CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A002900160001-2
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 10
• Document Creation Date: December 15, 2016
• Document Release Date: September 5, 2002
• Sequence Number: 1
• Publication Date: January 10, 1957
• Content Type: REPORT

10 January 1957
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Copy No. 131
CURRENT
INTELLIGENCE DOCUMENTNO. ..7 /
NO CHANGE IN CLASS.
BULLETIN C DECLASNI;?iED
CLASS. CHANGED TO: TS S C a A
NEXT REVIEW DATE: 25
AU TH H
DAT ` REVIEWER: ~,00
OFFICE OF CURRENT INTELLIGENCE 100
CENTRAL INTELLIGENCE AGENCY
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State Dept. review completed
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CONTENTS
p7i002900160001-2
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1. PRIME MINISTER EDEN RESIGNS
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5. MASJUMI WITHDRAWAL FROM INDONESIAN CABINET
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6. MOLLET'S ALGERIAN POLICY
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8. INFLATION IN SOUTH KOREA MAY RAISE CRITICAL ISSUE
FOR US-KOREAN RELATIONS
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1. PRIME MINISTER EDEN RESIGNS
Sir Anthony Eden's resignation offers
the opportunity for a new prime minister
to restore foreign and domestic confi-
dence in a conservative British govern-
ment, Eden's belligerent defense of the Suez intervention at
a time of mounting troubles in administering gas rationing
had brought an increase in popular demands for his departure.
Some government leaders may also have felt that efforts to
restore relations with Britain's allies and with the Common-
wealth were being retarded by Eden's continuance as prime
minister.
Either Leader of the House of Commons
Butler or Chancellor of the Exchequer Macmillan may be
asked to form a new government. The appointment of Butler,
who has avoided any responsibility for the Suez intervention,
would present a clearer break with the past.
The decision on calling early general elec-
tions rests with the new prime minister. In view of the Con-
servatives' substantial parliamentary majority he will prob-
ably decide against elections at this time, when public opinion
appears to be turning away from the government.
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5. MASJUMI WITHDRAWAL FROM INDONESIAN CABINET
The withdrawal of the Masjumi party
from the Indonesian cabinet is a severe
blow to Premier Ali's government, but
does not necessarily mean its immediate
downfall. Although two small Christian
parties are likely to follow the Masjumi's example, the sur-
vival of the cabinet will depend on whether the opportunistic
Nahdlatul Ulama (NU) adheres to its public commitment to
continue support of the present regime.
Ali is favored by the unwavering backing
of President Sukarno, who has reiterated his desire to avoid
a "cabinet crisis" until the Sumatran problem is settled.
The government can also depend on continued Communist as-
sistance. In a parliamentary showdown, Ali can expect to be
upheld in a vote of confidence as long as the NU stays in line.
Parliament is due to reconvene on 21 January.
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6. MOLLET'S ALGERIAN POLICY
Premier Mollet's 9 January declaration
of French policy on Algeria contains a
few minor concessions in anticipation of
the UN Algerian debate late this month
but will do little to alleviate explosive
conditions in Algeria. Its main intent seems
to be to hold right- center support in the Na-
tional Assembly. The only major new ele-
ment is an invitation for representatives from democratic
countries--but not under UN auspices--to observe the elec-
tions promised three months after a cease-fire.
On 8 January, Mollet told Ambassador
Dillon he feared the French population in Algeria might re-
sort to violence. He warned that a UN resolution condemn-
ing French policy could trigger off counterterrorism that
might lead to the overthrow of the present regime in France.
He said the French delegation would walk out if the General
Assembly insists on its competence to discuss the issue, and
that France would withdraw permanently from the UN if a res-
olution condemning French policy were passed.
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8. INFLATION IN SOUTH KOREA MAY RAISE CRITICAL
ISSUE FOR US-KOREAN RELATIONS
The Seoul wholesale price index has
reached the level which, under the
terms of an August 1955 US-Korean
agreement, will probably require an
upward revision of the hwan-dollar exchange rate at the
end of the first quarter of 1957. Any attempt to implement
the agreement seems certain to enrage President Rhee and
revive the difficulties accompanying this issue. He has in-
dicated that he will resist strenuously any attempt to revise
the rate. Rhee is obsessed with the notion that revisions of
the exchange rate have been the primary cause of inflation,
and that a fixed rate would ensure fiscal stability,
The agreement, which was achieved only
after protracted negotiations, calls for a 500-1 rate so long
as the index does not rise by more than 25 percent above the
September 1955 level. In the week ending 4 January, prices
rose 6.9 percent to bring the index to a point 26. 3 percent
above the base, and prices are continuing to rise. The black
market exchange rate exceeds 1000-1.
The American embassy reports that the
Ministry of Finance directed the Bank of Korea to withhold
the above figures, but that they had already been made pub-
lic. This suggests that political pressure may be brought to
bear on the Bank of Korea to Manipulate the future price in-
dex.
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