WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A006900030001-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 32
• Document Creation Date: December 20, 2016
• Document Release Date: June 26, 2006
• Sequence Number: 1
• Publication Date: February 14, 1969
• Content Type: SUMMARY

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DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
State, DIA, USAID reviews completed
Secret
44
14 February 1969
No. 0357/69
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RET
(Information as of noon EST, 13 February 1969)
Far East
VIETNAM
North Vietnam's top negotiator in Paris flew to
Hanoi this week, presumably for another review of
strategy. Military action in the South continued
at a steady but unspectacular pace amid persistent
indications that the Communists are getting set for
another offensive, the timing of which remains un-
clear.
Page
1
MILITARY TRIES TO BREAK SIEGE IN SOUTH LAOS 5
The government is making a last effort to break the
enemy siege at Thateng in the south, while elsewhere
the military situation remains generally quiet.
LITTLE MOVEMENT LIKELY AT NEXT WEEK'S SINO-US MEETING 6
Peking's recent actions toward the US suggest that
the Chinese do not expect much real business to be
transacted at the next Warsaw meeting. Nevertheless,
the resumption of the talks may have helped to open
up new diplomatic opportunities for Peking elsewhere
in the West.
Europe
EAST GERMANS RESTRICT BERLIN ACCESS
To give meaning to their contention that the sched-
uled meeting in West Berlin on 5 March of the West
German Federal Assembly is "illegal" and a "provoca-
tion," the East Germans this week imposed new re-
strictions on travel to West Berlin by West German
officials.
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SECRET
SOME INTERNAL STRAINS EVIDENT IN SOVIET HIERARCHY
The public reappearance of Soviet Premier Kosygin
last week has not entirely dispelled the uncertainty
that built up over the past month concerning the
stability of the collective leadership, and there
is some evidence that the senior leaders are coming
under pressure from aspiring younger men within the
politburo and at the central committee level.
USSR'S ECONOMY HAD VARIED GROWTH IN 1968
The USSR's gross national product last year rose an
estimated 5.5 percent, slightly below the annual
average for 1966-67. Agricultural output reached a
record level for the fifth year in a row, but indus-
trial production fell back to the relatively low
levels of 1963-65.
DUBCEK LEADERSHIP COUNTERS CZECHOSLOVAK CONSERVATIVES
Party chief Dubcek has moved to stiffen the backs.
of his wavering progressive and moderate supporters
and to head off efforts by the conservatives to
strengthen their position. Emerging from a brief
illness and a period of political passivity, Dubcek
also sought to reassure Moscow that he was in con-
trol of the internal situation.
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age 11 E LY SUMMARY 14 Feb 69
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Middle East - Africa
THE WEEK IN PERSPECTIVE
15
FATAH GAINS CONTROL OF ARAB TERRORIST ORGANIZATION
16
Fatah has ended two months of maneuvering by taking
over the leadership of the rival Palestine Libera-
tion Organization. Although this action may on the
surface seem to bring unity to the terrorist move-
ment, it could in fact cause still greater fragmen-
tation.
FEDERAL LEADERS ANXIOUS TO WIN NIGERIAN CIVIL WAR
Frustration over the slow progress of the war is
growing on the federal side, which is preparing yet
another "final offensive."
Western Hemisphere
THE WEEK IN PERSPECTIVE
19
PURGES CONTINUE IN BRAZIL
20
The government's continuing campaign to "clean up"
Brazil has already resulted in the purging of nearly
a fifth of the congress and has severely restricted
judicial independence.
SOLUTION UNLIKELY IN PERU-IPC DISPUTE
21
President Velasco's announcement that the Interna-
tional Petroleum Company's "debt"
than $690 million has effectively
on further efforts to resolve the
amounts
closed
matter
to
the
of
more
door
compen-
sation to the company for its expropriated property.
IMPORTANT CONGRESSIONAL ELECTIONS IN CHILE NEXT MONTH
21
On 2 March, three fifths of the Senate and the en-
tire Chamber of Deputies will be elected. The re-
sults will have an important influence on the devel-
opment of the campaign for the presidential election
in 1970.
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SOVIET-CUBAN ECONOMIC RELATIONS REMAIN STABLE
Another year of relatively unchanged Soviet economic
support to Havana is assured by the signature on 7
February of the Soviet-Cuban trade protocol for 1969.
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Le Duc Tho, North Vietnam's top negotiator, left Paris this week for
his third trip to Hanoi since he joined the North Vietnamese team in Paris
last June. He will presumably participate in another review of strategy during
his stay in Hanoi.
Both the Liberation Front and the North Vietnamese stuck to the usual
propaganda formulations during the formal sessions in Paris on 6 February.
The Front's chief negotiator, however, used an interview on 3 February to
present a softer version of the Front's rigid formal position.
Military action continued at a steady but unspectacular pace amid
persistent indications that the Communists are getting set for another offen-
sive, the timing of which remains unclear.
In conjunction with their planned military operations, the Communists
have been trying to exploit the Buddhists and other legal groups in South
Vietnam. They apparently hope to inspire popular demonstrations aimed at
discrediting the government and encouraging demands for change.
A month-long barrage of anti-American propaganda from Peking sug-
gests that the Chinese do not expect much real business to be transacted at
the Sino-US meeting in Warsaw next week. China's move to resume diplo-
matic contact with the US after a year's hiatus may, however, have helped
open new diplomatic opportunities for Peking elsewhere.
In Laos, the government is making a last effort to break the enemy
siege of the important southern base at Thateng. The initial phase of the
relief operation appeared successful, but the longer term outlook for the
heavily outnumbered garrison does not appear bright. Elsewhere in the
country, the military situation remains generally quiet.
Although the government party did not win a majority this week in 25X1
Thailand's first legislative elections in ten years, it will have enough support
from independent legislators to control the lower house. Real authority in
the country continues to rest with the military leadership.
