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December 21, 2016
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November 12, 2008
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January 28, 1966
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Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 State Dept. review completed 'ARMY review(s) completed ~ Copy' `e. SECRET GR:QUR (,.Ecc vs~ed:fcorn,cwtorpaticA ,rotyr rnd n~ and declnssIPicat~Qf, Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 25X1 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 SECRET (Information as of noon, EST 27 January 1966) VIETNAM The largest allied effort of the war--a search-and-de- stroy operation launched in Binh Dinh Province on 26 Jan- uary--encountered light enemy contact in its initial phase. Meanwhile, Hanoi has repaired the bomb damage to Dien Bien Phu Airfield and is extending the runway 2,000 feet. An unprecedented and as yet unexplained air- the operation is essentially a cargo drop. Meanwhile, Hanoi is preparing its people for a resumption of the air raids and the possibility SOVIET MILITARY TRANSPORT AVIATION The Soviet military air transport force has been grow- ing and is improving its capability to respond rapidly to emergency situations. RICH GOLD FIELD UNDER DEVELOPMENT IN THE USSR The Muruntau deposits in central Asia will eventually yield an estimated $20 million worth of gold annually at the lowest unit cost in the USSR. SECRET Page i WEEKLY SUMMARY 28 Jan 66 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 SECRET HUNGARIAN PARTY FACTIONALISM AND POPULAR DISSIDENCE Popular unrest over recently introduced economic measures, and factionalism at top party levels stemming in part from proposed economic reforms, are compound- in- the difficulties facing the Kadar regime. SOVIET-JAPANESE TRADE AND AIR AGREEMENTS SIGNED The agreements provide for only a gradual increase in trade through 1970, and for a direct Moscow- Tokyo air route for the first time. PEKING STEPS UP SUPPORT FOR INSURGENCY IN THAILAND The Chinese probably regard Thailand as an area with considerable future potential for actions aimed at undermining the US presence in Southeast Asia. Asia-Africa THAI-CAMBODIAN BORDER TENSIONS CONTINUE New flare-ups are likely following last week's clashes near the Gulf of Siam. Increasing activity of the Khmer Serei seems responsible for the trouble be- SECRET Page ii WEEKLY SUMMARY 28 Jan 66 Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 SECRET INDONESIAN STALEMATE CONTINUES The army is trying to counter Sukarno's call for a "Su- karno front" of leftist supporters. NEW INDIAN GOVERNMENT SETTLES IN Prime Minister Gandhi has pulled together a cabinet much like that of her predecessor, and is likely to con- tinue Shastri's practical approach to India's massive economic problems. ARMY REGIME CONSOLIDATING IN NIGERIA No visible opposition to Genera]. Ironsi's military gov- ernment has appeared, and the regime seems to be gain- ing confidence. Europe BEN BARKA AFFAIR STRAINS FRENCH-MOROCCAN RELATIONS Both nations apparently are trying to avoid a complete diplomatic rupture. Meanwhile, I)e Gaulle's opponents have seized upon the issue to embarrass him. MORO DESIGNATED TO FORM NEW ITALIAN GOVERNMENT He stands a good chance of forming a new center- left government, but maneuvering among members of his own party and between the coalition parties could de- lay its formation. SECRET Page iii WEEKLY SUMMARY 28 Jan 66 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 SECRET DOMINICAN MILITARY CHIEFS REMAIN DESPITE CAAMANO'S DEPARTURE 21 Although refusing to accept new assignments, the military has indicated it will not move against Garcia Godoy at present. Navy chief Jiminez, who has been urging a moder- PERUVIAN REGIME'S RELATIONS WITH CONGRESS STRAINED The senate's censure of the justice minister has created strained relations and has pointed up growing difficulties in the coalition supporting President Belaunde. ECUADOREAN JUNTA REVISES PLAN FOR RETURN TO CONSTITUTIONAL GOVERNMENT Its announcement that congressional elections will be held simultaneously with the presidential election scheduled earlier for 5 June is a major concession to politicians. SECRET Page iv WEEKLY SUMMARY 28 Jan 66 Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 SECRET *00 With the expiration of the 78-hour, holiday cease-fire on 23 January, South Vietnamese and allied forces resumed major op- erations, thus far encountering only sporadic enemy resistance. The largest allied effort of the war was launched in Binh Dinh Province on 26 January when some 17 South Vietnamese, US, and South Korean battalions began a search-and-destroy operation north of the provincial capital near the coast. Only light con- tact was initially reported. Earlier, US military officials in Saigon had reported that the North Vietnamese 18th Regiment, probably one Viet Cong regiment, and possibly two other Communist regiments--as yet unidentified --were filtering into the north- eastern sector of the province. Viet Cong incidents in- creased after the cease-fire pe- riod, although no major attacks have yet been reported. The most significant action during the post-Tet period was an enemy mortar bombardment on 25 January directed against US and South Vietnamese installations in Da Nang, which killed four and wounded 25 others. The attack included several rounds from a 120-mm. mortar--the second in- stance in which Viet Cong forces have employed this heavy weapon in South Vietnam. During the four-day cease- fire, enemy activity slackened considerably, but did not stop altogether. Most of the 106 in- cidents which occurred during this period were concentrated in the Saigon area, near Da Nang, and in Phu Yen Province. Al- tihough several serious incidents were reported, the majority con- sisted of harassment of outposts, patrols, and aircraft. Political activity in Sai- gon during the week came to a virtual halt as observance of the lunar new year holiday pre- vaailed. The US Embassy has re- ported, however, that Vietnamese Government relations with monta- gnard tribesmen in the central highlands have continued to de- te,riorate. Last month's short- lived revolt in several high- land provinces, which was in- spired by the tribal autonomy movement FULRO, was the most re- cent serious reflection of funda- mental montagnard grievances. Since then, the government has reacted firmly to circumscribe the FULRO movement, but has not yet developed a consistent policy toward the tribal population. Part of the difficulty at present, the US Embassy reports, is the existence of friction within the South Vietnamese Government be- tween Saigon officials and the local area commander as to who will control montagnard affairs. SECRET Page 1 WEEKLY SUMMARY Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 SECRET H I A i iu cnou R..chow NORTH Nrng-m ng Sung hslang ..- Phong>+Dien Bien Phu, + ~.'~ Sa1T I Phuc Yen ~q t' NUR. 1 HANOI 1. J ~a:n neua. ` : 'f' rill Ong., L A 0 S ( VIETNAM Luang Prabang f l Filanh Hot 1 i v.ENnANE t- Phan Rang AIGO?N Phan litim PHNOM*. r-- VIETNAM PFNH Bien Hoa Do Nang r SOUTH Ling-shur bui ch'S F4rl Bayard .. ? eai.an ' rChu Lal Paks. ?Quang Vgai Kcnlum - -1 An Khe Ple-ku ui Nhon r J r_ U M H 0 D I :Nha irang / 0& Lai . ' Neng yang 4. YEN O ~R! _- i 22nd Din it C RPS i J 24th O Ziai Zone 4Canlon Y1M0 HONG KM.'( ll'aR 5 U-k.l Division/ .\ ~Yinh tong Ho. t?'a ..Hue roo sua cra 28 JANUARY 1965 The Indochina -South'China Area GhtaiaF7flin HAINAN \)oih Division [ III CORPS v c ; Sn-. vNN; 7ih DI'v lSrOn SECRET Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 EGRET In Hue, about 1,000 persons gathered at one of the main pa- godas during the holiday period to pray for peace. Organized by a local Buddhist student associa- tion, the meeting was orderly and similar to other student prayer-for-peace meetings held in Saigon in recent weeks. Al- though some student statements and banners were reminiscent of the former militant anti-Ameri- can student movement in Hue, there is no firm indication yet as to whether the meeting was the beginning of a general peace movement or a special Tet cere- mony. DRV Military Developments Hanoi has repaired the bomb damage to Dien Bien Phu Air- field since 14 January and is extending the 4,000-foot runway some 2,000 feet. This airfield has not been used since June 1965, when it was made unservice- able by US air strikes. The Com- munist intent in reactivating the field could be to make it serviceable for jet fighters, or to use it as a logistical staging area for PAVN operations in Laos. An unprecedented and as yet unexplained airlift is being con- ducted to the Dien Bien Phu area. Most of this activity, has con- sisted of paradrops in the plains area south of the airfiaid 13 parachutes on the ,round southwest of the airfield with box-Like objects still at- tached to some of the shrouds, suggesting that the operation is essentially a cargo drop. DRV Propaganda In addition to taking maxi- mum advantage of the bombing lull to complete bomb damage repair and move supplies, Hanoi is pre- paring its people for a resump- tion of the air raids and the possibility of a long and pro- tracted war. On the occasion of the lunar new year celebrations, regime propaganda took a very confident line on the question of eventual Communist victory using the theme "time is on our side." This was coupled, how- ever, with warnings of more dif- ficult times immediately ahead. Hanoi broadcast Western news re- ports of a US troop build-up in the South and the possibility of an extension of the bombings into the Hanoi-Haiphong area. The 25X1 broadcast admitted that such steps would probably prolong the war. SECRET Page 3 WEEKLY SUMMARY Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 C,Pf'P IT Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 The An-B (Camp) carries a normal load of nearly 21,000 lbs. or 75 troops to a range of over 1,300 n.m. Camps make regular paradrops in East Germany and have flown air sampling flights related to Chinese Communist nuclear testing. load of about 20,000 tbs. or 91 troops to a distance of a mal it l d y p s nor iver e The An-12 (Cub) can about 1,300 n.m. The Cub's ability to operate from unpaved strips and its design for rapid cargo hand- ling have made it the mainstay of Soviet Military Transport Aviation. Still in the prototype stage of development, the giant An-22 (Cock) transport is expected to improve Soviet airlift capabilities considerably. The Cock should be able to transport a maximum load of 176,000 lbs. to about 2,800 n.m. SECRET Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 CIA-RDP79-00927AO05100120001-4 NWIV SECRET SOVIET MILITARY TRANSPORT AVIATION Soviet military air transport activities have provided good evi- dence of the current capabilities of Soviet Military Transport Avia- tion (VTA). Last April Soviet transports lifted about 5,000 airborne troops from the Soviet Union into East Germany during the West German Bundestag meeting in Berlin; in October, about 100 Soviet assault transports airlifted part of a Polish division, about 1,000 men plus equipment, into southern East Germany as part of a Warsaw Pact exercise. The main component of the VTA is that element serving the Airborne Troops (VTA/ABN). This force has about 650 transports which are based in the western USSR. In addition to providing aircraft for operations of Soviet airborne forces, the VTA/ABN also satisfies nearly all the heavy air- lift needs of the rest of the So- viet military establishment, prob- ably including the support of mis- sile test ranges and strategic mis- sile deployment, and the provision of large-scale air transport for nonairborne forces. The VTA's ability to respond to distant military and political situations is still limited, how- ever, by its size. It could prob- ably airlift at least the assault echelons of one Soviet airborne division with all its combat equip- ment in a single maximum effort. This combat