Document Type: 
Document Number (FOIA) /ESDN (CREST): 
Release Decision: 
Original Classification: 
Document Page Count: 
Document Creation Date: 
December 20, 2016
Document Release Date: 
June 29, 2006
Sequence Number: 
Case Number: 
Publication Date: 
October 19, 1999
Content Type: 
PDF icon CIA-RDP79-00927A003200100001-6.pdf2.84 MB
Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 CONFIDENTIAL CC!'DCT (CURRENT INTELLIGENCE WEEKLY SUMMARY COPY NO. 76 OCI NO. 0286/61 29 June 1961 CENTRAL INTELLIGENCE AGENCY OFFICE OF CURRENT INTELLIGENCE DOCUMENT NO. L DECLASSIFIED r.>ANGED TO: DATE: /--LA". H 770---2~~~ DA ',2Q'/~-~ey C FII TIAR; State Dept. review completed __ Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927A003200100001-6 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-RDP79-00927A003200100001-6 CURRENT INTELLIGENCE WEEKLY SUMMARY EAST-WEST RELATIONS . . . . . . . . . . . . . . . . Khrushchev has continued his efforts to impress the West with his unyielding determination to sign a separate peace treaty with East Germany if there is no East-West agreement on a German settlement by the end of the year. On 28 June he said the USSR was pre- pared to reopen negotiations but that Western moves toward mobilization would not deter the signing of a peace treaty. Bloc sources also have begun to issue assurances that a negotiated settlement is still possible. One Soviet diplomat characterized Khrushchev's deadline on Berlin as mainly intended to overcome Western "delaying tactics." He indicated that the USSR would defer a separate treaty if nego- tiations were begun before the end of the year. The maneuvers of the Soviet representative in the bilateral disarmament talks with the US in Washington suggest that Khrushchev is seeking to build a case of American refusal to engage in serious talks. . Page 1 . . . . . . . . . . . . . . . . . . ... . . . Page 3 Khrushchev, at a 28 June rally for the North Viet- namese premier, endorsed the Zurich declaration of the ,three Laotian princes as a "good beginning" and emphasized that it offered hope that the Laotians themselves will settle all other internal problems. Despite the air of victory displayed by Souvanna and Souphannouvong, Phoumi may still hope to limit Communist influence in any new government by relying on the legal position of the King and the constitution. 1 -1 The military situation remains generally quiet, a t oug of resistance continue. FRANCE-ALGERIA . . . . . . . . . . . . . . . . . . . . . . Page 6 De Gaulle's announcement that the transfer of army divisions out of Algeria is about to begin, together with continuing talk of partition, emphasizes his statements that he hopes to have the Algerian problem settled by the end of the year "by one means or another." His objective, however, is still to achieve an agreement with the PAG to create an independent Algeria with close ties to France. While top PAG leaders are reiterating their hopes of an early resumption of negotiations, they have given no indication on any intent to change their position. A new bloc arms shipment to the FLN via Morocco brings such shipments to a probable total of 4,500 tons since November 1960. SECRET Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 SECRET Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927A003200100001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY . . . . . . . . . . . . . . . . . . . . Page 7 The extension o runways at Havana's international airport would enable it to accommodate jet planes--possibly those of the Czech airline, which is expected to start regular flights to Cuba soon. President Quadros' move to study means of increasing Brazilian-Cuban trade is mainly a political move to mollify the Brazilian left. . . . . . . . . . . . . . . . . . . . . . Page 8 Plans for convening parliament on 3 July have been jeopardized by Tshombd, who since his return to Elisa- bethville has stated that Katanga will remain independent and has implied that he will not send a parliamentary delegation to Leopoldville. A boycott of parliament by Katanga would weaken the relative strength of the anti-Gizenga bloc, and if Tshombd refuses to send a delegation, Leopoldville leaders may seek a postpone- SOVIET ECONOMIC PROGRAM . . . . . . . . . . . . . . . . . Page 9 Khrushchev, speaking at Alma Ata on 24 June, prom- ised Soviet consumers that they could expect major material improvements as a result of the long-range economic plan in the party program to be published on 30 July and formally presented to the 22nd party congress in October. His statement that "the light and food industries will develop rapidly side by side with heavy industry" is the first suggestion to the Soviet public of an impending change in the long- standing priority of heavy industry. Such a policy shift had been indicated to Western newsmen on 20 EAST GERMAN FOOD SHORTAGE . . . . . . . . . . . . . . . . Page 10 In early June the East German Government was forced to institute limited rationing of butter; meat supplies have also declined. These difficulties stem in part from the effort to complete agricultural collectivization in 1960, from Chinese failure to meet contracts for de- livery of oil-seed crops for production of margarine, and from abnormally wet spring weather. CZECHOSLOVAKIA SHIFTS GOVERNMENT AND PARTY LEADERS . . . . Page 11 Party First Secretary Novotny announced a consider- able reshuffle of Czechoslovakia's party and government leaders at a central committee meeting on 22 June; the moves were almost-,wholly designed to improve control of agricultural production. In addition a new state com- mission has been created to oversee local government SECRET Approved For Release 2007/10/23: CIA-RDP79-00927A003200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 JC,t;K!/ 1 CURRENT INTELLIGENCE WEEKLY SUMMARY 25X1 25X1 organizations, which have not achieved the degree of control over the people intended by last year's ter- ritorial reorganization. GROWING POLICE POWER IN POLAND . . . . . . . . . . . . . . Page 12 Since late 1959 Poland has relied increasingly on police methods to control internal political, economic, and cultural activities. The return to prominence of several hard-line party members may have accelerated this process. Polish internal security measures, how- ever, are still not nearly so severe as those applied in other European satellites. SOUTH KOREA . . . . . . . . . . . . . . . . . . . . . . . Page 13 Leadership within the South Korean junta is still not firmly established, Pak's primary support comes from junior officers who are pushing for a clean-up of the military. This, however, has aroused the opposition of senior generals identified with the Rhee and Chang Myon regimes. Police- state controls are being used increasingly in an attempt to assure Pak's position. ARAB-ISRAELI TENSION . . . . . . . . . . . . . . . . . . . Page 13 Nine incidents along the Israeli-Syrian border dur- ing the week of 19-25 June apparently resulted in part from a tougher attitude on the part of Syrian border troops toward Israeli activities in the demilitarized zone. At least one incident may have been related to work on Israel's Jordan River diversion project. Ben- Gurion might order vigorous retaliation to enhance his party's prospects in Israel's forthcoming elections. Meanwhile, the Arabs have made further efforts to co- ordinate military plans and operations, but effective cooperation remains difficult to achieve. NATO DIFFERENCES ON STRATEGY . . . . . . . . . . . . . . . Page 15 Current NATO discussions of long-term strategic planning show the divergence between Britain's cost- conscious approach and the emphasis given by West Ger- many and Turkey to the alliance's military problems. There is general endorsement of a build-up of conven- tional forces, but agreement has not been reached on the role of nuclear weapons. ARGENTINA . . . . . . . . . . . . . . . . . . . . . . . . Page 15 President Frondizi is attempting to obtain Peronista electoral support for his party in Argentina's congres- sional elections next March. This support helped Frondizi win the presidency in 1958, and his party seems to need SECRET Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY it even more now, in view of the opposition aroused b many of his economic stabilization measures. SOUTH TIROL . . . . . . . . . . . . . . . . . . . . . . . Page 16 Further unrest is likely in the South Tirol prov- ince of Italy, following the flare-up of terrorist activities there earlier this month, and the breakdown of the 24 June talks between the Italian and Austrian foreign ministers. A new Austrian appeal, to the UN on behalf of the Tirolese is likely, and the Tirolese issue might also be used as a pretext by Italian right- ists to try to overthrow the Fanfani cabinet. FRENCH FARM AGITATION . . . . . . . . . . . . . . . . . . Page 17 The agricultural disturbances which spread rapidly in mid-June from Brittany through central and southern France are, like the labor agitation last spring, as- pects of the underlying social unrest hitherto held in check by De Gaulle's prestige and his pleas for national unity. The discontent led to outbreaks partly because, under the Fifth Republic, parliament is no longer an adequate channel for airing popular grievances. The government is somewhat concerned over the added strain on the security forces at a time when there is danger of extreme rightist outbreaks over De Gaulle's Algerian policy. COMMUNIST BLOC AGRICULTURAL PROBLEMS . . . . . . . . . . . Page 1 The Soviet Union, with an agricultural labor force about seven times larger than that in the US, produces one-third less; despite a substantial gain from 1953 to 1958, Soviet agricultural production did not grow at all in 1959 and 1960. The agricultural problem is evident throughout the bloc, and in Communist China has led to widespread malnutrition. Communist leaders frequently blame agricultural difficulties on organ- izational problems or natural disasters. While these difficulties are real, a major cause is the bloc's doctrinal commitments to practices which obstruct effective management and favor industry at the ex- pense of agriculture; restrictions arising from adverse climate and topography throughout much of the bloc are also a limiting factor. SECRET iv BRIEFS Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927A003200100001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY POLITICAL IMPLICATIONS OF A BRITISH ACCESSION TO COMMON MARKET . . . . . . . . . . . . . . . . . . . . . . . . Page 6 Far-reaching consequences for intra-European, Atlantic, and Commonwealth relationships are implicit in Britain's moves toward membership in the European Common Market (EEC). Enlargement of the EEC would probably disturb the French-German entente which has made possible the community's cohesion thus far. In addition, London would almost certainly challenge French leadership of the Continent and play a key role in determining how soon and in what manner political ties evolve among the participating states. British accession to the EEC could give new impetus to the drive for a unified Europe--in which even the European neutrals would have to participate in some way. Such a grouping would become an important component in the balance of world power. SECRET Approved For Release 2007/10/23: CIA-RDP79-00927A003200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927A003200100001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY Khrushchev has continued his efforts to impress the West with his unyielding determina- tion to sign a separate peace treaty with East Germany if there is no East-West agreement on a German settlement by the end of the year. At Alma-Ata on 24 June, in a brief reference to the German question, Khru- shchev stated that the USSR would adhere firmly to the posi- tion which he had outlined in his speeches of 15 and 21 June. Again on 26 June, in a message to East German