Transcript of 104-10302-10030.pdf

================================================== Page 1 ================================================== aaa 104-10302-10030 2025 RELEASE UNDER THE PRESIDENT JOHN F_ KENNEDY ASSASSINATION RECORDS ACT OF 1992 27 December 1963 SC No 00624/63 WEEKLY REVIEW OFFICE OF CURRENT INTELLIGENCE CENTRAL INTELLIGENCE AGENCY this DOCUMENT CONTAINS CODE WORD MATERIAL No FOREIGN DISSEM TOP SECRET GROUP Exclucez from autonaric 5111812 downgrading ana zeclassificction Cony ================================================== Page 2 ================================================== 13-00000 This document contains classified information affecting the national security of the United States within the meaning 0f the espionage laws, US Code Title 18, Sections 793, 794,and 798. The prohibits its transmission or the revelation of its contents in any manner to an unauthorized person, aS well as its use in any manner prejudicial to the safety or interest of the United States or for the beneft of any foreign government to the detriment of the United States: It is to be seen only by US personnel especially indoctrinated and authorized to receive COMMUNICATIONS INTELLIGENCE information; its security must be maintained in accordance with COMMUNICATIONS INTELLIGENCE REGULATIONS. No action is to be taken on any COMMUNICATIONS INTELLI- GENCE which may be contained herein, regardless of the advantages to be gained, unless such action is first approved by the Director of Central Intelligence. DISSEMINATION CONTROLS This document MUST NOT BE RELEASED TO FOREIGN GOVERNMENTS . If marked with specific dissemination controls in accordance with the provisions of DCID 1/7, the document must be handled within the framework of the limitation s0 imposed. law ================================================== Page 3 ================================================== 1 3-0oQ00 TOP.SECRET DINAR C 0 N T € N T S Informa tion as Of 1200 EST , 26 December 1963) THE COMMUNIST RORLD Page SOVIET TRADE_ ACTIVITY IN THE INUSTRIAL WEST Wi-thin a week after the centra1 committee approved Khrushchev 's plan for the chemical indus Sovfeji traders apparently bad thelr instructions and were renewipg contacts in_ the industria 1 West CHINESE COMMUNIST LEADERS AFRICAN_TQUR 2 #hile Chou En-lai and Chen Yi have been able to project an a ura of Afro-Asian amity during the first two weeks of their two-month tour they have not scored-comparable successes in tbe polftical or economic fields EAST GERMAN REACTION TO RELAXATION OF BERLIN TRA VEL 3 Tbe East German people wbfle e lated over tbe holi- trave 1 arrangements In Berlin; are publtcly- voicing_hope that may be permitted to vist their_ relatives 1n West Bex1n and_Hest Germany NORTA KOREA IMPROVES AIR DEFENSE CAPABILITY Pyongyang bas more W1de ly dispersed its supersonic MIG-213 has acquired relatively -sophisticated new radar, and_has-equipped-Its-IL-28s with an Improvedl bTind bombing and navigational system NORTH_VIETNAM' S MILITARY ESTABLISHMENT This military_force primar a ground army witb no tactical aIr and little nava1 capabillty, Is neverthe less the most formidable In Southeast Asia Its most notable achievement is ItS highly speclal- ized capability to support and ma intain Insurgency operations in_adjacent countries (Published se-p- arately as Specta) Report SC No 00624/63B) AS IA-AFRICA ENTHUS IASM_FQR SOUTH VIETNAM REG IME FLAGGING 5 The military regime 1s beg Inning to take steps to ma ke ItS counterinsurgency effort more effective but the generals still seem to have Iittle idea_of how to rally S1gnificant_popular support LAOS 6 Communist forces have moved to erase recent gains by rightist units in central LaOs Neutralist and Pa thet Lao representatlves are_ continuing their efforts to ease tension_ between_ the two factions 27 Dec 63 CURRENT INTELL IGENCE WEEKLY REV IEW Page 1 TOP SECRET DINAR try, day they- 11y ================================================== Page 4 ================================================== 13-00Q00 TOP SECRET DINAR AS IA-AFRICA (continued) Page FRENCH CABINET MINTSTER TO VISIT CAMBODIA (Armed_Forces Minister Messmer's vislt In early Jan= gary is designed pr imarily to strengthen French in- fluence Jn the wa ke of Sihanouk' S ca 11 for an end to the US afd program ARABS PLAN NO OVERT ACTION AGA INST ISRAELI PROJECT 8 (Arab military " chiefs apparently feel that overt mil= 1tary action aga inst Israel 'S Jordan River diversion project is not feasible but sabotage of its facili- ties may be attenpted. CYPRUS DISPUTE FLARES AGAIN 9 TTbe new outbreak fighting on Cyprus is a reation to President Ma karios determination to change the constitution so as to limft the role of the Turkish minority BREAKUP OF THE FEDERATION OF RHODES IA AND NYASALAND The temnEyear-old federation is be ing dissolved on_ 31 December beca use its black African population has persistently opposed it as a device to perpet- uate white rule Tts dissolution wi1l end London 's hopes for an economica lly integrated multiracial state and Increase the danger of bitter clashes be tween white and black nationa lists In its tbree erstwhile constituent territories (Published sep- arately a5 Spec ia1 Report SC No ; 00.624/63A) AREA NOTE 10 Saudi Arabia EUROPE THE COMMON MARKET CRISIS 11 Agreements reached_ on agricultural policy on 23 De cember are apparently sufficient to discourage De Gaulle from breaking up the community_ The agreement On a position for the Kennedy Round is_not necessarily favorable to_ the US UK-US FRICTIONS OVER SHIPPING_ POLICY 12 The Br itish Government bas advised shipping circles_ not to comply with US demands for information relat ng to rate discrimination agaTnst US exports REST GERMAN POLITICAL DEVELOPMENTS 13 Willy_ Brandt has again taken the center of the polit_ ical stage witb the success of negotiations to open the Wa 11 for the holiday season He has bee n named acting chaIrman of the SPD 27 Dec 63 CURRENT INTELL TGENCE WEEKLY REV IEW Page ii TOP SECRET DINAR of ================================================== Page 5 ================================================== 13-00Q00 TOP SECRET DINAR EUROPE (continued) Page AREA NOTES 14 NATO and Ice land WESTERN HEMISPHERE DOMESTIC POLITICS IN CUBA 15 Castro has cautlously continued efforts to reduce tbe influence Of the Moscow-orlented Cuban Com- munists who are said to have banded together to work clandestine ly aga Inst him_ DOMINICAN REG IME FACES NEW POLITICAL CHALLENGES 16 The_ KIIing of 15 guerril]as army troops ap= parently removes the insurgent threat but could provoke dangerous political repercussions The head of tbe provisional government has already re_ signed BRAZIL; 17 Appointment of Ney Ga lvao as_ finance minister reduces the a lready slight prospect tbat Brazil'si critical financlal_problems would be_ handled ef- fectively_ Other Cabinet_ changes_ may fo1low AREA NOTE 18 Bolivia 27 Dec 63 CURRENT INTELL IGENCE WEEKLY REV IEW Page 1ii TOP SECRET DINAR by ================================================== Page 6 ================================================== 