WEEKLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001000070014-5
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 24
• Document Creation Date: December 27, 2016
• Document Release Date: May 10, 2010
• Sequence Number: 14
• Publication Date: August 16, 1974
• Content Type: REPORT

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Weekly Review
16 August August 1974
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The WEEKLY REVIEW, Issued every Friday morning by the
Oilice of Current 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 ReseOrch, 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.
CONTENTS (August 16, 1974)
MIDDLE EAST
AFRICA
EUROPE
EAST ASIA
PACIFIC
WESTERN
HEMISPHERE
NTERNATIONAL
1 Cyprus
6 The Middle East: Temperature Rises
7 Soviet Mine-Clearing
8 Ethiopia: A New Constitution
9 Gulf of Aden: Soviet Influence
9 Spanish Sahara: Dispute Simmers
11 Portugal: Military Patience Tried
12 Canada: New Cabinet
12 Romania: Fire From Moscow
13 USSR Soyuz
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14 South Vietnam: Turning the Tide
15 Cambodia: The War Sputters
16 China: Naval Activity; Harvest
17 Australia: All in the Family
18 Chile: Squabbling in the Andes
18 Argentina: Cabinet Shuffle;
Guerrillas
20 Dominican Republic: Balaguer Endures
21 World Population Conference
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CYPRUS
The collapse on August 13 of the Geneva
talks, stalemated over Turkey's ultimatum to
Greece on constitutional and administrative ar-
rangements for Cyprus, led to a new Turkish
offensive apparently aimed at securing the north-
ern part of the island. Heavy fighting continues in
that area. In response, Greece has withdrawn
from military participation in NATO but report-
edly will not take any offensive action against
Turkey that would widen the area of confronta-
tion. Both Turkish and Greek leaders won sup-
port from their countrymen for the positions
they adopted.
Ankara's Position
After an initial period at Geneva in which
limited progress was made on some issues such as
prisoner exchange, Turkey adopted a non-com-
promise approach and gave Greece 24 hours to
Turkish landing craft west of Kyrenia
accede to its demand that Cyprus be divided into
two fully autonomous ethnic administrations.
Backing away from its earlier insistence on the
division of the island into two geographically
separate federal states, Turkey then supported the
concept of an autonomous Turkish Cypriot ad-
ministration composed of several separate polit-
ical units?cantons. Ankara asked for immediate
administration over its major canton?presumably
the area around Kyrenia, Nicosia, and Famagusta.
The Turks also called for agreement to negotiate
the size and boundaries of the other canton,
aimed at giving Turkish Cypriots control over one
third of the island.
Turkish Foreign Minister Gunes made clear
that on those two major points?establishment of
two autonomous administrations and immediate
demarcation of the main Turkish canton?Ankara
would accept no counter-proposals. At that point,
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the talks broke down and Turkey, having report-
edly taken a decision on August 11 to resume
fighting if its proposals were not accepted,
launched a new offensive.
Prime Minister Ecevit told a news conference
in mid-week that Turkey did not intend to annex
the island or upset the territorial integrity of
Cyprus. Rather, he said, the objective was to
secure the freedom of Turkish Cypriots. Ecevit
has mads clear that the precise area involved is
open to negotiation and that Turkey is prepared
to work out details at the conference table. The
Prime Minister avoided any direct comment on
the possibility of a clash with British forces, but
indicated concern over the Soviet position.
There is general unity on the Turkish polit-
ical scene in support of the government's decision
to reopen the fighting on Cyprus to gain what
Ecevit has called a "fair share" for Turkish
Cypriots. The leader of the primary opposition
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party in parliament, former prime minister
Demirel, issued a statement pledging full support.
Ecevit has summoned the Grand National
Assembly to an extraordinary meeting on August
19 to debate the extension of martial law over
certain provinces for an additional two months.
Athens' Position
In Athens, the Council of Ministers approved
Prime Minister Karamanlis' handling of the crisis
so far. The Prime Minister also received support
from former Greek political leaders as well as
exiled King Constantine. Greek military leaders
reportedly have informed Karamanlis that, while
they would defend Greek territory, they are not
prepared to declare war against Turkey. Shortly
after this exchange, Karamanlis is said to have
decided that Greece would not take any offensive
action against Turkey.
;30
Mediterranean Sea
35?M1.
15610.-
Territory controlled
by Turkish forces
lafkoniko
Boghaz
ter,: Aield
rynibou
Famagusta
fl ?
(U.K. &se
556404 8-74 Tsslo,
31.
Mediterranean Sea
1.0
Statute miles
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THE MILITARY SITUATION
Turkish forces on Cyprus launched an
offensive at dawn on August 14 with daily
strikes against targets around Nicosia, Fama-
gusta, and Morphou to support the units on
the ground.
The major Turkish thrust was a three-
pronged, armored drive from east of Nicosia
toward Famagusta. By nightfall, two columns
reportedly had reached Lefkoniko and Sinda,
while the third was only five miles from
Famagusta. Early the next day, the drive to-
ward Famagusta met with little resistance.
