CURRENT INTELLIGENCE WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A000400120001-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 16
• Document Creation Date: December 15, 2016
• Document Release Date: May 18, 2004
• Sequence Number: 1
• Publication Date: December 31, 1954
• Content Type: REPORT

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OCI NO. 3034
31 December 1954
CURRENT
INTELLIGENCE
WEEKLY
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
State Dept. review completed
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CONFIDENTIAL
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THIS MATERIAL CONTAINS INFORMATION AFFECT-
ING THE NATIONAL DEFENSE OF THE UNITED STATES
WITHIN THE MEANING OF THE ESPIONAGE LAWS,
TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS-
SION OR REVELATION OF WHICH IN ANY MANNER TO
AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
The Current Intelligence Weekly has been prepared prima-
rily for the internal use of the Central Intelligence Agency.
It does not represent a complete coverage of all current
situations. Comments and conclusions represent the im-
mediate appraisal of the Office of Current Intelligence.
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THE SOVIET WORLD r . . , . . . . . . . . < , < . Page 4
Signs of strain noted from time to time in recent
weeks among the top Soviet leaders may reflect division
,over the way in which the Soviet Union should proceed
to .chieve its foreign policy goals, such as the pre-
vention of West German armament. At the present time,
however, a dramatic change within the Soviet leader-
ship seems unlikely.
MAJOR TRENDS IN SOVIET POLICIES IN 1954 , . , . . , . Page 6
Soviet policy planning in all major fields appears
to rest on the fundamental strategic premises that,
under present conditions, a general war fought with
nuclear weapons would involve unacceptable military and
political risks for the Soviet Union, that Stalinist
pressures drove the non-Communist world to unite and
rearm, and that Stalin's policies resulted in serious
weaknesses in certain vital sectors of the Soviet
economy.
"DJILAS CONTROVERSY" AGAIN ERUPTS IN YUGOSLAVIA Page 9
The disciplining of Vladimir Dedijer shows that
the "Djilas controversy" of last January remains a
serious internal problem for the Yugoslav Communist
Party. . Tito seems t.o be in firm control, but some
further disciplining of party members may follow.
The issue does not appear to be connected with the
improvement in Belgrade-Moscow relations.
PEIPING BROADENS DIPLOMATIC RELATIONS , , . . ? Page 11
Peiping may soon achieve further successes in
its efforts to broaden its diplomatic relations.
Negotiations are under way with Afghanistan, Nepal,
and Yugoslavia; and Peiping has also made overtures
to Japan.
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PRESSURE MOUNTING IN ISRAEL FOR MORE AGGRESSIVE
POLICIES . . . . . . . . . . . . . . . . . . Page 12
Israel's frustration over what it considers to
be an unsatisfactory situation in the Near East is
resulting in a press campaign which is increasingly
critical of the United States and which urges a
tougher approach to the Arabs. The resultant build-
up of popular feeling in Israel is likely to cause
border incidents and promote instability in the area.
GUATEMALA--SIX MONxHS AFTER . . . . . . . . . . . . . Page 14
Six months after the overthrow of the pro-Communist
Arbenz regime in Guatemala, the Castillo Armas adminis-
tration still faces difficult political and economic
problems in its efforts to restore stability to the
country.
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THE SOVIET WORLD
Signs of strain noted from time to time in recent weeks
among the top Soviet leaders may reflect division over the
way,in which the Soviet Union should proceed to achieve its
foreign policy goals, such as the prevention oaf West German
armament. At the present time, however, a dramatic change
within the Soviet leadership seems unlikely.
The American embassy in Moscow has commented that the
striking differences on 21 December between Pravda,: the party
newspaper, and Izvestia, the government newspaper, in con-
nection with the re atjve emphasis to be accorded heavy
industry and production of consumers' goods could reflect a
basic.disagreement over the German question. The embassy
considers it logical that differences over Germany would
result in debate over the priority in heavy versus light
industry as part of the main issue relating to the effect
which an increase in military production would have on
domestic. economic policy,
On 24 December,,the Soviet press harked back to the old
.formula for heavy versus consumers' goods production in
pub-
lishing a three-month-old interview between Khrushchev andb-
a British scientist. However, Pravda again shifted the
emphasis to heavy industry on 2mber in its editorial
and-coverage of a two-week=old speech by Khrushchev.
