CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A003600110001-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 38
• Document Creation Date: December 21, 2016
• Document Release Date: April 6, 2009
• Sequence Number: 1
• Publication Date: June 15, 1962
• Content Type: SUMMARY

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Ne -7
SECRET
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
State Dept. review
COPY NO.
OCI N 0.0421 /62
15 June 1962
DIA review(s)
completed completed.
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
SECRET
GROLP I
Excluded from automatic downgrading
and declassification
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NW SECRET 1W
CURRENT INTELLIGENCE WEEKLY SUMMARY
15 June 1962
T H E W E E K I N B R I E F
(Information as of 1200 EDT 14 June)
to the cities in search of food and jobs and compounding
the regime's security problems. The regime is resorting
COMMUNIST CHINA'S PUBLIC SECURITY PROBLEMS . . . . . . . . Page
Recent disturbances in Canton underscore Peiping's
growing difficulties in maintaining public order. The
situation in Canton may be more tense than in China gen-
erally, but dissatisfaction is probably widespread since
the nationwide economic slump has created mass unemploy-
ment and a rootless population. Peasants are drifting in-
to shows of force to maintain order.
Page 2
King Savang is scheduled to designate a new provisional
government on 18 June at Vientiane. The three princes on
12 June finally reached agreement on ,a 19-member cabinet
headed by Souvanna, with Souphannouvong and Phoumi as vice
premiers with the right of veto over decisions in defense,
interior, and foreign affairs. The generally favorable
bloc reaction to the settlement has been tempered with re-
newed demands that the US withdraw its forces from Thailand.
ALGERIA . . . . . . . . .
The rift between military and civilian factions of
the Algerian nationalists apparently widened during the
meeting of the Algerian National Revolutionary Council
in Tripoli. The Algerian National Array now is massing
along the Tunisian border preparing for a return to
Algeria. There is an increasing possibility of clashes
between it and the French Army as the 1 July referendum
date approaches.
. Page 4
SOVIET FOREIGN POLICY DEVELOPMENTS . . . . . . . . . . . . Page 5
The declaration issued by the Warsaw Pact Political'
Consultative Committee which met in Moscow on 7 June is
further evidence that the Soviet leaders are not prepared
at present to bring the Berlin situation to a head. There
was no indication, however, that the USSR will moderate
its terms for a Berlin settlement in order to step up the
pace of the US-Soviet negotiations. Moscow apparently in-
tends to stand firmly on its present position while playing
for time in which to press for Western concessions by
warning that further "delaying tactics" will leave the bloc
no alternative but to sign a separate peace treaty with
East Germany.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
SINO-SOVIET RELATIONS . . . . . . . . . . . . . . . . . . Page 9
Developments at the 6-7 June top-level meeting in
Moscow of the Council for Mutual Economic Assistance point
up the growing cleavage between the pro-Moscow and pro-
Peiping members of the Sino-Soviet bloc.
The period of relative
moderation and mutual restraint in exchanges of polemics
which set in soon after the dispatch of the Soviet letter
began to break down in mid-April--perhaps as a reflection
of the nature of the Chinese reply.
. Page 12
Although the final official count is not expected be-
fore 18 June, officers of the Peruvian Army, which controls
the election machinery and favors Belaunde, privately state
that he will win.
The reformist, anti-Communist APRA will
probably charge electoral fraud and call a general strike--
a move which in the present atmosphere may lead to wide-
spread violence.
. . 0 Page 13
Fighting intensified during early June. Viet Cong
attacks increased notably over the weekly level in late
May, especially in the southern provinces, and harassment
of the coastal railroad was resumed. Communist propaganda
has attempted to discredit the ICC report, as yet unpub-
lished, censuring North Vietnam for subversive activities in
the South, and to depict "US intervention" as the basic
cause of increased tension.
. Page 14
The Adoula-Tshomb6 talks continue in a desultory fashion
amid charges and countercharges of stalling and an atmos-
phere of increasing acrimony. Only one., of the five joint
commissions proposed by UN representative Gardiner to ef-
fect Katanga's reintegration has been established since the
talks resumed on 22 May, and Tshomb6 now Insists that func-
tioning of all commissions must await an overall settle-
ment. Discussions centering on a monetary commission now
are bogged down in a squabble over continued circulation
of Katangan currency. Katangan leaders in Elisabethville
have made a series of public attacks on the Leopoldville
government, the UN, and the US.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
. . . . . . . . . . . . . . Page 15
Opposition to the South Korean junta is growing among
both military and civilian elements. Moves by security
chief Kim Chong-pil to increase his power threaten to up-
set the balance which junta leader General Pak Chong-hui has
sought to maintain among the military factions, while re-
ports and rumors of plots among politicians have multiplied.
Security forces have been placed on emergency alert against
subversion.
. . . Page 16
Bulgarian party First Secretary Todor Zhivkov, at the
urging of Khrushchev, has been attempting since last fall
to revamp--particularly through de-Stalinization--one of
the bloc's most conservative Communist parties. His ef-
forts have been thwarted by the powerful Stalinist faction
in the party. Although Zhivkov's faltering campaign was
given new impetus by Khrushchev's 14-20 May visit, the
Bulgarian leader is only beginning what will be a long-term
process in altering the basic outlook of the party member-
ship.
PROSPECTS FOR AZORES BASE RIGHTS NEGOTIATIONS
. . Page 17
Continuing adverse press criticism of US policies and
an increasingly nega:t ive attitude by high Portuguese of-
ficials indicate that Lisbon is building up a tough bargain-
ing position for renegotiation of the Azores base rights
agreement, which expires in December. The predilection
of the top military echelon for continued military coopera-
tion with the US will probably obviate any move to force
the US out of the islands, but Lisbon may decide it can
exert leverage on Washington's African policies by agree-
ing at this time to only a one-year extension.-F
SPAIN o a m o o o
Page 19
The Franco regime, in contrast to the unusual modera-
tion with which it handled the recent 'two-month strike wave,
has dealt promptly and repressively with opposition politi-
cal leaders for their activities at a recent nongovernmental
conference on European integration in Munich. Conservative
and other leaders from Spain united there with a number of
long-time Spanish exiles in pressing a resolution to the
effect that Spain must liberalize its political structure
to qualify for the Common Market, Despite its harsh measures
in this instance, the regime seems to recognize that the
political climate is changing.. It will probably be faced
with increasingly insistent demands for liberalization, par-
ticularly from labor.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
. Page 20
Public confidence in the Goulart regime, which rose
steadily during the early months of this year, has again
fallen off. Goulart's precarious health is one factor, as
are the stepped-up campaigning for the October guber-
natorial and congressional elections and the cabinet
changes they will soon precipitate. Certain basic foods
are in short supply, the foreign exchange rate has fallen,
and there has been a new outbreak of rural violence in
northeastern Brazil.
COLOMBIA . , .
Page 21
President-elect Valencia, who is scheduled to visit
the US in late June, is committed to the strongly pro-
Western policy of the Lieras government. There is wide-
spread concern in Colombia as'-to VnIencia's executive abil-
ity, however, and his administration faces such difficult
problems as alleviating Colombia's severe international
payments situation, obtaining an effective international
coffee agreement, and halting the recent increase in left-
ist agitation. Government forces continue unable to sup-
press the extensive rural violence that: has plagued Colom-
bia since 1948, and there is a danger that the currently
small Communist influence among the bandit groups may in-
crease.
NORTH VIETNAM'S AID DIPLOMACY IN AFRICA . . . . . . . . . Page 22
The North Vietnamese have set up a foreign aid pro-
gram in Guinea that they hope will be a prototype 'for
projects elsewhere in Africa. They are paying particular
attention to former French colonies, frequently pointing
out that they share a common bond of experience in the
struggle for independence from France. Unable to compete
with more affluent nations in terms of impact construction
projects for economically underdeveloped areas, Hanoi is
counting on its own approach--concentrating on teacher
training and public health--to support its bid for wider
international recognition and to increase its influence.
SOVIET CONCEPT OF WORLD WAR III IN EUROPE . . . . . . . . Page 1
Recent articles by Soviet military leaders on military
doctrine, when compared with available information on the
type of training, equipment, and force structure of Soviet
tactical units, reveal the nature and scope of operations
an"aicipated in Europe by the USSR in the event of World
War III. The Soviets envisage an initial intercontinental
exchange of nuclear fire and missile and bomber attacks on
strategic targets in Western Europe. This would be fol-
lowed up by nuclear-supported ground offensives aimed at
destroying the main NATO troop formations and capturing
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15 June 196:2
THE BLOC AND CUBA'S ECONOMIC PROBLEMS . . . . . . . . . . Page 4
Some three years of revolutionary upheaval in Cuba,
accompanied by gross mismanagement, the break in trade re-
lations with the US, and the measures taken to reorient
the Cuban economy toward the Sino-Soviet bloc, have led
to a general economic decline. Cuba now is experiencing
consumer shortages typical of Communist-dominated countries.
The bloc has responded to the country's mounting economic
difficulties with a strenuous drive to provide assistance.
Moscow's willingness to commit its resources and prestige
to aid the Cuban regime suggests that the bloc is confident
that Cuba can be made economically viable in the long run.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
COMMUNIST CHINA'S PUBLIC SECURITY PROBLEMS
Recent disturbances at
Canton transportation terminals
involving disgruntled travelers
trying to buy tickets to the
Hong Kong border underscore Pei-
ping's growing difficulties with
a restive population. A riot
on about 1 June at the Canton
railway station had to be put
down by troops, and several per-
sons were reportedly killed. In
view of Canton's proximity to
Hong Kong, the situation in Can-
ton may be more tense than in
China generally. Dissatisfac-
tion is probably widespread,
however, since the nationwide
economic slump has created mass
unemployment and a rootless popu-
lation.