airlift capability can be augmented to some extent in an emergency by calling on the civil air fleet and the transports assigned to various air force com- mands. The more than 500 heli- copters subordinate to tactical aviation could also be enlisted but their short range would limit their use to tactical airlifts. The major transports used by the VTA are the twin-engine AN-8 (Camp) and the four-engine AN-12 (Cub), both introduced in 1959. These two turboprop aircraft were the first Soviet assault trans- ports which could load and dis- charge cargo through rear doors, reducing loading time. Both the aircraft can use unsurfaced air- fields but neither can transport very large or heavy equipment. Last year the Soviets made the first public showing of the :Largest aircraft in the world-- the AN-22 (Cock). This prototype transport apparently can lift :L76,000 pounds of cargo or 400 combat troops over a distance of 2,800 miles. With its normal load of 50,000 pounds it reportedly has a range of about 5,000 miles without refueling and it can op- erate from unpaved air strips. It can also handle heavy and bulky items such as missiles and heavy ground armor. The size of the Soviet military air transport force has been growing and the quality of its aircraft improving. As a result the USSR is working to- ward a force able to provide sub- stantial support rapidly in any situation where it is required. SECRET Page 5 WEEKLY SUMMARY Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 -J 1_.'1 Ld l V L'1 A MAJOR USSR GOLD MINING AREAS 80787 SECRET Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 SECRET W RICH GOLD FIELD UNDER DEVELOPMENT IN THE USSR The USSR is now developing the Muruntau gold field in Soviet central Asia, which eventually will contribute significantly to Moscow's strained gold reserve position. The deposits will yield an estimated $20 million worth of gold annually--about ten percent of present total Soviet production--at the lowest cost per unit in the USSR. Three gold discoveries were reported in Uzbekistan as early as 1959, but intensive study of the Muruntau deposits did not begin until 1961. By 1965 Soviet geologists determined that Murun- tau's potential was many times the original estimate and that it probably was the richest sin- gle field ever discovered in the USSR. A recent Soviet article claims that Muruntau will yield more gold than Kalgoorlie in Australia, a field that has been exploited since 1912 and still produces $18 million worth of gold annually. Full-scale mining and process- ing operations will probably not begin at Muruntau until the late 1960s. Gold will be mined by the open-pit method, which is more economical than underground oper- ations. Muruntau's favorable southern location will also help reduce production costs. Mining costs in the principal gold re- gions now being exploited--in the Yakutsk ASSR and in Magadan Oblast of the Soviet northeast--are about $90 per ounce at the offi- cial rate of exchange, or almost three times the current world market price of $35 an ounce. Fragmentary evidence suggests that the USSR originally intended to develop Uzbekistan as a gold- producing region simultaneously with the leveling off of produc- tion in the northeast in order to reduce over-all costs. The pre- cipitous decline in Soviet gold reserves since 1963, however, has apparently led to a decision to continue expanded operations in the northeast as well as to de- velop the deposits in central SECRET WEEKLY SUMMARY 28 Jan 66 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 SECRET HUNGARIAN PARTY FACTIONALISM AND POPULAR DISSIDENCE Hungarian party leader Kadar Because of various actions may be faced with factionalism at over the past.year, the regime has the top levels of the party. This suffered a setback in its relations apparently stems in part from dif- with the population, which fears a ferences over proposed economic re- hardening of policies. Popular forms, now under discussion, which criticism and pessimism were already among other things call for less de- mounting when the December price in- tailed central planning and greater creases were announced, and reac- independence for enterprises. This tion to the announcement was prob- situation has been compounded by ably stronger than the party had popular unrest over economic measures anticipated. 25X1 already introduced, specifically the price increases announced on 19 December. In a New Year's interview Kadar mace critical reference to "narrow- minded sectarians" opposed to his policies. Moreover, the US Lega- tion in Budapest reports there were last-minute changes in and a close vote on the 1966 economic plan in the party central committee. Hard-liners in the politburo have not been a problem to Kadar for some time. Rather, Kadar's op- position in the party has come from lower level provincial Stalinists. The appearance of differences within the highest party bodies does not necessarily pose a direct personal threat to Kadar, but it introduces a new element into party affairs which could seriously hamper the regime's effectiveness. A worker demonstration and work stoppages resulting in as matey as 70-100 arrests have been reported in recent weeks. Western press ac- counts of these developments drew sharp and rapid denials from the Hungarian Government--for foreign consumption only. At home, however, politburo member Komocsin admitted in a-speech that the party was hav- ing "temporary political difficul- ties." Regime spokesmen have re- sorted to issuing statements and interviews defensively justifying the price increases in an attempt to counter popular discontent. moderate policies. tends difficulties for Kadar's As in the past the regime probably will continue to make ar- rests sporadically, hoping thereby to repress any further open mani- festations of dissidence. The problems within the party, however, may grow as the essential economic reforms are discussed further. Even though the party intends a very gradual introduction of the reforms, this early opposition por- SECRET Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 NE(,,'RL' 1 ' Nwo~ SOVIET-JAPANESE TRADE AND AIR AGREEMENTS SIGNED The recently concluded So- viet-Japanese five-year trade pact calls for only a gradual in- crease in trade through 1970. A civil air agreement was also signed which provides for a di- rect Moscow-Tokyo air route for the first time. Initially, at least, the route, which will be a joint enterprise, will use only Soviet aircraft and crews. After a sharp increase in trade during the early 1960s--it amounted to $150 million in 1960 --exchanges are expected to total about. $400 million this year, roughly the same level as in 1964 and 1965. The agreement report- edly aims at expanding trade to about $500 million annually by 1970. This modest increase is ap- parently due to the inability of the two sides to find suitable new items to exchange. As in the past, the USSR's leading exports will be timber, crude oil, pig iron, and coal, accounting for about 80 percent of Soviet deliveries. Japan's exports will center on merchant ships, machinery and plant equip- ment, textiles, and chemical goods. The trade list indicates that Japan is scheduled to sell about 100 ships to the USSR, in- cluding freighters, fish factory ,ships, timber carriers, and re- frigerator ships. A Soviet dele- gation is expected to visit Japan this March, reportedly to place large shipping orders. The air agreement permits the Japanese to fly across Si- beria on the Moscow-Tokyo route under a jointly operated service using Soviet aircraft and flight crews. Both parties will share financial interest in the under- taking. After two years the agreement can be reviewed with the possibility of permitting the Japanese to use their own air- craft on this route but the So- viets are not committed to any change at that time. to be held. F_ Soviet sensitivity to for- eign overflights of Eastern Si- beria had bottled up negotiations held off and on since 1958. With the Soviet TU-114 turboprop trans- port in service on the new route, air travel time between Japan and Moscow will probably be reduced by four to five hours, and by still more when the Soviet IL-62 jet transport becomes operational. Further Soviet-Japanese negotia- tions covering flight rights be- yond Tokyo and Moscow are still SECRET WEEKLY SUMMARY 28 Jan 66 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-0092 7AO05100120001-4 SECRET PEKING STEPS UP SUPPORT FOR INSURGENCY IN THAILAND The Chinese appear to be in- creasing their efforts aimed -at promoting insurgency in Thailand, and for the first time have pub- licly linked the growth of Commu- nist activity there with the war in Vietnam. Peking is being cau- tious, however, in moving ahead with its long-range plans to sub- vert the Thai Government. The Chinese probably regard Thailand as an area with considerable fu- ture potential for actions aimed at undermining the US presence in Southeast Asia. Peking is anxious, however, to avoid provoking vio- lent US reaction by moving too quickly. Peking has recently intensi- fied its propaganda offensive against the Thai Government, and the current Chinese line warns that, if Thailand does not stop aiding US military operations in Vietnam, Bangkok will be pulled down in the inevitable defeat of the "imperialists." On 2 January Liao Cheng-chih, a senior party spokesman, openly related the up- surge in antiregime activity to continuation of the war in Vietnam. Liao asserted that in 1966 the "Thai Patriotic Front"--set up in Peking a year earlier--together with "other political parties of Thailand" would "make even bigger contributions to the struggle against US imperialism and in de- fense of peace in Indochina." The current long-range Chi- nese campaign apparently got under way about 18 months ago. In Sep- tember 1964 the Chinese established a new school in Peking which pro- vided instruction in the Thai lan- guage. Two months later they set up the "Thai Independence Movement" in Peking. The Chinese followed this up in January 1965 by sponsoring the "Thai Patriotic Front" dedicated to the overthrow of the Thanom govern- ment and to the elimination of US influence in Thailand. In 1965 the Chinese are reported to have made at least one substantial purchase of Thai currency in Hong Kong. f k SECRET Page 10 WEEKLY SUMMARY ,Cni.nams. O Sanach 3O-ii Dnc. ~ ~ ~.OaT {.. v+?Tew Gf'u OF ni Nekton 0 PMro 0 f .--CAMBo H0 Eak' Ponh 28 Jan 66 I/' i tSaigon O 00 25X1 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 SECRET THAI-CAMBODIAN BORDER TENSIONS CONTINUE New flare-ups along the 400- mile Thai-Cambodian border are likely following last week's clashes in the isolated Hat Lek area on the Gulf of Siam. Responsibility for initia- tion of the fighting is not clear, but it may have been precipitated by an overly vigilant Cambodian post anticipating an attack from the Thai side of the border. Both sides have brought up lim- ited numbers of reinforcements and small naval craft. The scene of the fighting has long been a trouble spot. Tension in the area has been par- ticularly high since late last year, when Thai troops raided a Cambodian outpost. The disturbances are sympto- matic of tension between the two countries resulting from the 25X1 stye ped-up activity of Khmer Serei dissidents. 