(UNTITLED)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A010900050001-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 35
• Document Creation Date: January 12, 2017
• Document Release Date: June 30, 2011
• Sequence Number: 1
• Publication Date: August 30, 1974
• Content Type: SUMMARY

Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
NNO, %0
Secret
Weekly Summary
Secret
No. 0035/74
30 August 1974
Copy Nn 58
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
i, fhlj oc e; aratel as ype , a Reports grey
25X1 ..,.
CONTENTS (August 30, 1974)
1 Cyprus
5 The Middle East
10 Greece: Looking Toward Europe
11 Iceland: A New Government
11 UK: Trade Union Congress
12 Romania: 30th Anniversary Fete
13 UN: Troubled Waters for Shipping
EAST ASIA
PACIFIC
14 Vietnam: Fighting; Propaganda
15 Laos: Surviving Without Souvanna
16 China: Increasing Petroleum Sales
17 Malaysia: A Clean Sweep
MIDDLE EAST
AFRICA
18 Spanish Sahara: Referendum Set
19 Ethiopia: New Tack in Eritrea
WESTERN
HEMISPHERE
20 Netherlands Antilles:
Independence Problems Loom
20 Brazil: Foreign Trade Concerns
SPECIAL
REPORT
Comments and queries on the contents of this
publication are welcome. They may be directed to
the editor of the Weekly Summar
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
Iq
Next 1 Page(s) In Document Denied
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
 Clerides and Denktash (foreground) with UN officials Aga Khan and Waldheim
CYPRUS
(j&- SouKCtO,
Diplomatic activity has intensified, but there
has been little progress thus far in resolving the
Cyprus conflict. Greece and the Greek Cypriots
this week accepted a Soviet proposal to bring the
Cyprus crisis before a large international con-
ference under the auspices of the UN Security
Council. The Turks and Turkish Cypriots, how-
ever, rejected Moscow's suggestion, and continued
to advocate a return to the Geneva talks. The
Greek side has resorted to delaying tactics in an
apparent belief that it will gain more international
support as time goes on. The Turkish side, how-
ever, realizes that Greece is winning the propa-
ganda war, and reportedly is moving ahead with
plans to create an "autonomous Turkish Republic
of Cyprus." The military cease-fire on Cyprus is
holding, but Greek Cypriots have threatened guer-
rilla warfare, and tension remains high on the
island.
Diplomatic Maneuvering
Cypriot President Clerides and Greek Prime
Minister Karamanlis met last weekend in Athens
and reportedly are in agreement concerning
future policy toward Cyprus. The two continue
to demand that Turkey withdraw its forces to
positions held before the second round of fight-
ing, and they insist that Turkish "concessions"
are not substantial enough to warrant reopening
the Geneva talks. Both Athens and Nicosia later
accepted the Soviet proposal for an international
conference to discuss Cyprus. The vaguely
worded Soviet government statement, issued on
August 22, calls for Athens, Ankara, Nicosia, all
UN Security Council members, and some un-
specified nonaligned states to attend the conclave.
The Greek reply to the Soviet proposal,
however, reportedly expressed "agreement in
principle," suggesting that Athens has some
reservations. UN Secretary General Waldheim,
who met with the leaders of all interested parties
this week, indicated that neither Karamanlis nor
Clerides is really interested in the Soviet proposal.
There are other indications that their acceptance
of Moscow's plan was motivated by a desire to
delay negotiations and gain wider international
support for the Greek position. Clerides told
reporters, for instance, that opinion in Europe has
started to swing in favor of the Greek Cypriots.
By accepting the Soviet proposal, Karamanlis was
also able to make a gesture to the left in Greece,
the direction from which his most serious
SECRET
Page 1 WEEKLY SUMMARY Aug 30, 74
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
SECRET
{F OT
political problems are likely to come. Both
Karamanlis and Clerides realize they will have to
make concessions eventually, but they hope to
postpone doing so until domestic frustrations and
tempers cool.
After consulting with Karamanlis, Clerides
met with Turkish Cypriot leader Denktash and
UN representatives to discuss humanitarian prob-
lems. Waldheim said that some progress was made
in facilitating the movement of foodstuffs and
reuniting broken families on a case-by-case basis.
The two Cypriot leaders agreed to meet every
Monday, and Waldheim hopes that the two men
will eventually discuss political issues and con-
tribute to a resolution of the crisis. Athens and
Ankara, however, will probably keep the Cypriot
leaders on a short leash. In contrast to the Greeks,
the Turks hope for an early resumption of talks
involving only Athens, Ankara, the two Cypriot
communities, and Great Britain. The Turks view
the Greeks as being much better than themselves
at mobilizing world opinion and are worried that
they will be out-maneuvered diplomatically now
that the fighting has ceased. The Turkish side is
adamant that an eventual political settlement
recognize a separate and autonomous Turkish
administration in the northern part of the island.
The Turks have conceded that the exact bound-
aries of the Turkish Cypriot autonomous area are
negotiable. Statements by Denktash about the
possible establishment of an independent Turkish
Cypriot state are, in part, an effort to force the
Greek side to the bargaining table, but the Turk-
ish side reportedly is preparing to create such a
state if the Greeks continue to stall on opening
talks.
The UN Security Council was scheduled to
hold a special session on August 29 to discuss the
Cyprus situation. Clerides requested the meeting
to discuss the refugee problem on Cyprus, but a
strong possibility existed that debate would be
broadened.
Earlier in the week, Secretary General
Waldheim visited Nicosia, Athens, and Ankara to
soup a Fn)
sound out the antagonists on possible negotia-
tions and to discuss the role of the UN forces on
Cyprus. Waldheim expressed hope that a common
ground will be found that will permit peace talks
to begin, but acknowledged that a wide gap exists
between the Greek and Turkish sides. The Secre-
tary General believes that a first order of business
is to reach agreement on a new mandate for the
UN peace-keeping force. He wants to update the
mandate, which expires in December, to reflect
the new situation on the island.
The Soviet Angle
The Soviet proposal for an international con-
ference represents a continuation of Moscow's
efforts to establish a role for itself in the Cyprus
conflict and to reiterate its support for Cypriot
independence. The move also seems aimed at
exploiting Greek discontent with the Geneva
talks. The Soviet statement was issued only after
the Turks had completed their occupation of
northern Cyprus. This timing, along with the con-
tinued absence of direct Soviet criticism of
Ankara, indicates Moscow does not want the
proposal to be viewed as a slap at the Turks.
Now that the Greeks have accepted-and
Ankara has rejected-the Soviet proposal, Moscow
seems uncertain about how to proceed without
offending the Turks. Although Soviet public
comment is somewhat more favorable to Athens,
Moscow has not pushed its proposal energetically
with other countries or at the UN. The Soviets
will probably keep their gambit alive in order to
curry favor with the Greeks, but will probably
not chastize Ankara for rejecting it. Such crit-
icism might compromise Moscow's longer term
interest in maintaining good relations with
Ankara.
Britain, which had been working to win
Greek agreement to reopen the Geneva negotia-
tions, initially gave a chilly reception to the So-
viet plan. London reportedly says, however, that
it will not oppose such a proposal if it is accept-
able to the other interested parties. The US
SECRET
Page 2 WEEKLY SUMMARY Auo 30. 74
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
1411111W V-111111111"
mission to the UN believes that the plan is not
likely to win acceptance in the immediate future
unless there are new Turkish provocations on
Cyprus.
On Cyprus
\N6T SoV./zcr- o)
On Cyprus itself, the military cease-fire is
holding, but considerable tension remains. The
government, aided by the International Red Cross
and donations by several countries, is attempting
to relieve the plight of an estimated 200,000
refugees, but relief will be slow in coming.
Various Greek Cypriots, including some repre-
senting themselves as members of the right-wing
EOKA-B, have threatened to wage guerrilla war.
President Clerides reportedly will seek to control
the various paramilitary groups on the island, but
admitted last week that he does not have suf-
ficient power to do so at this time. Although the
threats of guerrilla war may not be translated into
deeds for some time, the Turks have begun to
Control of Economic Resources
(1-7)
In capturing about 40 percent of Cyprus,
Turkey has gained control of almost all of the
island's important economic resources. Permanent
partition along present lines would place the
majority Greek population-about 80 percent of
the total-in an economically untenable situation.
