WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A007700010001-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 58
• Document Creation Date: December 21, 2016
• Document Release Date: March 27, 2009
• Sequence Number: 1
• Publication Date: February 20, 1970
• Content Type: SUMMARY

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OuGICL
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
State Dept. review completed
Secret
ILLEGIB
20 February 1970
No. 0358/70
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(Information as of noon EST, 19 February 1970)
VIETNAM
Le Duan has issued a major new policy 'statement in
Hanoi. Action in the war remains light, and the
South Vietnamese have recently scored a number of
local successes. The legality and wisdom of the
Saigon government's proposed court action against
two Lower House deputies are again being questioned.
COMMUNISTS MAKE SWEEPING GAINS.` N NORTH LAOS
The Communist offensive against the Plaine des Jarres
is chalking up steady and' substantial gains, and the
government faces the prospect of losing control soon
over the entire area...
MASS TRIALS IN COMMUNIST CHINA
An anticorruption campaign has produced a wave of
public trials, but many of those in the dock are
probably guilty mainly of being losers in recent
political struggles.
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Europe
25X1
IAEA FACES A NEW ROLE
Next month's entry into force of the Nonproliferation
Treaty will increase the importance of the IAEA,
which must supervise its safeguards provision.
ITALY SEEKS NEW CENTER-LEFT GOVERNMENT
The long-expected negotiations looking toward a new
center-left government got under way last week with
the naming of Christian Derfiocrat Mariano Rumor as
prime minister - designate.
SPANISH FOREIGN MINISTER SCORES ON PARIS VISIT
Foreign Minister Lopez F ravo's warm reception in
Paris last week will make for closer relations and
will further his aspii*ations for a larger role for
Spain in international affairs.
THE POLITICS OF SUCCESSION IN YUGOSLAVIA
Political jockeying/in Yugoslavia has been generated
by an awareness th't the 77-year-old Tito will not
be around forever.`
HUNGARY PURSUES WESTERN TRADE
Proceeding from/a surprisingly large increase in ex-
ports to the West last year, Hungary is looking for
more trade and industrial cooperation schemes with
the West.
FINLAND PREPARES FOR PARLIAMENTARY ELECTIONS
Political polls forecast a shift away from the parties
in power, but the necessity to gain Moscow's acceptance
of any Finnish coalition would seem to rule out any
significant change in the government that will take
office after the March elections.
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Middle East - Africa
THE WEEK IN PERSPECTIVE 17
USSR TAKES TOUGH LINE ON MIDDLE EAST
The Soviet press is taking a more obdurate line as
Moscow awaits Washington's decision on whether to
give additional aircraft to the Israelis, who have
resumed bombing close to Cairo.
TENSION SUBSIDES IN JORDAN--FOR THE MOMENT
Tension in Amman has slacked off sharply, but the
apparent calm may be only a pause if the King--as
he has hinted--still intends to try bringing the
Arab-fedayeen under some measure of control.
INDIAN PARLIAMENT OPENS FOR CRUCIAL SESSION
Prime Minister Gandhi's "progressive" program and
political skills will be tested as never before by
the strongest opposition ever assembled in India.
INTRAPARTY RIFT CAUSES POLITICAL CRISIS IN TURKEY
Turkey's current political crisis, precipitated by
dissident members of the ruling Justice Party, cul-
minates a lengthy struggle for power between the
conservative and libejal wings of the party.
PAKISTAN MOVES TO AVER'-'FOODGRAIN SHORTAGES IN EAST
Rawalpindi is try~hg to ensure adequate food supplies
in East Pakistan:.during the last half of 1970 by mak-
ing early arrangements for imports of US grain.
Western Hemisphere
THE WEEK IN PERSPECTIVE
BOLIVIAN GOVERNMENT CONTINUES LEFTIST COURSE
Although President Ovando has moderated his state-
ments in recent weeks, he does not seem disposed to
reverse the leftist trend of his government.
DOMINICAN PRESIDENT SET FOR RE-ELECTION ANNOUNCEMENT 25
President Balaguer is heavily committed to seeking
re-election in may despite some high-level defections
in his party and the prospect of increased urban vio-
lence.
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BAHAMAS TIGHTENS CONTROL OF FOREIGN BUSINESSES
New government efforts to control ,the foreign busi-
ness community are again unsettling investment and
political circles in the Bahamas.
CARIBBEAN BLACK POWER CONFERENCE` SCHEDULED
The meeting will be held from 9 to 12 July in Barba-
dos. Any spontaneous isand-wide disorders would
severely tax Barbados' small security force.
GUATEMALAN ELECTIONS--A I FIANCE OF HISTORY
If the elections sc1eduled for 1 March take place and
a legally elected a4overnment is installed in July,
Mendez will be tb? third elected president since 1821
to serve a fulllterm in Guatemala. The shortness of
the time remaining before the balloting increases the
probability t)(at the elections will actually be held.
The postelection period however, mmay well-develop
into one oft crisis.
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The North Vietnamese offensive in north Laos has moved steadily
forward since it began just over a week ago, and the government faces.the
prospect of soon losing control of the entire Plaine des Jarres. The exiemy,
who has paid heavily for the advance, appears willing to sacrifice the
personnel and materiel necessary to regain control of the Plaine Farther
north, the Communists have overrun the remaining government outposts
near Pak Beng, thus achieving their long-sought goal of clearing the govern-
ment from the Nam Beng Valley.
North Vietnamese party First Secretary Le Duane-has followed up his
recent emergence from four months of seclusion by publishing a major
policy statement on behalf of the regime. Le Duan'S article, billed as a "very
important and basic document," is the first across-the-board policy review
promulgated since Ho Chi Minh's death. The full text, not yet available in
the West, could provide valuable insights into. Hanoi's priorities for domestic
affairs and for the war in the South.
Battlefield action in South Vietnam' has remained at a low level, but the
Saigon government found itself engad once again by opposition elements
immediately after the Tet holidays Ethnic Khmer Buddhists have renewed
their demonstrations against allvi!ged government discrimination, and the
Thieu administration is being7i riticized anew for its decision to try two
Lower House deputies charge with having Communist connections.
Philippine PresidentiMarcos is having some success in deflecting student
ire over domestic ills arTd corruption onto the US. The circumstances of a
rowdy student 110tration at the US Embassy in Manila on 18 February
indicate that it wa ,'officially encouraged. Not only were there persistent
radio reports in advance of the incident that a demonstration was expected
at the embassy t'~but the police did not respond to official US calls for
protection until the US compound had been under attack by demonstrators
for almost ap hour. Marcos remains on the defensive as most students appear
intent on continuing to air domestic issues, especially in view of the conces-
sions they have already succeeded in extracting from the president.
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VIETNAM
Le Duan, Hanoi's party first
secretary, has issued a major new
policy statement on behalf of the
regime. The statement, of which
only a short summary is available
in the West so far, pre-empted all
12 pages of the party daily on 14
February. The attendant publicity
buildup describes the work as a
"very important and very basic
document"--language usually re-
served for only the most authorita-
tive and comprehensive party state-
ments. The last pronouncement with
comparable billing, length, and
scope was the report by Truong
Chinh in mid-1968 signaling Hanoi's
return to a "protracted war" strat-
egy in the South and calling for
increased attention to internal
problems in North Vietnam.
Quiet on the Battlefield
Whatever the nuances of Le
Duan's pronouncement, there is
little doubt that "protracted war"
remains the watchword for Communist
forces in South Vietnam. There was
little military action during the
last week despite signs that the
Communists had hoped to follow up
the Tet holiday with a show of
force. In part, this reflects the
general effort they are making to
hold down battle casualties by mov-
ing only after careful preparation.
It appears increasingly clear that
the enemy is giving local commanders
greater leeway in deciding where and
when to attack. Apparently not many
commanders considered themselves well
enough situated last week to initiate
action.
Le Duan emerged only two or
three weeks ago from four months
of seclusion, and his article is
the first across-the-board policy
review from the top leadership
since Ho Chi Minh's death last
September. The summary contains
few hints of major policy shifts,
but the full text, with its ap-
parent detailed discussions of his-
tory, strategy, and tactics, could
provide the latest word on current
Communist objectives and strategy
in the South. It may also give an
inkling of the priority Hanoi at-
taches to the war in relation to
its other foreign and domestic con-
cerns. Moreover, such long and
detailed discussions have often
disclosed the special views or pre-
occupations of individual leaders
and have provided insights into
policy differences within the lead-
ership.
South Vietnamese forces have
been able to score well in some
local engagements recently. Regu-
lar units supported by tanks killed
more than 200 Communists in a series
of battles south of Da Nang. In
War Zone "D," north of Saigon, ir-
regular troops led by US and South
Vietnamese Special Forces captured
one of the largest enemy munitions
caches ever seized in the war.
South of Saigon, a South Vietnam-
ese task force apparently has suc-
ceeded in blocking the infiltration
of large North Vietnamese elements
from Cambodian sanctuary into the
upper delta.
The Communists struck back
strongly in the delta later in the
week, however, ambushing and badly
mauling a 150-man South Vietnamese
patrol in Kien Hoa Province. Other
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Communist units continue to resup-
ply and reconnoiter allied posi-
tions, presumably in preparation
for coming attacks. They remain
capable of launching a spring cam-
paign, including widespread shell-
ings and ground probes, with little
warning.
Troubles on the Political Front
Although the battlefield re-
mained relatively calm, the South
Vietnamese Government found itself
again engaged on the political home
front by opposition elements. Al-
most immediately after the Tet
holidays, some 1,000 Buddhist monks
of Cambodian (ethnic Khmer) descent
stormed the Tra Vinh police station
in the delta and marched on the
province chief's office there. Al-
though dispersed in a few hours,
the demonstration may presage a
renewal of the monks' campaign
against alleged discrimination by
In Saigon, the legality and
wisdom of the government's proposed
court action against two Lower House
deputies accused of having Commun-
ist connections have again come into
question. Under attack is the legal
keystone for the government's move--
the Lower House petition that advo-
cates lifting the parliamentary im-
munity of the two deputies. Its
critics claim that the Lower House
is not empowered to remove immuni-
ties by petition. Moreover, three
lawmakers are now reneging on their
signatures, thus suggesting that the
petition now lacks the requisite
Lower House backing.
The government nevertheless
seems determined to push ahead with
a military trial for the two accused
deputies. Given the extent to which
President Thieu has involved his 25X1
personal prestige in the case, the
chance that he can be deflected
from the course he has chosen seems
remote.
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Laos: Communist Offensive Progresses
CHkNA
THAILAND
Contestld territory
Limit of area claimed under
Communist and Neutralist
control, June 1962
Communists
regain control
of supply route
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G174F
0 r
TO KEN
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COMMUNISTS MAKE SWEEPING GAINS IN NORTH LAOS
North Vietnamese troops con-
tinue to retake key positions they
abandoned last August around the
Plaine des Jarres, and it appears
to be only a matter of time before
the entire Plaine is again under
enemy control.
Meo General Van Pao had
hoped to hold a few of his posi-
tions north and east of the Plaine
to retard further enemy advances,
but he ordered a withdrawal rather
than risk exposing his weary and
outnumbered troops to possible
annihilation. The restoration of
enemy control over the crucial
junction of Routes 7 and 71 at
Nong Pet had enabled North Viet-
namese forces to reopen their
vital infiltration and supply
artery down Route 7. Communist
elements have also occupied sev-
eral important positions on high
ground along the southern edge
of the Plaine. Initial govern-
ment moves to retake these points
have been rebuffed and the loss
of this entire sector appears in
prospect.
On the Plaine itself, the
Communists have continued to di-
rect heavy artillery and infan-
try attacks against Vang Pao's
forward headquarters at Xieng
Khouang Airfield. T.Ia o leader
ort
to 3 d -cri~ ii ire-ld to tre than
fall back
erromy a k. Although government
defenders so far have taken only
light losses, the enemy has suf-
fered substantial casualties in
his ground attacks against the
airfield. Employing several light
tanks, the enemy launched a heavy
assault on 18 February, but was
beaten back. The airfield's de-
fense is being hampered by the
steady arrival of government troops
retreating from areas north and
east of the Plaine. Most of these
troops are no longer effective, and
unless they are shifted to a less
exposed position, the government
may yet suffer sizable casualties.
