WEEKLY SUMMARY

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CIA-RDP79-00927A005700070001-4
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RIPPUB
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S
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34
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December 16, 2016
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November 29, 2004
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1
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Publication Date: 
April 7, 1967
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SUMMARY
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Approved Foc&lease 2005/04/22: CIA-RDP79-009278A'0057009.70001A becrei DIRECTORATE OF INTELLIGENCE WEEKLY SUMMARY RETURN TO REColkiisiNTk IMIaDIATELY AFTER IJSE JOB 71"- 7 2) BOX Secret 7 April 1967 No. O.84/67 Approved For Release 2005/04/22: CIA-RDP79-00927A005700070001-4 25X1 25X1 25X1 Approved For Release 2005/04/22 : CIA-RDP79-00927A005700070001-4 Approved For Release 2005/04/22 : CIA-RDP79-00927A005700070001-4 Approved ForZelease 2oo5m41gEO4RDp79-oo9214203570007Ooo1 -4 CONTENTS (Information as of noon EST, 6 April 1967) Far East e THE WEEK IN PERSPECTIVE 1 VIETNAM The Viet Cong have launched a major military-political campaign against the South Vietnamese Government's pacification program. In Saigon, political interest is focused on the selection of candidates for the presidency and the upper house of the legislature. Soviet shipments of economic aid to Hanoi have in- creased significantly USSR AND MALAYSIA AGREE ON TRADE AND DIPLOMATIC TIES The pact results from Moscow's search for additional contacts in Southeast Asia and from Kuala Lumpur's efforts to facilitate its rubber trade with the USSR and to improve its image in Asia and Africa. PEKING MOUNTS NEW CAMPAIGN TO DISCREDIT LIU SHAO-CHI The stage is apparently being set to strip the 69-year- old Chinese Communist chief of state of all his formal positions. This is one of many signs of continued dissension over the future course of the Cultural Rev- olution. SKCRET Approved Foll'IUrease 8iaiii:179-009Abb59(30070001-4 3 6 7 25X6 8 25X1 Ilk Approved For Release 2005/04/WCAtRDP79-00927A005700070001-4 Europe THE WEEK IN PERSPECTIVE 11 EASTERN EUROPEAN DIPLOMATIC ACTIVITY A number of Eastern European countries are making almost frantic efforts to slow down West Germany's campaign to normalize relations as well as create a facade of unity before a conference of European Com- munist parties opens on 24 April. STATUS OF THE SOVIET ECONOMIC REFORM Moscow's sparse reporting on the reform's progress suggests that difficulties continues to outweigh achievements. YUGOSLAV "DEMOCRATIZATION" GAINS MOMENTUM After dismissing his conservative heir-apparent Ran- kovic last year, Tito accelerated his program to de- centralize economic and political authority in Yugo- slavia and loosen the party's tight control. Changes made since then have aggravated the opposition to this program and created some ',problems which endanger achievement of its goals. Tito, however, continues his policy of cautious, moderate change. (Published separately as Special Report OCI No. 0284/67A) Middle East - Africa 12 13 THE WEEK IN PERSPECTIVE 15 RIGHT-WING TAKE-OVER CHURNS GREEK POLITICAL CRISIS The King's chances to gain parliamentary approval for the right-wing government he has appointed appear slim, and additional developments can be expected as the struggle for power continues. SECRET Approved Foe'ReltaSe 20M1ti41/22z: CiA1441511179-00k7A0D5M0070001-4 16 Approved For-aelease 2005/041,22Calik:RDP79-0092M505700070001-4 SOVIET-EGYPTIAN ECONOMIC RELATIONS PROBABLY REVIEWED Soviet Foreign Minister Gromyko made a hasty, unpub- licized visit to Cairo last week amid signs that Egypt's economic problems may have created some strain in Soviet-Egyptian relations. VIOLENCE ERUPTS IN ADEN Violence broke out as expected when the UN mission arrived but, despite nationalist predictions, did not get out of hand. The general strike, however, was effective. NEW STATE-LEVEL DEFEATS FOR INDIA'S CONGRESS PARTY The fall of the Congress government in the key state of Uttar Pradesh highlights continuing political in- stability on the state level, although the party re- tains its slim majority on the national level. ANGOLAN INSURGENCY DRAWS PORTUGUESE REPRISAL Insurgency along Angola's main railroad by Angolan nationalists operating out of the Congo (Kinshasa) and Zambia has prompted the Portuguese to suspend transit trade in an effort to force those two countries to clamp down on the insurgents. NIGERIAN BRINKMANSHIP CONTINUES Both Eastern governor Ojukwu and Commander in Chief Gowon continue their economic skirmishing, and there are new indications Ojukwu is thinking in terms of ultimate Eastern independence. Western Hemisphere 17 18 L9 20 22 THE WEEK IN PERSPECTIVE 23 CHILEAN VOTERS REBUFF PRESIDENT FREI Frei failed to get the vote of confidence he requested in the 2 April municipal elections. His Christian Democratic Party received only 36 percent of the votes, but remains the largest party in the country. BOLIVIAN GOVERNMENT OVERREACTS TO GUERRILLA ATTACK Shaken by the 23 March guerrilla attack on an army patrol near the southeastern town of Camiri, the gov- ernment is hastily attempting to organize counterin- surgency operations. SEGRET Page iii WEEKLY SUMMARY 7 Apr 67 Approved For Release 2005/04/22: CIA-RDP79-00927A005700070001-4 24 25 Auk Approved For Release 2005/04/9t:04NRDP79-00927A005700070001-4 CRACKS IN THE MEXICAN MONOLITH The controlling Institutional Revolutionary Party (PRI) is selecting candidates for congressional and some gubernatorial elections in July in which an overwhelming PRI victory is certain. There are signs, however, that the increasingly sophisticated Mexican electorate wants more representative leader- ship. LABOR RESISTANCE TO ARGENTINE GOVERNMENT POLICY WEAKENS Various factions are competing for the leadership of the General Confederation of Labor, and the Onaania government is taking advantage of the disunity in worker ranks to impose wage controls designed to com- bat chronic inflation. SECRET Page iv WEEKLY SUMMARY 7 Apr 67 Approved For Release 2005/04/22 : CIA-RDP79-00927A005700070001-4 Approved For Release 2005/04qh-WIDP79-00927A848700070001-4 FAR EAST There are new signs of sharp dissension within the Chinese leadership over the future course of the Cultural Revolution. After two months of marking time, forces loyal to Mao Tse-tung have renewed their attacks on Chief of State Liu Shao-chi and party General Secretary Teng Hsiao-ping. Several leading members of the Military Affairs Committee have also been denounced by militants responsive to Mao and Lin Piao. The resurgence of pro-Mao forces, following a conference of central committee members last month, suggests an attempt to resume the purge of Mao's op- ponents and to reverse the policies associated with Chou En-lai--particularly those aimed at subduing militant Red Guards and Red Rebels. The attacks on Liu, Teng, and key military leaders may signal a drive by pro-Mao militants to divide the coalition of forces which obliged the Mao faction to retreat in late January and February. The Vietnamese Communists are maintaining their intransigent stand on negotiations. Despite unusu- ally heavy casualties and the failure of three regi- mental-size attacks against US forces engaged in Op- eration JUNCTION CITY, there are no signs of any de- cline in Communist determination to prosecute the war. The first round of local elections for South Vietnam's village councils was held without serious incidents or Viet Conq interference. SECRET Approved FoPrIeeleaL 2001Wil: EM79-0073habOgi00070001-4 Oft, SECRET 411i, Approved For Release 2005/04/22 : CIA-RDP79-00927A005700070001-4 Savannakhet T HAILAND NORTH VIETNAM .Quang Tri Sepone? Lou or,r; TRi ?Pakse ?Saravane sn- '1/4? CAMBODIA N ^ ?Da Nang 0LaANG NAM QGANG TIN Chu Lai .AttoPou )4) < M Kontum? j Peku itt% K Then "ON .Quang Ngai HG NGAI R!NH DINH - 'An Khe DA R LA OPERATION ?Ban Me idNCTION CITY Thuot 000 LONG ? Nhon PHU 1f TN .Tuy Hoa QUAINc; r EN \ Da Lat? +C. LAM GONG A.., -"LON G i ...