Other signs of tension were evidenced when the Soviet
press on 24 December announced the execution of former Soviet
security chief V. S. Abakumov and several of his associates.
The nature of the charges--particularly that the "Leningrad
case" was falsified--made it appear to be a move directed
against Malenkov by one or more of his colleagues. The
"Leningrad case," apparently referring to the extensive re-
movals of Zhdanov appointees in the Leningrad party organiza-
tion during 1949, was generally interpreted as being part
of Malenkov's strategy in gaining control of the party
apparatus. Perhaps connected to this development is the
.fact that V.., M..Andrianov, the official placed in the Lenin-
grad post to administer the shake-up, was removed in November
1953 at aLeningrad party meeting attended by Khrushchev.
It is not inconceivable, however, that the announcement
was designed by the leadership to attract further popular
support through criticism of the Stalin regime and its ruth-
less police methods. Malenkov, himself, may be behind the
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move.. He may wish to rid himself once and for all of any
association with the Leningrad affair by publicly blaming
it on Abakumov and Beria. At the same time, he may also
be serving notice to a minority group among the leadership
that the post-Stalin policies inside the USS11 will continue
and public manifestations of disagreement within the leader-
ship will not be tolerated.
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MAJOR TRENDS IN. SOVIET POLICIES IN 1954
Soviet policy planning in all major fields appears to
rest on the fundamental strategic premises that, under
present conditions, a general war fought with nuclear
weapons would involve unacceptable military and political
risks for the Soviet Union, that Stalinist pressures
drove the non-Communist world.to.unite and rearm, and
that Stalin's policies resulted in serious weaknesses
in certain vital sectors of the Soviet economy. This
Soviet estimate of the world situation is suggested by
the USSR's major foreign, internal, and Orbit policies
during 1954, and by recent expressions of what seems to
be the prevailing mood among the top Soviet leadership.
Malenkov last March referred to the possibility of
the "destruction of world civilization" in a general war--
not just the collapse of capitalism--and the prominent Soviet
economist Varga recently declared that "peaceful competition"
between Communism and capitalism must not be allowed to
develop into World War III, which would threaten the
destruction of the human race. At the Moscow reception
commemorating the October revolution, Malenkov stressed
to Ambassador Bohlen the USSR's "serious and sincere"
desire for "peace and normal and good relations with all
countries." While such declarations may be considered part
of the Communist peace propaganda, evidence suggests that
they also reflect the general mood and thinking of the
Kremlin leaders.
The outward manifestation of this basic trend in
strategic thinking is evident in Soviet foreign policy.
Outright military pressures and heavy-handed methods of
expanding the areas of. Soviet influence and control have
been abandoned in favor of a return to the more traditional
methods of diplomatic maneuver and of political infiltra-
tion through local Communist organizations within non-
Communist countries. The Soviet leaders are trying to
ensure a prolonged period of "peaceful coexistence" during
which the danger of general war would not be great and
Western apprehensions regarding Moscow's expansionist
inclinations could be allayed.
In terms of policy planning, Soviet leaders seem to be
preoccupied with long-range consolidation and strengthening
of the Communist bloc within its present frontiers both
in Europe and the Far East rather than the extension of
this empire by military action or outright attempts by
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foreign Communist parties to seize power. As long as the
present Soviet strategy continues, the USSR can be expected
to discourage other Communist states, particularly China,
from initiating any action that could not be localized
or that appeared to involve substantial risk of general
war. In the Soviet view, cumulative Communist power will
eventually turn the balance of world power against the West
and open new opportunities for outward thrusts from present
frontiers.
The top leadership seems to be going through a period of
relative stability, even though there are occasional signs of
differences over execution of policies. The principle of
collective leadership has been strictly enforced throughout
the party hierarchy, and the Kremlin is making a major effort
to strengthen and invigorate the Soviet political system by
limiting "bureaucratic" leadership and encouraging honest,
efficient, and imaginative direction at all levels.
In its current domestic economic policy, the Soviet regime
has been deeply committed to expanding production by intro-
ducing new incentive measures to raise labor productivity.