-thy Remy
staged a small sapper raid ag
Vang Pao's main headquarter
Long Tieng. This was the
action ever undertaken
this base, which is th
the government effor
east. The attack,
one aircraft, pro
to confuse Vang
induce him to
at
rst
ainst
key to
in the north-
hich destroyed
ly was intended
ao's forces and to
ull troops off the
Plaine to def'6nd the Long Tieng
area. Ther, are no indications
that the firth Vietnamese intend
to make major thrust against
Long Ti:eng. The rugged terrain
and large numer of Meo villagers
in t}x'e area make the enemy's task
of owing in strength on this
Intensive tactical air strikes
have probably taken a heavy toll
on enemy units. Nonetheless, the
Communists appear willing to ac-
cept heavy personnel and material
losses in order to restore their
control over the Plaine.
In an apparent effort to fore-
stall a government move to rein-
force the Plaine des Jarres with
troops from the southern panhandle,
the Communists launched their
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MASS TRIALS IN COMMUNIST CHINA
A wave of officially inspired
public mass trials is sweeping Com-
munist China. The main targets of
the drive, according to regime prop-
aganda, are those who have been en-
gaging in graft, theft, corruption,
and embezzlement. Some opportunists
no doubt took advantage of the break-
down in controls during the Cultural
Revolution to line their pockets,
and Peking is now moving to punish
them. Many of those brought to
trial, however, are probably fairly
low-level people who are guilty of
being losers in the political strug-
gles of the past year or two rather
than of economic crimes.
19 polit:tcal
o en ers a i is e with rA7ddical
Red Guard organizatiQns-were sen-
tenced to death _aa~ a mass trial last
month. In Kwigtung, teams of in-
vestigators are conducting a search
for fadtionalists who committed mur-
der and other serious crimes during
the- ultural Re-Vb'i tion_.
The anticorruption campaign,
thus appears to be closely linked
to the present political counter-
attack by party cadres who suffered
abuse by the more radical Red Guard
elements during the Cultural Revolu-
tion. Public pronouncements on
party building are increasingly
forthright in their attacks on erst-
while "rebels" who believe they auto-
matically qualify for leading posi-
tions in newly emerging party com-
mittees. Honan radio on 10 Febru-
ary, for example, stated flatly that
those rebels who continue to engage
in factional activities do not meet
the qualifications for party member-
ship, and are not qualified to parti-
cipate in rebuilding the party ap-
paratus.
Some of the old cadre, however,
are afraid of "offending the rebels,"
according to the Honan broadcast.
Their reluctance to strike out
against radical antagonists almost
certainly stems from their experi-
ences during the pendulum-like
swings of the Cultural Revolution.
Most cadre apparently are not con-
vinced that those purged today will
not be back to haunt them tomorrow.
Nevertheless, many of the old-line
cadre who were attacked during the
Cultural Revolution will probably
seize any opportunity to take some
form of revenge against their for-
mer tormentors.
Radical elements will not ac-
cept this state of affairs passively,
however, and further disorders may
be in the offing as they continue
to resist efforts by local officials
to intimidate and punish them. The
success of the punitive efforts of
local authorities depends largely
on their willingness to commit them-
selves. This, in turn, rests to a
major extent on their reading of
the leadership picture in Peking.
Even experienced party members must
find that view very clouded.F
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The highlight of the 25-nation Geneva disarmament talks t44t resumed
this week, was an address by UN Secretary General Thant to_ he conferees.
The Soviets have indicated that they, like the US, will seek cdmpromises on
the draft seabeds treaty with Canada and Argentina, , two of its more
influential critics. Moscow continues its preference fdr a ban on both
chemical and biological weapons, whereas the US fairs agreement at this
time only on biological weapons. Moscow is still ,,opposed to on-site in-
spection, although it is willing to consider other approaches to verification.
The second round of the technical talksAtween the US and USSR on
peaceful nuclear explosions (PNEs) ended tliS week. The Soviets told the US
that they are now in agreement with the,.Srinciple of considering a role for
the International Atomic Energy Agengy`in the "international observation"
of PNEs called for by Article 5 of tl/ Nonproliferation Treaty. The super-
powers are under some pressure inahe PNE field; Sweden this week urged
the Geneva disarmament confereeo draft an agreement for an international
service that would handle nucleaf'explosions for peaceful purposes.
Tito is expected to att,hid the Lenin centennial on 22 April
His appearance in Moscow is likely to
put a brake on rising Yugoslav-Soviet tensions, but Tito as usual will be
prepared to defend Yvfoslav interests and to argue that Belgrade's policies
are not incompatiblewith international Communism. Tito's presence also
will fortify the det urination of Romania's Ceausescu, who will also be on
hand, to resist posble Soviet pressures to conform.
Hungaria Foreign Minister Peter evidently intends to try to engage the
Belgians in a,,alogue on a European security conference during his visit to
Peter has also scheduled
visits to Ae Netherlands, Norway, and Sweden before the end of June. He is
in Bul ria this week for talks with his counterpart, Bashev. Meanwhile,
Bulg .ian chief Zhivkov is on a good-will mission to Prague.
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IAEA FACES A NEW ROLE
The 26-nation Board of Gover-
nors of the International Atomic
Energy Agency (IAEA)will convene
in Vienna on 24 February to tackle
a number of critical tssues. Most
of these questions relate to the
increased importance of`,the IAEA
as an enforcement agency \nce the
Nonproliferation Treaty (NAT) en-
ters into force next month..
N
Under Article 3 of the WT,
all nonnuclear-weapon states a-
hering to the treaty must begir\ ne-
gotiations with the IAEA on saf,-
guards agreements--designed to p
vent the diversion of fissionable
material from peaceful uses--withik
six months of the NPT's entry into ,
force. The agreements are to be
completed within the following 18
months. States may negotiate the
safeguards agreements with the IAEA,
either individually or collec-
tively--a provision designed specif-
ically to accommodate the European
Atomic Energy Community (EURATOM).
The UK has proposed that the
board create a safeguards cQnmit-
tee to consider the position the
IAEA should take during tJe forth-
coming negotiations. Although pres-
sure for some such mechanism appears
irresistible, the six FURATOM na-
tions are being very s?'kicky about
its terms of reference. They fear
that the wording could encourage
premature discussion of the deli-
cate relationship/that must ulti-
mately be worked-/out between EURATOM
and the IAEA.
EURATOM considers that assur-
ances given during the negotiation
of the NPT provide for continuation
of its own safeguards system and
that the IAEA's role will be re-
stricted to verification of the ef-
fectiveness of EURATOM's system.
This viewpoint is expected to be
expressed in the mandate that the
Council of Ministers of the Euro-
pean Communities (EC) will give to
the EC Commission, which must ne-
gotiate with the IAEA on behalf of
EURATOM. EURATOM members are con-
cerned, however, that this position
may be challenged immediately by
the Japanese and others who allege
that a,,privileged position in safe-
guards'matters for a regional group-
ing like EURATOM could give it an
adv4ntage in the peaceful applica-
tic4n of nuclear technology.
These anticipated problems
,-',.over safeguards are closely tied
to the current jockeying over the
uture composition of the IAEA Board
oc Governors. Many IAEA members be-
likve that expansion of the board
wou d increase confidence in the
IAEA The Western powers are among
the 1"6 co-sponsors of an Italian
propos`lil that would increase the
membership to 33. Italy and West
Germany--EURATOM countries--would
be among the nine IAEA members
"most advanced in the technology
of atomic energy" that would receive
permanent selqts on the board.
Rome's initiative, however, has
encountered strong resistance from
the Soviet bloc, the Africans, and
the Scandinavians. Earlier this
week the Soviets presented an alter-
native scheme to expand the board
only to some 29 or 31 members, with
Italy and West Germany not receiving
permanent seats. This plan accords
with the views of Sir Phillip Baxter
of Australia, chairman of the Board
of Governors.
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At the meeting next week, the
governors may also consider an East
German request for IAEA safeguards
on a recent shipment of 20 - cilo-
grams of slightly enriched ur'a um
received from the USSR. The IAAE'
staff appears to favor compliance
with the request, the first by a
nonmember, noting that an inspection
arrangement would not necessaril
as a state. Bonn, howeve -, ias cer-
tain reservations, an ther EURATOM
members, too, may,~ar that arrange-
ments the IAEAworks out for East
Germany might constitute a precedent
for applying inspections to West
Germany.
The coming months will be an
important test of `the ability of the
international community to work
out ef,edfive enforcement proce-
for a major arms control
4 ure with wide applicability.
If t~attempt is successful, the
proced xes might constitute a pre-
cedent fo,resolving some of the
verificatio'problems involved in
monitoring other disarmament meas-
ures, such as a,_, comprehensive nu-
clear test ban.
ITALY SEEKS NEW CENTER-LEFT GOVERNMENT
President Saragat's choice on
12 February of Christian Democrat
Mariano Rumor as prime minister -
designate formally opened the long-
expected negotiations lookint toward
a new center-left government. This
process is always laborious, and
success is not a foregone conclu-
sion. The Christian Democrats (CD),
the Socialists, the right-wing Uni-
tary Socialists, and the Republicans
had been considering the timing of
a new coalition ever since the pre-
vious center-left government fell
last summer and was replaced by a
minority government under Rumor.
Differences still exist among
the Christian Democrats over the
question of returning to the center-
left now or keeping a minority CD
government until after local elec-
tions this spring. The question is
intertwined with conflicting leader-
ship ambitions, with the CD left-
wing's preference for an exclusive
two-party coalition with the Social-
ists, and even with resistance to
vacating cabinet posts. Socialist
divisions over the terms of coopera-
tion also make Rumor's task diffi-
cult. The very important question
of whether to accept Communist co-
operation in parliament may be the
toughest problem of all.
Formation of a new government
by early March would provide a rel-
atively stable atmosphere in which
to prepare for local and regional
elections in the late spring. These
elections are of particular inter-
est because they are to mark the
initiation of regions--a form of
decentralized government--on a na-
tionwide basis.
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SPANISH FOREIGN MINISTER SCORES ON PARIS VISIT
The warm reception accorded
Spanish Foreign Minister Lopez
Bravo by top French officials dur-
ing his official visit to Paris
last week will promote closer bi-
lateral relation and will aid
his efforts to have Spain play a
larger role in intAxnational af-
fairs.
Both French Foreign Minister
Schumann and Lopez Bravo stressed
the almost total community of
views established on internafj oval
questions during their talks.--,-
France will sponsor Spain's retirn
to full participation in Eur6pe
affairs and expects to develop as'`,
close relations with Spain as
those it now has with Italy.
The most notable immediate
result of the visit was the sign-
ing,of an agreement under which
Spain will purchase 30 Mirage
aircraft. A substantial amount
of the aircraft construction
Spain.
will be performed in
Lopez Bravo emphasized that,
ineveloping closer ties with
France, Spain did not want to de-
tract"-,from its cordial relations
with ids present allies, and that
it inte ded to remain a good
friend of.the US. Spain may ex-
pect, how4ver, that the improving
relationship with France will re-
duce Madrid's dependence on the
US and increase Spain's bargain-
ing power in the coming negotia-
tions with Washington on the fu-
ture of Joint bases in Spain.
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THE POLITICS OF SUCCESSION IN YUGOSLAVIA
Political jockeying in Yugo- I the regime's current policy of
slavia has been generated by a
sudden, general awareness that
the time left for the 77-year-old
Tito to act as a unifying influence
is at best limited. Without fan-
fare or prior warning, power and
interest groups that will shape
Yugoslavia's political dynamics
in the post-Tito era are beginning
to take shape.
