WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A008900030001-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 28
• Document Creation Date: December 21, 2016
• Sequence Number: 1
• Content Type: SUMMARY

Approved For Release 2008/05/20: CIA-RDP79-00927A008900030001-3
Secret
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
State Dept. review completed
Secret
9 July 1971
No. 0378/71
Copy
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CONTENTS
( formation as of noon EDT, 8 July 1971)
MI i,~ E EAST k RICA
WESTERN HEMISPHERE
Booming Despite British Withdrawal . . . . . . . . . . 8
Wins Election . 9
's Japan Policy/' . . . . . . . . . . . . . 10
Indonesian Governme
Singapore's Econom
More Recriminati
st Shuffle . . . . 6
Than Rejoicing in Pe ing 7
b~ii
Japan: Sato's
Page
The High Costs of War .\\ . . . . . . . . . . . . ... . . . . . . 4
Laos: The
Cambo
Indoc
New Polish Plan Recognizes the Corner j . . . . . . . . . . . . . . . 11
Yugoslavia: New Government Assembl g,ih the Wings . . . . . . . . . 12
Downturn in British Economy During F)rst Quarter . . . . . . . . . . . . 13
The Netherlands: New Dutch Govern~fienkes Office . . . . . . . . . . 14
Palestinians Meet Again ...ar~B Again... . . . . . . . . . . . . . . . . 16
Iraq: Baathi Stew Bubbli~g Again . . \\. . . . . . . . . . . . . . . . 17
Uganda: Army Proble s Trouble Amin Government . . . . . . . . 18
Iran Prepares to Fill military Vacuum in t~{ie Persian Gulf . \ . . . . . . . . 19
South Africa: Polit,~~al Liberals Hope to Witten Constituency . . . . . . 21
Development0in Chile . . . . . . . . 22
Dominican epublic: A Plotter Is Exiled 23
Andean Group
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FAR EAST
Indochina: Vietnam-And Then There Were Seven
The Viet Cong's Madame Binh last week
issued yet another Communist proposal for a
Vietnam settlement. Her seven-point statement
softens the Communist position on POW release
but retains and amplifies a very tough line on US
disengagement from the war. In addition, it
clothes Hanoi's political demands in language that
is both, less precise and more attractive than ear-
lier formulations. The whole tone of the state-
ment is conciliatory, and Communist spokesmen
have carefully left the impression that there is a
good deal of room in it for negotiation.
The seven points state that if the US sets a
"terminal date for the withdrawal from South
Vietnam in 1971 of the totality of US forces"
and those of its allies, the Communists and the
allies will immediately work out arrangements to
ensure the safety of the withdrawing troops and
to release the soldiers and civilians "of all parties"
held in captivity. Prisoner release, the statement
says, will begin and end on the same dates as the
US withdrawal.
The formula on prisoner release is new; up
to now the Communists have said only that the
POW issue will be "discussed" when the US sets a
withdrawal date. By including for the first time
civilian as well as military prisoners, however, the
Communists are opening the whole thorny prob-
lem of the Communist civilian cadre who are now
held by Saigon. More importantly, despite all the
conciliatory language, the demand that US mili-
tary disengagement be total-including non-
combatants, equipment, and bases as well as
combat troops-is as firm as ever.
On the political side, the Communists have
reverted to vague generalities reminiscent of their
ten points of 1969; more recently, in the eight
points issued last September, they have been
more specific in their demands. The eight points
contained an elaborate scenario involving the
ousting of the present Saigon regime, the forma-
tion of a new non-Communist "'administration,"
and the establishment of a temporary coalition
government on the basis of negotiations between
this "administration" and the Communists.
The scenario is the same in the new state-
ment except that the demand for a coalition
government has been replaced with a fuzzier call
for a broad "government of national concord."
Furthermore, only President Thieu is named in
the seven points as an unacceptable leader in
Hanoi's eyes; earlier statements had included Vice
President Ky and Prime Minister Khiem as well.
The seven points do refer to earlier demands
that the "government of national concord" have
"three segments," including what Hanoi considers
right-thinking individuals from the present Saigon
government and from the Communists' provi-
sional government as well as "peace-loving" peo-
ple who presently belong to neither. Even this
proposal is less specific than before, however, and
the Communists seem to be trying to leave the
impression that the form of government, and per-
haps its substance as well, is negotiable.
Poking the Ant Hill, or Something More?
There are some things that can be said with
reasonable certainty about the purpose of the
new proposal. It is fairly clear, for instance, that
Hanoi thought a more forthcoming position on
POWs, coupled with a restatement of the standard
Communist demands for US military disengage-
ment from Vietnam, would cause a good deal of
difficulty for the US Government. The broader,
less polemically phrased reformulation of Hanoi's
political proposals no doubt was composed in
hopes of encouraging antiwar sentiment in both
South Vietnam and the US.
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More specifically, the seven points try to
make the Communists appear more reasonable
and conciliatory just at a time when election
maneuvering in South Vietnam is becoming more
intense. Although the Communists certainly do
not intend to participate overtly in the elections,
they may calculate that by cultivating a less in-
transigent image they can help antigovernment,
antiwar candidates in both the legislative and the
presidential elections.
But there are signs that Hanoi is looking for
something more. The renewed vagueness of the
political proposals, the very comprehensiveness of
the changes they contain, and perhaps most sig-
nificantly the fact that Le Duc Tho of the North
Vietnamese party politburo is back in Paris after
an absence of over a year, all suggest that the
seven points were framed so as to interest the US
in exploring them further. Hanoi presumably
would be most eager to ascertain whether Wash-
ington is any less adamant in its refusal to talk
with Hanoi about a political settlement in South
Vietnam. The Communists may consider this
something of a long shot, but there do seem to be
hints that Hanoi has something more in mind
than simply causing trouble. for the administra-
tions in Saigon and Washington. .
Prompt Peking Endorsement
Peking quickly took steps to dramatize its
close support of Hanoi's latest move in Paris. In
an editorial in the authoritative People's Daily on
3 July, the Chinese fully endorsed the Vietnamese
Communist seven-point proposal as the "correct
way for the peaceful settlement 'of the Vietnam
question." Peking's prompt reaction to the Viet-
namese proposal is unprecedented and suggests
that Hanoi, coordinated its new move with Peking.
The Chinese waited five months before acknowl-
edging the ten-point plan advanced by the Viet-
namese in May 1969 and delayed for three
months their. endorsement of the. Communists'
eight-point plan of September 1970.
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Also last weekend, the Chinese signed the
second supplemental military aid agreement of
the year with the Vietnamese: under the agree-
ment Peking will supply unspecified equipment
and materials The normal mili-25xl
tary aid pact for 1.971 was signed last October,
and the first supplementary agreement was
reached in February. The signing of the latest
protocol was accompanied by a warm, high-level
reception in -Peking for the North Vietnamese
military aid delegation.
