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1. THE COMMUNIST BLOC 2

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v CENTRAL INTELLIGENCE BULLETIN

2 January 1959

’ DAILY BRHEF

I THE COMMUNIQT BLOC USSR: @vidence indicates that Khru.shchev's defeated

opponents--Malenkov, Molotov, Kaganovich, Shepilov, and Bulganin=--are slated for expulsion from the party, but not

.v for imprisonment or execution. Khrushchev's attack at the

do December plenum of the party central committee appeared I

to foreshadow some further move against them. _ _The 21st

party congress later this month would provide a convenient fomimjoeforesuhich to make the amiouncement

B}e‘r1in Situation: In a communication of 27 December, J

the Soviet commandant in Berlin indicated that the East Ger- mans now are responsible for cases of USS military personnel T O detained in,East Berlin. This is a hint that the::USSR already may have relinquished-;to the East Germans, an._e1ement of -its quadri- partite responsibilities in the city. (Page 1)

USSR-Iran: @oscow's latest note to Iran"§' delivered on 29 December, calls for a series of Soviet=-Iranian talks to settle outstanding issues before Tehran undertakes the "hos-

" tile" step of signing the proposed Iranian~=~American defense p Q agreemen.t. The Soviet campaign to pressure Iran into drop- / ping its military ties with the West emphasizes~Soviet charges '

that an Iranian-American "alliance" would threaten the security of the USSR and the Arab worlctjl

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(Page 2)

I I. ASIA-AFRICA Iraq: Clashes between pro-UAR and pro-Communist ele-

ments are becoming increasingly violent. More serious out- 0 breaks seem likely since both groups apparently feel they

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cannot yield to threats of force. A breakdown of public order on a large scale might encourage army leaders to attempt to remove Prime Minister Qasim; limit his au-‘ thority; or order him to crack down on pro-Communists.

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Algeria The Algerian rebels may soon attempt to sabotage the 420 mile 24 inch oil i elme France is constructing from the Hassi Messao ield in the Sahara to th Al stal of e gerian coa city oug

H the rebels’ defense ministr n Tun y 1 to make the greatest

possible effort to event construction of the pipeline and to launch vigorou ctions against all enemy facilities

(Map) (Pass 5)

Iran Ehe Shah of Iran 1S consideri a plan to pur chase a 25- rcent interest 111 the conso um of Western '

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oil compan which rates the country's petroleum in- dustry He prefers to a change in the 50/50 profit sharing formula Apparentl eeking US Government sup port for’ h1S plan, the Shah n d that increased oil reve nues would decrease Iran's need for American assistan

(Page 6) \ South Vietnam-Thailand Cambodia Eflotting by South

Vietnam to overthrow the Sll'l3.l1OL1E government in Cambodia

Vietnamese agents in Cambodia recently exfiltrated former Premier Sam Sary to head a resistance front against Sihanouk based in Thailand. Thai leaders, including Marshal Sarlt have indic d Willi ess to lend cl d ti ili- -

r , ngn an es ne m tary support. T_

' plotting apparently is not yet connected with recently reported plans by Da , Chhoun. Cambodian warlord to overthrow Sih k anou .

’Sihanouk is already alert to growing domestic and . e ernal intrigues against his rule. He may denounce these

intrigues as Westerninspired and turn to the Communist S

bloc for SUppOI_fl (Page 7)

Sudan: The cts are for an economic crisis some time in-March w Sudan’s free currency reserves will

6 Q have been exhausted. Severe economic dislocations apparently

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can be avoided only if substantial balance-of-payments aid or large cotton purchases come from outside sources be- fore mid-March. (Page 8)

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III. THE WEST *The Situation in Cuba (0130 EST, Z J §__I1,ui=1I‘YiI tT.h1e' Fidel

Castro rebels moved -swiftly to consolidate their control of the countr after the dd ll of th B ' y su en co apse e atista govern- ment on _1 January. Santiago, second largest city, fell and the rebels claimed control over the capital of Camaguey Province as well as the important seaport of gC.ienfu?egos. A. / pro-rebel army officer, Colonel Ramon Barquin, is in con- trol of the armed forces. Fidel Castro's hand-picked choice for the presidency, Manuel Urrutia, is expected in Havana at any moment. The Communists can be expected to exploit the fast-moving situation--perhaps by supporting a general strike--in an effort to gain political freedom and even le alit

arty, which was outlawed in 1953 by Batista. (Page 9)

France: The bold austerity program offers the best prospect since 1945 for stab°li ' th F 1 1 zing e rench economy, butr will nevertheless encounter some political hazards. Social- ist opposition to it gives the Communist party new leverage in its constant appeal for working-class "unity of "action."

