(UNTITLED)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A003800090001-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 41
• Document Creation Date: December 21, 2016
• Sequence Number: 1
• Content Type: SUMMARY

Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
,qW s
SECRET
SECRET
State Dept.
review completed
NAVY review
completed.
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
COPY NO.- -75
OCI NO. -0443/62
16 Nov 1962
CENTRAL INTELLIGENCE AGENCY
I (I OFFICE OF CURRENT INTELLIGENCE
Excluded from automatic
downgrading and
declassification
Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
 25X1 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
?~ SECRET 1W
CURRENT INTELLIGENCE WEEKLY SUMMARY
T H E W E E K I N B R I E F
(Information as of 1200 EST 15 Nov)
CUBAN DEVELOPMENTS . . . . . . . . . . . . . . . . . . . . Page 1
While 42 Soviet offensive missiles and some related
equipment and personnel have already been withdrawn from
Cuba, there is still no sign that other military equip-
ment, including IL-28 jet light bombers, is being prepared
for removal. Cuba's nearly complete silence on the status
of the Castro-Mikoyan talks is continuing amidst specula-
tion by foreign observers on the scene that every effort
will be made to prevent a breakdown in negotiations or
any hint of sharp disagreements from becoming publicized.
Some of the five Latin American governments maintaining
relations with Cuba are showing increasing unwillingness
to sanction further moves against the Castro regime.
BLOC DEVELOPMENTS IN THE AFTERMATH OF THE CUBAN CRISIS .
. Page 3
Moscow is developing its postcrisis line which stresses
that a final Cuban settlement will open the way for prog-
ress in resolving more important questions such as Berlin
and a nuclear test ban. In both private conversations and
propaganda, the USSR is claiming that Khrushchev's com-
mitments to President Kennedy have been fulfilled but that
the US is seeking to avoid implementing the president's offer
of assurances against a US invasion of Cuba.
Soviet spokesmen have begun to indicate interest in
a Berlin conference next January or February.
There are indications that Mikoyan's talks with the
Cuban leaders will end shortly. Meanwhile, the Chinese
Communists are continuing their thinly veiled attacks on
Khrushchev's handling of the Cuban crisis.
DE-STALINIZATION AND RELATED PROBLEMS IN EAST GERMANY . . Page 6
The East German party is undergoing new strains re-
sulting from the bloc-wide de-Stalinization campaign and
from plans for reorganization to cope with the country's
persistent economic problems. Shake-ups are probable in the
lower and intermediate levels of party and government.
Party cadres, already demoralized by what they regard as
Soviet weakness on the Cuban and Berlin issues, appear
frustrated and apathetic, while the population continues
outspoken in its complaints about economic hardships.
CZECHOSLOVAKIA ABOLISHES AGRICULTURAL FREE MARKET . . . . Page 8
Protracted public discontent over food supplies has
led the Czechoslovak Government to forbid the private sale
of agricultural products. This is the latest in a series
of measures to improve control over state procurement and
distribution of agricultural products., However, it will
not increase the supply of food, and it may even reduce it
SECRET
BRIEFS
Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
 Approved For Release 2008/04/04: CIA-RDP79-00927A003800090001-3
W SECRET
by depressing the peasant's incentive to produce food on
his private plot. The outlook for improved supplies of
quality foods in the near future is not bright.
INDIA - COMMUNIST CHINA . . . . . . . . . . . . . . . . . Page 9
With the battle front essentially static, developments
have centered in the political and propaganda fields. Al-
though both sides ritually profess their interest in.a
negotiated settlement, they are further apart--and nearer
a break in relations--than ever before. India is seeking
to keep open and improve its lines of communications with
Pakistan, the USSR, and Nepal. On the home front, the country
is approaching a war footing.
DEVELOPMENTS IN LAOS . . . . . . . . . . . . . . . . . . . Page 11
Premier Souvanna Phouma once again has threatened to
resign, claiming that his efforts have been hamstrung by the
intransigence of both the right- and left-wing factions.
The coalition commission set up to oversee the implementa-
tion of the Geneva agreements has bogged down in factional
wrangling
Souvanna appears to have fashioned at least
a surface compromise in the dispute between rival neutralist
groups in Phong Saly Province.
THE YEMENI SITUATION . . . . . . . . . . . . . . ... . . . Page 11
Saudi Arabia, Jordan, and the UAR remain deeply in-
volved in the Yemeni conflict. Growing resistance from
royalist tribes in northern and eastern Yemen has caused
the UAR to raise the total of its troops in Yemen to some
10 000.
However, the defection to the UAR.of the
commander of the Jordanian Air Force and two pilots has come
as a serious blow to King Husayn, and may lead him to re-
consider his policy of aiding the Yemeni royalists. The
Yemeni revolutionary regime, meanwhile, has stepped up its
propaganda attacks against the Saudi and Jordanian monarchies
and the British government in Aden.
CONGO DEVELOPMENTS . . . . . . . . . . . . . . . . . . . Page 14
The Congolese army attack on Kongolo in North Katanga
appears to be faltering in the face of Katangan air attacks,
and Adoula is desperately trying to develop some air capa-
bility there. UN military forces have been authorized
to take action against "the attackers" in the air or on
the ground. UN officials evidently believe that attempts to
achieve Katanga's reintegration with the Congo through con-
ciliation have failed, and that greater pressures now must
be exerted against Tshombu. They are easpeciall seeking
ways to deprive Tshombe of his mining :revenues.
SECRET
ii
BRIEFS
Approved For Release 2008/04/04: CIA-RDP79-00927A003800090001-3
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
SECRET
CURRENT INTELLIGENCE WEEKLY,SUMMARY
FRENCH-ALGERIAN RELATIONS . . . . . . . . . . . . . . . . Page 15
French officials have shown increasing irritation with
Algeria's foreign policy and its attitudes toward French
property and interests. Paris' disenchantment is the
greater because of the scale of French economic aid, which
includes coverage of Algerian treasury debts expected to
reach $400 million by the end of 1962 and continuation
through 1963 of $200 million a year in direct economic aid.
A further accumulation of minor points of friction, partic-
ularly if the Algerian Government should demand precipitate
withdrawal from the French nuclear test sites, could cause
De Gaulle to adopt a tough attitude toward continuing aid
and toward a renegotiation of the Evian accords.
STATUS OF US-PORTUGUESE AGREEMENT ON THE AZORES BASES . . Page 17
Talks between the US and Portugal on an extension of
the Azores bases agreement which expires on 31 December have
not yet begun. The delay is due in part to Portuguese in-
sistence that certain outstanding issues be discussed first.
Instead of granting another five-year extension of this
agreement, Portugal will probably agree only to a temporary
arrangement allowing US access to the bases next year. It
would hope thereby to use the issue as a lever for ex-
tracting more American support for its African policy.
COMMUNISTS CONTINUE TO CONTROL ICELANDIC LABOR FEDERATION. Page 18
A new effort will be made to oust the Communists from
control of Iceland's central labor federation at its
biennial congress from 19 to 23 November, but prospects for
success are not bright. Through their control of much of
organized labor, the Communists apparently are confident
that they will be able to weaken and eventually topple
Prime Minister Thors' pro-Western government by fomenting
strikes aimed at undercutting its economic reform program.
In anticipation of the June 1963 parliamentary elections,
they are also seeking to revive flagging public interest in
the once-emotional question of US military bases in Iceland.
BRITISH GUIANA FOLLOWING COLLAPSE OF INDEPENDENCE TALKS . Page 19
Guianese political leaders, whose disagreements
caused the collapse of the recent London conference on
independence for British Guiana, are planning to step up
political action. Their activities may lead to public
disorders before the end of the year, particularly in
view of the possibility of new strikes and at least one
legislative by-election.
SECRET
BRIEFS
Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
%NPO JL+'(:KE1' V%W
OPPOSITION TO COLOMBIA'S AUSTERITY PROGRAM . . . . . . . Page 20
The Colombian Government's new austerity program has
aroused widespread opposition which may have serious
political repercusssions. President Valencia already is
being criticized for his failure to exercise effective
leadership during his three months in office. The new
crisis is likely to further weaken public confidence in
the National Front government.
SOVIET INDUSTRIAL MANAGEMENT . . . . . . . . .
. Page 1
Soviet leaders are once again making a major effort
to find a solution for problems of waste and inefficiency
in their industrial organization. The need is especially
acute at this time because the industrial machine is
straining to meet commitments to the rapidly expanding space
and military programs, to the growth of industry itself,
and to the consumer. The solutions that have been suggested
are, as usual, mainly organizational in character. The re-
gime's plan of action is to be aired at the party central
committee plenum scheduled to begin on 19 November.
STATUS OF THE ITALIAN COMMUNIST PARTY . . . . . . . . . . Page 6
The tenth congress of the Italian Communist Party (PCI),
which convenes in.Rome next month, must cope with the serious
and widespread disorientation the party has faced in the
postwar period. Many party leaders are dissatisfied with
the ambivalent attitude the PCI has taken toward the govern-
ment since the Fanfani coalition accepted the support of
the Communists' erstwhile Socialist Party allies. The
threat of parliamentary isolation and the need to maintain
its political vitality have increased pressures for changes
in the party's structure and ideology.
PROSPECTS FOR INCREASED BLOC-MALAGASY RELATIONS . . . . . Page 11
The Malagasy Republic's moderate-government, which-has
maintained-a strongly anti-Communist position since the island
became independent in 1960, appears to be shifting toward a
cautious receptivity to bloc overtures. Although'this ten-
dency has so far produced only an increased number of quasi-
official contacts, it could be accelerated by highly placed
members of the opposition party and.the examples of African
states. Since the present level of Western support has not
produced the prosperity and higher living standards popularly
expected to follow independence, Tsiranana may accept bloc
aid and diplomatic relations.
SECRET
BRIEFS
Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
 Approved For Release 2008/04/04: CIA-RDP79-00927A003800090001-3
%me SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
WEEKLY REVIEW
CUBAN DEVELOPMENTS
Continuing photographic
reconnaissance flights over
Cuba by US military aircraft
have revealed no evidence that
the Soviet IL-28 (Beagle) jet
light bombers or other Soviet
military equipment unrelated
to offensive missile systems
are being prepared for with-
drawal. Assembly work on the
bombers and their trainer equiv-
alents is continuing at San
Julian airfield in westernmost
Pinar del Rio Province, where
33 of the 42 aircraft of this
type known to be in Cuba are
located.
seven of these aircraft were
completely assembled or nearly
so, while another six were in
lesser stages of completion.
The nine IL-28 fuselage crates
at Holguin airfield in Criente
Province remain unopened. Ex-
tensive improvement of this
airfield, including the con-
structicn of covered aircraft
revetments, is continuing.
Soviet military equipment
remaining in Cuba includes the
24 surface-to-air missile (SAM)
sites, several cruise-missile
sites, SAM assembly and checkout
facilities, and, in the four
Soviet armored groups, such
weabons as Frog artillery
rockets, Snapper antitank mis-
siles, and considerable quantities
of conventional land armaments.
At least 11 Soviet ships
have left Cuba with ballistic
missiles and associated equip-
ment. Alongside and overhead
inspection by US naval units
showed that eight of these ships
are carrying a total of 42
MRBIM.s as deck cargo.
Soviet personnel--probably
members of ballistic missile
units--also are leaving Cuba.
Photographs of several-of the
outbound Soviet ships show
large numbers of personnel and
improvised mess facilities on
deck. In addition, a Soviet
passenger ship has left Cuba
recently, apparently carrying
military personnel.
