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Approved For Release 2007/11/13: CIA-RDP79-00927AO09900010001-4 V Secret DIRECTORATE OF INTELLIGENCE WEEKLY SUMMARY State Dept. review completed Secret 3 November 1972 No. 0394/72 Copy N9 44 Approved For Release 2007/11/13: CIA-RDP79-00927AO09900010001-4 Approved For Release 2007/11/13: CIA-RDP79-00927AO09900010001-4 The WEEKLY SUMMARY,- issued every Friday morning by the Office of Current Intelligence, reports and analyzes signif- icant developments of the v eek through noort on Thursday. It frequently includes material coordinated with or prepared by the Office of Economic Research, the Office of Strategic Research, and the Directorate of Science and Technology. Topics requiring more comprehensive treatment and there- fore published separately as Special Reports are listed in the contents. CONTENTS (3 November 1972) 1 A Deadline Comes and Goes FAR EAST 5 Japan: New Spending 6 Hammer and Sickle in Bad Year 7 USSR-Chile: Distant Relations 7 Andreotti and the Communists 9 Yugoslavia: Kissing the Hand 10 Britain's Economic Problems 10 Ireland: Gains and Losses 11 Europe and Space: Still Holding MIDDLE EAST AFRICA 12 Israel-Fedayeen: Retaliation 14 Egypt-USSR: A Warming Trend 15 Egypt: More Domestic Problems 16 The Yemens: An Odd Couple 17 India-Pakistan: No Withdrawal 18 Iran: Clouds on the Horizon 19 Dahomey: Still Another WESTERN HEMISPHERE 20 Chile: No Rest for the Weary 21 Grenada Seeks Independence 21 Bolivia: Asking for Trouble 22 Uruguay: Bordaberry Bows Approved For Release 2007/11/13: CIA-RDP79-00927AO09900010001-4 Approved For Release 2007/11/13: CIA-RDP79-00927AO09900010001-4 JCI_f RC I A Deadline Comes and Goes Hanoi mounted an intense propaganda cam- paign in,- the wake.of its 26 October revelations about the peace negotiations. Charging that it was a "mockery . of truth" to assert that President Thieu could stand up to US pressure, Vietnamese Communist pronouncements demanded that the US sign the agreements on 31 October and asserted that any delay in the signing would be on Wash ington'slread. At the same time, both Hanoi and the Viet tongexhorted Communists North and South` to keep up the struggle and to be ready for anything. Nowhere in this outpouring did the Com- munists say what would happen if the US did not meet the deadline, but there were a few hints that Hanoi's position Was more flexible than it appeared, North Vietnamese spokesman Nguyen Thanh Le-, for example, dodged reporters' questions when, they asked him on 27 October what Hanoi would do if the deadline passed with- out a signin A second North Vietnamese spokes- man saidj_that Hanoi would be satisfied with an- i.nitialing of the agreement on the 31st and that the signing itself could occur after the US elections. "Hanoi, he claimed, would be willing to do some renegotiating in the interval. When it became apparent that the deadline was not going to be met, all Communist talk of deadlines ceased. The Viet Cong press spokesman in Paris issued a statement on 31 October that criticized the Us, for not signing, but said no more than that th`=--e U must respect the text of the accords and .sign them as soon as possible. Com- munist , rnecl a are,' now concentrating on the theme that the US i's responsible for prolonging the war. The Line from Moscow and Peking All this time, Hanoi was getting no backing on the deadline question from its two big allies. In other respects, however, the Soviets and Chinese differed from each other in several ways. The Soviets issued pro forma statements of support for Hanoi's general position, but Moscow was concerned mainly that a settlement not be derailed over relatively minor matters. According to TASS, Kosygin's principal message on 27 Octo- ber was that the negotiations should continue. TASS also singled out Dr. Kissinger's statement that the issues still to be decided are less im- portant than those already settled. Moscow stuck to this line as the days passed, although its com- ments grew more muted as the deadlock per- sisted. Peking, in contrast, made no direct mention of renegotiation in Paris. In a government state- ment on 30 October and a Peoples Daily on 2 November, the Chinese backed Hanoi's con- tention that an agreement was ready for signature and that Washington was to blame for any delay. Peking's comments implied that Hanoi was re- sponsible for the breakthrough in the negotiations and that the US was stalling with its talk of difficulties in Saigon. This, the Chinese charged, amounted to a "pretext" that belied the client nature of Thieu's relationship with Washington. The Chinese, however, were careful on this and other occasions not to imply that the negotiations were at an impasse or that further discussions should be ruled out. Their somewhat closer ap- proximation of the North Vietnamese position seems designed with an eye as much to Moscow as to Hanoi. SECRET Page 1 WEEKLY SUMMARY 3 Nov 72 Approved For Release 2007/11/13: CIA-RDP79-00927AO09900010001-4 Approved For Release 2007/11/13: CIA-RDP79-00927A009900010001-4 JtUNt I The Thieu government, backed by many demonstrations of popular backing and armed with statements of support from the supreme court and the National Assembly, is also mounting a propaganda campaign, which is grow- ing more intense. Three special emissaries have been sent out to explain Saigon's position to potentially sympathetic Asian governments, and, in a speech on 1 November, Thieu reiterated his criticism of the announced terms of settlement. As in his earlier statements, Thieu avoided ex- plicit criticism of the US. He charged that the Communists had put forth a peace agreement "fraught with perfidy and treachery." He stated once again his opposition to any agreement that does not provide for the withdrawal of North Vietnamese troops from South Vietnam, fails to recognize South Vietnam as a separate country distinct from the North, and does not provide for the right of self-determination of the South Vietnamese people. Along with the rhetoric, however, the Saigon government is