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Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Weekly Summary DOE review completed. DIA review completed. Navy review completed. NGA review(s) State Dept. review completed rARCffl $T : RECORD I C: C Secret Secret 15 March 1974 No. 0011/74 Copy N2 16 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Ee week through noon on Fhur.day_ It of Economic Research, the Office of Siratecaic Special Reports are Iiktetd in the CONTENTS (March 15, 1974) EAST ASIA PACIFIC I Syria-Israel 2 Israel: New Government and Negotiations 4 Arab States: On to Vienna 4 The EC Eyes Gold 5 West Europe - US: New Tensions 6 Cambodia: An Imperiled Enclave 7 Laos: Political Procrastination 8 South Korea: All's Quiet Now 8 Thailand: The Students Back Off 10 UK: Wilson Sets a Cautious Course 11 USSR-Japan: Siberian Development MIDDLE EAST AFRICA 13 1.4 15 16 17 18 Bulgaria Tightens Discipline USSR-France Communist Nuclear Power USSR: Mars Probe; Subs Portugal: African Policy Furor Spain: Church-State Tension's Rise Compromise "a la Beige" 19 Libya Seeks to Barter Oil 20 Oman-Iran: Tighter Bonds 21 Iran-Iraq: Cease-fire 21 Iraq: Kurdish Autonomy 22 South Africa: The Midas Touch 23 Ethiopia: Back to Work WESTERN HEMISPHERE 24 Guatemala: Election Aftermath 25 Cordoba Province: Peron's Policies 26 Venezuela: Orderly Inauguration SPECIAL REPORT (Published separately) 25X1 25X1 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 25X1 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Next 2 Page(s) In Document Denied Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 SECRET Syria-Israel Although Syria further strengthened its forces on the Golan front this week, there are signs that its military movements there have been ordered at least in part for internal purposes. In his Revolution Day speech on March 8, President Asad took his usual stance on negotia- tions with Tel Aviv, demanding-as he always has since the October war-a full withdrawal of Israeli forces from the Golan Heights and the restoration of "Palestinian rights." Although Asad said Syria will continue to maintain a state of war with Israel until his goals are attained, he also said the struggle has entered a political phase. The Syrians had taken a similar position in the joint com- munique issued at the conclusion of Soviet For- eign Minister Gromyko's visit to Damascus on March 7. Although the communique warned that there could be a "new explosion" in the Middle East if Syria's demands are ignored, both the statement and Asad's speech suggest the Syrians are still prepared to negotiate a disengagement accord with Tel Aviv. It now seems that Syrian activity on the Golan front could be intended by Asad to keep the pressure on Tel Aviv and to keep his own military preoccupied with the Israeli threat. Asad has reportedly ordered the Ministry of Foreign Affairs and Syria's news media not to issue inflammatory statements that Israel and other states could interpret as Syrian intransigence. Furthermore, tank squadron commanders were recently assigned to Homs military academy to take a six-month training course that they were originally scheduled to attend before the October war. Exchanges of fire between Syrian and Israeli forces have occurred daily during the past week. The sharpest clash occurred on March 8 when Syrian and Israeli gunners traded artillery and tank fire for several hours. Another lengthy artillery exchange was reported on March 13 along the northern edge of the Israeli-held salient into Syria. 25X1 Israeli tank crews Waiting at Golan SECRET Page 1 WEEKLY SUMMARY Mar 15, 74 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 SECRET The Israelis, for their part, have moved troops to positions from which they can better defend against any Syrian effort to pinch off the salient. Some Israeli units in the Golan Heights are now reportedly overstrength. (I - J Israel: New Government and Negotiations -Israel's new government focused on foreign In her speech to the Knesset on March 10, policy issues during its first week in office, after Mrs. Meir outlined the government's basic policy muddling through a cabinet crisis stemming guidelines and indicated that no fundamental primarily from domestic political disputes. change in foreign policy is contemplated. Both Prime Minister Meir Outlining policy she and Defense Minister Dayan, however, stressed the need for Israel to adopt a flexible approach in the Middle East peace negotiations, and to pursue further diplomatic contacts with the Arabs. Emphasizing that she had chosen a cabinet "without right-wingers," Mrs. Meir reit- erated that Israel was willing to negotiate a peace settlement with its Arab neighbors but said that Tel Aviv will continue to insist on defensible borders. This, she said, precluded a return to the 1967 lines as demanded by the Arabs. Deputy Prime Minister Alon on March 12 outlined the sequence of negotiations as envisaged by Tel Aviv; an arrangement of a Syrian-Israeli separation of forces, an interim arrangement with Jordan con- cerning the West Bank, and a renewal of negotia- tions with Egypt, then Syria and Jordan. Mrs. Meir emphasized the government's sup- port for the Geneva Middle East peace conference as a negotiating "base" that allows Israel at the same time to conduct bilateral talks with the Arabs elsewhere-something the government had preferred all along. The Prime Minister praised Cairo's policy on disengagement and peace "even if there are many ups and downs on the way," and said that the troop disengagement along the Suez Canal had been carried out "to the letter and the spirit" of the agreement arranged through Secretary Kissinger. SECRET 25X1 25X1 Page 2 WEEKLY SUMMARY Mar 15, 74 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 SECRE I "WV Dayan, too, said that Egypt was moving in the right direction and that the present dis- engagement line in the Sinai was clearly not the final one to which Israel would withdraw. He added, however, that he thought there should be no further Israeli withdrawals until a peace treaty had been reached with Cairo. The cabinet will be focusing its attention over the next several weeks on the Syrian troop disengagement issue. Mrs. Meir told the Knesset that the government will be able to present detailed ideas on the problem within two weeks. and is prepared to send an envoy to Washington for this purpose. Foreign Minister Eban left for the US on March 11, among other things to discuss and review the planning for the Syrian negotiations with Secretary Kissinger. Mrs. Meir said the government is also prepared to negotiate with Jordan concerning a West Bank settlement. She reiterated, however, that Tel Aviv would not negotiate with Pales- tinian terrorist groups intent on destroying Israel, and again emphasized the government's opposi- tion to the creation of a separate Palestinian state on the West Bank. She repeated her earlier pledge that new elections would be held before the government signs any agreement involving Israeli territorial concessions on the West Bank, if one of the government's coalition partners demanded them. The National Religious Party had asked for such a statement as part of its price for joining the coalition. Meanwhile, the government is clearly worried that Soviet Foreign Minister Gromyko's recent swing through Cairo and Damascus may have had a negative effect on the flexibility of presidents Sadat and Asad in the peace negotia- tions. Prime Minister Meir, Dayan, and one of the country's leading commentators all publicly ex- pressed doubts this week about Moscow's com- mitment to peace. Mrs. Meir went so far as to say ISRAELI LOSSES 7 Ilsrael this week published the names of the 2,522 military personnel who died in the October war-more than in the 1956 and 1967 wars combined.I[All but 190 of these were reservists, one reason the October war had such a profound effect on Israel's civilian population. Approximately 23 percent of those killed were officers. The high casualty rate among officers can be attributed to Is- raeli military tradition that calls for officers to lead their troops into combat. on March 12 that she is convinced the Soviet Union does not seek peace in the Middle East. The same day, Alon, evidently alluding to the US, called on the "friends" of both the Arabs and Israelis to exert their influence on the Arabs to adopt more sober, realistic and long-range pol- icies. He said that extreme Arab demands on Tel Aviv will only serve to drive Israel into a corner without leading to a solution. The Knesset approved the new cabinet after a lengthy debate on March 10 by a vote of 62 to 46, but there were nine abstentions-four of them from members of parties in the governing coali- tion. Mrs. Meir will probably have to spend more time than she would like mediating factional strife within her Labor Alignment and maintain- ing the unity of her coalition. As an initial measure, she expanded the cabinet from 19 to 22 members, thereby allowing her two coalition partners more ministerial port- folios. This, however, prompted the Alignment's Arab faction to ask for cabinet representation and the leftist Mapam faction of the Alignment to demand an additional post. The country's serious economic difficulties will require early attention. The Knesset votes on the budget several weeks from now and the government's first major test strength will probably come at that time. 25X1 SECRET Page 3 WEEKLY SUMMARY Mar 15, 74 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 SECRET' Arab States: On To Vienna The meeting of Arab oil ministers in Tripoli adjourned Wednesday evening without making any announcement about the oil embargo or future oil production levels. The Arabs will recon- vene on Sunday in Vienna, where the Organiza- tion of Petroleum Exporting Countries will be meeting to consider oil pricing policy'. ;Although the Arab oil nations are main taining an official silence on the future of the "oil weapon," there are claims, attributed to partici- pants at the meeting, that the oil ministers did, in fact, reach an agreement to lift the embargo and to restore oil production to pre-1973 war levels. JAt the conclusion of the Tripoli session, h owever, the conference chairman read a brief communique stating that the meeting was being adjourned until Sunday to give some of the minis- ters a chance to consult their governmentsjlThis I Lmay indicate that either new proposals were in- troduced or that there was a deadlock among the oil ministers.1 i c (According to an official Libyan news agency report, the Algerians proposed, as a compromise solution, the lifting of the embargo for a trial period of two months. The embargo would be reimposed presumably if no agreement on the made in Vienna, having been delayed to spare the feelings of the Libyans who favored maintaining the embargo) The EC Eyes Gold ,Soaring gold prices and the prospect of balance-of-payments