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May 12, 1972
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Approved For Release 2008/07/07: CIA-RDP79-00927A009500070001-2 Secret DIRECTORATE OF INTELLIGENCE WEEKLY SUMMARY NAVY review completed. State Dept. review completed Secret 12 May 1972 No. 0369/72 Copy N2 51 Approved For Release 2008/07/07: CIA-RDP79-00927A009500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 EEK MM RY, su b mig by the f urr~ I~ d +T1 2 ali" # ugh o4 r CONTENTS (12 May 1972) 1 Reactions 3 Italian Elections: No Solution 7 Indochina 12 China: Industry Moves Ahead 13 Japan-USSR: A Hint of Flexibility 14 Indonesia's Second Chance 15 German Economy Turns the Corner 16 Iceland: The Base Issue 17 International Oil Developments 18 Sadat: A Whirl with the Maghreb 20 The Yemens: More Machinations 21 Lebanon: Few Election Surprises 21 Turkey: Still Uncertain 22 Burundi: All Over, but- 22 Bangladesh: Aid Lags 24 Brazil: Church-State Frictions 25 Uruguay: Bordaberry Under Fire 25 Venezuela: Dictator to Return 26 British Honduras: The Heat's Off 27 Cuba Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 REACTIONS Hanoi's propagandists have responded to the US decision to shut off supplies to North Viet- nam with a flood of outraged rhetoric, but there are indications that the leadership itself is waiting for a strong sign of support from its allies. Hanoi's first official pronouncement on the US decision devoted almost as much attention to the need for more international support as to the US action itself. The government statement, issued on 10 May, included two long passages exhorting "fra- ternal socialist countries to check in time the bloody hands of the US aggressors" and express- ing "confidence" that North Vietnam's allies would not fail to measure up to their respon- sibilities. Earlier North Vietnamese comment on the President's speech emphasized in predictable terms Hanoi's own determination to continue the war whatever the cost. The North Vietnamese delegation in Paris asserted in a statement on 9 May that the Vietnamese people, "united as a single person," would continue to pursue their objectives. The Viet Cong delegation, in a parallel declaration, claimed that enough supplies are al- ready stockpiled to keep the offensive going. In other press play, the Vietnamese Communists have sought to conjure up images of a US leader- ship "gone rri,."' and have offered their most biting personal criticism of President Nixon since the US-China summit. North Vietnam's negotiators, meanwhile, have re-stated their claims of US intransigence in both the public and the private exchanges. Chief negotiator Xuan Thuy told a news conference in Paris on 10 May just before he left for consulta- tions in Hanoi-that it was Washington, not Hanoi, that had refused to budge at the latest round of secret talks. Politburo member Le Duc Tho, who accompanied Thuy to the airport, as- serted that Dr. Kissinger had tried to mislead the public with his statements that the Communists were insisting on setting up a Communist regime Page 1 in Saigon. Hanoi Radio argued that the US had in fact escalated its negotiating position by trying to cut North Vietnam off from outside support. On 11 April, Moscow issued a relatively low- key and temperate statement affirming that the Soviets have been giving and will continue to give the Vietnamese people the necessary support. The statement makes no mention of the forthcoming Soviet-US summit meeting. It does come down hard on the US for its alleged violation of interna- tional law, but is worded in such a way as to suggest that the USSR-initially at least-will not attempt to challenge the closure of North Viet- namese ports. Like previous Soviet statements on Vietnam, it warns that the US "bears the entire responsibility for its illegal acts" and that Moscow "will draw appropriate conclusions." The Soviets "resolutely insist" that the US cancel "without delay" its recent actions and return to the Paris talks. In short, the statement is essentially a hold- ing operation worded in such a way as to preserve Moscow's freedom of action. The Soviets elected to leave twelve dry-cargo ships and two tankers in North Vietnamese ports. There has been no unusual Soviet military reaction since the announcement of the blockade. Three Soviet warships in the South China Sea are returning from a long cruise in the Indian Ocean and may remain in the area pending further devel- opments before proceeding to Vladivostok. At least one of these ships refueled near the Paracel Islands on 11 May. A Soviet destroyer near the Philippines is heading south and will probably go to the Indian Ocean as the replacement for one of the returning ships. There is no indication that additional Soviet warships are headed for the South China Sea. From Peking Peking's first authoritative comment on the President's speech-which appeared on 11 May in SECRET WEEKLY SUMMARY 12 May 72 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 SECRET a People's Daily "Commentator" article-con- tinued China's pattern of reacting with restraint and moderation to the situation in Vietnam. While condemning the latest US military measures as a "dangerous step," the article did not charac- terize them as a threat, challenge, or provocation to the Chinese people or government. Moreover, Peking did not attack President Nixon personally and limited its rhetoric to replaying familiar themes of support, including that China is North Vietnam's "reliable rear area." Nothing in the statement commits Peking to a course of action with respect to the port closure or indicates how it will deal with the five Chinese merchant vessels that are in Haiphong harbor. Indeed, in speaking of the time limit prescribed for foreign vessels in North Vietnamese ports, Peking limits itself to saying that this action is a provocation "against the people of Vietnam and the people of the whole world." There is no evidence of any unusual Chinese military reac- tion. A measure of Peking's over-all restraint to date was its reaction to US attacks on two Chi- nese merchant vessels caught in the bombing of North Vietnamese ports last weekend. Although the first incident occurred on the morning of 6 May, Peking did not comment until three days later, and the protest issued by the Foreign Min- istry at that time was brief and relatively mild. From Saigon The South Vietnamese clearly have been given a shot in the arm by the President's speech. Prior to the address, setbacks on the battlefield had led to increasing criticism of the US for allegedly failing to give South Vietnamese troops enough support. Some prominent figures even charged that the US was prepared to make a deal with the Soviet Union that would sell out Sai- gon's interests. In a nationwide broadcast follow- ing the President's speech, President Thieu as- serted that the mining of North Vietnam's ports was a "decisive measure" reflecting US determina- tion to aid South Vietnam. Many pro-government and opposition political figures have also greeted the address enthusiastically. In London, the Heath government, which described US actions as "inevitable" under the circumstances, has refused to accept the Labor Party's challenge to dissociate London from Presi- dent Nixon's decision. British Foreign Secretary Douglas-Home has stuck to London's standard line that the UK's only constructive role in the conflict is, as co-chairman of the 1954 Geneva conference, to encourage conciliation. Douglas- Home met with Soviet Ambassador Smirnovski on 10 May and for the third time in the last six weeks urged Moscow to join with London in calling for a new international conference on Indochina. The ambassador was non-committal. An official French statement, released in Foreign Minister Schumann's name following the weekly cabinet meeting on 10 May, expressed France's concern over the "brutal worsening of the situation in Vietnam." The statement gave special attention to the risks of a confrontation between the superpowers. It reaffirmed the French position that the only solution to the war is a political one but did not fix any responsibility for the escalation of military activity in Vietnam. Paris has not condemned the North Vietnamese invasion, but the French did criticize the US last month for breaking off the Paris peace talks. In Canada, Prime Minister