WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A009400100001-9
• 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 2008/08/05: CIA-RDP79-00927A009400100001-9
Secret
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
State Dept. review completed
NAVY review
completed.
Secret
17 March 1972
No. 0361/72
Copy
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The- WEEKLY SUMMARY, - issued every Friijoy
rnt ruing b ? he .Office of txrze t Intelligence, rep r t,
and analyze c x significant developments o the :
t.hrough_ < n on Thursday. It frequently includes
material coord.ina.tecl urith car prepared by` the Q}:!:lcu
Of l,esiciii Reserxrch the Office of Strategic Ike
search, and the Directorate-.of Svience and Teclu.?iol
ogy?. Topics requiring more comprehensive treatrnent
' there rv? publiske separately, as Special Reptsrts
25X
art- 1 listed in he contents pages.
CONTENTS (1 March 1972)
1 Chile: The Fight Sharpens
2 Guatemala-UK: Who Blinks First
3 Footdragging in~Cyprus
4 Malta: Denouement Approaches
4 Troubled Waters for Oil
5 Nationalist (Mina: Stopgap Measures
6 The Dollar Rallies
6 CEMA Banks Expand Activities
13 French Communists Fare Well
1.4 Yugoslavia
MIDDLE EAST
A~FRIC:A
15 The Arab World
25X1
18 lndistlutably Indira's India
18 Pakistan: Debt Relief
19 Ceylon; Westward Ho
21 Zambia?`.Politics in Command
21 South-West Africa
WESTERN
HEMISPHERE
22 Peron's Political Punch
22 Soviets Fly High
23 Venezuela: Accentuate the Positive
24 Uruguay: Security Controversy
24 El Salvador: Latest Returns
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Chile: The Fight Sharpens
The seesaw 'battle between the Allende gov-
ernment and its opponents is taking on a new
intensity and may be-,yedging toward violence.
Minister of Econdrny Pedro Vuskovic is per-
sonally handling a new rsh of business take-overs
and seizures of allegedly hoarded goods. In reply
to angry protests, he warned that the government
would give no quarter in fighting to destroy op-
ponents of its economic prografns. Vuskovic also
chose his targets with an eye to`Rublic discontent
over growing shortages. One aim".Js to refurbish
the Allende administration's claim,_to represent
the underdog. During a rally of officially spon-
sored "distribution boards" in a si}um area,
Vuskovic promised that foot-dragging bthpaucrats
would be weeded out and that fish caught by
Soviet trawlers on loan would be distributed,,-free.
In addition to their public appeal, these moves,
would ease problems the government has brow kit
on itself by inefficiency and miscalculation.
assurance that its provisions wov d not be retro-
active.
Landowners in ruraf'areas are also said to be
moving to organize ?tassive seizures by agricul-
tural workers of ,;;:government agrarian reform
centers. Many fasrm workers oppose Allende's
plans to turn t)^ge centers into state farms instead
of dividing them into peasant-owned parcels. In
related mo gs, at least two large farms that had
been talon over by peasants led by miristas
(memb,Ors of the Movement of the Revolutionary
Left),, "were retaken for their legal owners by
arrd groups. The government claims that land-
oiners are reviving a vigilante group called the
The government also is beginning tofollow
through on its accusations that opposition parties
are inciting sedition. The president ofjhe conser-
vative National Party has been formally charged
with violation of internal security laws for claim-
ing in a broadcast speech that the government
itself is inciting violence by its refusal to crack
down on extremist actions. ,:1n addition to this
and other intimidations, economic reprisals are
most often specifically directed against political
opponents.
