CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A002500020001-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 54
• Document Creation Date: December 20, 2016
• Document Release Date: March 31, 2006
• Sequence Number: 1
• Publication Date: October 27, 1999
• Content Type: SUMMARY

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CONFIDENTIAL
COPY NO. 56
OCR NO.5015/59
29 October 1959
CURRENT
INTELLIGENCE
cocument No. --- Z------- -t
WEEKLY lie Change In Class. ^
De ss d A 1
Class. dha ed
SFfext Il W Dal---------
V"3 -?
uta: 41--- By
C:cLiment No. -----
No Change In Class. ^
^ Declassified
Class. Changed to: TS S 25X1
Next Review Date:
J Auth.: HR 70-3
Date: -.,Z1A1A._J_Jq
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
G UN DENTIAL
MILMM
State Dept. review completed
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THIS MATERIAL CONTAINS INFORMATION AFFECT-
ING THE NATIONAL DEFENSE OF THE UNITED STATES
WITHIN THE MEANING OF THE ESPIONAGE LAWS,
TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS-
SION OR REVELATION OF WHICH IN ANY MANNER TO
AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
The Current Intelligence Weekly Summary has been prepared
primarily for the internal use of the Central Intelligence
Agency. It does not represent a complete coverage of all
current situations. Comments and conclusions represent
the immediate appraisal of the Office of Current Intelligence.
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CONFIDENTIAL
CURRENT INTELLIGENCE WEEKLY SUMMARY
T H E W E E K I N B R I E F
OF IMMEDIATE INTEREST
SOVIET TACTICS PRELIMINARY TO THE SUMMIT . . . . . . . . . Page 1
Moscow this week continued its campaign for top-level
negotiations and exchanges of visits. An official TASS
statement expressed the view that the earlier a summit
meeting is called the better. There has been no authorita-
tive Soviet comment yet on the announcement that a Western
summit meeting will take place in mid-December. The an-
nouncement of the future visit of -Khrushchev to Paris
was accompanied by overtures for a visit by Italian Presi-
dent Gronchi to the USSR and for the rescheduling of a
trip by Khrushchev to Norway.
SOVIET 1960 PLAN AND BUDGET . . . . . . . . . . . . . . . Page 5
The first order of business at the Supreme Soviet
session now under way concerned the economic plan and
budget for 1960. The budget provides for the same level
of explicit military expenditures as in 1959. Unstated
defense expenditures are included in other budget cate-
gories, however, and the increase in total expenditures
budgeted for 1960 permits continuation of the growth of
military programs. The economic plan for 1960 calls for
an increase of 8.1 percent in industrial production over
1959. This year's performance is well above plan, and
Soviet planners probably expect substantial overfulfill-
ment again next year. The Supreme Soviet is also sched-
uled to hear a report on the international situation.
MIDDLE EAST HIGHLIGHTS . . . . . . . . . . . . . . . . . . Page 7
Iraqi Communists and "nationalists" in Qasim's en-
tourage are again engaged in intense competition for in-
fluence; rumors persist, however, that Qasim's physical
condition is not as good as the authorities have claimed.
Nasir, in a move to strengthen his position in Syria, has
made his trusted army chief, Marshal Amir, in effect vice-
roy of the UAR's northern region. The Sudanese regime's
prestige may be enhanced by further progress_inthe
Nile waters negotiations with the UAR. Libya's King
Idriss is considering cabinet changes. Khrushchev, pre-
sumably in an effort to draw further concessions from
Tehran, postponed formal response to the Shah's proposal
to give the USSR a written guarantee that Iran would not
allow missile bases on its territory.
CONFIDENTIAL
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CURRENT INTELLIGENCE WEEKLY SUMMARY
PART I (continued)
THE SITUATION IN CUBA . . . . . . . . . . . . . . . Page 10
The threat'of extremist control of the Cuban Govern-
ment grows as Raul Castro has increased his control of
all police and military forces and "Che" Guevara is wield-
ing extensive power through the National Agrarian Reform
Institute and has great influence over Fidel Castro, par-
ticularly on economic matters and foreign policy. It is
unlikely that Fidel Castro will moderate his course.
NEW BORDER CLASH HEIGHTENS SINO-INDIAN TENSION .
The latest clash between Indian and Chinese border
forces in the disputed Ladakh area of Kashmir has stirred
such animosity in India toward Communist China that early
negotiations on the border problem now seem unlikely.
Prior to the incident--the first serious clash since 26
August--both governments had been trying to prepare a
proper atmosphere for border talks. The Chinese insist
the Indians are responsible for the Ladakh incident but
their statements have indicated concern over the effect
on Indian opinion. Public pressure is forcing Nehru in
the direction of a tougher policy toward Peiping.I
A tougher policy would reduce
prospects for creating the "favorable atmosphere" Peiping
considers necessary for negotiations.
NOTES AND COMMENTS
. Page 11
PEIPING PUSHES COMMUNES DESPITE SOVIET CRITICISM . . . . . Page 1
Chinese Communist pronouncements in the past two
months have shown a determination to push ahead with the
commune program in the face of Soviet criticism. By
reviving a number of practical features as well as theo-
retical claims associated with the original commune pro-
gram, the Chinese Communists have reasserted positions
which are distasteful to the Soviet Union. Soviet in-
transigence and Communist China's renewed assertiveness
demonstrate how little progress has been achieved during
the past year in resolving the basic policy and ideolog-
ical conflicts. introduced into the Sino-Soviet relation-
ship by China's communes.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
PART II (continued)
CHINESE COMMUNIST TRADE AND AID PROGRAM FALTERS . . . . Page 3
Communist China, involved in a series of disputes
with its neighbors, has not followed up last year's in-
tense trade and aid offensive in South and Southeast Asia.
By failing to exploit trade opportunities and by threaten-
ing economic retaliation to gain political ends, Peiping
is losing hard-won economic gains in markets which have
provided the foreign exchange it requires for its imports
from Western Europe.
PEIPING ATTEMPTS TO PLACATE BURMESE ON BORDER ISSUE . . . Page 4
The deterioration of Chinese prestige as a__~result of
recent clashes on the Sino-Indian frontier has impelled
Peiping to give new reassurances to Rangoon on the long-
standing Sino-Burmese border issue. Chinese Communist
Foreign Minister Chen Yi on several recent occasions has
gone beyond protocol requirements to make personal contact
with a Burmese cultural delegation in China to stress
Peiping's desire to "coexist with its neighbors" and re-
tain Burma's friendship. Differences between Peiping and
Rangoon on the demarcation of the border appear to pre-
clude any early resolution of the issue.
SITUATION IN LAOS . . . . . . . . . . . . . . . . . . . . Page 5
The government's position in southern Laos continues
to deteriorate as the tribesmen who predominate in the
area are becoming increasingly sympathetic to the Commu-
nists. The postponed trial of Prince Souphannouvong and
other pro-Communist leaders now may begin in early Novem-
ber. Announcement of the forthcoming trial has inspired
a stream of protests from North Vietnam. Although Moscow
now opposes Secretary General Hammarskjold's plan to
replace the UN subcommittee with his own representative
in Laos, the secretary general continues to search for a
basis to accomplish this.
REPLACEMENT OF NORTH KOREAN FOREIGN MINISTER . . . . . . . Page 7
The replacement of North Korean Foreign Minister Nam
Il by Pak Sung-chul does not presage a shift in Pyongyang's
foreign policy or bloc orientation. Nam has retained his
deputy premiership, and the change has not affected his
other functions in the regime. Pak has headed the party's
international department for the past year and has risen
rapidly in the Foreign Ministry.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
PART II (continued)
MOSCOW PUSHES CAMPAIGN AGAINST PUBLIC DISORDERS . . . . . Page 8
Moscow is moving again in an effort to increase the
active support of the Soviet public in combating anti-
social behavior. Quasi-judicial "public juvenile delin-
quency commissions" are to be created, and "comrades'
courts" are to be given enhanced authority under a draft
law published recently for "broad general discussion."
Moscow claims that the proposed increase in public respon-
sibility for maintaining law and order is another "visible
sign of Communism," pointing out that government functions
are gradually being turned over to "public organs" as the
Soviet Union begins its "full-scale building of a Commu-
nist society."
MIKOYAN IN FINLAND . . . . . . . . . . . . . . . . . . . . Page 9
Soviet First Deputy Premier Mikoyan, during a visit
to Finland for the signing of a new Soviet-Finnish five-
year trade agreement and the opening of the Soviet Indus-
trial Fair, warned Finland against participation in the
projected seven-nation little free-trade area, which he
said the USSR regards as a remnant of the cold war. Feel-
ing precluded from direct membership, the Finns will
probably seek bilateral arrangements with the member states.
Mikoyan also warned against any increase in Finnish defense
forces, making it clear that Moscow regards Finland as
under the protection of the USSR. The new trade agreement
calls for an annual average increase of 2.5 percent from
1961 through 1965; the projected growth in total Finnish
foreign trade is expected to be 3 to 4 percent annually
during this period.
NEW EAST GERMAN FLAG USED IN CAMPAIGN FOR WESTERN
RECOGNITION . . . . . . . . . . . . . . . . . . . . . . . Page 10
East Germany is displaying its new flag in the West
on every possible occasion in order to promote its cam-
paign for recognition. This effort follows the Berlin
flag incidents of 6-8 October, which first focused atten-
tion on the East German banner. Many Western countries
will probably not oppose the flying of the flag when it
is displayed during international trade, sports, or other
events involving East Germany. There will probably also
be no opposition to display of the new flag on East German
merchant vessels or on barges using West Germany's inland
waterways.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
PART II (continued)
GOMULKA SHAKES UP POLISH REGIME . . . . . . . . . . . . . Page 11
The party and government shifts made on 27 October
in Poland indicate that Gomulka is taking a more serious
view than previously of his economic problems. He evi-
dently hopes, by bringing into the government men who
favor stronger central economic controls, to improve
economic planning and administration and to prevent a
further deterioration of.the situation. It is unlikely,
however, that Gomulka has decided to abandon any of the
features of his program--such as his opposition to forced
collectivization--which make Poland unique within the
ICELANDIC ELECTIONS . . . . . . . . . . . . . . . . . . . Page 13
The combined majority gained by the Conservative and
Social Democratic parties in Iceland's 25-26 October gen-
eral elections points to a further period of cabinet co-
operation between these two pro-Western parties. A co-
alition government formed by these parties, while friendly
to Western interests, would probably be compelled to con-
tinue to demand acceptance of Iceland's 12-mile fishing
limit, and it would be under some pressure to prove that
it is prepared to protect Iceland's interests on the ques-
tion of the Keflavik air base.
PROGRESS ON THE EUROPEAN COMMUNITY . . . . . . . . . . . . Page 14
The Council of Ministers of the European Economic
Community (EEC or Common Market) agreed at meetings in
Brussels in mid-October to proceed with the organization
of political discussions on a six-nation basis. Other
steps to strengthen the concept of a political Community
were favorably considered, and proposals were advanced
to reduce the EEC's 12- to 15-year transitional period to
eight years. Increased support for a liberal, world-
oriented trade policy by the Common Market is also appar-
GROWING LATIN AMERICAN INTEREST IN BLOC TRADE .
. Page 15
Brazil's plans to send a high-level trade mission to
Moscow in late November typify the interest of a number
of Latin American governments in expanding trade with the
Sino-Soviet bloc if the terms seem economically advanta-
geous. While four countries--Argentina, Brazil, Uruguay,
and Cuba--accounted for 90 percent of bloc trade with
Latin America in 1958, others are expected to help increase
the 1959 total. Bloc trade offers have been skillfully
designed to take advantage of Latin American financial
difficulties.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
PART II (continued)
BELGIUM REASSESSES ITS CONGO POLICY . . . . . . . . . . . Page 16
Dissatisfaction in the Belgian Congo with Brussels'
program of "accelerated political development" poses a
threat to communal and territorial elections scheduled
for December and has forced Brussels to offer the Congolese
a definite timetable for independence or autonomous status
by 1964. The two leading African parties rejected the
new program, however, and tribal disorders in the interior
add to the instability engendered by the nationalist de-
mands of African extremists in the lower Congo.
CYPRUS . . . . . . . . . . . . . . . . . . . . . . . . . . Page 18
The recent Turkish arms-smuggling incident has revived
tension on Cyprus and at least temporarily halted the work
of a commission writing a constitution for the future re-
public. Joint appeals by Archbishop Makarios and Turkish
Cypriot leader Kuchuk to the Greek and Turkish communities
to hand in to the authorities all illegally held arms
have paved the way for early resumption of talks. The
unuerlying distrust which exists on both sides in Cyprus,
however, probably will be reflected in increasingly diffi-
cult Greco-Turkish negotiations before Cyprus becomes an
independent state.
PATTERNS AND PERSPECTIVES
THE COMMUNES: A CASE STUDY IN LACK OF SINO-SOVIET
LIAISON . . . . . . . . . . . . . . . . . . . . . . . . . Page 1
Close review of Soviet journals and newspapers pub-
lished between March and September 1958--the period of
conception, experimentation, and initial organization of
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CURRENT INTELLIGENCE WEEKLY SUMMARY
PART III (continued)
the Chinese communes--indicates that the USSR had little
advance information, although Peiping must have realized
that the commune program had critical implications for the
bloc. In effect, if not in intent, Chinese claims chal-
lenged Soviet dogma and suggested that the Peiping general
line--embodying the communes--was significant not only for
the Chinese but for other bloc countries as well. Inade-
quate consultation between Moscow and Peiping on an issue
of such overriding importance calls into question the
effectiveness and closeness of the Sino-Soviet working
relationship in other respects.
POLITICAL TRENDS IN ISRAEL . . . . . . . . . . . . . . . . Page 5
Behind the relatively quiet Israeli election campaign,
there are social issues of deep and long-range political
significance. The increasing number of so-called "Orien-
tal" and Israeli-born Jews in the electorate may bring
greater future support for a more aggressive foreign pol-
icy. In preparation for the 3 November election, nearly
all parties are attempting to broaden their appeal to
these groups, which are becoming more politically conscious
and more restive under the domination of the older leaders,
who came from Europe.