Peiping's decision further
to reduce urban population--
thinly disguised as a campaign
to "aid agriculture"--was taken
primarily to cut down on the
amount of food that must be
shipped to the cities and to
diminish the potential for or-
ganized dissidence. Premier
Chou En-lai reportedly told the
National People's Congress this
spring that about 30 million peo-
ple--one third of the urban work-
ing force and their dependents--
will be transferred to rural
areas. However, not only are
jobless workers resisting re-
settlement, but the peasants in
many areas strongly resent their
coming. The already overpopu-
lated areas of rural China have
no need for additional labor.
In addition there appears
to be a shortage of farm tools
with which to equip the new-
comers. One recent article in
the People's Daily cited a com-
mune where tools had been made
out of "worn metalware and
broken wooden utensils."
urban food-ration tickets to
force them to move to the coun-
try. It is not known how many
of these people, unable to re-
loc ate,,become drifters without
documents.
Peiping's decision to push
forward with the program of
population relocation was made
despite the repeated failures
of such efforts in the past.
Even during 1956, when the re-
gime maintained firm control
over movement of the population,
the attempt to reduce Shanghai's
population failed when evacuees
soon filtered back into the city.
.Even some public officials
are being shifted away from the
cities.
In addition to the mass
movement of workers to the
countryside, destitute peasants
are coming to the cities to
look or beg for food. An ac-
count from Swatow in April stares
that peasants who termed them-
selves "rural village food-bor-
rowing teams" were begging in
the streets. Petty crime and
general lawlessness are reported
on the rise throughout the main-
1 n n oa
In some cities, discharged
workers are deprived of their
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,SECRE T
K ssy ? fPa Dong Tha {imp
f Vieng ?/ v ? \.`~}~ vinln
King Savang is scheduled
to designate a government of
national union on 18 June at
Vientiane. This move will be
preceded by a meeting of the
National Assembly on 15 and 16
June to grant "full powers"
to the King to appoint a new
government in accordance with
the provisions of the communi-
qud issued last summer in
Zurich following an earlier
conference of the three princes.
Agreement on the composition
of the new cabinet was reached
on 11 June at the meeting of
the princes at the Plaine des
Jarres. An accord was signed
the following day.
The agreement calls for
a 19-member cabinet which is to
be composed of two four-member
groups representing the Boun
Meng
La .
Ou Neua
a / Lai
?Phong Sa
Boun Neua
? HONG
Muong ALY
~Yo
BURMA MSingh Nuong%
an
Vien Tha
i(eng
Sen
Pou Khay
Ban NAMTHA
~ouei Sai
/ Na Mo?`?1./
Muone"O
S{aI]r LUANG Sam Neua?..
V PRARAN ,
aeq Muo Htlup
--'~Luaag
Ban ,-
'i"'~ P,ralt ng ~ Khan g
? Nong He
Sayabour Phou4 Muong~leine
Khwn :>Smn i dep ? v I( ~
fan H VIENTIANE Pak Sa
m~`
Heup
,f'"111 VIA IANE ;/
INTELLIGENCE WEEKLY SUMMARY
LAOS
Omit and Souphannouvong factions
and an 11-member "neutralist"
center group containing four
Vientiane and seven Xieng
Khouang neutralists. The com-
position of the center group
represents a compromise between
the seven-three split proposed
by Souphannouvong and the six-
four division urged by Phoumi.
Souphannouvong and Phoumi
are to hold positions as vice
premiers under Souvanna; all
decisions concerning defense,
interior, or foreign affairs
would require their unanimous
approval. Other key assignments
include: defense - Souvanna;
interior - Pheng Phongsavan;
foreign affairs - Quinim
Pholsena; finance - Phoumi;
economy and planning - Souphan-
nouvong and information -
Phoumi '1ongvichit.
'1al SAM NEUA
THAIL A ND
- - 4,.Udon Tha ni
L A O S
Government base area Road
hleo base area Trail
Kong Le/Pathet Lao/North Route number
Vietnamese areas Road under
construction
SARAVANI.-
,Sarav`anA
~Mnank Pakse `,
L.I on :.Bassac (
AttOpe
CH,4 ASSAK ?
14 1 ~/'~I~TTOPEU
SECRET
Thanh
Hoa
,: ,.-..
L n LaneTc hmponee
11 ?,SavannakhetMMu g
ouel Sane'
SAVANNAK Phine
SOUTH
VIETNAM
15 June 62 WEEKLY REVIEW Page 2 of 22
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Bloc Reaction
Moscow promptly welcomed
the coalition agreement as a
"victory of the Laotian people"
achieved by their perseverance,
the efforts of Souvanna Phouma,
and the "moral support of the
socialist camp headed by the So-
viet Union." As late as 10 June,
however, Soviet propaganda con-
tinued to charge that the US was
considering sending troops into
Laos if the talks broke down and
to warn that this "belligerent"
attitude would only fan Phoumi's
"adventurism."
A 12 June Izvestia article
warned that US forces in Thai-
land might be used in the future
to "exert military pressure" on
the coalition government to
abandon its neutralist policy.
Izvestia's assertion that
withdrawal of these forces
would be in accord with the
Vienna agreement between
President Kennedy and Khru-
shchev may foreshadow Soviet
diplomatic and propaganda
demands that they be pulled
out in order to ensure the
independence and neutrality
of Laos.
Khrushchev's 12 June let-
ters to President Kennedy and
Prime Minister Macmillan were
designed to place the USSR in
the position of being the leading
champion and defender of the
Laotian accords and a broader
political settlement in South-
east Asia. The Soviet premier
said the accords may become
the "pivotal event" both in
Laotian affairs and in the
"cause of strengthening peace
in Southeast Asia." He noted
that the way is now open for
coropleting the work of the
Geneva conference on Laos. In
the message to President Kennedy,
Khrushchev expressed satisfac-
tion that the Vienna agreement
on a neutral and independent
Laos "begins to be translated
into life."
Both Peiping and Hanoi
portray the agreement for a
Laotian coalition govern-
ment as a defeat for the US
goal of a "puppet regime"
there. Both temper their
satisfaction, however, with
a warning against possible
"aggressive action" by US
troops in Thailand. Pei-
ping has rebroadcast
Izvestia,'s call for the
prompt withdrawal of US forces
from Thailand and is likely
to adopt the theme that their
departure is necessary for
Laotian inde endence.
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The rift between military
and civilian factions of the
Algerian nationalists apparently
widened during the meeting in
Tripoli of the Algerian National
Revolutionary Council (CNRA)
It
Is still expected, however, to
dissolve itself after the 1 July
referendum.
One accomplishment of the
CNRA meeting was to select PAG
deputy premier Mohamed Ben
Bella as secretary general of
the National Liberation Front
(FLN) and former PAG premier
Ferhat Abbas as a member of
its political committee. The
FLN and the Algerian Communist
party are among the groups ful-
filling the conditions for par-
ticipation in the pre-referendum
political campaign, which opens
early next week.
PAG deputy premier Belkacem
Krim, principal Algerian negotia-
tor at Evian who returned to
Algeria with the Provisional
Executive's delegation on 10 June,
may be attempting to repair po-
litical fences on behalf of the
PAG moderates as well as to bol-
ster the Provisional Executive
in its continuing negotiations
with members of the Secret Army
Organization (OAS) and other
European elements who are attempt-
ing to elicit guarantees beyond
those obtained at Evian. Pre-
mier Ben Khedda, however--before
departing for Cairo, where he
is attending the Casablanca
Powers conference--reflected
the pressure from extremist ele-
ments when he clearly ruled out
any pre-referendum promise of
amnesty for OAS terrorists or
any semiautonomous status for
European residents in an inde-
pendent Algeria.
The American Embassy in
Tunis, commenting on the absence
from Tunis of all PAG/FLN leaders,
believes that the keys to a power
struggle may well be whether Ben
Khedda and Krim control nominations
to the constituent assembly through
the Provisional Executive, and
whether the French Army--despite
the provision of the Evian agree-
merit that it leave the frontier
after self-determination--will
hold the Algerian National Army
(ALN) forces outside Algeria until
the assembly is elected in July.
The possibility of clashes
between units of the ALN and
French forces increases as
ALN units prepare to return
to Al eria.
Although French officials had
previously played down the number
of European settlers fleeing Al-
geria by attributing much of the
total to the "usual vacation
season," Secretary of State for
Repatriation Boulin stated pub-
licly on 13 June that the number
of refugees between 1 and 12
June totaled 92,000. Previous
OAS threats to punish any de-
partees have been modified to
"permit" the flight of all but
able-bodied males, who are
"ordered" to remain and assist
with the scorched-earth policy
until and unless the PAG offers
more concessions to the Europeans.
The settler influx into France
--far higher than the authorities
had hoped or prepared for--has re- 25X1
portedly permitted infiltration of
armed OAS personnel among the refu-
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CURRENT INTELLIGENCE WEEKLY SUMMARY
The declaration issued by
the Warsaw Pact Political Con-
sultative Committee which met
in Moscow on 7 June provided
further evidence that the Soviet
leaders are not prepared at
present to bring the Berlin sit-
uation to a head and that they
intend to continue the bilateral
talks with the US. There was
no indication, however, that
the USSR will moderate its terms
for a Berlin settlement in order
to step up the pace of the ne-
gotiations. Moscow apparently
intends to stand firmly on
its present position while
playing for time in which to
press for Western concessions
by warning that further Western
"delaying tactics" will leave
the bloc with no alternative
but to sign a separate peace
treaty with East Germany.