Moving Back from Cambodia?
Bad weather restricted military activity this
week in South Vietnam's northern provinces, but
there were signs that the. Communists may be
sending some military units back into the south-
ern part of South Vietnam from Cambodia.
Although there, have been no recent move-
ments of elements of the Communists' 5th, 7th,
and 9th divisions back into northern and western
Military Region (MR) 3, there has been a spate of
reports of the cross-border movement of small
groups into the delta provinces of ?MR 4. Despite
the blocking of many of the enemy's primary
infiltration corridors by South Vietnamese forces,
prisoner and defector reports have claimed that
many company-sized or smaller enemy units have
managed to slip across the border and into base
camps within South Vietnam. Official figures
place the total number of men who have moved
into the U Minh Forest region in recent months at
nearly 2,200, and others have undoubtedly
moved undetected into the northern delta.
Whether these recent, but fairly small, move-
ments of men back into South Vietnam will be
followed by larger numbers of troops remains to
be seen. They could merely be part of an enemy
effort to strengthen weakened forces in the south-
ern part of South Vietnam. But the Communists
maybe planning to intensify'their'war effort in
the year ahead, and these moves could be in
preparation for offensive operations beginning
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this fall when the rains cease in the southern half
of the country.
There-io-some eviden t'o-stigg ,t, however, that
these action aa Ts
m arintended to support in
creased ill tly acti n
ity later o this year.
Vice President Ky this week became the first
presidential contender in South Vietnam to an-
nounce the choice of a running mate; southern
Catholic politician Truong Vinh Le will join his
ticket. Le, a chairman of the National Assembly
under the Diem government in the early 1960s,
narrowly missed election to the Senate last year
as head of a government-backed list composed
largely of Catholic moderates. Le's selection prob-
ably will gain Ky some support from Catholics
and splinter groups that otherwise would go to
President Thieu.
Ky himself apparently remains optimistic
that he will be on the
ballot
Recent reports indicate the Viet Cong are
working hard to strengthen their local cadre net-
work\in South Vietnam's two southern military
regions',,, perhaps with a view toward supporting a
more ambitious military effort in the coming
year. Resolution 10, issued by the Communists'
southern c9mmand (COSVN) earlier this year,
concentrated on improving the political arm of
the Viet Cong in areas that now ar under govern-
ment control.' The resolution directed that more
legal cadre-agents with official government docu-
mentation-must'be moved into these areas to live
among the people and persupde them to oppose
the government.
In addition to.iricrepsing the number of legal
agents, the Viet Cong Are closing out some of
their ineffective administrative units and moving
cadre to areas where th'ey can operate more suc-
cessfully. A provinc9evel committee in Bien Hoa
Province northeast Iof Saigon, for example, was
deactivated in late1April and its cadre reassigned
to understaffed units in neighboring provinces
and districts. Inytthe delta, the Communists have
been shoring up their local structure by forming
units that caq,,' monitor the activities of several
village administrations instead of relying on
separate organizations in each.
The Communists also are attempting to im-
prove cadre performance by reassi ning high-level
cadre to lower level positions.
MRs 3 and 4, district-level cadre
have been sent down to village committees and
party chapters to bolster cadre strength and im-
prove local operations. 25x1
The enemy's current emphasis on strength-
enin~ the cadre network may be intended only to
offset losses suffered at the hands of government
security authorities and to meet the requirements
of! carrying on the struggle over the long haul.
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Cambodia: The High Costs of War
With monsoon rains helping to cool down
Communist military activity throughout most of
the country, the Lon Nol government has been
left relatively free to wrestle with its mounting
economic problems. The situation has just seemed
to go from bad to worse, however, as inflation has
greatly accelerated and confidence in the cur-
rency has continued to plummet.
Prices have skyrocketed in Phnom Penh as a
result of increased military spending, depleted
stocks of imported items, reduced shipments of
food into the capital, and early indications of a
poor rice crop next season. Beef and pork were
selling at more than twice their normal prices, and
the open-market price of rice, which had held
steady since the war began, more than doubled in
a matter of days and has not fallen appreciably
despite government rationing at official prices.
This week the government asked that assistance
Page 4
under the PL-480 program be expanded to in-
clude rice.
The black-market value of the net has also
depreciated drastically. The price of a US dollar
in Phnom Penh, which was 250 riels on 21 June,
had zoomed to 350 riels in early July. The rea-
sons for this fluctuation were not entirely clear,
although the psychological effect of the shortage
of rice in the city probably contributed to it. It is
also likely that the further flight of capital from
the economically important Overseas Chinese
business community influenced the riel's plunge.
To ease the rice crisis, the government has
inaugurated daily military-escorted truck convoys
to move rice from well-stocked granaries in Bat-
tambang Province to Phnom Penh via Route 5.
The first such convoy of 62 trucks returned safely
to the Cambodian capital on 4 July. Tkegov-
e eat-official in charge -of-this-agr-iculturaJ
shuttle-service>ias= indicated. that it will take from
80 to 100 truckloads per day to meet Phnom
Penh's estimated daily rice requirements of 600
tons. Security arrangements call for a full
company of Cambodian soldiers to accompany
each convoy, and air cover will be requested. The
government apparently will have to move more
than 600 tons of rice per day from Battambang in
the next few weeks, however, if it hopes to in-
fluence farmers' decisions about how much rice
to plant for the 1972 crop.
Some recent developments appear to
brighten Phnom Penh's prospects for eventually
restoring public confidence in the country's war-
ravaged economy. Cambodia's leadership has
finally accepted in principle all of the sweeping
fiscal and monetary reforms recommended by the
International Monetary Fund (IMF) in March.
The first shipment of PL-480 agricultural com-
modities has arrived in Phnom Penh, and after
extended delays, the US aid program is beginning
to gather momentum.
A multilateral exchange support fund pro-
posed by the IMF-if established-would help
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0 Government-held location
0 Communist-held location
, -y .e- n
stabilize the exchange market and give Cambodia
a powerful instrument against inflation. The Cam-
bodians made their first pitch for foreign-ex-
change contributions to the fund to US, Aus-
tralian, South Korean, British, Japanese, and
Chinese Nationalist representatives at a meeting in
Phnom Penh on 5 July. France, which was not
represented at the meeting, apparently will also
be asked to participate.
To help condition the people and the ob-
streperous National Assembly to its proposed pro-
gram of "economic mobilization"-which consists
chiefly of the IMF's suggested reforms-Lon Nol
addressed the nation and warned of further belt-
tightening ahead. The assembly responded by
refusing to pass the highest budget in the coun-
try's history and sent it instead to a special com-
mittee for reconsideration.
The government has retained the military
initiative and continues to make substantial
progress. On 2 July irregular units seized high-
ground positions overlooking the northwestern
portion of the Plaine, and smaller units continue
search-and-destroy operations over most of the
Plairle, except in the northeastern area around
Khang Khay. They have encountered little enemy
resistance and have located numerous supply
caches, while enjoying heavy air support through-
out.