leaders, he termed a peace treaty a "com- pulsive necessity" and pledged that the'Soviet Government would "do everything" to have a treaty .signed by the end of the year. On 28 June Khrushchev warned that reports of pro- spective Western countermeasures would not prevent the USSR from proceeding with a peace treaty. He added that the USSR was taking the necessary measures to strengthen its military posi- tion should the Western powers begin mobilization. Khrushchev stated that the USSR favored talks with the Western powers on a peace treaty, but warned the West not to hope it can deliberately protract a settle- ment. He also sought to minimize the consequences of a separate treaty by again stating "there will be no blockade of West Ber- lin of any kind" and no "re- strictions" on access, provided that interested powers reach an agreement with East Germany. Khrushchev also hinted that a second meeting with President Kennedy might be "useful," al- though he did not link this directly to the Berlin question. Bloc sources have begun to issue some assurances that while Khrushchev's statements must be taken seriously, a negotiated settlement is still possible. The Rumanian ambas- sador in Brussels stressed the firmness of Khrushchev's posi- tion on Berlin during a conver- sation with the American am- bassador. He stated that while he did not believe that Khru- shchev had in mind preventing access of the Western powers to Berlin, the access of West Germany was another matter. A Soviet Embassy official in East Berlin who often acts as a channel to convey informa- tion to the West told 25X1 that the purpose 25X1 of rus c ev s deadline was to overcome Western "delaying tactics" and to force the West into negotiations before the end of the,year. He stated that if negotiations do begin, the USSR will not conclude a peace treaty with East Germany during 1961. He reaffirmed, however, that otherwise the bloc will def- initely convoke a peace con- ference and sign the treaty this year. This line suggests that Moscow is engaging in an opera- tion similar to that of November and December 1958, when Soviet spokesmen gave private assur- ances that Khrushchev's six- month deadline was designed to exert pressure on the West, and that the period could be extended if negotiations were arranged. SECRET WEEKLY REVIEW Page 1 of 18 Approved For Release 2007/10/23: CIA-RDP79-00927A003200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927A003200100001-6 SECRET Bloc diplomats in Geneva have also inspired press re- ports to the effect that "there must be negotiations." They are quoted as taking the line that some modification in the Soviet position would be possi- ble if restrictions were placed on the transfer of nuclear weapons to West Germany and some settlement on the frontiers in Eastern Europe were accepted as final. Along this same line, East German Deputy Foreign Minister Otto Winzer said in a press con- ference that "more and more- voices" could be heard in the West advising a new agreement whereby recognition of East Germany and of the Oder-Neisse boundary would be granted in return for a new legal basis for a Western presence in Berlin. Winzer claimed that even Sec- retary of State Rusk left open such a possibility, and that this was the "most remarkable feature" of the Secretary's press conference of 22 June. A Soviet spokesman in East Berlin is reported to have taken the line that an interim agree- ment could run for more than six months, the term proposed by the USSR, if something could be arranged to halt the flight of refugees. Bloc representa- -fives are reported by the same journalists to have begun sound- ing out the possibilities for a four-power conference. While Soviet propaganda commentaries have reiterated Khrushchev's deadline, Moscow has also taken pains to deny any intention of presenting an ulLimatum. An "Observer" arti- cle in Izvestia on 24 June stressed that Western reports of Khrushchev's 21 June speech misrepresented his position by dropping the qualifying "if's" from his statement. One such example, the article contended, was that "Khrushchev said the Soviets would sign a peace treaty with the German Democratic Republic alone if the Western powers refuse to take part in putting an end to the abnormal situation" in Berlin. The pur- pose of this "distortion," ac- cording to Izvestia, was the West's desire to conceal an unwillingness to hold reasonable talks on an equal footing. A long Soviet broadcast on the same day claimed that people in Western countries were "more and more" inclined to the idea of opening negotiations with the USSR on the problems of Berlin and Germany. Disarmament The maneuvers of the So- viet representative in the bi- lateral disarmament talks with the US in Washington suggest that Khrushchev is seeking to build a case of American refusal to engage in serious negotia- tions. Soviet tactics also sug- gest that Khrushchev hopes to use the talks as a means of increasing pressure for early Western agreement to another high-level conference on Berlin and Germany by attempting to create the impression of Ameri- i can intransigence on all East- West questions. ills ' 11101 WVV LW L. ueie_%;a Ie has contended that there was no agreement between Gromyko and Ambassador Stevenson to resume multilateral negotiations on disarmament by 31 July. He has made resumption of new ne- gotiations dependent on agree-- ment between the US and USSR on a "program" for complete and general disarmament or, "at least," a rapprochement of positions. He stated that the USSR could not accept the American position on the pur- pose of the talks and indicated that the main task was to hold an exchange on the substance of specific disarmament plans in order to determine whether there is any basis for proceeding with further multilateral negotia- tions. SECRET Page 2 of 18 Approved For Release 2007/10/23: CIA-RDP79-00927A003200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 SECRET Zorin also proposed that the two sides begin elaborat- ing disarmament plans so as to discover whether an agreement on general principles is pos- sible. He stated that the Soviet plan for complete dis- armament submitted to the UN last fall should be considered as a conference document. On 27 June, Zorin followed up this move by submitting a Soviet Government statement setting forth the "basic position" of the USSR. The statement re- views the history of prior ne- gotiations and reiterates the main points of the Soviet plan. In presenting the statement, Zarin emphasized that no suc- cess in the talks or in subse- quent negotiations was possible without consideration of specif- ic proposals by both sides. Zorin rejected the US pro- posal to add ten nations to the ten-nation committee which met in Geneva last year. His reason was that the proposed countries included states with military ties to the US. Zorin was vague, however, on the possibil- ity of adding two or three neu- trals as nonparticipating of- ficers. He merely stated that the USSR adhered to the princi- ples outlined in the talks between Gromyko and Ambassador Stevenson last March. The Geneva conference on Laos is still in the polemical stage, and both Soviet and Chi- nese representatives are de- nouncing Western control meas- ures for Laos. Soviet delegate Pushkin on 22 June stressed that the West's proposals for strengthening the International Control Commission (ICC) would mean "international control over almost all aspects of Laotian domestic affairs." Chinese For- eign Minister Chen Yi's address of 26 June also reflected de- termination to prevent any in- ternational control which would hamper the future activities of the pro-Communist elements in Laos. Soviet Premier Khrushchev, at a rally for North Vietnamese Premier Pham Van Dong in Moscow on 28 June, characterized the Zurich discussions between the three Laotian princes as a "good beginning" and expressed the hope that "before long the Laotians themselves will solve other internal problems." He emphasized that the Laotians can determine "the form of their state system, the paths of their social, economic, and cultural development." Khrushchev as- serted that the Zurich talks proved it was possible "to get down to practical steps" lead- ing to the restoration of peace in Laos. He said chances were good for a peaceful settlement of the Laotian problem, but he reiterated the bloc's contention that the US and its allies were evading a discussion of Gromyko's 17 May proposals. Khrushchev's remarks as well as bloc propaganda commen- tary on the Zurich discussions indicate that the Communists in- tend to exploit the Zurich declaration as evidence of a significant reconciliation of the rival Laotian factions and imply that the Geneva conferees would be guilty of unwarranted interference in the progress of future talks if they sought to discuss the subjects covered in the Zurich communique. In his 26 June address at the conference Chen Yi went to some lengths in underlining the bloc's distinction between the 1954 Geneva conference and the current one. Chen emphasized that the present war in Laos is SECRET Page 3 of 18 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY a "domestic war" and that it is thus "absolutely impermissible" to apply the 1954 ce a.-;e-tire agreements, which set up the ICC in its presen~. =or?rm. He agreed that the IC ;hound c,. n- trol the withdrawal of oroig'n military personnel from Laos in accordance with an agreceent to be reached by the conference on this matter. However, Chen stressed that future introduction of for- eign military personnel was the "primary responsibility of the Laotian government"--a govern- ment which the Communists antic- ipate will be heavily weighted in their favor. Gromyko's 17 May proposals also specifically stated that the ICC will carry out "all its work of supervi- sion and control in cooperation with the government of Laos." Events in Laos, as in Geneva, appear to be awaiting clarification of the signifi- cance of the Zurich communique. The ani.~z anparent concession extracted by i3oun Gum and Gen- era,( Phoin,,ij. at Zurich was the agreement by Souvanna and Sou- phannouvong to honor the role of the King and the constitution in forming a new government. Souvanna and Souphannouvong ap- proached the Zurich talks with the attitude of victors demand- ing political capitulation in line with the realities of the military situation in Laos. By relying on the legal instruments of the King and the constitution, and possibly count- ing on some cooperation from Souvanna, who presumably would head a new government, Phoumi may hope to limit Pathet Lao influence and retain some ele- ments of the present Vientiane The bloc has stepped up government and other non-Commu- its propaganda efforts to devel- nists in a new cabinet. op the theme of foreign involve- ment in Laos. Peiping's "People' Daily of 25 June charged the US with preparations for "new mili- tary ventures" and alleged that South Vietnamese, Thailand Souvanna is in Paris for a stay of about a week before pro- ceeding via Prague to Phnom Penh or Laos to resume the talks. Philippine troops are active in I He told Ambassador Harriman be- Laos. A similar note was struck fore leaving Geneva that the next day by Chen Yi. Hailing next step toward forming a coa- the three Laotian princes' ap- peal for withdrawal of foreign military person au ?