WEEKLY SUMMARY

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CIA-RDP79-00927A005800080001-2
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RIPPUB
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S
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39
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December 21, 2016
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June 13, 2008
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1
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Publication Date: 
June 16, 1967
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SUMMARY
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Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 DIRECTORATE OF INTELLIGENCE Secret WEEKLY SUMMARY G-PTVCY Ant, -- State Dept. review completed Secret 46 16 June 1967 No. 0294/67 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 25X1 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927A005800080001-2 SECRET (Information as of noon EDT, 15 June 1967) VIETNAM Communist forces in the delta broke the lull in the ground war in South Vietnam this week, but the main enemy threat continues to be in the northern prov- inces. On the political front in Saigon, Chief of State Thieu officially confirmed his candidacy for the presidency. Cambodia announced this week that it would raise the status of the missions of both Hanoi and the Liberation Front in Phnom Penh. CHINESE ARMY DIRECTED TO RESTORE ORDER There is little indication that the army is using its new authority, possibly because some leaders such as Defense Minister Lin Piao are more concerned with spreading the Cultural Revolution than with ending continuing disorder. SOUTH KOREAN REGIME TARNISHED BY ASSEMBLY ELECTIONS The size of its victory in last week's elections may increase factional tensions within the governing party, and blatant irregularities are stirring strong student protests. Europe SOVIET MOVES IN MIDDLE EAST SITUATION Moscow is escalating its diplomatic and verbal sup- port for the Arabs and airlifting military supplies to Egypt and Algeria. It wants to avoid a military confrontation with the West and is determined that the cease-fire be maintained. SECRET Page i WEEKLY SUMMARY 16 Jun 67 Approved For Release 2008/06/13: CIA-RDP79-00927A005800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927A005800080001-2 SECRET EAST EUROPEANS EXCEPT RUMANIA FOLLOW MOSCOW ON MID-EAST All the Communist states, except Rumania, that had relations with Israel have broken them. In a joint condemnation of Israel, Tito for the first time since 1948 aligned Yugoslavia with the Soviet bloc in a formal declaration. DEVELOPMENTS IN THE EUROPEAN COMMUNITY Europe's Six have agreed in principle on the composi- tion of a single Commission to replace the separate executives of the European Economic Community, EURATOM, and the Coal-Steel Community. Britain's bid to join is still under study and will probably be discussed again when the EEC Council meets on 26 June. SOVIETS MAKE ANOTHER TRY FOR VENUS Venus 4, launched on 12 June, will reach the planet in mid-October. Its specific mission is not known. Middle East - Africa THE WEEK IN PERSPECTIVE 17 AFTERMATH OF THE ARAB-ISRAELI WAR The Arab states, radical and moderate, are engaged in an anxious assessment of where their governments stand in the wake of last week's military debacle. Several of them seem threatened, to varying degrees, with in- creasing instability. Israel is trying to assure its military gains by putting up a generally obdurate political front to the world, but it will face prob- lems in administering the territory it occupies. THE MIDDLE EAST OIL SITUATION Some order is being restored in Middle East oil. pro- duction and distribution, but threats of sabotage, the refusal of Arab countries to supply British or Ameri- can consumers, and closure of the Suez Canal and Arab pipelines hamper early normalization of oil trade. SECRET Approved For Release 2008/06/13: CIA-RDP79-00927A005800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 SECRET POLITICAL UNREST THREATENS IN SENEGAL President Senghor's once incontestably strong polit- ical position has weakened markedly over the past year, as economic difficulties, internal political feuding, and religious tensions mount. NEW PRESIDENT IN SOMALI REPUBLIC President-elect Abdirascid has not made known his plans for the future, but his election on 10 June could presage an anti-Western trend in Somalia and increased tensions in the Horn of Africa. Western Hemisphere THE GUERRILLA SITUATION IN COLOMBIA The guerrilla bands have increased their membership and their efficiency, in spite of the government's counterinsurgent efforts since 1962. If the guer- rilla leaders coordinate their activities and over- come other organizational deficiencies, they could pose a serious security threat to the government. SECRET Page iii WEEKLY SUMMARY 16 Jun 67 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927A005800080001-2 SECRET ARGENTINE GOVERNMENT SWAYING TOWARD LIBERALIZATION Economy Minister Krieger Vasena's successes in sta- bilization and denationalization programs appear to have won the support of President Ongania despite objections from cabinet conservatives. ECUADOR: ELECTIONS AND CABINET CHANGES In one of the most important contests, Assad Bucaram, a strong critic of Interim President Arosemena, was elected mayor of Guayaquil. Cabinet changes follow- ing completion of the new constitution include the appointment of Arosemena's chief adviser at Punta del Este as foreign minister. BRAZILIAN ECONOMIC POLICY CAUSES CONCERN The decision to increase coffee support prices seems likely to have repercussions throughout the Brazilian economy and could jeopardize the vital stabilization program. SECRET Page iv WEEKLY SUMMARY 16 Jun 67 Approved For Release 2008/06/13: CIA-RDP79-00927A005800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927A005800080001-2 Nave SECRET FAR EAST There was a lull in major military ground action throughout South Vietnam last week. On the political front, Chief of State Thieu finally announced his can- didacy for the presidency in the September elections. Relations between the Provisional National Assembly and the ruling Directorate were subjected to new strains when the latter rejected a controversial ar- ticle in the presidential election law recently adopted by the Assembly. A new directive by the Peking leadership giving local military commands responsibility for restoring order signals another swing of the pendulum in China's internal struggle. This order by the party central committee and. military affairs committee resembles a mandate to the military in late January which resulted in only a short-lived suppression of militant pro-Mao forces. Although mob violence is increasing through- out the country, local commanders probably will act cautiously in executing this directive in view of the strong criticism of repressive moves against "true revolutionaries" last February and the subsequent re- surgence of pro-Maoist forces. Student demonstrations against irregularities in South Korea's National Assembly elections of 8 June have generated the most serious violence in Seoul and other major cities since protests against the treaty with Japan in 1965. The government has moved additional troops into Seoul and may be forced to impose martial law if the demonstrations continue to grow. Hanoi and the