Trudeau told Parliament that the US action in no way con- stitutes an "escalation" of the war in the light of the increased numbers of North Vietnamese troops in the south. He added that since his country was on good terms with all three of the major powers involved, it might agree to assume a role in a peace settlement. Trudeau said he felt that the interests of the three powers suggest that the war should be settled by negotiation rather than by military means and that the President's action does not obstruct such a path to peace. SECRET Page 2 WEEKLY SUMMARY 12 May 72 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927A009500070001-2 ITALIAN ELECTIONS: NO SOLUTION Italy's major parties emerged from the na- tional elections on 7-8 May with only marginal shifts in their parliamentary strengths and without a clear mandate on how to solve the issues that forced the dissolution of the last center-left government. The formation of a new government promises to be a difficult, protracted affair. As a group, the four parties of the center-left coalition that governed Italy for the greater part of the past decade gained six seats, giving them a total of 371 in the 630-member Chamber of Deputies. The parties of the extreme left did not do at all well. Although the Communist Party won two additional seats, the Proletarian So- cialists lost all 23 of their seats, and the militant Manifesto group failed to win any in its first test at the ballot box. The most impressive gains were made on the far right. The neo-fascists, who for this election joined forces with the tiny Monarchist Party, won 56 seats, 26 more than the two parties had in the outgoing Chamber of Deputies. Some of these gains were drawn from the center-right of the political spectrum where the Liberal Party lost ten seats. The Liberal Party's poor showing reduces the possiblity of a centrist coalition as a viable alternative to the deeply divided center-left align- ment. Italy's largest party, the Christian Dem- ocrat, had hoped to use the specter of a centrist coalition as a means of bringing their difficult ally in the center-left, the Socialist Party, into line. The election results indicate, however, that the four parties that would make up a centrist com- bination now have three fewer seats (331) than they had in the outgoing Chamber of Deputies. Although this is enough to constitute a mathe- matical majority, the margin is thin by Italian political standards. The new parliament is expected to convene on 25 May. At that time, the Andreotti caretaker government will resign and most likely will be succeeded by another Christian Democrat mi- nority government that will rule until a coalition can be patched together. This may not occur until after the major parties sort out their problems at party congresses this summer. An attempt prob- ably will be made to refurbish the center-left formula, but, if it is to have a chance to work, the Socialists will have to retreat from their demands for closer parliamentary cooperation with the Page 3 SECRET WEEKLY SUMMARY 12 May 72 Approved For Release 2008/07/07: CIA-RDP79-00927A009500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927A009500070001-2 SECRET Adding to the confusion brought about by growing labor dissatisfaction, Communist Labor Minister Oyarce resigned on 9 May to return to purely party duties. Oyarce claims that his deci- sion was made for "strictly personal reasons," but it could well be related to his poor performance in the cabinet. The final blow may have come when over 8,000 copper miners at the huge Chuquicamata mine went on a two-day strike to protest the political manueverings of the Com- munist general manager, David Silberman. That strike topped off a month of small strikes. Newspapermen, water-works employees, railroad workers, and public health doctors walked off their jobs, mostly for petty reasons. Wage demands played a part, but dissatisfaction with the politically motivated acts of government- appointed administrators loomed large. The Chuquicamata strike was especially damaging even though the settlement terms are unan- nounced. It cost Chile $1,500,000 in foreign- exchange earnings and was the first general strike there since the Chilean Government took over administration of the property from Anaconda. Silberman is an abrasive person, and has managed to alienate the labor unions, which are led by Popular Socialists and Christian Democrats. Neither party supports the Allende coalition. The government's prime problem with labor is that, despite promises, it is no more able to meet all of the desires of workers than was its predecessor. The Chilean worker, including the white-collar salaried employee, does not under- stand that his individual aspirations for increased benefits may result in less for all. The adminis- trators appointed by the government have not been able to win the support of the employees anymore than the previous private owners. As a result, the condition of unionized labor continues to be about the same as before, a Chuquicamata Mine situation dangerous for Allende since he bases his support on the working classes. The working class still supports Allende politically, but does not hesitate to undercut him through indiscipline and excessive demands. Oyarce's departure probably will not result in new initiatives, and the situation created by frequent disruptions in the economy will bring political problems for the coalition in SECRET Page 5 WEEKLY SUMMARY 12 May 72 Approved For Release 2008/07/07: CIA-RDP79-00927A009500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 SECRET SECRET Page 6 WEEKLY SUMMARY 12 May 72 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 SECRET The Communists continue to apply military pressure on the major battlefronts, with their main thrust during the week directed against An Loc. Heavy artillery and infantry assaults have been launched against the city. The pace of the enemy advance has slowed in northern South Vietnam as the Communists complete logistic and other preparations for a new push. They may soon increase the pressure against Hue and Kon- turn to coincide with their renewed attacks against An Loc. The Communists may hope the heavy fighting around An Loc will keep the South Vietnamese from sending reserve forces north. The Communists do not appear to be concen- trating large numbers of their troops in forward positions where they would be exposed to air and ground attacks. In the central highlands this week, the Com- munists captured Polei Kleng-the last major base west of Kontum City-and were exerting heavy pressure on isolated government forces at Ben Het. In the northern coastal area, elements from the North Vietnamese 711th Division are increas- ing their activity in southern Quang Nam Province and have moved closer to Da Nang and the pro- vincial capital of Hoi An. Farther south, Com- munist forces reportedly are preparing to attack Qui Nhon, the capital of Binh Dinh Province. the current flow of materiel into all regions of South Vietnam is very heavy. The Communists are pushing some shipments through in daylight, not just in Laos where the diversion of allied air assets to the battlefields has given them greater freedom of movement, but also in such high-risk areas as the approaches to Hue. Page 7 Refugees fleeing from Communist-occupied districts in northern Binh Dinh Province report- edly are bringing out stories of enemy efforts to consolidate political control there. The Commu- nists are said to be setting up "liberation govern- ments" and executing some government officials. Journalists who have interviewed the refugees re- port that the North Vietnamese units that led the attacks in Binh Dinh turned over civil authority to local Viet Cong officials, some of whom were South Vietnamese government cadre recruited earlier. The new governments are said to be trying criminals, arbitrating land disputes, supervising repair of war damages, and screening all indi- viduals who were connected in any way with the government. Some of these officials are being given the opportunity to cooperate with the Viet Cong, but others, particularly policemen, report- edly are being shot. The refugees' accounts are generally in ac- cord with earlier reports of how the Communists have proceeded after occupying other areas in South Vietnam, such as Loc Ninh in northern Binh Long