WEEKLY SUMMARY

Document Type: 
Collection: 
Document Number (FOIA) /ESDN (CREST): 
CIA-RDP79-00927A009900070001-8
Release Decision: 
RIPPUB
Original Classification: 
S
Document Page Count: 
44
Document Creation Date: 
December 21, 2016
Document Release Date: 
May 19, 2008
Sequence Number: 
1
Case Number: 
Publication Date: 
December 15, 1972
Content Type: 
SUMMARY
File: 
AttachmentSize
PDF icon CIA-RDP79-00927A009900070001-8.pdf4.63 MB
Body: 
Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 'mSecret DIRECTORATE OF INTELLIGENCE WEEKLY SUMMARY State Dept. review completed Secret 15 December 1972 No. 0400/72 25X1 Copy N2 44 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 Y SUMMARY, issued every Friday m rnina by of s:: rrent Intelligence, renorts and ar+afyzes sianif- rn>ents of the week throsgh noon an Thursday. cludes material coorriinated with nq, -prepared Economic Research the Office of Strategic and the Directorate of Science and T?cftnOIOgy, =separately as Special aeports are listed in the CONTENTS (15 December 1972) 1 Indochina: Looking to a Cease-Fire 5 Thailand: A Form of Legality 5 Malaysia: Chinese Checkers 6 Economic Problems Down Under 7 Japan: Polar Politics 8 Philippines: Stab from Right 9 Malta: The Next Step 10 USSR-France: Something "Special" 11 Yugoslavia: Youth Not Served 11 France Moves to Curb Inflation 12 UN - South-West Africa 13 Romania: Growth vs. Trade MIDDLE EAST AFRICA 14 India-Pakistan: Moving Ahead 16 Egypt: Bellicosity and Bickering 16 Bangladesh: Electioneering 17 Lebanon Stings Fedayeen 18 Afghanistan: Another Government 19 Iran: Ruling the Waves 20 Kenya: Sea of Troubles WESTERN HEMISPHERE 21 Chile: Back to the Old Grind 22 Bolivia: Banzer Slipping 23 Colombia: Soldiers and Politics 24 Cuba: Armed Forces Reductions 25 Panama: Negotiations Go Nowhere 26 Argentina: Peron SPECIAL REPORT Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 25X1 Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 Next 2 Page(s) In Document Denied Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 NNW Looking to a Cease-Fire From Thieu's Vantage Point -] IPresident Thieu this week reiterated his tough public stand on the peace negotiations; at the same time his government continued to pre- pare for a cease-fire period. In an address to the National Assembly, Thieu repeated agSaigo agreement standard demands that any peace provide for the withdrawal of all North Vietnam- s from the South and recognize a clear o t p ro ese demarcation between the South and the North. He also restated his objection to the "Council of National Reconciliation and Concord," which he sees as a disguised coalition government. The Pres- ident did not close the door completely on the announced peace terms and did not criticize the the gover US directly, attempting instead to put the onus t t o b Thieu's past on the Communists for pressuring the US into cabinet c likely, but do appear ha ges accepting unfavorable conditions. ] performance suggests that he may deliberate for IThieu made several new proposals in an some time yet before acting.j f flexibility and effort to create the appearance o to make his peace position appear reasonable, but the proposals do not go much beyond what Sai- gon had offered previously. They include a truce to begin before Christmas and end after New Year's Day, during which Hanoi would release all US prisoners and Saigon would release all North Vietnamese prisoners. Thieu said Saigon would release more than 1,000 North Vietnamese unilat- erally on the first day of a truce. He suggested that Saigon, Hanoi, and the Viet Cong could hold peace talks during the truce and that the truce might be extended if satisfactory progress were being made:) ` 1 Although the pro-government press had predicted Thieu would announce a broadening of his government and ask for an extension of his emergency powers, the President did not do so. He did call for closer cooperation with religious and political leaders, indicating that he may still be thinking of bringing some new elements into nment)? A pro-government senator told a IThieu has not yet revealed what n he plans to do about the emergency powers, him to rule by decree in several fields and are scheduled to expire on 27 December. In any event, three decrees announced earlier this month SECRET Page 1 WEEKLY SUMMARY 15 Dec 72 Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 SECRET have significantly enhanced the government's ability to operate in a cease-fire environment. The emergency powers were designed to help him deal with the Communist offensive without legislative action; the latest decrees deal with states of "alert," 'emergency," and "curfew" and seem aimed more at peacetime problems like demon- strations, strikes, and disorders.) Some Communist military units believe a cease-fire will be declared late this month and are preparing a last-minute round of attacks. A Viet Cong regional official told his troops there "will be a cease-fire" between 25 December and 1 January and ordered all "available forces" to carry out widespread attacks beforehand so as to control as much of the countryside as possible north and west of the capital( !? !Recent moves by Communist main-force units in several areas of the country do, indeed, suggest preparations for renewed combat. In northernmost Quang Tri Province, resupplied and reinforced North Vietnamese combat units have been relieving battle-weary units on the front lines. The threat to Hue has eased over the past few months, but major elements of a North Vietnamese division have shifted close to govern- ment strongpoints in the Que Son Valley of Quang Nam Province. These elements can call on tank and large-caliber artillery support.} there are signs that the North Vietnamese "1'2nd Division is preparing for attacks in the coastal lowlands of Quang Ngai Province.)LCommunist units in the highland provinces of Kontum and ~-Pleiku are shifting, presumably in preparation for new fighting. South Vietnamese forces heavily damaged an enemy unit as it crossed into South Vietnam from Cambodia "early this week. No major enemy moves have been detected in the delta provinces.'1 North Vietnamese Moving South: What to do when they return? 9 LHanoi, which has been absorbing North Vietnamese casualties from the South in some quantity during the past four years, seems to be preparing for a much larger influx, perhaps as part --Of a cease-fire~TAccording to the North Vietnam- ese, the Council of Ministers in Hanoi recently issued a new resolution on "wounded and sick combatants.') The resolution does not seem to alter earlier policies or procedures; rather, it reminds the people of their duties toward wounded returnees and urges more strenuous efforts to overcome the problems that lie ahead ,Wounded veterans have been returning home in significant numbers since shortly after the outbreak of the Tet offensive in 1968. The gov- ernment has tried to rehabilitate as many as pos- sible for useful work, going so far as to set up specialized facilities, such as handicraft industries, for some of the more seriously disabled. Those whose wounds are too serious to permit rehabili- tation and whose families cannot support them apparently are sent to camps scattered throughout the country, where they draw govern- ment allowances.'] SECRET Page 2 WEEKLY SUMMARY 15 Dec 72 Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 SECRET '?.According to one commentary on the new resolution, Hanoi anticipates "many difficulties" over the rehabilitation of "wounded com- batants" presumably from the sheer size of the effort.JINorth Vietnam's facilities probably are already strained by the casualties from the of- fensive that began last March; now, Hanoi must prepare to receive casualties who have remained in fairly large numbers at hospitals in base areas to the south, and it probably also anticipates an influx of wounded prisoners freed by the South Vietnamese. Hanoi has an obvious interest in solving this problem, both because morale in the army and among the people at large would suffer if the veterans were not taken care of and because the returnees would be a useful source of labor if they were rehabilitated.) J ! The North Vietnamese apparently have no new thoughts on how to cope with these diffi- culties. They do seem to be requiring state organs and factories to ensure that five percent of their staffs are disabled veterans, but otherwise the commentaries suggest more of the same-more "production establishments requiring no arduous labor," more exhortations to the populace to care for the disabled, and more monitoring of the problem by local party officials. Hanoi may be wrestling as well with the possibility that large numbers of non-disabled veterans will also return, but the regime has not yet mentioned this aspect of the problem.;] .The annual Soviet - North Vietnamese aid agreement was signed in Moscow on 9 December without the usual fanfare- /Although no figures were given,.i TASS /emphasized that the aid would include large con- signments of goods, equipment, and other prop- erty of "great significance" for the development of North Vietnam's economy and the strength- ening of Hanoi's "defense potential." SECRET Page 3 WEEKLY SUMMARY 15 Dec 72 Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 SECRET ' -, As speculation about a cease-fire in Vietnam spread, the chief Lao Communist negotiator returned to Vientiane from consultations in Hanoi and Sam Neua armed with a draft settle- ment of the Lao conflict. He presented the document to the ninth session of the Vientiane peace talks; it fleshed out previous Communist proposals and included a specific timetable for implementation. The draft provides for the crea- tion of a broadly based political consultative council and a new tripartite provisional govern- ment within 30 days of signature. It leaves the two sides free to administer their respective zones of control until a permanent coalition govern- ment can be formed. The proposal also stipulates that Vientiane be a neutral zone, a proviso aimed at protecting Lao Communist representatives from a recurrence of the harassment they received on occasion after the 1962 agreements. \ ` On military matters, the draft calls for a cease-fire in place once the agreement itself is signed and promulgated. The cease-fire would be supervised by a joint Lao commission supported by the International Control Commission using the 1962 Geneva Accords as terms of reference. Lao Communist Negotiator Phoun Sipraseuth and Prime Minister Souvanna Phouma The Lao Communists also propose a withdrawal of all foreign military personnel and advisers within 90 days after the agreement is signed. This stipulation goes beyond the initial Communist presentation in October, which only called for an end to US involvement. They are probab y respon ing to Souvanna's long- standing demand that all North Vietnamese be withdrawn.