Cyprus' key agricultural, mining, manufac-
turing, and tourist centers are all in the Turkish
Irrigated Area
- Attila Line
Front
SECRET
Page 3 WEEKLY SUMMARY
Aug 30, 74
25X1
25X1
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
zone of control. This area has accounted for con-
siderably more than half of the economic activity
on the island. Greek Cypriots have fled to the
mountainous, least productive areas. Still in
Greek Cypriot hands are the Limassol tourist and
commercial area, the port of Larnaca, and the
Troodos highlands where grazing and olive, wine,
and grape production are the chief occupations.
The Turkish-controlled zone includes land
devoted to wheat, barley, vegetables, potatoes,
and citrus fruits. Cyprus, already dependent on
imports for 40 percent of its food supply,
consumes all domestically grown wheat, barley,
and vegetables.
More than half the producing areas for these
foods, accounting for about 65 percent of
Cypriot agricultural output by volume, are under
Turkish control. The Turks occupy almost all the
agricultural areas that are permanently irrigated.
Turkish forces also control large sections of
the copper-producing region surrounding the city
of Xeros. This area, encompassing the Mavrovouni
and Skouriotissa operations of the US-owned
Cyprus Mines Corporation, accounts for two
thirds of Cypriot mineral production and 70 per-
cent of mineral export earnings. The Greeks
retain some copper resources, as well as important
iron pyrite deposits, south of the Turkish-
occupied zone.
Turkish troops occupy much of the principal
manufacturing district surrounding Nicosia as well
as the popular Kyrenia and Famagusta tourist
areas. While destruction in these areas has not
been extensive, the massive dislocation of workers
and the absence of tourists have brought eco-
nomic activity to a standstill.
Outside the occupied zone, fires caused by
Turkish bombing have destroyed a large part of
the southwestern timber lands. Resulting water-
shed deforestation will threaten the island's
already scarce water supply.
Water shortages, normal occurrences before
the war, are now severe. Crops have not been
irrigated in over a month, and livestock is re-
ported to be dying of thirst in large numbers.
The invasion has had a devastating impact on
Greek Cypriots, causing an estimated 100,000 to
200,000 to flee their homes and businesses. Pre-
liminary estimates by Greek Cypriot authorities
put the losses at over $200 million, including:
construction, $125 million; tourism, $36 million;
industry, $18 million; agriculture, $8-10 million;
lost working days, $18 million. Final figures will
probably be much higher.
While Ankara remains flexible, present Turk-
ish plans seem to call for a formalization of the
Attila line. Should there be an extensive exchange
of population between Greek Cypriots leaving
and Turkish Cypriots entering the occupied zone,
the land gained by Turkish Cypriots in the north-
east portion of the island would be much greater
than that abandoned in the southwest.
It is unlikely that the area left to the Greek
Cypriots could support the additional 150,000
refugees who might have to be resettled there.
Since food supplies already are inadequate, heavy
reliance on foreign food aid would be necessary.
Lacking significant manufacturing, agricultural,
mining, and tourist activity, the Greek-held areas
face extensive under-employment and massive
emigration.
Ankara is likely to consolidate its gains in
the northeast by pouring considerable investment
into the mineral, tourist, petroleum refining, and
service industries. The Turkish Cypriot popula-
tion, which formerly enjoyed a per capita income
only half that of Greek Cypriots, would profit
from the realignment.
The military expedition, which has cost
Turkey an estimated $370 million, would be com-
pensated by the creation of a robust Turkish
Cypriot economy and elimination of an annual
$22 million welfare payment made by Ankara to
SECRET
Page 4 WEEKLY SUMMARY Aug 30, 74
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
5 Algeria's tough stand will complicate Sadat's
effort to accommodate both Palestinian and
Jordanian approaches to the negotiations, and it
will strengthen the hands of those Palestinians
who oppose PLO leader Yasir Arafat. In particu-
lar, Boumediene's intransigence appears to rule
out any hope that Algeria will act as a mediator if
the coming meeting of the foreign ministers of
Egypt and Syria with representatives of the PLO
runs into difficulty(
(O jSadat, nonetheless, appears determined to
press his suit with the PLO and the Jordanians. In
a press conference on August 28, he reiterated his
thesis that Israel may try to exploit the contradic-
tion between the PLO and Jordan. Sadat has
emphasized all along that,- although advancing
Palestinian rights is all-important, neither the
Palestinians nor the Arabs as a whole will gain in
the long run if divisions in Arab ranks enable
Israel to avoid having to face up to negotiations.
In an apparent effort to squash any speculation
that he is becoming discouraged with the pursuit
of negotiations on the Jordan front and might
revert to the search for a further Egyptian-Israeli
disengagement, Sadat insisted in a speech on
August 25 that "Egypt will not put an end to the
state of war unilaterally.'
[President Sadat's hopes of working out a
s-coordinated Arab position on the roles to be
played by Jordan and the Palestine Liberation
Organization in the next phase of Middle East
peace negotiations were jarred last week by
Algeria's rejection of any role at all for Jordan. In
an uncompromising public address on August 22,
President Boumediene reiterated his support for
the resolution passed at the Arab summit last
November, which recognized the PLO as the sole
legitimate representative of the Palestinian
peopled
k jBoumediene warned that a leading role for
King Husayn at this time would not facilitate the
search for peace. He also insisted that Arab soli-
darity depended upon an honest agreement with-
out "backstage tricks," an apparent reference to
Egypt's agreement to allow Jordan to negotiate
for the return of the West Bank
Boumediene
Page 5
i i adat also chaired a cabinet meeting this
weeI that apparently approved preparations for
P, the Egyptian-Syrian-PLO meeting and favorably
reviewed Foreign Minister Fahmi's recent visit to
the US. The meeting, however, was held against a
background of grumbling within the cabinet over
Sadat's failure to maintain a true balance in
Egypt's relations with the two super powers.
if 1Sadat's critics remain personally loyal to
him. Their dissatisfaction is not a reflection of
1 9pposition to the US or of a preference for
SECRET
WEEKLY SUMMARY Aug 30, 74
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
SE( KET
Moscow, but of restiveness over the current lull in
peace negotiations and ungratified expectations
of US aid)
/2
y Jihe Egyptian media have begun to show a
more relaxed attitude toward the US since
Fahmi's return from Washington, and this press
reaction probably indicates some easing of the
concern within the cabinet.
J7 he exercise began on August 25 and ended
two hours ahead of schedule the next day. The
Israeli chief of staff termed the exercise a success,
with nearly all the recalled reservists reporting for
duty. The public call-up, which was said to have
involved "tens of thousands" of reservists, was a
test of Israel's ability to mobilize quickly in an
emergency. According to an Israeli military
spokesman, this system of recall was last used
operationally in 1967 and in an unannounced
practice call-up "some years ago."7
f 7 frel Aviv followed the mobilization exercise
with military maneuvers on Monday night in the
Sinai, but it is not known if any of the mobilized
reservists participated. Israel has held several
large-scale maneuvers during the past month, and
some reservists had been mobilized for then'l1
7 the Arabs, meanwhile, took precautions to
avoid being caught unprepared in case of an
Israeli attack. Egyptian troops took up defensive
In speeches last weekend and in his press positions along the length of the Suez Canal.
fi
con
erence this week, Sadat seemed to go out of Syrian and Jordanian forces also raised the
his way to mollify his domestic critics. He noted readiness condition of their forces.
the necessity of coordinating Arab positions with
Moscow before reconvening the Geneva Con-
ference, and he expressed a more general desire to
improve relations with the Soviets, stressing that
Egypt's friendship with one super power does not
signify its alignment against the other. This is a
standard position with Sadat but one that he has
not emphasized publicly since the Soviets
abruptly canceled a scheduled visit by Fahmi to
Moscow in mid-July)
11 [-Israel conducted its widely publicized
nationwide mobilization exercise this week amid
Arab apprehension that it would be used as a
cover for an Israeli attack.?
the number of Egyptian
tanks and infantry in prepared positions on the
west bank of the canal was quadrupled in 48
hours. the number
of ponton bridges across the canal was doubled
l7 from the original six and that antiaircraft bat-
teries were set up to protect them
7 n conversations with US military personnel
in EEypt, Egyptian officials stressed that these
moves were precautionary. Egyptian Chief of
Staff Gamasy said that although Cairo would not
risk being caught unprepared by the Israeli
actions, it would not violate the disengagement
agreement unless forced to do so. Other Egyptian
officers stated that the measures that had been
instituted would continue only as long as the
Israeli exercises were in progress.
