WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A006200050001-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 37
• Document Creation Date: December 20, 2016
• Document Release Date: May 30, 2006
• Sequence Number: 1
• Publication Date: January 12, 1968
• Content Type: SUMMARY

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Secret
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
State Dept. review completed
Secret
45
12 January 1968
No. 0002/68
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(Information as of noon EST, 11 January 1968)
VIETNAM
There has been no Hanoi follow-up to Foreign Minister
Trinh's statement of 30 December on the possibility
of talks with the US. Viet Cong local forces were
unusually active this week, particularly in the Sai-
gon area. In the northern border areas, Communist
main force units continued threatening maneuvers.
Photography reveals the probable presence of cruise
missiles in North Vietnam. In Saigon, Vice President
Ky has reportedly added his voice to the growing
criticism of President Thieu's lack of positive lead-
ership.
CONFUSION IN COMMUNIST CHINA
Fighting and disorder continue to be reported from
many areas, and leaders in Peking thus far seem un-
able to reach agreement on how to deal with the vio-
lence.
NEW MODERATION IN PEKING'S FOREIGN POLICY
An increasing number of indications suggest that
advocates of moderation in Peking have managed to
regain their influence over foreign policy which had
been lost to revolutionary extremists last summer.
JOHN GORTON: AUSTRALIA'S NEW PRIME MINISTER
Gorton, an increasingly influential figure on the
Australian political scene for two decades, is not
expected to make any major changes in foreign or
domestic policies.
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Europe
CZECHOSLOVAKIA'S NEW LEADER CHPRTS BOLD COURSE
Within a week. of replacing long-time Czechoslovak
party boss Novotny, Slovak leader Dubcek has moved
boldly to set. in motion fax-reaching changes bene-?
fitting society and the individual, but he has many
problems to overcome in the endeavor.
EAST GERMANY TRYING TO FORMULATE NEW VIEWS TOWARD BONN
In recent weeks, Pankow haE issued contradictory
statements on the status of West Berlin and the "two
Germanies" within the Germe.n nation as the East Ger-
mans struggle to formulate a comprehensive response
to repeated West German overtures for closer rela-?
tions.
USSR CONTINUES COMMERCIAL AIRCRAFT SALES CAMPAIGN
The Soviet Union has been raking a vigorous effort
to sell its commercial aircraft in Latin America and
Western Europe but has had little success so far
except with its helicopters.
BRITISH GOVERNMENT PONDERS BUDGET CUTS
For over a week, the British cabinet has been con-
sidering proposals for massive cuts in government
spending affecting both domestic and foreign policy.
DANISH ELECTORAL OUTCOME UNCERTAIN
Although 11 parties are competing for votes, the
principal contest will be between Prime Minister
Krag's Social Democrats and the two major non-
Socialist parties.
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ARAB-ISRAELI TENSIONS REMAIN HIGH
Border clashes continue along the Israeli-Jordanian
cease-fire line; Egyptian efforts to clear the Suez
Canal may be stymied by Israel's insistence that
Cairo reach some agreement with Tel Aviv before
clearing operations begin.
SOUTH YEMEN MAY FACE SERIOUS ECONOMIC PROBLEMS
So far the new government has been able to function
smoothly, although economic difficulties may prove
insurmountable if additional aid is not forthcoming.
EGYPTIAN ECONOMY BEARING UP UNDER SEVERE STRAINS
The June war further damaged Egypt's already weak
economy, but the country possesses a remarkable abil-
ity to get by under very adverse conditions and with
a little luck should be able to manage fairly well
over the next few months.
Western Hemisphere
THE WEEK IN PERSPECTIVE 25
CHILEAN PRESIDENT INCREASES POLITICAL SUPPORT
Although President Eduardo Frei obtained support
from his Christian Democratic Party for his contro-
versial wage readjustment legislation, he continues
to face problems from the leftists within the party
and from the opposition-controlled Senate.
COLOMBIAN ARMY TO MOVE AGAINST NEW GUERRILLA FORCE 27
GUATEMALAN GOVERNMENT BACKS DOWN ON TAX MEASURES
The government's retreat in the face of widespread
opposition will be taken as a sign of weakness and
could spur opposition elements into renewed activ-
ity.
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FAR EAST
Hanoi is seeking to exploit the impact of For-
eign Minister Trinh's statement that North Vietnam
"will hold talks" with the US after an unconditional
cessation of bombing and other "acts of war." The
North Vietnamese have claimed that this statement
has been warmly welcomed throughout the world and
have denounced President Thieu for blocking open-
ings to peace and for rejecting a coalition govern-
ment with the Liberation Front.
These moves have stimulated widespread uneasi-
ness in South Vietnam regarding the US attitude
toward talks and a coalition settlement. Saigon
leaders have reiterated their opposition to a coa-
lition and the National Assembly has rejected any
dealings with the Liberation Front. The South Viet-
namese Government reportedly suspended a newspaper
because it indirectly advocated the idea of a coa-
lition.
A series of Viet Cong attacks last week within
a 30-mile radius of Saigon and in the Hue and Da Nang
areas probably were aimed in part at aggravating
political unrest and uncertainty in the South by
demonstrating the government's inability to protect
these heavily populated areas.
Prince Sihanouk's initial public comments on
the Bowles mission underline his primary objective
of discouraging South Vietnamese and US forces from
pursuing Communist forces into Cambodian territory.
He praised American restraint in dealing with this
problem, claimed that Ambassador Bowles had stated
that the US would not invoke the doctrine of "hot
pursuit," and stressed Cambodia's desire to strengthen
the International Control Commission's ability to pre-
vent all foreign infiltration.
There are no signs that the divided leaders in
Peking have been able to agree on firm measures to
deal with spreading conflict and disorder throughout
China or to check the steady erosion of Peking's au-
thority in the provinces. Peking's propaganda con-
tinues to ignore widespread fighting, blandl or-
traying the situation as "excellent-II 25X1
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VIETNAM
Foreign Minister Trinh's as-
sert:-on on 30 December that North
Vietnam "will" talk with the US
if all war acts against North.