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VIETNAM
Le Due Tho, North Vietnam's
top negotiator, left Paris on 10
February for his third trip home
since he joined Hanoi's team in
Paris last June. He is expected
to arrive in Hanoi late this week
after brief stopovers in Moscow
and Peking. On each of his previ-
ous trips, in late June and mid-
October, Tho remained in North
Vietnam for about five weeks. His
visit may be the occasion for an-
other of Hanoi's periodic reviews
of strategy, including military ac-
tion in South Vietnam.
Both the Liberation Front and
the North Vietnamese generally
stuck to the usual propaganda form-
ulations during the formal sessions
in Paris on 6 February. Tran Buu
Kiem, the Liberation Front's chief
negotiator, used an interview on 3
February to present a softer ver-
sion of the Front's rigid formal
position. He claimed his harsh
language during the official meet-
ings was intended for publicity,
but that the Front actually was
realistic and flexible. Kiem con-
tended the Front is not opposed
to early considerations of mili-
tary questions, but that. political
issues must be treated as well.
Meanwhile, North Vietnam's
press is devoting a great deal of
attention to the state cf affairs
inside the country. Recent articles
and broadcasts have reflected strong
regime dissatisfaction with the per-
formance of key segments of the
population, including the party,
labor, youth, the army, some en-
gaged in agriculture and, particu-
larly, leadership cadre. Although
there are signs that many North
Vietnamese doubt the war is going
as well as Communist propaganda
claims, there are no indications
that these internal problems are
getting out of hand.
Military Situation in South Vietnam
Military activity continued at
a steady but unspectacular pace this
week amid persistent indications
that the Communists are getting set
for another offensive. A number of
small ground battles took place
along the southwestern- approaches
to Da Nang, in the provinces north--
west of Saigon, and at scattered
points in the delta. The Commu-
nists also shelled five provincial
capitals, although for the most
part the firing was directed at
military installations in and
around the towns. In Saigon,
stepped-up terrorism continued,
with the enemy making a particu-
lar effort to harass Civilian Self--
Defense Forces, the groups of cit-
izens who have been partially armed
and trained to bolster local secu-
rity. In the critical Saigon - II:[
Corps region, there are numerous
signs that enemy units are prepar-
ing for battle.
Six prisoners and defectors
brought in from separate engage-
ments in III Corps in recent days
have reported that the Communist
88th, 101st, and Dong Nai regiments,
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elements of the Viet Cong 9th Di-
vision, and several other separate
battalions have been ordered to
take part in an attack on Saigon.
Four of the reports are at least
partially supported by evidence in
captured documents.
To the north in Quang Nam Prov-
ince, which ranks second only to
the III Corps provinces in terms
of available enemy combat strength,
four more prisoners have reported
that the Communists are still pre-
paring for another thrust at Da
Nan q.
Despite the large number of
such indicators, the enemy's time-
table is not yet clear. Major at-
tacks have been forecast to occur
before, during, and after the Tet
holiday (17-19 February). If the
Communists do make their move in
the near future, the offensive will
most likely consist of widespread
shellings accompanied by sapper at-
tacks in urban areas and probably
main force assaults in the outly-
ing III Corps provinces and Quang
Nam. Should the Communists be
willing to take extremely heavy
losses, main force attacks of ma-
jor proportion could take place.
Regardless of the enemy's
timetable, it is clear that the Com-
munists are trying to exert maxi-
mum psychological pressure. Through-
out the country, numerous low-level
informants and enemy propaganda
statements warn of upcoming attacks.
These include a number of reports
of enemy units celebrating Tet early
in order to be ready to take part
in an offensive during the holiday
period.
South Vietnamese
Political Developments
In conjunction with their
planned military operations, the
Communists apparently hope to in-
spire popular demonstrations aimed
at discrediting the government and
encouraging demands for major
changes. Because the efforts of
the militant Buddhists to mount a
peace agitation campaign fit well
with the Communists' proposals for
a "peace cabinet," they are try-
ing to exploit the Buddhists and
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OF MII.I~ARIZEU ZONE
SOUTH VIETNAM
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other legal groups. The Communists
have apparently had some success in
penetrating the militant Buddhists
as well as some labor, student, and
intellectual organizations.
The inclusion of Liberation
Front representatives in the Paris
talks has made the peace issue a
prominent one in South Vietnam.
Even elements of the strongly anti-
Communist VNQDD Party have now
openly voiced a willingness to com-
pete in a "political struggle" with
the Communists "if that is neces-
sary for peace."
The South Vietnamese Government
is becoming increasingly sensitive
to any agitation over the peace is-
sue and in particular to calls for
a change in leadership in order to
hasten an accommodation with the Com-
munists. As a result of this sensi-
tivity, the government recently is-
sued a warning to militant Buddhist
leader Thich Thien Minh to stop his
agitation for peace. It has also
arrested a few minor political fig-
ures who were planning peace demon-
strations, and it has forced some
newspapers to suspend publication.
The government is nevertheless
trying to achieve a fine balance as
it acts to keep antigovernment agita-
tion within tolerable bounds. Pres-
ident Thieu and Prime Minister Huong
clearly want to intimidate peace agi-
tators and other critics in order to
prevent them from becoming a serious
embarrassment at home or in Paris.
At the same time, however, they hope
to avoid harsh measures that would
be regarded as overly repressive in
the world press or interpreted as
reflecting a lack of confidence in
the government's stability, possi-
bly sparking a full-blown confronta-
tion. Thieu, in particular, seems
to want to convey an impression of
a confident, stable government deal-
ing firmly but fairly with the mili- 25X1
tant Buddhists and other agitation
groups.
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MILITARY TRIES TO BREAK SIEGE IN SOUTH LAOS
The government is making a
last effort to break the enemy
siege at Thateng in the south,
while elsewhere the military sit-
uation remains generally quiet.
Under cover of unusually
heavy US air strikes, a company
of government relief troops and
vital supplies moved by helicop-
ter on 11 February to a defen-
sive position overlooking the
Thateng garrison. At the same
time, a number of friendly guer-
rilla teams were moving overland
to harass Communist forces. Al-
though the initial phase of the
operation appeared successful,
the outlook for the heavily out-
numbered government relief force
and garrison does not appear
bright. There are four or more
North Vietnamese battalions in
the area.
before turning its attention to
the more important guerrilla
base at Na Khang.
