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March 1, 1974
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Approved For Release 2009/05/01: CIA-RDP85T00875RO01000040001-2 G'l~~ Cc ~ C 1 t-' c_. Top Secret C 25X1 Weekly Review State Dept. review completed. ;jI Ed= io livs J1 1 3 07,_jjq. Top Secret 1 March 1974 Copy N2 426 Approved For Release 2009/05/01: CIA-RDP85T00875RO01000040001-2 Approved For Release 2009/05/01 : CIA-RDP85T00875RO01000040001-2 r CONTENTS (March 1, 1974) The WE.i_.f1,1._Y RE.VIEW, ip', in rho auturlut o)f 1974. The plan for cooperation was v : in keel aril earlier this year by a group of Middle Last experts lion) the foreign ministries of the LC states, acid was approved by the political director', in early February. The cooperative venture would ulclt,de matters within the purview 0f the LC as well as others such as Cultural relations that are out- side. For tills rca',on, the politic al c on)nlittee recoltunen(led that t1)'! Gentian) foreign nru)ister 51)0111(1 carry on the oegotwt ons Ill both b!', roles as president of the political Consultative group and as president of the LC Cuum 11. A number of t_(1 rn' nlher', Oro plcssrr)q for early .rclon, with an eye on the rotation,ll pattern for the 1_C presi(11!ncy. the West German', IM! IF) tine chin (Mill ,July. but the I (loch Wi;, take over for the following six months, f'ar rs (_oulcl 11)11', r 1',,1) inorttnl,)te political herlc!fit born a (folly of several month', in Initiating the nwq,)ti,ition'.. Approved For Release 2009/05/01 : CIA-RDP85T00875RO01000040001-2 Approved For Release 2009/05/01: CIA-RDP85T00875R001000040001-2 Less (hart twt, week, after Iii,, visit If) Cuba and the (JS, Soviet I uloigr Minister Gruntykc) was fill ill(! IOn(I aganr, trying to keel) (II) the ntonterhim of detente in 1_:urope even though the Middle La"t situation was ',till very much on his miner. r)tuin( Iii', vi',il IO I ranu hone I ci)ruary 15.18, Gin myku did nul stake t,tuch headway with any of (he problem, that have appeared in Soviet-It tench relations over the past few months, but he at least kept therm from getting worse. Paris ha'. been troubled by what it regards as a Soviet failure to consult adequately during the Middle Last war, while Moscow ha', serious reser- vations about the interest the French arc showing Ili W(!',t Lotopean defense cooperatiun. The So- viets h,rve also been disturbed by I:10 tee's unwill- Ingncss to participate in M(3Ff,, and stay feel that this attitude is sp)cading to other West Luropr!ari countites. Many of thcie pra.)blent, can only be tesolvecl at the ',outrun, if at all. Some pitrgrtlss ntaly be nct(le d ilmol Fresrctartt hontpi(Iou'', tiip to the USSk, whi(:h) has been under cOnsidelatiml for sonic (into. During Grontyko's stay ill Paris, it was announcccl that the trig) will take place in early Mauch, plubably next week. Looking fullhe' ahead, Ilm S()VI(!t',, Who) am f)reS(II11,11)ly .1wal(! Of Prn)tpi(lu.l's declining heal Iii, wi;l have! to cun',ic'el the policy they will take toward ranee after his (l1palltue front the political scene. Oil(,, reason for (arontyko's till) Iii Home from I n ,tIauy 18-22 besides touching ba:,e with the lt,tlial)', was to see the Pope. I he Vatican has recently been displaying a inure t)ragm,rlic ap- prO,lch tOWard church-state relations in cfin11)tU- ni%t countries. With Moscow'; approval, the Last Luropean Iegimes with I,ugc Roman Catholic populations have been respondinq in kind. The Soviets probably believe that in an era of detente, with Last-West contacts increasing, it is useful to neutratiie a potential source of internal discord In Eastern Lurope. While ill Rome, Grontyko touched on the Middle Last sittiartion, exf)Iessinct Moscow'', irrita- tion at being pushed Ion) center stage in the r.egoliations. 10 rcdSSer t the Soviet ic;ie, the For- atyn Mini',tci embarked fin Iii-, own tour of Arab capitals going to t)arta)',ctis On February 27 and schcdulntg a visit to Cairo MI M,ucII I. Approved For Release 2009/05/01: CIA-RDP85T00875R001000040001-2 Approved For Release 2009/05/01: CIA-RDP85T00875RO01000040001-2 Eastern European Foreign Trade Growth EASTERN EUROPE: FOREIGN TRADE BOOM Lastern Europe's foreign trade boomed in 1973, and most of the countries plan even larger growth this year. While Eastern Lurope as a whole accumulated a record hard-currency deficit with the West, its trade with the Soviet Union was again in surplus. Total trade grew some 17 percent last year- double the average annual rate for 1960-72 and a 20-percent increase is planned for 1974. With the exception of Hungary, all the countries ran hard- currency deficits. Total debt to the developed West -almost $5 billion at the end of 1972 grew substantially. Poland and Czechoslovakia amassed record hard-currency deficits of $1 billion and $300 million, respectively. East L= uropean imports were paced by large purchases of high-priced agri- cultural products and raw materials corn, soy- beans, and cattle hides. Western machinery and equiprnlent also remained in high demand, with purchases by Romania and Poland leading the way. Eastern Europe's large surplus with the Sovict Union I.,st year reflected the USSR's con- tinued