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Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 CONNUIDENTIAI; CURRENT INTELLIGENCE WEEKLY SUMMARY COPY NO. ifi OCI NO. 0023/60 14 January 1960 CENTRAL INTELLIGENCE AGENCY OFFICE OF CURRENT INTELLIGENCE NO'CHANGE IN CLASS. ^ D DECLASSIFIED 25X1 CLASS. CHANGED TO: TS S NEXT REViEv'J DATE: Awl 1990 AUTH: HR 77 0-2 DATE-: lllC 84? R_:`: "d[ i State Department review completed Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927A002600010001-3 THIS MATERIAL CONTAINS INFORMATION AFFECT- ING THE NATIONAL DEFENSE OF THE UNITED STATES WITHIN THE MEANING OF THE ESPIONAGE LAWS, TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS- SION OR REVELATION OF WHICH IN ANY MANNER TO AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW. The Current Intelligence Weekly Summary has been prepared primarily for the internal use of the Central Intelligence Agency. It does not represent a complete coverage of all current situations. Comments and conclusions represent the immediate appraisal of the Office of Current Intelligence. Approved For Release 2007/10/23: CIA-RDP79-00927A002600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Next 6 Page(s) In Document Denied Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927A002600010001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 January 1960 OF IMMEDIATE INTEREST Moscow last week carried forward its attempts on several fronts to place the USSR in the most favorable position in forthcoming East-West negotia- tions. In his address to the Supreme Soviet on 14 January, Khrushchev continued his ef- forts to focus on disarmament as the major international is- sue and sought to reinforce an impression of Soviet readiness to take immediate radical steps to solve the problem. The cut of one third in Soviet conventional forces pro- posed by Khrushchev would, if carried out, benefit the USSR in the following ways; 1) Reduce defense expen- ditures and allow proportion- ately more of Soviet resources to be put into economic develop- ment, which continues to'be one of Khrushchev's major current objectives. 2) Adjust the armed forces to Khrushchev's concepts of Soviet military needs. 3) Add a substantial num- ber to the labor force at a time when labor is in short supply as a result of the low birth rate during World War II. 4) Appear to lend substance to the USSR's disarmament cam- paign. Khrushchev announced that the armed forces would be re- duced by 1,200,000 men in the next few years, linking this reduction to the strong Soviet position in missile develop- ment. On missiles, he said, the USSR was several years ahead of other countries in the development and assembly-line production of intercontinental ballistic missiles of various types. Khrushchev stated the USSR had enough nuclear and atomic weapons to "literally obliterate" any oppohent and the means to deliver them any- where; he also said still more formidable weapons are under development. Khrushchev repeated his earlier assessment of a general trend toward an easing of ten- sions and expressed hope for a successful meeting at the sum- mit. For the first time he specifically listed a ban on nuclear tests as a topic for consideration by the heads of government and attempted to maintain pressure for an uncon- ditional ban on all tests. Re- ferring to Berlin, Khrushchev again held out his threat of a separate peace treaty with its "ensuing consequences" if ef- forts to solve the problem fail, but avoided linking this move to the outcome of the May summit meeting. Moscow has also sought in the past week to support its public contention of a gradual SECRET OF IMMEDIATE INTEREST Page ] of 8 Approved For Release 2007/10/23: CIA-RDP79-00927A002600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 January 1960 improvement in East-West rela- tions with ostentatious public gestures to Western leaders. Khrushchev's cordial personal messages to Presidents Eisen- hower and De Gaulle were in- tended as further evidence of the USSR's desire for fruitful negotiations. In delivering the messages, both Soviet am- bassadors pointedly referred to the forthcoming personal contacts during Khrushchev's visit to France and the Presi- dent's visit to the USSR. Soviet Ambassador Menshikov also struck an optimistic tone in his remarks to the press on opening the negotiations on a settlement of the lend-lease question. He stressed that a "just solution" could serve to improve not only eco- nomic relations between the Soviet Union and the United States but could also pro- mote better relations "as a whole." The pattern of restraint in challenging US peaceful in- tentions and the careful exemp- tion of the President from direct criticism were continued in Soviet comments on the Presi- dent's State of the Union mes- sage. As in the reporting of the President's tour, Moscow restricted its coverage to fac- tual reporting while resorting to foreign press comments for implied criticism. The US press was extensive- ly quoted by the Soviet press as charging that the American disarmament policy is "confused and uncertain," thus casting some doubts on the President's declaration of his intention to achieve world peace. In an effort to contrast this alleged uncertainty with Soviet policy, the President's speech was reported along with articles stressing the increasing sup- port throughout the world for Khrushchev's disarmament pro- posals. Moscow's careful avoidance of direct criticism of the President contrasts with Pei- ping's continuing attacks, charging him with playing only "lip service" to peace. These conciliatory gestures by Moscow, however, were ac- companied by moves--highlighted by the announcement of projected Soviet rocket tests in the Pacific--designed to sharpen the impression in world opinion that the USSR holds a command- ing lead in the modern weapons race. The foreign press was cited in documenting this im- pression, with particular em- phasis on quotations which re- port the test firings as a further indication of the grow- ing disparity between Soviet and American missile develop- ment. Moscow probably feels that demonstrations of missile prow- ess--reflected in the advance announcement and precise de- lineation of a specific zone of impact--will serve to strengthen the Soviet positions SECRET PART I OF IMMEDIATE INTEREST Page 2 of 8 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 January 1960 in current talks on nuclear testings, at the disarmament negotiations in March, and at the summit. Soviet propaganda media have also carefully stressed the exclusively peaceful and scientific nature as well as the legal basis of the program. Soviet scientists have been extensively quoted in support of the contention that the tests are an integral part of the USSR's space program, and US legal authorities were cited as having found no impediment to such tests under interna- tional law. The emphasis on legality and repetition of the compari- son of this action to similar US and British actions in con- ducting nuclear tests in the Pacific suggests that Moscow is attempting to establish a legal and political precedent for future Soviet testing in this area. The care in issuing a precise warning well in ad- vance of the tests and the stress on the fact that the impact zone is "thousands of miles from main sea routes" were prob- ably intended to bolster the legal basis of the Soviet move. While Moscow continued to avoid officially raising con- troversial problems concerning the summit conference the question o ast German participation might be raised at the beginning of the meet- ing. The continuing preten- sions of East German leaders to participation in the summit discussion on Berlin and Ger- many were publicly supported in the communique issued after the visit of an East German dele- gation to Outer Mongolia. While the delegation was in Communist China, the People's Daily in an editorial also characterized the East German position as "fully justified." Hints of new Soviet proposals on Berlin are probably intended to influence current Western consultations on joint policy positions at the summit by con- veying the impression that Mos- cow is seriously reconsidering its position, and adopting a flexible attitude toward work- ing out a proposal acceptable to the West. In a speech to the West Berlin assembly on 11 January, SECRET PART I OF IMMEDIATE INTEREST Page 3 of 8 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 January 1960 West German Chancellor Adenauer laid great emphasis on the need to preserve Allied rights in Berlin and warned that a sur- render on Berlin would lead to a whole series of capitulations. He said that the positions taken by the Western powers last summer at Geneva "went to the limit bearable" and declared that it would be a dangerous mistake to resume negotiations at the point on which they broke off. Segments of the West German press noted that although Adenauer and West Ber- lin Mayor Brandt agree on the need for preserving the legal basis for Allied presence in Berlin, Brandt also emphasizes that West Berlin's economic and political ties with West Germany must also be firmly maintained. Soviet delegate Tsarapkin's tactics at the nuclear test ban talks, which resumed in Geneva on 12 January, suggest that he will try to focus the negotia- tions on the USSR's proposals for settling outstanding polit- ical questions and to avoid pro- longed discussion of the stale- mated underground detection problem on which the Soviet position is most vulnerable. In his opening statement, Tsarapkin carefully avoided any reference to the failure of the technical experts to agree on the most important aspects of this problem and confined his remarks to expressing hope that the talks would move for- ward rapidly. He recalled the Soviet "compromise proposal" of 14 December on inspection- post staffing, composition of a control commission, and vot- ing procedures and contended that the most "crucial" un- resolved question before the conference is the Soviet pro- posal for an agreed annual quota of on-site inspections of suspected nuclear explosions. Tsarapkin emphasized that the United States still has not taken a formal position on this proposal. In response to the American delegate's insistence that the technical problems of under- ground detection cannot be ig- nored, however, Tsarapkin re- newed earlier charges that the views of the American scien- tists were politically motivated. He alleged that the American experts had been instructed to "prove" the impossibility of building a control system on the basis of the 1958 experts' report and to demonstrate that underground tests could not be detected, thereby justifying the exclusion of such tests from a ban for "military reasons." SECRET OF IMMEDIATE INTEREST Page 4 of 8 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927A002600010001-3 SECRET 14 January 1960 The Soviet delegate con- cluded by suggesting that such futile,discussions and recrimi- nations be ended and that the conference proceed with construc- tive work by discussing the USSR's proposal of 14 December. He pointedly called on the Brit- ish delegate to "live up to his statement" that Britain would do everything possible to con- tribute to the work of the con- ference. This remark indicates that the Soviet Union, in its drive to increase pressure on the United States to accept a com- promise formula, still believes it can exploit Britain's dis- position to settle for something less than the American concept of adequate safeguards against undetected nuclear tests. Moscow appears confident, moreover, that the United States, with the ten-nation disarmament conference and the summit meet- ing in the offing, will neither resume nuclear tests nor force a breakoff of the test-ban talks. Khrushchev probably still hopes to obtain agreement, at least in principle, on the main points of a test.cessation treaty which can be referred to the heads of government for final negotiation and approval. (Concurred