Vietnam are stopped uncondition-
ally has provoked wide specula-
tion on possible changes in the
North Vietnamese policy. So far,
however, Hanoi has not chosen to
elaborate on this statement. The
Communists have carefully con-
strued it as a reiteration of a
long-standing position and not
as a concession.
Although the modification in
Hanoi's official position set
forth in the Trinh statement seems
motivated primarily by a desire
to end the bombing and stall any
major US escalation, it may also
have been promoted in part by at
desire to probe both for US necco-
tiating terms and for signs of US
willingness to modify its objec-
tives in Vietnam.
The Communists may, for ex-
ample, believe they detect mod:L-
fications in the US position on
dealing with the National Libera-
tion. Front. Hanoi has not com--
ment.ed explicitly on US state-
ments about possible representa-
tion of the Front in future peace
negotiations, suggesting that the
Communists see these statements
as EL sign of greater US flexi-
bility.
Meanwhile, rumors generated
by the North Vietnamese state-
ment have sparked widespread un-
easiness in South Vietnamese
circles that the US might be pre-
paring to open negotiations with
Hanoi or to accept a coalition
government in the South that
would include the National Libera-
tion Front. Both houses of the
National Assembly have addressed
themselves to this question dur-
ing the past week.
High Saigon off:_cials, more-
over, have recently reiterated
their opposition to any coalition
government with the Front. Al-
though the concern will probably
not reach a level at which it be-
comes a critical factor in GVN-US
relations, it could begin to af-
fect the Vietnamese :response to
US initiatives on pacification
and other nation-building activi-
ties in South Vietnam.
The Communists lost little
time in capitalizing on the po-
=_itical unrest in South Vietnam.
On 7 and 8 January, Hanoi radio
and the Liberation Front condemned
South Vietnamese President Thieu's
opposition to a coalition govern-
ment and attempted to contrast
his negative attitude with the
Front's more positive approach to
the concept. While endorsing the
coalition idea in general terms,
the Front has not been very forth-
coming in spelling cut the details
of an acceptable coalition ar-
rangement.
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The Front's current political
program, for example, offers to
accept into the Front's ranks al-
most anyone willing to support its
objectives. This has been a long-
standing policy, however, and one
designed more to broaden popular
support than to present a precise
proposal for a "coalition govern-
ment" with disaffected Saigon of-
ficials. The new program recom-
mends a future government estab-
lished after general elections,
but it is deliberately vague about
the steps to achieve this. It
does not commit the Front to ne-
gotiations with the present Saigon
leadership for the purpose of
forming a coalition government.
Although recently captured
documents indicate that the idea
of a coalition has been discussed
extensively within the Communist
movement for several months,
these discussions are also vague
on details and timing.
A new problem facing the
Thieu government is the proffered
resignation of General Nguyen Duc
Thang, deputy chief of the Joint
General Staff in charge of Revo-
lutionary Development cadres.
Thang's wish to resign apparently
stems from what he considers foot-
dragging on the part of the gov-
ernment in instituting vital re-
forms, including a reorganization
of the armed forces, which would
strip the corps commanders of
much of their power base. Al-
though Thang's resignation has
been rejected, it still could
prove to be a source of embarrass-
ment if the press--which has li-
onized Thang--becomes aware of
his resignation attempt and the
reasons behind it.
Increased Military
Activity in the South
Viet Cong guerrilla and lo-
cal forces were active this week
throughout South Vietnam.
A flurry of large-scale,
enemy-initiated attacks occurred
within a 30-mile radius of the
center of Saigon. During a five-
day period, four major actions oc-
curred near the capital city, in-
cluding two bold assaults on nearby
towns. Most of these actions saw
extensive enemy use of mortars,
both preceding and during ground
attacks. For example, some 600
mortar rounds were fired as part
of a Communist attempt to overrun
the capital of Hau Nghia Province.
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Intense enemy mortar and
rocket barrages were also di-
rected at strategic US and al-
lied military installations else-
where during the week. A US
Marine supply base near Da Nang
was struck by a 122-mm. rocket
bombardment in a close follow-
up of last week's heavy rocket
attack on the Da Nang airfield
itself. An attack on the US
air base at Kontum in mid-week
inflicted moderate casualties
and extensive damage to aircraft
and associated equipment.
This phase of the Communist
winter-spring campaign has been
marked by unprecedented enemy
losses--a record 2,868 Communists
were killed last week--as well
as by an extremely high level of
enemy aggressiveness throughout
South Vietnam. It is possible
that the enemy is attempting a
particularly heavy show of force
to gain the maximum psychologi-
cal advantage with the populace
prior to the Tet holiday that
begins on 30 January. Communist
military preparations, however,
appear to foreshadow a resump-
tion of major offensive action
after Tet.
Communist main force units
continue to pose a major threat
in three border areas: western
Quang Tri - DMZ, western high-
lands, and northern III Corps.
Enemy reconnaissance activities
and probing attacks against
many allied outposts in these
areas have increased. Such ac-
tions may signal full-scale as-
saults on some of these outposts.
Possible Cruise
Missiles in DRV
North Vietnam may have ac-
quired short-range, surface-to-
surface missiles intended for
coastal defense. Possession of
such weapons, if confirmed, would
pose a significant threat to US
warships conducting shore bom-
bardment operations along the
DRV coast.
I nalysis of
photograp y revea ed two posi-
tions just south of Thanh Hoa
which contain camouflaged equip-
ment, including one object
identified as probably an SS-N-2
missile and several possible
rail-type launchers. This mis-
sile has a range of about 20
miles and was the weapon used
by the Egyptian Navy on 21 Octo-
ber 1967 to sink the Israeli
destroyer Eilat. The suspected
sites were bombed repeatedly by
US Navy aircraft on 5 and 6 Jan-
uary, but there is no firm evi-
dence from photography or pilot 25X1
reports that either site was oc-
cupied at the time of the at-
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CONFUSION IN COMMUNIST CHINA
Fighting and disorder con-
tinue to be reported from many
areas. Those most frequently
mentioned are the southwestern
provinces and southeastern
coastal cities, but the conflict
probably has spread to nearly
every province.
