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December 21, 2016
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April 22, 2009
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January 4, 1974
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Approved For Release 2009/04/22 : CIA-RDP85T00875RO01000020001-4 C/Aoc? / C. ltvR DSO FILE COPY FETMS N TO 111-1107 25X1 Top Secret Weekly Review 25X1 ~ Copy N! State Dept. review completed Approved For Release 2009/04/22 : CIA-RDP85T00875RO01000020001-4 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01000020001-4 Tt,o WEEKLY REVIEW, issued every Friday morning by the Office of Current Intelligence, reports and analyzes signif. (cant developments of the week through noon on Thursday. It frequently Includes material coordinated with or prepared by the Office of Economic Research, the Office of Strategic Research, and the Directorate of Science and Technology. Topics requiring more comprehensive treatment and there- fore published separately as Special Reports are listed In the contents. CONTENTS (January 4,1974) 1 The Middle East EAST ASIA PACIFIC 7 Cambodia: A Fresh Start 12 Oil: Europe Gets the Bad News 12 West European Communists Prepare MIDDLE EAST AFRICA 16 India: A Troubled Economy 17 Greece: Acting in Character WESTERN HEMISPHERE 18 Argentina: Peron Unveils a "Plan" 18 Panama: An Anniversary 19 Peru: A Decisive Year UNITED NATIONS Approved For Release 2009/04/22 : CIA-RDP85T00875RO01000020001-4 125X1 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01000020001-4 THE MIDDLE EAST 25X6 a~ With the Israeli election now completed, Egypt will look for quick progress toward a Jan 4, 74 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01000020001-4 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01000020001-4 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01000020001-4 Approved For Release 2009/04/22 : CIA-RDP85T00875R001000020001-4 Page 3 disengagement of forces along the Suez Canal. Cairo wants this both to satisfy its own need for an Israeli withdrawal and to serve as a salutary example, for the benefit of doubting Syrians, of the wisdom of the decision to proceed with nego- tiations. Although content to let the initial ses- sions of the military talks in Geneva proceed slowly in anticipation of the election, Cairo is unlikely to view the process of governmental reorganization in Israel as sufficient reason for further postponement of an agreement on dis- engagement. The Egyptians used the slow start of the talks to advantage, attempting to pin down the basic principles that will govern disengagement before turning to the specifics of territorial delin- eation. This is undoubtedly an effort to establish clear guidelines for the talks in order to prevent some of the inconclusive hoggling that marred and ultimately caused the breakdown of the Kilo- meter 101 talks. Egyptian and Israeli military negotiators ap- parently reached general agreement on some of their respective negotiating principles at the first three sessions on December 26 and 28 and Janu- ary 2. There remains, however, a major divergence of view on at least one Israeli principle, that of "mutuality." Tel Aviv insists that any Israeli with- drawal under a disengagement formula be ac- companied by a reciprocal Egyptian withdrawal, while Cairo is equally insistent that the territory it has retaken on the canal's east bank remain under its full military control. Over the years, dramatic purges, advances, and put-downs of Chinese Traders have become almost rommonplace. The startling souffle of top regional military leaders that was revealed this week, however, is absolutoly unprecedented and must rank near the top of the inscrutable moves made by Peking in the seemingly endless jockey- ing for position among power-holders in China. Seven of the eleven commanders of Peking's regional military forces-its main-line armed Cairo media commentary on the Israeli elec- tion, although thus far sparse, has reflected mis- givings that right-wing gains will in fact lead to Israeli procrastination. Cairo's message is clear: that the Egyptians cannot tolerate further dally- ing and have the military strength necessary to achieve Egypt's goals forcibly if this cannot be accomplished through negotiation. Although the Egyptians have not, in public commentary, tied the election question directly to the disengage- ment talks, the media's constant reminders that Egypt has a force to be reckoned with on the canal's east bank are an indication that Cairo does not intend to relinquish that bridgehead. Heavy artillery fire erupted along the Suez front on January 2 after several days of relative quiet. The firing took place throughout the day and apparently was more intensive than previous sporadic incidents. Eight Israeli soldiers were wounded in the