WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A005600030001-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 36
• Document Creation Date: December 21, 2016
• Document Release Date: June 3, 2008
• Sequence Number: 1
• Publication Date: January 6, 1967
• Content Type: SUMMARY

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DIRECTORATE OF
INTELLIGENCE
MEEKLY SUMMARY
State Dept. review completed
Secret
Secret
49
6 January 1967
No. 0271/67
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(Information as of noon EST, 5 January 1967)
Far East
VIETNAM
There were more incidents and casualties during the
New Year's cease-fire than at Christmastime. The
Viet Cong used the respite to infiltrate US Marine
defense positions and to unload supplies from large
trawlers off the coast of the delta. The Constituent
Assembly continues its work on a draft constitution,
but the issue of the government's veto and amendment
power remains unresolved. Hanoi continues to insist
on its well-established terms for negotiations, but
appears to be making an effort to project a more
reasonable image.
COMMUNIST AID TO NORTH VIETNAM IN 1966
Communist economic and military assistance to North
Vietnam in 1966 may have reached a value of $500 mil-
lion. Most of it was directly related to needs aris-
ing from the war, but both the USSR and China contin-
ued to supply some development aid.
SUKARNO ATTEMPTING TO COUNTER PRESSURES FOR HIS REMOVAL
The Indonesian President's confidence in his ability
to wear out his opponents seems unshaken, but in the
final analysis he can probably do no more than fight
a holding action.
NEW TURMOIL IN CHINA'S "CULTURAL REVOLUTION"
The leadership crisis appears to be moving into a new
phase that will be even more disorderly and disruptive
than the previous one. Attacks on senior leaders are
being stepped up, and a new "cultural revolution" drive
has been ordered in factories and villages.
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Europe
THE WEEK IN PERSPECTIVE
MOSCOW DISPLAYS CONCERN OVER TRENDS IN CHINESE ARMY
Soviet charges that Peking's anti-Soviet political of-
fensive is turning the Chinese Army into a "blind weap-
on" against the USSR, while obviously another propa-
ganda thrust, also demonstrates Moscow's genuine anx-
iety over the upheaval in China. This concern has
also been Evident for some time in Soviet military
dispositions near China and Mongolia.
F7_NNISH-SOVIET FRICTIONS RECUR
Soviet displeasure over some of the positions taken by
Prime Mini:-ter Paasio and his Social Democratic Party
may lead President Kekkonen to replace Paasio with
someone more acceptable to Moscow.
SOVIET COMMERCI_AI. AIRCRAFT SALES IN THE FREE WORLD LAGGING 16
Some of thy: less developed countries are receptive,
but Moscows sales efforts in Latin America and other
markets of the developed West have so far been fruit-
less.
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TITO FREES ARCHCRITIC DJILAS
The release of Djilas on 31 December will probably add
to the political turmoil that has been mounting in Yu-
goslavia since the dismissal of heir-apparent Rankovic
last summer.
Middle East - Africa
JORDAN STILL TROUBLED BY SECURITY PROBLEMS
The regime had to contend with an outbreak of terrorist
bombings in Palestinian west Jordan last weekend and
may face a renewal of demonstrations after Ramadan ends
:next week. Jordan apparently intends to stand firm
against permitting foreign Arab troops on its terri-
tory, despite formal claims that it is ready to accept
them.
MOBUTU SEIZES BELGIAN MINING COMPANY'S CONGOLESE ASSETS 21
President Mobutu's confiscation on 1 January of Union
Miniere's Congolese assets could be disastrous for the
Congo's finances and eventually for Mobutu's own po-
litical position as well. Mobutu still hopes for a
compromise with the company, but there has been no
proposal from either side which could bridge the gap
between them.
Western Hemisphere
THE WEEK IN PERSPECTIVE 23
FIDEL CASTRO'S EIGHTH ANNIVERSARY ADDRESS
Castro's speech on 2 January on the eighth anniversary
of the revolution was a comparatively low-key address
that gave no indications of changes in policy.
DEMONSTRATIONS PLANNED IN PANAMA
Demonstrations protesting the slow pace of negotiations
on a canal treaty have been called for next week on .
the anniversary of anti-US riots in 1964. The national
guard will probably be able to maintain order.
ARGENTINE PRESIDENT REORGANIZES CABINET
The revised cabinet, which includes new economics and
interior ministers, will probably act rapidly to re-
solve controversies over labor and budget policies.
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-PENSIONS RISE AMONG RURAL LABORERS IN BRAZIL'S NORTHEAST 27
A strike of sugar-cane workers in Pernambuco threatens
to spread to other sugar areas in the northeast, where
poverty and appalling social conditions are a fertile
breeding c-round for discontent.
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FAR EAST
Hanoi is attempting to reinforce pressures on
the US for a unilateral initiative--particularly a
cessation of air strikes against the North--to move
the Vietnam war toward negotiations. Ho Chi Minh
and Premier Pham Van Dong stressed to Western jour-
nalists that the US must make the first steps and
that North Vietnam is determined to persist indef-
initely if Washington refuses to make concessions.
Their statements were also calculated to emphasize
Hanoi's independence of foreign (Chinese) domina-
tion and to portray its terms for settlement as
moderate and reasonable. Hanoi scornfully rejected
the British proposal for talks between North Viet-
nam and the US and South Vietnam.
Communist forces in South Vietnam attempted
to use the New Year truce period to offload sup-
plies in the delta and to infiltrate US Marine
positions. In Saigon, the Constituent Assembly
has concluded its discussion of "basic principles"
for the new constitution and will now move on to
drafting detailed provisions.