The opposition, too, is active. Some private
businessmen reportedly are attempting to per-
suade workers in firms marked for expropriation
to seize them as.a means of thwarting the govern-
ment's intentions. The businessmen fear that the
government intends to step up its take-overs of
industries before the amendment designed to curb
them, recently passed by Congress, goes into ef-
fect. This concern was fueled by reports that the
Christian Democrats were negotiating for Al-
lende's approval of the amendment in return for
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Guatemala-UK: Who Blinks First
Secret negotiations in Washington last week
between Guatemalan Foreign Minister Herrera
and British Minister of State Godber failed to
take the heat out of the British decision to en-
large their garrison in British Honduras. The
Arana governrrtent reacted sharply only hours
after the meetings ended. In a strongly worded
communique, it characterized the British decision
as an act of aggression and a threat to the hemi-
sphere. It stated that all negotiations with Britain
had been suspended aid indicated that the gov-
ernment would take the necessary measures to
protect the dignity of Guatemala. Since then,
however, the government 1as kept an ominous
silence, waiting no doubt for' formal announce-
ment of the British position. t the British pro-
ceed with their plans, particulaNly if they send
Gurkha troops, Arana may 'take steps to
strengthen Guatemalan forces alon`c the border
and seek to bring the matter before theQAS.
Relations between the two countries` have
been sour for some time as a result oFGu4te-
mala's long-standing claim to British Honduras.
Guatemala views with alarm any change in th&,
colony's political status before thisAlaim is satis-
fied. In 1963, for example, Guatemala broke rela-
tions with Britain when a ;constitution was
adopted giving the colony a .. reater measure of
self-government. Formal dipj6matic relations have
not been resumed, but talks have gone on in an
effort to resolve the territorial dispute.
The current difficulties began in late January
when press reports trumpeted the arrival of a
large British force consisting of a battalion of
troops plus a naval task force that included
Britain's on}y active aircraft carrier. Guatemalan
President :?Arana, fearing that this force was
designed= to provide a shield behind which inde-
pendence would be granted, placed his
12,000-man army on alert. Tensions eased some-
what when the British withdrew their carrier and
denied that independence for the colony was near
at hand. Trouble flared up again in early March
when Britain informed Guatemala, that the bat-
talion-sized force cf Grenadier ,Guards on ma-
neuvers in the colony would not be reduced as
planned to the norrial garrison level of 220 men
but would be replced an equal number of
Gurkha infantrymen.
Britain's degfsion to triple the size of its
garrison is apparen':ly rooted in London's deep
concern about the possibility of a Guatemalan
surprise attack. London harbors suspicions that
Guaternabn troops near the British Honduras bor-
der were not mere'y engaged in fighting leftist
guerrillas. The Defense Ministry in Whitehall has
concluded that the normal garrison does not serve
to deter Guatemalan adventurism and would not
"be capable of providing an adequate defense.
Arana views the issue quite differently. He is
sensitive to the domestic political impact that the
Gurkhas-long asso,:iated with British imperial-
ism-would have. F-e is enraged that the British
have not lived up to previous assurances that the
additional troops would be withdrawn upon
completion of maneuvers, and he is suspicious
1hat a unilateral rrove toward independence is
still planned.
Foreign Minister Herrera's effort to persuade
the British to reconsider was completely unsuc-
cessful. The British refused to compromise. At
that point, Arana put the issue on the public
record, in effect committing the prestige of his
government t(3s an effort to oppose an increased
British military~,,resence in the colony. Arana,
however, holds fbW trump cards. Having signaled
his concern both ter the British and his own con-
stituency, he appears,willing to let London make
the next move. If tke British back down, par-
ticularly on sending Gl khas, the situation may
diplomatically, perhaps mifttarily.
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Footdragging in Cyprus
President Makarios has formally replied to
the Greek demands of 11 February. He has also
worked out an arrangement with UN officials on
the Czechoslovak arms issue. In both instances,
the Archbishop has made a show of compromise,
but, in effect, he has not surrendered the arms to
the UN forces on Cyprus, reshuffled his govern-
ment, or resigned-major issues as far as the
Greeks are concerned.
On 10 March, Makarios and the UN special
representative on Cyprus, Osorio-Tafall, reached
an agreement that allows for periodic UN in-
spection of the Czechoslovak arms. The agree-
ment calls for considerably tighter UN control of
the arms than did the 1967 agreement for an
earlier shipment of Czechoslovak arms. Neverthe-
less, the latest set of arms remains in Makarios'
custody, and the Turks, who support the Turkish
Cypriot demand for a complete turnover of the
arms to the UN, are unlikely to accept thear-
rangement in its present form.
