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December 21, 2016
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June 4, 2008
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July 2, 1971
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Approved For Release 2008/06/04: CIA-RDP79-00927A008900020001-4 Secret DIRECTORATE OF INTELLIGENCE WEEKLY SUMMARY State Dept. review completed DIA review(s) completed. Secret 2 July 1971 No. 0377/71 Copy Approved For Release 2008/06/04: CIA-RDP79-00927A008900020001-4 25X1 Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 SECRET CONTENTS (Information as of noon EDT, 1 July 1971) Page Indochina: Action in North Laos . . . . . . . . . . . . . . . . . . . . . 1 Vietnam: Pressure South of the DMZ . . . . 2 Cambodia: A Welcome Respite . . . . . . . . . . . . . . . . . . . . . 3 Sino-US Relations: Outlines of the Taiwan Issue . . . . . . . . . . . . . . . . 6 Party Building in Communist China: Not All Ha , Stayed the Course . . . . . . . 7 Indonesia Prepares for the Polls . . . . . .. . 9 Mutual Force Reductions: Heavy Summer Diet for NATO . . . . . . . . . . . 10 Poland: Gierek Steamrolls Ahead . / . . . . . . . . . . . . . . . . . . . 11 Tito Raises Anti-Sovietism Another Not . . . . . . . . . . . . . . . . . . 12 Accord Reached on UK Accession to ropean Communities . . . . . . . . . . 13 France: Pompidou as Europe's Maste/Builder . . . . . . . . . . . . . . . . 14 Malta-UK: Hard Bargaining Will Dor{iinate Talks . . . . . . . . . . . . . . . 14 Organization of African Un y: Summit Conference Concludes . . . . . . . . . 19 Iraq: Recent Developmer3 s in Relations with Moscow and Peking . 20 Rising Oil Revenues in Middle ast Pose Challenge for the US . . . . . . . . . . 17 Pakistan: Road to Civilian G vernment . . . . . . . . . . . . . . . . . . . 18 Panama: The Case df the Missing Priest . . . . . . . . . . . . . . . . . . . 22 Barbados: Prime inister Hits US-UK "Interference" . . . . . . . . . . . . . 23 Ecuador: Situati n Stabilizes . . . . . . . . . . . . . . . . . . . . . . . . 24 NOTES: IsraelyUSSR; Egypt-USSR; Saudi Arabia; Palestine National Council Meeting; Turkey; India; India; Dominican Republic SECRET Page i WEEKLY SUMMARY 2 Jul 71 Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927A008900020001-4 SECRET FAR EAS-r Indochina: Action in North Laos Government forces are chalking up signifi- cant gains as they press their rainy-season offen- sive on the Plaine des Jarres. On 29 June an irregular patrol penetrated as far as Xieng Khouang airfield in the north-central portion of the Plaine. Other patrols have pushed into the northeast section of the Plaine, destroying numer- ous small caches of supplies and equipment. Government forces have not been present in this area since February 1970 when they were driven out by a North Vietnamese counteroffensive. Q Government-held location communist-held location The government has also been successful in action west of the Plaine. Irregulars have captured Phou Seu, the strategic high ground on the west- ern edge of the Plaine, while other government forces have reoccupied Ban Na, an important ir- regular artillery base captured by the enemy in April 1971. On the southeastern edge, other ir- regular units have reinforced Phou Theung, which had been captured on 18 June. The North Vietnamese clearly have been caught off balance by the offensive. They have been pulling back some of their units from for- ward positions west of the Plaine, which in part accounts for Vang Pao's gains. The North Viet- namese, however, still have six regiments, with artillery and armor support, in the general vicinity of the Plaine. The government experienced one setback north of the Plaine when an enemy force overran Phou Vieng, one of the few government positions in the area. The irregular troops and about 2,400 civilians escaped to the northwest toward Phu Cum. The enemy has continued to shell Bouarn Long, the major guerrilla base north of the Plaine, but no ground assault has developed. In the panhandle, government clearing op- erations continue eastward from Dong Hene. Irregular patrols have penetrated as far as Muong Phalane, but have met stiff resistance around the town. More Talking About Talks On 22 June Pathet Lao leader Souphanou- vong sent a letter to Prime Minister Souvanna Phouma again calling for Lao peace talks. The Communists continued to insist that any progress toward a settlement depends on a total US bomb- ing halt, but they did add new proposals designed to give the impression that they are flexible and SECRET WEEKLY SUMMARY 2 Jul 71 Approved For Release 2008/06/04: CIA-RDP79-00927A008900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927A008900020001-4 SECRET ready to move if their terms are met. Souphanou- vong now is proposing that a cease-fire in Laos coincide with a US bombing halt; previous terms specified that a bombing halt must precede a cease-fire. In addition, the Communists have proposed that Vientiane and the Plaine des Jarres serve alternately as sites for the negotiations that they say would follow a cease-fire. This is the first time this year that the Communists have gone so far as to discuss the modalities of talks. Vietnam: Pressure South of the DMZ North Vietnamese troops continued to press their summer offensive just south of the DMZ during the week. Enemy shellings and attacks there have been more intense in recent weeks than at any time since 1968. Much of the fighting has been in the vicinity of the abandoned, and subsequently destroyed, Fire Support Base (FSB) Fuller, where South Vietnamese forces have been trying to dislodge the enemy from well-dug-in firing positions. Fuller, once known as the "Rockpile," was one of the key allied strongpoints built to inhibit the movement of enemy men and materiel toward the populated coastal lowlands. Other similar bases, including FSB Sarge, have also been the target of enemy attacks in the past few weeks. US forces withstood prolonged sieges at some of these bases in years past, but the South Vietnamese-now largely on their own-apparently are trying to avoid getting boxed in defending any one posi- tion. Nevertheless, they have moved in thousands of reinforcements from other parts of South Viet- nam and appear determined to thwart any enemy thrust eastward toward population sectors. To suppaxt=opera rrs-irr--the-D hZ -area,---'the North Vietnamese since early May have con- structed an--eight-mile road through the western end of the_DMZ_ rlto;t ie_Khe-San+yarea-at.Quang Tri-Prow:iis_,Ahe_first__road-of_ its_ki served in this area, may be intended to form a junction with another new~road__under construc- tion north of Route-609-'the latter links up with Route 9, the main east-west road between the border and ,fhe sea. Supplies and personnel have moved through the DMZ for years over an exten- sive network of trails, but this new road will greatly enhance Communist logistical capabilities = The tactical intentions of the North Viet- namese in the northern provinces are not entirely clear, but their recent advances may encourage rt. ` VIETN ~ eruya~i~ r_he\San.h..R_?FSB SECRET Page 2 WEEKLY SUMMARY 2 Jul 71 Approved For Release 2008/06/04: CIA-RDP79-00927A008900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 SECRET them to press farther south and east. They have more than enough infantry and artillery units along the DMZ and in the mountainous western half of Quang Tri Province to put the South Vietnamese to a severe test should Hanoi set such a course. In the coming weeks, the strength of the North Vietnamese push in Quang Tri Province and the South Vietnamese response to this pres- sure should provide a better indication of Saigon's ability to pick up the security burden in this region as US forces withdraw. Factional Dispute Rocks Saigon Student Community The assassination of a moderate leader of the Saigon Student Union (SSU) this week has inten- sified a dispute between student factions. Al- though the student was murdered by an unknown assailant, suspicion has fallen on the followers of militant student leader Huynh Tan Mam. In a disputed election last week, Mam's group was voted out of the SSU leadership in favor of a moderate slate that included the victim. The militants charged that the vote was rigged and broke up a meeting that was to validate the results. Although leaders of both factions are still trying to decide what to do next, it seems likely that the militants and moderates will each set up organizations claiming to be the legitimate leader- ship of the SSU. Although-themoderates have taken over control of the.SSU headquarters build- ing without a struggle, the militants reportedly .are.