WEEKLY SUMMARY

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'`Secret
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
State Dept. review completed
Secret
5 January 1973
No. 0351/73
Copy N2 44
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> WEEKLY SUMMARY, issued every' Friday morning by
Office of Current Intelligence, reports and analyzes signif-
nt developments of the weAk through noon on Thursday.
requently includes material coordinated with or prepared
the Office of Economic Research, the Office of Strategic
earch and the Directorate of Science and Technology.
arcs requiring more comprehensive treatment and there-
u published separately as Special Reports are listed in the
CONTENTS (5January 1973)
1 Chile: A Time for Expedients
3 India: Winter of Discontent
4 Malta- Deadlines and Demands
5 Indochina: Planning for the New Year
9 China: Troubles at Home
10 Korea: Slower Pace This Year
12 Scandinavia: Bombing Yields Political
3-cit-not
1 EC d=aces Trade Issues
:` Portugal: Holding On
MIDDLE EAST
AFRICA
1.4 Cyprus: Five More Years
15 USSR: Aid for Turkey
15 international Oil
16 Egypt: A Bad Start
116 Rhodesia: Smith and the Guerrillas
8 Israel-Syria: Stilt Sparring
1.8 Bangladesh: Dacca Intimidated
WESTERN
HEMISPHERE
20 Dominican Republic: Military Shake-up
21 Nicaragua Tries to Stand Up
22 Argentina: Violent Politics
23 The Hijacking Nettle
SPECIAL
REPORT (Published separately)
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CHILE: A TIME FOR EXPEDIENTS ( 1, 'y
FAs Chileans and their president totted up the
score at year's end, there were plenty of minuses
but also a few pluses. The theme struck by Presi-
dent Allende last week was the need for drastic
economic remedies to defend the people from
shortages and speculation.
Although Allende has warned of impending
austerity before, the realities of Chile's economic
position are now grim. Over the past two years,
the country has been on a consumption spree that
has cost it some $550 million in foreign reserves,
a large part of its material inventories, and a
serious deterioration in both productive capacity
and international credit rating. Nevertheless, Al-
lende will not necessarily get his comeuppance in
the March congressional elections. Many Chileans
are still better off now than before his election,
and Allende should be able to stave off severe
belt-tightening for another two months or so.
Moreover, the election coincides with the peak of
the harvest season. Food will be relatively plenti-
ful, and the annual summer slowdown should
permit some easing of distribution problems.
Since coming to power, Allende has used
economic levers to alter Chile's power structure in
an attempt to make his socialist revolution ir-
reversible. His populist policies, while causing
massive government deficits, excessive consumer
demand, and soaring inflation, have also markedly
eroded the opposition's economic base. Govern-
ment ownership and control, already widespread
in the pre-Allende period, has about doubled in
the past two years and now accounts or at least
one half of national output.
Allende's actions have encountered little ef-
fective resistance except when they have threat-
ened to cut deeply into middle-class interests. The
month-long strike that nearly paralyzed the econ-
omy in October was triggered by independent
truckers and small retail merchants, who were
later joined by professionals and larger entre-
preneurs. Although violence flared intermittently,
Allende was supported by the military, and the
subsequent entry of the military into key cabinet
posts, opposed by Allende's more radical coali-
tion partners, may lessen turmoil in the months
just ahead.
Allende has been able to boost popular sup-
port by granting huge wage increases to public
employees and fostering even larger hikes in the
private sector. With controlled prices, the average
Chilean enjoyed an increase of some 25 percent in
real income in 1971. Last year, wage increases
and bonuses were outpaced by increasing prices.
The shortages common in recent months have,
however, hit hardest at the living standards of the
upper and middle classes. Low-income people
with extra money in their pockets for the first
time probably have not yet begun to worry much
about the lack of things to buy and have been
delighted with the leveling of Chile's old elite.
Sobering realities are, however, coming
closer to home. Prices began to spiral in August,
raising the inflation rate for the year to more than
150 percent, and shortages of essential consumer
goods are widespread. Production in almost every
sector of the economy is stagnant or declining.
Private farm output has been hurt by expropria-
tions, and illegal seizures of farmland have created
fear and frustration throughout the shrinking
private sector. The lack of competent technicians
and managers has seriously hurt output on the
more than 50 percent of Chile's farmland now
controlled by the government. Poor weather,
shortages of seed, fertilizer, and credit have com-
pounded the problem. Because the farms taken
over had provided much of Chile's marketed out-
put, foodstuff deliveries to urban areas have
dropped sharply.
Production from the long-established large
copper mines has declined largely because their
nationalization triggered an exodus of skilled per-
sonnel, both foreign and local. In addition to
inept management, featherbedding, and poor
labor discipline, the mining industry in recent
months has been afflicted with machinery break-
downs and supply bottlenecks.
Allende has already gone much farther than
expected in liquidating Chile's assets to satisfy
consumers at home. He probably can maintain
imports until the election by running net foreign
reserves further into the red and by permitting
commercial arrears to increase. Some emergency
assistance will be forthcoming from Communist
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countries. The Soviets adopted a surprisingly hard
attitude during Allende's recent visit to Moscow,
perhaps in part because it now appears that sup-
port to Santiago cost them $103 million in hard
currency in 1972-about twice the amount re-
portedly agreed upon earlier in the year. The
meager $26 million in foodstuffs now offered by
Moscow contrasts sharply with the $300-500 mil-
lion Allende was seeking.
Communist assistance is not likely to stave
off import cutbacks for very long. These cutbacks
will mainly be in foodstuffs and industrial raw
materials. A continuation of economically reck-
less budget and wage policies in the face of con-
tracting resources would make runaway inflation,
rationing, or some combination of the two in-
evitable.
I he heating up of the campaign for the
legislative elections on 4 March has placed the
three military officers serving in the cabinet in a
few awkward positions. General Prats, the interior
minister, is under special challenge. Both the op-
position and government parties have been loud
in their praise of what they see as the "true" role
of the armed forces, but they differ greatly on
what this role should be. The political parties are
in this way forcing the military into defining
more clearly its position vis-a-vis the government,
an unwelcome task for the officers involved.'
The Christian Democrats took off the gloves
during parliamentary moves to impeach the Com-
munist minister of finance, Orlando Millas, on
charges that he had violated the terms tnat settled
the October protest strike. The Christian Demo-
crats' decision to join the National party in this
venture was prompted by both opportunism and
the desire to see Prats squirming when forced to
defend his Communist colleague. The general
took up the challenge, declaring the charges
"lacked constitutional or legal grounds" and
vigorously defending Millas. The general, unac-
customed to having his word doubted, had to sit
through a wide-ranging attack on his performance
as interior minister by Christian Democratic presi-
dent Fuentealba during a special senate session.
Prats considered that most of the points raised
were irrelevant and remarked icily that he must
have come to the wrong session. Another Chris-
tian Democratic senator's needling of Prats was
dismissed , by the general as "unacceptable in-
s;olence."
Earlier, a National Party newspaper was sus-
pended for three days after comparing General
"rats to "General Insa" (a brand of tire, the
implication being that both were full of air). So
far opposition criticism has only angered Prats; it
may, however, have reinforced the opinion of
many military officers that Congress is an un-
necessary body made up of irresponsible poli-
ticians. Such rough handling could reduce Prats'
reputed desire to try his luck in presidential poli-
fics after retirement2
To make the point once again that Congress
can harass, but not force substantive changes,
President Allende had Millas switch posts with the
minister of economy after the lower house ap-
proved the impeachment motion on 28 Decem-
ber. Millas had just completed drawing up the
1973 budget, and his forced departure from the
Finance Ministry will provide Allende with an-
other argument that the administration's poor
economic showing can be blamed on opposition
obstructionism.!
4-- In spite of opposition fears that Prats has
~oId out to Allende, he continues to be very much
his own man.
lie year-en
promotions an command Changes for the army, 25X1
undoubtedly closely monitored if not determined
by Prats, seem most favorable to officers per-
sonally loyal to the army commander himself. In
elaborating on how he sees the military role in
ciovernment, Prats has stuck to the doctrine that
the military is non-partisan but not always neutral
on particular political issues. The general has told
the Congress he will not allow the country to be
thrust again into the chaos of the October shut-
clown. While this dictum applies to all political
forces, the practical effect is to inhibit the op-
position.
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INDIA: WINTER OF DISCONTENT
The failure of two successive monsoons to
bring enough rain has dealt India an economic
blow of major proportions. The government's
emergency response-the importation of food
grain, the initiation of large-scale relief efforts,
the distribution of food, and the coordination of
the efforts of the central and state gov-
ernments-has generally been well received. There
is real danger, however, that once the immediate
emergency is over, nascent popular discontent
with Prime Minister Gandhi's failure to find a way
__ijout of the nation's long-term economic morass
will gather enough momentum to pose a threat to
her present, near-total control of the body politic.)
Political oratory throughout the six-week
winter session of parliament, which ended last
month, reflected rising popular disenchantment.