shelling. It was not clear which side began the shooting, but harassing artillery fire provides Cairo with a means of pressuring Tel Aviv and keeping world attention on the battle- front. Artillery fire also was exchanged on the Syrian front and three Israelis reportedly were strength-were switched from one regional post to another, in several cases leaving power bases they had held since the 1950s. One of the command- ers, Chen Hsi-lien, was pulled out of his strong- hold in Manchuria and sent to Peking, doubtless to be under the eye of the central leadership although he may retain an ability to make some mischief at the center. Hsu Shih-yu, who held a strategic regional post in east China, traded places with his neighbor in the Canton Military Region, an assignment of less importance. Approved For Release 2009/04/22 : CIA-RDP85T00875R001000020001-4 ~;~ Approved For Release 2009/04/22 : CIA-RDP85T00875RO01000020001-4 Peking Rotates Military Region Commanders Sinkiang SINKIANG ~.r....a Military Region Boundary Province Boundary 555037 1-74 LAN?CHOU -w- Han Hslen?chu NAN-CHING Ting Sheng- WU-HAN-Yang Te-chlh- SHEN-YANG General Political Department, Peking Mongolia rU Szechwan ~- n? chow Heilungkiang `'_,54i:ra i--vnNG Kirin ;:::_/:L any, Li ng Nh ort kl ~(oroa `- rienutlin Hopeh South Shr1nM rich; Yollnu I Korea TsInen p 5,,,, .wr r1'51N KiandGu in-chin 141-4 Nr1h ~hnnghnl A ci Cheklan~ 111 OU ii-chow Fukic C;1 Kw at no TAI /AN u Kwangsi aCanton T ^ r 'J, ac onu Kong lir Macao NKI - Pi Ting-chun-w- FU-CHOU -Hsu Shih?yu- - CANTON Tsang Ssu?yu-- TSINAN Chen Hsi-lion----m- PEKING -LI To-sheng-e- SHEN?YANG Page 4 WEEKLY REVIEW Jan 4, 74 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01000020001-4 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01000020001-4 From all appearances, it looks as If Chou En-lai and his associates masterminded the move, doubtless with the close collaboration of Mao, who is known to endorse reduction of military influence in party affairs. Actually the reduction of the authority of these military commanders, who garnered their power in the course of sup- porting the restoration of order after the excesses of the Cultural Revolution, has been under way for some time. Military membership on the Cen- tral Committee and Politburo was substantially reduced at the Tenth Party Congress in August. The move will almost certainly result in con- fining the shuffled leaders to their military duties for the time being and reduce their ability to influence civilian affairs in their new areas. Six of them had held the top civilian posts in their headquarters' province and had greatly influenced the implementation of government policy throughout their regions. Peking, perhaps slowly, but doubtless surely, will give the civil posts to civilian provincial figures, a process which has also been gradually under way during the past several years. While the moves testify to Chou's upper hand in party councils, the measured nature of the switches reveals that the military is still a powerful force in China with at important role to play. No leaders were purged, and the shuffle was a carefully balanced tradeoff. The moves seem to indicate that the top party leadership has en- dorsed the continuation of existing defense policy and authority in China. Some continued military influence on civilian policy can probably be anti- cipated, but the ability of the armed forces to bring extensive pressure to bear has been greatly reduced for some time to come. The careful, measured nature of the shuffle suggests that a majority of the military leadership in China was in agreement with the switches, although there may have been strong resistance by one or two of the commanders in the months prior to the move. It can be speculated that they have been given some assurances by Chou and his associates on the political cast-if not the iden- tity-of the civil leaders to be appointed to the vacated first secretaryships. And some agreements may have been reached on the men to be ap- pointed to the post of minister of defense and other key military jobs at the center, which have gone unfilled since the purge of Lin Piao and his associates. Approved For Release 2009/04/22 : CIA-RDP85T00875RO01000020001-4 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01000020001-4 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01000020001-4 Approved For Release 2009/04/22 : CIA-RDP85T00875R001000020001-4 The new government, relatively well- qualified to tackle the country's increasingly dif- ficult economic and political problems, has lost no time in getting down to business. It has al- ready announced that it intends to combat infla- tion, impose austerity measures and fiscal re- forms, increase the salaries of military personnel and civil servants, and improve the distribution of