WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A004700060001-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 25
• Document Creation Date: December 21, 2016
• Document Release Date: September 25, 2008
• Sequence Number: 1
• Publication Date: December 18, 1964
• Content Type: SUMMARY

State Dept. review completed.
xo Liecember 1964
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
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SE CRE T
(Information as of 1200 EST, 17 December 1964)
THE USSR AND THE UN "RESCUE FUND"
In conversations with US officials, Soviet representa-
tives have refused to commit themselves on the question
of a contribution to the UN "rescue fund," although
there are press reports that Soviet UN delegate Fedo-
renko has disclosed a specific figure to U Thant.
MOSCOW SETS NEW DATE FOR INTERNATIONAL COMMUNIST MEETING
The new Soviet leaders probably intended to demonstrate
that they will pursue a firm line toward Peiping.
POLITICAL DEVELOPMENTS AT SUPREME SOVIET SESSION
The most important political development at last week's
Supreme Soviet session may have been the open expression
of disagreement over matters relating to economic policy
and organization.
YUGOSLAVIA'S PARTY UNDERGOING REORGANIZATION
The moderate leadership of the Yugoslav League of Com-
munists has begun the party's most thorough overhaul
since 1952.
DEVELOPMENTS IN SOUTH VIETNAM
The political struggle between Premier Huong and the
Buddhists may soon intensify, even though the Buddhists
indicate some willingness to negotiate. The Viet Cong
have begun their winter offensive.
AREA NOTES
On Laos and South Korea
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ASIA-AFRICA (continued)
INDIA MOVES TO TIGHTEN HOLD ON KASHMIR
A hard line against Kashmiri separatism is popular in
India, but further steps to integrate the disputed
state into India may provoke a reaction there as well
as new difficulties with Pakistan.
EGYPT'S PROBLEMS IN YEMEN COMPOUNDING
Long-smoldering resentment of Yemeni republicans
against Egyptian control has developed into vehe-
ment open opposition to President Sallal's Cairo-
backed government.
Page
GOVERNMENT MILITARY POSITION SLIPPING AGAIN IN THE CONGO 8
Government units have encountered increased resistance
in the northeast, while rebel activity seems to be
building up in unpacified rear areas. At the same
time, Tshombd's military assets are shrinking.
25X1
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PARIS SEEKING TO REGULATE US INVESTMENTS IN FRANCE
However, France's EEC partners oppose any community
effort to regulate US capital in the Common Market,
and internal French restrictions would only drive US
money to a more congenial investment climate and de-
prive French firms of needed US technology.
WESTERN HEMISPHERE
OUTLOOK FOR THE NEW BRITISH GUIANA GOVERNMENT
To keep a majority in the legislature. Premier Burnham
must stay on good terms with United Force leader D'Aguiar,
with whom he has been at odds for years. Ex-premier
Jagan may take a moderate line in hopes of a comeback,,
but some elements in his party may start new trouble.
Racial antagonism in the colony remains high.
PERON:[STS PROMOTE UNREST IN ARGENTINA
Peron's announcement that he will refrain from further
political activity will probably not deter his hard-
line followers in Argentina from intensifying their
subversive activities, including new violence.
CHILEAN PRESIDENT SURVEYS SOME CURRENT PROBLEMS
Recent remarks by Frei touched on the need for a capi-
tal levy to finance his reform program, the progress of
negotiations with the US-owned copper companies, and the
growing opposition from the extreme right and the left.
IMPLICATIONS OF POSSIBLE COLOMBIAN CURRENCY DEVALUATION 13
While this action could be beneficial under more
favorable circumstances, such a move now might intensify
political unrest.
NEW POLITICAL TENSION IN HONDURAS
Honduran politics have been disturbed by the ouster of
defense minister Escalon,
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In conversations with US offi-
cials, Soviet representatives have
refused to commit themselves on
the question of a contribution to
the UN "rescue fund," although there
are press reports that Soviet UN
delegate :Fedorenko has disclosed a
specific figure to Secretary Gen-
eral U Thant.
