WESTERN EUROPE REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00912A001700010010-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 26
• Document Creation Date: December 20, 2016
• Document Release Date: November 29, 2005
• Sequence Number: 10
• Publication Date: March 7, 1979
• Content Type: REPORT

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Assessment
Center
Western Europe
Review
State Department review completed
Secret
RP WER 79-010
7 March 1979
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WESTERN EUROPE REVIEW
7 March 1979
CONTENTS
Italy's Government Crisis: A Tentative Prognosis
Italy's political crisis could lead to a
significantly larger and more di ect ov-
erning role for the Communists.
NATO: The Transatlantic Dialogue
NATO's West European members urged the
United States to increase its purchases
of West European weapons and defense-re-
lated items at last week's continuation
of the transatlantic dialogue.
European Communist Reactions to the Sino-Vietnamese-
Each of the three leading European Com-
munist parties--the Italian, the French,
and the Spanish--has staked out a posi-
tion on the Indochina conflict designed
to balance disapproval of the Chinese at-
tack on Vietnam with previous positions
on Kampuchea and, at the same time, to
preserve an image of independence from
the Soviets.
Kampuchean War
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Norway: The Politics of Oil
Norway's surplus oil revenues clearly
have been a bonanza for the Norwegian
economy, but they have also brought on
a host of unforeseen problems.
Canada: Tory Victory Seems Certain in Alberta
Election
Premier Peter Lougheed has called the
voters of resource-rich Alberta to the
polls on 14 March in an election certain
to return his Progressive Conservative
(Tory) government to power for the third
straight time.
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1 7
Italy's Government Crisis: A Tentative Prognosis
Italy's political crisis has a long way to run, and
any predictions of its outcome are necessarily specula-
tive. Analysis of the power relationships between and
within the principal parties, however, brings one point
into sharp relief: there is little prospect that the
Italian Communists can be denied a significantly larger
n1~A _ mow..-. '34, --L ----- -
This assessment rests on two key assumptions:
-- The Socialist Party will be unable to re-
solve the internal differences and other
problems that prevent it from joining
the Christian Democrats in a non-Communist
government.
-- The crisis is likely to lead to an election
that will not appreciably-alter relative
party strengths.
Electoral Stalemate
Most political leaders are not enthusiastic about
an election. The Christian Democrats, however, insist
that the 1976 election gave them a mandate to keep the
Communists out of government, and they show no sign of
yielding to Communist demands for Cabinet posts. Com-
munist Chief Berlinguer remains convinced that to ac-
cept less would leave his party in the same politically
exposed position it occupied under Prime Minister
Andreotti, when the Communists were pledged to support
the government in Parliament but had only a consultative
role in policymaking. Only the Socialist Party could
break this deadlock--by forming a majority with the
Christian Democrats--but the Socialists are unwilling
to do so if the Communists are left free to criticize
from the opposition. These factors make an early elec-
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Election forecasting is more art than science in
Italy, where opinion polls are seldom accurate measures
of voter sentiment. Moreover, some observers believe
the outcome might be different if the contest is held
after the European Parliament election on 10 June rather
that before; specifically they believe the Socialists
would have a somewhat better chance if the Euro can vote
occurs first. But most responsible timates
predict that whenever national elections are held, the
Communist vote would fall by a few points--but not below
30 percent--and the Christian Democratic tally would
rise slightly--but would remain around 40 percent. Es-
timates on the Socialists vary, although hardly anyone
says they would score large gains. Most observers be-
lieve they would hold their own--9.6 percent in 1976--
or gain slightly. Many Socialists, however, fear they
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Of the seven smaller parties that in 1976 took about
18 percent of the vote, the Christian Democrats could
not construct a workable alliance with the rightwing or
leftwing extremists, who might attract as much as half
this vote. The remaining small parties probably could
not win enough to give the Christian Democrats a majority
without either Socialist or communist support.