heavy purchase of conrumcr goods. Soviet deliveries of fuels and other raw materials were on sch-dule. Planned dellvcri c of thn5d coinmoJities through 19/5 should be sufficient to forestall major energy problems in Eastern Europe. Poland and Romania, the countries ir.6th the fastest growing trade with the West, r"o not plan to cut back on their purchasing this year. Czecho- slovakia also is likely to buy more Western machinery. East Germany will probably reduce its trade with the West. while machinery imports by Hungary and Bulgaria will rise rnoder :ely. This pattern will probably continue throur,h 1975. In the next plan period--1976-80-the East Europeans face serious raw-material supply 071 197;2 197.1- I'174" ?rrrliminary; hard on 197I plan I,dlilirrrnl down rnh ?'tl aird on 1'174 plan and wpplrnw'nl.t Inl nrnulion probler, Soviet deliveries probably will level off in volume but cost substantially more. East Euro- peal, inve tments in the exploitation of Soviet resources dill not begin to pay off until late in the 19''5s. The East European countries are likely therefore, to have to plan on rer!uced rates of _conomic growth during th;. 1976-30 pe? rod. Page 16 WEEKLY REVIEW Approved For Release 2009/05/01: CIA-RDP85T00875RO01000040001-2 Approved For Release 2009/05/01: CIA-RDP85T00875RO01000040001-2 Y?'JO.L1via prornu!gatcd it, third pot, ,ir constitution on February 21 with great pomp and circumstance but without Presidwnt Tito, who wr.s reportedly ill with a ''cold." Many of .,rs countrymen will see his absence as another sign that they may soon have to get along without hint. The constitution is Important to Tito be- cause it attempts to codify his approach to ruling Paqe 17 WEEKLY REVIEW Approved For Release 2009/05/01: CIA-RDP85T00875RO01000040001-2 Approved I-or Release 2UU9/Ub/U1 : (IA-RUF'8b I UU8tbRUU1000U4UUU1-2 , ,0 Yurlrr?,I,rvi,r, a110 thus to r'r1"ioe Ihat his political ,uid adni(nr,tr itlve conc'pt', will cor'linut''o (luni- Irate nalroo,-r Ili(!. II also ?,eck?, It' guar, 'ilt'e Ihc; -,uIV rval of Yo(pr,l,ina's undue su(:i.1lisi sy',Ieni after hr, rle,rll-. llnde,r pr(rparatrun for four year,, (lit tone .111(1 (.implicated do(ollimil ',(+, out Ill (Icln(I (Ii' tutor' of worker',' ,nl(-nnar,.1ne un(?i t 111(1 shennihen', ill(' p.1r ly a?, tilt' leading polrli( ,il lot( e iii the cntuilry. 1114, (oropo',it(oi of the collectrvn 1) 1'si- (Iercy, the hight'sl level of 'I.iti power, ha', hen' altered. It will now contain 9 in?,tcad of ;'3 nlenr' IN'i',. ('('',(Item i Ito will pies-d(( ov'r till-, hcu(Iv durrrin his life!rnrc hut, upoo ihi dcalli, the po?,( lion of ( h(ef )f ',tile will rotat' ariortl lh' inner, bt'P, on an ,annual ha',i',. I he Yurlu'J iv?. now tact the (len-anrlinq I.1?,k ( , f i r n 1 1 1 e n i n n t i n ( l the cunstitotioo i n ',lane',. I f I Ito rt'ri,rins phy'ncally 'Ind mentally active, it w(,uld greatly i,Icilitate the Iii 11 (.4 .', 1111(1 Iiiovi(le fun .- srinOther han?.rhon Into tilt, pn"t- iIto era. IIr, iii once from th' llrunitilgahnn ccrc11uiny, how- ever, (arses anew the question Of how long he can last. Yugoslav ufhc:rais have told We-,tern ruurn,il- r',ts Only that his cunenit illrle',', is "nit set roes." It ns hrgh;y rnil(k''ly, Iiuw,we(, flint n "Ingle cold would have kept Intro away horn such a signal evert. l-1r, absence tngeti- -:r with Iii" sudden d^- cis;on to postpone s(_hedulc(I hip" to 1-lungary and Africa---suggests that at minimum he will re- (tun' an extensive period of rest. Despite the rernar kable recuperative ability ito has shown in the past, his age-82 in May-is increasingly against horn, an(I each bout of illness can be ex- pected to exact a heavier toll of his ;physical capacities. EAST GERMANY: A FIRMER GRIP Ilie La',t Geonan Gov' nrr('nl", recent de cr.1on I'r ',hilt I)er,onnel ,uid owl-I! "Iru(.tural cli,nul.r, Ii file Cuuortl of Milli-,ter', r', nri attenrl-t to tightitn i!(onmii( ul)ernlmnn',. Ad(lihorial rrr(nr',- ter, ial port folio', have Inc,en 0 ,snlnt'd to ',eve(nl (11'p- lily preriiirs, ao(I the rule', of tI(c State 1'lanrun(l Comrni',?,ron and Staff, Contract (:ou(t hive ireen enh,uu:cd, Ili' court Im!" to en?,rne that vok! - i-,rr"e?, a(1he it to (ontla'itral obligation', i-.1st Germany frillille(I its 19/3 e(.c,ournc ?.,n, bot poly h^.(:.1n',e of otit"tanlrnrl re',ulI'. in tl'w 1(''.t half of tilt, year, i he ministerial char,(les arf Ill pant .n effort to (teal ?,vith the slow(Iown ill cunoniic (lrowi r,rt the last 11,111 of the yea(, .'nd in part to (-np('in ....I !.rw', Intended to ',lrengthen the cnitinil of the Lim.-:it of Min"inns ovel g(,vernrn'nt opoiations. the chanle?, Involve those ,r tints of the economy that have been (r tit ve(I at ('cent pIt'- 11urns of the [-,I ,t Gerr-n,nn Ii,uty'', cenhal c(Irr- niittee. ihU"e sector',, (n( luduig (nve'lnmeris, the applrcahan of itcn(I" to r(ts'ai(Ii and (Iivt,!upn(eni, Intl life rnana.1 enn!rt of suppIl", n11(I I.1w I I I,rlirI- are. crucial to the fulfllicnuvrt of the 19/?1 plan. f',r'e of the I!+('.