One column pushed to Boghaz and turned
south toward Famagusta, while a second col-
umn continued directly toward the city. The
southern column, however, halted short of
the British sovereign base at Dheklia. Ad-
vanced elements of the Turkish force prob-
ably reached the city early on August 15.
During the course of the first day's ad-
vance, the Turks captured Tymbou airfield
southeast of Nicosia. The Nicosia airport,
however, remained in UN hands although
there was heavy fighting between the Greeks
and Turks in the area.
in Nicosia itself, a cease-fire agreed to
late on August 14 apparently was broken
early the next day.
On August 14, the Turks seemed pre-
paring to launch an attack from Nicosia west-
ward toward Morphou, but ground forces
starting from the Nicosia area may have been
diverted to overcome Greek resistance near
the airport. On the next day, press reports
from Ankara claimed that the drive toward
Morphou was continuing and called for the
surrender of the city's Greek residents, but a
major push westward did not appear to be
under way as of late on August 15.
On August 11, two amphibious battal-
ions and one parachute battalion were ob-
served moving out of Athens to undisclosed
destinations. A column of about 100 tanks
was seen heading toward the port of Pireaus
and the naval base at Skaramanga. Three
troop ships also left Piraeus on the 11th and
arrived at Salonika by the 13th.
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In Cyprus
President Clerides returned to Cyprus on
August 14 and immediately called for an "ex-
panded representative" conference of leading po-
litical, labor, business, and newspaper leaders.
There have been press reports to the effect that
Clerides will attempt to get the conference to
agree that the northern part of Cyprus shall be
"handed over" to the Turks. There has been no
indication that
Clerides discussed this decision with Greek leaders
before he left for Cyprus. Clerides almost cer-
tainly will use the meeting to probe reactions to
possible territorial concessions to the Turks.
NATO Reacts
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Greece's decision to withdraw militarily
from NATO caught the other members by sur-
prise and left them in a state of shock. Most
agreed that the withdrawal would leave a gaping
hole in NATO's defenses on its southern flank.
They were especially concerned about the future
of NATO facilities on Cyprus and US bases in
Greece. In particular, it was feared that oper-
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NATO is not sure what it can do at this
point to bring Greece back into the alliance's
military structure or to ease tensions between
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UN soldiers under armed guard
Athens and Ankara. Secretary Luns is pondering
various demarches and has asked NATO members
for suggestions as to how he might fulfill his
responsibility for preventing conflict between two
alliance members.
The Greek move resembles the step taken by
France in 1966. By withdrawing only from the
military side of NATO, Greece?like France?will
be able to continue its participatinn in the im
portant political activities of thE alliance, in-
cluding meetings of the North Atlantic Council
and its committees.
The Greeks may have had a number of rea-
sons for their withdrawal, but the main one was
the bitterness they feel toward the alliance in
general and toward the US in particular. They
think that all NATO members could have done
more to deter Turkish actions in Cyprus and to
make Ankara adopt a more flexible stance at th
Geneva seace talks
reek armed forces leaders are vWually con-
vinced that either the US and Soviet Union have
concluded a secret agreement regarding the east-
ern Mediterranean or that the US is trying to
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appease Turkey in order to extract important
concessions from Ankara later.
EC Appeals
During the week, the EC appealed to Greek
and Turkish leaders to avoid any conflict and to
resume negotiations. In Athens, the French am-
bassador, acting on behalf of the Nine, expressed
sympathy for the Greek position and agreed that
the Turks are at fault. The EC apparently hopes
to prevent the Karamanlis government from
changing its basic Western orientation.
In fact, now that it has withdrawn from
NATO, Athens may begin to place more emphasis
on its relations with the EC. France had already
requested that the community disc-ss in Septem-
ber the association arrangements with Greece that
were suspended by the EC after the military coup
in 1967. Athens has now approached the com-
munity for meetings in the first week of Septem-
ber on relaunching the EC-Greek association.
Soviet Reaction
The Soviets' reaction to the renewed fighting
has been slow and cautious, in part because the
USSR has had to balance its interests in maintain-
ing Cypriot independence with its desire to avoid
offending Ankara. Thus far, Moscow has con-
centrated?without notable success?on obtaining
a greater role for itself in the resolution of the
situation, particularly through the UN, and it is
likely to intensify this effort.
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Soviet press coverage of the renewed fighting
has been largely reportorial. On August 14, Tass
noted the breakdown of the Geneva talks,
Athens' decision to withdraw militarily from
NATO, and the UN Security Council's resolution
calling for an immediate halt in the fighting and a
resumption of the peace negotiations. It also
carried?without comment?a statement from
Ankara that blamed Greece for the hostilities and
said Turkey's unilateral action was the only way
the lawful rights of the Turkish community could
be guaranteed.
Despite Moscow's concern that Turkey's de-
mand for federation and its military actions will
ultimately lead to partition, the Soviets still are
refraining from open criticism of Turkey. Soviet
Ambassador Malik, in his address to the emer-
gency session of the Security Council on August
14, blamed "certain NATO circles" for their
failure to implement the UN Security Council
resolution of July 23 and for the failure of the
Geneva negotiations. He said this proved that the
role of the Security Council should be enhanced,
and he renewed Moscow's call for a special Se-
curity Council mission to Cyprus.