Aerial photography indi-
cates that large quantities of
ballistic missile equipment re-
main in Cuba at several loca-
tions--including the ports of
Mariel and Casilda, where the
missilesthemselves were put
aboara ships--as well as at
several of the dismantled mis-
sile sites. Much of this pre-
sumably will be loaded on Soviet
ships now in Cuban waters or
on route to Cuba from the USSR.
Photography
confirmed that at least 11 of
the 29 MIG-21C (Fishbed) jet
fighters then located at the
Camilo Cienfuegos airfield near
Santa Clara, Las Villas Province,
were armed with air-to-air
missiles. Of another 8 MIG-2lCs
at San Antonio de los Banos air-
field in Havana Province, one was
observed to be equipped with
missile launchers, but it could
not be determined whether mis-
siles were in place.
SECRET
16 Nov 6 -Approved For Release 2008/04/04: CIA-RDP79-00927A003800090001-3 of 20
 Approved For Release 2008/04/04: CIA-RDP79-00927A003800090001-3
NOW
SECRET'
CURRENT INTELLIGENCE WEEKLY SUMMARY
HAVANA
yelp
~+ ArtemiSL.s
e
saytiago de~_ttis
off. -\
a. V 1%
? Confirmed surface-to-air missile (SAM) site
X Possible SAM site, exact location unknown
A Support facility for processing equipment
o Coastal defense cruise-missile site
--Effective air defense perimeter
(estimated radius: 20-25 nautical miles)
Airfield with MIG aircraft
Manzanillo
Santiago
? de COO
A fifth possible cruise-
missile installation was observed
near Marital in photography
The site consisted
of two small clearings atop
heavily wooded hills; the two
clearings were connected by roads
with partially concealed storage
areas and a headquarters area.
The Cuban armed forces are
further relaxing the state of
alert which has been in force
since 22 October.
The Castro regime has main-
tained a tight veil of secrecy
over the status of the extended
Castro-Mikoyan talks. During
the 10-12 November period, Cuban
press and radio information did
not even refer to Mikoyan's pres-
ence in Cuba.. The silence was
broken with publication of the
Soviet deputy premier's visit
to the University of Havana on
12 November. Mikoyan's repeti-
tion of earlier Soviet statements
of "support" for Castro's five
demands for "peace with dignity"
and his styling of the Cuban
demands as "a program for peace
in the Caribbean" were dutifully
reported in the Cuban press.
25X1
L while
serious differences do exist
between Castro's position and
that of the Soviets, both sides
seem equally determined to avoid
a breakdown in their talks and
will make every effort to pre-
vent word of their disagree-
ments from becoming public.
The apparent easing of
the Cuban crisis has produced
a growing disinclination among
at least three of the five Latin
American governments maintaining
diplomatic relations with Castro
to sanction stronger action
against him at this time. Chile
evidently intends to maintain
relations with Cuba, apparently
in order to avoid a split in
the governing coalition and to
be in a position to assert
Chilean influence in negotiations
with Cuba.
SECRET
16 Nov 62 Ur,,-.r,. .
Approved For Release 2008/04/04: CIA-RDP79-00927A003800090001-3 e
V.S.
eal Base
2 of 20
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
SECRET
BLOC DEVELOPMENTS IN THE AFTERMATH OF THE CUBAN CRISIS
Moscow's developing line
in the postcrisis period stress-
es that a final Cuban settle-
ment will open the way for prog-
ress in resolving more impor-
tant questions such as Ber
and a nuclear test ban.
the USSR is c aiming
that Khrushchev's commitments
to President Kennedy have been
fulfilled but that the US is
seeking to avoid implementingits
offer of assurances against
an invasion of Cuba.
The USSR concentrated on
maneuvers last week to block US
demands for UN on-site inspec-
tion and verification of the
removal of the missiles from
Cuba. Moscow radio charged on
14 November that US insistence
on the removal of "Soviet-made
military planes which are the
property of the Cuban armed
forces" shows that Washington
is more interested in maintain-
ing tension than settling the
conflict. According to an un-
confirmed press report, Khrush-
chev also sought to undercut
US demands that the IL-28 (Bea-
gle) jet light bombers be re-
moved by promising in a new
letter to President Kennedy that
these aircraft will eventually
be withdrawn and that, in the
meantime, they will be kept
under Soviet control.
Moscow continues to main-
tain silence on Mikoyan's talks
with Castro, except for noting
that their tour of Matanzas
Province on 9 and 10 November
"was marked by an exceptionally
friendly atmosphere." The So-
viet press has contained no
hints of the disagreements which
apparently obliged Mikoyan to
prolong his stay in Cuba. There
were indications, however, that
the talks will end shortly and
that Mikoyan would stop in New
York for further talks with UN
and US officials on his way
back to Moscow.
Future Soviet Tactics
Moscow's apparent intention
to make a serious effort in the
next half-year to resolve the
Berlin problem was evident in the
remarks of a Soviet official in "5X1
Geneva 25X1
that
the USSR woul not eman that
the West abandon its rights in
Berlin. He said Western forces
can stay in the city but some
form of international control
over West Berlin must be es-
tablished. He said Moscow is
ready to enter serious negotia-
tions and suggested a conference
on Berlin might be held about the
end of January or in February at
Geneva.
The Soviet official also in-
dicated that the USSR would re-
frain from any unilateral action 25X1
regarding Berlin as long as
reasonable prospects for a ne-
gotiated settlement exist.
Intrabloc Developments
Moscow has avoided any
further pronouncements on the
SECRET
16 Nov Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3 3 of 20
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
:lino-Indian border conflict
and the question of the sale
of MIG-21 jet fighters to India.
However, the USSR, is continuing
to deliver goods to India, and
the 14 November agreement to
supply India with equipment for
oil exploration work and the
announcement of the opening of
a new Indian consulate in
Odessa suggest that Moscow
hopes to prevent the border
dispute from causing any serious
disruption of its political and
economic relations with New
Delhi.
Peiping has continued its
thinly veiled attacks on Khru-
shchev's handling of the Cuban
crisis. The Chinese press in-
dicated support for Castro's
resistance to the "US-USSR ac-
cord" and characterized on-site
verification and the removal of
the IL-28 jet bombers as in-
fringements of Cuban sovereignty.
In addition to trying to compli-
cate Mikoyan's talks with Castro,
Peiping sought to undermine
Khrushchev's position in the
world Communist movement by
broadcasting a statement by the
chairman of the Indonesian Com-
munist Party lamenting the
"regrettable sacrifice" entailed
by the removal of the missiles.
The Indonesian Communist leader
was quoted as saying that "sov-
ereign Cuba was forced to do
things against its will."
The Chinese delegate to
the Bulgarian party congress
also indirectly attacked Khru-
schev's Cuban retreat by de-
scribingthe Cubans as a people
who "dare to fight and dare to
win." He also deplored the
fact that the Bulgarian congress
had been used as a forum for
new assaults on the Albanians.
Such attacks, he said, did not
reflect a serious Marxist-Lenin-
ist attitude. The Burmese and
North Korean representatives
at the congress echoed the Chi-
nese line.
The Soviet bloc's rapproche-
ment with Yugoslavia does not
appear to have been affected
by Khrushchev's handling of the
Cuban situation or the bloc's
dispute with China over the mat-
ter. On 7 November, the Soviet
ambassador in Belgrade publicly
reiterated that Tito will visit
the USSR as scheduled in December.
Belgrade and Moscow also will
apparently soon sign an agree-
ment for expanded technical co-
operation, a form of economic
assistance.
Although obviously pleased
at these developments, Belgrade
displayed some anxiety on 14
and 15 November when its propa-
ganda media vigorously complained
over anti-Yugoslav passages in
a recently published history of
the Soviet Communist Party and
the resolution of the just-con-
cluded Bulgarian congress. Tito
probably regarded these state-
ments as violations of his agree
ment with the bloc not to attack
each other. In an interview with
the Soviet ambassador on 14 No-
vember, Tito probably sought as-
surances that these statements
were aberrations and did not rep-
resent a shift in bloc policy.
Developments in the USSR
Moscow made a concerted
effort during the past week to
focus attention on internal
affairs. Following six weeks
of preparations, the party
SECRET
l -0 Nov /2n TSfl r1TYY TT f':~STT 1 TLT A
j Nov Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
SECRET
announced on 9 November that
its central committee will con-
vene on 19 November. The im-
provement of party management
of industry, construction, and
agriculture is the only item
on the agenda, and Khrushchev
is scheduled to be the principal
speaker.
There have been numerous
indications that Khrushchev in-
tends to initiate a new indus-
trial-administrative reorganiza-
tion at the plenum. While most
of the details are still unclear,
there is ample evidence that a
major change is anticipated, and
this could require an admission
that the 1957 reorganization of
industrial management has failed.
There also have been recent
suggestions that Khrushchev may
be preparing to proceed further
with de-Stalinization at the
plenum, raising the possibility
that he will blame past failures
and the need for a new reorgan-
ization on old-line bureaucrats
and Stalinist methods of admin-
istration. The announcement
of the resignation of A. F.
Zasyadko as chief of long-range
planning on the same date as
the announcement calling the
central committee into session
SECRET
could be an indication that
Khrushchev is bent on producing
scapegoats.
Most of the internal de-
velopments, however, seemed in-
tended to give the impression
of business as usual. The gov-
ernment announced that the Su-
preme Soviet will convene on
10 December.
Khrushchev's leadership of
agriculture has received consider-
able attention in the press. On
11 November, Pravda devoted one
fourth of its space to an article
extolling the publication of a
multivolume collection of his
articles and speeches on this
subject. On 13 November, the
press printed his lengthy mem-
orandum to the party presidium
on the harvest. As has been the
case since 1958, his estimate
seemed to be highly exaggerated. 25X1
The grain forecast for this year
may have been inflated by over
30 million tons.
15 NOV Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3 5 of 20
 Approved For Release 2008/04/04: CIA-RDP79-00927A003800090001-3
NOW
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
DE-STALINIZATION AND RELATED PROBLEMS IN EAST GERMANY
The renewed bloc-wide
de-Stalinization effort appears
to be placing serious strains
on East Germany's Socialist
Unity Party (SED) leadership.
These strains are in addition
to those imposed by the regime's
failure to overcome long-stand-
ing economic problems and to
gain Soviet agreement to sign
a separate German peace treaty.
Party boss Ulbricht is
adhering to his public position
that "collective leadership"
prevails at all levels of party
and government even as he pre-
pares to act on apparent Soviet
demands that the regime improve
its public image by purging un-
popular and inept officials.
Regime leaders are faced
with the dilemma of how to
make these changes prior to
the sixth party congress in
mid-January without encourag-
ing open criticism of U1-
bricht and his party's Stalinist
methods and background. Regime
leaders probably are also fear-
ful of the effect of a lower
level purge on a party already
shaken by Cuban developments.
The regime's dilemma was
apparent in the keynote address
by Hermann Axen on the anniver-
sary of the Bolshevik revolu-
tion. He said the SED owes
its "victories" to its col-
lective leadership, but he
attacked "revisionists and
dogmatists in the party who
have not yet found the strength
to overcome the personality
cult in their ranks and who
fail to grasp the conditions in
the struggle for peaceful co-
existence...." Obviously
aligning the SED with the So-
viet party against the Chinese
and Albanian heresies, Axen is
also criticizing those hard-line
East German Communists who do
not accept Khrushchev's recent
actions on Cuba and Berlin as
correct.
