WEEKLY SUMMARY

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CIA-RDP79-00927A004800050001-6
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Now INTELLIGIENCE AGENCY OFFICE OF CURRENT INTELLIGENCE State Dept. review completed GROUP 1 Excluded from automatic downgrading and declassification Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 25X1 Approved For Release 2008/04/21 : CIA-RDP79-00927AO04800050001-6 Approved For Release 2008/04/21: CIA-RDP79-00927AO04800050001-6 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 SECRET (Information as of 1200 EST, 11 March 1965) THE VIETNAM SITUATION Political maneuvering continues in Saigon, and the Bud- dhists may be preparing to put the Quat government to a test. The Communists meanwhile are making steady gains in the coastal areas of northern and central South Viet- nam, and,over-all Viet Cong troop strength is rising. Pacification efforts in the I and II Corps have all but ceased. The II Corps commander expects Saigon to enter into negotiations eventually, but the public and private actions of. both Hanoi and the Viet Cong belie repeated rumors of a desire on their part for peace talks. Yugo- slavia's Tito nonetheless is trying to organize an appeal by nonaligned countries for a conference to seek a Viet- nam settlement. Peiping still displays arrogant cer- tainty of Communist victory and, with Hanoi and Moscow, has reiterated warnings of dangers inherent in escala- tion of the war. MOSCOW MEETING SIDESTEPS SINO-SOVIET RIFT The communique following last week's "consultative meet- ing" of 19 Communist parties in Moscow reflects the in- conclusive results of the session and Moscow's retreat on the question of a world Communist conference in the face of opposition from several key parties. MOSCOW APPEARS RELUCTANT TO RESUME GENEVA DISARMAMENT TALKS 6 Soviet officials are taking the line privately that the Vietnam crisis poses obstacles to reconvening the 18- nation conference. SOVIETS REORGANIZE DEFENSE INDUSTRIES AND AGRICULTURE The return of the defense industries to the ministerial system does not appear of itself to foreshadow an in- crease in the influence of the military establishment. Neither does it necessarily portend similar changes in all branches of industry. Other decisions by the new regime suggest increased local direction of consumer- oriented industries, and the question of just where to draw the line may still be under debate. HOOF-AND-MOUTH DISEASE SPREADS IN CENTRAL EUROPE The vaccine available in Hungary--the prinicpal country affected--is reportedly not effective against the cur- rent strain of the disease. Quarantine restrictions are limiting movement in infected areas. SECRET 12 Mar 65 CURRENT INTELLIGENCE WEEKLY SUMMARY Page i Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 SECRET THE COMMUNIST WORLD (continued) Page ULBRICIIT'S HEALTH LIMITS HIS ACTIVITIES The 71-year-old East German party leader, who in recent years has been absent from his duties with increasing frequency, did not make his customary visit to the annual Leipzig Trade Fair. COMMUNIST CHINA'S FOREIGN TRADE The total may well increase moderately again this year, although the increase in exchanges with free world coun- tries is expected to be partially offset by a decline in trade with the USSR. ASIA-AFRICA INDONESIAN COMMUNISTS MOVE TOWARD MILITARY CAPABILITY 12 The government has been induced to undertake paramili- tary training programs for workers, peasants, and stu- dents which seem certain to be used ultimately by the Communists for their own purposes. OUTCOME OF KERALA STATE ELECTION IN INDIA Since no party won enough seats in the legislature to form a government, New Delhi will probably continue its direct rule until the 1967 general elections. RIFT AMONG AFRICAN STATES OVER CONGO ISSUE DEEPENS The OAU conference in Nairobi ended this week without any decision, as moderate leaders were unable to put through a resolution backing the Leopoldville government. The problem has been passed to the next OAU meeting, scheduled for September. FOOD AND MONEY PROBLEMS DIVIDE REGIME IN MALI Popular discontent over shortages and the need for more foreign financial help are contributing to a new strug- gle between moderates and leftists in Bamako. SECRET 12 Mar 65 CURRENT INTELLIGENCE WEEKLY SUMMARY Page ii Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 Approved For Release 2008/04/21: CIA-RDP79-00927AO04800050001-6 1 SECRET' ASIA-AFRICA (continued) Page EUROPE AUSTRIAN PRESIDENTIAL ELECTION MAY STRAIN COALITION The election was called to replace deceased President Schaerf, whose fellow Socialist, Vienna Mayor Franz Jonas, is favored to defeat the People's Party's Alfons Gorbach. Animosity between the two coalition parties has increased over the past ten years. NATO INFRASTRUCTURE NEGOTIATIONS Discussions in the North Atlantic Council next week of a proposal by the US to reduce its payments to the NATO infrastructure program may produce a sharp exchange if not a deadlock. EXECUTIVES OF THE THREE EUROPEAN COMMUNITIES MERGED While officials in all the EEC capitals are stressing the political and psychological significance of this move in furthering integration, the merger agreement is more an important first step than a definitive re- organization. TEMPORARY TRUCE AMONG ITALIAN COALITION PARTIES The undeclared cabinet crisis which had immobilized the government since the December presidential election has been resolved, but the Christian Democrats remain badly split among themselves over basic policies and have yet to achieve agreement with their coalition partners on several important issues. SECRET 12 Mar 65 CURRENT INTELLIGENCE WEEKLY SUMMARY Page iii Approved For Release 2008/04/21: CIA-RDP79-00927AO04800050001-6 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 *#Mp~ NOW SE G.RE T WESTERN HEMISPHERE RECENT ACTIVITIES OF LATIN AMERICAN COMMUNISTS They appear to be trying to implement measures agreed on at a highly secret meeting in Havana last November. Their main purposes seem to be to achieve greater co- ordination and unity, to give new impetus to Communist activity in the hemisphere, and to promote "solidarity with Cuba." Page UNREST IN HONDURAS 23 Political and military unrest is mounting with the ap- proach of the convening date (16 March) for a constituent assembly at which the regime seems intent on seeking rapid action to name Chief of Government Lopez "constitutional president" for a regular six-year term. CHRISTIAN DEMOCRATS SWEEP CONGRESS:[ONAL ELECTIONS IN CHILE 24 Despite his party's unprecedented majority in the Chamber of Deputies, President Frei may find enactment of his re- form program impeded by factionalism within the party and the inexperience of many of its newly elected legislators. Moreover, the rightist-centrist: losses which benefited the Christian Democrats also helped the Socialist-Commu- nist coalition, which remains a major political force. 12 Mar 65 CURRENT INTEL IGW WEEKLY SUMMARY Page iv Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 Muting Q, Nakh , n M 0B 0 Cao Lan o i -Ph q.. Binh ne Thanh ;Chem $ eiaf Z . c one'" ?G?? ?Bo Duc r Lod tl1 Division _ J oNinJ oPhuoc Bin, L~m f, ]Tay Ninh C4PITAl MILI R DIS i T ~V , 1 tH Divis on '\ ?? n g 0 Ho ??