CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A001900060001-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 43
• Document Creation Date: December 20, 2016
• Document Release Date: December 12, 2005
• Sequence Number: 1
• Publication Date: October 19, 1999
• Content Type: SUMMARY

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CQJEJDENTIAL
~SfCREF
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
COPY NO. 50
OCI NO. 4048/58
25 September 1958
Document No. -__--_ --6
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Decl sified
ange o? S 25X1
Date:
Date: 2O
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Class, Changed to: Ts so
25X1
Next Review Date: IQ
Auth.: HR 7n.a -- d
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9 n Class. p
^ Declassifi
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Document No.
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No Chan
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CENTRAL INTELLIGENCE AGENCY
OREJDENTJAL
SET ,
State Department, ARMY review(s) completed.
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THIS MATERIAL CONTAINS INFORMATION AFFECT-
ING THE NATIONAL DEFENSE OF THE UNITED STATES
WITHIN THE MEANING OF THE ESPIONAGE LAWS,
TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS-
SION OR REVELATION OF WHICH IN ANY MANNER TO
AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
The Current Intelligence Weekly Summary has been prepared
primarily for the internal use of the Central Intelligence
Agency. It does not represent a complete coverage of all
current situations. Comments and conclusions represent
the immediate appraisal of the Office of Current Intelligence.
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SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
25 September 1958
OF IMMEDIATE INTEREST
The Chinese Nationalists
stepped up their air activity
over the mainland on 23 and 24
September. Communist jet fight-
ers reacting in.large numbers
to Nationalist penetrations ap-
parently suffered their heaviest
losses to date, particularly on
24 September. No Nationalist
losses were reported, and some
of the Nationalist fighters used
Sidewinder air-to-air missiles
for the first time with consid-
erable success.
Nationalist pilots have
been increasingly aggressive in
inviting and initiating air en-
gagements over the mainland,
reflecting the mounting danger
that the Chinese Nationalists
might take more significant
unilateral military action
against the mainland. Chiang
Kai-shek told several high Amer-
ican officials on 23 September
that the Kinmen resupply prob-
lem must be solved within two
weeks. This was a modification
of a position he took on 12 Sep-
tember, when he said that dras-
tic steps would have to be taken
if the resupply effort did not
show marked improvement in five
days. Chiang also emphasized
on 23 September that if Tatan
and Erhtan islands, which he
described as being in a perilous
state, were attacked, the Na-
tionalists would employ all re-
sources to meet the attack.
situation continues to be the
interdiction of the Kinmens.
Since American naval forces be-
gan on 7 September to escort
convoys to the three-mile limit,
the resupply deliveries by sea
and air have averaged about 100
tons a day. As of 23 September,
the Kinmen garrison had on hand
sufficient rations and ammuni-
tion--the two most important
supply categories--to sustain
it for slightly more than a
month. Increases in the daily
tonnage delivered could extend
this period. Increased Commu-
nist interdiction efforts, to-
gether with expected poor weath-
er at this time of year, could,
however, prevent any extension.
Communist Action
Chinese Communist military
action remained primarily con-
centrated on interdicting sup-
plies to the Kinmens. Artillery
fire is still directed at supply
areas and targets of opportunity,
with heavier concentrations be-
ing laid on resupply convoys.
Communist naval units
have generally avoided clashes
with Nationalist forces. On 21
September, however, the National-
ists reported that two subchasers
and a patrol escort engaged five
Communist craft, probably tor-
pedo boats, near the Matsus.
One of the Communist craft was
reported sunk, another damaged.
The Nationalist Government
has attempted to increase pres-
sures on the United States to
increase its commitments to
assure the retention of the
offshore islands.
The most immediate and
critical problem in the strait
The Communists have
taken steps to improve their
air defenses. High-altitude
bursts near Kinmen suggest
that they are now using 100-mm.
antiaircraft guns, and radar-
aimed searchlights have been
observed on Amoy Island.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25 September 1958
A People's Daily editorial
on 21 September oar the first
time in recent months publicly
reflects the Peiping leaders'
actual comprehension of Ameri-
can nuclear capabili-
ty, stating', "We know
very well the immense
destructive power of
atomic weapons." Al-
though the editorial
repeats Peiping's
generalized boast that
"people and not weap-
ons" are decisive in
war, it declares that
any American nuclear
attack on the main-
land would result in
an attack on the
United States "by the
same means." The
passage on retaliation
is attributed by the
editorial to Khru-
shchev's 19 Sep-
tember letter to
President Eisenhower,
suggesting that Com-
munist China does
not possess nuclear
weapons of its own.
In a slight
moderation of Pei-
ping's earlier threats
against the United
States, the same
editorial states that
600,000,000 Chinese
will only fight "if"
the United States
should "impose war on
us." A 23 September
editorial in the Pei-
ping Kwang-ming Daily,
a lead` ng government
newspaper, carries
this line even fur-
ther. After announc-
ing "We will never
attack unless at-
tacked; if attacked,
we will certainly
NORTH
Han
SECRET
counterattack," the article
adds, "The Chinese people
have never intended to fight
with the United States."
i Chichit ,eYh J
`t{arb'~n ~ ~ nka
Eiden pyr
rt prth", .
~Pngr
watow
NG KONG
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SECRET
25 September 1958
Peiping continues to num-
ber its warnings against the
"intrusions" of American naval
and air forces, making its 12th
on 24 September. The Communists
are attempting to demonstrate
that such actions are frequent
and-are the cause of tensions,
which will subside only after
the numerous armed "provoca-
tions" cease rather than after
agreement is reached on a cease-
fire. There is still no in-
dication in these warnings that
Peiping considers that American
convoying activities warrant
direct military counteraction
at this time.
The Chinese Communists ap-
pear increasingly anxious to
head off any international de-
mands for an immediate cease-
fire without significant con-
cessions to Peiping. Their
propaganda insists that a cease-
fire should not be the immedi-
ate aim of the talks in Warsaw
and calls for the withdrawal of
American forces from the Taiwan
Strait area. A People's Daily
editorial on 22 September afes,
"Beyond this, all other talks
are pure nonsense." In an ef-
fort to stimulate world-wide
apprehensions and to prod the
United States into political
concessions Soviet as well as
Chinese commentaries continue
to stress the threat of war if
negotiations on the present
dispute fail.
Premier Khrushchev's letter
of 19 September to President
Eisenhower placed the USSR firm-
ly on record as "fully support-
ing" Communist China. After
repeating his earlier warning of
7 September that "an attack on
the Chinese People's Republic...
is an attack on the Soviet Union,
he alluded to the Sino-Soviet
mutual defense treaty and de-
clared: "May no one doubt that
we shall completely honor our
commitments."
. Khrushchev called on the
United States to withdraw its
forces from the area, includ-
ing Taiwan, and warned that if
such action is not taken, Com-
munist China "will have no other
recourse but to expel the hos-
tile armed forces from its own
territory...."
The letter--termed by the
American Embassy in Moscow as
probably the clearest warning
the USSR has made in the post-
war period that it is willing
to engage in direct military
action with the United States-
gives the impression that Amer-
ican accommodation to the Chi-
nese Communist position provides
the only alternative to major
hostilities. The clear restate-
ment of Soviet support for Pei-
ping is intended to discourage
an expansion of American mili-
tary activity in support of Na-
tionalist forces.
Moscow reacted to the re-
jection by the United States
of Khrushchev's letter with
press and radio charges that
the action violates "generally
accepted" diplomatic practices.
Since the start of the Sino-
Soviet American ambassadorial
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25 September 1958
talks in Warsaw, Soviet prop-
agandists have consistently
deprecated the possibility of
successful results on grounds
of American insincerity, claim-
ing that this view is substan-
tiated by intensification of
American military preparations
and evacuation of American de-
pendents from the Taiwan area.
Soviet domestic broadcasts have
charged that the United States
"has rejected in advance any
prospect of a peaceful settle-
ment" of the strait issue.
SECRET
apprehension
and
scare
buying
in the USSR,
as
did the
Middle
East crisis
of
last summer.
Western diplomats in Moscow are
generally in agreement that the
25X1
Soviet leadership does not want
25X1
or expect war to develop from
According to the American
Embassy in Moscow, the crisis
has not given rise to popular
MIDDLE EAST DEVELOPMENTS
Increased Christian-Moslem
tension, the result of a recent
wave of kidnapings and the mur-
der of a Christian editor in
Beirut, has made much more dif-
ficult Shihab's task as presi-
dent of Lebanon and has in-
creased the danger of Moslem-
Christian fighting.
Shihab's appointment of
Tripoli rebel leader Rashid
Karame to head a cabinet com-
posed of minor political figures
with no pro-Chamoun members ap-
pears to be a major concession
to the rebels and to Nasir. The
inclusion of several active op-
position supporters and the
awarding to Karame of the port-
folios of defense and interior
are an almost total defeat for
the pro-Chamoun faction. The
fact that the Damascus press on
23 September predicted the com-
position of the present cabinet
may give it a "made in Cairo"
label and build up pro-Chamoun
and Phalangist opposition which
will result in efforts to block
confirmation by Parliament on
30 September.
President Shihab has evaded
responsibility for maintenance
of the country's internal secu-
rity by vesting it in Karame's
hands.
The attacks by Christian
Phalangists on Moslems on 24
September are likely to result
in retaliation, and there is
danger that the security forces
will split along confessional
lines.
The situation is complicated
further by possible Syrian in-
tervention. Syrian Interior
Minister Sarraj, who is strong-
ly anti-Western, reportedly
wants to prolong tension in
Lebanon in order to prevent
stabilization short of com-
plete subservience to the UAR.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25 September 1958
s extremist pres-
sure is also aimed at moderate
opposition leaders and Presi-
dent Shihab. About 300 armed
men from Syria have reinforced
opposition leader Jumblatt
southeast of Beirut. Supplies
brought by this group include
winter clothing for Jumblatt's
men. Lebanese army officers
fear this move may reflect an
intention to intimidate the
Shihab government.
.Jordan
A UN representative is
scheduled to arrive in Jordan
about 24 September to establish
a "watchdog" mission there to
report on interference in Jor-
dan's internal affairs by neigh-
boring Arab states. Nasir as
in effect indicated that he
will not cooperate with this
mission, however, and the gov-
ernment-controlled Cairo press
has denied that Nasir agreed to
establish elements of such a
mission in the UAR.
Iraq
Internal maneuvering for
power in Iraq continues as
Premier Qasim, supported by a
group of older officers and
Minister of Guidance Shanshal,
as well as by the Communists,
strives to further downgrade
Vice Premier Arif, who fronts
for a group of pro-Nasir junior
officers and Baathists. The
brigade which Arif commanded
prior to the 14 July coup has
been sent south from Baghdad
for piecemeal employment against
the rebels, leaving Qasim's
former brigade unchallenged in
Baghdad.