The government was scored by members of her
own Congress Party, among others, for failure to
control inflation, to stem student violence, and to
eliminate corruption in both the central and state
governments. Unable to offer satisfactory ex-
planations or to unveil a credible remedial pro-
gram, the government fell back on rhetoric, and
malevolent "outside forces," including the CIA,
were offered as scapegoats. 1
gress al Y.
o
'J While Mrs. Gandhi still manages easily to elect her
people to the party's powerful Working Com-
mittee, the continued intra-party rivalry makes
the Congress a less effective and innovative
policy-making organization. )
l-u iPolitics-not economics-has always been
Mrs. Gandhi's long suit, and in 1972 she devoted
herself to reshaping the Congress Party. In state
elections last March she saw to it that, wherever
possible, only politicians loyal to her were
allowed to run on the party ticket. This resulted
in the election of officers loyal to her, but in
many instances with little personal political
strength. It produced weak state officials who
bucked all major, and many minor, problems
back to the already over-worked prime minister.
Mrs. Gandhi found herself embroiled in messy
and politically damaging local situations, such as
the recent squabbles between groups in the states
of Andhra Pradesh and Assam. As a result, there
has been a lack of authoritative direction on
national issues and factionalism between
moderates and radicals within the C
n P t
On the national level, the political opposi-
tion, until recently cowed by two massive Con-
gress victories at the polls, is stirring. Even the
pro-Moscow Communist Party of India, which
received Congress help during the last election,
has begun to criticize the Gandhi government on
bread-and-butter issues. The Congress, at its
I(j plenary meeting late last month, managed only a
call for implementation of previously approved
policies and a vow to end further pie-in-the-sky
promises, such as Mrs. Gandhi's earlier campaign
pledge to "eliminate poverty." Mrs. Gandhi can
count on a substantial measure of goodwill and
tolerance from among the Indian people, but she
has yet to offer them the kind of economic
11 leadership they demand-a situation which, if un-
corrected, can only hurt her and the gress
Party. F_ rl 25X1
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Prime Minister Mintoff delayed at least tem-
porarily his threatened termination of the base
agreement with Britain by "freezing" the situa-
tion while trying to find a face-saving way out of
his current difficulties. The time for action is
short, however, and the parties involved may be
heading for a showdown this weekend.
In a series of meetings in the last two weeks
with various allied representatives, Mintoff has
several times shifted both his deadlines and his
demands. The one unchanging-and key-con-
dition is that any new agreement provide for the
equivalent of a ten percent surcharge as com-
pensation for losses caused when the pound
sterling was floated. Details, he has implied, can
he worked out later. Mintoff also wants a guar-
antee against any further weakening in sterling.
He has rejected the regular British payment of 3.5
million pounds due on 1 January because the ten
percent surcharge was not included.
Although many Maltese accept the demand
for compensation as legitimate, they nonetheless
hope to avoid termination of the base agreement.
Mintoff has backed down a bit this week, sug-
gesting that he is under pressure from his cabinet
and party to avoid a complete break. Public con-
c_ern doubtless stems from the fact that
Mintoff-by his own admission-has failed to
come up with an alternative to British and allied
money or another way of gainfully employing the
nearly 6,000 workers whose jobs grow out of the
3ritish presence on the island. On 4 January,
Mintoff flew unexpectedly to Libya-the country
ire has implied will be his "safety net" should the
UK withdraw. He may want to determine what
conditions Libya would impose on any aid to
Malta.
few weeks has been erratic. He has responded to
Prime Minister Heath's notes rejecting Maltese
demands with angry outbursts, often hurling
bitter invective at one or more of the allied
ambassadors. At the same time, his formal re-
sponses to Heath have been polite and even con-
ciliatory. Moreover, his addresses both to the
Maltese legislature and to the public have been
i..alm and give the people little reason to fear that
he cannot successfully resolve his differences with
London. Mild support from an influential Cath-
olic Church newspaper, as well as the unwill-
ingness of the opposition Nationalist Party to
challenge the prime minister, has contributed to
the seemingly optimistic outlook of the average
Maltese citizen.
The Italians have taken the lead in trying to
persuade the alli accommodate
Mintoff.
Thelafese
leader has thus far insisted that any additional
payment be in cash, since he interprets grant aid
as "charity."
M i ntoff's inflated perception of Malta's
value may have led him to believe that his de-
mands will be met. If he is operating under such a
premise-as seems likely-he may shortly find
himself locked into a public posture from which
it will be impossible politically to retreat. In such
a situation, he may allow the British to depart
from Malta, knowing full well that the withdrawal
will cause long-term damage to the island's al-
As was the case during the last period of
negotiations, Mintoff's behavior during the past
ready shaky economy.
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ILLEGIB
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ILLEGIB
spectrum. To o
Planning for the New Year
(The Communists may be planning d neW
round of attacks in South Vietnam to coincide,
more or less, with the renewed Paris negotiations.
Reports to this effect are coming in from around
the country. Some indicate the attacks will be in
retaliation for the heavy bombing of North Viet-
nam; others suggest that the Communists hope to
increase anti-war pressure in the US. So far the
fighting countrywide is still light, though there
has been some increase in the action in the central
highlands and northern Quang Tri Province.
Except for northern Military Region 1, the
Communists do not now have either the strength
or the field positions for attacks of the magnitude
of their offensive this past spring. Most of the
enemy's main combat units in fact have reported
recurrent logistics and morale problems over the
past several weeks, and these will probably take
some time to straighten out. Much of the current
rhetoric about increased fighting may indeed be
aimed at bolstering troop morale, which has
flagged in many front-line outfits since the prom-
ised October cease-fire failed to materialize. The
Communists appear to believe that claims of their
own combat readiness offset the adverse effects
of allied military action, such as the recent bomb-
ing in North Vietnam and South Vietnamese
advances in Quang Tri Province.
New Controversy in Saigon
President Thieu's emergency powers expired
last week, but before they did he issued a series of
decrees dealing with defense, finance, and com-
merce. Many of the measures were technical in
nature, but one-a decree stiffening the require-
ments for legal political parties-has stirred up
Saigon political circles. The measure is designed in
part to force greater unity on the heretofore
highly factionalized non-Communist political
forth have to h
)erate legally, parties will hence-
ave chapters containing at least
five percent of registered voters in at least half of
South Vietnam's provinces and municipalities.
Existing parties have three months to meet the
membership requirements; new parties must com-
ply within a year after they begin operating. To
maintain legal status they will also have to win at
least 20 percent of the vote in elections for the
Senate, as well as 20 percent of the seats at stake
in Lower House elections.
Only a few of the country's 26 current legal
parties have any hope of meeting the new criteria.
Many smaller parties will thus be forced either to
go underground or to seek alliances with stronger
parties.
Some independent and opposition political
figures are charging that Thieu's primary objective
is to force everyone to join his Democracy Party,
but the administration appears unworried by the
clamor. One of the President's key political opera-
tives has told US Embassy officers that he expects
shrill protests, but believes that after a period of
agonizing, most significant political elements will
either join the Democracy Party or merge into
one or two opposition parties. Thieu would like
to consolidate anti-Communist forces in time to
face a political struggle with the Communists.
Tho Returns to Paris
Hanoi propaganda treated the renewed
bombing and the hiatus in the Paris talks in a
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fully predictable fashion, and the line on the
cutback in the bombing and Le Duc Tho's
departure for Paris produced no surprises. When
the US stepped up its air attacks, Hanoi con-
derr,ned the bombing, vilified President Nixon,
and asserted its determination to persevere. On
the substance of the negotiations it marked time.
Public pronouncements did little except reiterate
Hanoi's position that basic changes in the agree-
ment of 20 October were not to be considered
and that the US must sign that agreement.
Le Duc Tho is headed for Paris, and Hanoi is
advancing the ritualistic propaganda claim that it
has forced an end to the bombing above the 20th
parallel and has compelled the US to return to the
negotiating table. Pronouncements on the nego-
tiations themselves are fairly free of polemics, but
continue to avoid any detail on the talks. Radio
Hanoi, for instance, in a commentary marking
Tho's departure for Paris, simply praised the
Communists' negotiating record in general terms
and said that further progress in the talks was up
to Washington.
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Peking's Rhetoric Heats Up
The Chinese said nothing officially in the
days following announcement of a resumption of
the talks and the reduction in the bombing, but
Peking clearly welcomed the moves. In the wake
of the resumed bombing and the impasse at the
talks, Peking had signaled a growing concern that
the bombing might imperil a settlement. The first
Chinese reaction was restrained and low-key,
apparently because of Peking's overriding interest
in avoiding damage to Sino-American relations.
The Chinese avoided really harsh criticism of the
Nixon administration, and more importantly, did
not directly link Vietnam with Sino-American ties
even on 21 December when they protested bomb
damage to a Chinese ship in Haiphong harbor.
By the end of December, however, height-
ened Chinese concern about the course of events
in Indochina coincided with the visit to Peking of
the Viet Cong's Madame Binh, and the combina-
tion produced the strongest Chinese language on
the war in over a year. In response to an Ameri-
can journalist's question, Chou En-lai explicitly
linked the bombing to Sino-American relations.