Recent statements in
Neues Deutschland suggest that
party leaders are concerned over
the loss of confidence among
party cadres. A 27 October
editorial urging "iron disci-
pline" on the party implied that
some party elements had suc-
cumbed to the manipulations of
"opponents" and that some had
failed to adhere to "Leninist
norms of party conduct." A
shake-up may be coming, at least
in intermediate party and gov-
ernment levels.
The regime is taking
tentative steps to de-Stalinize-
its judicial system. A di-
rective of the supreme court,
published in the legal gazette
on 29 October, criticized
violations of the civil rights
of arrestees and demanded that
lower courts use greater dis-
cretion in confirming arrest
warrants. The directive, how-
ever, expressly left wide
latitude to authorities in
cases concerning "grave offences
against our socialist system."
The regime, moreover, has not
removed from their positions
such obvious Stalinists as
Justice Minister Hilde Ben-
jamin.
In economic affairs the
leadership is struggling with
two continuing major problems
--food shortages and the lack
of a clear authority for making
final economic decisions. With
apparent Soviet guidance, East
German policy has been fixed on
production goals and the alloca-
tion of resources--aspects which
were a source of serious disagree-
ment a year ago. East German
spokesman and the press have
practically ceased discussing
the campaign to make the
economy invulnerable to "Western
disturbances," and foreign
trade organizations are showing
renewed interest in interzonal
trade.
The food shortages, more
serious this year than in 1961,
have made the party cautious
in dealing with the population.
The people openly complain that
the shortages are inexcusable
SECRET
16 Nov 62 Approved For Release 2008/04/04: CIA-RDP79-00927A003800090001-3 of 20
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
NOW
SECRET'
CURRENT INTELLIGENCE WEEKLY SUMMARY
and feel that they have been
worsened by the regime's re-
fusal to reintroduce formal
rationing instead of relying
on "customer lists"--a system
which has resulted in hap-
hazard, inequitable distribu-
tion. There is no indication,
moreover, that the Soviet Gov-
ernment intends to do much to
ease the food shortages.
Nevertheless, general dis-
content over irregular supplies
and queues has not prevented a
9.5-percent increase over last
year in industrial labor pro-
ductivity through August 1962,
while wages rose by only one
percent. The regime is per-
severing in its decision to
carry out norm increases and
wage reforms, although this is
likely to intensify public
dissatisfaction and may even
lead to sporadic slowdowns and
strikes in some plants.
Changes in economic organi-
zation since 1958--notably the
creation of the People's Eco-
nomic Council in July 1961--
have made the economic apparatus
less effective, in this case
by creating a body in competi-
tion with the already existing
State Planning Commission. The
diffusion of responsibility
seriously hampers economic
growth, for which East Germany
depends heavily on improved
management and increased ef-
ficiency. Ulbricht has hinted
that a further reorganization
is in prospect.
The lack of clear authority
in economic affairs has encour- 25X1
aged rivalry among the more am-
bitious members of the regime.
These rivalries to date,
however, have not reached the
point of factionalism, and the
overriding need of answering to
Moscow probably will keep them
dampened to an acceptable level.
In the long run, the regime's
greatest problem remains the
lack of party or public enthu-
siasm for the leadership. Al-
though flight to the West is
now extremely dangerous, the
people continue their efforts
to escape and are increasingly
apathetic to regime pressures.
Against this background, unless
the ;party leadership succeeds in
overcoming the growing demorali-
zation in the party itself,
prospects remain dim that it
will be able to meet Soviet de-
mands for an improvement in the
regime's political image. 25X1
SECRET
16 Nov 62 WEEKLY REVIEW
Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3 " ' C1 "
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
%ow SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
CZECHOSLOVAKIA ABOLISHES AGRICULTURAL FREE MARKET
Protracted public discon-
tent over the food supply situa-
tion led the Czechoslovak Gov-
ernment on 31 October to forbid
1'"e private sale of agricul-
ural products. This is the
latest in a series of measures
to improve control over state
procurement and distribution of
agricultural products. Although
the government admits that sup-
plies of quality food such as
meat and dairy products are un-
satisfactory, it has failed to
increase producer incentives or
step up imports. As a result,
the outlook for an early im-
provement in the availability
of such foods is not bright.
According to the recent
decree, all agricultural prod-
ucts--even those from private
plots--now must be marketed
through state procurement
agencies. The government's aims
are to eliminate speculation
and to improve food distribution.
However, the food supply will
not be increased--and could
actually be reduced, since the
loss of income from his private
plot will further depress the
peasant's incentive to increase
food production.
In the past two years
dissatisfaction over food
supplies and prices has been
growing among urban con-
sumers. Many factors have con-
tributed to these shortages. A
stagnation of agricultural out-
put occurred at the same time
food imports were reduced in
1961 and 1962. Increased con-
sumer demand for quality foods
has resulted in part from a
faster rise in purchasing power
than in the supply of foods and
other consumer goods. Moreover,
the number of people who grow
their own food has declined be-
cause of increased urbanization
and because peasants are buying
more of their food in retail
outlets. Consequently, when
supplies of food leveled off,
as they did last spring, queues
became longer in many food
stores, and some riots occurred.
In response to consumer
complaints of shortages the
government claims that more meat
has been placed on the market
this year than in the past, that
shortages have been intensified
by the increased demand result-
ing from higher wages, and that
too large a share of farm pro-
duce is sold outside of state
distribution channels. It was
to prohibit such sales that
the government decided to abol-
ish the free markets. Officials
meanwhile continue to urge pro-
ducers to increase production
and deliveries, and to rebuke
consumers for demanding ever-
increasing supplies when they
are among the best fed in the
Sino-Soviet bloc.
Despite regime insistence
that food shortages must be over-
come by increased domestic pro-
duction, agricultural policies
to date have restricted private
initiative and thus do not promise
much success in stimulating pro-
duction. The output, as well
as procurements, of meat, milk,
eggs, grain, potatoes, and fodder
supplies this year will continue
to be short of established goals,
and will fail to meet consumer
demands.
Price increases similar to
those in the USSR--affecting both
procurement prices and retail
sales prices for livestock prod-
ucts--may be introduced in order
to stimulate producer incentives
and to curb consumer demands.
Rumors of impending food price
increases are widespread. The
regime also could decide to re-
strict wage increases in order
to help reduce demand for quality
foods .
SECRET
16 Nov 62 W1 T'WT.V P TT r' W
Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3 3 of 20
 Approved For Release 2008/04/04: CIA-RDP79-00927A003800090001-3
CURRENT INTELLIGENCE WEEKLY SUMMARY
Nearly a month after Pei-
ping opened its offensive
against Indian border positions,
armed conflict has abated
considerably. Both sides re-
main essentially where they
w're at the end of the first
reek's fighting (see map next
page), and clashes are limited
to routine patrol actions.
In the political and prop-
aganda fields, both sides rit-
ually profess their interest
in a negotiated settlement;
but through the welter of state-
ment and restatement, it is
evident that they are further
apart--and nearer a diplomatic
break--than ever. Nehru re-
sists any effort--such as China's
mutual withdrawal proposals--
which discounts Chinese "ag-
gression" and serves to equate
the Indian and Chinese posi-
tions. Peiping, after its
successful military effort,
seems more determined than
ever that any border arrange-
ments be on Chinese terms only.
would be better than noth-
ing.
India's public response
to the Chinese challenge continues
to be highly charged. Defense
expenditures for the current
fiscal year have been boosted
25 percent to nearly one billion
dollars to defray the cost of
new equipment, roads, more
troops, and stepped-up military
operations.
Nehru's appointment of Y. B.
Chavan as his new defense min-
ister brings to the cabinet a
vigorous 48-year-old, long re-
garded as one of India's ablest
leaders at the state level.
The prime minister now can direct
his attention to the task of
channeling along productive lines
the country's new surge of energy
and unity aroused by the frontier
attacks. The appointment of T.T.
Krishnamachari to the newly
created post of minister of eco-
nomic and defense coordination
will also contribute to this
end.
These were restated by
Premier Chou En-lai and Foreign
Minister Chen Yi in recent
conversations with rcving Brit-
ish diplomat Malcolm Mac-
Donald. They insisted that
Peiping's 23 October proposals
for a cease-fire and a with-
drawal from the de facto line
which existed in November 1959
are firm and will never be
withdrawn.
Obviously hoping for some
measure of British support for
such a solution, Chou gave the
impression the Chinese would
agree to the McMahon Line in
return for India's acknowledg-
ment of China's claim in Ladakh
and might make a further conces-
sion in the McMahon Line area. He
said, however, Peiping would re-
spond in kind to any new military
Diplomatically, New Delhi
has ;moved to put its affairs in
some semblance of order in re-
spect to Nepal and Pakistan.
This was easily done with re-
gard to Katmandu by calling off
Nepali exile raids. The problem
with Pakistan, however, is com-
pounded by centuries of com-
munal suspicion and 15 years
of national antagonism. Some
small progress is being made
in preventing differences from
spilling over into public acrimony.
Nehru has again raised the is-
sue of acquiring MIG-21 (Fishbed)
jet fighters from the USSR, ap-
parently for political reasons. He
has been variously quoted and mis-
quoted on the subject on recent
occasions, in which he has seemed
almost purposefully inconsistent.
initiative. Chen Yi commented However, it would appear that he
that the border conflict is was using the issue as a reasser-
localized and said a major war tion of his nonalignment, hoping
with India is "inconceivable." to counterbalance publicity about
He indicated that while Peiping Western arms aid while encouraging 25X1
hopes for a "perpetual" set- IMoscow to deliver more transports
tlement, something temporary
SECRET
16 Nov 69 1hP,'iuuY V D3:lrTi?I.&T ') of 20
Approved For Release 2008/04/04: CIA-RDP79-00927A003800090001-3
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
11111111111,104
%ol
CURRENT INTELLIGENCE WEEKLY SUMMARY
EASTERN CHINA - INDIA
FRONTIER AREA
MMEEMEMEHM
j_y
v~~c-~+
SECRET
Boundary shown on most US and Western maps
-..- Demarcated
x - Delimited only
Indefinite
Boundary shown on, recent Chinese and Indian maps
where differing from US and Western maps)
Chinese
Indian
+--
Railroad
Airfield
Road
Pass
- -
Major caravan route
,256',5
Spot height
or trail
(in feet)
O
50
100
150
Myyinn'
13 Nov 62 WEEKLY LVIEW Page 10 of 20
Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
SECRET'
CURRENT INTELLIGENCE WEEKLY SUMMARY
DEVELOPMENTS IN LAOS
Laotian Premier Souvanna
Phouma has again- threatened to
resign. He claims that his ef-
forts have been hamstrung by
the intransigence of both the
right- and left-wing factions
in the government. He appar-
ently hopes that his threat
will encourage more forthcoming
attitudes on both sides.
While the right-wing ele-
ments in the coalition have
not lent full support to Sou-
vanna, his present discourage-
ment stems primarily from the
persistent obstructionism of
the Pathet Lao. He has been
especially annoyed by the
tactics of Minister of Infor-
mation Phoumi Vongvichit, who
was the spokesman for the left-
wingers during Vice Premier
Souphannouvong's recent ab-
sence for medical treatment in
the bloc. Souvanna probably
hopes that Souphannouvong--who
has just returned to Laos after
visiting Moscow,. Peiping and
Hanoi--will restrain Phoumi
Vongvichit and give assurances
that the Pathet Lao will adopt
a more cooperative attitude.
Souvanna apparently has
fashioned at least a surface
compromise in the dispute be-
tween rival neutralist factions
in Phong Saly Province. Fol-
lowing a recent meeting in
the provincial capital with
the leaders of the opposing
factions, Souvanna claimed that
the difficulties had been "all
resolved."
