WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A004000010001-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 38
• Document Creation Date: December 21, 2016
• Document Release Date: June 3, 2008
• Sequence Number: 1
• Publication Date: March 22, 1963
• Content Type: SUMMARY

OCI NO. 0272/63
COPY NO. 79
22 March 1963
OFFICE OF CURRENT INTELLIGENCE
CENTRAL INTELLIGENCE AGENCY
State Dept. review completed
ya -zz~sa~
SECRET
GROUP I Excluded from automatic
downgrading and declassification
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Information as of 1200 EST, 21 March 1963
Soviet Comment on Costa Rica Conference and
US Cuba Policy. . . . . . . . . . . . . . . . Page 1
The volume of propaganda designed to discredit
US intentions at San Jose is a measure of the
importance Moscow attaches to preventing the US
from obtaining united Latin American support for
its Cuba policy.
American Correspondent's Report on Conditions
in Cuba . . . . . . . . . . . . . . . . . . . Page 3
Time-Life's Edmund Stevens believes Castro has
achy ve edastabilized position based on "organized
confusion" and that the possibility of an up-
rising is remote at present.
Anti-Castro Activities of Cuban Exiles
The Alpha-66 organization has claimed respon-
sibility for the 17 March raid on Cuba's north
coast, although members of the so-called Second
National Front of the Escambray are believed to
have participated.
Page 4
Castroite Solidarity Congress Set for Late
March in Brazil . . . . . . . . . . . . . . . . . Page 6
Delays in final preparations and the expected
small size of delegations other than the Cuban
and Brazilian suggest that the meeting may not
be an organizational success.
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anu l n,l loo
Effect of Sino-Soviet Rift on Moscow's
East-West Policy . . . . . . . . . . . . . . . . . . . Page 8
In Ambassador Kohler's view, Moscow feels no
East-West agreement is possible without aggra-
vating Sino-Soviet difficulties, and that the
present "pause" in Soviet foreign policy will
persist until Moscow decides how to deal with
the Chinese.
Significance of.Recent Soviet Economic Moves. . . . . Page 10
Despite speculation that these reflect a deci-
sion to increase military spending sharply at
the expense of consumer industries and agri-
culture, Moscow may only be trying to solve the
basic problem of resource scarcity by adminis-
trative manipulation.
USSR Augments Merchant Fleet. . . . . . . . . . . Page 12
It is shopping for at least 12 used Liberty
ships, presumably in response to Western re-
strictions on shipping to Cuba.
Chinese Ponder New Trade With Western Europe. . . . . Page 13
Any contracts concluded are likely to cover
equipment or technology for agriculture, as
China's economic stagnation has reduced its
needs for industrial imports.
Turmoil in the Yugoslav Communist Party . . . . . . . Page 14
The confusion stems from disagreement over eco-
nomic policy, reviving nationalism within the
individual republics, and uncertainty caused
by a regime shake-up now under way.
Soviet Defense Minister to Visit Indonesia. . . . . . Page 16
The Indonesians may ask for
an envoy competent to
discuss rescheduling o their debt payments to
Moscow,
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Asia-Africa (continued)
Communists Undermining Neutralists in Laos. . . . . . Page 17
Pathet Lao strategy appears to be to replace
Souvanna and Kong Le with "progressive elements"
of the neutralist group.
Tensions Mounting in South Korea. . . . . . . . . Page 18
Junta leader Pak may face a serious clash with
civilian elements, while military leaders con-
tinue maneuvering for power--to the detriment
of armed forces discipline and capabilites.
UAR, Syria, and Iraq Push Talks on Federation . . . . Page 20
The USSR, already involvedin' sharp propaganda
exchanges with the new Iraqi and Syrian regimes,
continues to manifest its distrust of federation
moves.
Election of Opposition Slate in Parliamentary
Offices Threatens Overthrow of Congolese
Government . . . . . . . Page 21
Premier Adoula's inner circle may attempt to
install a compromise successor acceptable both
to it and to the opposition to prevent a radi-
cal takeover.
Europe
Italy's National Election Campaign. . . . . . . . . . Page 24
The present prospect is that the center-left
government formula--which has been the major
issue in the campaign--will continue.
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Europe (continued)
French Coal Strike Continues . . . . . . . . . . . . . Page 26
The report expected this weekend from a gov-
ernment committee studying disparities in
wages between public and private industry
may indicate whether compromise or a show-
down is in prospect.
Political Stability Threatened in Greece. . . . . . . Page 27
The growing bitterness between the government
and the principal opposition party involves
issues which caused Greece's prolonged insta-
bility between the world wars.
Impasse Developing Among Finland's Cabinet
Parties . . . . . . . . . . . . . . . . . . Page 27
They remain sharply divided over economic policy
but hesitate to precipitate a government crisis
for fear of once again inviting Soviet interven-
tion.
Western Hemisphere
Communist Penetration of Brazil's Pernambuco
State Government . . . . . . . . . . . . . . . . . . . Page 30
The new governor has put Communists and sym-
pathizers in key positions; one restraining
influence is the strongly anti-pommunist com-
mander of the army headquartered in the state
capital.
Bolivia May Accept Czech Offer to Build
Antimony Smelter . . . . . . . . . . . . . . . . . . . Page 31
Liberal terms, a depressed economy, and pressure
from the Bolivian left may make it difficult to
turn down what would be the first bloc industrial
enterprise in the country.
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Soviet comments on President
Kennedy's meeting with the Cen-
ral American presidents in Costa
Rica stressed that the main pur-
pose of the talks was to "study
new aggressive actions against
peaceful Cuba." TASS described
his arrival statement as con-
cealing a desire to form a com-
mon front of reactionary forces
against Cuba.
The heavy volume of Soviet
propaganda designed to discredit
US intentions is a measure of
the importance Moscow attaches
to preventing the US from obtain-
ing united Latin American sup-
port for its Cuba policy. A
Soviet broadcast to South America
on 19 March claimed that the US
in developing an anti-Castro pro-
gram is concentrating on the Cen-
tral American governments be-
cause it has failed in efforts
to involve such countries as
Brazil, Mexico, Chile, Bolivia,
and Uruguay--which adhere to the
principles of nonintervention and
maintain relations with Cuba.
