CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A002100060001-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 48
• Document Creation Date: December 21, 2016
• Document Release Date: November 19, 2008
• Sequence Number: 1
• Publication Date: February 12, 1959
• Content Type: SUMMARY

Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
CONFI
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
ARMY review(s)
completed.
COPY NO. 54
OCI NO. 0488/59
12 February 1959
State Dept. review
completed
DOCUMENT NO.
NO CHANGE IN CLASS.
0 DECLASSIFIED
CLASS. CHANGED TO:
NEXT REVIEW DATE:
RUTH: R 70-
DATE/
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE RETURN TO ?CNPI t
IMM BIATM AFTER USE
JOB ~ _ BOX
CONFIDENTIAL
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
CONFIDENTIAL
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
T H E W E E K I N B R I E F
OF IMMEDIATE INTEREST
THE GERMAN PROBLEM . . . . . . . . . . . . . . . . . . Page 1
Moscow probably plans to counter a Western proposal
for a foreign ministers' conference this spring with de-
mands for another heads-of-government meeting. Khrushchev's
speeches to the party congress stressing the "positive
reaction" throughout the world to the 1955 Geneva summit
meeting and indicating that Moscow will continue to press
for another top-level conference probably reflect his
desire to enhance his personal stature as a world states-
man. Bonn has indicated that, in the event of East-West
negotiations, it might undertake to make some conciliatory
moves in its relations with Poland.
IRANIAN-SOVIET NEGOTIATIONS BREAK DOWN . . . . . . . . Page 2
The Soviet delegation which came to Tehran at Iranian
invitation on 29 January left on 11 February, after the
negotiations for a nonaggression pact broke down. The
talks collapsed over Iranian insistence on remaining in
the Baghdad Pact and signing a bilateral defense agree-
ment with the United States. The USSR will probably re-
taliate with a strong propaganda attack aimed primarily
at the Shah, and with economic and diplomatic pressure.
MIDDLE EAST DEVELOPMENTS . . . . , . . . . . . .
Cabinet shifts in Iraq appear to be bringing into
sharper focus the conflict between Iraqi nationalists,
pro- and anti-UAR, and the Communists. The pro-UAR min-
isters had apparently hoped that their resignations,
along with those of the Sovereignty Council members,
would pressure Qasim into stronger action against the
Communists. Instead, Qasim seized the opportunity to
replace them with extreme leftist, but still non-Commu-
nist,figures. However, the new cabinet also seems to be
in trouble on the Communist issue. Iraqi developments
and a large-scale celebration in Kuwait of the anniver-
sary of the UAR have frightened the Ruler into a crack-
down on nationalist elements.
CONFIDENTIAL
. Page 3
THE WEEK IN BRIEF
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927A002100060001-4
*Npi SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
PART II
NOTES AND COMMENTS
NUCLEAR TEST TALKS . a o a... o? o 0. 0 o a a e o 0 o Page 1
The Soviet Foreign Ministry statement on 7 February
demanding an unequivocal Anglo-American response to Mos-
cow?s insistence on a permanent unconditional test-
cessa-tion agreement, in combination with recent Soviet moves
at Geneva, suggests that Moscow is preparing the record
in anticipation of a stalemate which could lead to a sus-
pension of negotiations. While Moscow remains obdurate
on key issues, the statement gives an appearance of will-
ingness to negotiate. Moscow is attempting to blur the
present sharp focus on the issue of effective control and
shift the attention to the Western stand on duration of
the treaty.
the Taiwan Strait crisis, and the commune program, and
to reduce the divergence between its own line and Soviet
25X1
25X6
PEIPING TAKING MORE MODERATE LINE IN FOREIGN RELATIONS o o Page 2
Peiping?s first editorial comment since the Soviet
21st party congress is one of several recent indications
that the Chinese Communists may be adopting a somewhat
more moderate line in foreign policy. The comment follows
closely Khrushchev?s line of "peaceful competition" with
the West and lays heavy stress on growing "demands for
peace." Peiping may be trying to offset unfavorable im-
pressions resulting from its previous diplomatic posture,
NEW SINO-SOVIET ECONOMIC AGREEMENT o 0 0 o a a< o o a e, Page 3
The new Soviet agreement to assist China in the con-
struction of 78 heavy industrial installations, like
earlier Sino-Soviet "aid" pacts, is a pay-as-you-go barter
arrangement, involving no Soviet loans or credits. The
USSR is contracting to deliver to China, over the next
nine years, industrial equipment and technical materials
in exchange for Chinese products. The announcement, timed
pronouncements on "peaceful competition."
SECRET
ii
THE WEEK TN RRTEF
Approved For Release 2008/11/19: CIA-RDP79-00927A002100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
PART II (continued)
to coincide with the end of the Soviet party congress, is
designed to give substance to the many references at the
congress of the "inviolability of Sino-Soviet friendship."
SOVIET CONCERN WITH MANPOWER FOR EASTERN REGIONS . . . . . Page 4
Soviet Premier Khrushchev denied recently that the
USSR?s Seven-Year Plan would fail because of a manpower
shortage. He asserted that there are "several extra
people" in Moscow for every job, and that he intends to
send about a million of these to the eastern regions to
"really work." Khrushchev's evident determination to
shift labor resources to the east may develop into one
of his pet campaigns. In any case, his remarks reflect
the determination of the regime to expand its exploitation
of the resources of this area, despite the relatively
great initial investment requirements per unit of return.
FLIGHT OF REFUGEES FROM EAST GERMANY . . . . . . . . . . . Page 5
Defections from East Germany, although down 22 per-
cent from 1957, continued at a high rate throughout 1958,
when over 204,000 persons fled, most of them to West
Berlin, in reaction to the increasingly repressive poli-
cies of the Ulbricht regime. The total number of escapees
from East Germany has reached approximately 2,350,000
since 1949. In addition to the loss of skilled workers,
technicians, and managers, a very large increase in the
defection of doctors, scientists, and teachers has created
11GV4
TITO'S TOUR INTENSIFIES HIS DISPUTE WITH THE BLOC .
. . . Page 8
The Kremlin's mounting concern over the effect of
Tito's current visits with Asian and Middle Eastern leaders
has been reflected in statements made at the Soviet 21st
SECRET
THE WEEK IN BRIEF
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
SECRET %
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
PART II (continued)
party congress. Tito has stepped up his efforts to
strengthen ties with states in South and Southeast Asia
and the Middle East--as demonstrated by the extension of
his UAR visit and the inclusion of Greece in his itinerary.
VOROSHILOV'S VISIT TO INDIA . . . . . . . . . . . . . . . Page 9
plant.
The visit of Soviet President Voroshilov to India for
two weeks beginning on 24 February will probably be used
by Moscow to smooth over recent signs of friction with
New Delhi and to express continued Soviet support for
India's economic development plans. The visit will also
serve to focus public attention on Soviet economic aid to
India, such as that for the recently opened Bhilai steel
Nepal's first national elections beginning on 18
February are unlikely to achieve King Mahendra's purpose
of relieving the country's chronic political instability.
It is doubtful that any one of Nepal's many parties and
factions can win a majority in the new parliament. The
probable result will be an ineffective coalition govern-
ment, with the King remaining the dominant force. The
Indian Government, trying to promote a stable and pro-
gressive government in Katmandu to protect its-interests
and limit Peiping's influence, apparently is supporting
the moderate socialist Nepali Congress party, which will
probably win the most seats.
Page 10
AFRO-ASIAN YOUTH CONFERENCE . . . . . . . . . . . . . . . Page 11
and Communist delegations. Neutralist suspicion of Moscow
and Communist aims is apparently reflected in the wording
of the resolution condemning imperialism "in all its forms"
and "foreign interference in the affairs of other coun-
tries." The UAR garnered considerable propaganda advan-
tage as host, while the Soviet press and radio interpreted
the conference as affirming the identity of interest be-
tween the Communist bloc and underdeveloped nations.
The Afro-Asian Youth Conference in Cairo ended on 8
February with a show of unanimity and the adoption of a
long list of anti-imperialist resolutions, although there
were numerous indications of conflict between neutralist
BRITISH PLANS FOR ADEN . . . . . . . . . . . . . . . . . . Page 12
The current visit of Colonial Secretary Lennox-Boyd
to Aden will probably lead to development of a timetable
for constitutional evolution toward independence within
SECRET
iv
THE WEEK-IN BRIEF
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
PART II (continued)
five to ten years of Aden Colony and of the Aden Protec-
torate Federation. Yemeni-inspired disturbances preceding
London's inauguration of the federation on 11 February,
however, underline the major obstacle to orderly steps
toward the intended grant of self -determination.
TUNISIAN-FRENCH RELATIONS . . . . . . . . . . . . . . . . Page 13
Tunisia's relations with France are again deteriora-
ting following the recent arrest in Tunis of French citi-
zens on espionage charges, President Bourguiba's claim to
a portion of the Algerian Sahara, and the shelling of
Tunisian territory on 9 February by French Army units in
Algeria. Bourguiba may be playing up these issues not
only to reduce further France's favored position in
Tunisia but also to divert attention from the government's
failures in economic and financial matters.
THE CAMEROONS PROBLEM IN THE UN . . . . . . . . . . . . . Page 14
The UN General Assembly will resume its session on
20 February to decide on termination of the French trus-
teeship over Cameroun and to discuss the related problem
of the British Cameroons. There is considerable distrust
of the Paris-sponsored moderate Cameroun Government on
the part of the Asian-African bloc. If the required two-
thirds majority for an agreement is not secured and set-
tlement is postponed until next fall, there could be
serious disorders in Cameroun, and the pro-Western govern-
ment might fall.
SECRET
25X1
25X1
THE WEEK IN BRIEF
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
stc1{t"!" %we
12 February 1959
SPANISH GENERALS UNEASY OVER FRANCO'S SUCCESSION a
Top Spanish Army generals, concerned over Spain's
deteriorating political and economic situation, seem to
be maneuvering to reach an understanding with the non-
Communist opposition in order to ensure an orderly suc-
cession to Franco.
MIKOYAN'S VISIT TO THE UNITED STATES . . . . ... . . . Page 1
lated to convey an impression of stability and normalcy
and to portray the Soviet leaders as rational and toler-
Mikoyan's remarks on Soviet, internal affairs were calcu-
The Soviet leaders apparently conceived First Deputy
Premier Mikoyan's visit to the United States as a major
move in their developing political offensive in Europe
which opened with Khrushchev's challenge to the Western
position in Berlin. Mikoyan's two principal objectives
were to sound out official and public opinion an Berlin
and Germany and to create a political climate which would
facilitate Soviet efforts to bring the Western powers to
high-level negotiations on terms favorable to the USSR.
Page 17
ant men with whom the West could do business
MIDDLE EAST OIL PRODUCTION 1958-1959 .
. Page 5
The prospects for Middle East crude oil production in
1959 are for a record year, although output probably will
not increase as sharply this year as last. The area pro-
duced 4,247,000 barrels daily in 1958, up a record 20 per-
cent from 1957, while production declined in the rest of
the free world. The Arab states' reaction to the first
major breaches of the 50-50 profit-sharing principle will
probably intensify the industry's political problems in
the areas
SECRET
vi
THE WEEK IN BRIEF
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927A002100060001-4
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
PART III (continued)
THE PROSPECTS FOR CONTINUED FINNISH NEUTRALITY . . . . . . Page 13
Moscow's role in bringing about the fall of the
Fagerholm government has underscored Finland's precarious
position as a virtually unarmed state on the Soviet border.
Finland feels that it is free to develop internally along
the lines of a Western democracy, but that it must to a
large degree tailor its foreign policy to suit Moscow.