The Soviets are no doubt delighted with
Athens' decision to withdraw from NATO mili-
tarily and with the prospects for increased tension
in US-Greek relations. Over the longer term,
Moscow may work for better relations with the
new Greek government in the hope of profitin
from the strains in the NATO allianc
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THE MIDDLE EAST: TEMPERATURE RISES
Israeli "saber rattling," responses in kind by
Egypt and Syria, and increased Egyptian-Libyan
tensions combined to raise the political tem-
perature again last week. Taken together, the
latest developments highlight the difficulties in-
volved in restoring momentum to the negotiating
process.
Tel Aviv, Cairo, and Damascus sounded
alarms over the prospect of renewed hostilities,
and Sadat's latest expression of pique with
Qadhafi, resulting in his withdrawing the Egyp-
tian military mission, serious;y shredded their re-
maining military-political ties. The new round of
mobilization measures and military exercises may
have been undertaken partly for political effect,
but they have heightened nervousness on all sides
and increased the risk of further military brink-
manship.
Following naval and large-scale air and
ground maneuvers earlier in the month, the
Israelis on August 12 anncunced plans to conduct
the first nationwide test of their mobilization
system since the war last October. No date was
given for the exercise, which is scheduled to last
no more than 24 hours and reportedly will in-
volve less than half of the Israeli reserve force.
Probably hoping to reassure its dervous Arab
'neighbors, the government promised to inform
the UN command and all foreign diplomatic
representatives in Israel when the test is to take
place.
Tel Aviv's military mo 'es in part reflect its
alarm over the continuing Soviet resupply effort
to Syria and its desire to show Washington how
seriously it regards the situation. Aside from con-
siderations of military prudence, the Rabin gov-
ernment is determined to demonstrate its pre-
paredness to the home audience and is hoping to
make it clear to the Arabs that it will be entering
any future negotiations from a position of
strength. The Israelis will probably continue some
forms of militant posturing beyond occasional
raids against fedayeen targets in Lebanon.
Cairo has denounced the Israeli measures as
"warlike" and responded with its own, though
less extensive, mobilization measures.
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To date, Damascus' response to the Israeli
exercises has also been relatively low key. Syria
has placed its army on alert, however, and con-
tinued warlike noises from Tel Aviv could pro-
voke the Syrians into raising the level of tension
higher. Appai-ent Soviet attempts this week to fan
Arab, and particularly Syrian, suspicions of Israeli
motives could also complicate President Asad's
problems in restraining the Syrian military. On
the negotiations issue, the Syrians will continue
to impose a constraint on Sadat because they
begrudge his central role in the proceedings, ques-
tion his judgment, and distrust his motives. As
usual, the Syrians have their cards pressed finvily
to their chests, and there has been no overt con-
firmation from Damascus of Egyptian Foreign
Minister Fahmi's plans to meet with the Syrian
foreign minister and a Palestinian leader later this
month.
The Libyan Connection
There seems little risk that the Egyptian-
Libyan quarrel will move into the military arena,
but Cairo's recent militant posturing also provides
addition& clout to Sadat's admonitions to
Qadhafi to stop meddling in Egyptian affairs. His
accusations of Libyan subversion stem from a
legitimate concern that Qadhafi is working to
undermine his domestic position. At the same
time, Sadat also sees the Libyan leader as a dis-
ruptive force in the delicate balancing act Sadat is
now engaged in to prod both Jordan and the
Palestine Liberation Organization into something
resembling a coordinated negotiating positiin
toward Israel. By attempting to intimidate Qa-
dhafi, and perhaps drive a wedge between him
and other members of the Revolutionary Com-
mand Council, Sadat almost certainly hopes to
weaken Libyan support for Arab radicals, leaving
himself freer to steer the negotiations in the direc-
tion Cairo wants them to go.
Jordanian Fears
Sadat's juggling act also led him into some
fresh difficulty with Amman. Statements in early
August on the Palestinian problem by Egyptian
Foreign Minister Fahmi were interpreted by the
Jordanians as a repudiation of Sadat's agreenient
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an July 18 with King Husayn, which the Jor-
danians insist allows Amman to represent in
Geneva all Palestinians in Jordan, including those
on the West Bank. Fahmi's statements drew a
sharp Jordanian response and Sadat was obliged
to write Husayn reaffirming the agreement and
urging him not to be concerned with what is
being published or broadcast. The Egyptians now
appear to have mollified Amman?at least for the
time beina.
Arab Summit Delayed
The Egyptians apparently have succeeded in
reaching at least one major goal?the postpone-
ment at least until late October of the Arab
summit meeting that had been scheduled for earl
Se tember.
