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Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 0 COW I~ENIINL r~~eEr CURRENT INTELLIGENCE WEEKLY SUMMARY COPY NO. 49 OCI No.5646/58 4 December 1958 AUTH: !HR 70-2 DATE:(.~q~i EVYER: NEXT REVIEW DAT L- DOCUMM}ENT NO. NO CHANGE 1i! 25X1 0 DECLASS!F+t-0 s CLASS. CHANGED Ta: TS S CENTRAL INTELLIGENCE AGENCY OFFICE OF CURRENT INTELLIGENCE CONFIDENTIAL RETURN TO ARCRiVE`S ft RECUHUS CENTER rTfR 25X1 25X1 State Department review completed Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 THIS MATERIAL CONTAINS INFORMATION AFFECT- ING THE NATIONAL DEFENSE OF THE UNITED STATES WITHIN THE MEANING OF THE ESPIONAGE LAWS, TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS- SION OR REVELATION OF WHICH IN ANY MANNER TO AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW. The Current Intelligence Weekly Summary has been prepared primarily for the internal use of the Central Intelligence Agency. It does not represent a complete coverage of all current situations. Comments and conclusions represent the immediate appraisal of the Office of Current Intelligence. Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 25X1 25X1 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 Next 8 Page(s) In Document Denied Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 4 December 1958 MIDDLE EAST DEVELOPMENTS Iraq Harassment of foreigners in Iraq, particularly American and British, continues amid a general atmosphere of tension. Further negotiations with the Iraq Petroleum Company (IPC) regarding company-government relations are in prospect, but the responsible ministers ap- pear unfamiliar with the tech- nical aspects and have been publicly hostile to the company. Iraqi Foreign Minister Jumard professes to oppose the more obvious manifestations of anti- Western sentiment, such as the Baghdad press play given to nonexistent Communist demonstra- tions against Vice.President Nixon in London, but Jumard ap- pears to have little influence. The political situation in Khartoum is still unsettled, but there are some signs that General Abboud is emerging as a genuine "strong man." The cabinet last week approved ac- ceptance of American economic aid, curbed pro-UAR newspapers, and had pro-Communist leaders arrested. At the same time, however, the government has recognized Communist China. The Egyptian press claims a new Sudanese offer to negotiate the Nile waters question will be forthcoming in a few days. ments. yan-American base and aid agree- Libya In a measure to increase the popularity of the govern- ment and at the same time to build up pressure on the United States, Prime Minister Kubaar an- nounced on 30 November he would demand renegotiations of the Lib- SECRET PART I OF IMMEDIATE INTEREST Page 4 of 8 25X1 25X1 - Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 SECRET The lifting of martial law in Jordan this week signified no real improvement in the se- curity situation, but was de- signed to give the government a psychological boost and to undercut UAR propaganda refer- ring to Jordan as a police state. The legal powers of the Rifai government to deal summarily with suspected subversives re- main unimpaired. The new rightist-oriented French National Assembly--sched- uled for its first legislative session next April--lacks the balance of forces Premier de Gaulle desired, and may serious- ly curtail his freedom of ma- neuver in seeking an early so- lution to France's principal problem--Algeria. De Gaulle is expected to be elected presi- dent on 21 December and to ap- point a new premier shortly thereafter. With his prestige at a new high and his power to govern by decree extending for some time, he may try to move rapidly toward the comparatively liberal solution he is assumed to favor. Information Minister Jacques Soustelle's Union of the New Republic (UNR), which has emerged as the strongest party in France, will be an unknown quantity until its real posi- tion in the assembly and its degree of cohesiveness are de- termined. United only by unde- fined "Gaullism," the UNR is erEdmond Michelet, to an ex- treme rightist fringe. The par- ty apparently has attracted votes from all parties includ- ing the Communists and has ab- sorbed the Poujadist movement practically entirely. The election results were far from a clear mandate for the integration of Algeria with France, but they will be inter- preted as such; De Gaulle's problem will be to decide how far he can go in disregarding this view. Although the UNR is pledged to support the pre- mier's policies, Soustelle im- mediately hailed the election as a victory for "French Algeria." This view is presumably shared by most of the 71 deputies from Algeria and the Sahara, where only a few victorious Socialists in Algeria may deviate from the prointegration program advocated by the army and the European settlers. Most of the 132 In- dependents, second numerically in the National Assembly, and George Bidault's 13-member actually a heterogeneous group "Christian Democratic" wing of ranging from completely loyal the Popular Republicans would Gaullists, typified by cofound- also back integration. SECRET Page 5 of 8 __ Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 SECRET CURRENT. INTELLIGENCE WEEKLY SUMMARY 4 December ? 1958 De Gaulle should be able to divert some of the national- istic criticism of any moves he makes toward a comparatively liberal Algerian solution by pushing other programs popular with the nationalists. These include his efforts to enhance France's international prestige by demanding equality with the United States and Britain in coordinating global policies, to press for a national nuclear- weapons program, and even to call for further European in- tegration under French leader- ship. De Gaulle can also divide the rightists on economic and social policies, since truly Gaullist elements of the UNR will be inclined to join forces with the Socialists and Popular Republicans on such matters rather than with the economical- ly and socially conservative Independents. The Socialists, smarting from their sharp drop in assem- bly strength, will be strongly INDEPENDENTS 132 ALGERIAN BLOC 67 inclined to go into opposition, with an consolidating their new position as the domi- nant parliamentary representa- tives of the left. Socialist left-wing elements may press for close ties with the Commu- nists in order to constitute a united left in the assembly. They will probably agree that much of the drop in Communist electoral strength resulted from abstentions..rather than from desertions to the right. The Radicals and the Popu- lar Republicans will probably call.on the Socialist party to keep an open mind on the question of participation in the govern- ment. They will be eager to put forth the left and center as an alternative to the Inde- pendents if the UNR shows-any willingness to make good its pro- fessed rejection.of the right ist label. De Gaulle will al- most certainly prefer this in order to avoid permitting the 25X1 bloc. assembly to be dominated by the UNR'right wing and the Algerian In further moves to estab- lish a record which will place on the West the onus for any failure to reach agreements, Soviet bloc delegates in both Geneva conferences have intro- duced formal "declarations" summarizing bloc proposals and criticizing Western positions. These declarations, one of which has already been published, are further efforts to place the bloc in the strongest possible position in the final stage of the talks and may foreshadow proposals to raise the talks to SECRET OF IMMEDIATE INTEREST Pate 6 of 8 - Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 SECRET the foreign minister level. In his 2 December interview with Premier Khrushchev, Senator Humphrey gained the impression that Moscow is willing to make some concessions in order to reach some kind of agreement for nuclear test cessation. However, the Soviet leader gave the impression he does not an- ticipate agreement on measures to prevent surprise attack. Nuclear Test Cessation Talks On 29 November the Soviet delegate introduced a declara- tion stressing the "merits" of the Soviet position and accusing the West of evading an agree- ment by insisting on detailed discussion of a control system. After listing four major points in the Western position which "cast doubt on the successful completion" of the talks, the Soviet declaration stated that the USSR would not object to the inclusion of "basic provi- sions on control" in a treaty on the cessation of tests. This ostensible concession was intended to remove a weak point in the Soviet position--the vague relationship between the Soviet-proposed treaty and a protocol on controls. On 1 December the Soviet delegate clarified the declara- tion, stating that although he would prefer to have the treaty and control provisions embodied in two separate documents, he was prepared to accede to West- ern insistence on one document. The Soviet delegate objected to the article in the American draft agreement requiring the parties to pledge prompt and full cooperation with a nuclear weapons test control organiza- tion on the grounds that the American concept would create an international organization not under control of the three nuclear powers. On 3 December the Soviet delegate retreated from the recommendations made by the ex- perts at Geneva last summer for a world-wide inspection system, alleging that the technical talks at that time did not examine the question of whether an "entire" system was needed. He is now insisting that any control organization be limited to the three nuclear powers, with decisions based on unan- imous agreement. This, in ef- fect, would provide Moscow with a veto over all actions of the organization. It is apparent from his further comments that the Soviet delegate is particularly in- terested in his government's veto power over decisions in- volving inspection of any sus- pected violation. He insisted that inspection be performed by ad hoc groups formed- only after receipt of evidence from which the organization "decides" there is a "strong suspicion" of a nuclear explosion. He then contended that a system confined to the territorial possessions of the three nuclear powers and to the oceans would be adequate at present, since this would cover 80 percent of the territory of the world, and "100 percent of that of the nuclear powers." The agreement to embody all commitments in one document is a concession in form only and does not alter the basic Soviet position that an agreed draft of a permanent and unconditional test cessation agreement with only the briefest reference to controls must precede discussion of the details of the control system. SECRET PART I OF IMMEDIATE INTEREST Page 7 of 8 