The "cultural revolution" in China appears to
be entering a new phase that will be even more dis-
orderly and disruptive. In what may be final prep-
arations for the public dismissal of Liu Shao-chi
and Teng Hsiao-ping, Red Guard posters reportedly
asserted that Mao and Lin Piao have personally de-
nounced the two men and demonstrations against them
have been held almost daily in the past two weeks.
Although Indonesian President Sukarno continues
to profess confidence in his ability to outmaneuver
his opponents, he can do no more than fight a hold-
bl
b
y
a
ing action. The movement to depose him pro
will gather momentum when congress reconvenes in
mid-January.
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KIEN
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The Indochina -South China Area r??'c~'
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VIETNAM
The Military Situation
In South Vietnam
The 48-hour New Year's truce
between opposing forces in South
Vietnam was marred by a greater
number of incidents and casual-
ties to both the Viet Cong and
US forces than in the two-day
Christmas respite.
.A total of 169 Communist-
initiated incidents were reported,
67 more than in the 24-25 Decem-
ber cease-fire period. Most of
the incidents were limited ac-
tions involving short bursts of
small-arms fire directed against
US patrols or encampments. There
were 53 instances, however, in
which exchanges of fire resulted
in casualties.
For example, on 31 December
a US infantry company in the
western highlands of Kontum Prov-
ince was attacked and engaged for
more than five hours by a Viet
Cong/North Vietnamese Army Force
estimated at battalion size. On
the same date a heavily armed
Viet Cong force of about 1,000
combat troops attempted to use
the cease-fire to infiltrate US
Marine defensive positions west-
northwest of Hue, in northern
coastal Thua Thien Province.
A third major incident oc-
curred on 1 January when two
Communist steel-hulled trawlers
unloading cargo on the southeast-
ern coast of South Vietnam's
southernmost province, An Xuyen,
attacked US Navy coastal surveil-
lance units with heavy machine-
gun fire. US forces returned
the fire, sinking one trawler
and heavily damaging the other.
Friendly casualties sus-
tained during the 31 December -
1 January truce included 23
killed (17 US) and 41 wounded
(27 US). Known enemy losses
totaled 41 killed and 20 cap-
tured.
No significant contact
with large enemy troop concen-
trations has occurred since
the resumption of allied search-
and-destroy operations on 2 Jan-
uary
Constituent Assembly
South Vietnam's Constituent
Assembly continues to make prog-
ress on drafting a constitution,
although its relations with the
government remain unsettled.
On 3 January, the assembly
concluded its debate on basic
constitutional principles and
assigned subcommittees to for-
mulate an initial detailed
draft. The assembly agenda
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calls for a plenary debate on
the draft to begin on 11 Jan-
uary. Some delegates estimate
that these deliberations will
be completed by late February.
11owever, pr:)biems will un-
doubtedly arise given though the
outline of the fiture government
and the general principles of the
constitution havE been agreed
upon. Several snnecific issues
which aroused controversy still
remains to be resolved. The as-
sembly's rate of progress will
generally depend upon the degree
and the type of detail it attempts
to =insert in the constitution.
Meanwhile, 108 of 117 dele-
gates have taken an oath to "de-
fend" the assembly's final ver-
sion of the constitution, follow-
i_ng the government's formal re-
Eusal last week to relinquish
its partial veto power. However,
it remains uncertain whether the
assembly would it fact be able
to muster the twc-thirds majority
vote necessary tc override any
government amendments. In order
to avoid this situation--which
would mean a loss of prestige
for one side or the other--as-
semblymen hope that the govern-
ment will deliver any official
suggestions it may have while the
constitution is still being
drafted.
Hanoi on Nego tiations
A Hanoi repr?sentative com-
mented for the .fi--st time on
Page 4
5 January on recent efforts by
US Ambassador. Goldberg and
U Thant to probe Hanoi's in-
tentions. The DRV representa-
tive in Paris, Mai Van Bo, in
an interview with Western news-
men characterized Ambassador
Goldberg's efforts as an "old
song" and rejected any inter-
vention in Vietnam by the UN.
Prior to this statement,
Hanoi propaganda media had
handled the 19 December US
letter to U Thant with consid-
erable restraint. Both Moscow
and Peking quickly denounced
the US initiative. Hanoi's
initial restraint conveyed an
image of reasonableness, prob-
ably in response to world-
wide pressures for a cessation
of hostilities during the year-
end holidays. Hanoi has fre-
quently been advised by some
of its allies to try to iden-
tify with such free-world sen-
timents and to improve its pub-
lic image by appearing more
moderate and reasonable on the
subject of a negotiated settle-
ment.
Throughout this same time
period, however, North Vietnam-
ese leaders, when addressing
foreign audiences, emphasized
the necessity for the US to
take the first step and-usually
defined this as an unconditional
cessation of the bombings. In
a 2 January interview with Der
Spiegel, President Ho Chi Minh
claimed that peace would return
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immediately once the "US stopped
its aggression" and called for
both a cessation of the bombings
and withdrawal of US troops.
All DRV statements remained ex-
ceedingly vague about what North
Vietnam might do in exchange for
such a US concession. The DRV
representative in Paris, for ex-
ample, was quoted by Western press
sources on 5 January, as promising
only that an American approach for
a Vietnam settlement, after a
bombing cessation, would "be ex-
amined" by his government.