Later, Mao himself received Madame Binh at his
residence-an extraordinary gesture, since his
appearances in previous months had been limited
to infrequent meetings with visiting heads of state
and government. The Chinese also staged a rally
for Madame Binh attended by much of the top
leadership and some 10,000 persons. The rally
was not large by Chinese standards, but it was the
first such demonstration on Vietnam in Peking in
13 months. Chinese rhetoric at the rally and at
two receptions for Madame Binh produced harsh
formulations not heard in Peking for some time.
While Chinese statements during this period,
especially the joint communique at the end of
Madame Binh's visit, edged Peking closer to the
Vietnamese Communists on some key issues, the
statements also implied that there was no change
in Peking's basic view of the situation in Indo-
china, and that the Chinese still strongly favor an
early negotiated settlement. In effect, Peking
embellished the Viet Cong's prestige, strength-
ened its standing with Hanoi, and registered its
concern over the war.
Temperate Reaction From Moscow
Soviet media have handled the de-escalation
of the bombing and the resumption of the talks in
a routine fashion, but the bombing raids in
December did generate a temporary increase in
Moscow's attention to Vietnam. Soviet leaders
condemned the bombing and demanded that the
US immediately sign the cease-fire agreement.
The language was pro forma, the minimum the
Soviets felt they could get away with.
The two-week visit of Truong Chinh, the
second-ranking man in the North Vietnamese
hierarchy, was handled in very low-keyed fashion.
Chinh spent a few days touring the Soviet coun-
tryside after attending the anniversary celebra-
tions and departed on 30 December after only
one publicized meeting with politburo member
Suslov. It is unusual that Chinh did not meet with
either Brezhnev or Kosygin.
To the general observation by Brezhnev on
21 December that the prospects for US-Soviet
relations could be endangered by developments in
Vietnam, Moscow added an indirect warning that
one specific consequence might be a delay in the
party chief's visit to the US. In the London
Evening News of 29 December, Soviet newsman
Victor Louis, a sometime unofficial spokesman
for the Kremlin, stated flatly that a visit to the
US by party leader Brezhnev "was out of the
questio until a Vietnam agreement had been
signed.
Laos: Little to Cheer About
Government leaders greeted the new year
with expressions of hope that the bogged-down
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which the Communists have occupied temporarily
several times in recent years, does not pose a
direct military threat to the government, but it
does strike a politically sensitive nerve and
prompts a quick government reaction. Irregular
units already are moving from Luang Prabang
.toward the road junction, while the dispersed Lao
Army units are being regrouped for a counter-
attack;
Combat in the south was at a low level as
government troops consolidated recent gains and
the Communists reorganized their battered units.
Irregulars on the Bolovens Plateau have cleared
the last enemy units from Route 23 west of
Paksong and the road should soon be opened ned to
traffic for the first time in over a year.
peace talks in Vientiane will yet lead to a settle-
ment of the Laos conflict. In the field, Lao sol-
diers had little to celebrate as the fighting con-
tinued on several major fronts.]
The long anticipated Communist assault
against Bouam Long, which began with light shell-
ings last week, has developed into a full-fledged
siege. Irregular defenders have abandoned several
outlying positions in the face of Communist
ground attacks, falling back to well-fortified
defenses on the base periimeter. Daily shelling by
the Communists has caused few casualties, but
did close the Bouam Long airstrip to all but
helicopter traffic. Heavier fighting is still to
come-only three of the seven North Vietnamese
infantry battalions near Bouam Long have been
committed so far.,!
'To the west, Pathet Lao and dissident neu-
tralist units began the new year by routing a
1,000-man Lao Army force from positions
,around Sala Phou Khoun, astride the only road
link between Vientiane and the royal capital of
Luang Prabang. The loss of Sala Phou Khoun,
LA'QS
'Clear
11 - dove/nment
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Dong
Hone
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CHINA: TROUBLES AT HOME
I [The end of the year in China is a time for
proclaiming past successes and projecting future
;goals, and this week the regime's three major
publications dutifully produced a year-end assess-
ment in the form of a joint editorial. While it
devoted more attention than usual to internal
political affairs, once again the language was
vague and the tone subdued. To add to Peking's
problems, the decline in the 1972 harvest was the
sharpest in over a decade. J'
/Much of the political strain in China today
can be traced to Peking's almost paranoid preoc-
cupation with the campaign to denounce former
Defense Minister Lin Piao. Designated at one time
as Mao Tse-tung's official heir, Lin fell in Sep-
tember 1971 and has subsequently been accused
in not-so-secret party documents of a variety of
sins including a conspiracy to assassinate Chair-
man Mao. Most of China's provincial adminis-
trators are military professionals, and many evi-
dently fear that they may still somehow be
implicated in Lin's alleged coup plot.
"step-by-step" consolidation of the trade unions,
the youth league, and other mass organizations. 1
!Although the New Year editorial was equally
vague about last year's economic performance,
earlier official reports admitted a four-percent
decline in grain production. Output of the most
,"important industrial crops-cotton and oil seeds-
was also down, and the regime is being forced to
make economic adjustments on a scale not
required since the early 1960s. So far, these
adjustments have been limited to moderate
increases in imports of grain, cotton and vegetable
oil, accelerated inter-regional transfers of grain,
and introduction of programs to save and con-
serve grain. Ration levels apparently are being
maintained in most areas, although consumption
is reportedly down in rural areas where food
crops were poor!
' 'The New Year's editorial this year provided
scant consolation for these administrators. It
declared that the campaign against Lin and his
supporters was the primary task facing the nation
in the new year. It said, however, the approach
should be one of "criticism first and rectification
of work style later," a formulation that suggests
some elements in the regime wish to temporize on
a confrontation with local administrators, The
editorial did retain many of the regime's harsh
admonitions directed at these local leaders,
including one sharp criticism directed specifically
against army men who hold civilian positions.
This ambivalent language could be another indica-
tion of a lack of unanimity in Peking.
;onsistent with its projection of only crude oil, electric power, and chemical fertilizer.
limited progress at home, the editorial omits any 'The failure of the editorial to cite specific figures
reference to the convening of a National People's suggests that the increases were less than in the
Congress, the government forum that would sup- previous two years, when industry was recovering
posedly put its imprimatur on the many person- from the dislocations caused by the Cultural
nel and institutional changes wrought by the Revolution. The shortfall last year in industrial
Cultural Revolution. The editorial's exhortations crops will adversely affect light industrial
to strengthen party leadership were routine; in production in 1973, especially the output of cot-
fact, the only specific political task laid down was ton textiles.
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ture, increases in industrial production, according
to the editorial, were paced by gains in steel, coal,
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KOREA: SLOWER PACE THIS YEAR
The two Koreas entered 1973 with newly
reorganized governments ostensibly committed to
unification, but with old antagonisms and
suspicions that dim the prospect. In fact, the
year-old, North-South dialogue may _be slowing
down after the meetings late last year.,;
!It is the South Koreans who have put the
brakes on what had appeared to be rather rapid
progress. After publicly rejecting persistent North
Korean requests for a mutual reduction in arms
and an end to Seoul's anti-Communist legislation'
the South Koreans have privately ruled out for
the present a summit or the expanded political
contacts Pyongyang has been urging. In addition,
President Pak has instructed his principal nego-
tiator to adopt a very gradual approach even to
less sensitiye issues, such as economic and cultural
exchanges.'
:Seoul's caution reflects President Pak's con-
cern that if the talks move too rapidly, some of
South Korea's domestic or international positions
may be placed in jeopardy. In particular, Pak
seems anxious to avoid any agreement which
would undercut the rationale for a continuation
of extensive US military assistance. Pak's attitude
may be influenced by a belief that he can afford
to limit the scope and pace of the talks now that
the constitutional changes, which he claimed were
made necessary by the negotiations, have given
him a mandate for six more years.T
SDespite this lack of enthusiasm in Seoul,
neither side wants to see a breakdown in the talks
at this point, and both have implied that progress
in the negotiations can still be made,; In public
`'statements in the past several weeks, President
Pak has underscored his willingness to move
ahead on issues which will contribute to national
:unifications North Korean spokesman Pak Song-
chol has pointed out that the dialogue is making
"definite progress" and has suggested that
Pyongyang believes further advances can be made
in time?
/Although neither capital anticipates any
major developments, both are sufficiently flexible
to allow limited progress on economic, cultural,
and perhaps humanitarian exchanges. Action on
even these matters is certain to be slow. The next
significant high-level meeting will probably not
occur until February at the earliest.
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Scandinavia
BOMBING YIELDS POLITICAL FALL-OUT
Some Nordic leaders, particularly of the
center-left, are trying to turn pro-Hanoi sentiment
over the bombing of North Vietnam into domes-
tic political gains.-j
In Sweden, where Prime Minister Palme
compared the bombing to Nazi atrocities, Wash-
ington's strong reaction came as a surprise. The
US Embassy in Stockholm has been without an
ambassador since last August, and the Swedes
were informed that the deputy chief of mission
would not return to his post from home leave. It
was also suggested that the new ambassador slated
to replace Hubert de Besche ought not to come to
Washington as scheduled.
Palme countered by spearheading a drive for
signatures on a petition calling for cessation of
the bombing and a quick peace settlement. He
declared that he had no intention of recalling the
Swedish ambassador or delaying the departure of
the ambassador-designate. The other political par-
ties-some of which had been less willing to criti-
cize the US in the past-found it politic to follow
Palme's lead. Even the Swedish Trade Union Con-
federation, which criticized Palme lass: fall for his
flagging economic policies, sided with him and
supported the now aborted Nordic Trade Union
proposal for an all-European boycott of US goods
and shipping.
