WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A010400010001-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 25
• Document Creation Date: December 21, 2016
• Document Release Date: January 9, 2008
• Sequence Number: 1
• Publication Date: July 6, 1973
• Content Type: SUMMARY

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Secret
Weekly Summary
State Dept.
review
completed
Uvw
review(s)
completed.
Secret
6 July 1973
No. 0377/73
Copy N? 1099
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CONTENTS (6 July 1973)
1 Egypt
3 France: Shifting Gears
4 Indochina
5 China: Passing Up a Birthday
G Yugoslavia: Tito's Health
7 Romania: Seeking Arms
7 Bulgaria: Differences with Moscow
8 Iceland: Angling for a Solution
8 The Netherlands: A Chief Resigns
MIDDLE EAST
AFRICA
11 South Asia: Agreement to Talk
12 Nigeria-UK: Friends Again
13 Rhodesia: No Deal
13 Iraq: All in the Family
14 Oman: Winds of Change
15 The Yemens: Trials and Talks
WESTERN
HEMISPHERE
15 Uruguay: Signs of Opposition
16 Chile: A Bizarre Turn
17 Ecuador: Petroleum Policy
13 Brazil: Inflation
19 international: Agriculture; Money
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Jtl;Kt I
EGYPT
Qadhafi in Cairo
I (President Qadhafi's stay in Egypt has done
little, if anything, for the scheduled merger of
Egypt and Libya; instead, it may merely have
solidified positions on both sides. Having flown to
Egypt because of a spat with his colleagues or the
Revolutionary Command Council, Qadhafi has
been treated by President Sadat to a grand tour of
Egypt's political institutions. The tour is
doubtless calculated to expose Qadhafi to dis-
Page 1
senting Egyptian views on his person, his revolu-
tion, and his union.?
2 rThe result has been an exchange of public
criticism and barbed insults which have revealed,
on the one hand, Egyptian reluctance to throw in
wholeheartedly with Qadhafi in September and,
on the other, Qadhafi's disdain for the Egyptian
political systeml[If the Egyptians are not more
reluctant than ever about entering a union with
Qadhafi, they are at least more willing to express
Qadhafi and Sadat
A questioning look
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their reluctance openly. Cairo's insistence on a
gradual approach to union appears to have made
Qadhafi more determined than ever that/ there
must be full merger in September, if not before;
The natural result of all this wrangling is that
no tangible progress has been made toward
implementing the merger. Left unstated in the
wide press coverage being given these exchanges
has been the undoubted controversy over
Qadhafi's role in the new statet!Differences within
Libya's ruling council over the role he and the
other council members should play apparently
helped prompt Qadhafi's abrupt departure from
Libya two weeks ago and,;jalthough this split
seems reparable, the larger Egyptian-Libyan dis-
agreement may not be. Union has begun to ap-
pear an increasingly remote prospect and, al-
though some form of merger may still be pro-
claimed on 1 September, cracks. are likely to
appear even before the plaster dries/
Soviet Treaty in Doubt
}Qadhafi's visit and Egyptian unhappiness'
over the Nixon-Brezhnev summit have led to
speculation in Cairo that the Egyptian-Soviet t
friendship treaty, concluded in May 1971. may be
in jeopardy QQadhafi hinted in a Cairo speech last
week that the treaty should be abrogated if it
does not prove more productive of Soviet assist-
ance to Egypt.)There have been indications that,
under the merger, treaties affecting one party will
be subject to review and possible veto by the
other party{'
lCairo, which would not bow to Qadhafi on
such an issue, has its own reasons for dissatisfac-
tion with the Soviets. Long unhappy with what it
considers an inadequate level of Soviet assistance,
Cairo has recently shown its concern that US-
Soviet detente is pulling the USSR still further
away from full political and military backing for
the Egyptian cause. Cairo columnists have, since
the conclusion of the Nixon-Brezhnev summit,
noted that the new era of detente demands some
Egyptian move ag inst the USSR and specifically
against the treaty.f
/ ( Other journalists have counseled modera-
tion, and the issue is surely under debate in
Egyptian Government circles. A decision to
renounce the treaty would not be taken easily;
whatever gains might result in terms of popularity
among the Egyptian people or with Libya would
not offset the damage to Egypt if the Soviets
reacted by reducing their aid. Cairo may calculate
that Soviet interest in maintaining good relations
with the Arab world would preclude any major
cuts./
(Cairo has other problems. It is attempting to
smooth over a controversy in the Arab world
roused by Foreign Minister Zayyat's "Palestinian
initiative." At the opening session of the UN
Middle East debate on 6 June, Zayyat urged that
the "Palestinian nation" be given the same right
to exist as was accorded Israel in 1947!
I 1His statement has been universally derided
and misunderstoocij The fedayeen have roundly
denounced the initiative as a subversion of their
goal of liberating he entire territory of Palestine,
including Israel/( Jordan is disturbed by the
implication it sees in Zayyat's remarks that its
West Bank is the obvious site of a future inde-
pendent Palestinian stateZ
lCairo is busy explaining what Zayyat meant.
It is trying to persuade the Arabs that Egypt
intended only to enunciate a policy of self-
determination for the Palestinians that would
allow them the right to exist within Palestine on
the basis of any sort of arrangement which they
could work out themselves. Cairo's attempts at
reassur nce probably will not have the desired
effect.
i the message that Egypt hopes to facilitate a
settlement of its problem with Israel by divorcing
itself from the resolution of the Palestinian prob-
lem has been lost on Israel. The Israelis have
registered a firm "no" to Zayyat's state-
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FRANCE: SHIFTIN GEARS,
(Paris is reviewing its positions on a number
of international issues, especially as they involve
relations with and between the super powers.
While there is no evidence at this point that a
significant shift in French policy is impending,
Paris in recent weeks has used a number of fo-
rums to express its concerns and make demands.