_, he too:.: e:)ains to emphasize the serious- ness with which the Chinese view the presence of Chinese Nation- alists in Laos and called on the conference to settle the issue, lition government was to decide who should be premier. Confi- dent that he would be so desig- nated, Souvanna commented that, after that step, he would con- sult with the King and that a provisional government could be set up without seeking assembly approval. SECRET 29 June 61 WEEKLY REVIEW Page 4 of 18 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 SECRET Souvanna apparently envi- sions that the assembly could "stay on the shelf" until.short- ly before new elections; al- though he asserted that a "nor- mal" situation must be restored before elections are held, he professed to believe this could be achieved within a year. Sou- vanna implied that a more thorny problem would be integrating the armed forces of the three sides. Souvanna told Harriman that Phoumi was the best figure on the Boun Oum side and that, if he resigned from the army, he could be given a cabinet post. He asserted that the men around Phoumi were a cause of trouble through their desire to retain the posts they now hold. Souvanna's remarks to Harriman, as well as some of his recent public statements, suggest that he may believe that General Phoumi is ready to make a deal with him. The military situation in Laos has remained generally quiet. Kong Le - Pathet Lao forces are continuing their ef- forts to mop up Meo pockets in Xieng Khouang Province despite the handicaps of adverse weath- er, difficult terrain, and the tenacity of the Meos. Some minor skirmishing has occurred on the fronts north of Vientiane and Luang Prabang and there con- tinues to be some evidence of efforts to build enemy strength in Khammouane Province and in the Tchepone area. Political talks at Namone remain suspended, awaiting the return of Boun Oum, due on 30 June, and General Phoumi. SECRET WEEKLY REVIEW Pace 5 of 11= Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY FRANCE-ALGERIA French orders to begin the transfer of army divisions from Algeria and continuing talk of partition emphasize De Gaulle's statements that he hopes to have the Algerian problem set- tled by the end of the-year "by one means or another." His ob- jective, however, is still to achieve an agreement with the rebel provisional Algerian gov- ernment (PAG) to create an in- dependent Algeria with close ties to France, and current French tactics are aimed at inducing the PAG to undertake substantive negotiations. French leaders attribute the deadlock at Evian to persistent error on the part of the PAG negotiators, who read into every French offer the intention of keeping Algeria French. Paris has maintained con- tact with the PAG since the Evian talks were adjourned, and it has sent back Bruno de Leusse, who was deputy for Min- ister for Algerian Affairs Louis Joxe during the first round of talks, to conduct "procedural" talks with Algerian negotiators beginning any time after 3 July. When some "basis of agreement" is reached by this method, Paris will resume the formal negotia- tions it broke off on 13 June. 25X1 During the interval, France has outlined plans to partition Algeria if the PAG tries to drag out the talks. According to the French information di- rector in Algiers, the French feel that the PAG is very much afraid of partition but is little concerned over possible efforts to create an "Algerian Algeria" without it. Paris seemingly intends to delimit two coastal areas around Algiers and Oran as French en- claves into which both pro, French Moslems and Europeans SECRET from other parts of. Algeria will be encouraged to move by a date sufficiently remote to avoid the impression of an imposed transfer of populations. On 27 June De Gaulle specified that France must hold on to the Oran area, which includes the strategic naval base at Mers el-Kebir. Civilian and military ex- tremists will see in these moves --and in particular the announced decision to withdraw an initial division immediately--concrete evidence of the "De Gaulle sell- out" they have feared. This conviction will keep tension high in Algeria, and new vio- lence may be sparked by extrem- ists of either side. While top PAG leaders con- tinue to reiterate their hopes that talks will resume soon, 25X1 they have given little indica- tion of an intent to make s stantive concessions. The PAG "package" almost certainly includes French rec- ognition of the PAG as sole Spokesman for Algeria, and French admission that the Sahara is an integral part of Algeria. Military bases also would have to remain under Al- gerian sovereignty. Dahiab said, however, that the PAG wanted to keep French settlers in Al- geria for economic reasons and was willing to make it attrac- tive for them to stay. WEEKLY REVIEW Page 6 of 18 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 SECRET The rebels continued to be concerned over efforts by France to revive interest among coun- tries bordering on the Sahara in joint programs for develop- ment of its natural resources. PAG officials reportedly plan to visit each country concerned to argue that any problems con- cerning the Sahara can be set- tled after Algerian independence. Meanwhile, the Algerian rebels continue to receive sig- nificant foreign military and financial support. On 12 June a Soviet ship at Casablanca began off-loading 1,300 tons of arms and ammunition, most of which was probably destined for the FLN. Soviet bloc shipments to the FLN via Morocco since November 1960 are estimated to total 4,500 tons. The shipments are believed to have contained mostly explosives, small arms and ammunition 25X1 A Mexican press statement suggests that bloc jet trans- port aircraft will soon begin using Havana's Jose Marti International Airport, which was closed to most traffic for an indefinite period beginning on 20 June. the airport had been close to permit lengthening of its land- ing strips in order to accommo- date jet aircraft. A Havana "planes of friendly nations" to refuel in the Azores en route to Cuba. Cubana Airlines, which has maintained regular service be- tween Prague and Havana since the conclusion of a civil air agreement with Czechoslovak Air- lines last March, has had dif- ficulty securing landing rights for refueling purposes along the route. It is possible that bloc-made jet transports with a longer flying range will be leased or sold to Cubana through Czechoslovakia in order to solve the problem. The more likely user of jets, however, is the Czech airline, which is expect- ed to initiate its own regu- larly scheduled flights to Havana in the near future. The Cuban radio and press were enthusiastic over a re- port on 21 June that Soviet astronaut Yuri Gagarin would visit Cuba for the celebrations on 26 July of the eighth anni- versary of the Castro movement's first attack on the Batista regime. Government propagan- dists contrasted the visit with the recent trip to South America of Ambassador Stevenson, whom they attacked as a "merchant of aggression" who "aims to corrupt human.minds and hire cannon fodder." newspaper article on the fol- 25X1 lowing day said the runway ex- Alfonso tension was undertaken because Gutierrez, Mexican director of Portugual has refused to permit the Cuban National Petroleum SECRET Pace 7 of 18 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927A003200100001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY Institute (IN?), has been dis- missed and replaced by a Soviet engineer. Gutierrez said that top Cuban leaders sought to persuade him to remain in Cuba as chief of the Geological Institute, one of the four new enterprises. Sporadic incidents of anti- Castroiactivity within Cuba con- tinue'to be reported, but the government apparently. has moved quickly and efficientli against the instigators in most cases. CONGO Plans for convening parlia- ment on 3,July--with the twin aims of installing a new.govern-' ment and drafting a new consti- tution--have been jeopardized once again, by Katanga President. Moise Tshombd. On 24 June, Tshombd was re- leased from his Leopoldville de- tention by the central govern- ment after he agreed to send a Katanga delegation to parliament. According to Premier Ileo, Tshombe also agreed to reunite Katanga with the Congo and to cease separatist activity such as the printing of Katangan cur rency. Back in Elisabethville, however,'Tshombd on 26 June at- tacked [leo and 'other Congolese leaders with whom he, had sworn eternal friendship at the time of his release. In a speech on 28 June, he stated that Katanga would remain "independent," and implied 'that he would not send a delegation to. parliament. In time, Tshombd may be forced to modify his intransi, genre. by pressure from Leopold- ville, his own subordinates, or the UN. For the short term, President Quadros' announce- ment on 21 June that he had ordered a study of the possibil- ity of increasing Brazil's trade with Cuba is mainly a political gesture. According to a Havana radipbroadcast on 22 June, Quadros also appointed a committee to prepare a Brazil- ian "industrial exhibit" to be sent to Cuba. Brazilian-Cuban trade has in the past accounted for less than one percent of each country's total trade, and their principAl, e*ports are competitive. Quadros was probably interested in making a public pronouncement satis- factory to Brazilian leftists in order to offset the effect of strong action which he took recently against striking pro- Castro students in Recife. however, a boycott of parliament by Katanga would weaken the rel- ative strength of the anti- Gizenga bloc and may force Leo- poldvi'lle leaders to seek a post- ponement. A delay would damage the prestige of the central gov- ernment and strengthen the de- termination of Gizenga's sup- porters. The American Embassy in Leopoldville estimates that the Congo's best hope is for a moderate government in which Gizenga'a faction has representa- tion but not control. A European businessman who travels widely in the Congo was impressed in mid-June by the continued deterioration in economic conditions, particular- ly the shortage of trade goods and unemployment. By contrast, he felt the general political outlook to be more hopeful, de- spite an atmosphere of insecu- rity in Katanga which "had not yet had its revolution." He speculated that in the re- mainder of the Congo, "sobri- ety now was setting in." SECRET 29 June 61 WEEKLY REVIEW Page 8 of 18 Approved For Release 2007/10/23: CIA-RDP79-00927A003200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY SOVIET ECONOMIC PROGRAM Khrushchev, speaking at Al- ma Ata on 24 June, promised So- viet consumers they could expect major material improvements as a result of the long-range ec g- nomic plan in the party program to be published on 30 July and presented to the 22nd party congress in October. His state- ment that "the light and food industries wily. develop rapidly side by side W th heavy indus- try" was the first suggestion to the Soviet public of the change implied by his informal remarks to Western newsmen at the Brit- ish Trade Fair in Moscow on 20 May; he did not, however, re- peat the specific promise that the rates of growth for light and heavy industry would be virtually equalized. Any change in favor of the Soviet consumer is significant because it reflects an adjust- ment of the long-standing pri- ority of heavy industry. It is probable, however, that Soviet planners foresee only a modest change in the relationship be- tween light and heavy industry. Since the light industrial base is small, it could be substan- tially expanded without signifi- cant diversion of reserves away from heavy industry. The regime announced early this year that the rate of over- fulfillment of some industrial goals would be cut back in or- der to achieve a better balance in the economy and provide addi- tional support to lagging agri- cultural production. The con- tinuing failure to achieve planned agricultural goals, to- gether with some of Khrushchev's earlier remarks on the subject, suggests that the reduction in the disparity between the growth rate for heavy industry and consumer goods may be made for the most part by a transfer of resources to agriculture. Elsewhere in his speech, Khrushchev predicted popular enthusiasm for long-range eco- nomic goals, which presumably will be presented in the form of a 20-year plan in the party program. The program will be portrayed as the instrument for the defeat of capitalism by peaceful means and the blue- print for the final stage of the "building of communism" in the USSR. Khrushchev's words to the Kazakhs, who were commemorating the 40th anniversary of their republic, were less reassuring. This problem republic, where rapid industrial and agricul- tural development has been ac- companied by serious housing and consumer-goods shortages, major agricultural problems, several political shake-ups, and at least one major strike, was chided for "completely un- satisfactory" work thus far this year on housing and construc- tion plans. Khrushchev hinted, however, that funds for housing construction--at least in 25X1 Kazakhstan--may be increased if presently allocated funds are properly spent. SECRET 29 June 61 WEEKLY REVIEW Page 9 of 18. Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY EAST GERMAN FOOD SHORTAGE In early June the East Ger- man Government was forced to institute limited rationing of butter; meat supplies have also declined. These difficulties stem in part from the effort to complete agricultural collec- tivization in 1960, from Chi- nese failure to meet contracts for delivery of oil seed crops for production of margarine, and from abnormally wet spring weather. The East German diet has always been basically similar to that of West Germany, though less diversified. The quality of East German foodstuffs is in- ferior, however, and during the past ten years the East German consumer has frequently faced temporary shortages. This chronic problem now appears as a shortage of dairy products and, to a lesser extent, of meat, but in other years potatoes, vegetables, and grain have been scarce. Currently, total food supplies--measured by caloric content--are at about the same level as during the same period of 1960--perhaps slightly higher. Shortages will continue for some time. Since milk pro- duction should be at its highest level in June, the normal sea- sonal decline of milk production during the summer may intensify the problem. Similarly, supplies of meat usually reach a high level in June and July, then de- cline until the fall slaughter in October. Acting Premier Willi Stoph, in a speech at Markkleeberg on 14 June, admitted that diffi- SECRET culties exist in the supply of milk, butter, and meat. He blamed this on the failure of local governments to assure con- tinuous supplies through proper purchasing programs and on the failure of collective farmers to meet planned state quotas. East German press reports have attributed a lag in spring field work and a high rate of spoil- age of early fodder crops to the unusually heavy rainfall during May and early June. East Germany is always de- pendent on imports of food, which usually amount to about 30 per- cent (by value) of total imports. Currently, however, the bloc has little food to spare for the relatively well-fed East Germans, and the regime must use hard currency if it is to satisfy its consumers. Communist China's recent cancellation of deliveries of oil seed to East Germany has compounded the import problem, and a continuation of recent sup- plementary purchases, such as the unplanned importation of butter from Denmark in the first quarter of 1961, will cut into the foreign exchange available for import programs which are more in line with the regime's industrial objectives. While it is highly unlikely the regime will attempt to re- enlist the support of the farmers to the extent of modifying its collectivization program, other measures to increase output-- such as changes in the pricing system--are possible. To avoid greater discontent, the regime could make additional outlays of hard currency for imports of quality foods. 29 June 61 WEEKLY-REVIEW Page 10 of 18 25X1 25X1 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY Party First Secretary Novotny announced a consider- able reshuffle of Czechoslova- kia's party and government leaders at a central committee meeting on 22 June; the moves were almost wholly designed to improve control of agricultural production. He severely crit- icized the performance of local government functionaries in carrying out agricultural poli- cies, and announced that a com- mission for the direction of local government will be es- tablished under the supervision of a deputy premier. Increasing parochialism among local officials and their desire not to alienate the farmers have complicated Prague's ambitious plans, de- spite the transfer of thousands of central party and government bureaucrats to rural areas during the territorial reorgan- ization last year. Novotny wants to "eliminate the differ- ences between rural and urban areas by 1970," in part by making the rural population dependent on state-dispensed wages for their incomes. Apparently a major role will be played by the new com- mission, and a number of local government officials may be replaced when it becomes active. It may be headed by Rudolf Barak, who was relieved of his position as interior minister and has not yet been reassigned. Barak retains politburo member- ship and his post of deputy premier. Novotny named a member of the party secretariat, for- mer Agriculture Minister Lubom- ir Strougal, to head the In- terior Ministry, which has some responsibility for overseeing local compliance with party policy. The division of these responsibilities between the new commission and the Interior Min- istry has not yet been announced. The former party secretary in charge of agriculture, Vratislav Krutina, has replaced Strougal as agriculture minister. The appointments of Strougal and Krutina put the party's top agricultural experts in govern- ment posts where they can exert maximum influence. In related shifts, Novotny named Jindrich Uher, who was minister of the food industry, as internal trade minister, a post which controls retail distribution of food prod- ucts; Josef Krosnar, former min- ister of state control, has re- placed Uher in the Food Ministry. Changes in the party lead- ership, most of them apparently necessitated by the government shuffle, included the transfer of two members out of the party secretariat to concentrate on their governmental posts, and the promotion of three high- ranking party leaders to still higher party posts. Other un- specified personnel actions were approved by the central committee; this may signify purges among secondary-level government and party officials. Agriculture is the weakest sector of the economy; production has barely surpassed the pre - World War II level. The regime hopes to increase output 23 per- cent during the Third Five-Year Plan (1961-5) through the amal- gamation of collectives, in- creased investments, better management, and a pressure cam- paign to complete the five-year quota in four years. The chances of achieving these goals are slim. SECRET Page 11 of 18 25X1 25X1 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY GROWING POLICE POWER IN POLAND The Polish regime's ef- forts to increase its controls over political, economic, and cultural affairs have been ac- companied by the development of enhanced police prestige and authority. Since late 1959 a growing number of "Stalinists" --who were key members of the former Bierut regime--have re- turned to positions of promi- nence and power within the party and government; they apparently have accelerated the trend to- ward administrative rather than established legal procedures of control. Many Poles have reported widespread concern among knowl- edgeable Polish citizens and have dated the manifestations of new police power from April 1960, when Brig. Gen. Kazimierz "Gaspipe" Witaszewski took over the administrative department of the party central committee --a position allowing him to influence the staffing of police and intelligence organs. A re- cent shake-up in the office of the prosecutors-general has been ascribed to Witaszewski, who is said to have installed his hard-line proteges in all top posts. Much of the growth in police activity has been related to the regime's strenuous effort to `improve controls over the economy. The effectiveness of this campaign has been striking- ly illustrated by figures re- leased in Warsaw on 24 June which showed that 1,945 civil servants were sentenced for corruption in 1960--as compared with only 91 in 1959. The death penalty for economic offenses was introduced in late 1960. Since then, several secret sum- mary trials, from which there is no appeal, have imposed severe punishments--although the one death sentence was later rescinded. Westerners in Poland have observed several instances of police strong-arm methods, in- cluding the recent beating of loiterers in Warsaw and the harshly conducted arrests of many unruly spectators at a hotly disputed Polish-Soviet soccer game. Those arrested subsequently were sentenced to three months in jail. A prominent Communist in- tellectual recently told US Embassy personnel that he was discouraged by the "re-emergence of repression" in Poland. He said that methods based on force were used and approved by party officials who believed them to be the only effective means of control. He hinted that there were differences of opinion at the highest party levels on the efficacy of such measures, but he added--somewhat cryptically -that there was little hope for a change until next year. Security considerations have been receiving progressive- ly greater weight in Polish handling of contacts with for- eigners. Many Polish citizens who have contacted foreign dip- lomats recently have been in- terrogated, warned about future contacts, or urged to report concerning these relations; of- ficial action of this kind was infrequent in the past. More- over, it is becoming ihcreasing- ly difficult for Poles to get passports. There have been several reports of interrogation of tourists by militia or secret police; priests and former Polish citizens have been among those most frequently questioned. Administrative regulations gov- erning foreigners in Poland have been purposely made con- fusing in order to provide the Interior Ministry with a pre- text for expulsion. SECRET 29 June 61 WEEKLY REVIEW Page 12 of 18 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927A003200100001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY Polish practices still do not approach in severity in- ternal security measures of other European satellites. There is no indication that a return to the open police bru- talities of the Stalinist era is contemplated. Nevertheless, it is apparent that Polish police activities at all levels have become more efficient, more per- vasive, and more restrictive than at any time since 1956. The struggle between the group of younger officers sup- porting Maj. Gen, Pak Chong-hui and senior officers led by Lt. Gen. Chang To-yong, nominal head of the Supreme Council for National Reconstruction (SCNR), appears to be intensifying. The inner circle of the junta led by Pak has not yet consoli- dated its control over the military Pak appears to be moving toward ever-increasing police state controls to assure his position. Security-boss Lt. Col. Kim Chong-pil has ordered the armed forces purged of all personnel involved in antirevo- lutionary or anti-Pak activities. Kim Chong-pil and Pak have been close associates since the inception of the 16 May coup. On 14 June, Kim was named director of the newly organized South Korean central intelli- gence agency, which has responsi- bility for coordinating the collection of information, in- cluding military, and investi- gation of all matters at home and abroad related to national security and criminal activity. Recently promulgated ex post facto laws are so broadly drawn that almost any person regarded as a threat to the junta could be accused of some act making him liable to the death penalty or a long prison term. Retired Lt. Gen. Song Yo-chan, newly appointed de- fense minister, has observed that the situation within the Supreme Council and nation can be stabilized only by the emergence of an unchallenged leader. Meanwhile, public refer- ences by the regime to its initial pledge to return the government to civilian control are becoming more vague. The appointment of the first two civilian cabinet ministers on 22 May--to head the Ministry of Finance and the Ministry of Economic Development--is not a harbinger of an early return to civilian authority, although additional civilians may be appointed to head other largely economic ministries. 