Moscow has ignored the US
denial of the Soviet allegation
that US warships shelled a Soviet
fishing vessel. Propaganda on
this incident was released simul-
taneously with the first Soviet
acknowledgment of the withdrawal
of Soviet troops from Cuba.
The difficulties and con-
flicting pressures confronting
the Soviet leaders in dealing
with the Cuban problem were again
reflected in the private remarks
of a Soviet diplomat
The diplomat said the Cuban prob- 25X1
lem remains one of Moscow's main
preoccupations because Soviet
prestige is heavily involved and
because Cuba plays a significant
role in the dispute with Ch*na.
Moscow's aim in strengthening
Cuba's defenses, according to
the Soviet diplomat, is to make
Cuba invulnerable to an attack
by any Latin American country
without full US support. He ex-
pressed the view that President
Kennedy is unlikely to order a
direct attack at this stage and
that US actions will be limited
to inciting internal revolution
in Cuba. He implied that Moscow
is confident that the Castro re-
gime can meet this threat and
said Raul Castro and Che Guevara,
who "thoroughly control" the
regime, have Moscow's complete
confidence.
The Soviet diplomat denied
that the withdrawal of "several
thousand Soviet technicians" in
mid-March was the result of US
pressure. He contended that
these technicians had completed
their training mission and that
their departure, which had been
planned previously, was publicized
to give the appearance of a Soviet
bid for good relations with the
US. He said additional tech-
nicians will be withdrawn as
soon as their missions are ac-
complished and Cuban military
units are qualified to handle
their weapons.
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AMERICAN CORRESPONDENT'S REPORT ON CONDITIONS IN CUBA
Time-Life correspondent
Edmund Stevens, who recently
returned to his regular Moscow
assignment after a two-week
visit in Cuba, told US Ambassa-
dor Kohler on 11 March he be-
lieved the Castro regime has
achieved a stabilized position
based on a system of "organized
confusion." He found evidence
of discontent among the populace,
but observed that this was tem-
pered by considerable Cuban
"happy-go-luckiness" and by the
fragmentation and disorganiza-
tion of groups opposed to the
regime.
Stevens felt that the
possibility of a general up-
rising is remote at present.
He said, however, that if the
economic situation continues
to deteriorate, he could not
guess what the opposition to
Castro would be like "a year
from now."
Soviet citizens with whom
he talked in Cuba expressed
disgust over their general
situation there and spoke bit-
terly about the financial drain
ou the USSR that Cuba has become.
Some referred openly to Soviet
economic aid to Cuba as "pouring
money down a rat hole." During
the flight to Moscow on a Soviet
TU-114, a Soviet military officer
spoke to Stevens about the "enor-
mous cost" of these flights--the
longest nonstop civil flights
in the world, which seldom carry
many paying customers and are
evidently heavily subsidized
by the USSR.
Stevens also reported that
the Cubans preferred Czechs and 25X1
Poles to the Soviets, who are
regarded by many Cubans as "cold,
unsociable, and stingy."
He found
that members of the large Chinese
Communist Embassy staff (about
40 persons) in Havana were doing
an effective propaganda job
among the large Chinese element
in the Cuban population. These
personnel, he observed, blended
well into the local scene whereas
the Soviets did not.
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ANTI-CASTRO ACTIVITIES OF CUBAN EXILES
Alpha-66 has claimed
responsibility for the 17
March hit-and-run raid via speed
launch on the port area of
Isabela de Sagua, located on the
northern coast of Cuba's Las
Villas Province. Leaders of
the anti-Castro organization
said that a Soviet military camp
and a Soviet ship were attacked
during the raid, which evidently
took place at about midnight
on 17 March. Press reports of
the attack on the "Soviet camp"
and allegations that Soviet
sailors were wounded in the at-
tack have not been confirmed
by any other sources. The Castro
regime has identified the dry-
cargo ship L'gov as the one at-
tacked.
The number and identity of
the attackers are not known,
but member of the Second National
Front of the Escambray (SNFE)
organization as well as some
Alpha-66 elements are believed
to have staged the attack from
a point outside US territory. 25X1
The two anti-Castro organizations
are believed to be closely inter-
related
Alpha-66 is one of two
prominent Cuban exile groups--
the other being the Student
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Revolutionary Directorate--
that have staged hit-and-run
raids by boat on Cuban targets
in the past year. Alpha-66
has announced that one of its
basic objectives was to attack
a Soviet 'ship in Cuban waters.
The organization staged a simi-
lar raid against the same Cuban
port area on 8 October 1962,
claiming afterward that various
Soviet small arms had been cap-
tured in a "commando raid"
against a Soviet installation
there. Leaders of the organ-
ization were unable to provide
convincing proof of its claims,
however.
There are indications that
the government has not yet been
successful in attempts to liq- 25X1
uidate insurgents in the Sierra
Escambray area of southern Las
Villas Province.
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CASTROITE SOLIDARITY CONGRESS SET FOR LATE MARCH IN BRAZIL
A "Continental Congress of
Solidarity with Cuba" is sched-
uled to be held in Brazil from
28 to 30 March. Despite earlier
equivocation over the matter,
the Goulart administration has
reportedly decided to permit
the issuance of visas to foreign
delegates wishing to attend the
meeting. Its attitude toward
granting other facilities--in-
cluding a meeting place--is
still unclear.
Brazilian sponsors of the
congress are expected to publi-
cize it as widely as possible
within Brazil and Havana's
Prensa Latina to make a major
propaganda effort throughout
Latin America.
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However, delays in final
preparations plus the fact that
few national delegations other
than the Brazilian and Cuban are
apt to be large, suggest that
the congress may not be an or-
ganizational success.
Mexican Marxist
leader Vicente Lombardo Toledano
and pro-Communist former presi-
dent Lazaro Cardenas are backing
the congress and that the rival
Juliao and Prestes groups in
Brazil are both actively promot-
ing it suggest an attempt to in-
clude varying hues within the
leftist political spectrum.