Viet Cong Liberation Front, sec- onded by Moscow and Peking, have moved to improve their relations with Cambodia by declaring their rec- ognition of Cambodia's territorial integrity within its "present borders." Chief of State Sihanouk has stated that the North Vietnamese mission in Phnom Penh will be upgraded to an embassy and that the Liberation Front will be accorded diplomatic status. SECRET Page 1 WEEKLY SUMMARY 16 Jun 67 Approved For Release 2008/06/13: CIA-RDP79-00927A005800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 SECRET VIETNAM Military Situation in South Vietnam Except for isolated instances of heavy fighting between allied and Communist forces in the Me- kong Delta and in War Zone "D" north of Saigon, the ground war in South Vietnam has remained at a relatively low level. Sporadic contact between US Marines and North Vietnamese Army (NVA) regulars in northernmost I Corps continues, amid indications that NVA main force units are ap- parently reoccupying previously held positions in the southern portion of the Demilitarized Zone (DMZ) and in adjacent areas of Quang Tri Province. Although NVA regulars are cap- able of attacking in the DMZ/north- ern Quang Tri Province area with a force equivalent to three divi- sions, the immediate outlook is that the Communists will continue resupply and reinforcement activi- ties while harassing and ambush- ing US Marine and South Vietnam- ese forces in battalion-size for- mations. The Communists are also con- tinuing to reinforce the Northern Front command, which is responsi- ble for enemy operations in lower Quang Tri Province and in all of adjacent Thua Thien Province. Re- cent prisoner interrogations in- dicate that North Vietnamese in- filtrators are being utilized to upgrade Northern Front support companies to battalion-size units. These forces pose a division-size threat to the Hue/Quang Tri city area, but battalion-size attacks against South Vietnamese district headquarters coupled with harass- ments and attacks against strategic outposts between the two provin- cial capitals appear to be the most probable enemy course of ac- tion. In the central highlands, there are signs that some ele- ments of the Communists' B-3 Front military command may have with- drawn to Cambodia to reorganize and resupply, possibly in prepara- tion for an anticipated summer of- fensive against allied positions in western Pleiku Province. There has been little contact this week between the US 4th Infantry Divi- sion (Operation FRANCIS MARION) and NVA main force units, and abandoned enemy bivouac sites have been discovered. On 10 June, however, Viet Cong units executed a heavy mortar attack against three US military installations and a Revolutionary Development training center in Pleiku city. More than 125 mortar shells struck the allied targets, re- sulting in nearly 150 casual- ties. SECRET Page 2 WEEKLY SUMMARY Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Approved For Release 2008/06/13: CIA- RDP79-00927A005800080001-2 `Hal Lang ) r Glo Linh Dona Ha i.am oor+ Turcn nuc SECRET Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 SECRET Presidential Politics In Saigon After weeks of maneuvering, Chief of State Thieu officially announced his presidential candi- dacy on 14 June. Although he did not name his running mate, he followed Premier Ky's lead and said that he would choose a civilian. A Thieu-Ky race will cause some strains among the military. Both candidates claim, however, that military unity and stability will not be affected. Ky apparently believes that Thieu's lack of support among the military will preclude any serious split. According to Ky, Thieu has lost the respect of all four corps commanders and has incurred the marked opposi- tion of other general officers. Although Ky may hold an ex- aggerated view of the extent to which support for Thieu is wan- ing, his basic assessment is shared by III Corps commander General Le Nguyen Khang, and possibly by Thieu himself. Ac- cording to Khang, Thieu has the firm backing of only Directorate Secretary General Pham Xuan Chieu, minister for planning General Dang Van Quang, and Fifth Division commander Gen- eral Pham Quoc Thuan. Thieu himself apparently is not very sanguine about his chances of winning, but is de- Cambodian-Vietnamese Relations Hanoi has finally achieved full diplomatic recognition from Cambodia, not only for North Viet- nam but for the South Vietnamese Liberation Front. In return Hanoi and the front have agreed to recognize the "present bor- ders" between South Vietnam and Cambodia. Both Hanoi and Cam- bodia apparently feel they have accomplished a major objective. These same issues have been un- der discussion for more than two years and had been the subject of two unsuccessful conferences-- one in Peking in late 1964 and another in Phnom Penh in 1966. The Cambodian gesture is par- ticularly important for the Lib- eration Front which not only gains another foreign post abroad, but will be accorded "diplomatic status" in Phnom Penh, according to Cambodian Chief of State Si- hanouk. Most Front offices abroad, even in Communist capi- tals, are accredited only to un- official popular organizations and have only semidiplomatic status. SECRET Page 4 WEEKLY SUMMARY Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 *AW SECRET There is little indication that the Communists have made any real commitments or concessions on actual delimitation of the Cam- bodian border, but apparently their statements suit Sihanouk's present purposes. He has secured simi- lar "recognition" of his borders from both Moscow and Peking in re- cent days, indicating that in spite of his recent domestic campaign against the Cambodian leftists, he believes that internationally he has more to gain from the Commu- nists than from the West or an un- responsive South Vietnam. CHINESE ARMY DIRECTED TO RESTORE ORDER Communist China's Army was given a mandate on 6 June by the central committee and the military affairs committee to restore or- der in troubled areas. Although the order seemed to be clear-cut, it did not spell out its local application, and reports of dis- orders continue to be received, with little indication that the army is exercising its new au- thority. This suggests that some elements in the country's lead- ership are more concerned with pushing the revolution, and thus are blocking the directive. It may only be, however, that local commanders are moving cautiously until the situation clarifies. commands to assume full responsi- bility for maintaining law and order. Noting that fighting and destruction of state and personal property had become major prob- lems, the seven-point directive ordered the army to handle all violations severely and to arrest troublemakers. The order is similar to an in- effective one issued on 14 May by the Peking Municipal Revolutionary committee and signed by Minister of Public Security Hsieh Fu-chih, authorizing the local garrison command to sto all violence in the capital. The long overdue directive, reported through posters, un- equivocally ordered local military SECRET Page 5 WEEKLY SUMMARY Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 SECRET the past month when Red Guards have broken into public offices to steal documents, no attempt has been made to stop them. The nationwide directive of 6 June is being similarly ignored. According to posters displayed in Peking in recent days, COMMUNIST CHINA: Scenes of Disorder Since 6 June Directive JAMMU AND KASHMIR ,_- m di-,e on several occasions in MONGOLIA ; u mem ~ UPIt}R''~ bloody clashes between Red Guards and local "conservative forces" are still taking place almost daily in some areas. From 6 to 8 June, for example, hundreds of pro-Mao revolutionaries were al- legedly beaten up and killed in Chung-king. On 7,8, and 9 June, forces led by party leaders in Huai-ning, Anhwei Province, r ~HENSi Fr r f ;;t A N i-.