CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A002000010001-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 49
• Document Creation Date: December 20, 2016
• Document Release Date: December 13, 2005
• Sequence Number: 1
• Publication Date: October 27, 1999
• Content Type: SUMMARY

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CONFIDENTIAL
SEeREF
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
COPY NO. 50
OCI NO. 4053/58
30 October 1958
DOCUMENT NO. ._.r..
NO CHANGE IN CLASS. 0
0 DECLASSIFIED
CLASS. CHANGED Af C)
NEXT REVIEW DATE:
AUTH; 70
DATE) REVIEWER;
CENTRAL INTELLIGENCE AGENCY~SQS 01"a
OFFICE OF CURRENT INTELLIGENCE .1% a~,Slvi~~S
CONFIDENTIAL
State Department review 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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n^ ^~'" DENT IAL
CURRENT INTELLIGENCE WEEKLY SUMMARY
OF IMMEDIATE INTEREST
MIDDLE EAST DEVELOPMENTS
Arab-Israeli tension is
again building up as the with-
drawal of British troops from
Jordan nears completion. Ac-
cording to the most recent
schedule, the withdrawal may
be completed by 3 November
King Husayn now plans
Lataki
Baniya
" Cyprus
(UK) TripoI
LEBANON
MEDITERRA V E A N BEIRUT
SEA ...~.la.
Half
ISkA
Tel Aviv:Jaff
Atexa~d Said r 9,
? Oil field
? Oil refinery
^ Pumping station
European
tion" on 9 or 10 November
Husayn's departure could
be the signal for a gradual
shift toward an accommodation
with Nasir; it also presumably
removes one obstacle to a coup
attempt by the more violent
- Standard-gauge railroad
-- Nafrow?gauge railroad
---Main motor road
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SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
pro-UAR elements. The Israelis
have long indicated they would
view either development as ner-
cessitating some action on their
part, and military circles in
Israel have hinted that they
favor an immediate occupation
of West Jordan despite the prob-
lems raised by the presence of
a large Arab refugee population
there. Prime Minister Ben-
Gurion last week proposed that
if the status quo in Jordan were
changed, West Jordan should be
demilitarized under the aegis
of the UN and Israel's frontiers
should be guaranteed by the UN
and the "great powers."
Kurdish communal elements in
Kirkuk in northern Iraq on 25
October was suppressed by the
army after some considerable
loss of life and property damage.
This disorder was probably a
product of Kurdish excitement
over the visit of Mulla Mustafa
Barzani, Kurdish leader recent-
ly returned from the USSR, al-
though the government apparently
has sought to minimize publicity
over his tour of his Kurdish
home areas.
A clash broke out in Bagh-
dad on 27 October, when pro-UAR
demonstrators heading toward
the airport to welcome a visit-
ing UAR dignitary were inter-
cepted by a mob of anti-UAR
partisans, probably organized
by local Communists. Army tanks
were used to suppress this inci-
dent, after police stood aside.
The Iraqi Baathists con-
tinue to assert that.former Dep-
uty Premier Arif will return on
5 November. They anticipate
that he will be brought back
into the government as a member
of a predominantly military cab-
inet rather than as the head of
a new regime. Arif's where-
abouts is still uncertain. Ru-
mors have had him in Switzer-
land, Rome, and, most recently,
in Cairo. These rumors probably
represent little more than wish-
ful thinking by Baathist sup-
porters, but the political situ-
Inside Iraq, tensions also
seem to be increasing again.
Rioting between. Turkish and
ation .in Iraq is still very
fluid.
TAIWAN STRAIT SITUATION
Peiping's Defense Minister
Peng Te-huai issued a message
on 25 October to Chinese "com-
patriots" suggesting that for
the time being, the Chinese Com-
munists intend to use political
tactics toward their objective
of gaining control of the off-
shore islands. Peng's message
is, in effect, a declaration of
a limited cease-fire which "fa-
cilitates for a long time to
come" the entrenchment of the
Nationalists on the Chinmens.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Peng implies that a "fat" gar-
rison will be a better future
prize than a "lean" one.
Peng's order enables Pei-
ping to claim that the Chinese
Nationalist Government is able
to maintain itself on the Chin-
mens purely by Communist suf-
ferance. At the same time, the
Chinese Communists retain the
flexibility to fire or not to
fire without appearing to accept
American proposals for a de
facto cease-fire and without
incurring the risk of expanded
hostilities or American involve-
ment. The limited cease-fire
is "still conditional on not
introducing American escorts."
Peng thus continues the
regime's efforts to bring about
the disengagement of the United
States from any active military
support of the ' Nationalists and
to obtain a de facto Ameridan
recognition of its
claim to a 12-mile
limit of its 'ter-
ritorial waters. Since
American destroyers
modified their pat-
tern of patrolling
in the Matsu area on
22 October, Peiping
has not issued a "se-
rious warning" against
alleged American in-
trusions.
Chinese Commu-
nist propaganda prior
to 21 October, as
well as Peng's ear-
lier cease-fire orders
of 6 and 12 October,
pointed to "political
work" as the prin-
cipal method to be
used in the campaign
to take over the off-
shore islands and Tai-
wan. Peng's latest
message makes it clear
that Peiping does not
expect important gains in the
immediate future. He states,
"We are not advising you to break
with the Americans right away;
that would be an unrealistic
idea." Peiping does expect, how-
ever, a lowering of Nationalist
morale, some grumbling against
the Nationalist authorities, and
even defections during a pro-
longed period of pressure against
the offshore islands and Taiwan. 25X1
gip:.:HONG KONG
SOUTH CHINA SEA
Q Nationalist held
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 October 1958
Communist Military Activity
Communist artillery in the
Amoy area has fired on the Chin-
mens daily, with the exception
of a 23-hour lull on 23 and 24
October. The firing has been
relatively light and sporadic,
however. The 25 October order
of Communist China's defense
minister was clarified by a
Peiping announcement the next
day declaring: "Today happens
to be an even date. Our mili-
tary units on the Fukien Front,
strictly abiding by the order
of the minister of national de-
fense, did not bombard the air-
fields on Chinmen or the wharf,
beach, and ships at Liaolo Bay
when they shelled Chinmen."
This made it clear that the Com-
munists did not intend to sus-
pend all shelling "on even
dates," but only to refrain from
shelling those areas specifical-
ly mentioned in the 25 October
order.
newspapers have asserted that
the only way to deal with the
Chinese Communists "id by means
of force." The papers also
emphasized that the Nationalist
campaign to recover the China
mainland "seeks to couple a war
in the Taiwan Strait area with
a revolution on the mainland."
These comments probably were
intended to offset any public
impression that the government
had weakened in its resolve to
recover the China mainland.
Nationalist military of-
ficials indicated to the press
on 25 October that their gov-
ernment has agreed in prin-
ciple to an American request,
made prior to the offshore is-
land crisis, for a gradual one-
third reduction in the armed
forces on the offshore is-
lands, with a corresponding
increase in firepower through
modernization. This fact sug-
gests Taipei could be moving
toward decreasing the garrisons.
In commenting an the Dulles-
Chiang communique, Kuomintang
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CONFIDENTIAL
CURRENT INTELLIGENCE WEEKLY SUMMARY
PAKISTANI ARMY TAKE-OVER COMPLETED BY MIRZA OUSTER
The ousting of President
Mirza on 27 October by General
Ayub consolidates Ayub's con-
trol over Pakistan and makes it
clear that the army is in sole
command. Ayub apparently sus-
pected Mirza of political maneu-
vering to enhance his own power
at Ayub's expense. Mirza has
been flown under army escort to
Quetta, near the Afghan border,
from where he is to proceed to
England.
As the new President, Ayub
may be expected to continue
Pakistan's cooperation with the
West. He showed special con-
cern over neutralist political
speeches before the 7 October
take-over, and since then has
arrested numerous leftist lead-
ers in Pakistan. His new gov-
ernment, however, may attempt
to improve relations with the
Arab states.
The army probably will be
fully occupied with administer-
ing the country. The initial
apprehensions in Kabul and New
Delhi will probably dissipate,
as military adventures are un-
likely under Ayub, who has been
a cautious military leader.
Since 7 October, Pakistani agi-
tation over the Kashmir issue
has been shelved.
President Ayub seems un-
likely to relinquish power vol-
untarily in the foreseeable
future. With his appointment
of nonpolitical figures as min-
isters in the new cabinet, all
top political and administrative
positions now are held by new
personnel. This will probably
further discourage most party
politicians, who presumably will
continue to wait and see for
the time being. The public will
probably not be offended by
Mirza's departure. He has no
mass popularity, and his polit-
ical strength has been declin-
ing since late 1957.
Vigorous prosecution of
corruption has created an at-
mosphere favorable for at least
initial improvements in the na-
tional economy. Ayub has focused
attention on the problems of land
reform and refugee settlement as
necessary first steps toward in-
creased agricultural production
and general economic development.
The new regime may be able to
introduce some reforms bringing
relief to tenant farmers and
hastening the distribution of
newly irrigated land. However,
the army has already begun to
discover its limitations in fram-
ing sound economic policies.
After certain initial successes,
it will encounter the basic prob-
lems inherent in the oountry's
inadequate natural and person-
nel resources.
Ayub has made a strong ap-
peal for East Pakistan's support.
East Pakistan, however, probably
will chafe under an exclusively
West Pakistani army regime and
may erupt in open unrest if gov-
ernment policies appear to favor
West Pakistan.
HARASSMENT OF UNITED STATES' INTERESTS IN CUBA
American businesses and the
nickel installation owned by the
US Government in Cuba's rebel-
dominated Oriente Province are
being increasingly threatened
by an upsurge in revolutionary
activity. Rebel leader Fidel
Castro, publicly committed to
an "all-out" effort to prevent
the national elections scheduled
CONFIDENTIA
'DART TT NOTES AND COMMENTS
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__ SECRL T -
CURRENT INTELLIGENCE WEEKLY SUUARY
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ISI.RRA MALSTRA ~S,IN~,YO GAG. -20
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for 3 November, has increased
his demands on companies located
in areas under rebel domination
in an attempt to acquire sup-
plies and cash to support his
movement.
During the two years since
Castro landed in Oriente Prov-
ince, US companies have suf-
fered losses, through sabotage
and theft, estimated in excess
of $2,000,000. Castro has re-
peatedly professed respect for
US personnel and installations,
but many companies have been
approached' for sizable "con-
tributions." These demands are
not limited to foreign companies;
Cuban enterprises have been sub-
jected to a growing number of
rebel-imposed taxes.
One company, the US Gov-
ernment - owned, $95,000,000
nickel installation at Nicaro,
closed down following the evacu-
ation of more than 50 US employ-
ees and dependents on 24 Octo-
ber because of the loss of admin-
istrative personnel and a lack
of supplies. American officials
doubt that the Cuban Army can
guarantee security in the area.
The operations of the Texaco
refinery near Santiago have been
seriously curtailed by rebel in-
terference, which has included
the temporary kidnaping of two
employees. The company is con-
sidering a shutdown if rebels
persist in their blackmailing
demands for cash or arms valued
at several hundred thousand dol-
lars. Other US companies in
Oriente have been su}ijected to
varying degrees of harassment.
Castro has announced his
intention to continue disruptive
actions through the electoral
period, threatening to call a
general strike--a strike called
last April failed--and to paralyze
transportation and communications
throughout the island. He has 25X1
warned all Cubans to stay in-
doors on election day.
Marshal Sarit is going
ahead with his plans to remold
Thailand's political institu-
.tions. He is expected to an-
nounce about 1 November the
formation of a provisional cab-
inet which will operate under
an as-yet-unrevealed provisional
constitution. This regime will
probably stay in power for at
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 October 1958
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least a year, during which time
a new "permanent" constitution
will be drafted and the ground
prepared for election of a more
amenable legislature.
There are growing indica-
tions that Sarit himself is to
be premier in the provisional
government, with the other major
portfolios assigned to his col-
leagues in the military group.
The inclusion of the same mili-
tary personnel who were in the
former Thanom cabinet would point
up the fact that Sarit's "revo-
lution" is only a partial one.
Several of his military follow-
ers are notoriously corrupt, and
their activities were a contin-
ual problem to Thanom.
The new "permanent" con-
stitution is expected to place
severe limits on the powers of
the legislature with a corre-
sponding strengthening of execu-
tive powers. The articles be-
ing considered include one pro-
viding for exclusion of assem-
bly members from the cabinet
and another allowing dismissal
of the cabinet without refer-
ence to the assembly. Mildly
socialistic economic provisions
reportedly will also be incor-
porated at Sarit's personal in-
sistence.
The arrests of alleged Com-
munists and other opposition
elements are continuing but are
apparently running behind the
targets set by the police. This
suggests that many of those most
vulnerable to charges of being
Communists may have succeeded
either in escaping the police
net or in bribing the police to
avoid arrest. Twelve pro-Commu-
nist or leftist newspapers are
still closed down, and the police
seem to be enforcing a previously
imposed ban on the showing of So-
viet and Chinese Communist films
in Bangkok.
The pro-Western Sudanese
Government coalition, led by
Premier Abdullah Khalil's Umma
party, is facing renewed pres-
sures from both the neutralist,
pro-Egyptian National Unity
party (NUP) and from the Suda-
nese Communist party. The con-
troversial question of accepting
American aid is the central
issue, but the ruling coalition
is also charged with corruption,
unsuccessful economic policies,
and "foolhardy" measures against
labor.
