WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A011400020001-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 19
• Document Creation Date: December 21, 2016
• Document Release Date: January 31, 2008
• Sequence Number: 1
• Publication Date: July 2, 1976
• Content Type: SUMMARY

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Secret
Weekly Summary
On file Department of Agriculture release instructions apply.
USAF, DOS review(s) complete
Secret
CI WS 76-027
No. 0027/ 76
July 2, 1976
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SECRET
CONTENTS
1 Middle East
Lebanon
3 Europe
European Communism;
Portugal; United Kingdom;
Italy; Greece-Turkey
7 Far East
Philippines
8 International
World Grain; Tin Council
9 Poland: The Food Prrce Upheaval
'11 Mozambique: First Year of Independence
13 Seychelles: Independence
Comments and queries on the contents of this
publication are welcome. They may be
directed to the editor of eekly
Summary,
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SECRET
LEBANON
The Palestinians and their leftist
Lebanese allies suffered significant
reverses in heavy fighting this week as
Syrian forces pressed their military ad-
vantagein northern and eastern Lebanon
in tandem with Christian assaults on ma-
jor Palestinian camps in Beirut.
At the same time, Damascus gave new
signs of encouragement to Libyan Prime
American.
.University
Minister Jallud to continue his mediation
mission and to the Arab League to
persevere in its peace efforts. These
gestures could be seen as part of President
Asad's continuing effort to buy time and
neutralize pressure From other Arabs for a
dilution of Syria's military role. Asad in
fact still appeared determined to tame the
Palestinians and impose a Lebanese
settlement that preserves the Christians'
rights, despite the unhappiness of many
Syrians and hostile Iraq's retention of a
large military force near its border with
Syria.
Fighting
The Christians on June 29 captured Jisr
al-Basha, the smaller of two Palestinian
refugee camps and fedayeen strongholds
to which Christian militiamen laid siege
last week; most of the camp's residents
apparently managed to escape before its
capture. The Tall Zatar camp appeared
likely to fall shortly. An unsuccessful
attempt by Palestinian and leftist forces
to relieve the camps' defenders by break-
ing through the Christian-inhabited Ayn
Rummanah section of the city and their
seizure there of the headquarters of the
Christian Phalanges Party drew the
Phalangist militia into the fray, giving the
Christians a decisive edge.
The battle for Tall Zatar has spurred
outbreaks of violence throughout Beirut
and the surrounding area. Palestinian lef-
tist forces have been conducting diver-
sionary attacks near the port and on
Christian Area
{Si~tut~ Mih
T. ...
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SECRET
~7c.~-o R~ ~~~Ai2aa.~
Christian positions in central Beirut;
fighting spread as far south as the suburb
of Kafr Shima. The Palestinians have
threatened that the fall of Tall Zatar
would be followed by all-out reprisals
against Christians in Beirut and
.elsewhere.
The destruction of the heavily fortified
Muslim strongholds in east Beirut and
consolidation of Christian control there
will virtually complete the de facto parti-
tion of the city. The Christians' success
has also given them a psychological boost
and made them less interested in an early
start of the long-projected round-table
negotiations.
The Syrians have offset their modest
pullbacks in the Beirut suburbs under the
short-lived truce agreement negotiated by
Jallud last week by reinforcing troops
besieging Sidon, despite assurances to
Jallud that they would withdraw from
Sidon too.
The Palestinians have charged that
Damascus introduced some 4,000 troops
plus armor into northern and eastern
Lebanon this week. The introduction of
fresh Syrian forces is not confirmed, but
the Syrians have in fact tightened their
grip on the Bekaa Valley, laying siege to
Al Hirmil and increasing pressure on
Balabakk. Christian forces in the moun-
tains ofcentral Lebanon have, meanwhile,
stepped up attacks on the Palestinians and
leftists from the west.
Truce Efforts
Jallud seemed at one point early this
week to have abandoned his efforts to
work out effective cease-fire
arrangements and facilitate the entry of
Arab contingents for the peace-keeping
force sanctioned by the Arab League last
month. As of June 30, however, he was
still negotiating with President Asad, who
has apparently convinced the Libyan that
Syria is still willing in principle to
withdraw its forces from key locations, in-
cluding the Sidon area. Jallud has been
the sole channel of communication
between the Syrians, the Christians and
the Palestinian-leftist group.
The very apparent difficulties of the
Palestinians in Beirut since last week have
evoked, for the most part, little reaction
from other Arab states. At midweek,
however, the Arab foreign ministers met
again in emergency session, largely at the
behest of Egypt, which is carrying out
with some ostentation its recently assum-
ed role of defender of the fedayeen. The
ministers called-without result-for a
cease-fire to take effect on July 1 and
created a committee to monitor the truce
and draw up a timetable for implementing
earlier league resolutions on Lebanon, es-
pecially the ones pertaining to the Arab
peace-keeping force.
Subsequently, Damascus announced
that 1,300 Saudi and Sudanese troops had
arrived in Lebanon to carry out the
league's peace-keeping mission. Asad is
probably confident that these forces-in-
troduced reluctantly by Riyadh and Khar-
toum-will not significantly affect Syria's
military predominance.
President Asad stilll faces serious
threats as he persists in his Lebanese ven-
ture. Apart from the domestic discontent,
which apparently includes members of his
military, he has to worry about the Iraqi
farces on his eastern border. The leaders
of the rival Baathist regime in Baghdad
are strong supporters of the Palestinians
and-might be tempted, if the Palestinians
appeared to be going under, to order
cross-border harassment incursions, if not
an outright invasion of Syria. Asad may
be counting on Saudi Arabia to keep
Egyptian President Sadat off his back and
to apply what influence it can muster on
Iraq. The Saudis, who would very much
like to see Asad restore order in Lebanon,
may be helpful to a poinnt. But dramatic
Palestinian reverses will make it difficult
for even those Arab states who support
Syria to remain silent indefinitely.