-prepared to.Jesar.t.to. force. Mam and his followers may seek to use the dispute to stir up renewed student agitation against the government, but the assassination may work against Mam's efforts to recruit new sup- port. Factional disputes and lack of student inter- est in protest activities have prevented the mili- tants from launching many disruptive demonstra- tions this year. For its part, the government has been quietly encouraging the moderates in an effort to curtail Mam's influence. It probably will continue to do so, but it will move cautiously in an attempt to prevent violence during the current pre-election period. Cambodia: A Welcome Respite Communist military activity seems to be subsiding to lower rainy-season levels as govern- ment forces northeast of Phnom Penh apply the finishing touches to one of the Cambodians' most successful military operations of the war. Govern- ment troops evidently made an excellent showing in the final phase of their prolonged effort to dislodge the enemy from the marshes northeast of the capital. A postaction assessment indicated that Cambodian soldiers made unusually effective use of firepower, maneuver, and air support to drive elements of several North Vietnamese main- force units from their prepared positions near Kompong Chamlang. The success in the northeast was fashioned primarily by US-trained Khmer Krom troops, who have been the mainstay of the Cambodian Army (FANK) since the war began. Although they suffered heavy casualties in the month-long campaign, the Khmer Krom forces' performance undoubtedly gave Phnom Penh a much-needed psychological lift. The government apparently intends to main- tain a sizable military presence in the Kompong Chamlang area for the time being. Several multi- battalion clearing operations were launched early in the week near Kompong Chamlang to disrupt possible enemy supply and infiltration move- merits. These forays have not generated any sig- nificant Communist resistance, however. FANK troops also regained some ground in the southwest, when they moved unopposed into the town of Srang, which had been in Communist hands for two weeks. The enemy was not entirely inactive in the southwest, however. In the most notable action on Route 4 since that highway was reopened in early May, the Communists carried out a heavy rocket and mortar attack on the government's armored camp some 12 miles east SECRET Page 3 WEEKLY SUMMARY 2 Jul 71 Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 SECRET of the Pich Nil Pass. Efforts by enemy elements to breach the camp's defenses were repelled with the aid of air strikes. Combined military and civilian casualties on the government side were five killed and 25 wounded, while six Commu- nists were killed. Rice has virtually disappeared from stores in Phnom Penh as a wave of hoarding has gripped the capital. The shortage undoubtedly is attrib- utable for the most part to the refusal of mer- chants to sell rice at the artificially low price imposed by the government. Another contributing factor may have been concern that intensified enemy action on Route 5 in recent weeks may interrupt rice shipments into the capital. Battambang merchants will smugb1. - i' into Thailand rather than pay thhea i ribes exacted at FANK outposts along-Route 5 and assume the substantial risk-of losing the entire cargo to the Communists: The recent deterioration of the Cambodian riel relative to the Thai baht has pro- To a ctrnnn i +' t ~9#tng" meet the situation in Phnom Penh, the government has begun selling its own stocks in rationed amounts at official prices in the hope of persuading merchants to release their stocks. The government also intends to inaugurate a transpor- tation program soon to expedite large-scale ship- ments of rice from Battambang to Phnom Penh via military-escorted truck convoys. Even if these Page 4 measures ease the present crisis, there evidently is a possibility Cambodia may yet have to import some rice. The minister of commerce has claimed, for example, that 32,000 tons of American rice will be needed before the end of 1971 F_ SECRET WEEKLY SUMMARY 2 Jul 71 Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 Sino-US Relations: Outlines of the Taiwan Issue Recent, high-level pronouncements from Pe- king have restated the Communist position on the Taiwan issue and Sino-US relations in both sweet and sour terms. By focusing heavy attention on their stand, the Chinese continue to make it clear-as they have in other public and private statements-that the issue will remain the first order of business between the two governments as far as Peking is concerned. Premier Chou En-lai's remarks to American newsmen in Peking on 21 June on the Taiwan issue represent China's "sweet" approach to the problem. Chou emphasized that the American military presence on Taiwan and in the Taiwan Strait is the key obstacle to improved relations between China and the US. He remarked that if US forces were withdrawn and Washington no longer "considered Chiang Kai-shek as the repre- sentative of China," it would amount to "recogni- tion that the People's Republic of China was the only lawful Chinese government." After that, Chou said, all other problems would be solved and the establishment of diplomatic relations with Washington would follow. Chou's comments do not signal a change in Peking's long-standing position that the island's status is strictly an internal matter to be settled by the Chinese. Chou completely rejected the notion of "two Chinas, or one China - one Taiwan" formulations, which have long been anathema to Peking. His carefully tailored re- marks on Sino-US differences, however, were meant to suggest that these differences were rela- tively narrow and could be solved without a complete overturn of established US positions. For example, Chou continued to avoid mention of the US defense treaty with the Nationalist government. and President Truman's 1950 directive that the Seventh Fleet separate the combatants in the Taiwan Strait. Speeches and broadcasts over the weekend make standard references to US "provo- cations" in and near Taiwan and stress that the US, together with Japan, is scheming to separate the island permanently from the mainland. A New China News Agency article on 27 June, for example, criticized visits to Taiwan by high US officials and US pledges to fulfill its treaty obliga- tions to the Nationalist government as evidence of US intentions to "strengthen its military occupa- tion" of the island. In the same vein, the article also condemned US-Taiwan joint military maneuvers in the region and accused the US of helping to train secret agents for use by the Taiwan government to "harass" the Chinese main- land. Finally, statements connected with the anniversary insist that US "imperialism" must withdraw from Taiwan-a formulation broader and vaguer than Chou En-lai's recent remarks. The anniversary is generally an occasion on which Peking stresses a hard-line approach to the Taiwan problem, particularly in view of the fact that it is observed in conjunction with the start of hostilities in Korea. Nevertheless, this year's tough statements have been less belligerent than those made by Army Chief of Staff Huang Tung- sheng last year. Moreover, the new formulation- that US "imperialism" must withdraw from Taiwan-leaves Peking's options open. The Com- munists can either insist that the US must sever all ties with the Nationalists or they can adopt Chou's more restrictive-and probably more authoritative-interpretation. The generally mild and reasonable tenor of Chou's earlier statements to the US corre- spondents is clearly part of an attempt by the Chinese to improve further the atmospherics sur- In less than a week after Chou's interview with the American newsmen, Peking showed its "sour" side on the Taiwan issue in a series of relatively hard-line statements keyed to the anniversary of the outbreak of the Korean war rounding Sino-US bilateral issues. In fact, Chou was careful to stress that Sino-US contacts would continue to develop-at least on an unofficial level-even in the absence of an agreement on Taiwan. Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 SECRET Party Building in Communist China: Not All Have Stayed the Course The last lap of China's party reconstruction marathon has been accompanied by kaleidoscopic personnel changes at the provincial level. In the course of hammering out party settlements for a number of long-troubled areas over the past two months, Peking has downgraded and probably purged five key province leaders. Numerous secondary officials on the governing Revolution- ary Committees established since 1967-1968 also have failed to attain party posts, and outsiders only recently transferred to the provinces in- volved have leapfrogged to the top of the local power structure. The drastic changes wrought by Peking in the most recently formed party com- mittees are partly a measure of the regime's frus- tration over its inability to curb deep-seated divi- Fions that have been hampering the consolidation of local authority and the implementation of soma key national programs. The personnel changes also reflect the Byzantine manuevering between rival politburo elements who are seeking to enhance the political positions of their pro- teges in the provinces. The complex character of some of the recent settlements is graphically illustrated by Peking's refusal to award the post of provincial party chief in five instances to leaders who were selected to head provincial governments during the Cultural Revolution. The regime has offered no explana- tion as to why these five were passed over, but all were heavily embroiled in factional struggles, and their political fate was almost certainly the subject of intense debate in Peking. Their replace- ment is a sharp departure from the practice fol- lowed by the regime since last December whereby all other incumbent provincial leaders have been confirmed as the party chief of the corresponding provincial party committee. Although only four of China's 29 provin- cial-level party committees remain to be formed, it now appears that further major leadership Page 7 changes are likely before the process is com- pleted. The political situation in Tibet, Szechwan, and Heilungkiang provinces seems particularly tense, and recent radiobroadcasts indicate that in Tibet, at least, the regional revolutionary com- mittee chairman may have already been ousted. Four of the recently downgraded provincial leaders-Wang Hsiao-yu in Shantung, Liu Ko-ping in Shansi, Li Tsai-han in Kweichow, and Teng Hai-ching in Inner Mongolia-were all supported by local extremists and appeared to be proteges of some of the radical ideologues on the polit- buro. Their fate apparently reflects the declining ability of their patrons to broaden their bases of power in the new party structure and reinforces the impression that effective leadership in most of China's provinces remains heavily weighted in favor of conservative-oriented military men and veteran civilian officials. Nevertheless, the influence of the more mili- tant elements in the regime on the committee formation process cannot be entirely discounted. Countervailing leftist pressure, for example, seems responsible for the recent failure of alternate politburo member and Hopeh provincial govern- ment head Li Hsueh-feng to obtain the chief party post in his bailiwick. Li probably was sacri- ficed, in part, because of objections raised by the ideologues that too many veteran cadres, in- cluding some prominent victims of purges carried out early in the Cultural Revolution, have re- cently been given ranking provincial posts. Li's ouster does not appear to be a complete victory for the ideologues, however, because his replace- ment in Hopeh appears to share his conservative predilections. The fact that a similar situation has developed in Inner Mongolia, where a radically inclined leader has been replaced by one of simi- lar persuasion, suggests that a careful but perhaps inherently unstable balancing act is still being SECRET Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 SECRET carried on by moderate and leftist forces within the politburo and at lower levels as well. Given the complex pattern of Peking's per- sonnel juggling and logrolling, it appears that the mere establishment of provincial party com- mittees will prove no panacea for overcoming the political divisions, passions, and leadership dislo- cations engendered by the Cultural Revolution. Indeed, the results of the provincial-level staffing process seem to demonstrate that many old per- sonal rivalries have been submerged rather than eliminated, that factionalism has been institu- tionalized in the new party structure, and that a number of the "solutions" certified by Peking in recent months ma prove more apparent than real. COMMUNIST CHINA: Key Dropouts in the Provincial Party Marathon Teng Hai-ching ousted SINKIANG 2 Province boundary Party committee not yet formed.. Hsueh-feng Revolutionary Committee Chairman who failed to make the party committee or whose- status is uncertain Revolutionary Committees. The majority of these ii Tsai-han new leaders are transfers from other provinces. ousted SECRET Page 8 WEEKLY SUMMARY Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927A008900020001-4 SECRET Indonesia Prepares for the Polls The Suharto government appears likely to come out on top in the 3 July elections, Indo- nesia's first national polls in 16 years, despite some revulsion over the government party's heavy-handed campaign practices. Although elec- tions are being held at both national and pro- vincial levels, the principal stakes are 360 seats in the 460-member Parliament, a body of relatively limited legislative powers. The remaining 100 members will be appointed by the government. This Parliament will constitute half of the 920-member congress that formulates national policy and in 1973 will choose the next president and vice president. The government's immediate aims, therefore, are to ensure both a responsive Parliament and a congress that two years from now will re-elect President Suharto for another five-year term. The campaign officially ended on 26 June, but the government party, SEKBER GOLKAR, probably will remain active to the final day. GOL- KAR, an army-affiliated coalition of occupational and social groups such as youth, labor, and farmers, has steamrolled its way through the country, proselytizing groups attached to the other political parties and demanding the alle- giance of government employees. Although its rapid accumulation of a following has been im- pressive, its arm-twisting methods could be coun- terproductive. Its goal is half (180) of the elected parliamentary seats but it will be satisfied with a strong plurality. Even if its tally should drop to something between 70 and 131 seats, the govern- ment probably could still develop a parliamentary following of sufficient size to approve Suharto's programs. The election essentially is a contest between GOLKAR on the one hand and the nine political parties on the other. Only three of these have a significant following-the secular National Party (PNI), the traditionalist Moslem Nahdatul Ulama (NU), and the modernist Indonesian Moslem Party (PMI). The PNI and NU have resisted GOL- KAR as firmly as they dare without provoking a government reaction and should do fairly well in densely populated Java and parts of Sumatra. The PMI, which has been consistently obstructed by the government, expects-by its own admission- to win only a small portion of the popular vote. The army, which dominates the Suharto gov- ernment, distrusts political parties largely as a result of the irresponsible behavior of parties during the 1950-57 period of unstable parliamen- tary government. It sees the parties as lacking a sense of national purpose, and it regards party activity as disruptive to national unity. The mili- tary and those civilians who are working with it are concerned over the long-term problem of developing stable representative government in a nation of diverse peoples where parties have tended to represent geographic, ethnic, and re- ligious differences-cleavages that can easily be surfaced and exploited. The army takes the view that a GOLKAR electoral victory would be the first step toward some form of political restruc- turing that would de-emphasize these national cleavages. Although ideas on restructuring are still only vaguely formulated, SEKBER GOLKAR seems to be a move toward at least experimenta- tion with a single mass party that would enlist support from all significant groups in Indonesian society. SECRET, 9 WEEKLY SUMMARY Approved For Release 2008/06/04: CIA-RDP79-00927A008900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 SECRET EUROPE Mutual Force Reductions: Heavy Summer Diet for NATO At a time when alliance activity usually is entering the summer doldrums, the attention of the Allies is riveted om'the quickening pace of the dialogue on mutual and balanced force reductions (MBFR). NATO has planned an in- tensive work program for, the weeks ahead to flesh out a negotiating p sition and to deter- mine how and when to ove toward negotia- tions. On both questions, allied views diverge. Moreover, many of the Allie are worried