This is consistent with current
Cuban policy pronouncements,
which continue to urge the
unification of the world Com-
munist movement as the only
means of liquidating "imperi-
alism."
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The Communist World
EFFECT OF SINO-SOVIET RIFT ON MOSCOW'S EAST-WEST POLICY
In commenting on the change
in Moscow's posture toward the
West since the end of January,
Ambassador Kohler has suggested
that the major factor has been
the Soviet leaders' preoccupa-
tion with Peiping's challenge.
He believes they feel no agree-
ments with the West are possible
which would not aggravate their
difficulties with the Chinese
and be vulnerable to Peiping's
attacks. He anticipates that
the resulting doldrums, if not
actual chill, in East-West re-
lations will persist at least
until the Soviet leaders
decide how to deal with the
Chinese Communists.
Berlin and Germany
There are no indications
that the Soviet leaders expect
early progress in the exploratory
talks with the US on Berlin
which will resume in the near
future. Moscow, which took the
initiative on 26 January to re-
new these exchanges, has agreed
to a US suggestion that the
coming round be held in Washington.
While local Soviet authori-
ties maintain a relaxed approach
to sporadic incidents in Berlin
and on the access routes, Moscow
continues to take advantage of
any opportunity to remind the
West about the need to settle
the German and Berlin problems.
Most recently, the USSR protest-
ed a West German law which would
place West Berlin judges under
Bonn's jurisdiction. The Soviet
notes to the Western powers de-
nounced the law as an illegal
attempt to extend West German
authority into West Berlin and
said such actions "emphasize
the urgency" of a Berlin agreement.
Soviet propaganda continues
routine references to Khrushchev's
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proposals to replace the "NATO
flag" in West Berlin with the
"UN flag." The East German press
reported Adzhubey's 15 March
statement in a Vienna press con-
ference that the USSR would not
object to a "temporary presence
of Western troops" in West Ber-
lin, provided they were placed
under the UN flag.
Soviet statements and propa-
ganda marking the first anniver-
sary of the Geneva talks deplore
the lack of positive results and,
as usual, place the entire blame
on the West. Moscow denounced
the French underground nuclear
test in the Sahara as another
attempt to torpedo the talks and
as further proof that the West
does not want to end the nuclear
arms race.
Outer Space
The only recent progress in
US-Soviet negotiations has oc-
curred in the bilateral talks
on outer space cooperation,
held in Rome from 11 to 20
March. The discussions were
amicable and the scientists
representing the USSR refrained
from raising political or legal
questions. Agreement was reached
on carrying out a weather satel-
lite program which would include
establishment of a communica-
tions link for exchanging weather
data received from artificial
satellites and on conducting
a joint test of communications
by means of a passive reflector
satellite.
Discussions on a third proj-
ect, the coordinated launching
of satellites to measure the
earth's magnetic field, were
not completed because the So-
viet representatives requested
time for further study of the
project. The discussions will
be resumed, probably in May,
at the next meeting of the
technical subcommittee of the
UN committee on peaceful uses
of outer pace.
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SIGNIFICANCE OF RECENT SOVIET ECONOMIC MOVES
Events of the past few weeks
make it clear that Moscow has
been going through another in a
series of re-evaluations of the
problem of how to allocate the
USSR's economic resources. Some
government statements have gener-
ated speculation that Moscow is
planning a sharp increase in mil-
itary expenditures at the expense
of investment in other fields,
especially consumer industries
and agriculture.
However, the evidence may
also be interpreted to mean that
Moscow has reaffirmed its previous
policies of gradually increasing
military expenditures and pursuing
an investment program favoring
defense and heavy industry as
opposed to consumer industries.
Such an interpretation might in-
clude the possibility that a new
attempt will be made through
administrative changes--rather
than any basic change in the
allocation of resources--to
alleviate the chronic problems
of the Soviet economy and to
make some progress toward ful-
filling Khrushchev's overambitious
promises to the consumer.
Speculation first arouse from
Khrushchev's speech on 27 February,
in which he expressed concern
over the heavy arms burden being
carried by the Soviet Union which
"diminishes--and cannot but dimin-
ish--the opportunity for the
people to gain direct (consumer
goods) benefits."
On 13 March an unusual
meeting of key party and govern
The Communist World
V
ment leaders set up a Supreme
Economic Council as the top state
body for managing industry and
construction. Dmitry Ustinov,
long associated with the defense
industry and suspected of being
the key figure in the develop-
ment of the Soviet ICBM, was
named to head the new agency.
The meeting also announced that
current planning for 1964-65
was to be reworked along with
a new Five-Year Plan to follow
the present Seven-Year Plan ter-
minating in 1965.
These events have an ominous
ring, but they lose much of it
when placed in the context of
economic malaise and of the re-
peated attempts of the Soviet
leaders to overcome basic prob-
lems of resource scarcity by
administrative manipulation.
Since the 27 February speech
there have been two notable re-
assertions of the Khrushchev line
of the last several years which
has continued to give the consumer
promise for some improvements.
In an Izvestia article on 3 March,
Petr Lomaco, chairman of the State
Planning Committee, said the time
had come "to divert more means,
materials, and equipment" to con-
sumer goods production and to
agriculture. He supported Khru-
shchev's call at the central com-
mittee plenum last November for
greater development of the chemical
industry and particularly of those
branches directly concerned with
consumer goods production and
agriculture.
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The announcement of new two-
and five-year plans indicated that
these should be worked out on the
basis of the "tasks" outlined in
the Twenty-Year Plan announced in
October 1961 and the decisions of
the November plenum. Both plan
and plenum had reaffirmed the pri-
ority of heavy industry but called
for some improvement in'consumer
welfare, proportional development
of all, branches of the economy,
and "adequate defense capacity."
Soviet editorials during the
past few weeks have neither adopted
an unusually militant line in in-
ternational, relations nor played
an austerity theme for the Soviet
consumer. On the contrary, those
commenting on Khrushchev's speech
stressed the importance of con-
tinuing development of consumer
welfare. On 1 March Pravda fea-
tured the statement, is nec-
essary to do still more to satisfy
the requirements of the people,"
and two days later it ran a six-
column pictorial feature on Soviet
housing. Economicheskaya Gazeta
of 2 March rea firmed the 1963
consumer goods and housing goals.