~ Mo.... -iA Inh Division pKamPak chaff O0 h r CORPS -An ' ftL Loci I C3 ;N oPhuoc Vinh Con Son (Poole Con lore) CON SON CIO id ?_:;,>N ANC; Boon 2JD i QQu~ngNgai 22d Dyv si~n~I Pleiku An c 7K J I'SINH NC 0 Di Linh i .7 s13 C> A RLAC Ban Me Thuot 23d Divisio T I YEN Da Let ? ti DC Approved For Release 2008/04/21: CIA-RDP79-00927AO04800050001-6 111010, llikuw# Nang (Tourane) V.Iloi?~t}i SOUTH VIETNAM MILITARY BOUNDARIES As of 8 March 1965 mmumm Corps boundary Special zone boundary Division boundary Hop Tac area 46993 15 50 75 100 Miles 0 25 50 75 100 Kllamolo Approved For Release 2008/04/21: CIA-RDP79-00927AO04800050001-6 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 Naw, SECRET Bloc response to the Viet- namese crisis continues to cen- ter on political action. Mos- cow, Hanoi, and Peiping have re- iterated their warnings of the dangers inherent in escalation of the war. At the same time, Peiping and Hanoi stress the Viet Cong's growing strength and expanded control in South Viet- nam which they apparently believe is seriously undercutting US ef- forts to pressure Hanoi into terminating its material support of the Communist insurgents in the South. Viet Cong Military Action The Communists are continu- ing to make steady and signifi- cant gains in the coastal areas of the northern and central prov- inces of South Vietnam. Govern- ment forces in some rural areas north of Saigon are abandoning their areas to the Viet Cong and withdrawing into district and provincial capitals. General Nguyen Huu Co, the commander of the South Vietnamese II Corps area, recently told US officials that he is considering a. general retrenchment and consolidation of counterinsurgency efforts in his area. in the expectation of eventual negotiations on ending the war. Co stated that although he personally did not favor neu- tralism, he expected his govern- ment to enter into negotiations eventually, possibly this year. Co has recommended that because its capital is threatened, the province of Binh Tuy be dis- solved "so that the Viet Cong will be unable to claim that they have captured a provincial capital. " The Viet Cong's strength- ened posture in the northern and central provinces is due in large part to the steady growth of their military force. Gen- eral Co claimed that eight new, heavily armed Viet Cong,bntta.l- i.ons had recently appeared in his area. Over-all Viet Cong troop strength throughout the country also continues to rise. Recent analysis of Viet Cong prisoner reports and captured documents has resulted in an upward read- justment of COMUS MACV's order- of-battle holdings for Viet Cong regular forces. The new esti- mate puts total Viet Cong main force strength at 37,270, with five regimental headquarters, 50 battalions, and 145 separate companies. Pacification Program Stalled In the I and II Corps, the pacification programs designed SECRET CURRENT INTELLLIGENCE WEEKLY SUMMARY Page 1 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 Approved For Release 2008/04/21: CIA-RDP79-00927AO04800050001-6 N"01 N..W SECRET to eliminate the Viet Cong from a planned sector and bring it under firm government control have all but ceased. In the rest of the country only a few widely scattered areas report advances in the program. It is anticipated by the US authori- ties in Saigon that the role of the US aid mission officers in the I Corps area, and probably in parts of the II Corps as well, now will change from as- sisting in pacification to ref- ugee relief. The flow into refugee cen- ters in I Corps has increased markedly. In the 2nd Division area alone refugees total some 73,000. The influx is a reflec- tion of the extensive territo- rial gains being scored by the Communists in northern and cen- tral Vietnam. South Vietnamese Political Developments In Saigon, political ma- neuvering continues among the various parties and military factions. Although Premier Quat is showing interest in programs to increase government effec- tiveness in Saigon and in the provinces, he has observed that much of his time and energy is taken up by the political in- trigues of the military and the problem of relations among the Catholics and Buddhists. Quat is evidently considering ways to bring the generals, at least, Under government control al- though such a course runs the risk of provoking countermoves against his government. There are indications in recent Buddhist requests for satisfaction on past grievances that the Buddhists may be pre- paring to put the Quat govern- ment to a test. Buddhist leader Tarn Chou now has publicly dis- avowed the peace movement headed by monk Quang Lien, which the senior ranking monks agree in- vites Communist exploitation, but there is no real sign that the Buddhist leadership is abandoning its interest in the theme of peace itself. Possibility of Negotiations both the pu is an private actions of Hanoi and the Viet Cong continue to sug- gest that they intend for the present to keep up a heavy pace of military action in South Vietnam and currently have no interest in international dis- cussions on a settlement of in- surgency. The Viet Cong Liberation Front in a broadcast on 8 March flatly rejected the notion that SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY Page 2 Approved For Release 2008/04/21: CIA-RDP79-00927AO04800050001-6 Approved For Release 2008/04/21: CIA-RDP79-00927AO04800050001-6 NwoS,E CRET the US can successfully exert military pressure to gain a strong position "in the final round" for a political solution in South Vietnam. The broadcast described the landing of US marines as a "planned" expansion of the war but "no threat to the heroic Vietnamese people." The presence of the marines, according to the Front, will merely "increase the resentment of all the Vietnamese people and intensify their will to unite and knock them out." A Front spokesman, at a press conference in Peiping on 8 March, ruled out any negotia- tions "so long as there is one single shadow of US imperialism in Vietnam." Hanoi gave implicit sup- port to this stand by broadcast- ing on 10 March a statement by the Front's central committee reiterating that the situation can stabilize only when the US has been "driven out of Viet- namese territory," a national democratic coalition government formed, and the "stooge" gov- ernment in Saigon abolished. The statement called on the "people and the Liberation Army" to continue to "deal deadly blows at the US aggressors" in South Vietnam. The only public statement by a high-ranking North Viet- namese official on the subject of negotiations since the air strikes began was contained in Defense Minister Giap's reply to a question on this subject by a Japanese television dele- gation. The interview was pub- lished by Hanoi on 10 March. Giap stated that the "only way out" for the US lies in the withdrawal of US forces from South Vietnam and the cessation of attacks on North Vietnam. Yugoslavia's President Tito is trying to organize