In a series of year-end speeches
to domestic audiences DRV leaders
underscored Vietnamese determina-
tion to continue the fighting un-
til they have achieved their basic
and long-standing demands. Both
First Party Secretary Le Duan
and Defense Minister Vo Nguyen
Giap this week warned their
people that they could expect
harder times in 1967, and Giap
characterized the DRV four-point
proposal for a settlement of the
war as "fundamental aspirations"
and "our unshakable position."
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COMMUNIST AID TO NORTH VIETNAM IN 1966
Communist economic and mili-
tary aid to North Vietnam may
have reached a value of $500 mil-
lion in 1966. The USSR and China
supplied most of the aid. Lesser,
in some cases to}:en, amounts were
supplied by the Fast European
Communist countries, Mongolia,
North Korea, and Cuba.
The bulk of the deliveries
consisted of trarsportation equip-
ment:, heavy machinery for building
:roads and airfields, medical sup-
]plies, small arms, artillery, and
air-defense weapcns. The volume
apparently has been limited by
Hanoi's ability to absorb supplies
and equipment, and in no case has
the cost placed any significant
burden on the economy of the sup-
plier.
Economic aid reached a new
high last year--some $250 million
:_n value--and is likely to grow
again this year as more equipment
and machinery become necessary to
maintain Hanoi's economy and re-
pair war damage. New aid agree-
ments--many in the form of grants--
were signed with all Communist
countries except Yugoslavia in
September and October. Although
the aid has gone mostly toward
meeting needs created directly
by the war, the USSR is helping
to build a number of electric
power plants and to develop coal
mines, and Chinese are continuing
to assist in construction of the
Thai Nguyen steel plant.
Military aid in 1966 probably
also reached about $250 million,
matching 1965 outlays. Unless
major new weapons systems--such
as coastal defense missiles or
ships to establish an effective
naval force--are introduced, de-
liveries could slacken in 1967.
Hanoi and Haiphong are probably
already the most heavily defended
cities in the history of air war-
fare. The USSR can be expected to
continue supplying artillery,
vehicles, small arms, and radar,
as well as replacement aircraft,
surface-to-air missiles, and anti-
aircraft artillery. China's main
contribution will continue to be
small arms, vehicles, and some
technical assistance.
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SUKARNO ATTEMPTING TO COUNTER PRESSURES FOR HIS REMOVAL
Indonesian President Sukarno,
in the face of growing pressure
for his removal, has been trying
to wrest the initiative away from
his opposition.
Sukarno has been emboldened
by differences among his opponents
and by hesitation by his powerful
antagonist, General Suharto, to
force a final showdown. He has
demanded that the cabinet be re-
shuffled in his favor and has
threatened to dissolve the con-
gress. At various times in the
past few weeks he has alternately
threatened to resign, refused to
resign, threatened to go abroad,
refused to go abroad, agreed to
explain his past policies, refused
to explain his past policies,
and demanded increased funds.
Despite a 21 December joint
declaration of unity by the chiefs
of the armed forces, their subse-
quent series of meetings with Su-
karno proved inconclusive in
clarifying Sukarno's future role.
Sukarno has succeeded in add-
ing to the public confusion and
the general restlessness among
some of General Suharto's more
"hawkish" colleagues. Although
Sukarno is reported to profess
optimism over his prospects for
a comeback, in the final analysis
he can probably do no more than
fight a holding action. The
press is being encouraged to de-
nounce him and the movement to
oust him by constitutional means 25X1
will probably receive new impetus
when congress reconvenes in mid-
January.
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NEW TURMOIL IN CHINA'S "CULTURAL REVOLUTION"
China's leadership crisis
appears to be moving into a new
phase that will be even more
disorderly and disruptive than
the previous one. Attacks on
senior leaders are being stepped
up in tempo and intensity, and
a new "cultural revolution" drive
has been ordered in factories
and villages..
Red Guard posters displayed
in Peking on 5 January reportedly
assert that Mao Tse-tung and
heir-apparent Lin Piao have per-
sonally denounced chief of state
Liu Shao-chi and party general
secretary.Teng Hsiao-ping. Ral-
lies and demonstrations have
been held almost daily in the
past two weeks to denounce the
two, apparently in preparation
for their public dismissal.
In Mao's reported criticism,
he bitterly complained that Liu
and Teng had ignored his counsel
--treated him like a "deceased
parent"--during the past decade.
He also charged that they had
forced him out of the post of
chief of state in 1958. This
appears to be a patent fabrica-
tion, since the transfer of this
honorary post to Liu at that
time seemed to be part of a de-
liberate policy to groom him as
Mao's successor. No details of
Lin Piao's denunciation are
available yet
Page 9
On 31 December, Red Guard
posters for the first time de-
manded that former Peking mayor
Peng Chen and other early vic-
tims of the "cultural revolution"
be executed. During.the past
week Red Guard posters and ban-
ners have also directed their
fire against several officials
who seemingly have been in good
standing. These include three
men who were brought into the
party secretariat in July--Tao
Chu, Liu Ning-i, and Yeh Chien-
ying. Tao ranks fourth in the
present hierarchy, Liu directs
the All-China Federation of
Trade Unions--apparently reor-
ganized about 31 December--and
Yeh Chien-ying is a member of
the powerful Military Commission
of the central committee.
According to a Red Guard
newspaper distributed on 5 Jan-
uary, Tao Chu was denounced at
a meeting on 4 January by Madame
Mao and "cultural revolution"
official Chen Po-ta as a "bour-
geois reactionary" loyal to Liu
and Teng. Tao Chu reportedly
was dragged around the streets
of Peking by Red Guards on 5
January.
While tensions mount in Pe-
king, orders have gone out to
intensify the "cultural revolu-
tion" in factories and farms.