that MBFR is in danger of becming primarily a tion to MBFR is no longer tenable, and the government is reviewing its entire approach. As part of this review, Paris plans to initiate bi- lateral talks with Moscow to probe Soviet ob- jectives, but how, or whether, Paris will con- cert its efforts with those ofi'the other Allies is uncertain. Bonn, apparently reassured after Brandt's recent consultations An Washington, appears somewhat less pessifistic about the effect on Western defensesof force reductions even if these initially include only US and Soviet forces The merman G f . overnment eels strongly, London remains among the most skeptical however hat any Western decisions on force of the Allies, questioning wheth r any force reductions must be coordinated within the AI- reductions can be negotiated that will not un- liane Defense Minister Schmidt has cautioned dercut Western defenses. The Brit is also fear ?a the two superpowers must not ignore the that the drift toward negotiation is out- members of NATO in agreeing even to sym- stripping allied preparations and that ~ashin bolic troop reductions. Bonn favors movement ton's rush to the bargaining table," as. one toward eventual multilateral MBFR talks, but British official put it, is aggravating t iprob- would prefer that this stage be delayed until a lem. The UK also thinks it premature ap- Berlin settlement is reached. point an emissary to discuss MR with the East prior to the meeting play ied for Octo er advocated by Canada ar ' Italy. A number o . Allies nevertheless w i't to keep this option open while an initial negotiating position is being worked out.J' Paris'' generally shares London's skepticism and is/particularly concerned about news re- ports that forward-based nuclear systems might be included in MBFR talks. France reportedly now considers, however, that its simple opposi- Meanwhile, Moscow has continued to urge that NATO clarify its position and move more quickly toward negotiations. Soviet Charge Vorontsov told US officials last week that be- cause MBFR was a Western idea, NATO should be roviding answers and specific proposals instead o asking questions. Although in no way defining the Soviet position more precisely, Vorontsov as- serte that the current method and pace of bilat- eral echanges would lead nowhere and claimed that scow is "read for substantive discus- sions." SECRET Page 10 WEEKLY SUMMARY Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927A008900020001-4 SECRET Poland: Gierek Steamrolls Ahead Party leader Gierek has taken further steps to consolidate his primacy in the hierarchy and to push his policy of national "renewal." At a central committee plenum last week, hard-line, anti-Semitic politburo member Mieczyslaw Moczar was dropped from the secre- tariat, where he had long been responsible for military and internal security affairs. The move had been heralded earlier in the week when parlia- ment appointed him to the chairmanship of the Supreme Chamber of Control, a politically unin- fluential government body. Although Moczar may remain on the politburo for cosmetic reasons un- til the party congress at the turn of the year, his downgrading signals the effective political retire- ment of a man who had long been considered a rival to former party leader Gomulka and, at least potentially, also to Gierek. Moczar's ouster from the secretariat was in part anticlimactic because, at least since his re- ported heart attack in April, his responsibilities have been exercised by party secretary Kania. Indeed, there is some evidence that Moczar may have been deprived of these functions soon after the change of regime last December, and that his role since then was increasingly limited to repre- senting the splintered remnants of the hard-line faction he once headed. The central committee also dismissed party secretary Starewicz, a Gomulka holdover and the only Jew in the party hierarchy. With Moczar's ouster, Starewicz apparently was no longer needed on the secretariat to balance off-if only symbolically-the party's anti-Semitic forces. Neither of the two slots was immediately filled, suggesting that Gierek's penchant for streamlining the bureaucracy may extend to top party organs. Since last December, dismissals of holdovers from the Gomulka regime have reduced the politburo from 12 to 10 members and the secretariat from nine to seven. If Gierek does not intend a permanent reduction, he may fill these vacancies at the party congress, using the coming months to select reliable and efficient men. Gierek seems to be demonstrating his com- mand of the situation by purging even such sensi- tive areas as the security apparatus. Once the prime base of Moczar's power, the Interior Minis- try is now undergoing a series of shifts marked by the recent dismissal of a deputy minister and the arrest on criminal charges of four staffers. All five men were closely allied to Moczar. These develop- ments form part of Gierek's housecleaning in the party, state, and trade union apparatus that began early this year with shifts in the middle and local echelons. Gierek has made clear that this process will extend to the party rank and file in coming months. With a responsive apparatus and no per- sonal rival in sight, Gierek seems certain to domi- nate the party congress. Long-range economic policy, stressing the needs of the hard-pressed Polish consumer, was the main substantive topic of the plenum, and once again reflected Gierek's efforts to deepen his popular support. This goal was also furthered by parliamentary passage last week of a bill granting the powerful Roman Catholic Church legal title to former German church property in the ter- ritories gained by Poland after World War 11. This step toward fulfilling the regime's commitment to "normalize" church-state relations will be welcomed by the overwhelmingly Catholic population as it already has been by the epis- copate, and may give new impetus to the ongoing negotiations between the church, the regime, and SECRET Page 11 WEEKLY SUMMARY Approved For Release 2008/06/04: CIA-RDP79-00927A008900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927A008900020001-4 SECRET Tito Raises Anti-Sovietism Another Notch Since May, President Tito has been trying to unify his fractious nation by increasingly playing on Yugoslav fears of Soviet intentions. Domestic dividends have begun to appear, and there are signs that Tito now\is also willing to take steps in the foreign policy field to strengthen the nation's will and ability to resist future Soviet pressure. After the Brioni presidium session in late April, which met behind closed doors to discuss a budding nationality crisis, Titostumped the coun- try calling for purges of malefactors and deliv- er ing strong-but undocumented-warnings of hostile foreign interference. His pu a threats had superficial success in quieting temporarily the loudest of the nationalists, but the vigi' nce theme was even more effective and gave Tito a onsensus: that he has turned successfully against hr polio cal opponents. During the past week eat n the Croat party leadership, which in May pf ced .ito changed gears in an unusual call, for moves against extreme nationalists. Further ore, the Slovenian party, which has been satisfied with diversion of Slovenia's wealth t6 poorer areas, held a meet- ing on 28 June t produced a firm commitment to the principl that Yugoslav security overrides individual republic interests. ,fie stimulus for these important changes of tone was provided by a party commission meeting n 23 June that criticized Moscow's allegedly (hostile intentions toward Yugoslavia and warned of a possible deterioration in relations between the two countries. The meeting took the unusual step of ordering that the discussion be dissemi- nated to the lowest party levels. This extension of Belgrade's polemics with the Kremlin, however, is only in part tactical. The Yugoslavs are keenly aware of untraceable rumors of Soviet-backed invasion schemes, and the re- ported scheduling of Warsaw Pact military maneuvers in the area has augmented the impact of these otherwise unrealistic rumors. Halfway through a crucial political reform period, Tito can ill afford to allow openings for Soviet pressure. For these rre" ons, Belgrade has taken two circumspect foreign policy steps to enhance its internatio.naf position and to provide tangible reassu~ce to the people. First, the Yugoslav fo rgfgn minister made a trip to China from 8 to June, and the treatment of this visit by Yugoslav media was intended to emphasize that common cause-oppositon to Moscow-can, in a crisis, override ideological differences. At the same time, the