WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A005900050001-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 34
• Document Creation Date: December 21, 2016
• Document Release Date: April 13, 2009
• Sequence Number: 1
• Publication Date: July 21, 1967
• Content Type: SUMMARY

Approved For Release 2009/04/13: CIA-RDP79-00927AO05900050001-4
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
State Department review completed
DOE review
completed.
OSD review(s)
completed.
Secret
53
21 July 1967
No. 0299/67
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(Information as of noon EDT, 20 July 1967)
VIETNAM
The intensity of ground fighting in South Vietnam
slackened during the week, but the deployment of
Communist main force units in three areas--Quang
Tri Province, the western highlands, and north-
western III Corps--continues to suggest prepara-
tions for major offensive operations. In Saigon,
the special election committee of the Provisional
National Assembly briefly threatened to disqualify
the Thieu-Ky ticket this week, but the full as-
sembly voted the next day to approve their candi-
dacy.
PEKING'S POLITICAL CONTROL DETERIORATING
Political contention has already virtually paralyzed
administration in some provinces and disrupted eco-
nomic activity and rail service. Many provincial
military and political authorities are being hard
pressed by contentious revolutionaries who appear to
be immune from arrest. In spite of these develop-
ments, the regime seems reluctant to intervene openly.
COMMUNIST VIOLENCE CONTINUES IN HONG KONG
Hard-core Communists are continuing their campaign of
violence against British authority in Hong Kong de-
spite setbacks from police raids on Communist control
centers.
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THE MILITARY SITUATION IN LAOS
The Communists have increased their pressure on
government forces in some areas in northern Laos,
but there is still no evidence that the North Viet-
namese and Pathet Lao forces are planning a signif-
icantly higher level of fighting during the current
rainy season.
Europe
KIESINGER AND DE GAULLE PARLEYS MAKE LITTLE PROGRESS
The talks on 12-13 July were generally unproductive,
and their views on such questions as relations with
the US and British membership in the EEC are no
closer than before.
SOVIET INDUSTRY CONTINUES IMPROVED PERFORMANCE
The mid-year figures on the Soviet civilian economy
indicate that industrial production has continued to
grow at about 8 1/2 percent.
NEW EAST GERMAN GOVERNMENT FORMED
The new Council of Ministers resembles the old, al-
though some deadwood and at least one public rela-
tions liability were dropped in the shuffle.
SECRE'1'
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Middle East - Africa
THE WEEK IN PERSPECTIVE
THE SITUATION IN THE MIDDLE EAST
UN observers are now on both sides of the Suez Canal
but the atmosphere following the second cease-fire
remains very explosive. The Israelis want to put
small boats into the Canal to establish a precedent
for future transit rights, something the Egyptians
have no intention of allowing. The Soviets and Arabs
apparently are still trying to agree on the extent of
aid still needed. In the UN, attempts to work out an
acceptable resolution have all but foundered. The
Assembly seems more likely to refer the issue back to
the Security Council.
NIGERIAN MILITARY SITUATION FLUID
Federal forces captured the key junction of Nsukka on
14 July but may have been forced to withdraw because
of Biafran attacks behind their line of advance. A
federal amphibious operation may be under way to open
a new front on Biafra's coast.
MERCENARY REBELLION SUBSIDES IN THE CONGO
The mercenaries have settled down near Punia, at least
for the time being, and the rest of Congo (Kinshasa)
is trying to regain its equilibrium.
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Western Hemisphere
NEW DIFFICULTIES WITH PANAMA CANAL TREATIES'
Efforts by the Panamanian Government to achieve early
ratification of the new canal treaties with the United
States have hit a number of snags.
POLITICAL PROBLEMS FOR CHILEAN PRESIDENT
President Frei's Christian Democratic Party is coming
under control of a left-wing faction critical of many
of the government's policies.
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FAR EAST
The second crisis in two weeks in Saigon's
presidential politics was resolved when the
Provisional National Assembly approved the Thieu-
Ky ticket and disqualified General Duong Van "Big"
Minh's candidacy after its special elections com-
mittee had recommended just the opposite. The mili-
tary Directorate reportedly reacted to the commit-
tee's display of antigovernment sentiment by threat-
ening to void the constitution and arrest assembly-
men if its recommendations were not overruled.
Chief of State Thieu, Tran Van Huong, and Phan Khac
Suu now are the major contenders among a total of
11 candidates.
Communist military action this week in the
central and southern portions of South Vietnam was
confined to small-scale attacks on troop positions,
military outposts, and administrative headquarters.
In the north, the Communists staged their third and
most damaging rocket attack on Da Nang Air Base this
year.
In Hong Kong, the authorities have retained the
initiative with a series of police raids on Commu-
nist control centers. These strong measures have
shaken the morale of the Communists and disrupted
their apparatus. Sporadic terrorist attacks con-
tinue but a Communist attempt to paralyze shipping
by a seamen's strike had little success. Peking
continues to exhort its Hong Kong "compatriots" to
redouble their efforts but prudently refrains from
more than general pledges of support.
On the China mainland, the first public dem-
onstration since April against Liu Shao-chi may
foreshadow a renewed drive against his tenacious
supporters throughout the country. There is no
evidence, however, that this tactic is having any
success in uniting rival factions in the Mao camp.
Near anarchy prevails in widespread areas with at
least six provinces broadcasting reports of attacks
by militant revolutionaries against local army
troops and police.