Province. They evidently have well- developed procedures for capitalizing on their military operations, and these occupation meas- ures are being carried out with a mixture of benevolence and terror. It is clear that they are intended for the long term, and that it is the Communist plan to stay in the areas they have seized. Refugee Problems Da Nang is trying to cope with some 400,000 refugees who in recent weeks have SECRET WEEKLY SUMMARY 12 May 72 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 SECRET streamed into the city from Quang Tri, Hue, and outlying regions. Government authorities are hav- ing difficulty providing water-let alone food, medical care, and sanitary facilities. There is a growing fear that the city will be attacked and, if it is, the resulting confusion could greatly compli- cate efforts to defend it. The situation will be eased somewhat if a plan to ship as many as 100,000 refugees to a new refugee center in Mil- itary Region 3 is successfully carried out. Thieu Seeks Emergency Powers confidence in their military prospects in the south. An important North Vietnamese military commentator published a progress report on 4 May. He claimed that the Communists now had sufficient "latent strength" in South Vietnam to fight "protractedly and on a large scale" and that the current offensive was only part of a prolonged effort. Last weekend, other Communist press commentary compared the current action to the Vietminh victory at Dien Bien Phu-the anniver- sary of which was celebrated on 7 May-and the Communists' southern military command urged Communist forces in the South to encourage a President Thieu hopes to secure National Assembly passage next week of a measure grant- ing him emergency decree powers for a six-month period. Thieu already has wide authority to act in times of emergency, but he apparently hopes that assembly approval of the measure will help to demonstrate national unity and boost South Viet- namese morale. The President should have little trouble obtaining the support he needs in the Lower House, but his prospects are uncertain in the Senate, where independent and opposition elements are in the majority. Thieu has met per- sonally with Senate Chairman Huyen, the leading independent, and presidential aides are attempt- ing to line up sufficient votes in the upper house. The President plans to take some actions on his own and already has proclaimed martial law throughout the country. He will implement a series of economic measures to raise revenues to meet current heavy expenditures. Included are a special war bond issue and new tax surcharges on business establishments and consumer commodi- ties. The government will await authority from the assembly before implementing income and property tax legislation. Communist Confidence Over the Offensive On the eve of the US initiative against North Vietnam, the Communists were showing increased Page 9 popular "insurrection against the Saigon r 11 he Viet Cong command had given the initial phase of the offensive high marks and had concluded that local forces now had an opportunity to re-estab- lish power in the liberated areas. To be sure, Communist commentary has not been all in this vein. The Viet Cong command's assessment, for instance, contained sober warn- ings about Communist shortcomings, particularly in the delta. The overt pronouncements made much of the need for further guerrilla and polit- ical action, and for the consolidation of areas now under Communist control. Some of Hanoi's op- timistic line may simply have been intended to brace Communist fighters for further struggle. Nevertheless, it is doubtful Hanoi would have struck such an authoritative tone in its commen- tary if it were not convinced that the optimism was basically warranted. The Communists evi- dently have decided, after a month of action, that the returns justified the offensive and that there is a good chance they can change the course of the war decisively through continued military action. Hanoi's increasing confidence in its military prospects almost certainly helps to account for the recent hardening in its public line on nego- tiations. Premier Pham Van Dong, for instance, left the strong impression with a French SECRET WEEKLY SUMMARY 12 May 72 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 bhuxh,1' newspaperman on 3 May that North Vietnam would continue the war even if the bombing stopped and President Thieu resigned. He also characterized the Viet Cong's seven-point pro- posal and the elaboration of last February as "indivisible in their parts and timing," clearly indicating that Hanoi would not be willing to negotiate any part of the package separately. The Viet Cong's press chief in Paris, who has been one of the most vociferous spokesman for Hanoi's hard negotiating line in recent weeks, has told a group of Vietnamese residents that the Communists would be willing to consider a cease- fire only if Thieu's resignation was accompanied by sweeping administrative changes in Saigon. He also asserted that the Viet Cong are now seeking a "political and military victory" encompassing both the removal of Thieu and the defeat of Vietnamization; these, he said, "are now insep- arable." Most Communist spokesmen have avoided linking progress in negotiations so explicitly to a complete administrative overhaul in Saigon, but Hanoi's leaders may well have decided that, in view of the initial progress of Communist forces on the battlefield, they have no need to soft-pedal their maximum demands. Page 10 SECRET Vang Pao, at left, at Long Tieng WEEKLY SUMMARY 12 May 72 In Laos, Vang Pao is moving quickly to take advantage of the withdrawal of many Communist units from the area southwest of the Plaine des Jarres. Irregulars moving north from Skyline Ridge have reoccupied Sam Thong, the former refugee center six miles from Long Tieng that has been in Communist hands since mid-March. Enemy units apparently abandoned defensive po- sitions around Sam Thong, and the irregulars had little difficulty in occupying the town. A smaller irregular force skirted Sam Thong earlier in the week, briefly occupied Ban Na and found that Tha Tam Bleung, on the new Communist road to the Plaine, was unoccupied. Another of Vang Pao's units is along a ridge leading toward Phou Pha Sai, a strategic high point overlooking the southern Plaine. Some North Vietnamese units remain near Skyline Ridge to screen the general withdrawal, and some enemy artillery pieces remain within range of Long Tieng. These enemy forces will probably continue to repulse any irregular effort to cut the route back to the Plaine before the Communist withdrawal is complete. Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 SECRET PHNOM* PENH CAMBODIA NeakLuong Communist Phnom Penh's vulnerability to hit-and-run Communist raids was demonstrated anew on 6 May when a number of government installations were shelled or attacked by small sapper teams. The Communists did relatively little damage to their principal targets, the Monivong bridge and the Ministry of Defense building, but civilian cas- ualties were higher than in previous attacks on the city. It is likely that the attackers were mainly Vietnamese Communists from the 44th Sapper and 96th Artillery regiments, aided by some local Khmer Communist troops. The scope of the raids and their proximity to the heart of the city were cause for fresh concern in Phnom Penh, and additional steps have been taken to reorganize the capital's defenses. The attacks may have been designed to erode public confidence in the Lon Nol government and to keep large numbers of government troops tied down in the capital region. If so, the Communists have achieved some success, because the govern- ment subsequently recalled several battalions from areas west of the city and a brigade that had been assigned to the operation to reopen Route 1 from Neak Luong eastward to Svay Rieng town. That operation was stalled in its opening phase by the Communists, and the Cambodians reportedly have no plans to resume it. For the time being, they apparently are content to carry out limited SECRET clearing operations near Neak Luong and to cling to Svay Rieng, their only remaining outpost on the highway. With little prospect of regaining control of the principal land route to South Vietnam, the Cambodians are now also losing ground farther south