CURRENT INTELLIGENCE WEEKLY SUMMARY

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SECRET
(CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
COPY N0. ~3
OCI N0. 0402/62
2 F~bru~.ry 1962
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
SECRET
State Dept., OSD, & DIA review(s) completed.
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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 Summary has been prepared
primarily 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
immediate appraisal of the Office of Current Intelligence.
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 OSD REVIEW COMPLETED
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ument Denied
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sECRET
At the 29 January session
of the nuclear test ban talks
in Geneva, the chief Soviet
delegate, S. K. Tsarapkin, pro-
voked a dispute over the ques-
tion of recessing the conference
and alleged that the US was
seeking to conceal its refusal
to continue negotiations. He
refused to accept a communique
to the effect that the confer-
ence would recess until a com-
mon basis could be found for
re-establishing negotiations.
Tsarapkin charged the West with
wrecking the conference and
made no effort to arrange future
meetings. Although there was
no formal statement that the
conference had ended, Tsarapkin
made it clear that there would
be no further meetings.
Three days earlier the
USSR had abandoned its former
position and rejected the US-UK
proposal to merge the test ban
negotiations with the broader
disarmament negotiations sched-
uled to begin in Geneva on 14
March. Although Moscow had
previously urged that the test
ban question be solved "inter-
dependently" with general and
complete disarmament, at the
26 January session Tsarapkin
read a government statement
which insisted on continuing
the tripartite talks to negoti-
ate on the basis of the Soviet
proposal for the test ban with-
out any international controls.
The Soviet statement charged
that the Western merger proposal
was aimed at distracting the
attention of the 18-nation
committee from its main task--
"to work out an agreement for
general and complete disarma-
ment"--as well as avoiding the
solution of the problem of end-
ing nuclear weapons tests. The
statement reaffirmed that "the
final solution" of the test ban
question could be found "only in
the conditions of the implementa-
tion of general and complete
disarmament."
The Soviet withdrawal from
the talks is probably aimed at
creating a political justifica-
tion for resuming Soviet tests
in the future ar~.~'. blaming the
US for the failures to reach any
agreement. It could also be
meant as a warning to neutrals
determined to find some area of
agreement at the March disarma-
ment talks that the USSR--until
general and complete disarmament
is an accomplished fact--is un-
alterably opposed to effective
international inspection in the
USSR, and that the neutrals' hope
lies in persuading the West to
accept something less.. The
Soviet press and radio promptly
initiated a campaign charging
the US and UK with breaking off
the talks and denouncing them
as "opponents of a test ban and
exponents of the arms race." An
Izvestia article claimed that
"the a ligerent American atom-
mongers have unmasked themselves
and rudely defied the aspirations
of all the peoples" for a test
ban. Izvestia also asserted
that un er~t~e Kennedy administra-
tion, "the situation at the talks,
far from improving, has further
deteriorated through the fault
of the Western side."
The USSR now may seek for-
mal UN approval of its proposal
for a ban on atmospheric, outer
space, and underwater tests,
using national detection means
for control purposes, with a
moratorium on underground tests.
Soviet leaders may believe that
the end of the Geneva talks will
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CURRENT INTELLIGENCE WEEKLY SUMMARY
lead to a resumption of US tests
in the atmosphere which could
be used as a further pretext
for the USSR to claim that it
had no choice but to continue
with its own nuclear testing.
Moscow is giving heavy play to
Western press reports on prepara-
tions for US atmospheric tests
at Christmas Island. Since the
US5R com_~~eted its series of
tests last fall, the Soviet
government has frequently warned
that US underground tests and
plans for atmospheric tests
leave the USSR free to resume
testing in the interests of its
security. Its statement on 26
January reiterated such warnings.
Berlin and Germany
In .the first direct Soviet
press comme~it on the current US-
Soviet talks in Moscow on the
Berlin question, a 25 January
Izvestia article by Polyanov
en~ounced attempts to create
a distorted idea of the purpose
of the talks. Noting that "pro-
nouncemQnts" on the US-Soviet
exchange are "leaking" into the
Western press and suggesting
that they are officially in-
spired, Izvestia argued that it
is "dangerous" to present the
talks as an effort to ascertain
"if it is not possible to serve
the old dish--maintenance of
the occupation regime in West
Berlin--with a new diplomatic
sauce."
