WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A006100060001-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 29
• Document Creation Date: December 20, 2016
• Document Release Date: March 8, 2006
• Sequence Number: 1
• Publication Date: November 17, 1967
• Content Type: SUMMARY

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Secret
DIRECTORATE OF
INTELLIGENCE
W., f
WEEKLY SUMMARY
Secret
State Department review completed
52
17 November 1967
No. 0316/67
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(Information as of noon EST, 16 November 1967)
Far East
VIETNAM
Communist main force units, supported by local Viet
Cong elements, have launched an ambitious "winter-
spring campaign" in South Vietnam's western high-
lands. On the political scene, Prime Minister
Nguyen Van Loc announced the formation of the new
cabinet on 9 November.
NORTH VIETNAM'S SHIPPING PROBLEMS GROW
North Vietnam's port operations continue to be ham-
pered by cargo handling difficulties. Essential
needs are being met, however, and in recent months
port congestion has been somewhat eased.
CIVIL DISOBEDIENCE CONTINUES TO TROUBLE CHINA
Peking's attempts to unite rival Red Guard factions
appear to be running into trouble and clashes be-
tween opposing groups are increasing although the
level of violence still remains well below that of
last summer.
PEKING CONTINUES MODERATE STANCE TOWARD HONG KONG
The Chinese Communists are continuing their efforts
to restrain the more militant elements in Hong Kong
and to direct the confrontation with the British in-
to channels that will not seriously injure China's
economic interests.
INDONESIA: RICE AND POLITICS
Indonesia's current rice shortage and spiraling
prices may become a major political problem for the
Suharto regime.
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BULGARIA INCREASES CONTACTS WITH NON-COMMUNIST WORLD
Bulgarian party chief Zhivkov, seeking to reap the
benefits of a more balanced policy between the East
and West, recently has been energetically trying to
improve Sofia's political and economic relations
with the non-Communist world.
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Middle East - Africa
THE WEEK IN PERSPECTIVE
MERCENARY PRESENCE PLAGUES CONGO (KINSHASA) AND RWANDA
The problem of what to do with the mercenaries in
Rwanda has been turned over to an OAU subcommittee
and may drag on for several weeks, while the batch
of mercenaries who invaded Katanga has returned to
Angola.
BRITISH TO TURN OVER SOUTH ARABIA TO NLF
Although the British have now agreed to negotiate
with the National Liberation Front (NLF) for the
formal transfer of authority in South Arabia, the
Saudi Arabians remain concerned over the prospect
of NLF domination and may try to undermine the new
regime.
TENSIONS RISE ON CYPRUS
A tenuous cease-fire has halted serious fighting,
but Greek and Turkish emotions remain high and a
period of tension and mutual recriminations can be
expected.
Western Hemisphere
PANAMA COALITION STILL SPLIT ON PRESIDENTIAL NOMINEE
A recent ruling by the Electoral Tribunal has thrown
the race wide open again, and the continuing dispute
among the governing parties is giving opposition
leader Arnulfo Arias a definite lead.
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NEW THREATS TO PERU'S STABILITY
President Belaunde's political prestige received a
sharp setback on 12 November when his party lost
two important congressional by-elections and the
Christian Democratic Party withdrew from the gov-
erning coalition.
CHILEAN STABILIZATION PROGRAM HEADS FOR TRCUBLE
The 1968 wage-price policy of President. Frei has
provoked opposition from virtually all political
and economic sectors, and although he appears fi-
nally to have the support of his own party, pros-
pects for congressional approval are dim.
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FAR EAST
The Communist "winter-spring campaign" in
South Vietnam focused last week on the western
highland provinces of Darlac and Kontum. The
willingness of Communist commanders to take heavy
losses in actions around Dak To underscores their
aim of drawing in and tying down major allied forces
in order to relieve pressure on Communist posi-
tions in coastal areas and the delta. This objec-
tive was also reflected in Hanoi propaganda claims
that US forces have lost the initiative in the
highlands and have been forced into a "passive
posture" throughout South Vietnam.
In Saigon, Prime Minister Nguyen Van Loc an-
nounced a cabinet that is dominated by generals
and holdovers from the Ky government. Although
the new cabinet is balanced regionally and re-
ligiously, only a few members have been chosen on
essentially political grounds and most appear to
be competent technicians or experienced adminis-
trators.
Efforts to unite rival Red Guard factions in
China are making little progress and disorder is
spreading again. Although the level of violence
remains well below that of last summer, militant
groups have been emboldened to defy appeals to
end disorder and the military is again displaying
some hesitation in dealing with factional conflicts.
The Chinese press continues to voice implied sup-
port for the militants and to greet the growing
violence as a "great victory" for the Cultural
Revolution.
