CURRENT INTELLIGENCE WEEKLY SUMMARY

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SECRET
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
COPY NO. 70
OCI NO. 0414/62
27 April 1962
State Dept. review
completed
NAVY review
completed.
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
SECRET
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 April 1962
T H E W "E E K I N B R I E F
(Information as of 1200 EST 26 Apr)
page
SOVIET FOREIGN POLICY DEVELOPMENTS ? ? ? ? ? ? ? ? ? ? ?
Recent public pronouncements by Khrushchev and Gromyko
reviving the idea of a summit meeting probably were in-
tended to prevent recriminations over the resumption of
atmospheric nuclear testing from jeopardizing US-Soviet
talks on a Berlin settlement. Both leaders professed to
see signs of hope that an agreement on Berlin is possible
and reaffirmed Soviet interest in another heads-of-govern-
ment meeting. In contrast to this hopeful tone on Berlin,
me the US for a
bl
t
a
o
the USSR stepped up its maneuvers
resumption of Soviet testing and to set the stage for a
possible boycott of the test ban subcommittee discussions
at Geneva. Moscow promptly condemned the first US atmos-
SOVIET RELATIONS WITH DISSIDENT COMMUNIST STATES ? ? . ? ? Page
pheric test in the Pacific series.
state and party ties with Tirana.
Sino-Soviet relations appear to be following a pat-
tern of correct state relations and virtually nonexistent
party relations; disputed issues apparently continue un-
resolved, and disparate interpretations of these issues
are restated with varying degrees of vigor, Gromyko's
visit to Belgrade this month typifies the normality of
Soviet-Yugoslav state relations--itself' an irritant in
Sino-Soviet relations--while there are no party relations
between these two countries. Chinese political and eco-
nomic support for Albania, a focal.point in the Sino-Soviet
dispute, has been maintained, while Moscow now has cut both
Page
President Guido was finally compelled by military pres-
sure and =congressional inaction to issue a series of decrees
to deal with the problem of the Peronista election victories
on 18 March and to open the way for electoral reform. The
decrees, issued on 24 and 25 April, provide for federal con-
trol over the provinces, for annulment of all recent elec-
tion results, and for presidential elections on 27 October
1963. These moves--which imply rule by executive decree,
at least until new congressional elections--will increase
ARGENTINA ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?
the possibility of violent demonstrations on 1 Mayas
threatened by the Peronistas?
ALGERIA ?
The arrest of :Salan, which has raised the morale of
French security forces and probably weakened European set-
tler confidence in the OAS, may provoke extremist elements
in Algeria to step up terrorism and sabotage. Government
security forces, however, appear to be taking more effec-
tive measures against the OAS in the larger cities. of Al-
geria. Meanwhile, the provisional Algerian government and
the Algerian National Army are maneuvering for power with-
lf
hi
mse
in Algeria, with vice premier Ben Belia aligning
with the latter.
luxx T'
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27 April 196:2
CONGO . . . . . . . . . . . . . . . . . . . . . . . Page 9
Adoula's political position has-been hurt by his in-
ability to make any progress on getting Tshombd to accept
his terms for Katangan reintegration and his failure to
prevent Tshombe's "escape" to Elisabethville. Adoula is
bitter against the US and the UN, doubtful that negotia-
tions will produce a settlement, and apparently in a frame
of mind to look for help from any source. On 24 April he
publicly called for assistance from "friendly Afro-Asian
states," and US and UN officials fear he may follow through
on his threats to ask for the withdrawal of UN forces.
Tshombd, who senses a strengthening of his bargaining posi-
tion, is reported eager to return and resume-the talks.
He has informed UN officials in Elisabethville he will re-
turn on 3 May.
. Page 11
North Vietnam appears to be trying to get Cambodia's
Prince Sihanouk to make a formal proposal for an inter-
national conference on Vietnam. The Communists may hope
that international.pressure for a negotiated settlement
can be increased sufficiently to retard US support for
South Vietnam. Despite stepped-up military activity a-
gainst the Viet Gong, the government 'troops have yet to
win a major victory and there has been no perceptible
slackening of the Communist drive. Airlift operations are
bringing the government's authority to some remote areas,
but much of the countryside continues to give active or
passive support to the Viet Cong forces.
LAOS . . . . . . . . . . . . . . . . . . . . . . . . . . Page 13
The political situation remains deadlocked, and there
has been no recent contact among the principal figures in-
volved. Phoumi continues to promote his "royal solution,"
but even should King Savang accept a role of leadership,
support from Souvanna and Souphannouvong is unlikely.
"Friendship missions," designed to gain dip oma c
and economic support for the Vientiane regime, have begun
visits to several Asian nations. The military situation
remains generally quiet despite a recent flurry of action
at Nam Tha in the northwest.
SYRIA
. . . . Page 14
Syria's new cabinet reflects the socialistic and pan-
Arab pressures that induced the army to overthrow the con-
servative parliamentary regime a month ago. Prime Minister
Azmah last week enunciated a policy of economic planning
and limitation of private capital investment, and renational-
ized Syria's largest industrial combine. Although pro-Nasir
sentiment is strong, there is also strong opposition to full
union with Egypt, especially in the army.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 April 1962
EUROPEAN CONFEDERATION DEVELOPMENTS . . . . . . . . . . . Page 16
Efforts of the six, Common Market (EEC) countries to
reach agreement on a treaty to establish a political union
are snagged onthe questions of British participation and the
role of such a union in the Atlantic alliance. Some prog-
ress.: was made toward an agreed text by the EEC foreign
ministers on 17 April, but Belgium and the Netherlands
declared they would not sign until assured of Britain's
membership--which they consider essential to prevent French-
German domination of a united Europe and to link such a
union to the US. The success of further efforts to con-
clude a treaty will probably depend to a considerable de-
gree on London's position and tactics,
PEIPING DENOUNCES US NAVAL ACTIVITIES OFF CHINA COAST . . Page 17
In an unusual amplification of recent "serious warn-
ings," Peiping has charged that US naval activity off the
key Chinese naval base at Tsingtao constitutes a "new and
graver provocation" connected with Chinese Nationalist
preparations for a return to the main:Land> Communist
vessels shadowed a US destroyer on a recent patrol in the
area. Communist military activity in the offshore islands
area has remained at a low level.
INDO-NEPALI RELATIONS . . . . . . . .. . . . . . . . . . . Page 18
King Mahendra's recent five-clay visit to New Delhi
neither resolved basic Indo-Nepali differences nor recon-
ciled their policies toward the India--based Nepali exile
movement, the immediate irritant in their relations. Both
sides, however, seem satisfied with the limited results
of the visit, which at least cleared the air between Nehru
and the King. Both appear anxious to prevent further deteri-
oration in their relations.
. Page 19
President Ydigoras is continuing his efforts to reach
an accommodation with his non-Communist opposition. Evidently
recognizing the precariousness of his position, he has even
implied that he would accept some check on his political
authority in return for the collaboration of respected men
he has asked to join his cabinet. The strikes and demon-
strations against Ydigoras which the opposition hoped to
launch on 23 April failed to reach substantial proportions,
but opposition leaders still hope to incite sufficient dis-`'
order to cause the armed forces to oust the President.
GREEK POLITICAL SITUATION . . . . . . . . > .
Page 20
The antigovernment demonstration in Athens on 20
April was part of a continuing campaign by the non-Com-
munist opposition Center Union to discredit the government
and force its resignation. While Center Union leaders
have publicly repudiated aid from the Communist-dominated
United Democratic Left (EDA) in their campaign, EDA members
apparently spearheaded attacks on the police. The govern-
ment, with a large parliamentary majority and palace. support,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 April 1962
appears in no immediate danger. The situation is ex-
pected to remain heated for some time, however, and
new demonstrations and repressive action against the
opposition are possible.
ITALY'S PRESIDENTIAL ELECTION . . . . . .
. Page 21
Italy's president for the next seven years will be
chosen by secret balloting of the two houses of parliament--
plus ten regional representatives--beginning on 2 May. The
attitude of the new president may influence the future of
Christian Democratic Premier Fanfani's experiment in left-
center government backed by Nenni Socialist allies in par-
liament, The Communists, who may have the deciding voice,
will try to swing the election to the candidate they con-
sider most likely to disrupt Fanfani's arrangement with
their former Socialist allies. The large Christian Demo-
cratic party's difficulty in agreeing; on a candidate makes
the outcome uncertain.
COLOMBIA'S PRESIDENTIAL ELECTION
. Page 22
The 6 May presidential election will be conducted
under the National Front system formed in 1957 to return
Colombia to constitutional rule after the overthrow of
dictator Rojas Pinilla. This system makes Guillermo
Valencia, a Conservative, the joint Liberal-Conservative
candidate to succeed the incumbent Lleras Camargo, a Liberal.
Although Valencia's election is virtually assured, pros-
pects for continued stability will depend largely on his
ability to deal with such problems as international pay-
ments difficulties and persistent rural violence.
THE BOLIVIAN-CHILEAN DISPUTE . . . . . . . . . . . . . . . Page 23
Bolivia is making a major issue of its dispute with
Chile over the waters of the Lauca River--suspending diplo-
matic relations and appealing to the Council of the OAS.
The Bolivian Government seems little interested in the
water resources as such but rather in rallying domestic
support for the ruling party with an eye to the congres-
sional elections in June and in distracting public at-
tention from current economic difficulties.
Official concern over agricultural difficulties was
revealed at a recent meeting of the central committee of
the North Vietnamese Communist party, The harvest was
poor in 1960 and mediocre in 1961, and this year's goal
of an 11-percent increase in agricultural output seems
highly optimistic. Hanoi seems to put the blame chiefly
on peasant apathy and the poor leadership of the rural
collectives.
Page 24
SPECIAL ARTICLES
WEST NEW GUINEA . . . . . D . . . . . O . . G . . . Page 1
West New Guinea, the object of a twelve-year dispute
between the Netherlands and IndonesiaL, is likely to remain
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CURRENT INTELLIGENCE WEEKLY SUMMARY
27 April 1962
an economic liability for the foreseeable future and to
present administrative difficulties for whatever power
YUGOSLAVIA'S DOMESTIC PROBLEMS . . . . , . . . . . . . . . Page
The Yugoslav leadership's policies of decentraliza-
tion of economic and political responsibilities are being
challenged by special interest groups, both inside and
outside the Communist party, and the regime is faced with
difficult problems in controlling dissent without stifling
local initiative. How Belgrade copes with these problems
will in large part determine whether Yugoslavia continues
to make progress economically and politically. Any marked
retreat from the present policies could result in economic
stagnation and growing instability.
THE PORTUGUESE COMMUNIST PARTY . .
The small but tightly disciplined Portuguese Com-
munist party (PCP), banned since 1929, has survived many
years of police repression. It has exerted an appeal out
of proportion to its size because of the nation's very
low living standards and the growing dissatisfaction with
the policies of the Salazar regime. From time to time it
has demonstrated a capability to stage demonstrations
. Page 10
The non-
Communist opposition apparently has no strong convic-
tions against collaborating with the PCP, whose influence
is likely to grow in the post-Salazar period.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
WEEKLY REVIEW
SOVIET FOREIGN POLICY DEVELOPMENTS
Recent public pronouncements
by Khrushchev and Gromyko re-
viving the idea of a summit
meeting probably were intended
to prevent recriminations over
the resumption of atmospheric
nuclear testing from jeopardizing
US-Soviet talks on a Berlin
settlement. Both leaders pro-
fessed to see signs of hope that
an agreement on Berlin is pos-
sible and reaffirmed Soviet
interest in another heads-of-gov-
ernment meeting. In contrast
to this moderate and hopeful
tone on Berlin, the USSR stepped
up its maneuvers to blame the
US for a resumption of Soviet
testing and to set the stage for
a possible boycott of the test
ban subcommittee discussions
at Geneva.