rice. It has also pledged closer military-civil co- operation and better results in conscription and pacification. Prime Minister Long Boret will have to make full use of his political skills to move toward these objectives, but his solid standing with President Lon Nol should help. The Khmer Communists quickly sounded the usual negative note about the new govern- ment, predicting that it will soon be "crushed" uy economic crises and insurgent military pressure. In a new year's message, Sihanouk's "prime minis- ter" Penn Nouth said the war is in its final phase and expressed hope for victory in 1974, but then backtracked a bit to state that the Communists are getting ready for a "long-range struggle." The military situation had a familiar look. In the Phnom Penh area, the Communists remained active on the east bank of the Mekong, firing more rockets into Phnom Penh. Several landed close to the US Embassy and one exploded in the nearby presidential compound, but damage was light. For the first time, the Communists also used 105-mm. howitzers to shell the city. The Communists kept Route 4 closed south- west of Kompong Speu, although at midweek government forces made limited gains 15 miles from the city. North of Phnom Penh, government units made little headway in their attempts to clear a section of Route 5 some 15 miles from the CAMBODIA: A FRESH START capital. that the Communists plan to launch a major of- fensive in this area ain;ad at defeating the Cam- bodian Army's 7th Division and opening the way to attacks on Phnom Penh itself. Although Com- munist commanders hope to be able to carry out s'ich attacks this month, the rallier stated that the attacks could be delayed until March if troop reinforcements and munitions do not am' e-7' time. 25X1 25X1 Page 7 Jan 4, 74 Approved For Release 2009/04/22 : CIA-RDP85T00875R001000020001-4 25X1 I Approved For Release 2009/04/22 : CIA-RDP85T00875RO01000020001-4 Next 3 Page(s) In Document Denied le Approved For Release 2009/04/22 : CIA-RDP85T00875RO01000020001-4 -77 Approved For Release 2009/04/22 CIA-RDP85T00875R001000020001-4 The initial sense of relief felt by the oil importing countries of Europe over the easing of the Arab oil cutbacks was quickly replaced last weak by concern over the effects of the large increase in crude prices. The promise of more oil did not prompt any of the EC partners to ease consumption restrictions imposed since the begin- ning of the cutbacks. Of particular concern is the huge increase in the world's oil import bill-estimated at $bO bil- lion for the OECD countries. The Europeans fear this will fall unevenly on the importing countries and lead to national rather than cooperative meas- ures to protect trade and payments balances. The sharp Increases in oil prices and their unpredict- able impact on payments balances will probably further delay progress toward monetary reform. Almost all the EC countries have boon trying to strike bilateral deals with the Arabs to guaran- tee a steady, long-range supply of oil. Most of the deals, either proposed or already concluded, call for development aid and industrial investment in exchange for oil. France, which recently nego- tiated an agreement with Saudi Arabia, is un- happy over the meager quantities of oil involved in that deal. Should other bilateral arrangements also fall short of expectations, cooperation among consuming countries-and then between con- sumers and producers, as envisaged in Secretary Kissinger's call for an energy action group-might be encouraged. The EC countries have still not formulated a position on the Kissinger proposal. Although par- ticipation in an energy action group is favored by Henri Simonet, the EC vice president in charge of energy matters, some members of the community will probably want more progress toward an EC energy policy before agreeing to a joint response. Moreover, the Europeans are far from clear about the extent to which the US proposal might pre- empt an eventual European approach to the Arab producers. Although approval of the energy proposals agreed to in principle at the Copenhagen summit is still stalled, the Nine are reportedly prepared to provide, on a voluntary basis, information con- corning oil movements and availabilities to the EC Commission. It is not certain, however, that the governments will be able to produce all -ho in- formation requested. particularly roaardina prices. Sharp disagreements have surfaced in the most recent preparatory sessions for the confer- once of West European Communist parties, sched- uled to convene in Brussels in late January. Some Western parties, because of domestic political considerations, are reluctant to go along with the suggestion of the Italian and French Communists to issue a joint position paper on West European problems. During meetings in Rome in late 