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June 4, 2008
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July 12, 1963
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Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 ~, 1-~ 12 J~.ly 1963 aCi No. p~88/63 Copy No . `~' WEEKLY SUMMARY OFFICE OF CURRENT INTELLIGENCE State Dept. review completed H.tJ`TUii1V 1'U t~~.;ur~~a ~.C,i~.arti IMMEDIATELY AFTER USE - - -~ - GROUP I Excluded from automatic downgrading and declassification CENTRAL INTELLIGENCE AGENCY Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 25X1 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 SECRET (Tnformatian as of 1200 EDT, 11 July 1963) VISIT OF US STUDENTS TO CUBA The group is receiving red-carpet treatment and will probably remain for several mare weeks. MOSCOW PREPARES FOR TEST-BAN TALKS Moscow is making friendly gestures toward the West an the eve of the talks. Soviet sources have not made clear whether Khrushchev's offer of a partial test-ban agreement is contingent on a NATO - Warsaw Pact nonaggression treaty. BITTER ATMOSPHERE SURROUNDS SING-SOVIET TALKS The USSR and China clearly expect their secret talks in Moscow to result in a further dis- integration of relations. USSR AND IRAQ HEIGHTEN ATTACKS ON ONE ANOTHER. The Soviet Union has taken a series of diplomatic actions and Iraq has been conducting a heavy anti-Soviet propaganda campaign. GOMULKA'S DIFFICULTIES WITH PARTY FACTIONALISM Factionalism probably forced the postpone- ment of the party congress until 1964, but Gomulka seems to have thwarted at least temporarily a drive for power by a group of hard-line nationalists. PEIPING STRUGGLES WITH UNEMPLOYMENT PROBLEM The regime has had little success in resettling the surplus urban population, and there is prospect of worsening morale problems if this summer's harvest is poor, as seems likely. ASIA-AFRICA 12 July 63 SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 SECRET' ASIA-AFRICA (continued) FURTHER NEUTRALIST RETRENCHMENT IN LAOS The Communists are maintaining pressure at several points, and efforts to arrange talks between Premier Souvanna and Prince Souphannouvong remain stalled. PAKISTAN'S "INDEPENDENT" FOREIGN POLICY Recent accommodations with Communist China show a continued shift away from close alignment with US policy. AREA NOTES Malaysia, Yemen, Syria THE DE GAULLE - ADENAUER MEETING In their 4-5 July meeting the two leaders made little or no progress toward resolving any major issue. AGRICULTURAL DISCONTENT IN FRANCE Farm leaders have generally endorsed recent govern- ment concessions but local groups and individual farmers are still not entirely satisfied. SECRET 12 July 63 CURRENT INTELLIGENCE WEEKLY SUMMARY Page ii Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 5E CRET EUROPE (continued ) Page ITALY'S NEW PREMIER As head of an administrative government, Leone is expected to assume responsibility only far the con- duct of routine business. He has announced his intention to serve only through October. PORTUGAL UNDER ANTICOLONIALIST PRESSURE Expected African demands for UN sanctions will probably revive Portugal's threats to leave the UN and may lead to a further hardening of its position on renewing the Azores base agreement. WESTERN HEMISPHERE BRAZILIAN FINANCIAL POLICY Brazil's new finance minister is seeking to formulate a financial policy predicated on close cooperation with the United States. BRITISH GUIANA DEVELOPMENTS The Jagan regime has emerged from the 11-week strike which ended on 8 July more firmly entrenched in off ice than it was before the walkout began. ARGENTINE ELECTION RESULTS The 7 July elections marked the strengthening of the center-oriented parties at the expense of the Peronists and showed a strong preference for constitutional government. VENEZUELAN PRESIDENTIAI, CANDIDATE The Democratic Action party has nominated Raul Leoni as its candidate in the elections tenta- tively scheduled for November. 12 July 63 CURRENT INTEL.LI~~~ WEEKLY SUMMARY Page iii Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 SECRET VISIT OF US STUDENTS TO CUBA The group of 59 US students now visiting Cuba has been receiv- ing red-carpet treatment ever since its arrival from Prague two weeks ago. Beginning with personal con- ferences with Fidel Castro and his brother Raul, the students have been continually lionized by the regime's leaders. Included among their hosts have been such stal- wart Communists as Blas Roca, director of the newspaper Hoy, Carlos Rafael Rodriguez, head of the government's agrarian reform office, and. Lazaro Pena, secretary general of its labor organization. In addition the students' move- ments and. activities have been minutely covered by the press and radio. Indications are that the stu- dents will be in Cuba for several more weeks; they are reported now on an extended tour that will take them from one end of the island to the other. For as long as the visit lasts, the Castro regime can be expected. to continue publiciz- ing statements at:~ributed to the Americans that are: favorable to Cuba and critical of the US. SECRET 12 Ju~.y f3 CURRENT INTELLIGENCE WEEKLY SUNmZARY Page 1 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 `'~ SECRET The~Communist World MOSCOW PREPARES FOR TEST-BAN TALKS On the eve of the 15 July three-power talks on a nuclear test ban, Moscow has made a number of gestures toward the West calculated to create a favorable atmosphere for the beginning of the talks. This contrasts with the exchange of broadsides with Peiping immedi- ately prior to and even during the early stages of the Sino- Soviet talks. During his visit to the US Embassy for the Independence Day reception, Mikoyan praised the policy of peaceful coexist- ence and stressed the need for an end to the Cold War. In marked contrast with last year's treatment, President Kennedy's telegram thanking Khrushchev and Brezhnev for their 4 July congratulatory message was published in full in Izvestia and Pravda. The Soviet press on 7Tu'~y-carried an article by P. T. Gobets, a Soviet par- ticipant in the Geneva "hot line" talks. The article noted that US and Soviet experts had begun work on resolving "complex technical problems" connected with setting