WEEKLY SUMMARY

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• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A009800080001-8
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• Document Creation Date: December 21, 2016
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• Content Type: SUMMARY

Approved For Release 2008/04/28: CIA-RDP79-00927AO09800080001-8
M' Secret
DIRECTORATE OF
INTELLIGENCE
State Dept. review
completed
WEEKLY SUMMARY
Secret
27 October 1972
No. 0393/72
Copy NQ 56
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 WEEKLY SUMMARY, issued every Friday morning by
the Office of Current Intelligence, reports and analyzes signif-
icant developments of the week through noon on Thursday.
requently includes material coordinated with or prepared
the office of Economic Research, the Office of Strategic
search, and the Directorate of Science and Technology.
s requiring more comprehensive treatment and there
published separately as Special Reports are listed in the
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_EKLY SUMMARY contains classified information
ing the national security of the United States, within
e meaning of Title 18, sections 793 and 794, of the US
amended. Its transmission or revelation of its con-
tits to or- receipt by an unauthorized person is prohibited by
MIDDLE. r-A~D i
AF Ut
I :.hit the lino-Soviet Uispuie
3 T:urepe: A View from the Sumrnrr
3 Indochina
China: Lots of Moves, Little Uairn
ii Korea: Business as Usual
USSR-Iran: Accentuate the i csil uc:
NAI 0: Conference I ever
Iceland: Fishing ana the Base
Canada: Election Day rsiears
Hooiania: Recycling
Yugoslavia: The Serb Purge
_. jmrnun ,t Lurope: !our iii ouri 3L..i.
sk is?: I award a t unsti rou Uri
h Yemen:.: I al~ing iri ,_r=rep
'..WVL t !NI
MI`=HPt h'fl:
I ~ti r9ama: I bintj up Loose i i,
Chile: Allende aria the Strike
Venezueia: erezrrrneriisrrtu
j;r;thout i'J
r,,,, ;a: _es; Lentraiisrn
=entral i=A.merica: Arid Now I net,..,
1I10 V our
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'Over the past few months, the Chinese and
Soviets have missed few opportunities to blacken
each other's reputation. While the Soviets have
been buttonholing foreign visitors in Moscow for
several years with recitations of Chinese sins, the
increasing number of diplomatic visitors in Peking
is giving the Chinese new openings to counter
with warnings about Soviet infamy. The dispute
still strongly colors the foreign policy of both. I
Peking on the Offensive
I LRecent high-level delegations to Peking from
the UK, France, Canada, Japan, and West
Germany have all come away with the same im-
pression: the Chinese hierarchy is acutely pre-
occupied with the Soviet threat, and this in-
fluences almost every facet of Chinese foreign
policy.;
[The most comprehensive recent exposition
of Chinese views came during the visit of German
Foreign Minister Scheel in mid-October. German
officials say the Chinese were surprisingly eager to
castigate the Soviets as both expansionist and
untrustworthy. Chinese Foreign Minister Chi
Peng-fei cited the 1968 invasion of Czecho-
slovakia as proof of Soviet "treachery," and
argued strongly that the time was not opportune
for concluding treaties with Moscow. He claimed
China did not object to Bonn's treaty with
Moscow, but bluntly warned Scheel that the So-
viets viewed all treaties as temporary, and that the
agreement would be "tossed in the scrap basket"
when Moscow found it convenient to do so.
Chi expressed an acute interest in develop-
ments in the European Communities and ap-
prehension over proposed conferences on force
reductions and European security. Countering
Scheel's statement that the Soviet Union was
being forced by internal pressures to reduce the
arms race and come to an accommodation with
the Western European nations, Chi said that such
internal pressures ranked low compared with
Moscow's judgment that detente with the West
allowed the Soviets to build up its defenses on the
Sino-Soviet border. Chi painted the Soviet Union
as a dangerous expansionist power that would
attack either the West or the East if it thought
gains could be made. He cautioned the Germans
to remain vigilant, to pay more attention to na-
tional defense, and not to give up the US nuclear
umbrella. Chou En-lai was just as critical of the
Soviets, although he used less polemical language
than his foreign minister. 1
, I
/ f In their discussions with Scheel-and with
other recent visitors such as French Foreign Min-
ister Schumann-the Chinese obviously had in
mind the then upcoming EC summit and no
doubt hoped to encourage movement toward
political unity in West Europe. Indeed, the
Chinese give tacit approval to a strong NATO and
the US nuclear umbrella as a means to this end.
The Chinese realize that overt and strenuous op-
position to such projects as talks on force re-
ductions and European security would be
counterproductive, but they are unlikely to
abandon attempts to convince European diplo-
mats that Moscow is using detente as a facade to
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strengthen itself militarily, and that the long-term
prospect of peace with the Soviets is an illusion.'
I Chinese apprehension about the Soviet
threat is certainly not new-it has remained high
at least since the Sino-Soviet border clashes of
1969. What is new, however, is the active, and
even optimistic tone of China's current diplo-
matic and propaganda offensive against Moscow.
This note of self-confidence was struck in Chiao
Kuan-hua's policy speech before the UN on 3
October, and is perhaps best exemplified by the 1
October National Day joint editorial, which
claimed that Peking's flexible approach in foreign
policy is effectively countering Soviet efforts to
encircle and isolate Peking.
Moscow Fights Back
?Aware of the opportunities Chinese officials
have had recently to warn foreign statesmen
about Soviet objectives, Moscow has launched a
public counteroffensive. On 19 October, the
Soviet weekly New Times condemned Peking's
efforts to make trouble for the USSR in Europe.
In what reads like a blow-by-blow rebuttal of
Chinese comments to the Scheel delegation, New
Japanese Foreign Minister Ohira's visit to
Moscow succeeded only in underscoring the
gulf between the two countries on the crucial
Northern Territories issue. The Soviets, while
clearly interested in improving relations with
Tokyo, were apparently unwilling to meet
Japan's demand that all the disputed islands
be returned. The communique, issued on 25
October, said that consultations between the
two foreign ministers would be held "in
1973." The statement was deliberately vague
and shed no light on whether lower level talks
on the peace treaty and territorial issues
would get under way before their next
meeting.
Times berated China for trying to convince West
European politicians of the need to unite against
the USSR. The article also raised a sensitive issue
in charging that China hopes to re-equip Chinese
industry with Western aid, and thereby increase
China's military capability, "including the nuclear
missile one."
I Soviet leaders are painfully aware that
Chinese claims of new diplomatic successes
amount to a qood deal more than empty talk.
Over the last few weeks, the Russians have had to
sit on their hands watching China normalize re-
lations with the two most important states on
their flanks. China's closer links with Japan and
West Germany strengthens the hand of all three in
their dealings with Moscow, and the Soviet
leaders are clearly concerned that Peking's ability
to foul Soviet lines to these two key countries has
been improved.
The chief Soviet negotiator at the border
talks, Deputy Foreign Minister Ilichev, flew back
to Peking last week after two months in Moscow,
where he has spent more than half of his time
._over the past year. He arrived back in China in
time to mark the third anniversary of the current
talks with appropriate ceremony; that is, no
ceremony at all. Neither side bothered to mention
the occasion, which slipped by unnoticed on 20
October. There has been no real evidence of
progress in these talks, and what the Soviets and
Chinese have recently been saying, both privately
and in public, strongly suggests the negotiations
will remain stalemated for the foreseeable future.