The NUP is the second
largest party in the Sudan, with
SUDANESE GOVERNMENT
25 percent of the seats in Parlia-
ment compared with the Umma
party's 35 percent; its popular
following is approximately as
numerous as that of the Umma.
In a situation where the votes
of a number of deputies can be
bought, the NUP, especially if
it gets further financial aid
from Egypt, has some prospect
for gaining control of the gov-
ernment in mid-November, when
Parliament is scheduled to
reconvene.
The Communist party has no
representation in Parliament and
no great popular following, but
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 October 1958
it controls the leadership of
the bulk of organized labor and
has effective front groups among
students and intellectuals. Al-'
though the Sudan is essentially
an agricultural country and the
government runs most industry
and transport, the trade union
movement, with about 55,000 mem-
bers, is in a powerful position.
Some 21,000 of the union members
belong to the Sudan Railway
Workers' Union and some 17,000
to unions affiliated with the
Sudan Workers' Trade Union Fed-
eration (SWTUF). Both these
organizations are Communist led,
and a sustained strike by their
workers could paralyze the Suda-
nese economy.
The government has attempt-
ed to destroy the SWTUF, first
by setting up a rival trade fed-
eration, the Sudanese Government
Workers' Trade Union, Federation,
with only slight success, and
then by passing legislation de-
signed to make the SWTUF illegal.
On the basis'of the new law,
the government instituted an
action this month against the
SWTUF in the Sudanese courts,
but failed to obtain a ruling
outlawing the organization. The
Communist party and the SWTUF
responded on 21 October with a
one-day strike and with worker
and student demonstrations. The
strike was effective throughout
the country, particularly in
the transport industry. Most
significant was the support of
the demonstrations by the NUP.
This support underlines
the potential danger to the gov-
ernment of parallel--but not
necessarily coordinated--action
by the NUP, operating principal-
ly in Parliament and with po-
litical maneuvers, and by the
Communist party, undercutting
the government through agita-
tion, demonstrations, and
strikes. Government officials
are reported to be seriously
disturbed, and Khalil has
threatened strong measures
against "forces of anarchy."
The Algerian rebel regime,
which rejected French Premier
de Gaulle's invitation to come
to Paris to arrange a cease-
fire, seems to be continuing
to maneuver for his acceptance
of the Algerian National Lib-
eration Front (FLN) as the val-
id spokesman for Algerian Mos-
lems. Paris has consistently
refused such recognition, claim-
ing the FLN represents no more
than a small, rabid minority.
While branding De Gaulle's
offer of safe-conduct to "lead-
ers of the rebellion" to come
to Paris for talks a "request
for unconditional surrender,"
rebel "Premier" Abbas attempted
to keep the door open by pro-
posing negotiations on neutral
ground for "a true solution of
the Algerian problem in its en-
tirety." This position is in
accord'with Abbas' 26 September
statement which soft-pedaled 25X1
demands for independence and 25X1
expressed his regime's readiness
to negotiate.
Rejection of De Gaulle's
offer, rather than its quali-
fied acceptance which had been
anticipated by some French and
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 October 1958
Tunisian circles, was probably
dictated by extremist military
members of the rebel regime in
order to retain command of the
Moroccan and Tunisian lead-
ers, while deploring the tactics
the Algerians and gain their
support in his difficulties
employed by the Algerians in re-
jecting De Gaulle's offer,,prob-
ably will continue to urge that
the Algerians be amenable to a
compromise with France as a
step toward ultimate independ-
ence for Algeria. The joint
Moroccan-Tunisian offer made
last November to mediate a set-
tlement of the Algerian dispute
still stands, and Bourguiba con-
tinues to seek to enlarge his
influence for moderation among
with Nasir.
THE MILITARY BACKGROUND OF DE GAULLE'S NATO PROPOSALS
French Premier de Gaulle's
proposals for an American-Brit-
ish-French "directorate" to co-
ordinate global strategy are
not aimed solely at enhancing
French prestige, but appear to
be based at least partially on
French military thinking that
the nature of modern warfare
demands new concepts for stem-
ming Communist encroachments.
French military leaders believe
they have a "new weapon" in the
form of perfected psychological-
warfare techniques to supplement
NATO and to cope with subversive
warfare on a global scale.
General Paul Ely, chief of
staff of the French armed forces,
has been a stabilizing pro-NATO
influence in France. In the July
1957 issue of the semiofficial
Review of National Defense, he
argued Mid polarization of the
world around the US and the USSR
had reeultedlin.' ale' -tinge- .
defense problems, "even though
in terms of localized con-
flicts," to a global plane.
Ely delineated three axes along
which Soviet pressure is ex-
erted: (1) Europe; (2) the
Middle East, prolonged into
North and Black Africa; and
At only em a +stlttary action, in pwi-
at* teal Jr' 'k, obtain groat r"Wts
#,tUi liwtt.d am*, but propaganda can sage wlil+esod
in tiwi..forr,.snp the natar. of the foots th ..leoa,
an .Overt tty amoosoefat op ration, #f*it.d airs
or. only the "*to .tappets, .o to .pale, of that
to .ww p., ri.n,tly .qg.d throughout Vi world--
piyrAtrologtaa, ror-rhtch mod rn t.ohrigws a~pJ*;fy
.rid intensify to such a point that the .omstt ..
o#.r pa..ibtlttt.a of action as brutal and deal-
StVl oa outright .wars
--Review of National Defense, July 1957
(3) Southeast Asia. He con-
cluded that the increasing im-
portance of ideological over nu-
clear factors:in the development
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 October 1958
of modern war "exalts the
psychological aspects of po-
litico-military action." In
another article published this
week,. Ely reiterates these
ideas and calls for creation
of an "African shield" patterned
on NATO, along the "Paris-Al-
C C,la Delmas
ce d c pact
3~i? t ?lw-t aUiancf riaJiy 4 r-
? ,- aol y V ttf a bor. semcaNt iii
3~O p, J f . to li opc, Us Use l~l
OF444el iv se sires 04'
tAr?7 ? mat an, A.Us are `
.:by a; Soitt polio, idorittcal to !tint cpoiMt id~Oli
A aes? ut'up.
--Review of r l Deden , .;July
giers-Brazzaville axis" and
stronger regional defense of
Western interests in eastern
Africa.
Ely's views apparently
stem from the French Army's
increasing emphasis on psycho-
logical warfare and action,
which was stimulated by France's
failure to retain Indochina
despite overwhelming conven-
tional military superiority.
He now seems convinced that
France is successfully applying
in Algeria warfare techniques
superior to purely conventional
military operations and appli-
cable to most, if not all, areas
of tension. The French have
adapted Chinese Communist
leader Mao Tse-tung's concepts
of mass indoctrination and con-
trol of native populations in
countering Algerian rebel tac-
tics.
Recent French military lit-
erature is replete with argu-
ments that France is "fighting
NATO's battle" in North Africa
and that the withdrawal of most
French NATO units from Europe
to Algeria in no way diminishes
France's contribution to NATO.
A recent article in the Review
of National Defense quest o'i ns
e outlook for European coun-
tries in a NATO "which involves
weakening them in the'inter-
mediate zone" between NATO's
boundaries and the limits of
the United States' widespread
interests.
The military services are
reportedly re-examining French
diplomatic and military prob-
lems from the viewpoint that
American-Soviet nuclear parity
has vitiated NATO's deterrent
strategy. The conclusion is
that "the two major- powers
could no longer risk annihila-
tion to protect allies but
would only retaliate with nu-
clear weapons if attacked di-
rectly themselves," and that
"the only protection now for any
country is its own thermonuclear
devices."
TENSIONS WITHIN THE PORTUGUESE ARMED FORCES
Premier Salazar's regime,
which since last spring's elec-
tion campaign has encountered
open opposition unprecedented
in his 30-year rule, now is-
reported concerned over a rift
in the Portuguese armed forces
between supporters and opponents
of the recently dismissed de-
fense minister, Col. Fernando
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 October 1958
dos Santos Costa. The rival
factions both seem loyal to
Salazar, but may be maneuvering
to strengthen their positions
against the day when the 69-
year-old prime minister retires.
Shortly after the presi-
dential inauguration in August,
a major cabinet reshuffle
dropped Santos Costa, presumably
to eliminate friction between
civilian and military components
of the cabinet, and also prob-
disturbances had kindled public
discontent and made him, after
Salazar, the principal target 25X1
of the opposition.
ably to quiet dissension in the
army. Santos Costa is ambitious
and has been regarded as one of
the most likely successors to
Salazar. He commands the per-
sonal loyalty of many key of-
ficers, but many junior officers
resent his dictatorial methods,
promotion policies, and efforts
to inject the army into politics
during the presidential election
campaign last May. Moreover,
his vigorous measures to prevent
a continuation of the campaign
completely loyal to Salazar, and,
except for Air Force General
Humberto Delgado, the opposition
presidential candidate in May,
there are no indications of dis-
loyalty to Salazar among high-
ranking military officers.
In view of rumors that
Salazar intends to retire with-
in a year, intrigues involving
pro- and anti-Santos Costa fac-
tions will probably be consider-
ably influenced by the political
fortunes of General Delgado,
whose campaign for the presidency
stirred up popular unrest that
has since continued. He has
little military support for his
political activities, but in the
May electoral campaign he was
unusually successful in uniting
opponents of the regime, and
his subsequent criticism of the
government has led to rumors he
would be arrested. The extensive
public discontent will probably
encourage the military to take
an active part in selecting and
establishing Salazar's successor.
WEST GERMAN - SOVIET RELATIONS WORSEN
Relations between West Ger- as a result of Soviet refusal to
many and the USSR have deteri- discuss political conditions in
orated markedly since the sign- East Germany with either Chan-
ing of the trade and repatria cellor Adenauer in Bonn or Am-
tion treaty last April, largely bassador Kroll in Moscow.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 October 1958
Adenauer plans to continue his
talks with Soviet Ambassador
Smirnov, but he has publicized
the USSR's negative attitude
in an effort to counteract the
increasing tendency among Bun-
destag members to accept the
Soviet proposal for a four-
power commission to negotiate
a peace treaty with "the two
Germaniesi. "
Adenauer may also be con-
cerned over East German press
reports that 27 Bundestag mem-
bers discussed reunification
with East German representa-
tives during the recent Bundes-
tag session in Berlin. He is
therefore attempting to em-
phasize continued Soviet in-
transigence on East Germany
and unification, while demon-
strating his own willingness
to explore all avenues with
Moscow, including a meeting
with Khrushchev.
West German officials are
not particularly concerned
over the increasing coolness,
pointing out that the most Bonn
expects are occasional periods
of improvement, such as Miko-
yan's visit last April. Bonn
is delaying the start of nego-
tiations on cultural exchanges
to see if the number of re-
turning German repatriates in-
creases after Bundestag rati-
fication of the trade and re-
patriation agreement. Of about
15,000 to 20,000 repatriates
expected, less than 2,000 have
returned since the agreement
was signed.
In order to satisfy grow-
ing Bundestag pressure, the
Foreign Ministry has prepared
a conciliatory reply to the 18
September Soviet note, which
proposed a four-power commis-
sion whose discussions would be
limited to drafting a peace
treaty. Bonn's note will prob-
ably ignore Soviet criticism
of Bonn's NATO policy. It
will, however, attempt to keep
alive West Germany's proposal
for a commission on the entire
question of German unity by
!-noting'Soviet "agreement in
principle" to the idea of a
four-power commission.
Moscow's refusal to dis-
cuss East Germany stems from
fear that acknowledging a legit-
imate West German interest in
the subject would undercut its
policy of achieving recognition
of the "two Germanyes " .Moscow
continues to fall back.on its
peace--treaty proposal as evi-
dence of willingness to solve
the German problem.
NEW FIGURES FOR KHRUSHCHEV'S
Soviet production goals
for 1965, recently revealed in
advance of the over-all Seven-
Year Plan, suggest that the
USSR's planners envisage- - a-,.
growth in industrial production
of at least 10 percent annually
over the next seven years. Fore-
shadowing such targets, Pre-
"ASTOUNDING" SEVEN-YEAR PLAN
mier Khrushchev recently stated
that the Seven-Year Plan will
"seem...improbable" and will
"astound" the world.
High Soviet officials
stated this month that the
steel goal for 1965 is 91,000,-
000 metric tons--11,000,000 tons
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CURRENT INTELLIGENCE WEEKLY .SUMI14RY.
below US output last year and
near the lower limit of Khru-
shchev's 1972 target of 100,-
000,000 to 120,000,000 tons.
Although serious problems exist,
this ambitious goal could be
met if the priority allocated
the industry is increased and
some success is achieved in im-
porting equipment from the free
world. This and other goals
recently mentioned in the press
indicate that the iron and steel
industry is expected to achieve
larger rates of increase in
1959-65 than have been accom-
plished since 1955. The 1965
targets for crude iron ore also
are only slightly below the
lower limits of Khrushchev's
1972 goals.