up the "hot line" between "the White House and the Kremlin." Moscow announced on 10 July that the line would go into operation on 1 September. Khrushchev's primary move to indicate to the West his interest in the forthcoming talks was his invitation to Belgian Foreign Minister Spaak to visit the USSR for an ex- change of views. TASS charac- terized their $ July meeting in Kiev as "marked by an at- mosphere of sincerity and mutual understanding." Moscow TV promptly carried films showing the two leaders in friendly con- versation. The substance of their conversation has not yet been reported. The former NATO secretary general, however, is well known as an advocate of some type of NATO - Warsaw Pact nonaggression treaty. The in- vitation to Spaak at this time reflects considerable Soviet interest in the nonaggression issue, which Khrushchev linked with a partial test-ban treaty in his 2 July speech in East Berlin. Moscow has evaded clarify- ing whether Khrushchev's latest proposal for a partial nuclear test-ban agreement is contingent on Western acceptance of a NATO - Warsaw Pact nonaggression treaty. Moscow broadcasts have widely repeated Khrushchev's 2 July proposals but provide no indication of the exact rela- tionship of a nonaggression treaty with a test ban. Mikoyan and Deputy Foreign Minister Zorin, responding to Western press queries at the US Embassy reception of 4 July in Moscow, seemed purposefully vague on the Soviet position for the three-power test-ban talks. Mikoyan said that Khru- shchev's 2 July speech "directly"' called for a "connection" be= tween a partial test-ban agree- ment and a nonaggression treaty. Zorin, however, stated that the nonaggression treaty is not a condition for a test-ban agree- ment--but then said. it is "part of the whole." SECRET 12 July 63 CURRENT INTELLIGENCE WEEKLY SUMMARY Page 2 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 SECRET In a brief conversation with Ambassador Kohler at the reception, Miltoyan was generally noncommittal on the details of the test-ban offer. He made the routine complaints over the US rejection of the Soviet offer to permit two or three on-site inspections to police a ban on underground testing, but would not say whether the demand for a moratorium on such testing had been dropped. A possible indication of Moscow's serious interest in the three-power talks is its refusal to grant visas to US and British newsmen to cover the talks. The Soviet embas- sies in Washington and London have so far refused to grant such visas on the grounds that there is a firm three-power understanding that the talks would be "secret" and that there would be no press brief- ings. After the US Embassy informed the Soviet Foreign Ministry on 5 July that the US had no objection to the is- suance of Soviet visas to US newsmen, a Soviet official took note of the statement but gave no indication that the USSR is changing its p~.~sition. Zorin's presence during the Khrushchev-Spaak meeting suggests that he may have been tapped to represent the USSR at the talks. Denial of Soviet Testing Soviet journalist Yuri Zhukov, who is often used as an unofficial spokesman for the Soviet leadership, has denied US press speculation on pos- sible recent Soviet nuclear testing. He told a US Embassy official on 1 July that the rumored explosions were "earth- quakes, as announced by the Soviet press." Zhukov expressed the hope that the US Government now shared the view of "certain Western observers" that the xislt of an "isolated" one-kilo- ton test is "nothing" compared to the danger if additional countries gain a nuclear capa- bility. His remarks suggest that the Soviet leaders wish to prevent such press speculation from having adverse repercus- sions on the test-ban talks. Following Zhukov's private denial, a few Soviet broadcasts ~.lso denied that the USSR had ir.ecently tested, and ridiculed the AEC's comments on the pos- sibility of Soviet testing. SECRET 12 July ~3 CUii,iiEP1T INTELLIGENCE ~YEEI~LY SU141PwIAl1Y Page 3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 '~rlr+ SECRET The Communist World BITTER ATMOSPHERE SURROUNDS SING-SOVIET TALKS The USSR and China clearly expect their secret talks in Mos- cow to result in a further disin- tegration of relations. They do not appear interested in finding a formula that would allow for a gradual subsidence of their bitter contest, but rather each hopes to turn this tactical phase of their deepening conflict to advantage. With an eye to the mast interested audience and the major prize to be won--the world Communist parties--each side is attempting to pin respon- sibility for the ever widening split on the other while posing as the only party interested in re-establishing unity. This was the intent of the Soviet central committee state- ment published in Pravda on 9 July. The statemen~laimed that two firm and important agreements--to cease polemics and to hold the tallss--had been reached. It accused China, how- ever, of engaging in actions breaking the first agreement and thus making it impossible for the talks 4o succeed. While charging that the Chinese are carrying an a "de- liberate campaign" to worsen Sino-Soviet relations, with a disregard far the "dangerous consequences of such a policy,'} the statement disingenuously pro- claimed Soviet good faith by insisting that the Soviet party, "despite such unfriendly actions," will continue to strive to "overcome the difficulties." The immediate pretext for this Soviet tactical protest was a rally held in Peiping on 7 July in honor of the five Chinese thrown out of Moscow for dis- tributing polemical literature. The rally, attended by over 7,000 Chinese officials and addressed by Foreign Minister Chen Yi and other high officials, was designed to justify the Chinese action and, in turn, blame the Soviets for their "'unreasonable" behavior. The Chinese Communist party made its bid for the sympathy of the world Communist parties in a statement issued on 10 July. As has frequently happened in the past, the Chinese re- versed the roles that the two parties were playing and in the face of the provocative Soviet attack. posed as the innocent _,__. CHRQNt3L4GY ~, ~~~y~-,~~~fiET =T~1,L~5 -=~~MO;~bYt' T1M6)-~ 5 July 1430 1b3D - 1830 SECRET lODO ~ L3Q0_ 15DD -.'jZt}D 12 July ~3 CURREId3.' INTELLIGENCE WEEKLY SUPJlMARY Chinese arrive Vnukovo Airport Preliminary meeting uay's discussions opened Length of sessions undeterm Talks resume Substantive issues rumored to have been discussed for the first time ncurrent meeting between lower level assistants 'd day-long recess taken Page 4 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 SECRET inj~.