Polyanov, who regularly
comments on international af-
fairs for Izvestia, accused
Western dip oma s of paying
lip service to the search for
mutually acceptable solutions,
and criticized "some Western
policymakers, including Secretary
Rusk," for believing that by
demonstrating "firmness" the
Western powers will be able
to preserve the occupation status
in West Berlin and "wreck the
conclusion of a peace treaty
with the GDR." Polyanov de-
clared that opponents of a sepa-
rate treaty with East Germany
should bear in mind that while
the Soviet Government has
emphasized that it is not
"superstitious" about deadlines
for signing such a treaty, the
Soviet Unioa "has never left
any doubt" that the German
peace treaty will become fact,
that West Berlin will become a
free city, and that "its new
status will-have firm inter-
national guarantees."
The Soviet writer warned
against Western "hopes" that
the US-Soviet talks can be used
as a smokescreen to add to the
occupation rights,"which have
long outlived themselves." He
said Western diplomacy is risk-
ing cutting the limb out from
under itself and "remaining
beyond the pale of a peaceful
settlement."
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sECREr
CURRENT INTELLIGENCE WEEKLY SUMMARY
Autobahn
Highway
~T Railroad
Subway (U-Bohn)
MEMBERS OF DIPLOMATIC CORPS
AND OCCUPATION FORCES ONLY
8. Friedrichs[rasse
WEST GERMANS ONLY
3. Bornholmerstrasae
9. Heinrich Heine Strasse
WEST BERLINERS ONLY
S. Chausseestrasse
6. Invalidenetrasse Authorized East Germans and East Berliners
10. Oberbaumbrnecke presumably can cross at any border points
Gromyko implied
a e owlet leaders were
in no hurry to conclude the
.Thompson-Gromyko exchange of
views. Ina conversation with
Thompson a~t an Indian Embassy
reception, Gromyko, responding
to Thompson's comment that he
hoped to continue the talks
"early next week," said that
ORIGINAL CROSSING POINTS
OF 13 AUGUST NOW CLOSED
1. Kopenhagenerstrasse
2. Wollankstrasse
4. Brunnenetrasse
7. Brandenburger Tor (Gate)
11. Puschkin Allee
12. Eisenstrasse
14- Rudowerstrasse
he would be available "at any
time" and went on to say he
realized that Thompson was
"handicapped" by being away
from headquarters.
On 30 January, Sir Rohan
Delacombe, the UK's Berlin com-
mandant, tailed on Soviet Com-
mandant Solovyev with proposals
for the restoration of freedom
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CURRENT INTELLIGENCE WEEKLY SUMMARY
of movement by the US and Soviet
commandants across the sector
Aorder; the ban has been in
effect since 27 December. Speak-
ing for all three Western com-
mandants, Delacombe proposed
that the US commandant and his
staff, civilian and military,
should be able to enter East
Berlin without hindrance; if
Solovyev agreed, the US comman-
dant would also lift his ban.
The British reported that Solov-
yev made the expected references
to East German sovereignty over
the Soviet sector and disclaimed
responsibility over East German
police but promised to make a
report and await instructions.
In an interview with the
East German news agency on 30
3anuary, First Deputy Foreign
Minister Otto Winzer used cur-
rent negotiations between the
Western air attaches and the
Bonn government concerning
fares on the Western airlines
to Berlin as an occasion to
challenge the legality of
Western civil air operations
in the Berlin corridors. While
his arguments were directed
mainly against Bonn's role in
setting the air fares, Winzer
strongly advanced East Germany's
claims to sovereignty over the
corridors, reiterated the stan-
dard bloc views that Western
use of the corridors is reserved
exclusively for the supply of
the Berlin garrisons, but ad-
mitted that control of such
traffic was reserved to the
USSR under the Bolz-Zorin ex-
change of letters of 20 Septem-
ber 1955. He vigorously attacked
the contention advanced in the
US note to Moscow on 8 September
1961 that the USSR in 1947 in-
dicated its acquiescence in the
use of the corridors by Western
civil air traffic. He also
declared that "an internationali-
zation of access routes to West
Berlin" was "completely incom-
patible with the GDR's sovereign
rights."
Meanwhile, the East Germans
are rushing completion of the
new highway linking East Berlin
and Schoenefeld airport out-
side the city. They probably
will step up their campaign to
interest Western air carriers
which do not have access to the
lucrative Berlin traffic--re-
served to airlines of the three
Western powers--in eventually
expanding services to Schoene-
feld, which now can accommodate
jet planes.
The East Germans have con-
tinued their construction activi-
ties at the sector border cross-
ing points. A custom-type shack
has been built at the Invaliden-
strasse crossing, reserved for
West Berliners, leaving only the
Sonnen Allee crossing without
such a shed. On the other hand,
the slalom-type barriers inhib-
iting outgoing traffic at the
Bornholmerstrasse crossing point
for West Germans were removed;
obstacles remain in the lane
used by vehicles entering East
Berlin.
