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Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Secret Weekly Summary State Dept. review completed Secret 3 August 1973 No. 0381/73 Copy N2 44 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 CONTENTS (3August 1973) 1 Detente in Eastern Europe: Reassurances and Warnings; Pact Meeting; Bulgaria 3 South Asia: Little Progress 4 Visiting Prime Ministers: Japan; Australia EAST ASIA PACIFIC S Indochina 7 China: A Quiet Army Day 7 Philippines: Marcos Progresses 8 Oil in Southeast Asia 9 Thailand-Burma: The End of Lo Hsing-han 12 EC: Talking about Defense 12 CEMA Approaches the EC 13 GATT: Ready to Begin 14 Italy: A Decisive Rumor MIDDLE EAST AFRICA 16 Greece: A Confident President 16 Cyprus: New Stresses WESTERN HEMISPHERE 1 / Cuba: Celebration, Castro Style 18 Peru: Steady as She Goes 19 Ecuador: Political Battlefield 20 Chile: Stuck on Square One Comments and queries on the contents of this publication are welcome. They may be directed to the editor of the Weekly Summary, F- F Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 ILLEGIB Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 2 lihe Soviet leadership is trying to walk the thin line between extolling detente's virtues and convincing the Soviet people and Communists everywhere of the need to remain vigilant against ideological subversion. The task would be diffi- cult under any circumstances, but the variety of audiences to be dealt with makes it all the more complicated.1 [A number of Soviet leaders have already ? taken part in the campaign. Brezhnev, party ideol- ogist Suslov, and Defense Minister Grechko have all spoken out since Brezhnev's return from his trips to Bonn, Washington, and Paris. None of them has expressed any reservations, however, about the wisdom of the detente policy itself, nor has there been any evidence of important institu- tional opposition to that policy. Even the military has taken a strong stand in support of detente] I fBrezhnev, nevertheless, has hinted that reservations about detente exist in the USSR and among its allies. In his Lenin Peace Prize speech he observed that moving from con- on 11 July , frontation to peace is not easy. He offered implicit reassurances to the doubters that the leadership would remain vigilant, but reaffirmed his commitment to detente and said that the USSR must also be ready to head off any attempt to resume the cold war.T 2 I fBrezhnev returned to the charge on 13 July, in a speech marking the 70th anniversary of the birth of Lenin's Bolshevik Party. Addressing com- munists at home and abroad, Brezhnev pointed out that the USSR's foreign policy "ensures the further deepening of fraternal relations" with otter socialist countries and "promotes the strengthening of the unity of the communist movement and of all anti-imperialist forces." Only then did he note that implementation of the "Soviet peace program" is likely to diminish the danger of a new war.] (Speaking at the same celebration, Suslov Jreminded his audience of Lenin's bitter quarrels wits other leftist leaders over political and organi- zational questions. Suslov insisted that commu- nist parties must always be highly centralized and disciplined organizations dedicated to the goal of a dictatorship of the proletariat. He emphasized that membership must be restricted to politically active people, whose actions and beliefs are in keeping with party principles. While endorsing detente, he pointed out that the central com- mittee plenum last April had called for greater vigilance against the imperialists' "hostile ideolog- ical diversions."] 1 rMany Soviet commentators have directly j..addressed questions that have been raised about 2 detente. They have said that it will endure, that it represents the best interests of the USSR, the other socialist countries, the international com- munist movement, and the non-communist world, anc that benefits are already flowing from it. They have also reassured critics that the leader- ship will not be "too trusting" vis-a-vis the "capitalists," that Soviet military strength will be preserved, and that trade with "capitalism" will not open the door to "penetration" or "exploita- tion" of the Soviet economy. In addition, the SECRET Page 1 WEEKLY SUMMARY 3 Aug 73 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 SECRET ~-' USSR will not desert its "socialist" allies and will continue to support "national liberation" aspira- tions.'' 1 Trhese commentators have -also warned that ,a-the recent relaxation of international tension does not mean peaceful coexistence on the ideological front. Efforts to protect the purity of communist beliefs and the strength of the commitment to communism's long-term goals must be increased as detente goes forward on a state-to-state level. Moscow has also insisted that discipline must be tightened in the international communist move- ment, and that individual parties must not lose internal discipline if they choose to cooperate with social democrats and other leftistsl 41 Lhina, potentially the most controversial topic, was treated only obliquely. The communi- que warned that constant vigilance is necessary against those who are "creating distrust and hostility among peoples," but this was probably aimed at both Western and Chinese opponents of detente. On relations among Communists, the participants adopted the Romanian formulation, which calls for "close fraternal cooperation of communists of all countries."] a The air of secrecy surrounding the central committee plenum on 17-19 July and the sudden revival of anti-American r l d t k p opagan a as wee 1 0 suggest that some elements of the party leader- hi il . h p st l arbor strong reservations about detente] U s f The third annual meeting of the party leaders of the Warsaw Pact countries plus Mon- golia was held in the Crimea on 30-31 July n the ,g IThe plenum, which was devoted to foreign absence of frequent meetings of the Warsaw . policy, failed to produce the strong endorsement Pact's Political Consultative Committee, the of closer ties with the West expected in the wake Crimea meetings provide an informal setting for of Brezhnev's visit to the US. Fragmentary re- discussing policy coordination; they have become ports indicate only that the meeting reaffirmed an institution themselves.? Sofia's close ties to Moscow, while new openings 5 IThe meeting gave Soviet party chief Brezh-'? Y nev a chance to describe his recent visits to Bonn, Washington, and Paris. As expected, the other party leaders expressed firm support for Mos- cow's detente policy and singled out Brezhnev's personal contribution for special praise. If con- troversy arose, the bland communique issued at the end of the meeting did not show it] 1i The party leaders restated their goal of ending the European Security Conference this year, with the final session at the summit level. They made a bow toward Western concerns over freer movement in Europe by calling for "wide and varied contacts between the