(,on,.I '.hif1', (live (mire we- spor(sibilities to deputy h(eniiel, who had pre- viously 'xeICI%e(1 no specific ri(nisterial dupes. Another deputy prt'n-ie' lu'.t his pistil, but renna(n', a rneniber of the Council of M(n(ste(?, and has been made deputy chairman of the State Planning Commission. The Planning Commission now has three nnenihers Of ministerial tank, reflecting the governnneiit's decision to strengthen it Ili accord- ance with a statute passed in August 1973. The st.,totc charges the commission with supervisinq the execution of economic and social plans ,,s well as development of the plans them- selves. Approved For Release 2009/05/01: CIA-RDP85T00875R001000040001-2 Approved For Release 2009/05/01: CIA-RDP85T00875RO01000040001-2 I I' ovi(Ir.R(e I?, IIo1( on(.lusive, 1)u1 ,111i(. I1'?, Ill the Soviet pr(?SS in recent week', indi(:al(.' th,ll )e(.retary Schlosingor's st,ltelll(!Ilt?, On III(! IlPW U() largelir g doctrine have added to the controversy a111nn(1 Soviet ofli(.ials over (Ill! choice', MO,cow confront!, in the Rational security area, flee out- corne of this debate coul(I halve a direct effect on the Soviet position in the. SAL I negotiation!,. One point of view, uxpresse(1 by Yury Arba- tov, head of the USA Institute, in the January issue of the international Communist journal, /'r?/,lent of !'g'ate an,! So, ralr%in, holds that there . 110 realistic alternative to negotiated arras 1e- straint since a continuation of the arms race will only result in vast expenditures without adding to the security of either side. According to Arbatov, the "law" that the cost of every new generation of weapons increases geometrically ha', produce( a situation in which defense expen(li'urns are dis- rupting the normal functioni,lg of a state's cr,)- nonnic rnechanisnl. Arbatov also argues that military force can no longer be used to achieve political objectives. Ile contends thrt some US in iiLiiy theorists we hying to find a way out of the strategic impasse through "rules of the game" that would slake nuclear war more thinkable by targeting weapons only against the adversary's military installations. This revival of US interest in a c(?:_'nterforce strat- ogy, Arbatov charges, is being used to justify new wea~)ons pragrarns and a bigger defense budget. Arbatov maintains that it is unlikely that new weapons advances will provide either side with any real advantage, but that a destabilizing effect can be produced if either believes that its adver- sary has obtained some advantage. A somewhat different perspective or. the arms question is contained in an article in Red Star on February 14 by Army General Ye. Malt- sev, who argues that the change in the US attitude toward the Soviet Union aid the prospects for peace are based on the military strength of the USSR. Unlike Arbatov, Ma!+.sev seems to imply that a bigger US defense budget and the new US targeting doctrine is a just reason for an increase in Ili- Soviet dofen',o potential. Maltsev's refer- ence to the. "topical" nature of maintaining re- liable SOvl11t dof(!I15(1s ,1l'U Sllgg(1Sts that till! Iss11Q, he tliscu?,?,rd are contrnversial. Uefere,e Minister Grechko'?, statenuxlt', on I ebruary 23, the Soviet Anted I orces Uay, also can be Interpreted as evidence of a debate in Moscow about Illture defense allocation',. Grechko himself did no: seem to come clown unequivocally on Maher side of the debate. At one point, Grechko referred to "further strength- ening" of the USSR's defer!,(: capability, but this he quickly balanced by asserting that the Soviet Army and Navy "now have everything necessary to rout any aggressor." On the whole. Grechko was riot particularly be!Iicose, and his statements (lo riot provide evidence that he is at odds with Page 19 WEEKLY REVIEW Approved For Release 2009/05/01: CIA-RDP85T00875RO01000040001-2 Approved For Release 2009/05/01: CIA-RDP85T00875RO01000040001-2 SOUTH VIETNAM MOUE CIIANGCS IN SAIGON i'Ie,idonl Ihivii h,I?, ol(lelr?d the Ie111omeI1I of .11 Iea',I ten rIvIlvI,1l'. ,111(1 11a11(Iful Of pluvin(v chief',, Ino?,1 Of whom Ito ,ulny r.olonels, a', palI Of Ili, l ullorlt effort t(1 I('VII,l /(! III', govc'111111elll ,'ndWiled out l;(eou petfoIrr WI',, ihieu un(Iouhterlly sees 11 nerd to 11 (111ce ill(, number of "(![)lot off,- and r'cu',t of Iho?,o marked for Iclirenr.!rli have vithor been without (1111m it ass:e1111t1e1115, holding Io.',ser pn',iliun?, In the hltleaucla(.y, of ',erving ,r, ,unha'r,adol', .11)1'),1(1. '1111ee of those 101110.rl load ;teen publicly accu',e(i Of corruption. 'Tile retirenlent order is one of it recent series of steps Ihicu has taken to crack (town oil official corruption. the f're5idenl has (leclared that the government intends tO "cleanse" i'Self of wrong- doers, and he has aul/lolired a stepped-up media campaign dcnuu11ci111] con option. COi!Icidtrlg with the goverr;nl(:rtt Icolganiz,ltion last month was the ouster of one cahinct minister and several police officials because of their alleged Connections with gambling and prostitution rings. Moreover, Thieu reportedly has Iaid down the law to at least two of his fo(lr military region commanders, telling their) that the high incidence of corruption in their area, must be stopped. "Anti-(?orroption" c,,nlpaigns have been an- nounced previously by Saigon, but usually with little lasting effect. Although this latest campaign could meet the same fate, it has been