THE YEMENI SITUATION
Saudi Arabia, Jordan, and
the UAR are becoming further
involved in the conflict in
Yemen.
This involvement in the
Yemeni conflict has produced
serious strains within Jordan.
The defection to the UAR on
12 November of the Jordanian
Air Force commander and of two
pilots the following day is
evidence of the dissatisfaction
SECRET
16 Nov 6,' Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3 11 of 20
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
within the military over the
government's policy of aiding
the Yemeni royalists, and is
a serious blow both to the
prestige of King Husayn and
to the government of Prime
Minister Wasfi Tal. In a
conversation with the US am-
KAMARAN
Pty 1 yv'
y ddoh
Alf(udp
SECRET'
16 Nov 62 WEEKLY REVIEW Page 12 of 20
Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
PARABIA
bassador, Husayn--apparently
discouraged and saddened by
the defections--indicated that
his policy toward Yemen would
be re-examined. The King also
told the ambassador that he had
ordered the grounding of all
Jordanian Air Force planes in
'NEUTRAL-
ZONE
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
SECRE7'
CURRENT INTELLIGENCE WEEKLY SUMMARY
Jordan. He reportedly has re-
versed an earlier decision to
recall the planes sent to Saudi
Arabia, but has restricted them
to flights over Saudi territory.
Growing resistance from
royalist tribes in northern and
eastern Yemen has led the UAR
to commit another brigade to
Yemen, raising the total of UAR
troops there to 9,000-10,000.
On 9 November the UAR and the
Yemeni revolutionary government
announced the signing of a de-
fense pact, apparently designed
to deter direct Jordanian and
Saudi intervention in Yemen.
This pact has been followed
by repeated threats from Yemeni
revolutionary leaders that they
will respond to any "further
Saudi aggression" by carrying
the war into Saudi territory
and that they will counter any
air attacks by bombing Saudi
airfields.
There is additional ev-
idence, meanwhile, of friction
developing between the Yemeni rev-
olutionary leaders and Egyptians
sent to advise them. The rev- 25X1
olutionary government itself
has already undergone one
drastic reorganization
Leaders of the Yemeni
revolutionary government,
evidently with some coaching
from Cairo, are continuing
their sharp propaganda attacks
against the Saudi and Jordanian
monarchies and the British gov-
ernment in Aden. Sana radio
announced that President Sallal
has ordered that a republican
government-in-exile for the
Arabian Peninsula be created
in Yemen. It is to be organ-
ized by Nasir al-Said, a pro-
Communist extremist
SECRE7'
16 Nov f Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3 13 of 20
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
SECRET %no
CURRENT INTELLIGENCE WEEKLY SUMMARY
CONGO DEVELOPMENTS
Attempts by the Congolese
central government to exert
military pressure on Tshomb6
appear to be failing, but there
is growing evidence that UN
forces are planning early moves
to press him to reintegrate
tanga with the rest of the
ountry.
Troops of the Congo Na-
tional Army (ANC) attacking
Katangan forces at Kongolo in
North Katanga seem to be suffer-
ing reverses, despite the fact
that ANC -forces there--some
5,500--outnumber the Katangans
by more than three to one.
Katangan air strikes and bomb-
ings have scattered and demoral-
ized the attackers.
Premier Adoula is desper-
ately trying to find ways of
countering the air attacks,
but he has almost no effective
air strength in that area.
Adoula has asked the US to sup-
ply aircraft rockets
Adoula may have obtained
UN military support in North
Katanga. UN chief representa-
tive Gardiner told Ambassador
Gullion on 13 November that UN
officials in New York had au-
thorized UN forces to engage
the "attackers" either in the
air or on the ground in the
event of any renewed action.
UN officials in New York
and the Congo evidently are
leaning increasingly toward
adopting measures to exert pres-
sure on Tshomb6.
The weight of evidence
suggests that the UN is planning
some means of depriving Tshomb6
of his mining revenues probably
by occupying principal mining
towns. A military move to
seize control of the railroad
exit points at Difofo and
Sakania would probably meet
with less Katangan military
resistance.
Both Acting Secretary Gen-
eral Thant and Under Secretary
Bunche privately stated on 9 No-
vember that if Tshomb6 gave an un-
satisfactory response to Thant's
request for a statement of inten-
tions, they would consult the US,
UK, and Belgium on "abandonment of
the plan and new courses of action."
They deny that the 15 November date
Thant had mentioned to the Congo
Advisory Commission had any signif-
icance other than as a deadline
for Tshombe's reply.
Tshomb6 has replied to Thant
with renewed assurances of his sup-
port for the implementation of the
UN integration plan. In his reply
Tshomb6 complained of Adoula's han-
dling of tae new constitution, of his
failure to abide by the spirit of the
plan, and of the ANC attacks in North
Katanga. Bunche's preliminary reac-
tion to Tshombe's reply was negative,
and UN officials will probably take
the complaints as confirming their
aontlo
+emene? ~-'Akell o?~, ~ Mung6ere
eq IImt ine 900
W pN
dg------- ;
ANGQLA
L United Nations forces-
0 Congo National Anny
[ L- Airfield
- Railroad
MILES 2~1
\ Bukavu~
tle
$50
view that Tshombd is the prin-
cipal culprit and that all-out
support should be given Adoula.
REPUBLIC OF THE CONGO
SECRET
1_6 Nov 62 WETi:KT.v RVVTW f.v
Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3 14 o f 20
 Approved For Release 2008/04/04: CIA-RDP79-00927A003800090001-3
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
FRENCH-ALGERIAN RELATIONS
French officials have
shown increasing irritation with
Algeria's foreign policy and its
attitudes toward French prop-
erty and interests. Paris'
disenchantment is the greater
because of the scale of French
economic aid, which includes
coverage of Algerian treasury
debts expected to reach $400
million by the end of 1962 and
continuation through 1963 of
$200 million a year in direct
economic aid. A further accumu-
lation of minor points of fric-
tion, particularly if the Al-
gerian Government should demand
precipitate withdrawal from
the French nuclear test sites,
could cause De Gaulle to adopt
a tough attitude toward contin-
uing aid and toward a renegotia-
tion of the French-Algerian
agreement signed at Evian last
March.
The $400 million "advance"
to the Algerian treasuryT
is enabling the Algerian
Government to continue opera-
tions. How long Paris will
continue such support is ques-
tionable, but its immediate
and far-reaching effect on Al-
gerian stability--especially
with a greatly diminished Al-
gerian tax base--will give
France a strong bargaining
weapon if Algerian Premier Ben
Bella demands a drastic re-
vision of the Evian accords.
French officials feel that
the $200 million economic aid
level planned for 1963 satisfies
the obligations France assumed
at Evian. According to the chief
economic adviser to Minister of
Algerian Affairs Louis Joxe, 80
percent of the 1963 funds will
be obligated to finance projects
now under way, and only some $40
million will be available to
finance projects requested by
the Algerian Government. The
projects, already under way,
collectively known as the Con-
stantine plan, are directed pri-
marily toward industrial con-
struction and improved public
infrastructure such as ports,
roads, hospitals, and schools.
The plan's concentration on
urban centers and the lack of
direct benefits for the hard-
pressed Algerian rural popula-
tioncould cause friction between
the two governments.
Algerian conduct since the
formation of the Ben Bella gov-
ernment has done little to
convince Paris that cooperation
between France and Algeria is
going to be a two-way street.
Ben Bella has, on several occa-
sions, stated his desire for
"sincere cooperation" with
France but he has also spoken
in sweeping terms of the need
for ;revision of the Evian ac-
cords. French officials ap-
preciate that some of these
statements were intended to
bolster his domestic position
or to establish a bargaining
position, but the statements
may have lessened French public
willingness to continue aid
to Algeria. Algerian acts
SECRET
16 Nov 62 WEEKLY flT vrrww
Approved For Release 2008/04/04: CIA-RDP79-00927A003800090001-3 l~ U# "
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
SECRET
against French property and the
remaining Europeans, including
sequestrations of French farms,
have also worsened relations
-atween the two countries.
in a newspaper interview
on 23 October, Ben Bella said
there was no question of alter-
ing French base rights by armed
force. Subsequently, however,
he said there could be no fur-
ther French nuclear tests in
the Sahara, although the Evian
accords include five-year
French leases on Saharan nuclear
and missile test sites.
France is already making
preparations to move its mis-
sile and nuclear test program
out of Algeria, and plans may
also be under way to leave the
large Mers-el-Kebir naval base
before the expiration of its
separate 15-year lease. How-
ever, withdrawal before other
arrangements are made would
hamper French naval operations
in the Mediterranean and could
delay France's nuclear weapons
development program.
The gross effect of these
irritants has not, thus far,
been sufficient to cause France
to basically revise its Algerian
policy. French officials continue
to hope that French aid will
strengthen the position of those
Algerian leaders who see the need
of French economic aid, technical
personnel, and markets, or at
least prevent their replacement
by more extremist leadership. De
Gaulle's personal prestige is
closely tied up with his claim to
have solved the Algerian problem,
and he will be reluctant to see co-
operation between the two countries
ended.
them well.
However, French policy will
in the end depend on his assess-
ment of whether the benefits re-
maining for France justify a con-
tinued financial outlay. As far
back as April 1961 he said that
France would abandon an independ-
ent Algeria hostile to France, and
that if the Soviet Union or the US
wanted to replace France, he wished
SECRET
16 Nov 9 WFF:KT.V RF.V TF.W!d D- e 16 of 20
Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
*40 SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
STATUS OF US-PORTUGUESE AGREEMENT ON THE AZORES BASES
Talks between the US and
Portugal on an extension of
the Azores bases agreement
which expires on 31 December
1962 have not yet begun. The
delay is due in part to Portu-
guese insistence that certain
outstanding issues be discussed
first. Instead of granting
another five-year extension
of this agreement, Portugal
will probably agree only to
a temporary arrangement allow-
ing US access to the bases
next year. It would hope there-
by to use the issue as a lever
for extracting more American
support for its African policy
--most immediately in the
forthcoming UN debate on Angola.
Last August the Portuguese
presented the US with a "bill
of complaints" listing a num-
ber of issues on which, they
stated, an understanding was
necessary before they were
prepared to discuss the bases.
Some of the issues in which
the Portuguese are most inter-
ested involve, in one way or
another, the question of US
support in the UN for Portugal's
African policy. However, there
have been to date only limited
exchanges between the two gov-
ernments on these issues.
In a 5 November demarche
to Portuguese Foreign Minister
Franco Nogueira, Ambassador
Elbrick pointed out that any
talks designed to reach an ac-
commodation regarding the bases
would be unlikely to be com-
pleted before the end of the
year. He proposed that the
present agreement be extended
for two years.. Franco Nogueira
rejected the proposal and said
he felt negotiations could be
completed by 31 December. He
added that if it appeared later
that the deadline could not be
met, appropriate arrangements
could be made for continued
use of the bases temporarily.
The present Portuguese
position is similar to that
taken in the course of the
last negotiations for an ex-
tension of the agreement, then
due to expire at the end of
1956. Increasing suspicion
of 1US foreign policy, includ-
ing the American attitude to-
ward Portugal's overseas
provinces, was the main factor
behind Prime Minister Salazar's
suggestion that the agreement
be allowed to continue in
effect only during 1957. How-
ever, it was negotiated with-
out great difficulty before
the end of that year for a five-
year period. Salazar at the
time hinted that Portugal
might eventually take over
operation of the bases; other-
wise, he said, "You Americans
will be in the Azores for-
ever."