. Page 8
Vienna is experiencing a period of accelerated polit-
ical and diplomatic activity resulting in large part
from the impact of last May's parliamentary elections.
Socialist influence in and out of the government is on
the increase, raising serious problems for the hard-
pressed People's party of Chancellor Raab. The intense
political competition is an obstacle to formulation of
the "clearer concept" of Austrian neutrality which Foreign
Minister Kreisky has promised. Such issues as the South
Tirol dispute with Italy are increasingly affected by
domestic politics. The trend toward political as well as
military neutrality seems likely to continue.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
SOVIET TACTICS PRELIMINARY TO THE SUMMIT
Moscow this week continued
its campaign for top-level nego-
tiations and exchanges of vis-
its. An official TASS statement
on 23 October expressed the view
that "the earlier a summit meet-
ing is called, the better-for
the cause of peace." It also
restated the Soviet position
that only the heads of govern-
ment "vested with great confi-
dence and the necessary powers"
can find solutions to the in-
ternational issues dividing the
world.
With Macmillan's trip to
the USSR last February and Khru-
shchev's visit to the United
States, a Khrushchev meeting
with De Gaulle still remained
to be scheduled. Khrushchev's
acceptance of an invitation to
visit Paris was announced on
23 October. No definite date
apparently has yet been set for
the visit, although the French.
have announced it will take place
during the first three months
of next year, nor has any an-
nouncement of a return visit by
De Gaulle been made.
Sovi:et~; Ambassador Vihogradov
stated on 22 October that Presi-
dent Eisenhower has proposed a
summit conference at the end of
this year, and the Soviet Govern-
ment is in agreement. The 23 Oc-
tober TASS statement, issued
purportedly to clarify the So-
viet position on the timing of
a summit in the face of con-
flicting foreign press reports,
was a further move to put pres-
sure on the French.
The announcement of Khru-
shchev's -future visit' to
Paris has been accompanied by
Soviet overtures for a visit
by Italian President Gronchi to
the USSR and for the reschedul-
ing of Khrushchev's visit to
Norway, canceled last August.
The Italian cabinet is almost
certain to recommend acceptance
by Gronchi, according to an
Italian official, and Norwegian
Prime Minister Gerhardsen stated
officially in July his govern-
ment's hope that the visit could
take place at a later date. He
reportedly has informed Moscow
that Norway would prefer to
have Khrushchev's visit come
after President Eisenhower's
visit to Moscow.
Moscow is continuing to
avoid actions which might bring
about a worsening of US-USSR
relations in the wake of Khru-
shchev's visit to the United
States. On 24 October, follow-
ing President Eisenhower's
statement in a press conference
that he favored a summit "by
the end of the year," TASS
withdrew a previous statement
which asserted that Khrushchev,
during his visit in the United
States, told the President the
Soviet Government felt a summit
conference should be convened
before the end of the year.
Moscow may have feared that
the TASS release might be
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PAWL' I OF IMMEDIATE INTEREST
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CURRENT INTELLIGENCE WEEKLY SUMMARY
interpreted as pressure on the
President.
In handling the Langelle
incident the Soviet Government
exercised extreme restraint.
It did no more than issue a
brief summary of its version
of Langelle's apprehension.
De Gaulle's invitation to
Khrushchev, characterized by
Paris as the "indispensable"
prelude to an East-West summit
meeting, appears primarily in-
tended to underscore his belief
that Paris should have a lead-
ing voice in global affairs.
Aside from the prestige accru-
ing from a trip to France by
Khrushchev, De Gaulle apparent-
ly sees the visit as an oppor-
tunity to test Soviet desires
for a real detente.
The French President's
invitation was, as stated, not
precipitant. De-,Gaulle apparent-
ly intends to continue opposing
an East-West summit meeting be-
fore next spring. He may hope
that the explosion of the French
atomic bomb--scheduled for next
March or April--will strengthen
Paris' position. He reportedly
intends to receive West German
Chancellor Adenauer in Paris,
possibly on 1 December, before
the Scheduled Western summit
conference.
'De Gaulle still maintains
his hard line on Berlin and
Germany, in close support of
the Paris-Bonn alliance, and
advocates a "common" European
policy to present a strong, uni-
fied front to the Soviet Union.
Nevertheless, he is apparently
convinced that East-West ten-
sions must be relaxed, and that
Europe--led by Paris--can play
a moderating role between the
United States and the USSR.
He appears also to be
seriously awaiting more spe-
cific signs of Soviet inten-
tions to work for a real de-
tente. Statements in Parlia-
ment on 27 October by Premier
Debre and Foreign Minister
Couve de Murville repeated the
21 October cabinet communique's
condition that the detente be
allowed "to show itself" in the
United Nations, Southeast Asia,
the Middle East, and Africa. In
addition, the necessity for
"methodical and thorough prep-
aration" was advanced as making
next spring the most appropriate
time for an East-West summit
meeting.
De Gaulle's personal in-
clinations, his motives for ex-
tending the invitation, and the
official French statements in-
dicate that De Gaulle will take
the "global" approach with the
Soviet leaders rather than con-
dentrate solelyn specific
French-Soviet issues
~On Germany and Berlin,
De Gaulle will probably hold
to the established Western po-
sition, although he may refer
to his earlier public statement
recognizing the Oder-Neisse
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line as indicative of Western
willingness to work out a quid
pro quo. De Gaulle is almost
certain, too, to press his own
pet proposal for a joint East-
West aid program to underde-
veloped areas.
In June, De Gaulle told
President Gronchi of Italy that
Europe should be prepared for
eventual collaboration with the
Soviet Union. In a speech last
May at Bourges, De Gaulle, push-
ing his East-West aid proposal,
said that such a joint effort
would show the peoples of the
two camps "that they resemble
each other, that regimes do not
make any difference, and that
they are white men on both sides,
that they are civilized people
who possess great means, great
resources, and that consequent-
ly their duty is the same."
French officials, includ-
ing De Gaulle, have frequently
expressed the view that the So-
viet Union, under pressure of
Chinese expansion, will even-
tually return to cooperation
with the West, and that inter-
nal"pressures in the Soviet
Union are hastening its "Euro-
peanization." A De Gaulle
spokesman has written that a
new world equilibrium must be
found to guarantee the survival
of Western civilization and
avoid the catastrophe of a nu-
clear war.
Disarmament
Khrushchev's remarks to
Austrian leaders earlier this
month provide further evidence
that Moscow's long-range eco-
nomic and military planning is
not predicated on any substan-
tial reductions in military ex-
penditures through an East-West
disarmament agreement. Accord-
ing to Austrian Foreign Minister
Kreisky, Khrushchev stated that
Soviet plans for raising the
standard of living are based
not on savings.from disarmament
but on increases in productivity
under the Seven-Year Plan.
Kreisky said further that
Khrushchev gave him the impres-
sion the`USSR will accept dis-
armament controls but expressed
doubt that Soviet views on the
timing and scope of controls
would be acceptable to the
United States. The Soviet lead-
er appears to have repeated the
vague and ambiguous position on
controls that he outlined in
his speech before the UN General
Assembly on 18 September and in
subsequent pronouncements. He
called for an international con-
trol body composed of all states
but made it clear that this body
would have "free access to all
objects under control" only after
complete disarmament has been
achieved.
Soviet propagandists con-
tinue to place heavy emphasis
on the Soviet proposal for
"general and complete" disarma-
ment. Moscow cites the fact
that disarmament is the "chief
point" on the United Nations
General Assembly agenda as an
indication of the great changes
that have come about as a re-
sult of Khrushchev's visit to
the United States.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Propagandists have alleged
that the "overwhelming majority"
of the delegates in the General
Assembly approve of the Soviet
plan for total disarmament.
They called "very gratifying"
and a "confirmation of the con-
structive nature" of the Soviet
disarmament proposal, the Brit-
ish delegate's statement in the
Political Committee on 19 Octo-
ber that the USSR and the Western
countries have been brought
closer together on several as-
pects of disarmament.
Test-Cessation Negotiations
The Soviet delegate's
opening statement at the nu-
clear test-cessation talks,
which resumed in Geneva on 27
October after a two-month re-
cess, reflects Moscow's confi-
dence that it is in a strong
position to resist Western de-
mands for new technical dis-
cussions on underground detec-
tion techniques and for relat-
ing the annual number of in-
spections under the limited
quota system to the estimated
number of unidentified seismic
events.
The Soviet delegate charged
on 28 October that British sup-
port now for new technical talks
diverges from the Macmillan pro-
posal for an annual inspection
quota. He pointed out that al-
though the new American data
had been published a month and
a half before Macmillan set
forth his proposal in Moscow,
the British prime minister did
not Contend then that the Amer-
ican information required new
technical talks prior to agree-
ment on the number of annual in-
spections. He called for United
States confirmation of the So-
viet delegation's "assumption"
that the three delegations now
agree "in principle" to the So-
viet draft proposal following
the Macmillan idea, asserting
that the conference could then
move on to fixing a definite
number of annual inspections.
In support of the Soviet
contention that there is need
for only a "small number of in-
spections," the Soviet delegate
claimed that the right of any
party to demand inspection of
the other party at any moment
would act as a deterrent to a
would-be violator of any test-
cessation treaty.
Moscow is apparently also
confident that its 28 August
declaration that it will not
resume testing unless the West-
ern powers conduct such tests
places its delegation at Ge-
neva in a strong position to
reject any new American effort
to limit agreement, for the
time being at least, to atmos-
pheric tests only. The Soviet
delegate called the declaration
proof that the USSR will do
everything necessary to achieve
the goal of "rapid agreement to
end all types of tests."
On 28 October, in support
of Soviet resistance to new
experts' talks, he implied
that the United States wishes
to prepare the way for eliminat-
ing underground testing from
any cessation treaty. He as-
serted that such a treaty would
be "worthless" since it would
not stop the nuclear arms race,
development of old ones, or
even eliminate the danger of
radioactivity in regions of the
tests.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
The 1960 budget announced
on the opening day of the cur-
rent Supreme Soviet meeting re-
veals total revenues and ex-
penditures at a record high.
The increases--approximately
6 percent over 1959 plan lev-
els--are much smaller, however,
than the unusually large in-
creases planned for 1959 over
1958. Heavy industry retains
its favored position in the
economy.
The explicit military al-
location for 1960 is the same
as that for 1959--96.1 billion
rubles. Stated military outlays
have thus remained virtually
stable since 1956. Defense
expenditures are concealed in
other budget categories, how-
ever, and the increase in total
expenditures budgeted for 1960
will permit continued growth
in those military programs thus
financed. Outlays for scien-
tific research insti-
tutes, planned at 27.3
billion rubles in
1959, are to be in-
creased by 15.4 per--
cent in 1960, con-
tinuing the rapid
growth since 1955
in this area.
In his speech
on the 1960 annual
economic plan, Gos-
plan chief Kosygin
accounced that the
successful perfor-
the goal of 7.7 percent, is
projected at 8.1 percent in
the plan for 1960. Soviet
leaders probably expect over-
fulfillment again in 1960; the
average annual rate of increase
necessary to fulfill the Seven-
Year Plan is 8.7 percent.
Individual industrial out-
put goals for 1960 for iron ore,
steel, petroleum, and electric
power are moderately higher
than anticipated 1959 produc-
tion. Performance in the fuel
industries is expected to be
sufficient in 1960 to supply
a broader internal market and
to permit greater exports.
Petroleum exports have already
risen from about 10,000,000
tons in 1956 to about 18,000,-
000 tons in 1958, according to
Soviet statistics.
Power consumption per work-
er is expected to increase 8
COMPARATIVE USSR AND US INDUSTRIAL PRODUCTION
SELECTED ITEMS
MILLION METRIC TONS (EXCEPT ELECTRIC POWER)
Iron Ore
88.8 94.0 105.0 150-160 96.0
Pig Iron
39.6 42.7 46, 5 65-70 71, 6
Crude Steel
54.9 60.0 64.9 86-91 102.0
Crude Oil
113,0 129,0 144.0. 230-240 355.0
Electric Power
233.0 262.0 291.0 500-520 754,0
BILLION K W H
mance of the economy thus far
during the first year of the
Seven-Year Plan (1959-65) has
made possible higher targets
for 1960 than originally en-
visaged. Gross industrial
output, which is expected to
increase approximately 11-12
percent in 1959 compared with
USSR
US
ACTUAL
EXPECTED
PLAN
PLAN
1957
1958
1959
1960
1965
percent in 1960, while labor
productivity is planned to in-
crease 5.8 percent compared
with the annual 5.4 percent
goals set for the last three
years. The seven-hour day,
.41-hour week, is expected to
be extended to all workers in
all branches of ind+.;stry during
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PLANNED BUDGET REVENUES AND EXPENDITURES FOR 1958-1960
MACHINE
TRACTOR STATIONS
SOCIAL
INSURANCE RECEIPTS
STATE LANDS
TAXES ON ENTERPRISES
AND ORGANIZATIONS
CURRENT INTELLIGENCE WEEKLY SUMMARY
~1
a
SOCIAL-
CULTURA
FINANCING
THE
NATIONAL
ECONOMY
1960, although progress in this
line has been lagging recently.
The new plan maintains the
growth rate in capital invest-
ment, scheduling an 11-percent
increase over 1959. Like last
year, there is a heavy concen-
tration of investment in metal-
lurgy, chemicals, oil and gas,
and machine-construction, al-
though the rate of investment
appears scheduled to ease.
slightly. Preliminary reports
imply that state housing expend-
itures are to increase approxi-
627.7
4
V
25.0
30.3
N
M
uately 15 percent above the
level planned for .1959, :thus
maintaining the emphasis of the
last few years on housing con-
struction.