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VIETNAM
Although the intensity of
major ground fighting in South
Vietnam slackened during the past
week, the deployment of Communist
main force units in Quang Tri
Province, the western highlands,
and northwestern III Corps con-
tinued to suggest preparations
for major offensive operations.
A 13-battalion US Marine/ARVN
task force, Operation HICKORY II,
conducted from 14-16 July, was
aimed at reducing the Communist
threat to US Marine positions in
the strategic Con Thien - Gio Linh
area of northeastern Quang Tri
Province. The Marines had been
subjected to heavy pressure from
a minimum of 11 battalions from
five North Vietnamese Army (NVA)
re~z?.rrncs. The short-term allied
~: =n made only sporadic con-
the enemy but it prob
a_...v forced at least a temporary
wits. ?awal of some NVA combat ma-
neuver elements to sanctuary
within or north of the DMZ.
In western Quang Tri Province
near the Laotian border, two US
Marine battalions this week con-
cluded Operation CROCKETT, a two-
month sweep of the hills and val-
leys surrounding the vital Marine
garrison at Khe Sanh. The opera-
tion was targeted against ele-
ments of the 325th NVA Division
and may have pre-empted a major
drive by the 325th against Khe
Sanh and/or nearby Lang Vei Spe-
cial Forces camp. More than 200
Communists were killed as against
US losses of 52 killed and 255
wounded. On 17 July, a South Viet-
namese paramilitary patrol was
engaged near Khe Sanh by an esti-
mated enemy battalion, reinforc-
ing other indications that the
325th is preparing to resume large-
scale activity in the Khe Sanh
area.
In central I Corps, on 15
July, an enemy force shelled the
US air base at Da Nang with ap-
proximately 50 122-mm. rockets
from 24 firing positions located
on a mountain some seven miles to
the southwest. US casualties in
the ten-minute bombardment were
8 killed and 175 wounded. In ad-
dition, of the approximately 235
aircraft and helicopters based at
Da Nang, ten were totally destroyed,
28 heavily damaged, and 17 lightly
damaged. Losses are estimated at
$80 million. Approximately two
hours prior to the rocket attack
against Da Nang, Communist troops--
wearing ARVN uniforms and the in-
signia of a local garrison--over-
ran the Quang Nam provincial jail
located about 14 miles southeast
of Da Nang in the city of Hoi An.
Moderate casualties were inflicted
on the installation's defenders
and nearly 1,200 detainees were
set free.
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Phong Dien
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The attacks on Da Nang and
Hoi An lend additional credence
25X1 to recent reports
of a major reinforce-
ment of communist strength in
Quang Nam Province via infiltra-
25X1
tion from Laos through the
A Shau
Valley area of western
Thua
Thi
en
25X1 numerous newly cons
tructed
enemy
fortified areas, foxholes,
bunk-
ers, and AAA/automatic weap
ons
positions on mountainsides less
than seven miles west of Da Nang.
In southern I Corps, US Navy
coastal surveillance forces on 15
July ran a Communist 120-foot
steel-hulled trawler aground ap-
proximately 11 miles northeast of
Quang Ngai city after having
shadowed the vessel for four days
in international waters off the
South Vietnamese coast. The
trawler was fired on by US naval,
air, and artillery units and by
South Korean marines dispatched
to the scene. The Koreans killed
twenty-three enemy personnel on
board the craft, and salvaged
nearly 2,000 weapons and more
than five million rounds of am-
munition. The trawler, the sec-
ond intercepted since March off
the Quang Ngai coast, is believed
to have been bound for Cape Batan-
gan to resupply elements of the
2nd NVA Division operating in that
area.
In the western highlands,
prisoner interrogations indi-
cate that the Communist B-3
Page 4
Front military command has es-
tablished forward command posts
in both western Kontum and west-
ern Pleiku provinces, apparently
to provide closer direction of
large-scale and possibly simul-
taneous operations in both areas.
Meanwhile, north of Saigon,
major
elements ot the ivision
have redeployed eastward from
Tay Ninh Province and are ready
to attack in the Binh Long - Phuoc
Long province border area of III
Corps.
On 11 July, elements of the
7th Division's 141st Regiment
lost 144 killed in an abortive
attack on an ARVN battalion pro-
viding security for pacification
activities near An Loc.
The Presidential Race in Saigon
South Vietnam's military lead-
ers have weathered their second
political crisis in less than three
weeks. A special election commit-
tee of the Provisional National
Assembly precipitated the latest
disturbance by voting on 17 July
to disqualify Chief of State Thieu
and to let General Minh run.
As a result of the election
committee action, the leading gen-
erals met on the 18th, and agreed
to invalidate the new constitu-
tion and arrest the assemblymen
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25X1
25X1
if they upheld their committee's
ruling against Thieu and Ky. Ac-
cordingly, troops in the Saigon
area were placed on alert pending
Thieu/Ky and Minh tickets.
the past nine months, when the
votes were tallied, the majority
of the deputies chose not to buck
the generals, and the crisis dis-
solved as quickly as it had arisen.
The outcome of the crisis--ap-
proval of the Thieu/Ky ticket and
disqualification of "Big" Minh's
candidacy by the assembly was not
unexpected, but amid the tensions
preceding the assembly voting on
18 July, the country's emerging
political institutions were placed
in some jeopardy.