Despite their factional
differences, however, Iraqi
army leaders continue to co-
operate with the Egyptians in
military planning to improve
Iraq's defense against foreign
intervention.
Recently announced plans
to centralize in Cairo the plan-
ning, coordination, and execu-
tion of UAR policies probably
presage a move to strengthen
Nasir's control over Syrian af-
fairs. Even the limited autonomy
granted the Syrian region fol-
lowing union with Egypt last
February allowed too much freedom
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25 September 1958
to groups which resented Egyp-
tian economic and political
domination. Nasir presumably
fears the natural attraction
of Iraq for Syria and, in curb-
ing the activities of Syrian
politicians, will seek to pre-
vent political cooperation be-
between the two areas.
Saudi Crown Prince Faysal
has taken a noticeably harder
line toward American policy in-
terests in recent talks with
Ambassador Heath. Faysal's
frustrations with budgetary
problems have led him to charge
that the Arabian-American Oil
Company (Aramco) is indifferent
to Saudi financial difficulties.
Faysal, apparently reflecting
the influence of his pro-Egyp-
tian petroleum adviser, hinted
to Ambassador Heath that action
to curtail Aramco's rights may
be under consideration.
SECRET
The ambassador also inferred
that some recognition of the
Soviet bloc is being considered.
This would be in line with Fay-
sal's intention to have a "neu-
tral" foreign policy for Saudi
Arabia. Closer Saudi relations
with the UAR may be developed
at the meeting of the Egyptian-
dominated Arab League scheduled
for 1 October in Cairo.
Kuwait, largest Middle East
oil producer, also appears headed
toward closer relations with
Nasir. The deputy Kuwaiti rul-
er, Abdulla Mubarak, declared
in Cairo on 24 September that
Kuwait was prepared to join the
Arab League and contribute to
an Arab Development Bank. Such
a bank would in effect be a de- 25X1
vice by which Kuwait and Saudi
Arabia would contribute to UAR
economic development.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25 September 1958
NOTES AND COMMENTS
CHINESE COMMUNIST MOBILIZATION CAMPAIGN
Peiping claims that in
less than three weeks the Chi-
nese people have been "fully"
mobilized, with every eligible
person--perhaps as many as 150,-
000,000 of the total 650,000,-
000--"under arms." This mobi-
lization, intended to demon-
strate popular support for the
regime's stand on the Taiwan
issue, has stimulated the Chi-
nese people's nationalism and
has whipped up anti-American
feeling, which the regime is
channeling into stepped-up pro-
duction efforts and support for
its program for formation of
"people's communes."
Peiping on 7 September be-
gan its campaign for the "mobi-
lization" of the Chinese people
against American "aggression"
with a call'for the "voluntary"
enlistment of all between the
ages of 17 and 40 in an "every-
one-a-soldier" movement. The
press and radio have since
played up angry slogans, mot-
toes, and statements by indi-
viduals, and are proclaiming a
popular desire to master mili-
tary techniques in the "shortest
time possible." Thus a truck
driver pledges tb "crush" the
American aggressors under the
wheels of his vehicle. Sea
militia corps, comprising over
100,000 fishermen with their
boats, have reportedly been or-
ganized to perform patrols,
commando raids, and rescue mis-
sions.
Except in Fukien Province,
where the militia may be assist-
ing regular army troops in some
guard duties, the real signifi-
cance of the mobilization cam-
paign lies in its propaganda
aspect. The Chinese Communist
Army is capable of handling most
situations which might arise on
the mainland and might even be
hampered by the presence of
amateur militiamen. Further-
more, American army officials
in Hong Kong doubt that the Chi-
nese have sufficient weapons
to arm millions of recruits.
The mobilization campaign
has given great impetus to the
formation of "people's communes,"
in which the militia has both
a real and a propaganda func-
tion. As originally planned
early this spring, the militia
was intended as an integral part
of the communes, apparently to
provide both greater discipline
over the peasants and an organ-
ized labor pool more responsive
to the demands of the commune
leaders. This is still believed
to be the militia's primary job,
despite Peiping's assertions now
that it is prepared to play a
major role in national defense.
The regime will face a
severe test in changing the lives
of the peasants during the com-
mune movement and will need the
tighter internal security which
a real militia f r rovides.
_0~
CHINESE COMMUNIST MOVES AGAINST HONG KONG AND MACAO
Peiping is continuing its
practice of asserting "Chinese
rights'" in Hong Kong. In the
past two months the Chinese
Communists have intensified
their complaints, protesting
the expulsion of a Communist
middle-school principal for un-
lawful political activities, the
closing of a Communist-controlled
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25 September 1958
school as structurally unsound,
and alleged incursions into
Communist air space. Peiping is
harassing Hong Kong fishermen
to force them to join mainland
marketing cooperatives. The
British note that the colony is
being subjected to one of the
heaviest propaganda barrages in
years.
British authorities are
rounding up suspected agitators
in anticipation of riots between
rival Chinese factions on 1
October, the Communist national
holiday, or on 10 October, the
Nationalist holiday. Hong Kong
police probably could cope with
any disturbances.
Macao also is under mount-
ing Chinese Communist pressure,
which the Portuguese authorities
find difficult to resist. Al-
though it rejected a recent Com-
munist request for the estab-
lishment of diplomatic relations
with Peiping and the severance
of those with Taipei, Portugal
felt compelled to yield to Com-
munist pressure to the extent
of requesting Taipei to recall
its commissioner in Macao at
least until after the October
holidays.
The British foresee serious
difficulty in the Chinese Com-
munist claim to a 12-mile ter-
ritorial waters limit, which
London rejected on 13 September.
Peiping's claim would place
the entire western sea approach
to Hong Kong in Chinese Commu-
nist waters and would narrow
the eastern entrance to a width
dangerous for rough weather
transit and involving consider-
able detours. Some air ap-
proaches also would be over
Communist waters.
HONG KONG
J - 3Po ~C: ~'~ ("1 L 3
BOUNDARY OF HONG KONG TERRITORIAL WATER,
~OKOL' LSLANDS
124576 809183 14oo' 114? 151
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25 September 1958
Naval incidents on 15 Sep-
tember indicated the Chinese
intend to support their 12-mile
claim. Two Communist vessels
nearly ran aground two British
motor launches, and another
British.ship was signaled by a
Communist shore station to
"leave Chinese territorial wa-
ters." Although the British
feel they cannot restrict their
patrols without serious damage
to their prestige, they never-
theless have instructed them to
proceed as "unobtrusively as
possible" in an attempt to avoid 25X1
an exchange of fire with Com-
munist vessels.
CHINESE UN REPRESENTATION QUESTION
The moratorium on Chinese
UN representation was adopted
on 23 September with the solid
support of the Latin American
bloc and most of the Western
and Asian nations allied with
the United States in defense
treaties. The vote shows, how-
ever, a loss of support from
last year which may be critical
for Nationalist China's opposi-
tion in the UN. Although Pei-
ping's vote rose only from 27
to 28, Taipei for the first
time lost the support of Greece,
Iceland, and Austria. Remarks
during the discussion of the
issue also suggest that any Gen-
eral Assembly consideration of
the Taiwan Strait crisis would
bring substantial support for
Peiping's attendance as a party
to the dispute.
Greece and Iceland, which
have supported the United States
on this question for the last
seven years, abstained this year;
U N VOTE ON SEAT FOR COMMUNIST CHINA
Argentina
Australia
Belgium
Bolivia
Brazil
Britain
Canada
Chile
Colombia
Costa Rica
Cuba
Dominican Republic
Ecuador
El Salvador
Ethiopia
France
Guatemala
Haiti
Honduras
Iran
Italy
Japan
Jordan
Lebanon
Liberia
Luxembourg
Mlaya
Mexico
Nationalist China
Netherlands
New Zealand
Nicaragua
Pakistan
Panama
Paraguay
Peru
Philippines
South Africa
Spain
Thailand
Turkey
United States
Uruguay
Venezuela
Afghanistan
Albania
Bulgaria
Burma
Byelorussia
Cambodia
Ceylon
Czechoslovakia
Denmark
Finland
Ghana
Hungary
India
Indonesia
Austria
Greece
Iceland
Israel
Laos
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Iraq
Ireland
Morocco
Nepal
Norway
Poland
Raman is
Soviet Union
Sudan
Sweden
Ukraine
United Arab Republic
Yemen
Yugoslavia
ABSTENTIONS - 9
Libya
Portugal
Saudi Arabia
Tanisia
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25 September 1958
another NATO country, Portugal,
consistently abstains because
of Macao. Athens' decision to
abstain may have resulted large-
ly from pressure by Krishna
Menon of India. Foreign Minis-
ter Averoff has been quoted as
saying that "the only delegation
and person to whom Greece can
turn for assistance on the Cy-
prus-question is India and
Menon." Iceland's abstention
may be partially attributable
to a desire to court Arab-Asian
and Soviet bloc backing for its
plan to ask the General Assembly
to endorse the 12-mile terri-
torial waters limit. In addi-
tion, Iceland may have been in-
fluenced by the other Nordic
countries, which have long sup-
ported Peiping's entry into the
UN.
Austria's abstention, how-
ever, is directly attributable
to pressure from the USSR. The
chief Austrian delegate told Am-
bassador Lodge on 23 September
the USSR had urged Austria to
take a line more independent of
Libya, which supported the
moratorium last year for the
first time, abstained this year.
This turnabout reflects Libya's
present policy of abstaining
when it cannot agree with the
Arab majority, which in this
case has been in favor of Pei-
ping's entry for years.
Cambodia's recent recogni-
tion of Peiping and the change
of government in Iraq resulted
in both of these countries op-
posing the moratorium this year.
However, Peiping had one less
vote this year than it would
have had because of the union
of Syria and Egypt, which last
year had two votes.
Cyprus remains tense as
the 1 October date for implemen-
tation of the British plan for
limited communal self-government
approaches. Ankara's decision
to appoint the Turkish consul
general in Nicosia as its first
representative to Governor Foot
is a conciliatory move which
might prevent an immediate out-
break of new violence. Actual
implementation of the plan could,
however, lead to increased sabo-
tage, cause the Greek Cypriots
to engage in illegal demonstra-
tions, and spark attacks by the
Greek-Cypriot organization EOKA
on British military and civilian
eaders. While there is no evi-
dence that EOKA intends to at-
tack Turkish Cypriots at this
time, armed attacks on Turkish-
Cypriot police, which would prob-
ably occur during large-scale
violence, could lead to renewed
communal warfare and further em-
bitter relations between Greece
and Turkey.