in Kampot Province. The Communists there followed up their recent capture of Kompong Trach by taking a 35-mile stretch of Route 16, and by 9 May had driven the Cambodians out of the small towns of Tuk Meas, Tram Sasar, and Tani. These actions were probably undertaken in order to facilitate the movement of supplies southward to the South Vietnam border. As is the case on Route 1, the government to date has shown no disposition to try to regain the initiative in Kampot. Indeed, since the Chenla II operation on Route 6 was smashed by the Com- munists late last year, the Cambodian Army leadership seems to have adopted an increasingly defensive strategy. This timidity can clearly be seen in the Cambodians' failure to take advantage of the movement of a number of Vietnamese Communist main force units into South Vietnam by launching operations into contested areas of the countryside. Page 11 WEEKLY SUMMARY 12 May 72 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 SECRET China in 1972 seems headed for a third consecutive year of rapid growth of industrial production, featured by large increases in arma- ments and other heavy industrial output. The rate of over-all advance will be slower than in 1970 and 1971, because the slack in many industries created by the Cultural Revolution has by now been taken up and the demand for raw materials cannot be easily satisfied. Peking's claims of vig- orous industrial gains in the first quarter of 1972 seem generally credible; these gains indicate that Chinese economic growth has not been signifi- Percentage Increase Jan-Mar 72 Jan-May 71 over over Jan-Mar 71 Jan-May 70 Heilungkiang 6.1 n.r. Kirin 13.5 15.7 Liaoning 11.1 15.4 Hopeh 10.5 n.r. Hunan 8 14 Shansi 13 15.7* Shantung 15+ n.r. Chekiang 12.6 15.6 Kiangsi 16+ n. r. Kwangsi 18.42 20.8 Szechwan 20 30+ Yunnan 22.9 n.r. Shensi 26.1 18 Kansu 14.9 n.r. City Shanghai 6 18.7 Peking 9.7 25 Tientsin 14.4 11.4 n.r. - not reported *Jan-Jun 71 over Jan-Jun 70 cantly impeded by the continuing political struggle within the top leadership. In the last two weeks, Peking has announced percentage increases in the gross value of indus- trial production for the first three months of 1972 compared with the same period in 1971 for 17 of China's 29 provincial-level administrative units-comprising most of the major industrial areas. In most cases, the increases claimed for the first five months of 1971 are much greater than the claims for early 1972. Relatively moderate increases were claimed for established industrial areas-Heilungkiang, Kirin, and Liaoning provinces in the northeast and the three special municipalities of Peking, Tientsin, and Shanghai. In contrast, high growth rates were claimed for Szechwan, Yunnan, and Shensi provinces-inland areas that are receiving large allocations of capital investment for indus- trial and armaments production. In addition to these provincial claims, Peking has released percentages for nationwide output in one key branch of industry-steel. Output of iron ore was said to be up 13.5 percent in the first quarter; pig iron, 18.5 percent; crude steel, 15.6 percent; and rolled steel, 19 percent. Here again, the rate of advance, while substantial, is generally lower than suggested by last year's claims for steel. The generally smaller gains in 1972 may reflect a slowdown in local iron and steel plant programs and possibly production difficulties at the Wu-han and Pao-t'ou iron and steel plants- the only large plants not singled out for fulfilling output plans. The relatively large increase in rolled steel output narrows the gap between the output of crude steel and more finished prod- SECRET Page 12 WEEKLY SUMMARY 12 May 72 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927A009500070001-2 SECRET JAPAN-USSR: SIGNS OF FLEXIBILITY The Soviets have begun suggesting to the Japanese that Moscow is prepared to make con- cessions on the "Northern Territories," the islands seized by the USSR at the end of World War 11. The Japanese want them back as a condi- tion for signing a peace treaty. The Kremlin now appears to be seriously considering settlement of the dispute, although a final decision has not been reached. In Tokyo last January, Foreign Minister Gromyko avoided serious discussion of the terri- torial issue. He merely acknowledged that it was "one of the problems" involved in negotiating a peace treaty. Subsequently, Soviet officials have gone further, saying that the subject is under discussion in Moscow or that a compromise is possible. Although the Soviet media have been silent on the issue, lecturers have been telling the Soviet public that the issue will be discussed in peace treaty talks. Some Russians have hinted that Moscow might renew an old offer to return the two minor islands, Habomai and Shikotan. Other Russians have talked of returning all four. SECRET Page 13 WEEKLY SUMMARY 12 May 72 Approved For Release 2008/07/07: CIA-RDP79-00927A009500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927A009500070001-2 SECRET Soviet signs of flexibility on this key issue are in part designed to create a positive atmos- phere for peace treaty talks, which are likely to begin later in the year. Moscow may also want to encourage Japan to think of reciprocal conces- sions. Foreign Minister Fukuda has already sug- gested that Japan would consider demilitarization of the islands. In settling the dispute, Moscow will doubtless try to drive a hard bargain; it would probably like an agreement to include a demili- tarization provision as well as additional Japanese concessions such as a firm financial commitment to Siberian development. Meanwhile, Moscow's hesitant flirtation with Japan has been proceeding in other areas. A Jap- anese technical team is now in the USSR to examine the feasibility of a billion-dollar invest- ment in the Tyumen oil pipeline across Siberia. Although this is the first time Moscow has per- mitted the Japanese access to the Tyumen oil field, the ever-suspicious Soviets have talked of confining the "inspection" to a helicopter over- flight. Moscow and Tokyo last month completed their annual discussions on fishery problems. The USSR took a tough stand, and the contentious question of Japanese fishing rights in Soviet waters was not resolved. Such dealings indicate that Moscow's drive for better relations with Tokyo has yet to be translated into significant economic concessions. INDONESIA'S SECOND CHANCE Western aid donors, impressed by Indo- nesia's continued economic progress, have pledged a record amount of aid this year. About $725 million in loans and grants, $97 million more than last year and $55 million more than Djakarta had originally requested, has been com- mitted for the fiscal year that began on 1 April. The US will remain the major donor, prom- ising $203 million, followed by Japan with $185 million, and the World Bank group with about $145 million. These three together account for almost three fourths of the total aid committed. In contrast to previous years, the major part of the assistance-about $400 million-is for project aid, with the remainder slated for food, commodi- ties, and other non-project items. Djakarta's success in stabilizing the economy is largely the result of foreign aid and the policies pursued by the government. Inflation is now under control: prices rose by less than three per- cent during 1971 compared with about 650 per- cent in 1966, when inflation was at its worst. Aid commitments of more than $2.5 billion since 1966 (excluding the recent pledges), declin- ing trade deficits, and the rescheduling of foreign debts have brought about significant improve- ment in the balance of payments. New foreign investment totals more than $1.5 billion since 1967, and all indications point to a continued favorable investment climate. The rapid develop- ment of the country's petroleum resources has been a particularly bright spot. Oil now accounts for more than 60 percent of Indonesia's export earnings, and this portion is expected to increase. Problems remain, particularly in agriculture, which still is the most important segment of the economy. Agricultural production has stagnated during the past decade, and, as a result, the country's per capita gross national product re- mains one of the world's lowest. The exceedingly high population density of Java, the largest island, has continued to cause social and