Soviets Revive Summit
Soviet views regarding
more favorable prospects for a
Berlin agreement and an eventual
heads-of-government meeting
were set forth by Khrushchev in
an interview with US publisher
Gardner Cowles on 20 April,
which was published on 24 April,
and by Gromyko in his speech to
the Supreme Soviet on the same
day. Cowles said he received
the impression that Khrushchev
would invite the President to
the USSR as soon as some "break-
through" occurs in negotiations
on such issues as Berlin. Khru-
shchev sought to give the ap-
pearance of endorsing the Presi-
dent's views on the need for care-
ful advance preparations for a
summit conference, saying that
the summit would be a "pinnacle"
to confirm "some agreement on
the questions on which our com-
mon decision is required." He
did not rule out the possibility,
however, that the heads of govern-
ment might have to meet if the
"international situation be-
comes even more complicated"
to prevent a "military conflagra-
tion."
Gromyko took the same line
in his speech, stressing Mos-
cow's desire for further "seri-
ous talks" to prepare "specific
results" for submission to the
heads of government.
Berlin and Germany
In his interview with
Cowles, Khrushchev repeated
standard Soviet positions on
current problems. He professed
to see a glimmer of hope for
a Berlin agreement but declared
that Western forces must with-
draw or at least give up their
occupation status. This hint
that the USSR may not insist
on the withdrawal of Western
forces if the West will agree
to a new status for West Berlin
which terminates the "occupa-
tion regime" is consistent with
other recent bloc indications
that this issue is negotiable.
The Soviets, however, may press
for a time limit and ceilings on
Western forces remaining in
West Berlin.
Although the Soviet for-
eign minister acknowledged that
"many obstacles still remain"
in negotiating a Berlin agree-
ment, he appeared intent on
assuring the US that Moscow
is satisfied with the progress
made thus far in the bilateral
talks. He said these exchanges
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CURRENT INTELLIGENCE WEEKLY SUMMARY
demonstrated the desire of both
governments to "search for a
rapprochement of positions."
Gromyko reiterated the
USSR's standard positions on
five questions related to a
"postwar peaceful settlement,"
which, he said, must be achieved
"simultaneously" with the con-
clusion of a bloc peace treaty
with East Germany. These in-
clude: "normalization" of the
West Berlin situation which
would terminate the "occupation
regime" and replace Western
forces with neutral or United
Nations contingents for a
"definite period" of time; "re-
spect" for East German sovereign-
ty; legalization of existing
frontiers of the two German
states, including the border
between East Germany and the
Federal Republic; prohibition
on the transfer of nuclear
weapons to either German state;
and a nonaggression pact between
NATO and Warsaw Pact countries.
He also made it clear that the
USSR will insist on the severance
of all legal ties between West
Berlin and West Germany.
Gromyko welcomed as a
"step forward" what he described
as the "US statement" that
there are no obstacles to com-
bining new access arrangements
with the bloc's demand that
East German sovereignty be
respected. He contended that
the USSR and East Germany are
seeking to narrow differences
on access guarantees and called
attention to the proposal Walter
Ulbricht made last month for an
"arbitration agency" to settle
disputes which may arise in
implementing an "agreement on
free transit to West Berlin."
Gr-omyko noted, however, that
this international organ must
not have any administrative
functions that would interfere
with East Germany's internal
affairs and that it presupposes
replacement of Western forces
in West Berlin by neutral or UN
forces.
Gromyko also termed US
understanding of the importance
of banning the transfer of nu-
clear weapons a "positive
fact" and claimed that an under-
standing has been reached in
principle on a nonaggression
pact.
For the first time during
the course of US-Soviet talks
on Berlin, Pravda has reported
that Moscow had briefed high-
ranking party officials in a
number of European satellites
on the bilateral discussions.
Taken together with Pravda
articles, which have reported the
meetings between Secretary Rusk
and Soviet Ambassador Dobrynin,
the Soviet actions mark a de-
parture from the practice of
avoiding publicity on the
Thompson-Gromyko talks. The
Pravda articles tend to convey
to Soviet readers the impression
of some movement in the US-Soviet
discussions on Berlin and Germany.
Situation in Berlin
In Berlin, there has been
a noticeable easing of tension
between Soviet and Allied forces
during the past three weeks.
This has been particularly
evident in the air corridors,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
following the suspension of Soviet
flight activity there after 29
March; on military trains coming
into West Berlin, which have been
operated without deliberate inter-
ference for over two months now;
and in the lack of harassment of
Allied patrols into East Berlin.
However, the Soviets have continued
their sporadic attempts to induce
US military convoys on the Autobahn
to give advance notification of
their travel plans. Even in this
field, however, they have not
pressed or insisted on changes in
the convoy processing procedures
as much as they did earlier this
year.
Disarmament Talks
In a pessimistic assessment
of the Geneva disarmament confer-
ence, Gromyko warned in his 24
April speech that "it would be
wrong to think that the committee
is close to working out real dis-
armament measures." He made the
usual charge that the Western pow-
ers want to continue the arms race
and that their proposals are de-
signed to "undermine" Soviet de-
fenses. He contended that the
eight-nation "compromise" proposal
for a nuclear test ban control
system supports the Soviet position
that existing national detection
systems are fully adequate.
Gromyko did not threaten a
Soviet boycott of the conference
after the US resumes atmospheric
tests, but Soviet delegate Zorin
at Geneva told correspondents on
20 April that the USSR will walk
out of the test ban subcommittee.
On 25 April, prior to the AEC an-
nouncement of the first US atmos-
pheric test in the Pacific series,
Western correspondents reported to
US delegates that the eight non-
aligned nations were requesting
the USSR not to walk out of either
the subcommittee or the general
conference and "most particularly
the latter" after the US atmos-
pheric series commenced. A member
of the Soviet delegation strongly
implied to an American official
that the Soviet Union would test
"immediately" after the US series
began.
Moscow promptly reported the
AEC announcement. The Soviet press
and radio subsequently began a
propaganda campaign condemning the
US resumption. Zorin told the 26
April plenary session of the dis-
armament conference that the USSR
now is compelled to "take the neces-
sary measures to protect its securi-
ty." He told the conference that
the USSR would seek "sanctions"
against the US for resuming atmos-
pheric nuclear testing.
Until the AEC announcement,
Zorin had maintained his efforts
to put the US and Britain on the
defensive and to demonstrate the
USSR's backing for the eight neu-
tralists' proposal. He stressed
that in accepting it as the basis
for further negotiations, the
USSR had adopted a new position
which endorses the principle of
international on-site inspection of
unidentified seismic events. He
called on the West to refrain from
testing in view of both "world public
opinion" and Soviet acceptance of the
neutralists' plan. He warned that
Western testing would threaten the
future of the Geneva negotiations.
Other Space
In his interview with Cowles,
Khrushchev welcomed the idea
for a joint US-Soviet develop-
ment of a moon rocket and for
a treaty on outer space. He
maintained that there were no
insurmountable obstacles, once
a start could be made on dis-
armament. He separated the
outer space question into two
stages. He said that in the
first stage it will be necessary
to settle the question of ex-
changes in the field of use
and exploration of outer space
"on a national basis." The
second stage would be "to
pool the material, technical,
and scientific resources for
the joint solution of problems
in order to proceed from com-
petition to the pooling of
efforts in the conquest of
outer space." The Soviet pre-
mier argued that "some differ-
ences" appear in the realiza-
tion of this stage, because the
principal means of the conquest
of outer space is "now the rock-
et," which is also the "principal
weapon of war." He said it was
"natural" for both sides to seek 25X1
to keep secret "equipment and scien-
tific achievements" in this sphere.
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Sino-Soviet relations ap-
pear to be settling into a
mold in which correct state
relations are maintained while
party relations continue to
deteriorate; while disputed
issues apparently continue un-
resolved and disparate inter-
pretations of these issues are
restated with varying degrees
of vigor, considerable stress
on friendship and unity is the
order of the day. Each side
has damped down the heat of
the exchanges, reiterating
only a defense of the funda-
mentals that continue to distin-
guish its own outlook. Despite
their continued jousting on
such issues as Albania, peace-
ful coexistence, and the per-
sonality cult, both the Soviet
Union and Communist China seem
to have decided on a breathing
spell to prevent the deteriora-
tion in their relations from
inevitably developing into an
irrevocable break.
Both countries appear
wedded at present to a policy
of containment--containment
of the dispute within the limits
of retreat from fundamental
differences of view on one end
and a complete break in relations
on the other. The Chinese have
apparently felt all along that
their primary goal--an equal
voice in establishing bloc
policies--could best be at-
tained within a federation of
Communist states, rather than
as the undisputed leader of a
weak coalition outside of So-
viet hegemony. Their present
economic difficulties probably
add a powerful stimulant to
maintaining ties, however loose,
with the rest of the bloc. The
Soviet leaders may see renewed
hope in China's difficulties
and may feel that a change in
the Chinese leadership, or in
the views of the present leaders,
is a possibility.
The 92nd anniversary of
Lenin's birth on 21 April gave
each side an opportunity to
state its case, but the reactions
were modest. The anniversary in
1960 was the occasion for an
impassioned attack by the Chi-
nese on Soviet views and an
equally strong counter by Soviet
ideologists. This year, both
appeared to feel that a simple
reaffirmation was sufficient.
The major speech by Soviet
party Secretary Ilichev on 22
April gave little attention to
the main issues which divide
the bloc, and Pravda editorials
commemorating the anniversary
discreetly avoided contentious
themes. However, Pravda did
publish a letter from Lenin to
Polish Communists condemning
"leftist, sectarianist, dogmatic
elements" and counseling care-
ful planning before launching
a revolution. The advice in
the letter is said to have
"tremendous importance for the
whole international Communist
movement"--a remark clearly in-
tended for the Chinese Communists
and their Albanian supporters.
On 24 April, Pravda published
a compilation of Len ni quotations
calculated to "prove" that Lenin
was a firm supporter of peaceful
coexistence. The collection was
gathered to show the error of
"opportunists of all sorts"
who claim that Lenin never
would have agreed to peaceful
coexistence between socialism
and capitalism. Again Pravda's
intent seems clear--to deprive
the Chinese of the protection
of Lenin's prestige. While the
Chinese propaganda surrounding
Lenin's anniversary was reason-
ably heavy, it too managed to
remain nonpolemical.
Peiping appears to be treat-
ing the current phase of the
Sino-Soviet dispute much as it
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handled the phase after the
patchwork Moscow conference of
world Communist leaders in late
1960 and in the manner recom-
mended by Chou En-lai at the
22nd Soviet party congress
last October. In public, the
Chinese are emphasizing the
positive aspects of the relation-
ship, the unity, the friend-
ship, the cooperation. At
the same time, they are avoid-
ing heated polemics when pos-
sible. Beneath the public show,
however, Peiping is making
clear to Moscow that it holds
firm to its views in the dis-
pute.
The speech by Yang Hai-po
to the Soviet Komsomol Congress
in Moscow on 16 April is an
example of Chinese tactics. On
international issues separating
Peiping and Moscow, Yang en-
dorsed peaceful coexistence,
but canceled this out by re-
peating the Chinese stress on
he necessity for "struggle"
and by vehemently attacking the
Kennedy administration. On
the positive side, Yang re-
iterated Peiping's standard, now
hollow, avowal "always to learn
from the advanced experience of
the Soviet Union" and thanked
the Soviet people for past aid.