A rice shortage in Indonesia and the conse-
quent rise in prices threaten to develop into a
major political problem for the Suharto regime.
Student organizations have seized upon the issue to
renew demonstrations against corruption and in-
efficiency in the government.
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V I ETNAM
Communist main force units,
supported by local Viet Cong ele-
ments, have launched an ambitious
"winter-spring campaign" in South
Vietnam's western highlands. Since
the campaign began early this
month, the enemy has staged a se-
ries of large-scale assaults, am-
bushes, and heavy mortar barrages
on US and South Vietnamese posi-
tions from southern Darlac Prov-
ince to central Kontum Province.
The focus of this activity
has been the area around Dak To,
where at least five North Vietnam-
ese regiments--some 7,000 men--
are currently deployed. US and
South Vietnamese forces counter-
ing the Communist threat in this
area now total more than 9,000
men, including 12 battalions and
their respective headquarters units.
Enemy losses thus far in the
campaign around Dak To have been
extremely high and will undoubt-
edly affect the efficiency of fu-
ture efforts. Since the current
fighting began on 3 November,
more than 600 enemy soldiers have
been killed in contrast to
friendly casualties of 102 killed
and 533 wounded. The Communist
forces nevertheless possess the
manpower and heavy weapons, pos-
sibly including rocket forces, to
mount additional large-scale ac-
tions.
The enemy strategy evidently
also includes maintaining pressure
on allied units in Pleiku and Dar-
lac provinces. The North Vietnam-
ese 95B Regiment, which has been
recently reinforced, remains ac-
tive in western Pleiku. Small
unit attacks, probes, and shell-
ings are expected against some
of the more lucrative allied tar-
gets in the area. Elements of
the North Vietnamese 33rd Regi-
ment have been involved in sev-
eral mortar attacks on US posi-
tions near Ban Me Thuot.
According to a recently cap-
tured enemy document, Communist
plans for the "winter-spring" of-
fensive in the highlands call for
large-scale maneuvers designed
to draw in and tie down large
numbers of allied. troops, thus
relieving to some extent allied
pressure in the coastal areas.
The highlands campaign has ap-
parently also been coordinated
with recent intensive enemy ef-
forts farther south in northern
III Corps.
For the present, however, a
lull in activity in northern III
Corps continues. Some of the Com-
munist forces in northern Binh
Long and Phuoc Long provinces are
regrouping, while others are con-
tinuing to prepare for future of-
fensive activities. Elements of
the Viet Cong 9th Division, which
apparently took heavy losses in
the recent fighting around Loc
Ninh, have moved northward to
positions near the Cambodian bor-
der. Elements of two North Viet-
namese regiments are just south
of Song Be. They have been noted
making battle preparations, in-
cluding the construction of de-
fensive positions and, possibly,
the preparation of 140-mm. rocket
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firing positions--heretofore un-
observed in III Corps.
Political Developments
In South Vietnam
Prime Minister Nguyen Van
Loc announced the formation of the
new cabinet on 9 November. Nine
of its 17 ministers served in the
previous cabinet. The key minis-
tries--defense, interior, foreign
affairs, revolutionary development,
and economy--are headed either by
generals or by holdovers from the
Ky government.
Although the new cabinet is
balanced regionally and reli-
giously, only a few of the appoint-
ees have been chosen on essen-
tially political grounds. Rather,
most appear to be competent tech-
nicians or experienced administra-
tors. The appointments therefore
largely confirm earlier statements
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of President Thieu that cabinet
members would be selected on the
basis of competence and ability
to work together.
The recently elected lower
house of the National Assembly
held its first working session on
8 November. Nguyen Ba Luong was
named acting chairman and Duong
Van Ba acting secretary general.
Luong has since announced he will
be a candidate for the permanent
chairmanship of the lower house.
His principal rival for that post
probably will be Ho Huu Tuong, a
prominent Buddhist layman identi-
fied with the militant Buddhist
faction. The government is opposed
to Tuong's candidacy, and is re-
portedly attempting to organize
opposition to it.
The upper house, continuing
to work on its internal organiza-
tion, has decided to create 12
standing committees to deal with
legislative matters and its own
internal affairs. The senators
decided not to create a position
of secretary general, principally
because they did not want so
much power vested in one man. In-
stead, a five- to ten-man internal
affairs and rules committee will
probably act as the regulatory
body for such matters as control-
ling the agenda and ruling on leg-
islative procedures.
Political maneuvering in the
legislature, apart from the com-
petition for assembly offices,
presently centers on efforts to
create political blocs in the
lower house. Although there are
reports that religious and other
groups are endeavoring to form
blocs that would give them politi-
ical leverage, the most success-
ful effort to date appears to be
that of the government in launch-
ing the Democratic Bloc, with pos-
sibly as many as 50 members.