The key to stability during
the succession period rests with
the armed forces. Traditionally
the military views itself as the
guardian and protector of the
federated Yugoslav state, and it
can be expected to support those
elements it considers best able
to hold the Yugoslav system to-
gether. Throughout the postwar
period, the military has been
content to let the politicians
run the government, but recently
the armed forces have been dis-
playing some political muscle. At
issue is whether the government
should make extensive new arms
purchases.
A preview of the "liberal-
conservative" struggle that will
follow Tito was provided at a
Croatian party plenum in late
January. There a leading Croa-
tian party member, Dr. Milos Zanko,
was censured for attacking Croa-
tian nationalism and was removed
as a permanent delegate to the
powerful party conference. In
essence, Zanko was arguing against
decentralization in favor of a
tightly controlled and ideologi-
cally more orthodox Yugoslavia.
Tito himself is cognizant of
the problems that will accompany
the transition period. Shortly be-
fore departing on his current Afri-
can tour, Tito attempted to remove
at least one difficulty by indicat-
ing that his choice for successor
is Edvard Kardelj--a leading intel-
lectual and the father of the Yugo-
slav self-management system.
A growing uneasiness is ap-
parent among the Yugoslav party
leaders, who worry that current
debates on party policies could
foster unnecessary discontent
and strain. Recent press articles
have stressed the need for party
unity and adherence to prescribed
policies. Recently the influential
Belgrade daily, Borba, has urged
the party to rejuvenate itself
by getting rid of deadwood and
opposition elements. No purges
have as yet resulted, but an in-
formal review of party members'
loyalties seems to be under way.
Yugoslav leaders, aware that
the USSR will probably use the
instability of the post-Tito pe-
riod to its own advantage, will
make an intensive effort to re-
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HUNGARY PURSUES WESTERN TRADE
Hungary's exports to the West
increased significantly last year,
and Budapest continues to solicit
Western technology and to seek var-
ious cooperative arrangements with
Western firms. Budapest is un-
likely to shift a major portion of
its foreign trade to Western coun-
tries, however, even though it plans
during 1971-75 to expand exports to
the West more rapidly than to the
Communist countries.
The Hungarians have been work-
ing to eliminate a chronic deficit
in trade with the West by restrict-
ing imports and encouraging exports.
Sales in Western countries rose
three times faster than the planned
10 percent last year, resulting in
an export surplus of $44 million
with the West as compared with a
deficit of $64 million in 1968.
Imports from the industrial West in
1969 rose only nine percent above
1968 levels. This is partially the
result of Hungary's economic reform
program, which calls for increased
efficiency in foreign trade.
Following the reorganization
of foreign trade under the reform,
firms with the right to engage di-
rectly in foreign trade apparently
stepped up exports to hard-currency
countries. Exports of live animals
and beef, primarily to Western Eu-
rope, in the first half of 1969,
apparently played an important part
in the rapid growth of total ex-
ports. Meat shortages at home will
make it difficult to expand signif-
icantly further sales of these
products over the next few years.
To maintain growth in exports to
the industrial West, Hungary must
rely primarily upon good grain har-
vests and upon an increase in in-
termediate manufactures, such as
textiles and aluminum.
Hungary also is seeking the
import of advanced technology from
the West to upgrade its economy.
Although still obliged to rely on
Western credits to finance imports
of capital goods, the Hungarians
have been rather conservative in
recent years in making use of such
credit. On the other hand, Hun-
gary has been increasingly active
in arranging industrial coopera-
tion schemes with the West and in
making use of Western licenses.
A US firm has initialed a $6.8-
million contract with a Hungarian
firm for the sale of technology,
technical assistance, and equip-
ment for a light bulb factory.
Another US firm currently is ne-
gotiating the sale of technical
know-how for an ammonia plant that
would comprise part of a large
Western-equipped fertilizer plant.
Hungary also is seeking entry into
the General Agreement on Tariffs
and Trade to further its trade
prospects with the West.
These efforts to increase
trade with the West, however, are
unlikely to loosen Hungary's trade
dependence on the USSR. At pres-
ent 35 percent of its total trade
is with the USSR. Most of Hun-
gary's raw material requirements
such as iron ore, fuel oil, cot-
ton, and wood pulp come from the
USSR. Also, the Soviet Union re-
mains the largest market for Hun-
garian commodities such as machin-
ery, transport equipment, and fab-
rics.
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Israel resumed its bombing close to Cairo this week after a short pause
possibly occasioned by its strike in error at a civilian factory. The Egyptians
are responding with an increasingly steady series of air strikes at Israeli
positions along the Suez Canal. The Soviet press is taking a much more
obdurate line toward events in the area, apparently in the hope of deterring
the Israelis and of increasing pressure on the US not to respond t9 tel Aviv's
standing request for more aircraft.
In Jordan, tension has slacked off sharply-at least ,for the moment.
King Husayn seems to have backed down on his "law~a'nd order" decree,
although there are some signs that he may yet insist ,fin token compliance.
Talks between the government and a newly formed ~ldayeen "coalition" are
presently in recess because of religious holidaysfit Kt both sides continue to
watch each other warily. Ammans' concern over e fedayeen was implicit in
its recent bid for a special UN session to recc isider an imminent cutback in
UNRWA's program in the Palestine refugee ?camps. A drop in this assistance
would add to the refugees' bitterness an`would facilitate fedayeen recruit-
ment activities.
In
India the budget session of parliament scheduled for 20 Feb-
ruary presents Mrs. Gandlji`with another test of her minority government's
stability. She enters they"session somewhat encouraged, however, by having
regained the political jfiitiative following two recent contests-one with the
opposition Congress,,Party and the other with the Supreme Court over bank
nationalization.
Four of jj ahomey's former presidents have filed to run in the presi-
dential elections now scheduled for next month. The army officers currently
running the government remain badly divided, however, and there is a
possibility that one faction or another will forestall the election with a
coup.
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USSR TAKES TOUGH LINE IN MIDDLE EAST
The,--Soviet press is taking
a more obdurate line as Moscow
awaits Washington's decision on!
whether to give additional air-
craft to the Israelis, who this
week resumed bombing close to/
Cairo.
A TASS statement on 16.x" Febru-
ary, probably triggered bye the re-
cent Israeli bombing of ari Egyp-
tian civilian factory, wa`s one of
the toughest Soviet statements in
recent months. It specifically
pledged the Soviet Union to help
the Arabs defend themlves and
also denounced Israeli military
activities in unusually strong
terms. The commentary differed
somewhat from earlr Soviet pro-
nouncements by giv!ing only the
barest nod to the-'need for a po-
litical settlement in the Middle
East.
A Pravda article on 12 Feb-
ruary warned that Israel's deep-
penetration `aids into Egypt and
a US decisich to sell more Phan-
toms and Sk ihawks to Tel Aviv
would occa$ion increased Russian
support fg`r the Arabs. Moreover,
the peri4 ica1, New Times, warned
on the same day of the dangers of
appeasg aggressors and pledged
that the USSR considers "many-
sided' assistance to the Arabs
its "international debt." Other
publications in recent days have
hinted that, .._af,--thiis?age, Mos-
cow -Wt)- id -ne,~,U aRQKt either res7
toration of the cease-fire or a--
limitation on arms.
The tough line taken by the
Soviet press appears designed to
increase pressure on.7srael to
stop its raids and o deter the
US from approving el Aviv's stand-
ing request forge aircraft. At
the same time, ow ever, the Soviets
are in effect tainting themselves
into a cornerywith their unyield-
ing attitude~on the question of
new arms dreliveries to the Arabs.
If Moscow s current diplomatic and
propagda campaign fails, it is
likely to find its room for ma-
neuver considerably reduced in an
inc.r-eas ntrly"Terious situa i
Meanwhile, the Israelis re-
sumedbombing close to Cairo, end-
ing the short pause that followed
their misrgeted attack last week
on a civili factory, the death
toll for whic has'now reached 80.
On 17 February ,,Israeli aircraft
struck at two,AIeged SA-2 sites
some 20 miles below Cairo, one at
Dahshur an the oth r near Helwan.
In Jerusalem, Prime Minister
Golda M'ir, perhaps reflecting
Israel embarrassment over last
week's bombing mistake, reiter-
ated Israel's willingness to ob-
serve a cease-fire as soon as
Nasir does likewis
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TENSION SUBSIDES IN JORDAN--FOR THE MOMENT
Tension in Amman has slacked
sharply, at least on the sur-
ent that law and order must be
preserved. He also noted that,
although the fedayeen had his and
the country's support, they would
keep it only as long as they
played their "proper" role. In
addition, Husayn insisted that
any agreement between the govern-
ment and the fedayeen "must pro-
tect everyone."
During the current lull, both
sides have retained their forces
in place and seem to be watching
each other warily--despite some
instances of cooperation. Most
street barricades have been re-
moved, but armed fedayeen are very
much in evidence in Amman. Gov-
ernment forces, although less con-
spicuous, remain on the outskirts
of the city and, according to
rumor, have been reinforced.
face, following the Arab feda-
yeen's militant challenge to King
Husayn's "law and order" decree
of 10 February. The apparent calm
may be only a pause, however, if
the King--as he has hinted--still
intends to try bringing the guer-
rillas under some measure of con-
trol.
At the end of last week, as
armed fedayeen clashed with police
and threw up roadblocks in the
streets, the King agreed to a
"freeze" on his decree. He also
began talks with the leaders of
a newly formed fedayeen "coali-
tion." These talks are presently
in recess because of religious
holidays, but are scheduled to
resume around 21 February.
Over the weekend, the King
held a press conference in which
he was clearly trying to cool the
situation. He was conciliatory
to the fedayeen, sought to iden-
tify his objectives with theirs,
and attributed their strong reac-
tion to a "misunderstanding" of
his intent. He was not, he said,
trying to disrupt or eliminate
the movement, as they charged;
he was only carrying out his duty
to maintain order in the urban
centers. He cited the deaths of
some 100 Jordanian civilians that
he alleged had resulted from ac-
cidents involving armed fedayeen.
At the same time, King Hu-
sayn made several points in his
press statements suggesting that
he has not entirely given in and
that the confrontation may not be
over. He was particularly insist-
Meanwhile, the various feda-
yeen groups--there are at least
ten--remain united as never be-
fore, and do not consider the
showdown over. Fatah, the larg-
est of the commando groups, has
urged that the loose coalition
formed to challenge the King's
orders be made a permanant body.
Fatah spokesmen claim that only
the present unity has made it
possible "to contain the confla-
gration," and suggest that con-
tinued unity could do so again.
Fatah's Voice of Cairo on 16 Feb-
ruary broadcast a warning against
believing that everything had
ended. It said that the forces
opposed to the fedayeen were still
strong and active, and that they
still hoped to succeed one day
in "liquidating the revolution."
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INDIAN PARLIAMENT OPENS FOR CRUCIAL SESSION
Even under the best of con-
ditions, the formulation of a
union budget has often tested
Indian governments. In the bud-
get session of parliament that
opens on 20 February, Mrs. Gandhi
not only has to harmonize con-
flicting regional interests, but
also intends to seek a parlia-
mentary mandate for her contro-
versial "progressive" program.
Moreover, she must contend with
discord in her own Congress Party
faction, and must balance the of-
ten conflicting desires of the
other parties on which she depends
but with which she is not form-
ally allied. Finally, she must
outmaneuver the Organization Con-
gress Party, which leads the
strongest opposition ever to con-
front an Indian prime minister.
Mrs. Gandhi's government sur-
vived a no-confidence vote during
the winter session of parliament,
but she won no major victories.
During the nearly two-month re-
cess, both factions of the Con-
gress Party have concentrated on
strengthening their organizations.
Neither side appears to have
gained appreciably, but several
events may have given Mrs. Gandhi
a psychological edge. After sev-
eral false starts, her supporters
managed to put together a fragile
governing coalition in Bihar State,
and also to topple the Organiza-
tion Congress government in her
home state of Uttar Pradesh.