SECRET
25X1
25X1
25X1
25X1
25X1
25X1
Page 6 WEEKLY SUMMARY Aug 30, 74
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
 25X1 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
.~CLKI= I
PORTUGAL: CONTEST FOR POWER
~> 1Friction between President Spinola and the shuffle last month when Spinola and ex - prime
Armed Forces Movement has subsided, at least minister Palma Carlos failed to receive the sup-
temporarily. There is no indication, however, that port of the entire Movement. Goncalves' fol-
their basic differences have been resolved, al- lowers, who lean toward the left, believe that
though Spinola appears to be gaining a slight rapid and more radical reforms are imperative)
he latest crisis was triggered by Spinola's
insistence that the Coordinating Committee of
the Armed Forces Movement, which has been
monitoring government decisions, be downgraded
or eliminated entirely. Spinola threatened to
resign over this issue, claiming that the present
arrangement prevented him from carrying out his
policies./
25X1 1 )- !A complete deadlock was prevented when
Spinbla and Movement leaders agreed to poll all
25X1 military officers.
the majority of officers favored dis-
banding Coordinating Committee and gave a
vote of confidence to Spinola. Spinola's support
was particularly strong in the army, while the
1--navy remains less content with the President's
leadership. In any case, Spinola will have more
freedom to implement the Movement's program
as he sees it without the supervision of the com-
mittee, although he will continue to coordinate
his moves with the hierarchical structure of the
armed forces and the government.
presented a united front, but the continuing con-
test for power has split it into two factions.
Spinola and his followers, including some young
officers in the Armed Forces Movement, advocate
gradual reform of the political, economic, and
social structure, as well as a slow process of de-
colonization. They believe that the provisional
government must proceed slowly because it does
not have a mandate from the people?
)- [The rift in the Movement appears to be
working to Spinola's advantage. The great ma-
jority of the officers are said to be politically
neutral, but believe that they must side with
Spinola and his chief of staff, General Costa
Gomes. Moreover, a group of regular officers
2Ippears to resent the maneuverings of political
activists in the armed forces. 25X1
a campaign is under way to reassign 25X1
politically active members of the Armed Forces
Movement to overseas duty. Such a move was
(.rumored recently when junta member Rosa de
Coutinho was sent to head the military junta in
Angola and Minister without Portfolio Melo
Antunes was assigned to Mozambique. The latter
appointment had been postponed, however, and
may be canceled(
[Although Spinola appears to have won
anot er round in this continuing contest for
power, his position apparently is still not as solid
as he would like
7 (Lisbon this week passed a major milestone in
its v6ithdrawal from Africa as a colonial power It
j). 6\The Armed Forces Movement has previously 21
'J G rrhe opposition is led by Prime Minister
~Goncalves, who assumed office in the cabinet
signed in Algiers a formal agreement accepting the
independence of the Republic of Guinea-Bissau,
which had been proclaimed a year ago by the
rebel movement in Portuguese Guinea. The signa-
tures of Portuguese and rebel representatives were
hardly dry before Portugal began repatriating its
troops,
[The agreement is to take effect on Septem-
ber 10 when formal ceremonies are to be held in
J` Bissau to mark the territory's independence.
.`)President Spinola, who led Portugal's military
campaign there for five years, reportedly will be
present for the occasion. The two countries will
then establish diplomatic relations]
SECRET
Page 8 WEEKLY SUMMARY Aug 30, 74
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
JCI.rRC I
27 j s part of the settlement, Lisbon agreed to
remove all Portuguese forces from the territory
by the end of October, although it will leave
behind sizable numbers of technicians, educators,
and medical personnel. There are approximately
20,000 troops from Portugal in the territory.
Nothing was officially announced about the
future of several thousand locally recruited
troops, although the rebels have indicated in the
past that they will take no reprisals against any
who fgree to support the independent govern-
ment.
2.7 I he agreement leaves open the future of the
Cape Verde Islands. A referendum will be held
k there at some later date, and representatives from
y(A Guinea-Bissau will be allowed to campaign on
behalf of union with the republic. During the
insurgency, rebel leaders consistently claimed to
represent the islands. The Portuguese wish to
retain them because of their strategic value/
i (Guinea-Bissau's major problem now is its
back4vard economy. The territory has no re-
sources to exploit and is heavily dependent on
imports. Subsistence agriculture is the main way
of life, with exports limited to modest quantities
of palm oil, peanuts, and root crops. Significant
external economic assistance will be needed.
Although the agreement commits Lisbon to such
aid, Portugal's resources are limited, and domestic
political and economic uncertainties will hamper
its ability to support its former territory
the Front will also have a two-thirds majority in
the provisional cabinet. The target date for full
independence for Mozambique is said to be June
19757
2-8
here is no sign of forward motion in
Angela, however, largely because rebel leaders
continue to fight among themselves. A congress
of the Popular Movement for the Liberation of
Angola was called two weeks ago to resolve the
organization's bitter leadership dispute and to
consider joining forces with the Zairian-based
National Front for the Liberation of Angola. This
meeting collapsed recently following the with-
drawal of the organization's president, Agostinho
Neto, in protest over a censure vote against his
leadership. At present, there appears to be no
solution to the disarray in the Angolan liberation
effort. Lisbon is thus left in the awkward position
of being willing to give up the territory but having
no meaningful political organizations with which
The settlement in Guinea-Bissau should)~j
boost Lisbon's stock with insurgent leaders in !
Mozambique. Portuguese officials apparently are
optimistic about an early settlement there and
will resume talks with rebel leaders on September
5, probably in Lusaka, Zambia/
'?O President Spinola reportedly has accepted
the entative agreement for a transitional govern-
ment in Mozambique that Foreign Minister Soares
recently worked out with rebel leaders. According
to Portugal's ambassador to the UN, the new
regime is to be headed by a Portuguese high
commissioner and a prime minister from the
rebels' Front for the Liberation of Mozambique;
to negotiate.
SECRET
Page 9 WEEKLY SUMMARY Aug 30, 74
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
SECRET
GREECE: LOOKING TOWARD EUROPE
3q t When the new governor of the Bank of 37- [The Nine are generally well disposed to "do
Greece remarked in an interview with a German something" for Greece, even though individual
newspaper last week that Greece was "unimagina- interests may vary somewhat. All the EC mem-
5- ble as a free state outside the European Com-3, bers agree that they should work to preserve
munity," he was reflecting the priority the Greece's Western orientation. They probably
Karamanlis government places on Greek-EC rela- I share the dismay expressed by French President
tions. One of the new government's early movesr ~, Giscard d'Estaing this week that Europe had been
was to make arrangements for Foreign Minister powerless to prevent hostilities between Greece
Mavros to see EC Commission President Ortoli in and Turkey, both associate members of the
Brussels, a visit set for early next month, and for. 2 community. The Germans, however, are almost
a later trip by the finance minister. Aware of the3 certainly more anxious than France to encourage
long-standing interest of the European Parliament 3- Greece's military reintegration into NATO. Bonn
in the Greek question, Athens played host for a 37is also jealous of preserving what it considers its
five-day visit last week of the parliament's Dutch unique good relations with both Ankara and
president. The Greeks have now formally re- Athens. The Italians, and probably some of the
ji quested renewal of those provisions of the 1961 37 other EC members, remain suspicious of French
treaty of association that were suspended by the ambitions in seeking closer relations with Greecel
EC after the military coup in 1967. Full member-
ship in the EC remains a goal, but whether Athens 3 fAll of the Nine can still probably agree on 7the presses it in the near future will depend on how the desirability of restoring association ties with
such a Greeks read sentiment among the Nine for Greece. According to German officials, the EC
step/. 3 Council meeting on September 17 is expected to
make a positive decision on this. One effect
would be to unfreeze some $55 million in loans
37 The Karamanlis government is above all in-3 that had been blocked by the 1967 EC action.
terested in the acceptance and legitimacy it feels There may be some legal problems over restoring
EC ties will confer and presumably has few it-7 these funds, however, as well as on such questions
lusions that restoration of full association ties I as extending the old association agreement to the
with the community will replace the security three members of the EC who have joined since
links with the West severed by Greece's with- the original pact, and on resuming discussions on
'
drawal from NATO
s integrated military struc-
ture. Top Greek officials nevertheless clearly see
"Europe" as in some sense a political alternative
to ties with the IJS. In a recent interview with an
Italian newspaper, Foreign Minister Mavros noted
that Greek policy would be less "regulated by the
Americans" and that Athens had now "at last to
look toward Europe." The campaign to restore
normal relations with the EC has broad support
among Greek politicians, with the possible excep-
tion of returned left-wing leader Papandreou. The
only explicit opposition has come from pro-Mos-
cow Communist elements.?
agricultural harmonization. Among other early
issues to be discussed are new financial aid and a
statute covering Greek migrant labor in the ECJ
37 The community will probably want to move
quickly to answer any Greek requests, but it will
be reluctant to restore ties before full democratic
forms are restored in Greece. Athens would
probably accept this as a condition for renewed
relations, but prolonged haggling over terms could
strain the good will both sides are
showing.