public of all countries," but they took it all back in the next sentence, which stipulated that these contacts must develop with strict respect for "sovereignty and noninterference." The leaders also made a standard reference to the "great importance" of force reductions in Europe, but did not elaborate.7 to the West received but a passing nod. Indeed, the regime's failure to publish the plenum speeches of party boss Todor Zhivkov or anyone else suggests that Zhivkov is still prodding some of the faithful to join the era of detente.I SECRET 3 Aug 73 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 ~~ JCVnC I =~; 5' the forced retirement of candidate polit- buro member and former interior minister Angel Tsanev also points to differences within the leadership. The brand of communism advocated by Tsanev and his followers apparently so far exceeded the conservatism of Zhivkov that they had to go.1 and hope for better US-Bulgarian relations made by the deputy minister of foreign trade during his mid-July tour of the US. The contradiction in- dicates more than a lack of political sophistica- tion on the part of the Bulgarians, and appears to be another reflection of disagreement about detente? 10 VOn top of this, anti-Americanism has, for no tiG lNevertheless, Zhivkov's recent speeches- apparent reason, suddenly reared its head again] 'including his toast to visiting French Premier Ibn 24 July, charges first made last April of US ? Messmer on 20 July-have reasserted Bulgaria's peared in the Bulgarian press. The next day, all North Korean anti-American display, comrnemo- y rating the 20th anniversary of Pyongyang's "victory" in the Korean conflict, appeared in the 10 Bulgarian People's Army House. These two events 11 contrast sharply with the expressions of good will commitment to detente as defined by Moscow. The more conservative elements in the Bulgarian leadership, however, seem to be using Moscow's25X1 expressions of concern over those who may misuse detente as an excuse to express their own SOUTH ASIA: LITTLE PROGRESS W, J\ week of hard bargaining by high-level Indian and Pakistani negotiators in Islamabad has resulted only in agreement to meet again in New Delhi on 18 August. The negotiators seem to have made a major effort to find areas in which com- promise is possible, but with little success. 69 biscussions centered on the issues raised in the India-Bangladesh joint declaration of 17 April. The Pakistanis stuck to their position that all prisoners of war must be returned immediately and that Bangladesh must not try some of them for war crimes:? ')a rThe Indians have denied Pakistani press charges that they raised "extraneous" questions such as the recognition of Dacca by Pakistan and Page 3 the admission of Bangladesh to the UN blocked last year b a Chinese veto.IF su si iary bi- a era problems-the resumption of trade, for example-could not be dealt with because Islarnabad insisted that the major issues be settled first 1 -?t)- Prospects for success in the next round of talk!; appear bleak. The Pakistanis are unlikely to charge their stand. The Indians, who have been acting essentially as representatives of Bangladesh, may make another effort to soften Dacca's demands, but their chances of progress in that direction are slim. If the negotiators fail to reach 25X1 agreement, another summit meeting between Bhutto and Mrs. Gandhi may be sought in an attempt to break the impasse. SECRET WEEKLY SUMMARY 3 Aug 73 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Visiting Prime Ministers (I _0 duly was a good month for Prime Minister Kakuei Tanaka. Early in the month, Tanaka's Liberal Democratic Party confounded the politi- cal forecasters and held its own in the Tokyo municipal elections. Tanaka had personally cam- paigned for party candidates, and the party as a whole appeared to take heart from the success. In mid-month, the high-level meeting of the US- Japan Joint Economic Committee in Tokyo pro- vided an official forum for the Japanese to claim that trade account problems had been generally eliminated. The Japanese media liked the eco- nomic talks and gave the Prime Minister's sched- uled visit to Washington lots of favorable cover- age. Tanaka is taking back home with him a new affirmation from President Nixon of the impor- tance of Japan to the US. The two have met twice in 11 months, and the joint proclamation of a new era of relations, with stress on equal partner- ship and cooperation, will enhance the Prime Min- opposition parties are still boycotting the ses- sions, and some critics are already calling it the least productive of all postwar Diets. Tanaka must find some way to get his re- maining major legislation enacted without forcing his bills through while the opposition is still out. This sort of railroading is considered bad political form in Japan. If he fails to get his legislation, his detractors in his own party as well as in the opposition will be out again in full cry? 55 JPrime Minister Whitlam's effective public performance during his working visit to Washing- ton this week will bolster his position back home, already strengthened by his deft handling of the is recent Labor Party conference'f-lis discussions with President Nixon and other US officials have received favorable treatment in the Australian press. Whitlam's deportment probably also heart- ened his more conservative countrymen, who feared that his abrasive nature might damage US-- Australian relationslin publicly reaffirming the importance Australia attaches to its US ties, Whit- lam insisted that Australia under his leadership is a friend and partner of the US-but one that has ister's improved domestic position. The Prime r Minister will have to move quickly and effectively if he is to capitalize on the gains from his US trip. His major problem is the Diet, which he was forced to re-extend until 28 September. The independent interests of its own. SECRET WEEKLY SUMMARY 3 Aug 73 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 ~ftw SECRET is rcommunist regimes of varying stripes have been calling attention recently to their direct ties with the Viet Cong's Provisional Revolutionary Government in South Vietnam. In addition to the publicity attending the accreditation in early June of several Communist ambassadors who presented their credentials somewhere in Quang Tri Prov- ince, the subject of aid is figuring prominently in Communist propaganda. The USSR, China, Mon- golia, and Yugoslavia have announced that they will be providing aid to the South Vietnamese Communists directly, whereas in the past, foreign assistance has been channeled through the North Vietnamese. To drive home the point, a Mongol- ian delegation has just presented Communist officials in northern South Vietnam with some 2,400 tons of goods. In the sphere of political support, Soviet leaders recently told visiting Hanoi leaders Le Duan and Pham Van Dong, that the Provisional Revolutionary Government "alone" represents the genuine aspirations of the South Vietnamese