WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A004400010001-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 29
• Document Creation Date: December 21, 2016
• Document Release Date: June 9, 2008
• Sequence Number: 1
• Publication Date: February 28, 1964
• Content Type: SUMMARY

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D1= F`ICE -OE CU 9F 41T: .INTLLIGENCE
State Dept. review completed
28 February 1964
()CINQ. 0320/64
Copy. No.
RAL I T LL G: A-+GENCY
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SECRET
(Information as of 1200 EST, 27 February 1964)
THE COMMUNIST WORLD
KHRUSHCHEV DE-EMPHASIZES NEW LANDS
He is publicizing the view that his new program for
greater use of chemical fertilizers and irrigation in
Soviet agriculture will permit eventual reduction of
grain farming in the New Lands.
MOSCOW AGAIN SHOWS CONFIDENCE IN BULGARIAN LEADER ZHIVKOV
He has returned from Moscow with the largest credit the
USSR has granted any bloc country since 1961. Some as-
pects of the Sino-Soviet dispute and questions of bloc
unity may also have been discussed during the visit.
EAST GERMANY STEPS UP CAMPAIGN FOR RECOGNITION
The regime, with some success, is intensifying its ef-
forts to induce neutralist countries to accept the Com-
munist "two Germanys" theory and ignore West German
threats of political and economic reprisals.
POLISH REGIME FACES LABOR UNREST
It is preparing for possible serious labor reaction
this spring and summer when the already restive popu-
lace'feels the impact of wage reductions and employ-
ment cutbacks under the new anti-inflationary program.
CIIOU EN-LA I VISITS SOUTH ASIA
He has assured his hosts in Burma, Pakistan, and Ceylon
of Peiping's peaceful intentions, blaming India for fail-
ure to settle the Sino-Indian border dispute. Chou has
also pressed for a new Asian-African conference.
NEW TALKS SCHEDULED ON INDONES IA-MALAYSIA DISPUTE
However, these, like the earlier talks, will be hampered
by Indonesia's refusal to withdraw troops from Malaysian
Borneo until a political settlement is reached and by
Malaysia's opposition to a settlement before withdrawal.
Page
1
KHANH TRYING TO ASSERT CONTROL IN SOUTH VIETNAM
General Khanh continues to try to reinvigorate the Sai-
gon government's a aratus
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ASIA-AFRICA (continued)
CYPRIOTS TURNING IRE TOWARD UK AND US
They are angry over lack of support in the UN Security
Council, and are making gestures toward the USSR; Maka-
rios may be aiming to force out British troops.
GABON REGIME STILL FACES DIFFICULTIES
The French intervention to restore President Mba has
succeeded in stabilizing the situation temporarily, but
the hostile reaction inside and outside the country
suggests that Mba and possibly other pro-French African
leaders may have been weakened over the longer run.
DE GAULLE'S MEETINGS WITH ERHARD AND SEGNI
De Gaulle's talks this month with the West German Chan-
cellor and the Italian President produced no surprises.
NEW AUSTRIAN CHANCELLOR
Josef Klaus' replacement of Alfons Gorbach signals a
shake-up in the government which may jeopardize the
two-party coalition which has governed for IS years.
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WESTERN HEMISPHERE
Page
TI1E SITUATION IN PANAMA to
Presidont Chiari, still under conflicting pressures
end the US-Panamanian impasse, is quietly supporting dis-
cussions to this end under both UN and OAS auspices. The
Communists meanwhile are missing no opportunity to pro-
long the crisis as long as it suits their purposes.
POLITICAL TURMOIL IN BOLIVIA
President Paz Estenssoro's bid for re-election is rbeing
hindered by dissension in his own party and surpris-
ingly ingly stiff resistance from disparate opposition groups.
CHINESE COMMUNISTS TO OPEN TRADE MISSION IN BRAZIL
While the Brazilian presidential press secretary regards
this move as a prelude to full diplomatic relations, the
foreign minister has claimed that no decision is likely
before the next UN deliberation of the China question.
LEGISLATIVE ELECTIONS NEXT WEEK IN EL SALVADOR
The Rivera government, eager to prove that it is genu-
inely democratic, is taking pains to avoid the grievances
which led all the opposition to boycott the 1962 elections.
