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March 22, 1974
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Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 vue vate Secret Weekly Summary DIA review completed. State Dept. review completed Secret 22 March 1974 No. 0012/74 CRIVAL RECORD PLEASE RET TO Coy NO 16 25X1 AGENCY ARCHIVES, Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 CONTENTS (March 22, 1974) 1 Arabs Turn on Oil Valve 3 Europeans Unsure of US Aims 4 Israel-Syria Special :s., EAST ASIA PACIFIC 6 Japan: US Bases; Oil; Trade 8 Cambodia: Of Setbacks and Sihanouk 9 South Vietnam: More Communist Moves 9 Philippines-Malaysia: Muslim Rebels MIDDLE EAST AFRICA 15 South Africa: Bantustan Independence 16 Iraq-Kurds: Time is Running Out 17 Pakistan: Clouds on the Horizon 18 India: Grim Economic Prospects WESTERN HEMISPHERE 19 Venezuela: Terrorism Comeback 20 Peron Looks Eastward 21 Chile: Bolivia Ties 22 Guatemala: Onward With Laugerud 10 Brezhnev Speaks on Agriculture 11 Yugoslavia: Trieste Again 12 Italy: Rumor Tries Again 1.3 Prague Girds A ainst the West 14 Portugal: Supporting the Right Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 Next 2 Page(s) In Document Denied Iq Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 vftple SECRET Arabs rurm On Oil Valve Arab oil should start flowing toward the US soon. The amount immediately available will re- store a major part of the oil received from Arab sources before shipments to the US were em- bargoed last October during the Middle East war. After the announcement on March 18 of the Arab decision to lift the embargo, Saudi Arabian Oil Minister Yamani told newsmen that his coun- try's production will be increased immediately by more than 1 million barrels per day. Most of the increase, he said, will go to the US. If Saudi output does go up by that amount, production will be about at the level that prevailed last September. .Production can be increased immediately, and there is substantial tanker tonnage available in the Persian Gulf. The normal transit time be- tween the gulf and the US is 35-40 days. Further- more, a small number of tankers en route to other destinations may be diverted to the US. Addi- tional supplies could begin to reach the consumer even sooner, because refiners and distributors may be more willing to draw down stocks in anticipation of greater crude oil supplies.; The increase in production should exert fur- ther ownward pressure on crude prices. The full impact will depend on the extent to which US oil consumption increases in response to the lifting of Arab restrictions. Auctions by producer gov- ernments in recent weeks have brought lower offers than the governments had expected] i The refusal of Iraq, Libya, and Syria to join in ending the embargo will have little effect on world oil supplies. Iraq never did cut production and did not participate in the meetings of Arab oil ministers in Tripoli and Vienna at which the embargo was ended. Libyan production is only about 200,000 barrels per day below its Septem- ber level. Prior to the embargo, the US received about 350,000 barrels per day from Libya. Syria, a minor producer, does not export oil to the US.1 1 The agreement announced in Vienna also provides for increased amounts of oil for Italy and West Germany, and for individual members to increase production to the level necessary to implement the various decisions. Yamani said, however, that the embargo on the Netherlands would not be lifted.) SECRET Page 1 WEEKLY SUMMARY Mar 22, 74 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 SECRET The announcement by the Arab oil ministers followed a decision on March 17 by the 12-nation Organization of Petroleum Exporting Countries to maintain current posted prices during the next quarter: OPEC's decision was a compromise be- tween Saudi Arabia, which had hoped to lower prices, and Algeria and Libya, which had pressed for still higher prices.] ;None of the Vienna agreements were easily reached, primarily because the oil-producing countries are aware that any substantial increase in production must ultimately lead to lower prices. Although current Arab production is only 88 percent of the September 1973 level, world crude prices have been softening for several weeks as adjustments to the earlier price hikes curbed demand.) The Arabs' inclusion of a provision for a review on June 1 of the decision to lift the embargo against the US means they have not foreclosed use of oil as a political weapon in the future. The Egyptians and the Saudis, however, had concluded that the time had come to make a gesture of recognition to the US for its diplomatic efforts that led to disengagement on the Egyp- tian-Israeli front and to encourage Washington to press ahead in working toward a comprehensive settlement. They worked hard for a united front on this stand, but finally failed to bring along the Syrians and Libyans. The hard-lining Algerians were persuaded to go along with the majority, but apparently only after some tough bargaining. The Algerians had earlier argued for the review proviso, and its inclusion in the agreement was probably at their insistence. lEgypt's failure to achieve unanimity was a setback for President Sadat, although not an unexpected one; he has tried to minimize the importance of Arab differencesliCairo's authorita- tive Middle East News Agency went to some lengths to play-down the dissenting positions of Syria and Libyaj Although Syria strongly opposed lifting the oil embargo in the closed-door sessions of the Arab oil ministers, Damascus has said nothing publicly. President Asad almost certainly believes "And this valve controls the Dow Jones averages." that the move has hurt Syria's negotiating posi- tion, just as he believes his interests were damaged by Egypt's earlier decisions to exchange POWs and to agree to a disengagement of forces in the Sinai. If no progress is made on a separation of forces agreement on the Golan front, Asad will probably press Saudi Arabia and Egypt to reim- pose the embargo in June. -4 (Throughout the debate among the Arab oil ministers, the Libyans apparently avoided ob- structionist tactics in an effort to preserve their uneasy rapprochement with the Egyptians and the Saudis. Syria's firm opposition, however, pro- vided the Libyans with a convenient justification for finally rejecting the majority decision. Al- though sharply critical of the announcement from Vienna, Tripoli has focused its objections on the timing of the decision rather than on the issues; by thus qualifying its dissent, Tripoli has left itself some leeway for future moves SECRET 25X1 25X1 Page 2 WEEKLY SUMMARY Mar 22, 74 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 SECRET Europeans Unsure of US Aims The governments of the nine EC member( President Nixon's remarks in Houston this have reacted publicly with restraint to recent ex- week, reaffirming his personal opposition to any pressions of US displeasure-including the Presi- unilateral US withdrawal of troops from Europe, dent's criticism in Chicago last week-with the have generally been greeted in Europe as a concili- inadequacy of political consultations between the atory gesture and a move to relax the charged Nine and the US. tran-Atl + + an h Several of France's partners have acknowl- edged the need to consult more fully with Wash- ington on pending community political decisions. There are, nevertheless, no signs that agreement among the Nine on a procedure for such consul- tations will be any easier to find now than during the lengthy discussions leading to the framing of the draft US-EC declaration that did not meet US requirements. Rather than encouraging France's partners to isolate Paris on the issue of relations with the US, the trans-Atlantic tensions seem to have increased their wariness of an open con- frontation with Paris. The problem of reconciling the wish of most of the Nine to preserve close ties with the US with their intention of preserving the integrity of a "European" decision-making process is not made easier by the shaky position in which many of the community governments find themselves today. t oug t o ine are un i e y soon o agree on any new suggestions for improving US-European consultations, Chancellor Brandt is reportedly drafting a reply to the US-after talks with the other EC members-in order to keep a dialogue open. ; is a mosp ere. But even if they are now less inclined to term the US stand an ultima- tum, European