WESTERN EUROPE CANADA INTERNATIONAL ORGANIZATIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00865A000400190002-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 18
• Document Creation Date: December 12, 2016
• Document Release Date: December 31, 2001
• Sequence Number: 2
• Publication Date: February 24, 1975
• Content Type: NOTES

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Secret
No Foreign Dissem
gu~p~ mau~%o
Western Europe
Canada
International Organizations
Secret
OCI-0138-75
February 24, 1975
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CONTROLLED DISSEMjNO DISSEM ABROAD
BACKGROUND USE ONLY
Warning Notice
Sensitive Intelligence Sources and Methods Involved
NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
Classified by 005827
Exempt from general declassification schedule
.-)f E. 0. 11652, exemption category:
4 58 (1), (2), and (3)
Automatically declassified
on: Date Impossible to Determine
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WESTERN EUROPE - CANADA - INTERNATIONAL ORGANIZATIONS
This publication is prepared for regional specialists in the Washington com-
munity by the Western Europe Division, Office of Current Intelligence, with
occasional contributions from other offices within the Directorate of
Intelligence. Comments and queries are welcome. They should be directed to
the authors of the individual articles.
Plan Ready on Military Role in
Portugal . . . . . . . . . . . . . . . . . 1-2
Spanish Army Appears Split or, Police
Role . . . . . . . . . . . . . . . . . . . 3
New Danish Government Program. . . . . . . . 4-5
Bilderberg Conference To Discuss
Inflation . . . . . . . . . . . . . . . . . U
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Italian Republican Leader Softens Line
on Communists . . . . . . . . . . . . . . . 9-10
Britain's Unemployment Rate Climbs . . . . . 11-12
A Potpourri of Energy Developments in
Western Europe . . . . . . . . . . . . . . 13-14
February 24, 1975
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Plan Ready on Military Role in Portugal
The Armed Forces Movement's 200-member General
Assembly has approved a plan to formalize the mili-
tary's role in the government's decision-making
process.
Reliable sources have told US embassy officials
that a seven-point program was approved by the assembly
last, week and is now being discussed with the military
rank and file and political party leaders. The pro-
gram provides that:
--The Movement will continue to guide Portugal's
political process indefinitely.
--The recently announced economic plan cannot
be made more conservative, but only more "pro-
gressive."
--The campaign for constituent assembly elections
will not begin on March 3 unless the political
parties have agreed on minimum standards for
their platforms set by the Movement.
--Presidential candidates must be approved by
the Movement.
--The future constitution will'be based on the
program of the Armed Forces Movement that was
published shortly after the coup last April.
--The new constitution will grant legislative
powers to the Council of State, now a rubber-
stamp body that approves all legislation.
The Council will be controlled by the military,
and the Movement will help select the civilians
that comprise one third of the body.
--The Movement will choose the ministers of
defense and economy after a constitutional
government is elected.
February 24, 1975
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Although the Movement has repeatedly insisted
that it does not intend to install a military
dictatorship, Movement officers have been impatient
with the bickering among political parties and
believe that they must keep a firm hand on Portugal's
progress. They fear an inexperienced civilian
government might destroy the changes they have
already instituted. Continuing dissension might
precipitate a return to a right-wing system and
place Movement officers in jeopardy.
The program is certain to provoke opposition
from Portugal's civilian leaders, although even
moderate politicians recognize that the Movement
must have some role in order to preserve security
and to guarantee basic civil liberties. Moderates
will resist, however, those parts of the program
they regard as an overly active intervention by
the military in politics.
Both Socialist and Popular Democratic leaders
25X1
were critical of the new "legislative"
powers
given
to the seven-man military junta earlier
this
month.
Since then, Movement members, including
Prime
Minister
Goncalves, have retaliated by attacking
those
who
have warned against the possibility of a "civil
war" and of divisiveness within the Movement. These
attacks were clearly directed at Socialist Party
leader Snares and other who have spoken out on these
lines.
On Friday, Soares abruptly canceled a trip
to Bonn for "internal reasons." Scares may have
decided he needs to concentrate on his party's
response to the assembly's plan to formalize the
Movement. (Secret)
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Spanish Army Appears Split on Police Role
The arrest of two army officers in Barcelona
last week suggests there is serious disagreement
within the army over the role the military should
play in maintaining order in Spain.
According to the most plausible account, the
two officers had been urging colleagues to pressure
the captain general of the Barcelona military district
to refrain from using the army to maintain public
order. They apparently also pushed for an organized
protest against the disciplining of a fellow officer
who disobeyed a direct order to divulge the names
of subway strikers in Barcelona.