in by ORR and OSI) 25X1 Iraq Under the new law on po- litical parties which came into effect last week in Iraq, four parties have applied for recog- nition by the Ministry of In- terior--the socialist National Democratic party, the United Democratic party of Kurdistan, and two other groups, each pro- fessing to be the "true" Iraqi Communist party. One group, led by Abd al-Qadir Ismail al-Bustani and Zaki Khayri,represents the "orthodox" Communists. Its journal, Ittihad al-Shaab, is the recognized ommunis mouth- piece. The other group is led by Daud Sayyigh, publisher of Al-Mabda, who had been a dis- senter from the Iraqi party leadership as far back as 1942. Sayyigh engineered a party split in 1947 and carried many younger idealistic members with him. There are rumors that Say- yigh has Qasim's blessing, and Sayyigh's application may be a manuever by Qasim to cause dis- sension among the Communists in accordance with his policy of balancing contending political factions. Qasim's favoring of the Sayyigh faction, by grant- ing its application for legal status, would fit in well with his idea that Iraqi Communists are true Iraqi nationalists. It would appear more likely, how- ever, that Qasim, faced with the choice of deciding which of the two contending factions to license, will allow both to operate. Taking advantage of Nasir's mounting troubles in Syria, Qasim has seized the initiative in the UAR-Iraqi propaganda war. Following up his revival last November of Nuri Said's Fertile Crescent plan--envisioning the union of Iraq, Syria, Jordan, and Palestine--Qasim has publicly denounced Egyptian domination of Syria and openly appealed to the Syrians to break away, saying SECRET OF IMMEDIATE INTEREST Page 5 of 8 Approved For Release 2007/10/23: CIA-RDP79-00927A002600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927A002600010001-3 SECRET 14 January 1960 Iraq "will not stand idly by in the face of injustices done the Syrian people." Accompanying Qasim's at- tempts to promote himself as the principal Arab nationalist leader have been charges that Egypt and Jordan joined Israel in annexing parts of Palestine. Qasim has appropriated about $1,500,000 for the establish- ment of a "Palestine govern- ment," and is calling for in- corporation of the Gaza Strip (now under Egyptian administra- tion) and the Palestinian sec- tion of Jordan, plus Israel, into a Palestine republic. Qasim has intimated that he will support the notorious for- mer Mufti of Jerusalem, Haj Amin al-Husayni,in this effort. Baghdad's propaganda is also focusing on the Arabs in southwestern Iran, charging oppressive Iranian rule and making demands for territorial changes. In the Persian Gulf area, the Omani rebels have been feted and given propaganda assistance in competition with that of Cairo. Qasim is also loudly supporting the Algerian rebels. Another facet of Qasim's propaganda war has been an ap- peal to the Kurdish minorities of Syria and Iran to look to Iraq for realization of their aspirations for autonomy. Syrian reaction to the res- ignation of five Baathist UAR cabinet ministers has subsided, with the general feeling one of relief at the apparent end of the party's widely resented influence in Syrian politics. Nasir's break with the party involves an element of risk to the regime, however, including the UAR's possible loss of Baathist support throughout the rest of the Arab world and a move by Communist elements to ally themselves with the dissi- dent Baathists. The regime has been care- ful to present its differences with the Syrian Baathists as individual disagreements rather than a split with the Baath as a whole. Cairo probably is es- pecially concerned over the possible effect of Syrian de- velopments on its relations with the Iraqi Baathists, who have hitherto been the UAR's closest allies against Qasim. Nasir also promised the Baath- ist leadership in Beirut last month to continue UAR subsi- dization of the party's efforts in other Arab states. An area- wide break with the Baathists could be a setback for his prestige and influence in the Arab nationalist movement. Cotton Boom Egypt and the Sudan are experiencing a rather surprising SECRET PART I OF IMMEDIATE INTEREST Page 6 of 8 Approved For Release 2007/10/23: CIA-RDP79-00927A002600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET 14 January 1960 sales boom in long-staple cot- ton. The steady decline in long-staple cotton prices which has characterized the situation since the Korean war now has been reversed. In the important Liverpool market, long-staple prices continue to strengthen, with Egyptian cot- tons leading the advance. Sudanese cottons are experienc- ing a similar heavy demand. Al- though the long-term prospects for long-staple cottons continue quite gloomy, some experts feel that the present demand for fine yarns will be sustained for at least the next year. Despite only negligible sales to Communist bloc coun- tries, Cairo probably has dis- posed of about half of its 1959- 60 long-staple cotton crop since the marketing season be- gan on 1 September. The cur- rent crop is about 2,074,000 bales--up about one percent from last year. During the last marketing year (1 Septem- ber 1958 to 31 August 1959), the Communist world took about 1,330,000 bales--65 percent of Egypt's cotton exports. In this marketing year, however, the USSR had purchased only 20,- 000 bales by mid-December, and Egyptian trade sources believe the bloc will buy substantially less than half of the current crop. Although purchases from all bloc countries may still be important, Western demand for Egyptian cottons paid for in Western currency will cause Cairo to prefer to market most of its cotton in nonbloc coun- tries. The Sudan has solved, at least temporarily, the cotton crisis which threatened the economy in 1958 and early 1959 and promised to lead Khartoum into closer economic relations with the Communist world. With substantial surplus long-staple cotton and a near record 1958- 1959 crop, the country abandoned its "administered" cotton prices and returned to the free market system which prevailed before 1958. Although prices fell substantially, Khartoum had sold all of its cotton stocks by August 1959. Harvesting of the 1959-60 crop began in December and will continue through March. This crop--estimated to be about 625,000 bales--is up 9 percent from last year and will be the largest in history. Advance sales, which began on 17 De- cember, were very successful, and all cotton offered for March-June delivery was sold. With higher prices, Khartoum may have the most successful cotton year ever. Reflecting the cotton boom-- and hence general economic improve- ment--the Sudan has decided to abandon all barter deals and to rely entirely on the free market system. The Communist bloc, which25X1 has never been important in the Sudanese cotton market, will thus be even less so this year. SECRET OF IMMEDIATE I1 u'EREST Pave 7 of 8 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET 14 January 1960 Aleksey Kirichenko, who un- til a few months ago was func- tioning as Khrushchev's second- in-command in the party secre- tariat, has been demoted to the job of party chief in Rostov Oblast, according to a Soviet press announcement of 13 January. The assignment represents a serious reversal in his political fortunes. He replaces Nikolay Kiselev, Rostov Oblast party chief since 1952, who was "transferred to other work." Kirichenko's status as a full member of the party presidium, a post he has held since July 1955, was not mentioned. While Kirichenko has not been reported involved in policy disputes, in recent months he no longer seemed to enjoy Khrushchev's full con- fidence. Kirichenko, now 52, was a Khrushchev protege and asso- ciate for many years. Khru- shchev was apparently responsi- ble for Kirichenko's rapid rise in top party circles since 1953. In June 1959, however, Khrushchev told Governor Har- riman that Kozlov had been picked as his successor. Since then Kirichenko has not engaged in the kind of substantive party activity which had previously marked him as one of the four top Soviet leaders. Factional infighting in the highest circles of the party is most often observed in the areas of personnel appoint- ments and policy decisions. There has been a rash of per- sonnel changes recently: up- heavals in the leadership of several republics, extensive changes in the secret police (KGB), shifts in the central party apparatus, and, more re- cently, the return of Presidium member Nikolay Ignatov to full- time work in the party secre- tariat after several months in disfavor. Some of these changes probably reflected maneuvering involving Kirichenko. The decision to reassign Kirichenko was probably made last month at a special secret session of the party central committee which was held im- mediately following an open meeting devoted to agricultural problems. No announcement has been made concerning the special session, but reports from Moscow indicate that it also considered the decision to abolish the Ministry of Internal Affairs 25X1 and the program of the Supreme Soviet meeting which began on 14 January. SECRET Page 8 of 8 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET CURRENT INTELLIGENCE '#VEEKLY SUMMARY 14 January 1960 The USSR Supreme Soviet has abolished the USSR Ministry of Internal Affairs (MVD) and assigned its functions to the republic internal affairs min- istries. The demise of the MVD, long a symbol of police terror under Stalin and Beria, will enable Khrushchev to make extravagant propaganda claims about the growth of "socialist democracy" under his leadership. The decision to formally do away with the central MVD was apparently reached by the party central committee during the last week in December, per- haps at a two-day closed meet- ing following the plenum on agriculture. Elimination of the MVD is but the final step in Khru- shchev's deliberate decimation of the vast police empire built up by Stalin and Beria. Since 1953, the MVD had been systemat- ically stripped of its powers, having lost control of the se- cret police, the forced labor complex, various construction enterprises, and the border 'troops. Nikolay Dudorov, a party careerist who had headed the MVD since 1956, had decen- tralized the ministry's remain- ing functions and reduced its personnel to an extent which suggests that he was assigned to preside over the final liq- uidation of the MVD. Disposition of the central MVD's responsibilities is not likely to be a problem. Ad- ministration of the civil police (militia) probably will be left to the republic internal affairs ministries and local governments which have shared this function with the central ministry since late 1956. Since the border troops of the MVD were assigned to the State Security Committee (KGB) in 1958, it seems probable that the MVD internal security troops will also be assigned to that organization, thus strengthen- ing the secret police organiza- tion created by Khrushchev in 1954. Almost simultaneous with a step which will be represented as an expression of confidence in the maturity and reliability of the Soviet people, however, the party central committee has expressed deep dissatisfac- tion with the work of its prop- aganda apparatus in molding popular attitudes. In a long resolution, bristling with criticisms and stipulating im- provements, the party has de- manded a sharp reorientation and expansion of propaganda functions. The regime, the resolution suggests, is intent on innoculating the population against ideological infection from expanded East-West contacts and "peaceful coexistence." The resolution also ac- centuates the party's concern over the failure of the propa- ganda machine to gear itself closely to the regime's most pressing and immediate politi- cal and economic goals. Con- demning the abstract or jargon- ridden content of much of Soviet propaganda, the resolution again and again stresses SECRET PART II NOTES AND COMMENTS Pace 1 of 17 