WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A011500090001-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 21
• Document Creation Date: December 21, 2016
• Sequence Number: 1
• Content Type: SUMMARY

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Secret
Weekly Summary
State Dept. review completed.
Secret
CG WS 77-009
March 4, 1977
Copy
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SECRET
The WEEKLY SUMMARY', issued every Friday morning by the
Current Re-porting Group, reports and analyzes significant
developments of the week through noon on Thursday. It fre-
quaently includes material coordinated with or prepared by the
Office of Regional and Political Analysis, the Office of Eco
nomic Research, the Office of Strategic Research, the Office of
Scientific Intelligence, the Office of Weapons Intelligence,
said the Office of Geographic and Cartographic Research.
CONTENTS
1 Africa
Uganda; Tunisia-Libya;
Zaire-Angola
2 Middle East
Jordan-Palestinians;
Lebanon;
Sudan-Egypt-Syria
China Border; US Relations;
5 Europe
France; n Spain
7 Asia
Philippines; South Korea
7 International
OPEC
8 Lebanon: Reconstruction Prospects
11 USSR: Decline of the Belorussian Faction
13 North Korea: Mounting Problems
15 France: Pushing Solar Energy Technology
16 Economies of Non-OPEC Developing States
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SECRET
UGANDA
President Idi Arrin's special security
forces apparently continued this week to
track down suspected tribal enemies of his
despotic regime while the publicity-loving
President kept the world in suspense with
moves that seemed to threaten the safety
of US citizens in Uganda.
The chief target of the security forces'
campaign, which evidently has been under
way in the country for several weeks, con-
tinued to be members of the predominant-
ly Christian Acholi and Lango tribal
groups. These groups, which were the
bulwarks of the regime overthrown in
1971 by Amin, a Muslim, have borne the
brunt of the bloodletting that Amin's
security forces have conducted periodical-,
ly since he took power.
President Amin 60>'
Amin's enemies, especially exiled
Acholi dissidents in Kenya and Tanzania,
have been plotting against the Ugandan
leader for years, but their efforts to
overthrow him have come to naught
because of poor planning and Amin's per-
vasive security a aratus.
Amin's move affecting the ap-
proximately 240 resident Americans,
mostly missionaries, came on the heels of
sharp criticism of his regime in the US
and elsewhere because of the deaths last
month-almost certainly at the hands of
Amin's security forces-of the Anglican
archbishop of Uganda and two Christian
cabinet ministers. Orders prohibiting the
Americans from leaving the country and
summoning them to a meeting with Amin
were subsequently canceled, but the
government radio has continued to charge
US involvement in schemes to invade
Uganda.
u a may be coming to his aid. The
Castro government has shown increasing
interest in Uganda since it opened an em-
bassy in Kampala a little over a year ago.
The Cubans sent a high-ranking military
officer to represent them at the Ugandan
regime's sixth anniversary observances in
January. There are some indications that
the number of Cubans in the country is
growing.
TUNISIA-LIBYA
A long-standing dispute between
Tunisia and Libya over the continental
shelf in the Gulf of Gabes intensified last
month when Libya sent an oil drilling rig
into disputed waters. Both countries have
reportedly sent naval vessels to the area,
as have the Italians, who operate the rig.
When Tunisian patrol boats discovered
the drilling rig, they ordered it out of the
area. Tunisian Prime Minister Nouira is
said to regard the presence of the rig in the
gulf as a violation of a tacit understanding
between the two countries that neither will
drill there until the boundary dispute is
settled.
According to a Tunisian official, Lib-
yan Prime Minister Jallud subsequently
warned Tunisia's representative in Tripoli
that the Libyans would "open fire" on any
Tunisian patrol boats that tried to in-
terfere with the drilling operation. In ad-
dition, the Libyans reportedly have
threatened the Italian drilling firm with
confiscation of its assets in Libya "and
worse" if the rig complies with the Tuni-
sian demand that it leave.
The Libyans' strategy appears to be to
bring pressure on Tunisia to accept joint
exploration of the shelf-a proposal re-
jected in the past by the Tunisians, who
want to establish a demarcation line and
have exclusive rights to their portion.
Both sides will try to avoid an incident
at sea, but with tensions running high, an
exchange of fire could take place.
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SECRET
ZAIRE-ANGOLA
Angolan President Neto has been un-
receptive to recent efforts by Zairian
President Mobutu to improve relations
between their governments.
Mobutu, who opposed Neto's Marxist-
orien':ed faction during the Angolan civil
war, concluded some time ago that he
would have to mend fences with the vic-
torious Neto, both for self-protection-and
to have some influence in southern
African affairs. The Zairian leader has
taken steps since late last year to reduce
support substantially for Angolan in-
surgent groups fighting Neto's regime,
and in January he announced recognition
of Neto's government.
So far, Mobutu's gestures have ap-
parently failed to move Neto, who con-
tinue~ to feel strong antipathy to the
Zairian. In the past two weeks, both Neto
and his foreign minister have again
criticized Zaire publicly, claiming it is still
permitting "Angola's enemies" to operate
from bases in Zaire. The Angolan Presi-
dent also charged his neighbor with
receiving US soldiers sent to prepare a
military attack on Angola.
Net o is unlikely to be interested in any
real improvement in relations with Zaire
as long as he is faced with a serious in-
surgency situation in Angola. Even if
Mobutu finally cuts all ties with the
guerrillas-and it is by no means certain
he intends to do so-?Neto would probably
continue to suspect him of aiding them.
For their part, the various insurgent
groups can probably maintain their
present levels of activity for some time
no matter what Mobutu does.
JORDAN-PALESTINIANS
Jordan and the Palestine Liberation
Organization last week began formal
talks in Amman aimed at reconciling
their feud in the interest of developing a
common Arab position and strategy for
peace negotiations with Israel. The initial
round of the talks, which are likely to con-
tinue intermittently for some time, ended
inconclusively.
The Jordanian delegation was headed
by Prime Minister Badran, and Palestine
National Council speaker Khalid
al-Fahum, who had visited Amman in
January to set up the talks, was chief
spokesman for the PLO. The dialogue
between the two parties-bitter foes since
King Husayn drove most of the
Palestinians from Jordan in 1970 and
1971-was promoted by Egypt and Syria,
which are hoping to bring about some
form of association between Jordan and
the PLO that would overcome Israel's
objection to dealing directly with the
PLO.
During the discussions, the Jordanians
rejected PLO requests for financial and
military help for West Bank Pales-
tinians-presumably to be channeled
through the PLO. Jordan also turned
down requests for permission to open ad-
ditional PLO offices in Jordan and for the
release of Palestinians detained by the
Jordanians.
The PLO delegation reportedly was
pleased to hear from the Jordanians that
they would go to a resumed Geneva
Conference on the Middle East only as a
"confrontation state" and that the PLO,
not Jordan, should represent the
Palestinians. Husayn indicated thereby
that he was continuing to adhere to the
decision of the 1974 Arab summit con-
ference designating the PLO as sole
spokesman for the Palestinians.