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY Surprise-Attack Talks On 28 November the Soviet delegate introduced a declara- tion which spelled out bloc proposals linking "concrete measures" to reduce the danger of surprise attack with specif- ic disarmament measures. The Czech delegate followed with a draft agreement along the same lines. Both documents re- stated with minor variations long-standing Soviet proposals for ground control posts and aerial photography to be ac- companied by such "concrete" disarmament measures as reduc- tion of foreign forces in Europe by one third and denucle- arization of both parts of Germany. For the first time, Moscow set forth its views on the num- ber and general location of control posts at railroad junc- tions, major ports, and high- ways. According to the decla- ration, 28 control posts should be located on the territories of members of the Warsaw Treaty, including six in the USSR, and 54 posts in NATO and Baghdad SECRET PART I OF IMMEDIATE INTEREST Page 8 of 8 Pact countries, including six in the United States. These totals were said to be based on the density of population and communications networks. In addition to Moscow's standard proposal for aerial photography in a zone 500 miles on either side of the demarca- tion line in Europe, the Geneva declaration for the first time extended aerial inspection to Greece, Turkey, Iran, Japan, and Okinawa. Aerial inspec- tion zones in the Soviet Far East and the western United States were made conditional on the establishment of both ground control posts and aerial photography zones in Europe and the Middle East. This omnibus plan linking inspection systems with specific disarmament steps is designed to sharpen the contrast between the bloc's demand for "practical" measures to prevent surprise attack with Western insistence on a careful technical study of 25X1 the problem, avoiding political issues posed by the Soviet dis- armament proposals. Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 CONFIDENTIAL CURRENT INTELLIGENCE WEEKLY SUMMARY 4 December 1958 NOTES AND COMMENTS AFRO-ASIAN ECONOMIC CONFERENCE The widely heralded Afro- Asian Economic Conference, to be held in Cairo from 8 to 11 December, will provide a major forum for Soviet and Egyptian anti-Western propaganda. Al- though the purpose of the meet- ing is to search for ways to in- crease foreign trade and eco- nomic cooperation among Asian- African countries, significant progress along these lines ap- pears unlikely. The Soviet Un- ion probably will use the con- ference to reiterate its pledge, "tell us what you need, we can help you," which was given at the Afro-Asian Solidarity Con- ference held in Cairo last year. Moscow. probably will attempt to gain maximum benefit from its Aswan High Dam aid agreement. UAR leaders have expressed concern over what they describe as the eventual "evils" of the European Common Market. Nasir believes the Common Market will result in discrimination against Egyptian goods and higher prices for European goods. The UAR leaders may therefore attempt to push plans for an Arab "common market" scheme to counter alleged Western economic imperialism. Iraq, which in previous Arab meetings has been a restrain- ing influence on such Egyptian maneuvers, reportedly will rec- ommend the creation of a "big Asian-African economic organiza- tion" which would establish trade centers for principal products of the area. Baghdad has al- ready called for the establish- ment of a rice center in Commu- nist China and a cotton center in Egypt. While Cairo claims that in- vitations have been sent to "194 economic organizations in 101 Afro-Asian countries," a sub- stantially smaller number of countries are likely to be rep- resented. Communist China, Mon- golia, North Vietnam, North Ko- rea, and the Soviet Union will- send delegates. Although many countries are sending legitimate Chamber of Commerce representa- tives, the meeting will be domi- nated by Egyptians, Russians, and fellow travelers. Because the problems of establishing meaningful rela- tionships among these underde- veloped areas are so complex, the conference probably will concentrate on setting up perma- nent planning bodies rather than announcing immediate solutions. These study groups, however, should provide still another ve- hicle for the extension of So- viet and Egyptian influence throughout Asia and Africa. AFRICA AND THE EUROPEAN ECONOMIC COMMUNITY The current visit to Afri- ca's east coast of a delegation from the Commission of the Euro- pean Economic Community (EEC) could be significant for Western Europe's future relations with the African continent as a whole. The mission, headed by Director General for Overseas Territories Helmut Allardt, will be the first real sounding of local sentiment toward the EEC in Madagascar, Somalia, and French Somaliland, which were among those colonial CONFIDENTIAL PART II NOTES AND COMMENTS Page 1 of 11 - Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 SECRET CURRENT INTELLIGENCE 'WEEKLY -SUMMARY 4 December 1958 and trust territo- ries associated with the Common Market in keeping with the Eurafrican concept. When the idea of European-African cooperation was in- itially advanced by the French in 1956, it was greeted with great reserve by the other EEC members, but it has become more acceptable as the EEC itself has increased in stature. Allardt and others on the commission staff are effective advocates of a "European effort" to secure an economic hegemony in Africa not based on preser- vation of the polit- cal status quo. They believe the EEC's oww- seas development fund of $581,000,000 may be an effective weap- on in achieving this objective. Some members of the Euro- pean Parliamentary Assembly who fear Soviet gains from S K DENMA T ~N ET ~1 [ Flome\ !A/lIN1 l 1 ,14- 25 V. IT 0 Eurafrica (African areas associated with the European Economic Community) associate Morocco, Tunisia, and Libya with the Economic Community. (The following non-African territories have been associated with the Economic Community or will be the subject of further negotiations to that end: St. Pierre and Miquelon New Caledonia and dependencies French settlements in Oceania French Antarctic Territories Dutch New Guinea, Surinam and the'Dutch West Indies) the dissolution of colonial ties support this thesis and have pressed the commission to assert an "independent position." Problems arising from Guinea's rejection of the new French constitution have added a note of urgency to these pleas for a "European" policy. The commission, anxious to establish the principle that association with the EEC does not depend on membership in the French commu- nity, believes a campaign to win African confidence would be off to a poor start if cooperation is ruled out with one of the first African states to obtain inde- pendence after formation of the AND N YAS ALA ND Common Market. This thesis has not yet been accepted in Paris, but Allardt feels sufficiently strongly about it to postpone his trip to western Africa rather than go there without stopping in Guinea. The unresolved conflict over Guinea points up both the delicacy and the importance of the EEC's position. The com- mission's efforts to establish itself in Africa as a separate entity representing the six- nation community could aggra- vate the colonial problems of France and Belgium, and, in the event of conflict, the com- mission's influence among SECRET PART II NOTES AND COMUENTS FRENC EQUAT. AFRICA AMEROUI/ Page 2 of 11 -__- Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY Common Market members might be jeopardized. On the other hand, a position of relative in- dependence is probably essential if the EEC is to gain wide- spread acceptance in Africa and develop as an important funnel for Western economic and technical assistance to the Africans. PAKISTANI REGIME BEGINNING TO IMPLEMENT REFORMS Pakistan's military regime has begun to implement its prom- ises of political and economic reform. The government's pres- tige depends largely on its ability to provide the country with substantial evidence of progress, particularly in agri- culture. It is already encoun- tering opposition from large landowners and the business community. Politically, the new regime has consolidated its control of the government and withdrawn the army from most local martial-law administration. Among its many new measures, it has delegated extensive administrative author- ity to government units below the provincial level, apparently to forestall renewed demands for provincial autonomy,- along lin- guistic lines. It has also taken strong measures to eliminate corruption in public and business life. To strengthen the economy, highest priority apparently is being given to raising agricul- tural production. However, gov- ernment land reform proposals may have important political re- percussions if they threaten the position of the powerful land- lord class. Owners of large estates are already trying to obtain the highest possible com- pensation for lands they may lose. Plans being prepared by the Land Reforms Commission to prevent uneconomic fragmenta- tion of productive lands are being attacked as "un-Islamic" because they contravene Islamic inheritance laws. In the face of this opposition, the reforms finally implemented by the gov- ernment may be less substantial than originally hoped. Although the public has welcomed the regime's initial efforts to reduce prices, the Planning Commission and some civilian government officials are emphasizing the dangers of the regime's price-control pro- posals. These, they hold, may destroy the incentive of pro- ducers and discourage badly need- ed new investment. Should the army submit to pressures from large land- owners and industrialists and modify previously announced policies, popular disillusion- ment could build up rapidly and weaken the government's position. In addition to its econom- ic and political activities, the military regime is pressing for further modernization of Pakistan's armed forces. Prob- ably partly to test Western attitudes toward the new regime and American intentions regarding future military aid, Ayub's government has requested F-100 fighters from the United States SECRET PART II NOTES AND COMMENTS Page 3 of 11 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY The five-party coalition government of Karl August Fag- erholm resigned on 4 December as a result of Soviet pressure. Moscow intensified its two-month-old campaign against Finland last week by canceling orders from several large Fin- nish firms and by refusing re- quests for additional shipments of crude oil. The Finns, in an effort to reduce this year's trade imbalance with the USSR, had attempted to purchase So- viet oil for stockpiling--a measure which