warning the populace that there may soon be an end to the fighting. Radio Saigon declared on 29 October that everyone under- stands that "a cease-fire is only a matter of time and that it will come... possibly in a few weeks." The army radio has also implied that a cease-fire was near, asserting that this would mean a com- plete Communist defeat. SECRET Page 2 WEEKLY SUMMARY 3 Nov 72 Approved For Release 2007/11/13: CIA-RDP79-00927A009900010001-4 Approved For Release 2007/11/13: CIA-RDP79-00927AO09900010001-4 StUKt I JAPAN: NEW SPENDING The cabinet has proposed a supplementary spending bill of $3.7 billion during the fiscal year ending 31 March 1973. The bill is intended to speed recovery from the recent economic slow- down and help reduce the trade surplus by raising demand for imports. If passed by the Diet, the new spending would come at a time when the rate of growth is accelerating, while its impact on imports would not be felt for some time. The proposed expenditures are substantial. If approved, they would boost government out- lays during this fiscal year more than 25 percent above the previous year's level. Spending of this magnitude would aggravate Japan's incipient inflation. Noting that both wholesale and con- sumer prices rose at an annual rate of about ten percent during the August-September period, the governor of the central bank has called for fiscal restraint, and the Ministry of Finance has ex- pressed apprehension over larger expenditures. These considerations may lead the Diet to trim the bill. With elections expected this winter, how- ever, Diet memb ers are aware that the new mone would be earmarked for a variety of objectives that appeal to important voting blocs. Spending would go into government salaries, transfers to local governments, payments to rice producers and a variety of loans and investments. Increased government spending would add fuel to a recovery that already is well under way. The growth of real gross national product, which slipped to about six percent during the recent economic slowd own, is accelerating even faster than Tokyo had expected. During the first half of 1972, industrial production was up about 8.5 percent from the same period last year and th pace is increasing. SECRET Page 5 WEEKLY SUMMARY 3 Nov 72 Approved For Release 2007/11/13: CIA-RDP79-00927AO09900010001-4 Approved For Release 2007/11/13: CIA-RDP79-00927AO09900010001-4 J1= _.t1t I USSR: HAMMER AND SICKLE IN BAD YEAR Moscow can only have been disappointed in the performance turned in by Soviet industry and agriculture during the third quarter of this year. Although industrial production improved slightly in the period, output is estimated to have grown by only five percent from January through Sep- tember over the comparable period last year-the lowest nine-month growth rate for industry since 1969. A Pravda editorial stressed that Soviet in- dustry will have to accelerate production in the next two months if the industrial output plan for 1972 is to be met. As a result of a severe winter and summer drought, the grain crop this year will be at least ten percent below last year, and harvests of other important crops such as fodder, potatoes, and sugar beets will be poor. SOVIET INDUSTRIAL GROWTH (Noreen rage rate Jan through Sept) Machlnerp 1n.4 8.8 9^ 7.6 Consumer non-durables 3.1 4,9 39 1.9 Within the industrial sector, output in the machinery category-which excludes military- space hardware items-continued to grow faster than industrial materials or consumer non- durables. The production of most machinery items, however, failed to match last year's in- creases with the notable exception of agricultural equipment and television sets. The growth in pro- duction of industrial materials was also down somewhat from the pace in 1971. The production of consumer non-durables failed to live up to the promises made by Brezh- nev at the beginning of the current five-year plan. Production of processed foods rose at a rate com- parable to that in 1971, but at only half the rate required to meet the ambitious goal of the 1972 plan. Moreover, the impact of the poor harvest in 1972 will be felt in the food industry, possibly by the end of the year. The growth rate of soft goods output-clothing and shoes--lagged far behind last year's and even further behind that necessary to reach the 1972 target. Problems continue to plague the agricultural sector. By mid-October, state and collective farms still had not threshed about eight percent of the total area sown to grain. Significant areas in the European part of the RSFSR and in the Ukraine probably have been abandoned or used for graz- ing, and the arrival of winter weather in Siberia and the Urals may have caused considerable losses there. Continued uncertainty over the size and quality of the grain harvest may result in further Soviet imports before the 1973 harvest. In fact, recent reports are that international grain com- pany representatives are in Moscow now, possibly negotiating additional grain contracts. Meanwhile, the 1973 grain crop is off to a bad start. As the fall sowing campaign came to an end, only 75 percent of the planned area had been sown to winter grains-which usually con- tribute about 40 percent of total grain produc- tion-a record shortfall. The lack of soil moisture in some areas hit by the summer drought pre- vented fall seeding. As in 1972, the barren areas will have to be renown next year with lower yielding spring grains. SECRET 25X1 Page 6 WEEKLY SUMMARY 3 Nov 72 Approved For Release 2007/11/13: CIA-RDP79-00927AO09900010001-4 Approved For Release 2007/11/13: CIA-RDP79-00927A009900010001-4 SECRb I USSR-CHILE: DISTANT RELATIONS The Soviet civil airline, Aeroflot, will inaugu- rate regular weekly service to Santiago via Rabat, Havana, and Lima on 4 November. The new service and a large Soviet industrial and agri- cultural exposition now in Santiago are the most recent signs of Moscow's interest in Chile since Marxist President Salvador Allende took office two years ago. Aeroflot had sought Latin routes beyond Cuba