On the Soviet - East German
autobahn checkpoint at Babelsberg
outside West Berlin, permanent
barriers have recently been
built, consisting of steel
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CURRENT INTELLIGENCE WEEKLY SUMMARY
beams with five-inch spikes af-
fixed across both outside lanes
of the autobahn. On the inside
lane the barriers are hinged at
kround level so that they can
be lowered to block traffic.
Similar construction has not
yet been observed at Marienborn
on the western end of the auto-
bahn.
Peaceful Coexistence
The Soviet emphasis on
peaceful coexistence has con-
tinued, and has been reinforced
by a new stress on the necessity
to avoid nuclear war. In a
telegram to Eleanor Roosevelt
on the 80th anniversary of her
husband's birth, Khrushchev
applauded the late President's
unaerstanding that "ideological
differences should in no way
interfere with the development
of friendly relations between
the Soviet and American peoples
and governments." He stressed
that the removal of the danger
of anew war"largely depends
on the state of relations be-
tween the US and the USSR."
An Izvestia article on
Roosevelt's birth anniversary
echoed Khrushchev's statements
but interjected a critical com-
ment on the current state of
Soviet-US relations. After
recalling that when President
Kennedy was elected, Khrushchev
sent him a cable expressing
the hope that joint relations
would return to those existing
when Roosevelt was in office.
Izvestia asserted that "unfortu-
nate~y--as recent events show,
this hope has not been realized."
Izvestia and a similar Pravda
article suggested, however, the
possibility that the Kennedy
administration would eventually
return to Roosevelt's policy of
friendly relations with the USSR.
Both articles denounced
the Truman and Eisenhower ad-
ministrations for their failure
to carry out Roosevelt's policy.
Pravda praised Roosevelt's
"cone usion" that "peaceful
coexistence of states with
.different social systems was
necessary."
Moscow has been publiciz-
ing bloc and nonbloc Communist
leaders' statements on the de-
structive consequences of a
new wor id war, In an inter-
view with Pravda on 25 January
Marsha 1 Ma i~vsky stated tha t
war "holds out irreparable
damage to all the countries
of the world." On the same
day, Pravda carried Italian
Communist leader Togliatti's
comment that "war must be avoided
at any cost," The official
Soviet news agency TASS tran8-
mitted to consumers in Europe
Togliatti's additional comment--
not carried by Pravda--on the
danger of mutual destruction
in the event of world war, On
29 January Pravda published an
interview by the chief editors
of Pravda and Izvestia with Fidel
Castro in which the Cuban leader
said that "peaceful coexistence
is a correct strategy...inasmuch
as it is necessary to avoid at
any price a world atomic war,"
which would bring "catastro is
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Souvanna Phouma, heading
into a new round of efforts to
form a coalition government,
is under no illusion this can
be accomplished quickly or easily.
He warns of possible dangerous
consequences in case of another
failure, Because of the height-
ened friction and suspicion, he
plans to confer separately with
Noun Oum and Souphannouvong
af~ier consulting first with King
Savang in Luang Prabang on 2
February. If these private ses-
sio~as prove productive, he in-
tends to call a joint conference
of all three princes.
Boun Oum and Phoumi have
not changed their opinion of
Souvanna's ability to control
the spread of Communist in-
fluence after a coalition govern-
ment is formed, and they ap-
parently intend to continue to
bargain hard for what they
regard as at least minimum means
of guarding against this danger.
It is debatable whether Boun
Oum and Phoumi are prepared to
seek a formula which would
satisfy their interests and yet
permit the key ministries of
defense and interior to go to
Souvanna's neutralist supporters.
Thai Premier Sarit has been
in communication with Phoumi
on this matter, but it is doubtful
if Sarit has forwarded mo re than
lip-service advice to accept the
Nest's position that neither Vien-
tiane nor the Pathet Lao should
hold these two posts.
Savang shares Phoumi's dis-
taste for Souvanna, but he ap-
pears increasingly impatient
with developments. In an inter-
view with Ambassador Brawn on
29 January, the King complained
that Souvanna relied on French
and Soviet advice, Souphannouvong
on the Chinese Communists, and
Phoumi on the Thais, and that
none of the three ever stood by
his word. Despite his distaste
for politics, Savang could play
a pivotal role in a negotiated
settlement by virtue of the
symbolic position of the King
as a rallying point.