people.? It [Efforts to enhance the status of the South Vietnamese Communists as distinct from the North Vietnamese were apparent before the cease-fire agreement was signed last January, and the trend has accelerated since then. Madame Binh, for example, received a gala reception from Peking on one of her trips from Paris late last year and was similarly feted in Moscow in March and April. For the Communist countries, beating the drum for the Provisional Revolutionary Govern- ment undoubtedly serves as a cheap and con- venient means of partially offsetting the unpalata- ble messages they have been giving their Viet- namese allies It ]'Indeed, except for publicizing the aid agree- men s and showy receptions, the Communist countries are still treading carefully, with one eye on Washington, when it comes to backing up the Vietnamese Communists on specific issues. Only Hungary echoed their recent charges concerning US and South Vietnamese cease-fire violations, and their line on the political impasse has fared even worse. In an award ceremony for the "am- bassador" from the revolutionary government in Moscow last week, President Podgorny merely expressed vague "solidarity" with Vietnamese Communist positions, and added a pointed re- minder that the USSR expects all parties to abide by the cease-fire agreement? /L he delegation, headed by Premier Pham Van Dong, concluded visits to Poland and Romania on 28 and 31 July, respectively, and departed for Bulgaria. 14 [In Poland, the chief topic of discussion was apparently post-war reconstruction of North Viet- nam. There were few public references to the US or to the ICCS, and nothing about Poland's prob- lems on the ICCS. The joint statement issued at the end of the visit was bland, with much mutual praise but little substance. A Warsaw paper re- ported that industrial cooperation would increase, and Radio Hanoi claimed that the two sides signed "agreements on loans, deferral of payment on loans, and exchange of goods." The Poles apparently did not follow the lead of Moscow and Budapest in canceling Vietnamese obligations to repay loans. The language also suggested that, like the Soviets but unlike the Hungarians, the Poles did not conclude a formal aid agreement. I I7'[The delegation paid a brief visit to Romania and signed several agreements there, including one on economic and military assistance.) i9 fGovernment and Communist negotiators in Vientiane this week sat down to draft the actual text of an agreement on how to implement the Lao peace accord signed in February. Both sides are saying that the major issues have been re- solved and that a signing ceremony is near at hand.? ``0f,The sudden surge toward agreement was the resu 10f ,The some significant Communist compro- mises on provisions dealing with a coalition gov- ernment. Communist envoy Phoumi Vongvichit dropped his insistence that Pathet Lao leader SouDhanouvong be named sole deputy prime min- ister. The Communists also stopped demanding the important cabinet portfolios of defense and inte'ior. The last major obstacle was surmounted when the Communists scaled down their demands SECRET Page 5 WEEKLY SUMMARY 3 Aug 73 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 SECRET Souvanna, however, clearly seems satisfied. He is already preparing his rightist critics for the agree- ment. Key members of the National Assembly have been briefed on the terms and similar brief- ings will probably be given to senior military leaders. Some of the more intractable rightists will object to any agreement, but others appear picased that the Communists will control little more of the government in Vientiane than they did eleven years ago.1 2i The fighting is still close to Phnom Penh, but little ground is changing hands. The city's key lines of communication are open. Northwest of the capital, government units clashed with Khmer Communist elements within four miles of Pochen- tong airport. To the south insurgent resistance coupled with army command problems disrupted government efforts to push down Route 3 and regain a foothold along the Prek Thnaot River- the only natural barrier in this sector. To the east, small insurgent units skirted government defenses on Route 2 and by midweek had begun harassing outposts on either side of the Bassac River near Takhmau-the capital's largest suburb. Other on the number of Pathet Lao security troops to be stationed in Vientiane and the royal capital of Luang Prabangi ZD 7i-hese concessions from the Communist side followed by about two weeks Souvanna's decision to accept the Communist concept of a delineation of zones of control as well as Communist provi- sions that could render supervision or inspection of the withdrawal of North Vietnamese forces ineffective. In exchange for accepting less than a lion's share of political power, the Communists will have unfettered control of three fifths of the country-the area important for protection of North Vietnam's border and for Communist sup- ply operations to South Vietnam and Cambodia. Their share of the population is no more than a third 'Za TLast-minute dickering over language and minor issues could delay the signing of the new agreement past the hoped for deadline next week. i/ PHNONP` PENH Pochentong Airfields Takhmau / / 0 5 Miles SECRET Page 6 WEEKLY SUMMARY 3 Aug 73 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Jt=l.Kt I insurgent elements late in the week cut Route 1 twelve miles southeast of Phnom Penh -1 CHINA: A QUIET A2Y evolution ince the Cultral Revolution thrust the armed forces into civilian politics in a major way, Army Day on 1 August has been a major political event in China. This year, however, it passed-as have other recent holidays-without fanfare. i he customary editorial did not appear, and the De- fense Ministry reception was uneventful. Al- though there had been much speculation in China that the event would be used to publicize new appointments to the military high command, none emerged. As part of its effort to reassert party control, the regime has been attempting, with some suc- cess, to disengage the army from politics, though Peking evidently is still formulating specific guide- lines on civil-military relations. This problem, to- gether with an apparent desire to deflate the tion until the Tenth Party Congress, which may army's image, may account for the absence of an Army Day editorial. Moreover, the Chinese could be deferring further public discussion of the ques- Ifavcrably anyway.l this vote of confidence fol- PHILIPPINES: MARCOS PROGRESSES -16 *[Philippine voters were put through their paces on 27 July and gave the martial-law regime of President Marcos an overwhelming mandate to con-inue along the same lines indefinitely. Careful preparations produced a 90-percent "yes" vote, although there were good indications that a ma- jority of Filipinos would probably have voted lows the first ten months of martial law, during which Marcos has largely neutralized potential sources of opposition. Philippine security forces have moved successfully against the political ap- paratus of both the pro-Peking and pro-Moscow communist parties. All but the most intractable of Marcos opponents have now been released from jail after promises of good behavior) 2.. (poradic rumors throughout martial law h E! indicated that anti-Marcos groups were plan- ning hostile action, but little open opposition ever developed. The only major security problem, the current Muslim rebellion in the south, is rooted in historical social and economic tensions. The Mao- ist New People's Army on Luzon, while still a dangerous adversary, is currently content to avoid direct confrontation with government forces.) 