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HJRR JNT INTELLIGENCE WEEKLY SUMMARY Page iii
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*we SECRET
KHRUSHCHEV DE-EMPHASIZES NEW LANDS
Khrushchev is publicizing
the view that his new program
for greater use of chemical
fertilizers and irrigation in
Soviet agriculture will permit
an eventual reduction of grain
farming in the New Lands_I
Of approximately 225 mil-
lion acres now being farmed in
the New Lands, 100 million were
brought under cultivation in
the last decade. Production of
grains in the area has been de-
clining for several years, and
mismanagement of the land has 25X1
led to serious wind erosion.
This together with a severe
drought in 1963 resulted in the
poorest crop since the incep-
tion of the program.
The intention is probably to 25X1
introduce a rational soil con-
servation program--rotating
grain with other crops, fallow-
ing, and seeding the more mar-
ginal land to grasses.
Some such program probably
will be adopted even if--as thus
far seems possible--this year's
grain harvest in the area is
relatively good. Precipitation
this past fall and winter has
been above normal. 25X1
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28 Feb 64
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SE CRET
MOSCOW AGAIN SHOWS CONFIDENCE IN BULGARIAN LEADER ZHIVKOV
Bulgaria's premier and party
boss, Todor Zhivkov, has come
home from his 17-19 February
trip to Moscow with renewed evi-
dence of Russian confidence in
his leadership. Moscow has
granted Bulgaria a new $333-mil-
lion credit and has established
a joint Commission for Economic
and Scientific-Technical Coop-
eration.
The credit, the largest the
USSR has given any Soviet bloc
country since 1961, will be used
to support Bulgaria's Fifth Five-
Year Plan, due to commence in
1966, and probably to help fi-
nance Soviet equipment and tech-
nical aid for Bulgarian construc-
tion projects between now and
1969.
The new intergovernmental
commission is apparently similar
to those Moscow recently set up
with Czechoslovakia and Hungary,
which are responsible for bilat-
eral coordination of economic
plans for 1966-70, including the
supply of Soviet raw materials
and the development of speciali-
zation of labor and cooperation
in many economic sectors. The
commissions serve to bind these
countries to the Soviet economy
and will help to lay the ground-
work for preparing the new sat-
ellite economic plans to 1970.
The agreements are probably also
intended to give new impetus
toward greater intrabloc inte-
gration, largely stalled since
the defeat last year of Khru-
shchev's proposal for a planning
staff within the bloc-wide Coun-
cil for Mutual Economic Assist-
ance.
While the communiqud issued
at the end of Zhivkov's visit
was a routine resumd of Soviet
views on international questions,
speeches by the Soviet and Bul-
garian leaders suggest that as-
pects of the Sino-Soviet dispute
and questions of bloc unity were
also discussed.
Although Moscow has always
underwritten Bulgaria's economic
development, the new credit will
be understood in Bulgaria as a
fresh sign of Soviet support for
the Bulgarian leader. Zhivkov,
who lacks a broad base of support
in the still hard-line Bulgarian
party, has been criticized since
assuming the premiership in No-
vember 1962 for failing to find
quick solutions to chronic na-
tional economic problems.
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V
SWO
k Country extending full recognition
All hae,ri I . 1 (;F'r~rnr r nha,sie A"PI
1
eg,inr1,
which hrts a
Country with Fast German consulate.: general
or consulate
(All but Syri t bav - nns1,/e,t?s et,('rnL
r country with official East German trade
mission
o Country with unofficial, East German trade
mission
28 FGaRUARY 1964
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East German Representation Abroad
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low-, V4001
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The Communist World
EAST GERMANY STEPS UP CAMPAIGN FOR RECOGNITION
The East German regime,
with some success, is intensi-
fying its efforts to induce
neutralist countries to accept
the Communist "two Germanys"
theory and to ignore West Ger-
man threats of political and
economic reprisals. These
efforts to gain international
acceptance have been enhanced
by the regime's dealings with
West Berlin on the Christmas
pass agreement and have been
spurred by Bonn's efforts to
normalize its relations with
the East European countries.
The East Germans achieved
their most notable success to
date in Zanzibar, where their
diplomats outmaneuvered nego-
tiators from West Germany and.
secured the new regime's per-
mission to establish full dip-
lomatic relations. East Ger-
man media now assert that the
East German chargd has received
Zanzibar's agrement as ambas-
sador. This doubtless will be
used by regime spokesmen in an
effort to induce other African
countries to grant East Ger-
many, if not de jure recogni-
tion,at least semidiplomatic
status for its trade missions.