Despite the lack of results, both Peking and
Moscow apparently continue to regard the talks
as a useful channel of communication on the
sensitive frontier problem, and neither seems to
want them to end. During a conversation early
this month with a Western diplomat in Moscow,
1 Soviet negotiator Ilichev dutifully explained that,
while the talks were stymied, "one must be
patient."
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Paqe 2 WEEKLY SUMMARY 27 Oct 72
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)The principal achievement of last week's
nine-nation summit meeting in Paris was the ex-
plicit recognition that the communities' goals are
both economic and political. With an as yet
undefined "European union" announced as an
objective of the member states within this decade
and with a large number of deadlines set over the
next two years for new policies, the summit out-
come was more positive than expected.]
L7imetables for policies do not, of course,
assure that agreements on them will be reached.
Nevertheless, the EC has in the past advanced
and other such far-reaching reforms will pre-
sumably have to wait until a general review of EC
institutions is undertaken in 1975 in the context
of a debate on "European union." Interim pro-
posals will be presented next year, however, on
how to improve community decision-making,
how to extend the powers of the parliament, and
how to strengthen the institutions required by the
movement toward economic and monetary union.
The summit also agreed to increase the minis-
terial-level foreign policy consultations from two
to four meetings a year.
[in response to growing criticism that the EC
is inward looking, the leaders acknowledged that
the community's external relations must take into
account the "international political implications
for, and the effects of, community policies under
construction." Despite the emphasis on global
responsibility, general reference was made to the
EC's special ties to the Mediterranean coun-
tries-ties that the US fears will provide the EC
with preferential trading access to Mediterranean
countries. The French and British resisted Bonn's
desire to "institutionalize" the US-EC dialogue,
but all emphasized the importance of trans-
Atlantic agreement. Heavy stress was also laid on
improving the EC's performance vis-a-vis
under the pressure of self-imposed deadlines, and
many of the intended policies are the necessary
pre-conditions for the effective economic and
monetary union the members are pledged to
achieve by 1980. Moreover, in pressing for action
on social, environmental, and regional policies,
the leaders were aware that progress in such areas
might help recapture popular interest in the com-
munity itself.,)
/iThey also recognized a need to appeal to the
"man in the street" by democratizing the com-
munity. The Dutch in particular argued strongly
for popular election of the European Parliament
but the French and British were opposed. This
*(from left): Eyskens (Belgium), Werner (Luxembourg), Lynch (Ireland), Joergensen (Denmark, partially hidden),
Brandt, Biesheuvel (Netherlands), Pompidou, Heath, Andreotti (Italy), and French Premier Messmer.
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developing countries, although the summit failed
to endorse some of the specific aid goals sug-
gested by the commission.
Intended both to welcome the accession of
the new members and to give fresh impetus to the
integration movement, the summit may in fact
have been the beginning of a new relationship
among the member states. Along with the Dutch,
the Germans were in great part responsible for the
affirmation of the community's international out-
look-including a commitment to early progress
on trade negotiations. Prime Minister Heath con-
tributed the note that the world scene requires
Europe to make its voice more clearly heard.
Although the French can be expected to continue
to oppose delegation of additional powers to
community institutions, President Pompidou
showed a certain flexibility in conceding that
community procedures-in contrast to inter-state
cooperation-should be accorded the "widest
possible use" in putting into effect the programs
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IIARONIO - _P ~I~I O lL
~, a~ rs a 4 4 crap su ra
ARGENTINA: WILL PERON RETURN? 25X1
jf The question of whether former dictator
Juan Peron will return to Argentina is currently
overshadowing all other topics of political specu-
lation in Buenos Aires, including the coming elec-
tions. The latest story, picked up by the major
international news agencies, is that Peron will
arrive on 17 November, accompanied by a host of
Peronist leaders as well as the embalmed body of
his second wife, Eva. ,,The return of the beloved
i`Evita-preserved by a method similar to that used
on Lenin-would stir an emotional outpouring
that might well diminish the importance of
Peron's arrival on the scene, but would assure
maximum coverage to the long-awaited second
coming.
if ,There is no assurance, of course, that the
speculation is fueled by anything more than the
usual political maneuvering. Peron, in fact, is con-
tinuing to play his normal game of giving dif-
ferent stories to each person he talks to. He is
reported to have told the French news service on
22 October that he has no immediate plans to
travel to Argentina. He said that his "tactical
command" in Argentina had not told him his
presence was vital and that he did not want to
return to his native land if his presence would
create more violence. At about the same time, he
reportedly told an Italian correspondent that he
would make the trip very soon because his
"tactical command" had informed him that his
presence in Argentina was necessary.
EV' P
X000 _:
LN108iiE
fP Tii 1111-
Political Posters in Buenos Aire'
Ithe rumors about his
coming may become reality if an electoral agree-
ment can be worked out between the military and
N ,the Peronists. Both Peron and President Lanusse
appear to agree that if the old dictator does
;,return he should limit himself to a short visit of
three or four days, preferably in some provincial
;;city. This type of sojourn would fulfill Peron's
promise to return while at the same time reducing
the chance of an assassination attempt by any of
his sworn enemies. It would also reduce the risk
seen by the military that Peron would be carried
into power by massive demonstrations as he was
in 1945. The scenario, thus, would be that Peron
would arrive in Argentina, endorse an electoral
agreement with the military, anoint someone to
carry the Peronist banner in the March elections,
and then return to Madrid to live out whatever
remains of his already long and active life. F_
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WEEKLY SUMMARY 27 Oct 72
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Communist plans to raise the level of mill- 'The Lao Communists indicate that they at-
tary action this month, reported from many parts tach considerable importance to the current
of South Vietnam, have been implemented on round of peace talks in Vientiane. In the week's
only a limited scale thus far. In recent weeks, in most significant development, the Communists
fact, the South Vietnamese have gained much of announced on 25 October that Phoumi Vong-
the battlefield initiative and are making more vichit was being dispatched to the Lao capital to
determined efforts to recapture lost territory. serve as a "special adviser" to their negotiating
There are no signs, that Communist units are team. Phoumi is generally regarded as one of the
pulling back from prime target areas. top three I._ao Communist leaders and, as such,
During the week, enemy activity consisted,
for the most part, of shelling and harassment. A
number of airfields, including Da Nang, Bien Hoa,
Pleiku, and Phan Rang, were hit by large-caliber
rockets- Government bases and some towns also
came under rocket and mortar fire. Road traffic
was harassed, especially in the highlands and in
the provinces nearer Saigon.
presumably will have wide discretion in dealing
with government negotiators.
r At the second session of the talks on 24
October, chief Communist negotiator Phoune
Sipraseuth concentrated on the familiar argu-
ments that Souvanna's government can no longer
be considered the neutral government of national
union set up in 1962 by the Geneva Conference
and that the two sides must negotiate, on an
equal basis, a new coalition structure. The govern-
ment and the Communists have now taken their
initial bargaining stances on political issues, and
serious probing for signs of give could begin at
next week's talks. Although, on 24 October,
Phoune castigated the government for a lack of
"good will and realism," he held out the hope of
a constructive dialogue by pointing to "certain
points" in Vientiane's position as "capable of
bringing us together."
spread speculation or some official directive re-
garding the imminence of a cease-fire may have
had an effect on the willingness of some Com-
munist troops to go into battle.
