WEEKLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001000070003-7
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 26
• Document Creation Date: December 22, 2016
• Document Release Date: October 15, 2009
• Sequence Number: 3
• Publication Date: June 21, 1974
• Content Type: REPORT

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Ton Secret
NAVY Review Completed
Weekly Review
Top Secret
21 June 1974 25X1
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Copy N2 636
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NAVY Review
Completed
CONTENTS (June 21,1974)
1 In the Wake of Disengagement
The WEEKLY REVIEW, issued every Friday morning by the
Office of Currey-t Intelligence, reports and analyzes significant
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 therefore
published separately as Special Reports are listed in the
contents.
EAST ASIA
PACIFIC
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13 China Graffiti
15 South Vietnam: Fighting Slackens
15 Laos: Non-Communist Stirrings
17 Cambodia: Changing the Guard Again
17 Thailand: Labor on the Move
WESTERN
HEMISPHERE
MIDDLE EAST
AFRICA
4 Portugal: Spinola's Problems
5 Belgium: A More Stable Government
6 USSR: Elections; Foreign Policy
8 Soviet Military Developments
9 Italy: Rumor Gets a Reprieve
10 Austria: The Presidential Stakes
10 Eastern Europe: Grain Outlook
19 Cr lombia: New Guerrilla Woes
19 Panama-US: Canal Negotiations
20 Argentina: Peron's Troubles
22 North Yemen: Military Take-over
23 Cyprus: Makarios' Difficulties
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NAVY Review Completed
In The Wake of DIsengagement
Disengagement of Syrian and Israeli forces
continued on schedule this week on the Golan
Heights. In a brief ceremony on June 18, the
Israelis handed over to UN observer forces a
180-square-mile swath of territory. The area was
turned over to the Syrians the following day.
Israeli forces have now withdrawn from all but a
three-mile-wide strip of the land they captured
during the October war. They are expected to
withdraw to within one mile of the 1967 cease-
fire line by this weekend, and to complete their
redeployment by June 26. Kuwait and Morocco
announced that their forces, at Syria's request,
will soon begin to return home. The Saudi con-
tingent is also expected to leave Syria before long.
Once disengagement is completed, President
Asad reportedly will make changes in the cabinet,
the Baath Party hierarchy, and the Syrian military
establishment, allegedly in preparation for allow-
ing greater economic and political freedom.
Asad is considering form-
ing a national union government
which he would
,
invite exiled Syrian politicians to join after
declaring a general political amnesty. He will cer-
tainly proceed cautiously if he moves in this
direction at all. Asad seems more likely to take a
different route, tightening his control over the
party and the army by weeding out recalcitrants
Israelis turn first parcel of land over to UN control
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who still oppose his efforts to negotiate with
Israel.
With President Nixon's visit now past, Presi-
dent Sadat has turned to more difficult diplo-
matic tasks. Algerian President Boumediene's
stopover last weekend marked the start of the
round of bilateral consultations with Arab leaders
that Sadat promised as a prelude to reopening the
Geneva conference. Sadat has also called for a
broad four-way "summit" with Syria, Jordan, and
the Palestinians to coordinate positions, and there
are rumors of a separate mini-summit among
Egypt, Syria, Algeria, and Saudi Arabia. A full
Arab summit is now set for Rabat in early Sep-
tember.
Recognizing the difficulties of working out a
common Arab strategy, Egyptian officials antic-
ipate that the peace conference will not convene
until after the Arab leaders' meeting in Sep-
tember. Between now and then, Sadat will try to
satisfy the conflicting demands of Jordan and the
Palestinians. Although most of the work to ac-
complish this will be behind the scenes, he has
made it clear in public that he expects com-
promises from both sides. Sadat has told the
Palestinians that, no matter how much they may
dislike the prospect, they rdust coordinate their
position with Jordan. Asa further nod to Jor-
dan's interests, the Egyptians have also dropped
all open reference to the Palestine Liberation Or-
ganization's status as the sole legitimate represent-
ative of the Palestinians.
Israeli aircraft attacked fedayeen positions in
southern Lebanon several times this week. The
raids-the first since the signing of the Syrian-
Israeli disengagement agreement-were apparently
a delayed response to the terrorist attack on June
13 on the Israeli settlement of Shamir. The Israeli
retaliation was delayed until President Nixon left
the Middfr East. Casualties and damage from the
air strikes were less heavy than those that followed
the incident at Maalot last month. They should
not be an impediment to further progress in Mid-
dle East peace negotiations.
Many Israelis, meanwhile, are increasingly
concerned that the improving Arab-US ties may
be at Israel's expense. Prime Minister Rabin
reflected this anxiety in a speech on the eve of
President Nixon's visit to Israel, saying that dif-
ferences of opinior, with Washington are quite
possible as Arab-US relations warm.
Israel's press and public opinion have been
particularly exercised over the US-Egyptian agree-
ment to negotiate a pact on nuclear cooperation
for peaceful purposes. Early this week the opposi-
tion in parliament submitted a no-confidence
motion--its first against the new Rabin govern-
ment-over the cabinet's low-key reaction to the
announcement of the agreement. The government
survived, however, by a vote of 60 to 50. Rabin
took the Knesset rostrum twice to emphasize that
he had expressed his anxieties over the accord to
President Nixon and was seeking reassurance from
independent experts on the promised safeguards
to prevent military use of the nuclear technology.
At the same time, he warned his critics against
"spreading panic" over a technological develop-
ment that could perhaps be delayed but not
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prevented. Government spokesmen stressed the
continuir.g US commitment to provide Israel 'vith
large-scale military and economic assistance.
The Soviet press played down the President's
trip, and, not surprisingly, emphasized the con-
tinuing importance of the Soviet Union in the
region. Moscow was particularly sensitive to
speculation in the Western press that renewed
US-Arab cooperation would result in the decline
of Soviet influence.
Pravda, for example, asserted on June 16
that.the success. of Soviet-Arab cooperation had
produced the change .in the Middle East climate
responsible for the improvement in US-Arab rela-
MONEY: NO AGREEMENT ON REFORM
. No major agreements on international
monetary reform or on the. recycling of. oil
funds were reached at last :week's financial
meetings. These included sessions of the Inter-
national Monetary Fund's Committee of
Twenty, the Group of Ten (major financial
powers), and the Bank for International Set-
tlements. Participants again pledged. not to
pursue beggar-thy-neighbor policies in dealing
with the impact of higher oil prices, but they,
failed to develop arrangements that would
allow each consuming country to finance its
higher oil import bill for a sufficient; time to
permit smooth adjustment.
The Committee of Twenty failed to
develop an outline for basic international
monetary reform. Uncertainties arising from
sharply increased oil prices precluded agree-
ment, despite nearly two years of negotia-
tions. It condemned the "cold-war" advocates in
the. West for trying to portray the President's trip
as a campaign to undercut Soviet-Arab ties. The
US was portrayed as a Johnny-come-lately, whose
basic interests are still at variance with Arab goals.
Meanwhile, Soviet journalists have begun
circulating rumors of an impending renewal of
Soviet-Israeli diplomatic relations. It is doubtful,
however, that Moscow and Tel Aviv an, ready to
take such a step at this time. The Israeli foreign
minister said on June 19 that relations with Mos-
cow are as bad as they have ever been since 1967.