- t NQRTH VIETNAA SECRET Page 6 I K WIANGTUNG SOUTH KOREA hanghd, Han rh,u~1 C EKIA?NG Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 V.n ch'.1, IT aiy(ia YEl L!)W /F ~ ,. ~` sinan 1 SEA H g aL aut~C1 AUTONOMOUS REGION Lheng hot ?ON N EAST CHINA SEA PHILIPPINES Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 reportedly attacked a group of pro-Mao revolutionary rebels, killing or injuring 150. Local military commanders probably would be very reluctant to interfere in such conflicts, merely on the authority of the broad 6 June directive, and would be unlikely to act except on ex- plicit instructions from above on handling individual conflicts. The army had been given a similar broad mandate in February, but in March and April came under heavy criticism for having sup- pressed "true revolutionaries" and several commanders were dismissed as a result. The situation is further complicated by the fact that the chief "troublemakers" involved in recent clashes usually have been supported by powerful Red Guard groups in Peking appar- ently backed by elements in the leadership. Since these militant leaders, particularly Mao and Defense Min- ister Lin Piao, seem to be rela- tively unconcerned over the cost of disorder, and determined to sustain the momentum of the Cul- tural Revolution and its instru- ment, the Red Guard movement, the SECRET Page 7 WEEKLY SUMMARY turmoil doubtless will continue. Lin Piao is reported to have said in a 30 March speech that "only by having disorder is it possi- ble to distinguish the black ele- ments.... In all revolutions there will be some damage. The seriousness of this must not be exaggerated." Lin Piao, who has been identi- fied with radical policies through- out the Cultural Revolution, has been given unusually heavy propa- ganda attention since early May in an attempt to build up his pub- lic image as the chief voice, af- ter Mao, in determining policy. On two occasions, 23 May and 9 June, Lin headed gatherings of the leadership in the absence of Mao; these were Lin's first solo performances of this kind. His name figures prominently in two documents which have been pub- lished in book form and widely circulated since late May, for use side by side with Mao's quota- tions and works. One is a letter from Lin to the military affairs committee dated 22 March 1966 and the other a summary of a February 1966 "forum on literature and art in the armed forces" which he is said to have "entrusted" to Madame Mao. Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 SECRET SOUTH KOREAN REGIME TARNISHED BY ASSEMBLY ELECTIONS The overwhelming victory of President Pak Chong-hui's Demo- cratic Republican Party (DRP) in the 8 June South Korean National Assembly elections has turned out to be a mixed blessing for the re- gime. Although the DRP's capture of 130 of the 175 seats in the as- sembly represented a clear reaf- firmation of public support for Pak's policies, the size of the victory and the many irregularities that accompanied it have created new problems. Election practices have aroused strong student protest demonstrations. For the first time since the rioting of 1964-65, the government has had to use the police to quell student. demonstrators, who are demanding new election. The army's Capital Security Command has been alerted. Within the regime, the size of the victory threatens to ag- gravate factional tensions. Em- boldened by the party's success, hard-core elements who helped to deliver the vote are likely to put new pressure on Pak for a greater voice in policy decisions and the selection of high administration officials. A party council has charged that "excessive support" by the executive branch of the gov- ernment in the elections caused the present difficulties. This appears to be an attempt by the hard core to save itself and get rid of its rivals by making government offi- cials scopegoats. The election also could work a setback for the development of an orderly and constitutional op- position. The defeated parties, embittered by the conduct of the election, will be under strong pressure to revert to inflammatory and obstructionist tactics to make their voices heard. The main oppo- sition group, the New Democratic Party, has decided on an assembly boycott and is demanding new elec- tions. Some of the administra- tion's most outspoken critics are among the opposition winners. The government is aware of the immediate dangers and is ac- ting against some of its own fol- lowers in order to reduce public indignation. It has arrested 46 DRP members, including one as- semblyman-elect, and charged them SECRET Page 8 WEEKLY SUMMARY Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 SECRET EUROPE The Middle East situation continues to occupy the attention of Europe. The USSR has stepped up its diplomatic and verbal support for the Arabs and begun an airlift of military supplies to Egypt and Algeria. Presently, the USSR's major effort is being made at the UN. The call by the Soviets for an emergency session of the General Assembly is an obvious effort to use that forum as a more resonant sounding board for drumming up support for them- selves as well as for the Arabs. The Soviets find themselves snarled in procedural difficulties, how- ever, and their hasty maneuver has raised suspicions on the part of many delegations over the wisdom and utility of such a course. Paris has agreed to a General Assembly meet- ing but has stipulated that any question requiring action would have to be submitted to the Security Council. The French are still hoping for quadri- partite action to settle the crisis, and in the council the main participants would four major owers. All East European regimes except Rumania have closed ranks with Moscow in support of the Arab countries and have broken off relations with Is- rael. Yugoslavia, joining with the bloc for the first time in almost 20 years, signed the joint statement condemning Israel issued at the Commu- nist "summit meeting" in Moscow on 9 June. Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 SECRET SOVIET MOVES IN MIDDLE EAST SITUATION Moscow is escalating its diplo- I military alert or of any redeploy- matic and verbal support for the Arabs. Its objective is to meet Arab demands for more resolute ac- tion and keep pressure on Israel to hold the cease-fire. The Soviets' aim throughout the Mid-East conflict has been to avoid a military con- frontation with the West. Therefore, they are determined that the cease- fire be maintained. Soviet diplomatic efforts to regain favor with the Arabs have thus far been little more than ges- tures, reflecting the weakness of the Soviet, as well as the Arab, position. The hasty convocation on 9 June of the Communist "summit meeting," however, presaged an in- tensified bid to fortify the Soviet image with the Arabs. This meeting produced a statement vowing that the bloc nations would "do every- thing necessary" to rebuff Israel's aggression if its forces did not re- turn to the "truce line." The statement, however, contained no specific commitments and--with the exception of breaking relations with Israel--there has been no evi- dence that any concrete action in support of the Arabs was planned. Apart from continued military transport flights to the middle East, the operations of Soviet ground and air units are generally normal. There is no evidence of a Page 10 ments of ground or air combat units. Although the Soviet naval squadron in the Mediterranean could not op- erate for long against the US Sixth Fleet, Soviet warships are appar- ently shifting their center of op- erations eastward. Several Soviet warships are now operating between C rus and Syria The primary pur- pose this maneuver, however, is more psychological and political than military. The USSR is continuing its large airlift of military supplies to Egypt and Algeria. SECRET 25X1 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927A005800080001-2 Presently, the USSR's major po- litical effort to enhance its influ- ence among Arab states and attempt to reverse Israel's military gains is being made at the United Nations. UN Ambassador Fedorenko is making every effort to get a special ses- sion of the General Assembly to dis- cuss the Arab-Israeli problem. So- viet officials are indicating that the primary purpose of such a ses- sion would be to treat the subject of "Israeli aggression" and the withdrawal from occupied territory to armistice lines. The Soviet initiative has raised many procedural issues. An emergency session necessarily involves the "Uniting for Peace" resolution and a request for such a session must be endorsed by either a majority of the Security Council or by a majority of the UN members. The Soviets presum- ably chose to proceed in this way in order to get an immediate assembly meeting and to get around the re- strictions the UN Charter imposes on parallel consideration of issues by both the council and assembly. Ac- cording to Article 12, the assembly can make no recommendations while the council is considering a matter unless the council so requests, and only the Uniting for Peace resolu- tion--which the Soviets have always opposed--permits the assembly to take any action on threats to inter- national peace that would be binding on members. The Soviets claim, how- ever, that they are not acting under that resolution since they "would not request the UN to use troops for peacekeeping." The initial reaction to the So- viet maneuver is less than enthusi- astic. Saudi Arabia and Kuwait have recommended that the Arabs oppose an emergency session. Some Europeans are considering abstaining on the Soviet request. Although there are few states that will publicly op- pose the session, many doubt its usefulness. The Africans see the session as largely a forum for So- viet propaganda. The Latin Ameri- cans believe they should devote their efforts to avoiding or defeat- ing a harsh resolution. Many dele- gates have speculated that the So- viets merely wanted the assembly as a pretext for a high-level peace conference. If the assembly meets, the de- bate is likely to be long and bitter. The Soviets will be hard put to round up the necessary two- thirds vote required for a substantive res- olution on an "important question." Some countries which would be will- ing to recommend that Israeli troops withdraw to armistice lines would not support the condemnation of Is- rael. One counterproposal which might be made to the Soviet resolu- tion would be an assembly recommen-25X1 dation that the secretary general send a personal representative to the area. SECRET Page 11 WEEKLY SUMMARY Approved For Release 2008/06/13: CIA-RDP79-00927A005800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 SECRET EAST EUROPEANS EXCEPT RUMANIA FOLLOW MOSCOW ON MID-EAST All East European regimes except Rumania closed ranks with Moscow in support of the Arab countries in the Middle East crisis. Yugoslavia, joining with the bloc for the first time in almost 20 years, also signed the joint statement condemning Israel issued by the 9 June Communist "summi-t meeting" in Moscow. Bulgaria and Czechoslovakia severed relations with Israel im- mediately after the Soviets took this action; Hungary and Poland delayed their decision but re- luctantly fell into line two days later. Yugoslavia, probably to avoid any association with the Soviet lead, took an additional day to make its break announce- ment. Rumania has given no in- dication that it plans any break in relations. Neither East Ger- many nor Albania has relations with Israel. In signing the joint state- ment in Moscow, Tito for the first time since his break with Stalin in 1948 aligned Yugoslavia with the Soviet bloc in a formal declaration. His close associa- tion with Nasir in the nonaligned movement and his personal concern that "imperialistic" forces are gaining sway in the world prob- ably prompted this decision. Tito was also reflecting his ir- ritation with Washington over what he considers its reneging on support for Yugoslavia's internal reforms and over the recent bombings by emigr6s of Belgrade's missions in the US. Tito's position reportedly has drawn criticism from other leaders in Belgrade. Some of them probably fear that he has sacri- ficed a portion of Yugoslavia's hard-won independence and is risk- ing Belgrade's good relations with the Western world, particularly the United States. In the past, subordinates have been able to damp down Tito's more radical pol- icy swings, and they may be able to do so in this case. In any event, Tito himself probably will take the first opportunity to re- gain his balance between East and West, as he has often done in the past. Rumania, as has become common, differed with its Communist allies and refused to sign the 9 June con- demnation of Israel. In a declara- tion of its own on 1.0 June, Bucha- rest tended to favor the Arabs but also called for direct nego- tiations between them and the Is- raelis. As the week progressed, however, Bucharest appeared to be increasingly concerned by Israeli statements on possible territorial annexations. The Rumanians prob- ably fear the protracted Israeli intransigence on a withdrawal set- tlement could make Bucharest's "neutral" position progressively more difficult to maintain .F SECRET Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 SECRET DEVELOPMENTS IN THE EUROPEAN COMMUNITY After two years of delay, largely occasioned by France's battle against community "supra- nationalism," the six members of the European communities seem finally to have decided on the 14 individuals who will make up the communities' first combined Commission. This body will re- place the separate executives of the European Economic Community (EEC), EURATOM, and the Coal-Steel Community (ECSC). The new Com- mission--on which agreement has been reached in principle--looks stronger than might have been expected in view of the French attitude and despite the depar- ture of two of the more effective commissioners--EEC President Hall- stein and Vice President Marjolin. The nominations will not be formally agreed on until the treaty merging the three executives goes into effect on 1 July and some changes are still possible--De Gaulle, for example, has not yet personally approved the French members--:but it is virtually cer- tain that Jean Rey of Belgium will head the new body.. Rey has had long experience with the communi- ties, is