25X1 The relative quiet that vicinity of the demilitarized has prevailed along the Israeli- zones. Only one death has been Syrian border for several months reported from the nine incidents was interrupted last week by a between 19 and 25 June, but the new series of incidents in the flare-ups could presage further SECRET 29 June 61 WEEKLY REVIEW Page 13 of 18 Approved For Release 2007/10/23: CIA-RDP79-00927A003200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY ISRAELI -SYRIAN BORDER AREA Canal or conduit, proposed or under construction \\\\\ Demilitarized Zone UAR EGYPT Tel Aviv - Jaffa ~ I `. GAZA 25X1 sro p NEGEV DESERT and more serious trouble along the border. Sporadic firing has continued. Israel has informed the UN Security Council of its concern over recent Syrian actions. The UN chairman of the Israeli-Syrian Mixed Armistice Commission be- lieves personnel in Syrian bor- der posts now are taking a tough- er line toward Israeli activities in and near the demilitarized zones. Israel's attitude toward the border situation may well be conditioned by the election campaign now under way in Israel. Ben-Gurion probably could en- hance his Mapai party's election prospects by ordering vigorous retaliation against Syrian "attacks." Israeli road construction immediately adjacent to the northernmost demilitarized zone apparently precipitated the ex- changes of fire on 19 and 20 June. Four of the recent in- cidents occurred in that vicin- ity and five were in the vicin- ity of the central zone north of Lake Tiberias. In one of the latter inci- dents, an Israeli watchman was killed and another was wounded at a work camp near the pumping station the Israelis are build-' ing as part of their Jordan River diversion project. The project, which has aroused the hostility of all Arab states, has stimulated new efforts on the part of the Arabs to co- ordinate their military plans and operations. Earlier this month the Arab League's Defense Council, consisting of the foreign and defense ministers of mem- ber states, met in Cairo to consider a UAR proposal for a joint command. The establish- ment of such a command was one of the features of the 1950 Arab collective security agreement; it has not been realized because of inter- Arab differences which have frustrated most attempts to achieve effective Arab unity. Reports since the recent Cairo meeting indicate that agreement on the principle of forming a joint command was reconfirmed. Unanimity will be much more difficult to achieve on actual arrangements to make the joint command structure an effective mechanism. 25X1 SECRET WEEKLY REVIEW Page 14 of 18 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927A003200100001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY Current NATO discussions of long-term strategic planning point up the divergence between Britain's growing concern with defense costs and the German and Turkish emphasis on mili- tary problems. There is general endorsement of a build-up of conventional, forces, but agree- ment has not been reached on the role of nuclear weapons. Efforts to secure agreement be- fore the annual NATO ministerial meeting in.December appear like- ly to focus more attention on methods of sharing defense costs. British representatives to the North Atlantic Council (NAC) contend that in view of the al- liance's limited resources, the council should make the essen- tially political judgment of what kind of Soviet attack is most likely and then instruct the military authorities to plan accordingly. The British stated on 23 June that an attack in- volving from three to five So- viet or satellite divisions seemed most probable. For any Soviet attack that conventional .forces cannot contain, London wants NATO first to use only tactical nuclear weapons and to resort to strategic weapons --expected to signal general war--only if these prove inade- quate. Britain's economic diffi- culties govern its interest in limited nuclear war. With the conscription call-up ended, Lon- don is not prepared to supply the men for larger conventional forces. Chancellor of the Ex- chequer Selwyn Lloyd warned on 22 June that Britain must re- duce overseas military expendi- tures. NATO Secretary General Stikker believes that London's position stems largely from its desire to get the Germans to offset the drain on Britain's balance of payments incurred in maintaining British forces in Germany. Many of the allies are un- easy at the concept of limited war. West Germany and Turkey, as the most geographically ex- posed, are pressing their long- standing campaign for a forward strategy based primarily on mil- itary rather than economic con- siderations. Bonn's representa- tive told the NAC on 23 June that NATO's deterrent, to be credible, must be ready for any- thing, since the attacker can decide priorities. His specific points dealt largely with strength- eningthe nuclear aspects of NATO's program. The Turkish representative agreed with the Germans that NATO must be ready for the worst possible Soviet attack and must base strategy on such facts as geography and Soviet military dispositions rather than on ques- tionable estimates of Soviet in- tentions. He urged obtaining NATO military commanders' ideas on these matters, but he cautioned that the results might show that allies. Turkey needed more aid from its ARGENTINA President Frondizi and his Intransigent Radical party (UCRI) are taking steps to ob- tain Peronista support in the March 1962.elections, in which half of the Chamber of Deputies will be renewed and provincial officials elected. These elec- tions will vitally affect Fron- 29 June 61 dizi's ability to continue his economic stabilization program and will influence the presi- dential contest in 1964. His need for additional electoral support is underlined by the unpopularity of economic meas- ures, like his recent railroad reform program which will cut SECRET WEEKLY REVIEW Page 15 of 18 Approved For Release 2007/10/23: CIA-RDP79-00927A003200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY some 75,000 workers from the payroll. Peron's orders to his fol- lowers to support the UCRI in 1958 helped give-Prondizi his landslide victory. Not all of Peron's instructions have been obeyed by his followers in the past, but his endorsement of a qualified candidate could be decisive, as it was in 1958. An official UCRI communi- que on 21 June appeared intended to attract Peronistas as well as others. The nonutunique be- latedly endorsed Prondigi's 1959 suggestion that political parties broaden their organiza- tions "to permit the election of men from all sectors who want to collaborate in the development program of the government." Influencing the UCRI bid may be the Peronistas' policy de- cision on 5 May to drop their blank-vote tactic and bargain with other parties. Their sup- port in the elections in a small town on 4 June brought victory to a pro-Communist and pro-Castro faction of the Socialist party. Since the Socialist party won the February elections in the federal capital with strong although un- official Peronista support, both Peronista and anti-Peronista leaders have voiced concern about the growth of pro-Castro sentiment among the split Peron- istas and about Communist infil- tration of the several neo-Peron- ista parties. 25X1 Violence broke out again this month in the predominantly German-speaking South Tirol province of Italy, with damage estimated at over $4,000,000 to power lines and other installa- tions. Talks between the Ital- ian and Austrian foreign minis- ters over the I'irolese demand for greater autonomy broke down on 24 June, and a new Austrian appeal to the UN is in prospect. 29 June 61 In the five-day conference between Italian and Austrian experts which preceded the for- eign ministers' talks, it was evident that the Austrians con- sidered Italian offers ''of great- er administrative autonomy un- acceptable without greater leg- islative autonomy.;- According to the Austrian press, radical elements apparent- ly made gains at the SECRET WEEKLY REVIEW Page 16 of 18 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY Approximate area of German speaking population in northern Italy (South Tirol) Region boundary Province boundary recent conference of the South Tirol Peoplets party. Some Italian officials be- lieve that Austrian officials have been encouraging the ex- tremists and even participating in the planning and implementa- tion of their activities; how- ever, it seems more likely that the disturbances have been instigated by Austrian terror- ist societies and pan-Germanic groups. The Austrian press has generally condemned the recent violence as inimical to the best interests of the South Tirol. The Italians have long fa- vored bringing the South Tirol issue before the International Court of Justice (ICJ), while Austria has pressed for UN ac- tion. Last year Vienna brought the matter to the General As- sembly, which recommended bi- lateral negotiations. The head of the Austrian delegation to the preparatory conference of experts told the US Embassy in Vienna on 27 June that the outlook for a solution seemed "hopeless." He said his government was under"almost irresistible" pressure from the extremists and would have no choice but recourse to the UN if the Italians insisted on resort to the ICJ. Tension remains high in the South Tirol, and further unrest is likely. Italian rightists, who have long dis- trusted Premier Fanfani for his views on various domestic issues, might try to use such outbreaks as a means of overthrowin his minority government. The agricultural disturb- ances which spread rapidly in mid-June from Brittany through central and southern France are, like the labor agitation last spring, aspects of the underlying social unrest hitherto held in check by De Gaullets prestige and his pleas for national unity. The dis- content led to outbreaks partly because, under the Fifth Republic, SECRET WEEKLY REVIEW Page 17 of 18 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927A003200100001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY parliament and the political parties are no longer adequate channels for airing popular grievances. Parliament's frustration over its inability to influence government policy led it to defeat the government on two minor issues on 27 June. While touched off by a drop in certain commodity prices, the unrest appears to be based on economic difficulties of a structural nature. Agricultural production is still far from modernized, and farm income has been kept low by an antiquated marketing system, competition from farmers outside ;Frances , and a policy of relatively low agricultural price supports. Especially in Brittany, farm association leaders feel that farmers have not had an equita4 ble share of France's economic growth under De Gaulle. The government's remedial program has hitherto centered on marketing reforms and other long-range improvements. A meeting between government and farm leaders planned for 29 June may result in some limited government concessions, but there is no indication that the government will meet farmer de- mands for broader relief now. T'ze farm agitation is likely, SECRET however, to stiffen French demands that the Agricultural provisions of the European Economic Community treaty be put into effect in order to facilitate the movement of surplus French production to the other members of the EEC. At least in the initial in- stances, the roadblocks and protest meetings were