Palme's Social Democrats face a serious chal-
lenge in elections next September. Recent popu-
larity polls showed them trailing the three
bourgeois opposition parties. Seemingly unable to
reduce inflation and high taxes, the government
will attempt to divert popular attention from
those domestic issues upon which it is vulnerable
for as long as possible
y ;'.Denmark's government, also run by Social
Democrats, reacted strongly at first, but re-
sponded with "unspeakable relief" to the news of
reduced bombing. Nevertheless, the cabinet pro-
posed on 2 January that parliament allocate
$725,000 in "extraordinary aid" to the Red Cross
for use in North Vietnam. While numerous NATO
countries have donated humanitarian aid to both
North and South Vietnam through the Interna-
tional Red Cross, Denmark, along with France, is
among the first to channel government funds
solely to Hanoi. This may strengthen the Danish
leftists, who also advocate defense cults.
fl/ ;The furor over the bombing in Finland is
stibsiding, but the government, always seeking
ways to placate Moscow, seized the excuse to
recognize Hanoi. Helsinki may hope this will help
assuage Soviet displeasure over an eventual
Finnish tie with the European Communities.
Leftists in Iceland condemned the bombing
at a pro-Hanoi rally on 31 December. One Com-
munist minister reiterated his party's call for the
withdrawal of the American-manned Icelandic
Defense Force, which he termed an "occupation
force." The mini-coalition in Norway, which
would like to hold together until elections in the
fall, kept its initial protest mild, though it did join
;tan all-party declaration, similar to the one in
Sweden, calling for a halt in the bombing and an
end to the war.
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SECKE I N11111111-P, .
EC FACES TRADE ISSUES
S,! )Trade policy and preparations for a series of
multilateral trade negotiations under the auspices
of the General Agreement on Tariffs and Trade
(GATT) will be high on the agenda of the newly
enlarged European Community this year. At issue
in some of these talks will be how much com-
pensation is due the GATT partners of the EC as
a consequence both of the inclusion of new mem-
bers in the EC customs union and of the establish-
ment of free-trade agreements with those EFTA
states who have not joined the community. Per-
haps before the end of 1973 a more far-reaching
r0and of talks is scheduled to begin and the US
GATT with the relevant statistical information on
the EC-EFTA arrangements. There is also uneasi-
Hpess in the community over both these earlier sets
of negotiations, however, due to concern that in
them the EC will in effect be called upon to make
concessions that could be used for bargaining
purposes in the later, broader talks-)
/EC preparations for the general trade lib-
eralization round are still in an early stage. At the
working level, the Commission has established a
special committee to study the issues, but con-
sultations with the member states have not yet
hopes that they will result in action to lower begun. The GATT preparatory committee for the
tariff walls still further, start eliminating non-c imultilateral trade negotiations will hold its first
tariff barriers, and reduce agricultural pro- meeting at the end of January in an attempt to
tectionism.' draw up a calendar for the work which must
,,The community's overall attitude on these-
3-issues is aggressively defensive, in part reflecting a
feeling that, taken together, the upcoming nego-
tiations could have the effect-if not the intent-
of undoing the enlarged EC. The French, par-
ticularly defensive, argue that the EC's remaining
tariff protection contributes to its cohesiveness,
that the common agricultural policy is funda-
mental to EC unity, and that there is a need for
strong regional blocs like the EC, if there are ever
to be negotiations between "equals.'"]
/' french views will probably be somewhat
tempered by Britain, West Germany, and other
members with strong interests in trade outside of
Europe. Initially, however, the normal slowness
of community procedures, complicated by prob-
lems of reorganizing work in the new EC Commis-
sion, is likely to create delays that will serve Paris'
recalcitrance.:'
/The community's initial position on the
GATT negotiations over the consequences of EC
enlargement is simply that no compensation to
third countries is required. In the case of Britain,
for example, the EC argues that the increased
protection for agricultural products will be more
', than offset by lower tariffs on industrial items. A
vast community work load has been largely
responsible for the EC's tardiness in providing
precede the actual negotiations. There seems little
doubt that the EC as a whole will be wary of
these preparatory exercises, at least until it is
clearer what authority the US negotiators will get
from Congress. In addition, the EC will not be
very forthcoming on such grinding bilateral issues
as US citrus exports.
PORTUGAL: HOLDING ON
New administrative statutes, which became
effective on 1 January, attest Lisbon's determina-
tion to retain strong control of its overseas ter-
ritories. The statutes will do little to help Portugal
meet pressures for a dialogue with independent
black African states on the future of its African
provinces.)
LThe statutes amplify the "Organic Law for
the Overseas" enacted last April to implement a
1971 constitutional amendment which promised
autonomy in provincial affairs. The subsequent
organic law provided for only limited changes,
and the enabling statutes indicate that the
changes are in fact window dressing.
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Although texts of the statutes for the seven
overseas territories may not be identical, the
statute for Mozambique is probably typical. It
spells out the duties and powers of the governor
general and the provincial government, conferring
on them somewhat more prestige than they
formerly had. Lisbon's ultimate veto power and
political control remain essentially unchanged.
The governor general has been given the rank-but
not the title-of a cabinet minister and will hence.
forth report to the government in Lisbon rather
than to the overseas minister alone. The pro..
vincial legislative and advisory organs have been
expanded and renamed, but the governor general
retains virtually unlimited legislative authority.
He may, if he wishes, delegate some authority to
these bodies.'
Elections to the new legislative bodies are to
be held by 31 March. As in the past, some reD-
CYPRUS: FIVE MORE YEARS
President Makarios has announced that he
will seek re-election on 18 February. Under the
constitution, the archbishop faces an electorate
made up entirely of Greek Cypriots; Turkish
Cypriots simultaneously elect the vice president.
Makarios' election to another five-year term is
.assured, and there is even a possibility that no-
body else will file by 8 February, the official
deadline. This would give him the presidency
without the formality of balloting:
The archbishop's enemies will, nevertheless,
try to discomfit him, since they cannot defeat
him. They may attempt, for example, to force
balloting by putting up a relatively unknown
opponent and then urge large numbers of absten-
tions. They would hope thereby to demonstrate
Makarios' dependence on the island's substantial
pro-Communist vote ilThere is also a chance that
resentatives will be directly elected. The rest will
be chosen by various corporative, special interest
groups, or the governor. New election regulations
are expected to increase participation by African
voters although they will remain a minority:'',
The new statutes are unlikely to satisfy the
provincial administrators who prefer diminished
control from Lisbon. Neither will the statutes
appease foreign critics of Portugal's determination
to retain its overseas possessions. Furthermore,
the failure to provide for any real autonomy in
the future will complicate any effort by Lisbon to
comply with the UN Security Council resolution
of last November. The resolution calls upon
Portugal to negotiate with the "parties con-
cerned" with a view to ending the present armed
confrontation and granting the territories the
right to self determination and independ-
supporters of General Grivas, who see Makarios as
an obstacle to union with Greece, will create
disturbances. There have already been 'minor
shooting and bombing incidents. Security forces
can probably cope with the Grivasites, but there
is a danger that pro-Makarios forces will reply in
kind, building up to a level of violence that would
be worrisome on Cyprus.[
A race for vice president was averted in the
l urkish community when the incumbent, Fazil
Kucuk, announced he would not stand for re-
election, leaving Rauf Denktash as the only
candidate. Denktash has been for some time the
real leader of the Turkish community. He is also
chief Turkish Cypriot negotiator in the inter-
communal talks, which are now largely dormant
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USSR: AID FOR TURKEY , INTERNATIONAL OIL
Poscow's largest foreign aid credit to a non- 7 J l After a year of negotiations, Saudi Arabia
Communist country in 1972 was extended to and Abu Dhabi have initialed an agreement with
Turkey in December, and the loan should a- Western oil companies that provides for participa-
strengthen the USSR's role in Ankara's economic, --~tion in company operations within their borders.
development. Participation was set at 25 percent beginning this
month; by 1 January 1982, it is to reach 51
percent. Although Qatar and Kuwait have delayec25X1
signing similar agreements, they probably will do
so soon .j
Construction of the one-million-ton steel
plant at Iskenderun was begun in 1970; com-
pletion of the first phase is scheduled in 1974.
The new credit will be used to double the plant's
capacity by 1978 and eventually expand it to-
four million tons. Despite the isolated location of
the mill, which will make it a high-cost producer,
it is estimated that it will save Turkey $13 million
in foreign exchange annually. The plant, now
employing some 30,000 Turkish construction
workers, will provide permanent employment for
12-15,000 people when completed.
I'Libya, which has been pursuing its own
vision of participation, has summoned three more
i US oil companies to Tripoli next week for nego-
tiations. The companies believe the Libyans are
prepared to open serious discussions now that an
agreement has been signed with Saudi Arabia and
Abu Dhabi.