While politburo member
Bruno Leuschner's recent month-
long trip to Indonesia, Cam-
bodia, Burma, Ceylon, and India
failed to yield spectacular
results, he induced Ceylon to
raise the East German trade
mission in Colombo to consulate
general status. Moreover, his
welcome by top government of-
ficials, including Nehru in
India, will fuel propaganda
claims that East Germany is a
respected international entity.
In India, Cambodia, and Ceylon,
his visit coincided with the
signature of cultural agreements.
He appears to have laid the
basis for a degree of long-term
economic cooperation with Cam-
bodia.
West Germany's response
to Ceylon's action was unex-
pectedly sharp. Six times
before, it had reluctantly tol-
erated the setting up of East
German consulates general else-
where. In this case, however,
its concern that other nations
might follow suit caused it to
terminate economic assistance
to Colombo--a sharp reminder
that Bonn still follows its
Hallstein Doctrine and will
break off diplomatic relations
with any nonbloc nation that
recognizes East Germany.
The East German regime is
loudly claiming that its suc-
cesses have created a real di-
lemma for Bonn despite its much
greater economic power. For-
eign Minister Bolz, greeting
Leuschner upon his return, de-
clared that Bonn's efforts to
enforce its Hallstein Doctrine
involved open interference in
the internal affairs of neutral-
ist countries. Bolz also sought
to appeal to West German oppo-
nents of the doctrine when he
characterized it as "a noose
which West German policy has
put round its own neck and which
dom of movement."
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28 Feb 64 CURRENT INTELLIGENCE WEEKLY SUMMARY
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POLISH REGIME FACES LABOR UNREST
The Polish Government is
preparing for possible serious
labor unrest in reaction to
Gomulka's new anti-inflationary
measures, which, among other ef-
fects, will result in a signifi-
cant unemployment problem for
the first time in the postwar
period. The most dangerous pe-
riod will come this spring and
summer when an already restive
population feels the full im-
pact of wage reductions and em-
ployment cutbacks. Approximately
300,000 new workers will be com-
peting this year for only 100,-
000 new jobs, and food shortages
are at their worst just before
the summer harvest begins.
As a precaution, the re-
gime has been building up its
security forces, even though it
hopes through nonviolent meas-
ures to head off any civil dis-
orders. An unusual number of
top party leaders, for example,
have been visiting industrial
plants around the country giv-
ing speeches designed to mollify
the workers. Gomulka himself
spoke at the Zeran automobile
works. Local governments also
are reportedly scaling down plans
for mass participation in this
year's observance of 22 July,
Poland's national day. Some
plans have been made to have 100,-
000 workers return to the coun-
tryside, but few jobs are avail-
able there. The regime also
hopes to halt the flow of labor
from rural areas to the cities,
but is likely to be only partly
successful. Much of the pros-
pective unemployment is likely
to be among young people, white-
collar workers, and women--espe-
cially nonparty members. Peasants
"commuting" from the fare: to in-
dustrial jobs also will suffer.
On 3 February a Katowice
newspaper reported that of the
many workers who had been dis-
charged since the end of the
year, 4,500 were white-collar
workers. The paper frankly
stated that "not all would find
work this year." A recent is-
sue of the party weekly Polityka
reported the firing of uppto
10,000 design engineers, and
noted that those who were re-
tained faced salary cuts. "For
many people there will be no
work," the paper added, and it
quoted "embittered designers"
as saying they are the "victims
of someone else's errors."
There are indications of
differences at high party levels
over the wisdom of the retrench-
ment plan. Jozef Olszewski
was recently dismissed from his
post as chief of the central
committee economic department
probably because he outspokenly
opposed full implementation of
the harsh party program. Ols-
zewski apparently stuck to his
views even after demotion and
"exile" to Katowice, because re-
portedly he also was ousted
from the post he took there.
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Chou En-lai's current trip
to Burma, Pakistan, and Ceylon
is part of Peiping's developing
campaign to present itself as
a reasonable power, firmly op-
posed to imperialism in any form.
Chou has sought to assure his
hosts of China's peaceful inten-
tions and has pressed for a new
Asian-African conference. In
all three countries he made a
special effort to present Pei-
ping's case in the Sino-Indian
border dispute, to reiterate
China's desire for a fair set-
tlement, and to blame New Delhi
for failure to reach agreement.
In Rangoon, Chou got a
wary reception, although the
Burmese rolled out the protocol
red carpet and public statements
made much of Sino-Burmese friend-
ship. Ne Win's desire to main-
tain a neutral stance resulted
in a cautious final communique
on 18 February which must have
been disappointing to Peiping.