The Democratic Bloc, being
promoted by Ky and other top lead-
ers, will reportedly assume a
strong progovernment stance in the
lower house and will support Ngu-
yen Ba Luong's bid to become chair-
man of that body. Luong will be
the nominal head of the bloc, but
the actual leadership will be
vested in Representative Le Tai
Hoa, reportedly at Ky's request.
Ho Chi Minh Possibly Ailing
Ho
was "very weak" an was confined
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to bed when the Soviet ambassador
invited him to the celebrations
in Moscow. The 77-year-old leader,
moreover, has made no public ap-
pearances since North Vietnam's
national day celebrations in late
August.
Despite his inactivity and
apparent aloofness from the po-
litical scene, there has been no
indication that his subordinates
have had difficulty in running
the country without his immediate
leadership and direction. The
evidence suggests that the re-
gime's major policies--particu-
larly on strategy for the war and
on possible peace negotiations--
have been the result of collec-
tive decision-making.
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NORTH VIETNAM'S SHIPPING PROBLEMS GROW
North Vietnam's port opera-
tions continue to be hampered by
cargo handling difficulties. Es-
sential needs are being met, how-
ever, and in recent months port
congestion has been somewhat eased.
Imports by sea in the first
half of this year reached a record
high average of about 128,000 tons
per month. This placed heavy de-
mands on port facilities, partic-
ularly at Haiphong. Ships had
to wait days before starting to
unload and cargo began to pile up
on the docks. By August, turna-
round time for ships was averag-
ing more than 30 days.
Since then, however, imports
by sea have been cut back and con-
gestion has eased. In October,
only about 90,000 tons were un-
loaded and the average turnaround
time dropped to 19 days. This was
still higher, however, than in
1966 when the average turnaround
time was only 13 days.
Silting in the main channel
into Haiphong also creates prob-
lems and most ships must now en-
ter the harbor at high tide. Those
drawing as much as 26 feet of
water have been forced to wait
ten days or more for a high enough
tide.
The average load per ship is
now being reduced--possibly to
permit entry to the harbor at any
high tide. In some recent cases,
small Soviet ships carrying flour
have been diverted to other ports
to ease the strain at Haiphong.
Bomb damage to key bridges
in the Haiphong area has made the
moving of goods through the port
area increasingly difficult and
time consuming. Pontoon bridges,
ferries, and the intensified use
of inland waterways, however,
have minimized the disruption to
the transport system. In addition,
frequent air raid alerts, espe-
cially at Haiphong, cut consid-
erably into working time at the
docks.
Despite these problems, North
Vietnam continues to import es-
sential nonmilitary goods by sea.
Bulk foodstuffs accounted for over
65 percent of October's imports
and petroleum totaled another 13
percent. The North Vietnamese
should be able to maintain the
present level of cargo arrivals.
Instead of using Haiphong,
cargo from incoming ships can be
loaded into barges at the many
island anchorages in the Gulf
of Tonkin. This has been done in
the past with tankers but prob-
ably would be done on a large
scale only as a last resort be-
cause barges shuttling to and
from the mainland would be highly
vulnerable to air attacks.
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CIVIL DISOBEDIENCE CONTINUES TO TROUBLE CHINA
Peking's attempts to unite ri-
val Red Guard factions appear to be
z-unning into trouble, and clashes
between opposing groups are increas-
ing. Although the level of violence
,still remains well below that of
last summer, it has again begun to
affect China's transportation net-
work. The disorders, which never en--
i_irely ceased in September and Oc-
tober, now seem to be spreading,
.both in long-troubled areas of west
China and in the east.
Militants in Peking have given
~.o clear sign to the radical Red
Guards to resume "revolutionary"
activity, but the leftists appear
to be ignoring appeals for calm and
order, and the army seems unwilling
or unable to deal effectively with
the growing civil disobedience and
:anarchy. The military continues to
intervene in many cases once out-
breaks have occurred, but it does
not appear to be acting with uniform
determination throughout the coun-
try.
pearing in public with Mao Tse-
tung in circumstances that suggest
they have been partly rehabilitated.
Li Hsueh-feng and Yu Chiu-ii, two
former leaders who had been pushed
even further into limbo, appeared
on the same occasions. Their pub-
lic appearance seems designed to
underscore the strength of the mod-
erate faction. Regime propaganda
continues to stress such moderate
themes as the importance of unity
among "revolutionaries" and the need
to resume classes.
The press, however, has recently
been carrying a number of articles
and editorials that appear to em-
phasize the radical point of view.
A People':. Daily article on 10 No-
vember found great value in disorder,
calling it "a great victory for the
Cultural Revolution." On 13 November
a People's Daily editorial warned
that ideological fervor was sagging
and that those who did not display
proper zeal may "be thrown off the
wagon.