Pathet Lao harassing activ-
ities in Vientiane Province have
increased in recent weeks in an
apparent attempt to demonstrate
the government's inability to
provide security in this impor-
tant area. There have been, how-
ever, no indications of large-
scale enem movements into the
province.
In north Laos, Communist
terrorists on 10 February killed
one US military attache' and
wounded another during an attack
at Muong Soui. This is the
second raid in ten months against
Americans at this post. There is
no evidence that the raid pre-
sages any concerted enemy effort
against government forces there.
Communist forces farther
north are attempting to clear
the remaining elements of a
government force that moved into
the Muong Son area last summer.
Presumably, the enemy is concen-
trating on these isolated troops
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LITTLE MOVEMENT LIKELY AT NEXT WEEK'S SINO-US MEETING
Peking has set the stage for
next Thursday's Sino-US meeting at
Warsaw with a month-long barrage of
anti-American propaganda and a se-
ries of bitter attacks on the Presi-
dent. Although the Chinese appar-
ently do not expect much real busi-
ness to be transacted in Warsaw, the
resumption of the talks may have
helped open new diplomatic opportun-
ities for Peking elsewhere. China's
move to resume diplomatic contact
with the US after a year's hiatus
has been widely interpreted abroad
as evidence of new Chinese modera-
tion and willingness to work with
the West, and this may have been a
factor in the timing of Rome's and
Ottawa's recent decisions to recog-
nize Communist China.
Peking's failure to return its
ambassador to Poland for next week's
meeting indicates that the Chinese
do not expect much progress, The
ambassador was recalled in the sum-
mer of 1967--presumably for "revo-
lutionary" reindoctrination, as were
most other senior Chinese diplo-
mats--and has never returned to his
post. Liao Ho-shu, Peking's former
charge in the Hague, believes that
the Chinese will use the meeting to
reiterate their propaganda attacks
against the new US administration
and to protest its granting of po-
litical asylum to Liao.
On 7 February, the Canadian
Embassy in Stockholm contacted the
Chinese Embassy to arrange a mu-
tually acceptable time and place to
discuss recognition. The Italians,
on the other hand, have been content
to await Peking's reaction to For-
eign Minister Nenni's recognition
announcement of 24 January, and have
not sought any direct contact with
the Chinese. The Belgians, who
have consulted with the Canadians
and Italians on the Chinese ques-
tion in the past, have said that
they will rethink their policy.
In addition, both West Germany and
Luxembourg are apparently reconsid-
ering their China policies.
Although the Chinese no doubt
welcome these developments, Peking
has thus far shown no public or
private reaction. In fact, continu-
ing Cultural Revolution turmoil and
political uncertainty in Peking 25X1
seem to mitigate against a rapid or
imaginative Chinese response to
such Western overtures. I
Although the de-
lcrnrcun recognition will be made
on levels higher than the Foreign
Ministry, the actual establishment
of diplomatic relations could be
difficult and slow, especially if
the countries involved make an ini-
tial attempt to preserve some form
of political relationship with Tai-
wan.
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Moscow came under an unusual amount of sniping from its "friends"
this week. An apparent new assertiveness came through in the public remarks
of Rumania's Ceausescu. Several Czechoslovak leaders defended liberalizing
measures in their country with vigor, and at the Italian Communist Party
Congress, a number of speakers took pot shots at the invasion of Czecho-
slovakia.
By and large, Moscow sat and took it, for a variety of possible reasons:
differences within the leadership, attention to larger East-West issues, and
the desire not to rock the international Communist boat prior to the world
Communist conference in May.
Among the East-West issues on the Soviet mind was the Middle East.
Bilateral talks among the four powers got under way in New York, but the
resolution of substantive differences-even among the four-seemed a long
way off.
Reacting to the West German Federal Assembly meeting set for 5
March in Berlin, the East Germans came up with new restrictions on travel to
West Berlin by West German officials. Even before these went into effect,
they began to harass West German traffic from Berlin. Some intensification
of pressures, but probably well short of a blockade or infringing on Allied
rights, can be expected in coming weeks.
Bonn officials tend to view the East German decree as simply another
attempt to demonstrate East Germany's opposition to holding the Federal
Assembly in West Berlin rather than as a preliminary to further moves
against the city. The West Germans doubt that the decree will actually
impede the gathering of presidential electors on 5 March.
Hungarian party chief Kadar's visit to Moscow seems to have been little
more than another round in what may be a new series of bilateral discussions
between the USSR and its fickle neighbors. Finnish Foreign Minister Kar-
jalainen will try to ease Soviet apprehensions on his trip to Moscow next
week. The Finns do not seem to have been much shaken by the Pravda
article on 7 February alleging a re-emergence of reactionary forces in Finland 25X1
hostile to Moscow.
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EAST GERMANS RESTRICT BERLIN ACCESS
To give meaning to their con-
tention that the scheduled meeting
in West Berlin on 5 March of the
West German Federal Assembly is
"illegal" and a "provocation," the
East Germans this week imposed new
restrictions on travel to West Ber-
lin by West German officials. Pan-
kow has already begun a very limited
harassment of West German access to
the city and has stepped up its
progaganda; it may take other ac-
tions--such as holding military ex-
ercises--to increase tension.
Pankow announced on 8 Febru-
ary that effective 15 February the
1,036 members and the staff work-
ers of the Federal Assembly--which
will elect the new president--will
not be permitted to travel through
East German territory. The East
Germans also proscribed the trans-
port of "working materials" for the
assembly as well as travel by mem-
bers of the Bundestag defense com-
mittee and all members of the armed
forces. The decree will remain in
force "until further notice."
bers of the West German armed forces.
Moreover, by slowing down passenger
traffic from Berlin to the Federal
Republic, beginning on 9 February,
Pankow itself demonstrated that it
does not need its latest ban but
can use already existing decrees to
justify minor harassments.