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927A002600010001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMy 14 January 1960 practical, concrete goals. "The efficacy of party propa- ganda shows intself first in concrete production results," it asserts. "There must be less political blather and more concrete struggle for an acceleration of the pace of Communist construction. Oral and printed propaganda must serve the mobilization of the masses for successful imple- mentation of the Seven-Year Plan and the entire program of the construction of Commu- nism in the USSR." In a burst of buying ac- tivity, the USSR signed con- tracts for at least $200,000,- 000 worth of complete Western plants at the end of 1959. The deals for British, French, West German, Swedish, and American equipment were concluded by a special Soviet purchasing team which set up headquarters in London in mid-October and has just recently returned to Mos- cow. The sets of equipment involved had, in many cases, been the object of negotiations throughout 1959. The terms of the deals are not yet known. The USSR is known to have purchased in 1959 at least an- other $100,000,000 worth of Western plants, some of them on credit terms guaranteed by Western European governments. The purchases of all complete sets of equipment and plants are for future delivery and will be largely reflected in trade from 1960-63. The year-end purchases reflect stepped-up activity inspired by Soviet policy, inaugurated by Khrushchev in 1958, to speed economic growth through purchases of techno- logically advanced Western equipment. About one third of the purchases apparently are linked to expansion of the Soviet chemical industry--syn- thetic rubber and plastics-- while the remainder include sugar refineries, textile equip- ment, printing machinery, and wood-processing plants. Soviet trade with the en- tire free world increased from $2.4 billion to about $3 billion in 1959, according to Deputy Premier Mikoyan; trade with West European industrial countries apparently accounts for the largest part of the expansion. Despite the apparent failure of Soviet sales in Western Europe to keep pace with the increased purchasing activity--a fact which seems to have led to some Soviet payment difficulties recently--the buying activity suggests that Moscow considers these difficulties only tempo- rary. (Pre- 25X1 pared by ORR New bonus regulations for the Soviet Union's industrial managers, supervisors, and technicians became effective on 1 January 1960 for most branches of heavy industry and state agriculture. They had been introduced in construc- tion, transportation, communica- tion, and other industries on SECRET PART II NOTES AND COMMENTS Page 2 of 17 Approved For Release 2007/10/23: CIA-RDP79-00927A002600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 January 1960 1 October 1959. The regula- tions, which affect about three million .people, replace a similar set of national stand- ards developed with many varia- tions since 1946. The new rules, an integral part of the over-all wage and salary re- form to be completed by 1962, are intended to give managers and technicians a more direct personal incentive for re- ducing production costs. The most important provi- sions of the new system call for bonuses for reducing pro- duction costs and, in certain industries, for improving product quality. All bonuses for cost reduction are contin- gent on simultaneous fulfill- ment of the production plan, the labor productivity plan, and the plans for deliveries. Bonuses previously paid solely for fulfillment and overful- fillment of the production plan are to be discontinued, except in modified form in "certain industries where a growth in production is of ex- ceptional importance in the de- velopment of the national econ- omy." The new bonus arrangements are likely to reduce the earn- ings of many of the highest paid managerial personnel and also will result in smaller earnings differentials among industries and among individ- uals within an industry. In industries where the wage and salary reform now is largely complete, basic sala- ries for most managerial-tech- nical employees have been raised considerably, although some of the highest salaries have been cut. It appears, however, that even with these higher basic salaries, the managerial personnel in general will be hard pressed to main- tain their accustomed earnings under the new bonus regulation. In industries not yet under the new wage and salary system, managers will be under severe pressure to keep their incomes from falling sharply. Whatever the effect of these changes on morale, the substantial narrowing of wage differentials implicit in the changes is in line with the re- gime's policy of "narrowing the gap between the earnings of low-paid and high-paid work- ers." Moscow seems to feel that it can safely do this with- out adversely affecting the sup- ply of managerial-technical talent, since the rewards to such persons still are suffi- ciently high to attract new recruits, and those already in the group cannot better their lot by moving elsewhere in the economy. The new system probably will succeed in making Soviet managers and supervisors more cost-con- scious and thereby should also en- courage a more receptive attitude toward new production techniques, one of the objectives emphasized by the June plenum on automation. This is in contrast to the old system,which primarily rewarded gross output. The improvement of the production process was resist- ed if it meant a reduction,however temporary,in the volume of output. (Prepared by ORR) 25X1 SECRET PART II NOTES AND COMMENTS Page 3 of 17 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 January 1960 CHINESE COMMUNIST - SOUTH KOREAN INCIDENTS The clash on 10 January between a South Korean patrol boat and ten armed Chinese Communist fishing vessels re- flects Peiping's determination to resist Korean attempts to enforce the unilaterally pro- claimed "Rhee line." Neither Peiping nor Tokyo recognizes the line, which demar- cates fishing grounds and extends as far as 175 nautical miles from the South Ko- rean coast. Korean officials claim that Chinese fishing boats are becoming more ac- tive within the Rhee line area, and more incidents can be ex- pected. Violations of the line have result- ed in frequent inci- dents between South Korean coast guard patrols and Chinese and Japanese fishing boats. Seoul's light- ly armed and poorly maintained coast guard, which is not under the UN Command's operational control, is largely used to enforce the line. Two encounters with Chi- nese fishing boats' Occurred in December, and in both cases the armed Chinese vessels forced the Ko- rean patrol boat to withdraw. The 10 January encounter came at night about 50 miles off the southwest Korean coast, well within the Rhee line. The Koreans, who have stepped up attempts to seize Japanese fishermen in retaliation for the repatriation of Koreans in Japan to North Korea, probably thought they were in pursuit of unarmed Japanese boats. The Korean boat was immobilized apparently will continue to disregard the'Rhee line. The extent of the damage to the Ko- rean boat suggests that the Chi- nese junks were heavily armed. Despite its objections to Seoul's restrictions on fishing in the Yellow Sea, Peiping it- self bans foreign fishing in a wide band off its own coast. SECRET CHINA NOTES AND COMMENTS Page 4 of 17 and one crew member killed. A Korean request for US air sup- port was refused. Although it is unlikely the Chinese deliberately pro- voked the recent incidents, they Demarcation line fob fishing operations according to the 1955 Sino-Japanese apceemaot Extension of line 16 August 1957 aF 1, vc _ l 1?1 It a~_ 25X1 25X1 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927A002600010001-3 SECRET 14 January 1960 In private negotiations in 1955 with Japanese fishing in- terests, Peiping established a line some 40 to 70 miles off the China coast running from Manchuria to the 29th parallel, later extending it to the 27th parallel. The Chinese Commu- nists have occasionally seized Japanese boats operating with- in this proscribed area, SECRET PART II NOTES AND COMMENTS Page 5' of 17 Approved For Release 2007/10/23: CIA-RDP79-00927A002600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927A002600010001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUliliAR.Y 14 January 1960 The government of Field Marshal Sarit, after one year in office, remains firmly en- trenched and has laid the foun- dations for favorable political and economic' development in Thailand. Sarit's generally able cabinet includes several competent economic special- ists who, together with various advisory committees set up by the premier, have largely estab- lished the legal and administrative SECRET PART II NOTES AND COMMENTS Page 6 of 17 Approved For Release 2007/10/23: CIA-RDP79-00927A002600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 January 1960 framework necessary for the substantial expansion of for- eign investment in Thailand's economic development. Con- servative fiscal management has led to a stable currency and comfortable gold and for- eign exchange reserves. Premier Sarit has taken a personal interest in elimi- nating what he considers ana- chronistic social ills, such as opium smoking, prostitution, and the thousands of pedicabs which in the past contributed to serious traffic congestion in Bangkok. While these so- cial reforms have clearly bolstered Sarit's popularity, their permanence is open to question, and government ad- ministrative efficiency has suffered as the result of Sarit's personal preoccupa- tion with social reform. The Sarit regime's accord" plishments in the political realm have not kept pace with its achievements in other fields. Almost 15 months have elapsed since Sarit's October "revolution," but the country still lacks the new constitu- tion he promised at the time. Meanwhile, political parties are still suppressed and the country remains under martial law, These delays are less serious in Thailand than they would be in a more politically sophisticated country; never- theless, continued lack of prog- ress in returning to more nor- mal forms of political conduct might lead to increased restive- ness among civilian elements of Thailand's small ruling class. Internationally, the re- gime has maintained Thailand's strongly pro-Western orientation and has taken tentative steps toward the formation of a loose regional grouping of the South- east Asian states. Thai re- lations with Burma have con- tinued to improve, and Sarit and his colleagues have taken a concerned but realistic view of developments in Laos. Re- lations with South Vietnam have been clouded by Thailand's de- termined effort to resolve the problem of the Vietnamese refu- gees in the northeast, largely through their gradual repatri- ation to North Vietnam. Re- lations with Cambodia continue to be cool, with both countries from time to time engaging in acrimonious polemical exchanges. Rumors of discontent with- in the ruling military clique continue to crop up periodical- ly, but as long as Sarit's health holds up, he will prob- ably be able to keep his fol- lowers in line through the judi- cious dispensation of funds and other favors, an activity at which he is unusually adept. Sarit's illness--cirrhosis of the liver--appears for the mo- ment to have been arrested; however, Sarit maintains a hard working pace and could have a serious relapse at any time. PREPARATIONS FOR CEYLON'S NATIONAL ELECTION CAMPAIGN COMPLETED Preparations for national elections in Ceylon have pro- ceeded smoothly despite the abrupt dissolutionof Parlia- ment in December and the imme- diate scheduling of elections for 19 March, one year before they were due. Nominations were filed and the official roster of contesting parties completed on 4 January. SECRET NOTES AND COMMENTS Page :7 of 17 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET 14 January 1960 The island's voters