/4 Some prominent leaders of the powerful Union for the New i

0 Republic, the largest party in the Assembly, have previous ly opposed austerity measures in the hope of broadening the ” new party's appeal to labor, They will probably welcome

to seek relaxation of the program. (Page 11)

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6 Q test may be under way. The group was said to be bound for "a term southeast of Colomb-Bechar," presumably Regganfl

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I. THE COMMUNIST BLOC

Berlin Situation

The Soviet commandant in Berlin notified the US com- mandant on 27 December that East German police are hold- ing in custody an American soldier who had been found in East Berlin the preceding night. The Soviet note added that "German" authorities had said they would release this man to an American representative.

The US Mission in Berlin points out that this is the first time Soviet authorities have stated that it is necessary to deal with the Germans for the release of Allied military per- sonnel taken into custody in East Berlin. This in effect turns over to East Germany jurisdiction which has been a.Soviet responsibility under quadripartite agreements. The same responsibilities do not apply to similar cases in East Germany outside the city itself. American officials note, moreover, that this is the first time a question of military personnel has formed the subject of a communication from the Soviet commandant, such matters having previously been: handled on the provost-marshal level.

Moscow also appears to be making preparations to with- draw its headquarters from the Karlshorst compound in East Berlin to some locale outside the city. The number of Soviet personnel at Karlshorst already has been diminished by the withdrawal of Soviet advisers from the East German Army and certain ministries. The post exchange at Karlshorst will be closed down on 1 February 1959,I

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a Soviet administrative team which has closed down other compounds is being assigned to close out th Ka lsh ti t 11 ti Q tsid B rli construction of e r ors nsaaon., u e e n, administrative buildings is being rushed in one area, possibly for use of Soviet officials being transferred from Berlin.

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2 Jan 59 CENTRAL INTELLIGENCE BULLETIN Page 1 Approved for Release: 2020/02/21 C03000012

i 3 E £ K A S ZKQ Approved for Release: 2020/02/21 C03000012

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Sovsietilileieiesieelree

E/I_oscow’s efforts to forestall the conclusion of an Iranian- American defense agreement have resulted in a noticeable cooling of Soviet-Iranian relations, The Shah of Iran said that Soviet Ambassador Pegov told him on 26 November that if Iran continued to follow its present policies, Moscow would be forced to regard it as an enemy. The latest Soviet note, delivered on 29 December, called for a series of talks on out- standing issues and deplored growing tension between Moscow and Tehran. It alleged that conclusion of the bilateral agree- ment would result in the basing of US troops in Iran and the stationing of the US Navy in the Persian Gulf--actions which could only lead to further deterioration of relations. Pre- vious Soviet notes on 27 November and 31 October had warned Tehran of the dangers Iran would face in placing its territory at the disposal of an "aggressor group" and had stated that Moscow "will not remain indifferent" to this added threat to its southern frontiers?)

Eléy holding up work on border river surveys and normal purchases of Iranian rice, Moscow has hinted at further eco- nomic pressure if relations continue to deteriorate, while at the same time promising economic advantages if Iran adopts a "friendly" coursej

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Egviet Deputy Foreign Minister V. S. Semenov on 15 De- cember rejected an Iranian protest against remarks in the 2'7 November Soviet note and chided the Iranian ambassador on "secret clauses" in the projected agreement. Semenov asked the Iranian ambassador to inform the Shah that the Soviet Gov- ernment considered conclusion of this agreement a "hostile" act directed against the USSR which Moscow could neither ignore nor tole-rate;