These moves are not regarded as
particularly disastrous for her
rivals, however, and opportuni-
ties to recoup are likely because
of the increased instability in
state governments.
Most opposition leaders have
concentrated on keeping their op-
tions open. Those parties that
backed Mrs. Gandhi during the
earlier no-confidence vote have
underlined the conditional nature
of their support. Moreover, the
rival Organization Congress has
been able to form new state-level
working relationships with a mixed
bag of conservatives and nation-
alists, and even with a leftist
party. If established at the na-
tional level, such relationships
could spell trouble for Mrs.
Gandhi's program.
The Supreme Court recently
voided last year's bank nation-
alization measure, making it nec-
essary for Mrs. Gandhi to intro-
duce new legislation to meet the
court's objections. Bank nation-
alization was a popular issue,
however, and little opposition
is expected. Her government will
encounter more trouble with its
other "progressive" legislation--
bills to abolish subsidies paid
to former princely rulers, to set
new guidelines for land reform,
and to put a ceiling on urban
property holdings. Mrs. Gandhi's
party is by no means made up en-
tirely of "progressives," and her
program could alienate some power-
ful conservative supporters.
The prime minister's popular-
ity with the masses is at an all-
time high, and she has several
parliamentary maneuvers available
to help her. Nevertheless, she
is the leader of a minority gov-
ernment, and the current budget
session will test her ability as
never before.
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Turkey's current political
crisis, precipitated by dissident
members of the ruling Justice Party,
culminates a lengthy struggle be-
tween the party's conservative and
liberal wings. The immediate crisis
broke on 11 February when 41 con-
servatives from the Justice Party
took the unprecedented step of vot-
ing with the opposition to defeat
the budget.
The budget itself was not at
issue, but was merely the vehicle
seized upon by the dissidents to
pull the rug out from under Prime
Minister Demirel and the party lib-
erals. Although budget approval
was not a confidence issue, sev-
eral opposition leaders viewed it
as such and called for Demirel's
resignation. Three days later,
after high-level party conferences
and a meeting of the cabinet, he
obliged. President Sunay immedi-
ately asked Demirel to form a new
government, which he is now en-
deavoring to do; some announcement
is expected early next week.
Meanwhile, the Justice Party
is preparing to expel the 41 de-
fectors. They have expressed no
intention of leaving, however, and
have even challenged Demirel's
personal leadership by announcing
that they would support any other
prime minister from the party. In-
asmuch as the entire conservative
wing may include as many as 100
deputies, its loss would make a
coalition necessary and elections
almost certain.
The chain of events leading up
to the current crisis started when
the party's leading conservative,
former minister of communications
Bilgic, and his followers were
dropped from the cabinet after the
election in October. The Bilgic
group retaliated by walking out of
several important party meetings
and by withholding support on some
procedural questions in parliament.
INTRAPARTY RIFT CAUSES POLITICAL CRISIS IN TURKEY
--'13 Independents
- 6 New Turkey Party
-8 Unity Party
6 Nation Party
In late January, eight members
of the Bilgic faction were expelled
for antiparty activities during the
election. Bilgic and five other
prominent conservatives immediately
resigned from the party's top admin-
istrative body, charging they had
proof of corruption among the lib-
erals. At the time, the dissidents
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gave no sign of bolting the party,
but the lines had been sharply
drawn, and this led directly to the
present crisis.
Demirel now appears to have
two courses open. He can either
try to gain the support of enough
non - Justice Party deputies to
PAKISTAN MOVES TO AVERT F00DGRAIN SHORTAGES IN EAST
To avoid a recurrence of last
year's near crisis in food supplies
in East Pakistan, Rawalpindi now is
arranging for food imports for the
last half of 1970. Pakistan has in-
dicated to the US, its major source
of grain imports, that 600,000 tons
under the Food for Peace aid pro-
gram (PL-480) --about half the amount
of the last agreement--would be re-
quired.
West Pakistan in recent years
has rapidly increased foodgrain pro-
duction, largely by improving ir-
rigation and using the so-called
miracle seeds. In 1969 for the
first time in more than a decade
it produced more cereals than it
consumed. On the other hand, East
Pakistan's production has stagnated,
and with population increasing at
about 3 percent annually, its food-
grain deficit has grown steadily.
These deficits had been filled
largely with PL-480 imports, but
in the wake of West Pakistan's in-
creased foodgrain production Rawal-
pindi thought it could meet the
East's shortages in 1969.
form a new government, alone or in
coalition, or move toward early
elections. He appears to be with-
in five votes of having a bare ma-
jority in his own right. Regard-
less of the outcome, however, he
almost certainly faces further
testing at the party's biennial
convention late in 1970.
than anticipated because of increased
consumption in the West and a drop
in government procurement prices.
Food prices rose some 25 percent
in the food-short East last year,
creating popular unrest. Easterners
helped bring down the Ayub Khan gov-
ernment last year because they felt
discriminated against, and they
blamed the new military administra-
tion for the rise in food prices.
The Pakistani Government finally
sought PL-480 grain in mid-1969 to
fill the East's deficit. An agree-
ment was delayed until early this
year, however, by Rawalpindi's fruit-
less attempt to obtain the right to
export wheat for hard currency while
receiving US aid grants. About
800,000 tons of US grain will be
shipped to East Pakistan by May,
and another 200,000 tons later.
This will supplement 300,000 tons
of grain provided by other foreign
governments under aid programs.
The government should be able
to obtain larger quantities of do-
mestic grain for the East from this
year's crop. West Pakistan's grain
production is expected to continue
Only about a third of the 1.7
million-ton deficit, however, was
filled from domestic sources. Gov-
ernment grain procurement was less
its rapid growth and the procure- 25X1
ment price has been raised to en-
courage larger sales to the gov-
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The re-integration of Cuba into the inter-American system continued to
be a major topic of discussion in Latin America this week.
Last Sunday, Brazil's foreign minister issued an official communique
stating that his country is adamantly opposed to any efforts to relax trade
restrictions against Havana or to bring it back into the Organization of
American States. Cuba's continued support for Brazilian terrorists, its grant-
ing of refuge to the terrorists released in exchange for-the kidnaped US
ambassador, and its antigovernment propaganda broadcasts are some of the
reasons Brazil cannot change its attitude toward the Castro government.
In Trinidad-Tobago, Prime Minister Williams' political party on 15
February publicly endorsed his statement at the recent meeting of the
Inter-American Economic and Social Council that Cuba should be readmitted
to the inter-American system. An agricultul mission from Trinidad-Tobago
is supposed to go to Havana at the end of the month. Prime Minister
Williams, who is particularly intereste 'in learning about Cuba's sugar and
cattle industries, has indicated that further contacts with Castro will be made
in the near future.
In a conversation with theiUS ambassador Wednesday, Mexican Foreign
Minister Carillo Flores said )that he believes the resolution of 1964, which
suspended Cuba from the JOAS, has been overtaken somewhat by events. He
does not believe that tuba is interested in returning to the Hemisphere
system at this time ayway. He added that it would be unrealistic to
consider the questio 'now because many Latin American nations are op-
posed.He added th/t Mexico could not play a leading role in bringing Cuba
back into the system because his government had never implemented the
resolution to I ep her out. (Mexico is the only country in Latin America
that still maintains diplomatic relations with Havana.) If a vote were taken,
however, C~arillo Flores said Mexico would vote in favor of Cuba's return.
After four years of fruitless discussion, the Venezuela-Guyana Mixed
Border Commission expired this week. Both countries apparently have
agreed to delay the preparation of a final report so that direct negotiations
can be held. It seems unlikely, however, that such negotiations will lead to
an early solution. Guyanese forces apparently fired a few shots near Vene-
zuelan forces on Ankoko Island this week, underscoring the continuing
danger posed by the proximity of the armed forces during a time of tension.
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BOLIVIAN GOVERNMENT CONTINUES LEFTIST COURSE
President Ovando has moder-
ated his public statements in re-
cent weeks and has muzzled the
most outspoken members of his gov-
ernment. He does not, however,
appear disposed to reverse the
leftist trend of his government.
The Ovando administration is mov-
ing speedily to improve its rela-
tions with the Soviet Union, and
at the same time the President
himself seems to be resisting
pressures from the armed forces
to remove some of the leftists
from his cabinet.
ment to the new Soviet ambassador I military.anove against Ovando have
be accompanied by a reshuffling ,---
of the cabinet. President Ovando
has been under pressure from the
military to dismiss leftist ci-
vilians from his government
The Foreign Ministry an-
nounced that it had granted agree-
Rumors o
to Bolivia in "record time." The j died d
tive industries. For their
part, the Soviets have reacted
to the new Bolivian Government
with caution and at this time do
not appear prepared to offer any
more than "scientific and techni-
cal assistance." Bolivia already
has trade agreements with several
East European countries and soon
will discuss trade possibilities
and the opening of diplomatic re-
lations with Poland.
Julio Garret, Bolivia's left-lean-
ing ambassador to Moscow, was to
open talks on 16 February on the
Soviets' offer of scientific and
technical aid to Bolivia's extrac-
Administrative reforms that
will involve the reorganization
of some government ministries are
expected to be approved before
the end of the month, and there
are rumors that the reforms will
n in recent weeks, but
esident could be courting
serj6us trouble if he is, indeed,
intent foil-owing this course.
The Ovando
government is current'~' seeking
to sell oil to Brazier; and the
Brazilian Governme t may see this
as an opportunityAo obtain a
lever with whic4-pit might be able
to influence t e Bolivian Govern-
ment. Brazil/ must have outside
sources of p troleum, and the
sale of a -large quantity of oil
would he alleviate Bolivia's
serious-economic problems and im-
provevando's political image.
An agreement for Brazil to pur-
cI se Bolivian oil would thus
see alvatageous to both coun-
tries.
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DOMINICAN PRESIDENT SET FOR RE-ELECTION NNO
President Balaguer is heavily
committed to seeking re-election in
May despite some high-level defec-
tions in his party and the prospect
of increased urban violence. He
ill probably announce his bid in
have
electi
will ste
term. He
gressional
from the ran
down at the end of his
as maneuvered for con-
upport, has ousted foe
formist Party
edly encourage
paigning being
of the governing R
(PR), and has undo,
the blatant ca
nducted by m
and civilian supp
election.
rters for
On 13 February
Lora, a frustrated pr
pirant, tacitly acknow
success of Balaguer's
albeit unofficial--ca
announced his resign
PR in order to lead
nized political pa
n. Lora
rom the
recog-
ng that
Despite some r
ignations in
the mayors
nation's
scale d
unlik
odds
is
follow his example.
ent high-level res-
e party--including
f the capital and the
econd largest city--large-
ections from the PR seem
y. Balaguer still is an
on favorite, and few Reform-
s will be willing to risk their
are of the political pie.
Balaguer can legally enter the
campaign as late as 1 April, but he
will probably announce sooner. He
has convoked a party national as-
sembly for 25 February, and it re-
portedly will issue a unanimous call
for his re-election. Last year the
President used his Independence Day
speech on 27 February to hint at his
availability for re-election, and
the national holiday offers a con-
venient date for the launching of
his drive for renomination. The
official campaign period, as set
by the Electoral Board, has already
begun.
Balaguer's announcement, when-
ever it comes, will signal a sig-
nificant upswing in electoral ac-
tivity and could possibly set off
urban violence. His foes are al-
ready bickering among themselves,
wever, and their ability to mount
an\ffective electoral challenge is
nist p ties, although they have
not yet mulated a firm strategy
for the campaign, can be expected
to continue to promote urban ter-
rorism. Their activities, how- 25X1
ever, stand little chance of side-
tracking a Balaguer bandwagon.
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eft those opposed to his re-
with little hope that he
resident
ential as-
dged the
nt-running--
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BAHAMAS TIGHTENS CONTROL OF FOREIGN BUSINESSES
New government\efforts to
control the foreign 'business com-
munity are again unsettling in-
vestment and political\circles
in the Bahamas.
