stitutional provisions giving the armed forces virtual auton- omy in the governmental struc- ture. The civil government thus has little control over the military, many leaders of which expect again to assume direct control of the government when the Villeda administration has become sufficiently discredited in the public mind. INDIAN FINANCIAL CRISIS The rapid decline of India's foreign exchange reserves in recent weeks suggests that a flight of capital has begun as a result of apprehension regard- ing the outlook for the economy. The reserves have declined at the rate of $15,175,000 a week since early June, after declin- ing by only about $6,000,000 a week during early 1958. They stood at the dangerously low level of $442,400,000 on 4 July. Such a flight of capital could be managed by underinvoicing exports and overinvoicing im- ports and depositing the dif- ferential abroad. This would be almost impossible for the Indian Government to control. The Indian Government re- cently estimated the foreign exchange deficit for the fiscal year ending 31 March 1959 at $617,000,000, and the deficit for the last three years of the Second Five-Year Plan (1956-61) at $1.317 billion after taking into account all assured for- eign aid. India held only $561,- 000,000 in reserves at the be- ginning of the present fiscal year. Indian officials had hoped that the reserves could be reduced to about $200,000,000, but the fear that a capital flight is beginning may cause SECRET NOTES AND COMMENTS Page .12 of 16 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 -SECRET 17 July 1958 the government to adopt a more cautious view. In a drive to increase its falling exports, the govern- ment has reduced or elimi". nated the export duties on a number of products. It is requiring all sugar refin- eries to sell part of their output abroad, even though this means selling at a loss, since the price in India is above the world market price. Import restrictions have also been made even more stringent, and the government reportedly plans to make imports scheduled for the 1 April - 30 September licensing period last for the following three months as well. While such a drastic cut in imports will force many fac- tories to curtail production be- cause of shortages of imported raw materials and parts, the gov- ernment may decide that increased unemployment is more acceptable than a third cut in the Second Five-Year Plan, especially since nearly all major projects are well underway. It recognizes that such import restrictions are only a stopgap measure,how- ever, and will make an all-out ef- fort to obtain large-scale for- 25X1 eign aid before abandoning the goals of the plan. SECRET NOTES AND COMMENTS Page 13 of 16 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927A001800070001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 17 July 1958 MODERATE FORCES FACE TEST IN SINGAPORE BY-ELECTION The 26 July by-election to the Kallang district seat on the Singapore city council will pose a major test for the proposed United Socialist Front (USF), which is still in process of formation. Singapore Chief Min- ister Lim Yew Hock's Labor Front and the conservative Liberal Socialists, the main components in the proposed USF organization, have agreed to support one can- didate in this election in an effort to defeat the left-wing People's Action party (PAP) candidate and halt steadily growing pro-Communist strength in Singapore. Their failure in this first test would be a se- vere blow to the USF concept of political cooperation among moderates and would pave the way for future left-wing vic- tories. ly based and effective po- litical organization. Chief Minister Lim is fully aware of the importance of a victory in Kallang and is making a strong personal fight for the moderate candidate. He faces an uphill battle, however, for the Communist-influenced PAP appears to have lost none of its strength since sweeping 13 of the 14 seats it contested in the city council elections last December. The PAP is well organized and financed and appears to be in an excellent position to augment its strength by capitalizing on Singapore's economic difficulties, which have created a growing unem- ployment problem. Victory ini. Kallang would give the USF a temporary boost, but it would have only a few months to consolidate its strength and build an island- wide grass-roots organization to compete with the PAP in the Legislative Assembly elections early next year. No moderate party in Singapore has ever been able to create a broad- Chief Minister Lim's agree- ment with the conservative Liberal Socialists indicates that he has, at least for the present, abandoned his long-standing ef- forts to strengthen the moderates by persuading the right-wing" group in the PAP, controlled by Secretary General Lee Kuan Yew, to., j oin his Labor.. Front..:in a lef t- of -center non-Communist coalition. 25X1 SECRET Page 14 of 16 Approved For Release 2007/10/23: CIA-RDP79-00927A001800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 - SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 17 July 1958 POLITICAL CRISIS IN LAOS The Souvanna Phouma cabi- net in Laos will resign shortly to permit the formation of a new government following the re- cent National Assembly elec-' tions. The polarization in Laotian politics which followed the pro-Communist victory in the elections has resulted for the first time in an effective left- ist opposition, which may con- trol about one third of the Na- tional Assembly. Right-wing politicians belatedly have moved to unite by merging the Independent and Nationalist parties into the Rally of the Laotian People (RLP). In addi- tion, young members of the Laotian elite who hold positions in the army and civil adminis- tration have formed a political instrument, the "Committee for the Defense of the National In- terest," through which they in- tend to work for the formation of a strong anti-Communist government. The younger conservative elements associated with this committee are alarmed about the erosion of the government's authority in the provinces and about the ineffective response of the present conservative pol- iticians to the growing politi- cal and subversive capabilities of the Communist-dominated Neo Lao Hak,Zat. They believe an- other conservative government containing the same discredited politicians would ensure the loss of the country to the Com- munists at the next general election in December 1959 or early 1960. Accordingly, the young e- lite have warned Souvanna Phouma that unless a strong anti-Commu- nist government is invested, the group, apparently acting with army support, will take "extreme measures." Souvanna and Foreign Minister Phoui Sananikone are sympathetic to the group's call for "new faces," but are resist- ing proposals for a government composed exclusively of young technicians headed by Souvanna. Both feel the new cabinet would have to include a few deputies drawn from the several factions in the assembly or it would stand little chance of investi- ture. At best the conservatives are likely to muster only a slim majority for