commentators still perceive Wash- ington's position as a challenge to Western Eu- rope. Conciliatory sounds from both Washington and Paris, it is recognized, have not changed the substance of the debate. Moreover, there has already been some Euro- pean comment alleging a US "carrot and stick" approach to Europe. Such allegations reflect a lingering uncertainty over what the US specifi- cally wants, short of becoming a de facto member of the community. There are still suspicions that the US requires an impossible choice be made between European unity and ties to the US. France, for its part, may now be as inter- ested in keeping trans-Atlantic quarreling within bounds as any of its EC partners, since to do otherwise would undermine Paris' aim of demon- strating that all the Europeans are in the same boat vis-a-vis the US. There are signs that the French may in fact welcome a breather from25X6 US-European polemics in order to launch a series of proposals ostensibly aimed at reinvigorating movement toward European unity. With the EC under pressure from the outside, its traditional decision-making processes stagnating, and leader- ship from the other members lacking, Paris may hope-by making apparent concessions to Euro- pean solidarity-to have a better chance of shaping European institutions more to its liki g. SECRET Page 3 WEEKLY SUMMARY Mar 22, 74 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 SECRET Israel-Syria Measured Step Toward Negotiiations Despite the artillery exchanges on the Golan Heights this week, Syria and Israel moved a step closer to negotiations on a separation of forces. Tel Aviv announced that Minister of Defense Dayan will come to Washington on March 29 to handle the next exchange of proposals on disen- gagement. Damascus has reportedly named Brigadier General Hikmat Shihabi, chief of mili- tary intelligence, as its delegate to the talks, but he is unlikely to come to Washington while Dayan is in town. Secretary Kissinger will act as inter- mediary and is expected 1o meet with both parties separately after his return from Moscow late next weekl In contrast to Dayan, General Shihabi is little; known outside the Arab world. He has served as a negotiator before, however, and is said to be highly regarded by President Asad. Last June, for example, Shihabi was in charge of the talks that resulted in the reopening of the Syrian- Lebanese border. In addition to his intelligence duties, he is a member of the important Baath Party Military Committee and of the Syrian Army's Political Bureau. Shihabi speaks fluent Russian and English as well as some French.( 'Dayan, for his part, has reportedly expressed some reservations about the value of coming to Washington. He is said to believe the gap between the Israeli and Syrian negotiating positions is still too great for productive discussions in Washing- ton and that more of Secretary Kissinger's Middle East shuttle diplomacy will first be necessary. Speaking in Tel Aviv on March 18, Dayan called Syria's present terms for a disengagement "totally unacceptable," perhaps referring to Syria's re- ported calls for an Israeli withdrawal from the Golan Heights. Echoing a theme heard from other top Israeli political leaders over the past week or two, Dayan claimed that Moscow was not doing all it could to bring peace to the area and that the Soviets had the power to press Damascus into moderating its stand. )The Israeli cabinet, meanwhile, has report- edly approved a disengagement proposal that calls for withdrawal from the Syrian territory captured in the October war, a thinning of forces on both sides of the cease-fire line, and creation of a UNEF-patrolled buffer zone. The cabinet also decided to insist on the return of all Israeli POWs held by Syria before any withdrawals occur.' \The disposition of the town of al-Qunay- tirah, which Israeli forces captured in 1967, may determine how much progress is made during the first phase of negotiations] Prime Minister Meir ':has repeatedly insisted that her government will SECRET page 4 WEEKLY SUMMARY Mar 22, 74 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 not "reward" Syria for its surprise attack last October by handing back territory captured in 1967. The Syrians have been just as adamant about regaining at least some land lost then, in- cluding al-Qunaytirah.1 The town, once an im- portant administrative center in the area and the largest town on the Golan Heights, has acquired considerable symbolic importance to the Syrians, and especially to Asad, who is still under pressure at home to demonstrate negotiations with Israel are worthwhile. 11 `The Israelis, in a long-planned move, are moving their two newest and largest missile patrol boats from the Mediterranean to the Red Sea. The deputy commander of the Israeli Navy in- formed the US naval attache in Tel Aviv that the boats were scheduled to reach South Africa late last week. They were expected to remain in port at Capetown for several days before continuing their 12,000-mile voyage to Sharm-ash-Shayk on the southern tip of the Sinai. I j The boats are the first units of an Israeli- designed and built variant of the French Saar-class missile patrol boat. The Israeli version is larger, heavier, and capable of extended operations at sea. It is also more heavily armed, carrying six to eight Gabriel anti-ship missiles, two 76-mm. guns, and two heavy machine guns. ,',The Israeli-designed Gabriel missile was ef- fective against Egyptian and Syrian patrol boats during the October war, despite its relatively short range of 11 nautical miles. The Israelis have been testing an improved version of this missile that has a range of over 21 nautical miles. It probably is now, or shortly will become, the main armament for the new boats.] 1 1-1 . he Israeli Navy has had plans to send mis- sile boats to the Red Sea since at least early 1972. At that time, Israeli naval officials stated that the ~- six boats of this class, all of which were then 1~ under construction, were to be specifically equipped for operations in the hot climate of the Red Sea. The third boat was launched recently, but will not enter service for several more weeks. The other three boats are scheduled to be com- pleted by the end of this year.` (,. )Iuring the October war, Egypt sent two destroyers to the Bab el Mandeb Strait at the southern end of the Red Sea, effectively blocking the passage of Israeli shipping, Israel's entire force of operational missile boats at that time-12 French-built Saar boats and the first Israeli-built Saar variant-was based on the Mediterranean coast. There were no Israeli naval units in the Red Sea with sufficient range or firepower to chal- lenge the Egyptian destroyers. The movement of long-range missile boats to the area, however, will enable the Israelis to contest any future attempt to sever their sea routes. 555493 San CIA Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 SECRET US BASE REDUCTIONS he latest round of fl teral talks concerning US base reductions in Japan resulted in an agree- ment to return 32 US facilities on Okinawa to the Japanese over the next several years. Nevertheless, Tokyo clearly does not want the reductions to dilute the credibility of the US defense guarantee. Relinquishing the Okinawa facilities will have a minimal effect on US operational capabili- ties. Basically, the moves represent a consolida- tion of facilities rather than a reduction of forces. None of the facilities is of great military signifi- cance, and no deadline has been set for the trans- ter. US forces, moreover, will retain partial use of nearly half the installations to be returned, and many transfers will occur only after alternate facilities are constructed by the Japanese. Although the US has been primarily respon- sible for the actual shape and scope of this as well as previous reductions, Tokyo has obtained Wash- ington's support to make the recent base transfers appear to be the result of joint discussions rather than unilateral US decisions. Even so, the Japa- nese Government has delayed the transfer of many facilities by its failure to allocate sufficient Iunds to construct alternate installations for exist- ing US forces. It also has urged the US to delay transfer of several facilities until the Japanese military is able to absorb them. 1-he government is caught between domestic political pressure to reduce the US military pres- ence-particularly in urban areas where land is scarce-and its own desire to maintain