SECRET
Page 10 WEEKLY SUMMARY Aug 30, 74
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
)After eight weeks of negotiations, the con-
servative Independence Party and the moderate
Progressive Party reached agreement this week on
a coalition government. The new government will
be headed by the chairman of the Independence
Party, Geir Hallgrimsson, who is pro-US and
favors retention of the US-manned NATO base,
probably with some modifications.)
/the coalition will have 42 seats in the 60-
seat parliament, and each party will have four
ministers in the cabinet. Progressive Einar Agusts-
son retains his post as foreign minister and pro-
vides continuity as chief negotiator on the base
issue. Unlike past base negotiations, when Agusts-
son was buffeted between moderates in his own
party and leftists in the Communist Party, he may
now be able to settle down to useful talks
he new government may still require a US
rasp nse to the stringent demands for a reduction
of US troop levels put forward by the previous
coalition last April. Although Reykjavik probably
will not insist that all its proposals be accepted,
the so called "non-negotiable" demands, first
raised last year, are expected to remain on the
table. These include the hiring of more Icelandic
nationals at the base, on-base housing for all US
military personnel, and separation of civilian and
military facilities at the airport.
Geir Hallgrimsson
Einar Agustsson*
Olafur Johannesson*
Prime Minister (IP)
Foreign Minister (PP)
Commerce Minister
Justice Minister (PP)
Finance Minister (IP)
Gunnar Thoroddsen
Halldor Sigurdsson*
Vilhjalmur Hjalmarsson
Fisheries Minister
Health & Social
Security Minister (IP)
Industries Minister
Social Affairs Minister (IP)
Agriculture Minister
Communications Minister (PP)
Education and Culture
Minister (PP)
*Served in the previous government.
(IP) Independence Party (PP) Progressive Party
UK: TRADE UNION CONGRESS
r Britain's trade union leaders will try to put
on show of unity at the annual meeting of the
1{2T-des U
i
C
th
t
S
n
on
ongress
a
opens on
eptember
C.'
he deepening economic crisis, however, I' 2. The congress will provide Labor Party leaders
may occupy much of the government's attention, L13 with an important forum from which to publicize
at least initially. Last week, the Icelandic Central their position on major issues
Bank restricted foreign currency trading when
foreign reserves dropped dangerously low. The
first priority of the new coalition will be to 1r~ Jfhe convention will be held at a time when
devalue the krona-currently valued at about 95 J, all the political parties are preparing to open their
to the dollar-by approximately 15 percent. The campaigns for the expected-but still unan-
government must also make decisions on wage" nounced-general election. Prime Minister Wilson
and price controls, which were due to expire this r will probably set a date for the new election when
week but have been extended for another 9.3 he addresses the opening session of the congress.
month. One high official said this week that Wilson had
SECRET
Page 11 WEEKLY SUMMARY Aug 30, 74
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
SECRET
decided to call the election within live weeks, and reaffirmation of Bucharest's independent course
that the Cabinet favored October 31 in the Communist world.?
he most important contribution that the
?unio s could make to Labor's campaign is to L/ t f [In his opening remarks to a session of the
reaffirm their pledges to restrain wage demands. ~. Grand National Assembly on August 22-with
The new general secretary of the congress, Len Soviet Premier Kosygin and Chinese Deputy
V..} Murray, is expected to ask labor to moderate its y) Premier Li Hsien-nien in the audience-Ceausescu
wage demands this fall in order to fulfill the . r tossed a few rhetorical bouquets to Moscow, but
unions' bargain with the Labor government-the j4there was little in which Moscow could take com-
so-called social contract. He probably will also fort. The Soviets could not, for example, miss the
stress that in this election year, it is more impor- implications of Ceausescu's repeated use of the
tant than ever that the unions avoid the damaging word "all" when referring to the absolutely equal
divisiveness of the past and strive for a consensus rights of parties and countries. The Romanian
on the main issues facing Britain? leader reasserted Bucharest's intention of develop-
With no quick and easy solutions to Britain's
e' on mic problems in sight, the issues facing the
union leaders promise to raise emotional and dif-
ficult questions. There are a host of draft resolu-
tions, ranging from demands for extensive wealth
redistribution and increased nationalization to
simple restatements of support for the leader-
ship's efforts to solve the economic problems. If
ing relations with all states "regardless of social
system"-a reference to the West-and he stressed
that international relations should be based on
Bucharest's highly touted principles of "full
equality and...non-recourse to the use or threat of
force." This was a particularly pointed statement
since it came almost six years to the day after the
Soviet invasion of Czechoslovakia
the congress follows the lead of the powerful
miners union, however, it will travel a moderate 1/5 fCeausescu's remarks on the Romanian
route? economy, and his ridicule of those who had
earlier advocated that Romania remain an agricul-
The congress will also consider several tural nation, drew applause even from Kosygin. It
resolutions dealing with British membership in1 was Khrushchev's promotion of this role for
the European Community. A majority of the Romania that initially caused Bucharest to launch
motions introduced on this issue urge renegotia- its independent course in the early 1960s]
tion of the terms under which Britain joined the
community, to be followed by a referendum in j~
which the voters could decide whether they ap- 'oscow's reaction to the anniversary was
prove the new terms. corr Cect but perfunctory. Premier Kosygin met
once privately with Ceausescu, and then left the
C\lthough most congress members are inLf country on August 24, reportedly in spite of an
f tor of maintaining contacts with individual invitation to extend his stay a few days
European labor unions, only the more conserva-
tive unions also support institutional ties with the
EC. The present policy of non-participation is
expected to be endorsed by the congress. F_
cBy contrast, the Chinese sent an ex-
cepti nally warm and even effusive telegram,
citing the two countries' common stru
le a
ainst
gg
g
&J( "imperialism and hegemonism." Deputy Premier
Li had two private sessions with Ceausescu; each
was described as taking place in a "warm and
I (,, [President Ceausescu used the 30th anniver-
aNy of Romania's liberation to make a pointed
friendly atmosphere."
SECRET
Page 12 WEEKLY SUMMARY Aug 30, 74
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
1%+' ' I F -I i lmwi
(1.5- Developing countries are pushing for ratifica-
tion of a highly controversial shipping agreement
sponsored by the UN Conference for Trade and
Development. The Code of Conduct for Liner
Conferences, if adopted, could shift a substantial
portion of-international seaborne liner cargo from
the traditional maritime powers to the developing
countries. Liner cargoes include all seaborne cargo
except bulk goods such as grain, petroleum, and
other raw material.
y6 [Less-developed countries have the most to
gain from this proposal. The liner fleets of these
countries account for only 15 percent of the
nearly 50 million deadweight tons in the world
liner fleet and carry far less than 40 percent of
their own liner trade. Fleet expansion-at least to
the point where each country can carry 40 er-
cent of this trade-is far in the future, however(
9 (Other provisions of the code that have
95 'In recent years, many developing coun- arou ed contention include a requirement that
triesl_anxious to expand their own merchant rate revisions take place only 15 months or more
fleets-have passed laws giving preference to their97 after consultation with the governments involved,
own ships in carrying their own trade. Acceptance and criteria for conference membership that dis-
of the code would make such protectionist legisla- criminate against third-flag ships
tion unnecessary in the liner field
Conferences-the associations of liner
o pe)ators that set rates and allocate sailings
among member firms on specific routes-have
created much resentment among developing coun-
tries by arbitrary rate increases and by refusing
membership to the national lines of the develop-
ing countries they server
C) The most controversial aspect of the pro-
d code is a cargo-sharing formula that has
pitted the developing countries against the major
maritime powers. This formula offers each nation
the right to carry 40 percent of its seaborne liner
trade while reserving 20 percent to third country
ships]
!'