The new petroleum goal of
240,000,000 tons for 1965, men-
tioned to Eric Johnston by Mik-
oyan early this month, is 10,-
000,000 tons over previous in-
dications and more than double
the 1958 goal of 113,000,000
tons. If this new target is
achieved, the industry will be
well on its way toward the 1972
Usable Iron Ore
Pig Iron
Crude Steel
Finished Steel
Petroleum
Cement
Natural Gas
Electric Power
Wool Textiles
Silk Textiles
Knitwear
Cotton Fabrics
Artificial Fibers
Leather Footwear
Trucks
Autos
Buses
goal of 350-400,000,000 tons
envisaged by Khrushchev.
The natural gas goal re-
mains at the high level of ear-
lier forecasts, and the electric-
power goal is probably a refin-
ment of an earlier, somewhat
higher, rounded figure of 500
billion kilowatt-hours. Khru-
shchev's recent decision to
stress development of thermal
power--which brings quicker re-
turns--over the expansion of
hydroelectric capacity may re-
flect in part concern over at-
tainment of such a level of
production. The Seven-Year Plan
will call for a greatly in-
creased output of trucks and
buses by 1965, but it will sched-
ule fewer passenger cars than
did the original Sixth Five-
Year Plan.
Khrushchev has been explor-
ing other possibilities for a-
chieving maximum growth and tight-
ening the economy. He hopes to
achieve significant additional
output from student labor; ex-
tracting work from them may
PRODUCTION ANNUAL INCREASE (%)
1958 1965 1972 1956-60 1958-72 1959-65
1957 Plan or Eat. 7-Year Plan Khrushchev's Original 6th Khrushchev's 7-Year Plan
Actual Forecast 5-Year Plan Forecast
84 87 160 (EST.) 9.1
37 39.5 70 75-85 9.9 5.3 8.5
51 55 91 100-120 8.6 5.3 7.5
40.2 42.5 70 8.3 7.4
99 113 240 350-400 13.3 9.4 11.4
29 34 82 90-110 19.5 8.6 13.4
18.5 31 150 260-310 32 16 25.3
210 232 488 800-900 13.5 9.8 11.2
308 318 558 600-710 6 5.2 8.3
880 928 1,594 15 8.1
463 505 940 9 9.3
6.1 6.1 8.7 4.2 5.2
149 628 26.5
315 342 515 600-700 9 4.9 6.1
372 390 650
114 120 170
10 11 40
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CURRENT INTELLIGENCE WEEKLY SUMMARY
become something of a crusade--
like conquering the "new lands."
"School children's brigades" of
Stavropol Krai are reportedly
already achieving better bar-
vests than collective farms,
and Khrushchev called for this
patriotic example to be emulated
elsewhere in agriculture and,
by inference, in industry. In
another effort to tighten the
economy, the diversion of in-
vestment funds intended for in-
dustry into "unessential con-
struction"--swimming pools, cul-
ture palaces, and private homes
--has been exposed and penalized
in recent months.
The outlook for the con-
sumer is one of gradual improve- 25X1
ment in the major items of food ,
housing, and clothing.
(Prepared by ORR)
Khrushchev, Agricultural
Minitter Matskevich, and lesser
Soviet figures have indicated
in recent statements that im-
portant changes aimed at in-
creasing the efficiency of the
collective farms may be made
soon, probably in early 1959 at
the 21st party congress or at
the third All-Union Collective
Farmers' Congress.
Payment of guaranteed
monthly cash wages involving
new performance norms has already
been introduced experimentally
on several collective farms,
reportedly with favorable ef-
fects on output and worker
morale. If adopted, this new
method of payment would be a
further step toward converting
collective farms from coopera-
tive membership groups to or-
dinary Soviet business enter-
prises operating, like the
state farms, on a profit-and-
loss basis. Recent decrees re-
organizing machine tractor
stations and establishing a
single-price system for state
procurement of agricultural
products were earlier major
steps in this direction.
Matskevich recently said
conditions now are ripe for
such a move, and Khrushchev--
speaking on a related subject--
noted the time has come to set
correct work norms in agricul-
ture. To deal with such mat-
ters, the farmers' congress
will amend the collective-farm
model charter established in
1935 and may make collective
farms similar in many respects
to a state farm or factory.
Modeling collective farms
more closely after industrial
enterprises would make it pos-
sible to calculate agricultural
production costs on a nation-
wide basis for the first time in
Soviet history. It would also
provide the state with additional
means to exert pressure on the
collective farms to cut costs
and increase output. The system
might thus facilitate the trans-
fer of labor from agriculture to
industry.
Other possible developments
in the near future include a
rapid increase in purchases by
collective farms of the exten-
sive livestock owned privately
by individuals, and the estab-
lishment of a collective-farm
union. Khrushchev's favorite
farm, Kalinovka, has recently
purchased all the privately
owned livestock of its members.
While Khrushchev has previously
warned against a too rapid ex-
tension of this procedure, it
may be sanctioned at the col-
lective farmers' congress and
spread rapidly.
Establishment of a collec-
tive-farm union has been dis-
cussed in the Soviet press.
Such a "union" has been suggested
as an organization which could
draw funds from the stronger
farms to help the weaker.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Systematic improvement of
collective farm villages ap-
parently will be stressed in
the future. The farmers' con-
gress is to examine "the urgent
problems" of collective farm
construction. Part of Khru-
shchev's controversial 1951
speech on agrogorods--large im-
proved collective-farm settle-
ments--was reprinted in August
in Izvestia--the part on the
necessity_of further construc-
tion on collective farms to im-
prove the cultural and everyday
conditions of life. More re-
cently, in Pradva, a collective-
farm chairman stated the time
had come for the advanced col-
lectives to pose the question
of radically reconstructing
their villages on the basis of
long-range architectural plans.
Neither of these recent
statements, however, resurrects
the controversial aspect of
Khrushchev's speech,which cal.led
for eliminating small villages
and developing agrogorods. Thus,
if the question of establishing 25X1
agrogorods is being reopened, it
is being done so cautiously.
Prepared by ORR)
SOVIET DILEMMA OVER THE NOBEL PRIZES
The awarding of Nobel
prizes for literature to Rus-
sian poet and novelist Boris
Pasternak and for physics to
atomic scientists P. A. Cheren-
kov, Igor E. Tamm, and I. M.
Frank has posed the Soviet re-
gime with the sharpest dilemma
it has yet faced in its efforts
to increase its respectability
abroad while maintaining dis-
cipline at home. The overriding
need to shelter the Soviet citi-
zen from anti-Soviet attitudes
has forced Moscow to denounce
both the literary award and its
recipient in an attempt to
counteract the increase in popu-
lar interest resulting from the
first Nobel prize award for lit-
erature to a Soviet writer.
Pasternak's prestige in Soviet
literary circles was already
high,and most Soviet readers
were aware of the existence of
the book.' The regime's deci-
sion to permit acceptance of
the coveted physics award was
made only shortly after this
denunciation of Pasternak.
A letter signed by seven
prominent members of the USSR
Academy of Sciences and
published in Pravda on 29 Octo-
ber made a shar-stinction
between the "tendentious nature"
of the Pasternak award, with
its "specific reactionary po-
litical aims" and the "fully
deserved" physics award for
work of "intrinsic scientific
value." Groundwork for such a
distinction is laid in the Great
Soviet Encyclopedia, which notes
that Nobel prizes, especially
in the fields of literature and
work for peace, are "frequently
connected with the political
interests of reactionary cir-
cles."
The announcement on 23
October of the award to Paster-
nak, for his achievements in
lyric poetry and in the field
of the great Russian epic tra-
dition for his first novel,
Doctor Zhivago, evoked the
sharpest Soviet press attack
on a literary work since Stalin's
death. The members of the Nobel
prize committee for literature
were stigmatized by Pravda as
"enemies of democracy" d "ad-
vocates of war," and the award
was denounced by Literary Ga-
zette as a "hostile political
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CURRENT INTELLIGENCE WEEKLY SUMMARY
act directed against the Soviet
state." The novel was described
as a political lampoon to-
tally without literary value,
and its hero as a moral mon-
strosity and resurrected Judas.
Pasternak himself was said to
have "selected the, path of shame
and dishonor" in joining those
who are trying to stop the for-
ward movement of Communism. In
an interview with a Western
press correspondent in March,
Pasternak spoke repeatedly of
his sense of obligation to
"bear witness" as an artist and
to provide a document of his
age, regardless of the cost.
Pasternak personally will go
beyond stern words and the very
real financial pressures which
his expulsion on 27 October
from the USSR Union of Writers
will entail. His first cable
in response to the award, de-
claring himself "immensely
thankful, touched, proud, as-
tonished, abashed," was followed
by a second indicating his
"voluntary" refusal of the
award in view of "the meaning
attributed to this award by the
society in which I live."
Mindful of the danger of
making him a martyr, Pravda
ridiculed "silly rumors of per-
secution," asserting that any
West European or American writer
might envy the life Pasternak
lives, and Literary Gazette
contented itself with consign-
ing him to a fate of "popular
disdain."
How much "popular disdain"
the press attacks will create
among the Soviet reading public
is debatable. Official expres-
$ions of disdain are not even
unanimous within the rest of
the bloc. Although most
the European satellites
of
fell
obediently
into line,
the
Polish Writers' Union
sent
25X1
Pasternak a
message of
con-
gratulations
after the
Soviet
regime's attacks.
It seems unlikely that
disciplinary measures against
EAST GERMANY EXPANDS ARAB-AFRICAN CONTACTS
East Germany is trying to
develop political and trade
contacts among the new countries
of Africa and is also broadening
its existing contacts with the
Arab countries, particularly
with the United Arab Republic,
with the hope of ultimately
securing recognition as a sov-
ereign state. These efforts-
have been accompanied by a con-
tinuing attempt to overcome
West German influence and to
counter Bonn's threats to.br.eak?-
relations..with any .state which
recognizes the Ulbricht regime.
East Germany recently sent
a diplomatic delegation to
Guinea with the apparent immedi-
ate aim of establishing some
form of permanent mission in
that country and with the ulti-
mate hope of gaining full
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CURRENT INTELLIGENCE WEEKLY SUMARY
recognition. The East Germans
probably hope that Marxist-
oriented Premier Toure will be
amenable to relations.
An East German delegation
headed by a high trade official
was reportedly soon to leave
for Ghana for a prolonged stay,
and will offer Ghana a number
of complete indus-
trial installations.
As in Guinea, the es-
tablishment of a com-
mercial foothold
would serve as the
basis for subsequent
efforts to secure
recognition.
East Germany
reportedly plans al-
so to open three or
four other trade mis-
sions in Arab coun-
tries, perhaps staffed
in part by dip-
lomatic personnel.
It hastened to "rec-
ognize" the new re-
gime in Iraq, and
soon after the July
coup sent Paul Wandel,
its ambassador to
China, to Baghdad to
seek diplomatic rec-
O C E A N
missions in the two capitals.
East German Premier Grotewohi,
moreover, has sent Premier
Qasim a letter which may in-
clude an offer of credits or
other economic aid.
The East Germans may also
be considering recognizing the
Algerian provisional government,
following Communist China and
the two Asian satellites, in
order to further its campaign
for recognition by the UAR.
East Germany, like the USSR, is
reported offering "an unlimited
number of scholarships" to
USER ~
30183
OCT013ER 1958
ognition. This mission was ap-
parently not completely success-
ful, however, for Baghdad an-
nounced it would establish
diplomatic relations with all
bloc countries except East
Germany and would maintain only
economic relations with the
latter for the time being.
The two countries signed
a trade agreement on 26 Octo-
ber which includes provisions
for technical cooperation and
the establishment of trade
Tun
e c w#i:dst
- MW
s o wrn a:'; recent int t;<
Algerian students, and in its
propaganda media it has support-
ed the Algerian "liberation"
campaign.
Although East German news-
papers habitually refer to
their Cairo representative as
their "ambassador to the Arab
states," the UAR, in order to
avoid a break with West Germany,
has not yet recognized East
Germany. The countries main-
tain trade offices in each
other's capital and have
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recently signed a trade agreement
under which East Germany has
granted a $20,000,000 long-term
credit to the UAR for complete
industrial plants and equipment.
German society.
(Concurred in by ORR)
ber with the declared purpose
of improving Arab-German friend-
ship and combating the activi-
ties of the counterpart West
ociety was formed on 10 Octo-
Month-long efforts within
the North Atlantic Council (NAC)
to convene a conference of in-
terested parties to the Cyprus
dispute have collapsed with an-
nouncement from Athens that the
Greek Government would not at-
tend such a conference. The
Greek decision to oppose a con-
ference at this time apparently
was largely inspired by the at-
titude of Archbishop Makarios.
Makarios, who had previously
indicated his intention to at-
tend the proposed conference as
representative of the Greek
Cypriot community, may have been
influenced, in turn, by the in-
transigent wing of the Cypriot
Ethnarchy.
Officially, Athens has re-
jected the conference idea be-
cause of "juridical and pro-
cedural" obstacles and because
the results would be "disad-
vantageous to Greek Cypriot in-
terests." Both government lead-
ers and the press have pointed
to what they regard as a lack
of a "conference spirit" in the
NAC discussion. The Greeks and
Makarios particularly emphasize
that their recent renunciation
of enosis has not been matched
by comparable concessions by
Ankara and London. The Greeks
are insisting on abandonment of
partition as a final solution.
In addition, Greek officials,
despite assurances-.to the con-
trary by NATO Secretary General
Spaak, continue to believe that
little attention at the confer-
ence would be given to the ma-
jor Greek interest in an ulti-
mate solution for Cyprus.