2 (From Marcos' standpoint, matters are well in hand, and he is ready to begin building a more permanent government structure to replace the ad hoc style that has characterized his rule under martial law. He plans to create a small legislative advisory council of about 100 members. It will be appointed by the President and include represent- atives of former elective bodies and private inter- est groups. The council will be charged with the responsibility for appointing a successor to Mar- cos should he die in office. Marcos apparently believes that the lack of a clear successor has been an important cause for misgivings about the long- term stability of the Philippines, especially among foreign and domestic businessmen. Resolution of the succession problem will be the council's first order of business. SECRET Page 7 WEEKLY SUMMARY 3 Aug 73 25X1 25X1 25X1 25X1 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 ttKt OIL IN SOUTHEAST ASIA 3 1 the winding down of the Indochina conflict, 29 The most intense interest right now is in combined with the growing world demand for oil, % South Vietnam. Thirteen companies, acting either has stimulated new interest in the offshore areas individually or in consortiums, responded to Sai- of Southeast Asia. Oil geologists regard these 3"gon's recent invitation to bid for offshore oil areas as promising, but they have not yet been concessions. The four companies that were adequately explored. This situation is changing awarded concessions-three are American-are re- fast as a number of Western companies are step- quired to spend some $60 million on exploration ping up their explorations and seeking new con- during the next five years to retain their conces- cessions off Burma, Cambodia, India, Malaysia, sions, South Vietnam, and Thailand. Even North Viet- nam's offshore waters are drawing interest-) '.f the Italian state oil company and North Vietnam reportedly have reached an "understand- Gull -L " ___ - ing viding for -"brat'-' in th 1 Tonkin. Jther areas in South Asia are getting atten- ? In Burma and India, new offshore con- tracts are being negotiated with Western com- panies in a startling reversal of earlier go-it- alone policies; ? In Cambodia, the Ministry of Mining re- cently awarded a concession to an American- run Hong Kong firm; ? In Thailand, two US oil companies have found traces of oil and gas offshore; ? In Malaysia, several promising discov- eries recently prompted a government at- tempt to replace existing concession arrange- ments with production-sharing plans. Conflicting territorial claims by several coun- tries pose an obstacle to further exploration. This is particularly true of the Gulf of Thailand, a very promising area, parts of which are disputed by South Vietnam, Cambodia, Thailand, and Malay- sia. In recent bidding for South Vietnamese con- cessions, the companies avoided the gulf area and concentrated largely on undisputed areas in the SECRET WEEKLY SUMMARY 3 Aug 73 25X1 25X1 25X1 25X1 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 1411111111K ; z t r i 1 Thai land/Burma THE END OF LO HSING-HAN 3S the capture of a leading Southeast Asian y opium smuggler earlier this month has thrown some elements of the drug trafficking apparatus 36in the Thailand-Burma border area into disarray. The capture also seems certain to put more pres- sure on Bangkok to be more aggressive in re- ducing narcotics trafficking in the border area. The smuggler, Lo Hsing-han, was arrested by Thai police on 17 July when he fled into Thailand to escape the Burmese Army, which was attacking his camp just inside the Burmese border. Lo's brother, the financial mastermind of the opera- tion, and other key officials of Lo's organization were arrested a few weeks earlier by the Burmese. Lo was deported to Burma on 2 August at Rangoon's request. 35" [The collapse of Lo's empire will, for a time, have an intimidating effect on other traffickers in the area. It also brought to an end Lo's efforts to 3(Q ally opium traffickers and armed ethnic dissidents against the government and the Burmese Commu- nist Party. The arrests do not mean that the flow of narcotics out of Burma has been stopped. Two former Chinese Nationalist generals, who operate a sizable smuggling apparatus from bases in north- ern Thailand, are now in a position to become the largest opium traffickers in the region-a develop- ment certain to be of considerable embarrassment to Thai officials.) 3 [The fact that the Thai were willing to col- laborate in capturing and extraditing Lo is being played up in the government-controlled Burmese press as an important step forward in Thai- Burmese relations. Bangkok could hardly have refused help in this case, given Lo's notoriety. Rangoon's stress on the need for greater Bur- mese-Thai cooperation is probably motivated partly by a desire to pressure the Thais into stopping their support for Burmese dissident groups and partly to shift some of the spotlight of international criticism on the opium traffic away Page 9 from Burma and nd. SECRET WEEKLY SUMMARY 3 Aug 73 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Approved-For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 The UN impasse on the Middle East was soli ified last week when the Security Council debate concluded with a US veto. The debate-- which had been in recess since June--produced virtually no new initiatives. The only hint of movement, an Egyptian suggestion early in the session that Cairo might consider separating the return of its own territories from the Palestinian question, was lost in a melee of accusations and bitter rhetoric. Secretary General Waldheim's fact-finding trip to the area seems likely to produce little, if anything; it does continue the illusion of diplo- matic activity. Grateful for the US veto, the Is- raelis are proffering full hospitality, but the Arabs are expected to give Waldheim a cool recep- tion. It is possible that the council will meet again in September to hear Waldheim's report, but the fall activities of the General Assembly should discourage another debate. This third US veto, within a year. of a non- aligned resolution may lead to some counter- action or issues like the Korean question in the fall General Assembly, where the nonaligned hold a majority and there is no veto. Within the past week, nonaligned