for a long time, presumably for political reasons. At least the long hauls to and from Latin America with well-below-capacity loads look like certain money losers. But the Soviets seem to be angling for more. At present, Lima is only a refueling stop, but Aeroflot is seeking Peruvian permi7an- to take on and discharge passengers as well. Moscow may also try to arra along South America's east coast to lessen travel time to Chile from Rabat. The Soviet exposition in Santiago opened on 26 October and will run until 21 November. It reportedly includes exhibits by two dozen Soviet enterprises, and Soviet commercial counselors stationed in several Latin American countries are on hand to facilitate sale of the wide range of goods on display. There is no Soviet military representation at the fair, and no military hard- ware is being offered. Despite these signs, Moscow and Santiago remain cautious of each other. For their part, the Chileans have used only a small portion of the $169 million in new credits that the Soviets ex- tended last July. In fact, Santiago still has not used some Soviet project loans proffered as far back as 1967. Most of the items offered for export by Moscow are not really needed in Chile, and Santiago apparently does not want to become so dependent on Moscow that its Western ties would be further reduced. Recently, however, when such foreign capital became scarce, Chile did begin to make small drawdowns on Soviet credits. Soviet media have been paying greater attention to Chile in recent weeks. The articles are uniformly pro-Allende, but the Soviets scrupulously avoid promising anything more than ANDREOTTI AND THE COMMUNISTS Prime Minister Giulio Andreotti's trip to Moscow last week provided the Soviets with an opportunity to level sharp criticism at Italian for- eign and domestic policies. Rome's decision to permit homeporting of a US submarine tender off Sardinia-a policy already under attack by Italian Communists-came under especially heavy fire in Moscow. Foreign Minister Medici said the talks were marked by a "frankness" that "could not always be pleasant-either for one party or the other." 25X1 Moscow doubtless coordinated its position with the Italian Communist Party in advance. The Soviets claimed that talk of detente contrasted with the Italian lease of a base to the SECRET Page 7 WEEKLY SUMMARY 3 Nov 72 Approved For Release 2007/11/13: CIA-RDP79-00927A009900010001-4 Approved For Release 2007/11/13: CIA-RDP79-00927A009900010001-4 SECRET US and maintained that this would allow nuclear submarines to dock at La Maddalena off the northern tip of Sardinia. Premier Kosygin was unimpressed by Andreotti's explanation that only a military repair facility was involved and observed that the arrangement "might force the Soviets to reconsider their position on such matters in the area concerned." Turning to the European Communities, Kosygin attacked "closed groups in Europe." He declared the Soviets could not tolerate the dis- crimination against socialist states that would re- sult from a unified EC commercial policy. The Soviets said they expected to continue to make bilateral commercial deals with individual coun- tries rather than negotiate with the Communities as a unit. On domestic Italian affairs, Kosygin took Andreotti to task for the recent terrorist bombings of trains carrying Communists to a na- tional labor rally. Kosygin echoed accusations by Italian labor leaders that neo-fascists were re- sponsible, allegations that have not yet been proved. Rome and Moscow did manage to agree to a protocol calling for periodic consultations be- tween Soviet and Italian leaders. There were fairly detailed discussions of the Conference on Secu- rity and Cooperation in Europe and the Mutual and Balanced Force Reduction talks. A long-term trade agreement was envisaged in economic dis- cussions, but no conclusion was reached. Andreotti returned home to face more trouble from the Communists. The party is .forcing a Senate test on the homeporting question early this month. The Communists are likely to emphasize that, heretofore, the nearest repair facility for American submarines was the Spanish port of Rota in the Atlantic. The government's majority in the Senate is both narrow and fragile. The neo-fascist Italian Social Movement may give Andreotti a margin of victory on this question but, if so, the vote will antagonize the Social Democrats or the Re- publicans and might prompt one or the other to resign from the governing coalition. It could not survive the defection of either party. A characteristic of Andreotti's nine-month tenure has been a more assertive attitude in for- eign affairs in contrast to the preoccupation with domestic affairs of most postwar Italian govern- ments. In addition to the trip to Moscow, the new approach shows up in Rome's discussions of the southern Mediterranean with Malta and Libya and in the serious pitch Rome is making for a perma- nent seat on the UN Security Council. Rome has pushed with considerable success for the use of Italian as an official language at the Conference on European Security and has won a part-time role in the force reduction talks as a "flank" state, sharing a post with Turkey and Greece. To some extent, the government will be testing the popular appeal of this more active international role in the approaching Senate debate. SECRET 25X1 25X1 Approved For Release 2007/11/13: CIA-RDP79-00927A009900010001-4 Approved For Release 2007/11/13: CIA-RDP79-00927A009900010001-4 SECRET Party leaders have swallowed their misgivings and endorsed Tito's purge. It is now apparent that he is not just reshuffling personnel but is making drastic changes in power balances and in the party's operating style. Since this involves a re- centralization of power, the task will be painful, difficult and protracted. On 30 October, the purge expanded not only beyond Serbia, but beyond the party itself. Tito summoned the full party presidium to his summer home on the island of Brioni. During this meeting, each of the regional party bosses ad- mitted to