25X1
Archbishop Makarios and the
Greek Government are intensely
opposed to the British plan, re-
garding it as a first step to-
ward partition. Makarios pro-
poses dropping the plan in favor
of eventual independence for Cy-
prus, with both enosis--union
of Greece with Cyprus--and par-
tition precluded. The Makarios
proposals were immediately at-
tacked as "too conciliatory" by
the intransigent wing of the Cyp-
riot ethnarchy. Meanwhile, Ma-
karios and Greek church leaders
in Athens are applying pressure
on the Karamanlis government to
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5EUXET Now
25 September 1958
force it to abandon Greek ties
with NATO if the British pro-
ceed with their plan.
Karamanlis says he has only
two alternatives if the plan is
implemented without modifica-
tions--to resign or to withdraw
Greece from NATO. It is unlike-
ly, however, that Karamanlis
would- resign, in view of the
recently increased Communist
vote in Greece and the danger
that his resignation could lead
either to further leftist gains
or to a rightist dictatorship.
On the other hand, Greece might
progressively dissociate itself
from NATO--while not actually
withdrawing. It might also re-
call its ambassadors from London
and Ankara.
NATO Secretary General
Spaak and prominent members of
the British Labor party are
cautioning London to postpone
implementation of its plan, in
view of the anticipated effect
in Cyprus and on NATO. Foreign
Office spokesmen, however, in-
sist that the version of their
plan announced on 15 August will
be implemented. In an effort
to calm the Greeks, however,
London may announce before 1
October an end to its ban on
the return of Makarios to Cy-
prus.
The proclamation by the
Algerian National Liberation
Front (FLN) on 19 September of
a provisional regime was timed
to offset the anticipated af-
firmative Algerian vote on the
French constitutional referen-
dum and to gain support of Al-
gerian Moslems for the FLN's
boycott of the vote to be held
in Algeria from 26 through 28
September. Rebel spokesmen
claim that "political workers"
and the Army of Liberation in-
side Algeria demanded the gov-
ernment's formation to produce
a psychological impact before
the referendum. Continuing ter-
rorist and guerrilla activities
are also designed to disrupt
the voting. Nevertheless, the
French Army will make a maximum
effort to get Moslems to the
polls and ensure a large af-
firmative vote.
The new government is
headed by moderate nationalist
Ferhat Abbas, who joined the
FLN in April 1956 and is.con-
sidered to be a figurehead. The
16-member cabinet is almost
evenly balanced between moder-
ates and extremists and between
politicians and military fig-
ures. Although FLN spokesmen
deny that a decision has been
made regarding the seat of gov-
ernment, they do not rule out
,Cairo as a possibility.
The FLN claims it is deal-
ing cautiously with the United
Arab Republic and says the Al-
gerian regime will not allow it-
self to come under the influence
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5ECRET
25 September 1958
of any government.
ly arranged
It apparent-
France has warned that
recognition of the Algerian
regime would be considered an
"extraordinarily unfriendly
act," but a Foreign Ministry
spokesman assured American of-
ficials there is "no question"
of recalling French ambas-
sadors from Tunis or Rabat.
Paris, he said, would make
every effort to ensure that
Moroccan and Tunisian rec-
ognition would not result in
such embarrassing "practical
consequences" as an exchange
of ambassadors or "official"
acknowledgment of clandestine
aid to the rebels.
Ifor Iraqi
recognition to precede that of
the UAR. Moreover, the Iraqi
press reveals that Iraq has
granted $280,000 to the new gov-
ernment for victims of "French
brutality." Tunisia, Morocco,
and all members of the Arab
League except Lebanon have
recognized the regime, while
Communist China on 22'Septem-
ber became the first non-Arab
state to do so. An FLN lead-
er has denied that the rebels
desire to embarrass the United
States on the question of rec-
ognition, but recognition has
been formally requested.
A trial of strength be-
tween Premier de Gaulle and
the military and rightist ele-
ments demanding integration of
Algeria with France may arise
when he visits Algeria immedi-
ately after the constitutional
referendum on 28 September.
His recently publicized pref-
erence for a compromise solu-
tion may stem from a desire to
reassure the Moslems that he
holds to his June promise of
reaching a settlement with the
elected representatives of the
whole Algerian community. He
will probably try to avoid a
showdown with resident and mil-
itary leaders, at least until
after the November parliamen-
tary elections.
The French Army and set-
tlers in Algeria have shown un-
easiness over De Gaulle's offer
of independence to the African
territories and over statements
by the Socialist and Radical
parties in anticipation of a
liberal Algerian solution.
They will probably be further
perturbed by recent press re-
ports that De Gaulle has char-
acterized both integration and
independence as "foolish"
solutions. De Gaulle may have
been led to indicate a
preference for a moderate so-
lution by the stepped-up ter-
rorist campaign the Algerian
nationalists have unleashed in
France, climaxed by the assas-
sination attempt against Infor-
maton Minister Soustelle, and
by the formation of an Algerian
government-in-exile. He may
feel he cannot afford to allow
further deterioration in re-
lations with the Moslems if
his hope of negotiating with
elected representatives of all
Algerians is to be realized.
Army support will be nec-
essary for De Gaulle to make
any moderate solution prevail
over the settlers, who profess
to favor integration as a means
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25 September 1958
of keeping Algeria French but
are unwilling to accept politi-
cal, social, and economic equal-
ity for the Moslems.
he can induce the army and set-
tlers in Algeria and their sym- 25X1
pathizers in France to accept
a solution which would not
involve integration.
estimating the extent to which
Khrushchev's sharp attack
on the French Government in a
Pravda interview broadcast on
21 September apparently stems
from his displeasure over the
recent meeting between French
Premier de Gaulle and West Ger-
man Chancellor Adenauer and may
presage a stronger Soviet stand
on the North African problem
and possibly a shift in Moscow's
attitude toward the De Gaulle
government.
Soviet preoccupation with
developments in French - West
German relations is evident in
Khrushchev's statement that a
rapprochement between "French
reactionaries and West German
revengemongers" can only be a
step toward war. The Soviet
premier charged that French
ruling circles are prepared to
sacrifice the "higher national
interests" of France "to assure
for themselves the support of
one of the most reactionary re-
gimes in Europe." In another
interview published on 23 Sep-
tember in the West German week-
ly Die Zeit, Khrushchev again
warned against the establishment
of a Bonn-Paris axis, comparing
it with the prewar Berlin-Ronne
axis.
25X1
The proposals made by Khru- would lead to fundamental changes
shchev on 21 September in his in Soviet secondary education.
memorandum on schools, if car-
ried out in their present form, The proposals, already ap-
proved by the party presidium,
SECRET
Moscow's relatively re-
strained and cautious attitude
toward the De Gaulle government
during its first four months in
power reflected the Soviet leaders'
hope that the French premier
would pursue a nationalistic line
which would weaken NATO and re-
verse the policy of close coop-
eration with West Germany. While
its earlier expectations have
been disappointed, Moscow is
still apparently hesitating to
take action which would preclude
a future deal with De Gaulle.
Although Khrushchev denounced
the proposed new French consti-
tution and several leading fig-
ures in the Paris government,
he refrained from a personal at-
tack on De Gaulle.
Khrushchev attacked De
Gaulle's failure to end the "in-
iquitous colonial war against
the Algerian people," but he
avoided any indication that
the USSR might recognize the Al-
gerian rebel government pro-
claimed on 19 September. Com-
munist China's recognition prob-
ably will be followed by public
Soviet support which may lead
eventually to formal recognition.
De Gaulle may be under-
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J1 1XG I -
25 September 1958
will probably be considered next
at a central committee plenum,
then developed into theses for
"nationwide discussion," and
finally adopted by the Supreme
Soviet and the union republics.
Such a lengthy procedure sug-
gests an attempt to gain public
cuneurrence for an unpopular-
measure. The proposed system
would probably limit the full-
time education of the vast ma-
jority of Soviet youths to seven
or eight years, although second-
ary education would be available
for young workers in their spare
time.
The memorandum notes that
Soviet higher educational in-
stitutions can admit only 450,-
000 students each year. Khru-
shchev said that the majority
of secondary-school graduates,
nearly twice this number, not
only fail the entrance examina-
tions for universities and in-
stitutes, but at the same time
"turn out to be untrained for
practical life, do not know
production," and consider farm
and factory labor beneath them
and "a kind of insult."
Khrushchev proposed that
all children in the Soviet Union
complete seven to eight years
of school. The majority would
then go directly into "socially
useful labor at enterprises,
collective farms, and other
places of work." These young
people could complete their
secondary education at corre-
spondence or evening schools or
at part-time agricultural train-
ing centers.
It was also proposed that
first- and second-year univer-
sity students study only on a
part-time basis while working
a full day in industry or agri-
culture. In their third year
they would study at the univer-
sity three days a week and work
the other three days. In their
fourth and fifth years their
studies would be interrupted
only by "production practice"
in their specialties.
Khrushchev.stressed that
there would be "no exceptions"
for children of high Soviet of-
ficials, but that children who
at an early age demonstrated a
special gift for science, math-
ematics, music,. or visual arts
would receive in the secondary
schools full-time preparation
for higher education. He recom-
mended that during the projected
three- to four-year transition
period, some ten-year schools be
preserved in order to maintain a
regular flow of gifted students
into the universities and in-
stitutes.
Khrushchev insisted the
general educational level would
not be lowered by his proposed
changes, which he attempted to
justify by stating that only 80
percent of the school children
now complete the seven-year
course. He also revealed for
the first time that of the stu- '
dents in Moscow's higher educa-
tional institutions, only 30 to
40 percent are children of work-
ers and collective farmers.
Khrushchev is also con-
cerned over the annual increment
to manpower, which is an impor-
tant element in maintaining the
high Soviet rate of industrial
growth. The age group now leav-
ing school is composed of chil-
dren born during World War II,
a period when the birth rate
suffered a severe decline. Stat-
ing that "in the near future...
we must send 2,000,000 to 3,500-
000 adolescents" to work every
year, Khrushchev instructed
Gosplan to draw up a long-term
plan for the employment of ad-
olescents.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25 September 1958
Nuritdin A. Mukhitdinov,
a Soviet party secretary and
presidium member, arrived in the
United Arab Republic on 17 Sep-
tember for a ten-day visit and
has conferred with top officials
of both of its regions. The
visit is being portrayed by Mos-
cow and Cairo as a good-will
tour stemming from Nasir's visit
to the USSR in May, with offi-
cial business limited to talks
on the extension of Soviet-UAR
cultural and economic ties.
Mukhitdinov may, however, at-
tempt to smooth out Soviet UAR
policy differences involving
the Middle East.
There is evidence that
Nasir was dissatisfied with the
equivocal promises of Soviet
support he received after his
hurried flight to Moscow fol-
lowing the Iraqi coup. Several
points of friction remain, aris-
ing out of differences of ap-
proach by Moscow and Cairo on
such issues as Iraq and the ac-
tivities of local Communist par-
ties. Moscow's acquiescence to
the dissolution of political par-
ties in Syria at the time of the
union with Egypt has not les-
sened efforts to build up Com-
munist party strength through-
out the Middle East.