Finland will continue to trade extensively with the bloc
both for political and economic reasons and will not asso-
ciate itself in the near future with any of the projected
European cooperation programs. The Finns will, however,
work cautiously toward closer economic ties with Scandi-
navia--including a Nordic customs union--presumably with
the assent of the USSR.
SECRET
vii
THE WEEK IN BRIEF
Approved For Release 2008/11/19: CIA-RDP79-00927A002100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
'Soelegr %w
CONFIDENTIAL
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
OF IMMEDIATE INTEREST
THE GERMAN PROBLEM
Soviet Premier Khrushchev's
speeches to the party congress
stressed the "positive reaction"
throughout the world to the 1955
Geneva summit meeting and made
it clear that Moscow will con-
tinue to press for another top-
level conference. Khrushchev's
strong preference for a summit
gathering probably reflects his
desire to enhance his personal
stature as a world statesman.
These statements favoring
a four-power heads-of-govern-
ment meeting this spring have
been accompanied by Soviet
press treatment of the Mikoyan
visit to the United States and
Prime Minister Macmillan's
forthcoming trip to the Soviet
Union as forerunners of another
summit conference. An Izvestia
article of 5 February by Lord
Chorley, British left-wing
pacificist Laborite, declared,
"There are at present more fa-
vorable signs for a summit
meeting than at any time since
the 1955 Geneva conference."
The Prague radio suggested that
the Macmillan trip will serve
as "a kind of prelude for ne-
gotiations between the great
concluded that Dulles had failed
to remove the "grave differ-
ences" among the Allies and that
his trip produced no change in
Western cold-war policies and
determination to "maintain the
occupation of West Berlin."
Macmillan Visit to Moscow
The Soviet leaders probably
welcome Macmillan's forthcoming
visit as an opportunity to probe
for divergencies in American
and British approaches to Ber-
lin and Germany and to the de-
sirability of a new summit con-
ference. The Soviet press has
stressed the British public's
"profound satisfaction" with
the visit and suggested that
the forthcoming British general
elections strongly influenced
the prime minister's decision.
Soviet propaganda has sought
to create the impression of Amer-
ican displeasure over Macmillan's
trip, charging that one of Sec-
retary Dulles' purposes was to
dissuade the prime minister
from going to Moscow.
Preparations for Transfer
Communist statements on
Berlin continue to point to 27
May as the time when access con-
trols will be turned over to
the East Germans, despite high-
level Soviet suggestions that
the Kremlin will defer the turn-
over if negotiations are then
under way. The Soviet chief
warden at Spandau Prison recent-
ly told his American counter-
part, that "they" were planning
to turn their functions over
to the East Germans on 27 May.
The East German regime has
Reaction to Dulles Trip
Bloc propaganda described
Secretary Dulles' trip to West-
ern Europe as an urgent attempt
to overcome differences among
the Western Allies on Berlin
and Germany. Particular em-
phasis was placed on attempts
to contrast the "intransigent
and unyielding attitude" of
Chancellor Adenauer with the
flexible approach of British
leaders. The Soviet press
UNOW
CONFIDENTIAL
OF IMMEDIATE INTEREST P e 1 of 4
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927A002100060001-4
SECRET _,WP
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
consistently maintained that
it will be given the access
controls when the six-month
grace period ends, despite other
international developments.
Physical preparations to
transfer controls over East
Berlin are continuing. A trans-
it system between East Berlin
and points in East Germany by-
passing the Western sectors and
a customs or control barrier on
the elevated system's sector
border crossings now are ready
for use
The Kremlin is reported
planning to do away with the
Western military liaison mis-
sion now accredited to the So-
viet forces in East Germany.
The protocol chief at the So-
viet Embassy in East Berlin
commented recently that the
missions were incompatible with
Soviet policy on East German
sovereignty and would go at an
early date. If this step were
taken, the USSR would in turn
lose its military missions in
the three former Western occupa-
tion zones, but would have its
embassy in Bonn available to
gather military information.
West German Position
Bonn has outlined what is
probably its maximum effort to
appear,more conciliatory in the
event of negotiations on Germany.
The steps which Bonn is prepared
to take in East-West negotiations
--bilateral nonaggression pacts
and diplomatic relations with
its Eastern neighbors and recog-
nition of the Oder-Neisse bound-
ary--would not be new concessions,
since Bonn had held these moves
in reserve as potential bargain-
ing points prior to the Berlin
crisis. All of these proposals
are aimed at Warsaw and would
serve the dual objective of
satisfying internal West German
demands for an "active Eastern
policy" and Bonn's desire to
exploit any weakening of bloc
support for Ulbricht.
The negotiations on a non-
aggression pact between Iran
and the USSR have broken down,
and the Soviet mission led by
Deputy Foreign Minister Vladimir
Semenov has departed Tehran.
Additional Soviet pressure on
Iran is likely to follow this
rebuff.
The Shah took the initia-
tive in beginning these nego-
tiations last month and at the
outset appears, to have been
willing to specifically ex-
clude a bilateral agreement
with the United States in re-
turn for concessions in respect
to the Soviet-Iranian treaty
of 1921. Later the Shah de-
veloped misgivings and sought
to avoid meeting with the So-
viet mission on grounds of
"illness." After pressing
the United States for addition-
al aid and guarantees, the I-rani-
an Government stiffened its
terms in the negotiations with
the USSR by insisting that a
nonaggression pact should not
preclude the right to sign the
pending bilateral agreement
with the United States.
SECRET
PART I OF IMMEDIATE INTEREST Page 2 of 4
Approved For Release 2008/11/19: CIA-RDP79-00927A002100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927A002100060001-4
SECRET
low
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
While the Shah and Iranian
officials earlier expressed the
hope that, the USSR would reject
their terms, they now fear So-
cussions.
Other possible Soviet
measures include military
demonstrations on the frontier
and threats to exercise the
right to advance troops into
Iran under the 1921. treaty.
The Kremlin might also en-
courage dissident groups and
stimulate labor trouble or 25X6
sabotage by Arab workers in
Iran's oil fields. Moscow
could. upset the Iranian economy
by withholding shipments of con-
struction, consumer, and light
industrial goods for which Iran
depends on the USSR. The USSR
could also upset Iran's wool and
cotton industries by cutting
back on purchases for which
there is no free world demand.
MIDDLE EAST DEVELOPMENTS
Iraq
Cabinet shifts in Iraq
appear to be bringing the con-
flict between Iraqi national-
ists, both pro- and anti-UAR,
and the local Communists into
sharper focus. Last week pro-
OAR nationalists, including
moderate Foreign Minister Ju-
mard and firebrands like Minis-
ter of State Rikabi, apparent-
ly felt last week the time had
come to carry out their oft-re-
peated threats to resign. They
almost certainly believed Qasim
would accede to their demands
for a stronger anti-Communist
policy rather than have an open
break in the government. They
probably felt that, if Qasim
did not, their resignations
would be the spark for a gener-
al movement against him by dis-
satisfied army elements and
others.
Qasim, however, seized the
opportunity to replace the six
dissidents with ten new appoint-
ees, retaining in the cabinet
the two most pronounced leftists
--pro-Communist Minister of
National Economy Kubba and
Finance Minister Hadid.
Hadid, a member of the
National Democratic party (NDP),
which is led by Kamil Chadirchi,
Qasim's chief political adviser,
was joined by four or five other
civilian NDP sympathizers. Under
Chadirchi's guidance, the NDP
has followed policies which
have often paralleled the Com-
munist line, and Chadirchi has
often denied that the Communists
pose any threat in Iraq.
Near Eastern press reports,
however, state that Husayn Ja-
mil, the new propaganda minis-
ter, has submitted his resig-
nation because Qasim overruled
Jamil's decision to suspend a
Communist newspaper. Jamil's
action, if followed by resig-
nations by other members of the
NDP, would indicate a reversal
of the NDP attitude toward the
Communists and a possible tem-
porary coalition between this
party, which has opposed closer
SECRET
PART I OF IMMEDIATE INTEREST Page 3 of 4
Approved For Release 2008/11/19: CIA-RDP79-00927A002100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927A002100060001-4
SECRET
12 February 1959
ties with the UAR, and the pro-
UAR elements'on an anti-Commu-
nist program.
The reaction of the army
to this reported second cabi-
net crisis is not yet known.
In the cabinet appointments
announced earlier, Qasim seemed
to be trying to respond to army
sentiment that there should be
more military representation
in the cabinet and at the same
time to divide his choices
between officers whom he could
control and officers who, while
unsympathetic to his policies,
would be less dangerous or in-
fluential in the cabinet than
in their previous positions.
If he rides out the latest
crisis, Qasim presumably. will
attempt to make further trans-
fers in the army.
UAR propaganda has sought
to reap some advantage from
the Iraqi developments; student
demonstrations were organized
to-protest';the.death sentence
announced for Colonel Arif, the
former Iraqi deputy premier, and
the UAR-controlled press alleged
that the Iraqi Army was near
"rebellion" over the cabinet
changes.
The Ruler of Kuwait, who
is reported to have observed
developments in Iraq with grow-
ing anxiety and who has long
been worried by the growth of
radical Arab nationalist senti-
ment in his own domain, last
SECRET
week was frightened into"crack-
ing down on the more vocal
nationalists. Passports of
some were taken up, others were
fired from.'their government'
sinecures, and the more fervent-
ly nationalist "literary clubs"
and journals were closed down.
The immediate cause of this
action was the celebration in
Kuwait of the anniversary .of
the formation of the UAR, which
was turned into a general nation-
alist demonstration with strong
antigovernment overtones. The
Kuwaiti Government now has been
reorganized, both to strengthen
the public security forces and,
if possible, to bring together
in a common front all the ele-
ments of the ruling Subbah fam-
ily.
The crackdown undercut a
policy of appeasement of the
nationalist forces which the
Ruler had been pursuing for some
time. Only a fortnight ago he
was on the verge of announcing
Kuwait's adherence to the Arab
League, a move which had British
blessing. The Ruler also was
contemplating a substantial con-
tribution to the Cairo-dominated
Arab Development Bank. Both
these actions were presumably
motivated by the hope that Nasir
would respond by protecting Ku-
wait against the more menacing
nationalism of Iraq. However,
all such moves apparently have
been shelved for the time being 25X1
by the Ruler's preoccupation
with his internal problem.
PART I OF IMMEDIATE INTEREST Page 4 of 4
Approved For Release 2008/11/19: CIA-RDP79-00927A002100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
CONFIDENTIAL
`CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
The Soviet Foreign Minis-
try demand on 7 February for
an unequivocal Anglo-American
response to Moscow's in-
sistence on a permanent uncon-
ditional test-cessation agree-
ment, in combination with re-
cent Soviet moves at Geneva,
suggests that Moscow is pre-
paring the record in anticipa-
tion of a stalemate which could
lead to a suspension of nego-
tiations. Resembling in form
the Soviet delegate's over-all
position summarized at the con-
ference on 30 January, the
statement makes it clear that
the USSR will stand on its
basic position and now is con-
centrating on improving its
public posture.
The detailed criticisms
of the Western position on the
key issues of duration of the
treaty and voting procedures
in the control commission were
designed to make the Soviet
stand on these issues appear
reasonable in contrast with
the Western viewpoint.
Moscow probably hopes the
statement will help its dele-
gation blur the present sharp
focus on the issues of control-
commission voting procedures
and control-post staffing and
shift the emphasis to the re-
fusal of the British and Amer-
NUTP, N 3: COMMENTS
NUCLEAR TEST TALKS
icans to answer whether they
would agree to cease testing
"for all time."