representatives blocked Western initiatives for UN action on terrorism and issued a statement condemning US bombing in Cambodia. The veto also opened a rift between the US and the other Western members of the council. These states accepted the nonaligned resolution as reasonable and have let it be known that they feel the US was too rigid. They also indicated that they could not permit themselves to be arrayed with the US against countries with whom they have major commercial interests. Some of them see in last week's events evidence of increasing US disinterest in the UN. I n Egypt, the veto brought new disil- lusionment. It confirmed the Egyptian view, re- stated by President Sadat in a speech immediately after the conclusion of the debate, that the US and Israel are engaged jointly in a campaign to induce Egypt to sue for peace on Israeli terms. Sadat interpreted the veto as evidence of full US support for Israel, for its negotiating terms, and for its position in the occupied territories. He may now look to other mediators than the US Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 StUKt I = EC: TALKING ABOUT DEFENSE ' (p Recent meetings of the Nine have high- lighted the lingering doubts in major West Euro- 147 pean countries about the implications for Euro- t pean security of the US-Soviet agreement on the i j prevention of nuclear war? recognizes the EC as a reality and has appointed CEMA Secretary General Fadeyev to negotiate with the Western bloc. Having several years ago abandoned hopes that the EC would disappear of its own accord, the USSR has been moving to- ward recognition of the need to deal with the EC on an official basisl As long ago as March 1972, A/& fAn Italian official claims that the French are Brezhnev was acknowledging the "reality" of EC. still more critical of the agreement than anyone else. At a meeting last week in Copenhagen, they reiterated the theme that the two superpowers are intent on becoming world policemen, thus seri- ously reducing the decision-making role of smaller countries. While the German representatives at the meeting stoutly maintained the official line that Bonn had received all the assurances it re- quired from the US during Defense Minister Leber's visit to Washington, they still seemed to harbor private misgivings. The Italians appeared to be somewhere between the French and the Germans in their view of the agreement.I LfC [The Italians claim that a specific working group has been set up to analyze the US-Soviet agreement in detail. The German version is that 7 all that has been planned is an informal considera- tion of the agreement prior to meetings of the EC j. political directors and foreign ministers in early 49 September. Whatever the case, this is the second time this year that the EC's political consultation machinery has discussed a defense topic of major importance. Unlike the talks held in such NATO forums as the Eurogroup, the EC discussions in- volve the French. If the trend toward EC consid- eration of defense topics continues, these discus- sions could assume a more important role in con- certing W tern European opinion on security questions Last December, Brezhnev said that a way could probably be found for the two blocs to establish business relations if the EC would refrain from "all attempts at discrimination." The ap- pointment of Fadeyev was probably decided at the CEMA council meeting in June.1 SO in addition to removing a contradiction to their policy of detente, the Soviets probably ex- pect some tangible benefits from a more positive attitude toward the EC. They may anticipate that CEMA's bargaining position will be strengthened if bloc-to-bloc negotiations take place and that concessions can be obtained in areas like agri- culture. Eastern European agricultural products have encountered difficulties in the EC market in recent years because of the EC Common Agricul- tural Policy. tJ The USSR undoubtedly hopes that by using CEMA to negotiate with the EC, the Soviets will be better able to control the tendency of individ- ual Eastern European states to deal bilaterally with the West. Some Eastern European countries may for the same reason resist formal bloc-to-bloc relations. Some are also concerned with maintain- ing their own relations with the EC. Romania, for example, independently applied for the general- ized preferences for EC grants to less-developed countries and was accepted by the EC in June.) horn said the Soviets told him that the ball is now in the EC court. Although the Soviet move CEMA APPROACHES THE EC oses problems for the community, the EC con- siders Soviet recognition, by itself, a welcome 50 TSoviet officials in Moscow told Prime Minis- development. The Soviet proposal for direct EC- ter Thorn of Luxembourg last week that CEMA CEMA negotiations is another matter altogether. SECRET Page 12 WEEKLY SUMMARY 3 Aug 73 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 1 1 " A ' that trade in agricultural and industrial products siould be handled similarly as the US would like, the EC position that there are "special problems" was also recognized. g;i LThe declaration suggests that participating governments obtain negotiating authority as repidly as possible in orde t ll t lk r o a ow a s about fn re-examining this position, the EC Com-S3specifics to start. This preference for speed re- The EC has long opposed such negotiations, not only because of a reluctance to acknowledge CEMA as an equal, but also because of the practi- cal problems of dealing with a regional grouping that lacks, among other things, a convertible cur- rency, a payments union, and a meaningful equiv- alent of the common external tariff.? proposal for negotiations that might rely pri- marily upon working contacts between the EC and the individual states of Eastern Europe, and reserve a suitably ambiguous, token role for CEMA. The commission will, in any case, take time to achieve a common EC position, especially since the community has not yet really begun to grapple with the substance of the common com- mercial policy it is suDDosed to annly to the East mission may succeed in working out a counter- GATT: READY TO BEGIN Si in a month-long meeting at Geneva, top trade officials of some 80 developed and develop- ing countries succeeded in drafting a declaration S')L'of principles to guide the coming multi-national flects EC fears that too much may be "given away" in the negotiating preliminaries if US trade legislation is held up in Congress. On the other hand, the EC agreed with the US contention that Washington's lack of authorizing legislation does not prevent analytical work from beginning right alter the formal opening of the trade negotia- tions. S,L the question of whether the trade negotia- tions can move forward only after monetary sta- J bility is achieved also remains to be settled in Tokyo. The US position has been that progress in the monetary area is dependent upon progress in the trade negotiations. Paris' extreme version of the monetary-trade link was