For its part, the PLO maintained its
familiar line that it would accept an in-
vitation to Geneva, but would find it dif-
ficult to accept one based on an un-
modified version of UN Security Council
Resolution 242, which deals with the
Palestinians in humanitarian rather than
political terms. The PLO representatives
made no suggestions on the question of
future links between Jordan and a possi-
ble Palestinian state on the West Bank
and the Gaza Strip.
The two parties agreed to meet again to
explore their future relations in greater
depth. The delay will allow both the PLO
and Jordan an opportunity to obtain a
clearer reading of Egyptian and Syrian
expectations in the talks. 25X1
LEBANON
Fighting in southern Lebanon between
Palestinian-leftist forces and Christian
militiamen supported by Israeli artillery
fire has continued almost unabated since
late January. The Palestinians are getting
the worst of it and may lose all access to
the-border with Israel.
Christian forces initiated the fighting
specifically to clear Palestinians and left-
ists from a "security belt" several
kilometers wide along the border, and
they clearly are accomplishing their aims.
They have the upper hand militarily and
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 Presidents Sadat of Egypt (left), Numayri of Sudan (center), and Asad of Syria sign agreement at Khartoum meeting
aP-T
have gained control of much of the border
area from Hasbayya west to the
Mediterranean.
Palestine Liberation Organization
leader Yasir Arafat and Christian
Phalanges Party leader Pierre Jumayyil
reportedly agreed in late February to end
the fighting, but the two men have ap-
parently been unable or unwilling as yet to
follow through. Fighting, consisting chief-
ly of artillery duels, has not let up since
the agreement.
Law and order is all but nonexistent
throughout southern Lebanon. Many
towns now under Christian artillery at-
tack, including Nabatiyah, are in the
hands of leftist hoodlums, and large
numbers of Muslim inhabitants are either
evacuating the area or supporting the
Christians because of excesses by leftists
and radical Palestinians.
The government appears powerless to
control the situation. The minister of in-
terior told the US charge recently that his
ministry could do nothing, and President
Sarkis apparently has no ideas on how to
end the fighting. He has reportedly been
considering asking the UN for troops
to patrol the south, but no formal re-
quest has been made.
Lebanon has no regular military forces
at all and no security forces numerous or
effective enough to restore order. Syrian
troops are proscribed from venturing deep
into southern Lebanon by Israeli objec-
tions. (An analysis of the damage sus-
tained by Lebanon during the civil war and
of President Sarkis' reconstruction plans
appears in the feature section of this
publication.)
SUDAN-EGYPT-SYRIA
A meeting of the presidents of Sudan,
Egypt, and Syria held in Khartoum on
February 27 and 28 underlined the close
relations that have developed among their
moderate governments. The three
presidents plan to get together privately
with Saudi Arabia's Crown Prince Fahd
when he is in Cairo next week to represent
his country-their common benefac-
tor-at the first Afro-Arab summit.
The Khartoum meeting produced little
in the way of tangible results. Sudan
became a member of the largely symbolic
joint political command established by
Egypt and Syria last December. The three
presidents-who can now claim to head a
political "union" containing more than
half the population of the Arab
world-may hope to use the tripartite
arrangement to increase their influence in
Arab affairs.
The talks were apparently initiated by
Sudanese President Numayri. His main
object was to obtain an expression of
wider Arab backing for his government,
which he believes is threatened by
Ethiopia and Libya. Egyptian President
Sadat, long at odds with Libyan President
Qadhafi and increasingly concerned about
developments in the Horn of Africa,
wanted to show support for his friend
Numayri. Syrian President Asad sought
to improve his ties with Arab moderates,
in part because of his continuing problems
with Iraq.
Saudi Arabia is likely to welcome
cooperation among the three countries as
helping both to draw Syria further away
from the USSR and to prevent the spread
of Soviet influence in the Horn of Africa,
an area of growing concern to the Saudis.
They believe that the widespread turmoil
and increasing leftist orientation in
Ethiopia and the extensive irredentist
claims of Soviet-backed Somalia provide
the USSR with opportunities for further
gains.
Among other things, the Saudis are
worried about what will happen in the
French Territory of the Afars and Issas,
which is coveted by both Ethiopia and
Somalia, when it becomes independent
later this year. They want France to retain
a military presence there as a counter to
Somali and Soviet ambitions and are
ready to support an independent govern-
ment both politically and economically.
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SECRET
CHINA BORDER =
The chief Soviet negotiator at the
Sino-Soviet border talks, Deputy Foreign
Minister Ilichev, left China for home on
February 28, apparently with no results to
show for his three-month stay. The USSR
had sent Ilichev to Peking soon after Mao
Tse-tung's death and the purge of China's
leading leftists to probe for any change in
Chinese attitudes.
llichev's arrival in Peking on
November 27 ended an 18-month in-
terruption in the talks, which began in
1969. The Chinese told foreign officials in
Peking privately that Ilichev had brought
no meaningful new proposals and that
China's position on the border issue
remained as firm as ever.
Publicly, the Chinese made a point of
stressing; the continuity of their major
foreign policy objectives, one of which is
firm opposition to what they characterize
as Soviet "expansionism." In January,
anti-Soviet propaganda from China,
which had dropped off in volume although
not in content after Mao's death, in-
creased markedly.
Early last month, a Soviet radio com-
mentary made the first direct criticism of
China to be carried by Soviet media since
the death of Mao; it lamented that
China's new leaders were continuing the
"old anti-Soviet line." The commentary
was restrained, however, as was a lengthy
rebuttal of China's propaganda attacks on
the USSR in an authoritative "Observer"
article in Pravda a few days later, and the
Soviets have not resumed all-out
propaganda attacks on the Chinese.
Although the Soviets are clearly
frustrated over the failure of efforts to
start a dialogue with the new Chinese
leaders, they may still have some hope for
an eventual easing of Sino-Soviet ten-
sions. The Soviets apparently believe the
Chinese leadership has yet to stabilize,
and they probably remain encouraged by
China's continuing domestic emphasis on
the need to purge the leftists' supporters.
US RELATIONS
The USSR has taken concrete steps to
demonstrate that US actions in support of
human rights in the USSR will hamper
some aspects of relations between the two
countries. Soviet leaders are particularly
smarting over US contacts with Soviet
dissident leader Andrey Sakharov.
The Soviets gave a cold reception to a
US delegation that visited Moscow late
last month to arrange a long-term ex-
change of physicians. The chairman of the
USSR-USA Friendship Association, who
had extended the invitation to the delega-
tion, refused to meet with it. A deputy
minister of health told the chief of the
group that US statements on human
rights are making bilateral exchanges
"difficult to arrange."
In meetings with the delegates, the
Soviets harangued them on human rights
problems in the US and pointedly refused
to discuss future exchanges-the first time
the Soviets directly linked any bilateral
program to the human rights debate.