25X1 significant new dissident at- tacks have been reported since the 30 December raid at 0 Smach. The Cambodians are also 25X1 moving additional reinforcements to border positions in the 0 Although statements emanat- ing from Phnom Penh and Bangkok are colored as always by rhetoric which has characterized public exchanges through the years, there are some indications that positions in the capitals may be hardening. Sihanouk has publicly indicated that Cambodian troops will "retaliate" in the event of future Thai "aggressions," and there is some evidence that they are already doing this. On the Thai side, Foreign Minister Thanat gave an unusual press conference early this week in which he at- tacked the Mansfield report's treatment of Cambodia as too sym- pathetic. He complained that the report contained "veiled accusa- tions" that Thailand and South Viet- nam were violating Cambodian ter- ritory SECRET Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 SECRET INDONESIAN STALEMATE CONTINUES The Indonesian situation remains essentially unchanged: administration is largely para- lyzed, maneuvering between Presi- dent Sukarno and the army con- tinues, and neither faction has been successful in enlisting sig- nificant foreign economic assist- ance. Sukarno has continued the limited political offensive which he began on 15 January. On 20 January--in their first show of force since 1 October--left- wing elements estimated to num- ber 10,000 people staged a pro- Sukarno demonstration as a coun- ter to the anticabinet rallies which the army had encouraged the previous week. Sukarno told the demonstrators and his assem- bled cabinet that although he was being pressed by "reaction- aries" he would not retreat "even one millimeter" until God and the Indonesian people say he is no longer wanted. He reiterated his call for a "Sukarno front," which appears to offer an inci- pient vehicle for the develop- ment of a new political left. The army is trying to con- trol the front by ordering that any individual or organization that wants to join should regis- ter this intention with KOTI, the Supreme Operations Command, through which the army functions on nonmilitary matters. The army permits the front to operate, how- ever, except in West Java where the local commander has prohibited it. With the permission of the Djakarta army commander, the front hung anti-US banners in the streets on 22 January. The ban- ners were removed three days later after the US Embassy had pro- tested to both the Foreign Minis- try and the military. Army commander General Su- harto has moved to strengthen his control over the anti-Communist and anticabinet Student Action Command which staged large demon- strations involving limited vio- lence earlier this month. The army apparently is concerned that the students may take extremist action that could be politically damaging to the army and its civilian supporters in the con- tinued maneuvering with Sukarno. Both Sukarno and the army persevere in their approaches to various foreign governments for economic assistance. Both factions find, however, that significant aid is unlikely to develop until a unified ad- ministration is re-established in Indonesia. STIT (_"4R fa Page 12 WEEKLY SUMMARY Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 25X6 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 SECRET THE INDIAN CABINET PORTFOLIO Home Affairs External Affairs Defense Railways Food and Agriculture; Community Development Parliamentary Affairs; Communications Industry Finance Planning Law Transport; Aviation; Shipping; Tourism Commerce Irrigation and Power Education Labor; Rehabilitation MINISTER * G. L. Nanda * Swaran Singh * Y. B. Chavan +* S. K. Patil C. Subramaniam * D. Sanjivayya S. N. Chaudhuri Asoka Mehta G. S. Pathak N. Sanjiva Reddy Manubhai Shah Fakhruddin Ahmed * M. C. Chagla ** Jagjivan Ram shastri's cabinet * Nshru's last cabinet Earlis. Nehru cabinets SECRET Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 SECRET _AW Continuity appears to be the watchword of the new Indian Government as it prepares to present its program to the next session of Parliament, scheduled to convene on 14 February. In- dia's massive economic burdens leave Prime Minister Gandhi lit- tle recourse but to continue the relatively practical approach adopted by Shastri during the past year. Mrs. Gandhi has pulled to- gether a cabinet that is little changed from that of her predeces- sor. Eleven of its 15 members have previously held cabinet posts, ten of them under Shastri and nine under Nehru. Shastri's most influential colleagues, De- fense Minister Chavan and Agri- culture Minister Subramaniam, have retained their portfolios, as have six other ministers. An important addition to the group is Asoka Mehta, the deputy chairman of the govern- ment's interdepartmental economic planning commission, who has been named minister of planning. Mehta is ideologically in tune with Mrs. Gandhi's socialist ap- proach to national development, but is not burdened with the disruptive, doctrinaire rigidity of leftist former finance minis- ter T. T. Krishnamachari. Mehta's ability to work harmoniously with the present cabinet's more con- servative Finance Minister Chaud- huri, a recent Shastri appointee, will be tested as the two put together a 1966-67 budget for presentation next month. eration. India's strained relations with Pakistan have eased a bit as both countries work toward implementing the provisions of the Shastri-Ayub Tashkent declara- tion. On 22 January Pakistan's army chief, General Musa, met in New Delhi with General Chaudhuri, his Indian counterpart, to discuss mutual troop withdrawals from positions occupied during last year's India-Pakistan fighting. They agreed to a preliminary 1;, 000-yard pullback by the end of January and made plans to com- plete the withdrawal by 25 Febru- ary, the date specified in the Tashkent declarations. UN ob- server groups currently stationed in Kashmir and the Punjab-Raja- sthan area will oversee the op- SEC`RET' Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 SECRET The country has continued generally calm, and General Iron- si's new military regime appears to be consolidating its position and gaining greater confidence. Major uncertainties about Nige- ria's future remain, however, and delayed tribal violence on a large scale or a breakdown of army discipline could still jeop- ardize security. Although planning still seems to be mostly on a day-to-day ba- sis, the frantic improvisations of the period immediately follow- ing the initiation of the coup on 15 January by younger officers have ended. Late last week Ironsi, the regional military governors he had named, and top police leaders evidently agreed on the basic outline of their interim government. Subsequently the formation of a Supreme Mili- tary Council and a Federal Execu- tive Council--both headed by Ironsi and devoid of any civilian members--was announced. However, civil servants, whom Ironsi had confirmed in their positions along with the judici- ary on assuming power, are play- ing key roles in the new regime. They appear to be keeping the machinery of government function- ing more or less smoothly both in Lagos and in the regional capitals. Over the longer run serious difficulties are likely to arise between these career officials and the top military leaders. Thus so far the new leaders seem to have little in the way of a program. Domestically they are committed only to the main- tenance of law and order while a new constitution is being pre- pared. Foreign policy is to be based on "nonalignment" and "friendly relations with all," and foreign investors have been reassured. There continues to be no visible opposition to the changes and no reports of trouble from the most likely initial source-- northern Muslim elements, civil- ian or military. The new author- ities have continued to be con- cerned about this possibility, especially last weekend when the murder of respected former prime minister Balewa was confirmed, and have taken numerous steps aimed at forestalling violence. Statements by important tradi- tional leaders urging calm and support for the new government have also helped. Moreover, it now appears that the great major- ity of Nigerians welcome the avowed general objectives of the new leaders--the eradication of corruption and tribal-oriented government. For the immediate future, much depends on Ironsi and the advice he follows. Many 25X6 reports indicate he continues to have difficulties with younger officers who have their own ideas of how the military government should be run. Ironsi will be strained further as he becomes involved in the details of reconstruction, and especially in the development of new power structures in the now politically disorganized Northern and Western Regions. ...7.(.'i GR L J[ Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 25X6 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Next 1 Page(s) In Document Denied Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 N"We SECRET iow- Europe BEN BARKA AFFAIR STRAINS The charges of high-level French and Moroccan involvement the abduction and presumed murder in Paris of Moroccan leftist leader Ben Barka have worsened relations between the two countries and created internal problems for each. Both nations have recalled their ambassadors but appear to be try- ing to avoid a complete diplomatic rupture. French Foreign Ministry offi- cials maintain that there is no in- tention to cut off economic and technical aid. The ostensibly pri- vate three-day visit to Paris be- ginning on 22 January of Moroccan former foreign minister Guedira, who has been used by King Hassan in the past to smooth over diffi- culties between the two countries, probably signifies a desire by Has- san to halt the deterioration of relations. In France, the government has been forced to replace the head of its external intelligence and coun- terespionage service (SDECE) and to shift the service from the premier's office to the Armed Forces Ministry. The changes probably were intended to demonstrate that the government was moving promptly and without re- gard to the rank of the offending parties. In addition, the moves were a rebuke to the SDECE and a means of exerting stricter control over it. Although the French press has implicated cabinet-level officials and at least one of De Gaulle's per- sonal advisers, no official move against these men has been apparent thus far. FRENCH-MOROCCAN RELATIONS The political opposition, led by defeated presidential candidate Francois Mitterrand, has seized on the issue to embarrass De Gaulle. In addition to pressing for more in- formation, De Gaulle's opponents have called for a special session of parliament in order to question the government. Without signifi- cant defections from the Gaullist majority in the National Assembly, however, it is doubtful that the opposition can force a special ses- sion. The harshness of France's at- tack on Moroccan officials is begin- n:Lng to arouse Moroccan nationalism. For instance, the traditionalist Istiqlal press, normally critical of Minister of Interior Oufkir and no friend of Ben Barka, has taken an anti-French rather than an anti- Ou.fkir line. The semiofficial Mo- roccan press agency is countering French press criticisms and is hit- ting hard on the seamier aspects of French official involvement, imply- ing that De Gaulle himself surely was aware of his agents' activities. The King has been at pains to demonstrate publicly his solidarity with Oufkir. At the same time, there is some tentative evidence that he is firming up his ties with the army, preparing the ground to remove Oufkir, if he has to do so. Oufkir, however, controls all police un:Lts and himself has good military connections. Although Hassan has stressed Morocco's desire to maintain good relations with France, he might nonetheless move quickly to be the first to break relations if he felt De Gaulle was about to do so. SECRET WEEKLY SUMMARY 28 Jan 66 Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 SECRET Premier-designate Moro's chances of forming a new center- left government appear promising. Nevertheless, hard bargaining among his Christian Democrats (CD) and between the coalition parties could delay its forma- tion for as much as a month or so. The outcome of coalition negotiations on the composition of the new cabinet, and priori- ties for legislative measures will depend largely on Moro's ability to paper over factional conflicts in his own party. Moro's resignation on 21 January was triggered by CD "snipers" who helped defeat a government bill on the establish- ment of state-run nursery schools. The negative CD votes breached agreement with the CD's coali- tion partners on an important element of the government's re- form program, and concern over CD disunity on this crucial is- sue prompted Moro's governing partners to ask for his resigna- tion. The key to resolution of the CD's immediate internal difficul- Lies may lie in satisfying the demands of the Fanfan; faction which, along with CD right-wing- ers, apparently helped defeat the school bill. Fanfani has called for a major party and government shake-up. He may seek at least three ministerial posts for him- self and his followers in the new cabinet. The CD's coalition partners have been critical of Fanfani's recent actions, how- ever, and the CD will also prob- ably have to try to satisfy the demands of all its other factions for representation in the cabinet. If Moro fails to form a new government, President Saragat might, as a last resort, appoint a caretaker government and call for new national elections within six months. None of the coali- tion parties wants elections now, however, and key leaders of the three lay parties favored Moro to head a new government. little li lih d that they will respond. 