deficits resulting from higher oil prices are increasing pressures in Europe for a substantial increase in the official price of gold. The official price has remained at $42.22 an ounce since February 1973, while the free market price recently hit $180. Italy and France are pressing for early action by the EC to increase the price of gold for transactions between central banks. West Germany, the Netherlands, and Britain are opposed to such action, hoping that the International Monetary Fund will agree to raise the price of gold later this year. Italy and France would gain the most pro- portionately from a price increase. At an official price of $150 per ounce, for example, their com- bined foreign reserves would increase by about $20 billion, or over 130 percent. A strengthened reserve position would benefit Italy particularly, greatly improving its credit-worthiness, now disengagement of forces in the Golan Heights weakened by a $6-billion Eurodollar debt; it also would free foreign exchange needed to finance an expected 1974 trade deficit of $8 billion. Paris favors the appreciation of gold because, in addi- tion to welcoming a sharp rise in the value of foreign reserves, it believes that gold should play an active role in payments among central banks. This change would be facilitated by giving gold a higher official price. The other three countries reject unilateral EC action in part as an unnecessary slap at the US. Bonn also is concerned about the inflationary impact of increased reserves. The gold question therefore remains under study in the EC mone- tary committee. Last week the EC monetary committee re- portedly ruled out fixing a new gold price. They are, however, considering a number of proposals to internationalize the problem, using a country's SECRET Page 4 WEEKLY SUMMARY Mar 15, 74 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 ,, JtC:Nt I gold reserves, for example, as collateral for Inter- national Monetary Fund loans. Next month, the committee will meet again to narrow the options. Differences among the EC members and Ger- many's strong position within the EC make uni- lateral action unlikely before the June meeting of the International Monetary Fund in Washington. If the price of gold is not raised at that time, the community will probably boost it unilaterally later in the summer because of the pressure of rising import costs. West Europe - US: New Tensions (American criticism of the EC Nine's decision last week to pursue a European-Arab dialogue on long-term economic and cultural cooperation has met with understanding in some European official and press circles. The predominant reaction, how- ever, has been surprise and puzzlement over "real" US motives, and worry about the implica- tions for European unity. There are some willing to concede that the US has been frustrated trying to achieve meaningful consultations with the Nine. They nevertheless appear dubious that the extensive prior consultation the US desires on community actions can be accomplished without making a mockery of European efforts at com- mon policy formulation. Adverse US reactions to the EC-Arab pro- posals have tended to be countered by European arguments that ? the US knew about the European inten- tion to talk with the Arab states since last October's summit of the Nine in Copenhagen; ? the US was kept informed of the state of the Nine's progress on this matter; ? the Nine had deliberately excluded ref- erences to a European role in a Middle East peace settlement and had made an ultimate EC-Arab foreign ministers' meeting condi- tional on agreements in working-level groups; ? the European effort is as likely to open differences among the Arabs as it is to unify them to resist the US mediating role in the Middle East; ? the dialogue with the Arabs is a long- term process that could bring to the surface differences among the EC members them- selves, and is thus not a real competitive threat to the US; ? France's partners, while seconding EC- Arab cooperation, partly in order not to widen the breach with Paris opened by the Washington Energy Conference, are still eager to participate with the US in the work of the conference-inspired energy coordinating group. Behind these arguments lies the fear of France's partners that angry exchanges across the Atlantic may be increasingly couched in terms that will eventually force the Europeans to choose between "Europe" and the US. They feel that this "choice" is not only impossible but also obscures the real issue for them-the struggle between the Gaullist conception of a "Europe of Fatherlands" and maintaining, however faintly, momentum toward a supranational Europe. Not many European officials are as outspoken as West German State Secretary Apel, who, in a recent interview, welcomed France's "plain talking," but at the same time called for confronting France's concept of Europe with Germany's desire for a supranational Europe. Chancellor Brandt has indicated he would welcome an early presidential visit in order to try to overcome US-European differences. The Ger- mans are clearly not hopeful, however, that the French will permit an explicit formula for politi- cal consultations-given Paris' line that such com- mitments would be tantamount to admitting a tenth member to the community table. 25X1 25X1 SECRET Page 5 WEEKLY SUMMARY Mar 15, 74 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 SECRET CAMBODIA: AN IMPERILED ENCLAVE 1 \Military activity was centered on Kampot ^ the Communists are also making a consider- again this week as both sides raised the stakes at able investment at Kampot, apparently seeking a that southwestern city. With the continued arrival victory to help offset their recent poor showing in of reinforcements from Phnom Penh and else- where, Cambodian Army strength at Kampot has increased to over 3,000. These troops are being supported by aircraft from the nearby base Ream and a small flotilla of navy gunboatsi the Phnom Penh region In a manner reminiscent of the insurgent at siege of Kompong Cham City last summer, Com- munist propaganda broadcasts have been warning ,27 11 f In a significant bid to improve the govern- men 's situation at Kampot, the army high com- mand removed the city's inept commander. His replacement wasted little time attempting to expand Kampot's tight defensive perimeter. By mid-week, government troops had made some gains, but the Communists were still within mortar range of the city itself. Despite shortages of food and water, civilian morale is holding up government de enders at Kampot of their inevi- table defeat" and urging civilians to leave the city.1 ,Elsewhere, government units in the Phnom Penh area have reopened Route 4 between the capital and the highway town of Kompong Speu. They inflicted some heavy casualties on the Com- munists in the process. Cambodian Army troops have also made some progress in clearing Route 1 southwest of Phnom Penh Domestic Difficulties .~.,C Schools in Phnom Penh, which reopened on March 6 after being closed for almost two months, partially as a security precaution, shut down again early this week. The latest closure resulted from the determination of disgruntled teachers to teach only the first ten days of the month. Leaders of the national teachers' associa- tion have vowed to stick to this policy until the Ministry of Education explains more clearly what the government is willing to do to meet their economic demandsl [Meanwhile, radical students in Phnom Penh showed signs of stirring up fresh trouble for the government. They reportedly are pressing for a commemorative ceremony on March 17 for stu- dent-teacher activists killed a year ago by govern- ment security agents. The government has already indicated that such a ceremony will not be allowed because it would probably turn into an antigovernment rally. In addition, the government has vetoed public observances of the fourth anniversary of Sihanouk's ouster on March 18. City officials have been warned, however, that if local disturbances should occur on either date, they should refrain from usin firearms quell the unrest. SECRET Page 6 WEEKLY SUMMARY Mar 15, 74 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Iftwe SECRET ime LAOS: POLITICAL PROCRASTINATION I- 7 Prime Minister Souvanna has encountered further delays in his efforts to form a new coali- tion government. Much of the responsibility for f t in the coalition n um tion without some form of prior approval by the assemblq. the recent loss o mome negotiations rests wi the Lao Communist lead-,O Souvanna's evident discouragement over ership in Sam NeuaJ Chief Pathet Lao negotiator thee events may be tempered somewhat [y the Phoun Sipraseuth returned to Vientiane on March return to Vientiane this week of the North Viet- 9 after nearly two weeks of consultations in Sam namese ambassador after an effective absence of Neua, but there are no indications as yet that he nearly 10 years. The Prime Minister will probably brought back any new proposals that might break view this development as a further indication of the stalemate.l Hanoi's support for a coalition government and of L se fire He may ea h "2.1 )Although Phoun is back, there is still no sign of senior Lao Communist official Phoumi Vongvi- chit. Souvanna has been hoping that Pathet Lao chairman Prince Souphanouvong would soon re- turn Phoun to Vientiane as his plenipotentiary representative, with the promised list of Commu- nist candidates for the coalition cabinet and its quasi-legislative advisory political council. Mean- while, the Pathet Lao negotiating delegation in Vientiane, almost certainly taking its cue from Sam Neua, is now demanding more effective im- plementation of the procedures for neutralizing the twin capitals of Vientiane and Luang Prabang as the price for further progress toward forming the coalition.1 J The Communists' intransigence has played into the hands of Souvanna's conservative politi- cal opponents in the National Assembly. They are now demanding that the King convene a special legislative session to address the constitutional problems raised by Souvanna's plan to form the new government by direct royal investiturlThe deputies claim they are not trying to obstruct Souvanna's scenario for forming the coalition, and they actually appear to be chiefly concerned with securing or maintaining positions in the new government?In any event, the special session may 2?not materialize because the cabinet has advised the King that the session would be unwarranted inasmuch as the assembly formally reconvenes in early May. To make matters more complicated for the Prime Minister, however, there are indica- tions that the King may be backpedaling from his earlier assurances that he would invest the coali- e aos c its satisfaction with t also calculate that the ambassador's reappearance will inspire the Pathet Lao to be more flexible in their negotiating demands. 