13-00Q00 TOP SECRET DINAR The Communist World SOV IET TRADE ACTIVITY IN THE INDUSTRIAL WEST Within a week after the ing program was presented to central committee approved the plenum and allocations for Khrushchev 's plan for the chem - various trade corporations for ical industry , Soviet traders next year were approved . aRparently had their Instruc_ tilons and budget allocations The Soviet need for addi- and were renewing their activ- tional credit to finance planned lity in trade circles of the in- expanded purchases is crucial . Idustrial West _ The USSR presunably can generate sufficfent funds to meet down Contracts for fertilizer payments on sizable orders installations, plastics and syn- However credit arrangements thetic plants petrochemical must be set now to spread out lequipment and mining machinery the heavy crush of payments are already in various stages of which otherwise would fall due negotiation Officials in Bonn in 1965-66 when equipment con- report they have under consider- tracted for next year wi 11 be ation a proposal by a West Ger- delivered_ Soviet ability to man consortium to supply the increase hard-currency reserves USSR with S400 mi llion worth of is not likely to Improve in the petrochemical equipment_ A near future_ Moscow S current Soviet mission is negotiating grain imports will reduce Its with the British Imperial Chem- gold reserves by 25 percent ical Industry (ICI) which here- If these continue beyond mid- tofore has supplied the USSR 1964 _ the Soviet bard-currency with technical know-how ICI position will be under further reportedly has offered to de- strain_ liver equipment and processes for the production Of fertiliz- Despite the bleak forelgn ers herbicides rubber chem- exchange prospects for tbe USSR ica is and plastics _ Negotia- Soviet officials appear hopeful tions also are under way for that Western competition for large numbers of Japanese chemi- Soviet orders wi 11 be adequate ca 1 fertilizer plants _ to foster Western governmental and banking opinion favorable Another Western consortium to more and longer term credit_ involving US equipment and proc- Moscow may also hope that a esses is discussing delivery continuation of its relatively Qf a iarge` 0il refinery. In restrained foreign policy wi11 addition _ 9 contracts for a wi de be helpful in this context _ range of other machinery and Whi le viewing the USSR as an equipment will probably soon be acceptable commercial risk, the Signed . These contracts appar- banking community bas hereto- ently had been postponed until fore been unwi lling to extend the new chemical equipment buy- credits beyond a_ five-year pe- riod because of uncertainty about future political develep_ ments (SECRET) 27 Dec 63 CURRENT INTELLIGENCE WEEKLY REVIEW Page 1 TOP SECRET DINAR ================================================== Page 7 ================================================== 13-00Q00 TOP SECRET DINAR The Communist World CHINESE COMMUNIST LEADERS AFRICAN TOUR With-two_Weeks_of_thelr -pro= continent Criticism of the jected two-month tour of Africa USSR waS reportedly a recurrent completed _ Chou En-lai and For- theme in Chou S four lengthy Minister Chen Yi can clalm talks with Nasir Nasir report- high marks for thelr efforts to edly said that Chou talked about project an aura of Afro-Asian the USSR the way the Soviets amity and to Identify Peiping used to talk about the US _ He with African aspirations_ There accused the Soviets of trying is no evidence however that to colonize China of breaking they have scored any comparable political and economic promises , success in the political or eco_ and of becoming tools of the nomic fields _ US and he warned that any Afro- Asian country which became de- The joint communique issued pendent on Moscow would suffer on 21 December at the conclusion the same fate as Peiping _ of tbe Chinese leaders visit to Cairo contains few surprises _ In Algeria Chou sounded a and reports from Algiers suggest similar note_ He cited China 's that discussions with Ben Bella early support for Algerian rev- are following predictable lines _ olutionaries-~support which aC- Thus far the Chinese have at- tually pre-dated that of the USSR tempted to minimize differences_ He has a lso undoubtedly scored play up past contacts, and press Soviet unreliability_ The Chi- such themes as militant struggle nese may be pressing the Algerians against colonialism and "US im- to use some of the Ss0-million ' perialism_ credit offered in October _ This offer was made to counter a S100_ In both Algiers and Cairo, million Soviet credit offered Chou S hosts sought to demon - earlier the same month _ strate their nonalignment by actions designed to play down Sino-Soviet rivalry for the impact of the Chinese lead- African support also flared at ers arrival Cbou was greeted the UN where Peiping outmaneu- in Cairo with a 21-gun Salute, vered Moscow on the question of but Nasir was not on hand. In enlarging the representation in Algeria Ben Bella was on hand principa l UN organs to accommo- to greet his guests but the top- date the African bloc _ Soviet level delegation he sent to the delegate Fedorenko had attempted Soviet Union just before Chou 's to make It appear that the Chi- arrival is receiving more pub- nese were opposed to the African- licity than the Chinese guests_ sponsored expansion plan because they insisted that any change It has becone increasingly in the UN be tied to Peiping S apparent that a major objective ow a dmission to tbe Security of the trip has been to undercut Council. The USSR found itself Soviet influence throughout the holding a suddenly emptied 27 Dec 63 CURRZNT INTELLIGENCE WEEKLY REVIEW Page 2 TOP SECRET DINAR eign bag_ ================================================== Page 8 ================================================== 13-00000 TOP SECRET DINAR The Communist World however when Peiping-loudly Such_secrecy may-well be_prompted repudiated Fedorenko S statement by security considerations _ Chi] and accused tbe Soviets of using nese officials were apparently the issue as a pretext for Op- seriously shaken by the abortive posing Afro-Asian demands _ plot to klll Liu Shao-chi in Cambodia last spring_ The Chi- Chou can be expected to nese envoy in Cairo reportedly capitalize on this during next told Nasir of concern for Chou 'sl week S visit to Morocco and in safety and asked tbat travel subsequent stops in Guinea plans during the Chinese leader 5 Ghana and Ma li No detaiis of visit to the UAR not be made Chou S itinerary beyond Rabat public_ (SECRET NO_ FOREIGN DIS_' have_ been made_public_by-Peiping. SEM) EAST GERMAN REACTION TO RELAXATION OF BERLIN TRAVEL Reaction of_ East_Germans party_headquarters--Is-still to the agreement to let West fairly cautious: One party Berliners visit relatlves in member Jn Magdeburg said: "The East Berlin is hopeful but still reason we don 't let our citizens fafrly cautious judging by re- go to West Germany is that we Ports from iocai party officials. are afraid they will defect _ Mf But be was promptly