Likewise, Khrushchev since
the 27th has reiterated standard
themes of the last several years.
On 16 March he sent a letter to
the central committee presidium
urging more truck farms and ir-
rigation of a broader range of
crops--both resource-heavy under-
takings. On his present trip
south, he has made many stops at
chemical plants engaged in pro-
ducing agricultural chemicals;
several Soviet journals have re-
cently voiced the need for more
fertilizer for Soviet agriculture.
While these signs do not necessar-
ily mean an upswing in support
for agriculture, they do suggest
that Khrushchev has not changed
his basic view that as much sup-
port as possible should be pro-
vided.
The administrative changes
made at last week's meeting ap-
pear to complete the main elements
of the sweeping economic reorgan-
ization called for by the November
plenum. While a Supreme Economic
Council was not specifically men-
tioned at that time its formation
is clearly designed to meet Khru-
shchev's harsh criticism of top-
level planning. The new council,
according to the announcement, is
to serve under the Council of
Ministers--presumably to relieve
that body of administrative mi-
nutia--and will coordinate planning
activities at the national level.
The need for coordination
is a logical outgrowth of the
November plenum, which actually
increased the number of national
agencies involved in some aspect
of economic planning.
The choice of Ustinov is
equally logical, in view of the
mood expressed at the November
plenum. Khrushchev sharply
contrasted the organization and
administration of the defense
industries with what he de-
scribed as "disunity" in other
areas of the economy. The ap-
pointment is clearly in line
with Khrushchev's desire that
the planners exercise greater
imagination in the introduc-
tion of new products and new
technology--a trait which he
attributes to the defense in-
dustries.
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The Communist World
USSR AUGMENTS MERCHANT FLEET
The USSR has recently been
shopping for at least 12 used
Liberty ships, presumably in
response to Western restric-
tions on shipping to Cuba.
Ships of this type--de-
signed to carry large cargoes--
could meet much of Cuba's ship-
ping requirements and free many
of the 50 to 60 Soviet ships
now being used on the Cuban run.
The price--$165,000 to $180,000
each--equals only a few months'
expenditure for the charter of
a Western ship for Cuban trade.
Economy thus is one motive be-
hind this new policy. Another
is the reluctance of Western
shipowners to make ships avail-
able for this purpose.
The USSR's purchase of
second-hand ships is not ex-
pected to interfere with its
normal program of acquiring
new ones. Contracts for con-
struction of fast modern cargo
ships and large tankers have
been concluded or are being
negotiated with Japan, Yugo-
slavia, Denmark, and Finland
as well as with East European
countries. Special ships--
such as floating drydocks and
fishing and fish-processing
vessels--are also being con-
structed for the USSR in both
the free world and the European
satellites. Last year the USSR
built or bought new 110 mer-
chant ships worth $480 million.
Moscow undoubtedly will exceed
its goal of doubling Soviet
merchant ship tonnage during
the 1959-65 Seven-Year Plan.
The Soviet merchant fleet
is now the 11th largest in the
world and is about one fourth
the size of the US merchant
marine. The growing size of
the fleet should reduce depend-
ence on chartered free world
ships, and enable the USSR to
"show the flag" increasingly
by operating shipping lines 25X1
to Africa, South and Southeast
Asia, and Latin America.
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die Communist World
CHINESE PONDER NEW TRADE WITH WESTERN EUROPE
Lu Hsu-Chang, Chinese Com-
munist Vice Minister of Foreign
Trade, is now in London for trade
talks, and may go on to other
West European capitals. West
European traders have been in
Peiping, and. last month a produc-
ers'consortium concluded contracts
for'delivery to China in 1963 of
over one million tons of ferti-
lizer worth $30 million.
Lu's visit to Western Europe
is the first by a Chinese Com-
munist trade official of minis-
terial rank. It presumably is
more than ceremonial, but it is
likely that purchases will be
moderate. Some new contracts for
industrial equipment may be con-
cluded now that trade with the
USSR--formerly the chief source
of such purchases--is plunging
downward. Negotiations may also
be completed with the British for
a few more commercial aircraft.
Highly skilled Chinese
technical and engineering groups
have traveled widely throughout
Western Europe in the past year,
assessing the iron and steel in-
dustry, engineering products,
petrochemical and chemical plants,
and aircraft and ship production
facilities.
Lu's visit may provide a
clue to whether China intends
eventually to substitute Western
plants for those previously ob-
tained from the USSR or to engage
in a long, arduous "bootstrap"
operation. It may take the middle
course of submerging its aversion
to reliance on external sources
22 Mar 63
deliveries were completed.
ment would be deferred until
long enough to let Western tech-
nicians build pilot plants to be
copied subsequently by Chinese
engineers.
Chinese imports of machinery
and equipment from all sources
exceeded $500 million as early
as 1952 and totaled nearly $1
billion annually during the leap
forward. Because of economic
deterioration, such imports plum-
meted to less than $250 million
in 1961 and even lower in 1962.
The free world's share of these
purchases--technologically advanced
equipment not readily available
in the bloc--has run to about one
tenth of the total.
There is little likelihood
that Western firms will soon go
back to their former level of de-
liveries, let alonepick up a
large share of what the bloc for-
merly supplied. Economic stagnation
following the disruptive leap for-
ward of 1959 has reduced China's
immediate requirements for large
industrial imports. Furthermore,
the slow rate of recovery and
China's inability to use industrial
capacity already available suggest
that imports of industrial items
will remain at very low levels
for some time.
What contracts are concluded
are likely to cover equipment and
technology to support the agricul-
tural sector now being emphasized
in China. Such purchases would
require only small down payments
from China's meager foreign ex-
change reserves. The bulk of
machinery shipments to China for
complex facilities such as ferti-
lizer plants could not be made
until 1964 or later, and full pay-
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Vfte 1%w
4I:W ORGANIZA110N OF 'n 1E LI?AGUE OF (AMMUNTS-I'S OF 1U,OS AVIA
CENTRAL
AUDITING CENTRAL rt7NIMIT E '
EXECUTIVE
COMMITTEE
COMMISSION FOR COMMISSION FGA.