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terms and implied that Soviet-style com-
munism is ineffective and no longer a
viable model for Western parties.
Italy's Berlinguer said the development
of Marxism had not kept pace with world
realities. This theme was repeated by
Spanish party leader Carrillo, who
referred to the scientific approach to
socialism as a "kind of mysticism and
predestination," which the movement had
outgrown.
Berlinguer restated his party's intention
to follow an autonomous line free of
foreign interference and "within the
framework" of Italy's alliances-a
reference to the party's acceptance of
Italian membership in NATO and the
EC.
Berlinguer went on to assert that there
could be no single leading communist
party or state. He said that the conference
was not a meeting of an international
communist body because "no such. body
exists and can ever exist," either on a
European or world level.
He also recalled the Italian party's
criticism of the Soviet invasion of
Czechoslovakia. This reference was made
to illustrate his point that the principle of
non-interference in other parties' affairs
does not rule out the right to assess their
theoretical and political stands.
French party leader Marchais likewise
made reference to the general concern
about the "image of socialism"; he
claimed it served "common ideals" when
the French express views on the
divergence of a communist country from
these ideals. This was an obvious effort to
justify the French Communists' criticism
earlier this year of Soviet treatment of
political dissidents.
In his statement, Marchais maintained
much the same line that had helped to
prolong the preparatory efforts for the
conference. As far as the French were
concerned, he said, such meetings no
EUROPEAN COMMUNISM longer serve a useful purpose. To
emphasize the French party's adoption of
The major West European communist a more independent stance, Marchais
leaders at the European communist party reminded the audience that his party had
conference this week reasserted their in- recently discarded the concept of the "dic-
dependence from Moscow in no-nonsense tatorship of the proletariat."
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.~~.vn~ ~
Spanish Communist leader Carrillo, in
the most strongly worded speech delivered
at the conference, underscored his party's
independence from Moscow. He de-
manded that diversity be accepted and
gave a thinly veiled warning that failure
to do so would result in a schism.
Presumably with an eye toward his par-
ty's efforts to win legalization in Spain,
Carrillo asserted that full democracy is es-
sential for all "socialist states" and
observed that socialism in VVestern coun-
tries would be brought about by
pluralism.
Among the speeches of the East. Euro-
pean party leaders, those delivered by
Yugoslav President Tito and Romanian
President Ceausescu were, as anticipated,
the most independent.
'l'ito clearly aimed his message at
Moscow by hammering on the necessity
of different roads to socialism. He
stressed that Yugoslavia opposes any
form of interference in the internal af-
fairs of other parties.
In an allusion to Yugoslav-Bulgarian
differences over Macedonia, Tito as-
serted that the failure of Yugoslavia's
neighbors to recognize the rights of
national minorities is contrary to human
rights and Marxism and undermines
peace in Europe.
Ceausescu made clear that Romania
will not accept Soviet backpedaling on the
conference document. He defended
"socialist patriotism" and the role of the
nation in international affairs.
In a reference to the Brezhnev Doc-
trine, Ceausescu called for effective safe-
guards against interference in Ro-
mania's internal affairs. He also ad-
vocated the simultaneous dissolution of
military blocs as a means of eliminating
suspicion.
Like Tito, President Ceausescu
declared that the inevitable differences
among parties-read, among others, the
Soviets and Chinese-should be solved in
a "principled spirit" in private, bilateral
meetings.
Polish party chief Gierek took a
cautious stance in his speech and placed
more stress on the solidarity of the move-
ment and less on Poland's role in the com-
munist world. He will make a more im-
portant speech tomorrow at Katowice, a
key Polish industrial city.
25X1
~l
PORTUGAL
~/
Portuguese army chief Ramalho Eanes
scored a resounding victory in the
presidential election last Sunday, collect-
ing more than 60 percent of the Popular
vote. Socialist Party leader Mario Soares,
whom Eanes has said he will name prime
minister, welcomed the vote as a decisive
mandate for the minority Socialist
government he expects to form.
Despite his status as front-runner
throughout the campaign, the
president-elect is still somewhat of a
political puzzle. He first emerged on the
national scene as the leader of the conser-
vative "operational" officers who crushed
the leftist military rebellion last
November. During the campaign, left-
wing critics seized on his rightist connec-
tions and asserted that, as a strict dis-
ciplinarian, he might be tempted to take
over if the party government did not meet
his approval.
Mare conservative military and party
backers, in contrast, were taken aback by
Eanes' endorsement during the campaign
of agrarian reform and a Portuguese
brand of socialism. In the end, Eanes won
because of the prevailing view that he was
the best candidate to ensure the support of
the military for Portugal's still fragile
democratic institutions.
Eanes has already made it clear he will
tolerate no attempts to undermine these
institutions. By serving simultaneously as
president and armed forces chief of staff,
he will have sufficient power to back up
that statement.
His admonitions are most likely aimed
at discouraging the Communists-who
retain substantial influence among
labor-from mobilizing worker protests
against the economic measures the new
government will be forced to take. The
Communists were embarrassed by the
election results, in which their candidate,
ctavio Pato, ran a poor fourth with only
8 percent of the vote. 25X1
Far left candidate Ote; o de Carvalho,
who won 17 percent of the vote, may also
be contemplating agitation against the
new government. He apparently regards
his second place finish as a mandate to
revive his plan for a government based on
far left-wing grassroots. organizations.