Like most Chinese comment since
mid-1960, his reference to the
past implied that Soviet assist-
ance is not continuing--an im-
plication strengthened by his
reaffirmation that China would
advance by "relying on the
labor of our own bands:'
Sino-Soviet Economic Relations
After four months of nego-
tiations, the 1962 Sino-Soviet
trade agreement was signed in
Peiping on 20 April, and this
too suggests that the Chinese
will have to rely on their own
labor. Although the week-long
visit of the Soviet minister of
foreign trade evoked the custom-
ary slogans of cordiality and
friendship, the tone of the
accompanying propaganda and a
Joint communique suggest no
changes, for better or worse,
were made in Sino-Soviet economic
relations. No plans for increased
trade were announced, even by
implication, and no mention was
made of any form of Soviet aid
to China, except in the past
tense or in the sense of "mutual
assistance," i.e., balanced
trade.
M. N. Suloyev, a vice chair-
man of the Soviet State Committee
for Foreign Economic Relations
(GKES), remained in China after
some members of the Soviet dele-
gation departed on 21 April.
GKES is responsible for super-
vising Soviet foreign aid programs
and overseeing those trade organ-
izations involved in the construc-
tion of industrial installations
abroad. Last year GKES conducted
"economic, scientific, and techni-
cal" talks with the Chinese for
more than two months after the
conclusion of the 1961 trade
agreement. Suloyev's stay in
China suggests that similar,
although less important, nego-
tiations are taking place again
this year.
Yugoslavia
The wide gulf that continues
to separate Moscow and Peiping
despite their new-found emphasis
on unity is illustrated by their
treatment of Yugoslavia and Al-
bania, Communist states which
stand at opposite ideological
poles. The 16-21 April visit
to Belgrade by Soviet Foreign
Minister Gromyko typifies the
normality characteristic of
Soviet-Yugoslav state relations--
itself an irritant in Sino-Soviet
relations--while party relations
between the two countries re-
main, nonexistent. The perpetuity
of normal state relations, how-
ever, has apparently dispelled
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CURRENT INTELLIGENCE 'WEEKLY SUMMARY
some of their mutual distrust.
Belgrade, for example, is ap-
parently contemplating buying
Soviet military equipment--
which, except for several heli-
copters last year, will be the
first such purchase since its
break with the Cominform in
1948.
The communiqud signed at
the end of Gromyko's visit in-
dicated that Belgrade continues
to hold views similar to Mos-
cow's on most East-West issues
and demonstrated as well that
the Soviets continue to adhere
to those foreign policy concepts,
such as peaceful coexistence
and the need for negotiations,
to which the Chinese take sharp
exception. At the same time,
the similarity between this com-
muniqud and that released after
Yugoslav Foreign Minister
Popovic's trip to the USSR last
summer points up the absence of
significant forward movement in
Soviet-Yugoslav relations.
Albania
Although the Soviet Union
has slightly modified its ap-
proach to Sino-Soviet relations,
it still refuses to treat China's
sole fervent supporter, Albania,
with equal circumspection.
Albania was not invited to take
part in the Komsomol Congress,
and the Soviet delegate led an
attack on the tiny Communist state
which all East European delegates
echoed. The Chinese delegate,
however, insisted that Albania
remains a member of the "social-
ist bloc" in good standing, and
the North Korean and North Viet-
namese representatives refused
to comment on the problem.
Soviet-Albanian state rela-
tions now have dwindled to noth-
ing. Albania's ties with Commu-
nist China, however, continue to
flourish. A delegation of the
Albanian Society for Aid to Army
and Defense under Maj. Gen. Spiro
Moisiu returned on 18 April from
a tour of almost four weeks in
China. The next day a Chinese
delegation under First Deputy
Minister of Communications Sun
Ta-kuang arrived in Albania to
participate in the first meet-
ing of the administrative council
of the Sino-Albanian joint stock
shipping company (CHALSHIP). On
5 April, Radio Tirana announced
that the company--which was
formed in late December to facil-
itate Sino-Albanian trade--had
opened a home office in Durres,
with -a branch office in Canton.
ARGENTINA
Argentine President Guido
was finally compelled by military
pressure and congressional in-
action to issue a series of
decrees to deal with the problem
of the Peronista victories in
the 18 March election and to
open the way for electoral re-
form? The decrees, issued on
24 and 25 April, provide for
federal control over the provinces,
and for annulling the results
of all provincial, local, and
congressional elections held
between 17 December 1961 and 18
March 1962. Guido also announced
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CURRENT INTELLIGENCE WEEKLY SUMMARY
for 27 October 1963 the election
of a president and vice president
who would take office on 1 May
1964, the scheduled end of
Frondizi's term. The armed
forces insist on the adoption
of proportional representation
to replace the present electoral
system which enables a party
polling as little as one fifth
of the vote to win control of
the government. They also insist
on outlawing the Peronista and
Communist parties but would
allow Peronista elements to
organize other parties not under
Peron's direction.
Guido's decrees--which im-
ply rule by executive decree
until new congressional elections
--will increase the possibility
of disturbances and sharpen
attacks on the thin line of
constitutionality the regime
has been trying to maintain.
The Chamber of Deputies has the
constitutional right to decide
on the acceptability of elected
deputies, but its debates on the
political crisis caused by the
military's ouster of Frondizi
produced no vote on the Peronista
problem before 26 April, the
Chamber's deadline for decision--
Congress normally convenes on 1
May. The state of siege which
has been in effect since November
1958 suspends constitutional
guarantees, however, and enables
the president to rule by decree.
The month-long crisis has
compounded confusion in both
civilian and military circles.
Leaders of the majority Intran-
sigent Radical Civic Union (UCRI)
--which encouraged Guido to
assume the presidency as legal
successor to Frondizi--have
failed to maintain party dis-
cipline in the Chamber to
carry out their confidential 25X1
agreement with Guido and the
military on legislation to ease
the crisis.
The army showdown on 21
Apri was ended without violence,
but full unity has not been re-
stored.
The armed forces fear
that there may be widespread
disturbances on 1 Ma .
FP-eronista-led
for unions are already on
alert for a general strike.
Numerous Peronista offices
have been closed since the fed-
eral government took control of
the provinces on 24 April.l--
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The arrest of Salan, which
has raised the morale of French
security forces and probably
weakened European settler conf i-
dence in the Secret Army Organi-
zation (OAS), may provoke ex-
tremist elements in Algeria to
step up terrorism and sabotage.
Salan probhbly did not exercise
control over many of the Euro-
pean terrorists, and men such
as ex-General Paul Gardy, who
has broadcast his assumption
of OAS leadership, and es-
pecially ex-Colonel Godard are
considered more ruthless and
capable leaders.
reconvened National Assembly,
declared his government's most
urgent task was to break the
OAS "without recourse. " In view
of growing impatience on the
part of the provisional Algerian
government (PAG) with continued
terrorism, this language suggests
that De Gaulle is unlikely to
make his decision as to whether
to commute the death sentence
given ex-General Jouhaud until
the Salan trial--scheduled to 25X1
begin in mid-May--is over and
the effects of the anti-OAS
drive can be assessed.
Paris
has indicated concern over OAS
capability to damage the Saharan
oil fields.
The security forces, how-
ever, appear to be taking more
effective measures against the
OAS in the larger cities of
Algeria. Resentment among the
Moslems of Algiers and Oran is
reportedly approaching the
point where their leaders may
no longer be able to impose dis-
cipline. This resentment stems
not only from the indiscriminate
OAS killings, but from economic
privations and misery resulting
from the de facto partition the
terrorism has created. Moslems
employed in European sectors are
deprived of their work, while
the overcrowded Moslem areas
suffer from insufficient medi-
cal and sanitary facilities.
Premier Pompidou, in his
26 April maiden speech to the
Meanwhile, the PAG and the
Algerian National Army (ALN)
are maneuvering for power with-
in Algeria, with PAG vice
premier Ben Bella aligning
himself with the ALN. The ALN
is said to be angered because
the Evian accords impose a bar-
rier against its entry into
Algerian political activity
while facilitating the return
to Algeria of those loyal to
the PAG. It is particularly
incensed because all the ALN
members of the mixed armistice
commission in Algeria are staff
officers attached to and a_-
pointed by the PAG.
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Since his liberation,
Ben Bella has seldom mentioned
the PAG in public remarks,
but has conspicuously visited
ALN camps in both Morocco and
Tunisia.
In a
series of PAG plenary meet-
ings which began on 23
April, Ben Bella may press
for an early meeting of
the National Revolutionary
Council in order to remove
most of the PAG members.
to his present position Ben
Bella may be able to effect
important changes in the
operation and organization
of the Al erian nationalist
movement.
Premier Adoula feels that
he has failed in his mandate to
reintegrate Katanga and appears
to be in a frame of mind to act
rashly. Ambassador Gullion says
that Adoula believes the US and
the UN no longer have the will,
the strategy, or the means to
help him unify the Congo, and
that the premier is convinced
that even were Tshomb6 to nego-
tiate an agreement, it would
not be kept.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Adoula now appears to be
trying to regain the initiative.
On 24 April he called--for the
first time publicly--on "friend-
ly Afro-Asian states" for help
if Tshombb refused to end Ka-
tanga's secession. Ambassador
Gullion believes Adoula may try
to obtain bilateral aid from the
Casablanca powers and that he
may also follow through on his
threats to ask the UN to with-
draw. He notes that the estab-
lishment of bilateral aid from
the Afro-Asian states may pro-
vide a channel for Soviet bloc
assistance to Adoula. Adoula
may be reconsidering his previous
rejection of Soviet bloc support,
but there has been no confirma-
tion of the report that he plans
to visit Moscow in May.
Tshombb, despite his charges
of bad faith on Adoula's part,
appears confident and gives every
indication
0 that he will return to Leo-
poldville and resume negotiations.
UN officials have renewed UN se-
curity guarantees, and Tshombb has
told them he will return on 3 May.
He will be preceded by an advance
Katangan delegation. Tshombb's
alacrity in resuming the talks
probably reflects his awareness
that military action against Ka-
tanga is unlikely while he is
engaged in talks.
The resumed talks will,
initially at least, probably
center on some new draft con-
stitutional proposals Adoula
presented to Tshombb before
Tshorab6's departure. The pro-
posals, which would allow even
less provincial autonomy than
under the present system, will
almost certainly be rejected
by Tshombb. While Adoula is
not sanguine over the pros-
pects of reaching a negotiated
settlement, he is willing to
resume the talks and has said
that many items in his draft
proposals were inserted for
bargaining purposes.
Tshombb's gratitude for
the UN's honoring its guaran-
tees for his personal safety
has brought at least a tem-
porary improvement in Ka-
t angann-UN relations. Mean-
while, the sentencing by Leo-
poldville of South Kasai "King"
Albert Kalonji to five years'
imprisonment may produce
violence in that area.
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CURRENT INTELLIGENCE MEEKLY SUMMARY
North Vietnam is trying
to push Cambodia's Prince
Sihanouk into formally proposing
an international conference on
Vietnam. With a series of
statements over the past week,
the North Vietnamese have al-
ternately sought to play on
Sihanouk's vanity and to in-
crease the atmosphere of ten-
sion he is anxious to allay.
On 18 April, Nguyen Van
Vinh, member of the North Viet-
namese central committee and
head of Hanoi's National Re-
unification Committee, told
the North Vietnamese National
Assembly that "it is very
necessary to reconvene the
Geneva conference to discuss
the Vietnamese question."
Hanoi earlier had shown its
interest in "consultations"
between the 1954 Geneva powers
but had not been so specific.