Petroleum Company will resume next week, and
74 [Negotiations between Iraq and the Iraq
This largess has done much to improve company officials are hopeful an accord can be
Soviet-Turkish relations, but it has not com- signed this month. The two sides reportedly
pletely dispelled the distrust of the Soviets so reached an agreement in principle last week, but
deeply ingrained in the current generation of at the last minute the Iraqis asked for a delay so
Turkish leaders. While the atmosphere sur- that they could overcome opposition to the agree-
rounding President Podgorny's visit to Turkey last ment by leftists who describe it as capitulation to
April was properly cordial, negotiations over the '~.4the West. As a result of the progress made in the
language of the communique were very tough. negotiations, the company has extended until 31
The constant Soviet push for more consultations,,-) January its moratorium on taking legal action
and visits has had some success, however, and/ i against buyers of oil from its nationalized hold-
reflects the importance Moscow attaches to satis- ings.
factory relations with states on its southern
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EGYPT: A BAD START
President Sadat's concern with domestic
problems in his speech to the nation on 28 De-
cember was appropriately prophetic, preceding by
two days a fresh outbreak: of student unrest. In
his speech, Sadat warned against further religious
feuding and stressed the extent of the freedom
allowed students in Egypt, vowing not to permit:
the polarization of the nation's youth. But
Sadat's tolerance of "real democracy" in his
speech was not meant to imply tolerance of
student agitation; shortly thereafter the Cairc
press announced that a number of students and
other malcontents had been arrested:
The arrests led quickly to renewed demon-
strations. Protests against the arrests began at
Cairo University on 30 December, and spread to
other campuses in the capital and to Alexandria
on 1 January. Demonstrators in the capital on 2
and 3 January attempted unsuccessfully to break
through cordons of police surrounding the
campuses, in order to carry their protest to the
center of Cairo. Reports of up to 120 new arrests
have circulated in Cairo S.
The government initially attempted to
placate the protesters by promising speedy dis-
position of the cases of those arrested and by
giving assurances that student rights would be
protected. This was not enough to defuse the
situation, however, compelling Sadat to suspend
all university classes on 3 January, a week before
the mid-year academic break. The closing of the
schools will probably help restore order, but
further protests are likely before the students are
dispersedJ
Anti-regime sentiment among the students
has never been far below the surface. Unhappiness
over the government's failure to deal forcefully
with preparations for "the battle" is endemic and
the contradiction between promises of greater
freedom and the student arrests fed already ,
serious doubts about the credibility of the Sadat
regime.
The Egyptian President addressed another
troublesome domestic issue in his speech when he
returned to the subject of "the battle" with
Israel. Trying to answer recent domestic criticism
that the nation was not prepared for war, Sadat
announced that he had ordered the cabinet to
prepare for the "outbreak of fighting." He further
decreed the establishment of committees for "war
affairs" in every province and one at the national
level that he himself would supervise. Additional
efforts to enlist the aid of Syria, Libya, and the
other Arab states in "the battle" were promised.
On the diplomatic front, Sadat pledged an "inter-
national move" that would remind the rest of the
world of the responsibilities it bore for Egypt's
current uncomfortable situation.
%Sadat has, of course, spoken in these terms
before; this time, at least, he did not set himself
any potentially embarrassing deadline.
RHODESIA: SMITH AND THE GUERRILLAS
The sharp increase in counter-guerrilla opera-
tions during December reflects in part Prime Min-
ister Smith's fear that recent terrorist raids could
be forerunners of serious insurgency. Smith may
also be seizing the opportunity to dispel com-
placency among his white constituents and rally
flagging support for his attempts to gain inter-
national acceptance for his rebel regime.,
The publicizing of heightened terrorism
began in early December when security authori-
ties reported skirmishes with a guerrilla band near
Rhodesia's northeastern border with Mozambique
and discovery of a sizable arms cache,: Shortly
before Christmas, guerrillas reportedly raided the
homes of two white farmers in the frontier zone
and placed land mines which injured members of
two security patrols. Announced counter-
measures included "a massive counter-terrorist
sweep," extension of compulsory military service
for white youths from 9 to 12 months, and can-
cellation of Christmas leave for all police and
army personnel
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'+'' The government has stressed that the pre-
Christmas raids were the first concerted attacks
on whites since early 1970, that the guerrillas had
"sophisticated" weapons of Communist origin,
and that captured raiders have admitted that they
intended to subvert black Rhodesians.
Although Mozambican guerrillas have greatly
extended the infiltration routes available to their
Rhodesian counterparts, the Rhodesian nation-
alist organizations in Zambia have not sig-
nificantly increased their limited paramilitary
capabilities. Last March, under prodding from the
OAU, the two main organizations-the Zimbabwe
African Peoples Union and Zimbabwe African
(cj jEven more disconcerting, the raiders were National Union-a reed to a joint military com
able to move freely from their bases in Zambia-1j mand.
through Mozambique because a frontier corridor
had been opened by Mozambican guerrillas. Al-
though spokesmen in Salisbury assert that
Rhodesian and Portuguese security forces work
together smoothly, Rhodesian officials have im-
plied deepening doubts of Portuguese capabilities
for suppressing the Front for the Liberation of
Mozambique. Rhodesian pessimism apparently re-
flects the fact that Portuguese 'authorities do not
regard the border with Rhodesia as a high-priority
area.
e uer-
rilla band that tangled with o esian patrols in
late November reportedly was one of four that
had been independently dispatched by the
Zimbabwe African National Union, the smaller of
the two. Presumably, the raiders were hoping that
a few hit-and-run strikes would yield enough
publicity to attract more international support
Smith probably is stressing the terrorist
menace to help hold white Rhodesians to his
strategy for gaining Britain's recognition and end-
ing economic sanctions. Steadfastness, he tells
them, will eventually regain Britain's concurrence
in the settlement negotiated in November 1971,
which London rejected after the Pearce com-
mission concluded that most black Rhodesians
were opposed. Steadfastness, Smith hopes, will
induce "responsible" black spokesmen to approve
the 1971 accord-or a slightly modified version-
which in turn will bring the British around. Ap-
parently Smith also believes that stressing the
grim alternative of mounting terrorism will induce
the right wingers in the ruling Rhodesian Front
Party to swallow whatever concessions must be
made to win over enough black spokesmen.
Focusing on terrorism could, nevertheless,
stir up countercurrents of repression and resist-
ance. For instance, last fall Smith's government
sponsored legislation that requires black
Rhodesians to carry identity cards and tightens
restrictions on their physical mobility. The new
laws were denounced by moderate black leaders,
and the current anti-terrorist campaign may
intensify white sentiment for harsh enforce-
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ISRAEL-SYRIA: STILL SPARRING
The Israeli-Syrian border area heated up as
the New Year approached, after about five weeks
of inactivity. In the last week of December Israeli
aircraft twice bombed army and fedayeen bases in
Syria in reprisal for shellings, mining operations,
and attempted ambushes in the Golan Heights.
On 2 January, a Syrian MIG-21, which was trying
to intercept an Israeli air reconnaissance flight,
crashed when the pilot ejected after being out-
maneuvered and evidently before any shots were
fired.
;-The incidents from the Syrian side-SOME,
fedayeen-inspired and one involving Syrian Army
artillery-have been minor, and none of them
produced any Israeli casualties. Indeed, Da-
mascus' actions appear almost perfunctory. Al-
though Damascus pays lip service to "throwing
the Israeli occupier out" and permits the feda-
yeen to lob an occasional shell, it is unlikely that
the Syrians intend to push the Israelis to the
point where they respond on a major scale!
Meanwhile, the frustration of the fedayeen
at their failure to mount a credible military threat
against the Israelis is forcing the guerrillas more
and more into terrorism. Their latest spectacular,
the 19-hour occupation of the Israeli Embassy in
Bangkok by four Black September terrorists, was
less than a rousing success. Although the guerrillas
did grab the headlines momentarily, they failed to
secure the release of fellow fedayeen held in
Israel, their avowed purpose. The Egyptian am-
bassador in Bangkok interceded to persuade the
guerrillas to turn over their six Israeli hostages in
return for safe passage to Cairo
BANGLADESH: DACCA INTIMIDATED
'The government, with an eye on the current
election campaign, has been reluctant to move
against young leftists who have been attacking US
government installations. During the past two
weeks, mobs of students and other youths, many
of them affiliated with leftist opposition parties,
have seriously damaged USIS centers in three
district capitals and have been demonstrating at
the USIS building in Dacca, part of which they
have occupied. They have been protesting the
resumption of US bombing in Vietnam; they are
also trying to embarrass the ruling Awami League
as campaigning for the parliamentary elections in
March picks up steam.`
The government response has been erratic.
Only on 1 January, after demonstrators report-
edly injured nearly 60 policemen at the USIS
building in Dacca, did the police act resolutely,
:-firing on the mob and killing two students Other-
wise, the government has made little effort to
block or apprehend the marauding youths. The
government has been unresponsive to official US
requests for better protection and has indicated
that it is reluctant to issue any public: expression
Of regret for the damage already done. In fact,
many Awami League leaders even are publicly
claiming that American and Chinese "agents" are
somehow responsible for stepped-up agitation
against the government by student groups and
opposition parties following the New Year's Day
shootings.