a joint appeal by the nonaligned coun- tries for an immediate inter- national conference to seek a peaceful settlement of the Viet- nam situation. He undoubtedly hopes, by taking the initiative in convening a conference on such an important international -oroblem as Vietnam, to bolster the lagging international in- fluence of the nonaligned na- tions as well as his own lead- ing position among them. Peiping's Response Recent Chinese Communist :statements continue to display arrogant certainty of Communist victory in South Vietnam. Ac- cording to a 4 March Peiping commentary, the US now faces a choice between ultimate mili- tary defeat and unconditional withdrawal. While Peiping's latest propaganda statements reiterate SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY Page 3 Approved For Release 2008/04/21: CIA-RDP79-00927AO04800050001-6 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 SECRET standard formulations on US "ag- gression," they still omit spe- cific threats of Communist coun- teraction. This line was fol- lowed in the treatment of the ar- rival of US marines at Da Nang, which Peiping condemned as a further step by the US to widen the war and as representing the entry of the US as an "open bel- ligerent." A Peiping People's Daily editorial of 9 March, hailing the recent visit of Pakistani President Ayub, implied that he had concurred in the Chinese charge that the US is trying to "extend its aggressive venture and thereby retrieve defeat." Actually the joint communique signed at the conclusion of his visit omitted mention of Vietnam. Moscow in another govern- ment statement again warned of the far-reaching consequences for Soviet-US relations if the US continued its "planned aggres- sion" against North Vietnam. The statement, which pro- tested the 2 March US air action against the DRV, asserted that US policymakers are "deeply mis- taken" if they think they will "frighten anyone by their bomb- ings of DRV territory." A number of low-ranking S viet officials have stressed to West- ern representatives the dilemma which now confronts the Soviet Union. They have argued that Moscow is under heavy pressure to assist the DRV with military equipment, but have also ex- pressed the hope that such aid will not jeopardize relations with the US. These sources have empha- sized Soviet frustrations with the Vietnam crisis and attempted to place most of the blame on the Chinese Communists. One Soviet official claimed that the 4 March demonstration against the US Embassy. took place against the wishes of the Soviet Govern- ment and caused it "acute embar- rassment." He intimated that the demonstration was whipped up by Chinese students and accurately predicted that Peiping would ex- ploit the affair for its own ad- vantage (see next article). Bloc Military Action No North Vietnamese troop deployments have been detected within the past week, although naval units were alerted on 9 March apparently in anticipa- tion of another air strike. No Chinese Communist military de- ployments directly related to Vietnam have been detected. There is as yet no firm evidence that bloc military 25X1 equipment has arrived in the DRV since the US air strikes began. SECRET 12 Mar 65 CURRENT INTELLIGENCE WEEKLY SUMMARY Page 4 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 SECRET MOSCOW MEETING SIDESTEPS SINO-SOVIET RIFT The communique following last week's "consultative meeting" of 19 Communist parties in Moscow re- flects the inconclusive results of this session. The conditions pro- posed for steps leading to a new conference make any such meeting highly unlikely in the foreseeable future. Despite this setback on the conference issue, Moscow can gain some satisfaction from the communi- que's call for a cessation of "un- friendly and degrading" polemics and its opposition to the "inter- ference by any party in the inter- nal affairs of other parties." The communique proposes that the 81 parties which attended the 1960 conference hold a "prelimi- nary consultative conference" to discuss a new world meeting. No dates are suggested, however, and the proviso that "all fraternal parties" participate in prepara- tions in effect gives the Chinese Communists a veto. The treatment given the re- newed conference proposal is an attempt to cover up what is actu- ally a Soviet retreat in the face of opposition from several key parties. In view of Moscow's past support of conference proposals, however, and the vitriolic denun- ciation generally given them by Peiping, the Russian leaders can hardly be expected to refrain from all further talk and agitation on this issue. In a further reflection of Moscow's effort to avoid contro- versy, the communique avoids any treatment of substantive issues, thereby denying Peiping ammuni- tion for its propaganda machine. The statement concludes rather caustically with the hope that "all fraternal parties will re- spond favorably to this con- sultative meeting." Peiping's press has not mentioned the Moscow meeting, but People's Daily chose the day the communiqu was published to reprint a blistering anti- Soviet attack from the Japanese Communist paper Akahata which charged that "mo rT n revisionist support for Johnson is an open act of betrayal of the princi- ples of Marxism-Leninism." The Chinese have also added a formal protest to their ini- tial propaganda alleging Soviet police brutality in putting down25X1 last week's student demonstra- tion against the US Embassy in Moscow. On 6 March the Chinese staged an unprecedented demonstration against the Soviet Embassy in Peiping. Several hundred Chinese and foreign students protested the actions of the Moscow police, but apparently contented themselves with shouting slogans. SECRET 12 Mar 65 CURRENT INTELLIGENCE? WEEKLY SUMMARY Page 5 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 Approved For Release 2008/04/21: CIA-RDP79-00927AO04800050001-6 J'E G'KL+ 1 '"' MOSCOW APPEARS RELUCTANT TO RESUME GENEVA DISARMAMENT TALKS Moscow has not yet offi- cially responded to the US pro- posal to resume the Geneva dis- armament talks this month or early in April. However, Soviet officials have been privately taking the line that the Vietnam crisis has created new obstacles to reconvening the 18-nation conference. Last month a So- viet UN de.egate told a US offi- cial that the "present situation" in Vietnam was "not propitious" for disarmament talks. He noted that "many people in Moscow" wonder how such talks can take place when "one side" works for relaxation of tensions and arms limitations with one hand and contributes to tensions and the danger of war with the other hand. Soviet leaders may fear that Peiping would use a resump- tion of the disarmament talks to castigate Moscow for "soft- ness" in sitting down with the US at a time when the US is al- 25X1 ].egedly committing "aggression" against a member of the "social- ist camp." SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY Page 6 Approved For Release 2008/04/21: CIA-RDP79-00927AO04800050001-6 Approved For Release 2008/04/21: CIA-RDP79-00927AO04800050001-6 vfto~ *Moe SECRET SOVIETS