face a complex pre-election scene, however, as 899 candidates have been nominated for 151 elected parliamentary seats on behalf of 18 recognized parties and four others which will contest unofficially. Only six of these parties are well established. Moderate elements are repre- sented by the United National party (UNP) and the Sri Lanka Freedom party (SLFP), the left- ists by the Trotskyite Lanka Sama Samaj (LSSP), the Commu- nist party (CCP), and the re- constituted Mahajana Eksath Peramuna (MEP). The Federal party represents the Tamil- speaking minority. The three main competitors for the moderate vote are the UNP, the SLFP, and Prime Minis- ter Dahanayake's new Ceylon Democratic party. The UNP's 127 candidates make up the largest group nominated by a single party. UNP-backed in- dependents probably are con- testing in most of the 24 other constituencies, although in some cases the party probably will not oppose certain SLFP or Democratic party candidates. At this time neither of the latter two parties seems to constitute by itself a seri- ous threat to the UNP, although the extent of these parties' popular backing is uncertain. Dahanayake, however, has managed to enlist enough sup- port since forming his party in early December to nominate 99 candidates, and some SLFP members may have retained con- siderable popularity in their own constituencies despite their party's loss of country- wide support. The UNP there- fore will have to wage an all- out campaign to prevent other moderate candidates from split- ting the moderate vote and destroying the UNP's chance of winning a majority. None of the three leftist parties appears able independ- ently to win either a majority or a plurality. The LSSP, the leading opposition party in the former government, does not seem likely to increase its parliamentary representation substantially over the 14 per- cent it won in 1956. The par- ty will have to resolve the growing conflict between its radical and relatively moderate factions before it can campaign successfully, and it will have to modify its unpopular language policy before it can count on extensive popular support. The MEP may capture a good share of the leftist vote, although it is not likely to establish a broad-based organization with- in the next two months. so. A united front would be the most successful leftist strategy against the moderates, but the policy and personality differences which have pre- vented such an alliance in the past apparently continue to do LONDON CONFERENCE ON CYPRUS British, Turkish, Greek, and Cypriot leaders meeting in London on 16-18 January will seek agreement on the still- unresolved issue of the size of British bases on Cyprus in order to permit independence to go into effect on 19 Feb- ruary as scheduled. To enable legislation to be passed in time, a bill should be ready by the time the British Parlia- ment reconvenes on 26 January. All major constitutional issues have already been resolved. SECRET NOTES AND COMMENTS Page 8 of 17 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 January 1960 Both the Turks and the Turkish Cypriots support the latest British offer, and Greece also considers it reasonable. President-elect Makarios has insisted on further concessions, however, and is under heavy pressure from the Communist- led AKEL, which opposes any bases whatever, and from the Grivas forces, who favor greater limitations on area and rights than Britain is prepared to accept. Under the terms of the agreements of last February, Britain retains sovereignty over two military bases-- Dhekelia and Akrotiri--plus other rights, including full control over other small mili- tary sites (primarily radar and communications facilities), use of connecting roads, and the use of areas for troop training. London has success- ively reduced its proposals for the base enclaves to an area of about 113 square miles, including less than 1,000 Cypriots. on Cyprus arrived. elections 25X1 for the House of Representatives and the Greek and Turkish com- munal chambers are still sched- uled for 7 and 10 February respectively. On 12 January the last British battalion not scheduled to remain in the base area after independence left Cyprus, and advance parties of the Greek and Turkish military contingents to be stationed IMPLICATIONS OF PINAY'S OUSTER FROM FRENCH CABINET French Finance Minister Pinay's ouster over his clash with Premier Debre will probably hasten the adoption of a more expansionist economic policy and be accompanied by increas- ing criticism of De Gaulle's efforts to build up national prestige at the expense of the Western alliance and by dissat- isfaction with the mounting cost of such efforts. Pinay's identi- fication in the public mind with France's newly won eco- nomic stability increases the risk of a loss of investor confidence if his "hard-money" policy is relaxed and additional SECRET PART II NOTES AND COMMENTS Page 9 of 17 25X1 25X1 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET 14 January 1960 government involvement in eco- nomic planning is permitted. In any event, increasingly vocal opposition to De Gaulle's over-all program can be expect- ed, both from Pinay's Independ- ent party and other groups. Premier Debrd, seconded by Minister of Industry Jean- neney and others representing the "Gaullist" Union for the New Republic (UNR) in the cabi- net, has been subjected to growing pressures to loosen the Pinay economic restrictions on consumption and expansion and to push programs stressing social benefits. The UNR group favors a selective rise in wages and farm prices and is working on plans for creating a new national bank to aid in the reconversion of depressed areas and industries, for or- ganizing a government-con- trolled company for marketing Saharan oil, and for implement- ing decrees embodying De Gaulle's proposals to give la- bor a voice in corporate manage- ment. Even though the publicized aspects of the Pinay-Debrd quarrel deal almost exclusively with economic problems, politi- cal considerations are probably even more important. Pinay had been viewed by the UNR group as a holdover from the dis- credited Fourth Republic, an opponent of accelerated eco- nomic expansion, and a threat to the UNR's attempts to build a new political base for the present regime. On the other hand, Pinay has an established political following based on his promi- nence as a leader under the Fourth Republic and is still nominal head of the Independent party, which in terms of par- liamentary representation is the most important group sur- viving from the Fourth Republic era. The Independents have been showing increasing signs of serious disagreement with De Gaulle's "liberal" offer of self-determination to Algeria, his highhanded treatment of Parliament, and his apparent downgrading of NATO and the Western alliance. Pinay has been reported as having presidential ambitions and now may seek to further these by exploiting the opposition of certain pro-NATO elements to some aspects of De Gaulle's policies. In any event, he has probably increased his political stature by leaving the govern- ment when his economic policies seem At the height of their suc- cess. SECRET Page 10 of 17 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 January 1960 AUSTRIA'S TIES WITH AN INTEGRATED EUROPE Austrian Vice Chancellor Pettermann's increasingly vio- lent attacks on the European Economic Community (EEC or Com- mon Market) reflect the growing confusion in Vienna over Austria's role in an integrated Eu- rope. Contrary to up with the EEC. Protection of those interests is complicated, however, by domestic politics, by the political struggle be- tween the EEC and EFTA, and by PERCENT OF COUNTRY'S IMPORTS FROM EFTA FROM EEC PERCENT OF COUNTRY'S EXPORTS TO EFTA TO EEC tho Snrinlict 1nnd_ spite the government's BRITAIN 9.7 39 14.1 10.1 4 13.1 decision to si an on 2 DENMARK .6 36.1 0. 3 31.7 creating the Euro- PORTUGAL 21.6 39.2 1 17.5 24.7 pean Free Trade As- SWEDEN 24.5 41.8 34.9 31.0 sociation (EFTA or SWITZERLAND 10.8 58.8 15.5 39.2 Outer Seven), most Austrians know that the country's inter- ests are closely tied SECRET PART II NOTES AND COMMENTS Page 11 of 17 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET 14 January 1960 Vienna's fear of offending the USSR. These political consider- ations--rather than economic interests--largely account for the decision, after lengthy de- bate, to join the EFTA. Of all the EFTA countries, Austria is economically most dependent on the EEC: West Germany and Italy are its two best customers, and the Common Market area accounts for more than half of its total trade. By contrast, among the EFTA, only Britain's trade is less oriented toward its EFTA partners than Austria's, and geographical remoteness and other factors will be major obstacles to Austrian exploita- tion of the markets the EFTA may open up. Business elements in Chan- cellor Raab's People's party, as well as some trade union leaders, have tended to favor Austria's direct association with the EEC, but Socialist leaders in particular have argued against such a course. Foreign Minister Kreisky has contended at various times that tiny Austria cannot ef- fectively bargain with the"pow- erful" EEC and that EEC member- ship is ruled out by Austria's military neutrality law, by the State Treaty restrictions against an "Anschluss" with Germany, and by Vienna's bi- lateral commitment in the Mos- cow Memorandum of 1955 to fol- low a neutral policy modeled after Switzerland's. Many observers regard this interpretation of Vienna's neutrality commitments as dan- gerously restrictive on Austria's freedom of action. If the hoped-for merger of the EEC and the EFTA fails to materialize, as seems increasingly likely, the economic facts will prob- ably compel the government to consider whit bilateral arrange- ments it can make with the EEC. The influential Austrian League of Industrialists is reported recently to have sounded out EEC President Halistein along these lines. Such a solution, however, has probably been made doubly difficult by the Socialists, who have in effect given Moscow useful arguments for actively opposing it. Thus far, the USSR is not known to have ob- jected to Austrian participa- tion in the EFTA, but Soviet officials have made it clear that direct Austrian associa- tion with the EEC would be con- sidered "unneutral." The Danish political sit- uation is uncertain in view of the serious illness of H. C. Hansen, prime minister of the coalition since May 1957. Han- sen, who commands widespread respect among other parties as well as among his own Social Democrats, has been one of the main forces preventing a fur- ther curtailment of Denmark's defense effort, already the lowest among the NATO coun- tries other than Iceland. Hansen's retirement would be a seriously unsettling event in the normally placid Danish political scene. The coalition government would not be affected immediately, since none of the parties--the Social Democrats, the Radical Liberals, and the Justice party--is at present SECRET Page 12 of 17 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 January 1960 anxious to have early new elec- tions. There probably would be, however, increased disagree- ment among the divergent coali- tion partners, a growth of factionalism within the Social Democratic party, and an even DANISH PARLIAMENT MAY 1957 ELECTION more cautious approach on the part of the government to con- troversial questions relating to defense. Antidefense elements might attempt to further curtail the modest defense effort. On sev- eral occasions, the North At= lantic Council has voiced con- cern over the generally low level of Danish preparedness, particularly the size of the defense budget, which now con- stitutes about one fifth of the annual budget and about 3.2 per- cent of the GNP. A new com- promise defense bill, largely the work of Hansen and now un- der consideration by parlia- ment, provides for a 10- to 15- percent increase in the defense budget