Party officials opposed to Mao
and Lin continue to be the main
target of this drive.
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In the last two weeks,
workers and peasants have been
told to join in more vigorously,
and Red Guards, in a shift of
policy emphasis, were encouraged
to "exchange experiences" with
workers. All production units
are thus exposed to the kind of
politically inspired policies
that brought vir:ual economic
collapse during :he 1958 "leap
forward." The permission is
hedged with exhortations to main-
-tarn and increase production,
but there is no assurance that
this will be an effective curb.
With chaos reported in many
factories even before "cultural
revolution" agitation on their
oremises was permitted, it is
:.zot likely that Eroduction will
fare well if--as a number of
sources have indicated--workers
and peasants' orcanizations led
by activists take over manage-
ment and are urged on by inspec-
tion teams of outsiders with no
appreciation of production proc-
esses.
The regime itself seems to
be losing the economic realism
of recent years. Year-end claims
--for the first time since the
original "leap forward"--consist
of outright falsehoods, apparently
to promote the belief that China
is ready for another leap.
up to 150 percent in a year.
Instead of the usual at-
tempt to mislead by unverifiable
and meaningless claims, Peking
now states flatly that in 1966,
China had the biggest grain crop
in history. In fact, however,
it was almost certainly less
than the mediocre 1965 harvest.
The claim was also made that in-
dustrial output increased 20
percent in 1966. Many factories
have been cited as examples where
forces released by the revolution
have brought production increases
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EUROPE
The Christmas and New Year cease-fire arrange-
ments in Vietnam again focused Western Europe's at-
tention on the war. The failure of some West European
leaders to generate further peace moves seems to
have reinforced an already pessimistic attitude to-
ward peace prospects.
De Gaulle, during the New Year holiday, issued
two statements, his most critical yet of US policy
in Vietnam. He has previously called for unilateral
US withdrawal, but in tones less sharp. He ap-
parently now feels that his position, and his claim
to a part for France in any postwar settlement, will
get wider support. Nevertheless, the French press
has criticized his castigation of the US as solely
responsible for the war. In Britain, US policy in
Vietnam is in for another rough time. The press
there is making much of stories of bombing in Hanoi,
and it will be against this background that Parlia-
ment, when it reconvenes next week, will further
attack Foreign Minister Brown despite his latest
appeal for talks between North and South Vietnam
and the US.
The Soviets last week used their army journal
to put on the public record an expression of their
concern over the military implications of their
quarrel with China. Moscow drove home the point
that--because of what Mao has done to the Chinese
army--Russians have no alternative but to regard
Chinese forces as potential enemies rather than
allies.
Yugoslavia marked the New Year with an amnesty
which included most notably Milovan Djilas, Tito's
one-time comrade in arms and heir apparent, whose
bold criticism of Communism's failings have twice
landed him in jail. His release highlights a trend
toward liberalization apparent in other ways as
well in Yugoslavia, but the regime will have to
watch him closely for it is not clear that he has
yet been persuaded to refrain from criticizing re-
gime policies.
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MOSCOW DISPLAYS CONCERN OVER TRENDS IN CHINESE ARMY
The USSR is showing growing
concern, both publicly and co-
vertly, over the military impli-
cations of its dispute with China.
An editorial in Red Star on
29 December warned that Mao Tse-
tung and Lin Piao are turning the
Chinese Army into a "blind weapon"
in their political offensive
against the USSR. The editorial
charged that Peking is inculcating
the Chinese military with chauvin-
ism and animosity toward the Rus-
sians in order to further aims
Page 13
"hostile to the interests of in-
ternational socialism." Red
Star said that Peking refused to
acknowledge the need to unite
the military strength of Commu-
nist states against "imperialism"
even in the event of a new world
war.
A summary of the article was
broadcast internationally, indi-
cating that it is meant as another
propaganda thrust in Moscow's
campaign against "Mao and his
clique." However, the editorial
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also displays ger.uine Russian
worry over the upheaval in China.
This concerr has been mani-
fested in the military sphere in
precautionary moves by the USSR
year China and Mongolia in recent
years. Moscow probably sees no
acute military tl.reat at present,
but is apparently determined to
respond vigorously to any Chinese
provocation.
Page 14
Incidents along the border
continue, and the USSR has in re-
cent months publicized isolated
cases in which alleged border
;iiolators have been captured
along the eastern frontier. More-
over, frontier problems were ap-
Oarently discussed at some length
during the Soviet party plenum
last month. And members of the 25X1
Soviet politburo are now laying
the issue before meetings of party
activists in key cities.
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FINNISH-SOVIET FRICTIONS RECUR
Finnish Prime Minister Paasio
faces an uncertain political fu-
ture as a result of frictions
which have developed with Moscow.
The Russians are also dis-
satisfied with the line which the
SDP--the dominant party in Fin-
land's four-party coalition gov-
ernment--took on international
issues at its November congress.
This dissatisfaction was reflected
in a recent Pravda article attack-
ing the SDP for failing to condemn
West German "revanchism," for its
alleged disinclination to dis-
associate itself from the pro-
Western stance of the Socialist
International, and for its refusal
to align itself with the Finnish
"peace" movement.
went
as far as they could to conciliate
the Soviet Union in the foreign
policy resolution adopted by the
congress. There are indications
that even if the leadership had
been inclined to be more accommo-
dating to Moscow, ordinary dele-
gates would have opposed further
concessions. The mood of the ma-
jority of the delegates was appar-
ent in the sharp defeats of reso-
lutions and candidates for office
supported by the left wing of the
party.