Committees" and in unifying po-
litical factions in "grand al-
liances." The propaganda has a
defensive tone, however. On 8
January, the New China News
Agency hailed the recent forma-
tion of the Kiangsi Revolution-
ary Committee as proof of a re-
cent assertion by Mao Tse-tung
that the "situation is not just
good, it is excellent," and in
a few months will "become better
still."
This bland portrayal of the
situation is belied by consider-
able evidence from provincial
newspapers 25X1
that the leadership is in trouble
in several of the ten Revolution-
ary Committees established in the
past year. Peking represents
these as stable areas governed
by Maoist approved leaders.
None of this disorder is
reflected in Peking's propaganda,
which stresses such themes as
the progress allegedly being
made in forming "Revolutionary
a main target of at-
tack at the moment is the chair-
man of the Kweichow Revolutionary
Committee. He has never been un-
der fire before and played a
central role for the Maoists last
spring and summer, not only in
Kweichow but elsewhere in the
southwest. The leaders of the
Heilungkiang Revolutionary Com-
mittee have also been denounced
by Red Guards in the last two
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Status of Provincial Governments, 12 January 1968
fl Revolutionary Committee
Preparatory Group
F-I Military Control Committee
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Thus far, leaders in Peking
seem to have been unable to
reach agreement on how to deal
with the spreading violence,
and as a result their guidance
has been indecisive and ineffec-
tual in checking the erosion of
Peking's authority in the prov-
inces.
NEW MODERATION IN PEKING'S FOREIGN POLICY
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Although Communist China
continues to be wracked internally
by Cultural Revolution violence,
an increasing number of indica-
tions suggest that advocates of
moderation in Peking have managed
to regain their influence over
foreign policy, which had been
lost to revolutionary extremists
last summer.
The return to a more moder-
ate and cautious approach has
been reflected in actions Peking
has taken to ease tension in
Hong Kong. F -777~
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Peking has clearly been
concerned with the failure of
extremist tactics in Hong Kong.
It probably hopes that a moder-
ate approach will be more effec-
tive in attracting the support
of dissatisfied non-Communist
groups and thus win over a broader
section of the population.
Peking's recognition of the
futility of premature resort to
revolutionary violence was also
evident in NCNA's year-end status
reports on the Communist movements
in Laos, Burma, and Thailand.
Peking hailed a series of "bril-
liant victories" allegedly won
by these groups but laid heavy
stress on the long-term nature
of "people's war" and the virtue
of "self-reliance." The three
parties were applauded for their
efforts in building a popular
base among the masses, which was
cited as a necessary prerequisite
for "people's war." The Burmese
party, in particular, was lauded
for its "20-year revolutionary
civil war," but probably derived
little comfort from Peking's ad-
monition that further "protracted
struggles" lie ahead.
None of the statements con-
tained even a pro forma pledge
of Chinese support. The rosy
picture of "excellent revolu-
tionary situations" noted by
Peking seems primarily designed
to cover China's reluctance to
involve itself more heavily in
the armed struggles within the
three countries.
Peking's preoccupation with
domestic affairs and the war
in Vietnam has encouraged a
restrained attitude toward armed
struggle by "fraternal parties."
This recent tone of pragmatic
moderation, however, has also co-
incided with Foreign Minister
Chen Yi's apparent recovery of
much of his political importance
and his control over the Minis-
try of Foreign Affairs. Chen Yi,
who in effect was suspended last
summer while under heavy attack
by Red Guard proponents of "rev-
olutionary" diplomacy, resumed
a busy schedule in November. On
28 December, he received the
French ambassador, his first
such session with a Western dip-
lomat in a year.
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JOHN GORTON: AUSTRALIA'S NEW PRIME MINISTER
Australia's new prime min-
ister, John Gorton, is not ex-
pected to make any major changes
in foreign or domestic policies.
He has reaffirmed Australian de-
termination to stay in the Viet-
nam war and to show the Commu-
nists that "aggression does not
pay.
Gorton, 56, has been in-
creasingly influential on the
Australian political scene for
two decades. His leadership
qualities will now be put to the
test in efforts to arrest the
erosion of popular support for
the governing Liberal-Country
coalition. This decline stems
in part from former Prime Minis-
ter Holt's lack of a firm hand
in maintaining discipline within
the coalition leadership. The
government has also been embar-
rassed by its inept handling of
several recent domestic issues.
John G. Gorton
Moreover, the opposition
Labor Party has greatly improved
it image since Cough Whitlam re-
placed old and erratic Arthur
Calwell as party leader early
last year. Labor's increased
popularity was demonstrated in
the senatorial elections of No-
vember 1967, when it received
45 percent of the popular vote
compared with the coalition's 42
percent. Gorton's priority po-
litical task, therefore, will be
to reverse the trend toward La-
bor before the next scheduled
election in November 1969.
A forceful and likeable
personality, Gorton has held
many executive posts over the
years. In addition to serving
as senator since 1949, he has
been minister of the navy, of
works and mining, and most re-
cently of education and science.
He has acted as the government's
foreign affairs spokesman in the
Senate, and since last October
has also been the coalition's
majority leader. Within the next
few weeks, Gorton is expected to
resign from the Senate and seek
election to Holt's former seat in
the lower house, from which prime
ministers are traditionall cho-
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EUROPE
The outline of plans for a sweeping liberaliza-
tion of domestic policy and a more independent foreign
policy has been broached in the Prague press follow-
ing the election on 5 January of Slovak leader Alex-
ander Dubcek as the new Czechoslovak party first secre-
tary. Dubcek apparently has chosen this means to
make known his aspirations and intentions. From War-
saw, in the meantime, rumors continue to be reported
of behind-the-scenes political maneuvering and of
plans for a reorganization of the top Polish party
leadership.
In Moscow, there were intimations that the party
central committee is to meet later in the month. Pos-
sible agenda items include the situation in Czecho-
slovakia, on which the top Soviet leadership may wish
to present its views, and the plans for the consulta-
tive meeting of Communist parties now set to open on
26 February in Budapest. It is also widely rumored
that party secretary Demichev is to be demoted at
the meeting, possibly to the Ministry of Culture.