-- . .....-...-)Th, "Phan Rang ? N t N H (I, J...., I "',..?.... Th N H KHANH HOA ?Nha Trang L.,.) CAM RANH THU AN -"":11h4Vinh . THAN 8114 Hien 12:1" Y , . . ? Hoa 1 ? \ Roan Loc N 'N PHONE,\rUpN tONG 1"111' I'VEI KIEN GIANG COL:ONG r"IEN/BA COVEN ILO ?Vinh?ong /OEN HOA ho V:NH H AN N XLIVEN Rung Tau SOUTH VIETNAM 0 MILES 100 Approved For Release 2005/04/22 : CIA-RDP79-00927A005700070001-4 SECRET Approved For Release 2005/04/22 : CIA-RDP79-00927A005700070001-4 SECRET VIETNAM Following the Communists' un- successful and costly regimental attack of 1 April--their third in two weeks against US forces con- ducting Operation JUNCTION CITY north of Saigon--military activ- ity during the week consisted mainly of smaller scale but fre- quently intensive clashes in widely scattered areas of the country. Recent patterns of Com- munist activity, meanwhile, ap- pear to bear out indications that the Viet Cong have decided to launch a major campaign of mili- tary and political harassment against the Revolutionary Develop- ment (RD) program. reflect increas- ing Viet Cong concern and frus- tration, particularly since the fall of 1966, with pacification measures and military operations designed to erode popular support for the Communists. Late last year the Peoples Revolutionary Party (PRP)--the Communist party in the south and the political control apparatus of the Viet Cong--apparently decided on sub- stantially increased levels of guerrilla warfare and civilian proselyting to consolidate Viet Cong holdings in the countryside and reverse the RD successes. Recent Viet Cong and Hanoi propaganda broadcasts have urged Communist armed forces to an- nihilate US-rebel pacif_cation groups" and announced the estab- lishment of an award sytpm fn encourage this effort. the Communists plan to recruitand infiltrate a large number of key urder- ground party workers into ham- let and village administrations, to induce peasants to obstruct pacification, to propagandize the RD program as an American- sponsored activity, to initiate large-scale attacks on areas where RD is enjoying suc:ess, and to direct selective acts of terrorism against RD team work- ers in an effort to harass and demoralize the workers and in- timidate the population. The number of Viet Cong - initiated incidents targeted against the RD program thus far in 1967 already substantiatly exceeds the total number re- ported for all of 1966. During the first quarter of 1967 nearly 200 enemy attacks against RD team workers were reportel, 105 of which occurred during the pe- riod 1-26 March. one of the over-all ?bled- tives of a planned Communist summer offensive in Quang Nam, SEC R El' Page 3 WEEKLY SUMMARY 7 Apr 67 Approved For Release 2005/04/22 : CIA-RDP79-00927A005700070001-4 25X1 25X1 25X1 25X1 25X1 Approved Foto Release 2005/04/22 : CIA-RDP79-0092ft005700070001-4 SECRET Quang Tin, and Quang Ngai prov- inces, is to prevent expansion of the RD program in these three southernmost provinces of I Corps. This campaign reportedly will begin on 15 April and continue through September. Election Plans in South Vietnam With South Vietnam's con- stitution now in effect, politi- cal activity is centering in- creasingly on elections to fill out the institutional framework. Already, in the absence of any real national cohesion or gen- uine political organizations, traditional regional and religious considerations appear to be in- fluencing the political maneuver- ing for presidential and vice- presidential tickets in the ex- pectation that such factors will weigh heavily in the elections. The only firm candidacy among prominent civilians in the ?residential race thus far is that of Constituent Assembly chairman Phan Khac Suu, an elderly southerner of the Cao Dai sect and a former chief of state. Suu's general area of strength is the populous delta, and his slate will probably gain addi- tional votes on the popularity of his running mate, Dr. Phan Quang Dan, among northern ref- ugees in the Saigon area. How- ever, former premier Tran Van Huong, another prestigious south- erner, is expected to announce his candidacy soon, and Suu and Huong may well end up splitting the southern regionalist vote. Dai Viet party leader Ha Thuc Ky is another apparent civilian candidate, but his popular base is largely limited to the two northernmost provinces. He may ultimately decide to trade his support for a spot on some other candidate's ticket. Fencing for the military's presidential nomination con- tinues between Chief of State Thieu and Premier Ky, with Ky slightly ahead thus far. Pub- licly, Ky has stated on several occasions that he would defer to Thieu's candidacy, thus in effect putting pressure on Thieu to declare himself. Thieu, who may have some doubts about his chances in any case, prob- ably would far prefer to ac- cept a nomination by the mili- tary than to announce his candidacy on his own. Privately, maneuvering undoubtedly con- tinues on both sides, although Thieu's natural reticence in public may be working against him behind the scenes as well. The military hierarchy appears hopeful that Thieu and Ky will resolve the question themselves. If the two men cannot agree soon, however, other senior gen- erals may have to decide the matter. In any event, the over- riding consideration in the SECRET Page 4 WEEKLY SUMMARY 7 Apr 67 Approved For Release 2005/04/22 : CIA-RDP79-00927A005700070001-4 Approved For Re-tease 2005/04/22 : CIA-RDP79-00927A0415,700070001-4 sEcRgr process continues to be the pres- ervation of military unity. Both Thieu and Ky appear well aware that such unity will de- pend largely upon the degree of support that the one who does not run offers the nominee. Pro- viding that military unity re- mains intact and that an accept- able civilian running mate is selected, the military candi- date will be in an extremely strong position in view of his connections with the only real national organization and his access to other governmental machinery. On the legislative side, potential candidates are already stirring for the upper house elections--which will be held concurrently with the presiden- tial election on 1 September. Constituent Assembly deputies, members of the Peoples - Armed Forces Advisory Council, and politicians currently out of office are reportedly maneuver- ing to form ten-man electoral slates as called for in the con- stitution. Balloting will be on a nationwide, at-large basis, and the winning slates will com- prise the 30- to 60-man Senate. The lower house election, set for 1 October, has not yet at- tracted as much attention, but many Constituent Assembly mem- bers apparently have their eye on this race. The first step toward im- plementing local reforms took place on 2 April with the elec- tion of some 219 village coun- cils throughout the courr_ry. Voter turnout was high, urd lit- tle Viet Cong counterelection ac- tivity materialized. Hovever, US officials remain concerned about postelection securty for the successful candidates. Soviet Aid Deliveries to Hanoi Soviet shipping to North Vietnam increaspd 25X1 propaply in response to agree- ments reached last fall on addi- tional economic aid. Over-all shipments of commercial cargo were up almost 70 percent