launched with much more fanfare and the appearance of a more genuine effort to get at the root causes. In addition to reshuffling the cabinet and giving Prime Minister Khicm added responsibility, Thieu is streamlining his own office by eliminat- ing several Special ascictant:' positions, Nnang Duc Nha, Thieu's former pnvcte secretary who was just appointed minister of information, has left the presidential office, but Khiem is still con- cerned over Nha's influence and activities. Al- though the Prime Minister says the reorganization clearly establishes his primacy, he expects that Nha will continue to have some direct access to Thieu. Suulh Vietnam'', V(.ooooly 11,1-, Ill .1 sevol,' ',Ilnnll ful atnlu',i two yell", ,vol uthe toil look I', for mole of the ',auto' in the rooulIi'. to come. I-c:onnmic problmrl', ple',enlly pu',o. the (,Irenlo',t throat to Prc'adenl I h!oil'', otherwise .,'lend (Ionre',lic pn',iIion, and tilllinued deleliol- ahun would increase llle risk of pol't.cal irl?,ta- Hlily. I hicu recognize', this threat, ,111(I many of 111', caltlllet shifts ovel ill(! last Six Itlullth!, have been attempt' to Ming in Inen who are 1111110 energetic and action-oriented. Still, no clear-cut ccunomi(: policies have emerged. Saigon is leaning toward more direct con- trols, but posscs%es only lirnitc(I financial and adrnirlistrative tools to deal with short-terITI prob- lems. With retail price' tit) Gr: percent Over last year and art additional ',5 percent ',o far this year, continued declines in real income will almost surely dvcrea',e the efficiency Of both military units and civilian programs. Economic problems--as well as potential pc'itical difficulties--arc presently concentrat?!d in urban areas and among people with fixed in- ColTles. Stagna,ion in indushial production, rapid inflation, and the sharp reduction in US military spending have all hit elrban areas the hardest. Although no data are av:uilable, unemployment is clearly on the increase; a recent US Embassy study estimates that unemployment may now on the order of I mitiion people, some 15 percent of the labor force. Even for those employed, wages generally are failing to keep up with the rising cost of living. This is particularly true of government employees, both civilian and military, who ac- count for more than one fifth of the labor force. Despite a 25-percent pay increase last year, the real wages of government employees are probably at best only two thirds that of a year ago. Page 20 WEEKLY REVIEW Approved For Release 2009/05/01 : CIA-RDP85T00875RO01000040001-2 11 % Approved For Release 2009/05/01: CIA-RDP85T00875RO01000040001-2 I or Inwer level enrplnyee',, (heir regular S~ I My r 10 10111(1 .1 "('1ie?, of ,pee ,al allowaucr.', as well a?, (nntnri',',ary ,Ord 1'X privrhtcl,'', will ? .)w barely (.Over a f,uurly'', expenditroe' for rice. Mnnnhcihting and the (!ntl)luyruent Of olher f,nnil, rnenrheIS heist, but Iob?, ,ue Scarce. In aeldi- trun to Son,,, lay-tiff', by Vietonrne'e manufactur- er,,, the U5 ',eclor which it it', peak in 1909 directly ?rplnyed ',onre 150,000 Victnalm-w 'Ind prctb?''. , indirectly provided work fur an ecitraf nunrl,er (.onlin(re', to redrr,.e errtployntent of Vietn,tntese. Agriculture remain', relatively strong, recov- ering from a (I isappninti rig year in 1972. Real incomes in this sector hive probably increased somewhat over the past few years, and there 'we preliminary indications that a record rice harvest is now coming in. This performance is unlikely to be custaine(1, however, because fertilizer is scarce and fuels are expensive. Llecent increases in r~ce production have been due almost entirely to greater use of high-yield varieties, more intensive use of chemical fertilizers, and increase(] mechani- zation. The retail price of fertilizer more than doubled over the past year, however, and another important input, gasoline, was up more than 200 percent. Some farmers reportedly are now reverting to subsistence agriculture, with increased use of the traditional but lower yielding varieties of rice. These varieties are hardier and less dependent on the vagaries of weather and on imported inputs. With this shift, farmers will probably still be able to meet their own needs as well as insulate them- selves somewhat from extarnal market forces, but private merchan~s or government representatives may find it more and more difficult to purchase rice in the delta for shipment to Saigon and other rice-deficit provinces. Increases in the prices paid to farmers would eventually lead to greater pro- duction, but these prices were nearly doubled last year Another price increase would add to the burden of low-income urban families or, if the government attempted to subsidize rice sales, put added strains on a government budget already displaying a large deficit. Wu,ld pace.', (or the cfnwf', laic ha',ed abroad by Vtetn,ntr ro',e Ur avrnage of 25 lit icerrl la',t year. Ihu',, it Saiquo were to continue the',anre vcrlu'?t^ of it', major inrpoit', Ierhliter, rice, wheat, petrolerrrn prociucI', its 1974 bill cuul(1 tidal well Over ?900 million. (iecau',e expor I', are expected to he only about $100 million thi', year, the US Lruha',,y has regtrc'ste(I