The East Germans doubtless co-
ordinated their moves in advance
with the USSR. Moscow registered
its public approval in a Pravda ar-
ticle on 10 February, stating that
the West German attempt to hold the
assembly in Berlin "is meeting a
deserved rebuff."
Moscow has been using a carrot-
and-stick approach with Bonn in dis-
cussing the scheduled meeting. So-
viet diplomats were still trying,
as late as 7 February, to strike a
"bargain" on other issues in an ef-
fort to influence West German offi-
cials to change the site. Bonn's
announcement on 12 February that it
intended to go ahead presumably will
put an end to these Soviet efforts.
The new ban in itself will have
little practical effect as it only
supplements existing decrees and
laws that already restrict the pas-
sage of various categories of per-
sons and goods. West German offi-
cials usually fly to Berlin in any
case and there have been no indi-
cations that Moscow intends to let
the East Germans harass flights and
risk a confrontation with the Al-
lies. The ban on the defense com-
mittee and armed forces is gratui-
tous and was probably included for
propaganda effect. Bonn had al-
ready decided not to hold defense
committee meetings in Berlin, and
Allied regulations prohibit the pre-
sence in the city of uniformed mem-
West German officials have in-
dicated that the government may call
a special meeting of the East and
West German trade negotiators to de-
liver a low-key warning that Bonn
is "determined" to resist hindrances
to Berlin access. The West Germans
are likely to avoid any hint of a
trade cutback, however, and other
countermeasures being considered
will have little or no effect should
the East Germans decide to increase
tension further. Nevertheless, Pan-
kow will be limited in what it can
do by Soviet wishes, and Moscow has
thus far indicated that it does not
want to create a new Berlin crisis.
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SOME INTERNAL STRAINS EVIDENT IN SOVIET HIERARCHY
The public reappearance of Pre--
mier Kosygin last week has not en-
tirely dispelled the recent uncer-
tainty concerning the stability of
the collective leadership, and there
is some evidence that the senior
leaders are coming under pressure
from aspiring younger men within the
politburo and at the central com-
mittee level.
There is no lack of difficult
issues--the stuff of political dis-
pute--:Facing the Soviet leaders.
These include disappointing figures
can the 1968 industrial growth rates,
the need to assess the new US ad-
ministation, and the continuing
Lack o:E "discipline" in East Europe
and throughout the world Communist
movement.
Signs of drift have been par-
ticularly marked in Soviet policy
toward Eastern Europe. Much of the
steam has gone out of Moscow's post-
Czechoslovakia drive to enforce
greater regimentation. CEMA and
Warsaw Pact "summit" meetings--pre-
sumably to put the stamp of approval.
on new integration measures--have
not been held and do not appear im-
;mi_nent.. Bucharest appears to be
successfully stalling in the face
of Soviet pressure for Warsaw Pact
maneuvers in Rumania this spring,
and party leader Ceausescu has re-
gained some of his old assertiveness
toward Moscow. Moreover, the Czech-
oslovak resistance, if weakened, has
not been destroyed.
One factor possibly accounting
for Moscow's "do-nothing" approach
was the absence from Moscow since
late December of much of the polit-
buro, including the three senior
members. Brezhnev and Podgorny re-
turned to Moscow in time for the
cosmonaut celebrations on 22 Janu-
ary, only to be greeted by an at-
tempted assassination. Kosygin,
amidst reports that he was ill, re-
mained absent until 6 February.
one other member of the politburo--
Deputy Premier Mazurov--is still
out of sight. Helastappeared in
Moscow on 6 January and was subse-
quently reported to be ailing.
The assassination attempt un-
doubtedly alarmed the Soviet leaders
and seemed to throw them off their
stride for a time. There is no in-
dication that the assailant was a
member of a conspiracy, however,
and the regime has shown no sign
that it intends to play up the con-
spiracy angle.
Most notable among the recent
anomalies were conflicting state-
ments by Soviet officials as to
whether Kosygin's prolonged absence
was or was not caused by poor health
and, if so, how seriously ill he
was. On 31 January, a Foreign Min-
istry official finally issued a
statement hotly.denying Western
news reports that Kosygin had a
severe liver ailment. The suspi-
cion arises that some elements in
the leadership have been attempt-
ing to create uncertainty about
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Kosygin's health with the idea of
speeding his retirement. Although
Kosygin appeared to be in good
health on his return from
there is
a ques i.on
mar remains over is political fu-
ture.
This may have opened up a new
round of maneuvering by and on be-
half of leading contenders to Kosy-
gin's post, notably Deputy Premier
Polyansky. He has been given some
unusual public exposure in the ab-
sence of Mazurov, the other leading
candidate to succeed Kosygin.
Movie-goers were treated last week
to a special feature on Polyansky's
visit to North Korea last September,
replete with flattering shots of
the deputy premier in action. He
was also singled out to join Brezh-
nev, Podgorny, and Kosygin at the
talks on 6-10 February with Hun-
gary's Kadar. Meanwhile, there are
also indications that the unsinkable
Shelepin, now head of the Soviet
trade unions, may be on the move
politically again.
Kosygin's job does not appear
to be the only target. The present
maneuvering is taking place against
a background of veiled public crit-
icism of the leadership, some prob-
ably directed against Brezhnev's
conduct of affairs. His pet land
improvement program has been the
subject of sharp controversy since
last summer. Although Brezhnev re-
affirmed the leadership's commit-
ment to the program at the October
plenum, he did so in a highly de-
fensive manner, and the sniping
continues.
More serious signs of disaf-
fection are suggested by the appear-
ance in recent months of at least
three articles on collective lead-
ership. The articles treat Lenin's
style of leadership in such a way
as to set up a sharp contrast with
present practices. One article
stressed that central committee
members under Lenin boldly ex-
pressed their own thoughts and in-
troduced amendments to draft deci-
sions "irrespective of who had
drafted them." Lenin's outstanding
quality, according to another ar-
ticle, was his acknowledgment of
the supremacy of collective leader-
ship "even when in his opinion the
collective erred." This note was
last sounded in the summer of 1967
when there was ample evidence of
dissatisfaction in some party quar-
ters with the leadership's handling
of the Middle East crisis.