} ..The presentation of a final draft ready for signature indicates the Lao Communists are con- fident that the government will eventually accept the terms being offered. Government negotiators did not address themselves specifically to the Communist draft and merely reiterated Vien- tiane's opposition to the Communist formulations concerning an internal political settlement. None- theless, Prime Minister Souvanna Phouma, too, seems confident that a negotiated settlement in Laos could come soon after a cease-fire in Viet- SECRET Page 4 WEEKLY SUMMARY Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 SECRET THAILAND: A FORM OF LEGALITY (,c. ;~ As the Philippines and the Republic of Korea have moved to one-man control, they have attempted to retain a certain measure of constitu- tional legitimacy. Thailand is in no mood to be different. Ruled by a military group since the end of 1971, a cosmetic return to the forms of con- stitutional government appears at hand. A number of senior Thai officials have told US Embassy officers that the ruling National Executive Council intends to end its existence on 21 December and promulgate an interim constitu- tion. An earlier two-year experiment in constitu- tional government ended in November 1971 when the army leadership, frustrated by parliament's obstructionist tactics and irritated by the forum it provided for attacks on the government, scrapped the constitution and reasserted full control over the country's political life. Thailand's small and weak civilian political opposition responded to the military's foreclosure with a whimper, not a bang. Although the govern- ment has been under no significant pressure to return to constitutional rule, both the chairman of the council, Thanom, and the King have felt uncomfortable v6ihout a mantle of constitutional 9 ) legitimacy. Consequently, Thanom has been publicly promising a new constitution since last spring. Its promulgation, however, has been delayed because of disagreements over the distrib- ution of power and positions within a new regime and Deputy Chairman Praphat's reluctance to relinquish his powers under martial law. Praphat, who has measurably strengthened his position over the past year and is clearly the most powerful figure in the government, apparently has now dropped his objections. A new constitutional framework for the Thai Government will not significantly loosen the military's grip on political power. The new interim constitution reportedly provides for a unicameral parliament made up in large part of military appointees. The new cabinet is all but complete and will incorporate much of the present National Executive Council. The only key slot left to be filled is the foreign minister. Praphat is strongly opposed to Thanom's choice, former foreign minister Thanat Khoman; Pote Sarasin, the only senior civilian remaining in the government, may become a compromise selec- (Southeast Asian states, sensitive to what they see as an inevitable scaling down of US commitments, are keeping an anxious eye on each other. Kuala Lumpur's long-standing interest in normalizing ties with China and complementary championing of regional "neutralization" have placed Malaysia in the forefront of the search for a new place in the shifting Asian power balance. The Malaysians have been transparently proud of their innovative, if hastily thought out, foreign policy. A gap is developing between the Malay- sians and their somewhat more cautious neigh- bors, and this could set back the timing of their accommodation with Peking. According to a senior Malaysian foreign af- fairs official, the prospects for accommodation were enhanced by talks last month between a Malaysian Government delegation and Chinese Premier Chou En-lai. In response to Malaysian queries, Chou assured his guests that Peking has no interest in competing for the loyalty of Over- seas Chinese in Malaysia or elsewhere in Southeast Asia. On another major Malaysian worry-Chinese support for Malaysian insurgents-Chou admitted that it was "akin to religion" for Peking to provide moral support to liberation movements. He stressed, however, that Peking will limit its support to propaganda, and even indicated that SECRET Page 5 WEEKLY SUMMARY Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 SECRET the level of this assistance was negotiable. Al- though Chou's candid remarks by no means erased Kuala Lumpur's uneasiness over Peking's links with the Malaysian insurgency, the foreign affairs official expressed confidence that the matter could be resolved to Kuala Lumpur's sat- isfaction. The pace of Kuala Lumpur's progress toward diplomatic relations with Peking will be strongly influenced by the views of its partners in the Association of Southeast Asian Nations-Thai- land, the Philippines, Singapore, and Indonesia. 11 1 )The new labor governments in Australia and New Zealand will be faced with economies that, although basically sound, have been experiencing periods of sluggish growth, unemployment, and inflation. Inflation and unemployment were strong campaign issues in Australia, prices having increased some six percent during the past fiscal year and with unemployment hovering around two percent, a ten-year high. Moreover, Austra- lia's gross national product, which grew at six percent annually during the late 1960s, dropped to only three percent in the year ending June 1972:\ Growing economic nationalism in Australia is probably an even more important issue than either inflation or unemployment. The massive infusion of foreign private capital during the past few years and the large number of bids by foreign interests for the take-over of Australian firms led to charges that Australia was selling off its na- tional heritage. In response, the last government set limitations on foreign control of Australian resources; the Labor government probably will strengthen this policy. It has plans to establish a secretariat to oversee the flow of foreign invest- ment and II take-overs and mergers involving large firms. lContinued, if gradual, economic improve- ment during 1972 meant that economic issues On 4 December, Prime Minister Razak told parlia- ment that Kuala Lumpur intended to gain the agreement of its partners before it moves ahead on accommodation with Peking. Razak subse- quently sought to dispel an impression that these partners held a veto power over Malaysian deci- sions regarding China, but Kuala Lumpur is never- theless anxious to stay in step with its neighbors, particularly Indonesia. This would mean that the process of Sino-Malaysian rapprochement will be slow since Jakarta, which is conducting its own dialogue with Peking, is inclined to delay a resto- ration of diplomatic ties at least until next spring. had less impact on the New Zealand elections. Inflation was reduced from 11 percent in 1971 to about six percent in 1972, and an expansionary budget provided tax relief for most New Zealanders. Tight credit policies, however, helped slow the real economic growth rate this year to less than the three-percent annual average of the past few years. The new government probably will maintain tight controls on credit. The ques- tion of regional development has become an important issue in New Zealand. North Island has attracted most of the new industry while many parts of South Island have seen their population drift off to industrial centers elsewhere. The new Labor government will need to stimulate indus- trial development in depressed areas an increase employment opportunities in the South. Z (Despite the problems, the economies of both countries will probably show improvement next year. The new governments are not expected to introduce any major changes in economic policy. In Australia there are already signs of recovery as the economy responds to the stimulus of an expansionary budget. Moreover, the demand for Australia's minerals is growing so the country's strong trade balance will very likely improve. New Zealand, still largely dependent on agriculture, will grow more slowly. SECRET Page 6 WEEKLY SUMMARY Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 Am, Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 JAPAN: POLAR POLITICS ( S;; .. E% Sharp gains by the Communists and modest advances by the Socialists in the 10 December elections will further polarize the political scene in Japan. Tanaka's liberal Democrats did well enough, but the moderate opposition was dealt a shattering blow. The Liberal Democrats still enjoy a comfortable majority in the Diet, returning with 282 seats in the 491-member lower House. Gains scored by the Communist Party make it the third largest in the Diet and qualify it to introduce non-budgetary legislation and to sit on the Steering Committee of the Lower House. Japan's pragmatic and nationalistic Communists captured more than 10 percent of the popular vote. The party increased its strength in urban and suburban areas and received unusually strong support in Tokyo, Osaka, and Kyoto. The Com- munists failed to gain ground in the Liberal Democrats' rural strongholds. The Socialists recovered over half of the 50 seats lost in the last general election. They achieved, however, little increase in their percent- age of the popular vote, and most of the advance is attributable to an improved strategy in the assignment of candidates. Although Prime Minister Tanaka did manage to strengthen his position within the Liberal Democratic Party the fact that his party is faced with stronger opposition on the extreme left means he will have to rely more on compromise to keep his conservatives united. He will probably invite former foreign minister Fukuda, his prin- SECRET Prime Minister Tanaka casts his ballot. Japan's 1972-1969 General Elections for the House of Representatives December 1972 December 1969 Liberal Democratic Party 271 288 0 Japan Socialist Party 118 9 14 Japan Communist Party 38 47 Komeito Democratic Socialist Party 29 19 2 31 0 Minor Parties 14* 16 Independents 491** 486 Eleven independent candidates have affiliated with the Liberal Democrats. * The (louse of Representatives was expanded to 491 members in 1970 with the addition of rnembers from Okinawa. 