In any case, Fedorenko has
insisted that the contribution will
be forthcoming only if all claims
against Moscow are canceled and
there are no further complaints
about its "so-called arrears." He
indicated that the voluntary con-
tribution scheme is acceptable only
if the General Assembly proceeds
with its work on a normal basis. The
Soviets appear to be holding fast
also to their rejection of a pledg-
ing conference and their insistence
that an unknown amount should per-
mit voting and wipe out all ar-.
rears.
Moscow probably feels confi-
dent it is in a strong negotiating
position. It appears to be count-
ing on delaying any action on its
arrears until several other UN mem-
bers, notably France, become sub-
ject to the Article 19 sanction on
1 January.
MOSCOW SETS NEW DATE FOR INTERNATIONAL COMMUNIST MEETING
Moscow announced on 12 Decem-
ber that the meeting of Communist
parties previously scheduled for
15 December has been postponed un-
til 1 March 1965. A terse Pravda
statement declared that this de
cision was reached on the basis of
interparty consultations to permit
better preparations prior to the
preliminary session which is to ar-
range a world conference.
The setting of a specific date
appears designed in part to demon-
strate that, despite the postpone-
to reconcile interparty differences,
in contrast to Peiping's obstruc-
tionist tactics. The Chinese, how-
ever, can be expected to represent
the postponement as a Soviet retreat
and an illustration of weakness.
ment, the new Soviet leaders intend that the Chinese are willing to at-
to pursue a firm line toward Pei- tend a Soviet-sponsored preparatory
ping. The Chinese bitterly assailed conference next spring. On the con-
Moscow's previous attempt, under trary, there is some evidence that
Khrushchev, to convene a meeting. unless the Soviets are willing to
The Soviets will probably at-
tempt to portray the deferment of
the meeting as evidence of their
reasonableness and sincere desire
hold the meeting under Chinese
ground rules--a very unlikely prop-
osition--Peiping will oppose the
spring conclave as forcefully as De-
cember's.
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The Peiping-oriented Commu-
nist Party of Indonesia, perhaps
lofting a trial balloon for the
Chinese, has already announced that
it will not attend any international
meeting "unless it is properly pre-
pared and is attended by the Com-
munist parties of all Socialist
states." Indonesian party chief
Aidit reportedly advised the Soviet
ambassador that it would be better
not to organize any meeting than to
convene one which would worsen in-
terparty differences.
The most important political
development at the three-day Su-
preme Soviet session which adjourned
on 11 December may have been the
open expression of disagreement
over matters relating to economic
policy and organization. Kosygin's
speech on the state plan, which was
one of the major items on the
agenda., reflected his businesslike
attitude toward these problems.
Like those of the other main par-
ticipants, it was unusually down to
earth and contained a minimum of
propaganda embellishment.
The high-level personnel and
organizational changes which were
the subject of numerous Moscow ru-
mors on the eve of the meeting did
not take place. The only signifi-
cant change was the appointment of
First Secretary Brezhnev in place
of Khrushchev as the chairman of
the commission for drawing up a new
state constitution. Brezhnev's ap-
pointment confirms that the new
leaders are observing the tradi-
tional practice of giving precedence
to the party leader over the gov-
ernmental head.
The failure of the session to
deal with other personnel problems
is an added indication that the or-
ganization of the new government is
still under debate. This in turn
lends credibility to the continu-
ing statements from the leadership
that restructuring will be done cau-
tiously.
The apparent decision of the
new Soviet leaders to refrain from
any serious or bold foreign policy
initiatives was reflected in Kosy-
gin's address. Stanchly reaffirm-
ing the USSR's policy of detente
with the West, the Soviet premier
struck a note calculated to assure
US policymakers that the Soviet
Union is ready to enter into bilat-
eral discussions on a wide range of
topical questions. However, he of-
fered little prospect for a meaning-
ful resolution of basic issues. Mos-
cow's show of interest in renewing
formal contacts on major East-West
questions appears to be largely
aimed at instilling a sense of
movement in foreign policy in the
wake of Khrushchev's ouster.