One purpose of the Soviet leaks, therefore, may
be to tell the Arabs that if their new relationship
with the US goes too far. Moscow can also seek
new friends.
command. sufficient funds to bail out:coun-
tries with oil-related payments problems.'','',
The Group of,Ten agreed to allow' gold
to be used as collateral at negotiated'prices'ini
official borrowings. This measure will not sig
nificantly increase the borrowing; capability.of
developing countries,, and will. pr
partial and temporary relief.:,to
countries with major paymentsAiff
Although. they. were unable .'to reach any.
consensus, central bankers at the:: monthly
meeting of the Bank of International Settle
ments in Basel discussed a number of pressing
problems, including: the,recycling of oil Funds
to consuming countries; central, ban{, asp f'
monetary gold reserves; and Italy's financial1.
plight. Plans to aid Eurocurrency banks in the';
event of a financial crisis were also discussed
tions. The committee merely adopted a num~ again, but the bankers did not. come: up' with
ber of interim refcrm measures that will riot
substantially alter existing practices. New
guidelines for the management of floating ex
change rates are so general, for example, that'
their own :currency intervention goals .: More
over, a new 'IMF- lending facility, does; not
,any proposals. Italy's government crisis,- and:
the premature departure of-Italian -Central:,
Bank Governor Carli. from the meeting, pre-
ventcd the bankers from arriving at Concrete,
plans to help Rome finance its payments'.de-?
tive.
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I I
PORTUGAL: SPINOLA'S PROBLEMS
President Spinola continues to stump the
country in an effort to consolidate his leadership
in the midst of labor disputes and difficulties in
bringing about a cease-fire in the African ter-
ritories.
Situation in the Metropole and...
Spinola's latest series of speeches has been
addressed to military units, to which he continues
to stress the need for order, discipline, and vigi-
lance in the face of unrest fomented by ex-
tremists. He appears to be more concerned about
the threat from extremists on the left than on the
right.
Spinola's personal appeal to the rank and file
is designed to assure his control over the military
establishment and the younger officers repre-
sented in the Armed Forces Movement, which
was instrumental in ousting the Caetano regime.
The Movement is still an unknown quantity, and
some of its members may be sympathetic to the
views expressed by leftists represented in the pro-
visional government.
Meanwhile, the government is continuing to
take a firm hand in settling labor disputes and
discouraging anti-government demonstrations by
leftist groups. Last week, the government settled
a dispute over TV programming by taking over
management of the station in order to end its
control by leftists.
The only present work stoppage of major
importance is a strike by postal and telecom-
munication workers, which began this week. The
government issued a communique in which it
promised a study of worker grievances, but crit-
icized the strike and warned that Lisbon will be
firm in order to assure a return to normalcy. The
Portuguese Communist Party supported the gov-
ernment by also issuing a statement critical of the
strike.
...in Africa
Lisbon's Worts to conclude early cease-fire
agreements with the insurgents in Portuguese
Africa are seriously bogged down. A second
round of talks with Portuguese Guinean in-
surgents, this time in Algiers, broke down on June
14 after only two days, and no date has been set
for a new meeting. The negotiators apparently
were unable to reach agreement on the political
process to be implemented in the territory. The
rebels want Lisbon to recognize the independent
state they have proclaimed as well as their right to
exercise political control over it. After fighting
for more than a decade, they want no part of
Spinola's plan to hold referendums giving the
inhabitants of all the territories a choice of
options.
A preliminary round of talks was held with
insurgents of the Front for the Liberation of
Mozambique in Lusaka, Zambia, on June 5-6. The
results suggest that the negotiations scheduled to
open next month with that group are likely to be
in many respects a replay of those with the
Guinean rebels. Unlike the rebels in Portuguese
Guinea, those in Mozambique have virtually no
political organization in the territory. Conse-
quently, they will probably try to string out the
negotiations until they have had time to prepare
for a take-over.
So far, Lisbon has been unable to draw
Angola's three insurgent organizations to the
negotiating table, although it reached agreement
this week with the smallest of the three groups
#o suspend hostilities. Like the other insurgent
organizations, the Angolan groups were surprised
by the Lisbon coup, which came at a time when
they were squabbling within and among them-
selves. As a result, Lisbon has felt no pressure to
meet their rhetorical demands for "independence
first." The three groups are scheduled to meet
later this month in Zambia to try to iron out their
differences and form a united front against the
Portuguese, but the effort may be thrown off
track by the announcement that the smallest of
the three has independently agreed to a cease-fire.
Moreover, one faction of another of the groups
has also announced it was ready to end the fight-
ing. Nothing has been heard from the other fac-
tion of this group or the third rebel organization.
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The new governors-general recently ap-
pointed for Angola and Mozambique arrived at
their posts this week. Their installation ceremonies
were low key, and there was little in their de-
meanor to suggest that they will be able to come
to grips with the political uncertainties now
prevailing in their territories. Little public en-
thusiasm was shown for the arrival of either man.
The development of local political organi-
zations in the African territories has been erratic.
Of the three, Mozambique appears to be furthest
along, although little forward motion has been
achieved even there. The only organization to
make any impact thus far is a grouping of liberal
white lawyers and journalists who had long been
critics of the former regime's policies. Their
money and access to the media gives them a
distinct advantage over potential competitors.
They support the Front for the Liberation of
Mozambique and would make a powerful ally for
the front in any future referendum in the terri-
tory. They have virtually no political support
among the population, however, and any suc-
cessful political movement will have to take into
account the strong, and disparate, tribal interests
throughout the territory.
BELGIUM: A MORE STABLE GOVERNMENT
The Wallonian ling'ristic party's decision
earlier this month to participate in Prime Minister
Leo Tindemans' center-right government has
given him a nine-seat majority in parliament.
Tindemans now has the opportunity to advance
legislation that might have been blocked by the
Socialists, Belgium's second largest party. He also
plans to develop greater regional autonomy,
which will strengthen his position with the other
two linguistic parties.
The entry of the Wallonian party-the fir, -,t
o: the linguistic parties to participate in a Belgian
g',vernment-gives the coalition, which has been
;.;..cused of a Flemish bias, a better balance and
therefore more stability. The acceptance of gov-
ernmental responsibility may temper the Wal-
lonian party's separatist demands. The party
apparently has reached an understanding with the
Wallonian wing of Tindemans' Christian Social-
ists, which fears that greater regional autonomy
may eventually lead to the dissolution of Belgium
as a unitary state.
Because of the sensitivity over the regional
autonomy issue, Tindemans has called for pro-
visional agreements on regionalization that can be
implemented through a simple parliamentary
majority rather than the two-thirds vote required
to amend the constitution. His program calls for
the establishment of regional councils for Brus-
sels, Flanders, and Wal!onia. The councils would
advise the government on such matters as the
allotment of national budget funds within their
respective regions on the basis of population,
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Tindemans also announced that Brussels
would be limited to its present 19 communes.
The extent of the Brussels region was an issue
that led to the breakdown last April of the nego-
tiations among the Social Christians, the Liberals,
and the linguistic parties. The Flemish faction
favored limiting the predominantly French-
speaking capital to its 19 districts, while the
French-speaking group wanted the boundaries
fixed according to poc,ular vote.