economic prob- SECRET Page 14 WEEKLY SUMMARY 12 May 72 Approved For Release 2008/07/07: CIA-RDP79-00927A009500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 SECRET GERMAN ECONOMY TURNS THE CORNER Business and banking circles in West Germany are persuaded that the economic down- swing has bottomed out and that an earlier-than- anticipated revival is under way. The leading eco- nomic research institutes now project a 2.5 per- cent rise this year in real gross national product, compared with their forecast last fall of no more than one percent. The revised estimate is roughly in line with the official government estimate. The upward revision reflects positive signs in a number of key activities. Industrial production and construction were stronger than expected during the first quarter of 1972. Their relatively good showing is attributable in part to the un- usually mild winter and to the resumption of production in the important metal-working indus- tries following highly disruptive strikes last November and December. A renewed rise in the index of new orders booked by industry suggests, however, that the improvement is more basic. Especially encouraging to German businessmen is the growth in export orders, which provides some reassurance that the competitive strength of Ger- man goods has not seriously deteriorated in the wake of last year's revaluation of the mark. With business activity during the first quarter of 1972 holding up better than expected, umemployment has remained far below the level reached during the 1966-67 recession. The num- ber of jobless declined from a high of 375,000 in January to 231,000 in April, or less than one percent of the labor force. During the same period, the number of foreign workers increased by about 100,000 to a near record of more than 2.2 million. Despite some recent easing, inflationary pressures remain strong. A continued rise in the cost of services has partly offset a substantial deceleration in the price rise of industrial goods. As a result, the cost-of-living index last month was still up 5.1 percent from April 1971. This compares with the 5.8 percent increase for the year between December 1970 and 1971. Ironically, the improved business outlook is likely to aggravate, rather than ease Bonn's domestic political problems. Economics and Finance Minister Schiller had counted on con- tinued slack in private demand to reduce in- flationary pressures further and, equally im- portant, to justify implementation of his con- tingency budget. But the contingency budget, which would have permitted realization of at least some of the government's long-promised social and economic reforms, already has fallen victim to rising private demand. Moreover, Schiller's regular budget proposals for 1972 have been at- tacked as fueling inflationary fires. In fact, it was a vote on the budget that brought Brandt his first parliamentary defeat as chancellor. Once the treaty issue is resolved satisfactorily, inflation and the government's alleged mismanagement of the economy are certain to become the principal issues in the next parliamentary election cam- paign. SECRET Page 15 WEEKLY SUMMARY 12 May 72 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927A009500070001-2 SECRET After less than a year in office, Icelandic leaders appear to have retreated from their pre- election advocacy of complete withdrawal of all US forces from the Keflavik NATO base. The present, more moderate attitude is due largely to US efforts to acquaint them with the important role the base plays in Western defense strategy. During Secretary Rogers' visit to Reykjavik last week, Foreign Minister Agustsson implied that his government's position had modified a great deal. He stopped short, however, of guaran- teeing that all troops could remain. Agustsson said that Iceland would remain in NATO and honor its commitment, which includes the base at Keflavik. Nevertheless, Agustsson added, Iceland had joined NATO with the condition that no foreign troops be stationed in Iceland during times of peace. Admitting that it was difficult to define "times of peace," the foreign minister said his government was studying the question. It would not, in any case, be able to undertake negotiations on bases until the fishing-limits issue is out of the way. Iceland intends to extend its fishing limits to 50 miles offshore on 1 Sep- tember. The present center-left coalition has only a two-vote margin, and this severely limits how far it can go on the base issue. Its acceptance of US funds to build a crosswind runway at Keflavik, for example, nearly caused the coalition to break up when the Communist Labor Alliance, a coali- tion partner, objected to the US assistance. The Labor Alliance can be expected to stand against any subsequent bilateral agreement on the base that falls short of complete withdrawal. Despite the deep division on the runway issue, the Alli- ance declined to pull out of the government, claiming that its position regarding the runway Foreign Minister Agustsson greets Secretary Rogers. SECRET Page 16 WEEKLY SUMMARY 12 May 72 Approved For Release 2008/07/07: CIA-RDP79-00927A009500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 SECRET funding was well known before the coalition was formed. The Communists could use the same ex- cuse for staying in after losing a decision on the base, but they would seriously damage their credi- bility. The Progressive Party could offer conces- sions to keep the Labor Alliance from defecting. Recognition of Hanoi, which would place Iceland in step with the other Scandinavian countries, and support for East Germany in world organizations might temper Communist reaction to a decision to let US troops stay. If the government were to collapse as a result of a decision keeping US troops on the base, the most likely successor would be a more pro-American coalition includ- ing the right-wing Independent Party and the So- Representatives of OPEC and Western oil companies this week held a second round of nego- tiations on participation by OPEC's members in the companies' operations within the members' borders. Even though OPEC's hand may have been strengthened by reports that Japan intends to negotiate with that organization for the direct purchase of oil, the complexity of the participa- tion issue makes it unlikely that even a frame- work for an agreement can be reached before the next scheduled OPEC ministerial meeting in June. Libya and Nigeria, which have recently accepted settlements to offset losses caused by devaluation of the US dollar, are only now turning their full attention to the participation issue. Saudi oil minister Yamani is representing the Persian Gulf members of OPEC in this round of discussions. The talks have centered on the timing of 20-percent participation by OPEC members and on the method of determining compensation for the companies' assets. Since individual coun- try-company agreements will have to be ham- mered out after a general framework is estab- lished, it is unlikely that any participation will be implemented before the beginning of next year. Japan's proposal to buy directly from OPEC probably will be submitted to that organization later this month. Although the plan would give Japan more control over its oil supplies, Tokyo in turn would be required to develop research organ- izations and finance the construction of new oil facilities, roads, and harbors in OPEC countries. Even if Japan is able to bypass the Western oil companies, which will be difficult because of their deep involvement in Japan's oil industry, Tokyo initially will purchase only a small part of its petroleum needs directly. The agreements Libya and Nigeria reached with the oil companies for an 8.49-percent in- crease in the posted price of crude oil to offset dollar devaluation is the same settlement reached in January by the Persian Gulf members of OPEC. Libya's agreement, which is retroactive to 20 January, should yield about $170 million in ad- ditional revenue this ear In Venezuela, meanwhile, government con- cern over a potential revenue shortfall resulting from the depressed level of oil production evi- dently is deepening now that the general election campaign is in its early stages. To avoid the poli-25X1 tical embarrassment of budget stringencies, the government has been urging the oil companies to accelerate tax pa