REORGANIZE DEFENSE INDUSTRIES AND AGRICULTURE The USSR has restored the ministerial form of organiza- tion for its defense industries and expanded the powers of the central Ministry of Agriculture. These decisions probably are part of a reorganization of the economic system that has been warmly debated since the ouster of Khrushchev. The need for re- organization has been explicitly recognized by both Brezhnev and Kosygin. The fact that decisions affecting at least two major parts of the economy now have been made could indicate that a policy stalemate in the top lead- ership has been broken, but it is too early to be certain that all differences have been fully resolved. The major defense indus- tries--aviation, shipbuilding, defense (largely ground arma- ments), radio, electronics, and medium machine building (mili- tary uses of atomic energy)-- have been returned to ministe- rial direction at the Moscow level. Under Khrushchev's sys- tem of state committees insti- tuted in the late 1950s, the responsibilities for plant man- agement and control of supplies in most branches of industry were vested in the regional eco- nomic councils, with the role of state committees in Moscow limited to research, development, and education in their respec- tive spheres. It is true that even under Khrushchev's system defense industries were gen- orally exempt from decentralized control--control being retained in Moscow by state committees. But the new ministries will prob- ably effect a tightening of di- rect central authority over the Industries involved. A new ministry of general machine building has also been created with unspecified func- tions. Its head, S. A. Afanasyev, was previously the chairman of the economic council of the RSFSR. A ministry with this name existed from 1955 to 1957, when it was incorporated in the state committee for defense technology. Among the various possibilities for the production responsibility of the new ministry are munitions and solid propellants or missile production. The return of the defense industries to the ministerial system does not appear of itself to foreshadow an increase in the influence of the military estab- lishment. Neither does it neces- sarily foreshadow similar changes in all branches of industry. Other decisions by the new regime suggest increased local direction of consumer-oriented industries and the question of just where to draw the line may still be under debate. In a concomitant administra- tive reorganization, the USSR Ministry of Agriculture has been strengthened by subordinating tie republic agricultural ministries SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY Approved For Release 2008/04/21: CIA-RDP79-00927AO04800050001-6 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 SOWIV ONO and adjacent HUNGARY border areas Extent of Hoof-and-Mouth Disease Outbreak Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 NWO-0 %00 SECRET The Communist World to it as well as to their re- public Councils of Ministers. This action will probably re- store the responsibilities of management and over-all control of agriculture to the central ministry, which in recent years has been charged only with re- search, extension work, and agricultural education. Such HOOF-AND-MOUTH DISEASE SPREADS IN An outbreak of hoof-and- mouth disease (aphthous fever) in Central Europe has reached epidemic proportions in Hungary. The Hungarians reportedly have no effective vaccine for this strain of the disease, which threatens to cause significant losses to the livestock in- dustry. Quarantine measures have already interfered with the reg- ular procurement and distribu- tion of livestock products. An upward trend in livestock num- bers, which began in 1964, is being restricted and may be re- versed. While the disease is con- sidered endemic to Hungary, the current outbreak is by far the most serious in years. At least 15 of the 19 counties are cur- rently affected. The Hungarians, however, have failed to report the disease, which has been spreading through the country since last fall, and left it to the Czechoslovak Government an increase in the central min- istry's powers was indicated by the reappointment on 18 February of Vladimir Matskevich to the post of minister. When he held this post from 1955 to 1960, Matskevich was known to be a proponent of strong central con- trol over the agricultural sector. to make the first announcement of the closing of the Czech- Hungarian border to tourist travel. The Czechoslovaks have de- scribed the outbreak in south- ern Slovakia, which started in January, as the most serious epidemic of the past decade. Isolated outbreaks have recently occurred also in sev- eral areas of Bohemia, in East Germany, and in Rumania on the Hungarian border. There have been several occurrences in Yugoslavia since last fall, in the interior of the country as well as along the Hungarian boarder. Yugoslavs believe in- fection was brought in from Italy, Hungary, or Czechoslova- kia by travelers and wildlife. Apart from the economic ef- fects of the disease, quarantine restrictions have seriously limited movement in infected areas. SECRET' CURRENT INTELLIGENCE WEEKLY SUMMARY Page 8 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 "'m' SECRET ULBRICHT'S HEALTH LIMITS HIS ACTIVITIES Age and failing health have apparently begun to take their toll of East German party leader Walter Ulbricht. The 71-year- old first secretary and state council chairman failed to at- tend the annual Leipzig Trade Fair as announced, despite the presence at the exhibition of a high-level Soviet delegation. On past visits to the fair, Ul- bricht has toured all of the exhibits and talked with other visitors. Such a routine might have proved too taxing for Ul- bricht, who has been observed to tire during recent public appearances. Arrangements sub- sequently were made for the So- viet delegation to confer with Ulbricht in East Berlin on 9 March. Apart from the infirmities of age, the nature of Ulbricht's ailment is uncertain. In recent years he has been absent from his duties more frequently and for longer periods of time. In June 1964, he was accompanied on a 14-day tour of the USSR by one of East Germany's foremost respiratory and cancer special- t 4 s If the first secretary should be disabled or forced 12 Mar 65 The Communist World to follow a more restricted reg- imen, politburo member and party security chief Erich Honecker probably will assume ,additional party duties for him. :Honecker has been second to U1- ibricht in the party leadership for two years. Recently he has begun to play a role in govern- ment affairs as well, at the expense of Premier Willi Stoph, who has been ill. Stoph, long considered a force in the East German regime, assumed the premiership follow- ing the death of Otto Grotewohl in September 1964. His influ- ence seems to have begun to wane almost immediately. As far as can be determined, Stoph played no role in the last two plenary meetings of the East German party central committee or the Volkskammer, the national legislature. In January, Neues Deutschland