On February 28, Soviet. authorities
detained for several hours two Soviet
Jewish activists who were trying to enter
the US embassy, in the company of an
embassy officer, to deliver a report on
violations in the USSR of the Helsinki
human rights agreements. The Soviets
had not made arrests in similar cir-
cumstances in years.
Moscow has intensified its polemics on
human rights following its strongly word-
ed demarche to Washington two weeks
ago. Commentaries in Pravda and on
Moscow radio warned that US statements
could adversely affect efforts to improve
relations.
On February 20, a Pravda commen-
tator, participating in a panel discussion
on Moscow domestic radio, decried what
he called the US "parallel course" of
limiting nuclear arms and interfering in
Soviet internal affairs. This was the most
direct Soviet statement so far raising the
possibility of linking negotiations on
strategic arms to the current controversy
over human rights.
Soviet officials and commentators none-
theless have continued to stress
Moscow's interest in pursuing arms
limitations with the US, particularly a sec-
ond SALT accord. A Soviet Foreign
Ministry official commented privately
last week that Moscow would like to see
the public furor die down and "quiet
diplomacy" return.
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SECRET
FRANCE
The French municipal elections to be
held on March 13, with a run-off a week
later, are viewed by all the participating
political parties as a national test of
strength and a bellwether of the legislative
election in 1978, although the campaign is
being fought mainly over local issues and
personalities.
A recent assessment by the US em-
bassy of the campaign in Paris and the
provinces concluded that:
? The left will make substantial
gains in the more important cities with
populations over 30,000.
? There appears to be an irresistible
tide in favor of the Socialist Party and
the United Left in those constituencies
where the left has been able to agree on
common lists of candidates.
? Former prime minister Chirac's
renovation of the Gaullist party and
the economic austerity program of
Prime Minister Barre will only
marginally help candidates of the
government majority.
? Prime Minister Barre, who came
to office only six months ago, is win-
ning increasing respect from the
French public and is becoming a
counterweight to the images of Presi-
dent Giscard as indecisive and Chirac
as overly activist.
A region-by-region poll last month in-
dicated that 55 percent of the voters in-
tended to vote for the left. If that percen-
tage is maintained in the national election
next year, the left will gain a parliamen-
tary majority. Even in former bastions of
the centrists and conservatives in eastern
and western France, 50 percent of the
voters now say they will vote for the left in
1978; candidates of the left polled only 37
percent of the vote in those places in 1973.
The governing coalition's brightest spot
this year appears to be Paris, where the
center and rightist parties expect to defeat
the leftist alliance of the Socialists and
Communists. The victory is likely to be
tarnished, however, by the spectacle of
Giscard's and Chirac's parties running
competing lists in the first round and by
quarreling among the governing parties
over the post of mayor.
After the 109 seats on the city council
are filled, the members will meet to elect
one of their number mayor. Chirac has
declared that he is a candidate for the
post, but neither he nor Minister of In-
dustry d'Ornano, Giscard's candidate for
mayor, is likely to have the necessary ma-
jority. The governing parties will have a
strong motivation to work out a com-
promise, since failure to do so could open
the way for a leftist candidate-thus
depriving the government of an important
springboard for the 1978 parliamentary
campaign. I,, I''
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SECRET
SPAIN
The Spanish government in the past
two weeks has taken its toughest stand
against the far right since the death of
General France 15 months ago. The
government's move appears to be a warn-
ing that Prime Minister Suarez will
attempt to deal as firmly with efforts by
the right wing to derail Spain's movement
toward democracy as he has with those by
the far left.
The crackdown on the right included a
raid on a clandestine small arms factory
and the arrest of the leader and some 30
members of the Guerrillas of Christ the
King. Following these actions, the
Anti-Communist Apostolic Alliance-
a group that gained prominence by
assassinating four Communist lawyers in
January-threatened Suarez with death
and warned of widespread bloodshed if he
goes ahead with plans to hold a national
election this spring.
The action against the right may have
been in response to public criticism that
the police were not being as zealous in
curbing right-wing terrorists as they had
been in cracking the ultraleft group
responsible for the recent kidnapings of
two prominent Spanish officials; the of-
ficials were rescued last month. Charges
of police collusion with extreme rightists,
common under Franco, when some
rightist groups apparently functioned as
the covert arm of the police, have recently
increased in the Spanish press.
Suarez may also have hoped that the
police action against the right would help
placate members of the leftist opposition
parties, who were angered when the
government turned over to the Supreme
Court the question of legalizing the Com-
munist Party. The left will be further up-
set if the court rules that the party is il-
legal under current Spanish law.
Whatever the court's decision, the
much publicized meeting of the leaders of
the Spanish, Italian, and French Com-
munist parties in Madrid this week
demonstrates how far political liberaliza-
tion has come since the death of Franco.
Spanish Communist leader Santiago
Carrillo clearly sees the meeting with
Berlinguer of Italy and Marchais of
France as a chance to impress both the
court and the voters with the Spanish
Communists' nondogmatic, "Eurocom-
munist" image.
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'tl.Kt I
Negotiations that have been under way
in Libya since early February between the
Philippine government and Philippine
Muslim rebels are threatened with early
collapse as a result of President Marcos'
determination to hold a plebiscite in a
proposed Muslim autonomous zone in the
southern Philippines.
The initial round of the Libyan-spon-
sored talks in December resulted in a
cease-fire and an agreement that the
Muslims could have an autonomous zone.
The agreement did not call for a
plebiscite, but Marcos contends that one
was implicit in references to the need to
follow Philippine "constitutional
processes" in establishing the zone.
The Muslims and their Libyan backers
deny that such a vote was part of the
December understanding. They know that
Marcos intends to limit the size of the
zone by generating a negative vote by
Christian majorities in 3 of the 13
provinces proposed for inclusion in the
zone. Muslim demands regarding an ad-
ministrative structure and their own
armed forces-demands that go well be-
yond the sense of the December
agreement-are also imperiling the
negotiations.
Chances for successful talks were
further reduced by a cable that Libyan
President Qadhafi sent to Marcos on
February 27. Qadhafi insisted that all 13
provinces be included in the proposed
autonomous region and that the plebiscite
be scrapped. He threatened a resumption
of hostilities by the rebels if these con-
ditions are not met. Marcos, however,
says he has a transcript of a phone conver-
sation in which Qadhafi indicated agree-
ment to a plebiscite.
Marcos has publicly admitted that the
negotiations are in a "deep crisis," and his
defense secretary has approached US of-
ficials regarding expeditious delivery of
US arms in preparation for renewed
fighting. As of midweek, however, Mar-
cos was hoping to arrange an early recess
without a public show of rancor.
SOUTH KOREA
South Korea's export-oriented
economy benefited handsomely from the
worldwide economic upturn in 1976. The
country's current-account deficit was
slashed from $1.9 billion in 1975 to a mere
$300 million last year, while its real gross
national product grew by 15 percent.
Growth in GNP and exports probably
will be less rapid this year, but South
Korea's major targets-l0-percent real
growth and $10 billion in exports-appear
attainable. The country's strengthened
payments position has improved its
chances of attracting needed foreign
capital.