an intnrecliatc Supplemental lid appro- priation of $250 million. I his would be in addi- tion to the. $500 million the US has provided annually over the past few years, Which includes surplus agricultural goods sold under PL-480. Sai- gon's major source of foreign exchange Other then foreign aid--US spending in South Viebtant-has dropped shirply from a peak of $400 million in 1971 to ah,)ut $130 million last year. Aid from countries other than the US, pri- marily Japan , d France, will probably continue to increase, but over the short tern the total amount will stake only a small dent in Vietnam's aid and import requirements. Total aid from these sources will probably amount to somewhat Tess than $100 million this year, about double that provided in 1973. Thus, given the present levels of anticipated foreign aid for this year, the outlook is for an economic performance similar to that of 1973-low domestic and foreign investment, little o: no growth in production, widening income inequalities, growing unemployment, and con- tinued deferral of reconstruction and Jevelop- ment. Moreover, each increase in consumer prices, with no concomitant gain in money incomes for the working classes, increases the prospects for public unrest. Page 21 WEEKLY REVIEW Approved For Release 2009/05/01 : CIA-RDP85T00875RO01000040001-2 Approved For Release 2009/05/01: CIA-RDP85T00875R001000040001-2 CAMBODIA: MORE GOVERNMENT GAINS The government's military fortunes con- tinued to rise this week as Cambodian Army units won the upper hand over Khmer Communist forces south of Phnom Penh. By mru-week, army troops had ralaken almost all of their previous holdings on lh-3 south bank of the Prek Thnaot River, forcimi the Communists to pull their artil- lery beck out of range of the capital for the first time in a month. Advancing government troops discovered five abandoned howitzer positions as well as significant quantities of ammunition and supplies. Norte. vest of Phnom Penh, the Communists have taken heavy losses in men and material as a result of a hard drive by government forces. These setbacks apparently disrupted Communist plans to launch a series of coordinated moves against the a ital Thus far, the only attacks have been carried out along Route 1 some four miles south- east of the city. Army commanders have been able to call in reinforcements from less active fronts, and appeared to have contained this Com- munist effort late in the week. Farther afield, government garrison forces have ventured forth from the southern provincial capital ""f Takeo to score minor tactical victories over understrength insurgent units. Similar suc- cesses have been reported in the north around Kompony Cham City. Teacher-Student Agitation Phnom Penh's secondary school teachers are still out on strike over economic grievances, even though their classroom, have been closed since late last month. They rave now been joined by primary school teachers, who have publicly com- plained that the governmeot had taken their state- ments oe economic hardships in bad faith by accusing them of serving communist aims. In addition to the teachers' statement, the government was handed a "peace declaration" by the university students' association-whose recent activities have had a leftist tinge. Unlike previous student documents, this one treated both the government and the Khmer Communists equally urging both sides to seek peace through negotiations. i he declaration also stressed prob- lems of social injustice, suggesting that the stu- dents may soon shift to exploiting these issues. The relatively mild tone of the declaration in- dicates that the government has had some success in its efforts to undermine and isolate radical university student leaders. Page 22 WEEKLY REVIEW .-Approved For Release 2009/05/01: CIA-RDP85T00875R001000040001-2 Approved For Release 2009/05/01: CIA-RDP85T00875R001000040001-2 LAOS: THE COMMUNISTS' TURN The next moves in the negotiations to form a new coalition government apparently are up to the Lao Communists. Chief Pathet Lao negotiator Phoun Sipraseuth is due to leave Vientiane, for Sam Neua soon to report on his political dis- cussions with Prime Minister Souvanna. Phoun gave no definite date when he would return to Vientiane. For his part, Souvanna is still hopeful that the coalition will be formed in the near future. At a press conference late last week marking the first anniversary of the Laos cease-fire agreement, Souvanna stated that he expected senior Pathet Lao official Phoumi Vongvichit to return to Vien- tiane "very soon" with a definitive list of Com- munist designees for the new cabinet and its ad- visory political council. As the next step in his scenario, Souvanna said he anticipates meeting Lao Communist leader Souphanouvong in Luang Prabang to review and approve the nominees for the new government. According to Souvanna, he and Souphanou. vong-accompanied by the entire membership of the coalition-wuuld then be invested by the King. Page 23 WEEKLY REVIEW Mar 1, 74 Approved For Release 2009/05/01 : CIA-RDP85T00875R001000040001-2 Approved For Release 2009/05/01: CIA-RDP85T00875R001000040001-2 THAILAND: THE STUDENTS, AGAIN Bangkok's fractious students never