Reflecting the continued
Soviet interest in seeking a
solution to the Berlin problem
through negotiations, Khru-
shchev's 12 June message to
President Kennedy hailing the
formation of a Laotian coalition
government commented that the
settlement in Laos provides an
example for "solving other in-
ternational problems which now
divide states and create tension
in the world." Khrushchev
pointed out that all that was
necessary was a "desire to
resolve international problems"
on a basis of mutual coopera-
tion, taking account of the
interests of all sides.
The Warsaw Pact declaration
stated that Foreign Minister
Gromyko had reported on the
US-Soviet negotiations and
that the other Warsaw Pact mem-
bers endorsed the Soviet posi-
tion and favored the continua-
tion of the bilateral talks.
The statement attacked what it
claimed were Western efforts
to use the talks to delay a final
settlement on the main issues,
namely, the withdrawal of the
occupation forces from West
Berlin and the liquidation of
the occupation regime. It de-
clared that if the West is un-
willing to agree to a mutually
acceptable solution to the Ger-
man problem then the bloc will
conclude a separate treaty,
after which West Berlin "will
be regarded as a demilitarized,
free city." The memorandum
Khrushchev gave President Kennedy
at Vienna in June 1961 stated
that the peace treaty "will
specifically designate the
status of West Berlin as a
free city," but the USSR has
devoted little attention to
this point in recent months.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Berlin Incidents
Moscow has used the recent
series of incidents along the
Perlin sector border to warn
against any moves to upset US-
Soviet talks and to question
Western intentions regarding
a negotiated settlement. A 10
June Moscow Radio commentary,
alleging that the incidents
were caused by West Berlin
police provocations, pointed out
that this rising air of tension
was taking place "precisely
at the same moment" when the
US-Soviet talks were being held.
The commentary pointed out that
the West's deliberate encourage-
ment of the West Berlin authori-
ties in this regard raised the
question of its "real desire"
for successful talks.
The increased tension on
the sector border has been
due in large part to the grow-
ing number of escape attempts.
This has resulted in more ag-
gressive action by the East
German border police and a
greater willingness on the part
of West Berlin authorities to
come to the aid of the refugees.
The Ulbricht regime has in-
tensified security measures
along both the sector and zonal
border surrounding West Berlin
and has also begun to build more
substantial defenses inside
East Berlin.
The USSR gave its formal
backing to the East Germans in
a note delivered to the three
Western occupation powers on
7 June. The note takes the
position that provocations dur-
ing the last week in May were
caused by the West Berlin police
with the open support of the
occupation forces in West Ber-
lin. It stressed that these
incidents only serve to demon-
strate the urgent need to "normal
ize" the situation in West Berlin
and "eliminate the occupation re-
gime there."
The note concluded on an
ominous note, stating that the
Soviet Government "may be
forced to take appropriate
measures in order to fulfill
its obligations toward the
German Democratic Republic."
The USSR thus attempted to
disclaim responsibility for
the actions of the East Ger-
man police, and to induce the
Western Allies to bring pres-
sure on West Berlin officials
to change their policy which
authorizes West Berlin police
to shoot back at East Germans.
Moscow used the occasion
of West German Defense Minister
Strauss' recent trip to the
US to attack Bonn's alleged
intentions to secure nuclear
weapons from the US and de-
scribed the visit as another
step in West Germany's campaign
to obstruct progress in the
US-Soviet bilateral talks on
Berlin. Izvestia on 12 June
also bitterly attacked the West
German Government for allegedly
planning the "provocative" in-
cidents now occurring in West
Berlin and concluded that this
only serves to complicate solu-
tion of the Berlin problem.
The East Germans have pro-
tested the scheduled 17 June
visit by Adenauer to West Ber-
lin. A note to the US via
Prague claimed that the visit
disregarded the "legal" posi-
tion that West Berlin is not
part of West Germany and
that Adenauer's visit was de-
signed to encourage "acts of
aggression" in Berlin at a
time when "certain signs suggest
a possibility of understanding"
on the normalization of condi-
tions in West Berlin. The note
pointed out that the West German
leader's flight on a military
aircraft would violate the air
traffic regulations for West
Berlin inasmuch as these air
routes were "originally estab-
lished to supply the occupation
troops."
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The communique issued fol-
lowing the 6-7 June meeting in
Moscow of the Council for Mutual
Economic Assistance (CEMA) re-
iterated Khrushchev's 30 May
call for an international con-
ference which would discuss the
creation of "an international
trade agency embracing all coun-
tries of the world without any
discrimination."
The Soviet Union's in-
creasing concern with the de-
velopments in the Common Market
received renewed emphasis dur-
ing the past week. Reflecting
Soviet awareness that the ques-
tion of British membership in
the Common Market is a critical
issue, a 10 June Pravda editorial
commented on the increased dif-
ferences among Common Market
countries in connection with
negotiations on the UK's ad-
mission to the organization.
The article alleged that France
and West Germany are intent
on weakening the UK's position
within the Commonwealth, while
Great Britain wants to strengthen
its position in West European
markets.
Bloc propaganda commentary
during the past week also
stressed that the CEMA confer-
ence clearly demonstrated the
unity and cohesion of the "so-
cialist" countries and con-
trasted this with the capital-
ists, who are splitting the world
into "isolated" economic blocs..
The Pravda editorial concluded
thatK ushchev's proposal to
hold an international confer-
ence on trade would offset the
capitalists' policy of disrupt-
ing economic intercourse and
that the Soviet leader's pro-
posal has met with understanding
on the part of those who sin-
cerely desire unhampered expan-
sion of international trade.
On 13 June the Soviet-
French trade negotiations on
a proposed three-year trade
pact extending the present
commercial agreement between
the two countries were sus-
pended. The Soviets apparently
decided to make a major issue
of the Common Market and de-
manded that preferential tar-
iffs enjoyed by the member
nations of the European Economic
Community (EEC) should be ex-
tended to Soviet goods. Mos-
cOw's action suggests that it
may step up its attack in
future trade deliberations
with members of the EEC. The
Soviet negotiators proposed
that the trade discussions
be! resumed in the fall. West
Germany is also due to negoti-
ate a renewal of its long-term
trade agreement with the Soviet
Union which expires at the end
of 1963.
Disarmament and Nuclear Testing
The 7 June declaration of
the Warsaw Pact Political Con-
sultative Committee was con-
fined to the issues of Berlin
and Germany; it did not mention
other major East-West issues,
such as disarmament and nuclear
testing. Moscow has, however
stepped up its propaganda cam-
paign against US plans for high-
altitude nuclear tests. It
continues to publicize the
Soviet Government statement of
3 June, and numerous protests
of Soviet and non-Communist
scientists. An authoritative
Pravda "Observer" article on
T-June described US high-al-
titude tests as an "integral
part of the great strategy of
American imperialism" which
aims at prescribing to the
world "the narcotic of an end-
less and hopeless arms race
disguised as a vitalizing remedy."
The current campaign seems
aimed more at capitalizing for
propaganda purposes on concern
expressed by elements of the
world scientific community over
the possible consequences of
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CURRENT INTELLIGENCE WEEKLY SUMMARY
the US tests in outer space than
at justifying a Soviet test re-
sumption in the immediate future.
At the Geneva disarmament
conference, Soviet delegate
Zorin charged on 8 June that
the West was maneuvering and
making a "pretense" at nego-
tiating while quickening the
pace of nuclear explosions. The
conference will recess after
the 14 June session and will
reconvene in Geneva on 16 July.
Outer Space
Moscow TASS promptly re-
ported the 8 June US-Soviet
communique announcing agreement
in the bilateral talks at Geneva
for plans to gradually increase
the exchange of information re-
ceived from weather satellites
aiming at eventual coordinated
launchings of such satellites.
Moscow also noted that plans
were examined for joint efforts
in the sphere of world magnetic
survey and said that discussion
of questions related to inter-
national cooperation in com-
munications by means of arti-
ficial earth satellites will
be continued at subsequent meet-
ings. There has been no Soviet
press comment on the bilateral
talks thus far, but the fact
that Moscow reported factually
on the conclusion of the cur-
rent sessions seems to indicate
Soviet satisfaction with the
course of the talks.
Moscow has also reported
the tabling of the Soviet draft
declaration on "principles" re-
garding exploration and use of
outer space and a draft treaty
on the rescue of cosmonauts and
space ships in distress at the
7 June session in Geneva of the
legal subcommittee of the UN
Committee on Outer Space. TASS
reviewed the documents, including
the provision in the "principles"
declaration which aims at banning
the use of earth satellites for
military reconnaissance purposes.
Citing an 11 June article
in The New York Times on the
posle increased role of the
Pentagon in US space programs,
correspondent Kondrashov in
the 12 June Izvestia asserted
that the Pentagon, with White
House sanction has begun working
out a program aimed at intensi-
fying the military uses of outer
space and also ensuring US con-
tro,l over outer space in the
interests of "preparations for
war." Kondrashov claimed that
US preparations to "militarize
the cosmos" are "clearly ag-
gressive" in view of President
Kennedy's alleged statement on
the possibility of a preventive
war against the USSR. He as-
serted that this trend "deals
a blow" to the UN resolution on
peaceful uses of outer space--
which the US had supported.
The Soviet central press on
13 June carried a less virulent
TASS dispatch which took note of
alleged "alarm and anxiety" of the
delegates at the resumed sessions
of the 16th UN General Assembly oc-
casi!oned by The New York Times re-
port. TASS asserted that the Penta-
gon program and the US decision to
conduct high-altitude nuclear
tests "profoundly contradict" US
assurances about a desire for
peaceful uses of outer space and 25X1
for cooperation in this field with
the Soviet Union and other coun-
tries within the UN framework
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CURRENT INTELLIGENCE 'MEEKLY SUMMARY
SING-SOVIET RELATIONS
The communique issued fol-
lowing the 6-7 June top-level
meeting in Moscow of the Council
for Mutual Economic Assistance
(CEMA) points up the growing
cleavage between the pro-Moscow
and pro-Peiping members of the
Sino-Soviet bloc. In effect,
the actions taken there tend
to formalize the clear, but
heretofore de facto, split in
the camp by institutionalizing
an in group and an out group
within an organizational frame-
work.