Activity has remained relatively light in the
rest of the country. In the central panhandle,
government clearing operations continued be-
tween Dong Hene and Muong Phalane, but
Laos
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irregular units attempting to enter Muong Phalane
have so far encountered stiff enemy resistance.
in Lne DOIUV nS r1dWedu area, yvvernrnenL
forces that raided Ban Gnik, east of Pakse, encoun-
tered stiff resistance. This is the first operation in
the area since the abortive attempt to retake Pak-
song in early June.
Japan: Sato's Last Shuffle
Prime Minister Sato once again demonstrated
his unusual adroitness in manipulating top-level ap-
pointments to further his goals. In his postelection
cabinet reshuffle on 5 July, Sato accommodated
the major powers in the party while strengthening
the chances of Takeo Fukuda to succeed him as
prime minister when his term ends next year.
Sato installed ex - Finance Minister Fukuda as
foreign minister, a post that will give him additional
experience in international affairs prior to his bid
for the prime ministership. Sato also named a top
supporter of Fukuda to the key post of Liberal
Democratic Party (LDP) secretary general, which
largely controls distribution of party funds and
appointments.
At the same time, the prime minister did an
expert job of accommodating the interests of the
other major aspirants for the prime ministership.
Kakuei Tanaka, a major contender who resigned
last week as secretary general to take responsibility
for the LDP's poor showing in the Upper House
elections on 27 June was named to the Interna-
tional Trade Ministry. The ambitious Yasuhiro
Nakasone left his post in the Defense Agency to
become chairman of the LDP's executive board, a
move that will enable him to broaden his base of
party support for a future assault on the prime
ministership. Nakasone's successor as defense chief,
KeiKichi Masuhara, is a long-time defense expert
whose more low-key approach to the job should
provide less fuel for charges of "reviving Japanese
militarism."
In confronting one of the first major tasks
facing the new cabinet, that of reducing strains in
US-Japan relations caused by economic issues,
Sato's new appointees should be more effective
than their predecessors. In particular, Fukuda and
Tanaka, because of their political clout, are better
equipped to bring reluctant bureaucrats into line on
economic policy. It is possible, however, that the
rivalry between these two prime ministerial aspir-
ants will occasionally result in disagreement on
major economic issues.
This is almost certainly the last cabinet re-
shuffle-before Sato steps down. The skillful cabinet
shift apparently satisfies demands for "new blood"
at the top level; these have been heard particularly
from key business leaders alarmed by Communist
gains in the recent elections. Sato's careful bal-
ancing of party factions in this "lame duck" cabinet
will also help considerably in preventing the suc-
cession struggle from excessively undercutting his
ability to make major policy decisions during his
last year as prime minister.
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More Recrimination Than Rejoicing in Peking
The persistence of deep-seated divisions
throughout the nation's leadership hierarchy was
affirmed by the low-key celebration of the party's
50th anniversary last week. Peking's major pro-
nouncement marking the event failed even to hail
the recent progress in reconstituting most of
China's provincial-level party committees, a
reticence reflecting not only the incompleteness
of the tortuous process but also the broad dis-
agreement it has engendered over personnel selec-
tion and organization. Further, many of the party
organs that have been established are as yet an
uneasy amalgam of contrary political tendencies.
The historic occasion also did not elicit a full
leadership turnout, an extraordinary omission
since there were indications that a major meeting
of key central and provincial officials had been
convened in Peking shortly in advance of the
anniversary. The absence of public display further
attests to the lack of cohesion within China's
ruling politburo and more particularly to the con-
tinuing uncertainty surrounding the political fu-
tures of four of its ranking members.
The official editorial commemorating the an-
niversary was largely a panegyric to the correct-
ness of Mao Tse-tung's "line," together with a
recounting of the political sins of many of his
earlier party opponents. The article, however, was
remarkable for its cursory treatment of the
achievements of the Cultural Revolution. Al-
though it did severely castigate deposed state
chairman Liu Shao-chi-a must on almost any
occasion- the editorial, in pointedly ignoring
other opponents uncovered by Mao and his radi-
cal lieutenants on the Cultural Revolution Group
(CRG) during the 1966-68 period, declared flatly
that "we will not go into detail about this revolu-
tion."
This gingerly approach clearly reflects the
mounting political pressure over the past year on
the former CRG leaders and on many of their
ultraleftist proteges in the provinces; the current
intensity of the factional and personal conflicts
generated by this pressure, in fact, casts consider-
able doubt on the ultimate outcome of the Cul-
tural Revolution, and much of its history may
even be in the process of being rewritten. The
editorial's condemnation of counterrevolu-
tionaries who created chaos and sought personal
power in the revolution, its call for exposing
conspirators and renegades still in the party, its
praise for the army's role in restoring order, and
its heavy criticism of leftist deviations seem aimed
at downgrading the radical ideologues who were
the prime movers in the Cultural Revolution. In
particular, the editorial's scoring of "sham Marx-
ists" who pretended to be theoreticians "to bluff
and hoodwink innocent people" appears to be a
direct slam at long-absent politburo standing com-
mittee member Chen Po-ta, the regime's leading
theoretician and the former head of the CRG.
The obvious antileftist bias of the anniver-
sary editorial, an intensifyiing nationwide
crackdown on extremists, substantial erosion in
the positions of revolutionary activists in many
provincial party committees, and the recent
re-emergence in important party positions of
some prominent officials believed purged early in
the Cultural Revolution, all appear to confirm a
substantial swing in the balance within the
unsettled politburo in favor of a relatively
moderate grouping of leaders that includes
Premier Chou En-lai and some of the powerful
central and regional military figures. Nevertheless,
the questionable political status of two politburo
members and a major military regional com-
mander associated with the latter grouping, as
well as continuing, if tenuous, indications that
some elements in Peking are disszitisfied with the
"conservative" cast of the emergent party ap-
paratus, suggests that important elements of
China's complex leadership equation remain
unsolved and that it is still too soon to discount
entirely the political influence of the radical
ideologues.
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Singapore's Economy Booming Despite British Withdrawal
Singapore's economy continues to grow
rapidly despite the almost complete withdrawal
of British defense. forces, which is scheduled for
completion by the end of the year. Although the
announcement in 1968 of the UK's withdrawal
gave rise to dire predictions for Singapore's fu-
ture, these proved unfounded as the growth rate
continued to increase, reaching 15 percent last
year. Fueled by private foreign investment, Singa-
pore has been transformed in the last decade from
an entrepot to a leading manufacturing center,
and its attractiveness to foreign investors seems to
be increasing. Because it produces for export and
has become a regional center for marketing and
other services, Singapore's economic outlook
appears bright.