Thus, a new election will almost certainly confirm
the predominance of the two major parties, leaving the
Christian Democrats with essentially the same options
they have today.
Divided Socialists
But as the current lineup suggests, the Christian
Democrats' basic problem is not arithmetical. It is a
political problem that centers on the failure so far of
the Socialists to establish themselves as a reliable
alternative to the Communists.
The Socialists occupy what seems to be a fatally
ambivalent position. Even though they were allied with
the Christian Democrats in the government from 1963 to
1974, they have never been able to break clear of the
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Communists, with whom they share power in local govern-
ments representing about half of Italy's population.
To some extent, the ambivalence reflects concern that
too exclusive an association with either major party
would lead to the Socialists' absorption or demise. It
also mirrors a deep and historic split in the party be-
tween those who view the Communists as their natural
allies and those who are willing to work with the Chris-
tian Democrats.
Socialist Chief Craxi is in the latter category.
He seemed during the last year to be giving his party
new vitality, primarily by rallying Socialists around
the one theme on which they could all agree--Socialist
"autonomy." He hoped that, given enough time, this
policy would allow him to broaden the party's electoral
appeal, distinguish it more clearly from the Communists,
and lay the basis for renewed cooperation with the Chris-
tian Democrats.
But Craxi's efforts had gained no real momentum
when Berlinguer broke with the Andreotti government last
month. Berlinguer's move deprived Craxi of the time he
needed and forced the Socialists once again to choose
between the Communists and the Christian Democrats--an
agony they were spared by the inclusion of all three
parties in Andreotti's parliamentary majority. Since
then the divisions in the Socialist Party have resurfaced,
and Craxi has been forced to adopt the sort of contra-
dictory stance that has always undermined socialist
credibility--claiming Socialist "autonomy" on the one
hand while asserting on the other that the Socialists
cannot join an government from which the Communists
are excluded.
Berlinguer has thus already achieved one of his
goals in bringing Andreotti down; he has demonstrated
how little tangible progress Craxi has made and shown
that the Socialists are still too weak for the Christian
Democrats to lean on. Craxi's hand would be strengthened
in the highly unlikely event of a sharp rise in the So-
cialist vote, say to about 14 or 15 percent. Even then,
however, the Socialists would almost certainly want some
arrangements ensuring that the Communists would share
any blame for unpopular government decisions. So when
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the dust settles, the Christian Democrats will probably
still have as their only alternative to Berlinguer a So-
cialist Party that sa s it will not enter the government
without him.
Outlook
There are three possible outcomes to the current
crisis:
-- Communist entry into the government.
-- A Communist return to the opposition.
A compromise solution that denies the
Communists Cabinet seats but gives
them a substantial and increased voice
in policymaking and implementation.
If the Christian Democrats retain their plurality
in an election, they will almost certainly have done so
by relying once again on a tough anti-Communist campaign.
They are therefore likely to emerge with the same dilemma
they have today: in need of Communist cooperation but
pledged to keep the Communists out of the government.
This dilemma is likely to be compounded by deep divisions
in the Christian Democratic: Party over how far to go in
bargaining for Communist support.
It might appear that the Communists could simply
force their way in, using the party's labor muscle and
its apparent ability to cause widespread economic dis-
ruption. But it will not be that easy. The Communists
are highly skilled at choosing issues with which to pres-
sure the government, but they must be careful not to
throw their weight around in ways that damage their re-
sponsible image--one of the main factors behind the Com-
munists' strength and their broad appeal.
In fact, these constraints on the Christian Demo-
crats and Communists are likely to give the smaller
parties some leverage even if they perform poorly in an
election. Thus the election would not signal an end to
political maneuvering.
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The only result that would slice through all these
complications--and bring the Communists immediately into
the government--would be one that featured minor party
losses large enough that the Christian Democrats would
have no alternative to a coalition with the Communists.
But that would require a greater polarization of the
electorate than seems likely at this point.