ments. SECRET Page 17 WEEKLY SUMMARY 12 May 72 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 SECRET President Sadat's tour of North African states from 4 to 10 May produced little beyond continuation of his efforts to solidify the Arab front. During a joint three-day visit to Algeria with Libya's President Qadhafi, the rhetoric was standard. The main themes were Arab unity and the Palestinian cause. Even on these emotional issues, however, the public remarks of Sadat and Boumediene were relatively restrained and prob- ably disappointed the more fiery Qadhafi. The final communique was muted; the usual Arab issues were raised, the promises of action were limited and vague. Moreover, specific criticism of the US was restricted to passing remarks about American "aggression" in Indochina. Sadat did manage to become the first Egyp- tian chief of state to visit Tunisia. While there, he was exposed to a strong dose of Bourguiba's "logic and realism" regarding the Arab-Israeli con- flict. The Tunisian President registered his skepticism concerning the "efficacy of con- ventional warfare to solve problems," a remark, according to the US Embassy, that took some of the wind out of Sadat's sails. Nevertheless, the Egyptian chief of state quickly returned to fa- miliar themes regarding the inevitability of war and the unhelpful US role in the Middle East. The final communique in Tunis was dominated by Tunisia's moderate views. It included an appeal, launched by Bourguiba and accepted by Sadat, calling for US-USSR intervention in the Middle East before the situation deteriorates further. Following a stop in Libya, Sadat returned to Cairo with little to show his people. The fact that Egyptian military leaders accompanied Sadat has raised some speculation that closer military co- operation was one of the topics discussed in pri- vate, and the Cairo media can be expected to play up this vision. The swing through North Africa was the peripatetic Sadat's latest move in a wide- ranging effort to create the impression of greater Arab solidarity in the face of continued Israeli "aggression." Sadat's peregrinations are also in- tended in part to provide a divertissement for the Egyptian people, who are becoming a bit dis- pleased over his failure to produce any movement at all in the Arab-Israeli stalemate. SECRET Page 18 WEEKLY SUMMARY 12 May 72 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 SECRET hardly respond because of the vagueness of the bid. fashion to his proposal and that he expects more formal responses. The Israelis have told the US that they view this initiative as a non-starter and that they can, in any case, AT THE UN The flurry of activity at the UN regarding the Middle East situation ended abruptly last week, and special envoy Gunnar Jarring returned to his duties as Swedish ambas- sador to the USSR. His mission remains at an impasse, and neither he nor Secretary General Waldheim expects any movement until after the Moscow summit. Waldheim, however, now appears more inclined to push his own concept of a Middle East peace conference under UN auspices. He claims that neither side has reacted in a negative SECRET Page 19 WEEKLY SUMMARY 12 May 72 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927A009500070001-2 SEGRE'1' THE YEMENS: MORE MACHINATIONS Sana, has been touted for leadership in the exiles' National Unity Front organization or as a par- ticipant in a government-in-exile. is the rowing involvement of Libya's Prime Min- ister Qadhafi. I he newest wrinkle in the tortuous affair h Qadhafi told the prime minister of ana e was prepared to support Sana against Aden with arms and money-which, incidentally, have not yet materialized. The only condition laid down by Qadhafi was that Abd al-Qawi Makkawi, an exiled Adeni political figure, be given an active role in anti-Adeni planning. Makkawi, now in onan.an? BAHRAIN QATAR UNITED ARAB EMIRATES YEMEN YEMEN (Sana) (Aden) 'S.- SECRET Page 20 WEEKLY SUMMARY 12 May 72 Approved For Release 2008/07/07: CIA-RDP79-00927A009500070001-2 Prime Minister Qadhafi's offer of aid to Sana and his alleged sponsorship of Makkawi are prob- ably motivated by a desire to eliminate what he considers the Communist-atheist government in Aden, reduce Saudi influence in Sana, and en- courage his own brand of Islamic socialism in the two Yemens. Saudi Arabia has not yet reacted, but King Faysal is not apt to look with favor on a Libyan role in peninsular affairs. 25X6 The task of welding the ideologically diverse and chronically disputatious exiles into a unified military and political organization will be dif- ficult, if not impossible. Efforts have been under way in the past several weeks in Sana to refurbish the National Unity Front-the nearly impotent umbrella organization of exiles-and to select an over-all political leader. Despite threats by the Saudis to withhold funds, conservative tribal ele- ments in the National Unity Front have refused thus far to cooperate with what they describe as the "political" component of the Front-largely defectors from the ruling political organization in Yemen Aden . Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 SECRET In the parliamentary elections completed last week, the traditional politicians, who have dominated parliament and whose success depends on regional, clan, and religious ties, were returned in large numbers. A few leftists were elected, and the relatively large leftist vote should serve as a warning that public patience with the system's inability to cope with economic and social prob- lems is wearing thin. Lebanon's most prominent leftist, Kamal Jumblatt, was re-elected along with many of his supporters. They had the undivided support of the Druze religious community. In parliament, he will continue to serve as the rallying point for anti-regime criticism, especially if, as in the past, the traditional politicians are unable to submerge their personal rivalries long enough to enact needed reforms. At the same time, the center bloc of dep- uties, the main source of President Franjiyah's support in parliament, has been greatly strength- ened as a result of the elections. Consequently, the government should find it much easier to push its programs through parliament. Tempo- rarily, at least, nearly all factions will cooperate with the government in the hope of getting some representation in the new post-election cabinet. The biggest losers in the elections were the right-wing Maronite Christians, in general, and former president Chamoun, in particular. Al- though he himself was re-elected, all but one of his running mates were soundly defeated by Jumblatt's supporters. The elections were no more violent than in the past and were for the first time almost totally free from government interference. Foreign inter- ference was also considerably less than in the past, primarily because the new leaders of Egypt and Syria seem less inclined to use Lebanon as an arena for pan-Arab ideological struggles. The fedayeen, apparently fearing government re- prisals, generally remained aloof.) Prime Minister - designate Suat Urguplu has not yet named his government, and there is no indication when he will be able to do so. Desig- nated on 29 April to form a new government, Urguplu ran into problems almost immediately when he tried to tie the timing of national elec- tions to the implementation of reforms. Urguplu may also wait for the leadership and policy direc- tion of the Republic Peoples Party to be re-estab- lished following the power struggle now under way between the leftists and moderates in the party. The chief of the party, Ismet Inonu, re- signed on 8 May after suffering a sharp defeat at the hands of the party's leftist faction. The party, which had been led by Inonu for 34 years, was left in disarray. Meanwhile, the caretaker government, headed by Minister of Defense and acting Prime Minister Ferit Melen, is carrying on the daily business of government. Parliament is meeting as usual and passing legislation, including a law in- tended to discourage members of the armed forces from involving themselves in politics. The new land reform bill, introduced by Melen shortly after he became acting prime minister, is under committee consideration. 