Having outpolled the Communists, he
may try to portray himself as the leader of
the Portuguese left.
UNITED KINGDOM
UK officials at an EC Monetary Com-
mittee meeting have acknowledged the
possibility of additional borrowing from
the International Monetary Fund this
year. The intention would be to finance
the repayment of any future drawings the
UK may make against the $5.3 billion
standby credit it received from most ma-
jor industrialized nations and the Bank
for International Settlements. The credit
expires on December 9.
Publicly, the Labor government has
tried to de-emphasize the need For ad-
ditional borrowing from the Fund. It does
not want to stir up adverse political reac-
tion to the conditions which the Fund can
be expected to attach to a new loan.
As the UK economy recovers, the
government presumably hopes to be in a
better position to accept the economic
constraints accompanying further Fund
assistance. We expect that a further Fund
drawing will require-cuts in public spend-
ing and possibly as much as a $3.6-
billion reduction (17 percent) in public
sector borrowing.
British officials also revealed that com-
bined private and official sterling balances
fell by $1 billion during April and May.
This compared with afirst-quarter 1976
drawdown of about $160 million.
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SECRET
ITALY
Italian party leaders are examining
possible formulas for breaking the
political deadlock following the in-
conclusive parliamentary election on June
20-21. Serious bargaining will not begin
until after the opening of parliament on
July 5 and may produce a minority Chris-
tian Democratic government as an in-
terim solution.
Although the Christian Democrats con-
tinue to talk in terms of another coalition
with the Socialist Party, there are signs
that they are inclined to form a caretaker
minority government to give other par-
ties, especially the Socialists, time to sort
out their post-election o lions.
many new aces wou e
roug t into such a government to help
freshen the Christian Democrats' im-
age. There has been some speculation that
Prime Minister Moro will step down to
become president of the Chamber of
Deputies and be succeeded by Interior
Christian Derrtocratic leader Zaccagnini
~ ~' i
Minister Cossiga-a relative newcomer in
higher party circles.
Under the minority formula, the Chris-
tian Democrats would seek the support of
the other parties, except for the
neo-fascists, on a limited number of key
issues-particularly in the economic field.
The Christian Democrats-who hope that
the Communists will act "responsibly"
by not opposing the government
program-plan to insist on a clear distinc-
tion between the roles of the majority and
the Communist .opposition. This would
not, however, preclude open consultation
with the Communists to work out
legislative compromises. Such con-
sultations have been held behind the
scenes with increasing frequency in recent
years.
The Socialists continue publicly to re-
ject any formula that fails to at least in-
clude the Communists in the
government's working majority in parlia-
ment. Privately, however, some Socialist
leaders have hinted that a stopgap minori-
ty government might be acceptable if
agreement can be reached on certain
programs.
The Socialist Party remains the
linchpin in Christian Democratic efforts
to form a coalition excluding the Com-
munists. Some Socialist Party insiders
say it may take several months to over-
come factional differences on this issue.
The factional squabble may be intense
and could threaten party secretary
Francesco De Martino's position.
The Communists, meanwhile, are leav-
ing the initiative on government proposals
to the Christian Democrats. The Com-
munist Party directorate, which met last
week, confined itself to stating the party's
readiness to assume responsibility "in ac-
cordance with its political weight." There
are indications that the party is willing to
accept a formal consultative relationship
with the government, particularly if it
could obtain the speakership of one of the
parliamentary chambers or key com-
mittee chairmanships. ~~ 2
Communist EconomicPro~posal
Luciano Lama, secretary general of
Italy's largest labor confederation, the
Communist-dominated General Italian
Confederation of Labor, has indicated
that his organization, at least, is prepared
to cooperate in apost-election economic
stabilization program. He recently told an
interviewer for a Socialist newspaper that
Italian workers are prepared to make
sacrifices to ensure economic stability.
Lama advocated a mild type of incomes
policy in exchange for tax and credit
policies favoring employment. He urged
applying cost-of-living wage adjustments
only to earnings below a fixed limit,
tightening controls over worker
absenteeism, and re-examining seniority
step pay hikes and terminal pay bonuses.
Lama also called for the rationing of
gasoline, meat, and luxury imports. He
insisted on greater diligence in tax collec-
tion to reduce evasion by upper income
groups and streamlining the civil service
to cut public expenditures.
Most of Lama's demands are consistent
with established Communist Party policy
but the offer to curb cost-of-living wage
adjustments represents a sharp break
from previous trade union positions.
Communist Party chief Berlinguer
repeatedly has demanded that the govern-
ment make no attempt to alter the
price-wage mechanism. Wage discipline,
he contends, can come only from the un-
ions themselves.
Any significant reduction in cost-
of-living pay adjustments would be view-
ed with relief by Italy's foreign creditors,
most of whom have repeatedly urged their
elimination as a required first step to ease
Italy's inFlation rate and balance of-
payments gap. The International
Monetary Fund may make curbs on such
adjustments a condition for further
Italian borrowing.
With Italy's trade unions about to
resume their triennial wage negotiations,
Lama's professions of labor's willingness
to be reasonable will soon be put to the
test. The pre-election ban on strike ac-
tivity-instituted by the General Italian
Confederation of Labor to ease voter ten-
sions-has been lifted, and 1.2 million
farm workers have already staged a
nationwide walkout.
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GREECE-TURKEY
Tensions between Greece and Turkey
are growing as preparations near comple-
tion for the sailing of a Turkish seismic
research vessel into the contested Aegean
Sea. The exploration will take place in an
atmosphere soured by the failure of Greek
and Turkish negotiators to make any
significant progress in talks last month in
Paris and Bern on the range of Aegean
questions dividing them.