25X1 25X1 SECRET Page 7 WEEKLY SUMMARY Mar 15, 74 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 SECRET SOUTH KOREA: ALL'S QUIET FOR NOW lGovernment confidence that the tough policies of the past few months would damp domestic opposition was borne out last week as Seoul's major universities reopened without in- ciden social action groups seeking to increase political awareness among workers and thus bring them into the mainstream of osition to Pak's ol- icies. The regime's heightened anti-Communist campaign, which has focused on Pyongyang's recent sinking of a South Korean fishing boat and other "provocative" activity, has been a major factor in defusing the situation: Many critics of k1the government now believe tha't North Korean hostility toward the South is undiminished, and that backing for the President's tough domestic policies is warranted. These critics include some senior military officers who had questioned the need fox draconian tactics against domestic dis- sidentsIlThe same feeling of solidarity in the face bf the Northern menace is reportedly evident on -some campuses and is being buttressed by the ;.regime's continuing hard line in bilateral negotia- tions with Pyongyang IAlthough Pak's domestic problems have eased, he is hardly out of the woods. Some stu- dent protests are still likely this spring and could provide a catalyst for political action by intellec- tuals and Christians) The regime is alert to prevent disturbances and is quietly arresting students at- tempting to generate opposition's Economic Problems Loom ) The regime is giving increased attention to the plight of the economically hard-pressed urban workers who have been hardest hit by the doubling of the cost of living in the past year ,President Pak has taken a number of measures to meet anticipated demands for higher wages and better working conditions. His willingness to in- volve himself directly in labor affairs reflects growing concern that the demands of urban workers could easily become linked with calls for political reform)1ln the past two months, the ,regime has moved to crush efforts by Christian THAILAND: THE STUDENTS BACK OFF ~` Unlike previous encounters, the Sanya gov- ernment has gained the upper hand in its latest wrangle with student activists. Former student leader Thirayut Bunmi has called off further pro- test activities pending results of a government investigation into charges that government of- ficials burned down a village suspected of sup- porting Communist insurgents) yy Thirayut's backpedaling reflects a growing -Wva eness by the students that official and public tolerance of their agitation is wearing thin. At the height of Thirayut's campaign, Prime Minister Sanya publicly expressed his "disappointment" with Thirayut's activities, and the police implied in interviews with Bangkok jour lists that he might be a Communist sympathizer! While staying in the background, key generals also let it be known that the army was ready to crack down on unruly studen{i q('' SEven though the government seems to have cowed student leaders, at least temporarily, it must steer a careful course in handling the village incident. If it tries to whitewash the affair, it risks renewed student agitation; it must also deal care- fully with military sensitivities, which have been aroused by student charges of misconducfl tj, ,. [Although the government's investigation is )n t o ye complete, press reports indicate that gov- ernment investigators have already concluded that the village was indeed a Communist base, and that local defense volunteers were responsible for destroying it. If the government accepts these findings, both sides should be satisfied because the blame would fall on local officials, and the army would be absolved of any wrongdoing. SECRET 25X1 25X1 Page 8 WEEKLY SUMMARY Mar 15, 74 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 25X1 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 SECRET he relatively moderate program outlined by Zrim Minister Wilson's minority Labor govern- ment this week is expected to be supported by both wings of the Labor Party in addition to most of the opposition groups. The government's mar- gin of support will vary, depending on the issue and the attitude of the opposition parties, with the views of the Tories of greatest significance for the survival of the government. ii, sOn the domestic front, Willson plans to subsi- dize some food products, improve pensions, and increase home construction. He promised to re- peal the Industrial Relations Act detested by the unions and replace it with a conciliation and arbitration service. The only nationalization sug- gested was a pledge to prepare proposals for pub- lic ownership of development land. Wilson did not propose to nationalize any aspect of the North Sea oil operations, although he did call for "a much greater public share in the benefits."' e . 3, The most controversial measure in the pro- gram was Wilson's pledge to seek a "fundamen- tal" renegotiation of EC entry terms and to put the results before the British people. Labor's strategy with respect to the EC is still unclear, but Foreign Secretary Callaghan is scheduled to go to Bonn next week to confer with Chancellor Brandt and Foreign Minister Scheel, probably on EC mat- ters. According to a press report, the British in- tend to be present at all EC meetings, but they would not approve any major political decisions until the government works out its European policies] - i The first test of Britain's intentions may comb at the meeting of EC agricultural ministers that will probably take place next week. The Community must reach agreement on farm prices by April 1, and the French and German govern- ments, in particular, are under strong pressure from farmers to gain new--and higher-prices quickly. Should the UK block agreement, consid- erable turmoil among the farmers is likely and the governments could take unilateral measures that might-seal the fate of the common agricultural policy ;LC agricultural commissioner Lardinois has visited London and tried to explain various com- promises that could satisfy UK interests without wrecking the community's farm policy. Wilson may try to take advantage of these, as well as attempt to win agreement in principle for an overall readjustment of Britain's financial burden under the common agricultural policy: On other foreign policy issues, Labor prom- ised "full support" for NATO and the main- tenance of "a modern and effective defense system," but with defense expenditures reduced after consultation with Britain's allies. The gov- ernment also will "support the search for a just and lasting peace in the Middle East" based on UN resolutions calling for the withdrawal of Is- raeli forces from occupied Arab territories. lWilson can count on the support of the Li'befals, as well as the Scottish and Welsh nation- alists, for most of his domestic program, although the latter may not always show up to vote on issues not directly related to their own interests. They also may become uncooperative if Wilson does not meet their demands for increased self- government in Scotland and Wales. Labor is ex- pected to move cautiously on nationalization, in view of the strong opposition of Tories, Liberals, and the Ulster Protestants whose combined votes could bring down the government.] On the EC membership question, the Liber- als and the Tories, with the exception of a few followers of Enoch Powell, would oppose with- drawal or any tough British stand. The national- ists and the Ulster Protestants would favor with- drawal. Wilson may not be able to count on all of his own parliamentary Labor Party to support his EC plans. There are now 75 Labor pro-marketeers in parliament and if they defy party discipline, as they did several years ago over the same issue, they would bring down the government if the issue was withdrawal from the EC.' ,t"--iWith the exception of a few Liberals who would like to see an election sooner rather than later, the bulk of the opposition members of parliament are like) to coo erate with Wilson over the near term. SECRET Page 10 WEEKLY SUMMARY Mar 15, 74 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 ? SECRET USSR-Japan SIBERIAN DEVELOPMENT MOVES FORWARD 7 The USSR and Japan initialed a document Ylat week that could pave the way for one of their biggest economic deals since the end of the Sec- ond World War. If a final agreement is reached, the Japanese will provide a credit of more than $400 million to help finance a coal mining project in Yakutsk in eastern Siberia. In return, the Japa- nese will get more than five million tons of coking coal annually for 16 years beginning in 1983.1 1 -1 (The terms of the bank loans and the price of he coal are among the important details that still have to be worked out at negotiations that will begin in Tokyo later this month. The Japanese, who found the Soviets more eager to negotiate than before, are con, ident that a final agreement will soon be reached. jC1 tThe Yakutsk coal project has been the most promising of the five prospective Siberian pro- jects. The outlook is not so favorable for joint development of Siberian oil, gas, and timber. The project with the next best chance of success in- volves exploration for Sakhalin oil. Soviet trade and banking officials are expected to go to Tokyo I to determine the amount of capital that Japan will provide for offshore exploration. The USSR has been asking for $200 million in equipment and services, and the Japanese have been offering substantially less [The agreement on the Siberian coal project is the first serious indication that the long dead- lock over the plans to exploit Siberian resources may be breaking. General Secretary Brezhnev sent Prime Minister Tanaka a message urging joint de- velopment in Siberia just before the Japanese delegation arrived in Moscow to negotiate the coal agreement. Soviet press commentary has also chided the Japanese for delaying decisions on Soviet-Japanese economic relations. This com- mentary strongly suggested that the Soviets were piqued by the fact that Tokyo's relations with Moscow were taking a back seat to its relations with Peking Nevertheless, serious obstacles remain. The ~Ja~pa ese need US equipment to undertake the Yakutsk oil and gas project, but US participation is threatened by the prohibition of Export-Import Bank financing for the Soviet Union. The Soviets, for their part, appear to have some trepidation about sharing their most vital resources. Moscow, moreover, believes that Japan may be the country that is hardest hit by the energy crisis and that it will eventually have to come to terms with the Soviets on a long-term basis. Japanese Interested In Siberian Resources asF/e "Yakutsk Oland `Vffshore Oil .,R ?,,;"and as Fiifd 0 500 NAUTICAAL LM MILES Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 25X6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 SECRET