:Although the Bangladesh police are poorly
trained and ill equipped, they probably have the
capacity, with the assistance of paramilitary units,
to provide adequate protection for IJS installa-
tions. The government apparently believes that
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est party.
strong action against the protesters could lead to
unmanageable unrest or seriously hurt the Awami
League's election prospects. These fears seem
somewhat exaggerated. Leftist opposition parties
have considerable strength among students and
can generate further anti-government and anti-
American demonstrations, but they probably do
not have enough public backing to pose a serious
threat to the regime. Prime Minister Mujib re-
mains widely revered, and his Awami League,
despite having lost some of its popularity over the
past year, is still the country's largest and strong-
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THE YEMENS: UNITY CLAIMS VICTIM
The uncertain prospect of uniting the two
Yemens has resulted in the downfall of the man
who started it all. Under fire from moderates at
home since he signed the unity agreement with
Yemen (Aden) in October, Muhsin al-Ayni sub-
mitted his resignation as prime minister of Yemen
(Sana) on 15 December; two weeks later he was
replaced by Abdallah al-Hajri, a member of the
three-man ruling Republican Council. Al-Hajri has
opposed many of al-Ayni's policies and looks
with skepticism on the possibilities for unity with
Aden under its current leftist regime.,
Named as al-Hajri's deputy in the cabinet
shuffle was Muhammad Ahmad Numan, son of a
past prime minister and himself a former ambas-
sador to France. Numan will also serve as foreign
minister, taking over that portfolio from al-Ayni.
Two leaders of the Adeni exile community in
Sana also assumed cabinet posts, joining a third
exile leader held over from the previous cabinet.
The presence of these Adenis is probably
intended to give an aura of unity already
Dominican Republic
MILITARY SHAKE-UP
President Balaguer, aiming to prevent key
military subordinates from developing inde-
pendent power bases, has once again shaken up
the top levels of the securiity services. The most
prominent figures involved are Brigadier General
Neit Nivar and his archenemy Major General
Enrique Perez y Perez.(
Nivar was removed on 25 December as chief
of national police and is yet to be reassigned.
Perez y Perez was transferred from the largely
ceremonial position of secretary of state of
interior and police to the more powerful post of,
army chief of staff. The new police chief is Brig-
adier General Jose Cruz Brea, a colorless Perez y
achieved, in the event the Sana-Aden talks break
down.'
Al
-Ayni has long had powerful enemies
among conservative elements who distrust his
leftist inclinations. He has never had a power base
which would enable him to deal effectively with
these oponents, and his recent dealings with
Aden, culminating in the unity agreement, gave
them all the ammunition they needed. Saudi
Arabia's conservative government also sought al-
Ayni's removal.
'Although the new cabinet is already being
criticized as a tool of the Saudis, moderates in
Nana are probably satisfied with the new regime
and particularly with al-Hajri; they will probably
feel reassured that their interests will be better
protected against Aden's leftist machinations.
Pouring salt on al-Ayni's wounds, the government
appointed him "adviser on unity affairs" in an
effort to ensure that, should the talks falter, he
would be around to take the blame, but al-Ayni
Perez supporter who formerly headed the armed
forces intelligence section.
~Nivar reportedly was angered by his removal,
but Balaguer has since announced that Nivar
would receive "an appropriate high position" in
the government. On 29 December, the Dominican
Senate in "emergency session" created the new
cabinet post of secretary of state of the pres-
idency. The incumbent would be directly answer-
able to Balaguer. This makeshift position looks
like a good, safe spot in which to neutralize the
politically ambitious Nivar.
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~As the shock of the earthquake abates and
essential public services are gradually restored,
Nicaraguans are beginning to return to their old
jobs or to find new ones, and a food-for-work
program, now in the planning stage, should en-
courage this trend. One sure sign that normality-
at least as a state of mind-is returning is the
resumption of political sniping by the opposition. 7
r.t ~A transportation bottleneck initially slowed
distribution of relief food shipments, but the
system now appears to be operating smoothly
around Managua, as well as in cities like Leon and
Granada where nearly 200,000 Managuans have
sought refuge.; The medical situation has
improved to the extent that the US Army is
phasing out its medical personnel, leaving the
equipment for use by Nicaraguan and foreign
volunteers.jlNicaraguan technicians have repaired
enough power lines and water mains to restore
services to the fringe areas of the stricken city,
and some 60 to 70 percent of the area's limited
industrial capacity is back at work!
~I r (With the first stage of disaster relief winding
down and attention turning toward plans for
recovery, the opposition is starting to criticize
General Somoza's handling of the emergency. The
Conservative Party has accused the military of
usurping civilian functions, of barring opposition
leaders from participation in the effort, and of
distributing aid on a partisan basis. Somoza, who
feels he has done his best for the country in the
emergency, bitterly resented this criticism. He did
say that he would try to draw the three-man
executive council into the relief operation as
circumstances permit. He also said that the
constituent assembly would soon resume sessions,
thus increasing civilian presence in the govern-
9`7ment'eWith essentials such as food and water now
reaching the needy, criticism is abating, and the
opposition appears to have missed its chance.'
Quake Relief Supplies
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The earthquake alone would have caused heavy-handed response that could lead to
serious dislocations. Coming as it did on the heels cancellation of the elections or at least make a
of a lengthy drought that destroyed a large,;:,j-mockery of the term "free elections." President
portion of the crop, the quake has left Nicaragua Lanusse has reiterated his intention to lift the
in a serious condition that will continue for the state of siege and permit free and open cam-
better part of 1973. Food relief, for example, will paigning. The state of siege will, however, be
be necessary until the September harvest, and the replaced by a presidential order giving the mili-
cost of rebuilding the capital will be a staggering tary wide authority in dealing with subversives.,
^,:---------'- ----"
b
d
'
' I
to
ur
e
economy.
ARGENTINA: VIOLENT POLITICS
Terrorism and politically inspired violence
have risen rapidly and maneuvering for the
coming elections has intensified since Juan Peron
departed for Madrid in mid-December. President
Lanusse has assured the nation, however, that
""nothing and nobody can stop the process of
constitutional normalization."'
The Christmas holidays are normally quiet in
Argentina, but during the Christmas week there
were two assassination attempts (one successful),
a kidnaping, and several minor attacks. The
attempted assassination of a Peronist union
official stemmed directly from the conflict in the
Peronist movement over which faction will
dominate the election slates. The slaying of
Admiral Berisso, on the other hand, appears to
have been motivated by his alleged involvement in
the massacre of imprisoned terrorists last August
The kidnaping of Vicenzo Russo, an executive of
an Argentine subsidiary of ITT, has also been
attributed to terrorists who asked and received
more than $500,000 for his release.
This upsurge in terrorist activity is probably
designed in part to stampede the military into a
in the midst of this surge in violence, Argen-
tine politicians have been scrambling to meet the
2 January deadline for nominating candidates for
all national, provincial, and local posts to be con-
tested in the March elections. Presidential tickets
now seem set with nine parties or coalitions of-
fering candidates. Of the nine, only four seem
capable of pulling the 15 percent: of the vote
necessary to participate in the realignment of
slates for the two-way runoff that seems certain
to be needed on 8 April.'
The Radical Civic Union seems certain to
make it into the second round with Ricardo
Balbin as its candidate. The Peronists, too, are
assured of going at least that far despite the mass
disenchantment with a ticket headed by Hector
Campora. Former welfare minister Francisco
Manrique also seems to stand a good chance of
pulling at least 15 percent of the vote despite
President Lanusse's efforts to drain off his sup-
port with the last-minute nomination of air force
General Ezequiel Martinez. The naming of
Leopoldo Bravo, a political leader in San Juan
province, as Martinez' running mate indicates that
Lanusse will continue to try to undercut his
former welfare minister, who is dependent on the
provincial vote. At the moment, Martinez appears
the weakest of the four candidates given a chance
of making it into the runoff, but Lanusse may
still be able to channel enough funds and support
to his man to make him a serious candi-
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Ifr / cFollowing on the UN General Assembly's
failure to begin meaningful consideration of
measures against terrorism, the legal committee of
the International Civil Aviation Organization
(ICAO) will meet next week in Montreal to seek
progress on the specific problem of hijacking. The
committee will consider ways to enforce the
provisions of anti-hijacking conventions that are
already on the books./
r' > iFhe US has proposed that the discussions
.+ center on the draft it circulated in Washington
last September. That draft calls for a graduated
response against any country that gives refuge to
hijackers, with the.suspension of international air
service being the ultimate sanction. Canada, Italy,
the Netherlands, New Zealand, Nicaragua, and the
United Kingdom have joined the US in'asking the
legal committee to discuss the draft, although
some of these countries are not in total agreement
with it.%
he French-who have opposed the US
proposal from the outset-have come up with an
ingenious diversion. They suggest that those
provisions of The Hague Convention obligating a
state either to extradite a hijacker or to prosecute
him in its own courts be added as an amendment
to the Chicago Convention of 1944, the basic
document governing ICAO. Any member of
ICAO which violated the new amendment could
be expelled from the organization, a step that
would represent "sanctions" of a sort. Paris fears
that stronger provisions would oblige it to take
action against Arab states it has been courting.