There is also good evidence, however, that
allied air and artillery attacks, together with more
aggressive South Vietnamese ground operations,
have severely crippled enemy units and that sev-
eral key officers as well as many combat troops
have been killed or otherwise put out of action.
As the peace talks go on, government forces
in north and south Laos are trying to regain
important ground before drier weather permits
the Communists to reinforce and resupply. In the
north, irregular troops have again moved onto the
southern Plaine des Jarres and are pushing toward
high-ground positions at the Plaine's eastern and
western edges despite North Vietnamese infantry
and armor attacks. The assignment of an addi-
tional 2,000 troops to this operation makes it the
largest task force yet committed to the ten-week
campaign in the north.
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? Government-held location
Communist-held location
Strong NVA assults
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'Although the Communists have been hit
hard by daily air strikes, they appear determined
to counter the new thrusts. If the irregulars are
expelled this time, Vang Pao will have little time
left to organize another foray against the Plaine
before the Communists begin to receive dry-
season reinforcements.
In south Laos, eight irregular battalions are
meeting stiff resistance from North Vietnamese
units entrenched in the town of Saravane. South-
west of Saravane four other battalions operating
behind Communist lines in the vicinity of Ban
Lao Ngam-a village on an important enemy sup-
ply route-have yet to encounter opposition.
The Communists, meanwhile, launched an
offensive of their own. Late last week, elements
of the North Vietnamese 39th Regiment forced
the government garrison to abandon Khong
Sedone, while troops from the North Vietnamese
9th Regiment launched several major attacks on
government positions farther south near the inter-
section of Routes 23/231.`!The presence of gov-
ernment troops at Ban Lao Ngam may force the
North Vietnamese to shift some of their units
back to that area and away from these offensives.
CAMBODIA: THE NEGOTIATIONS DILEMMA
jWidespread interest in a cease-fire in South
Vietnam and the opening of peace talks in Laos
have had an obvious impact on the Lon Nol
government, whose own negotiating prospects
remain uncertain. In its second statement on a
cease-fire in less than a month, Phnom Penh late
last week reiterated that any cease-fire must be
Indochina-wide and must provide for an im-
mediate and internationally supervised with-
drawal of all Vietnamese Communist troops from
Cambodia. While the government undoubtedly
recognizes its dependence on external forces to
effect such a withdrawal, the statement depicted
the resolution of the Khmer Communist "prob-
lem" as strictly an internal affair.'
But other than its curt acknowledgment that
the Khmer Communists do indeed represent a
problem, the Lon Nol regime has thus far not
revealed any serious interest in dealing with the
indigenous insurgents at a politically high level.
One reason for Phnom Penh's reluctance is fear
that substantive contacts would support the
Khmer Communists' contention that the current
conflict is a civil war. Another important reason is
Lon Nol's apparently sincere view that the Khmer
Communists are largely misguided nationalists
who will rally to the government once Vietnam-
ese Communist forces have withdrawn from
Cambodia.
The President's appraisal of the Khmer Com-
munists seems unduly optimistic, however. In the
past two years, the Khmer Communists-a num-
ber of whom were trained in North Vietnam-
have laid the foundations for a Communist infra-
structure in virtually every province in the coun-
try. Despite continuing handicaps such as internal
dissension, a shortage of experienced cadre, and
friction with their Vietnamese allies, the Khmer
Communists have developed their military forces
to the point where they are increasingly willing
and able to shoulder more of the Communist war
effort in Cambodia. During the present dry
season, for example, Khmer Communist forces
have been chiefly responsible for the pressure
against several key lines of communication.
'I The role played by Sihanouk would be a
complicating aspect of any possible future nego-
tiations between Phnom Penh and the Khmer
Communists. In a recent interview in Peking,
Sihanouk asserted that both Le Duc Tho and
Chou En-lai support his stand that "the Cam-
bodian problem could only be settled with Siha-
nouk." The Lon Nol government, however, has
consistently held that it would never deal with
Sihanouk, and the deposed prince has been
equally adamant about refusing to negotiate with
the present regime in Phnom Penh. There are also
indications that, although appreciative of Siha-
nouk's present political and proi.)aganda value, the
Khmer Communists would be reluctant to see
him return to power permanently.
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CHINA: LOTS OF MOVES, LITTLE GAIN
I )Peking has made a number of high-level
appointments in the government and the party-a
process that virtually halted after the Lin Piao
affair last fall)[The new appointees are a mixed
bag, and their selection conveys an impression of
continued political struggle rather than of
progress toward unity. The cursory treatment of
domestic affairs in the National Day joint edi-
torial, the continued delay in convening the
National People's Congress, and the failure to
designate a leader for the armed forces all suggest
that the leadership remains divided on a number
of key issues.
Despite the regime's persistent calls for the
reduction of the political and administrative role
of the military, two of the three new government
ministers are veteran army officers.' )One of the
two was closely associated during the Cultural
Revolution with Li Te-sheng, alternative polit-
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buro member and head of the General Political
Department of the armed forces, whose star
seems to be rising. j
c IThe third new appointee, Minister of the
State Planning Commission Yu Chiu-li, is a vet-
eran civilian administrator who assumes the
regime's top economic post at a time when eco-
nomic planning is becoming more important. Yu,
who was severely criticized by leftist Red Guards
during the Cultural Revolution, is a strong sup-
porter of Premier Chou En-lai, and his promotion
improves the position of moderate forces at the
center.
~On the other hand, the elevation last month
of ang Hung-wen, a youthful textile worker
from Shanghai, to what appears to be an im-
portant party post in Peking is almost certainly
favored by leftist elements in the leadership.
Since Wang's arrival in Peking, he has appeared
frequently at the side of Madame Mao and polit-
buro member Yao Wen-yuan, both prominent
r, leftists Indeed, Wang's promotion, which
preceded the ministerial appointments by only a
few weeks, may have been part of a package deal
which balanced off contending interests in
Peking. j
,Thus, while Peking may have made some
progress in breaking the personnel logjam at the
top, the regime does not appear to have gained
much ground in resolving the deep-seated fac-
tional and ideological differences within the top
leadership. Rather, the recent appointments seem
to be products of a continuing process in Peking
in which the progress of moderate elements in
restaffing the party and state bureaucracies with
like-minded personnel is matched to an important
degree by gains on the leftist side of the ledger.
Moreover, the degree to which Premier Chou and
Madame Mao are personally identified with these
rival interests strongly suggests a clash of wills. In
such a conflict, Mao's role is a determining fac-
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'.Seoul's 17 October martial law decree has
generated virtually no domestic resistance, and
the government has already begun to ease some of
the restrictions to avoid prolonging the crisis
'atmosphere. Public assembly for all but political
purposes is now permitted. Some universities have
been allowed to reopen. The armed forces have
been instructed to avoid interfering with routine
activities, and the presence of military equipment
and personnel in the capital and other major cities
is being kept to a minimum. The political opposi-
tion and the press remain under tight security
wraps; no arrests have been reported.'
