Created: 5/6/1960

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India, DiiiESiied in crash programdefenses on Chineseurgent request (or US

Ami-European disorders in

DN1 intention to form political party foreshadows strangleold-Urn politic Uns.





his speech to the Supreme Sovietay,

Khrushchev resortedoviet device, frequently used on the eve of important East-West negotiations, designed to place the Western powers, particularly the United States, on the defensive and to demonstrate that the USSR'scoexistence line does not result from any weakness which the West could exploit in summit talks. In general he sharply a criticized the Wests attitude toward the summit and charged qI violations of Soviet air space by American aircraft. The speech probably was also intended to warn against anyexpectations in the Communist world regarding the outcome of the Paris meeting and to prepare the ground for blaming American "insincerity" should the talks break down.

rjiruancneT-opened with an optimistic appraisal offor the Soviet economy, especially for thebut had little new to offer except for the announcementcurrency exchange to take place in (Page 3)



'Turkey: Student groups continue isolated but bitteragainst the Menderes regime. Any governmentto arrest opposition leaders, still rumored to be awouldew crisis. The commanderGround Forces reportedly has resigned, [premierrepeated charges that the opposition Republican(RPP) was directing the recent riots are disputed byof the Turkish General Staff, who believes the studentwere spontaneous. RPP leader Inonu iswith recent events, believing that his party hassupport from the governments continuing attemptsIts6)


India is engagedrash program to improvetransport, and communications in the sensitiveborder regions. Defense Minister Krishna Menon, inthe program with Ambassador Bunker, requestedconsideration of an earlier Indian approach toilitary transports. The Indian Air Force nowof these Fairchild Packets, but only six of them areMenon said India needs theircraftthe monsoons in mid-June, and is also interested inofore Packets and one orercules8)


Belgian Congo:ay disorders at Stanleyville, in which the cars of Europeans were stoned, constitute the first major anti-European outbreak of the pre-Independence period. They coincided with two political rallies in the area inwith legislative elections to be held from IVtoay. The Incident is likely to accelerate the departure of Europeans rom the Congo prior to its independence onune. The threat further anti-European outbreaks will add to the problems of

^Belgian security forces, which are already hard pre the peace between warring tribes in Kasal Province.

to keep

The reported creationew political party by the young reformist group, the Committee for Defense ofInterestsitter struggle with the conservative Rally of the Lao People, the party of formerPhoui, for control of the new government of Laos. CDNI leaders, assuming credit for the anti-Communist sweep ln- elections, have made it clear that they intend to be the dominant force in the new government. Communist propaganda before the elections hinted that the "civil war" in Laos might be expanded

if the CDNI were to assume9)



Austria-USSR: Premier Khrushchevs expected visit to Austria--for which Vienna has proposed the week ofune to 3continue the upward trend in official exchangesthe two countries initiated by Chancellor Raabs visit to Moscow inhese exchanges have had distinctadvantages for the USSR in the past, and the forthcoming ceremonial visit will afford Khrushchev another opportunity to cite Austrian-Soviet relations as an example of successfulcoexistence."

*ecent trade union actions indicate that anmajority of the Labor party membership may demandof the partys support for an independent British nuclear deterrent policy. These developments, following the Macmillan governments decision to abandon the Blue Streak missilehave faced the Labor party with the necessity ofts nuclear defense policy. Increasing public agitation fornuclear disarmament and the prospecthift lnposition will add to the pressures on the government to show some tangible progress ln disarmament negotiations.]


outh Vietnam: The Cambodian Governmentthat its ground forces, supported by fighter"sizable South Vietnamese troops" who crosseday. Cambodiaay requested theCommission (ICC) to make an "on the spot"Informed the organization that the Cambodian Army hasa reportouth Vietnamese battalion is en routeborder area. Ambassador Trimble is suspicious ofof Cambodlas version, and feels Cambodian leadermay be seeking to "prove" aggression by South VietnamJustify the signing of some agreement with visiting Chinesepremier Chou En-lai for closer Sino-Cambodianwhile expressing friendship for the Westecentwith Ambassador Trimble, stressed that Cambodiahesitate to "throw itself into the arms of the Chineseif another serious border incident with South Vietnam oc=



(Available during the preceding week) Short-term Outlook in Indonesia.

Situation and Prospects in East Germany. SNIEMay

Strength of the Armed Forces of the USSR. SNIEMay



Khrushchevs Supreme Soviet Speech

Khrushchev climaxed his pre-suromit maneuverspeechay to the Supreme Soviet in which he resortedoviet tactic frequently used on the eve of importantattempting to place the West on the defensive and to demonstrate that the USSRs peaceful coexistence policy does not result from any weakness the West could exploit at thetable.