Last week the Pindling ad-
ministration introduced legis-
lation to abrogate portions'-of
the Hawksbill Agreement, which
grants some local autonomy to=.
Freeport investors. In the gov-
ernment's view, the agreement
has allowed the Freeport business
sector to circumvent official
immigration controls. Pindling
has repeatedly contended that
businessmen have abused their
privileges by not hiring natives.
He is obviously staking out the
theme of "Bahama for the`Baha-
mians" as a prime political issue.
There is growing concArn among
Bahamians over the number of for-
eign nationals in the country.
There are about 72,000 foreigners
in an estimated population of
170,000.
The important Freeport Com-
munity, a group of largely US-
and British-owned business enter-
prises,
may challenge the legislation
on legal grounds. It is unlikely,
however, to have much success in
Bahamian court's. If the govern-
ment persists in its policies,
foreign investors will be dis-
couraged,,
There is probably widespread
public sympathy for Pindling's
position. The US consul general
in Nassau, however, reports that
"substantial opposition" within
the government is coalescing
around the ambitious Minister of
Education Wallace-Whitfield.
Although
Pindling has not exercised strong
leadership and a challenge to his
authority could develop, his ri-
vals would find it difficult to
obtain support if they confronted
him on such an emotion-laden is-
sue.
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SECRET
CARIBBEAN BLACK POWER CONFERENCE SCHEDULED
The second Black Power Con-
ference is scheduled for 9-12 July
in Barbados. Spontaneous disor-
ders could occur that would se-
verely tax Barbados' small secu-
rity force.
Bermuda's Roosev
a radical opposition p
who organized the confe
t Brown,
nce held
eived
in Hamilton last year, rd
permission from Barbados
i me
Minister Barrow to hold the`
mee t-
ably
ing. Although Barrow is pro
concerned about the effect th
conference could have on the
tourist industry, he apparentl
concluded that he could not af-
ford to try to block the meet'xf'c
and leave himself vulnerable Ao
domestic charges of a sellgdt to
the white establishment.
Last year's meep ng was a
generally peaceful Xffair that at-
tracted some 1,300 ''delegates,
largely from Ber da. The Brit-
ish, who are re 'ponsible for the
colony's exterfial affairs, util-
ized a "stop'. list" to keep out
known troublemakers, including
some from the US. The UK also
provided "a backup Marine force to
guard against possible disorders.
Barbados, however, with only a
680-man police contingent sup-
ported by a largely ceremonial
300-man reserve regiment, would
be hard pressed to cope with any
island-wide disturbances.
Despite the publicity ac-
corded the gathering last year,
few tangible results emerged, and
black power in the Caribbean has
remained generally an ill-defined,
nascent concept. indeed, over
the past year its organizational
strength has waned. In Jamaica,
for instance, black-power groups
have splintered, the movement's
newspaper-'has ceased publication,
and the--theme of black nationalism
has thus far failed to elicit a
si9riificant popular response.
Most of these difficulties, in
Jamaica and elsewhere, however,
can be traced to leadership and
financial problems.
Black power, in spite of its
current problems and limited po-
litical significance, remains a
potential rallying point for dis-
i-dent black groups in the Carib-
baan. Nationalism that is unmis-
ta.ably on the rise in the area
coukd encourage the growth of
radial factions. Several of the
Caribbean governments have been
highly'esensitive to the formation
of domestic black-power groups
and monitor their activities
closely.' Given this apprehension
and the black nationalists' con-
tinued facility for headline
grabbing, the July conference is
likely to attract international
attention. It is unlikely to
have significant short-term im-
pact on black-power fortunes in
the Caribbean, however. 25X1
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vVV0 V{.
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Secret
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
Special Report
Guatemalan Elections -A Defiance of History
Secret
N! 18
20 February 1970
No. 0358/7013
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SECRET
GUATEMALAN ELECTIONS-
A DEFIANCE OF HISTORY
Constitutional order has been the exception
rather than the rule in Guatemala, but President
Julio Cesar Mendez Montenegro hopes to reverse
this situation. If the elections scheduled for 1
March take place and a legally elected government
is installed in July, Mendez will be the third
elected president since 1821 to serve his full term.
Despite Guatemala's troubled history and its
present political problems, all legitimate political
forces as well as key military officers are ap-
parently determined to make the democratic
process work. A normal transfer of power could
mark the beginning of political maturity. Guate-
mala's lack of social and economic institutions is
so profound, however, and the exclusion of a
large majority of the population from national
life is so absolute that Guatemalan political de-
velopment will remain in a primitive stage for
some time to come.
A revolution in 1944 raised the possibility
that dynamic government could undo the feudal
socioeconomic system, break down the cultural
and linguistic barriers entrapping nearly half the
population, and generally modernize Guatemala.
Ten years of revolutionary government under
Juan Jose Arevalo and his successor, Jacobo
Arbenz, overturned the traditional power bases
and began to remold Guatemalan society. The
revolution fell increasingly under Communist
Special Report - 1 -
influence, however, and in 1954 Arbenz was over-
thrown by Carlos Castillo Armas. His restoration
of the old elite to its traditional place has left a
bitter heritage and an acceptance of extremism in
politics. Reformers have been indiscriminately
considered Communist by the conservatives,
whose inflexibility in turn makes the liberals
more willing to collaborate with the extreme left.
The arbiter of power in Guatemala, the mili-
tary, leans heavily toward conservativism and
anti-Communism. A military coup in March 1963
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was triggered by the return from exile of former
president Arevalo, a leftist, to run in the sched-
uled elections. The military government subse-
quently turned over some power to the elected
Revolutionary Party candidate, Mendez Monte-
negro, in July 1966.
Mendez promised the armed forces that he
would not interfere in their institutional affairs-a
promise he kept until 1968. During the first two
years of his administration, he showed keen
awareness of the political tightrope he had to
walk. In spite of his revolutionary rhetoric,
Mendez endorsed no bold reform, withdrew even
modest proposals in the face of opposition from
any important sector, and permitted the military
to lead a vigilante-style offensive against Commu-
nist insurgents and their presumed sympathizers.
Through the good offices of Colonel Guillermo
Mendez Montenegro, a respected military surgeon
and the President's brother, a cooperative rela-
tionship between the presidency and the armed
forces developed.
Mendez believes that his major contribution
to Guatemala's political progress will be the
modest but rarely achieved goal of survival in
office. His government has provided some
minimal progress in noncontroversial fields such
as school construction, road-building, and the
like. Since 1968 Mendez has several times risked
provoking the military by beginning to exercise
his constitutional prerogatives, relieving powerful
officers of their commands and making other
administrative decisions affecting the armed
forces. Most notably, he successfully halted the
extralegal repression of Communists and sent
three key military leaders who were deeply in-
volved to diplomatic posts abroad. If he does no
more than accustom the military to submit to
civilian authority, he will have accomplished a
highly important task.
Special Report
The Indian Carries a Heavy Load
Only a small minority of the population
participates actively in political life, and only
about one fourth of Guatemala's five million
people are politically aware. Guatemala is one of
the most backward of the Latin American coun-
tries by all social indices such as literacy, health,
income, or public welfare. About 44 percent of
the population is outside the Westernized society,
living in the centuries-old style of the Mayas. This
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group retains its Indian language, wears tradi-
tional Indian dress, and is considered inferior by
the Westernized majority. Political parties ignore
them during campaigns, merely trucking submis-
sive groups to the polls on election day.
More than half the Westernized group,
though culturally distinct from the Indians, lives
in similar poverty, illiteracy, and rural isolation. It
is only peripherally cognizant of the national
government and has no idea of influencing it. The
political parties solicit support from this group,
but only at election time.
Even among the minority that is actively
aware of the government and seeking to influence
it, there is little political development or activity
through organized pressure groups. The interest
of this minority is primarily personal and self-
protective, and there is no tradition of national
interest or of government dedicated to bringing
the prosperity of Guatemala City to the mass of
poverty-stricken citizens.
For the most part, political organizations in
Guatemala have been personalistic groups with no
political philosophy or with only ill-defined pro-
grams and attitudes. There is no tradition of
addressing issues, formulating policy, or continu-
ing contact with a constituency.
Of the four parties now legally registered,
the oldest and least personalistic is the ruling
Revolutionary Party (PR), which dates from
1957. Its heritage is the revolution of 1944 to
1954, and a large part of its active membership
entered politics and government during that
period. Self proclaimed as reformist and left of
center, it has operated during the past four years
Special Report
Mario Fuentes Pierdccini
government candidate
as a centrist, moderate organization. The PR's
leftist tradition and the leftist background of
many of its prominent members, however, still
make it suspect to some of the military and other
forces working to retain the status quo. Over the
years the PR, especially since it became the gov-
ernment party, has expanded its organization
throughout the country, even down to the hamlet
level. It has the best coordinated propaganda
machine and the greatest resources of all the
parties. The PR is conducting the most modern
electoral campaign in Guatemalan history this
year, making heavy use of television, radio, the
press, and other propaganda media.
The PR's presidential candidate, 49-year-old
Mario Fuentes Pieruccini, has evolved from a
little-known party warhorse to a national figure.
Fuentes was a co-founder of the party, partici-
pated in the 1944 revolution, and has served as
president of the Congress. He is a successful
lawyer and is highly respected within his party.
He belongs to the PR's moderate reformist ele-
ment. His most recent government position was
that of minister of finance, which he resigned to
accept the presidential nomination.
Fuentes' running mate, Oscar Castaneda
Fernandez, strengthens the slate by virtue of his
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? Flores
Special Report
GUATEMALA ya
'Chiquimula
Midd:kesex'
BRITISH
HONDURAS
20 February 1970
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S1 JK]i'l
apolitical reputation and his respectability, which
broadens Fuentes' appeal beyond partisan
bounds. Although the party has engaged to some
extent in smear tactics, Fuentes has not. He has
promised to renounce the presidency if he fails to
win a popular plurality and the election is thrown
into Congress. Fuentes is committed to an honest
election and is eager to avoid even the appearance
of fraud. To this end, he successfully urged the
government to request election observers from
the Organization of American States.
The PR campaign has emphasized stability,
continuity, and peaceful revolution. The party
has promised to help the agrarian sector through
loans, credit, technical assistance, electrification,
and by building roads. The private sector has been
promised institutional stability and government
cooperation. For the general public, education is
to be improved and free textbooks granted. Be-
lieving that a large voter turnout is to its advan-
tage, the PR's principal slogan is, "The vote is the
way."
The confidence of the party leadership that
it will win both the presidency and a majority in
the Congress has been bolstered by polls. The
Guatemala City electorate, which accounted for
one third of the PR vote in the 1966 election, is
being given special attention. The capital, with
one fifth of the voters, is also the psychological
and physical seat of power. The PR faces its
strongest opposition from both the right and the
left in the capital city, whereas in most of the rest
of the country the PR is competing primarily
with only one opposing force. Party leaders are
concerned that unless the PR makes a good show-
ing in the city, the legitimacy of its expected
victory in the rural areas will be seriously ques-
tioned.
Special Report
The political right includes the National Lib-
eration Movement (MLN), whose tradition is that
of the antirevolutionary "liberation" of Castillo
Armas in 1954, and the Democratic Institutional
Party (PID), a contrived organization set up by
the military regime that ruled from 1963 to 1966
as the government party for the 1966 elections.
The rightist forces for the most part serve what
might be called the oligarchic interests. The PID
has almost no constituency of its own, but is
made up of wealthy landowners and coffee grow-
ers. The MLN includes a respectable conservative
element, fanatical extremists
most of the military
commissioners hw serve the military's inter-
ests and act as an informal intelligence net, and
nonpartisans who are fearful of the banditry and
insurgency that plague the country and believe
that strong action against criminals and subver-
sives is needed.
The right's standard bearer, Carlos Arana
Osorio, is the champion of the anti-Communists.