Britain and-Turkey, while
insisting that the major atten-
tion of the conference should be
focused on the-British. seven-year
interim plan for Cyprus, did ac-
cept discussion of a final solu-
tion as an item for the agenda.
The wide divergence of views in
Athens and Ankara concerning a
final Cyprus solution,' however,
makes it highly unlikely that a
permanent solution could be
worked out at any conference in
the near future. The sudden
Greek rejection of the confer-
ence idea will probably be fol-
lowed by official explanations
in London and Ankara, charging
Greece with sole responsibility
for failure to convene a Cyprus
conference--a move which will
further embitter Anglo-Greek
and Greek-Turkish relations.
NATO Secretary- General
Spaak is apparently attempting
to keep alive the possibility of
further NATO conciliatory ef-
forts in the Cyprus dispute at
some future date. The major at-
tention of the parties to the
dispute, . however, will now switch
to New York,?where the UN Gen-
eral Assembly is scheduled to
take up the Cyprus issue during
its present session. Greece
will probably try principally
to gain international support
for an independent Cyprus.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 October 1958
Criticism of policies of
the Turkish Government and, in
turn, the government's threats
to curb the Republican People's
party (RPP) are expected to be-
come more intensive during the
session of the Grand National
Assembly which begins on 1 No-
vember.
Prime Minister Menderes'
opponents may exploit the wide-
spread discontent over economic
conditions and the dissatisfac-
tion over the government's con-
duct of foreign affairs and
restrictions on individual free-
doms. Since Menderes' Democrat-
ic party (DP) holds 415 of the
610 legislative seats, the
principal threat to the prime
minister lies in discordant ele-
ments within his-own party
combining against him.
Laws restricting the press,
curtailing academic freedom, and
limiting public political meet-
ings have been strengthened dur-
ing recent years. The prime
minister backed the use of force
in a small town in north-central
Turkey on 17 October where
police clashed with supporters
of the RPP who were seeking to
welcome their party leader,
Ismet Inonu.. Under Inonu's
aggressive leadership, the RPP
has vigorously attacked all these
restrictive measures. Menderes
has responded to this criticism
by alleging that the opposition
is willing to resort to revo-
lutionary methods to obtain power
and by threatening to take stern
measures to protect the country.
For the first time in many
years, the conduct of foreign
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 October 1958
policy probably will be a parti-
san issue in the assembly; last
summer the opposition sought a
full debate on this issue in
the special sessions of the
legislature, but were given only
a brief hearing. While essen-
tially pro-Western, the RPP
sought political advantage by
criticizing the Baghdad Pact
and by demanding a review of
arrangements under which the
United States uses the facili-
ties at Adana air base.
Menderes' opponents can be
expected to exploit widespread
dissatisfaction over rising
prices and shortages. Since
economic conditions may improve
as the stabilization program
made possible by foreign cred-
its takes effect, they will
probably highlight the present
inflation and scarcity of goods
during the coming session.
Faced with criticism on
these issues and with opposi-
tion from within and outside
his party, Menderes may carry
out his threats to take meas-
ures to restrain the RPP.
JAPANESE POLICE LAW CONTROVERSY
Growing popular opposition,
led by the Socialists, to Prime
Minister Kishi's effort to
strengthen the powers of the
Japanese police could weaken the
political position of the con-
servatives and undermine Kishi's
control of the government party.
Protest strikes by left-wing
labor unions are planned for
early November, and the use of
force by the government to
control the situation would
strongly influence the public
against Kishi.
The controversial "Police
Duties Execution Law" now before
the Diet has been designed by
Kishi to cope with the extreme
tactics of leftist organizations
--particularly those of the Gen-
eral Council of Trade Unions
(Sohyo), the Communist-dominated
teachers' union (Nikkyoso), and
the student federation (Zenga-
kiiren). The bill empowers the
police to take into "protective
custody'! individuals suspected
of instigating disruptive
demonstrations,such as sit-down
strikes in government build-
ings.
Police authority to take
preventive action is the central
issue; Kishi insists such
power is necessary to maintain
public order and safety, while
the Socialists foresee a revival
of pre-World War II restrictions
on civil liberties.
The Socialists have gained
the support of large liberal
groups in addition to the usual
leftist organizations by exploit-
ing the widespread popular
sensitivity to excessive use of
police powers arising from bitter
prewar experiences. They already
have strong press support.
Kishi appears determined
to secure passage of the law
despite popular criticism.
Finance Minister Sato, his
brother, stated on 24 October
that the government would use
the defense forces to control
any popular demonstrations.
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PART II NOTES AND. COMMENTS
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 October 1958
The Socialists resorted to
violence in the Diet when the
bill was introduced on 8 Octo-
ber, and the government ap-
parently believes they will
again use extreme tactics, which
would strengthen the govern-
ment's position.
CHINESE COMMUNIST WITHDRAWAL
The Chinese Communists an-
nounced on 26 October that the
last of their troops have been
withdrawn from North Korea.
This move completes on schedule
the withdrawal plan announced
earlier this year. The Chi-
nese are capable, however, of
deploying about six armies--
about 300,000 troops
--to forward areas of
North Korea within
two weeks if rein-
forcements should be
required by the North
Korean Army.
The withdrawal
plan was, first an-
nounced on 18 Febru-
ary in a, joint state-
ment by Chou En-lai
and Kim I1-sung. On
12 March, Peiping
radio announced that
Chinese "volunteer"
forces would be com-
pletely withdrawn
from North Korea by
the end of 1958 and
that the withdrawal
would be completed
in three stages.
Chinese Communist
troops in North Ko-
rea at, that time to-
taled about 300,000
FROM NORTH KOREA COMPLETED
and included five armies--the
1st, 16th, 21st, 23rd and 54th.
The final phase of the withdraw-
al began on 25 September and
involved the ..Chinese Commu-'
nist 1st Army .and. support
Units totaling about 100,000
troops.
NORTH KOREA
118
Selected Order of Battle
No,th Nmea
td n Army grDUD Ca rDa
IIL~~Jl7
n
rt
-
eapua
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.2
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]a
CHINA
H"a
Mnxipo}~n
Y^L?
NORTH
Chengi n
Antung
KOREA
b
p
H. n
g
Hungna
m
.Chongju
SEA OF
JAPAN
KO
REA
/ II
IA
PYONGY G
r / III
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cm n mPO 2
D.aniliLarizad ion.
C7 S-n
VII V
SOUTH
38_
KOREA
SEOL
30 OCTOBER 19'38
?
5.mchok
SEOUL
Wori
Ingh.n
30184 iz
e~ a SUWON ~f lap
SECRET
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CURRENT INTELLIGENCE WEEKLY SUMMARY
It is probable that small
detachments of communications,
liaison, and logistics personnel
will remain in Korea for at
least a short time to take
care of the final details of
the withdrawal. An-:,.,undeter-
mined number of advisory person-
nel may remain for an indefinite
period.
The location of most of the
troops withdrawn from North
Korea is unknown, but
troops
may
have
been
sent
to
Southeast
China.
The redeployment
of
North
Korean Army units to replace
the withdrawn Chinese Communist
armies has resulted in some loss
of defensive depth in the for-
ward areas, with reserve divi-
sions having greater areas of
responsibility. The 334,000-
man North Korean Army is greatly
outnumbered by the South Korean
and the remaining UN forces,
which total about 589,000. This
numerical disparity is offset
to a considerable degree, how-
ever, because the North Korean
Army has developed a powerful
artillery capability and pos-
sesses an air force of at least
535 jet fighters and about 100
jet light bombers. South Korea
has only 98 jet fighters and
no jet bombers. In addition,
the Chinese Communist capabili-
ty to re-enter Korea in force
on short notice assures the
North Koreans of adequate mili-
tary assistance if it should
be required.
PROSPECTS FOR UN STAND-BY PEACE FORCE
The idea of establishing
a permanent UN stand-by peace
force along the lines of the
UN Emergency Force (UNEF) cre-
ated two years ago is likely
to meet with considerable op-
position when it is discussed
by the General Assembly in
early November. The assembly
probably will ask Secretary Gen-
eral Hammarskjold to consult
with member governments about
such a force and report back to
the next session.
Hammarskjold, in a 10 Octo-
ber report on the experience
gained in operating the 5,000-
man UNEF in Gaza, recommended
that any UN police force be
recruited only on an ad hoc
basis after an emergency situa-
tion has arisen. He suggested
a paramilitary force which would
not include troops from the five
permanent members of the Securi-
ty Council. The force would be
sent into a danger area only
with the consent of the country
involved and would strike only
in self-defense. The Security
Council or the General Assembly
would make the final decision
to use the force; ultimate de-
cisions on operations would be
left to the secretary general.
Hammarskjold was criticized
by the USSR for supporting Ameri-
can "imperialism" through US
"Control" of a UN peace force.
On 24 October, a Soviet UN dele-
gate-told the American delega-
tion that the USSR remained
strongly opposed to any UN
force controlled by any organ
other than the'Security Council,
where the USSR has a veto.
Indian and Yugoslav opposition
apparently stems in part from
a long-held view that creation
of a permanent UN peace force
overemphasized the military
aspects of the UN Charter. Both
countries, however, have troops
currently serving in the UNEF.
Recent debates in the as-
sembly's budget committee have
revealed growing sentiment for
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 October 1958
financing UN peace and security
operations by such new means
as voluntary contributions by
the big powers. Costs for UNEF
were assessed by the General
Assembly on the same percent-
age basis as members' regular
contributions to the UN budget,
but only 25 of the 81 UN mem-
SECRET
PART II NOTES AND COMMENTS
bers have paid their 1957 assess-
ments in full. The Soviet
bloc contends that such assess-
ments are illegal. Virtual sub-
sidy of a UN stand-by peace
force by the free-world big
powers would lay it open to the
charge of Western domination.
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CONFIDENTIAL _
SAWWrIon,
CURRENT INTELLIGENCE WEEKLY SUMMARY
30. October 1958
PATTERNS AND PERSPECTIVES
One of the most far-reach-
ing social reorganizations of
modern times is under way in
Communist China, where new
social and economic organiza-
tions called "people's communes"
are being established. Rural
communes are formed by merging
the older collective farms into
larger units, a move in viola-
tion of last fall's central
committee resolution which pro-
vided that the size of collec-
tives should be limited and
then fixed for ten years. The
prototype commune, called the
"Sputnik," was formed last
April, but it was not until
July and August that Peiping
began to give intensive pub-
licity to the subject.
The leadership's motives
for pushing the drive almost
certainly include economic ones
--to increase production and
limit consumption--as well as
political and sociological ones,
to enhance, party control and
foster a "new_ way of life."
Peiping argues that the commune
is better suited to meet pres-
ent demands for more manpower
and investment capital and for
the communalization of daily
living.
The politburo resolution
in late August advised against
"undue haste" in forming com-
munes but, only a month later,
over 90 percent of the nation's
farm households had reportedly
been enrolled. Some 750,000
collectives are said to have
been merged into 23,384 com
munes, and Peiping observes
that the speed and scope of the
movement has exceeded that of
the "high tide" of cooperativiza-
tion in late 1955.
Description
The commune controls not
only agriculture, but industrial,
commercial, cultural, and mil-
itary affairs as well. Although
the People's Daily has noted a
"tendency" to link communes into
"federations" within county
boundaries or to embrace en-
tire counties, the present com-
mune is in general equal in
size to a township, and as such
is much larger than the collec-
tives it replaces. The struc-
ture of the township government
and the commune administration
is identical--they have the
same chief, the same party sec-
retary, and the same people's
congress, and the people's
council of the township is the
administrative committee of the
commune.
Under this committee are
the various commissions--plan-
ning, technology, and supervi-
sion are usually included--and
departments--covering such
fields as agriculture, commerce,
finance, education, and mili-
tary affairs--which actually
run the commune. Under these
in turn are the various produc-
tion teams for industry and
agriculture, which in many
cases are the old collectives
under a new name.
Once organized, the commune
generally takes over all property,
common funds, and reserves of
the collective and some of
the liabilities. The commune
strikes at the remaining vestiges
of private property by absorb-
ing privately held plots, or-
chards, and some domestic ani-
mals.
Early communes began,by ,
paying members on a "wage-plus-
reward" system. This was a
striking innovation, replacing
the twice-yearly-payments in
kind to collective members cal-
culated on the basis of work-
days valued as a portion of col-
lective income. The commune
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CURRENT INTELLIGENCE WEEKLY SUMMARY
member gets a straight monthly
wage in cash. Wage earners in
the commune are classified for
pay purposes into a number of
categories based on physical
power, technique, intensity of
work, and "work attitude."
Bonuses are distributed--usual-
ly to only 40-60 percent of the
members--on the basis of such
criteria as "progressive think-
ing, work enthusiasm, obedience,
love of public property, and
struggle against evil persons."
Those lacking these traits get
no share in some 20-25 percent
of the commune's wages.
More recently, the trend
has been toward the "gradual"
adoption of a "wage-plus-supply"
system, under which members
are provided, in addition to a
wage, "free" staples like rice
or wheat. Chairman Mao has
encouraged the spread of this
system, suggesting that it need
not stop at basic foodstuffs,
but might be broadened to in-
clude other necessities such as
clothing. Some communes have
gone so far as to include lux-
uries in the supply system,
probably on the grounds that
the leadership can easily sup-
press "inappropriate desires."