The military situation re-
mains tense, although there ham
been at least a tempoxary halt
in the advance of enemy units
against the government post at
Nam Tha in the northwest, and
no further engagements have been
reported recently in the Mahaxay-
Nhommarath area in south-central
Laos. Despite reinforcement
of the defending forces at
Nam Tha, enemy units now occup~~
ridges overlooking the approaches
to the town and probably could
capture it with little diffi-
culty. The airfield o~.~side
the town has come under enemy
mortar fire.
Kong Le and Pathet Lao
forces, with increased backing
by North Vietnamese combat
troops and cadre, have been
improving their posture for
possible resumption of general
hostilities. North Vietnamese
elements in Laos, now estimated
at 9,000 men, apparently have
contributed significantly to
recent reverses suffered by the
Laotian Army. Indications are
that the Communists continue to
prefer a negotiated settlement,
but Pathet Lao and bloc propa-
ganda makes it clear that any
attempt by Phoumi to regain the
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SRCRR T
CURRENT INTELLIGENCE WEEKLY SUMMARY
.rT~?~.''rcK;,-', 'Luang.
_ Prabang
7~, ~aaa ;,, n
g
ong~
~n8"
porars
~
~g
ssy ~ XIkNG JUAN;
"'"~\Thon1~~ ~~
VIE`fidF4ANE _ ~ Pak
LAO S
~- Government forces
?- Kong Le-Pathet Lao forces --
initiative in the military field
while stalling over terms of a
settlement will be strongly re-
sisted.
Both the Vientiane and Xiang
Khouang groups have filed com-
plaints of cease-fire violations
with the International Control
Pha Lane
annakhet
fi ~ Sane ~
uorl~ ~" "? ~ N
Hiner,'.. ~` :~'
Pakse ~ ,
Attop
PASSAK ',
Commission (ICC) and the Geneva
conference. The ICC has asked
and received Vientiane's permis-
sion to visit trouble spots. The
commissioners now are seeking
similar assurances of cooperation
from the, authorities at Xien?
Khouang.
SRCR,~T
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CURRENT INTELLIGENCE WEEKLY SUMMARY
PUNTA DEL ESTE
Initial reaction in Latin
limerica to the outcome of the OAS
foreign ministers' meeting in
Punta del Este was generally favor-
able, particularly in the countries
which had supported the immediate
exclusion of Cuba from the OAS.
The Peruvian delegation, which vied
~irith Guatamala in proposing the
strongest anti-Castro action,. said
it tvzs "truly satisfied. " .Colombia's
government declared itself "com-
pletely satisf led" with the deci-
sions taken at the Punta del Este
conference, and President Lleras
sent congratulations to the Colom-
bian delegation. The Guate~aalan
congress authorized Pres_~dent
Ydigoras to congratulate Guatemala's
delegation for its "fir=~. ~.t~; i tude ."
Among these countries, C~.'~u's
ouster from the OAS is .~~y~ ~a.rently
regarded as a generaX y y ~~ ~a~~uate
substitute for a proposal, prior
to the conference, for a mandatory
break in diplomatic and economic
relations.
Delegations from countries
which favored a soft line on Cuba,
on the other hand, are facing sharp
criticism at home and appear to be
on the defensive, although they
abstained rather than vote against
the key exclusion proposal. In
firgentina, Foreign Minister Carca-
no has been forced to resign as a
result of military demands for
changes in President Frondizi's
foreign and domestic policies--
demands triggered by Argentin 's
abstention vote. The military are
pres:~ing hard for a break in diplo-
r~iatic relations with Cuba. In
~3razil, Foreign Minister Dantas,
the most pro-Castro ebief dele-~yT the UN as excessive .
A UId of ~ icer told US
Consulate officials in Elisa-
bethville on 30 January that
ar "offensive" aainst the
mutinous Congolese troops
in Kivu and northern Katan-
ga vrould begin soon. He
indicated it would be a
joint action b.y UN Ethio-
pian troops and Congolese
forces under General Lun-
dula.
~~~enciz of:iicial:~ are preas-
i.nc~ nor early +~onclusion of an
t'.lgerian accord, and both the~T
~.nd rebel leaders have indicated
that one may lie imminent . ldin-
i.,ster for :ilgerian Affairs Joxe
told Ambassador Gavin on ?4
~'anuary t~iat all of :~?rance's
w'.ifferences whiz the PAG have
Moen resolved. ;iowever, a mem-
x~er o.f Premier Debra's staff
cpin~c' that the provisional A1-
~:erian government (PAG) may well
iela,~ ai?~ning an accord until
:r. i c' ~6karch .