The restoration of diplomatic relations between
Bonn and Belgrade appears to be drawing nearer. Ac-
tual negotiations may begin later this month, probably
at some neutral site since neither side apparently
wishes to hold talks in the other's capital.
Top British officials were on the move this week
spreading the news of London's decision to slash its
foreign military commitments. Commonwealth Secretary
Thomson was touring Southeast Asia, while Foreign Min-
ister Brown stopped in Tokyo and Washington. Prime
Minister Wilson is due in Washington on 8 February
following a visit to Moscow on 22-24 January.
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CZECHOSLOVAKIA'S NEW LEADER CHARTS BOLD COURSE
Within a week of replacing
long-time Czechoslovak party boss
Novotny, Slovak leader Dubcek has
moved boldly to set in motion far-
reaching changes benefiting
society and the individual, but
he has many problems to overcome
in this endeavor.
Dubcek has shown a keen
awareness of the necessity for
realistic responses to the serious
problems facing the country,
particularly on the domestic
scene. He has also made clear
his understanding of the needs
of the people.
On 10 January the official
party daily, Rude Pravo, pub-
lished an article that set forth
in broad outline a series of
radical proposals. If imple-
mented, these proposals would
constitute a domestic policy
more liberal than that of Yugo-
slavia. This plan presumably
reflects the consensus of the
central committee under Dubcek.
It emphasizes that henceforth
Czechoslovak democracy must al-
ways be concerned with the rights
and liberties of the individual.
Moreover, the party may no
longer
use its power to undermine
this
ideal "by the pressure
of
au-
thority in the name of
the
com-
munity's interests."
As a
corol-
lary, the article points out that
Czechoslovakia must develop forms
of administration that create
"more and more room for self-
administration."
The article also asserts that
the party must withdraw from its
ubiquitous role in society and
must remove itself from the di-
rect administration of the gov-
ernment and the economy. In or-
der to accomplish this, Czecho-
slovak officials, from the high-
est to the lowest levels, will no
longer be permitted to hold both
government and party posts. It
appears that virtually all party
leaders, as well as thousands
of middle-level functionaries
will be affected.
Personnel changes in the
party and government, as well as
structural changes in the lat-
ter, are in fact being considered.
The National Assembly convened
earlier this week, presumably
to decide upon these shifts.
Premier Josef Lenart--who, like
Dubcek, is a Slovak--is almost
certain to lose his job because
it would be impolitic for Slovaks
to hold both top party and gov-
ernment posts; he is also said
to have supported the ousted
Novotny. Other officials who
may be significantly downgraded
include party secretary and
ideology chief Jiri Hendrych,
and Foreign Minister Vaclav
David, both of whom are of the
Novotny mold. Novotny himself
apparently will be allowed to
keep the presidency at least for
the time being.
In foreign policy, Dubcek
may take a more nationalistic
line than his predecessor, seek-
ing better relations with the
West and the US in particular,
and possibly reopening talks
with West Germany on the
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establishment of diplomatic re-
lations. Indeed, if the Rude
Pravo article is any indication,
Dubcek apparently envisions a
foreign policy as independent as
Rumania's.
Dubcek will need time to
consolidate his position and
to form a more stable coalition.
This will be a complicated
process because he will have
to loosen the party's absolute
grip on political power to make
his reform programs work and
to satisfy liberal demands for
greater cultural and political
freedom. He will undoubtedly
encounter stiff opposition from
many of the entrenched regional
and district functionaries, who
have in the past thwarted ef-
forts at reform in order to pro-
tect their positions. In an-
ticipation of such a response,
and as a means of countering it,
Dubcek has already sent selected
party presidium members and cer-
tain of his Slovak party col-
leagues on speaking tours around
the country to explain his new
programs.
Novotny and his hard-line
cronies remain for the present
on the party presidium. Although
their tenure seems limited and
their influence is probably in
abeyance at this point, Dubcek
himself may not be able to count
on the unqualified support of a
majority of the presidium members.
His position may have been
strengthened, nevertheless, by
the enlargement of the presidium
by four members experienced in
some of Czechoslovakia's key
problem areas.
Dubcek's election appears
to have been a last-minute com-
promise among factions within
the presidium and central commit-
tee. No member of the Slovak
minority has ever held the top
party post, and Dubcek's activi-
ties will be closely scrutinized.
Czech leaders almost certainly
resent him, partly because of his
youthfulness, but primarily be-
cause the Slovaks over the years
have been in the vangua d of the
opposition to Novotny.
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establishment of diplomatic re-
lations. Indeed, if the Rude
Pravo article is any indication,
Dcek apparently envisions a
foreign policy as independent as
Rumania's.
Dubcek will need time to
consolidate his position and
to form a more stable coalition.
This will be a complicated
process because he will have
to loosen the party's absolute
grip on political power to make
his reform programs work and
to satisfy liberal demands for
greater cultural and political
freedom. He will undoubtedly
encounter stiff opposition from
many of the entrenched regional
and district functionaries, who
have in the past thwarted ef-
forts at reform in order to pro-
tect their positions. In an-
ticipation of such a response,
and as a means of countering it,
Dubcek has already sent selected
party presidium members and cer-
tain of his Slovak party col-
leagues on speaking tours around
the country to explain his new
programs.
Novotny and his hard-line
cronies remain for the present
on the party presidium. Although
their tenure seems limited and
their influence is probably in
abeyance at this point, Dubcek
himself may not be able to count
on the unqualified support of a
majority of the presidium members.
His position may have been
strengthened, nevertheless, by
the enlargement of the presidium
by four members experienced in
some of Czechoslovakia's key
problem areas.
Dubcek's election appears
to have been a last-minute com-
promise among factions within
the presidium and central commit-
tee. No member of the Slovak
minority has ever held the top
party post, and Dubcek's activi-
ties will be closely scrutinized.