In his speech, which was largely devoted to economicKhrushchevessimistic assessment offor agreement at the summit, citing recent Westernstatements and actions as providing little ground for hope that the Western leaders "are really looking for concreteHe charged that "aggressive forces" in the United States recently have intensified their efforts to "wreck the summitor at least prevent it from reaching agreements."

References to President Eisenhower, although couched in moderate terms, went further in criticizing him than at any time since Khruahchevs visit to the United States. The Sovietremarked that recent speeches by American spokesmenad omenavorable outcome at the summit and said this situation had been aggravated by the "unfortunate fact that even the American President approved theseeregret that President Eisenhower Intended to limit his presence at the summit to only seven days and observed that this shows that questions to be discussed in Paris "do not enjoy due attention on the part of the US Government."

Khrushchev apparently intends to use his charges of recent violations of Soviet air space by American aircraft to embarrass the United States as much as possible without blocking his path to the summit. He denounced such violationsdirectand announced that the USSR would take the matter to the UN Security Council. He charged that the incidents were timed to coincide with the summit meeting and that the United States is seeking


to weaken the USSR'S "determination to fightelaxation of international tension and an end to the cold war and armsn an effort to portray American policy as irresponsible andand to generate widespread public alarm over itsconsequences, Khrushchev warned that the USSR reserves the right to reply to "such aggressive actions" in the future "with measures which we shall find necessary to ensure the safety of ourithout committing the USSR toourse, he attempted to convey the notion that lt might employ missile

Khrushchev's speech probably was also calculated to warn against any exaggerated expectations ln the Communist world regarding the outcome of the Paris talks, which he has been careful to portray as only the firsteries of suchKhrushchev's harsh criticism of the United States may also be intended toase for blaming Americanshould the talks break down.

Khrushchev carefully disassociated himself from the more belligerent policies favored by the Chinese Communists. He"We shaU not spread the ideas of Communism by means ofaving used the aircraft incident to raise the threatew and dangerous crisis, Khrushchev concluded his speech by reaffirming his "clear-cut, consistent" commitment to thepolicy" of peaceful coexistence. By pledging himself to spare no effort at Paris toutually acceptablehrushchev sought to reassure Western leaders and forestall speculation that he has lost Interest ln summit talks.

In his Supreme Soviet speechay, Khrushchev held out bright hope for major improvements in the Sovietwelfare but, with the exception of the plan to alter the value of the ruble, disclosed little that was new. Plans to abolish income tax for factory and office workers and shorten the workweek were restatements of Seven-Year-Plan goals. Like other topics in the speech, these plans were discusseday designed to gain maximum propaganda benefit, but the Soviet consumer has been and will continue to beesidual claimant on economic output.

Khrushchev continues to be extremely optimistic about overfulfillment of the Seven-Year Plan and about progress in "catchingis data continue to be carefully selected to make the bestexample, comparisons in cloth production were again presented in linear measures,ear of using the more realistic and less favorable square measurement.

Khrushchev reiterated the goalhour workweek for aU except coUective farmers by the end0 and of startinghour workweek Lessf0 workers now havehour workweek, and the conversion has hardly started outside of heavy Correction of hoarding and of inefficient use of labor, together with technological improvements, is making itfor the USSR to carry out the cut in man-hours without sacrificing increases in output.

The income tax hasery minor source (currentlyercent) of budget revenue, which depends mainly on indirect taxation,rofit deductions and turnover tax. The abolition of income taxes will have the effect of raising slightly the take-home pay of most workers, although the more highly paid workers will have their wages decreased by an amount equivalent to the tax no longer charged.

Khrushchev stated that all prices and all payments will be revalued at the end of the year on the basis of ten old


rubles for one new. The existing currency is to be replaced by new currencyhree-month period. The change would have no significant effect in domestic trade. Khrushchev said the gold content of the ruble will be raised but did not say by how much.

The external value of the ruble will also be changedate not yet announced and probably different from the one-to-ten rate applying to domestic funds. This would make itto bring the two values of the ruble closer together, simplify the bookkeeping of the USSR's foreign trade, and enhance the prestige of the ruble. The currency change will also give the regime useful data as to who holds theoutstanding currency.[




[Occasional student demonstrations continue in the larger Turkish cities, and the security situation could deteriorate rapidly ii the government implements reported plans to lift the parliamentary immunity and arrest four to six oppositionThe situation in Ankara remains tense, as indicated by the angry student demonstration which broke out in the capitalay around the car in which Premier Menderes was riding. Menderes reportedly was jostled but uninjured.