sic
(Before it can be adopted, the code must be
ed by 24 countries operating at least 25 per-
cent of the world's liner tonnage. So far, only the
Philippines has endorsed it. The EC is taking a
hard look at the code since it conflicts with EC
treaty prohibitions against discrimination among
community members. Japan, which voted for the
draft code at Geneva, seems the most likely
maritime power to sign, particularly since Tokyo
has budgeted $1 million for drafting new legisla-
tion necessary to adjust domestic laws to the
provision of the code. The US voted against the
code at Geneva. but is currently_ reviewing its
position
SECRET
STAT
Page 13 WEEKLY SUMMARY Aug 30, 74
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
JLC:KC
} 3 Military action picked up during the week in
the orthern provinces and in areas close to Sai-
Ylon. A number of fresh Communist attacks in
.z midweek against government positions on the
high ground south of Hue resulted in the loss of
5 several outposts.. The action appears designed to
challenge control of the southern approaches to
the city. In South Vietnam's Military Region 3,
Communist military action reached its highest
level in fourteen months, with new action erupt-
ing in western Tay Ninh Province and to the
north of Saigon.)
3 ) These latest Communist initiatives may force
Y Saigon to. rejuggle, sonde of its combat' units,
which have been shifted to other threatened
regions of the country. South Vietnamese of-
ficials are showing increasing concern over the
lack of reserve forces in the Saigon area, and
rUegional commanders are clamoring for more
fighting strength.?
though the Communists have not ruled out polit-
ical means of securing Thieu's ouster, Hanoi has
obviously become increasingly disenchanted with
its political prospects in the South and may have
decided to try to push Thieu into negotiations by
force
S7 [North Vietnam may also be addressing the
question of Chinese and Soviet support for its
future strategy in the South. A recent article in its
NOISES FROM THE NORTH
,57 (in keeping with the generally higher level of
military activity, North Vietnamese propaganda
has taken a more militant turn. Hanoi apparently
believes that President Nixon's resignation, to-
gether with Washington's unsolved economic
troubles, have left the US-and, by extension, the
Thieu regime-considerably weakened, opening
up new political and military opportunities for
the North. A Viet Cong broadcast of August 12,
for example, claimed that the resignation was a
blow to the "Thieu clique" and urged the people
of the South to seize the opportunity "created by
the enemy's crisis" to deal it "grave setbacks.'7
7 `The new line includes-for the first time
since the signing of the Paris accords-calls for the
overthrow of President Thieu. Earlier, Hanoi had
taken the position that the Thieu government
would be replaced in due course through negotia-
tions involving all the parties in the South. Al-
SECRET
Page 14 WEEKLY SUMMARY Aug 30, 74
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
NW11 JCIrrt I 1,.r
army newspaper appears to take several swipes at
past counsels of restraint by stressing the histor-
ical necessity of Hanoi's "liberation war," arguing
that "Marxists must inevitably support this war,"
and making a particular effort to counter any
charge that renewed fighting in South Vietnam
would lead to world war?
jThe article, which was not presented as an
authoritative party pronouncement, was unsigned
and has not been broadcast or printed in the
party paper. It was, however, cast in a format
usually reserved for important statements. It may
be intended to register sharp dissatisfaction with
the present level of military aid from Moscow and
Peking--which has declined considerably since the
cease-fire. It could also reflect an internal debate
over the reliability of future support from abroad,
or perhaps merely serve as a warning to Peking
and Moscow that Hanoi intends to prosecute the
war on its own terms?
57 \The shift in Hanoi's propaganda is consistent
with!) a continuation of the current relatively
heavy military pressure on South Vietnamese
forces. It could also mean that the Communist
high command has decided on a policy of grad-
ually stepped-up attacks that will probe the ef-
fectiveness of Saigon's army and the firmness of
US support.
LAOS: SURVIVING WITHOUT SOUVANNA
5? Prime Minister Souvanna Phouma left Laos
early this week for several months of convales-
cence in France. The 72=year-old Lao leader has
been making slow but steady progress from the
massive heart attack he suffered seven weeks ago,
but his condition is still considered serious and it
is questionable whether he will ever be able to
resume full political activity:?
here were earlier indications that Souvanna had
esignated Phoumi as the sole "acting prime min-
ister," but in the end he apparently decided on a
duumvirate arrangement as a means of maintain-
ing the political equilibrium between the two
sides during his absence
O Wfhe coalition government has continued to
function without Souvanna's strong hand at the
helm, but both Communist and non-Communist
members are apprehensive about the effect the
Prime Minister's absence will have on the current
political situation. The non-Communists are
worried that the Pathet Lao will try to take
advantage of the leadership vacuum created by
Souvanna's absence. They are especially fearful
that the tough and highly talented Phoumi will
attempt to outmaneuver the lackluster Leuam,
even though both deputy prime ministers are sup-
posed to share power equally'
56j? rThe Pathet Lao, for their part, are antic-
ipating rightist intransigence on key policy initia-
tives that have been made by the Communists,
and they may be wary of other forms of trouble-
making as well. As a result, they may proceed
cautiously while Souvanna is away rather than
risk disrupting a political trend that has been
evolving in their favor ever since the formation of
the new government
he deep-seated distrust and suspicion be-
tween the two sides threatens to make the resolu-
tion of serious problems facing the coalition all
the more difficult. The economy remains in
desperate straits, a wave of labor unrest has hit
Vientiane, and thorny political issues-such as the
dissolution of the National Assembly and the
implementation of Pathet Lao leader Souphan-
ouvong's 18-point national program-remain un-
resolved~
ouvanna has reportedly counseled the coali-
JPrior to his departure from Vientiane,
Souvanna publicly announced that he was turning
over the affairs of state to Communist Deputy
Prime Minister Phoumi Vongvichit and to his non-
Communist counterpart, Leuam Insisiengmayl
tion's temporary leaders to avoid any contro-
versial or divisive issues that could disrupt the
fragile coalition, and to concentrate instead on
routine government business. This reinforces the
prospect that a period of executive inaction is in
store.
SECRET
Page 15 WEEKLY SUMMARY Aug 30, 74
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
StC:KE I
CHINA: INCREASING PETROLEUM SALES
(~,j'N ~ .)
~hina will e' port at least 4 million tons of
crude oil this year, and Peking has suggested that
much larger amounts will be available during the
remainder of the decade. By 1980, crude oil
exports probably will rise to 50 million tons a
year.
Peking's plans to increase oil exports sub-
stantially over the next five years are borne out
by the construction of new oil-handling facilities
at ports in north China and the purchase of the
dredging equipment needed to make Chinese
ports deep enough for large tankers. China is also
actively engaged in acquiring tankers of over
50,000 deadweight tons to transport crude oil for
export.
Crude oil production has come largely from
onshore fields, although some offshore exploita-
tion is being carried out in the Pohai Gulf. So far,
activity in the deeper waters of the continental
shelf has been limited to geological surveys. Even
without production from offshore fields, how-
ever, reserves are large enough to meet the goal of
50 million tons of crude exports by 1980. If
production accelerates, or even if it only increases
at the present rate of 22 percent annually, China
could reach its export goal and still provide a
generous increase for domestic use.
If Peking should encounter unexpected dif-
ficulties in achieving its goal, it might change its
attitude toward direct foreign participation in the
development of the petroleum industry. Peking's
present position is against joint ventures, direct
foreign investment, or product sharing. Neverthe-
less, "cooperative" arrangements-those initiated
by China and presented as a straightforward com-
mercial exchange of technology and equipment
for a specified quantity of production-cannot be
ruled out. Exploitation of the deeper waters off
SECRET
Page 16 WEEKLY SUMMARY Aug 30, 74
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
NOW NMW
the Chinese coast will almost certainly require
foreign, and particularly US, technology.
Over the next few years, rapidly increasing
oil supplies will be a major factor in modernizing
the Chinese economy. Aside from fueling its
growing defense establishment, extra oil supplies
are being used to: develop the petrochemical
industry; supply expanding civil air, merchant
marine, and truck transportation services; increase
the supply of fuels for irrigation and farm
machinery; and generate electric power. Even the
consumer has felt direct benefits-kerosene for
home use was removed from the list of rationed
commodities in 1972.