the credi- bility of the US defense guarantee. Thus, while supporting a policy of a more austere US base structure consistent with the movement toward detente in the region, Tokyo believes that a con- tinued US presence is necessary as a deterrent against future Chinese or Soviet military pres- sures. A Foreign Ministry spokesman has stated chat the growth of the Soviet Pacific Fleet, in particular, represents a serious concern to his government. Tokyo's desire to demonstrate support of the security ties with the US was a major reason behind Japan's willingness to grant home-porting rights at Yokosuka to a US carrier task force a few years ago. Several government officials, in talks with their US counterparts, have made it clear that Tokyo still desires US forces in Japan to maintain a significant combat capability as evidence of American intentions to remain involved in Asian security. One of these officials suggested, for ex- ample, that these forces should include elements of the Seventh Fleet and mobile task forces com- posed of marine and air force units. The officials added that, while there can be further base reduc- tions and consolidations, the US combat presence should not be reduced substantially at the present time. FEW ALTERNATIVES TO OIL . Tokyo is altering its long-term energy plans n an attempt to reduce dependence on foreign oil, but is not likely to have much success. Nu- clear power development is being accelerated, and the downward trend in coal production will be reversed. Nevertheless, Japan probably will still depend on oil for close to 70 percent of its energy needs in 1985, compared with 75 percent at pres- ant. Since domestic offshore exploration is only just beginning and the potential yield is uncertain, nearly all of Japan's oil probably will still be imported. Nuclear plants currently account for only 2 percent of Japan's total electric power capacity. Before the oil crisis, Tokyo planned to increase this share to 25 percent by 1985. The Japanese now have decided to accelerate their development program, possibly boosting the nuclear share of generating capacity to 30-40 percent by 1985. The program, however, already is bogged down because of controversy over the location of plants. Even if this were solved, the Japanese might have difficulty obtaining sufficient en- riched uranium. Under these circumstances, Japan probably would be able to boost nuclear capacity to only about one third of total electric power SECRET Page 6 WEEKLY SUMMARY Mar 22, 74 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 SECRET JAPAN'S PRIMARY ENERGY CONSUMPTION Percent of Total 1973 Estimate 1980 Plan 1985 Plan Oil 75 73 71 Coal 17 11 9 Natural gas 1 4 5 Nuclear 1 8 11 Hydro 6 4 4 generating capacity by 1985. Nuclear power thus would account for 12-13 percent of total energy requirements, only a small increase above the share called for under existing plans. 'I ~. `;' ;Coal consumption will continue to increase over' the next decade, but coal's share of total energy will decline considerably. Domestic pro- duction fell from a peak of 50 million tons in the mid-1960s to 22 million tons last year. An in- crease of only one million tons is planned during 1974-75. Even with maximum effort, the Japa- nese probably could not boost output to more than 35 million tons by 1985. Coal reserves are estimated at 20 billion tons, but quality is poor and exploitation will be difficult.*! )Least significant in Japan's energy outlook are hydroelectric power and natural gas. Hydro- electric capacity has nearly reached its limit; future gains in output will come mainly from pump-storage power plants, which can be used only a few hours a day. Although domestic sources of natural gas are being sought, most of Japan's supply will continue to be imported. The Japanese have been negotiating for supplies with numerous countries-including Abu Dhabi, Iran, Indonesia, and the USSR-in the hope of raising imports ten-fold by 1985. These efforts may be increased, but natural gas is unlikely to account for more than 5 ercent of Japan's total energy by the mid-1980s. Trade Grows with North Korea 7 Trade between Japan a d North Korea is growing steadily, having nearly tripled since 1971 and topping $150 million last year. The major constraint on further trade growth is Pyongyang's limited ability to earn foreign exchange, but polit- ical factors in Tokyo also play a role. The Tanaka government has always been in- terested in achieving better balance in its relations with the two Koreas and in contributing to a softening of Pyongyang's tough international stance. It has not aggressively pursued political relations with the North, however, both because of the absence of significant public pressure on the issue and because of opposition from right- wing elements of the ruling party. There also is a desire not to get too far ahead of the US on Korean policy matters. With a list of more im- portant foreign policy problems to be resolved- most conspicuously, an aviation accord with Peking and energy agreements with the US and the EC-it is increasingly unlikely that Prime Min- ister Tanaka will choose to press ahead on the political front with North Korea. Tokyo has been willing, however, to move in concrete ways to improve economic relations. Steps have been taken to permit the establish- ment of a permanent North Korean trade mission in Japan, although final agreement may be some time off. Tokyo also recently approved the first North Korean application for Export-Import Bank credits-for a $2-million towel plant. The North Koreans seem anxious to buy more from Japan. Over the past year, Pyongyang has increased purchases of such products as steel, textiles, telecommunications equipment, and ma- chinery-much of it included in deals for com- plete plants. The largest transaction for a whole plant is the pending purchase of an integrated steel mill. Implementation of this transaction probably will hinge on Tokyo's granting of Ex- port-Import Bank financing. In the energy field, North Korea has ex- pressed interest in electric power generating facili- ties, including a small nuclear power plant, and in a small oil refinery. A cement plant valued at about $50 million was ordered last year, and contracts have been signed for the purchase of sulfuric acid and ammonia plants. Factories to produce synthetic textiles and consumer dur- ables-refrigerators, washing machines, and color television receivers-also have been sought, as have plants to make telephone, telex, and tele- SECRET Page 7 WEEKLY SUMMARY Mar 22, 74 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 SECRET CAMBODIA: SETBACKS AND SIHANOUK The Khmer Communists this week dealt the Bove nment its first significant setback of the year by capturing Oudong. Late in the week, a 700-man Cambodian Army force was still holding on just outside Oudong, but insurgent troops had burned almost the entire town and had led off a large number of its 20,000 inhabitants. Govern- ment relief columns working their way toward Oudong from the north and east were stalled by stiff resistance. ,Although Oudong has little tactical im- portance, it is a recently created provincial capital and a former royal capital with religious and historical significance. Its capture on the anniver- sary of Sihanouk's overthrow provides the Communists with a much-needed victory to offset their recent poor showing in the Phnom Penh area. in the far southwest, fighting has picked up around the isolated coastal city of Kampot, but government defenders there have held their ground. Reinforcements and supplies continue to arrive by air and sea, and government strength has grown to over 3,600. The Communists, who are proceeding cautiously, recently used 120-mm. mortars at Kampot. This is the first time the big mortars have been used in the war.1 1On the international front, Communist rep- resentatives have renewed their tough line on negotiations. Sihanouk himself, during a brief visit to the Pathet Lao headquarters in Sam Neua last week, took the opportunity to reject any new possibility of talks with the Lon Nol government. He repeated the familiar line that any negotia- tions would have to be between his "government" and Washington. The Prince also lashed out at "bigger and stronger" countries, almost certainly China and the Soviet Union, which "prefer to SECRET compromise with American imperiaiisnR...if not literally throw themselves into its arms.") Sala Lek Pram ek Captured byjK dorig