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May 7, 1958
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Approved ForrIWAORelease,/3ZIEwEi7TT0097gv03700060001-4 - 0 7 May 1958 copy NO-140 INININIMPE I PON DIA and DOS review(s) completed. PGC,.. . f cL,A .:;. c: TO: NEXT F3c_ViEW DATE: AUTH: IHU 70;2 0 oor, 2~ :/0/, TOP SECRET Approved For Release 2002/07/30 : CIA-RDP79T00975AO03700060001-4 25X1 Approved For Release 2002/07/30 : CIA-RDP79T00975AO03700060001-4 Next 1 Page(s) In Document Exempt Approved For Release 2002/07/30 : CIA-RDP79T00975AO03700060001-4 \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ON EE CENTRAL INTELLIGENCE BULLETIN 25X4' 7 May 1958 DAILY BRIEF I. THE COMMUNIST BLOC ters. *Soviet summit tactics: The 12-point agenda for a sum- mit meeting which Foreign Minister Gromyko gave to the three Western ambassadors on 5 May was a detailed repeti- tion of virtually all Soviet proposals since 10 December with- out any major modifications. In his separate talks with the three ambassadors, Gromyko is unlikely to elaborate much further on the 12 points and will probably press instead for detailed Western responses to the Soviet proposals. If such a response is not forthcoming at an early date, the USSR will probably contend that further ambassadorial talks would be fruitless and demand an early convening of the foreign minis- view that government-to-government negotiations are the Berlin: Western barge traffic through East Germany stopped on 5 May when bargemen refused to pay higher tolls imposed by East Germany. The Bonn and West Berlin gov- ernments are discussing the question of paying the new charges. They consider the East German reasons for the tax to be fraudulent and are looking for ways to retaliate. The East Germans hope that the continued use of such tactics will serve to remind the West Germans of the Communist way to solve German issues. (Map) 25X1 Approved For Release 2002/07/30 : CIA-RDP79T00975A003700060001-4 Approved Foeleas MME Approved For Release 2002/07/30 : CIA-RDP79T00975AO03700060001-4 year development program. ment, it might feel compelled to appease the opposition by repudiating the Eisenhower doctrine. Foreign Minister Malik has suggested the United States grant Lebanon $25,000,000 a year or a "initial years" of a six- India: The public announcement by the National Devel- opment Council, India's highest planning body, that several important segments of India's Second Five-Year Plan (1956- 1961) are behind schedule, and that other important aspects of the plan are to be curtailed will create further problems for the Nehru government at a time when the Indian.public is becoming increasingly aware of weaknesses in the Con- gress party. The cuts are necessitated by a shortage of domestic and foreign capital as well as rising costs. Agri- cultural and industrial development programs have lagged 7 May 58 DAILY BRIEF ii 25 quests for aid. Middle East: The worst drought in over 20 years ac- companied byte heaviest locust infestation in more than 10 years threatens to bring about near-famine conditions in several Middle Eastern countries by this summer. Crop failures will lead to severe economic and possibly political problems, especially in the United Arab Republic and Jor- dan. The United States can expect to. receive numerous re- Lebanon: Public statements by the minister of public works a his government will ask the United States for about $170,000,000 in aid over the next six years probably place the Lebanese Government in a position from which it will be difficult to retreat without serious loss of face. If the Lebanese cabinet does not repudiate the minister's state- INIVINEMENE, 25X1 25X1 Approved For Release 2002/07/30 : CIA-RDP79T00975AO03700060001-4 Approved F SON RON .~y g- III. THE WEST *France: The Popular Republicans' decision on 6 May to inin a government formed by Pleven gives him a. fair during the first two full years of the plan, and government spending for the first three years will probably come to only about half of the total projected outlay. (Page 5) Iran-Pakistan: The Shah of Iran plans to discuss the possibility of a federation involving Iran, Pakistan, and possibly Afghanistan when he sees Pakistani President Mirza in Karachi on 13 May. The subject of some form of union has been broached several times during the past month by top Iranian and Pakistani officials. Iran has previously dis- cussed the idea with Turkey, but the Ankara government's attitude was cool. While the creation of a new alliance in the near future is unlikely, the discussions reflect continuing concern in the area over the future of the Baghdad Pact. The Shah is motivated partly by a desire to share the advantages of Pakistan's relatively modern armed forces, and hopes that Pakistan may be interested in the possibility of access to Iran's oil revenues. cnance oz oeing investea, out the asntuae of the lnaepenaents remains in doubt. Their position will probably be determined \ on the basis of Pleven's selection of ministers. The Social ists have agreed to support Pleven, but not to participate. 