Notwithstanding the results
of the congress, the Social Demo-
crats made another conciliatory
gesture toward Moscow in a pre-
Christmas statement by their par-
liamentary group stressing the
importance to Finland of develop-
ing "especially active, friendly
relations" with the Soviet Union.
The pronouncement also declared
that it was imperative to work
for peace and security in Europe,
and particularly for a "normali-
zation of the German situation."
The Soviets probably hope to
secure further concessions by
maintaining pressure on Paasio
and the SDP leadership, who fear
that another effort may be under
way by Moscow to blackball the
party. Only last May the SDP
emerged from eight years of po-
litical isolation imposed by
President Kekkonen and Moscow,
and then only after winning a de-
cisive election victory and "purg-
ing" its leadership of outspoken
anti-Soviet officials.
Kekkonen's position in this
latest dispute between the Social
Democrats and Moscow is unclear.
However, if Paasio is unable to
establish a satisfactory working
relationship with the Soviet
leaders, Kekkonen is likely to
replace him with an individual
more acceptable to the Soviet Un-
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SOVIET COMMERCIAL AIRCRAFT SALES IN THE FREE WORLD LAGGING
Soviet commercial aircraft
salesmen continue to find a re-
ceptive market it less-developed
countries attracted by discount
prices and long-term credits but
have had little success elsewhere
in the free world.
The USSR is trying to re-
cover its once-dcminant place in
Guinea's civil air operations.
It managed to sell three AN-24
(Coke) aircraft to Air Guinea this
fall and in the process succeeded
in blocking Pan American's efforts
-.:o keep a role in Guinea's civil
air business. Some 40 Guinean
pilots and technicians are now
in Moscow completing a five-month
training course on the AN-24.
The Somali Republic--a new cus-
tomer--has just taken delivery
of 2: AN-24s.
Soviet aircraft promoters,
however, have made no headway in
Latin America. Recent negotia-
.ion.s for the sale of AN-24s to a
Brazilian airline apparently ran
into trouble over arrangements
for technical servicing, a factor
which will continue to hinder
Soviet efforts to develop new :mar-
kets. A three-week visit to Rio
de Janeiro last month by Soviet
aircraft production and export
officials did not result in any
sales contracts, but :Brazilian
aviation representatives have
been, invited to pay a return
visit to Moscow. The Soviet
salesmen, one of whom went on to
Chile from Brazil, may intend
to make a promotion swing through-
out Latin America.
The Soviet sales campaign
elsewhere in the West has been
similarly unrewarding. After
conducting extensive demonstra-
tion flights of the IL-18 (Coot)
in Sweden, Moscow met with a
rebuff when the prospective
customer, a charter company, de-
cided to purchase American Boeing
727 jets instead. The Soviet
aircraft export agency, Aviaexport,
having failed to dent the Western
market through its own efforts,
now has contracted with a British
air sales organization, Trade-
planes, for an export demonstra-
tion base at London's Gatwick air--
port. The British firm will
promote sales of the AN-24 and
Soviet helicopters.
Cooperative arrangements may
also be developing between the
French and Soviet aircraft indus-
tries. This subject was discussed
when the Soviet minister of the
aviation industry visited Paris
in November. At that time the
USSR expressed an interest in ac-
quiring French turboprop engines
for use in its helicopters, in
exchange for Soviet high-powered
-jet engines for use on short hauls.
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SI'C,RII"F
The short-range turboprop AN-24, the USSR's best-selling
transport, maintains its popularity with customers.
The turbofan TU-134, scheduled for export this year,
may draw prospective buyers.
Model of the supersonic transport which Moscow hopes
to fly by 1968.
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Ifto
SECRET
TITO FREES ARCHCRITIC DJILAS
Tito's decision to release
his long-imprisoned archcritic,
Milovan Djilas, on 31 December
will probably add to the politi-
cal turmoil that has continued
to mount in Yugoslavia since the
dismissal of the heir-apparent,
Aleksandar Rankovic, last summer.
Yugoslavia's liberals may take
some encouragement but conserva-
tives may oppose Tito's policies
more and. more openly.
Djilas broke his parole in
the early 1960s--he was jailed in
1956 and released four years
later--because he believed his
political future would ultimately
be served by the martyrdom of
prison. There are few indica-
tions of what Djilas' present in-
tentions are, but his chances of
regaining political prominence
in the near future are slight.
The liberals will view
Djilas' release with mixed emo-
tions. Since his past ups and
downs have been taken as a gauge
of the regime's permissiveness,
many now will be encouraged to
intensify -their calls for greater
freedom of debate and to press
for a more meaningful electoral
and parliamentary system. Other
liberals, however, probably fear
that Djilas will jeopardize
the progress already made by
pushing his more radical ideas.
Djilas is anathema to the
conservatives because in 1956
he criticized Yugoslavia's au-
thoritarian system and its privi-
leged party bureaucracy, and in
1962 implicitly challenged the
regime by publishing his anti-
Communist tract, Conversations
With Stalin. Rankovic's conserv-
ative__bacckers will probably re-
gard Djilas' release as evidence
of the regime's commitment to
complete diffusion of party con-
trol, thus making more remote
their chances of regaining sig-
nificant influence in the regime.
Although apparently still
leaderless and disorganized,
the conservatives will probably
become more openly opposed to
Tito's political and economic
reforms. Some of the ultra-
conservatives may also attempt
to show their displeasure through
activities embarrassing to the
regime, such as occurred on 20
and 23 December, when anti-Amer-
ican demonstrations on the Viet-
nam issue apparently led by pro-
Rankovic elements got out of
hand.