Communists Road cup SOUTH VIE- Page 8 WEEKLY SUMMARY Mar 22, 74 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 SECRET SOUTH VIETNAM: MORE MILITARY MOVES / Communist forces in the central highlands times in the past. In early 1973, Marcos created a IaSt'weekend initiated some of the heaviest fight- diplomatic uproar that seemed to threaten the ing since the cease-fire. Their attacks, directed cohesion of the Association of Southeast Asian against several government outposts near Kontum Nations-Malaysia, Singapore, Indonesia, Thai- City, probably were in retaliation for government land, and the Philippines. Marcos now believes efforts to block an eastward expansion of the that he has much better evidence of Malaysian Communist logistics corridor. The South Viet- involvement in the form of testimony by cap- namese 62nd and 95th Ranger battalions, posi- tured rebels, who claim they were trained in tioned northeast of Kontum City, have been at- Malaysia.' tempting to disrupt Communist efforts to con- nect a new road with an existing one) t/-` [Manila began the latest round by leaking to ,r foreign journalists a story that it has proof that Over 100 government Rangers, who had Malaysia is supplying arms and ammunition to the beer missing for three days, reported on March 9-rebels. Philippine officials have shown some of 20 that up to half of the troops of the two this "evidence" to Saudi Arabian Foreign Minister government units may have been killed, including Saqqaf, who visited Manila last week, and to the the commander and deputy of the 95th Battalion/ US ambassador] To the south in Military Region 3, govern- ment officials believe that the Communists may be preparing for new military action before the end of the month. The South Vietnamese antic- ipate some form of reprisal for the successful government operation during February in the Ho Bo Woods in Binh Duong Province as well as against other security operations in the region. COSVN on March banned a civilian activities along a road connecting Tay Ninh and Binh Duong provinces because of Communist military traffic. In addi- tion, ralliers reported in early March that a medical unit has been moved into the forward area of the border provinces northwest of Saigon and additional food supplies are being sent there as well. Philippines-Malaysia MORE WORDS OVER MUSLIM REBELS d, -) Manila and Kuala Lumpur apparently are building toward another war of words over alleged Malaysian support for Philippine Muslim rebels. President Marcos and his military advisers charge that outside military support channeled to Muslims through the Malaysian Borneo state of Sabah is a key factor enabling the rebels to resist armed forces efforts to end the fighting) Philippine officials have raised charges of M~laysian support to Muslim insurgents at various L) IS- )Marcos probably hopes his campaign to pre- sent the Philippines as the aggrieved party will serve a dual purpose. Other Southeast Asian states, principally Indonesia, may be persuaded in the interests of regional harmony to press Kuala Lumpur to curb support from Sabah to the rebels. In addition, Marcos hopes to discredit Malaysia in the eyes of other Islamic states, par- ticularly Arab oil producers, and thus undercut Malaysian agitation against Manila's treatment of its Muslim minority/ 9 7- 1 -Marcos is combining his anti-Malaysia cam- paign with a skillful cultivation of certain Middle East states, such as Saudi Arabia. He seeks to convince them that he is making an honest effort to settle the Muslim problem but that outside interference makes this extremely difficult. Marcos obviously has his eye on the Islamic for- eign ministers' conference scheduled for Kuala Lumpur in May]. ~-- If Kuala Lumpur and Manila begin trading char es over the Muslims, Jakarta will undoubt- edly be drawn in because of its concern over the implications for regional stability and coopera- tion. Jakarta may try to revive the tripartite talks held in Hong Kong during 1973. At that time, Indonesia tried to act as an honest broker to settle the long-standing Philippine-Malaysian feud, nrenared to compromise. SECRET Page 9 WEEKLY SUMMARY Mar 22, 74 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 BREZHNEV SPFAKSON AGRICULTURE . 3 S7 I ) Speaking at'-the 20th anniversary of the start of hrushchev's New Lands program, Soviet party leader Brezhnev unveiled a land-improve- ment program for the Russian Republic aimed at leveling off the large fluctuations in Soviet agri- cultural output. He also spoke of the need to modernize and simplify agriculture's organiza- tional structure. Indicating that agriculture is a top-priority sector, he warned that "national eco- nomic problems" must not tempt a diversion of resources from the farms. Brezhnev revealed that 35 billion rubles would be spent during 1976-80 in the first phase of a 15-year project to develop agriculture in the non-black soil region of the Russian Republic. This sum is equal to a fourth of planned agricul- tural investment during the current Five Year Plan. The new program will include traditional land-reclamation projects-irrigation and drain- age-as well as increased supplies of mineral ferti- lizer and other agricultural chemicals. The plan covers 124 million acres, 79 million of which are arable and the rest useful for grazing. The crop area represents about 15 percent of total sown acreage and is about equal to the 70 million acres plowed up in the New Lands of Kazakhstan and Siberia. Although the non-black soil area has large tracts of boggy, uneven land, it has a high annual precipitation and responds well to the application of lime and mineral fertilizer. The Brezhnev agri- cultural programs of 1965 and 1970 got good results by providing more chemicals for this area, which has furnished more than one third of the increase in grain output in recent years. The new program is feasible only because the Soviets have been successful in boostinc their output of mineral fertilizer. On the other hand, the Soviets do not have a good record in implementing land-reclamation programs, however, and the Brezhnev plan is un- likely to work out as announced. In recent years, the amount of land that slipped into disuse ex- ceeds additions of newly reclaimed land. In any case, major benefits from the new program will not be realized before 1980. a streamlining at the national level. Brezhnev's speech also hinted that some agri- cultural reorganization may take place in the near future. He noted that the Central Committee is now looking over suggestions for improvements from the grass roots. He endorsed such local-level experiments as agro-industrial and inter-farm or- ganizations, but warned that "hasty, artificial nudging and exertion of pressure" will not be tolerated. On the national level, he stated that the present structure of management has become over-complicated. Brezhnev called for "a unified approach" to all agricultural questions for the country as a whole and better coordination among the departments concerned with agricul- ture. At the same time, he stressed that central- ized planned guidance must be balanced with operational independence for state and collective farms. These proposals echo in many ways the reorganization scheme currently under way in the industrial sector, namely, the creation of large, integrated production units at the local level and SECRET Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 SECRET (The current dispute between Belgrade and Rome over jurisdiction in the "Zone B" corridor south of Trieste will probably continue to be noisy for some time. Tito is not expected to alter Yugoslavia's long-held position, especially since his other neighbors could raise similar irredentist claims. He undoubtedly believes that maintaining a firm stand will help to ease this burden for his successors.