On 6 February Soviet chief
delegate Tsarapkin said the
conference was deadlocked and
warned that the delegates might
part "in a few days" without
being able to submit a report
to their governments because of
the failure of the Western
powers to present their full
position. Tsarapkin criticized
the "piecemeal" methods used by
the United States and Britain
in introducing their draft ar-
ticles.
the nuclear-test issue be dis-
cussed at any future high-level
The Soviet delegation with-
in the next week may make fur-
ther adjustments in its posi-
tion--without altering Moscow's
basic stand on voting procedures
and duration--in order to under-
score its professed desire to
conclude an agreement "as soon
as possible." Ambassador Wads-
worth feels that the British
delegation is unhappy over the
present sharp clash and may be
inclined to interpret almost
any Soviet gesture as a real
concession. As a final move
before a breakoff, the Soviet
delegation might propose that 25X1
CONFIDENTIAL
PPRT II NOTES AND COMMENTS
Page 1 of 1S
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927A002100060001-4
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
PEIPING TAKING MORE MODERATE LINE IN FOREIGN RELATIONS
Peiping's editorial com-
ment on 8 February, its first
on the international situation
since the Soviet 21st party con-
gress, is one of several recent
indications that the Chinese
Communists may be adopting a
somewhat more moderate line in
foreign policy. The comment
follows closely Khrushchev's
line of "peaceful competition"
with the West and lays heavy
stress on growing "demands for
peace."
Manifestations of what may
be a softer approach by Peiping
to some countries had already
appeared in January. British
diplomats reported greater cor-
diality after a year of exceed-
ingly cool relations. Peiping,
while still attacking Japanese
Prime Minister Kishi personal-
ly, has not rebuffed Tokyo's
suggestions that talks to im-
prove relations between the two
countries be resumed at the ambas-
sadorial level.
The military lull in the
Taiwan Strait also fits with
Peiping's less bellicose pur-
suit of its international objec-
tives,. The most noticeable
change, however, has been in
propaganda output--particularly
that concerning Taiwan, The
"liberation" theme is played
down and references to "Chiang
bandits" are missing. Instead,
the "compatriots on Taiwan" are
offered "gestures of compassion"
in announcements of periodic
cease-fires, and even statements
accompanying "punitive" bombard-
ments remind Nationalist defend-
ers that only a "few reaction-
aries" are obstructing "peace-
ful negotiations" for reunifica-
tion with the mainland.
These developments are in
sharp contrast with the tough
approach Peiping followed last
SECRET
P-RT II NOTES AND COMMENTS Page e` of 18
Approved For Release 2008/11/19: CIA-RDP79-00927A002100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
year, when ;bitter and often vin-
dictive attacks were launched
against countries considered to
be frustrating Peiping's inter-
national objectives.
Peiping's earlier diplomat-
ic posture, the Taiwan Strait
crisis, and the commune program
have damaged Chinese Communist
prestige among neutrals, as well
as among more liberal elements
of the?.bloc. It is possible
this was explained to Communist
China's leaders by a group of
ambassadors recalled in December
from their posts in South and
Southeast Asia.
This diplomatic meeting
appears to have taken place
about the same time as a central
committee plenum in Wuhan, and it
is likely that a review of the
past year's efforts was made
at the plenum. The first in-
dications that a more "*peace-
ful" line might be pursued
came in a Red Flag article
soon after the m c -December
plenum.
Such an assessment may
well have revealed a lack of
progress under the hard policy
and led to recommendations for
one of greater moderation and
flexibility. A program of this
nature, while helping to remove
the onus of bloc bully from
Peiping, would also provide
closer alignment with Soviet
pronouncements on the "peace-
ful competition" between East
and West.
NEW SINO-SOVIET ECONOMIC AGREEMENT
Under an economic agree-
ment signed by Premiers Khru-
shchev and Chou En-lai on 7 Feb-
ruary, the Soviet Union will as-
sist China in the construction
of 78 additional heavy indus-
trial enterprises which will be
paid for by concurrent Chinese
exports. Soviet assistance will
amount to approximately $1.25
billion, spread over the next
nine years. The 78 "big" plants,
which include metallurgical,
chemical, coal, oil, machine-
building, electrical machinery,
radio-technical, building ma-
terials, and electric power
plants, will be started between
now and 1967.
The USSR by September 1953
had agreed to export machinery
and equipment and to provide
technical assistance for 141
plants; the following year 15
more projects were added to the
list. In April 1956 the total
of Soviet "aid" projects was in-
creased to 211, and in August
1958 the Soviet Union agreed to
supply technical assistance and
a limited amount of equipment
for 47 more enterprises. Since
a large part of the 211 projects
are finished or under construc-
tion, Moscow And Peipin.g,proba -
bly agreed that.China's economy
will soon be ready for another
massive injection of Soviet
assistance.
The method of repayment by
China will apparently be the
same as for the more than $2
billion in equipment and assist-
ance for industrial plants which
the Soviet Union has been sup-
plying China under the earlier
agreements. This $2 billion
amounts to some 25 percent, of
the total value of the 211
plants. Moscow has provided
Peiping with credits covering
the equivalent of only 20 per-
cent of the Soviet share in the
cost of these plants. In 1950
the USSR granted a $300,000,000
economic loan, supplemented by
another credit for $130,000,000
in 1954 when the original loan
had been spent.
At the present time, China
is not only paying for all its
imports from the USSR, but is
also making payments on the two
economic loans and.the military
credits received from the USSR.
SECRET
PA IT II NOTES AND COMMENTS Page of 18
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927A002100060001-4
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
These major "aid" projects
are in addition to a large num-
ber of other Chinese industrial-
ization projects where Soviet
technical or material. aid play
a lesser but still important
part--all of which are on a pay-
as-you-go basis. The new agree-
ment points out that Chinese
technical and material contribu-
tions to the new projects will
be much greater than heretofore.
Soviet assistance to China's in-
dustrialization drive is to con-
tinue at least through the end
of China's Third Five-Year Plan
in 1967, and, while the projects
now scheduled probably represent
a minimal figure at most, the
relative importance of the So-
viet role probably will continue
to diminish.
The announcement, timed to
coincide with the end of the
Soviet party congress, is de-
signed to give substance to the
many references at the congress
of the "inviolability of Sino-
Soviet friendship."
(Prepared by ORR)
SOVIET CONCERN WITH MANPOWER FOR EASTERN REGIONS
Soviet Premier Khrushchev
has denied that any manpower
shortage will cause the USSR's
Seven-Year Plan (1959-65) to
fail. Speaking at a recent
diplomatic gathering, he as-
serted that there are "several
extra people" in Moscow for
every job, and that he intends
to send about a million of these
to the eastern regions to "real-
ly work." Khrushchev's evident
determination to shift labor
resources to the east may develop
into one of his pet campaigns.
In any case, his remarks.re-
fleet the desire of the regime
to expand its exploitation of the
resources of this area, despite
the relatively great initial
investment requirements per unit
of return.
The Seven-Year Plan speci-
fies that by 1965 the eastern
regions--the Urals, Siberia,
. Eastern Regions of the USSR
SECRET
PART II NOTES AND COMMENTS Page 4 of 18
Approved For Release 2008/11/19: CIA-RDP79-00927A002100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927A002100060001-4
SECRET ......... ....
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
the Soviet Far East, Kazakhstan,
and Central Asia--should be
producing 50 percent of the
USSR's coal, 46 percent of the
electric power, 30 percent of
the oil, 43 percent of the pig
iron, 47 percent of the steel,
and 48 percent of the rolled
metal.
However, the share of total
capital investment to be al-
located to the development of
the eastern regions in the plan
is described merely as "more
than 40 percent"--the same term
used in the Sixth Five-Year Plan
(1955-1960), which was consider-
ably underfulfilled in the three
years before it was superseded.
Actual investment in the eastern
regions in 1956-1958 was only
32 percent of total capital in-
vestment. More initial invest-
ment per unit of return is re-
quired in the eastern regions
because of great distances in-
volved and the inadequate work-
ing force.
At present the eastern re-
gions contain about 30 percent
of the USSR's population. In
order to achieve the projects
outlined in the Seven-Year Plan,
additional migration into the
area must take place, and this
in turn will require consider-
ably more housing and other
construction.
Past exploitation of the
area depended in part on forced
labor. This seems to have proved
inefficient, however, and has
gradually been dropped since
Stalin's death. Khrushchev's
new education program, which
will put a larger proportion of
young people to work, will pro-
vide a reserve of labor for the
eastern regions.
Plans for effecting the
transfer of a million workers
out of Moscow were not elabo-
rated. Apparently the transfer
will not be.through the use of
special bonuses, since Khru-
shchev remarked at the congress
that "by preserving such allow-
ances we.appear to be discredit-
ing a...most rich area of the
Soviet Union." As during the
industrial reorganization, Khru-
shchev will probably have a'fa.ir
degree of success in relocating
workers in remote areas.
Khrushchev also said at
the recent diplomatic gathering
that the Russians had once con-
sidered using Chinese labor, but
had decided against it, as being
unnecessary. He added that the
program to receive some 30,000
Bulgarians to take jobs in the
USSR "to relieve Bulgarian un-
employment" had been a mistake. 25X1
These workers, he said, would be
moved from mining to "gardening,"
in which they excel.
FLIGHT OF REFUGEES FROM EAST GERMANY
Defections from East Ger-
many although down 22 percent
from 1957 continued at a high
rate throughout 1958, when over
20:,000 persons fled in reac-
tion to the increasingly repres-
sive policies of the Ulbricht
regime. The total number of
escapees from East Germany to
West Berlin and West Germany
has reached approximately 2,-
350,000 since 1949; this loss
of personnel makes unlikely any
rapid increase in economic de-
velopment. In addition to the
loss of skilled workers, tech-
nicians, and managers, a very
large increase in the defection
of doctors, scientists, and
teachers has created serious
problems.
SECRET
PART II NOTES AND COMMENTS Page 5 of 18
Approved For Release 2008/11/19: CIA-RDP79-00927A002100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
SECRET ....
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
By increasing internal con-
trols, the regime succeeded in
early 1958 in reducing the num-
ber of refugees. The exodus,
nevertheless, rose last summer
to a high figure, including a
large number of in-
tellectuals, forcing
the regime to make
certain concessions,
notably to doctors
and small shopkeep-
ers.
The authorities
in Bonn estimate that
there is but one doc-
tor per 1,700 persons
in East Germnay, com-
pared with one per 750
in West Germany; 1,-
242 doctors, dentists,
and veterinarians fled
in 1958, an increase
of almost 300 percent
over 1957. It is re-
ported that doctors
ers and farm workers, 350,000
skilled workers and craftsmen,
32,000 persons in the technical pro-
fessigns., and:.Anore than, 350,000
children have fled. The majority
of the refugees are under 45, a
EAST GERMAN REFUGEES TO WEST GERMANY
F__ I
331,390
1953 1954 1955 1956 1957
Note: Figures include only those entering through
normal West German refugee channels.
1958
from other satellites may
called in to help staff some
East German institutions. To
alleviate the shortage of teach-
the call has gone out to
BREAKDOWN OF EAST GERMAN REFUGEES
BY OCCUPATION
11957 1958
INDUSTRY & HANDICRAFT 61,594 39,319
TRADE & TRANSPORT 31,476 23,983
UNSKILLED WORKERS 28,688 20,462
HOUSEWIVES 26,283 23,085
AGRICULTURE 15,748 9,287
HOUSEHOLD & HEALTH SERVICES 13,679 11,843
ADMINISTRATION & JURISPRUDENCE 8,583 8,894
TECHNICAL PROFESSIONS 5,568 4,394
ARTS 3,667 5,228
NONWORKERS
(PENSIONERS, CHILDREN, & STUDENTS) 66,336 57,597
young workers and housewives to
volunteer for training to re-
place some of the elementary-
school teachers who fled in
1958.
The flight of personnel
has also had a deleterious e:-
feet on some sectors of the
economy. During the 1949.5a
period, more than 123,000 itar,A-
high percentage of them of mili-
tary age (18-25).