25X1 The Italian Communist Party (PCI), which is holding its eleventh national party congress (25-31 January) has stepped up its attacks on the center-left and has reiterated its appeal to left-wing CDs and Socialists to ,join with it in forming a new government majority. There is SE( 'RET Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 `"' SECRET Despite rebel leader Caa- mano's departure on 22 January, the military chiefs, led by De- fense Minister Rivera, are re- fusing to accept new assignments and this position appears to have overwhelming backing among the armed forces. The military has indicated it will not move against Garcia Godoy at the present time and navy chief Jimi- nez, who has been urging a mod- erate line on the other chiefs, the removal of some controversial civilian officials by the provi- sional regime. The failure of the provi- sional regime to pay the military their regular salaries for Janu- ary may be an attempt to bring them into line. Considering the patience he displayed in effect- ing Caamano's exit, however, it seems unlikely that Garcia Godoy would follow such a course of action if he felt it would pro- voke a rash countermove by the armed services. The chiefs appear convinced that the Inter-American Peace Force (IAPF) would not move against them, and Rivera is claiming he has written guaran- tees from the Brazilians and Paraguayans to this effect. It is more likely, however, that the IAPF will follow whatever orders are given it by the OAS Committee. This latter group would probably be willing to use force to back Garcia Godoy, but only after exhaustive attempts at peaceful persuasion fail. Despite the military's hard line, there may be some flexi- bility in its stand. Before Caamano's departure, for example, Rivera had indicated he would probably accept the Washington attache post if assured by Gar- cia Godoy that the rebel chief- tain would not be allowed to re- turn until after the June elec- tions. Other concessions that might appeal to the military are a guarantee that no other com- mand changes will be made and Even if the impasse over.de- parture of the military leaders is resolved peacefully, there may be some unpleasant by-products such as an increase in anti-Amer- icanism among military officers. They are upset by continued US support of the provisional regime --which they see as leftist or- iented at best. Caamano departed with little fanfare after receiving guaran- tees as to the security of his men from the OAS Committee. The extent to which Garcia Godoy gave the rebel leader concessions in order to get him to leave is not clear, but he may have made prom- ises regarding integration of rebel military into the armed services that could be difficult to keep. In any event, Caamano's departure removes a constant ir- ritant to the regulars and will 25X1 reduce the chance of renewed fighting between the two hostile SECRET 28 Jan 66 Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 25X1 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Next 1 Page(s) In Document Denied Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 SECRET The senate's censure of Jus- tice Minister Paniagua on 19 Jan- uary did not provoke a major cabi- net crisis, but it put a further strain on executive-legislative re- lations. Events surrounding the censure, which forced Paniagua's resignation, also pointed up grow- ing difficulties in the alliance between the Christain Democratic Party (PDC) and President Belaunde's Popular Action. Paniagua's censure was one of the most blatantly political anti- administration moves to date by the coalition of the moderate leftist APRA and the moderate rightist Na- tional Odrista Union (UND), which controls both congressional houses. The coalition attack was set in motion, however, by the intemperate behavior of Senator Hector Cornejo, a PDC leader. Reacting angrily to the irresponsible conduct of all involved, President Belaunde gave serious consideration to forming a military cabinet. Cooler judg- ment led him to appoint able PDC deputy Roberto Ramirez del Villar to the justice post. The naming of Ramirez clearly reflects Be- launde's irritation with Cornejo, as the two men represent rival fac- tions in the PDC. The administration's relations with Congress may become still worse. APRA-UNO reportedly now is considering censure of the minis- 25X1 The military junta, which earlier had announced its plan to restore constitutional government in 1966 through presidential elec- tions to be held on 5 June, has now announced that congressional elections will be held simultane- ously. This major concession to the politicians was made on the advice of several former presidents and as a result of pressure from the armed forces. Now afforded an op- portunity to win remunerative seats in the traditionally corrupt leg- islature, second-echelon politi- cians probably will be less inter- ested in pressing demands for a constituent assembly and an interim president--earlier sought by most politicians to strengthen their po- sition during the transition period. Some reduction in the size of Congress may be decreed. As yet the junta has reportedly made no decision concerning a time for mu- nicipal elections. Registration of voters has progressed and, if the political parties now turn their attention to constructive ac- tivity, the transition to civilian rule should develop reasonably well. Thus far, however, no figure of stature has been put forward as a presidential nominee, nor have the parties begun adequate preparations for the campaign. SECRET Page 24 WEEKLY SUMMARY Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 25X1 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 SECRET SECRET Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 28 January 1966 OCI No. 0274[66A DISARMAMENT NEGOTIATIONS RESUME IN GENEVA Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 25X1 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 *fto SECRET DISARMAMENT NEGOTIATIONS RESUME IN GENEVA Disarmament talks resumed this week in Geneva in the Eighteen Nation Disarmament Committee (ENDC). Since the first talks in March; 1962, ENDC sessions have run for a period of about three months between recesses. Despite the lengthy consideration of dis- armament issues by the UN General Assembly at its 20th session, and in other forums, nonaligned ENDC delegates are eager to get back to Geneva. Never- theless, there is no evidence of any significant shift in the positions of the key nations, and the outlook for progress presumably is further dimmed by the war in Vietnam. Any advances seem likely to be limited to a further sorting out of some of the is- sues involved in a nuclear nonproliferation agree- ment, a comprehensive'test ban treaty, a treaty ban- ning underground testing above a certain threshhold, and the creation of nuclear-free zones. Exploratory talks for a world disarmament conference may also disclose some of the problems involved in associat- ing Peking with any disarmament talks. Background The present negotiations stem from the sessions of the United Nations Disarmament Com- mission (UNDC), which was sud- denly convened by the USSR last spring for the obvious purpose of providing a forum for attacks on the policies of the United States in Vietnam, the Dominican Republic, and the Congo. The USSR was joined by some of the Afro-Asian nations in linking disarmament with US aggression-- countries such as Algeria, Guinea, Mali, and Jordan expounded on the evils of colonialism and criti- cized US "intervention all over the world." When the debate did focus on disarmament, most of the serious speeches dealt with the need to draw up a nonprolif- eration agreement, but little was accomplished. Even so, the Western powers expressed hope that the ENDC would be convened later in the summer. The USSR unexpectedly agreed, and the ENDC met in August. Af- ter an initial round of Soviet propaganda, the discussion was for the most part constructive, dealing with a number of collat- eral arms-control measures rather than general and complete dis- armament. Attempts to work out terms of a nonproliferation treaty were overshadowed, however, by differences among the Western Al- lies over its implications for nuclear sharing in NATO, and the meetings were cut short by the opening of the 20th Assembly of the United Nations. The assembly inherited the issues left over from both the UNDC and the ENDC sessions. Five disarmament resolutions were de- bated and approved by the First, SECRET Page 1 SPECIAL REPORT Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 SECRET Committee (Political and Se- curity Committee) and were then passed overwhelmingly in the assembly since none of them in- volved substantive agreements. However, the heavy majorities chalked up by the assembly res- olutions and the increased ini- tiative shown by the nonaligned members seem to have imparted a sense of urgency to the resump- tion of the talks in Geneva. Nonproliferation At the head of the ENDC's agenda will be the halting of the spread of nuclear weapons. With Peking's detonation of a nuclear device in October 1964 and a ten- or twenty-nation nu- clear world becoming a foresee- able possibility, all the mem- bers consider nuclear prolifera- tion the most vital problem fac- ing the committee. But there agreement stops. At'the UNDC meetings last spring, the discussion of non- proliferation began on the basis of a 1961 Irish proposal that nuclear states undertake to re- tain absolute control of their nuclear weapons and not to give nonnuclear states control of such weapons or power to decide when they would be used. The question was soon broadened, however, by the vigorous in- sistence of India and other non- aligned countries on the need for UN or other safeguards for the security of the nonnuclear states against nuclear black- mail. The Indians and others also insisted that nonprolif- eration proposals be integrated with other disarmament measures, such as a comprehensive test ban, a complete freeze of the production of nuclear weapons and means of delivery, and the reduction of stockpiles of such weapons. When the nonproliferation issue was later taken up at the ENDC, serious consideration was delayed by the well-publicized differences among the Western Allies over the terms of a draft treaty. A draft prepared by Britain prior to the opening of the ENDC caused West Germany in particular to object that the language would impede the sub- sequent organization of a NATO nuclear force. Although the British reluctantly agreed not to present their proposals un- til there had been sufficient Allied consultation and consented to the substitution of a last- minute alternative Allied draft, they nevertheless felt prodded by domestic politics to state their reservations to any treaty leaving open the