Kosygin's appeal to the US to
"consolidate and continue" the
"change for the better" contrasts
with the USSR's more strident sup-
port of "national liberation" strug-
gles. This effort reflects the new
Soviet leadership's concern with the
Chinese problem and its need to coun-
ter Peiping's charges that the USSR
harms the interests of the anti-im-
perialist front by its policy of
"peaceful coexistence."
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YUGOSLAVIA'S PARTY UNDERGOING REORGANIZATION
The moderate leadership of
the Yugoslav League of Communists
has begun the party's most thorough
overhaul since 1952. The composi-
tion of the executive and central
committees was significantly changed
at last week's eighth party con-
gress, and the new central commit-
tee was then asked to concentrate
administration of the party in the
hands of Tito and three key aides.
The leadership apparently hopes
by this means to prevent liberals
and conservatives from frustrating
implementation of the relatively
moderate economic and governmental
policies approved by the congress.
Apparently as a sop to the
leadership's liberal and conserva-
tive critics, their major repre-
sentatives were not eliminated from
the party's top body--the execu-
tive committee. Six new members
were added, however, most of them
probably moderates. Almost half
of the 155-member central commit-
tee is new; 44 members were re-
placed, mostly old party hacks,
and 25 were added.
With these changes, the lead-
ership implemented its new policy,
adopted by the congress, on rota-
tion of party officials. The new
central committee members, by and
large, represent the younger party
officials who have been unable to
move up in the hierarchy because
of the presence of older, ineffec-
tive functionaries. The average
age of the new members is 45, in
contrast to 52 for the old.
The party leadership sprung
on the new central committee an
unannounced plan to revamp com-
pletely the party's administra-
tive commissions, a subject never
broached in speeches at the con-
gress. This maneuver was appar-
ently chosen to minimize opposi-
tion and to preclude hostile com-
ment from the floor of*the congress.
This plan will apparently give
the three secretaries under Tito
virtual control over all spheres
of party activity. Aleksander Ran-
kovic seemingly retains his piv-
otal position as arbiter of party
discipline and personnel. The po-
sition of Edvard Kardelj will have
been enhanced if, as seems likely,
he becomes the interpreter of
party policy on economic and gov-
ernmental affairs. He already is
the most important official in
Yugoslavia's government--increas-
ingly an independent mechanism.
Veljko Vlahovic, a moderate on
the order of Kardelj, joined the
elite leadership when added to
this exclusive group by the party
congress. He now is in a posi-
tion to contend for the number-
one spot when Tito leaves the
scene.
These three top secretaries
will exert their authority through
the executive committee (the po-
litburo) and the central commit-
tee, whose members also will be
assigned specific responsibilities
as members of the new administra-
tive commissions. The leadership
apparently hopes this new organi-
zation will allow more timely
guidance to party officials, as
well as permit quicker and more
effective reaction to challenges
from both inside and outside the
party.
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VIIIIIIIIII? %0
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Buddhist leaders in South
Vietnam are still pursuing their
antigovernment campaign. They
have published letters to the
US ambassador and to Chief of
State Suu asking that Premier
Huong be replaced, and have
staged hunger strikes in Saigon
to dramatize their case. The
Buddhist leaders still insist
that they hope to bring about a
change by constitutional proc-
esses, but they are hinting
that they may soon have to re-
sort to fiery suicides and mass
demonstrations. Although key
Buddhist leaders, including Tri
Quang and Tam Chau, state that
they are willing to negotiate
with Suu and the High National
Council, Quang's conversations
with US officials give'no impres-
sion that they would accept
Huong's retention.