References to shortages of
agricultural labor have appeared
in numerous reports, and East
Zone publications are urging
women to work a few hours daily
on the farm or in the factory.
Almost 10,000 farmers fled last
year, largely because of the in-
tensification of pressures on
the private peasant.
The loss of some 11,000
engineers in the last five years,
including 2,345 in 1958, has
also had an adverse effect on
the regime's ambitious plans.
The chairman of the party
economic commission, dismayed
at the flight of the intel-
ligentsia, expressed anxiety
that the loss of technical and
scientific personnel would
hinder the chemical industry,
which is designed to become
one of the pillars of the
East German economy.
SECRET
PART II NOTES AND COMMENTS Page 6 of 18
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
Ifte
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
TITO'S TOUR INTENSIFIES HIS DISPUTE WITH THE BLOC
The Kremlin's mounting con-
cern over the effect of Tito's
current visits with Asian and
Middle Eastern leaders has been
reflected in statements made at
the Soviet 21st party congress.
Speeches emphasized two main
themes as guides for bloc prop-
aganda calculated to tarnish
Yugoslavia in neutralist eyes.
They charged that Yugoslav eco-
nomic development has lagged
significantly behind that of
the bloc, and that Yugoslavia's
policy of avoiding alliance with
any bloc is fraudulent because
Belgrade is a signatory to the
Balkan Pacts
In response to attacks
voiced at the congress, Tito
has stepped up his efforts to
strengthen ties with states
in South and Southeast Asia and
the Middle East--as demonstrated
by the extension of his visit
to the UAR and the inclusion of
Greece in his itinerary.
Tito undertook his trip in
part to demonstrate to the Sino-
Soviet bloc Yugoslavia's inter-
national respectability, and
the cordiality accorded Tito on
his tour has caused concern in
Moscow lest the sympathetic re-
ception of his views jeopardize
Soviet achievements in the area.
Tito reportedly has indi-
cated considerable apprehension
over Soviet moves in the uncom-
mitted world and during the re-
mainder of his trip will prob-
ably be even more candid. He
may seek to strengthen the Bal-
kan Pact. Moscow has already
accused Tito of promoting the
USSR's present differences with
Cairo, and its concern will not
SECRET
PART II NOTES AND COMMENTS Page 8 of 18
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
Nowo SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
be lessened by Tito's probable
attendance as Nasir's guest at
the 21 February anniversary of
the founding of the UAR.
Belgrade apparently has
abandoned any hope that Khrush-
chev might a; to moderate the
dispute and has responded with
vigorous personal attacks
against him. Both Moscow and
Belgrade now clearly consider
that there are few remaining
areas where they can cooperate.
In his closing speech to the
congress Khrushchev limited
these areas to questions on the
state level "on which our posi-
tions coincide." On 5 February
the Yugoslav ambassador in
Moscow stated that it now is
clear the fight with Moscow
"had never been ideological but
was a question of Yugoslav
independence."
Belgrade now may become
more sympathetic to the West's
international position, but it
is unlikely there will be any
dramatic reorientation in its
position. The Yugoslav reply
early in February to the USSR's
10 January note on Berlin and
Germany, for example, welcomed
the proposals as a basis for a
solution of the problem and a
means of reducing world tensions.
VOROSHILOV'S VISIT TO INDIA
Soviet President Voroshilov
will pay a formal visit to India
starting 24 February, He will
be accompanied by some 20 offi-
cials, including party presi-
dium member N. A. Mukhitdinov,
a leading spokesman on Soviet
relations with Afro-Asian coun-
tries, as well as the "foreign
.nister" of the Georgian SSR,
and ranking officials of the
Soviet Foreign Ministry and
State Committee for Foreign
Economic Relations,
recriminations with Cairo over
the UAR's anti-Communist cam-
paign and because of concern
over the effect of Tito's visit
to Asia. Khrushchev, in his
concluding speech on 5 February
to the 21st party congress, went
out of his way to praise Nehru
and India's economic development
program, and Mukhitdinov praised
Nehru's "farsighted policy" in
an address to the congress on
30 January.
The visit will be largely
ceremonial, but Moscow will use
the occasion to express contin-
ued Soviet support for India's
economic development plans and
to smooth over the friction a-
rising from attacks by Soviet
ideologists on Prime Minister
Nehru and on India's foreign
and domestic' policies,
Soviet officials seem
eager to improve relations,
possibly because of recent
Soviet spokesmen and prop-
agandists can.also be expected
to utilize Voroshilov's visit
to advance claims concerning
Soviet economic aid projects
in India such as the Bhilai
steel plant, which was formally
opened on 4 February amid con-
siderable fanfare. Khrushchev
alluded to the Bhilai plant in
his 5 February speech, compar-
ing it favorably with the
steel plants being built 'in
India by the West Germans and
British.
SECRET
PART II NOTES AND COMMENTS Page 9 of 18
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
SECRET _..........~''~ .. _ . _._ _
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
No mention was made in Mos-
cow's announcement of Voroshi=-
loo's trip of the possibility
of his going to Nepal to repay
King Mahendra's visit of last
June. However, a Soviet economic
delegation arrived in Katmandu
on 12 February to begin talks
on Soviet economic and tech-
nical assistance.
ae e -
r nmen as stalled
on inviting Voroshilov despite
reported heavy pressure by the
USSR during Januar
ELECTIONS IN NEPAL
Nepal's first national elec-
tions will begin on 18 February
and continue on a staggered
schedule through 3 April. It is
increasingly doubtful that any
one of Nepal's many parties and
factions can win a majority in
the parliament to be established
under a new constitution. The
result will probably be an in-
effective coalition government,
with King Mahendra remaining in
a dominant position, and a con-
tinuation of the political insta-
bility which has plagued Nepal
since 1950. The Indian Govern-
ment has long sought the estab-
lishment of a stable and progres-
sive government in Nepal as one
means of limiting Chinese Com-
munist influence.
While little information is
available on the progress of the
election campaign, particularly
in the outlying areas of Nepal,
it seems likely that neither party
labels nor national issues will
determine the outcome of the
voting for the new parliament's
109 seats. Most of the politi-
cally unsophisticated population
will vote on the basis of the
candidates' personal popularity
or power and their stand on
local questions. Many candi-
dates apparently are running
as independents, preferring to
negotiate their political affili-
ation after it is clear which
party is in the strongest posi-
tion. The party line-up in par-
liament is thus likely to be ex-
tremely fluid.
The moderate socialist Ne-
pali Congress, the country's
largest and best-organized party,
is led by B. P. Koirala and
probably will win the most seats.
This party may be prevented from
gaining a majority, however, by
the sizable vote likely to go to
independents, to the Gurkha Par-
ishad, a rightist party with a
strong hold on the rural popula-
tion, and possibly to former
Prime Minister K. I. Singh's
United Democratic party. Singh
probably retains a considerable
personal following, although
it is not clear whether this
support extends to his party,
Most observers regard the
Communist party's prospects as
limited, since it does not ap-
pear to exert as much influence
as Nepal's major parties. The
SECRET
PART II NOTES AND COMMENTS Page 10 of 18
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
SECRET NEW
12 February 1959
strength and activities of the
Communists are still largely
unknown factors, however, and
they could make a surprising
showing by relying on united-
front tactics and by exploit-
ing local issues.
The Indian Government, which
has a major stake in the elec-
tions, appears to be backing the
Nepali Congress. New Delhi prob-
ably is providing this party with
at least some material support.
Indian officials apparently re-
gard the Nepali Congress as hav-
ing the best chance of forming
the stable government which they
feel is essential to protect In-
dia's.special interest in Ne-
pal.
The week-long Afro-Asian I als attending without the approv-
Youth Conference in Cairo ended
on 8 February with a show of
unanimity and the adoption of
the expected long list of gener-
ally anti-imperialist resolu-
tions, Throughout the confer-
ence, however, there were numer-
ous indications: despite the
censorship imposed by the confer-
ence secretariat and the UAR
Government, of conflict between
Communist and neutralist dele-
gations. Arab delegates and ob-
servers, largely Egyptian and. Syr
.ian, greeted the remarks of some
Soviet and Asian Communist dele-
gates and messages from Khru-
shchev and Chou En-lai with the
chant, "Neither East nor West."
Neutralist resistance to
Communist domination apparently
is reflected in the wording of
the conference's first resolu-
tion condemning imperialism "in
all its forms" and "foreign in-
terference in the affairs of
other countries." Both the So-
viet and Chinese Communist dele-
gations aware of neutralist
antipathy, were described as
behaving with considerable cir-
cumspection and restricting
much of their activity to "cloak-
room" persuasion.
al of their governments. UAR
efforts to pass off such "cap-
tive'" delegates as- representing
bona fide youth organizations
were largely unsuccessful. Dur-
ing the course of the meetings
both the Yemeni and South Viet-
namese delegations withdrew--
Yemen in conflict with the secre-
tariat's, decision to seat expatriate
Yemenis and delegates from Aden
Protectorate, and the South Viet-
namese in. protest over the pres-
ence of delegates from the USSR,
which they do not consider an
Asian nation. Indonesia, refus-
ing to send a delegation for the
same reason which prompted the
South Vietnamese withdrawal,
was represented by a "fellow
traveler" resident in Budapest.
The UAR, as anticipated,
used the conference for its own
propaganda purposes. There were
well-organized youth parades, a
military display, and slogan
chanting on behalf of President
Nasir, with an occasional thrust
at Iraqi Premier Qasim. The
UAR's favorite targets--Zionism,
the "usurpation" of Palestine,
King Husayn of Jordan, and for-
eign military bases--were con-
demned by conference resolutions.
More than 400 delegates
representing about 50 nations
were at the conference. Several
delegations, however, were com-
posed of exiled or refugee nation-
The Soviet press and radio
gave steady but routine publicity
to the conference, interpreting
it as a further affirmation of
the identity of interests between
SECRET
PART II NOTES AND COMMENTS Page 11 of 18
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
v SECRET
12 February 1959
bloc countries and the under-
developed nations. Pravda on
9 February admitted lTrcol-
lisions of different points of
view" occurred, and Moscow and
an Afro-Asian country
protest that the USSR is not
Peiping displayed considerable
sensitivity to the Vietnamese
BRITISH PLANS
British officials hope
the current visit of Colonial
Secretary Lennox-Boyd to Aden
Colony and Protectorate will
lead to development of a time-
table for constitutional evolu-
tion toward independence. Lon-
don formally inaugurated the
"Federation of Arab Amirates
of the South" on 11 February
during his visit.
Britain prompted this fed-
eration of the 18 nominally in-
dependent, British-protected
rulers,as a more effective means
of resisting subversion by Yemen
and the UAR. Although the feder-
ation now includes only six
TURKEY
7 ~..a 3
'LES1 _ IRAQ
UAR \\
LIBYA (EGYPT)
rulers, the British hope the
other 12 will join later and
count especially on the promise
of the large Sultanate of Lahej
to do so.
Others may be inhibited from
joining, however, by the dis-
turbances inspired by Yemen in
the six states. In the Aulaqi
sheikdom, whose ruler had been
one of those most anxious to
federate, the increasing strength
of the Cairo-backed opposition
group is worrying the British.
The federation will prob-
ably begin as a merely formal
NAMES IN RED INDICATE MEMBERS
OF THE FEDERATION OF THE
ARAB AMIRATES OF THE SOUTH
USSR
AFGH.
IPAK.