~red party. Their relatively temperate rep~?y, cast in tone~~ of regret and sorrow, was de- signed to nullify the Soviet attempt to ].ay responsibility on China': doorstep and in turn to pin the blame on the Soviet Union. The statement dismisses the ;soviet charges as "ground- less" and reiterates a charge of "unreasonable behavior" an the part of the Soviet Union, but reliew~ more on a rather subtly phrased series of rhetor- ical. questions to make its points. 13y contrasting their own righteous behavior--re- printing Soviet letters and statements and allowing Soviet personnel in China to distribute them--with the ;soviet failure to do similarly, the Chine;~e attempt to present a picture of tYremselves as a mature and re- sponsible party, worthy of leadership, Feigning bewilderment that the Soviet Union should find something objectionable in the rally liel.d for the fi~~e expe'_ted Chinese, the statement inno- cently asks if the Soviet Union wants them declared personae non gratae in China as well as in the UaSR. The statement insists that true "solidarity" between equals cannot be at- tained by adopting such a '"dictatorial attitude," To drive home the con- trast betvreen their own be- havior and that of the soviet Union more strongly, the Chi- nese published the Soviet 9 July statement in People's Daily on the same day ey ma e~ieir Uv~n statement. They also published anti-Chinese selections from Pravda editorials, the editorials c.f vaxious other Soviet newspapers, and excerpts from Khrushchev's 2l June speech to the ;soviet central committee plenum. Ta buttres;:~ their charges of Soviet anti-Chinese behavior, they al:~o published a report from their Moscow correspondent cataloguing the aeries of regional meetings an the Sino-Soviet di:~pute. Most members of the ;soviet hierarchy have fanned out from Moscow to address these n~eetistgs, apparently condemning the Chinese and ex- plaining the Soviet plans for meeting the challenge. ether soviet actians reflect the bitterness and tension that must exist in the secret meetings. Khru,hchev ostentatiously left Mos- cow far Kiev on 5 July, the day the Chinese arrived and the tall~.s opened. while there he mat with Helgian Foreign Minister Spaak, in a "cordial." exchange. ri'he Soviet radio has replaced its Ru:;sian- )_anguage program taped in Peiping with one prepared by the Cuban Radio Institute in Havana for ;soviet listeners. l;ntitled '{Cuba Today," this program is apparently to be a regular feature, as the Chinese program had been. Thus the uoviets have given ample evidence that they have no intention oz compromising their policies as desired by Peiping, but intend to pursue them with even greater vigor. The Chinese have :indicated that they intend to continue their str~~g~;1e against the ;soviet party, not least in the bilateral. ta11~s. The actions b,y both parties and their preparations to b lame the other for the failure of the talks, .even while they are in progrv:~s, point up the hollow nat..re of the charade being played SECRET 12 Ju1.y a3 CUIZR.>;N'I' INTKLLICI';NCI; W;a~KLY aUlldh4~RY Page 5 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 SECRET The USSR continues to in- tensify its attacks on the Iraqi Government's campaign against the Kurds. The 9 July Soviet note to the Baghdad government repeated earlier charges of "bloody outrages" against the Kurds, and at the same time sought to make the repression of the Kurds an international issue by claiming "interference" by the CENTO powers and Syria. This allegation, developed in greater detail in identical notes of the same date to Syria, Iran, and Turkey, appears to be intended to refute Baghdad's clam that the Kurdish problem is strictly an internal Iraqi affair. The UN Economic and Social Council, now meeting in Geneva, has granted a Soviet request to cansider Moscow's charge of genocide against Iraq, and Soviet UN Ambassador Fedorenko stated on 10 July that the USSR may request a meeting of the Security Council to con- sider the Kurdish issue. Moscow may also intend to use these charges to revive its 1957 proposals for a great- power declaration renouncing the use of force in the Middle East and banning interference in the internal affairs of the area. Renewed proposals along these lines presumbaly would be aimed at testing Western reaction to including general East-West issues in the three- power discussions which begin in Moscow on 15 July. The Soviet statement made no reference to a previous threat to terminate aid to Iraq. Soviet economic aid programs are continuing on a reduced scale, but arms deliveries have been suspended. Iraqi propaganda media have conducted a heavy anti- communist, anti-Soviet campaign for the past month. Baghdad television has carried personal attacks on Khrushchev, and has run and re-run films of the Soviet repression of the Hungar- ian revolution in 1956 and the East German uprising in 1953, as well as Khrushchev's shoe-pounding at the UN. News- casters have read open letters to Khrushchev from Iraqi citi- zens asking the USSR to stop interfering in Iraqi internal affairs. The press during the past week has called the Soviet Union a "Dr. Jekyll and Mr. Hyde" which is "pitied, hated, and contemptible," and has described Marxist ideology as a mixture .of blasphemy and apos- tasy. Baghdad has also accused Moscow of seeking to placate Peiping with its pro-Kurdish policy. On 9 July Baghdad radio accused the Soviet Union of "bestial suppressive methods and extermination of thousands" of its citizens for rejecting Communism. SECRET 12 July 63 CURRENT INTELLIGENCE Z~EEKLY SUMPltARY Page 6 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 FIGURES IN POLISH PARTY FACTIONALISM Left to right: S. Jedrychowski , E . Ochab, Z. Kliszko, M. Spychalski, A. Zawadzki, W. Gomulka, E . Gi erek, J . Cyranki ewi cz, A. Rapacki, R. Zambrowski , J. Morawski, I. Loga-Sowinski . Party first secretary Gomulka surrounded by members of the politburo. ZENON KLISZKO: Gomu I ka's right hand man and staunchest supporter, Party politburo and secretariat, RYSZARD STRZELECKI: Leading member of the hard-line nationalists, sometimes called Partisans Party secretariat but not yet politburo. ARTUR STAREWICZ: Up-and-coming moderate from ranks of those who generally but not always support Gomu I ka . Party secretariat. JOSEF CYRANKIEWICZ: Leading member of the group of ex-socialists scattered throughout the central committee who generally but not always support Gomu I ka . Party politburo and secretariat. ROMAN NOWAK: One of the few pro-Moscow hard-I i Hers, known as the Natoli n group, remaining in a high position. Politburo and secretariat WLADYSLAW MATWIN: One of the few remaining revisionists brought in with Gomulka in 1956. Politburo and secretariat. Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 ~""~ SECRET ~ GOMULKA'S DIFFICULTIES WITH PARTY FACTIONALISM Factionalism in the Polish Communist Party is causing dif- ficulties for Gomulka and has probably forced the postpone- ment of the party congress un- til the first half of 1964, However, Gomulka seems to have thwarted at least temporarily a drive for power by a group of hard-line nationalists. There are two groups of hard-liners within the Palish party, a pro-Moscow group op- posed to Gomulka's return in 1950 and an increasingly in- fluential group of nationalist anti-Semitic hard-liners whose chief spokesman appears to be Ryszard Strzelecki. In addi- tion there are several loose groupings of moderates and liberals varying in political coloration and support of Gomulka. Infighting among all these factions and the dilemma created by struggling against revisionism at home and dog- matism in the international movement have apparently pre- vented Gomulka from holding the congress scheduled by party statute for this year. At the 4-6 July central committee plenum Gomulka moved to placate the various factions. In an apparent concession to the hard-liners, Roman Zambrow- ski, a traditional hard-liner, recently disowned by the Strze- lecki faction because he is a Jew, resigned his position in the party politburo and secre- tariat. At the same time, how- ever, Gomulka promoted Jewish party press chief Starewicz and Polish ambassador to Mos- cow Jaszczuk--both unsympa- thetic to Strzelecki's fac- tion--to the party secretariat. Moreover,5trzelecki was not promoted to the politburo as his followers had reportedly expected. Although he is generally believed to have masterminded the hard-line cultLtral policy laid down at the plenum, the commission to direct and assure adherence to this new policy will reportedly be headed by two moderates who` support Gomulka. The personnel changes at the plenum probably were in- sufficient to improve Gomulka's control over the factions and at best were a holding action. He will probably have to under- take a decisive shake-up of personnel in the higher levels of the party to assure some degree of unity prior to holding a part congress. SECRET 12 July 63 CURRENT INTELLIGENCE WEEKLY SUMMARY Page 7 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 ~ SEC'RET ""~ Recent reports of wide- spread industrial unemployment and continued attempts to re- locate surplus urban population indicate that Peiping has failed to realize its hopes for eco- nomic improvement in 1963. In- dustry appears to be in better balance than last year, but job appartunities remain scarce and the total employed may even have declined because of the reduction in surplus workers required by the current economy campaign. While productivity statistics may have risen slightly because of this re- trenchment, production appar- ently has not benefited and the depressed economy is proving in- capable of absorbing the laid- off workers. The regime has had little success in its attempt to re- settle this surplus urban pop- ulation in rural areas. Many urban residents have evaded re- settlement orders, many evacuees have returned to urban areas, and additional rural residents have infiltrated into the cities. Although migration data are not available, the regime reportedly believes that some 30 million people moved into the cities during the 1958-60 period of the "leap: forward." This entire increment is presumably now surplus since regime authorities have said that 30 million people should be moved to the country- side. Rural residents have been resentful of the influx of urban evacuees and uncooperative in sharing their limited food. sup- plies with the newcomers. In same cases peasants have re- fused to accept evacuees and have forced them to move on. Already overpopulated, China's rural areas need such things as chemical fertilizer, not more labor. Mast of the refugees who poured into Hong Kong from the mainland last summer were un- employed city dwellers threat- ened with resettlement in farm areas. While tighter border controls make such an exodus unliltely this year, the dis- satisfaction and resentment that motivated-last year's mass migration are still prev- alent.. If this summer's harvest is worse than last year's poor crop--which now seems likely--the resulting food situation could. seriously exacerbate morale problems in China's cities. i SECRET 12 July 63 CURREPTT INTELLIGENCE WEEKLY SUMMARY Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 cHrr~A ~ ciong Yo Meng< Auong~+ L Sing; ~ds.~~~ Muang Soui ~,,..~?'r' '~~NEUTRALI57 HEADQUARTER No~~~ Luang Prabang ---~?-? R c a d ----- Track cr tail Airfield HONG SALY aien ~ F `"1 / ` ~ ~ .tea ~ ~ ti 1i ~ ?9~,. ~o ~~ Sam Neua _._ ~.? ~?~ K 55~ Vaq~ Vieng j~.g~~ ? VIENTIANE }Pak 1~~ Cf a Ban Hin .off"ic~~"' Sane V(am Heup 12 ~V _ ~o,. ~LL~ ~: TNA/L ANL3 Oheu 7'henen9 a,~~ ~`oYS"Tltatat ~~'~ ~ ~Mali2xay F J ~ ng Net udrt Sav nnakhet Thant FEaa ..