Mukhitdinov has made a
rapid rise to prominence under
Khrushchev's tutelage and now
apparently is responsible at
the highest level for Soviet
Middle Eastern policies. Al-
though his government post is
only that of chairman of the
Foreign Affairs Committee of
the USSR Council of Nationali-
ties, Mukhitdinov has increas-
ingly taken the public role of a
top Soviet spokesman on Arab
and Middle Eastern affairs. He
traveled with Nasir on his 18-
day tour of the USSR in May and
is to accompany Marshal Voro-
shilov to Afghanistan in Octo-
ber. Mukhitdinov's UAR visit 25X1
may serve as a prelude to a Khru-
shchev visit tentatively sched-
uled for this fall.
BLOC MOVES ON GERMAN UNITY PROBLEM
The Soviet and East Ger-
man governments have moved dur-
ing the last three weeks to un-
dercut a West German initiative
on the reunification problem
which could have placed the bloc
in a difficult p:,opaganda posi-
tion.
Anticipating a West Ger-
man proposal for the establish-
ment of a four-power commission
to discuss the "German ques
tion," with top priority given
the reunification issue, the
East German regime on 4 Septem-
ber addressed notes to Bonn and
the three Western powers calling
for a four-power commission
which would be limited to draft-
ing a peace treaty for Germany.
Moscow endorsed this proposal
in notes on 18 September to the
two German governments, the
United States, Britain, and
France. The Soviet leaders thus
hope to camouflage their in-
transigence on this question by
making West Germany and its
allies appear to reject an os-
tensibly constructive Communist
initiative.
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"' SECRET
CURRENT INTELLIGENCE WEEKLY SUMMART
25 September 1958
The series of notes has
stimulated renewed interest in
the "German question" in West
Germany on the eve of the new
session of the Bundestag. While
Chancellor Adenauer has dis-
missed the East German proposal
as propaganda and has rejected
the Soviet note, the idea of
negotiating a peace treaty as
a first step continues to at-
tract support from West German
opposition parties as well as
from some government circles.
The opposition can be expected
to bring up in the Bundestag
the issue of a four-power peace
treaty commission.
By seizing the initiative
on such a commission, Moscow
hopes to divert attention from
the Western formula for unifi-
cation, which gives top priority
to free elections, and to focus
the debate on conclusion of a
peace treaty as the first order
of business. The Communist
suggestion of a commission was
calculated to impress the public
with the existence of some kind
of common ground on this problem.
Moscow may also hope to show
that the Western position on
recognition of East Germany
is a false barrier standing in
the way of the West's accepting
provisions of the East German
notes.
Soviet leaders, however,
have not deviated from the long-
established Soviet position
toward the German problem: that
reunification is the exclusive
responsibility of the two German
states and that the role of the
four powers is confined to draw-25X1
ing up a peace treaty in con-
sultation with representatives
of Bonn and Pankow.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25 neptember 1958
The Salazar regime in
Portugal, troubled by sporadic
unrest since the presidential
election last spring, is now
concerned over the possibility
of new disorders early in Octo-
ber. It is prepared to crack
down on opposition activities,
but is anxious lest public dis-
content be aggravated by any
severe treatment of General
Humberto Delgado, former presi-
dential candidate and a presist-
ent critic of the government.
Delgado intends to address
a big rally in Oporto on 5
October, the anniversary of the
republic. The government feels
obliged to arrest him if he
makes political attacks on that
occasion, but fears making him
a martyr and running the risk
of riots like those in Oporto
in mid-May. In their efforts
to avoid such a contingency,
the authorities are now seeking
to get him out of the country
or installed in a new "safe"
post at home.
The regime is seriously
concerned over the effective
organization evidenced by new
opposition groups in which
Communist influence has increased
since June. It fears Communist
use of these groups to create
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25 September 1958
incidents--a technique well
demonstrated during the elec-
tion campaign last May. Delgado
has told the defense minister
that he has probably been ex-
ploited by the Communists, who
supported him in the election
campaign and penetrated his
organization, but has apparent-
ly taken no steps to disown the
party.
Government attempts to com-
bat unrest seem to have been
confined thus far to police ac-
tion against the opposition and
efforts to remove dissension
within the regime itself. Del-
gado's public protests against
the arrest and mistreatment of
some of his election backers
have, for example, been stigma-
tized by the regime as subver-
sive. Salazar's reshuffle of
the cabinet in mid-August ap-
pears to have been designed
more to reduce friction between
its military and civilian com-
ponents than to pave the way
for political and socio-economic
reforms. The government has
made no move to meet the de-
mands which Delgado has been
pressing--the removal of re-
strictions on personal free-
dom, increasing economic pro-
duction,and effecting a more
equitable distribution of wealth.
Until it does, it may find the
preservation of public der in-
creasingly difficult.
STRAINS WITHIN THE WEST INDIES FEDERATION
Antagonism and rivalry
among West Indian political
leaders are accentuating weak-
nesses within the West Indies
Federation inaugurated by Brit-
ain early this year. The pos-
sibility of the secession of
Jamaica, the most important
political and economic unit, in
the federation, is being dis-
cussed by some political and
economic leaders there as well
as by the local press.
Both Jamaican political
parties now question whether
Jamaica should remain in the
federation. Antifederation
sentiment stems largely from
economic factors. Commercial
interests, for example, are
apprehensive about the proposed
customs union and fear the ef-
fects of interisland free trade
on protected Jamaican industries
such as cement and textiles.
Growing political differ-
ences, many personal, are under-
lining the Jamaican problem.
Leaders of the island's two
political parties resent what
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SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
25 September 1958
they consider the "empire-
building" tendencies of federal
ministers, that is, their ef-
forts to augment the federal
government's few powers. Even
Jamaican Chief Minister Norman
Manley, who heads the majority
federal party, has joined the
critics of federation--probably
in part out of personal rivalry
with the federation's prime
minister, Sir Grantley Adams.
Jamaican public hostility
has been aggravated by the re-
cent aggressive attacks on
Jamaica's policies by Eric
Williams, the anti-American and
ardent profederalist chief
minister of Trinidad, the fed-
eration's second most important
member. Jamaicans believe
Williams is determined to be-
come the leader of the federal
government while "forcing"
Jamaica to play a subordinate
? CAYMAN
ISLANDS .~.
JAMAICA
NICARAGUA
role or to secede. Williams'
previous issue, the demand for
the United States base at
Chaguaramas, Trinidad, as the
capital for the federation, has
faded out since the joint US-UK-
West Indies commission's recom-
mendation against complying.
While alienating the
Jamaicans, Williams continues
his efforts to gain British
Guiana's early entry into the
federation. He has received
support only from the opposi-
tion party in British Guiana,
while Cheddi Jagan, Communist
leader of the majority party
there, continues to rebuff these
efforts. Jagan maintains that
before the colony joins the
federation, British Guiana must
gain complete internal self- 25X1
government and the federation
obtain independence within the
Commonwealth.
,,. CAICOS ISLANDS
n, .11
TURKS ISLANDS
Caribbean
ATLANTIC OCEAN
PUERTO
RICO
^^~~ VIRGIN
ISLANDS *f Nevis
St. Christopher ,Antigua
Sea
Montserrat GryGuadeloupe
,Dominica
Q, Martinique
Grenada
Chaguaramas Tobago
- Federation of West Indies
MILES
400
J
COLOMBIA
SECRET
,St. Lucia
r, I
if Barbados
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25 September 1958
MANEUVERING FOR THE VENEZUELAN PRESIDENCY
The Venezuelan parties
have failed thus far to agree
on a joint presidential candi-
date for the scheduled 30 Novem-
ber elections--the major initial
step in carrying out their
"truce and unity" program de-
signed to guard against a return
to military rule. This has led
to a rise in political tensions,
while rumors of another mili-
tary plot and of another civil-
ian general strike contribute
to the uncertain outlook.
In the latest attempt to
reach multiparty agreement on
the elections, the Democratic
Republican Union (URD), probably
the third largest party, recent-
ly put forward junta President
Admiral Larrazabal as the joint
presidential candidate. The
proposal apparently faces op-
position from the Democratic
Action (AD), the largest party,
and the Christian democratic
COPEI, probably the second
strongest party. COPEI, which
objects to a military candidate,
and AD, which has a strong pro-
Larrazabal minority faction,
reportedly may join to back
COPEI chief Rafael Caldera, who
is believed to be the party
leader most acceptable to the
military and the other parties.
Larrazabal, probably the
most popular figure in Vene-
zuela, may resign from the junta
shortly to launch his candidacy
as an "independent" in a move
which could split the parties
and undermine the unity program
unless all major groups endorse
him.
At pres-
ent n_ - a the support of the
navy, commanded by his brother,
and could probably win the Com-
munist vote and a considerable
portion of the AD's, along with
a large part of the unorganized
vote, which constitutes most of
the Venezuelan electorate.
Larrazabal has removed a
number of key ground force of-
ficers believed opposed to his
presidential ambitions,
Meanwhile, there is re-
ported civilian pressure for
calling a general strike to de-
mand the wholesale removal of
officers suspected of plotting
against the regime. Should
such a strike take place, it
might unite the now leaderless
armed forces and touch off se-
rious violence, particularly
since many civilians possess
arms.
THE BRAZILIAN CONGRESSIONAL ELECTIONS
In the Brazilian congres-
sional and gubernatorial elec-
tions to be held on 3 October,
President Kubitschek's middle-
of-the-road Social Democratic
party (PSD) will probably sus-
tain substantial losses. Gains
will be made principally by the
so-called "populist" parties,
particularly Vice President
Goulart's left-wing Labor party.
The campaign has been marked
by the usual maneuvering by
candidates, and seemingly
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25 September 1958
contradictory party alliances,
which may make it difficult for
the PSD to maintain a workable
congressional coalition.
A new electoral law which
takes effect this year places
the PSD at a disadvantage by
giving added weight to the ur-
ban vote, on which the "popu-
list" parties' strength is
based. While the populists
have generally supported Kubit-
schek in the past congress,
their cooperation will be in-
creasingly in question, since
three of their national leaders
are strong contenders to cap-
ture the presidency from the
PSD in 1960. A gain for the
Labor party in particular would
probably mean stepped-up na-
tionalist agitation and in-
creased difficulties for Kubit-
schek's financial stabilization
measures.
The prospects for the il-
legal Communist party are mixed.
Although split on both ideolog-
ical and tactical grounds, it
will probably see a number of
members and sympathizers elect-
ed on the tickets of other par-
ties, as has been the case in
the past. The Communists are
campaigning openly for selected
candidates in each major party,
but with particular emphasis on
the Labor party and almost none
on the PSD. Recent government
and church attacks on Communist
political activity are apparent-
ly based only partly on these
alliances, however. With Com-
munist chief Prestes at liberty
for the first time in 11 years
and purveying the party's new
"soft" line--a combination of
bourgeois and nationalist senti-
ments--the Communists have clear-
ly been attempting to rebuild
past congressional sentiment
for legalizing the party.