The arrests have given rise to speculation
that a military plot may be under way against the
Franco regime. Although there is little support for
such speculation, it will add to political uncertainty
in Madrid. High-ranking military officers have told
US embassy officials that'the affair*is an'isolated
incident, not evidence of a dissident movement. They
acknowledge that the arrests will be misconstrued,
however, and claim that a simple reprimand would have
sufficed. Indeed, the arrests indicate that the
government is both nervous and determined to nip in
the bud any military dissidence. (Confidential)
February 24, 1975
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New Danish Government Program
Danish Prime Minister Jorgensen's economic
proposals, announced to parliament on February 20,
aim primarily at attacking unemployment.
Jorgensen labeled the depressed construction
industry the major cause of the country's highest
unemployment rate in 20 years and proposed a doubl-
ing of new housing construction. Jorgensen's plan
also calls for an easing of spending limitations
on local and provincial governments to increase
public works projects. The export industries and
aid to the unemployed will also get boosts under
the new program.
The new budget will be similar to the Hartling
government's budget. The tax reduction measures,
which the S~ocia.l Democrats opposed when they were
introduced by Harting last May, will be retained.
Jorgensen said savings measures to offset the re-
duced tax will be more limited than the Hartling
government would have liked and predicted a larger
deficit for 1975.
Foreign policy received only brief mention
from Jorgensen. He said that foreign, defense,
and EC policies would be carried out along tra-
ditional lines based on Denmark's membership in
the UN, NATO, and the EC.
The government's program .is.moderate b;y
Social Democratic standards, reflecting Jorgensen's
dilemma in the face of tough parliamentary opposi-
tion. The Social Democrats control only 53 of the
179 seats in parliament. The Social Democrats' pet
"economic democracy" plan to socialize Denmark by
gradually turning over ownership of businesses to
employees will have to be shelved for the time
being.
February 24, 1975
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Jorgensen's heavy emphasis on domestic affairs,
particularly the economy, shows where Danish priorities;
lie. Public impatience with government leaders and
frustration over the government's inability to turn
the economy around have pushed foreign affairs into a
secondary role. (Confidential)
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25X1A
Bilderberg Conference To Discuss Inflation
The twenty-second Bilderber-g conference, an
annual gathering of US and European business,
scientific, and political leaders for an unofficial
exchange of views on matters of international con-
cern, will be held at Ismir, Turkey in April. For
the discussions this year on "Inflation and its
Effects," the group will include more central bank
directors and trade union officials than usual.
British Conservative leader Margaret Thatcher has
also been asked to attend. Dutch Prince Bernhard,
who initiated the series of meetings in 1954 at
the Bilderberg hotel in the eastern Netherlands,
chairs the annual sessions, at which main speakers
are allowed only ten minutes and others are limited
to five. (Unclassified)
February 24, 1975
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9
Iceland Reasserts LOS Position
Iceland informed a meeting of the Nordic
Council in Reykjavik last week that it intends
to proceed with plans to extend its territorial
waters to 200 miles later this year. To the
disappointment of the Icelanders, the other
Nordic countries did not express support for
Iceland's position and limited themselves to
expressions of "understanding" for Reykjavik's
special position.
Protection of the vital fishing industry
is an emotional issue in Iceland and probably
the principal political topic. Disputes over
fishing rights led to the 1972-73 Cod War with
the UK and to current sparring with the West
Germans. The present government is anxious to
prove that it can be just as tough as the pre-
vious leftist coalition on the! fishing issue
and will take every opportunity to press its
position.
Iceland will not take any decisive action
until the outcome of the Law of the Sea Con-
ference, scheduled for March 17-May 10, is
known. If the conference fails to reach an
agreement, Reykjavik will probably act unilat-
erally. (Confidential No Foreign Dissem)
February 24, 1975
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Italian Republican Leader Softens Line on
Communists - ---~ ._
According to press reports, Deputy Prime Minister
Ugo La Malfa is drawing fire from conservative Italian
politicians for his recent statements suggesting that
the Republican Party--which La Malfa heads--should
not rule out some form of governmental collaboration
4 with the Communists after the nationwide local elections
in June.
I
La Malfa has recently noted that the local elections--
which will provide the clearest measure of party strengths
in the last three years--will inevitably be followed by
a reassessment of the political situation. He says
that it is :impossible to predict how the dominant
Christian Democrats will respond to the Communists'
renewed offer of collaboration until the election
results are known. In his latest remarks, La Malfa
seems to be saying that, in any event, his party will
of make a firm decision on the Communist question
ntil after the elections. Since he does not exclude
priori the possibility of an agreement with the
ommunists, conservatives are accusing La Malfa of
acitly endorsing one.
La Malfa is a committed Atlanticist and a
professional economist who frequently clashes with
the left on economic policy. According to
however, La Malfa has had at least -
ranging private discussions since last fall with
Communist leader Enrico Berlinguer, once at his own
request and once at Berlinguer's.