For his part, Premier Huong
still refuses to bow to Buddhist
pressure, although he says he
may eventually consider cabinet
changes. One minister has already
resigned. Huong has denounced
Buddhist leaders for soliciting
US intervention in domestic af-
fairs, and has warned that the
ban on demonstrations will be
enforced and "plotters" arrested.
He also appears to be maneuvering
to exacerbate rivalries among
Buddhist sects in order to
weaken his opponents.
The Viet Cong have begun
their winter offensive. There
has been an increasing number of
large-scale attacks--nine so far
this month--and ambushes, result-
ing in heavy casualties on both
sides. Battalion- and company-
size actions were reported from
the northern highlands to the
delta. Small-scale incidents
of terrorism and hamlet harass-
ment remain at a high level. A
continued rise in both the scale
and intensity of Communist activ-
ity can be expected. The Viet
Cong have put out special exhor-
tations to greater effort to com-
memorate the fourth anniversary
of the founding of the National
Liberation Front on 20 December
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Laos: The neutralist
drive ,agWinst the strategic hill
position at Phou Kout, launched
on 2 December, has stalled in
the face of stiff Communist re-
sistance. Farther south, the
Pathet Lao capability to move
almost at will through the coun-
tryside was evidenced by a com-
mando-type raid against a sup-
ply installation on the out-
skirts of Thakhek on the night
of 12-13 December. Other areas
remain relatively quiet, with
government forces consolidating
their positions in the Ban Nong
Boua Lao area east of Savannak-
het and in the Tha Thom region
southeast of the Plaine des
Jarres.
South Korea: President
Pak Chong-hui will be hard
pressed to prevent a major clash
between friends and foes of his
one-time strong man Kim Chong-
pil at the government party's
convention tentatively slated
to open on 28 December. Kim's
opponents are seeking to break
his hold on the party by call-
ing for the elimination of its
secretariat, where the pro-Kim
forces are strong.
Kim's group has been in-
creasingly on the defensive
since last June, when Pak sent
Kim to the US in semiexile. Pak,
however, probably is reluctant
Prospects remain dim for any
early resumption of high-level
talks among the faction leaders.
The Pathet Lao, still hopeful of
getting the other factions into
agreement on a 14-power confer-
ence, have called for renewed
negotiations in Paris. The anti-
Communist factions, probably en-
couraged by what they consider
to be a toughening US position
in Southeast Asia, do not appear
anxious to negotiate. In an ef-
fort to avoid the onus for fi-
nally breaking off the talks be-
gun in Paris last August, however,
rightist and neutralist leaders
have said they are willing to
hold talks in Laos. The Pathet
Lao strongly oppose a new meeting
there.
to see the influence of his long-
time friend and confidant com-
pletely purged from the party,
and, in the guise of a compromise,
appears likely to support reten-
tion of a modified secretariat.
At the same time, any of
Kim's hard-core followers who
feel sufficiently threatened may
make an all-out fight to save
their position. A struggle at
this juncture could reverse the
trend toward growing public con-
fidence in the government, and
thereby weaken Pak's ability to
cope with domestic problems and
gain acceptance of a settlement
with Japan.
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tir-l V
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INDIA MOVES TO TIGHTEN HOLD ON KASHMIR
New Delhi's most recent move
toward integrating Kashmir into
the Indian union will be popular
throughout India, but will greatly
increase the prospects for unrest
--possibly violence--within Kash-
mir itself and for a sharp reac-
tion from Pakistan. The new moves
involve extending provisions of
the Indian constitution to the dis-
puted state, thereby permitting
imposition of direct administra-
tive control from New Delhi, if
that should become necessary.
A hard line against any form
of Kashmiri separatism is one of
the few almost universally popular
policies that the new and still
somewhat insecure Shastri govern-
ment could adopt. Only a small
and marginally influential group
of Indians advocate the substan-
tial abridgement of Indian author-
ity in the state that would be
necessary to resolve Kashmiri and
Pakistani grievances.