By placing new restrictions
on Prestes' political activity
and sponsoring radiobroadcasts
condemning the party as a tool
of Moscow, the government prob-
ably hopes not only to make the
Communist cause unpopular in
congress but to deal a blow to the
growing number of fellow-travel-25X1
ing nationalists both in and out
of congress.
SOVIET-JAPANESE TRADE
Trade between Japan and
the USSR during 1958 is expect-
ed to reach approximately $45,-
000,000--less than the target
stipulated in the trade agree-
ment of last December, but more
than double the 1957 total. Re-
laxation of COCOM controls and
indications that the USSR may
make additional commodities avail-
able to Japan are likely to lead
to a further growth in trade
between the countries. In some
instances this could result in
a reduction of Japanese imports
from the United States and oth-
er free-world countries.
Tokyo hopes to export prod-
ucts this year valued at $25,-
000,000 and anticipates imports
of $20,000,000. The USSR, how-
ever, consistently has maintained
the trade balance in its favor
and is insisting that Japan ac-
celerate its importation of So-
viet goods.
Japan now is accepting So-
viet orders for small ships,
rolling stock, chemical fibers,
and industrial equipment to add
to normal exports of light in-
dustrial goods. In return, Ja-
pan has been buying larger
amounts of Sakhalin coking coal,
lumber, and metallic ores. Mos-
cow also is offering to supply
new items--wheat, crude oil,
tin, soybeans, and coal from the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25 September 1958
Kuznetsk region, al-
though it apparently
has only limited
amounts of such com-
modities available
for export. The Jap-
anese Government is
considering a trial
import of semihard
wheat and may feel
under compulsion to
accept some other
Soviet commodities,
1953
1954
1955
1956
1937
1958
(JAN-AUG
JAPANESE TRADE WITH USSR
EXPORTS I IMPORTS I TOTAL I PERCENT OF TOTAL TRADE
7,400
39,000
2,076,000
760,000
9,300,000
20,000,000
$ 2,126,000 $ 2,133,000
2,250,000 2,289,000
3,054,000 5,130,000
2,870,000 3,630,000
12,300,000 21,600,000
17,000,000 37,000,000
80924
1.29
1.45
despite their relatively high
price, for the sake of expand-
ing exports to the USSR.
The recent opening of ship-
ping services between Japan and
Soviet ports in Siberia and on
the Black Sea should assist
trade; two Japanese economic
missions are either in the USSR
or en route there to investi-
gate trade possibilities. Dur-
ing trade negotiations opening
in Moscow in late October, Ja-
pan intends to propose a 60-
percent increase in planned 1959
trade. (Con- 25X1
curred in by ORR)
NORTH KOREA PLANS BIG ECONOMIC EXPANSION
North Korean Premier Kim
I1-sung, in a recent speech
marking the tenth anniversary
of his regime, outlined greatly
expanded goals for the economy
and said the First Five-Year
Plan (1957-61) would be ful-
filled 12 to 18 months ahead of
schedule. In what appears to
be a junior version of Peiping's
"giant leap forward," Pyongyang
has set goals for .'six or sev-
en" years from now that are at
least double the ambitious
Five-Year Plan targets for many
basic industrial goods.
Much of the speech was de-
voted to comparing what Kim
sees as the sorry economic
plight of South Koreans with
the abundant life of North Ko-
reans, who are "rushing toward
socialism like a flying horse."
He emphatically stated that
economic exchange could be the
most important single means for
unifying Korea, and the tone of
his speech suggests that Pyong-
yang is attempting to make an
issue of the competition in
economic development between
North and South Korea. Al-
though Kim I1-sung's appraisal
of South Korea's economy, which
he claims is on the verge of
bankruptcy, is extremely biased,
Pyongyang's leaders may actually
believe they can attain a suf-
ficiently high level of produc-
tion to attract real support in
the South.
Kim emphasized that heavy
industry would continue to get
priority. He took considerable
pains to justify the "correct-
ness" of this policy, and his
defensive tone indicates that
the struggle over this issue
which admittedly took place in
1956 has not been forgotten.
He also said that within six or
seven years North Korea would
become a completely self-
sufficient "industrial-agri-
cultural" nation. The metal-
lurgical, machine-building,
power, coal, chemical, and
building-material industries
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25 September 1958
NORTH KOREAN ECONOMIC GOALS
(METRIC TONS EXCEPT WHERE NOTED)
(1957-1961)
PIG AND GRANULATED IRON
330,000
700,000
4,000,000
STEEL
277,000
670,000
3-3,500,000
ELECTRIC POWER (BILLION KWH)
6.9
9.7
20.0
COAL
5,000,000
9,500,000
25,000,000
CHEMICAL FERTILIZER
321,000
630,000
1.5-2,000,000
CEMENT
895,000
1,750,000
5,000,000
FISH
564,000
620,000
1,000,000
GRAIN
3,200,000
3,760,000
7,000,000
809172
will be developed "ahead of
the others."
The speech hinted at a
measure of decentralized con-
trol with respect to light in-
dustry. Food-processing and
other light industries are to
be developed by building small,
locally run factories in every
county, so that by 1959 produc-
tion from this type of enter-
prise will equal the total out-
SECRET
put of enterprises
still under the Min-
istry of Light In-
dustry. As the lo-
cal industries devel-
op and expand, so
too will the "local
organs of power."
Grain production
is scheduled to reach
7,000,000 tons, in-
cluding 4,000,000 tons
of rice, by 1964 or
1965--almost double
the Five-Year Plan
goals. More irriga-
tion and increased
application of chemi-
cal fertilizer will be the
principal means of achieving
this goal.
The announcement of these
greatly expanded targets, which
directly follows the month-long
visit to China of the North Ko-
rean state planning chairman,
may indicate that Pyongyang has
been able to negotiate addi-
tional economic assistance.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25 September 1958
Since Stalin's death in
1953, the USSR has placed in-
creasing emphasis on its econom-
ic and cultural relations with
other nations. Soviet leaders
apparently hoped this more lib-
eral approach would not only ap-
pear responsive to the Soviet
people's desire for greater
freedom and contact with the
West, but would also enhance the
USSR's prestige and influence,
especially in underdeveloped
nations, thereby supporting the
broader objectives of Soviet
foreign policy.
Moscow's cultural offensive
has consisted of encouraging
visits by foreign heads of state
and selected groups--scientists,
artists, students, tourists--
and showing them only the best
the Soviet Union has to offer.
It has likewise made wide use
of the press, films, and radio
for this purpose. While the
Soviet leaders have exchanged
with free-world countries care-
fully selected representatives
of a wide variety of professions
and activities, Moscow has con-
sistently sought to shield the
general Soviet public from con-
tact with Western ideas and in-
stitutions and to prevent any
comparison with reality of the
image of the West as built up
in Soviet propaganda.
Growth of Exchange Program
Soviet cultural and scien-
tific exchanges, virtually non-
existent in 1950, have steadily
increased since Stalin's death.
The widespread cancellations by
free-world governments after the
Soviet intervention in Hungary
were followed by an all-out So-
viet campaign to restore con-
tacts. The number of delega-
tions exchanged with the free
world in 1957 increased 30 per-
cent over 1956, and exchanges
with the free world during the
first half of 1958 more than
doubled over a comparable peri-
od in 1957.
The Soviet Union has re-
cently made determined efforts
to increase the number of formal
exchange agreements with the
free world, and it now claims
to have over 90. The US-USSR
agreement signed last January,
the most comprehensive thus
far, provides for a fivefold
increase in the number of offi-
cially sponsored exchanges in
the next two years. The USSR
has pointed to this in negotia-
tions with Britain, West Germany,
and Turkey in an attempt to
break down opposition of these
governments to concluding simi-
lar agreements. In the six
months since the accord went in-
to effect, exchanges between the
United States and the Soviet Un-
ion have risen by over 65 per-
cent, and privately initiated
exchanges have been greatly stim-
ulated.
There has been a noticeable
emphasis on scientific, techni-
cal, and professional delega-
tions--most years they have ac-
counted for over half of all So-
viet exchanges--demonstrating
the Soviet leaders' desire both
to impress the world with the
USSR's stature in the scientific
world and to foster exchanges
which will pay off in higher
Soviet production and greater
technical advances. The number
of sports and cultural exchanges
is also growing. The great in-
crease in trade delegations over
the past six months reflects the
present Soviet trade offensive.
The majority of exchanges
with the free world have been
and still are with the United
States and the countries of
Western Europe. Nevertheless
the USSR, in conjunction with
its efforts in the economic and
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25 September 1958
diplomatic fields to exploit the
ascendant forces of nationalism,
anticolonialism, and social un-
rest, for over a year has placed
particular emphasis on develop-
ing further cultural contacts
with the underdeveloped nations
of Asia, Africa, and Latin Amer-
ica. Expanded contacts with
these nations accounted for
most of the 1957 increase.
Since the inception of the ex-
change program, moreover, So-
viet propaganda has given far
greater publicity to contacts
with underdeveloped areas than
to those with the more advanced
nations.
SOVIET EXCHANGE PROGRAM
(NUMBER OF DELEGATIONS EXCHANGED)
2,S27
Organization of Exchanges
Two organizations divide
the responsibility for handling
official and unofficial Soviet
exchange groups. The State
Committee for Cultural Relations
with Foreign Countries was set
up in May 1957 under the Coun-
cil of Ministers to coordinate
official cultural exchanges.
Last February the Union of So-
viet Societies for Friendship
and Cultural Relations with For-
eign Countries was created to
handle unofficial exchanges.
The transfer to the latter
of the apparatus and functions
of the All-Union Society for
Cultural Relations with Foreign
Countries (VOKS) demonstrates
the increased emphasis the USSR
is giving to cultural relations.
Since 1925 VOKS had been the
principal body through which
the USSR had conducted its ex-
ternal cultural relations, but
its effectiveness had been im-
paired by too close association
with the party and government.
Soviet propaganda has therefore
stressed the spontaneous popu-
lar origin of the new union and
the voluntary association in it
of the 19 newly formed counter-
part friendship societies.
VOKS had maintained a close
liaison with Soviet friendship
societies abroad which, under a
thin disguise of nonpolitical
respectability, acted as the
effective agents of Soviet cul-
tural and political propaganda.
The patently fellow-traveling
complexion of these societies
and the consequent refusal of
most Western governments and
official bodies to have anything
to do with them reduced their
usefulness and that of VOKS to
the Soviet Government. The new
union, however, although obvi-
ously under tight party control,
has encouraged the formation of
more representative and appar-
ently less partisan societies
abroad.