Yugoslavs cautiously avoided direct involvement in the Sino-Soviet dispute. The move for which Belgrade probably has Highest hopes, however, is the recent overture closer military ties with the US. On 25 June US military attache in Belgrade was informed Assist nt Defense Minister Dolnicar that Yugoslavia k now ready to discuss arms pur-. chases, trainir9 of Yugoslav officers in US military schools; and other exchanges. Dolnicar emphasized that nos compromise of Yugoslavia's nonaligned posture or,-,'fierce independence" was envisioned or acceptable,' but he clearly indicated that new op ortunities for im roved relations are welcome. Page 12 SECRET WEEKLY SUMMARY Approved For Release 2008/06/04: CIA-RDP79-00927A008900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 SECRET Accord Reached on UK Accession to European Communities The accord reached in Luxembourg last week between Britain and the six members of the European Communities virtually assures agree- ment on an accession treaty by the end of the year. The accord was generous on the issues of real emotional concern to the British. New Zealand has been granted outlets for its dairy products through 1977 and the`,opportunity to retain a special relationship with the UK there- after. Britain's contribution to the EC budget will be a good deal higher than its initial offer, but much less than the French had proposed, and attenuation of the full burden after 1977 is pos- sible. The community conceded the need to re- consider its fisheries policy, also an issue on which crucial votes are at stake in the British Parliament. Although the Heath government still faces a hard political battle to obtain ratification, and entry in any case is a year and a half away, Britain is in a sense already a participant in the com- munity. Interim consultative arrangements have been set up, and the community is unlikely to take major decisions without allowing for the prospect of UK membership. In a broad range of questions going beyond specific EC matters, Lon- don will likewise be taking into account its basic new commitment. With the increased likelihood of an enlarged community, speculation is intensifying about the political and institutional future of the EC. In effect responding to concern over the possibility that the` UK might align with France in opposition _'to the principle of ma- jority' voting in the EC Council and to a stronger European,"Parliament, Bonn's Foreign Minister Scheel ;,fast week publicly aired his "conviction" that the EC would be more democratic with Britain in it. The community will now have to decide pry arrangements with the European Free Trade Association (EFTA) members that are not candidates for EC membership. The Council will soon begin debating two options presented by the Commission. The first proposes that the six EFTA noncandidates be permitted to 'maintain their present arrangements with the new EC members for two years following the co,m m u n i ty's enlargement-with subsequent arrangements to be studied. The second option would institute free trade in industrial goods between the noncandidates and the enlarged EC. Full-scale discussions with the non- candidates will begin this fall. Sweden and Switzerland, in particular, are expected to want closer ties. The Commission, however, is concerned that there be minimum interference with community procedures from nonmembers. Although its proposals would seem to grant the noncandidates access to the EC market without institutional obligations, the Com- mission may believe that in the long run the noncandidates will seek full membership be- cause they will feel a necessity to participate in EC decision-making. SECRET Page 13 WEEKLY SUMMARY Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 SECRET France: Pompidou as Europe's Master Builder In a television interview last week on his second anniversary as president, Georges Pompidou dwelt at some length on his views regarding the future of Europe. Clearly pleased that recent polls show that the public considers his European policy his greatest success since taking office, Pompidou often`-.stressed the role that he personally played in unbloc ing Europe and opening the way for British entry to the EC. His statements suggest that he is determd to project and enhance his image as a "European" statesman, and to become the architect and master builder of a new Europe. While the characteristics of his "confederal" Europe bear a resemblance to the "Europe of States" advocated by General deg ~raulle, the emphasis and context of Pompiou's European policy are different. Whereaf5e Gaulle's primary goal was detente, entente; and cooperation with f; the East-a Europe,-,66m the Atlantic to the Urals-Pompidou -gives priority. to the organiza- tion of WesternEurope. Writing in Le Monde, the respected commentator Michel Tatu put it this way: "Not only has it not been a question of East-West relations or of 'detente'; [Pompidou's statements] seem toconcretize the existence of a 'Soviet world' which the West can scarcely in- fluence." Tatu concludes that rather than seeking to reconcile the two halves of Europe, Pompidou is intent on strengthening Western Europe so that Using a map to illustrate his prrt; Pom- pidou spoke of Western Europe asad "small, fra- gile and menaced peninsula" tvveen two super- powers, the US to the wesand the Soviet Union to the east. The po FCa edifice Pompidou would construct excludes the Americans, "our friends and allies...b who are not Europeans." And hile,a:thming that Europeans want excellent Pompidot?s;.,'goal is an independent Western Europe that "through the pooling of resources, would find "its '''own place in the world," and therefore be able to rival both Washington and Moscow. Pompidou asserted that the construction of the Europe he envisions will be more complicated after the enlargement of European Communities because, as he put it, the British have a different way of approaching problems. He also identified as a potential roadblock Britain's "special com- mitments in certain areas, such as defense." Nevertheless, he concluded, "if one wants, one ought to be able to construct Europe."[-- Malta-U K: Hard Bargaining Will Dom, inate Talks Prime Minister Dom Mintoff's f r-st order of Mintoff has outlined concept of what business since taking office on 1. une has been should be included in,~a,-{`r`~`ew agreement, but he his proposal to revise the r'nse and financial has not specified i' he considers "adequate Mme, agreements with the UKweight them more in compensation ~r use of Maltese facilities, such Malta's favor. Lond9P which has adopted a wait- as airfields,,,_ tf wharves. London expects that the and-see attitude, ` til it learns more details of the price wil;rr- e high. The prime minister in -effect proposal, is:-~ repared to take a tough bargaining asks F;;f straight compensation in return for use of ~ position _current th`#e' facilities as opposed to the SECRET Page 14 WEEKLY SUMMARY 2 Jul 71 Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927A008900020001-4 SECRET combination of loans and grants. He also demands that any new agreement include, among other things, a strict definition of. the facilities to be offered and the restriction of such facilities to UK forces. Mintoff's demands raise many problems, a prime one being the relationship between NATO and UK forces on Malta. London does notfeel it would be useful to pursue such questions`'vyith Mintoff now, but it does want to determine what facilities Malta would provide, particularlyN whether and under what circumstances they . would be available for NATO purposes. The UK is meeting Mintoff's requirements and at present is pessimistic about reaching an agreement that would not cause London major difficulties. The British already believe that they are paying more for present facilities and, rights than they are worth, and London's final decision to meet Mintoff's monetary demands may depend on whether NATO is interested in helping the UK maintain a military presence on Malta. intoff's Malta Labor Party has expressed interest'''n promoting better relations with the Arab statesin the Mediterranean, and during the recent political campaign the party indicated it was prepared to^s,ign an economic agreement with Libya. Mintoff's zest for seeking closer ties with Tripoli will depend largely on the success of his negotiations with London. He seems to be using the possibility of a rapprochement with Tripoli to put pressure on the UK and other Western nations to increase their aid and investments. MIDDLE EAST -AFRICA ISRAEL-USSR: The recent visit of Soviet:journa- list Victor Louis to Israel, Foreign