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SECRET `w
MIDDLE EAST - AFRICA
Some of the continuing problems in the area
have taken on a new and, in some cases, dangerous
twist.
In Africa, the Congo's Mobutu has proceeded
willy nilly to take over Union Miniere's assets
regardless of the potentially disastrous economic
implications for his country. Immediate tensions
may have eased in Nigeria now that the long-sought
meeting between Supreme Commander Gowon and Eastern
Region military governor Ojukwu has finally taken
place--in Ghana--but no reconciliation of divergent
substantive issues is yet in sight. The Smith re-
gime in Rhodesia remains adamant despite the threat
of economic sanctions, and the Zambian economy still
stands to suffer the most from this dispute.
Jordan remains the principal trouble spot in
the Middle East as terrorist attacks protesting
King Husayn's vacillation toward Israel continue.
Husayn, however, has succeeded temporarily in put-
ting off the stationing of Iraqi and Saudi troops
in west Jordan until after the Arab Defense Coun-
cil meets again in mid-February to consider his
government's proposal to strengthen Arab forces
on all fronts with Israel. The military lull in
Yemen was broken by recent Egyptian bombing, and
it is questionable how long Saudi King Faysal can
restrain the royalists from a renewed offensive.
India now has enough food on hand--or in the
pipeline--to see it through the general elections
scheduled for 15 February, but the Congress Party
still has strains in the leadership and faces more
trouble from Hindu protestations over the slaughter
of cows. In Pakistan, the return to political life
after seven years of exile of many capable civil-
ian politicians will provide an interesting weather-
vane on the fortunes of Ayub's military government.
The future of parliamentary democracy in Afghanistan
is in doubt because of the King's growing dissatis-
faction with Prime Minister Maiwandwal's conduct of
government.
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S1;CREI'
JORDAN STILL TROUBLED BY SECURITY PROBLEMS
King Husayn's regime had to
;contend last weekend with an out-
break of terrorist bombings in
Palestinian west Jordan and may
-race a renewal of demonstrations
against the regime there next week.
On 1 January there were two
explosions in Jerusalem, one near
an office of the government's
broadcasting service and the other
inside the headquarters' compound
of the security po-_ice. Another
bomb exploded the next day at the
governor's office.
the deployment of Iraqi and Saudi
troops in west Jordan may herald
the end of recent pro forma coop-
eration on joint Arab defense plans
against Israel. The government
apparently intends to stand firm
against permitting foreign Arab
troops on its territory, despite
formal claims that it is ready to
accept them. The conditions it
has attached to their entry are to
be discussed at another meeting of
the Arab Defense Council in mid-
February, but it is doubtful
whether Jordan will attend.
These bombings, like the six
in Amman in late December, caused
Little damage and no casualties,
but it is evident that the govern-
ment has not been totally effec-
Live in stopping the infiltration
of terrorists and rlunitions from
Syria. The Palest:_ne Liberation
Organization, broadcasting from
Cairo, has claimed credit for the
Jerusalem bombings, alleging that
they were the wore: of one of its
"army" brigades.
Many observers in west Jordan
believe that new demonstrations
may occur there after the Muslim
holy month of Ramadan ends on 11
January. The mass turnouts ex-
pected at Friday morning prayers
on. 13 January probably will create
a particularly tense situation.
The government is also anxious
about the reopening of schools af-
ter Ramadan vacation
Jordan's maneuvers in reaction
to radical Arab pressure favoring
Amman has also called for an-
other summit meeting of Arab chiefs
of state, stressing that it is un-
realistic to assume any effective
Arab military alliance can be
forged until political antago-
nisms within the Arab world are re-
solved. Jordan's request stated
Amman was opposed to meetings
other than at the summit since
lower level meetings would not
have the authority to reach mean-
ingful decisions.
This continuing inter-Arab dis-
pute has been accompanied by brief
clashes along the Israeli-Syrian
border during the past week. These
incidents thus far have not re-
sulted in any Israeli fatalities,
often the signal for an Israeli
reprisal. The earlier discovery
by the Israelis of land mines near
the Syrian frontier and a 3 January
bomb explosion close to the Lebanese
border which presumably was caused 25X1
by Syrian-supported terrorists sug-
gest that further trouble can be
expected.
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SECRET
MOBUTU SEIZES BELGIAN MINING COMPANY'S CONGOLESE ASSETS
President Mobutu's confisca-
tion of Union Miniere's Congolese
assets on 1 January could be dis-
astrous for the Congo's finances
and eventually for Mobutu's own
political position as well. He
apparently is still hunting for a
way out of the impasse, but there
is no sign that Union Miniere is
particularly interested in com-
promise.
Mobutu's government has set
up a new company to run Union
Miniere's activities in the Congo.
Unlike the provisional adminis-
trative council which he estab-
lished on 23 December, all of the
new company's directors are Con-
golese, and the Congolese Govern-
ment will hold 60 percent of its
stock. On 15 January, unless
Union Miniere pays the $150 mil-
lion or more that Mobutu says it
owes the Congo, the extensive
Congolese interests of the related
Societe Generale holding company
allegedly are to be seized as
well.
Contrary to what the Congo-
lese apparently expected, Union
Miniere has shown no inclination
to yield on important points. The
company--as well as Societe
Generale--seems to have decided
that now is a good time to get
out of the Congo. Both concerns
have extensive interests outside
the country and are in sound
shape financially even without
their Congolese holdings.