On 14 March, the Cypriot am 5assador to
Athens handed Makarios' formal reply to Greek
Prime Minister Papadopoulos. There is some indi-
cation that the Greeks may piblicize Makarios'
reply, an action that would ,atiggest they are not
satisfied with it. Press spec Ration on the contents
of the message indicates that Makarios, while ap-
pearing conciliatory oar the Greek demands is
actually playing for more time to strengthen his
domestic position afr'd divide his opponents.
The pres'in Cyprus has leaked reports that
Greece had Krior knowledge of the arms delivery.
Makarios - no doubt behind these leaks and is
using t Cam to try and drive a wedge between
Turke and Greece. The Archbishop's repeated
clai that the arms issue is settled probably is
aimed at shifting Athens' attention away-from the
arms to the other problems. Makarios would be
on more solid ground if he were ,able to do this,
but Turkish pressure on Athens is likely to keep
the Greeks from bypassing the issue.
Concerning the Greek demand to reshuffle
his government, th9;Archbishop insists that this is
a matter for the )Q' priot people to decide. In his
more compro$r rising moods, however, Makarios
has stated that he would keep in mind Greek
suggestions;' noting that they have been made in
the context of promoting harmonious relations
between Greece and Cyprus.
The Archbishop has not responded to his
`bishops' request that he resign as president. There
are signs, however, that Makarios will propose to
the bishops that he serve out his term, which ends
next year, and then let the Cypriot people decide.
The religious leaders may accept this in an at-
tempt to head off the growing difficulties
between church and state that have resulted from
their request. I n any event, such an agreement
would reduce the opposition of the Greek
Cypriot public to the bishops and allow them to
resume their normal functions.
The standoff between the Archbishop and
Athens should not have a serious effect on the
Cypriot economy, which has been growing at an
average real rate of about 7.5 percent since 1967.
The chronic nature of Cyprus' political instability
has inured investors who have come to expect
periodic flare-ups. In 1967, the year of the last
flare-up, the economy doubled its growth rate
over 1966. The only industry likely to suffer is
tourism, which accounts for about eight percent
of gross domestic product.
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'..71_.ll1s L' 1
Malta: Denouement Approaches
In the past several days, Prime Minister Mintoff
has put forth several versions of his terms for an
agreement, but there are indications he may settle
for less. His disorderly casting about contrasts
sharply with his past bargaining tactics.
Mintoff told Italian Foreign Minister Moro that
he would sign an agreement on the terms offered at
the London talks if he receives an additional. one-
time payment of $13 million. Rome's efforts to
raise this sum in conjunction with Bonn and Wash-
ington initially were rebuffed, but the Germans have
since shown some flexibility. The Italians, who have
stressed Malta's significance to NATO and Italian
security in the western Mediterranean, made a uni-
lateral offer to Valletta of $6.5 million, payable
after an accord is signed. Mintoff received Rome's
offer warmly, but he still demands the full $13
million. He has asserted that a settlement should
include "something in writing" specifically exclud-
ing visits to Malta by the US 6th Fleet as well as
providing Malta recourse in the event of a sterling
devaluation.
In the meantime, UK withdrawal operations
continue, and time is growing short. Naval commu-
nications facilities lave been moved aboard a Royal
Navy ship in Valletta harbor, and dismantling of the
radar complex will begin early next week. Although
the British have said privately that.there is no "point
of no return" in tie withdrawal process, they may
be unwilling to cor tinue acting as NATO's proxy if
an agreement is not reached or in sight by the end of
TROUBLED WATERS FOR OIL
The Arabian American Oil Company, Aramco, agreed in principl ! to 20 percent Saudi Arabian
participation in oil operations within that country, setting the stage for further negotiations, the pace of
which may become quite active by midsummer. Saudi Oil Minister `. amani had been talking with
Aramco for several weeks. He was seeking to establish a pattern of participation that could be extended
to all Persian Gulf members of the Organization of Petroleum Exporting Countries. After reporting last
week in Beirut to a plenary session of that organization, he was charted to continue negotiating on
behalf of the Persian Gulf membersand report the results at the next full session on 26 June.
The ensuing bargaining is certain to be contentious. The companies will seek high compensation
and assurances of stability; the countries want a quick settlement at I )w cost with much flexibility.