over the same period of 1966. Pe- troleum shipments were up some 25 percent over the average delivery rate last year, and deliveries of fertilizer, transportation and construction equipment, and machinery and spare parts also increased. Part of the larger aid deliv- eries was in response to ur- usual North Vietnamese fouc re- quirements. During this pe- riod the USSR delivered 3G,000 tons of grain products, con- pared with only 6,000 in all of 1966. an unusi.ally large number of Soviet ships called at North Vietnamese ports in the first three months of the year--63 compared with a total of only 122 for all of 1966. This reflects the use of smaller ships drawn from the Soviet Far Eastern Fleet. SECRET Approved FoPrWleaie 2005th/212Y: 0:51WRDP79-0007A1)051070070001-4 25X1 25X1 Oh, ANA Approved For Release 2005/04/22: CIA-RDP79-00927A005700070001-4 SEC R1,1' USSR AND MALAYSIA AGREE ON TRADE AND DIPLOMATIC TIES An agreement signed early this week between the USSR and Malaysia on trade and diplomatic ties results from Moscow's search for additional contacts in South- east Asia and from Kuala Lumpur's efforts to facilitate its rubber trade with the USSR and to improve its image in Asia and Africa. The trade agreement provides for the establishment in the Ma- laysian capital of a ten-man So- viet mission, three members of which will have diplomatic im- munity, and provides for a recip- rocal Malaysian mission in Mos- cow. The missions will constitute the first permanent exchange of representation of any sort be- tween the two countries. No date is set for the establishment of the missions, but Kuala Lumpur reportedly does not expect the first Soviet representatives to arrive before July. Although the text of the agreement has not been published, it provides for "most favored nation" treat- ment without setting any levels of trade. The communique also announced agreement in principle to exchange diplomatic representation. Ma- laysia presently does not have diplomatic ties with any Commu- nist country, but there are sev- eral incentives for this change in policy. The European Commu- nist nations comprise the prin- cipal market for Malaysia's rub- ber at a time when world rubber prices are falling--last year the USSR was its largest single customer. The Malaysians prob- ably also believe that these moves will improve their image among nonaligned nations who have been critical of Kuala Lum- pur's Western orientation. The agreement marks a sig- nificant achievement in Moscow's long-standing effort to establish contacts in Southeast Asian coun- tries where it has not tradition- ally been active. In April l9ffi it signed a trade agreement with Singapore with provisions simi- lar to those in the Malaysian agreement. Singapore subse- quently agreed to accept a one- man TASS office. The Soviets have also been seeking a TASS office in Kuala Lumpur, and the latest agreement may encourage them to renew this request. Last month Soviet and Phil- ippine representatives held talks in Bangkok concerning the possi- ble initiation of trade, and an unofficial Philippine mission is scheduled to leave for Moscow later this month. Although Ma- nila has thus far refused to establish either trade or diplo- matic relations with any Commu- nist country, the Malaysian agreement may inluence a change ( in this policy. 25X1 SECRET Approved Fog(Release 21105/047221-itafAIRDP794)0927A6C75700070001-4 25X6 Approved For Release 2005/04/22 : CIA-RDP79-00927A005700070001-4 Approved For Release 2005/04/22 : CIA-RDP79-00927A005700070001-4 Approved Foy! Release 2005/04/22 : CIA-RDP79-0092,4005700070001-4 SECRET PEKING MOUNTS NEW CAMPAIGN TO DISCREDIT LIU SHAO-CHI The stage is apparently be- ing set in Peking to strip Liu Shao-chi of all his formal posi- tions. Until August 1966 the 69-year-old chief of state was number two man in the party. Teng Hsiao-ping, party general secretary, will in all likeli- hood be removed with Liu, and other high officials may be in- volved. These developments fol- low a reportedly stormy central committee work conference con- vened in mid-March, and appear to reflect continuing dissension in the leadership. Demonstrations against Liu have spread to all parts of China. Foreign newsmen in Peking report that since 2 April the streets have been choked from morning to night with hundreds of thou- sands of demonstrators. March- ing in well-disciplined columns the crowds carried portraits of Mao and chanted "down with Liu Shao-chi, Teng Hsiao-ping, and Tao Chu." Tao was fourth in the hierarchy established at the central committee plenum last August, but has been in disfavor since December. It now is almost certain that Liu and Teng lost all sig- nificant authority in August. They have been heavily attacked through posters, Red Guard news- papers, and rallies since Decem- ber, but the official campaign against them began with a 30 March broadcast of a Red Flag attack on Liu's book How To Be A Good Communist. This key party document--written in 1939 and re- published in 1962--now is labeled a "poisonous weed." On 31 March Peking broadcast a more direct and savage Red Flag attack which described Liu as a "vampire," a "parasite," and a "Quisling" and demanded that this "Khrushchev- like individual ambitionist and schemer" be thoroughly discred- ited and removed. Liu is being accused of at- tempting to compromise with Chiang Kai-shek in the 1930s and to strike a political bar- gain with the US in 1949 in ex- change for economic aid. He is also accused of advocating ex- tension of privately farmed plots in rural areas, detente with the US and the Soviet Union, and reduced assistance to other "peoples' revolutionary strug- gles." The official charges, without directly naming Liu, state that he has always op- posed Mao's thought and "peddled" his own writings--in contrast to Vice Chairman (and present number two) Lin Piao, who has always called on his soldiers to study Chairman Mao's works. The charges against Liu are obviously fabricated, as his statements and actions during the past 17 years have shown him to be a staunch supporter of Mao's policies. One purpose clearly is to blacken Liu's name even more and to justify his ouster. Another may be to rekindle enthusiasm for the SECRET Page 8 WEEKLY SUMMARY 7 Apr 67 Approved For Release 2005/04/22 : CIA-RDP79-00927A005700070001-4 Approved For ReFosse 2005/04/22 : CIA-RDP79-00927A0W00070001-4 SECRET Cultural Revolution. Certain of the accusations, such as exten- sion of the private agricultural plots, have been standard ones leveled against unnamed "class enemies" for several years. Chou En-lai himself made these charges in an address given in December 1964 at a major ses- sion of the National People's Congress. In fact, however, Chou, but not Liu Shao-chi, was associated with these policies when they were in vogue in 1961 and 1962. Chou, however, so far has been able to retain a firm grip on third place in the leader- ship. In recent weeks prominent Red Guard groups in Peking have been aiming moderate to heavy fire at several of Chou's sub- ordinates, but have exempted Chou from criticism. Current official denuncia- tions of Liu accuse him of hav- ing worked "in collusion with another top party person in au- thority taking the capitalist road"--an obvious allusion to Teng Hsiao-Ping. The protracted campaign to remove the two men may best be explained by dis- sension over who is to be impli- cated with Liu and Teng and brought down. Many senior party figures have been closely as- sociated with Liu and Teng, who had dominated the party appara- tus for more than a decade be- fore their fall last Auuust. The campaign againEt Liu and Teng is apparently spilling over into new