SAUDI
ARABIA
L A N
FRENCH. ?1, W
SOMALILAND ~'d
DHALIN WESTERN ADEN
LOWER YAFL'` F p D H L
PROTECTORATE
ADEN COLONY
EASTERN A D E N
PROTECTORATE
SECRET
PART II NOTES AND COMMENTS Page 12 of 18
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
union with continued British use
of military facilities guaran-
teed in return for small-scale
economic and military aid.
local trouble areas, Aden now
is headquarters for the Brit-
ish Forces, Arabian Peninsula.
The establishment in April 1958
of this unified command,
which reports directly to Lon- 25X6
don without going through Cy-
prus, underscores the impor-
tance Britain attaches to ensur-
ing continued access to Persian
Gulf oil. Aden is also a
vital transit link .with the
Far East.
While most of the British
troops there are deployed in
TUNISIAN-FRENCH RELATIONS
Tunisia's relations with
France are again deteriorating
following the recent arrest,by
Tunisian security agents of sev-
eral French citizens on espion-
age charges, President Bourgui-
ba's claim to a portion of the
Algerian Sahara, and the shell-
ing of Tunisian territory on
9 February by French Army units
in Algeria. Bourguiba may be
playing up these issues not
only in seeking to reduce further
France's favored position in
Tunisia but also in diverting
attention from the government's
lack of progress in dealing with
pressing economic problems and
his inability to obtain finan-
cial concessions from France.
The 13 French citizens re-
cently arrested, as well as an
assistant French military at-
tache who was expelled, are
accused of intelligence activi-
ties, including the tapping of
telephone conversations between
Tunisian officials and Algerian
rebel leaders. The Tunisian
Government, which has abrogated
its technical agreement signed
last August to modernize its
communications system and dis-
TRIPOD-_~
TRIPOL ITANIA
LIBYA
O Tunisian territorial claim
Approximate area of
petroletmi concession
missed all French communications
employees, almost certainly will
demand that France reduce its
embassy staff, which now `num-
bers 650 persons.
The territory claimed by
Bourguiba amounts to some 6,000
square miles of the Sahara and
SECRET
Bizerte
MEDITERRANEAN SEA
P-der incide
t
n
?Kasserine 2
PART II NOTES AND COMMENTS Page 13 of 18
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
forms the greater part of a pe-
troleum exploration concession
tentatively awarded by Paris
last month to a French-American
firm. The concession apparently
parallels a provisional boundary
separating Algeria from Tunisia,
established years ago by French
military offi'ials. This bound-
ary has been challenged several
times since Tunisia became in-
dependent three years ago. The
Tunisians have indicated that
they will seek to bring their
claim before the International
Court of Justice unless they ob-
tain satisfaction from France.
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
An official Tunisian com-
munique charges that 16 mortar
shells fired from Algeria into
THE CAMEROONS PROBLEM IN THE UN
The UN General Assembly
will resume its session on 20
February to decide on the pro-
cedure for. terminating the
French trusteeship
over Cameroun and to
discuss the related
problem of the Brit-
ish Cameroons. These
issues could have
serious internation-
al repercussions if
no agreement achieves
the required two-
thirds majority and
settlement is post-
poned until the next
meeting of the Gen-
eral Assembly in the
fall. In that case,
France, which fears
that any delay in in-
dependence for Cam-
eroun could provoke
disorders there or
......SECRET.......
Tunisian territory west of Kas-
serine killed one person and
caused heavy property damage.
This incident is reminiscent of
French attacks last year--pre-
sumably directed against Algerian
rebel installations inside Tu-
nisia--the more serious of which
precipitated crises in Tunisian-
French relations and resulted
in the withdrawal of all French
troops from Tunisia except those
based at Bizerte, Tunisian fears
of a French military reoccupa-
tion probably will be reiterated,
and Bour iba. 25X1
may use this
occasion o presser more arms
from the West.
While there seems to be no
dispute over the timing.of Cam-
eroun's independence, many Asian
and African nations--influenced
Kaduna
NORTHERN REGION
"a- NIGERIA
Fb rvda acaio
aa. a
J ugucREr ox
e
`mss
{
lead to a fall of Prime Minis-
ter Ahidjo, might unilaterally
carry out its promise to free
Cameroun on 1 January 1960.
t
CAMERO JN
'
Douala Yaounde
HFRENCH EQUATORIAL AFRICA
by propaganda from the Commu-
nist-inclined Union of the Cam-
eroons People (UPC)--consider
the moderate Ahidjo government
SECRET
PART II NOTES AND COMMENTS Page 14 of .18
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
SECRET
12 February 1959
a French stooge. These nations
demand a plebiscite on independ-
enee and new legislative elec
tions under UN supervision de-
spite the recent report of a
UN mission that such a polling
would be unnecessary. France
and the Cameroun Government
fear that the UPC, which in-
stigated violent riots in 1955
and carried on guerrilla war-
fare for several years, might
gain influence through elections
and upset the fragile Ahidjo
coalition of conservative Mos-
lems and Christian and pagan
tribesmen.
The problem is complicated
by the situation in the British
Cameroons. Although Britain
has administered its smaller
share of the former German col-
ony of Kamerun as part of Nige.'-
riy, in 1958 it recognized the
southern portion of its trust
territory as a separate region
within Nigeria. London has
hoped that its trust area would
federate with an independent
Nigeria after October 1960 de-
spite the attraction of reunifi-
cation of the Cameroons espoused
by the UPC and other Cameroun
parties.
To counter the activities
of a strong UPC delegation which
has Cairo backing and has re-
ceived_support at the All-Afri-
can Peoples' Conference at Accra,
France and Cameroun are concen-
trating their diplomatic efforts
on the UN's uncommitted nations.
Paris is seeking the support of
the Latin American nations,
while the Cameroun Government
is contacting the African states .
The Cameroun missions to Ethi-
opia, the Sudan, Tunisia, Li-
beria, and Guinea are optimistic;
the one to Morocco appears to
have been rebuffed. Ghana
probably remains distrustful of
Ahidjo.
British.hopessuffered a
setback in late January when the
Southern Cameroons voters ousted
Dr. Endeley, who favored close
ties with Nigeria. The voters
gave the opposition party of
Dr. Foncha 14 out of 26 legis-
lative seats and a small popular
majority. Because of the close
vote, a plebiscite almost cer-
tainly will be required to de-
termine the people's desire re-
garding independence or reuni-
fication. Although Dr. Foncha
has not revealed his policies, 25X1
he is likely to favor independ-
ence and.then a loose associa-
tion with Cameroun.
SECRET
PART II NOTES AND COMMENTS Page 15 of 18
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
SECRET
12 February 1959
SPANISH GENERALS UNEASY OVER FRANCO':S SUCCESSION
Top Spanish Army generals,
concerned over Spain's deteri-
orating political and economic
situation, seem to be maneuver-
ing to reach an understanding
with the non-Communist opposi-
tion in order to ensure an
orderly succession when General-
issimo Franco departs from the
scene, voluntarily or otherwise.
The army enjoys a privi-
leged position in Spain and
has been considered the re-
gime's most reliable support.
Nevertheless, during the last
year a few high generals have
increasingly criticized Franco's
policies and the government's
inefficiency and corruption.
Franco retains the personal
loyalty of army leaders, but
top generals are increasingly
concerned over the regime's
failure to remedy basic economic
ills and check widespread un-
rest. They are also concerned
over the hostility with which
80 to 85 percent of the popula-
tion are reliably reported to
regard the army.
Army leaders probably feel
that any system of succession
Franco may prepare will lack
stability unless supported by
opposition elements, which have
recently become more outspoken.
Some of the most influential
generals, including Munoz Gran-
des, chief of the High General
Staff, Army Minister Barroso
Sanchez-Guerra, Garcia-Valino,
former high commissioner for
northern Morocco, and Miguel
Rodrigo, captain general of the
Madrid military region, are be-
coming increasingly interested
in preparing in advance to meet
a situation that might exceed
Franco's powers of control.
They have reportedly made
contacts with such opposition
leaders as ex-Falangist Dio-
nisio Ridruejo, head of the
SECRET
e 17 of 18
PART I-Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927A002100060001-4
~Ww SECRET
CURRENT 'INTELLIGENCE WEEKLY SUMMARY
12 February 1959
Socialist Party of Democratic
Action, and Gil Robles and
Gimenez Fernandez, leaders of
the Christian Democratic right
and left wings respectively.
They are also said to have
been in touch with Socialist
leaders, some 58 of whose fol-
lowers were arrested last No-
vember for engaging in clan-
destine political activity.
These contacts may be
aimed at ascertaining how much
opposition support the army
could expect in the event of a
coup. Active backing for a
move by the military to take
over would probably be forth-
coming from the lower echelons,
particularly from reserve, com-
pany-grade officers. These are
largely anti-Franco university
dents or recent graduates
Ninety percent of
25X1
the Spanish Army troops are
draftees or one-term volunteers
with a low esprit de corps.
SECRET
PART II NOTES AND COMMENTS Page 18 of 18
Approved For Release 2008/11/19: CIA-RDP79-00927A002100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
ovow
CONFIDENTIAL
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
PATTERNS AND PERSPECTIVES
MIKOYAN'S VISIT TO THE UNITED STATES
The Soviet leaders apparent-
ly conceived First Deputy Pre-
mier Mikoyan's visit to the
United States as a major move in
their developing political of-
fensive in Europe which opened
with Khrushchev's challenge to
the Western position in Berlin.
Mikoyan's two principal objec
tives'in his talks with American
leaders and his tour of the
country probably were to sound
out official and public opinion
on Berlin and the German ques-
tion and to create a political
climate which would facilitate
Soviet efforts to bring the
Western powers to high-level
negotiations on terms favorable
to the USSR.
Appraisals of the results
of Mikoyan's trip at the 21st
party congress suggest that
the Soviet leaders believe the
visit, supported by recent dip-
lomatic initiatives intended to
demonstrate the USSR's desire
for high-level talks, succeeded
in generating growing expecta-
tions of an early East-West con-
ference which will seriously
inhibit Western freedom of ac-
tion in responding to future So-
viet moves, such as a withdrawal
from East Berlin. Moscow prob-
ably considers that these ex-
pectations will encourage a
desire in Western public opin-
ion to avoid, or at least delay,
measures to insure Western access
to Berlin. which carry a risk of war.
The decision to send Mikoy-
an to the United States may have
been taken following the firm
Western response to the Soviet
notes of 27 November proposing
that the "occupation" of Berlin
be ended and that West Berlin be
converted into a demilitarized
free city. Mikoyan apparently
had no thought of such a trip as
late as October 1958, when he
told he did not
since the United States had
grown steadily more reactionary
and he did not want to ruin the
good impression he had received
when here in the 1930s. He said
Khrushchev should go, and then
qualified his first statement
by saying, "I wouldn't want to
go to America.. unless Khrushchev
went."
Soviet Objectives
The Soviet leaders may
have decided that their efforts
to undermine Western unity in
meeting the challenge on Berlin
required some dramatic initiative.
They probably hoped Mikoyan's
talks with American leaders
would lend greater credibility
to rumors of secret Soviet-
American negotiations which were
circulated by Soviet sources in
Western Europe in early December.
These rumors, which alleged that
the United States had agreed to
a Soviet suggestion that neither
side should inform its German
partners, were obviously aimed
at shaking the confidence of the
West Germans and the other NATO
allies in American policy and
intentions.
During the course of Mikoy-
an's tour of the United States,
Soviet correspondents in Paris
were seeking to stimulate fears
of a private Soviet-American
deal to settle world problems.
They stressed that the Mikoyan
trip marked a "historic turning"
in world affairs and that, while
the results would emerge only
gradually, the United States and
the USSR--the only two real world
powers--were now considering
bilateral arrangements to resolve
outstanding issues on the basis
of coexistence.