The government is feeling its way gingerly
and will probably maintain extremely tight secu-
rity at home until the process of amending the
constitution is completed toward the end of the
year. The proposed amendments -designed to
perpetuate Pak's leadership-will be announced
on 27 October, but the South Korean authorities
have already begun to leak details of these pro-
posals, probably in an effort to cushion their
impact. The arrangements include:
? a president chosen for six years by a
group of electors selected from local adminis-
trations controlled by the government;
? a national assembly, serving concur-
rently with the president, to be partially
elected and partially appointed by the new
executive. '
Members of the Extraordinary State Coun-
cil, the current governing body composed of the
President and his cabinet, have been busy lobby-
ing in business and diplomatic circles to reassure
domestic and foreign entrepreneurs that the new
measures will not damage the country's economy
or affect economic activities. President Pak and
. his prime minister seem particularly sensitive to
the possibility that the nation's economy could
suffer as a result of a lack of confidence in the
government.
As suggested in Pyongyang's mild propa-
ganda coverage of the martial law decree, Seoul's
action has had little direct impact on the progress
of the North-South talks. The Red Cross delega-
tions met in Pyongyang as scheduled on 24 Octo-
ber to discuss proposals for putting divided
families in touch with one another; no agreement
was reached, but further talks are planned. Seoul
and Pyongyang have also agreed that the co-chair-
men of the higher level Coordinating Committee
will meet twice next month. Both appear to be
looking to these sessions to iron out difficulties
A larger image: Stadium portrait of President Pak during Armed Forces Day parade
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LThe economy, stagnant in 1971, is on the
upswing. Industry's order books are slowly filling,
profit margins are improving, investment is pick-
ing up, and unemployment, which failed to rise as
much as feared during the slowdown, has leveled
off. These gains, however, are likely to be over-
shadowed by the acceleration in inflationary pres-
sures. Inflation is a major issue in the November
election, and the record increase in living costs
last month will fuel opposition charges that the
inflation results from three years of economic
mismanagement by the Brandt government.
.','I Real gross national product, which grew by
two percent in the first half of this year, is likely
to rise at double that rate during the second half.
Increases in domestic orders for machinery and
equipment reflect the improving investment
climate. Growing inventories and orders for raw
materials and semi-finished goods also indicate
improved business confidence. Export demand
has increased significantly, quieting widespread
fears that a revalued deutschemark would price
German goods out of foreign markets.
Employment has not yet increased, but the
number of workers on reduced work shifts has
declined drastically. Unemployment in September
was only about 195,000, less than one percent of
the labor force, and reported job vacancies num-
bered nearly 600,000. At the same time, the
foreign labor force exceeded 2.3 million, up five
percent from 1971.1
:5 ()_Inflation remains the Achilles' heel of the
West German economy. Living costs in Septem-
ber were 6.2 percent over the same month last
year-the highest increase since the Korean War-
and probably will rise five percent next year.
Inflation in West Germany is no worse than in
other industrial countries-indeed it is less than in
most-but this will cut little ice with voters,
especially at a time when the specter of unem-
ployment is receding.,;
(Business, labor, and government agree on the
pressing need for anti-inflationary action, but
there is no consensus on the measures to be
taken. Labor favors increased competition to
On the Move Again
restrain price increases, while business calls for
wage and government budgetary restraints. The
government has moved to increase price com-
petition by liberalizing imports from Eastern
Europe, but the effect probably will be negligible.
The Brandt government, heavily dependent on
labor support, has steered clear of prescribing
wage guidelines. I
c - JAs in the past, the Bundesbank has had to
assume the principal responsibility for anti-in-
flationary measures. To slow down domestic
credit expansion, the bank recently raised its dis-
count rate and the rate for loans secured by
collateral. West German bankers doubt that credit
policy alone can correct the inflation and have
called for complementary government budgetary
action. The main economic research institutes,
fearing renewed disruptive monetary inflows,
have called for a new deutschemark float, but this
has been ruled out by the economic ministry.
Bundesbank President Klasen has warned, how-
ever, that if prices continue to rise sharply, the
bank will not hesitate to take additional restric-
tive measures.
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The Shah's visit to the USSR from 10-21
October brought a considerable public display of
goodwill but
new Soviet assurances have not dis-
pelled his misgivings about Moscow's ambitions in
countries bordering Iran.'
The visit had all the red-carpet trappings
necessary to make it a success in public relations.
In addition to formal talks with party leader
Brezhnev, Premier Kosygin, and President
Podgorny, the Shah and Empress Farah were
given an extensive tour through several Soviet
republics. They stopped in industrial centers,
talked to local leaders, and visited the Soviet
cosmonaut training center. This sort of activity
served to enrich the Shah's position as a major
international figure and to show that the Soviets
can increase their influence in the Persian Gulf
area without completely alienating the Shah.
Despite the camaraderie, there is no evidence
that the basic problems troubling Soviet-Iranian
-;relations are any closer to solution. A lengthy
communique catalogued all the similar points of
view between the two on a variety of inter-
national issues, but did not cover Soviet support
for India against Pakistan or the expanded Soviet
presence in Iraq-two points that have long
troubled the Shah. The communique also failed
to mention Moscow's pet plan for Asian collective
security, which Podgorny resurrected in his
speech at a Kremlin reception honoring the Shah.
The best the Shah could do was to get the
Soviets on record as favoring the settlement of
Persian Gulf problems by the countries in the area
"without interference from outside powers," a
formulation that has not relieved his anxieties.
After his return to Iran, the Shah expressed his
deep concern to the US ambassador over Iran's
dangerous position between India and Iraq.
The Shah's continuing reservations about So-
viet policy did not prevent him from signing a
15-year economic and technical treaty plus an
agreement to expand cultural exchanges over the
next five years. The treaty is the latest step in a
series of agreements that have increased economic
relations in recent years. In addition, it was
agreed that the metallurgical works at Isfahan,
would be enlarged. Agreement was reached to
Empress Farah and the Shah greeted in Moscow by Podgorny and Kosygin.
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cooperate in the electrification of certain Iranian
railways and in making preliminary studies lead-
ing to the construction of power stations and
transmission lines in Iran.
2 ;The Soviet and Iranian press gave extensive
coverage to the visit, particularly to the benefits
each side would gain from the expansion of trade
and economic relations. The communique notes
that both sides are interested in regular consulta-
tions and concludes with Podgorny's acceptance
iThe NATO allies have resolved the dispute
over who should participate in Mutual and
Balanced Force Reduction talks with the Warsaw
Pact members. The countries of NATO's southern
flank-Greece, Turkey, and Italy-have insisted on
an active role at these talks, while the US has
sought to restrict participation to those countries
with forces or territories directly involved in
possible force reductions. The compromise
reached this week provides for a rotating repre-
sentative from both the northern and southern
NATO flanks, each having the right to speak by
invitation on issues directly concerning the flank
states. ,i
LThe compromise permits acceptance of the
Soviet proposal that preparatory talks for a Con-
ference on Security and Cooperation in Europe
begin on 22 November with a formal conference
tentatively set for June 1973. In addition, pre-
paratory talks on force reductions are proposed
for 31 January 1973 with the formal conference to
come in September or October. The participation
arrangement, plus the provision for on-site con-
sultations and regular consultations at the North
Atlantic Council, should reassure each of the
allies that they can share in making decisions
affecting their interests. Nevertheless, in accepting
this compromise, the Turkish representative
claimed that Ankara was not entirely satisfied and
might still press the Soviets bilaterally to permit
flank state "advisers" in addition to rotating rep-
resentatives..]
j So far the Soviets have not stated their posi-
tion on the participation issue although generally
they have followed the earlier US lead in wishing
to limit participation to those countries most
directly concerned. The Soviets would definitely
not wish to see an opening through which the
independent-minded Romanians might seek to
join in the talks. On the other hand, the Soviets
may allow the Hungarians to take part. The
USSR's position is keyed to its desire to gain
early NATO approval for convening a security
conference. To obtain this, Moscow, however un-
happily, may accept the NATO view on participa-
tion in force reduction talks.