possible emer- gence of a European-controlled nuclear force. In the ensuing discussion, the Soviet Union stated that the Allied draft could not serve as a basis for negotiations be- cause any treaty which permitted the creation of a NATO nuclear force was unacceptable. The SECRET SPECIAL REPORT 28 Jan 66 Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 SECRET nonaligned for their part gen- erally welcomed the Western draft since it was the first time that specific terms had been proposed. However, Brazil, India, Sweden, the UAR, and Nigeria urged that "both facets of proliferation" --an increase in nuclear arsenals and the spread of nuclear weapons to other countries--must be dealt with together. The final memoran- dum of the nonaligned, however, attempted to compromise between the two positions by stating that measures to halt the prolifera- tion of weapons should "be coupled with or followed by" tangible steps to halt the nuclear arms race and to reduce nuclear weap- ons stocks and means of delivery. A few days after the con- vening of the 20th General Assem- bly, the USSR offered its version of an "appropriate" nonprolif- eration treaty--one which would prohibit any granting of the right to participate in the own- ership, disposition, or use of nuclear weapons to nonnuclear states directly or indirectly via third states or groups of states. After lengthy debates--which the Soviets put to good use by at- tacking NATO nuclear sharing as well as the nuclear aspirations of West Germany--a compromise be- tween the Soviet and US draft res- olutions was worked out by the nonaligned members of the ENDC. Passed by the assembly without a negative vote, the resolution recommended the earliest possible resumption of ENDC negotiations on a treaty containing "no loop- holes" that might permit non- nuclear states to gain access -to nuclear weapons. The prominence which West- ern reporting during the past year has given to the urgency of the proliferation problem is undoubtedly a factor in the Soviet Union's ready agreement to continue discussions in Geneva. It probably hopes that sufficient pressure for a nonproliferation agreement will be generated to cause the Western Allies to lose interest .in any kind of MLF for good, and it may even be that this is Moscow's sole objective. The forthcoming talks, how- ever, will permit further probing of possibilities for a compromise between the major powers. Particularly, they may clarify what the USSR has kept obscure: the degree of nuclear sharing Moscow would accept and still sign a non- dissemination agreement. In any case, many on the ENDC seem to feel this may be the last year to work out some sort of agreement. Certain states such as India and Israel may acquire nuclear weapons, and several other nations such as Sweden, Japan, West Germany, UAR, Pakistan, and South Af- rica may be motivated to develop nuclear weapons. Comprehensive Test Ban Treaty Among the more important goals of the nonaligned members of the ENDC are. obtaining general SECRET SPECIAL REPORT 28 Jan 66 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 SECRET adherence to the limited test ban treaty of 1963 and extend- ing that treaty to ban all test- ing. The Chinese detonations and the prospect of additional tests by both Communist China and France have given added impetus to the first, and the belief in some quarters that there has been improvement in detection and identification systems for seismic disturbances has encouraged optimism regard- ing the second. The US on the other hand believes that, while there have been improvements in detection capabilities, there have been no substantial improve- ments in identification capabil- ities. Although support for a com- prehensive test ban treaty is widespread among Western as well as Afro-Asian powers, the chief stumbling block remains the op- position of the Communist nations to any type of on-site inspec- tion. At the UNDC sessions last spring attempts were made to work out a compromise. The UK, in indicating its support for such a comprehensive treaty, said that--with the advancement in means of detection--there was a need for a smaller number of on-site inspections. Sweden, after calling on the nuclear club to halt all testing, pro- posed that there be a continuous flow of data from national ob- servation systems evaluated by disinterested scientists who would be a part of a "detection club" of nonnuclear powers. Sweden also introduced a resolu- tion urging all states to adhere to the partial test ban treaty and requesting that the ENDC give priority to extending that treaty to underground tests. At the ENDC sessions the Western members continued to stress the importance of extend- ing the limited treaty to banning underground tests. The US and UK argued that the results ex- pected from a world-wide net- work of large-aperture seismic arrays (LASA) would make it pos- sible to determine the nature of a greater proportion of seismic disturbances, but that on-site inspections would still be neces- sary because some 20 percent of underground events above a few kilotons could still not be iden- tified as to type by seismological means. The LASA system is still undergoing evaluation in the West and until such evaluation is complete, its ultimate effec- tiveness cannot be determined. The Brazilian delegate then sug- gested that the present ban be extended to cover tests above a threshold of seismic magnitude of 4.75 on the Richter Scale-- which he felt could be detected by national means--but did not call for a moratorium on smaller tests. Pressing hard for an agree- ment, the nonaligned members maintained that the nuclear powers must be willing to take some risks in order to conclude a com- prehensive test ban. In a joint memorandum they called for an immediate suspension of all nu- clear weapons tests and noted that a comprehensive test ban agree- ment would be facilitated by the exchange of scientific informa- tion between nuclear powers or by the improvement of detection systems if necessary. The Soviet delegate, however, continued to maintain that national means of detection would be sufficient, and announced that Moscow would SECRET Page 4 SPECIAL REPORT 28 Jan 66 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 SECRET accept a UAR proposal which in lened the need for on-site inspec- essence endorses the Soviet call for an unverified ban on all underground testing. In the General Assembly, the eight nonaligned members of the ENDC again carried the ball, introducing a resolution which urges'that all nuclear weapons tests be suspended, that all countries respect the lim- ited test ban treaty, and that the ENDC continue with a sense of urgency to work on a compre- hensive test ban--taking into account advancement in the pos- sibilities for international cooperation in the field of seismic detection. This resolution was later changed so that it no longer called for the immediate suspen- sion of nuclear tests, but urged instead a permanent cessation of all nuclear testing as soon as possible, with the implica- tion the ban would be subject to a verification agreement. The resolution stated that im- proved seismic detection possi- bilities should be considered in reaching a comprehensive test ban treaty and thus be a con- dition for suspension of nuclear testing. Moscow objected to this latter part of the resolution and its acceptance by the General Assembly could be considered a defeat for the Soviet Union. However, if the negotiations on a nonproliferation agreement bog down in the current talks, the eagerness of the eight for some alternative progress may lead them to accept the view that de- tection advancements have less- The past year has seen a sharp increase in interest in a world disarmament conference. This idea was advanced in 1961 when Ethiopia proposed a world conference to outlaw the use of nuclear weapons, and a resolution to this effect was passed by the General Assembly over the oppo- sition of the Western powers. A Soviet resolution calling for the implementation of the resolu- tion at an early date did not come to a vote, however, At the UN Disarmament Com- mission meetings last spring, the Yugoslav call for a world confer- ence received overwhelming sup- port from the nonaligned nations, probably because of the lack of progress on disarmament and their desire to include the Chinese Communists as well as the French in any negotiations. In adopting the resolution, the commission recommended that the General As- sembly urgently consider the pro- posal, and at the Geneva talks in August, the idea was again briefly mentioned when Burma sug- gested that the major powers must take the initiative on the matter. In the 20th General Assembly, the Afro-Asians led the campaign for UN approval despite opposition from the Western powers who pointed out the dangers, problems, risks, and lack of promise involved. A group of 43 nonaligned nations led by Yugoslavia and the UAR intro- duced a resolution calling for a conference no later than 1967 to which all countries would be SECRET SPECIAL REPORT 28 Jan 66 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 SECRET invited and suggesting consulta- tions to establish a representa- tive preparatory committee. Saudi Arabia proposed that a small group explore whether there was in fact a constructive basis for a conference. In De- cember such a group met to dis- cuss plans but made no decisions. Since then the Western pow- ers have been informally confer- ring on the best way to handle the matter. A world conference would raise many knotty problems, such as the attendance of divided states and their willingness to sit down together at the same table. It remains uncertain whether Chinawould attend. Dur- ing the assembly discussions Peking stated publicly that it would not attend but some Commu- nist delegations believe this is not Peking's final word and that if the conference were com- pletely divorced from UN auspices the Chinese would come. In any case soundings will be taken to see if the Chinese will par- ticipate in an exploratory group. If the conference is ever convened, many Western powers and especially ENDC members ex- pect it will result in no more than another round of propaganda attacks between the East and the West, and in the process will undermine the ENDC. Alternative suggestions which have been made are the French proposal for a conference of the nuclear powers, and the Nigerian suggestion that all "powerful" nations meet. However, the nonaligned have set high hopes on the larger arena and are unlikely to give up the idea unless Peking categorically re- fuses to attend. Other disarmament issues discussed during the past year may come up in Geneva, but none is likely to receive much atten- tion. An Italian proposal that each nonnuclear state should uni- laterally eschew acquisition of nuclear weapons for a specified period of time is an alternative should a nonproliferation treaty not materialize. However, the nonaligned countries are increas- ingly reluctant to relinquish any chance of obtaining nuclear weapons unless there is a pros- pect of general and complete disarmament. India has main- tained that security assurances must be given the nonnuclear states, but its delegation made no effort to obtain an endorse- ment of joint nuclear guarantees during the disarmament discussion in the General Assembly. The concept of nuclear-free zones is a popular one among some of the Latin American countries and in the Middle East. Western powers support such zones for Latin America and the Middle East, provided the balance of military power is not disrupted and the transit of ships carry- ing nuclear weapons is not banned. The Communist proposal for a nu- clear-free zone in Central Eu- rope has met with reservations on the part of some of the West- ern powers. Czechoslovakia and Mongolia propose that the two Germanies renounce the use of nuclear weapons.. In the 20th General Assembly, an African- backed resolution was passed