INTER,'-1N DEOLOGICAL axF
RL`1 4TIONS WORK
ORGANIZATIONAL-
POLITICAL
SECRETARIAT
COMMISSSION4
FOR CARVES
i- Each of these commissions has as members the presidents of the comparable commissions
of the republic party organizations.
There may be more administrative bodies under the Secretariat than are listed here-- e.g.,
a Commission for Agitation and Propaganda.
C MISSION FOB,
ORGANIC ICSI IAi '?
QUESTIONS
CEtU'IR AL
CONTROL,
COMMITTEE
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AJL %_4l",, l VW
The Communist World
There is considerable tur-
moil in the Yugoslav Party--
called the League of Communists--
as a result of a split over eco-
nomic policy and a revival of
nationalism within the country's
ethnically and culturally diverse
republics. Many officials, more-
over, are probably concerned for
their own personal fortunes in a
reorganization now under way
which will affect the entire re-
gime by the end of the year.
According to Ambassador
Kennan, who made a tour in early
March of the more developed re-
publics (Croatia and Slovenia)
and talked with Tito and other
Yugoslav leaders, the issue
which most clearly divides party
opinion is whether recentraliza-
tion or further decentralization
is the better means of improving
the economy. The issue of most
immediate importance is whether
new investment should be chan-
neled into the more developed
or backward republics.
Each republic is seeking to
satisfy its own economic inter-
ests, and national feelings in
Slovenia are running higher than
at any time since World War II.
Tito's position, according
to Ambassador Kennan, is some-
what ambivalent, but appears to
lean toward decentralization
to the extent of encouraging a
freer flow of investment capital
by giving local enterprises and
governments the power to invest
surplus funds in other regions
and types of activity. Through-
out his tour, the ambassador
found no tendency to be guided
by Soviet patterns or even to
take account of Soviet views.
The current conflict stems
from the economy's poor per-
formance in 1961 and the first
half of 1962 and has already
stimulated orders--most force-
fully enunciated at a central
committee meeting last July--
for a shake-up of the Yugoslav
bureaucracy. Hoping to better
utilize personnel and bring new
blood into leading positions,
Aleksander Rankovic, Tito's
chief deputy in the party,
decreed at that meeting that--
contrary to present common
practice--ho regime leader may
hold more than one high post
in the party, the government,
or the economy. Such posts,
moreover, are henceforth to
be rotated periodically.
At a 17-19 January meeting
of economists and high-ranking
federal and republic leaders,
debate was so acrimonious that
a full account of the meeting
has never been made public. The
Croats and Slovenes were vir-
tually unanimous in support of
further decentralization.
The reshuffle of the party
began in January when extensive
organizational and personnel
changes were made in its ad-
ministrative and coordinating
organizations (see chart).
They will probably have the
effect of giving all levels
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The Communist World
of the party a better understand-
ing of policy decisions made at
the top, and it will be more
difficult to conceal deliberate
failure to implement regime pol-
ities. The Macedonian party,
moreover, has eliminated one
arm of the local party bureauc-
racy by doing away with central
committee secretariats.
The Croatian party decreed
in January that local party
leaders can serve only two "man-
date periods." This policy,
which may be copied at the fed-
eral level and in other republics,
will create problems of continuity
and cause trouble for those party
organizations which have a short-
age of willing party workers.
The formation of a new
Commission for Organizational
Questions suggests that further
structural changes can be ex-
pected. These may come in con-
nection with a party congress
which is due by statute before
May but which will probably not
be held until fall at the earliest.
The changes in government
posts will come sometime this
summer after a new constitution
is ratified by Parliament in
April and national elections
are subsequently held. In
addition to the removal of job
holders who now have party or
economic posts as well, this
process will involve some rota-
tion of personnal. There will
also be at least one new high
government position to fill--
that of vice president of the
republic.
This shake-up of the regime,
with the implications personnel
shifts have for eventual suc-
cession to Tito's position of
leadership, has probably added
to the turmoil in the party and
regime. Rankovic, already the
front runner to succeed Tito,
probably strengthened his hand
in the recent party changes,
since he both ordered and
supervised them.
The more conservative
element in the party will prob-
ably be the losers? Local bosses,
whose primary qualification
was service with the partisans,
are being forced to relinquish
the little empires they have
ruled since World War II. To
this extent, the change may
represent the emergence of the
new generation of Yugoslav Com-
munists.
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NW wo
SOVIET DEFENSE MINISTER TO VISIT INDONESIA
Soviet Defense Minister
Malinovsky is scheduled to
arrive in Indonesia on 25 March
to inspect the massive arms
buildup which the Soviets have
supplied. Various havaland
air force demonstrations will
reveal to some extent the ef-
fectiveness of Soviet military
training.
The Indonesians are likely
to ask Malinovsky when a Soviet
delegation will arrive to nego-
tiate a rescheduling of their
debt repayments to the USSR
The Soviet Union used the
recent United Nations ECAFE
meeting in Manila as a forum
for standard propaganda attacks
on colonialism, the "restrictive"
trade practices of the West, and
the absence of representatives
from North Korea and North
Vietnam. The Soviet delegate
also implicitly denounced the
Malaysian Federation and the
suspension of US aid to Ceylon.
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IJiJ' ~.,I1\lJ l
COMMUNISTS UNDERMINING NEUTRALISTS IN LAOS
Tensions remain high on
the Plaine des Jarres following
the recent defection to the Pa-
thet Lao of elements belonging
to a neutralist battalion sta-
tioned in Xieng Khouang town.
Neutralist Commander Kong Le
has placed his forces on an
alert, arrested two dissident
officers, and transferred reli-
able forces to reinforce the
Xieng Khouang garrison.
The Xieng Khouang defection
apparently was instigated by pro -
Pathet Lao "neutralists" under
the influence of Foreign Minis-
ter Quinim and Colonel Deuane._,
Pathet Lao complicity is likely.
