WESTERN EUROPE CANADA INTERNATIONAL ORGANIZATIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00865A000600120001-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 14
• Document Creation Date: December 12, 2016
• Document Release Date: December 27, 2001
• Sequence Number: 1
• Publication Date: March 20, 1975
• Content Type: NOTES

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Secret
No Foreign Dissem
Na
1TL~F a
Western Europe
Canada
International Organizations
Secret
No. 0157-75
March 20, 1975
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9 D
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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
of E. 0. 11652, exemption category:
? 5B (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.
EC Finance Ministers Debate Internal
Exchange-rate Problems . . . . . . . . . . . . 1
EC Commissioner Soames Asked to Peking . . . . . 4
Lisbon Delays Assembly Vote Thirteen Days. . . . 5
Norwegian Leftists Form New Party. . . . . . . . 7
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Portuguese Government's Ban on
Political Parties a Hot Issue in Italy . . . .10
March 20, 1975
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25X1A
EC Finance Minister Debate Internal
Exchange-rate Problems
In a series of meetings last Tuesday, EC
finance ministers discussed several problems
relating to floating exchange rates and decided
to seek consultations with the US on ways of
spurring Western economic growth.
The ministers agreed to seek discussions
with the US, apparently in order to ask for
more stimulative US economic policies. The EC
countries feel that their own efforts must be
aided by more aggressive US rnflationary poli-
cies in order to stimulate a significant turn-
around in European economic activity this year.
In fact, most EC members are still being quite
cautious in applying stimulative measures to
avoid rekindling inflationary pressures. De-
spite this, some of them have been critical of
what they feel has been excessive US concern
with inflation at the expense of economic grow-
th and, consequently, the size of their export
markets.
Those EC ministers involved with the oper-
ation of the 7-country European joint float met
with the non-EC float members and Swiss repre-
sentatives to discuss the inclusion of the Swiss
franc in the currency group. The Swiss, who
hope to relieve upward pressure on the franc and
maintain a competitive position with their Euro-
pean trading partners, have apparently made a
formal application for discussions on the sub-
ject. Some EC members of the joint float, espe-
cially the UK, Italy, and Denmark, are apprehensive
March 20, 1975
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that Swiss inclusion in the band may cause up-
ward pressure on it, making the reentry of those
EC currencies still floating outside the band as
well as the continued maintenance of weaker EC
currencies in the band more difficult. Despite
these objections, it is quite possible that the
Swiss will reach agreement with the current
members or link up with the currency group either
formally or informally within the next month or
two.
The French, who left the European joint
float a year ago, are also apparently seeking
to rejoin, but on their own terms. In response
to a demarche by the Belgians, Paris expressed
an interest in rejoining the joint float if the
current 2.25 percent margins of fluctuations
between currencies could be expanded to 4 or
4.5 percent.
It is unlikely, however, that the other
members will be willing to accept the French
terms since it was the disenchantment with the
IMF decision to broaden international margins
to 4.5 percent on. December 10, 1971 that pro-
vided the impetus for the implementation of
narrower margins between EC currencies.
In another move related to exchange-rate
problems, the EC finance ministers decided to
revamp the "European unit of account" to make
provision for exchange-rate changes between
member currencies. The change will, in effect,
lead to increased payments by those countries
whose currencies depreciate relative to other
EC currencies. :Because the use of a flexible
payments system would cause political diffi-
culties--especially for the British--if applied
at present to sensitive areas such as agricul-
ture and the Community budget, the Council de-
cided to limit the use of the revamped unit to
March 20, 1975
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the European Investment Bank and European
Development Fund. Further applications will
have to await the final settlement of problems
such as Britain's position in the EC. (Secret
No Foreign Dissem/Controlled Dissem)
March 20, 1975
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25X1A
EC Commissioner Soames Asked to Peking
The projected visit of Christopher Soames, the
EC commissioner for external affairs, to Peking in
May will mark another step toward establishing formal
relations between the EC and China. The Soames visit
is being made at the invitation of China's Institute
for Foreign Relations.
Peking, having already officially accepted a Com-
mission memorandum proposing an EC-China trade agree-
ment, has acknowledged the Commission's right to speak
for the community in trade matters. The Soviet Union
has been reluctant to concede this much, despite the
EC policy that gave the Commission the right to negoti-
ate trade accords with communist countries since the
beginning of this year.
The Soames visit is a further sign that Peking and
the West Europeans want to strengthen relations. This
was exemplified earlier this year by the visits to China
of Dutch Foreign Minister Van der Stoel and West German
political leader Strauss. Other West European leaders
are expected in the sparing, and Chinese Vice Premier
Teng Hsia-ping may visit Paris in May.