Such contacts between the Communists and the
governing parties are not unusual, but the La Malfa-
Berlinguer discussions were notable for their generally
non-ideological tone. The two differed on some points--
the effects on the economy of recent labor-management
agreements, for example--but they were in accord on a
number of other issues. They agreed that the Christian
Democrats are unable to make the hard choices necessary
for economic reform. La Malfa criticized the Socialists,
moreover, for acting like the Christian Democrats and
February 24, 1975
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4 failing to live up to their reformist image; Ber-
linguer has directed the same criticism at the Socialists
in recent speeches.
The overall tone of the talks was conciliatory.
Berlinguer assured La Malfa that the Moro government
did not have to worry about hard opposition from the
Communists, and La Malfa offered to provide the
Communist leader with some economic data that his
aides could not obtain from government sources.
A softer stance on the Communist issue by
the Republicans--the smallest of the four center-
left coalition parties---would not be a decisive
factor in the deliberations of the larger parties.
Because they are a relatively homogeneous party of
intellectuals, however, the Republicans enjoy
influence out of proportion to their size. A
less hostile Republican attitude toward the Communists
would thus help to legitimize the latter's claim to
a direct voice in the government.
In recent meetings, the other three coalition
parties--Christian Democrats, Socialists, and Social
Democrats--have flatly ruled out any concessions to
the Communists. La Malfa's equivocal remarks may
indicate a less ideological view of the Communists,
but they almost, certainly reflect as well his fear
of being left out in the event of rapprochement
between the Christian Democrats and Communists.
(Secret No Foreign Dissem/Controlled Dissem/No Dissem
Abroad/Background Use Only)
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25X1A
Britain's Unemployment Rate Climbs
The labor situation in Britain has
worsened considerably in the past two months.
Unemployment now stands at 3.4 percent of
the labor force and job vacancies have declined
dramatically. In addition, there has been
a significant increase in the number of persons
working fewer hours than normal, particularly
in the automobile industry, since the official
tally was taken on February 10.
The head of the nation's largest trade
union recommends that the nationalized industries
broaden work programs, and that the government
promote more housing construction, initiate
a nationwide "buy British" campaign, and impose
selective import controls.
British government officials are concerned
about the mounting unemployment, but in recent
statements both Employment Secretary Foot
and Chancellor of the Exchequer Healey noted
that British umemployment is still lower than
in other EC countries and the US. Healey,
who has repeatedly chastised British workers
for making large wage demands, warned that
if Britain hopes to avoid the high levels
of unemployment in the US and West Germany,
three measures will be necessary:
--a lower level of wage settlements,
with strict adherence to the social contract
guidelines;
--a more extensive program of industrial
training because there is a shortage of skilled
workers;
--new investment where there is a serious
shortage of plant capacity.
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Foot, in commenting on Britain's 20 percent
inflation rate, said that the government later
this year may decide to use restrictive budgetary
measures, such as increased taxation, to curb
mounting inflationary pressures. Such measures
should reduce imports and allow resources
to be diverted to export industries and hopefully
increase employment in this sector.
Foot said he believes that the social
contract--the informal pact under which the
unions pledge to restrain wage demands in
return for social legislation--is still viable
despite the miners' settlement which calls
for wage increases of more than 30 percent.
He said the government could not possibly
resort to statutory controls, although there
are some cabinet members who favor such measures.
(Confidential No Foreign Dissem)
February 24, 1975
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A Potpourri of Energy Developments in
Western Europe
Austrian Chancellor Bruno Kreisky announced
last week that a European-Arab symposium would
be held in Vienna on a mutually convenient date
to discuss pricing policy and multinational oil
company profits. Kreisky made the announcement
upon his return from a fact-finding visit to
North AfrJca on February 16 and implied that
only Socialist leaders from Europe would be
invited to meet Arab political leaders and techni-
cal experts. During a meeting of Socialist
leaders from 20 countries held in West Berlin on
February 22, Kreisky reiterated his intention to
hold such a symposium.
A member of the Irish parliament claimed his
government "snubbed" an offer from Libya to lend
the country "hundreds of millions of dollars"
and provide oil at preferential prices. Senator
Noel Browne of the Irish Labor Party charged
that Irish foreign ministry officials failed to
tell Foreign Minister Fitzgerald of the offer.
Fitzgerald issued a brief rebuttal claiming that
the offer, reportedly made by Libya's roving
ambassador, Dr. Hamoul, was "inappropriate" and
should have been made through government-to
government channels.
The West German government announced Friday
that the f st high-grade gas deposits have been
found in the German sector of the North Sea. The
size of the gas fields cannot be determined, but
"gestimates" range as high as 80 billion cubic
meters. The find was made by a consortium of
nine German, French, British, and American
companies.
The British are worried that the developing
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international oil glut may drive down the price
of oil. In order to make the British oil venture
in the North Sea profitable and pay off the
country's massive foreign debts, the price of oil
must remain high. Soaring production costs,
uncertainty over the Labor government's policies,
and a tight credit situation threaten to slow
down or even halt exploitation of the off-shore
fields. (Confidential No Foreign Dissem)
February 2.4, 1975
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Secret
Secret
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