1973, the Italians and French sup- ported the view that a paper that took a generally positive view of the EC but that would also make specific recommendations on community issues would be an important stop toward increasing communist influence on EC decisions. The Italian Communists, who are the main organizers of the Brussels parley, have encount- ered other stumbling blocks-especially the reluct- ance of several parties to follow the Italians to- ward greater independence from the Soviets on European issues. The Austrian and West German parties insisted that the conference avoid any issues that might sour their relations with Mos- cow. The French Communists, though supporting the joint position paper, have tried to restrain the Italians from airing other issues more sensitive to Page 12 WEEKLY REVIEW Jan 4, 74 F 7fFi'fG2"iY~uC.4~8i ?.a'~a3'~. a:ilf".$5te e'.~nS~A~S.~ 'sa. '~'~`- ?F' }.:':w _~?e'^_ 1`~1tae~.,.~.i s2:~'Lb .. ?c?,? .t vi Approved For Release 2009/04/22 : CIA-RDP85T00875R001000020001-4 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01000020001-4 le Next 1 Page(s) In Document Denied Approved For Release 2009/04/22 : CIA-RDP85T00875RO01000020001-4 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01000020001-4 INDIA: A TROUBLED ECONOMY This year's favorable monsoon will bring roc? ord harvests of food grains and commercial crops, increasing national Income 5 percent or more for the fiscal year ending March 31, 1974, Industrial production remains low, however, and strong In. flationary pressures persist. In addition, economic stagnation has been encouraged by government inaction and bureaucratic discouragement of pri? veto investment. The failosre of supply to keep pace with demand pushed October prices 21 percent higher than a year earlier, and further price increase, seem certain. An excellent harvest should reduce inflationary pressure on foodstuffs, but the sharp increase in the money supply, due primarily to government financing, is stimulating demand. In August. the government announced a 10?porcent Jan 4, 74 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01000020001-4 1 reduction In nondefense expenditures to offset sharply increased outlays for food subsidies, drought relief, and government salaries. Non?capl? tat ixpanditures, huw..er, continued to rise. The deficit of over V-00 million for the first six month:. of the fiscal ;?ear ending in March 1974 Is more than five limes thn deficit budgeted for the entire year, Now Delhi remains reluctant to In. crease revenues by taxing agricultural Incomes, the only potentially Irrpn tax source loft. Industrial production has increased less than one percent so far this year compared with 7 percent it 1972. Factors hampering production ii clude: ? tightened government restrictions on im- ports of raw materials and spare parts; ? the slow tempo of government capital spending; ? government hostility toward most pri- vate foreign inve:tmont; ? chronic energy shortages. Electric power station construction is far behind schedule. coal production has stagnated. and pe? trotoum imports have been curbed by sowing world prices and the Arab production cutback. The adverse affect of fertilizer shortages on agri? cultural production has not Leon apparent be. cause of the favorable weather, Now Delhi's international financial position has substantially improved and appears more than adequate to meet the country's crucial shorl?torm import requirements, essential for increasing in. dustrial production and exports. Foreign ex? change reserves are $1.2 billion, the equivalent of about five months- imports; additional intirrna- tional Monetary Fund monies availablo stand at $1.1 billion, and unused non-project aid is about $450 million. Moreover, prospects for foreign aid. both from the USSR and the Western Aid Con? sortium. are good. The govcrnment. however, is reluctant to draw down reserves or to borrow 'tom the IMF, even though economic growth might be stimulated by doing so. Approved For Release 2009/04/22 : CIA-RDP85T00875RO01000020001-4 GREECE: ACTING IN CHARACTER The now junta this week abolished the con- stitutional court that had been sot up three months ago by Papadopoulos to rule on which political groups would be allowed to participate In elections, Earlier, It had removed all references to municipal and parliamentary elections from the constitution. The government clearly does not wish to encourage even speculation about elec. Lions or other political expression. The junta has eased the current ban on public meetings of more than five people-it will allow the executive boards of banks and other stdte?controlled Institutions to meet, but with police permission. This mild concession Is un- likely to placate critics who have become more vocal as the authoritarian character of the new regime has become