silenced by The party central head- comrades who parroted the party quarters, obviously concerned line on "the terror agaInst our that the agreement might bave GDR citizens In West Germany . domestic repercussions ordered district officials to submit Public expression of dls_ immediate reports and detailed satisfaction wltb barsh travel follow-ups on reactions to tbis and internal controls has been partial relaxation of travel recurrent in recent months curbs imposed in connection reaching a peak prior to the with the building of the Ber lin 20 October parliamentary elec_ Wa11_ Most of the responses tions_ state that the people are elated but are publicly voicing hope The people's reaction to that they may be permitted to the pass agreement with West visit their reletives in West Berlin points up one of the re- Berlin and West Germany . Many gime S major problems: how to East Germans express hope that project an Image of itself as a the present move wi1l be followed sovereign state and of East Ber - by other relaxations--a reaction lin as its capital without in- probably quite unpalatable to creasing discontent among its the regime_ population , who still risk shoot- ing 1f they attempt to escape Public comment--at least to West Berlin_ (SECRET KIMBO) as reported by the various 27 Dec 63 CURRENT INTELLIGENCE WEEKLY REVIEH Page 3 TOP SECRET DINAR ================================================== Page 9 ================================================== 13-00000 TOP SECRET DINAR CHINA CHONGIN Yalt XIMCKAEX, NORTH Ui KOREA 'SiNCHANGNI GNAMST' MAAMCHAM IONGJU JONDOK FUKCHANGNI PYCNGNI KORE SUNAN ~IANI Byongyang PIORGYANG ONCHON CHANGJO HWANGH: SinGYE PYONGGANG KOKCHONGNI Kaesong SOUTHIKOREA SAM site Bomber elements Fighter defense elements Combined command headquarters Radar station East coast filter center Early warning radar coverage TOP SECRET DINAR Declmber ID0J Miles I0O 7eS 3t TOP SECRET DINAR ================================================== Page 10 ================================================== 13-00000 TOP SECRET DINAR The Communlst World NORTH KOREA IMPROVES AIR DEFENSE CAPABILITY North Korea has_recently coverage Six new_types of taken severa l steps which signff- radar at least one of wblch icantly strengthen Its air de- Is beileved to be exclusively fenses MIG-21 (Fishbed) jet of Chinese Communist manufacture , fighters which were first de- bave been detected _ For the tected only at Pukchang-ni alr- present these radars will ap- field now are being statfoned parently supplement ra ther than at other airfields Pyongyang replace Nortb Korea 'S origIna 1 has also apparently just acquired three types__Knlferest A , SCR- a large number of relatively 270 and Token _ Sophisticated types of radar sets _ In addition. the North The identifiable new types Korean bomber force which has include Kniferest B Spoonrest al total of about 10o IL-28 A and a new type of Chinese Com _ (Beagle) jet light bombers is munist origin which is probably in part now equipped with , and a substantial modification of has been training with , an in- the SCR-270_ Spoonrest A is proved blind bombing and naviga - sometimes used aS tbe acquisi- tional system_ tion radar for surface-to-alr missile sites but it is a ls0 Testing of and flight traln- used in an eafiy warning role ing with the new fighters__1O and is probably intended for that to 14 of which were apparently use in North Korea Acqulsition obtained from the USSR in the of these new radars reflects fall of 1962--were first noted North Korea 'S efforts to extend in communica tions intelligence the range of its early warning in June 1963 _ Since that time detection system _ To improve the MIG-2ls have been detected beight-finding capability Pyong - frequently 1n flight activity yang has also introduced more involving ground controlled in- sophisticated radars such as tercept exercises Rockcake and Stonecake Beginning in October MIG- Another improvement in North 21s bave been noted opera ting Korea S air capability is the from Wonsan on the east coast equipment of about twenty IL-28s Of North Korea Their deploy- with an improved blind bombing ment to this alrfield places and naviga tional radar system des _ supersonic fighters on botb the ignated Shorewa lk. When properly east and west coasts of North used this system permits precl_ sion navigation and blind bombing Korea without the use of ground communi- Tbe North Koreans have re- cations whicb would betray tbe di- cently_expanded_their radar rection of the flight and the tar- get designation. (TOP SECRET DINAR) 27 Dec 63 CURRENT INTELLIGENCE WEEKLY REVIEW Page 4 TOP SECRET DINAR ================================================== Page 11 ================================================== 13-00000 TOP SECRET DINAR Southeast Asfa ENTHUSIA SM FOR SOUTH VIETNAM REGIME FLAGGING Communlst guerrilla activ_ members of the-Clvilian-advlsory ity increased only sllghtly in Counc1l of Notables Returned connection with the third anni- versary_ on 20 December of the exiles appa rent ly are not rep- Viet Cong S Llberation Front resented and there Is a dearth despite advance CommunIst propa ~ of direct provincial represen- ganda exhortation for a major tation_ Many appointees how- military effort _ The Viet Cong ever are prominent political, continued to direct attacks and professional and religious harassing activities primarily leaders who could provide effec- at strategic hamlets tive guidance to the regIme if they are gIven a cbance South Vietnam 's new govern- ment is showing extreme sensi- Apa and disenchantment tivity to discussion of a "neu- over tbe new government are wide- tralist solution 11 to its in- spread among such key elements as middle-grade officers stu- surgency problem The Communists dents and politicians Criti- Liberation Front has repeatedly cism centers on tbe lack of proposed sucb a settlement and the idea is gainlng new advoca tes firm direction by the ruling gen- as a result of Cambodia S ca 11 era Is on repea ted reshuffling for an international con ference _ of loca 1 officials deemed in- Sa 1gon 5 military rulers last competent corrupt or close to week closed down a tbe Dlem regIme ) and on the rise newspaper in Viet Cong activity_ There which was expressing interest 1n neutralism However editorials are signs that junta members in the vernacular press even tbenselves are beginning to share thougb a ttacking neutraiisne bave tbe disillusfonment of some cir- kept the debate in tbe public eye _ cles with Premier Tho 'S provi- On 20 December Saigon students_- sIona 1 cabinet , whIch Is described possibly encouraged by the re- as Ineffective and regiona 1 In outlook. gime--demonstrated against neu- tralism Leading genera ls nevertheless seem to have few effective steps On the military front , the in mind to rally popular support _ government is beginning to take Three genera ls recently compla ined some steps to overcome the leth- to US offlcials that they were hav: argy that bas a ffected its coun - ing trouble finding qualified terinsurgency effort since the