As it stands now, the presi-
dential race has narrowed down
from 18 to 11 candidates with the
real contest between Thieu and
civilians Tran Van Huong and Phan
Khac Suu. The consequences of
Minh's removal from the election
are not yet clear. If Minh
should throw his weight behind
Huong, Huong's ticket might at-
tract even greater support than at
present from among the militant
Buddhists, southerners, and per-
haps among a portion of the mili-
tary. On the other hand, should
Minh's backers or the militant
Buddhists choose to do so, they
could probably promote some pub- 25X1
lic protest against present elec-
tion procedures, a clamor which
would only serve to hamper South
Vietnam's efforts to move toward
representative government.
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PEKING'S POLITICAL CONTROL DETERIORATING
Renewed demonstrations in
Peking and elsewhere against dis-
credited party leader Liu Shao-chi
appear to foreshadow a new and
perhaps enlarged drive against
alleged followers of Liu through-
out China. This will probably
lead to an increase in political
contention, which has already
virtually paralyzed administration
in some provinces, and disrupted
economic activity and rail traffic.
Red Guards chanting anti-Liu
slogans have been parading the
streets of Peking almost daily
since 12 July, the first public
demonstrations against Liu since
April. A massive anti-Liu parade
was held in Shanghai on 18 July.
Shanghai radio explained on 17
July that the new campaign was
necessary because Liu still has
"henchmen" in nearly every sector
of society, including the army,
who must be discredited and pulled
down. Both Peking and Shanghai
warned on 17 July that Mao's
enemies are plotting a "counter-
attack."
Page 6
On 16 July, Peking radio
lauded the Red Guards and said
they should be given broad license
to carry out their political ac-
tivities. Shanghai radio said on
18 July that college and high
school students--who had been
ordered only last week to "resume
classes"--would serve in the van-
guard of the new political cam-
paign.
Military and political au-
thorities in many provinces are
being hard pressed by dissident
and contentious revolutionaries,
who, it would seem, are immune to
arrest. For two weeks the pro-
vincial radio station in the
northeast province of Kirin has
been complaining that extremists
are beating up police and troops,
breaking into military headquar-
ters, destroying military vehi-
cles, and even "sowing dissension"
among military units. Honan radio
has been broadcasting similar
complaints since April. According
to other provincial broadcasts,
military authorities in Anhwei,
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Chekiang, Yunnan and Sinkiang are
also under attack.
For several weeks the south-
west province of Kweichow--one of
the few provinces praised by
Peking for its "revolutionary"
successes--has been broadcasting
long, inflammatory "battle
articles" designed to encourage
"revolutionary" drives in thirteen
other provinces against "big and
small" officials. The articles,
lurid accounts of maltreatment
suffered by two former party of-
ficials in Szechwan from 1962 to
1966, paint the former bureaucracy
there as a black mass of villains;
the broadcasts claim that some
are still in place, suppressing
true revolutionaries, and defying
the central committee.
Neither Szechwan nor any
other target province named by
Kweichow has rebroadcast these or
similar polemics, implying that
local authorities in those prov-
inces do not share Kweichow's
militancy. The two authors of
the Kweichow broadcasts are mem-
bers of a committee appointed by
the central committee on 7 May to
run Szechwan. The broadcasting
of their views from Kweichow sug-
gests divisions within the new
Szechwan leadership. This is
headed by Chang Kuo-hua, long-time
military commander in Tibet who
was named to the Szechwan post
even though he has often been
denounced by Red Guards.
In spite of the deteriorating
political situation in the prov-
inces, the regime is reluctant to
intervene openly. Minister of
Public Security Hsieh Fu-chih said
at a rally in Yunnan on 3 July
that it was Mao's desire that lo-
cal military and revolutionary
factions settle their disputes
themselves. According to poster
reports, Hsieh's delegation went
on to Hupeh Province in mid-July,
presumably carrying the same mes-
sage.
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Page 8 WEEKLY SUMMARY
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COMMUNIST VIOLENCE CONTINUES IN HONG KONG
Hard-core Communists are con-
tinuing their campaign of violence
against British authority in Hong
Kong despite setbacks from police
raids on Communist control centers.
The strong police action
begun last week with army support
has been increasingly successful
in blunting Communist efforts to
create mass disorders. Subse-
quently, the number of violent
incidents declined and crowd con-
trol became easier. The inability
of the Communists to offer effec-
tive resistance to the breakup of
their command posts seems to have
shaken their morale. In addition,
the arrest of some leaders found
among the 800 persons seized dur-
ing the raids has been a blow to
the Communist cause, as was the
loss of safe havens stocked with
homemade weapons.
The militants, however, are
persisting in sporadic terrorist
attacks on the police and public
transportation services. They are
now attempting to tie up Hong Kong
harbor facilities by calling a
strike which so far has been un-
successful.
suggests that the Chinese Commu-
nists do not intend to provide
more than minimal backing for the
campaign against the Hong Kong gov-
ernment at this time. Chinese Com-
munist propaganda continues to take
the line that the Hong Kong "com-
patriots" can win on their own--
relying on the "thoughts of Mao"
and improved organization to con-
solidate public support behind the
local Communist apparatus. An au-
thoritative 16 July People's Daily
Commentator article urged the
Hong Kong Chinese to "carry on the
struggle with redoubled efforts,"
but made no specific pledges of
assistance from China.
Except for a few minor inci-
dents, the Chinese border with
Hong Kong has remained quiet
since the 8 July fire fight at
Sha Tau Kok. Peking has protested
the arrest of three New China News
Agency (NCNA) correspondents by
the British in Hong Kong. One
has been sentenced to a two-year
prison term. The Chinese have
staged several small demonstra-
tions in front of the British Em-
bassy demanding their release but
thus far the Chinese reaction has
been little more than pro forma.