Czech leaders almost certainly
resent him, partly because of his
youthfulness, but primarily be-
cause the Slovaks over the years
have been in the vanguard of the
opposition to Novotny.
EAST GERMANY TRYING TO FORMULATE NEW VIEWS TOWARD BONN
Considerable confusion seems
to have accompanied East German
(GDR) efforts in recent weeks to
formulate a comprehensive response
to repeated official and unoffi-
cial West German (FRG) overtures
for closer, but unofficial, rela-
tions. In the past six weeks,
Pankow has issued contradictory
statements on the status of West
Berlin and the "two Germanies"
within the German nation.
The Soviet Union did not
support East German leader Walter
Ulbricht's claim on 1 December
that West Berlin "legally" be-
longs to the GDR. Since then,
GDR spokesmen, including Ulbricht,
have reverted to the less-threat-
ening, standard line that West
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Berlin is an "independent politi-
cal entity."
The regime's recent comments
on certain proposals concerning
the two Germanies and the German
nation probably reflect its deep
need to justify again--particu-
larly for its Eastern European
allies--its hard-line policy
toward Bonn.
The most significant expres-
sion of these views appeared on
28 December in a Neues Deutsch-
land article ostensibly w-ritten
by Wolfram Neubert, a lecturer
in the Communist Party's Institute
for Social Sciences. Without
mentioning it by name, Neubert
was responding to an unofficial
study widely publicized in West
Germany that was designed to show
the way to reunite the German na-
tion. Neubert ostensibly rebutted
the study's contention that the
German nation is now composed of
two "constituent states," but
his arguments actually paralleled
some in the study. He stated,
for example, that the "German
nation continues to exist... in
the form of two different (sov-
ereign) states together with the
independent political entity of
West Berlin."
The "peculiarity" that the
GDR and FRG are "states of one
nation," however, does not mean
to Neubert that normal interstate
relations should not be pursued.
Such relations, he rationalized,
would not mean that the GDR would
consider West Germany and West
Berlin as "foreign" states.
"They were, are, and will remain
German." Neubert thus contra-
dicted earlier statements by East
Germany's leading propagandist.
Neubert also argued that the
"national needs of all Germans"
and the true interests of the
German nation are presently pro-
tected and fostered by the GDR.
In so doing, he went further than
any other East German official in
advancing the claim that Pankow
rather than Bonn has the right
to represent all Germans. There
are indications that this aspect
of Neubert's arguments will serve
as the basis for East German
propaganda in the coming months.
Neubert's formulas, however,
will be difficult to sustain be-
cause they seem to give Bonn an
opportunity to pursue its policy
of limited rapprochement with East
Germany, and probably will not be
effective in dampening Eastern
European desires to establish
diplomatic relations with West
Germany. In the meantime, the
East Germans probably will have
to continue to search for a way
out of the impasse they have
largely created fnr themselves.
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USSR CONTINUES COMMERCIAL AIRCRAFT SALES CAMPAIGN
The USSR continues to eye
the world commercial aircraft
market with considerable inter-
est. Soviet aircraft. promoters
are busy in Western Europe and
in Latin America, but so far their
sales campaign has been unre-?
warding.
Moscow is pushing hard to
break into traditional US and
British markets in Latin Amer-
ica. Political considerations
and a general unfamiliarity with
Soviet aircraft, together with
concern over spare parts, main-
tenance, and technical assist-
ance, have thus far prevented
the Soviets from gaining an en-
try into the market despite of-
fers of discount prices and at-
tractive financial terms.
Moscow now has come up with
a new twist designed to attract
customers. It is offering to
lease TU-134 medium--range jets
at a "reasonable" price to a
domestic Brazilian airline for
a two-year period, after which
they could be purchased with the
rental fees applied to the cost.
This type of arrangement, which
is to be offered to other Latin
American countries, could prove
attractive because it provides
an opportunity to determine whether
the Soviet aircraft are economi-
cally competitive in operation
before a decision to purchase is
made.
Moscow has had no luck in
Western Europe in pushing sales
of its transports, such as the
AN-24 and the TU-134, which face
heavy competition from established
Western manufacturers. The new
Soviet IL-62 four-jet 186-pas-
senger aircraft, comparable to the
British VC-10, may receive a boost
when one leased by Air France is
introduced on the Moscow-Paris run
this summer.
Helicopters remain the USSR's
best seller. Considerable inter-
est has been shown in Western
Europe in the large MI-6 and MI-10
(Flying Crane) helicopters, which
have no counterparts in the West.
The MI-8 28-passenger helicopter,
significantly cheaper than the
comparable Western model, also is
attracting some buyers. In an
effort to capitalize on this in-
terest, Moscow now is emphasizing
the commercial adaptations of
this type of plane for fire fight-
ing, passenger transport, agri-
cultural work: and car o carr ing.
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BRITISH GOVERNMENT PONDERS BUDGET CUTS
The British cabinet has been
considering proposals for massive
cuts in government spending af-
fecting both domestic and foreign
policy. An announcement of the
results of these discussions is
expected when Parliament returns
from its Christmas recess in mid-
January.
Cuts in defense spending
will amount to approximately 400
million pounds of the one billion
pounds the government wants to
save by 1.970. The savings will
be made at the expense of com-
mitments to SEATO, Malaysia, and
the Persian Gulf states. The
F-111 contract with the US prob-
ably will. also be affected.
Britain will probably pull
the last of its forces out of
the Malaysia/Singapore area by
the end of 1971, if not sooner.
Commonwealth Secretary Thomson--
dispatched to Commonwealth coun-
tries in the Far East to inform
them of the proposed cuts--is
talking in terms of withdrawing
by mid-1971. A similar time-
table for departure from the
Persian Gulf also seems probable.
It is unlikely, however, that
troop levels will be cut in Hong
Kong, Malta, or Cyprus, and the
question of reducing British
forces in. Germany will be deferred
pending talks with the US and
West Germany.
Defense Minister Healey is
fighting for retention of the
F-111 contract, primarily on the
grounds that US cancellation
charges would be prohibitive.
Faced with formidable opposition,
Healey is hoping for a compromise
that would reduce the number of
F-ills purchased from 50 to 35.