25X1 The acts of violence that surrounded the execution on 6 May of three terrorist leaders appear to have subsided for the time being.n Should terrorism increase again and Urguplu remain un- able to form a government, the military's suf- ferance of a civilian-run government may come to SECRET Page 21 WEEKLY SUMMARY 12 May 72 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927A009500070001-2 SECRET BURUNDI: ALL OVER, BUT- The government has bloodily suppressed a terrorist insurrection in southern Burundi after two weeks of intense fighting although isolated pockets of resistance remain. Chances for an early return to political stability are slim, however. The insurrection involved about 1,000 Hutu dissidents; some of them took part in an abortive attempt to overthrow the Tutsi-dominated gov- ernment in 1965. The dissidents, armed mainly with machetes and mystical powers, laid waste large areas of southern Burundi before being over- come by the army and local militia. As many as 15,000 refugees are reported to be in Tanzania and several thousand more may have fled to Zaire. An international relief effort is under way, but so far has been unable to meet the refugees' needs. Through widespread arrests among Hutu government officials, the government has accumu- lated what it considers irrefutable evidence that the insurrection was a planned attempt to spark a general uprising by the Hutu majority against the Tutsi-run government. The US Embassy estimates that better than 100 of these officials have now been executed. Although the government has not captured all the rebel leaders, it suspects a former SECRET Page 22 WEEKLY SUMMARY 12 May 72 Approved For Release 2008/07/07: CIA-RDP79-00927A009500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927A009500070001-2 SECRET commandant of the gendarmerie who fled to Rwanda in 1965 of being a major figure. Another suspect, a former economics minister relieved of his portfolio in a cabinet shuffle early last year, has been killed, according to the army. President Micombero is convinced that the dissidents were supported and trained by Chinese and North Korean agents in Tanzania. We have no evidence that this is so, and the Chinese almost certainly have had no hand in the affair. Political recovery from the violence is likely to be slow. Micombero still has not formed a new cabinet to replace the one he hastily dismissed on Only about 20 percent of the $500 million in emergency relief pledged to the Bangladesh Government for this year has been delivered. So far, about 600,000 tons of food have arrived- well below the UN target. Clogged limited ports, harbor facilities, a lack of storage space, and in- adequate internal transport have impeded distri- bution. Receipts of food and other supplies may increase as the ports return to normal, but tor- rential rains this month and into the fall will make distribution difficult. Relief commitments continue to grow and are only about $60 million short of the UN goal for 1972. India and the US have assumed the major share, and most of the current supplies come from these two sources. Most of the USSR's $10 million in relief--about 2 percent of the total-has already been delivered. In spite of Moscow's poor showing in relief, it leads in offering development assistance. Some $42 million for industrial installations and geo- logic exploration have been re-allocated from credits extended to Pakistan before the creation of Bangladesh. The Soviet commitment accounts for about half the total. Development assistance cannot be implemented on any large scale, how- ever, until emergency assistance becomes more effective and transport problems ease 29 April, at the time the violence broke out. The main targets in the cabinet dismissals were the powerful ministers of justice, foreign affairs, and information, whose growing influence Micombero was moving to curb. These ministers-leaders of a radical faction within the government-have con- sistently advocated a harsh stand against the Hutus. The violence of the past weeks may generate wide support for their position. In any case, Micombero faces an extended period of factional infighting within the governing Tutsi 25X1 oligarchy before he can form a cohesive cabinet and return a degree of political stability to the country. SECRET Page 23 WEEKLY SUMMARY 12 May 72 16 12 11 10 Sweden Norway Japan USSR i= I Approved For Release 2008/07/07: CIA-RDP79-00927A009500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927A009500070001-2 SECRET Diverging interpretations of the proper role of the church in society have led to further trouble between the Catholic hierarchy and the military-backed government. Bishop Lorscheiter, the secretary general of the National Council of Brazilian Bishops, reportedly believes that the administration, with the specific approval of Pres- ident Medici, is waging a systematic campaign to prevent the church from conducting any of the civic or pastoral functions called for under recent papal directives. The bishop believes that the cur- rent difficulties of a French-born priest, Father Francois Jentel, will convince many prelates that this is so. The Brazilian press reported in early March that 50 settlers, led by Father Jentel, had at- tacked and wounded several policemen in a village in largely undeveloped Mato Grosso State. The priest denied participating in the battle and placed responsibility for the incident on a gov- ernment-sponsored land development company that was trying to evict the settlers from their land. He accused the local police of corruption and of aiding the land company to invade proper- ties and burn homes. The cleric also charged that powerful economic interests had bought off fed- eral officials who came to investigate the situa- tion. He said the only solution to the problem was a thoroughgoing agrarian reform program, which the government has the capability-but not the will-to carry out. Government and military officials, on the other hand, view Father Jentel as a dangerous agitator. On 19 April, a federal police official told Bishop Lorscheiter that the government intended to expel the priest from Brazil. Many of Father Jentel's colleagues would regard such a move as totally unjustified; his immediate superior has warned the press that the police are hunting down the cleric to expel him "for his heroic service to Indians and settlers." Father Jentel apparently has gone underground, probably with the assist- ance of other Catholic clergymen. Even before this issue came up, church-state relations were at a low point. Among the other current sources of friction are the four to eight months' delay before the government grants visas to foreign missionaries, and the outright refusal to permit the entry of some foreign clergymen. A series of discussions between certain government officials and Catholic prelates and laymen have yielded nothing. Indeed, the meetings reportedly have deteriorated into acrimonious exchanges of charge and counter-charge between the two sides. Although both the administration and the Catholic hierarchy would really like to avoid confrontation, the Jentel case shows how a seemingly minor incident can grow into a serious problem. Each new incident tests the restraint of the two sides, and the time may come when those counseling moderation will not prevail. SECRET Page 24 WEEKLY SUMMARY 12 May 72 Approved For Release 2008/07/07: CIA-RDP79-00927A009500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927A009500070001-2 SECRET URUGUAY: BORDABERRY UNDER FIRE Despite reports that President Bordaberry enjoys the full cooperation of major opposition leader Wilson Ferreira, Bordaberry may be losing the legislative initiative to the Blanco chief. Senator Ferreira, whose coalition controls two thirds of the Blanco congressional seats, has supported the government's state of internal war, which is due to expire on 15 May. Ferreira has indicated that his continued cooperation depends on Bordaberry's moving against rightist terrorist groups. To underline the point, Ferreira sided with the leftist Frente Amplio to suspend several of the President's emergency powers in the last two months. Although Bordaberry received con- gressional approval for a temporary suspension of some constitutional guarantees to deal with ter- rorist violence, the government was forced to release approximately 150 prisoners last week in compliance with a legislative ruling on how long suspects may be held. Again, Ferreira sided with the