He is a caudillo whose fame stems from his leader-
ship of the antiguerrilla campaign in the northeast
in 1967-68. Arana's background makes him a
Carlos Arana Osorio
rightist candidate
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prime target for Communist terrorists
Arana's need for bodyguards an
close security has restricted his personal appear-
ances, and he has used small, informal meetings
rather than rallies in his campaign. He is an out-
spoken law-and-order advocate, and war on crimi-
nality, in essence, is the only string for his bow.
The MLN professionals, in trying to broaden his
campaign, have fashioned a platform dedicated to
better public administration, financial stability,
an increase in national productivity at all levels,
social development, and defense of Guatemala's
claim to British Honduras.
Arana is generally credited with personal
integrity and good will. Although he has tried to
broaden his appeal beyond the caudillo image, he
projects essentially and unabashedly as the strong
man most able to end lawlessness in the country.
His running mate, Eduardo Caceres Lenhoff, is an
independent rightist whose honesty and experi-
ence in government add respectability to the
ticket. The MLN-PID coalition nevertheless suf-
fers from the lack of a responsible image. The
widespread violence that attended the anti-
Communist campaign in 1967 and 1968 appalled
many Guatemalans, and some of the cutthroat
toughs on whom Arana relied during that period
remain part of his entourage. Much of the MLN
leadership is extremist and noted for its habitual
conspiring and political trouble making. The coa-
lition may have gained some sympathy, however,
by virtue of its continual victimization by the
Communist terrorists, whose prize targets are
rightist leaders and their supporters.
The Christian Democrats (DCG), the only
registered leftist party, has made its credentials
available to a melange of groups that ostensibly
represent the democratic left but in fact have
Special Report
close ties with the extreme left. By sponsoring
this so-called "national front," the_ already
divided DCG has exacerbated differences within
its own ranks, and these differences have been
exploited by the young radical wing of the party
and by the Communist-tinged left. Four of the
DCG legislative candidates may be members of
the Communist Party, and eleven others have had
such connections in the past.
The DCG's presidential aspirant, Jorge Lucas
Caballeros, is touted as the "clean hands" candi-
date, a ploy that has provoked a mudslinging
contest with the government party. The PR,
countering DCG charges of corruption, has re-
vived stories of Caballeros' implication in a coffee
scandal during his service as minister of economy
in the recent military government, and is empha-
sizing his military past by referring to him as
"Major Caballeros." Caballeros recognizes the
improbability of his winning the presidency, but
he anticipates playing a key role if neither of the
other two contenders wins a majority. His run-
ning mate, Edmundo Lopez Duran, was expelled
by the PR in 1967 for publicly criticizing the
administration's counterguerrilla campaign, and
he is little known outside his home state.
The DCG suffers from a serious shortage of
campaign funds, and its near bankruptcy is
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reflected in its feeble campaign effort. Neverthe-
less, it is strongly supported in Guatemala City by
leftist intellectuals and retains some base of sup-
port in communities near the capital and in the
Indian highlands. The DCG is tied less to the old
power structures than the other parties and there-
fore may have some appeal among the non-
partisan middle class and the various alienated
segments of society. The leftist front has stressed
the need for effective social revolution to eradi-
cate the conditions that spawned the guerrilla
movement. The nation requires change, according
to the party, especially through administrative,
educational, agrarian, and fiscal reform. The DCG
attacks the "false revolutionary" stance of the
government party and uses the line, "Get what
you can from the PR, but vote your conscience at
the polls." Realistically, the party hopes to elect
to Congress five or more deputies (it has none
now) whose "intellectual superiority" would per-
mit them to use the legislative forum to enhance
the party's prestige. The PR leaders are concerned
with competition from the DCG, which they be-
lieve will appeal to voters on the left who are
dissatisfied with the social accomplishments of
the Mendez administration.
Two factors inhibit confidence that a normal
transfer of power will occur. One is the belief
within each party and legitimate political force
that all the others are predatory. The mutual
distrust and real fear of one another create a
climate of apprehension and provoke cycles of
defensive contingency planning and conspiracy.
The other threat, more easily defined but as diffi-
cult to measure, is the subversive one.
Special Report - 7 -
Although each party apparently has an
honest desire for proper elections, all have shown
a congenital inability to resist the sort of elec-
tioneering tactics that undermine stability. Both
opposition parties have harped on the govern-
ment's control of the election machinery and
have warned of impending fraud. Both the left
and the right have also accused the official party
of harassment and intimidation. It is popularly
believed that the PR is using official resources in
its campaign. The right, by floating rumors that
military cliques are plotting to overthrow the
government, has played on the fears of the gov-
ernment and of leftist parties that military inter-
vention will occur. The DCG, exploiting the gov-
ernment's inability to end Communist terrorism,
claims. falsely that its presidential candidate was
the victim of an assassination attempt.
The candidate of the right, Colonel Arana,
commands significant respect and support in mili-
tary circles. In his public reiteration that "he will
not accept defeat" if the elections are fraudulent,
lies an implicit threat that he would use his army
support to seize the government. The confidence
of Arana and his followers that he will win an
honest election despite indications that the gov-
ernment party is the likely victor adds credibility
to this threat. Whatever the result, the radical
wing of the rightist coalition probably will not
admit that it lost honestly to the PR, and will
exhort Arana to seize the presidency with his
military support. Because Arana would be likely
to succeed in such an attempt, a regular succes-
sion depends in large measure on his evaluation of
the fairness of the election.
The government is fully aware of the threat
from Arana and has moved to undercut his re-
sources. President Mendez made numerous com-
mand shifts that deprived Arana loyalists of
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important troop concentrations. The impact
within the armed forces and the effect, if any, on
their mood is not yet clear. There seems to be an
unusual lack of unity in the officer corps now,
although it may be more apparent than real. The
unprecedented concentration in Guatemala City
of reputedly "left-leaning" commanders in con-
trol of the troops there has led to talk, probably
unfounded, that they would forcibly prevent an
Arana victory.
A persistent goal of the Communist in-
surgents has been to provoke a military take-over
of the government, thus creating a climate of
repression they believe would benefit them. The
insurgency movement has its roots in a young
army officers' revolt in November 1960, fol-
lowing which the dissidents established a guerrilla
base in the northeastern mountains. The guerrilla
movement was taken over by Communists, and
guerrilla and terrorist attacks have plagued Guate-
mala ever since. They provided the most serious
threat to stability during the military regime
(1963-66) and in the early days of the incumbent
Mendez government. Under Mendez, special units
of the army and police launched an all-out attack
on the subversives, employing clandestine groups
for an assault on the Communists. That program
was highly effective in disrupting the Commu-
nists' networks and bases and in inhibiting con-
tinued support from their sympathizers. The
attendant wave of violence, however, was indis-
criminate. Although it presumably shrank the
insurgent ranks significantly, it also victimized
hundreds of innocents. The campaign was halted
in March 1968, and Communist activity since
then has concentrated on re-evaluating assets,
regrouping, training, tightening the organization,
and recruiting.
Secrecy and compartmentation within the
Communist organizations have been very effec-
Special Report
tive, and evaluation of the current Communist
threat is at best imprecise. The ability of the
Communists to create a serious crisis in Guate-
mala is clear, however. They have an undisputed
capability for hit-and-run terrorist acts, in which
they engage with some regularity. Their crimi-
nality is professional; they choose targets selec-
tively and they effectively execute well planned
operations. Assassinations and kidnapings are
their specialty in urban areas. They are believed
to have acquired several hundreds of thousands of
dollars from kidnapings in the past three months
alone. Their style of operation has been to alter-
nate periods of activity and quiet.
They have, in fact, stepped up
their activity to the extent that the government
has been under extreme pressure to enforce strin-
gent security measures. A minimum state of emer-
gency to grant the police extraordinary powers
without limiting the election campaign was in-
voked, but terrorism has continued sporadically
since early December. A main target has been
security personnel, nine of whom have been assas-
sinated in this period.'Two prominent public fig-
ures, a respected conservative candidate for
mayor of Guatemala City and a highly regarded
editor of Guatemala's largest newspaper, were
also assassinated. In December the subversives
also set a series of firebombs in downtown Guate-
mala City, causing damage estimated in the mil-
lions.
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Although the pressures and tensions created
by these acts have been heavy and disruptive, the
short time remaining until the balloting on 1
March makes the outlook for holding elections
good. There remains the possibility, however, that
the terrorists can manage one spectacular act,
such as the assassination of one of the presidential
candidates, that might ruin the electoral process.
POSTELECTION PROSPECTS
The postelection period may well develop
into one of crisis. If no presidential candidate
secures an absolute majority of the popular vote,
it is up to the Congress to choose, between the
two candidates with the highest popular vote. The
constitution, however, is unclear as to whether
the outgoing or incoming congress has that re-
sponsibility. The government party has a comfort-
able majority in the incumbent legislature, but if
it lost that advantage in the new congress, the
issue of which congress should choose the chief
executive could be a difficult one to solve peace-
fully.
During the election period, President Men- 25X1
dez has resisted initiating a full anti-Communist
program. He believes that doing so would en-
courage violence, which in turn would diminish
the vote for the government party and increase
that for the right. If he is confronted with a
continuing high level of Communist activity after
the elections, however, he may turn again to the
extralegal method of counterattack, especially if
he believes this would undercut any rightist coup
movement.
If the PR's Mario Fuentes is victorious, as
presently seems likely, there will almost surely be
some disruptive action by extremist backers of
Carlos Arana. If Arana himself heeds the blandish-
ments from coup-prone elements, a serious crisis
would be all but inevitable.
Special Report -9
The prospects for the peaceable fulfillment
of the constitutional schedule for the installation
of a new government, therefore, are not bright. If,
however, the current commitment by all the
major political forces in Guatemala to "make a
beginning" prevails over traditional antidemo-
cratic habits, the country could begin to see
progress toward coping with the nation's multi-
tude of social and economic ills.
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Secret
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
Special Report
Finland Prepares for Parliamentary Elections
Secret
NS 13
20 February 1970
No. 0358/70A
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During the past five months representatives of Finland's eight political parties
have been crisscrossing the nation in an attempt to gain support in the parliamentary
elections scheduled for mid-March. At issue is the record of the two center-left
coalitions that have governed Finland since 1966. The burden of defending their
performance has fallen on the Social Democrats, who, as the largest party in both
coalitions, have twice held the prime ministership. The performance of the other
major coalition partners, the agrarian Center Party and the Communist-dominated
Peoples Democratic League, also is being debated, however. Political polls forecast a
shift away from the parties in power, but the necessity to gain Moscow's acceptance
of any Finnish coalition would seem to rule out any significant change in the
government that will take office after the March elections.
A record three million Finns will have a
chance to express their opinion of four years of
popular front government when they go to the
polls on 15 and 16 March. In the face of the
doubts held by many political observers at home
and in other Western countries that a government
coalition including the Communists could work,
the Finns have succeeded in carrying out a wide
variety of economic and social reforms under the
popular front's auspices and have lived through
perhaps the most stable parliamentary term in
Finland's history.
Considerable prejudice against the Commu-
nists had to be overcome for this achievement to
be realized. At the birth of the republic in 1917,
made possible by the rapid collapse of Russia in
the wake of the October revolution, the Finns
were aware that their independence rested on the
weakness of the Bolsheviks rather than on their
sincere subscription to the principle of self-
determination. This was underlined when civil
war broke out early in 1918 between the bour-
geois "whites," openly backed by imperial
Germany, and the socialist "reds," surreptitiously
Special Report
backed by Soviet Russia. As the "reds" were
forced back toward the Soviet border, their ra-
dical wing captured leadership of the cause, and
after their defeat, the radicals became the nucleus
of the Finnish Communist Party, founded in Mos-
cow in 1918. For the next quarter of a century
the Finnish Communists, based in the Soviet
Karelo-Finnish region athwart Finland's eastern
border, launched propaganda and infiltrated
agents to subvert the bourgeois republic.