Vietnamese to fill government posi[ coup _ A long-range paclfication tions and that press criticism program bas been launched in one of ther efforts was unhelpful _ of the most troublesome provinces Genera1 "Big" Minh the chlef of in the northern part of the coun- state, has Indicated a persona 1 try_ and broad command changes distaste for a prominent role, bave been Introduced in two prov- and has asserted that the people inces south of Sa igon where would gradua lly come to appreciate security bas been deteriorating_ the new government as prob lems In the political field were solved on a province-by the government_bas_named_60 province-basis (SECRET NO FOR_ EIGN DISSEM/ BACKGROUND USE ONLY) 27 Dec 63 CURRENT INTELLIGENCE WECKLY REVIEW Page 5 TOP SECRET DINAR lay thy ================================================== Page 12 ================================================== 13-00000 LAos CKINA CHINA Nam Sphong NORH VETNAM BURMA SDien Bien Phu am Thha AANOI Muong Sa Sam Neua Ban Houei Sai Luang Prabang Ban Ban P'cine_ Sayaboury Xieng JerregjKhouang Vieng GULF OF TONKIN Vinh Pak Sane Kam Keut VIENTIANE ak Sao Nhommaratr Thakhek Tcheponet QNTH vvanqakhet VBAAM THAILAND Saravane Pakse Road Attopeu Trock or trail Railroad BTATUTE Miles 100 CAMBODIA 33s CODE WORD MATERIAL ON REVERSE OF PAGE Ssumao Saly 1 Mekong Vang 1 ================================================== Page 13 ================================================== 13-00000 TOP SECRET DINAR Asfa_AfrIca LAOS Communtst Torces bave a meeting on 20 December Jn the moved to erase recent ga Ins Plaine des Jarres both S1des Qade by rightist units In' cen- called for an "early" meetIng tral Laos _ Pathet Lao troops , between Prenier Souvanna and reportedly supported by sub- PrInce Souphannouvong _ They stantial numbers of North Viet- aIso agreed In prInciple that namese on 19 December captured elements of the coalltlon govern_ Kam Keut and the nearby aIrfield, ment should be transferred from three days after occupyIng the Vientiane to the royal capital route junctIon at Lak Sao . at Luang Prabang whlch would be Right-WIng messages have de- neutrallzed and piaced under trl- scribed a key rightist parabattal- partite control _ Both factions ion as "completely smashed , reiterated thelr support for Communist units have advanced the formatlon of a mixed polIce south of Lak Sao toward neutral- force In a neutrallzed Vlentlane _ Ist positions along Route 8-A but there have been no indica- General Phouml 's right- tions that they intend to press WIng factlon whIch was not their advantage by 8 major drive represented at the meeting on Nhommarath which Is st1ll remalns skeptIcal of Pathet held by rightist forces _ In Lao Intentions_ Phouni apparently other areas there have been belleves that an agreement for reports of only limited actIv- the neutralization of Luang Involvlng scattered skir- Prabang is unlikely , but he may nishes and artillery exchanges_ Join in talks on the subject He has Lndicated however that Meanwhlle neutralist and the neutrallzation of Vientiane Pathet Lao representatIves are is contingent on the willfngness contInulng ther efforts to of the Pathet Lao to aIlow free negotlate an easing of tensions movement 1p areas of Laos now be tween the two factions_ At under their control (TOP SES CRET-DINAR) 27 Dec 63 CURRENT INTELLIGZNCE WEEKLY REV IEW Page 6 TOP SECRET DINAR key 1ty ================================================== Page 14 ================================================== 13-00000 TOP SECRET DINAR Asla_Africa FRENCH CABINET MINISTER To VISIT CAMBODIA ATmed Forees-Wtntster In-mirftary-aid -probably-would Rlerre Messmer s visit to Cam _ be limited to reconditioned and bod1a from 4-7 Janua ry Ls de - obsolete equfpnent_ such as s1gned primarily to strengthen trucks and light armored vehic les Trench influence there in the Increased cultura 1 and technica 1 wake of Prince Sibanouk s ca 11 assistance probably would Include for an end to the US aid pro- further belp for the French unl- gram _ Messmer'8 high-leve l versity mIssion more teachers entourage_ which Inc ludes the and 30 or 40 additional technical Chfefs of tbe Foreign MInistry's experts , espec ially agricultural~ Tndochina and Cultural and Tech - ists nical divisions will probably recommend sone increases In aid, The extens Ion 0f French a1d put De Gaulle apparently bas will be complicated by Cambodfa 's no intention of taking on any claims for compensation for Qarge new commitments_ losses incurred as a result of the 1958 deva luation of the French-grant aid to Cam - French franc Since 1958 France podia since 1956 bas amounted bas asserted that a large-sca le to only $15 million Current aid program would be Lmpossi- assistance 1s threefold: a ble until there is agreement on military training misslon of at an exchange rate but a compro- peast 250 men ; cultura 1 aid in mIse may now be In sight _ ihe form of a university mission land 319 teachers in Cambodian schools; and the naintenance of Sibanouk bas sought French about 40 experts in the fields help 1n ma Inta Inng Cambodia 's of bea lth and public works In policy of neutrality- and in laddition, a number of French recent talks witb the US and tbe na tionals bired by tbe Cambodian UK France has supported hls Government hold positions of ca i1 for an Internationa 1 con - cons iderable influence in the ference on Cambodian neutral- Ministry of Finance the Treas - ity, despite US objections urY , and the premier' s office Indeed De Ga ulle bas consIst- and are among Prince Sihanouk 5 ently sought to meet Sibanouk advisers more thban ba lf way and Paris may now encourage Sibanouk Paris bas Indicated it has to press thls issue (CON _ no intention of equaling tbe FIDENTIAL) us_aid_progran, Any-Increase 27 Dec 63 CURRENT INTELLIGENCE WEEKLY REVIEW Page 7 TOP SECRET DINAR ================================================== Page 15 ================================================== 13-00000 ISRAEL'S JORDAN RIVER DIVERSION PROJECT LEBANON- Canal or conduit; proposed or under construction Demilitarized Zone SYRIA Pumping Station (Under Construction) SRAEL Haifa Tunnel Reservoirs Tuanel NeGEV Tuanel ISRAEL Desert JORDAN Meditetranean Sea Tol Avlv Jofta JORPAN Jortabm DEO 43 GAZ Strip NeGev Desert STATUTI Vildo 34446 CODE WORD MATERIAL ON REVERSE OF PAGE Lituni ================================================== Page 16 ================================================== 13-00000 TOP SECRET DINAR Asta-Africa ARABS PLAN NO OVERT ACTION AGA INST ISRAELI PROJECT The Arab States eyidently states with a dllemga Damascug 0 not n any overt mITtary w1ll be under strong pressure action aga Inst Israel wben In to fulfill Its threats aga Inst late January or early February the Israeli schene particularly the Israells begin pumping tests in view Of the close proxlmfty for their Jordan Rlver diversion of the Syrian border to Israel's project but sabotage of the pumpIng station on Lake TIberias _ Project S facilities may be at- tempted _ Nasir's wariness about be - coming involved in a war wIth The Arab