In agriculture, Kosygin
announced that the gross output
of grain, sugar beets, and a
number of other crops in 1959
"is expected to" surpass the
average annual output of the
last five years despite unfavor-
able weather in a number of dis-
tricts. Kosygin did not dwell
on comparisons of this year's
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CURRENT INTELLIGENCE WEEKLY SUMMARY
harvest with 1958, since re-
sults are far less favorable
than last year,:, when a rec-
ord harvest was obtained.
The 1960 goals in agriculture
announced by Kosygin are gen-
erally in line with the
planned goals for 1965. How-
ever, the USSR will probably
fall far short of real-
izing these or the major
1965 agricultural goals.
The other item of importance
on the agenda besides the budget
and plan is a forthcoming report
on the international situation
and the foreign policy of the
USSR. Also on the agenda is con-
sideration of a draft bill on
the procedure of recall of USSR
Supreme Soviet deputies and con- 25X1
firmation of decrees of the
Presidium issued since the last
Supreme Soviet meeting.
MIDDLE EAST HIGHLIGHTS
Iraq
Despite the spate of rumors
that Prime Minister Qasim has
suffered a relapse or complica-
tions from his wounds, and has
even been flown to a bloc capi-
tal for treatment, there is no
good evidence to contradict the
26 October statement by Iraq's
minister of health that "all is
well." A speech by Qasim over
Radio Baghdad was broadcast on
25 October. The American Em-
bassy believes it unlikely that
optimistic medical reports would
be continuing if anything were
seriously wrong with the prime
minister. Numerous photographs
of a smiling Qasim, standing
erect or sitting in his hospi-
tal room, are being published in
the Baghdad press to quash the
rumors.
Apparently nettled by
statements regarding the danger
of Communism in Iraq, Prime
Minister Qasim has taken the
lead in castigating enemies of
his regime in the UAR and Jor-
dan. In a press interview on
27 October, Qasim called Jor-
dan's King Husayn a "scion of
treason," and declared that
Iraq stands as the strongest
nation in the Middle East.
Baghdad radio, which has long
characterized Nasir as a frau-
dulent Arab nationalist,
charged that Cairo and Amman,
at "imperialist" instigation,
are plotting against Iraq.
The Qasim regime is re-
ported to be striking out in
another fashion at the UAR in
retaliation for its support of
dissident Iraqi elements. Rep-
resentatives. of the Iraqi re-
gime in Lebanon have contacted
exiled Syrian elements--Kurds
and Druze--in an attempt to fo-
ment trouble against the UAR
regime in Syria. While it is
unlikely that these efforts
will be successful, it does
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CURRENT INTELLIGENCE WEEKLY SUMMARY
suggest that Qasim now is pre-
pared to retaliate against the
UAR in its own territory.
Tight security measures
continue throughout Iraq, and
a curfew is still in force be-
tween 2000 and 0500 hours.
Exist visas are still restricted
to holders of diplomatic and
special passports. Economic
activity has reached a new low
since the assassination attempt
on Qasim. There has been a gen-
eral paralysis of government at
the decision-making level, and
the closing of the frontiers
has disrupted foreign business
operations.
UAR
Vice President Amir took
over last week as Nasir's lieu-
tenant in Syria, in a major
effort by the Cairo regime to
cure the many ills plaguing the
northern region of the UAR.
Nasir's presidential decree of
21 October gave Amir nearly
absolute authority over Syria's
political and economic struc-
ture. Amir is expected to move
quickly to initiate the economic
reform measures to which the
regime has devoted much plan-
ning over the past year, and
he will be responsible for
getting under-way the Syrian
branch of the UAR's single-
party political organization,
the National Union.
No early changes in Syrian
cabinet positions are expected.
Interior Minister Sarraj was
given the recently enlarged
duties of director of propa-
ganda and information by a de-
cree accompanying' the one of'21
Oc he appar-::sly will con-
tinue as Nasir's security watch-
dog in Syria. Amir presumably
will also give special attention
to eliminating dissidence with-
in the Syrian Army.
The prospects for solving
the problems of Syria's dis-
located economy in the near fu-
ture are not bright. Two con-
secutive years of drought and
the business community's lack
of confidence in the abilities
and intentions of Cairo since
the union in 1958 have stulti-
fied the formerly free and
growing economy. Cairo's gran-
diose schemes for industriali-
zation are unlikely to bear
fruit for several years, even
if pushed through over the pro-
test of vested government and
private interests.
The lag in Syria's agricul-
tural production caused by the
regime's too-rapid confisca-
tion and redistribution of land
cannot be made up next year,
and forecasts for the coming
crops are not encouraging..The
regime must continue its at-
tempts to persuade the public
to live off promises while
putting its utmost effort into
the reform programs.
The public's discontent
may be abated somewhat by the
regime's concessions to politi-
cal autonomy through the estab-
lishment of a Syrian branch of
the National Union. Membership
in this organization was decided
by local elections throughout
the UAR last July, and the
National Union now replaces all
former political parties.
Amir is expected to carry
forward the regime's plans for
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CURRENT INTELLIGENCE WEEKLY SUMMARY
29 October 1959
selection of local and provin-
cial governing councils from
the National Union membership,
leading soon to the formation
of a new National Assembly for
the whole UAR. The assembly's
powers will almost certainly be
circumscribed by those of the
executive, but the regime will
probably try hard to give it
some semblance of a truly rep-
resentative body with real
legislative authority.
Negotiations in Cairo be-
tween high-level Sudanese and
UAR officials on the Nile waters
dispute appear to have made sub-
stantial progress. The two
countries are reported to be
near agreement on the key issue:
the quantities of "unallocated"
water to be allotted to each.
A wide difference remains, how-
ever, between'the sum the Sudai?
is asking and the,amount the UAR
is willing to pay as compensa-
tion for Sudanese land which
will be flooded after the con-
struction of the UAR's Aswan
High Dam.
Important Sudanese reli-
gious and political leaders are
urging Prime Minister Abboud to
take initial steps for a transi-
tion back to a civilian govern-
ment.
Libya
There are reports that 70-
year-old King Idriss is consid-
ering a shake-up of the Libyan
cabinet early next month.
for a new membership for Libya's
rubber-stamp Parliament may well
be put off until early next year.
Arab League Oil Meeting
About 50 oil "experts" from
nine of the Arab League's ten
member states--Tunisia is not
represented--and delegates from
Kuwait, Qatar, and Bahrein opened
a ten-day conference in Jidda on
25 October. The meeting is sup-
posed to put the final touches
on a plan by Sheik Abdullah
Tariki, Saudi Arabia's director
of petroleum affairs, for a
1,250-mile pipeline which would
partly parallel the existing
American-owned Trans-Arabian
pipeline. The Arab plan calls
for linking oil fields in Iraq,
Kuwait, and Saudi Arabia with
seaports in Syria and Lebanon.
A project setting up an Arab
oil tanker fleet is also ex-
pected to be drafted. These
proposals are to be submitted
for approval at the 11 December
meeting of the Arab League's
Economic Council.
the meeting
iI also study an "ideal con-
tract" between oil companies and
producing nations. The pact re-
portedly would provide for a
57-percent share of revenues
to go to the host government
rather than the 50 percent now
usual in international oil op-
erations. The "ideal contract"
apparently will also provide
for government participation
in the management of the com-
pany, as well as for the exten-
sion of profit-sharing to all
aspects of the oil industry,
including marketing.
he may decide to
invest a revised federal cabinet
with increased powers over
Tripolitania Province. Elections
Premier Khrushchev, in a
talk with Iranian Ambassador
Masud-Ansari on 16 October, ex-
pressed interest in the Shah's
proposal to give the USSR a writ-
ten guarantee that Iran would
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CURRENT INTELLIGENCE WEEKLY SUMMARY
29 October 1959
not allow missile bases on its 1 bloc radio propaganda campaign
territory. However, he deferred
giving a formal response to the
proposal--which had been broached
by the Shah to Soviet Ambassador
Pegov in late September--on the
grounds that he would take the
matter up with "his government."
Khrushchev also criticized Prime
Minister Eqbal for his "anti-
Soviet" statements at the recent
CENTO meeting in Washington.
against the regime. These.
radio attacks were relaxed some-
what in September, concurrent
with Pegov's return to his
post after an extended absence,
but they have since been large-
ly resumed. Iranian officials,
however, are now less concerned
with the propaganda attacks,
apparently because public in-
terest in them has diminished.
Khrushchev's move in de-
laying a response to Ansari,
who reiterated the offer, may
reflect caution induced by
the Shah's behavior in causing
the failure of the talks in
February and confidence that
he can draw further concessions
from Tehran.
The Soviet premier probably
regards the Shah's offer as ev-
idence of the effectiveness in
Iran of the prolonged Communist
The Shah, who discussed
the Khrushchev-Ansari.talk with
Ambassador Wailes on 23 October,
noted that Khrushchev had di-
rected his fire against the US-
Iranian defense agreement. The
Iranian ruler said he interpreted
such attacks as evidence that
Soviet leaders look on the agree-
ment as an obstac a to a Soviet
attack on Iran, a ther directly 25X1
or by a "possible indirect at-
tack by Afghanistan or Iraq with
Fidel Castro apparently
does not recognize the danger
of Communism for Cuba and is
not likely to be influenced to
moderate his course. Qualified
observers feel his violent anti-
US attacks of the past week will
continue and that his demands
for US concessions may become
more extreme.
Leaders of the extremist
forces are Raul Castro and "Che"
Guevara, both obsessively anti-
American and suspected of Com-
munist sympathies. Raul was
recently named minister of all
army, navy, air, and police
forces, which will enable him
to control them even more close-
ly for political purposes than
he has done thus far. Guevara
is director of industrial regu-
lation and development and con-
sidered actually'. to run the
Castro regime's most powerful
and unrestricted agency, the
National Agrarian Reform Insti-
tute.(INRA).
Both Raul and Guevara are
believed to exert dominating in-
fluence in determining high
Cuban policy in all domestic
and foreign matters and to nul-
lify the influence of moderate
officials who hitherto have
managed to temper some of the
revolution's more drastic as-
pects.
Among its many nonagrarian
functions, INRA is evidently the
chief agent in Castro's strenu-
ous efforts to increase trade
with countries other than the
United States. An INRA mission
now is in Asia, and another left
for Europe on 27 October seek-
ing to purchase equipment in
Italy, Germany, France, and
Spain. The latter group is led
by INRA's leftist executive di-
rector, Nunez Jimenez, and will
also serve as the Cuban delega-
tion to the conference in Rome
of the United Nations Food and
Agricultural Organization.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
While Castro's drastic eco-
nomic reforms have substantial-
ly reduced the purchasing pow-
er of private interests, INRA
has received large government
grants and sizable donations
from groups anxious to demon-
strate'ttheir support of the
revolution. Its missions, there-
fore, are Cuba's biggest pur-
chasers and can enter into
large-scale agreements, some of
them probably utilizing barter..
One such agreement is re-
ported under consideration
with West Germany in the
development of Cuba's poten-
tially important mining in-
dustry, where extensive Amer-
ican interests are threat-
ened by'the cabinet action
of 27 October which withdraws
important concessions granted
by previous governments.
The latest clash between
Indian and Chinese border
forces in the disputed Ladakh
area of Kashmir has stirred
such animosity in India toward
Communist China that any early
negotiations on the border prob-
lem now seem unlikely. Prior
to the incident--the first se-
rious clash since those in As-
sam in August--both governments
had been trying to prepare the
way for diplomatic talks.
New Delhi and Peiping are
standing firm on their conflict-
ing versions of the incident,
each claiming the other side
was to blame for "intruding"
in its territory. The clash,
in which nine or ten Indians
were killed, occurred some 40
miles inside the generally rec-
ognized border between Ladakh
and western Tibet, about at the
point where the boundary claimed
by Peiping slices off a large
section of northeastern Ladakh.
Neither Peiping nor New
Delhi is precise in defining
the align.:ent of the "tradi-
tional boundary" in Ladakh.
The Indian claim to his iso-
lated and barren sector of
Kashmir is based on a treaty
made by the rulers of Kashmir
and Tibet in 1842 and on sub-
sequent British maps. The In-
dians have not exercised physi-
cal control over the area, at
least in recent years.
Peiping denies the valid-
ity of the 1842 treaty and the
British maps, claiming the
boundary shown on Chinese maps
is based on "historical tradi-
tions." Most of the disputed
territory has been occupied
by Chinese forces since 1956,
when they began construction
of a military highway between
Sinkiang and Western Tibet cut-
ting across the area. Ladakh
was the scene of several inci-
dents in 1958 and 1959 when
Indian patrols sent to recon-
noiter the region were captured
by the Chinese. The latest
clash probably was the result
of a similar effort by forces
on both sides to extend the
range of their patrol activity
in the wake of increased ten-
sion along the entire Sino-In-
dian frontier.
In any event, the 21 Octo-
ber incident probably was not
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CURRENT INTELLIGENCE WEEKLY SUMMARY
'AND ' K
- Location of
last two clashes
- -Boundary shown on recent
Chinese Communist maps
Selected road
25X1 ---Selected trail
29 OCTOBER 1959
0 MILES 200
intended by either side as a
provocation, in view of their
recent efforts to ease tension
and establish a climate for
negotiations. Progress toward
talks had been snagged on Neh-
ru's insistence that the McMahon
line be accepted as the legal
boundary between Assam and Ti-
bet and that Chinese troops be
withdrawn from outposts they
hold in Indian-claimed terri-
tory before discussions begin.
The Chinese might be will-
ing to consider mutual with-
drawal from points along the
McMahon line in Assam, but they
apparently have no intention
of abandoning claims to north-
eastern Ladakh. Chou En-lai in
September called on Nehru to
respect the "status quo" along
this part of the border, which
in effect would leave the Chi-
nese in uncontested possession
of the 6,000 square miles of
"udog
a
Shillong-
territory they claim in
Ladakh.