Growing oil exports will also help finance
China's large wheat imports and multi-billion-
dollar industrial plant purchases. In the next few
years, oil exports could provide half a billion
dollars annually. Nevertheless, the markets for
China's oil exports are not unlimited. Japan, the
major market for Chinese crude, follows a policy
of diversifying its sources of oil and will seek to
avoid becoming dependent upon China. Any
attempt to market large quantities of products,
which could provide higher returns, will face
serious opposition from the Japanese refining
industry. A widening of the Chinese share of the
product market in Hong Kong and. Southeast Asia
will face strong competition from the inter-
national oil companies that now dominate these
MALAYSIA: A CLEAN SWEEP 4th ~f
1The Razak govern errs rnping victory
in th9e national election last weekend promises a
continuation of moderate domestic policies aimed
at containing the racial tensions that are never far
below the surface in Malaysia. Kuala Lumpur's
foreign policy will continue to emphasize South-
east Asian regionalism, and the government will
Page 17
maintain its somewhat detached but basically
friendly attitude toward the US.
The National Front, a new confederation of
nine parties that represent all of Malaysia's major
races, will dominate the 154-seat lower house of
parliament. Parties in the Front have won 121 of
the 131 seats decided so far. The government is
expected to win an equally large share of the
remaining seats from the Borneo state of
Sarawak, where returns from remote jungle dis-
tricts will not be in for another week.
The election outcome marks the virtual
attainment of Prime Minister Razak's goal of a
government of "national consensus," an all-
embracing coalition with only token opposition.
Despite the multiracial nature of the con-
federation, the main government party-the
United Malays National Organizaton-is pre-
dominant, and Malay political pre-eminence was
enhanced by some redrawing of constituency
boundaries before the election. Approximately 40
percent of the population is Malay, 40 percent
Chinese, 10 percent Indian, and 10 percent tribal
groups who live in the Malaysian part of the
island of Borneo.
The government kept racial tensions in
check during the election by abbreviating, the
campaign and forbidding discussion of provoca-
tive topics. It hopes the strength of its showing at
the polls will further reduce the likelihood of
communal rioting such as erupted after the last
election in 1969.
Razak was under no obligation to call elec-
tions for another 18 months, but the government
decided to take advantage of current favorable
factors. The Malaysian economy, for example, is
booming now but could slack off later on. Recent
gains over Communist guerrillas in Sarawak had
also deflected the people's attention from some
expansion of the nagging insurgency in peninsular
Malaysia.
SECRET
WEEKLY SUMMARY
Aug 30, 74
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
SPANISH SAHARA: REFERENDUM SET
') ( pain announced last week that a referen-
dum to decide the political future of Spanish
Sahara will be held under UN auspices in the first
half of 1975. The decision to proceed with a vote
on self-determination as recommended by earlier
UN resolutions has irked Morocco's King Hassan,
who has been pressing to have the area turned
over to Morocco through bilateral negotiations.
Madrid's move is also likely to lead to new fric-
tion between Morocco and the two other
parties-Mauritania and Algeria-that are in-
terested in the disposition of the area.1
(17 Fn a speech on August 20-the same day
Ould Daddah, Boumediene, Hassan
" "?`''?`?'y %-AV1?'CI 1 UI IL countering Morocco's. They have quietly solicited
intention to hold a referendum-King Hassan at- support in Arab and African capitals for the UN
tached tough conditions to Morocco's agreement resolutions, which provide for the exercise of
to the plan. He insisted that any vote must occur 11 "self-determination and independence" by the
under international control after Spanish troops people of the territory, and will strive to reinforce
and admini
t
ti
h
d b
ra
s
on
a
een withdrawn. He
further indicated that he would oppose holding7o
the referendum if the principle of independence
were one of the options offeredLln the past,
Rabat had implicitly accepted independence as
one option, provided the 20-25,000 Saharan
nomads it claims live in southern Morocco are
allowed to vote
Ir~ he King argued again that the best way to
,,,settle the Sahara question is through bilateral
negotiations between his country and Spain. He
implied he would accept a UN mediator to facili-
tate such talks?
C I? rHassan's tough line will make it difficult for
him to compromise on anything less than Moroc-
can control of all the territory. Although the King
1 stressed his desire to acquire the territory through
peaceful means, he repeated the threat he made
last month to resort to force if necessary. The
continuing movement of Moroccan troops to the
south is designed to give added meaning to his
words.1
t.~ Meanwhile, Mauritania has sent a letter to
the UN indicating that, although it will not re-
nounce its own claim to Spanish Sahara, it will
accept international arbitration of the issue under
UN auspices. The Mauritanians are in fact less
interested in pressing their claim than in
them in the UN General Assembly this fall. More-
over, they have privately requested Madrid to
keep its troops in the Sahara through the referen-
dum and for several years thereafter to guarantee
the territorial integrity of the new state
?j FAlgeria has so far avoided taking a public
s'8an in the dispute but clearly does not want to
see the territory become part of Morocco. Like
Nouakchott, Algiers is probably counting on a
resolution being passed in the UN General Assem-
bly this fall that will support a referendum with
independence as an option and thereby pre-empt
a bilateral deal between Spain and Morocco. As
president of the General Assembly this fall, Al-
gerian Foreign Minister Bouteflika will be in a
good position to coordinate such an effort?
he Spaniards have made clear to the Moroc-
cans heir determination to go through with the
referendum, but they otherwise seem to be trying
to remain flexible. Madrid has, for example, ex-
pressed interest in consulting further with the
other interested parties.
t e Saharan issue is
now widely recognized as a serious liability by the
Spanish government, and any solution short of a
simple transfer of territory to Morocco would be
acceptable to Madrid-including a vote for affili-
ation with Morocco in the forthcomin referen-
dum.
SECRET
Page 18 WEEKLY SUMMARY Aug 30, 74
25X1
25X1
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
`"' JtUt-it 1
liW 1Irime minister Mikael's government, strug-
gling to survive under the pressures emanating
from the military reformists' Armed Forces
Coordinating Committee, has begun a new effort
to resolve problems in Eritrea Province, which has
been troubled by an active revolt for a decade.
The committee, meanwhile, has further isolated
Emperor Haile Selassie, and may be preparing to
force his ouster or abdicationq
13 IMikael announced in parliament last week
That the government would give priority to solv-
ing the Eritrean problem; he blamed the blood-
shed there on maladministration by previous.-'
governments. Defense Minister Aman, a key link,)
between the cabinet and the committee, who is'
himself from Eritrea, said he would visit the
province in preparation for making new policy
recommendations. The Interior Minister pledged
to appoint in Eritrea only officials who would
implement the new policies; the appointment of
government are also unwilling to grant full
independence, the Front's avowed goal
`fig he loosely organized rebel movement is
divided on the question of negotiations, and the
spokesman's statement is probably not the final
word on the Front's position. The government's
new policies would seem to have at least a chance
of attracting widespread support from the Eri-
trean public and moderate rebel leaders.]
14 [Last week the coordinating committee also
took further action to trim back Haile Selassie's
perquisites. It abolished the Ministry of the Im-
perial Court, which administered the Emperor's
household, and nationalized his palaces. The com-
mittee has also placed unspecified restrictions on
the Emperor's travels, although it is not clear
whether this was for his own protection or to
prevent him from meddling in political affairs
unpopular officials has been one of the main 17 tThese actions followed two weeks of unprec-
sources of discontent. The Interior Minister also edented open criticism of Haile Selassie, during
said the government would review the status of which he was denounced and the monarchy as an
Eritrean prisoners with an eye to granting am- 7 institution was denigrated in press articles and
nestg. pamphlets. The committee may have instigated
7 T [Moving quickly to implement its promises,
the government on August 24 appointed a
popular and respected civilian to replace a mili-
ytary officer as governor general of Eritrea. Two
Aman arrived in the province to talk
s later
da
,
y
with local leaders and members of the army gar-
rison. Aman apparently did not plan to talk
directly to members of the rebel Eritrean Libera-
tion Front on this visit although the military is
these moves to undermine the Emperors prestige
as a prelude to his removal
78 `Haile Selassie's ouster could provoke a
serious reaction among the rural population. The
coordinating committee might try to prevent
serious violence by maintaining the monarchy and
placing the Emperor's grandson, Zara Yacob, on
the throne.
believed to have had unofficial contacts with the lii (Meanwhile, a major dispute between Mikael
rebels.] and the committee over the Prime Minister's ap-
pointment last month of four cabinet members
VOn the day Aman arrived, a spokesman for'- found objectionable by the military was finally
the ront in Beirut declared the rebels' willing- resolved by a compromise. In a ministerial re-
ness to negotiate a peace settlement with the
Ycoordinating committee. He insisted, however,
that the Front first be recognized as the sole
legitimate representative of the Eritrean people-a
condition unacceptable to the military and
probably to most Eritreans. The military and the
shuffle announced on August 25, Mikael dropped
three of the four men from the cabinet and de-
moted the fourth to a lesser ministry. One of
those dropped was given an ambassadorship. The
committee, which had wanted to arrest all four,-
in the end arrested only one.