errors in his bailiwick and promised to follow through on Tito's program for tightening discipline. They completely accepted his reasons for purging the Serb leaders two weeks ago and backed his demands for substantial changes throughout the party. Tito warned against any shrinking from the housecleaning he is embarked upon, and he expressed confidence that the new a Serb leaders will not shrink from their pace- setting task. As part of the housecleaning, Tito said that the party must bring in more young people and workers. The elevation of two representatives from the generation of post-war Communists, Tihomir Vlaskalic and Nikola Petrovic, to the top posts in the Serbian party is an example of what Tito wants. Similar changes in other regional or- ganizations can be expected. Plenums are scheduled for late this week in Kosovo and Vojvodina, where the provincial parties, closely tied to the Serbian apparatus, have yet to take action on Tito's various demands for change. Belgrade is showing concern over the effect of the purges on Yugoslavia's image abroad, par- ticularly in the West. Tito indicated at the presidium meeting that he does not want heads to roll indiscriminately. Another speaker denied that the purge would affect Yugoslavia's policy of nonalignment. This latter statement was probably meant to forestall any thoughts abroad that for- eign minister Tepavac's resignation signified a shift in Yugoslav foreign policy. The US Embassy in Belgrade foresees no such shifts. Marko Nikezic, Serb party boss, Presidum member Latinka Perovic, Nikezic's deputy, Presidium member Bora Pavlovic, Belgrade party boss, Presidium member Krste Miloslavlevski, Macedonian party secretary, Presidium member Stane Kavcic, Slovenian premier, Presidium member Mirko Tepavac, foreign minister Frane Barbierri, editor of Nin, Belgrade's most influential weekly Aleksandar Nenadovic, editor of Politika, influential daily Veroslava Tadic, political editor, Belgrade TV SECRET While no open opposition to Tito's moves has developed, his precipitous attempt to reorient the party will prove worrisome for his lieutenants. He has engineered two regional purges in less than a year. These have demoralized a large number of party members, and public acts of self-contrition by those purged have, in effect, lessened public esteem for the regime. Tito will need time to put together a new team and straighten out the precise relationship between regional and federal party or- ganizations and the relationship of both to non-party bodies. The big question now is whether Tito at age 80 has the time left to get it done. F Page 9 WEEKLY SUMMARY Approved For Release 2007/11/13: CIA-RDP79-00927A009900010001-4 Approved For Release 2007/11/13: CIA-RDP79-00927A009900010001-4 SECRET Britain is enjoying its most rapid economic growth in recent years, but serious inflation, labor unrest, and a wobbly pound are obstacles to con- tinued progress. The government has yet to imple- ment policies that will both sustain growth and allow smooth integration into the EC in January. Expansionary budgets in fiscal 1972 and 1973 have increased the level of economic activ- ity in Britain. Substantial cuts in individual income taxes and sales taxes have spurred a rapid rise in consumer spending. Compared with an average annual growth of 1.9 percent in 1969, 1970 and 1971, real gross domestic product prob- ably will rise by about 3.5 percent this year. Private investment, however, has been dis- appointing. Manufacturing investment in the first half of 1972 was 7 percent below the comparable figure for the second half of 1971, and the share of gross private fixed investment in gross domes- tic product-9.8 percent-is among the lowest in Western Europe. Moreover, the faster pace of economic activity has been accompanied by con- tinued wage and price inflation. Retail prices, after falling steadily during the summer, have again accelerated, reaching a 7.6-percent annual rate in September, and wage costs continue to rise at about ten percent annually. Progress toward voluntary wage-price restraints has been slow, and even if a settlement is reached, the outlook for successful implementation is dim. Several large unions have already indicated that they will refuse to abide by any such agreement. Speculation that Prime Minister Heath may move to impose statutory controls is mounting. Such measures would be out of step with Heath's economic philosophy, but he may be forced to impose them as the only way to avoid a disastrous wage-price spiral. The Confederation of British Industries has stated that it will not extend its voluntary price restraints unless the unions accept some form of restraint on wages. Without these restraints, price inflation would be likely to surpass the 9 percent rate of 1971, with serious consequences for the competitiveness of British exports. Page 10 Uncertainty over the outcome of the anti- inflation talks has apparently heightened the nervousness in foreign exchange markets over London's ability to survive the cold shower of competition in the EC. The value of the pound has fallen sharply, down to $2.34 on 31 October. The sell-off was orderly for the most part, but hectic enough at times to require limited inter- vention by the Bank of England. A persistent rumor, initiated by a West German financial pub- lication, that the pound would be repegged at $2.25 contributed to the decline, as did the $700-million trade deficit posted in the third quarter. The EC would like to see the pound repegged by the time the UK enters the Com- munity, but not at the low levels reached in late October. British officials are likely, however, to delay setting a new rate, perhaps past 1 January, partly in the hoe that the pound will recover in the meantime. As the date of actual entry into the EC approaches, concern is mounting in Ireland about the economic benefits to be realized from membership. Expecting that free access to the EC market would enhance Ireland's attractiveness to foreign investors, Dublin has long counted on the establishment of foreign