clearer. Thirty-six former members of parliament recently issued a state. ment to foreign news agencies calling for the release of political prisoners and the restoration of normal political conditions in Greece, Some 30 individuals reportedly still are under arrest because of their participation in the rioting and demonstrations last November that precipitated the latest military coup. Relatives of the prisoners have charged that they are 1 : ilg hold in the island prison camps that have recently been reopened. The government has not re- sponded to these charges, which have appeared so far only In the English language local press and are unlikely to have wide circulation because of press censorship. The government, meanwhile, has generously rewarded the military officers who backed the coup and on whose continued suppo?t it depends. About 50 officers have been promoted to briga- dier general and another 50 made colonel. Key supporters of tho coup-such as armed forces chief Bonanos--have received one of the country's highest military decorations. Pag1 17 WEEKLY REVIEW Jrn 4. 74 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01000020001-4 Exports are increasing at a much lower rate than Imports. In the first five months of fiscal year 1973, exports increased 12 percent while Imports rose 34 percent, resulting in a trade deft. cit of $97 million, compared with the $245 mil. lion surplus for all of fiscal year 1972. The In. crease in imports reflects Increased food grain purchases and higher prices for petroleum and fertilizers rather than substantially Increased put. chases of industrial commodities. Government Indecision and a cumbersome bureaucracy are fundamental problems Inhibiting the growth of the industrial sector. New Delhi has expanded Its role in trade and industry through restrictive legislation, licensing, and nationaliza. tion. Private Investment has slowed while busi- nessmen await a clearer picture of the Indian Government's intentions. Critics have called for greater use of market mechanisms in all phases of economic policy. Suggested changes include: ? reduced government spending; ? elimination of widespread price controls, which foster a r-sassive black market and a reduced tax and investment base; ? increased agricultural prices to farmers and cc>tisumors; ? liberalization of licensing restrictions on private sector Industrial production. The government, however, has continued to move slo,vly. The proposed fifth Five?Year Plan, scheduled to begin on April 1. 1974, fails to address the country's current economic problems. A loading economist in the Planning Ministry has resigned in protest over the plan's unrealistic trade and production goals, and a key member of the prestigious National Council of Applied Eco- nomic Research has recommended Ian be delayed ayear. Approved For Release 2009/04/22 : CIA-RDP85T00875R001000020001-4 ARGENTINA: PERON UNVEILS A "PLAN" After much advance fanfare, President Peron outlined the details of his government's three- year, $10?billion development plan in a speech on December 21. Although the program is buitio billed as a panacea for Argentina's economic ::ird social ills, it provides low specifics on how the country will finance the extensive projects for expanding social welfare and improving the eco- nomic infrastructure. Peron revealed no major policy innovations in his generally moderate-if overly optimistic` speech. Indeerd, for the most part he merely to. iterated well-known Peronist doctrine such as accelerating the distribution of income to work- ers, achieving economic and political independ? once, and promoting Latin American integration, In addition to projecting increased economic growth. Peron frequently cited successes already achieved in culling inflation and unemployment, buoying foreign-exchange reserves, and raising in. come and retirement benefits for wage earners. Such achievements, ai well as the lofty aims of "Plan Trienal," may be ephemeral. Even if political leaders remain committed to the plan. a downturn in foreign trade accompanied by an inability to generate necessary domestic savings and foreign investment could force Peron to scale down his development program. Moreover, there are signs that union pressure for higher wages could erode the tenuous agreement between workers and management to hold the line on increases. Disintegration of that agreement could undermine even the limited economic advances made so far. PANAMA: AN ANNIVERSARY The (until anniversary of this bloody protests In January 10G4 against the US presence in the Canal Zone is likely to pass free of violence, and the rhetoric In observance of the anniversary may even be muted. The atmosphere Is relatively calm, and prospects for negotiation of a new treaty are better than at any time since the riots. If General