(Republican Peoples party (RPP) leader Inonu is reported pleased with the extent of political gains which he believes have accrued to his party during recent events. He feels that the PP should remain quiet for the present and let theengender greater unpopularity with its oppressiveThe RPP will continue to apply, pressure on thehowever, as Indicated by the action of RPP deputies in walking out of the National Assemblyay when an RPP deposition requesting an investigation of the premiers recent actions was not read before the legislature.

[The chief of the Turkish Armed Forces General Staff,Erdelhun, in reviewing recent events in Istanbul for the American army attacheay, stressed that no evidence had been uncovered that the RPP had participated in or directed thestudent demonstrations. This comment is contrary to recent statements by Menderes and the Ministry of Interior denouncing -the RPP for instigating an "openrdelhun also stated that as long as he remains chief of the General Staff, the Turkish Army will not be used either to overthrow the government or to crush the opposition. Erdelhuns blunt statements indicate his firm determination to maintain the armed forces' traditional aloofness from politics and do much to clarify recentabout the armys potential role ln future political crises. The reported sudden resignation of the commander of the Army Ground Forcesay demonstrates, however, that important army leaders are opposed to the present governments policies^

Zj i

Arab Boycott

The UAR press and radio are leading the Arab world in an increasingly shrill campaign against the alleged Israelibehind the picketing of the UAR ship Cleopatra in New York and the Congressional amendment of the Mutual Security Act. As the boycott continues, the possibility grows that it will beto include American aircraft and the import of American goods. To date, most American-flag ships headed for Arab ports have been diverted, so thatew have actually been boycotted. American embassies and consulates have recommended thatpassengers on US ships stopping at UAR and Lebanese ports not disembark because of the possibility of involvement ln

American-owned vessels under flags of convenience will not be boycotted]

ay the Bahrein government, oat of consid-

eration ior its oil revenues, reversed an Initial order to boycott both US-flag and US-owned tankers, and an American-flag tanker has since been loaded. The boycott in Kuwait, however, doesto American tankers, but very few call there and the Kuwait Oil Company has decided these will be diverted.!-

India Desires Immediate 'Purchase of US Military Transports

[India's strenuous efforts to improve its defensiveand means of communication in the remote Himalayan border regions were outlined to Ambassador Bunker byMinister Krishna Menonay to support his request for urgent US consideration of an earlier approach for the purchase ofG twin-engine military transports with spares. He claimed the urgency is tied to the coming monsoon season, which begins in mid-June and will make overlandto the mountainous border areas extremely difficult if not impossible^]

Qdenon further stated that later, in connection with its road-construction program in the border region, New Delhi wants to buydditionals. He also expressed an interest in one orercules turboprop military transports, and suggestedflnancingthese later purchases with credits from the Export-Import Bank or some other lending agency.}

(The Indian Air Force now hass, of which only six are reported operational. These craft, together-ith India's military and civilian fleet of time-worn aircraft ofype, are at present the mainstay of theairlift capability in the north. Plans to beginofith an Indian-produced, British-designed turboprop transport will not be carried outhe Indians, however, are apparently convinced they cannot wait that long, inasmuch as the border problem with the Chinese, left unsettled by the Nehru-Chou conversations, will continue for some timeTJI-


Political Maneuvering in Laos

The reported creationew political party in Laos by the young reformist Committee for Defense of National(CDNI)itter struggle among the victorious conservative elements in the recent elections for control of the government to be formed after the National Assembly convenes onay. [The new party, as yet unnamed, will consist ofdeputies elected with CDNI affiliation or support;of its precise strength will probably have tooting test after the assembly opens. The CDNI will reportedly continue to function as an anti-Communist reform group whose mam function will be to generate the mass support necessary to assure the new party of control of the assembly.}

There are strong indications that the new party may attempt toovernment without the participation of former Premiers Souvanna Phouma and Phoui Sananikone, who between them control the bulk of the deputies in the other majorgrouping, the Rally of the Lao Peopleny suchif successful, would givearrowly basedwhich would face formidable opposition in the assembly; an unsuccessful effort wouldesidue of bitterness that would impair vital RLP-CDNI cooperation in any coalition

General Phoumi and other CDNI leaders have claimedfor the anti-Communist sweep in the elections and appear determined to cash in on the political gains they feel their group has made in recent months. They can be expected to hold outominant voice in whatever government is formed and to oppose the appointment of either Souvanna or Phoul as premier.

A CDNI-dominated government would be the development most likely to lead to an intensification of Communist Pathet Lao guerrilla attacks throughout the country. Communist propaganda before the elections consistently singled out the CDNI for attack and hinted that the "civil war" ln Laos might be expanded if the CDNI were to assume power.