SECRET
Page 19 WEEKLY SUMMARY Aug 30, 74
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
SECRET
Netherlands Antilles:
INDEPENDENCE PROBLEMS LOOM
P-I Turing his recent visit to the islands, Dutch (The lag in tourism on St. Maarten has been
Prime Minister den Uyl was quoted by the press made worse by publicity over violent labor
as stating that the Netherlands Antilles must plan disputes. Recently, the official residence of the
for independence by 1978. This is earlier than J? lieutenant governor was destroyed by fire in what
most Antilleans had expected, and such a time is believed to have been an attack by arsonists
frame would meet strong opposition, both from S sympathetic to the labor cause. The chronic
the public and from local officials who fear that I, animosity between labor leaders and the political
economic problems could lead to political up- establishment is not likely to improve, and the 25X1
heavals and that Venezuela might try to take over accompanying economic troubles on St. Maarten
in the absence of Dutch defense. ~`j could be particularly damaging to the general
ewnurn ui Ln Teaerailon
1L, IThe Netherlands Antilles and Surinam are 25X1
he last remnants of what was once one of +k-
richest overseas empires in the world. The Dutch
government, anxious to rid itself of the social and
25X1
economic problems plaguing the islands and
sensitive to the stigma of "colonialism," has been
seeking to promote their independence since the
end of World War II. In 1954, the two former
colonies were granted autonomy in their domestic
affairs, although The Hague retained ultimate
authority over their foreign affairs and defense
'f 0 `Surinam has decided to announce its in-
dependence in 1975, but the Netherlands Antilles
is still trying to retain its ties to the Netherlands.
Antilleans insist that, even if the present level of
Dutch aid were continued, they could not accept
independence unless The Hague guaranteed their
defense. The Netherlands is unlikely to do so
since it has already announced the withdrawal of
one third of the 600 Marines it has maintained in
the Netherlands Antilles and is contemplating
extensive reductions throughout its defense
establishment.7
-? The current wave of labor strikes and eco-
nomi dislocations is also reinforcing Antillean
fears of early independence. The world economic
slowdown has caused significant reductions in the
labor force and a slump in the all-important
tourist industry. One US-owned firm has laid off
over 400 of its 500 employees. Moreover, the
teachers union of the Netherlands Antilles and a
labor union on Aruba are threatening general
strikes, and pilots and other personnel of the local
airline are engaged in a work slowdown.1
SECRET
Page 20 WEEKLY SUMMARY Aug 30, 74
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
F
Secret
Secret
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
Secret
Weekly Summary
Special Report
The European Security Conference:
Progress and Problems
Secret
N2 58
August 30, 1974
No. 0035/74A
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
Special Report
August 30, 1974
SECRET
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
SECRET
(N? Sou)qc,~7.0
The European Security Conference: Progress and Problems
The Conference on Security and Cooperation in Europe, which opened in July
1973, has reached another turning point. If progress is to be made when the talks
resume in Geneva on September 2, Moscow will have to make some hard decisions.
The conference has been a centerpiece of Soviet foreign policy for many years.
Its antecedents extend back into the 1950s. Originally, Moscow conceived it as an
ersatz peace conference to confirm the postwar boundaries of a divided Germany.
Subsequently, Brandt's Ostpolitik treaties formalized West German acceptance of
the boundaries and conceded the Soviets much of what they desired from Bonn, but
Moscow still wanted broader West European and US endorsement of the status quo.
Gradually, the Soviets began to see a security conference as a useful device to
secure more forward-looking objectives. They hoped a successful outcome would
facilitate their access to Western technological and financial resources. They also
wanted the conference to create some kind of permanent body that would enable
them to play a role in all European affairs.
At first, the Soviet proposal for a security conference was firmly opposed by
the West. But after the Quadripartite Agreement on Berlin had been signed in June
1972 and agreement had been reached to start force reduction talks, the NATO
countries agreed to let the conference begin.
Special Report -2- August 30, 1974
SECRET
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
Most of the West Europeans by 1972 had
begun to see certain opportunities in a security
conference. Some of the smaller countries viewed
it as a way of participating in detente. Bonn
thought the conference would be a logical ex-
tension of its Ostpolitik. Paris viewed it as an
opportunity for exercising independent diplo-
macy. The EC as a whole believed the conference
would provide a chance to coordinate its policies
toward the East.
Primarily, however, the West Europeans saw
a chance to bring greater freedom to the people
of Eastern Europe. They insisted that the con-
ference take up the issue of the "freer movement
of people and ideas" between East and West, and
that it reach specific agreements in the "freer
movements" area, not simply repeat pious
principles.
The West Europeans also wanted specific
"confidence-building" measures relating to
military security as a corollary to further political
relaxation. They are now reconciled to the fact
that some of their suggestions for achieving
detente-particularly the proposal concerning
notification of military movements-will not be
acceptable to Moscow in their present form.
The Soviets have persistently maintained
that the conference should be brief and general,
confining itself largely to endorsing broad princi-
ples. They have seemed distressed that it has
dragged on this long, although Moscow now
grudgingly admits that it is not surprising that a
conference composed of 35 delegations represent-
ing two divergent systems and a wide variety of
special interests has not reached easy agreement
on a spectrum of complex issues.
The Western countries have presented a
united front, partly because of the caucus of the
EC countries at Geneva. By meeting regularly and
producing an impressive number of position
papers and drafts, they have maintained the
West's momentum at the talks. After consultation
with the US, the proposals of the EC group have
frequently become the basis of Western positions.
Special Report
SECRET
The Soviets appear to have been genuinely
surprised by the degree of unanimity on the
Western side and by the support the West has
received from the neutrals.
The Soviets will clearly have to concede
more than they originally intended in order to
bring the conference to a successful conclusion.
During the last session from April 23 to July 26,
1974, the Soviet negotiators seemed to be in a
strait jacket. While ritualistically insisting that
they wanted the conference to end in July, they
seemed unable or unwilling to make the necessary
concessions.
The main promoters of detente in Moscow
may not have been able to muster a consensus for
further concessions on sensitive issues relating to
discipline within the Soviet Union. Changes in
some Western governments and political un-
certainties in others may have caused the Soviets
to pause until the outlook became clearer.
Tactically, they may have decided it would be
advantageous to hold out while testing the West's
determination.
Many of the issues seem obscure or overly
specialized, yet stripped of jargon, they reflect
the larger problems in East-West relations. The
emphasis on detail results partly from the West's
desire to obtain specific benefits, rather than to
join the Soviets in grandiose, but meaningless
platitudes. The subject matter of the conference
is divided into four substantive categories, or
"baskets," on which working groups are trying to
prepare documents for high-level approval at the
third and final stage of the conference. The
Soviets are still pressing for a summit-level con-
clusion. The "baskets" are:
? principles of international relations;
? cooperation in economics, science/tech-
nology, and the environment;
August 30, 1974
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
? freer movement of people and ideas;
? follow-on machinery to the conference.
Basket I. So far, the working groups have suc-
ceeded in formulating statements on several of
the principles to be contained in this basket.
Agreement has been reached on inviolability of
frontiers-a difficult statement and, in Soviet
eyes, the most important-and considerable
progress has been made on drafting the human
rights principle. On the question of non-inter-
vention in internal affairs, the West is trying to
come up with phraseology that will inhibit Soviet
assumptions of a right to intervene in the affairs
of socialist states without interfering with
Western desires to facilitate human contacts. The
Yugoslavs and Romanians are also eager to
prohibit various types of intervention. Resolution
of this principle has been deferred until the next
round.