mflitary chiefs Israel over Jordan wa ters was who met in Cairo in mid-December also evident in a speecb he apparent ly dec ided tbat direct ma de on 23 December He empha - @ilitary attacks are not feasi- sized that the problem 1s polit- be The chiefs reportedly ica ] rather tban mflitary In agreed bowever tbat the states nature and that the chlefs of border_ on Israel should staff cannot solve it He mount Independent and uncoor- called for a summit weeting of dinated clandestine operations Arab presidents and kings to seek a solution _ The Arab League Defense Council whIcb meets in January , Israel,. according the probably will approve this rec - chief of Israell military in - ommendation but Its Implementa - telligence , cons Lders there 1s tion Is another matter Egyp- an outside possibility tbat tian,Jordanian _ 9 and Lebanese Syria might bomb or shell the officials have indicated pri- pumping facility's transformer Yately that their governments station_ However , } the Israelis ba ve no intention Of taking believe the primary threat stems aggressIve action of any kind from forer Palestinians now aga inst the Israeli project - lving In Syria Jordan or Leba non, who migbt make a dra -' Nasir bowever , told the ma tic effort to sabotage the Canadian ambassador in early project even though they prob- December tbat be was worried ably could not cause serlous that Syrfa might act unflater- danage (SECRET NO FOREIGN aply_ and present the other Arab DISSEM/BACKGROUND USE ONLY) 27 Dec 63 CURRENT INTELLIGENCE WEEKLY REVIEW Page 8 TOP SECRET DINAR plaf ing to ================================================== Page 17 ================================================== 13-00000 TOP SECRET DINAR Asia-Africa CYPRUS DISPUTE FLARES AGAIN be Tlghting between thee Greek In the face Of these dez and TurkIsh Cyprlot communttLes velopments the Turklsh Govern- which began on 21 December and ment threa 'tened to exercise its was continulng on 26 Dcember rlght under tbe 1959 agreement despite efforts to obtaLn a cease- to Intervene on Cyprus Three fire 1s the culmLna tfon Of a Turklsb jet fighters fiew over steady growtb of tenslon on the Nicosia on: 25 December and island durlng the past few weeks _ TurkLsh naval units appeared off The new tension followed Presl- the island _ Part of the 650-man dent Makarlos presentatlon to TurkIsh garrIson On Cyprus left Turkish Cypriot leaders of propos _ Its barracks to move into one als for changng the Cyprus con- of the Turkish quarters of tbe stitution_ The proposals wblch capital. Part of tbe 950-man essentially Iovolved removing tbe Greek contingent then moved to guarantees to the Turkish minor - protect Greek areas _ Tbe Situa - ity that had been written into tion evidently prodded Athens the Cyprus settlement Of 1959 and London into a more active were rejected by the Turkish Gov- role and Greek , Turkish and ernnent even before the Turklsh Britisb forces On Cyprus bave Cypriots bad made their vlews been placed under a unffied Brlt- known . Ishb-led command _ Britain as a0- nounced It 1s sending 150 ad- Most of tbe initial fight- ditional troops . Ing appears to have been be tween Greek Cypriot police and tbe Turk- The vlolence may make lead- Isb underground and to bave taken ers of both sides more cautious place in the Turkish areas of Nic_ In pressing political demands _ Osia_ Tbe situation there de- Soon after the outbreak Makarfos} teriorated progressively durLog told the US ambassador he would the week as the police lost con- g0 more slowly In pushing bls con] trol to extrenlst groups Of ir- stitutional revlsions Botb eth- regulars from both communitLes _ nIc groups bowever w11l be fur - A cease-fire to be supervised ther embi ttered-_particulariy by the Britisb bad not been ef- the Turklsh community whicb fective as of the morning of 26 is believed to have suffered December Fighting bad also con- much the beavier casualties tinued at tbe port city of Iar- (CONFIDENTIAL) naca ; the rest of the Island was qutet but-tense- 27 Cec 63 CURRENT INTELLIGENCE WEEKLY REVIEW Page 9 TOP SECRET DINAR ================================================== Page 18 ================================================== 13-00000 TOP SECRET DINAR Asla-Africa AREA NOTE Saudl Arabia : Crown PrInce were variously reported to have Fa ysa [ appea rs to haye wea thered been tbe new budget Which cuts hls latest dispute with Klng funds a llotted to tbe roya] Saud without maklng any conces- family , and Faysa 1 's refusa 1 sions The detalls of a new to give cabinet posts to two arrangement between tbe two are 0f Seud's sons not known but Faysa ] 19 still firmly in control of the govern - In blockIng Saud 's chal- ment Royal Guard elements lenge Faysa 1 appa rently was which the KIng ordered to pOs1- supported by most of the im_ tlons around his pa lace at the portant members of the royal he ight of the dIspute ha ve now family Throughout tbe crisis been withdrawn _ the Saud1 regular army rema Ined under the orders Of the minis- 'The dispute centered on ter of defense Prince Sultan_ Saud 's attempt to resume per- a Faysa 1 adherent _ Some ob- sona 1 control of tbe government servers have reported that the which he rellnqulshed to Faysa 1 Klng 8 actIon has actua served; a_year ag0 wben hls bealth to strengthen-Faysal '8-position broke The Immedla te Issues (CONF IDENTIAL NO FORE IGN DISSEM) 27 Dec 63 CURRENT INTELLIGENCZ WEEKLY REVIER Page 10 TOP SECRET DINAR 1ly ================================================== Page 19 ================================================== 13-00000 THE TARIFF DISP ARITIES ISSUE The tariff disparities issue which has plagued preparations for 'the' Kennedy Round for many months originates-in the fact-that-there-are substantiol-differences between the EEC and US. tariffs o individual items, even though over-all tariff levels roughly the same Because the EEC common external tariff wos arived at bY;averaging the -tariffs of the member states, te EEC tariff schedule is characterized by the absence of "peaks &nd lows" in the US schedule_ on the other hand_ the rates vary much more , &nd some individual tariffs remain very high in comparison with those of the EEC. Accordingly 'fhe EEC and the French in particular have insisted that & 50-percent cut in tariffs by both the US and the EEC would leave the US with substantial protection on certain items and deprive the EEC of bargaining power to effect their future reduction _ The diparities issue was believed to have been tettled at_the GATT ministerial meefing lost May with @ formula which provided that tariffs on industrial items would in general be: reduced equally and across the board , except that special rules" would aPply; "where sig nificant adverse effects on trade would result from disparities in tariff levels:" In faet, ever_ this formula merely shifted the argument to the Problem %f determining what disperities are" "significant" Or meaningful in trade terms_ Because ihe 'special rules" would mean in Mostcases smaller tariff reduction by the EEC than by the US, the EEC has attempted to