which calls on all states to re- spect the continent of Africa as a nuclear-free zone. This SECRET Page 6 SPECIAL REPORT Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 ,wool *Me SECRET may encourage a new initiative by supporters of the Latin Ameri- can nuclear-free zone. Still other items to be considered are the Western pro- posals for a freeze on the num- ber of strategic nuclear vehicles and a cutoff on the production of fissionable materials for weapons use. These were dis- cussed at the UNDC, but have re- ceived only limited attention since then. The UK delegate suggested that these proposals might be linked to an agreement to destroy a specified number of delivery vehicles in order to bring existing nuclear weap- ons down to "lower, safer, and less costly levels." The Soviet bloc has taken the line that both proposals are useless and would in effect increase the danger of nuclear war, since the US has vast stock- piles of nuclear materials which it would use to produce weapons for a long time. The bloc also opposes a freeze on delivery vehicles because the US would still have a considerable stock- pile of warheads. Another Western item will be a proposal that developing countries limit competition in nonnuclear arms by entering re- gional arrangements to refrain from acquiring certain sophisti- cated military equipment. Im- plementation of these arrange- ments would be properly veri- fied in order that a military balance be maintained. The Soviets seem likely to bring forth such old chestnuts as the resolution they intro- duced at the UNDC calling for the withdrawal of troops on foreign soil and the liquidation of foreign military bases. In the same forum, the Soviets pro- posed a special conference in 1966 for the purpose of "banning" nuclear weapons to be preceded by a declaration by each nuclear state that it will not be the first to use nuclear weapons. Support for such measures has been limited to the Communist satellites plus states such as Nigeria, the UAR, Cambodia, Iraq, Mali, and Chile, which want foreign bases liquidated. However, the Soviets may have received a certain boost from the General Assembly's approval last fall of a resolution con- demning the existence of mili- tary bases in small territories. Another Soviet idea is the reduction of military budgets-- an approach supported by many of the less-developed countries which propose that the result- ing savings be used for their economic aid. Brazil has pro- posed at least a 20-percent re- duction, a figure supported by Italy, India, Jordan, Haiti, and many of the African countries. The Soviets may play up this pro- posal again by tying it in to in- creased US expenditures in Viet- nam. The Soviets are likely to include chemical warfare on the agenda as a means to attack US actions in Vietnam. SECRET Page 7 SPECIAL REPORT Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 SECRET Finally, the Soviet "nu- clear umbrella" proposal may be raised once more. It calls for the elimination of all nu- clear delivery vehicles and war- heads at the outset of general and complete disarmament with the exception of a limited num- ber retained in the Soviet Un- ion and the United States. The West opposed this proposal be- cause of its lack of balance and realism as to timing and veri- fication. Any significant break- through in Geneva appears doubt- ful, despite the enthusiasm for it in many quarters, the growing understanding of the problems involved, and the in- genuity which has been demon- strated in advancing possible compromises. Against the tense background of the Vietnam war, many would consider even the agreement to resume talks an accomplishment. Whether Moscow still wants to keep a door open to the West, whether it sees opportunities to advance its influence with the nonaligned countries, whether it feels it could not afford to stay away, or all of these, is difficult to say. However, it may be expected that the Soviets will have much to say on Vietnam before any meaningful discus- sions are begun. At this session the non- aligned are likely to have a more significant and influential role. In the last UN session, it was the Afro-Asians, often supported by the Soviet bloc, who passed proposals over West- ern opposition. The resolution on military bases in small ter- ritories is an example. A stalemate on a nonproliferation treaty may be expected in Ge- neva, and the resulting frustra- tion is likely to cause the eight nonaligned to put pressure on the major powers for other measures such as a comprehensive test ban treaty. If the ENDC fails to come forth with sub- stantial progress, its prestige as a disarmament forum will un- doubtedly be damaged and in- terest will probably shift to preparations for a world dis- armament conference. SECRET Page 8 SPECIAL REPORT 28 Jan 66 Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Noe SECRET SECRET Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 SCIENCE AND TECHNOLOGY IN COMMUNIST CHINA CENTRAL INTELLIGENCE: AGENCY FFICE OF CURRENT INTELLIGENCE GROUP I Excluded from automati 25X1 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 25X1 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 SECRET SCIENCE AND TECHNOLOGY IN COMMUNIST CHINA* Communist China lags far behind the more ad- vanced nations of the world in major areas of science and technology. Peking's leaders want to narrow this gap, and are making energetic efforts to pro- vide research facilities and manpower to support their ambitious development plans. A major share of all scientific and technical resources appears to be allocated in direct or indirect support of advanced and conventional weapons programs. This concentration is believed to be retarding seriously the growth of a strong technical base for the broader needs of the economy. Chinese weapons develop- ment. programs are based almost entirely on technology made available by the USSR before aid was abruptly terminated in 1960. The Chinese are also looking ahead and trying to de- velop follow-on models to avail- able Soviet designs for weapons systems. The status of such in- dependent work is unknown, how- ever. It is possible that the current emphasis on applying available technology is taking place at the expense of basic developmental research needed to achieve long-run objectives. While the level of indus- trial technology in China varies sharply between sectors, on the whole it is very backward and in most industrial fields prog- ress has been slow since 1960. Significant successes have been achieved in the field of advanced weapons, however. By shrewd allocation of scarce human re- sources and with the benefit of substantial past Soviet aid, the Chinese have been able to explode nuclear devices, undertake a diversified missile program, and embark on other military re- search and development programs of some significance. Major Problems China's key weakness is the shortage of well-trained scientists in the middle and upper brackets of competence. The regime could assemble a team of researchers competent to make progress toward almost any single objective, but only at the expense of other proj- ects. For the lower level of tech- nical services, a good supply of SECRET SPECIAL REPORT 28 Jan 66 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 SECRET technicians and narrowly trained engineers is available. In 1965 China had some 846,000 living graduates in scientific and tech- nical fields, including 476,000 engineering specialists (see chart). The large number of graduates is not, however, a good indicator of China's scientific capabilities. Much of the train- ing has been of low standard. Only 10,000 or so have received any training at the graduate level and of these only some 3,000 scientists have had for- mal training to the Ph.D. level, mostly in the United States, Eu- rope, or the USSR. The first formal programs offering four-year Ph.D.-level training were established in the universities and in the Academy of Sciences in 1956. Current total enrollment in such programs is not known but may be on the order of 2,500. Another conspicuous weak- ness is the shortage of research apparatus, test equipment, ma- chine tools, and various tech- nological materials that require sophisticated processing. China has been turning increasingly to nonbloc countries for scientific equipment. From such countries as France, the UK, Japan, and Switzerland, China has been ob- taining technical data designs and prototypes of reliable equip- ment, new instrumentation, unique apparatus, and critical raw ma- terials. Chinese scientific research work is primarily applied and is concerned almost wholly with ur- gent practical problems. Informa- tion on most foreign research and development accomplishments, both basic and applied, is readily available in scientific and en- gineering journals, which the Chinese monitor and exploit routinely. Peking is reluctant to tie up its limited scientific manpower in extensive basic re- search. Organization of Research Scientific research in Com- munist China is being conducted under a broad ten-year plan (1963-72). The plan was drawn up in 1961-62 with the aim of fill- ing the gap left by the Soviet withdrawal of aid in 1960. Chi- nese determination to work out a plan at a time when economic dislocations made long-term eco- nomic planning extremely diffi- cult points up the high priority assigned to scientific research. Under party supervision, the Chinese Government plans and supervises scientific and tech- nological affairs through the State Scientific and Technologi- cal Commission, a senior body in the State Council (see chart). The commission has possibly 40 or more divisions which handle particular substantive scientific and technological fields and per- form or manage supporting services. The commission is believed to have a defense technology division for incorporating military problems SECRET Page 2 SPECIAL REPORT Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 %ow *00 SECRET Cumulative Scientific and Technological Graduates by Field of Specialization for Selected Years in Communist China Other than 'Scientific & Technological Natural Sciences Agriculture Health Engineering 1950 1960 SECRET Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 SECRET into the national planning of research and development. There is close coordination within the party of military and scientific affairs. The chairman of the State Scientific and Technical Commission, Nieh Jung-chen, is concurrently a vice chairman of the party's key Military Affairs Committee and was a marshal be- fore the abolition of military ranks in June 1965. The actual execution of re- search and development is carried out principally by the Chinese Academy of Sciences and by the research organs of the various technical ministries. The minis- tries operate central research academies with subordinate re- search institutes, and have juris- diction over additional research facilities attached to industrial plants. The Chinese Communist Party is dominant in scientific life. Reliable party members are pres- ent in each scientific unit. Top authority rests with a party man, who is not necessarily the formal head of the unit. The party not only supervises tech- nical work of scientists but also devotes much effort in an attempt to try to improve their political attitudes. Scientists are repeatedly told that it is important to be "red" as well as "expert," and that this goal can be achieved only by spending much time studying the works of Mao Tse-tung and applying his "think- ing" in their research work. To what degree political demands of this sort will impede scientific research will depend on the extent to which scientists are allowed to do their own work without in- terference while merely giving lip service to political shib- boleths. Major Fields of Research Physics: Capabilities in physics are sufficiently well developed to provide for normal scientific growth and for gen- eral support of economic and military