Syrian agreement to the delay
wi give a at more time to work out some sort
of an understanding between the Palestine Liberd-
tion Organization and Jordan before the Geneva
talks. In order to secure acceptance of the post-
ponement proposal, its sponsors?Egypt and Jor-
dan?apparently had to agree to an early pre-
paratory meeting of Arab foreign ministers, which
is now scheduled to be held on September 1 in
Cairo, according to the Eavotian Dress
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SOVIET MINE-CLEARING
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The Soviet mine-sweeping operation is con-
tinuing in the Strait of Gubal. The Soviet task
force?including the helicopter carrier Leningrad,
a guided missile destroyer, seven minesweepers,
and five support ships?was forced to discontinue
operations for several days due to bad weather.
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The operation is now expected to be com-
pleted by the first of September, but may be
extended if the Soviets are asked to clear the
minefields in the Isra- 1-controlled inner channel
of the strait or the ,..inefield off At Tur. The
Soviets reportedly will approach the Israelis at the
UN and request permission to sweep the eastern
side of the channel. The Egyptians refuse to con-
firm officially the existence of the minefield near
At Tur. They may want to keep this minefield in
place in an effort to restrict Israeli access to the
Sinai oil fields.
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ETHIOPIA: A NEW CONSTITUTION
The draft constitution completed last week
provides for the establishment of the parlia-
mentary democracy favored by the military re-
formists who in recent months have ended the
highly personal rule of Emperor Haile Selassie and
his inner circle. Over the near term, however, the
political situation seems certain to remain un-
stable, with still tighter military control a con-
tinuing dossibility.
The draft document was drawn up by a
special constitutional review committee ap-
pointed by Haile Selassie last March in the after-
math of the military revolt that triggered
demands for political liberalization. The draft
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must now be reviewed by the cabinet, the parlia-
ment, the Emperor, the military, and the general
public. The debate will be lively, and some re-
visions are likely before the new constitution is
put into force, probably later this y,-Jar.
The draft version has not yet been pub-
lished, but it is known to make the government
responsible to the National Assembly rather than
to the monarch, who is stripped of all effective
power and reduced to a ceremonial figure. It also
separates the executive, legislative, and judicial
branches; pi ?vides for freedom of political asso-
ciation; dis-establishes the Ethiopian Orthodox
Church; and sanctions female succession to the
throne. Other articles provide the legal basis for
far-reaching land reform znd grant Ethiopia's 14
provinces a large degree of autonomy.
The new constitution marks an effort to
replace the present ineffective structures of gov-
ernment with new institutions capable of coping
with the wide.;pread demands for political and
social change. Presumably, the new system would
eventually place the country on a firmer footing,
but the Ethiopians have had no experience with
democratic government, and it will take time Lthe new institutions to take root.
Meanwhile, Prime Minister Mikael has
averted a confrontation with the politically pre-
eminent Armed Forces Coordinating Committee
by agreeing to dismiss four cabinet ministers
accused of corruption by the military. The mili-
tary had threatened to take over the government
if the ministers, appointed by Mikael after he
assumed office last month, were kept on. Mikael's
capitulation further undermined the cabinet's
prestige, and members of the committee remain
suspicious of his refusal to accept their guidance.
The committee may yet decide to establish a
caretaker military government, but its members
are still divided on that issue.
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Gulf of Aden:
SOVIETS SEEK TO EXPAND INFLUENCE
The Soviets seem to be intensifying their
efforts to maintain?and, if possible, expand?
their footholds in the Gulf of Aden region in
anticipation of the reopening of the Suez Canal.
Moscow
wants to maintain a substantial naval force to
counter US naval 3hem:1th in the reaion.
the USSR could no longer rely
on Egyptian naval facilities and would have to
depend more heavily on ports in South Yemen
and Somalia.
In line with this thinking, the Soviets have
apparently pledged new military and economic
assistance to South Yemen. Moscow's feats that
the conservative Arabs may try to oust the leftist
regime have also led it to urge Aden to adopt a
more moderate and flexible foreign policy toward
is neighbors. Perhaps in response to Moscow's
counsel, the Adenis reportedly decided in late
July to seek diplomatic ties with Bahrain and the
United Arab Emirates.
The Soviets already use naval facilities in
Berbera and would undoubtedly like to stagr;
naval reconnaissance flights from Somalia. Dalet
airfield, when finished, will be suitable for such
flights by Soviet TU-95 Bear D aircraft. The
Soviets could follow the pattern established in
Guinea, where they periodically base reconnais-
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sance aircraft and maintain some support facilities
l'or them. To use Somalia, however, the Soviets
would have to seek overflight permission from
countries such as Iran, Tut key, or Egypt. 25X1
M ogadiscio, which has apparently been
somewhat embarrassed by the Friendship Treaty,
is sensitive to criticism by other Arab govern-
ments of its ties with the USSR. It has been a
frequent cri"..c of foreign bases in Africa, and the
ruling Supreme Revolutionary Council has report-
edly been split over the question of closer links to
Moscow. It may have been the Somalis' heavy
dependence on the USSR for military assistance
that impelled them to grant Moscow military con-
cessions.