~4 SAVAN NAF~{ 1 ET ~yTchep e Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 SECRET Asia-Africa FURTHER NEUTRALIST RETRENCHMENT IN LAOS Military activity in Laos remains at a low level, but Communist pressures and the Zack of food and ammunition have forced further neutralist re- trenchment. There are no indications that the Communists will attempt at this time to take Thakhek-- a key town an the Mekong--and thereby risk a further escala- tion in the fighting. Farther south, increased Pathet Lao guerrilla and probing activities near Savannakhet, Saravane and pakse suggest the passible initiation of larger scale Communist military activity in this sector. At Attopeu, where the Lao Army garrison is surrounded by Pathet Lao units, the situation has been quiet. Preliminary talks are being held in Vientiane between neutralist and Pathet Lao of- ficials in regard to security arrangements for the proposed meetings between Souvanna and Prince Souphannozzvong at the Plaine des Jarres. The Pathet Lao have proposed that rightist forces be withdrawn from the Plaine des Jarres airfield SECRET 12 July 63 CURRENT INTELLIGENCE 4YEEKLY SUMP~IARY sufficiently far that they can- not "sabotage the talks even by artillery." Meanwhile, Pathet Lao propaganda continues to urge Souvanna to put an end to alleged acts of provocation by Phoumi and Kong Le forces and to create a "favorable atmosphere" for talks. Relations between Vientiane and the "independent neutralist" General Khamouane in Phong Saly Although the takeover of the former French airbase at Seno by phaumi's troops in late June initially generated a violent reaction from the French, they have been more or less pacified by Souvanna. However, Souvanna's statement that Phoumi's action was taken on behalf of the coalition govern- ment is cited by the Pathet Lao as another example of Souvanna 's increasing subser- vience -ho ri Mist and US influence. Page 10 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 `~ SECRET ~ PAKISTAN'S "INDEPENDENT" FOREIGN POLICY In recent months the course of Pakistan's foreign policy has shifted a few more degrees from the west toward the .independent po- sition first charted bythe A.yubgov~ ernment some two years ago. Moves in this direction include a pre- liminary civil air agreement with Peiping and a demand that SEATO formally recognize the "threat" against Pakistan posed by India's military buildup. The trend toward a limited accommodation with the bloc which began in 1960 was intended primarily to appease growing neutralist sentiment in Pakistan and to put the US on notice that Pakistan's cooperation should not be taken for granted. A number of top officials, taking the view held by many intel- lectuals and large sections of the public, began to question the value of a rigid commit- ment to the West through member- ship in the CENTO and SEATO pacts. They argued that some neutralist countries seemed to gain as much or more by exploit- ing the competing interests of the major power blocs. As Western efforts to help bring about a solution of the Kashmir dispute were renewed in 1961-62, the. more independent line was geared to the narrower but nationally vital interests of Pakistan's relationship with India. The radical change in India's relations with the West which followed the Chinese Communist border attack last fall focused Pakistani concern even more intensively on the subcontinent. Still further impetus was provided recently by the Anglo- American declaration--as ex- pressed in the Kennedy-Macmillan communiqud of 30 June--that military aid to India would continue beyond the "emergency" phase. This reinforced the conviction of nearly all Paki- stanis that the "balance of power" in the subcontinent, under which they felt India's pre- ponderant military power had been offset by Pakistan's arms pact with the US, was being drastically altered to Pakistan's disadvantage. Expansionist "Indian Hinduism" remains the prime security problem for Pakistan, as a senior Foreign Ministry official recently put it, and his country's present foreign policy is designed to achieve greater flexibility and maneu- verability. While privately claiming that Pakistani author- ities have no illusions about the long-range intentions of Communist China and the USSR, he said that his government is exploiting all available op- portunities to improve Pakistan's position against India. The official recognized that current Pakistani policy regarding China runs counter to US global strategy and ob- served that this was something the US would have to learn to live with. President Ayub currently is stressing the need for closer relations with Pei- ping and ma be considerin new ties. SECRET 12 July 63 CURRENT INTELLIGENCE WEEKLY SUMMARY Page 11 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 'PROPOSED FEDERATION OF MALAYSIA Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 SECRET Malaysia: The agreement signs in London on 9 July by representatives of Malaya, Singapore, Sarawak, and North Borneo largely settles terms for internal arrangements of the Malaysian federation; which is scheduled to be formally inau- gurated on 31 August. It is likely that Brunei also will be included, although the Sultan is still holding out for better terms. Indonesia reacted by stat- ing that it would not x?ecognize Malaysia and may withdraw from the Indonesia-Malaya-Philippines heads-of-state conference sched- uled for 30 July. In a public address on 10 July, President Sultarno claimed that by signing the London agreement, Malayan Prime Minister Rahman had broken a promise that a referendum would be conducted in the Borneo territories before Malaysia was formed. On 9 July Foreign Min- ister Subandrio had stated that Indonesia would resume "active confrontation" of Malaysia if the Borneo territories "are forced into Malaysia" without being permitted the right of self-determination. Indonesia had dropped its overt opposition to Malaysia Yemen; Intense fighting between Yemeni royalists and Egyptian-republican forces is continuing in northern Yemen. There are still no indications that Cairo is preparing to withdraw any troops. ~ Syria: The Baathist re- gime scored another victory over its opponents with its ouster of Chief of Staff Hariri on S July. The chief of staff, who had considerable support among civilian and army elements, apparently was lured to army. headquarters where he was ar- rested, forced to hand in his resignation, and put on a plane far Europe almost imme- diately.