( one B came under Yugoslav administration and r the terms of the Allied peace treaty with Italy in 1947 and of the London memorandum of understanding in 1954. Although Yugoslavia and Italy are both signatories to the London docu- ments, they have not signed any bilateral agree- ments on the border. Since the end of World War II, Italian rightists-who are particularly strong in the Trieste area-have blocked Rome's efforts to meet Belgrade's demands for official Italian recog- nition of Yugoslav jurisdiction over Zone B. In recent years, however, the Italians have been able to give Belgrade private assurances that no re- newed claims would be made:7 `Rome apparently broke this pattern with an unpublicized note in mid-January which reas- serted Italian claims to the territory and protested Yugoslavia's posting of border signs in Zone B. Rome was apparently prompted to formalize its protest after Belgrade failed to respond to an oral request for an explanation. The request was triggered by parliamentary pressure from the neo- fascists. The government probably wanted to avoid neo-fascist grandstanding at a time when public confidence is at a low point due to the recent cabinet crisis and a major oil pay-off scan- dal. Although this note was subsequently recalled, Rome renewed its claim with another protest on March 11. Belgrade then made the quarrel public by issuing its own diplomatic protest and opening up the propaganda vent. 5 'jtalian diplomats claim that Rome wants to soften the polemics by officially expressing its desire for good relations, but without fully with- ill r l b- i i B d i l l i i p o e gra e w a ts terr tor a c m. ng draw ably reject this because it leaves the Italian claim on the public recordr(As Rome prepared its next move, the Yugos}av Government strongly Page 11 denounced the Italian position on March 20. Bel- grade put the onus on Italy for "crushing" good bilateral relations and warned that Yugoslavia "knows how to defend its territory. For Tito, the problems posed by the Zone B controversy extend well beyond Italian-Yugoslav relations. Irredentism is an unpleasant backdrop to his efforts to ensure a smooth succession, and Tito almost certainly believes that he cannot ac- cept Rome's renewed claims to Zone B without inviting similar problems from Bulgaria. Al- though the Bulgarians do not make any direct claims on Yugoslav territory, Sofia steadfastly asserts that citizens of Yugoslavia's Macedonian Republic are Bulgarian by nationality. The Yugo- slavs have recently been extremely defensive about the Bulgarian position, which has also prob- ably undercut an improvement in bilateral rela- of Trieste (1947-541 Umago ZONE`B ---international boundary(1970)w O MILES H 555494 3-74 SECRET Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 ITALY: RUMOR TRIES AGAIN j 1Prime Minister Rumor's new center-left gov- ernment will probably survive a forthcoming vote of confidence in parliament. The odds, however, are against the coalition enduring much beyond the national referendum on the legalized divorce bill, scheduled for May 127 IThe speed with which Rumor was able to put the government back together after its dis- solution on March 2 indicates that the coalition partners merely papered over long-standing dif- ferences. With the divorce campaign already heat- ing up, the parties were reluctant to embark on the long negotiations usually required to formu- late a program and reshuffle cabinet portfolios' s a result, the new government looks and sounds very much like the old one. The major difference is that the Republican Party, which triggered the crisis by withdrawing from the gov- ernment after failing to resolve a dispute with the Socialists over economic policy, has refused to accept cabinet posts. The Republicans are limiting their participation to support in parliament for a cabinet made up of the remaining three center- left parties-Christian Democrats, Socialists, and Social Democrats] i The new government has echoed its pred- ecessor's pledge to give top priority to the fight against inflation and problems related to the energy shortage)l Substantial progress is unlikely, however, since the dispute over how to achieve these goals remains unresolved )There is already widespread talk of a new political "stocktaking" after the divorce refer-,,. endum. In the meantime, the campaign leading up to the referendum will probably have first call on political energies. The referendum will either con- firm or abrogate a 1970 law that legalized divorce, but most politicians are playing for higher stakes! Those who favor legalized divorce-including all' of the liti po cal parties except the Christian Democrats and neo-fascists---will portray the referendum as a challenge by the Catholic Church Rumor's dilemma - No solution ahead to individual civil rights. This alignment of forces will isolate the Christian Democrats from their coalition partners and allow the Communists to accuse the Christian Democrats of collusion with the neo-fascists. The Communists, who were stunned by the neo-fascists' electoral gains in the early 1970s, will conduct their campaign as an anti-fascist crusade-1 (i TMany politicians think that the referendum has turned into a personal battle between the leaders of the country's two major parties- Christian Democrat Amintore Fanfani and Com- munist Enrico Berlinguer. Berlinguer, in a bid for a Communist role in the national government, has been arguing that the time is ripe for a rapproche- ment with the Christian Democrats. He thus tried to get Fanfani to go along with a plan to cancel the referendum in order to avoid an open battle between the two parties. Fanfani's refusal to co- operate, however, has given substance to the con- cerns of more militant Communists who doubt the wisdom of Berlinguer's call for _a modus vivendi with the Christian Democratsil Even the Soviets have chided Berlinguer for falling into a trap set by Fanfani.; lln this atmosphere, it will be difficult for the Communists to adopt once again the moderate line that gave Rumor's previous government an extended breathing spell. The Communists still hope for an eventual deal with the Christian Democrats but, for the moment, the party line is one of "intransigent" opposition to Rumor's fra Flo , li oa tion SECRET P,ige 12 WEEKLY SUN` MARY Mar 22, 74 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 SECRET PRAGUE GIRDS AGAINST THE WEST CL4 i~Cr ~ Prague's growing attentiono ideological is- cipline reflects the domestic political dangers that the regime sees in detente. Czechoslovak media have stepped up their attacks on Western propo- sals for freer movement and on the corruptive nature of Western ideas and values. In addition, the regime has begun a "complex cadre assess- ment," that is, a review of the ideological and professional credentials of all personnel holding responsible positions in the party and state bu- reaucracy. These moves are clearly designed to serve notice on all segments of the population that detente will not be allowed to erode the party's control. Prague is evidently attempting to respond to Soviet calls for strict conformity throughout East- ern Europe. In many respects, however, detente poses a unique problem to the Czechoslovak lead- ership. Unlike most other East European regimes, authorities in Prague must contend with a popula- tion that still cherishes Western democratic tradi- tions and has fresh memories of Dubcek's "social- ism with a human face." The leadership feels it must move effectively to immunize or get rid of those in key positions who might be susceptible to Western influences so that any increase in East-West contacts does not make the infection worse. In the effort to counter the Western position on free movement, the Czechoslovak press has recently given much space to restating and de- fending the party line on the European security talks. The media have noted that Prague favors cultural exchanges but cannot permit "deliberate attempts" by forces in the West-including Radio Free Europe's "hostile and anti-socialist propa- ganda"-to undermine Czechoslovak sovereignty, laws, and customs. One recent article also charged that Washington was tying the extension of Amer- ican credits to the acceptance of propagandistic US films and cultural programs. The leadership's rather formalistic approach to the campaign for ideological discipline is not likely to reduce the attractiveness of Western values among all segments of the population, especially the youth and dissident writers. The decision to conduct the cadre review will, how- ever, drive home the message to all party mem- bers that detente cannot mean a relaxation Czechoslovak political life SECRET Page 13 WEEKLY SUMMARY Mar 22, 74 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 SECRET PORTUGAL: SUPPORTING THE RIGHT Pi he short-lived military revolt last week re- yealed dissent within the military over Portugal's African policy and may rave weakened Prime Minister Caetano's position? \By agreeing earlier to the dismissal of Gener- als Costa Gomes and Spinola, Prime Minister Cae- tano has increased his