Turkish officials announced last week
that the vessel-the Sismik I-would
enter the Aegean on July 7. Other reports
suggest that Sismik I-which has been in
drydock for refitting-will only be en-
gaged in a shakedown cruise when it
leaves Istanbul on July 7 and is un-
likely to be ready to operate in the Ae-
geanuntil the end of July or early August.
Ankara is sending the ship out to assert
its claim to a share of the potentially
mineral-rich Aegean seabed and to offset
opposition charges that the Demirel
government has not pressed Turkish
rights in the Aegean with sufficient vigor.
The government has been vague, however,
on just where it intends to conduct its
seismic explorations.
Ankara has repeatedly insisted on its
right to operate on the high seas, but there
are indications that it may choose to
make only symbolic thrusts into disputed
waters in the hope of minimizing the
danger of a Greek reaction while ob-
taining the desired domestic impact.
Athens will take a dim view of any
Turkish incursions into the disputed
waters. Last week, the Greeks expressed
concern to US officials that Turkish air
exercises scheduled for July 4-13 off Izmir
might be timed to coincide with activities
of the Sismik I.
Turkish officials have recently assured
the US embassy that Ankara intends to
follow a less provocative course than the
Greeks fear. According to a Turkish naval
officer, the Turks have no plans to provide
MEXICO
`f'
Jose Lopez Portillo is unopposed in the
election on July 4 for a six-year presiden-
tial term. Even if he had opposition, the
pervasive power and proven- voter appeal
of the ruling Institutional Revolutionary
Party would assure him victory. Lopez
Portillo will assume office December 1.
The certainty of his victory may keep
many of the 27 million registered voters
from going to the polls. A significant
number of Mexicans alienated by the
authoritarianism of the PRI may also
stay away in protest or purposely cast in-
valid ballots. A high rate of abstentions
would be embarrassin .
or appearances' sake, the PRI would
have preferred to have an opponent, but
its only serious opposition, the conser-
vative National Action Party, could not
agree on a candidate in time to make the
filing deadline. Two other parties, the
Popular Socialist Party and the Authentic
Party of the Mexican Revolution, both
pawns of the PRI, endorsed Lopez Por-
tillo. Also up for election are members of
both houses of Congress and one gover-
nor.
Although the PRI does very well at the
polls in all areas of the country, its stand-
ing in the large cities has slipped in re-
cent years. In 1973, when elections for the
lower house were last held, the PRI ob-
tained only 51.7 percent of the 439,400
votes cast in the Federal District. These
results were a surprise to the party,
leading to the appointment of new leaders
to top party posts. The opposition, par-
ticularly the National Action Party, will
probably regain a few seats in ttie Federal 25X1
District and in other metropolitan areas, 25X1
but the PRI will as before capture most of
the congressional seats.
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SECRET
PHILIPPINES
5"I - 5 ~.
The Philippine government's proposals
for new arrangements governing
American use of military bases .reflect
President Marcos' more nationalistic
posture in foreign policy. He apparently
intends to press for an agreement that will
give him the option to phase out the US
military presence within the next ten
years.
In responding to post-Vietnam trends
in East Asia, Marcos is moving toward
assigning higher priority to alignment
with his partners in the Association of
Southeast Asian Nations and with the
Third World than to maintaining
traditional political and military relations
with the US. Marcos defined his new
priorities in his independence day message
on June 12, citing a "new dimension to
our independence" that will emphasize
"freedom" in foreign relations as well as
in internal affairs. 25X1
In discussing the implications of his
new foreign policy stance in his June 12
speech, Marcos disavowed any intention
to "embark on a rash course of complete
self-reliance in defense." He emphasized,
however, that the principle of "sovereign-
ty and extraterritoriality are non-
negotiable issues."
In translating this principle into specific
provisions, the Philippine draft agreement
imposes highly restrictive limitations on
operational, logistic, and administrative
activities of US forces:
? US forces would be confined to
the use of Clark Air Base and Subic
Bay naval station;
? Prior approval of Philippine base
commanders would be required for
most US flights, routine exercises, and
port calls;
? US combat operations would also
require prior approval, and nuclear
and toxic chemical warfare weapons
would be prohibited;
? The authority of US commanders
over US military and civilian per-
sonnel and equipment would be cir-
cumscribed by requiring that US ac-
tivities conform to Philippine laws and
regulations.
The proposals also limit the new base
agreement to five years, with provision for
extension for only an additional five
years. Either party could terminate the
agreement upon written notice of one
year.
Some of these highly restrictive
limitations almost certainly were inserted
for bargaining purposes. President Mar-
cos is anxious to secure increased US
financial and material support for his
armed forces and defense industries and is
unlikely to press his more extreme
demands. He probably will eventually be
prepared to ease some of the tougher
limitations on US facilities, but he will in-
sist that the final agreement contain
language that will validate his claim to
complete "sovereignty" over military
v~r
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SECRET
WORLD GRAIN ~~ ~ ~~
Our initial forecast of 1976??1977 world
grain production, excluding rice, is for a
record 1,045 million tons, 6 percent above
the 1975-1976 figure. This compares with
the US Department of Agriculture's latest
estimate of 1,062 million tons.
What is expected to be a better Soviet
harvest accounts for nearly three fourths
of the increase, more than offsetting a
smaller West European crop. In turn,
global import demand should. be weaker,
permitting small additions to stocks of
major exporters and helping to ease the
tight supply situation that has prevailed
since 1973.