Political leaders will thus probably find themselves
once again in search of a formula that allows the Com-
munist Party to claim it is part of the government and
the Christian Democrats to claim it is not. It will be
more difficult to find such a formula this year, however,
because the Communists have been convinced by experience
that such midstream status poses too many political risks.
If Berlinguer again agrees to something less than
Cabinet seats, he will almost certainly insist on strict
guarantees that Communist advice be solicited--and be
verifiably heeded--on nearly all policies. Such a pack-
age might include "technician" ministers associated with
the Communist Party, Communist membership on some sort
of formal committee charged with managing economic policy,
and a precedent-shattering Christian Democratic agreement
to form coalitions with the Communists in some key local
governments. In short, Berlinguer would have to be able
to say--convincingly--that he stood on the verge of Cabi-
net status.
Despite their distaste for such an agreement, the
Christian Democrats are likely to see it as the least
objectionable path because the only remaining option--
allowing the Communist Party to go into opposition--
would probably merely lead the Christian Democrats in
a circle. They would have to turn for a majority to
the Socialists, who would probably be more inclined to
follow the Communists into opposition, leaving the Chris-
tian Democrats once again at Berlinguer's door.
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NATO: The Transatlantic Dialogue
NATO's West European members pressed for a greater
US commitment to a "two-way street" in arms purchases
at last week's continuation. of the transatlantic dialogue.
The allies are still dissatisfied with the level of
American purchases of West European weapons and defense-
related goods and are urging Washington to make a major
deal soon. Reflecting a decision of the Independent
European Program Group (IEPG), the West Europeans asked
Washington to supply them data on US purchases of West
European supplies during fiscal years 1974-77, in order
to support their contention that such purchases have
been decreasing.
The allies object to US insistence that West European
products be economically competitive with US goods in
order to qualify for defense contracts. On the contrary,
the West Europeans stress that access to the US market
is es tial if their arms industries are to be competi-
tive.
The allies resent what they consider to be Washing-
ton's roadblocks to Western Europe's attempts to win US
defense contracts. They claim that the United States
fails to take transportation costs into account when com-
paring bids, thus widening the disparity between prices
of US and West European products. In addition, they
complain that US quality standards exceed those of
Alliance standardization agreements, the provisions of
which are supposed to be reciprocal. This poses problems
for West European firms seeking subcontracts from a US
prime contractor.
The West Europeans view US authorization to grant
exemptions from provisions of the "Buy American" act as
a positive step and hope that this law will not be
applied to collaborative West European programs. The
IEPG now wants the United States to exempt West European
carriers from re ulations discriminating against non-US
competitors. 1 -1
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An IEPG ad hoc group has accepted an Italian pro-
posal for Alliance-wide development of a medium-range
(50-2,000 meters) antitank weapon. This reflects earlier
IEPG approval of a US outline on specific weapons families
and cooperative arrangements that might promote cost
efficiency and avoid duplication under the Long-Term
Defense Plan. The system the Italians have proposed
would be a West European product and would be the first
of a family of third generation antiarmor munitions.
The United States would be expected to take the le
developing a long-range system.
In related developments, NATO's Conference of
National Armaments Directors has made known its intention
to act as a forum for proposals designed to encourage
standardization and interoperability of military equip-
ment. Moreover, in the wake of the Klepsch Report pre-
sented to the European Parliament last June, the European
Community has recently begun to grapple with the "two
way street" issue. Klepsch had suggested that the Com-
munity's machinery could be used to organize and structure
the industrial aspects of armaments production.
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European Communist Reactions to the Sino-Vietnamese-
Kampuchean War
Each of the three leading European Communist parties--
the Italian, the French, and the Spanish--has staked out
a position on the Indochina conflict designed to balance
disapproval of the Chinese attack on Vietnam with previous
positions on Kampuchea and., at the same time, to preserve
an image of independence from the Soviets. The parties
resolved these conflicting pressures in three different
ways. All three are enmeshed in domestic issues, and
the Italians in particular have shown sensitivity to
rank-and-file opinion in the construction of party po-
sitions.