Torrijos decides to speak, he can point to one specific gain==Washington's plan to transfer to Panama two airfields that will provide expansion room for the growing Atlantic port of Colon, A large factor in the improved prospects for productive negotiations is a notable softening in Torrijos' approach, After his tough tactics during the UN Security Council meeting in Panama List March provoked a US veto of Panama's resolution on the canal, Torrijos apparently became con? vinced that some moderation was necessary to preserve any hope of getting a new treaty. He took several steps to improve the negotiating climate, including toning down anti-US ptopa. Banda on the canal issue. He and Foreign Minister Tack have also adopted a moderate tone in talks with the chief US canal negotiator, Ambassador Ellsworth Bunker. Although the horizon is brighter for a new canal treaty than at any other time during the Torrilos regime, hard bargaining lies ahead. The Panamanians have hinted at some flexibility in their negotiating positions on the duration of US jurisdiction in the Canal Zone and on the transit lion of authority from the US to Panama. In many other areas, such as the amount of compen? seltion to be paid by the US and the possibility of building a new sea-level canal. Panama's positions remain almost completely undefined. As in the past, the Panamanians are likely to work out their positions on these issues largely in terms of responses to US initiatives. Torrijos still prefers to deal with broad principles that do not entail specific commitments. He will probably continue to leave the bargaining on details to 25X1 Foreign Ministry technicians. whose actions will Page 18 WEEKLY REVIEW Approved For Release 2009/04/22 : CIA-RDP85T00875R001000020001-4 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01000020001-4 This could be the most cruclal year for the military government. With several key economic and political problems likely to come to a head, the government's response will determine the long-range course of the revolution. The nationalizrtion of the US?ownwi Cerro do Pasco Corporation on January 1, 1974 will give the regime some mut.1'nooded public sup. port. The honeymoon may be short, however, as the government must learn to manage the giant mining complex and to deal with recalcitrant unions. Foreign "Imperialists" will now no longer be available to bear the brunt of leftist labor demands or the blame for economic downturns. A seriously d'sruptive strike by teachers and another by capper minors In late 1973 were "sat. tied," but antigovernment radical leftists remain in control of both groups. The fishmeal Industry Is still stagnant, and the labor situation will be further aggravated by continuing inflationary pressures. President Velasco, who has been in power since October 1968 and had serious health prob. lams in 1973. may step down by the and of the year. Of prime concern to him will be the preset, vation of the leftist?natinnaliit character of the revolution. At present, however, no single can. didate has emerged with sufficient support from both military "radicals" and "moderates" to avoid a divisive struggle for the succession. Recently announced cabinet shifts afford no evidence o! any significant change in the relative balance between moderates and radicals; further changes are likely. however. Military command reassignments appear designed primarily to solid. ify Velasco's control. Prime Minister Mercado is slated for retirement at the and of tine "ear but a moderate. Genrrtl Morales Bermudez. is in line to replace hi:n. he would than become the logical successor to the President. The more radical gon, orals, however. would be unlikely to welcome Morales Bermudez. and ho apparently does not hive the wide base of support enjoyed by Mercado. Relations between President Velascr, and Morcada are reported to have worsened since Velasco's unusual public announcement In No. vember about Mercado's pending replacement. Mercado may try to ouat Velasco and assume the presidency but-given the relative balance of power between r'toderates and radicals and the consid- arable personal support still enjoyed by Volasco- this would be a risky move, Peru's leaders remain acutely aware that their government stands out as South America's most radical since Chilean President Allendo's downfall. The military takeover In Santiago rein. forced long-standing Peruvian fears of Chilean intentions. Equally persistent fears In Chile of Paru's attitude has probably been strengthened by the arrival of a shipment of Soviet tanks in Peru last November, These mutual susp-"ons, however exaggerated, will continue to influence the Velasco regime's reaction to domestic opposition and foreign criticism. Peru has embarked on a program to modern. ire and expand its navy. It has recently purchased ships fo! its formerly US?suriplied navy from Italy. the UK, the Netherlands. and West Ger? many and is reportedly considering a Sc viot offer of patrol boats. Peru acquired three naval vessai-s during 1973. Two British destroyers were delivered. both reconditioned and modernized with EXOCET anti.