investiture. It is possible that the strong leftist opposition, in combina- tion with the opportunism and factionalism characteristic of the conservative deputies, will wreck efforts to establish a strong government. In that event the young elite might very well make good'.their threats to impose a government by extra- constitutional means. Such a move would probably have the support of the army leadership, which has long debated inter- vening in the deteriorating political situation. JAPANESE - SOUTH KOREAN NEGOTIATIONS Indications that South Korea intends to continue for- mal negotiations for normaliz- ing relations with Japan, de- spite its strong protest over Japan's decision to parole a group of Korean detainees in Japan, suggest that Seoul ex- pects to secure certain advan- tages by continuing the dis- cussions, at least for the time being. SECRET PART II NOTES AND COMMENTS Page 15 of 16 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 SECRET CURRENT INTELLIGENCE WEEKLY;SURY 17 July 1958 Beginning on 21 July, Japan is planning to parole 26 of 93 Korean detainees who, having entered Japan illegally since World War II, now desire to go to North Korea. Eventually all 93 are expected to be released in Japan, but Seoul is demanding that they be sent to South Ko- rea. Most of the 1,200 other illegal postwar entrants already have been repatriated to South Korea. A Japanese Foreign Ministry official has asserted Japan will not forcibly repatriate the dis- puted detainees and thereby pre- sent the spectacle of a non-Com- munist country sending "hapless detainees in manacles" to a country where they can expect punishment on political grounds. Tokyo's position also may be influenced by a desire not to antagonize North Korea. SECRET PART II NOTES AND COMMENTS South Korea's Vice Foreign Minister Kim told an American Embassy officer in Seoul that his government would not break off negotiations, but would of- fer a compromise solution, such as the hospitalization of the 93. As a bargaining lever, how- ever, Seoul may threaten to ter- minate the talks. The Japanese Foreign Minis- try, irritated by South Korea's repeated postponement of sub- stantive discussions on the con- troversial Rhee fishing line 25X1 since negotiations were resumed on 15 April, believes Seoul is trying to extract concessions from Japan on the return of art objects, fishing vessels, and other claims issues, before beginning talks on the fishery issue from which the Japanese feel t have somethin to gain. Page 16 of 16 -- Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927A001800070001-6 CONFIDENTIAL CURRENT INTELLIGENCE WEEKLY SUMMARY 17 July 1958 PATTERNS AND PERSPECTIVES SOVIET PUBLIC'S ATTITUDE TOWARD THE GOVERNMENT During the past several years, an increasing diversity of views on'internal develop- ments have been expressed in the Soviet Union, and there are suggestions that public opinion may be emerging as a factor in the political life of the coun- try. Unorthodox views emerge principally from among the more educated and highly paid sectors of the population. These views are expressed, however, with cynicism rather than with any expectation of change. Among the lower income groups, on the other hand, per- sonal security and visible im- provements in economic condi- tions have laid the basis for positive support of Khrushchev and his policies. This support rests, however, on self-inter- ested recognition of personal gains possible under..Khru- shchev's leadership rather than on the more idealistic atti' tudes evoked in the early days of the regime. General Breakdown of Attitudes The "new Soviet man," the selfless executor of party di- rectives and ardent promoter of Marxism-Leninism presented in official Soviet propaganda as representative of the vast ma- jority of Soviet citizenry, seems to be found only among the youth, and then only rarely. Even the high school student tends to loose his ideological enthusiasm when brought face to face with life as it exists outside the classroom. present policies accept many of the basic elements in the sys- tem. Few object to government control of heavy industry, cen- trally planned economy, the So- viet educational system, or even Communist party hegemony. The problems that beset their lives they see as arising from partic- ular policies of ;the. :regime rather than from the Soviet sys- tem itself. Indifference toward Marxist theory and party-line pronounce- ments is almost universal. Although all Soviet citizens seem to have absorbed a great amount of official propaganda as a result of constant expo- sure, for many the repetition of the party line is often me- chanical. The impassiveness often shown by Soviet citizens when the official position is, challenged by a Westerner seems to testify to such an absence of emotional or mental involve- ment. While the mass of Soviet citizens are dissatisfied with one aspect or another of their lives and to varying degrees unenthusiastic about specific policies and goals of the re- gime, love of homeland and pride in the growing world power of the USSR tend to keep this dis- content from becoming a politi- ccal problem. In addition, most citizens seem to be convinced of or resigned to the 'inevitable victory of the Soviet Union and world Communism. More important perhaps is the fact that few can conceive of an alternative to the existing regime. On the other. hand, except for certain minority nationali- ties which present their own special problems, few Soviet citizens reject the Communist system in toto. Even those who express negative attitudes to- ward the present leadership and Effect of Post-Stalin Policies The removal of arbitrary police terror and the subsequent destruction of the Stalin myth had a profound effect on the Soviet population, loosening CC` IuENTIAL ? PART III PATTERNS AND PERSPECTIVES Page 1 of 15 Approved For Release 2007/10/23: CIA-RDP79-00927A001800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927A001800070001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUM M. 17 July 1958 tongues and shaking many long- accepted beliefs. During Sta- lin's later years, public opin- ion was silenced by fear and awe of his power. The break- down of this structure resulted in a chaotic situation; bewil- derment,high optimism, cynicism, and open dissatisfaction in varying combination spread through all levels of the pop- ulation. One important reason be- hind the regime's subsequent effort to restore a more favor- able interpretation of Stalin was to end this unsettled state. De-Stalinization was supposed to clear the record and stimu- late more voluntary support for the regime; it was never in- tended to provide a symbol for continued liberalization. Most Soviet citizens now tend to see the top leadership, collectively and individually, reduced to human size. As one Soviet student commented, "Now every taxi driver in Moscow feels it is his duty to curse out Khrushchev. Theater-goers laugh at newsreel shots of him. No one laughed at Stalin." Two trends appear to be emerging from this situation. Among the 'lower economic groups, where material considerations