maximize the area to which these rules would apply while the US has sought to minimize their aPplication. After lengthy negotiation_ 0 GATT subcommittee reached considerable measure of agreement last month o & formula which would identify & "significant" tariff disparity in the first instance as one in which the high rate is @t least 30 percent of value and at least:_ 1O percent above the lower rate - Because this formula would identify sone 850 US items &s eligible for "special treatment the subcommittee proposed seven' gdditional qualitative, Sri- teria which would reduce considerably the number of_eligible items Jhe three to which the US attaches importance wauld (1) require that there be sbstantial imports of the item concerned from the high tariff country into the '(2) exclude items where there gre sb- stantiol imports into the high tariff country; and (3) exclude items % which the lowi tariff; country, maintains quotas_ The formula qpproved by the EEC o 23 December would sbsiitute for the 30/10 critericn 2/1 fommula. A disparity would be identified as' oe in which the high tariff is twice % high as the low one apparently with the additional qualification that in most cases ihere would have to be & ten-point percentage sread between the two rates._ This formula would Provide for special treatment for far more than 850 items, including items % secial US expert_interest The grrangements for qualitative criteria also-seem-tohave been-modified to the US' disadvantage SECRET NO FOREIGN DISSEM_ CODE WORD MATERIAL ON REVERSE OF PAGE are long how- secial lowi ================================================== Page 20 ================================================== 13-00000 TOP SECRET DINAR Europe THE COBMON MARKET CRISIS The Conmon_Market appears to On farm products In the trade ne- have averted disaster Tor the sec = got1atrons__a)though a0 Tmprovement bnd tIme In less than a year _ The over the Inltlal Mansholt propos - eleventh-hour agreements reached a Is--also lea ves much to be desired 'on agricultural polIcy on 23 De - from the US view_ In genera 1 the cember are apparently sufficient EEC proposes that if Its levy sys- to dIscourage De Gaulle from carry- tem operates 1n such a way a5 to ng out hls threat to break up the cause difficultles for the exports community _ Moreover the Germans of nonmembers _ then the EEC Commis- and Dutch succeeded in extracting sion will be called on to propose limited comml tments from Paris on "appropriate T11 but unspecifled EEC particlpa tion in the Kennedy measures These would not appiy Round of tariff negotiations_ These if It 1s technically impossibie to algreements do not cover a11 the out- deternine how much protection is S tanding issues however and the actually involved in the levy sys - manner Jn which they were reached tem. Will leave a residue Of bitterness _ Nor is It certain that major US interests have fared well The general rellef within The ma in agricultural elements the communlty which greeted these #n the package" dea 1 are the reg- agreements reflects both the ulations concerning Intracommunfty depth of the crisis and Some Dp- trade in beef rice and daLry prod - timism tbat the Common Market's ucts and the rules governlng the unlty may have been restored . The community farm fund _ Their effect promlnent role played by the is to open the large West German EEC 's commlss_on In achleving market to farm exports of France the compromise has In particu- Italy _ and the Netherlands--gen - lar encouraged those who hope to erally at a substantial advantage strengthen the community's io- Over the exports of nonmembers Al- stitutional structure . though approval" Of these and the financlal regulatons is an im- Portant step formard the ques- In France the conviction tion of grain price unifica tion 1s was evidently WIdespread _ how_ still unsettled. Further considera- ever that both Bonn and The tion of the formula proposed by Com- Fague were qute prepared to see mlssioner Mansholt has been delayed the French "leave" the Common Mar - until next year _ ket and In the event of its breakup to seek alterna tIve The agreement on a Kennedy ties witb the Outer Seven _ More - Rpund position likewise an ad- over while it may prove healthy vance for the community but from tbat Bonn "stood up" to De Gaulle thhe US vlew not necessarily favor- in this instance its motive was able _ On the long-standing problem strongly colored by a desire to pro_ of tariff "disparities 10 the EEC tect its inefficient farmers Nor adopted 2 formula which would does it augur we11 for US-EEC re- exempt from the proposed 50-per- lations that the French blane tbe cent 1inear reduction in tariffs US for much of the opposition a far larger number of items than they_encountered (SECRET-NO the UShoped for Fhe~EEe positton FOREIGN DISSEM) 27 Dec 63 CURRENT INTELLIGENCE IEEKLY REVIEI Page 11 TOP SECRET DINAR key is ================================================== Page 21 ================================================== 13-00Q00 TOP SECRET DINAR Europe UK-US FRICTIONS OVER SHIPPING POLICY Brit-sh_shfpplng and offi- Thus wbat are seen as cial cIrcles are Tncensed over American efforts to regulate recent US dema nds for Inforwa - InternatJona 1 sblpping 1Jnes In tion re lat to rate discrin- order to Lmprove the unfavorable Ination aga inst US exports US balance Of payments bave The BrItish Government has ad- caused Lncreas rancor In vised aga Inst compliance on Britain - Before Parllament ad- the grounds tbat thls Informa - journed for its Christmas recess tion 1s commercia ]ly confiden- on 20 December some Conserva - tfal _ that the US cannot tive MPs ca lled for reta Ilatory dema nd what the UK Government restrictons on US shLps arriv- cannot obta In Ing at UK ports Although the MPs did not spec Ify wha t re- Following a recent con - strictions they had in wind gressIona 1 investiga t Ion Into the government cannot afford alleged rate discrimination In the present pre-election aga inst American exports the period to leave Itself open US MaritIme CommLss Ion asked to cha rges that It is not atten- the North Atlantic Frefght Con - tive enough to domestic Interests ference to explain tbe differ- entials on a long list of Items , The Douglas-Home government sett a 20 January deadlLne while hopeful of some comprom Ise for compl tance under pena . before the 20 January deadline of heavy fInes The US posi- 1s busily linlog up internatlonal tibn 1s that US exporters are support At the recently con- lbelng pena 1ized because outward cluded conference of transport Irajtes are bigher on the a verage minlsters of 10 European marl- than tbe Loward rates time natlons Brita in proposed that Japan be invlted to join British and other shlpping the united front of European 11nes regard the differentla ls maritine countries In a genera 1 1as economIca justiffed Tbe protest aga Inst US shlpping itonnage of US exports 1s much policies thereby a ligning greater than Import tonnage , roughly three quarters of tbe and shlpping 1-nes-~anxlous to world's Shlpping business aga