BULGARIA TIGHT NS DISCIPLINE The Bulgarian arty) has 4 een predictably prorpt in supporting the Soviet idea that detente calls for greater ideological discipline among Mos- cow's East European allies. Now Sofia is having trouble implementing the Soviet guidelines. At the Prague conference of propaganda specialists in January, for example, party secre- tary Konstantin Tellalov strongly endorsed the Soviet call for an "ideological offensive" which, he said, should focus on the weaknesses of the capitalist system. In mid-February, a party ple- num exhorted the faithful to guard against the dangers inherent in detente from "both the right and the left," and to understand that "there is not, and can never be, peaceful coexistence in ideology." Converting such exhortations into action, however, is apparently another matter. In the main speech at the plenum, party secretary Aleksandur Lilov admitted that there is "weak- ness" within party ranks, and scored those "even in high positions" who hold mistaken views on what detente and cooperation with the West is all about. Bulgarian propaganda subsequently took a slightly harsher tone toward the West, though it is still less caustic than it was a year ago, and news features are focusing on the ills afflicting capital- ist societies. Commentaries on some US policies, however, are characterized more by lack of bal- ance than by outright attacks on US actions. Additionally, Sofia has begun more careful screening of applicants for foreign travel, in keep- ing with Lilov's call to mobilize Bulgarians as traveling salesmen for socialism. There are, how- ever, no indications that prospective travelers are receiving any guidance on how to propagandize socialist achievements abroad. On a personal level, the drive has moved some Bulgarians to reduce their contacts with US Embassy officials. A national party conference is scheduled for later this month, ostensibly to review progress since the party congress and to discuss material and cultural standards. The Bulgarian leaders, in hopes of ending the current indecision among party officials at all levels, may use the confer- ence as a forum in which to spell out the details and implications of the drive for greater ideologi- cal discipline. USSR-FRANCE 1Soviet-Frenh relations remain ruffled, Presi- dent Pompidou's 24-hour visit to the USSR not- withstanding. Both Pompidou and Brezhnev lauded the exchange of views, but the absence of the usual communique and the description of the talks as "frank" and "realistic" suggest that sig- nificant differences remain. The European security talks at Geneva fig- ured prominently among the wide variety of in- ternational and bilateral topics discussed. Pompi- dou agreed with Brezhnev that the conference be concluded rapidly, but refused to endorse a sum- mit-level finale unless it was justified by prior progress. Although the Soviets had received fore- warning of Pompidou's views during Gromyko's visit to France last month, Pompidou's position is still a painful rebuff to Brezhnev who has put great personal store in the conference and in a grande finale for it. As for the Middle East prob- lem, Pompidou is said to have merely "taken note" of Brezhnev's hints that France should in some way associate itself with a peace settle- ment. 25X1 Brezhnev and Pompidou SECRET Page 13 WEEKLY SUMMARY Mar 15, 74 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 SECRET COMMUNIST NUCLEAR POWER The Soviet nuclear power program, lagging far behind the US effort, is finally beginning to get off the ground. Although nuclear power pro- duces only a minute portion of electric power in the USSR, its share is growing rapidly as the result of a sizable construction program now under way. The first 440 megawatt reactor at the Kola nuclear power plant on the Murmansk Peninsula went into operation last year, bringing the total capacity of Soviet nuclear power plants to 2,400 megawatts-about 10 percent of US capacity. So- viet nuclear power capacity should double this year with the addition of a second 440 megawatt unit at the Kola plant and the planned start-up of two 1,000 megawatt units at the Leningrad nu- clear power plant. Moscow is concentrating its nuclear power plants in the European USSR, where 80 percent of Soviet electric power is consumed. This will reduce the need to transport fuel from Siberia for conventional electric power generation and relieve the pressure to develop the capability of trans- mitting Siberian power to the European USSR. Each 1,000 megawatts of nuclear capacity in the European USSR will reduce the fuel needed from the east by the equivalent of 2 million tons of coal per year. The USSR is also assisting Eastern Europe in nuclear power plant construction. Nuclear capac- ity in Eastern Europe, however, will remain neg- ligible for some time. ? A 70 megawatt nuclear power plant built with Soviet help has been in operation in East Germany since 1966, and a Soviet 440 megawatt reactor began. operation there at the end of 1973. ? Soviet technicians helped complete a 150 megawatt power plant in Czechoslovakia in 1972, and nuclear power plants with Soviet 440 megawatt reactors are under construction in Bulgaria, Czechoslovakia, East Germany, and Hungary. ? Poland and Romania are scheduled to have Soviet 440 megawatt reactors by 1970 1973 1974 1975 1980 Installed nuclear power (Plan) (Plan) (Plan) capacity (MN/) 925 2,400 4,864 8,000 30,000 Production of electricity (billion kwh) 3.5 Share of total electricity 0.5 SECRET Page 14 WEEKLY SUMMARY Mar 15, 74 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 SECRET The Soviets have been unusuallyy frank in o sing the fate of their latest series of Mars discl space probes. Mars 6, the last of the four probes to reach Mars, passed the planet on March 12 and released an instrument capsule in an attempt to obtain data and TV pictures from the planet's .7 / Two Soviet nuclear-powered submarines, one V-class attack and the other a C-class cruise- missile unit, were sighted in the Indian Ocean on March 7. This is the first time th t submarines of these types have been sent there. 1 surface. The instrument capsule transmitted data `~ 2. jThe submarines are believed to have left during its descent but, according to a Tass an- Northern Fleet waters in January. When last nouncement on March 14, radio contact broke sighted, they were in the Gulf of Aden headed off just before it reached the surface. toward the Somali port of Berbera, where they may take on fresh provisions. After operating in Three days earlier, Mars 7 passed the planet and also attempted to land an instrument capsule. According to the Soviets, a malfunction occurred and the capsule flew by the planet instead of descending to the surface. Last month Mars 4 and 5 arrived, intended to orbit the planet, but Tass reported that only Mars 5 went into orbit. These spacecraft were to photograph Mars and relay data back to earth from the instrument capsules to be released by Mars 6 and 7. The Tass announcements are terse and do not provide any details concerning the nature of the failures. In recent years Soviet scientists have become increasingly willing to discuss failures in the space program at international conferences, but Tass has rarely admitted such failures.( the Indian Ocean, the two submarines probably will proceed east to become the first in their classes to operate with the Soviet Pacific Fleet) 1 3 VThe C-class submarine, which has been used to track US carriers in the Mediterranean, carries eight SS-N-7 anti-ship missiles. These missiles can be fired from underwater, using the submarine's own sonar for target detection and tracking. The V-class carries up to 32 torpedoes and is used primarily for anti-submarine operations:) The Soviet Indian Ocean naval group also includes two F-class attack submarines. The Soviet surface force there was recently augmented by a Kresta II - class guided-missile cruiser, the first time a ship of this class has been in the Indian Ocean. In addition, the surface force in- cludes a destroyer, two ocean escorts, two fleet minesweepers, an amphibious ship, and several C-class Cruise Missile Submarine SECRET Page 15 WEEKLY SUMMARY Mar 15, 74 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 SECRET PORTUGAL: AFRICAN POLICY FUROR 1 ' The internal dispute over Portugal's African policy continues to send shock waves through the Portuguese establishment. A four day military alert, which confined troops to their barracks, was lifted on March 12, but younger officers who agree with General Spinola on the need for greater autonomy for the overseas territories, are being quietly posted as far away from Lisbon as possiblei. a muc ecora a colonel who served wit~c- tion under Spinola in Portuguese Guinea has been reassigned there for a fourth tour. Another Spinola supporter has been suddenly withdrawn from the Army Staff College and assigned to an obscure post in the northwestern corner of Portugal. He reportedly was the spokesman for a group of officers at the college who refused to support a plan last December for a government take-over by ultrarightistsl 1 ' \The transfer of these officers, and others like them, suggests that rightists are attempting to undercut Spinola's support within the military. Once this is achieved, they may feel more secure about disposing of Spinola himself.1 ?7 [Spinola is at the center of the controversy because of a book he published last month. It argues that Portugal's current African policy isolates it from the rest of the world, is too expensive, and, as a practical matter, is not working 7:a ( His thesis has found considerable support in the officer corps, particularly among the junior officers, who are tired of repeated African tours. Reformist circles also are backing Spinola, along with pragmatists who are concerned over the large percentage of the national budget that is spent on defense-.1 `) [Prime Minister Caetano has been trying to appease both sides in the dispute but the pros- pects for a compromise do not seem good, now that the debate has been made public. A cabinet reshuffle and changes in military commands may be necessary to restore unity within the govern- ment's The reaction from Angola, one of the over- seas territories, is mixed. Most civilian and mili- tary leaders seem relieved that Spinola's argument for self-determination has run into trouble. Some officials, concerned about a regression to the Salazar era, say that Portugal's African policy can never be the same now that Spinola has spoken out. The media in Angola have supported Prime Minister Caetano's handling of the affair, al- though one editorial criticized the National As- sembly for endorsing Caetano's actions without having fully debated the issues. SECRET 25X1 25X1 Page 16 WEEKLY SUMMARY Mar 15, 74 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 w SECRET SPAIN: CHURCH-STATE TENSIONS RISE 96, 1 pastoral letter calling for