directed by younger farm elements, and officials of the traditional agricultural organizations were hesitant about backing the agitation. Attempts by both Communists and extreme rightists--including some associated with the Organiza- tion of the Secret Army in Algeria--to exploit the move- ment seem to have been unsuccess- ful. The government, however, has not ruled out the 25X1 hypothesis that the demonstra- tions are part of a plan to weaken De Gaulle's political position and tie down security forces in areas remote from Paris. Security forces in France Are considered barely adequate for normal coverage, and government spokesmen have in the past voiced alarm when police units have been tempo- rarily transferred to Algeria. Page 18 of 18 Approved For Release 2007/10/23: CIA-RDP79-00927A003200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY SPECIAL ARTICLES COMMUNIST BLOC AGRICULTURAL PROBLEMS Recent farm problems in the Communist bloc have pointed up the sharp disparity between the agricultural situation in the United States and that in the Communist countries. With an agricultural labor force about one seventh the size of that in the Soviet Union, the United States produces one- third more'. During the last decade US agricultural output increased 25 percent and pro- duction per person employed in agriculture rose two thirds; Soviet agricultural output, stagnant under Stalin, increased 50 percent between 1953 and 1958 under the stimulus of Khru- shchev's programs and good weather but has not grown since. Severe agricultural problems in Communist China have led to widespread malnutrition and the use of scarce foreign exchange for unprecedented imports of farm commodities from the West. In a speech to the party central committee plenum held last January to discuss agri- cultural problems, Khrushchev described agriculture as "out of step" with industry and the demands of the consumer and called for organizational changes, an increase in agri- cultural investment, and the introduction of new material incentives for improving the quality and quantity of farm production. An extensive shake- up of Soviet officials at all levels has since occurred, and charges of corruption, ineffi- ciency, and falsification of agricultural reports have been leveled. Among major organizational changes now being implemented, the Ministry of Agriculture, heretofore in charge of the entire agricultural operation, has been restricted to the much smaller responsibility of con- trolling practical agricultural research work and disseminating the results of such work. An elaborate new national organ- ization--an "all-union associa- tion"--has been created to sup- ply farms with equipment, spare parts, fertilizers, and other production needs; to coordinate production plans for these items with the State Planning Commis- sion (Gosplan), the factories, and the farms; and to control the repair and testing of farm equipment. A State Committee for Pro- curements was also established to control collection of agri- cultural products through a system of contracts with col- lective and state farms. It also was given the duty of checking on individual farm performance and informing re- sponsible officials of short- comings. These are only the latest in a series of major innovations in Soviet agricul- ture introduced by Khrushchev in an attempt to raise output and labor productivity. Stalin, who gave over- whelming priority to industrial expansion, depended mainly on compulsion for the direction of agriculture, whereas Khru- shchev has relied more on in- centives and increased invest- ment. Prices paid by the state for agricultural products have several times been raised and farm taxes have been reduced; attempts have been made to es- tablish a real link between individual income and produc- tion; and collective farms have SECRET 29 June 61 SPECIAL ARTICLES Page 1 of 10 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY COMPARATIVE AGRICULTURAL STATISTICS ( PRELIMINARY DATA ON 1960 OUTPUT ) Grain Meat Milk Cotton (million (million (1,000 (1,000 metric tons) metric tons) metric tons) metric tons) UNITED STATES 193 12.2 57,152 3,115.5 SOVIET UNION 100 5.9 54,100 1,470.0 COMMUNIST CHINA 155 5.2 neglig;ble 1,800.0 EUROPEAN SATELLITES 43 3.2 26,700 28 been allowed to buy their own machinery--previously owned and operated by the Machine Tractor Stations. In addition, during 1954-56, nearly 90,000,000 acres of idle land (primarily in northern Kazakh SSR, west- ern Siberia, and the Volga-Ural grain region) were brought into cultivation. To support a planned expansion of the live- stock industry, a program for a large increase in the area planted to corn was inaugurated in 1955. As a result of these and other changes, there has been --except during the past two years--a gradual improvement in the Soviet diet, which in terms of calories and general health requirements is now probably adequate. It is still, however, a predominantly "bread and potatoes" diet, with lim- ited quantities of such "qual- ity" foods as meat and vegetable oils. The failure to improve the diet in 1959 and 1960 prob- ably is a source of great cha- grin to Khrushchev, who only a few years ago promised that the Soviet Union would soon surpass the US in per capita production of meat and milk, In Kazakhstan last week Khrushchev promised the Soviet people the highest standard of living in the world as an ob- jective of the lone-range eco- nomic plans to be presented at the 22nd party congress in Oc- tober; however, he did not use this-opportunity-to repeat his boast about overtaking the United States in meat and milk output. Communist China One of China's primary problems'for many years has been to feed a rapidly expanding population--now estimated at 700,000,000, increasing at a rate of 2 to 2.5 percent per year. Even under normal con- ditions the average Chinese diet is marginal, not only in quality but frequently even in quantity. In a year of low food production, when certain areas are particularly hard hit by natural calamities, sharp regional differences in diet result from the inability of the transportation network to distribute food supplies evenly. Peiping's program for eco- nomic development has been based on the belief that China could be industrialized rapidly, despite technological backward- ness and the unfavorable ratio of population to arable land. Modernization of agriculture was to await industrial devel- opment--i.e., until industry could provide both the re- sources for further industrial growth and for increased in- vestment in agriculture. Such a program involved a deliberate gamble that the thin margin be- tween food production and the minimum needs of the population could be maintained. In 1958 Peiping inaugurated a series of "leap forward" pol- icies to strengthen agriculture and industry. Peasants, organ- ized into communes, were driven SECRET 29 June 61 SPECIAL ARTICLES Page 2 of 10 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY to carry out a series of inno- vations called Mao?s "eight- point charter," Extraordinary efforts were made to build ir- rigation projects and to im- prove the soil, but results were minimal; the new meas- ures were hastily and un- scientifically applied, ig- nored practical experience, and could not be quickly assimilated under varying lo- cal conditions, Inflated agricultural production fig- ures were announced as part of the "leap forward" fanfare, but an official reassessment in the fall of 1959 sharply reduced some of the earlier fantastic claims for 1958. There have been persist- ent food shortages in Commu- nist China since 1959. Grain output in 1960 was probably near the 1957 level, when there were 50,000,000 fewer people to feed. As a result, rations were cut to a slow- starvation level over large areas, and rations of such foods as meat, vegetables, and cooking oil were severely lim- ited throughout the country; although now apparently brought under control, malnutrition and related health problems were widespread for a time. Perhaps the best indicator of the severity of the shortage was Peiping's decision to pur- chase from the West 5,000,000 tons of grain for delivery in 1961, Elsewhere in the Bloc In the satellite countries, agriculture continues to give the economic planners the most trouble. In Eastern Europe, long-term planned rates of growth for industry have been achieved or exceeded, but no major plan for agricultural output has ever been fulfilled. The 1955-59 average gross value of agricultural production was still below the prewar average in East Germany, Czechoslovakia, and Poland--compared with an average increase of 27 percent for Western Europe. In the Far Eastern satellites, agri- culture remains a serious prob- lem; food shortages were re- cently reported in North Viet- nam. Reasons for Farm Problems The typical Soviet re- sponse to agricultural trou- bles has been to blame organ- izations and officials; the Chinese prefer to blame the weather. There is some valid- ity to these assessments, but they do not tell the whole story. Priorities: The leaders of all the bloc countries, have deliberately given agriculture a low priority in relation to the sector of the economy most directly related to over-all economic growth and national power--e.g., heavy industry. Among the major results of this policy are inadequate mecha-- nization of agriculture and the shortage of fertilizer. The Soviets have almost completely mechanized the major field operations of plow- ing, seeding, and grain harvest- ing, but they have only one third as much tractor horse- power per plowed acre as do US farmers, and only one half as much grain-combine capacity per acre of small grain. Many impor- tant farm operations, such as the cleaning of grain and the handling of livestock, are still performed in a relatively prim- itive fashion. Because of the shortage of machinery--and the lack of spare parts and repair facilities--the Soviets are frequently unable to get their plowing and harvesting done on time, and thus sometimes suffer excessive crop losses. The Soviets plan to triple production of mineral ferti lizer during the current Seven- SECRET 29 June 61 SPECIAL ARTICLES Page 3 of 10 - Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY Year Plan, but they are un- likely to accomplish their goal. While his income has been raised substantially by Khru- shchev?s programs, the Soviet farmer remains low man on the totem pole, with only very lim- ited economic rewards as an incentive. As a consequence, and despite the fact that the Soviets are training large num- bers of agricultural special- ists; the farm labor force is heavily weighted with the least economically productive--the old, the very young, and the least educated, Chinese agriculture has scarcely been affected by mod- ern machinery; only 5 to 6 per- cent of the land is cultivated by mechanical means. The min- imal investment made in farm implements has been mainly in hand tools o The Chinese have announced varying plans for in- creasing mineral fertilizer production, but there is no possibility that their needs can be met by domestic production for many years to come, Natural Causes: Both the USSR and Communist China suffer from severe natural restric- tions in their attempts to in- crease agricultural output. Although only about 10 percent of the land in the USSR is cul- tivated (as compared with 20 percent in the United States, there are no readily available large areas of uncultivated land suitable for production. Much of the land newly plowed in recent years is of such marginal productivity that it would not be cultivated at all in the United States. The growing season is short over most of the USSR; moreover, those areas with the most fa- vorable growing temperatures are generally those with the least adequate precipitation. The limitations of topog- raphy and climate on Chinese agriculture are revealed by the fact that, despite the