WEEKLY SUMMARY

• Document Type: SPECIALCOLLECTION
• Collection: Tet Declassified
• Document Number (FOIA) /ESDN (CREST): 03172646
• Document Creation Date: January 28, 2019

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DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
50
2 February 1968
No. 0005/68
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.1001 41.10
The WEEKLY SUMMARY, issued every Friday morning by the
Office of Current Intelligence, reports and analyzes significant
developments of the week through noon on Thursday. It fre-
quently includes material coordinated with or prepared by the
Office of Economic Research, the Office of Strategic Research,
and the Directorate of Science and Technology. Topics requir-
ing more comprehensive treatment and therefore published sep-
arately as Special Reports are listed in the contents pages.
WARNING
The WEEKLY SUMMARY contains classified information af-
fecting the national security of the United States, within the
meaning of Title 18, sections 793 and 794, of the US Code, as
amended. Its transmission or revelation of its contents to or re-
ceipt by an unauthorized person is prohibited by law.
SEGRET
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1.10, I
CONTENTS
(Information as of noon EST, 1 February 1968)
Far East
THE WEEK IN PERSPECTIVE
VIETNAM
The unprecedented Communist offensive touched off
on the eve of Tet was country-wide and continued
unabated over a three-day period. Although the
offensive had slackened by 1 February, the Commu-
nists still had partial control of four provincial
capitals. President Thieu declared martial law
throughout the country.
CAMBODIA RENEWS CRITICISM OF VIETNAMESE COMMUNISTS
Cambodia's uneasy relations with the Vietnamese
Communists appear to be under increasing strain,
but it appears unlikely that Chief of State Si-
hanouk will push matters to a diplomatic break.
NORTH KOREA REMAINS UNYIELDING IN PUEBLO CRISIS
The North Koreans show no signs of retreating
from the confrontation provoked by their seizure
of the Pueblo. Their immediate aim apparently
is to maintain pressure on the US during the
current Communist offensive in South Vietnam.
FACTIONAL FIGHTING CONTINUES TO PLAGUE COMMUNIST CHINA
Peking is showing increasing concern about faction-
alism, both within the military establishment and
among "revolutionary" organizations, but the central
leadership apparently has been unable to reach a
concensus on how to deal with the problem.
SEC
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Europe
THE WEEK IN PERSPECTIVE
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11
USSR REPORTS CONTINUED ECONOMIC GROWTH IN 1967
Final figures released by Moscow on the USSR's
economic performance last year indicate that the
regime was able once again to claim relatively
satisfactory results in almost all sectors of the
economy. As in the recent past, however, these
were achieved in large part by sacrificing invest-
ment in new capacity essential to maintain current
rates of growth.
NEW CZECHOSLOVAK LEADER CONSOLIDATES POSITION
In less than a month, Czechoslovak party First
Secretary Dubbek has taken several steps that will
strengthen his leadership of the new regime.
USSR CONCLUDES TRADE NEGOTIATIONS WITH EASTERN EUROPE
Despite increases called for in their 1968 agree-
ments with the USSR, the Eastern Europeans' trade
with the Soviet Union is not likely to grow as
fast as it is with the West, partly because they
are seeking to acquire the latest technology.
SLIGHT THAW NOTED IN HUNGARIAN ATTITUDE ON US RELATIONS
Budapest has recently indicated interest in nego-
tiating solutions to certain long-standing problems
with the US, a significant change from the politely
negative stance adopted last November after the
arrival of the first US ambassador.
NEW MANEUVERS OVER BRITISH ROLE IN EUROPEAN COMMUNITIES
Various proposals have beer made by the continental
countries to keep alive Britain's bid for member-
ship in the Communities, biA so far none has led to
positive results.
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,wor Nevi
ET
UN TRADE AND DEVELOPMENT CONFERENCE OPENS IN NEW DELHI
Although there is little optimism that the con-
ference will come up with immediate measures for
aiding less-developed countries, it may stake out
realistic principles to guide future international
action.
Middle East - Africa
20
THE WEEK IN PERSPECTIVE 21
CONCILIATORY MOOD PERVADES ELECTIONEERING IN CYPRUS
Preparations by the Greek and Turkish communities
for the presidential elections next month are
proceeding peacefully.
ISRAEL SEEKS MORE MILITARY AIRCRAFT
With the Arab nations' collective jet fighter
inventory now roughly three times that of Israel,
Israeli officials are searching Western Europe
and the US for fighter aircraft to reduce the
numerical deficiency.
RECENT GOVERNMENT REORGANIZATION IN EGYPT
The changes appear to represent some return to
normalcy following the military defeat last summer.
Western Hemisphere
THE WEEK IN PERSPECTIVE
ET
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ARGENTINE MILITARY IMPATIENT WITH ECONOMIC PROGRESS
The military leaders, who helped install and feel
responsible for the success or failure of the
Ongania regime, are concerned about public dis-
satisfaction over rising costs and wage restric-
tions.
26
3RAZILIAN GOVERNMENT REACTS STRONGLY TO OPPOSITION CRITIC 27
If President Costa e Silva decides to prosecute
perennial oppositionist Carlos Lacerda under provi-
sions of the tough new national security law, it will
be widely interpreted as a lack of self-confidence
and will discredit his much-publicized efforts to
"humanize" the Brazilian revolution.
CUBA WARNS POLITICAL MALCONTENTS
The ouster of 11 members of the Cuban Communist Party
appears designed to convince doubters at home and
abroad that Castro is still in control and charting
his own course.
DOMINICAN SITUATION CONTINUES UNSETTLED
Threats of violence from the left, a Communist victory
in student elections, and President Balaguer's de-
cision to allow the return of exiled General Wessin
y Wessin are likely to keep the political pot sim-
mering.
INCIDENTS MAR PARAGUAYAN ELECTION CAMPAIGN
With Paraguayan national elections little more than
a week away, campaign incidents are testing the
spirit of coexistence among the participating parties.
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SEQr(ET
FAR EAST
Hanoi is portraying the Communist attacks on
cities and allied military and civil installations
throughout South Vietnam as a major turning point
in the struggle. This well-coordinated show of
force apparently was designed primarily as a
damaging psychological blow against the Saigon
government and the US presence rather than as a
bid to seize and hold major population centers.
The heavy attacks on allied airfields throughout
the country probably were intended to set the
stage for a major assault in the Khe Sanh -
Demilitarized Zone area. Hanoi has claimed that
the country-wide assaults have "dangerously scat-
tered" US forces, reduced their defensive capac-
ity, and exposed to attack the "nerve centers" of
US power in Vietnam.
The North Koreans appear determined to main-
tain tensions over the Pueblo seizure at a high
level during the Communist offensive in South
Vietnam. Hanoi and the National Liberation
Front enthusiastically supported Pyongyang's
action, claimed that they and the North Koreans
share the same battlefront against the "US im-
perialists," and predicted a "more rapid" defeat
for the US in Vietnam if the US "dares to lay a
hand on North Korea."
Pyongyang's tactics thus far appear to be
based on the assumption that, by holding the
Pueblo crew as hostages, it can deter the US from
invoking military retaliation and oblige the US
to restrain the South Koreans from moves against
the North. The North Koreans are also seeking
further insurance against US reprisals by con-
veying assurances that the Pueblo crew is being
well treated and by hinting vaguely at their wil-
lingness to discuss the issue in the Korean Mili-
tary Armistice Commission, provided the US re-
frains from military threats.