We estimate world wheat production
for 1976-1977 at 365 million tons, up 4.5
percent over 1975-1976. Consumption
will rise less rapidly than production,
despite increased feed use in the USSR
and Europe.
Global import demand for wheat will
be down 7 million tons, with most of the
decrease occurring in the Soviet Union,
India, and Brazil. Larger supplies in all
the major exporting countries point to
strong competition during the coming
year.
Foreign demand for US wheat next
year is likely to be about 27.7 million
tons, the smallest in five years. This low
level means US carryover stocks will in-
crease 37 percent to more than 20 million
tons by July 1, 1977.
Although feed-grain supplies, especially
corn, have tightened in recent months, we
expect same easing in the new crop year
beginning October 1. World feed-grain
production in 1976-1977 will be up 8 per-
cent to 680 million tons because of larger
US and Soviet harvests. Our latest
forecast of Soviet grain prospects implies
a 45-percent increase in feed-grain output,
including rye, over last year's poor
harvest.
The recent strong import demand for
corn is not expected to continue into the
coming marketing year. We estimate
global demand for corn imports will be
down 8 percent from the 54.3 million tons
traded in the current year, including a
5-million-ton cut in Soviet imports.
Drought conditions have changed our
earlier prediction of lower European
Community corn imports to one of in-
creased imports. We also estimate that
Japan will boost corn imports to support
an expanding livestock program.
Foreign demand for US corn will drop
6.8 million tons in 1976-1977, to about
35.4 million tons. A stock addition of
nearly 10 million tons is expected, raising
carryover stocks to 18.8 million tons b
~"~?
TIN COUNCIL --'~ ~
The International Tin Council on June
30 approved another five-year accord
designed to stablize prices and supplies
through management of a buffer stock.
Bolivia's last-minute notification of its in-
tention to ratify allowed the agreement to
take effect provisionally on July 1.
Bolivia-the world's second largest tin
producer-fought unsuccessfully for in-
creasing the council's floor ar-d ceiling
prices, hoping to protect its inefficient,
high-cost, and strike-plagued tin mining
industry. World tin prices that. are now
well above Bolivia's break-ever- point of
$3.10 per pound presumably weakened La
Paz's case. The Bolivians also were un-
happy with the lifting of producer export
controls.
La Paz and other producers, who have
long complained about the council's
leadership under a Westerner, apparently
were successful in gaining agreement that
an Asian would head the council for the
next term. A compromise probably will be
reached to place the consumer-supported
candidate, an Australian, in a top ad-
visory position.
Additional wrangling is expected, and
the pact will collapse by the end of the
first year if the members fail to ratify the
agreement. Bolivia probably will be the
main source of contention, again pressing
for a hike in council floor and ceiling
prices and for obligatory financial con-
tributions from consumers to the buffer
stock. At present, such contributions are
voluntary. Meanwhile, the US has
stated it will not contribute during
the first year.
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Having backed off from food price increases, party chief
Gierek now faces the difficult task of restoring the authority his
regime has lost and ftnding more acceptable solutions to the
economic problems that prompted the proposed price hikes.
Polish wor ers ast wee again dem-
onstrated their political power by forc-
ing the regime to withdraw its proposed
stiff price increases on basic food items.
Party chief Gierek now faces the difficult
task of restoring the authority his regime
has lost and finding more acceptable
solutions to the serious economic
problems that prompted the proposed
price hikes.
The Aborted Program
The proposed price increases for meat,
vegetables, dairy products, eggs, and
sugar affected about one fifth of personal
consumption in Poland. Meat prices alone
would have gone up an average of 69 per-
cent, total food prices an average of 40
percent, and the cost of living IS percent.
In addition, the government had hoped
to stimulate food deliveries to the market
by increasing procurement prices, which
were to have risen by 19 to 20 percent for
livestock. The accompanying wage
package would have favored low-income
workers (a 20-percent raise) at the ex-
pense of the middle- and high-income
groups (perhaps as little as 10 percent).
Worker reaction to the announcement
of the price increases was almost im-
mediate. On the morning of June 25,
workers at the Ursus tractor factory out-
side Warsaw blocked entrances to the
plant, roughed up supervisory personnel,
tore down Polish and communist flags,
and stopped all trains on nearby rail lines.
Poland: The Food Price Upheaval
A party headquarters in Radom-60
miles south of Warsaw-was burned after
a peaceful protest demonstration turned
into a riot. Police did not fire on the
demonstrators and apparently made no
arrests.
There were rumors in Warsaw of sit-
ins, strikes, and railway sabotage
throughout the country.
US embassy also report at a genera
strike was scheduled to take place on June
26 and 27. Work stoppages did occur in at
least 80 factories. The police were ob-
viously under strict orders not to confront
the striking workers and to avoid blood-
shed.
Late in the afternoon of June 25,
Premier Jaroszewicz went on television to
announce that the government was
withdrawing its proposals. He justified the
decision primarily by claiming that Polish
workers had presented many suggestions
for amending the proposals and that the
government would need several months to
consider them. His announcement ap-
parently ended the disruptions.
Rationale for the Increases
Until this year the Gierek regime had
delivered on its promises of a higher stan-
dard of living. Under Gierek's liberal
wage policies, real per capita consump-
tion has risen an average of 7 percent a
year since 1970, an exceptional improve-
ment. The growth in real personal income
averaged 9 percent, the difference going
into savings deposits or currency holdings.
The marked increase in meat consump-
lion, from 53 kilograms (117 pounds) per
capita in 1970 to 69 kilograms (153
pounds) in 1975, was of particular impor-
tance to Polish workers.