dependence on the ultra- right wing of the Portuguese establishment-an element he has never been popular with in the past. They forced him to back down before when he tried to modify Portuguese African policy, maintaining that any relaxation would lead to the loss of the overseas possessions. The ultra-right faction includes President Thomaz, the forty wealthiest families, and some high-ranking mili- tary officers. It is especially annoyed because Caetano permitted the publication of Spinola's book, and it probably will continue to suspect the Prime Minister of wanting to create a federation of Portugal and its overseas provinces,] 1The right wing may have been behind the refusal of Portuguese censors to allow publication at home of Caetano's statement to a French news weekly that he would not resign, although other portions of his interview were carried. President Thomaz's reluctance to prolong the present crisis by firing the Prime Minister may protect Caetano for the time being( The sporadic military alerts of the past week have been lifted, but military and government officials are concerned about the extent of dissent over the firing of Costa Gomes and Spinola. Neither general appears to have been directly in- volved in the revolt by some 200 officers and men, but the march on Lisbon belies the declara- tions of loyalty given last week by other senior military officers just before the public announce- ment of the dismissals (Jther signs of defiance were evident last week when the alumni association of Lisbon Mili- tary College awarded decorations to the two dis- missed generals and to Lt. Colonel Joao Bruno, a close associate of Spinola and a hero of action in Portuguese Guinea. In addition, both generals wer elected to top offices in the alumni associa- tior . The government is treating the two generals with caution. Both are free to come and go in Lisbon. General Spinola's book urging a federa- tion with the African provinces-which set off the furor that led to the dismissals-is now being permitted to be sold in Lisbon bookshops' \The government has, however, arrested Lt. Colonel Bruno along with some 30 other officers. According to press reports quoting informed mili- tary sources, the general commanding the Lisbon military academy and an admiral who is the naval secretary of the Armed Forces Defense Staff have been dismissed in the aftermath of the abortive revolt.] ]The regime may succeed in stilling dissent within the armed forces and censoring public dis- cussion of overseas policy, but in so doing it only postpones the day of reckoninn over its efforts to SECRET rage 14 WEEKLY SUMMARY Mar 22, 74 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 SOUTH AFRICA: BANTUSTAN INDEPENDENCE 1r `cLavt_ J) Transkei, the oldest of the self-governing tribal homelands-Bantustans-created within South Africa, may soon request independence. Prime Minister Vorster apparently has encouraged the move in order to show South African whites, who go to the polls next month, that the Bantus- tan program is working out to their advantage. It is doubtful, however, that the remaining tribal homelands could be brought to accept independ- ence without concessions by Pretoria that would provoke serious white opposition. South Africa's white rulers developed the Bantustan program in the early 1960s to justify their policy of rigid apartheid-racial separation. An eventual transition to independent status has been a feature of the program from its inception, although Pretoria expects the Bantustans to re- main completely dependent satellites. Transkei has had an autonomous administra- tion since 1963. At its recent annual congress, the territory's leading political party resolved to South Africa: Bantustans Basotho Qwa Qwa Bophuthatswana Ciskei 10 Gazankulu J Kwazulu Lebowa -.,_w Swazi* Transkei Venda 200 Miles Not yet self-governing SECRET Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 SECRET request independence within the next five years. Last week, Transkei's chief minister, Kaiser Matanzima, introduced an independence resolu- tion in the Transkei legislative assembly. In a private conversation with the US consul general in Durban, Matanzima stated that inde- pendence could come within two years. He em- phasized, however, that before his government would accept independence, Pretoria must turn over a small Indian Ocean seaport and other land parcels that have been tentatively promised. Ma- tanzima had previously asserted that Transkei would not accept independence until Pretoria ceded much more extensive territories that orig- inally belonged to the Transkei's Xhosa tribe. the only Bantustan that has a consolidated terri- torial base, and leaders of other homelands have a greater need than Matanzima to insist on major land transfers before independence. Although Pre- toria has plans for a partial and very gradual consolidation of other Bantustans, actual land transfers have barely begun. The Vorster govern- ment is proceeding cautiously in order to mini- mize its financial burden and, more important, the opposition of white farmers who have to move from any lands transferred to the home- lands. IRAQ-KURDS: TIME IS RUNNING OUT At the party congress, Matanzima reportedly argued that Pretoria would increase its financial (Iraq's troubles with its Kurdish minority aid to Transkei after independence because Prime Minister Vorster wants the first independent Ban- (,% tustan to become a "showcase," both to induce leaders of other Bantustans to request independ- ence, and to gain international approval for the Bantustan program. These arguments apparently won over party members who had wanted to hold out until Transkei's maximum land claims were met. Matanzima's hope of greater financial aid from Pretoria may be unrealistic, but Vorster is believed to have assured hinn that modest terri- torial claims would be readily granted as part of an independence settlement. Matanzima's willingness to go forward on this basis with the implementation of the Bantus- Lan program will be politically helpful to Prime Minister Vorster. With national elections sched- uled for April 24, he is especially eager to show white voters that he can mollify the Bantustan leaders with concessions that are far short of the sweeping demands they put forth in a manifesto last November. Early independence for Transkei would not necessarily hasten independence for the other seven homelands that now have some degree of self-government, but it could spur the demands of the leaders of the other Bantustans for consolida- tion of their fragmented territories. 1 ranskei is could soon erupt into serious fighting. Baghdad has given the Kurds until March 26 to accept its plan for limited autonomy. Kurdish leader Bar- zani has already rejected the plan publicly, and last week Kurdish forces seized several Iraqi garri- sons near the Turkish border. Although there have been rumors of attempts to re-open talks between the two sides, no progress appears to have been made in resolving the impasse.) 1Meanwhile, both sides are continuing mili- tary preparations. The government may first try to establish a puppet government in the Kurdish area. Such a government is likely to be opposed strongly by most Kurds, however, and if the gov- ernment ultimately feels compelled to resort to ground and air attacks, the badly outnumbered and outgunned Kurdish rebels will be forced to relinquish population centers and take up new positions in the mountains where the terrain would be to their advantage. IFor several weeks now, many Kurds have been fleeing to the north, either to join the armed rebels or to seek refuge. These refugees could become a serious problem for the Kurds if the government decides to impose an economic blockade of the area, making it difficult to ac- quire clothing, food, and shelter. SECRET 25X1 25X1 Page 16 WEEKLY SUMMARY Mar 22, 74 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 1400, SECRET _ 140* PAKISTAN: CLOUDS ON THE HORIZON i j prime Minister Bhutto's personal prestige is currently at an all-time high, largely as a result of the public relations dividends he gained from the Islamic summit conference in Lahore last month. Recent developments in the Punjab and Baluchi- stan, however, could eventually cause problems for him and his ruling Pakistan People's Partyl r [Earlier this month, Mustafa Khar was re- placed as chief minister of Punjab Province by Mohammed Haneef Ramay, a move that in effect reversed the power positions of the two diverse political forces on which Bhutto's party is based in the Punjab. Ramay, born in Lahore, represents the urban elite that is committed to social, eco- nomic, and land reform. Khar's support has come mainly from the rural and conservative elements of the province. Although Khar reportedly will not challenge Ramay and the urban elite's present control of the party apparatus, his supporters may not go along with him. In that event, the internal cohesion of the provincial party organiza- tion could face a serious test.