Tindemans has also declared that he intends
to broaden the base of his government in order to
attain the two-thirds majority necessary to enact
more substantive reforms in regionalization. He
also indicated that the coalition partners had
agreed that none would resign unless an alter-
native maiorit arranaem ttainable.
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I I
Views on Foreign Relations
The elections to the Supreme Soviet on June
16 climaxed over two weeks of ritual "campaign"
speech-making by Soviet leaders. The election
speeches provide some insights to the leadership's
thinking on key foreign policy issues. There were
differences in emphasis and occasional hints of
disagreement, but the speakers, not surprisingly,
hewed close to the same line on most topics.
Detente remains the focus of Soviet foreign
policy. Soviet-American relations were consis-
tently cast in a favorable light, with frequent
praise for the accomplishments of the past two
years and optimistic references to the coming
summit. For example, Party Secretary Pono-
marev, a recent visitor to the US, was notably
positive in his remarks on detente. Many speakers
said the goal of current Soviet diplomacy is to
make detente "irreversible."
There were, nevertheless, numerous refer-
ences to various obstacles to peace that East and
West must surmount. Foreign Minister Gromyko
revived Brezhnev's formulation of last fall in re-
ferring to "zig-zags" in relations because of the
enemies of detente in the US. Marshal Grechko
found appreciable positive chat.,ges in interna-
tional relations but warned that the danger of war
is still a "grim reality." Brezhnev, however, took a
more positive view, saying that progress in rela-
tions with the US "can and must continue."
The G6:,eral Secretary singled out the arms
race as the foreign policy issue of the greatest
importance and complexity. It also appears to be
a matter of controversy in the Kremlin. Several
speakers, including President Podgorny, spoke of
the need to strengthen the national defense. Pre-
mier Kosygin, on the other hand, rejected the
notion-attributed to "some" in the West-that
"increased military expenditures can be accom-
modated amidst the policy of detente."
On the Middle East, the Soviet leaders
credited the US` R for making possible the "prac-
tical steps" tot ,acrd peace that have recently been
taken in the Middle East. But Gromyko, like
other speakers, indicated his sensitivity over US
initiatives in the area by ruling out "half-measures
favored by Israel and its backers." Brezhnev
promised Soviet support for additional steps to-
ward a permanent settlement based on negotia-
tion: at the Geneva Conference. He also seemed
to hint that diplomatic relations between the
USSR and Israel could be resumed.
European issues also received considerable, if
somewhat muted, attention. Brezhnev noted with
approval the pledges by Giscard d'Estaing and
Schmidt to continue the policies of their prede-
cessors, but said little else in support of these two
new leaders. The various speeches indicate that
Moscow still sets high store in the European
security conference and its early windup at the
summit level. There were no signs, however, that
the Soviets are prepared to make concessions on
the freer movements issue that has stalled the
talks.
Moscow may, however, be contemplating
progress at the mutual force reduction talks. Brezh-
nev said the Soviets would be willing to take
limited measures toward arms limitation, es-
pecially in central Europe, adding "there is a
possibility in the near future to achieve here the
first concrete results."
Strong criticism of China as a consistent
theme in the election speeches. Brezhnev echoed
his colleagues in charging that Peking is in open
collusion with right-wing imperialists in the West.
He also made the standard references to Moscow's
desire for normalization of relations and for
friendship with the Chinese people.
The texts of many of the leaders' speeches
appearing in local papers were rather heavily
edited in the central press versions to achieve
greater uniformity and apparently to ensure a
sufficiently positive treatment of detente. Undip-
lomatic, hard-line rhetoric deemed acceptable for
local audiences was often excised in the Moscow
editions. For example, critical rema.,ks about the
US were culled from the speeches of Gromyko,
Shelepin, Suslov, and Mazurov.
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The Pecking Order
The protocol sequence of the campaign
speeches provides clues to the relative political
standing of the regime's top leaders. In the matter
of rankings, last is first, and pride of place again
went to General Secretary Brezhnev, who de-
livered his address on June 14, just two days
before the election. President Podgorny and Pre-
mier Kosygin also held onto their positions as
number two and three, respectively.
Since the last Supreme Soviet election in
1970, Party Secretary Kirilenko has drawn closer
to Suslov, also a party secretary, who holds the
fourth position in the Soviet hierarchy. Party
Secretary for Agriculture Kulekov delivered his
speech a full week later than Minister of Agricul-
ture Polyansky, pointing to the former's position
as the top agriculture official.
Party Secretary for Cadres Kapitonov also
moved up and cc,., '4d be in line for promotion to
candidate Politburo member. At age 59, he is an
experienced apparatchik and has held his present
job since 1965.
Most intriguing is the sharp rise in the status
of Politburo candidate member and party sec-
retary Ponomarev, who delivered his speech ten
days later than other candidate members and on
the same day a.; Foreign Minister Gromyko, a full
member of the Politburo. The pairing of the two
underscores the inherent rivalry between their
positions. In recent years, Ponomarev has as-
sumed broader responsibilities in the foreign
affairs field. These have taken him beyond his
regular role of dealing with non-ruling Communist
parties and brought him into contact with many
non-Communist governments.
The campaign oratory produced a new
honorific phrase in referring to Brezhnev-the
"first candidate for deputy." Full texts of some
of the speeches carried in local papers revealed
that not all leaders were equally generous in their
praise of the General Secretary, despite efforts in
the central press summaries to smooth out these
discrepancies. Variations in the treatment of
Breznnev's primacy point to continuing politick-
ing within the leadership and the need for Brezh-
nev to heed these signals.
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SOVIET MILITARY DEVELOPMENTS
The Sovdat's two heliLopter carriers are now
operating in the Medi:.,:rranean. The Leningrad
entered from the Black Sea on June 16, while the
other carrier, the Moskva, has been in the Medi-
terranean since late April.
This is the Leningrad's first cruise outside of
home waters in over two years, and is only the
second time the two Soviet carriers have operated
in the Mediterranean at the same time. The previ-
ous occasion was during a world-wide '_Saviet naval
exercise in 1970.
The Leningrad is now heading west in the
Mediterranean after briefly joining the Moskva at
an anchorage south of Greece. The two carriers
and other ships of the Soviet Mediterranean
Squadron will probably soon hold anti-submarine
warfare exercises in the central Mediterranean.
P.fterwards, the Leningrad may proceed to North-
ern Fleet waters, as it did in 1970 and 1972.
The Leningrad is carrying two large canvas-
covere sects apparently helicopters, on its
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A serious political crisis was avoided on June
19 when Prime Minister Rumor's three-party coa-
lition government compromised on the terms of
the economic austerity program. The agreement
on fiscal policy is not expected to be ac-
companied by a new sense of political coopera-
tion, however, and the staying power of the
Rumor government will remain tenuous.
After nine shaky days, the center-left gov-
ernment remains in place, not so much because of
its own efforts but because Presideiit Leone has
refused to accept Rumor's resignation, and be-
cause Italy was given permission to use its gold
reserves as collateral for foreign loans. In addi-
tion, Italians have become more and more aware
that there is no alternative to a center-left govern-
ment, and that the economic situation is serious.
Leone's consultations with political leaders
after Rumor submitted his resignation on June 10
reportedly convinced him that the quarrel was
due as much to political rivalries as it was to
differences over economic policies. Leone asked
Rumor to make a fresh effort to ov' rcome these
differences and thr:atened to preserrc the issues to
parliament for public debate if he was not
successful.