A 9-percent average increase in meat
production in the period 1971 to 1974 was
encouraged by abolishing compulsory
deliveries to the state and by raising meat
procurement prices. This increase in
production was possible only because of a
combination of good weather and large
grain imports.
The fragility of the fodder base was
demonstrated when excessive rains in
1974 led to poor fodder crops and the
widespread slaughter of hogs. Hog
numbers dropped by 5 percent. By March
1975, the decline in meat supplies led to
disturbances in several Polish cities.
Gierek acted quickly, rushing supplies
to troubled areas, cutting meat exports,
raising imports, and going to the popula-
tion in a series of sympathetic speeches.
These steps proved to be only a stopgap;
Gierek again had to take emergency
measures in October 1975 in response to
another crisis.
Meeting popular expectations of ever
higher meat supplies has been very expen-
sive for the regime. A continuation of the
1971 freeze on retail meat prices in the
face of a steady rise in prices paid
producers has sent government subsidies
soaring. Food subsidies more than
quadrupled between 1971 and 1975,
reaching 14 percent of budget outlays in
1975, compared with less than 6 percent in
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1970. At the same time, higher domestic
consumption of meat has held meat ex-
ports below planned levels and rising
world grain prices have pushed up the cost
of imported feed. The meat policy thus
contributed to record hard-currency
deficits.
In 1975, Polish leaders debated whether
to curb grain or equipment imports and
opted for the farmer. Hard choices were
necessary because of the deteriorating
balance-of-payments position. Massive
borrowing to finance purchases of
Western machinery coupled with the
flagging of exports to the recession-hit
West raised Poland's hard-currency debt
from $1.9 billion at the end of 1973 to
$6.9 billion by the end of 1975. Gierek
decided to forge ahead with the industrial
program and resigned himself to the need
for higher retail prices to slow increases in
consumption of meat and certain other
highly subsidized foods. The major ques-
tion was the size and timing of the price
increases.
Picking up the Pieces
The decision to go ahead with the price
hikes was apparently reached only recent-
ly. Reporting over the past several years
has indicated that Polish economists have
generally advocated price increases, while
politicians feared public reaction. Warsaw
may have decided to implement the hikes
immediately instead of waiting for the
August vacation period because con-
sumers were beginning to hoard such non-
perishables as sugar.
In an initiaLattempt to recoup some of
its prestige, the regime staged
demonstrations over the weekend in sup-
port of the price increases. Such efforts,
however, cannot conceal the fact that the
regime and to some extent Gierek himself
have suffered their most serious reverse
since coming to power. The regime mis-
judged how the population would react to
the large increases. There are numerous
indications that people expected, and
would have grudgingly accepted, increases
of 20 to 30 percent. 7'he average Pole,
however, would not tolerate increases of
two or three times that amount.
There will almost certainly be per-
o~
sonnel shifts to create a scapegoat.
Premier Jaroszewicz seems particularly
vulnerable. Some of the young, aggressive
economists and managers who pushed for
the increases may also find themselves
shunted aside. Although Gierek must in-
evitably shoulder some of the blame, his
position seems secure at present.
He will probably soon seek ways to
shore up his personal prestige, perhaps_by
quashing any calls for retribution against
the workers who began the strikes. His
failure thus far to take to the hustings-as
he usually does-suggests that he is
somewhat unsure of himself.
More Trouble Ahead
After the excitement of last week dies
down, the regime will once again have to
seek solutions to the serious economic
problems that provoked the price in-
creases.
With retail prices fixed at a level far too
low in relation to demand and farm prices
too low to stimulate marketing, shortages
will become even more prevalent, and
consumer dissatisfaction will increase.
Meat and other foods will probably be in-
creasingly diverted from state stores to
the free market. The regime will be anx-
iously awaiting the crop results in
September.
In the meantime, the Poles will un-
doubtedly seek additional supplies of
grain and meat. They had already planned
to import 3.3 million. tons of grain from
the US this fiscal year, much of it under
credits from the US Commodity Credit
Corporation, and will probably now
return for additional supplies and credits.
They will probably shop for meat in
East European markets, as in 1975.
Moreover, Soviet concern about potential
instability in Poland may make Moscow
receptive to a Polish request for hard-
currency credits, or possibly grain.
The Polish crisis will also make the
Soviet and other East European
governments even more cautious about in-
creasing their own food prices, even
though they also are; confronted with in-
adequate meat supplies and rising budget
subsidies.
The Poles will still be forced to raise
prices eventually, brut they will wait at
least several months,; they then are likely
to choose a series of smaller increases.
The regime presumably will also have to
restore the hikes in procurement prices so
that farmers will rebuild the fodder base
and livestock herds.
The need to increase meat and grain
imports casts some: doubt on Poland's
ability to control overall imports, thus
further weakening its credit rating.
Western bankers have already been con-
cerned about Poland's ability to handle
further borrowing. Moreover, one of the
underpinnings of Poland's credit rating
has been its political stability, which may
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President Machel's nationalist government appears to be
firmly established after a year of independence. !t faces a host
of political and economic problems, however, at a time when it
is becoming increasingly preoccupied with support for the
Rhodesian insurgency.
~3-72
Mozambique: First Year of Independence
Mozambique comp ete its ors year of
independence last week.
In contrast to Angola, there was a
dominant nationalist orgat-ization in
Mozambique, the Front for the Libera-
tion of Mozambique, which permitted a
much mare tranquil transitional period to
independence and the establishment
afterwards of a widely accepted govern-
ment.
Tribal and regional tensions exist
beneath the surface, however, and Presi-
dent Samora Machel's government faces
serious economic problems. There is
already evidence of restiveness in parts of
the country over the regime's efforts to
regiment and indoctrinate the population.