Mikoyan's public assessment
of his visit, in his speech of
31 January to the party congress,
want to go to America again, so"ght to convey the impression
CONFIDENTIAL
s
PART III PATTERNS AND PERSPECTIVES Page 1 of 15
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
25X1
25X1
of an irresistible drift to-
ward a general accommodation
between Moscow and Washington
in which the United States would
recognize the status quo, es-
pecially in Eastern Europe, and
seek to avoid a showdown on
Berlin. He told the congress
he had concluded that American
leaders are now inclined "to
recognize the principle of
peaceful coexistence." He noted
that "in contrast to earlier
times, the American statesmen
expressed a readiness to nego-
tiate" and that they no longer
talked of a "policy of con-
taining, repelling, or liberat-
ing ~ t,
At his press conference on
24 January after his return to
Moscow, Mikoyan implied that
American policy on Germany had
softened and suggested that
Washington was moving toward
accepting a confederation scheme
as the first step toward a Ger-
man settlement. He remarked
that Secretary Dulles' state-
ment that free elections were
not the only way to reunifica-
tion "cannot be disregarded"
and said, "this is a very in-
teresting statement."
Khrushchev, in his opening
speech to the party congress,
contended that the warm recep-
tion accorded Mikoyan confirms
the fact that there is a "grow-
ing number of adherents of
friendly, neighborly relations
with the Soviet Union" in the
United States. He said Mikoy-
an's visit "gave reason to hope
for a further thawing" in So-
viet-American relations.
Soviet pronouncements on
the visit also attempted to
cast doubt on the firmness of
American policy on Berlin and
Germany by stressing the alleged
divergence between the American
people's desire for an end to
the cold war and the policies
of their government.
the Kremlin has instructed Com-
munist journalists in Moscow to
mount a propaganda offensive
charging that the Department
of State is out of tune with the
will of the American people, and
especially American "capitalists,'"
who desire an end to the cold
war and an expansion of trade
with the USSR.
Mikoyan Avoids Serious Talks
Mikoyan's failure to take
advantage of his private talks
with American leaders to put
forward new proposals for set-
tlement of such issues as Berlin,
Germany, and a cessation of nu-
clear weapons tests, coupled with
the obvious propaganda aims of
Soviet public assessments of the
visit, suggests that this was
primarily an exercise in "diplo-
matic atmospherics."
The only act which had the
character of an official over-
ture was Mikoyan's delivery to
Secretary Dulles on 5 January
of an aide-memoire on Berlin
and a German peace treaty. This
message, however, contained no
significant changes in Moscow's
Berlin proposals. It merely
informed the United States that
the Soviet Union, ""in the very
near future," would present the
Western powers with a draft
German peace treaty and call
for a conference within two
months to sign a treaty. Mikoyan
made no effort in subsequent con-
versations with high American of-
ficials to open serious exchanges
on the Soviet notes of 10 Janu-
ary which formally called for a
peace treaty conference.
The proposal for a peace
treaty conference was mainly a
move to create the appearance
of a Soviet desire to meet the
Western position that Berlin can
only be discussed in the wider
framework of Germany and Euro-
pean security. Mikoyan took
great pains to appear flexible
and reasonable on this problem.
He denied that the USSR would
shorten the six-month period of
grace for negotiations on a
free-city status for West Berlin
and even contended that the West-
ern notes of 31 December had not
really rejected the Soviet pro-
posal. "We were delighted," he
SECRET
PART III PATTERNS AND PERSPECTIVES Page 2 of 15
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927A002100060001-4
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
said, "to see that you proposed
negotiating the propositions.',
He repeatedly denied that Mos-
cow's 27 November note was in-
tended as an ultimatum and
stressed Soviet willingness to
consider Western counterpropos-
als or modifications of its
proposals.
At the same time, Mikoyan
indicated, but with much less
emphasis, the USSR's determi-
nation to carry out its an-
nounced intention to transfer
controls over Allied access to
Berlin to the East Germans if
no agreement on a free-city
status is reached and warned
that any Western resort to
force to ensure access "would
be met with force."
Mikoyan's discussions with
American leaders also covered
the Middle East, the Far East,
disarmament, Soviet-American
trade, and the Lend-Lease set-
tlement question. He defended
Soviet positions on all these
issues vigorously and resource-
fully but confined his remarks
to familiar lines.
Disarmament
Mikoyan expressed strong
doubt as to the United States'
desire to reach agreement in
the Geneva nuclear-test talks.
He repeatedly stressed the
USSR's unwillingness to give
up the veto power in the con-
trol commission and insisted
that "unanimity" of the three
nuclear powers was indispens-
able and that decisions made
by any other means would be
meaningless. He charged that
the West exaggerates the im-
portance of a control system
since both sides can detect the
other's tests. Mikoyan said
Communist China should par-
ticipate in any disarmament
agreement and suggested that
while the Peiping regime does
not have nuclear weapons now,
this situation could change
in the absence of an agree-
ment among the present nuclear
powers.
While Mikoyan constantly
stressed the USSR's desire for
expanded trade with the United
States in his public remarks,
he showed no interest in set-
tling the Lend-Lease account in
his private talks with American
officials. Instead, he took
the position that no significant
expansion of trade could be ex-
pected without the repeal of
American legislation adversely
affecting Soviet trade and with-
out the extension of long-term
credits. He indicated that the
USSR was not interested in any
small increase in trade which
might be possible under present
circumstances. Mikoyan's main
interest seemed to be propaganda
exploitation of American trade
restrictions. In his Moscow
press conference, he contended
that American business circles
favored easing these restric-
tions, but that the State De-
partment was opposed. "We shall
wait for better times," he said.
Communist China
In addition to calling for
Chinese participation in any dis-
armament agreement, Mikoyan re-
peated the standard Soviet line
that the USSR and China under-
stand each other very well and
that "we are not worried" about
the implications of growing
Chinese military power and pop-
ulation. He said the West should
not underrate the intelligence
and ability of the Peiping lead-
ers. However, he took a rather
condescending attitude on the
communes issue, observing that
the Chinese have not yet aban-
doned some of the "wrong ideas"
which the USSR rejected after
experimentation in the early
years of the Soviet regime.
Summit Talks
Mikoyan took the position
that the present trend of events
makes another summit conference
inevitable. He said,"I do not
think a conference can be es-
chewed. One can sidestep-it for
SECRET
PART III PATTERNS AND PERSPECTIVES PaLyP
Approved For Release 2008/11/19: CIA-RDP79-00927A002100060001-4 3 of 15
 Approved For Release 2008/11/19: CIA-RDP79-00927A002100060001-4
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
awhile, but it is bound to take
place eventually." After his
return to Moscow, he termed his
talks with American leaders as
"a step forward to meetings at
all levels," but parried a
question as to whether a sum-
mit meeting could be held in
the next several months.
Kremlin Politics
In answering questions on
Soviet domestic politics,
Mikoyan sought to create the
impression that Stalinism was
a thing of the past. He spoke
often of Stalin's "mistakes"
and of steps to correct them,
but his criticisms were com-
paratively mild and little
different from what Khrushchev
has said at Moscow diplomatic
receptions,
Mikoyan's comments on
more recent events in the Krem-
lin seemed similarly calculated
to convey a picture of political
normalcy and stability and to
portray the present leaders as
rational men not given to the
use of purge methods. He denied
reports of Malenkov's death and
spoke of his respect and affec-
tion for Molotov, suggesting
that he had been removed from
high office simply because he
had been out of step with the
times. He stated that Molotov
might be entrusted with a re-
sponsible diplomatic post, but
that he would never again hold
a position where his conserva-
tive outl- ok could act as a
brake on policy.
Mikoyan's remarks on the
removal of security chief Serov
were not consistent. On one
occasion he linked him with
Bulganin,Molotov, and Shepilov
as examples of individuals
dropped from their posts for
unsatisfactory work; later he
declared that Serov had not
been "fired," but had simply
been transferred to a military
post. In either case, however,
his explanation was designed
to remove the taint of purge
politics from the Serov case.
Reactions to Mikoyan
Almost without exception
those who met Mikoyan at the
numerous private gatherings
came away impressed by his
alertness and resourcefulness.
One observer noted that Mikoyan
"came out ahead in practically
every interchange." Business
audiences, especially, were
impressed with Mikoyan's grasp
of international economics and
his wide-ranging interest in
practical things.
On the whole, Mikoyan suc-
ceeded in maintaining a posture
of affability, his self-control
was good, and he was frequently
skillful in turning an embar-
rassing situation into a humor-
ous one. One observer remarked
that Mikoyan had been well
briefed on American public re-
lations techniques.
Mikoyan's Impressions
Mikoyan's party congress
pronouncements were apparently
dictated by policy considera-
tions and probably do not accu- 25X1
rately reflect his real assess-
he holds a fairly
rU4.L.L..a. I.,LC. W. %iVJ. a a c4aau ~aalj 25X1
American strength and potential.
He stated that the 1947 esti-
mates of Soviet economists
that the American economy was
on the verge of a major depres-
sion had proved wrong. He also
indicated that he believed
those Soviet economists who now
forecast that the American cap-
italist economy would "deteri-
orate" during the next ten years
would also be proved wrong. Mi-
koyan said he expected the So-
viet economy would grow at a
faster rate than the American, 25X1
but that he did not think Ameri-
can production would "deterio-
rate."
SECRET
PART TTT UATTRRNS AND PERSPECTIVES Page 4 of 15
Approved For Release 2008/11/19: CIA-RDP79-00927A002100060001-4
 SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
MIDDLE EAST OIL PRODUCTION 1958-1959
The prospects for Middle
East crude oil production in
1959 are for a record year, al-
though output probably will not
increase as sharply this year
as last. The area produced
MIDDLE EAST CRUDE OIL PRODUCTION
(THOUSAND BARRELS A DAY)
1957
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
- 1958
Signature by Tehran in
1958 of a 75-25 profit-splitting
agreement with the Standard Oil
Company (Indiana) effectively
ended the 50-50 formula for new
Persian Gulf concessions. The
In other conces-
sion developments, the
Sapphire Petroleum
Company-of Canada was
awarded two small areas
totaling about 386.1
square miles under a
77 78
32 41
BAHREIN NEUTRAL
ZONE
90206 A
departure by this im-
portant American firm
from the long-estab-
lished pattern of avoid-
ing joint company-gov-
ernment operations
poses even more problems
than the break in the
50-50 formula.
75-25 joint participa-
tion plan. The joint
Iranian-Italian com-
pay :SIRIP' , which
in 1957 was the first
4,247,000 barrels a day (b/d)
in 1958--up a record 20 percent
from 1957--while production de-
clined in the rest of the free
world. Iraq had the largest
increase--61.3 percent more than
1957--largely as a re-
sult of recovery from
the effects of the
Suez crisis. In terms
of volume, Kuwait's
production increased
the most--up a record
257,000 b/d--remain-
ing the largest crude
producer in the Mid-
dle East.
Before Prime
Minister Mossadeq na-
tionalized oil in
1951, Iran produced
almost as much crude
as the rest of the
CRUDE OIL PRODUCTION
(THOUSAND BARRELS PER DAY)
0 --
1935
90206 B
to adopt the 75-25 arrangement,
will drill an offshore explora-
tory well this July.
Tehran plans to build pipe-
linos from the 514,000 b/d re-
MIDDLE EAST AND TOTAL FREE WORLD
area combined. In 1958,with?its
production at:. 825,000 b/d--14
percent more than 1957--Iran's
production trailed behind that
of Kuwait and Saudi Arabia, In
1959, Iran may edge Saudi Arabia
out of second place.