-,hip missiles, awl the Netherlands turned over a reconditioned cruiser that is to serve as the Peruvian Navy's flagship. Two submarines being built by West Germany are slated for delivery within the next tow months. In late 1973, Po-!u conch cied negotiations with Italy for the purchase of four missile-armed destroyer escorts. The $200-million sale provides for the assembly of two of the ships at the Peru. vian Navy yard. with Italy providing all necessary machinery, weapons, electronics. and technical assistance. T. eso will be the first warships built in Peru. Lima's decision ou whether to accept a long. standing Soviet offer of patrol boats will be Page 19 WEEKLY REVIEW Jan 4. 74 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01000020001-4 Influenced more by their price and quality than politically inspired reluctance to deal with the USSR, since Peru recently purchased tanks from The shift away from the US as a primary source of arms was prompted by congressikrgal UN General Anombly PROMISE AND PROBLEMS The 28th General Assembly, which con. cluded in December, had opened last fall with a promise of improved relations among the major powers and greater solidarity among tt,e non- aligneri members. US-Soviet consultations on as- sembly issues did bring about concurrence on issues ranging Pram terrorism and Law of the Sea to the UN budget, China continued to act with sell restraint and finally d"mphasized the most contentious issues, such as Cambodia and +(orea. Both the USSR and China again competed for third-world favor, however, and engaged in a cer. tain amount of anti?US rhetoric. The assembly witnessed the growing determination of the non. aligned members to air their political and eco- nomic grievances, a determination clearly ex- hibited at Ihu Algiers Nonal,t'ned Conference, which immediately preceded the opening cl! '-Ae assembly. Several landmark steps were taken at the General Assembly: membership for the two Ger- Mcnios, scheduling of both the Law of the Sea and the World Food conferences. tinrncing for the UN Emergency Force, and approval of the Convention on this Protection of D:Olomati. Many important political questions. however, never came to a decisive vote: the UN military command in Korea, the Cambudian representa. Lion issue, terrorism, the Middle East. representa. lion for Guinea-Bissau. and several disarmament proposals either never came up for debate or were postponer! until next year. cutbacks In military assistance, restrictions on US arms transfers to less-developed countries, and US suspensions of arms sales In response to Peru's seizure of fishing boats, Although the US has lifted its moat recent suspension, Lima Is un? willing to rely on the t ' as a military supplier, Peru's recent purchases v, ill add speed, range, and firepower to its naval inventory and lend further The nonaligned state' were more cohesive and better organized I d% year than previously. Dominated by the militant Afro-Arab states, the nonaligned states were also more aggressive id took advantage of a growing reluctance on he part of the Latin Americans and Western L rro. pean. to challenge the nonaligned leadership on ncos issues. In the face aS strong opposition from the major powers, however, the nonaligned states suffered setbacks on several major i;;ues. The nonaligned caucus by a small margin failed to prevent postponement of a resolution to seat a Sihan,uk delegation as the legal representatives of Cambodia. They were unable to prevent an off= the floor agreement that put off the challenge to a US military presence in Korea. The nonalignods themselves concluded that they could not muster sufficient support this year to gain recognition for the revolutionary state of Guinea-Bissau and ac. c'pted instead a resolution simply welcoming its declaration of independence. The Western states, however, were unable to overcome nooalignod resistance to measures against terrorism. The problem of terrorism was never bre.'ugi;t to debate because the biocs of the (bajor power;, and the nonaligned states were each sufficiently strong to bock the other's proposals but not strong enough to press their own initia. lives. The primary question for the assembly next year is whether the nonaligned, assisted by Al- geria's position as president of the assembly, will be able to unite sufficiently to attain the political potential that their numbers alone would gest is in their grasp. 25X1; Page 20 WEEKLY REVIEW Jan 4, 74 Approved For Release 2009/04/22 : CIA-RDP85T00875RO01000020001-4