( l [in Baluchistan Province, the plans of the People's Party for ending the governmental instability and tribal dissidence that have long troubled the area could be upset by the party's heavy-handed methods of strengthening its posi- tion. Several members of the provincial assembly, who belong to the National Awami Party, the main opposition group, were recently jailed or forced into hiding and their seats declared vacant. By-elections for the vacated seats were boycotted by the National Awami Party, which charged that the government would manipulate the results in order to ensure the election of People's Party candidates. The boycott apparently has given the People's Party enough seats to establish firm con- trol over the provincial government, but at the cost of increasing the frustration and anger of the opposition. / Prime Minister Bhutto, for his part, is attempting to undercut the role of the traditional leaders of the Baluchi and Pathan tribes by imposing administrative changes in the province from Islamabad. These tribal leaders have gen- erally supported the opposition. 7 >L ) i n addition, the recent murder of an opposi- tion politician in Baluchistan may cause further trouble for Bhutto's party. The deputy speaker of the provincial assembly, who was also a Pathan leader, was found dead on March 13. If his death can be traced to the People's Party, other Pathan leaders and politicians in the province will be under strong pressure from their constituents to avenge the killing or risk losing popular support. SECRET Page 17 WEEKLY SUMMARY Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 SECRET INDIA: GRIM ECONOMIC PROSPECTS 1 The outlook this year for the depressed Indian economy is grim. Inflation, stagnating industrial production and smaller-than-planned increases in agricultural output continue to be major problems. Chronic trade imbalances are increasing because of soaring import costs- especially for food grains, petroleum, and ferti- lizer-and slow export growth. The prospects for obtaining new foreign aid remain uncertain. Inflation is India's major economic problem, with the rate of inflation clirribing to record levels in 1973. At the end of December, wholesale prices were 26 percent higher than a year earlier. The principal cause of inflation-deficit financing of government expenditures--continues unabated. Slow industrial and agricultural growth also con- tinue to constrain supplies, which remain only slightly ahead of population increases. The budget for the fiscal year beginning April 1 virtually ignores the inflation problem. Expenditures are scheduled to increase 16 percent to $11.7 billion and the deficit is projected to move up 33 percent to $160 million. The actual deficit last year was ten times that estimated, and this year it is again likely to be significantly greater than anticipated in the budget. Industrial production stagnated in 1973. Hampered by energy shortages, transport bottle- necks, raw material shortages, labor strife, and reduced demand for capital goods, there is little chance of recovery this year. In addition to recurring electric power deficiencies and coal shortages, petroleum is now in short supply. India imports 70 percent of its petroleum supplies. Increased domestic oil production hinges on the long-term success of exploratory drilling now under way offshore from Bombay. Renewed attention is now being given to coal, which has long been neglected despite sizable reserves. New Delhi's efforts to counter energy shortages by cranking up domestic coal production and increasing petroleum exploration will take time. For the immediate future, energy shortages will continue to hamper industrial production. Agricultural production has recovered from last year's dismal performance and food grain production probably will increase about 10 percent to 105 million tons in the crop year ending June 30, 1974. Output is still 10 million tons below planned levels, however, because of bad weather, crop disease, and fertilizer shortages. Grain stocks and indigenous government procure- ment efforts will be inadequate to maintain the government's food grain distribution system until the fall harvest. Nearly 2 million tons of grain imports, already contracted for this year, are being delivered. More will be needed but high prices will curb sizable purchases for some time, unless New Delhi can obtain concessionary terms from sellers. Although exports increased about 20 per- cent in 1973, imports increased 45 percent, creating about a $150-million trade deficit. New Delhi received virtually no new net private foreign investment and had to use foreign exchange reserves and borrow $75 million from the Inter- national Monetary Fund to pay its bills. In 1974, the deficit will increase as import costs continue to rise. Import priorities have not yet been sorted out, but it is unlikely that imports will be adequate to accelerate production. Higher petro- leum and fertilizer prices in 1974 will cost India an additional $1 billion, the equivalent of one third of its export earnings. India's $1.1 billion International Monetary Fund quota and another $1.1 billion in foreign exchange reserves are available, but New Delhi is hesitant to draw down reserves or to go deeply into debt to the fund. The Free World Aid India Consortium will meet in June to consider new foreign aid. Most donors have been cautious, however, and the chances of India nhtaininn sharnly inrreacPd aid are not good. SECRET Page 18 WEEKLY SUMMARY Mar 22, 74 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 SECRET VENEZUELA: TERRORISM COMEBACK (1 '}, '1 `1, Y c-i) leir Left-wing extremists are following through on declaration of war against the new presi- dent, Carlos Andres Perez, and his Democratic Action administration. Claiming to be urban guer- rillas belonging to the outlawed Bandera Roja and Punto Cero organizations, the extremists assumed credit for the rash of arson and bombings as well as a bank robbery that coincided with Perez' inauguration. Domestic as well as US-owned businesses in several Venezuelan cities were targets of the ter- rorists, who set fires that destroyed six structures of the largest warehouse complex in Caracas and damaged a high-rise apartment building in the city's center. In addition, bombs were found in a US-owned department store and in the offices of a US oil company. Attempts to put out the ware- house blaze-the worst in Caracas' history-were hampered for a time by snipers shooting from a nearby low-cost housing project at firemen and police. National guard and army troops were finally called in to restore order. The government's reaction thus far has been relatively low key. Interior Minister Luis Pineura Ordaz has been urging the media, particularly the sensationalist tabloid press, not to give the ex- tremists the publicity they are seeking. In his first press conference, President Perez repeated the admonition, characterizing the terrorism as the work of a few with no political backing. At the same time, Perez warned that he would give no quarter in clamping down on further outbursts. Government officials believe that the guerrillas hope to provoke a repressive counter-reaction from the new government that would unite the now-divided leftist forces in the country and at the same time win publicity for their moribund organizations. Lacking the men, the organization, and the foreign support they received during the full-scale armed insurgency in the 1960s, the terrorists have nothing to gain but annihilation by openly baiting Warehouse complex blazes Terrorist arson the Perez administration. Even the leftist political parties, including the marxist Movement to So- cialism, have publicly dissociated themselves from the extremists, a fact acknowledged by President Perez when he absolved the legally established leftist parties of any connection with the terror- ists. Although some of the incidents could be the work of common criminals, there is little doubt that the level of guerrilla violence, as well as the announcements by groups claiming to be guer- rillas, has increased in recent days. Although the extremists are not capable of shaking the stability of the government, they can manage scattered acts of violence, which will probably continue for SECRET Page 19 WEEKLY SUMMARY Mar 22, 74 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 SECRET PERON LOOKS EASTWARD )in an attempt to retain Buenos Aires' independent outlook in international relations, Juan Peron is seeking to expand Argentina's economic relations with the Communist world. Several Communist nations have responded by agreeing to extend substantial amounts of long- term aid to Buenos Aires. Romanian President Ceausescu, during his visit to Argentina in early March, signed a $100-million credit agreement. The credits, the largest by Bucharest to a South American coun- try, cover aid for agricultural, mining, and petro- Recent Economic Agreements with Communist Countries January-March 1E174 Country Date Type of Agreement Ciuc.hrrslovckin February 21 Protocol on expanding erononlir: couperolion lung~lry March DrIJI el:onon 111 aril le0i I:,r.l11I,,,I,I,I.