a strong advocate of European political unity, and most recently demonstrated his ability in representing the EEC during the Kennedy Round negotia- tions. Rey's nomination was as- sured after Italian Treasury Min- ister Colombo--whom the Six had first agreed to support--declined to serve. The new Commission, by bring- ing together responsibilities now vested in the separate executives, will be in a better position to take initiatives on a wide variety of economic problems requiring community action--notably, poli- cies on energy and transportation. It might also help EURATOM and the ECSC, both of which have lacked effective leadership. How- ever, a shakedown period will un- doubtedly be needed to sort out responsibilities and merge the staffs of the three executives. The French are alluding to the difficulties inherent in this process as precluding any early Commission role in dealing with the British bid for community membership. Commission studies on the effects of UK entry, how- ever, are already in an advanced stage. The EEC Council last week acknowledged the British, Irish, and Danish applications for mem- bership. The Six are expected to take up the question again when the Council meets on 26 June, but this meeting may not settle the issue of whether the community proceeds to ponder by itself on the UK's "eligibility" and the effects of its entry-- as the French presumably want-- or whether London will be invited to participate in some way in an early stage of the debate. if the Council requests the Commis- sion to submit findings, the Com- mission could--as part of its deliberations--undertake its own discussions with the British. London is concerned over the de- lays in the start of the negotia- tions and is trying, through SECRET Page 13 WEEKLY SUMMARY Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 FULL-SCALE MODEL OF VENUS 3 EXHIBITED AT THE RECENT PARIS AIR SHOW 66900 6-67 CIA SECRET Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 SECRET contacts with the Five, to force the pace of the Council's deliber- ations, but it is apparently re- luctant to establish contacts first through the Commission. Prime Minister Wilson will visit Paris on 19 June. There have been no hints of what line he will take with De Gaulle, but he will probably restate Britain's acceptance of the com- munity treaties and try to mini- mize the UK's economic difficul- ties--which could not be aggra- vated by the Middle East crisis. London's diplomatic activities in support of its membership bid may be stepped up in Bonn, since West Germany assumes the presi- dency of the EEC Council after 1 SOVIETS MAKE ANOTHER TRY FOR VENUS Venus 4, launched on 12 June, is the first Soviet deep space probe in more than 18 months. According to Soviet announcements, the 2,400--pound scientific ve- hicle is on course for Venus and is functioning normally. There is no indication of its specific mission, however. Like the USSR's earlier deep space probes, Venus 4 was first placed in a low parking orbit. After making nearly a full revo- lution of the earth, the space- craft was put into a trajectory toward Venus, and it will reach the planet: in mid-October. Since its beginnings some six years ago, the USSR's Venus program has been plagued by space- craft failures. able for such launches. If the Soviets follow their previous practice, they will try one or two more Venus probes during the next three weeks while the relative positions of the Earth and Venus are still favor- SECRET WEEKLY SUMMARY 16 Jun 67 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 SECRET SECRET Page 16 WEEKLY SUMMARY 16 Jun 67 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 %ftw SECRET MIDDLE EAST - AFRICA With the suspension of fighting in the Arab- Israeli war, each side is concentrating on improv- ing its negotiating position. The Israelis appear to have displayed varying degrees of obduracy in their demands, either out of calculation or be- cause of internal disagreement or both. The Arabs, with Communist support, apparently hope to reduce their losses by presenting themselves as the ag- grieved party in international forums. The war, and the Arab military debacle, are having political repercussions throughout the Mid- dle East. The Israeli rout of radical Arab forces has almost certainly encourage the royalist side in the Yemen war, and there have been reports of growing instability in many Arab states, notably in Libya and even in Egypt itself. Farther afield, Mrs. Gandhi's vigorous championing of the Arabs has given further ammunition to her critics in- side India. SECRET Page 17 WEEKLY SUMMARY 16 Jun 67 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 SECRET AFTERMATH OF THE ARAB-ISRAELI WAR The Arab states, radical and moderate, are engaged in an anx- ious assessment of where their governments stand, internationally and domestically, in the wake of the Egyptian, Syrian, and Jorda- nian military defeat. On the Is- raeli side, Tel Aviv is trying to assure its military gains by putting up a generally obdurate political front to the world; differences among the numerous press releases describing Israeli peace aims may reflect varying degrees of "hawkishness" among Arab Summit The principal radical Arab maneuver apparently will be to convene an Arab summit meeting. The Algerians, with President Boumediene as spokesman, have been given the lead in this. Nasir feels, probably rightly, that this is not the moment for him to try to stand openly as the maximum leader. His present pose, re- flected in his "resignation" and reinstatement by popular demand last weekend, is one of manfully shouldering the blame for the disaster and temporarily stepping behind the curtain. The over-all purpose of the summit referred to by Nasir in his "resignation" announcement is to show the "imperialists" that it is the whole "Arab nation" and not just Gamal Abd al-Nasir who is their enemy. Thus, if the summit is to be successful, it must assemble practically all the Arab states, moderate as well as radical, and at the same time en- sure that all subscribe to a strongly anti-Western line which Nasir and/or Boumediene lay down. This may be more easily conceived than done; the best achieved so far appears to be an Arab foreign ministers' meeting in Kuwait sched- uled for 17 June. Much will depend on how strongly and what kinds and quan- tities of Soviet support are forth- coming for the radical Arabs (see article on page 10). But much also will depend on how "moderate" the so-called moderates--such as Saudi Arabia, Libya, Jordan, Leba- non, Iraq, and peripheral Morocco and Sudan--calculate they can af- ford to be at this :juncture. Na- sir's propaganda and subversive ap- paratus throughout the Arab world is doing its best to keep up a viciously anti-Western agitation making moderation as difficult as possible, and it has muted the in- cipient anti-Soviet statements that appeared even in the Egyptian press earlier this week. Internal Repercussions In Arab States Moderate Arab leaders them- selves, in addition to looking hopefully for some gesture from the West which they could cite to justify a line less blatantly hos- tile than Nasir's, are taking stock of their internal situa- tions. SECRET Page 18 WEEKLY SUMMARY Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927A005800080001-2 UU V Ik 11 1 T=ipoli LEN MEDITERRANEAN Sidon, j ") DAMASCUS Haifa((''`T'26e {~ Tthi rial\ ISRAEL[ Gaza