Mongolia, the only Asian
satellite which has stood firmly
beside the USSR in its dispute
with Communist China, has been
rewarded by having its status
raised from observer in CEMA to
full member. Although no action
formally expelling Albania from
CEMA was announced, the fact
that Tirana was not invited to
the meeting indicates that it
is no longer regarded as an ac-
tive member of the organization.
China, North Korea, and North
Vietnam were not listed as
observers at this meeting, al-
though all three had held the
same status as Mongolia at
earlier similar CEMA meetings.
Albania, moreover, was not
invited to participate in the
Warsaw Pact Meeting which took
place on 7 June, indicating
that it is no longer considered
a member of that organization
either. In this instance, how-
ever, Mongolia was not listed
even as an observer to the meet-
ing; China, North Korea, and
North Vietnam were also absent.
All of these countries have on
occasion attended Warsaw Pact
meetings as observers. The Al-
banian Government has sharply
protested that both the CEMA and
Warsaw Pact meetings were il-
legal, and any actions taken
null and void, since it, as a
member of both organizations,
was not invited.
CEMA may have been chosen
over the Warsaw Pact as the
organizational framework for
the Moscow-led faction of the
bloc as a not too subtle warning
to those left out that the
price of a privilegedeconomic
status is closer identifica-
tion with Soviet views. This
would apply particularly to North
Vietnam, whose attempts to
maintain a neutral stance have
made its positions more non-
Soviet than pro-Peiping. CEMA
also provides a more convenient
vehicle for future possible
inclusion of Yugoslavia, if
current Soviet attempts at a
new rapprochement with Tito
are successful.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Temporary Moderation in Polemics
25X1
Apparently in order to im-
prove the atmosphere
and
to demonstrate in concrete
terms what could be expected
from an accommodation, the So-
viet leaders began in early
March to put a better face on
Sino-Soviet relations and to
publicize Sino-Soviet unity
wherever feasible. Broadcasts
to China adopted a new tone,
accentuating elements of unity,
and in mid-March Soviet denun-
ciations of Albanian leaders
dropped off. Khrushchev's
public remarks in March and
early April could not be con-
sidered major polemics against
Peiping, although they con-
tained criticism of Chinese
domestic programs. For their
part the Chinese, perhaps while
they debated the merits of the
Soviet proposals and made their
decision, also contributed to
the lull during March and through
late April by toning down their
polemics and publicizing joint
Si:no-Soviet activities.
The quieting of the sur-
face agitation was a relative
and modest one, however. Through-
out the period there were ex-
changes of views on the effect
of disarmament on the "national
liberation movement," the rela-
tive merits of the Soviet and
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Chinese style of peaceful co-
existence, and the dangers of
revisionism. Most important,
the Soviet Union moved rapidly
ahead with its plans to improve
relations with Yugoslavia.
It seems probable that the
Chinese reply to the Soviet pro-
posals came in the middle of
April and that it was an im-
plicit, if not outright, rejec-
tion. At any rate, the period
of relative moderation and mu-
tual restraint ended then. The
long-delayed signing of the
1962 Sino-Soviet trade protocol
took place on 20 April with in-
dications that no improvement
in economic relations was in
sight. On 22 and 24 April,
Pravda and People's Daily car-
rie on their most heated ex-
change since late February,
using selected quotes from
Lenin's writings as ammunition.
On 25 April the Chinese re-
sumed in their theoretical
journal, Red Flag, the series
of articles attacking "revi-
sionism" which they had begun
in February. The last of these
articles, which were clearly
intended to identify Khru-
shchev with such views, had ap-
peared on 1 March. Another in
the series appeared in the
16 May issue of Red Flag. On
28 April, a People'-s Daily
article published a detailed
rebuttal of an article in the
April issue of the Soviet publi-
cation International Affairs on
the nature of nuclear wa'r, the
spread of nuclear weapons, and
disarmament.
The resumption of Chinese
attacks on revisionism followed
the announcement that Soviet
Foreign Minister Gromyko would
visit Yugoslavia from 23 to
28 April. In the face of the
clear opposition from the Chi-
nese to this policy, however,
Khrushchev went ahead to endorse
Yugoslav "socialism," spoke of
the need for an improvement
in Soviet-Yugoslav relations,
and finally invited Tito to
the Soviet Union for an unof-
ficial visit. Moreover, on
10 May the Soviet Union sud-
denly returned to attacking
Albanian leaders, collectively
and by name, in a new series
of broadcasts--the first since
16 March.
Thus Moscow's action with
regard to CEMA appears to be
another tactical move in the
continuing political warfare
between the Moscow-led faction
and the Chinese-led faction
of the Communist movement.
Moscow has expanded a formerly
all-European organization to
include an Asian member. At
the same time, it has moved to
make clear the exclusion of a
former European member. With-
out closing the door permanently,
the Soviet Union has indicated
that the benefits that flow from
close association with the
strongest member of the "social-
ist: camp" are available only
to those willing to accept So-
viet leadership. As in the case
of the letter, it is necessary
fox, Peiping and its supporters
simply to make the proper re-
sponse in order to be assured
of a warm welcome.
Outlook
Peiping's immediate re-
sponse has been to ignore the
CEMA communique, although it
has taken note of the Warsaw
Pact communique. It has also
demonstrated its continued sup-
port for the heretical Albanians
by republishing in the 9 June
People's Daily a full page of
se actions Tom a violently
anti-Soviet speech made by
Albanian leader Hoxha on 30
May. Before the CEMA action
was made public, Peiping had
been content to report only
that Hoxha had made an impor-
tant speech in connection with
his election campaign.
Both the USSR and China
appear to wish to avoid pre-
cipitating a complete break
in relations. Within the
limits imposed by this de-
sire, however, they continue
to maneuver for a decisive
tactical advantage over the
other. The fruits of this
game will probably be a slow
but steady deterioration in
relations.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
PERUVIAN ELECTXONS
Official returns from
Peru's presidential and congres-
sional elections on 10 June are
scheduled to be announced by
the National Elections Board
sometime after the 18th. Al-
though each major party has
published unofficial figures
demonstrating that its own
candidate has a slight lead,
the nearest approximation of an
official statement is that by
Peruvian Army officers to the
US Army attache on 12 June that
Fernando Belaunde Terry had won
the presidency. The army con-
trols the election machinery
and favors Belaunde. In view
of pre-election reports that
the army would use its position
as constitutional arbiter of
the election to put Belaunde in
office fraudulently, the of-
ficers' claim can be taken as
a ,probably accurate forecast
of events rather than an ob-
jective report of the actual
ballot count.
tional tension stemming from
the bitter election campaign
could burst into serious vio-
lence reminiscent of the con-
flicts of the 1930s between
the army and APRA.
It was generally conceded
before the elections that APRA
would win control of congress
regardless of who was elected
president. The army indicated,
however, that Belaunde's left-
ist-supported Accion Popular
would win about 99-congressional
seats to APRA's 70,with former
dictator Manuel Odria's general-
ly conservative supporters
having about 43.
Before the elections,
leaders of the reformist, anti-
Communist APRA threatened to
call a general strike if their
candidate, the redoubtable
Victor Raul Haya de la Torre,
was thought to be the victim
of fraud. APRA controls most
of organized labor in Peru and
could easily make good on the
threat. If a strike is called,
widespread civil disturbances
are almost certain to result.
In the event that the army is
called out to assist the police
in maintaining order, the emo-
An anti-APRA coalition in
congress would force APRA into
opposition to a government of
conservative and leftist extrem- 25X1
ists, leading to serious dif-
ficulties throughout Belaunde's
six-year term.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
SOUTH VIETNAM
W11,11 OP
8,.4M Qua
(Ca
Fighting in South Vietnam
intensified during early June.
The government forces stepped
up their use of air and heli-
copter support and of naval
craft, reflecting a gradual
improvement and greater flexi-
bility, in planning and exe-
cuting operations despite the
absence of spectacular results.
Communist attacks in
the first week of June were up
substantially over the previous
S llie aaox
Communist Guerrilla Activity
+ P .. Railroad
Road
week, especially in the
Nambo area, where on 4 June
a force estimated at 400
overran a district headquar-
ters and a guard post during
simultaneous attacks on several
targets, including an agroville
(large resettlement center)
to the north of Bac Lieu. The
Viet Cong resumed harassment
of the coastal railroad, am-
bushing one train and derail-
ing another near Phan Thiet
and sabotaging a bridge
north of Quang Ngai. A num-
ber of company-size attacks
were carried out against iso-
lated villages and outposts.
Propaganda from Hanoi,
supported by a Chinese Com-
munist Foreign Ministry state-
ment on 9 June, has strongly
condemned the majority report
of the International Control
Commission, as yet unpublished,
citing North Vietnam for ag-
gression and subversion.in
South Vietnam. These pro-
nouncements argue that the
.report exceeds the commission's
competence and is invalid with-
out Polish concurrence. They
have ignored the report's
censure of South Vietnam for
-'the introduction of US materiel
and personnel. The Communists
apparently fear that the re-
port may be used to justify.
a larger US commitment in the
South and are attempting to 25X1
show that "US intervention"
is the basic cause of increased
tension.