plants to alleviate its serious and chronic unemployment. Some ob- servers now believe that the continuing rapid wage increases will erode the international com- petitiveness of Irish goods and scare away needed investment. Ireland's recent economic performance has been disappointing. Real gross national product rose by only 1.5 percent in 1970 and less than three percent last year. Per capita gross national product, which was about $1,600 in 1971, is among the lowest in Western Europe, and the unemployment rate has reached eight percent. SECRET 25X1 25X1 Approved For Release 2007/11/13: CIA-RDP79-00927A009900010001-4 Approved For Release 2007/11/13: CIA-RDP79-00927AO09900010001-4 SECRET Kiw 1,96$-7 1971 Ireland Francs 1 United Kingdom West G~, The government hoped that Irish access to the large EC market would spur growth by pro- viding greater incentives for production and investment. In particular, it was hoped that non- EC, especially US, firms would be attracted by Ireland's low wage scales and its new position inside the EC's tariff wall. The need for invest- ment from additional sources has been accentu- ated by a sharp drop in British investment in the wake of the troubles in Northern Ireland. The incomes generated in Ireland by foreign firms' activities were anticipated as a major stimulus to economic growth. EUROPE AND SPACE: STILL HOLDING After a series of delays, the European Space Conference will finally meet on 8-9 November to consider a possible European role in the US post-Apollo program. The US had asked for a decision by the end of Octo- ber, but disagreements among the European states forced the cancellation of a ministerial session scheduled for last week. The major dispute is between the West German prefer- ence for post-Apollo cooperation and the French insistence on developing an inde- pendent European space launcher. Wage increases have lately been far in excess of those in other EC countries, seriously eroding Ireland's chief advantage of low wage costs. Many commentators fear that Ireland may be pricing itself out of the market for foreign-financed industrial investment, especially in view of the increasing competition for such investment else- where in Europe. Ireland is still a low-wage area, but potential investors, who must consider future as well as present wage levels, will be wary of investing heavily in an area where annual wage hikes have been running at 13 to 16 percent. Dublin, although expressing concern, has not taken remedial action. A National Pay Agree- ment, signed in July, ostensibly was designed to slow inflation and reduce labor strife. The agree- ment included provisions for industrial pay increases averaging 12 percent. Barring unlikely increases in productivity, the higher wages will boost unit labor costs by seven to nine percent, thus cutting into the competitiveness of Irish goods. Any attempts by the Irish Government to curb wage inflation, however, would be extremely difficult without the cooperation of labor overwhelming pressure from consumers. Next week's meeting will consider a new German proposal that post-Apollo be treated as a "special project"-thus leaving open the possibility that both programs could receive some form of European endorsement. If this proposal is not accepted, Bonn threatens to withdraw from the European cooperative effort and negotiate a bilateral post-Apollo agreement with the US. Bonn has, however, agreed to contribute to continued studies on a European launcher, thus demonstrating that its main concern is not to kill the European project, but to assure a West German role in the nost-Apollo program. SECRET 25X1 25X1 Page 11 WEEKLY SUMMARY 3 Nov 72 Approved For Release 2007/11/13: CIA-RDP79-00927AO09900010001-4 Approved For Release 2007/11/13: CIA-RDP79-00927A009900010001-4 SECRET Israel-Fedayeen PRE-EMPTIVE RETALIATION Israeli aircraft on 30 October bombed four Arab guerrilla bases close to Damascus, the first such action since the bombings of 15 October and Tel Aviv's enunciation of a pre-emptive strike policy vis-a-vis the fedayeen. The raid came less than 12 hours after the West German Government had acceded to the demands of two Black Sep- tember hijackers of a Lufthansa 727 and released the three Arab terrorists involved in the Munich slayings. An Israeli spokesman denied the action was directly connected with the prisoner release. The government and public were incensed over what they called Bonn's "hasty capitulation" to the hijackers, however, and the strikes seemed de- signed to demonstrate that, while other countries might be soft on terrorists, Israel was not. Tel Aviv recalled its ambassador from Bonn and the Israeli parliament passed a resolution calling for "no submission" in dealing with the fedayeen "criminals and murderers." Subsequently, the Israelis struck again, this time at a Syrian military camp near the northern Lebanon-Syrian border. This was in retaliation for a Syrian artillery barrage against the Golan Heights, which Damascus had undertaken in response to the Israeli air strikes on 30 October. On 31 October, the Israelis moved more troops, armor, and heavy artillery into the heights, ap- parently to reinforce troops there and to indicate to Damascus they were ready for any contin- gency. These Israeli actions reflect some frustration in dealing with the new Palestinian terrorist tactics, particularly in regard to bringing other countries to act. Israel can readily cope with terrorism along its cease-fire lines, in the occupied Arab territories, and within Israel itself. The prob- lem is with terrorist activities abroad. Last week, for example, Dutch authorities released a Pales- tinian found to be carrying an arsenal of ex- plosive letter bombs and weapons as well as a half-dozen passports, including an Algerian dip- lomatic one. Tel Aviv cannot understand such action by the Dutch or Bonn's "surrender" of the Munich prisoners. The Israelis, as a result, see the task of controlling the terrorists as devolving more and more upon themselves, and this rein- forces Israel's