Wars between Communist states present doctrinal
problems that complicate the standard considerations
arising from the invasion of one country by another.
How is it that Communist states can go to war? Are all
sides concerned really "Communist"? What are the limita-
tions of sovereignty for Communist parties and the states
within their jurisdiction? While the positions of Euro-
pean Communist parties--particularly the French--sometimes
came close to Moscow's especially on the Chinese invasion,
they never really coincided. Italian and Spanish Com-
munist leaders compared the recent fighting to the 1968
Warsaw Pact invasion of Czechoslovakia, thus reminding
the Kremlin that Europeans are still a lying the lessons
of that event.
The Italian Communist Party
The Italian Communist Party (PCI) faced a dilemma:
it admires Vietnam and disapproves of Pol Pot, but it
also deplores armed intervention. Its first public
statements--reflecting a position that was arrived at
too hastily, according to an editor of L'Unita--came
out in favor of the "liberation" of the Kampuchean
people from the Pol Pot - Ieng Sary group. Italian
Communists acknowledged Vietnam's role in the conflict,
but the Kampuchean people themselves were said to have
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borne the brunt of the struggle. Romano Ledda, PCI
Director of International Studies, wrote in L'Unita that
the fall of Pol Pot must have been brought about from
within; otherwise Vietnamese support would have been
even greater. Ledda went out of his way to criticize
China for having driven Hanoi into the arms of the USSR,
but his support for Vietnam was not unconditional; he
insisted that the question of national sovereignty re-
mains fundamental, implying that Vietnam should not use
its position to crush Kampuchean independence.
An editorial in L'Unita on 10 January dismissed as
"hypocritical" the criticism m of Vietnam and the USSR by
extreme leftists and rightists. L'Unita urged its read-
ers to seek "rational" rather than "ideological" answers
to the problem. It then went on, however, to wrestle
with some of the ideological problems posed by a war be-
tween Communists--and wound up using US "im erialism"
as a handy safety valve.
When popular liberation movements transform them-
selves into states, the editorial argued, "contradictions"
can develop as a result of national aspirations, histori-
cal considerations, and the unequal and unjust distribu-
tion of resources. Asserting what it touted as an "in-
dependent" PCI position, L'Unita stated that disagreements
between Communist parties are serious, but it quickly
added that the "strategies and hypocrisies" of the Carter
Administration are just as serious. Indochina is a prob-
lem, asserted the editorial, but it should not distract
people from the main problem--US imperialism.
PCI maverick Lombardo Radice, in the 16 January
L'Unita, stressed that the PCI should not have held back
criticism of Pol Pot until he was ousted. Radice de-
scribed the fallen regime as a "military" distortion of
Communism warped by years of struggle against imperial-
ism. He compared Phnom Penh's excesses to those of the
Red Brigades and suggested that much bloodshed could have
been avoided if Pol Pot's aberrations had been pointed
out in time. Noting that most Communist regimes have
had periods of difficult government transitions, Radice
argued that Czechoslovakia might have provided a peace-
ful example, but "we know all too well how and by whom
that peaceful change of political line was halted."
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A La Stampa i terviewer peppered Pa'etta with ques-
tions on Kampuchea 25X1
Panetta noted that a few weeks e ore
the Chinese invasion a PCI delegation to Hanoi had taken
the position "that no one should look on Kampuchea as a
zone of influence and no one should use it as a theme
of instrumental propaganda."