published a photo- g`rap o oph and other dele- gates to the Volkskammer on its front page but failed to iden- tify the premier. Honecker appears to be the most likely--though by no means the only--candidate to succeed Ulbricht as first secretary. It is unlikely, however, that any successor will inherit the power exercised by Ulbricht. At least initially, power will probably pass to a Soviet-style collec- tive leadership made up of sev- eral politburo members, in, which Honecker may be pre-eminent, SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY Page 9 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 Approved For Release 2008/04/21 : CIA-RDP79-00927AO04800050001-6 SECRET COMMUNIST CHINA'S FOREIGN TRADE China's foreign trade may well increase moderately again this year thanks to its burgeon- ing free world trade. Peiping's trade, which has edged up steadily after bottoming-out in 1962, reached about $3 billion last year--roughly the same amount of foreign trade as Nor- way. This figure, however, is still well below the "leap for- ward" high of $4.2 billion re- corded in 1959. Chinese Communist trade with the free world reached about $1.9 billion last year, over 60 percent of the total, and could account for an even larger share this year. Pei- ping is pushing its exports-- textiles, manufactured goods, and foodstuffs--to pay for in- creasing imports of industrial equipment, grain, and ferti- lizer. Purchases of grain last year accounted for about 45 per- cent of Peiping's $975 million worth of imports from the free world. Fertilizer imports ac- counted for over 5 percent, while industrial equipment to- taled less than 15 percent. Since mid-1963, Peiping is known to have purchased about $120 million worth of free world industrial plants for construc- tion in China over the next few years. Work will begin this year on a number of plants,in- eluding a Dutch fertilizer plant and an associated British syn- thetic ammonia installation, a Japanese synthetic fiber plant, and a West German petroleum re- finery. An Italian refinery and a British plastics plant may also be started. China already has ordered 25X1 about 2.6 million tons of grain, worth about $170 million, for delivery this year. Total purchases may match or exceed last year's $440 million worth of Western grain. In addition to the grain 25X1 deals, fertilizer purchases may reach a record $100 million this year, This expanding commerce with the free world is expected to be partially offset by China's sagging trade with Communist countries. The heavy export surplus which enabled China to pay off its major debts to the USSR will no longer be necessary, SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY Page 10 Approved For Release 2008/04/21: CIA-RDP79-00927AO04800050001-6 Approved For Release 2008/04/21: CIA-RDP79-00927AO04800050001-6 Now, SE GRLT -moo and the Soviets have already be- gun placing small orders in the West for some goods formerly de- livered by China. Sino-Soviet trade, which totaled less than $500 million last year, is ex- pected to drop further in 1965. Press reports suggest, however, that more trade is planned with Eastern Europe and Cuba. SECRET 12 Mar 65 CURRENT INTELLIGENCE WEEKLY SUMMARY Page 11 Approved For Release 2008/04/21: CIA-RDP79-00927AO04800050001-6 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 SECRET INDONESIAN COMMUNISTS MOVE TOWARD MILITARY CAPABILITY The Indonesian Communist Party (PKI), which is steadily increasing its political influ- ence, appears also to be making progress toward developing a military potential. The party already has considerable capa- bility for disruptive mass ac- tion, but heretofore has been unable to obtain enough arms or training to permit it to ex- ert direct military pressure. In response to repeated Communist demands since mid- January, Sukarno now has ordered the top commander in Sumatra to arm workers and peasants there. it seems inevita.bl a, tTie orce will soon include Communists either through infiltration or through Communist political' pressure for a "representative" force. The arming of "workers and peasants" in any number any- where in Indonesia, establishes a precedent which the Communists will use to justify the exten- sion of the program. The Communists' main strong- hold is in Java.. University students are be- ing given limited military in- struction, and most of their units are presumed to include Communists. SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY Page 12 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 SECRET The PKI presumably hopes ultimately either to neutralize the armed forces through infil- tration or to develop an effec- tive military arm of its own. Despite the pro-Communist trend in Indonesia, the party still seems apprehensive that event- ually it may have to resort to force either to defend itself or to make a final bid for power. In the meantime, even the limited capabilities likely to grow out of the present train- ing programs should assist Com- munist front groups in their mass action activities, and the total training effort will fur- 25X1 ther Communist infiltration throughout Indonesian government and society. OUTCOME OF KERALA STATE ELECTION IN INDIA The election on 4 March in India's Kerala state failed to give any party enough votes to form a government. The state, will probably continue to be ruled directly from New Delhi for at least the next few months, and probably until the 1967 general elections. The official Congress Party, with 36 of 67 seats necessary for a majority in the state leg- islature, is now attempting to organize a coalition. In the unlikely event that such a coalition is formed, it will be very unstable. There is also a slim chance that new elections will be called. Although the Peiping-or- iented Communists won 40 seats-- the largest number of any party --the over-all Communist showing in terms of seats was not sub- s-'tantially better than in the most recent election of 1960 and was inferior to the 1957 election when the Communists--then united-_ secured power. This year, the pro-Moscow Communists won only three seats, which will severely limit their influence in the state and will also damage the pro-Moscow party's national standing. In terms of the per- centage of votes cast, the two Communist parties together fared worse than in any previous Ke- rala election. SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY Page 13 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 Approved For Release 2008/04/21 : CIA-RDP79-00927AO04800050001-6 RIFT AMONG AFRICAN STATES OVER CONGO I SUE DEEPENS African moderates and ra.di- cals fought each other to a stand- off over the Congo at the Organi- zation of African Unity foreign ministers' meeting in Nairobi which ended on 9 March. Al- though both sides are claiming a victory, the OAU itself has clearly been weakened by the participants' inability even to paper over the deep rift. Five days of acrimonious wrangling in, closed sessions resulted in no new Congo reso- lution at all. Instead, the ministers bucked the problem to the African heads of