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27 FEBRUARY 1958

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THE COMMUNIST BLOC

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THE WEST
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Approved for Release: 2019/08/20 C03179854
_
Approved f0r_l3el<-31§e;_2Q19/08/20 C03179854

CENTRAL INTELLIGENCE BULLETIN

27 February 1958,

DAILY BRIEF

JJ 1. THE COMMUNIST BLOC

Summit talks--Soviet giewz In contacts with West-
ern diplomats, I SovietEForeign Ministry officials are
probing to determine what steps would be necessary
to bring about a summit meeting. The French have
been told Moscow is preparing a new series of letters,
7%
V
and that there would be no objections to a foreign
ministers‘ meeting if there were frior agreement on
a date for a summit conference.
(Page
‘

1)

I I. ASIA-AFRICA
Indonesia: President Sukarno is scheduled to
deliver aT{aj_or speech on 3 March in which he is
expected to cast the current rebellion in terms of
Western support for the dissidents and to demand
an all-out campaign against the rebels. There are,
on the other hand, rumors of growing underground
&Q% resistance to Sukarno in Java. Djakarta, meanwhile,
has denounced the 20 February seizure of an Indo-
nesian~operated vessel by a Dutch warshi as irac
intended to support the rebel cause.
(Page
1

2)

Japanese - Chinese Communist trade: Commu-

nist Cliinifiias 'agr‘eYe7i'"t‘o exp6r't' substantial quantities
i

of coal and iron ore to Japan in exchange for steel

products under a five-year barter contract with

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Japanese steel industry interests involving

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$280,000,003 trade each way. Japanese steel

sales to COiflfil31'.':1.ll'llSt China have spurted since the
relaxation of strategic trade controls in 1957, and
substantial further expansion, to an extent-I; threat-
ening remaining COCOM
controls, is possible.
(Page 3)

III. THE WEST

Britain: The government is preparing a policy
statement dealing with the problem of "disengage-
ment"I_in central Europe. Despitelack of support in
the Foreign Office, the cabinet is anxious to show
s om e i nitiative for domestic p olitical reasons , and
will probably call for Western endorsement of some
Q_ compromise between the Rapacki plan and the 1955
Eden plan for reduction of forces and arms on either
side of the East German-~- Polish border. German
reunification will remain central to any British pro
posal (Page 4)

2'7 Feb 58 DAILY BRIEF

Z/ \Appro\/ed
—SEGR+E—'F
for Release 2019/os/20 \\\\
 Approved f0r_B_<§_le§1_sei_2919/os/20 003179854

I. THE COMMUNIST BLOC

Soviet Views on Summit Conference

recent conversations with French and American
In
diplomats, Soviet Foreign Ministry officials have said
that Moscow is preparing a new series of letters on a
summit conference. In a slight modification of its pre-
viously adamant stand against a foreign ministers‘ meet-
ing, the USSR told the French it would agree to a
foreign
ministers‘ meeting provided there was prior agreement
on a date for a summit conference.

Foreign Minister Gromyko told the French that dis-

cussion of German unification would. be pointless, and he
said that the control of outer space could be discussed
only in connection with nuclear disarmament. First
Deputy Foreign Minister Kuznetsov told Ambassador
Thompson that some topics could. be settled quickly at
a summit conference with little preparation--including
a ban on testing nuclear weapons and the thinning out of
troops in Germany.

Kuznetsov also asked Thompson whattype of delega-

tions President Eisenhower had in mind. when he suggested
exchanges with the USSR to improve the chances for East-
West negotiations. As one possibility he mentioned an
exchange of members of the Supreme Soviet and Congress
‘

,,/
1/

W»;

—SEGR-E-'F

27 Feb 58 CENTRAL INTELLIGENCE BULLETIN Page 1

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 Approved for Be_|_e_a§e_:__@019/08/20 C03179854

II. ASIA=~AFR1CA

ln_don<-3_sian*f Siytuation

Indonesian President Sukarno is applying "harsh

-

pressure" to make non-Communist elements in Java

declare their support for the central government's
campaign against the rebe1s,\
The recent declaration of the
\