Exchange of Delegations
The USSR in its emphasis on
scientific and technical ex-
changes now sponsors important
scientific conferences, and So-
viet physicists, chemists, phy-
sicians, and engineers attend
all important international con-
ferences and, on invitation,
tour Western scientific institu-
tions.
The Soviet Union recognizes
the value of increased cultural
and sports contacts as an open-
ing wedge to future exchanges.
Moscow has usually seen that
only top-ranking artists repre-
sent the USSR in the West, re-
serving others for less discrim-
inating audiences in Asia and
Africa.
The Sixth World Youth Fes-
tival in the summer of 1957
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`'K SECRET
25 September 1958
brought 34,000 young people
from 131 countries to the Soviet
Union, according to Soviet fig-
ures. Apparently to convince
the visitors that the iron cur-
tain was a "myth," unprecedented
freedoms were permitted during
the festival.
Although students from out-
side the bloc account for only
about 3 percent of the nearly
15,000 foreign students studying
in the USSR, the number from
underdeveloped nations is stead-
ily growing. Moscow has offered
many more scholarships than
these countries have accepted.
Every effort is made to recruit
politically active students from
the colonial areas in anticipa-
tion of their future usefulness
to Moscow as leaders in their
own countries.
The number of Soviet stu-
dents who have studied in the
West for a year or more since
World War II is still infini-
tesimal, and the scheduled ex-
change of 20 students this fall
under the US-USSR agreement in-
volves the largest group of So-
viet students ever to study in
a free-world country. Afraid
of exposing its youth too long
to Western freedoms, the USSR
has favored short-term exchanges
of student groups with the free
world.
Tourism has been encouraged
by bringing the costs down--
through rebates, special group
rates, and an adjusted ruble
exchange rate for noncommercial
transactions--to correspond more
closely to the price of compa-
rable tours in the West. The So-
viet agency Intourist now offers
a choice of more than 40 guided
tours, and travel by automobile
became possible in 1957 for the
first time since the war. How-
ever, to make certain the tour-
ist receives only the desired
impression, as well as to ob-
serve security precautions,
routes are carefully defined
and travelers are invariably ac-
companied by an Intourist guide
and interpreter. Some 40,000
bona fide tourists are believed
to have visited the Soviet Union
in 1957. By contrast, only about
10,000 Soviet tourists visited
the free world in 1957, although
this figure is expected to triple
by the end of this year.
Press, Radio, and Films
The USSR has contributed
heavily to book fairs and ex-
changed books with libraries the
world over. Its invasion of the
Indian book and periodical mar-
ket is an example of the extent
to which Soviet efforts have
gone in this line. By asking
prices far below cost for ex-
cellent editions in both English
and the regional languages and
by giving liberal terms, the
USSR has presented impossible
competition to Indian publish-
ers and importers of Western
publications. Figures on the
amounts spent annually in sub-
sidization of foreign Communist
party publications and on bro-
chures and articles reprinted
in the foreign press are extreme-
ly high.
Foreign books translated
and published in the Soviet
Union are carefully chosen and,
although many foreign classics,
novels, and books on folklore
are reprinted, the emphasis con-
tinues to be on scientific and
technical works, especially
American. The USSR, having
never signed the international
copyright convention, rarely
pays royalties to authors abroad.
Adlai Stevenson, who conferred
with the Russians on this ques-
tion on his recent trip to the
USSR, was given little encourage-
ment.by the authorities.
Distribution of the maga-
zine Amerika since the first is-
sue appeared in October 1956
has been hamstrung by the Soviet
state distribution monopoly.
Month after month thousands of
copies, never offered for sale
in the provinces, have been re-
turned to Moscow as "unsalable."
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SECRET
25 September 1958
The United States, however,
sends to libraries throughout
The Soviet Union most of the 2.000
complimentary copies it is allowed
to distribute, and the magazine's
effectiveness can be seen by the
frequent attacks on it by the
Soviet press and radio.
Moscow broadcasts in 45
foreign languages and dialects.
As of last April the USSR de-
voted more than 700 hours per
week of non-Russian-language
broadcasts to free-world coun-
tries--300 to Asia, the Middle
East, Africa, and Latin Ameri-
ca, and the rest to North Amer-
ica and Western Europe. Its
concentration on underdeveloped
areas and uncommitted nations
is again shown by the steady in-
crease in broadcasting to South-
east Asia, the Middle East, and
Africa.
The Soviet Union's efforts
in the motion-picture field
take a variety of forms: pro-
duction of cultural films and
documentaries illustrating So-
viet achievements, use of cost-
ly promotional devices, partic-
ipation in film festivals, of-
fering of films abroad at prices
far below cost, and payment of
high prices for mediocre films
from small film-producing coun-
tries. Americans attempting to
negotiate film exchanges with
Moscow have observed that, in
accepting films for showing in
the USSR, Soviet officials pre-
fer westerns, frivolous comedies,
and starkly realistic dramas--
those which best reinforce the
,image built up in the minds of
the Soviet people of a decadent
America totally lacking in cul-
ture.
The Russians seem to be
eager--as in all fields--to
learn American methods in motion
pictures, radio, and television,
but are reluctant to make any
agreement which might restrict
their policy of censorship with-
in the USSR. The projected ex-
change of radio, television, and
motion-picture material under
the recent US-USSR agreement is
still subject to negotiation.
tive tongues.
There is increasing empha-
sis in the Soviet Union on
the study of languages, es-
pecially those of Asia and Af-
rica, and Soviet diplomats,
technical advisers, and teachers
are being equipped to convey 25X1
the Soviet message to the people
of these countries in their na-
KHRUSHCHEV'S AGRICULTURAL POLICY SINCE 1953
Soviet Premier Khrushchev,
in a speech last July at the
Polish Embassy in Moscow, spoke
ebulliently of conditions fa-
voring Soviet industry and agri-
culture. The tone of his re-
marks contrasted sharply with
that of his September 1953 re-
port on agriculture, in which
he complained bitterly about
the state of agriculture as
Stalin left it. Many far-reach-
ing changes benefiting agricul-
tural output have been made
since 1953, and Khrushchev has
been intimately associated with
all of them. His policies made
possible a record harvest in
1956, and this year's output may
again reach an all-time high.
Exceptionally favorable weather
has contributed and is contrib-
uting greatly to these records.
By contrast, agricultural output
in 1957 fell below 1956, almost
entirely because of less favor-
able weather.
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25 September 1958
Stalin's policy of coer-
cion to expand production has
been largely replaced by a sys-
tem based on economic incentives.
Increases in prices
paid for produce,
along with tax re-
ductions, have aug-
mented peasant in-
come.
While Khrushchev
has continued Sta-
lin's practice of
and supply depots. The MTS for-
merly had a near monopoly on the
machinery used by the collective
and was the focus of local poli-
tical control over the collec-
tive farms.
giving priority to 130
industry, he has
placed increasing
emphasis on agricul-
tural expansion. In
the last several
years, there has been
a substantial growth
in capital investment
1950-53 1954
AVERAGE
in agriculture,. and the long-
term trend toward a smaller
agricultural labor force has
been halted. Thus the impor-
tance of agriculture as a com-
petitor for resources has in-
creased.
Organizational Changes
Probably the most impor-
tant organizational change in
Soviet socialized agriculture
since its establishment in the
1930's was the machine-tractor
station (MTS) reorganization
USSR: PROCUREMENT OF COLLECTIVE - FARM
PRODUCTS
EHI
NEW SYSTEM
MTS
OBLIGATORY
DELIVERIES
P
PAYMENTS
IN KIND
R C
ABOVE QUOTA
PURCHASES
CONTRACT
PURCHASES
instituted by Khrushchev this
year. The collective farms now
can buy and operate their own
machinery, while the MTS's are
being transformed into repair
In another innovation, stem-
ming from the MTS reorganiza-
tion, the party central commit-
tee on 18 June decided to discard
the long-established multiple-
price system of procuring agri-
cultural products from collec-
tive farms in favor of a simpler
system. Instead of compulsory
deliveries, payments in kind for
MTS services, and above-quota
purchases, the state will pur-
chase produce at single prices,
beginning with the 1958 crop.
In commenting on the general
level of the new prices, Khru-
shchev implied that the amounts
to be paid to the collective
farms will approximate funds
previously paid them plus funds
allocated to the MTS's. Live-
stock prices appear to be con-
siderably higher than previous
average prices.
The importance of the com-
pletely socialized state farm
sector has increased signifi-
cantly. The area sown by state
farms rose in 1957 to more than
25 percent of the total sown
area for the country, in con-
trast to 12 percent in 1953.
The rapid increase in the rel-
ative importance of state farms
results primarily from the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25 September 1958
new lands program, in which
state farms play a big role.
In recent years, moreover, some
collective farms have been
transformed into state farms.
Production Programs
More than 85,000,000 acres
have been brought into culti-
vation under the new lands
program, raising sown acreage
by about one quarter. Although
national grain harvests will
henceforth be higher, grain
from the new lands will probably
be more costly than that from
the traditional grain areas.
In January 1955 Khrushchev
announced a program for in-
militate against production
on 70,000,000 acres over a long
period. In 1958 nearly 50,-
000,000 acres were sown in corn.
Khrushchev's program
launched in May 1957 to catch
up with the United States in per
capita production of meat, milk,
and butter in the next few years
has received tremendous pub-
licity. Khrushchev berated his
economists for being too con-
servative in their analysis of
livestock potentialities and
criticized the scientists in
the experimental stations for
underestimating the value of
corn. The livestock program
is probably the most unrealistic
of all of Khrushchev's farm pro-
grams. With the pro-
gram as now constituted,
the goals cannot be
achieved, and meat
production especially
will fall far short
of the 1960-62 goal.
USSR:OWNERSHIP OF LIVESTOCK
1957
(MILLION HEAD)
OWNED
PRIVATELY BY
COLLECTIVE
FARMERS
ALL CASTLE COWS HOGS
*Owned by state farms, state farm
employees, city dwellers, etc.
creasing the corn acreage by
1960 from about 10,000,000 to
70,000,000 acres--an area almost
as large as that seeded to corn
in the United States. This pro-
gram was conceived in the hope
of obtaining large supplies of
feed as a basis for expanding
the livestock industry. Al-
though basing his corn program
on the American model, Khru-
shchev apparently disregarded
the fact that there is no large
area in the USSR as suitable as
the corn belt in the United
States. Restrictions of soil
and climate will make corn farm-
ing relatively expensive and
The USSR will be
able to increase the
output of livestock
products substantially
in the next several
years, however, and
Khrushchev may con-
veniently overlook
his earlier promises.
In April 1958, for the
first time, he quali-
SHEEP
AND fied his promise to
GOATS
' th the
i
catch up w
United States in live-
stock products by making it con-
tingent on solution of the fod-
der problem.