poster attacks by Red Guard militants against top-level military men and government of- ficials. On 5 April three key military figures who hao seemed to be in good standing--Hsu Hsiang-chien, Yeh Chien-ving, and Nieh Jung-chen--came inder fire. Hsu and Yeh were pub- licly affirmed as vice chairmen of the party's powerful vIAAtary Affairs Committee on 25 Aarch. New attacks on Foreign Minister Chen Yl and Finance Minister Li Hsien-nien for pushing tne "Liu- Teng line" have appeared. De- spite this, Chen has corn_nnued to perform his public duties and, with his usual aplout, told a group of visiting Japa- nese on 3 April that he wel- comed criticism and was not worried about his personal po- sition. Rallies and poster Ettacks during the past week appcar to be part of a major effort by militant elements in the lead- ership to reverse the slowdown in the Cultural Revolution noted during February and early March. All signs, however, point to continued dissension among leaders in Peking over the future course of the all- tural Revolution.1 25X1 SECRET Approved Foip131#as 2005 C- CWRI1QP79-00927A005700070001-4 mmARY 7 Apr 67 Aik Approved flio*t. Release 2005/04/22,: CIA-RDP79-00927A005700070001-4 SECRE1 SECRET Approved For RelHse 29E0pR442%iSEIA-RDP79-009217A095700070001-4 Page Approved For Release 2005/04/4.r WETP79-00927AW5700070001-4 EUROPE East European diplomatic activity continued apace this week but produced no evident departures from established positions on relations with West Germany or on attendance at the conference of Euro- pean Communist parties scheduled for late April. The numerous bilateral consultations serve pri- marily to prevent additional rents in the already ragged fabric of East European unity, at least in advance of the conference. Moscow appears to be somewhat disconcerted by press reports of US assurances to Bonn that the draft nonproliferation treaty would not bar German participation in a future European nuclear force. Recent Pravda and Izvestia articles have asserted that such assurances undermine "the spirit an pur- poses of the proposed treaty" and create new ob- stacles rather than clear the way to an agreement. Although the Soviets have not said an agreement so construed is unacceptable, the publicizing of this interpretation in the West causes difficulties for them, given their general posture vis-a-vis West Germany and the prospect of demands on the USSR by some Warsaw Pact countries for a greater role in nuclear defense matters. In France, the 261-214 vote which reaffirmed Chaban-Delmas as president of the National Assembly suggests that the Gaullists will have little trouble finding parliamentary support for government pro- grams. The full extent of government control over the assembly will not be clear until the presidents of the six standing committees are elected in the next few days. SECRET 25X1 Approved F(iIA:leal'e- 200W: 811-11g2Y79-0d9bM(000070001-4 Approved Folkelease 2005/94/22+% MA-RDP79-009M005700070001-4 S EU K. P, EASTERN EUROPEAN DIPLOMATIC ACTIVITY The heavy round of diplo- matic activity in Eastern Europe that began in February continues unabated. It has two related purposes: to slow down West Ger- many's campaign to normalize its relations with the Eastern Euro- peans and to create a facade of unity in Eastern Europe before the conference of European Commu- nist parties which is to open at Karlovy Vary, Czechoslovakia, on 24 April. This week, Poland's Gomulka went to Bulgaria to renew a treaty of friendship and mutual assist- ance?almost a year before it was due to expire. The treaty links Sofia with treaties Warsaw had already signed with East Germany and Czechoslovakia, and with one between East Germany and Czech- oslovakia. It is intended to forestall any early bid by Sofia for diplomatic relations with Bonn. Bulgaria has in addition agreed to renew its friendship treaty with the USSR which is also nearly a year from expira- tion. While Sofia bowed to the pressure of its allies despite an obvious interest in relations with Bonn, efforts to get Hungary into the treaty network have had no visible success. The Russians probably made the first represen- tations when Janos Kadar visited Moscow in February. Gomulka paid an official visit to Budapest in early March and East German For- eign Minister Winzer took up the quest late in the month. The Hungarians have appar- ently made no promises and may be bolstered in their resolve by the visit later this month of Rumania's Ceausescu--who started things by establishing relations with Bonn virtually without conditions in January. However, Budapest has agreed to further talks with the East Ger- mans. Meanwhile, preparations for the Karlovy Vary conference have run into some discord. Several parties--particularly the Ital- ian--reportedly view the origi- nal uocuments that the French and the Poles prepared for the meeting as too rigid. Czecho- slovak party secretary Koucky's unannounced visit to Moscow on 30 March probably was to smooth the way for appointing the Ital- ians and Czechs to a redrafting committee. The Poles and the Italians have been entrusted with the task of persuading East Europe's twin mavericks--Rumania and Yugoslavia--to send delegations to Karlovy Vary. Those countries, however, appear to be lobbying in their own behalf. Both Tito and Ceausescu, have conferred with leaders in Moscow since February and with each other. High-level Yugoslav delegations have visited Warsaw and Bucharest, and Ceausescu, as noted, will soon visit Budapest. There are rumors of indeci- siveness in Bucharest, but there seems little likelihood that either Rumania or Yugoslavia will send of- ficial delegations. Bucharest may in the end decide to send observers, however. SECRET ApprovedWPRelliase NOF5M-#2iFlea-VDP79-.606HA6075700070001-4 25X1 Approved For Rojease 2005/04/2v?1epP79-00927/405700070001-4 STATUS OF THE SOVIET ECONOMIC REFCRM The reform movement in Soviet industry, nearing the halfway mark of its initial phase (1966-68), has so far been only a partial success. While such an evaluation now is necessarily qualified because Moscow's report- ing has been sparse, the very lack of data suggests that the program's difficulties continue to outweigh its achievements. Implementation of the reform movement resumed early this year after a moratorium during the last quarter of 1966 on the transfer of enterprises to the new system of management and in- centives. The number of converted enterprises was scheduled to to- tal about 2,500 by the end of March, although less than a third of this number had been trans- ferred by the end of 1966. The schedule calls for half of all industrial enterprises to be working under the new system by the end of 1967, with the re- mainder to be converted during 1968. The reform is also being extended to the nonindustrial sectors of the economy on an as yet unspecified schedule. Trans- portation, communications, and service enterprises have already been affected, and recent press discussion indicates that several hundred state farms will be re- organized according to the new principles. The Soviets claim that en- terprises transferred to the new system last year considerably outperformed industry as a whole in terms of sales, profit, and labor productivity. This coes not necessarily vindicate the reform principles, however, since the converted plants were Ehove average in efficiency in -te first place. Moscow has been silent on how their 1966 pEr- formances compared with p:-Evious years. A large part of the reformed plants' good showing last year probably came from their mere efficient use of land, labor, and capital. To the extet that the new principles reduce the inefficiency of the old s.7E;tem-- which emphasizes maximum output with few penalties for the wasteful use of resources--they will bring about a temporarily accelerated rate of growt'i_ The reform movement ',,111 take a major step forward cn July when new wholesale prices are adopted for heavy indistry. Comparable revisions went _nto effect early this year for light industry. The present pha:;e of the Soviet economic reform, how- ever, is just a beginning, and the basic tenets of the Spviet economic system--central planning and administratively set prices-- remain unaltered. Bureaucratic interference and obstrucLionism from the banks continue tp com- pound the problem of conv2rting part of Soviet industry tD the new system while the majority of factories operate on theid principles. The long-term re- sults thus will be determined by actions taken in subseauenT: years. 