These have included President Pompidou's sum-
mit meetings with President Nixon, and with
Heath, Brandt, and Brezhnev. The French have
also spoken out at preparatory talks for those
meetings and in multilateral European gatherings)
-9 \Paris evidently fears that the US and USSR
will, without consulting Europe, make bilateral
arrangements that could be detrimental to French
interests. The French consider that they already
see evidence of such "super power collusion."
The French are concerned that West Germany
may be able to move into a more neutral position
from which it could negotiate in relative inde-
pendence with the two super powers. The success
of Brandt's Ostpolitik-and the consequent dimi-
nution of France's self-appointed role as Western
Europe's interlocutor with the Soviets-appar-
ently stimulated this nirtiri,Iar rnnrprr
Page 3
In a speech to the National Assembly on 19
June, Foreign Minister Jobert added to the specu-
lation that France may be shifting from its past
prefE!rence for the status quo toward support for
the development of new European security ar-
rangements.
ever a ess, a er a rez nev-
ompi ou summit, official French spokesmen
emphasized that US-Soviet agreements would not
affect French plans to continue their independent
defense options and that Pompidou had refused
to reconsider his decision to stay out of the force
reduction talks.
Some of the obscurity in French pronounce-
ments is doubtless deliberate; part of it may come
from a conflict between what the French want
and what they are prepared to concede. Efforts to
strengthen European unity and to promote closer
European defense cooperation in the near term
are likely to be limited by France's own reluc-
tance to dilute its sovereignty. European nuclear
defense cooperation over the longer term is even
more complicated. There is the problem of Ger-
man participation, and Paris' determination that
only a French hand can unleash the French nu-
clear force. The implications of recent US-Soviet
moves seem to have spurred the French to see
what movement is possible within these bound-
aries and to ascertain to what extent their part-
ners will cooperate.
The French approach to Western Europe's
political and economic relations with the US is
not so ambiguous. Paris clearly is trying to prod
the EC into protecting European interests by tak-
ing a strong line in economic and financial talks
with the US and by refusing to lend formal char-
acter to Europe's dialogue with the US. The
French have been skeptical about the "year of
Europe," and Jobert has said that US-EC mul-
tilateral consultations, and an Atlantic summit,
must be preceded by genuine progress growing
out of bilateral talks and talks in forums like
NATO and GATT. The French take a narrow
view of what would constitute orogress in such
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StUKt I
Getting It Straight
Morale problems and "misunderstandings"
over the North Vietnamese party line prompted
4 Hanoi in April to dispatch a ranking Central Com-
i-mittee member to the South. The problems
appear to have arisen because of Hanoi's unwill-
ingness to support renewed major military opera-
tions in the South.
the official sent by Hanoi was the head
o the Central Committee's Propaganda and
Training Section, To Huu. He told assembled
COSVN officials in Tay Ninh Province that be-
cause of the "international situation" and a
"weakening of the war-making potential" on the
Communist side, a large-scale military offensive
could not be attempted for three to five years.
Possibly to assuage concern that this policy
amounted to abandonment of the revolution in
the South, Huu claimed that North Vietnam
would now concentrate on consolidating its
economy, to serve as a "large rear base area for
the South"-a well-worn Hanoi phrase.
He also made some overblown claims about
North Vietnam's intent to provide generous eco-
nomic support. Huu claimed that to match eco-
nomic gains made by Saigon, Hanoi will con-
centrate "all of its economic resources" in sup-
port of the Communists in the South. The North
even plans, with the help of the Japanese Com-
munists, to set up Honda factories and textile
plants in "liberated areas." He asserted that
"three million" North Vietnamese will be
resettled in "liberated areas" by mid-1974, espe-
cially in Binh Long and Tay Ninh provinces just
north of Saigon.
improve the skills, morale, and health of the of-
ficials.
Huu originally
intended to visit only Quang In Province, but
decided to go on to COSVN after arriving in
South Vietnam. This suggests that he found more
serious "misunderstandings" over Hanoi's policy
on the war and on party matters than he antici-
pated. Given the apparent extent of Viet Cong
concern, To Huu's verbal effort probably had
only a limited palliative effect.]
l Both the Thieu government and the Viet
Con have issued new proposals toward a political
7settlement, but neither has altered its basic posi-
tion very much
17 The Thieu government has proposed the
creation of four commissions to consider various
d aspects of the problem and has offered a new
!'timetable for a settlement culminating in general
elections next December. President Thieu report-
edly has ordered Saigon's negotiators to continue
to seek early elections and the withdrawal of
North Vietnamese troops from the South. Thieu
is still stressing the need to present a conciliatory
image in order to place the blame on the Commu-
nists for blocking an agreement.,
if [The Viet Cong are still emphasizing the need
for "democratic freedoms" in South Vietnam and
calling for an early agreement on military issues
and the return of detained personnel. Like
Saigon, the Communists appear to see little in-
centive at the moment for serious bargaining, and
they too are likely to concentrate on cosmetic
modifications that do not alter their basic de-
Huu took the occasion to clarify an article mandsl
by party First Secretary Le Duan early in the
year, which criticized the ineffectiveness of some Fighting More Localized
party officials. Le Duan, in the article, suggested
that some of them would have to be weeded Z _. f Military activity increased slightly early in
out-a suggestion that had no small effect on the week, but most of it was in the few areas still
morale. Huu tried to mitigate the damage by hotly contested by the two sides. The heaviest
claiming that Duan's lecture had been intended to action came in the highlands west of Kontum
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WEEKLY SUMMARY 6 Jul 73
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City, where the government is using heavier artilleri
and air support in an effort to dislodge North Viii--
namese troops from two villages they captured last
month?
Last week, General Toan, the commander
Military Region 2, threatened to attack Communist
installations if the villages were not evacuater_.
