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December 20, 2016
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April 26, 2006
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June 14, 1968
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Approved For Release 2007/03/08: CIA-RDP79-00927A00658@t-0 DIRECTORATE OF INTELLIGENCE WEEKLY SUMMARY Secret 45 State Dept. review completed Approved For Release 2007/03/08: CIA-RDP79-00927A006500 00 `i,7 8 24/68 Approved For Release 2007/03/08 : CIA-RDP79-00927AO06500020001-0 Approved For Release 2007/03/08 : CIA-RDP79-00927AO06500020001-0 Approved For Release 2007/03 ff M. J WP79-00927AO06500020001-0 (Information as of noon EDT, 13 June 1968) VIETNAM There is still no break in the Paris talks, with the North Vietnamese maintaining their position on the bombing issue in very hard-line terms. Street fight- ing in Saigon suburbs has subsided, but the Commu- nists continue their pressure on the capital through a series of intense rocket bombardments. President Thieu has replaced General Loan, a key supporter of Vice President Ky, as chief of the national police. MAOISTS RENEW DEMANDS FOR "REVOLUTIONARY STRUGGLE" The violent fighting that continues to plague some areas of China seems to be fueled by current propa- ganda exhortations to "arouse the masses" against enemies of the state. NEW INDONESIAN CABINET WILL FOCUS ON ECONOMIC RECOVERY President Suharto's new cabinet, installed on 10 June, has been charged with developing and executing a five-year economic plan and preparing for general elections in 1971. Europe SECRET 25X1 Approved For l$ *sdi 2007 3 ( 'yCI? n-009~tA,6g6156C%20001-0 Approved For Release 2007/03/08 : CIA-RDP79-00927A006500020001-0 SECRET NEW EAST GERMAN CHALLENGE OVER WEST BERLIN With the introduction of new controls on West German travelers and goods transiting East Germany, the U1- bricht regime has taken its most serious step against Berlin since the building of the Wall in 1961. DISORDER GROWING IN FRANCE Although over 9 million of the 10 million striking workers have returned to their jobs and the general strike has thus virtually ended, the danger of seri- ous disorders has increased during the past week. CZECHOSLOVAK-SOVIET RELATIONS REMAIN UNEASY The fragile "understanding" between Moscow and Prague was jarred this week when the Soviet Foreign Ministry for the first time formally protested an article that had appeared in a Czechoslovak newspaper. ECONOMIC REFORM LAGS IN CZECHOSLOVAKIA The Dubcek regime has had to weather the initial phase of the political storm before it could begin to focus on the problems of economic reform. NEGOTIATIONS CONTINUE FOR NEW ITALIAN GOVERNMENT Negotiations for renewal of the coalition between the Christian Democrats and the Unified Socialist Party seem likely to be prolonged, and Italy may be without decisive government at a time of increased internal strains caused by the crisis in France. TITO ENDS RIOTS, PROMISES REFORMS IN YUGOSLAVIA Tito's promise on 9 June to satisfy student demands for jobs and social reform probably will cause fur- ther party dissension and temporarily slow up his economic reforms. NEW TRIBAL UNREST THREATENS EASTERN INDIA Hill tribe pressure is forcing the government to con- sider establishment of a largely autonomous hill state in eastern India. The government, faced with the still festering Naga and Mizo rebellions, can ill afford further disruption in the region. SECRET Approved For ~sgi2007 YC J@TP7 -00924 A0Jun 06568020001-0 Approved For Release 2007/ RPN-RDP79-00927AO06500020001-0 GREEK "REVOLUTION" PLODS FORWARD 20 A cabinet shift may be in the offing Little resistance activity has been noted and some Greeks are even tak- ing comfort in the stability of life under the mili- tary regime. SOMALIS REFOCUS THEIR ATTENTION ON DJIBOUTI The French Territory of Afars and Issas, the former French Somaliland, may be edging into the political spotlight again as Mogadiscio leaders consider the implications of recent reports of possible "repercus- sions" of the French crisis. UN INCREASES SANCTIONS AGAINST RHODESIA The new UN call for expanded economic sanctions is not likely to trouble Rhodesia's economy in any sig- nificant way, and there is hardly any chance that it will bring down the Smith regime. Western Hemisphere POLITICAL CRISIS IN COLOMBIA NOT RESOLVED The Senate's refusal on 12 June to accept President Carlos Lleras' resignation has not ended the contro- versy over his constitutional reform program. SHOWDOWN TEMPORARILY AVERTED IN BOLIVIA President Barrientos seems again to have managed to outmaneuver his opposition in the face of serious economic and political problems. SECRET Approved Fo1 fea i2O b : f 79-0b62fA 06 0020001-0 Approved For Release 2007/03/ffDP79-00927A006500020001-0 CHILEAN COMMUNISTS CONTINUE POLITICAL MANEUVERING The Communist Party has renewed its call for a broad leftist front to contest the 1970 presidential elec- tions, but it hinted that it might abandon its tra- ditional Socialist allies if they continue their present extremist tactics. SECRET Approved Fob' eadse 20OWlk :O pl?79-OQg27 06M0020001-0 Approved For Release 2007/ O R -RDP79-00927A006500020001-0 The North Vietnamese are continuing to take a hard official line on the bombing issue at the Paris talks and elsewhere. There are a number of indications that they plan to intensify propaganda efforts in support of their position, with a particular view toward influencing American public opinion. The ground war in South Vietnam slackened noticeably during the week, but rocket attacks on Saigon increased. Skirmishing around Khe Sanh continued amid indications that the Communists intend to raise the stakes in that area by augmenting their forces. In the western highlands, Special Forces camps remain likely targets for possibly major enemy attacks. In Saigon, Vice President Ky has responded to the latest blow to his power position-General Loan's removal as national police chief--by an- nouncing his resignation as director of the People's Self-Defense Force. Seemingly persuaded that President Thieu will bypass him on all matters of importance anyway, Ky appears resigned to staying in the background at least until some issue presents itself on which he might be able to rally the senior generals against Thieu. In China, the Cultural Revolution has received new impetus from a set of "instructions" by Mao Tse-tung published jointly by People's Daily and the Liberation Army Journal on 2 June. Subsequent exhortations to army officers and veteran party bureaucrats, who