The new lands expansion,
the corn program, and the pro-
gram for catching up with the
US in per capita meat and milk
production have points of
similarity. All should yield
some benefit, but none is
likely to be nearly as success-
ful as Soviet leaders claim to
expect. All are relatively
expensive, and all show evidence
of inadequate planning, es-
pecially in their initial stages,
with the result that progress
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25 September 1958
has been by fits and starts.
Central direction has been
another of their characteris-
tics, with relatively little
left either to local initiative
or to the "experts" who would
be best qualified to plan pro-
grams of this nature. All have
been put into effect with a
speed that would be impossible
if much decentralization ac-
tually existed.
Prospects
The average caloric intake
of Soviet citizens, despite
their increasing numbers, will
continue to be adequate, and
there will probably be moderate
improvement in the composition
of the diet. The USSR will be
capable of exporting more
agricultural commodities than
in the past and of absorbing
significant amounts of the
agricultural exports of various
underdeveloped countries. The
extent of both the imports and
exports will probably be deter-
mined largely by political con-
siderations.
Under present programs,
the growth of agricultural out-
put will be slower than in the
period since Stalin, because
the stimulus of the new lands
and corn programs will already
have been largely dissipated.
If Khrushchev cannot be satis-
fied with a rate of growth far
less than that which he boast-
fully promised, he will prob-
ably initiate still more changes.
The USSR's inefficient use of
agricultural labor is another
reason for future moves by Khru-
shchev. Industry's needs, to-
gether with a decrease in the
rate of growth of the labor
force, will create pressure to
release manpower from agricul-
ture.
Agricultural problems will
probably receive much attention
at the forthcoming 21st party
congress in January and at the
scheduled All-Union Congress of
Collective Farmers in early
1959. Some lines of action
which may be taken are suggested
by recent developments and
press discussions.
As a result of the MTS
reorganization and the new
single-price procurement sys-
tem, Moscow may feel it neces-
sary to establish at the col-
lective farmers' congress a new
collective farm model charter
to replace the one established
in 1935. In this event, a col-
lective farm will probably
emerge which more closely re-
sembles a state farm or facto j.
Khrushchev's favorite farm
in his native village of Kalinovka
has recently purchased all the
privately owned livestock of its
members. While Khrushchev has
warned against a too rapid ex-
tension of this procedure, this
innovation may be sanctioned
at the collective farmers' con-
gress and become a rapidly spread-
ing movement. Khrushchev may
view such a move as important
in his attempt to catch up with
the United States in per capita
meat production.
There has been considerable
discussion about and experiment-
ing with the practice of paying
collective farm workers entirely,
or almost entirely, in cash and
including a minimum wage system.
If this were done widely, it
would further reduce the dif-
ferences between collective
farmers and industrial workers.
industry and agriculture.
Preoared by. ORR 25X1
Establishment of a collec-
tive farmers' union has been
discussed in the Soviet press.
Apparently the contemplated
"union" is an organization of
farms rather than of farmers.
The "union" has been suggested
as an organization to compel
the economically stronger farms
to help the weaker. This would
speed the process of disbanding
those MTS's which are being
retained because backward col-
lectives cannot now purchase
the machinery, and would also
further the trend of reducing 25X1
income disparities, a principle
already being applied both in
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25 September 1958
INDONESIA: PRESIDENT SUKARNO, THE ARMY, AND THE COMMUNIST PARTY
With the decline of non-
Communist parties in Indonesia
during the past 18 months, the
three centers of power in the
country are, in order of impor-
tance, President Sukarno, the
army, and the Communist party.
Alhtough the army's political
strength is increasing, Sukar-
no's lead in authority and pres-
tige remains large. The Commu-
nists, although expanding their
following at the grass-roots
level and benefiting from their
association with Sukarno's pol-
icies, are being obstructed in
the use of their strength by
army tactics.
Sukarno remains the key to
all significant government ac-
tivity in Indonesia. Although
his prestige and area of maneu-
verability have diminished, any
policy to be successful,must
have his support. His principal
source of power and prestige is
support of the masses, partic-
ularly in Java where over 60
percent of Indonesia's 82,000,-
000 people live.
In early 1957 Sukarno an-
nounced a program of "guided
democracy" which called for a
de-emphasis of political parties
and parliamentary government.
Indonesia had been independent
for seven years, had averaged
a new cabinet every year, and
had made little economic prog-
ress. The 1955 national elec-
tions, which had been expected
to provide a cure-all for the
country's problems, had only
created a coalition government
of eight parties whose inexperi-
ence and rivalry made for con-
tinued indecisive and ineffi-
cient government.
Sukarno had just completed
tours in both the West and the
Sino-Soviet bloc. He felt he
had seen in Communist China such
tremendous economic advances
that Chinese methods held les-
sons for Indonesia. Sukarno
has repeatedly stated that he
is a Marxist but not a Commu-
nist. He appears to believe he
can establish a socialist state
and can use Communist techniques
without threatening Indonesia
with Communism.
Sukarno encountered expected
opposition from the non-Commu-
nist political parties. He had
the support of the army, however,
and the vigorous assistance of
the Communist party and other
leftist elements.
With this support, he was
able to form in April 1957, with-
out consulting political parties,
the present extraparliamentary
business cabinet, led by a non-
party prime minister, Dr. Djuanda.
In June 1957 he installed an ex-
traconstitutional national coun-
cil under his own chairmanship,
and he has recently named a pre-
paratory council to formulate
a national economic planning
board.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25 September 1958
In the interim, however,
he appears gradually to have
become aware of the increasing
Communist strength which his
own policies have permitted.
He has therefore apparently wel-
comed army measures which began
about December 1957 to obstruct
the growth of Communist influ-
ence.
Sukarno has not personally
challenged the Communist party
and probably will not for two
reasons: he wishes to retain
its support; and a challenge
to the party, whose chief sup-
port--like his own--comes from
Java, would force the Javanese
masses to choose between him
and the Communists. He fears
the results of such a choice
since it would not only whittle
away his own source of power
but at the same time would set
up a powerful antagonist.
The Army
The Indonesian Army has
assumed an increasingly power-
ful position, including a grow-
ing policy-making role, since
the beginning of conflict with
the rebellious provinces in Su-
matra and North Celebes last
.March. This period has coin-
cided with restrictive moves
against the Communists. The
army's increased power has re-
sulted from three factors: the
considerable authority permitted
the army under the present "state
of war"; the support of Sukarno;
and the prestige accruing from
its success in suppressing the
revolt.
Chief of Staff Nasution
and other army leaders, although
sharing Sukarno's desire for na-
tional stability and progress
and his exasperation with the
ineffectiveness of political
parties, differ with him over
his willingness to rely on the,
Communist party. Nasution has
said the army's task is to steer
a middle-of-the-road course,
preventing a move either to Com-
munism or to a Moslem state.
Nasution subordinated anti-
Communist action for the first
two years of his tenure, which
began in October 1955, in the
interests of building a disci-
plined army. His first signifi-
cant move against the Communists
was in December 1957, when Su-
karno instituted a campaign to
take over Dutch interests in
Indonesia and the Communists
seized the opportunity to force
a far more extensive take-over
than most government elements
had anticipated. When the army
moved to control those interests
seized by Communist-influenced
groups, Sukarno did not inter-
fere and apparently supported
the move.
Army leaders are aware that
the rebellion has provided the
Communist party with new oppor-
tunities for growth. Nasution
has therefore banned political
activity in all areas except
Borneo and Java, taken steps to
prevent leftist-inspired demon-
strations, and thus far
forestalled Communist-inspired
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25 September 1958
strikes and boycotts by decree-
ing that the army "cannot ap-
prove" actions which would dis-
turb the public order. A few
pro-Communist army officers
have been transferred from po-
sitions of influence. The army
also pressed--although with only
moderate success--for a cabinet
reshuffle last June to reduce
leftist influence. Nasution
persisted and succeeded in ac-
quiring American arms which,
although purchased only in to-
ken quantities, balanced to some
extent large military purchases
from the Communist bloc.
National elections, which
had been scheduled for September
1959 and in which significant
Communist gains were anticipated,
have now been postponed a year.
None of the army moves al-
ready taken against the Commu-
nists constitutes major opposi-
tion. Generally they have been
minor moves of containment or
obstruction. Army leaders, al-
though willing to go further
than Sukarno, fear Communist
power and hesitate to challenge
it before first strengthening
their own position with the In-
donesian people and stabilizing
the country generally.
In addition to the major
problems of Sukarno and the Com-
munists, the army has internal
difficulties of factionalism,
Communist infiltration, and low-
er rank discontent which weaken
the position of'army leaders.
Army factionalism is on the
decrease, although a renewal,
growing from the rebellion and
aggravated regional prejudices,
can be expected as soon as dis-
affected units are restored to
the army roster. Those elements
which formerly constituted the
most effective opposition to
Nasution and his followers are
with the dissidents in Sumatra
and North Celebes, so that the
present officer corps is rela-
tively disciplined. Nasution's
chief threat is Sukarno, himself,
who may come to fear tie chief
of staff as a serious rival and
arrange his removal. This does
not yet appear likely.
Communist infiltration of
the army is heaviest in the en-
listed ranks.
In the officers corps, where om-
munist sympathy appears limited, 25X1
the Communists rely on using
persons of extreme pro-Sukarno
sentiment.
Enlisted men are poorly
paid and frequently have sub-
standard living conditions. Both
the Communists and army faction-
al leaders have exploited their
discontent.
The Communist Party
The Indonesian Communist
party (PKI) has risen rapidly
from a third-rate party in 1952
to the largest in Java in 1957,
in great part by following na-
tional-front tactics which have
included support for Sukarno
and identification with his pol-
icies.
The PKI is better organized
and has worked harder than any
non-Communist party. Under Sec-
retary General D. N. Aidit, the
party's membership is believed
to be at least 700,000 and may
approach claimed membership of
over a million. The party won
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25 September 1958
7,000,000 votes--25.6 percent
of the total--in the 1957 Java-
nese provincial elections, and
made gains in limited local
elections elsewhere in Indonesia.
It has made vigorous prepara-
tions for the now postponed na-
tional elections, while non-Com-
munist parties have been vir-
tually inactive. The Communists'
strongest front group is SOBSI,
Indonesia's largest and most ef-
fective labor federation. Com-
munists also control the larg-
est veterans' organization,
PERBEPSI, and the largest peas-
ant organization, BTI.
The party strongly support-
ed military measures against
the provincial dissidents and
has shared in the prestige ac-
cruing from their defeat. Re-
strictive army measures, how-
ever, have prevented the con-
siderable exploitation of this
development which the Commu-
nists had obviously planned.
Communist leaders are re-
ported disturbed over increased
army power and the apparent ac-
quiescence of President Sukarno
to army policies. They also
appear di.stressed over that part
of Sukarno's "guided democracy"
concept which calls for the de-
emphasis of political parties.