25X1 SECRET Page 13 WEEKLY SUMMARY 7 Apr 67 Approved For Release 2005/04/22 : CIA-RDP79-00927A005700070001-4 4016 Approved For Release 2005/94/22J CJA-RDP79-00927A005700070001-4 SECRE SECRET ApprovedPWRglase `5f)661oiii-IvittNIRDP792061/Aba5700070001-4 Approved For Release 2005/0426,ay DP79-00927/4085700070001-4 MIDDLE EAST - AFRICA The quarterly rotation of Turkish troops on Cyprus--usually an occasion for incidents--went off smoothly. This was a boon to Athens because the Greek Government is currently embroiled in yet an- other confrontation between the King and the Papan- dreous. India's Congress government also is suffer- ing setbacks having now lost control of all but seven of the 17 state legislatures. Its problems are exacerbated by the surprising unanimity of the opposition parties in putting forth candidates for the presidency and vice presidency, an act which caught Congress Party leaders off balance. Army machinations continue to plague three of West Africa's military regimes. In Dahomey, younger army officers are threatening to impose a supreme military committee on the ineffective Soglo govern- ment. Togolese Army Chief of Staff Eyadema has stated privately that he would assume the title of chief of state on 13 April, giving up any idea of early elections. Sierre Leone's new military re- gime is off to a shaky start with nascent factional- ism within he ruling council and signs of restive- ness among junior army officers. There have been recent movements of Tanzanian troops and military supplies to the Mozambique bor- der, probably related to the anticipated renewal of activity by Mozambique guerrillas. Since insurgency began in late 1964, the guerrillas have mounted "of- fensives" each spring at the end of the rainy season. In Congo (Kinshasa), Mobutu is talking about a mas- sive reorganization of his parliament and extensive constitutional changes. 25X1 SECRET Approved FoP4q14easle52005ftlfill2y CURRINRT9-0082W057A0070001-4 doiN Approved For Release 2005/04/22 : CIA-RDP79-00927A005700070001-4 SECRET RIGHT-WING TAKE-OVER CHURNS GREEK POLITICAL CRISIS King Constantine's naming of National Radical Union (ERE) leader Kanellopoulos as premier early this week capped two weeks of intense political maneuvering in Athens. The King and the new premier are trying to obtain a parliamen- tary vote of confidence and the passage of a simple proportional electoral bill, but the chances for success are slim. All of the other principal parties have de- clared they will vote against the new government when it goes before Parliament on 12 April. Failing a vote of confidence, Kanel- lopoulos is empowered to dissolve Parliament and to head a service government to supervise elections after a 45-day campaign period. The new cabinet is composed wholly of ERE deputies, many of whom support the self-exiled ERE strong man and former premier Constantine Karamanlis, who has had his differences with Kanel- lopoulos in the past. This ap- parent detente between the two party leaders could be short- lived. Many ERE deputies are opposed to early elections because they fear their chances for re- election are slim. Others have long expressed the view that some form of dictatorship is the only solution that can ensure the fu- ture of "democracy" in Greece. Although it appears that the King is still aiming for elec- tions in May, his installation of Kanellopoulos has once again re- vived the "monarchy" question. Center Union (EK) leader George Papandreou has portrayed the King's action as a "grave scandal" and insists the "universal dis- approval" of Kanellopoulos should persuade him to resign and permit the installation of an impartial service government to hold honest elections. Papandreou's son Andreas, the King's chief oppo- nent, has taken his usually bit- ter stand and charged that the King has lost forever the chance to reconcile himself with the Greek people. Public reaction to events so far has been generally mild, but there have been some student demonstrations. However, the EK and the crypto-Communist United Democratic Left can be expected to step up their antigovernment protests, and serious trouble could develop between the demon- strators and the security forces. Kanellopoulos has promised swift police action if violence does occur. With the confidence debate not scheduled to begin before next week, the protagonists may have a short breathing spell. However, action is sure to step up at that time as the grappling for position continues. Regard- less of the outcome of the vote, the King will almost surely face new hurdles before the elections. 25X1 SECRET Approved For Release 2005/04/22 : CIA-RDP79409,27A005700070001-4 Page 1b WEEKLY SUMMARY Approved For Rejease 2005/W krA.Ai-RDP79-00927A4K)5700070001-4 SOVIET-EGYPTIAN ECONOMIC RELATIONS PROBA Both Moscow and Cairo have been unusually tight-lipped about Foreign Minister Gromyko's visit to Egypt last week. The visit seems to have been arranged on short notice and took place amid signs that Egypt's economic prob- lems may have created some strain in Soviet-Egyptian relations. The Soviet foreign minister's arrival was coincident with the presence in Cairo of a delegation from the International Monetary Fund (IMF), which has been de- manding stringent economic reform before considering any further assistance to Egypt. His visit also overlapped that of a high- level Soviet economic delegation seeking to adjust the Soviet aid program to conform with Egypt's latest cutback in development plans. The latter delegation's only significant decision was to allocate about $161 million from earlier Soviet credits for expan- sion and new construction at the steel complex in Helwan which have been under consideration for a number of years. Moscow has shown extreme re- luctance in assuming the responsi- bility for bailing Egypt out of its economic difficulties and probably is disquieted by Nasir's failure to heed Soviet advice. A Soviet economic advisory group, invited last fall by Nasir, rec- ommended the adoption of an aus- terity program similar to but less stringent than the IMF's and urged Cairo to reach some compromise with the IMF. Meeting the requirements of the IMF is LY REVIEWED the key to obtaining some relief from Western creditors who are owed about $200 million in 1-ird currency in 1967 alone. Moscow probably also is dismayed by Nasir's recent with- drawal of Cairo's request ioi US wheat. The USSR has repeatedly stressed its reluctance to replace the US as a major supplier of Egypt's annual 2.5-million-ton import requirement. Although it is providing 250,000 tons of wheat with repayment under the bilateral clearing agreement, Moscow has of- fered to provide an additional 400,000 tons only if Cairo rays for it in hard cash or in commodi- ties outside the clearing acree- ment. France has imposed conditions