determination to hit the fedayeen and their Arab hosts wherever and whenever it can. Israel's selection of Syria over Lebanon as a target is somewhat curious, as the hijackers had organized themselves at Beirut and boarded the aircraft there. The US Embassy in Tel Aviv sus- pects that the Israelis had wanted to hit the fedayeen in Syria for some time and calculated that strikes in the wake of the hijacking would draw less international criticism. Three Arab terrorists put aboard jet bound for Zagreb at Munich Airport. Page 12 Meanwhile, Libya's lionizing of the hijackers and Munich slayers has drawn special attention in the semi-offical Israeli newspaper Davar. The day after the prisoner release, Davar stated, "the country of destination of the Munich murderers SECRET Approved For Release 2007/11/13: CIA-RDP79-00927A009900010001-4 Approved For Release 2007/11/13: CIA-RDP79-00927AO09900010001-4 StUKt I TURKEY Iskenderun JORDAN 0 M a0 553768 11-72 which will give them shelter... shall in the eyes of Israel become a partner to the Munich murders and as such can expect any punishment." Israel has the capability to strike fedayeen bases in Libya. SECRET Page 13 WEEKLY SUMMARY 3 Nov 72 Approved For Release 2007/11/13: CIA-RDP79-00927AO09900010001-4 Approved For Release 2007/11/13: CIA-RDP79-00927A009900010001-4 SECRET 25X1 25X1 opposition to a rapprochement would appear serious enough for Egyptian leaders to proceed gingerly. The reconciliation process seems likely to continue, however, and the departure of War Minister Sadiq on 26 October may serve to smooth the way a little. His relations with the Soviets were frequently strained_ 25X1 25X1 Prime Minister Sidqi SECRET EGYPT-USSR: A WARMING TREND Top Egyptian officials seem to be pursuing a thaw in their relations with Moscow, in spite of the reservations being expressed by some Egyp- tians about the wisdom of this course. Following his visit in mid-October to the Soviet Union, Prime Minister Sidqi painted a bright picture of the improved state of Soviet- Egyptian ties. Speaking to a joint session of the nation's legislature and political organization on 25 October, Sidqi described his discussions in Moscow as having melted "the ice in our rela- tions." Underscoring the scope of Soviet military aid to Egypt, he said, "The Soviet Union is fulfill- ing and will continue to fulfill all its pledges to consolidate our war potential." Egyptian Em- bassy officers in Moscow also put a good face on the present state of affairs when they told US officials there that Cairo was satisfied with the results of Sidqi's visit. Clearly, numerous and serious differences remain, however, including the maior issue of sophisticated arms Page 14 WEEKLY SUMMARY 3 Nov 72 Approved For Release 2007/11/13: CIA-RDP79-00927A009900010001-4 Approved For Release 2007/11/13: CIA-RDP79-00927A009900010001-4 Jt _;N I EGYPT: DOMESTIC PROBLEMS The resignation from all his posts of Muham- mad Sadiq promises to make President Sadat's life more uncomfortable. Sadiq was one of the most powerful officials in Egypt, holding concurrently the key posts of deputy prime minister, war min- ister, minister of war production, and commander in chief of the armed forces. He was popular with military professionals and had attracted other followers for his outspoken distaste for the Soviet Union. Sadiq's personal relationship with Presi- dent Qadhafi of Libya is reportedly excellent. They share a deep animosity toward the Soviets, Qadhafi's money and influence would, ot course, be useful to Sadiq in any comeback bid. These actors may have con- tributed to a iq s unseating, but so did his well- advertised anti-Soviet attitude. Perhaps the funda- mental reason was the increasing acrimony in the SECRET long-standing feud between Sadiq and Prime Min- ister Sidqi. Ali. There are as yet no signs that Sadiq is planning countermoves, but the regime is perhaps rightly apprehensive. The chief of the navy, who was considered close to Sadiq, was replaced, and more purges of military figures considered loyal to Sadiq may follow. No one person succeeded to all of Sadiq's posts. The chief of Egypt's intelligence organiza- tion, General Ahmad Ismail Ali, took over as war minister and commander in chief of the armed forces. Ali is considered to be one of Sadat's closest advisers and was a classmate of the Presi- dent in military school. Ali's loyalty to Sadat, plus his ties to Egypt's intelligence mechanism, could be a source of aid to the President in clealinq with the fallout from Sadiz's re- moval. Page 15 WEEKLY SUMMARY 3 Nov 72 Approved For Release 2007/11/13: CIA-RDP79-00927A009900010001-4 Approved For Release 2007/11/13: CIA-RDP79-00927A009900010001-4 SECRET Prime Ministers al-Ayni (Sana) and Muhammad (Aden) confer with Sadat after reaching agreement. THE YEMENS: AN ODD COUPLE The prime ministers of the two Yemens, their countries on the brink of all-out war for nearly a month, approved a far-reaching agree- ment in Cairo on 28 October that provides for the eventual creation of a single Yemen and spells out the terms for a settlement of outstanding dif- ferences. The next step will be for the two heads of state, Salim Rubayi Ali, Aden's champion of peasant revolution, and Abd ar-Rahman al-Iryani, head of Sana's traditionalist regime, to meet- probably on 25 November in Libya-to bless the agreement. The two presidents will also appoint committees to draft a constitution and to make specific plans for unification within one year. Before it becomes effective, the new constitution will have to be ratified by Sana's tribally con- trolled legislature and by Aden's Marxist Peoples' Council and then approved in referenda in both Yemens, surely a lengthy process. Unity has long been the objective of many Yemenis, but it seems improbable that a true modus vivendi can be reached-even in a year- between the ideologically disparate regimes. Both governments would like to see unification take place, but on their own terms and in their own image. The Cairo agreement is probably not so much an expectation on the part of the