JEZ j -3 ' vBir Lahfan6 1 IANA1. Romani pi'Awja ? Al Qantas Gebel Libni, Abu l h Great Fzyid Bitter Lake .waygi a REM ILi1 R1ZED ZONE Port Taufiq An ? Nakhl S I N A Nablus ? z )Jerus Eila D \ f R E P U B L` I\C (E G Y P T) 4U CJ O O O Sharm ash-Shaykh Hurghada 4? RED Areas reported occupied by Israe SECRET ?Rafid Nawa "'~ .Maxkh Miskin AMMAN SAUDI Approved For Release 2008/06/13: CIA-RDP79-00927A005800080001-2 Ago, Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 SECRET Jordan's King Husayn, the top moderate until he betook him- self for protection into the Na- sirist camp on the eve of hostili- ties, has come through the ordeal so far in much better shape than expected. The "heroic" stand of the small Jordanian Army compares favorably with the ineptitude demonstrated by the Egyptians, and Husayn currently has at least a ripple of popularity going for him. From Lebanon, however, ten- sions between Christians and Mus- lims are reported so acute that the government dares not make any significant move for fear of a new civil war. In Saudi Arabia, King Faysal's government is try- ing to ride out a stron current of basic xenophobia (For oil developments in Saudi Arabia and elsewhere in the Middle East, see next article.) Some regimes almost cer- tainly see themselves threatened with more or less imminent over- throw. In Libya, where, in the crisis atmosphere, the civilian government in effect handed over authority to the security forces, there is a question. whether it can get it back or control the situation even if it does. The Sudan's internal situation, un- easy before hostilities, has be- come more so as the general area tensions have sharpened. The radical states, of course, are not immune to these problems, but they have been better so far at concealing them from outside observation. Recriminations over the defeat must be rumbling around the Egyptian politico-military structure. Both Marshal Amir, sec- ond to Nasir in the hierarchy, and War Minister Shams ad-din Badran have been retired or withdrawn from the scene, and a new army commander appointed. It remains to be seen, however, whether significant fis- sures or merely repairable cracks appear in the Egyptian military. No dissident leadership can be expected from the civilian National Assembly, which faithfully called on Nasir to withdraw his "decision" to go back to the "ranks of the public." The Syrian Government's situ- ation is even more obscure. It may be that government administra- tion in Syria at the moment is largely ad hoc. The Baath military regime, however, remains formally in charge of the apparatus and evi- dently controls the propaganda ma- chinery. Another, although at this stage considerably less significant, fac- tor in the Arabs' calculations is their military posture. At the moment, however, the Arabs are in no condition to continue the strug- gle militarily, whatever the popu- lar sentiment or the exhortations of the Algerians. They depend utterly on the USSR for re-equip- ment and additional spares. SECRET Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927A005800080001-2 SECRET Israel's Situation Israel's problems are just beginning, too. Tel Aviv has started to administer the occu- pied territories--a good deal of propaganda has already begun on how friendly Israeli troops are helping repair damage to Arab buildings in West Jordan, for ex- ample--and to take stock of cap- tured military equipment. The regular Israeli national weather forecasts now include Sinai, and Sharm ash-Shaykh is reportedly referred to as "Solomon's Bay." More seriously, the basic Israeli contention that the Arabs must now recognize Israel's ex- istence is being put forward in a variety of diplomatic and propa- ganda forms. Prime Minister Eshkol told the Israeli parliament on 12 June that his government would not. agree "to revert to the situation which existed until a week ago." Predictably, defense minister General Dayan has taken a harder, more specific line in his press interviews than have other top members of the govern- ment. A clearer picture of what the Israelis expect or really want to get out of the situation may emerge when the full nature of the international pressure and the real occupation costs to Is- rael are known. Other Asian Attitudes The postwar situation also continues to be the focus of at- tention among governments more or less intimately involved with one side or the other in the past. The Iranian Government is trying to strike a balance among its hatred of Nasir, its ties with Is- rael, and its desire to avoid al- ienating the moderate Arab States. The Iranian ress blasts Nasir for the debacle same time, Tehran aid to Jordan and At the has sent medical Iraq. The Indian Government, in pub- lic statements and in maneuvering at the UN, has strongly supported the Arab cause. Even within the Congress Party, however, there is mounting opposition to what is termed Mrs. Gandhi's "bankrupt diplomacy" on the issue. New Del- hi's official attitude has been heavily influenced by its hope to retain Arab goodwill in the face of India's perennial dispute with Muslim Pakistan over Kashmir, by its traditional ties with the UAR, and, in all probability, by its reliance on the USSR--the Arab champion of the moment--for mili- tary e ui ment. SECRET Page 21 WEEKLY SUMMARY Approved For Release 2008/06/13: CIA-RDP79-00927A005800080001-2 IdEk Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 SECRET THE MIDDLE EAST OIL SITUATION Some order is being re- alternate stored in Middle East oil pro- European duction and distribution, but awaiting threats of sabotage, the re- moves in fusal by Arab countries to sup- ply British or American con- sumers, and closure of the Suez Canal and Arab pipelines hamper early normalization of oil trade. The principal Arab oil-pro- ducing countries have resumed at least limited operations. Saudi Arabia and Kuwait are producing and shipping to destinations other than the US and UK. Other Arab producers in the Persian Gulf sheikdoms are also shipping oil. Iraq's fields remain closed down. Labor dissidence keeps Libyan fields closed. Iran, the major non-Arab producer, did not interrupt production, but its output has been reduced by tech- nical difficulties occasioned by factors not related to the war. Uncertainty over these de- velopments, unwillingness to risk being added to the Arab embargo list, or being committed this early to cooperative ventures, seem to have influenced the OECD's oil committee to delay instituting any emergency pro- grams. There have been no seri- ous efforts to invest quickly in mit formulation of emergency supply procedures. It remains uncertain when the Suez Canal will be reopened Arab consumers also have some problems. Jordan has not yet indi- ca e any shortage, although its supplies are delivered via the tapline from Saudi Arabia, which remains closed. Most of Egypt's domestic production comes from areas of the Sinai now under Is- raeli control. SECRET Page 22 WEEKLY SUMMARY oil sources. West consumers may also be the outcome of legal the US which would per- 25X1 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 25X1 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Next 1 Page(s) In Document Denied Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 ? wl~ SECRET POLITICAL UNREST THREATENS IN SENEGAL Senegalese President Senghor's political position appears to be weakening. Senghor, a pro-French, Catholic