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The Situation in Iraq

Open clashes between Communist sympathizers and pro- UAR elements are increasing and spreading throughout Iraq. Centered in Baghdad, these clashes may be the prelude to more violent outbreaks as the opposing factions gather their forces. Apparently determined to demonstrate that Commu- nist violence does not intimidate them, UAR supporters have reversed their previous policy 1oi".lying; low and now are try- ing to make a show of strength. Communist gangs are roam- ing Baghdad streets at night looking for anti-Communists, while Baathists have been reported assassinating Commu-*1 nist partisans. Although the army has quelled disturbances in such provincial towns as Ramadi, Falluja, and Kirkuk, a further deterioration of public order might encourage army leaders to attempt to remove Prime Minister Qasim or limit his authority if they cannot force him to reverse those of his

[present policies which aid the Communists.‘

The funeral of a member of the Communist-infiltrated Popular Resistance Organization (PRO) was used by Commu- nist sympathizers as the excuse for large-scale demonstra- tions demanding expansion and arming of the PRO to "pro- tectlthe people" against the "fanatic enemies of the Republic."

the demonstra- tors c‘han'te.~ri . slogans in support of Qasim and shoute the heads of supporters of the former royal regime.

The war of words between Baghdad and Cairo has reached new heights, With the Baghdad press "demanding" the naming of "those responsible for inspiring Nasiris attack on the Sy- rian Communists. " Cairo radio has broadcast the resolution

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of the Kuwait Arab Literary Conference which condemned the Iraqi representatives for their charges that the con- ference was not a free forum.

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Re__b§_ls Ordered to Sabotage Partially Comp_l£t_e_d_ P1251171? ;1-7t1‘.iii §51l1él h;ll_,fii_§lH ‘Tit- 6

The defense ministry of the Algerian rebels‘ provisional government ordered the rebel command for eastern Algeria

_ \to launch "vigorous" sabotage operations against the 24-inch pipeline which France is build- ing from the Hassi Messaoud oilfield in the Sahara to ‘the

Mediterranean.

The order, which urged "the greatest possible effort" be made to forestall French use of the pipeline, was evokedj

\informing the ministry that the French were laying pipe at a more rapid rate than had been expected and had installed about 36 miles as of mid-December. An earlier report indicated the French are working around the clock in an effort to extend the line its full 420 miles to the Algerian coastal city of Bougie by October 1959. As the route followed necessarily traverses extensive tracts. of rebe1-in- fested territory, the rebels may have greater success in im- plementing this instruction than they have had previously when ordered to take general action against other targets“

No attacks on the Bougie pipeline construction project, which began about three months ago, are known to have oc- curred as yet. The rebels have reportedly caused occasional brief interruptions in the flow of Hassi Messaoud oil along the temporary combination six-inch pbpeline and rail route activated last January, largely for psychological purposes. Despite these interruptions, however, some1‘1,617,000 barrels of oil had been shipped from Algeria by September, and year- end figures will probably come close to the 2,450,000-Tbarrel target set for 1958.

France hopes to ship Hassi Messaoud oil at the rate of 85,000 barrels a day immediately upon completion of the Bougie pipe line, increasing this to 240,000 b/ulitby

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\together with equal shipments from an- other remote Saharan field by a pipeline across Tunisia on which construction is scheduled to start in 11959, would provide the French communit with virtually all its estimated crude require-

months ago was reported to have assured the rebels that no Sal- ments by 1962. Lflyowever, Tunisian President Bourguiba

haran oil will flow through Tunisia until Algeria becomes inde- pendent? (TOP SECRET EIDER NOFORN)

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Shah of Irang(iIiongsi_idegringm_l\Ie*w Oig1;l>fo_li_cy

£':Ill6 Shah is considering a plan whereby Iran would pur- chase a 25-percent interest in the consortium of Western oil companies which operates most of the countryis petroleum industry. The consortium, which took over the operation of the Iranian oil industry in 1954 as part of a general settlement following the nationalization of the Anglo—Iranian Oil Company, currently operates underra 50/50 profit-splitting agreement which is scheduled to remain in force until 1994:]

[ibis new plan, if implemented, technically would not breach the traditional 50/50 formula but would, ‘in effect, give Iran about 62.5 percent of the profits of the consortiumis operations. Such a device was used in three concessions re- cently awarded to American, Canadian, and Italian companies. Since Iran does not have sufficient funds to make the suggested purchase, the Shah probably enivisages a loan from the consor- tiur_r_,i3