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VIETNAM
The unprecedented military
offensive during the Communists'
self-proclaimed lunar new year
cease-fire involved attacks
against principal cities and ma-
jor US bases throughout South
Vietnam. According to the Com-
munists' own propaganda, it is
part of their long-heralded "gen-
eral offensive" designed to trig-
ger a "general uprising" among
the South Vietnamese people in
support of Liberation Front ob-
jectives.
The military attacks con-
tinued unabated over a three-
day period, and although the
vigor of the offensive had slack-
ened by 1 February, the Commu-
nists still had partial control
of four provincial capitals and
maintained scattered pockets
of resistance throughout the
country. In addition, the major
threat to Khe Sanh and northern
Quang Tri Province continues.
It is unlikely that the cur-
rent military action is designed
to hold any principal towns for
extended periods of time. Al-
though the Liberation Radio is
portraying the current offensive
as an effort to destroy the Thieu
government and replace it with one
under Communist control, it is
doubtful that the Communists fore-
see an early collapse of the Sai-
gon government. Foreign Commu-
nist propaganda is more realistic
in calling the offensive a dis-
play of military strength that
will force the US to recognize and
deal with the Front.
There are no signs to date
that the Communists have been suc-
cessful in rallying significant
SE
popular support for their "uprising."
They undoubtedly have succeeded
in shaking civilian confidence
in the Saigon government, however,
and in inflicting serious setbacks
to security and pacification pro-
grams throughout the country. Com-
munist propaganda is attempting
to give the impression of wide-
spread popular support by citing
the establishment of local or-
ganizations called "alliances
of national and peace forces,"
which will negotiate with the
Liberation Front to set up a new
government.
It will probably be some
time before the full military
extent of the offensive will be
known, especially in rural areas.
Reports indicate enemy assaults
were made against at least 22
provincial capitals and against
some 30 to 40 districts head-
quarters. More than 6,000 Com-
munists have reportedly been
killed, and allied forces' cas-
ualties now stand at nearly 600
killed (93 US) and over 1,700
wounded (562 US). Damage to al-
lied aircraft and facilities
is extensive. In addition, the
Communist assaults and the allied
reaction to them appear to have
taken a heavy toll of civilian
casualties.
The Communist offensive had
been carefully prepared and co-
ordinated in advance, possibly
to take maximum advantage of
surprise during the Tet holiday
truce period.
In its initial phase, the
military action was directed al-
most exclusively against targets
in southern I Corps and II Corps,
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and involved coordinated actions
by the Communists' B-3 Front in
the highlands and their Military
Region 5 command in the coastal
provinces.
In addition to mortar and
ground attacks on such major
bases and neadquarters as Da Nang,
Chu Lai, and Nha Trang, fighting
was particularly bitter at Hoi
An, the capital of Quang Nam Prov-
ince, and at Kontum city in Kon-
tum Province. Allied forces are
now reported to be control of
all major II Corps towns except
Kontum and Ban Me Thuot, although
sporadic contact is still reported
in the outskirts of several pro-
vincial capitals.
Among the enemy targets in
Saigon were the US Embassy, the
Presidential Palace, the govern-
ment radio station, and the Tan
Son Nhut military complex. It
took US troops about six hours
to drive a band of attackers from
the US Embassy grounds. The build-
ing itself was rocked by several
large explosions, but no struc-
tural damage was reported, and
the embassy is now fully opera-
tional. Scattered, sometimes
heavy, ViEt Cong activity was
continuing elsewhere in Saigon
at last report.
On 31 January, enemy mortar
and grount attacks struck prov-
incial capitals and district
towns in the delta and in the
two northernmost provinces of
I Corps. Attacks were reported
in at least eight of the 16
southern tlelta provinces. On
1 February, fighting was con-
tinuing in at least three cities,
My Tho in Dinh Tuong, Ben Tre
in Kien Hoa, and Chau Phu in
if
Chau Doc Province. In the lat-
ter province, the Communists
appeared to be still in control
of the city.
With the exception of Hue
in Thua Thien Province, allied
reaction forces apparently have
countered the enemy's thrust
throughout the northern T Corps
area. Elements of a Communist
regiment were reported to be in
control of important sectors of
Hue on 1 February. The area im-
mediately south of the Demili-
tarized Zone (DMZ), however, still
remained relatively quiet. Evi-
dence of a heavy enemy build-up
throughout the area of the DMZ
continued to be reported.
GVN Declares Martial Law
Saigon's President Thieu
responded to the country-wide
Viet Cong offensive by declar-
ing a nationwide state of mar-
tial law on 31 January. This
action temporarily suspends
some of the civil rights guar-
anteed under the constitution
and permits the President to
govern by decree for 12 days.
Earlier in the week, Thieu
had devoted much of his "State
of the Union" message to dis-
missing Communist proposals for
peace talks. He rejected any
coalition government with the
Front, and said that the bombing
of North Vietnam could not be
stopped unless hostilities
ceased in the South. He added,
however, that bombing could be
decreased by stages in propor-
tion to a Communist decrease in
military ground activity in
the South.
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CAMBODIA RENEWS CRITICISM OF VIETNAMESE COMMUNISTS
Cambodia's uneasy relations
with the Vietnamese Communists
appear to be under increasing
strain.
Chief of State Sihanouk made
one of his sharpest attacks on
North Vietnam and the Viet Cong's
Liberation Front in an emotional
press conference on 27 January.
He referred bitterly to recent
statements by Hanoi and the
Front as "indirect threats" to
his regime, and he accused the
"Maoist camp" of backing Cambo-
dian Communists in an effort to
pressure Phnom Penh to maintain
its anti-US posture.
Sihanouk warned the Commu-
nists that such tactics would
not work and could be dangerously
counterproductive. He pointedly
raised the specter of a Cambodian
government closely tied to the
US in order to remind the Commu-
nists that he can still exercise
options that will be extremely
damaging to their interests. In
so doing, Sihanouk went much
further than he has in the past
in publicly acknowledging the
extent to which the Vietnamese
Communists use Cambodian terri-
tory
Sihanouk's outburst was
triggered by a recent renewal in
western Cambodia of leftist-
inspired dissident activity,
which has included a number of
attacks against small police
outposts. Although he admitted
that Phnom Penh's evidence is
weak, Sihanouk holds both Hanoi
and Peking responsible for these
activities.
Sihanouk also appears to be
reacting to what he apparently
regards as the threat posed to
Cambodia by the Communists' ex-
cessive use of Cambodian terri-
tory to prosecute the war in
South Vietnam. /
Although there is specula-
tion in Phnom Penh that a "dip-
lomatic break" is now inevi-
table, it seems unlikely that
Sihanouk will push too hard
against the Vietnamese Communists
as long as he continues to be-
lieve that the Communists will
prevail in South Vietnam. He
apparently does want, however,
to refurbish Cambodia's standing
as a neutral in the Vietnam war,
even if it causes some short-
term problems with the Commu-
nists.
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NORTH KOREA REMAINS UNYIELDING IN PUEBLQ CRISIS
The North Koreans show no
signs of retreating from the
confrontation with the US pro-
voked by their seizure of the
Pueblo and its crew,
They appear to be gambling
on the assumption that, by hold-
ing the crew as hos-:ages, they
can deter US military reprisals,
force the US to restrain the
South Koreans, and prolong the
confrontation. Their immediate
aim apparently is to maintain
diversionary pressures on the US
at a high level during the cur-
rent country-wide Communist of-
fensive in South Vietnam. Over
the longer term, Pyongyang prob-
ably hopes these tactics will
aggravate US - South Korean re-
lations, discredit the Seoul gov-
ernment, and extract valuable
concessions from the US.