Portugal's African policy
is scheduled for debate in the
UN very soon, and Lisbon may
be expected to watch closely
for signs of support from the
US. If the Portuguese believe
their case is receiving adequate
consideration, they may well
agree to extend the present
agreement on the Azores--their
only ace--through 1963. Con-
tinued US support of the kind
desired during next year might
result in a five-year extension
through 1968.
On the other hand, if the
Portuguese feel they are not
receiving sufficient support
from Washington, they would
probably insist that any ex-
tension be limited to a period
of a few months and would un-
doubtedly indicate that further
renewal depended on a change in-
US policy. Only in the event
of what they regarded as extreme
provocation by the US would
they be likely to insist that
the bases be evacuated.
SECRET
16 Nov 62 WEEKLY REVIEW n....... , 117 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3 ~f 20
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
SECRET'
CURRENT INTELLIGENCE WEEKLY SUMMARY
COMMUNISTS CONTINUE TO CONTROL ICELANDIC LABOR FEDERATION
Labor elements associated
with Iceland's pro-Western
coalition government will at-
tempt to wrest control of the
30,000-member Central Labor
Federation (IFL) from the Com-
munists at the federation's bi-
ennial convention from 19 to 23
November. Prospects for their
success, however, are not bright
because of the continued collab-
oration of the opposition Pro-
gressives (agrarians) with the
Communists in trade union as
well as in political matters.
The Communists, despite
their control of the IFL for
the past eight years and their
ability to muster the support of
up to a fifth of the electo-
rate in recent elections, have
failed in their immediate ob-
jective of toppling Prime Min-
ister Thors' Conservative - So-
cial Democratic cabinet. How-
ever, they have used their
control of organized labor to
impede implementation of the
sweeping economic reform pro-
gram Thors was committed to
when he took office in November,
1959.
The recent action by sever-
al large Communist-controlled
unions renouncing wage contracts
which would not expire until
spring and demanding 10-15-per-
cent wage hikes is expected to
set a pattern for other unions.
The government therefore will
probably confront a direct
cha]Llenge to its leadership--
and possibly its survival--this
winter. Thors faced a similar
situation in June 1961 when the
Communists called a near-general
strike which was settled by ac-
ceding to their wage demands
and resorting to a devaluation
of the krona to maintain econom-
ic stability.
If the same problem arises
again this winter, Thors' at-
titude would probably be af-
fected by the approach of par-
liamentary elections next June.
The government cannot afford to
appear to be unsympathetic to
what many workers regard as
justified demands.
The impending elections
also threaten to revive the cur-
rently tranquil but potentially
disruptive issue of NATO bases in
Iceland. In the 1950s, the Com-
munists and isolationist groups
in Iceland were able to focus con-
siderable public attention on
this question. The Thors gov-
ernment, determined to deny anti-
Western elements a propaganda
weapon, has requested that a
NATO infrastructure agreement on
the building of petroleum storage
and mooring facilities in Ice-
land be deferred until after the
June elections, It probably
fears the effect of the cur-
rent Soviet propaganda offen-
sive for complete disarmament
and elimination of foreign
SECRET
16 Nov 62 WEEKLY REVTFW
Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3 1? '- "'
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
SECRET L
CURRENT INTELLIGENCE WEEKLY SUMMARY
BRITISH GUIANA FOLLOWING COLLAPSE OF INDEPENDENCE TALKS
Guianese political leaders,
whose disagreements caused the
collapse of the recent London
conference on independence for
British Guiana, are planning to
step up political action. Their
activities may lead to public
disorders before the end of the
year, particularly in view of
the possibility of new strikes
and at least one legislative by-
election.
The conference, called to
discuss a new constitution and
set a date for independence, was
adjourned on 6 November because
the Guianese were unwilling
either to compromise their dif-
ferences on the electoral system
or to accept British arbitration.
Both opposition parties--the
Negro socialist People's National
Congress (PNC) and the small,
ultraconservative United Force
(UF)--remained adamant in their
demands for proportional repre-
sentation, new elections before
independence, and retention of
the present voting age of 21--
none of which Premier Jagan was
prepared to concede.
The British are considering
a referendum in the colony to
settle the impasse on propor-
tional representation, but may
delay taking action for several
months. A British decision is
also pending on the colony's
future security arrangements.
The Guianese
public could easily be aroused
to violence by provocative
tactics. Two clashes--one on
21 November injuring 29 per-
sons--have already occurred
between militant supporters
of Jagan's Progressive Youth
Organization and the UF's
Guiana United Youth Society.
There are several other
potential sources of trouble
in the near future. A new round
of strikes appears to be in pros-
pect in the sugar industry, and
in view of the depressed economic
situation, there may be strikes
in other areas as well. Jagan's
efforts to cut into the following
of unions that support the opposi-
tion may contribute to the strike
threat.
Jagan's precarious legisla-
tive majority of two is likely
to tempt the PNC and the UF to
press for a long-deferred by-
election in the Houston constit-
uency, which they would stand a
chance of winning if they worked
together. Also, Attorney General
Ramsahoge has indicated his in-
tention of resigning both his
ministerial and legislative posts
before the end of the year. A
by-election to fill the legisla-
tive vacancy would subject Jagan's
government to further electoral
hazard.
The Jagan government's
attitude toward the US appears
to be worsening. Minister of
Natural Resources Benn on 10
November accused both London
and the opposition leaders of
being tools of "powerful ele-
ments" in the US.
SECRET
16 Nov 62 WEEKLY REVIEW
r_ -- 19 of 20
Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
'IWO SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
OPPOSITION TO COLOMBIA'S AUSTERITY PROGRAM
The announcement on 8 No- it is uncertain that the admin-
vember by Finance Minister Sanz istration will be able to gather
of Colombia's new economic sufficient congressional support
stabilization plan touched off to put it into effect. Presi-
A t Valencia has been under con-
en
h
ave
a wave of protest that may
serious political repercussions
and further weaken public confi-
dence in the National Front gov-
ernment. The new crisis is
likely to open the gap dividing
the factions in both the Con-
servative and Liberal parties--
the two parties comprising the
National Front government.
Official statements from
the two major labor federations
and many business groups have
been critical and have urged
the government to reconsider
the plan. The main objections
apparently arise out of a fear
that the new measures will gener-
ate sharp price increases.
The main features of the
economic plan include new con-
sumer taxes and higher import
tariffs. A tax on all imports
has resulted in effect in a
devaluation of the peso. Sanz
thereby avoided outright devalua-
tion, which would have been
politically less acceptable.
The program is intended to ease
Colombia's severe balance of
payments deficit--estimated at
$100 million in 1962--and to
help finance the country's ten-
year development plan.
The US Embassy--while prais-
ing the program--reports that
tin.uing criticism from all sides
for his failure to exert effec-
tive leadership. There have been
several cabinet crises since
he assumed office in August,
and two cabinet ministers have
resigned. A major Liberal
Party faction--the Liberal Rev-
oluutionary Movement--withdrew
its support of the administration
in protest against Valencia's
political appointments.
A further hindrance to the
government's efforts to gather
support for the plan is the con-
tinued confusion regarding the
leadership of the Liberal Party.
The Liberals have been virtually
leaderless since Carlos Lleras
announced his resignation as
party chief in August. Still
hoping to persuade Lieras to
return, the party has not
elected a successor.
Colombia has generally
been regarded as a potential
showcase of the Alliance for
Progress, but the political
uncertainty and the economic
crisis are likely to hamper
the country's ability to
participate in the program.
SECRET'
16 Nov WEEKLY REVIEW Pare 20 of 20
Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
SPECIAL ARTICLES
SOVIET INDUSTRIAL
Waste and inefficiency in
Soviet industrial organization
are matters of considerable con-
cern to Moscow. Concurrent in-
dustrial commitments to the
rapidly expanding space and
military programs, to the growth
of industry itself, and to the
consumer have pointed up defi-
ciencies in management. Proposals
for remedying defects in the
system have ranged from tighten-
ing centralized control of the
economy to permitting local
leaders wider latitude in mak-
ing decisions. The regime's
plan of action is to be aired
at the party central committee
plenum scheduled to begin on
19 November.
Inadequacy of
Sovnarkhoz Innovation
It has been over five
years since Khrushchev launched
the last major industrial re-
organization, which replaced
the centralized industrial min-
istries with over 100 regional
councils of national economy
(sovnarkhozes). The system
thus created was intended to
inspire greater initiative in
local managers, who were pre-
sumed better able to judge day-
to-day requirements than Mos-
cow-based administrators re-
sponsible for a particular
branch of industry throughout
the country.
In five years the sovnarkhoz
system has not added appreciably
to Soviet industrial progress,
and numerous changes have not
overcome its defects. While
there is little to indicate
that Khrushchev would abolish
the system, he is undoubtedly
concerned over its defects. He
told a conference of railway
workers in Moscow last July:
"It is easy to abolish min-
istries, but it is more dif-
ficult t.o re-organize the
economy and better distribute
production...it, is necessary
to overcome...conservatism...."'
Current Problems
Present concern appears
to stem from the recent moderate
declines in industrial and in-
vestment growth rates. Many re-
sources contributing to more rap-
id growth of earlier years have been
dissipated, and technological
changes in Soviet industry
are not keeping pace with the
regime's policy requirements.
The space and weapons
programs in recent years have
been taping an increasingly
large share of the output of
the machine-building industries,
with a parallel drain on top-
quality scientific, engineering,
and technical manpower. Many
of these same resources are
needed for the key economic
investment programs--moderni
zat:ion and technological im-
provement in industry, and
more equipment and chemical
products for agriculture. This
competition for resources has
compounded planning and supply
problems, as have efforts to
gain quick boosts in vital
output--for example, stepping
up the number of work shifts
in some machine-building plants
this year .
Excesses of Bureaucracy
The Soviet press in recent
months has presented a detailed
picture of problems hampering
the operation of the economy.
None of these is new; most
were of concern prior to the
industrial reorganization of
1957 and some have been ag-
gravated by it. Khrushchev's
approach to economic manage-
ment--flexible implementation
at local levels of objectives
set at the center--has proved
to be administratively infeasible
because of the tendency at those
levels to give precedence to
local over national consider-
ations. In an effort to remedy
"localism" and other problems,
the central leadership has
SECRET
16 Nov 62 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3 f 14
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
NW
CURRENT INTELLIGENCE WEEKLY SUMMARY
issued a series of patchwork
decrees, steadily reducing
freedom of action of local
authorities.
Management complains of
excessive "tutelage" from the
planners on the working-level
problems of industry or, at
the other extreme, of failure
of planners to provide suf-
ficient and timely direction
when needed. One sovnarkhoz
chairman noted that the State
Planning Commission (USSR
Gosplan) concerns itself with
his area's plan for waste
paper and glass scraps while
another chairman complained
that the annual plan may not
arrive until the year's activ-
ities are well under way. Ap-
parently the 1962 plan did
not reach some sovnarkhozes
until March or April.
Industrial managers say
that plans for supply fail to
support plans for technologi-
cal improvements and new con-
struction. The results are
construction bottlenecks and
missed production deadlines.
The claim is frequently made
that Gosplan schedules the
shipment of manufactured
articles from plants which
are not yet in existence.
Agencies at the interme-
diate and central level of
administration are subject to
similar rebukes for excessive
bureaucracy, parallel admin-
istration, and poor channels
of communication to the local
levels. One sovnarkhoz chair-
man claimed that to obtain
authorization for the 1962
plan for technology for his
area he had to approach over
100 separate Moscow-based
agencies. Presumably similar
coordination was required at
the republic level. Many
factory managers spend a num-
ber of weeks each year in Mos-
cow and not a few have deputies
in full-time residence there.