are paramount, the improvement in working conditions and sup- ply of food and consumer goods have generated a positive at- titude toward the regime, if not toward Communism. Among many members of the intelligentsia, however, par- ticularly university students and those below the top levels in the cultural and social pro- fessions, events of the last few years have seemed more often than not to have fortified their alienation. This was the seg- ment of the population which took the greatest advantage of the easing of thought control and had been the most enthu- siastic about the prospects for further liberalization suggested by the de,-Stalinization campaign. By the same token, they have become the most 'disillusioned by the regime's renewed emphasis on ideological conformity and increased restrictions on free- dom of expression. Hungarian Revolution Western observers have found that most Soviet citizens with whom they have come in con- tact were aware of what really transpired in Hungary and deeply disturbed by the actions of their government. Recently a Western embassy official, dining in a restaurant in the Caucasus, fell into conversation with a Soviet truck driver who had been in the military service in Hungary at the time of the revolution. He kept insisting he had not killed any Hungarians. It was clear that this experience had been a nightmare for him, fill- ing him with a sense of horror and shame. The glaring contrast be- tween what the public knew and felt about these events and the version presented by Soviet prop- aganda media may in part: account for Khrushchev's sensitivity over the Hungarian issue and his occasional defensive attempts to rationalize the intervention as having been painful but un- avoidable. The execution of Nagy has probably revived these feelings among the Soviet popu- lation. Antiparty Group Reactions to the purge of Malenkov, Molotov, and Kagano- vich provide one of the best examples of how widely opinions vary on any given issue. One man, representing the official point of view, remarked that the antiparty group had tried to grasp power at the top: "Their ouster will mean more opportuni- ties for our people to express themselves in the government." A taxi driver, however, admitted that he was upset because Malen- kov had been the "one who got SECRET PART III PATTERNS AND PERSPECTIVES Page 2 of 15 Approved For Release 2007/10/23: CIA-RDP79-00927A001800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 17 July 1958 things for the people." "We were surprised," a high school English teacher stated, "but what must be, must be. It is good for the government." A waiter tersely passed off the purges as "just like all the rest," probably echoing the feelings of the majority who have always viewed high-level political developments as above and beyond them. One interesting aspect of the purge of the antiparty group was the large reservoir of pop- ular good will toward Malenkov that it revealed. In the minds of many Soviet citizens, Malen- kov is still associated with a popular food and consumer goods program. Many contend that 1954 was the best postwar year. This attitude is apparently being reinforced by such stories as the one now making the rounds in central Asia which alleges that Malenkov made a great hit with the workers at the electric power station he now heads by inquiring about their living conditions immediately on his arrival. The inability of Khru- shchev to erase this positive picture of Malenkov probably accounts in part for the con- tinued effort to single him out for special condemnation. World Prestige The emergence of the So- viet Union as a world power is generally a source of pride to the Soviet people, the launch- ing of the first earth satellite being one of the most recent and dramatic illustrations. Soviet citizens are strongly impressed by the technical achievements of sputnik and take almost child- like delight in the world-wide recognition it has brought the USSR. Some opinions, however, have been contrary to this gen- eral mood of jubilation. Some Soviet citizens have disparaged the importance of the launching and others have dwelt on the price at which it was made pos- sible. A provincial dentist, for instance, remarked with dis- gust to an American Embassy of- ficial, "We can't buy good food, clothing, or automobiles at rea- sonhble prices, but we do have a sputnik." Khrushchev's slogans on "catching up with the West" have struck another responsive chord. The Soviet people have long been aware of the higher standard of living in the West and read into these slogans a reassurance that the gap will soon be bridged. In fact, what is to be a future accomplishment sometimes tends to be thought of as something almost achieved. Many people have not been so impressed, how- ever. A Soviet engineer, com- menting recently on milk, meat, and butter goals, remarked cyni- cally, "Sure, we'll catch up tomorrow morning or, at the very latest, tomorrow night." Living and Working Conditions Since 1953, an impressive number of government decrees have been aimed at improving the working and living conditions of the population. Relaxation of the stringent labor laws went a long way toward easing one of the more important sources of discontent. Other measures taken have included increasing pension rates and minimum wages and shortening the working day in certain industries. Most important has been the gradual increase in the availability of food and consumer goods. Almost all Soviet citizens appear to feel that in this respect living conditions have begun to show real signs of improvement. The most frequent and bitter com- plaints now seem to be reserved for the severe housing shortage. Agriculture is the area of the economy which has received the most unprecedented attention during the past five years and one in which living conditions and morale have shown the most improvement. Khrushchev undoubt- edly believes that the critical SECRET PART III PATTERNS AND PERSPECTIVES Page 3 of 15 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 SECRET 17 July 1958 failure of agricultural policies under Stalin can only be reme- died by significantly improving the lot of the peasants and pro- viding them with material in- centives to produce. Since 1953, agricultural decrees have provided, among other things, for the cancella- tion of individual tax debts, an increase in ptdcurenhent prices for various crops, and, most recently, changes in the price system for deliveries to the state. These various meas- ures have worked significant changes in the Soviet country- side. While conditions are still far worse than in the towns, the grinding poverty of Stalin's day is beginning to disappear. More importantly, the Soviet peasant, who under Stalin constituted the most disaffected element of the pop- LEBANON: ITS RELIGIOUS COMMUNITIES AND THE STATE The internal difficulties in Lebanon emphasize the prob- lems arising from the existence of many rival religious sects in the country and from the del- icate balance among them on which the government is based. Jealously guarding their priv- ileges, the