Despite the difficulties
in sitting down around the con-
ference table, Peiping and New
Delhi have indicated clearly
they feel it would be to their
own interests to work out some
form of agreement.
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McMAHON LINE
MigyiturA,
INDIA Mara.
MILE. JO
I 1
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Peiping's statements on
the Ladakh incident have indi-
cated concern over its impact
on Indian opinion. While re-
jecting New Delhi's protest,
the Chinese concluded their
note of 26 October in a mod-
erate tone, offering to return
ten captured Indian border
guards and expressing the hope
that India would "refrain" from
any words or deeds further
damaging mutual relations.
The violent reaction among
the Indian press and public to
the latest developments shows
that Peiping's concern was well
founded. Nearly all major news-
papers and political groups--
the Communists being a con-
spicuous exception--have joined
in the denunciation of China
and are demanding stronger
measures to counter Chinese in-
cursions. Nehru personally as
well as his policies have never
before come under such sustained
and vehement criticism. As a
result, his government is being
pushed in the direction of a
tougher policy toward Pei-.
ping.
25X1
25X1
New Delhi is not
likely, however, to take any
action which would preclude
eventual negotiations. In this
connection, Nehru probably is
counting heavily on Moscow to
exert further pressure on Pei-
ping to reach a peaceful solu-
tion. It is likely to be some
time, however, before the "f a-
vorable atmosphere" which the
Chinese consider necessary for
negotiations can be created.
The noteworthy feature of
bloc commentary so far on the
latest incident in Ladakh is the
silence from Moscow, which has
been trying to avoid an appear-
ance of undue partisanship on
the issue. The East German press
in contrast is giving open sup- 25X1
port to Peiping's position, ac-
cusing India of "armed incursion"
against Chinese territory.F I
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CURRENT INTELLIGENCE WEEKLY SUMMARY
The Chinese Communist cen-
tral committee plenary session
held at Lushan from 2 to 16
August approved previous modi-
fications of the commune system
and formalized the transfer of
authority from the commune to
the lower, production-brigade
level. A decision was also
made, however, to push ahead
vigorously with the revamped
commune and to wage a spirited
defense against the rising vol-
ume of domestic and foreign
criticism. (See Part III,
page 1.)
As the latest in a series
of major changes in the original
commune system since December
1958, the transfer of controls
from tha commune to the produc-
tion brigade (the old collective
farm) appeared to constitute
an ether step backward in a gen-
eral retreat from untenable po-
sitions. Earlier party decisions
had directed the commune's eco-
nomic activity away from rural
industry--the "backyard" steel
campaign--to traditional agri-
cultural pursuits; had authorized
a return to individual owner-
ship and "free markets" in order
to stimulate production; had
altered drastically the original
commune system of distribution
in favor of material incentives;
and had decreed that participa-
tion in the mess halls and other
communal services was a "vol-
untary" matter.
With the earlier abandon-
ment of the ideological preten-
sions linking the commune with
the rapid achievement of a Com-
munist society, it appeared in
August 1959 that the commune
existed largely in name only.
One of the basic charges ad-
vanced by its critics, apparent-
ly at the Lushan meeting, was
that "the people's commune is
much the same as the higher
stage agricultural producers'
cooperative, and it was there-
fore utterly unnecessary to
set it up."
Recent developments, how-
ever, indicate a firm resolve
on the part of the Chinese Com-
munist leadership to instill
new vigor in the commune pro-
gram. The best evidence of this
is the reversal of policy with
respect to the commune mess
halls. Whereas an authoritative
article in June had conceded that
mess halls were generally unpop-
ular and could be disbanded,
the new hard line in September
strongly defended the mess halls
on both practical and theoretical
grounds and called for the early
reactivation of those which had
been dissolved earlier "by mis-
take."
A similar call to re-estab-
lish commune nurseries under-
lined the regime's intention to
promote once again the concept
of the commune as the organizer
of a collective way of life.
Other directives have urged com-
mune authorities to organize
"labor armies" in combating
natural calamities, carrying
out water conservancy construc-
tion, and undertaking harvest
operations, thus demonstrating
another "superior characteristic"
of the commune over the old col-
lective farm.
Unable to demonstrate the
"great successes" claimed for the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
communes to date, the regime
has once again begun to stress
the future course of develop-
ment of the commune system.
By reviving the original time-
table for attaining "all-people"
ownership of the commune "with-
in three to six years" and by
re-emphasizing that the commune
contains rudiments of Communism
and thus foreshadows the future
Communist society, the Chinese
Communists have reasserted pol-
icy and doctrinal positions
which are clearly obnoxious to
the Soviet Union.
The second basic charge
leveled at the commune, also
presumably at Lushan, was that
"in order to establish people's
communes, you must build Com-
munism, otherwise you cannot
establish them." Although at-
tributed to domestic critics,
this charge reflects the long-
standing Soviet hostility to-
ward China's communes. The very
term "commune" is distasteful,
because by definition it is
Communist in character and im-
plies an advanced stage of social
development for China parallel-
ing or even exceeding that
achieved by the Soviet Union.
Soviet insistence on this
point, underscored during the
recent Khrushchev visit to China,
has fostered dissension within
the Chinese Communist party--as
admitted in recent provincial
press articles linking Soviet
views with "right opportunist"
opposition. At the same time,
Suslov's endorsement in Peiping
of the antirightist campaign
was probably intended to disso-
ciate the Soviet Union from in-
ternal policy matters in China.
Major speeches and party
editorials since the August cen-
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tral committee meeting reflect
the embarrassment and resent-
ment of the Chinese Communist
leadership over the position
of their Soviet comrades. The
party organ editorial of 29
August, stressing the socialist
character of the people's com-
mune, inquired, "Is there any
thing wrong with organizing
people's communes in order to
promote more effectively the
collective economy of social-
ism?" In a recent Pravda arti-
cle, Vice Premier an arty
Secretary General Teng Hsiao-
ping coupled a plea for assist-
ancec and support with an oblique
warning that "the Chinese people
have always carried on their
struggle resolutely on their
own."
The commune has been de-
fended as an orthodox Marxist-
Leninist institution conform-
ing with the historical laws of
development of "a large country
of the East," representing "a
glorious victory for the Marxist-
Leninist theory of uninterrupted
revolution," and, by implica-
tion, possessing "international
significance" for other "social-
ist" countries.
In sum, the Chinese Commu-
nist leadership has served no-
tice on its domestic and foreign
critics that it intends to make
no further concessions and that
henceforth it will advance, al-
though at a somewhat slower pace,
toward a number of the original
goals of the commune program.
Soviet intransigence and Commu-
nist China's new assertiveness
demonstrate how little progress
has been achieved during the
past year in resolving the basic
policy and ideological conflicts
introduced into Sino-Soviet re-
lations by China's communes.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Communist China, involved
in a series of disputes with
its neighbors, has not followed
up last year's intense trade
and aid offensive in South and
Southeast Asia. By failing to
exploit trade opportunities
and by threatening economic re-
taliation to gain political
ends, Peiping is losing hard-
won economic gains in markets
which have provided the foreign
exchange it requires for its
imports from Western Europe.
These setbacks, plus China's
unilaterally imposed embargo
on trade with Japan for undis-
guised political reasons,amount
to virtual abandonment of the
Chinese economic offensive in
Asia,
The Chinese, irritated
over Indonesia's plans which
would restrict the activity of
Chinese entrepreneurs in Indo-
nesia, bluntly threatened In-
donesian Foreign Minister Su-
bandrio with "economic warfare"
designed "to bring Indonesia to
its knees." For its part, Dja-
karta has made it clear that
Indonesia would rather forego
economic aid than submit to
Chinese interference. While
Peiping's threats are virtually
meaningless in economic terms--
China purchases only a small
portion of Indonesia's rubber
output--such tactics are in-
compatible with any serious at-
tempt to extend Chinese influ-
ence through economic penetra-
tion.
China has already failed
to carry out this year's rice
export commitments with Indo-
nesia, and Djakarta does not
expect to receive the total
amount contracted for. The
combined effect of such set-
backs can only endanger China's
position as a major supplier
of Indonesian imports.
The border dispute with
India has undermined many months
of work in cultivating Indian
markets for newly developed
Chinese export products. Simi-
lar disputes with Burma and
Nepal have contributed to the
indefinite postponement of the
small Chinese aid programs in
those countries. Even in Cam-
bodia, where work on four Chi-
nese aid projects has recently
been accelerated, there is
little enthusiasm for Peiping's
efforts.
In Malaya, which has long
been a major source of China's
foreign exchange earnings, Pei-
ping continues to spurn trade
opportunities because of al-
leged discrimination against
Chinese products. While they
have little effect on Malaya,
these measures contribute to
the decline in China's influ-
ence in another valuable export
market. Chinese price-haggling
and other demands during nego-
tiations on this year's rice-
rubber protocol with Ceylon
have diminished Colombo's in-
terest in further economic con-
tacts with China and may result
in cancellation of the rice-
rubber agreement.
The continued lag in this
year's trade drive results par-
tially from internal disloca-
tions caused by the "leap for-
ward," but, since exports to
Western Europe have been main-
tained at fairly high levels,
this does not explain entirely
the inactivity of Communist
China in carrying forward its
trade and aid program in South-
east Asia.
In 1958, when Peiping's
demands for machinery and in-
dustrial raw materials exceeded
the supplies available from the
bloc, Chinese imports from
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Western Europe reached record
heights, and China developed a
trade deficit of about $225,0001-
000 with that area. To offset
this deficit and maintain 'the
necessary imports, China used
the stepped-up export drive in
Asia to generate foreign exchange.
The momentum of last year's
drive carried this trade forward
for several months into 1959,
but Chinese imports from Western
Europe now are greatly reduced
The Chinese Communists,
seeking to improve their rela-
tions with Rangoon, are devoting
more than usual at-
tention to Burmese
officials and are in-
timating they are
willing to settle the
Sino-Burmese border
issue.
In a gesture not
required by protocol,
Foreign Minister Chen
Yi went to the air-
port to meet a Burmese
cultural delegation
attending Chinese Na-
tional Day celebra-
tions and saw the
group off on 17 Octo-
ber. Chen's farewell
statement to the del-
egation stressed Chi-
na's desire to "coex-
ist with its neighbors
and with all coun-
tries." In an unusual-
ly moderate remark
for a Chinese leader,
he added that China
"needs" a peaceful
environment and con-
tinued relaxation of
the world situation
"in order to solve its
problems completely."
These concilia-
tory moves apparently
were prompted by the
recent decline of
Chinese prestige in
and foreign exchange demands
presumably less urgent. After
the great efforts originally
put forth to establish Chi-
nese goods in Asian markets,
however, there has been no
campaign to consolidate past
gains. China's failure to
follow up its previous suc-
cesses seems, at least in some 25X1
instances, an unnecessary sac-
rifice to current political ex-
pediencies.
New Delhi as a result of the
clashes on the Sino-Indian
frontier. The Chinese are
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anxious to head off a simi-
lar deterioration of relations
with Rangoon, which has become
increasingly irritated by Pei-
ping's stalling on the Sino-
Burmese border issue. Last
spring, Burmese Prime Minis-
ter Ne Win submitted a package
proposal as Burma's "final
offer."
The Chinese hope to avoid
the appearance of recalcitrance
by playing down the differences
between their position and Ran-
goon's. The Chinese ambassador
assured Ne Win that China ac-
cepted Burma's definition of
the border, with reservations
about only a few areas. Since
part of Burma's border claim
is based on the McMahon line,
which China refuses to accept
as its formal border with India,
Peiping may be trying to make
the Burmese feel they are being
granted something denied the
Indians. Rangoon has not pub-
licly supported India in its
dispute with China.
The Chinese have told Ne
Win they are ready to renounce
their claim to the Namwan leased
tract, but that they insist on
acquiring the Hpimaw area. The
Burmese are willing to agree on
these two points, but they are
likely to be wary of Peiping's
reservation that its acceptance
of Burmese claims to areas in-
habited by ethnic minorities
is only tentative and subject
to the approval of "local
opinion" in Yunnan.
In the case of the Wa
States, the Chinese may be
making claims to areas more
extensive than the Burmese
are willing to concede.
These differences apparent-
ly are sufficient to pre-
clude a quick solution to the
border problem.
The government's position
in southern Laos continues to
deteriorate. Communist propa-
gandists and terrorists are hav-
ing increasing success among
the region's tribesmen, whose
already limited contact with
central government authority
has been further reduced by
transfers of army troops to
the north. The tribal people's
fear of the Communists and lack
of faith in the army are re-
p.:;rted as the main reasons
for their swing to the Com-
munists. 25X1
The American Embassy in
Vientiane considers it impera-
tive that the Laotian Army be-
gin at.least strong patrol ac-
tions in order to avoid a gov-
ernment loss of authority by
default.
French Foreign Ministry
officials have expressed simi-
lar concern over the decline of
the government's authority in
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The trial of Prince Sou-
phannouvong and other pro-
Communist leaders, originally
scheduled to begin on 26 Octo-
ber, now may begin in early No-
vember. The postponement has
been ascribed by the government
to a defense request for more
time in which to prepare its
case. A high Justice Ministry
official told an American Embas-
sy officer recently that some
defendants would be tried in
absentia, possibly indicating
government plans to strike at
the entire top leadership of
the pro-Communist Neo Lao Hak
Zat (NLHZ).
Hanoi reacted promptly to
the announcement of the trial,
condemning it as a violation of
the Geneva and Vientiane agree-
ments. On 26 October, Soviet
Ambassador to London Malik made
strong representations to Sel-
wyn Lloyd and delivered a Soviet
note also protesting the trial
of the 14 Neo Lao Hak Zat lead-
ers as a violation of the Ge-
neva agreements and calling for
a meeting of the Laos Interna-
tional Control Commission to.
consider what should be done.
The Foreign Office plans to re-
ply that the trials are an in-
ternal problem for Laos and are
neither in violation of the
Geneva agreements nor within
their jurisdiction.