A Hanoi broadcast on 19 April
lauded Sihanouk for his "deep
attachment to peace," noting
that he had been "promoter of
the Geneva conference to settle
the Laotian question," and
heartily endorsed what Hanoi
chose to call Sihanouk's "sug-
gestion" to hold an interna-
tional conference on Vietnam.
Sihanouk in fact has made
no formal proposal for a con-
ference but used a Chinese
Communist statement about the
need for "consultations" as
a takeoff for discoursing on
possible solutions to a situa-
tion he described as growing
ever more dangerous. Feeding
this sort of apprehension, the
Vietnamese People's Revolution-
ary party, a southern subsidi-
ary of North Vietnam's Lao
Dong (Communist) party, had a
statement broadcast by Hanoi
on 24 April threatening to call
for "material and men" from
North Vietnam, unless something
was done to reduce the level of
US military assistance to Diem.
The USSR thus far has not
publicly endorsed a conference
but has requested that Britain,
as cochairman of the Geneva
conference, join it in an ap-
peal to the US to withdraw its
"aggressive troops" from Viet-
nam. The British rejection of
the Soviet request may make
Moscow more willing to support
Sihanouk's initiative. Moscow
supported Sihanouk's call for
a conference on Laos last year,
The Communists probably
reason they have little chance
to get a conference now. How-
ever, they would hope that inter-
national pressure for a negoti-
ated settlement could be raised
to the point where it would have
some retarding effect on US sup-
port for South Vietnam's war
against the Viet Con g.
The Communist military
and political drive in South
Vietnam has shown no percep-
tible slackening despite harass-
ment from more aggressive and
mobile government operations.
Since early March, Viet Cong
attacks have been sustained at
a high level, with less dramat-
ic use of battalion-size forces
than occurred last fall, but
with greater frequency and im-
proved firepower. The Viet
Cong still rely chiefly on
smalJL-scale, erosive guerrilla
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CURRENT INTELLIGENCE WEEKLY SUMMARY
raids, engaging in larger
clashes at times and places of
their own choosing. A favorite
tactic is to strike at remote
outposts manned by the govern-
ment's paramilitary forces in
order to draw ground reinforce-
ments which can be ambushed en
rout
Government troops, now
expanded to 193,000 regulars,
have so far scored no major
victories. Heavy Communist
casualties, largely from air
strikes, are claimed--about
7,200 between 1 January and
16 April, as compared with
about 3,860 for government
forces; this total, however,
is based partly on estimates
and may have been exaggerated
by the South Vietnamese.
A major weakness of the
government continues to be in-
adequate access to information
on the Viet Cong and inadequate
processing of available infor-
mation. Programs are under way
for improvement in this area,
and there have been some recent
reports of cooperation from
villagers. Helicopter air-
lifts are providing a greater
impact of government authority
in isolated areas, but much
of the countryside lacks ef-
fective government control.
Viet Cong forces, often natives
of the area in which they oper-
ate, retain the active or pas-
sive support of villagers.
The government's program
to relocate peasants into
strategic hamlets, now under way
in a few provinces north of
Saigon, has proceeded relatively
SECRET
smoothly but furnishes little
clue so far of the government's
ability to provide tangible
benefits or win positive loyalty
in the countryside. Some
25X1
con- 25X1
cern over the caliber of Viet-
namese leadership of the pro-
gram as well as over the wis-
dom of launching it in Viet 25X1
Cong strongholds with inade-
quate troop support--a situation
which could invite setbacks in
its early stages.
The Diem government ap-
pears to have adequate rice
stocks for Saigon and the defi-
cit areas of central Vietnam
and is making some headway with
its fiscal and monetary reforms
designed to help finance counter-
insurgency. While morale among
government officials appears
to have improved over its low
of last fall, there is still
considerable dissatisfaction
with Diem's continued reluc-
tance to undertake administra-
tive and political reforms.
Propaganda from the Com-
munist National Front for the
Liberation of South Vietnam
is strongly aimed at the frus-
trations of Diem's non-Communist
political opposition and at the
rank-and-file military, where
a high desertion rate--about
1,000 per month in midwinter--
results from long combat duty,
low benefits, and fear of Viet
Cong reprisals against rela-
tives. In addition, fear of
expanding warfare and govern-
ment; plans to conscript youths
of Chinese origin are reported
to be causing growing restive-
ness and some susceptibility
to Communist influence within
the large Chinese community.
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General Phoumi remains
sanguine that the US will
"eventually agree" to support
his formula calling for King
Savang to head a government
of national union.
ie
King as in icatece a he
might reluctantly assume lead-
ership if given full powers by
the National Assembly, which is
scheduled to convene in early.May.
27 Apr 62
CURRENT INTELLIGENCE WEEKLY SUMMARY
r"I n
nn ` Son \ \,-
SECRET
It remains highly unlikely,
however, that Souvanna and
Soupphannouvong--who now have
Western support for a Souvanna
cabinet--would agree to the
assumption of such a role by
Savang. Soviet Ambassador
Abramov, terming Phoumi's pro-
posal "unrealistic," stated
that Souvanna and Souphannouvong
wou:Ld never accept it.
BURMA rauong&\J
Sin5Nam
fha
,H!~ ei
LAO S
'Government forces
7leo operational areas Road
Kong Le/Pathet Lao/North Ira iI
Vietnamese forces ? Route number
Kong Le /Pathet Lao/North -????? Road under
ese areas construction
7,5 7 75 l0i'. Mil-32415
long
Ia.
Ou Neua
e9' PRABA
Pak ? ?
geng'Muun Hour,
~.~ wan '
ko?o Prabang }-
Muortg
Kggsy'
!%~Jamot
v
,Plfong Saly
?oun N?eru~a
Mpong SAYG
-y
P.
,IV ? 4
-- ~iJ
VIEN?IANE
J
THAILAND
~_- tl o~~c'3 n1i?anl
'rnIO\
J
CAMBODIA
ahaxay.1,
Pha Vic.;--
-=lei_Tcheputiy
Inakher -
~SRVRNNAKH
Muong
'shiny, .
0UT
TNM!
N
NORTH
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A "friendship mission" now
is in Thailand, and other visits
are scheduled to Sotith Korea,
South Vietnam, Malaya, Na-
tionalist China, and the Phil-
ippines. Vientiane leaders,
probably aware that their
missions stand little chance
In his first statement of
policy since assuming office,
Syrian Prime Minister Azmah re-
flected the socialistic and pan-
Arab pressures that led the army
to overthrow the conservative
parliamentary regime a month
ago. He emphasized the neces-
sity for state-directed economic
planning and the limitation of
private capital investment.
Simultaneously he announced the
renationalization of the "Big
Five," Syria's largest indus-
trial combine which has interests
in textile mills and cement
factories.
of gaining any economic aid, 25X1
have indicated that they are
hoping to evoke diplomatic sup-
port for their anti-Communist
stand and that such support, if
widespread and vocal, might com-
pel Western powers to revise
their Laos policy.
Antigovernment forces have
increased their pressure in
northwestern Laos.
Under the provisions of
July 1961 decrees relating to
industry and banking, 25 per-
cent of the profits of all busi-
ness enterprises were to be
distributed to the workers, a
ceiling of $14,300 was set on
individual corporate salaries,
50-percent government partic-
ipation in specified companies
was instituted, all banks and
insurance companies and certain
large corporations were national-
ized, and individual holdings
in any company limited to
$35,000, with the government
taking over any amount above
this sum. Former owners were
to receive nonnegotiable
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CURRENT INTELLIGENCE WEEKLY SUMMARY
15-year, 4-percent bonds in pay-
ment. It is estimated that aside
from the Industrial Bank, with
its 6,265 stockholders, less
than 500 persons were affected
by the bank seizure and only 19
by the insurance companiesidecree.
Three factories owned by 159
persons were nationalized, and
the limitation of ownership in-
volved 207 individuals.
These laws, with the ex-
ception of the 25-percent employee
profit participation and worker
representation on boards of di-
rectors, were abrogated by the
Dawalibi government in early 1962.
The violent reaction which ensued
on the part of leftist elements
was one of the motivations for
the army intervention of 28 March,
and the laws will probably soon
be reapplied.
Nasir's agrarian reform law
of September 1958 remains in
force except for minor revisions.
It has not been a major political
issue, although antiregime ele-
ments have alarmed the peasantry
by predicting it would be re-
voked. Azmah's statement indi-
cated he intended to implement
the law.
Opposing Ideological Forces
Latent pro-Nasir sentiment,
especially in the Aleppo area,
was brought to the surface fol-
lowing the 28 March army coup,
and its importance and strength
were underscored by the subse-
quent revolt of some elements of
the Aleppo garrison. Worker and
student demonstrations there and
in other cities showed the extent
of aspirations for Arab unity
under Nasir's leadership among
younger civilian and army ele-
ments. There is little doubt
as to the widespread desire for
some form of Arab unity in Syria,
but the actual strength of forces
pushing for reunification with
Egypt is not known; their strength
may be overestimated as a result
of their adeptness at expressing
their feelings vocally and their
ability to organize mob action..
Historically, sentiment for
union with Iraq has been strong
among a large segment of the
Syrian population, especially
in the Aleppo area, and while
there is an aversion to Qasim,
his demise and replacement by
an Arab nationalist regime
might give encouragement to
these forces. There is a small
element which looks with favor
on Jordan's King Husayn, but
this group is losing strength.
Within the Arab unity
element, two schools of thought
are prevalent: one that seeks
full union with Nasir's Egypt,
and another that desires to
maintain Syria's identity with-
in an Arab federation. At pres-
ent the latter grouping prob-
ably is the predominant one.
Aside from a numerically in-
significant industrial and
merchant class, the former
owners of large agricultural
estates, and the conservative
religious element, few Syrians
quarrel with the goals of Nasir's
"Arab socialism." The struggle
will be concentrated on the
problem of what form of unity
is to evolve. It is this
question that could raise the
specter of civil war, so nearly
awakened at the beginning of
April.
The Syrian Army at the pres-
ent time is divided into three
ideological groupings: those
favoring union with Egypt, anti-
Nasir conservative officers, and
a dominant faction which would
be willing to see a closer re-
lationship with Nasir short of
full union. This middle faction
fears that a return to union
would bring about Egyptian domi-
nation of the Syrian Army and
reversion of Syria to second-
class status. The present army
junta derives its basic support
from this faction.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Efforts of the six Common
Market (EEC) countries to reach
agreement on a treaty to estab-
lish a political union are
snagged on the questions of
British participation and the
role of such a union in the
Atlantic framework. Recent con-
cessions by De Gaulle permitted
some progress toward an agreed
text at the meeting of EEC
foreign ministers in Paris on
17 April. Nevertheless, the
talks adjourned without agree-
ment when Belgium and the Nether-
lands declared they would not
sign until assured of Britain's
accession to the EEC and its
membership in the confederation.
gian fears--shared by the
Dutch--of big-power dictation.
Spaak declared in his press
statement that a united Europe
"cannot be conceived and created
except on an equality of states,"
and it "would be dangerous and
unacceptable for certain power-
ful countries to imagine that
when they had arrived at an
agreement among themselves the
problems were automatically
resolved."
In taking the lead in block-
ing the treaty, Belgium's Spaak
was apparently motivated by his
persisting distrust of De Gaulle
motives in pushing the political
project. Following the meeting,
Spaak explained to the press
that he still believes a Euro-
pean political union should be
supranational in form, but if
this is impossible, then it is
of "highest importance" to have
the "equilibrium and experience
which British membership would
contribute. He then referred
to his fears concerning the
future of the Atlantic alliance
Whether tensions between
the small and big countries in
the Common Market have become
so aggravated as to pose a
serious threat to4EEC cohesion
and the negotiations on British
accession remains to be seen.