but also authorizes a gradual reduction of the con- scription period from 16 to 12 months. Danish officials. insist, however, that internal polit- ical factors do not permit a substantial increase in defense spending; this could be achieved only by an increase in taxes or at the expense of the popular and extensive social welfare program, GERMAN MINORITY 1 FAROE ISLANDS 2 GREENLAND 2 Possible successors to Hansen as prime minister are Acting Prime Minister Kampmann, who has displayed considerable vigor as minister of finance, and Foreign Minister Krag. Neither Kampmann nor Krag, how- ever, possesses Hansen's pres- tige or influence, either to hold the coalition cabinet to- gether or to lead the Social Democratic party in early elec- tions. Elections are likely in the fall, and it is possi- 25X1 ble that interparty strains among the coalition could precipitate them earlier. The recent escape of ten imprisoned Portuguese Communist leaders is causing concern to the Salazar regime over the reliability of certain sectors of the security forces as much as over the threat of intensi- fied opposition. The clandes- tine Portuguese Communist party is small--membership is estimated SECRET NOTES AND COMMENTS Page 13 of 17 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 January 1960 25X1 25X1 at 9,000--but well organized, and it probably hopes to exploit. the subsurface discontent with the Salazar dictatorship which broke out on several occasions during the 1958 presidential campaign. Alvaro Cunhal, former sec- retary general of the Portuguese Communist party, and nine other "hard-core" party leaders escaped for Peniche prison north of Lisbon on 3 Januar . taped from a military prison est possible participation in the national elections of 1961, Communist leaders are re- portedly well financed, and they may attempt to cooperate with other militant oppositionists. In that event, their highly dis- ciplined party would probably seek to exploit any efforts that these opponents of the re- gime might make to turn present latent popular discontent into overt manifestations of unrest. Various opposition groups in the north, representing the most di- verse idiological views, are con- certing plans to ensure the wid- Concern over Cunhal's es- cape is especially high because the government believed his im- prisonment in 1949 had broken the back of the Portuguese Com- munist movement. Moreover, his break came only five weeks after two army officers, who had been convicted of complicity in the attempted coup of March 1959, es- In view of this develop- ment and the escape of the ten Communists, the security authori- ties have already imposed in- creased surveillance on all public gatherings. The Castro government's efforts to organize a confer- ence of "hungry nations" is a bid for a position of leader- ship among the neutralist, underdeveloped countries with which Cuba now identifies it- self. Cuba insists that the conference, to be held in Ha- vana in the summer of 1960, is not political but economic and technical, and that its main objective should be "the draft- ing of a charter of the econom- ic rights of people." Castro officials seek in their public statements to imply that the conference will have formal UN cooperation. Secre- tary General Hammarskjold, how- ever, has in the past been care- ful to prevent his organization from being involved in conferences SECRET NOTES AND COMMENTS Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 25X1 25X1 Page 14 of 17 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET 14 January 1960 of an obviously political or propagandist nature. mats and economists, one led by Foreign Minister Raul Roa, are now visiting over 30 Afri- can, Asian, Mediterranean, and Latin American countries to discuss a proposed agenda. The other governments are being in- vited to co-sponsor the meeting, and expenses are offered by Cu- ba for five delegates from each country. Roa probably made a particularly strong approach to Nasir during their recent talks, since Cairo is already cooperating to establish closer Cuban-UAR ties. The foreign minister will also visit Tuni- sia, Morocco, Libya, Yugoslavia, and Greece. Another team led by the Cuban ambassador to India has left for Jordan, Lebanon, Iraq, Pakistan, Ceylon, Iran, Indo- nesia, Thailand, and the Phil- ippines. Still others are visiting Liberia, Ghana, Cam- eroun, Guinea, Yemen, Sudan, Saudi Arabia, and most Latin American countries. tion is a "humanistic" middle path between capitalism and com- munism. However, Cuba's poli- cies in the UN,OFS, and elsewhere seem designed primarily to assert defiance of the United States. Brazilian Foreign Minister Lafer says he feels the confer- ence would benefit only the Com- munists and hopes that Latin American countries will not attend. Brazil considers its own Operation Pan America Latin America's best hope for obtaining US economic aid and evidently fears that Castro's activities threaten its success. Other countries have as yet evinced no decided reaction, but if sufficient official sup- port is not forthcoming, a con- ference of "leaders" of special interest groups would probably be substituted to help propa- gandize the moral and economic "responsibilities" of richer countries, particularly the United States. Rioting by several hundred unemployed persons in Caracas on 11 January occurred against a background of economic diffi- culties and followed a series of terrorist bombings earlier this month. The government for the present commands the loyal- ty of the majority of the armed forces and is in full control The rioting, which was soon checked by police and national guard action, began as a protest against the government's reduc- tion in its emergency public works program and followed a peaceful demonstration of unem- ployed on 8 January. Communist and radical elements of the Dem- ocratic tepublican Union party of the situation, but a resump- (URD), a dissatisfied component tion of public violence could { of President Betancourt's non- serve as a pretext for an at- Communist three-party coalition, tempted takeover by discontented may have been the principal in- military groups. stigators of the labor unrest. SECRET Castro's determination to follow a "third-position" for- eign policy is consistent with Four teams of Cuban diplo- 1 his claim that the Cuban revolu- Page 15 of 17 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 January 1960 Violent demonstrations last August by unemployed were the only other cases of serious rioting which have occurred since President Betancourt took office in February 1959. How- ever, frequent rumors of dis- content and plotting, especial- ly in the army and national guard, and of subversive activ- ities of exileshave created an atmosphere of public tension. A wave of terrorist acts last October, like those early this year, resulted in a number of arrests and the reassignment of several suspect officers. Communists, particularly through their strong influence in the press, have magnified these in- cidents, apparently in part to discredit the armed forces and to emphasize their call for unity among all civilian groups to prevent the return of a military dictatorship. weak. Betancourt has also been' confronted by other economic and political problems, includ ing potential strife in the key oil industry, friction within the governing coalition, and a sharp decline in foreign ex- change last fall which adversely affected business confidence. Although the URD professes its adherence to the regime, its radical elements often collabo- rate with the Communists, who are excluded from the coalition, and at times appear to stand with other dissatisfied civil- ian groups. An extension of such opposition might pose a threat to the stability of the Betancourt regime and also in- crease the possibility of a coup attempt by the military, which have now been placed in command of the Caracas police force. The Communist and URD parties have their strength concentrated in the capital, where Betan- court's support is relatively The economic and social tensions of France's overpopu- lated West Indian islands have long given the extreme left a dominant position there and have recently been aggravated by the arrival of colonial- minded French refugees from North Africa. The rioting in late December on Martinique sparked new interest in Paris, and there are reports that on his way home from the United States in April De Gaulle will visit the islands and the under- developed department of French Guiana. There is no indication however, that Paris plans to increase its economic aid to the extent necessary to solve the basic problems of the area. Major problems in the two island departments--Martinique and Guadeloupe--arise from the rapid expansion of the racially mixed population and the exist- ence of a narrow economic base. More than 50 percent of the population of Martinique is under 20 years of age. Sugar cane and banana production pro- vides seasonal employment bare- ly reaching subsistence level for the majority of the island- ers. Metropolitan social benefits are only partially available, and government investment funds amount to only $4,000,000 for 1960. Reports of De Gaulle's prospective visit may presage SECRET PART II NOTES AND COMMENTS Page 16 Of 17 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET 14 January 1960 FRENCH CARIBBEAN DEPARTMENTS Haiti { British .Honduras Guat m la , Honduras 1 J El Salvador 'Nicaragua Panama Costa Rica Estimated estimated area population Square Miles Martinique 270,000 385 Guadeloupe 255,000 680 French Guiana 30,000 35,000 Dominican Republic .I Venezuela Y (ritish Colombia ) Sgrina Ecuador 1 -.M . : _1 Peru more assistance, but any expan- sion of the present aid program for social and economic proj- ects is unlikely to broaden the islands' economic base suf- ficiently to provide the foun- dation for a viable economy. France's monopoly of the islands' economy and finances is a major point of friction, and both departments have long chafed at the control of policy by Paris. This issue is stressed by the largest political group on Martinique, ex-Communist poet-politician Aime Cesaire's Progressive party, and by the Communist party, which now con- trols the most important local administrations on Guadeloupe. Local politicians stir up racial conflict inherent in a situation where some 5,000 metro- politan Frenchmen hold most of the important economic positions and head the political adminis- tration. An influx of French settlers emigrating from the former French areas of Tunisia and Morocco--some of whom re- portedly have displayed arro- gant behavior toward the native population--and several recent incidents of race discrimina- tion in Paris involving West Indian students have added to the tension. The Republic Se- curity Companies from the metro- pole,whose police actions may have sparked the recent rioting, also cause local resentment. Sparsely populated French Guiana presents different prob- lems. Although undeveloped bauxite deposits and a variety of tropical timber offer possi- bilities for economic growth, there is apparently neither a coordinated plan for French economic aid nor government en- 25X1 couragement of extensive migration to French Guiana from the over- populated islands. SECRET NOTES AND COMMENTS Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 LEL,~ 4 Saint Barthelemyd Guadeloupe u' m Marie Galante 2 Dominica Martinique 7 a Barbados Page 17 of 17 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 January 1960 PATTERNS AND PERSPECTIVES Tn the spring of 1958, Peiping felt the need for a far-reaching foreign policy review, Relatively concilia- tory policies pursued since 1955 had not succeeded in gain- ing recognition for the regime; neither had they eroded US sup- port for the Chinese National- ists nor softened the resolve of the Nationalists to resist "peaceful liberation." These were some of the matters up- permost in the thinking of Mao Tse-tung and leading