With the exception of Iran and Iraq, which have been negotiating indiv dually with the oil companies,
the remaining Persian Gulf producers are expected to follow Saudi AraLia's lead. Some other members
of the Organization of Petroleum Exporting Countries probably will continue to engage in bilateral
negotiations on questions involving oil operations within their borders. _ibya and Nigeria are expected
to demand more than 20 percent initial participation. Algeria and In aonesia already have achieved
effective participation in their oil industries, while Venezuela has not y,'t made known its position on
equity participation.
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Nationalist China: Stop-Gap Measures
In an attempt to gain a little international
leverage in the wake of the President's China trip,
Taipei has publicly suggested it will adopt a more
flexible stance on contacts with the USSR and
East Europe. Though the government has also
begun to put out information on limited domestic
political reforms, the programmed renomination
of Chiang Kai-shek for another term as president
indicates that significant reorientation is not in
the wind.
On 7 March, the Nationalist foreign minister
stated that his government is interested in con-
tacts with Communist nations "if they are not
puppets of Communist China" and hinted that
Taipei would not be averse to eventual establish-
ment of diplomatic relations with them. Two
days earlier, the government announced that it
would consider allowing foreign companies on
Taiwan to export to the USSR and East Europe,
at first probably through third parties, and that
Taipei would continue to relax restrictions on
imports from these countries.
The initiatives are in line with Taipei's ef-
forts to prevent Taiwan's economic and political
isolation. Since their ouster from the UN last
October, the Nationalists have acted to assure the
continued availability of foreign capital and have
waged a world-wide trade offensive to preserve
and expand access to foreign markets. At the
same time, Taipei has attempted to maintain
semi-official missions in countries that have
formal relations with Peking.
The timing of the announcements was
clearly designed to suggest that Taipei has not
been boxed in by the Shanghai communique and
that the Nationalist Government, like its rival in
Peking, can conduct diplomacy on the basis that
"the enemy of my enemy is my friend." Move-
ment toward contacts with the USSR and East
Europe has been in the works for some time.
After Victor Louis' widely publicized visit to
Taiwan in 1968, discreet contacts with the So-
viets were maintained in several capitals, and
there has been significant indirect textile trade
with East Europe since 1970. Moscow has cau-
tiously encouraged the Nationalists, believing this
would upset Peking. But diplomatic relations,
which would involve a formal break with the
Chinese Communists, are out of the question.
A few days after these foreign policy moves,
Taipei indicated that long-planned domestic po-
litical reforms would soon be unveiled. On 9
March, the Kuomintang Central Committee
plenum passed resolutions calling for the "rein-
vigoration" of parliamentary bodies. Precise de-
tails were not given
The Central committee
ves fhe power to aesign and implement the
parliamentary changes in the president, not the
parliamentary bodies. This indicates that the
regime realizes its plans will not meet popular
expectations and that it wishes to avoid legislative
pressure for more significant programs.
The Central Committee has also approved
proposals to streamline its own structure. The
reduction of its subordinate bodies by one fourth
is certain to cause much backstage jockeying for
power. There have been demands for party re-
form, but it is likely that this particular reorgani-
zation is intended to consolidate and maintain the
grip of the Generalissimo and his son on the party
machine. Chiang Kai-shek's re-election next week
will probably also bring a reshuffle of the gov-
ernment in its wake. The very fact the Gen-
eralissimo has chosen to remain in office, how-
ever, has clearly reduced the possibility of
significant foreign or domestic policy
shifts.
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THE DOLLAR RALLIES
The dollar rallied during the week of 13 March after suffe'ing its severest attack on
international exchange markets since the Smithsonian Agreemert of mid-December. The
Reuters index of major foreign currencies rose from an 0.8 percent premiu m...abatie their
composite central rate on 28 February to 1.90 percent on 9 March, but !fnce subsided to
about 1.4& percent. Nevertheless, the potential for more monetary s still exists.
The dollar's recovery is attributed mainly to the pean belief that the monetary shock
waves of last week have been spent. Moreover, feel the weakness of the dollar thus far in
1972 will gradually disappear in the comi onths. Indications that US interest rates have
bottomed and may have started a slo*tcent point to a gradual nar-owing of the international
interest-rate gap. In addition, r%*