A NLHZ communique publi-
cized by Hanoi radio on 28 Oc-
tober affirms rebel readiness
to negotiate a settlement with
Vientiane. The communique
warns, however, that continued
"struggle" is the only alterna-
tive if the Laotian Government'
refuses to alter its present
policies.
Malik told Lloyd on 23
October that the USSR was "ab-
solutely opposed" to a UN pres-
ence in Laos, according to the
Laos desk officer of the Brit-
ish Foreign Office. Deputy
Foreign Minister Kuznetsov
raised no objection on 7 Octo-
ber when Dag Hammarskjold
first outlined his plan to ap-
point a representative in Laos
after the UN fact-finding sub-
committee has submitted its re-
port. The Soviet Government
may feel that any acquiescence,
even though unspoken, in Hammar-
skjold's plan would undercut its
insistence that the only inter-
national framework on which to
base a solution in Laos is the
Geneva agreements. The USSR
may also fear that tacit ap-
proval of the plan would set a
precedent which could be used
again in situations where
it would clearly be against
Soviet interests.
Laotian Premier Phoui, hav-'
ing completed consultations with
American officials in Washing-
ton, plans to return to Vien-
tiane within a few days. He
hopes first, however, to make
a brief stopover in New York
to consult with Hammarskjold
and perhaps a few friendly UN
delegations. Phoui's decision
to limit his stay in New York
was apparently influenced by
Hammarskjold's concern lest
Phoui's presence prove a dis-
ruptive factor during the ex-
pected delicate maneuvering in
the UN over the subcommittee
report and the secretary gen- 25X1
eral's plan to establish his
own representative in Vien-
tiane.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
REPLACEMENT OF NORTH KOREAN FOREIGN MINISTER
On 23 October, North Korean
Deputy Premier Nam Il was re-
placed as foreign minister by
Pak Sung-chul. Pak, who has
been a deputy foreign minister
of increasing prominence and di-
rector of the powerful interna-
tional department of the party
central committee, has had an
important hand in policy formu-
lation for some time. It is un-
likely that his appointment pre-
sages any shift in North Korean
foreign policy or bloc orienta-
tion.
Nam has retained his deputy
premiership, and h : addressed
the Supreme People',,- Assembly
in that capacity of the day fol-
lowing the announcement of his
removal as foreign minister.
His replacement, therefore, has
not affected his other functions
in the regime.
Prior to his appointment
as foreign minister in 1953,
Nam served as army chief of
staff and top Cry?dmunist nego-
tiator at Kaesong and Panmunjom.
Able and experiences, he has
been characterized as arrogant,
extremely ambitious, and a pub-
licity seeker. The 46-year-old
Nam was educated in the Soviet
Union, taught school in Soviet
Asia, and reportedly served as
a captain in the Soviet Army
during World War II. Fluent
in Russian and strongly Soviet
oriented, Nam arrived in North
Korea in 1945 and was influ-
ential in setting up propaganda
and educational organs closely
dodeled on their Soviet counter-
parts.
Nam's removal does not ap-
pear to signal a decline in So-
viet influence and a concomitant
rise in China's prestige. He`be-
.longs to. the 'Soviet-Korean group
(former Soviet citizens of Korean
parentage)-which asserted its
control of the North Korean
party in 1956 and probably
has consolidated this control
in the more than a dozen min-
isterial changes that have oc-
curred in the past two years.
Pak Sung-chul, who was born
in Korea in 1902, has a military
background like his predecessor.
At the outbreak of the Korean
war, he was commander of the 15th
Division of the Korean People's
Army, and before the armistice
ne had become a major general
in charge of the reconnaissance
bureau of the North Korean high
command. He apparently began
his diplomatic career in 1954
as minister and later ambassa-
dor to Bulgaria, and was appointed
a deputy foreign minister in 1956.
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CURRENT INTELLIGENCE WEEKLY SUSMMAIV
Moscow is moving again in
an effort to enlist the active
support of the Soviet public in
coubating antisocial behavior.
Qu,6si-judicial "public juvenile
de:inquency commissions" are to
be created, and "comrades'
courts" are to be given en-
hanced authority under a draft
lay published recently for
"b]-oad general discussion."
Jui'enile delinquency commis-
sions evidently will be set up
under oblast executive commit-
tei!s, and under Councils of
Ministers in those republics
where oblasts do not exist.
Described as "public or-
ganizations" in the proposed
lay,, they will be empowered to
subject adolescent offenders
to such punishments as repri-
mand, public apology to plain-
ti:'fs, transfer to medical in-
st:.tutions, or confinement in
rej'ormatories. They will also
handle cases of child neglect
and will determine which chil
dre a should become wards of the
state; public wards will be
provided employment or enrolled
in schools. The commissions
wi:.l have the right to hold
pai-ents or guardians responsible
foY juvenile delinquency and to
is:,ue public reprimands, levy
monetary fines, or refer cases
of negligent parents to the
cor grades' courts.
During the past year these
so-.called "courts" have been
ori'anized widely in factories,
offices, and apartment houses.
Th( it primary function is to
surimon general meetings at which
such petty offenders as chronic
absentees, drunks, and hooligans
ar( subjected to mass condemna-
tion. Despite some objections
to this procedure from legal
cil cles, the fear of public em-
bairassment has won increasing
recognition as a legitimate
means of ensuring social con-
:fortuity, and granting legal
status to comrades' courts will
also set the official seal of
approval on the methods they
employ.
Under the terms of the
draft law, comrades' courts
will be empowered to try minor
offenses if, in their view, the
accused can be "corrected through
public influence." The courts
will be allowed to petition law-
enforcement agencies to drop
criminal proceedings in such
cases, and offenders will be
paroled to the comrades' cdurt
for "re-education and correc-
tion."
In the field of rehabili-
tation, the bill proposes to
give control commissions of
local and regional governments
the right to recommend suspend-
ed sentences or reduced prison
terms in less serious cases.
Employment and the "necessary
material conditions" will be
guaranteed released convicts.
The bill also calls for increased
work by the volunteer militia
brigades, and "advises" republic
legislatures to pass laws en-
listing public aid in the strug-
gle against alcoholism.
The draft bill is not in-
cluded on the agenda of the
present Supreme Soviet session,
and its publication for discus-
sion suggests that it probably
will not be ratified until the
next meeting of the legislature.
By encouraging the people to
discuss the bill at mass meet-
ings and to submit their rec-
ommendations for changes, the
regime is evidently attempting
to keep the pressing problem
of antisocial behavior before
the public eye and at the same
time give the general populace
some sense of direct par-
ticipation in national af-
fairs.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Moscow claims that the
proposed increase in public
responsibility for maintaining
law and order is another "visi-
ble sign of Communism," pointing
out that government functions
are gradually being turned over
to "public organs" as the So- 25X1
viet Union begins its "full-
scale building of a Communist
society.'
In Helsinki for the signing
of a new Soviet-Finnish five-
year trade agreement and the
opening of the Soviet Industrial
Fair, Soviet First Deputy Premier
Mikoyan praised Soviet-Finnish
relations as an "example of
peaceful coexistence and fruit-
ful cooperation between states
with differing social and econom-
ic systems." At the same time,
however, he warned Finland against
participating in the projected
seven-nation little free-trade
area (Outer Seven) or increas-
ing its defense forces.
Mikoyan said at a press
conference on 22 October that
the USSR regards Western European
economic groupings as "remnants
of the cold war era." In an
obvious reference to Finland's
pending decision regarding mem-
bership in the Outer Seven,
Mikoyan stated that Finland is
the USSR's "most important West
European trade partner" and ex-
pressed confidence that Helsinki
would consider the importance
of Soviet trade and reach an
"advantageous decision" concern-
ing its links with the planned:
organization.
Previous unofficial Soviet
warnings caused the Finns to
adopt a wait-and-see attitude
toward the little free-trade
area; Mikoyan's statements defi-
nitely preclude direct Finnish
membership. Nevertheless, an
official of the ruling Agrar-
ian party said on 23 October
that the Finns would try to
"smell out" Soviet views further.
The Finns are concerned over
the ultimate competitive posi-
tion of their exports to West-
ern European markets and may
seek to preserve their position
by informal bilateral arrange-
ments.
Mikoyan formalized earlier
indications that the USSR op-
posed strengthening of Finnish
defenses. At the opening of
the Soviet Fair on 23 October,
in a speech otherwise devoted
exclusively to the USSR's prog-
ress, Mikoyan referred to the
latest Soviet proposal for gen-
eral and complete disarmament
and pointed to Finland's "for-
tunate position because it need
not take part in the arms race."
He told the Finns that under
the joint Soviet-Finnish Treaty
of Friendship and Cooperation,
"The USSR and its military
might are the guarantee of Fin-
land's security."
The American Embassy in
Helsinki notes that this is
the first time the USSR has
officially and publicly voiced
this "liberal" interpretation
of the 1948 treaty, and it sees
Mikoyan's statement as one more
step toward giving Moscow "open
and avowed protecting power
over Finland."
When President Kekkonen
during his state visit to the
USSR last year raised the ques-
tion of removing the 1947 Peace
Treaty limitations on the size
of the Finnish defense forces,
Khrushchev replied that this
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CURRENT INTELLIGENCE WEEKLY SUMMARY
could not be done at a time when
the USSR was advocating dis-
armament. The implication that
the USSR regards Finland as a
"protectorate" brings the Finns
face to face with the reality
of their situation and will
inevitably depress public morale
unless countered by signs of a
more independent official atti-
tude.
The new Finnish-Soviet
long-term trade agreement for
1961-65, signed by Mikoyan on
22 October, calls for Finnish
exports valued at $800,000,000
--one third of which will be
in ships--and imports at $750,-
000,000. This represents an
average annual increase in trade
between the two countries of
2.5 percent. The projected
increase in Finland's total
foreign trade during this peri-
od is 3 to 4 percent. The
Finns rejected a Soviet demand
to supply all Finland's crude
oil requirements, but the new
agreement calls for an increase
of at least 30 percent in the
value of Soviet oil deliveries.
Mikoyan's visit, which
ended on 28 October, included
a tour of the country and the
launching of an icebreaker
built by Finland for the USSR.
NEW EAST GERMAN FLAG USED IN CAMPAIGN FOR WESTERN RECOGNITION
The new flag of the German
Democratic Republic is being
flown at every opportunity in
the West as a new facet of the
effort to induce Western powers to
recognize East Germany. East
Germany is energetically dis-
playing the standard in various
Western European cities in
order to capitalize on the pub-
licity generated by the 6-8
October flag incidents in Ber-
lin.
the flag. In Paris on 17 October,
East German volleyball teams
walked out when local author-
ities refused them permission
to fly the flag and play their
national anthem. In Vienna
on 21-22 October, the flag was
displayed on a building housing
an East German exhibition; the
Austrian authorities did not at-
tempt to prevent this, since
there is no legal provision for
doing so.
On 10 October the new
flag appeared for'the first
time in West Ger-.
many when it was
displayed in Stutt-
According to the East German
press, the flag has also been
gart, where the East
Germans were partici-
pating in a world
bicycle-riding cham-
pionship. As this
was an international
event, a spokesman
for Bonn's Ministry "PA
of All-German Affairs "o, GEaMP
claimed there was no
legal basis for pro-
hibiting the East
Germans from flying
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CURRENT INTELLIGENCE WEEKLY SUMMARY
flown without interference dur-
ing the past two weeks in Copen-
hagen, Wolverhampton in England,
Goteburg...in Sweden, and Tehran.
In addition, all East German
ocean-going and inland vessels
are flying the new flag in for-
eign waters--a move which is
not likely to be opposed,'since
such identification serves an
essential purpose. East German
barges also display the new
flag while on West Germany's
inland waterways, and Bonn is
undecided how to meet this is-
sue.
While there has been some
opposition to these flag dis-
plays, most countries are un-
likely to permit this issue to
interfere with trade, sports,
or other exchanges with East
Germany. Following a 28 Octo-
ber decision by the Bonn cab-
inet, negotiations now are un-
der way between Bonn and the
state governments providing for
joint police action to prevent
the public showing of the East
German flag in the Federal Re-
public. There has been signif-
icant opposition to a ban from
the political parties, including
those in the governing coali-
tion. The West German Sports
League has protested that if
the East German flag is banned
in the Federal Republic, many
international events are like-
ly to be transferred to East
Germany.
West Berlin authorities
are working out plans--subject
to approval by the Western
allies--for action in the event
of new flag incidents such as
might occur on 7 November, the
anniversary of the Soviet Octo-
ber Revolution, which is a
holiday in East Germany. The
allied powers will deliver a
strong warning to Soviet au-
thorities in Berlin not to allow
another flag incident on this
occasion.
GOMULKA SHAKES UP POLISH REGIME
The party and government
shifts made on 27 October in
Poland indicate that Gomulka is
taking a more serious view than
previously of his economic prob-
lems. He evidently hopes, by
bringing into the government
men who favor stronger central
economic controls, to improve
economic planning and admin-
istration and to prevent a fur-
ther deterioration of the eco-
nomic situation. While it can-
not yet be ascertained how far
the tightening of control over
the economy will go, it is un-
likely that Gomulka has decided
to abandon any of the features
of his program which make Po-
land unique within the bloc.
Gomulka is said to have
become increasingly irascible
and short-tempered in recent
months. He is suspicious that
his programs are being atstructed,,
either deliberately or by in-
competence. There is consid-
erable evidence of miscalcula-
tions in planning, inflexibil-
ity in the execution of plans,
and unwillingness to make ad-
justments to meet changed con-
ditions. The lack of coordina-
tion within and among economic
ministries has been noticeable.
The unsatisfactory level
of worker productivity, the
rising cost of living, the
shortage of meat and animal feed,
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CURRENT INT: s:,LIGENCE WEEKLY SUMMARY
29 October 1959
and the drought which threatens
the winter grain crops are also
major elements contributing to
Poland's economic problems. Go-
mulka recognizes that unless
Poland's economic situation con-
tinues to improve, as in the
past, there may well be serious
political consequences.