The sustained growth achieved
during the 15 years of President Pak 25X1
Chong-hui's rule has played a major role
in creating the fairly broad public support
that the South Korean government en-
joys. Pak has taken care to see that all
sectors of society have a stake in this
growth, paying particular attention to
raising rural incomes and setting pay
floors for urban blue-collar workers.
Modest welfare programs have been
launched and are to be expanded as the
economy develops. Abroad, the South
Korean "economic miracle" has attracted
favorable notice from many third-world
countries and has helped Seoul further its
goal of strengthening political ties with
International: OPEC Price War Persists
The two-tier price system of the
Organization of Petroleum Exporting
Countries may persist through the year.
The Saudis are reaffirming their intention
not to budge from their present lower
prices, and market forces are easing the
situation for the OPEC members main-
taining the higher price.
Cold weather and the natural gas shor-
tage in the US have caused a rapid draw-
down of the large consumer oil stocks
built up late last year before the price rises
went into effect. Oil demand in noncom-
munist countries seems likely to exceed 50
million barrels per day in the first half of
1977-more than 5 percent above the
comparable period last year.
For OPEC oil, the estimated first-half
demand of some 31 million barrels per
day is slightly higher than last year. This
level of demand will keep sales sufficiently
high to satisfy the minimum revenue
needs of the l l OPEC countries main-
taining the higher price even if Saudi
Arabia meets its production target of 10
million barrels per day for the first
quarter.
In that event, the high-price OPEC
states would sustain an average sales loss
of 6 percent, but this would be more than
offset by the 10-percent increase in prices.
Although Iran, Iraq, and Kuwait would
suffer sales losses greater than the 6-
percent average, their monetary reserves
and access to world capital markets
would allow them to bear the loss without
great hardship.
In fact, the outlook for these states is
brighter because crude output in Saudi
Arabia has been held back by bad
weather, and it now seems most unlikely
that the Saudis will attain their first-
quarter production goal.
Nevertheless, at least the Persian Gulf
producers do not want to see the price
split maintained indefinitely and remain
interested in a compromise that would
break the impasse. Some among the 11
have expressed the belief that it can be
resolved only by a heads-of-state meeting,
but most OPEC leaders will not agree to
attend a summit unless the are
reasonably sure of its success
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25X1
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President Sarkis is banking heavily on the rapid recon-
struction of Lebanon as the best hope for restoring stability
and reuniting the country.
Lebanon: Reconstruction Prospects
The cease-fire in Lebanon has halted
the worst phase of the Lebanese civil war.
None of the combatants is in a position to
resume major hostilities, and most have
grudgingly accepted the mandate Syria
received from the Arab League to impose
a truce.
The truce should provide sufficient
security for President Sarkis to begin a
serious reconstruction program. Sporadic
violence will slow the pace of reconstruc-
tion, especially in Beirut and other coastal
cities, but the current strength and dis-
position of Syrian forces should prevent
major disruptions in most parts of the
country. In the south, tensions remain
high between Israeli-backed Christian
troops and Palestinian forces.
The broad emergency powers granted
him by the Lebanese parliament, coupled
with Syrian military backing, have given
Sarkis temporary authority to set
priorities and policies without being
thwarted by sectarian quarreling. Sarkis
recognizes that the search for a durable
political settlement will be long and ar-
duous, and he is delaying political reform
until reconstruction is under way.
In delaying efforts at formal reconcilia-
tion, Sarkis' strategy is to protect the sub-
stance and progress of his reconstruction
program from political bargaining. In the
meantime, he intends to create de facto
reunification by rebuilding the country.
Sarkis hopes in this way to resolve some
of the lesser conflicts that divide
Christians and Muslims, to allow the
bitterness of war to subside, to strengthen
moderate voices in both camps, and thus
to improve the chances for successful
political negotiations.
If he is to have any chance of carrying
out this plan, Sarkis will need continuing
cooperation from the Syrians, timely
financial and technical assistance from
other Arabs and the West, and continued
political support from key Arab states.
Even with this help, the magnitude and
complexity of the task he faces militate
against early success.
War Losses
Lebanon suffered huge human losses
during the 20 months of civil war. Out of a
population of about three million, at least
40,000 were killed and 200,000 wounded.
The prolonged civil strife prompted
many individuals to leave Lebanon,
primarily foreign workers and Lebanese
Christian professionals. Some are return-
ing, but their loss-temporary or per-
manent-has created a serious impedi-
ment to early reconstruction.
As many as 1.5 million persons may
have been displaced. Whether the move-
ment of people has significantly changed
the balance between the Christian and
Muslim populations probably will not be
known for some time. Reliable
demographic data will not be available for
planning reconstruction.
Material destruction was severe.
Lebanon apparently suffered at least $3
billion in physical damage and an ad-
ditional $4 billion to $5 billion in lost in-
come. Beirut's commercial center has
been almost totally destroyed, and only
some 10 percent of Lebanon's industrial
facilities are still in operating order.
Substantial numbers of displaced per-
sons are living in homes and apartments
abandoned by others. Although there is
no housing shortage at present, one will
develop if very many of the estimated I
million refugees who fled Lebanon return
to the country.
Accurate breakdowns of the losses in-
curred by the various combatants are not
available. The Christians appear to have
suffered less in terms of material damage
than their Muslim adversaries; if so, their
economic advantage over the Muslim
majority is now even more pronounced.
The port of Beirut should be able to
begin operations soon; the harbor sustain-
ed only minimal damage. Beirut's inter-
national airport also suffered only
moderate damage and will be able to ac-
commodate prewar levels of traffic as
soon as new navigational equipment is in-
stalled. Basic utilities, such as telephone
and electric services, survived the fighting
with little serious damage.
The central government has emerged
from the conflict in sound financial condi-
tion. Eighty percent of Lebanon's curren-
cy remains backed by gold, and foreign
exchange reserves total about $1.6 billion.
The government itself spent next to
nothing on the war, which was financed
externally and through private fund rais-
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..rLVN-
ing. As a result, the Sarkis government
should be able to borrow enough in inter-
national money markets to help finance
reconstruction.
Intangible Damage
Some of the war damage has been in-
tangible. Lebanon has experienced a de
facto partition. The Christians have made
battle lines into borders, established
their own public administration and ser-
vices in the predominantly Christian
areas, and generally begun preparing per-
manent partition. The war heightened the
Christians' sense of being a beleaguered
minority that cannot afford any diminu-
tion of its political power.
The civil war undermined the con-
fidence of all Lebanese. The collapse of
central authority was a shock to the many
Christians and Muslims who believed that
their tradition of consensus-building and
compromise would stave off full-scale
war. The numerous shattered cease-fires
attest to both the erosion of the
traditional political process and the per-
sistence of those who want to believe in it.
The war has badly damaged the
Lebanese people's self-perception as
highly cultivated and able to stand aloof
from intra-Arab disputes and serve as a
model of democracy for neighboring
countries and a bridge to the West. This
image may have been illusory, but it
helped the Lebanese maintain their
neutrality in the region, sustain a delicate
religious balance at home, and preserve
the principles of restraint and com-
promise that were the cornerstones of
their political process in better times.