greater autonomy for the Basque provinces has caused a major dispute between church and state leaders. The pastoral, which was authorized by Bishop Anoveras of Bilbao and read from the pulpit on February 24, directly challenged Premier Arias. In a speech to the Cortes on February 12, Arias had warned the church to stay out of politicsC jThe Anoveras case has created a flurry of nego- tiations involving the government, the Spanish Epis- copate and the Vatican. The government wanted to deport Anoveras, who was under house arrest during the first week of the crisis, but was unable under the terms of the Concordat to act against the bishop without the Vatican's permission"( h_, The government claims it has been in constant communication with the Vatican. Police surveillance around the bishop's house was withdrawn after a hurried trip to Rome by the resident papal nuncio. Anoveras was allowed to attend a meeting of the Spanish Episcopate in Madrid, following a statement on March 9 denying that Anoveras had any intention of attacking national unity. The statement, which can be loosely interpreted as an apology, may help defuse the crisis] )G1 The church has not backed down, however, from its traditional stand on church-state relations in Spain. The statement reiterated a number of basic prerogatives enjoyed by the Spanish church under the terms of the Concordat. The government was reminded, for example, that each bishop had full liberty to administer his diocese, to preach the gos- pel based on concrete temporal problems, and that the Vatican had the exclusive right of judging the pastoral actions of bishops( 'the government has not yet responded to the statement, but it may reply after a cabinet meeting on March 15. It is widely rumored that Franco has been personally involved in the case, and he is said to have been responsible for mediating the deep differ- ences that have been reported in the cabinet over this issue. The Anoveras case, therefore, has not only disrupted church-state relations, it has again brought to the fore the question of who will arbitrate dif- ferences in the government after Franco is gone. SECRET Page 17 'WEEKLY SUMMARY Mar 15, 74 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 SECRET COMPROMISE "A LA BELGE" IThe Belgian parliamentary elections of March 10 checked and partially reversed trends set during the past two elections. The meteoric rise of the ethnic parties was halted, and the three old-line parties more or less held their own. These results could be interpreted to mean that eco- nomic issues have overtaken regionalism as the most important concern in Belgian politics. It is more likely, however, to reflecta general feeling that the time has come to reach a compromise "a la beige" on the central problem of regional au- tonomy, which threatens to tear the country into three insignificant entitiel ernized" platforms in which they stressed their commitment to increased autonomy for the re- gions. Unlike previous elections, moreover, pre- liminary assessments indicate that local issues and personalities had a strong impact on voting pat- terns. The realization that essentially parochial ethnic parties are less able to cope with the eco- nomic and social problems manifestly besetting the country undoubtedly also played a part. In this vein, the looming showdown between the Belgian Government and the multinational oil companies may have influenced voters to opt for the more "national" parties 1 Ironically, the moderate Social Christians, wI o had opposed early elections, were the only The King, after consulting party leaders, will party to benefit. The Social Christians scored name a formateur of a government-probably a gains in both Flanders and Wallonia for the first Social Christian/Socialist coalition. Although the time in 16 years and increased their parliamentary Liberal votes are needed to produce the two- lead by 5 seats. Thus strengthened and virtually' ''thirds majority essential for regional reforms, the assured of leadership in the next coalition, the conservative views of the party are unpopular, Social Christians are in a good position to domi- especially with the Socialists. The chairman of the nate the Socialists, in spite of the latter's greater y Flemish wing of the Social Christians has already party disciplined announced that his party has "written off" the , - Liberals as a coalition partner) ,, i The Socialists who ambled t i g ,- o ga n domi nance in a new coalition by bringing down the first Socialist-led government in 15 years, lost two seats, widening the gap between the two major parties to 131 The linguistic parties, catering to ethnic de- manls for more rapid and far-reaching regional ,autonomy, failed to increase their strength. This mediocre showing will decrease their chances of paricipating in the next governrnenf] ,)]The chastened Socialist Party will have less authority to push its economic reforms as a pre- condition to coalition, and there will be pressure from its left wing to stay out of the new govern- ment. However, the left wing has been weakened by Social Christian gains in Wallonia, and many Socialists, disgruntled by the lukewarm response to the left wing's radicalized platform, may favor cutting their losses by staying in the government.i lThe swing back to the old-line parties may fr )4he alternative to a "traditional" coalition repr4sent a vote of confidence for the relatively would be a grouping of Social Christians, Liberals moderate plans for regionalization embodied in and ethnic parties. Such a coalition was rejected the December 1970 constitutional reforms. The by the Wallonian wing of the Social Christian Socialists, who have most to lose from radical3) Party in January when Leo Tindemans was -decentralization and most to gain from concen- charged with putting together a makeshift govern- tration on national social and' ' economic issues, ment in order to stave off elections. Unless the have interpreted the results to mean that regional- Wallonian wing were willing to give ground, an- ization is no longer the cornerstone of Belgian other attempt along these lines could exacerbate nolitirs i .. .. -. The three old-line parties successfully dulled the edge of ethnic rivalries by presenting "mod- wings and bring on a complete split. In any event, a government comprising such disparate groups SECRET Page 18 WEEKLY SUMMARY Mar 15, 74 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 VAW SEUNb I IWO, '[/,Libyan Premier Jallud's recent junket to European capitals was motivated largely by com- mercial considerations. As a result of the national- ization of some foreign oil interests, the govern- ment is faced with the task of marketing up to 70 percent of Libyan crude oil output. Moreover, unlike many other major oil producers, Libya continues to show strong interest in barter deals] In recent months, preliminary agreements, Sweden, and negotiations are in progress with 1J' West Germany. In Eastern Europe barter arrange- ments with Romania and Bulgaria have been re- newed and new barter contracts have been signed with Poland, Czechoslovakia, and Hungary.( JJ~ ` Libya's strong commitment to the principle df dil barter sales predates the October war. Dis- illusionment with cash sales stemmed initially from the loss of foreign reserves resulting from the US dollar devaluation. Subsequently, nation- alization of the BP/Bunker Hunt oil concessions and the ensuing threat by the former operators to take legal action against the sale of nationalized oil spurred a Libyan search for barter markets. The search accelerated last summer following the Libyan take-over of 51 percent of the assets of the other foreign oil companies operating in Libya. By the time war broke out, Libya had concluded oil barter deals with the USSR, Romania, Bulgaria, Brazil, and a number of devel- oping countries. Libyan representatives also had visited state oil companies in France and Italy seeking to arrange long-term agreements covering the exchange of Libyan oil for capital goods, technical assistance, and arms. 25X1 `% / JIn view of the general softening of oil prices and Libya's cavalier attitude toward contracts, some of these barter deals are likely to fall through. Libya continues to shop among the developed countries for the goods it wants, and it may renege on some contracts in favor of others for either economic or political reasons. Arrange- ments with the East European countries-with the possible exception of Romania, which offers advanced oil technology-will be particularly vulnerable because of Libya's low opinion of most East European goods. The developing coun- tries that have almost nothing to offer but polit- ical support may fare worst of all, especially if Libya achieves better accommodation with other Arab states Italy and France, however, may reap fringe benefits. In the wake of recent barter agreements, affiliates of both the Italian and French state oil firms have secured sizable new oil concessions in Libya. The agreements, which involve joint opera- tion with the Libyan state oil company, will entitle the European firms to about 20 percent of any oil discovered. plus a preferential claim on SECRET Page 19 WEEKLY SUMMARY Mar 15, 74 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 SECRET OMAN-IRAN: TIGHTER BONDS Ties between Muscat and Tehran were strengthened significantly as a result of Sultan Qabus' visit to Iran earlier this month. The Shah gained the first public commitment by another Persian Gulf littoral state to his call for regional security cooperation). In the final communique, the two countries announced their determination to act jointly to meet any threat to the security of either and to keep the Strait of Hormuz and adjacent seas free for navigationj `I The statement is a considerable victory for the Shah whose efforts to conclude some type of mutual security arrangement with other gulf leaders have been unsuccessful. Qabus UNITED 4R'AB Abu Dhab , SAUDI ARABIA Dhofar YEMEN (Aden) Salala h Muscat is well aware that his closer cooperation with the Shah risks alienating his Arab neighbors, espe- cially Saudi Arabia, who are suspicious of Te- hran's intentions in the lower gulf. The Sultan has an overriding interest, however, in ensuring that more Iranian help will be available if needed to combat leftist guerrillas in Oman's Dhofar Prov- ince. An Iranian force of some 1,400 men is currently in Oman supporting the Sultan's effort.; he Iranians are said to have accepted Muscat's claim to the Quoin Islands and agreed that the waters between the islands and the Omani mainland should be con- sidered Omani internal waters. Both points had been causes of disagreement between the two countries during median line discussions in Geneva last fallI - In addition, Iran agreed to establish an Iranian bank in Muscat, to initiate weekly air service between the two capitals, and to provide SECRET page 20 WEEKLY SUMMARY