In 1944, following Finland's overwhelming
defeat at the hands of the USSR, the Finnish
Communists, as a "democratic" party, were al-
lowed to re-establish themselves in their home-
land and were invited to take part in the govern-
ment. This honeymoon lasted until 1948, when
the Communist minister of interior advised
Paasikivi, then president, that a Communist take-
over was in the works. With the example of
Czechoslovakia fresh in their minds, the army and
police swiftly nipped the planned coup in the bud
and, following parliamentary elections that year,
the Communists were sent into political exile,
which was to last 18 years.
During the first half of this exile Finland was
governed by a "red-green" coalition of the Social
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Democratic and Agrarian (subsequently Center)
parties. The Social Democrats themselves had
been in political exile during the first decade of
the republic's existence because of their identifi-
cation with the losing "red" cause in the Civil
War. Their willingness to accept the bourgeois
republic, as well as their status as the nation's
largest political party firmly grounded in the
trade union and cooperative movements, pro-
tected the Social Democrats during Finland's
brief flirtation with some of the elements of
fascism in the early 1930s, and these qualities
finally convinced the parties on the right that
they would be a reliable coalition partner. Even
while the Social Democrats were gaining respecta-
bility on the right, however, they were subjected
to constant Communist efforts to infiltrate and
subvert the labor movement, and were labeled as
"social fascists" or "social traitors." The ire of
the Soviets and the Communists was particularly
aroused by the Social Democrat's energetic sup-
port of the struggle against the USSR between
1939 and 1944. After the Finns were defeated,
the Soviets made sure that the Social Democratic
Party's chairman, who served in the all-party coa-
lition during the war, was tried on charges of
being "responsible for the war" under the terms
of an ex post facto law that was contrary to the
Finnish constitution but was enacted under So-
viet pressure.
In the immediate postwar period, the Social
Democrats were fervently wooed by the Commu-
nists, who formed a Peoples Democratic League
hopefully as a vehicle for their joint efforts. Ex-
cept for a small minority on the far left, the
Social Democrats refused to give way to these
blandishments and instead stubbornly fought the
Communists' efforts to take over the labor move-
ment. After the Communist setback in 1948, the
Soviets renewed their attacks on the Social Demo-
cratic leadership. By a combination of threats and
bribes, the USSR brought about a split in the
Special Report
party and trade union movement, which resulted
in the formation of the splinter Social Democratic
League. With the cooperation of the Agrarian
(Center) Party led by President Urho Kekkonen,
the Soviets succeeded in excluding the Social
Democrats from the government from 1958 to
1966.
The Agrarians, representing the more pros-
perous segments of the Finnish rural population,
had been a junior partner in nearly all of the
nation's prewar governments. Only after the other
bourgeois parties had discredited themselves in
Soviet eyes by refusing to heed Urho Kekkonen's
wartime plea for peace with Moscow was the road
clear for the Agrarians to move up to national
leadership. The image of Kekkonen's party was
enhanced by the success of its efforts to resettle
the Finns displaced by the loss of Karelia to the
USSR and to return the economy to normal after
completing payment of heavy postwar repara-
tions.
Kekkonen, as prime minister during most of
the period from 1950 to 1956 and as president
since then, concentrated his efforts in the area of
foreign policy, and gained the reputation, war-
ranted or not, as the only Finn who could deal
with the Russians. By association, this reputation
was extended to Kekkonen's Agrarian (Center)
Party generally, and as a result, the post of for-
eign minister virtually became the party's prop-
erty. The Agrarians were not reluctant to use
their position as guardians of the so-called Paasi-
kivi-Kekkonen foreign policy line-neutrality
friendly to the Soviet Union-to act as a judge of
the reliability of their major competitors for the
non-Communist vote, the Social Democrats and
the conservative National Coalition Party. At the
same time the Agrarians entered into competition
with the Communists for the title of the party
most useful in facilitating good relations with
Moscow.
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Despite successes in the political wars, the
Agrarian Party leadership, and particularly Presi-
dent Kekkonen, soon realized that the balance
was gradually going against it. The primary reason
for this was the erosion in the party's constitu-
ency as a result of Finland's transformation from
a rural, agrarian society to an urban, industrial
one. Not only were Finns moving off their farms
into provincial towns, but there ensued a great
migration from the poorer, traditionally Agrar-
ian-and Communist-north and east to the more
prosperous south and southwest, areas of tradi-
tional Social Democratic and conservative pre-
dominance. In an effort to project an image that
would have more appeal for uprooted Agrarian
adherents now in the cities, the party in 1965
changed its name to the Center Party.
A second reason for the shift away from the
Center Party was the success of the Social Demo-
crats and Communists in refurbishing their image.
Persons in the Social Democratic leadership who
were obnoxious to the Soviets either retired or
resigned, and an "opening to the left and to the
east" was espoused. The party not only strove to
bring its one-time members in the splinter Social
Democratic League back into the fold but also
extended feelers to the Communists and radicals
in the Peoples Democratic League. The leaders of
the Social Democratic Party attempted in addi-
tion to present a more positive image in their
relations with the Soviet Union and advocated a
more activist approach in carrying out Finland's
neutral foreign policy.
The Communists responded affirmatively to
the Social Democratic initiatives, thanks to the
rising influence of a new generation of leaders
forming the liberal wing of the party. Aware that
old Communist appeals were increasingly irrele-
vant to the conditions of Finnish society, the
Special Report
liberals brought about a shift of emphasis in party
doctrine from violent, revolutionary change to
gradual reforms through parliamentary means.
Cooperation with all "progressive" groups was
sought, and to this end, election alliances were
made with the splinter Social Democratic League
throughout the country. Approaches to the Social
Democratic Party were unavailing because of the
latter's standing policy against forming election
alliances. The Social Democrats displayed greater
willingness, however, to cooperate with the Com-
munists in other areas, especially in the splintered
trade union movement, than at any time since
1948.
The damping down of disputes on the left
half of the political spectrum, combined with an
appearance of respectability and of renewed initi-
ative resulted in a landslide for the Social Demo-
crats. In the 1966 elections they picked up 17
additional seats in Parliament, climbing back from
their 1962 low point, and they increased their
support by 44 percent, or nearly 200,000 votes,
while the vote for all parties increased only
70,000. The only other party to pick up seats in
Parliament was the Social Democratic League,
which did so at the expense of its electoral al-
liance partner, the Communist-dominated Peoples
Democratic League. After the Communists saw
how cleverly their junior partner had turned elec-
toral alliances to its advantage, they vowed that
the number and terms of such future alliances
would be more rigorously controlled to yield
greater benefit to the Communists.
THE PAASIO GOVERNMENT, 1966-1968
President Kekkonen, concerned about the
power position of his Center Party, called on the
Social Democrats, as the largest party and the
only true victors in the 1966 election, to form the
broadest possible coalition, including the Commu-
nists. The way for such an idea, unthinkable only
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Parliamentary Seats
by Election Districts, 1970
Lapland
9
Oulu
18
Vaasa
19
(north)
13
Central
Finland
11
13
Hame
(south)
14 4
Kuoplo
11
Mikkeli
10
Kymi
15
Helsinki
22
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North
Karelia
8
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a short time earlier, had been carefully prepared
by the President in the years immediately pre-
ceding the election. In a series of addresses he
deplored the divisions in the nation resulting from
the 1918 Civil War and the isolation of the Social
Democrats and Communists, representing half the
electorate, from the center of power. Some ob-
servers of the Finnish political scene believed that
Kekkonen was, through an act of consummate
statesmanship, attempting to make amends for
the rancor his own actions had created during the
postwar period, but most believed that Finland's
master politician had merely seen the handwriting
on the wall earlier than had his contemporaries.
In any case Social Democratic Party chair-
man Rafael Paasio agreed to become prime min-
ister, and after more than two months of rugged
negotiating, put together a coalition including the
Social Democrats, Center, Peoples Democrats
(two of whom were Communists), and the splin-
ter Social Democratic League. The Center Party
occupied the Foreign and Defense ministries. It
agreed to give up the Interior Ministry to the
Social Democrats, moreover, only if the police
and border guard were subordinated to the minis-
ter of defense acting as "assistant" to the minister
of interior. The Social Democrats reached into
their ranks of technicians outside Parliament to
staff the key ministries of Finance and Education,
in which areas they intended to carry out wide-
ranging reforms. As for the Communists, only
ministries of secondary importance were offered,
and each of these positions was backstopped by a
Social Democratic or Center appointee to moni-
tor Communist activity.
For much of its first year in office the Paasio
government devoted its energies to adjusting to
the new political line-up. It soon became apparent
that Paasio himself was no leader, despite his
years of service in the party and Parliamen
Special Report
soon became apparent that he was unable to
establish good working relations with either Presi-
dent Kekkonen or the Soviets. Alarmed at the
frittering away of the party's opportunity to
prove itself, younger Social Democrats pushed
through a resolution that no man could serve
simultaneously as party chairman and prime
minister. Paasio, uncomfortable as prime minister,
opted for retaining his party post and resigned
from the government in early 1968 following the
election of President Kekkonen to a third six-year
term.
THE KOIVISTO GOVERNMENT, 1968-1970
To replace Paasio the Social Democrats
named Mauno Koivisto, a political unknown from
the cooperative and workers' saving bank move-
ment, who had been drafted in 1966 into the post
of minister of finance. Koivisto, with the advan-
tages of a working-class background, a lack of
identification with any group in the party, rela-
tive youth, and good looks, proved to be a skillful
minister, carrying out a budget reform and a
successful devaluation in late 1967. He also dis-
played a refreshing candor in his relations with
the public, was fluent in both Swedish and Rus-
sian, and seemed to be acceptable to Kekkonen
and the Soviets. All these qualities created a cer-
tain euphoria in the party, and he was soon being
touted as presidential timber in 1974. In an effort
to cut Koivisto down to size, the Center Party
demanded that, in addition to presidential hope-
ful Foreign Minister Ahti Karjalainen, the new
cabinet include a third presidential hopeful, the
former prime minister and chairman of the Center
Party, Johannes Virolainen, as minister of educa-
tion. By so doing the Center Party hoped to take
over an area where the Social Democrats had
earned considerable credit by introducing a com-
prehensive school reform, closing the sharp divi-
sion between the academic, technical, and voca-
tional courses of study in the secondary schools,
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Composition of Parliament and Government Coalition, 1968-1970
5l# fkNMEiNT COq[ 't l* Social me xati 'arty
and making university admission available to a
larger share of the school-age population. Besides
the shifts brought about through jockeying be-
tween the Social Democratic and Center parties,
the Koivisto cabinet was expanded to accommo-
date the Swedish Peoples Party, which left the
opposition because it believed that the interests
of Finland's Swedish-speaking minority would be
better served if its principal political exponent
were in the coalition.
During its term in office, the Koivisto gov-
ernment has devoted nearly all of its energy to
transforming the economy. In the wake of the
1967 devaluation, a broad range of reforms in
fiscal, monetary, wage, price, income, and em-
ployment policy have been introduced. The
thrust of these reforms has been to contain price
inflation, promote private domestic investment,
reduce government unemployment assistance, and
promote labor mobility through retraining. The
reforms are also aimed at phasing out marginal
agricultural production and reducing surpluses,
encouraging industrial diversification and export
promotion, separating wage agreements from the
cost-of-living index, increasing housing construc-
tion in urban areas, removing barriers to trade,
and promoting closer economic relations with
Special Report - 6 -
Finland's Nordic neighbors. With the assistance of
numerous bright, young Social Democratic tech-
nicians and the strong backing of President
Kekkonen, Koivisto has been able to chalk up a
remarkably successful record of accomplishment
in a relatively short period of time.
COALITION SHORTCOMINGS: PROBLEMS
FOR THE SOCIAL DEMOCRATS
The coalition's record has been marred, how-
ever, by instances of failure. In some cases these
could not be helped, but in other cases they
stemmed from Koivisto's political inexperience.
The most nagging problem has been the unem-
ployment rate, which soared to 4.6 percent in
mid-1968, the highest figure in a decade, and
which has tapered off only gradually since then.