rejected by its EC partners in favor of a formulation calling for parallel progress in the two areas but would go no further) trad e negotiations. The agreement on a draft 57 jThe active participation by the developing 11 5) ma es it all but certain that a ministerial meeting countries at the preparatory committee meetings in Tokyo, scheduled for 12-14 September, will J made it evident that the trade negotiations will kick off the negotiations, which have come to be r.2involve a rich-poor confrontation. In the bar- known as the Nixon Round. The draft avoids gaining over the draft declaration the rinci al p p , decisions, however, on several differences that are a' points gained by the less-developed nations were a certain to re-emerge not only in Tokyo but also r3watered-clown version of their demand for pref- during the negotiations themselves. The negotia- erential treatment and a provision calling for Geneva in November and to end in 1975.1 x' . Several controversies involving the US, EC, and Japan remain. Language was finally found in J- Geneva to disguise differences over the treatment r,of agriculture, but this will remain a very prickly issue between the US and the community. Al- though the declaration embraces the contention special procedures for negotiations between them and the developed countries. A dispute between the Africans and the Latin Americans over special consideration for the least developed countries, a category that includes some African countries but no Latin American ones, will be carried into the Tokyo meeting. The draft reflects wide support on this point for the Africans, particularly from the less-develnnpri rniinfrinc in Asia. 25X1 25X1 Page 13 SECRET 3 Aug 73 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 SECRE F_ iro s S 04A With parliament's long summ recess abou to begin next week, Prime Minister Rumor has invoked emergency decree laws to attack the soar- ing inflation that he regards as Italy's number one economic problem. Last week he slapped a three-month freeze on the price of food and the output of large industrial firms. Rents for persons with low incomes were frozen until the end of the year. The freeze package deals primarily with the symptoms rather than the underlying causes of the Italian inflation. The freeze should succeed in temporarily stemming the inflation and reducing expectations of further price increases that lead to inflationary hedging. The ultimate success of the measures will depend in part on whether price movements can be effectively monitored and public cooperation enlisted in a country where circumventing regulations is a fine art. The gov- ernment is unwilling to endanger Italy's precari- ous economic recovery and hesitates to invoke really strong deflationary measures in support of its anti-inflationary program. In addition, Ru- mor's commitment to long-awaited social reforms snakes significant cuts in government spending unlikely. Rumor is aided by widespread sentiment in favor of emergency measures. He will probably secure parliamentary approval of the decrees be- fore the recess next week, since he has the sup- port of his coalition partners. Labor leaders have been cooperative so far, and the opposition has maintained a low profile. Only the Neo-Fascists opposed the measures in early parliamentary voting, while the Communists and Liberals ab- stained. Governmental cohesion will not be tested severely until parliament returns in the fall and has to make some very tough choices on domestic reform issues. SECRET Page 14 WEEKLY SUMMARY 3 Aug 73 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 SECRET USSR: THE ECONOMY AT MID-YEAR The economic report for the first six months of t e year pictures a mild recovery from the poor performance of 1972, although shortages of C;q agricultural raw materials, growing out of the poor harvest last year, continue to limit gains in industrial output. Industrial production for civil- ian purposes grew by about 5.7 percent, much less than the recovery achieved in he first half of 1970 after the bad harvest in 19691 r5? rThe output of all industrial materials, except for electric power and petroleum products, grew at higher rates than a year ago. In the machinery category, the growth of producer durables slipped from the rate achieved a year ago, but consumer durables continued to improve, boosted by Civilian Industrial Growth (Annual percentage rate) 1970 1971 1972 1973* Over-all Industrial Production 7.0 6.0 5.0 5.5 Industrial Materials 7.0 5.5 5.0 5.5 Machinery Consumer nondurables 9.0 10.0 8.0 9.0 expanding production of television sets and re- suggests that consumers can expect supplies to frigerators7 improve in the coming months. fiP lOther indicators of trends in consumer wel- S'S rlndustries producing goods for use in agri- fare were mixed. Soft goods posted a modest cult? re posted a respectable, but not outstanding, 4' recovery after near stagnation last year. The out-I' performance. Increases in the output of fertilizer, 5q put of processed foods slipped; vegetable oils tractors, and agricultural machinery were in were down 15 percent and processed meat was keeping with the modest annual goals for the Five off by 6 percent Year Plan. Despite recent setbacks in farm J7? The leadership's determination to maintain or expand herds despite shortages of feed grain 4 and fodder led to a decline in meat production. By mid-year, herds in the socialized sector (three fourths of the total) were increased 2 percent above the levels of mid-year 1972. Although meat supplies were inadequate in half of the provincial cities visited by officers from Embassy Moscow during the first six months, the build-up of the herds, together with further imports of grain, output, Moscow apparently feels that the 1971-75 program to support agriculture is still adequate i 7 [Prospects for 1974 are brighter because of encouraging reports from the investment sector and the 1973 harvest. New plant completions increased by 13 percent in the first half of 1973 compared with the first half of 1972. Crop and livestock production should rebound, ensuring a much larger flow of raw materials from h farms next year. 25X1 -ECRET Page 15 WEEKLY SUMMARY 3 Aug 73 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 SECRET GREECE: A CONFIDENT PRESIDENT 7 &George Papadopoulos-the first President of the new republic-appears confident and in con- trol of his government. The 78.4-percent "yes" vote must be officially approved by the Supreme Court within fifteen days of last Sunday. The court is also obliged to consider formal com- plaints contesting the validity of the vote, and opposition politicians plan to submit a list o+ ")voting irregularities. The vote claimed by the re- gime will be validated, however, despite the offi- cial pressure and the usual skulduggery that clearly inflated the size of the affirmative vote.? 7,f jPapadopoulos' victory statement on 30 July included a pledge to fulfill his pre-election prom- ises. One of his deputies, Stylianos Pattakos, stressed to the US ambassador that the regime intends to follow scrupulously its constitutional obligations. Pattakos said that a constitutional court would be set up immediately to oversee the creation of political parties. He added that munic- ipal and national elections would be held by the end of 1974, although the regime has not yet determined which election will come first.) 