Many are now left with a sense of lost
direction and with a new cynicism that in-
cludes a resigned acceptance of violence.
Plans for Reconstruction
President Sarkis is banking heavily on
rapid reconstruction as the best hope for
restoring stability and reuniting the coun-
try. For the past several months, he has
been collaborating closely with a small
group of advisers on a detailed plan
designed to rectify social and economic
dislocations caused by the war and
eliminate many of the problems that
triggered it. It is a blueprint for restruc-
turing the country in a way that en-
courages reunification.
The rebuilding and expansion of Beirut
is the centerpiece of Sarkis' plan. The
hope is to eliminate the previous division
of the capital into a middle- and upper-
class inner core and a slum-infested
outer ring. Efforts will focus on in-
tegrating the two parts by improving
housing and amenities in the suburbs and
establishing a better transit system for the
entire region.
Some public housing projects may be
started, and Muslim slum areas most
affected by the fighting may be razed.
Some industrial facilities may be moved
away from Beirut altogether in an effort
to establish employment opportunities in
Lebanon's poorer rural areas. Plans for
the city center include the creation of a
new area for commercial development
and construction of a new presidential
palace, parliament building, and cultural
center.
The government has emphasized its in-
tention to reestablish the country's educa-
tion system in a way that transcends
religious and community ties and in-
culcates a sense of nationalism.
A national superhighway system has
also been proposed to link much more
closely the various sections of Lebanon
and provide additional job opportunities
throughout the country.
Expenditures to cover these ambitious
programs are slated at $800 million an-
nually over the next 15 years. The govern-
ment plans to contribute from its own
resources about $100 million per year.
The balance is to be raised abroad, prin-
cipally in the form of long-term, low-
interest loans from bilateral and mul-
tilateral sources.
Several Arab and Western
governments have expressed their
willingness to aid the Lebanese with
sizable loans and grants. Arab develop-
ment banks have already pledged $342
million toward Lebanese reconstruction.
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Looking east from the war-torn business center of Beirut
Procuring additional commercial finan-
cing should pose no problem, given the
basically sound financial condition of the
central government.
Almost all aid receipts will be funneled
by the Central Bank or the Development
Bank through the private banking sector
to qualified loan applicants at nominal
rates of interest. By reserving a key role
for private banking in the reconstruction
program, the government has gained the
support of the normally conservative and
powerful business community.
This close working relationship may
come under strain later as reconstruction
progresses and economic imperatives
become less clearly defined, but at least
initially the government can depend on
almost total cooperation from the
resourceful and skilled business communi-
ty.
The Lebanese are working to restore
Beirut to its prior status as the Middle
East's financial and business center. This
will be difficult because Bahrain, Dubai,
and Amman, among other cities, have
begun :o become major banking and com-
mercial centers and will continue to vie
with the Lebanese capital for regional
headquarters of Western financial and
business enterprises.
The ultimate success of the reconstruc-
tion pragram will depend on its ability to
initiate sustained growth before the
Syrian security umbrella is lifted. If the
security situation can be kept generally
under control for the next several months,
Lebanon's prospects for economic
recovery appear good.
The Security Dilemma
Sarkis' government has formally com-
mitted itself to rebuilding the Lebanese
military as quickly as possible, but it has
done so only in the context of providing
the public with assurances of protection
against possible Israeli incursions in the
south. Indications are that Sarkis will
concentrate on the more practical and
promising strategy of reconstituting an in-
ternal security force loyal to him and will
proceed more slowly in rebuilding the
regular armed forces.
Sarkis has little reason to believe that a
new Lebanese army can be insulated from
sectarian antagonism-no matter how
careful a balance is struck between
Muslims and Christians. The military
proved far more vulnerable to the political
currents that pushed the country into civil
war than did the internal security forces.
Sarkis probably realizes that in the near
term he has a far better chance of con-
trolling a paramilitary internal security
force-which would be better able to
combat the immediate problem of local
violence and terrorism than would the
conventionally organized Syrian forces.
Equally important, such a Lebanese force
would provide a buffer between the ap-
proximately 30,000 Syrian troops in the
country and an increasingly resentful
Lebanese public.
Having established a security force,
Sarkis could then coordinate the restora-
tion of the regular armed forces with the
disarmament of private militias. This
would give him time to solicit assistance
from other countries, which could provide
a counterweight to Syria.
A Lebanese security force designed ex-
pressly to deal with insurgency, terrorism,
and subversion-areas that fall between
routine police functions and defending the
country against an external
threat-would have to be largely infantry
and highly mobile. The force would need
moderate firepower and reliable com-
munications, but not advanced weapons
systems.
No Lebanese security force created in
the next few years is likely to be able to
deal effectively with renewed civil war or a
significant external threat. The Syrian-
dominated peacekeeping force will
probably be needed in Lebanon for at
least a year, and Lebanese government
cooperation with Syria will be essential
even after Syrian troops are withdrawn.
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The Belorussian faction headed by First Deputy Chairman
of the Council of Ministers Mazurov, which came to
prominence in the Soviet leadership following the ouster of
Khrushchev, appears to be in decline as one of Brezhnev's
lieutenants moves up.
USSR: Decline of the Belorussian Faction
Over the past year, a number of signs
have suggested that a shift may be quietly
occurring in the balance of power within
the Soviet leadership. The shift appears to
involve a decline in the political strength
of the Belorussian faction. The senior
member of this faction, Politburo
member Kirill Mazurov., has lost his
status as the only first deputy chairman of
the USSR Council of Ministers and has
simultaneously been reduced in protocol
rank. Mazurov had been widely regarded
as first in line to succeed Aleksey Kosygin
as chairman of the Council of Ministers
(premier). His prospects now seem poor.
To a lesser degree, the political position
of Mazurov's protege, Petr Masherov,
party first secretary in Belorussia and a
candidate Politburo member, appears to
have slipped as well. Given Mazurov's dif-
ficulties, Masherov may also have
problems in maintaining his seemingly
secure position as head of the party ap-
paratus in the Belorussian republic.
The Rise of the Belorussians
The prominence of the Belorussian fac-
tion dates back to a major political
breakthrough it achieved in the months
following the ouster in October 1964 of
Nikita Khrushchev. Mazurov, who was
then party first secretary in the Belorus-
sian republic, was moved to Moscow,
promoted to full Politburo status, and
made a first deputy to Kosygin. Second
Secretary Masherov was made Belorus-
sian party leader and given the candidate
Politburo rank that normally attaches to
the post.
The effect of these developments was to
give the Belorussian faction greater
political weight within the national party
than its size or previous political impor-
tance would merit.
Mazurov and Masherov have been un-
able to climb further. There is some
reason to believe that there may have been
friction between them and General
Secretary Brezhnev. Mazurov and
Masherov appear to have been both
politically and personally cool to
Brezhnev, and neither has participated in
the development of personal adulation of
Brezhnev-the so-called Brezhnev
cult-to any significant degree.