125X1 cipal rival in the party, to join the new cabinet that he appoints later this month. The cabinet is likely also to include a number of politicians who can, hopefully, stem voter dissatisfaction with the conservatives' approach to domestic affairs. Page 7 WEEKLY SUMMARY 15 Dec 72 Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 1W - I -A00"17- I Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 The Philippines STAB FROM THE RIGHT There is a history of violence in Philippine politics which makes the citation of plots and counter-plots against any government leader entirely plausible. President Marcos is now using that climate of belief to move against his political enemies. Although it appears most likely that the assassination attempt on his wife last week was the work of a single, unbalanced individual, Marcos claims that it was part of a broad "rightist" conspiracy allegedly hatched in Decem- ber 1969 and already responsible for at least nine attempts on his own life. '' ;Even before the attack on his wife, the Presi- dent had publicly accused unspecified right-wing elements of threats to his regime, and he asserted he had broken an assassination ring financed by prominent Filipino families. In late November, a nephew and a son-in-law of Sergio Osmena Jr., who ran for president in 1969, and a nephew of Fernando Lopez, who is Marcos' vice president, were charged with complicity in the plot.. elements. Marcos obviously believes he is now in a position to move against enemies in the establish- ment who could not by any stretch of the imag- ination be implicated in so-called Communist con- spi ra cies l By keeping his enemies on all sides on the defensive, Marcos gains freedom to revamp the nation's political structure. He is already moving to make political parties irrelevant by putting pressure on government officials, legislators and national leaders of all political persuasions to line up behind his new constitution and thus put their seal of approval on Marcos' new order. Politicians are left with few issues to discuss; critics of Marcos fear arrest if they speak out.) In an effort to mobilize the people behind himself and his "new society," Marcos has an- nounced the creation of a mass national front organization. He apparently intends that the or- ganization will eventually replace the present two-party system. The new organization i k s wor - ing closely with the government in implementin g The President originally cited goals of the new society.'IJ if Marcos' plans suc-th, ..C win nave established himself as the un- munist threat to justify his imposition of martial challenged populist leader n" law, law, and earlier arrests have been largely of leftist nines he Philip- SECRET Page 8 WEEKLY SUMMARY 15 Dec 72 Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 J SECRET CAfter several weeks of private talks with representatives of the UK and other NATO coun- tries, Prime Minister Mintoff has explained his views on the sterling issue to the Maltese parlia- ment. He may next publicly threaten to abrogate the base agreement signed last March. The UK has informed Mintoff and its NATO allies that it does not intend to make up the difference between what Malta would have received had the pound held its value and what Malta is getting because the floated pound sank. All of the allies except Italy have said they will stand behind the British decision. Mintoff told the parliament that, as he re- called it, he and British Defense Minister Car- rington agreed last spring that each side would be at liberty to act as it deemed best if devaluation occurred. Despite these recollections, Mintoff was persuaded near the end of negotiations to drop his demand that the devaluation contingency be covered in the agreement. Until this speech, Mintoff had not expressed his dissatisfaction with the present agreement, even to the members of his cabinet. payment falling due on 1 January 1973. He con- firmed that he would refuse to accept the January payment, Mintoff proposed that the countries which benefited from the sterling float could make up his losses. This proposal is similar to one suggested by the Italians. They reason that the NATO coun- tries party to the agreement allocated funds to meet the rental payments, which are made in pounds. When the pound was floated last June and its value fell from $2.60 to less than $2.35, each country had to provide less of its own cur- rency to meet the rental payment. The Italians have suggested the UK along with the allies make the annual payment of 14 million pounds and that the other countries make separate bilateral contributions in their own currencies to cover the difference between the present sterling rate and the rate at the time of the agreement. London does not oppose the Italian sug- gestion so long as there is no renegotiation of the basic rental agreement and any arrangements be- tween other contributor countries and Malta are on a strictly bilateral basis. British Carrier at Malta Welcome for how long? Mintoff had, however, discussed the issue with British High Commissioner Moreton, who informed Mintoff that London could not enter- tain his demands for sterling guarantees while Malta was in default in repaying British loans. Mintoff told the high commissioner that the dead- line was not his but was imposed on him by the Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 SECRET President Pompidou and Foreign Minister Schumann will go to the Soviet Union on 10 January for two days of talks with General Sec- retary Brezhnev and Foreign Minister Gromyko. A joint announcement describes the trip as "un- official,' Nevertheless, the meeting comes at a time of major East-West negotiations on European mat- ters, and thus underscores the "special" Franco- Soviet relationship that has evolved since the early 1960s. French sources expect the talks to center on European problems, especially the Conference on Security and Cooperation in Europe and the related talks on force reductions. French and Soviet positions on the former are close, and Brezhnev can be expected to use the meeting with Pompidou to give new impetus to the Helsinki preparatory talks, which are scheduled to resume on 15 January. Other international subjects will be considered; both French and Soviet sources, for instance, expect an exchange of views on postwar reconstruction in Vietnam. A complicating factor in the Franco-Soviet relationship is Moscow's ties with the French Communist Party. These ties may be more than usually on the minds of the principals during the visit because French national elections are due next spring. The leftist coalition of Socialists and Communists has got its campaign off to a good start, but the visit will undercut one of its chief campaign themes-that Pompidou has been "sliding toward Atlanticism." On the other hand, the trip may weaken the "Red menace" theme so often sounded by election-seeking Gaullists. Senior Politburo member Suslov, who was in France this week to attend the 20th congress of the French Communist Party, probably used this argument in an attempt to make Pompiclou's trip more palatable to the French Communists. In any case, Moscow seems quite willing to let the French Communists pay whatever price is neces- sary to keep Franco-Soviet state-to-state relations on the upswing. Brezhnev and Pompidou in Paris During Brezhnev's 1971 Visit Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 SECRET YUGOSLAVIA: YOUTH NOT SERVED Li [The younger generation in Yugoslavia will come under stricter party control as a result of ,' the conference held by the League of Commu- nists last week. The conference did little, if any thing, to ameliorate the country's problems with its youth.\ "Krsta Avramovic, party executive bureau member in charge of youth affairs, in the keynote address acknowledged that party and youth or- -`ganizations have failed to create opportunities for youth to participate in the self-management sys- -a,'=-, tem. On the other hand, Avramovic reiterated 219 official concern that the younger generation has become open to the influence of foreign ideo- logies;I`A conference resolution called on the party to find better means for implementing its leading role among youth and their organizations. The youth and student federations are to be merged into one, thus eliminating the special status now enjoyed by the student organization. Further, Marxist training in the school system will be made the "prime" basis of the curriculum [Yugoslav youth is interested in bread-and- butter issues, and these got a good deal of atten- tion from the 100 speakers at the conference. tf They highlighted as key problems the lack of job opportunities for the young and poor living con- ditions and educational opportunities for work- ers. The speakers frequently admitted frankly ,a that the young are vocal in expressing their dis- appointment. In general, though, few meaningful proposals ems advanced for new programs to attack these probl ,)/ President Tito attended the sessions and de- livered the closing speech. He obviously con- sidered the conference another step in the cam- 7?paign to recentralize the party and again make it the dominant force in Yugoslav political life. Tito 4 expressed general satisfaction with the con- ference, but said that too little attention had been 4i. paid to recent efforts to remove unsuitable ele- ments from the party. He spoke on the need to find jobs at home for young men of military age, hinting that their freedom to leave the country in search of work might be restricted in the future.j qyouth will find little to cheer about in the conference results. Students will decry the loss of their organization and grumble about closer party supervision. Working youth will not feel that their problems were in any way resolved. All will object to more Marxism in the schools. The gen- eration gap has not been bridged. The government, recognizing the mounting threat of inflation to its political position and to the economy, was goaded into further action when prices rose in October by 0.9 percent. Discontent over food prices has been rising, and the Pompidou government is committed to the EC goal of holding inflation in 1973 to four percent. The new moves are not sufficient to reduce significantly the rate of inflation and prob- ably are not the last in a series of measures begun last summer. 3 SECRET Page 11 WEEKLY SUMMARY Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 AMW StU1\LI _- ;i ; The most immediate impact should come from cuts on 1 January in the value-added tax on industrial products and food items as well as the suspension of the tax on beef. Prime Minister Messmer assured the French public that he would personally see to it that the tax cuts were passed on to consumers--something that has not always happened in the past. If so, the cuts will have public appeal, but will do little to reduce the underlying inflationary pressure which stems from huge increases in the money supply and a strong labor push for higher wages. To make up the revenue lost by the tax cuts, the government will sell $1 billion of long-term bonds. It also urged labor to limit wage demands next year to six percent.] }Actions to limit credit growth also have been taken. In addition to the 33-percent reserve UN - SOUTH-WEST AFRICA: SQUARE ONE 'L The Security Council last week extended the secretary general's mandate to try to move South-West Africa toward independ- ence, butcouncil members are far from happy with. what Waldheim has done to reach that goal., ,j y IThe council referred in passing to the activities of Alfred Escher, Waldheim's per- sonal representative for South-West Africa, A but most members regard Escher's mission to '.South and South-West Africa during October rall y and November as a fiasco. He was gene clumsy and made embarrassing public state- ments on several occasions. At the conclusion of his visit, Escher drew up an "agreement" with South African Prime Minister Vorster which the UN envoy apparently intended only as a memorandum of conversation. Pre- toria, however, seized on the document as a great victory for its concept of what should constitute "independence" for South-West Africa A ;, The views of the UN and South Africa are, in fact, as far apart as ever. The Security I Council has reaffirmed the inalienable right of requirement imposed in November on lending by financial institutions, a variable penalty rate now will be applied to any institution whose loans rise more than 19 percent in the 12-month period beginning last April. To cut consumer spending and to stimulate savings, interest rates on savings accounts have been increased slightly.; r1 )Noticeably lacking from the government's program so far has been any form of wage-price controls or any strong action to curb the growth of the money