77 VThe make-up of the republican cabinet is in doubt. The altered constitution will require a major re-organization of the government appara- tus, but Papadopoulos intends to move slowly and carefully. Military opposition increased dan- gerously as a result of his rush to establish a republic, and Papadopoulos wants to avoid gener- ating unnecessary frictions over the appointment of a cabinet. His key military supporters tear that, now that he has increased his powers, he will no NAI ox' Greets Few Chose "OXI " longer have to consider their views and interests. To allay their fears and check their disaffection, Papadopoulos may stretch out the cabinet selec- tion process until fall, particularly if he wishes to weed out some of the more contentious members of the oresent government. CYPRUS: NEW STRESSES 7P pore than 70 bombings, along with the kid- naping of a cabinet minister, are the latest prod- ucts of the struggle between Archbishop Makarios and George Grivas. One casualty occurred as a result of the bomb attacks, which have come from supporters of both Grivas and the govern- akarios has blamed Grivas for the kidnap- ing. The kidnapers, who have held Justice Minis- ter Vakis since 27 July, have not made their demands known, but a pro-Grivas daily has called for the resignation of Makarios and the dispersal of his auxiliary police force. Makarios has repeat- edly said that he will not yield to blackmail, and after the kidnaping vowed to wipe out Grivas' underground bands JO/ [The Archbishop has recently strengthened his security forces, rounded up scores of Grivas adherents, and restricted the pro-Grivas press. Al- though the aged Grivas' health reportedly is fail- ing and his supporters are heavily outnumbered by Makarios' forces, he and they appear deter- mined to retaliated Tone aspect of the rivalry-and the immediate c aus of the current incidents-is the controversy in the Cyprus church. A few months ago, Grivas and Athens supported an attempt by three bish- ops to defrock Makarios unless he agreed to relin- quish his presidential powers. The Archbishop responded by convening a church synod that re- buked the bishops and defrocked them instead. In late July, Makarios enthroned the first new bishop. The Archbishop's intention to pursue his purge of those who have challenged him ensures continuing problems, and probably more vio- lence? for the troubled Greek Cypriot commu- nity. SECRET Page 16 WEEKLY SUMMARY 3 Aug 73 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 25X1 25X1 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 .~ Jt'_,I1t I IiiiiiiiiiiiiiiiiV CUBA: CELEBRATION, CASTRO STYLE oO3JUnrelenting hostility toward the US was the main theme of Fidel Castro's anniversary speech on 26 July. Although his rejection of rapproche- ment conflicts with the Soviet policy of detente, his comments on domestic matters revealed pol- icy shifts that clearly show his increased accept- ance of Moscow's advice on the home front--even when it entails embarrassing ideological back- trackingI ,P2TAlthough Castro did not address the subject of Cuban-US relations directly, in discussing hemispheric politics he cast the two countries in clear-cut adversary roles. He thus reaffirmed his espousal of confrontation as the best means of capitalizing on what he sees as a growing anti-US trend in Latin America. He also reiterated his long-standing rejection of Cuba's reintegration into the Organization of American States and called for a new regional organization, excluding the US, that would enable the countries of Latin America to stand together against the US. He that, because the level of "political awareness" in ruled out any reorganization or rejuvenation of Cuba remained relatively low, material incentives J?j the OAS, saying: "It makes no sense to revive it; would have to be added to moral stimuli. He let us allow it to die a natural death." His remarks83vacillated on this ideological point until 1967, were a rebuff to those Latin American loaders when he shifted to strict adherence to moral who have been working to readmit Cuba as an incentives. Following the economic problems of active partici ant in th OAS e p J 22 While he declined to follow Moscow's policy of detente, Castro had warm praise for Soviet economic and military assistance and defended the USSR against "certain leaders... of the third world" who speak of "two imperialisms." He characterized those who draw parallels between the USSR and the US as servants of the "real 1970, however, material rewards gradually reap- peared, and regime spokesmen had to perform coivoluted verbal gymnastics to explain them in light of official policy. Castro has now accepted publicly the Soviet line that, although moral incentives are superior, both must still be em- ployed at Cuba's state of political development) imperialism." He probably made these statements P2, [Moreover, Castro hinted that he is playing a with an eye on the conference of so-called non- smaller role in the regime's decision-making aligned countries, scheduled for Algeria in Sep- process---yet another trend that the Soviets have tember. He may have decided to lead Cuba's been pushing. He put it this way: "If in the delegation himself and was using this speech as a uncertain times of 26 July (1953) and in the first means of getting a leg up on a leadership role at years of the revolution, men individually played the conference. If he does go, he will undoubt- decisive roles, that role is now being played by edl attempt to orient the proceedings against the the party. Men die; the party is immortal." A UST lesser role for Fidel has been apparent ~ for some time, but he has never admitted it publicly ?