Defects at the Local Level
From the viewpoint of
the central authorities, much
is remiss at the local level.
Hoarding of industrial
materials--in reaction to
frequent supply disruptions--
is apparently increasing. Some
local managers seek to establish
their own supply channels, thus
introducing further dislocations.
Much current discussion
concerns inadequacies in the
incentive system. Tradition-
ally success in Soviet industry
has been measured by the level
of output, and the quality
has been secondary. Such
factors as cost reduction,
labor productivity, and ef-
ficient use of capital have
received relatively little
consideration. This "gross"
approach to the economy has
encouraged the wasteful use
of resources and hampered the
introduction of advanced methods.
Recently an outspoken critic
of this system, the aircraft
designer O.K. Antonov, pointed
to the ludicrous situation at
one factory where high-grade
ore is regularly adulterated
to baring it into conformity
with the established output
standards.
The present system dis-
courages risk-taking. A
factory manager strives to
avoid technological improve-
ments--which often initially
lower production and raise
costs. Planners themselves
take a short-term view of this,
according to Antonov, who
notes, that a hew machiae which
will make ball bearings twice
as costly but with fourfold in-
crease in wearability has little
hope of acceptance. Production
bonuses and wage payments
predicated on plan overfulfill-
ment encourage plant managers
to "hide" resources and strive
for a "calm" plan, while plan-
ners, aware of this tendency,
boost output goals beyond a
reasonable level. As a consequence
many plants are forced to shift
to production for which they
have no, real capability in
order to meet their assignments.
Remedies Proposed by
Earlier Plenums '
The first major attack
on these problems since the
SECRET
16 Nov 62 RDF.0T A T A Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3 E
SECRET
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
1957 reorganization came at
the central committee plenum
of June 1959. At this plenum
36 separate tasks--mainly
staff studies--were outlined
and assigned to the appropriate
governmental agencies. These
were aimed at boosting the
overall industrial program
but emphasized particularly
increasing automation and
mechanization--keys to the im-
portant productivity goals of
the Seven-Year Plan. This
plenum, however, like the
technological plenum the fol-
lowing year, was mainly a
forum for reciting symptoms
rather than for devising
remedies for the underlying
causes of the difficulties.
Of the tasks enumerated, none
has been completed on time
and only two have resulted
in major decrees.
As of 1 January 1960,
bonuses for managers and
technical personnel in many
major industries were made
dependent upon the fulfillment
of the cost-reduction plan,
provided that plans for quality
improvement, production, and
delivery were met. Later that
year a bonus system was estab-
lished for persons introducing
new technology. Neither of
these bonus systems is working
well. The first is so complex
that evaluators, lacking in-
formation, are often forced to
ignore all but output totals.
It is inequitably applied and,
in practice, actually encourages
shortcuts on quality. The
second, which was made dependent
on the economic results of innova-
tions adopted, fails because
of the difficulty of measuring
such results, and does not
offer adequate rewards.
Another direct result of
the plenums was a decision to
revise wholesale prices. The
purpose of the revision, sched-
uled to be completed in 1963,
is to stimulate more efficient
use of resources. Judging from
Soviet statements, however,
the approach is little dif-
ferent from earlier revisions,
which have not been very ef-
fective.
Counterproductive Changes
Some of the organizational
changes introduced since 1957
have aggravated perennial prob-
lems instead of solving them.
In mid-1960 the responsibility
for long-term planning was taken
away from Gosplan and transferred
to a new agency, Gosekonemsovet.
Gosplan retained the short-
term planning function. This
division was apparently made
in order to bring about greater
concentration on the two major
aspects of state economic
control. In December 1961, how-
ever, Khrushchev announced the
implementation of a planning
procedure in which both long-
and short-term plans are closely
coordinated and given greater
continuity. There are indications
that there is overlapping and
duplication of the functions of
the two agencies. The release
of Gosekonomsovet chief Aleksandr
Zasyadko on 9 November for
reasons of "health" may be tied
to this anc other related dif-
ficulties and is one of several
portents of significant changes
in planning procedures.
In mid-1960 each of the
major republics established
republic-level economic councils
to coordinate economic activities
of the subordinate sovnarkhozes.
This move, intended among other
things to improve interre-
gional deliveries, has actually
only increased the bureaucratic
pressure on the producing level.
In another attempt to
solve the supply problem,
centralized control over a
wide range of commodities has
gradually been introduced.
This has, however, apparently
not remedied a situation that
was endemic in the pre-1957
economic ministries, whose
supply lines stretched through-
out the country, often in
parallel. Khrushchev deplored
this at the Railroad Workers
Conference last May when he
pointed to the "clever minds
who ship the same goods from
Odessa to Vladivostok and in
reverse."
The most recent organiza-
tional innovation was the
SECRET
16 Nov 6"
Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3 .4
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
w lk~
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
creation last year of 16
regional Planning and Coordina-
tion Councils. These now are
only advisory bodies concerned
with developmental problems,
but they are chaired by top
regional officials and may be
given a larger role in the
future.
In recent years the volume
of data needed to administer
and control the economy has in-
creased greatly. One authority
indicated that to provide sound
plant-by-plant working descrip-
tions of material requirements
for introducing the new tech-
nology presently planned for
the economy would necessitate
many times the present planning
force (estimated at around 700,-
000). To cope with this prob-
lem new statistical methods
are being tested, and planners
are exhibiting a keen interest
in computer technology and
programing. Gozekonomsovet
is reported to be using a com-
puter system in its planning
activities.
Current Proposals
At the 22nd Party Congress
in the fall of 1961 Khrushchev
called for broad discussion of
economic planning and admin-
istration. The recent public
discussion of industrial
management is obviously an
offshoot of considerable of-
ficial work on the subject at
the highest levels.
comprised of several industrial
enterprises which manufacture
similar products and which are
amalgamated under one manage-
ment with a certain degree of
product specialization at each
unit. This concept, it is
claimed, has enabled the units
involved to reduce administrative
personnel, make more efficient
use of manpower, materials and
equipment, and be more respon-
sive to the introduction of
specialized technology.
Firms manufacturing light
industrial products have been
formed in many parts of the
country, and the chief of the
Ukrainian Gosplan has indicated
that they may be adopted as the
standard form of industrial
organization in his republic.
In some areas where the firms
prevail, it has been possible
to eliminate the regional branch-
of-industry administrations.
Amalgamation also reduces
the practice of "double-counting"
--in which an enterprise counts
into its own production the
value of goods received from
other enterprises. Unless
the system is universally ap-
plied, a sovnarkhoz which
adopts the firm system will.
appear at a disadvantage to
those that do not.
Thus far, there has been
no major amalgamation of heavy
industrial plants along firm
line. s.
One category of proposal
concerns means of reducing
administrative complexities
and improving communication
and supply channels. Most
of these have only local
application--for example,
placing local industry still
under city authorities under
the regional councils.
Of more importance are
proposals for increasing in-
dustrial specialization through
the broad introduction of the
"firm" concept of management.
The so-called firms were first
established earlier this year
in Lvov Oblast. A firm is
Opposition to the firm
concept has apparently come
mainly from factory managers
who :fear a loss of their plants'
identity and from some regional
officials who see in it a threat
to the intermediate adminis-
trat;Lons under their command.
Proposals for improving
planning and control have evoked
the sharpest public debates,
and it is likely that the most
radical reforms will be in the
planning and control areas.
The Liberman Proposal
None of their proposals
made thus far would alter the
SECRET
Approved For Release 2008/04/04 CIA-RDP79-00927AO03800090001-3 14
 Approved For Release 2008/04/04: CIA-RDP79-00927A003800090001-3
vow V"01
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
basic premises of the Soviet
system: centralized control
through the state plan and
state-controlled prices. How-
ever, at least one proposal,
introduced by a professor at
the Kharkov Economic-Engineer-
ing Institute, Ye. G. Liberman,
would give local factory mana-
gers much broader authority
encroaching on perogatives now
exercised by state administra-
tions. The Liberman proposal
was apparently first introduced
at a planners' conference held
in Moscow last year. It was
presented to the public in
Pravda on .9 September 1962
and recently Liberman was per-
mitted to broadcast his views.
At that time he said that his
system would soon be tried out
experimentally at various
factories, suggesting that his
ideas have regime backing. Other
management systems are also in
the experimental stage.
Basically the Liberman
proposal, as with other related
ones, attempts to solve the prob-
lem of creating acceptable local
initiative in a state-controlled
system. In his view the present
system of state-imposed pro-
duction indexes hems in the
local manager, prevents him
from responding to innovations,
and in general instills con-
servatism throughout the system.
Liberman would have plant
managers responsible for vir-
tually all control functions
at the plant level. These would
include determination of wage
payments, costs of products, in-
vestment, new technology, and
capital repair. The manager
would be obliged to meet only
three state-determined goals:
physical volume, assortment
of production, and a time-limit
for supplying consumers. Plant
progress would be measured and
a sliding-scale bonus paid on
the basis of profitability:
gross profit divided by total
working and fixed capital.
According to Liberman,
this scheme would cause managers
to use capital and other re-
sources more efficiently, pro-
duce goods of higher quality,
and be more willing to introduce
new products and technology.
Central authorities would re-
tain control over large-scale
investment and overall levels
of industrial and defense
production. Liberman would
also have prices continue
to be set by the state but he
emphasized the need for improve-
ment in this area.
This statement was recently
seconded by a prominent member
of the Soviet Academy of Sciences,
Aksel Berg. Berg, going far be-
yond the Liberman criticism of
prices, revived a 1959 proposal
by L.V. Kantrorvich for the
introduction of a system from
which prices closer to those
obtained in a competitive
market system could be calculated.
Berg's proposal, however, would
represent a gigantic and highly
complex task for the planners
and accountants.
Other Proposals
In contrast to the decen-
tralization aspects of Liberman's
proposals, other suggestions
have concentrated on refining
planning and control techniques
along present lines. None of
the proposals have gone so far
as to suggest establishment of
free-market conditions in any
major area of the economy. The
most recent statements in of-
ficial planning journals reiterate
the continued importance of
central control, and the trend
over the last several years
has been toward placing greater
restrictions on the local levels.
SECRET
16 Nov 62 SPECTAT, ARPTCT.W - -_ 5 of 14
Approved For Release 2008/04/04: CIA-RDP79-00927A003800090001-3
 Approved For Release 2008/04/04: CIA-RDP79-00927A003800090001-3
*4W VW
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
STATUS OF THE ITALIAN COMMUNIST PARTY
The tenth congress of the
Italian Communist Party (PCI),
which convenes in Rome next
month, must cope with the most
serious and widespread disorien-
tation the party has faced in
the postwar period. Many party
leaders are dissatisfied with
the ambivalent attitude the
PCI has taken toward the gov-
ernment since the Fanfani coal-
ition accepted the support of
the Communists' erstwhile So-
cialist Party (PSI) allies.
The threat of parliamentary
isolation and the need to main-
tain its political vitality has
increased pressure for changes
in the party's structure and
ideology.
Soviet line. On the potentially
most divisive issue--the PCI's
relations with the various
other national Communist par-
ties and with Moscow--Togli-
atti has effected a compromise
both between elements of the
PCI and with Moscow.