now dominate provincial governments, to protect the "masses" and respect their "revolutionary zeal" are adding further fuel to the violent fighting that continues to plague some parts of the country. Indonesian President Suharto has put together a new cabinet which, while giving a nod to the political parties' persistent calls for greater representation, preserves army control over key security ministries and has more of the technical expertise vital for getting on with the government's first order of business-economic rehabilitation and development. The Sato government in Japan, which faces upper house elections early next month and is aware of recently emerging, widespread popular concern with the US military presence, has abandoned its usual silence on the delicate issue of US bases. Official statements last week cautiously criticized some aspects of US operations but did not question basic US-Japanese security relationships, which Sato himself has reaffirmed in a campaign speech. SECRET 1 Approved Page Release 2005/03/O U I '-WDP79t 604 A Approved For Release 2007/03/08 : CIA-RDP79-00927AO06500020001-0 SECRET VIETNAM No break in the Paris talks developed during the week as North Vietnamese spokesmen continue to portray their position in very hard-line terms. Newly arrived politburo member Le Duc Tho told CBS' Charles Collingwood that no progress in the talks could be expected until the US dropped the reciprocity issue and agreed to an unconditional cessation of the bombing. On the propaganda front, Hanoi is reported to be undertak- ing a number of steps to strengthen support for its negotiators in Paris. Among them is a plan to have such Communist-dominated groups as the World Peace Council organize speaking tours of the US. Hanoi is also trying to ar- range rallies in Paris and other .capitals. Meanwhile, Vietnamese Com- munist propagandists are becom- ing more active in defending the right of all Vietnamese to fight anywhere in their country against the allies. US charges of Hanoi's troop involvement in the South have pushed them into a more openly defensive stance on this issue. The Communists may also be attempting to pressure the northern populace for even greater sacrifices in support of the war in the South. A Liberation Front statement of 11 June affirmed that the South Vietnamese people, while relying mainly on their own strength, also "have the right to receive assistance in all as- pects from their kith and kin northern compatriots." The state- ment claimed, in addition, that the "South Vietnamese people to date have reserved the right to appeal for and receive assist- ance in all aspects from their friends in the world, including assistance in weapons and volun- teers. Political Developments in Saigon President Thieu, in a major move against Vice President Ky and his followers, replaced the still-hospitalized General Loan as chief of the National Police Force on 9 June. Although Loan has long been an obvious target in Thieu's systematic campaign to cut Ky down to size, most ob- servers in Saigon had not expected Loan's ouster to come this soon. Thieu's action may have been spurred in part by the urgings SECRET Approved PFogr Release 200E7/03/08 : CIAAARDP79-010923 0~ 00020001-0 Approved For Release 2007/03c/RDP79-00927A006500020001-0 of General Khiem, the new interior minister, but its main inspiration was probably a determination by the ever-cautious President that Ky was not as strong as Thieu, had previously supposed. Ky's failure overtly to oppose Thieu's maneuvers in connection with the establishment of the new Huong government may have helped the President to reach this con- clusion. Ky thus far seems to have accepted quietly this latest blow to his political fortunes. On 12 June, he resigned as director of the people's self-defense force Ky will probably bide his time, looking for a clear-cut issue--possibly the peace issue--on which he can rally the senior generals against Thieu. Ky has been careful to avoid direct comment on the Paris talks, but he has on a number of occa- sions emphasized his opposition to any compromise with the Com- munists. Colonel Tran Van Hai, com- mander of the Vietnamese Rangers, has been named to succeed Loan. Hai is described as an able, apolitical officer The mayor of Saigon, wounded in the accidental attack on the police command head- quarters last week, has also been replaced. In addition, a new commander has been installed for the Capital Military District, a position previously held by Gen- eral Le Nguyen Khang along with his command of III Corps. Khang has offered Thieu his resignation as III Corps commander, but Thieu has not yet acted on it. Saigon civilian politi- cians are beginning to talk more openly about possible negotia- tions with the National Libera- tion Front. Former deputy prime minister Tran Van Tuyen, in a letter to a Saigon paper, has declared that the Front, although an instrument of the North Viet- namese Communist Party, posses- ses an army, controls part of the country, and must be acknowl- edged as a political reality. He reiterated proposals, which he and others first put forward some months ago, calling for a mili- tary conference between Saigon and the Front to arrange a truce, to be followed by an interna- tional political conference to settle the war within a broader framework of peace in Southeast Asia. Tuyen's statements follow similar remarks made in the US by newly appointed Minister of State Phan Quang Dan, who said he favors talks with the Front aimed toward a cease-fire, if not toward SECRET Approved F&i Wea a 200~''MW OW19-004 7/ WA&20001-0 Approved For Release 2007/0' 8d PDP79-00927A006500020001-0 an eventual coalition. His com- ments have caused considerable consternation in Saigon and could cost him his job when he returns unless he revises them to fit the harder government line. These issues previously were taboo and their open discussion caused some persons to be arrested. One impetus toward a more candid public consideration of talks with the Front is almost certainly the widespread concern over the pos- sible direction of bilateral talks between Washington and Hanoi and the conviction that the South Vietnamese themselves must be primarily responsible for deter- mining their own future. Another stimulus may be the trend toward a greater civilian voice in the government, which many local politicians have long considered to be the prerequisite for ending the war through negotiations. The War in South Vietnam House-to-house fighting in Cholon and Gia Dinh has subsided, but the