The core of the PCI's line is now a reaffirmation
of its position on interventionism. The party condemns
both attacks "by countries claiming to be socialist,"
although it continues to criticize the Chinese attack
on Vietnam more heavily than the Vietnamese invasion
of Kampuchea. An implication of the PCI stance may be
that plans for more formal, contacts between the PCI and
Chinese Communist Party will be postponed, but not can-
celed. F I
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ropean integration, and Chilean President Pinochet,
Marchais charged Beijing with having "aggressive in-
tentions with regard to the Socialist Republic of
Vietnam." Marchais went on to warn the Chinese to
keep their hands off Vietnam. Otherwise, he threat-
The French Communist Party
There is no evidence of any vacillation in the
French Communist Party (PCF) line. The PCF, whose for-
eign policy often parallels that of the CPSU, has come
closer to Moscow on this issue than either of the other
parties. A December PCF - Portuguese Communist Party
communique stressed both parties' "solidarity with the
Vietnamese people." After a 19 February meeting between
Sergio Segre and Maxime Gremetz, heads of the foreign
sections of the Italian and French parties, both sides
expressed concern over China's attack on Vietnam and
the resulting threat to peace. (An earlier meeting be-
tween Segre and Socialist Party chief Mitterrand had
resulted only in a note of shared concern at developments
in the international situation, "with special reference
to Indochina.")
In January, the PCF clearly supported the overthrow
of Pol Pot, charging his regime with extreme brutality.
L'Humanite editor Yves Moreau, noting that the Chinese
had stopped mentioning Pol Pot and Ieng Sary, questioned
whether Beijing had given up on them. "Did they not
govern in fact by methods of arbitrariness and terror
more than those used in Beijing by the Gang of
Four? . . ."
Moreau went on to claim that changes in Phnom Penh
were a relief for the Khmer people, putting an end to
tension between Vietnam and Kampuchea. The PCF, like
the CPSU, has all but ignored the guerrilla war bein
carried out by the Khmer Rouge. 25X1
Even before the Chinese attack on Vietnam, party
leader Marchais warned that French Communists would
condemn any Chinese aggression in Southeast Asia. Speak-
ing over Radio Monte Carlo on 9 February, Marchais stated
that serious differences exist between his party and the
Chinese (at no point did he refer to the Chinese leaders
as Socialist or Communist). After listing the French
party's complaints about Chinese support for NATO, Eu-
ened to revive the anti-Vietnam war movement.
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Once the Chinese attack started, however, the French
began to show signs of restraint, perhaps in reaction to
the initially cautious Soviet comment. The 20 February
L'Humanite published the text of a Chinese statement
discussing the possibility of withdrawal from Vietnam
and an article demanding that such action be immediate.
The PCF called again for the resurrection of the antiwar
movement, but its message to Beijing was more of a plea
than a threat: "When we should be jointly fighting
Imperialism--the only enemy of the people advancing
along the path of their national and social liberation--
fo
bl
i
r
e
a
it is particularly painful and unjustif
socialist country to attack another. . . .
The Spanish Communist Party
During the months preceding Vietnam's invasion of
Cambodia, the Spanish Communist Party (PCE), weak in
votes and stong in criticism of the USSR, concentrated
on the Spanish election campaign. At first, Spanish
Communists simply declared that the Vietnamese-Kampuchean
conflict, still in its festering stages, should be set-
tled through negotiations. Those who fought against US
imperialism, the party maintained, sh uld be able to
settle their differences peacefully.
The PCE, like the PCI, deplored Khmer Rouge abuses
and considered the rapidity of Pol Pot's fall to be evi-
dence of his lack of popular support. Unlike the PCI,
however, the PCE expressed reservations soon after the
new Kampuchean Government came to power. "Nobody for-
gets the example which the Vietnamese people showed the
world when confronted with imperialist aggression, but
what cannot be justified :is the use of weapons and ag-
gression as a means of resolving disputes between social-
ist states" (Mundo Obrero, 9 January). Pol Pot, despite
his abuses, was a .Socialist. Vietnam, despite its record,
was an aggressor.
Beyond this, the PCE worried about the Soviet role.