would only tem- porarily have alleviated the large trade credit balance now held by Finland. By its re- fusal, Moscow is seeking a firmer orientation of Finland's trade with the USSR. Cancel- lation of orders and postpone- ment of advance payments total nearly $6,000,000, according to the Finnish Foreign Ministry. As a result, unemployment has been increasing sharply. Fagerholm quit following the resignation of the five Agrarian cabinet ministers. The Agrarian party leaders have been insisting on the necessity of thoroughgoing changes. Un- til a new government is formed, Prime Minister Fagerhoim will also act as foreign minister. In his search for a gov- ernment with which the USSR X11_ deal, President Kekko- nen is'said to favor one composed of all non-Communist par- ties but the "regu- lar" Social Demo- crats, some of whose leaders are particu- larly disliked by the USSR. The regu- lar Social Democrats would be replaced by the opposition Social Democrats, who were expelled from the par- ty on 29 November. This formalization of the split in the Social Democratic party will have widespread political repercussions and could lead to Communist domi- nation of the Finnish trade union movement through a paral- lel split in the Confederation of Labor (SAK). The opposi- tion Social Democrats control SAK, but the regular Social Democrats have already formed a rival organization--the "Joint Organization of Trade Unions." Kekkonen and the other Finnish leaders probably hope to satisfy the USSR without including the Com- munist-front Finnish People's Democratic League (SKDL) in the cabinet. The possi- bility of SKDL's partici- pation in the next govern- ment, however, cannot be excluded. Pravda has quoted the Finnish Communist press to the effect that only the formation of a govern- ment based on "the working class" could solve Finnish economic problems and in- crease trade with the USSR. The Communists are now in their strongest position since 1948 to demand in- clusion in the government and are organizing a mass demonstration on 9 December to press their demands. (Concurred in by ORR) FINNISH DIET 200 SEATS JULY 1958 QUADRENNIAL ELECTIONS GOVERNMENT COALITION 1FNTFR /:ENTER SECRET Page 4 of 11 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 4 December 1958 BULGARIA'S NEW ECONOMIC PROGRAM Bulgarian party chief Zhiv- kov, speaking at the central committee plenum last month, called for a"great leap for- ward" in economic development, making even more unrealistic demands on agriculture than the decision in October to ful- fill the present five-year plan (1958-62) ahead of schedule. The primary means to be employed for reaching the new targets--mobilization of the masses, day and night operation of equipment, and economies in the use of raw materials--sug- gest that the concept of a "leap' forward" will be used propagan- distically to wring the maximum output from production facili- ties. Although using Chinese Communist terminology, the ap- peal is probably inspired by the USSR's recently published Seven-Year Plan. In presenting this plan Khrushchev pointed out that the next few years will be decisive in the strug- gle between Communism and capi- talism. The Bulgarians are proud their steadfast adherence to orthodox methods has brought acknowledgment in bloc publi- cations that their country is the most advanced of the "peo- ple's democracies" in "building socialism,"and they have clearly taken a cue from Khrushchev's prediction and have launched an ambitious program of their own in order to retain their leading position. Zhivkov calls on agricul- ture to double 1958 production next year and triple`it in 1960, an apparently impossible achieve- ment. In recent years, gross agricultural output has de- creased from the previous year's SECRET NOTES AND COMMENTS Page 5 of 11 level as often as it has risen, and the five-year plan scheduled only a 35-percent increase. The agricultural sector is to concentrate on irrigation, other land improvements, and construction--relying heavily on the labor and means of the collective farms, which are , now being enlarged by mergers. These mergers apparently entail the transfer of some production activities of the villages to the enlarged farms in order to process part of the produce on the spot. The mergers,; will necessitate a reorganization of district party organs, and the Bulgarian press has stated there will be only one village council for each enlarged farm. Citing Chinese Communist ex- perience, Zhivkov has said that experimental plots will be en- couraged on the enlarged farms. Capital investment for food and light industries rath- er than for heavy industry is emphasized because of the huge production increases expected from agriculture and because such investment will have an immediate economic effect. Present plans for heavy in- dustry apparently are not being scrapped. Zhivkov cites various methods by which industrial, construction, and transportation performances can be improved, including reduction of all non- essential imports and the use of substitutes, introduction of additional shifts and as- sembly-line methods, and more technical training for workers. Bulgaria has many unem- ployed, and labor heads the list of reserves on which the economy will draw in its "leap forward." Men under 50, women Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 3 December 1958 under 45, and government and party workers are to give from 30 to 40 voluntary workdays in production annually. Even cen- tral committee members are in- cluded under the motto: "Let out leaders step in the mud a little." While 1962 industrial tar- gets could be achieved in 1960 at the present rate of growth, none of the methods outlined by Zhivkov, can bring about the huge rise in agricultural output demanded. (Prepared by ORR) COMMUNIST CHINA'S DRIVE FOR MORE Peiping -ha9?-- t'sing3ed out the iron and steel industry for special emphasis in its "giant leap forward." Tens of mil- lions of workers have been mo- bilized in an intensive program to double production this year by turning out 17,000,000 tons of pig iron and 10,700,000 tons of steel. A substan- tial portion of the expected increase-is to come from the num- erous small iron and steel installations. recently set up in the countryside. The goals are likely to be achieved, but the product will probably be of substandard and uneven quality and of questionable utility. The campaign to increase production of iron and steel-- unusual even in.Com- munist China, where a mass campaign of some type is almost always under way-- has received a tre- mendous amount of at- tention and "every- one," from Madame Sun Yat-sen to the ordinary peasant has been engaged in making iron and steel "in his spare time." Hundreds of thousands of small, locally operated blast furnaces have sprung up during the past few months. Development of the three large modern centers at Anshan, Wuhan, and Paotow has been stepped up, and work is proceeding on a number of MALL IRON SMELTING FURNACES IN SINKIANG AND SZECHWAN PROVINCES SECRET Page 6 of 11 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927A002000060001-4 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY C . COMMUNIST RON&S"" PRODUCTION Po IRON into steel because of excessive impurities. The utility of the steel is impaired because the form and shape in which it is cast is probably often not suitable for proc- essing in a rolling mill. The use to which such a product can be put would there- fore be limited to smaller, relatively modern plants. The program, which began in earnest only last summer, seems to have been one of im- provisation with little advance planning. Production of pig iron was stressed almost exclu- sively at first. Peiping then took up the problem of making good steel from the varied quality of pig iron and is now beginning to turn its attention to providing finishing capacity for steel. One of the major problems connected with the small-plant approach to iron production lies in the varia- tions in quality; much pig iron is unsuitable for conversion blacksmith forging in- to simple tools or for smelting for the producti:>>i of ingots or castings in larger plants. The movement just get- ting under way for consolidating the thousands of small facilities into larger, more efficient units is, in part, a result of this problem. In addition to the benefit from the extra production, Pei- ping also stands to gain from the propaganda impact at home and abroad, particularly in under- developed areas. The Indian Government, for example, is plan- ning to send a delegation to 25X1 study the new Chinese iron and steel program. (Prepared by ORR) North wean Premier Kim Il-sung is coiipleting the last leg of a good-will tour of Com- munist China and North Vietnam. He is accompanied by Vice Premier Pak Chong-ae, Foreign Minister Nam II, and Education-Culture Minis- ter Yi Il-kyong. Minister of Na- tional Defense Kim Kwang-hyop heads a "military good-will mis- Kim set the tone for his public statements in China in a speech at the Manchurian bor- der city of Antung by referring to "sharing the bitter with the sweet in the war against the American imperialists" and to "friendship and unity sealed with blood." sion" which left Pyongyang on ! Following a "tumultuous but 21 November on the same train conventional good-will visit to and apparently is accompanying Peiping, a top-level meeting of the premier's delegation. Chinese Communists and North SECRET Paare 7 of 11 Approved For Release 2007/10/23: CIA-RDP79-00927A002000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 SECRET Koreans took place on 26 Novem- year. This trip, Kim's first ber at Wuhan. The New China to Hanoi, parallels the re- News Agency dispatch on the cent visit of South Korean meeting was limited to a state- President Rhee to South ment that Mao Tse-tung, Liu Vietnam. Shao-chi, Chou En-lai, Teng Hsiao-ping, and Chu Te were the Chinese representatives. No mention was made of the topics discussed. Participation by senior policy and ideological authorities emphasizes the im- portance attached by both par- ties to the meeting. Discussions there probably involved further efforts to ad- vance the Ccufimunist program Por the unification of Korea and a coordination of policy positi _l_J on "other divided areas" in Far East. Relations with Ja.:,aa and joint action to further the objective of an American disen- gagement in the western Pacific may also have been covered, as well as such topics as increased Chinese economic assistance to North Korea and the ideological impact of the commune program on Asian Communism. After leaving truhan, Kim went to Hanoi, returning Ho Chi Minh's state visit of last A joint communiqud is- sued on 1 December at the conclusion of the talks in Hanoi