The US Embassy in Tunis
reported on :~0 January, as
s'AG ministers began arriving
nor their meeting there this
~~eet~end, that its PAG sources
~~ere optimistic that a settle-
rr. ert was imminent . ~~ high PAG
=.ourc~ told emba~ay officers
c=n '7.9 January that secret talks
~~~it).z the .r^rench were then in
tiession, and :?rench Delegate
C=~~neral i,~2orin cony irmeG to
t~~ Consul General Porter that
Joxe was meeting rebel foreign
minister 2~ahlab on 30 January.
On `?6 January rebel information
minister Yazid--then in Pabst
--told a U3 correspondent that
the PAG was empowered to sign
an agreement and would not
have to refer the matter to
its parent organization, the
cumbersome National Revolution-
ary Council.
Although Paris has not
phrased its desire for a
cease-fire declaration b;:r
15 February as a ultimatum,
government spokesmen have
made clear that an early
attempt to enforce a uni-
lateral French solution is
in prospect if a favorable
PAG decision is not forth-
coming. Joxe told Gavin
that if the PAG cannot make
'the last big decision"
in another month or so,
France will have to force
its own settlement. french
officials in Algiers expect De
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Gaulle's 5 February radio-tele-
vision speech to be "climactic."
The Secret Army Organiza-
tion (OAS) may feel compelled
to take violent action imme-
diately after any official
announcement of an accord in
order to capitalize on the
immediate reaction of the Euro-
pean settlers.
Absence of an immediate
OAS reaction will not signify
extremist acceptance Of Alger-
ian independence, however, since
at least some OAS leaders are
said to feel that action should
be deferred until Paris attempts
to implement an agreement. Joxe,
on the other hand, reportedly
feels the OAS may act even be-
fore announcement of an accord,
out of concern that the Euro-
peans will not be sufficiently
angered by the terms of the
agreement to follow the OAS
into violent action.
Senior French security of-
ficials in Algiers now are re-
ported to be in general agree-
ment that, while the hard core
of the OAS is capable of caus-
ing considerable bloodshed,
chances of a successful OAS coup
in Algeria have been reduced.
American officials in Algiers
report that since the latest
stx?ikes and demonstrations,
French security officials appear
less interested in appeasing
the European population and
inure determined to maintain
order at any cost. During a
31 January conversation with
Morin, Porter gained the im-
pression that Morin would not
be at all reluctant to come
to grips with the OAS.
One official predicted
that saturation of Algiers,
Constantine, and Bone by French
Army troops would be the next
anti-OAS tactic employed by
the government; press reports
of 31 January indicate that
such a move is beginning. In
France itself, according to
the press, the government is
building up security forces
in the Paris region and may
divide France into five major
zones for better coordination
of its anti-OAS drive,
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sECRE~'
CURRENT INTELLIGENCE WEEKLY SU~dARY
THE USSR'S 1961 ECONOMIC REPORT
Moscow's official report
on the Soviet economy for 1961
states that industrial produc-
tion--which was slightly behind
plan at midyear--exceeded its
annual target and made good
progress toward the 1965 goals.
The consumer, however, had a
relatively poor year; agricul-
tural output increased only
slightly and is still far be-
hind plan; the goals for hous-
ing and consumer goods produc-
tion were not met. The report
contained indications of d if f i-
culties which may hamper future
growth if not corrected.
The increase in investment
was well below that achieved
in recent years, and plans for
introducing new productive ca-
pacity were not met in many in-
dustries. Shortages of building
materials and defects in plan-
ning and management probably
played a part in some of the
shortcomings, as did the addi-
tional support now apparently
being given to agriculture. The
possibility that some of the
shortfalls are attributable to
transfer of resources to the
military program cannot be dis-
counted,
the plan for new capacity was
slightly underfulfilled. The
goal for the chemical industry
was not met,although the in-
crease was somewhat higher than
during 1960. The production of
plastics and synthetic resins
continues to lag well behind
plans,as does that of mineral
fertilizer.
The Soviet machine build-
ing and metal processing indus-
tries are still increasing at
a rate nearly double that of
industry as a whole, but annual
plans for a number of key com-
modities were not fulfilled in
1961. Petroleum refining and
chemical equipment output were
well short of their goals, and
the output of metallurgical
equipment actually declined be-
low the 1960 level.
Industrial labor produc-
tivity rose substantially less
than the 6 percent planned. The
effects on industry of this
shortfall were offset by an
above-plan increase in employ-
ment. The state labor force
reached 66,000,000--the level
origina lly set for 1965.