Rumor's negotiations were interrupted by
regional elections June 16-17 in Sardinia that
resulted in losses for his Christian Democrats and
gains for left-wing parties. Final returns showed a
6-percent loss for the Christian Democrats and a
7-percert gain for the Communist Party com-
pared tca the last regional elections in 1969. Tie
same pattern is apparent when the comparison is
with the Sardinian returns in the 1972 pa''lia-
mer.tary elections, although the percentages are
not as dramatic.
When Rumor resumed negotiations on June
18, the Socialists-buoyed by the Sardinian elec-
toral results-seemed less amenable to com-
promise. They introduced an additional problem
by pressing for the institutionalization of con-
sultations between the center-left government and
the Communist Party on major' issues. The Com-
munists have participated in "cloakroom consui-
President Leone (I) and Premier Rumor
tations" in the past, but the Christian Democrats
have always resisted giving them a formal role in
the decision-making process.
In their efforts to secure a larger role for the
Communists, the Socialists may have been moti-
vated by a desire to associate the Communists
with what will probably be an unpopular reaction
to the austerity program. Because the Socialists
and Communists compete for the same general
portion of the electorate, the Socialists would
prefer not to shoulder all the blame for the belt-
tigltening measures the government has agreed tc
implement to cool Italy's overheated economy.
The terms of the agreement have not been
announced, but it is expected to contain stiff tax
hikes and credit restraints to curb imports and
inflation. The Socialists had been resisting credit
restrictions because of concern that recession and
unemployment would re:.ult, and initial press re-
ports indicate that the Christian Democrats gave
in on the credit squeeze issue.
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AUSTRIA: THE PRESIDENTIAL STAKES
The Austrian presidential election on June
23 is likely to be a closer contest than local
political observers had originally expected. What-
ever the outcome, Austria's foreign and domestic
policies will not be affected, because the func-
tions of the post are largely ceremonial; the Aus-
trian president has virtually no role in the policy-
making process.
Rudolf Kirchschlaeger, the Socialist Party
candidate, entered the campaign with several ad-
vantages. He is the foreign minister in Chancellor
Kreisky's government and has gained considerable
publicity as a result of his recent official visit to
India and China, where he met with major politi-
cal figures. The opposition People's Party, on the
other hand, held off naming a candidate until the
last minute. The party finally chose the mayor of
Innsbruck, Alois Lugger, who is a political un-
known outside .is own area.
Despite Kirchschlaeger's built-in advantages,
public opinion polls earlier this month indicated
that he ''tad only a slight lead of 42 to 38 percent,
with the !-emaining voters undecided. Subsequent
revelations that Kirchschlaeger was a member of a
right-wing organization during the Nazi period
and of the opposition People's Party for a brief
period after the war have hurt his image with his
Socialist colleagues and may cut into his strength
even further. Kreisky, who had hand-picked
Kirchschlaeger despite the resr-vations of many in
the party's rank and file about the Foreign Minis-
ter's conservative and Catholic background, has
nevertheless reiterated support for his nominee.
the Soviet crop remains uncertain. Even assuming
average weather throughout the remainder of the
crop season, however, the grain harvests in both
areas will be well below the record 1973 levels.
This could result in substantial grain imports in
FY 1975.
East European Drought Broken
Above-average rainfall and below-average
temperatures in May and early June alleviated the
drought in Eastern Europe, but the heavy rains
have caused some flooding in most countries.
Breadgrain output will probably not reach more
than 34.5 million tons, 7 percent less than last
year. The harvest of coarse grains also is likely to
fall short of the near record 34.8 million tons set
in 1973.
In the southern countries-Bulgaria, Ro-
mania, and Hungary-the rains brought most of
the winter grains out of the long drought in good
condition. They also aided germination and early
development of spring-sown grains, especially
corn. Because soil moisture generally remains be-
low normal, however, a hot dry summer could
reduce grain production even more.
In the northern countries-Czechoslovakia,
East Germany, and Poland-subsoil moisture in-
creased to almust normal by early June. In Po-
land, grains suffered from both winterkill and
drought, however, and winterkill may also have
been higher than average in East Germany.
Poor Weather Threatens Yields in USSR
Kirchschlaeger is still expected to win. A
narrow victory, however, would provide another
psychological boost for the People's Party, which
has been picking away at Socialist strength on the
local and state level during the past year.
25X1 25X1
GRAIN OUTLOOK IN COMMUNIST EUROPE
Long-needed rains have improved grain pro-
spects in Eastern Europe, whereas the outlook for
Above average winterkiil and delays in spring
sowing, together with the assumption of average
growing conditions in the important June-July
period, indicate a Soviet grain output this year of
about 190 million tons. Although far below both
the planned output of 206 million tons and the
record 222.5 miliion tons of last year, a crop of
this size would still exceed the pre-1973 high of
187 million tons.
The USSR normally relies on winter grains
for about one third of its supply. In the fall of
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1973, the Soviets planted the largest area of
winter grains since 1968. Temperature extremes
and sparse snow cover damaged about one fourth
of these fields, leaving.a smaller acreage than the
average harvested in 1966-71. Moreover, yields on
the remaining area may be no more than average
because of spotty germination last fall, tempera-
ture variations, and spring frosts.
Spann so win t ff
o
t
tons estimated for FY 1974, and exports will be
lower. Romania-usually a net exporter of stain-
entered a precautionary request for US grain
before rains improved harvest prospects. The
northern countries may also increase grain im-
ports because of the reduced output of rye and
the possibility of a poor potato crop.
g g
. o
o an early start, but Soviet domestic requirements and export
cold, snow, and rain in mid-April stalled the cam- commitments are at least 6 million tons more
paign. Unus..-il cold in late May killed some of the than the projected crop. The USSR probably
newly seeded grain in the European RSFSR and increased grain stocks-mostly wheat-by 15 to
the Ukraine. More important, when the last of the 25 million tons in 1973 following its record
late grains is planted this week, the total area is harvest. Nevertheless, wheat imports may be
likely to be about 5 million hectares less than the necessary to correct imbalances in domestic
planned .130 million. On. the 'basis of growing supplies since the quality of a large share of the
conditions so far, yields of spring grains will be wheat stocks may be below milling standards and
below the average of the past ten years. Weather, the share of breadgrains in the 1974 acreage is
however, has its greastest effect on spring grains smaller than us,-;al. If world prices for wheat and
in June-and July. feed grains were attractive, moreover, Moscow
Shortfalls Cold $pu.r l'mports ' might buy to avoid using reserve stocks and to
maintain flexibility in meeting requests for grain
Eastern Europe's; import`. requirements for.-- from Eastern Europe
or Thir
FY 1975 are likely to be higher than the 8 million such as India. ountries
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le
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? Failure to expose its faults and not al-
lowing others to do so.
? Using an anti-leftist drive in 1970-71 to
suppress people unjustly and eliminate repre-
sentatives of the masses fr'wr the revolu-
tionary committee.
Adding weight to the' last charge, the posters were
signed by'persbns''who were named to the original
revolutionary, committee in 1967 but have since
been rem wed.