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SPANISH SAHARA: DISPUTE SIMMERS
Moroccan Prime Minister Osman, accompa-
nied by his foreign minister, traveled to Madrid
early this week in Rabat's continuing diplomatic
campaign to press its clair is to the Spanish
Sahara. Although there was no public indication
of significant movement by either side, the posi-
tive tone of the joint communique issued at the
end of the two-day meeting, as wrIl as initial
Moroccan press reactions, seemed to set the stage
for further bilateral talks. So long as the dialogue
continues, King Hassan is unlikely to resor to
force, and will keep his military pressure tactics
under careful control. The Spaniards, meanwhile,
appear to be searching for a compromise that
wou'd avoid a confrontation but would pevrnit
Spain to appear rasponsive to the various UN
resolutions committing Spain to arrange a referen-
dum permitting self-determination of the terri-
tory.
Moroccans Push for Action
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In his effort to create a sense of urgency,
Hassar again placed the Moroccan military on
alert and has shifted more units closer to the
border with Spanish Sahara. One of the units, an
infantry battalion, was scheduled to arrive in
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MAURITANIA
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MALI
Tarf,va on August 15. The other unit, a landing
battalion, was to arrive in Agadir a day later. A
mechanized battalion also reportedly was shifted
to Agadir late last month?about the same time
Hassan first placed Moroccan forces on alert and
recalled some reservists. The alerts serve both to
ensure the readiness of the military and to divert
the attention of its offic"rs from domestic prob-
lems. The recalled reservists reportedly are being
used, along with active duty personnel, to form
two new inf.ntry battalions.
Hassan may be expected to move additional
units toward the border if his diplomatic efforts
are not successful. The recent move south of
some F-5 reconnaissance aircraft and two heli-
copters suggests that he also is interested in
collecting intelligence on the area. Considering
the relative military capabilities of Spain and
Morocco, however, Hassan will probably continue
AI
to be highly cautious in risking hostilities in-
volving his regular military forces.
At some point, Hassan may decide to in;tiate
limited military action, such as using tribesmen
for cross-border operations, something he has
done previously. Hassan is intent on gaining Third
World support, and clashes between tribesmen
and Spanish forces would draw international
attention to the area.
Spaniards Search for Compromise
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The issue has been so sensitive in Spain that
the government has severely restricted coverage of
the Spanish Sahara in the press. No correspond-
ents have been permitted to visit the area. The
Spanish military is extremely angry about this
ban on press coverage. Reportedly, they feel it is
necessary to begin conditioning the Spanish
public to the possibility of military operations in
the area. The recent deaths there of several
Spanish soldiers, reportedly during skirmishes
with armed bands, have been officially ascribed to
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PORTUGAI : MILITARY PATIENCE TRIED
Moderdte elements within the Portuguese
military are growing impatient with leftist tactics
that have delayed government action on critical
problems.
The economy and labor are key areas in
which the military wants immediate government
action. The Council of Ministers on August 4
passed a package of measures designed to stimu-
late economic activity, but agreement on long-
promised legislation to curtail strikes and lock-
outs was more difficult. The cabinet has now
approved the establishment of an interministerial
department to deal with labor conflicts.
The temporary suspension of three major
Lisbon dailies on August 1 resulted in part from
the growing intolerance toward the left. News
reporting in Portugal has been slanted to favor the
left, and, according to the US embassy in Lisbon,
the junta viewed this as unfair communist exploi-
tation of the freedom of expression guaranteed in
the program of the Armed Forces Movement.
Protests from journalists forced military authori-
ties to lift the ban, and negotiations are now
under way on a new press law. Nevertheless, last
PORTUGUESE GUINEA
The UN Security Council on August 12
unanimously approved the membership appli-
cation of the Republic of Guinea-Bissau, pro-
claimed last year by the rebels in Portuguese
Guinea. The General Assembly is expected to
follow suit when it convenes its annual session
next month. Lisbon apparently plans to rec-
ognize formally the territory's independence
and to announce the transfer of power to the
rebel government just prior to the openina of
the General Assembly.
ZOA I
Leftists demonstrate iq Lisbon
weekend the government indefinitely suspended
the weekly publication of the Maoist Reor-
ganizing Movement of the Proletariat Party and
used military forces to block access to a rally
protesting the action.
The military leaders are also incensed over a
propaganda campaign waged by the far left to
persuade military personnel to resist orders and to
form unions. The junta last week issued a warning
to extremists and secured the resignation of the
only far leftist in the government. The leftist
official had been instrumental in organizing
centers to politicize soldiers.
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MacEachen
CANADA: NEW CABINET
The new Canadian cabinet?announced last
week by Prime Minister Trudeau?closeiy re-
sembles its predecessor and does not presage any
basic shift in policy toward the US.
The most important change was the appoint-
ment of Allan MacEa-hen to the External Affairs
Ministry. His predecessor, Mitchell Sharp, moves
over to MacEachen's old job as president of the
Privy Council; Sharp will also retain the post of
deputy prime minister. MacEachen, a veteran
Liberal politician, has had little experience in the
area of foreign affairs, but he demonstrated con-
siderable skill and tact as the Liberals' floor leader
during the minority period.