sects are continu- ally at odds with each other. A strict distribution of gov- ernmental offices along reli- gious lines and constant alert- ness on the part of the author- ities against agitators have been the means relied on to pre- vent the outbreak of religious strife. Lebanon is not a unity in the national sense, but is a mosaic of divergent traditions and religious beliefs. Through- out its history, it has been an area of migration and resettle- ment, a refuge for minorities. The cultural and linguistic dis- tinctions which came to be in- stitutionalized by the Ottoman authorities--each sect forming a semiautonomous community with- in the state--have been largely preserved in law and in practice in the modern state. Religious Communities In matters affecting a religious community, the gov- ernment deals with it as a whole through its spiritual leaders, not with the members individu- ally. Certain civil functions are the province of the spiritual SECRET PATTERNS AND PERSPECTIVES Page 4 of 15 ulation and still apparently strongly opposes the collective farm system in its present form, has softened in his opposition to the regime. Khrushchev's recent plan to abolish the machine tractor stations (MTS) and sell the ma- chinery to the collective farms has perhaps been the most popu- lar move. J kolkhoz officials were literally swarming over the MTS's, inspecting the equipment in de- tail and forcing MTS officials to sell machinery at prices much lower than they were asking. These sales were followed by 25X1 drunken orgies in which every- body participated. - Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMI&BY 17 July 1958 heads, not the government. They are allowed to administer the property and institutions of their communities and to decide matters of personal status--mar- riage, divorce, inheritance, and parochial education--in ac- cordance with the tenets of their faiths. The decisions of ecclesiastical courts in these fields are enforced, by the state. Both Moslems and Christians are conscious that membership in a religious community is the basis of all political and so- cial rights and obligations. This is as equally true among the Christian sects, as between Moslems and Christians. Each sect ',tends', to be a closed community deeply suspicious of outsiders--to leave one's sect is, to leave one's world and live without loyal- ties and the protec- tion of the community. As long as foreign intrusions were kept to a minimum, this traditional system worked fairly well. However, under the impact of Western ideas, particularly the concept of a na- tion-state, and with outside political in- fluences and rival- ries intervening on the local scene, the old order has begun to decay without a satisfactory substi- tute to take its place. Sectarianism in Government Fifteen distinct religious sects are recognized under Leb- anese law--11 Chris- tian, two Moslem, the Druze, and the Jews-- each constituting a separate community in the eyes of the state. In addition, several other minor sects exist in Leb- anon. The Lebanese constitution, in contrast with those of other Arab states, makes no mention of the official religion of the state. Since no single commu- nity constitutes a majority of the populace, the constitution specifically provides that the communities shall be "equally" represented in public appoint- ments and the composition of the cabinet. Public office is considered by each community as LEBANON SECRET *Hamah Approximate Distribution of Religious Communities Approximate population proportions in Beirut: Sunni Moslem ............??.. 30% Shia Moslem ............??... 5% Maronite ...................... 10% Armenian Catholic.......--- .5% Armenian Orthodox.......... 25% Greek Orthodox 10% Others (Protestants, Jews, Syrian Catholics)... 15% - - - Limits of Ottoman province of Mount Lebanon PART III PATTERNS AND PERSPECTIVES Page 5 ofd Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 17 July 1958 a fief, and this view applies to every office from the presi- dency on down. Thus the various communities are a substitute for political parties as well as religious entities. Since an unwritten agree- ment in 1943, the president has been a Maronite Christian, the a new one would show that Mos- lems actually outnumber Chris- tians because of their higher birth rate and the influx of predominantly Moslem Arab refu- gees from Palestine. The Mos- lems are agitating, however, for a reapportionment of governmental positions based on a more real- istic recognition of the actual population statistics. Some Moslem leaders are even demanding that the presidency be at least open to a Moslem. LEBANESE PARLIAMENT GREEK RMEN'_ j; DDX urxDi MINORITY SE I SHIA MOSLEM SUNNI MOSLEM 14 66 SEATS SPEAKER (SHIA) MARONITE prime minister a Sunni Moslem, and the speaker of Parliament a Shia Moslem. The cabinet seats are apportioned among Sunni and Shia Moslems, Greek Orthodox and Catholics, Maron- ites, and Druze roughly in pro- portion to their numbers among the populace. Representation in Parliament is apportioned along confessional lines, with the eight most numerous sects holding 65 seats. The 66th seat is allotted to a represent- ative of the minority sects. The present apportionment of governmental offices favors the Christians, especially the Maronites, since it is based on the 1943 census, which included over 250,000 emigrants, most of whom were Christians. No cen- sus has been taken since that date because the Christians fear The most impor- tant Christian group consists of the Uniat Churches--oriental, churches recognizing papal supremacy. Of these, approximately 350,000 Maronites form the largest single de- nominational group, 29 percent of the pop- ulation. The leader of the Maronites is Patriarch Paul Maushi, who opposes President Chamoun. This church has close ties with France, which has used it in an attempt to maintain a special position in Lebanon. The patriarch has great influence throughout the country, and his voice is heeded in political, economic, and ecclesiastical affairs. The other Uniat groups are the Greek Catholics (Melkites), who number about 85,000 and who are less Western-oriented than the Maronites; the Syrian Catho- lics, with some 6,000 adherents; and the Chaldeans and Armenian Catholics. There is also a Latin Catholic church, which does not belong to the Uniat group. Next to the Uniats,, the Orthodox Eastern churches com- prise the largest group of Christians. Of these, the 140,- 000 members of the Greek SECRET PART III PATTERNS AND PERSPECTIVES Page 6 of 15 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 SECRET 17 July 1958 Orthodox Church are the most important, totaling 10 percent of the population and nearly one fifth of Lebanon's Chris- tians, largely concentrated in the area south of Tripoli. They are more Arab and eastern in orientation than the Maronites. Through its ties with the Rus- sian Orthodox Church, the Greek Orthodox Church is a prime tar- get of Soviet political-religi- ous designs in the Middle East. Definite inroads have been made through visits by Russian church officials and