Mar 15, 74 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 25X1 25X1 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Now, SECRET NMI* Fighting on the long-troubled Iran-Iraq bor- ination of Luis Weckmann, Mexican ambassador der as virtually stopped, following the cease-fire to Bonn, as the observer, but Tehran has not yet arranged last week by Iraqi Baathist leader Sad- responded\[From 1967-69 Weckmann served as dam Husayn al-Tikriti and the new Iranian ambas-7 his country's envoy to Israel, and the Iranians sador in Baghdadi' Forces of both sides remain may fear he will lean over backwards to prove he concentrated in the area, however, and in the is not anti-Arab. absence of a broader rapprochement, new border skirmishes could occur at any time), r~,(t (Diplomatic relations between Baghdad and eh an, re-established in October, have remained intact despite the major border clash a month ago and the serious fighting at scattered locations last week. Representatives of the two countries have maintained a dialogue and were finally able to agree on the wording of a UN Security Council consensus statement, issued in response to Iraq's formal complaint. The two sides may begin nego- tiations soon on border demarcation and other fundamental problems, but real progress is likely to be slow because of historic enmity and con- tinuing mutual suspicion j ((1 Iran would probably like to keep Iraqi forces occ pied on the border, believing that it would then be more difficult for Baghdad to settle its Kurdish problem and concentrate on subversion in the Persian Gulf and within Iran. At the same time, however, the Shah is anxious to establish his good faith and fairness in dealing with Iraq in order to prevent erosion of his carefully nurtured policy of cooperation with the Arabs. Moreover, the restoration of relations between the two neighbors was widely popular among Iranians who see it as opening the way for pilgrimages to the most important Shia shrines, which are in Iraq. These considerations give Tehran a real in- terest in limiting the consequences of border clashes 1k Meanwhile, UN Secretary General Waldheim is mmoving to implement the February 28 Security Council consensus statement, which called for a report on the border situation by an independent observer. Baghdad has approved Waldheim's nom- _ f The Iraqi ii ~bvern ent on March 11 moved to irhpose its plan for limited self rule on the Kurdish minority in northern Iraq. Baghdad acted amid considerable fanfare, when it became clear that month-long negotiations with Kurdish lead- ers had broken down. March 11 was the deadline for granting autonomy set by an agreement in 1970 between Baghdad and the Kurdish leaders. The Kurds, led by Mulla Mustafa Barzani, have publicly rejected the government's plan as "inade- quate." The autonomy law provides for limited self- government in the area of northern Iraq having a Kurdish majority-to be determined by a census yet to be taken. The autonomous region, adminis- tered from its capital in Irbil, would continue to be an integral part of the Iraqi Republic. The Kurds objected particularly to articles that limit their judicial independence, and allow the Iraqi president to dissolve the Kurdish legis- lature, and appoint and dismiss the Kurdish chief executive. They also find unacceptable provisions for merging Kurdish police and security forces into the government's forces and for a national supervisory authority with the power of final decision over the Kurdish government. The imposition of the autonomy plan prompted a number of serious local clashes. SECRET Page 21 WEEKLY SUMMARY Mar 15, 74 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 SECRET Both sides are reported to be highly mobil- ized and ready for combat. The government nor- mally has at least two mountain divisions de- ployed in the Kurdish area, and it has been devel- oping an airmobile strike force that can be sent in by helicopter. During recent weeks, the govern- ment has also moved additional forces, including armor, into the northeast, possibly to try to cut off supply routes from Iran. Heavy fighting could break out at any time, but both sides appear to be moving cautiously. Barzani has ordered his forces to take defensive action only, and the government forces appear to be limiting themselves to clearing the Kurds from sensitive areas and to taking over strategic oosi- SOUTH AFRICA: THE MIDAS TOUCH Proceeds from old sales la 0t year reached a record $2.6 billion, paying half of South Africa's total import bill. The steep rise in international gold prices since mid-January portends a healthier South African balance of payments this year, despite a tripling of oil import costs. Last year, South African mines produced 852 metric tons of gold, of which Pretoria mar- keted about 824 tons at prices averaging $95-100 an ounce. Foreign reserves, nevertheless, were drawn down 44 percent in the last half of the year to offset an expanding trade deficit and growing movements of capital abroad. In January and February 1974, the steep rise in gold prices to as much as $184 an ounce reversed the foreign exchange drain without an increase in the volume of gold sales. South Africa's oil bill in 1974 will probably more than triple to at least $1 billion. South Africa relies on imports for all of its oil needs, which come to about 350,000 barrels per day, including supplies for re-export. If strictly en- forced, the Arab embargo would cut the oil im- ports by about 50 percent, but Pretoria's readi- ness to pay the going international prices has minimized the dropoff. Gasoline rationing, which had been scheduled for March 1, has been post- poned indefinitely. The ballooning oil costs on top of expected strong demand for other imports could push total import growth in 1974 substantially beyond last year's 22 percent expansion. All in all, South Africa's total foreign payments will probably ap- proach $8 billion. Capital movements into the country and earnings from exports other than gold will cover about $4.5 to $5.0 billion. Pre- toria can make up the difference without drawing on foreign reserves if gold sales from current production bring at least $115 an ounce. South African gold production this year is projected at about 820 tons, almost 60 percent of world gold output. Demand for gold will be bol- stered by continued uncertainty in money mar- kets, as the energy crisis and international in- SECRET Page 22 WEEKLY SUMMARY Mar 15, 74 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 ETHIOPIA: BACK TO WORK (( ~~'~ tei f2 C ( S The ending of a fouday-old general s rike on March 10 removed one direct threat to the government, but continuing unrest among other dissatisfied groups will prevent an early return of stability. The attitude of the military remains the critical factor. At present, it is not completely unified in its aims, but a majority of those who participated in the rebellion now appear to be supporting the new government. The agreement between the government and the Ethiopian Labor Confederation promises im- portant concessions to all the workers' demands, but it will be some time before any tangible benefits reach them. The government agreed in principle to establish a minimum wage higher than the current average wage. The strike was free of violence; workers heeded their leaders' request to stay off the streets and avoid trouble. Twice during the week, student demonstrations were dispersed by the police. The students are continuing calls for elec- tions and the ouster of Prime Minister Endalkat- chew. Meanwhile, elementary and secondary school teachers are continuing their strike, now in its third week, until the government meets their demands for higher pay and a review of educa- tional policies. The government agreed as part of the settlement with the labor confederation to reach a decision on the teachers' demands before March 19. 1 Emperor Haile Selassie continues to demon- strate a willingness to make concessions. At a news conference on March 11, he said he would accept the formation of political parties, although he considered a single party system best for Ethi- opia. He said the monarchy will remain as a symbol of national unity, but indicated that the emperor's powers would be adapted to the new political realities. Haile Selassie also said promised constitutional changes would be decided by a special committee being set up by the Prime Min- ister. Moderate military leaders probably see some value in Endalkatchew's government. Its members come from the elite group that has traditionally ruled Ethiopia, and therefore may have some chance of overcoming resistance from the die- hard conservatives. At the same time, the new ministers are mostly younger men who support progressive reforms. Militants within the military, however, view the new cabinet as only a slight improvement over previous ones; they consider the new ministers too closely identified with the conservatives. The moderates are working to bring the mili- tants under control. A radio broadcast in the name of the armed forces on March 10 disclaimed responsibility for antigovernment leaflets circu- lating in the capital. The broadcast warned that direct action would be taken against any indi- vidual circulating leaflets suggesting the army would support a popular rebellion against the government. Continuing unrest in the air force, especially among some enlisted men, poses the most immediate test of the moderates' ability to control the situation. SECRET Page 23 WEEKLY SUMMARY Mar 15, 74 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 SECRET ruatemala remains tense in the aftermath of the disputed presidential election. Police have been able to control demonstrations thus far, but government officials fear that student protests may spread and become more violentl \The assassination of a leftist political activist in the capital on March 11 by gunmen believed to be sponsored by the government is adding to the tension.IIThe victim, a former Communist Party .official and, more recently, head of a university legal aid office, had been fingered for elimination by the government some months ago) The murder provoked anger among students, who clashed with police after the victim's funeral the next day. The government is trying to convince the public that the murder was done by leftists to produce a martyr[ had before the killing. He added that assassination or kidnaping attempts might be made against gov- ernment officials. Meanwhile, General Efrain Rios Montt, the defe'ated presidential candidate, is saying publicly that protesting the government fraud is futile. At a news conference on March 13, he said he was retiring to private life, adding that he would not support a popular uprising or a coup in his favor. Privately, however, he may be urging his followers Jon. If low-key demonstrations can be maintained over an extended period, unrest may grow'? `l'ower