"Intervention by the big powers, by themselves or through
'
inde-
intermediary countries, endangers the countries
pendence. The manipulation of some countries by others
d
"~
d
l
.
e
u
is a danger-from which nobody would be exc
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Russian and Chinese revolutions as well. 25X1
`The PCF also took a hard line, claiming that the
United States clearly had connived, in the attack and
afterward had tried to justify it. Yevgeniy Babenko of
TASS emphasized the French position under its heading
"Who Supports Aggression"? According to Babenko, the
PCI spoke of US sympathy for and understanding of Beijing
PCE leader Carrillo himself denounced "China's in-
vasion of Vietnam." At a meeting in Sestao, Carrillo
expressed his indignation at a people who struggled for
decades against US imperialism being attacked by those
"who call themselves" Communists.
The official PCE communique (20 February) condemned
China, but only in the context of previous condemnations
of Vietnam's role in Kampuchea and the USSR's in Czech-
oslovakia. The PCE stressed this latter point as it
called Yugoslav President Tito and Romanian President
Ceausescu, two Communist leaders actively concerned
about interventionism, to bring the Sino-Vietnamese war
to the attention of the UN.
The American Connection and the Soviet Response
The PCE was the strongest in its condemnation of
the US role in the Chinese invasion. A 20 February
Mundo Obrero editorial affirmed that Washington not
only knew of the Chinese attack well in advance--probably
having had Chinese intentions confirmed during Deng
Xiaoping's (Teng Hsiao-ping) visit to the United States--
but actually desired it. The United States, it charged,
considered China's action to be punishment for the US
defeat in Vietnam. The PCE alleged that the logic of
the situation, if carried to the extreme of a Sino-Soviet
conflict, might serve the Americans as revenge for the
and US connivance in the attack as an expression of
bourgeois hatred for the socialist community. TASS made
no mention of the Spanish statement of 20 February.
The USSR did not approve of parties that connected
one invasion with the other. To do so, according to the
Soviets, was to make the situation of the aggressor equal
to that of his victim. On 23 February TASS clearly showed
how the Soviets viewed Western Communist positions. The
PCF was included in a list of those parties that had
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made special statements condemning China. Italy was
only mentioned through the Segre-Gremetz meeting, where
the communique made no mention of Kampuchea. The PCE,
having connected Indochina and Czechoslovakia, was not
mentioned at all.
Beyond expressing its approval or disapproval in
such ways, the USSR might use the Indochina conflict as
an excuse to renew pressure for a worldwide conference
to excommunicate China and reaffirm the principle of
proletarian internationalism. Such a move would find
no more favor in Madrid or Rome than previous attempts
to call such a gathering. French Communists would prob-
ably resent the move as well, since any hint of acceptance
of such an idea would aggravate splits in a party already
involved in a serious' debate about its doctrinal and po-
litical future.
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Norway: The Politics of Oil
Norway's surplus oil revenues clearly have been a
bonanza for the Norwegian economy, but they have also
brought on a host of unforeseen problems. The governing
Labor Party finds itself championing a tough austerity
program while the nonsocialist opposition parties--which
have long had to take a back seat--have benefited from
the government's apparent inability to manage the new
source of wealth, now 10 percent of the state's income.
There is strong multiparty support for the use of oil
revenues to underwrite economic development, but sharp
party differences over the means and specific goals seem
certain to tax the minority Labor government's staving
power in the months ahead. 25X1
The Norwegian Government, in the first years after
the discovery in 1969 of oil and gas deposits in the
North Sea, borrowed heavily in anticipation of future
oil income to finance an elaborate social welfare system.