The North Koreans are con-
tinuing the defiant stance they
adopted during the Military
Armistice Commission meeting on
24 January. In official state-
ments and propaganda, Pyongyang
has maintained it acted within
its rights as a sovereign state,
and that the Pueblo was engaged
in hostile acEivity in North Ko-
rean territorial waters. Pyong-
yang has attempted to document
its version of the incident by
broadcasting an alleged confes-
sion and other statements by the
commander of the Pueblo. More-
over, Communist propaganda has
attempted to connect the Pueblo
with the war in Vietnam. The
commander was said to have stated
his mission was in preparation
for a "new war" of aggression in
Asia and that the US regards Ko-
rea and Vietnam as "two fronts
of the war."
The North Koreans have
avoided specifying conditions
for the release of the Pueblo
and its crew. Pyongyang has,
however, repeatedly condemned
efforts to involve the UN. A
high-ranking North Korean leader
complained on 31 January that
the US was seeking a solution
through "illegal discussions at
the United Nations." He went
on to observe that "there is a
precedent for the treatment of
similar cases at the Korean Mil-
itary Armistice Commission."
This "precedent" probably
refers to negotiations at Pan-
munjom in 1963-64 over the fate
of two US helicopter pilots
downed in North Korea. In its
desire to extract maximum propa-
ganda value from that case, how-
ever, Pyongyang kept the negotia-
tions going for 13 months before
releasing the pilots.
Despite their militant stand,
nothing the North Koreans have
done suggests they are about
to embark on large-scale hostil-
ities. Their actions have been
largely defensive, apparently
as a precaution against some re-
taliatory action by the US or
South Korea. Propaganda state-
ments claim that the country
is "prepared to counter any
provocations or surprise inva-
sion."
-s+-eirET
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On the diplomatic front,
the Soviet Union has supported
the North Korean position while
treating the incident as a mat-
ter to be resolved between the
US and North Korea. Moscow's
tactics appear designed to mini-
mize the situation and to
forestall any possible US mili-
tary action, while keeping their
public record of support for
North Korea unassailable. Pre-
mier Kosygin reflected this line
in his statement to Western re-
porters in New Delhi, saying
that the incident was a viola-
tion of territorial waters and
should be settled as such by the
two countries involved.
The Soviets voted against
the matter being brought before
the Security Council but have
indicated a willingness to have
North Korea invited to appear
before the council as long as
the invitation is unconditional.
The Security Council has been
stalemated over the issue of
inviting North Korea to attend.
Peking's reaction to the
Pueblo incident has been rela-
tively restrained and has avoided
any specific reference to steps
China might take to support
Pyongyang. Although the Chinese
Government statement on 28 Jan-
Page 7
uary warned that "US imperialism
had forgotten the lesson it was
taught in the Korean War," it
promised only that the "Chinese
Government and people firmly
support the just stand" of North
Korea. The statement seemed
primarily intended to portray
the Pueblo's capture as further
evidence of US plans to expand
the war in Vietnam--a favorite
theme of recent Chinese propa-
ganda.
Some South Korean leaders
have complained that the US has
devoted too much attention to
the Pueblo crisis and has played
down�EN-J.�issue of North Korean
violations of the armistice
agreement, particularly the at-
tempt to assassinate President
Pak. Seoul is also concerned
that Pyongyang may gain status
at South Korea's expense, either
through an invitation to par-
ticipate in the UN Security
Council debate or by direct US -
North Korean negotiations.
Another sign of South Korean
uneasiness was a suggestion in
a Seoul newspaper editorial on
31 January that the government
might have to consider withdrawing
troops from South Vietnam if
the US reduced its forces in the
Korean area following a settle-
ment of the Pueblo crisis.
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FACTIONAL FIGHTING CONTINUES TO PLAGUE COMMUNIST CHINA
Peking is showing increas-
ing concern About factionalism,
both within the military estab-
lishment and among "revolution-
ary" organizations in the coun-
tryside, but there is as yet no
indication that the central lead-
ership has been able to reach a
consensus to deal firmly with
the problem. Using official
propaganda organs, moderate ele-
ments continue to stress the
damage that factionalism is
causing to the country's economic
and political fabric. More rad-
ical elements, however, seem de-
termined to protect the "revolu-
tionary" Red Guards--the primary
source of the trouble--and to
keep them active.
Violent and disruptive fac-
tional fighting is still being
reported from widely scattered
parts of China. Although these
disorders are sporadic, they ap-
pear to be on a fairly large
scale and show no signs of Abate-
ment.
Amoy, in
Fukien Province, is in a virtual
state of anarchy. Hainan Island
in Kwantung Province, evidently
has been the scene of widespread
violence.
The regime has made a special
effort to maintain order in the
capital city, but violent clashes
Page 8
have broken out several times in
Peking in the past few weeks,
according to newspaper reports.
One hundred persons were reported
injured in a clash on 25 January,
and on the same day Peking tele-
vised the trial of 11 men charged
with murder, complicity in murder,
and distributing "counterrevolu-
tionary tracts."
Much of this violence con-
tinues to be ignored in official
regime propaganda, which merely
deplores factional disputes in
general terms. In the past week,
official media have particularly
stressed the necessity for the
army to avoid factionalism in its
own ranks, as well as involvement
in disputes among "mass organiza-
tions"--a euphemism for Red
Guard and other "revolutionary"
groups. This line strongly sug-
gests that Peking is becoming in-
creasingly concerned about fac-
tionalism already existing within
the military as well as the pro-
pensity of army commanders to 3.3(h)(2)
support one or another of the
Red Guard factions.
Hainan Island report that
local army forces have been sup-
plying arms as well as offering
political support to one faction
on the island, while the navy
backed an opposing faction.
Although official propaganda
has taken an increasingly stern
$44eRrrf
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%we
attitude toward the problem of
factionalism in the military and
among the Red Guards--a Libera-
tion Army Journal editorial on
28 January took a realistic and
sober approach to the problem--
the Red Guards themselves appar-
ently still operate under a pro-
tective umbrella. Recently re-
ceived Red Guard materials indi-
cate that the militant organiza-
tions are continuing their attacks
on local military commanders and
on established "revolutionary
committees" in the provinces.
Moreover, they continue to
circulate statements by radical
leaders in the capital that ap-
pear designed to encourage mili-
tancy in the hinterland. A speech
given on 12 November by Chiang
Ching, Mao's wife, which called
upon the Red Guards to "disturb
the enemy," has now been dis-
tributed throughout the country
for "study and guidance" as an
official central committee di-
rective. The speech has been
widely reproduced in Red Guard
newspapers, but has been ignored
in the official press.
A further sign of the bold-
ness of the militants was a re-
cent poster attack on the Peo-
ple's Daily--the official organ
of the central committee. The
paper was lambasted for repro-
ducing in November a photograph
that, because of the angle of
the camera, showed a Mao quota-
tion upside down. The delay in
making this far-fetched charge
suggests that the paper came
under attack for recent state-
ments condemning militant ob-
structionism in uncompromising
terms.