Communists continue to subject the Saigon area to a heavy rocket bombardment. The rain of rockets, some of which are falling perilously close to key installations in the main government and business part of Saigon, is beginning to excite demands by South Vietnamese politicians for re- taliation against Hanoi. Minor skirmishes with enemy troops continue to be reported on the outskirts of Saigon. These engagements largely involve Viet Cong local and main force units charged with keeping up pres- sure by mortar and rocket fire and successive ground probes. These troops are be- ing supported by an outer ring of units from the three major Communist divisions in the area, the 5th, 7th, and 9th. Their apparent mission is to conduct harassing attacks against outlying allied bases to screen the flow of munitions, SECRET Approved F r eledse 2007ffia" : j 79-0QW-6W65Q0020001-0 Approved For Release 2007/03/08SPLAfff79-00927AO06500020001-0 food, and replacements to the Viet Cong units nearer the Jvu I I I V I L I IvnlvI city. From the time this latest Communist campaign of harass- ment in the Saigon area began on the night of 4-5 May until 10 June, civilian casualties resulting from the shellings and the street fighting have been placed at 433 killed and 3,660 wounded. In addi- tion, the government's refu- gee burden has been increased by over 160,000. The enemy paid a heavy price, losing an estimated 10,000 killed in the Saigon area during the month of May. .Doug Hai NORTH "~ VIETNAM Z, Demilitarized Zone KheSanh --rING TRI `.fj Hue' 3 HUA THIEN \ - -?.._..~ ~r _11'Da Nang .Saravane { JUANG NAM .AJANGf TIN ti"l Chu Lai Elsewhere in the country, ground fighting was relatively light during the week. In the Khe Sanh area, however, skirm- ishing and Communist probing actions continued amid indica- tions that the enemy force structure may be augmented to the equivalent of two divi- sions. In the western high- lands, Communist forces con- tinued their attempt to isolate the US Special Forces camps at Oak Pek and Polei Kieng through harassment of access routes and -"~-~ ~Quang Ngai r 1 - allied fire-support bases. In Quang Nam Province, vigorous allied countermeasures during recent weeks appear to have re- duced the threat of early and large-scale enemy offensive ac- tion. F_ I SECRET Approved For R% e4007/0,tb1?*-bfA-I%NW409271A00 0b$0001-0 Approved For Release 2007/ 3/08 Cl DP79-00927AO06500020001-0 SECRET MAOISTS RENEW DEMANDS FOR "REVOLUTIONARY STRUGGLE" The violent fighting that continues to plague some areas of China seems to be fueled by cur- rent propaganda exhortations to "arouse the masses" against ene- mies of the state. This propa- ganda line stems from a set of "instructions" by Mao Tse-tung published jointly by''Peop'le's Daily and the' Liberati-oF -Army Journal on 2 June. Recent broadcasts from Peking and several provinces insist that the "masses" be given a larger role in the Cultural Revolution. Army officers and veteran party bureaucrats who now dominate pro- vincial governments are being told to protect the "masses" and to re- spect their "initiative" and "revo- lutionary zeal." On 7 June, Peking radio even spoke of "organizing and arming the masses." feuding Red Guard factions are fi htin more openly and violentl there have been clashes involv- ing large numbers of armed stud- ents and workers nearly every day since late May in Canton or nearby cities. Two dormitories at the large Chungshan University have burned down. In nearly every in- cident the army has taken no ac- tion except to prevent bystanders from approaching the trouble zone. A curfew has been imposed in Canton covering the Chungshan campus and other major trouble spots. The problem of maintaining order in Canton is complicated by the influx of thousands of refu- gees from the adjacent province of Kwangsi, where fighting and burning in several large cities have forced residents to flee. The new propaganda line has already had an inhibiting effect on efforts by the army to maintain or- der in some areas, and as a result SECRET fight- 25X1:_ ing at Kueilin, on the main rail- 25X1 road has paralyzed transportation. Approved Fcgr-al~glegse 20kQ 8 5 79-010492)&90@?00020001-0 25X1 Approved For Release 2007/03/08 : CIA-RDP79-00927AO06500020001-0 Approved For Release 2007/03/08 : CIA-RDP79-00927AO06500020001-0 Approved For Release 2007/03/08 : CIA-RDP79-00927AO06500020001-0 SECRET NEW INDONESIAN CABINET WILL FOCUS ON ECONOMIC RECOVERY President Suharto's new cabi- net, installed on 10 June, has been charged with developing and executing a five-year economic plan and preparing for general elections in 1971. In constructing the cabinet, Suharto has balanced the demands of his various critics against his own desire for expertise and has produced a government that is more competent than its prede- cessor. Suharto reduced the num- ber of military members, slightly increased party representation, and put most technical posts in capable nonparty hands. The new government, which has thus far drawn little criti- cism, is composed of six military officers and 17 civilians. Eight of the civilians are party repre- sentatives, but four of them hold nonportfolio posts that appear to carry little influence. The army retains the key security posts of defense and internal af- fairs. An able member of Suharto's staff of economic advisers has been given the finance portfolio. Newly appointed Trade Minister Sumitro, a political exile dur- ing much of the Sukarno era, is also a trained economist. Adam Malik remains as foreign minister. toward economic recovery is es- sential for political stability and that further improvement must be achieved by 1971 when elected government is to be reinstituted. They hope to initiate a five-year development plan next year empha- sizing increased agricultural production and a rehabilitated and expanded infrastructure. Work on the five-year plan apparently has already begun under the direction of Widjojo, the head of the National Planning Board. Suharto's appointees to the financial and economic min- istries and related bureaus have been working well together for some time and the development plan should go forward relatively unhampered by interdepartmental feuding. It now appears that Indo- nesia will not receive all of the $325 million in economic assist- ance from non-Communist donors which it had requested for 1968. Western Europe and Japan have been less generous than origi- nally hoped. Suharto and Widjojo, who earlier had reacted with near panic when they realized all re- quested aid would not be