Peiping has indicated that the
supply aspects of the system
are based on the Marxist prin-
ciple "to each according to his
needs."
Under either system, the
commune member will perhaps
recognize one hang-over from
the past--the fact that the in-
terests of the state come first.
Peiping does not hide the fact
that it expects better mobiliza-
tion of rural capital through
the communes. Their size will
permit the accumulation of a
larger capital fund in one
place. Insofar as production
is increased and consumption re-
duced, the rate of capital for-
mation will be increased. Some
early communes have reported
marked success in this respect.
The Sputnik Commune estimates
that 30 percent of its income
this year will be channeled
into its public fund. This
compares with a national aver-
age of around 20-22 percent.
In the communes, rural
supply and marketing coopera-
tives become departments which,
under the leadership of state
commercial departments, buy
and sell for the commune and
set up branch sales--and pre-
sumably purchasing--centers
throughout the commune. Old
credit cooperatives become cred-
it departments. Under the pro-
fessional leadership of the
state bank, they accept deposits
from members, regulate the
floating capital of the commune,
extend loans to production teams
on behalf of the state bank,
and settle noncash accounts with
other communes.
The authorities in Pei-
ping have not yet come to grips
with all the financial problems
this rural reorganization will
bring. The first notable pub-
lic commentary on this aspect
of the communes was in a "letter"
from the finance minister to
the theoretical journal Red Flag.
He noted that the communes w1ll
inevitably bring a decrease in
commodity exchange, and that
the present tax structure, which
leans heavily on revenues ex-
tracted from this exchange, is
no longer "suitable." He of-
fered no solution in his letter.
However, the Sputnik Commune
says it has taken over the re-
sponsibility of paying an "over-
all tax" to the state, including
taxes on agriculture, industry,
and trade. It has also assumed
responsibility for delivering
agricultural products to the
state in accordance with regula-
tions.
The communes'will help
further the regime's demands
for fuller and better use of
rural labor, both men and women.
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30 October 1958
Labor will be organized along
military lines and will tackle
its tasks as an "army fights a
battle." With its centralized
control of the township's labor
force, the commune can plan
larger projects than were pos-
sible under the old system and
marshal the labor force nec-
essary to carry them out. It
will be possible to shift labor
more freely between agriculture
and industry.
"New Way of Life"
The social changes the_icom-
munes bring to Chinese village
life will, in the long run,
probably far outweigh the eco-
nomic. Plainly, the leaders
in Peiping intend to create
what Red Flag has called a "new
way o?-Ti?-e"-through the or-
ganization of communal mess
balls, housing, nurseries,
schools, and other "amenities."
Communal mess halls have
so far received more stress
than other aspects of the new
life. Peiping has pointed out
that not only do they help re-
strict "excess" consumption--
one mess hall entirely elimi-
nated "excess" consumption three
days after it opened--but also
they free the housewife to work
in field or factory. By speed-
ing up the eating process, they
permit the workers to spend
more time on the job; one com-
mune reported that each person
put in three extra hours a day
in the fields after its mess
hall opened. Finally, polit-
ical cadres and activists have
noted the advantage of having'
the whole production unit as-
sembled in one place to receive
"instructions and explanations."
Party Secretary General
Teng Hsiao-ping has publicly
stated the regime's intention
eventually to relocate all
housing. "Residential areas in
rural regions," he said, "will
come to look like beautiful
cities." The regime has al-
ready begun what may be a slow
process of tearing down old
houses and using the materials
to build large, barracks-like
dwellings which will be home
to the communalized Chinese
peasant. This aspect, together
with the communal mess halls,
will bring him a highly cellular
existence. He will be inex-
tricably tied to his particular
production unit, and will work,
sleep, eat, study, and relax
with his co-workers. There
will be no place to hide.
The regime has suggested
that the breakup of the tradi-
tional Chinese family is a.
primary objective of the com-
munal system, which seems well
designed to achieve this. Wages
are being paid directly to the
individual wage earner rather
than to the head of the house-
hold. Husband and wife may be
separated by work assignments
in distant parts of the commune.
Children are in communal nurs-
eries or schools, and the re-
gime has strongly indicated its
preference that these should
be run as full-time boarding
installations.
At one school operated in
this manner, it is said that
the children "no longer think
about their homes." Even when
the family is reunited,, it
will most likely be at a com-
munal meal, in a communal bar-
racks, or at a communal meet-
ing. This destruction of the
old patriarchal Chinese family
will not come easy for the Com-
munists, especially in South
China, where the family and the
family goods are especially
well entrenched, and Peiping
admits that the family probably
will exist for a "long time."
Measures such as these
seem designed also to facilitate.
the total regimentation of all
Chinese behind the regime's
programs and their complete sub-
mission to its authority. There
will be a further extension of
an already pervasive politer,
ical control: An ithportant
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30- October 1958
instrumentality of this will
be the commune's militia, only
a small and rigidly select part
of which will be armed. It
will serve as the state's in-
ternal security police in rural
areas.
An ancillary effect will
possibly be a drop in the rate
of population growth, which
last year reached 2.5 percent.
The brake which these social
factors put on population growth
will be in addition to what-
ever can be achieved through
birth control techniques such
as contraception, abortion,
and sterilization.
Dispersion
The Chinese Communists
have frequently suggested that
in the event of a wholesale
nuclear war the country with
the greatest and most widespread
population will stand the best
chance for survival as a nation-
al unit. Both Mao Tse-tung and
Chu Te have spoken of the need
to have "relatively complete
industrial systems" providing
diversified goods in various
parts of the country. The com-
mune will emerge as an almost
self-contained unit with its
own administration, agriculture,
industry, education, and mili-
tary system. These units might
well reduce the vulnerability
of the local control structure
and permit it to continue even
when cut off from central au-
thority.
Recent statements by top
leaders make it plain that
cities and industrial regions
are expected to follow the ex-
ample of their rural cousins.
Some months ago, the press cited
instances of the formation of
urban collectives to release
women from the "burden" of
housework for work in mills and
factories. Communal kitchens
and nurseries followed. Then,
in September, Chairman Mao di-
rected that large plants like
the Wuhan Iron and Steel Works
should gradually turn themselves
into integrated enterprises
which turn out a variety of in-
dustrial goods and embrace agri-
culture, exchange, culture, and
military affairs.
Teng Hsiao-ping, while on
a recent tour in the northeast,
listened to reports on experi-
mental work being done there on
urban communes. Applauding the
idea, he encouraged the city
of Ssuping--about 140,000--to
go ahead with the organization
of such a city-wide commune.
More recently the People's
Daily, commenting that the old
social life in cities, factories,
and mining districts is "in-
compatible" with current needs,
approved the "growing pressure"
for the establishment of urban
communes. It called attention
to the "readjustment" of work-
ers' housing at a coal mining
site in Shansi, where the hous-
ing has been reallocated on the
basis of production teams and
their accompanying party and
administrative superstructure.
Widespread adoption of this
step, the daily argued, will
"drastically improve" the re-
lations between the leaders and
the masses, free workers' de-
pendents of "burdensome" house-
work, rid the teams of "unde-
sirable characters," and lead
to rapid production increases.
Such a step, the daily con-
cluded, must be taken "sooner
or later."
Some non-Communist observ-
ers: have reported that Chinese
peasants are "cheerfully" ac-
cepting communal life--not an
entirely unexpected development
at this early stage in the pro-
gram. Conditioned to submitting
to the will of the state by a
harsh series of "counterrevolu-
tionary" campaigns during the
first years of the regime, the
populace was further prepared
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for communalization by the re-
cently concluded "rectification"
campaign of 1957-58. However,
there have been hints in the
Communist press that the program
has met with some resistance.
Obviously a number of very
pressing problems will follow
from this far-reaching social
reorganization. Some have al-
ready begun to crop up, includ-
ing a problem which has plagued
--but not prevented--earlier
reforms introduced by Peiping.
This is the perennial problem
of the comparatively well-to-do
peasant.
Like the collective system
before it, the commune in effect
penalizes the more efficient
producers by taking all but a
bare minimum away from him. In
the case of communes, the prob-
lem is magnified since now it
is entire villages or coopera-
tives which have to sustain the
less efficient ones. It is
questionable how long Peiping
can go on penalizing its better
farmers without destroying their
incentive to excel.
The system certainly con-
centrates tremendous power over
details of daily life in the
hands of a few. Cases of re-
sentment have already arisen in
the assignment of work grades
and wages. The loss of pri-
vate plots, orchards, livestock,
fowl, and other holdings, as
well as of house and home will
of course not please everyone.
The degrading of the peasant
from the status of part-owner
to hired hand will not be pop-
ular, nor will the introduction
of an almost monastic way of
live, with hard work, little
food, strict military discipline,
and only two days off a month.
On the other hand, most
peasants may be willing to ac-
cept communal living for the
time being. Accustomed as they
are to very little, they may
welcome the security of guar-
anteed food, shelter, and cloth-
ing, as well as provisions for
medical care, education, and
entertainment. It is probably
the breakup of the family sys-
tem that will become the crucial
issue for the Communists.
Economically, it is doubt-
ful that the mere reorganization
will of itself have any great
effect on agricultural output.
It will bring greater intensity
of labor, but the regime has
certainly heavily exploited
this aspect in the past. Bene-
fits will accrue from the bet-
ter maneuverability of labor
in the communes and the larger
capital funds made possible by
the size of the commune. Some
assistance can be expected in
the furthering of advanced farm-
ing techniques, but large-scale
farming will still have to wait
for Chinese industry to produce
the needed machinery.
Small-scale industry, which
the communes will in many
cases be taking over, is expected
to add significantly to nation-
al output--more so in quantity
than in quality--but this is
the fruit of another program.
The full burden of the com-
munal status will probably be
felt only after some years. The
communes constitute Mao Tse-
tung's greatest gamble, and
there seems at least a possibil-
ity that this time he has asked
more of the human material than
it can stand, and that there
will eventually be an explosion.
International Significance
Peiping is claiming that
communes will provide China
with a good form of organization
to speed up socialist construc-
tion and the transition to Com-
munism. Such statements seem
to imply that Peiping, while
still engaged in "building so-
cialism,'' is already taking
steps along the road to Commu-
nism and is thus approaching
the status of the Soviet Union.
In general, Peiping gives the
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impression that the advance to
Communism is a long-range goal,
stating, for instance, in the
authoritative Red Flag that it
is not approprTte to "strain"
to advance from socialism to
its higher phase. At times,
though, Peiping has sought to
give the impression that, the
"transition to Communism" is
much nearer.
The Chinese Communists are
presenting Mao Tse-tung's con-
cept of the commune as a crea-
tive development of Marx and
Engels, citing specifically the
last two points of the Commu-
nist Manifesto: "combine agri-
culture and industry and facili-
tate the gradual elimination of
distinction between town and
country"; and "combine educa-
tion and material production."
In outlining a specific way of
life under Communism, the-Chi-
nese, although basing it on ac-
(Prepared joint-
The Soviet leaders proba-
bly view the Geneva talks on a
nuclear test-cessation agree-
ment, opening on 31 October, as
the climax of their intensive
efforts over the past 'three
years to make this the central
issue in the East-West disarma-
ment debate. The USSR, however,
faces the severest test of its
pose as the world's principal
advocate of halting nuclear
tests. The announcement on 22
August by the United States and
Britain of a conditional one-
year suspension of tests begin-
ning on 31 October has confront-
ed Moscow with a difficult chal-
lenge to its long-standing at-
tempts to blame the West for
failure to agree on a test ban.
Soviet maneuvers such as
the unilateral test suspension
last March and concessions to
ensure the success of last sum-
mer's Geneva technical talks (ona
test-detection system have been
based on the assumption that
the United States and Britain,
in a showdown,could be expected
to reject any agreement to halt
tests which was not linked to
progress on other aspects of
disarmament. Moscow's succes-
sive proposals, therefore, have
been aimed at increasing pres-
sure on the West to accept an
unconditional test ban by ap-
pearing to meet Western objec-
tions to the USSR's terms.
In view of this pattern of
Soviet policy, the Soviet nego-
tiators at Geneva probably will
concentrate on discrediting the
American and British position;
this, makes an extension of their
one-year test suspension con-
tingent on the installation of
an effective inspection system
and satisfactory progress in
reaching agreement on and in
implementing other substantial
arms control measures.
SECRET
cepted dogma, have advanced be-
yond Soviet theoreticians. The
apparent Soviet coolness to the
idea is reflected in Moscow's
lack of comment.
Aside from doctrinal con-
siderations, Moscow may also
be concerned over the effect of
the Chinese communes on the Eu-
ropeansatellites., The Yugo-
slavs have characterized com-
munes as a combination of Stalin-
ism and feudalism and have em-
phasized Peiping's presentation
of them as the basic organiza-
tional form :of coming Communist
society in China.. .Eastern :?
European Communists have re-
portedly been taken aback-
by . Peiping's assertions-that 25X1
this is what life under
Communism will be like.
ly with ORR)
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 October 1958
The Russians probably will
press for an immediate "politi-
cal decision" on an uncondition-
al and permanent test ban, while
insisting that elaboration of
an inspection system--a Western
condition for agreement--can be
discussed subsequently. While
the Soviet delegates probably
will be prepared to discuss con-
trols, they will seek to mini-
mize and defer this problem by
pointing out that the Geneva
technical experts already have
unanimously agreed that a con-
trol system is "possible and
feasible."