The regime has announced that
many schools have opened through-
out the country, but a growing body
of evidence suggests that in many
cases neither students nor teach-
ers are actually returning to the
classroom. Middle schools in Can-
ton were reportedly closed after
a school was burned down on 4 No-
vember.
Developments in Peking suggest
that current policies may be in
'=1ux. Several moderate figures who
were sidelined in August--in par-
ticular Foreign Minister Chen Yi and
army leaders Yeh Chien-ying and Hsu.
I-isiancf-chien--have recently been ap-
In addition, a recent series of
editorials in the Liberation Army
Journal and People's Daily dealing
with problems in the army stressed
that the military lacks proper un-
derstanding of mass movements. This
suggests that the army is being ac-
cused of treating the Red Guards too
harshly.
On 14 November, many regional
military leaders appeared publicly in
]?eking in the company of Mao Tse-tung.
A high-level review of current
policies, and in particular the
army's role in governing China,
be under way in the capital.
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PEKING CONTINUES MODERATE STANCE TOWARD HONG KONG
The Chinese Communists are
continuing their efforts to re-
strain the more militant elements
in the Hong Kong apparatus and to
direct the confrontation with the
British into channels that will
not seriously injure China's eco-
nomic interests in the colony.
Recent talks between leading
Hong Kong Communists and Chinese
authorities in Canton were prob-
ably aimed at ensuring that the
Hong Kong Communists did nothing
to mar the current trade fair in
Canton and to explore ways of ex-
panding Communist earnings in the
colony.
The Hong Kong mainland border
has been relatively quiet as ne-
gotiations between the Chinese
Communist and British authorities
continue. According to local
Communist press reports, the
principal issues under discus-
sion are the reopening of a
border crossing and the return
of three Hong Kong policemen,
including one British inspector,
and five mainland Chinese. No
public announcement has been
made on the progress of the ne-
gotiations.
In Hong Kong, the militant
Communists are continuing the
use of genuine and dummy bombs
in their campaign to erode Brit-
ish authority. They are becom-
ing more selective in choosing
targets, however, and are employ-
ing more powerful and sophisti-
cated devices. Last week, an
apparent sabotage attempt was
made against a road and tunnel
complex. The use of dummy bombs
places a maximum burden on the
police while avoiding adverse
public reaction to civilian cas-
ualties. At the same time, the
militants are stepping up their
propaganda in labor unions and
schools to win public support in
a long-term campaign a ainst the
colonial government.
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INDONESIA: RICE AND POLITICS
Indonesia's current rice
shortage and spiraling prices may
become a major political problem
for the Suharto regime. Although
imports will provide some relief,
the scarcity--aggravated by poor
distribution--will persist and
prices probably will continue to
rise until the next harvest in
late March. In some areas the
price has already gone up 50 per-
cent..
Rice represents more than
a third of the cost of living
index in Djakarta and is an im-
portant determinant of other
prices. The Djakarta cost of
living index is used to judge the
progress of the national stabili-
zation effort--the priority task
of the present regime. Both the
government and its critics there-
fore regard rice as an indirect
gauge of the success or failure
not only of the stabilization
program, but of the Suharto re-
gime itself.
Various political organiza-
tions are exploiting the rice is-
sue for their own purposes. In-
donesia's university and high
school student confederations--
KAMI and KAPPI--have staged a
series of demonstrations protest-
ing high prices and corrupt or in-
efficient officials. Although they
may be motivated in part by a de-
sire to protect the consumer, the
students need a popular issue to
maintain their role as political
gadfly of the "New Order" and to
restore some semblance of unity
in their own ranks.
The large National Party
(PNI)--now under heavy pressure
from Suharto to support the gov-
ernment or be banned--has hinted
that it will defend the cabinet on
the rice issue if the government
will stop the anti-PNI campaign.
The rice problem has served to
bring together such disparate ele-
ments as the leftist PNI university
student organization and the anti-
leftist KA.MI.
The political problem is
compounded by indications that
serious planning errors have
been made in the rice procurement
program and that army officers
have been involved in speculation..
These circumstances add weight
to charges of government corrup-
tion and of Acting President Su-
harto's reluctance to take forth-
right action against it.
Suharto has effectively
blunted the student demonstrations
so far. The persistent shortage,
however, combined with failure to
deal with corruption and with the
political frustrations of all In-
donesian civilian groups, is likely
to create recurrent and perhaps
mounting political problems over
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The USSR seems to have won agreement from some
The session wi e made
to look like a preliminary to a world conference,
a goal the Russians have been pursuing off and on
since before Khrushchev's removal. Nevertheless,
the world gathering itself is still far in the
distance. Moscow's present aim is probably to
achieve at least the appearance of progress toward
Communist unity.