members of the party politburo when they brought their ambassadors to many bloc and Asian coun- tries home for consultations in April. The ensuing devel- opments provide a case study in Chinese Communist foreign policy formulation. This reconstruction of the machinery and procedures em- ployed in working out new pol- icy lines is derived for the most part from information re- leased by the Chinese them- selves. For four months preceding the recall of the ambassadors, Mao had been touring various provinces with several polit- buro members and provincial party first secretaries, re- viewing domestic policy and approving the dismissals of local "rightist" party officers. Mao has insisted for years that on-the-spot investigations were indispensable for any policy- maker. As he put it, "If you have done no investigating, you have no right to speak"; opin- ions not based on such investi- gations, he said, are "nothing more than groundless fantasies." With this predisposition for first-hand examination of prob- lems, he felt the need for briefings on foreign policy matters from experts who had been in personal contact with problems in posts abroad. Following preliminary briefings from the envoys, the politburo informed the ambas- sadors through Foreign Minister Chen Yi of its decision to take a new look at the government's foreign policy. At small, in- formal meetings with officials in the Ministry of Foreign Af- fairs, the ambassadors outlined what they considered the best tactics for the immediate future.. Policy Toward Neutralists Future policy toward neu- tralist countries was discussed The recommended pol- icy toward Cambodia was concil- iatory; the policy toward Thai- land would be less cordial, but not threatening; the posture toward Laos, where the "ruling circles" were seen as moving SECRET PART III PATTERNS AND PERSPECTIVES Page 1 of 13 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 January 1960 closer to the United States, would be watchful and--when necessary to inhibit measures against the Pathet Lao--threat- ening. Policy toward these coun- tries, as well as toward India, Indonesia, and the Middle East- ern and African countries, was discussed by all present. Af- ter a few days, the debates-- the Chinese insist that every official must speak out frankly in policy discussions--were halted and the participants told by Foreign Minister Chen Yi that they should take time off for a rest. He invited the ambassadors to accompany him to the Ming Tomb Reservoir-- ostensibly to observe the prog- ress there, but primarily to give them an opportunity to relax and clear their heads. The discussion was re- sumed after a few days, and for the next two weeks the pol- icy toward the neutral coun- tries was debated further, The question of the level of eco- nomic aid became a center of contention as each country in the underdeveloped areas of the Middle East, Africa, and Asia was discussed. The participants finally submitted a report to the cen- tral committee secretariat rec- ommending economic-aid levels for each country and detailing the political and diplomatic effort to be carried out in the future. The secretariat was asked to submit the report to the full central committee later in the month for a deci- sion. In practice this meant that it would be submitted first to the politburo, and that the politburo's decision would be ratified by the cen- tral committee. Policy Toward Pro-US Countries Foreign Minister Chen Yi was joined by several other members of the party's polit- buro when the meetings with the ambassadors and Foreign Minis- try officials turned to consider the question of Peiping's policy toward pro-US governments. The politburo members of- fered the view that it was time for China to take a harder line against these governments; there had been few diplomatic successes under the soft line, which had sought to use low-level economic and cultural contacts as prelim- inary moves toward the establish- ment of diplomatic relations. They suggested "struggle"--po- litical warfare--over the long haul to compel these governments to change their alignment with the United States and eventually to accept the necessity for for- mal recognition of the Peiping regime. The ambassadors and other Foreign Ministry personnel added their comments, all of which concurred with the views ad- vanced by the politburo members. These comments were reported to a session of the full politburo at which Mao and his top lieu- tenants put the final stamp of approval on the "hard line." A politburo report detail- ing the hard line was one of several general policy reports read to the central committee plenum which met in late April prior to the convening of the larger body, the national con- gress of the Chinese Communist party. Discussion of the for- eign policy report resulted in minor changes in the text, and the report was then expanded for presentation to the National Congress. The presiding officer of the central committee secre- tariat, Secretary General Teng 1-Liao-ping, read the draft re- port on foreign policy to the party's national congress at its first meeting on 4 May. He stated that an embargo might have to be SECRET PART III PATTERNS AND PERSPECTIVES Page 2 of 13 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET 14 January 1960 imposed on trade with Japan if the strongly pro-US government were returned to power as a result of parliamentary elec- tions; urged that an "uncom- promising" diplomatic and propaganda attack be waged against the Yugoslavs, who had criticized the Soviet Communist party at their April congress; and declared that all "imperi- alist" states should be sub- jected to bitter criticism in China's propaganda. Officials on lower party and government levels were in- structed to adhere "strictly without variation" to the new concept, which totally modi- fied the "reasonable" approach of the 1955-58 period. During the following two weeks, delegates to the con- gress commented on the draft report, in compliance with the suggestion of the presidium (presiding committee) of the congress. "Reasonable" amend- ments and alternative sugges- tions were taken into account when the draft was finally re- vised and "unanimously" ap- proved by the delegates in late May. Chinese propagandists-- following a briefing from their superiors, who had discussed the new line with members of the central committee's propa- ganda department--began to stress the need for the Commu- nist bloc to "struggle" against the major capitalist states, "headed by the United States." Peace must not be "begged," and if war comes, the "peoples of the world" should not doubt the outcome--a victory of the bloc over the "imperialist" states. Foreign missions in Pei- ping were subjected to petty harassment. Chinese employees in the missions went on tempo- rary strikes, and food became difficult to obtain. The situ- ation became even worse for the British mission following the American and British landings in the Middle East in July. Policy Toward Offshore Islands In consonance with its policy shift toward a harder line in foreign affairs, the politburo considered the ad- visability of a new initiative in the Taiwan Strait. It called on Peiping's military leaders to begin a series of round- robin policy discussions on "national defense in the light of the current international situation" and the future de- velopment of the armed forces. The military committee of the party's central committee met in an enlarged conference be- tween 27 May and 22 July. Outside the conference, those politburo leaders con- cerned with formulating mil- itary policy met to decide on a tactical course. The US and UK landings in the Middle East were viewed by politburo mem- bers as providing the Chinese with an opportunity for a new initiative to probe American determination to help the Nationalists defend the off- shore islands, particularly since the United States was "committed" in Lebanon. De- fense Minister Peng Te-huai "summed up the discussion," which led to a decision calling for preparations for shelling of the Chinmen complex, naval harassment of this complex and the Matsus, and attacks against any Nationalist aircraft pene- trating mainland air space. The military committee "approved" the politburo's decision. China's major military ally--the USSR--was probably informed of the decision at the top-level meeting in Pei- ping with Khrushchev and his military advisers. Mao and Khrushchev engaged in a series of meetings which lasted from 31 July to 3 August, during SECRET PART III PATTERNS AND PERSPECTIVES Page 3 of 13 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 January 1960 which decisions presumably were made on how to coordinate the Chinese probe with Soviet dip- lomatic efforts against the West. The USSR was to lend its support to the Chinese move in- directly by suggesting to for- eign diplomats that the Nation- alists were becoming "provoca- tive" in the Taiwan Strait and were being encouraged by the United States. Moscow was to direct other Communist regimes to follow a similar line. As Chinese Communist air activity began to increase in the strait, Peiping's propa- ganda machine stated that the "liberation" of the offshore islands and Taiwan was an "ur- gent" matter. A belligerent article in the Chinese theo- retical journal Red Flag in mid-August boastecTthat the Communists were not afraid of American A-bombs, while a Communist newspaper in Hong Kong warned that the South China Fleet was prepared to attack the Chinese Nationalist Navy. On 23 August, the day of the first major barrage against Chinmen, Foreign Minister Chen Yi assured foreign diplomats in Peiping, "We will take those offshore islands!" Chou En- lai in September deliberately attempted to create the impres- sion that unless the United States forced Chiang Kai-shek to withdraw his troops from Chinmen, the Chinese Communists would attack the islands and any American military forces seeking to support the Nation- alists. Chen Yi's statement and Chou's effort were clearly intended to carry out the po- litburo decision to probe American willingness to stand firm in defending the National- ists. The precise timing of the first major shelling may have reflected another decision prob- ably made at the late August session of the politburo, namely the push ahead in the program to form communes. By 6 Septem- ber the slogan "Liberate Taiwan" was being used by local Commu- nist party members to convince the people they should enter military-type communes and work for the coming war effort. The slogan was a key theme at the Supreme State Conference, con- vened on 6 September, which called for nationwide "mobili- zation." A series of statements by top American officials and the "beefing-up" of the Seventh Fleet made it clear to the po- litburo that if an attack was ordered against the offshore islands, the United States would commit its forces. Pei- ping therefore decided to back- track. Premier Chou En-lai was designated by the politburo to state in his 6 September reply to Secretary of State Dulles' 4 September statement at New- port (which implied that the United States would regard an attack on Chinmen as prepara- tory to an attack on Taiwan and therefore a reason for war) that Peiping was ready to re- sume ambassadorial talks with the United States. The decision to agree to reopening talks was made by the politburo after consultation on the night of 4 September and at resumed consultations and dis- cussions on 5 September. The politburo itself acted in the fast-developing situation; it did not convene a plenum to in- form central committee members formally of the decision to avoid a military clash with American air and naval units. There was simply not sufficient time for round-robin discus- sions, the hearing of various views, and the drafting of lengthy reports. The peaceful overtures were combined with warnings designed to head off a military SECRET PART III PATTERNS AND PERSPECTIVES Page 4 of 13 