-The-initial target of the attacks was almost
certainly Wu Te a member of the Politburo who
also heacls'the revolutionary and party commit-
tees in Peking. Wu had recently weathered in-
direct attacks when the Cultural Group of the
State Council, which he also heads, was criticized
for allowing' the' writing and staging of several
ideologically' 'offen'sive plays. The, two-pronged
assault' against' WU' was quickly merged through
posters that link th'e'eornm'ttee leaders with"th'e''"
most frequently criticized play, "Three Visits to
Peach Mountain." Wu is not without his sup-
porters, however, and the Cultural Group was
highly praised in the People's Daily of June 4 for
fostering revolutionary songs.
Within a few days, the poster attacks broad-
ened to include another target, Politburo member
and Hunan provincial boss Hua Kuo-feng. Some
of the posters, purportedly authored by a Hunan
worker group that had come to Peking to present
its case, attacked Hud by name. These posters
were quickly removed. Others, which criticized
the Hunan leadership in general terms, were al-
lowed to remain. This is the first overt indication
that Hua is under fire. The attacks, made in the
name of former Cultural Revolution leftist groups
in Hunan, strongly suggest that Hua is currently
in the moderate camp.
The new poster ground rules are favorable to
the left, but the revised reguiations are being
strictly and carefully enforced. The authors of the
posters that attacked a central leader by name-
and therefore violated central instructions-were
apparently visited by security forces the next day.
Moreover, it is obvious that poster attacks at this
stage of the campaign do not indicate that their
targets are in irreversible political trouble. More
than one provincial leader, ir, the course of offi-
cial escort duties for visiting foreigners, has cas-
ually pointed out posters attacking him. The Pek-
ing posters are in full view of foreigners and, in
fact, reserved parking has been established across
the street, for the curious. Furthermore, putative
"moderates" are not the only ones under attack.
The authors of some of the Peking posters have
themselves been attacked, while the political and
military boss of Heilungkiang Province, a Cultural
Revolution leftist, is also being criticized.
Most importantly, the power of final judg-
ment with regard to purges has been retained by
the central authorities. Chinese officials have
emphasized that while anyone can put up posters,
punitive action against cadras must be approved
by Peking. This has the affect of significantly
devaluating the political currency of the poster
25X1
A new round of poster criticism has ap-
peared in China. In Peking, the MunicipallRevolu-
tionary Committee leadership has been assailed
while attacks on provincial party leaders continue
to mount. The upsurge in poster warfare was
authorized by a central directive issued in late
May. The order negates the restrictions on the
placement and content of posters that had been
promulgated at the beginning of the campaign At
the same time, however, Chinese officials have
made it clear that party authorities in Peking
retain the power to determine the political fate of
leaders, regardless of poster criticism.
The posters pasted to the headquarters wall
of the Peking Municipal Revolutionary Commit-
tee on the night of June 12 were almost certainly
authored by elements on the political left. The
placards made three main charges against the
committee:
? Failure to implement vigorously the
anti-Lin, anti-Confucius campaign.
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The level of military action in some sections
of the country is down. Increasing rains are partly
the reason, but some government operations are
also being impeded by stiff resistance and supply
problems. On other battlefronts, the Communists
are holding back because of heavy casualities in-
flicted by government forces.
The most significant fighting is still occur-
ring in the government operation north of Saigon
in Binh Duong Province, where local commanders
now acknowledge that they will need more time
to recapture outposts recently seized by the Com-
munists. Some sharp fighting is also still occurring
along the Cambodian border in the northern delta
as Saigon's forces press their efforts to regain
control over vast rice-growing areas there. In the
central highlands, the South Vietnamese appar-
ently have abandoned their retaliatory thrust to-
ward Vo Dinh in Kontum Province.
Despite the slower tempo, there are indica-
tions that the Communists" current campaign is
not yet over-particularly in the northernmost
provinces where the weather is improving. Many
North Vietnamese combat units there have been
strengthened during the past year. The Commu-
nists may also soon move against several remain-
ing government outposts deep in territory they
hold in the highlands. In addition, there are signs
that the Communists intend to increase military
actio,i in Tay Ninh and several other provinces,
even though the combat capability of some of
their units in these areas has declined.
The Communists are also likely to put more
emphasis on smaller scale operations aimed at
blocking sections of such key highways as Na-
tional Route 1 for longer periods of time in order
to disrupt the flow of military and commercial
traffic between the provinces and Saigon. Such
activity keeps the pressure on the government and
The Communists are still out in front polit-
ically in the ten-week-olr' coalition government,
but the non-Communist sid3 is finally beginning
to show some signs of life.
Aided by the skillful parliamentary maneu-
vering of Prime Minister Souvanna, non-Commu-
nist members of the coalition cabinet have
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Souphanouvon l) embraces Souvanna upon return
to Vientiane in April
succeeded in a' least temporarily blocking passage
of two important proposals that Pathet Lao
leader Souphanouvong recently pushed through
the Joint National Political Council, which he
chairs. One proposal, a comprehensive 18-point
national political program, sets forth domestic
and foreign policy priorities and objectives for the
new coalition. The other, an equally comprehen-
sive bill spelling out "regulations" on democratic
freedoms, lays the groundwork for a system of
press censorship. Both proposals have been de-
ferred to cabinet committees for further study.
In addition, non-Communist cabinet minis-
ters managed to parry initial Pathet Lao efforts
on behalf of Hanoi to get the new government to
recognize the Viet Cong's Provisional Revolution-
ary Government. The question of recognition was
reportedly scheduled for discussion by the cab-
inet last week, but was sidetracked by the non-
Communists' delaying tactics. On still another
front, non-Communist Defense Minister Sisouk na
Champassak has turned back repeated attempts
by his Pathet Lao deputy and by Communist
Deputy Prime Minister Phoumi Vongvichit to
bring Lao army activities under joint supervision.
25X1
The non-Communists are also trying to
organize a new, broadly based political party,
"The National Union of Peace and Reconcilia-
tion." the pro-
pnsed party has the backing of conservative po-
litik.al and military leaders, demobilized veterans,
a number of former National Assembly deputies,
the rightist Sananikone clan, and Souvanna's
neutralist party. In a related move, the non-
Communists have decided to establish a "brain
trust" led by Sisouk and neutralist Interior
Minister Pheng Phongsavan to formulate domestic
and foreign policy guidelines for the new party.
Despite these actions, the non-Communists
will probably find it difficult over the long haul
to hold their own with the Communists in
political planning and organizational drive and
discipline.
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CAMBODIA
The latest round of political maneuvering :n
Phnom Penh resulted early this week in the for-
mation of a new cabinet by Prime Minister Long
Boret. This was the eighth change in cabinets
since Sihanouk was ousted in March 1970. The
new ministerial portfolios have been parceled out
to eight members of Lon Nol's majority Socio-
Republican Party, seven independents, and two
senior military men. Sirik Matak's minority
Republican Party, which held four posts in the
outgoing cabinet, settled for increased representa-
tion on the Executive Council, the country's top
policy-making body.
The exclusion of the Republicans from the
cabinet is designed to placate the Socio-Repub-
lican - controlled National Assembly, whose inter-
pellation of previous ministers was largely tcc:
blame for the dissolution of Long Boret's first
cabinet. Pan Sothi, the Socio-Republican secre-
tary general and the instigator of the anti-govern ~,
ment activity in the assembly, has been brouch.
into the new cabinet as first deputy prime mk-
ister and education minister, apparently in hop.,.:s
that he will have less time to keep the legislat:.!r a
stirred up. Most of the other key ministers rare
Socio-Republican holdovers from the prevk ns
cabinet.