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ErFeR-ET NINO
EUROPE
Moscow has poured more cold water on West
German hopes to negotiate an exchange of declara-
tions with the USSR renouncing the use of force. In
a note delivered this week, the Russians indicated
that Bonn would have to go a long way toward recog-
nizing East Germany as the price of such an agree-
ment. The note, in addition to mollifying the
East Germans, will test how far Bonn will go in
its eagerness for progress on its eastern policy.
Premier Kosygin returned from a six-day visit
to India that ended with a promise of more frequent
exchanges in a number of fields. The visit was ap-
parently made at Mrs. Gandhi's repeated urgings
and was mainly a demonstration of friendship.
Almost all sectors of the Soviet economy
performed satisfactorily in 1967, according to the
final figures that Moscow has just released. Farm
output fell only slightly below the record levels
set in 1966 when growing conditions were excep-
tional. The good economic results were achieved
in large part, however, at the sacrifice of in-
vestment in new capacity, which is needed to main-
tain current growth rates.
Yugoslavia and West Germany announced the
resumption of diplomatic relations on 31 January,
marking an end to the ten-year lapse that began
when Belgrade recognized East Germany. Earlier
in the week, Yugoslav - West German trade nego-
tiations were suspended, reportedly because of
Bonn's failure to liberalize its policy on im-
ports from Yugoslavia. The talks will be resumed
in the early spring.
In Denmark, Hilmar Baunsgaard, a leader of
the neutralist-tending Radical Liberal Party,
is putting together the first non-Socialist cab-
inet in 15 years. What the new government's posi-
tion on defense and foreign policy will be is not
yet clear. As a result of the lost H bombs,
however, it will be under growing public Dressure
to redefine US rights in Greenland.
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5.E.GRET
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USSR REPORTS REPORTS CONTINUED ECONOMIC GROWTH IN 1967
Final figures released by
Moscow on the USSR's economic
performance last year indicate
that the regime was able once
again to claim relatively satis-
factory results in almost all
sectors of the economy. As in
the recent past, however, these
were achieved in large part by
sacrificino investment in new
capacity essential to maintain
current rates of growth.
Industrial output is esti-
mated to have increased at the
same rate estimated for 1966.
The failure to improve on last
year's growth rate is largely
ascribable to a marked slowdown
in all components of industrial
production during the final quar-
ter of 1967. This may have re-
sulted in part from the ending
in October of the campaign to
honor the 50th anniversary of
the revolution with above-plan
obligations.
In the important machinery
sector, the rate of increase in
military and space hardware was
appreciably higher than that of
the sector as a whole. This
difference in growth is indica-
tive of the continued priority
accorded the defense establish-
ment following the ouster of
Khrnshchev. Judging from the
1968 plan and budget, moreover,
a continuation of this trend is
planned this year.
Agriculture's performance
in 1967 failed to match the
record level of output produced
a year earlier, but the shortfall
was minor for most farm products.
The chief exception was the cru-
cial grain harvest--down to an
estimated 120 million metric tons
(mint) from 140 mint in 1966. This
is still sufficient to meet
domestic needs, however, and to
provide for a modest export sur-
plus. Meat and dairy products
registered impressive increases,
but livestock numbers did not
rise, and in the case of hogs
actually declined. It is pos-
sible that available feed supplies
may have suffered in the past
several years as the farms con-
centrated on the more profitable
bread grains.
Despite the slippage in the
industrial growth rate during the
last quarter of 1967 there was
nevertheless a notable accelera-
tion in the output of agricul-
tural machinery. Although this
recovery is considerably below
the level required by the Brezh-
nev program, it is nonetheless
the first evidence that the farm
sector is receiving more resources.
It remains to be seen whether
this reversal of the poor per-
formance in the production of
farm machinery during the past
few years will be sustained.
The Soviet consumer enjoyed
further gradual improvement in
his standard of living last year.
This was partly attributable to
the regime's decision to treat
the populace to more consumer
_sgx--}Rrr
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goods during the anniversary year.
A major increase in the consump-
tion of better quality foods was
made possible by record levels of
livestock products. Savings de-
posits nevertheless rose almost
twice as rapidly as the increase
in total money income. This is the
third year in a row that a consid-
erable increase has occurred in
savings, indicating continued la-
tent purchasing power and suppres-
sed inflationary pressures. New
housing fell far short of plan,
as usual.
As in the recent past, the
relatively favorable performance
of the Soviet economy last year
was in large measure the result
of decisions to emphasize the
here and now at the expense of
future growth. Investment pro-
grams in both industry and agri-
culture showed unimpressive in-
creases, and the completion of
new projects was not up to plan
in the iron, steel, chemical,
and paper industries, among
others. Most construction or-
ganizations also fell short of
their completion goals.
Despite its formal adher-
ence to a number of goals for
1970 that will require extensive
new capacity, during 1966-67
the regime has allowed the rate
of growth of industrial invest-
ment to fall by one third from
the already low rates of 1961-
65. At the same time, invest-
ment in agriculture is growing
at a rate roughly half that re-
quired under the Brezhnev pro-
ram for 1966-70. Unless these
trends are reversed, the regime
runs the risk of not being able
to maintain its recently achieved
rates of growth.
NEW CZECHOSLOVAK LEADER CONSOLIDATES POSITION
In less than a month, Czech-
oslovak party First Secretary
Dubcek has taken several steps
that will consolidate his posi-
tion as the new regime leader.
His actions to date have
been capped by a meeting with Soviet
leaders in Moscow, which both
sides have been eager to repre-
sent as a success. Dubcek's
quick trip to the USSR on 29-30
January, during which he was un-
accompanied by any other Czech-
oslovak official, gave both sides
a chance to size up the other and
to go into Dubcek's plans for
changes in the country's domestic
policies. The Soviets may have
been somewhat reassured, but must
still look on Dubcek's liberaliz-
ing experiments with apprehension.
Prague's unusually effusive
description of the talks was
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lacking in specifics, but stated
that "a full accord of views on
all questions discussed" was
reached in "an atmosphere of cor-
dial friendship, sincerity, and
friendly understanding." The two
parties were said to have "ex-
changed views" on foreign policy
questions and the problems of
international Communism.
Certain specific problems
in bilateral relations probably
were set aside for another time
and for lower level officials
to deal with. On the same day
that Dubcek arrived in Moscow,
for example, a Soviet delegation
wound up nine days of talks in
Prague on the question of pricing
policy, long a source of friction
that has interfered with trade
between both states.
Having received at least
the tacit acceptance of Soviet
leaders, Duncek probably returned
home with confidence in his plans
to set Czechoslovakia on a new
course and to broaden his base
of political support. To mollify
critical intellectuals prior to
his Moscow trip, he already had
allowed the Czechoslovak Writers'
Union to elect its own liberal
leadership. He has also per-
mitted the union to publish a
new weekly journal to replace
the one taken away from the union
by former party boss Novotny.
While heartened, the intel-
lectuals have not completely re-
laxed their suspicious attitudes.
In contrast to their bitter op-
position to Novotny, however,
they view Dubcek's election as
"the beginning of a process in-
side the party and society in
which writers want to take part."
On 23 January, one of Dub-
cek's trusted colleagues, Vasil
Bilak, was elected to succeed
him as first secretary of the
Slovak Communist Party. The
two apparently achieved a good
working relationship while run-
ning the Slovak party between
1962 and 1967. The election
of Bilak, a Ukrainian, continues
the trend started by Dubcek of
elevating representatives of
national minorities into posi-
tions of power. Dubcek, him-
self a member of the Slovak
minority, had already appointed
a man of gypsy origin to the
party presidium.