ranks of the army, he would have only an outside chance of provoking a coup on his behalf. President Arana has the firm backing of the top generals, and remains determined to turn over the presidency to General Kjell Laugerud on July 1.1' 1 -_ Shortly after the assassination, a high-level)l 'government official told the US Embassy that agitators intend to arm students with pistols and Molotov cocktails. The official stated that police had orders to control disturbances with as little use of force as possible, although the government fears the students will now seek conflicts with police, rather than try to avoid violence as they F Presidential office Object of dispute Arana will call on the military to assume control of the government only if public order deteriorates seriously. ~If the tinny oes in ervene, it wou pro a y install a general of Arana's choosing as a caretaker chief of state for an indefinite period. Arana, would, in effect, retain control: i`17fWhile tension grew during the week, the administrative details of the election were cleared away in short order. The congressional commis- sion set up to recount the vote announced its findings on March 11 over the protests of nine opposition members who resigned in anticipation of the results. To the surprise of no one, the commission ruled Laugerud the winner. On March 12, the Congress chose Laugerud over Rios, com- Il `$ pleting the formalities required by the constitu- ;I tion since no candidate was credited with a malor- ity, of the votes. SECRET 25X1 25X1 Page 24 WEEKLY SUMMARY Mar 15, 74 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 SECRET Cordoba Province BATTLEGROUND FOR PERON'S POL CIES The Peron governmbnt continues t have scant success in defusing the inflammatory situa- tion in Cordoba, where intermittent violence ex- tended into a second week, following a police revolt that toppled the leftist administration of the province. The appointment of a rightist fed- eral trustee or interventor to take over the prov- ince may provoke increased violence and clashes between left and right. It will certainly evoke strong protests from left-leaning Peronists, and possibly new defections from the President's fac- tionalized movement. The government interventor, Duilio Brunello, comes from the Ministry of Social Wel- fare where he was closely associated with Minister Lopez Rega, a confidant of Peron and an arch- enemy of the left. Brunello, a Peronist since 1945 and a relative unknown on the national political scene, is likely to have difficulty restoring order. His links to Lopez Rega, who, along with Vice President Madame Peron, may have had a hand in influencing Peron's decision, will make him anath- ema to leftists of all stripes. Moreover, Peron's choice may rankle opposition Radical Party leaders who suspect Lopez Rega of playing a major role in the bungled Cordoba affair. The first reaction to the naming of an inter- ventor was the resignation of Cordoba police Ex-Governor Obregon Cano chief Navarro, whose ouster of Governor Obregon Cano set in motion the chain of events that led to federal intervention. Navarro's decision to step down was not unexpected, since Peron apparently bowed to opposition demands that the instigator of the maladroit insurrection be tried for sedition. It is still unclear, however, whether Peron really intends to sacrifice Navarro or to find some face- saving means to avoid aggravating political passions with a trial. In any case, Navarro achieved what he set out to accomplish-to bring down the leftist-controlled labor and government administrations in Cordoba. Peron's handling of the Cordoba situation is obviously uppermost in the minds of socialist- oriented Peronist youth, who have issued their harshest criticism of his policies to date. At a rally of almost 50,000 young Peronists commemo- rating the first anniversary of President Campora's election last March, speakers were critical of the government, and particularly of conservatives closely aligned with Peron. The large turnout shows how unsuccessful Peron has been in ousting the leadership of the "revolutionary tendency" of Peronist youth from the main body of his young leftist supporters and replacing them with leaders more amenable to his control. Meanwhile, bombings and other violent dis- turbances have continued to rock the provincial capital as extremists seek to maintain tension in the highly politicized atmosphere of the city. Members of the outlawed Marxist People's Rev- olutionary Army-Argentina's largest and most active terrorist organization-reportedly have been involved in some of the turbulence. The prospects for an early end to the vio- lence will depend largely on how the federal administrator chooses to deal with the precarious situation in the province. If he fails to come to grips with the problem through conciliation, the government may be forced to call on the armed forces to restore order. Such action, which would be distasteful to the military, would also increase SECRET Page 25 WEEKLY SUMMARY Mar 15, 74 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 SECRET -IPresident Carlos Andres Perez was in- augurated this week in ceremonies attended by delegations from over 76 countries, including large representations from the Communist states. Reports that leftist extremists would attempt to mar the orderly transfer of political power from the outgoing Social Christian party to Perez's Democratic Action Party proved unfounded.; In his inaugural address, Perez focused on oil, the issue of most concern to his administra- tion and to Venezuelans. As expected, he em- phasized the necessity for an early reversion of oil company concessions to the state but avoided setting a rigid timetable for such action. In sharp contrast to recent statements on the subject by the outgoing Caldera administration, Perez' remarks were non-polemical. Perez promised that reversion would be speeded up, but he cautioned that the "softer the tone of our voice, the more likely will we be heard and understood." Perez President Perez and his predecessor said that he intended to go forward with his plan to appoint a broadly based commission to study possible alternatives for the operation of the in- dustry. In a conciliatory gesture to the opposition parties, Perez added that the Congress would ob- viously have the last word and could debate his government's proposals; this would amount to a formality, however, because his Democratic Ac- tion party has an absolute majority in both houses of Congress ('y In a private conversation this week with a visiting member of the US delegation to the in- augural, Perez said that his government would welcome concrete recommendations from the US oil companies concerning the terms of a new working arrangement with the government. He promised that his administration would respond to their proposals and would begin negotiations regarding their present concessions and their future role in the exploitation and development of new petroleum reserves in the country( 0j Although US oil companies have avoided public comment on the future of their investment in Venezuela, in private statements they have been optimistic that they will be able to secure terms that will afford some protection to their $1.5-billion investment. They are convinced that foreign firms have a definite role to play in the future of Venezuelan oil. Venezuela, they feel, does not have the ability to manage the entire industry without foreign help. Several companies have reportedly already made tentative ap- proaches to officials of the new administration. A senior official of Exxon's Venezuela subsidiary (Creole Petroleum Company) said recently that he believes that even when nationalization comes, companies will_ be able to reach agreements with the government j( - ' The oil officials' optimism may well have been increased with the appointment this week of Valentin Hernandez Acosta as petroleum minister in the new administration. Hernandez, Venezue- la's ambassador to Austria and to OPEC, is a petroleum engineer-diplomat who has spent his professional career in studies relating to petro- leum and international affairs and spent some time working for Creole Petroleum Corporation SECRET Page 26 WEEKLY SUMMARY Mar 15, 74 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 25X1 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Secret Secret Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 '" err wr Secret Weekly Summary Special Report Brazil- Geirel Takes Over Secret N2 16 March 15, 1974 No. 0011/74A ARCHIVAL RECORD PLEASE RETURN TO 25X1 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 ,. Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 r.-rw JtUN17I BRAZIL Geisel Takes Over Ernesto Geisel is the fourth army general to assume the presidency since the 1964 revolution. His inauguration marks the culmination of a pro- cess begun well over a year ago and developed without the air of tension that accompanied all previous changes of government since the revolu- tion. Basic policy directions -top priority to eco- nomic development, continued stress on rooting out subversion, and further attention to expand- ing Brazil's international prestige-are likely to remain unchanged. The new President will have ample opportunity to demonstrate his consider- able competence in dealing with a number of economic and, to a lesser extent, political challenges. Special Report - 1 - SECRET March 15, 1974 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 'M IM&I SECRET Background Geisel was formally confirmed as president on January 15 by a special electoral college com- posed of the national congress and a number of state legislators. He had earlier been designated by Medici, in consultation with leading members of the military establishment. The smooth transition to Geisel differs markedly from earlier successions since 1964. In 1967, Costa e Silva had maneu- vered himself into the presidency by becoming the spokesman for officers who called for harsher Castello Branco ('64-67) Special Report policies than those of Castello Branco, first of the military presidents. When Costa e Silva was inca- pacitated by a stroke in 1969, wrangling among generals who wanted the presidency led to the installation of Emilio Medici as a compromise candidate. Medici undoubtedly had all this in mind when he began to plan for the succession, and he laid the groundwork carefully. Several factors en- abled him to deal from a position of strength his predecessors did not enjoy. One is the Costa e Silva ('67-69) Medici ('69-74) SECRET Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 '"W 5L L9KI I performance of his administration. Sustained eco- nomic growth and virtual cessation of serious terrorist activity solidified support behind him. His demonstrable success prevented the emer- gence of a serious challenger who could appeal for support to military officers dissatisfied