During Van der Stoel's visit, Chinese Foreign Mini-
ster Chiao Kuan-hua said that China was seriously con-
sidering negotiating a trade agreement with the EC and,
according to the Dutch, appointing an ambassador to the
EC as well. (Confidential)
March 20, 1975
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25X1A
Lisbon Delays Assembly Vote Thirteen Days
The 24-man Revolutionary Council has announced
a two-week delay in the constituent assembly
election. It will now be held on April 25, the
anniversary of the overthrow of the Caetano regime
by the Armed Forces Movement; the electoral campaign,
due to begin today, was put off until April 2.
A statement by the Communications Ministry on
Tuesday had hinted that the election might be
postponed from the scheduled date of April 12--not
because of recent political turmoil but because
of "technical problems." The Council indicated
that disagreement among political parties over
party symbols to be printed on the ballots had
caused the delay. The Communists reportedly are
afraid that the use of variations of the hammer
and sickle by extreme left-wing groups might confuse
Communist voters.
When the Armed Forces Movement assumed power,
it promised an election for a constitutent assembly
within a year. Another postponement, however,
would indicate that the Movement does not intend
to hold elections at all.
In a related development, the Movement
increased its control over the election by remov-
ing the 14 political party representatives from
the National Electoral Commission, leaving 14
government and military officials to oversee
the election. A Popular Democratic Party leader
has told a US embassy official that the move
might turn out for the best, however, because
vocal representatives of the extreme left were
holding up the work of the commission. (Con-
f ide n ti a 1)
March 20, 1975
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25X1A
Norwegian Leftists Form New Party
Four of Norway's leftist parties papered
over differences at a "unity congress" from
March 14-16 and decided to merge into the Social-
ist Left Party.
The four parties--the Communists, Socialist
Peoples Party, Democratic Socialists, and In-
dependent Socialists--made their debut in the
parliamentary elections of 1973 as the Socialist
Election Alliance and won 16 of 155 seats.
At an Alliance congress last April, the
parties decided to form one large "radical"
party in 1975. In the interim, ideological
differences threatened the merger. A declara-
tion of principles, drawn up at the "unity
congress," omitted important ideological ques-
tions pending further discussion.
Although the Socialist Left Party now has
been formed and a constitution has been worked
out, the component parties have not dissolved.
They have promised to do so, however, before
the end of 1976. This would mark the first
time a communist party has voluntarily dis-
banded to merge with another leftist group.
Despite ideological differences still to
be ironed out, the Socialist Left Party is
united in opposition to NATO, the EC, and most
of US foreign policy. The new party will contin-
ue the work of the Socialist Election Alliance--
exerting leftist pressure on Norway's ruling
Labor Party. (Confidential)
March 20, 1975
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Portuguese Government's Ban on Political Parties
a Hot Issue in Italy
The recent ban on three political parties
in Portugal--including the Portuguese Christian
Democrats--has become a major issue in Italy,
where the move is being cited by the Italian
Christian Democrats--the dominant party in
Italy--as evidence of what happens when a
communist party acquires substantial influence
in the government.
The Italian Christian Democrats on Tuesday
withdrew their observers from the Communists'
national congress, now meeting in Rome, and
accused Communist chief Berlinguer of failing
to condemn the Portuguese events in his speech
to the congress. The official Christian Demo-
cratic newspaper, meanwhile, front-paged a bitter
denunciation of the Portuguese decision and
concluded that "communism has not changed."
Italy's Communists are clearly aware of
their vulnerability on the Portuguese issue.
Berlinguer treated the matter gingerly in his
speech opening the congress; he was at pains
to stress that the Portuguese situation was
"entirely different" from that of Italy and
that the path chosen by his party was also
different.
Berlinguer's speech was remarkable, more-
over, for its unprovocative and conciliatory
tone. It was obviously designed to calm fears
that the Communists are a threat to Italian
democracy or, in the international sphere,
to US interests. He emphasized, for example,
that his party no longer advocates Italian
withdrawal from NATO and said that a US voice in
world affairs was "indispensable."
March 20, 1975
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Thus, the withdrawal of the Christian
Democratic observers the next day had a stunning
effect and reportedly cast a pall over that session
of the congress.
The Italian Communists have viewed the
Portuguese situation as a test case of a communist
part sharin er in a NATO country. According
to they advised the Portuguese
Communists a eowas year to follow a cautious
policy and to avoid trying to destroy the country's
traditional-type Western Europe government. The
Italian Communists probably will try to justify
the ban on the Portuguese Christian Democrats
by recycling Lisbon commentary which accuses
them of being associated with the abortive coup.
(Secret No Foreign Dissem)
March 20, 1975
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