Minister Eban's expressed willingness to resume a dialo ue with the USSR, L__J have inspired numerous press rumors that the re-establishment of Soviet-Israeli relations is im- minent. The Soviets in the past have used Louis to carry out unofficial contacts with countries with which they do not have relations, and his visit to Israel does indicate that the USSR has some interest in assessing thee reaction both in Israel and the Arab states-'to unofficial Soviet- Israeli contacts. Althoujh there is no evidence that relations between the two countries will be restored in the :near future, the resumption of unofficial contacts would provide both sides with an additional channel to try to head off another round.,of hostilities in the Middle East. SECRET Page 15 WEEKLY SUMMARY 2 Jul 71 Approved For Release 2008/06/04: CIA-RDP79-00927A008900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927A008900020001-4 SECRET EGYPT-USSR: Egyptian Deputy Premier ---a Foreign Minister Mahmud Riad arrivedin Moscow on 29 June on the first leg of a plomatic swing that also includes stops in Pr ue, Budapest, and Belgrade before his retur o Cairo on 17 July. The exchange of instr ents of ratification for the USSR-Egypt T aty of Friendship and Co- SAUDI ARABIA - EGYPT: King Fay is strong endorsement of President Sadat's feign policies at the c/nn visit to Cairo last Satthe Egyptian leader's East negotia- tions. Fssued prior to his depahich shoulders the "bigct with Israel, deserves According to the CairKing's exten- sive discr cabinet-level officials t negotiations, FaysaI's , the future of operation was the highlight of Riad's five-day stay in the USSR; he is also holding comprehensive discussions on Middle East developments with Foreign Minister Gromyko and other Soviet offi- cials. One of the subjects Riad seems almost cer- tain to raise is the possibility of direct Soviet- the Persian Gulf, the proposed Arab summit conference, and Jordanian military pressure against the fedayeen: Following up their meetings with fedayeen leader Yasir Arafat, the two heads of state agreed to send a Saudi Arabian and an Egyptian emissary to Amman in an effort to reconcile Jordanian-Palestinian differences. PALESTINE NATIONAL COUNCIL MEET- Liberation of Palestine (PFLP), whh has sent ING: The ninth session of the Palestine LH:id`a-' only a token delegation to prey us sessions of tion Organization's (PLO) parliamentary body, the council, has decided to p cipate fully in the the Palestine National Council.,,rrow scheduled to coming meeting The P intends to resent a . p meet in Cairo on 7 July,..ely to be as unpro- critical report onpolicies and activities of the ductive as previous. atherings. Disputes have entire fedaye~movement since the June 1967 already arisen ong the representatives of the war, be ' ng with a discussion of its own mis- major feda y organizations regarding the dis- takesothh Fatah and PLO Chairman Yasir Ara- tributiorseats at the council, and the date and f may also come under heavy attack by the the site of the meeting have as usual been change , `yradical group for allegedly obstructing the unifica- at the last minute. The Popular Front far-=tFie tion of the guerrilla movement. SECRET Page 16 WEEKLY SUMMARY 2 Jul 71 Approved For Release 2008/06/04: CIA-RDP79-00927A008900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 SECRET Rising Oil Revenues in Middle East Pose Challenge for the US During the past year the eight Middle East oil producers (Libya, Saudi Arabia, Iran, Kuwait, Iraq, Algeria, Abu Dhabi, and Qatar) that are members of OPEC have concluded agreements with the oil companies that ensure massive in- creases in the countries' oil revenues through 1975. Receipts will be raised even further by rising production in most of these countries. Annual oil revenues in the producing countries are expected to swell from less than $6 billion in 1970 to nearly $16 billion in 1975.\0. With more hard currency the o6states will increase their imports, and as a result f =ere may be a sizable growth in US exports tote area,. particularly of capital goods associated wilti tie petroleum industry or with general econofnic development programs. In addition, there nr y\l e a significant increase in US military eq;pmen sales to Iran and Saudi Arabia. US sas to the Middle East oil states, although amounting to only about two percent of total S exports, al- ready greatly exceed US imports from these countries. At present the transferto the US of earnings by American oil companies operating in the Middle East is more important to the US balance- of-payments position than commodity trade with the Middle East oil ;'producers. Private American oil investment in the area yields an annual return of $1.6 billion, whereas the US surplus in trade is only one third of this amount. Prospective increases in Middle East imports will not be sufficient to prevent a huge increase in the foreign-exchange reserves of several of the producing states. Holdings in the eight countries are expected to rise from about $5.6 billion at the end of last year to more than $25 billion at the end of 1975." Reserves are likely to approach $8 billion in each of three countries-Libya, Saudi Arabia, and Kuwait-and holdings in Abu Dhabi and Qatar will be impressively large relative to the irYSpopulations. Possession of large amounts of hard currency will make it possible for the Middle East oil exporters to pursue several actions unfavorable to the US. These include nationalization of the oil companies; even if equitable compensation were paid, nationalization would result in considerable damage to the US' balance of payments because `\of the end of profit repatriation. The increased ,,serves could also be used to subsidize political movements and less affluent governments in the area?\ oil money already is being channeled to Egypt; Jordan, and the fedayeen. Moreover, the rise ineserves could be used to bring financial pressure on the West as, for example, by convert- ing dollar assets into gold. Such financial actions, however, probably could not be carried out with- out some cost to the producing states themselves, and governments-of most of these countries have shown little interest in this type of adventur- ism. TURKEY: The foreign trade.., raw promulgated in April to maximize foreign-exchange earnings by keeping export prices up/ a`nd import prices down is having detrimental sje effects. The government is facing enormous, problems in implementing a system that calls fo'r` the Ministry of Foreign Eco- nomic Affairs to% `set minimum export prices and maximum im. t prices and to approve almost all trade transactions before they take place. Several large orders have been lost because of govern- mental delays in responding to export requests. The new program also is reportedly causing a shortage of some imported raw materials. Unless the system is modified before the major agricul- tural export season begins this fall, it could have a serious effect on Turkey's foreign-exchange earn- ing capability. SECRET Page 17 WEEKLY SUMMARY 2 Jul 71 Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927A008900020001-4 SECRET Pakistan: Road to Civilian Government The plan for transferring power to a civilian government, which President Yahya Khan an- nounced on 28 June, gives the politicians a much smaller role than they had under the rules in effect before 25 March. The transfer is to be made in "four months or so" depending on the circumstances at that time. An appointed committee, rather than elected representatives, will draft the new con- stitution, and, according to Yahya, even after civilians begin to govern they will have at their "disposal the cover of martial law for a period of time." This may mean that the army intends to retain ultimate control. Although Yahya again promised maximum provincial autonomy, he also made it clear that the federal government will have "adequate" authority. It is unlikely that provincial power will approach what many East Pakistanis were de- manding before fighting broke out last March. The government has also announced a new budget that calls for maximum austerity and in- creased self-reliance. The budget appears to be less than completely realistic, however. For example, it is unlikely that, given the grim state of the economy, new taxes will produce the expected 11.3-percent increase in revenue. The new budget also presumes a 20-percent increase in foreign aid. Much of this aid is already in the pipeline from previous commitments, but if the outlook for additional aid does not improve, the development budget, which is now slated for a small cutback, is likely to suffer a further