As part of the cut in non-
defense expenditures, the British
press has reported that London may
pull out of the UK-French Concorde
supersonic transport program, and
postpone a project to construct a
tunnel under the English Channel.
In the case of the Concorde, doubts
about its long-term economic via-
bility contribute to London's re-
luctance to continue.
Nevertheless, the government
still must reduce domestic spend-
ing in order to channel resources
into export industries and hold
price and wage levels in check.
Among the domestic measures most
frequently mentioned as vulnerable
are free medicine under the health
program, highway construction,
and the planned rise in the com-
pulsory education age from 15 to
16.
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The Wilson government un-
doubtedly believes that trimming
some of Labor's sacred social.
welfare programs poses a real.
danger of a split with the party's
left wing. A speed-up of defense
cuts and cancellation of other
projects would permit less drastic
reductions in social. programs and
help promote part unity.
DANISH ELECTORAL OUTCOME UNCERTAIN
The special election in Den-
mark on 23 January will mark the
second time in just over a year
that Prime Minister ]Crag and his
Social Democratic Pa:cty (SDP)
have been compelled to seek a
fresh mandate from the electorate
for the government's economic
policies.
Because of the ?aroliferation
of political parties--il will
participate in this election---
Denmark has had coalition or
minority governments ever since
World War II. This time, the
odds are once again against the
emergence of a strong government
that could push through the com-
prehensive anti-inflationary
measures required to allow Den-
mark. to benefit from its recent
devaluation.
One result of the election
could be the reconstruction of a
minority Social Democratic cab-
inet, weak and dependent on the
parties of the left and right for
support on specific issues. On
the other hand, if the so-called
"bourgeois" parties make si.gnifi--
cant gains, they will be encour-
aged to overcome their differences
and try to form the first non-
Socialist government in 15 years..
Public opinion polls indi-
cate that the SDP is likely to
lose some of the 69 seats it now
holds in the 179-member parliament,
and that the two major non-So-
cialist parties may increase their
69-seat total.. Neither group is
expected to win a parliamentary
majority. The balance of power
in parliament. is again likely to
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VII-I
be held by the smaller parties--
the far left Socialist People's
Party (SPP) and the Radical Lib-
erals. Both parties favor down-
grading Denmark's defense com-
mitments to the Western alliance.
The neutralist-oriented Radical
Liberals advocate slashing de-
fense spending, and the SPP urges
withdrawal from NATO and adoption
of neutrality.
Ever since the 1966 elections
in which the SPP doubled its rep-
resentation and obtained a pivotal
position in parliament, Krag has
been forced to depend on the SPP
for support on domestic policies.
Krag's uneasy alliance with this
anti-NATO party was opposed not
only by conservatives in his own
party, but also--and more
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strongly--by a radical left-
wing faction in the SPP which
favored demanding a higher price
from Krag for the party's sup-
port. It was this dissident
SPP faction that broke ranks
with the party and brought down
the Krag government in mid-De-
cember. It has since split off
completely from the SPP and
formed a new party, thus adding
another element of uncertainty
to Denmark's already murky
electoral scene.
There seems little likeli-
hood at this time that the post-
election government will be
under pressure to take measures
that would affect the status of
US installations in Greenland
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MIDDLE EAST - AFRICA
Some problems took on an optimistic note
this week, but given the deep rooted antagonisms
in the area such optimism is probably ephemeral.
Egypt's intentions to begin clearing opera-
tions to release the 15 cargo ships trapped in
the Suez Canal since the June war may run afoul
of Israel's insistence that Cairo reach some
agreement with Tel Aviv before the operations
begin. Even if Egypt decides to proceed unilat-
erally, however, Israel may hesitate to use mili-
tary force to halt the work.
The new government in South Yemen has been
able to function smoothly so far, although eco-
nomic difficulties may prove insurmountable if
additional aid is not forthcoming.
In Athens, recently released Andreas Papandreou
may soon leave the country. Interior Minister Pat-
takos says his request to travel to the US will be
approved. Meanwhile, King Constantine remains in
Rome amid doubts about his early return.
India's Congress Party leaders, at the party's
first annual conclave since last February's general
election, have declared their intention to move
against failing non-Congress governments in several
states. Indo-Pakistani relations suffered at least
a temporary upset this week when the Pakistanis
ousted an Indian diplomat for alleged espionage ac-
tivities and India reciprocated in kind.
In the Nigerian civil war, Lagos army head-
quarters reports that Biafran resistance has eased
both around Enugu and at Bonny on the coast. Lagos
now is aware that Biafra has French mercenaries,
and Gowon is reported to approve a policy of "no
quarter for mercenaries."
There are some indications that Congolese Presi-
dent Mobutu may be willing to let the rank and file
mercenaries now in Rwanda return to Europe, but de-
velopments since his hard-hitting press conference
on 9 January criticizing the Rwandans introduce some
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CRAB-ISRAELI TENSIONS REMAIN HIGH
Border clashes continue
along the Israeli-Jordanian cease-
iire line, and efforts to clear
the Suez Canal may be stymied by
Tsra.el's insistence that Cairo
reach some agreement with Tel
Aviv before clearing operations
begin.
Israeli and Jordanian forces
have exchanged fire four times
this month and tensions remain
high. In a fire fight on 8 Janu-
ary, the Israelis used aircraft
For the first time since 21 No-
vember to silence Jordanian ar-
tillery.
in some cases, the Israelis
may be initiating the exchanges
in retaliation for continued Arab
terrorist infiltrations from Jor-
dan. Israeli Minister of Defense
Mos.ae Dayan recently said, "If
the mine layings continue, it is
doubtful if the population along
the East Bank will be able to con-
tinue living where they do." On
1 January, firing apparently be-
gan between Israeli forces and
terrorists on the occupied West
Bank and somewhat later
t e Israelis fired
across the river into Jordanian-
held territory, killing four refu-
gees. Border clashes will con-
:inue as long as Arab terrorists
cross Jordan to infiLtrate Israel
and the West Bank.