Kinshasa's financial situa-
tion, on the other hand, is be-
coming critical. Union Miniere
is the source of about 70 percent
of the Congo's foreign exchange,
and the flow from this source
has been cut off since 20 Decem-
ber. The Congo will not be as-
sured of its foreign exchange un-
less it can work out firm market-
ing arrangements for its copper.
Union Miniere, the most readily
available agent, has said it will
not do any marketing under pres-
ent circumstances. The company
has also threatened to take legal
action to attach any copper the
new Congolese company does ex-
port. Even if there is no liti-
gation, it will take precious
time to start foreign exchange
flowing in again.
Meanwhile, activity in the
Katanga mining region has al-
ready been disrupted. The com-
pany's accounts in Katanga are
blocked, and no one is being
paid. The board of the new Con-
golese company has yet to provide
any firm direction, and communi-
cations with Brussels are almost
nonexistent. Perhaps most im-
portant, the 2,100 Europeans
essential to continued mineral
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SECRET
production are growing increas-
ingly nervous. Company officials,
who are still running the mines,
are trying to keep departures
to a minimum--in part because a
rapid outflow might stimulate
Mobutu to use force to restrain
any remaining Europeans. A sub-
stantial and perhaps disruptive
reduction in the European work
force seems inevitable, however,
unless Mobutu can provide the
whites with credi:ole guarantees
of personal safety and salary.
Mobutu's position does not
appear to be jeopardized for the
time being by his moves. Over
the long run, however, the eco-
nomic disruption caused by the
dispute is likely to have social
and political repercussions which
Mobutu will have trouble control-
ling.
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SECRET ~ir-
WESTERN HEMISPHERE
Four Latin American governments have recently
undergone ministerial changes or made moves in that
direction. This has strengthened the stability of
two of them but sharpened political tensions in the
other two.
Argentine President Ongania's replacement of
two of his regime's four senior cabinet officials
last week may have been timed to preclude a demand
by the military for such changes. The cabinet shuf-
fle may temporarily lessen military and public criti-
cism.
In Bolivia, quarreling over patronage among
the parties in the tenuous government coalition led
the labor and agriculture ministers to resign on
28 December, which in turn sparked pro forma resig-
nation offers from the rest of the cabinet. Presi-
dent Barrientos, who may have staged the "crisis"
himself, emerged with his authority enhanced, his
cabinet intact, and his political base probably
strengthened.
A petulant opposition-controlled congress in
Peru censured President Belaunde's education minis-
ter for no good reason last week, thereby automati-
cally forcing the minister's resignation. Such tac-
tics have eliminated nine cabinet ministers during
Belaunde's term, and the military is reported
highly irritated.
Meanwhile the latest spat between Guyana's
Prime Minister Burnham and his coalition partner,
Finance Minister D'Aguiar, continues as the two men
consider further cabinet changes beyond those re-
cently decreed by Burnham. The main sticking point
is whether Burnham or D'Aguiar is to control the
economic development portfolio. This issue--plus a
host of others--could wreck the coalition with little
or no warning.
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SECRET
FIDEL. CASTRO'S EIGHTH ANNIVERSARY ADDRESS
Iidel Castrc's speech on
2 January commemorating the
eighth anniversary of the Cuban
revolution was a routine, compar-
tively low-key address that gave
no indications of changes in pol-
icy.
Much of the speech was de-
voted to a somewlat inflated ver-
,ion of his regime's achievements
in public health, education, in-
clustry, and agriculture. He prom-
ised continued repid economic de-
velopment in spite of such draw-
jacks as a seriot.s lack of ex-
Derienced technicians and trained
)ersonnel.
Obviously irritated by US
efforts to block Cuban trade with
,:countries of the free world,
Castro lashed out at the "economic
blockade," describing it as "a
-aolicy that consists of trying to
spread hunger amcng the masses."
Cuba currently has several im-
?ortant trade deals pending in
Western Europe ard Castro pre-
dicted, probably quite accurately,
that the countries involved would
turn a deaf ear to US requests
that they refuse Cuba long-term
redit.
Although he admitted that
the government is gradually buy-
ing out those peasants who still
have small landhcldings, a measure
what has provoked grumbling,
Castro maintained that "never in
.he history of our land have we
had greater unity." Alluding to
the "close contact" between the
masses and the leaders, Castro
suggested that he would be less
and less in the limelight and
that other high-ranking regime
officials--Raul Castro, President
Dorticos, Armando Hart, Ramiro
Valdez, Juan Almeida, and other
central committee members--
should assume a greater share
in the direction of the party.
There is no reason to believe,
however, that Castro seriously
intends to reduce his own role
in running the country. It is
more likely that he was offering
a verbal hedge against possible
accusations that he is perpetu-
ating the "cult of the personal-
ity" in Cuba.
A heavy rain that caused
the cancellation of a scheduled
fly-past by Cuban jet fighters
probably was also responsible
for the brief amount of time that
Castro devoted to revolutionary
movements abroad and the situa-
tion in Vietnam, two of his fa-
vorite subjects. Toward the end
of the address, which lasted two
hours and 45 minutes, he reiter-
ated Cuban solidarity with rebel
groups fighting in Venezuela,
Colombia, and Guatemala and dra-
matically sent greetings to "'Che'
Guevara and his comrades, wher-
ever in the world they may be."
He concluded by continuing his
practice of attaching a slogan to
the new year naming 1967 the "year
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DEMONSTRATIONS PLANNED IN PANAMA
Panamanian student, labor
and civic groups plan a "march
of sovereignty" in Panama City
on 9 January to commemorate the
third anniversary of the anti-US
riots in 1964 and to denounce
the alleged lack of progress in
the canal negotiations.