The government's timetable for repayment, however, was
knocked askew by exaggerated predictions about oil pro-
duction and revenue, expensive delays in exploration,
and massive cost overruns at offshore platforms. More-
over; heavy expenditures were made to bail out ailing
companies and industries. The net result was to inflate
wages and the demand for imports at home and reduce the
competitiveness of Norwegian goods abroad. By mid-1978,
Norway's foreign debt reached $15 billion equal to 30
percent of its gross national product. 25X1
The Labor Party has survived two national elections
and a change of leadership during this time, but has
seen the Conservatives make steady gains in popular sup-
port. Prime Minister Nordli, who has led the government
since 1973, last year instituted a tough austerity pro-
gram of wage and credit restraints to redress Norway's
failing ability to compete. A prime objective is to
bring about structural changes to the Norwegian economy
through the gradual elimination of subsidies. So far,
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the effort, which is overwhelmingly backed by the
Norwegian public, seems to be working. Labor and indus-
try organizations, however, are critical of the govern-
ment's approach and opposition parties have threatened
to block implementing legislation.
Development Strategy
The Labor government's attempts to work out a com-
prehensive plan for using the oil revenues have been
complicated by its reliance on a small leftwing Social-
ist party to maintain its one-vote margin in Parliament.
Until recently this has not been a serious problem, since
the nonsocialist parties have been in general agreement
with Labor's program. The Conservatives, however, are
obviously emboldened by recent gains in opinion polls
and have begun to criticize Labor for blaming external.
factors--international economic developments--for Norway's
economic problems.
In January, in a move that nearly caused the gov-
ernment to collapse, the Conservatives were instrumental
in blocking a long-term swap of Norwegian oil for Swedish
technology--the Volvo deal--despite earlier pledges of
support. Under the terms of the multifaceted deal ne-
gotiated by the Norwegian state oil company and Volvo,
Norway agreed to supply Sweden with oil in return for
timber over a 20-year period. The Norwegians were also
to get a 40 percent share of the automobile company,
while Volvo would receive oil exploration rights. The
Labor government had hoped the deal would serve as the
cornerstone of its oil development-modernization scheme,
but the agreement ran into strong opposition in both
Sweden and Norway. It was finally jettisoned before
coming to a vote in Parliament, which the government
was certain to lose.
The opposition from the Conservatives, who found
themselves aligned with the leftist Socialists on this
particular issue, underscores the growing importance
of the various parties' economic development philosophies
in the disposition of the oil revenues. The Labor Party,
along with a substantial number of Conservatives, be-
lieves that a continuous process of structural economic
adjustment is necessary to preserve the Norwegian way
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ment.
of life. They advocate a "moderate" tempo of oil de-
velopment with extensive state participation and with
the profits plowed into industrial modernization. In
contrast, the smaller parties--including the leftist
Socialists--and some Conservatives believe that little
real change is needed. These groups would go slowly
on current oil exploitation, severely restrict future
oil development, and use the revenues to preserve agrar-
ian and small town interests. They are especially
worried that the growth of an industrial society will
undermine traditional Norwegian values.
The Labor government is determined to press ahead
with industrial development, but will probably have to
back off somewhat from such major undertakings as the
Volvo deal. The Conservative-led opposition is not
against increased Nordic cooperation, but it does be-
lieve that cooperation will. develop naturally and need
not be forced by the government. For the Conservatives,
the past few months have clearly proved politically in-
vigorating, and they can be expected to keep exploiting
Labor's vulnerabilities on such issues as oil develop-
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Canada: Tory Victory Seems Certain in Alberta Election
F7 I
Premier Peter Lougheed has called the voters of
resource-rich Alberta to the polls on 14 March in an
election certain to return his Progressive Conservative
(Tory) government to power for the third straight time.
The Tories could even fulfill their campaign slogan--"79
seats in 79"--and win every seat in the legislature.
Albertans enjoy a privileged position in the Canadian
federation--they not only earn more than the national
average, but they pay the lowest taxes in the country--
and Lougheed's vigorous efforts to protect this position
are expected to be as potent an electoral platform this
time around as in 1975.
Lougheed is also wooing the voters with major new
spending programs. Last month he:
-- Gave the municipalities $1 billion
(Canadian dollars) to help ease the debts.
-- Said the province would subsidize low-
interest mortgages for low-income families
at a cost of about $200 million per year.