The Burmese paid lip service to
Chinese leadership in Asia and
expressed the hope that Peiping
and New Delhi would enter nego-
tiations "on the basis of the
Colombo proposals"--a plan for
bringing India and China to the
conference table advanced by
Ceylon and five other nonaligned
states in December 1962.
The visit to Pakistan appears
to have been more successful.
Chou made a strong bid for closer
ties by supporting the Pakistani
position on the Kashmir question.
Breaking a long-standing Chinese
silence on the explosive issue,
he declared that the dispute
should be "resolved in accord
with the wishes of the people of
Kashmir, as pledged to them by
India and Pakistan."
Although the joint communi-
qu6 issued at the conclusion of
Chou's talks with Ayub Khan on
23 February avoided the word
"plebiscite"--a
solution
to the
Kashmir problem
favored
by Pak-
istan and firmly
opposed
by New
Delhi--its language has
been
interpreted by both the
Pakistani
and Indian press as a solid en-
dorsement of Pakistan's position.
The statement also endorsed
another Asian-African conference,
demanded Chinese Communist admis-
sion to the UN, and called for a
"peaceful negotiated settlement"
of the Sino-Indian border dispute.
Chou may plan during his stay
in Ceylon to suggest new terms
for negotiations with India or
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The Communist World
make a gesture calculated to
give the appearance of new Chi-
nese flexibility on the Colombo
formula., Peiping probably an-
ticipates--correctly--that
India will reject any suggestion
which falls short of full accept-
ance of the Colombo proposals
as interpreted by New Delhi and
is prepared to exploit this as
demonstration of stubborn In-
dian refusal to accept a peace-
ful Chinese overture.
NOTE: Tito, Nasir, and
other sponsors of a second sum-
mit conference of nonaligned
nations are pushing hard to
ensure that it conies off before
the proposed conference of all
Asian and African states. A
nonaligned preparatory session
--at the ambassadorial level--
is scheduled for Colombo for mid-
March. The summit meeting it-
self is expected to take place
sometime in September, probably
in Cairo.
The rival Asian-African
conference, a pet project of
the Indonesians as well as Pei-
ping, will probably take place
in their country at Bandung--
as did the 1955 gathering . The
timing of the meeting itself,
however, or of any preparatory
session, is not yet firm. 25X1
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NEW TALKS SCHEDULED ON INDONESIA-MALAYSIA DISPUTE
Malaysia, Indonesia, and
the Philippines reportedly have
agreed to new ministerial talks
which will open in' Bangkok on
3 March. The talks will be ham-
pered, however, by the same
problem present at the February
meeting: Indonesia's refusal
to withdraw troops, regular or
irregular, from Malaysian Bor-
neo until a political settlement
is reached, and Malaysia's re-
fusal to agree to a settlement
until withdrawal is arranged.
The Philippines, while essen-
tially supporting Indonesia
against Malaysia, tries to main-
tain an appearance of moderation
and mediation.
Malaysia declared an "air
defense zone" effective 25 Feb-
ruary over Malaysian Borneo and
adjacent waters to discourage
Indonesia from infiltrating new
personnel or resupplying its
guerrilla fighters by airdrop.
The UK, at Malaysia's behest,
has ordered that any Indonesian
aircraft violating the air zone
be shot down.
However, Foreign Minister
Subandrio reiterated on 24 Feb-
ruary that Indonesia will find
"ways and means" to resupply
its guerrillas in Borneo. If
they are not resupplied, he
claimed, "they surely would not
obey the order given them to
cease fire."
It is believed that more
than 200 Indonesian guerrillas
are still inside Malaysian Bor-
neo. Malaysian authorities have
reported seven incidents there
since the cease-fire became ef-
fective on 25 January.
Although preoccupied with
Malaysia confrontation, Indone-
sian Government officials have
indicated some concern over the
more aggressive tactics of the
Communist Party and over Indo-
nesia's rice shortage, an annual
development which this year is
one of the worst the country has
experienced. Communist-controlled
labor unions seized the offices
of British estates and companies
in Java and North Sumatra last
month. Those properties located
in Java--but not those in Sumatra
--have since been turned over to
government "supervisory" person-
nel.