reduc- tion. The one area that probably will not be scanted is military expenditures, where a 6.3- percent increase is called for. I n East Pakistan, clashes between the army and the insurgents continue. The Mukti Fouj (liberation force) is having some success- especially along the province's eastern border-in preventing the restoration of normal transporta- tion and communications. Nevertheless, the level of guerrilla activity so far does not threaten the army's hold on major towns, nor does it prevent the army from moving into any part of East Pakistan. In India, agitation for an invasion of East Pakistan persists. Prime Minister Gandhi, how- ever, has told Parliament that New Delhi will not embark on "any adventurist policies." arLiam ent has been very critical of the US for allowing- further shipments of arms to Pakistan: 'the Indians believe that the US violateda'promise to halt all such shipments. IndyariiForeign Minister Swaran Singh, back-from his recent foreign tour, told Parliamefif that he was dissatisfied with Wash:ingtonn's explanations and claimed that US P61 is :cabLo s: Top-level UN officials will meet in Geneva next week to try to iron out the several problems in the international community's refugee relief efforts. One substantial problem-the presence of Indian and Pakistani troops along the border-has inhibited aid to nearby refugee camps on both sides of the frontier. The UN high commissioner for refugees has considered seeking an allocation of UN troops, but there is no likelihood that such a mandate could be obtained in the Security Council at this time. SECRET Page 18 WEEKLY SUMMARY Approved For Release 2008/06/04: CIA-RDP79-00927A008900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 SECRET INDIA: On 29 June New Delhi assumed control of the administration of West Bengal, the nation's most troublesome state, after `,'the state govern- ment had resigned the day before. Prime Minister Gandhi's Ruling Congress. `Party had been the leading partner in a multiparty coalition, but ruled with a paper-thin' majority. The threat of defections from the., coalition, the burden of coping with five mi,l,lion East Pakistani refugees, and the government's inability to curb a wave of lawlessness and political assassinations led to the INDIA: Mrs. Gandhi's new petroleum minister favors policy changes that could,provide an incen- tive for greater Western collaboration in India's exploration efforts. If adopted, these changes would reduce India's reliance on Soviet-assisted exploration programs, w7iich have produced only limited results during/the past 20 years. Other fall of the three-month-old government. The Marxist Communists, the largest single party in the former government, branded the dissolution "undemocratic," but probably favored the move in hopes of winning a majority when new elec- tions are held. Elections may be far off, however, because each of the last two periods of central rule lasted about a year. West Bengal joins three of India's 18 states that are currently being gov- changes now under consideration include retail price increases and rationing. These revisions will be subject to public and parliamentary objections, but New Delhi will have to take some action if it is to avoid an increasingly serious fuel short- age. Organization of African Unity: Summit Conference Concludes The eighth annual chiefs-of-state conference of the Organization of African Unity (OAU) ended in Addis Ababa ahead of schedule on 23 June. The meeting, the shortest in the OAU's history, was attended by only ten heads of state of the 41 member countries. The most controversial matter that faced the conference was the proposal of Ivory Coast Presi- dent Houphouet-Boigny, originally floated last November and presented in Addis Ababa by the Ivorian foreign minister, that African states have official contacts and begin a dialogue with South Africa. The delegates refused an Ivorian request for a discussion in depth of the subject- Houphouet-Boigny's immediate objective-and quickly dispensed with the issue by passing a strong resolution condemning any dialogue unless Pretoria first modifies its raciall policies. OAU opposition, however, is unlikely to deter Houphouet-Boigny, who indicated that he intends to hold his own meeting with representatives of the few African governments-suc:h as Malawi and Gabon-that are in sympathy with his position. The conference also endorsed the strongest pro-Arab resolution on the Middle East situation yet adopted by the OAU. The resolution called SECRET Page 19 WEEKLY SUMMARY 2 Jul 71 Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927A008900020001-4 SECRET for the immediate withdrawal of Israeli forces from all Arab territories, expressed full support for Egypt, and empowered the OAU chairman to begin an African effort to bring about a Middle East settlement. The presence of Mauritanian President Ouid Daddah-elected OAU chairman for the coming year-and Somali President Siad and Sudanese President Numayri-both of whom were among the six newly elected vice chair- men-was probably a factor in the adoption of the pro-Arab resolution. The delegates decided to hold the next sum- mit in Rabat, Morocco, although Kampala, Uganda, had been expected to be the next site. Kampala had been the original choice for the 1971 summit, but the meeting was shifted to Addis Ababa after some African leaders raised objections to the military government that seized power in Uganda last January. As a result Uganda boycotted the summit conference after attending a preliminary ministerial meeting. Summit officials announced that because of Uganda's absence the next summit conference could not be held in Kampala and that Morocco, the only country to extend an invitation, was "se- Iraq: Recent Developments in Relations with Moscow and Peking Recent discussions have brought Baghdad its first economic credit from Communist China and a reaffirmation of economic commitments by the USSR. At the same time Moscow made little headway on reconciling its differences with Iraq over Middle East issues. Peking extended almost $40 million in credit for plants, equipment, and technical assistance during the recent visit to Peking of an Iraqi dele- gation headed by Baghdad's minister for oil and minerals. Repayment on the interest-free credit is to be in Iraqi goods during the period from 1984 to 1993. Although the announcement of the agreement did not specify the type of plants the Chinese will provide or the kind of Iraqi goods to be used in repayment, the composition of the delegation suggests that the talks may have focused on Iraq's oil and petrochemical in- 25X1 dustries A high-level Soviet delegation headed by V. N. Novikov recently visited Baghdad for more than a week of discussions covering a wide range of topics. The two sides signed a protocol cover- ing the second stage in the development of the North Rumaila oilfield and the construction of a canal to regulate the Euphrates River. Production of oil at North Rumaila is expected to reach nearly 20 million tons annually with the comple- tion of the second stage; oil from the first stage is to begin flowing early next year. profitable. Although the economic talks went well, political discussions seem to have been less warm. The final communique included a favorable men- tion of the Palestine resistance movement but reflected little progress toward gaining Baghdad's support for a political settlement of the Middle East situation. Discussions aimed at easing the friction between the ruling Baath Party and the Iraqi Communists apparently were equally un- SECRET Page Approved For Release 2008/06/04: CIA-RDP79-00927A008900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927A008900020001-4 SECRET WESTERN HEMISPHERE Panama: The Case of the Missing Priest The case of Father Gallegos, the priest who was kidnaped and may have been secretly killed by the National Guard early last month, has con- tinued to simmer. The church has completed its investigation of the incident and now appears to be moving to confront the Torrijos government with its evidence. The regime, facing its first serious domestic crisis, has attempted to weather the storm without admitting or conceding any- thing. Unsuccessful in its efforts to shift suspicion away from itself, the government had hoped that with press censor- ship and the passage of time the matter would be forgotten. Public in- terest in the case has persisted, however. Prayers for Gallegos of- fered at every mass, a day of national penance, and a televised sermon by Archbishop McGrath have helped to keep the Bishop McGrath issue alive. Students who supported the work of the