Industry
While the pattern thus far
in the Seven-Year Plan {1959-65)
is one of slightly slowing rates
of growth, the overfulfillment
achieved in heavy industry
would enable the economy to
meet the 1965 target even with
a considerable reduction in
growth rate. Commodity-by-com-
modity development, however, was
uneven in 1961. The output plans
for the major items of ferrous
metallurgy--pig iron and crude
and rolled steel--were essen-
tially met or overfulfilled,
but plans for increasing capacity
were badly underfulfilled. Oil
production continued to grow at
a rate more than adequate to meet
the 1965 target, but gas produc-
tion, although advancing rapidly,
was below plan, and difficulties
with the supply of pipe and
equipment are likely to hamper
this industry for some time.
Electric power production
~uas still on target in 1951, but
Investment
Probably the most impor-
tant development in the Soviet
economy in 1961 was the sub-
stantial slowdown in the cap-
ital investment program. State
investment under the national
economic plan is reported to
have grown by 9 percent--5 per-
cent below plan. However, total
nonagricultural investment--
which also includes private and
locally planned investment--in-
creased less than 3 percent, as
compared with an annual increase
of 14 percent for the last five
years.
The total volume of non-
agricultural construction failed
to increase over 1960, and there
was a sharp decline in housing
construction. Most threatening
to the future growth of the
economy were the apparently
small increases in industrial
construction--well below the
performance of previous years.
sEC~r
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GURREh~ INTELLIG:3N?CE WEEKLY $:ARY
- P r o d u c t i o n Percentage increase --;
1961 1962 ACTUAL PLAN 7 YEAR PLAN +~
PLAN ACTUAL PLAN 60 over 59 61 over 60 62 over 61 1962-65
SOVIET ECONOMIC SITUATION.
- SELECTED INDICATORS -
Pig Iron (Million Metric Tons) 46.8
Steel (Million Metric Tons) 65.3
Oil (Million Metric Tons) 147.9
Gas (Billion Cubic Meters} 47,2
Electric Power (Billion Kilowatt Hours.) 292.3
Cement (Million Metric Tons) 45.5
Mineral Fertilizers (Million Metric Tons) 13.9
51.2 50.9 56 8.8 8.7 10.0 9.2
71.3 70.7 76.9 8.8 8.7 8.7 7.9
164 166 183+ 14.1 12.1 10.2 9,6
63.3 60.9 72.4 26.5 27.0 29.6 25.3
327 327 366 10,2 11.8 11.9 12.3
51 50.9 57+ 17,2 11.8 11.9 13.5
15.3 15.3 17.2 7,7 10.0 12.4 23.0
?Annual averoge for yeas romaining
1959 1960 1961 1962
ACTUAL ACTUAL PLAN ACTUAL PLAN
Gross Industrial Production 11.5 10 8,8
Group A (Heavy industry) 12.0 10.9 9.5
Group B (Light industry) 10.3 7+ 6.9
Labor Productivity (Industry) 7.4 5.3 6.0
Capital Investment(State 12 11.5 12.6
Centro I i zed)
Problems in the investment
and construction programs have
commanded the increasing atten-
tion of the Soviet leadership
over the past year and a half,
and received--along with agri-
culture--extensive attention at
the 22nd party congress last
fall. The plan fulfillment re-
port blamed last year?s diffi-
culties on such things as the
dispersion of resources among
too many projects, failure of
contractors to carry out con-
struction on time, and the in-
adequacy of plans, technical
specifications, and construction
equipment. while poot planning
and management of investments
have played a part in the diffi-
culties, the lag in construction
:materials output--botch in types
and quantities--is an important
factor.
Moscow is already taking
steps aimed at overcoming these
problems, For example, to im-
prove planning and management
Khrushch~ev has "suggested" a
moratorium on new construction
starts, and First Deputy Premier
Rosygin has outlined measures
for greater centra~ supervision
of the construction program. No
n_ew official measures have yet
been announced, however, for
overcoming building materials
difficulties, In general, re-
sumption of former rapid rates
of investment growth would re-
quire increases in the alloca-
Lion of funds substantially
above those presently planned I~~j
for x.962 . SECRE T
9.2 8.1
10.+ 8.8
6.6 6.6
4+ 5.6
9.0 8.1
To the Soviet consumer the
poor performance in housing was
probably the greatest single
disappointment. The 1961 goal
for urban housing was underful-
filtled by about 15 percent. If
the Seven-Year Plan goal is to
be reached, the state must now
give the industry a higher
priority--a difficult choice
in the light of competing prob-
lems in construction--and. re-
lax recent restrictions on
private housing construction.