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CURRENT INTELLIGENCE MEEKLY SUMMARY
The Adoula-Tshomb6 talks
which resumed on 22 May continue
to limp along following UN
representative Gardiner's plan
to get the two leaders to agree
to establish five joint com-
missions under a UN chairman to
settle military, monetary, eco-
nomic, transport, and political
matters. According to the plan,
agreements on the five com-
missions would be capped by a
final communique in which Tshomb6
would renounce Katanga's seces-
sion.
Since 30 May, when Adoula
and Tshombe announced agreement
on the establishment of the
first commission (military),
discussions have concentrated
on monetary affairs. The two
have agreed to set up a single
national bank of issue, but
Tshomb6 refuses to withdraw his
Katangan currency and insists
it circulate on a par with that
of the Congo.
their mandates were agreed
upon.
In his letter to Gardiner,
Ts',.homb6 questioned Adoula's
desire to reach a peaceful
settlement, charging that Adoula
had sent a request to the UN
Congo Advisory Commission ask-
ing that UN forces be ready
to intervene in Katanga should
the talks fail. The Katangan
leader accused UN officials
of trying to get Brussels and
the mining companies to stop
paying taxes to Katanga in
order to "render it powerless,"
and reminded Gardiner that he
regarded the UN's job in the
talks as restricted to good
offices only.
Adoula continues to believe
that Tshomb6, on the advice of
his Belgian advisers, is stall-
ing. Adoula is apparently con-
tent, however, claiming that
the talks "will build a good
record."
Talks were halted from 2
to 6 June as a result of a
verbal fracas between Tshomb6
and northern Katanga Baluba
leader Jason Sendwe, who is a
vice premier in the Leopoldville
government; Sendwe threatened
to have Tshomb6 arrested.
Tshomb6 on 11 June, ap-
parently to put Adoula and
Gardiner on the defensive and
to clarify his own position,
complained in a letter to the
UN representative that the
publicity given by him and U
Thant to the agreement on the
military commission was in-
correct; no agreement had yet
been given, he said, and none
could until an overall agreement
had been reached. At a reception
the next day, Tshomb6 made it
clear he would not name the
Katangan representatives to the
military commission or let it
or any other commission begin
work until all commissions and
SECRET
Adoula has begun to express
concern that Katangan extremists--
particularly Foreign Minister
Kimba and Interior Minister
Munongo--are influencing Tshomb6
and that, regardless of Tshomb6's
intentions, they will repudiate
any agreements that he might
reach. Adoula thinks some
measures should be taken--pre-
sumably by the UN--to restrain
and isolate these individuals.
Ki:mba and Munongo have made
strong public attacks on the
Leopoldville government, the
UN, and the US
UN representative Galeb
n lisabethville and other
diplomats also have expressed
fear that Munongo and Kimba will
try to sabotage any rapprochement
if not attempt to unseat Tshomb6.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
South Korea appears to be
approaching a new period of
political crisis. Security
chief Colonel Kim Chong-pills
efforts to extend his power
are generating serious strains
within the ruling junta. The
recent appointment of a Kim
supporter to command the South
Korean First Army--the combat
force facing North Korea--
threatens the balance of power
which has been maintained among
contending military factions by
junta leader Gen. Pak Chong-hui.
Kim's forays into the
economic field and ensuing
charges of corruption have
weakened confidence in the in-
tegrity of the regime. His
manipulation of the stock market
reportedly has netted him over
$7,500,000 to help finance his
security and political activities.
Prime Minister Song Yo-chan is
threatening to resign--although
agreeing to stay on until the
situation quiets down--unless
Kim's economic activities are
curbed. Song believes that he,
not Kim, will be the one sacri-
ficed in the final showdown.
The barring from political
activity of most former civilian
leaders, some of whom retain
strong local ties, has increased
bitterness among the politicians.
rumors of antigovernment
plots reflect growing and more
active opposition to the regime.
The security forces have been
placed on an emergency alert
against subversive actions.
The small but emotionally
charged student demonstrations
which broke out in Seoul on
KOREA
6 June protesting the mistreat-
ment of Koreans by US military
personnel appear to have had
tacit official approval. The
students' intentions were known,
and the regime probably saw an
opportunity to bolster its claim
that it was under increasing
public pressure to secure a
status-of-forces agreement.
3t soon became apparent, how-
ever, that student dislike of
the regime was also a factor
behind the disorders. The gov-
ernment firmly but cautiously
brought them to an end by 10
June after they had spread to
Taegu, South Korea's third
largest city.
A currency conversion ini-
tiated on 10 June--apparently
intended as a device to confis-
cate almost $100,000,000 from
large private and corporate
holdings--is probably the regime's
final settlement with business-
men and politicians who accumu-
lated illegal wealth during the
Sy:ngman Rhee and Chang Myon
administrations. General Pak
has explained that the govern-
ment will use most of the funds
fo:r industrial development. The
measure Is likely to depress
economic activity, however,
and may be followed by the
nationalization of important
industrial and commercial enter-
prises.
General Pak has so far
given no indication of uncer-
tainty and is probably confident
he can control the situation.
However, attempts by opponents
of the regime to exploit the
unrest could lead to a crisis,
particularly if some senior
military leaders feel their
position is challenged and
attempt a coup.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Since the Soviet 22nd
party congress last fall, Bul-
garian party First Secretary
Todor Zhivkov, at the urging
of Khrushchev, has been at-
tempting to revamp--particularly
through de-Stalinization--
one of the most conservative
Communist parties in the
"socialist camp." His efforts
have been thwarted by the power-
ful Stalinist faction in the
party. One of the main pur-
poses of Khrushchev's 14-20
May visit to Bulgaria was to
instill new vigor and direction
in Zhivkov's faltering campaign.
Although Zhivkov has made
some progress in de-Stalinizing
the Bulgarian regime, the re-
sults are inconclusive. He
was able last November to oust
from positions of power one-time
hard-line party boss Vulko
Chervenkov and has made him
the primary scapegoat for such
de-Stalinizing as has been
carried out. Despite Zhivkov's
efforts? however, many members
of the party central committee
reportedly still admire and
respect Chervenkov and regret
the loss of his talents. Other
sources have reported that the
Bulgarian people regard the
anti-Chervenkov campaign cyni-
cally, considering present-day
leaders equally tarred with the
Stalinist brush.
has argued in the Bulgarian
Writers' Union that "Stalinist
norms" must be abandoned, but
has ignored vociferous demands
from the members that the
culture bosses of the past be
ousted.
The reason for Zhivkov's
difficulties is that a majority
of the present district and
central party leadership
supported Chervenkov and find
the concept of de-Stalinization
completely foreign to their
out:Look.
Opposition to Zhivkov has
been and is particularly strong
in the politburo.
The most notorious Stalinist
after Chervenkov, Georgi
Tsankov, was ousted as minister
of interior in March but--in-
dicative of the caution with
which Zhivkov is moving--re-
tains his membership on the
party politburo. The regime
e as
nera y een una e to muster 25X1
a majority in this body for any
of his de-Stalinization measures.
As a. result he has had to turn
to the central committee to
push through his programs.
He has even had to expand
central committee meetings to
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CURRENT INTELLIGENCE YI-EEKLY SUMMARY
include district party secre-
taries to tip the balance in
his favor.
support among the local party
leaders, as a whole they remain
Stalinist oriented. Khrushchev's
visit has probably ensured that
they will not actively oppose 25X1
Zh:Lvkov at the eighthBulgarian
party congress scheduled for
late August.
The reform of the Bul-
garian party will probably
come about only over a long
period. To resolve the con-
flicting views of groups within
the party, to loosen the
rein on culture and arts, and
to effect closer party rela-
tions with the nonparty popu-
lation will require lengthy
re-education of party members.
Although Zhivkov has been
slowly building up personal
PROSPECTS FOR AZORES BASE RIGHTS NEGOTIATIONS
Continuing adverse press
criticism of US policies and an
increasingly negative attitude
by high Portuguese officials
indicate that Lisbon is build-
ing up a tough bargaining posi-
tion for renegotiation of the
Azores base rights agreement,
which expires on 31 December.
The predilection of the top
military echelon for continued
military cooperation with the
US will probably obviate any
move to force the US out of
the islands, but Lisbon may
decide it can exert leverage on
Washington's African policies
by agreeing at this time to
only a one-year extension.
The existing agreement--
which gives the US use of the
Azores military base, including
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Lajes and Santa Maria airfields
--was signed in September 1951,
extended for a year in late
1956, and renewed for a five-
year period with some minor
changes in November 1957. Al-
though the US makes no direct
payment for the use of the
base, it has spent approxi-
mately $100 million in develop-
ing it, in addition to about
$300 million in military assist-
ance programs to Portugal since
1950.
While Portuguese officials
have been bitterly outspoken
since early 1961 against US
refusal to condone Lisbon's
African policies, it is only
in recent weeks that the threat
of terminating the base agree-
ment has been explicitly raised.
Prime Minister Salazar told an
American newspaperman on 17
May that he could not agree
to a renewal, as the Portuguese
people would fail to under-
stand it in view of the "suc-
cessive attacks" by the US
on Portugal.
While the Belgian NATO
representative, who spent
several hours with Salazar on
2 June, believes a firm deci-
sion has not yet been reached,
he has the impression that
Salazar might decide not to
renew. It is unlikely, however,
that Salazar will be able to
reject the advice of his mili-
tary authorities. The Portu-
guese Army chief of staff told
General Norstad late last
month that he believes "cur-
rent problems" with the US
will not prevent a satisfac-
tory renegotiation, and the
American Embassy in Lisbon
reports that the great majority
of the military leaders "cannot
conceive of a possible refusal
to renew."
The regime's stiffening
attitude may reflect puzzle-
ment over US intentions. For-
eign Minister Nogueira has
stated that it is up to the
US to make a "formal request"
to renegotiate. The regime
probably expects this topic
to be raised during Secretary
Rusk's 27-28 June visit to
Lisbon.