One of these articles appeared
in the leading Estonian party jour-
nal, and Estonian party boss Kebin
has been publicly at odds with cer-
tain policies associated with
Brezhnev. The other two articles
seem to be traceable to Shelepin's
influence. Beyond this, the dis-
senters cannot be pinpointed nor
their strength gauged. There is
evidence, however, that dissatis-
faction is growing among provincial
officials on at least one issue--
the leadership's restoration of the
highly centralized ministerial
structure. Calls for greater local
authority and complaints that re-
gional planning is being seriously
neglected have become more frequent.
Dissatisfaction of this sort may
provide the younger leaders in the
politburo with new opportunities in
any challen e to the presenf col-
lective.
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USSR: SELECTED INDICATORS OF ECONOMIC PERFORMANCE
Gross
Nail ionaI
Product
Agricultural
Production
Consumption
(per capita)
1961-65 Average Annual Rate of Increase
* Including Allowances For Replenishing Domestic Inventories Of
Military Hardware Due To Re-supplying The Arab Client States.
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USSR's ECONOMY HAD VARIED GROWTH IN 1968
The Soviet economy grew at a
moderate pace in 1968, but perform-
ance was not consistent. Gross na-
tional product rose an estimated
5.5 percent, slightly below the
average for 1966-67. Over-all agri-
cultural output reached a record
level for the fifth year in a row,
but the rate of growth of industrial
production fell back to the rela-
tively low levels of 1963-65. The
distribution of output indicates a
continuation of the trend estab-
lished in 1966-67, favoring the mil-
itary and investment in consumer
sectors at the expense of growth-
oriented investment.
Soviet industrial growth fell
to 6 percent, largely because of the
continued neglect of investment and
inefficient use of labor and capi-
tal. The drop was evident in prac-
tically all branches with the no-
table exception of machinery--the
source of producer and consumer dur-
ables and military hardware. The
rate of increase in industrial ma-
terials dropped sharply and growth
in consumer nondurables was modest.
Investment in industry in-
creased at about the same moderate
rate as in 1967. The inefficient
use of capital continues to cloud
prospects for more rapid growth in
the near future. The backlog of
unfinished construction is esti-
mated to have increased by nearly
15 percent, and the growth rate of
labor productivity in industry and
construction fell sharply. So far,
productivity has failed to increase
substantially in response to the
new incentives provided by the eco-
nomic reform, which now applies to
about 75 percent of all industry.
Agricultural output was 4 per-
cent above the relatively high level
achieved in 1967, reflecting a
bumper grain crop and record pro-
duction of potatoes and sugar beets.
The 1968 grain crop, estimated at
135 million tons, was second only
to the record crop of 140 million
tons believed harvested in 1966.
Over-all agricultural performance
was marred only by a low rate of
growth in livestock products,
mainly the result of insufficient
feed and an absolute decline in
output from the private sector.
Last year's harvest will en-
able the Soviets to meet domestic
demand for high-quality bread, to
increase grain reserves, and to
continue for the second year in
succession their traditional role
as a net grain exporter. The
striking success in boosting farm
output in 1966-68, however, has led
to a weakened commitment to step
up the flow of resources to agri-
culture. Although total invest-
ment increased moderately, the rate
of delivery of tractors, trucks,
and agricultural machinery declined,
as did mineral fertilizer.
The consumer experienced an-
other substantial increase in liv-
ing standards. Although more ap-
pliances, clothing, and quality
foods were available, a sharp rise
in personal incomes widened the gap
between supply and demand for con-
sumer goods, services, and housing.
Savings deposits increased by about
20 percent as consumers continued
to set aside much of their excess
purchasing power. This latent in-
flationary pressure was reflected 25X1
in rising prices in the collective
farm market, the only organized
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DUBCEK LEADERSHIP COUNTERS CZECHOSLOVAK CONSERVATIVES
Czechoslovak party chief Dub-
cek has moved to stiffen the backs
of his wavering progressive and
moderate supporters and to head off
efforts by the conservatives to
strengthen their position. Emerging
from a brief illness and a period
of political passivity, Dubcek also
sought to reassure Moscow that he
was in control of the internal
situation.
In one of his strongest speeches
since last November, Dubcek attacked
"extremists" at both ends of the po-
litical spectrum who are promoting
their own political line and trying
to organize opposition groups. His
specific targets, however, seemed
to be pro-Soviet conservatives and
"realists" who are trying to create
an opposition bloc in party lead-
ership bodies prior to the central
committee plenum in March.
Neither the progressives nor
the conservatives appear to have
a majority in the central committee
at the present time. Both factions
are seeking support among the
large number of uncommitted moder-
ates, many of whom are waiting to
see which way the wind is blowing.
Progressives probably were
encouraged by Dubcek's talk, as
well as by the remarks of several
other top leaders who have indi-
cated in recent days that a "re-
vised" reform program is in prepara-
tion. Premier Cernik on 7 Febru-
ary stated that the government in-
tends to promulgate laws permit-
ting--within prescribed limits--
freedom of speech,. expression,
and assembly and association. The
regime also will continue its work
on economic reform and the problems
emanating from the country's newly
introduced federalization.
Moreover, the progressives ap-
pear to have won a temporary vic-
tory in their efforts to prevent a
full-scale government clampdown
on the mass media. The pro-Soviet
conservatives reportedly expected
a purge, but only a minor reshuf-
fling of personnel has material-
ized. Moreover, Politika, the
liberal anti-Soviet party weekly
banned after the invasion, has
now been reinstated, and Czecho-
slovak youth have been given a new
publication to replace Student,
which had also been shutdown be-
cause of its heretical anti-Rus-
sian commentaries.
Perhaps encouraged by these
developments, the Slovak press on
1.2 February broke the silence im-
posed under the authoritarian rule
of Slovak party chief Husak.