scored the US for maintaining military bases in the Far East and de- manded the withdrawal of all foreign troops from the territory of other na- tions. Unification of both Korea and Vietnam was pro- claimed a common concern, although a clear distinction was made in the solutions to be sought. Korean uni- fication is to be an in- ternal matter "to be set- 11.1 MALAYA Kim II-sung's Tour, Peiping d'~?......... * Antung Pyongyang SOUTH KOREA tied by the Korean people themselves"; Vietnam must be reunited in "conformity with the Geneva agreement." SECRET PART II NOTES AND COMMENTS Page .8 of 11 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927A002000060001-4 SECRET Thie widening breach between Thailand and Cambodia threatens to undermine Western efforts to advance regional cooperation aimed at thwarting Communist ex- pansionism-in Southeast Asia. If relations between the two countries' continue to deterio- rate,. Cambodian Premier Sihanouk may turn to Communist China for support as he did last summer during his border dispute with South Vietnam. Sihanouk is surprised by the furor created by his suspen+- sion last week .of relations with Bangkok over ?oritical tt*ms~ : the Thai press... He :now ap- pears anxious to patch up the quarrel. The ruling Thai mili- tary group, however, apparently wanting to keep the issue alive for domestic political purposes, has stiffened its requirements for.:.a .restoration of relations. In addition, Thailand is con- sidering submitting the dispute to the UN Security Council. Cam- bodia has already circulated a letter of protest at the UN charging that Thailand's activi- ties are "a threat to the peace These developments preclude an early settlement of differences between the two countries. The disposition of Thai leaders to ascribe Cambodia's actions to Communist influence or pressure increases the like- lihood that Sihanouk will charge Thailand with acting under "SEATO instructions" to overthrow his neutralist regime. Rumors of American complicity with Thai- .,land in the present crisis are already current in Cambodian of- ficial circles. Should Thailand use its American-trained forces ia..:border reprisals against Cam- 'bodia's detention of 32 Thai na- tionals--as is being urged by some Thai military leaders--Siha- nouk might feel driven to seek military equipment from Peiping. The Laotian Government is in the initial phase of a pro- gram of administrative and se- curity reforms designed to re- store public confidence and check Communist expansion in the rural areas. A sweeping monetary reform has been fol- lowed by an extensive shifting of inept or corrupt administra- tive officials. More effective patrolling by the Laotian Army has reassured villagers in some areas of the government's abili- ty to protect them from repris- als by the Communist-dominated Neo Lao Hak Zat (NLHZ) party. In several provinces heavily infested by the NL,H?y military of- f icers have been appointed deputy governors in order to ensure ef- fective army security measures. SECRET Page 9 of 11 Approved For Release 2007/10/23: CIA-RDP79-00927A002000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 4 December 1958 These first stirrings of a positive government program are threatened by displaced conservative politicians,: who continue to harass the govern- ment in the hope of recovering former positions of influence now held by young reformist leaders in the cabinet. It is possible these individuals will use the special session of the National Assembly in January as an opportunity to overthrow the government. Phoui is searching for some means to mollify them, perhaps by expanding his cabi- net or by creating suitable gov- ernment sinecures. Revulsion against the nar- row opportunism of conservative deputies runs strong along the reform axis of Laotian politics the Crown, the army, and the reformist Committee for the De- fense of the National Interest (CDNI). The parliamentary sys- tem has become increasingly dis- credited, THE SITUATION IN CUBA The Batista government in Cuba, which announced new ar- rests of disaffected army offi- cers last week, is in a more precarious position than at any time since Fidel Castro landed on Cuba's southeastern coast two years ago. Rebel forces, now estimated at more than 8,000, virtually control Oriente Province, Cuba's largest and most populous prov- ince, and sabotage and harass- ment activities in three other provinces have increased. Al- though the Cuban Army retains possession of the major cities in Oriente, it has been unable to break rebel blockades which have cut off Santiago, Guantana- mo City, and other cities, or to prevent the rebels from dis- rupting transportation and com- munications in the eastern half of the island. Provisions are in short supply in many locali- ties. The rebel drive is serious- ly endangering Cuba's hitherto prosperous economy. Rebel ac- tivities have interfered with the coffee harvest and will probably hinder the sugar har- vest scheduled to begin in a few weeks. The disruption of transportation has already caused heavy losses by preventing the shipment of products to domes- tic markets. Rebel activities have forced several companies, including some US owned, to cur- tail operations or to shut down, and unemployment,:,patticularly in Santiago, is becoming a seri- ous problem. Heavy government expendi- tures to support the campaign against the rebels are also be- coming a drain on the economy. SECRET PART II NOTES AND COMMENTS Page 10 of 11 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927A002000060001-4 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY The prolonged political insta- bility has had an adverse ef- fect on both trade and tourism, causing unrest within business and commercial circles. The deterioration of the economy and the government's failure to stem the Castro re- bellion are causing serious dis- affection in the armed'forces. Some sen or officers are believed to be considering a move with civilian coopera- tion to establish a military junta which would attempt to 25X1 negotiate a truce with the rebel movement. SECRET NOTES AND COMMENTS Page 11 of 11 Approved For Release 2007/10/23: CIA-RDP79-00927A002000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 CONFIDENTIAL PARTY PROBLEMS IN THE POLISH COUNTRYSIDE Two years after his return to power in Poland, Wladyslaw Gomulka still.lacks=?fu'lll control over portions of the party ap- paratus, especially at the grass-roots level. This has been one of the more serious hindrances to his program for the development of "social- ism" in Poland. Local party functionaries--mostly appointed by the Stalinist Bierut regimeand still sympathetic to its prin- ciples--exhibit a guarded hos- tility toward Gomulka. Some of them are able to hamper his program, and most remain a po- tential danger to his author- ity. Despite his efforts since October 1956, he has not yet succeeded in winning over these hostile bureaucrats or in re- placing them with men loyal to him. Most lower- and middle- echelon party functionaries in the provinces apparently ex- pected Gomulka's tenure as party leader to be a short one. In order to be on the safe side if a change should occur, many of them preferred not to become too closely identified with him. Furthermore, their sense of security in following such a course was bolstered by Go- mulka's disavowal of tough Stalinist measures to compel compliance with his program. The fact that Gomulka had long been out of contact with the party and did not know most of the middle- and lower-level of- ficials, nor they him, also made his problem more diffi- cult. Period Since October 1956 Since October 1956 the local organizations of the Po- lish United Workers (Communist) party (PZPR) have virtually disintegrated as effective or- gans of control. Gomulka was so engrossed with pressing high- level problems involving the very survival of his regime, in the face of attacks by the Soviet-backed elements of the PZPR, he had little opportunity to devote attention to the party organization in the countryside. Some of the changes which Gomulka himself introduced tended to reduce still further the effectiveness of local party bodies. In an effort to cut costs and rid the party of some of the top-heavy bureaucracy which had grown up under the former leaders, Gomulka decreed a sharp reduction in the number of paid party workers. In many instances the abler party workers at the lower levels lost their jobs, while the entrenched bu- reaucrats higher in the PZPR hierarchy were able to retain theirs. The loss of police power also proved to be a great handicap to the party apparatus in rural areas. The populace in rural areas, which never had much respect for the average party functionary, soon came to ignore the activ- ists and treat them as having virtually no authority. Go- mulka's disavowal of forced collectivization and the sub- sequent dissolution of most collective farms encouraged the Polish peasant's individualism and traditional disrespect for authority. In addition to the weak- nesses deriving from these fac- tors, party authority in rural areas was further weakened by the elimination of the "nomen- clatural' privilege, which had permitted party secretaries at all levels to approve candidates for specific civil, commercial, and industrial positions. At provincial and lower levels this authority was transferred to CONFIDENTIAL Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 4 December 1958 local government officials, thus increasing their prestige and power at the expense of the party functionaries. The relatively free elec- tions of January 1957 in which strong identification with the party frequently proved a handi- cap, swept into office substan- tial numbers of people who had rather tenuous ties with the PZPR and even a number of non- party individuals. The local party secretaries found they could not depend on the newly elected to reward loyal PZPR activists with the good jobs, so later that year a limited "nomenclatural' privilege was restored to party secretaries. The power of party secretaries has since increased to some de- gree, but they have not regained their former authority. The period immediately following October 1956 also brought a significant revival of the old United Peasant party (ZSL) and the beginning of-a new struggle between it and the PZPR for dominance in the coun- tryside. Farmers now felt free to express a preference for the ZSL and to reject the efforts of the PZPR activists to induce them to follow Communist direc- tives, a situation contributing further to the party bureau- cracy's weakness and lack of influence. The chaotic situation re- sulting from the lowered morale, power, and prestige of the local (PZPR) organizations led to a clamor by