Probably a majority in the
Italian party wants increased
autonomy from Moscow. This
reflects a widespread convic-
tion that there are serious
incompatibilities between the
interests of the Soviet Union
and those of a party operating
in Western Europe. Many of
the party's leaders have held
the view, at least since 1956,
that the world Communist move-
ment is many-centered and no
longer monolithic. They ac-
cordingly advocate "national
roads to socialism"--a position
which implies not only the use
by national parties of differ-
ent means of reaching power but
also different means of exer-
cising it.
National Congress
The PCI congress will
UNCODEDLng together on 2 December
more than 1,000 delegates
elected by the 114 local con-
gresses held throughout Italy.
The national congress can be
expected to give "unanimous"
endorsement to theses which
were drafted in early August
UNCODED, a special committee of party
leaders and published in mid-
September.
Relations With Moscow
On international political
issues and on the broad discus-
sion of such concepts as the
nature of imperialism, the PCI
theses adhere firmly to the
This attitude has brought
severe criticism from some of
the other European parties who
charge that the Italian party
seeks leadership over the Euro-
pean Communist movement and
that its "revisionist" attitude
divides the movement and hampers
it advance.
A lthouT
Togliatti himself formulated
the "national roads" concept,
he has been circumscribed by
the necessity of avoiding a
possible rupture with Moscow--
which has in the past handled
the Italian party cautiously
on this issue--and by the need
to keep intraparty forces in
balance.
PCI leaders went to the
Soviet Union several times
for consultation on the theses,
SECRET
16 Nov 99 cnVOTAT ATfmTnT Wo 6 of 14
Approved For Release 2008/04/04: CIA-RDP79-00927A003800090001-3
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
l
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
and Moscow's press comment on
the document has been uncriti-
cal. This appears to indicate
that Moscow and the PCI managed
to reach over-all agreement re-
garding the wording. However,
the Russians could be expected
to take issue with the PCI if
the party should attempt to
lay an ideological foundation
for the strategy to achieve
socialism in Western European
capitalist societies.
The establishment of a
Socialist-backed Italian Govern-
ment has considerably increased
pressure within the PCI for a
comprehensive examination of
the party's ideological premises.
Amendola, last March, publicly
discussed capitalism in terms
scarcely different in some
respects from the reformist
Marxism of many PSI members.
Increased autonomy from
Moscow and some doctrinal modi-
fications would give the PCI a
firmer basis for tactical ma-
neuversdesigned to make the
party appear more "democratic"
and help it in its present ef-
forts to avoid political isola-
tion. It would also give the
party more maneuverability in
its response to Soviet policy
moves--such as Khrushchev's
decision to put missiles in
Cuba--and therefore make it
less subject to harmful reper-
cussions.
Aside from tactical con-
siderations, however, it is
significant that some party
members--particularly in the
Communist Youth Federation--pro-
fess what appears to be a sin-
cere desire to bring ideology
more nearly into a genuine ac-
cord with socio-economic reality.
di
x offici
ITALIAN PARLIAMENT
NOVEMBER 1962
CHAMBER OF DEPUTIES
REPUBLICANS (PRI) 6
DE0OCRATIC SOCIALISTS (PSDI) 19 /
NENNI: SOCIALISTS (PSI) 86.',:
Coalition ccbincr, which Is
dependent span PSI support
24 NEO-FASCISTS (ME)
-6 OTHERS-
Policy Toward EEC
The party theses diverge
somewhat from the public Soviet,
position regarding policy toward
the European Economic Community
(EEC). As the Communist-domi-
nated World Federation of Trade
Unions (WFTU) and the other
European Communist parties
continue outright condemnation
of the EEC, this issue could
well become the most important
source of controversy the theses
pose.
As stated by Khrushchev
in early September, the Soviet
position, while still extremely
critical of the EEC, appears to
be evolving. The Soviet party
recognizes the Common Market
as a fact of life and may hope
to achieve some kind of cooper-
ation between it and the bloc's
economic grouping (CEMA).F-
SECRET
16 Nov 62 0T'''r'TAT "T)ITT1~ -1 - of 14
Approved For Release 2008/04/04: CIA-RDP79-00927A003800090001-3
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
NW
CURRENT INTELLIGENCE WEEKLY SUMMARY
Both the Communist-con-
trolled Italian General Confed-
eration of Labor (CGIL)--Italy's
largest labor union--and the
PCI now take a somewhat ambiva-
lent attitude toward the EEC.
They publicly accept it as a
"political and economic reality"
which has favored economic de-
velopment, but they charge that
it has also strengthened the
power of European monopolists
at the expense of labor. The
CGIL proposes that the WFTU open
an office at Brussels for the
purpose of monitoring EEC actions
and bringing Labor views to the
organization. While the CGIL
is partly motivated by worker
interests, the PCI's aim is to
disrupt the EEC's political
evolution.
The PCI and the Center-Left
Socialist support for
Italy's present center-left, gov-
ernment is potentially the most
serious threat that the PCT has
had to face in the postwar peri-
od. Those who favor the ex-
periment see in it two closely
interrelated major objectives:
they hope to weaken the PCI,
reduce PSI collaboration with
it in city and provincial ad-
ministrations, and eventually
isolate it politically; and they
hope to achieve this aim by im-
plementation of an ambitious
reform program aimed at solving
the basic economic problems
which the PCI has traditionally
exploited as its main source of
electoral appeal.
This is serious disagree-
ment in the PCI regarding the
formation of a political strategy
which would permit it to avoid
political isolation while it
attempts to bring down the gov-
ernment. The party characterizes
itself as the "constitutional
opposition" which opposes the
government in general but sup-
ports specific measures toward
social reform. The party's
public position is to view the
center-left government, in
Togliatti's words, as "a step
in the right direction but too
timid and too obscure."
At the same time, the PCI
uses every available opportunity
to undermine the government by
exacerbating differences between
the coalition parties and the
PS]:, by attempting to delay
legislation, and by placing
emphasis on the "inadequacies"
of the government's program.
It can no longer vote against
legislation without showing
that it is isolated on the left
and is being bypassed by the
government's achievements.
When it supports government
bills the party claims credit
for social reforms and presents
itself to the electorate as the
force which pressures the
government to meet its promises.
This strategy is inde-
cisive, and sometimes ambiguous.
Togliatti adopted it only after
serious intraparty dissension.
Heated debate over aspects of
the strategy continues at all
party levels.
One party faction--the
"hard liners" or "old guard"
--consistently advocates forth-
right opposition to the govern-
ment and, calls for "explicit
condemnation" of the "opening
to the left" and a broad attack
against the PSI. The currently
prevailing line, however, is
that of the "innovators" or "re-
visionists," who believe that a
strategy of ostensible support
is an absolute necessity in
view of the dangers of political
isolation. They claim that
"internal contradictions" within
the government majority are
bound to lead to its demise.
The fall of the government or its
failure to carry out its prom-
ises would put the PCI in a
position where it can increase
its strength by attracting
those disillusioned with the
government and also to claim
that no real "turn to the
SECRET
16 Nov 6 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001_ 3 8 of 1
SECRET
 Approved For Release 2008/04/04: CIA-RDP79-00927A003800090001-3
MW Vftw
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
left" is possible without the
PCI. Togliatti has endorsed
this strategy, and there is
some indication that individual
"hard liners" may be downgraded
at the congress.
Relations With the PSI
And the Labor Front
Relations between the PCI
and the PSI--which were com-
mitted to "unity of action"
until 1957--have steadily de-
teriorated, and their respec-
tive publications have engaged
in progressively sharper polem-
ics as PSI cooperation with
the government parties in-
creased. Nevertheless, the
two parties remain linked in
the CGIL, in cooperatives, and
in city and provincial adminis-
trations. The PCI is accusing
the Socialists of displaying
in their relations with the
coalition parties a "fundamen-
tal weakness which could lead
to the adoption of "centralist
policies" detrimental to the
working class.
The PCI is acutely aware
of the dangers to it of the
PSI's plans to enter a post-
election government on a five-
year contract, and an all-out
attack to prevent this can be
expected. Attempts to under-
mine the center-left govern-
ment can be expected to be
greatly accelerated during the
spring electoral campaign, and
Communists will inspire demon-
strations and strikes to dis-
credit the government and em-
barrass the Socialists--through
their membership in CGIL--when-
ever a suitable issue can be
found. PSI participation in
the CGIL is likely to be the
issue most difficult of solu-
tion in the context of future
center-left relations.
The PCI's main weapon is
its control over the CGIL.
The "hard liners" want to use
the CGIL openly to bring down
the government through massive
strikes and by provoking
clashes with the police in the
hope of casting doubt on the
ability of the government to
maintain order. The official
party position is to use the
union selectively and press
hard only on specific commit-
ments made by the government.
The PCI's ability to use
the union is somewhat restricted
by pressures within the CGIL
for greater tactical autonomy
frorl the party in order to pursue
strictly economic goals. The
relative failure of the 4 No-
vember general strike, called
on the Cuban crisis issue,
illustrates labor's increasing
reluctance to engage in politi-
cal strikes.
Other Problems
The party is worried over
membership losses
The PCI's caution in
avoiding any controversy with
Moscow over the content of the
theses may be partly motivated
by the need to secure Soviet
funds for the 1963 national
elections.
At the end of 1961 the
party claimed 1,728,000 members
--a .3.6-percent decrease since
1960 and a continuation of a
pattern of decline since 1954,
Paradoxically, PCI voting
strength had regularly increased
until this year's June munici-
pal elections--involving approxi-
mately 10 percent of the electo-
rate---in which the party suffered
a small decline, the first in a
major electoral contest since
the war.
The bulk of these elections
were in the South, where the
party is relatively weak, and
cannot be used. to predict future
voting patterns. However, they
gave rise to considerable con-
cern in the party, because it
SECRET
16 Nov 62 Approved For Release 2008/04/04 CIA-RDP79-00927A003800090001-3 ) of 14
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
needed a clear advance to
reaffirm the correctness of
its leadership line and in
order to check internal dis-
unity. The PCI has made
strenuous efforts to halt the
membership decline, but ris-
ing prosperity, a general and
growing indifference to
politics, and increased PSI
collaboration with the Chris-
tian Democrats render its task
increasingly difficult.
On the basis of incomplete
returns, the PCI has also suf-
fered losses in the 11 Novem-
ber municipal elections, which
involved an electorate of about
1,250,000.
Since the 22nd Soviet
party congress, some Italian
party leaders--and the Youth
Federation in particular--
have increasingly questioned
the principle of "democratic
centralism" in party life and
have called for a "liberal-
ization" of internal delibera-
tions. Some leaders have
gone so far as to advocate
recognition of "minority"
opinions, and Amendola has
stated that the need for
"fictitious unanimity" in
past. Freer discussions
would help the PCI in pro-
jecting a more credible image
of the party's "democratic"
character, but Togliatti has
supported the "old guard" in
blocking these pressures.
Prospects
Despite the party's dis-
orientation and incipient po-
litical isolation, it remains
a strong, mass party. It has
the largest and best-organized
membership of all Italian
parties and the basis of its
appeal--popular discontent
arising from social, economic,
and regional disequilibria--
is still exploitable. One
out of every four Italians
still votes Communist.
There are other formidable
opponents of the center-left
government formula--the right
wing of the Christian Democrats,
the Liberal Party, and the left
wing of the PSI--and should
these succeed in their efforts
to undermine the Fanfani cabinet,
the PCI is alert to exploit the
resultant instability. Severe
economic difficulties or a
period of international political
crisis would also provide the
party with opportunities to
create political unrest. Firm
control over the CGIL is an
ever-available and potent weapon
despite the growing disinclination
of both union leadership and
rank and file to engage in
political strikes.