forth- coming, now appear to be adjust- ing their plans and to be set- ting their economic sights on 1969--the year to move from sta- bilization to rehabilitation. Suharto and his colleagues believe that visible progress SECRET Approvedp-eRelegse 2pp,40> l&gf)P791Q09 7 100?500020001-0 Approved For Release 2007/0& C fZDP79-00927AO06500020001-0 The seeds of a new Berlin crisis were sown during the week by East Germany. The East German parliament passed a series of laws designed to underscore Pankow's sovereignty and to solidify West Berlin's status as a third political entity. These actions were undoubtedly coordinated in advance with Moscow. Passport and visa requirements for West Germans desiring to enter East Germany also are intended to emphasize that the Federal Republic is a foreign state rather than part of a divided nation. These measures will be viewed in Bonn as a further challenge to West Germany's claim to represent all Germans. They could affect the Allied position in Berlin, which would be weakened in proportion to the degree of authority over access assumed by the East Germans. President Tito has temporarily defused the student revolt in Yugo- slavia, but party factionalism and economic priorities may interfere with his attempts to meet "justified" student demands. In Belgium, the four-month-old government crisis appears to have been resolved following agreement earlier this week between the Social Christian and Socialist parties on a program for a new coalition govern- ment. It is likely to be headed by Gaston Eyskens, a former prime minister and veteran Social Christian leader. The outlook for the new coalition is not bright, however, because of the persistent tensions arising from the unresolved linguistic dispute. The UN General Assembly overwhelmingly approved on 12 June a resolution endorsing the nonproliferation treaty and requesting that it be open for signature and ratification at the earliest possible date. The US and USSR hope to call a meeting of the Security Council in the next few days to consider security assurances for nonnuclear countries. SECRET cre Approved or l elease 2007/03/0$ S8 P79-00927A00%500020001-0 Approved For Release 20073/ -RDP79-00927A006500020001-0 NIET NEW EAST GERMAN CHALLENGE OVER WEST BERLIN With the introduction of new controls on West German travel- ers and goods transiting East Germany, the Ulbricht regime has taken its most serious step since the building of the Wall in 1961. The imposition of passport and visa controls for West Ger- mans and West Berliners is de- signed further to underscore East German sovereignty and at the same time to enhance the claim that West Berlin is a third po- litical entity. The new regulations require West Germans and West Berliners to procure East German visas to transit or visit East Germany. After 15 July,. West Germans will also be required to produce pass- ports for such travel. These documents may not include any reference to Bonn's claim to rep- resent all Germans. The East Germans began issuing visas on 12 June. West German Chancellor Kiesinger told Allied ambassadors on 12 June that the situation is serious and that "not just pro- tests but countermeasures are needed." At the same time he said that it is necessary to pro- ceed with caution and realism. The chancellor also noted that his government had not yet de- cided what countermoves could be taken by West Germany and the Allies. In light of recent upheavals in Eastern Europe--especially in Czechoslovakia--where important Soviet interests are at stake, the Soviets have been more inclined to back Pankow's assertion of sovereignty at Bonn's expense than they might otherwise have been. Soviet diplomats, in endorsing East Germany's previous moves to increase its control over West German travel, have sought to dampen any suggestion of tension, instead linking the moves to al- leged West German "provocations" and emphasizing that Allied ac- cess to Berlin will not be af- fected. Soviet commentary has soft- pedaled the latest and boldest East German action, characterizing the passport and visa requirement as a "routine" measure "fully in line with the norms of interna- tional law and practice." Pravda on 13 June defended the controls as a justified and inevitable re- sponse to the pending West German emergency legislation. The East Germans may have been encouraged when the West failed to make a strong response to earlier bans against travel in East Germany by members of the right-wing National Democratic Party and senior Bonn officials. The extent to which they implement the new regulations may be related to the intensity of Western reaction. F_ I SECRET Approved ParjRelease 20MM@8 S P79-OW21Ab0600020001-0 Approved For Release 2007/03i : t -1FDP79-00927AO06500020001-0 DISORDER GROWING IN FRANCE Over 9 million of the 10 mil- lion striking workers have re- turned to their jobs, and the gen- eral strike has thus virtually ended. The danger of serious dis- orders, however, has increased during the past week. The deaths of two workers and a student in clashes with police attempting to clear strike-bound plants have raised tension anew after a period of relative calm. In the wake of violent dem- onstrations protesting police "brutality," the government on 12 June banned all public protests until after the parliamentary elections and ordered the disso- lution of seven extreme leftist groups under a 1936 law prohibit- ing the formation of combat groups and private militia. These re- pressive government moves could make the situation even more ex- plosive. Instead of trying to concil- iate the rebellious students and workers, the government is con- centrating on winning the June elections by following a tactic of deliberately polarizing po- litical forces. This increases the possibility of violent con- frontations between the right and left, and will make even more dif- ficult the solution of basic so- cial and economic problems. De Gaulle's strong emphasis on the dangers of the "totalitarian en- terprise" of Communism together with the government's mobilization of "civic action" committees and the Committee for the Defense of the Republic--a group of World War II resistance veterans--have given new impetus to right-wing forces. the government's agreement to submit a bill to reimburse those whose property in Algeria was na- tionalized are intended to rally extreme rightists to the regime. The French Communist Party (PCF) is giving the Gaullists am- munition for their anti-Communist campaign by reiterating the call for a "popular front" government. The Gaullists contend that the PCF's goal has been to install itself in power and that it has used the crisis to push toward that end. The party, however, initially was largely preoccupied with limited economic and politi- cal aims. Only when the crisis mushroomed and De Gaulle appeared unable to control it did the PCF escalate its demands and thus open itself to charges of aiming at revolution. 