seem to run out of issues to sustain them in trying to continue playing a prominent political role. Last week, three major student organizations staged a large protest rally, charging that government secu- rity forces burned a village in the northeast be- cause the inhabitants were suspected of aiding Communist insurgents. The students demanded that the government compensate the villagers and punish those in the military who were responsible for the incident. Although Thai officials have privately admitted that the charges are accurate, the government has not responded formally to the students' "unconditional" demands. It has, however, set up a committee to investigate the affair. This is the first time that the students have focused on an issue involving the military's inter- ests. If they press their demands, they risk offend- a military leadership grown impatient over student agitation. Under present circumstances, the army lead- ers probably would not use a move against the students as a pretext to oust the civilian govern- ment of Prime Minister Sanva. The army seems to view its current role solely as one of preserving order. There is a danger, however, that strong and effective measures to restrict student political ac- tivity might lead to a confrontation between the Page 24 army and the students. Army sensitivities are run- 25X1 ning particularly high at this time because of the student demonstrations over the military's alleged involvement in the Village burning incident. THE "4TH BURMA RIFLES GOVERNMENT" 25X1 The installation of a new government in Rangoon on March 2 will complete the process of legitimizing Ne Win', 12-year-old regime as a civil- ian government. Ne Win assumes the presidency, and the new administration is a thinly disguised continuation of the former one. Ne Win is likely to maintain power indefi- nitely-a prospect that offers i?ttle promise for the easing of Burma's staggering economic prob- lems. Twelve years of mismanagement have re- duced Burma, once the world's leading rice ex- porter, to the point where ii is unable to meet its now modest export commitments. Effective secu- rity controls have stifled discontent and pre- vented coalescence of an opposition. Ne Win's final step in assuming the presi- dency was preceded by the proclamation of a socialist republic on January 2-the 26th anniver- sary of Burmese independence-an act that for- malized Burma's homespun socialism. In a De- cember plebiscite, Burmese voters ratified a new socialist constitution by a 95-percent majority amid government surveillance, widespread viola- tion of the secret ballot principle, and fraudulent tabulation of votes by local authorities eager to produce massive affirmative majorities. Under the new constitution, political activ- ity remains the preserve of the regime's monopoly party, the Burma Socialist Program Party. Candi- date lists for the 451-member People's Assembly c ted over the past several weeks were drawn up uy the party executive committee. Rangoon cynics have dubbed Ne Win's new regime the "4th Burma Rifles Government," from the fact that ten of the seventeen cabinet members were com- rades of Ne Win in his old military unit. Although Ne Win and most of his cronies shed their military titles some time ago, they have continued in con- 25X1 25X1 Approved For Release 2009/05/01: CIA-RDP85T00875R001000040001-2 CHILE: AT HOME AND ABROAD The retirement of two senior generals and the maneuvering over the composition of a key governmental advisory group reflect junta Presi- dent Pinochet's determination to prevent the emergence of potential rivals for power. Army Chief of Staff Urbina, although posing no threat to Pinochet, was apparently retired be- cause his conduct under the previous regime had earned him the mistrust of his peers. The other retired officer, General Manuel Torres, apparently clashed with the junta president over government policy once too often. Pinochet reportedly has had disagreements with other ambitious generals as well. He apparently feels his position is now firmly enough established for him to deal force- fully with such problems, and further changes in the high command may be in the works. Pinochet and the rest of the government are not concerned exclusively with the mechanics of power, however. In Paris, a meeting between Chile and its major creditors last week resulted in the rescheduling of all but $150 million of some $650 million in payments due this year. The draft agreement calls for payments of 5 percent of the rescheduled debt this year, 5 percent in 1975, 10 percent in 1976, and the remainder over the fol- lowing seven years. Another meeting will be held in late March to approve the draft. At the UN this week, Chile was busy defend- ing itself against an impassioned attack by the widow of the late President Allende, and Ambas- sador Bazan continued his tireless efforts to save Chile's place in the nonaligned group. The latest threat to this position is Santiago's decision- which Bazan is vigorously trying to reverse-to allow a Chilean team to play South Africa in a Davis Cup tennis match. Chile's major foreign concern continues to be Peru. Lima's purchase of tanks from the USSR and