supply, currently rising at about 18 percent annually. The French inflation has not reached the point where it is self-sustaining, but the huge money supply does mean that the public has readily available the means to go on a buying spree should the right psychological spark be pro- the people of South-West Africa to "self- determination and independence" based on "national unity" and "territorial integrity." This is a far cry from what South Africa has in mind. Foreign Minister Muller, however, has commented only that his government is "disappointed" with the Security Council ac- tion and wishes to continue the dialogue with the UN. Pretoria presumably sees in the ex- tension of Waldheim's mandate a chance to maintain a facade of flexibility while proceed- ing with separate development for the 11 tribal homelands that compose South-West Africa.1 ~"[Whatever Waldheim does to carry out his renewed mandate, it is virtually certain that he will not reappoint Escher. Waldheim may name a new personal representative, or he may respond to the wishes of some African countries and involve himself directly, as he did last spring when he traveled to Pretoria. Unless he has considerably more to show for his efforts when he reports back to the coun- cil, the current attempt to solve the problem through mediation could grind to an end. SECRET Page 12 WEEKLY SUMMARY 15 Dec 72 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 + . SL(.;HL I ROMANIA: GROWTH VS. TRADE Growing concern about the continuing large trade deficit with the West led the Romanian plenum, which approved the 1973 economic plan last month, to agree to improve controls on imports and to push harder to expand exports. Romania's growing debt to the West should result from its acceptance by the World Bank, which is likely to follow Romania's membership in the International Monetary Fund.J I 'in addition to setting higher import duties " " and a review of imports from the West, the } the return1on current exports. These moves repre- billion. Although the details are not known, as well as agricultural products, could backfire; products in the West, and higher prices would not help. The demand for Romanian agricultural exports will remain high, but poor weather this fall threatens winter wheat output and reduces-1) prospects for next year's exports. The debt bur- den, however, may be eased by short-term debt relief resulting from membership in the Fund and longer term development loans from the World Bank. _5 )Import controls should not seriously inhibit economic growth in priority areas. Perhaps re- flecting the need for these new controls, there was no official mention of President Ceausescu's earlier hopes of achieving the goals of the 1971-75 plan ahead of schedule. The 1973 plan calls for a 16-percent increase in gross industrial output; cutbacks in investments being discussed so far will affect largely the so-called "unpro- ductive sectors" of the economy such as school and hospital construction. /The Romanians have been warned not to expect improved supplies of consumer goods. The regime has established a new council whose purpose appears to be the equitable and rapid distribution of the consumer goods that are available. Moreover, Ceausescu is keeping his com- Page mitment to rapid increases in wages, and he has announced that incentive payments will be made to employees in sectors tha overfulfill the plan goals. 25X1 25X6 SECRET WEEKLY SUMMARY Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 SECRET India-Pakistan MOVING AHEAD ON PULLING BACK This week Indian and Pakistani troops began to withdraw from all the territory captured on the western front a year ago. Once the withdrawal is complete about two weeks hence, India will have vacated 5,139 square miles of Pakistani ter- ritory along the international border south of Kashmir, and Pakistan will have pulled back from 69 square miles of India. The new line of control in the divided state of Kashmir will reflect rela- tively minor modifications in the prewar cease- fire line. This is the first major step toward imple- mentation of the Simla agreement, signed by India and Pakistan on 3 July, and was made possible by mutual concessions on the 500-mile line of control in Kashmir. India had made with- drawal from any captured territory. conditional on agreement on the line in Kashmir. ~, ;The two sides had been at impasse on they? matter for sometime, and the breakthrough was only announced on 7 December following a meet- ing in Lahore between the Indian and Pakistani army chiefs. According to the compromise agree- ment signed on 11 December, Pakistan agreed to give up its claim to a tiny, strategically insignifi- cant enclave in exchange for two equally unim- portant villages held by India. Until the break- through, both sides believed that giving in on the approximately one and one half square miles involved would prejudice their claims to all of Kashmir. The trade off presumably allows each side to consider its 25-year-old claim to Kashmir inviolable. More importantly, the trade off in- dicates both countries are probably willing to live indefinitely with the status quo. India, holding about two thirds of Kashmir, including the im- portant Vale, has privately made it known it was interested in making the cease-fire line a per- manent border. The mutual withdrawals could pave the way for progress on other matters, such as the restora- tion of trade and communication links and resumption of diplomatic relations between India and Pakistan. There is far less optimism about a break in the impasse between Pakistan and Bangladesh, which in turn is preventin the re- lease of Pakistani prisoners from India. SECRET Page 14 WEEKLY SUMMARY 15 Dec 72 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 SLUKL I India/Pakistan: Occupied Territory 'n4, jr rnasnmlr 7 J///. Vale \ SECRET Page 15 WEEKLY SUMMARY 15 Dec 72 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 SECRET EGYPT: BELLICOSITY AND BICKERING =r=- lin the past few weeks, the beat of war drums has picked up in Cairo, and there have been singular manifestations of dissatisfaction with President Sadat and his administration. This does not mean, however, that war is about to break out in the Middle East or that Sadat is about to depart.) he war talk is probably related in part to the government's concern with troublesome domestic problems. Several influential Egyptians have examined these problems and concluded that a resort to limited fighting might serve some useful purpose. On 27 November, Prime Minister Sidqi alleged that the country was prepared for war. Egypt's leading journalist, Muhammad Haykal, recently asserted that armed conflict must be resumed but that Egypt alone is not up to the task. Another influential editor, Ihsan Abd al-Quddus, who, like Haykal, sometimes reflects President Sadat's views, stated that even another defeat would be "more honorable than sur- render." F,< ).Many Egyptians remain opposed to exer- cising the military option, recognizing that the Egyptian war machine is in no condition to take on the Israelis. It may be that Cairo's leaders hope the threat to use force will bring renewed diplo- matic efforts to break the Middle East deadlock or at least divert the attention of the Egyptians from domestic ills.J /Similarly the display of dissatisfaction by Egypt's normally docile legislature may be an- other way of letting off steam. During the meet- ings, extraordinarily sharp criticism was directed at government policies, primarily at Prime Minis- ter Sidqi. Among other things, the legislators said they were not at all convinced by Sidqi's claim that the government had completed its war plans. Following a rebuttal of the People's Assembly criticism by Sidqi on 12 December, however, the legislature did unanimously approve the prime minister's policy report of 27 November. The unprecedented attack by the legislature on Sidqi would appear to be aimed at Sadat as well, for Sadat bears a heavier responsibility than Sidqi for the bind Egypt is in. E 25X1 9 /The frank coverage given the legislature out- burst in the government-controlled press, on the other hand, could point to a plan to dump the unpopular Sidqi. He has faced opposition from the beginning of his term last January, when his so-called confrontation cabinet was derided by students as totally inadequate to the task of pre- BANGLADESH: ELECTIONEERING /The campaign for the national elections next March has been going strong for several weeks, even though it does not begin officially until the new constitution goes into effect this weekend. The ruling Awami League is likely to retain a sizable majority-though not its present virtual monopoly-of parliamentary seats. The league has factional problems, but it probably will not frag- ment before the election. The party's reputation has been tarnished by allegations of widespread corruption, continuing economic troubles, and an uneasy law and order situation. The Awami League is strongly pro- Indian and has suffered because sentiment against India is growing. Nevertheless, the small opposi- tion parties are disunited and without a leader the people would see as a credible alternative to Prime Minister Mujib. So far, the best prospect the opposition has been able to throw up is Ataur Rahman Khan, the leader of the tiny Bangladesh National League. Ataur has been relatively temperate in his public pronouncements, but he is trying to persuade several of the more strident leftist opposition parties to forma coalition with his group. SECRET 25X1 j Page 16 WEEKLY SUMMARY 15 Dec 72 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 SECRET Violence among competing political groups-a chronic phenomenon in Bangladesh- will most likely increase as the campaign gains momentum. Rival parties and candidates also will probably keep trying to link each other with foreign scapegoats such as China, Pakistan, India, LEBANESE STING THE FEDAYEEN 1' JA series of sharp encounters with the feda- yeen were triggered when the guerrillas returned to the sensitive area near the border with Israel in violation of the agreement concluded in Septem- berjJThe fighting began on 8 December when an army patrol flushed out a fedayeen band in a forbidden zone two miles from the Israeli border. The fedayeen command made no attempt, as it has in the past, to damp down the situation, but instead ordered its units to resist army efforts to evacuate them. The fighting intensified and the next day spread to the southeastern Arqub area- Fatahland-where guerrilla bases are con- centrated. The exchange of small arms and mortar fire on the two days left two soldiers and an esti- mated nine commandos dead; nine army person- nel and 17 guerrillas were wounded. The army used artillery, so guerrilla losses are likely to have been even greater. The fedayeen troublemakers have now left the forbidden zone. )Although Lebanon has thus reasserted its authority, Prime Minister Salam is worried about the impact of the Palestinians' current propa- ganda campaign alleging that Beirut is collabo- rating with Israel to crush the guerrilla movement. Local reaction to this agitation by pro-fedayeen elements and leftists has been minimal.) Page 17 14 ;Another source of Lebanese concern is the intentions of Fatah leader Yasir Arafat, who is