needs. The Chinese have made limited achievements in low-energy nuclear physics, but accelerators available for research are few in number and variety. High-energy physics in China is confined largely to theoretical aspects because of a shortage of experimental fa- cilities. About 50 scientists were being trained in this field at Dubna in the USSR before they were pulled out in June 1965. Mathematics: Chinese mathe- maticians are competent and ac- tive. Their work follows the lead of foreign mathematicians and most of it deals with appli- cations in the areas of compu- ters, automatic control, statis- tics, operations research, and linear programing. Native competence in com- puter technology is growing, but China will remain behind the West for many years. An increasing number of special-purpose analog computers and fairly high-speed digital computers are becoming available but their supply is limited and strict allocation of computer time is required to solve priority economic and military problems. SECRET SPECIAL REPORT 28 Jan 66 Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 law V40 Military Affairs Committee SECRET Politburo of the Central Committer of the Communist Party Pory1 State Planning Commission State Scientific and Technological Commission State Oceanographic Bureau Coordinolion Divisions Advisory Committee Science Section of Propaganda Department Chinese Scientific and Technical Association Provincial Scientific and Technical Committees ----T--------1--T----------------- 1 t t t 1 1 I Ministry of Chinese Academ Ministry of Ministry of Other Ministry of y of Sciences Higher Public National Technical Ministries of Agriculture Education Health Defense Ministries Machine Building China Universities First - Civil Industrial Universities Committee for of Science and Committee for National Defense Committees on Equipment and Colleges Agricultural Technology Research Medical Research Science Committee Research (Probable) Second - Nuclear Energy Third - Aircraft Fourth - Electronics Research Academy of Fifth - Weapons and Vehicles Military Sciences Central Research IArtilery, armored Academies and vehicles, and Institutes possibly missiles) Academy of Sixth - Naval and Civil Military Medical Marine Engineering Earth Sciences Research Research Sciences Laboratoles Seventh - Possibly Missiles Technical Sciences Departments Departments of Plants and Eighth - Agricultural Philosophy and and Institutes and Institutes Factories Machinery Peking China Specialized University of Medical Technical Schools Agriculture College and Colleges State Economic Commission SECRET Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 SECRET Electronics: China is con- ducting a wide range of research and developmental activities in electronics. Progress is hampered, however, by deficien- cies in other industries, not- ably precision instruments, metallurgy, and chemicals. Work on lasers is handicapped by lack of suitable high-qual- ity crystals. Although many types of germanium transistors are being produced, China lags considerably in industrial- scale techniques for refining germanium and silicon. Chemistry: Some good work in inorganic chemistry is con- ducted by the Chinese, particu- larly on the methods of anal- ysis, and separation and prep- aration of pure materials, es- pecially for applications in the fields of electronics and nuclear energy. Chinese or- ganic chemistry research is far behind that of the West. A major program on high polymers has been initiated, yet work- ers are capable of only a small amount of high-quality basic research. In the field of pharmaceutical chemistry, some very good original work has been done, resulting in some success in producing drugs for export. Metallurgy: China's metal- lurgical research program is expanding and China now pro- duces a limited variety of al- loy steels, including ordinary grades of stainless steel, high- speed tool steels, and some spring steels. Corrosion-re- sistant steels for use in fer- tilizer plants have been de- veloped. A limited capability- for producing high-temperature metals used in jet aircraft en- gines and missiles may be develop- ing. Aluminum and magnesium technology is adequate and a modest research activity has been reported. Geophysics: Meteorology is probably the most active geo- physical science in China. Con- siderable work to improve weather forecasting and equipment has been accomplished and further work is planned. Geodesy cap- abilities are adequate for sup- plying geodetic parameters for an IRBM range but not for an over-water ICBM range. Military Applications Military technology in China places considerable emphasis on the manufacture of duplicates and modifications of foreign equipment of proven capability, especially Soviet guided missiles, aircraft, naval weapons, and electronics. SECRET Page 6 SPECIAL REPORT Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 25X1 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 SECRET 25X1 Despite their urgent need of missile equipment for air defense, the Chinese are prob- ably still several years away from achieving widespread de- ployment of surface-to-air mis- siles. It has been expected for some time that the Chinese would equip at least some of their fighters with air-to-air mis- siles similar to the US Side- winder or the Soviet AA-2 (Atoll). There is, however, no firm in- formation that China has been able to develop these missiles, either. Missiles: China has had an active uided missile program since about 1958. With Soviet assistance,*the Chinese con- structed a missile test range- head at Shuang-cheng-tzu with a potential range of 1,100 miles, and a rocket engine test center at Chang-hsien-tien. With Soviet help, the Chinese also established a small test range and associated facilities for its coastal defense variant of the Kennel air-to-surface mis- sile at Lien-shan on the Gulf of Liaotung. Page 8 Aircraft: The Chinese have extensive design information on Soviet combat aircraft of pre- 1960 vintage, and they have a number of aircraft factories sup- plied in whole or in the part by the Soviets before 1960. The Chinese are working hard to com- plete some of the old Soviet pro- grams. They probably will be producing an advanced fighter aircraft such as the MIG-21 (Fishbed) soon, and a larger aircraft, possibly the TU-16 Badger subsonic jet medium bomber, in two to three years. Inde- pendent aeronautical research has been limited. The Chinese have a research establishment consisting of a medium-size, continuous-flow subsonic wind tunnel and a supersonic gas dy- namics facility with a capabil- ity estimated to. be Mach 5_ Nevertheless it is unlikely that SECRET SPECIAL REPORT 28 Jan 66 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 VOOV SECRET the Chinese will be able to pro- duce a native-designed combat aircraft in the next few years. Naval Ships: Chinese naval research capabilities have been limited largely to copying So- viet-designed navy ships, in- cluding W-, R-, and G-class sub- marines, Riga-class destroyers, and Osa- and Komar-class fast patrol boats. Nevertheless, the Chinese now have the capability for independent development of minor surface warships and are building a new large ship model testing complex which will con- siderably improve their capabil- ities. According to an article published in a Chinese tech- nical journal in 1965, experi- mental work has been under way which could lead to development of a high-speed submarine. The model being tested had a hull profile similar to the USS Barbel or the nuclear-powered UM S iip- jack . The Chinese have acquired Soviet designs for several types of marine steam turbine and ma- rine diesel engines. There has been evidence of a Chinese in- terest in nuclear ship propul- sion since 1957. They have been actively studying nuclear propul- sion systems and in 1960 Premier Chou En-lai stated that China would have a nuclear submarine within five years, a prediction presumably made in the expecta- tion of substantial Soviet as- sistance. Probably little if any assistance was actually given, however. If the Chinese wish to de- velop a significant naval threat to the United States they would probably consider the nuclear powered submarine a highly at- tractive objective. Any con- ventionally powered submarine capable of reaching the US un- refueled would be large and slow and would be vulnerable to de- tection both in transit and on station. Military Electronics: Most work in this field has involved adaptation of Western, Soviet bloc, and Japanese equipment to domestic production. The Chi- nese have limited design capa- bilities, however, and have pro- duced three or four versions of native VHF early-warning radars and one native radar, the Cross Slot, operating in the micro- wave frequency range. In addi- tion, they have produced versions of Soviet radars, the Rock Cake height finder and probably the Fire Can AAA control radar. Evi- dence of Chinese limitations is their apparent inability to pro- duce a surface-to-air missile control radar. They obtained perhaps as many as ten Fan Song S-band radars from the Soviets before mid-1960. They prob- ably have been trying either to copy this or design a simpler native system, but there is no firm evidence that they have been successful in either course. Industrial Applications Although there are sharp differences among sectors, the general level of industrial technology in China is far be- hind that of the United States, the USSR, Western Europe, and Japan. China has adequate SECRET SPECIAL REPORT 28 Jan 66 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 SECRET technology within some basic in- dustries, such as steel, coal, electric power, and aluminum, but even in these industries technical assistance from abroad is required to keep up with ad- vances in products, equipment, and production techniques. In more complex fields such as pre- cision instrumentation, petro- chemicals, chemical fibers, and chemical fertilizers, China is heavily dependent on imported equipment as well as knowledge. The backwardness of technology is not a great hindrance in some sectors, such as construction and transportation, because simple techniques can fill most needs. Automation in the Western sense does not exist in most industries. An exception is the highly modernized electronics industry, which uses such equip- ment to produce electronic tubes and several other electronic components. During the next few years technological progress in in- dustry is not likely to speed up from its present slow pace unless China receives large- scale technical assistance from abroad. Defiance from the USSR has deprived China of a major source of assistance, and its suspicious, intransi- gent attitude toward nearly all other foreigners makes it unlikely that Soviet aid will be replaced on the same scale from any source. Techno- logical advance therefore probably will be at a slow rate and will be centered on a small group of industries. In a few industries, however, es- pecially those related to ad- vanced weapons, a high priority in the allocation of scarce technical resources probably will yield impressive improve- ments in technological capa- bilities SECRET Page 10 SPECIAL REPORT Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 VAW 1%0 SECRET SECRET Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 2 28, January 1966 OCI No. 0274/66C Copy No. 55 SPECIAL REPORT CZECHOSLOVAKIA BEGINS IMPLEMENTATION OF NEW ECONOMIC PROGRAM CENTRAL OFFICE OF INTELLIGENCE AGENCY C U R R E N T I N T E L L I G E N C E AC IVa U,Lcor", zarTIUV TO SECRET dow-ngrading and declassification 25X1 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 25X1 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 SECRET CZECHOSLOVAKIA BEGINS IMPLEMENTATION OF NEW ECONOMIC PROGRAM Czechoslovakia's new economic program was first outlined two years ago to deal. with grave economic shortcomings. It has become clear, however, that after a year of experimentation, the