25X1 centrist coalition representing directly only about 150 of the DuD deputies in the National Assembly. Brazil: The agreement with Poland on 2 May to barter coffee for 14 small cargo ships is a reflection of Brazil's continuing foreign exchange crisis and its disappointment over its failure to obtain ships from the US reserve mer- chant fleet. The government may also be receptive to a reported Rumanian offer to furnish drilling equipment for 1121 1 7May58 5 NM HE& 25X1 25XI 25 Approved For Release 2002/07/30 : CIA-RDP79T00975AO03700060001-4 7 May 58 Approved Fjr Release 2002/07/30 CIA-RDP79T00975A0q3700060001-4 the government oil monopoly in exchange for agricultural commodities. Limited agreements of this nature, however, do not constitute a change in Brazil's over-all trade policy, which is oriented- essentially toward trade with free world countries. DAILY BRIEF iv U 25 Approved For Release 2002/07/30 : CIA-RDP79T00975AO03700060001-4 Approved Fob- Release 2002/07/30 : CIA-RDP79T00975A~03700060001-4 USSR Proposes Comprehensive Summit Agenda Foreign Minister Gromyko's 12-point summit agenda is a comprehensive restatement of virtually all Soviet pro- posals since 10 December for discussions at a summit con- ference. It does contain some minor changes, but no major modifications, In his separate talks with the Western am- bassadors, Gromyko will probably press for detailed re- sponses. If such a response is not forthcoming at an early date, the USSR will probably demand an earlier convening of the foreign ministers, contending that the ambassadorial talks have been valueless. The USSR may argue that its comprehensive list of agenda items should be used as the basis for negotiation, because it contains all the major categories of legitimate issues raised so far by either side. Moscow will continue to refuse to discuss Eastern Europe on the ground that it is outside the competence of a summit conference. The USSR still seeks to avoid a discussion of German unification by placing a German peace treaty on the agenda instead. It has, modified its previous proposal that the sum- mit conference conclude such a treaty and now suggests that it only agree on the basic principles of a treaty. Moscow continues to give great emphasis to the termi- nation of nuclear tests, the first item on the agenda. It says that British and American suspension of tests would make possible an agreement at the summit "consolidating these decisions" which could be followed by discussion of control arrangements. One new feature designed to increase public support for the proposals is the emphasis on mutual assistance to under- I. THE COMMUNIST BLOC developed areas, particularly the Middle East. 7 May 58 CENTRAL INTELLIGENCE BULLETIN Page 1 25X1 Approved For Release 2002/07/30 : CIA-RDP79T00975AO03700060001-4 Approved For Ohl ase 2002/07/30 : CIA-RDP79T00975 3700060001-4 ~BAI. 'IC FEDERAL' REPUBLIC ..wl Hamburg *Schwerin 3 Braunschweig G E R M A N Y Magdeburg OF 3 Oebisfelde Hannover EAST 171o`BERLIN Potsdarh Brandenburg. -!~?'h`7 Frankfurt j Halle:: Wartha ,t ~Plauen oeh c uchh 1 4%F ho t IPA {y Toepen Noi 1 MAIN COMMUNICATION ROUTES WEST GERMANY-BERLIN 25X1 Approved For Release 2002/07/30 : CIA-RDP79T00975A003 0 0 - Approved For Release 2002/07/30 : CIA-RDP79T00975A0p3700060001-4 Berlin Mayor Brandt Seeking Retaliation for New Barge Taxes West Berlin's Mayor Brandt, who went to Bonn on 5 May to discuss with the West German cabinet the new higher taxes on barge traffic to Berlin imposed by the East Germans, believes that Bonn might retaliate by levying similar taxes on East German barges moving to Hamburg. Such retaliation probably would be ineffective, however, be- cause East Germany's Baltic ports have been handling increas- ing amounts of its ocean cargo, as well as satellite transit trade. Brandt described as "phony" the East German argu- ment that the new barge taxes were justified on the grounds that an Elbe River dam, now under construction at Geesthacht near Hamburg, will cause a flood problem in East Germany. The canals through East Germany carry about 2, 500,000 tons of goods into West Berlin each year, including nearly all of West Berlin's bulk imports, such as coal and building materials. In 1955, the East German regime drastically raised the tolls on West German truck traffic to Berlin, ostensibly for road repair.. Since that time, the Bonn government has paid the truckers a subsidy to cover the increase in tolls. The last dispute over barge traffic occurred in 1955-56, when the USSR refused to renew barge permits. The matter was even- tually worked out on a "semiofficial" basis between East and West German waterways technicians. The Berlin Senate will discuss with Bonn a possible budget subsidy for the new barge taxes, estimated by the press at $7,000,000 annually and by the American Mission in Berlin at $4,200,000. The East German regimehopes by the use of such tactics to remind the West Germans that government-to-government negotiations are the way to resolve German problems. 