25X1 25X1 Now that De Gaulle again ap- pears to be in command, the Commu- nists are being more circumspect. At this juncture, the PCF appar- ently does not expect the left to win a majority in the elections but it hopes to capture the lead- ership of the left by obtaining an impressive margin on the first bal- lot. 125X1 SECRET Approved FoP aA12007 aYOPi'4t?fkP9-00911fA`o 5 20001-0 Approved For Release 2007/gfftgL --RDP79-00927A006500020001-0 CZECHOSLOVAK-SOVIET RELATIONS REMAIN UNEASY The fragile "understanding" between Moscow and Prague was jarred this week when the Soviet Foreign Ministry for the first time formally protested an ar- ticle that had appeared in a Czechoslovak newspaper. Moscow's note objected to the reprinting of a New York Times article which alleged that Soviet military officials were involved in General Sejna's es- cape from Czechoslovakia. The note accused the newspaper of re- printing the article with the "one aim" of disturbing friendly relations between the USSR and Czechoslovakia. Virtually de- manding the reimposition of cen- sorship controls, the note ex- pressed the "conviction" that the "appropriate Czechoslovak organs will take the necessary measures" to prevent the appear- ance of similar reports. The Soviet decision to re- vive the issue of press freedom at the intergovernmental level indicates Moscow's continuing dis- satisfaction with the Dubcek re- gime's determination to use only informal controls on the press. The Soviet note was delivered al- most simultaneously with the ar- rival in Moscow of a Czechoslovak economic delegation led by Deputy SECRET Premier Strougal to continue nego- tiations on a large Soviet loan. The fact that the delegation left two days later without a Soviet commitment for immediate aid tends to confirm reports that Moscow is using the prospect of economic as- sistance to force a retreat on the issue of press freedom as well as to exert influence on the course of other reforms. As yet, the Soviet press has made no move to resume the war of words that ended during Kosygin's stay in Czechoslovakia. Soviet re- porting of developments in Czecho- slovakia continues to be biased, but without direct criticism. The Soviets continue to exert other psychological pressures, how- ever. Preparations may now be com- plete for a Warsaw Pact command- staff exercise in Czechoslovakia. The exercise was announced three weeks ago. The Czechoslovak Defense Ministry has issued numerous press statements intended to allay do- mestic fears that the USSR will use the exercise to cover military in- tervention. These statements stress that only a "minimum" number of So- viet troops will take part and that they will leave Czechoslovakia on conclusion of the exercise, which is to last several days. Approved Rucjele se 20071@:B/1085 1RPP79-iOV93;,40g%E Approved For Release 2007/0:H( cl$,-RDP79-00927AO06500020001-0 ECONOMIC REFORM LAGS IN CZECHOSLOVAKIA The Dubcek regime has had to weather the initial phase of the political storm before it could begin to focus on the problems of economic reform. Dubcek cannot yet afford to identify himself with an economic program that may risk alienation of any of his supporters, however. The Czech political situation has not yet been stabilized, and the economic future is so uncertain that he would be foolish to tie his hands with a detailed program. Central to Czechoslovak eco- nomic plans is the question of the availability of foreign cred- its. Czechoslovakia continues to seek credits primarily for the purchase of Western technology and for short-term assistance in maintaining the consumers' stand- ard of living. Amid constant re- ports of credit feelers in the West, Czechoslovak Deputy Premier Lubomir Strougal went to Moscow 10 June for a continuation of talks on long-term Soviet-Czecho- slovak economic cooperation. A major topic of discussion prob- ably will be a sizable foreign currency credit that Prague is seeking from Moscow. Meanwhile, the impatient re- formers led by Deputy Premier Ota Sik continue to complain about the slow progress in spelling out a new economic policy. They cite the failure to phase out ineffi- cient firms and to do away with central control of the economy. The comprehensive study of the economy promised by Dubcek's ac- tion program has yet to be pub- lished, nor has a progress report been made. Nevertheless, two major deci- sions have been made recently, neither of which had been included in the original economic reform of the Novotny regime. The first involves the establishment of workers' councils, which are to manage certain enterprises. The second downgrades the role of the industrial trusts, which had been deemed central to administrative efficiency and the success of the original economic reform. Now, however, enterprises and firms will not be obligated to associate with the trusts. Other limited measures toward economic reform also have been taken this year. These include the continued closing down of un- economic mining operations, the introduction of new management principles in agriculture, and the recent cutback in 1980 goals for the production of electric power, steel, and coal. In a related de- velopment, labor unions are slated to have "real" power to represent workers' interests: they will elect candidates for political of- fices and will promote legislation beneficial to workers. SECRET Approved For Fl ~ eas;31007 XCFW-N5*y9-009if'Aa 5U60D20001-0 Approved For Release 2007/gib.L:RcA-fRDP79-00927AO06500020001-0 NEGOTIATIONS CONTINUE FOR NEW ITALIAN GOVERNMENT Negotiations for renewal of the coalition between the Chris- tian Democrats, Italy's largest party, and the Unified Socialist Party (PSU), which has been the junior partner in recent years, seem likely to be prolonged. Italy may thus be without deci- sive government for some months at a time of increased internal strains caused by the crisis in neighboring France. The PSU decided to withdraw from the government after suffer- ing losses in the parliamentary elections of 19-20 May. Both the Christian Democrats, the co- alition leaders, and the Commu- nists, the chief opposition party, gained seats. Although the PSU right wing