provincial officials for aid from the party's na- tional headquarters. The of- ficials repeatedly asked the central committee for more trained personnel, but, because of the economy measures under- taken by Gomulka, few paid ac- tivists could be added to the party payroll. Party funds had been cut sharply because of the large number of Communists not paying their dues following Oc- tober. Even after a measure of party discipline had been re- stored in the early months of 1958, it was reported that not more than 50 percent of the mem- bers were paying their full dues. Problems of Rebuilding Although Gomulka has demon- strated remarkable political skill in rebuilding the Polish party from its state of near dissolution two years ago, his inability to reorganize the en- tire party into a cohesive unit responsive to his will remains a potential threat to his po- sition. No matter how firm his control may be at the top, he must depend on the large number of officials at the grass roots to translate party orders into action. This remains Gomulka's most pressing problem, since he has for the most part succeeded in gaining control of the party apparatus at the national and provincial levels. Gomulka has Kilrays, been reluctant to unleash a Stalinist "witch hunt." Nevertheless he has carried out a quiet purge of antagonistic and poorly quali- fied party functionaries, and he has succeeded in weeding out many incompetents and unreli abler without fuss on fanfare He has consistently refused to be stampeded into rash actions in this direction lest they in- crease his problems instead of solving them. Many doctrinaire Stalinist holdovers are especially opposed to Gomulka's agricultural poli- cies. The collective farm is an instrument of political con- trol as well as a unit of pro- duction, and the Stalinists con- sidered Gomulka's action in per- mitting the dissolution of the collective farms "a return to capitalism" and an ideological heresy. Gomulka has always maintained that the "socializa- tion" of agriculture., is 'the basic goal of the PZPRl.'ind has said that capitalism In the countryside is incompatible SECRET PART III PATTERNS AND PERSPECTIVES Page 2 of 15 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927A002000060001-4 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 4 December 1958 with socialism in the cities. He differs with his opponents, however, on the pace and the methods to be employed. He claims the old coercive meas- ures, which aimed at rapid col- lectivization, were harmful and caused peasant hostility to the party, as well as low produc- tivity of the socialized sector of Polish agriculture. an integral part of life for millions of Poles and that an all-out war against the church would result in a Pyrrhic vic- tory at best. Gomulka has been adamant in his position that the prin- ciple of voluntary acceptance of socialization in the coun- tryside must be strictly ob- served. He advocates a pro- gram of education aimed at con- vincing farmers of the advan- tages of collectivization, and state aid to existing collec- tives in order to enable them to modernize their facilities and surpass the productivity of private farms. To further this objective, Gomulka has urged that successful and re- spected peasants be recruited as party activists. Old-line party function- aries in rural areas are dis- gruntled because Gomulka made a truce with the church which permitted it a greater measure of freedom than it enjoyed un- der the Bierut regime. They consider the church agreement one of Gomulka's greatest back- ward steps, for now the village priest has again become more powerful than the local Commu- nist party official. The priest's influence in Catholic Poland, and especially in rural areas, extends far beyond reli- gious matters, permeating so- cial, political, and economic life as well. Gomulka too would like to curb the power of parish priests. He has several times character- ized the political activities of the clergy in the country- side as a serious problem to be overcome by the party. Go- mulka hopes to accomplish his aims gradually through subtle rather than harsh tactics and without provoking trouble. He realizes that Catholicism is Gomulka today probably is more popular among the peasants than with any other group in Poland, largely because of his liberal policies toward agri- culture and the church. At the same time, the PZPR is weakest in the countryside and has lit- tle following among the peasants, who in their political thinking tend to separate Gomulka from his party. In meeting the formidable task of revitalizing the party in rural areas, Gomulka will probably follow a policy of try- ing to bring into positions of authority able men who are loyal to him and at the same time have some standing with the people. Few people meet these require- ments, however. Revitalizing the Party One of the most important innovations introduced by Go- mulka to combat demoralization and to revitalize the party at the lower levels was the crea- tion of "problem commissions" by the local first secretaries to solve various problems faced by the organization. "Volun- teers" from the party ranks would be named for the commis- sion at a party meeting, and the group thus formed would be assigned to work with a full- time party official. The compo- sition of these commissions was arranged so that no one ever worked on a problem involving his own area of responsibility. Since most problems arose in the fields of propaganda, party education, and discipline, most commissions worked with party officials responsible for these activities. Through the use of the Problem Commissions, the local party organization was able to get much of its work performed by unpaid party activists under SECRET PART III PATTERNS AND PERSPECTIVES Page 3 of 15 Approved For Release 2007/10/23: CIA-RDP79-00927A002000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 SECRET CURRENT INTELLIGENCE WEEKLY SIIMMY 4 December 1958 the supervision of a full-time party functionary. While the problem commissions frequently were able to shore up the shaky local party apparatus, they did not necessarily strengthen Gomulka's control at the lower levels. The "verification" of party membership, ordered by the 10th plenum in October 1957 at Gomulka's behest, was an- other attempt to restore party discipline, rid the ranks of factional and opportunistic elements, and win better con- trol of the party apparatus. Neither politically nor organ- izationally did it produce all the results Gomulka hoped for, however, since the "verifica- tion" was carried out by the apparatus itself. For the most part, those affected were the most apathetic rank-and-file members--15 percent of the par- ty's total membership was dropped--leaving the hard core of the local party machines in- tact. Party weakness in the countryside has been an impor- tant factor in the repeated postponement of the long-over- due Third Party Congress, now scheduled to open on 10 March 1959. Gomulka refused to call the congress until he consid- ered his control over the cen- tral party organization suf- ficiently strong to enable him to push through his program. The first secretary's announce- ment at the party's 12th cen- tral committee plenum on Octo- ber of a date for the congress reflects his confidence that he now has this control. While no drastic moves against opponents seem likely between now and the congress, many Stalinists, opportunists, and incompetents in the party apparatus probably will be quietly replaced with Gomulka supporters. Gomulka's stra- tegy appears to be one of gradually weakening the conser- vative faction and, whenever possible, winning over party bureaucrats instead of assault- ing his political opponents frontally. Gomulka would pre- fer to placate, persuade, and reassure able party function- aries and use them for his own purposes rather than carry out a drastic purge. Gomulka is taking no chances on not having a major- ity of the delegates to the party congress on his side. Delegates are to be chosen by the party organizations at the provincial level and in indus- trial enterprises. By having delegates elected by higher level organizations, where he is strong, instead of at the lower levels and in the country- side where his control is weak- est, Gomulka will assure himself of a loya l majority at the congress. Following the election of a new central committee . by. the carefully chosen congress,Gomul- ka will for the first time be in a position to remake the entire party apparatus into an instru- ment responsive to his own ideas and capable of implementing his his policies. SECRET PART III PATTERNS AND PERSPECTIVES Page 4 of 15 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927A002000060001-4 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY THE POLITICAL POTENTIAL OF ARAB LABOR UNIONS Arab labor unions operate predominantly as political, rather than economic, organiza- tions, and have been subject to governmental suppression or control. Union leaders are conditioned to political action because material gains for their memberships can be achieved only through bargaining with and pressure on the governments, or through labor representation in the governments. The moti- vation for strikes has been political more often than eco- nomic. Generally speaking, the Arab union movements are still new, loosely organized, and weak, and their development varies sharply from country to country. Their potential as a real political force stems from the basic weakness of other political institutions and from the chronic instabil- ity of most Arab governments. since encouraged their growth but has made sure at every step that they remain dependent on the government and subject to his orders. Before the creation of the UAR last February, the Syrian unions had some inde- pendence and a number of pro- Communist leaders. At Nasir's instigation, however, several of the stronger leaders, both Communist and independent, have already been ousted. He now has a program under way for the gradual federation of the Egyp- tian and Syrian trade union movements; he plans an elaborate new control apparatus to pro- vide close government super- vision and direction of union activities down to the factory level. Thus the UAR union move- ment is an asset to Nasir's political position rather than a threat. Arab unions have long been a primary target for Communist penetration, and have also be- come involved in the struggle between Nasir's pan-Arab nation- alism and the nationalist move- ments of other Arab states. Continuing failure by unstable Arab governments to take the forceful measures necessary to improve economic conditions will promote tighter cohesion among workers, further growth of unions, and an increase in