'While awaiting the Soviet response, the allies
are preparing for both sets of talks. Most of the
NATO allies still want some parallelism between
the two conferences in order to assure progress in
both. In demarches to Moscow, some of the
allies-especially the UK-will attempt to rebut
previously expressed Soviet preferences for com-
pleting the security conference before starting on
force reductions. On the other hand, some NATO
countries, notably the French, continue to fear
that force reductions-which they still view as a
long-term and dubious project-will get in the
way of progress at the security conference.
.The first multilateral meeting with the East
on a security conference now looks to be less
than a month away, and the allies still have a
good deal of work to do. The multilateral talks in
Helsinki are expected to result in the establishment
of several commissions to draft agreements on the
main topics to be discussed at the conference
next year-security questions; freer movement of
people, ideas, and information; and economic,
technological, and environmental cooperation.
Discussion in NATO of the mandates these com-
missions should be given is barely under way and
could well bring out further differences among
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ICELAND: FISHING AND THE BASE
"A collision at sea can ruin your entire day. "
Thucydides 471-400 B C
Despite incidents at sea last week, high-level
fishing talks between Iceland and the UK may
still be possible. Leftists in the Reykjavik coali-
tion, who oppose efforts at an interim agreement,
probably instigated the incidents, one of which
was a collision between an Icelandic naval vessel
and a British trawler.
Thus far, London has resisted demands from
fishing interests that British naval ships patrolling
the North Atlantic be sent in with the trawlers to
"protect" them, and the Foreign Office still
hopes to get high-level talks restarted. The UK
dock workers' union has banned the handling of
all Icelandic cargo in British ports and will try to
extend the ban to other European ports.!
Technical talks had resumed in Reykjavik on
5 October. It was agreed that subsequent high-
level discussion would address catch limitations,
size of vessels, and three types of fishing zones
within the territorial waters claimed by Iceland:
permanently closed conservation zones, exclusive
Icelandic zones, and areas in which the British
would be allowed to fish at specified times. The
main issue-Icelandic jurisdiction over a 50-mile
limit-was not treated. The Icelanders reacted
strongly to the dock workers' boycott and the
British have beefed up the number of naval vessels
patrolling the North Atlantic. Both governments,
however, wish to settle the issue and probably
will work to restart negotiations if further inci-
dents do not occur. 'I
In Reykjavik, the rift between Foreign Min-
ister Agustsson and Fisheries Minister Josefsson
has widened because of Josefsson's attempts to
sabotage the fishing negotiations. Josefsson, a
leader of the Communist-oriented Labor Alliance
Party, declared that the technical talks ended
without results and charged that a further
"harangue" with the British would be useless. He
said the time was approaching when British
trawlers would be seized for fishinq within the
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limits. Agustsson countered that the technical
talks had indeed improved the possibility of
resolving the dispute. He did not comment on the
division within the government coalition.
f If the fishing issue is ever settled, the gov-
ernment will concentrate on reviewing the agree-
ment on the Icelandic Defense Force at Keflavik.
Without consulting Washington, Agustsson told
parliament on 19 October that negotiations with
the US would commence in January. The US
ambassador subsequently told Agustsson that a
later date might be more acceptable. According to
,.Prime Minister Johannesson, leader of the Pro-
gressive Party, the next six months may be dif-
ficult for US-Icelandic relations. Another min-
ister, Vladimarsson has said that he expects
"substantial revisions" in the agreement. He said
he personally felt that the Defense Force should
remain on the island, but at a reduced level,
Vladimarsson, who represents the Organization of
Leftists and Liberals, controls the swing votes in
Icelandic patrol boat Aegir and British trawler
Wyre Viciory during an earlier incident,
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the three-party coalition. Along with Johannes-
son's party, the Leftists and Liberals are basically
friendly to the US, and the party leaders' state-
ments probably represent pre-negotiating
atmospherics. J
"The Communists are likely to benefit from
any eventual compromise that Agustsson can
negotiate on the fishing issue. Josefsson's opposi-
tion to any concessions will be applauded by
many Icelanders, who feel that the government
should stand firm. While not directly related to
the fishing issue, the Defense Force negotiations
will be affected by it. The non-Communist coali-
tion partners would want to show gains in a new
agreement to offset any concessions on fish-
ing.
CANADA: ELECTION DAY NEARS
' [A Trudeau victory appears certain on 30
October after a lackluster election campaign. Ef-
forts by his opponents to exploit potentially
embarrassing issues have had little impact.)
The latest public opinion poll, taken in mid-
September, showed that Trudeau and his Liberal
Party had the support of 44 percent of the voters
who had made a decision-11 percent still remain
undecided. Robert Stanfield and the Progressive
Conservatives had 31 percent, while David Lewis
and the New Democratic Party had 21 percent-a
substantial rise over earlier polls. I
[Unemployment and the amount of compen-
sation paid to the jobless still figure as campaign
issues, stressed particularly by the Progressive
Conservatives. Unemployment reached a record
high of 7.1 percent in September. Benefits paid
under unemployment insurance went up by 13
percent in August, even though the number of
claimants dropped by five percent. Trudeau con-
tinues to explain unemployment as a by-product
of an earlier "baby boom," and he dismisses as
unimportant the high payments being made to
the jobless.
(,- LTrudeau's former minister of communica-
tions, Eric Kierans, who resides in the prime min-
i' ister's home district, has written Trudeau a letter
explaining that he intends to vote for the New
Democratic candidate because of that party's
,economic position. Kierans has long been an out-
spoken critic of Trudeau's administration, but his
decision could still have an impact on voter deci-
sions. On the other hand, Claude Wagner, an
erstwhile Liberal who now leads the Conservative
Party in Quebec, earlier was expected to cause
difficulties for Trudeau. Latest readings on Wag-
ner's campaign reveal that he is not picking up
substantial support even in his own district; he
has ceased campaigning in the rest of Quebec in
order not to damage his own future. y
["Trudeaumania," a feature of the 1968 cam-
paign, has not been apparent this year. For the
f most part, the prime minister has kept a low
profile. Only occasionally has he been forced to
respond specifically to charges made by his op-
ponents. Stanfield, Trudeau's principal opponent,
has not been able to catch the imagination of the
voters although his campaign tactics have been
more lively than in 1968, when one observer
described travel with him as "akin to riding in a
funeral procession." The third candidate, David
Lewis, head of the New Democratic Party, did
manage to raise the only emotional issue in the
campaign when he blasted the large corporations.