Qpparently seeking US Government support for his plan, the Shah noted that an increase in oil revenues would cause a proportionate decrease in Iran“s needs for American economic aid. The Iranian budget for the year beginning 21 March 1959 currently is estimated by Tehran to have a deficit of about $100,000,000 for which substantial American aid may be re- quested in addition to the "normal aid progran_1_.l7

[flnlike the recent agreement in Venezuela, the Iranian- consortium concession agreement apparently prevents a uni- lateral change in the profit-sharing formula. Despite this legalblock, the Shah may decide to press for increased oil revenues by other methods if his suggested purchase plan is proposed and rejected3

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-S-EGRE-T-

2 Jan 59 CENTRAL INTELLIGENCE BULLETIN Page 6 Approved for Release: 2020/02/21 C03000012

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South Vietnam's Intrigues Against Sifianouk Regime ’ _ TH W, s s W W-77* g _,_--I r_.‘1|!uu... s , .

Eénuth Vietnam is actively plotting to engineer the re- moval of Crown Prince Sihanouk from power in Cambodia in the conviction that his close relationship with the Com- munist bloc menaces Vietnamese national existence,? \one of Cambo as top political figures, Sam Sary, was smuggled out of the country on 21 December for grooming in Saigon as head of a resistance front against Sihanouk to be based in Thailand. Sam Sary's flight was arranged by South Vietnam's envoy in Phnom Penh, Ngo Trong Hieu. Vietnamese agents in Bang- kok are coordinating these plans with Thai military leaders, including Marshal Sarit, who have promised clandestine military Sl.lppOI_‘__f:]

[iitenams plotting, at least at this stage, seems to be apart from coup plans against Sihanouk being hatched by Dap Chhuon, Cambodian military leaderwho is alarmed at grow- ing Communist influence in Cambodia. Chhuon, however, contemplates support from both South Vietnam and Thailand to facilitate a takeovei]

Lfhere is serious danger that Sihanouk, who is already alert to growing domestic and external intrigues against him, will denounce this plotting as Western inspired and turn to the Commimist bloc for support. South Vietnam's representative in Cambodia informed Saigon that the situa.'-: tion in Phnom Penh "is dangerous. . .with the authorities watching for the slightest chance to place us under arresiig

2 Jan 59 CENTRAL INTEICLIGFNCF BUIIFTIN Page 7 Approved for Release: 2020/02/21 C03000012

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Sudan Faces Crisis

Both the Sudanese Government and the American Embassy expect a severe economic crisis in the Sudan sometime in March when its free currency reserves will have been exhaust- ed. The deteriorating economic situation, in large part a re- sult of the government's unrealistic cotton marketing policy, now has reached a point where Khartoum cannot solve the prob- lem without assistance. In this atmosphere of economic crisis, the Sudanese Supreme Council apparently is moving into a de- cisive phase;-of its foreign relations. The Sudan's longer-term policy may be decisively influenced by whether increased eco- nomic aid comes from Western or Sino-Soviet bloc sources.

Thus far the Sudan has not concluded large barter deals with the Sino-Soviet bloc, but the present 230,000-bale sur.-~ plus of long-staple cotton and the prospect of an additional 620,000 bales from the near-record crop now being harvested probably will make Khartoum receptive to a Soviet offer of a large barter deal. A high-level economiac delegation expected to arrive in the near future may bring an offer of substantial assistance not only for the immediate crisis but for lon --term development projects as well.

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2 Jan 59 CENTRAL INTELLIGENCE BULLETIN Page 8 Approved for Release: 2020/02/21 C03000012

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‘ii vi

111. THE WEST

The $it“!§»*1°nl¥1..CPl1a .(013_Q..E§T.i..3lrm“Ba1‘lLl Following the sudden collapse of the Batista regime in

Cuba on 1 January, the Castro rebel movement moved quick- ly to seize control of the country. Fidel Castro declared he would not accept an army-backed provisional government and threatened to call a general strike unless Manuel Urrutia, his personal choice for president who is en route to Havana, is given power. A walkout has paralyzed air service to and from Havana, and there are indications a general strike might be spreading in the western provinces.

Col. Ramon Barquin, a former military attache in Wash- ington who had been in prison since leading an unsuccessful military coup against Batista in 1956, announced that he has assumed control of the armed forces in Havana.