On another of Israel's bor-
ders, Egypt has indicated it is
now willing to allow the release
of the 15 cargo ships trapped in
the Suez Canal since the June war.
Bgypt appears to be proceeding
unilaterally toward moving the
ships despite Israel's insistence
that some prior agreement be
.reached with reel Aviv before op-
erations in the canal actually be-
gin. UN officials in the area may
be able to work out a satisfactory
arrangement, but even if Egypt
proceeds without Tel. Aviv's con-
sent, the Israelis may hesitate
before using military force to
halt such a nonmilitary operation.
Egypt, meanwhile, is having
problems convincing other Arab
states of the need for an early
summit conference. In the face
of Syrian and Saudi Arabian re-
fusal to attend, the summit pro-
posed for 17 January in Rabat has
now been postponed indefinitely.
Further efforts will likely be
made to convince the recalcitrants
to attend, but there is little
hope the endeavor will be immedi-
ately successful.
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SOUTH YEMEN MAY FACE SERIOUS ECONOMIC PROBLEMS
The new government of South
Yemen has been able to function
smoothly so far but economic dif-
ficulties may prove insurmount-
able if additional aid is not
forthcoming
Some of South Yemen's present
air of stability results from the
exile or detention of vocal po-
litical figures. Opposition ele-
ments--especially the Front for
the Liberation of Occupied South
Yemen (FLOSY)--are demoralized
and lack effective channels of
communication with their exiled
leaders. The absence of daily
newspapers pending a new press
law has also helped calm the
situation.
The new government is prob-
ably relatively popular upcoun-
try, but its composition does
not include influential elements
in Aden other than the trade
unionists. Government policies
so far have been moderate; there
has been no effective propaganda
in favor of progressive-socialist
doctrine, and the President has
promised to preserve a "free econ-
omy." Foreign policy has been
unadventurous, with pledges of
friendship for all regardless
of political orientation. Some
of this moderation may result
from the government's realization
that British budgetary aid may
be all that is keeping it from
economic disaster. The British
subsidy--l2 million pounds--
lapses in May, however, and its
renewal is in doubt.
The army, purged of its most
traditionalist officers, has
taken up with apparent serious-
ness its new role as shield of
the National Liberation Front
regime. Continued army support,
however, is almost certainly de-
pendent on the government's
ability to pay salaries, and
this may not be easy without
British aid. Meanwhile, jobs
are scarce, and many members of
the British and Indian communi-
ties, which had generated jobs
and commercial activity, have
already left. Those business-
men who still remain are uneasy.
The external--and to some
extent, internal--orientation of
the new regime will probably de-
pend largely on the source of
future financial aid. So far,
the government's announcement
that it will take aid without
strings from any country, East
or west, has met with no response,
although several countries have
indicated their willingness to
consider various types of tech-
nical assistance. The Saudi at-
titude toward the new government
has been cautious, if not actively
hostile, and Kuwait and Libya
have been noncommittal. The
USSR has not yet given any indi-
cation of what its role might be
in the new state; two Soviet
diplomatic officials from Cairo
visited Aden briefly last month,
but returned without any indi-
cation of their mission. Cairo
radio, however, later announced
that the USSR and South Yemen
would exchange diplomatic rela-
tions at the ambassadorial level.
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EGYPTIAN ECONOMY BEARING UP UNDER SEVERE STRAINS
Egypt suffered a number of
blows during and after the June
war that exacerbated its already
severe economic problems. The
country, however, possesses a
remarkable ability to get by
under very adverse conditions,
and with a little luck should
be able to manage fairly well
over the next few months.
Egypt's foreign exchange
earning ability was severely hit
by the closure of the Suez Canal
and the curtailment of tourism
following the events of last
June. Its earning ability was
further circumscribed by the
damage inflicted upon Egypt's
two main oil refineries at Suez
in October. Large foreign debt
obligations will probably remain
a pressing problem.
How well the country manages
in the immediate future depends
largely on two rather uncertain
factors. Egypt was promised
$250 million of annual aid at
the Arab summit conference in
September, and payments of this
aid have made up for the loss
of much of its foreign currency
earning capacity. Although
these payments have so far been
prompt, there is no guarantee
how long they will continue.
Egypt is also currently nego-
tiating for a new agreement with,
the International Monetary Fund
which, if concluded, will facil-
itate debt rescheduling and help
Egypt obtain new loans from
Western sources. The agreement
.is not yet firm but prospects
for its conclusion are good.
If the aid from its fellow
Arabs continues, Egypt should
be able to manage well enough
over the next few months. Food
on order appears adequate to
cover requirements until the
summer of 1968, and consumer
necessities remain readily
available, with rationing in
effect on only a few items. A
severe import curtailment pro-
gram held Egypt's trade deficit
in 1967 to the lowest level in
recent years. The country's
liquid foreign assets are cur-
rently slightly greater than
comparable holdings in 1966.
Export prospects for 1968
also look bright under the
circumstances. Oil exports
will be affected by the loss of
Sinai oil and the damage to the
Suez refineries, but these losses
will be somewhat offset by in-
creased output from remaining
oil fields. Major export crops
appear to be doing well, and in
1968 Egypt will enjoy substantial
benefits from the Aswan Dam in
increased electrical power out-
put and acreage under irrigation.
I
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~~ i in ~l`7 n' r
ISE~ .;..
I'ItSP 1~RE
Thg ast;week~ been relatively quiet in Latin
and the puees ;of many legislatures, schools,
and uni,ugr~ta.gs
ing -new, trains--this time over, the proposed 1968
budgot;. Peter D'Aguiar, the
force his _party to vote against;; the measure even if
that meantYbringing-down Prime Minister Burnham's
government and paving theway for pro-Communist op-
position leader Cheddi Jagan to regain power. At
wpek'..s,.end, opposition to this plan within his own
arty was apparentlycausing D'Aguiar to reconsider.
be the-straw that decdeshim to pull out of political
lie.andgzve up leadership of his party--an action
that by itself would not bring Burnham down.