just as severe, and Austra.ia, where Egypt now seeks whea7, is considering doing the same The unimformative communique' following Gromyko's visit merely mentioned that bilateral re3a- tions were discussed and dealt almost exclusively with Vietnam and general foreign policy mat- ters. The most topical foreign policy issue would have be?ri the situation in Aden. Moscow has not taken an active role in this is- sue but could be expected to voice its concern if it felt that Arab rivalries in the area might lead to a dangerous escalation of the Saudi-Egyptian confrontation. The omission of any reference to economic matters--which were undoubtedly covered--may indicate that talks in this sphere were troubled and inconclusive./ 25X1 SECRET 7 Approved F&Wleai 200eibiriz: eepib i9-00927AAtEA30070001-4 diek Approved For Release 2005/Q4/2Z: gIA-RDP79-00927A005700070001-4 K VIOLENCE ERUPTS IN ADEN Violence erupted in Aden, as expected, upon the arrival of the UN advisory mission, but despite nationalist predictions, the riots did not get out of hand. The general strike, however, was com- pletely effective. Each of the two main nationalist groups, the Front for the Liberation of Oc- cupied South Yemen (FLOSY) and the National Liberation Front (NLF), now seems to be directing its terrorist activity toward winning dominance over the other. Torrential rains on 1 April, the date scheduled for the arrival of the UN mission, and the subse- quent delay of its arrival until 2 April, appear to have helped dampen the violent reception planned by the nationalist groups. Discovery of large arms caches by the authorities just beforehand may also have reduced the casual- ties. Through 3 April, the of- ficial count was three killed and 24 wounded as a direct result of the skirmishes between terror- ists and British troops, but the final toll will undoubtedly run higher. The three-man UN mission-- composed of representatives of Afghanistan, Mali, and Venezuela-- is under the protection of some 2,500 British troops. The mission has announced that it intends to proceed with its investigations "irrespective of the situation." So far the FLOSY and NLF leaders have refused to see the mission while it is under British sponsor- ship. However, the mission plans to visit nationalist headquarters in Taizz, Yemen, in order to hear the views of the opposition lead- ers. This UN concession to the nationalists' demands may do little to assist their cause, because of the vicious rivalry between the two main groups. FLOSY claims that it is the sole representative of the South Arabian people; the NLF says that these people are represented by several nationalist groups, including it- self and FLOSY. Behind these surface issues, there is a deadly struggle for the postindependence dominance of South Arabian poli- tics and for unchallenged support by Nasir. Several times previously the two groups have used general strikes and terrorist attacks in Aden to mask assassination at- tempts against the leaders of the rival parties. Nationalist rivals are believed to have caused several casualties during the current demonstrations, in- cluding the death of Haydar Shamshir, a FLOSY leader. This has exacerbated animosities to the point where a FLOSY speaker is reported to have told a mass rally on 4 April that Shamshir's assassination could touch off civil war. FLOSY has called for a con- tinuation of the general strike through 10 April. The NLF opposes the extension and will distribute leaflets to this effect. 25X1 SECRET Approvicfnr Rii6sewaRig021/221V0A-RDP7-06117A605700070001-4 Approved For alease 2005/04/22c ;_ RCIAIRDP79-00927M05700070001-4 s EE NEW STATE-LEVEL DEFEATS FOR INDIA'S CONGRESS PARTY The fall of an 18-day-old Congress Party government in the state of Uttar Pradesh on 1 April highlights the continuing polit- ical instability on the state level resulting from India's February general elections. On the national level, however, Con- gress still retains its slim majority. The Uttar Pradesh government was the second Congress regime in two weeks to be toppled by defections from the party. Neigh- boring Hariana, whose Congress Party administration collapsed in a similar manner on 22 March, now has a new non-Congress coali- tion government led by the de- fectors. The same kind of coali- tion is expected to take power in Uttar Pradesh. The loss of Uttar Pradesh-- India's most populous state (about 85 million people) and once the major stronghold of Congress political power--was a jolting setback for the party. Congress now has majorities in only seven of the 17 state leg- islative assemblies, has failed to win control of Goa's local government, and is out of power in two other union territory legislatures. Non-Congress gov- ernments now control not only the two southernmost states but also those spanning the entire width of northern India and including some of the most heav- ily populated and productive areas of the country. The future, -.- stability of at least three more Congress state governments could be threatened by factionali3n and personality clashes. Several of the new non- Congress state governments s:on- tain built-in elements of in- stability. Only the Communist- dominated regime in Kerala, he regionalist government of Madras, and the conservative Swatantra- led coalition in Orissa have fairly good prospects of hanging together. Elsewhere the ncn- Congress coalitions are bond together mainly by their ccmmon desire to deprive Congress of ?????????10...P., Lk7,10 C.WARAT MAHARASHTRA MYSORE ANDREA PRADESH Madras INDIA Loco Governments Potty goveinment ruie" .ngress Putty government SECRET Approved ForWease-2005/61ialaWf4-009277Ag7C707070001-4 AIIlk Approved For Release 2005/04/22 : CIA-RDP79-009211A05700070001-4 S R ET power. One of these disparate coalitions, the leftist-dominated government of West Bengal, has been confronted with a major problem in maintaining law and order in the capital city of Calcutta due to communal conflict between Hindus and Sikhs. The recent rash of defec- tions from state Congress Party governments has touched off speculation that Congress' slim majority in the national Parlia- ment may soon disappear. So far, however, the malaise has been confined to the states where the premium for defection from the organized party is greatest-- leadership of an alternative government. This incentive is absent in New Delhi where the splintered opposition parties have not yet been able to forge a united opposition front to at- tract dissident Congress legis- lators. ANGOLAN INSURGENCY DRAWS PORTUGUESE REPRISAL Insurgency along Angola's principal railroad prompted the Portuguese in mid-March to suspend transit trade which is vital to the Congo (Kinshasa) and of im- portance to Zambia. Insurgents based in these countries appar- ently derailed three trains last month along the Benguela Railroad in eastern Angola. Both the Congo and Zambia are economically dependent on copper exports, and the Benguela Railroad has been the largest single carrier for the Congo and recently for Zambia. Zambia was forced in late March to compromise its policy toward the white regime in Rhodesia and to revert par- tially to rail routes through that country. The importation of needed goods over the Benguela Railroad is especially important to the Congo's Katanga region, and other import routes, including the Rhodesian Railways are al- ready clogged. If the Angolan line should remain closed for an extended period of time, the 25X1 cash economy of Katanga will de- teriorate sharply and Zambia would be faced with the decision to set aside its political prin- ciples and to make fuller use of the Rhodesian Railways. Lisbon is fed up with the