25X1 7 May 58 CENTRAL INTELLIGENCE BULLETIN Page 2 Approved For Release 2002/07/30 : CIA-RDP79T00975AO03700060001-4 Approved For Re ease 2002/07/30 : CIA-RDP79T00975A!3700060001-4 Makassar. F- A Approved F or Release 2002/07/30: CIA-RDP79T00975 _ Menodo DiailoIo" ALAANE RA / ~~olo .O1anggola yep Approved Fo elease 2002/07/30 : CIA-RDP79T00975A 03700060001-4 II. ASIA-AFRICA Situation in Indonesia Djakarta forces in the Palu area include two bat- talions and one company brought in from Java and Bor- neo in early April and one battalion of North Celebes troops which has defected to the government. The North Celebes battalion has few weapons. The Indonesian Army on 6 May arrested a number of persons in Djakarta, reported to be chiefly Chinese Nationalists, on charges of having engaged in "foreign subversive activity." The arrests presumably are con- nected with government threats of action against Chi- nese in Indonesia if alleged Chinese Nationalist aid to the dissidents did not stop. The American ait attache in Djakarta has been in- formed that four Russian instructors on board an Indo- nesian merchant ship recently purchased from the So- viet Union were killed late in April when the ship was bombed by dissident aircraft in Makassar Strait. 7 May 58 CENTRAL INTELLIGENCE BULLETIN Page 3 25X1 25X1 25X1 Approved For Release 2002/07/30 : CIA-RDP79T00975AO03700060001-4 25X1 Approved For Drought and Locusts Menace Middle East . Near-famine conditions are threatened in some Near Eastern countries as the result of severe drought and heavy locust infestation. In Israel, exceptionally dry hot weather has caused a complete crop failure in the Negeb and poor crops elsewhere. Famine conditions are predicted in Jor- dan this summer--45 percent of the population have already been affected by the drought, and the value of the expected crop loss is estimated at one third of the regular national budget. Growing unemployment among agricultural work- ers will have serious political repercussions if the govern- ment is unable to furnish them work. Iraq's agriculture has been struck a double blow by locusts and drought. While Iraq has about 50,000 tons of wheat on hand which might be exported, this may be reserved for internal consumption in light of the crop losses. Syria, normally a wheat exporter, will have only a small quantity for export this year--a surplus which will be reserved to meet Egypt's requirements. In the eastern desert, 800,000 sheep are re- ported threatened by the drying up of watering places and sparseness of grass. President Nasir is said to be serious- ly concerned that the Syrian crop situation will engender po- litical difficulties as well as put a strain on Egypt's economy by cutting off an anticipated source of wheat imports. A Syrian ban on grain exports will directly affect Lebanon, which imports about 75 percent of its wheat requirements. In addition, agricultural production may have been reduced by several locust swarms. Reports from Saudi Arabia in mid- April stated that all agricultural and most garden crops in central and eastern Arabia were threatened by the worst locust infestation in 14 years. About 10,000 egg-infested acres of land in Kuwait have produced swarms of locusts that have flown into Iraq and Iran. Many Middle Eastern governments can be expected to ap- ply to the United States for eco:aumic assistance. 7 May 58 CENTRAL INTELLIGENCE BULLETIN Page 25X1 25X1 Approved For Release 2002/07/30 : CIA-RDP79T00975AO03700060001-4 Approved For Release 2002/07/30 : CIA-RDP79T00975AO037P00060001-4 India's Second Five-Year Plan to be Cut Back The National Development Council, Indian's top economic planning body, has just completed a review of progress thus far under the five-year plan and has outlined future pros- pects. Its findings indicate that important segments of the plan are behind schedule and that a shortage of domestic and foreign capital as well as rising costs will force major cuts in the plan. India's most important problem, increasing agricultural production to keep pace with an annual population growth of 5,000,000 persons, is not yet being solved. Deficit financing has been used to a greater extent than had been planned, and alternate