The USSR's reaction to the
Anglo-American announcement of
22 August and its proposals for
a test-cessation agreement sug-
gest that the Soviet leaders
continue to believe they have
more to gain by constantly seek-
ing to make the West appear re-
sponsible for blocking a test-
cessation agreement than by as-
suming the far-reaching commit-
ments involved in a test ban en-
forced by a control system ac-
ceptable to Washington and Lon-
don. This line of action re-
flects Moscow's basic estimate
that the nuclear stalemate will
continue indefinitely and that
the psychological aspects will
dominate the East-West struggle.
In this situation, the
USSR's fundamental aim. is to
stigmatize nuclear weapons by
all the diplomatic and propa-
ganda means at its disposal,
thereby inhibiting the West's
willingness to use them, but
without sacrificing Soviet free-
dom of action by accepting the
restraints that would be imposed
by an effective control system.
Soviet Policy Since 1957
Moscow's maneuvers over the
past year to force a clear-cut
Showdown with the West on the
issue of a test ban separate
from all other aspects of dis-
armament have centered on under-
cutting the West's contention
that Soviet opposition to effec-
tive controls is the principal
barrier to a termination of
tests. The USSR's proposal in
the London talks on 14 June 1957
for a two- to three-year sus-
pension under international con-
trol was the initial attack on
what Moscow regarded as the most
vulnerable point in Western po-
sition.
Before introducing this
ostensible concession, however,
the Russians had carefully probed
the firmness of the United States
position, which held that a
test ban could not be separated
from other aspects of the nu-
clear problem. The American
delegate at the talks stated
that the United States would
not agree to a temporary cessa-
tion except as part of an agree-
ment including a commitment to
a cutoff date on the production
of fissionable material for nu-
clear weapons. This apparently
convinced the Soviet leaders
that the Western powers would
not accept any formula for an
unconditional ban.
In his 31 March 1958 speech
to the Supreme Soviet, Foreign
Minister Gromyko stated that
the USSR's proposal--for a two-
to three-year suspension enforced
by an international commission
with control posts in the USSR,
the United States, Britain, and
the Pacific area, including Aus-
tralia--was intended "to pre-
vent the opponents of a cessa-
tion of tests from subterfuges."
He declared that after the West
had rejected this proposal, "it
became clear... that this was
not at all a matter of control
but of stubborn unwillingness
of certain circles of the West-
ern powers to limit the nuclear
arms race."
USSR's Unilateral Suspension
The unilateral suspension
of Soviet tests decreed by the
Supreme Soviet on 31 March 1958
was the boldest stroke in Mos-
cow's long campaign to force
the Western powers to take an
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CURRENT INTELLIGENCE WEEKLY SUMMARY
unequivocal stand on the test-
ban issue and to arouse world-
wide resentment toward American
and British nuclear policies.
This move was timed to place
the forthcoming Western tests
in the worst possible propaganda
light. The Soviet leaders took
a calculated risk that-they
could unilaterally suspend tests
for some time without incurring
serious military or technologi-
cal disadvantages. They rea-
soned they would be free to re-
sume testing at a date of their
choosing because the United
States and Britain would not
counter with proposals which
would call the Soviet bluff.
The Supreme Soviet deci-
sion carefully paved the way
for a resumption of Soviet test-
ing by stipulating that should
the United States and Britain
continue:: their tests, the USSR
would "act freely in the ques-
tion of testing-bearing-in
mind the interests of the se
curity of the Soviet Union."
The next move in the Soviet
campaign to heighten pressures
on the West to take an unequivo-
cal stand on an unconditional
test ban was Khrushchev's ac-
ceptance on 9 May 1958 of Presi-
dent Eisenhower's earlier pro-
posals for technical talks on
methods of detecting violations
of a possible test-cessation
agreement. This step consti-
tuted a marked departure from
the USSR's previous insistence
that all negotiations on inter-
national control of any aspect
of disarmament could come only
after agreements had been con-
cluded in principle.
This reversal of position
was partly motivated by the need
to offset the damaging effects
of Moscow's abortive charges of
US nuclear bomber flights over
the Arctic toward Soviet fron-
tiers. Moscow had called an
emergency meeting of the UN Se-
curity Council in which the So-
viet charge backfired badly,
and the Soviet delegate was ma-
neuvered into having to veto
an American proposal for an in-
ternational inspection zone in
the Arctic to prevent surprise
attack.
During the exchange of
notes between Moscow and Wash-
ington on plans for the techni-
cal talks, the USSR sought in-
creasingly to extract from the
United States at least a tacit
commitment that the talks must
lead to an agreement to end
tests. The Soviet note of 13
June attempted to establish a
link between the technical dis-
cussions and a decision to end
tests by stating that the USSR
"proceeds from the assumption...
that as a result (of the quick
conclusion of the talks) agree-
ment will be reached on the sus-
pension of nuclear weapons tests
by all powers possessing-~them."
On 25 June, Moscow sent a
further note which charged that,
by failing to agree that the
talks must result in a test ban,
the United States was "dooming
the conference to failure be-
forehand," The note implied a
threat to boycott the meeting
unless the United States "con-
firmed" that the talks "must
be subordinated" to the task
of achieving a test-cessation
agreement.
This overnight reversal:,
which may have resulted from
Khrushchev's personal interven-
tion, wat an attempt to wring
from the United States a last-
minute acceptance of the prin-
ciple of an unconditional test
ban, or failing that, to delay
the talks and thereby generate
new pressures on Washington to
change its position. But the
USSR backed down and sent its
delegation to Geneva after the
United States had reaffirmed
its position and had announced
that the American scientists
were proceeding as scheduled.
It soon became apparent
that the USSR wanted the talks
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 October 1958
to succeed and was making con-
siderable concessions to achieve
this end. The American chair-
man of the Western delegation
observed on 25 July that, in
every important case, the So-
viet bloc delegates had accept-
ed the major elements of the
Western position, agreeing to
points which the Western scien-
tists did not believe at the
outset they would accept.
These unusually concilia-
tory tactics were governed by
Moscow's expectation that an
agreement on test-cessation
methods would create heavy pres-
sure on the West to accept a
separate and. unconditional test
ban. The Russians believed
that any Western failure to fol-
low through on a technical agree-
ment would place the United
States and Britain in an ex-
tremely difficult position and
appear to confirm Soviet charges
that Western insistence on con-
trol was merely a means of evad-
ing a test ban.
Subsequent statements by
Soviet leaders strongly suggest
that the concessions at Geneva,
like Moscow's proposal of June
1957 for control posts to en-
force a two- to three-year test
suspension, were aimed at fur-
ther discrediting the Western
claim that the USSR was respon-
sible for failure to reach agree-
ment because of its opposition
to an effective control system.
Khrushchev declared on 30 Au-
gust that the Geneva agreement
had "finally buried the legend
about the alleged impossibility
of control over the observance
of an agreement to end nuclear
tests." He underscored the
USSR's acceptance of the Geneva
recommendations and stated,
"There can now be no-excuses
or justifications for refusing
to end at once and everywhere
the experiments with nuclear
weapons."
US-UK Suspension
The announcement by the
United States and Britain on
22 August 1958 of a conditional
one-year suspension of testing
seems to have caught the Soviet
leaders off balance. They im-
mediately recognized this as a
major challenge to their strate-
gy. The Western initiative
greatly complicated Moscow's
plans for exploiting the Geneva
technical agreement to embarrass
Washington and London.
Khrushchev's reply came
on 30 August in a Pravda inter-
view in which he sought to dis-
credit the announcement as just
"another attempt to lull the
vigilance of the people showing
legitimate concern at the con-
tinuing nuclear tests carried
out by the United States and
Britain on an ever larger scale."
He insisted that the announce-
ment did not really change the
Western position and that Wash-
ington and London "are still
looking for loopholes to avoid
an instant suspension of tests."
He dismissed the proposal to
stop testing for, one year as of
"no importance whatsoever, for
a year is precisely the period
necessary for preparing another
series of nuclear tests."
As for the Western propos-
al to extend the suspension
one year at a time,Khrushchev
charged that the United States
and Britain "hedge this agree-
ment with such reservations and
conditions that it becomes clear
they have no real intention of
renouncing further tests of nu-
clear weapons."
Khrushchev then moved to
bolster the Soviet position for
a major showdown in the negotia-
tions which the United States
and Britain proposed for 31 Oc-
tober. His most immediate con-
cern was to counter any impres-
sion that their tests last sum-
mer had given the Western pow-
ers a commanding lead in the
nuclear race. His great sensi-
tivity on this point was reflect-,
ed In his charge that the West-
ern powers had attempted to ex-
ploit the Soviet moratorium
to gain "unilateral military
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 October 1958
advantages for themselves."
After recalling that the Supreme
Soviet decision of 31 March had
stipulated that if the other
powers continued their tests,
the USSR would be "free to act
as it sees fit," Khrushchev de-
clared that the Western tests
"relieve the Soviet Union of
the obligation it had assumed
unilaterally."
Test Resumption
On 11 September, Moscow
announced that Northern Sea ma-
neuvers would be held from 20
September to 25 October, "with
actual use of various types of
modern weapons." Soviet propa-
gandists poured out a growing
stream of arguments designed to
explain and justify the forth-
coming test resumption. Gro-
myko sought to offset the ad-
verse effects of the new tests
by calling on the UN General As-
sembly on 16 September to en-
dorse a "universal cessation"
of tests "for all time."
On 1 October, the day after
the USSR resumed testing, Mos-
cow sent notes to the United
States and Britain proposing
that the Geneva conference be
held at the foreign ministers'
level--a move timed to create
the impression of a new Soviet
"initiative" and to demonstrate
the importance the .USSR at-
taches to these talks. Gromyko's
7 October press conference state-
ment that the Soviet Union "has
all grounds to discontinue its
tests only after it conducts
the same number of such tests
as were held by the United States
and Britain" since 31 March was
intended to underscore the ra-
tionale for resuming tests. Depu-
ty Foreign Minister Zorin on 27
October reiterated Gromyko's
stand in rejecting the Western
proposal for a gone-year ban'
and reserved: the right to
match the number of Western
tests since 31 March if the
Geneva talks fail.
Moscow's negotiating tac-
tics probably will be to make
its demand for an immediate,
permanent, and unconditional
test cessation the key issue.
The Soviet delegate will con-
tend that the first order of
business must be to conclude a
definitive "political" agreement
on test cessation. He probably
will take the position that the
Geneva technical talks have
demonstrated the feasibility of
an effective control system and
that therefore there should be
no difficulty in spelling out
such details as the nature of
the supervisory body, the compo-
sition of inspection teams,
location of control posts, and
the immunities and privileges
of inspection personnel after
the basic political agreement
has been signed.
In his 30 August Pravda
interview, Khrushchev defined
the purpose of the conference
as being "to conclude an agree-
ment to end for all time tests
of atomic and hydrogen weapons
of all kinds by all states."
He made no mention of the con-
trol problem, dismissing its
importance with the statement:
"Considering the positive re-
sults of the Geneva conference
of experts,, these negotiations
could be brought to a conclusion
within two or three weeks."
If in the course of the
Geneva conference the Soviet
leaders conclude that the United
States and Britain will not
abandon their position making
the extension of a one-year sus-
pension contingent on installa-
tion of an effective control
system and "satisfactory progress"
toward agreement on such meas-
ures as limitation and reduction
of fissionable material for
weapons purposes, they may drop
their demand for a "permanent"
cessation and reintroduce the
June 1957 plan for a two- to
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 October 1958
three-year suspension under in-
ternational control.
Prevention of Surprise Attack
The USSR apparently will
seek to establish a close link
between the technical talks on
measures to prevent surprise
attack--scheduled to open in
Geneva on 10 November--and the
conference on nuclear-test ces-
sation. Soviet notes have
stressed that any agreement on
surprise attack must be made
contingent on "definite steps"
in the disarmament field, par-
ticularly a test-cessation
agreement. Moscow's note of 15
September explicitly rejected
the American view that surprise-
attack talks should take place
without prejudice to the posi-
tions of the two governments
on the timing and interdepend-
ence of the various aspects of
disarmament. The fact that the
test-cessation conference will
open just ten days before the
surprise-attack talks in the
same city will facilitate So-
viet efforts to underline the
close relationship between
these questions.
Moscow's acceptance on 2
July of President Eisenhower's
earlier proposals for technical
talks on the surprise-attack
problem probably was motivated
primarily by the need to over-
come the adverse effects of
the abortive Soviet charges
against alleged Arctic flights
of American nuclear bombers
and the executions of the lead-
ers of the Hungarian revolt
announced in mid-June. Khru-
shchev's letter took the line
that the surprise-attack prob-
lem had become "especially
acute" because of the bomber
flights.
Soviet tactics at the con-
ference probably will be cen-
tered on repeating previous
Soviet schemes calling for the
establishment of control posts
at railway junctions, large
ports, and highways, and re-
ciprocal aerial inspection in
"zones of concentration of
military forces" in central Eu-
rope and in equal portions of the
Soviet Far last and the western
United States. Soviet'negotia-
tors can also be expected to
stress that solution of the
surprise-attack problem is bound
up with the settlement of other
questions, such as renunciation
of the use of nuclear weapons
and missiles, creatlbx of. _a atom-
free zone in Europe, a nonag-
gression pact between NATO and
Warsaw Pact members, abolition
of foreign bases, and reduction
of foreign forces in Germany
and other European states.