Indonesian officials may
fear disturbances over the
rice shortage in East and Cen-
tral Java. The Communist Party,
although capable of serious ex-
ploitation of the rice shortage
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Jut,a Sea
Djakarta
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through its strength among the
peasantry and urban wage-earn-
ers, apparently prefers at this
time to concentrate on such is-
sues as Malaysia, anti-Ameri-
canism, and efforts to gain
representation in the cabinet.
KI-IANII TRYING TO ASSERT CONTROL IN SOUTH VIETNAM
General Khanh continues
to try to consolidate his con- morale has
trol in Saigon and to expand dropped in o the regular
the South Vietnamese Government's and paramilitary forces. This
presence in the countryside.
He has made more trips to the
provinces and has taken several
steps designed to revive the
amnesty program for Viet Cong
followers, which had bogged
down after a promising start
early last year.
The new regime has also
at least promised to set rig-
orous standards of conduct for
its administrators and to im-
pose stiff penalties on corrupt
or abusive officials. At the
same time, it apparently plans
to hold early trials for per-
sons accused of misdemeanors
under the old Diem regime, and
has arrested more of Diem's
former ministers. Khanh has
not yet indicated, however,
when or what formal charges
will be brought against the ar-
rested generals who composed
the recently ousted junta.
drop is attributed in part to
Khanh's move against popular
members of the former junta as
well as to increased military
resistance from well-armed Viet
Con units.
ere is grow-
ing neu ra is ntiment in the
countryside and among urban
youth.
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Viet Cong military pres-
sure on the government had grad-
ually picked up since the end
of the Communists' self-pro-
claimed cease-fire during the
mid-February lunar new year
celebrations, but it is still
at normal levels. Recent armed
Communist attacks have been on
a small scale, but there have
been some effective ambushes,
raids, and sabotage. There
appears to be increased empha-
sis on terrorism against stra-
tegic hamlet officials and on
propaganda to encourage the
idea that defeat of the Saigon
regime is inevitable.
CYPRIOTS TURNING IRE TOWARD UK AND US
The Greek Cypriots' grow-
ing estrangement from the US
and the UK has been accompanied
by a closer relationship be-
tween'the Makarios government
and the Soviet Union.
Vice. President Kuchuk,
the Turkish Cypriot leader, has
denounced President Makarios'
plan to recruit an additional
5,000 special police as designed
to "legalize acts of murder,
arson, and looting." Turkey's
Foreign Minister Erkin has also
expressed concern over the move
and over Makarios' demand that
all Cypriot civilians turn in
their arms. Erkin complains
that if the Turkish Cypriots
do not turn in their weapons,
they will be treated as outlaws;
if they comply with the order,
they will be defenseless.
Makarios' latest move may
also be part of an over-all plan
to force the British to leave
Cyprus. The new police recruits,
added to the present 1,200-
member Greek Cypriot police
force, will give Makarios nearly
as many as the 7,000 troops in
the British peace-keeping force.
On several recent occasions,
the Greek Cypriots have pro-
tested activities of members
of the British force--alleging
that they are preventing the
Cypriot police from performing
their duties and that they are
aiding the Turkish Cypriots to
create de facto partition.
The Greek Cypriot press
continues highly critical of
the US and the UK for failing
to support Makarios'position
before the UN Security Council.
Well-known anti-Communists,
such as Minister of Labor
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~00 %0
Principal BtiUSh sovermgn base uea5
Prncipal roads
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Asia-Africa
Papadopoulos,,, are calling for
closer relations with the So-
viet bloc. Negotiations for
a Cypriot-Soviet air agreement
are under way in Nicosia. The
negotiations were scheduled
prior to the outbreak of vio-
lence but both governments are
utilizing them to emphasize the
trend toward closer relations.
Leaders in both Greece
and Turkey have expressed the
view that a Cyprus solution
will require an understanding
between top officials of their
countries. Both sides appear
reluctant, however, to initiate
soundings for a possible "sum-
.mit" meeting. In addition,
Greek Premier Papandreou has
told the US ambassador he can-
not ignore the current wave of
emotional feeling for Cyprus
in Greece by publicly opposing
Makarios. He has promised, how-
ever, to try to exercise a re-
straining influence on the Greek
Cypriots. Papandreou has again
warned that while a Greco-Turk-
ish war would be "insane," Greece
will react immediately if the
Turks move into Cyprus.
In the Mersin-Iskenderun
area of southern Turkey--op-
posite Cyprus--there has been
a continuation of the build-up
of Turkish forces for possible
use on Cyprus. Landing craft
and trucks have arrived, the
former significantly improving
Turkey's capability to put troops
ashore on Cyprus.