Communist parties to hold another meeting.
Rumania and Hungary last week exchanged drafts
of a new friendship and mutual assistance treaty to
be signed in February 1968. In recent years, their
relations have been poor and at times even hostile.
The renewal may signal Bucharest's intent to rene-
gotiate similar accords with the USSR, Bulgaria,
and Czechoslovakia, which also expire early in 1968
There is no sign that such negotiations are yet
under way.
The Harmel study on the future of NATO remains
on a thorny path. NATO Secretary General Brosio is
drafting a summary to be presented at the ministe-
rial meeting next month. The French abstained in
the vote authorizing Brosio to make his summary,
contending that the ministers themselves must ne-
gotiate a text. The French will probably find mat-
ter to criticize when Brosio's draft is reviewed at
the meeting of the Special Group on 22-23 November.
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BULGARIA INCREASES CONTACTS WITH NON-COMMUNIST WORLD
Over the last seven months,
Bulgaria has consulted with 28
economic or political delegations
from various non-Communist coun-
tries of western Europe and the
Middle East, and a variety of
new arrangements has resulted.
Sofia has signed agreements
for increased trade with Sweden,
France, Italy, Egypt, the Sudan,
Syria, and Iran. It has entered
into joint trading companies with
France and Australia, and has
concluded tourist agreements with
Norway, Austria, Iraq, and Egypt.
Finally, Sofia has agreed to
scientific, technical, and agri-
cultural cooperation with Iraq,
Denmark, and France.
'These efforts to get on good
terms with the non-Communist world
have been in large part motivated
by trade problems. The country's
hard-currency purchases have re-
sulted in a cumulative trade def-
icit with the West of about $350
million since 1964. Bulgaria's
exports to the industrial West
last year were worth approximately
$200 million. The economic pinch
that has ensued was particularly
evident at the Plovdiv fair in
October when Bulgaria was unwill-
ing to purchase Western industrial
goods in the quantities some coun-
tries--notably Britain, France,
and Belgium--had been led to ex-
pect.
In a new departure for Sofia,
a high-level trade delegation
headed by the deputy minister of
foreign trade is scheduled to ar-
rive in the US next April to begin
consultations with government and
business officials. These meet-
ings will help overcome the mis-
conceptions Bulgarian officials
have harbored in the past about
free market processes. The Bul-
garians hope to reach agreements
to expand their exports--particu-
larly of tobaccos and wines--to
cover the cost of modern industrial
goods they need to purchase in
the US.
Sofia's interest in consulta-
tions, and its new desire to dis-
play its products to prospective
American customers, attest to the
regime's growing awareness of the
importance of developing greater
flexibility in foreign contacts,
especially with the US. The desire
for increased contacts with the US
and other non-Communist countries
also illustrates Bulgarian party
leader Zhivkov's determination to
assert Bulgarian national interests
in new and different wa s.
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MIDDLE EAST - AFRICA
Problems in the area continue to smoulder and
could ignite at any time, as shown by the flare-up
of fighting on Cyprus this week.
Israeli troop movements--billed by an Israeli
Army officer as routine troop rotations--could in-
crease Arab fears of another retaliatory strike,
particularly since units in the Syrians heights
area are involved. The potential for trouble is
further heightened by reports that Arab resistance
organizations on the West Bank of Jordan are plan-
ning to increase terrorism this month. Moreover,
it appears that Israel intends to hold its posi-
tions along the Suez Canal at least until the Arabs
agree to negotiate.
In strife-torn South Arabia, the Saudi Arab-
ians may be planning to work with exiled South
Arabian rulers to undermine any regime dominated
by the National Liberation Front. The Front, after
months of fighting its rival nationalist group,
now seems to have the upper hand and is in process
of negotiating with the British.
The leadership dispute between Algeria's
Boumediene and his chief of staff remains un-
resolved. A "good offices" commission has been
set up to mediate, but the leftist pro-Egyptian
chief of staff is confident that he can force the
ouster of three of Boumediene's henchmen.
The Nigerian civil war appears likely to con-
tinue for some time. Biafra shows no signs of
giving up, despite suffering sizable losses in
attempts to retake Enugu and in the fighting around
Calabar. The Organization of African Unity has
failed to date to follow through on the resolutions
of the Kinshasa meeting and all attempts by would-
be mediators to bring the two sides together have
bogged down over mutually unacceptable terms for
opening peace talks.
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SECRET
MERCENARY PRESENCE PLAGUES CONGO (KINSHASA) AND RWANDA
Efforts to evacuate Schramme's
mercenaries and Katangans from
Rwanda are proceeding slowly,
while the batch of mercenaries
who invaded Katanqa has returned
to Angola.