In presenting his new government's program
to the assembly, Long Boret warned against the
consequences of any further political squabbling.
He also indicated that he may be less lenient
toward student and teacher activists by an-
nouncing stricter measures to maintain public
order. At the same time, however, he noted the
government's intention to reopen its dialogue
with the students. On the economic front, the
Prime Minister outlined new economic measures
to combat spiraling inflation in the capital.
Cambodian army units northwest of the cap-
ital made some progress this week when they
secured a corridor between the Tonle Sap River
and the government base at Lovek. River convoys
immediately began evacuating thousands of
refugees to the provincial capital of Kornpong
Chhnang farther north.
Communist plans for renewed attacks on
Lovek have; apparently been disrupted by a suc-
cessful government push up Route 5 southeast of
Lovek. Late in the week, lead elements of a
government task force were within four miles of
Lovek and had retaken the town of Kompong
Luong, lost to the Communists in April. The
government troops claim to have killed over 300
insur ent heavy fiahtina long the hi-1-
way. in
25X1
THAILAND: LABOR ON THE MOVE
Thailand's labor movement, long the step-
child of Thai politics, may have come of age last
week. I n a rare show of strength, workers' associa-
tions from around the country banded together
to turn what had been a minor labor dispute by
textile workers into a major political problem for
the two-week-old Sanya government. The change
was made possible by the new psychological cli-
mate created by the Bangkok press, which gave
prominent and sometimes sensational coverage to
the event. Before it was all over, the workers had
attracted to their cause student radicals who, for
a time, threatened to turn the textile strike into a
violent, anti-government protest.
The government was slow to recognize either
the potential for trouble or the growing support
for the strikers among labor associations through-
out the country. At the climax of the negotia-
tions, these associations threatened a general
strike. The government offered major concessions
as the strikers' ranks were being augmented by
technical school students known more for their
prowess in street battles than for their trade skills.
Labor leaders can point with satisfaction to
the results of their first serious endeavor at organ-
ized mass action. The strikers won an increase in
the minimum wage for all Bangkok-based factory
workers as well as improvements in job security
and severance pay. Unofficially, the workers were
told by the government that another increase in
the minimum wage, for workers throughout the
country, would probably be enacted next year.
Jun 21, 74
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Workers demonstrating in Bangkok
Besides these tangible gains, local labor leaders
also gained valuable organizational experience
that should strenathen their hands the next time
they decide to take on the government.
The labor movement still has a long way to
go, however, before it can be considered a key
element in the Thai political equation. A law
prohibiting the formation of labor unions is still
on the books, although the new constitution is
expected to guarantee workers the right to organ-
ize. Moreover, elements of the conservative ruling
elite--principally the monarchy and the mili-
tary-remain wary of a strong labor movement,
fearing it may be infiltrated by the Communists.
The fiery rhetoric of student radicals and several
labor leaders during the height of the strike last
last week will surely heighten these fears. Further-
more, labor still lacks both a national spokesman
and the formal organization necessary to mobilize
the workers and keep their interests before the
government.
Nevertheless, representatives of the striking
textile workers did display a keen sense of just
how far they would push the government. Indeed,
in many ways their handling of the strike paral-
leled the tactics used by the Thai student move-
ment, which thrived by confronting the govern-
ment and then backing off when it had wrung
significant concessions. The workers' seem to he
headed in the same direction.
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lutionary Armed Forces of Colombia.
The Torrijos government, eager to start
negotiating for a new canal treaty, is trying to
smooth the way for the substantive talks. Foreign
Minister Tack, who has an important voice on the
canal issue, recently set forth his government's
current moderate line in an interview with a Bra-
zilizri newspaper. Tack pointed to the declaration
of eight principles that he and Secretary Kissinger
had signed in February as the base on which the
negotiators for the two sides are now ready to
build. The minister maintained that he was not
overly concerned about opposition within the US
Congress to eventual transfer of coitrol of the
canal to Panama; he was sure the justness of
Panama's case would overcome this obstacle.
General Torrijos may have several reasons
for wanting to get the negotiations moving now.
He is at a peak of popularity, and has even suc-
ceeded in persuading most of the holdouts in the
business community to support his stand on the
canal issue. He may also hope to head off the
type of protest recently carried in the Panama-
nian press, in which a group of nationalistic law-
yers urged him not to give an inch in the nego-
tiations.
Whether Tack is as unconcerned as he said,
Torrijos clearly is worried about possible
The long-standing insurgency problem in
rural Colombia appears to be entering a new
phase. Pro-Moscow guerrillas of the Revolution-
ary Armed Forces of Colombia have carried out
several sizable operations in recent weeks. The
organization had previously Seen restrained by
the orthodox-and legal-COIoIT.blan Communist
Party, to which it is closely tied. Government
counterinsurgency forces, which have enjoyed
some success in containing the pro-Havana Na-
tional Liberation Army over the past 18 months,
are reportedly impressed by the pro-Moscow
group's level of training and discipline.
Although the National Liberation Army has
never had more than about 200 guerrillas in the
field, it has remained relatively secure in the
country's mountain ranges. The group's large
urban support network, with cells in Bogota and
ether cities, has proved its greatest weakness.
Government forces have been able to neutralize
the rural insurgents by interrupting their urban
sources of supply.
The newly active Revolutionary Armed
Forces of Colombia, on the other hand, consists
largely of peasants who assemble to stage a guer-
rilla operation and then disperse again, thus re-
maining almost totally independent of vulnerable
support elements in the cities. The security serv-
ices concede privately that the organization poses
a potentially greater insurgency threat than the
National Liberation Army has ever done. In addi-
tion to the group's less vulnerable organization, it
is also numerically larger, better equipped and
trained, and better led. Moreover, its traditional
association with the Communist Party may prove
to be an unexpected source of strength. The
leftist coalition dominated by the Communists
received 3 percent of the vote in the general
election last April, and it will probably inherit
additional followers from the collapsing National
Popular Alliance, which received 10 percent of
the vote. The Liberal Party government to be
inaugurated in August is unlikely to institute
curbs on any political party, although it will be
no less anti-guerrilla than the incumbent Con-
servative government.
Whether the pro-Moscow guerrillas realize,
or even approach, their potential will depend in
part on the general political atmosphere. With the
end of the National Front coalition of Liberals
and Conservatives, the country's 16-year tradition
of political tranquility may be hard to maintain.
The beneficiaries of renewed competition be-
tween the two major parties will include the
minor parties, and among them are the Commu-
nists and their semi-official action arm, the Revo-
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opposition in the US to a new treaty. He has
enlisted Panamanian management and labor
groups in a public relations campaign to present
Panama's case to the US public and Congress, and
he would like the negotiations to move ahead
before US opponents of a treaty have time to
launch a counter-campaign.
The Panamanian leader may be willing to
make some gestures to ease the road to negotia-
tions, but there are no indications that he will be
any less adamant on his basic demands than he
has been in the past. Currently, Panamanian del-
egates to international meetings such as the con-
ference of the Universal Postal Union are pushing
their country's claim to sovereignty over the canal
despite US urging that these matters be kept
within the context of the bilateral negotiations.