financial aid to distressed bishoprics. Another target of Soviet policy has been the Armenian Orthodox (Gregorian) Church, the world's oldest national church, whose membership in Leb- anon is estimated at 70,000 per- sons. Speaking an alien lan- guage, the Armenians are half- isolated socially and are mainly craftsmen, office workers, and professional people. Soviet influence has made some inroads among the Armenians, who are divided into two factions, with the anti-Soviet Dashnak group predominating. Another small group is the Syrian Orthodox (Jacobite) Church, which ...has about 5,000 members. Most of Lebanon's 6,000 Jews live in Beirut and include refugees from Syria. following the 1948 events in Palestine. While the existence of Israel has had its repercussions in Lebanon, the authorities have been careful to curb anti-Jew- ish activities, lest they exac- erbate the general sectarian antagonisms. The main Moslem sects in Lebanon are the Sunnis and the Shias. The Sunnis regard the Koran, supplemented by the Tra- ditions of the Prophet--words and deeds attributed to the prophet Mohammed--as the sole and sufficient repository of the Moslem faith. They are the largest Moslem group in Lebanon, numbering 300,000. They com-.. prise about one third of Beirut's population and dominate Tripoli, the country's second city. They lack the tight communal cohesion of other groups, and sharp social differences exist within '.the Sunni community. In the north, the Sunni peasantry is dominated by a small upper class of semifeudal families. In the cities they form a part of the urban prole- teriat. Sunni conciousness of belonging to the religion of the greater part of the Arab world has given them a "majority attitude, " a sense of being "un- justly" overshadowed by their former second-class subjects, the Christians. The Shias (Mutawalis) con- stitute the second important Islamic sect. They believe in the Imamah, the combined secular and spiritual leadership of Islam which they claim descended from Mohammed to the Imam. The Imam has remained "hidden" since the 9th century and they believe he will reappear and rule the world. Two Shia subsects are the Ismailis, whose leader is the Aga Khan, and the Zaidis of Yemen, whose leader is the pres- ent ruler of Yemen, Imam Ahmad. Numbering about 250,000, the Shias live principally in south- ern Lebanon and the Biqa Valley. Economically, they are the most backward of the communities and are practically serfs on the estates of feudal lords. The 85,000 Druze also be- lieve in a "lost" leader who will some day return. Some practice systematic dissimula- tion of their beliefs for pro- tection against possible perse- cution. They are concentrated on the southern half of Mount Lebanon, just east and south of Beirut. Members of closely knit agricultural groups, they have retained a great deal of their feudal organization,,their'loyal- ty. td .heir :chieftains,. and dis- like, of outsiders. SECRET PART III PATTERNS AND PERSPECTIVES Page 7 of 15 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927A001800070001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 17 July 1958 The representatives of the great Druze families dominate the community. Among these are the rival Jumblatt and Ar- san families. The Shihabs, the family of army commander Gen- eral Shihab, were originally Druze professing to be Sunni Moslems, but the general's an- cestors became Maronites in the 18th century. However, another branch of the family remains Moslem, a factor which may con- tribute to the general's ambig- uous behavior during the present crisis. PROSPECTS FOR A EUROPEAN FREE TRADE AREA The impasse which has arisen in negotiations for the projected free trade area (FTA) derives mainly from Britain's overriding concern with its world trading role as contrasted with the desire of the six Com- mon Market nations for a more thoroughgoing integration of Western Europe. Developments in France have forced the United Kingdom to abandon its 1 January 1959 deadline for establishment of the FTA. The De Gaulle`gov- ernment may drag its feet less than previously expected, how- ever, and in the 24-25 July meeting of the Intergovernmental Committee (IGC) may agree to a West German compromise formula that would make possible con- tinued negotiations for a FTA. The six countries of the European Economic Community (Common Market) are committed to the development of an integrated community on the Continent that would go a long way toward elim- inating national political and social differences as well as merging their economies. They are so dedicated to this objec- tive that, despite the genuine desire of five of the six for a FTA, they are willing to sup- port France in some of its ob- jections to the FTA rather than see the EEC itself jeopardized. Britain and to a lesser ex- tent the other ten non-EEC coun- tries of the Organization for European Economic Cooperation (OEEC) want the FTA as a means of access to the Common Market without sacrificing their over- seas trading interests or ac- cepting the EEC's supranation- alism. The United Kingdom in particular sees its world posi- tion menaced by competition that would result from West German exploitation of the grow- ing EEC market and resource base were Britain to remain completely outside. The countries of the EEC feel Britain is demanding the best of two worlds. They see the United Kingdom as gaining free access to the rich indus-= trial market on the Continent while restricting EEC members' access to Commonwealth markets through "imperial preference" and to the United Kingdom's large home market for agricul- tural products. Such a position they believe would also confer disproportionate financial ad- vantage on Britain by enabling it to attract American capital for investment in firms that would benefit from these double advantages. The disagreement between the two sides centers on three main issues: 1) common tariff SECRET PART III PATTERNS AND PERSPECTIVES Page 8 of 15 Approved For Release 2007/10/23: CIA-RDP79-00927A001800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 17 July 1958 versus nationally determined tariffs; 2) coordination of national policies; and 3) treatment of agricultural trade. A Common External Tariff Central to the differences in concept and interests of the EEC as a customs union and those of the non-EEC candidates for the FTA is the question of whether or not all shall share a common external tariff. Both the EEC and the FTA contemplate gradual removal of tariffs against member nations over a period of 12 to 15 years. The EEC would then have a single external tariff while non-EEC members of the FTA would remain SECRET a Potential members of the Free Trade Area Member nations of the European Economic Community (Common Market) 0 200 400 600 800 Miles free to fix their own national tariffs against outside coun- tries. On the EEC side of the con- troversy, the high tariff mem- bers, France and Italy, fear that if the EEC is merged in a larger FTA trading arrangement, their own protected producers will be threatened by competition from low-cost goods imported from the outside world through non-EEC member countries of the FTA hav- ing low external tariffs. To guard against this contingency they have demanded at various times in negotiations: 1) a system of certification of origin of such imports and a compensa- tory levy at the EEC border; THE PROPOSED FREE TRADE AREA (ALL OEEC COUNTRIES) POPULATION GNP 1955 1956 (Billion (Millions) Dollars) European Economic Community (Common Market) BELGIUM-LUX ........ 