Ultranationalists and lead-
ers of Panama's badly splintered
Communist movement have called
for "massive" demonstrations
over the four-day period. Pre-
vious anniversaries have been
relatively quiet, but emotional
demonstrations may attract more
popular participation this year
because of increased interest
in the canal negotiations and
the government's handling of the
1 December Rio Hato incident.
This incident, which in-
volved the alleged detention of
a Panamanian commercial aircraft
at a US-leased training area,
touched off charges in the press
and on the floor of the National
Assembly that Panama's sovereignty
had been violated. The furor
over the incident was quickly
magnified into criticism of the
US role in the treaty talks. The
Robles government belatedly tried
to restrict the anti-US campaign
and set the record straight but
its efforts were too late to
erase the initial image of a US
affront to Panamanian sovereignty.
Extremist-led student groups
staged "sovereignty" marches into
the Canal Zone and the Rio Hato
base in mid-December. To dis-
courage such incursions into the
zone during the forthcoming an-
niversary, government-influenced
information media in Panama City
recently have stressed the "de-
sirable pace" of the canal talks
and urged the public to avoid
"excesses" that might retard
them.
President Robles, in an ef-
fort to undercut extremist plans,
issued an executive decree on 4
January calling for official
memorial observances next Monday
to honor the "martyrs" killed
in the 1964 riots.
Although there is always a
danger of an unexpected outbreak
of violence, it is probable that
the anniversary will pass with
no incidents beyond the capacity
of the national guard to contain.
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SECRET
IRGENTINE PRESIDENT REORGANIZES CABINET
Argentine P.esident Ongania
has reorganized :iis cabinet,
ousting two members who had been
strongly and consistently criti-
cized by the nation's military
leaders.
Ongania too-, this step on
his own initiative, hoping to avoid
any impression tzat he was act-
ing under milita=-y pressure. He
subsequently reaffirmed, in a
year-end speech, his determin,a-tion
to keep the army out 6f politics.
Ongania asked for the resiq--
nation of all four cabinet min-
isters and their subordinate
secretaries following several
weeks of controversy within the
government over labor policy and
growing dissatis=action with the
indecisiveness o= Economics Min-
ister Jorge Salirnei and the pro--
Franco statement:3 of Interior
Minister Martine: Paz. These are
the two who were dropped. Foreign
Minister Costa Mendez and Social
Welfare Minister Petracca have
been reappointed and Transport
Secretary Antonio Lanusse, who
Led a strong facu.ion opposed to
conciliation with labor, was ap-
pointed to the p=-eviously vacant
post of minister of defense.
The reorganization should
help dispel idea,; that Ongania
was beginning to favor a fascist-
style government and should also
give the regime a more dynamic
image.
Ongania's new choices for
the economics and interior posts
in the cabinet are well qualified.
The new economics minister,
Adalbert Krieger Vasena, is a
highly respected economist and a
former minister of finance. The
new interior minister, Guillermo
Borda, served as a federal judge
during the Peron era and had been
appointed to the Supreme Court
by Ongania soon after the coup
last June which brought him to
power. However, Ongania's selec-
tion of Lanusse as defense minis-
ter may help perpetuate disagree-
ment within the government on
some issues.
The new cabinet will probably
act rapidly to resolve the labor
policy question and also to firm
up the 1967 budget, which should
have been ready for announcement
before the end of 1966. It ap-
pears that the generals are not
opposed to the new appointments
but are still impatient for the
government to implement some of
the policies promised by Ongania
in his public s eeches.
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TENSIONS RISE AMONG RURAL LABORERS IN BRAZIL'S NORTHEAST
Sugar-cane workers in Cabo
in Brazil's northeastern state
of Pernambuco have been on strike
since mid-December trying to
force employers to pay the legal
minimum wage and back wages. The
strike may well spread to other
sugar producing parts of this
region, where widespread poverty
and appalling social conditions
provide a fertile breeding ground
for discontent.
This strike is one of the
first among rural workers since
the change of government in 1964
neutralized Francisco Juliao,
his peasant leagues, and other
left-leaning groups trying to
exploit the misery of northeast-
ern workers. Conditions have
deteriorated for the sugar-cane
cutters under the Castello Branco
regime. Landowners have moved to
reassert their complete control,
at times by the traditional method
of hiring gunmen to intimidate
recalcitrant workers. Attempts
to demand fair wages have been
stifled, and union leaders have
been advised that military and
police authorities would regard
strikes as "subversive agita-
tion.,,
The Cabo union is supported
by--although not affiliated with--
the large Pernambuco Federation
of Rural Workers, whose leaders
claim that nearly 99 percent of
the state's rural workers do not
receive the minimum wage. Father
Paulo Crespo, an aggressive and
influential priest - labor or-
ganizer, has attacked the gov-
ernment for failing to alleviate
the rural labor crisis. He has
denounced employers, saying that
conditions now are worse than in
the time of slavery. He warned
that the government and employ-
ers are running the risk of cre-
ating desperate, starving mul-
titudes--hunger is an increasing
problem--and predicted that
strife would result.
to prevent labor unrest from
spreading throughout the north-
A few employers apparently
are hiring scab labor to try to
break the strike, and the govern-
ment has promised to use the po-
lice to prevent this practice.
Some owners, on the other hand,
may secretly be attempting to
spread the strike in order to
convince the government that they
need higher sugar prices before
they can pay minimum wages or meet
expenses. Some undoubtedly hope
that the government will be
forced to raise prices in order
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