their inclination and capabil- ity to participate in anti- government actions. United Arab Republic In Egypt, where the union movement has been a carefully controlled creation of the gov- ernment and is dependent on government beneficence, union membership has grown rapidly. Nasir recognized the potential of the trade unions early and used them in his take-over from Naguib in early 1954. He has SECRET The International Confeder- ation of Arab Trade Unions (ICATU) was established under Egyptian aegis in March 1956, and its purpose is to spread Nasir's gospel and influence among trade unionists in other Arab states and in African states. In some countries, such as Lebanon, Jordan, and Iraq, this effort is a logical ad- junct of more direct UAR polit- ical intrigue; in others, where the governments quickly clamp down on such political interfer- ence but are disinclined to take unpopular measures against labor, it presents an opening for entry of the Nasir doctrine. When the ICATU was founded, Nasir said it would permit the trade union federations of the individual Arab states to belong to their own "neutral" inter- national organization, rather than to either the "imperialist- controlled" International Con- federation of Free Trade Unions PART III PATTERNS AND PERSPECTIVES Page 5 of 15 Approved For Release 2007/10/23: CIA-RDP79-00927A002000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 4 December 1958 MOROCCO 9,800,000 P 800,000 M ALGERIA 9,600,000 P 115,000 M 42 U TUNISIA 3,800,000 P 230,000 M LIBYA 1,350,000 P 5,500 M 7 U SUDAN 10,000,000 P 55,000 M 112 U. UAR (EGYPT) 23,600,000 P 350,000 M 1,200 U UAR (SYRIA) 4,150,000 P 40,000 M LEBANON 1,500.000 P 25,000 M JORDAN 1,500,000 P 12,000 M Arab Labor Unions P Population M Union membership u Number of unions (ICFTU) or the Communist-con- trolled World Federation of ;Trade Unions (WFTU). In practice, however, while many Arab feder- ations have severed their con- nections with the pro-Western ICFTU, the new ICATU has worked closely with the Communist fed- eration. The most recent ex- ample was joint sponsorship by the ICATU and the WFTU of the propagandistic meeting in Sep- tember of "Trade Unionists in Support of Algeria." The leadership of the ICATU has become starkly pro-Communist. Its Egyptian secretary general, Fathi Kamel, is reported to be a party member. Its non-Commu- nist Syrian president, Subhi SAUDI ARABIA 7,000,000 P - M - U KUWAIT 207,000 P - M QATAR AND TRUCIAL SHEIKDOMS 40,000 P - M - U MUSCAT AND OMAN 550,000 P - M - U ADEN 140,000 P 12,000 M Arab states of North Africa as an area particularly appro- priate for such expansion, but there he must contest with the aspirations of the General Fed- eration of Tunisian Workers, which is trying to form a con- federation of North African labor unions independent of Nasir's influence. The labor union movement in Morocco is the largest among the Arab states, and almost all members are in unions affiliated with the Moroccan Labor Union (UMT) created in 1955 under the auspices of the ICFTU. The UMT is becoming increasingly power- Khatib, has not been present at iful and Marxist. Allied with recent important meetings and the radical left wing of the has apparently been quietly eased (ruling Istiglal party, it is out. Several other members of challenging the power of the the ICATU executive body have Communist party records. King and his moderate government. In Algeria, union members, Presently affiliated with 1 predominantly Europeans, Are af- the ICATU are the big general ` filiated vrith four federations confederations of both Egypt and which are branches of French Syria, the Communist-controlled labor groups. The Algerian af- workers' federation of the Sudan, filiate of the French General two of the four major federations Confederation of Labor was out- of Lebanon, the Jordanian Fed- lawed, along with the Algerian eration of Trade Unions, and the Communist party, in September one sizable federation of Libya. !1955. The ICFTU-affiliated Gen- leral Union of Algerian Workers, Nasir is eager to expand created under the auspices of the membership to include trade the Algerian National Liberation union federations of other states Front, which is directing the in Africa and Asia. He sees the four-year-old rebellion, has SECRET PART III PATTERNS AND PERSPECTIVES Page 6 of 15 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 4 December 1958 probably carried out some clan- destine operations in Algeria, but its main activity is out- side the country and political in nature. The Syndicalist Union of Algerian Workers, cre- ated by the rival nationalist organization, the Algerian Na- tional Movement, never estab- lished a foothold in Algeria, but claims to have 75,000 dues- paying members among Algerian workers in France. In Tunisia, 98 percent of Tunisian trade unionists belong to the General Federation of Tunisian Workers (UGTT). The UGTT is an auxiliary organiza- tion of the Neo-Destour party and has five posts in the 11- member cabinet. A small Commu- nist-directed federation, the Union of Syndicates of Tunisian Workers, dissolved itself in September 1956. The UGTT, hav- ing aided the formation of ICFTU affiliates in Morocco and Algeria, is pressing for the formation of a North African trade union confederation. Three fourths of Libyan unionists are in unions affili- ated with the Libyan General Workers' Union. The port work- ers of Tripoli have Libya's best-organized union. The new, small but rapidly growing Oil Workers' Union reportedly has pro-Communist leaders. The union movement in the Sudan is more significant than its small membership would sug- gest. Members are concentrated in the key sectors of Sudanese industry and transport, and pri- or to the 17 November military coup, the Sudanese Communist party controlled the big Rail- way Workers' Union and the ma- jor Sudanese Workers' Trade Union Federation. The new mili- tary government has begun action to curtail Communist influence in the unions, dissolve front groups, and drive the party underground. Iraq The overtly organized union movement in Iraq is practically nonexistent. But because past Iraqi governments consistently suppressed regular unions, a system of covert workers' groups has sprung up in which the Com- munist party has played a major role. The Communists have had a part in directing organized activity by the Baghdad tobacco workers and the Basra oil workers, but little is known generally about other workers' groups, ex- cept that they remained strong enough, even in the face of stern reprisals by the Nuri Said government, to call strikes and mobilize street demonstrators. The Nuri Said government's practice of labeling virtually all its domestic opponents Communists and of resorting to waves of indiscriminate arrests resulted in a general feeling among Iraqi workers that the Communists must be on their side. The continuing failure of suc- ceeding Iraqi governments to improve the lot of the workers has resulted in an antigovern- ment bias of long standing. The return of Communists from exile and the release of Communist leaders from prison since Qasim's coup have permitted an increase in party activities among Iraqi workers. Lebanese trade unions are well developed, relatively in- dependent, and basically anti- Communist. About 90 percent of the members are in unions affili- ated with the "big-four" fed- erations, all of which have non- Communist leadership. The Com- munist party controls one tech- nically illegal federation and seven or eight small unions. The union movement is strong enough to exert considerable political influence. It has not done so as yet, primarily because of wrangling and differing views SECRET PART III PATTERNS AND PERSPECTIVES Page 7 of 15 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927A002000060001-4 SECRET CUIRENT INTELLIGENCE WEEKLY SUlfrCIiARY 4 December 1958 among the leaders of the four main federations. Trade unions in Jordan are heavily concentrated on the west bank of the Jordan River. Unions accounting for about half the total membership are affiliated in the Jordan Federation of Trade Unions. King Husayn's government last year disbanded many of the unions and ousted both pro-Nasir and pro-Communist union leaders. The government has permitted-- and supervised--reorganization of some of the outlawed unions and formation of a number of new ones. As a result, the present union movement does not appear strong enough to initiate anti- governmental political action, but a well-planned coup to over- throw Husayn could probably count on Jordanian unions to furnish organized support. able Arab-nationalist and Com- munist agitation among the oil workers. In Bahrein, the focal point for worker agitation was the Arab-Nationalist, anti-British Committee of National Unity (CNU)2 which called 'frequent strikes and terrorist demonstra- tions until the government sup- pressed it and imprisoned its leaders in late 1956. No force- ful opposition group has yet emerged to replace the CNU, but Egyptian, Iranian, and Saudi agitators continue to be active among the workers. In Saudi Arabia, Yemen, Oman and Muscat, Qatar, and the Trucial Sheikdoms, there is lit- tle industry--except for oil operations--and no appreciable workers' movement, organized or unorganized. In Kuwait and Bah- rein, there are still no trade unions, but laws permitting their organization are being instituted. In Kuwait, there is consider- Three fourths of Aden's union members, including the oil workers, belong to unions affil- iated in the Aden Trade Union Congress. The congress, created by the British to forestall de- velopment of a "radical labor movement," has become a focal point for Arab nationalism and anti-British activity. Under strong influence from Cairo, it staged general strikes for po- litical purposec in April and November of this year. These strikes, which closed down oil operations and the bunkering facilities of one of the world's most important bunkering ports, endanger the future value of Aden as a British military base. WESTERN EUROPEAN RECESSION AND THE UNDERDEVELOPED COUNTRIES The continuing mild downturn in Western Europe's economy has already caused the curtailment of imports from the underdevel- oped primary-producing countries; and, if the trend intensifies, it may seriously aggravate the exporting and foreign exchange difficulties of those raw-materi- als producers. Although a seri- ous recession in Western Europe is not expected, the continuing threat to the economic growth of the underdeveloped countries is likely to lead many of them to press for enlarged international development funds and price sta- bilization arrangements. For the first time since 1952, total industrial production in the second quarter of this SECRET PART III PATTERNS