Both leaders may also have had an ear-
ly career association with former Polit-
buro member Aleksandr Shelepin, a rival
of Brezhnev's during much of his tenure as
general secretary. Shelepin was a
secretary of the Communist Youth Union
(Komsomol) on the national level when
Mazurov was picked to head the Belorus-
sian Komsomol in 1946 and when
Masherov took over Mazurov's Kom-
somol position in Belorussia a year later.
Mazurov is reported to have participated
with Shelepin and Politburo member
Mikhail Suslov in an attack on
Brezhnev's leadership in 1970.
Despite any reasons Brezhnev might
have had to distrust him, Mazurov did not
suffer immediately. Although Shelepin's
status in the leadership declined
dramatically in Brezhnev's ranking of
Politburo members at the 24th party con-
gress in April 1971, Mazurov's position
improved slightly; he ranked seventh in
the leadership and higher than anyone else
in his age group. In 1972 he was chosen to
give the traditional speech honoring the
anniversary of the October 1917 revolu-
tion, although it was not his turn to do so.
He had previously given the address in
1968, and both Premier Kosygin and
Dmitry Polyansky, who at the time was,
along with Mazurov, a first deputy
premier, should each have been due for a
second appearance before Mazurov.
At the Supreme Soviet sessions in 1973,
moreover, Mazurov delivered a major
report on education-even though such
visibility for Politburo members at these
sessions had become infrequent during the
Brezhnev era. Finally, Mazurov's main
rival to succeed Kosygin, Polyansky, was
demoted in February 1973 to minister of
agriculture, leaving Mazurov as
Kosygin's sole first deputy.
These developments appeared at the
time to improve the likelihood that
Mazurov would eventually replace
Kosygin as chairman of the Council of
Ministers. In addition to his obvious
qualifications, he had become the logical
bureaucratic choice.
Political Decline
Despite Mazurov's enhanced status,
Brezhnev may not have intended to let
him benefit from Polyansky's demotion.
Nikolay Tikhonov, a long-time
associate of Brezhnev's, was appointed
first deputy chairman in September 1976,
thus depriving Mazurov of the status of
being the only first deputy. Tikhonov has
not yet been appointed to the Politburo,
but he has appeared with Politburo
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 Kirill Mazurov (center left) joins other Soviet leaders in parliamentary vote last October
members in pictures published in the
Ares:;.
In spite of Brezhnev's apparent inten-
tion to promote Tikhonov to the Polit-
buro, Tikhonov remains in the somewhat
unusual status of having the government
post of first deputy chairman without
simultaneously holding the party rank of
Politburo member, It appears that op-
posit on persists within the leadership to
Brezhnev's desire to make personnel
changes that would alter the political
balance within the Politburo. Kosygin and
Mazurov seem likely to have led this op-
position, with the probable support of
Suslov. Even Brezhnev's limited success
last September in promoting Tikhonov to
his present government position apparent-
ly occurred only when Kosygin was
physically incapacitated last August and
Mazu, ov was also apparently absent from
duty.
Mazurov did not assume any of
Kosygin's responsibilities until a month
after Kosygin's accident and a few days
after Tikhonov's promotion. Mazurov
was also the only Moscow-based Polit-
buro member to miss Marshal
Yakubovsky's funeral and the six
preliminary birthday award ceremonies
for Brezhnev in December.
Whatever the cause of Mazurov's inac-
tivity, Brezhnev appears to have used it to
weaken Mazurov and at the same time
bolster his own position. Brezhnev now
has for the first time a close ally in a
senior position within the Council of
Ministers. The effort to reduce Mazurov's
status, moreover, appears to have
accelerated.
Since his reappearance in September,
Mazurov has been subjected to a number
of protocol slights. Although his formal
ranking in leadership name lists has
declined only slightly during the year,
several pictures of the leadership appear-
ing in Pravda have suggested a reduction
in his status. More important, the group
picture of the leadership at the December
19 birthday award ceremony for Brezhnev
placed Mazurov at the far end of the
group, next to candidate Politburo
member Petr Demichev, another leader
who is apparently in political difficulty.
Tikhonov appears to have been given
responsibilities in the government that
have been exclusively Mazurov's since
1972. It is traditional for the second-
ranking government fig are to sign
decrees of the Council of Ministers in
Kosygin's absence. Mazurov performed
this function 21 times in the first half of
Page
1976 when he was the only first deputy.
Since June 4, however, Mazurov has per-
formed this function only once, on
November 25, even though Kosygin was
ill and absent from work from August un-
til late October.
By comparison, Tikhonov has acted for
Kosygin in this role on 21 occasions since
August 3. As Mazurov has been otherwise
publicly active since early September, his
apparent loss to Tikhonov of most of this
responsibility may mean a further decline
in his position.
Political Prospects
Mazurov has political assets that
provide him with some ability to defend
his position. He has, in conjunction with
others, blunted Tikhonov's advance. He
also has recently published an article in
Kommunist, his first important publica-
tion in four years. Finally, he has main-
tained a secure political base in
Belorussia. The leadership of the republic,
including the position of first secretary,
is dominated by men who held impor-
tant assignments in the republic or
obkom apparatus when he was party boss
there.
While there is no firm evidence yet that
a serious effort has been made to under-
mine Mazurov's political connections in
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JCI..KC 1
Belorussia, such a move would not be sur-
prising. The proceedings at the October
1976 plenum of the national party Central
Committee have already provided a hint
that Masherov, the republic first
secretary, may be in some political dif-
ficulty. Of all the candidates and full
members of the Politburo with provincial
responsibilities, only Masherov did not
speak at the plenum. His place was taken
by Tikhon Kiselev, the chairman of the
Belorussian Council of Ministers.
Test of Control
The recent death of a senior republic of-
ficial may provide a test of the control still
exercised by Masherov and Mazurov over
Belorussian affairs. The vacancy could be
used by Moscow to inject an "outsider"
into the Belorussian leadership in order to
tighten central control. This practice has
been used frequently in non-Slavic
republics, but Moscow has not interfered
in major personnel appointments in
Belorussia in this way over the last 20
years. Such intervention by Moscow
would mean a serious political setback for
the Mazurov-Masherov faction.
Moscow could, on the other hand,
make a slightly less threatening change by
realigning the existing Belorussian
leadership. A Belorussian official more
closely associated with the Brezhnev fac-
tion could be promoted. A. A. Smirnov, a
Belorussian party secretary with respon-
sibility for industry, is the only leader in
the Belorussian party bureau who appears
to have such connections. If he is
promoted to a senior position, such as
republic party second secretary, as a
result of the reassignment of other leading
figures, Mazurov's and Masherov's hold
on the republic party machine will be
damaged.
It remains uncertain whether the
Belorussian vacancy will be used as a
political lever against the positions of
Mazurov and Masherov in Belorussia, or
whether Tikhonov will finally achieve
Politburo status. Either development,
however, would appear to signal a further
weakening of the Belorussian group and
indicate that its long-term prospects in a
Brezhnev-directed transition are not
good.