-. Hariri's departure, however, is not likely to put an end to the power struggle be- tween Baathist and anti-Baathist elements, some of which are pro- Nasir and some hostile to hirn. SECRET 12 July G3 CLTIZRETZT INTELLIGENCE V~EEKLY STJMMAItY Page 12 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 ~ SECRET `'"~ The 4-5 July meeting in Bonn between De Gaulle and Adenauer made little or no headway toward resolving any ma ~r issue . the two leaders did not reach any understandings beyond those listed in the of- ficial communiqud. In the military field, the two governments agreed to place an unspecified number of com- pany-size units in each others' armed forces by the end of the year, and to undertake joint development of a vertical take- off plane. There is no evi- dence that either side raised the question of cooperating in the development of nuclear weapons. Among the various cultural and educational agree- ments concluded, the most far- reaching is an ambitious youth exchange program. Discussions aimed at find- ing a compromise between the high German and low French grain prices apparently made little progress. In the end, both sides settled for return- ing the problem to the EEC Council of Ministers for further study. Efforts to find a mutually acceptable formula for UK consultations with the EEC were equally unproductive. Probably the most important accomplishments of the. talks were the precedent set for future heads-of-state meetings under the Franco-German treaty and the initiation of Chancellor- designate Erhard into the pattern of face-to-face meetings favored by De Gaulle and Adenauer. Although their first session seems not to have been completely cordial, both De Gaulle and Erhard came away professing confidence of their ability to work together in the future. There has, however, been some reason to suspect that with the approaching end of the Adenauer era, De Gaulle might play down somewhat the bilateral relationship with Germany in favor of an attempt to promote closer European con- federation within the framework of the EEC. An indication of this is an official French ap- proach to Italy just before the Bann conference in which Rome was urged to take the initiative in strengthening EEC institutions as a prerequisite to closer political integration. u De Gaulle has scheduled a 25X1 press conference for 29 July at which time he may s eak out on the subject. SECRET 12 July 63 CURRENT INTELLIGENCE WEEKLY SUMMARY Page 13 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Europe Recent government concessions aimed at placating farmers' dis- content have been generally en- dorsed by the leaders of national farm organizations, but local groups and individual farmers have not been altogether appeased. A1- thaugh antigovernment demonstra- tions have subsided lately, these are likely to pick up again if prices far farm products do not rise appreciably. Plans for a nationwide demonstration appear to have been set aside for the moment. Underneath the current rural unrest are the steadily lower prices being received for local fruits, vegetables, grains, wines and dairy products as a result of overproduction and competition from imports. The government has sought to alleviate the situation by raising the price of wheat, suspending the importation of 12 July 63 Algerian wine and selected fruits and vegetables, and increasing some subsidies. These are, at best, stopgap measures falling far short of a long aver due revamping of the government's over-all farm policy. French farm interests have also suffered from Paris' moves in the EEC, notably De Gaulle's ex- clusion of the UK, a major food importer. other factors hurting the farmers are the impasse over regulations far trade in certain commodities under the EEC's agri- cultural program and failure to re- solve the grain price problem at the recent De Gaulle -Adenauer meet- ing. With labor unrest growing apace in recent months, all this promises a severe strain on the government's efforts to hold the line against inflation and to maintain a satisfactory rate of national economic growth. CURRENT INTELLIGENCE WEEKLY SUMMARY Page 14 25X1 25X6 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 SECRET ITALY'S NEW PREMIER Giovanni Leone, premier of Italy's all -Christian Democrat administrative government, was probably asked to form a cabinet because his reputation as a neutral in political outlook made him acceptable as a care- taker to all of the center-left parties. He has announced. that he expects to serve only through October, that is, until after the Socialist Party congress that month decides on the party's attitude toward a new center-left government. Leone is expected to assume responsibility only for the conduct of routine gov- ernment business and not initiate decisive long-range policies . Prior to his appointment to the premiership, the 54- year-old Leone was president of the Chamber of Deputies-- a position he had held since 1955. He served as a lieu- tenant colonel in the Italian army during World War II, and afterward played a prominent part in drawing up the sections of the constitution pertaining to the judiciary and constitu- t ional court. He has been a deputy from Naples since 1946. His one previous try at form- ing a government, in the turbu- lent days of early 1960, ended in failure. Leone has never been prominent in the policy-making circles of the Christian Demo- cratic Party nor are his views on the socio-economic reform program as represented by the center-left formula known. He appears, rather,to have built a reputation on his ability to maintain a neutral position when critical political issues arise. While this seems to have gained him some respect 12 July 63 Europe as a moderator between factions of his party, it also appears to indicate a lack of strong political and social convictions. In the US Embassy's view he is not generally well liked by colleagues. The embassy also characterizes him as a "color- less" figure who, as president of the Chamber, gave an "unin- spired. and pro. forma" performance. As head of an administra- tive government, Leone is responsible, among other routine matters, for steering the budget through parliament against a 31 October deadline. This period