One of the most important
changes was the removal of
Edward Ochab from his post as
agriculture minister and his
appointment to, the party secre-
tariat. He retained his posi-
tion on the party politburo.
In 1956 Ochab played an impor-
tant role in Gonuilka's return
to power and stepped down as
party first secretary to make
way for him. Ochab is reported
to have come under fire for
certain agricultural policies,
in particular for a decision
last year to reduce pig-breed-
ing on state farms--which al-
legedly contributed to the pres-
ent meat shortage. The timing
of his removal from the Agri-
culture Ministry when Poland is
facing a severe meat shortage
and the prospect of a short
crop next year because of a pro-
tracted drought suggests that
he may be held responsible for
the situation.
Named as deputy premiers
were Eugeniusz Szyr and Julian
Tokarski, respectively chairman
of the Planning Commission and
minister of heavy industry and
of motor industry in the Stalin-
ist Bierut regime. Szyr was
ousted from his planning post
following the Poznan riots in
June 1956, but has served on
several ad hoc party commis-
sions and since January 1957
has been a member of the Eco-
nomic Council of Ministers.
Long known as an advocate of
tighter central control over
the country's economy, Szyr
sharply criticized Gomulka and
his economic policies at a
central committee plenum
last fall.
Tokarski has not held any
significant party or govern-
ment post since 1956. Tadeusz
Gede, currently ambassador to
Moscow and a deputy premier
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CURRENT INTELLIGENCE WEEKLY SUMMARY
29 October 1959
prior to October 1956, was ap-
pointed first deputy chairman
of the Planning Commission.
All three men are con-
sidered to be competent admin-
istrators who favor, and would
willingly implement, harder in-
ternal policies, especially in
the economic field.
Another government change,
but one which had nothing to do
with the economic crisis, was
the dropping of Wladyslaw
Bienkowski from his position as
minister of education. Bien-
kowski, an old friend and con-
fidant of Gomulka, has been re-
garded by many Polish Communists
as too "liberal" and has been
on the downgrade politically
for some time.
These changes affect the
governmental rather than the
party functions of these indi-
viduals. While Gomulka appears
to retain firm control of
the party, the appointment
of known advocates of a harder
economic line may encourage
dissident elements wbo have
not favored Gomulka's policies.
ICELANDIC ELECTIONS
The combined majority
gained by the Conservative and
Social Democratic parties in
Iceland's 25-26 October general
elections portends a period of
cabinet cooperation between
these two pro-Western parties.
Since December the Social Demo-
crats have constituted a minor-
ity government with the tacit
support of the Conservatives.
The elections, the first held
under the new proportional rep-
resentation system approved
earlier this year, gave the Con-
servatives 24 seats and the So-
cial Democrats 9 seats in the
newly enlarged 60-member Al-
thing.
The two "labor" parties--
the Social Democrats and the
Communist-dominated
Labor Alliance.
scored the most im-
pressive gains in
terms of popular
vote. The Social
Democrats benefited
from their anti-in-
flationary economic
program, which ap-
pears to have won
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PART II NOTES AND COMMENTS
increased public confidence and
acceptance. The more modest
gains of the Communists prob-
ably can be attributed both to
their attempts to exploit the
unpopular aspects of the gov-
ernment's economic policies
and to recent.-incidents at
the Keflavik air base which
aroused some nationalistic in-
dignation.
In the negotiations for a
postelection government, the
Conservatives and the Social
Democrats will play dominant
roles. The prospect that cer-
tain politicians in these par-
ties might be prepared to ac-
cept token Communist participa-
tion as a price for securing
labor peace appears less likely
ICELANDIC PARLIAME
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CURRENT INTELLIGENCE WEEKLY SUMMARY
now than before the elections.
The gains made by the Social
Democrats strengthen their po-
sition in resisting probable
Communist demands for represen-
tation in the government.
A government formed by the
Conservatives and Social Demo-
crats, while friendly to West-
ern interests, probably would
be compelled to continue to de-
mand international acceptance
of Iceland's unilaterally ex-
tended 12-mile fishing limit.
The government would also be
under some pressure to prove
that it is prepared to protect
Iceland's interests in issues
concerning the Keflavik base
and relations with NATO or the
US defense force. The new govern-
ment probably will not immedi-
ately attempt to change the re-
cent pattern of extensive trade
ties with the Soviet bloc, since 25X1
all parties in principle favor
diversification of the country's
forein trade.
A developing strength and
unity of purpose were again
evident at the 13-15 October
meetings in Brussels of the
Council of Ministers of the
six-nation European Economic
Community (EEC or Common Mar-
ket). While the proposals
agreed to were largely tenta-
tive, they nevertheless promise
an accelerated achievement of
economic goals, new steps to
strengthen the Community polit-
ically, and a growing measure
of agreement on the EEC's com-
mercial policy toward the rest
of the world.
The decision to proceed
with organization of periodic
political consultations on a
six-nation basis is a sign of
the increasing confidence in
the Community's future. These
consultations will occur at
the foreign ministerial level,
no new institutions will be
set up, and the agenda will be
restricted to "political im-
plications of the Community's
financial and economic poli-
cies. "
This plan falls short of a
"perfectionist" scheme offered
by Bonn which would have in-
volved the Community's assembly
in wide-ranging political de-
bates, but it is a significant
recognition that the six members
have political interests in com-
mon. Other proposals to fur-
ther the concept of a political
community--including popular
election of the assembly--re-
ceived favorable initial re-
sponse.
The ministers agreed to
discuss in November measures to
reduce the 12- to 15-year tran-
sitional period of the EEC by
at least four years and to
strengthen collaboration on
monetary and fiscal matters.
An initiative toward a Community
program of technical and finan-
cial assistance to underdeveloped
countries was also approved,
and an ad hoc committee to draft
a plan was formed. President
Hallstein and the EEC Commis-
sion were directed to proceed
as rapidly as possible with the
negotiations to establish
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CURRENT INTELLIGENCE WEEKLY SUMMARY
29 October 1959
associative ties between the
Common Market and Greece and
Turkey.
Prospects that the Common
Market will pursue in general
a liberal, "world-oriented"
foreign. trade policy have im-
proved. Proposals to this ef-
fect--embodied in the so-called
"Hallstein reports"--have been
accepted by the member govern-
ments as a basis for further
discussions. Elements both in
West Germany and in the Bene-
lux countries who would prefer
the EEC to concentrate instead
on early accommodation with the
projected Outer Seven grouping
have not given up hope for a
broader European economic asso-
ciation.
Pleas fora new EEC initia-
tive to this end are not likely
to succeed without Bonn's sup-
port of the West German Govern-
ment, and Adenauer believes that
the political primacy of the 25X1
Common Market should not be weak-
ened by economic considerations
at this time.
GROWING LATIN AMERICAN INTEREST IN BLOC TRADE
Brazil's plans to send a
high-level trade mission to Mos-
cow in late November':typify the
interest of a number of Latin
American governments in expand-
ing trade with the Sino-Soviet
bloc if the terms seem economi-
cally advantageous. Brazil hopes
to barter its excess coffee
stocks for equipment, includ-
ing petroleum machinery, and
raw materials needed for eco-
nomic development.
Four countries--Argentina,
Brazil, Cuba, and Uruguay--ac-
counted for 90 percent of Latin
America's $275,000,000 trade
with the bloc in 1958. Other
countries, however, will help
raise the 1959 total, which may
reach the 1955 peak of $340,-
MAJOR LATIN AMERICAN DIRECT TRADE
WITH SINO-SOVIET ILOC-1958
120' 215 MILLION DOLLARS F_
ARGENTINA
110272
000,000. The bloc offers, often
featuring low prices and low-
interest credit, have been
skillfully designed to take ad-
vantage of Latin American finan-
cial problems, including dif-
ficulties in marketing major
exports and inadequate export.
earnings to cover essential im-
ports and goods for economic
development.
The USSR has been Uruguayt
best customer for wool during
the past two years, and has pur-
chased from Cuba 500,000 tons
of sugar at low prices--ap-
proaching the 700,000-ton peak
in Soviet purchases in 1955.
Peiping
has just bought
10,500
tons of
Chilean nitrate
and has
offered to buy 50,000 tons of
copper, Chile's main export and
a commodity in short supply in
the bloc. The Chilean foreign
minister said that any agree-
ment would be limited to 30,000
tons and would be regarded as
supplanting indirect sales to
the bloc through West Germany.
Plagued with excessive
world coffee production, Latin
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29 OCTOBER 1959
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CURRENT INTELLIGENCE WEEKLY SUMMARY
American producers hope to .le--
velop new markets in the bloc,
especially since suc.i sales are
not chargeable under the 1959-
1960 International Coffee Agree-
ment effective 1 October. The
quasi-official Colombian Coffee
Confederation recently renewed
agreements with East Germany,
Czechoslovakia, Rumania, Hun-
1 1 -y, and the USSR calling for.
~ La
the barter of coffee for manu-
factured items. In late October
the Sao Paulo State government
in Brazil announced that it hai+
concluded arrangements with
Czechoslovakia to barter coffee
for an $8,000,000 hydroelectric
power station.
The eight-man Brazilian
trade mission to Moscow will in-
clude the heads of the Brazilian
Coffee Institute, the petroleum
:instit zte, and the state petro-
leum monopoly. It will investi-
{;ate in particular the prospects
:for bartering coffee for Soviet
petroleum equipment. Estimates
on trade targets vary from $30,-
000,000 to $100,,130,000. A year
ago the USSR signed an agreement
to supply Argentina with $100,-
000,000 we :.~th of petroleum e-
quipment on credit, but Argen-
tina has not yet received the
$30,000,000 worth ordered.
Dissatisfaction in the Bel-
gian Congo with Brussels' pro-
gram of accelerated political
development poses a threat to
communal and territorial elec-
tions scheduled for December
and has forced Brussels to offer
the Congolese a definite time-
table for independence. The
elections are planned as the
first step in the Congo's evo-
lution toward self-government,
but extremists in the Congo are
calling for a boycott of them.
The program for Congolese
political development outlined
by Congo Minister Auguste de
Schrijver on 16 October is the
most conciliatory yet offered
by 3russels. It calls for the
establishment of an all-Congo
government and a bicameral leg-
islature by Augast 1960. With-
in four years, the legislature
would work out a constitution
and decide whether to opt for
total independence or for inter-
nal autonomy with a degree of
association with Belgium. The
cabinet's program will be pre-
sented to Parliament the first
week in November.
Although Belgium report-
edly remains prepared to
underwrite the 1959 Congo budg-
et, possibly in range of $100,-
000,000, there are evidences
of division within the Belgian
Government, which is hard
pressed financially. The ma-
neuvering of the powerful op-
position Socialists--who are
not committed to support the
government's political and
economic program for the Congo--
will also make it difficult
for De Schrijver to obtain the
national support he needs.
In the Congo, reaction to
De Schrijver's program has been
negative. On 23 October, the
two leading African parties in
the Lower Congo re,e.. ted it as
providing "fictitiou. independ-
ence." Both groups were criti-
cal of tb; four-year transition
period prior to independence and
of Brussels' failure to discuss
the plan with Congo parties.
The gulf between the Congo ex-
tremists and Belgian authori-
ties is reflected in continuing
demands by the Abako, the dom-
inant party in the Lower Congo,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
29 October 1959
for independence from the remain-
der of the colony. Belgian
policy continues to be based
on maintaining the territorial
unity of the Congo.
Tension continues high in
the interior, although violence
between the Lulua and Baluba
tribes--stemming from tradition-
al tribal rivalries--has been
brought under control. Recent
tribal clashes may be cited
by conservative elements in
Brussels as evidence that the
government is moving too rapid-
ly in the direction of Con-
golese independence. A major
change in Belgian polic how-
ever _,appears unlikely.Fyk
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On 18 October a British pa-
trol boat intercepted a small
Turkish sailing craft apparently
attempting to smuggle arms into
Cyprus. This incident has re-
vived tension on the island and
at least temporarily halted the
work of a commission writing a
constitution for the future re-
public. Newspapers in Greece
and Turkey have treated the
issue in a manner which has in-
flamed long-existing Greek and
Turkish mutual suspicions. A
Turkish Foreign Ministry offi-
cial, in a conversation with
American Embassy officers, has
denounced British authorities on
Cyprus--accusing the acting gov-
ernor of being "phil-Hellene and
anti-Turk"--for revealing infor-
mation about the incident to the
Greek Cypriots,and for releasing
the story to the press.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Archbishop Makarios immedi-
ately suspended the work of the
constitutional commission--com-
posed of representatives from
Greece, Turkey, and both commu-
nities on Cyprus--and charged
the Turks with bad faith. This
was followed by reports in the
Greek press of other Turkish at-
tempts to smuggle arms, and re-
ports in Turkish newspapers that
the Greeks were creating a new
armed underground on the island.
Makarios, aware that right-
wing Greek Cypriot nationalists
would seek to exploit the arms-
smuggling incident to urge re-
pudiation of the Cyprus agree-
ment of last spring, apparently
took the firm stand in order to
maintain his position as unchal-
lenged leader of the Greek com-
munity. He may also have seen
an opportunity to obtain con-
cessions from Turkish negotiators
in the stalemated work of the
constitutional commission, as
Turkish officials in Ankara
have charged. The powers of
the future Turkish Cypriot vice
president were not clearly de-
fined in the basic agreement
drawn up by Greece and Turkey
last Fbbruary, and recent ne-
gotiations have failed to re-
solve a dispute over executive
powers.