Collapse of the UN secre-
tary general's efforts to find
a compromise resolution on Cy-
prus has been followed by a
similar effort by the six non-
permanent members of the Se-
curity Council. If this at-
tempt also fails, Makarios may
attempt to get a special meet-
ing of the General Assembly,
where Cyprus probably expects
widespread support for its un-
derdog role in the dispute.
Meanwhile,the refugee sit-
uation on the island is be-
coming critical, with some
6,000 Greek and 42,000 Turkish
Cypriots reportedly in desper-
ate need of assistance. These
figures could rise to 20,000
and 60,000, respectively, in
the next 30 days.
SECRET
28 Feb 64 CURRENT INTELLIGENCE WEEKLY SUMMARY
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:11RRAII&NI IVORY r TO
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SECRET *toe
GABON REGIME STILL FACES DIFFICULTIES
Gabon's President Leon Mba
appears to be moving to stabilize
his position in the wake of the
French Army's nullification of
the 18 February military coup.
However, reactions in Gabon and
elsewhere in Africa to Paris'
military intervention have been
unfavorable, and Mba may be per-
manently branded as a French
puppet.
Since his restoration on
19 February, Mba has been pressed
by the French to modify the hard
line he took immediately after
being reinstated. The military
participants in the coup are in
prison, but Mba has since pro-
claimed that the civilian poli-
ticians involved--his "children
who wandered"--would not be pun-
ished unless an "inquiry commis-
sion" found they were directly
connected with the coup. Mba
had taken a number of repressive
measures against opponents dur-
ing the past few years, however,
and associates who supported this
policy presumably are urging him
to resume it.
Currently, ex - eoreign Minis-
ter Jean Aubame, who headed the
short-lived provisional govern-
ment, and most of the other mem-
bers of that regime are free,
although Mba has decreed that
they will not be permitted to
contest the legislative elections
now rescheduled for 12 April.
These elements might nonetheless
be allowed to participate in a
postelection government, an ar-
rangement reportedly sought by
the French.
The French are making strong
efforts to justify their inter-
vention and to counter the ad-
verse criticism which arose from
it. They have reportedly already
withdrawn the bulk of the 350 re-
inforcements flown into Libre-
ville. However, the 15 Gabonese
deaths which occurred when the
French moved in have aroused
strong anti-French passions
throughout Gabon, where it is
felt that Paris could have forced
formation of a coalition govern-
ment without bloodshed.
The decisive French move in
Gabon may over the short run have
the intended stabilizing effect on
the states of former French Africa.
Many of the old-line leaders of
the Paris-oriented Afro-Malagasy
Union (UAM) states have already
blessed the French action. By so
doing, however, these conservative
"first-generation" leaders have
rendered themselves vulnerable to
the charges of radical African
states that they are dupes of a
colonialist power.
Within the UAM states them-
selves, moreover, youngEi,,better
educated elements particularly
sensitive to their countries'
dependence on Paris are showing
their resentment. This kind of
reaction, which will sharpen
their frictions with the estab-
lished leaders, is particularly
noticeable so far in Chad, where
a split appears to be develop-
ing within the government be-
tween the "young Turks" and the 25X1
conservative elements.
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INWO~ SECRET
DE GAULLE'S MEETINGS WITH ERHARD AND SEGNI
De Gaulle's meetings with
West German Chancellor Erhard
on 14 and 15 February and with
Italian President Segni and
Foreign Minister Saragat be-
tween 19 and 22 February pro-
duced no surprises. The visit-
ing leaders stated their re-
sepctive positions on European
and East-West issues more forth-
rightly than did their predeces-
sor governments on similar oc-
casions in the past, but failed
to budge De Gaulle.
De Gaulle's session with
Erhard was the semiannual heads-
of-government meeting provided
for by the year-old Franco-
German treaty.
Some agreement
was reached on bilateral mat-
ters such as greater use of
those areas set aside for joint
military training. Discussion
of joint projects for the pro-
duction of certain weapons ap-
parently made little progress,
however.
The forthcoming Latin
American trips of De Gaulle and
West German President Luebke
brought about a vague "agree-
ment" on the coordination of
investment in Latin America.
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SECRET
Europe
Chancellor Alfons Gorbach's
resignation on 25 February sig-
nals a shakeup in the Austrian
Government which may jeopardize
the two-party coalition that has
ruled the country for 18 years.