The New Democrats may gain a few seats in
Parliament, but this will have little effect on the
standings of the other two parties or on Trudeau's
excellent prospects of remaining prime minis-
)Since that poll was taken, several issues have
been raised that could diminish support for
Trudeau. Two newspapers published a secret gov-
ernment report on the progress of Trudeau's
)bilingualism program. The report suggested that
Trudeau's goals, highly publicized throughout the
campaign, may not be reached. Administration
officials have tried to refute the conclusions of
the report, saying that the data used were not the
most recent. Although the publication of this
report caused some consternation among adminis-
tration officials, Trudeau's opponents have not
capitalized on it."j
ter.
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ROMANIA: RECYCLING
;President Ceausescu, in a new round of key
personnel shifts, has moved to strengthen his
hand in resolving economic difficulties and to
increase popular support for his efforts to deal
with corruption, inefficiency, and consumer
welfare. Further recycling of government and
party people is expected as Ceausescu pursues his
search for the "correct mix" of expertise in party
and state positions.
The most significant changes involve Manea
Manescu, relieved as chairman of the Economic
Council; Virgil Trofin, released as chairman of the
Central Council of Trade Unions; and Deputy
Premier Paul Niculescu-Mizil, assigned the added
post of minister of education and instruction.
Although Manescu, along with Trofin, has been
appointed deputy premier and given a ministerial
portfolio, both the Economic Council and
Manescu have been subtly downgraded. The
establishment in July of the Supreme Council for
Economic and Social Development, headed by
Ceausescu, took much of the play away from the
Economic Council.
In the only change not related to economic
performance, George Macovescu replaced Foreign
Minister Corneliu Manescu, who had held that
post for 11 years. This shift probably reflects
Bucharest's recognition that the quickening pace
of East-West detente requires the introduction of
different skills. The new foreign minister has had
long experience in East-West matters
ROMANIAN PERSONNEL SHIFTS
Name
Member of
Permanent
Presidium*
Maurer, I. G.
Yes
Premier
Verdet, I.
Yes
First Deputy Premier
Niculescu-Mizil, P.
Yes
Deputy Premier
Minister of Education and Instruction
?vice M. Malita
13 October 1972)
Draganescu, E.
Deputy Premier
,
Minister of Transport and Telecom-
munications (vice F. Danalache, 13
October 1972)
Fazekas, J.
Deputy Premier
Manescu, M.
Yes
Deput
Premi
**
y
er
Chairman, State Planning Committee
(vice M. Berghianu
13 October 1972)
Patan, I.
Deputy Premier
,
Minister of Foreign Trade
(appointed 23 February 1972)
Radulescu, G.
Yes
Deputy Premier
Trofin, V.
Yes
Deput
Pr
i
**
y
em
er
Minister of Home Trade
(vice N. Bozdog, 13 October 1972)
*The three remaining members are N. Ceausescu, who is President of the Council of State; E'. Bodnaras, a Vice
President of the Council of State; and G. Pana, a member of the Council of State.
**Appointed 13 October 1972
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y ;The appointments also highlight personal
,accountability. Trofin, while a confidant of
Ceausescu, has also been a cautious critic of the
President's economic policy. Trofin's new assign-
ment as minister of home trade puts him on the
firing line where he will be responsible for dealing
with critical public attitudes toward food supplies
and prices. Ceausescu, however, may also intend
the assignment to signal to the public the regime's
concern for improving consumer welfare needs. J
t W i th the latest changes, Ceausescu has
tightened the lines of authority between the party
politburo and the government's executive
agencies-the Council of Ministers and Council of
State. It thus appears that he is moving toward
the fusion of party and state responsibility,
particularly with respect to the economy, that he
first proposed at the national party conference in
The Serb central committee met on 21-23
October, but did not announce the resignations
until 25 October, four days after they were ac-
cepted. The plenum failed to name successors to
outgoing party boss Nikezic and his second in
command, Latinka Perovid ,'Many top officials
fear a wider purge and they feel threatened by a
resurgence of conservatives replaced during
Nikezic's four-year reign. The Serb central com-
mittee will meet again late this week, presumably
to decide the succession question and the extent
of the purge of Nikezic's supporters. J
...REPERCUSSIONS OF THE PURGE IN
SERBIA MAY FORCE TITO TO INTER-
VENE AS "ARBITER."
December 1967. Further personnel shifts are ex- (,rte Tito said last week that he did not want to
pected, perhaps as early as next month. They will be the "arbiter" of Serb party problems, but he
reflect the decisions to improve economic ef- may be drawn in anyway. If the central com-
ficiency and social discipline made at the party mittee fails to agree on a successor or if Nikezic's
conference in July. With the Supreme Council for supporters should back a candidate not accept-
Economic and Social Development already estab- able to Tito, the old leader would certainly be
lished, and with the Economic Council now ! T,drawn back into the squabble]JAdditionally, the
clearly cast in a subordinate role, Ceausescu mays central committee has warned of the danger that
let another institutional shoe drop and call for the the purge in Serbia might cause an eruption of
establishment of a Social Council to deal pri- personal vendettas, and this would also draw Tito
marily with youth and minority problems. into the controversy.]
/Repercussions of the purge in Serbia have
threatened to disrupt future activities of the
federal party. Communists at Belgrade University,
a stronghold of support for the liberal intellectual
Nikezic, have asked for postponement of a party
conference, now scheduled for the third week in
aOpposition to Tito's demand for the sacking November. They alleged that Tito's reform de-
of Serb party leaders crumbled last weekend y i mands require additions to documents for the
when the republic's central committee accepted conference. The federal party executive bureau is
its leaders' "resignations."1(Tito, however, may be studying the request, but it is likely that Tito
forced to intervene again to restore order and 7-_would read a delay as an indirect attack on his
f
confidence in the badly shaken Serb party and to " current campaign against party indecision and
limit the side effects of the purge in other areas..) inaction.
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COMMUNIST EUROPE: TOURIST BONANZA
(Tourism is becoming an attractive earner of
hard currency for the USSR and Eastern Europe.
Communist Europe has come to realize that it is
generally easier to increase tourist services than
exports of merchandise to the developed West,
that the tourist industry requires less investment
relative to earnings, and that the industry has a
relatively short pay-off period. Soviet tourist
revenues increased by about 75 percent over the
last five years while those in Eastern Europe grew
by 50 percent. In 1971, some 4.6 million Western
tourists--about twice the number in the mid-
1960s-traveled to Eastern Europe and the USSR
where they spent an estimated $226 million. 1,
All indications for 1972 are that earnings
from tourism will be at a record level. Indeed,
Western tourist experts expect continued growth
through the 1970s. The lack of good quality hotel
rooms is the most serious impediment to in-
creasing tourism, but programs are under way to
build more hotels. The USSR reportedly is en-
gaged in a five-year, $300 million program that
includes the construction of 30 large hotels.
Americans Visit the Kremlin
Hungary and Bulgaria are vigorously promoting
hotel construction, and Poland has renewed build-
ing after years of inactivity. Romania remains the
most active and is expanding investment in new
tourist facilities around the capital and on its
Black Sea coast. Recognizing their own short-
comings in this field, some East European coun-
tries have made arrangements w+th Western firms
to supply capital, materials, and management for
new tourist facilities.
The USSR appears to have relatively little
difficulty in attracting Western tourists in spite of
poorly managed facilities, scarcely adequate food,
and indifferent treatment. Curiosity still draws
most of the tourists going to the USSR, where
rates are relatively high by Western standards.