9.2 9.75 FRANCE................Q.6 52.00' WEST GERMANY..... 51.6 41.80 ITALY .................... 48.2 21.70 NETHERLANDS ....... 10.9 8.20 TOTAL ....... 163.5 . 133.45 Countries that probably will join FTA with full obligations: AUSTRIA ............... 7.0 4.21 DENMARK ................ 4.5 4.15 NORWAY ............... 3.5 3.38 SWEDEN ............... 7.3 8.74 SWITZERLAND ....... 5.0 6.24 uK ......................51.2 57.40. TOTAL ........ 78.5 64.12 Countries that probably will join FTA with special conditions: GREECE ................ 8.0 2.15 ICELAND .............. IRELAND ............... 2.9 1.52 PORTUGAL............ 8.8 1.78 TURKEY ................24.8 3.92 TOTAL .? . ?44.7 9.53 GRAN D TOTAL ...... 286.7 227.10 PART III PATTERNS AND PERSPECTIVES Page 9 of 15 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 17 July 1958 2) equalization of external tariffs between the EEC and the non-EEC countries of the FTA; and 3) a compromise arrange- ment known as the Carli plan under which a compensating duty would be levied only on products on which the tariff of the non- EEC, re-exporting FTA country was below a specified level. Britain, in accordance with its interests in procuring ma- terials from low-cost sources and subject to low tariffs in order to support its vital ex- port trade, refuses to accept a common FTA tariff on the grounds that it would involve discrimination against the rest of the Commonwealth and other outside trading partners. Although "imperial prefer- ence" establishes a relatively low 10 to 15 percent reduction in tariff rates, it does pro- vide preferred outlets for Brit- ain's manufactures and has much significance as a symbol of Commonwealth unity. At the re- cent Commonwealth meeting, other members expressed serious con- cern that the present FTA ne- gotiations might involve Brit- ain in another preferential sys- tem. The importance of Common- wealth markets to Britain is declining relative to the Euro- pean market as Commonwealth -countries industrialize. Its exports to these markets have shown little change in volume since 1950, while those to the EEC area have increased by about 40 percent. In absolute terms, however, the Commonwealth mar- ket remains well over ten times as large a market for Britain at about $12 billion annually. The Continental concept of a Common Market envisages supervision by central institu- tions to "harmonize" the eco- nomic and social policies of the six member states. These institutions will seek to elim- inate national differences in production costs attributable to dissimilarities in taxes, social security, and conditions of work when they are found to have an undue effect on the ability of national industries to compete in the Common Market. Britain and the Scandi- navian nations take strong ex- ception to the "harmonization" principle, seeing it as a cloak for French protectionism, and therefore contrary to their in- terests in maximizing interna- tional trade on a global basis. The non-EEC countries further point out that their govern- ments do not have the powers to regulate working conditions such as overtime pay or equal pay for women, such matters be.= ing settled by collective bar- gaining between employers and unions. Agricultural Trade Of all the provisions of Britain's initial FTA proposal, that which would exclude trade in agricultural products from tariff removal has provoked the widest objections, including strong remonstrances from most of the other non-EEC member countries of the OEEC. They, as well as the EEC countries, find that their trading inter- ests require a lowering of tar- iffs on Britain's imports of food products, which exceed any other country's in volume, in return for freer access to their home markets for the United Kingdom's exports of manufac- tured products. This situation is partic- ularly acute for Denmark, for which agricultural products constitute 70 percent of its total exports to the OEEC area. Of this amount Britain takes about half, but the 39 percent going to EEC countries is also vitally important. The Danes, confronted with the possi- bility of exclusive marketing SECRET PART III PATTERNS AND PERSPECTIVES Page 10 of 15 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 --SECRET. CURRENT INTELLIGENCE WEEKLY SUVUARY 17 July 1958 arrangements and of a substan- tial'increase in tariffs on their exports to the important West German market, as tariffs are averaged to establish the common EEC external tariff, are seriously considering joining the EEC despite their preference for the FTA in which trade in food products would be liberal- ized. In most EEC countries also, agricultural products ac- count for a large proportion of their exports to Britain--40 percent for Italy and Benelux; 22 percent for France--thus reinforcing their determination to have such products included in FTA tariff reduction. Some 60 percent of Brit- ain's imports of agricultural products come from the Common- wealth and only 10 percent from the EEC area. But three fourths of these imports from the Com- monwealth are either noncompeti- tive (tropical) with EEC agri- culture or in product categories (grain) not subject to the. 10- to 15-percent tariff imposed on dutiable items. The United Kingdom has rejected EEC demands that it modify "im- perial preference" to share the Common- wealth market for in- dustrial products on the grounds that such action is up to the Commonwealth members. However, there would appear to be consid- erable room for bar- gaining, in collab- oration with :other Commonwealth members, on preference in Com- monwealth member mar- was imperative in order that tariff reductions be undertaken by the other 11 OEEC members in step with those scheduled by the EEC among its members for 1 January 1959. As it became increasingly apparent during the spring that France's pre- occupation with internal prob- lems might prevent its adjust- ing its previous negative posi- tion on the FTA, as urged by the EEC Commission, the negotiators' interest grew in a compromise formula earlier proposed in- formally by West Germany. This formula calls for a voluntary simultaneous 10-per- cent reduction of tariffs by the eleven non-EEC countries on 1 January to match the internal tariff reductions of the EEC. This would provide a basis for synchronizing tariff reductions and allow further attempts to negotiate formal agreement on a FTA before the second round of EEC. tariff reductions, scheduled. for ,1 January 1960. EXPORTS OF THE COMMON MARKET, FREE TRADE AREA, AND THE UNITED KINGDOM: 1955 EXPORTING COUNTRY AREA COMMON MARKET FREE TRADE AREA UNITED KINGDOM* UNITED STATES & CANADA kets for EEC manufac- tures