Although other sectors of the economy,
such as tourism and banking, also experienced
increases, more than half of the growth last year
in Singapore's gross national product was due to
increases in fixed capital formation, primarily in
manufacturing. The growth in government reve-
nues, in turn, was sufficient to cover the sharp
increase in defense spending during the last fiscal
year. No major tax increases are planned, al-
though recently released figures show a more than
50-percent increase in total projected defense
spending during the current fiscal year.
Singapore's main attractions to foreign in-
vestors are its stable government, an efficient and
honest civil service, tax and other economic
incentives, a well-trained and disciplined labor
force, and low wage rates. Unlike many of its
Asian competitors, Singapore has managed to
keep wage rates from rising faster than produc-
tivity. Its success in.attracting foreign investment
also has allowed the government to be selective in
choosing industries employing advanced tech-
nology and offering training programs to local
employees. As a result, Singapore's labor force is
becoming one of the most highly skilled in South-
east Asia; foreign manufacturers of electronic and
optical goods, for example, established plants in
Singapore last year.
Oil refining, Singapore's largest industry,
continues to grow rapidly. Refining capacity,
which at almost 400,000 barrels per day is larger
than that of any other nation- in Asia except for
Japan, is scheduled to reach 825,000 barrels per
day by the end of 1974. Foreign investment in
refining, estimated at $250 million, equals invest-
ment in all other manufacturing activities com-
bined. More than two thirds of the foreign invest-
ment in manufacturing already committed for the
next four years, moreover, will go to expand oil
refining facilities.
Singapore has experienced some economic
disappointments recently, however, especially the
failure of a major US investor to participate in the
aerospace industry, but another US firm and a
British-Singapore company are proceeding with
plans to convert the former British bases for aero-
space purposes. Singapore is using the former
bases that have already been turned over to build
and repair ships as well as oil rigs.
Despite government statements to encourage
the use of Singapore shipyards by Soviet ships, it
is unlikely that the USSR will allow its naval ships
to be repaired and maintained in areas also serv-
icing British naval vessels. Soviet merchant ships,
however, have been using Singapore's yards for
minor repairs for some time. Moreover, two
Soviet maritime teams that visited Singapore early
this year recommended that Soviet merchant
ships use Singapore's facilities for planned rather
than for strictly emergency repairs. The expected
increase in Soviet port calls will reflect the growth
of commercial Soviet shipping in the area, due in
part to the fact that Soviet ships charge less than
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Indonesian Government Wins Election
The government party, Sekber Golkar,
scored a sweeping victory in the parliamentary
elections on 3 July. Although the final count will
not be available for some weeks, government
sources now claim that Golkar will surpass its
own goal of 50 percent of the popular vote and
will win close to 200 of the 360 elected parlia-
mentary seats. These, with the 100 appointed
members, will enable the army-controlled Suharto
government to continue its priority program of
economic improvement.
Trailing Golkar at some distance is the tradi-
tionalist Moslem party, Nahdatul Ulama (NU),
which may win about 60 seats. Even further
behind are the secular National Party (PNI) with
perhaps 40 seats and the modernist Indonesian
Moslem Party (PMI) with 25. Roughly five seats
each may go to three minor parties-the Islamic
Unity, Catholic, and Christian (Protestant)
parties.
Perhaps the most startling feature of the
election returns so far is the stunning reverse
suffered by the Indonesian National Party (PNI).
Once the largest party in the country, the PNI has
traditionally counted on its strength in the bu-
reaucracy and its mass following in densely popu-
lated East and Central Java. The bureaucracy,
however, was pressed to register with Sekber
Golkar, and the PNI suffered a series of diffi-
culties, including a lack of funds, in organizing
and implementing its campaign.
Predictably, the government is being charged
with vote manipulation, but the losing parties
have no effective way to translate their frustra-
tion into action, and no major protest is likely to
develop. For the most part, the parties are react-
ing to the election outcome with what appears to
be stunned silence. Although it was obvious that
the government's heavy-handed pressure tactics in
favor of Golkar influenced many voters, the large
vote total for Golkar indicates that the Indo-
nesian people have accepted Sul-iarto's policies
and style.
The government has regarded a successful
election outcome as the first step toward restruc-
turing the political party system and further de-
emphasizing the traditional parties. Political stra-
tegists apparently are thinking in terms of devel-
oping a single mass party from Golkar, which
itself is an army-affiliated coalition of social and
occupational groups. This nevi organization
would enlist support from all significant elements
in Indonesian society and hopefully would bridge
the societal cleavages that are emphasized by the
present parties. The pace at which the govern-
ment moves toward developing such an organiza-
tion, however, depends on the amount of atten-
tion it is willing to divert from its economic
program to political action.
The cabinet and presidency are not imme-
diately affected by this election because under
the Indonesian constitution the cabinet is respon-
sible to the president and the president is elected
by congress. The latter, a 920-seat body that
formulates national policy, is indirectly affected
inasmuch as parliament makes up half its mem-
bership.
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Fits and Starts in the USSR's Japan Policy
The USSR seems to be having considerable
difficulty in formulating a consistent policy
toward Japan. Increasingly concerned about
growing pressures in Tokyo for better relations
with Communist China and desirous of counter-
ing this trend, Moscow has in recent months used
a variety of channels to impress upon the Japa-
nese its desire for better relations. The Japanese,
however, attach little urgency to improving ties
with Moscow. There is little political capital to be
made on this issue in Japan, while advocacy there
of better ties with China creates a highly favor-
able popular response.
In late June, the Soviets sent an emissary to
publicize Moscow's current "peace offensive" and
to help improve the USSR's image in Japan. The
visit, however, unhappily coincided with the sign-
ing of the Okinawa reversion agreement, and the
Japanese used the occasion to remind everyone of
the USSR's failure to return the "Northern Ter-
ritories." The USSR lost further ground when it
postponed again, this time indefinitely, the an-
nual USSR-Japan economic cooperation meeting
on grounds it was not adequately prepared for the
negotiations. The cancellation probably reflected
SECRET
Page 10 WEEKLY SUMMARY
disagreement in Moscow over plans for Siberian
development and the role to be granted the
Japanese in it, as well as economic considerations
such as the terms of financing.
Despite the rapid growth of Soviet-Japanese
trade (last year Japan moved ahead of the UK to
become the USSR's most important trading part-
ner in the free world), economic relations con-
tinue to be hindered by the conflicting priorities
both sides attach to them. Moscow is thinking
about the long-term integrated development of its
eastern areas, whereas the Japanese are interested
in the short-term profitability of specific ven-
tures. Despite years of negotiations, the Soviets
have been unable or unwilling to agree to terms
that would attract Japanese capital and technol-
ogy in the volume the USSR professes to want.
Only two major joint development projects
have been concluded between the two countries.