'55 '56 '57 '58
12 FEBRUARY 1959
finery at Abadan--the world's
largest--to a port on.the Per-
sian Gulf, probably Khor Musa
about ten miles west of the port
of Bandar Shahpour. These pipe-
lines would carry about 350,000
b/d of refined products from
SECRET
PART III PATTERNS AND PERSPECTIVES Page 5 of 15
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
SECRET `"'''
12 February 1959
the Abadan refinery, reducing
Abadan's dependence on the
Iraqi-controlled Shatt al Arab
River, which is now used by
tankers carrying some 300,000
b/d. Tehran had feared the
tankers might be blocked dur-
ing the Iraqi revolution. It
also considers the charges
Iraq levies on ships using the
Shatt al Arab excessive. In
1958, these fees totaled near-
ly $5,600,000--a sum Tehran
asserts is about equal to its
share of refinery profits.
While several firms are
interested in constructing the
new pipelines, estimated to
cost between $250,000,000 and
$300,000,000, Iran may have
difficulties financing this
project.
The consortium of Western
companies operating Iran's
"nationalized oil industry" un-
der a 50-50 profit-sharing ar-
rangement is completing the
$53,000,000 26-28 inch pipe-
line from the Gach Saran field
to a terminal at Kharg Island.
This field, discovered in 1928,
now produces only about 60,000
Iran-Canada Oil Co. (Sapphire;
b/d because of a lack of trans-
port facilities.
Progress on the government-
owned and -operated Qom strike
has been disappointing. The Qom
wildcat, located more than 200
miles from any other Iranian
field, was brought in during
1956; it gushed uncontrolled at
80,000 b/d until the well col-
lapsed. Since Iran's plans to
build a major pipeline from
Qom through Turkey to the
Mediterranean depend on devel-
oping Qom, these plans are sus-
pended.
Iranian oil revenues rose
to $244,640,000 in 1958 from
$150,954,000 in 1956. Govern-
ment expenditures, however,
have increased even faster, re-
sulting in growing pressure for
the consortium to increase vol-
untarily Iran's share of the
profits.
Iraq
Despite the coup in Iraq
last July and the political in-
stability, oil production ih.1958
was . they highest in;:;the country.'s
history--averaging 721,000 b/d.
SECRET
LJ Aramco
O U0
Italian concessions(SIRIP)
Dubai Marine Areas Ltd.
Abu Dhabi Marine Areas Ltd.
Iran-Pan American Oil Co.
Development Petroleum
(Trucial Coast)
Iranian Oil Exploration
Arabian Oil Co. (Japanese) L 2 and Producing Co.
PART III PATTERNS AND PERSPECTIVES Page 6 of 15
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
1% SECRET v
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
Oil pipeline
?'???'?" Proposed oil pipeline
--- Oil pipeline under construction
The northern field's pro-
duction reached the 520,000
b/d capacity of the pipeline
running to the Mediterranean;
further increases will have to
await completion--probably this
year--of additional pipelines.
With completion of these lines,
crude capacity will increase 30
percent to 700,000 b/d.
At Iraq's southern fields,
production rose to 225,000 b/d
in 1958 from 186,000 b/d the
previous year. Inadequate fa-
cilities at Fao--Iraq's major
oil port--limit exports to 240,-
000 b/d. The Basrah Petroleum
Company plans to build a $45,-
000,000 deepwater terminal about
20 miles from Fao. When com-
pleted in 1960, output from the
southern fields could reach
440,000 b/d. Thus total Iraqi
production could rise to 1,140,-
000 b/d by 1961.
Although production is in-
creasing, the Iraq Petroleum
Company (IPC) is under constant
government pressure to-. liberalize
its concession agreement in line
with newer area agreements. It
o Caspian &a
Resht
has already given up its off-
shore rights beyond three miles,
and there are reports that the
company has offered to relin-
quish 50 percent of its con-
cession area--25 percent imme-
diately, the rest over a number
of years. The Iraqi Government,
however, demands the surrender
of 50 percent at once, an addi-
tional 20 percent in five years,
and, within ten years, all un-
developed areas not needed. The
government is said to be consid-
ering offering these undevel-
oped areas on a 70-30 basis,
with substantial government
participation. Baghdad would
then use these agreements as
a lever to force IPC to aban-
don the 50-50 formula.
On regional Arab oil mat-
ters, the new Iraqi regime ap-
pears to be following the same
approach as earlier governments
--firm resistance to any efforts
by Cairo to assert dominance
over oil-producing Arab coun-
tries. Iraq has thus far shown
no inclination to share any of
its oil revenues--a record
$234,674,884 in 1958--with its
"have not" neighbors.
SECRET
PART III PATTERNS AND PERSPECTIVES Page 7 of 15
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
Saudi Arabia
Crude production reached
an all-time high in 1958--
1,013,000 b/d--but Saudi offi-
cials are becoming increasingly
critical of the Arabian-Amer-
ican Oil Company (Aramco) for
failing to match the sharp pro-
duction increases of other oil
countries in the Middle East.
Saudi Arabia's competent but
anti-American di-
rector o petroleum affairs,
Abdullah Tariki, has accused
the company of "cutting our
throats," Tariki cites the
fact that Saudi production in-
creased by only 2.1 percent--
about 21,000 b/d--while output
in other Middle East areas has
increased over 20 percent.
Kuwait, Saudi Arabia's closest
competitor, increased output
in 1958 by 22.5 percent, 257,-
000 b/d.
buezp
AL SUDR
/ ASL
,WADI BABA
RAS GHARIB.
JeTus 1e
S.7
UAR
(EGYPT)
? Oil field
- Oil pipeline
- - Proposed oil pipeline
Arabian American Oil Company
concession
Arabian American Oil Company,
area of preferential concession
rights
SECRET
A major reason for the
rapid increase in Kuwaiti out-
put is the discount given to
purchasers. Saudi Arabia
forced Aramco to discontinue
giving discounts as incentive
for companies to purchase large
quantities of Saudi crude.
In addition to production
problems, the Saudi Government
suffered several other reverses
in oil matters during 1958.
Aramco won the Onassis tanker
dispute when the arbitration
tribunal agreed that Riyadh had
violated the company's conces-
sion by giving Onassis shipping
rights for Saudi oil. Saudi
Arabia's plans to award a 60-40
profit-sharing oil concession
in the Preferential Area--where
Aramco has only the right to
meet any competing bid--failed
when the Standard Oil Company
(Indiana) announced that the
S A U D FADHILI?
ABQA19 bAMMA
Al Huittuf,
*eHIIPA AD ~s
PART III PATTERNS AND PERSPECTIVES Page 8 of 15
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927A002100060001-4
SECRET lvw~
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
Saudi terms were "completely
unacceptable." Negotiations
have been resumed, however.
In addition, Tariki failed
to make progress with his de-
mand that Aramco pay $165,000,-
000, which he claims the com-
pany owes for overcharges on
Saudi crude shipped via Tap-
line to the Mediterranean. He
has stated that Aramco's parent
companies are holding down Saudi
production, asserting,"If these
parents think they can bring us
to our knees, they are wrong.
We will hold out and we will
win."
While production did not
increase significantly, Aramco
paid royalties amounting to
$337,000,000 and spent $63,000,-
000 on projects aimed at rais-
ing production.
Neutral Zone
In terms of Middle East
oil production, the Neutral
Zone between Kuwait and Saudi
Arabia was insignificant in
1958; crude production aver-
aged only 78,000 b/d, How-
ever, production probably will
rise to over 100,000 b/d this
year. Moreover, the Saudi-
Japanese-Kuwaiti agreement
for offshore rights has given
the area a new importance.
The onshore areas are un-
der concession to two American
firms--the Getty Oil Company
and the American Independent
Oil Company (Aminoil). Field
operations are on a joint ba-
sis. Getty received its con-
cession from Saudi Arabia,
while Aminoil is exploiting
Kuwait's half interest. Each
company pays its consignor
country roughly: 50 percent of
the profits; they totaled from
$8,000,000 to $10,000,000 in
1958.
The agreement assigning
Saudi Arabia's--and later Ku-
wait's--half interest in the
offshore Neutral Zone area to
the Japan Petroleum Company,
Ltd., was the first to depart
specifically from the 50-50
split which prevailed in the
area, Saudi Arabia and Kuwait
will participate in the manage-
ment of the company, Profits
from the transportation, refin-
ing, and marketing, as well as
production of oil will be split
56-44 on Saudi Arabia's half-
interest and 57-43 on Kuwait's.
Thus far the Japanese have
limited their work to preliminary
geophysical studies. There seems
little doubt, however, that they
may find substantial quantities
of oil this year. Saudi Arabia's
major offshore field--Safaynia--
which borders the Neutral Zone,
may extend into the zone proper.
Tariki has commented that "all
the Japanese need to find oil
is a compass and rowboat."
Kuwait
A production increase of
22.5 percent lifted Kuwait's
output to an average of 1,400,-
000 b/d in 1958--the third high-
est production in the free world.
Only the United States with
6,706,000 b/d and Venezuela
with 2,600,000 b/d had a higher
production. Facilities in Ku-
wait are inadequate to handle
more than 1,500,000 b/d, and two
shut-infields lack pipelines.
By mid-1959, however, the 60-
mile, 30-inch pipeline connect-
ing the Raudhatain field--dis-
covered in 1955--to the port of
Mena al Ahmadi may be completed.
Expansion of the port's loading
capacity to 2,500,000 b/d is
planned to be completed by the
year's end.
Kuwait boasts the world's
largest crude reserves--conserva-
tively estimated at 60 billion
barrels--compared with US re-
serves estimated at 33 billion
barrels and Venezuelan reserves
at 16.5 billion barrels. Oil
revenues in 1958 probably
reached $375,000,000 and may
exceed $400,000,000 in 1959.
SECRET
PART III PATTERNS AND PERSPECTIVES Page 9 of 15
Approved For Release 2008/11/19: CIA-RDP79-00927A002100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
SECRET,
CURRENT INTELLIGENCE WEEKLY SUMMARY
.12 February 1959
Basrah
F
I R A Q
RAUDHATAINN 'O \
(nonproducing)\ " \)
/
W A ~ T 1_1 0asr as Sabihiya
30" pipeline!-_
cait Bay
Al Iahra 0
? Oil field
-Oil pipeline
-'~ Oil pipeline
under construction
12 FEBRUARY 1959
MILE
30306
K ` NEUTRAL ZONE
31
,ZONE
The rapid increases of the
Kuwait Oil Company--owned Joint-
ly and equally by the Gulf Oil
Corporation and by the British
Petroleum Company, Ltd.--are
even more impressive when it
is recalled that no oil was
produced in Kuwait before 1946.
The recent government action
in Venezuela, which in effect
increased the costs of producing
crude, could lead to even faster
than "normal" increases in Mid-
dle East production. Because
of its very low production
costs, Kuwait's output prob-
ably would rise proportionally
faster than other countries
in the area.
Other Persian Gulf Areas
By area standards, pro-
duction of other oil-producing
areas in the Persian Gulf is
insignificant. In Qatar, the
largest of these producers,
output increased about 21 per-
cent--to 168,000 b/d last year
from 139,000 b/d in 1957.
Bahrein Island crude output
also increased--the first in-
crease in several years--to
40,600 b/d last year from
L
32,000 b/d in 1957.
While not noteworthy
for its crude pro-
duction, Bahrein re-
fines about 186,500
b/d daily; the bulk
of this crude is
moved by pipelines
from Saudi Arabia.
In other devel-
opments, offshore
drilling by Abu Dhabi
Marine Areas, Ltd.--
two-thirds British-
and one-third French-
owned--about 20 miles
northeast of Das
Island brought in
two wells in 1958--
the Adma F-one, which
tested at 10,000 b/d
in May, and Ummshaif-
one, which tested at
about 2,400 b/d in
September. These
two wildcats hold
promise of a major commercial
discovery.
Algeria
Oil production increased
in Algeria to about 11,000 b/d
last year from only 346 b/d in
1957. Transportation bottle-
necks prevented even more dra-
matic increases. Hassi Messa-
oud was the only one of the
six oil fields discovered
since 1956 that was producing.