Ankara's initial reaction
to'the interception incident
was an immediate denial of the
smuggling charges. A subse-
quent conciliatory statement
from Ankara that the Turks con-
tinued to favor full implemen-
tation of the Cyprus agreements
did not erase the suspicion
aroused among Greek Cypriots
that Turkish officials were in-
volved in the smuggling opera-
tion.
before Cyprus becomes an inde-
Joint appeals by Makarios
and Turkish Cypriot leader Ku-
chuk to their communities to
hand in to the' authorities all
illegally held arri,a have paved,
the way for early resumption of
the suspended talks. The smug-
gling incident, however, has re-
vealed the underlying distrust
which exists on both sides in
Cyprus and probably will be re-
flected in increasingly diffi- 25X1
cult Greco-Turkish negotiations
pendent state.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
PATTERNS AND PERSPECTIVES
The period between March
and September 1958--the period
of conception, experimentation,
and initial organization of the
Chinese communes--offers an op-
portunity for a case study of
Sino-Soviet liaison. The deci-
sion to establish the communes
was one of the most important
ever taken by Peiping and had
enormous implications for the
development of China's economy.
The program incorporated
economic and social policies
markedly different from those
of the USSR and in effect con-
stituted a unique Chinese path
of development toward Commu-
nism. Moreover, the Chinese
surrounded the communes with
ideological claims which in ef-
fect, if not in intent, consti-
tuted a challenge to Soviet
dogma on the "transition to
Communism." Further, the., Chi-
nese suggested that they be-
lieved their general line--em-
bodying the communes--to be sig-
nificant for other bloc coun-
tries, especially but not ex-
clusively those in Asia. The
wide disparity in bloc state-
ments on the communes--evi-
denced recently during the cel-
ebrations of Peiping's tenth
anniversary--testifies to a
diversity of opinion on the sub-
ject throughout the bloc.
Because of the Chinese com-
mune program and the assertions
surrounding it had and have
critical implications for the
entire bloc, Moscow would prob-
ably have expected the Chinese
to consult and coordinate close-
ly throughout the spring and
summer of 1958 before the reso-
lution was taken. However,
judging from Soviet comment on
Chinese economic developments
in that period--comment ex-
pressed primarily in Soviet
party journals and newspapers--
there was little or no coordina-
tion.
First Hints of Communes
After the Chinese Commu-
nist party (CCP) conference at
Chengtu in March, a campaign
to merge small collectives soon
began in two pilot provinces.
Some of these "large coopera-
tives" amalgamated 20 to 30
existing cooperatives, and many
features of the later communes
appeared in these early proto-
types. In April, Mao wrote an
article (not published until
June) in which he implied an
intention to move into a more
advanced stage of "production
relations." In that same
month, there were a number of
indications that, while the
USSR's dialectical glossary
does not concede that any other
bloc. nation has as yet begun
the preliminary "transition to
Communism,"Peiping was now go-
ing to claim an accelerated
schedule for moving toward the
ultimate stage of Communism.
Lu Ting-i, director of
the party's propaganda depart-
ment, stated flatly that the
young generation would "per-
sonally build a Communist so-
ciety in China." Another party
official enjoined Chinese youth
to prepare for "Communist under-
takings" under the leadership
of "the great party and Chair-
man Mao." Such remarks were
important because they treated
"Communist undertakings" as an
immediate concern for the youth
of China. They were accom-
panied by other statements which
foreshadowed the impending re-
vival of a "cult of personal-
ity" built around Mao and were
used to provide a doctrinal
backdrop for the audacious com-
mune program.
In May the Chinese party
held a congress at which the
communes were almost certainly
discussed. Liu Shao-chi pre-
sented to the congress a novel
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CURRENT INTELLIGENCE WEEKLY SVNNARY
and heretical interpretation of
the concept of "uninterrupted..
revolution," a doctrine which
was subsequently employed by
the Chinese to justify the com-
mune program. In the same
month, a People's DDaaily edi-
torial wrote that the "day of
constructing Communism (in
China) is not very far off."
In short, there are good indi-
cations that in March, April,
and May, the top Chinese lead-
ership was already actively
considering and making prepara-
tions fora nationwide commune
program.
Indications of Soviet Ignorance
If the Russians had had
ready access to the thinking of
the Chinese party leaders, they
would have received indications
of the coming commune program
during the spring of 1958. Yet
as late as June 1958, before
the Bulgarian party congress,
Khrushchev himself bestowed an
unusual accolade on the Chinese
party for its "enormous contri-
bution to the theory and prac-
tice of the socialist revolu-
tion." This unusual praise for
Chinese creativity would have
been high praise at any time.
In view of Khrushchev's
coolness toward the communes
after they were formally
launched, it is unlikely that
he would have made such a state-
ment--particularly to a forum
of bloc leaders--if he had been
aware of the decisions taken at
the Chengtu party conference in
March and the party congress in
May.
Similar praise for Chinese
"creativity" was voiced at the
June 1958 Academy of Sciences
conference on the theoretical
problems of "building Commu-
nism" in the USSR. That this
conference was largely unaware
of, or at least unprepared to
deal with, the impending com-
munes program was evident from
the lack of attention to bloc-
wide problems of "socialist and
Communist construction." One
Soviet theoretician said vaguely
that the "socialist countries
would enter Communism possibly
by economic zones," but he did
not specify--as he did in Octo-
ber--that European countries
would enter Communism before
Asian countries. The Russians
evidently were not yet con-
cerned with pre-empting the im-
pending Chinese claims to be
nearing Communism.
Even the most specialized
of Soviet journals--those pub-
lished by and for Soviet Sinol-
ogists---seemed to be in the
dark. A lead article in the
principal Soviet Sinology jour-
nal,written in June or even
later, and entitled the "Tri-
umph of Leninist Ideas in China,"
concluded that the Chinese were
following "the Leninist coop-
erative plan and the experience
of kolkhoz construction in the
Soviet Union."
In late July, the principal
Soviet economics journal wrote
that "truly inexhaustible re-
serves" were to be found in the
Chinese cooperative structure
which "today rules supreme in the
Chinese village." This article
appeared more than a month. after
discussions in Chinese journals
had clearly implied that China
was ready for a more advanced
type of "production relations."
The very term "people's commune"
--Peiping has since said--had
been adopted in June by Mao and
the Chinese party central com-
mittee. Moreover, politburo
member Chen Po-ta had formally
unveiled the concept of the com-
mune in Red Flag in July.
Khrushchev-Mao Talks
Khrushchev arrived in Pei-
ping on 31 July to confer with
Mao. It is not known whether
Khrushchev was aware of the
communes before his departure,
or, if so, whether this was one
of the topics he came to dis-
cuss. The gravity of the Mid-
dle East situation at the time,
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CURRENT INTELLIGENCE WEEKLY SUJURY
as well as the imminence of a
new Chinese Communist venture
in the Taiwan Strait, would
seen to have justified a top-
level meeting, even without a
critical development in Chinese
domestic policy. Further,
there was nothing in the joint
communique to suggest that the
internal affairs of either ,
country had been under discus-
sion. Pravda and People's
Daily editorials following the
meeting were devoted exclusive-
ly 'to foreign affairs or to
intrabloc problems such as that
of "revisionism."
The Soviet party, even if
it had had only overt Chinese
sources to work from, should
have been able by some time in
August to deduce that a reor-
ganization of the Chinese coun-
tryside was in the offing and
that this reorganization would
introduce a new form to be
called the "people's commune."
Some Western analysts, working
only from open sources, were
able in mid-August to describe
features of those "communes."
Yet Soviet analysts, like
Western analysts, may at that
point still have had only a
dim idea of the social, econom-
ic, and ideological extremes to
which the communes were lead-
ing. Moscow may well have es-
timated that the Chinese agri-
cultural reorganization would
stop at some sort of enlarged
cooperative, similar to those
formed last year in Bulgaria,
or that it would lead to unions
of cooperatives similar to
those now being formed in the
USSR itself. There is the
further possibility that Moscow
had not yet had time properly
to evaluate whatever informa-
tion it had on the commune pro-
gram.
Comment on Eve of Resolution
In any event, articles in
Soviet journals throughout Au-
gust and even in early Septem-
ber continued to state that the
Chinese cooperative system was
viable and had enormous possi-
bilities for development. They
also emphasized that China was
following the tested Leninist
cooperative plan and tested So-
viet experience, and continued
to congratulate the Chinese on
their creative application of
Marxism.
On 5 August, a journal of
the central committee of the
Soviet Communist party, In Aid
of Political Self-Education,
claimed that the gigantic-
-prob-lem of cooperatization in China
had been "solved." On 18 Au-
gust--one month,after the Red
Flag article, two weeks after
the Mao-Khrushchev meetings,
and seven days after the New
China News Agency reported in
foreign transmissions that it
was Chairman Mao's "guiding
idea" to organize Chinese so-
ciety into "large communes to
form the basic units of Chi-
nese society"--a Pravda edi-
torial wrote that thChinese
peasants spoke "with enthusiasm
about the great possibilities
inherent in the cooperative
system."
On 4 September, M. Kapitsa,
deputy chief of the Far Eastern
Department of the Ministry of
Foreign Affairs and a long-time
Soviet expert on China, wrote
a eulogistic article in Red
Star on the "great leap for-
ward." He said that the "Com-
munist party of China has been
guided by the most important
Marxist-Leninist theses in
every stage of socialist con-
struction."
If the Russians had had
early, frank, and complete in-
formation on the communes and
the ideological claims that
would surround them, they would
almost certainly have been
alarmed--as witness the strain
evident in Sino-Soviet relations
after the full scope of the Chi-
nese intiative was made public.
This alarm probably would have
been passed down to the key
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CURRENT INTELLIGENCE WEEKLY SUMMARY
party journals and newspapers,
which would not then have been
writing of China's "creative"
application of Marxism-Leninism
right up to the publication of
the commune resolution.
Moreover, if the Soviet
leadership had been fully aware
of the impending Chinese initi-
ative, it probably would have
begun to take some pre-emptive
ideological action well before
the time it began to do so--
November 1958. Yet Chinese
and bloc specialists, reading
the Soviet party journals in
the period from March to Sep-
tember 1958, could only have
the impression that Moscow had
no qualms about Chinese politi-
cal, social, and economic poli-
cies.
It is conceivable that
there was alarm but that it was
confined to higher party cir-
cles. It is doubtful, however,
that reflections of such alarm
could have been kept entirely
out of a periodical so close
to the center as Pravda, or an
article by a man so close to
the center as the deputy chief
of the Far Eastern Department
of the Foreign Affairs Ministry.
Similarly, while it can be ar-
gued that the Soviet leaders,
aware of the Chinese intentions,
intended Soviet press refer-
ences to the viability and
great potential strength of
the cooperatives as a subtle
warning to the Chinese not to
go too far, such covert warn-
ings would be difficult to rec-
oncile with the simultaneous
praise for Chinese creativity
--praise which decreased sub-
stantially after the commune
resolution was made public.
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Implications of Poor Liaison
In sum, the evidence from
Soviet party journals and news-
papers suggests that the Soviet
party had less advance informa-
tion on the Chinese communes
than would be expected if there
were a close working relation-
ship between the two parties.
The Chinese were well aware
that the commune program had
critical implications for the
entire bloc. It was they who
chose to give it bloc-wide and
ideological importance. While
it is difficult to generalize
about Sino-Soviet liaison on
the basis of one case study,
the poor liaison on an issue of
such overriding importance as
the communes may call into
question the effectiveness and
closeness of the Sino-Soviet
working relationship in other
respects.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Behind the relatively quiet
Israeli election campaign, there
are social issues of deep and
long-range political signifi-
cance. The increasing number
of so-called "Oriental"--from
North African and Middle East-
ern countries--and Israeli-born
Jews in the electorate may bring
greater future support for a
more aggressive foreign policy.
In preparation for the 3 Novem-
ber voting, meanwhile, nearly
all parties are attempting to
broaden their appeal to these
groups, which are becoming more
politically conscious and more
resistant'.,to the domination of
the older, Europeanized leaders.
The Elections
On 3 November, the fourth
Israeli elections since the
country achieved statehood in
1948 will determine the entire
membership of the Knesset, Is-
rael's 120-seat unicameral par-
liament, as well as the compo-
ISRAEL: PAST ELECTION RESULTS
SEATS WON IN KNESSET
Mapai
He rut
General Zionists
Achdut Haavoda(p)
Mapam
Hapoel Hamizrachi
Mizrachi
Agudat Israel
Poalei Agudat Israel
Communists
Mapai Arab Parties
Progressives
Sephardim
Yemenite s
Minor Parties
(A) Formed United Religious Front
(e) National Religious Front
(C) Torah Religious Front
(D) Originally one party
sition of municipal and local
governments. Twenty-four par-
ties--more than in any previous
election--are engaged in what
so far has been a comparatively
quiet campaign. The former
burning issue of how to cope
with Arab violence was re
solved by the Sinai'campaign
in 1956, and there now is a
marked relaxation in concern
over the country's security.
The economy is in a period of
relative prosperity, with per-
sonal incomes higher than ever
before and unemployment at an
all-time low. These conditions
may make more voters stay at
home, as may the increased con-
fusion among some voters at the
plethora of parties.
T
Israel's transit difficul-
ties in the Suez Canal have be-
come the major foreign policy
issue in a campaign otherwise
notable for an absence of such
issues. The ultranationalist
Herut and the left-wing Achdut
Haavoda parties have criticized
the government for its lack of
"progress" in the dispute- with
the UAR over the Inge Taft, the
Israeli-chartered Danish ship
which has been detained at Port
Said since May.
The.principal domestic is-
sue is the election procedure
itself, in which proportional
representation has produced a
large number of parties, none
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CURRENT INTELLIGENCE V6FIK*LY SUMMARY
29 October 1959
of which has ever won a clear
majority. Prime Minister Ben-
Gurion abhors this system be-
cause, although his Mapai party
has always won a plurality, he
has been forced to lead govern-
ing coalitions of several par-
ties which have inhibited his
freedom of leadership. He wants
instead a two- or three-party
system in which there would be
a "responsible" opposition. How-
ever, his Mapai party's proposals,
and those of the General Zion-
ists, for a constituency system
have been defeated in the Knes-
set.