Despite an admonition from President Thieu that.
such a move was politically unwise, South ViElt-
namese aircraft this week bombed several Viet Cori:,
airfields in Kontum, including the large field at Dal,
To/
', )The other persistent trouble spot is the deh_;a
province of Chuong Thien. There, both sides seem
determined to expand their areas of control. The
':.fighting has been local, and conflicts of this sor i-
could spread in the months ahead, particularly t,
areas where one side or the other believes it has beer
cheated by an eleventh hour land grab. The patterr
could be broken, however, if, as now seems likely,
Viet Conq truce supervision teams begin to arrive it
the field.;
The Communists have indicated that they are
finally ready to proceed with their staffing of the
Two-Party Joint Military Commission at the grass-
roots level, perhaps within the next few days. Th:
Communists' persistent refusal to put teams in the
field has prevented the Joint Military Commission
from becoming an effective body or dampeninq
local flare-ups. The Communists claim they have
been hampered by the Thieu government's reluc-
tance, at least until recently, to assure either secu-
rity or sustenance for the Viet Cong teams, most o4
which would be based in government-held towns
and villages. It may be that the Viet Cong have been
short on skilled, reliable men who could handle the
complex political give and take required.
Fighting Wears on in Cambodia
~. ; In the continuing game of roadway roulette,
the Khmer Communists this week returned to the
attack along Route 4, Phnom Penh's only link to the
seaport of Kompong Soim, and closed this highway
some 20 miles west of the capital. Almost all of the
available rice in Kompong Som had been trucked to
Phnom Penh before the Communists moved onto
the road/
4 North of the capital the insurgents switched
thei military efforts from Route 5, which was once
again reopened at midweek, to Route 6. Communist
units quickly managed to gain control of almost the
entire 25-mile stretch between the ferry landing on
the Tonle Sap River and the crossroads town of
Skoun. A government counter-attack along Route 6
may be delayed until reinforcements can be released
from security duty along Route 5 and from clearinc
operations closer to Phnom Penh.
Passing Up a Birthday
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Holidays have become humdrum affairs since
the death of heir apparent Lin Piao, but none has
suffered so greatly as the party anniversary. The
mass rallies and parades of old have generally given
way to small affairs in the parks, but even this
concession to gaiety has been omitted from the
party anniversary for the past two years.
The leadership has shown that, despite its dif-
ferences, it can produce some sort of innocuous
statement if need be. There was no joint editorial
when the party turned 52 on 1 July, leaving party
officials throughout the country still waiting for
guidance on a host of knotty problems. The rehabili-
tation of purged officials is antagonizing those al-
ready ii place; the drive to promote young people
into the leadership ranks is alienating the veterans;
the political role of the military-thrust into power
by the Cultural Revolution-is still a question mark;
and the endless criticism of Lin Piao is causing
confusion and apprehension.
The party is not yet completely rebuilt after
the wreckage of the Cultural Revolution. Recon-
struction continues at lower levels, but party leaders
at the top have yet to untangle the various ramifica-
tions of the Lin Piao affair. A top item on the
agenda is the need to erase the embarrassment of the
Ninth Party Congress in April 1969. This congress
elected Lin the party's sole vice-chairman and des-
ignated him Mao's successor. A new party constitu-
tion and the selection of new politburo and central
committee members are also high on the list. Faced
with these problems, the leadership has had little
inclination to celebrate the party birthday. F_ ~ 25X1
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Tito Ailing...
-`,)-trhere are new protocol regulations in Bel-
grade that relieve Tito of many exhausting cer-
emonial responsibilities. Under the new system,
Tito will receive only visiting chiefs of state, and
they are asked to visit him at his "current place of
residence." He will host luncheons, but from now
Page 6
on his vice president will take his place at lengthy
evening receptions. The vice president will meet
and see off visiting dignitaries and accompany
them on any travels inside Yugoslavia. Further-
more, there are suggestions that Tito may dele-
gate more authority over the substantive aspects
of state visits.?
\This reduction in Tito's activities was fore-
cast two months ago in a speech by Stane Dolanc,
his heir-apparent in the party. There had been
signs that Tito was divesting himself of some
presidential duties earlier in the year. He is 81
years old now and is leaving most of the routine
party and state business to younger men.!
Romanian President Ceausescu and Yugoslav
President Tito will meet in Belgrade in mid-July
for the seventh time since August 1968 when
they stood together in opposition to the Soviet
invasion of Czechoslovakia. This time, Tito and
Ceausescu will wish to discuss their respective
strategies for the European security talks.
squeeze on Yugoslav investment resources and
help open a port that would provide an Adriatic
The benefits of close cooperation between
the two men were highlighted last week by the
announcement that Romania is negotiating a
credit for the development of port facilities at
Bar; in southern Yugoslavia. The Yugoslavs have
had problems financing the project-which in-
cludes a railway from Belgrade to Bar through
inaccessible areas of Montenegro and Serbia to
Belgrade. The Romanian credit would lighten the25X1
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SEUKE I
ROMANIA: SEEKING ARMS
,Spurred by haggling over prices and types of
military equipment from the Soviet Union,
Romania is stepping up its efforts to buy a variety
of non-Soviet weapons. Bucharest has been mov-
ing along this road for some time and has sought
arms from a variety of non-Soviet sources; most
recently, it has considered buying arms from the
Chinese and Austrians..
s (~ IThe Romanian chief of staff, Colonel Gen-
0 discussed arms pro-
eral Ion Gheorghe
,
curement during his visit to China in late June.
n )The fact that he met with a number of Chinese
naval officials may indicate the type of equip-
ment sought. Earlier in June, Gheorghe visited
Austria, where he showed a keen interest in ar-
mored cars and tanks. Bucharest is additionally
negotiating with several Western firms for joint
production of helicopters. Ostensibly for civilian
use, the craft could be used in military or military
support roles?