AND PERSPECTIVES Page 8 of 15 Approved For Release 2007/10/23: CIA-RDP79-00927A002000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 4 December 1958 year in Western Europe turned downward--a decline of about 1 percent--following a much re- tarded rate of growth in 1957. Subsequent data on various im- portant industries--for example, the present moderate decline in orders for steel products in France and Britain--suggest that the total decline for the year as a whole has been appreciably larger. A general decrease in the demand for resources, both for internal consumption and for ex- port, began in the second half of 1957 and has continued during 1958. Slackened demand is mani- fested generally in the accumula- tion of stocks in the coal and textile industries, which are unable to compete effectively in world trade. A moderate slack- ening of demand in the steel and metal-fabricating industries is more significant as it reflects somewhat reduced investment in machinery and equipment and the fact that capacity is catching up with demand. The present tendency to reduce industrial inventories also suggests a pause in economic growth, which might become more serious before new impetus to demand develops. There has also been a sig- nificant reduction in employment levels throughout Western Europe, although with considerable varia- tion from country to country. In Britain, for example, unem- ployment--2.8 percent of the COMMODITY PRICE INDEX 1952 =100 81124 2A DECEMBER 1958 25X1 labor force in October--is caus- ing political concern for almost the first time since the war. In West Germany, on the other hand, renewed expansion in the building and durable consumer goods-;industries'has reduced unemployment-to a new low. European:Mh?ket?s Sigti ieance Western Europe's high in- dustrial development and com- parative lack of raw materials make it the most important mar- ket of the countries producing raw materials. Although Western Europe's gross national product is only 60 percent of that of the United States, its imports of raw materials during 1956 were valued at $12.2 billion, or about double those of the United States and Canada. The coincidence of Europe's stagnation with the recent US recession intensifies its impact on the exports of the countries producing basic materials. In contrast with the situation in 1953-54, when Western Europe's then buoyant economy provided a strong demand for raw materials to offset reduced US buying, the slowdowns in both areas in 1957- 58 largely overlapped, with Europe's occurring before the American recovery could exert a compensatory effect. SECRET PART III PATTERNS AND PERSPECTIVES Page 9 of 15 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY Impact in Asia, Latin America A further downturn in West- ern Europe's economy, even if limited, can be expected to have disproportionately adverse ef- fects on the economies of the countries producing raw materi- als. Reduced marketing of their products since the third quarter of 1957 and the general weakness of commodity prices during the past two years have already seri- ously depleted foreign exchange holdings of most of these coun- tries and led to financial crises in many. Mid-1958 reserves of nonindustrial countries, other TRADE OF NONINDUSTRIAL COUNTRIES OF FREE WORLD ( BILLION DOLLARS) The recent resort to emer- gency foreign financial assist- ance in Brazil, Colombia, Chile, Peru, and Bolivia was made nec- essary mainly by depressed prices and reduced exports of coffee and nonferrous metals. Current foreign exchange difficulties among all South Asian and Middle Eastern countries, except Iran, are caused to a large extent by rising imports in relation to exports and worsening terms of trade accompanying the slack de- mand for their products by in- dustrial countries. Prospects Reversing the cliche that "when the US economy sneezes, Western Europe catches pneumonia," OEEC ex- perts see in the Ameri- can recovery an impetus toward renewed expan- sion in Europe sometime in 1959. But, since Western Europe did not reach its peak of in- dustrial production until the first quarter of this year--about 15 months after the crest Excludes the United States, Canada, Japan, and the OEEC countries, as well as the petroleum exporters -Brunei, Sarawak, the Netherlands Antilles, Venezuela, Trinidad, and the Middle East oil producers. 811242C 4 DECEMBER 1958 than petroleum exporters, were down nearly $2 billion from a year and a half earlier. Payments and reserves dif- ficulties in Malaya, Ceylon, In- donesia, and most other free Asian and Far Eastern countries are largely attributable to trade deficits brought on by de- clines in world prices and mar- keting of major exports such as rubber, tin, and tea. India and Turkey, experiencing internation- al financial crises brought on by overambitious development pro- grams, also face reduced earnings from exports such as fibers and chrome. in the United States-- there may well be a de- lay of several months before the upturn is felt in Western Europe. Moreover, although the US upturn began in May, there has been a considerable de- lay in the expected increase in the US demand for imports from primary producers, as indicated by a stable level of total com- modity imports through September. Countries exporting raw materials can derive some reas- surance from an incipient up- ward trend in world prices for some of the more important com- modity exports and from a sharp rise in October of letters of credit issued by American banks to finance increased imports early in 1959. Nevertheless, conditions in' Europe, the major export outlet of the SECRET PART-III PATTERNS AND PERSPECTIVES Page 10 of 15 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927A002000060001-4 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 4 December 1958 underdeveloped countries may deteriorate even further before an upturn occurs. Most of the underdeveloped countries, therefore, can be expected to maintain pressure for early implementation of nrooosals to enlarge interna- PEIPING'S SHIFTING VIEWS ON TRANSITION TO COMMUNISM Peiping has recently al- tered its stand on the immi- nence of Communism in China and now is stressing that the coun- try is still in the stage of "socialist" construction. Pol- itburo member Chu Te on 21 No- vember called for the indus- trialization of the "entire country" and of the communes, for management of agriculture in the same manner as industry, and for attainment of the "high- est world levels in science and culture." In describing the last- mentioned goal as one of the "necessary conditions" for eliminating the "serious" dis- crepancies between industry and agriculture, town and coun- try, and mental and physical labor, Chu in effect added an- other obstacle to China's rapid progress toward socialism on the road to Communism. He com- plained that Peiping's achieve- ments to date "are still far behind what is needed to com- plete the building of social- ism," and warned against "be- having like Utopians." Chu's remarks are more in line with current Soviet doc- trine than earlier Chinese statements which had played tional development assistance and credit facilities such as an international development association. They will also press for larger resources for the Tnternational Monetary Fund:and for international com- modity price stabilization ar- rangements. down a high level of industrial- ization as a necessary condition for the transition to Communism. In a recent article, the People's Daily on 22 Noveiuoer stated that payment according to "work" rather than "need" would continue throughout the "course of socialist construc- tion." Chinese propagandists now state that the principle of pay-according-to-work, pre- viously described as a "vulgar" practice, is an "objective and unavoidable rule in the econom- ic life of a socialist society." They also say the system of payment in food according to "need" can be introduced only in those communes where sup- plies are abundant. The negative cast of Pei- ping's current statements on the transition to Communism gives some support for the view that Peiping has begun to defer to Soviet leadership, particu- larly since Soviet Ambassador Yudin on 7 November corrected China's claim of rapid "progress toward Communism." Yudin said that the Soviet Union, where production is beginning to rival that of the most advanced capi- ta list.countries,'.is just reach- ing the point where socialism SECRET PART III PATTERNS AND PERSPECTIVES Page 11 of 15 Approved For Release 2007/10/23: CIA-RDP79-00927A002000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927A002000060001-4 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 4 December 1958 begins to change to Communism. By this statement, he implied that the Chinese could not hope to enter the Communist stage of development until a much higher level of production has been reached. Before November the Chi- nese had based their views on the future form of Communism almost exclusively on several works of Marx and Engels and on some of Lenin's early writ- ings, rather than on current Soviet theses. They claimed that their views on labor un- der Communism were similar to those generally expressed in Marx's Critique of the Gotha Program, in which Marx speaks of the "enslaving subordina- tion of the individual to di- vision of labor" disappearing in the "higher phase of Com- munist society." Mao Tse-tung's chief lieu- tenant, Liu Shao-chi, implicit- ly attacked labor specializa- tion on 16 September, declar- ing that "all capable persons in out society must engage in labor--particularly physical labor." Propaganda department chief Lu Ting-i made a direct attack earlier the same month, calling for the training of "all-purpose workers" who would be capable of various jobs in the factory, on the farm, and in the militia. Liu cited Mao as well as Marx and Engels as authority, but he did not give any Maoist text. Lu quoted the following from Engles' Prin- ciples of Communism: "Educa- tion allows young people to familiarize themselves quickly with all systems of production and to alternate from one meth- od to another depending on the needs of society." In discussing the emanci- pation of women, the Chinese have stressed liberation from household chores, as discussed in Engles' Origin of the Fami- ly, State and Private Property and Lenin:'.s 1919 work, The Great Beginning. Communal mess halls, nurseries, and kinder- gartens are justified by cita- tions from Lenin's article. Thus Peiping's approach to freeing women from the "slav- ery" of the old-style family continues to differ consider- ably from Moscow's. Peiping's claim of early September that it had attained eight of the ten conditions for achieving Communism laid down in the