Pravda, the Slovak party daily,
printed a bitter criticism of the
Soviet bloc press for its anti-
Czechoslovak polemics. The ap-
pearance of this article suggests
that Husak's grip on Slovakia is
beginning to slip. His popularity
in his own region has dropped con-
siderably and the Russians, who
once lauded his capabilities, are
apparently reassessing their estima-
tion of his potential.
The Soviets, meanwhile, may be
permitting Dubcek a small measure of
flexibility in return for Prague's
willingness to portray Czechoslovak-
Soviet relations in a more favor-
able light. Dubcek and the Czecho-
slovak officials who have recently
talked with the Russians, includ- 25X1
ing Foreign Minister Jan Marko, have
all alluded to the allegedly im-
proved atmosphere.
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Israeli Prime Minister Eshkol's public statements this week provoked a
domestic political storm and resulted in the introduction of a motion of
no-confidence by right-wing parties who want Israel to hang on to all the
occupied Arab territories. The critics were clearly trying to make some
political points in an election year, but Eshkol easily won the vote. The
incident, nevertheless, points up the touchiness of the territorial issue and
the difficulties of obtaining an Israeli withdrawal.
The Lebanese Government fears that Palestinian terrorist activities in
the country are getting out of hand again and is trying to find ways to
control them. President Hilu will soon send special representatives to Saudi
Arabia, Kuwait, and Libya to urge these governments to use their influence
to curtail the terrorists.
Pakistani opposition leaders have still not responded to President
Ayub's proposal for talks on 17 February despite a number of significant
government concessions designed to improve the climate for negotiations.
Nearly complete returns from India's mid-term state assembly elections
point up the continuing decline of the Congress Party in the north-the
political heartland of the country. Congress failed to regain a majority in
West Bengal, Bihar, Uttar Pradesh, and the Punjab. The most spectacular loss
was in West Bengal, where Congress was routed by a Communist-dominated
coalition.
This week's visit of US Sixth Fleet units to Turkey has thus far passed
without serious incident. Leftists opposing the visit have been allowed to
hold daily demonstrations, which may become more severe as their frustra-
tion mounts over the strict security precautions. A few arrests have been
made for minor incidents, and one student has threatened self-immolation.
The government is determined to prevent any recurrence of the student riots
that erupted last July during a similar visit.
In Nigeria, there is a growing sense of urgency among federal leaders
who are convinced that unless the war is won soon, Biafra will gain more
foreign support. The secessionists are apparently still receiving substantial
amounts of munitions.
In Tanzania, a Chinese Air Force team is surveying air facilities, appar-
ently in response to Dar es Salaam's request for jet fighters and radar. Any
agreement with Peking on an air defense program will almost certainly lead
to the departure of the Canadian training mission, one of the last sources of
Western influence in Tanzania.
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FATAH GAINS CONTROL OF ARAB TERRORIST ORGANIZATION
Yasir Arafat and other Fatah
leaders have successfully con-
cluded a concerted effort to gain
control of the Palestine Libera-
tion Organization (PLO). Unwill-
ing to continue playing a second-
ary role in Palestinian politics
and seeking to assume the legiti-
macy that the PLO has long held
among the Arab states, Fatah two
months ago began a campaign to
take over the organization. As-
serting that the PLO is a national
front of Palestinians rather than
a monolithic political organiza-
tion, Fatah leaders joined a num-
ber of PLO bodies. They had ear-
lier regarded the PLO as a rival
to their own movement.
When the PLO was established
in 1964 by the Arab League to rep-
resent the Palestinian people in
the league, its charter provided
for the creation of three subor-
dinate bodies: a parliament, the
Palestine National Council; the
.Executive Committee, elected by
the council; and the Palestine
Liberation Army, the organiza-
tion's military arm.
In elections held this Janu-
ary for seats on the council,
Fatah garnered 33 of 105 seats,
becoming the largest single fac-
tion. When the first meeting of
the newly elected council was
convened in Cairo last week, the
old-line PLO leaders as well as
representatives of two other ter-
rorist organizations--the Popu-
lar Front for the Liberation of
Palestine and the Vanguard of the
ARAB TERRORISTS IN TRAINING
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People's Liberation War--did not
attend because they were dissatis-
fied with the results of the elec-
tions. Fatah then succeeded in
placing three men on the 11-man
executive committee and Fatah's
spokesman, Yasir Arafat, was
elected chairman.
Although the new leadership
is attempting to convince those
who boycotted the council's meet-
ings to continue to work with the
PLO, it is probable that they will
refuse to do so unless some of the
power they formerly held is re-
stored. It seems unlikely, how-
ever, that Fatah will surrender
the gains it has made thus far.
The old PLO leadership may there-
fore claim they are the only le-
gitimate leaders and try to form
a new terrorist organization.
Thus, although the move by Fatah
may seem to bring unity to the
terrorist movement, it could ac-
tually result in further splits.
FEDERAL LEADERS ANXIOUS TO WIN NIGERIAN CIVIL WAR
For the past few weeks fed-
eral leaders have been preparing
for a "coordinated" attack by all
three federal divisions, probably
with the immediate objective of
capturing the secessionists' one
operating arms supply airstrip.
Federal leader Gowon's chief of
staff told the US military attache
in Lagos that Nigeria's leaders
are counting on a military victory
by the end of March. The chief of
staff expressed concern for the
future if the war is extended be-
yond that time. This sense of
urgency results in part from fed-
eral fears that the US is changing
to a pro-Biafran position and may
even be considering a military in-
tervention in Nigeria. This fed-
eral concern was demonstrated last
week when the Nigerian trade com-
missioner took steps to reassure
US businessmen that they are wel-
come in Nigeria.
Dissatisfaction with Gowon's
conduct of the war is growing
among civil servants
ere may we be a move against
Gowon if the federal offensive
does not bring early military
successes.
Federal frustration is also
evident in the Nigerian leaders'
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continuing hard-line attitude on
foreign relief to Biafra. On 10
February, the federal. information
commissioner, referring to the
recently inaugurated Red Cross
night airlift from Dahomey to Bi-
afra, stressed that the Nigerian
Government does not approve of
night flights into Biafra.