Peking's reaction to the
stronger British police action
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THE MILITARY SITUATION IN LAOS
The Communists have in-
creased their pressure on gov-
ernment forces in some areas in
northern Laos, but there is still
no evidence that the North Viet-
namese and Pathet Lao forces are
planning to initiate a signifi-
cantly higher level of fighting
during the current rainy season.
In a predawn raid on Luang
Prabang Airfield on 16 July, a
sabotage squad destroyed nine
MuongSmg
Nam Bac
Nam Tha
1ao Cai
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,
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-6 ksane
v.~Dua 'Rao
T-28 aircraft and damaged a tenth--
almost all the T-28s on the field
at the time. These aircraft have
been the core of recent government
efforts to counter Communist forces
harassing government outposts
around Nam Bac. The raid may also
have been a North Vietnamese at-
tempt to weaken the government's
short-term tactical air capabil-
ity in preparation for a Commu-
nist probe against a government-
held area such as Nam Bac.
CHINA
Lang $on--.,
Mong C
+Thanh Hoa
Udon Than' Khammouane (Tha kkl k)
Nakhon3hano
? NATIONAL CAPITAL
ROAD
TRACK OR TRAIL
75 MILES
75 KILOMETERS
S pone
(TOepone
Savannanhet
Mukdahan \Muong Ph ne'
Muong Nong-
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Page 10
OF
TO.'\ KI N
Demarcation
Line
SOUTH
VIE NAM
In the Plaine des Jarres
area, Communist forces re-
cently intensified their ar-
tillery fire on outlying de-
fensive positions of the key
neutralist base at Muong Soui
without attempting to take any
perimeter outposts. Thus far
no major Communist build-up
has been detected. Government
forces carrying out a clearing
operation are encountering lit-
tle or no resistance from small
pockets of Pathet Lao in the
area.
There has been no sig-
nificant enemy action in south-
ern Laos. A sweeping opera-
tion on the rim of the Bolo-
vens Plateau was recently dis-
continued because there had
been only slight contact with
North Vietnamese and Pathet
Lao forces.
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EUROPE
Public opinion in Western Europe on the whole
continues to favor the idea of Britain's accession to
the Common Market, despite De Gaulle's evident hostil-
ity, which he once again displayed in his conversa-
tions with Chancellor Kiesinger on 12-13 July. Formal
action on the UK's application will not occur until
the fall.
In Bonn, controversy continued over the effect
of Kiesinger's proposed ten-percent cut in previous
defense estimates. Defense Minister Schroeder still
opposes the compromises between the coalition partners
which would make the heaviest cutes in defense ex-
penditures over the next few years.
Soviet arms shipments to Egypt have continued.
The precise nature of the commitments the USSR has
exacted from its Eastern European colleagues to aid
the Arabs is not clear, but economic as well as arms
aid seems to be contemplated.
The Soviet public has been told--by Pravda--that
Chinese Red Guards created alarms and excursions on
the Soviet frontier. The incident occurred earlier
this year, but was not publicized at the time. It is
being resurrected now presumably to justify a continu-
ing augmentation of Soviet forces al n the Sino-Soviet
frontier.
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KIESINGER AND DE GAULLE PARLEYS MAKE LITTLE PROGRESS
The meeting on 12-13 July
between Chancellor Kiesinger and
President de Gaulle was generally
unproductive. For the Germans,
the timing was awkward since there
is a growing tendency in official
and press circles to greet De
Gaulle's policy pronouncements
cooly and critically. The two
leaders remained far apart on
the main substantive issues, but
did manage to agree on ways to
improve Franco-German consulta-
tion.
De Gaulle seems to have
made an unusually strong effort
to improve the atmosphere in the
relationship between the two coun-
tries, and in particular to swing
the Germans into his camp on such
issues as British entry into the
EEC. These efforts were prompted
in part by French awareness of Ger-
man concern over French-Soviet co-
operation in the recent Middle
East crisis. De Gaulle was also
clearly even more anxious to keep
Bonn from taking a leading role in
pushing ahead Britain's EEC appli-
cation, a move which would leave
France isolated in its attempt to
keep the UK out of the Common
Market.
De Gaulle's arguments were
evidently received unenthusias-
tically. Agreement was reached
to conduct a joint study of the
political and strategic situations
that may develop in the 1970s.
Bonn, however, gave no indication
that it is ready to weaken its ties
with NATO and the US and accept the
Gaullist vision of the future.
Regarding British entry into
the EEC, Kiesinger was apparently
unable to move De Gaulle. Kiesinger
taxed De Gaulle with failing to con-
sult adequately during the Middle
East crisis and on the De Gaulle -
Kosygin talks. They agreed that
in the future there should be
closer consultation during crisis
situations. The leaders further
agreed to establish a joint com-
mission to supervise economic, in-
dustrial and technical cooperation,
and that each government should
appoint a high-ranking official
responsible for bilateral coopera-
tion in general.
In general, Kiesinger again
made clear his determination to
keep relations with Paris as
friendly as possible, and not to
allow them to sag as his pred-
ecessor, Erhard, had done. The
Germans are still looking for
help from the French in promoting
ties with Eastern Europe. They
reportedly expressed their appre-
ciation for French "insistence"
on German reunification in
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SOVIET INDUSTRY CONTINUES IMPROVED PERFORMANCE
Moscow's official mid-year
status report on the Soviet econ-
omy, indicates that industrial
production continued to grow at
the same accelerated rate regis-
tered during the first quarter of
1967. Calculations based on the
report show an estimated increase
of eight-and-one-half percent in
industrial output excluding mili-
tary and space hardware. Total
industrial output probably grew
at a somewhat higher rate. The
continued growth in the production
of consumer nondurables, particu-
larly processed food and clothing
through June was largely attribut-
able to increased supplies of
agricultural raw materials result-
ing from last year's record output
of crop and livestock products.