Problems facing the North Korean government have ap-
parently led to increased tensions within the regime.
Economically, budgetary restraints seem called for; politically,
President Kim Il-song has clouded the succession issue by
grooming his own son.
The North Korean government is faced
with a variety of political, diplomatic, and
economic problems. There are signs that
limited discontent within the regime has
been one result.
President Kim 11-song is almost cer-
tainly concerned at present about several
matters:
? The succession question is cloud-
ed by his own decision to push the can-
didacy of his son.
? The country's prestige abroad has
been seriously eroded by its large
default on foreign debts just as the
dynamic growth of South Korea's
economy gains world attention.
? Despite growing ,production of
conventional land and naval weapons,
there have been some rumblings in the
North Korea: Mounting Problems
military about the need for
sophisticated weaponry to help main-
tain or strengthen the North's present
weapons advantage over the South
Korean armed forces.
Kim is sensitive to these domestic
problems and seems to be addressing
them in an orderly and unhurried way.
There is no persuasive evidence that the
problems are posing any serious con-
straints on his ability to cope with the im-
plications for North Korea of future
changes in the US presence in the South.
Kim and His Son
There is no reason to believe that
current tensions have posed a challenge to
the President's authority or caused a
significant modification of his policies.
His inner circle of advisers is composed of
long-time associates or persons with fami-
ly ties to him. All major policy initiatives
are either introduced personally by Kim
or attributed to him.
Kim nevertheless seems haunted by the
prospect that his legacy will not long en-
dure after his death. In a move un-
precedented in a communist nation, Kim
is grooming his 37-year-old son, Kim
Chong-il, as his successor. High North
Korean officials reportedly have con-
firmed young Kim's status as heir-ap-
parent to some foreign visitors, but there
have been no direct references in the
North Korean press to the son's future in
any capacity.
The President probably is moving slow-
ly on this matter because he needs time to
build his son's political acceptance and
legitimacy and also to avoid a lame-duck
status for himself.
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The son, for his part, is pushing a cam-
paign to strengthen allegiance to the elder
Kim "from generation to generation."
Young Kim may be making efforts behind
the scenes to move his own allies into in-
fluential positions in key in-
stitutions-such as the party, the military,
and the security forces. Some new faces
have emerged, but no wholesale changes
are ,-vident.
There probably is some opposition
within the party to young Kim's rise, and
that opposition may explain in part the
somewhat heightened tension within the
regime that has recently been reflected in
the output of its media. Most senior party
leaders are probably loyal to Kim 11-
song-he has systematically eliminated
his rivals over the years-but they may be
less enthusiastic about the younger Kim.
In any case, resistance is likely to re-
main largely passive as long as Kim senior
is around. Although he is overweight and
reportedly has a heart problem, for a per-
son nearing his 65th birthday Kim main-
tains a vigorous schedule of activities.
Economic Woes
North Korea's large hard-currency
foreign debt-it owes $1.4 billion to
private West European and Japanese
creditors-clearly is having an important
effect on the country's domestic economy.
It has virtually brought to a halt the
North's efforts to import increasing
amounts of Western machinery and
technology, and has seriously jeopardized
chances for any new acquisitions from the
West of the major plants that are critical
to the promotion of rapid industrial
growth.
Kirn II-song has little choice but to
scale back the ambitious economic
development plans associated with the
next long-term "prospective plan." He
has already designated 1977 a "year of
readjustment." There will doubtless be
further retrenchments in what was, in any
event, an unrealistic set of goals. The
regime's need to rethink its economic
priorities could have been a major factor
forcing a delay in the national party con-
gress that was to convene last year.
The extent to which North Korea's debt
problems have affected the country's
economic infrastructure is not clear.
There are some reports of industrial slow-
downs, power shortages, transportation
bottlenecks, and difficulties in the labor
force. These have been traditional
headaches in a highly centralized
economy that operates inefficiently.
Problems of internal allocation and dis-
tribution probably have intensified as a
result of the greater competition for
resources. The basic needs of the popula-
tion, however, are probably being met,
and so far the North's heavy industrial
sector has shown continued growth.
The foreign debt problem carries with it
political as well as economic costs. It un-
dercuts Kim's efforts to broaden North
Korea's international contacts and com-
plicates his efforts to isolate South Korea.
It also increases North Korea's
dependence on China and the USSR at a
time when Kim is anxious to maintain his
freedom of action. Kim seems to be
attempting to minimize this dependence
by trying to restore some of the com-
petitive equilibrium in relations with
China and the USSR.
Military Priorities
In recent months, the long-time con-
troversy among North Korea's military
leaders over the relative importance of
"men versus weapons" has taken on a
new dimension. Increased attention given
to this issue in the media probably reflects
renewed concern within the North Korean
military hierarchy over the need for
sophisticated weaponry to ensure that the
North can maintain its present ar-
maments advantage over the forces of
South Korea.
North Korea is dependent on outside
suppliers for aircraft, missiles, and ad-
vanced electronics. China can resupply
most of the equipment in the present
North Korean inventory, but only the
Soviet Union has the capacity
technologically to upgrade North Korea's
air arm and air defenses.
A North Korean military officer who
has publicly identified himself with
those emphasizing the importance of
"outside support and aid" was included
among the officials accompanying North
Korean Premier Pak Song-chol on a visit
he made to Moscow in late January.
Kim II-song is determined to maintain
his freedom to maneuver, and he has con-
sistently resisted reliance on the Soviets
when he perceives the political costs to be
too high. Premier Pak's visit produced no
new public agreements, and the visit was
accorded restrained treatment by both
sides. This suggests that the Soviets either
expressed little interest in meeting the
North's military needs, or attached con-
ditions the North Koreans were unable or
unwilling to meet.
The apparent increased political debate
within the regime could also mean that
the North's economic problems have
prompted a reappraisal of the con-
siderable budget allocation accorded the
North Korean armed forces and defense
industries. A shift of development
resources from military to economic uses
could result in a leveling out of the steady
increase in military production facilities
that has continued since the early 1970s.
Kim would almost certainly not permit
budgetary restraints seriously to hamper
the continued modernization of the armed
forces or to reduce troop strengths below
acceptable levels
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The French are heavily committed to developing
solar-electric systems and believe they have a head start in an
expected race with the US to sell solar power technology to
third-world countries.
France: Pushing Solar Energy Technology
France apparently intends to make a
serious effort to become the world's
leading exporter of solar energy
technology.
This desire probably is behind the tim-
ing of the much publicized symbolic
link-up in January of the French
64-kilowatt experimental solar power
system at Odeillo, in the Pyrenees, with
the national electric grid. It coincided
with the opening of a solar technology
meeting in Nice attended by represen-
tatives of 22 Middle Eastern and southern
European nations and 4 major inter-
national energy agencies..