prime ministers that there will or should be movement toward unification as a device to stop the fighting. Sana Prime Minister Muhsin al-Ayni and Aden Prime Minister Ali Nasir Muhammad also announced in Cairo that they had agreed to: ? reopen their borders; ? ban terrorist activity; ? return to Sana or Aden those exiles who wish to go home; SECRET Page 16 WEEKLY SUMMARY 3 Nov 72 Approved For Release 2007/11/13: CIA-RDP79-00927A009900010001-4 Approved For Release 2007/11/13: CIA-RDP79-00927A009900010001-4 JCUKG 1 ? withdraw troops from territory captured after 26 September; ? close "training camps." These points are to be implemented within to "training camps" would seem to indicate that al-Ayni has committed Sana to shut down the bases used by the National Unity Front, the um- brella organization of anti-Adeni dissidents whose incursions into Aden from Sana territory in mid- September ignited the recent fighting. The demili- tarization of the National Unity Front, if al-Ayni can accomplish it in the face of what will very likely be fierce opposition from the tribesmen and Saudi Arabia, would be a triumph for Aden. Neither Saudi Arabia nor the front has publicly commented on the Cairo agreement. India-Pakistan NO DELINEATION, NO WITHDRAWAL Failure to agree on where the line of control runs through Kashmir continues to delay mutual troop withdrawals two months after the deadline set by President Bhutto and Prime Minister Gandhi last summer at Simla. At that time the Indians and Pakistanis agreed that their forces would pull back to the border except in Kashmir, where both sides would continue to occupy the territory they held when the cease-fire went into effect last December. New Delhi later made its with- drawal conditional on the delineation of the line of control in the disputed state. The Pakistanis are anxious to have the Indians withdraw from the relatively large There are reports that the Sana government now is in disarray. AI-Ayni's supporters defend the unity agreement as necessary. They claim that the military effort to overthrow Aden had bogged down and note that Kuwait, Algeria, and Iraq were pressing for conciliation. Tribal and military leaders in Sana could try-especially if they get Saudi backing-to obstruct implementation of the agreement and any future negotiations with Aden. They might also try to force al-Ayni out of office. Even if he were ousted, it would be hard for a successor, no matter how committed he might be to the overthrow of Aden, to abrogate the agreement and resume the war. In the meantime, Prime Minister al-Ayni has left Cairo en route to Algeria. He will stop over in Libya before returning to Sana to face his area they now occupy south of Kashmir and have acquiesced in Indian claims on several parts of the Kashmir line. The only current disagreement is over an area of one and a half square miles. The Pakistanis believe that if they withdraw from this particular area, they would establish a precedent for Indian de- mands that Pakistan also give up the only significant territorial gain they made during the 1971 war. Moreover, the Pakistanis may well suspect that should they give in on this point, the Indians will find another reason to delay the troop withdrawals. SECRET 25X1 25X1 Page 17 WEEKLY SUMMARY 3 Nov 72 Approved For Release 2007/11/13: CIA-RDP79-00927A009900010001-4 Approved For Release 2007/11/13: CIA-RDP79-00927A009900010001-4 SECRET IRAN: CLOUDS ON THE HORIZON The country currently is enjoying its greatest economic boom, with oil revenues skyrocketing and real gross national product up about 14 per- cent last year. At the same time, Tehran is con- fronted with rising unemployment and wide- spread underemployment, a far cry from the Shah's hopes for full and meaningful employ- ment. The International Labor Organization recently reported that the situation probably will worsen, particularly in urban areas. Although the government contends for public consumption that the unemployment rate is no more than four percent, it is clear that the percentage of potential workers without jobs is considerably higher. Officials admit to an 11-12 percent unemployment rate in urban areas, and it has been estimated that roughly one fifth of the entire labor force is either unem- ployed or underemployed. Despite prospects for continued rapid eco- nomic growth, urban unemployment probably will continue to rise. The government estimates that some 1.5 million new workers will enter the labor market during the five-year period begin- ning next March. The number of marginally Marginally Employed Workers Rural workers moving to city in search of work. employed rural workers who will flock to the cities in search of jobs will continue to grow. Only a small number of young people will be absorbed into the expanded education programs that the government is arranging. Although fixed investment in the economy is scheduled to more than double during the next five years, experience suggests that this will not provide the jobs needed. Much of the new invest- ment in industry, and to some extent in agri- culture, will go into capital-intensive projects where only very limited numbers of new job opportunities will be created. Rising unemployment could increase social and political discontent at a time when the Shah already is facing sporadic dissidence in urban centers. Discontent probably will continue to be largely unorganized; Iranian labor unions and political parties are little more than showpieces. It does, however, provide an exploitable issue for foreign interests as well as domestic dissident groups. SECRET Page 18 WEEKLY SUMMARY 3 Nov 72 Approved For Release 2007/11/13: CIA-RDP79-00927A009900010001-4 Approved For Release 2007/11/13: CIA-RDP79-00927A009900010001-4 or-u -Ar 1 The junior army officers who last week over- threw the three-president civilian government that had ruled Dahomey since 1970 are established in power and seem determined to stay for some time. Although no major policy shifts appear im- minent, the new junta will perhaps be more na- tionalistic