pressure of population over centuries, the cultivated area--concentrated in the eastern third of the coun- try--still comprises only about 11 percent of the land area. There is little potential for any rapid increase in this fig- ure. The cultivated area in the US exceeds that in China by about 75 percent; on a per capita basis the US figure is over six times that for China. As a re- sult of the intensive use of land through multiple cropping, however, the sown area some- what exceeds that in the United States. Doctrine: Communist agri- culture suers seriously from the ideological biases of its directors. A prejudice for gigantism has made the Soviet farms and the Chinese communes too large to be efficient eco- nomic units; a prejudice against the use of prices for the de- tailed guidance of farm man- agers makes it extremely dif- ficult to give appropriate instructions and incentives; and an apparent failure to un- derstand the nature of agricul- ture as a biological industry, with inherent uncontrollable elements, has led to premature attempts to establish factory- type methods and organizations. A basic distrust of in- dividual initiative and enter- prise has made it impossible to decentralize decision making effectively. A totalitarian party authority has repeatedly sought to impose on agricul- ture a variety of ill-consid- ered and untested panaceas. Collectivization: The de- gree to which collectivization per se has affected agricul- tural production is difficult to assess for the bloc as a whole. In the Soviet Union, col- lectivization--essentially com- pleted before World War II--was SECRET 29 June 61 SPECIAL ARTICLES Page 4 of 10 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY introduced forcibly at a ter- rible cost of lives and result- ed in a major setback to pro- duction. Even today, however, there remains a noncollectiv- ized sector--small private plots and livestock maintained by in- dividual peasant families on both the collective and state farms. In the aggregate, this subsidiary agriculture provides an important share of the food for the Soviet consumer, and Khrushchev's attitude toward it has been to exercise moderate but persistent pressure toward its eventual abolition. Collectivization took sev- eral forms in Communist China. The most notable was the much- publicized commune system in- troduced in 1958. This form of organization has not proved a success, either in organizing production or in forwarding communal living, and has disin- tegrated to the point where the commune is hardly more than a federation of collective farms. Rapid progress in collec- tivization in Eastern Europe has been accompanied by disorganiza- tion of production and passive resistance by the peasants. Poland, the one satellite which has not pushed collectivization, has shown the largest rise in agricultural production in re- cent years. Yugoslavia offers an in- teresting case study in agricul- tural collectivization. Since abandoning this form of agricul- tural organization in 1953 and subsequently adopting more liberal policies favoring agri- culture, Belgrade has in- creased gross agricultural out- put by a faster rate than any of the European satellites. Statistical Falsification: Statistical malpractices by of- ficials at practically all ad- ministrative levels throughout the Communist bloc present prob- lems to the economic planners; to the extent that falsifications cannot be accounted for and ad- justments made, the operation of the economy suffers. In the USSR, unusual dis- tortions in agricultural data apparently had been on the in- crease in recent years and had reached the point where the re- gime felt impelled to take mas- sive action. In January, Khru- shchev soundly condemned falsi- fication with the statement that one cannot "eat statistics. Since then, numerous "cases" of falsification have been exposed in the press, and on 24 May the Kremlin decreed that padding of production reports would be punishable by imprisonment of up to three years. The exaggeration of agri- cultural statistics has also been a serious problem in China. It is not clear, however, to what extent exaggerations are the result of manipulations by cen- tral authorities or, as apparently is the case in the USSR, the result of efforts by local of- ficials to cover up poor per- formances. The various bloc regimes apparently are now facing up to the fact that agriculture should be accorded a higher priority with increased rates of invest- ment. More realism is discernible in other areas as well: the Chi- nese have backed off somewhat from the excesses of their commune experiment, and the Soviets have at least given lip service to the need for permitting agricul- tural experts to make technolog- ical decisions, free from politi- cal interference. In the long run, in spite of natural limitations, the ra- tional application of scientific methods offers the Communist coun- tries the possibility of an ef- ficient and productive agriculture. In the next few years they should be able to increase agricultural output faster than population growth and thus to raise living standards or export agricultural products. Even with advanced technology, however, agriculture will remain essentially different from most industrial activities, and to be efficient will require a large degree of decentralized decision making. It is not clear whether the Communists have suf- ficient flexibility to operate such a system effectively. SECRET 29 June 61 SPECIAL ARTICLES Page 5 of 10 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY POLITICAL IMPLICATIONS OF A BRITISH ACCESSION TO COMMON MARKET Far-reaching consequences are implicit in Britain's moves toward membership in the Euro- pean Common Market (EEC). While there is still skepticism re- garding London's bona fides toward the European movement, responsible British officials have said that EEC affiliation would mean wholehearted British participation in Europe's eco- nomic and political unification. Should this prove to be true, fresh impetus would be given a process already making notable strides; major readjustments in the pattern of intra-European and Atlantic relationships would almost certainly follow; and a new component might even- tually be added to the balance of world power. Institutional Changes Even without major changes in the Common Market treaty, Britain's accession would imply substantial modification of the political basis of the EEC. In part this would be a matter of adapting institutions, the most important of which are the Par- liamentary Assembly, the Com- mission, and the Council of Ministers. In the assembly, Britain could not hope to obtain more than parity of representation with France, West Germany, and Italy. This would appear to involve no insoluble problems, however, nor would Britain's participation in the Commission --the EEC's independent admin- istrative and executive body. At present, no more than two of the nine commissioners may be nationals of the same state, however, and their appointment-- by agreement among the member countries--would become a more delicate process than before. difficult problem would be ad- justment of the voting rules. Many council decisions require unanimity, but the treaty pro- vides for gradual curtailment of veto rights as the community develops. In the present six- member council, four votes con- stitute a majority in some in- stances, but provision is also made for "prescribed majorities" in which the national votes are weighted. Such procedures would be difficult to change-- even in the case of a simple majority, it will make material difference to the community's future whether four votes con- tinue to constitute a majority in a council enlarged to seven members, or whether the re- quired number is increased to five. Institutional Operations These seeming technical- ities gain additional signif- icance because of the institu- tional issues which have long troubled the EEC. Although the Common Market was federalist inspired, true supranationalism was realized only to a comparatively limited degree--and that not so much in the powers of the independent executive or the assembly as in the application of the majority principle to the council, where decisions are ultimately made. As a practical matter, the EEC's hybrid institutions have func- tioned comparatively well, al- though their defects have be- come increasingly apparent in recent months. Nevertheless, ef- forts of the federalists over the past three years to strength- en the Commission and make the assembly a true parliament have been regularly contravened by the nationalists, led by France. Like the founding members, Britain would be represented by a cabinet-level minister on the EEC Council, and here the most It is by no means certain on which side of this issue Britain's weight would ulti- mately fall. London has regularly SECRET 29 June 61 SPECIAL ARTICLES Page 6 of 10 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 CURRENT INTELLIGENCE WEEKLY SUMMARY GENERAL PURPOSE EUROPEAN PARIAMENTARY PARLIAMENTARY ASSEMBLY CONTROL 142 members chosen by national parliaments of 6 member coun- tries. EEC COUNCIL CSC COUNCIL OF MINISTERS OF MINISTERS EURATOM COUNCIL OF MINISTERS One cabinet-level representa- POLICY tive of each state, usually FORMATION, foreign or economic ministers. COORDINATION, & EXECUTION 5-9 members appointed by agree- ment among member states or co-opted. SECRET Reviews and debates annual re- ports of the three communities. May compel executive commissions and CSC High Authority to re- sign. Formulate general community pol- icies and harmonize related na- tional policies. Majority principle tends to re- place unanimity as treaties are implemented. Generally supervise application of the three treaties. Recommend community policies-- in some cases councils must be unanimous to overrule. 7 judges and 2 advocates ap- JUDICIAL pointed by agreement among the CONTROL member states. Interprets and reviews legal ap- plication of the three community treaties. ORGANIZATIONAL CHANGES UNDER CONSIDERATION 1. Pending draft convention would increase membership to 426, two-thirds to be elected by universal popular suffrage. 2. New assembly would retain present powers of review and debate, but early acquisition of legislative authority seems unlikely. 1. De Gaulle's confederation plan calls for periodic meet- ings of heads of state and their principal ministers, organized by permanent secre- tariat. 2. Ostensibly designed to coordinate and concert foreign and domestic policies of the member states. 1. Three executives would be fused into single, enlarged commission. 2. Enlarged commission would probably retain existing pow- ers of its predecessors. 