Communist strategy appears to
be the gradual undermining of
Premier Souvanna and Kong Le
and their ultimate replacement
with "progressive" neutralists
such as Quinim and Deuane.
Souvanna, who returned on
13 March from the first leg of
the royal international good-
will tour, seems undisturbed by
the recent events on the Plaine
des Jarres. Referring to his
talks with Communist leaders in
Moscow, Peiping, and Hanoi,
Souvanna claimed to have received
"ironclad" assurances that in-
terference in Laotian internal
affairs would cease. He prob-
ably feels that he has engaged
the "honor" of the Communist
powers in support of his
While the Pathet Lao radio
has refrained from attacking
;3ouvanna directly, it recently
has come out in support of
Colonel Deuane and "progressive
elements" of the neutralist
group and has strongly protested
Kong Le's arrest on 12 March of
the two pro - Pathet Lao "neutral-
ist" officers.
Nam Ng / ?PLAINE Muong Ph.
7Phou Keng.1 DE'S, JARRES
J
25X1
Ban Sen Louang ' Ban Hine'
Road v -?- r.. Track or trail
+ Airfield
22 MARCH 1909
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coalition government, and that
consequently they will be reluc-
tant--at least in the near fu-
ture--publicly to withdraw their
support.
Meanwhile, the Communists
have tightened their squeeze on
Kong Le's supply lines from
North Vietnam, allowing only a
trickle of necessities to reach
his neutralist forces on the
Plaine des Jarres. This has
made his troops increasingly
dependent upon air supply- from
Vientiane. The Souvanna govern-
ment is using Soviet and US air-
craft to fly cargo to Kong Ise
forces on and near the Plaine,
as well as the large Boeing
transport operated by the Inter-
national Control Commission.
Although the Pathet Lao have re-
frained from attacking these
aircraft, they retain the capa-
bility to interdict such flights
with antiaircraft fire.
TENSIONS MOUNTING IN SOUTH KOREA
South Korean junta leader
Pak Chong-hui appears to have
retreated from his decision,
announced on 16 March, to ex-
tend. military rule for four more
years. That decision, subject
to the outcome of a national ref-
erendum, had brought Pak into
direct confrontation with civil-
ian political forces that sup-
ported an early return to rep-
resentative government because
the conditions he set for the
referendum made it clear that it
would be no more than window
dressing. On 19 March he an-
nounced. he was suspending for
12 days his plan to continue in
power in order to allow leading
civilian politicians time to
consider an offer to proceed with
previous plans for a successor
civilian government providing
"corrupt politicians" agreed not
to run for election.
This may turn out to be just
another tactical maneuver, al-
though Pak has backed down on
several occasions this year in
the face of strong opposition to
his decisions. Nevertheless the
continuing polemic between him
and the politicians threatens
to develop into a major clash.
Before the past week's events,
factional turmoil in Pak's regime
and his failure to win support
from the politicians had upset
his plans to be elected presi-
dent of the promised civilian
government. In February he an-
nounced that he was withdrawing
from politics. He also sent his
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Asia-Africa
right-hand man, former security
chief Kim Chong-pil, out of the
country as a "roving ambassador."
Although these moves gave the
appearance of easing the tran-
sition to civilian government,
they did not end the strife.
Important military figures
whom Kim was seeking to freeze
out of the regime continued
their maneuvers to gain the
ascendapcy. Following the ex-
posure on 8 March of a coup plot
involving army, air force, and
marine personnel, security of-
ficials began arresting mili-
tary officers, including promi-
nent members of the regime op-
posed to Pak and Kim. Subse-
quently, allegations of addi-
tional'coup plots and staged
demonstrations calling for the
continuation of military rule
gave the appearance of growing
instability, and set the stage
for Pak to announce his inten-
tion to stay in power. At the
same time there was an increas-
ing tendency on the part of the
press, recalcitrant military
factions, and intellectuals to
hold the US responsible for
South. Korea's political and
economic difficulties.
The various service chiefs
have assured US officials that the
Korean armed forces will stay out
of political infighting and can
be relied on to maintain order.
If force is needed to keep order,
however, some ambitious officers
may use the opportunity to try
to seize power for themselves.
Moreover, leading officers who
see themselves threatened with
loss of position, or who are
seeking more power, are likely
to continue attempts to organize
personal support among other of-
ficers and possibly among civilians.
Such activities will weaken
military discipline and reduce
the capabilities of the armed
forces. The pilots of one jet
fighter squadron reportedly are
threatening to go on strike un-
less the regime releases air
force officers involved in the
recent coup attempt. Meanwhile,
reports of pro- and antiregime
agitation among South Korea's
volatile students raises the
possibility of popular disturb-
ances.
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UAR, SYRIA, AND IRAQ PUSH TALKS ON FEDERATION
Negotiations for the estab-
lishment of some type of federa-
tion of the UAR, Syria, and Iraq
have taken on a new sense of
urgency. On 17 March the,first
round of talks in Cairo was re-
cessed for "several days or a
week" while the Syrian and Iraqi
delegations returned home to
report to their governments.
However, only two days later the
new Syrian regime sent a higher
level group led by Prime Minister
Sitar back to Cairo. Michel
Aflaq, secretary general of the
Baath party's international organ-
ization, arrived at the same time.
The Syrian Government may
have acted so quickly because it
feared that failure to show
progress toward Arab unity might
cause renewed domestic pressure
strong enough to threaten it or
at least its large Baathist
segment. On the other hand, any
commitment to a federation scheme
which would sacrifice to Nasir
a significant measure of Syria's
independence of action would
probably be equally dangerous to
the regime..
Cairo's Middle East News
Agency announced on 20 March
that a high-level Iraqi delega-
tion was expected to arrive very
soon to resume participation 25X1
in the negotiations.
Although the USSR has
avoided direct comment on the
talks in Cairo, it has manifested
continuing distrust of any Arab
unity arrangement under Nasir's
leadership. Pravda alleged on
16 March that t' he US is seeking
to "drive" the Arab states into
the sham unity of an "oil. con-
federation."
The USSR continues its sharp
propaganda exchanges with the
new regimes in Iraq and Syria.