private assurances and ambivalent policies of the Congo and Zambia in the past. The Angolan gov- ernor general admits that the Portuguese may be unable to pre- vent attacks on the railroad, but he is convinced they can ef- fectively hinder insurgent ac- tivity. Zambia has been most sus- ceptible to Portuguese pressure and has increasingly clamped SEC R ET Approvaqq::,r Fie1eas06681b4/22MMIIIVRDP7g-00027A005700070001-4 Approved For Re,lease 2005/04/21,WRI101379-00927A005700070001-4 CONGO Brazzaville DEMOCRATIC REPUBLIC Kinshasa OFTHECONGO TANZANIA A Lake Tanganyika Luanda 14GUELA P.R. Lobito Bengue ANGOLA MALAWI COPPERBELT ZAMBIA Lake Lusaka A Han tic SOUTH-WEST AFRICA (REP. OF 5.AF.1 Windhoek BOTSWANA Beira MOZAMBIQUE (PG RT Ocean Gaberones 66209 4-67 down on numerous nationalist groups over the past few months. The leader of the insurgent group responsible for at least one of the rail incidents claims that attacks on the Benguela Railroad were contrary to his instructions, and he hopes to prevent further incidents. However, he pointed out that it is virtually impos- REPUBLIC OF SOUTH AFRICA Pretoria? Mbab n renco Marques sible for Zambia to control its long border with Angola. The Congo, involved Ln dip- lomatic skirmishes with r'ortugal for several months, has )7et to face up to the drain on its econ- omy caused by the railroad shut- down and so far has done _Attie to curb the nationalists _n its area. 25X1 SECRET Page 21 WEEKLY SUMMARY 7 Apr 67 Approved For Release 2005/04/22 : CIA-RDP79-00927A005700070001-4 AlPk dank Approved For Release 2005/04Si/U22. ? CIA;RDP79-00927A005700070001-4 tREJ NIGERIAN BRINKMANSHIP The economic skirmishing be- tween Nigerian Commander in Chief Gowon and Eastern Governor Ojukwu has entered a phase of concrete but limited moves and countermoves. Both seem prepared to continue in this vein for some time, although there are new indications Ojukwu is thinking in terms of ultimate independence for his region. In partial fulfillment of his earlier threat to take con- trol of revenues generated in the region, Ojukwu issued an edict on 31 March requesting federal revenue collectors in the East to pass all payments directly to the Eastern government rather than to the federal account. The edict does not alter the ex- isting formula for allocating revenues among the regions nor does it touch the important oil revenues, which are mostly paid to the federal account in London. According to Eastern officials, the revenues collected under the new edict will be used to pay up arrears they claim the federal government owes, after which they will be remitted to Lagos as before. There are reports, however, that the edict is merely the first step in asserting full control over all revenues gener- ated in the East. Thus far the federal govern- ment's principal reaction to Ojukwu's edict has been to halt Nigeria Airways flights to the East. This move, which Lagos de- fends on grounds that Ojukwu has already sequestered airline rev- CONTINUES enue, will deny him any further income from this fairly lucra- tive source. Ojukwu is likely to use the flight ban to justify new anti- federal actions and will consider this one more reason why the East must operate more independ- ently. In what may be further preparation for moves toward eventual secession, Ojukwu is appealing to all Ibos--the East's major ethnic group--to return home. It is unlikely that the Su- preme Military Council would formally approve military action against Ojukwu or even a total economic blockade. Both the Western and Mid-Western governors have already opposed a proposal requiring East-bound shipping to call first at Lagos. In what is probably a contingency move, how- ever, federal forces along the border between the Eastern and Northern regions have been re- inforced in the past two weeks with several hundred men and some armored personnel carriers. Meanwhile the Ghanaian med- iators who last January managed to arrange a meeting in their, country of the feuding Nigerian leaders are continuing their ef- forts. Ojukwu has already agreed to another meeting in Ghana. Gowon, however, is reportedly re- luctant but will consult the other military governors. SECRET ApprovedP.greRe2ase 2w00g1/0W22SFaikkbP79-606.19,4075700070001-4 Approved For Ralease 2005/04,J7(jefDP79-00927111065700070001-4 WESTERN HEMISPHERE Inter-American officials as well as various ex- tremist groups are completing last-minute prepara- tions for the summit meeting in Uruguay from 12 to 14 April. Most of the foreign ministers and their subor- dinates assembling in Punta del Este for the foreign ministers' conference beginning on 8 April will stay on for the meeting of presidents. This preliminary meeting--which actually is the final session of the talks begun last month in Buenos Aires--has as its primary task the drafting of a preamble for the declaration to be signed by the presidents. The ministers may also make new efforts to come up with an acceptable text for an agreement renouncing ac- quisition of certain costly military equipment. It now seems virtually certain that the keenest topics for the summit talks will be Latin American economic integration and the terms of trade for the area's raw material exports. On the former issue, a fairly sharp dichotomy remains between nations like Brazil and Peru which favor a cautious subregional approach to a common market, and others which prefer a more rapid, area-wide approach. Most official and unofficial Latin American com- mentary on the eve of the conference--excepting, of course, the increasingly shrill Cuban and other ex- tremist propaganda--reflects a sober but guardedly optimistic attitude toward the chances for success. Security forces in Uruguay are bracing for more protest demonstrations and minor attacks on US prop- erty. Some Communist-inspired violence during the summit seems likely there and perhaps elsewhere but should pose no serious threat to the proceedings. 25X1 SECRET 7 Approved Fc W PrWeaL320005/Y 66,9-0092740V00070001-4 40111?,. Approved For Release 2005/04/22 : CIA-RDP79-00927A005700070001-4 S RE] CHILEAN VOTERS REBUFF PRESIDENT FREI President Frei did not re- ceive the vote of confidence he had requested from the Chilean electorate in the 2 April munici- pal elections. Piqued by the op- position-controlled Senate's re- fusal to permit him to visit the US and the failure of his consti- tutional reform legislation, Frei concentrated on the elections for the local councilmen. He cam- paigned vigorously throughout the country, urging voters to support members of his Christian Democratic Party (PDC) as a sign of approval of his administra- tion. The election results appear to bear out the opposition claims that a majority of the population opposes the Frei administration. The PDC received only 36 percent of the votes--a drop from its 42 percent in the 1965 congressional elections--while the Communist- Socialist Popular Action Front increased its total substantially. However, the PDC got more than twice as many votes as its clos- est rival and doubled the number of municipal posts under its con- trol. It thus obtained increased patronage opportunities and will also be able to improve its local organization, a well-known PDC weakness. The PDC's failure to repeat the success of its presidential and congressional campaigns was in part a result of normal dis- satisfaction with the actions of the party in power. Frei's eco- nomic stabilization program has hurt many sectors that are ac- customed to operating in an in- flationary situation. Further- more, Chile historically has had a multiparty political system. The presidential election of 1964 presented the Chilean elec- torate with a choice