The Social Democrats have been attacked not
only by the opposition but also by the other
parties in the coalition as insensitive to the needs
of the people. Despite this criticism, Koivisto has
persisted in his policy of reducing government
assistance through the dole and public works,
hoping that the unemployed who are concen-
trated in the poorer agricultural and forest areas
of the north and east will decide to migrate to the
more prosperous, labor-deficient industrial areas
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of the south and southwest. Unfortunately, once
the rural poor pull up roots, they tend to keep
moving until they reach prosperous Sweden,
which now has employed nearly 100,000 Finns.
If this trend persists and the birth rate continues
to drop, Finland's total population could eventu-
ally show a net loss at a time when its economy
needs labor.
Another area of controversy has been Koivis-
to's identification with the aim of full participa-
tion by Finland in the proposed Nordic Economic
Union (NORDEC). At first the other political
parties in and outside the government were con-
tent to let Koivisto carry the ball on this proposal
in the belief that it would never get off the
ground. However, once the project began looking
feasible, the Communists, under pressure from
their conservative wing, began attacking the idea
as inimical to Finnish-Soviet relations. In addi-
tion, Foreign Minister Karjalainen, with the back-
ing of the Center Party, set about to torpedo the
project because he was piqued that Finland might
gain a foreign policy success not directly attrib-
utable to his own efforts. Koivisto, enraged at
these eleventh-hour betrayals, threatened to pull
Finland out of NORDEC negotiations, resign
from office, and place the issue before the voters.
The outrage expressed both at home and in the
other Nordic countries at this indiscreet display
of political squabbling over an issue vital to the
interest of the whole Nordic area forced Koivisto
and his adversaries to backpedal and restore grad-
ually the status quo ante. In the process Finland
and its leaders came out looking pretty foolish.
A third area of dispute has been the govern-
ment's agricultural policy. The nation is burdened
with a butter and grain glut caused by agricultural
subsidies enacted under Center Party sponsorship.
The Social Democrats have advanced nearly every
expedient to reduce these surpluses short of des-
troying them, but these proposals have been
Special Report
blocked by the Center Party. The agricultural
reforms agreed on-reducing land under cultiva-
tion and adjusting prices paid to farmers-are long
term in nature, and the continued growth of
agricultural surpluses meanwhile has become an
acute embarrassment. For its part, the Center
Party continues its attack on Social Democratic
policy, even resorting to the argument that
studies released to the press showing that mar-
garine produces less cholesterol than butter are
part of a socialist plot against the farmers.
OTHER PARTY POSITIONS
CENTER PARTY
In addition to agriculture, the Center Party
has dusted off foreign policy, and particularly
relations with the Soviet Union, as an election
issue. Despite the protests of the other political
parties that the principles of Finland's policy as
expressed in the Paasikivi-Kekkonen line are
universally accepted, the Center Party persists in
touting its own skills in advancing Finland's inter-
ests. Thus, it has pointed out that the favorable
response to the Finnish initiative on the European
security conference and the selection of Helsinki
for the opening of the strategic arms. limitation
talks (SALT) are proof that Center Party strategy
on behalf of Finnish neutrality has received inter-
national recognition.
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A new issue has been developed for the
Center Party by Education Minister Virolainen in
the debate over reform of the universities. In an
attempt to pander to the youth, which has be-
come bored with the Center Party, Virolainen,
with silent Communist backing, came down hard
for the principle of "one man, one vote" in uni-
versity administration. If adopted, this would
mean that the universities would be turned over
to the students, who have an edge of ten to one
over the faculty. The Social Democrats have de-
nounced this stand as sheer opportunism, and
with the aid of the parties on the right they
would probably squelch the proposal if it were
ever to come to a vote. Still another issue, welling
up from the Center Party's grass roots, is dissatis-
faction with the broadcasting policies of the state
radio and television. In the eyes of Center Party
voters, as well as of supporters of right-wing par-
ties, the Finnish Broadcasting Company, under its
new Social Democratic director, is too left wing,
both in its presentation of news and documen-
taries, and in its willingness to satirize such
shibboleths as patriotism, motherhood, and re-
ligion, and to slip in items not suitable for
children. The Social Democrats have responded to
these attacks only by pointing to bourgeois
dominance of the press and publishing media.
The Communists have been silent in the elec-
tion campaign until quite recently. This is not so
much a reflection of their satisfaction with the
policies of the coalitions in which they have par-
ticipated as the result of a split between the
party's liberal and conservative wings. Tension
between the two factions built up throughout the
early 1960s as the liberals gradually occupied
positions of influence in the party and modern-
ized its program. These differences were inten-
sified by the liberals' condemnation of the Soviet
invasion of Czechoslovakia. The extent of the
Special Report
O, K. , let's try one more time -- for the sake of the child.
A
Hehingin SanOmar, 9,1anwry 1970
split was not revealed to the public, however,
until the party congress last April. At that time
the conservatives walked out in protest against
the liberal composition of the party's central
organs and thereupon began organizing parallel
party organizations of their own to lay claim to
Communist loyalties. The Soviets, alarmed at thy
possible demise of a major West European Com-
munist party-the only one to sit in a govern-
ment-forced the adversaries to negotiate until a
compromise was reached. The two sides came to
grudging agreement in January, but neither side
has any confidence that the arrangement will last
beyond the election. Many believe that the
damage done to the party and its front, the Peo-
ples Democratic League, is already too great to be
repaired before the elections, and that a con-
siderable number of the League's supporters will
stay home in protest.
Only now are the Communists developing a
program. For the most part they are drawing on
the arsenal of charges developed by the conserva-
tives in their attack on the liberals' participation
in the center-left coalition. The essence of their
argument is that the government is spending too
much, forcing a rise in taxation, and yet is not
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7r,k.~is r, 1
spending enough to obtain increased pensions,
more housing, and greater state control over or
participation in such fields as banking, insurance,
and medicine. In addition, the Communists
charge the Social Democrats with selling out to
the bourgeoisie by their failure to tax corporate
profits more heavily, to carry out a thorough-
going tax reform that would place heavier bur-
dens on the wealthy, or to introduce industrial
democracy by giving employees a greater voice in
running their places of work.
Many of the same arguments are repeated,
but with different emphases, by the conservative
National Coalition Party. Thus, in their interpella-
tion of the government in Parliament last fall, the
conservatives attacked the imbalance in public
finances, the failure of the government to solve
agricultural and unemployment problems, higher
taxes, and "creeping socialism." At the same time
the conservatives denounced as excessive most of
the controls imposed on the economy in the fight
against inflation and called for increased military
expenditures. Koivisto's reaction to these incon-
sistent demands has been low key; he has pointed
out that structural economic changes are costly
and long term, and that the government is trying
to minimize their harmful side effects.
*Qe
Natio na
Coalition Party
Koivisto
~~
(l
Special Report
The only other party to attract national at-
tention has been the radical rightist Rural Party,
the brainchild of former Center Party member
Veikko Vennamo. The Rural Party mustered only
enough votes in 1966 to get one seat in Parlia-
ment, but by aiming demagogic appeals to the
electorate in both the countryside and the cities,
its share of the vote jumped from 1 percent in
1966 to 7.3 percent in the 1968 local elections.
Vennamo also ran in the 1968 presidential elec-
tion and scored an impressive 11.3 percent as a
result of his no-holds-barred campaign aimed at
President Kekkonen. The Vennamo phenomenon
has refused to disappear, and as seen in two
special elections last fall as well as in political
polls, the party's strength continues to grow, to
the dismay of the other parties. The Rural Party
particularly draws support from the "backwoods"
Communists and supporters of the Center Party,
who have become alienated because they feel
party leaders based in Helsinki are willing to
desert party principles to gain a place in the
government. The party is irresponsible and has no
program except to attack the government con-
stantly. During the presidential campaign,
Vennamo even went so far as to call for revision
of Finland's eastern frontiers. For obvious reasons
the Rural Party has been regularly denounced by
Moscow as a "revival of fascism" and harmful to
continued good Finnish-Soviet relations.
POLITICAL TRENDS AND POSSIBLE
OUTCOME
The attitude of the Soviet Union is decisive
to the outcome of the March election. If it were
not for Finland's geographic location, the trend
to the right noted since 1966 in such barometers
as the local elections of 1968 and numerous pub-
lic opinion polls would probably result in a bour-
geois victory and a right-center or right-socialist
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Parl elections
Local ule,o ons
Opinion Poll
Party
3/66
10/68
12/69
Hural Party
1,0
73
8.0
National Coalivon Party
13.8
16,1
17.0
Liberal Party
6.5
5.5
8.0
Swedish Peoples Party
6.0
5.6
6.0
Other 0.5 4.0
100,0 100.0
coalition government. Moscow, however, over the
years has taken upon itself the task of passing on
the acceptability of different Finnish political
combinations. No matter how the electorate
votes, Finnish politicians realize that the right-
center alternative, which would include Ven-
namo, would not be tolerated by the Soviets,
while the right-socialist combination, even with-
out Vennamo, would also be repugnant. Thus, the
Finns are limited to choosing from a center-left
combination of varying breadth, an all-left gov-
ernment, an all-party coalition, a one-party
minority government, or a government of non-
party technicians. The last three options are
chosen usually in periods of national or parlia-
mentary crisis, and an all-left government would
not be possible, as it would not have a parliamen-
tary majority behind it. The most likely combina-
tion to emerge from the 1970 election, therefore,
will be a center-left combination similar to the
present one, with variations expanded slightly to
include the Liberal Party or diminished slightly to
exclude the Swedish Peoples Party.
Complicating the picture is the void sur-
rounding the post of prime minister. Some ob-
servers believe that the Center Party, as the largest
Special Report
single "bourgeois" party, would be given the man-
date for forming a government, despite its antici-
pated electoral losses, if the five "bourgeois" par-
ties between them managed to gain a "majority"
in Parliament. In such case, the most likely candi-
dates would be the old war horses, Virolainen and
Karjalainen.
On the other hand the Social Democrats will
probably remain as the largest party, regardless of
ideology, and the only coalition member likely to
come out of the March election with its party
base intact. Thus, they are very much in the
running for leadership of a new coalition. The
party's choice of candidates for the prime minis-
ter's post, however, is limited. The incumbent,
Koivisto, has already made it clear that he has no
stomach for the frequently ad hominem style of
political infighting practiced in Finland, and he
has stated for the record that nothing will make
him happier than to leave his post to return to the
job of Governor of the Bank of Finland. Koivis-
to's public statements on other subjects have con-
sistently demonstrated that he means what he
says.
On the other hand, there are no obvious
successors to Koivisto. The ambitious minister of
industry, Vaino Leskinen, is despised within his
Social Democratic Party as well as generally for
blatantly toadying to Moscow's wishes after
having once been a leader of the party's anti-
Soviet right wing. The most popular man in the
party and the architect of its 1966 victory, Kaarlo
Pitsinki, has been unable to persuade the Soviets
that he is politically reliable; thus blocked from
political advancement, he has withdrawn from
active political life to become the nonpartisan
governor of Uusimaa Province. Socialist intel-
lectuals, such as parliamentary foreign affairs
committee chairman Pekka Kuusi and political
- 10 - 20 February 1970
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 Approved For Release 2009/03/27: CIA-RDP79-00927AO07700010001-8
~r ~,tcr 1
scientist Pentti Viitta, and bright young bureau- therefore, that the reluctant incumbent may be
crats such as national labor mediator Keijo drafted to continue as prime minister to enable
Liinamaa and state secretary Paul Paavela, have him to reap the credit when his policies bear fruit,
made no enemies, but at the same time they have thereby promoting his chances in the 1974 presi-
no political base within the party. It is possible, dential election.
Special Report - 11 -
20 February 1970
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 Approved For Release 2009/03/27: CIA-RDP79-00927AO07700010001-8
Secret
Secret
Approved For Release 2009/03/27: CIA-RDP79-00927AO07700010001-8