These initial changes seem
to be having their desired ef-
fect. It has been reported, for
example, that younger, progres-
sive elements in Czechoslovak
society are optimistic that
Dubcek's election will result in
a genuine break with the past.
Whether their optimism is justi-
fied or not, their rising expec-
tations that the party's dead
hand will be lifted from domestic
affairs will generate additional
pressure in that direction.
...SUC-4R-Ler
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USSR CONCLUDES TRADE NEGOTIATIONS WITH EASTERN EUROPE
Trade negotiations have re-
cently been concluded between the
USSR and each of the Eastern Eu-
ropean countries. Despite the
increases called for, Eastern
Europe's trade with the USSR is
not likely to grow as fast as
that with the West, partly be-
cause they are seeking to acquire
the latest technology. Neverthe-
less, the USSR still is the most
important source of raw materials
for Eastern Europe and provides
a market for a variety of manu-
factured goods not readily sal-
able elsewhere.
The Soviet Union provides
approximately 80 percent of East-
ern Europe's imports of basic
fuels and raw materials, in-
cluding crude oil, rolled steel,
coal, iron ore, pig iron, and
cotton. Deliveries of many of
these products are to be increased
in 1968. The USSR has warned,
however, that Eastern European
countries expecting to purchase
larger amounts of raw materials
from the Soviet Union after 1970
must grant credits to help pay
exploitation costs. Some such
arrangements have already been
concluded. In 1963, five coun-
tries extended $49 million in
credits to the USSR to assure
supplies of phosphorite, and
more recently Czechoslovakia
agreed to invest $556 million
to guarantee oil deliveries.
The USSR also supplies about
one third of the machinery and
equipment imported by Eastern Eu-
ropean countries, including 60
percent of oil-drilling equip-
ment and more than one half of
tractor and truck requirements.
Soviet grain deliveries furnished
about two thirds of Eastern Eu-
ropean import requirements from
1960 through 1964, but declined
to one half last year, and are
expected to remain at about the
same level this year.
The Soviet share of Eastern
European foreign trade varies
markedly from country to country,
ranging from 26 percent of Ru-
mania's total trade to 56 per-
cent of Bulgaria's. The Eastern
Europeans' collective share of
total Soviet trade is currently
more than 50 percent. The USSR
orders some 75 percent of its
imports of machinery and equip-
ment from these countries, prin-
cipally from East Germany and
Czechoslovakia. The bulk of
Soviet orders are for rail trans-
port equipment, seagoing and
river vessels, and equipment for
the food and chemical industries.
The current Soviet program to
increase the availability of con-
sumer goods at home in part de-
pends on purchases from Eastern
Europe, and these imports are
slated to increase in 1968.
SUG-ftET
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The USSR has expressed
dissatisfac-Aon with foreign
trade prices, but suggestions
by Soviet economists to estab-
lish a new pricing system have
not been acceptable. The USSR
contends that under the present
system it pays too much for most
Eastern European machinery and
equipment, and that Soviet raw
material exports are priced too
Low to cover the growing costs
of exploitation.
SLIGHT THAW NOTED IN HUNGARIAN ATTITUDE ON US RELATIONS
The Hungarian Foreign Minis-
try Aas recently indLcated re-
vived interest in negotiating
solutions to certain long-stand-
ing problems with the US. This
is a significant change from the
politely negative stance that
Hungary adopted after the ar-
rival last November of the first
US ambassador to Communist Hun-
gary.
Budapest's initial coolness
was designed to minimize the
political impact of the increase
in the level of US representa-
tion and to demonstrate that
Hungary's acceptance of the
change did not imply a shift in
the regime's basic alignment.
The Kadar regime does not
want its motives misunderstood
by its Communist allies. It
has proposed, therefore, to
negotiate on topics that have
clear precedents and are thus
politically "safe." So far,
the Hungar:_ans have expressed
specific interest in joint eco-
nomic ventures, a consular treaty,
Page 18
economic claims, and a possible
easing of restrictions on the
size of the embassy's staff.
In keeping with its apparent
desire to minimize US contacts
with the Hungarian population,
the regime maintains that ex-
panded cultural relations would
be politically "dangerous" and
has again refused to discuss
the matter. The Foreign Minis-
try also displayed sensitivity
to possible publicity arising
from any of the proposed nego-
tiations, warning that such
publicity could abort the talks.
The Hungarians are being
very cautious. Simultaneously
with their private approaches
to the US, they have in a num-
ber of ways publicly under-
scored their basic alliance
with the Soviet Union. Within
this context, however, there
appears to be room for a grad-
ual and low-key improvement
in Budapest's relations with
Washington.
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NEW MANEUVERS MANEUVERS OVER BRITISH ROLE IN EUROPEAN COMMUNITIES
Various proposals have been
made in the continental countries
to keep alive Britain's bid for mem-
bership in the Communities, but so
far none has led to positive re-
sults.
The Germans evidently are
awaiting the results of Kiesinger's
and Brandt's talks with De Gaulle
in Paris on 15-16 February before
committing themselves to specific
proposals. They have suggested,
however, that Britain consider join-
ing EURATOM, presumably as an in-
terim step.
Bonn also envisions that the
commission would play a role in con-
sulting with the British on their
application and in exchanging in-
formation.
The Benelux countries have of-
fered a potentially far-reaching
"package" plan to break the cur-
rent stalemate. They proposed that
the Six consult with the four ap-
plicants--perhaps through something
like the existing agreement between
the UK and the Coal-Steel Community--
on matters covered by Community
treaties. Moreover, "joint action"
was proposed in fields not directly
included in the treaties, such as
patents, arms development and pro-
duction, and technological coopera-
tion. Finally, "other European
countries," are invited to par-
ticipate in political consultations
that the Benelux countries are ini-
tiating among themselves on foreign
policy and other "questions of com-
mon interest."
Page
The Benelux plan is not without
risks for the Communities. Some of
the areas for suggested economic
cooperation touch on questions al-
ready under Community jurisdiction,
and the envisaged political coopera-
tion would be outside such jurisdic-
tion. The effect of the plan thus
might be to detract from the Commu-
nities. The proposals nevertheless
have the advantage of sidestepping
the issue of negotiating some form
of associate, half-way, or transi-
tional membership which the British
have already rejected. Moreover,
they conform to British ideas about
gaining a foothold in European de-
liberations as a way of "preparing"
for EC accession.
In Brussels this week, Italy
and Germany expressed interest in
the plan but the Benelux countries
were not given a mandate to get dis-
cussions started. The emphasis was
on possible technological coopera-
tion, and there was apparently lit-
tle attention given to political
cooperation. France was clearly
not enthusiastic, but has not flatly
opposed the Benelux plan. Couve,
however, recently told the Belgian
ambassador in Paris that the "time
was not ripe" for it.
Meanwhile, the Dutch and Ital-
ians have balked at discussions--
which were due to begin this week
in a Community framework--on tech-
nological cooperation, among the
Six. The EC Council will discuss
in February whether the Commission
should pursue its study of "dispar-
ities" between the Community and the
applicants for membership.
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When the German leaders visit
Paris in February, De Gaulle may
try to give some content to his
suggestion of "possible arrange-
ments" between Britain and the Com-
munity. While not discouraging the
Germans from exploring what De
Gaulle may have in mind, the British
doubt that anything acceptable to
Paris would also be to London. The
French may simply reply on a dis-
play of renewed interest in accel-
erated cooperation among the pres-
ent Community members in order to
ward off any German participation
in contacts with the British that
would exclude France.