and easier access to Brit- ain for agricultural exports from the EEC that do not com- pete with the Commonwealth. Present Negotiation Since last October the United Kingdom has insisted that establishment of the FTA in 1958 MILLIONS OF DOLLARS COUNTRY OR AREA OF DESTINATION UNITED* KINGDOM COMMON MARKET FREE TRADE AREA WORLD 341 804 1,434 2,248 AGRICULTURE** 1,319 5,643 10, 294 18,257 TOTAL 952 1,327 2,707 4,342 AGRICULTURE** 2,953 8,813 16,889 32,945 TOTAL 212 68 313 729 AGRICULTURE** 601 1,074 2,616 8,496 TOTAL NOT AVAILABLE 503 1,338 3,004 AGRICULTURE** NOT AVAILABLE 2,354 4,940 19,799 TOTAL 'INCLUDES IRELAND AND ICELAND "FOOD, BEVERAGES AND TOBACCO NOTE UNITED KINGDOM AND COMMON MARKET TOTALS ARE INCLUDED IN FREE TRADE AREA FIGURES. As the time for the IGC meeting has approached, both Britain and France have taken increasingly cautious positions on the 10-percent reduction. In order to avoid committing itself to the precedent for es- tablishment of the FTA that would be implied if the 10-per- cent cut were to '.take place SECRET PART III PATTERNS AND PERSPECTIVES Page 11 of 15 ----Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 17 July 19 58 solely among OEEC nations, France proposes that the cut be made by these nations in relation to the whole outside world. In addition, France wants the cut to apply only for those EEC nations, such as itself, which have tariffs above the approximate average tariff of the Six. Thus, France in com- mitting itself to the 10-percent cut against the rest of the world would only be agreeing to begin on 1 January 1959 to do what it would have to do anyway as the external EEC tariff grad- ually assumes the level of the average of all EEC countries. Britain, on the other hand, stipulates that it will agree to the 10-percent cut arrange- ment only if agricultural prod- ucts are excluded and the cut applies only between OEEC na- tions. This would establish a precedent tantamount to accept- ance of the FTA in principle. Britain has intimated that un- less there is significant prog- ress toward general acceptance of the FTA, it may instruct its chairman of the IGC to report to the OEEC Council on 26 July SECRET that his committee has failed to carry out its instructions. This carries the threat that the United Kingdom would then be prepared to abandon the ef- fort for the free trade area. Since the French techni- cians continue firmly opposed to the FTA, progress or failure in the IGC, meeting will depend on De Gaulle's decision on the position France is to take. His 1 July talk with Prime Min- ister Macmillan indicated he was not fully aware of the po- litical implications of a col- lapse of the FTA. However, Foreign Minister Couve de Murville, who has been assigned responsibility for FTA affairs, is evidently convinced that agreement on the FTA is.ulti- mately inevitable for France. General de Gaulle's past aver- sion to supranationalism and preference for looser forms of union in Western Europe that would include the United King- dom suggest that France's posi- tion in the IGC meeting will be to give the minimum con- cessions necessary to make possible continuation of nego- tiations to establish the. FTA. PART III PATTERNS AND PERSPECTIVES Page 12 of 15 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 17 July 1958 SINO-SOVIET BLOC ACTIVITIES IN THE NEAR EAST elements in Lebanon probably reassured Moscow that such a prospect has become more remote. 1. General Bloc Policy: Sino-Soviet bloc policy toward the Near East is aimed at weak- ening and ultimately eliminat- ing Western influence by sup- porting radical Arab national- ism, exploiting existing ri- valries and tensions, and in- creasing the USSR's own par- ticipation in Near Eastern af- fairs. Bloc leaders are seek- ing thus to gain a position of influence which would enable them to vitiate the Western base structure in this strategic region and to deny Near Eastern oil resources to the West. Dur- ing the period of this report, Moscow continued efforts to identify itself as the champion of Arab nationalism against "Western imperialism" and Israel, and to strengthen its ties-with Egypt, Syria, and Yemen. 2. Moscow probably re- garded the formation of the United Arab Republic as a tem- porary setback inasmuch as the influence in Syria of both the USSR and of local Communists, which had been progressively increasing since August 1957, was checked by the assumption of direct control by Nasir. Nasir's visit to the Soviet Un- ion in May does not appear to have been completely success- ful. While the visit rein- forced the popular image of So- viet support and the similarity of UAR and Soviet policies, Mos- cow only partially agreed to UAR demands on scaling down debts, and refused to' sell new- er model jet fighters and to lower prices on jet transports. During the visit Soviet leaders were also displeased with signs of a growing political and eco- nomic rapprochement between Nasir and the West,although the UAR's support of anti-Western 3. Diplomatic Representa- tion: The ommun s s a es m- mediately recognized the UAR after it came officially into existence in February. The seven bloc countries with diplo- matic missions in Cairo--the USSR, Communist China, and all the Eastern European countries except East Germany and Albania --accredited these missions to the UAR, while the Communist missions in Damascus were down- graded to the rank of consulates and their military attaches were promptly withdrawn. 4. Yemen's adherence to the amorphous "United Arab State" produced no change in its ties with the bloc; the Soviet Union has a small mission in Sana, while the Chinese Communist and Czech ambassadors in Cairo are also accredited to Yemen. Bloc diplomatic representation in Lebanon, Sudan, and Israel--the other states of the Near East having relations with bloc coun- tries--did not change during the period. On 1 March King Saud re- ceived a Soviet diplomat--the first such visit to Saudi Arabia by a bloc official--who probably used the opportunity to request the establishment of formal re- lations and to extend exploratory offers of Soviet economic as- sistance. 5. Economic Activity: Sino- Soviet bloc commerce with Near Eastern countries rose from $278,000,000 in 1956 to $460,- 000,000 in 1957, the bulk of which was conducted with the UAR. Trade with the bloc last year accounted for 20 percent of Egypt and Syria's combined total imports and 40 percent of total exports, with the surplus used in part to service obligations arising from economic aid and arms purchases. Yemen has also SECRET PART III ANNEX Page 13 of .15 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 SECRET CURRENT 'INTELLIGENCE WEEKLY SUMMARY 17 July 19 58 become indebted to the bloc and the bulk of its exports--esti- mated at about $10,000,000 an- nually--will be obligated for some time if the credits are repaid. Bloc trade with other Near Eastern countries was neg- ligible last year in terms of their total foreign transactions. 