Kashmir's relative calm in
the past six months has been due
largely to hopes that negotiations
involving India, Pakistan, and the
Kashmiri leader Sheikh Abdullah
might take place and lead to some
loosening of India's grip on the
state. The recent announcement of
further integration measures makes
such talks unlikely at this time.
Some Kashmiri Muslims may react by
organizing violent resistance to
these new Indian pressures.
Pakistan is interpreting the
integration measures as confirma-
tion of its suspicions that the
Indians have no real intention of
negotiating a settlement. In re-
sponse to Delhi's moves, the Paki-
stanis are likely to accelerate
their aid to dissident Kashmiris,
may instigate more and bigger in-
cidents along the cease-fire line
--they now average about three a
day--and are presumably consider-
ing again bringing the Kashmir
question the Security Coun-
cil.
EGYPT'S PROBLEMS IN YEMEN COMPOUNDING
Egypt's problems in Yemen are
being compounded from within the
Yemeni republican camp. As a re-
sult of the continued postponement
of the all-Yemen national truce
conference, the long-smoldering
resentment of Egyptian control has
developed into open defiance of
President Sallal's Egyptian-sup-
ported government.
Following Egypt's and Saudi
Arabia's failure to agree on basic
guidelines for the conference,
which was originally scheduled for
late November, Yemeni republican
cabinet members resigned whole-
sale, leaving three deputy pre-
miers and President Sallal to run
the government with the help of
Egyptian advisers. The ex-cabi-
net members demanded that the
truce conference convene in a neu-
tral place under the supervision
of the Arab League. They probably
reasoned that this move might
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permit Nasir to save face and
at the same time enable the re-
publicans to escape the full
weight of Egyptian influence.
Early last week, the Egyp-
tians received a new blow when
another group of influentia.l
republicans defected to Sa.udi
Arabia via Aden.
Egypt and Saudi Arabia
meanwhile continue to negotiate
over the conference conditions
and to try to maintain, or im-
pose, a cease-fire through joint
observer teams. Neither side
ha.s reacted openly to the latest
developments among the Yemeni
republicans. Time now appears,
however, to be working to the
a.dvanta.ge of the Saudis and their
royalist proteges, and there
are some indications that Egyp-
tian activity has narrowed to 25X1
maintaining Yemen as a spring-
board for attacks a.ga.inst the
British in the Aden area.
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AMEROON _ A7
REPUBLIC
OF THE
CONGO
Pnunenul Gourtdon, emi e heir rr:;c r
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GOVERNMENT MILITARY POSITION SLIPPING AGAIN IN THE CONGO
The Congolese Government's
military position has recently
slipped in some areas, and the
general outlook could deterio-
rate rapidly.
Mercenary-led government
units in the western Congo have
resumed their slow advance but
against growing rebel resist-
ance. Government forces in the
Boende area have driven a strong
rebel force out of some neigh-
boring towns. Other units have
resisted rebel pressures in
towns along the road between
Boende and Stanleyville.
Elsewhere the picture has
darkened considerably for the
government forces. A rescue
attempt from Stanleyville to
relieve beleaguered troops on
the road at Opala has been
stalled. Troops which were ad-
vancing rapidly in the north-
east via Paulis toward the Suda-
nese border now are encircled
by a large number of rebels who
are well armed and exhibit some
guerrilla expertise. The goods
laden barges destined to relieve
Stanleyville have been forced
to halt 120 miles downriver by
fire from heavy weapons on the
left bank.
In the eastern Congo, the
government columns south and
southwest of Bukavu have also
been stalled. West of Bukavu,
on the roads to Kindu and Stan-
leyville, army units are stymied
by destroyed bridges and in-
creased rebel harassment. The
area commander believes that
Uvira, on the Congo-Burundi bor-
der,is in for another major
rebel assault soon--perhaps on
Christmas day. The rebels are
reportedly concentrating at Fizi,
south of Uvira near Lake Tangan-
The government still re-
tains the military initiative
around Kindu, but the string of
garrisoned towns from Kindu to
Nord Katanga Province are con-
stantly harassed by roving bands
of rebels. Along the province
border, mercenary-led government
columns are bogged down by siz-
able and determined rebel units.