Inst avoid ha If-loaded or In-ba 1 last the US position Japan agreed westbound voyages-~have tradf- to do so, and tbe collective tiona lly charged lower rates protest was filed with tbe for Items Imported into the US State Department on 23 Decem - Itban for exports from this ber (CONFIDENTIAL XO_ROR- country. EIGN-DISSEM) 27 Dec 63 CURRENT INTELLIGENCE WEEKLY REVIEW Page 12 TOP SECRET DINAR Ing ing and ing 1ty 1ly ================================================== Page 22 ================================================== 13-00000 TOP SECRET DINAR Europe MEST GERMAN POLITICAL DEVELOPMZNTS The openLng @f the Berlin Brandt 's_postlon be foraLized Ia 11 dur ing the holiday season at a spec Ial party convention and the death of Soc Ia1 Demo- next month Fritz Erler the cratic Party (SPD) cha Lrman party's foreign and defense Erich Ollenhauer bave placed expert is slated to take Rilly Brandt once aga Ln in the Brandt 's Place in the bierarchy Center of the German political as second deputy cba Irwan _ As sttage _ the SPD leader Brandt would stand to be - candidate for chan- The agreement to open the cellor in the 1965 general elec - Wa11 resulted from Brandt's un- tions If current Opinion polls ceas efforts to ease condi- are any indication, the SPD tlons for Berliners His will- will give the CDU a strong race ihgness to reach agreement with In tbat contest the East Zone authorities on the pass issue is being criticized Brandt however has not by sone Christian Democrat ic yet committed himself since Union (CDU) leaders and by the to accept the SPD cha irwanship CDU-oriented press in West Ger- might require bim to resign as many Brandt however is bank- mayor of Berlin and move to Bonn . Ing on tbe expectation tbat most In So doing he would bave West Germans like the Berliners _ operate at a distance from his will approve his action He political bastion _ has even hinted that there may be further negotiations witb the Wba tever Brandt dec Ides . East Germans to extend the period the_ SPD is bound to miss the Oj tbe passes beyond the 5 Jan - concillating influence of Ollen- uary cutoff date_ There is also hauer who was able to bold speculation that both East and together the often highly Iest Germar w1l1 find the pass antagonistic factions of the aggreement a model for agreement party Brandt with bs ideas Qn other issues of greater flexibility in forelgn policy may be expected Brandt who was the most to clash more frequently with Jogica1 choice was named acting Hebner , who-_despite hls Com _ cha irwan of the SPD Immediately munist past--has come to rep- after Ollenhauer S dea th on 14 resent the SPD 's rlght Wing -_ Decenber Deputy_Chairman Her= (SBERBT NO-FOREIGN_DISSEM) bert Wehner has proposed that 27 Dec 63 CURRENT INTELLIGENCE FEEKLY REVIEW Page 13 TOP SECRET DINAR ing to ny ================================================== Page 23 ================================================== 13-00000 TOP SECRET DINAR Europe AREA NOTES NATO: The NATO ministe Iceland '8 Qear general 7l meeting Ip Parts , which ratrke was Sezt_ed: On 21 Decem- lended on I7 December avoided ber- when_:labor and management serious discussion of the more agreed to 4 25-percent wage 1nz contentious Issues faclng the crlease_ The 11-day work stop- alance _ There was , for in- page was led by Communlst-dom- stance, only passing reference inated unlons seeking , as in to tbe matter of nuclear Shar- the past to force the reslgna- I9g. While NATO ' s military tllon of the Conservative M So- Posture was generally recognized cial Democratic government as still Inadequate, the Force discrediting Its economic poli- Planning exercise-~whlch 1s cies _ The settlement Is regarded des1gned to belp correct thls as a political victory for Prime situatfon--was not discussed Minister Benediktsson s govern - at 41l. The dispute over basic ment SInce the Conmunists were strategy 9 the chlef stumbling ueabie to maintaln a solid grip block to the exercise, was put on labor off until after De Gaulle's press conference . sometime in Tbe settlement however January. wi11 Intensify Inflationary pressures and wi 11 probably force Benediktsson to take ex- A11 but the French agreed traordinary measures to malntan that the allance should explore economic stability_ For pollt- ppssibilities of negotiating ical reasons he wl i1 try to avofd wi th the Soviets on outstanding apother currency devaluation, Sast-West Issues_ The. Germans but it Is doubtful that tbe as usual indicated some reser government can maintain Its vations because Of their sensi economic stabilization program tivlty regarding Ber11n and Mithout_resorting to thts -meas- man reunification_ The questipn ure (CONFIDENTIAL) df restricting Western credits to the Soviet bloc was reserved for future constderation (SE- CRET NO_FOREIGY DISSEM) 27 Dec 63 CURRENT TNTELLIGENCE WEEKLY REVIEY Page 14 TOP SECRET DINAR by Ger- ================================================== Page 24 ================================================== 13-00Q00 TOP SECRET DINAR Western Hemisphere DOICSTIC POLITICS IN CUBA Fidel Castro Is continulng his their "sectaran" efforts to secure effort to reduce the Influence of pOsItions for thelr comrades at the the veteran CommunIsts who were lead- expense of Fldelistas A clandes _ ers of tbe Moscow-orlented _ pre-rev- tine source reported hearing "ru- olutfonary Communlst party 0f Cuba mors" 1n hlgh regIme circles late Castro's campa 1gn aga inst them_ last month tbat veteran Communists launched 1n a bitter attack In March bave banded together in clandestine 1962 subsequently seemed to lose cells to work aga Inst Castro. steam _ Recent reports from know 1 - edgeable clandestine sources bow- Che Guevara continues to be the ever indicate that the old liners Cuban leader most openly critical Of are aga In on tbe defensive and are the Soviet Union and the most Insist- lfkely to suffer further In govern- ent on the "necessity" of accelerat- ment Shake-upS which may be In the Ing tbe revolution in Latin America offlng Castro nevertheless con- Fidel Castro 1s sa1d to agree witb tinues to move slowly In order to Guevara 's position but awareness of avoid undue disruption within hls Cuba S own self-interest st1ll com- regime pels bim to be more cautious In pur - suing policles: that could be Ioter - The only major veteran Commu- preted as ant-Sovlet_ It neverthe_ nist ffgure to remain 1n Castro's less remains a key regIme policy to good graces is Carlos Rafael Rod- encourage Communist revolutlon Io riguez the head of the Na tiona 1 Latln America Agrarian Reform Institute_ Rod- riguez position has actua_ been A clandestine source wbo Is 2 strengthened in recent weeks witb high-_level Cuban dlploma t asserts the ralsing of hfs job to cablnet tbat Cuban leaders prIvately recog_ level _ He bas evldently convinced nize that popular discontent wltb Castro of his persona 1 loyalty and the regime Is widespread. He claims, Of hls abillty as an administrator _ bowever that they are confident It Is also possible that Rodriguez their unpopularity has reached Its performs