Under the terms of an agreement signed in 1968,
the Japanese agreed to supply $133-million worth
of bulldozers and timber-processing equipment in
exchange for an equivalent amount of Soviet
timber and wood products during 1969-73. The
other project involves the Japanese in the devel-
opment of the Soviet Pacific port of Vrangel
under an $80-million credit. The Japanese see the
latter agreement as being more important because
it will help improve the economic infrastructure
of the eastern USSR. The considerable potential
for Soviet-Japanese economic collaboration
cannot be realized until Soviet port facilities and
the underdeveloped transportation network in
this area are improved significantly.
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EU ROPE:
New Polish Plan Recognizes the Consumer
The Gierek regime took another step toward
fulfilling its promises to the Polish consumer at a
recent central committee plenum called to amend
the 1971-75 economic plan drafted by the
Gomulka government last year. Final approval of
the new plan will take place during the sixth
party congress at the turn of the year.
At the plenum, Premier Jaroszewicz dis-
cussed certain of the newly established goals and
stressed planned increases in the growth of con-
sumption and real wages. Major provisions of the
1971-75 plan compared with achievements in
1966-70 are as follows:
Growth (in percent-
1971-75 Plan
1966-70
ages except as noted)
Directives
Actual
Consumption
38
30
Agricultural
Production
18-21
9.2
Per Capita Meat
Consumption
(in kgs.)
7.6-8.6
17-18
37
Analysis of these goals indicates the difficul-
ties of making dramatic changes in a short period.
Consumption, which has long been slowly declin-
ing relative to national income, is scheduled to do
no more than retain its share over the plan period.
Even this may not be accomplished because of
the tendency to underfulfill the consumption
plan. Real wages are scheduled to increase twice
as fast as during the previous period, but con-
sumption per capita is planned to increase by
only 31 percent compared with the 26 percent
growth achieved in 1966-70.
Given the magnitude of current housing
shortages, scheduled increases in construction will
not provide for a significant improvement over
the goals in the original 1971-75 plan. Assuming
the Gierek plan is fulfilled, the over-all gain to the
average Pole will be only slightly better than that
projected under Gomulka.
There are, however, some bright spots in the
plan for the consumer. Consumption of meat is
planned to increase rapidly, and a quicker growth
in social services (not counted in the figures above
on consumption) is scheduled. Finally, some real-
location of investment from heavy to light indus-
try and agriculture may make possible greater
consumption increases in subsequent plan pe-
riods.
Economic results for five months of 1971
demonstrate that the consumer is somewhat bet-
ter off than previously and that the government
has been able to start achieving some of its goals.
Especially good results were realized in retail sales
and in supplies of some foods, and agricultural
production currently is described as favorable "on
the whole." Some negative developments include
above-plan investments and sporadic instances of
inadequate supplies of meat, butter, and some
light industrial products.
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Yugoslavia: New Government Assembling in the Wings
The Yugoslavs have begun to decentralize tion, which should ensure a safe passage through
political power and institutionalize the choice of the transition period. His sojourn in Croatia over
a successor to President Tito. A new collective the 4 July weekend, and particularly his face-to-
presidency and a Federal Executive Council re- face meeting with Croat party chiefs, was a key
duced in size and power are expected to be in move in pursuit of an amicable solution.
place by the end of the month.
The Federal Assembly enacted Tito's sweep- COLLECTIVE PRESIDENCY
1) President - Josip Broz Tito
2) Vice President - (to be elected
from representatives below)
SERBIA
Dragoslav Markovic (Serb)
1)
2
Koca Pop vic (Serb)
)
3
3) Dragi Stamen (Serb) (Serb)
CROATIA
1) Mirko Tripalo (Croat)
2) Jakov Blazevic (Croat)
3) Djuro Kladarin (Serb)
SLOVENIA
1) Marko
2) Marko
lc bicic (Slovene)*
3)
Sergej Krajger (Slovene)
MACEDONIA
1)
Krste Crvenkovski (Macedonian)*
2)
Kiro Gligorov (Macedonian)*
3)
Nikola Minchev (Macedonian)
BOSNIA
1)
HamdijaPozderac(Muslim)
2)
AugustinPapic(Croat)
3)
RatoDuljnjic(Serb)
MONTENEGRO
1)
Veljko Micunovic (Montenegrin)
2)
Vidoje Zarkovic (Montenegrin)
3)
Dobroslav Culafic (Montenegrin)
VOJVODINA
1) IlijaRajacic(Serb)
2) Matyas Kelemen (Hungarian)
Kosovo
1)
Veli Deva (Albanian)
2)
Ilijaz Kurtesi (Albanian)
Despite the clash of republic interests, Tito *front-runners for the vice presidency
has strenghtened his control of the internal situa-
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Page 12 WEEKLY SUMMARY 9 Jul 71
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ing constitutional amendments on 30 June,
thereby providing a legal basis for the political
reforms. Appointments to the collective presi-
dency, henceforth the supreme state policy-
making authority, were completed smoothly
before passage of the amendments. All that re-
mains to be done is to create and staff federal and
republican administrative offices and to elect,
from among the appointees, a vice president, who
would serve one year, and would become presi-
dent if Tito died. The three most likely candi-
dates for the vice-presidency this year are ex-
Premier Mitja Ribicic, a Slovene, and two
Macedonians, Krste Crvenkovski and Kiro
Gligorov.
Dzemal Bijedic, a Bosnian Muslim, has been
nominated prime minister of the Federal Execu-
tive Council (FEC) and is now selecting a new
cabinet. Although the new FEC will be only an
administrative body with no policy-making
authority, the cabinet appointments could
become a contentious issue. The Croats, the most
vocal of the nationalistic minorities, have already
announced that they want to obtain influential
positions in the state secretariats of foreign trade,
foreign relations, and internal security. The
wavering in Belgrade over the total number of
cabinet posts is one indication of the byplay of
interrepublic interests over control of the ad-
ministrative body.
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The basis for resolving the question of the
vice-presidency is consistent with the thrust of
the whole reform program-to counterbalance
republic and nationality interests at the federal
level. Central to the success of this approach will
be the balancing of Croat and Serb officials. The
failure of the Serbs to nominate their strongest
leaders to the collective presidency suggests they
are shooting for higher posts, probably in the
party. They have succeeded in placing Mijelko
Todorovic as head of the National Assembly but
they will not be satisfied with this post, if only
because until now it has been largely ceremonial.
The Croats, because of their recent nationalistic
outbursts, are in a poor position to bargain but
can rightfully expect some high-level federal
posts.
Downturn in British Economy During First Quarter
of the UK's gross do- of payments po ition,~,b.owever could deteriorate
Preliminary estima%
mestic product... show a "drop of almost three sharply wityh,,a vival of demand because the
percent in the first quar,,ter'of 1971. Fixed capital resulting-upturn in\imports probably would not
expenditure was off by nin e.percent, and exports __be1natched by an eq)valent increase in exports.
of goods and services were down -seven percent.