Premier TshombC's reliable
military assets meanwhile are
dwindling, There now are only
about 200 mercenaries, down from
400 in early November. Tshombd
also has fewer aircraft than two
months ago. In October, seven
T-6s manned by mercenaries were
available, in addition to three
B-21s and twelve T-28s flown by
Cubans. Only three T-6s are in
flying condition now, and these
probably will be grounded shortly
for lack of maintenance. Crews
of the B-26s and T-28s are still
holding up but under considerable
pressure which is likely to in-
crease rather than decrease.
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US DIRECT INVESTMENTS IN THE EEC
(MILLION DOLLARS )
COUNTRY
1950
1957
1960
1961
1962
BELGIUM and LUXEMBOURG
69
192
231
261
283
FRANCE
217
464
741
857
1,006
GERMANY
204
581
1,006
1,177
1,472
ITALY
63
252
383
483
540
NETHERLANDS
84
191
283
310
370
COMMON MARKET TOTAL
637
1,680
2,644
3,087
TOTAL US INVESTMENTS ABROAD
11,788
25,394
32,778
34,664
37,145
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PARIS SEEKING TO REGULATE US INVESTMENTS IN FRANCE
The French are casting about
for ways to curb growing US in-
vestments in France, which pres-
ently stand at well over a billion
dollars. Although this is less
than one percent of total invest-
ments, Paris is concerned about
the impact that American capital
is having on certain key sectors
of the French economy. According
to the French weekly Enterprise,
US business now "dominar8per-
cent of the French firms in which
it participates, jointly controls
7 percent, and holds a minority in-
terest in only 6 percent.
In seeking entry into the
French capital investment market,
US firms have held a marked advan-
tage over potential domestic com-
petition. This is due to their ad-
vanced technology, enormous finan-
cial resources, and a large, se-
cure home market. Of the 200
largest industrial firms in the
world, the US controls 123, while
French interests control nine (and
Germany---with a GNP comparable to
that of France--controls twice as
many). Total French expenditures
for industrial research are only
9 percent of the comparable US
outlay.
No serious obstacles were
raised against American investment
in France before 1963. However,
when such US companies as Firestone,
Pillsbury, General Foods, and Good-
year subsequently took commanding
positions in certain areas of the
French economy, the government.be-
gan to take a closer look. Chry-
sler's acquisition of a 64-percent
share of the SIMCA automotive com-
plex in 1963 generated further con-
cern, and De Gaulle earlier this
year made a personal effort to
block General Electric's acquisi-
tion of Machines Bull, the leading
French computer manufacturer. The
paucity of French technological re-
sources in this field obliged him
to give way, although a face-sav-
ing arrangement was worked out to
leave Bull's military-related com-
ponents under French control.
In the spring of 1963 the
French proposed that the EEC adopt
some special measure to regulate
American capital in the Common Mar-
ket, but were rebuffed.. Despite in-
creasing concern in Germany and
Italy over the recent US capital
inroads in those countries, there
11177n indication of any greater
gness at this time to coun-
ter the present trend. De Gaulle
recently suggested that this trend
could be reversed by promoting
greater European economic unity
through such moves as broader car-
tel arrangements.
While Paris could impose se-
vere restrictive measures internally
--such as withdrawing voting rights
from French corporation shares ac-
quired by foreigners or selectively
suppressing tax and credit privi-
leges--capital would then flow to
another country where the investment
was more congenial. Such measures,
too, would deprive France of the ad-
vanced technology that is vital to
the o erations of some French firms.