Gorbach has been replaced
by Josef Klaus, chairman of the
Catholic People's Party, the
larger member of the coalition.
Klaus leads the faction in that
party which thinks Gorbach has
been too conciliatory in his
dealings with the Socialist Party,
the other partner in the coali-
tion. Klaus had resigned his
post as finance minister last
year to emphasize this view,
and it was growing support for
Klaus that led to Gorbach's res-
ignation.
The coalition, which in-
cludes the only two parties of
any size in Austria, has become
increasingly fragile since the
end of the Soviet occupation of
Austria in 1955. It was held
together only with difficulty
after a bitterly contested elec-
tion in 1962 in which the Peo-
ple's Party won 81 seats in the
legislature to 76 for the So-
cialists.
Although Klaus apparently
intends to fill several of the
cabinet posts allocated to the
People's Party with individuals
who share his attitude toward
the partnership, indications are
that the Socialists are agreeable
to preserving it. In the imme-
diate future, moreover, the pro-
gram of a Klaus government is not
likely to differ greatly from
that of the outgoing regime;
over-all defense and foreign
policies seem certain of remain-
ing firmly fixed. Klaus' rec-
ord indicates, however, that
he is likely to acerbate long-
standing doctrinal differences
between the two parties, making
a long "honeymoon" improbable.
On the EEC the parties ap-
pear to be somewhat closer than
they were some months ago. The
discouraging results of recent
efforts to expand Austrian trade
with the bloc and poor prospects
for exports to Western Europe
are lessening Socialist opposi-
tion to some sort of association
with that community.
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SECRET
Western Hemisphere
President Chiari
continues under conflict-
ing pressures in his efforts to
bring an end to the impasse in
US-Panamanian relations. The
strongest of these pressures
and the one he cannot resist
is the demand from a majority
of his countrymen that the US-
Panamanian treaty be revised.
On the other hand, Chiari
remains under pressure from his
fellow oligarchs to ease the
strained relations between the
US and Panama. Although he
cannot bow to the urgings of
these oligarchs, his past sus-
ceptibility to their influence
makes him suspect in the eyes
of the left. Furthermore, he
is aware that any softening in
his position would seriously
impair the chances of the gov-
ernment-sponsored presidential
candidate in the May elections.
The US Consulate in Panama
City feels that economic dete-
rioration is close to the point
where conditions will be ripe
for a move by either leftist or
rightist elements to oust the
Chiari government. Capital
flight since the beginning of
the crisis on 9 January now
amounts to more than $28 mil-
lion and is continuing. Sales
of almost all goods have de-
clined, and banks reportedly
are sharply reducing both per-
sonal and business loans.
Under these circumstances
the local Communist apparatus
is missing no opportunity to
gain strength and influence.
The official line on the crisis
developed by Panama's Communist
party, however, stresses opposi-
tion to a coup effort at this
time. This is presumably be-
cause the party is convinced
that the Chiari administration's
inept handling of the current
crisis serves Communist pur-
poses quite satisfactorily for
the time being. Indeed, the
Communists can be expected to
bend every effort to prolong
the US-Panamanian conflict in
anticipation that it will
eventually produce a revolu-
tionary situation.
Meanwhile, Chiari has been
quietly supporting discussions
held under both UN and OAS aus-
pices to end the impasse. A
Costa Rican move to mediate the
US-Panamanian dispute led to a
20 February meeting between
Chiari and Costa Rican Presi-
dent Orlich. Discussions have
continued since then, and on 25
February, the Costa Rican UN am-
bassador reported his impression
that the conferees were close to
agreement on some new proposals.
Panama, however, has not
given up the idea of appealing
its case directly to the UN, or
of taking some drastic unilat-
eral action. A local radio-
broadcast of 24 February spoke
of the possibility that the
President may call a special
session of the National Assem-
bly to "reject" all US-Panamanian
treaties.
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SE CRET ?.rr
Western Hemisphere
POLITICAL TURMOIL IN BOLIVIA
The political situation
in Bolivia is becoming increas-
ingly turbulent as the presiden-
tial campaign approaches the
home stretch. President Paz
Estenssoro's bid for re-elec-
tion is being hindered by dis-
sension within his own party,
the National Revolutionary Move-
ment (MNR), and by surprisingly
stiff resistance from disparate
opposition groups.