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 January 1960 clash with the United States. The Chinese leaders probably sent a communication to Mos- cow through Ambassador Liu Hsiao. Pravda stated on 5 Sep- tember that title Soviet Union would not quietly watch Amer- ican military operations in the Pacific, "whose waters also wash Soviet shores." Soviet Premier Khrushchev wrote Pres- ident Eisenhower on 7 Septem- ber that an attack on China "is an attack on the Soviet Union." on 19 September in the strongest official So- viet statement ever directed against the US Government: Khrushchev wrote Eisenhower that "may no one doubt that we will completely honor our com- mitments" to China as stipu- lated in the 1950 Sino-Soviet treaty of alliance; if China falls victim to nuclear attack, "the aggressor will at once get a rebuff by the same means." In addition to invoking the Sino-Soviet alliance as a deterrent to attack by the United States, the Chinese on 4 September proclaimed a 12- mile territorial limit, placing the offshore islands clearly within Chinese Communist juris- diction. On 8 September the Foreign Ministry was directed to start its numbered "serious warnings" of US "intrusions" into claimed waters. The po- litburo was convinced that one way to avoid the risk of en- gagement with American forces was to discourage the United States from allowing its naval vessels to escort Chinese Na- tionalist resupply ships to the offshore islands. The party leaders, at politburo meetings in late September and early October, delineated in some detail a policy of political rather than military struggle against the United States without agreeing to a cease-fire. They failed in their attempt to interdict the resupply effort for the Chinmens and were unwilling to risk greater US involvement. Odd-day shelling, they decided, permitted them to use artillery as a political weapon--to pre- vent the status quo from appear- ing "frozen" while keeping hos- tilities at a minimum. Above all, it was to be made clear to the United States that Peiping had no intentions of starting a major ware For- eign Minister Chen Yi was di- rected to communicate this at- titude to the United States through a visiting Canadian journalist. At a five-hour interview on 30 October, Chen told the journalist that "peace- ful means" of approaching the Nationalists would prove effec- tive. The effect on local party members of this backdown in the Taiwan Strait situation became a matter of concern to the po- litburo, which had operated without keeping the central com- mittee fully informed. It was agreed that Chou En-lai should present a rationalization de- signed to make the retreat look more like a rebuff to the United States. Members and alternate members of the party central committee and heads of national governmental and party organiza- tions, as well as provincial and municipal propaganda chiefs, rushed to Peiping to attend the hastily convened meeting of the party's propaganda department. To help party members to a "correct understanding of the present struggle in the Taiwan Strait," Chou discussed Mao's new book, "All Imperialists and Reactionaries Are Paper Tigers." Chou cited a series of events going back to World War II "to prove" Mao's thesis that im- perialist nations are really hollow shells which will SECRET PART TTT PATTERNS AND PERSPECTIVES Pace 5 of 13 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY r.` 14 January 1960 "eventually" collapse. Follow- up commentary in People's Daily --the daily organ of th a propa- ganda department--carried the key statement that, as Mao has put it, "Strategically we should despise all enemies; tactically we should take them seriously." In other words, the United States is a "paper tiger" that "can still bite." When the central commit- tee was called together in late November, the politburo in- formed the members that China needed at least "ten years of peace" in order to develop its economy. The central committee The long-dormant dispute over use of the Jordan River waters has become a pressing is- sue in Arab-Israeli relations. Israel, for economic reasons, is proceeding unilaterally with a development project which will eventually divert large quanti- ties of water from the river to the Negev desert for irrigation. This has awakened the Arabs to the need for considering now any long-range countermeasures, par- ticularly any large-scale con- struction for diversion projects of their own. Bellicose Arab statements in the face of Israel's determination to car- ry out its plans have increased tension and the likelihood of incidents. Receut'Political.Background The problem of developing and equitably distributing water from the Jordan River has been, until recently, a relatively quiescent issue, Eric Johnston's mission on behalf of President Eisenhower, beginning in 1953, plenum then considered the re- ports read by politburo mem- bers, which stated that with the first phase of the "rush to communes" completed, the serious work of modifying com- mune procedures and commune organization must now be under- taken--together with the work. of relieving food shortages and transportation difficulties. This concentration of the eco- nomic situation in the country facilitated the politburo's effort to minimize the Taiwan Strait backdown. Despite this reversal, the "hard line" for- eign policy was continued into 1959. resulted in a plan for unified development of the river valley, but although technical agree- ment on the plan was virtually achieved, the Arab League Political Committee late in 1955 refused to approve it on political grounds. Israel, which had accepted the plan, subsequently discontinued river diversion work it had started on its own, in the face of threatened Arab military action. Other water resources in Israel, however, now are al- most fully exploited. Accord- ingly, Israeli Finance Minister Eshkol announced last November that diversion, with or with- out Arab agreement, of water from the Jordan River for irri- gation purposes had become a top-priority project for his government. Work on "stage one" of the project had ,already begun. The Arab states reacted im- mediately. Their press spoke of possible military action to avert a "fait accompli," and the SECRET PART III PATTERNS AND PERSPECTIVES Page 6 of 13 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 January 1960 United Arab Republic formed a committee to make a technical study of means of diverting waters from the river's source streams be- fore they leave Arab territory, in order to deprive Israel of access to them, At Cairo's initiative, a tripartite study committee was also formed, with repre- sentatives from Leb- anon, Jordan, and the UAR--the Arab ripari- an states. These commit- tees now have con- cluded their studies, and the UAR Foreign Ministry has re- quested that the Arab League Council be convened to dis- cuss the matter pre- paratory to taking whatever measures it determines necessary to thwart Israel's plans. If a special session is not called earlier, the subject has been included on the agenda of a for- eign ministers' coun- cil meeting planned for early February at which the over-all NEGEV DESERT Palestine problem is to be dis- cussed. Among courses of po- litical action to be considered are submission of the question to the UN Security Council, to the General Assembly, or possi- bly to the International Court of Justice. Israeli Foreign Minister Golda Meir, in a December speech in the Israeli parliament, re- sponded to this Arab activity by asserting that development of her country's resources was an elementary right which Israel would execute "with all means at our disposal." She added PROPOSED JORDAN RIVER DEVELOPMENT PROJECT Canal or conduit, proposed or under construction \W\ Demilitarized Zone UAR EGYPT: Tel Aviv - Jaffa lll~ that "what we do within our borders is our business" and not dependent on "the whims of SECRET LEBANON Eshed Kinnerot (Proposed pumping station JORDAN 25X1 25X1 PART III PATTERNS AND PERSPECTIVES PaEe 7 of 13 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 January 1960 Israel's Plans The Israeli plan involves moving 320 million cubic meters (mcm) of water annually from the Jordan Valley in northern Israel, an area with a net sur- plus of water, to thecoastal plain and arid southern half of the country--the Negev de- sert, When it is finally com- pleted in eight to ten years, the project--comprising a series of diversion canals, tunnels, pumps, regulating reservoirs, and pipelines-- will extend from a point on the north end of Lake Tiberias at Eshed Kinnerot to a distri- bution point at Pelugot, about 125 miles to the south. Amer- ican experts have estimated that the entire ten-year proj- ect could be finished within two years if adequate funds were available. Together with other devel- opment schemes, the project is expected to provide living area for a large part of the rapidly increasing population; the country's irrigated acreage would be enlarged by about 270,000 acres to a total of close to 600,000. Half of the increased population is ex- pected to result from immigra- tion. The Arabs fear that con- tinued Israeli immigration will result in overcrowding and, eventually, aggressive terri- torial expansion. Jordan in particular is also alarmed at what it claims would be the greater salinity of the water downstream which it would want to utilize. According to Israeli engi- neers, water could best be di- verted from the Jordan River at the Banat Yacov bridge, about two miles downstream from the drained Lake Hula. However, that point is within the con- troversial demilitarized zone along the Israeli-syrian bor- der, and in the past when the Israelis have tried to proceed with diversion work there, Syria threatened war and complained to the UN Security Council. In 1953, the chief of staff of the UN Truce Supervision Or- ganization ruled that Israel would have to stop this activ- ity in the absence of a specific agreement with Syria on the problem; Israel thereafter said it had deferred work at Banat Yacov. Instead, it will pump the water from Lake Tiberias, which is fed by the Jordan and which is outside the demilita- rized zone. An eventual pumping station was later to be situated there anyway as part of the over-all project. "Stage one" of the project, upon, cpimpletion.,in 1903,. ,.will pump 150 to 180 mcm of Lake Tiberias water annually to a "central conduit" system which will link at its southern end with another pipeline system extending to the Negev. The 78-mile conduit will be nine feet in diameter and is being financed in part by Israeli bonds, which are purchased widely in the United States. Israel has applied for a $14,- 000,000 loan from the US Devel- opment Loan Fund for additional financing. The Israelis argue that, although this conduit would eventually be tied into the Jordan River system, the conduit could be supported with- out arousing Arab criticism be- cause initially, beginning early in 1962, it would carry only water originating wholly within Israel. The Israelis also have un- dertaken a smaller project in- volving construction of a spe- cial conduit for conveying water from the southern end of Lake Tiberias to the Beit Shean area SECRET PART III PAT'ERNS AND PERSPECTIVES Page 8 of 13 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET 14 January 1960 on the western side of the lower Jordan Valley. They claim this is necessary in or- der to "replace" water which so far has been drawn from the Yarmuk and Jordan rivers but which will be siphoned off when Jordan completes its East Ghor Canal project. Israel claims that its over-all plans regarding the Jordan River are compatible with the Johnston Plan and could be integrated with that scheme if it should be imple- mented. However, the govern- ment's director general for water planning has admitted that the capacity of the in- stallations planned by Israel would permit it to withdraw much more water than had been envisioned in the Johnston ne- gotiations. He