On 9 November, Congolese
President Mobutu called a special
meeting of an Organization of
African Unity (OAU) subcommittee
to discuss the mercenaries. The
ten-nation subcommittee, meeting
from 10 through 12 November, pro-
duced a resolution that does not
mention extradition to the Congo
but does stipulate certain condi-
tions to be met before the mer-
cenaries can be evacuated.
Among these conditions is a
demand that both the mercenaries
and the governments of their coun-
tries of nationality give written
guarantees that the mercenaries
will never return to Africa nor
engage in activities that might
endanger the stability of African
states. The mercenaries report-
edly signed their guarantees on
15 November, but there is still
some question whether Belgium and
France will be willing or able
to meet the resolution's demands.
Additionally, Mobutu seems anxious
to commit these governments to
some scheme for the reconstruc-
tion of Bukavu before he will
agree to the evacuation. Rwandan
President Kayibanda is eager to
get rid of the mercenaries as soon
as possible. There have been signs
that he was thinking either of
braving the OAU's wrath and mount-
ing an independent evacuation or
attempting to have them extradited
back to the Congo. Some mercenaries
reportedly are quietly slipping
away in small groups.
The 1,600 Katangans and de-
pendents who were with Schramme's
mercenaries are presenting their
own problems. Tentative arrange-
ments to have them airlifted to
Zambia have been delayed until
Zambia receives an official re-
quest from the Mobutu government
to take the Katangans. Although
Mobutu says he has "no objection,"
the Zambian Government does not
want to risk later recrimination
from Mobutu and is waiting for
something more specific.
The mercenaries who invaded
western Katanga in early November
have returned to Angola. They
have been disarmed by Portuguese
authorities and are to be returned
to their home countries. Now
operating in a "postcrisis" at-
mosphere, President Mobutu has
ordered the army units flown to
Bukavu and Katanga for the emer-
to return to their garrisons..
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BRITISH TO TURN OVER SOUTH ARABIA TO NLF
The British have agreed to ne-
gotiate with the National Liberation
Front (NLF) for the formal transfer
of authority in South Arabia. Ge-
neva has been chosen for the nego-
tiations in order to emphasize that
the NLF is an equal and freely con-
senting party. Lord Shackelton will
head the ministerial-level UK ne-
gotiating team.
The British decision has in-
creased chances for an orderly with-
drawal of their troops and has
heightened chances that the NLF will
be able to set up an operative gov-
ernment before the British leave.
Britain's earlier reluctance to
meet the conditions originally de-
manded by the NLF had dimmed pros-
pects for an orderly turnover of
power. The NLF had called for a
ministerial statement from the Brit-
ish, prior to negotiations, recog-
nizing the Front as the sole repre-
sentative of South Arabia.
The NLF eased the tension on
11 November by indicating that it
was willing to forgo formal recog-
nition in advance provided the
negotiations were held in a neu-
tral venue. Brown then announced
on 14 November that Britain will
begin negotiating the transfer of
power in about a week and that UK
forces will be completely with-
drawn by 30 November. If negotia-
tions are not completed by that
date, he said, "there is nothing
to stop them from continuing as
between independent countries."
The Saudis remain particularly 25X1
concerned at the prospect of a
South Arabia dominated by the NLF,
Although the British had
pledged to turn over authority to
whatever group gained effective
control, Foreign Secretary Brown
was reluctant to give formal recog-
nition to the NLF. His difficulty
was mainly a reflection of the sen-
sitivity of Saudi Arabia, Egypt, and
the Persian Gulf states. London
especially did not wish to jeopard-
ize the recent improvement in UK-
Egyptian relations which had re-
sulted in Egypt's granting authori-
zation for British aircraft to over-
fly Egypt during the final evacua-
tion.
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S EC,RET
TENSIONS RISE ON CYPRUS
A tenuous cease-fire has
halted serious fighting that
erupted in the Ayios Theodoros -
Kophinou area of Cyprus on 15 No-
vember. Greek and Turkish emo-
tions remain high, however, and
a period of tension and mutual
f,ecrimination can be expected to
accompany efforts to negotiate a
more stable arrangement.
The day-long battle--the most
serious in two years--broke out
after the Greek Cypriots in the
southeast coast area attempted to
resume routine police patrols that
had been discontinued last July.
On 14 November, a patrol entered
Ayios Theodoros without being op-
posed by the Turkish Cypriots, who
were apparently taken by surprise.
The next day, however, when the
patrol. attempted to re-enter the
town, shooting began and quickly
spread northward in Kophinou.
With the UN peace force unable to
__nterc:ede, the National Guard took
control of both areas, overrun-
ning a. number of UIDI observation
posts in the process.