OSI)
Concurred in by 25X1
THE ASWAN HIGH DAM AND THE NILE WATERS QUESTION
Soviet Premier Khrushchev's
offer to lend the UAR the equiv-
alent of up to $100,000,000 to-
ward construction of the first
stage of the Aswan High Dam
should enable Cairo to make a
substantial start on the proj-
ect--the estimated total cost
of which exceeds $1.3 billion.
The idea of the Aswan High Dam
--officially known as the Sadd
al-Aali project--as a major
economic scheme designed to
provide at least a partial solu-
tion to Egypt's economic prob-
lems has long been a key point
of President Nasir's domestic
policy.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Earlier attempts to begin
construction have faced two ma-
jor difficulties. The magni-
tude of the project precludes
its construction from wholly
Egyptian resources and requires
foreign aid or credit of up to
$400,000,000. An earlier fi-
nancing offer involving a $200,-
000,000 loan from the World
Bank and a $70,000,000 grant
from the United States and Brit-
ain was withdrawn in July 1956.
Subsequent Egyptian claims that
Suez Canal revenues would en-
able the country to begin con-
struction were largely propa-
ganda.
A second major block has
been the lack of an agreement
between Egypt and the other
seven riparian powers, espe-
cially the Sudan, on a division
of the Nile waters to be stored
by the dam. The numerous Egyp-
tian-Sudanese conferences on
this question have all ended
without agreement, and the is-
sue has become a political
football. Cairo has accused
Sudanese Prime Minister Khalil
of using the issue for politi-
cal gain--which he has, since
it is the one issue which unites
all Sudanese elements, even the
most pro-UAR, against what they
believe to be excessive Egyp-
tian demands. Cairo also is
using the Sudan's refusal to
renegotiate the 1929 Nile Waters
Agreement as a device to go
ahead with new works without
Khartoum's consent.
Khartoum, with some mis-
givings, has agreed in princi-
ple to the Sadd al-Aali project,
but not to the Egyptian plan
for sharing the surplus water;
it attaches a distribution plan
of its own as a condition to
acceptance of actual construc-
tion. The absence of a riparian
agreement has been an effective
bar to international financing
of works on the Nile both in
Egypt and the Sudan, but the
lack of such an agreement may
not halt the bloc's willingness
to implement its offer.
SAUDI
ARABIA
lake ~
Ruda l/
Lake Albert _11
BELGIAN JGAA KENYA
CONGO Entebbe
The bitter disputes which
are likely to occur should Egypt
begin construction without a
division-of-waters agreement
might work to Moscow's advantage
by pitting the Kremlin-supported
Cairo regime, which in turn could
probably be assured of general
Arab League approval, against a
Western-supported "recalcitrant"
Sudan. President Nasir recent-
ly stated that Egypt intended
to go ahead with the dam regard-
less of the Sudan's views.
The Sadd al-Aali Project
According to preliminary
estimates of the International
Bank for Reconstruction and
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THE NILE RIVER
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Development, the Aswan High Dam
project is technically sound
and on completion--16 years for
the entire project and 10 years
for the dam itself--would in-
crease Egypt's irrigated area
by 1,349,400 acres--from 6,-
383,700 to 7,733,100--and con-
vert to perennial irrigation
the 695,460 acres of land nor-
mally irrigated by flooding.
The ultimate result, according
to Egyptian estimates, would
be an increase in agricultural
income of about 45 percent.
Initially, the dam would also
supply about 720,000 kilowatts
of power--almost double this
amount later--which is about
45 percent more than the present
total Egyptian electric genera-
tion. Even if the dam is con-
structed, however, and all
planned benefits realized, it
would do little more than to
enable Egypt to maintain its
extremely low standard of living.
Sudanese agreement to con-
struction would appear essen-
tial, since the reservoir created
by the dam would extend 342
miles upriver)-- including 125
Miles into the Sudan. This
flooding would.displace-an esti-
mated 50,000 Sudanese now living
in the Wadi Halfa district.
Moscow's $100,000,000 loan
offer--payable in 12 years at
2.5 percent, probably beginning
in four years--is not large
compared with the original West-
ern proposal of $270,000,000,
including an outright grant of
$70,000,000. Nevertheless, it
will allow Egypt to make sub-
stantial progress on construct-
ing the dam itself. The imme-
diate gain for the USSR will be
the prestige it acquires in the
Arab world for making a start
on the project possible.
The $1.3 billion estimated
in 1955 to be the total cost of
the project now,is probably in-
adequate, since world prices of
the necessary imported materi-
als, as well as the local Egyp-
tian costs, have been steadily
rising. Egypt's ability to fi-
nance the local costs has also
deteriorated. Deficit financ-
ing by the present regime has
raised the government's indebt-
edness about 180 percent, from
$266,000,000 at the beginning
of 1955 to $740,000,000 in July
1958.
The Soviet credit will prob-
ably he used to construct the
dam itself rather than be spread
over the entire project. Mos-
cow undoubtedly will exploit
this as a monument to Soviet
generosity and as evidence of
its "unselfish" assistance to
underdeveloped countries. The
total cost of the dam proper is
about $316,000,000, of which
ESTIMATED COST OF THE AS WAN HIGH
(MILLION DOLLARS)
FOREIGN
LOCAL
EXCHANGE
CURRENCY
TOTAL
COST
COST
High dam and civil works
149
167
316
Power equipment and
transmission facilities
126
39
165
Irrigation and related
facilities
72
225
297
Indemnities and resettlement
6
23
29
Interest during construction
37
E3
120
TOTAL PUBLIC INVEST-
390
337
947
MENT IN DAM PROJECT
Private or public investments
in reclamation and housing
393
393
TOTAL
390
930
1,32o
With its accept-
ance of this Soviet
30 OCTOBER 1958 aid offer, the United
Arab Republic will
SECRET
$149,000,000 is re-
quired in foreign ex-
change--that is, in
imported goods. The
remaining $167,000,000
is needed in local
currency. According
to present reliable
estimates, $100,000,-
000 would cover the
necessary foreign-ex-
change costs of the
dam for the next six
years; an additional
$49,000,000 would be
needed for the re-
maining four years of
construction.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
have been allocated approximate-
ly half the $2.1 billion in
military and economic aid ex-
tended by the Sino-Soviet bloc
to non-Communist countries.
Nile Waters Question
In the conflict between
Egypt and the Sudan over the
disposition of the waters of
the Nile, Cairo claims rights
to a greater portion of water
than Khartoum is willing to
acknowledge and wants a pro-
portionately larger share of
any surplus resulting from the
construction of new works on
the river. The Sudan is not
immediately in need of more
water, but desires a final de-
termination of the share each
nation is to receive before any
new construction begins in or-
der to forestall Egypt's de
facto acquisition of additional
water rights. The dispute has
worsened in recent weeks, with
Khartoum refusing to be bound
by the 1929 agreement and Cairo
planning to go ahead with new
works without agreement from
the Sudan.
Egypt's Position
Egypt insists that the av-
erage flow of water past Aswan
is only 80 billion cubic meters
a year rather than 84 billion
as claimed by the Sudan. A
conservative estimate of the
average flow is 83 billion.
Egypt also claims 51 bil-
lion cubic meters in existing
water rights, 3 billion cubic
meters more than Khartoum ac-
cepts. Based on the amount of
irrigated
land,
at
8,000
cubic
meters per
year
per
acre,
the
figure would be 48.21 billion.
Neither country disagrees with
the Sudan's existing rights of
some 4 billion cubic meters.
Egypt's claim to an even-
tual total of 62 billion cubic
meters would be more than ad-
equate for all irrigation pur-
poses. If the maximum amount--
7,785,000 acres--of land in
Egypt were irrigated, approxi-
mately 58.25 billion cubic
meters of water would be re-
quired. The Sudan is willing
AVERAGE NILE DISCHARGE AT ASWAN
Figures based on selected periods
(BILLIONS OF CUBIC METERS)
103
Includes
maximun
flood years
Excludes
maximum
flood years
Includes
maximum and
mimimum
flood years
1913-
1914
LOWEST
YEAR
to allow 49 billion cubic me-
ters as Egypt's ultimate share.
The Sudan's Position
Sudanese engineers say
that 5,500,000 acres of land
are suitable for immediate de-
velopment: 3,000,000 with a
gravity irrigation system in
the Gezira between the White
Nile and the Blue Nile south of
Khartoum; 1,500,000 acres with
pump irrigation systems on the
Niles; 500,000 to be watered
from the Atbara River; and 500,-
000 to be watered from the pro-
posed Jonglei Canal. The Su-
dan claims the right to irri-
gate this area at the same rate
as Egypt--8,000 cubic meters of
water an acre per year. The
total figure the Sudan wants
would thus be 44 billion cubic
meters, the equivalent, because
of evaporation loss, of 35 bil-
lion cubic meters at Aswan.
In defense of its position,
Khartoum cites a study made by
an American engineer, H. L.
Cory, which was published by
the Egyptian Government in 1920.
Cory would have given 61 bil-
lion cubic meters to Egypt and
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 October 1958
23 billion to the Sudan. Now,
however, the Sudan argues that
because of its rapid develop-
ment, this figure is too low
and it needs 31 billion cubic
meters more than it now re-
ceives. Khartoum, admitting
that it would be a number of
years before it could use the
full amount it is asking, in-
sists that water rights be de-
termined before any diversion
project--such as the Aswan High
Dam--is built and Egypt ac-
quires more water rights.
summer, when the natural river
flow is used almost exclusively
by Egypt. The Gebel Aulia Dam
--completed in 1937 with a res-
ervoir capacity of 2.5 billion
cubic meters--was built solely
to irrigate Egyptian land.
Proposed Development Projects
All existing works in the
Nile system are designed princi-
84 84
ffm 80 11
NILE WATER SUPPLY & ALLOCATION
(BILLIONS OF CUBIC METERS)*
El SUDANESE CLAIMS EGYPTIAN CLAIMS
84
EVAPORATION
AT HIGH
DAM
EGYPT'S
SHARE
SUDAN'S
SHARE
AFTER AFTER
DEVELOPMENT CONSTRUCTION
OF NILE OF ASWAN
BASIN DAM
SUDAN
A
AMOUNT OF TOTAL
WATER EXISTING
AVAILABLE WATER RIGHTS
UNALLOCATED
SURPLUS
SUDAN'S
SHARE OF
SURPLUS
Existing Works
Egypt has six barrages but
only one dam--the Aswan Dam
built in 1902 with a present
reservoir capacity of 5.3 bil-
lion cubic meters. Barrages
are designed not to store flood
waters, as is the Aswan Dam,
but to regulate the water level
during flood time and divert it
into irrigation canals.
The Sudan has no barrages
but has two dams, the Senna on
the Blue Nile and the Gebel
Aulia on the White Nile. The
Senna Dam--with a relatively
small storage capacity of 1
billion cubic meters--stores
water to irrigate the Sudan's
cotton crop in Gezira without
using Nile waters during the
EGYPT'S
SHARE OF
SURPLUS
CORY AWARD
1920
EGYPTS
SHARE
SUDAN'S
SHARE
pally to regulate
the annual flood, and
none ks concerned
with irrigation stor-
age over a period of
70125-3 years. The next
step in the Nile de-
velopment is to provide long-
term storage facilities. If
this is not done, an extension
of the irrigated area could
prove disastrous' in a year
with a water shortage. Two
general plans have thus far
been advanced: the Aswan High
Dam and a comprehensive stor-
age scheme. Egypt's high-dam
proposal was first seriously
put forth in 1953. The stor-
age scheme, favored by the Su-
dan, has long been under study.
The Aswan High Dam
The Aswan High Dam project
involves the construction of a
dam across the Nile about five
miles upstream from the exist-
ing Aswan Dam. The new dam
would create a reservoir with
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SCHEMATIC DIAGRAM OF NILE BASIN
30 October 1958
ASSUIT BARRAGE
NAG HAMMADI BARRAGE
ISNA BARRAGE
v
EGYPT \ /
ASWAN HIGH DAM
(130)
SUDAN
GEBEL AULIA DAM
(2.5)
CURRENT INTELLIGENCE WEEKLY SUMMARY
SL'DD SWAMPS
JOGLEI
BARRAGE E
15ff//y DIVERSION
t,-in Nile
lrS.j MEROWE DAM (4TH CATARACT DAM)
Y (10)
Pihor
River
LAKE VICTORIA
(100 INCREASE)
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CURRENT INTELLIGENCE WEEKLY SUMMA1Y
30 October 1958
a capacity of 130 billion cubic
meters. Its primary purpose
would be to store water for ir-
rigation. Secondarily, it
would protect Egypt's downstream
areas from flood and provide
improved navigation conditions.
The dam itself would take
at least ten years to build.
The reservoir would store 70
billion cubic meters for irri-
gation and 30 billion for flood
control. The other 30 billion
cubic meters would be allowed
for silting.
The advantages of this
project to Egypt would depend
on the share of the water Cairo
would receive under its agree-
ment with the Sudan. If Egypt's
share were significantly less
than 61 billion cubic meters,
the project might not be worth
the large investment required.
It is on this point that dis-
cussions with the Sudan were
broken off in mid-1955, when
Khartoum refused to acknowledge
Egypt's right to this amount.