between Frei and the Communist backed pro-Castro Socialist Senator Salvador Allende. Many middle- class Chileans, who are essen- tially conservative, voted for Frei as the lesser of two evils, and a good deal of his success carried over into the congres- sional elections in 1965. The municipal elections, however, afforded voters a choice among a number of candidates, and many returned to the National Party, an amalgam of the two traditional conservative parties Frei's congressional opposi- tion probably will become more intransigent as a result of the elections. The left wing of the PDC, which has accused the government of losing its revo- lutionary fervor, may attempt to capitalize on Frei's setback to gain control of the party at its national congress later this year. 25X1 SECRET Approva ?Or Fieleaseillf0W4/EIWXRDP7i-06074C705700070001-4 Approved For Release 2005/04/414f47P79-00927A4005700070001-4 BOLIVIAN GOVERNMENT OVERREACTS TO GUERRILLA ATTACK The Bolivian Government, shaken by the 23 March guerrilla attack on an army patrol near the southeastern town of Camiri, is hastily attempting to organize counterinsurgency operations. The military has abandoned its earlier idea of confronting the guerrillas immediately. Plans call for a sustained counterin- surgency campaign which could last for months. Outposts and roadblocks are being set up, and patrols are being sent out to probe for strongholds. A special army combat force will be equipped and trained to attack the base camp at a later date. At pres- ent there is no unit in the Bo- livian Army properly trained for guerrilla warfare. There have been reports of limited contact with the guer- rillas during the past week, but no significant clashes have oc- curred since 23 March. The Iden- tity of the band is still uncer- tain, but it seems to be a force of 35 to 100 disparate leftist elements parentlyTh7jambushed army pa- trol had stumbled onto the guer- rilla nucleus and forced the band into action earlier than the guerr4.11as had planned. The guerrilla band a; now constituted--limited in size and isolated--does not pose a threat to the government. If the mili- tary succeeds in destroyi-ag the movement in a relatively ihort period of time, Barrientos' im- age as a leader will be eahanced and other extremist group-; will be discouraged from atteirroting similar actions. Conversly, failure to find and defeat the guerrillas could give encourage- ment to the extremists, dissi- pate military and police (Jun- teractions, and place Barrien- tos in a difficult political po- sition. / 25X1 SEC R Page 25 WEEKLY SUMMARY 7 Apr 67 Approved For Release 2005/04/22 : CIA-RDP79-00927A005700070001-4 Aiak mak Approved For Release 2005?:16/22riely-k-RDP79-00927A005700070001-4 ,u)-rc CRACKS IN THE MEXICAN MONOLITH Mexico's controlling Insti- tutional Revolutionary Party (PRI) is in high gear for the 2 July election of seven governors and all 178 deputies of the national assembly. This is the first nation- wide election since Gustavo Diaz Ordaz became president in 1964 and is an important step in the consolidation of his control over the country's elaborate political machinery. The will of the President is the main factor in the choice of candidates. Although top-level posts in the PRI and in the gov- ernment bureaucracy are filled with Diaz Ordaz appointees, most of the governors and all of the Congress remain from the last administration. Some among this latter group who are considered loyal to Diaz Ordaz will be ele- vated to high appointive positions and will figure heavily in the speculation for the 1970 presi- dential race. The indisputable dominance of the PRI leaves few questions about the outcome of this summer's "contest." A few seats in Con- gress may be captured by minor parties, but there are no opposi- tion candidates for governor. Despite the absence of effective partisan opposition, dissatisfac- tion with the PRI, based on the ruling party's arbitrary "impo- sition" of even local candidates, is growing among the increasingly sophisticated electorate. N TED ST TE .,,Fa,sho FELIX Serna AN MEXICO GOVT. PARTY'S CANDIDATES FOR GOVERNOR 2 July 1967 elections A 2 Eduardo EvzoN0 o Lozano 3 Anfordo ROCHA Cordero " Manuel MORENO More ntl:" Avers., elinn:heCiASTRO I. Sonora 2. Nuevo LeOn 3. San Luis Potosi 4. Guanajuato 5. Queretaro 6. Colima 7. C;arnoeche /7 *MEXICO 'Carlos SANSORES PablAILVA Garth CITY -- Per" 'G A es 66214 4-67 Currently dramatizing Mexico City's deafness to grass- root sentiment is an unusually persistent protest against the PRI's gubernatorial candidate in the state of Sonora. Even though the 1961 campaign in Sonora had been bitterly con- tested and discontent with the party's choice of Faustino Felix Serna was predictable, the party badly misjudged the depth of popular resentment. Students who have led the sporadically violent protest are now calling for the resignation of the in- cumbent governor and have elic- ited student support from out- side the state for their demands. SECRET Page 26 WEEKLY SUMMARY 7 Apr 67 Approved For Release 2005/04/22 : CIA-RDP79-00927A005700070001-4 Approved For Release 2005/04/2Z:HWRIM579-00927ADEPS700070001-4 So far the party hierarchy has indicated no readiness to back down in Sonora, and PRI selections in the other six states have presented no unusual diffi- culty yet. President Diaz Ordaz is be- lieved to be interested in "democ- ratizing" the government party by encouraging constituent rather than party selection of candi- dates. Such a radical altera- tion to the system, which would render impotent the now powerful party bosses, is a delicate and difficult undertaking. Develop- ments such as the Sonora affair may work toward the liberaliza- tion of PRI's control, but only over the long run. I 25X1 LABOR RESISTANCE TO ARGENTINE GOVERNMENT POLICY WEAKENS. The Ongania government, ap- parently convinced that Argen- tina's disorganized labor move- ment is temporarily powerless to force it to alter its economic policies, is imposing new wage freezes and price controls in its effort to combat inflation. Although inflation raised living costs about 30 percent last year, the government has announced that it will limit wage increases through 1968 to a range of 8 to 24 percent, depending on the amount of the workers' raises during 1966. It is comtemplat- ing complementary restrictions on price increases. The labor movement is in serious disarray after the defeat last month of its "Action Plan" for strikes and demonstrations. Government pressure forced the General Confederation of Labor (CGT) to call off the plan. Now the COT is trying to resume ne- gotiations with the government similar to those in the early months of President Ongania's rule. Ongania, however, is un- likely to be moved by labor leaders' continued claims that his wage policy will hit the lower income worker hardest and that the workers are bearing the brunt of the government's anti- inflation policies. Various factions within the CGT are struggling to gairi con- trol of the organization. It now appears, however, tha_ Peron- ist moderate Augusto Vandor will maintain his hold over th,- CGT ruling council. Surprisinaly, Vandor has kept the loya17:y and support of much of labor despite the failure of the "Action Plan" for which he was largely -espon- sible. His main rival, Jose Alonso, an orthodox Peron_st who did not support the "Action Plan," has lost ground in ef- forts to form a coalition of unions to fight Vandor's rtle. 25X1 S1CRET 7 Apr 67 Approved ForPlaase2005/01iE/221YCIZiM4-00927A005700070001-4 Approved For ReleWe 2005/04/22 : CIA-RDP79-00927A005T00070001-4 Secret Secret Approved For Release 2005/04/22 : CIA-RDP79-00927A005700070001-4