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June 26, 2006
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February 14, 1969
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Approved For Release 2007/03/06 : CIA-RDP79-00927A0069000300`0~1-5t DIRECTORATE OF INTELLIGENCE WEEKLY SUMMARY State, DIA, USAID reviews completed Secret 44 14 February 1969 No. 0357/69 Approved For Release 2007/03/06 : CIA-RDP79-00927A006900030001-5 25X1 Approved For Release 2007/03/06 : CIA-RDP79-00927AO06900030001-5 Approved For Release 2007/03/06 : CIA-RDP79-00927AO06900030001-5 IA RDP79-00927A006900030001-5 Approved For Release 2007/0S3/06 : EC 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. SECRET Approved For Re e12007/Q LCIA4 0092779AC1906?30001-5 Tne Approved For Release 2007/03/06 : CIA-RDP79-00927AO06900030001-5 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. SECRET Approved F Release 0 7/ 3/06 : CIA-RDP79-00927AO06900030001-5 age 11 E LY SUMMARY 14 Feb 69 Approved For Release 2007/gF fIt-RDP79-00927AO06900030001-5 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. SECRET Approved For Rbkra" 200VM : MA y79-0427 06680030001-5 Approved For Release 2007/0 6 - ffA- DP79-00927A006900030001-5 4V T 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. SECRET Approved FoI l ,se 2G IL fsuiQ i)P79-01M27@,806900030001-5 Approved For Release 2007/028W t. fDP79-00927AO06900030001-5 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. SECRET Approved For RR45lts~ 200 ' rY d EWY9-009 4(W906?30001-5 Approved For Release 2007/03/06 : CIA-RDP79-00927AO06900030001-5 SECRET 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, SECRET Approved For eleaae 20R /P# S~1f79-0Q%27 (}P6N0030001-5 ige Approved For Release 2007/0 / , b* DP79-00927AO06900030001-5 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 SECRET NORTM VIETNAM OF MII.I~ARIZEU ZONE SOUTH VIETNAM 90 100 MILES Approved For Reltesse32007N ~YC$]' bOO *-009iiA& &b30001-5 Approved For Release 2007/03/pt(qIffP79-00927AO06900030001-5 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. SECRET Approved Forfeaise 20 '/bg 5dMWIP79-0642DM0030001-5 Approved For Release 2007 M :E b-RDP79-00927A006900030001-5 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 Muory$Son" Na Khan M ong Sow Plaine io'nr_ Ja ret Corn mun ist-controlled territory SECRET S;rovbnec ~Tlnateng Bolovan$ pteteau Aftopeu e 5 ~V EKLY SUMMARY 14 Feb 69 Approved For R~e~ ase 2007/03/06 : CIA-RDP79-00927AO06900030001-5 Approved For Release 2007/gy0~ftRDP79-00927A006900030001-5 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. SECRET Approved PWF leas4VMM -RDP791:@0% 900030001-5 Approved For Release 2007/~i0~ivt-RDP79-00927A006900030001-5 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. SECRET Approved For RqI Q 2007lg16I;) A $-0-0092~AO(Ybob%0001-5 Approved For Release 2007/03/06 Cm_ IP79-00927AO06900030001-5 ACCESS ROUTES TO BERLIN } f J Approved For Release 2007/03/06 : CIA-RDP79-00927AO06900030001-5 SECRET Approved For Release 2007/0 310 .DP79-00927AO06900030001-5 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. SECRET 25X1 Approved For I egeasFh 20d '1W : i b l9-009 4(0806?30001-5 Approved For Release 2007/03/06 : CIA-RDP79-00927A006900030001-5 SECRET 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 SECRET Approved Fqof elelae 7 f rNMIRDP79-0@@2?Qg0W0030001-5 Approved For Release 2007/O9VRDP79-00927A006900030001-5 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. SECRET Approved For ehle 20WYMI M %V"VP79-00927AVW9 030001-5 SECRET Approved For Release 2007/03/06 : CIA-RDP79-00927AO06900030001-5 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. Approved For Release 2007/03/06 : CIA-RDP79-00927AO06900030001-5 SECRET Approved For Release 2007/03/06 G1A,RDP79-00927AO06900030001-5 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 