i 7 (Romania has undertaken a significant ven-
ture in arms production with Yugoslavia. The
Y prototype of a jointly produced, lightly armed
fighter-trainer is scheduled for test flights in early
1974. The plane uses a Rolls Royce engine, and
bids are being taken from a number of British and
French firms for component parts. Bucharest and
Belgrade are slated to take 100 planes each, with
3(' [The Romanians are gambling that Soviet
interest in European detente will enable them to
slip out from under Moscow's thumb for a good
portion of their arms needs. Bucharest is seeking
I some of these arms from neutral states in an
obvious effort to soften a negative Soviet re-
action. President Ceausescu further attempted to
minimize Soviet suspicion in a speech on 30 May,
when he assured Moscow that Romania intends to
continue ettin most of its arms from the
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Y17 :The Bulgarians in two recent articles in an
official journal indulged themselves in some mild, 25X1
but most unusual, criticism of the Soviets. The
articles registered Sofia's unhappiness with CEMA
integration and the requirement on Bulgaria to
contribute to the development' of Soviet paper,
steel, gas and other industries. The Bulgarians are
annoyed over lack of coordination, complaining
that extractive enterprises built in a "resource-
rich country"-i.e., the Soviet Union-with for-
eign financial aid, should have "common produc-
tion and realization of production goals." Mild as
it is, this criticism is noteworthy since in Bulgar-
ian eyes the Soviet Union can normally do no
wrong.
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Some NATO members are taking steps that
could eventually lead to a temporary settlement
in the Cod War between Iceland and the UK.
Their actions probably stem from Iceland's de-
mand to renegotiate the base treaty within six
months. Until the fishing dispute is resolved, little
progress can be expected in negotiations on reten-
tion of the base at Keflavik.
, (o [The UK's refusal to withdraw its warships
from inside the 50-mile limit is the immediate
obstacle in the fishing dispute. London may be
feeling a bit isolated from its NATO colleagues,
some of whom have taken measures to resolve
their own fishing differences with Iceland. Nor-
way, for example, has concluded technical level
negotiations for an interim fishing agreement. If
the Icelandic cabinet can overcome the objections
of the Communist minister, Norway will become
the second NATO country, after Belgium, to have
such an agreement/
05 (West Germany, which has been allied with
the UK in continuing to fish in the disputed area,
resumed fishing negotiations on 29 June. No
agreement was reached, but the Icelandic negotia-
tors reportedly discussed allowing the Germans to
fish to within approximately 30 miles of shore-
an unexpected concession that may encourage the
Germans to break ranks with the British. The
atmosphere was further warmed when it was an-
nounced that Chancellor Brandt plans to visit
Iceland next month, a move welcomed by the
Icelandic foreign ministe]
The Norwegian agreement may enable Oslo
to pay a role in mediation efforts, despite a
previous rejection of Norwegian good offices by
both London and Reykjavik. If the Germans con-
clude an agreement, the British might be per-
suaded to withdraw their ships, a gesture that
almost certainly would result in resumption of
negotiations and possibly a temporary settlement.
All of this would take most of the summer to
accomplish if it is ever accomplished. The base
negotiations promise to be difficult at best unless
supporters of the base can show that NATO mem-
bership was instrumental in an eventual resolution
of the fishing dispute and that the US-manned
THE NETHERLANDS: A CHIEF RESIGNS
The chairman of the Joint Chiefs of Staff,
Army General Willem van Rijn, last week resigned
in protest against the defense policies and pro-
grams of the new left-center government. Van
Rijn, who will apparently step down on 1 Octo-
ber, said he no longer wants to be associated with
policies that would weaken the national defense
capability., I
A The resignation is dramatic evidence of the
opposition in the Defense Ministry and the upper
echelons of the armed forces to the defense plans
of the Labor Party and its leftist allies. Defense
Minister Vredeling is playing down the affair, but
he is well aware that the Labor Party's proposals
to eliminate the Dutch air force and delay force
modernizations are causing consternation among
career government officials, civilian as well as
military. The divergence of opinion between Vre-
deling and the civil servants under him may well
widen if the pace of East-West negotiations quick-
ens 1:
:!Y (More important, the stability of the fragile
government is likely to be affected by the resigna-
tion. Several Catholic and Protestant politicians in
the coalition share van Rijn's concern and may be
unwilling to tolerate the leadership of a prime
minister who wants to lower defense spending.
The matter could come to a head during debates
on the defense budget this fall. The Catholic
People's Party helped defeat two pieces of minor
legislation just before parliament adjourned for
the summer, apparently to increase the party's
leverage in the coming test of wills.
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Aircraft Production
FRANCE IN FRONT
The US aside, non-Communist countries
produced 2,840 military and civil aircraft in
1972, down slightly from 1971. About -.300
were military aircraft; by comparison, the US
alone produced about 2,100 aircraft for mi itarv
purposes n 1972. France procuceri 1.145 aircraft
and was the largest non-Communist producer,
except, of course, for the US. France led n all
categories except trainers and transmits.
Fighter aircraft production macned 435 of
which 180 were produced by France. The French
total was more than three times as large as any of
the other seven producing countries. France, the
UK, and Sweden are the only countries oroducinq
domestically designed fighter airframes, and only
France and the UK design their own fighter
engines. Fighters produced by Fren_e in 1972
included the Mirage III, Mirage 5, V ram F1, and
.Jaguar. The UK produced the Hamer an aircraft
that can take off and land verticaliv, anc; the
.Jaguar. Sweden built the Draken and the Viclgen.
Production of the Draken, however, t-as virtialiv
ended, and the Viggen probably will be produced
c,nly in limited numbers.
Helicopter production for 1972 stood at
685. more than 300 of which were uroduced by
France. The remainder was divided among six
ether producinq countries. France, which
produces a wide variety of helicopters, ha, be-
come the prime competitor to the US in ooth
export sales and sale of licensed-production rights
for helicopters.