Sharp had indicated earlier that he wanted a
less burdensome job. He can still be expected,
however, to exert a moderating influence in cab-
inet deliberations on US-related matters. Former
incumbents still hold the other key portfolios
affecting Canadian-US relations?energy, finance,
and industry, trade, and commerce.
25X1
The remainder of the cabinet appointees are
old faces. The most interestng change, domesti-
cally, was the appointment of a French Canadian
as president of the Treasury Board. Since coming
to office, Trudeau has sought to change the nega-
tive image of Ottawa held by many Quebecois.
The appointment of French Canadians to impor-
tant government posts strengthens Quebec's
identification with Ottawa and makes the federal
government more sensitive to that province's
problems.
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ROMANIA: FIRE FROM MOSCOW
Romanian Foreign Minister Macovescu's visit
to China from August 4 to 9 has added to Mos-
cow's annoyance over Bucharest's independent
policies.
During the visit, Chinese Foreign Minister
Chi Peng-fei lauded the Romanian people for
"defying brute force" and for "courageously de-
fending their national independence and state
sovereignty." Macovescu picked up Chi's expres-
sion of "heartfelt" support for Romania, praising
Sino-Romanian relations and calling President
Ceausescu's visit to Peking in June 1971 a "con-
tribution of the first magnitude" to better under-
standing and friendship between Peking and
Bucharest. The anti-Soviet overtones of the
Ceausescu visit had prompted Moscow to put
heavy psychological pressure on Romania during
July and August of that year.
Moscow, already piqued at the presence in
China of the Romanian chief of staff, promptly
reacted to the outpouring of mutual expressions
of Sino-Romanian support. In a broadcast to
China on August 6, the Soviets leveled a sharp
personal attack on Chi. The Macovescu-Chi re-
marks also probably triggered the Soviets to
direct an implied warning to Bucharest. In a
Romanian-language broadcast on August 7, Mos-
cow touched on a variety of problems, including
the sensitive issue of Transylvania and Bucharest's
alleged lack of gratitude for "all" that the Soviet
Union has done for it.
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The commentary put special stress on Soviet
cooperation with Hungary, particularly in the
field of energy. It said that Hungary, which is
"unlucky because of its small territory," had been
able to proceed with its industrial development
thanks to reliable sources of energy from other
socialist countries.
Moscow's emphasis on the Hungarian ex-
ample was undoubtedly intended to needle the
Romanians, who have a long-standing dispute
with Hungary over irredentist sentiments in
Transylvania. It also was meant to show to the
Romanians the advantages to be gained by being
more cooperative, a telling point since Romania
depends on the USSR for some critica natural
resources.
USSR
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SOYUZ SPACECRAFT LAUNCHED
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The Soviets launched an unmanned Soyuz 25X1
spacecraft on August 12 from the Tyuratam mis-
sile and space center. Tass identified the craft as
Cosmos 672 and said that it carried scientific
equipment for space exploration.
Cosmos 672 is probably a modified Soyuz,
intended to check out changes in the spacecraft's
equipment designed specifically for the joint US-
Soviet mission scheduled for next year. Before
the joint flight, the Soviets are expected to con-
duct a series of manned Soyuz missions to pro-
vide spaceflight experience for the cosmonauts in
the program who have not flown in space.
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SOUTH VIETNAM: TURNING THE TIDE
South Vietnamese counterattacks appear to
be turning the tide of battle in the government's
favor on the major battlefields of South Vietnam.
Saigon's successful reinforcement, rotation,
,nd support of government forces on the Quang
Nam battiefroni has halted. at least temporarily,
the Communist move toward the populated low-
lands. Consequently, the Communists generally
have been forced to change their tactics from
concerted ground attacks against government
25X1
positions to occasional shellings. General Truong,
the able MR-1 commander, although still con-
cerned about the government's defenses a..ouncl
Hue, is satisfied that his tactics of shifting and
supplementing units have been primarily responsi-
ble for giving the South Vietnamese the upper
hand in the northern provinces.
In coastal Binh Dinh Province, government
forces have cleared a six-mile stretch of National
Route 1 that the Communists held for more than
a week and have regained control of most of the
high ground captured by the Communists on both
sides of the highway during the past few weeks.
The movement of part of the South Vietnamese
22nd Division to Binh Dinh has been responsible
for the improvement in security. The move does
not appear to have weakened government de.-
fenses in the highlands to the west. 25X1
There has been no significant military action
in Kontum Province since the siege of the Ranger
camp at Mang Buk was lifted some two weeks
ago. The government's regional commander has
ordered his forces to seek out the North Viet-
namese units that witi'ldrew. He also plans to
retake several artillery positions that were overrun
earlier this month.
In Pleiku Province, the government is not
quite as strong, and recent North Vietnamese
movements suggest that despite the increasing bad
weather, heavier fighting could be in store there.
Pleiku City is in little danger, although the North
Vietnamese could attack several lesser targets and
could close the two key highways with little addi-
tional preparation.