will give the center- left parties a breathing space in which to negotiate their differences and open the way for them to farm a majority LEONE government. Leone in his 1 July investiture speech ex- pressed the hope that such negotiations would be resumed, but it seems unlikely that he will play a major role in any behind-the-scenes talks that take place. SECRET CUFRENT INTELLIGENCE WEEKLY SUMb~3.RY Page 15 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 ~r.r SECRET Europe Recent moves by anti- colonialist countries to embar- rass Portugal, together with the certainty of a demand by the African bloc later this month that the UN impose political and economic sanctions, are likely to revive Portuguese threats to pull out of the world organiza- tion. Lisbon will probably blame the US for much of its trouble with the African states and may further harden its position on renewing the Azores bases agree- ment. As a result of anticolonial- ist resolutions taken at the Addis Ababa conference in late May, the UAR-and Ethiopia have broken diplomatic relations with Portugal and others are likely to follow suit soon. In the absence of diplomatic ties to break, Algeria, Senegal and reportedly Cameroon have an- nounced their sympathy for this course of action. In Latin America, Bolivia announced a severance of relations on 5 July. At the UN the African bloc has requested a meeting of the Security Council late this month at which time it will press for a "hard-line" resolu- tion against Portugal embodying mandatory sanctions and possibly calling for its expulsion. It SECRET 12 July 63 CURRENT INTELLIGENCE WEEKLY SUMMARY is most unlikely that Portugal will make any meaningful con- cessions, least of all public acknowledgment'of the right of self-determination for its African territories. Under the circumstances, the stage would be set for a Portuguese walkout, perhaps for good. Meanwhile, the latest irritant contributing to Portu- gal's steadily deteriorating relations with the Congo is Premier Adoula's recent public recognition of Holden Roberto's Angolan government-in-exile. "Retaliatory action" could in- clude a diplomatic., break as a minimum and might be extended to blocking the mouth of the Congo River and interdicting use of the Benguela railroad., which carries Katanga ore to the coast. If the Portuguese extended "retaliatory action" to Washing- ton, they might threaten to deny the Azores bases to the US. Under the present state of the Azores agreement, the US posi- tion there is unchallenged during 1963, but if negotiations for an extension of the agreement reach an impasse, the Portuguese can demand that the US begin the evacuation process not later than 1 Januar 1964. Page 16 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 `~ SECRET Western Hemisphere Brazil's new finance min- ister, Carvalho Pinto, is seek- ing to formulate a financia_1 policy predicated on close cooperation with the United States. He hopes to work out a program that will at least slow down inflation and--in view of Brazil's tight foreign exchange situation--ta reschedule repayments of the government's foreign debt. Pinto's objective will be hard to attain. His predeces- sor's anti-inflation program, aimed at keeping the cost of living from rising more than 25 percent this year over the 1962 level,has already failed. By the end of June, prices had risen 3p percent over those for December 1962, and the end is not in sight. Complicating Pinto's task are the sluggishness in some areas of Brazil's economy and the consequent rise in pressure for governmental relaxation of credit restrictions. Even be- fore he assumed office, expan- sive wheat and petroleum sub- sidies, removed earlier in the year, had been reinstated. Pinto himself , perhaps mindful. that his home state of Sao Paulo has been hard hit by the restrictions, has acknowledged the need for such financial. measures to assist lagging sectors of the economy. To combat Brazil's for- eign exchange crisis, Pinto apparently hopes to cut back the outflow of capital by reducing remittances of profits, dividends, royalties, and patents while at the same time attracting more "produc- tive" foreign investment. Brazil is also anxious to do something about rescheduling its foreign debt payments which, during the .1963-65 period, will reach $1,8 billion, or 43 percent of estimated export earnings. For a breathing spell, it is seeking postpone- ment of a $25_million payment due to the US Treasury on 24 July. In connection with the long-standing problem of the Brazilian Government's commit- ment to purchase the properties of American and Foreign Power Corporation in Brazil, President Goulart has stated his inten- tion to carry out the pur- chase and not resort to ex- propriation. The negotia- tion of an understanding between the new minister of mines and the company is likely, however, to result in still further delays. SE C'RET 12 July 63 CURRENT INTELLIGENCE WEEKLY SUMMARY Page 17 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 SECRET Western Hemisphere BRITISH GUIANA DEVELOPMENTS The Jagan regime has emerged from the 11-week strike which ended on 8 July more firmly entrenched in office than it was before the wall~out began. The strike; moreover, has aggravated racial animosity between Negroes and East Indians and deepened the country's economic problems. It also gave the regime an excuse to develop closer ties with Cuba and the Communist bloc. Although Jagan's opponents will probably try to continue antigovernment activities, they are discouraged by their fail- ure to topple the government. In addition, there is little sense of satisfaction among workers returning to their jobs under an agreement which, at best, is only a partial victory. There are, moreover, indications that the Trades Union Congress, which spearheaded the strike, may be corning apart at the seams. For example, approxi- mately a fifth of the sugar workers (one-half of organized lobar) have indicated an inten- tion to pull vut of their TUC- affiliated union, apparently to join one that is government- sponsored. Although the government has agreed to drop the labor legislation which caused the strike, it apparently will pur- sue efforts to dominate the