The incident apparently re-
sulted. largely from Cypriot armed
forces commander General Grivas'
insistence that the patrols be re-
sumed, by force if necessary--a
policy reportedly opposed by Cyp-
riot President Makarios. Grivas
may have seen this course of ac-
tion as a chance to repair his
dwindling prestige in the Greek
Cypriot community.
The Greek Government, which
has been critical cf Grivas' tac-
tics in the past, apparently ap-
proved. of his plan to resume the
patrols. It is not clear, how-
ever, whether this support was
the forerunner of some further
Greek initiative on the over-all
Cyprus problem. Whatever its in-
itial intent, Athens later ordered
both the cease-fire and the with-
drawal of the Greek Cypriot Na-
tional Guard from the area of the
fighting.
Ankara expressed its grave
concern and strongly implicated
Gr.Lvas in the affair. During the
fighting, a Turkish Foreign Min-
istry official warned of possible
air involvement if the issue were
not resolved. Upon hearing of
the cease-fire, another Turkish
official said it remained to be
seen whether the Greek Cypriots
could be compelled to restore the
status quo. The cabinet was in
emergency session through most of
the night of 15 November, and a
session of the Grand National As-
sembly was held on 16 November.
The Greek and Turkish gov-
ernments appear to be more agi-
tated than at any time since the
Turkish air strike on Cyprus in
1964. Concern over the outbreak
was increased by several previous
incidents that had already height-
ened tensions. Both air forces
have been in a high state of
alert for several days as the re-
sult of alleged mutual overflights.
The clandestine entry into Cyprus
of Turkish Cypriot leader Denk-
tash earlier this month, his ar-
rest, and his subsequent release
also contributed to generally
strained relations.
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WESTERN HEMISPHERE
Several Latin American countries have been giv-
ing increased consideration to expanding ties with
the USSR and some East European Communist nations.
Colombia recognized Rumania this week. It has
also signed a new five-year trade agreement with the
USSR, and diplomatic recognition may be in the off-
ing. A Soviet trade mission is expected in Ecuador
shortly, a follow-up to a European visit of a simi-
lar mission from Ecuador last month.
President Gestido of Uruguay has called for in-
creased trade with the bloc, and his government is
considering several deals. Guatemalan officials
hope to sell surplus coffee in Eastern Europe and
may enter into some kind of barter agreement.
Although Chile and the USSR agreed last January
on a trade and technical assistance package amount-
ing to some $57 million, there has not yet been any
significant increase in trade between them. Peru
recently rescinded a law forbidding trade with Com-
munist countries, but no action has followed and
the Peruvians have been cool toward recent Czecho-
slovak overtures for a trade agreement.
In another development, Mexico reportedly has
made an arrangement with Cuba whereby the Mexicans
will sell some $4.5 million worth of henequen fiber
from the economically depressed state of Yucatan to
help the Cubans ease a shortage of jute fiber.
Fiber is essential to the Cuban economy because it
is used in the manufacture of sugar bags.
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Sl-~iCJRE']`
PANAMA COALITION STILL SPLIT ON PRESIDENTIAL NOMINEE
The presidential race is wide
open again, with the division in
government ranks giving opposition
leader Arnulfo Arias a definite
lead. The Electoral Tribunal's
ruling that National Guard Com-
mandant Bolivar Vallarino--a pos-
sible compromise candidate--does
not have "command jurisdiction"
appears to exempt him from the
requirement that public offi-
cials who intend to run for the
presidency must resign by 12
November.
Failing to reach agreement
with his coalition partners on a
mutually acceptable candidate for
the May 1968 election, Robles
backed off from his earlier en-
dorsement of David Samudio. He
suggested Comptroller General
Olme do Rosas as a compromise,
but opposition to Rosas and dis-
pleasure with the Electoral Tri-
bunal's ruling on Vallarino
prompted the President to reaf-
firm support for Samudio. The
four dissident coalition parties
are continuing to back Second
Vice President Arango.
Meanwhile, Robles has can-
celed a scheduled meeting with
the eight coalition parties and
postponed the national conven-
tions of the four loyal parties,
which were to be held on 18 No-
vember. Efforts to settle the
deadlock could continue until 13
January, when presidential candi-
dates must be inscribed.
Thus far, Robles has managed
to alienate a large segment of
the elite group that controls
Panama and most of the military,
which has traditionally kept the
group in power. At one point,
a group of guard officers demanded
Robles' resignation for refusing
to nominate Vallarino, but ap-
parently backed off when Robles
took a strong stand against their
interference.
Although military action appears
unlikely, Robles is faced with
the difficult task of finding
a candidate at least palatable
to both the elite and the mili-
tary. Failure to do so only in-
creases the chances of the con-
troversial Arnulfo Arias.