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Although the Communists have been able to
fire rockets at Bien Hoa Air Base daily during the
week, government forces have been able to
strengthen their defenses in the important areas
north and west of Saigon. Elements of three Com-
munist divisions are reportedly again ready to go
on the attack, but heavy government artillery fire
and air strikes may throttle the Communists'
plans.
Despite the few ominous signs of an impend-
ing increase in Communist battle action in several
key areas and the prospects of reduced American
assistance, top government officials are expressing
cautious optimism. For example, late last week,
the chief of the South Vietnamese Joint General
Staff reported that both President Thieu and he
were confident that government forces can con-
tain Communist initiatives throughout the coun-
try. While admitting that some areas were less
strong than others, they both feel that the im-
portant population and agricultural sectors of the
country are well defended.
CAMBODIA
THE WAR SPUTTERS
Combat throughout most of the country has
settled into the normal rainy season pattern of
relatively small-scale fighting on widely separated
fronts. Some of the skirmishing has occurred
within earshot of Phnom Penh as the Khmer
Communists test defenses along the Mekong
River. Government forces have reacted well and
no major positions have been lost. Communist
rocket crews, mean .hile, continue their random
and relatively ineffective firing on the capital.
Insurgent gunners elsewhere along the
Mekong are getting in their final licks before
rising flood waters begin forcing them back from
the river banks. Shore fire sank one cargo ship in
a convoy bound for Phnom Penh late last week,
and salvage crews just managed to save another.
Early this week, intense shelling sank two naval
craft escorting a resupply convoy headed upriver
from the capital and forced the convoy to turn
back.
2bAl
In the northwest, the contest continues for
the rice crop that is harvested in the fall. Attacks
that began in Battambang Province last month
have spilled over into nearby Siem Reap, Pursat,
and Kompong Chhnang provinces. The lull in
large-scale fighting elsewhere, however, has
allowed tne high command in Phnom Penh to
dispatch reinforcements to the northwest.
THE UN CAMPAIGN
Cambodian officials made themselves con-
spicuous on the international circuit this week as
the government stepped up the campaign to
retain its UN seat. Prime Minister Long Boret
arrived in Bangkok on August 14 following brief
visits to Jakarta and Manila. He is trying to prod
leaders of the member countries of the Associa-
tion of Southeast Asian Nations to take a more
active role in lobbying for Phnom Penh's cause in
the UN. Boret has also dispatched his foreign
minister, Keuky Lim, on a stumping tour t-
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Rangoon, Geneva, and West Africa.
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In New York, the government's new perma-
nent representative, Chhut Chhoeur, has been
busy mapping strategy with delegates from Japan,
Indonesia, and Australia. As a result of recom-
mendations from these representatives and their
governments, Phnom Penh is currently consider-
ing several new initiatives, including a request that
a UN fact-finding team be sent to Cambodia and a
possible General Assembly resolution calling for
negotiations between the two Khmer nar-
ties. I
Long Boret and friend
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CHINA
NAVAL ACTIVITY NEAR THE STRAIT
Chinese naval activity in the Taiwan Strait
area has increased in recent weeks.
In mid-July, two Osa-class auided-missile
boats were seen at the
naval base at San-tu-ao near the northern entrance
to the strait. This is the closest to the strait that
the Chinese have sent any of their guided-missile
boats, and may suggest the formation of a squad-
ron there. If so, this would be the second Osa
squadron in the area.
Increased Chinese activity in the Taiwan
Strait area dates from early this year. After
seizing the Paracel Islands in late January, the
Chinese for the first time sent three guided-missile
destroyer escorts through the strait to ioin their
South Sea Fleet.
PEKING
PUrN
A ,
NORTH
SEA ?
FLEET
Shanghai
Pu-mon-ch'ang
San-t u-no
EAST SEA
FLEET
IRAN
Canton
5563813 8-74
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Peking has not used its ships provocatively .125x1
this area, but the stationing of guided-missile
boats nearby and the appearance of naval units
well within the strait will likely cause concern in
Taipei.
UNFAVORABLE HARVEST PROSPECTS
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China's 1974 grain crop appears unlikely to
reach the record 250 million tons harvested last
year. Even if the weather were unusually favor-
able for the rest of the year, the prospects for
producing the 255 million tons that would be
needed just to keep pace with population growth
are small.
Early-harvested grain crops?which normally
account for 40 percent of grain output?were
poor because of drought in the north and un-
seasonable frost in the south. Erratic spring rains,xi
together with unusually low temperatures, havo2.5xi
forced changes in acreage patterns that will ad-
versely affect fall-harvested crops. Furthermore,
the growth of domestic fertilizer production has
slowed, and deliveries from Japan?China's major
source of imported fertilizer?have been cut back.
Grain imports, meanwhile, are increasing.