Soviet propaganda. on the repres-
sion of Communist parties there
has begun to charge that the 25X1
US, through the CIA, was in-
volved in the.cou.ps in these
two countries.
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try Asia-Africa
ELECTION OF OPPOSITION SLATE IN PARLIAMENTARY OFFICES THREATENS
OVERTHROW OF-CONGOLESE GOVERNMENT
The government of Congolese
Premier Adoula suffered a serious
setback on 15 March when oppo-
sition candidates swept into all
seven elective offices in the
lower house by majorities equiv-
alent or close to a two-thirds
vote. The government can be over-
thrown by two thirds of those
present in either house, or by a
single majority in both houses.
On 16 March Adoula
was expressing confidence he would
survive. Ambassador Gullion feels
that be might squeak through on
a censure motion, but believes
that both Adoula and President
Kasavubu are badly overestimating
their strength.
The premier reportedly plans
to announce his new cabinet any
day. The 15 March vote raised
the price of support, however,
and he may have to make many con-
cessions and possibly shift the
government's moderate orientation.
He told Ambassador Gullion that
no "Lumumbist" would be permitted
to succeed him, intimating that
extra constitutional measures
would be taken to block any ex-
tremist takeover. He expressed
doubt that the opposition could
form a government, and thought if
he were overthrown he would be
called back.
In Elisabethville, Moise Tshombd
publicly .and privately con-
tinues to profess that his aim is
reconciliation with the central
government. At the same time, he
complains that the U Thant plan
for Katangans reintegration has not
been fully applied by Leopoldville,
particularly as regards promulga-
tion of a federal constitution and
the 50-50 split of Katangan reve-
nues between the central govern-
ment and Katanga. Tshombd has
also made it clear that he intends
to work for reunification of the 25X1
North and South Katanga provinces.
Although Adoula probably will
include Katangans in his cabinet, he
is unlikely to include Tshomb6 him-
self at this time. In any event,
Tshomb6 is almost certain to try to
exact heavy concessions in return
for Katangan support.
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Europe
The major question to be de-
cided by Italy's 22-29 April na-
tional elections is whether the
center-left government formula
will continue. At the moment, the
chances are that it will and that
Christian Democratic Premier Fan-
fani will once again form a center-
left coalition dependent on par-
liamentary support from Pietro
Nenni's Italian Socialist Party.
So far, foreign policy has
played a secondary role. The only
flurry of any significance has
come from the Communist attempt
to stir up feeling against the
government's willingness to partic-
ipate in a NATO multilateral nu-
clear force.
The most striking aspect of
the campaign to date has been the
almost total political isolation
of the Communist Party. The Com-
munists have been obliged to avoid
any frontal attack on the center-
left concept of government; their
sallies about reforms being un-
attainable unless Communists have
a hand in their implementation
have been effectively parried on
all sides, most notably by their
former Nenni Socialist allies.
The Communists, nonetheless,
have continued to hit hard on the
themes that the government has
failed to put through important
agricultural reforms and to carry
out the constitution's provisions
for dividing the mainland into
regional administrations. Mean-
while, pressures to modernize the
party and to refurbish its public
image have resulted in large-
scale purges--reportedly as much
as a third--of old-line Communists
from party electoral lists.
The Christian Democrats are
being criticized by their coalition
partners--the Social Democrats and
the Republicans--and by the Nenni
Socialists for not carrying out
their commitment to set up regional
administrations. This is expected to
help the Communists in some areas.
The Socialists, despite their own
neutralist tradition, are at odds
with the Communists on important for-
eign policy issues. They reject Com-
munist chief Togliatti's attacks
against Italy's participation in
the multilateral force, maintaining
that such an arrangement is a ,safe-
guard against dangerous prolifera-
tion of nuclear arms.
Both rightists and Communists
are blaming the government for ris-
ing living costs. The budget min-
ister, however, has pointed to recent
government measures to cope with
this problem and noted that whereas
the cost of living has risen by
seven percent over 1961, wages have
risen 16 percent. The Christian
Democrats and their coalition
partners call attention to the un-
precedented legislation accomplished
by this government in the field
of tax and school reform and in
liberalization of former Fascist
laws.
Rightist opponents of the
center-left formula are also using
the multilateral force issue to
belabor Premier Fanfani's govern-
ment. Many of them are castigat-
ing the government for losing
international prestige by accept-
ing subordination in a multilateral
force rather than insisting on
arming Italian national vessels
with Polaris missiles.
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Europe
FRENCH COAL STRIKE CONTINUES
The government has been
trying to end the three-week-
old coal miners' strike without
increasing its original wage
offer. It has sought instead
to placate the miners with prom-
ises of job tenure and retrain-
ing. The report expected this
weekend from a special govern-
ment committee studying dispar-
ities in wages between public
and private industry may indi-
cate whether compromise or a
showdown is in prospect.
Union representatives,
anxious to stake out their bar-
gaining positions in advance,
have adopted a critical attitude
toward the committee. The govern-
ment, for its part, is waiting
to take its cue from the tenor
of the report. It probably
hopes to use the report either
as a face-saving device to grant
further concessions to the miners,
or alternatively, as evidence
to justify its stand before the
general public.
A high official of the
Christian Workers Confederation
privately informed the US Em-
bassy in Paris that he thought
there was a possibility of a
compromise involvi.na an 8-percent
wage increase. Miners at the
local level are setting the
pace, however, and it is diffi-
cult to predict how they will
react to a specific government
offer.
The embassy has the impres-
sion that the government is in-
clined to let the strike situation
simmer for a short time before
initiating further moves. By
allowing the strikes to drag on,
the government may hope to wear
down the miners, and may antic-
ipate that the inconveniences
created will gradually erode
their public support. The govern-
ment is also attempting to under-
cut this support by publicizing
the higher prices and taxes that
would be required to offset the
cost of an over-all wage increase.
Public support remains high
at this point, however, and
strikes of varying duration
have been called in various
public services and nationalized
industries to demonstrate work-
er solidarity with the miners.
Leaders of the Communist-dom-
inated miners union--one of three
on strike--are taking a harder
stand and are predicting the
spread of the strike to other
industries.