Meanwhile, there still ap-
pears to be little hope for a ne-
gotiated settlement to the war,
although another mediatory effort
has been initiated--this one under
the auspices of the African and
Malagasy Common Organization (OCAM.).
At its recent meeting in Kinshasa,
this organization of 14 French-
speaking African states decided to
contact leaders of the two sides
to urge peace negotiations. Biafra
would probably be receptive to the
OCAM move, but Lagos, although it
is apparently willing to meet with.
OCAM representatives, would prob-
ably prefer that any African peace
initiative be within the context
of the Organization of African
Unity's committee on Nigeria--an
instrumentality unacceptable to
the Biafrans. 25X1
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Peruvian President Velasco's announcement last week that the Inter-
national Petroleum Company's "debt" to Peru amounts to more than $690
million has effectively closed the door on further efforts to resolve the
matter of compensation for the company's expropriated property.
The Brazilian Government's campaign to "clean up" the country con-
tinued this week with the removal of 33 more federal congressmen from
office. The number of ousted congressmen now totals 81-nearly a fifth of
the members-and further reduces the likelihood that the government will
even consider reopening congress until it is thoroughly "sanitized."
In Guatemala, the ruling Revolutionary Party is again seeking a candi-
date for the presidency in next year's general elections following the with-
drawal of Defense Minister Chinchilla.
The party will probably seek a man who can counter the
candidate of Guatemala's reunited right, Colonel Carlos Arana, the former
commander of counterterrorist operations in the guerrilla-infested northeast.
President Trejos of Costa Rica has again failed to gain legislative
approval of the San Jose Protocol, which provides for a 30-percent surcharge
on many imports from outside the area. The government failed to win
passage on 10 February and its next opportunity will not arise until congress
reconvenes on 10 March. If, as is likely, Costa Rica is unable to ratify the 25X1
protocol, Nicaragua is expected to erect barriers against imports from Costa
Rica and possibly other countries that fail to implement the agreement.
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PURGES CONTINUE IN BRAZIL
The government's continu-
ing housecleaning campaign has
already resulted in the purging
of nearly a fifth of the Congress
and has severely restricted ju-
dicial independence.
On 7 February, the govern-
ment removed 33 more federal con-
gressmen from office and sum-
marily retired two military court
judges. The political rights of
all but three of the congressmen
were canceled for ten years.
Those punished appear to have
been selected capriciously; over
a th-rd of the congressmen were
from the progovernment party and
many seem to have had only minor
records of "corruption" or of
opposition to the government.
This purge brings the total num-
ber of ousted congressmen to 81--
five senators and 76 deputies--
and further reduces the likeli-
hood that the government will
even consider reopening Congress
unti:_ it is thoroughly "sanitized."
Five state legislatures have
also been closed, including those
in the key states of Sao Paulo
and Guanabara, for "transgress-
ing against the revolution's
ethical principles." Many of the
politicians in the legislatures
had been widely discredited, and
there: has been no public outcry.
In Sao Paulo, in fact, the gen-
eral population seemed pleased
at the government's decision to
"throw the blighters out."
restricts the Supreme Court's
powers to review crimes against
"national security" and to respond
to appeals for habeas corpus. Al-
though this new act will presumably
satisfy the military, it is not
likely to win kudos for the gov-
ernment in any other domestic or
international quarters.
The National Security Council
has also approved the creation of
a general military-police commis-
sion to investigate "subversive or
counterrevolutionary acts." The
commission's charter is so sweep?-
ing and vague that it could easily
open the way for wholesale investi-
gations.
The Catholic Church, a prin-
cipal potential source of opposi-
tion to the government, has re-
mained quiet. Liberal prelates
who originally were anxious to
blast the government's actions ap-
parently decided to see if the ad--
ministration's broad new powers
might produce large-scale social
reforms. If the government does
not produce soon, however, many
progressive and even some moder-
ate churchmen seem ready for an
open confrontation, a development
that would threaten stability and
further widen the gap between the
government and the governed.
Additional punishments and
purges seem likely. Although Presi-
dent Costa e Silva personally
might prefer to bring such repres-
The judiciary has also con-
tinued to suffer at the hands of
the military. Another institu-
tional act decreed on. :31 January
sions to an early conclusion, his
own position could be in jeopardy
if he tries to deny radica
tary demands.
25X1
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SOLUTION UNLIKELY IN PERU-IPC DISPUTE
President Velasco's announce-
ment that the International Petro-
leum Company's (IPC) "debt" to
Peru amounts to more than $690
million has effectively closed
the door on further efforts to
resolve the matter of compensa-
tion to the company for its ex-
propriated property. The govern-
ment stated when it expropriated
the property last October that
IPC's "'debt" would be balanced
against the value of its assets
in determining what, if any, com-
pensation was paid.
The government's valuation
of the expropriated assets has
been placed at $54.7 million, and
by Peruvian law this amount will
be placed in a special bank ac-
count. IPC, however, may not
actually have this money until
the matter of its debts has been
cleared up. In this regard, Peru-
vian law requires that the debt
be paid in full before the com-
pany can officially protest the
action or take it to the courts.
The size of the "debt," which was
calculated by charging the com-
pany for every barrel of petro-
leum it has taken out of the
ground since 1924, is adequate
assurance that this requirement
will not be met.
Procedures will soon begin
for the confiscation of IPC's re-
maining property in Peru to help
pay this large debt, and Presi-
dent Velasco will have been suc-
cessful in totally evicting the
company.
25X1
25X1
In an effort to in- 25X1
crease the pressure on the US to
refrain from invoking the Hicken-
looper Amendment, the President
has called Peru's ambassadors
home to coordinate a hemisphere-
wide campaign to gain support
for the Peruvian position.
Minister of Finance Valdivia,
in a discussion with the USAID
director, pictured himself and
Foreign Minister Mercado as fight-
ing a losing battle in the gov-
ernment for a more moderate posi-
tion toward IPC. Valdivia, who
is under fire and expects he may
soon be out of office, said he
was greatly concerned that the
course of events could lead "to 25X1
an extreme move away from West-
ern institutions."