state, who are not scheduled to meet until September in Accra. How- ever, some African diplomats in Nairobi expect an extraordinary summit conference to be convened much sooner. The forces spearheaded by French-speaking West African moderates, which favored a. clear- cut endorsement of the Leopold- ville government were evidently in the majority at Nairobi. Nevertheless, they again failed by one vote--as they had last September in Addis Ababa--to push through a resolution author- izing African support, including troops, for Tshombd. This time three moderate states were ab- sent from the final crucial session. A compromise resolu- tion sponsored by Ethiopia and Tunisia, which would merely have continued the OAU's special 10- member Congo commission, fell three votes short. In view of the latter vote, the commission seems unlikely to be convened again until a. new mandate is obtained, espe- cially as its chairman, Kenyan President Kenyatta., has been weary of his role for some time. Ethiopian officials connected with the commission have said it has no further mission at this time, and on 10 March Tshombe said it "no longer exists." However, Kenya's foreign minister has stated that the commission will continue unchanged. The radicals' main positive thrust was an unsuccessful ef- fort early in the Congo debate to admit spokesmen for the Congolese rebels to the confer- ence. Otherwise, this group of nine strongly anti-Tshombe' countries--Algeria., Egypt, Mali, Guinea., Ghana, Sudan. Congo (Bra,zzaville) , Uganda, and Tanzania--concentrated on vilify- ing Tshombcf and sometimes the US and on blocking the moderates. Meanwhile, leaders of sev- eral feuding rebel factions have recently been assembling in Cairo, presumably in response to efforts of their radical backers--especially Egypt, Ghana, and Algeria--to prod them into some sort of united front. In the Congo, the govern- ment's military position con- tinues to improve. SECRET 12 Mar 65 CURRENT INTELLIGENCE WEEKLY SUMMARY Page 14 Approved For Release 2008/04/21: CIA-RDP79-00927AO04800050001-6 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 SE CRE''T A showdown may be shaping up between moderate elements in the Malian regime and radical leftist supporters of President Keita. The focus of the prob- lem is rising popular discon- tent over food shortages, to- gether with the need for new foreign economic support to keep the government going. Shortages of basic foods appear to be widespread, de- spitegovernment efforts to as- sure supplies. French and Amer- ican officials who have visited outlying areas have been told that government representatives have recently traveled great distances attempting to find millet and rice for Bamako and other urban centers. These agents are said to have been generally unsuccessful unless they were willing to pay black market prices. In Bamako, there are rumors that rationing may be instituted. Keita recently acknowledged publicly that the state trading organizations were partially at fault, but he said that most of the shortages were due to "sabotage" by private traders. In addition to its food supply problem, the Malian Gov- ernment is near bankruptcy. On 22 February, it opened wide-rang- ing negotiations with France, dealing with Mali's foreign debts, its shaky currency, and its financial requirements. Paris reportedly is laying down stiff terms, including reform of Mali's state enterprises, as conditions for further aid. Meanwhile, Bamako apparently is :Looking elsewhere--notably to- ward Peiping--for offers with which to counter French pressures. Since mid-January, there has been dissension within t e par y 25X1 politburo, involving both clashes between personalities and sub- stantive disputes. A relatively moderate faction, including Min- ister of State Kone, party polit- ical secretary Diarra, Interior Minister Bocoum, and National Assembly President Haidara now appears to be advocating changes in Mali's policy. They are per- sonally vulnerable, however, since Kone has long been consid- ered a French favorite, while Flocoum and Haidara are closely associated with the old elites of their respective home baili- wicks. Moreover, Bocoum is be- lieved to be personally involved in black marketing and smuggling. Pro-Chinese leftists in the cabinet, who have few ties to traditional Malian society, are emerging as Keita's chief allies in the present maneuver- ing. The eventual outcome of the conflicting pressures is not yet discernible. However, it appears possible that further anti-US outbursts, such as press attacks or the carefully con- trolled demonstration at the US Embassy on 8 March, will occur as by-products of the internal struggle. SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY Page 15 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 25X1 Approved For Release 2008/04/21 : CIA-RDP79-00927AO04800050001-6 Next 2 Page(s) In Document Denied Approved For Release 2008/04/21: CIA-RDP79-00927AO04800050001-6 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 vwp~ SECRET AUSTRIAN PRESIDENTIAL ELECTION MAY The campaign for election of a successor to President Schaerf on 23 May may be marked by an upsurge of political hard feeling. Although Austria's two major political parties--Schaerf's Socialists and the Catholic Peo- ple's Party of Chancellor Klaus-- are partners in the coalition government that has ruled Austria for twenty years, animosity be- tween them has increased since the end of the Allied occupation in 1955. The People's Party on 9 March nominated former Chancellor Alfons Gorbach as its candidate. The 66-year-old Gorbach is well known throughout Austria and has support in the provinces although he appears weak in Vienna. The Socialist Party seems inclined to nominate Vienna Mayor Franz Jonas. Jonas, 65, has been an active Socialist leader for more than 40 years and was twice arrested as a mem- ber of his party's underground when it was outlawed during the 1930s. The Socialists have held the presidency and the People's Party has dominated the chancel- lorship since 1945, and the So- cialist Party is again favored to capture the presidency. The partisan campaigning which ac- companied the last presidential election in 1963 was heated and put considerable strain on the SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY Page 18 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 SECRET Europe Discussions in the North Atlantic Council next week of a proposal by the US to reduce its payments to the NATO infra- structure program may produce a sharp exchange if not a dead- lock. Preliminary soundings have produced a negative reac- tion, and members have said flatly that "under no circum- stances" will they accept "uni- lateral dictation" of what the US share should be. Since its adoption by NATO in 1951, the infrastructure program has spent about $3 bil- lion on the construction of over 160 jet-capable airfields; a communications network of thou- sands of miles of cable, radio links, and land lines; and al- most 5,600 miles of pipeline and mammoth fuel storage facil- ities. These installations