Moreover, despite reduced demand, pr4ces and
wages continued upwa{r'd.
Several recent-deve`opments have brightened
the otherwisew?gloomy picture, however. The rate
of increase in unemployme~t has slowed sharply,
and-'1he balance of payments was favorable for
the first four months of the year. Net earnings on
invisibles, such as investments, banking and
tourism, are averaging about $120 million a
month, or roughly three,', times the monthly
deficit on commodity trade. London's balance-
the government is c
economy. further.
ing under increasing pres-
ams that will stimulate the
assess the impact 'on demand of recent tax cuts
and increased''-p nsion payments and other
benefits before uidertaking additional refla-
tionary measures. The government continues to
believe that the economy will ;grow by three
percent during fiscal )1972, but it is unlikely that
this forecast will be 'realized.
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The Netherlands: New Dutch Government Takes Office
Lengthy postelection negotiations concluded
with the formation on 6 July of an unprece-
dented five-party coalition government, led by
Prime Minister Barend Biesheuvel, a popular
Protestant party figure.
Biesheuvel's center-right government re-
places that of Petrus de Jong, which lost its par-
liamentary majority in the national elections of
28 April. Both coalitions are identical with the
exception of the addition of a small socialist
splinter party-the Democratic Socialists '70 (DS
'70). Biesheuvel's working majority will be one
seat less than de Jong's, but additional tacit sup-
port from ultraconservative parties should assure
the government of a comfortable margin in parlia2,
parties. The Labor Party, imbued with NOW
Leftist ideology, dominates the latter pol.i`ical
grouping. Unlike his predecessor, Biesheuv 1 has
fashioned a cabinet of accomplished po}ticians
distinguished for their parliamen.ary ex-
perience-the type of experience rejuisite for
maintaining stability in such a complicated coali-
tion arrangement. Y
On foreign policy matters,road consensus
exists among the coalition part'ers. A firm com-
mitment to NATO and th preservation of
amicable bilateral relations ith the US remain
keystones. Changes in nuan e are to be expected,
however. Emphasis will be put on strengthening
the European Community's (EC) institutions and
on broadening its,/political dimensions.
Biesheuvel, his defense minister, Henri de Koster,
and the new foreign "minister, Norbert Schmelzer,
have been intenselyi involved in EC affairs and are
more likely than previous Dutch leaders to con-
ceive and approach problems from a specifically
European orierkiation.
Nevert eless,, the essential basis for the gov-
ernment's f rmation was a draft program dealing
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0
DS'70 8
CPN- Communist Party of the Netherlands
PSP- Pacifist Socialist Party
Progressive Opposition Bloc
PPR- Radical Political Party
D'66- Democrats `66
Pvd A- Party of Labor
New Government Coalition
DS '70- Democratic Socialists '70
KVP- Catholic People's Party
ARP- Anti-Revolutionary Party
CHU- Christian Historial Union
VVD- Liberals
Page 14 WEEKLY SUMMARY 9 Jul 71
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7AO08900030001-3
I% Second Chamber of Dutch Parliament
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almost exclusively with domestic affairs. At the
insistence of DS '70 and the Liberals, the coali-
tion committed itself to a two-year program of
austerity in order to curb inflation and to correct
balance-of-payments difficulties. Funding of the
social programs that the three confessional
parties-particularly the Catholic Party-promised
in their electoral campaigns will obviously be de-=,?" certainly provides a source oi future discord
layed and will be contingent upon an au.5picious within the five-party arrangement. The issue may
financial situation and economic grog thi'. have to be faced soon. With the expiration this
The basic agreement among the coalition
parties on__q,ver' ment financing was left pur-
posefu ague in order to facilitate the coali-
tion's formation, but the government's,~,,..intenfion
to expand housing, social insuraoee1?benefits, and
defense spending wiLlfa a tax increases
ultimately unavo.idab'ie. The apparent contradic-
tion between-ai near-standstill tax policy and an-
nounced?-priorities causes apprehension among
,trade-union leaders and the Catholic left wing and
month of the national wage curb, an explosion of
wage demands is expected. This could upset the
government's anti-inflationary plans and foster
trouble from the parsimonious-minded Liberals
MIDDLE EAST-AFRICA
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Page
with the various feda. een organizations ',It_ is
expected to concentration the perennial problei'
of fedayeen unity, but,it is not likely to be any
predecessors have been.
Yasir Arafat reported t -t a ouncil in his
role as chairman of the PL3`'Me claimed that the
military strength of~ Palestinians had been
doubled over th year by an~expansion of the
three brigads- of the PLO's military arm, the
Palestine-Liberation Army (PLi?). The guerrilla
chieftain also renewed his wishful forecast that
the resistance movement would become even
more powerful with the unification of the various
fedayeen organizations. Regarding relations with
SECRET
Palestinians MeetAgain ...and Again...
The ninth session of~\,the Palestine National
Council, the-parliamentary 'organ of the Palestine
Liberation Organization (PLO), began on 7 July
in Cairo with an address.,,b_y President Sadat on
Egyptian support for the Palestinian cause. The
expanded council now mbers455 delegates,
including 116 who either represent orsyrnpathize
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Amman, Ara at said that Palestine and Jordan
were linked to they by many ties and~that there
must be politica unity betwee_n:Ah6 two under
the leadership of a`Lordaniatl ational front.
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SECRET
fedayeen strongholds, preferably in a sufficiently sides.
month, presumably rVect a continuation of the harmed recent attempts by a Saudi-Egyptian
govern-ment's policy of gradually reducing delegation to mediate between the two
Meanwhile, fighting between fedayeen and low-key marnrierrto a id unleashing hysterical
Jordanian Government troops broke out again outcries in the Arab press. In this, the government
last weekend in the area between Jarash and" appears to have been su essful; the recent in-
Ajlun in northern Jordan, he clashes, similar to cidents do not seem to have halted the thaw in
those that occurred daring the latter part of last- relations between Jordan and Egypt, or to have
Iraq: Baathi Stew Bubbling Again
In recent weeks, the political atmosphere in
Baghdad appears to have become somewhat more
lively, at least in comparison with the relatively
low incidence of coup plot reporting that had
obtained for some months.
British-sponsored coup plot. No details are avail- terness among" the Kurds and could eventually
able beyond the fact that/three British Embassy result in "new fighting. )Kurdish leader Mulla
staff officers were expelled for their supposed Mustapha Barzani remains suspicious of govern-
espionage activities, but the Baathis are forever ,rrient intentions and iay again turn to the
suspicious that the U,K is engaged in antiregime Iranians for aid in order/to reopen the struggle.
when Iraqi authorities rolled up an allegedly is causing '-increasing frustration and bit-
Baghdad also, may be in for some new
troubles with the `rebellious Kurdish minority in
the north. The government has still not imple-
mented some of the political aspects of the ac-
cord, signed in March 1970, fh-a`were aimed at
giving the Kurds some'degree of political
The latest incident occurred early this week autonomy. This slow-`0 zce
problems.
political isolatiori,l, even from its Arab brethren.