The conference agenda contained a
proposal advocating complete technical
and scientific cooperation among the
countries of the Mediterranean Basin to
harness and utilize solar energy, including
creation of a pool of experts who would be
available to all member nations.
In an apparent bid to dominate any
joint effort, the French government
proposed the formation of a permanent
joint secretariat under its supervision to
coordinate future activities on solar
energy. The Italian representative reacted
by charging that the conference had
degenerated into a French commercial
venture. He accused the French of being
"neo-colonialist in spirit" in their com-
mercial solar energy operations. The
French have nevertheless formed the
secretariat and named their minister of in-
dustry and energy to head it.
The French believe that linking the
facility at Odeillo to the national power
grid has given them a head start in what
they predict will be a race with the US to
sell solar power technology to third- world
countries, particularly Arab states. The
French director of new sources of energy
said his country now has the advantage
because it "can already show operational
equipment," while the US is only
"presenting futuristic projects."
Although the French have scored a first
in solar energy use, the connection of the
low-power experimental facility at
Odeillo to the power grid is basically a
ploy to attract potential foreign customers
and influence domestic budget
deliberations. In the capability to
generate commercial solar power on a
large scale, France trails Italy; last year,
the Italians announced that fac-
tory-guaranteed solar power systems of
100-kilowatt and 1-megawatt capacity
were available for order, although they
could not be delivered for two to three
years.
The Odeillo facility has an array of 63
flat heliotracking reflector mirrors, each
with a surface area of 45 square meters.
These direct sunlight onto a fixed
parabolic concentrator that consists of
9,500 small mirrors. The concentrator
focuses the radiation on a sealed boiler
containing a special heat-carrying fluid
that circulates through a heat exchanger,
boiling water and creating steam to drive
a turbogenerator and produce electricity.
A commercial solar power facility
would use the simpler, more efficient
method of focusing individual tracking
concentrator mirrors directly on a boiler.
The French say they will experiment
with the working-model solar electric sta-
tion at Odeillo for the next year in order
to learn how to manage a solar plant. At
the same time, however, they will con-
tinue their development program. Test
mirrors are being ordered for a $30-
million experimental 10-megawatt
solar-thermal power plant to be con-
structed in southern France beginning in
1979. The French expect to build several
more experimental plants before con-
structing a commercial facility.
Export Prospects
The French are heavily committed to
developing solar electric systems, both
solar-thermal and photovoltaic, for the
export market. They have contracted to
sell 20 1-kilowatt solar water pumps and a
25-kilowatt solar-electric turbine pump-
ing system to Mexico; they also are
marketing the smaller pump in black
Africa. The government has subsidized
three French firms working on prototypes
of a 1-kilowatt solar generator to replace
diesel generators in remote areas and ex-
pects to export a commercial version to
developing nations.
The French are developing
100-kilowatt photovoltaic arrays for the
Iranian rural electrification program.
France also has joint solar energy
development agreements with Brazil,
Egypt, Algeria, and Saudi Arabia. The
United Arab Emirates has sh w
in a similar agreement.
.
15 WEEKLY SUMMARY Mar 4, 77
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Developing countries outside OPEC suffered badly follow-
ing the oil price increases of 1973 and 1974. The prospects for
1977 are only marginally better, and the US and other
developed states will be pressed to review their aid efforts.
Economies of Non-OPEC Developing States
Developing countries that are not
members of the Organization of
Petroleum Exporting Countries have been
through some hard times since the sharp
oil price increases of 1973 and 1974.
Although the continuing boom in their
commodity exports softened the blow
from OPEC price hikes for a while, their
economic growth turned down markedly
in 1975, and their current-account deficit
rose to an unprecedented $30 billion, in-
cluding official transfers.
Efforts by these countries to maintain
economic activity and avoid domestic
political problems resulted in record net
borrowing of $45 billion from official
sources and private capital markets in
1974 and 1975. Despite the vigorous use
of restrictive measures in most countries,
the average inflation rate for the group as
a who!e soared from 10 percent in 1972 to
30 percent in 1974 and 1975.
In 1976, these developing countries
began to show some improvement. The
average growth of their combined gross
national product exceeded 5 percent,
almost reaching the 1961-1973 average.
Export gains directly stimulated growth
and also permitted somewhat more ex-
pansionary government policies.
Preliminary data point to a decline in the
current-account deficit to roughly $20
billion, including official transfers.
Foreign exchange reserves recovered to
near the equivalent of three months' im-
ports, the ratio that had prevailed in the
1960s.
At the same time, inflation continued at
a high rate in these countries, and their
governments continued to make heavy use
of private capital markets. The more
prosperous developing countries secured
an additional $10 billion to $12 billion in
Eurocurrency loans and other private
credits, adding to already sharply in-
creased foreign debt levels.
The pause in economic recovery in the
developed countries, the increase in oil
prices in January, and stabilization
policies in a few of the developing coun-
tries will probably cause some current-
account deterioration and a slowdown
in real growth in 1977.
Slower expansion, coupled with steady
improvement in financial management in
several key Latin American countries,
should mean generally lower inflation.
Meanwhile, with debt-service payments
sure to rise sharply in 1978, those develop-
ing countries with relatively easy access to
foreign private capital will try to refinance
their debt with longer-term credits.
The immediate outlook is not threaten-
ing, but trouble spots could develop in the
next 6 to 18 months. Brazil's situation has
tightened sharply. In the face of a
quadrupled oil bill, mixed export
prospects, and much higher inflation
rates, Brazil until recently has resisted a
shift to policies to restrict demand.
Because the government now appears
determined to come to grips with foreign
payments and inflation problems, 1977
will probably be a time of downward ad-
justment; early projections are for slow
growth in GNP after growth of nearly 9
percent in 1976.
Mexico's outlook appears brighter at
first glance largely because of rising oil
production. Economic growth in 1977 will
be limited, however, by the need to con-
tain imports through credit, fiscal, and
wage controls. Questions being raised
among foreign bankers may complicate
short-term access to private capital
markets, inducing Mexico to turn to the
US and other official lenders for help. To
improve bankers' confidence in Mexico's
repayment capabilities, the government is
now beginning to publicize the magnitude
of recent oil discoveries.
Countries that depend heavily on con-
tinued access to export and capital
markets in the West could also be blown
off-course by protectionism or stiffer com-
petition for private credits. The cir-
cumstances of the poorest developing
countries-such as India, Bangladesh, and
Kenya-will continue to depend largely
on fluctuations in weather and official aid
flows.
Developed Countries' Role
In this changing international environ-
ment, the US and other developed coun-
tries will be under pressure to review their
aid efforts and consider new instruments.
Requests are likely for expanded support
of the International Monetary Fund's
short- and medium-term financing
facilities and for more flexible food aid
arrangements.
The most serious problems may arise
with respect to the more advanced
developing countries. The amount of
private money funneled to them through
the US and Eurocurrency markets will
depend on current banker perceptions of
their-credit-worthiness and on the level of
demand from developed country
borrowers. At present, governments in the
developed countries have little influence
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Secret
Secret
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