Machel is clearly the dominant figure in
Mozambique. Despite occasional rumors
of dissension within the leadership, we
have no hard evidence of any serious splits
among senior members of the regime. The
President has been confident enough of
his position to make several trips out of
the country in recent months.
Crackdown on Opponents
The government has been slow and in-
efficient in setting up administrative
machinery, but it has wasted no time try-
ing to organize and indoctrinate the pop-
ulation in support of the Front-the only
legal party-and President Machel.
Government-controlled media constantly
preach "vigilance" against real or imag-
ined enemies of the state, who are said to
two days of disturbances in the capital.
troops belonging
to the Matron a et me group instigated
the disorders. The Makonde were the
backbone of the Front's fighting force
during the insurgency against the Por-
tuguese, but they have been un-
derrepresented in the regime since in-
problem in the north when he charged, in
a speech last February, that "rumor-
mongers" were trying to thwart govern-
ment programs in the north. The Presi-
dent called for ahigh-priority redevelop-
ment effort in the area.
Economic Problems
Mozambique has considerable
economic potential, but the disruptions
caused by the transition to black rule and
the doctrinaire socialist policies pursued
by Machel have disrupted the economy.
Urban unemployment is high, and there
have been occasional food shortages.
The departure of the bulk of the coun-
try's white population, including many
with needed skills, has hurt the econ-
omy the most. Out of apre-independence
be backed by "imperialism" and
"capitalism."
Shortly after independence, a special
police force was created with broad
pavers to arrest and detain suspected op-
ponents of the government. A crime has
become virtually anything the police say it
is, and thousands have been jailed.
Although the country has been largely
calm during the past year, there was an
uprising last December in Maputo by
several hundred members of the police
and the army. The dissidents apparently
were reacting to an announcement by
Machel of a crackdown on corruption and
political agitation among the military and
police. Loyal forces restored order after
Moaarrtbiq
' ---__'..`:.:a--:Maputo
0
Indian
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President Machel meeting with Soviet President Podgorny (rJ and Foreign Minister Grom yko in Moscow, May 1976
white population-mostly Portuguese-
of 200,000, fewer than 30,000 remain.
Most of the country's doctors and many
technicians who managed the ports,
railroads, and businesses have left. The
Machel regime has made an effort to stem
the white exodus, but it is continuing, and
the number of whites in Mozambique
could be fewer than 10,000 within a few
months.
Mozambique's closure of its border
with Rhodesia last March in compliance
with the UN sanctions program has added
to the economic problems. The flow of
Rhodesian exports over Mozambique's
rail system and through Mozambican
ports had provided Mozambique with
some $40 million annually-between 10
and 15 percent of its foreign exchange
earnings.
Thousands of rail and port workers
have lost their jobs, and Mozambique no
longer imports Rhodesian corn, beef, and
poultry. Food shortages have become
more of a problem in some areas.
The Machel regime, on the other hand,
has quietly maintained important
economic ties with South Africa. More
than 80,000 Mozambican workers are
employed in South African mines and
earn about $100 million annually; this is
Mozambique's largest source of foreign
exchange.
More than 7 million metric tons of
South African goods are exported
through Mozambican ports annually. The
South African government's interest in
maintaining the relationship is reflected in
repeated offers to provide technicians to
help maintain the port of Maputo.
Mozambique would almost certainly be
reluctant to allow an increased South
African presence unless there was
other way to keep the port open.
Foreign Affairs
Mozambique is a front-line state on the
Rhodesian problem. Machel began work-
ing in 1974 with the presidents of Tan-
zania, Zambia, and Botswana and in
cooperation with South African Prime
Minister Vorster for a peaceful transition
to black rule in Rhodesia.
By late last year, however, Machel and
Tanzanian President Nyerere had become
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convinced that only a military solution
would work. Machel has since taken the
lead in supporting the Rhodesian
nationalist insurgents.
Most of the guerrillas are based in
Mozambique, where they receive training
and maintain operational bases from
which they launch frequent small-scale at-
tacks across the long border between the
two countries.
Mozambique's role in the war has left it
vulnerable to Rhodesian retaliatory raids.
Rhodesian cross-border incursions and air
strikes have inflicted casualties on
Machel's forces and damaged some
Mozambican installations as well as
guerrilla staging bases. Mozambique's
army is being expanded, but is poorly
trained and inefficient compared to the
Rhodesians.
Mozambique is looking increasingly for
foreign help to meet defense and
economic needs. It has received pledges of
more than $200 million in economic aid
since independence, more than half of it
from Western sources.
Machel has turned to China and the
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USSR for military aid and technical help,
When Mozambique became indepen-
dent, relations with China were con-
siderably warmer than they were with the
USSR. The Chinese had been heavily in-
volved in training the Front's guerrillas
during the insurgency against the Por-
tuguese.
Although Soviet military assistance
was also important, Machel and his
colleagues seemed suspicious of Soviet
motives and appeared to have been put off
by heavy-handed Soviet methods in mak-
ing demands on Mozambique during the
transitional regime and the early months
of independence.
Relations with the USSR began to im-
prove late last year, mainly because both
countries were strongly supporting the
Popular Movement in Angola. The war-
ming trend has become more pronounced
in recent months and was highlighted by
recent visits to Moscow by Defense
Minister Chipande and by Machel
himself.
Although several modest economic
agreements were concluded during
Machel's visit, he clearly was seeking
sophisticated technical and military
assistance unavailable from China. do the
communique issued at the end of the visit,
the Soviets pledged to strengthen Mozam-
t present, t ere are probably fewer
than 50 Soviet military advisers in
Mozambique, but the number is likely to
grow as Soviet military hardware arrives.