Last weekend, President-Bakr dispatched personal
emissaries with m'gssages for several Arab leaders,
explaining Baghdad's stand on Middle East issues.
The exact content\of the messages-,has not been
made public, but since the advent of,the Asad
regime in Syria, the Iraqis have been lef?t'v. rtually
alone in their radical anoroach to Middle East
If Baghdad's recent diplomatic moves are
indicative, the re'g me may be feeling uneasy in its
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U4anda: Army Pr,
blems Trouble Amin Government
Since the military goernment seized power
last January, army troops-' iargely from the West
Nile District, President Amin's home area-have
been taking advantage of th sir new-found domi-
nance to settle long-standi g grievances with
northern Nilotic civilians a d army troops, the
source of much of ex-Pre 'dent Obote's support.
Many Nilotes, particul `rly Acholi and Lango
tribesmen, have been killed, beaten, or indis-
criminately arrested or,detained. The government
has announced that 6 0 enlisted, men and 75
officers-out of an army\.of-about 10,000-have
been killed in recent rporith~\ Although the deaths
have been officjally attributed to border encoun-
ters wi"Fro-Obote guerrihlas infiltrating from
Tanzania, this explanation ,is discounted by the
`US Embassy in Kampala.
General Amin has thus far made little effort
to impose discipline on the army or to restrain his
fellow West Nilers;
moted to important
senior enlisted ranks.
some have even,,been pro-
mand structure appears
a,r-esult, the army com-
p be deteriorating, with
exercising complete
shes between troops at
been reported recently.
some local commander
authority in their areas. Cl
army installations have als
The-Ugandan my, which served as an im-
portant prop, for a Obote administration, has
long been known s a poorly disciplined force,
troubled by tribal Oroblems and given to brutal
excesses. Now that i is the, mainstay of the gov-
ernment, it is provingq even more difficult to re-
strain. If the present\\leadership isjo remain in
power, however, it will; have to gain some kind of
control over the unruly army, a feat that roved
difficult even for the crafty Obote
CONGO(B` CHINA ~ ecently available
information indicates`~t both. Moscow and Pe-
king signed military agreeme fs u:,ith the Brazza-
ville government last year. In/November'--China
agreed to provide: about $2
tary assistance including
machine guns, and oth
by May 1971. The agreemen,is the largest of the ground forces equip ent. Total Soviet military
three Brazzaville has signe with Peking, and aid to the Congo no amounts to over 12 mil
brings China's total military aidAo approximately lion.
$3 million.
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In June 1970 Moscow agreed to provide an
estimated $9.2-million worth of military equip-
ment including two of the, four AN-24 medium
transports delivered last February, as well as
illion worth of miii.- smaller transports, spare )parts, and aviation
-62 light tanks, rifles, ``'support equipment. The Oreement also calls for
ground forces equip- the supply_this year oeveral light amphibious
ortedly were delivered tanks, armored _peronnel carriers, and other
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Iran Prepares to Fill a Military Vacuum in the Persian Gulf
A major expansion of the Iranian armed
forces is continuing in anticipation of the British
withdrawal from the Persian Gulf later this year.
The Shah views the British departure as a develop-
ment that will afford. Iran the opportunity to
assume a pre-eminent role in the security of the
Gulf area and he considers expansion of his mili-
tary forces. essential to this new role.
The air force recently received the first four
of 32 late model Phantom fighter aircraft and
further deliveries are scheduled at the rate of four
per month. Iran already has 31 earlier model
Phantoms and 109 F-5 fighters. By the end of .~~
1975, the Shah plans to have about 135 Phan:,`
toms but anticipates no appreciable increase in
the number of F-5s. The air force will also acquire
additional reconnaissance and transport aircraft.
The Iranians have been building three "new
airfields on the Persian Gulf at Bandar Abbas,
Bushire, and Jask. When the last one;is completed
later this year, Iran will be capable of covering the
entire Persian and Oman Gulf,, areas. Bandar
Abbas also is the site of the new Iranian naval
base on the Strait of Hormuz, the entrance to the
Persian Gulf. The combination of a major new
airfield and an important naval base there will
strengthen Iran's ability to,control the mouth of a
vital sea lane.
To enhance the mobility and the military
cargo and troop-carrying capabilities of all three
armed services, Iran has ordered a wide variety of
helicopters from Agusta of Italy-all of which are
manufactured under license from US companies.
The first group of an order of 16 Chinook
medium transport helicopters already has been
delivered to the air force and by the end of 1972
Iran is to receive 55 light transport and 145
utility helicopters. The/6nly helicopters now
the Iranian inventory,,are 25 light transport types
supplied by the US }Some of the new helicopters
that are destined for the Iranian Navy reportedly
will be stationed on the Persian Gulf to sup-
plement the patrol activities of the navy's newly
acquired hovercraft,.
The navy has received from the UK eight
10-ton' hovercraft capable of carrying 30 to 35
combat-equipped troops at a cruising speed of 50
knots. It also will receive four 50-ton hovercraft,
which can transport 120 to 140 troops at 60
knots. The Shah views these craft as vital to a
fast-moving, flexible, and effective armed force in
the Gulf and has had a special hovercraft base
built on Khark Island in the northern Gulf. The
navy also is scheduled to receive this year from
the UK at least two of four new 1,200-ton frigates
armed with Sea Cat SAMs.
The Shah has; not neglected the army; he
'recently purchased `about 300 Chieftain tanks
from the UK to bolster the current inventory of
about 850 US-manufactured tanks. Delivery of 36
Chieftains will be made this year and the entire
order is to be completed. early in 1975.
Among the littoral states of the Gulf, Iran is
in the best position to ;,establish military pri-
macy-it has the largest, best equipped, and best
trained army, navy, and air force. Only Iraq is
capable of posing any serious threat to Iran. Many
Iraqi troops, some formerly,;stationed in Jordan,
are being redeployed to eastern and southern
parts of Iraq, where military:,sk,irmishes between
Baghdad and Tehran have been 'normal fare for
the past several years. Despitelithe potential threat
from Iraq, however, Iran could defeat any of the
littoral states, individually or in combina-
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U.S.S.R.
/- v,,, CASPIAN
j abriz Astara\1 SEA
\Hamadan /.Qom
Khorramabad. ' .
NEUTRAL
ZONE -
navalbase
ho[ramshah
Shatt a>AA
Khark
Island
hoverc ft
base
50-TON HOVEICRAFT
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Page 20 WEEKLY SUMMARY 9 Jul 71
TR IAL
S TES
new airfield
Jask
200
Statute miles OrHgN
GULF OF OMAN
W )fl C pandlungl oBar9 f aCMuez`
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South Africa: Political Liberals Hope to Widen Constituency
The Progressive Party-a small but vocal lib-
eral voice in South Africa-has launched a vigor-
ous campaign to attract young Afrikaners dis-
satisfied with the ruling National Party. In pursuit
of this goal, the party has changed its leadership
and some of its policies, and is trying hard to
change its image as well.