The other parties realize
such a change might well lead
to their extinction, since their
strength is dispersed in com-
parison with the more concentrat-
ed voting bases of Mapai and
the General Zionists.
Behind these political is-
sues, however, lie social issues
reflecting deeper trends with
more serious long-range impli=
cations. These issues are point-
ed up for this election by the
increased sense of grievance
among Sephardic or Oriental Jew-
ish immigrants over problems
they attribute to discrimina-
tion on the basis of national
origins. Their bitterness,more
manifest in this election than
ever before, was a factor in
communal riots during the sum-
mer in the Wadi Salib section
of Haifa and elsewhere. The
government has belatedly ac-
knowledged the depressed living
conditions of many of these
people by announcing that it
plans to build 5,000 new housing
units as part of a program to
clean up the slums and transi-
tional camps where many Orien-
tals live.
This move is designed to
salvage the Oriental vote which,
partly because of the communal
consciousness aroused by the
riots, has become an important
segment of the electorate. It
now is politically expedient
for a party either to exploit
the bitterness of this group
or to demonstrate that the par-
ty offers opportunities to
Orientals. As a result, the
Oriental voters are being wooed
from all sides.
On the 17 minor parties,
five are Oriental. David Ben-
Haroush, the leader of one of
them called the North African
Immigrants Association, is
serving a two-year prison sen-
tence for his part in Wadi Sa-
lib riots. Another group, the
National Sephardic party, as-
serts that it seeks to defend'
"the depressed Sephardic
masses against their Ashkenazic
(describing Jews of predominant-
ly European origin) overlords"
and proclaims, "Wadi Salib was
the bastille of the Sephardim."
The established parties
too have taken cognizance of
this group. Mapai claims that
18 percent of its candidates
are members of Oriental commu-
nities. Nevertheless, while
the lists of the major parties
tend to show some increase in
the number of Oriental candi-
dates, the difference is not
pronounced.
Of the larger parties,
Herut is making the strongest
appeal on communal grounds,and
it seems to have a significant
following among the Orientals.
Ben-Gurion ridicules Menachem
?f3eeigin, Herut's demagogic lead-
er and perhaps Israel's out-
standing orator, as a "clown"
who can fool only children or
primitive people, but, at least
politically, that is just what
many Orientals are. Having
come from feudal North African
and Asian societies, some are
illiterate and are baffled by
even the simplest amenities.
The Changing Electorate
Roughly 30 percent of Is-
rael's more than 2,000,000 were
born in Africa or Asia. There
are about 172,000 newly eligible
voters for this election,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
including young people who have
reached the voting age of 18
since the last elections and
immigrants during the past five
years, who comprise 10 percent
of the population. Most of
the immigrants are North Afri-
cans.
The merger of the two
streams of Israeli immigration--
one from Europe and the other
from North Africa and the Mid-
dle East--has created a complex
cultural problem. The Orientals
have had difficulty in becoming
integrated with the Western way
of life that dominates the Is-
raeli scene. For example, the
Ministry of Education has found
that children of Oriental immi-
grants, including those born
in Israel, find it hard to keep
up in school with their counter-
parts of European origin, ap-
parently because of environ-
mental and social factors. Most
of their parents lack any par-
ticular training and thus have
trouble finding jobs other than
as domestic servants, laborers,
and the like. Some Orientals
have remarked that the govern-
ment is aware of them only when
they are needed to fight a war,
In contrast,European Jew-
ish immigrants are easily inte-
grated and can adapt more read-
ily to life in Israel. They
have skills, and in some cases
professions, that the country
needs. They usually get better
housing sooner, in part because
of an expectation that Orientals
are used to and can get along
with less adequate facilities.
The government apparently gives
the Ashkenazim such preferen~-
tial treatment so that more
Europeans will want to immi-
grate. Reports on conditions
in Israel get back to Europe,
which.has the largest remain-
ing reservoir of potential Jew-
ish immigrants, primarily in
the Soviet bloc countries.
Many in the European com-
munity in Israel reportedly
fear that the Orientals might
eventually dominate the coun-
try. Hence immigration from
the West is eagerly sought. At
the, same time taere are indi-
cations that further Jewish
immigration from North African
and Asian countries is con-
trolled and even curtailed, ex-
cept in cases in which the peo-
ple concerned must be "rescued"
from oppression.
Another group of increas-
ing political significance are
the Sabras, or native-born Is-
raelis, who comprise about 30
percent of the population.
Both the Sabras and the Orien-
tals generally lack the zeal
for Zionism of the country's
older leadership. Since most
of the established parties are
descendants of early factions
within the Zionist movement,
which had European origins,the
Sabras and Orientals often
either have been repelled by
or have had difficulty in
grasping the importance of the
variations of Zionist ideology
to which these parties adhere.
The influence of these
groups has resulted in a grad-
ual process of adjustment be-
tween the parties on the one
hand and the Sabras and the
Orientals on the other, ac-
companied now by the emergence
of non-Zionist parties with an
outright communal orientation.
This adjusting process apparent-
ly accounts in part for what
the American Embassy perceives
is a general political drift
to the right in Israel. It is
characterized by the develop-
ment of greater individualism
with less ideological and more
cultural "group consciousness."
The trend is marked even in the
left-wing collective settlements.
The doctrinaire ideology
of labor socialism of Mapam and
Achdut Haavoda is said to be
losing much of its appeal for
many Israeli "socialists." Among
the socialist parties, Ben-Gurion's
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moderate Mapai party reported-
ly is most effective in chang-
ing with the times. It frankly
acknowledges and embraces a
variety of socialist interpre-
tations within one party. This
flexibility augurs well for
the party's future.
A trend toward the right
in Israeli politics, if it de-
velops significantly, together
with the growing political
consciousness of the Sabras
and the Orientals, may indi-
cate that "activism"--general-
ly taken to mean a more ag-
gressive posture--as a policy
toward the Arab states may well
receive increasing support.-in
the present election, Herut,
the leading exponent of acti-
visism, probably will win some
additional seats beyond the
15 it has had in the third
Knesset.
This could result in in-
creased activist influence on
Israeli foreign policy from out-
side the government. By continu-
ing its criticism of any moder-
ate attitude or policy toward
Arab-Israeli affairs, backed by
what is anticipated will be its
prestige as the country's second
largest party,it could encourage
or force the government to be
more aggressive. Because of
deep and long-standing hostili-
ty between Herut and Mapai,Herut
almost certainly will not be in
a position during the term of
the fourth Knesset to exert a
direct influence on government
policy through participation in 25X1
a Mapai-led. coalition. The fu-
ture, however, may provide such
an opportunity.
TRENDS IN AUSTRIAN POLITICS AND FOREIGN POLICY
Vienna is experiencing a
period of accelerated political
and diplomatic activity result-
ing in large part from the im-
pact of last May's parliamentary
elections. The present gov-
ernment continues the two-par-
ty coalitions of the past 14
years, but the influence of the
Socialist party, always the
minor partner, has increased
sharply and now poses a serious
threat to the future of the
heretofore dominant People's
party. While a major realign-
ment of political forces is not
yet in prospect, the political
competition is an obstacle to
formulation of the "clearer con-
cept" of Austrian foreign policy
which Foreign Minister Kreisky
has promised.
Raab and the People's Party
The call by the People's
party for an extraordinary par-
ty congress next January is in-
dicative of the unusual polit-
ical ferment. The party's poor
electoral showing in May--a
decline repeated in the 25 Octo-
ber municipal elections in
Vienna-- has raised an insistent
demand for reforms lest the par-
ty succumb to "decrepitude."
The difficulties derive in part
from traditional frictions among
constituent groups.
The workers in People's
party ranks have long been a
declining minority, and the in-
dustrialist element in recent
years has increased its influ-
ence at the expense of the
farmers. Business leaders, who
contribute heavily to the par-
ty's coffers, are increasingly
dissatisfied with Chancellor
Raab's representation of their
interests. Other elements are
pressing for reorientation to
preserve the party' claim to
represent the into ? ?sts of "all
the people."
The Coalition Balance
By contrast, the Socialist
party is a well-run and disci-
plined machine. It has ruthlessly
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CURRENT INTELLIGENCE WEEKLY SUMMARY
29 October 1959
retired aging party leaders in
favor of a new generation of
able and agile politicians, and
it has formulated a new program
considered by Western Europe a
model of modern socialism.
The coalition's future
will depend heavily on the abil-
ity of the People's party to
produce an equivalent transfor-
mation. Raab's recently ex-
pressed willingness to relin-
quish at least part of his
duties may mean he will even-
tually give up his party or
government functions or both.
His failure to make some con-
cessions--and there are moves
afoot to force him to--will
aggravate his party's real
dilemma: how to broaden its
appeal while retaining the sup-
port of its right-wing elements.
Politics and the South Tirol
The intracoalition contest
is an important factor in Au-
stria's increasingly immoderate
stand on the perennial dispute
with Italy over the South Tirol.
Since assuming control of the
newly established Foreign Min-
istry last July, Bruno Kreisky,
a Socialist, has closely identi-
fied hirn:e*. with the South
Tirolean cause. He has rejected
Italian "concessions" as "utter-
ly inadequate" and, by referring
to the issue in the UN General
Assembly in September, ha's 1.akE n
an initial step toward -ir. t-er-
nationalizing" this heretofore
bilateral dispute.
Kreisky's support of the
Tirolean claims is a marked de-
parture from previous Socialist
policy. With little likeli-
hood of gaining votes in the
remote event this predominantly
Catholic and rural area should
be returned to Austria, the
Socialists have traditionally
urged a compromise. Their pres-
ent reversal, enhancing the
South Tirol as a "popular is-
sue," makes it increasingly dif-
ficult for either party to urge
restraint.
European Integration
The delicate question of
Austria's role in the European
Economic Community (EEC or Com-
mon Market) is another foreign
policy issue on which bipartisan-
ship may be breaking down. Since
more than half of Austria's
total trade is with Common Mar-
ket countries, the two parties
agree that exclusion from this
market would be a major hard-
ship for the Austrian economy.
At the same time, it has been
generally understood that a neu-
trality issue is involved and
that, given Soviet hostility to
an integrated Europe, an Austrian
move to join the Common Market
might create major difficulties.
The Austrian expedient,
however, of going along with
the Outer Seven grouping--the
proposed little free-trade area
--in hopes that agreement will
ultimately be reached o-1 a
broader, nonpolitical European
economic association, has been
challenged in both parties. In-
du,,,trialists in the People's
party think that the Outer Seven
holds little promise for Austria,
whose h1b9t important markets
are in the EEC's West Germany
and Italy.
On the other hand, the So-
cialists are somewhat suspicious
of integration in general and
some of them are hostile toward
the Common Market. Socialist
Vice Chancellor Pittermann, for
example, has : on -occasion
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CURRENT INTELLIGENCE WEEKLY SUMMARY
29 October 1959
described the EEC
as a "new form of
exploitation through
cartel capitalism--
a supranational
bourgeois bloc which
will have to be op-
posed in due time."
Neutrality
Kreisky, whose
views on this mat-
ter are now less ex-
tremq finds himself
handicapped by such
,
partisanship in
carrying out his idea
of a "general con-
cept of Austrian
foreign policy,"
heretofore not pos-
sible "because of
the necessity of hav-
ing to find transitional solu-
tions."
His problem is made partic-
ularly acute by the various in-
terpretations of Austria's 1955
military neutrality law. Those
who feel that this law only
obliges Austria to avoid mili-
tary alliances are opposed by
opportunists who feel a "friend-
ly attitude" toward the Soviet
bloc will produce economic con-
cessions. Still others want
Austria to attempt to bridge
major East-West differences.
Kreisky is probably sincere
in wanting to curb these tend-
encies. He has declared that
Austria cannot exercise any
great influence on world events,
and at best can perhaps become
''a point of occasional contact"
between East and West. He has
defined Austrian neutrality as
purely military, obligating the
state to maintain a neutral po-
sition with respect to the mil-
itary actions of the great pow-
ers,. limiting no citizen
in his freedom of political
thought.
Internal, External Pressures
There are numerous obstacles,
however, to the systematic im-
FEDERAL
PUBLI
OF ERMANY
YUGOSLAVIA
plementation of such a realistic
policy. During President
Schaerf's receiat visit to Mos-
cow, for example, Khrushchev
observed that "neutrality is
neutrality in all spheres of
life" and said this ihould in-
clude Austrian recd nition of
East Germany. State,nents made
by Schaerf indicate that the
"bridge concept" of neutrality
is by no means dead.
Stemming the tide of offi-
cial and unofficial exchanges
with the bloc would be difficult;
as a result of Schaerf's and
Raab's visits to Moscow, both
Khrushchev and President Voro-
shilov have accepted invitations
to visit Vienna. The expected
completion this fall of Austria's
accession to the bloc-dominated
Eastern Danube Convention sug-
gests that the political,,his-
torical, and above all, economic
reasons for Austria's "normal-
izing" its relations with its
neighbors may become increasing-
ly compelling.
In a period of reduced in-
ternational tensions, there-
fore, the trend toward a broad-
er, Swiss-type neutrality in
Austria is not likely to be re-
versed. Whether this trend be-
comes dangerous will depend on
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CURRENT INTELLIGENCE WEEKLY SUMMARY
29 October 1959
many factors, of which a major
one is whether Austria main-
tains the minimal defenses for
armed neutrality.
Switzerland this year
will spend $225,000,000 on de-
fense--about 3.4 percent of
its gross national product.
Austria not only lacks some of
the formidable natural defenses
of Switzerland, but its mili-
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59 period.
tary spending has never exceed-
ed 2 percent of its GNP; pres-
ent defense forces are capable
of little more than maintaining
internal security. During the
recent budget discussions, more-
over, the coalition agreed to
a $6,000,000 cut in defense al-
locations for 1960, thus reduc-
ing planned expenditures to
$70,000,000, roughly the same
as actual spending in the 1957-
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