Torrijos is convinced that it is essential to con-
t!nue to press the US because Washington might
ARGENTINA: PERON'S TROUBLES
Peron's program to put the lid on inflation is
showing signs of strain as the agreement among
labor, management, and government to hold
down wages and prices begins to come unstuck.
In the midst of these economic difficulties, Peron
is also faced with a new threat from the terrorists.
Economic Pact Comes Unglued
The President seems determined to patch up
the cracks in his year-old "social pact"-the
cornerstone of current economic policy-but fur-
ther deterioration seems inevitable as efforts to
keep labor demands in line falter, profits and
investment diminish, and fiscal irresponsibility
pushes up the money supply and spurs consump-
tion beyond current production. The strains on
the social pact, which had reduced inflation to
some 10 percent since the Peronists' return, have
resulted in wage increases of around 20 percent
and price increases averaging aroiind 6 percent-
all ahead of schedule. Meanwhile, Peron has post-
poried a showdown with labor by granting
workers a one-month pay bonus effective in July.
Peron's dramatic threat to resign on June 12
in the face of growing economic difficulties, and
his quick retraction on the same day before a
massive demonstration by the Peronist faithful,
appeared to be a well-orchestrated maneuver to
rally popular endorsemen. for his policies. Peron's
speech from the balcony of government house, in
which he expressed his pleasure at the large turn-
out and thanked the crowds for the chance to
hear the "voice of the people," was in the best
Peron tradition-it was the technique used during
his earlier days in power to drum up enthusiasm
and acceptance for his programs. 25X1
The scenario that unfolded, particularly the
resignation of the entire cabinet and Peron's ex-
peditious reaffirmation of confidence in his min-
isters, also bore signs of being stage-managed to
convey a show of strength, possibly to obscure
the government's floundering performance and its
paucity of ideas on ways to deal with the prob-
lem. Peron reiterated his faith in the general
guidelines set down by his economic team, but he
may be putting pressure on them to devise some
quick adjustments. He would probably not sack
the officials responsible for directing the econ-
omy except as a last resort.
!n a meeting with union officials last week,
Peron agreed to consider a pay bonus-granted
two days later-but demonstrated that he had no
specific remedies for the workers' grievances over
what they see as a disequilibrium in the social
pact's regulation of wages and prices. Instead,
Peron chose to lambast the press for magnifying
the "sma;l mistakes of government officials" and
trying to undermine his poiicies. Earlier, the Presi-
dent had lashed out at businessmen, the "oligar-
chy," s 'd other unspecified "enemies" in what
appeared to be a reversion to tactics he employed
more than two decades ago. The image he pro-
jected was one of petulance and flailing about in
search of a handy scapegoat. As economic dif-
ficulties multiply, Peron may find himself under
increasing pressure to deflect the blame for
administration failures.
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The government has already warned busi-
nessmen that heavy fines or imprisonment awaits
them unless they step up production and stop
hoarding good. For their part, the businessmen-
already cutting investment and inventories to
minimize losses-have complained bitterly iaiat
artificially low prices are driving them to bank-
ruptcy while wage controls go unenforced.
Much of the reason for the disintegration of
the social pact can be attributed to the height-
ened turmoil and dissension within the Peronist-
controlled labor movement. Old-line leaders in
the union bureaucracy are losing their grip over
younger workers who are increasingly dissatisfied
because their economic and political demands are
not being met. As a result, many workers have
resorted to open defiance by staging wildcat
strikes and occupying plants. Moreover, the isola-
tion of the national labor leadership from its rank
and file has made the labor force more receptive
to proselytizing by opposition left-wing activists.
The growing violence and gangsterism within the
labor sector is ample testimony to this danger.
The inherent threat, of course, is that loss of
control in the labor movement will force further
deterioration in profits, investment, and eventu-
ally output. The combination of eroding dis-
cipline among his key working-class political -ase
and falling real incomes could prove to be Peron's
biggest headache.
If the President moves to appease labor with
new wage hikes, business will be further pinched
and productive capacity will suffer new disloca-
tions. This would lead to more shortages and to
greater consumer discontent. The vicious cycle
would encourage additional economic disruption
and political unrest. So far, Peron has done little
more than buy time. Barring some dramatic turn-
about in economic policy, the respite is likely to
be a brief one.
Guerrillas Pose New Threat
Meanwhile, following four years of major
successes in urban subversion, the Marxist
People's Revolutionary Army has recently an-
nounced plans to form rural guerrilla fronts. The
terrorist leaders apparently intend to concentrate
both on increasing activities within the country
and on strengthening ties with similar groups in
neighboring countries.
According to a communique signed by guer-
rilla leader Roberto Santucho, the development
of an operating capability in the countryside will
enable his organization to maintain closer contact
with subversive groups in neighboring countries
and "fan the flames of armed socialist revolution
across South America." Tie communique stated
that part of the funds obtained in the ransom of
Exxon executive Victor Samuelson had been dis-
tributed to these groups.
The Argentine Marxist group announced
earlier this year that it was establishing a coordi-
nating junta with other Marxist organizations in
Chile, Boliv;a, and Uruguay, but there has been
little evideoce until recently of increased activity.
A few weeks ago, however, when police dis-
covered a large weapons cache in Buenos Aires,
there was circumstantial evidence suggesting that
25X1 25X1
The simultaneous development of urban and
rural guerrilla fronts may also represent a propa-
ganda effort to point up the embarrassing failures
of recent security operations. Last month, hun-
dreds of police and soldiers raided a rural guerrilla
base in northwest Argentina. The widely publi-
cized operation came to an inglorious end when
the guerrillas temporarily seized the town from
which the security forces had operated.
Despite the n,>w emphasis on rural guerrilla
fronts, it is unlikely that the Marxist organization
will shift its main focus away from the cities.
Rural areas could serve as a temporary haven,
however, should the government's counter-
terrorist program eventually prove more success-
ful. Rural insurgencies in other Latin countries
have generally failed for lack of local sup
ort
p
25X1
25X1
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NORTH YEMEN: MILITARY TAKE-OVER
Colonel Ibrahim Hamdi, the armed forces
deputy commander, led a military take-over of
the government last week. Hamdi, who will exer-
cise supreme power under a "transitional" con-
stitution, is a moderate nationalist who favors a
strong central government. On June 19, the ruling
Command Council-headed by Hamdi-named
former prime minister Muhsin al-Ayni to form a
new cabinet and to irrolement modernizing
changes.
In selecting al-Ayni, the Command Council
risks loss of the subsidy from Saudi Arabia that
bridges the gap betlveen Sana's income and its
expenditures. King Faysal seems well disposed
toward Hamdi, but regards a!-Ayni as a dangerous
radical who favors the leftist regimes in Iraq and
South Yemen.
Hamdi's assumption of power came on the
heels of a clash between President Iryani and
conservative tribal leaders over the government's
handling of a recently uncovered Baathist coup
plot backed by Iraq. The tribal sheikhs, led by
Abdullah al-Ahmar, the head of the Consultative
Assembly, accused Iryani of not taking suffi-
ciently tough measures against Baghdad or the
local plotters. In the subsequent maneuvering,
Iryani resigned-a favorite ploy that he apparently
used once too often-and t;'~bal forces threatened
to occupy the capital. Hamdi, who has little toler-
ance for traditional tribal influence, used his
troops to face down the gathering tribal irregu-
lars. With army pressure mounting, al-Ahmar
stepped down from his legislative post, and the
tribally dominated assembly was subsequently
dissolved.