Political infighting has
been fierce for several weeks;
on 22 February it erupted into
violence. On that day, the
home of Vice President Lechin,
Paz' pro-Communist archrival,
was bombed. In short order,
the homes of two pro-Paz gov-
ernment officials got the same
treatment. Then, on 25 Febru-
ary, an attempt was made to as-
sassinate air force commander
Rene Barrientos, who, bitter
at losing the MNR's vice-presi-
dential nomination to Federico
Fortun, has turned against Paz.
Also, Paz' refusal to back Bar-
rientos for the vice-presidency
caused a certain amount of un-
happiness among the MNR rank
and file. This sentiment has
probably now been heightened.
Perhaps the most serious reper-
cussion of the Barrientos affair
is the anger it reportedly
caused among leaders of the
armed forces.
These developments show
the deep trouble Paz will have
in coping with splintering
tendencies within the MNR as
well as growing unity among
opposition elements. Most of
Lechin's followers have already
withdrawn from the party, and
have scheduled a nominating
convention of their own on 2
March. Although Lechin has
been noncommittal on whether
other groups will be invited to
attend with a view to establish-
ing an anti-Paz popular front,
discussions covering this pos-
sibility have been conducted
clandestinely for several weeks.
It seems inevitable that
such politically motivated
terrorism will continue in the
days ahead. Whether it takes
the form of individual acts of
violence or develops into some-
thing worse remains to be seen.
On 26 February the armed forces
were put on alert as a precau-
tion against further terrorism.
In any event, the Barrien-
tos incident may be a source
of considerable embarrassment
to Paz, particularly if it is
proved that the government's
secret police were implicated
in the assassination attempt.
Another anti-Paz group
within the MNR, known as the
Defense Bloc for the National
Revolution, was recently organ-
ized by a number of prominent
members whose political orien-
tation ranges from the right
to the extreme left. The group,
headed by former President Her-
nan Siles Zuazo, is dissatisfied
with the Paz-Fortun ticket. It
hopes to pressure Paz into
adopting a new electoral system 25X1
which would allow any number
of MNR candidates to run for
the top offices.
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SECRET
Western Hemisphere
A high-level Brazilian For-
eign Ministry official has con-
firmed that Communist China will
soon establish a permanent trade
mission in. Rio de Janeiro. Five
Chinese officials who will be at-
tached to the mission were last
reported in Geneva awaiting com-
pletion of visa formalities.
President Goulart's press
secretary, Raul,Ryff, was quoted
this week as saying that the open-
ing of the trade office is a prel-
ude to the establishment of full
diplomatic relations with Peiping.
Since he made no allusion to tim-
ing, it is.not clear whether his
statement is out of line with the
foreign minister's repeated allega-
tions that Brazil does not contem-
plate such action before the Chi-
nese representation question is
dealt with at the next session of
the UN General Assembly.
In any event, the Goulart
government is likely to reconsider
the Chinese "request--turned down
last year--to hold an industrial
exhibit in Brazil.
LEGISLATIVE ELECTIONS NEXT WEEK IN EL SALVADOR
El Salvador is preparing for
elections on 8 March in which all
54 seats in its unicameral legis-
lature are at stake. President
Julio Rivera's National Concilia-
tion Party (PCN), which now holds
all the seats, is expected to be
returned with a solid majority,
although the opposition Christian
Democratic Party (PDC) may win as
many as 10 sealts. Several others
may go to the small Renovating Ac-
tion Party (PAR).
The Rivera administration--
which restored the country to con-
stitutional governmeht'in 1962 af-
ter nearly two years of military
rule--looks on this election as an
opportunity to prove that it is a
genuinely democratic regime. It
has, therefore, taken a number of
steps to avoid the grievances which
led all the opposition parties to
boycott the 1962 elections. The
Legislative Assembly, for example,
moved to satisfy the PDC when it
recently amended the electoral law
to simplify documentary require-
ments for candidates. At the re-
quest of the PAR, the Central Elec-
toral Council extended for 20 days
the deadline for inscription of
candidates. Furthermore, the min-
ister of defense has reiterated as-
surances that security forces will
in no way interfere with the elec-
tions.
There are, however, some tenu-
ous indications that things may not
go as smoothly as the government
would like. One is a rumor--given
wide dissemination in the leading
newspaper--asserting that the PCN
and the PDC have reached a secret
understanding on the distribution of
seats. This rumor has been denied
by both parties. Moreover, there
is still a possibility that the mil-
itary may--as in the past--harass
opposition parties to the point of
causing them to withdraw from the
election.
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