Nogueira indicated the
political quid pro quo he has
in mind when he told a Swedish
journalist on 22 April that
Lisbon would "very probably"
present new terms, including
a US guarantee for a "more posi-
tive attitude toward our prob-
lems... in effect, moral sup-
port for our legitimate claims."
Presumably he envisages de-
manding official US statements
favorable to Lisbon's over-
seas policy and public assur-
ances that the US will not
support rebel movements.
Lisbon will probably also ask
for significant financial as-
sistance, and possibly for
some military equipment.
The Portuguese are well aware
that the Azores base is the only
"t:rump card" in their dealings
with the US, and they will at- 25X1
tempt to use it to secure maxi-
mum concessions during the rights
renegotiations.
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CURRENT INTELLIGENCE 'WEEKLY SUMMARY
The Franco regime, in con-
trast to the unusual moderation
with which it handled Spain's
two-month strike wave, has dealt
promptly and repressively with
opposition political leaders
for their activities at a recent
nongovernmental conference on
European integration in Munich,
Conservative and other leaders
from Spain united there with a
number of long-time Spanish
exiles in pressing a resolution
to the effect that Spain must
liberalize its political struc-
ture to qualify for the Common
Market. The regime nevertheless
seems to recognize that the
political climate is changing.
It will probably be faced with
increasingly insistent demands
tor liberalization, particularly
from labor.
The Munich resolution was
backed unanimously by the 118
Spanish delegates, a third of
whom were exiles. This seems
to have generated renewed enthu-
siasm and created new ties be-
tween exiles and domestic op-
positionists. A major factor
may be the important role report-
edly taken by the younger members
of the group from Spain in
facilitating agreement. Lack of
effective ties among opposition
groups has been a serious draw-
back in the past and was one of
the reasons they were unable to
capitalize effectively on the
recent strike.
No immediate results, how-
ever, are to be expected from
the Munich resolution, in view of
the prompt governmental measures
to exile or isolate prominent op-
position spokesmen. Joaquin
Satrustegui, leader of the mon-
archist Union Espanol, and two
monarchist colleagues` have been
sent to the Canary Islands, Right-
wtng Christian Democrat Jose Maria
GiLl Robles and Jesus Prados
Arrate, member of the social demo-
cratic Accion Democratica, have
chosen exile.
While the energetic govern-
ment action gives an impression
of decisiveness, it is also a
sign of weakness, indicating the
regime's difficulties in adapting
to new political and economic
situations. By attempting to
demonstrate firm control in this
instance, it may hope to make
clear to labor that there is a
limit to laxity beyond which the
regime will not be pushed, regard-
less of foreign reaction.
Nevertheless, labor may be
Franco's greatest problem. The
government-sponsored syndicates
have been discredited as repre-
sentatives of workers' rights,
and the extent of this vacuum be-
came increasingly apparent as
the strike wave spread. Advocates
of direct action, particularly
among the younger members of the
opposition, may be encouraged to
develop more forceful means to
assert labor's rights.
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CURRENT INTELLIGENCE 'WEEKLY SUMMARY
Public confidence in the
Goulart regime, which rose
steadily during the early months
of this year, has again fallen
off. One important factor is
the expectation of a new cabinet.
Congressional and gubernatorial
elections are scheduled for 7
October, and ministers who run
must resign their cabinet posts
by 7 July. Prime Minister
Tancredo Neves, who is among
those doing so, has tended to
support President Goulart rather
than compete with him, but Neves'
successor may seek to utilize
more fully the powers his office
was given by the constitutional
amendment of September 1961,
through which Brazil adopted a
parliamentary form of government.
In the Sao Paulo guber-
natorial race, former President
Janio Quadros has improved his
standing and now may be running
abreast of ex-Governor Adhemar
de Barros and a less widely
known protege of the incumbent
governor. In the key north-
eastern state of Pernambuco,
pro-Communist Miguel Arraes
appears to be the early favor-
ite, as his opposition tries
to agree on a attractive candi-
date. Goulart's brother-in-law
Leonel Brizola, governor of
Rio Grande do Sul, has lost
popularity in his home state,
but on 22 May he opened a cam-
paign for deputy from the
state of Guanabara--which in-
cludes the city of Rio de
Janeiro--in a speech violently
attacking the United States,
North Americans, and the Alliance
for Progress.
Both Arraes and Brizola
may face legal impediments to
their candidacies, however, be-
cause of a constitutional pro-
vision barring from the guber-
natorial and congressional
traces persons closely related
to an incumbent state or federal
chief executive. Arraes is the
brother-in-law of Governor
Sainpaio of Pernambuco, although
Arrraes' wife now is dead, and
Br:izola's wife is President
Goulart's sister.
There also are indications
of instability in the economy.
There is a shortage of prime
staples--beans and rice--in most
major cities except in the
three southernmost states, and
this shortage is accentuated
by hoarding. In the north and
northeast, there have been
floods in some areas, while
drought prevails elsewhere. The
foreign exchange rate has fallen
about 12 percent since early
May.
Spreading rural unrest was
indicated by the killing of eight
people in a clash between rural
workers and police in late May
in Maranhao, a previousl eace-
ful. northeastern state.,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
COLOMBIA
Guillermo Valencia, who
is scheduled to visit the US
in late June, was elected Presi-
dent on 6 May as the candidate
of the National Front coalition
of moderate Liberals and Con-
servatives which has provided
Colombia with constitutional
rule and political stability
since the overthrow of dictator
Rojas Pinilla in 1957. Although
he has not yet announced cabinet
appointments or issued any major
policy statements, Valencia is
committed to the strongly pro-
Western policies of President
Lleras Camargo's administration.
Colombia's firmly anti-
Castro position and its enthu-
siastic support of the Alliance
for Progress are almost cer-
tain to continue after Valencia
assumes office on 7 August. Op-
position parties and dissident
factions within both the Liber-
al and Conservative parties
have shown signs of internal
weakening since the presidential
election and lack the force to
obstruct government programs.
There is, however, widespread
concern in Colombia as to Valen-
cia's executive ability.
The incoming administra-
tion will face difficult eco-
nomic problems, including a
balance-of-payments deficit
that may reach $130 million in
1962, according to official
Colombian estimates. The severe
payments problem is due primarily
to a sharp rise in imports and
the persistent decline- in the
world coffee market, the chief
source of Colombia's foreign
exchange earnings. According
to the minister of finance,
Colombia has lost over $400
million in the last four years
because of the unfavorable
coffee situation.
A high-level Colombian
economic commission has been
seeking import refinancing from
private European banks to cover
the deficit in commercial bal-
ances with European exporters
--primarily West German. To
alleviate the deteriorating
coffee situation, the govern-
ment is attempting to obtain
support for a new international
agreement on coffee prices to
stabilize the world market. In
addition, Colombia is seeking
a permanent quota in the US
sugar market.
The chronic rural violence
that has plagued Colombia since
1948 and caused more than 250,-
000 deaths has increased in
recent weeks with over 200 deaths
each month. Government security
forces appear incapable of sup-
pressing the violence in the near
future. Communist influence
among the bandit groups appears
to be largely confined to two
small communities, but there
is a potential danger that the
Communists will attempt to
organize the insurgents into
a coordinated guerrilla force.
The government is con-
cerned over the recent increase
in leftist agitation--particular-
ly among students--and the ris-
ing number of civil strikes,
largely protesting inadequate
public services. Numerous
large-scale student demonstra-
tions--generally anti-government
in nature--have occurred through-
out Colombia in the past several
weeks. While the Communists do
not have the capability of
seizing power on a national
scale in the forseeable future,
they are likely to continue
attempts to foment disorder.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
NORTH VIETNAM'S AID DIPLOMACY IN AFRICA
The North Vietnamese have
set up a foreign aid program in
Guinea that they hope will be a
prototype for projects else-
where in Africa. They are pay-
ing particular attention to
former French colonies, fre-
quently pointing out that they
all share a common bond of ex-
perience in the struggle for
independence from France. Ex-
ploitation of this theme has
produced some results: Guinea,
Mali, and Senegal have extended
recognition to Hanoi.
Hanoi radio announced on
5 June that specialists in trans-
portation and communication are
being sent to Guinea to help
build roads and bridges and
organize transport. A group of
doctors and teachers was sent
earlier under a cultural agree-
ment signed in 1961.
The teachers sent by Hanoi
have concentrated on teacher
training. Eight of the instruc-
tors on the staff of the Ecole
Normale Secondaire, which trains
teachers for the first three
years of secondary schools, are
North Vietnamese. These teach-
ers submitted a thoroughly
Marxist curriculum for the
school, which included such
topics as "Fundamental Princi-
ples of Socialist Education" 25X1
and "Marxist-Leninist Theory of
Knowledge as the Basis of the
Process of Education."
Unable to compete with more
affluent nations in terms of im-
pact construction projects for
economically underdeveloped
areas, Hanoi is counting on
its own approach to support its
bids for wider international
recognition and increased in-
fluence among former French
colonies. It probably does not
expect quick results. Since
last December's blowup over
the actions of the Soviet am-
bassador in Guinea, Conakry
has been giving closer scrutiny
to all bloc activities in the
country. Mali has not yet
responded to a North Vietnam-
ese offer last year to help in
the fields of public health and
education. Morocco has failed
to give a favorable reply to
North Vietnamese approaches for
recognition.
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Soviet military doctrine
as described by Defense Minister
Malinovsky and other writers in
the Soviet press last month
holds that the next world war
will be a rocket-nuclear war
and that targets for attack will
include centers deep in the
enemy rear. These writers as-
sert that the USSR, because of
its size and economic structure,
is less vulnerable than the
capitalist countries and thus
holds a strategic advantage.