Agriculture
Total agricultural pro-
duction increased only a little
over 1960. western observers
estimate grain production at
about 115,000,000 metric tons,
as against the Soviet claim of
138,000,000, The 1958 harvest,
upon which the Seven-Year Plan
agricultural goals are based,
was estimated at 130,000,000
metric tons.
The report said Soviet ,
meat production increased "some-
what;'buta slight decline is more
likely; with the increase in
popula-tiou,may per-capita availa-
bility of meat may be as much ds
10 percent below the 1959 Zeve1.
Milk production is said to have
increased 1.3 percent. while
this does not mean a critical
overall food supply problem,
it has resulted in local short-
ages of some foodstuffs.
(Prepared by
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CURRENT INTELLIGENCE WEEKLY S'UIOtAxY
The southern branch of the
intra-bloc pipeline from Brody
in the USSR to Bratislava, Czeeho-
slovakia, was put into operation
on i3 January 1962. This 450-
mile segment is part of the ex-
tensive system designed to move
crude oil from the oil fields
of the IIrals-Volga region of
the USSR to refineries under
construction in the European
satellites. The main Soviet
section from Kuybyshev to Mozyr
will use 40-inch pipe and have
a capacity of 45-50 million
tons a year. Approximately 110
miles of the 435-mile segment
from the Soviet-Polish border
to the East German termir~as has
been completed; completion of
this northern branch is sched-
uled for late in 1963. Work is
also under way on most portions
of the line within the USSR, ',
but the entire system is not
expected to be completed before
1964.
The pipeline in Czechoslo-
vakia, which extends from the
Soviet border near Uzhgorod to
a new refinery near Bratislava,
and the Soviet section of the
pipeline between Brody and
Uzhgorod were completed and
joined in October 1961. Pres-
ent plans call for the Czecho-
slovak section of the pipeline
to be supplied temporarily with
crude oil delivered by rail
tank cars to Brody.
The diameter of the Czecho-
slovak section of the pipeline
is probably 21 inches, which
would make its ultimate capacity
about 10,000,000 tons per year.
Initially its utilization will
be limited by the number of
pumping stations, the crude oil
storage capacity (a maximum of
200,000 tons), and the limited
refining capacity in the Brati-
slava area (about 1,500,000 tons
per year). A branch from the
Czechoslovak section of the
pipeline into Hungary approxi-
mately 80 miles long with 14-
inch pipe is scheduled for com-
pletion in May. It will be
used to supply an existing re-
finery at Szony, which also has a
capacity of 1,500,000 tons a
year. By 1965 the southern
leg is expected to be carrying
6,000,000 tons a year for the
Czechoslovak refineries and
3,000,000 for the Szazhalom-
batta and Szony refineries in
Hungary.
Imports of crude oil
through the Czechoslovak sec-
tion of the pipeline will re-
duce the load on Czechoslovakia's
overtaxedrail system, and the
annual savings in oil transport
costs are expected to reach
$24,000,000 by 1965. Use of
the pipeline will also eliminate
the need for 2,600 tank cars
and will reduce transloading
operations.
The USSR may also make
use of the pipeline to meet
commitments to Austria. Mos-
cow is obligated to export
at least 300,000 tons of crude
oil to Austria in 1962 under
provisions of the 1961-65
trade agreement. Crude oil
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CURRENT INTELLIGENCE- WEEKLY 3iflAtARY
32233
~~,.~t
Kremenchug'?
could be loaded onto Danube
barges from the pipeline at
Bratislava.
The ultimate capacity of
the northern branch across Po-
land into East Germany probably
w311 not be utilized until the
refineries under construction
in Poland and East Germany are
?' Liski
ready; they are scheduled for
completion between 1968 and
1970. By 1965 the flow through
the northern branch probably
will be 6,000,000 tons a year--
2,000,000 to the Plock refinery
in Poland and.4,OOO,OOO to the
5chwedt refinery in East
Germany.
pared by~RRj
.SECRET
Oil pipeline, completed
---- Oil pipeline, under construction
???????????? Oil pipeline planned; not yet
under construction
? Refinery planned or under construction
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~'it the 20 January celebra-?
~tion of the 20th anniversary of`
the Polish Workers' party (PPR}
:First Secretary Wladyslaw Go-
mulka asserted that the PPR,
~Nhich was formed in wartime
isolation from Moscow, had be-
~:ome master of an "independent"
socialist state. He added that
since 1942 the party had been
voluntarily allied for its own
good first with the USSR and
later with the Communist bloc.