Communist Manifesto and that the last two "are just now beginning to be attained" has not been repeated. The position now seems to be that communalization--a "socialist" process--will take more than six years in some areas of the country, and that Communism will be achieved only after a "relatively long historical period." Peiping appears at best to be moving toward an announce- ment at some time within the next four years that the "main" foundations of socialism have been built in China and that a socialist society can be "com- pletely" built--a declaration which may place its progress toward Communism somewhat be- hind the advance of Bulgaria and Czechslovakia and consid- erably behind the USSR's posi- tion. In discussing Communism the Chinese have cited Mao Tse-tung's Selected Works only to illus- trate the conkitions for Commu- nism but not as a basic source defining these conditions. The concept of the commune as the basic unit for China's future Communist society has been at- tributed to him, however. In the event that he issues a thesis on the subject,.Mao almbst:cer- tainly will point to the unique- ness of the commune program and apply it to "China's concrete conditions" in order to avoid a 25X1 bloc. direct challenge to Moscow's ideological leadership in the SECRET PART III PATTERNS AND PERSPECTIVES Page 12 of 15 Approved For Release 2007/10/23: CIA-RDP79-00927A002000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY CHINESE COMMUNIST TRADE Communist China's trade with the free world, which is often conducted with political objectives in mind, has in- creased from 26 percent of Pei- ping's total trade in 1954-- after the Korean war--to 38 percent in 1957, when it was valued at $1.16 billion. It is expected to amount to nearly $1.3 billion this year, out of China's planned $3.5 billion worth of foreign trade. At least half of China's trade with the free world is with the Far East and South- east Asia, where potential mar- kets for expanding light industrial ex- ports exist. China's exports to these areas have consistently ex- ceeded imports, earn- ing foreign exchange for Peiping's purchas- es in Western Europe. Hong Kong and Japan normally account for half of China's Far East commerce. During the early period of the Chinese Communist regime, Hong Kong served as an en- tl-'epot for goods from Western Europe. Now, as a result of estab- lishment of direct WITH THE FREE WORLD na has found a relatively fer- tile export market in Japan, its purchases from that coun- try have been made partly from the desirability of maintain- ing a balance of trade. Ja- pan's high production costs make its prices for steel and fertilizer comparable to iden- tical goods from Western Europe, but it is a nearby source for emergency purchases--as in 1956 when immediate demands for ce- ment were fulfilled rapidly. Ja- pan's payments in sterling for its import surplus have provided China with about $185,000,000 in foreign exchange to help meet its trade debts in Europe over the past eight years. COMMUNIST CHINA: TRADE WITH FREE WORLD (00%) PERCENT OF TOTAL TRADE trade relations with Europe, China's imports from the col- ony have fallen from more than $250,000,000 in 1950 to only $20,000,000 last year. On the other hand, Peiping's sales have gradually increased to the point where it now earns more than $150,000,000 in ster- ling annually from its export surplus with Hong Kong. Trade with Japan was in- significant until 1954, when China stepped up exports of ag- ricultural commodities and raw materials. At the same time, but to a lesser degree, Peiping increased imports from Tokyo and by early this year trade was nearly balanced. While Chi- China presumably will not be greatly affected over the long run by its cancellation of trade with Japan last spring. Trade contacts are in fact be- ing maintained through Hong Kong. Indirect trade by Sep- tember had amounted to $4,000,- 000. Southeast Asia Peiping has been able to further the impression through trade in Southeast Asia that China is the industrial giant of the Far East. It has cap- tured a growing share of mar- kets for light industrial goods, particularly in Indonesia and Malaya, despite a general re- uction in demand for these SECRET PAST III PATTERNS AND PERSPECTIVES Page 13 of 15 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 SECRET goods as a result of depressed economic activity in the area. The large Overseas Chinese pop- ulation in Southeast Asian coun- tries has assisted Peiping in introducigg its consumer goods. The Bank of China branches in Southeast Asia supply Pei- ping with commercial intelligence and provide easy credit terms for importers of Chinese goods. Peiping offers products at pric- es as much as 10 to 20 percent uelow those prevailing in the current market, and has report- edly offered rebates to mer- chants to compensate for im- port'taxes. The Chinese effort is not limited to exports. Com- munist China diverts its rubber purchases from one source to an- other in order to develop inter- nal pressures for increased eco- nomic.relations With : iping, The Singapore press reports that China now is banning all exports to Malaya, probably in retaliation for Malaya's an- nounced intention to close branches of the Bank of China. Peiping presumably hopes that Malayan merchants, who received loans and financial concessions from China, will press the gov- ernment for an accommodation with Peiping. Peiping may also decide to withdraw from Malaya's rubber market where, in the first eight months of 1958, Pei- ping almost doubled its total 1957 purchases. The cancella- tion would be a temporary set- back to China's program for economic penetration. It is likely that some trade with Ma- laya would continue through Singapore. Exploiting Indonesia's anti-Western attitude and dis- rupted economy, Peiping has se- cured a firm foothold through long-term commercial credits, loans, and emergency food ship- ments. In 1957, China supplied over 70 percent of the cotton cloth purchased by Indonesia. To assure retention of this mar- ket, Peiping is delivering on long-term credit cotton tex- tiles equal to 25 percent of its ..,sales" in Indonesia last year. China has offered to supply textile machinery and is exporting rice to Indonesia on credit. The Bank of China in normal commercial transac- tions with Indonesian importers arranges to provide importers of Chinese goods with the 100- percent deposit now required to obtain import licenses. Pei- ping also offers contracts quot- ing fixed prices for future de- liveries, at a time of wildly fluctuating commodity prices. In other parts of Asia, China uses credit programs and trilateral trade deals to in- troduce increasing quantities of its goods in return for sur- plus agricultural commodities. A loan to Cambodia enabled a wide variety of Chinese consum- COMMUNIST CHINA'S EXPORTS TO SOUTHEAST ASIA (MILLION DOLLARS) 96 1954 1955 1956 1957 1958(m) er. goods to be exported. Tex- tile equipment continues to be delivered to Burma, and ceme.iit factories have been offered to Pakistan. India is importing, for the second year, a variety of Chinese chemicals and news- print. China is offering in- dustrial raw materials and light manufactured goods to secure a permanent place in the Ceylon- ese market. New direct shipping lines from New Zealand and Aus- tralia to the mainland are be- ginning to stimulate trade be- tween these areas. Western Europe China's imports from West- ern Europe, mostly nonstrategic SECRET PATTERNS AND PERSPECTIVES Page 14 of 15 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 4 December 1958 goods, showed sudden increases in the last half of 1956 and in the last part of 1957, as a result of "exception" proce- dures to trade controls and the subsequent relaxation of these restrictions. Increased direct purchases of iron and steel--totaling about 125,000 tons in 1957--usually purchased and transshipped via Eastern Europe accounted for most of the recorded increases in ship- ments of strategic goods. A- bout 1,000,000 tons of iron and steel have been bought in Western Europe this year, re- flecting, in part,.the cancel- lation of planned purchases of 400,000 tons from Japan in 1958. Peiping's trade with in- dividual countries of Western Europe has been subject to wide fluctuations, resulting from political considerations and variations in China's economic planning. It is common Chi- nese practice to withhold trade contracts until a. foreign trade delegation arrives in Peiping in order to propagandize the accomplishments of such mis- sions. West Germany and the United Kingdom normally account for 50 percent of China's trade with Western Europe. Sino - West German trade has grown rapidly in recent years. It is stimu- lated this year by China's pur- chase of over 300,000 tons of steel plates. China's imports from the United Kingdom during the first nine months of 1958 were 75 percent higher than during the same period in 1957. These imports consist chiefly of metals, wool tops, and ma- chine tools. Trade under the initial agreements signed with the Scan- dinavian countries in the lat- ter part of 1957 may increase China's trade deficit in West- ern Europe. Peiping established its first economic tie; with Africa in 1955 by concluding a trade agreement with Egypt. China now conducts $100,000,000 worth of trade annually with 14 African countries, having official trade pacts with four. Peiping's purchase of Egyptian cotton, amounting to about $42,- 000,000 in 1957, has kept Sino- African trade balanced. China is now insisting on barter agreements with those trade partners with whom it has had trade deficits, while its cur- rent trade drive elsewhere in Africa is primarily to seek markets for its own goods. Although the American em- bargo has virtually eliminated trade with China's former major trading partner in the western hemisphere, Peiping is increas- ing its efforts to expand rela- tions with Canada and Latin America. China's purchases of Canadian wheat amount to over 100,000 tons this year--ten times greater than last year. In Latin America, Peiping is stepping up imports of Brazil- ian sugar and exporting large quantities of coal to Argentina. Trade with Latin America prob- ably will reach a new peak this year and may total $50,000,000. Communist China's growing import requirements from the in- dustrial West are largely bal- anced by its growing trade in underdeveloped areas where its 25X1 export balance provides the nec- essary foreign exchange. (Prepared by ORR) 25X1 SECRET PART III PATTERNS AND PERSPECTIVES Page 15 of 15 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 25X1 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4 ~CCRE7~ CONF/DENT/AL CONFIDENTIAL Approved For Release 2007/10/23: CIA-RDP79-00927AO02000060001-4