sources of financing will have to be developed in 1959-1961 if deficit financing is not to be carried beyond safe limits. Government development expenditures at the end of three years are expected to reach $5.,1,676 billion, or only about half of the $10.08 billion set as the five-year goal. Pri- vate investment is apparently keeping pace with planned tar- gets. In order to minimize adverse reactions, New Delhi has decided to keep the government's development expenditure goal at the original $10.08 billion. figure. Since costs have risen considerably since the plan was first drafted, however, the government recognizes it may get some 15 percent less than anticipated for its money. A strenuous effort will be made to keep high-priority targets involving agriculture, steel mills, mining, and power. Among the projects to be cut back is the popular community development program, which is raising the standards of farming, health, and edu- cation in India's villages. Serious cutbacks or failures--especially in food produc- tion--would produce unfavorable reactions from state gov- ernments and local populations which have counted on bene- fiting from much-publicized development programs, and Nehru's piling Congress party would find it increasingly dif- ficult justify its continuance in office. 7 May 58 CENTRAL INTELLIGENCE BULLETIN Page 5 25X1 25X1 Approved For Release 2002/07/30 : CIA-RDP79T00975AO03700060001-4 Approved Fo J Release 2002/07/30: CIA-RDP79T00975A Talk of Pakistani-Iranian Confederation Continues The subject of a confederation involving Pakistan, Iran, and possibly Afghanistan has continued to be ac- tively discussed by high Iranian and Pakistani officials, including the chiefs of state. This talk is still in an ex- ploratory stage, considering varying degrees of unity and even varying combinations of states, and no seri- ous negotiation or joint study of the problems involved is known to have been proposed as yet. The Shah of Iran has expressed the most interest in a Pakistani-Iranian confederation, envisioning him- self as chief of the new state. During a visit to Karachi on 13 May, he is expected to discuss the advantages and obstacles of confederation with Pakistani President Mirza, No firm agreement involving a cession o power y a government or leader in favor, for instance, of a unified military command or a single foreign policy seems likely in the near future. The viability of the confederation idea, however,, re- flects continued concern over the future of the Baghdad Pact organization in relation to the UAR and the Jordanian- Iraqi federation. Ankara, with which Tehran has discussed the idea of confederation, has reacted coolly. I 25X1 25X1 25X1 25X1 25X1 7 May 58 CENTRAL INTELLIGENCE BULLETIN Page 6 Approved For Release 2002/07/30 : CIA-RDP79T00975AO03700060001-4 Approved Fc III. THE WEST Brazilian-Polish Barter Agreement A trade contract under which Poland is to supply Brazil with 14 cargo vessels was.concluded on,2 May. The agreement totaling about $25,000,000 each way, calls for Poland to be- gin deliveries of these shipsin 1906 and to accept $18,000,000 worth of coffee over a three-year period. By expanding the government-owned segment of the Brazilian merchant fleet, the government hopes to save foreign exchange and improve its bleak long-term payments outlook. Until recently, Bra- zil had been unsuccessfully pressing a request for 24 mer- chant vessels from the US reserve fleet. The Brazilian Government has been under heavy politi- cal pressure to expand trade ties with the Soviet bloc, es- pecially in view of the continuing foreign exchange crisis and the mounting stocks of government-held surplus coffee. The Brazilian National Security Council has been dubious about the value of expanding such trade, and most trade officials have long opposed barter arrangements. The prospect of new austerity measures under a proposed stabilization and loan plan recently submitted to the International Monetary Fund has apparently impelled the government to investigate barter deals as a means of helping to finance its economic development program. This situation may also make the gov- ernment more receptive to repeated Rumanian barter offers involving oil drilling equipment for the Brazilian national monopoly. Brazil has shown some interest in Polish and Czech of- fers since mid-1956 of heavy equipment and "complete indus- trial installations," and has.accepted short-term credits from Poland of about $3Q, 000,000. Limited agreements of this type, however, would not represent any change in Brazil's over-all trade policy, which is essentially oriented toward multilateral arraments with the West. 7 May 58 CENTRAL INTELLIGENCE BULLETIN Page 7 25X1 25X1 Approved For Release 2002/07/30 : CIA-RDP79T00975AO03700060001-4