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OUTLOOK FOR THE NEW BRITISH GUIANA GOVERNMENT
Forbes Burnham replaced
Cheddi Jagan as premier of Brit-
ish Guiana on 14 December under
circumstances which bode ill
for either a stable, effective
government or for averting vio-
lence for very long. In last
week's election Burnham's Peo-
ple's National Congress (PNC)
won only 22 seats, as compared
with 24 for Jagan's People's
Progressive Party (PPP). The
PNC has an assured working ma-
jority, however, through the
promised support of the conserv-
ative United Force (UF), which
acquired 7 seats.
Burnham is a shrewd poli-
tician--and a hard worker when
he feels like it--but his nat-
ural cockiness and dictatorial
ruthlessness have been rein-
forced by victory. He may, in
fact, have troubles with the
UF, since he and UF leader Peter
D'Aguiar have been at odds for
years. Although Burnham for
tactical reasons endorses
D'Aguiar's pro-Westernism, Burn-
ham's socialist views will al-
most certainly clash with the
UF's business-capitalism approach.
Burnham plans to move
swiftly to establish his admin-
istration, but inherits some
badly muddled economic problems
which will strain the limited
administrative talent available
to him. He will also face a
determined opposition.
The voting, which virtually
obliterated several small anti-
Jagan parties, also deepened
the colony's racial cleavage.
Burnham has tried to win East
Indian support by including sev-
eral East Indians in his pre-
dominantly Negro government.
Such ploys, however, may have
little effect, particularly since
Burnham has named a Negro racist,
Ptolemy Reid, as first deputy
premier.
Plagued by power struggles
within the leadership, the PPP
appears to be floundering in un-
certainty over what to do next.
personally is complaining of
fraud but appears to be support-
ing a moderate nonviolent line
with the thought of making a
comeback.
Some US observers neverthe-
less feel that the PPP is almost
bound to resort to violence again
in a few months, particularly if
Burnham manages the government
reasonably well in the face of
legal opposition. The party
may not be averse to being pro-
voked to violence earlier by PNC
supporters. Yet, since London's
Labor government has warned that
it will not grant independence
before peace and stability are
clearly established, the PPP may
decide to behave. Either way,
sharp pressures could build up
for inclusion of the PPP in the
coalition as the only fair way
for East Indian representation--
thus bringing Communist influ-
ence back into the government.
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PERONISTS PROMOTE UNREST IN ARGENTINA
Juan Peron's announcement
in Spain that he will refrain
from further political activity
probably will not deter his
hard-line followers in Argentina
from intensifying their subver-
sive activities, including the
promotion of new violence.
While these Peronists are a
minority within the Peronist
movement, they are attempting
to enlarge their support by ex-
ploiting labor's economic griev-
ances, which they hope to pro-
mote into revolutionary action.
The hard-liners, moreover, are
adopting extremist tactics at
a time when some Peronists are
slipping into legal parties in
order to participate in next
March's congressional elections.
In the meantime, the
Peronist-dominated General Con-
federation of Labor (CGT) has
ordered a 48-hour nationwide
general strike for 17-18 Decem-
ber to protest the arrest of
CGT Secretary General Jose
Alonso at an unauthorized rally
last week. The arrest followed
clashes between the police and
demonstrators who arrived armed
with clubs and small arms.
The rally was billed as a part
of the CGT year-old "battle plan"
to protest economic and political
conditions, but its main intent
was to stir up unrest in the
wake of Peron's futile attempt
to return. Consequently inde-
pendent and some "soft" Peronist
unions--reportedly almost half
of the CGT unions--will ignore
the strike call, especially since
Alonso was released on 15 Decem-
ber.
Extremists are also trying
to increase tensions by stepping
up terrorist activities. The
homes of several anti-Peronist
leaders and the Buenos Aires
office of a Brazilian magazine
have already been bombed. Hard-
line Peronists have also begun a
campaign charging that US pres-
sure was responsible for the
"solid" front of South American
countries against the Peronists.