Soviet doctrine also states
that ultimate and decisive
victory over the "imperialist
aggressors" can be attained
only as a result of joint, well-
coordinated, and decisive ac-
tion of all the armed forces
and services. In short, say
Soviet military writers, "rocket-
nuclear war will be conducted
by massive, multimillion-man
armies." The latter concept
applies most directly to the
European theater and is reflected
in the type of training and
force structure of Soviet units
from East Germany to the Urals.
The Initial Exchange
Because of the overriding
importance of surprise in a nu-
clear attack, the Soviets ap-
parently believe that war would
come with very little warning
or last-minute buildup of forc-
es. They foresee that its
initial phase would include an
intercontinental exchange by the
opposing strategic nuclear forc-
es, and they recognize the dis-
ruption that would be caused
in the USSR. In the European
theater, the targets of highest
priority for Soviet medium-
range missiles and medium bomb-
ers would be NATO strategic
rocket and air bases and nuclear,
stockpiles. The Soviets would
thus hope to minimize the weight
of the nuclear attack the West
could launch on their own homeland.
Their strikes would also pre-
pare the way for a rapid ad-
vance by Soviet theater forces
into western Europe.
Zones of Operation
In World War II the Soviets
operated from eight to ten
"fronts"--the nearest US equiv-
alent is the field army--on a
line stretching from the Black
Sea to the Baltic. In a war
against NATO it is likely that
only about five would be used,
because of the anticipated
short duration of the campaign
and the necessity for dispersal
because of the West's weapons
of mass destruction. The
operational zones for the
fronts probably would be
Scandinavia, the North European
Plain, Austria and Italy, Euro-
pean Turkey and Greece, and
Asiatic Turkey and Iran.
The Soviet front of World
War II utilized.30-35 divisions,
whereas present concepts appear
to call for about 20-25 divisions
in a major frontal operation,
about a third of which would be
tank divisions. The new divi-
sions are far more mobile and
have tremendously increased
firepower over their counterparts
of the last war. As a result
the Soviets hope to achieve
speeds of advance sufficient
to allow them to destroy all
but remnants of the opposing
forces within the first few
weeks of the war.
Soviet military writers ex-
press the belief that World War
III, insofar as it pertains to
the ground forces,would be a war
of rapid maneuver. There would
be no stability of front lines,
and adjacent large units might
not even be able to maintain
contact. Thus the fronts in
Western Europe would operate
more or less independently of
each other.
The Soviets would count
heavily on formations now in
the border and immediately
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CURRENT INTELLIGENCE WEEKLY SUMMARY
adjacent
military districts
for the
ground attack;
there
about
95
divisions in
these
areas.
Units from the
North
Caucasus, Transcaucasus, and
Turkestan Military Districts
would logically comprise the
forces advancing into the Near
East. Units from the Odessa
and Kiev Military Districts
would advance through Rumania
and Bulgaria and possibly to-
ward Austria and Italy; troops
from the Carpathian Military
District might also be used in
the latter operation in conjunc-
tion with the USSR's Southern
Group of Forces in Hungary.
Units from the Belorussian, Bal-
tic, Carpathian, and Moscow
Military Districts would move
to link up with the Group of
Soviet Forces in Germany for
the major battle of the cam-
paign in Central Europe. An
attack on Scandinavia would in-
volve Leningrad and possibly
Moscow Military District troops.
The Warsaw Pact command
post exercise of October 1961
included as a major feature the
movement of elements from
several western border military
districts into Poland and
Czechoslovakia. Additional
exercises of this type are
expected as the Soviets attempt
to decrease the time needed for
a rapid reinforcement of the
forward areas.
The Follow-up
A tactical air army of some
400 fighters, fighter-bombers,
and light bombers and possibly
a unit of cruise missiles would
be subordinate to each of the
major fronts. Each front also
would have one or two brigades
of SS-2 350-nautical mile sur-
face-to-surface missiles
(perhaps 12 launchers). A
brigade of perhaps six launchers
for the 150-n.m. Scud missile
would be attached to each of
the several armies subordinated
to a front, and each division
would have two launchers for
free rockets with ranges of
11-26 n.m.
The Soviets expect to count
heavily on chemical missiles,
are
and they may expect to use con-
ventional explosives for some
of their shorter range missiles.
Possibly one third to one half
of the surface-to-surface missiles
available to a front would use
nuclear warheads.
During the initial stages
of a war, doctrine calls for a
pre-offensive preparatory
strike by front and army units
using nuclear weapons against
targets in the enemy rear to a
depth of the expected offensive
operation. This would be as
much as several hundred miles,
and targets would be enemy tactical
missile and tactical air bases,
tactical nuclear stockpiles,
major troop formations in the
enemy rear, ammunition dumps,
critical communications centers,
and POL dumps.
The initiation of the ground
attack would be accompanied by
nuclear and chemical strikes
by army and division-level mis-
sile units; their primary ob-
jectives would be enemy front-
line troop concentrations, enemy
nuclear support means, and
transportation bottlenecks.
An analysis of the number
of nuclear delivery vehicles
available to the Soviet front
leads to the conclusion that
perhaps 200-300 nuclear weapons
would be expended in a frontal
operation, with most being de-
livered in the first few days
of the attack and the remainder
held in reserve. The Soviets
evidently expect the first
strikes to destroy over half
of the opposing troops.
The Soviets hope to advance
rapidly to destroy remaining
enemy divisions and have spent
a considerable amount of train-
ing in river-crossing techniques
and rapid movement, including
movement through contaminated
areas. Depending on the situa-
tion and terrain, medium and
heavy tank formations would
lead the attack and be backed
by infantry units with strong
artillery support. Paratroop
divisions, of which there are
six in the European USSR, would
be dropped in appropriate
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.SECKL1 '
Probable Soviet Offensives in World War III
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strategic areas of the enemy rear.
Tactical aviation would provide
nuclear and non-nuclear support
and,together with surface-to-air
missile battalions, provide protec-
tion for the Soviet troops.
Where the front had a seaward
flank, units of the Soviet Navy
would provide missile and gun-
fire support.
Soviet military leaders ap-
parently anticipate huge losses
in their tactical formations in
such a battle,and this probably
is one reason for the stress on
mass armies in recent writings by
military theorists. It may also
be in this context that the in-
tegration of Warsaw Pact forces
is being given new emphasis -
two regiona com-
mands in the satellites. One is
said to involve Hungary, Rumania,
and Bulgaria, and the other East Gex'-
many, Poland, and Czechoslovakia.
It has not yet become clear
precisely how the Soviets expect
to use the satellite armies.
There is no firm evidence that
any satellite is to receive
either nuclear weapons or sur-
face-to-surface missiles. Con-
tinued unwillingness to give
them a nuclear attack capability
probably is a complicating fac-
tor, and it is difficult to see
hove large satellite formations
could be used without organic
nuclear support. It is possible
that satellite divisions would
be individually subordinated to
larger Soviet units and therefore
have army and front nuclear sup-
port.
It is also possible that 25X1
the satellite armies will have
a more limited mission.
t e mission
of East German border and infan-
try units would be to defend 25X1
against a NATO attack--with a
Soviet army on the right flank
and a Czech on the left--until
a counterattack could be pre-
pared. The 7th Tank Division
of East Germany would lead the
counterattack across the Rhine.
The Soviet army would link up
on the opposite bank and conduct
the offensive from there.
If this version is correct,
it is reasonable to assume that
the satellite armies, as well as
Soviet forces now in the satel-
lites, would bear the brunt of
the fighting--and the casualties--
in the initial stages of the
ground war and would be replaced
by troops arriving from the USSR
who would then drive westward
to capture Western Europe. -
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THE BLOC AND CUBA'S ECONOMIC PROBLEMS
Three and half years of
revolutionary upheaval in Cuba,
accompanied by gross mismanage-
ment, the break in trade with
the United States, and the meas-
ures taken to reorient the Cuban
economy toward the Sino-Soviet
bloc, have led to a general de-
cline. Cuba now is experiencing
consumer shortages typical of
Communist-dominated countries,
and the population has been told
by its leaders that sacrifice
will be necessary for the indefi-
nite future. Even though con-
siderable advice has been pro-
vided by bloc experts, the Cuban
leadership so far has proved it-
self incapable of directing a
centrally planned economy.
Cuban officials are frank in
acknowledging difficulties,
but retain their optimism for
the success of their plans and
appear confident of continued
bloc support.
While some bloc leaders
doubtless have serious reser-
vations over the course of
events in Cuba, particularly
the development of Castro's
self-styled brand of Communism,
Moscow has made a strenuous ef-
fort--aided to some extent by its
European satellites and Communist
China--to help overcome Cuba's
mounting economic difficulties.
Despite problems of distance,
an unfamiliar Latin American en-
vironment, and heavy Cuban re-
quirements, the bloc appears
willing to accept the burden
of supporting Cuba during its
transition from a Western to
a Communist-style, planned
economy. Prospects for Cuba's
development for the immediate
future are by no means bright.
However, Moscow's willingness
to commit its resources and
prestige to back the plans of
the Cuban regime indicates that
the bloc effort is geared for
the long run in the hope that
Cuba can be made economically
viable, and thus give impetus
to the Communist movement in the
western hemisphere.
Shortages
The most pressing problem
now facing Cuba is the severe
shortage of consumer goods, and
of raw materials to sustain even
the present reduced level of
industrial activity. The gravity
of this problem has often been
overstated in refugee accounts,
but the cumulative effects of
agricultural failures, poor
management, and disruption of
previous trade and distribution
patterns are clearly evident.
Per capita caloric food
consumption in Cuba is estimated
to have declined by more than
15 percent in the last two years.