The 1954 budget revealed a leveling off of military expendi-
tures and a continued emphasis on long-range economic develop-
ment and investment, combined with vigorous measures to carry
out the program for increased production of agricultural and
consumers' goods. The new emphasis on boosting agricultural
output and light industrial production and the leveling off of
military expenditures, as contrasted with the policies fol-
lowed under Stalin, probably would not have been undertaken
if the Soviet planners anticipated an imminent increase in
international tensions.
Moscow's military planning is similarly oriented toward
the long haul. The emphasis is on the steady strengthening of
military capabilities, in particular the improvement o! weap-
ons, rather than on the mobilization of forces. In general,
military policy it 1954 has been characterized by a stabili-
zation of announced expenditures, personnel strengths
and disposition of forces.
The 1954 budget allocation for maintenance and equipment
of the armed forces, although about ten billion rubles below
the amount allocated in 1953, appears adequate to maintain the
military establishment at its present strength. Moreover, since
it is likely that the 1953 defense allocations were underspent
and even fell slightly below the 1952 level, the smaller budget
allowance for 1954 probably does not represent a significant
reduction from actual 1953 outlays.
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The past year has witnessed changes in Soviet-Satellite
control relationships which likewise point to long-term
stabilization and consolidation. Satellite leaders apparently
are committed to continuing until 1960 their "new course"
policies aimed at increased consumers' benefits, and Moscow
has been moving toward greater relaxation of direct control
and toward granting the captive states at least the appearances
of greater autonomy. The Soviet leaders would hardly have
adopted this course if they were contemplating any drastic
tightening of the means of control to support expansionist
plans.
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"DJILAS CONTROVERSY" AGAIN ERUPTS IN YUGOSLAVIA
The disciplining of Vladimir Dedijer, formerly an im-
portant Yugoslav propagandist and the official biographer
of Marshal Tito, shows that the "Djilas controversy" of
last January remains a serious internal problem for the
Yugoslav Communist Party. Tito seems to be in firm.control, however,
and some further disciplining of party members may follow,
possibly reaching as high as the chief of staff of the armed
forces. The issue does not appear to be connected with the
improvement in Belgrade-Moscow relations.
The seriousness with which the regime views the situation
is shown by the preparations to prosecute Dedijer on a charge
of propagandizing against the state, in contrast to the action
last January when former vice-president Milovan Djilas escaped
criminal proceedings, although his advocacy of increasing
political democracy in Yugoslavia cost him his government and
party posts. The continuing support which Dedijer gave Djilas'
views was probably considered as presenting only a routine
problem--namely to quiet Dedijer, still a party central com-
mittee member.
The case assumed larger proportions when both men started
talking to foreign-correspondents, reaching the point where
Dedijer is now accused of aiding Djilas in attempting to
create factions within the party. Dedijer's open flouting
of party discipline in the past two weeks probably accounts
in part for the severity of the steps. against him. The
original decision to discipline him, however, was probably
taken at a central committee plenum on 27 November, three
days prior to Tito's departure. for Southeast Asia.
Djilas is said to believe that both Tito and Vice Presi-
dent Rankovic approved the original move before their trip.
Tito, in order to dissociate himself from a move which will
be unpopular among some younger elements of the party, may
have specifically desired that it take place during his ab-
sence. Dedijer, on the other hand, reportedly questions
whether Tito even knows about the current actions.
Dedijer has also claimed to sources of the American mis-
sions in Belgrade that the move to discipline him resulted
from connivance between the Soviet and Yugoslav parties to
remove some of those most responsible for stirring up anti-
Soviet resentment in 1948 in order to clear the way for a
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Yugoslav-Soviet rapprochement. Djilas, however, completely
discounts any Soviet influence in the present affair and
reportedly calls it strictly an intraparty. struggle, a
view supported by all the other evidence,
Disciplining of others is possible. There have been
reports that Chief of Staff Peko Dapcevic, who was peripher.
ally involved in the January dispute, is to be transferred
to an army field command. Besides Dapcevic, there are many
other top army generals who by nationality ties are allegedly
sympathetic to their fellow Montenegrin, Djilas. However,
Dapcevic's, strong condemnation of Djilas and Dedijer for
their actions may have saved the regime from having to take
steps which might arouse the hostility of the entire leadership
of the army. Rumors of an impending shake-up in the Foreign
Ministry have not been substantiated.