The Arab states violently oppose the strong sanc-
tions the US has in mind and have hinted that the
French idea might be more palatable. The Soviet
Union is against the US proposal on grounds that 25X6
international sanctions can be imposed only by
the Security Council. The Soviets might also find
the French idea appealing,)
r ~{ IFaced with these varied approaches, the legal
committee-which concludes its meeting at the
~.- end of January-is not likely to come up with a
,.,generally agreed draft, or even with a draft to
serve as a basis for discussion. If it can produce a
favorable committee report, however, the way
will be cleared for the international conference
scheduled to draw up an anti-hijacking conven-
tion next summer. Even if that conference should
agree to a convention, ratification by the individ-
ual signatory countries would be a drawn-out
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Secret
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
Special Report
Zaire: Shaba Comes Back
Secret
N2 45
5 January 1973
No. 0351/73A
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SIUKI I
IAIDESHABA
back
?
Special Report
5 January 1973
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Less than two weeks after independence, the
new Republic of the Congo was faced with a
cluster of serious problems-its army had mu-
tinied, its European functionaries were leaving,
and its richest province was on the brink of seces-
sion. On 11 July 1960, three days before the
central government broke diplomatic relations
with Brussels, the leader of that province-then
called Katanga-proclaimed its independence and
called for "close economic community" with Bel-
gium. Under Moise Tshombe's direction the seces-
sion lasted 30 months., until UN military opera-
tions forced the breakaway regime to surrender.
Now, almost ten years after the end of that
secession, the province (renamed Shaba, the
Swahili word for copper, in January 1972) has
lived down its past and is well on the way to
being fully integrated into the Republic of Zaire.
The authority of the central government is un-
challenged-although sometimes resented-and is
slowly making itself felt in even the remotest
areas of the region. Domestic and foreign invest-
ment in Shaba's important mining industry has
been rising steadily since 1969. The economic
boom has been lessened somewhat, however, by a
slump in world prices for copper, which provides
the vast bulk of Shaba's (and Zaire's) exports.
AFRICANIZED NAMES
Republic of the Congo . . Republic of Zaire
Leopoldville . . . . . . . . . Kinshasa
Katanga . . . . . . . . . . . . . Shaba
Elizabethville . . . . . . . Lubumbashi
Albertville . . . . . . . . . . . Kalemie
These economic improvements are felt
largely in the mining belt of southern Shaba. The
rest of the province is still suffering from the
disruptions brought on by the secession. Agricul-
tural production is expanding only slowly, trans-
portation and communications facilities continue
to rust away, and social services are virtually
non-existent. Survivors of the Simba revolt in
1964 .have turned to petty banditry and prey on
Special Report
the local populations along Lake Tanganyika,
often in competition with the army troops sent to
weed them out.
From Secession...
This independence is total. May God protect independent
Katanga.
Moise Tsho nbe, 11 July 1960
The territory known as Shaba has always
been a special case. Its vast mineral wealth earned
it the status of a semi-autonomous enclave within
the Belgian Congo.?Through a complex system of
holding companies and affiliates, private Belgian
economic interests managed for years to keep
administrative and political control of the area
from falling into the hands of either Brussels or
the colonial government at Leopoldville. In 1933,
however, administrative control passed from the
special provincial vice governor to the bureauc-
racy in Leopoldville. The move provoked a vio-
lent reaction from the area's Europeans who
regarded Leopoldville as the symbol of admin-
istrative "megalomania" and financial irre-
sponsibility.
Belgian and Congolese officials assumed
that, after independence, the new Congolese Gov-
ernment would take control of the Katanga
mining industry, crucial to the Congo's economic
survival. Moise Tshombe and his powerful
Katanga Confederation Party had close ties with
the Belgian economic community and resisted
such a take-over. Katangans-both native and
European-distrusted Prime Minister Patrice
Lumumba and his government and saw ample
evidence of its inability to maintain order. Taking
advantage of the mutiny of the Congo Army, the
breakdown of central authority, and the outbreak
of local disorders, Tshombe on 11 July 1960
raised the flag of secession. Belgium quickly sent
in troops, ostensibly to protect European lives,
but primarily to restore order and ensure the
continuation of economic and administrative ac-
tivities. The Congolese Government, in turn,
requested military assistance frorn the United
Nations to counter Belgium's "aggression." Al-
though Belgium quickly withdrew its troops upon
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the arrival of a UN peace-keeping force, it con-
tinued to give political and material support to
the Tshombe regime.
With support from the United Kingdom and
the Republic of South Africa as well, the
Tshombe government was able to maintain politi-
cal control and, above all, continue mining opera-
tions. Although the provincial government was
"Africanized," Belgian technical assistance re-
mained at a high level. Belgian personnel in
Katanga remained at their posts, in sharp contrast
to the mass exodus that took place throughout
the rest of the Congo. With mineral production
and sources of revenue thus intact, the Tshombe
government was able to support extensive tech-
nical and administrative staffs plus a large army
led by foreign mercenaries and Belgian advisers.
While things were fairly settled in the mining
belt, unrest flared elsewhere in Katanga. For
example, the Tshombe regime was unable to sup-
press a large-scale revolt by the Baluba in North
Katanga. In response, mercenary-led Katangan
gendarmes carried out a reign of terror from
which the area has not fully recovered. In the
South, Tshombe carried out a ruthless and sys-
tematic purge of all political opposition.
...to Integration
We are ready to proclaim before the world that the
Katanga secession is ended.
Moise Tshombe, 14 January 1963
The Tshombe government finally collapsed
in January 1963, following a series of highly
successful military operations by the central gov-
ernment and the UN. Faced with an imminent
march on Elizabethville, the provincial capital,
Tshombe struck his colors and shortly thereafter
went into temporary exile in Spain. A smooth
reintegration of the province into the republic
was held back by mutual suspicion and bitterness
between Leopoldville and Katanga. The central
government, under the leadership of Prime Min-
ister Cyrille Adoula, feared that Tshombe would
be able to rally his supporters and make a new bid
for power.
Special Report
Even the return of Tshombe in the summer
of 1964 for a brief sojourn as prime minister at
President Kasavubu's request did little to lift the
pressure against Katanga. Tshombe, realizing that
his presence in Leopoldville provoked fears of a
"Katangan take-over" among old-line Congolese
politicians, bent over backwards not to show any
favoritism toward his home province. He called
for national unity and stated repeatedly that
secession was a thing of the past. Tshombe not-
withstanding, Congolese officials, bureaucrats,
and the army were more intent on revenge than
rehabilitation. With the exception of the southern
mining belt, the province was virtually ignored.
Katangans were treated as pariahs; local politi-
cians were jailed or kept under preventive deten-
tion. Central government officials and military
personnel assigned to Katanga were given free rein
to run the province, and the government closed
its eyes to their excesses.
President Mobutu's seizure of power in No-
vember 1965 did little at first to change the
situation. Then a gradual shift in the central gov-
ernment's attitude toward Katanga began. The
turning point came in 1967 when Mobutu com-
aleted his nationalization of the Belgian copper
mines, and Katangans refused, to the evident sur-
prise and delight of the central government, to
support an abortive invasion by foreign mer-
cenaries from Angola.
Moreover, in 1967 President Mobutu estab-
lished a countrywide official political party, the
Popular Movement of the Revolution. This act
brought to an end his two-year moratorium on
political activity which he regarded as having been
at the heart of the Congo's instability. The party,
besides being designed to bolster Mobutu's
authority, served also to absorb former political
leaders, including those from Katanga, who were
considered to be ready for rehabilitation. Katanga
got its fair share of appointments to the party's
political bureau and regional organizations.
The national election campaign in late 1970
gave the central government, through the party,
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SEUKE I
Republic of Zaire
Kisangani
0
BBurun
BUJUMI
t,Kigoma
Tanzania
Special Report
Peoples Republic
of the
Congo
BRAZZAVILLE
Kindu-Port-
Empain
S haba
(form+erty Katanq. at
Copperbelt
--
~ Lubumb ash. _
5 January 1973
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its first major opportunity to reach rural Congo-
lese, many of whom had only minimal contact
with the government since the collapse of the
Belgian administrative system in 1960. In
Katanga, as well as other regions of the country,
party officials stumped the countryside seeking to
instill a degree of political consciousness in a
heretofore largely apathetic population. Although
Mobutu and the party-approved regional slate for
the national legislature ran unopposed, a heavy
voter turnout pointed to a new-found party
ability to mobilize people, if nothing else.
Since then, the party has concentrated on
swallowing up the village and tribal structures
that provided governmental services during the
secession and its aftermath, and on transferring
regional and tribal alliances to the central govern-
ment. Success has been uneven, because tribal
loyalties are strong and the central government is
viewed with deep suspicion. Nevertheless, the gov-
ernment has enjoyed a measure of success in
enlisting the support of tribal chiefs, even those
who once supported the secession. The govern-
ment has even managed to line up the brothers of
Moise Tshombe and well-known associates like
Godefroid Munongo, minister of interior and
security chief of the secessionist regime. The
latter was appointed to a government job by
Mobutu in 1971.
The tendency toward regionalism, a major
problem throughout the country's history, has
been weakened now that all important govern-
mental posts throughout the country, and par-
ticularly in the province, are Mobutu appointees.