They can be expected to
continue national-front tactics,
however, as long as they bene-
it from any identification with
Sukarno. They will probably in-
crease their efforts to sow dis-
sension between Sukarno and Na-
sution. Although undoubtedly
greatly disappointed at the
election postponement, they can
be expected to try to capitalize
on it by denouncing it as an ob-
struction of "the people's will,"
and they may attempt some test 25X1
of popular feeling on the issue.
Prospects
The three elements of In-
donesia's power complex remain
an essentially unstable mixture
despite some cooperation enforced
on them in recent weeks by the
provincial rebellion. Effec-
tive army opposition to the Com-
munist party at some future date
depends not alone on the approv-
al of this policy by President
Sukarno. Other factors essen-
tial for the army's progress
toward an effective anti-Commu-
nist policy would appear to in-
clude success in acquiring
enough arms from the free world
to permit a straightforward anti-
Communist political position;
progress, with the cooperation
of civilian elements in the gov-
ernment, toward redressing po-
litical disunity and economic
instability aggravated by the
provincial revolt; and Sukarno's
trust, particularly his belief
that no army leaders will attempt
to replace him or seriousl chal-
len a his popularity.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25 September 1958
FREE WORLD MONETARY PROBLEMS
There is widespread con-
cern among both the industrial
and the underdeveloped countries
of the free world over the ade-
quacy of monetary reserves and
development funds to support
desired rates of economic growth.
This concern probably will lead
many of the 67 finance minis-
ters meeting in New Delhi from
6 to 10 October as the board of
governors of the International
Monetary Fund (IMF) and the In-
ternational Bank for Reconstruc-
tion and Development (IBRD) to
press for early major increases
in the lending resources of
these two agencies.
The fears of a general
economic and financial crisis
which troubled many free-world
leaders a few months
ago have been signif-
icantly eased by the
improving outlook
for the American
economy and by re-
cent American initi-
atives for expanding
international credit
facilities.
Industrial Countries
Economic ex-
perts of the OEEC
.since mid-1958 have
generally seen lit-
tle danger of the
United States "ex-
porting" a recession
to industrial Europe.
They attribute the
present leveling off
in the Western Euro-
pean economy to anti-
inflationary meas-
ures taken to curb
the boom and to re-
store exchange sta-
bility after the dis-
locations of Suez
and last year's cur-
rency crisis.
BURMA
- INDIA
MALAYA
NEW ZEALAND
PAKISTAN
DENMARK
FRANCE
ITALY
NETHERLANDS
SWITZERLAND
WEST GERMANY
ARGENTINA
BRAZIL_
CHILE
CUBA
PERU
VENEZUELA-
FINLAND
IRAN
--------JAPAN
PHILIPPINES
In fact, well- SPAIN
sustained American YUGOSLAVIA
commodity imports
and sharply reduced trade ex-
ports have combined with grow-
ing US capital exports to
strengthen Western Europe's in-
ternational financial position.
These factors, along with the
return of a large amount of the
capital withdrawn from Western
Europe during the currency
crisis, have increased its gold
and dollar reserves by a little
over a billion dollars during
the first half of this year.
In Japan, also, the reces-
sion is believed to have been
brought on by anti-inflationary
measures which succeeded, how-
ever, in converting a payments
deficit of about $500,000,000
in the first half of 1957 to a
surplus of nearly $200,000,000
FREE-WORLD GOLD AND FOREIGN EXCHANGE HOLDINGS
UNITED KINGDOM
OTHER STERLING AREA
COHT1NWA1_-MEMBERS OF-
EUROPEAN PAYMENTS UNION
LATIN AMERICA
OTHER J REI _WOTIIDE
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1 41
1 42
1 41
43
123
117
113
1 13
168
STERLING AREA
OUTSIDE UK
CONTINENTAL
EPU COUNTRIES
24
J 32 LATIN AMERICA
65 OTHER
FREE WORLD
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CURRENT INTELLIGENCE WEEKLY SUMMARY
25 September 1958
during the first six months of
this year.
The industrial countries,
however, continue to watch
American trends very closely
out of concern over possible
direct repercussions on their
own economies. Greater appre-
hension is felt over possible
indirect effects, such as the
possibility that less developed
countries, confronted with a
reduced American demand for raw
materials in the event of a
slowdown of the US economy,
might in turn curtail their own
imports of industrial products.
Countries producing raw materi-
Als take one third of all
Western European exports, com-
pared with 7 percent taken by
the United States. These coun-
tries have recently maintained
high levels of imports only by
drawing on their reserves and
by heavy borrowing from the IMF,
the IBRD, and from private-
capital markets at a rate which
they are unlikely to be able to
continue.
Primary Producing Countries
The economic difficulties
among countries producing pri-
mary materials originated in a
general weakness of commodity
prices which has persisted over
the past two years. These dif-
ficulties have since been con-
siderably aggravated by the eco-
nomic slowdown in the industrial
nations.
In Latin America, depressed
world prices for coffee have led
to heavy payments deficits and
reserve losses in many coun-
tries, including Brazil and
Colombia, which depend on cof-
fee exports for a major share
of their foreign trade. A 50-
percent decline in the world
price of copper since 1956 and
declines in the marketing of
lead, tin, and zinc have sharp-
ly reduced the foreign exchange
earnings of Chile and Bolivia
add adversely affected those of
Peru and Mexico.
In Asia and the Far East,
persistent trade deficits in
1957 reached their highest point
since the Korean war. A major
factor was the decline in world
prices and marketing of rubber
and tin. Malaya is in a par-
ticularly poor position and the
Philippines is faced with a
dangerously deteriorated pay-
ments balance.
All countries in the Mid-
dle East and South Asia except
Iran are experiencing foreign
exchange difficulties largely
attributable to rising imports
and worsening terms of trade
for some of the areas' principal
exports. Emergency assistance
is now being arranged for Turkey
and India, but the reserves of
Pakistan, Afghanistan, Egypt,
and the Sudan are also precar-
iously low. Exports from Africa
south of the Sahara have in gen-
eral not yet been seriously af-
fected.
Role of the IMF
The IMF greatly expanded
short-term lending operations
since early 1956 to assist about
one third of its member coun-
tries to ward off or recuperate
from currency, payments and re-
serves crises. In so doing, it
may well have prevented a gen-
eral financial crisis which
might have had serious politi-
cal repercussions in several
countries. Massive assistance
to Britain after the Suez crisis
stemmed a run on the pound;
France was rescued from near
financial collapse early this
year; Japan has already and
Turkey soon will benefit; India
has just been assured of Ver
large IBRD and~multinational~
assistance; and Brazil last sum-
mer received substantial aid
from the fund to retrieve a
badly deteriorated payments and
reserves situation.
The fund has also increased
the effectiveness of its aid by
coordinating its efforts with
those of other lending agencies
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25 September 1958
such as the European Payments
Union, the IBRD, and with cred-
itor governments, notably the
United States and West Germany.
At the same time, fund sponsor-
ship of the joint operations
permits an insistence on much
stronger corrective measures--
as, for example, against domestic
inflation--then would be polit-
ically possible for an individ-
ual creditor nation.
These expanded operations
during the last two-and-one-
half years have used twice as
much of the fund's gold and
dollars as in the previous eight
years. As a result, the readily
available supply of such funds
is now below $1.5 billion--com-
pared with $3.4 billion on hand
when operations began in 1947.
With resources at such a low
S
level, the danger arises that
some countries might withdraw
their gold and dollar contribu-
tions if they should see a pro-
spective scarcity of funds in
relation to requirements.
Britain is particularly
sensitive to any possible weak-
ness in the fund, because of
its vulnerable trade, payments,
and reserves position in main-
taining the pound as the pay-
ments medium for 40 percent of
free world trade. Since its
sterling crisis a year ago,
Britain has, therefore, strong-
ly urged a general expansion of
the fund's gold and dollar hold-
ings. It contends that the
quadrupling of the value of
world trade between 1937 and
1957 and the consequent reduc-
tion of free-world reserves,
excluding those of the United
States, from 63 to 34 percent
of annual imports has brought
about a situation in which these
reserves are not adequate to
support present levels of world
trade with a safe margin. Brit-
ish representatives accordingly
advocate at least doubling the
fund's present level of author-
ized gold and dollar holdings.
Britain's contention is
often refuted by citing the fact
that in the stable and prosperous
year of 1928, corresponding
world monetary reserves were
only 35 percent of imports. The
president of the West German
Central Bank further insists
that any present inadequacy of
international monetary reserves
is the fault of deficit coun-
tries for not balancing invest-
ments with savings. He holds
that such reserves can only be
adequate in the long run when
all countries practice monetary
discipline to avoid speculative
movements and excessively unfa-
vorable terms of payment. This
West German financial authority
concludes that his country will
go along with an increase in
gold and dollar resources for
the fund only if the amounts
are reasonable, all members con-
tribute, and such increases do
not entail weakening of monetary
discipline in deficit countries.
Staff experts of the fund
take the view that neither 1928,
with many hidden credit malad-
justments, nor 1937, with
nominal reserves greatly in-
creased by the dollar devalua-
tion of 1934 and by the low
level of world trade, can serve
as an adequate criterion for
1958. They conclude that any
judgment of the adequacy of
present free-world reserves must
be conditional, depending both
on further strengthening of the
international credit system and
on future national willingness
to pursue flexible fiscal and
credit policies and to avoid
overambitious investment prac-
tices.
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25 September 1958
Reactions to US Proposals
Reaction in the Western
world to President Eisenhower's
announcement on 26 August that
the United States would propose
at the New Delhi meeting prompt
consideration of the advisabil-
4ty of a general increase in
quotas of fund member govern-
ments has been overwhelmingly
favorable. West European eco-
nomic and financial experts see
great merit in the proposal,
not only as possibly providing
a basis for relieving pressure
on sterling, but also for
strengthening financial confi-
dence among Continental countries
as they adjust to the new Com-
mon Market. The British press
hails it as the most promising
American pronouncement since
the Marshall Plan, while offi-
cials praise it for diverting
pressure on the United Kingdom
in the recent Commonwealth con-
ference for establishing a new
Commonwealth lending institu-
tion, a project which Britain
is not in a position to undertake.
SECRET
The Latin American diplo-
matic corps is united in its
enthusiasm for the proposal,
with specific endorsements from
both Chile, a deficit nation,
and Venezuela, a strong surplus
country.
India and other Asian
countries have reacted favorably
to the American proposal to ex-
pand the resources of the IMF.
Several of these countries, how-
ever, have shown greater inter-
est in the proposal to increase
the lending authority of the
IBRD and to create an interna-
tional development fund,
since their main concern is
in the flow of long-term
capital for development. Most
nations can be expected to
support the proposals at New
Delhi, but paying one fourth
of their additional contribu-
tion to the IMF in gold
or dollars will pose serious
problems for man .
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