Rebel units have stepped up their efforts to seize key cities in the three eastern provinces. On 1 January they cap- tured Santiago, Cuba's second largest city and capital of Oriente Province, and claimed control over the capital of Camaguey Province and the important seaport of Cienfuegos in Las Villas Province. Rebel columns were also reported to be marching toward Havana, where Castro sympathizers were attempting to restore order as rioters roamed the streets looting and burning.

Several Cuban embassies abroad have jumped on the Castro bandwagon. The chiefs of mission in Bonn, Paris, and Rio de J aneiro announced support for a rebel government, and exiles took control of the embassies in Washington, Mex- ico City, and Montevideo.

The outlawed Popular Socialist (Communist),_party (PSP) may now increase its efforts to ally itself with the rebel cause

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in an attempt to gain political advantages or recognition under a new government. On 2 January the Communist chief announced supportof the rebel movement and called for a_ "united front. " Although the PSP has been rebuffed in numerous previous at- tempts, it has given strong propaganda to the rebellion and has offered to cooperate in any general strike.

Communist sympathizers are believed to have penetrated. the rebel movement on a low level, and the anti-Ame rican sentiments held by some rebels--particularly within the group commanded by Raul Castro--could well be exploited to the Communists‘ advantage.‘

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New French Austerity Program Faces Political Complications fa“ F C ' '

The broad new economic program announced by Pre- mier de Gaulle and Finance Minister Pinay on 28 December offers the best prospect since 19% for a stabilized French economy. For the time being, at least, France probably has the capability to support both a stabilization program and the current drain of resources in Algeria.

The austerity program is already under attack by the official Socialist party newspaper as well as by the Commu- nist party; This situation gives the Communists their best opportunity since De Gaulle came to power to seek working- class "unity of action. " Socialist leader Guy Mollet now may find his self-assigned role of leader of the "loyal oppo- sition" to the new government complicated by Communist success in seeking "unity from below. " Although the Popu- lar Republican party is expected to support the austerity program, MRP leader Pierre Pflimlin is reported particu- larly apprehensive over its impact on peasants and labor. Both of the major non-Communist labor unions--the Socialist- oriented Force Ouvriere and the MRP-oriented Christian Workers’ Confederation--had repudiated austerity programs in advance although they do not intend to attempt protest strikes.

While a spokesman for the "Gaullist" Union for the New Republic (UNR), which is by far the largest group in the Assembly, has announced full support for the new program, some UNR leaders have previously opposed austerity mea- sures. Michelet, Debre, and Frey, for example, hope to win broad labor support partly through a policy of economic expansion. Such men will probably seize any opportunity to seek relaxation of those portions of the new program which appear objectionable to labor.

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THE PRESIDENT The Vice President

Executive Offices of the White House

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Special Assistant for National Security Affairs Scientific Adviser to the President Director of the Budget Office of Defense and Civilian Mobilization Special Assistant for Security Operations Coordination Board of Consultants on Foreign Intelligence Activities Special Assistant for Foreign Economic Policy Special Adviser to the President Treasury Department The Secretary of the Treasury Department of State The Secretary of State The Under Secretary of State The Under Secretary of State for Economic Affairs The Deputy Under Secretary for Political Affairs The Deputy Under Secretary for Administration The Counselor Director, International Cooperation Administration The Director of Intelligence and Research Department of Defense The Secretary of Defense The Deputy Secretary of Defense The Secretary of the Army The Secretary of the Navy The Secretary of the Air Force The Chairman, The Joint Chiefs of Staff Commandant, United States Marine Corps The Director, The Joint Staff Chief of Staff, United States Army Chief of Naval Operations, United States Navy Chief of Staff, United States Air Force Assistant to Secretary of Defense for Special Operations Director for Intelligence, The Joint Staff Assistant Chief of Staff for Intelligence, Department of the Army Director of Naval Intelligence, Department of the Navy Assistant Chief of Staff, Intelligence, Department of the Air Force Supreme Allied Commander, Europe Commander in Chief, Pacific Department of the Interior The Secretary of the Interior

Federal Bureau of Investigation The Director

Atomic Ene rgy Commission The Chairman

' National Security Agency The Director

National Indications Center The Director

United States Information Agency The Director

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