constitute an enormous capital investment in the' host coun- tries, and a considerable part of total expenditures have gone to European firms for construc- tion. Under the annual cost- sharing agreements which have financed the program, however, the US contributed almost 44 percent of the costs until 1957 and at present it is paying al- most a third. The US share in utilization of the infrastruc- ture facilities is only on the order of one fifth. Because of the imbalance between con- tributions and utilization and Europe's growing prosperity, the US now is asking that its contribution be reduced in 1965 to 25 percent, and thereafter to 20 percent. The only suggestion for avoiding a clash made so far is a Canadian proposal to integrate infrastructure programing with the work of the NATO Force Plan- ning Exercise (NFPE). The NFPE staff is expected to be seriously overburdened with its primary problems until some time in 1966, however, and in the opinion of the US ambassador to NATO could not handle the additional burdens of infrastructure screening and cost negotiations. Until this cost-sharing dis- pute is settled the current an- nual infrastructure program can- not get under way and no con- tracts can be let. The 1965 con- struction season is almost be- ginning. Many national construc- tion and spending programs, geared to annual infrastructure projects, stand to be hard hit if a lag develops in what was formerly an orderly process. In addition to these economic consequences and the ultimate effect on NATO's military strength, lack of agree- ment on infrastructure cost-shar- ing could have important political implications. The program has been frequently held up as a model of effective Alliance "integra- tion." A donnybrook now probably would be interpreted widely as signifying a further weakening in the fabric of the Alliance. SECRET Page 19 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 SECRET EXECUTIVES OF THE THREE EUROPEAN COMMUNITIES MERGED The agreement to merge the executives of the three European communities reached at last week's EEC Council meeting will contribute to efficiency by elim- inating the overlapping juris- dictions of the EEC and EURATOM commissions and the Coal-Steel Community's High Authority. Of- ficials in all the EEC capitals are also stressing the political and psychological significance of the move in furthering inte- gration. According to a French Foreign Ministry official, the recent progress on a common ag- ricultural policy followed now by the fusion agreement may be more important in the long run to Europe's unity than "prema- ture" discussions on a political organization as such. Nevertheless, the merger agreement is more an important first step than a definitive re- organization. Although it will establish Brussels more firmly as the community's administra- tive center, it leaves open the long-standing issue of creating a single "capital," for Luxem- bourg will retain several im- portant offices and Strasbourg will remain the seat of the Eu- ropean Parliament. Moreover, if any political organization emerges, Paris is expected to lay vigorous claim to its seat. Major problems are also expected to arise in conjunction with the merger of the three ex- isting treaties, for which the executive fusion has set the stage. Although fusion almost certainly means a de facto strengthening of the new com- Europe mission vis-a-vis the EEC Coun- cil, the essential question re- mains the extent to which supra- national features of the Coal- Steel and EURATOM treaties will be retained in a single community largely reflecting the EEC. In addition, an increase of the powers of the European Parlia- ment will be at issue, and sev- eral states may side with France in its desire to water down the majority voting provisions due to come into effect in 1966. The council's mandate call- ing for "exploratory negotia- tions" on EEC-Austrian ties is an important step in the evolu- tion of the Six's foreign policy, but the negotiations themselves could drag on for two years or more because of the complex po- litical, economic, and institu- tional issues involved. These include the questions of Aus- tria's continued membership in EFTA and the extent of EEC in- volvement to which Vienna could commit itself without violating its neutrality. Austria's EFTA partners have shown in the past their sensitivity to the conse- quences of an Austrian-EEC agreement, and the Soviet Union still maintains its strong op- position to any such deal. On the EEC side, procedural prob- lems involving the rights of mem- ber countries and the European Parliament are at stake, as well as the over-all political issue of framing a common policy on association arrangements ~ SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY Page 20 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 SE CRUET Europe TEMPORARY TRUCE AMONG ITALIAN COALITION PARTIES The undeclared cabinet crisis which had immobilized the Italian Government since the December presidential elec- tion has finally been resolved, and Premier Moro is expected to obtain a parliamentary vote of confidence shortly. The urgent need for antirecession measures and the lack of a viable demo- cratic alternative to the pres- ent center-left coalition forced the government parties into an accommodation which is little more than a, modus vivendi. It will be extremely difficult to avoid a new crisis in coming months because the Christian Democrats are still badly split on basic party policies, and no coalition consensus has been reached on several important differences. Rising unemployment, result- ing from lagging activity in key economic sectors, has increased labor unrest. Fear that reces- sionary pressures might spread encouraged the coalition to reach agreement on corrective measures, and prompt implementa- tion is expected. The antire- cession program features expanded public works and housing con- struction, with special incen- -tives aimed at increasing indus- "trial production and exports. Despite readily available funds for public construction projects, action has been hampered by anti- quated, time-consuming, bureau- cratic procedures, reform of which is a, major plank of the center-left program. Presumably the government intends to cut through this red tape. Ex-Premier Amintore Fan- f.'a.ni's appointment as foreign minister should temporarily neutralize a dangerous critic of the Moro government. Fa.n- fa.ni holds Moro largely respon- sible for his ouster from the premiership after the April 1963 national elections, however, and he has never ceased striving to regain the post. The most dynamic man in the cabinet, Fa.nfani will be a. force- ful foreign minister. Although it seems unlikely that he would want to engineer any important shift in major Italian foreign policies, he will probably clash with Moro and President Sara.gat over tactics. He may eventually be tempted to undertake foreign policy initiatives as a way to disrupt the delicate domestic political balance to his per- sonal advantage. SE CRET CURRENT INTELLIGENCE, WEEKLY SUMMARY Page 21 