French officials have predicted
dire consequences in both re-
spects, they are resentful of
Belgium's affront to De Gaulle,
and they are probably inclined
to blame London.
the evi-
dent inability of the EEC to
take even a short step from eco-
nomic toward political unity
may encourage the UK to attempt
once more to water down the EEC
into a free trade association
and. to press even harder for
the admission of countries--
such as the three European
neutrals--which do not share
the EEC's political objectives.
and said he had always considered
it necessary "not to move polit-
ical Europe away from the Anglo-
Saxons and to reject the idea
of a European third force."
Spaak has not always been
so eager for Britain's EEC
accession. He has, however,
shown increasing concern over De
Gaulle's views on nuclear weap-
ons, NATO, and disarmament, and
he apparently now is convinces
that only Britain's membership
would prevent De Gaulle from
using a European union to ad-
vance these views. His eager-
ness for British participation
was apparently also increased
by the early April meetings be-
tween De Gaulle, Fanfani, and
Adenauer, which increased Bel-
SECRET
Attempts to surmount the
present difficulties are still
expected--probably initially
during the 4-6 May NATO minis-
terial meeting in Athens. Their
success seems likely to hinge
in part on the attitude of Brit-
ain which, by accident or de-
sign, now is deeply involved in
the treaty talks. However,
an attempt by London to exploit
the differences among the Six
would almost certainly jeopard-
ize its EEC application, and
even an effort to mediate in-
volves the risk of misinterpre-
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CURRENT INTELLIGENCE WEEKLY SUMMARY
PEIPING DENOUNCES US NAVAL ACTIVITIES OFF CHINA COAST
The Chinese Communists re-
acted with vigor to the move-
ments of the US destroyer De
Haven, which began a reconnais-
sance patrol off the key North
China naval base of Tsingtao on
13 April.
Peiping issued three
"serious warnings"--197, 198,
and 199 in the series which
began in September 1958--charg-
ing that the vessel had "in-
truded" into Chinese waters and
refused to leave. The De Haven
was in fact at no point closer
than 30 miles from the coast.
This patrol was the first con-
ducted in the Tsingtao area
since the "serious warnings"
began; all previous warnings
had covered "intrusions" in
the area of the Taiwan Strait
and the South China Sea.
On 16 April Peiping ampli-
fied its warnings, with a de-
tailed statement denouncing the
presence of the destroyer as
a "new and graver provocation"
against the Chinese people.
This was the first time in near-
ly two years that the Chinese
had made more than a pro forma
denunciation of alleged US prov-
ocations. The movements of the
American vessel also drew an
unprecedented reaction from
Chinese Communist naval forces.
Chinese naval surface units
shadowed the De Haven during
its patrol.
The quick response can be
attributed in large part to
Peiping's concern over the ex-
tension of US naval activity
into this sensitive area. This
fact--along with frequent public
statements from Taipei concern-
ing an imminent return to the
mainland--has probably heightened
Peiping's sensitivity to the
possibility of some military or
paramilitary action against the
mainland. The 16 April state-
ment linked the presence of
the De Haven with purported US
efforts to "intensify tension
in the Taiwan Strait," and
connected these activities with
Chinese Nationalist military
preparations againstthe mainland.
32412
NORTH
VIETNAM
c:CZF ~ or'
25X1
SECRET
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SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
Peiping may have viewed the De
Haven's movements as an American
effort to test mainland defen-
sive reaction before a move by
Taipei.
Chinese sensitivity on
this score was recently under-
lined by the start of a major
Chinese Communist effort to jam
Chinese Nationalist propaganda
broadcasts to the mainland.
Communist jamming in the past
has been conducted on a partial
and irregular basis.
The Chinese have made no
recent effort to stress the
urgency of "liberating"
territory held by the Chinese
Nationalists; the subject
received only token attention
at the recent high-level meet-
ings in Peiping. Chinese Com-
munist shelling of the off-
shore islands remains at a
low level; no high explosives
have been fired for eight
INDO-NEPALI RELATIONS
Both India and Nepal appear
to have gained their minimum
objectives in the discussions
that took place during King Ma-
hendra's five-day visit to New
Delhi which ended on 23 April.
For the Indians, the most im-
portant of these was the King's
renewed recognition of the need
for close relations and for con-
tinuing consultations between
the two governments--a nod in
the direction of the "special
relationship" New Delhi con-
tends is required by their com-
mon heritage. The Nepalis'
minimum aims were primarily to
obtain reassurances from the
Indians with regard to Nepal's
sovereignty and formal Indian
condemnation, in the joint com-
muniqu6, of the "violent and
unlawful" activities which con-
tinue to threaten Nepal's
"stability and prosperity"--a
reference to the India-based
Nepali exile movement.
In addition, the visit
had the advantage for both
sides of clearing the atmosphere
between Nehru and Mahendra,
whose personal relationship
has never been warm or friendly.
The two leaders held private
talks on four of the five days
However, these talks, as
well as the lower level conver-
sations which paralleled them,
apparently failed to bring any
nearer a resolution of the sur-
face irritants and basic misun-
derstandings which have plagued
Indo-Nepali relations. Nehru
will probably tighten up a bit
in his generally permissive
policy toward the exile movement,
and the King will probably keep
the lid on manifestations of
anti-Indian feeling within Nepal
in the interests of preventing
further deterioration in their
relations. There are no indi-
cations, however, that their
basic suspicions about each
othe:r's long-term intentions
have abated or that either now
is prepared to take the steps
necessary, such as Mehendra's
compromising with the exile
movement or Nehru's suppressing
it entirely, to bring about a
genuine improvement in rela-
SECRET
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SECRET %to
With the Guatemalan
political crisis now in its
seventh week, President Ydigoras
continues his efforts to reach
an accommodation with his non-
Communist opposition. Evidently
recognizing the precariousness
of his position, he has even
implied that he would accept
some checks on his political au-
thority in return for the collab-
oration of respected individuals
whom he has asked to accept cabi-
net posts. He has also enlisted
representatives of the diplo-
matic corps to observe efforts
by a "citizens' committee" to
mediate between him and the
non-Communist opposition. He
is making a strong effort to
assure the public that the ex-
tensive corruption in his regime
will be controlled.
Most leaders of the three-
party non-Communist opposition
alliance are still adamant in
their demand that Ydigoras re-
sign, but Ydigoras, a skillful
political manipulator, knows
the weaknesses of this alliance
and may succeed with his old
"divide and rule" tactics in
provoking dissension within it.
SECRET
The strikes and demon-
strations which the opposi-
tion planned to launch on 23
April failed to reach substan-
tial proportions, though some
railway workers in outlying
stations stopped work and the
police used tear gas and clubs
to disperse antigovernment
demonstrations in the capital
on 24 April. Opposition lead-
ers still hope to incite suf-
ficient disorder to cause the
armed forces to oust Ydigoras
in an effort to restore order.
ber guerrilla group.
Communist and Communist-
influenced groups continue
their plans to gain a major
role in the opposition cam-
paign, but they now are be-
ing hampered by a growing
recognition of the Communist
danger among anti-Communist
opponents of Ydigoras. There
may be a new outbreak of guer-
rilla activity by the Commu-
nist-influenced 13th of Novem-
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SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
GREEK POLITICAL SITUATION
Antigovernment demonstra-
tions in Athens on 20 April
resulted in injury to 140 police
and demonstrators and the ar-
rest of 41 persons. The essence
of the dispute which brought
on the violence is the charge
by the elderly, non-Communist
Center Union (CU) leader, George
Papandreou, that Premier Karaman-
lis and his National Radical
Union (ERE) won their over-
whelming victory at the polls
last October through intimida
tion and corruption. The 77 CU
members of parliament. have re-
fused to accept the legality
of the government, have refused
to vote on government-sponsored
legislation, have brought charges
of election irregularities be-
fore the courts--most of which
have been thrown out--and have
demanded that the King call new
elections.
campaign, an EDA functionary
has stated that the CU covertly
asked for EDA support for the
20 April demonstration.
On 5 March, Papandreou
staged a rally in the largest
city on Crete which went off
without incident. The Athens
meeting, scheduled as an open-
air rally in a small square,
was prohibited on the grounds
that public safety might be
imperiled, although the govern-
ment indicated no objection to
an indoor meeting or a rally
at a 60,000-seat stadium.
Papandreou, however, kept to
his original plan, and rioting
broke out shortly after he
finished speaking.
The most serious incidents
reportedly were sparked by un-
employed construction workers
and militant leaders of the
Communist-dominated United
Democratic Left (EDA). While
Papandreou has repudiated EDA
support in his antigovernment
The riot was indicative
primarily of the ability of the
Communists to profit from non-
Communist political activities.
It also reflected the non-Com-
munist opposition's determination
to bring down the government
ddspite danger to public order
and the probability that the
far left will benefit.
The government, with a
sizable majority in parliament
and the sometimes reluctant
support of the palace, does not
appear to be in danger at this
time. It is obviously pleased
with the relatively limited
public response to the CU call
for a demonstration and with
the ability of the police to
handle the riot without calling
in the army. Certain elements
within the government, however,
may decide to use the recent
demonstrations as evidence of
the need for imposing strict
controls on all opposition
activity--at least until after
the NATO Ministerial Council
meeting in Athens opening on
3 May. Such action, combined
with the apparent determination
of the CU to use almost any
means to overthrow the govern-
ment, could have serious reper-
cussions on constitutional gov-
ernment in Greece. 25X1
SECRET
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%W %Wf
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
Italy's president for the
next seven years will be chosen
by secret balloting of the two
houses of parliament--plus ten
regional representatives--be-
ginning on 2 May. The attitude
of the new president can in-
fluence the future of Christian
Democratic Premier Fanfani's ex-
periment in left-center govern-
ment backed by Nenni Socialist
allies in parliament--both be-
cause of the pro forma resigna-
tion the cabinet must submit
to him and because of his inci-
dental opportunities to exert
pressure.
Neither President Gronchi
nor any of the other candidates
thus far seem to command the
simple majority which would as-
sure election on the fourth bal-
lot, let alone the two thirds re-
quired in the initial rounds.
All but one of the candidates
are members of the large Chris-
tian Democratic party, which in
the past has failed to maintain
voting discipline even after the
choice of an official candidate.
As a proponent of center-
left government, Gronchi ap-
peals to Socialist and probably
a large number of Christian Dem-
ocratic voters. As the first
Christian Democratic president
of the republic--he followed a
Liberal, Luigi Einaudi--Gronchi
holds a certain prestige. The
MARCH 1962
DEMOCRATIC SOCIALISTS
COMMUNITY MOVEMENT
DEMOCRATIC SOCIALISTS (PSDI) \\1,
SUPPORT
ABSTAIN
CJ OPPOSE
-NEO-FASCISTS (M5I)
` Includes 7 members appointed for life
Christian Democratic right wing
objects to his orientation, how-
ever, and the left wing dis-
trusts him for his decision in
mid-1960 to choose Fernando Tam-
broni to form a government--
which was swiftly brought down
following riots protesting its
dependence on neo-Fascist sup-
port. The Communists are said
not to favor him because his
ineligibility for a third term
reduces his susceptibility to
political pressures.
Foreign Minister Antonio
Segni has opposed the present
government formula and is sup-
ported by the conservative Lib-
eral party and right-wing Chris-
tian Democrats. He might also
be backed by the Communists,
since they will probably swing
their votes to the candidate
they consider most likely to
disrupt Fanfani's relations with
their former Socialist allies.
The center-left Christian Demo-
cratic majority might support
him on the last ballot if he
appeared likely to be elected
with Communist votes over their
veto. Gronchi was elected in
1955 under somewhat similar
circumstances.