suspected of having deliberately provoked the ,latest clashes `Arafat, under heavy fire from the fedayeen ranks for acceding to Beirut's re- strictions on guerrilla activities, has apparently decided to take on the army in a desperate f ; attempt to shore up his leadership. There is speculation in Lebanese Army circles that last weekend's bloody clashes may be only the first round in a protracted effort by Arafat to force the government to lift restrictions on cross-border operations into Israel. In view of Arafat's tenuous control of Fatah, however, there is some question whether he has sufficient backing to provoke a climactic showdown with the Lebanese. None- theless, guerrilla units loyal to Arafat are capable of harassing the army in the south for some time SECRET Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 SECRE I AFGHANISTAN: ANOTHER GOVERNMENT 'Mohammad Musa Shafiq, whose government won parliamentary approval on 12 December, has said privately and implied publicly that he will act more independently of the King than previous prime ministers. As foreign minister in the previ- ous government, Shafiq did make Afghan policy more activist without departing from the coun- try's basic neutrality.) ,Nevertheless, ultimate power will remain with the King, and the new prime minister will probably stop short of any real departures. i A. rShafiq may well be more successful in his first months in office than was his immediate predecessor, Abdul Zahir. Ultimately, Shafiq will probably achieve no more than the previous four men who have held the office in the nine-year period since the King initiated his "experiment in democracy.' /5Shafiq faces serious problems. The country is poor and undeveloped, and the largely agricul- tural economy has been staggered by two years of drought. Famine is still a threat in some areas. In foreign affairs, Shafiq's first major test may come over a water utilization treaty with Iran that some deputies have denounced as a sellout to the Shah. Also, revolutionary religious leaders may well react violently if political and economic reforms Drought-stricken Afghans await help. Prime Minister Shafiq are proposed; leftist students may take to the streets if they are not. ) ensures his own continued domination of Afghan politics but increases the likelihood of frequent :F [As important as any concrete economic p'roblem is a growing dissatisfaction-at least in Kabul-with Afghanistan's present political sys- tem. The corrupt and inefficient bureaucracy is unable to function effectively. A lack of organiza- tion and factional infighting have prevented the passage of important legislation in the lower house of parliament. As a matter of fact, a quo- rum is rarely achieved in this house. For several years, the King has declined to sign a bill that would allow parties to be organized as in most Western democracies. He apparently prefers to work behind the scenes, often not giving his prime minister the support he needs. He thus25X1 changes of government- SECRET Page 18 WEEKLY SUMMARY 15 Dec 72 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 SECRET IRAN: RULING THE WAVES 11n the year since the British withdrew from the Persian Gulf, the Shah has established Iran's military pre-eminence in the area and announced his ambition to extend his naval reach into the s Indian Ocean. This ambition may be made easier by an offer last week of port and communications facilities on the island of Mauritius.! .The Shah has long been determined to de- velop enough armed strength to deter adventures by hostile neighbors and to ensure egress through the Persian Gulf for Iran's vital petroleum ex- ports p'SeveraI years ago he thought largely in )terms of defending the Persian Gulf, but he extended this to the Gulf of Oman in anticipation of the British departure. In a Navy Day speech last month, he made public his intention to more than double the navy's striking force, alluding to the additional need of looking to the Indian Ocean, which "recognizes no frontiers." IFor some time the Shah and his prime min- ister have said that the Indian Ocean must remain free of big-power hegemony and competition. Prime Minister Ramgoolam of Mauritius, who has voiced similar sentiments, announced during an official visit to Tehran last week that his govern- ment would grant naval facilities to Iran, although Mauritius was not giving military bases to the big powers. The Iranians have not commented pub- licly, but are bound to be receptive.] f j In line with his expanding view of Iran's de ense responsibilities, the Shah has dramatically increased his air and naval weapons procurement, with some emphasis on developing a longer range cd,/erranean ---3ea CHAGOS ARCHIPELAGO (U K.) caMaROrs. INDIAN Mr1 AS, A MAURITIUS REUNION lFr.l lZA B,(J?F 0CEA N SECRET Page 19 WEEKLY SUMMARY CROZFT IS. Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 SECRET capability. Since July, he has signed arms con- Kenya's lucrative tourist industry. He also created tracts with the US totaling about $1.6 billion, another problem for Kenyatta, since Asians are roughly 15 percent more than the figure for the no more popular in Kenya than they were in 16 years ending in 1971. The new equipment is to Uganda. Kenyatta precipitately canceled Amin's be delivered within the next several years and will visit to Kenya's independence day celebrations, in supplement already substantial purchases-Ain- apparent displeasure with Amin's demand that cluding two British frigates equipped with Sea Ugandans in Nairobi be extradited because they Killer missiles and two US Sumner-class destroy- constituted a threat to his security. Apparently to ers-from the US, the UK, and the USSR. The cost appear even-handed, Kenyatta also canceled a of the new weapons can probably be absorbed by long-planned visit by Cypriot President Arch- an economy that has averaged an annual growth bishop Makarios, who was to have held a mass of 11 percent since 1964 and enjoys steadily baptism that would hardly fit in with Amin's increasing oil revenues and access to foreign cred- anti-Christian mood. KENYA: A SEA OF TROUBLES (Even though Kenya is in pretty good shape compared to most other African countries, Presi- dent Kenyatta is not without his problems as he leads his country into its tenth year of independ- 4 ence~lKenyatta, who spent the 1960s dealing with threats to his rule from the Luo tribe, now faces a tough challenge from his own Kikuyu. Kenyatta is disturbed that anti-establishment Kikuyu-and in Kenya this means against Kenyatta-seem to be gaining acceptance. He finds it difficult to halt this trend since, if he moves to neutralize the Kikuyu who oppose him, he may split the Kikuyu in such a way as to weaken the tribe's dominance of the country. ;Much of the criticism of the government in parliament this year has been spearheaded by northern Kikuyu who resent the way Kenyatta and his clique of southern Kikuyu run Kenya. Disaffected Kikuyu are courting support from disenchanted Luo and other tribes. The disputes in parliament between pro- and anti-government Kikuyu will move into the local arenas if party elections-reportedly promised early next year- materialize ;Meanwhile, Kenyatta is concerned that Somalia may intensify old claims to territory in northeastern Kenya inhabited by ethnic Somalis. Uganda's President Amin, by expelling Asians and threatening other expulsions, created an atmos- phere of uncertainty in East Africa that has hurt SECRET Page 20 WEEKLY SUMMARY The 80-year-old Kenyatta, who is still revered by the Kenyans for his role in leading the country into independence, will probably be able to keep control of the situation. Upon his death, 25X1 however, the struggle to succeed him will almost certainly bring out the worst of tribal and other Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 CHILE: BACK TO THE GRIND President Allende's two-week trip is unlikely to have a substantial effect on his situation at home or on his coalition's chances in the March 1973 congressional elections. His vanity was fed by the attention he received, and he refurbished ties with the Communist regimes, the third world, and influential Latin American countries, but he returned to Santiago on 14 December to the same knotty problems he faced when he left. The President probably realized before he arrived in Moscow that there was small chance of his receiving the hard cash credits that are Chile's prime current need, and there is no indication that he received a pleasant surprise. The Soviets committed themselves to expand aid in the joint communique issued on 10 December, but the commitment is vague. After the visit the Com- munist chief of the Chilean trade union con- federation tempered his claim that Soviet help would have "positive results for Chile" with a warning that socialist states could not give tech- nical and economic aid without extensive plan- ning. The president of the Chilean Central Bank, who took part in the Moscow talks, said that a "program of permanent and definitive" exchanges would be set up to make parts of the Chilean economy complementary with the Soviet economy. At home, the President's coalition is still in disarray as the election campaign begins. The Page 21 Communists have already done extensive and methodical groundwork and expect to capture from 20 to 25 percent of the vote. This is not a happy prospect for the less disciplined parties in the coalition, whose electoral chances look far drearier. The Socialists recognize that their deeply split party s wrn- dling membership and voter appeal no longer support the party's claim to primacy in the coalition. In fact, the Socialists are so widely blamed for the irresponsible economic policies and extensive corruption in the administration that Allende may consider the Socialist Party-at least under its present leadership-a political liability. The small extremist groups in the coali- tion are outspoken in their criticism of certain administration tactics and, like the Socialists, opposed the inclusion of the military in the cabinet. General Prats, acting chief executive in Al- lende's absence, and his two military colleagues in the cabinet are showing energy and satisfaction in carrying out their new duties, somewhat to the dismay of coalition leaders. The Communists agree with Allende that the insertion of the three generals into the government was a necessary counter against the recent prolonged economic shutdowns. On the other hand, the Communists recognize the pervasive military mistrust of their party and fear that General Prats may expand and prolong military influence in the government at their expense, possibly with Allende's tacit ap prova 1. SECRET WEEKLY SUMMARY 15 Dec 72 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 SECRET the inept handling of the recent devaluation devaluation to salaried workers, both industrial by the Banzer regime has exposed its basic vulner- and white collar. Neither negotiations nor repres- ability. sion by the government has stilled union demands for additional wage increases, and the current calm could end soon after the large year-end bonuses are paid.] a change o government could occur at any time, perhaps within a month.') 