On the other hand, implemen-
tation of the national socio-
economic reform program and an
expansion of the center-left
formula to more city, provincial,
and regional governments would
have a severe adverse effect
on the PCI. The government
hopes to undercut the party's
appeal by alleviating economic
discontent and thereby gradually
diminish the size of its popular
support. This would increasingly
accentuate the party's isolation.
The 1963 national elections will
afford some inkling of the im-
pact of the "opening" on the PCI.
Perhaps the most signifi-
cant factor which is now evident
is the increasingly strong pres-
sure within the party for re-
vision of its ideology and for
introducing more intraparty
"democracy." Moscow is unlikely
to allow the PCI to initiate
such changes, and the party's
leadership is placed in a dif-
ficult position because of grow-
ing intraparty pressure for them.
While Togliatti can be expected
to maintain the PCI's formal loy-
alty to moscow, he may, as he has
done in the past, take some inde-
pendent initiatives in order to
protect his personal position and
to advance the party's prestige
in the national and European arena.
Although other European Communist
parties are also faced with these
demands, the problem is especially
acute within the PCI, and Italian
party attempts to cope with them
can be expected to provide a con-
tinuing source of controversy
within the international movement.
SECRET
16. Nov 62 .~ -
Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3 - 14
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
1%W 148f
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
PROSPECTS FOR INCREASED BLOC-MALAGASY RELATIONS
President Tsiranana's mod-
erate government, which has main-
tained a strongly anti-Communist
position since Madagascar became
independent as the Malagasy Re-
public in 1960, appears to be
shifting toward a cautious re-
ceptivity to bloc overtures. Al-
though this tendency has so far
produced only an increased num-
ber of quasi-official contacts,
it could be accelerated by
highly placed members of the op-
position party and the examples
of African states. Since the
present level of Western support
has not produced the prosperity
and higher living standards pop-
ularly expected to follow in-
dependence, Tsiranana may accept
bloc aid and diplomatic re-
lations.
Initial Bloc Overtures
For almost two years the
Malagasy Government gave no en-
couragement to bloc efforts to
establish an influence on the
island. Soviet, Bulgarian,
and Czech delegations attended
the independence celebrations
in July 1960. The Soviet group
came prepared to sign a trade
agreement It urged the Malagasy
to exchange diplomatic missions
Th-ese pro-
posals met a cold shoulder.
About a year later, a three-
man Soviet trade mission arrived
in Tananarive. Government of-
ficials claimed that the Paris
embassy had informed Tananarive
of the impending visit only after
the plane carrying the Russians
was in the air. The mission
was allowed to stay for three
weeks. It made vague offers to
buy agricultural and mineral
products, and sought agreement
to set up a permanent trade
mission.
These gestures also received
a chilly reception. Tsiranana
po:Lnted out to the Soviets that
Madagascar was poor and under- 25X1
developed, and could not possi-
bly buy anything from the USSR.
During the year that fol-
lowed, the Malagasy began to
change their attitude toward
contacts with the bloc. In
April 1962 a two-man Bulgarian
trade team--with one-month visas
given by the Paris embassy on
its own authority--arrived in
Tananarive. The team subse-
quently succeeded in getting
their visas extended for one
year.
Other contacts with the
bloc followed rapidly. In June
the Polish Government offered
five scholarships for Malagasy
students to study economic
planning in Poland. The offer
was not rejected, but one minister
rather lamely told the US Embassy
that the government hoped no
suitable candidates would appear.
Last summer, numerous im-
portant people from Madagascar
found their way to the Soviet
Union. A 12-man Malagasy Cham-
ber of Commerce delegation spent
two weeks in the USSR and a day
in Prague. Two National Assembly
deputies represented the Malagasy
Republic at the Moscow World
Peace Congress.Four members of
the Malagasy Academy had a
month's visit as guests of the
Soviet Academy of Science. Gov-
ernment-designated Malagasy
representatives attended Moscow
seminars on fishing technology
and on rural health adminis-
tration.
These delegations were at
best quasi-official, and the
SECRET
16 Nov a'' cD'?r'TAT. AumTCT*We 11 of 14
Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
11W %me
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
Chamber of Commerce group was
purely nongovernmental. The
Soviet hosts approached it
nevertheless with proposals for
expanded commercial relations
and suggested that it seek ap-
proval from its government to
implement these schemes. Despite
these efforts, no action followed.
Domestic Political Factors
Shifting currents on the
domestic political scene ac-
count in part for the govern-
ment's permissive attitude to-
ward these contacts. Tsiranana
and his Social Democratic Party
(PSD) are in firm control, but
there appears to be a trend with-
in the government toward a more
doctrinaire application of
socialism.
There is a growing sentiment
among many in government circles
that the private sector is too
slow and too selfish in bringing
about the development of the
island. This groin which is in-
creasingly advocating national-
ization of business enterprises,
probably sees little reason why
Madagascar should shun contacts
with the "socialist states."
Communist Influence
The Communist Party of
Madagascar (PCM) claims to be
both authentic and independent
of Moscow's control, but appears
to consist of not over a dozen
active members and perhaps 50
The more serious Communist
threat comes from the chief op-
position party, the Congress
Party for the Independence of
Madagascar (AKFM). The AKFM is
directed by 20 to 30 active
Communists, most of whom were
trained in the Soviet bloc or
by the Communist Party of France.
Although the AKFM has only
three members in the present 107-
seat National Assembly, it con-
trols the municipal governments
of Tananarive, Diego-Suarez, and
Tamatave. Its president--who
was one of the delegates to the
Moscow Peace Conference--is mayor
of Tananarive, while the secretary
general, Giselle Rabesahala, is
a dedicated Communist.
The AKFM was originally a
genuine nationalist movement be-
fore it was penetrated by the Com-
MALAGASY REPUBLIC
Province boundary
o Province capital
munists. It still has great ap-
peal. for Malagasy nationalists,
particularly the educationally
more advanced Merina people of
the plateau area around Tananarive,
who seem not averse to following
the Communist line when it appears
to be serving nationalistic ends.
Since the attainment of
independence deprived it of its
SECRET
16 Nov 62 n?r?=~- ____
Approved For Release 2008/04/04: CIA-RDP79-00927A003800090001-3 of 14
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
chief objective, the AKFM has
concentrated on destroying re -
sidualFrench influence and on
fomenting suspicion toward all
forms of Western presence.
Tsiranana appears to be realiz-
ing that he is vulnerable to
many of its changes; there are,
for instance, at least 2,000
French "advisers" in his govern-
ment. Repeated AKFM charges
that he has made a "concentra-
tion camp" of Madagascar by re-
fusing to permit travel to bloc
countries may also have begun
to sink in.
The AKFM hold on the Merinas
is particularly significant.
This proud ethnic group ruled
Madagascar before the French
colonization and represents,
according to a local saying,
"one fifth of the population but
four fifths of the elite." The
Merinas aspire to capture power
from the Tsiranana government,
almost all of whose members are
from coastal tribes long held
in contempt, if not actual bond-
age, by the Merinas.
In the meantime, because
of the superior qualities of the
Merinas, the government is vir-
tually forced to employ a dis-
proportionate number of them in
the civil service--many just be-
low cabinet level. The influence
of the AKFM among such highly
placed Merinos may have helped
to generate the government's
change of attitude toward con-
tacts with the bloc.
Example of African States
Although the people of
Madagascar do not consider the
island part of Africa, the
country is not immune to politi-
cal developments on the conti-
nent. Its people share a com-
mon colonial past with the now
independent countries of Africa,
and have linguistic and cultural
ties with the ex-French colonies.
The government is linked with
the continent, at first through
the French Community, and now in
the African-Malagasy Union (UAM)
and the Monrovia grouping of
moderate African states.
The Malagasy Government
initially regarded Guinea and
Mali with detached pity as these
"radical" ex-French colonies
outside the Community became en-
tangled with the Soviet bloc
and increasingly oriented-toward
Ghana and the "radical" North
African states. This year, how-
ever, several of the Malagasy
Re-public's UAM partners have
shown themselves willing to con-
sort with the bloc. The premier
of Senegal visited Moscow in
June, and in October a Soviet
Embassy was established in Dakar.
The vice president of Dahomey
led a good-will mission to Mos-
cow and most of the European
satellites during the summer,
and announced his country's in-
tention to exchange diplomatic
missions with the USSR. Since
last November Niger has con-
cluded trade agreements with
Poland, Czechoslovakia, and the
USSR, and last month signed a
"cultural" agreement with the
USSR which appears to give the
Soviets ample opportunity to
flood the country with "experts."
This establishment of of-
ficial relations with the bloc
by friendly African countries
has generated much criticism of
the Malagasy Government for being
out; of step with its African
brothers. Tsiranana's visits
this year to Taiwan and West Ger-
many have been seized upon by
the AKFM as discriminatory and
pro-Western. His party ap-
parently feels this pressure;
at its annual conference in
September, the PSD adopted a
resolution calling for diplo-
matic relations with all coun-
tries.
SECRET
16 Nov 09 en'GPTAT nnmTnvi,. `3 of 14
Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
NW N%W
SECRET
Tsiranana and his government
could resist this pressure if
they could point to significant
economic and social progress.
Unfortunately, the miracle the
Malagasy people expected to
follow the end of colonial rule
is not likely to be realized in
the near future, even though
Madagascar has several advan-
tages over many other under-
developed countries. It is not
overpopulated, with only about
5.5 million people living on an
island over four times as large
as that occupied by Java's 60
million. The island's 18
tribes speak the same language,
and despite the Merinas' aspi-
rations to regain their past
hegemony, there is a sense of
national unity.
The economy, however, is
almost entirely agricultural,
frequently on the level of sub-
sistence farming. There are
fewer than 300,000 wage earners
out of a labor force of 2.5
million. Farming methods are
primitive, yields extremely low,
and barely 2 percent of the land
is cultivated. The typhoons
which frequently sweep the island
have at times reduced the east
coast harvests by as much as 40
percent. The main export crops--
coffee, vanilla, and cocoa--
suffer from world oversupply and
fluctuating prices. An inadequate
road system prevents efficient
marketing.
Industry contributes less
than 3 percent of the national
income and consists mostly of
the processing of agricultural
products, often on a level more
akin to handicraft than industry,
The exploitable mineral deposits,
principally graphite, account
for only a small fraction of
Madagascar's exports. French
trading companies dominate
foreign commerce and repatriate
their profits, while the Indian
and Chinese communities have a
near monoploy on retail trade.
There are almost no Malagasy
entrepreneurs.
Because of the complexity
of Franco-Malagasy relations,
the exact amount of French aid
is obscure, although it seems to
have' been at least $80 million
in 1960. A relatively small
amount of this money, however,
went into investments which con-
tribute to building Malagasy
economic strength. According
to the government's own estimates,
an investment rate of $120 million
a year is necessary merely to
maintain the present standard
of living in the face of an ex-
tremely high population growth
rate. In practice, since in-
dependence the rate of annual
investment has been less than
$50 million.
Madagascar.
The Tsiranana Government
lacks the means to improve upon
this bleak picture quickly enough
to silence its critics. If, for
political reasons, it hastens the
replacement of the French. advisers
or adopts restrictive measures to-
ward French commercial interests,
economic prospects will be even
worse. Consequently, the pres-
sures which appear to have already
eroded the government's once un-
equivocally anti-Communist po-
sition may soon create a climate 25X1
favorable for the establishment of
a significant bloc influence in
SECRET
16 Nov 0? O"VOTAT AnmTIYTT~c+ 14 of 14
Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
 25X1 Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3
Approved For Release 2008/04/04: CIA-RDP79-00927AO03800090001-3