They are not natives of the region in which they
serve and owe their primary loyalty to Mobutu
and the central government. The capital keeps a
watch for signs of corruption and mismanage-
ment, though the watch is not always kept with
even-handed dedication. The heavy influx of
civilian and military personnel from the central
government, while useful for Mobutu, has also
increased the chances for political clashes. In
early 1972, for example, a three-way political
feud developed among the provincial governor,
the mayor of the capital city, and the area army
commander. The feud gave rise to a tangled snarl
Special Report
of accusations and counter-accusations and even-
tually resulted in the dismissal of the mayor on
grounds of mismanagement and corruption.
Despite the charges, the real reason was that the
mayor came out second best in a personality clash
with the governor.
The governor's victory was not very long
lived. Shortly after the mayor's dismissal, the
governor himself, regarded by Zairian and foreign
observers alike as one of the country's best ad-
ministrators, was recalled to Kinshasa for "grave
failures" in the performance of his duties. In
September 1972 he was sentenced to a one-year
prison term for "anti-revolutionary acts," specifi-
cally for spreading "malicious rumors" about
Guinean President Sekou Toure at a time when
Mobutu was trying to improve Zairian-Guinean
relations. The new governor, taking his cue from
the fate of his predecessor, is keeping his head
down.
As a result of this sequence of events, many
provincial leaders have been left with the uneasy
feeling that the central government, dependent
upon a president who often seems capricious and
intemperate, may not be as stable as it appears. It
certainly makes the central government more dif-
ficult to deal with. Local politicians, for example,
were dumbfounded when Mobutu decided to
change the name of the region in order to "Afri-
canize" it, even though the old name, Katanga, is
as African as the new one. Then, Mobutu's at-
tacks early this year on the Catholic Church,
which inter alia provides the bulk of the prov-
ince's social services outside the mining belt, and
party propaganda that attempts virtually to deify
him add to the uneasiness of local officials. The
feeling is general, but so far has evoked little more
than resigned shrugs; it is not at this time likely to
be translated into active opposition.
Another source of uncertainty is the convic-
tion around that Kinshasa does not keep as tight a
rein on the local army as it does on civilian
officials. This is particularly true along Lake
Tanganyika where survivors of the late 1964
Simba revolt carry on a low scale but irritating
insurgency that is little more than banditry. The
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unrest fostered by these dissident groups has been
increased rather than abated by the abuses of
ill-disciplined Zairian troops sent in to suppress
the bandit rebels. In November 1972, army corn-
mander General Bumba recalled the sector's army
commander and his staff and the commander of
the lake guard to answer charges of exceeding
their authority and mistreating civilians in the
area of Kalemie. The sector commander's prede-
cessor had been relieved of duty on similar
charges five months earlier. Lack of discipline and
a general contempt for civilians have long char-
acterized the ranks of the army, however, and will
not be eradicated by isolated disciplinary actions
like this.
Economic Progress
The economic heart of Shaba is the mining
belt. The belt provides about 80 percent of
Zaire's exports and generates 45 percent of the
Copper Mine
Special Report
central government's revenues? primarily from
copper. At the time of independence, mining in
the belt accounted for 75 percent of Zaire's entire
mineral production. An extensive and well-de-
veloped rail and road network supported the
mining operations, which employed one third of
the province's 1.6 million people. Shaba also had
the largest population of European technicians
and administrators of any province, around
30,000. The industry was valued at $236 million.
Since 1967 President Mobutu has sought to
internationalize and diversify mining operations,
not only as a- means of finding additional capital
but also to offset the pervasive Belgian presence
throughout the industry. The government hopes
that by 1976 domestic and foreign investment in
mining and related activities will reach $1 billion.
The state-owned Gecamines (La Generale
des Carrieres et des Mines du Zaire), established in
1967 to replace the Belgian-owned Union
Miniere, is in the midst of a five-year development
program designed to increase copper production,
which reached 406,000 tons in 1971, by at least
five percent a year. The program calls for an
investment of $100 million to be jointly financed
by Gecamines, the Export-Import Bank, and the
European Investment Bank.
The largest single foreign source of new in-
vestment has been and is Japan. In 1967 President
Mobutu awarded a copper concession to a Japa-
nese consortium led by the Nippon Mining Com-
pany. Operating through its Zairian affiliate,
Sodimiza (Societe de Developpernent Industriel et
Minier du Zaire) the consortium hopes to produce
about 50,000 tons of copper per year from two
sites and is expected to begin work at a third site
in the near future. Total Japanese investment is
likely to reach $200 million by 1975. At present,
Sodimiza employs about 300 Japanese tech-
nicians and administrators, although this number
is expected to decrease gradually as African tech-
nicians are trained.
An international consortium, led by Stand-
ard Oil of Indiana and including British, French,
and Japanese interests, was awarded a concession
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by Gecamines in 1970 and hopes to be producing
at least 150,000 tons of copper a year by 1976.
By that time its total investment is expected to
approach $300 million.
Thus, the once-dominant Belgian presence
has been drastically reduced. Brussels no longer
participates directly in copper mining operations.
Through a highly complex system of interlocking
directorates and subsidiaries, Brussels does op-
erate a number of small affiliates, such as a
manganese mining operation near the Angolan
border. Apart from these affiliates, Belgium no
longer invests in the mining industry, although it
continues to handle the international transporta-
tion and refining of ore from Gecamines. The
30,000 Belgian technicians and administrators
who once made Shaba their private preserve have
been cut to about 1,600.
Development of the mining industry has
spurred development in related areas. Top pri-
ority is being given to the Inga-Shaba power
project designed to meet the increasing power
needs of Shaba's industrial growth. The govern-
ment is studying bids for construction of a
1,000-mile-long transmission line between the
Inga Dam near the mouth of the Congo River and
the Shaba copperbelt. The line is expected to be
completed by 1976 at a cost of $300 million.
General Electric, Westinghouse, and an Anglo-
Belgian firm have expressed interest in the
project. In addition, the government plans to
spend about $100 million expanding and mod-
ernizing the rail system that serves the mining
areas. Japan has proposed construction of a rail
line from Port Francqui to Kinshasa at an esti-
mated cost of $400 million. Completion of the
project would provide a direct rail link between
Shaba and the port of Matadi on the Congo River.
Not surprisingly, the rest of Shaba has been
virtually orphaned by the central government.
Kinshasa prefers to allocate the province's share
of national resources to the mining belt. Agricul-
tural production is rising very slowly. The wide-
spread agricultural network that existed in north-
ern Shaba was largely destroyed during the dis-
orders of the secession and has not been restored.
Special Report
Most of the area remains tied to self-supporting
agriculture and barter economies. Transportation
and communications facilities are slipping down-
hill since the rate of repair does not keep pace
with the rate of decay. At present, the only bright
spots outside the mining belt are a number of
sizable cotton plantations in northern Shaba, and
cattle ranching, which has been growing con-
tinuously since 1967.
In the longer term, Shaba is likely to be
caught between over-development of its mining
industry and under-development of its other re-
sources. Although copper production was ex-
pected to be up slightly last year, revenues were
down sharply because of a decline in copper
prices. Prospects for a resurgence in the world
market do not appear good at the present time
and this colors the economic outlook in Zaire.
Zaire supplies only about six percent of the
world's copper and will face stiff competition as
it tries to increase that percentage.
Already, the government is finding it dif-
ficult to attract foreign investors to set up indus-
trial plants that will draw on the Inga-Shaba
project. Since there is a world surplus in those
minerals like aluminum that Zaire would like to
exploit and since prices for these minerals are
low, potential investors have been reluctant to set
up shop in Shaba. The mining industry is steadily
becoming less and less profitable, but the govern-
ment is doing little to develop alternate sources of
income like agriculture and fishing.
Although the banditry and related arms
smuggling in the Lake Tanganyika area, combined
with the government's failure to maintain military
discipline, has fostered instability in that area, it
is more of a fragmented nuisance than a cohesive
threat, and is not likely to spread beyond its
present limits.
In spite of all these difficulties, there is a
sense of confidence in the future of the mining
belt, both in Kinshasa and Lubumbashi. Kin-
shasa's past indifference to Shaba's needs,
5 January 1973
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SECRET
motivated by a belief that the province had to be
punished for its secessionist transgressions, has
been replaced by a desire to send capable and
reasonable officials and civil servants into the
province. The picture is marred by the occasional
capriciousness of Mobutu or by intra-regional
rivalries, and by a lack of attention to areas in
Shaba outside the copper belt. In this part of
Special Report
Shaba, most of the services normally provided by
governmental agencies have to be supplied by
religious missions, and development, left to local
initiatives and resources, lags badly. Kinshasa is
doing little in the way of building needed schools, 25X1
clinics, and development projects. As a con-
sequence, much of Shaba is left in the position of
5 January 1973
SECRET
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 Approved For Release 2008/08/15: CIA-RDP79-00927A010000030001-9
Secret
Secret
Approved For Release 2008/08/15: CIA-RDP79-00927A010000030001-9
 25X1 Approved For Release 2008/08/15: CIA-RDP79-00927A010000030001-9
Approved For Release 2008/08/15: CIA-RDP79-00927A010000030001-9