The other types of aircraft produced in 1972
included transports, anti-submarine warfare air-
craft, trainers, and general utility aircraft. General
utility aircraft were the largest single category,
and production reached 1,220 planes, almost half
o' which were produced by France. Only 265
transports were produced in 1972-about 35 per-
cent by the UK, 20 percent by France, and 15
percent by the Netherlands.
The position of France among aircraft pro-
ducers is due not only to its high output, but to
its continued involvement in advanced design pro-
jects. Orders for French military aircraft fell
sharply during 1972; this reduced level may con-
tinue until sales of new models increase. The
French have been trying to reorient their aircraft
industry from its heavy dependence on military
production-about 60 percent. A number of civil-
ian projects are under way, and prototype aircraft
are undergoing flight tests.
Italy was a distant second to France. The
tr itish position in third place is being threatened
by West Germany. Over the longer term, the
outlook for the British aircraft industry is bleak,
but Italy probably can maintain production levels
because of its involvement in multinational gro-
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SOUTH ASIA: AGREEMENT TO TALK
+1 [India and Pakistan have agreed to hold h ch-
level political talks, but so far have not agreed _)n
either the time or the place. No such discussions
have occurred for almost a year, although military
leaders of the two countries met last December to
negotiate a new cease-fire line in Kashmir.(
`j Islamabad proposed talks as far back as
April, following an offer by India and Bangladesh
for a package deal, which involved the release of
Pakistani prisoners of war not slated to be tri,,d
for war crimes and an exchange of Bengalees in
Pakistan for Biharis in Bangladesh. The India,-is
were uncertain that: the Pakistanis were willinc io
discuss all elements of the Indo-Bangladesh pro-
posal, however, and demanded Pakistani accept-
ance of the package "in principle" as a precordi-
tion for talks. A standoff resulted, and difficulties
increased in May
5_5 )Last month, the Indians dropped their de-
mand for prior acceptance of the Indo-Bangladesh
r" package. The Pakistanis replied that they were
(,willing to discuss all elements of the proposal
anyway and suggested talks begin in Pakistan on 9
July. The Indians have now suggested 16 July n
j New Delhi. They are aware that President Bhui:io
and his top foreign policy advisers will be n
Washington at that time and may be seeking to
postpone talks until late July or early August]
y ? )The delay would give New Delhi more tirre
to try to modify Dacca's position on the issues. f
the discussions are held in India it will be eas er
for New Delhi to consult with the Bengalees, who
will not be represented in the talks. Most Inco-
Pakistani issues have been shelved, and the mee_-
ings are likely to focus on these issues between
Dacca and Islamabad:?
? Islamabad insists that the 90,000 Pakis-
tani prisoners of war in India be repatriated
immediately; Dacca refuses to agree to their
Page 11
being set free by India without progress on
other issues.
? Dacca insists that 195 Pakistanis be tried
for war crimes; Islamabad denies that Dacca
has the right to hold such trials and threatens
to try detained Bengalees for treason in retali-
ation.
? Dacca insists that Pakistan take a quarter
million Biharis; Islamabad, which does not
want these non-Bengalee Muslims, says that
Bangladesh has no right to expel them. Never-
theless, the Pakistanis privately accept respon-
sibility for some-perhaps 10-20,000-and an
agreed number probably could eventually be
negotiated.
Dacca insists that about 150,000 Ben-
galees in Pakistan must be allowed to return
to Bangladesh; Islamabad won't let them go
until the prisoner-of-war issue is resolved.
-, Dacca demands recognition as a precon-
dition for bilateral talks with Islamabad, but
did not make recognition part of the April
proposal; President Bhutto has said many
times that Islamabad should grant recogni-
tion, but he has been unwilling to take the
step without some concessions by Dacca. =
I) JFor the proposed new talks to make signifi-
cant progress, either Pakistan will have to soften
its position, or New Delhi will have to put more
pressure on Dacca. As of now there is no evidence
that Bhutto has modified his apparent belief that
any concessions could cause him political prob-
lems at home. Nor is there any sign that New
Delhi has become more willing or able to change
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at~eneral Gowon's trip to the UK, last month
s the latest manifestation of the improved atmos-
_)here between the two countriesABoth Lagos and
London regard the state visit--Cowon's first out-
side Africa since he came to power in 1966- as a
great successr
he good relations that existed through the
first six years of Nigeria's independence began to
break down during the civil war beginninc; in
4.967. The UK hesitated to ?Aupoort Lagos against
the secessionist Biafrans as firmly as (-D'c)won arid
his military government wished. The Nigerians
were )articularly displeased with London's refusal
to supply the sort of military equipment they
wanted. Strains continued after the war when
Gowan adopted a strong African nationalist line
on southern Africa and began to push hard for
indigenous control of Nigeria's British-dominated
+~con()mv .i
- relations began to iii pr ova I,is year aster
he UK rejected a proposed settlement watt its
breakaway colony of Rhodesia. Lag,-)-. had viewed
-he i:roposal as a sellout of the black t-thodesian
major ity/iC)n the eve of Gowon's visit to London,
!Nigeria signed a more favorable participation
,iqreernent w!th Shell-BP. Nigaria's largest pro-
)ucer, tnan the British had expected Lagos also
moved the ban on British iournalrUs that had
r~en, imoosec after reports e titical ,r Nigeria had
apoe.ireo in the British press. i
O VO1I
rtosno play ups new rule pis _hairman of
the i)AU. His ejection to this posy May 7.ym-
iOIiied Nigeria's importance on the (_,~ntir7cut amu
a::owon ernergence as are ir fiuenriai Atrican./
Low-_)n con irrued that Nigeria',, negatrde stan, I on
'Afrir an association with the LC leas softened
Tightly. Lagos still opposes association Tor J4'-
geria put will take part 'n talks i.,etween the
';frir ins arid LC representatwei later ni: ricnth.