did better than the left wing in the elec- tion., the left wing has acquired leverage as a result of threats by some of its leaders to force a party split. These leaders insist they will leave the PSU unless it gets convincing com- mitments from the Christian Demo- crats for action on long-promised reforms involving the universi- ties, taxation, and administra- tive red tape before joining any new coalition. Christian Democratic Secre- tary General Mariano Rumor on 11 June failed in what Socialist sources described as his final attempt to persuade the PSU to join a new coalition. A minority government now may be formed with Rumor or another leading Christian Democrat as premier to govern at least until the PSU congress next October. Such a government would need PSU par- liamentary support because the Christian Democrats would find the alternatives of extreme rightist or extreme leftist sup- port politically infeasible. The formation of even a minority government may take some time because the Socialists are likely to seek the maximum possible Christian Democratic commitment to reform before promising their support. Meanwhile, widespread stu- dent agitation, which began last November and has been fostered by the recent unrest in France, is continuing. It is still pri- marily directed toward reform of the archaic education system, although it has had some politi- cal overtones. The students in Italy, how- ever, unlike those in France, are not likely to find effective al- lies in economic interest groups. Italy's orthodox Communists, more- over, are generally unwilling to endorse student agitators. Never- theless, the unrest in the univer- sities could spread to social and political groups if effective re- forms are delayed by protracted Christian Democrat - Socialist negotiations. SECRET Approved dRelese 2Q,( -/QN85&&k4R4P79 -:pQ9g7A0W00020001-0 Approved For Release 2007 hbFi I i -RDP79-OO927AOO65OOO2OOO1-0 TITO ENDS RIOTS, PROMISES REFORMS IN YUGOSLAVIA Tito's promise on 9 June to satisfy student demands for jobs and social reform probably will cause further party dissension. In order to deliver on his promise, Tito will somehow have to reconcile the competing interests of older, ill-educated party members and the students who want their jobs. A review of existing investment prior- ities will be necessary and, if stu- dent demands for jobs are to be met quickly, a temporary slowdown in the economic reform may result. The riots of 2 and 3 June broke out following student accusa- tions of police brutality during a minor fracas in Belgrade. By the time the riots stopped, some 60 persons had been injured, some $120,000 in property damage had occurred, and the students had oc- cupied numerous university premises. Regime efforts to regain control through party organizations and fronts were successfully countered by the students, who set up ad hoc student action committees and vowed to sit in until their demands were met. The regime managed, however, to prevent the students from making common cause with workers harboring economic grievances. The student demands originally were relatively narrow and included greater participation in adminis- tering the university, more finan- cial aid to education, and improved employment prospects after gradua- tion. The protests soon took a political turn, however, and widened to embrace social inequality, the income gap between workers and administrators, the lack of democ- racy, and the incompetence of many officials. The rebels also called for the dismissal of those responsible for permitting alleged police brutality. Tito's speech on 9 June acknowledged the legitimacy of most of the students' grievances and promised that a party program dealing with them as well as cur- rent economic problems would soon be forthcoming. Despite his concilia- tory approach, however, Tito was firm in stating that no opposition to the new program would be toler- ated. His implication that he and other leaders should quit if they could not solve Yugoslavia's prob- lems probably was meant more as a warning to others in the party hierarchy than as a personal threat to resign. Tito also warned the students to beware of efforts to infiltrate their movement by Ran- kovic conservatives, Djilas lib- erals, and followers of Mao Tse- tung. The crisis further dramatized the divisions within the already badly fractured Yugoslav Communist Party. Conservative hard liners, particularly in the Serbian party and police apparatus, adopted a tougher stance toward the students than did the rest of the regime. Tito undoubtedly will intensify ef- forts to remove some of these hard liners from the middle and lower levels of the party, and the secu- rity chiefs in Belgrade and Serbia may be sacrificed to placate the students. Widespread changes in the party and government leader- ships probably will await the 9th party congress in December, how- SECRET Approved FPbraflease 2007M3 : ~ 1 79-OO92?Au b65OOO2OOO1-0 Approved For Release 2007/OO~,~k fRDP79-00927AO06500020001-0 SECRET Approved FF el se 2 9&-/(3/L8 ~9P79 p2937uAO 500020001-0 Approved For Release 20071,qL/(]g1 T-RDP79-00927AO06500020001-0 As fighting continues in the Nigerian civil war, domestic pressures are mounting on the UK to halt arms shipments to Lagos. Arms shipments have already been suspended by the Netherlands. The British Government is resisting these pressures while trying to persuade federal and Biafran representatives now in London to reopen peace talks. Lagos, however, has reacted to the possibility of a decreasing availability of arms by stepping up air and sea shipments in an effort to create a large stockpile of munitions and equipment. Tanzania and Zambia were the only UN members besides Albania and Cuba to vote against the nuclear nonproliferation treaty this week. Their position was undoubtedly affected by Communist China's agreement to construct the Tan-Zam railroad. Tanzania's vote will also ensure a red- carpet reception next week when President Nyerere visits Peking again in search of additional military and economic aid. Israeli and Jordanian forces continue to exchange shots across the Jordan River almost daily. Jordanian officials are fearful of an Israeli strike against the East Bank and have charged that the Israelis are massing troops along the cease-fire line. There is no evidence to support this charge, but if Jordanian fire kills more Israeli civilians a retaliatory strike could be mounted with little or no warning. Saudi King Faysal has agreed to finance a $36-million Jordanian arms purchase from