Nahdlatul Ulama, a Moslem party, urging4suppres-

\
\

sion of the dissidents, allegedly resulted from

Sukarno“s threats to expose corruption in party lead-
ership. Sukarno is said also to have threatened to
jail supporters of Hatta if the former vice president
V

does not denounce the_rebe1s.,

Sukarno is scheduled to make a major speech

on 3 March in which he is expected to announce an
alleout campaign against the rebels and their sym-
pathizers. In an attempt to marshal mass support
for his policy of firmness, Sukarno is likely to re-
involvement and to demand
1

new charges of We-stern

unity in the face of"'imperialist attempts" to divide
the country.

Strong action against recalcitrant non-Commu.-

nist leaders in Java might force some of them under-
ground to join Moslem dissidents (Daruli Islam) now
increasing their antigovernment terrorist activities
in and Central Java. The possibility of further
fr.

;.;-.;*.t'ii_government efforts is suggested by rumors of

the defection of one battalion in West Java which is
said to be under the influence of dissident Colonel
Lubisu. Lubis is alleged to have returned from
Sumatra recently to foment anti-Djakarta military
actionl
../f
\ \

27.Feb 58 CENTRAL INTELLIGENCE BULLETIN Page 2

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 Approved for_Re|ease: 2019/08/20 C03179854

Japanese Sign Major Steel Contract ,

With Communist China

_

An ambitious barter contract signed on in Peiping

26 February between Japanese steel industry representa-
ex-
tives and Chinese Communist officials calls for the
change of $280,000,000 worth of Japanese steel products
for an equivalent amount of Chinese iron ore and coal
over
possible polit-
a five-year period. Japanese response to
ical demands by Peiping in the future, plus the quality
and
price of Chinese raw materials, will determine whether
this target will be achieved.

Preliminary announcements indicate that the steel

products involved in the contract are no longer embargoed
by COCOM and are already being exported in increasing
amounts since the relaxation of controls last year. The
long-term plan, however, may envisage ultimate inclusion
of highly strategic items. The first year's goal of
more
$28,000,000 each way appears within reach, inasmuch as
the Japanese indicate they can supply 250,000 tons of steel
products in 1958 and Peiping alleges that large amounts of
raw materials are now available for export to Japan.
is separate from Sino-Japanese
The barter contract
talks, scheduled to begin in Peiping shortly for a general
trade agreement and exchange of permanent trade missions.
However, Japanese indications of readiness to comply with
Peiping's terms for establishment of the trade missions may
have substantially influenced. China's willingness to conclude
the barter deal. During negotiations over the past years
Peiping, in an effort to extract major political and eco-
nomic concessions, has refused. to supply raw materials
for Japanese heavy industry. \ \

-S'E-GREF

2'7 Feb 58 CENTRAL INTELLIGENCE BULLETIN Page 3

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‘
IJL/J. II. -l..IJ.l.J.L.IJ-.n.4.n-.-a

II I. THE WEST

Lond.on Preparing Disengagement Proposal

Beset by public pressure to show further initiative

toward. relaxing international tensions, the Macmillan
government is preparing a policy statement on "disen-
gagement" in central Europe. New British proposals
will probably call for the West to offer some variation
of the Rapacki plan, with German reunification included.
There has been Foreign Office opposition to any such
initiative, and an earlier interdepartmental study was
generally negative.

A Foreign
Office official expects that the substance
of the new proposals will amount to a restatement of the
Eden plan as presented. to the 1955 foreign ministers‘
conference, calling for a reunited. Germany and a zone on
either side of the present East German- i- Polish border in
which forces and armaments would be reduced and sub-
ject to mutual inspection.

Despite certain diplomatic and political advantages

in adhering closely to the Eden proposals, the final policy
review may bring Britain to advocate greater modification
of established Western positions than the official's state-
ment suggests. The Labor opposition, supported by con-
siderable independent opinion, insists that ‘Western
counternrooosals be made more attractive to Moscow.

V
I
‘

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27 Feb 58 CENTRAL INTELLIGENCE BULLETIN Page 4

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