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Europe
POLITICAL STABILITY THREATENED IN GREECE
Protracted and bitter re-
criminations between the Greek
Government and the largest par-
liamentary opposition party, the
non-Communist Center Union (EK),
threaten to revive long-dormant
issues involving the monarchy
and the army which caused pro-
longed instability in Greece
between the world wars.
In its continuing campaign
to overturn the results of the
1961 national elections, the EK
has criticized the failure of
King Paul to intervene to force
new elections and has denounced
the "complicity" of senior army
generals in what it terms "elec-
toral fraud." The royal family
has lost prestige and popular
support in recent years, and at-
tempts to blame the King for the
current political impasse could
once again raise the "question
of the monarchy.'
IMPASSE DEVELOPING AMONG FINLAND'S CABINET PARTIES
The wave of strikes with
which the Finnish Government
has been wrestling since January
is on the wane. Prime Minister.
Karjalainen thus appears to be
overcoming a problem that has
severely strained relations
among the four parties in his
coalition. He is by no means
out of the woods, however, as
his cabinet colleagues remain
SECRET
sharply divided over basic eco-
nomic policies.
The decision to settle the
strikes by granting higher wages
and salaries is a major bone
of contention. Coming at a time
when the economy is on the down-
grade, the government feels
compelled to offset the increased
pay for civil servants by cutting
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Europe
expenditures elsewhere. However,
its constituent elements cannot
agree where these cuts ought to
be made.
The Agrarians, who are the
dominant faction in the cabinet,
may try to get around the prob-
lem by pressing for new taxes.
This, however, is likely to be
rejected by the three other
coalition parties, particularly
if the main burden were to fall
on industry and urban dwellers.
There probably is consider-
able sentiment among the rank
and file in the minority parties
to withdraw from the government.
However, their leaders, more
sensitive to the realities of
Finnish political life, recog-
nize there is no satisfactory
alternative to the incumbent
multiparty coalition. In addi-
tion, President Kekkonen may
have discouraged other parties
from rocking the boat at this
time by hinting that he might
be prepared to consider repre -
sentation for the Communists if
the cabinet question is reopened.
Fear of raising sensitive
problems in Soviet-Finnish re-
lations is another brake on
any move to precipitate a cab-
inet crisis. The Soviets in
the past have seldom hesitated
to use their considerable
potential for influencing
the composition of Finnish
governments to assure the
maintenance of a regime in
Helsinki that is favorably
disposed toward the USSR.
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~r SE CRE T
Western Hemisphere
COMMUNIST PENETRATION OF BRAZIL'S
Miguel Arraes, the new
governor of Brazil's northeast
state of Pernambuco, has a repu-
tation of being a good adminis-
trator with a penchant for sur-
rounding himself with Communists
and others who have a distinctly
anti-American bias. Since taking
office on 31 January, his mana-
gerial skill has not been con-
spicuous, but he has lost no time
in appointing a number of Com-
munists and like-minded individ-
uals to key state positions. He
has also publicly attacked the
Alliance for Progress.
One of Arraes' first acts
was to bring Diogenes de Arruda
Camara, one of Brazil's most
important Communists, into his
administration, probably to draft
the state's agrarian reform plan.
Camara has been a member of the
Brazilian Communist Party (PCB)
since 1934; it was he who led
the party in the late 1940s and
early 1950s when Secretary
General Luis Carlos Prestes
found it convenient to go into
hiding. Camara failed of re-
election to the central committee
in 1960 because of "leftist de-
viation" but has remained active
within the party, most recently
in rural affairs.
PERNAMBUCO STATE GOVERNMENT
Humberto de Andrade, who has
been closely associated with
party activity in the army.
So far, firm information
is lacking concerning appoint-
ments to positions in the interior
of the state. Arraes, however,
is alleged to have told PCB
leaders that he intended to ap-
point Communists to influential
jobs there as well. These indi-
viduals would be in a position
eventually to challenge the
large landowners and perhaps
break the hold they now have on
the area.
All this may be only a
beginning. The state legislature
elected last October along with
Arraes has a nominally conserva-
tive majority, but can scarcely
be considered a bulwark against
Arraes has also appointed
card-carrying Communists to the
posts of state secretary of the
treasury and director of anti-
slum social service, and as his
private secretary. Communist-
inclined individuals have been
given a number of other cabinet
and subcabinet posts. Among
these is the new police chief,
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further Communist penetration
of the state government. The
governor, earlier this month,
managed to get one of his own
men elected president of the
legislature, a move which seems
to have taken the starch out
of his opponents. Anti-Arraes
elements are saying that because
of this turn of events they have
no hope of developing an effec-
tive opposition program.
The outstanding obstacle
to Arraes' campaign to exercise
Western Hemisphere
a free hand in Pernambuco is
the Fourth Army, headquarters
at Recife, the state capital.
He has worked to bring about
the reassignment of this army's
strongly anti-Communist bom-
mander,, General Castelo Branco,
but so'far without success.
President Goulart, who support-
ed Arraes in October, now may
be inclined to keep some sort
of rein on the governor's
activities.
BOLIVIA MAY ACCEPT CZECH OFFER TO BUILD ANTIMONY SMELTER
Czechoslovakia has made a
new offer to build an antimony
smelter near the Bolivian rail
and mining center of Oruro, lo-
cated 150 miles southeast of
La Paz. The smelter would be
the first bloc industrial enter-
prise introduced into Bolivia.
The original Czech offer
was provisionally accepted by
Bolivia in a contract signed in
June 1962. The agreement was
never implemented, however, be-
cause La Paz objected to the
repayment terms and the absence
of satisfactory performance
guarantees. The Czechs now have
offered more lenient terms of
repayment and guarantees covering
all construction and future
performance of the smelter.
The smelter cculd become
an issue in next year's elections.
The liberal terms offered, plus
the depressed economic conditions
around Oruro and the strong
political pressure from the left,
may make it difficult for Presi-
dent Paz Estenssoro to ignore
the offer. He may find it just
as hard to turn down Yugoslavia's
offer of a $5-million loan for
the development of hydroelectric
installations in Oruro and the
southern mining areas.
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