The Yugoslav leaders are probably not seriously concerned
over the actual power that Djilas adherents can exercise,
since his following has been largely among students, writers,
and similar groups. They are undoubtedly worried, however,
about the long-term influence of Djilas' and Dedijer's views.
Djilas and his supporters, especially now that he advocates
a full two-party political system, will probably be more and
more characterized as decadent "bourgeois" who, like Dedijer,
"place themselves at the disposal of those quarters abroad
who are not amicably disposed toward socialist Yugoslavia."
Belgrade can be expected to limit opportunities for public
expression of disagreement with the regime, a freedom somewhat
increased in recent years, and strong attempts are almost
certain to be made to seal off vocal dissidents such as Djilas
and Dedijer from contact with both Yugoslavs and foreigners.
Further attempts to tighten party discipline are likely and
a mild purge of '"nonbelievers" may follow.
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PEIPING BROADENS DIPLOMATIC RELATIONS
Peiping may soon achieve further successes in its efforts
to broaden its diplomatic relations.
Chou En-lai announced on 21 December that "Progress has
been made" in talks with Afghanistan and Nepal, and revealed
that negotiations are under way with Yugoslavia. He repeated
an earlier bid for relations with Japan.
Afghanistan recognized Peiping in January 1950 but never
exchanged envoys. Although Nepal has not recognized Communist
China, Chou said last September that Peiping was willing to
establish normal relations with that country. The Nepalese
foreign minister recently stated that his government was
considering the matter, and it seems likely that Nepal will
eventually enter into at least nominal relations with Communist
China.
Yugoslavia recognized Peiping in 1949 but was ignored by
the Chinese until recently. According to Belgrade, the current
talks are at Peiping's initiative, and the Chinese may be
talking directly with Tito while he is visiting in Southeast
Asia. China's present willingness to establish relations is
almost certainly a part of the Orbit's campaign to strengthen
its position with Belgrade.
Both Moscow and Peiping have been suggesting in recent
months that they may withdraw their previous condition for
the establishment of relations with Japan--namely, that Tokyo
must break with the United States.
In the last six months Peiping has concluded nonaggression
understandings with India and Burma, has sent a new and abler
ambassador to Indonesia, has replaced its minister in Finland
with an ambassador, and has named an ambassador to Norway and
charges to Great Britain and the Netherlands.
Peiping announced last September that contacts had been
made for the purpose of establishing normal relations with
Israel. Nothing further has been said on this matter, but a
trade delegation from Israel is soon to visit Communist China.
Peiping apparently intends to try to establish relations
even with those governments which have been markedly unfriendly
to it. Chou En-lai said last September that the view that
Peiping could not establish normal relations with Thailand and
the Philippines was "groundless."
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PRESSURE MOUNTING IN ISRAEL FOR MORE AGGRESSIVE POLICIES
Israel's frustration over what it considers to be an
unsatisfactory situation in the Near East is resulting in a
press campaign, in part government-inspired, which is increas-
ingly critical of the United States and which urges a tougher
approach to the Arabs. Israel appears to be largely interested
in 'calling : the attention of world opinion to the situation;
however, the resultant build-up of popular feeling in Israel
is likely to cause border incidents and promote instability in
the area.
The Israeli press has in the past several weeks shown
considerable uneasiness over various international develop-
ments which it views as inimical to Israel. Of top concern
has been the subject of American arms to the Arabs, Both
conservative and radical papers took advantage of the arrival
of the first shipment of American military grant aid equipment
to Iraq in mid-December to voice misgivings and thinly veiled
threats of Israeli action. The newspapers insisted that send-
ing arms to the Arabs canceled all Western declarations of
neutrality, posed a direct military threat to Israel, and
would force the country into an expensive armaments race.
The press has likewise given close attention to the
Egyptian detention of the Israeli vessel Bat Galim, which
attempted to transit the Suez Canal in late September. The
writers insist that Israel will not continue indefinitely to
accept Egypt's refusal to grant Suez transit rights, and warn
that unless the Security Council takes "action" on the Suez
issue, "Israel may consider herself released from some of the
obligations imposed by the UN Mixed Armistice Commission, de-
cisions."