Analysis of the published
data on machinery production in-
dicates that the output of dura-
bles that contribute directly to
military and space programs con-
tinued the rapid growth of 1966.
Civilian machinery--all machinery
except strictly military/space
end-items--increased by an esti-
mated nine percent. Compared
with the Soviet announced growth
rate for all machinery (which
includes military and space equip-
ment), this suggests that the
production of military/space
hardware during the first half
of 1967 increased by a range of
eight to ten percent. Within the
civilian machinery sector, more-
over, the defense-related category
of instruments, automation equip-
ment and control systems increased
its output by 16 percent. At the
same time, because capacity for
producing agricultural machinery
is sometimes converted to produce
military items, the negligible
rise in the production of agricul-
tural machinery relative to plans
suggests that some capacity in
this area may have been pre-empted
by rising military requirements.
This may have been at the expense
of Brezhnev's plan to increase
and stabilize agricultural produc-
tion.
A rise of nearly 20 percent
in the production of plastics
reflects the regime's efforts to
find cheap substitutes for certain
metals. The generation of electric
power recovered its former growth
rate of ten percent after an off-
year in 1966, and the long-ailing
forest products industry also
showed improvement. In the
processing of food products, the
dominant feature in the first
half of 1967 was the significant
increase in livestock products,
reflecting the excellent feed
supply position resulting from
the 1966 harvest.
The high rate of increase
in consumer nondurables, processed
food and clothing, registered
thus far indicates that this will
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be a relatively good year for the
Soviet consumer. This presumably
is a source of satisfaction to
the regime as it prepares for the
fiftieth anniversary celebration
of the November revolution. In
light of this emphasis, however,
the continued rise in military
machinery and equipment probably
means that investment in new
civilian productive capacity is
below plan. This foreshadows
certain limitations on the growth
of civilian industrial output in
the future.
The report is notably terse
in its treatment of the new sys-
tem of economic management, which
now affects more than 3,600 enter-
prises accounting for 25 to 30
percent of total industrial out-
put. All of Soviet industry is
to be transferred to this system
by the end of 1968. The latest
report continues the practice
of noting that the plants already
transferred have performed better
than industry as a whole, but it
fails to indicate how this com-
pares with their records before
conversion. The significance of
this claim is further diluted
because the enterprises initially
transferred were probably more
efficient than the bulk of Soviet
plants. In any case, no imme-
diately spectacular impact on
industrial growth is likely to
result from, the new system of
management.
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SOVIET INDUSTRIAL GROWTH SHOWS UPTURN IN FIRST HALF OF 1967
(Percentage Change From Corresponding Period of Previous Year)
I TOTAL INDUSTRY (Civilian)*
FIRST HALF
1961-64 1965 1966 1967
- 72 72 82
FULL YEAR 62** 7 72 72 (PLAN)
II MAJOR COMPONENTS OF INDUSTRY
1966
CIVILIAN MACHINERY
8.7 9.4 9.0
INDUSTRIAL MATERIALS
7.2 6.9
CONSUMER NONDURABLE GOODS
2nd Half FULL YEAR
* Figures rounded to nearest fractional half.
* Average annual rate of growth.
SELECTED COMMODITIES
Direction of Growth Rates***
Up: Metallurgical equipment
Electronics
Generators
Consumer durables
Down: Agricultural equipment
Oil equipment
Chemical equipment
Up: Forest products
Electric power
Steady: Fuels
Metals
Chemicals
Down: Construction materials
Up: Leather footwear
Meat
Vegetable oil
Clothing
Dairy products
*** Indicates direction of rates of growth in first half of 1967 relative to annual rates of growth in 1966,
67243 7-67 CIA
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NEW EAST GERMAN GOVERNMENT FORMED
Continuity of membership for
the main officers characterizes the
Council of Ministers selected by the
newly elected East German Volkskam-
mer (parliament) at its session
13-14 July, although it has been
somewhat streamlined. Once again
headed by Premier Willy Stoph, the
Council has been reduced from 53 to
39 members by excluding the many
chairmen, state secretaries, and
directors heading nonministerial of-
fices who formerly were accorded
concilor rank. The number of
ministries, however, was increased
as several lower level offices were
raised to ministerial status. Mem-
bership in the presidium, the ac-
tual policy-making body within the
Council, was increased from 10 to 15.
Personnel changes connected with
the reorganization of the Council
did not affect officials administer-
ing economic affairs, despite the
indirect criticism earlier leveled
at them in the party's theoretical
journal. Of the four prominent mem-
bers dropped from the council--dep-
uty premiers Bolz, Scholz, and Witt-
kowski, and Justice Minister Ben-
jamin--only Benjamin left under a
cloud of suspicion. The others are
elderly and have been relatively in-
active for some time. The removal
of "Red Hilda" Benjamin, long charac-
terized as one of the most Stalinist
of the East Germans, is probably in-
tended to improve the regime's image
at home and abroad. Other personnel
changes reflect Pankow's continuing
policy of rewarding younger "techno-
crats" associated with the new eco-
nomic system by elevating them into
top jobs.