Britain. The Indian Government, unable to put down the Naga and Mizo tribal insurgency in eastern India, is now being forced to come to terms with demands for local autonomy by the hill tribes of Assam. Concessions in Assam could, however, encourage further tribal and linguistic frac- tionalization. In Turkey, some 30,000 students this week launched a strike to demand reforms in the educational system, taking over several university buildings in the process. SECRET Approved IPorgl elease 20073/08 SCIA-RDP79-00927AO06500020001-0 SECRET Approved For Release 2007/03/08 : CIA-RDP79-00927AO06500020001-0 EASTERN INDIA BrahmaPUtYa G xis . Shillong. C H I N A Approved For Release 2007/03/08 : CIA-RDP79-00927AO06500020001-0 SECRET Approved For Release 2007/03 C ,tIDP79-00927AO06500020001 NEW TRIBAL UNREST THREATENS EASTERN INDIA After two years of equivoca- tion, the Indian Government is giving urgent attention to the possibility of establishing a largely autonomous hill state within the State of Assam. Fur- ther delay in reaching a decision could result in new disorders in the already embattled eastern re- gion. Pressure for the hill state comes from the moderate-led All Parties Hill Leaders Conference, representing tribes in the Garo and Khasi-Jaintia districts. The tribes resent domination by the Hindu population of the Assam Valley, which largely controls the state government. Unhappy with the government's continued vacillation, the con- ference recently withdrew its nine members from the Assam state assembly. It has also threatened to launch a nonviolent action cam- paign, which could get out of con- trol. More extreme elements, who may be responsible for recent bombings of Assam government build- ings in Shillong, threaten to take over the present conference lead- ership if prompt steps toward autonomy are not forthcoming. The government can ill af- ford disorder in the hill dis- tricts. The Naga and Mizo re- bellions, in the mountains and valleys to the south and east of the Assam Valley, already tie down some 70,000 Indian troops and paramilitary personnel. Des- pite an occasional hopeful sign, such as recent evidence of divi- sion in the Naga underground, there are no prospects for an abatement of these rebellions. There is thus far no evi- dence of Chinese help to other tribes, although the Chinese do give propaganda support to both the Naga and Mizo "struggles for independence" and to tribal op- position to Indian domination in the Assam Valley. Several members of the Indian Communist Party (Left) have been arrested in the Jorhat area for working with Nagas in sabotage activity. The Mizos may get some arms as- sistance and training in East Pak- istan, and they depend on the Chit- tagong Hill Tracts for a sanctuary. The government must weigh the need to forestall new dis- ruption in the eastern region against the effects of further fractionalizing India's states. Within Assam, the government's willingness to consider autonomy for the hill tribes has encour- aged similar aspirations by tri- bal groups in the plains. In- creased unrest among the plains tribes was manifested recently 25X1 when a mob of 4,000 Boro tribes- men attacked a police post in the Kokrajhar subdivision. SECRET Approved FoPrealsg 200fM1OM ddftY9-00617AW 020001-0 Approved For Release 2007/03/08 : CIA-RDP79-00927AO06500020001-0 SECRET GREEK "REVOLUTION" PLODS FORWARD A long-rumored cabinet shift may be the next step in the slow pace of political movement in Athens. The junta government appears capable of moving swiftly to counter any threat to its rule, and had no trouble spotting and apprehending two groups of left- ist and centrist plotters. Former premiers Papandreou and Kanello- poulos and other political figures remain under close guard. Arch- opponent Andreas Papandreou's campaign to arouse opposition to the regime abroad has had no ob- servable effect on the domestic scene. Some 53 persons were released from detention in late May, for good conduct and as a gesture of leniency, but over 2,000 accused Communists still remain in island prisons. The government has taken some steps in an obvious effort to curry favor with various special groups. A large number of agri- cultural debts have been canceled, apparently gaining the government some support among the rural pop- ulation--perhaps to the detriment of future budgets. In addition, there has been a relaxation of the controls on the domestic press, a move that has had a mixed recep- tion. Some editors and publishers seem to prefer imposed guidelines on what they may print rather than risking punishment for articles subsequently deemed uncomplimen- tary to the regime. Moreover, articles of the 1952 constitution dealing with the right of assembly and association have been reinsti- tuted, a move designed to win over both domestic and international labor circles. The junta may have reaped a windfall from the civil disorders afflicting France, the US, and other countries. Some Greeks appear to be taking comfort and even pride from the conclusion that military rule has spared them similar disorders. The regime is still frus- trated and dissatisfied with its failure to win full restoration of US military aid, but it seems able to view its domestic situa- tion with equanimity as it pro- ceeds stolidly toward the achieve- ment of its design for a new Greece. SECRET Approved fzqERe 2Q .QW8g FAI?P79-QQ927JWQ00020001-0 Approved For Release 2007/03JW. fZ -' DP79-00927AO06500020001-0 SOMALIS REFOCUS THEIR ATTENTION ON DJIBOUTI After more than a year of preoccupation with other political problems, the Somali Government seems to be shifting its attention again to the French Territory of the Afars and Issas (FTAI), the former French Somaliland. Somalia is constitutionally committed to bringing the large Somali popula- tion of the FTAI--the Issas--into a "greater Somalia." Somali Prime Minister Egal's government has nevertheless largely ignored the territory since the referendum of March 1967 in which the majority Afars "voted" to keep the FTAI under French control. The political crisis in France, however, has apparently raised fears in Mogadiscio that should the French grip on the FTAI weaken, the dominant Afars-- possibly with Ethiopian backing-- might take the opportunity to seize political control to the detriment of the territory's Somali inhabitants. Senior gov- ernment leaders met in Mogadiscio in late May to consider the impli- cations of recent reports of pos- sible "repercussions" of the French crisis in the FTAI. The long-standing tensions between Ethiopia