The Social Democrats have
presented their chief, Giuseppe
Saragat, and the Republicans
have agreed to back him. Sara-
gat's main cards are his strong
support of the Fanfani left-
center experiment; the argument
that the Christian Democrats
should give another party a
chance after seven years in con-
trol of both presidency and
premiership; and the fact that
his relinquishment of Social
Democratic leadership would fa-
cilitate reabsorption of his
party by the Socialists.
Dark horses--or "candidates
of weariness"--include Senate
President Cesare Merzagora,
Chamber President Giovanni Le-
one, and Vice Premier and Chris-
tian Democratic party president
Attilio Piccioni. A long shot
is Fanfani, to whom the Chris-
tian Democrats might turn in des-
peration as the only one with a
built-in majority.
SECRET
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I%kw SECRET
The 6 May presidential
election in Colombia will be
largely a test of the govern-
ing coalition's ability to
demonstrate strong voter sup-
port for the National Front
system--the most likely basis
for continued political sta-
bility in Colombia. This sys-
tem--which has afforded consti-
tutional rule since the over-
throw of dictator Rojas Pin-
illa in 1957 and has calmed
traditional Liberal-Conserva-
tive hostilities--provides for
alternation of the presidency
between the Liberal and Con-
servative parties and appor-
tionment of all elective and
appointive offices on a parity
basis.
Almost certain to be elect-
ed president is Conservative
Senator Guillermo Valencia,
candidate of the moderate
Liberal-Conservative coalition
which furnishes the major con-
gressional support for the
National Front government. Re-
portedly pro-US, Valencia plans
to visit the US after the elec-
tion. His only major opponent
is Alfonso Lopez, Communist-
supported candidate of a minori-
ty Liberal faction opposed to
the bipartisan government. As
a Liberal, Lopez is barred
constitutionally from taking
office, but he would demand
some cabinet posts should he
poll many votes. The rightist
Popular National Alliance party
has nominated ex-dictator Rojas;
his ,prestige among former de-
votees will probably divert
some votes from Valencia.
There are indications that
many Liberals--unwilling to vote
Conservative--will abstain rather
than vote for the leftist Lopez.
A large number of abstentions
would tend to weaken Valencia's
effective authority as presi-
dent and undermine the National
Front.
The new president faces a
severe balance of payments
situation, aggravated by the
continuing decline of the
world coffee market--from which
Colombia derives most of the
capital to finance its re-
form programs. It is generally
believed that most Colombians
support the National Front
but that Valencia must deal
effectively with the serious
socio-economic problems to
avert the outbreak of wide-
spread violence and a possible
military takeover.
Rural violence continues
to plague Colombia, with heavy
army and police casualties in
March--the highest for any
month in two years--indicating
a likely buildup of an antigov-
ernment campaign. Government
security forces are expected
to take precautions against
possiible outbreaks during the
electoral period.
SECRET
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SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
THE BOLIVIAN-CHILEAN DISPUTE
Bolivia is making a major
issue of its dispute with Chile
over the waters of the Lauca
River. It has appealed to the
Council of the OAS and has asked
that Article 6 of the Rio Treaty
of 1947, which provides for ar-
bitration in hemisphere dis-
putes, be invoked against Chile.
Chile, which wants the
Lauca water to irrigate land
near Arica, conferred with Bo-
livia when plans for the project
were completed in 1939, and fre-
quently thereafter while con-
struction was in progress, but
Bolivia made no protest until
late in 1961 when it abruptly
accused Chile of "geographical
aggression." Bolivian mobs
stoned the Chilean Embassy in
December when the irrigation
system was tested, and again in
April when Bolivia suspended
diplomatic relations. Chilean
officials, although consistently
maintaining a conciliatory atti-
tude, have refused to accede to
Bolivian demands that use of the
water be postponed.
The agitation against Chile
seems to have been incited large-
ly to rally domestic support for
the governing Nationalist Revo-
lutionary Movement (MNR) in the
June congressional elections.
Shortages and price increases
in basic commodities have re-
cently accentuated disillusion-
ment with the government's
failure to show progress in
economic development. Apathy
among its nominal adherents,
as well as strong opposition
among some urban elements,
have apparently led the MNR to
fear it will not receive its
usual high percentage of the
vote.
Periodically during the
past ten years, MNR members
have rallied to the support of
the government when it appeared
threatened by domestic or for-
eign enemies, and the govern-
Lake
Cat-ot nr
71 . fak,
ra
Chun(
L I V I A
)CHILE
? ment under both President Paz
and his predecessor has some-
times exaggerated or even fab-
ricated such threats to secure
a favorable political effect.
Bolivia's charge against
Chile in the OAS may have fur-
ther international repercussions
also. The dispute over the
Lauca River has already led to
speculation in the Bolivian
press of a renewed demand for a
Pacific Ocean port. Ecuador,
moreover, may find in the in-
vocation of the Rio Treaty a
pretext to reopen its boundary
dispute with Peru--settled under
this protocol in 1942 with the
US as one of the four guarantor
powers.
SECRET
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WAIP; SECRETE
CURRENT INTELLIGENCE WEEKLY SUMMARY
Official concern over agri-
cultural difficulties was ap-
parent in the report of North
Vietnamese Vice Minister of
Agriculture Nguyen Van Loc at
.a recent agricultural meeting
called by the party central
committee. Precipitation this
year has been below normal,
and the task of maintaining
soil moisture is apparently
being complicated by a shortage
of irrigation equipment and by
apathy among the peasants. Al-
though the drought continues,
officials appear to be con-
cerned less with adverse
weather than with the accumulat-
ing evidence of poor leadership
in the collectives and con-
sequent shortcomings in agri-
cultural planning and organiza-
tion. Their concern, however,
has not yet affected investment
priorities; heavy industry will
be favored over agriculture
again this year.
This year's first major
crop of rice, to be harvested
during May and June, is report-
edly "not prosperous" because
of shallow plowing and harrow-
ing, poor fertilization, and
general lack of care in cultiva-
tion. In addition, it is
reported that cultivation of
secondary crops such as corn,
sweet potatoes, and manioc
(an edible starchy root) is
lagging, and that too little
acreage has been planted in
manioc. The official explana-
tion puts more blame on "the
uncomprehensive leadership of
party committees" than on the
weather. Since expansion of
these secondary crops was
largely responsible for last
year's slight increase in agri-
cultural output, failure to
maintain this output in 1962
could have a serious impact
on the food situation.
The regime has also experi-
enced difficulty with its re-
cent innovation of an autumn
harvest. This policy seeks to
introduce a third major rice
crop between the traditional
harvests in May-June and in
October-November. Attempts to
enforce this new policy have
apparently delayed other
harvests because of overlapping
work requirements. Hanoi admits
that "pessimistic and negative
thoughts" prevail in those areas
where the 1961 autumn crop in-
terfered with other crops and
led to low yields. Nevertheless,
orders have gone out to in-
crease the acreage devoted to
the autumn crop, and the regime
has taken the unusual step of
exempting it from purchase by
the state this year. Although
farmers have been warned against
allowing the autumn harvest to
interfere with the other
harvests, it seems likely that
the incentive offered for this
crop will in fact contribute
to a slackening of effort on
the other crops.
In a report on the 1962
plan presented to the National
Assembly on 18 April, Vice Pre-
mier Nguyen Duy Trinh, chairman
of the State Planning Commission,
stated that the total value of
agricultural output in 1962 was
scheduled to be 11 percent above
the 1961 level. Special efforts
were asked in agriculture in
order to "solve the food question"
and to provide raw materials for
industry and goods for export.
Any shortfall in agriculture will
undoubtedly affect the optimistic
goals for raising industrial out-
put and exports. Even more sig-
nificant, however, is the need
to increase food supplies in
order to improve near-subsistence
diets, rebuild depleted food 25X1
stocks, and expand incentives
for workers.
SECRET
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,S 'CRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
SPECIAL ARTICLES
WEST NEW GUINEA
West New Guinea, the ob-
ject of a twelve-year dispute
between the Netherlands and
Indonesia, is likely to re-
main an economic liability
for the foreseeable future
and to present administrative
difficulties to whatever power
assumes the task of governing
it. It is one of the least
developed areas in the world:
its resources are extremely
limited, and its Papuan in-
habitants are backward and
culturally dissimilar. Its
area of 151,789 square miles
is populated by a sparse 700,-
000, and large parts are ac-
cessible only by air. Should
Indonesia acquire West New
Guinea and make a conscientious
effort to administer it, the
added task would complicate
the considerable problems which
Djakarta already faces.
the territory by abrogating
the 1949 agreements and re-
pudiating its debts to the
Netherlands. In 1957 and 1958,
in further retaliation, Indo-
nesiLa seized Dutch assets
throughout the
nation; in
1960,
Djakarta broke
diplomatic
re-
lations with The Hague; and in
November 1961, President Su-
karno issued his "tri-command,"
by which he justifies the
present Indonesian military
build-up in areas near New
Guinea and the infiltrations
into New Guinea territory.
The command consisted of orders
to prepare for general mobili-
zation, to frustrate the Dutch
formation of a "puppet" state
in 'lest Irian, and to hoist
the Indonesian flag there.
Sukarno has since stated re-
peatedly that West Irian must
be "returned" to Indonesia in
1962 and that he will use force
if necessary to acquire it.
Background of the Dispute
During discussions with
Indonesian nationalist leaders
in 1946, the Netherlands agreed
that the future sovereign state
of Indonesia should "comprise
the entire territory of the
Netherlands Indies," of which
West New Guinea (or West Irian,
as Djakarta calls it) was a
part. The actual transfer of
sovereignty in late 1949, how-
ever, did not include this area.
Instead, the question of the
"political status of New Guinea"
was to be determined by further
negotiations within one year
of the transfer. These and suc-
ceeding conferences were unsuc-
cessful.
In 1956 Indonesia retali-
ated against Dutch retention of
Economic Liability
The territory of West New
Guinea has been a consistent
drag on the Dutch budget. Dutch
assistance required to make up
for the area's unfavorable bal-
ance of payments has increased
annually--from approximately
$13 million in 1952 to about
double that amount last year.
A modest ten-year development
plan announced in 1960, if car-
ried out, would raise Dutch sup-
port to $33 million by 1964,
after which the outlay is sched-
uled to decline. The Nether-
lands offered before the United
Nations last November to con-
tinue this aid, even if New
Guinea should achieve independ-
ence or be granted some special
status under the UN.
SECRET
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Dutch efforts at develop-
ment have been rudimentary.
Even with a considerable out-
lay the territory shows no pros-
pect for the rapid development
of a self-sustaining economy.
Agriculturally West New Guinea
has little to offer. Most of
the country consists of coastal
swamps or rugged mountains,
and even in the relatively few
level, well-drained areas, the
soil is thin and poor. Agri-
cultural exports are limited
to small quantities of copra,
nutmeg, and mace. Scientific
research to improve and vary
production has been under way
for only a few years. Although
some results--particularly in
rice and rubber--are favorable,
considerable time and invest-
ment will be required before
the outcome can be termed an
asset.
New Guinea's mountains are
forest-covered, and foreign in-
WEST NEW GUINEA
Surfaced road -I- Civil airfield
Unsurfaced road .. Air base
terest in the timber potential
has led the government to grant
one forestry concession and
several forest exploration per-
mits. Many of the trees, how-
ever, are worthless as timber,
and those that are of value
are difficult to exploit be-
cause of their inaccessibility.