Comprehensive Storage Scheme
This plan calls for a
series of dams and barrages to
be built largely in the Sudan.
The bulk of the long-term stor-
age of irrigation waters, how-
ever, would be in Lake Albert
and Lake Victoria. By raising
the water level of Lake Albert
one meter, and Lake Victoria
four feet, the amount of stored
water would be equal to 105.3
billion cubic meters, some 35
billion cubic meters more than
the expected capacity for irri-
gation storage of the high dam.
Because of the large swamps
through which the water from
these lakes now passes,. how-
ever, the water loss through
absorption is substantial--on
the average about 50 percent.
To avoid this, a diversion
canal--the Jonglei Canal--
would have to be built. In
addition, a number of regulat-
ing barrages would be required,
as well as a dam at Lake Tana
in Ethiopia.
The Aswan High Dam and the
comprehensive storage scheme
might be made complementary.
The high dam could be somewhat
smaller than now planned,and'
other works could be undertaken
in the Sudan.
Without the Aswan High
Dam, or a similar project, the
growth of the Egyptian economy
is likely to lag far behind the
probable increase in population.
This would mean a steady decline
in the standard of living, with
serious implications for the
future social and political evo-
lution of Egypt. Even though
Aswan or similar works might
not make possible any signifi-
cant per capita rise in the liv-
ing standard, they would at least
prevent a disastrous deteriora-
tion in this standard. 25X1
Concurred in by ORR) 25X1
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 October 1958
ANNEX
SINO-SOVIET BLOC ACTIVITIES IN MAINLAND SOUTHEAST ASIA
1. General "Bloc Policy:
The Sino- ovie bloc is ac ive-
ly working to encourage neutral-
ism in Southeast Asia, to de-
stroy the Southeast Asia Treaty
Organization, and to encourage
the creation of a group of in-
dependent, nationalist anti-
Western entities which might
ultimately come under close Sino
Soviet influence.
2. Bloc policy has been
flexible and opportunistic,, ad-
justing itself to the degree of
anti-Communism evident in each
state. Peiping and Moscow have
avoided pressing too urgently
and have sought to influence by
example the states in which con-
ditions have been most favorable
to them. Thus in Cambodia and
in Burma--at least up to the
change in government--where bloc
activity has been most pronounced,"
Moscow and Peiping have attempt-
ed to be circumspect and have
tried to fulfill economic aid
agreements smoothly and satis-
factorily.
3. The bloc continues to
stand on a professed plank of
noninterference in the internal
affairs of other states embodied
in the "Five Principles" enunci-
ated by Chou En-lai and Nehru
in 1954. Chou repeated his "ad-
vice" to Cambodia's Chinese to
"refrain from taking part in po-
litical activities" during the
August visit of Cambodia's Prince:
Sihanouk to Peiping.
4. The immediate aim of
local Communist parties is two-
fold--to achieve legality and
eventually to turn their govern-
ments' policies into neutralist
channels. The USSR and Communist
China complement that aim by
discreet and frequent offers of
"disinterested"economic aid and
wider cultural relations.
5. Diplomatic Activity:
Repeated bloc Initiatives to
expand diplomatic representa-
tion met with success in Cam-
bodia and there is prospect of
similar results in Laos. Cam-
bodia, which already has resi-
dent missions from the USSR and
Czechoslovakia, recognized Com-
munist China in July,and ambas-
sadors have been exchanged. This
is a significant diplomatic
victory for Peiping in South-
east Asia and will considerably
raise Communist China's prestige
among the Overseas Chinese in
the area. Laotian officials
revealed in July that Laos will
probably send an ambassador to
Moscow by.the end of 1958,thus
ending a long period of stalling
by Vientiane since an exchange
was agreed on in principle in
late 1956. Malayan Prime Minis-
ter Abdul Rahman continues his
policy of refusing any formal
relations with the bloc until
the ten-year Communist rebellion
in Malaya is ended.
6. Burma has the broadest
bloc representation, having re-
lations with the USSR, Commu-
nist China, Poland, Czechoslo-
vakia, Rumania, and Mongolia.
In Thailand, only the USSR main-
tains a mission,which, with some
50 officials, is considerably
overstaffed in-terms of the work
at hand. Except for some 25
Polish officials on the Interna-
tional Control Commission, there
are no bloc officials in South
Vietnam.
7. Economic Activity: Ma-
laya, with its large Chingse
population, continues to be a
focus for Communist China's com-
mercial drive in Southeast Asia,
and the over-all level of its
trade with the bloc continues
to rise. From December 1957 to
May 1958, Malayan exports to the
bloc increased by 42 percent
over the first half of 1957 and
totaled about $43,000,000. Ma-
layan imports from the bloc
dropped 5 percent to $30,000,000.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
30 October 1958
The marked increase in exports
was caused by a doubling of rub-
ber exports to 75,800 long tons
--15 percent of Malaya's total
rubber exports for the first
half of 1958. Communist China
was once again the principal
bloc purchaser. Peiping is com-
peting with Japan and Hong Kong
and has intensified its trade
promotion activities in Singa-
pore since April. A wide va-
riety of new Chinese commodities
are appearing At prices slashed
10-20 percent below those of
normal suppliers. The effec-
tiveness of this campaign is
reflected in a 40-percent rise
in the value of Chinese Commu-
nist goods imported during the
first seven months of 1958 over
the comparable period in 1957.
8. Cambodia made its first
import allocations in April un-
der trade agreements with the
USSR, Czechoslovakia,and Commu-
nist China. The value of ex-
port licenses issued was much
lower than the level set for
imports. However, the alloca-
tions totaled about $2,600,000
and, if actually used, would
raise imports from the bloc in
1958 to at least 10 percent of
Cambodia's planned imports, ex-
clusive of those under aid pro-
grams.
9. The level of bloc trade
with Thailand continues to be less
than one percent of total trade
because of the relatively satis-
factory economic conditions in
Thailand, its pro-West align-
ment, and extensive American
aid. Thailand refused Soviet
formal trade overtures in March,
but did lift its embargo on rub-
ber exports to Communist China
and North Korea on 22 August.
An undetermined amount of il-
legal trade with Chinese.Commu-
nists is transacted through Hong
Kong. Burmese trade with the
bloc continues to decline, and
rice commitments to the bloc in
1958 have been cut back to 40,-
000 tons. Total trade declined
in 1957 to $57,500,000, or 11
percent of Burma's foreign trade.
Bloc trade with Laos and South
Vietnam remains negligible.
10. In the field of econom-
ic aid, bloc activities are con-
centrated on Burma and Cambodia.
Cambodia is now in the second
phase of a $22,400,000 Chinese
Communist grant-in-aid program,
which appears to be proceeding
smoothly. Phnom Penh has com-
pleted plans for various social
and economic projects,and sites
have been selected for the four
plywood, cement, paper, and tex-
tile factories that form the
core of the program. At the
end of Sihanouk's Peiping visit,
Cambodia accepted an additional
grant of $5,600,000, and Peiping
offered to expand the program
to include construction of small
iron and steel works and surveys
of underground fuel resources.
In addition, a Cambodian econom-
ic delegation to-the USSR, head..
ad by the economic planning
counselor,.completed preliminary.
economic and technical aid talks
in September. Construction is
now under way on the Soviet
"gift" hospital in Phnom Penh,
and Cambodia has included in
its 1958 import plan $1,000,000
worth of aid-financed goods to
raise funds to defray local costs.
11. Bloc countries, prin-
cipally the USSR, have extended
an estimated $41,600,000 in loans
to Burma. Implementation of So-
viet "gift" projects appears to
be progressing satisfactorily,
and construction has begun on
the technological institute in
Rangoon, a plow factory, and
irrigation. works. Two Soviet.-loans
totaling approximately $8,500,-
000 were announced in early 1958
but have not yet been implement-
ed. Communist China completed
expansion of a government-owned
textile factory during the first
half of 1958.
12. There were approximate-
ly 140 bloc technicians in Burma
in the first half of 1958 and
the number of Soviet technicians
will undoubtedly increase mark-
edly as .work on the Rangoon
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CURRENT INTELLIGENCE WEEKLY S1!T
30 October 1958
Technological Institute pro-
gresses. In Cambodia, there were
about 30 bloc technicians,mostl
from Communist China; additional
Soviet and Chinese technicians
are expected.
13. Cultural and Propaganda
Activities: Peiping increase
its urmese-language broadcasts
3.5 hours to a total of 10.5
hours a week, and Moscow will
increase its Burmese broadcasts
from 3.5 to 7 hours weekly on
15 October. Peiping also in-
creased its Vietnamese broad-
casts twice during the period
of this report to a total of
about 16 hours a week. Radio
Hanoi increased its broadcasts
to 13 hours weekly, adding a
new daily program called "The
Link Between North and South."
14. Bloc propaganda activi-
ties have been especially marked
in Cambodia, where Communist
China, the USSR, and North Viet-
nam have all' made rapid progress
in the film field. During the
first nine months of 1958., over
50 Soviet films appeared as com-
pared with a total of 15 to 20
during all of 1957. A number
of Chinese technicians have ar-
rived in Phnom Penh to install
the 20-kw. radio transmitter
presented to Sihanouk last year.
The bloc's propaganda efforts
within Cambodia have been aimed
primarily at youth through the
educational system, and Soviet
diplomatic personnel have con-
tinued to make aggressive ef-
forts along this line.
15. Subversive Activity:
Bloc officials in the area have
usually concentrated on develop-
ing correct cordial relations
with constituted authorities.
Covert contacts, however, are
maintained through embassies
and through Chinese Communist -
controlled banks in places such
as Burma and Singapore. The
banks provide legitimate finan-
cial support to pro-Peiping ad-
herents and are also a means of
psychological and economic pres-
sure on the population.
, 16. Communist China exploits
eXtensively pro-Peiping elements
within overseas Chinese communi-
ties throughout the area. Cultur-
ally,; these groups are to a large
extent resident aliens regard-
less of formal citizenship and
they are drawn toward the "home-
land" regardless of politics.
17. In Thailand,,-South Viet-
nam, Malaya, and Singapore, the
Communist parties are outlawed
and for the most part fragmented.
Although aid may have been given
from time to time to insurrec-
tionary forces, both the bloc
and local Communists generally
would prefer legality to dontin-
ued illegal and guerrilla activ-
ity. Bloc subversive efforts
have been aimed primarily at,
stimulating existing discontent
among non-Communists.
18. The developing politi-
cal situation in Laos, where
the Communist-dominated Neo Lao
Hak Zat (NLHZ) won 13 of the 21
assembly seats up for election
last May, has shown the Commu-
nists to be successful in using
legal and semilegal tactics.
The NLHZ appears to be making
strong gains in almost every
sector of Laotian society,in-
cluding a swell of pro-NLHZ sen-
timent among Laos' 13,000 Bud-
dhist monks who have some influ-
ence over village opinion. The
NLHZ also appears to be making
some headway in penetrating the
army and eroding government au-
thority in the provinces. Some
locally elected officials in
rural areas are reported to be
resigning under NLHZ pressure.
19. Reaction to Bloc Ac-
tivities: nera y spea ng,
the governments of the area are
preoccupied with and somewhat
fearful about resurgent Commu-
nist.China's rapid rise from
"semicolonial" status to econom-
ic and military stature as a
great power. There'is also a
great deal of respect for Chi-
na's economic achievement. Local
opinion tends to separate the
Russians as outlanders, and,
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CURRENT INTELLIGENCE WEEKLY HUMURY
except for localized incidents,
the pattern of::?Sovibt'activity
does not evoke a sense of threat
comparable to that of Communist
China.
20. Some resentment against
Communist China has been evi-
denced in Burma over the pro-
tracted Chinese border dispute,
and in Burma and Malaya over
bloc efforts on behalf of oppo-
sition parties or dissidents.
Singapore and Malaya are both
irritated by Russian tin dumping
on the world market and by Chi
nese Communist textile dumping.
On 1 October, Singapore and Ma-
laya restricted imports of Chi-
nese textiles.
21. Outlook: The Sino-So-
viet bloc's fluid and opportu-
nistic . approach, within the frame-
work of a policy of developing
wider contacts and relations on
all levels with the nations of
the area, will probably continue.
The development of sentiment
that is initially neutralist,
independent, and nationalist
will remain the general bloc
aim. Communist China and the
USSR will probably bend every
effort to developing a smooth
implementation of the economic
relationship with Cambodia as
ence.
a demonstration of what neutrali-
ty can bring. Normalization of
relations with Communist China
should lead to an increase in
Communist activity in Cambodia.
In Laos, the present trend is
toward a steadily growing Com-
munist influence and possibly
ultimate Communist control. The
bloc is likely to make little
progress in South Vietnam un-
less political unrest should
develop and disturb the tenure
of President Diem. President
Diem is now anticipating a sharp
upsurge in Communist guerrilla
activity and terrorism in South
Vietnam. Thailand and Malaya
will probably continue to pur-
sue policies of minimal rela-
tions with the bloc, although
in the former there are a few
indications of a softening to-
ward the bloc. The trend to-
ward the left in Burma has been
abruptly terminated by the ac-
cession of General Ne Win and,
for the duration of his premier-
ship, Communist influence should
diminish. Communist China's
economic offensive in Malaya and
its appeal to the large Chinese
minority there--38 percent of
the population--will probably
result in an increase of unof-
ficial Chinese Communist influ-
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