Prior to tnis meetinq. Lagos rwi i fu) A in t.itiU
Queen Elizabeth and General Gowon
1 T I n sterial conference or present and prospective
African EC associates in order to seek a common
positi un toward the EC(
1C,owon clearly desires to maintain close rela-
tic-ns with the UK, still Nigeria's most important
supporter in the fields of defense, foreign trade,
pr_vate investment, and technical assistance. Areas
of d sagreement will nevertheless persist as
Uowon citlisues an assertive African nationalist
pclIcy.
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RHODESIA: NO DEAL
%,`(Several senior officials from the foreign
office in London paid a quiet visit to Salisbury
last week, raising hopes for a settlement of the
dispute between the two capitals. Subsequent.
statements from both sides quickly scotched
these hopes. After the officials returned, Foreign
Secretary Douglas-Home told Parliament thai
they had found no basis for a compromise be
tween the Smith government and the black
African National Council.
JSmith's response in the Rhodesian Parlia-
ment to Home's statement expressed indignation
at British insistence that any constitutional settle-
ment must be approved by the council. According
to Smith, the council's demands include imme-
diate parity of black and white representatives in
the Rhodesian Parliament, integration of schools,,
,and amnesty for black nationalists who have
`committed terrorist acts. Although the contacts
that took place between the British envoys and
council leaders during the visit have not been
publicized )Smith implied that such unacceptable
demands amount to British
blacks.
IRAQ: ALL IN THE FAMILY
// mr.J:o
Violence has been a conin featuJof Iraqi
politics ever since the military killed several
members of the royal family when seizing power
in 1958. The assassination last weekend of Gen-
eral Hammad Shihab, the defense minister, and
the wounding of General Saadoun Ghaydan, the
interior minister, were the latest examples. The
immediate cause this time was the long-standing
power struggle between factions of the ruling
socialist Baath Party. There is no evidence of
external involvement.
According to Baghdad radio, which has
labelec' the episode an abortive coup attempt, the
two generals, both close supporters of President
al-Bakr, were lured into a trap by the director of
internal security, Nazim Kazzar. At some point
the plot apparently went awry, and Kazzar had to
flee toward the Iranian border. He took the two
generals along presumably as hostages. When the
escape route was blocked by troops, Kazzar and
his accomplices killed Shihab and two other of-
ficers and wounded Ghaydan. The killers were
captured and returned to Baghdad where they
face execution.
A three-man commission, headed by a mem-
ber of the Revolutionary Command Council, has
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been made in the wake of the incident, and if
events rollow the usual course for Iraq, a wide-
spread purge is likely to ensue.
President Bakr, who returned to Baghdad
from an official visit to Bulgaria and Poland about
the time of the incident, has not appeared in
public since his reception at the airport. All offi-
cial statements on the affair have been issued in
the names of the Baath Party and the council.
Saddam Husayn Tikriti, Bakr's chief rival, led the
funeral cortege for the slain defense minister.
Information from Baghdad is as always
sparse, but it looks as if civilian Baathists tried to
wrench control from the military element of the
party. Kazzar, reportedly a supporter of Saddam
Husayn Tikriti, appears in this case to have been
little more than a tool for a power grab by Tikriti
and the civilians. There have indeed been long-
standing differences between Bakr and Tikriti,
but unti now they have been fairly well con-
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f[wo recent developments could lead to a
change it the situation in (-)man, where Uhofar i
dissidents supported by Yemen (Aden) havE: been
waving a guerrilla war against Sultan Qabur. ]he
Sultan has attempted to open a diaicogue with his
leftist enemies; at the same timehe Chinese are
ending their assistance to the Popular Front for
the Liberation of Oman and the Arab Gulf. these
developments, singly or together, ire- riot likely to
produce a quick sett ement of ?h~ decade-long
insurgency, but they (:ould lend to i break in the
imoasse.r
conclude that Peking is reducing or discontinuing
-fhe assistance which it formerly provided the pop-
uiar front. Some British officials agree. They be-
I eve that Chinese advisers are no longer training
the rebels and that little Chinese materiel is reach-
inig the Dhofari front. Lack of Chinese aid will
not make much difference to the Dhofari rebels,
however, so long as the Soviet Union continues its
liberal assistance to Aden arid some of this aid
finds its way to the Dhofaris.
pXWAlT
Luwait
QATAR
Doha
UNITED ARAB
Abu Dhabi
EMIRATES
SAUDI ARABIA
) Meanwhile, reniarks by the Ltrinese foreign
minister when he was in Tenran last month have
mompted Iranian i oreign Ministry officials to
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THE YEMENS. TRIALS AND TALKS
'
The Sana government is pressing ahead wi.:h
large-scale roundup and prosecution _if
the
Adeni-sponsored saboteurs and terrorists. This
week five persons charged with the assassination
on 30 May of Muhammad Ali Uthman, member
of the ruling three-man Republican Council, we'e
put on trial in Sana. Since the discovery last April
of an extensive sabotage net, Sana has tried `.7
suspects, executing 17. A search is on for so ne
275 additional persons believed to be part of the
subversive apparatus supported by Aden. The lit-
ter, embarrassed by the continuing trials, retal-
iated on 30 June by announcing it would conduct
its own trials of a Sana-sponsored subversive
group.
Y(' )The opposition appears to be recovering
from the shock of the sudden closing of Congress
and is trying to mount a challenge to President
Bordaberry and the military. Bordaberry and the
military set out last week to conciliate labor, bit
quickly gave up in the face of a general strike.