East European vacations, on the other hand, are
attractive because they are cheap. With the excep-
tion of the USSR and East Germany, favorable
exchange rates are offered. Goods for tourists
with hard currency are also priced much lower
than for the local populace and can be obtained
at special hard-currency shops
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PAKISTAN: TOWARD A CONSTITUTION
I .Leaders of all major political parties have
agreed on the broad outlines of a new con-
stitution, a major step toward the adoption of a
permanent document. Efforts to produce a con-
stitution have been stymied for months by two
basic problems: the merits of a presidential versus
a parliamentary system, and the relationship of
the provinces to the central government.
The Pakistanis hope to avoid repeating their
past experiences with repressive presidents or un-
stable parliaments by adopting a system similar to
West Germany's. The Pakistani system will have a
prime minister responsible to parliament; he can
be removed only when another government has
been chosen and then only by a two-thirds vote.
The president, who has extensive powers under
the current interim constitution, will be a figure-
head.
,A bicameral legislative system will give some
protection to the interests of the smaller prov-
inces. In the senate, which will have only recom-
mendatory and delaying powers, all four prov-
inces will have the same representation. In the
much more important national assembly, repre-
sentation will continue to be based on popula-
tion.
.The jurisdiction of the provincial and central
governments will be approximately the same as
under past constitutions, but a council with equal
representation from the center and the provinces
will be created to resolve disputes. 1
,Although the agreement represents con-
siderable progress, extended haggling over details
is likely before a draft can be completed. More-
over, some important issues may not yet have
been resolved; for example, the powers of the
provincial governors, who will be appointed by
the prime minister, vis-a-vis the popularly elected
provincial assemblies. Another issue likely to
create further controversy involves the emergency
provisions of the constitution. Under the present
interim system, the president has almost absolute
power in emergencies.
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THE YEMENS: TALKING IN CAIRO
!Fighting on the border between the two
Yemens petered out last weekend following the
arrangement of a cease-fire, tForces from the Sana
side-army regulars, tribal mercenaries, and Na-
tional Unity Front elements-withdrew from the
Adeni town of Mukayras and other areas on 19
October, leaving only small and isolated guerrilla
units still across the border. Sana's forces report-
edly took heavy losses when they withdrew from
Mukayras under air and artillery attacks.
The two Yemens are now engaged in peace
talks in Cairo. Should these talks break down, it
seems unlikely that Sana and the National Unity
Front could regain the military momentum they
lost when Sana Prime Minister al-Ayni agreed to
Aden's overtures for a cease-fire and negotiations.`
,Some Sana officials, especially those who advo-
cate the overthrow of the Adeni regime, opposed
al-Ayni's decision to negotiate. Even these of-
ficials now recognize that a renewal of hostilities
is out of the question for the near future unless
vast quantities of heavy weapons, money, and
food are provided to remedy what they describe
as severe shortages,
Meanwhile, delegations from Sana and Aden,
meeting in Cairo since 21 October under Arab
League auspices, agreed Monday night on the
broad terms of a draft proposal calling for the
eventual unity of the two Yemens. The formul,'
provides initially for the formation of eight com-
mittees that will---within one year--draft a con-
stitution and plans for the fusion of the institu-
tions of the two sides. Sana's Prime Minister at
Ayni and Ali Nasir Muhammad, his Adeni coun-
terpart, are scheduled to join the talks on 27
October. The negotiators have yet to deal with
such thorny items as the status of political exiles
and nationalized property. An Arab League
spokesman said they decided to begin the talks
with the unity issue, believing that all other dis-
putes would be easily resolved in the wake of
agreement on unification.
Neither the National Unity Front nor its
backers in Saudi Arabia and among Sana military
and tribal circles can be expected to be pleased
with the course of the Cairo talks thus far, but
opponents of a settlement probably are relying on
a belief that great obstacles still stand in the way
of an implementation of the unity gree-
Meeting in Cairo
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PANAMA: TYING UP LOOSE ENDS
"7 JOespite a campaign by Panamanian ambas- the government may begin to explore ways of
sadors around the world to push Panama's claim controlling uncooperative businessmen. The
to sovereignty over the Canal Zone, there is as yet newly created municipal councils and community
no evidence that General Torrijos wants a quick boards will be used to revitalize local government
resumption of the stalled canal negotiations. Al- and improve communication between the na-
though Torrijos knows generally what he wants, tional leadership and the people. Torrijos also will
he apparently has not focused on details and has probably redouble his efforts to gain peasant sup-
been concerned more with atmospherics than sub- port and ensure his control of the countryside. He
stance. For the next few weeks, Torrijos is likely ,,/may concede defeat on his peasant collectives and
to concentrate on tying up loose ends at home, shift, temporarily at least, his support to the
but after the US elections, he may begin to give underfinanced but relatively successful coopera-
personal attention to his canal negotiating tive movement.
position.
?Torrijos began the "constitutional" phase of
his rule last week by reshuffling the cabinet. His
objective seems to have been to increase admin-
istrative efficiency. Technical competence figured
in most of the appointments. Nevertheless, there
is some ground for concern in the domestic busi-
ness community which has long feared Torrijos' .,p
reformist impulses. The new minister of aaricul-11
ture is
a e tist-oriented minister of labor
replaces one who had been anathema to the Com-
munists, and leftists have been retained as min-
ister of government and as rector of the Univer-
sity of Panama. I
;These changes represent a further edging to
the left, but, even more, they reflect Torrijos'
frustration over his inability during the past four
years to modernize Panamanian society. He re-
gards the failure of Panamanian businessmen to
increase their investment in the economy as a
deliberate attempt to sabotage his government.
He is upset by the lack of drive and responsive-
ness on the part of local officials. Finally, he is
particularly disappointed by the lack of success of
the collective movement, the showpiece of his
agrarian reform effort..]
,_2- Although financial and other constraints will
continue to impede Torrijos' populist program,
?j P /Real progress in achieving better distribution
of Panama's wealth will take more time and effort
than Torrijos is now willing to invest. After set-
ting the course, he probably will turn the helm
over to cabinet-level officials, shifting his own
attention to foreign affairs. Torrijos has found it
- politically rewarding to affect an independent for-
eign policy stance vis-a-vis the US. Recently, he
publicly branded the OAS blockade of Cuba as
shameful and unjustified. While denying any in-
tention of acting unilaterally, he has betrayed
more than a passing interest in establishing diplo-
Patic relations with the Castro government.
Torrijos has encouraged increased cultural con-
tracts with the Soviet bloc.
'1/ fAll this is secondary to Torrijos' real in-
terest-a new canal treaty. Realizing Panama's
lack of power and paucity of bargaining chips, he
has sought to increase Panama's nuisance po-
tential. To this end, he is trying to have the
Security Council meet in Panama in March and is
threatening not to accept US canal payments.
Torrijos has seemed more interested in developing
a position of strength from which to negotiate
than in actually negotiating. Foreign Minister
Tack has hinted, however, that negotiations might25X1
recommence after the US elections and opined
that a new treaty could even be achieved within
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CHILE: ALLENDE AND THE STRIKE
;President Allende may be close to neu-
tralizing the strike of businessmen, shopkeepers,
truck owners, and professionals that began on 10
October. Negotiations with strike leaders are now
in progress to work out a truce.;
Even before the negotiations began, the
strikes had begun to peter out. The scheduled
high point, a "Day of Silence" that was supposed
to demonstrate wide popular support for the
strikers, failed to do so; few additional groups
adhered to the protest. Financial pressures on the
businessmen, especially small merchants, induced
some to reopen their shops even without a settle-
ment. .