Premier Stoph's speech to the
Volkskammer on 14 July, in which he
stressed the necessity of using
scientific methods and modern tech-
nology and equipment, indicated the
regime's determination to continue
efforts to increase the efficiency
of the economy by using rational, as
distinguished from solely ideological,
methods.
The New Presidium Membership
Chairman: Premier Willy Stoph
Deputy Chairmen: Alfred Neumann, Minister for Materials
Gerhard Schuerer, Chairman of State Planning Commission
Max Sefrin, Minister of Health
*Alexander Abusch
Julius Balkow
*Kurt Fichtner
*Manfred Flegel
Wolfgang Rauchfuss
*Werner Titel
*Gerhard Weiss
*Herbert Weiz
*Kurt Wuensche, Minister of Justice
Siegfried Boehm, Minister of Finance
Georg Ewald, Minister and Chairman of GDR Agricultural
Council
*Most of the new members have previously served in the Council or were
deputy ministers before being promoted.
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MIDDLE EAST - AFRICA
The Arab-Israeli controversy continues to hold
the limelight both in the area and in the UN.
Algeria's Boumediene received much publicity
with his efforts to stiffen the Arab will to resist
Israel. He has made two trips to Moscow and has held
lengthy conferences with Arab leaders. In the process,
Boumediene may be laying the groundwork for project-
ing himself as chief Arab spokesman.
In other Middle East developments Iranian secu-
rity forces foiled a second attempt to sabotage oil
installations in Khuzistan Province in early July.
The saboteurs, who are Iranian Arabs, were equipped
with plastic explosives by the Egyptian consul in
Basra, Iraq.
In Athens, retirements and promotions in the air
force and navy have continued amid reports that the
regime is facing increasing economic problems and
growing, though still passive, popular disillusionment.
There has been considerable speculation over a possible
Cyprus settlement with Ankara, but there is no evidence
that any agreement is at hand.
India's Congress Party may suffer the loss of
another state government to an opposition coalition--
this time backward Madhya Pradesh--leaving the party
in control of only seven of the 17 state regimes. The
long-term stability of at least two more Congress-
controlled state administrations and several of the
states now controlled by non-Congress coalitions is
also threatened.
In tropical Africa the rebellion in the Congo
has largely been smothered and European fears tempo-
rarily quieted. The mercenaries are still a potential
threat, but their main concern now appears to be es-
cape from the Congo. Meanwhile, in Nigeria the federal
offensive against Biafra is making little headway and
the university town of Nsukka--earlier captured by
federal troops--may now be in the hands of the Biafrans.
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THE SITUATION IN THE MIDDLE EAST
A second cease-fire went into (there also were engagements at
effect along the Suez Canal on 15
July after two days of the heaviest
fighting since the original June
cease-fire. UN observers are now in
place on both sides of the canal, but
conditions remain very sensitive.
A major point of friction now
is whether small Israeli boats can
use the navigable portions of the
canal. The Israelis maintain that
the cease-fire line runs down the
middle of the waterway, and that
craft from both sides therefore may
use it. The Egyptians contend that
the east bank is the line, and have
told the UN they will have "no choice"
but to open fire if the Israelis
again attempt to put their boats in
the water.
The controversy, however, is
more than a local dispute affecting
the cease-fire. Prime Minister
Eshkol is quoted as saying in a press
interview that Israel is anxious to
have the principle of its ships'
presence in the canal recognized now
in order to "establish our freedom
of navigation for future reference."
In Cairo, the newspaper, Al-Ahram,
reflecting Egyptian sensitivity
stated on 19 July that Egypt will
not allow Israeli ships in the canal
"either at present or in the future."
In the fighting along the canal
on 14 July, the most serious trouble
was at the southern end although
Page 18
Qantara and Ismailia. The Israelis
said their positions opposite Suez
city were hit by intermittent
artillery, tank, and mortar fire
all that day. Five Israeli soldier:
were killed before aircraft silenced
the Egyptian batteries. Israeli
spokesmen said six Egyptian jets
were downed on the 15th, and they
admitted losing one Mirage fighter.
Most of the incidents during
the past two weeks probably were
initiated by the Egyptians to en-
hance their tarnished military rep-
utation.
Soviet Military Aid
The Soviets apparently are hav-
ing difficulties working out details
of military aid with the Arabs.
The differences probably concern
type and quantities of equipment
to be supplied, and possibly troop
training and the stationing of addi-
tional Soviet technicians in the
area. The same matters probably
interested the three high-level
Arab delegations which were in
Moscow for a day this week. In the
groups were Algerian Premier Bou-
mediene, Iraqi President Arif, and
the Iraqi and Egyptian chiefs of
staff.
Further developments may arise
from the meeting of Soviet and East-
ern European leaders in Budapest
on 11-12 July.
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Soviet military aid deliveries
by sea continue at a rate of about
two per week. Three fourths of the
38,000 tons of military equipment
carried by 16 Soviet ships since 5
June has been delivered to Egypt.
The shuttle of Egyptian ships
consisting of 11 voyages between Al-
giers and Alexandria appears to have
ended. The last ship, the Mugattam,
departed Algiers on 12 July after
loading 24 medium tanks, two 100-mm.
guns, and at least ten wheeled ve-
hicles. Other ships involved in
these movements have returned to
normal operations.
United Nations
At the UN General Assembly, at-
tempts to work out a compromise res-
olution have all but foundered. The
USSR has been trying this week to
convince the Arabs to accept some
reference to Arab termination of the
state of belligerency as part of an
Assembly call for Israeli troop with-
drawal.