While Hassi Messaoud's output
was limited by a combination
of a 6-inch pipeline and rail
transportation, plans call
for completion late this year
of the 420-mile, 24-inch pipe-
line now under construction
from this field to the Algerian
port city of Bougie. Late in
1959 or early 1960, the line
will carry about 100,000 b/d.
Perhaps by 1962 it will carry
about 320,000 b/d.
Construction on a 435-mile,
24-inch line from the Edjele
area near the Libyan border to
the Tunisian port of Cekhira
is expected to begin later this
year. If plans are realized,
SECRET
PART III PATTERNS AND PERSPECTIVES Page 10 of 15
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
I"NV
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
the line will move 150,000 b/d
by late 1960. Capacity later
is to be lifted to 275,000 b/d.
The French gamble in Algeria
seems to be paying off handsome-
ly. In less than three years,
proved reserves have increased
from virtually nothing to a very
conservative estimate of 3.5
billion barrels. Additions to
these reserves are occurring
almost monthly.
Tunis
TUNISIA
Biskra 1 }a
Cekhira
Touggour`f Bir Roinane
6" pipeline 24" p &ine!
Tripoli
In an effort to step up oil
activity in Algeria, France
passed a new Petroleum Law de-
signed to attract the major in-
ternational oil companies. Un-
der the law, profits are split
50-50, and this year several
"majors" are expected to expand
their activities to include Al-
geria. A concession to a firm
in which Standard Oil Company
(New Jersey) has 50-percent par-
ticipation was provisionally
ie Philippeville
p='_- pS~ I
'?` HASSI MESSAOUD
(A Colomb Bechar
MOROCCO J
MAURITANIA
C.
FEZZAN
? Oil field .01 ?
Oil pipeline ` /? rT r a F Li T C H A D
............?. Proposed oil pipeline
- - - Oil pipeline under construction
`
ZARZAITINE 0 ?~ Gadames
?
Discovery well )
TIGUENTOURINE j
FLADEBLARACHE? ?:EDJELE
OIn Salah OUAN TAREDERT? J L I B Y A
A L G E R I A
FRENCH
EQUATORIAL
AFRICA
12 FEBRUARY 1959 FRENCH WEST AFRICA
o - MILES 300
French interest in Algerian
oil is more than a drive for
profits; Paris sees a franc
source of oil as necessary for
stability and growth. Franc
crude oil production in 1957--
crude produced in France or the
French Union and purchased for
francs rather than hard cur-
rencies--amounted to only 29,-
000 b/d, while consumption of
major products amounted to
over 434,000 b/d.
L??
granted by the French Government
last month. Since the Arab na-
tions are virtually united in
their support for the Algerian
rebel cause, this sentiment
could portend difficulties-
for major oil companies which
have interests in Arab lands and
which also operate in Algeria.
Libya
Intensive exploration con-
tinues in Libya, and the first
SECRET
N
SUDAN
PART I' Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001 4 Page 11 of 15
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
commercial discovery already
may have been made. The Oasis
Oil Company (Ohio, Continental,
and Amerada companies) brought
in two wells only 75 miles south
of the Gulf of Sidra. A third
was also brought in about 25
miles farther south. These dis-
coveries, however, are still
under study.
Earlier hopes that the'
Standard Oil Company (New Jer-
sey) well near the Algerian
border was commercial failed to
materialize. Despite
the increasing number
of dry holes,, drilling
continues at a high
level, and 1959 may
determine whether or
not Libya will become
a major oil province.
Egypt
Egypt continues
to move toward self-
sufficiency in petro-
leum. The upward
trend in crude produc-
tion which began in
1957 was maintained;
crude yields practically no
kerosene or distillates. These
are major items in Egypt's
petroleum consumption.
Following the establishment
of the UAR in 1958 and the ex-
tension of Egyptian influence
in Syria, Damascus canceled the
concession of the American-
owned Menhall Company. This
company had discovered the Karat-
chock field in northeast Syria
which promises to produce sub-
stantial quantities of oil.
FAR EASThill .M
64,500 OTHER CANADA
27,800 86,100
production in 1958 reached 61,
000 b/d--compared with less
than 45,000 b/d the previous
year. Most of the increase
came from fields on the Sinai
Peninsula--the Belayim field
discovered in 1955 and the
Rudeis field found in 1956.
While production rose to
the equivalent of almost 70 per-
cent of total petroleum consump-
tion--about 80,000 b/d--crude
imports are high because of the
characteristics of Belayim
crude. In addition to having
a high salt content, making the
crude virtually unusable in
Egyptian refineries, Belayim
SECRET
IRAQ 24,800 (7.5x)
NEUTRAL ZONE
1,300 (0.5%)
The UAR has a $206,-
000,000 five-year petroleum
plan--$76,000,000 for Syria
and $130,000,000 for Egypt.
This plan includes construc-
tion of a pipeline from
Karatchock in Syria to Tartus
on the Mediterranean, ex-
pansion of Egyptian refin-.
eries as well as construc-
tion of a local pipeline,
and establishment of an
Egyptian petrochemical in-
dustry. Plans for a large
pipeline along the Suez
Canal reportedly have been
delayed for at least five
years.
PART ] Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4 ;e 12 of .15
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
SECRET 14~
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
PROSPECTS FOR CONTINUED FINNISH NEUTRALITY
The Soviet role in bringing
about the fall of the Fagerholm
government in Finland has under-
scored that country's precarious
position as a virtually unarmed
border state vulnerable to pres-
sure from the East. As such,
Finland recognizes that, al-
though free to develop inter-
nally along the lines of a
Western democracy, it must to
Having witnessed the in-
ability of the West to aid Hun-
gary in 1956, most Finns are
convinced that they must manage
their relations with the USSR
in such a manner that Moscow,
in the event of increased world
tensions, will not have cause
to fear for the security of its
northwest frontier. This is
both repugnant and humiliating
to them, but there is
increased acceptance
of the basic fact that
in the present situa-
tion Helsinki's for-
eign policy cannot
run counter to that
of Moscow.
The Finns are
anxious about the
Berlin situation and
concerned over in
creased NATO and West
German naval activity'
in the western Baltic,
which they feel may
result in Soviet
countermoves. The
1948 Treaty of Friend-
ship, Cooperation, and
Mutual Assistance be-
tween Finland and the
USSR obliges Finland
to repel an attack
on Finland, or on the
USSR via Finland, by
Germany or a state
allied with Germany
and to confer with the
USSR if such an at- 25X1
tack is threatened.
30309 I Apparently, Finnish
officials are concerned lest the
USSR consequently demand some
form of military cooperation to
meet the NATO-German menace.
a large degree tailor its for
eign policy to suit Moscow.
Finnish-Soviet Relations
Relations with the Soviet
Union remain the key factor in
Finland's foreign policy. All
Finnish officials pay obeisance
to the "Paasikivi line" of gain-
ing the confidence of the USSR,
although aware that it seriously
limits the freedom of action
of any Finnish government.
Economic Situation
Approximately 25 percent of
Finland's foreign trade is with
the Soviet bloc. The Finns believe
that for the sake of good pol_t.-
ical relations a significant
portion of their foreign trade
must be oriented toward the bloc.
SECRET
PART ITT PATTERNS AND PERSPECTIVES Pace 13 of 15
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
Furthermore, the area provides
a stable market for certain
high-cost Finnish exports and
furnishes certain vital raw
materials such as fuels and
grains which would otherwise
have to be'imported from hard-
currency areas.
The Finnish industries
most dependent on the USSR are
certain metalworking and ship-
building complexes created to
pay off postwar reparations.
These high-cost establishments
are noncompetitive in Western
markets, and the Finns appar-
ently intend to phase some of
them out over a period of years;
and to concentrate on the coun-
try's more competitive special-,
ties such as the woodworking and
paper industries. For this pur-
pose, Helsinki is hoping to ob-
tain loans and economic assist-
ance from the IBRD and the
United States.
Moscow, fearing a weaken-
ing of Finnish economic ties to
the USSR, has indicated its
suspicions of Helsinki's moves
to obtain Western economic as-
sistance. Hence, the Finns
might feel obliged to accept a
limited amount of Soviet eco-
nomic aid to counterbalance
loans from the West despite the
ruble balances they hold from
their exports to the USSR. They
would gladly accept Soviet gold
or hard-currency loans, which
could finance imports from out-
side the bloc, but the USSR has
indicated that only ruble loans
for the purchase of
bloc goods are avail-
able. During Finnish
President Kekkonen's
visit to Leningrad
in January 1959,
Khrushchev renewed
earlier Soviet offers,
which had included
one for economic as-
sistance of up : to
500,000,000 rubles.
The Finns are
unlikely in the near
200 SEATS
FINNISH DIET
SECRET
future to associate themselves
with any of the projected Euro-
pean economic cooperation pro-
grams, despite the fact that
most of their foreign trade is
with Western Europe. However,
they have not rescinded measures
liberalizing trade with the West
which went into effect in the
fall of 1957, and they now are
negotiating the extension through
1959 of multilateral trade and
payments arrangements with a num-
ber of Western European countries.
Finland also intends to
pursue its interest in Nordic
economic cooperation, specifical-
ly a Nordic customs union, and
Khrushchev.during Kekkonen's
visit to Leningrad in late
January reportedly interposed
no objections to such an arrange-
ment. The USSR'probably hopes
that Nordic economic cooperation
would weaken Denmark's and Nor-
way'?s.ties with NATO and Euro-
pean cooperation programs and
deter Finland from joining such
organizations.
Minority Government's Prospects
The minority Agrarian gov-
ernment of Prime Minister Suksel-
ainen, which took office on 13
January, faces difficult domestic
problems along with the primary
task of restoring good relations
with the USSR. Registered un-
employment on 23 January reached
91,000--the highest in the post-
war period. The Finnish Com-
munists and the Communist-domi-
nated Finnish People's Democratic
PART ITT PATTERNS AND PERSPECTIVES Page 14 of 15
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927A002100060001-4
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
12 February 1959
League (SKDL) will seek to cap-
italize on the economic distress
to include the SKDL in a popu-
lar-front government, but so
far none of the other parties
except the Opposition Social
Democrats and the left-wing
Agrarians have favored SKDL
participation.
Certain factors, however,
strengthen the position of the
Sukselainen government and point
to its lasting at least until
summer, when new elections may
be held. The democratic par-
ties--theregular Social Demo-
crats, the Conservatives, the
Swedish People's party, and the
Liberals.--will probably continue
to support Sukselainen to avoid
another protracted cabinet
crisis which might again strain
Soviet-Finnish relations and
frustrate efforts to cope with
the economic situation. An-
other crisis, moreover, would re-
open the question of SKDL par-
ticipation in the government.
The prospects for a popular-
front government are also de-
creased by indications that the
breach between the regular Social
Democrats and the Opposition
Social Democrats may be diminish-
ing. In addition, the resump-
tion of normal trade relations
with the USSR and the conclusion
of a Soviet-Finnish trade agree-
ment, now under negotiation in
Moscow, will have a positive
effect on the lagging economy
and thus win support for -the
Agrarian government.
(Concurred in by ORR)
SECRET
PART III PATTERNS AND PERSPECTTVES -^^e 15 of 15
Approved For Release 2008/11/19: CIA-RDP79-00927A002100060001-4
 25X1 Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
Approved For Release 2008/11/19: CIA-RDP79-00927AO02100060001-4
 Approved For Release 2008/11/19: CIA-RDP79-00927A002100060001-4
SYMM&RX-AZI .9
CONFIDENTIAL
CONFIDENTIAL
Approved For Release 2008/11/19: CIA-RDP79-00927A002100060001-4