Although valuable mineral
discoveries in the future are
a possibility, little so far
has been found. Oil was dis-
covered in 1934, but the yield,
never high, has declined since
1954. Exploration elsewhere in
the territory has been fruitless,
and the entire petroleum under-
taking is being closed out with
an ILnvestment loss.
A combine of Dutch and
American companies has a 75-
year lease to investigate de-
posits of cobalt, nickel, man-
ganese, and pyrites, and possible
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deposits of gold, silver, and
platinum. Another joint com-
pany is prospecting for gold,
and copper mining is expected
to begin in about four years.
West New Guinea has few
roads, and these are generally
limited to towns and oil-produc-
ing districts. Even well-de-
veloped trail nets are found
only in the northwest peninsula
and the Merauke region in the
south. Air transport supplies
the administrative and material
needs of the Dutch and Eurasian
community of some 18,000 and
the many missionary societies.
Rivers are the principal means
of native transport to the in-
terior.
Administrative Problems
Over half the scattered
population of West New Guinea
lives in tribal societies gen-
erally among the most primitive
in the world. In areas not
under direct government adminis-
tration--which in 1960 still
comprised 20 percent of the
territory--metals, cloth-weaving,
and cereal foodstuffs are un-
known, and pottery making has
been mastered only sporadically.
The population ranges cultural-
ly from headhunters to third-
generation Christians.
No one language is in gen-
eral use. Dutch is the official
language, but Malay is used
along the coast in both busi-
ness and government. In the
interior, there are some 100
languages and dialects. The
terrain in some large areas
has so isolated the tribes that
new languages appear to emerge
every dozen miles.
Only in very recent years
has the Dutch administration
begun to emphasize education
and to prepare West New Guinea
for self-government. Schools,
long loft to the missionaries,
by 1957 were more than half
government-owned or -subsidized.
The total number of school chil-
dren is about 60,000, most of
them between the ages of six
and twelve. They are enrolled
in establishments ranging from
three-year primary village
schools, which account for the
majority of the students, to
secondary and vocational techni-
cal schools. About 35 Papuans
are studying in Holland, but
only a few of these are in uni-
versities.
In 1955 the Netherlands
instituted local and regional
councils in north and northwest
New Guinea--the most advanced
area. Members were appointed
until 1959, when limited elec-
tions were permitted. The
councils have advisory powers
and are intended "as a prepara-
tion and training school for
the establishment of autonomous
communities."
In April 1961 the Dutch
established a 28-member national
consultative council of 16 elect-
ed and 12 nominated persons,
23 of whom were Papuan. Papuan
participation in administration,
all at low levels, now is approxi-
mately 50 percent, but under the
Dutch program it has been sched-
uled to reach 95 percent by 1970.
In December the council adopted
a flag and a national anthem
and voted to call the territory
West Papua.
Any administering power
must contend with the limited
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CURRENT INTELLIGENCE WEEKLY SUMMARY
but increasingly articulate po-
litical sentiment in West New
Guinea. The Dutch consider
politically aware Papuans--pos-
sibly equated with the estimated
40,000 who voted in 1961--as be-
longing to one of three groups:
those who favor continued Dutch
administration, those who pre-
fer a merger with Indonesia,
and those who look forward to
eventual self-government. Pre-
ponderant sentiment lies at
present with the last of those.
At least seven political parties
contested the 1961 council elec-
tions; five of these parties are
opposed to merger with Indonesia.
Complications for Indonesia
Indonesia is not able to
underwrite its own program of
economic development and has
accepted large-scale foreign
aid, including over $600 mil-
lion in economic and technical
assistance from the Soviet bloc.
The military buildup "to con-
front the Dutch" and possibly
to wage war over New Guinea
has contributed to a foreign
exchange deficit and has caused
economic dislocations within
the country. Lacking any ca-
pacity to undertake a develop-
ment program in Now Guinea,
Indonesia reportedly plans to
request large-scale outside
economic assistance to support
its administration there once
the area has come under Dja-
karta's administration. The
foreign minister made a general
approach for aid to the American
ambassador in mid-April. Regard-
less of the source of such as-
sistance, the undertaking would
add to Indonesia's debts. New
Guinea could offer nothing to
Indonesia's economic?base, and
its economic dificiences, even
without a development program,
would be a drag for years on
Indonesia's economy.
Indonesia, like most new
nations, is short of administra-
tive and technical personnel.
It can little afford to send
numbers of its own trained man-
power to New Guinea for adminis-
trative or defense purposes.
Although Djakarta is training
Papuans in Indonesia for a New
Guinea civil service and might
be willing to use some Dutch
or UN personnel in the area,
it would probably still insist
on sending some of its own
limited manpower for military
and administrative posts.
The temptation to Indonesia
would seem to be to acquire the
area. and then leave it alone.
Such. a policy, however, would
probably encourage separatist
sentiment among articulate Pa-
puans who might request assist-
ance from the Netherlands or
from Australia, which holds the
other half of the island of New
Guinea. Indonesia, itself a
culturally diverse and geograph-
ically sprawling archipelago,
has repeatedly faced real or
incipient separatism. The gov-
ernment would not be likely to
permit a separatist movement to
develop unchallenged in New Guin-
ea. Moreover, beyond the coast-
al a:reas, any lapse in adminis-
trative discipline would probably
encourage a renewal of once-
widespread tribal warfare.
President Sukarno, who
has almost singlehandedly pro-
moted the New Guinea campaign,
appears unaware of the problems
which acquisition of the area
is likely to bring. To him,
New Guinea represents an un-
finished phase of the national
revolution. Until it is merged
with Indonesia, his own life's
work is incomplete. Under
his leadership, there is no
alternative to the ultimate
acquisition of West New Guinea.
The only choice with Sukarno
is whether the acquisition shall
be by force or by negotiated
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CURRENT INTELLIGENCE WEEKLY SUMMARY
YUGOSLAVIA'S DOMESTIC PROBLEMS
The year 1961 was a period
of significant change for Yugo-
slavia. Early in the year,
Belgrade put into effect a
broad program of economic
liberalization designed to
make the economy more respon-
sive to foreign and domestic
markets and to decentralize
economic decision-making. In
the political sphere, the Tito
regime took steps to increase
public participation in gov-
ernmental functions and started
the process of adopting a new
constitution. These policies
have been challenged by special
interest groups, both inside
and outside the Communist party.
How the federal leadership
copes with the economic and
political problems which have
resulted from these develop-
ments will in large part deter-
mine whether Yugoslavia continues
to make progress economically
and politically. Any marked
retreat from the present policies
could result in economic stagna-
tion and growing instability.
Ideological Bases
Yugoslav leaders divide
their country's development
since World War II into three
periods. Up to 1953, they were
establishing a totalitarian
state and the party was consoli-
dating its control. Between
1953 and 1960, the regime ex-
perimented in an effort to
find appropriate programs and
institutions for Yugoslavia's
future economic and political
development. The country is
presently in a period devoted
to implementing programs de-
rived from these experiments
and designed to build an eco-
nomically developed state hav-
ing general public acceptance.
Yugoslavia's road of Com-
munist development is ideological-
ly unorthodox, differing signifi-
cantly from that prescribed by
Moscow. This disagreement is
basic to all Yugoslavia's dif-
fere~nces with the bloc and be-
comes broader as Belgrade enun-
ciates and puts its own concepts
into effect. Yugoslav ideologists
assert, for example, that Moscow,
beginning in the Stalin era, cor-
rupted Marxism by giving the
state too large a role in society;
Belgrade intends to avoid this
pitfall. When the Yugoslavs
talk about the "withering away"
of their own state--a process they
say now is under way--they mean
that standard government bodies
are already being increasingly
divested of managerial respon-
sibilities.
Under the reform program
instituted last year, industrial
workers' councils and management
groups generally had the author-
ity to determine their own affairs,
such as setting production levels,
wages, and rates of expansion.
Overall regime control of the
economy was exercised through
fiscal measures, such as taxes
and credits; through the authorita-
tive "advice" of informal con-
trol agencies, such as local
governments and producers as-
sociations; and by virtue of the
Communist party members in many
of the managerial groups.
The regime felt secure in
dispersing economic and political
authority, assuming that the
groups to which managerial re-
sponsibilities were being trans-
ferred were as loyal to the
Tito :leadership as the govern-
ment bureaucracy. This assump-
tion has proved erroneous, however,
and the programs promoting
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CURRENT INTELLIGENCE WEEKLY SUMMARY
economic liberalization and
political permissiveness have
released many hitherto quiescent
social and political forces.
While the elements behind these
forces may be loyal to the
regime's overall program, they
are not blindly obedient to its
specific directives and disagree
with its policy of iron unity
on all questions.
Thus, the once-homogeneous
regime is faced with conflicts
between rural and urban interests,
economic conservatism versus
liberalism, republic nationalism
versus Yugoslav federalism,
labor versus management, and
the haves versus the have-nots.
In coping with the serious
economic problems which these
conflicts are creating and in
attempting to limit dissent,
however, the regime must be
careful not to use heavy-handed
measures which would also deter
the local initiative the economic
liberalization was intended to
spark.
Problems Caused By Eco-
nomic Liberalization
The Yugoslav economy turned
in a poor performance during
1961, its first year under the
economic reform. The success
of the program depends on the
country's ability to acquire
foreign exchange. The regime
intended to force Yugoslav enter-
prises to produce quality goods
efficiently by stopping govern-
ment subsidies and by importing
quality foreign goods to com-
pete with domestic products on
the home market. Yugoslavia
already has a short-term foreign
debt problem, however, and as
of 30 November 1961, owed $878,-
000,000 abroad, of which 22
percent will fall due before
the end of 1963 and 64 percent
within the next five years.
Although the Soviet bloc
has been unwilling for some
years to make loans to Yugo-
slavia, Belgrade has had rela-
tively little trouble in ac-
quiring foreign exchange through
loans from the West. In fact a
number of Western states supplied
around $275,000,000 specifically
for the economic liberalization
and reform program. The foreign
policy positions Belgrade has
taken during the past year,
however, particularly at the
nonaligned summit conference
last September, has made the
West increasingly reticent to
grant loans.
This has made it necessary
for Yugoslavia to depend more
on exports as a means of ac-
quiring foreign exchange. Last
year, however, exports fell,
contrary to regime expectations,
and imports rose. As a result
of this imbalance in trade and
of its debt payment requirements,
Belgrade, to meet its obligations,
must obtain around $200,000,000
in foreign exchange in 1962.
There are indications that Bel-
grade is already falling behind
in repayment of some types of
short-term commercial credit.
Publicly, Yugoslav officials
blame last year's poor economic
performance on bad weather, which
caused a mediocre harvest; on
the type of Western economic
assistance provided for the re-
form.--part of which was tied to
purchase of specific commodities;
and on the growing integration
of European economic groupings.
Trade statistics show, however,
that these were contributory but
not primary causes.
What in fact happened was
that under the new, relaxed
economic regulations, many formerly
dormant problems quickly came
alive. Many formerly subsidized
Yugoslav enterprises were un-
enthusiastic about the new rel-
atively free market in which
competition would limit profits,
and in effect staged an export
strike. They did this by fail-
ing to modernize their foreign
merchandizing organizations or
to take any steps to improve
their competitive positions. Now,
apparently with the support of
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some high-level officials, these
enterprises are pressing for a
restoration of government sub-
sidies.
The decentralization of
economic decision-making created
other economic strains as well.
Factory management groups and
workers' councils, for example,
were given control over a great-
er share of enterprise income.
Many used this power to raise
industrial wages completely out
of proportion to increases in
worker productivity. In doing
so, they ignored regime policy
and created inflationary pres-
sures. Belgrade has ordered
industry to hold down wages in
1962, so that wage and produc-
tivity increases balance out for
1961-62, despite the public
grumbling this will probably
cause.