and Somalia over the FTAI had largely subsided as a result of Egal's efforts to reach a detente with Ethiopia and Kenya. Although relations with Ethiopia have improved somewhat, the future status of the FTAI and its Somali population, should the French de- cide to depart, remains one of the most potentially damaging stum- bling blocks in Egal's policy. Unlike his predecessor, Egal has avoided entangling himself with promises to the Somalis of the FTAI. He has preferred the French presence there until relations with Ethiopia reached a firm foot- ing on which some accommodation between the two governments might be worked out. He has been Although the Somalis' fears seem wholly unjustified by events, they have been reinforced by a report that Emperor Haile Selassie during his brief refueling stop in Djibouti early in May, met with the pro-French Afar leader of the FTAI Government, Ali Aref Bourhan. Although there is no confirmation that such a meeting took place, the fact that Haile Selassie stopped in Djibouti ap- parently was enough to alarm the Somalis and increase their sus- picions of Ethiopian intentions. SECRET Approved For i 1 asi-2007/16?I LyCl 1u $?-009i~A66adbb20001-0 Approved For Release 2007/0 8C IA- DP79-00927AO06500020001-0 criticized in Somalia for ignoring the FTAI in his detente efforts. To counter this criticism, he may have hoped to gain some concessions from President de Gaulle in May, but his trip was postponed because of conditions in Paris. Egal may have to take on the FTAI problem sooner than he would like. Elections to the Chamber of Deputies in Djibouti are scheduled for November 1968. The Ethiopians are likely to work behind the scenes to ensure an Afar victory as they did during last year's referendum. This in turn will probably produce an appeal from the Somali population for assist- ance from Mogadiscio. Egal's re- sponse will be carefully watched by his opponents, who will be look- ing for ammunition to use against him in the Somali parliamentary elections set for March 1969. UN INCREASES SANCTIONS AGAINST RHODESIA On May 29 the UN Security Coun- cil unanimously passed a resolution calling for expanded economic sanc- tions against Rhodesia. The move, prompted by increasing African pres- sures for actions to bring down the Smith regime, follows more than two and one-half years of selective sanctions that have so far failed to force Salisbury to relinquish its independence. The resolution's key measure enjoins UN member states, and calls upon nonmember states, to end all trade with Rhodesia except for mi- nor items such as medical supplies and educational materials. The resolution also prohibits UN members from providing investment capital to Rhodesia. Rhodesian passports will no longer be recognized, and states are urged to end all con- sular relations with Salisbury. The UN action is unlikely to have a significant impact on Rho- desia's economy and will almost certainly fail to bring down the Smith regime. Earlier sanctions have slowed economic growth but have not caused any major disrup- tions. Previous embargoes had already targeted most of Rhodesia's potential exports; the blanket sanctions now imposed will there- fore not have much additional ef- fect. Theoretically, the new meas- ure's greatest impact will be on Rhodesian imports, which until now have been only partially covered by sanctions. Rhodesia should be able to purchase most of its needs, however, because suppliers will probably continue to sell suffi- cient quantities of goods, either covertly or in open defiance of the Security Council. The Zambian Government can- not participate fully in the sanc- tions effort without inviting eco- nomic disaster. Without Rhodesian coal, Zambian copper production would have to be cut back drasti- cally. Rhodesia can also retali- ate by denying Zambia electric power or transport for its imports and exports, services on which the Zambian economy is dependent. Al- though the UN resolution calls upon 25X1 member states to assist Zambia, there is little they can do to sup- ply even minimal needs. SECRET Approved FargBelea2e 20QL7( 5gykRPF79-QQ9:~7 00000020001-0 Approved For Release 20071 O C[,-RDP79-00927AO06500020001-0 Increasing student unrest and continuing political maneuvering related to recent national elections preoccupied the governments of several Latin American countries last week. Widespread student strikes and demonstrations are again under way in Brazil. Police and students clashed in Rio de Janeiro on 11 June, resulting in a few minor injuries, and further incidents are likely. In Uruguay, Communist-led labor groups joined with students in protesting alleged "police brutality" in connection with a police-student confrontation on 6 June. More serious disorders are possible, and President Pacheco has imposed a limited state of siege. Argentine students are also disturbing public order. As is the case elsewhere in Latin America, the Argentine students are mainly protesting what they consider to be antiquated facilities and insufficient provision for student participation in school and university government. These com- plaints are being used for their own ends by Communists and other leftist extremists. In Chile, for instance, such elements have recently strengthened their bid for influence within the university reform movement by gaining control over a newly formed association of teaching and administrative personnel. Political restlessness remains high in the aftermath of recent presiden- tial and legislative elections in both Panama and Ecuador. Ballot counting to determine the composition of Panama's 42-member unicameral legisla- ture is slowly going forward amidst an atmosphere of confusion and behind-the-scenes attempts to rig the count. In Ecuador, a delay in officially confirming the outcome of the presidential race has led the apparent victor, Jose Maria Velasco, to warn that "civil war" will result if he is denied the presidency. In Guatemala, dissension within the Communist Rebel Armed Forces (FAR) over commander Yon Sosa's decision to await the completion of current training and resupply activities before resuming guerrilla warfare operations may provoke their resumption at an early date. Guerrillas in western Venezuela ambushed an army convoy on 8 June, inflicting heavy casualties. News of the encounter, which was the first major one in over a month, may be especially embarrassing to the Leoni government, which has widely publicized its successes in recent operations against such insurgents. 25X1 SECRET Approved FegReld"a%e 20 OC3