They dissolved the largest labor organization and
imprisoned some low-level labor leaders. T!-lis
prodded the leftist Frente Amplio coalition and
the Blanco Party into calling for Bordaberr,i`s
resignation and for the election of a constituent
assembly to write a new constitution.)
r crhe Colorado Party, of which Bordaberry is
a member, appears to be split on how to react to
the closing of Congress. The faction headed by
former president Jorge Pacheco seemingly favo s
working with the military in hopes of gaining
seats on the State Council that is to replace Con-
gress. Pacheco hopes to return to the presidency
The other important Colorado faction
leans toward joining the Frente
mph the Blancos in opposing Bordaberrv
and the military/
/I FTop union leaders have been demandiiiq
Bordaberry's resignation, too. The governrner t
Despite the subversion and the trials and
contrary to earlier indications that the Yemens
would drop even the pretense of working toward
unity, committees established by the union agree-
ment are scheduled to resume work on 16 July.
Libyz, Algeria, and the Arab League are spon-
soring the committee meetings and have undoubt-
edly been prodding both parties to maintain at
least a facade of unification efforts. Earlier this
week President Qadhafi invited the Yemenis to
hold some of the committee sessions in Tripoli.
The prospects for real movement toward unity
are, nevertheless, nil.
has sought to undercut the influence of the labor
leaders by granting a 30-percent wage increase,
but this is less than half what the workers are
demanding.
Opposition efforts are being hindered by the
government's ban on political agitation and by
the self-imposed exile of several of the most mili-
tant opposition leaders. If, however, the govern-
ment is unable to make peace with labor soon and
if the strike is prolonged, the opposition political
forces could find support among the workers and
the general public, who face food shortages and a
stoppage in essential public services.(
There appears to be increasing mili-
tary cissatisfaction with the President's handling
of the strike, but as yet the grumbling is diffused
and seems to lack the focus essential for ousting
the president.
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z c robeilion last Fr.ciav by ca srnah ainiy
.';ft in Santiago has neigntened apprehension
tcroughout Chile.
i tiaiiv. Allende erneraed fr( rn Fridav's
' eni, in a stronger personal position v -a-vis his
,.)cia,iist and Communist colleaoul"; to oast
'veek,, these parties had been _ooperatirin n ore
~oserv and taking a harder nine aoairst the oppo-
ion. This position wa,, conrininq the President.
,-du(ina hs ability to negotiate and ?~:rcinq nmm
to tougher actions than he oth- se would
'r-ive taken. When the rnilitarv units it Santaao
to nis oefense, he ,was able to :.L!irn rri,.ii-a,v
support for lies govornmrcnt
uric is littlr eviclencr that tho- rev() t was
t>rovnkec by the covernme'it but ..r_h ar thina
sloes seem possrole- it so, the goverment vas
probably a:ting w thou: the acqures(_ arise (it tyre
military command it an attempt is, hush cut
siotters. Accordinq to information v_wable, the
rr!bel,ious unit-the Second Arrnorecc i_iattaiiorr
lord i.,een visited Friday morninq by a go:Yvernn,ent
.Ielegation with orders to replace thr unit coin-
rrraneor. I he unit con-mander a-rest,.,! the del- ca-
0un ind proceeded witri his hoops irid tanks to
the novernment palace and the Defense Minrtry
demand the resignat on of he cis Tense m nis-
t,r. - lahting broke out. and within a few hours
,ryai troops arrived on the scene n p.,rade lornia-
-on ana wearing white brassard ;. which appear to
have been preparec betorehancr. T h( rebels were
rtuick.ly surroundec, and they then tinder d.
ho ocher unit joined the rebels]
5sIlende immediate y called for nationv~ide
state of siege that would have giver hirn e>tra-
'Ardinary powers 1 he move was -elr-_ced by tine
opposition-controlled congress. In tnf- newt n e,
the entire cabinet resigned n th exp, station that
Allende has, however, had to postpone naming his
new.v civilian ministers, indicating that he may be
having difficulty finding suitable and willing civil-
ians.!
The nationwide state of emergency and the
curtew in Santiago, imposed last week, were lifted
on Wednesday. This may serve to cool the atmos-
phere somewhat, but it could open the way for
the Popular Unity coalition to mount demonstra-
tions in support of the government. The military,
who remain agitated in the wake of Friday's
-wits, are not likely to approve such activity.
I he 75-day strike by workers at the El Teniente
copper complex has ended, and this could mean
that labor agitation may be reduced at least for
th- time bei rig.
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',,qe i. V E KLY SUMMARY
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j,,t-' tThe military government of President
Rodriguez is going ahead with plans to raise Ecua-
dor's status as an oil-exporting country and
obtain the maximum benefits from foreign
vestors.~
The possibility of a scandal surrounding the
awarding of a contract to sell the government's
`' royalty crude to a Japanese company last May
i-_i-ic - threatens to bring down the minister of natural
resources, Navy Captain Gustavo Jarrin.
Ecuador's military leaders canceled the contract
last month, citing "imprecision" and "irregular-
ities." The charges may be true. On the other
hand, -:he conditions for submitting new bids have
been lightened, and the Ecuadoreans may have
used the alleged irregularity as a convenient
excuse for obtaining better terms. If Jarrin were
removed, his replacement would in all probability
be another nationalistic naval officer. i`
(Ecuador has been accepted as an associab
member of the Organization of Petroleum Ex-
porting Countries.. Although Rodriguez he
hoped to become a full member, he has labeled
Ecuador's partial acceptance into the powerfw
organization a "breakthrough." The government
now can turn its full attention to negotiating nev,
contracts with foreign oil companies before the i
August deadline/ Many of the companies nov,
active in Ecuador are expected to postpon,
signing an con
=C' iThere is evidence that the government w dl
try to drive a hard bargain with the investors.
despite the lack of consensus on the matter. Thy:
ease with which Ecuador has been able to fird
buyers for the petroleum it receives from the
companies is adding to the government's con-
fidence. Earlier this month, the government
decided to raise the tax reference price on crude=
from $3.20 per barrel to $3.60. Although the new
figure is higher than Venezuela's price, it is in line
with prices set by producing countries in Norlh
Africa.