SECRET Approved For F asg200~/]Py: Pj79-0092-4A 0M30001-5 Approved For Release 2007/03/06 : CIA-RDP79-00927AO06900030001-5 SECRET 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. SECRET Approved FopSjRellise 2 7~R/gf~UWAF 4P79-01049? -15 g~00030001-5 Approved For Release 2007/gE fIf--RDP79-00927AO06900030001-5 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. SECRET Raq Approved For ga~e5200'7 :55 79-009 1 968030001-5 Approved For Release 2007/0,c Jt RDP79-00927AO06900030001-5 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 SECRET Approved FoI*elefise 200 MfI;U P79-00$2 Approved For Release 2007/03/,ek~.9P79-00927A006900030001-5 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' SECRET Approved For Reelgfi%e 007' l' RWO~ -00927AOFOG906030001-5 Approved For Release 2007/03/06 : CIA-RDP79-00927A006900030001-5 SECRET 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 SECRET Approved For F~P&sg8200 y. 1 1RW 9-00927A'OG69Q030001-5 Approved For Release 2007/WRTI RDP79-00927AO06900030001-5 Peruvian President Velasco's announcement last week that the Inter- national Petroleum Company's "debt" to Peru amounts to more than $690 million has effectively closed the door on further efforts to resolve the matter of compensation for the company's expropriated property. The Brazilian Government's campaign to "clean up" the country con- tinued this week with the removal of 33 more federal congressmen from office. The number of ousted congressmen now totals 81-nearly a fifth of the members-and further reduces the likelihood that the government will even consider reopening congress until it is thoroughly "sanitized." In Guatemala, the ruling Revolutionary Party is again seeking a candi- date for the presidency in next year's general elections following the with- drawal of Defense Minister Chinchilla. The party will probably seek a man who can counter the candidate of Guatemala's reunited right, Colonel Carlos Arana, the former commander of counterterrorist operations in the guerrilla-infested northeast. President Trejos of Costa Rica has again failed to gain legislative approval of the San Jose Protocol, which provides for a 30-percent surcharge on many imports from outside the area. The government failed to win passage on 10 February and its next opportunity will not arise until congress reconvenes on 10 March. If, as is likely, Costa Rica is unable to ratify the 25X1 protocol, Nicaragua is expected to erect barriers against imports from Costa Rica and possibly other countries that fail to implement the agreement. SECRET Approved For l$asIe9200Y1:l)(-X79-0091fA66Adbb30001-5 Approved For Release 2007/03/06 : CIA-RDP79-00927AO06900030001-5 SECRET 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 SECRET Approved F~r~ Rel2e~ se DP79-Q10492f7AOOPY00030001-5 Approved For Release 2007/09Th fff 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 SECRET Approved For Fk agd 2OOWI J Y: tfb T9-0091W@49dbb30001-5 SECRET Approved For Release 2007/03/06 : CIA-RDP79-00927AO06900030001-5 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. IPS , Approved For Release 2007/03/06 : CIA-RDP79-00927AO06900030001-5 SECRET Approved For Release 2007/03/06 : CIA-RDP79-00927A006900030001-5 SECRET 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 SECRET Approved Fo a l61se 2 -VR / % j &~PP79-0Qg2 %060030001-5 Approved For Release 2007/03/06 : CIA-RDP79-00927AO06900030001-5 SECRET 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 SECRET Approved For Release 2007/0 6L- &MAPJP-0092IAOP69b0%90001-5 P?'ve 24 W 25X1 Approved For Release 2007/03/06 : CIA-RDP79-00927AO06900030001-5 Approved For Release 2007/03/06 : CIA-RDP79-00927AO06900030001-5 Approved For Release 2007/03/06 : CIA-RDP79-00927AO06900030001-5 Secret Secret Approved For Release 2007/03/06 : CIA-RDP79-00927AO06900030001-5