11 1 0'1 ['The catalyst for a change could be wage demands by unionized labor. Because Banzer's price controls are not effective, merchants have T been able to pass almost the entire burden of j` j [President Banzer confided to the US ambas- sador that he has decided to oppose future wage demands, especially from the miners, by force and arrest labor leaders and "agitators." Banzer insists that these demands are being spurred by politically inspired agitation, not real economic needs This is often an accurate assumption in Bolivian Troops on the Move SECRET Page 22 WEEKLY SUMMARY 15 Dec 72 Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 -- Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 SECRET Bolivia, but the current plight of the salaried worker is unmistakable, and union leaders are responding to pressure from the ranks. Moreover, arrests of unionists in La Paz last month precipi- tated a strike and hardened labor's position. There is little reason to expect that further arrests would have better results, but presidential advisers, such as Interior Minister Adett-Zamora, seem to feel thatJ;the workers must be "taught a 1 lesson." Nevertheless, some room for negotiation !o( [The military is becoming more of a factor in politics as the National Front coalition begins to phase out. Since late summer, President Pastrana and other leaders of the Conservative Party have been attempting to retire or reassign a number of key military officers who are members or known supporters of the Liberal Party. Liberal sympa- thizers, like the defense minister and the three highest ranking members of the army command, have managed to retain their posts, however, and launched a counter-campaign to recruit Liberals into military ranks./ still remains.,', Pelations between the politicians and the military have been further strained by the circula- tion of a memo prepared by the judge advocate general of the army calling on political leaders to attend to the nation's social ills so that the mili- tary will not have to. Pastrana's latest move has been to weaken the military's representation on the National Security Council, prompting armed forces leaders to begin withholding sensitive infor- mation from non-military members of the govern- ment..) IDuring the past several weeks, intense po- litical pressure has forced the army to release a number of prisoners suspected of being guerrilla sympathizers. More than anything else, this abridgment of the armed forces' constitutional powers under the state of siege has raised military hackles] paign. 2 [The Colombian armed forces have avoided political involvement since the establishment of the National Front in 1958. Even before 1958, their participation in politics was infrequent. Against this background, the government's moves suggest a deliberate effort to politicize the mili- tary as the campaign for the 1974 presidential election gets under way. As a result, the armed forces have become a factor in the political arena and are likely to remain so throughout the cam- SECRET Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 SECRET CUBA: MORE ARMED FORCES REDUCTIONS IRecent remarks by Armed Forces Minister Raul Castro indicate that Cuba's ground forces have been reduced and will be cut still further. To fill in the gap created by the demobilization of regular troops, the ready reserves are being ex- panded and are training more with regular units. The air defense force has also been reduced, but the air force and the navy are likely to escape major cutbacks. j iSpeaking on the anniversary of the founding of the Rebel Army on 2 December, Raul com- plained that the "aggressiveness" of the US "forced upon us a need to have armed forces whose size was-and still is-higher than our demographic possibilities and economic develop- ment permit.") ;The theme of Castro's speech- greater dependence on reserves to supplement a smaller regular army-was also expounded in a speech delivered last month by chief of the General Staff Major Senen Casas Regueiroj The shift toward an enhanced role for the reserves has been in process for several years. For example, units called permanent infantry divi- sions were created in 1971 and placed under the command of armed forces vice minister Major Oscar Fernandez Mell. The men in these divisions are given basic infantry training, but spend most of their time performing agricultural tasks such as planting and cutting cane. This eases the require- ment on other military units to provide men for agricultural work and permits these units to con- centrate on training and operational require- ments.; !In addition, all academic and vocational training institutions at the senior high school level now provide basic military training, and all students are organized into either anti-tank or antiaircraft artillery units. The students receive full credit for this training which is deemed to satisfy their draft obligation of three years of military service.. In the event of hostilities, these students would function as artillery units, and the agricultural divisions would provide the infantry. Other reserve units staffed by demobilized regular troops, university students, former members of the militia, and similar personnel would be avail- able. ) j 1L)_ The reduced role of regular forces cannot but have a detrimental impact on Cuba's over-all military capability. In relationship to actual defense needs, however, the impact will be minimal. The army has long been bloated out of all proportion, and the reduction was long overdue. It must rank as a plus for the Castro regime. This would release a significant force for more productive tasks but retain the core of an apparatus capable of meeting Cuba's normal internal security and external defense require- ments. 25X1 SECRET Page 24 WEEKLY SUMMARY 15 Dec 72 Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 `?e OCl,.KC I PANAMA: NEGOTIATIONS i / LEfforts to get the canal negotiations back on j track failed last week as Panama refused any compromise and exhibited little beyond a willing- '-'j'ness to entertain additional US concessions,] jl`! )The US negotiators went to Panama City on 3 December at the invitation of Foreign Minister Tack to resume talks that had been stalled for nearly a year, largely because of Panama's in- ability to formulate a counteroffer to the US proposals of December 1971. A potential road- block was averted before the US negotiators arrived when Torrijos returned all of the buses that had been taken from the Canal Zone by striking Panamanian drivers. The US, for its part, agreed not to prosecute any of the individuals involved, if they do not drive buses in the Zone until the three-year statute of limitations runs out4 fAny hope that the meetings with top Pana- manian officials would narrow the differences was dashed, however, when the Panamanians pre- sented an uncompromising paper that reflected their previous demands. Their paper called for total Panamanian jurisdiction over the Canal Zone within five years and Panamanian control over the canal itself within 22 years. Panama also de- manded greatly increased economic benefits, the immediate return of much of the land and many of the installations in the Zone, the removal of the US Southern Command from Panama, and a greatly reduced US defense role. Panama ex- pressed a willingness to grant the US an option to construct a third set of locks or a sea-level canal, but insisted that the US take up the option within five years or it would be revoked. F; fTorrijos continues to believe that Pana- manian pressure will lead to further US SECRET Page 25 WEEKLY SUMMARY 15 Dec 72 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 JCI. r E I concessions on a canal agreement. He may focus _') (Peron's departure and his well-publicized an greater domestic attention on the issue over the nouncement were initially scheduled for 13 next couple of months. The government gave its December, but were delayed at the last moment. sanction, for example, to the Communist-domi- No explanation was given, but Peron appears to nated student federation to hold a major rally on, be having considerable difficulty in selecting a 12 December that concentrated on the canal candidate who will not seriously divide the problem. Additional rallies by student and other Peronist movement. organizations may be allowed. In an apparent attempt to demonstrate the government's com- mitment to its latest negotiating position, it publicly stated in-full detail the demands it is making on the US.` i Jn top of this, Foreign Minister Tack told US officials last week that Panama would not under any circumstances back down from its ef- forts to have a Security Council meeting in Panama in March. He stated that the meeting had nothing to do with the canal negotiations and that the US would not he harassed. These assur- ances should not be taken at face value since Torrijos may not be able to resist the temptation to bring new forms of ressure on the US even before March. ARGENTINA: PERON ?The rumors and speculation surrounding the timing and circumstances of Juan Peron's de- parture from Buenos Aires have been almost as confused as they were prior to his arrival nearly a month ago. Rank-and-file Peronists as well as po- litical observers waited all week for a statement from Peron that was billed as of "transcendental importance." It was generally expected that the old dictator would, in his statement, decline his party's presidential nomination, name another candidate, and then depart on a trip that would take him to Paraguay, Peru, and eventually back to Madrid.! )Peron himself has been barred as a candidate for president by a decree setting 25 August as the date by which all candidates had to be resident in Argentina. He has no desire to run anyway and has sought an arrangement whereby a non- Peronist-a military man or a member of the Radical Party-would head a joint ticket. Peron hoped in this way to hold the Peronists together under his leadership and avoid the power struggle involved in naming a Peronist. That individual would carry the party banner in the elections and thus inevitably become the favorite in the battle for party leadership when Peron finally steps down.) lJ-99 Such an arrangement has eluded him so far, but the delay in his trip plans suggests last-minute efforts are still being made to reach an agreement. If this fails, the old man, weary from a month of tension and political infighting, may give in to pressure from his advisers and give the nod to a Peronist. Or he could decide to continue the fight by maintaining his own candidacy until the supreme court rules on the constitutionality of the residency requirement. A ruling would not be likely until late January or February, and this would give him more time to maneuver. SECRET 25X1 Page 26 WEEKLY SUMMARY 15 Dec 72 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 25X1 Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 Secret % WOO Secret Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 Secret DIRECTORATE OF INTELLIGENCE WEEKLY SUMMARY Moscow and the Georgians Special Report Secret N2 46 15 December 1972 No. 0400/72A Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 25X1 Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 Next 1 Page(s) In Document Denied Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 