than previous Dahomey governments. The well-planned coup, Dahomey's sixth since 1963, was accomplished quickly by key army units from a garrison near the capital. There was no bloodshed. President Ahomadegbe, who took over last May as head of the ruling three- man Presidential Council, and his cabinet mem- bers were taken together in the presidential palace. Almost simultaneously, the radio station was seized, and prearranged statements were broadcast by the coup leader, Major Mathieu Kerekou, condemning the ousted civilian govern- ment and announcing the formation of a "rev- olutionary" military government. Governmental corruption, particularly a recent financial scandal involving the former finance minister, was billed as the motivating factor. The new cabinet, composed of majors and captains, includes members from the country's competing ethnic groups and regions. Several, in- cluding Kerekou himself, are veterans of previous coup plots. Some senior civilian officials have been retained by the new government, and more civilians, particularly those with needed expertise, are likely to be added later. Kerekou told the French ambassador that Dahomey's senior military officers would not be given posts in the new government nor allowed to remain in the army. Most of these senior officers have figured in past military take-overs, but had no hand in this one. Kerekou realizes the con- tinuing threat to his regime from the ever-schem- ing senior men and plans to place them in com- fortable sinecures. Two Presidential Council mem- bers and the cabinet are being detained pending investigation of their official activities and possible prosecution on charges of corruption. Kerekou moved quickly to smooth relations with France, whose aid helps keep Dahomey afloat. He asked that President Pompidou not cancel his trip to Dahomey scheduled for late November. The French responded with a warm message from Pompidou, postponing but not can- celing the visit. When meeting with the US ambas- sador a few days after the coup, Major Kerekou appealed for continued US aid for current trans- portation and telecommunications projects. The Major Mathieu Kerekou new leader has also moved to ensure good rela- tions with his immediate neighbors; delegations visited Nigeria and Togo on 30 October and a similar delegation may soon visit Upper Volta. One nearby state that is distinctly displeased by the coup is relatively wealthy Ivory Coast, which provides some financial support to an economic grouping of states to which Dahomey belongs. The Ivorian President has voiced his displeasure with this latest evidence of Dahomey's instabil- ity. SECRET Page 19 WEEKLY SUMMARY 3 Nov 72 Approved For Release 2007/11/13: CIA-RDP79-00927A009900010001-4 As President Allende completes the first third of his six-year term this week, his attempt, to socialize Chile using democratic ground rules is in disarray. His most recent challenge, the worst so far, has been a three-week protest shutdown. Allende's own overriding aim, his grasp on the presidency, has been served by the support given him by the armed services in the face of the shutdown. He has responded to the fluctuating but widely effective protests by mobilizing mili- tary and volunteers under a state of emergency to maintain order and most essential services and supplies, but the long-range effect will be con- siderable, especially on the ailing economy. Allende's handling of the shutdown at first elicited grudging admiration from his Communist and Socialist advisers. Then, after the President negotiated a truce on 27 October with the tiring strike leaders, the uncompromising Socialists refused to go along. They argued that time was on the side of the government and that compromises were therefore unacceptable. On 28 October, Allende suffered another of his periodic attacks of low blood pressure and the Socialists probably took advantage of this to press their position. Negotiations were later resumed but again fell through on 2 November, just as moderates on both sides were announcing that agreement was at hand. Allende has hoped to salvage from the situa- tion a cabinet more to his liking. For months, he has reportedly wanted a cabinet composed essen- tially of military officers and technicians. He felt that such a team, especially during the period leading to the legislative elections on 4 March, would reduce the government's inefficiency and corruption, lower political tensions, and make him less vulnerable to the pressures from coalition politicians. The need for a cabinet reorganization was hastened by the resignations of two ministers to meet electoral filing deadlines and by impeach- ment charges brought in Congress against these men and two others for allegedly going beyond their constitutional powers. The entire cabinet has now resigned to give Allende a free hand in dealing with this problem. The President has had difficulty, however, carrying out his plan for military participation. The chiefs of the armed services are divided over the advisability of military participation in the government. Some fear that the political advan- tages to Allende would outweigh the influence that could be brought to bear to moderate his policies. The Communists reportedly believe that officers in unimportant posts would strengthen the government and some Socialists are inclined to agree despite their lack of enthusiasm for the scheme. If Allende's illness and fatigue persist and he carries out his plan to seek some respite by making a trip abroad in this unsettled period, the pre-electoral truce, which moderates in govern- ment and opposition hope for, will be hard to find. 25X1 SECRET Page 20 WEEKLY SUMMARY 3 Nov 72 Approved For Release 2007/11/13: CIA-RDP79-00927A009900010001-4 Approved For Release 2007/11/13: CIA-RDP79-00927AO09900010001-4 Iq Next 1 Page(s) In Document Denied Approved For Release 2007/11/13: CIA-RDP79-00927AO09900010001-4 Approved For Release 2007/11/13: CIA-RDP79-00927AO09900010001-4 Secret Secret Approved For Release 2007/11/13: CIA-RDP79-00927AO09900010001-4