Khrushchev's Forthcoming Austrian Visit

Premier Khrushchev's expected visit to Austria thisfor which Vienna has proposed the week ofune to 3continue the notable increase in official exchanges between the two countries which has followed Chancellor Raabs visit to Moscow inore thanomparatively high-level exchanges have occurred since then, highUghted by Defense Minister Grafs visit to Moscow in8 and Presidentear later.esult ofrip, President Voroshilov has an invitation to visit Austria.

According to Austrian plans, Khrushchev will spend three days Inhe will be entertained with "all the pomp Austria canwill then tour the provinces. Austrian officials may hope the largely ceremonial occasion will also provideto discuss trade matters. Reparationsthe exception ofbe completed early next year, and Vienna has long hoped that these deliveries could be placedommercial basis after that.

Khrushchev will probably attempt to gain support for Sovietpolicy positions such as that on disarmament, and he will urge the Austrians, both in public and ln private, totrictlycourse. He will, as Soviet visitors have in the past, emphasize Austro-Sovlet friendship and cite relations between the two countries as an outstanding example of successful coexistence. US Embassy officials in Vienna note that the USSR ln the past has gainedpropaganda and prestige advantage" from its exchangewith Austria. During8 visit, for example,was hoping at the time to obtain some alleviation of Austria'scredited the USSR with the successfulof the state treaty.

Although the embassy officials doubt the exchange program has materially changed Austria's basic anti-Soviet feelings, they believe firsthand acquaintance with the USSRs technological achievements and power have Impressed Austrian visitors.)


(The resolut

tun tMsstiuay/uy me AmalgamatedUnion, Britain* second largest, demanding that the government renounce tho testing, manufacturing, and stockpiling of nuclearand the basing of such arms ln the United Kingdom indicated that opponents of Labor's present nuclear weapons policy willajority at the party conference next fall. The party* policy now calls for an independent British nuclear deterrenton-nuclearhree of the six Largest trade unions, which make up the bulk of the Labor party membership, are onfavoring unilateral nuclear disarmament. Local Laborwhichotes at the conference, have long supported this view. Together these add up tootes requiredonference majority^.]

[While party leader Gaitskell insisted as recentlyay that Britain could not disarm unilaterally and renege on its NATOhe acknowledged that Labors policy would have to beHe implied thatompromise to accommodateof the policy, the leaders might consider calling for an end to production of nuclear weapons but for retention of those already on hand. Any change in policy would come up for ratification at the conference^]

(The governments decision to abandon the Blue Streak missile project, which Labor contends is an admission of the impossibility of providing an independent British deterrent, gives party leaders an occasion for changing the party* nuclear defense policylosing further prestigeT/

LBislng antlnuclear sentiment In Britain apparently is notto the Laborites. In commenting on the highly successful Easter week-end march sponsored by the Campaign for Nuclear Disarmament, the American Embassy noted that the movement now contains supporters from among an Influential cross-section of the British public. These factors will add to the pressures on the Mac-millan government, already highly sensitive to public opinion on the issue, to achieve some tangible progress on disarmament in East-West negotiations."

THE PRESIDENT The Vice President

Executive Offices of the White House

Special Assistant for National Security Affairs

Scientific Adviser to the President

Director of the Budget

Director, Office of Civil and Defense Mobilization Director, National Aeronautics and Space Administration Special Assistant for Security Operations Coordination Chairman, Board oi Consultants on Foreign Intelligence Activities Special Assistant for Foreign Economic Policy Executive Secretary, National Security Council

The Treasury Department

The Secretary of the Treasury

The Department of State The Secretary of Sute The Under Secretary of State The Under Secretary of State for Political Affairs The Deputy Unoer Secretary of State for Political Affairs The Deputy Under Secretary of State for Administration The Counselor

Director, International Cooperation Administration The Director of Intelligence and Research The Department of Defense The Set mtary of Defense The Deputy Secretary of Defense

Assistant Secretary of Defense for International Security Affairs

The Secretary of the Army

Tho Secretary of the Navy

The Secretary of the Air Force

The Chairman, The Joint Chiefs of Staff

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

Commandant, United States Marine Corps

Assistant to Secretary of Defense for Special Operations

Director for Intelligence, The Joint Staff

Assistant Chief of Staff for Intelligence, Department of Army

Director of Naval Intelligence, Department of Navy

Assistant Chief of Staff, Intelligence, Department of the Air Force

Supreme Allied Commander, Europe

Commander In Chief, Pacific The Department of Commerce

The Secretary of Commerce Federal Bureau of Investigation

The Director Atomic Energy Commission

The Chairman National Security Agency

The Director National Indications Center

The Director

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