un- ions. An indication of this appeared in a story carried in the 8 July issue of Jagan's party's newspaper which flatly asserted that the government intended to reintroduce some form of labor legislation. Despite the strike settle= ment, there has been only a slight letup in the incidence of racial violence, now occurring particularly in the countryside. where both East Indians and Negroes have begun to move out of communities in which they are in the minority, The recent arrival of British Army re- inforcements will help preserve law and order, but they are unlikely to prevent the autbrealc of sporadic disturbances. The regime, meanwhile, has moved to regularize its trade arrangements with Cuba and the bloc by promulgating new licensing procedures t,a cover the importation of the sub- stantial quantities of food and petroleum products now on order from these sources. Under the system, regular importers con- ceivably could be forced out of business and the public re- quired to purchase bloc products imported by the government's trading organization. More deals with Cuba may be pending, judging by the pro- longed presence in Georgetown of two representatives of the Cuban Ministry of Trade. In any event, a colonial office ruling which permits Jagan to accept advance payments for Guianese goods to be delivered to Cuba and the bloc at a later date, such as the 45,000 tons of rice recently contracted for by Cuba, could help un- scramble the financial mess into which the government has gotten itself . SE C'RET 12 July 63 CURRENT INTELLIGENCE VTEEKLY SUMMARY Page J.8 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 ~ SECRET ~ 'Western Hemisphere The 7 July elections marked the strengthening of the center-oriented parties at the expense of the Peronists and showed a strong preference for constitutional government. The two leading parties-- both slightly left of center in a field of 69--are Dr. Arturo Illia's people's Radical Civic Union (UCRP) and the Intransi- gent Radical Civic Union (UCRI) headed by Dr. Oscar Alende. A new center party led by retired General Pedro Aramburu ran a strong third. Despite the call of bath Peron and ex- President Frondizi for the casting of blank ballots, only 15.9 percent of the voters did so compared to 25 percent in 1960. Since no candidate received a majority of the total 476 electoral votes, there will be considerable political trading before the electoral college meets on 31 July. The strong ARGENTINE ELECTIONS UNOFFICIAL RETURNS'w PARTY -UCRP POPULAR VC?TE t?lo) 2,318,777 "(25.9) UCRI 1,497,639 (1b.7) ARAMBURU 1,312,255 (14.7) wwgLANIC 1,402,694 (15.9) "The official count bean on - 11 July; and will :vary slightly from these early .returns. "* Mainly: Peronistbut includes usual 3=5% bland vot?. ~ _ ELECTORAL VOTE -.162 i o0 Bl showing by the three top candi- dates, however, has probab ly reduced the possibility of a dark horse being elected president. The trading will also involve the senators to be chosen by the provincial legislatures on 29 July and the 22 governors to be selected by provincial electors on 26 August. In the direct election of national deputies, the UCRP and UCRI made even stronger showings, winning 76 and 38 seats respec- tively in the 192-man chamber. The Aramburu and Conservative parties-won a total of 39 seats, while Peronist and neo-Peronist parties won 18. The weak blank vote has caused deep divisions within the Peronist movement and probably the bankruptcy of its leadership. The upsurge of the UCRP from its position as Argentina's third largest party in 1962 ref lects new votes from same former f ol- lowers of Peron and Frondizi. Illia and the UCRP campaigned on a more nationalistic platform than the UCRI. They particularly called for annulment of the con- tracts with foreign oil com- panies--mainly US--which the Frondizi government negotiated to help develop Argentina's petroleum resources. Illia, a 62-year-old physi- cian and politician from central Cordoba Province, has vowed to up- hold his campaign statements. He is anti-Communist but believes the Communists should be allowed legal status. He :has long advo- cated reuniting the UCRP and UCRI, which split in 1957 over Frondizi's leadership; a reunion, however, would depend on ironing out dif- ferences ~n party platforms SECRET 12 July 63 CURRENT INTELLIGENCE WEEKLY SUMMARY Page 19 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 ~ SECRET Western Hemisphere President Betancourt's Democratic Action party (AD) last week nominated Raul Leoni as its presidential candidate in the elections now tentatively scheduled for November. He was chosen largely out of respect for his position as party presi- dent and the strong labor support he commands. His unanimous nomination by the AD convention reflects the party's?confidence that it can win despite Leoni's appar- ent lack of support among inde- pendents and the large Social Christian Party (COPED , which now belongs to the governing coalition. This confidence may be unfounded, however, as in- formed opinion believes that COPEI support is essential to guarantee any AD candidate a clear-cut electoral victory. On present form COPEI, suspicious that Leoni will not give it the same degree of participation in the government that Betan- court has, may refuse to back him. The nomination was. a mild setback for Betancourt, who had preferred that his allies be permitted a voice in the selec- tion of his successor. It is possible, however, that Betan- court, with a view tb perpetu- ating the present coalition, will at a later date attempt to persuade his party to re- place Leoni with a candidate less likely to alienate COPEI and the nonaligned voters. Betancourt's moves will be governed somewhat by the success of the major opposi- tion groups in uniting behind a rival candidate. At this point, the Democratic Republican Union--Venezuela's largest op- position party--is negotiating with other parties to form a united opposition front. SECRET 12-July 63 CU:IREN'f INTELLIGENCE WEEKLY SUIt3141A#lY Page 20 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 25X1 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3 SECRET SECRET Approved For Release 2008/06/04 :CIA-RDP79-00927A004100050001-3