To cope with growing food
shortages, a rationing plan
was introduced in mid-March
which covers most staple food
items and continues the ration-
ing of fats and meats in effect
since last year. Under this
plan,, which immediately became
snarled in administrative prob-
lems and probably aggravated
the situation, per capita food
consumption in Cuba is estimated
to halve dropped from third to
seventh highest in Latin America.
The food shortage in Cuba
is attributable to a variety
of factors, including indiscrim-
inate livestock slaughtering,
government mismanagement of
agriculture, lack of material
incentives for the labor force,
and, recently, the worst drought
in many years. In addition, on
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the basis of overly optimistic
domestic production targets,
imports of foodstuffs were
reduced substantially during
the first three years of the
regime. As a result, food im-
ports in 1961 were estimated
at about two thirds the 1958
level.
Similar problems have
arisen in connection with sup-
plies of other goods once readily
available from the US. Raw ma-
terial shortages, which were
acute during part of 1961 and
which forced shutdowns at some
plants, have been relieved some-
what by increased deliveries
from the bloc, but quality
control, poor execution of
plans, and transportation dif-
ficulties remain continuing prob-
lems. Such difficulties are
chronic within the bloc and are
likely to be a permanent feature
of the Cuban economy.
Poor Sugar Crop
Increased exports of Cuban
sugar to finance necessary im-
ports normally would compensate
for the failure to produce suf-
ficient food and consumer goods.
However, because of the prob-
lems plaguing agriculture in
general, the 1962 sugar harvest
is expected to yield between 4.8
and 5.0 million metric tons of
raw sugar, about 17 percent less
than the average of the last five
years and far below the 1961 bump-
er crop of some 6.8 million tons.
After allowance is made for
domestic consumption and carry-
over stocks, not more than 5.7
million tons will be available
for export in 1962. Actual ex-
ports in 1961 totaled about 6.4
million tons.
As sugar accounts for some
80 percent of Cuba's export
earnings, such a reduction in
sales could result in further
severe complications for the
economy. Initially it appeared
that Cuba's reaction to the
poor crop would be a sharp cut-
back in sugar exports to the
bloc and an attempt to maximize
convertible currency earnings
from, sales to the West. Havana's
announcement early this year
of its intention to suspend sugar
sales temporarily, and its at-
tempt in the meantime to secure
bloc cooperation in bolstering
the sagging price of sugar, ap-
peared aimed in the same direc-
tion.
Now it appears that the
cutback in sales to the bloc
will be relatively minor. Sales
to nonbloc customers probably
will decline to below 1 million
tons, and the reduction in con-
vertible currency earnings will
further limit Cuba's ability
to procure supplies in the West.
Industrial Activity
While grandiose plans for
Cuba's future economic develop-
ment based on bloc aid are
slowly pressed forward, the
island's industrial establish-
ment has undergone a gradual
but general deterioration. A
comp:Lete collapse of industry
is by no means imminent, how-
ever, and the rate and type
of deterioration vary consider-
ably from one industry to another.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
In certain priority fields, such
as petroleum refining and nickel
processing, production has been
maintained at fairly high levels.
In industries producing for
civilian consumption, both
volume and quality have declined
substantially during the past
two and a half years.
Because nearly all Cuban
industrial equipment is of US
origin, procurement of replacement
parts in the face of the US em-
bargo probably is the primary
industrial problem in Cuba today.
Some equipment has been patched
up, other equipment has been
cannibalized, bloc equipment
has been substituted for worn-
out components, and other coun-
tries have been canvassed for
badly needed items. The flight
of qualified Cuban technicians
and irregularities in supplies
of raw materials from the bloc
have hastened the industrial
decline.
The bloc's response to
Havana's growing economic
troubles was not immediate and
probably involved prolonged de-
liberation over the wisdom of
subsidizing an economy in which
conditions are probably no worse
than those in much of Eastern
Europe and far better than in
the Communist Far East. Recent
Soviet moves in support of Cuba,
however, strongly suggest that
Moscow has decided a sustained
drive to overcome the deficien-
cies in the Cuban economy is
necessary to avert a major crisis
for the Castro regime.
Under a supplementary
trade protocol signed in Moscow
on 14 May, Soviet export
commitments to Cuba apparently
have been increased by about
$50,000,000 over the level
agreed to in the 1962 trade pact
concluded only last January.
The new protocol includes addi-
tional Soviet exports this year
of more than 5,000 trucks, 850
tractors, and an oil tanker.
Large quantities of Soviet in-
dustrial raw materials and food-
stuffs--including beans, pota-
toes, grains, flour, meat, milk,
and baby food--are scheduled for
delivery to help remedy Cuban
shortages. Similar trade proto-
cols boosting exports to Cuba
have been or will be signed
with most of the European satel-
lites.
The adjustments made in
these agreements afford Cuba
a measure of the balance-of-
payments relief it needs to
help overcome its economic
difficulties. While financial
terms are unclear, the agree-
ments evidently involve no in-
crease in Cuba's export commit-
ments or any cutbacks in ship-
ments of bloc industrial goods.
Presumably Cuba will be allowed
to run a deficit in this year's
trade with the bloc.
While stopgap measures
are employed to help check
the deterioration in industry,
plans for re-equipping the
island with new capital
equipment from the bloc con-
tinue to be expanded. Recent
announcements in connec-
tion with Soviet aid programs
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for producing tools, containers,
light bulbs, pencils, and other
light industrial products have
already gone into operation.
Contracts have been signed with
the satellites in recent months
for a variety of larger projects
such as shipyards, power stations,
cement plants, and textile mills,
but construction in most cases
is not slated to begin for a
year or more.
strongly suggest that the
USSR has extended another
$100,000,000 credit to Cuba.
Although terms are still
unclear, it may be a five-year
commercial-type credit similar
to one of the same size extended
last year for Cuba's nickel
industry. Such new aid would
bring total bloc commitments
for Cuba's industrial develop-
ment to at least $457,000,000,
including the initial long-term
credit of $100,000,000 provided
by the USSR in February 1960.
Under the Soviet program
some 20 separate industrial
projects are to be undertaken
in Cuba, including construction
of a large new steel plant and
expansion of three existing ones
and construction of a petroleum
refinery, two thermal electric
power plants, a file factory,
a tool factory, nickel plants,
and a machinery and spare parts
plant. Planning on many of
these projects is well under
way, and equipment has begun to
arrive for-the first installa-
tions. Partly as a result of
the stress on solving more im-
mediate economic problems, but
also because of the time re-
quired for the type of heavy
industrial construction envisaged
in the Soviet program, most of
these projects are not scheduled
for completion until 1965 or
later.
A similar lag will occur
in implementation of Cuban aid
agreements with the satellites,
but these programs generally
have moved forward more rapidly.
Initial emphasis has been on
small-scale plants to help re-
duce Cuba's dependence on im-
ported consumer goods. Plants
SOO
Foreign Trade
The sweeping changes
brought about in the Cuban
economy under Castro are most
evident in direction, compo-
sition, and level of foreign
trade. In 1958, the year be-
fore Castro came to power,
Cuba's exports brought in
$765,000,000 in convertible
Western currencies; in 1961
Cuba's export earnings had
declined to an estimated $640,-
000,000, nearly three fourths
of which was tied up in barter
arrangements with the bloc.
As a result of this year's
poor sugar crop, 1962 earnings
are likely to be about $50,-
000,000 less.
Similarly, total Cuban
imports dropped from $880,000,-
000 in 1958 to about $565,000,-
000 in 1961, reflecting both
the decline in export earnings
and the drastically curtailed
purchases of consumer goods.
formerly imported, primarily
from the United States. An
increasing share of total im-
ports has been taken up by in-
dustrial raw materials. While
purchases of food and consumer
goods may have a higher priority
this year, they are unlikely
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CURRENT INTELLIGENCE WEEKLY SUMMARY
to assume their former im-
portance in Cuba's overall
trade.
Cuba's trade with the
bloc this year is scheduled to
rise to well over $1 billion,
compared with about $850,000,000
in 1961 and only $265,000,000
in 1960. Trade with the USSR
is to increase from about
$550,000,000 in 1961 to
$750,000,000, making Cuba
Moscow's fifth-ranking world
trading partner, following
East Germany, Czechoslovakia,
Poland, and Communist China.
Havana's trade with nonbloc
countries probably will decline
to well below the $250,000,000
recorded last year.
Relations With the Bloc
Their complaints in the economic
field range from Cuban inability
or unwillingness to master basic
"socialist" concepts to Havana's
failure to recognize the burden
the Cuban economy imposes on the
bloc. Such statements probably
are accurate reflections of
views held by many bloc offi-
cials who distrust the relia-
bility of the Cuban leadership
--no matter how loudly it pro-
fesses its adherence to Commu-
nism--and who question extensive
aid commitments to a country
not a member of the "socialist
camp."
Moscow shows no sign of retreat-
ing from its decision to grant
Cuba special economic treatment.
On the contrary, the revised
1962 Soviet-Cuban trade agree-
merit suggests that even greater
efforts are to be made this year
in shoring up the Cuban economy.
Other innovations or concessions
--such as payments of hard cur-
rency for 20 percent of Soviet
sugar imports, limited multi-
lateral trade-and-payments
agreements, banking credits to
finance Cuban imports from non-
bloc areas, and Soviet willing-
ness to accept the heavy trans-
portation burden involved in
providing support to Cuba--all
testify to Moscow's conviction
that its efforts to produce an
economically viable Cuba are
worthwhile. Although there
obviously are limits to this
support, the USSR is unlikely
to be deterred in its efforts
by deficiencies which it be-
lieves can be corrected as
Cuba is brought further along
the path of Communist economic
development.
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