The tenor of his speech sug-
~;ested that he was describing
~. framework for future intra-
'oloc relations which would ac-
~~ommodate the divergent outloolcs
~~f the various Soviet bloc staiyes.
This formulation goes con--
~iderably beyond the strictly
:Polish "raison d'etat" which
~somulka advanced when he re-
turned to power in 1956. He
~~eclared then that in order to
,evert civil war and possible
Soviet intervention, Poland hacl
'to maintain close cooperation--?
on the basis of autonomy in in-?
~ternal affairs--with the USSR.
In his latest speech, Gomulka
implied publicly for the first
time that his removal from the
x~arty in 1949 and his subsequent
imprisonment for "excessive na-
tionalism" had been caused by
his pressing for bloc acceptance
of the same views he espouses
today. He emphasized that the
:ideas he advocated in the ear13T
~;~ears of the PPR are now in
:Force--and will continue in
.Force. The PPR was created from
-the ruins of the Polish Commu-
yiist party which Stalin liqui-
dated in 1938. It was never
:fully accepted by Stalin, al-
though the Stalinist wing was
:in power from 1948 to 1956 while
~somulka was out of power.
Gomulka's views--first ex--
}~ressed in 1945--on autonomy in
~~omestic affairs and equality ~n
:interparty relations are appar--
r~ntly being put forth as a means
of dealing with the schisms in
~~he once-monolithic bloc Stalin
}iad created. In his speech, Go-
rlulka characterized the postwa~?
party as a "new party, born of
~~ new historical epoch, which
called for new ideas, new methods
of action." The Polish leader
went on to imply that Khrushchev
had formally accepted these ideas
for the USSR at the Soviet 22nd
party congress.
Gomulka offered his new
concept of bloc relations when
he asserted that, although the
PPR had insisted on "its own
political independence" and its
"right" to rule in accordance
with "concrete conditions" in
Poland, the party had always
considered itself "one of the
units of the international Com-
munist movement." Many of the
present East European leaders
remain hostile to Gomulka's
relatively liberal internal pol-
icies, but they have at least
tacitly accepted his ideas con-
cerning independence both as a
means of perpetuating their own
regimes and as a justificatior.~
for their methods of maintain-
ing power.
This is perhaps best illus-
trated by the variety of East
European approaches to the Sino-
Soviet dispute and to Khrushchev's
renewed de-Stalinization campaign.
Except for Albania, alI the Eu-
ropean satellites basically are
committed to Khrushchev's policies
on these questions, but all have
dealt with them in terms reflect-
ing their own internal situa-
tions. This trend probably will
continue throughout the Commu-
nist world.
Soviet party secretary
Demichev said at the Warsaw
anniversary celebration that
the Polish party is making
a "worthy contribution to
the development of creative
Marxism-Leninism, to the
strengthening of the fraternal
comity of the socialist coun-
tries, and to the unity of the
international...movement." Go-
mulka appears to be closer to
Khrushchev now than at any
other time in his career, both
as an adviser and an executive
agent; the Polish leader's
pragmatic political ideas con-
tinue to receive strong Soviet
support.
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CURRENT INTELLIGENCE jYEE;~LY SUMb~ARY
The de-Stalinization cam-
paign in Bulgaria may develop
into a struggle between the pro-
~~hrushchev leadership under party
First secretary Todor Zhivkov
and the numerous Stalinists led
by ex-party boss Vulko Chervenkov.
7'he leadership opened its attack
on the Stalinists at a meeting
of the party central committee
last November. The first move
was to strip Chervenkov of his
important art and overnment
positions.
Althou gh Stalinism was of-
ficially discredited after 1956,
the weak pro-Khrushchev leader-
>hip made no overt moves against
the Stalinist element. The
Stalinists have played along
as the leadership gradually
gained strength, accepting cer-
tain changes in methods of run-
ning the party and paying lip
service to "co7lF~ctivity." Al-
though removed as party secre-
tary general in 1954 and as pre-
mier in 1956, Chervenkov until
November retained membership on
the politburo and a deputy pre-
miership with little apparent
political power. Moscow seems
to have regarded this arrange-
ment as r'ie best possible com-
promise ~~~ view of the inepti-
tude of the leadership and the
practical experience of the
Stalinists.
The most important recent
development in the regime's
campaign against the Chervenkov
faction was an article written
by party agitprop chief Vasil
lvanov and published in the De-
cember 1961 issue of Party Life.
It catalogued Chervenkov's theo-
retical and practical "errors,