its acceptance of Soviet training personnel are compounding Chile's concern over traditional Peruvian revanchism. Santiago newspapers, in what is probably a government-inspired campaign, have been warning Chileans of ar alleged Soviet- Cuban plan to use Peru as th ' new "bridge for Marxism" in the hemisphere. Chilean officials pri- vately have expressed the fear that Chilean exiles will accompany the Peruvians across the border and attempt to establish a rival government on captured Chilean soil. Plausible or not, such a scenario is not far- fetched to the Chilean military. Moves aimed at deterring the Peruvians include the reinforcement of ground and air forces in the north, plans for weapons acquisitions, and efforts to attract. for- eign investment to the border area. The Chileans also are looking for foreign political support. Pinochet plans to attend Brazilian President-elect Geisel's inauguration in March, and reportedly will seek a commitment for Brazilian assistance in countering a Peruvian attack. Pinochet may also attempt some face-to-face fence-mending with Page 25 Mar 1, 74 Approved For Release 2009/05/01: CIA-RDP85T00875R001000040001-2 Approved For Release 2009/05/01: CIA-RDP85T00875R001000040001-2 Bolivian President Banzer, who may also be at the Geisel inauguration. Chile might try to mitigate Bolivian revanchism and drive a wedge between Bolivia and Peru by offering La Paz more conces- sions on access to the sea through Chilean ports that once belonged to Peru. The rebellion by police in the provincial capitals of Cordoba and Mendoza may give Presi- dent Peron the excuse he has been seeking to oust the left-leaning governments of these provinces. Indeed, Peronist officials in Buenos Aires may have instigated the disturbances to justify federal intervention. Workers and politicie -s in both provinces, but particularly in Cordoba, are lining up behind left- and right-wing Peronist leaders. According to press reports, leftists in Cordoba are calling on workers to "maintain a state of alert" and to "depend" the governor and his aides, who were seized by the police. Rightists are appealing for public support to depose the "Marxist clique" that is governing the province. The governors of several provinces have been under heavy fire from conservative government and labor leaders in Buenos Aires since Peron's call for a purge of left-wingers last October. Peron has singled out Cordc*a as a center of leftist infection, making it clear that he would like to remove Marxists and Trotskyites from key gov- ernment and labor posts there. The trade union movement in Cordoba is dominated by radical left- ists, many of them well-armed and violently opposed to the Peronist labor bureaucracy in the capital. There have been conflicting reports concern- ing Peron's immediatr plans for ousting the gover- nors. He recently assured a gathering of provincial Pedetal police ready to move Because Cordoba is such a leftist stronghold, authorities have long expected that the governor and his administration would not go down with- out a fight. Whether Peron had a hand in creating the crisis or not, it is an opportunity he will find hard to resist. If he decides to intervene with troops, he will have full support from the armed forces, whose leaders are eager to settle old scores with radical leftists there. Some federal police already have been sent to Cordoba, and III Army Corps headquarters there has put its units on full alert. Peron may allow the situation to deteriorate a bit more before moving but, once he does, a violent confrontation is almost inevitable. 25X1 25X1 Page 26 WEEKLY REVIEW Mar 1, 74 Approved For Release 2009/05/01: CIA-RDP85T00875R001000040001-2 Approved For Release 2009/05/01: CIA-RDP85T00875R001000040001-2 25X1 25X1 25X1 25X1 GUATEMALA: PRESIDENTIAL ELECTIONS The governing coalition candidate, General Kjell Laugerud, has the best chance of winning what is expected to be a close presidential elec- tion on March 3. Laugerud's c]mp,rigrr managers, led by President Carlos Arana, appear reasonably confident that he will win a plurality or at least come close enough to permit them to rig the results without being too obvious. Laugerud's chief opponent is General Efrain Rios of the leftist National Opposition Front. The other contender is Colonel Ernesto Paiz of the centrist Revolutionary Party. If, as seems likely, no candidate wins a majority, the election goes to the Congress, which must then elect one of the top two vote-getters. On two occasions in the recent past, Congress picked the front-runner, but this is not mandatory. Should Laug^rud come in a close second, there would be considerable pres- sure on the government-controlled legislature to Rios supporters, if they believed victory was stolen from him by fraud would try to promoto protest demonstrations, and an un- stable situation could develop. The army, though its top brass is opposed to Rios, gives every indi- cation that it wants no part of a blatantly fraudu- lent election. A Paiz victory would probably not be opposed by either Laugerud or Rios sup- porters. Recently, in the estimation of the US L:nrbassy, Rios has slipped somewhat, due to internal party squabbling and