Britain, meanwhile, has thus
far apparently felt incapable of
doing more than waiting to see how
the effort of the continentals will
develop.
UN TRADE AND DEVELOPMENT CONFERENCE OPENS IN NEW DELHI
The concern of the less-de-
veloped countries (LDCs) over their
deteriorating terms of trade as well
as the slackening of aid from the
developed countries will probably
be aired at the second United Na-
tions conference on Trade and De-
velopment (UNCTAD), which opened
yesterday in New Delhi and will run
through 25 March. Although the at-
titude of the LDCs will probably
be more realistic than at the first
conference in 1964, there is little
optimism tha-: the conference will
achieve much in the way of imme-
diate results, in part because of
the financial difficulties facing
the major developed countries.
Despite their divergent in-
terests, the LDCs will endeavor to
present a common front toward the
industrialized nations. UNCTAD
Secretary General Prebisch has
urged them to press for specific
commitments from the developed
countries on a system of general
tariff preferences far LDC exports
3.5(c)
of manufactures and on the conclu-
sion of international agreements
to regulate trade in certain com-
modities. Demands for increased
aid, including financing to sup-
plement shortfalls in LDC export
earnings, are also likely.
The West is agreed in prin-
ciple to the granting of general
preferences. Difficulties could
arise, however, if the LDCs press
for something more specific at this
time because significant differences
remain among the developed coun-
tries on how to carry out a pre-
ferential scheme.
The Communist countries--
which also have been subjected to
demands by the LDCs--probably hope
to play down their own lack of a
unified policy. They can be ex-
pected to reach for some propaganda
benefit by pointing to Vietnam as
detracting from the US aid effort.
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MIDDLE EAST - AFRICA
Arab-Israeli tension continued to dominate
events in the area last week, but new stresses
appeared in the Persian Gulf and older problems
elsewhere dragged on.
A heavy exchange of gunfire across the Suez
Canal caused Egypt to suspend efforts to release
the 15 cargo ships trapped in the canal since
June. Israel previously had warned Cairo against
an attempt even to check the condition of the
canal in the north--a move which Israel probably
believes would weaken its leverage on Egypt for
face-to-face negotiations. Further international
pressure is expected, principally from the UK
but also from the USSR, to have the whole canal
cleared to normal traffic.
Stresses in the Persian Gulf, anticipated
eventually as a result of Britain's new "West
of Suez" defense policy, have begun to appear
already among the three major powers in the area--
Iran, Saudi Arabia, and Kuwait. Tehran has
evinced considerable irritation over Saudi sup-
port for Bahrain--which Iran publicly claims--
and over alleged Kuwaiti references to the
"Arabism" of the gulf. Riyadh has protested
recent Iranian oil operations on the Saudi side
of the gulf's median line.
In the Nigerian civil war, the renewed
federal offensive is still making significant
gains, but the Biafrans are apparently prepared
to fight for a long time. A Biafran emissary
is bringing back from London new peace proposals
from the Commonwealth Secretariat, but prospects
for early talks remain dim.
The Greek junta continues to strengthen
its position internationally and at home. Most
NATO and other countries have followed Turkey's
lead in resuming diplomatic contacts with the
regime. Officers who were sympathetic to the
King's abortive coup have been retired, and
some 50 university professors have been dis-
missed for disloyal activities. In a demonstra-
tion of self-confidence, the junta released 86 mnre:
political prisoners last week.
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CONCILIATORY MOOD PERVADES ELECTIONEERING IN CYPRUS
The rival Greek and Turkish
Cypriot communities are prepar-
ing for the presidential elec-
tions on 25 February in an atmo-
sphere considerably less menacing
than has existed on Cyprus in
some time. Neither community has
apparently been strongly stirred
by the other's moves.
In line with the 1960 con-
stitution, Greek Cypriots will
elec-: the president and Turkish
Cypriots will elect the vice
president in separate polls.
President Makarios is most un-
likeLy to have any opposition in
his bid for a new "mandate" from
the Greek Cypriot community. He
has cooled a minor flare-up among
some bishops who are critical
of his apparent abandonment of
the long-standing goal of enosis
(union with Greece). Pockets of
pro-enosis sentiment doubtless
will remair, however, especially
in the rural areas wftere the
church has considerable influence.
This will prevent any public an-
nouncement by Makarios that he
has completely ruled out eventual
enosis as a desirable goal.
Incumbent Vice President
Kucuk likewise will run unopposed..
An apparently more qualified but
politically unknown candidate
withdrew in favor of Kucuk, who
is a symboL to Turkish Cypriots
of their resistance to Greek
hegemony on the island. Ankara
also disapproved of any challenge
to Kucuk because it might divide
and weaken the Turkish community.
Makarios also may be consider-
ing new parliamentary elections.
This maneuver would be somewhat
more delicate for Makarios than
the present presidential elec-
tions. In the 1960 parliamentary
elections, Makarios allowed the
Communists to run unopposed for
five seats in Parliament in re-
turn for a Communist promise not
to contest pro-Makarios candi-
dates in other constituencies.
The Communist Party is the best
organized political group on
Cyprus, however, and probably is
capable of winning 20 percent
or more of the vote. If they
refused to cooperate again, the
unity of the Greek Cypriot com-
munity as well as Makarios' own
political position could be
weakened.
Unless Makarios uses the
presidential elections as a
springboard for the "courageous
decisions" he forecast in an-
nouncing them, the elections
will be meaningless. His real
motives still are unknown, but
if he does not move further
toward cooperation between the
Greek and Turkish communities,
he will be faced at some �oint
with a fresh crisis.
GritrT
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Now'
ISRAEL SEEKS MORE MILITARY AIRCRAFT
Israeli officials are search-
ing Western Europe and the US for
fighter aircraft. Israel cur-
rently has about 210 jet fighters,
only 52 of which are sophisticated
Mirage Ms, while the Arab na-
tions now have about 675 jets,
more than 250 of them late models.
To solve its fighter-bomber
shortage, Tel Aviv has begun to
take delivery of 48 US A-4 Sky-
hawks purchased before the war
in June. Israel has requested
additional A-4s and also has
asked for 50 US F-4 Phantoms.
The Israelis still hope to obtain
delivery of 50 Mirage 5 inter-
ceptors from France, but De Gaulle
has given no indication that he
is about to lift his embargo on
these aircraft.
Page 23
3.3(h)(2)
Another deal, involving the
purchase of 12 F-86s from US
surplus stocks through a Dutch
arms dealer, was dropped when
the US refused to grant an ex-
port license for the planes. An
Israeli attempt to obtain quick
delivery of Hawker Hunters from
the UK failed. The British said
that the aircraft would not be
available.
The F-86s and the Hawker
Hunters are in the same class
with the Mystere interceptors
presently in the Israeli inven-
tory. None of these aircraft is
a match for the MIG-21s or SU-7s
being supplied to the Arabs, but
will serve as stopgap hardware
until better interceptors become
available.
The Israelis have always
been at a disadvantage as far as
numbers of aircraft are concerned,
but this deficiency is counter-
balanced by the superior quality
of Israel's air staff, pilots,
and technicians. Although the
Arabs' collective jet fighter in-
ventory is now roughly three
times that of Israel, the Israeli
force retains the qualitative
superiority that quickly enabled
it to attain decisive air su-
premacy in the June war.