6. Bloc countries have to date agreed to provide Egypt, Syria, and Yemen with assistance valued at $887,000,000, or 40 percent of the bloc's total economic and military aid to underdeveloped countries. Eco- nomic and technical assistance projects, many of which are still in the planning stage, ac- count for over one half of total aid to the three Near Eastern countries, while the balance involves military aid, most of which has already been delivered. Agreements concluded during 1958 involving additional bloc assist- ance,including Soviet and Czech economic assistance to Egypt valued at $175,000,000 and $56,- 000,000, respectively, and So- viet and Chinese Communist cred- its of $26,000,000 and $16,300,- 000, respectively, to Yemen for economic development projects. During the current period, So- viet officials have stated that the USSR would be willing to ex- tend economic assistance to Leb- anon, Jordan, Saudi Arabia, and Sudan. The Sudanese Government has periodically expressed in- terest in Soviet aid; however, the prime minister has stated privately that the government is not seriously considering acceptance. 7. An estimated 1,700 bloc technicians,; mostly Soviet, Czech, and East German nationals, are working in Egypt, Syria, and Yemen, an increase of about 400 above the number believed to have been involved at the end of 1957. Slightly over one half of the current total is engaged in giving military instruction or in assembling military equip- ment. 8. Cultural and Propaganda Activities: The bulk of dele- gation exchanges between Near Eastern and bloc countries dur- ing 1957 involved Egypt and Syria: two thirds of the some 310 bloc groups traveling to the area visited these countries, while three fourths of the approxi- mately 200 Near Eastern delega- tions to the bloc were from Egypt and Syria. Professional, scien- tific, technical, and cultural groups predominated among the bloc delegations visiting the UAR countries, a further indica- tion of the bloc's tactic of cultivating Nasir's sense of im- portance. The small-scale bloc exchanges with Lebanon, Jordan, Israel, and Sudan, on the other hand, largely involved groups representing Communist or Com- munist-front organizations. 9. Bloc broadcasts in Arabic, which totaled only 28 hours per week at the end of 1956, have been expanded rapidly, reach- ing almost 70 hours per week in late 1957 and currently about 82 hours each week. This total in- cludes Chinese Communist broad- casts in Arabic which were in- itiated in late 1957 and increased in early April to over 10 hours per week. In ad- dition, the bloc broadcasts 3.5 hours a week to the area in French language programs which are in- tended for Europeans and educated Arabs. In May the Egyptian radio organization joined the Communist- controlled International Broad- casting Organization, becoming with Finland the only nonbloc members. 10. Subversive Activity: Soviet and other bloc officials and technicians in Near Eastern countries have avoided overt contact with local Communists and have outwardly maintained a degree of correct aloofness from internal problems involving the local government and Communist parties. In Egypt, where the Communists have been split among several factions, a merger in SECRET PART III ANNEX Page 14 of 15 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927A001800070001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMAStY 17 July 1958 January of the two major groups has brought the bulk of Egyptian Communists together in a single party. Although Nasir continues to harass minor Communists and to suppress all public Commu- nist manifestations, his policy of friendship with the bloc has created a favorable atmosphere which the Communists are suc- cessfully exploiting to attract additional adherents. Most Com- munist elements in Egypt have overtly supported Nasir's neu- tralist and reformist policies for the past several years at Moscow's bidding. Recently, however, dissatisfaction has in- creased among Egyptian Commu- nists over Nasir's repression of the Syrian Communist party and continuing signs that he would like to improve relations with the West. Egyptian Commu- nists are also believed to have penetrated the government at a fairly high level, and Moscow is attempting to develop a dis- ciplined underground apparatus to take advantage of future de- velopments. 11. The Syrian Communist party, which prior to the f or- mation of the UAR was the strongest Communist party in the area, has again been re- duced to cautious activity un- der the threat of imminent sup- pression. During the prepara- tions for the VAR merger, Syrian Communists maneuvered to main- tain the multiparty system and as much autonomy as possible for Syria. In the other Arab states, the Communists are seeking both to penetrate and to cooperate with pro-UAR radical national- ists in opposition to pro-West- ern governments and parties. In Sudan, the Communists are pushing for a "united front" of all elements opposed to the present pro-Western orientation of the government. In Israel, the Communists continue to be weak because of their stand favoring concessions to the Arab states and because the par- ty includes both Jewish and Arab--mostly Christian--members. 12. Near Eastern Reactions to Bloc Activities: Ara atti- tudes toward a loc have been a prime factor in Moscow's gains in moving toward its objectives in the area. The USSR has been successful, particularly among radical Arab nationalists, in representing bloc opposition to Western "imperialism" as equal to that of the Arabs and-in ex- ploiting the Israeli issue. Pub- lic Soviet espousal of Nasir and Arab causes, the visible evi- dence of bloc support in the form of aid, and the pro-Soviet line followed by most of the more rabid Arab journalists and radio commentators in their treat- ment of world news have also con- tributed to a favorable popular conception of the bloc. 13. The Outlook: Bloc lead- ers will probably continue a flexible and opportunistic policy of limited risks in the Near East by supporting Nasir against the West and against Israel as new occasions arise, but without mak- ing firm commitments to the UAR. The Soviet Union would, however, probably try to exercise cautious pressure on Cairo in the event Nasir moved toward a truly neu- tral position or if he adopted a course counter to bloc objec- tives. Nasir's admiration of Tito's past successes in getting assistance from both the bloc and the West without becoming depend- ent on either, and the close Yugo- slav ties with many radical Arab elements,especially in Syria, are also likely to emerge as dis- quieting factors in the UAR's relations with Moscow. 14. The bloc may be expect- ed to make additional offers of economic aid to Near Eastern coun- tries, particularly when such of- fers might have political value by embarrassing pro-Western gov- ernments of countries having eco- nomic difficulties. Moscow will probably direct local Communists, both as individuals and as par- ties, to continue the strategy of cooperating with and infiltrating radical nationalist groups. SECRET ANNEX Page .15 of 15 Approved For Release 2007/10/23: CIA-RDP79-00927A001800070001-6 25X1 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO01800070001-6