oft Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 Moscow and the Georgians A major crackdown appears under way in Soviet Georgia following the retirement of long- time republic party boss Vasily Mzhavanadze and the exposure of economic mismanagement and corruption of major proportions. Mzhavanadze, like Shelest in the Ukraine, was one of the few regional leaders who seemed to resist Brezhnev's emergence as the dominant man in the Kremlin; both went into political decline after Brezhnev consolidated his position at the 24th Party Con- gress. Although Mzhavanadze has not thus far been personally implicated in the charges of cor- ruption in Georgia, there are rumors that his wife was involved, and it is clear that he is being held responsible for the situation there. He will prob- ably be relieved of his candidate membership on the politburo at the next central committee plenum. The scandal that engulfed Mzhavanadze involved the revelation of a vast network of individuals, in and out of official positions, who had amassed personal fortunes by misappro- priating state funds, materials and land and by manufacturing and selling consumer goods, all quite illegally. Bribery, influence peddling, and kickbacks ensured the cooperation of those in the party and government whose job it was to prevent such activity. While corruption of this sort is not unusual in other parts of the Soviet Union, it was especially flagrant in Georgia, where a free- wheeling life style has combined with fierce na- tional pride to breed indifference-if not outright disdain-for the finer points of communist ethics. The character of Mzhavanadze's successor is good evidence that Moscow is serious in its intent to root out corruption in Stalin's homeland. The new party boss, Eduard Shevardnadze, earned his reputation as a tough crime-buster during his many years as head of the republic militia. His appointment to head the party is reminiscent of the choice in 1969 of Azerbaydzhan KGB chief Aliyev to take over and clean out the party after the exposure of widespread corruption in that republic. Shevardnadze's performance since he took over in September suggests that similar Special Report 15 December 1972 SECRET Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 SECRET house-cleaning in Georgia is getting started. Given the aggressively independent nature of the Geor- gians, however, it is unlikely that he will be able to do more than eliminate the most glaringex- cesses unless he resorts to really harsh measures. The Georgian Scene The swashbuckling, colorful Georgians are immensely proud of their rich and ancient Chris- tian heritage. Although their homeland was re- peatedly overrun by foreign invaders-Byzantines, Persians, Arabs and Turks-their culture and language have been preserved intact. The Geor- gian language, for example, has changed so little 11th Century Church in Mtskheta that school children today can easily read 12th century Georgian poetry. Thanks to Stalin, the republic has always occupied a unique position in the Soviet Union. Although Stalin quelled all Georgian strivings for any real measure of independence from Moscow, the republic enjoyed a privileged economic status during his time, and the people are stubbornly-if somewhat perversely-loyal to his memory. For them, Stalin is still a national hero and a symbol of Georgian greatness. Khrushchev's secret speech in 1956 denouncing Stalin touched off riots in Tbilisi that still stand as the worst civil disturb- ances in recent Soviet history. Since the riots, Moscow has made an exception of the Georgians and has permitted them to continue to honor the memory of their native son. Two years ago, for instance, the esplanade in Tbilisi was renamed after Stalin and his portraits now appear on city buses. Furthermore, the Georgians were never Russified to the same extent as other Soviet minorities, and the republic's leaders are almost entirely native Georgians. There are only seven Slavs among the 123 full members of the Geor- gian central committee. Georgia is also unique in that it is the only republic where the number of Russian inhabitants has declined in the last ten years. The exodus was undoubtedly prompted by the strong anti-Russian sentiment among the Georgians, who have become increasingly out- spoken in their practice of disparaging Russians and things Russian. There is, however, more sound than real fury in this attitude. Life in Tbilisi has an air of vitality, gaiety, and permissiveness, both in the style of living and in the style of business. Georgia has the strictest anti-narcotics laws in the USSR and probably has a greater narcotics problem than any other area. Mzhavanadze is the only regional leader of con- sequence who has ever publicly mentioned the problem. Judging from the frequent complaints in the press, there are probably more illegal firearms in Georgia than anywhere else. But most of all, it is the air of conspicuous consumption that marks Georgian life. There are SECRET Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 JCI..KC I reportedly more private cars per capita there than in any other republic. Collective farmers make a good living peddling produce from their private plots throughout the Soviet Union and the Geor- gians, particularly the residents of Tbilisi, seem to have money to lavish on good food and wine. The fact that Georgian affluence is often the result of shady business dealings is an open secret, and the citizens take pleasure in insisting that there are still millionaires in Georgia. After Khrushchev, Provincialism For the first few years after Khrushchev's ouster, Moscow's control over the provinces was relatively lax and assertiveness grew noticeably not only among the Georgians but among the other nationalities as well. The diffusion of au- thority within the collective leadership and the consequent difficulty in reaching agreement on any question kept the Kremlin from taking strong action against errant officials in the hinterlands. Regional leaders were able to find high-level patrons in Moscow and to play one leader off against another to protect themselves and their own regions. Mzhavanadze was one of the more inde- pendent republic leaders and there was certainly little interference from Moscow in his handling of Mzhavanadze, who loved to drink and hunt, ui himself luxurious private dachas in Tbilisi and in various resort areas in Georgia. He lived in high style. While he allegedly did not engage in corrupt practices himself, he did not prevent others from enriching themselves, with the result that under- Georgian-intelligentsia and was tolerant of Geor- gian nationalism. In public his attitude was re- flected in prideful remarks about the Georgian people; e.g., at the 24th Party Congress in 1971, most regional leaders echoed Brezhnev in extrava- gant praise of the Great Russians, but Mzhavan- adze blithely took the opposite tack, pointing out that the recent Moscow celebration of the 800th anniversary of Georgia's greatest poet, Shota Rustaveli, had shown "enormous respect" for the "ancient and original Georgian culture." Special Report Georgian Night Life While there is no good evidence as to who Mzhavanadze's allies were on the politburo, his frequent references to close ties between the Georgians and the Ukrainians suggest a special relationship to Shelest. Mzhavanadze and Shelest-along with Kebin of Estonia-were the regional leaders who took a dim view of Brezh- nev's efforts to enhance his own authority. Their opposition was reflected in the rather perfunctory references to Brezhnev in their speeches, in con- trast to the lavish praise heaped on the general secretary by his supporters. While there were other reasons, a key factor may well have been the recognition by these regional bosses that any weakening of collective leadership would mean the emergence of a strong leader in the Kremlin who would in turn restrict their freedom to maneuver. Their fears were well founded; Mzhava- nadze and Shelest found themselves isolated at SECRET Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 SECRET 4ft Statue in Moscow of 12th Century Georgian Poet Shota Rustaveli the 24th Party Congress. Their positions were further weakened when Brezhnev emerged with his authority significantly enhanced. The first sign of serious trouble for Mzhavan- adze came with the publication in Pravda on 6 March of a Central Committee decree criticizing the Tbilisi party organization for a wide range of shortcomings, including corruption, improper personnel policies and ideological and nationalist deviations. The appearance of the decree on the day after the anniversary of Stalin's death lent a particularly ominous note to the criticism. Special Report Tbilisi party first secreatry Otar Lolashvili, a close associate of Mzhavanadze, acknowledged the criticism at a meeting on 14 March. Calling for an improvement in cadres work, Lolashvili admitted that "criminals" had turned up as leaders of industrial enterprises and as store man- agers. He also revealed that a Georgian historian named Sidomonidze had come under attack- whether in the central committee decree is not clear-for writing a nationalistic book which claimed that the declaration of Georgian inde- pendence in 1918 was a good thing. In a subse- quent Georgian party decree, a whole group of officials was reprimanded, along with the author, for permitting publication of a book that clearly violated the proper Marxist-Leninist approach to history. Mzhavanadze twisted and turned. On the one hand he attempted to curry favor with Brezh- nev. In a speech in February, before the decree was adopted but when the work of the Tbilisi party unit was under scrutiny in Moscow, Mzhavanadze referred to the "Politburo headed by Brezhnev"--a formulation theretofore used only by Brezhnev's most ardent supporters. Mzhavanadze also toned down the nationalistic bite of his subsequent speeches. On the other hand, Mzhavanadze sought to protect Lolashvili and other subordinates from further attack. He spoke at the 14 March Tbilisi party meeting. Although he argued for tough measures, he pronounced the Tbilisi party organi- zation "healthy" and "capable of coping with any difficulties." At a republic central committee plenum in early April, Mzhavanadze again ex- pressed confidence in Lolashvili, repeating his earlier remark that the Tbilisi leadership was "healthy and able to cope." Mzhavanadze specif- ically praised Lolashvili's earlier speech for showing that he correctly understood how to overcome the shortcomings. Moscow officials evidently thought other- wise and were doubtless looking for more action and less talk. The ax began to fall. In May, city party secretary Nikolay Tskhakaya was removed for "errors" in his work. Tskhakaya was secretary for industry and was probably held responsible SECRET Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 ", SLUKC I loop, for much of the corruption uncovered in Tbilisi. Toward the end of July, Lolashvili was demoted and finally, at the end of September and two weeks after his 70th birthday, Mzhavanadze him- self stepped down. Although TASS reported that he resigned at his own request because of age, he clearly left under a cloud. The praise accorded him on the occasion of his birthday was con- siderably cooler than he had received at the time of his 60th birthday, and the choice of Georgia's MVD chief rather than one of Mzhavanadze's own political cronies to succeed him spoke loudly of Moscow's lack of confidence in his leadership. Since his retirement, Mzhavanadze's reputation has been further damaged by additional disclo- sures of the economic corruption that existed during his tenure. The exclusion of his name from a list of Politburo members who signed an Special Report obituary in Pravda on 19 October suggests that, for all practical purposes, he is no longer con- sidered a member of the top party body. He will almost certainly be formally removed at the next central committee plenum. Shevardnadze and the Georgian Rascals Shevardna ze is 44 and graduated from a pedagogical institute where he majored in history. He was described as erudite, attractive, polite, and unpretentious. In contrast to Mzhava- nadze, Shevardnadze was said to live simply in a modest apartment and to take public transporta- tion to work. He did not engage in drinking bouts with other highly placed officials. 