The Soviets have also tried to
amend the US-supported Latin American
resolution to refer to the "renuncia-
tion of the capacity to wage acts of
war" (instead of "end the state of
belligerency"), thus permitting Egypt
to retain a legal basis for denying
Israel navigation rights.
In view of their resistance to
the belligerency concept, it is doubt-
ful that the Arabs would even accept
the Soviet-revised Latin American
draft.
It therefore appears increas-
ingly likely that the Assembly will
end by simply referring the issue to
the Security Council and perhaps by
asking the secretary general to
send a special representative to the
area. Neither Israel nor Egypt has
ruled out this idea, but both pre- 25X1
fer that the representative be
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NIGERIAN MILITARY SITUATION FLUID
Nigeria's military situation
generally remains fluid, although
the federal push into Northwest
Biafra may have run into trouble.
Federal troops captured the uni-
versity town of Nsukka--one of
their major objectives--on 14 July,
but may have been forced to with-
NIGERIA
t
WES TER N
~Ibadan
LAGOS
IN.
draw because of subsequent attacks
against the rear areas by Biafran
forces.
Biafran military Governor
0jukwu claims that his troops
needlessly abandoned Nsukka and
0 RJ T H E R
JEnugu0 "?d~akalik
MID-
/ WESTERN
LAKE"
CHAD
Ikon -- y.. s
ary decreed ly
~%Cnlab ?
Ha Po
Bonny
Boundary of
former Region
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then reoccupied the town after
federal troops failed to consoli-
date the area. A federal military
leader has admitted that his
forces suffered a setback there.
There are indications, moreover,
that Biafran troops have also re-
captured a few villages between
Nsukka and the border. Federal
reinforcements are being sent
and the Nigerian military may
be forced to delay for some time
before launching another attack
toward Enugu, the capital of
Biafra, the secessionist Eastern
Region.
The Biafran Army may have
established new tactical head-
quarters closer to Enugu. Ojukwu
has stated that he intends to
spend the next two weeks strength-
ening the command and control of
his army before making a major
push against federal troops.
On the northeastern front,
federal forces have captured the
provincial capital of Ogoja
and are moving toward Abakaliki,
despite harassment by Biafran
guerrilla bands. There is no
clear evidence to indicate that
the federal plan to move south
toward Calabar is being imple-
Page 21
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WEEKLY SUMMARY 21 Jul 67
mented, but a federal column is
reportedly moving toward Ikom
on the Cameroon border, midway
to Calabar.
There are strong indications
that the long-standing plan to
land troops in Biafra's minority
tribal areas is about to be im-
plemented. Nigeria's single
landing craft, loaded with troops
and accompanied by three ships,
sailed from Lagos on 19 July.
Federal troops are also
successfully infiltrating into
the southwest rivers area of
Biafra. Ibo police and military
units, charged with ferreting
out these bands, are reportedly
concerned over their potential
for guerrilla activity.
On 15 July the Biafran re-
gime advised the US and UK repre-
sentatives to consider evacuating
their nationals. An evacuation
of all expatriates from the former
Eastern Region who wish to leave
is now under way, exept for the
US and UK official staffs in Enugu.
An Italian passenger ship capable 25X1
of carrying about 900 people ar-
rived in Port Harcourt on 20 July
for the evacuation
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MERCENARY REBELLION SUBSIDES IN THE CONGO
The mercenaries who left Kisan-
gani (formerly Stanleyville) on
12 July apparently have settled down
near Punia. It is not known whether
they plan to leave the Congo by air,
or whether they will decide to stay
put. Some, however, may have pro-
ceeded southward toward Kindu.
The mercenaries have some hos-
tages with them, including several
Italians brought from the Bukavu
area and a handful of Belgian civil-
ians. One planeload of mercenaries
with some Belgian Air Force person-
nel flew to Angola on 13 July. The
remaining mercenaries apparently are
at a plantation owned by one of
their leaders and have enough sup-
plies to hold out for some time.
They have a few small aircraft, but
complete withdrawal by air would
require additional planes flown in
from outside. If the mercenaries
Mbond.k.
I ASA..
,Mbuji MjtyA
choose to continue by land, they
would face a long and difficult trip
some 600 to 700 miles south of An-
gola and would be subjected to army
harassment most of the way.
Congolese Army units reportedly
have destroyed most of the key
bridges on the roads the mercenaries
would have to use. Army units along
these roads have been reinforced,
but the military high command is
somewhat undecided about what else
to do.
All of the Congolese and for-
eigners wanting to leave Kisangani
have been evacuated. Between 30 and
100 Europeans chose to remain for
the time being. Security has broken
down there and looting by both army
and civilians has occurred on an
unprecedented scale. Most foreigners
are treated with considerable hostil-
ity, and there are tales of army
brutality, particularly to Congo-
lese civilians.
The local administration at
Bukavu has begun to function
again, but some Europeans are
still being evacuated. Shops
have reopened, but supplies are
limited.
Calm has returned to Lubum-
bashi (formerly Elisabethville),
but considerable numbers of Euro-
pean mining personnel have re-
solved to leave the country in
the near future. President Mo-
butu, more concerned about the
military situation in the north-
east than with Katangan economic
problems, has done little to en-
sure the safety of the Europeans
or to offer incentives to stay.