,, A.Ithough the government will press for in-
brea ed benefits from foreign investors, the mili-
tary leaders realize that Ecuador has neither the
personnel nor the resources to go it alone. Jap-
anese investors have been eager to assist, and
Ecuadorean officials will continue to use this as a
bargaining tool in negotiations with US com-
panies. The prevailing air of uncertainty has
caused many companies to suspend operations.
Roth sides have a stake in getting things rolling
again, but the government believes it is now in the
SEA RET
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(Inflation--partic.ula rI' in food Oric?!s- snro-
vidinq and .vill continue to provide major chal-
lenee to the Medici adrnini',iration
Recent 'figures show that the ~I_n to r educe
this year s inflation rate to 12 per,_r~nt (compared
with tti percent in 1 O72) in trouble because of
the persistent price it crc.,se s of irr,f,ortant food
rte'!,_~. in )srtieuiar, beans. a >taple ire the l~razi -
an w,,rk innmmn',, d,r?t, h?vc do~rbled in orice
,!it( e January. Increases in inert ii,: milk irises
are enother serious problem. Although inf ation
Jul rig the first f ve months i;,3 w!-ole was ume-
vvh.:t below tnat of a vear ago, on - rises in April
,anti May were, :-treater thar the. ~.e in the same
narurths a year aqo.,`
! t e Medici adrrinistr.rtion he', (Derived r uch
ti Is considerable r,restige from in ability to
>olve economic and technic I nr,hfr~rri>. It has
eccntlv,v -eatfirmeed that inf ,~t ors i.r-,f( l is its
rii(jl est priority r)rohlern, it ,idea tir,n Cr ifin~
yeti !in,anrn ,nir;isor', acre ,!rriiit- t tr nti-
ril dior! ift,,rt, rr.,crnlly 'inr rc r l v, tr r~i i aver
PE: arlr ~ruiture nr~nistill. v'ia rn [;i.1 ,Iicl /
charged tI3.rt the firrht against 1'1;3[iun we;
turno. toori l,r x+urer~,_ He lost inrl -E innf-dI
(The regime's military backers have beer con-
ditinned to expect that the govcrnrnent will
deliver on its economic r,roriises. 1 he rni itarv
rook power in ld(--4 tr,rgeIv to righr what it con-
,,ide?ed a chaut-c situation. Indeed, Brazil's nter-
nati'nal credit ratina wa> at the t ere at a i all-
t.ime low, with growth ratees ti) match, and ir~fla-
.ion was pushing prices up by some 85 percent r
vear. To a great extent. the military'; iustificatiori
for remaining in power has beer the dramatic
reversal of these trends and the ev( r-irnpr )vinq
economic conditions- The last three veers have
witnessed annual gros/th in gross national product
('hanging price lags
of around 10 percent a year while inflation rates
were held to around 18 percent. In the eyes of
result-oriented officers, the regime would lose
some of its aura of success if it were to fail to
keep inflation within the 12-percent limit it set
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JC4..1I~1 C
)Not surprisingly, the major importers of US
soybeans reacted strongly to the temporary US
export embargo. The export allocation system
announced this week eased tension somewhat by
indicating that some of the soybeans already con-
tracted for would be delivered, but many coun-
tries-hoping for more generous treatment-were
still dismayed. The soybean measures will prob-
ably produce both political difficulties for the US
and economic difficulties for some of its major
trading partners.
insistent on self-sufficiency and therefore less
expensive to the consumer. The controls will
probably make it more difficult to resist French
pressures.
;The latest revaluation of the German mark
has not slowed the depreciation of the dollar,
which continues to hit new lows against European
currencies. Austria is the only country to have
revalued following the German move.
Although the European countries are not as
dependent as Japan on US soybeans, the US move
could have a serious impact on the livestock
industry, particularly in the smaller North Euro-
pean countries, but also in Germany and France.
At a minimum, the US move will aggravate an
already serious inflation throughout most of
Europe.
The European governments have been ex-
tremely critical of the US move. The French, in
particular, have cited the irony of the export
controls being imposed when Washington is press-
ing for easier access for US farm products to
European markets. One high French official
pointed out that the controls would strengthen
the hand of those who argue that the US is an
unreliable supplier and that defensive measures
have to be taken. The controls undermine the
position of EC members, particularly the British,
who would like to see an agricultural policy less
Page 19
Bonn's decision to revalue was taken in the
,ace of renewed large-scale currency movements.
In the past, the inflows consisted predominantly
of dollars, but this time, with the mark floating
against the dollar, European currencies flooded
in. On 28 June, the day before revaluation, the
Bundesbank had to buy about $900 million
worth of European currencies, raising its total
currency purchases to some $1.6 billion over a
12-day period. These purchases were threatening
Bonn's new anti-inflation program.
Revaluation will increase the price of Ger-
man goods sold abroad and reduce the price on
imported goods. It will lower the trade surplus,
but only over the long run. Indeed, Finance
Minister Schmidt has cast doubt on prospects for
any near-term reduction of the massive and grow-
ing trade surplus. May trade results-withheld
until after the revaluation announcement for fear
of setting off new speculation-support recent
estimates that the 1973 German trade surplus
might reach an unprecedented $11 billion. The
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THE EUROPEAN CURRENCY BAND, 1973
PERCENT CHANGE FROM CENTRAL. RATE
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initial perverse effects of the revaluation may ulators who bet on a mark revaluation. It may
send it even higher. encourage them to try their hand again, thereby
keeping the international currency markets unset-
Schmidt has been publicly critical of both tied. The mark may remain the chief target for
US and European economic policies. He said that specula':ors.
international monetary stability is not possible
without US involvement. He claims that had Ger-
many's partners in the joint float pursued sta-
bility as intensively as Bonn, Bonn would not
have been forced to revalue.
The revaluation will keep the joint float
going for at least a while longer. Revaluation
dropped the mark from the top of the European
band and relieved some of the pressure on the
band. The revaluation, however, represents
another windfall for money managers and spec:-
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