A significant aspect of the strike so far has
been the loyalty given the administration by the
armed forces, which were assigned responsibility
for public order under a "state of emergency."
The army controlled radiobroadcasting, imposed
a curfew, escorted convoys of truck drivers not
participating in the stoppage, guarded important
installations, and assisted in the distribution of
The most serious damage to the economy is
not likely to be felt until after the strike is over.
Food stocks have been reduced and their re-
plenishment will not be easy. Some factories that
remained open have exhausted raw materials on
hand, and the transportation system will be hard
pressed to resupply them before some workers are
forced into idleness. Petroleum reserves have been
expended. In a public address, President Allende
claimed that the cost of the strike was over $100
million, a price his country's already battered
economy can ill afford.
'z LThe political results of the protest could be
advantageous to Allende and his coalition, at least
for the time being. The President lost no time in
placing the blame for the temporary hardships on
private business, and he will have a ready
scapegoat for future problems as they surtace.
Dampening down the strike: Police riot truck douses demonstrators in Santiago.
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e opposition political parties, having
been reluctantly drawn into the protest move-
ment by the businessmen, may now suffer a let-
down as they realize that the strikes may be a net
loss for them, especially if the emergency
economic measures imposed by the government
are not rescinded.
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A constitutional amendment sponsored by
the governing Copei and opposition Democratic
Action parties would bar former dictator Perez
Jimenez from the presidency, but the political
ramifications of such blatant tampering with the
constitution will be felt for some time to come.
Last week, leaders of the two parties in-
troduced an amendment to the constitution-the
first since 1961-which would bar from high
public office anyone sentenced to three or more
years in jail for crimes committed in the exercise
of official duties. In 1968, Perez finished serving a
four-year term imposed on the basis of charges
that he took $14 million in government funds
during his administration the amendment proc-
ess requires a majority vote of both chambers and
approval by a majority of the state legislatures to
become law. Since the sponsoring parties com-
mand majorities in the congress and in 19 of the
21 state Legislatures, ratification will be a mere
formality.'
U ;Perez and his supporters have reacted
angrily, and Perez has even threatened violence if
he 'Castro regime is apparently giving more
responsibility to the Communist Party provincial
committees .by` phasing out the position of Polit-
ical "Bu"reau delegates in the various provinces.
1H a a iitd?mest"ic radio recently' announced that
the "Political. Bureau delegate to Camaguey Prov-
ince would become a vice minister of the armed
forces. j he, Political Bureau position evidently
will remain vacant. The broadcast also stated that
the position of Camaguey party first secretary,
now vacant, would be assumed by the former vice
,president of the National "Agrarian Reform In-
stitute. ".A "similar "shjft occurred in Matanzas Prov-
ince last year.
he Pol;itic"al Bureau " delegate system, in-
auguratod in 1968, was originally designed to
_he is not allowed to run, By waving the bloody
banner, he may hope to keep his supporters
united while he sounds out the major parties in
the hope of working out a political alliance with
one of them that will guarantee his followers
access to government patronage. It is questionable
how much political clout he will be able to ex-
ercise from his exile headquarters in Spain. Unless
he returns to Venezuela, an unlikely move at this
time, the diverse, often-feuding political groups
that have marched under his banner will probably
-look elsewhere for political power: Even if he
appoints a surrogate candidate, he miqht have
trouble transferring the allegiance of his sup-
porters.
In the pragmatic world of Venezuelan
politics, a political deal is not out of the question.
A number of minor parties representing a broad
political spectrum have shown their predilection
for political opportunism by opposing the con-
stitutional amen dment.?Their opposition is less a
demonstration of belief that this is an un-
fortunate bit of political intrigue than a re-
alization that it would not be wise to alienate the
provide centralized control over provinces where
local party management was ineffective. The
delegates were given authority over the provincial
first secretaries and reported directly to the
eight-man national Political Bureau. These recent
personnel changes indicate that the Camaguey
party- organization is judged to be ready to re-
sume control of its own political and economic
affairs. i
Should the Political Bureau delegate system
e completely abolished, Havana's control over
provincial administration is likely to diminish.
Nevertheless, Castro apparently is making at least
some concessions to the criticism, particularly
from, the USSR, that too much concentration of
power is counterprodu"ctive.
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former dictator's supporters. The leftist parties, in
particular, obviously hope to turn Perezjimenismo
to their electoral advantage by offering a socialist
anti-establishment and nationalist program that
they hope will provide an attractive substitute in
the eyes of the masses. They see the nationwide
support for the former dictator as holding
promise of a protest vote against the estab-
lishment forces.
?~
j In the coming months, there will be even
more politicking than usual as the parties gear up
for elections next year and attempt to capitalize
on the absence of Perez Jimenez from the
Central America
AND NOW THERE ARE FOUR
4 JAn interim arrangement has been reached
that re-establishes a free trade area among the five
Common Market countries. Costa Rica, El
Salvador, Guatemala, and Nicaragua are now in;
Honduras remains outside. While the re-
constitution of a limited market is a step forward,
fundamental difficulties still threaten the
market's long-range viability. I
[Normal trade patterns within the market
were disrupted by the war between El Salvador
and Honduras in mid-1969 and by Honduras'
decision in late 1970 to withdraw from the free
trade area. Costa Rica, in an attempt to reduce its
balance-of-payments deficit, further damaged the
integrationist movement early last month by
adopting a protectionist trade policy. El Salvador,
Guatemala, and Nicaragua retaliated by closing
their borders to Costa Rican exports, and the
stage was set for-if not a complete demise of the
market-a three-member market that would prob-
ably have proved inviable. Numerous efforts to
negotiate a settlement failed-mostly because of
Costa Rican intransigence-and Costa Rica even
considered alternative trade measures to com-
pensate for what looked like a protracted stale-
mate. }
~t (Cooler heads have now prevailed. The agree-
ment signed on 18 October returning Costa Rica
to the free trade area reflects a new conciliatory
attitude by the parties concerned as well as a
recognition that the Common Market still offers
the best possible road to regional economic
prosperity. Under the new guidelines, the other
members will provide Costa Rica with the export
incentives needed to reduce its foreign payments
deficit to manageable limits. Moreover, they will
increase to $25 million the annual amount of
credit extended for Costa Rican purchases within
the market. On the other hand, Costa Rica has
agreed to follow a new stabilization program-
something other members have insisted on before
normalizing trade with Costa Rica:)
These actions should offer a more favorable
climate for discussions scheduled in December to
correct inequities in the market's structure.
Honduras' refusal to participate in market affairs
until its border problem with El Salvador is re-
solved remains a major obstacle to the market's
revitalization. Such a settlement is not in sight,
although recent negotiations in Guatemala had
reached a point where a little flexibility could
have yielded impressive results.
)Despite continued problems, the forces of
regional disintegration appear no longer in the
ascendancy and there seems to be a growing con-
sensus that the market ought to be saved. Never-
theless, prospects for its early revitalization or
even restoration to its pre-1969 status are not
very good.
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