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RECENT GOVERNMENT REORGANIZATION IN EGYPT
Recent changes in the
Egypl:ian Government appear to
represent a return to a greater
degree of nprmalcy following
the trauma of the military defeat
last summer.
On 24 January, Ali Sabri
was reappointed secretary gen-
eral of Egypt's only legal polit-
ical organization, the Arab
Socialist Union (ASU). Sabri
had occupied the secretary gen-
eral slot until shortly after
the conflict with Israel, at
which time President Nasir took
over that post as well as the
position of prime minister, a
title he officially still holds.
Sabri's reappointment relieves
Nasir of the chore of heading
the practically moribund ASU.
In another change, the com-
mander in chief of the armed
forces, General Muhammed Fawzi,
was given added duties as the
minister cyf war. This position
also has been sharply upgraded
to give the minister greater
control over the entire military
effort and a more direct line to
the President. These new duties
would appear to give Fawzi in-
creased stature within the gov-
ernment and reflect Nasir's in-
tention to continue his own ef-
forts to improve the efficiency
of the Egyptian armed forces.
In another development, the
public trial of those accused of
conspiracy in the August plot to
overthrow the government began
on 22 January as scheduled. Fifty-
four defendants--mostly from the
military, and including Nasir's
former chief of intelligence,
Salah Nasir--are under indictment
for complicity in the affair. The
charge against the accused re-
cently was changed from attempt-
ing to seize control of the Armed
Forces General Command to attempt-
ing to overthrow the system of
government. Among the reasons for
the alteration of the charge may
be the discovery of more evidence
than anticipated, a more secure
feeling on Nasir's part that al-
lows him to make stronger charges,
and a stiffer attitude toward the
conspirators.
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Nor, Noir
WESTERN HEMISPHERE
The election of a secretary general of the
Organization of American States (OAS) continued
to be the subject of much diplomatic maneuvering
among Latin Americans last week.
Central American foreign ministers met in
Panama to consider their position for the fifth
ballot, and the Council of the OAS met a few days
later to decide whether the vote should be held
on 12 February as scheduled. The council decided
to go ahead as planned. None of the present three
candidates appears assured of a clear-cut victory,
and another impasse or even a close victory will
further tarnish the image of the organization.
In Guatemala, guerrilla activity may soon in-
crease. There are reports that Communist factions
have agreed to join forces and deploy away from
the capital. Right-wing civilian commando units,
supported by the army, are also reported to be
operating again in the northeast.
Violence is also likely in Panama.
The lame-duck status
of the administration was underscored when the
President failed to ask for special powers during
the eight-month legislative recess that began on 30
January. No legislative initiative--such as rati-
fication of the canal treaty drafts--can be taken
until Robles' term ends on 30 September.
In Chile, President Frei has withdrawn his
controversial wage-readjustment bill in the face of
sure defeat in the Senate, but plans for submitting
a revised bill are already under way. The original
bill was designed to hold down inflation and create
investment funds by paying part of a wage increase
in government bonds. Frei probably has the votes
to block the opposition's bill, which would divert
a portion of copper earnings into the treasury to
finance paying the whole increase in cash.
43-Fenn'
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ARGENTINE MILITARY IMPATIENT WITH ECONOMIC PROGRESS
Argentina's top military
leaders are again showing impa-
tience with the slow progress of
the government's economic reform
program, despite some substantial
successes In 1967.
Popular dissatisfaction with
the continuing rise in the cost
of living and with covernment
restrictions on wage increases
is causing considerable reaction
among some military leaders. The
generals, who brought the present
government to power and feel re-
sponsible for its success or
failure, are sensitive to criti-
cism of it.
President Ongania's regime
has made impressive gains in re-
forming the Argentine economy.
Since the beginning of the eco-
nomic reform program in March
1967, the budget deficit has been
significantly reduced, the peso
has been maintained at a stable
rate, and foreign reserves have
more than quadrupled. In addi-
tion, government operations have
been streamlined. The gains have
impressed both national and for-
eign bankers and financiers, but
have had little posLtive impact
on the Argentine public.
The commanders of the three
military services recently told
Ongania that "tangible" gains
would have to be scored by March
or changes might have to be made
in the cabinet and in government
policies. The military chiefs
reportedly even hinted that On-
gania himself might have to be
replaced.
Early in 1967, these same
military chiefs went through a
similar phase of grumbling and
impatience. They were mollified
then by cabinet changes that
brought in Economy Minister
Krieger Vasena, the architect of
the current economic program.
The government is committed to
Krieger Vasena's program, and
any show of vacillation could
undercut the entire stabiliza-
tion effort. In particular,
Ongania cannot do anything
"spectacular" to improve wages.
The situation is compli-
cated by an apparent cooling in
relations between Ongania and
army commander in chief General
Alsogaray, who up to now has
been considered one of Ongania's
strongest backers in following
the Krieger Vasena program.
This will almost certainly be
Alsogaray's last year as army
chief, however, and he can af-
ford to be somewhat more out-
spoken. In seeking a more popu-
lar government policy, Alsogaray
may be making an effort to en-
sure his own political influence
after he steps down. He has
even gone so far as to maintain
'FtS11�.
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contacts with with General Candido
Lopez, who was retired recently
for his attempts to form an op-
position movement.
Despite these rumblings, On-
gania's position remains secure.
Nevertheless, the continued pres-
sure against the economic reform
program and the somewhat more
independent line of the military
leaders may force some chan es
in government policies.
BRAZILIAN GOVERNMENT REACTS STRONGLY TO OPPOSITION CRITIC
President Costa e Silva has
reportedly decided to take ac-
tion against perennial opposition-
ist Carlos Lacerda, but has not
yet decided whether to go as far
as to strip him of his political
rights as hard-line military ele-
ments advocate.
The government reacted
strongly last week to counter
a suspected plot by Lacerda.
Military and security forces were
put on alert before Lacerda de-
livered a highly touted and vi-
tuperatively antiregime speech in
Sao Paulo on 28 January.
The alert set off an ava-
lanche of rumors that military
hard liners were attempting to
force the President to crack down
on Lacerda. The speech passed
without incident and by 29 Jan-
uary the alert was over. Press
Page 27
35(c)
and congressional reaction indi-
cated widespread puzzlement over
the administration's overreaction
and a belief that the government
had made itself appear more than
a little foolish.
Lacerda has been a thorn
in the side of every Brazilian
WEEKLY SUMMARY
SUMMARY
Lacerda
2 Feb 68
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Nue SEeRET
president for more than 20 years.
Although he was a key civilian
leader in the 1964 revolution
that ousted leftist president
Goulart, he soon became disen-
chanted with the military gov-
ernment and formed an alliance
with former presidents Kubitschek
and Goulart, both of whom lost
their political rights in 1964.
Lacerda's attacks on the
government as a dictatorship by
a minority group of military "ad-
venturists" have stung the Bra-
zilian military--which is not
used to being goaded. He has ac-
cused the administration of be-
traying the country to foreign--
specifically US--interests, has
compared it to the regimes of
Hitler and Mussolini, and has
promised to produce proof of cor-
ruption at high levels. His
blasts have struck a responsive
Page 28
chord with many Brazilians, par-
ticularly among leaders of the
only legal opposition party.