Since the party's formation in 1960, it has
concentrated on recruiting members from among
the more liberal elements of the English-speaking
community in urban areas. Party officials now
sense a changing political climate in South Africa,
with the two major parties no longer able to
command the allegiances of the past, and the
young, urban Afrikaner as an increasingly possible
"swing" group in white politics.
The Progressives' "new look" came out of
their party congress in February 1971. The most
significant change was the election of a dynamic
and hard-working political activist, Colin Eglin, as
the new chairman of the party. The youthful
Eglin, the complete antithesis of his aging pred-
ecessor, maintains extensive contacts in intel-
lectual circles and youth groups.
At the congress, the party membership also
approved a major shift in policy-from outright
opposition to qualified approval of the govern-
ment's plan for developing African tribal home-
lands (bantustans). The Progressives said in effect
that if "development" of the African within an
independent bantustan really means "improve-
merit," then the government should get on with
it. The rest of the platform remains essentially
unchanged. The party advocates a nonracial,
"qualified" franchise based on certain minimal
standards of education or earnings. It seeks to
promote unity between Whites and Coloreds
(people of mixed race) as well as between
Afrikaners and English speaking citizens, and to
eliminate the more offensive aspects of apartheid.
In their attempt to attract new adherents,
the Progressives have held meetings and organized
new chapters in several Afrikaner strongholds,
and have appointed a number of young Afri-
kaners as full-time party organizers. Moreover, the
party may soon offer an important position to
the recently resigned public relations officer of
the National Party, who left because his liberal
ideas clashed with the more conservative views of
the party leadership.
Despite these moves, the Progressives can
still be expected to proceed cautiously because
important elements within the party remain
skeptical about the new image. Moreover, al-
though the new enthusiasm and dynamism will
attract added membership to the ranks, the party
drew only 50,000 votes in the last election and
placed only one member in Parliament, so that it
has a long way to go before it becomes a sig-
nificant political force. Of more immediate im-
portance, however, is the possibility that any
successes may prove catalytic, speeding the intro-
duction of policy changes in the two major politi-
cal parties.
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SECRET
WESTERN HEMISPHERE
Developments i , Chile
DQ\mestic Politics
The MIR's pers' tent sort to vio-
US managers "in ve
that a study he
technicians had
ence i s increasingly . , u erproduci"ve in the
view of Allende and n); y of his backers, par-
ticularly the Communwst fa ty (PCCh). Eden the
hard-line PS leaders :ip os ensh ly has abandoned
its advocacy of aced violence harges by op o-
sition forces tha~Allen e favore armed groins
were having 2 telling f ffect amorf the many
Chileans shoked by several recent m riders com-
mitted b,/extremists. 'In this atmosph re, t
GAP was a political liability, so its members. e-
portedly are being assigned to government" en-
cies ' vhere they may reta)n security functio 's but
> ll provide a less visible1target for criticis f
Allende's Popular Unity (UP coalition is
touting the assured congression approval of
copper nationalization legislatio on 11 July as
Chile's "second independence .and is preparing
for extensive celebrations. The UP's massive pub-
licity build-up on the total,#ake-over of the large
copper mines features incessant charges that US
developers, who are stillipartial owners and man-
agers of the mines, have robbed Chile and are
responsible for most of the
In a speech on 3 July,
reports from French
clusions.
he President said that
nd Chilean technicians
e being received from the
bad condition." He added
!equested from visting Soviet
The'. Communist-led Confederation of Trade
Unions/has been given charge of distributing
man /,of the disaster relief supplies flown in
proynptly by the USSR following a particularly
sere winter storm in late June. The new Com-
u n ist Chinese ambassador in Santiago has
turned over more than $2 million cash to aid the
storm victims, and the Allende administration is
boasting of the receipt of relief from governments
cross the political spectrum. Tfie Eke offer--of-
Y~I~rerrtty--k~ei;ause-of-op~vsrt~en-,
best `s ossible relations with neighboring gov-
the
ernments,' hile is discussing solutions to bilateral
problems ith Argentina, and the presidents of
the two co tries plan to meet later this month
near the bo er. Cuban Ambassador Garcia an-
nounced on 5,,,July that Fidel Castro would visit
Chile "this yea'r\ presumably within 90 days." It
still seems likely. however, that Allende will try
to shore up his irn ge of respectability by visiting
Peru, Ecuador, and,olornbia before receiving the
country's problems. Cuban leader.
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Dominican Republic: A Plotter Is Exiled
President Balaguer has been both criticized
and commended for his handling of the case of
former General Elias Wessin y Wessin, who arrived
in Spain on 5 July after having been sentenced to
exile for conspiring against the government.
Several political figures, including Balaguer's
first-term vice-president, Francisco Augusto Lora,
and former president Juan Bosch, have publicly
objected to the highhanded way in which Presi-
dent Balaguer dealt with Wessin's self-proclaimed
conspiracy against the government. Bosch termed
the President's televised accusation against Wessin
on 30 June a "grievous spectacle." He also ex-
pressed alarm at the absence of protest from any
member of the judicial branch of the government
against the President's alleged usurpation of the
judiciary's responsibility. The general reaction as
reflected in the press, however, has dwelt almost
entirely on the theme that coups cannot solve the
country's problems and that constitutional gov-
ernment, however imperfect, is infinitely prefera-
ble to a government brought to power by vio-
lence.
Just what Wessin was trying to do and how
far he had progressed are still unclear, although it
seems generally accepted that a plot was afoot.
The press, however, has shown little curiosity
about details, possibly because almost no one but
General Wessin himself believed that he could
seriously threaten the government.
were modified just before the code became effec-
tive, and further adjustments could take place.
The failure to establish clear-cut "rules of the
game" by delineating mutual responsibilities of
member states and foreign investors is considered
a serious shortcoming from the investor's point of
view. The code's actual impact on foreign invest-
men,t probably will not be evident until a record
of im-p1e.rnentation and precedent is estab-
lished.
SECRET
ANDEAN GROUP: A common code governing
the treatment of foreign investment went into
effect on 1 July in Bolivia, Chile, Colombia, Ecua-
dor, and Peru. Although the code provides the
basis for eventual uniform treatment of foreign
investment throughout the subregion, it. is un-
likely that this goal will be realized in the near
future. The code contains numerous inconsist-
encies, ambiguities, and discretionary provisions,
most of which remain to be clarified. Five articles
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 Approved For Release 2008/05/20: CIA-RDP79-00927AO08900030001-3
Secret
Approved For Release 2008/05/20: CIA-RDP79-00927AO08900030001-3