IMPORTANT CONGRESSIONAL ELECTIONS IN CHILE NEXT MONTH
The results of the congres-
sional elections to be held in
Chile on 2 March will have an im-
portant influence on the develop-
ment of the campaign for the pres-
idential election in 1970. The
choices to be made--30 of the 50
senators and all 150 members of
the Chamber of Deputies--will
demonstrate the strengths not
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Composition
+o
Chilean
Congress
`MINOR PARTIES
9il?E,PF:NDENTS
PDC
(12)
(7)
PCCh
(5) ,
PR
(10)
PN
(7)
PO Cbr1stian D'e!nncrjtic (PS) Socialist
(PCCh) Communist
(PR) Radical
(PN) National
MINOR PARTIES
INDEPENDENTS
PDC (11)
(8.?) I
PCCh
(18)
PR
(19)
147 Seats
In 1969 the Senate will be increased to 50 members
and the Chamber of Deputies to 150.
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only of the major parties but
also of the competing factions
within them.
Of particular interest is
President Frei's Christian Demo-
cratic Party (PDC), in which a
vocal leftist faction advocates
cooperation with the Communists
in the presidential election.
Factionalism, plus the problems
of any incumbent party in off-
year elections, makes it unlikely
that the PDC can retain the 42
percent of the vote it won in
1965, six months after Frei's
stunning presidential victory.
Its goal is to maintain its posi-
tion as the country's dominant
party by obtaining at least 30
percent of the vote. Frei hopes
for a strong showing by PDC mod-
erates that will weaken the left-
ists' position at the party con-
gress to be held after the elec-
tions. Because that meeting will
set the tone for the presidential
campaign, and may also choose the
nominee, the congressional elec-
tion results could be crucial for
the future direction of the party.
Other political groups have
equally important interests at
stake. The Socialist Party is
engaged in a bitter battle with
its breakaway faction, the Popu-
lar Socialist Union. This strife
is almost certain to decrease the
total Socialist vote, which in the
last election was 10 percent. So-
cialist Senator Salvador Allende
is running for re-election and a
large victory would give him a
good chance for the nomination,
for the third time, of the Commu-
nist-Socialist Popular Action Front.
The conservative National
Party, which was formed in 1966
from two traditional parties after
the debacles of 1964 and 1965, may
profit from a general feeling of
uncertainty in the electorate. The
pace of reform in recent years,
too slow for many leftists, has
at the same time upset some mem-
bers of the middle class. Although
the National Party candidates suf-
fer from political inexperience
and a lack of organization, the
party could emerge as the second-
largest vote-getter. It may de-
rive some support from followers
of former president Jorge Ales-
sandri, whom the Nationalists openly
favor for the presidency although
as an independent he has been care-
ful to disassociate himself from
partisan activities.
The Radical Party, a tradi-
tional middle-class group, has in
recent years been led by people
who see the party's future tied
to that of the Communists. Al-
though the Communist Party, emi-
nently respectable in Chile, has
not spurned Radical advances, there
is little likelihood that it would
support a Radical presidential
candidate. Indeed, the Radicals'
national organization has been so
fragmented by factionalism that the
leadership might not be able to
take advantage of a strong Radical
showing caused by the traditional
grass-roots strength of the party,
The Communists themselves have
the strongest organization and
should improve on the 12 percent of
the vote they received in 1965. Be-
cause the Communist Party can de-
liver its vote virtually intact to
the presidential candidate it sup-
ports, other parties are courting
it assiduously. Its support could
be decisive in a close race.! 25X1
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SOVIET-CUBAN ECONOMIC
RELATIONS REMAIN STABLE
Another year of Soviet eco-?
nomic support to Havana is as-
sured by the signature on 7 Feb-
ruary of the Soviet.-Cuban trade
protocol for 1969. Although the
negotiations that began last No-
vember appeared less contentious
than those a year earlier, the
announced level of trade sug-
gests that it may not exceed
last year's estimated total of
$950 million.
Moscow also extended another
long-term credit to finance Cuba's
trade deficit, but the amount
was not specified. These cred-
its normally include funds to
finance the trade deficit for
the coming year plus whatever
may be necessary to cover the
unfinanced portion of past trade
deficits.
Soviet credits needed by
Cuba this year may exceed last
year's announced Soviet aid of
$3328 million. The 1968 trade
deficit was considerably larger
than originally planned because
Cuba shipped far less than the
2.7 million tons of sugar called
for in last year's trade proto-
col. The deficit is estimated
to be close to $400 million com-
pared with $250 million in 1967.
Current prospects indicate.:
that the 1969 sugar crop will
not be much larger than last
year's 5.2 million tons. Inter.-
s__ve preparations to meet the
1970 target of 10 million tons
are already interfering with the
current harvest. There is some
evidence, moreover, that cane
will be held back from this year's
harvest in order to increase the
yield next year.
Soviet exports to Cuba prob-
ably will not increase this year.
The USSR is expected to continue
to supply large quantities of ma-
chinery and equipment, raw ma-
terials, foodstuffs, and almost
all of Cuba's petroleum. Soviet
petroleum deliveries to Cuba last
year totaled 5.3 million tons,
only slightly above the total de-
livered in 1967. There are no
indications of any increase in
1969 that would permit lifting
the fuel rationing imposed last
year as part of Cuba's austerity
program.
The USSR continues to de-
liver equipment for Soviet-aided
economic projects. The only ma-
jor new economic project under-
taken with Soviet aid last year
was the start of construction on
a large nitrogenous fertilizer
plant. Soviet aid, however, con-
tinues to support the expansion
of Cuba's principal steel mill
as well as the renovation and ex-
pansion of the Cuban sugar mill-
ing industry.
Soviet deliveries of mili-
tary equipment are expected to
resume this year, probably as a
result of agreements reached dur-
ing the visit of the Cuban armed
forces' deputy minister to Moscow
last November. Military ship-
ments averaged about two a month
from September 1966 to February
1968, when the deliveries stopped,
probably reflecting the comple-
tion of shipments under the 1966
arms agreement. 25X1
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