Perhaps as many as 250 Cuban military
advisers are in Mozambique. Advisers
from both Cuba and the USSR apparent-
ly are helping to train the Rhodesian
guerrillas.
Despite the growing Soviet role,
Machel is trying to reassure the Chinese
that he is not tilting too far in Moscow's
direction. There are now about 100
Chinese civilian and military advisers in
Mozambique, and Machel wants them to
stay.
Mozambique's ties with Portugal have
The newly independent island republic is expected to be of-
frciallynonaligned, but not unfriendly to the West.
been soured by friction over the return
home of many Portuguese disenchanted
with life under the Machel government.
The Mozambican leaders, moreover, have
close ties with the Portuguese left and
have been unhappy with the recent
political trend in Lisbon away from the
left. Machel hopes to persuade some Por-
tuguese technicians to remain in Mozam-
bique, and negotiations between the two
governments to improve relations are un-
der way.
US relations with the Machel govern-
ment are colored by the US association
with Portugal during the insurgency.
Since independence, the US has been
linked with "imperialism" as the prime
target of Mozambique's government-con-
trolled media.
Official relations, however, have been
cordial, and in recent discussions between
US and Mozambican officials concerning
US economic assistance the Mozam-
bicans seemed eager to receive US aid.
Mozambican leaders welcomed
Secretary Kissinger's statement last April
on US policy in Africa, although they ob-
viously would like the US to go further in
support of black rule in Rhodesia.
Seychel%s: lnd pen ence
The Seyc e es, a British crown colony
in the Indian Ocean, became an indepen-
dent republic on June 29. The
archipelago, with a population of 60,000
on some 80 islands, has had internal
self-government since 1967.
Under the independence agreement
negotiated last winter, three small islands
that London detached from the Seychelles
in 1965 and included in the British Indian
Ocean Territory are being returned to the
Seychelles.
The new nation starts off with atwo-
party coalition government headed by
37-year-old President James Mancham,
who had been prime minister. He retains
control of foreign affairs, defense, and the
small police force.
Mancham founded the dominant
Seychelles Democratic Party in 1964; it
mostly represents the interests of the
country's established groups, especially its
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Mancham has
demonstrated consi era a political skill,
proving himself particularly adept at
pre-empting popular issues from his
political opponents.
The head of the junior party in the
coalition, 40-year-oid France Albert
Rene, is the new prime minister. As op-
position leader before the coalition was
formed last year, Rene forced the pace of
independence. His party, the Seychelles
People's United Party, has strong labor
support and is leftist in orientation.
Most of the people of the Seychelles are
engaged in subsistence farming and
fishing, but the country does export
limited amounts of cinnamon, copra, and
vanilla. Although soil and climatic con-
ditions favor the production of a variety
of crops, the country still must import
much of its food. Mancham hopes to ex-
pand tourism, the islands' main industry
since the first airport opened in 1971.
Officially Friends with All
Mancham says officially that he wants
the Seychelles, which this week became
the 48th member of the Organization of
African Unity, to be friendly with all. He
will probably adopt a policy of nonalign-
ment and voice support for the Indian
Ocean zone-of--peace concept.
He has, however, been generally
pro-Western and agreed in the in-
dependence accord that "hostile powers"
would not be allowed to use the
archipelago. He has privately said he
would prefer a US to a Soviet presence in
the Indian Ocean.
The Seychelles will maintain close ties
with the UK. It will become a member of
the Commonwealth and will receive wn-
siderable British aid, including budgetary
support and technical assistance.
The new government also hopes to re-
tain its links with Paris. France once ruled
the islands, and French cultural influence
is still strong, especially among the
numerically dominant Creoles.
and a few US Peace Corps volunteers
assist in educational and agricultural pro-
jects. A USconsulate was opened in May.
Both the Soviets and the Chinese will
probably try to gain influence in the
Seychelles by providing limited financial
or technical assistance and establishing
small diplomatic missions.
Seychelles officials have visited
Moscow and Peking, and a Soviet delega-
tion has visited the islands. Mancham is
likely to remain wary of the Soviets
because of support they have provided to
Rene's party.
Domestic Scene
The drive for independence gained
momentum in 1971, when Rene
aggressively took up the cause with a
political assist from the OAU. Mancham
and his party had advocated continued
crown colony status, but came out in
favor of independence just before the 1974
elections.
In the elections, Mancham's
Democratic Party received 52 percent of
the vote, but won 13 of the I S seats in the
legislative assembly. Rene's People's
United Party won over 47 percent of the
popular vote, but lost three of its five
seats. The incongruous result created con-
siderable resentment among opposition
activists, who staged violent
demonstrations.
Despite their differences, Mancham
and Rene agreed at constitutional talks in
London last year to an interim constitu-
tion and to the formation of a coalition
cabinet of eight members from the
Democratic Party and four from Rene's
group. They also agreed that each party
would name five new members to the
legislature. Mancham apparently made
the concessions to avert awalk-out by
Rene that might have delayed in-
dependence.
Both parties have agreed to continue
the coalition and not to hold elections un-
til 1979. Old animosities between
Mancham and Rene and their parties
could easily be resurrected, however.
Mancham reportedly continues to distrust
Rene, whom he sees as eager to move into
the presidency. Mancham may also be
concerned about the past proclivity of
Rene's party for violence.
Rene and other leaders of the People's
United Party, for their part, are probably
not reconciled to their minority role. They
may push for a greater voice in govern-
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