WEEKLY SUMMARY
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Collection:
Document Number (FOIA) /ESDN (CREST):
CIA-RDP79-00927A009900070001-8
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Original Classification:
S
Document Page Count:
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Document Creation Date:
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Document Release Date:
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Sequence Number:
1
Case Number:
Publication Date:
December 15, 1972
Content Type:
SUMMARY
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'mSecret
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
State Dept. review completed
Secret
15 December 1972
No. 0400/72
25X1
Copy N2 44
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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
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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
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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.']
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'?.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."
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' -, 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-
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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
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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.
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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-
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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.
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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-
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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
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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
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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
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;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.
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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
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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.
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India/Pakistan: Occupied Territory
'n4,
jr rnasnmlr
7 J///. Vale \
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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.
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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
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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-
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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
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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
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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
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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.
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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
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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-
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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
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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
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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.
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Secret
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
Moscow and the Georgians
Special Report
Secret
N2 46
15 December 1972
No. 0400/72A
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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
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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
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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
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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
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", 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
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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
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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
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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.
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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.
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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
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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
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