Unless positive measures are
taken quickly, the copper-based
Congolese economy could further
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WESTERN HEMISPHERE
The Western Hemisphere was generally quiet dur-
ing the week as most countries were preoccupied with
their own problems.
Cuba is gearing up for its annual 26 July cele-
brations, to be held this year in the eastern city
of Santiago. The highlight will be Fidel Castro's
speech, which will set the stage for the Latin
American Solidarity Organization meeting to be held
in Havana from 31 July to 8 August.
In Costa Rica, a major legislative battle is
brewing on a bank reform bill which President Trejos
has made a key goal of his administration. The
country's present banking system was instituted by
the opposition National Liberation Party, which
makes this reform a highly controversial issue.
Efforts by Panamanian President Robles to
hasten ratification of the new canal treaties may
be torpedoed by the legislature's desire for more
time to study the drafts--time the opposition will
use to build a case against the treaties.
In South America the most immediate challenge
to stability exists in Uruguay, where Communist-
incited labor strife continues. Argentina inter-
est centered on the Bolivian guerrilla problem
and on plans for the OAS meeting at which Venezue-
la's charges against Cuba will be discussed. In
Brazil the accidental death of former president
Castello Branco has removed a friend of the US as
well as a moderating political influence.
In Colombia and Peru, political progress
seems to have been stymied by long-lasting battles
between president and congress. Similar problems
in Chile and Bolivia are compounded by the fact
that in Chile the president is at odds with mem-
bers of his own party and in Bolivia the presi-
lapsed.
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NEW DIFFICULTIES WITH PANAMA CANAL TREATIES
Efforts by the Panamanian
Government to achieve early ratif i-
cation of the new canal treaties
with the United States have hit
a number of snags.
Foreign Minister Eleta has
expressed concern to Ambassador
Adair over alleged discrepancies
on a map of the land transfers
to be implemented by the new
treaties. Eleta claims the map
shows larger military base areas
and smaller areas of territory to
be jointly administered than were
agreed to by US and Panamanian
negotiators. This controversial
point could lead to a resumption
of discussions of the draft de-
fense treaty.
President Robles is recon-
sidering plans to come to Washing-
ton early next month for signing
ceremonies because of increasing
opposition to a hasty ratifica-
tion of the treaties. Both in the
cabinet and among government sup-
porters in the National Assembly,
there are doubts about the advis-
ability of his leaving the coun-
try during such a crucial period.
There is also concern that call-
ing a special session this summer
to ratify the treaties will give
the impression that the govern-
ment is trying to ram them through
without adequate time for a
thorough study of the drafts.
If the special session is
not called by 1 September, de-
bate would probably carry over
into the regular session that
opens on 1 October. The foreign
minister wants an early session
in order tc deprive the opposi-
tion of time to build a case
against the treaties. Most gov-
ernment deputies, however, favor
postponing debate until the regu-
lar October 1967 session or until
a special session can be called
after the presidential election
next May.
Meanwhile, Robles has re-
leased the entire text of the
draft treaties for serial publi-
cation in the conservative daily
La Estrella. This move was
prompted by alarm over the wide
circulation of unauthorized ver-
sions of the documents by oppo-
nents of the treaties and by the
fear that the government would
lose support by continuing to
withhold copies from the National
Assembly. The government is now
marshalling its resources for a
propaganda campaign to "sell"
the treaties.
There are indications that
the self-seeking politicians who
control large segments of Panama's
news media are using the treaty
issue to bargain for political
and economic concessions from the
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Lands relinquishable to Panama as of 27 June 1967,
,Lands in central area of Zone still under discussion
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As knowledge of the treat
becomes widespread, opponents
of the government can be expected
to find fault with the contents,
especially the defense treaty.
POLITICAL PROBLEMS FOR CHILEAN PRESIDENT
Chilean President Eduardo
Frei's Christian Democratic Party
(PDC), already torn by internal
dissension is being criticized
both in Chile and abroad for its
acceptance of the establishment
of a committee of the Havana-
based Latin American Solidarity
Organization (LASO) in Chile.
The PDC's position on LASO
demonstrates the increasing
strength of the left-wing "rebel"
faction which has been extremely
critical of Frei's policies. In
a statement issued on 10 July,
the party's National Council rec-
ognized that LASO is linked to the
Cuban advocacy of guerrilla war-
fare, but supported the right of
political groups to affiliate
with an international organization
so long as they do not interfere
with Chilean politics. The state-
ment added that guerrilla move-
ments resulted from "underdevelop-
ment and exploitation by national
oligarchies and foreign interests,"
as well as from Castroite agita-
tion. Domestic criticism of this
attitude has been echoed in Vene-
zuela, which is very sensitive
on the subject of Castro.
Frei lost little time in dis-
associating himself from the PDC's
position. He unequivocally con-
demned the international activi-
ties of LASO and stated that the
Chilean LASO committee would not
be permitted to incite violence
in Chile or in other Latin Ameri-
can countries.
Frei's control of the party
has been further weakened, how-
ever, by the election of "rebel"
leader Senator Rafael Gumucio as
president of the PDC at the Na-
tional Assembly meeting on 15 and
16 July. Although the PDC will
continue to support the govern-
ment, it probably will take more
extreme positions both in legis-
lative debates and in public
statements.
In the past Frei has often
been able to rally public sup-
port in his battles with the op-
position-controlled Congress by
claiming that the only alterna-
tive to the PDC is the Communist-
Socialist Popular Action Front
(FRAP). With the left wing of
the PDC sounding more and more
like FRAP, this argument is los-
ing much of its strength.
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