~uor, iruc~e I'u nl U110) 1 I'ro ocol on r'' pan, Iing r.nnuniir cnuper,luon li::ur,mi^ -ubr?ary 16 Cunvonliorr irsclenlilic I. Inilvrxlil:.r , ot)!, mliun I ?: br r.ny ~2 ~-i,i~ 1 111lr~u~;llor~ ru r. Sul I rrhruary 5-8 Gurlcral ~Igrunnrenl for Inuinil. irnd ler.Lnical ..n 4)CI,i IIU!1 "!l,urII .ri 8 A,'rl11 1 o I coop ralior v. IIICx]rr, irrlusl!0 field I1 58 nl ( cor,1) rr11I Ill .'t III11110g h/1,ln h 5 #f C i.rrlil ,nllccI icnl ';.~ `,~10U Ir b 13 n~llrcn runt Iln 1111 III.II 12 51] I-ehnruy 12 Aylcelnun: on econorlrIr ,:rrl r,nninicnial r"npcr.ition 1 r~bluury 12 CrrIr] II 10011/Ill 11 supply ,1 1111(1 inCr-, :mr1 ~.:1i111)if:nl !\Illc1enrrnI un sei1 0 11 hrr,,11 cu,lntrrl:nu leum development. A $37-million contract for Romanian oil-drilling equipment has already been signed. In mid-February, the USSR and Buenos Aires concluded a series of economic agreements that included credits, but the amount of aid was not fixed. Soviet financial assistance was offered for steel, petroleum, forestry, transport, power generation, and maritime industries. Soviet technicians already are considering a proposal to assist in the construction of a deep-water port in Patagonia, and Moscow is hoping to provide power-generating equipment for the prestigious Salto Grande hydroelectric project. Although Argentina has not yet accepted the Soviet bid for $65 million, which is below the lowest Western bid, Moscow sweetened the offer with $10 mil- lion of credits to defray local construction and installation costs. Recent economic agreements with other Communist nations include the provision of credits by Czechoslovakia for power-generating equipment and the eventual establishment of a joint company to produce power equipment for sale in Argentina and elsewhere in Latin America. Poland has pledged assistance to Argentina's fishing, shipbuilding, and mining sectors, while Hungary currently is drafting a cooperation agree- ment for bauxite development and a plant to manufacture port equipment. Argentina's plans for industrial diversifica- tion mesh with Communist desires to reduce the deficit in their Argentine trade, which has averaged more than $50 million annually over the past three years. Peron, faced with $2 billion in debt-service payments to Western creditors through 1976, may view Communist long-term aid, repayable in goods, as a viable alternative to increased Western assistance. This merger of interests should lead to an eventual increase in the exchange of goods, technical and scientific in- formation, and possibly personnel. SECRET Page 20 WEEKLY SUMMARY Mar 22, 74 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 ,"up' SECRET TO RENEW TIES WITH BOLIVIA believes that a Brazilian economic stake in the area would help discourage Peruvian incursions:? / 1 `Chilean junta chief Pinochet and Bolivian } President Banzer agreed last week to appoint a SIX MONTHS LATER )binational commission that will attempt to resolve major differences as a prelude to the 1 4) Pronouncements made on March 11 to mark renewal of diploma ic relations and economic six onths of government by the armed forces coo eration. and carabineros strongly reiterated their deter- 25X1 '.$ ination to restructure Chile's political, eco- 25X1 , j3 \ The major stumbling block to an agreement nomic, and social systems before allowing a return to civilian rule could be Bolivian insistence on obtaining an out- The statements outlined plans for the crea- let to the sea through Chile. The two nations tion of a ''social democracy" free of the partisan broke relations more than a decade ago during apolitics of the past. The military and police dispute over the use of common water resources.`/ S intend to eschew reliance on any organized polit- Even before that, however, ties had been strained ical group. Instead, they will attempt to create for almost a century because of Bolivia's claims to their own base of mass popular support through a territory on the Pacific coast conquered by Chile during the War of the Pacific} I The cordial meeting of the presidents was arranged by Brazilian officials during the inaugu- ration festivities in Brasilia. The new Geisel administration undoubtedly sees several benefits in improved relations: ? both military regimes would be strength- ened; ? even partial reconciliation would earn Brazil prestige as an international arbiter, since the two leaders met for the first time on Brazilian soil; ? a possible Chilean concession to Bolivia on access to the sea might involve internation- alization of a port in northern Chile, a devel- opment that Brazil views as an opportunity for economic gain and increased influence) [A series of regional trade agreements is -.i reportedly being discussed at Chile's suggestion. Chile is concerned about Peruvian revanchism and is anxious to attract foreign investment to its northern border region, and the junta probably SECRET Page 21 WEEKLY SUMMARY Mar 22, 74 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 SECRET highly structured chain of command extending from the junta to neighborhood councils. Par- ticipation will be compulsory. Junta President Pinochet emphasized the regimes sympathy with the low-income groups that are bearing the brunt of the economic recovery program. Although he acknowledged that further privations lie ahead, he promised that the same generation will reap the fruits of these sacrifices." Pinochet also noted that new taxers will spread the burden more evenly and warned "those who seek only their own profits and ignore their social duties" that drastic penalties will be imposed for violations of economic regula- tions., Christian Democratic Party patriarch Eduardo Frei was the only living ex-president not present to hear Pinochet's speech. He had planned to attend but changed his mind following publica- tion of the junta's paper on social development, dl GUATEMALA: ONWARD WITH LAUGERUD The Guatemalan Government, which seems to have stifled opposition to the disputed count in the election on March 3, is preparing to build a presidential image for General Kjell Laugerud, who is slated to assume office on July lj 101- )Guatemalans generally believe that Lauge- rud's election was engineered by gross fraud, but the opposition's attempts to thwart a Laugerud victory by peaceful resistance have been ineffec- tive. Appeals by defeated candidate General Efrain Rios Montt for nationwide strikes have gone unanswered, and street demonstrations have been easily broken up by police. The army has been uneasy over the situation, but its top gen- erals now appear to be backing the government, and coup rumors have subsided.) 1 7 `Rios has in effect removed himself from a position of opposition b r accepting a recall to active duty in th arm- reportedly as military attache in Spain. ':'C' 'Rios' principal supporters in the left-of- center National Opposition Front are still urging the public to reject the "imposition of Lauge- rud," but these efforts are likely to have little effect now that the Front is leaderless.) SECRET Page 22 WEEKLY SUMMARY Mar 22, 74 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 25X1 25X1 25X1 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4 Secret Secret Approved For Release 2007/12/19: CIA-RDP79-00927A010700100001-4