intellectual, has ruled Senegal's overwhelmingly Muslim population since before independ- ence in 1960. He has done so by astutely balancing a multitude of locally based traditional polit- ical factions, by cultivating im- portant Muslim leaders, and by manipulating the dominant party, the Senegalese Progressive Union (UPS). Over the years, however, he has made so many enemies that he may no longer be able to count on sure support from any quarter. Signals of serious political unrest have recently become in- creasingly conspicuous. There was a near-successful assassi- nation attempt on Senghor on 22 March. On the local level, politi- cal feuds have erupted into vio- lence, with some loss of life, in at least three scattered areas as the traditional factions jockey for position in the selection of UPS candidates for the national elections scheduled for next Feb- ruary. The tensions are unusually severe because of the 1966 merger into the UPS--at Senghor's insist- ence--of the leading opposition party, whose supporters now must be accommodated at the local level. Even more important is the unhappiness of powerful Muslim eco- nomic interests. A proposed urban renewal program in Dakar recently caused a lengthy and bitter con- frontation between Muslim land- lords and Senghor, who eventually had to back down considerably. The general decline of the country's economy, last year's drought, and the upcoming end of the French pea- nut subsidy (which must be sus- pended under Common Market regu- lations) have combined to reduce the income of the powerful Muslim brotherhoods and their peasant followers. Government mismanage- ment of peanut marketing arrange- ments and of price controls on food staples has aggravated the Muslim discontent. For the first time, the leader of one of the two largest brother- hoods this year omitted a tradi- tional holiday speech in favor of the government. This spring,prayers for Senghor's demise were reg- ularly offered in Senegalese mosques. The President's position of strict neutrality in the recent Middle East crisis will probably further alienate his Muslim con- stituents. Under the circumstances, there 25X1 could be a move against Senghor either by fanatic individuals or SECRET Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 SECRET F==" NEW PRESIDENT IN SOMALI REPUBLIC Former prime minister Abdi- rascid Ali Schermarke, generally considered a slight underdog in Somalia's second presidential election, showed unexpected strength in the National Assembly and was chosen on the third bal- lot for a six-year term over in- cumbent Aden Abdullah Osman. Tribal splits, opportunism on the part of individual deputies, and a reported last-minute switch of allegiance by two government fig- ures apparently were the key fac- tors in Abdirascid's victory. Another was the inability of Pres- ident Aden's supporters to unite his dominant but faction-ridden party, the Somali Youth League (SYL), behind him. The long-term implications of Abdirascid's victory are not yet clear, but his election may presage an anti-Western trend in Somalia. As prime minister, Abdi- rascid in the early years of his regime was considered pro-Western, but he subsequently paid court to Communist countries and received covert financial support from them. In 1963 he was instrumental in Somalia's acceptance of a siz- able Soviet economic and military assistance program which has en- SECRET Page 26 WEEKLY SUMMARY abled the USSR to (lain substan- tial influence in the country. Abdirascid's tenure as pres- ident may also portend new ten- sions and troubles for the Horn of Africa. In and out of office he was a militant supporter of Somalia's irredentist claims on Somali-inhabited territories in neighboring Kenya, Ethiopia, and French Somaliland. Mohamed Haji Ibrahim Egal, a northern politician who was instru- mental in lining up parliamentary support for Abdirascid, is expected to be named prime minister after Abdirascid assumes office on 7 July. Egal is considered con- servative and pro-Western, and he may lend some balance to the new gov- ernment. Egal, however, faces a difficult chore in putting to- gether a cabinet acceptable to the National Assembly. The posi- tion of the new prime minister and the direction in which his gov- ernment moves will also depend on whether Abdirascid chooses to re- main above partisan politics, as President Aden did, or to assume a more direct role in formulating government policy. Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 ~ftw SECRET WESTERN HEMISPHERE The Middle East crisis remained the principal preoccupation of most countries of the Western Hemis- phere last week. Local Communist propaganda efforts and talks with Brazilian and Argentine authorities by a special UAR envoy notwithstanding, sentiment con- tinues overwhelmingly favorable to Israel. Brazil is taking the lead among those Latin American governments urging that peace be restored and has proposed that a special international con- ference be called to work out a permanent settlement of the conflict. Brazil's ambitious Foreign Minister Magalhaes Pinto evidently sees such a conference--in which Brazil wants to participate--as a boost both for his country's great-power aspirations and for his own presidential hopes. In Bolivia, a state of siege declared on 7 June continues in force in the wake of agitation by the country's volatile tin miners and students and of general political unrest stemmin from the unsolved guerrilla problem. Most o Bo ivia s neighbors, in- c u ing Peru, Brazil, Argentina, and Paraguay, are increasingly concerned over Bolivia's guerrilla prob- lem, and military leaders of the latter three have even been discussing creation of a joint antiguerrilla command. Last week's execution of 19 military officers in Haiti was probably another of Duvalier's periodic object lessons to those who might be tempted to con- spire against him. The move could backfire, however, if some of his previously loyal military aides begin to have doubts about their own security. Elsewhere in the Caribbean, political unrest worsened in the British-associated state of St. Kitts - Nevis - An- guilla and martial law was declared on St. Kitts on 12 June because of turmoil over Anguilla's desire to break politically with the central government and re- turn to direct British rule. SECRET Page 27 WEEKLY SUMMARY 16 Jun 67 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 SECRET THE GUERRILLA SITUATION IN COLOMBIA The sporadic nature of guer- rilla activity in Colombia ap- pears to stem from organi- zational weaknesses Gov- ernment victories in several re- cent clashes have not so far seriously weakened the guerrilla movement and government officials warn that any expansion of guer- rilla activities could create a serious security threat. 25X1 25X1 Ith 25X1 rillas seem to be hampered 2bX1 by t eir 25X1 own weaknesses. ere is little coordination between the two guer- rilla organizations because of ideological and personality dif- ferences. PCC control of the Guerrillas of the Army of National Liberation (ELN), an in- dependent pro-Castro movement, op- erate in two fronts in the Depart- ment of Santander. Units of the Revolutionary Armed Forces of Colombia (FARC), which is con- nected with the Communist Party of Colombia (PCC), operate prin- cipally in the departments of Quindio, Valle del Cauca, Tolima, and Huila. The ELN has a force of about 200 men, and there are about 500 in the FARC. G ~ ~ l %~ ECUADOR ?