[Turning to the domestic scene, he ackriowl- before. He has not however, lost his grip on edged the "idealistic mistakes we have made in power. He still is undisputed ruler and has merely managing the economy" and called for a careful transferred to others a number of responsibilities _ - accounting of ex end +?r d es an p costs mat SECRET Page 17 WEEKLY SUMMARY 3 Aug 73 25X1 25X1 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 S+f In his fifth presidential independence day message, President Velasco lashed out against op- r ponents of his regime and declared that the mili- 86tary government will carry on "unflinchingly" with the economic, social, and political trans- formation of Peru. He made no mention of retire- ment. ooJ, 0( 1J Velasco appears to have resumed his role of moderator between radical and moderate factions in the military. He declared that the regime must consolidate achievements attained so far, but that it must also "deepen the course of the revolu- tion." This deepening, he said, will come in the form of action on the government's plans to buy out the US-owned Cerro de Pasco Company and promulgation of a long-awaited law on the owner- ship of property7 remain in private hands and need not be subject to "revolutionary" reforms as larger private businesses have been. I JAs he has done so often, Velasco emphasized that the Peruvian "revolution" is unique and op- posed to all dogmatic and totalitarian attitudes. The President went further than usual in disasso- ciating it from commurlism, but he also de- nounced blind anti-communism.) Joj 11 he counter-revolutionary threat was once again identified as an unholy alliance between displaced oligarchs who want to return to the past and dogmatic leftists who do not really know what they want. Velasco sees the former as the more dangerous, and his bitterest denunciations were for newspapers acting as the "principal Yspokesmen of right-wing counter-revolutionary JOVLln an apparent concession to the moderates, extremism." Behind the regime's most virulent the President reiterated that the state will never critics, according to Velasco, is the powerful hand dominate the economy. He promised that "small of unnamed "imperialist foreign interests" which :( scale" commercial and service enterprises will simultaneou ly encourage the right and finance the ultraleftI f ay Iln a point-by-point refutation of what he billed as the main lines of attack against the military government, Velasco denounced de- mands for a return to constitutionality, declared that social mobilization and agrarian reform will move ahead despite "minor mistakes," and hinted at increased government cont I over the media. More than hints are involved the Lima daily El 1C'onnercio is once again under pressure from gov- s'rnment-instigated labor trouble, ' %Velasco said that participatory democracy is still the revolution's goal, but he gave no indica- tion of when the people might start participating. Velasco also asserted that the regime knows where it wants to go, but he failed to mention that most Peruvians do not aooear anxious to go along. SECRET Page 18 WEEKLY SUMMARY 3 Aug 73 25X1 25X1 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 SECRET ECUADOR: POLITICAL BATTLEFIELD 27 [A war of words has broken out between Ecuador's military rulers and civilian political leaders. The battle threatens to spread, although the regime of President Rodriguez does not yet appear to be in real danger. $)7 11 n June, the press began to carry anti-gov- ernment statements by civilian politicians who had kept a low profile since the military took power in February 1972. The politicians were joined by retired Rear Admiral Valdivieso, who 71 otticers is especially disquieting to the armed P7 forces commanders, who believe such dissent reflects on the military as a whole? 2 7 Last month, the Democratic Restoration Front was formed. It includes several of the larger parties, and Valdivieso has come out in support of ao the front. Although the parties have agreed to oppose the military government, they have not yet been able to overcome political and person- ality differences or to agree on a plan to replace the current regime. )7tresident Rodriguez has led the counter at- tack against this wave of criticism. The govern- ment has warned that it will not tolerate the pq spreading of "false" or "subversive" charges, and has reiterated its resolve to continue in power until its loosely defined goals are met. Minister of ? Government Poveda has said that Valdivieso prob- ably will be arrested..- 8? #T h e military government apparently is united in meeting this challenge. There are no signs that Proano or Valdivieso has significant support within the armed forces, although each probably has a small following among younger, more liberal officers. The government's sharp reaction to the criticism, however, indicates that the leaders are concerned, not only about general disenchantment with military rule, but because the opposition may be growing confident enough to publicize documentation on official cor- ruption. It is highly unlikely that Rodriguez would step down without a fight, and there is no other officer to replace him who commands a wide base of support. The President, however, is likely to find himself under increasing criticism unless he can give at least a semblance of direction to his administration. He may use some nationalistic issue-territorial seas or petroleum resources-to relieve the domestic pressure. SECRET Page 19 WEEKLY SUMMARY was fired by Rodriguez over a year ago. 3 Aug 73 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 6E( -;HE I , 3 'resident Allende's "dialogue" with Chris- ban Democratic spokesmen this week only com- plicated Chile's prolonged political imbroglio. The ' - - iti l d All l i d d ' d oppos on ea ers rejecte en ng tac- e s e ay tcs in responding to their demands. They did not, however, have a firm plan ready to use against the 1r administration, despite their expectation that the qI talks would founder 4 3 tThe various plans under consideration by the Christian Democrats are not new. They consist IV chiefly of congressional action or another nation- cwide strike that they hope would pressure Al- lende to make concessions or create a pretext for some sort of military take-over of the govern- ment. Either course of action would require a ' degree of coordination, decisiveness, and strong leadership thus far lacking in most opposition ry~y moves against Allende. Additionally, divisions within the armed forces still inhibit significant military action against the government. General Prats r in spokesman for military con cerns. '$ lthough Allende would like to find a for- mul to relieve political and economic unrest, he probably believes he has little to gain and much to lose from making concessions. To the demand for a military cabinet, he pointed out that his relations with the military "are not good" and that officers might not cooperate in the unlikely event that his Popular Unity coalition would accept them in the cabinet. The Christian Demo- crats believe that Allende fears his own Socialist 13Party would leave the coalition if he were to appear to moderate the government Z Meanwhile, a truckers' strike like the one that touched off a widespread economic shut- down last October has greatly aggravated already #' 7serious supply problems. The naval commandant of Valparaiso has been put in charge of Chile's major port, which is also the focal point of a bus ~f _Sowners' strike. Railroad and fuel lines have been blown up to increase the impact of the truck q 7 strike, and violence is once again on the rise hr u h ut the country. qt SECRET Page 20 WEEKLY SUMMARY 3 Aug 73 25X1 25X1 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Secret Secret Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3 Next 1 Page(s) In Document Denied Iq Approved For Release 2007/11/16: CIA-RDP79-00927A010400050001-3