3. Federalists wish to ex- tend those powers--subject to Assembly review--but fear new confederation agencies would gradually assume direction of community affairs. cited the Common Market's supra- nationalism as an obstacle to British entry, and it has been generally assumed that London shares De Gaulle's distaste for the bureaucracy at Brussels. Lately, however, Foreign Office officials have said that Britain is prepared to accept not only the EEC institutions as they stand, but also the fact that they make decisions normally re- served to sovereign states. Such statements may re- flect no more than belated appreciation that the EEC is perhaps less supranational than Britain had initially supposed, but they may also reflect a realization that the Commission and aasembly play an important role, albeit a subordinate one. That role would likely increase in importance as Britain's ac- cession added to the diversity of the community and to the complexity of the issues it confronts. Thus London might quickly feel the need to contrib- ute its "political genius" to devising institutions capable of mediating national inter- ests while fostering a commu- nity point of view. Balance of Power The uncertainty surround- ing such issues is due in part to the unpredictable impact the addition of another large power to the EEC would have on the present pattern of intra-Euro- pean relationships. The continued cohesion of the six nations which founded the Coal-Steel Community in 1952 has reflected their common traditions and ob- jectives--some of which Britain does not share. Many observers believe, however, that the com- munity would have collapsed by now but for: the French-German entente; the tacit if reluctant acceptance of French leadership; and De Gaulle's conversion to the community--not per se, but as a vehicle for the advancing French hegemony in Europe. There is no way of telling how these political "facts" would adjust to Britain's par- ticipationr.but they would al- most certainly be changed. On many specific issues of commer- cial and military policy Bonn and London are close together, and Vice Chancellor Erhard has constantly favored a broader SECRET 29 June 61 SPECIAL ARTICLES Page 7 of 10 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 SECRET CURRENT INTELLIGENCE WEEKLY ' AY European framework to include Britain. Conceivably, this could provide the basis for an Anglo-German amity tending to isolate the French. De Gaulle for obvious reasons has made no secret of his distaste for Britain's over- tures to the EEC. As the only other European capital retain- ing world-wide interests and re- sponsibilities, London would clearly expect to share Europe's leadership with Paris. It is possible that if De Gaulle were unable to find sufficient ex- cuse for excluding Britain al- together, Anglo-French rivalry would carry over and prove highly troublesome in an enlarged community. Some observers, however, feel that Britain's membership would correct a political im- balance which is an increasing obstacle to early achievement of the ultimate goals of the EEC. Some of the smaller coun- tries resent "Franco-German domination"; they question that French political leadership alone would continue to con- tain Germany in the post-Ade- nauer period, and they see the British as an additional meas- ure of security. The Hague, for example, has stubbornly insisted that Dutch acquiescence in the loose European confederation which De Gaulle has been advo- cating is contingent on either independent institutions or British participation. Broader European Unity Moreover, the argument has been made that an EEC accommo- dation with Britain would re- store to the European movement the harmony it has increasingly lacked since the collapse in 1958 of Britain's efforts to form a broad free trade area of 18 European countries, in- cluding the EEC. Even though there was widespread recogni- tion at the time that the free trade area was probably unwork- able and posed grave risks for the EEC, the reluctance of many in the Common Market to see the "division" of Europe pro- gressively widened has been a brake on the EEC. The divisive effect of the seven-nation European Free Trade Association (EFTA) would be ended by Britain's joining the EEC. Denmark has already said it would follow Britain into the EEC, and Norway would probably eventually do likewise. A sim- ilar solution is feasible for Portugal, the remaining NATO member of EFTA, but for economic and possibly -political reasons Lisbon's ties to the EEC-would probably have to be looser--on the model; perhaps, of the- Greek-EEC convention. Far more difficult are the problems of EFTA's neutrals-- Switzerland, Sweden, and Austria --and of Finland, which is asso- ciated with it. The Swedes, like the Swiss, think of neu- trality as "a way of life," and would be loath to abandon it for membership in an organiza- tion with the objectives of eco- nomic and political union. Looser associative ties, which seem a more feasible alterna- tive, have the major disadvan- tage of linking the economic future of those who seek them -to an organization in which their influence over policy would at best be peripheral. Such status has been compared, for example, to a "cheap seat at the theater from which one can scarcely see the stage." For Austria, as for Finland, the problem is complicated by fear of Soviet retaliation. While the neutrality provisions of its constitution state only that Austria may not join alli- ances or have foreign military bases on its soil, Vienna has interpreted this as precluding membership in any organization composed predominantly of NATO members. Moreover, Vienna has been deeply committed by Foreign Minister Kreisky to the inter- pretation that the provision of the State Treaty prohibiting union of Austria with Germany precludes Austrian accession to an organization of which West Germany is a leading member. SECRET 29 June 61 SPECIAL ARTICLES Page 8 of 10 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY Perhaps the answer to Vienna's problem lies in taking whatever action Bern and Stock- holm decide on. Switzerland in particular has a good bargaining position with the EEC, and it might be possible for Austria to follow the Swiss example as a model of neutrality. While a major reappraisal of European policies would re- sult from Britain's signature of the EEC treaty, further repercussions would also follow, extra-European in scope. Lon- don's prolonged hesitation on the brink of a "European plunge" has reflected in large part the uncertain implications for the Commonwealth. The small tariff prefer- ences granted by one Common- wealth country to another are of declining economic importance to most members, but their elim- ination would remove one of the few tangible benefits of that loose association. This in turn would accelerate present tend- encies of Commonwealth members to seek the most favorable eco- nomic, military, and political arrangements, with little re- gard for the historic ties with Britain. For this reason, the Macmillan government will seek to retain a remnant of the pref- erences through protocols to the EEC treaty. Britain's turn toward Europe, however, comes easier now than it would have a few years ago. The proliferation of new Commonwealth members, their evident disregard for British views on important in- ternational questions, the con- tinued tendency of Canada, Australia, and New Zealand to look toward the United States for military protection, and the withdrawal of South Africa this spring have all decreased the Commonwealth's importance to each member and have removed some of its emotional appeal to the British public. Parliamen- tary discussion of possible Common Market entry has often focused less on Commonwealth ties than on obligations to other Europeans--Britain's EFTA associates. The Macmillan government nevertheless has no intention of "abandoning" the Commonwealth. If Britain were to lose a frag- ment of its identity to Europe, it might stress remaining Com- monwealth ties even more to distinguish itself from its new partners. Fortunately for Britain, the economic blow would fall hardest on the old Commonwealth members--Canada, Australia, and New Zealand--whose British ties are sturdiest. The New Zealand Federation of Labor's recent warning that British association with the EEC might mean an "end to the Commonwealth" might have been taken more seriously if it had come from a new Asian or African member. New Common- wealth members have indicated more interest in aid than trade, and as long as other Common- wealth members continue to re- ceive increasing amounts of eco- nomic assistance from London, they are unlikely to discard their membership lightly. With Commonwealth preferences eliminated, ]London would be obliged increasingly to empha- size to its Commonwealth part- ners the less tangible benefits of being in that club through the variety of consultative SECRET 29 June 61 SPECIAL ARTICLES Page 9 of 10 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY institutions and practices capped by the prime ministers' meetings. However, such consultations might in turn convince the more ardent European integrationists that London is still trying to maintain a special world-widein- fluence and is unwilling to par- ticipate wholeheartedly in the drive toward European unity. The Atlantic Community London's claim to a special relationship with the United States would shrink to the ex- tent that it submerged its eco- nomic and political future in the EEC. In practice, however, no British political leader in either major party is prepared to relinquish this claim. Some British advocates of the EEC link argue that London might even improve its position with Washington by being able to speak, at least in part, for the EEC partners. British ef- forts to retain the historic special position would be cer- complicate the intricate personal relationships with Continental leaders, present and future, and would consti- tute a major factor impeding the development of a broader European unity. For NATO, perhaps the most immediate consequences of Brit- ish membership in the EEC would be an end to the Six-Seven con- troversy and the establishment of a new forum where intra- European differences could be worked out. Some of the stanch- est NATO supporters anticipate that with Britain in the EEC, more effective pressure might be brought to bear to secure De Gaulle's cooperation in NATO. Others foresee a healthier trans- Atlantic partnership if the present EEC countries and Brit- ain, by pooling their resources, are more nearly able to balance American power than at present. There is implicit in such thinking at least an element of latent "European nationalism"-- as there has been in the inte- gration movement from the begin- ning. Thus, some of those who have most ardently urged the restoration of European power through collective action have felt that. Europe could not then be "ignored by Washington" and that it could even go its own way. Such nationalist-neutral- ist-isolationist advocates ap- pear a distinct minority, how- ever, in comparison with those who see Europe and North America drawn into an even closer rela- tionship. Some of the latter group are already elaborating a con- cept of an Atlantic Community, of which NATO and the new Organ- ization for Economic Cooperation and Development are the first manifestations. Jean Monnet, who perhaps more than anyone else has influenced the course of the European movement, is publicly predicting the eventual emergence of supranational Atlan- tic institutions. Conclusions While the prospect of a more efficient utilization of free-world resources is implicit in the prospect of a "better ordering" of Western Europe, there are few illusions that this potential will be either quickly or easily realized. Well over a decade has elapsed since the first moves toward European unity, and each step has encountered major difficul- ties. London's negotiations with the EEC will be difficult. They are not certain to succeed, nor is it assured that-the British electorate would approve such a basic reorientation of Brit- ain's future. In any case, the achievement of a viable Euro- pean unity will inevitably be a process in which the revising and signing of treaties are only the formalities. The process will be diffi- cult primarily because the stakes are so large. As it exists today, the Common Market --a community of some 170,000,- 000 people--has achieved rates of economic growth currently envied in the Anglo-Saxon coun- tries, and it is increasingly a dynamic economic and political force throughout the world. There is no reason why this momentum should not at least continue in a community half again as large, nor is there any reason why a unified Europe could not rank with the USSR, Communist China, and the United States among the formidable powers of the future. SECRET 29 June 61 SPECIAL ARTICLES Page 10 of 10 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 25X1 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6 CONFIDENTIAL r CONF w T:AL Approved For Release 2007/10/23: CIA-RDP79-00927AO03200100001-6