,The Panamanian,caXididate for secretary general of
the Organizati9n of Ampri~can States (OAS)--and the
leader on.'?he firs't..four ballots--roiled the waters
at aope.cial meeting.of the Council that he called
or .8 January. In polemical language, he charged
hat.a "siniste.r p.lgt"with fascist-racist overtones
ad been fabricated by' the press and the larger na-
tions of the hemisphere to block his election. The
sharp responses of several delegates suggest that he
has damaged his relatively favorable prospects.
There is presently no indication that any of the
three contenders will garner the necessary votes for
election on the fifth ballot, now set for 12 February,
barring some kind of agreement between two of them.
Failure to come up with a clear-cut consensus on a
candidate by that time will further tarnish the image
of the OAS.
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CHILEAN PRESIDENT INCREASES POLITICAL SUPPORT
President Eduardo Frei
won an important tactical vic-
to:~y at the national conven-
tion of his Christian Demo-
cratic Party (PDC) last week-
end. He obtained party sup-
po_-t for his controversial
wage readjustment legislation,
and installed one of his firm-
est backers as party presi-
dent. He was unable, however,
to get support for his pro-
posed one-year ban on strikes
over economic issues.
By defeating the left-
wing group that had controlled
the party leadership since
last July, Frei overcame one
of the obstacles tc a wage
law he considers vital to his
stabilization program. The
law provides for paying part
of a pending wage increase
in government bonds--a form
of enforced saving that would
slow inflation and create funds
for social development projects
The party's endorsement will
improve Frei's chances for get-
ting the law through the Chamber
of Deputies but it still faces
major opposition in the opposi-
tion-controlled Senate and is
likely to emerge in much modi-
fied form. Even if it survives
as written, tae law"s usefull-
ness will be greatly curtailed
by the failure to adopt a strike
ban.
Frei's strong personal in-
tervention was the deciding fac-
tor at the PDC convention. In
the past, he has been criticized
for taking an active: interest
in party affairs only in emer-
gency situations. The fact that
he was forced to make a second
speech at 4 a.m. indicates that
this was another emergency, but
his success may encourage him
to assume a more active role in
:party matters.
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COLOMBIAN ARMY TO MOVE AGAINST NEW GUERRILLA FORCE
The army is planning an
operation designed to eliminate
a guerrilla unit believed to be
forming in northwestern Colombia.
There have been reports of guer-
rilla training camps along the
border between the departments of
Antioquia and Cordoba for more
than a year, and on 6 January two
policemen and a civilian were
killed in an attack on a police
outpost in southern Cordoba.
Police suspect the attack
was led by Julio Guerra, allegedly
one of the leaders of a new guer-
rilla group that reportedly has
been responsible for many murders
and kidnapings in southern Cordoba
Department since last November.
In the absence of government se-
curity forces, the guerrillas are
reported to have virtually taken
control of that area, and many
residents have been forced to
flee.
The increasingly serious re-
ports coming from the area plus
the army's recent success in com-
bating guerrillas in other parts
of the country prompted the mili-
tary to plan a large-scale opera-
tion in the area. Most of their
success, however, has come in
rounding up urban support groups
and in small-scale rural operations.
Large sweep-through operations,
such as the recent one in Commu-
nist stronghold of Sumapaz have
netted them very little. 25X1
While government employees
and the more prosperous farmers
have been harassed, the guerrillas
have attempted to win peasant sup-
port by distributing free drugs
and medical assistance as well
as Communist propaganda.
SECRET
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SECRET
COLOMBIAN ARMY TO MOVE AGAINST NEW GUERRILLA FORCE
The army is planning an
operation designed to eliminate
a guerrilla unit believed to be
forming in northwestern Colombia.
There have been reports of guer-
rilla training camps along the
border between the departments of
Antioquia and Cordoba for more
than a year, and on 6 January two
policemen and a civilian were
killed in an attack on a police
outpost in southern Cordoba.
The increasingly serious re-
ports coming from the area plus
the army's recent success in com-
bating guerrillas in other parts
of the country prompted the mili-
tary to plan a large-scale opera-
tion in the area. Most of their
success, however, has come in
rounding up urban support groups
and in small-scale rural operations
Large sweep-through operations,
such as the recent one in Commu-
nist stronghold of Sumapaz, have
25X1
25X1
netted them very little.
was led by Julio Guerra, allegedly OLOMBIA
one of the leaders of a new guer- r - -
rilla group that reportedly has
been responsible for many murders
and kidnapings in southern Cordoba
Department since last November.
In the absence of government se-
curity forces, the guerrillas are
reported to have virtually taken
control of that area, and many
residents have been forced to
flee.
While government employees
and the more prosperous farmers
have been harassed, the guerrillas
have attempted to win peasant sup-
port by distributing free drugs
and medical assistance as well
as Communist propaganda.
PAN,
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Page 27 WEEKLY SUMMARY l2
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SFICRET
GUATEMALAN GOVERNMENT BACKS DOWN ON TAX MEASURES
Events in Guatemala over the
past week have pointed up the
weakness of the Mendez government
and could spur opposition elements
into renewed activity.
On 5 January t: ie government
backed down on a sales tax meas-
ure after merchants, apparently
in a consolidated effort, had
raised prices even on items ex-
cluded from the tax. The result-
ing unrest was compounded when at
the same time bus owners attempted
to double fares in the capital.
Opposition political ele-
ments--especially the Communists--?
reportedly were planning to ex-
ploit the unrest, and there were
also rumors of military discon-
tent and plans for public demon-
strations. During a series of
emergency meetings on 4 and 5
January, President Mendez and his
aides decided that the political
situation was too fragile to sur-?
vive such extensive opposition.
Police officers were placed on
buses to prevent the fare hike,
the tax was suspended, and the
government urged the people to
consider this a "patriotic act"
in defense of the public's in-
terest.
The tax suspension has re-
duced political tension, but it
may complicate any future effort
to enact or enforce measures that
are not acceptable to vested in-
terests or large sections of the
population.
Moreover, the impression that
the government panicked will be
taken as a sign of weakness and
will probably stir Mendez' oppo-
nents to probe for other soft
spots -A
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Secret
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