Also included in Basket I are military-related
"confidence-building measures." The Soviets were
initially against including any military matters on
the agenda, but have yielded to the strong sup-
port for this in the West. Only minor measures
have been agreed on to date, such as exchange
visits of military personnel, and bilateral and
voluntary exchanges of observers at maneuvers.
There are still sizable differences on notification
of maneuvers, the major issue, although the
differences are mainly quantitative, rather than
conceptual. The Soviets have offered ten days
notification, while the West would like seven
weeks; Moscow wants notification of maneuvers
at "army corps" level, the West whenever more
than 12,000 men are involved; the Soviets are
willing to give notification of maneuvers in a
100-kilometer border zone, while the West is
holding to the formulation "in Europe"; the
Soviets want to notify only neighboring states in
the case of national maneuvers, while the West
wants all conference participants notified of both
national and multinational maneuvers. The West
also would like a separate statement on the notifi-
cation of movements, as distinguished from the
measures on maneuvers themselves, but the
Soviets have stated that "the time is not ripe" for
consideration of this subject.
Special Report
Basket II. The subjects in this basket-coopera-
tion in economics, science and technology, and
the environment-have been the least contro-
versial. Nevertheless, some disagreements remain,
such as arrangements for business contacts, that
are not likely to be resolved until agreement is
reached on Basket Ill. Other undecided issues
specifically limited to the subject matter of
Basket II include the West's desire for more
reciprocity in exchanges of technology, and the
East's interest in incorporating a statement on
non-discrimination.
Basket Ill. The most intense controversy centers
in this area, where the West is seeking practical
measures to facilitate the "freer movement of
people and ideas" to balance what it feels are
Soviet gains in getting recognition of the existing
frontiers in Basket I. But the Soviets, concerned
about their domestic impact, want to minimize
such contacts, which they regard as interference
in internal affairs, and they want to include
phraseology stating that contacts must be con-
ducted in accordance with national "laws and
customs"--in effect giving the Soviets the uni-
lateral right to disregard any agreements govern-
ing such contacts.
In the last week of the previous session, a
compromise proposed by the Finns and other
neutrals cleared away one aspect of the problem.
Since the West was unwilling to concede the
Soviets a reference to "rational laws and
customs" in the preamble to Basket III, the
neutrals proposed instead a reference to principles
already agreed on for inclusion in the Basket I
declaration of principles. A statement will appear
in that declaration pledging participants to re-
spect each country's right "to determine its laws
and regulations," thus meeting some of Moscow's
requirements. In an effort to balance this, there
would be a reference elsewhere in the same decla-
ration to the obligation to conform to inter-
national law and to "pay due regard to and imple-
ment the provisions of the final document" of the
conference.
Even with the controversy over the preamble
virtually eliminated, serious difficulties remain
August 30, 1974
SECRET
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927A010900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
Special Report
SECRET
August 30, 1974
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
Or-U (C 1 --
over many of the specific "freer movement"
measures the West is seeking:
? Reunification of families. This is one of
the most complex and troublesome issues.
The Soviets. are resisting Western efforts to
allow emigrants to take with them savings and
proceeds from the sale of personal belongings,
or to emigrate to countries other than those
participating in the conference. The Soviets
are also resisting a clause intended to protect
the rights of applicants for emigration.
? Simplification of procedures for mar-
riages between nationals of different states.
The Soviets do not want to allow these
couples the right to settle in the country of
their choice.
? Removal of obstructions to travel in
other countries.
? Access to Western publications and more
freedom for Western journalists in the Soviet
Union and Eastern Europe.
? Encouragement of contacts among scien-
tists and educators and the opening of scien-
tific and educational institutions to non-
nationals.
? Western proposals to limit interference
with foreign radio broadcasts. This has not
come up for much discussion yet, but could
be controversial when it does.
Basket IV. This category deals with follow-on
machinery to the conference, originally strongly
favored by the Soviets. As a result of opposition
from the West, and the suspicious enthusiasm of
Romania and Yugoslavia, they now seem willing
to wait and see whether-if the conference suc-
ceeds-follow-on machinery will not develop
automatically.
Agreement and Disagreement in the West
The US and the West Europeans are in al-
most total accord on the substance of the confer-
ence; EC and US papers presented in July differed
6 -
Special Report -6-
only slightly. But there is considerable disagree-
only
ment on tactics. The West Europeans think the
US wants the conference over quickly, at practi-
cally any cost. They themselves are in no hurry,
and are not willing to sacrifice any of their
negotiating goals.
In the West European view, it is Soviet in-
transigence that has been holding up the confer-
ence. Last spring, the EC countries considered a
number of steps they might take to force the
Soviets to cooperate, including a call for indefi-
nite adjournment of the conference. Although the
EC countries decided against such extreme meas-
ures, their consideration of them is an index of
the importance attached to the Western negoti-
ating goals.
The West Europeans do not agree with the
Soviet wish for an early summit conference,
maintaining that one must not be held until
"acceptable" results are obtained by the West and
the general state of East-West relations is satis-
factory. Prior to the last Nixon-Brezhnev summit
in June 1974, many West Europeans were con-
cerned that president Nixon, weakened domesti-
cally, might make a number of concessions to the
Soviets, including agreement to a summit-level
conclusion for the conference. Although their
worst fears were not realized, several West
Europeans felt that the communique came close
to endorsing a summit meeting. The West
European delegations in Geneva were particularly
sensitive to the fact that the communique used
traditional Soviet language in referring to a
summit-level conclusion to the conference. Their
resentment deepened as Eastern delegates began
using the communique in their discussions with
Western representatives.
Secretary Kissinger was able to persuade
most of the allies that the US had not given in to
the Soviets, but a subsequent US proposal that
the West define its "essential" aims at the security
conference and produce draft texts of specific
minimum agreements, was met with widespread
skepticism. It seemed to the West Europeans that
the US was ready to sacrifice some of the Western
goals in order to promote a speedy end to the
conference.
SECRET
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
%J L_ unL_ I
The West Europeans have no trouble with
the idea of defining "essential" aims. But they do
not want to present the Soviets with a specific
outline of minimum Western objectives. This,
they believe, would lead Moscow to equate the
minimum Western goals with the maximum
Eastern concessions, thus reducing the bargaining
power of the West. The West will enter the fall
session with this tactical dispute unresolved, since
the EC nine will not have arrived at a formal
position on the US proposal by then.
Progress at the security conference has been
related to progress at the Vienna force reduction
talks at crucial points in the history of the two
negotiations. As the Conference on Security and
Cooperation enters the home stretch this fall, that
will again be the case. But the linkage is not likely
to be beneficial, as there is unlikely to be enough
progress at the force reduction talks to produce
movement at the security conference. A break in
the deadlock at the security conference on the
other hand, may have a positive impact on the
force reduction talks. The consensus of Allied
representatives in Vienna is that the Soviets will
continue to be stubborn at the force reduction
negotiations as long as the security conference has
not ended. Still, none of the West Europeans is in
a mood to rush the security conference in order
to promote progress in the force reduction talks.
While the Soviets would like the "freer
movement" issue to go away-Gromyko has said
that the best solution to the Basket I I I problem is
to cut the bottom out-they undoubtedly realize
that some show of flexibility is necessary to bring
the conference to a successful conclusion, particu-
larly a finale at the summit. When the conference
resumes, the Soviets will attempt to make only
those concessions necessary to keep it moving. At
the same time, they will seek to protect their
security interests from what they perceive as the
danger of Western ideological subversion, to water
down the Western proposals they consider most
objectionable, and to introduce ambiguity into
the wording of all "freer movement" items so
that there will be room for subsequent "interpre-
tations" that can be used to justify restrictive
policies.
Moscow may ultimately decide that it can
consider concessions on sensitive subjects such as
freer movement as nothing more than paper
agreements, subject to whatever limitations it
later chooses to impose. For example, a provision
for reading rooms could be undermined by subtle
harassment of those using them. Hard bargaining
seems in store on these issues. The Soviets are no
doubt convinced by now that the West is capable
of maintaining a firm position on major issues and
probably see no gain from obstructionist tactics.
SECRET
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
 Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8
Secret
Secret
Sanitized Copy Approved for Release 2011/06/30: CIA-RDP79-00927AO10900050001-8