Announced an expanded program to help
handicapped citizens.
Opposition parties--Social Credit, New Democratic
Party, and the all-but defunct Liberal Party--criticize
these spending programs as insufficient and outline
further spending plans of their time. The opposition
will exploit what it sees as Lougheed's insensitivity
to social policy issues as well as his slowness in di-
versifying Alberta's economy. Any inroads opposition
spokesmen make will not be enough to overturn the Tory
majority.
Lougheed's campaign will center on his call for
"strong leadership" to defend Alberta's constitutional
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rights, natural resources and, as a corollary of natural
resources, the Alberta Heritage Savings Trust Fund. On
these three subjects, Lougheed's attitude is that of the
beleaguered pioneer with his wagons drawn into a circle
to fight off marauders. It stems from his belief--
widespread in the Canadian west--that Ottawa runs the
country for the benefit of the populous, vote-filled
center (Ontario and Quebec), and would not hesitate to
sacrifice Alberta's interests thereto. And Alberta has
hefty interests: nearly 85 percent of Canada's oil and
gas and some coal deposits. Lougheed is heavily backed
by Alberta's lar and powerful oil interests in his
reelection bid. e
Recent disputes between Alberta and Ottawa involve
oil pricing and gas export policies. Alberta wants to
export more gas and bring the price of domestic oil up
to world prices. Ottawa wants to be sure there are suf-
ficient gas reserves for Canada before authorizing addi-
tional exports and to delay agreed oil price hikes as
part of its fight against inflation. Compromises are
in process on both these issues.
Prime Minister Trudeau said on 23 February that
Canada would allow exports of as much natural gas as
the National Energy Board declares surplus--2 trillion
cubic feet, potentially available for export in the next
four to eight years according to findings published last
week--a step that will please gas producers and will
also earn Canada some needed foreign exchange. Alberta
had already agreed to delay the oil price rise due last
January for six months, a move designed to show its
concern for national problems and to undercut any incip-
ient federal moves to make Albertan intransigence an
issue in the coming federal election campaign.
Although Lougheed enjoys the head-on bargaining
that these disputes entail, he wants to ensure a strong
hand. To this end, he insists at such forums as federal-
provincial constitutional conferences that any new con-
stitution must include provincial control over resources
and refuses to accept any wording that would erode Al-
berta's prerogatives in this area. In February, at the
latest constitutional conference, only Alberta and Que-
bec (whose separatist government has no interest in
promoting constitutional reform) would not agree to a
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constitutional formulation that would make clear that
resources fall under provincial control except in cases
of "compelling national interest." Alberta insists that
the affected provinces must be involved in all decision-
making about resources with no exceptions. To charges
that this strong regionalist stand damages the Canadian
confederation, Lougheed replies that Canada will be
stronger if the regions are stronger.
FROM WHV4 DiRECTPON 100 WE 6YP5 r -RV MOMS -,51R?"
I
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An integral part of the province's resources policy
is the Heritage Fund. Since early 1976 it has collected
30 percent of Alberta's nonrenewable resource revenues
and will accumulate between $10 billion and $12 billion
by the early 1980s. The Fund was set up to diversify
the Alberta economy before the nonrenewable resources
run out.
'This cartoon was taken from Ottawa Journal, 17 February 1979.
7 March 1979
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Lougheed clearly distrusts the intentions of other
Canadian leaders toward this huge nest egg and warns
that "they're coming at us" to "get at the Alberta
Heritage Savings Trust Fund one way or another." While
this protective pitch will appeal to the homefolks, op-
position complaints on how the fund is administered will
be harder to counter. The opposition, and even some
Tories, are unhappy that the fund is administered by the
Cabinet without legislative approval and little oversight.
And while the Tories have put money into new industries,
such as petrochemicals, opposition critics say it is not
enough. Much of the money is now in short-term securi-
ties because of the government's dilemma over how to
invest such immense amounts of money without disrupting
the provincial economy.
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