Frente. Ferreira's ability to play the pivotal role in major issues has prevented the Frente Amplio from moving effectively to discredit the adminis- tration and the Blancos. While individual Frente Amplio senators have succeeded in occasionally embarrassing the administration on the issue of counter-terrorism, the leftist coalition has been unable to develop a unified strategy. This failure can be attributed in part to internal dissension produced by the efforts of non-Communist leaders such as Zelmar Michelini and Enrique Erro to form their own blocs within the Frente. In addition, Frente spokesmen are divided regarding continued association with the Tupamaros. While the coalition has avoided defining its stand on the terrorist issue, since the recent violence several Frente leaders, including defeated presidential candidate Liber Seregni, have sought to dissociate themselves from the Tupamaros by publicly denouncing terrorism. Because of these splits within the organization, Frente spokesmen have Page 25 not been as forceful critics of the administration as Ferreira. Although Bordaberry is showing more political skill than many expected, he will have to move decisively and skillfully if he is not to lose out completely in policy matters to Ferreira- especially if the senator agrees to come into the administration. Ferreira rejected an earlier pres- idential offer to participate in the administration. Bordaberry has continued to press for Blanco cooperation, and Ferreira may change his Former dictator Marcos Perez Jimenez is emerging slowly but steadily as a serious pres- idential candidate for 1973. Despite a widespread belief that he is too much the coward to leave golden exile in Madrid and face the security hazards of a personal campaign, Perez says he will do so and plans to travel to Caracas later this month to sign the electoral register. His failure to attend to this technicality laid the basis for the Supreme Court annulment in 1969 of his election to the senate. Late last month, over 400 supporters from the myriad political groups claiming to be "his" party met with Perez to seek unity and set the groundwork for a coordinated campaign. Wily as ever, Perez encouraged all but made no real com- mitments. In Venezuela, which Perez ruled for ten years until his ouster in 1958, his unsavory record seems largely forgotten-one of many signs that the electorate is disenchanted with things as they are. Recent surveys confirm indications that large SECRET WEEKLY SUMMARY 12 May 72 Approved For Release 2008/07/07: CIA-RDP79-00927A009500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 SECRET blocs of votes are there for the taking by a new face or someone from outside the establishment. Only 11 percent of a group polled early this year claimed to belong to a party, and these affilia- tions were diffused among many groups. The high portion of uncommitted voters clearly is fertile political ground for Perez, whose supporters have already used to good effect the slogan, "Thirteen years of democracy: Had enough?" With a showman's timing, Perez plans to be in Venezuela on 22 May, his mother's birthday, to visit her grave and remind the Perez-watchers that she died while he was in prison and that the then-governing Democratic Action party denied him a visit during her last days. Moreover, he may arrive in the country about the same time as his archenemy, Democratic Action leader and former president Romulo Betancourt, who himself is re- turning from voluntary exile to take political 25X1 soundings for 1973. The findings of the observer sent by the OAS to British Honduras this week will mark the closing episode of the recent flare-up involving Guatemala's territorial claim to the colony. The territorial dispute has not, of course, been solved, but an unspoken moratorium on the issue seems likely to maintain the peace. Fear of a military incident arising from the build-up of troops by the Guatemalans in the Peten region adjacent to the colony and by the British across the border had all but dissolved by the end of April as the antagonists concentrated on the OAS. An OAS observer was finally dis- patched to determine the number of British troops now in the colony. The Guatemalans had claimed the British had moved in twice the 600 actually in British Honduras. The Guatemalans, who judge they did well in the confrontation, will try to give the im- pression that the lower troop count resulted from their initiative. They have already painted the OAS vote to send an observer as a show of solidarity with them against the few English- speaking Caribbean states openly advocating self- determination for British Honduras. In truth, the vote was in the long OAS tradition of useful ambiguity with only four states fully supporting Guatemala's position that territorial integrity supersedes self-determination, the rest groping for some way to get the adversaries back to the negotiating table. For all their ostensible faith in the Hispanic fraternity, the Guatemalans prob- ably have come to recognize that their territorial aspirations will never be realized through the OAS mechanism. All sides have expressed hope that talks can be reinstituted, but negotiations are likely to be more symbolic than serious. The threat of a mili- tary engagement brought a clearer appreciation of the territorial situation to the three parties, and a fresh standoff has been achieved. Both the British and the British Hondurans know more certainly that peace for an independent British Honduras requires some arrangement with Guatemala. The Guatemalans have at the very least secured tacit assurance from the British that independence will not be granted soon. Although a few Guatemalan hawks undoubtedly had hoped that the in- cumbent right-wing government in Guatemala would be the one finally to oust the British from Guatemala's "lost territory," President Arana clearly wishes, like his predecessors, to pass the problem along. Minor strains continue because the Guate- malan Army is still holding exercises in the Peten region, but the seasonal rains this month should remove this last obstacle to tran uilit . SECRET Page 26 WEEKLY SUMMARY 12 May 72 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 SECRET The Soviet ballistic missile submarine has left the Bay of Nipe following a week-long visit to Cuba. Accompanied by a Soviet destroyer that has been in Cuba since 5 March, the G-II - class diesel submarine entered the Atlantic early last weekend, apparently en route to home waters. During the entire time it was in Cuba, this submarine-the first ballistic missile unit to visit HAVANA Mariel Cienfuegos any foreign port-remained moored alongside a Soviet submarine tender in the Bay of Nipe. The destroyer and the submarine were on a northeasterly heading northeast of the Dominican Republic on 11 May. Their departure reduces the number of Soviet combatants in Cuba to one, an F-class diesel attack submarine in Mariel. The submarine tender moved to Santiago on Cuba's southern shore after the G-ll left the Bay of Nipe. Antilla' / Bay of NiPe Santiago de CubA. Fidel Castro was warmly received in Guinea, Sierra Leone, and Algeria, the first stops on an extensive barnstorming tour that will take him to most of Eastern Europe and eventually the USSR. Castro arrived in Guinea, the center of Havana's activities in sub-Saharan Africa, on 3 May and promptly launched into a speech aimed at developing the parallel between Cuba and Guinea as young, revolutionary, and anti- imperialist nations. The Cuban leader assured a mesmerized audience that the Guinean people ^ Guantanamo could count unconditionally on Cuban support. Following a side trip to call on President Stevens of Sierra Leone, with which Cuba recently estab- lished diplomatic relations, Castro arrived in Algeria on 8 May for a ten-day stay. The Algerian Government shares much of Cuba's political ideology, especially concerning liberation move- ments, but there is no evidence of joint support to any subversive group. So far, Castro has been circumspect in his remarks, but this could change if he sees his visit being upstaged by events elsewhere. SECRET Page 27 WEEKLY SUMMARY 12 May 72 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 25X1 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2 Secret Secret Approved For Release 2008/07/07: CIA-RDP79-00927AO09500070001-2