A regime effort to restore
a more reasonable balance be-
tween agricultural and industrial
prices also faltered. Agricul-
tural prices rose as scheduled,
but so did industrial prices.
As a result, a further increase
in agricultural prices will be
required this year even though
this will further stimulate
inflationary pressures.
On 13 April, the regime
retreated somewhat from the
spirit of the reform program
by making several other polit-
ically distasteful decisions
in an effort to check inflation
and increase the liquidity of
the economy. In addition to
the bill holding down wages,
the regime has also set maxi-
mum price levels. Parliament
ordered enterprises to settle
all outstanding debts by 13
May; institutions and government
bodies have until the end of
June. To enable industrial
enterprises to build up their
working capital holdings, in-
ventories of products not in
demand are to be liquidated by
sales at reduced prices.
The government, for its
part, has announced a $16,600,000
cutback in budget expenditures
and a $24,000,000 reduction in
investments, although this will
further slow the country's rate
of economic growth. Construction
of "administration or manage-
ment" buildings has been for-
bidden for the remainder of
the year. A new tax has been
levied on all imports, and
health service expenses will
be held to the amount spent
last year.
Republic Nationalism
The paramount political
problem facing the regime today
is the revival of frictions
between the federal government
and Yugoslavia's six culturally
and economically diverse
nationalities, represented
by republics and autonomous
regions in the federal struc-
ture. In the December session
of parliament, for example, a
number of deputies attacked
the regime's economic plan
for 1962 on the grounds that
it was unrealistic--i.e., on
subjective grounds: the in-
terests of their specific
national republics were not
adequately served. Two Slovene
SLOVENIA
0
Ljubljana
- Republic boundary
0 Republic capital
- - - Autonomous area boundary
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130SNIA AND
I IERCLCOVINA
Volvo inn
Novi Sad I
T ~'?(Hunga,ia,
ity)
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CURRENT INTELLIGENCE W]'JEKLY SUMMARY
deputies took the unprecedented
action of voting against the
plan, and Slovenia subsequently
declined to legislate an eco-
nomic plan for the current
year.
For the same reasons, in
January, Slovene and Macedonian
members of a commission charged
with drafting a new Yugoslav
constitution were so adamant
in their defense of "states
rights" that the regime-proposed
draft had to be discarded. In
early April, when it was an-
nounced that a draft still was
not ready, parliament had to
extend its mandate for up to
a year and postpone national
elections. The Slovene national-
ists by their actions declared
themselves in opposition to
the most important Slovene in
the federal hierarchy, Vice
President Edvard Kardelj, who
is also chairman of the Con-
stitutional Commission. Prob-
ably because of the national-
istic activities of the Slovenes
and the Macedonians, the Croa-
tian leadership met in mid-March
to consider formulation of posi-
tions reflecting their own
national interests.
Internal Security
The emergence of open
challenges to the economic and
political policies of the Tito
leadership points up the weak-
ness of the regime's control
mechanisms. Over the years,
Belgrade has discarded the
orthodox Communist mechanisms
of control, such as police
terror, and in their place
constructed an intricate system
of front organizations, ranging
from trade unions to workers'
councils.
These organizations were
effective as control mechanisms
as long as the Communist party
members who dominated the fronts'
leaderships unfailingly carried
out Belgrade's orders. According
to the regime's own admission,
however, many of these organizations
under the liberalization program
"turned into ambassadors endeavor-
ing to justify the stagnation and
lagging behind of industrial produc-
tion"--caused by the indiscipline
of industrial management and
workers' councils--"instead of
offering concrete assistance to
direct manufacturers." During
the April session of parliament,
the regime ordered establishment
of new commissions at all levels
of government to supervise the
allocation of enterprise income.
Certain of the control
organizations seem to be court-
ing ;public favor, even though
their leaders are not dependent
upon the people for their posi-
tions. The trade unions and
the appropriate committees of
parliament, for example, have
announced their opposition to
a regime proposal that the
public pay in part for treat-
ment under the country's social-
ized medical program. At the
December session of parliament,
moreover, one of its two chambers
refused to consider proposed
amendments to the law on enter-
prise income because it had not
had time to consider the bill
adequately. The groups engaged
in this type of popularity con-
test seem to be looking beyond
the current situation.
Although the leadership
of the Yugoslav party has re-
mained relatively stable since
World War II, the character
of the party has not. Of its
over 1,000,000 members, only
72,000 fought with Tito in the
multinational partisan strug-
gle against the Italians and
Germans. The regime admits
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CURRENT INTELLIGENCE WEEKLY SUMMARY
that the dilution of partisan
camaraderie has lessened the
party's militancy and weakened the
ties between the leadership
and the rank and file. Judging
from events of the last year,
persons with views contrary to
those of the Tito leadership
have also been brought into
the party, and they are numerous
and powerful enough to draw
republic and local party leaders
into conflict with Tito.
Outlook
From 14 to 16 March Tito
held a conference of republic
and federal party, government,
and front organization leaders
at which "current economic and
political questions" were dis-
cussed with the focus on en-
suring greater economic stabil-
ity and more responsible con-
duct by regime leaders. The
party's executive committee
met again on 3 April. Measures
such as the establishment of
control commissions at the
April session of parliament
were decided upon at these
meetings, but the full results
of the deliberations are prob-
ably not yet apparent and
further decisions are probably
required.
It seems probable that
certain regime leaders are
pressing for a return to more
orthodox Communist economic
and political practices and
the removal of officials who
sponsored policies of liberal-
ization. These leaders will
be only partially satisfied
by the regime's most recent
actions, however, and can be
expected to continue their
pressure. Enterprise manage-
ments, moreover, which also
attempted to sabotage the re-
form, now find themselves under
far greater financial pressure
as a result of the partial re-
treat from the program.
The regime pledged at the
April parliamentary session
that there would be no general
retreat from economic liberal-
ization. Liberals and republic
nationalists will take heart
from this assertion. At the
same time, these elements will
find disturbing the limited
renewal of federal interference
in local economic matters.
The Tito leadership prob-
ably would not attempt a com-
plete reversal of the general
liberalization trend. The
Yugoslav people during the past
ten years have become accustomed
to a gradual relaxation of
political repression and a con-
tinuing increase in their material
well-being. They would not quiet-
ly accept a return to old ways,
and there are apparently those
both inside and outside the re-
gime who would be willing to lead
them in an attempt to oppose
such a move.
Yugoslavia appears headed
into a period of unknown dura-
tion. in which political cohesive-
ness and stability will decrease.
Leaders of opposition elements
may well continue to organize
their forces and seek wider
support in the expectation
that their own particular fac-
tion and views will prevail in
the struggle which will ensue
when the 69-year-old Tito dies.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
THE PORTUGUESE COMMUNIST PARTY
The small but tightly dis-
ciplined Portuguese Communist
party (PCP) has survived many
years of police repression. It
probably has no more than 8,000
members, but a high degree of
organization has enabled it to
infiltrate student, intellec-
tual, and worker groups, and to
organize front organizations.
The party has been increas-
ingly successful in exploiting
the widespread economic dis-
tress in Portugal, where living
standards are the lowest in
Western Europe and where it
faces no strong competition
from other political organiza-
tions. The only legal political
party is the government's Na-
tional Union, although non-
Communist opposition groups are
tolerated to a limited degree.
These are middle-class in back-
ground, disunited, and generally
ineffective. The PCP is the
only opposition group to
champion vigorously the workers'
demands for better living
conditions.
During the last few years
the PCP has been able to capi-
talize on the growing dissat-
isfaction with the domestic
and overseas policies of Prime
Minister Salazar's regime. The
party is further assisted by
the feeling of many among the
non-Communist opposition groups
that the PCP is no threat to
them and that its members are
Portuguese first and Communists
second. Unlike the don-Com-
munist opposition in Spain,
they seem to have no strong
convictions against collaborat-
ing with the Communists.
Background and Strategy
The PCP was banned in
1929 shortly after Salazar as-
sumed dictatorial powers, but
began to attract a popular
following about the time of
the Spanish civil war. It was
almost destroyed by police ac-
tion between 1937 and 1940,
but subsequently was revitalized
by a, new leader, Alvaro Cunhal.
Under his direction, the PCP
increased its membership to
10,000 by 1949, when Cunhal was
jailed. This figure fell to
4,000 six years later, when
the police blocked party ef-
forts to build a unified oppo-
sition front.
From 1956 to 1960, the
PCP was under the dominance of
its bourgeois faction, and it
concentrated on recruiting
students and intellectuals
--who now make up about a third
of its membership--rather than
industrial workers and peasants.
It supported Humberto Delgado
for the presidency in 1958,
infiltrated his organization,
and in mid-1959 utilized Delgado
as the figurehead for a new
opposition front, the National
Independence Movement.
In January 1960 Cunhal
and nine other PCP leaders es-
caped from prison. Cunhal was
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elected secretary general the
following year, and reversed
the party's emphasis on intel-
lectuals as targets in favor
of recruiting industrial workers
and peasants. The party aims
at a "national uprising," but
it has ruled out attempting to
incite a purely military up-
rising on the grounds that this
would result in a military junta
which would be violently anti-
Communist.
The Armed Forces
Tactics
The PCP's present tactics
are governed by its strategy
of supporting any group working
for the overthrow of the Sala-
zar regime. In this framework
it seeks to penetrate and con-
trol various organizations.
Its propaganda emphasizes the
need to improve living condi-
tions and restore democratic
liberties.
Despite the 1960 reversal
of emphasis in recruiting, the
party has continued to extend
its influence among university
students. Communists probably
organized the Oporto demonstra-
tions of 8 March 1962 in which
a number of students participa-
ted.
PCP penetration of univer-
sity students paid off in 1961
when reservists, called to active
duty because of developments in
Angola, enabled the party to
spread propaganda within the
armed services and encourage
desertion. As a group, young
reserve officers are considered
the least trustworthy element
among the regime's supporters.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
fleers, have been used for Com-
munist agitation among the
Portuguese military units as-
signed to Africa.
Outlook
The party has also used
students and reserve officers
to extend Communist influence
in Angola and Mozambique. As
early as 1954 it began to offer
help in creating Communist
parties in those two territo-
ries by recruiting African stu-
dents in Portugal--who are
largely mulattoes--into the
party's youth front for a future
African cadre. While there
has been some friction between
the PCP and the Africans--who
have on occasion appeared
more nationalist than Commu-
nist--these students, when
called to active duty as of-
In trying to spread dis-
content in the metropole, the
PCP can be expected to exploit
the government's difficulties
in Angola. Very recently the
clandestine Radio Free Portugal
has been aiding the party by
broadcasts probably emanating
from Rumania. The programs
have been devoted largely to
a denunciation of the war in
Angola and a call for amnesty
for Portuguese political prison-
ers and exiles. On 14 April
the PCP broadcast an appeal to
Portuguese workers to observe
May Day as the day of working-
class unity against the war and
the regime's restrictions on
popular freedoms.
The PCP's potential is
strengthened by its capability
for infiltrating the government,
the increasing unrest in the
country, and the lack of cohesion
among the non-Communist opposition
groups. Although unlikely to
affect the policies of any
government which would immediately
follow that of Salazar, it would
probably be able to make trouble
for any subsequent and probably
more liberally oriented successor
by simultaneously stepping up
its infiltration tactics and ex- 25X1
ploiting popular demands for
radical socio-economic changes.
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 25X1 Approved For Release 2008/04/24: CIA-RDP79-00927AO03600040001-0
Approved For Release 2008/04/24: CIA-RDP79-00927AO03600040001-0