said Israel would give the necessary as- surances that it would not overdraw its quota. The Is- raeli concept of the Johnston Plan, moreover, differs some- what from that of the United States. In essence, the US concept gives Jordan approx- imately 30 mcm more usable water annually than Israel's would allow. Arab Plans Israel feels it is justi- fied in proceeding with its development plans and in re- questing United States support for them because Jordan has received American financial as- sistance for the first phase of its East Ghor project. The Jordanian project in its initial stage, now under way, includes a tunnel and a 12-mile canal which by mid-1961 will permit irrigation of some 30,000 acres along the eastern side of the Jordan Valley--the East Ghor. Water will be drawn from-the Yarmuk tributary of the Jordan River. Other Arab plans are es- sentially negative. The scheme formulated by the UAR for di- verting the Jordan's tributaries before they enter Israel envis- ages, according to press reports, two stages: first, the tribu- tary originating in Lebanon, the Hasbani River, would be diverted by tunnel through the Lebanon Mountains into the Litani River and thence to the Mediterranean; second, a special fund financed by Arab govern- ments and citizens would fi- nance diversion of the Baniyas and Yarmuk rivers around Israel. The Dan River, the largest of the three source streams above the Yarmuk, however, originates at springs on the Israeli-Syrian border and could not readily be denied Israel. The Israelis believe the Arabs could cut off up to 25 percent of the Jordan's water if their plans were carried out. The cost of these tributary diversion schemes, in view of the geographical obstacles which would have to be surmounted, would appear to be prohibitive. The mandate of the UAR's tech- nical committee which surveyed the problem specified that ex- pense was not to be a deterrent, however, because of the over- riding political objective. Ful- fillment of the plan neverthe- less appears to be an extremely remote possibility. Both Israel and the Arabs have indicated that diversion by either side would be re- garded as an act of war. In the meantime, there is danger that border tensions, particu- larly along the Israeli-Syrian border, will become so acute as a result of the dispute that clashes may well increase both in number and in seriousness. SECRET PART III PATE'S AND PERSPECTIVES Page 9 of 13 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 January 1960 Latin America's toughest and most durable dictator--Gen- eralissimo Rafael Trujillo of the Dominican Republic--now faces what may be the greatest challenge from opposition move- ments since he consolidated his control some 30 years ago. Even his tightly organized police state has not been immune to the revolutionary ferment which has developed over the last few years in the Caribbean. Should the 68-year-old Generalissimo be removed from the scene in the near future, moreover, the other members of his regime probably could not long con- trol the situation, and a strug- gle for power would result, with pro-Communist exiles and other radicals playing a prom- inent role. Growing Disaffection Over the years, Trujillo's oppressive regime has driven hundreds into exile and built up explosive forces of resent- ment among the close to 3,000,- 000 Dominicans at home, but this dissidence has been par- ticularly marked during the past six months--a period also marked by reports of Trujillo's declining health. His armed forces--with the reported help of local peasants-- crushed a 225-man attack made last June by insurgents from Cuba, but the heavy military spending he has undertaken to counter such attacks has added to his economic and political difficulties. Sinee.the invasion attempt in June, there have been re- ports of sabotage in the armed forces and bombings in Ciudad Trujillo, the capital. A series of diplomatic and military de- fections abroad are added indi- cations of the Generalissimo's falling prestige. In July, the ambassador to Ecuador and the first secretary of the Dominican UN delegation resigned and asked for political asylum. A month later, the vice consul at Curacao asked Venezuela for asylum, and his brother, an officer in the Dominican armed services, also defected when sent to persuade him to reverse his decision. Within the Dominican Re- public, fear of the secret po- lice is so strong that opposi- tion seems to be still largel unorganized. Military expenditures of about $50,000,000 during 1959 --equaling about one third of the regular budget--were a heavy drain on an economy already suffering from depressed world prices for most of the country's exports. Economic deteriora- tion has encouraged discontent, particularly among professional classes and businessmen, many of whom were already conscious of Trujillo's unpopularity in other Latin American countries. SECRET PART III PATTERNS AND PERSPECTIVES Page 10 of 13 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 January 1960 Dominican Exiles Substantial numbers of Do- minican exiles have taken ref- uge in the United States, Vene- zuela, and Puerto Rico. Smaller groups have collected in Cuba and other Caribbean countries. Plotting among the exiles has been continuous but, until this year, divisions among them were so extensive that their efforts were ineffective. Since the ry DOMINICAN CU6O ? REPUBLIC Son Juan Puerto. Rico T, ~ 1. 0 Principal concenlratio is of exiles from the Dominican Repjblic, ouster of Batista in Cuba last January, the numerous exile groups have stepped up their activities and made some prog- ress toward unity, but they are still divided into two main camps over the question of co- operating with the Communists. Aside from the Communists themselves, who are organized as the Popular Socialist party (PSP), the most important exile organizations are the Communist- infiltrated Dominican Libera- tion Movement (MLD)--which has had Cuban support--and the anti- Communist Unity Bloc of Domini- can Liberation (BULD) organized in Venezuela. The Dominican Communist party is small in membership, but it has exercised consider- able influence in Dominican rev- olutionary activities during the past year. It is the only opposition party to have had legal status during a portion of the "Era of Trujillo." The Generalissimo invited the PSP :members to return from exile in 1946, apparently hoping to create an impression that the Dominican Republic was a liberal democracy. Until he suppressed the party and imprisoned its leaders nine months later, the Communists worked hard to in- filtrate labor and to organize strikes. They were supported at the time by many Dominicans simply because the PSP was the only organized opposition in the country. After being released from prison in 1950, most of the PSP's survivors lived in Gua- temala until the pro-Communist Arbenz regime was overthrown in 1954. The nucleus of the PSP then fled to Mexico, where it remained until Fidel Castro came to power in Cuba, at which time its headquarters reportedly moved to Havana. There it has capitalized on Cuban demands that all Dominican opposition movements be represented in a common front in order to receive Cuban support, The other two exile groups are divided over whether Communists should be included in anti-Trujillo plans. SECRET PART III PATTERNS AND PERSPECTIVES Page 11 of 13 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927A002600010001-3 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY 14 January 1960 Dominican Liberation Movement The Dominican Liberation Movement was formed early in 1959; an MLD commander led the June invasion force of Domini- cans, Venezuelans, Puerto Ricans, and Cubans. The leading ele- ment in the MLD is the Commu- nist-infiltrated Dominican a cise disproportionate influence, especially if it should again receive backing from leftist Cuban officials and military leaders, as it did prior to the June invasion. Since the failure of the June invasion, the MLD has di- rected its efforts toward a- chieving the diplomatic isola- tion of Trujillo's government and to explaining the program it hopes to put into effect after Trujillo is overthrown. Its representatives have traveled to Peru, Colombia, Ecuador, Chile, Uruguay, and Argentina-- as well as the United States-- to arouse public opinion against Trujillo. In some of these countries, especially Colombia, attempts are being made to recruit men for future invasion attempts. Patriotic Union (UPD), which is probably the strongest of the exile organizations, and has branches in New York, Caracas, and Havana. After refusing an invitation extended last May by a bloc of non-Communist exiles to join in an anti-Tru- jillo front, the UPD and the Communists formed an alliance through their affiliation in the MLD. Other MLD affiliates are a group in Venezuela (the FIDDV) and the United Dominican Democratic Front (FUDD), which has a Mexican and a New York branch. The MLD's seven-member executive council includes one man suspected of Communist par- ty membership, and the council's president, Francisco Castellanos, has repeatedly been termed a fellow traveler. The non-Commu- nist leaders in the MLD cooper- ate with the Communists because they believe that no attempt to oust Trujillo is likely to succeed without the combined efforts of all exiles. Some of the non-Communists are ac- tively trying to prevent the Communists from dominating the MLD, but the Communist minority is experienced and energetic and will probably continue to exer- Spokesmen for the MLD assert that their program has no quarrel with the Catholic Church and will recover property stolen by the Trujillo family, start a program for land' reform, sponsor a free labor movement, promote representative democracy, and reform the school system so that it will build up a "na- tional conscience." There is evidence that the MLD is in communication with anti-Trujillo elements in the Dominican Re- public. The Unity Bloc of Domini- can Liberation was formed at Caracas in March 1959 purported- ly to achieve unity among SECRET PART III PATTERNS AND PERSPECTIVE- Page 12 of 13 Approved For Release 2007/10/23: CIA-RDP79-00927A002600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 SECRET 14 January 1960 anti-Trujillo forces. However, the backbone of the BULD--the old Dominican Revolutionary party (PRD)--opposes giving the Communists a voice in rev- olutionary affairs. The PRD or some of BULD's smaller af- filiates have branches in New York, Caracas, Havana, and Puerto Rico. The leadership of BULD, although it contains colorful old revolutionaries such as PRD members General Miguel Angel Ramirez and Juan $O8ch, is somewhat tarnished as a result of its long record of failure in ousting Trujillo. The dominant PRD's political orientation is left of center and has been likened to Presi- dent Romulo Betancouxt's Demo- cratic Action party in Venezuela and ex-President Jose Figueres' National Liberation party in Costa Rica. The PRD has friend- ly relations with the Interna- tional Confederation of Free Trade Unions and the Inter-Amer- ican Regional Organization of Workers. It is likely that Betancourt and Figueres would support BULD if they believed it had some chance of success. ican Republic. However, General Ramirez and other anti-Communist exiles in Cuba have been denied Cuban aid and frequently are harassed by the authorities there in their thus-far-unsuccessful atteiipts to organize an invasion force. For the time being, it appears that the main possibility open to the non-Communist exiles is to use their influence in the free world labor movement to press for a world-wide trans- 25X1 portation and communication boy- cott of firms serving the Domin- SECRET PART III PATTERNS AND PERSPECTIVES Page 13 of 13 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 25X1 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3 C TAL SrrET SEC E CONFIDENTIAL Approved For Release 2007/10/23: CIA-RDP79-00927AO02600010001-3