Arias has been ousted from
the presidency on two occasions
for his dictatorial and authori-
tarian behavior. The popular
Panamenista leader has already
concluded tentative agreements
with some of the dissident coali-
tion leaders for an electoral
alliance. The cabinet officers
who represented the dissident
parties have now resigned, leav-
ing their parties free to make
a formal deal with Arias. In-
deed, the continuing rift in the
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coalition may encourage just such
a move.
25X1
There is little or no
knowledge of Arias' position on
the proposed canal treaties ex- 25X1
cept that they "are a dead is-
sue" until after Robles leaves
office.
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SECRFT
NEW THREATS TO PERU'S STABILITY
Peru's fragile political and
economic stability is threatened
by recent developments. Presi-
dent Belaunde's political pres-
tige received a sharp setback on
12 November, when his party lost
two important congressional by-
elections and the Christian Demo-
cratic Party (PDC) withdrew from
the governing coalition.
Although the government ex-
pected to lose the race in La
Libertad Department, a stronghold
of the opposition APRA party, its
poor showing in Lima---which has
nearly 41 percent of the elector-
ate--came as a shock to party
leaders. Not only did the oppo-
sition APRA party run well ahead
of the government candidate, but
extreme leftist candidate Carlos
Malpica showed surprising strength
and drew nearly 13 percent of the
vote. Malpica's electoral alli-
ance of extreme leftist and Com-
munist parties, which attracted
nearly 100,000 votes, may develop
into a strong and threatening
"leftist" front.
ist front" to contest the presi-
dential elections in 1969.
The present unstable polit-
ical situation will probably add
a new dimension to growing public
concern. There have already been
repeated demands from groups
that normally support Belaunde
that he ccme to grips with mount-
ing economic problems or step
down.
The President's indecisive
handling of recurring economic
crises and his apparent decision
not to intervene to secure con-
gressional. approval for vitally
needed tax reforms are already
having their effect on the econ-
omy. Foreign exchange reserves
are almost: exhausted, and the ad-
ministration must soon choose be-
tween further devaluation or
strict economic controls. One
major bank is reportedly warning
its clients that foreign exchange
reserves are too low to sustain
the present unrealistic exchange
rate for long.
The PDC's withdrawal from
its nearly five-year-old alliance
with the Belaunde administration
stems from disillusionment with
the pace of economic and social
reforms, the President's indeci-
sion in coping with current prob-
lems, and a growing leftist trend
within the party. PDC leaders
are now openly calling for the
formation of a "democratic left-
Whatever the government's
decision, it is almost certain to
provoke new demands for wage ad-
justments to match the rising
cost of living. In this charged
atmosphere, military leaders
are continuing with contingency
plans to take over the government 25X1
if the situation deteriorates
to the point where the believe
it is necessary.
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CHILEAN STABILIZATION PROGRAM HEADS FOR TROUBLE
A split appears to have been
averted in President Frei's Chris-
tian Democratic Party (PDC) over
the 1968 wage-price policy, but
the legislation still faces op-
position from virtually every
other political and economic
quarter.
Frei considers the wage re-
adjustment legislation a vital
part of his stabilization program,
which is aimed at curtailing the
inflation that has plagued Chile
for more than 50 years. The leg-
islation provides for an over-all
wage increase in 1968 of 25 per-
cent for employees of private
firms and 20 percent for govern-
ment employees. The government's
original plan called for 15 per-
cent of the increase to be in
cash and the remainder in bonds.
The bonds would be used for a
fund to increase government in-
vestments in fields such as
petrochemicals.
The PDC cabinet members ap-
proved the plan, and threatened
to resign unless the party sup-
ported it. The party finally
agreed to a graduated scale that
would give lower income workers
a higher percentage of cash. if
this compromise is accepted by
the government, a formal split be-
tween Frei and the leftist PDC
leaders will be averted.
The Communists and other
leftists have made no secret of
their opposition to the bill. Con-
servatives and private business-
men also are apprehensive, because
they fear further government in-
volvement in economic activity.
Businessmen object strongly to the
price control provisions of the
legislation, and prospects for
congressional approval of the en-
tire program are dim.
The labor unions, many of
which are controlled by Communists
and Socialists, contend that the
legislation does not adequately
compensate union members for the
inflationary price increases last
year. Furthermore, the proposal
contains a one-year ban on the
right to strike. The Communist-
controlled Chilean Workers' Central
is considering calling a general
strike in opposition to the legis-
lation.
Although general strikes for
political purposes rarely have
much success in Chile, opposition
to the wage program is so wide-
spread that this one might gain
nationwide support. Even if the
strike ban is included in the
final legislation, 1968 is certain
to see increased labor agitation
because the government has had only
mixed success in dealing with il-
legal strikes.
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