a weak grass-roots campaign. I lis best showing will be in Guatemala City, which accounts for 25 percent of the total vote. Rios' hopes were also dampened by Colonel Enrique Peralta's recent decision riot to support hill) openly. Instead, the popular former chief of state freed his followers to make their own decisions. Peralta is said to be privately urging his supporters to vote for Rios, but since they represent a wide range of views they will probably not vote in a bloc for any single candidate. In addition, Rios may be hurt by a last-minute government slur campaign, branding his National Opposition Front as communist and insinuating that the Christian Democrat Party, which is a member of the Front, is under foreign influence. Paiz has quietly improved his chances in the last several weeks by campaigning effectively in the interior, where he now appears able to beat Rios, and possibly pass Laugerud. He will still have to make heavy gains in the capital to finish second, however. Inflation is the only significant issue, and Rios has made some gains exploiting A. Violence is not the explosive issue it was in 1970, although government gunmen have murdered some local opposition politicians. wins and is denied his victory. The Communist Party is urging its members and sympathizers to vote for Rios, but is not publicly assisting the Rios campaign. The party decided several weeks ago not to initiate violence over the next few weeks for fear of giving the government a pretext to cancel the election and to retaliate in kind. Violence could break out after election day, however, especially if Rios 25X1 Page 27 Approved For Release 2009/05/01: CIA-RDP85T00875R001000040001-2 Approved For Release 2009/05/01: CIA-RDP85T00875R001000040001-2 JIIfIgII IfI Iron, the II,11,11 111upagamla rrlra?,rs, Arnlyd I 1111 e?, Mi1)r,lrr tL11Il (.a?,h0 a( ( nnlplisllerl little rrf ,1 ?,uh?,tnntive n,ilnrr' dlnnlg Ill-, rrrent till)', 10 the (J')')i and (:;r'( h11?JOVakia III YugO? ?,I,,vi,1, however, Ili', c IIII-day ?,tay ntllkr'd a high 1)011)1 in Ihr ?,Ir .itlily i1)Iplr)ving I('1a1Iuns br'lwr(,n I Iavana .111(1 I lelgt adv. Up0n nrriv,ll in Mu5cow Ott I ehl(I,lry (r, I4111l was (liven Only .1 lukewarrtl Im 1,I)hnn In .spite Of the fact that th(, visit wa', in "Irsponse to .111 invitation frOn1 the Cl'SU." After 1 bnir?f i(.Icnowl- e(Igenlent Of Ill-, ill Iivll, the Soviet pie's', ( oared no (Iertails of his visit and ignored his departure for I'rarlue five (lays later. When he ar r ivrd )lain in Moscow on I ebluary 20 in tr,mr,it hone I'rlqur to flelgrade, the Soviet press 111,1(1e no mention Of his Ctechosiovak sojourn, leaving the impression that he had been in the IISSR for the previous two weeks. The reasons for Ran I's trip to Moscow, th,i low-level reception conlrnittee, and perfunctory press treatment are unclear. Although the trip was classified as "unofficial" in both the Cuban and Soviet press, an individual of Ratil's rank he is also party second secretary and first vice prime minister would seem to call for more attention from his hosts. Moreover, those accompanying Raul also received short shrift. His wife, who is head of the Cuban Women's Federation, Vice P me Minister Flavio flravo, Cuba's represenla- trv' to the sixth meeting of the CLMA Executive Committee, and Vice Minister of Interior Jose Abrantes, got little or no mention. The signing of the Soviet-Cuban trade pro- tocol for 1974 in January would seem to preclude (,( On)Ili i( tn,ltt'rs a?, fhr sulrlrv I Of it,irrl'?, bilk', With fill, "(wi)ts, .111(l Ow vi?,il (if I ('unid Ilrr; I)11,v In (:uba jOSI pr 1111 to i4atri'?, fill) shOUld have nhvralerl II1r nerd for 1114Ihrn 41)141111 al (If-,( 11?,?,11 n. It scans mist likely, iheteIOre, lh,il 14,1111 was in Mr)"( uw 111 111.1kr. a pit( 11 for )-our nlihtary a?,?,r?,I? ,1111 rv. II 1111?, i?, Irur, 111e plaving down Of III,, visit ug(lesls Ihal Mu?,r.0w cithrr 11u11r(I a )leaf rat if) ;n?, 1 1(4111',I OI I?, (It?I.!Irninrd 10 rlr,.r,rn1)ha,t,e ,iny new .11 11), sI)il)nlrnt?,. CiecIao'lov.k heallnenl Of (0)11'?, till) visas only slightly better than 111,rt Of the S,)viels, ile W.V. (liven priority attention upon ,arrival 111(1 (ir- parture, but his activities while in C;echosJov,lkia were given sparse coverage. Ilk visit was again (hlracleriied "unnffi( ial" 11)(1, accoIdIII(I to Ilav,)u1 at least, resrllte(1 from ,11) invitation bon) Czechoslovak Defense Minister D;ur, who 11,1(1 visited Cuba last year. In conh,st, the Yugoslav portion of the Itii), described as "official," received broad pie?,s coverage in both 1-lavana mid 13elgr??de. 1-6trl traveled widely throughout the country, met with many top leaders, and was given red carpet treat- ment. Although no specifics were revealed, one of the matters discussed involved "further develop- ment of cooperation between the armed forces of the two countries." Until last year, when a gradual warming trend began to develop, Cuban- Yugoslav relations had been cool. Raul'', visit, however, indicates that whatever major problems existed between the two countries have been largely overcome and that ties are well on the Page 28 WEEKLY REVIEW Approved For Release 2009/05/01: CIA-RDP85T00875R001000040001-2