liberal priest, as well as peasants whom he had helped, have demanded justice. Moreover, groups that have long been dissatisfied with Torrijos have recognized the explosive potential of the case and have encouraged a showdown between the church and the government. Archbishop McGrath has not been particu- larly forceful in his dealings with Torrijos in the past, with growing public support and pressure from within the church, he cannot back away from a fight this time. He probably will urge the government publicly to repudiate and punish the guilty, to commit itself to avoid any further interference with the church, and perhaps to bring to an end the re- pressive tactics that it has used on occasion. Flexibility or a will- ingness to` compromise, however, have been lack- General Torrijos ing on the government side. Torrijos has thus far refused to open the case to public scrutiny 25X1 One reason may be that re- sponsibility for Gallegos' disappearance may rest at the top of the Guard hierarchy, perhaps even with Torrijos himself. Nevertheless, if the church can sustain its current momentum, government action will become necessary. Torrijos will run grave risks should he decide to attack the church openly. SECRET Page 22 WEEKLY SUMMARY 2 Jul 71 Approved For Release 2008/06/04: CIA-RDP79-00927A008900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927A008900020001-4 SECRET Barbados: Prime Minister Hits US-UK "Interference" Prime Minister Errol Barrow's emotional at- tack on 24 June against the US and Great Britain for alleged meddling in the internal political af- fairs of Barbados probably is related to the elec- tions to be held late this year. The unexpected and so-far-unexplained charges were followed by a threat to request the withdrawal of US and British nationals as well as diplomatic representa- tives. His use of the public media rather than private diplomatic channels for leveling his ac- cusations suggests that he is more interested in establishing a reputation for political independ- ence in the election campaign now getting under way than with arranging the settlement of genuine grievances with Great Britain or the US. The incidents Barrow cited as examples of foreign interference were defined only vaguely. Perhaps the most serious was his contention that a leading member of the opposition, the Barbados Labor Party's Bernard St. John, had been asked by a New York founda- tion to comment on a "confidential" report on Barbados before the re- port had been submitted to the cabinet. The re- port allegedly was given to St. John by the Twentieth Century Fund and was said to have concerned a survey by the Inter-American De- velopment Bank. St. John later denied Bar- row's charge and charac- terized the prime minister's statements as election propaganda. Other charges by Barrow included a con- fused accusation that the US had used "the big stick" method against Barbados because it had rejected a proposed $7 million US loan guarantee for low-cost housing. He also said the US was "squeezing Barbados" by refusing to sign a bi- lateral air transport agreement. He charged that the US had opposed independence for Barbados because "it wanted this country to remain a colony for economic reasons," and said that the US had given the opposition political group "moral and other support" to oppose independ- ence in 1966. Barbados' last elections were held in Novem- ber 1966 when it became independent, and new elections must be held within five years from that time. Although no specific date has been set, Barrow's party has already announced its slate of candidates. Barrow's attack, therefore, seems to fit into the context of using the US and Great Britain as convenient whipping boys during the local political cam ai n. Nevertheless, Barrow may entertain some genuine fears that the opposition is courting support from abroad. His press confer- ence may have been designed to serve the double purpose of asserting his own freedom from for- eign domination and warning the opposition to avoid seeking assistance from, foreign inter- ests. SECRET Page 23 WEEKLY SUMMARY 2 Jul 71 Approved For Release 2008/06/04: CIA-RDP79-00927A008900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 SECRET Ecuador: Situation Stabilizes President Velasco may enjoy a brief respite from attempts to unseat him noW that he has successfully banished two antigovernment figures. Assad Bucaram, a popular opposition leader and former prefect of Guayas Province, had returned clandestinely to Ecuador some weeks ago from exile in Panama. He was apprehended on 20 June and the following day was exiled to Paraguay, where his political activities are likely to be se- verely limited. Several days later General Luis Jacome, who had figured prominently in military plotting, agreed to accept exile in return for full pension rights and left for Venezuela on 25 June. There was no significant public reaction to either who recently re- turned from a visit to outlying military units, has reported that the Jacome exile has caused little reaction among senior officers. Junior officers, however, were outspokenly critical of President Velasco and the defense minister. Many of these younger officers admitted that with Jacome's exile they no longer have a leader but added that "somehow" a way would be found to get rid of the corrupt Velasco regime. Although some mili- tary elements may not be happy with the present situation, their ability to formulate plans and carry them out will be severely curtailed without strong leadership. With the opposition under-control, at least temporarily, the government has announced its plans for a return to constitutional government. At a convention of Velascofollowers on 25 June, Minister of Government Jaime Nabot announced that elections will be held in June 1972 for the presidency, the vice presidency, and congress. At the same time the voters will be offered the opportunity to indicate whether they will accept the 1946 constitution as amended or whether they wish the incoming congress to write a new one. President Velasco would turn over the gov- ernment to his successor on 31 August 1972. The coupling of the constitutional question with the regular presidential and congressional elections probably will disarm many of those who might otherwise attack the plan, as the ambitious politi- cians cannot afford to abstain from the elections. The announcement of.the plan to hold elec- tions and the government's new-found firmness in dealing with opposition leaders and would-be mil- itary plotters point up the President's determina- tion to finish his term in office. The 78-year-old Velasco has been elected five times and removed from office three times. His apparent desire to finish his current term indicates that he is likely to bow to any reasonable demand that will ensure SECRET Page 24 WEEKLY SUMMARY 2 Jul 71 Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927A008900020001-4 SECRET DOMINICAN REPUBLIC: In an unprecedented and highly dramatic broadcast over nationwide radio and television on Wednesday night, Presi- dent Joaquin Balaguer accused former General Elias Wessin y Wessin of plotting-ta.oyerthrow the government. Surrounded by the entire"h'iglcgm- mand of the armed forces and national police Balaguer displayed Wessin y Wessin in custody and accused him face-to-face of masterminding a coup attempt. The President offeredas evidence a recording purported to have been made by Wessin y Wessin in which the former general allegedly announced the downfall of the "corrupt and brutal" Balaguer government. Balaguer then turned Wessin y Wessin over to the military for judgment and demanded that a verdict be quickly returned. Details of the alleged plot are scanty. A few enlisted men had been arrested for involvement in pro - Wessin y Wessin activity prior to the tele- vised spectacle, but there=is nothing to indicate that the plot posed" a real threat to the govern- ment.tThe carefully staged humiliation of Wessin ssin, however, indicates that Balaguer has chose,.t.o destroy completely the former general's potential ias=a>threat to his government. Although the harsh treatment accorded 'Nessin y. Wessin may seem out of proportion to the seriousness of the threat, Balaguer's method of handling the incident will discourage anyone, who might have been tempted to come to the former general's support or who might be involved in independent plotting. SECRET Page 25 WEEKLY SUMMARY 2 Jul 71 Approved For Release 2008/06/04: CIA-RDP79-00927A008900020001-4 25X1 Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4 Secret Secret Approved For Release 2008/06/04: CIA-RDP79-00927AO08900020001-4