The armed forces have so
far refrained from taking any
action against the Peronist
demonstrations. However, they
can be expected to move swiftly
in support of the police if
Peronist-instigated disturbances
threaten to get out of hand.
Breaking its customary. silence
regarding unrest, the government
issued a communique on 15 Decem-
ber firmly warning that it was
prepared to use all forces at
its disposal to suppress any
form of disorder or the perver-
sion of legitimate trade union
activities into springboards for
partisan political gains.
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Chile's newly inaugurated
President Frei is saying that
his administration anticipates
growing opposition from both
the extreme right and the left.
On the right, Frei fore-
sees difficulty in dealing with
some of Chile's wealthiest men
who heretofore have paid virtu-
ally no taxes. Frei estimates
that five years would be re-
quired to achieve a fully ef-
fective income tax system. He
therefore is inclined to feel
that a. capital levy will be nec-
essary if "needed and promised"
reforms are to be implemented
anytime soon.
On the far left, Frei as-
cribes increasing labor a.gita.-
tion to leftist fears of the
growing popularity of his gov-
ernment with the masses.
Frei is satisfied with the
progress of his government's
negotiations with the US copper
companies in Chile to increase
production and exports and to
get a larger Chilean voice in
company operations. A settle-
ment with Anaconda. reportedly
will be announced on 18 Decem-
ber. Meanwhile, the President
feels that the time has come to
start giving greater attention
to other important industrial
problems.
Commenting on the interna-
tiona.l Christian democratic
movement in Latin America., Frei
said that his party will not
overtly attempt to influence
Christian Democrats abroad and
will follow a cautious line
aimed at a.voiding charges of in-
tervention. He denied that the
Chilean and Venezuelan parties
are rivals for continental lead-
ership of the movement. Although
Frei ma.de no mention of it, his
party, in fact, played a role
in the recent organization of
the new Ecua.dorea.n Christian Demo-
crat Party.
IMPLICATIONS OF POSSIBLE COLOMBIAN CURRENCY DEVALUATION
A sharp decline of Colom-
bia's dollar reserves last week
almost forced a devaluation of
its peso which could have ag-
gravated many of the country's
other problems. Although for-
eign exchange transactions this
week have so far averted the
need for such action, a simila.r
crisis could occur at any time.
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Western Hemisphere
Devaluation is regarded
by many fiscal experts as in-
evitable and, if accompanied
by appropriate regulatory meas-
ures, conceivably beneficial
to Colombia's economy. Prece-
dent, however, is not reassur-
ing. In 1962, the last time
the peso was devalued, the oper-
ation was handled so ineptly
that it triggered a severe in-
flationary situation.
Another devaluation at
this time could thus be a dan-
gerous political step for the
government to take. President
Valencia has already been the
target of intense public criti-
cism for several months. In-
deed, Colombia's entire National
Front system of government is
under continuous attack because
of its inertia and failure to
improve economic conditions.
Although a political crisis
brought on by a devaluation
may cause bickering progovern-
ment leaders to submerge their
differences, it could also fur-
ther intensify the existing
political unrest.
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:Honduran politics have been
disturbed by the ouster of De-
fense Minister Escalon. He was
dismissed following a disagree-
ment with Chief of Government
Lopez over a recently promul-
gated amnesty decree for politi-
cal offenders.
At the root of the problem
is a successful effort by Zuniga
to drive a wedge between Lopez
and Escalon. Since the October
1963 coup which brought Lopez
to power, Zuniga has missed no
opportunity to exploit the dif-
ferences between the two men or
to downgrade Escalon as the num-
ber two man in the government.
The two most important army
units---the First and Second Bat-
talions--stationed in Tegucigalpa
remain loyal to Lopez. As long
as they remain so, it would be
virtually impossible to over-
throw him.
Meanwhile, a number of sub-
versives outside Honduras have
taken advantage of the amnesty
to return to the country. Their
presence may eventually create
sufficient political tension to
cause postponement of elections
now scheduled for mid-February.
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