25X1 Shevardnadze earned his reputation by rooting out illegal busi- nesses in Georgia. He was known particularly for his long struggle with underground operator Otar - 5 - 15 December 1972 SECRET Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 SECRET Lazishvili, described as one of the most powerful and wealthy of the Georgian millionaires. C Lazishvili was a phenomenon which could only appear under the Soviet system and then only in the specific conditions of Geor- Lazishvili reportedly began his career a a river who distributed illegal goods to stores. Thanks to enormous energy and talent, he became one of the richest people in Georgia with a far-flung network of underground factories. In the factories he manufactured a variety of consumer goods which brought in large sums of money. Lazishvili allegedly exercised enormous power, and it was widely believed that he could Special Report name and remove secretaries of the Tbilisi city party committee and even secretaries of the Geor- gian central committee, some of whom were re- ported to be his henchmen. The first clashes between Lazishvili and Shevardnadze apparently came when the latter was head of the Georgian Komsomol (1957-61), or shortly thereafter when he was Tbilisi district party secretary. It was claimed that many illegal enterprises were concentrated in his district and that Shevardnadze set himself the task of rooting them out. In so doing he incurred the wrath of Lazishvili, who succeeded in having him transferred to a less important post. Pub- lished Soviet data on Shevardnadze's career do not quite jibe with this story, but it is evident that he did suffer a setback at about that time. He was dropped from the Georgian central com- mittee in 1964 and was not re-elected until 1966, after he had been appointed MVD chief. 25X1 25X1 Politburo member Aleksandr 25X1 Shelepin. as still head of the all-union 25X1 Komsomol in 1957 when Shevardnadze was head of the Georgian Komsomol and thus was ac- quainted with him. During one of Shelepin's trips to Georgia, perhaps in early 1965, he reportedly remarked at a meeting that he did not see among those present "that remarkable lad, Shevard- nadze." Possibly, these words 25X1 had some effect as Shevardnadze was named head of the Ministry of Public Order, now the MVD, soon thereafter. At this time Shelepin was at the peak of his power and could easily have arranged SECRET Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 SECRET such an appointment. Shevardnadze continued his struggle against underground business and cor- ruption, Mzhavanadze feared Shevar na ze because D files contained enough material to compromise both Mzhavan- adze and his wife. Mzhavanadze was unable to remove Shevardnadze. from the MVD post be- cause the latter had strong support in Moscow. On the other hand, Shelepin was in eclipse by this time and could not have been much help to Shevardnadze. It is also hard to believe that Mzhavanadze was not powerful enou h at least up until 1970, to effect his removal. Shevardnadze began arresting Lazish- vili's cronies. Lazishvili reportedly went raging to Moscow to seek the support of the procurator general of the Soviet Union, Rudenko, with whom he had been on very friendly terms. Rudenko, so the story goes, had learned by then of Lazishvili's fading fortunes and would not receive him. Indeed, Lazishvili's fortunes had faded so far that he was arrested in Rudenko's reception room. The arrest probably came some time in late 1971 or early 1972, and the investigation of the case may have had considerable bearing on the March central committee decree criticizing the Tbilisi party leadership. An article exposing La- zishvili's shady dealings and stating that the Geor- gian was being tried appeared in the Soviet press on 1 March. The article appeared in Trud, She- lepin's trade union newspaper, suggesting She- lepin's continuing support for Shevardnadze. Furthermore, the publication of the article only a few days before the central committee decree on Tbilisi was issued served to focus attention on the aspect of the Georgian problem that was Shevard- nadze's particular forte, crime. It also gave him a personal boost that may have helped him get the Special Report assignment first to replace Lolashvili as Tbilisi party boss in July and then Mzhavanadze as republic party boss in September. The drive against corruption quickened fol- lowing Shevardnadze's elevation to the top job. The most scandalous case so far broke on the pages of Pravda on 19 October, the same day Mzhavanadze's name was omitted from the list of Politburo members. The case involved construc- tion of private dachas on land outside Tbilisi assigned for workers' private plots. According to Pravda, many citizens, including high officials, used phony documents to sign on as workers and, under the pretense of erecting light garden sheds, built luxurious houses, some of baronial dimen- sions. Certain of the housebuilders allegedly used their official positions to divert building materi- als, equipment, and even labor for the construc- tion of the dachas. Among those fired as a result of this scandal were the party secretary and the chairman of the executive committee of the Tbilisi district where the illegal construction occurred, a deputy minis- ter of local industry, the chief of the Transcau- casus gas pipeline administration and numerous lesser fry. SECRET Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 Adw SECRET Further revelations came at the Georgian party plenum held in early November. In his first major speech as party boss, Shevardnadze painted a black picture of conditions in Georgia and laid the blame squarely on Mzhavanadze's doorstep. He charged that a dulling of vigilance and an "atmosphere of liberalism" had permitted corrup- tion to spread among top-level officials with serious economic consequences. Statements at the plenum revealed that Georgia, always at the bottom of the list of republics in terms of economic growth, was lagging more seriously than ever this year. The industrial growth rate for the first nine months fell from 5.8 percent in 1971 to 2.2 percent in 1972. The planned target was 6 percent; the na- tional average was 6.7. Furthermore, Shevard- nadze noted, last year's quotas were fulfilled only because they were reduced by 103 million rubles. Shevardnadze blasted this "alchemy of numbers" and warned that the plan has the force of law. He also complained about the poor quality of con- sumer goods and blamed shortages of fruits and vegetables on profiteering by collective farmers. Other leaders spoke glumly about the Georgian economy. Special Report Ironically, it is possible that Shevardnadze's war against economic crime has been responsible at least in part for the serious lag in economic growth and that at least for the immediate future very little improvement can be expected. underground business is so much an integral part of the republic's economy that many Georgians believe Shevardnadze's Ono enterprise gets involved in illegal production without ful- filling the state plan as a precaution. Even when the necessary materials for meeting the plan are not provided, the director will find a way. Fur- thermore, change in Georgian style would destroy the "material incentive" of everyone from the director down to the workers who receive addi- tional illegal wa es. In addition, the practice of reducing plan targets, which Shevardnadze complained about, clearly reflected the siphoning off of funds and materials to underground businesses. The Trud account of Lazishvili's operation claimed that he obtained material from the Tbilisi synthetic goods factory, which was run by one of his cronies, and that the losses to the factory were covered up by cutting production norms. Thus, official figures on Georgian production do not take into account SECRET Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 v SbUKE I all the goods manufactured and sold on the side. One look at the affluent scene in Tbilisi would suggest that this is true and, as Georgians pri- vately insist, the best quality goods can only be bought "under the table." It would seem that if Shevardnadze and his backers in Moscow are bent on knocking out underground business in Georgia, they must be prepared to accept con- siderable economic dislocation for some time to come. Georgian Nationalism The criticism of Georgian nationalism in the March central committee decree and subsequent public reprimand of historian Sidomonidze sug- gested that Moscow's ire would focus equally on the twin problems of Georgian nationalism and corruption. Since then, little attention has been paid to the problem. Shevardnadze has con- centrated almost exclusively on corruption. He did not even mention the sin of nationalism in his 1 November speech. He did not do so in the one bland article he has contributed to the forth- coming 50th anniversary of the Soviet Union. The anniversary is being used as an occasion for acclaiming the friendship and unity of the Soviet Special Report peoples, concentrating, of course, on the leading role of the Great Russians. Moscow, too, must have found it easier to reach a decision to tackle corruption in Georgia, particularly since it had so obviously gotten out of hand, than to go for the more sensitive and divisive issue of nationalism. Shevardnadze him- self may be deliberately seeking to avoid treading on too many Georgian toes at one time, but there is also reason to believe that he may not be the 100-percent Moscow man in Tbilisi. the Georgians seemed pleased with the choice of Shevardnadze to replace Mzhavanadze, despite the former's con- nections with the police apparatus. In particular they considered him one of their own, since he has spent his entire career in Georgia, whereas Mzhavanadze lived outside the republic until he was named party boss in 1953. If these Georgians are right about Shevardnadze, then his task will be indeed monumental-to root out corruption without attacking the errant nationalism which - 9 - 15 December 1972 SECRET Approved For Release 2008/05/19: CIA-RDP79-00927A009900070001-8 Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8 Secret Secret Approved For Release 2008/05/19: CIA-RDP79-00927AO09900070001-8