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 SECRET Western Hemisphere25X1 RECENT ACTIVITIES OF LATIN AMERICAN COMMUNISTS Latin American Communist lead- ers appear to be trying to imple- ment measures agreed upon at a highly secret meeting in Havana last November. The main purposes of that conference seem to have been to seek greater coordination and unity among the Communist par- ties in Latin America,,to give new impetus to Communist activity in the hemisphere, and to promote "solidarity with Cuba." The traditional fractionaliza- tion among the Latin American Com- munists has become increasingly evident in the past few years as a new generation of Communist ac- tivists--inspired by the Cuban model and influenced by what they believe to be Peiping's strategy of "armed revolution"--has begun to challenge the old-guard, pro- Moscow leadership in a number of parties. The Communists at the Havana meeting apparently decided to try to mollify their young ac- tivist challengers by agreeing to support, in certain instances, more revolutionary tactics, which they hope will draw the militants back to the orthodox party fold. This may have been behind the Guatemalan Communist Party's (PGT) recent marked change in policy. The PGT appears to have dropped its peaceful revolutionary efforts and opted for "hard line" tactics in opposing the Peralta government. The Uruguayan Communists have taken action very much in line with ,the recommendations of the Havana conference by beginning prepara- ?ions for a Latin American "soli- darity with Cuba" congress to be convened in Montevideo. The con- gress was first scheduled for early April, but recent reports indi- cate it will be postponed at least until June. If held, this will b(25X1 the first such hemisphere-wide con- gress since the March 1963 meeting in Niteroi, Brazil. SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY Page 22 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 N%W~ *W0 SE CRUET Western Hemisphere Political and military un- rest is mounting in Honduras as the 16 March convening date for the constituent assembly ap- proaches. The government seems intent on rapid action by the assembly naming the present chief of government, Colonel Oswaldo Lopez, "constitutional president" for a regular six- year term. The Liberals, smoldering over the blatant rigging of the 16 February election, are split on whether to send their 29 elected representatives to the 64-man assembly. The group in favor of participation argues that only in this way can the party have any voice in the gov- ernment and prepare for its eventual legal return to power. Other Liberal leaders, who are apparently in the majority, argue that this course of action would simply legitimize the gov- ernment's election farce. The latter group, which has impor- tant support among the strong labor unions in the north coast area, is inclined toward trying to bring the government down y force. The explosiveness of the political situation is height- ened by growing unrest among the military, where resentment has long been rising over the influence the civilian Ricardo Z uniga exerts over Colonel Lopez. The most recent demonstration of Zuniga's power took place last week when he engineered the dis- nissal of the chief of the air force, Colonel Armando Escalon, along with a number of Escalon's ranking subordinates. Escalon is regarded sympathetically by certain Liberal leaders. Al- though he himself believes the military should stay out of pol- itics, he might find himself im- pelled into an alliance with other 25X1 officers and Liberals against the regime. Although Honduran security forces will be able to control the situation in the cities, past experience 25X1 indicates that they will find it difficult to cope with disorders in the outlying areas. SECRET Page 23 Approved For Release 2008/04/21: CIA-RDP79-00927A004800050001-6 Approved For Release 2008/04/21 : CIA-RDP79-00927AO04800050001-6 %W.f *NW SECRET Western Hemisphere CHRISTIAN DEMOCRATS SWEEP CONGRESSIONAL ELECTIONS IN CHILE Chilean President Eduardo Frei's Christian Democrats (PDC) rolled up a majority much larger than even its leaders expected in the 147-member Chamber of Deputies in the congressional elections on 7 March. With 43 percent of the popular vote, the PDC exceeded the next three parties combined and elected 82 deputies, the largest single party block since 1841. It, became the biggest party in the Senate also, although it is still a minority there since only 21 of the 45 seats in the upper house were in contention. The far-left Communist- Socialist FRAP coalition gained a deputy and three senators, al- though its vote percentage fell to 26.5. Big losers were the three traditional parties--Rad- icals, Liberals, and Conserva- tives--which collectively fell from 53 percent in the last con- gressional contest to only 26.7. The Conservative Party, reduced to 3 deputies, has been so weak- ened as to foreshadow demise, while the Liberals dropped 22 deputies and 3 senators. The centrist Radicals, losing 3 sen- ators and 18 deputies, ran a feeble second behind the PDC, a position which they will also hold in the legislature. The election confirms the leftward swing of Chilean poli- tics, now more or less polarized between Marxist and non-Marxist left. Frei now has sufficient strength to carry his reform program into law once the new Congress convenes 21 May. Po- tential obstacles which he may SECRET CURRENT INTELLIGENCE WEEKLY SUMMARY Page 24 encounter, however, include possible factionalism within his own party, political incom- petence of many of the inexpe- rienced new PDC legislators, and a tendency toward haste and poor drafting in submitting bills for consideration. The results in no wise in- dicate the arrival of a millen- ium in Chile. The non-Commu- nists have won, but the anti- Communists have been beaten and the FRAP has strengthened it- self in Congress. FRAP's per- formance indicates that it re- mains a major force in Chilean politics and, with the support it may receive from newly opened bloc legations in Santiago, can be expected to continue unabated its efforts to gain power. The relative strength shown by FRAP and the poor performance of the Radicals could lead the latter eventually to reach an agreement with FRAP for a new "popular front" such as that which they shared from 1938 to 1948, pos- sibly to oppose the soaring PDC for the presidency in 1970. emulate. The PDC's new mandate may ,serve to strengthen its tendency toward economic nationalism at home and toward an "independent, third world" orientation in its foreign economic policy--al- -though in his victory statement Frei cited the confidence which Foreign investors' allegedly have in Chile as an example which Chilean industrialists should Approved For Release 2008/04/21: CIA-RDP79-00927AO04800050001-6 25X1 Approved For Release 2008/04/21 : CIA-RDP79-00927AO04800050001-6 Approved For Release 2008/04/21: CIA-RDP79-00927AO04800050001-6 Approved For Release 2008/04/21 : CIA-RDP79-00927AO04800050001-6 SECRET Approved For Release 2008/04/21: CIA-RDP79-00927AO04800050001-6