with the regime's performance. Then there is Medici's choice of Ernesto Geisel, highly regarded by the military establishment as well qualified to admin- ister the next phase of the revolution. The presidency of Brazil caps a career that has included a variety of high posts. A retired four-star general, the 65-year-old Geisel most re- cently headed Petrobras, the national oil enter- prise. Under his guidance the company pursued highly aggressive policies to help fulfill the needs of an increasingly oil-thirsty nation. Because Bra- zil has relatively little oil of its own, the company undertook numerous ventures overseas and, in the process, became Latin America's largest corpora- tion. Geisel also served as a judge on the Supreme Military Tribunal, which has jurisdiction over cases involving national security matters. In that capacity he delivered tough, well-articulated Reis Velloso Minister of Planning opinions. A leader of the movement that ousted left-leaning President Goulart in 1964, Geisel served as chief military adviser in the cabinet of President Castello Branco. The most frequently heard observation on Geisel's character is that he is taciturn and re- served, and prefers to remain out of the public eye as much as possible. Like his brother Orlando, the powerful outgoing army minister, he is re- garded as a man of considerable discipline, who fully supports an authoritarian approach to gov- ernment. Ironically, there is speculation, fueled largely by hopeful politicians, that Geisel's view of politics is a bit more liberal than that of Medici, who has virtually ignored congress and politicians. Other than naming a trio of legislators to his cabinet, Geisel has given no public indica- tion that this is really so. It appears that Geisel's cabinet will be hard- working, competent, and entirely trustworthy. None of the ministers has an independent power base, and all are expected to be responsive and subordinate to the President. Geisel is accustomed to running his own show and, unlike his predeces- sor, will keep a firm grip on the day-to-day for- mulation and execution of policy. Some observers also feel that Geisel will be more nationalistic Shigeaki Ueki Minister of'Mines and Energy Special Report SECRET Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 SECRET New refinery, the sixth built by Petrobras One of the largest petrochemical complexes in South America at Santo Andre Special Report SECRET Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 ,%W SECRET Mario Simonsen Minister of Finance Special Report SECRET than Medici, especially with respect to the terms governing foreign enterprises wishing to operate in the country. To implement economic policy, Geisel has chosen as finance minister Mario Henrique Simon- sen, a 39-year-old economist who is highly accom- plished in academic, business, and government undertakings. Simonsen, like his predecessor, favors the energetic pursuit of growth rather than redistribution of income. Another important member of the economic team is the current planning minister, Reis Velloso, also an able econ- omist, who will remain in that post. Geisel's chief financial adviser at Petrobras, Shigeaki Ueki, will join the cabinet as minister of mines and energy. Even though Brazil's economy has been booming for several years and is in no apparent danger in the near-term, it is possible to discern areas of concern to the new administration. One is inflation, which the incoming finance minister views as a serious domestic problem. Last year the cost-of-living increase exceeded the regime's stated goal of 12 percent, the first time Medici had failed to hold it to the mark set. Rising import prices, as well as unusually large increases in the money supply, fueled the inflation. Espe- cially hard hit were prices of staples such as rice, beans, beef, and milk. In an effort to stem the upward trend, the government put controls on prices, limited food exports, and imported some basic items that were in particularly short supply. Nonetheless, there have been shortages in food stores. Geisel's selection of several agricultural experts for cabinet posts suggests that he intends to place great emphasis on increasing Brazil's food yield as one way of dealing with shortages and inflation. Since Brazil must import most of its oil and consumption is constantly rising, the sharply higher price of crude also contributes heavily to inflationary pressures. Already this year there have been two substantial price hikes for gasoline. Inasmuch as the new President has a specialized knowledge of oil and the oil industry, Brazil will certainly continue to improve its techniques in Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 the quest for more petroleum. Innovations may include barter deals exchanging such commodities as sugar, rice, and soybeans for crude. Geisel may even call on foreign oil firms to assist in difficult and expensive exploration within Brazil. In a na- tion traditionally wary of allowing foreign explor- ation, Geisel's credentials as an oil expert and a strong nationalist would place him in a far better position than any other Brazilian to consider such a move. The high price of imported oil has caused some decline in Brazil's foreign reserve holdings. The drop prompted the government to abandon a 40-percent deposit requirement that it had im- posed on the heavy influx of foreign loans last year as a means of curbing inflationary pressures Brazil hopes that the relaxation will encourage foreign lenders, who have lately shown some hesi- tation in dealing with Brazilian enterprises. Since the country's foreign reserves are considerable, no real threat is seen for the short term. Careful management may be needed, however, to avert more serious, long-run consequences. Brazil's practice of relatively frequent "mini devaluations" of the cruzeiro is apparently being altered and may undergo further changes. There have already been two devaluations this year, both larger than usual. Brazil's exporters have claimed for some time that the cruzeiro is over- valued relative to other world currencies, perhaps by as much as 10 percent, thus reducing their ability to compete. The Geisel administration may further step up the pace and scale of devalua- tions to assure a competitive edge in trade. There is also a possibility that the govern- ment program of incentives to export industr es may be revamped. The LIS is considering counter- vailing duties on Brazilian shoes, which have made large inroads in the US market, claiming Brazilian subsidies to the industry give it an unfair advan- tage. If such a move is carried out, Brasilia fears similar measures against its other manufactured exports. The incoming finance minister report- edly favors less direct subsidies and greater use of exchange rate adjustment to encourage exports. Special Report SECRET SECRET Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Geisel is not likely to make any significant changes in Brazil's independent but essentially pro-Western foreign policy. Outside Latin Amer- ica, and especially in international forums, Bra- silia will continue to pursue commercial advan- tages aggressively and seek to play an increasing role in international affairs. In inter-American conclaves, Brazilian diplo- macy is now attracting a bloc of conservative countries that includes Chile, Bolivia, Uruguay, Paraguay, and most of Central America. At the same time, Foreign Ministry officials will remain alert to any attempt by the Peron government in Argentina to isolate Brazil from the Spanish- speaking countries, particularly those in the Andean Pact. The new foreign minister, Antonio Azeredo da Silveira, is a "Brazil firster," an ardent nation- alist. He has served since 1969 as ambassador to Buenos Aires and is considered an expert on River Plate affairs. He does not, however, appear to Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 `..rte Jtuh I have the personal stature to shape bold new policy directions on his own. Brazil already has strong economic ties with neighboring countries and will continue to be sensitive to their fears of its growing power. (A forthcoming Special Report will be de- voted to Brazilian Foreign Policy.) undesirables-largely old style politicians-had their political rights suspended. They thus be- come eligible, in theory, to re-enter public life. At least one of them, former President Juscelino Kubitschek, remains well-known and popular. Geisel might decide to extend the period of sus- pension, but he is more likely simply to warn them to remain inconspicuous. The revolution has all but eliminated the old style, free-wheeling politics, which the military judged to be overly cynical and corrupt. Within the narrow confines of the "system" now in effect, however, Geisel will need to make a num- ber of essentially political decisions, some of which could be more than routine. One decision concerns senatorial and guber- natorial elections scheduled for later this year. Geisel, as his predecessors did, will pass on the acceptability of candidates. He has already begun preliminary groundwork in the state of Rio Grande do Sul, where he recently prevailed on the announced senatorial candidate-whom Geisel deemed a weak entry-to withdraw publicly from the race. The man Geisel apparently favors, how- ever, reportedly may be unwilling to run. Geisel can be expected to continue his close scrutiny of Rio Grande do Sul, both because it is his home state and because the factionalized official party experienced setbacks there in recent local elec- tions. There have been extensive rumors- nourished largely by those who stand to benefit- that Geisel may undertake some sort of general liberalization regarding censorship, relations with the church, and restrictions on political activity. Geisel, however, is well aware that despite prom- ises by his two immediate predecessors to "hu- manize the revolution" and to "restore full democracy," neither felt confident enough to take steps in this direction. Thus, Geisel, in keep- ing with his reserved ways, has made no such public promises. He has avoided direct comment on the matter, stressing instead the need for hard work and continued vigilance, especially in the face of continued violence in other countries. Yet the successes of the Medici regime- which all but eliminated the terrorist threat-have created conditions in which the military establish- ment might well go along with a very limited liberalization. In fact, Geisel's reputation and the respect in which he is held by civilians and mili- tary alike place him in a position from which he could, should he choose, carry out a modest This year marks the expiration of a ten-year period during which a large number of political Special Report -7- SECRET March 15, 1974 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6 Secret Secret Approved For Release 2008/04/15: CIA-RDP79-00927A010700090001-6