If the government now gives
in to hard-line pressure and
prosecutes Lacerda under provi-
sions of the tough new national
security law, a considerable
press and public hue and cry can
be expected. Although such ac-
tion would have strong backing
from the military--the ultimate
arbiters of Brazilian stability--
it would be widely interpreted
as a sign that the administra-
tion lacks self-confidence. It
would also play into Lacerda's
hands by making him a political
martyr. Further, it would dis-
credit Costa e Silva's much-
publicized efforts to "humanize"
the revolution begun by his
�redecessor.
8.ET
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*we ,fte
CUBA WARNS WARNS POLITICAL MALCONTENTS
The Communist Party mini-
purge announced last weekend in
Havana, though directed against
potential political malcontents
in Cuba, will be taken by Moscow
as another affront. Moreover,
it confirms to any latent or
actual doubter within or out-
side Cuba that Fidel Castro is
still thoroughly in control.
According to the official
party newspaper, Granma, Raul
Castro told the central commit-
tee members last week that those
purged supported the Soviet line
on all issues that have caused
the strain in relations between
Moscow and Havana. According to
the newspaper, these issues in-
clude Fidel Castro's emphasis on
"armed struggle" in Latin America,
his attack on Soviet credit and
technical assistance to Latin
American "oligarchies," and his
opposition to the USSR's "uni-
lateral" withdrawal of rockets
from Cuba during the missile
crisis of October 1962. Report-
edly, members of this "microfac-
tion" contacted Soviet and some
East European officials in the
hope of getting them to prevail
on Castro to abandon his inde-
pendent line.
The leader of the antiparty
group is Anibal Escalante, a two-
time loser who was also purged
in 1962. The errors committed
by the only other prominent per-
sons charged--central committee
members Ramon Calcines and Jose
Matar--appear to be that they
consulted with Escalante while
drafting planning papers or status
reports. The central committee
decided to expel both Calcines
and Matar from the committee, and
to purge only Calcines from the
party. Escalante and the other
eight low-level members of the
"microfaction," however, are to
be tried by Revolutionary Tri-
bunals.
Although some "old guard"
Communists are among the antiparty
group, it appears to comprise a
cross section of Cuban society,
and the central committee's actions
should not be construed as a purge
of old pro-Soviet Cuban Communists.
"Old guard" Communists such as
Carlos Rafael Rodriguez and Blas
Roca are not affected at all.
The purge of this generally
low-level group, which posed no
serious threat to the regime, is
a dramatic warning to other mal-
contents that opposition to Cas-
tro's extremist policies will not
be tolerated. In addition, it
makes clear to Moscow that Castro
will continue Cuba's active sup-
port for armed revolution.
The special central commit-
tee meeting also issued resolutions
proclaiming Cuba's solidarity with
_s14elltri7
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MAW
.sg-eitrr
North Vietnam and support for Nortn
Korea in its confrontation with the
US. In addition, it ratified the
political bureau's decision not to
send a delegation to the scheduled
international Communist con-
ference at Budapest. Moscow's
first response�a brief TASS re-
port of the proceedings in Ha-
vana--ignores the provocative
implications of Raul Castro's al-
legations. Whatever their private
reaction, the Russians will go
some distance to avoid doing fur-
ther damage to their relations
with Havana by engaging in a pub-
lic exchange of insults.
Although the Soviets are in
a position to apply economic pres-
sures against the Cubans, they
are unlikely to jeopardize their
stake in Cuba by resorting to
heavy-handed reprisals. Signs of
their intentions should appear with
the publication of the new So-
viet-Cuban trade agreement a draft
of which is now near completion.
DOMINICAN SITUATION CONTINUES UNSETTLED
Threats of violence from
the left, a Communist victory in
student elections, and President
Balaguer's decision to allow the
return of exiled General Wessin
y Wessin are likely to keep the
political pot simmering.
On 20 and 24 January, the
secretary general of the left-
of-center Dominican Revolutionary
Party accused the government of
condoning rightist repression of
the left. He charged that a price
tag ad been put on his head by
an unnamed US intelligence agent
and warned that the party would
retaliate in kind if a member of
the party's national executive
committee or any "revolutionary"
were murdered.
Page 30
Leaders of the Marxist-
Leninist Dominican Popular Move-
ment, speaking to a labor group
on 20 January, reportedly said
the party has adopted a political
line of violence similar to that
of the Guatemalan revolutionaries.
The spokesmen stressed that their
party must strike back against
"repression," and made it clear
that US citizens would be included
as targets.
Although an increase in vi-
olence has been apparent during
the past few months, only a few
incidents appear to have political
overtones and there is no evidence
of a calculated campaign of vi-
olence by the right or left. Acts
of terrorism by the left, how-
ever, probably would be met by
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.S.E4+FltT- -Now
ruthless counterterrorism from the
right. In such an event, the
possible involvement of US citi-
zens cannot be ruled out.
The Communist victory in
student elections at the Autono-
mous University of Santo Domingo
(UASD) on 29 January does not
augur well for future university-
government relations. The elec-
tion will probably reinforce the
position of the leftist UASD
authorities in their present stand-
off with President Balaguer over
the university budget. It may
also bring increased pressure on
Balaguer by his conservative ci-
vilian and military supporters to
curb Communist influence on the
campus.
Meanwhile, the legal recog-
nition of the Democratic Quis-
queyan Party (PQD) and Wessin's
Page 31
declaration as the party's 1970
presidential candidate are pres-
suring Balaguer to permit Wes-
sin's return. At a press con-
ference on 24 January, Balaguer
said Wessin would be allowed to
return at an "opportune moment,"
the timing of which depended on
"circumstances." The President,
as well as many of his security
advisers, probably views Wessin
and the PQD as a threat to the
government.
33(h)(2)
Leftist demands for the re-
turn of exiled former "constitu-
tionalist" officers--particularly
Colonel Caamano, whose whereabouts
is still unknown--will probably
follow Wessin's return to the coun-
try. 3.5(c)
41.PeirE17
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INCIDENTS MAR MAR PARAGUAvAN ELECTION CAMPAIGN
With Paraguayan national
elections little more than a
week away, campaign incidents
are testing the spirit of coex-
istence among the participating
parties.
The worst problems appear
to have involved scheduling of
oppostion election rallies. In
several cases, the Radical Lib-
erals have made arrangements to
use a hail only to find that it
has been pre-empted by President
Stroessner's Colorados.
Early in January two promi-
nent former exiles, Carlos Pastore
and Colonel Alfredo Ramos, were
officially disqualified as op-
position candidates for the Senate
on the Radical Liberal ticket.
This action was probably ordered
by President Stroessner, on the
basis of their long records as
leaders in anti-Stroessner plots
and armed incursions. The party
has reluctantly submitted a new
slate, but has protested the ar-
rest of several party members.
Recently, a number of Feb-
reristas in Concepcion were re-
portedly arrested and roughed up
by the police. Party leaders have
protested, but not very strongly
in view of the fact that Febre-
rista youth had been painting
antiregime slogans in the city
prior to Stroessner's arrival for
a campaign rally.
Despite the recent political
arrests and reported acts of vi-
olence, the government still ap-
pears resolved to hold the most
honest election in Paraguayan'his-
tory. The minister of interior
is making a sincere effort to en-
sure that rural authorities act
responsibly during the election,
and has threatened punishment for
those that do not.
In spite of the difficulties
and growing animosities, it seems
that all four parties will par-
ticipate in the election, with
Stroessner and his Colorados of
course emerging as the winners.
_SEC--ftEr
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