On June 15, al-Ahmar and many other
sheikhs pledged their support to Hamdi and the
Command Council, ending the danger that army-
tribal fighting might break out. The tribal leaders
fell into line after Saudi Arabia, which has long
subsidized the tribes, announced its support for
the new North Yemeni military leadership.
Al-Ayni's appointment as Prime Minister
came after considerable maneuvering by him and
his allies following his return from his arnbassa-
dorial post in London four days after the military
take-over. Colonel Hamdi probably saw the al-
Ayni appointment as necessary to win support
from the moderate left in North Yemen, with
whom al-Ayni is well connected. In addition,
Hamdi served as deputy prime minister in a cabi-
net headed by al-Ayni in 1971-72, although little
is known of their relationship. AI-Ayni shares the
view of Hamdi, and much of the military, that
administrative and financial reforms are essential,
and that the central government should be
strengthened at the expense of local tribal
sheikhs. Abdullah al-Ahmar and other tribal
leaders apparently were consulted and gave grudg-
ing consent to the appointment; Hamdi and the
Command Council reportedly promised to moni-
tor al-Ayni closely.
So long as Hamdi and his supporters in the
Command Council hold sway, the Saudis will
probably take no action to counteract al-Ayni's
appointment other than to observe closely his
choices for the cabinet and his behavior in office.
The Saudis, as recently as January 1974, used
their considerable influence in Sana to veto al-
Ayni's appointment as prime minister.
The Marxist regime in South Yemen, which
has long been at odds with the North Yemenis,
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has thus far taken a low-key approach to the new
situation in Sana, characterizing it as an internal
matter. Aden has not yet been heard from on the
al-Ayni appointment. For his part, Colonel
Hamdi, although concerned about the threat from
the south, has made no hostile gesture toward
Aden. A spokesman for the Command Council
has, in fact, indicated that the new military rulers
will continue unity talks between the two
Yemens, which have been taking place in a desul-
tory manner for some time.
CYPRUS: MAKARIOS' DIFFICULTIES
President Makarios' continuing effort to se-
cure greater control over the Greek-officered
Cypriot National Guard is encountering strong
resistance from Athens, which uses the Guard as
an instrument of influence in Cyprus. The contro-
versy is intensifying amid an upsurge of anti-gov-
ernment violence by Eoka-3, the outlawed terror-
ist organization that favors the union of Cyprus
with Greece.
Makarios believes Athens is encouraging col-
lusion between the Guard and Eoka-B in an at-
tempt to bring grea?:er pressure on him. He is also
angered by the involvement )f guardsmen in a
series of incidents directed against his regime. In
pressing his campaign for control of the Guard,
Makarios demanded in early June that the selec-
tion of Greek Cypriot officer trainees be trans-
ferred from the National Guard general staff to
his government. The legal authority to make such
appointments is vested in the government, but in
fact they have been made by the general staff. In
a follow-up letter on June 15 to the Guard com-
mander, a Greek general, Makarios requested that
57 cadets now undergoing training be removed
from the program by June 20. Makarios charged
they had been specifically chosen for their hostil-
ity to him.
The Greek government has rejected Ma-
karios' demand concerning future cadet appoint-
ments and is likely to refuse to sanction the
release of the cadets already in training. Athens
told Makarios last week that it had instructed
Greek guard officers to cease any involvement in
Cypriot politics, but that it could not completely
control their activities. Athens also demanded
that Makarios disband all "illegal organizations,"
meaning especially his personal paramilitary
force, and intervene to stop the current campaign
against the Greek government in the pro-Makarios
Cypriot press. 25X1 25X1
The President
may bring the dispute over the 57 cadets to a
head by refusing to pay their salaries when they
complete training and are commissioned.
Makarios hopes eventually to reduce the
term of service for national guardsmen from the
present two years to 12 or 14 months. That
would cut the size of the 12,000-man force in
half and secure at least a proportionate decrease
in the number of Greek officers needed to com-
mand it. His ultimate goal is to transform the
Guard into a full-fledged army manned and led
exclusively by Greek Cypriots. 25X1 25X1
Meanwhile, the new wave of Eoka-B vio-
lence, which began following the recent arrest of
a number of its supporters, was capped this week
by the assassination of a pro-Makarios official of
the right-wing farmers' union,
The terrorist offensive is probably designed
in part to put pressure on Makarios to cease his
campaign to control the Guard. The terrorist
leaders want the Guard to remain under mainland
Greek control. While the scale of the offensive
suggests that Eoka-B may have recovered some of
the strength it lost as a result ..?f the death last
January of its four der, General George Grivas,
the Makarios government probably has the capa-
bil*,ty to deal with it.
On the intercommunal front, the six--
year-old talks between the Greek and Turkish
Cypriot communities, which aim at devising a
new syst9m of government for the island, were
resumed on June 11. Positions have hardened,
poor.
25X1 25X1
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 Gustave Jarrin (1) of Ecuador and Secretary General Khene of Algeria preside over OPEC meeting
OPEC: POSTPONING DECISIONS
At their conference in Quito this week, the
OPEC oil ministers agreed to continue the freeze
on posted crude oil prices for another three
months and to allow individual OPEC members,
as of July 1, to increase royalties by 2 percent or
otherwise raise the government take by an equiva-
lent amount.
Both actions were taken following a con-
certed effort by Saudi Arabia to hold down oil
prices. At least five other OPEC members-
Algeria, Nigeria, Libya, Iran, and Kuwait-argued
for an increase in posted prices to offset world
inflation. The recognition of Saudi market power
probably I%d the OPEC ministers to drop their
demands for posted price increases. They settled
for a statement cal!ing on the industrialized coun-
tries to take strong measures to control inflation.
The conferees decided to review the price ques-
tion again at their next meeting in Vienna on
September 12, implying that if inflation were not
better controlled, prices would be increased.
Saudi Arabia dissociated itself from the
decision to raise royalties. The Saudis announced
that they would not move to increase their rev-
enues, pending the outcome of negotiations with
the owners of ARAMCO in July.
The effect of the royalty charges on other
OPEC members' prices will not be determined
until each one announces how the increase will be
implemented. If they decide to use light Arabian
crude as the benchmark and apply a 2-percent
increase only to royalty charges, an increase of 11
ants per barrel in the price of oil to consumers
would result. The oil bills for the US and Japan
would each increase by about $50 million and
Western Europe's oil bill would rise by nearly
$150 million during the third quarter of 1974.
Currently, there is an excess of oil on the
world market at present prices. Oil stocks in the
US, Western Europe, and Japan are reaching-and
in some cases exceeding-desired levels. With con-
sumers still resisting high prices, several in-
dependent European refineries have had to cut
back output because they cannot sell their pro-
ducts at a profit.
The oil surplus will be made worse if Saudi
Arabia increases production and goes ahead with
its plan to auction 2 million barrels per day of oil
this summer. If this happens; the other OPEC
countries will be forced either to cut back pro-
duction or to accept lower prices.
In other actions, the OPEC ministers decided
to postpone for another three months any de-
cision on an OPEC development fund for oil-
importing developing countries. They also re-
jected apolications for full membership from
Trinidad and Tobago and the Congo, granting
them observer status only.
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