party has de- cided to retain important aspects of central control, which could jeopardize some of the more liberal fac- ets of the reforms. Although the party has announced that many of the reforms were effective as of Janu- ary 1966, as scheduled, both the recently published party theses and the plan for 1966 indicate that the actual nature and extent of the reform program will depend to some degree on economic developments dur- ing 1966, and to what extent earlier economic short- comings are corrected. Some aspects of the program as outlined in the party theses are to be discussed at nationwide meetings in preparation for the party congress in May, particularly new roles for local organs of the government and party. It is already apparent that certain changes such as the strength- ening of the "national" committees which support mainly local services and a revision of the party's functions on a local level will cause much debate and probably will create dissension. The General Program Faced with inefficient in- dustry and agriculture which have caused economic stagnation since 1962, the Novotny regime at the end of 1963 outlined a new economic program designed to bring about fundamental im- provements in the economy, partly by revamping the system of ad- ministration and management. The program was designed to es- tablish more sensible criteria for economic decisions, and, in particular, to increase econom- ic decision-making at lower levels, but without posing a threat to political leadership. On paper the economic re- form appears to be the most liberal proposed for any bloc country, but in practice the changes to be made are no more liberal than those adopted in other East European countries. In central planning, the pro- gram calls for emphasis to be further shifted from inflexible, short-term quantitative goals to establishment of broad, long- term guidelines. A more realis- tic price system and a decen- tralization of management are to be introduced. Individual enterprises are to be allowed to determine many of their own short-range production plans, set some prices, and have more control over disposition of their earnings. Increased ma- terial incentives are stressed as the major road to higher SECRET!' SPECIAL REPORT 28 Jan 66 Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 SECRET living standards. However, con- tributions to economic growth by both individual workers and enterprises would be the basis for determining the extent. of these incentives. The Prague regime is now taking the first cautious steps to put the reform into effect throughout the country. Al- though extensive experiments were conducted in 1964-35 in selected enterprises in apply- ing some of the principles of the new system, the regime has made clear that complete intro- duction of the new economic sys- tem will not be achieved soon, and will in fact be dependent upon the carrying out of a price reform in early 1938. The lead- ership has no intention of es- tablishing a completely free market economy, and the reten- tion of many essential elements of a command economy in itself will limit the extent of changes that can be made. A number of central con- trols will continue to exist in the economy. The regime will continue to rely largely on ad- ministered prices; only a small portion (about tl percent) of the prices are to be freely set and these only for luxury con- sumer goods. Labor allocations and impor-tart investments will continue to be made centrally, but the individual laborer's right to change jobs voluntarily will for the first time be legal. The industrial branch director- ates are expected to exert sub- stantial controls over their subsidiary enterprises, but the degree of control will not be unifor m. The party is devoting considerable attention to the application of scientific and technical knowledge and higher standards of efficiency in in- dustry as a means of raising the quality and technical stan- dards, and thus the salability, of Czechoslovak goods at home. Goods are to be improved so as to be competitive on the world market in order to bring in needed foreign currency and improve Czechoslovakia's for- eign trade balance. Scheduled Implementation in 1966 Last November the party central committee made certain organizational and personnel changes in the central organs of government to enable them better to carry out their new functions of long-range planning. Three existing ministries of machine building and metal- lurgy were merged into a single Ministry of Heavy Industry. In December the staffs of existing and newly created state commis- sions were augmented by person- nel from economic ministries and factories, as well as from the academic institutions that were prominent in the debate on economic reform. These changes had been preceded by an industrial reorganization during 1964 and 1935 in which industrial enterprises were con- solidated under approximately 85 branch managements instead of the nearly 200 which existed before. Implementation of the new program began on 1 January 1966 in all industrial, trade, ',E 'R .E T Page 2 SPECIAL REPORT Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 SECRET and construction enterprises, the services and purchasing sec- tors, local industry, and in the motor vehicle transportation field. In such areas as agri- culture and other transportation fields, where the reforms are not to be introduced until 1967, experiments will continue to be conducted over the next year. Industrial branch managers are now to take greater respon- sibility for their enterprises, and profits are to be the prin- cipal measure of success or failure. To what extent the branch managers will be willing or able to exercise their new prerogatives remains to be seen. Enterprises will now be able to draw up their own production plans in which demand for their products will play a more impor- tant role, and fewer detailed plans will be imposed from above. Because many individual enter- prises must pay wages from in- come, wages will therefore be more directly dependent upon good results. Wages in an enter- prise will be subject to upper limits (a ceiling on the growth of wages) and lower limits (a guaranteed wage). A good mana- ger with a staff of energetic workers should be able to pay wages well above the lower lim- its. The goals established for the 1966 draft economic plan in general follow those set forth in the previously published eco- nomic program for 1966-70 and take into account the moderate achievements of 1965. Increases slated for national income (3.4 percent), industrial output (5.6 Page 3 percent, and investment (7 per- cent) in 1966 are within the range of annual goals established in the 1966-70 plan. In indus- try the greatest increases in production are planned for power (8.8 percent), engineering (7.3 percent), and chemicals (7 per- cent). Attempts will be made to effect structural changes in the heavy engineering industry so as to improve the technical standards of Czechoslovak heavy engineering products. The Role of Agriculture Regime officials recognize that sound development of the entire economy cannot be accom- plished without a more rapid growth in the rate of agricul- tural production. In order to compensate for poor results achieved in agriculture in 1965, especially in crop production, gross agricultural output in 1966 is slated to increase more than the annual growth rate required to meet the 1970 goal. Although the agricultural sector is not scheduled to change over to a new system until 1967, a number of steps will be taken in the interim to promote im- provement in agricultural pro- duction. Increased incentives and efforts to reduce production costs are to be adopted this year to stimulate the interest of farmers and managers, respec- tively, in production results. An improved management system for agriculture, including more authority for producing units, is to be introduced as another stimulant to improve performance, and steps are to be taken to SECRET SPECIAL REPORT 28 Jan 66 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 SECRET ensure a constant level of man- power in agriculture. In 1966, moreover, the agricultural sec- tor is slated to receive 21 per- cent more equipment than it did in 1965 and, along with this, certain specified measures are to be applied to overcome the perennial problem of maintenance of agricultural equipment. Party Control The recently published theses for the party congress to be held in May reaffirm the party's leading role over the economy, as did the official document on economic reform. The party is to be the major element guiding introduction of the program and "selling" it to the people. Regional and district committees and all ba- sic party organizations are ex- horted to put their authority behind the implementation of the new system. Under the sys- tem the local party units have been told that they are not to guide production directly or even to share responsibilities for decisions of economic mana- gers. Their principal function is to provide managers with po- litical support in applying eco- nomic policy. Many local party leaders object to this formula since it could lead to a seri- ous reduction of their author- ity. The "national" committees: which are governmental bodies functioning at local levels, are to have greater financial responsibilities at all levels --including regional, district, and town. As in the past, they are mainly responsible for local services, including social wel- fare and cultural measures. The party theses point out that the national committees must achieve maximum self-sufficiency finan- cially, but presumably the cen- tral party officials will watch this closely lest the national committees attempt to become too independent. Their role vis-a- vis the central organs, regional planning, and agricultural coop- eratives is to be set forth in the coming months. The party central committee has called a conference of chair- men of regional and district na- tional committees and of national committees of major cities for the near future to delineate fur- ther the role of the national committees and how their greater responsibilities can be dove- tailed with management of the economy. These changes have al- ready led to debate and some dissension in the party and gov- ernment which are likely to in- crease as the final formulations are prepared for the party con- gress. The central committee has published the theses so that ex- tensive discussions on them can take place at nationwide confer- ences to be held prior to another central committee plenary session to be held in May. At that time the draft 1966 economic plan will be re-examined, and an elab- oration of Czechoslovak economic policy is to be made for approv- al by the party congress. SECRET Page 4 SPECIAL REPORT Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 %Wf N* SECRET It is clear that the re- gime is committed to the re- forms, but the new program con- stitutes such a departure from past practices that party lead- ers are still groping their way. Both the timing and pro- visions of the program there- fore will be kept sufficiently flexible to avoid insofar as possible severe economic or political dislocations. It is probably in light in- dustry, especially in the con- sumer goods industry, that the reforms will have a chance to make the greatest headway for the short run. If the program as presently outlined does not succeed in overcoming Czecho- slovakia's more serious economic problems in the long run, other new methods for their solution will have to be considered. SECRET Page 5 SPECIAL REPORT 28 Jan 66 Approved For Release 2008/11/12 : CIA-RDP79-00927A005100120001-4 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 SECRET SECRET Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 25X1 Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4 Next 3 Page(s) In Document Denied Approved For Release 2008/11/12 : CIA-RDP79-00927AO05100120001-4