The current trials in Egypt and Lebanon of spies for Is-
rael are also given intensive treatment in Israel. The pos-
sibility of their execution has roused the press to threaten
mass retaliation, since "we hold an army of real Arab spies."
Added irritants to public opinion are the uncertain future
of North African Jews, the proposed rearming of West Germany,
and public statements by prominent Americans critical of Israel
or friendly toward the Arabs.
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The intensity of this campaign appears to have at least
tacit: government approval. Despite Prime Minister Sharett's
reputation as a moderate, he has clearly indicated that Is-
rael is determined to secure free transit of the Suez. He
has told American officials that if the Bat Galim is permitted
to pass through the canal, "the United States could be as-
sured of a long period of lull."
Other Israeliofficials have also been outspoken on these
issues, thus giving the impression that the government is
adopting a harder line. Aside from the known "activists" in
the government, which are grouped around Defense Minister
Lavon and Chief of Staff Dayan, there appears to be a gradual
increase in the number of younger and more aggressive leaders
in the government and party organizations. Several reports
have in the past months noted intemperate statements of Yigdal
Alon and Israel Galili, two retired colonels now active in
politics.
The government, in emphasizing that the situation in
which Israel-finds itself is impossible, apparently is con-
tinuing its efforts to alert international opinion and induce
the Western powers and the UN to force the Arabs to negotiate
a settlement with Israel, or at least to moderate their eco-
nomic boycott.
By permitting the development of this strong press cam-
paign, the government exposes itself to increasing pressure
to take a tougher line toward the Arabs and the West. It
runs the risk of destroying some of the popular good will in
Israel toward the Western powers, particularly the United
States. Furthermore, the government may be forced by intense
popular sentiment on this problem to engage in frontier
action or permit private expressions of antagonism, includ-
ing acts of violence against the Arabs. The interception of
a Syrian air liner in mid-December appears to have been thus
motivated.
War between Israel and the Arabs as a result of such in-
cidents is not anticipated, but the stability of the Middle
East is further undermined through this development, thus
decreasing the possibility of a negotiated settlement.
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Six months after the overthrow of the pro-Communist
Arbenz regime in Guatemala, the Castillo Armas administration
still faces. difficult political and economic problems in its
efforts to restore stability to the country.
The anti-Communist movement which supported Castillo
Armas' revolution against Arbenz last June is disintegrating.
Public confidence in Castillo's administration was described
by the American embassy on 17 December as being at its lowest
ebb since the abortive army uprising last August, though Presi-
dent Castillo himself continues to enjoy wide personal popu-
larity. The administration, which assumed merely a cloak
of constitutionality with the election on 10 October of a
constituent assembly, is resisting pressure from political
groups, hungry for public office, for a return to constitu-
tional government.
Castillo wants to rule by decree for as long as possible,
and hopes to delay the promulgation of a new constitution
for at least a year. His administration still shows evidence
of confusion and bungling, and is being widely criticized
for its ban on all political parties and for other alleged
antidemocratic tendencies. A number of unconfirmed rumors
of impending plots against the government are causing
further uneasiness.
Evidence that the Communists are recovering from their
collapse of last June has appeared in the clandestine cir-
culation of Communist newspapers. The embassy received a
reliable report in November that a well-organized system of
Communist underground cells has been formed. The embassy
believes that the Communists are not strong enough to cause
trouble by themselves, but that their ability to operate at
all is an unsettling factor.
Economically, the administration is faced with serious
immediate problems for which no quick solution seems possi-
ble. Unemployment is at a.-record level and labor morale
is low. Business, though slowly recovering, is still de-
pressed and business leaders lack confidence in the govern-
ment. The high cost of living and a threatened shortage of
corn, a basic food crop, add to the discontent.
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The full effect of the $6,400,000 in.American aid will
not be felt for several months. An eventual boost to the
economy may come from investments by American oil companies,
now competing for concessions in Guatemala. On 27 December
,the Guatemalan government and the United Fruit Company, the
country's largest business, signed a new agreement which will
bring the government considerable additional revenue.
Neverthelessgunless economic recovery is speeded up and
unless the administration shows more ability, the political
situation may deteriorate over the next three to six months
to such an extent as to threaten the regime.
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