-??~?~ Page 29 4 SECRET PERU / !."iAl Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 SECRET guerrillas is apparently loose and weak. Many PCC leaders are not wholeheartedly in favor of guer- rilla war, and the FARC guerril- las sometimes appear to be more interested in controlling small "enclaves" than in offensive op- erations aimed at overthrowing the government. Neither guerrilla organization seems to be capable of forming a strategic plan or program or of organizing a so- phisticated military campaign. Both, however, have been highly effective in individual operations. The present insurgency must be distinguished from traditional banditry and non-Communist guer- rilla warfare which have plagued the Colombian countryside since 1948. The latter have diminished in recent years, but insurgency has increased in scope and serious- ness. If the guerrillas overcome their organizational weaknesses they could pose serious problems of government control of the coun- tryside, put a severe drain on the government's limited finan- cial resources, and weaken pub- lic confidence in the government. ARGENTINE GOVERNMENT SWAYING TOWARD LIBERALIZATION The successes of Economy Min- ister Krieger Vasena's stabiliza- tion and denationalization programs appear to be swaying Argentine President Ongania toward more liberal policies. In reaction to this trend three conservative cabinet officers resigned last week after an unsuccessful strug- gle to defeat the new petroleum law, which will grant exploita- tion concessions to foreign oil firms-. Among the "nationalist" min- isters who resigned was the secre- tary of the National Development Council (CONADE), Isidoro Marin. The vacant posts have been filled by men more sympathetic to Krieger Vasena's ideas, but sev- eral other important cabinet posts are still held by conservatives. Some military officers also con- tinue to oppose the economy min- ister on grounds of national se- curity. It is unlikely, however, that they will be able to re- verse the new economic plans, which have won increasing approval from foreign investors and may return Argentina to self-suffi- ciency in oil production for the first time since 1962. SECRET WEEKLY SUMMARY 16 Jun 67 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 SECRET ECUADOR: ELECTIONS AND CABINET CHANGES Provincial and municipal elec- tions were held throughout Ecua- dor on 11 June for the first time since 1962. Nearly one million voters turned out to elect the mayors and the provincial and municipal. councils that will gov- ern for the next four years. In- complete returns indicate general support for center-left candi- dates. In the important contest for mayor of Guayaquil, Ecuador's largest city, Assad Bucaram was victorious in a field of five, as expected. He received nearly 60 percent of the total vote, more than twice that of his closest rival, Pedro Menendez Gil- bert of the National Velasquista Federation (FNV). Bucaram was the candidate of a coalition com- prising the Concentration of Pop- ular Forces (CFP)--his own highly personalistic political party-- and the :Ecuadorean Liberal Party (PL). The CFP-PL coalition also won five of the eleven seats on the Guayaquil municipal council, and at least four of the nine vacancies on the Guayas (Guaya- quil) Provincial council. Bucaram's margin of victory is impressive in light of the num- ber of candidates running against him, and. he will probably be pushed by his followers to seek the presidency in the general elections scheduled for next June. He has been severely critical of Interim President Otto Arosemena, and his victory presages a period of strained relations between Guayaquil and the national gov- ernment., a political independent but backed by the FNV, won the mayoralty race in an upset over his Conservative Party opponent. Castillo waged { an energetic last-minute campaign appealing primarily to the lower classes. The Conservatives, how- ever, appear to have captured a majority of the seats on the Quito municipal council. In other developments, all cabinet members submitted their resignations on 10 June to allow Arosemena to reorganize his gov- ernment now that the constituent assembly has finished its work on the new constitution and has ad- journed. Arosemena has rejected the resignations of all but three. Julio Prado Vallejo, a jour- nalist for one of Ecuador's lead- ing newspapers, has been appointed minister of foreign relations. 1is newspaper co umn has contained frequent at- tacks on the United States, US investments, and the Alliance for Progress. In the other two appointments, Aurelio Davila Cajas, director of the Conservative Party, has SECRET Page 31 WEEKLY SUMMARY Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Awhk Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 SECRET been designated minister of pub- lic health, and Rafael Franco, a nonentity, has been given the agriculture portfolio. The cabi- net is now composed mostly of rightists, a change Arosemena agreed to make some months ago in exchange for support of a bill extending his term of office un- Se tember 1968. BRAZILIAN ECONOMIC POLICY CAUSES CONCERN The new Brazilian Government's tendency to evade difficult eco- nomic decisions appears to be lead- ing to some relaxation of the sta- bilization program. President Costa e Silva has apparently bowed to pressure from powerful coffee interests in for- mulating Brazil's coffee policy for the 1967-68 crop year. Coffee last year accounted for 44 percent of Brazil's total exports of $1.7 billion, and the coffee policy is a key factor in the over-all gov- ernment economic program. Growers have been urging the government to increase the basic coffee support price, which has been held down in recent years in an effort to discourage production and encourage diversification into other crops. The newly announced program increases support prices 28 percent immediately and 11.5 percent more on 1 January 1968. In making this decision, the Pres- ident apparently overrode the ad- vice of his economic ministers and. technicians who had called for one 15-percent increase for the entire year. The support price increase will have repercussions through- out the Brazilian economy. It seems sure to halt the program of reducing coffee production and di- versifying crops, and to bring windfall profits to exporters who have withheld stock from past crops. Also, there will probably be reduction of the export price of Brazilian coffee. As no de- mand increase is expected and Bra- zil was already competitive in the world coffee market, this will probably not increase sales sig- nificantly and may well result in reduced foreign exchange earn- ings. In the long term reduced Brazilian prices can have a sig- nificant impact on the world mar- ket, driving down the price re- ceived by all coffee producing countries. Several other important eco- nomic policy decisions are expected in the near future. If Costa e Silva continues to take the line of least resistance and bows again to other powerful pressure groups, the entire stabilization program could be slowed down significantly. SECRET Page 32 WEEKLY SUMMARY Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 25X1 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 w Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2 Secret Secret Approved For Release 2008/06/13: CIA-RDP79-00927AO05800080001-2