a useful and trusted liaf- nadlr and that they are begLnning son role between Castro and Soviet to make up lost ground _ They ex- leaders _ Fe returned to Havana On pect for instance that economic 22 December after a two-week trip difficultles- a major source of to the OSSR and several Soviet satel- discontent-_will be largely over- lites where = according to press ac- come withbln three years Tbe strat- counts he_ was in contact with high - egy of tbe government , this souce re- ranking Communist Party officials ports is to hold on until tbe econ_ omy improves and until Cuban subver - The old-line Cuban Communists sive efforts elsewhere in Latin rema In strong_ according to a re- America result in the establlshment cent clandestine report in the In- of one or more Communist a Ilfes 1n termediate and lower echelons of the hemisphere _ Then , the regime the military and party hierarchies _ feels it will be secure (SECRET NO Wherever possible they continue FOREIGN DISSEM/ BACKGROUND USE 'ONLY) 27 Dec 63 CURRENT INTELLIGENCE WEEKLY REVIEW Page 15 TOP SECRET DINAR 1ly ================================================== Page 25 ================================================== 13-00000 TOP SECRET DINAR Western Hemisphere DOMINICAN REGIME FACES NEW POLITICAL CHALLENGES The_k+Hngof 15_guerrt2las among Clvillan and mLLtary by Domlnican Army troops On 21 elenents Only the prompt ap- December apparently removes the polntment of Forelgn Mlnlster last pocket Of Insurgents Op- Dona ld ReLd to tbe vacant post posing the government _ However In the trlumvIrate appears to the incident could provoke dan- have helped avert a serious gerous political repercussions _ political crlsis for the moment _ Emllio De Los Santos head The triumvlrate has asked of the governing mIlltary-In- the cabinet-~which was chosen stalled triumvirate resigned in from and 1s responstble to sIx protest over what he regarded as mInorIty polltIcal parties__to Itbe brutal and unnecessary kill- resign to permit the appoint- of the Insurgents Includ- ment of a more independent group_ Ipg tbe president of tbe pro- This move bas promnted strong Castro 14th of June Political protests from four Of tbe splinter Group. The army commander of parties backing the regIme who the area In which the incfdent stand to lose pa tronage ; the took place insists the dea tbs outcome Is unclear_ were tbe unavoidable result of a ffre fight. If stories of axmed forces "brutality" be - However the Na tlona 1 COme Widespread however tbey Civic Unlon , the only SIzable could provoke dangerous bostility party 1n the government_ backs toward the regLme from rank-and- the cablnet reorganlzation_ file Dominlcans who recall the More Important the key leaders repressIve measures of former Of the armed forces are provid- dictator Trujillo. Ing the triumvirate wIth tbeir support , which could prove cru- The reslgnatIon of De Los cial Jn a political showdown _ Santos precipitated frantic ma - (SECRET_NO FOREIGN_DISSEM) neuvering-wi-th-n-the-government 27 Dec 63 CURRENT INTELLIGENCE WEEKLY REVIEH Page 16 TOP SECRET DINAR ing ================================================== Page 26 ================================================== 13-00000 TOP SECRET DINAR Western HemIsphere BRAZIL 3 Furtber-changes in the Bra - Goulart Galvao_ can be_expected_ Zilian cablnet are expected fol- to toe the adm instration 1ine lowing tbe reslgnatIon last week falthfully_ Horeover Ga lvao 's of Finance MInIster Carva Jho appointment may be a temporary Pinto A moderate leftist Ney expedient des Lgned to allay Ga lvao_ was appointed Pinto's fears that BrIzola would succeed successor but there rema ins a Pinto Ga lvao is a persona % Possibility tbat Leonel Brizola - friend of Brizola and there is wbo bad been actively pushed for speculation tbat BrIzola WIll, the post by the extreme left-- In fact_ eventua move into lpaly eventua receive some min - the Finance Hinistry _ istry _ There Is widespread be - lief in the army tbat War Hin- The new finance minister ister Jair Ribeiro will also be inberits a lmost insurountable replaced in the near future As economic and financ La 1 problems bne responsible Braz_lian Com - Chief among these are a rampant melntator bas remarked with Gou- Inflation that may see the cost hart minlster an In- of living Increase 80 percent tterin one tbis year_ and a staggering forelgn debt involving approxi- mately $1 billion In paywents Ney Galvao's appointment due OVEI the next two years _ lacitua Ily reduces the previously Isllght prospect tbat Brazil 's The severity of tbe eco- critical financia l problems would nomic situation and Goulart's Ibe handled effectively _ Ga lvao 's apparent intention to assume Iqualifications in the economic greater personal direction over field are weak at best and his rec - financial policies increase ord as head Of tbe Bank of Braztl the possibility of radical meas- aQes not command confidence with- ures that might be detrimenta 1 iq the business community _ Be _ to foreign creditors and In- fore taking his new post he vestors Goulart reportedly is served a5 minister without port- cons 1dering na tionalization of folio in charge Of coordinating a 11 public utilities and can- forelgn trade policies a job cellation of minfng concessions _ he performed without any par- Measures such as these could ticular distinction _ lead to further deterioration of Brazil's economic position _ (SECRET) Although his views are perhaps Gomewbatto-the-rtght0f 27 Dec 63 CURRENT INTELLIGENCE WEEKLY REVIEW Page 17 TOP SECRET DINAR 's+ 1ly 1ly 1s "every ================================================== Page 27 ================================================== 13-OO800 TOP SECRET DINAR Hestern Hemisphere AREA NOTE Bollvla The politica] assure his renomina tlon , and competitron between Bolivian designate his Own runnIng mate. Vice President Juan Lechin and president Victor Paz Estenssoro If the forthcoming conven- is bound to Intensify Sharply tion repudiates Lechin , he may as each maneuvers to line up well withdraw from the MNR and support for the presidential establish a "popular front" po- nomination at next month s con- litical party. He probably vention of the Nationa list could count on the support of Revolutionary Movement (MNR) political groups ranging from Lechin probably still hopes to leftist extremists to disgrunt led pull an upset by dislodging Paz factions within right-Wing parties or at least to demonstrate suf- It would seem unlikely though, ficient strength to assure him- that these disparate groups could Self of retaining his vIce- coa lesce into an organization Presidential post Paz seems powerful enougb to defeat Paz certain, however to be able to well-organized machine in the control the party-'s- convention , elections set for June (SECRET) 27 Dec 63 CURRENT INTELLIGENCE WEEKLY REVIEW Page 18 TOP SECRET DINAR ================================================== Page 28 ================================================== 13-00000 TOP SECRET TOP SECRET

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