Contracts for delivery of 9.6 million tons of grain
in fiscal year 1975-20 percent more than in fiscal
year 1974?have already been signed, and more
purchases are likely. The US share of these
CHINESE IMPORTS OF GRAIN
(Million Metric Tons)
FY 1974
Wheat Corn Total
FY 1975 (Preliminary)
Wheat Corn Total
US
3.1
1.7
4.8
2.7
0.1
2.8
Canada
1.6
0
1.6
4.0
0
4.0
Australia
1.2
0
1.2
1.6
0
1.6
Argentina
0
0.3
0.3
0.5
0.6
1.1
Other
0
0
0
0.2
0
0.2
Total
5.9
2.1
8.0
9.0
0.6
9.6
Note: Totals may not add because of rounding.
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purhases has declined as a result of Peking's dis-
satisfaction with US corn and of its deliberate
policy of diversifying sources of supply. In the
past year, China has concluded three-year agree-
ments with Canada, Australia, and Argentina to
provide more than 4 million tons of grain an-
nually through 1976.
The long-term program to end dependence
on imported grain and chemical fertilizers?a
program built around the purchase of 13 urea
fertilizer complexes?will not help until near the
end of the decade. In the interim, Chinese agricul-
tural production and the need for foreign 'rain
will remain sensitive to weather con
S.
AUSTRALIA: ALL IN THE FAMILY
The newly re-elected Labor government of
Prime Minister Whitlam is caught up in a mount-
ing series of labor, economic, and political prob-
lems. Widespread labor unrest and indiscipline
among Labor Party parliamentarians are com-
plicating Whitlam's efforts to deal with acceler-
ating inflation and industrial troubles. Last week,
he publicly warned national trade unions to stop
pushing for unacceptable wage increases and to
cooperate with the government.
Over the past few months, Australia has ex-
perienced a rash of strikes, culminating last week
in nationwide walkouts by transport and oil-
industry workers. Although the immediate crisis
has now eased, there are signs that the public is
losing its patience with labor militants, and Whit-
lam is worried that public unhappiness will turn
on the Labor government, causing losses at the
polls in future by-elections. The latest national
political survey showed public support for the
Labor Party had dropped several points.
Whitlam's biggest concern is the growing rate
of inflation. In his efforts to combat the problem,
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Whitlam 25X1
the Australian leader has been trying to hold
down wages. The unions have ignored calls for
restraint, however, and have pressed ahead with
wage demands to keep salaries in step with rising
prices. Whitlam last week warned employers to
cease giving in to exorbitant wage demands and
passing along the cost in higher prices.
In addition to his economic woes, Whitlam
continues to have problems getting his legislation
through parliament. Six bills, whose prior re-
jection had been the justification for the general
election in May, were recently passed at a joint
sitting of the two houses, but opponents of the
measures are planning to challenge them in the
courts and may try to block funding needed to
implement some of the new legislation. Whitlarn
is also having trouble with his own party caucus,
some of whose members reportedly are losing
confidence in his ability to deal with economic
issues. His problems stem not only from the in-
creased influence of the party's left wing, but also
from pique among many party members at the
Prime Minister's arrogant style of leadership and
his failure to coordinate olic ec
with the caucus.
It
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CHILE: SQUABBLING IN THE ANDES
Since the coup last September, many Chil-
ean officials and businessmen have wanted
changes in the Andean Pact's foreign investment
code. That code treats all foreign investment
uniformly, but because Santiago was trying to
attract foreign capital, it wanted to be able to
make special concessions. Some Chileans even
contend that Santiago's ratification of the code
was not valid because it was enacted by presi-
dential decree and not by Congress.
Officials in Chile's Economics Ministry had
offered to discuss modification of the code with
other Andean members, but this appeal for
changes apparently fell on deaf ears. Last month,
therefore, Santiago promulgated its own new
investment law, which is creating considerable
dissension among members of the Andean Pact.
Protests have been lodged by several governments,
with particularly strong denunciations by Peru
and Venezuela.
The new law spells out the "rules of the
game" for foreign investors in Chile. It should
simplify the red tap_ and conflicting policies that
emerged during the Allende administration. The
law contains assurances that foreign equity will
not be discriminated against, and that capital and
profits may be repatriated. All new investments
will be channeled through a committee for for-
eign investment, consisting of senior government
officials. Individual contracts will spell out items
that could become sources of trouble. Disputes
arising under these provisions can be appealed to
a special tribunal that replaces the variety of
arbitration bodies that proliferated during the
Allende period.
Although the new law does not go into
specifics on key questions as does the Andean
code, there are indications that contract provi-
sions will be much more liberal. The Chilean law
allows the junta to decide on foreign participation
in a particular operation on the basis of national
importance. As a result, new contracts will prob-
ably reflect Santiago's desire for more foreign
capital.
Peru and Venezuela, which have stricter for-
eign investment laws than the Andean code, have
25X1
come out strongly against Chile's new law. Peru
has gone so far as to insist that Santiago desist
from applying the law
The promulgation of Chile's foreign invest-
ment law has thus confronted the Andean Pact
members with a dilemma. On the one hand, the
other members of the Andean system cannot per-
mit Chile to enjoy the advantages of more foreign
capital that may result because of Santiago's more
liberal provisions. On the other hand, Chile's na-
tional pride will not allow it simply to scrap its
new law and start again. Under such circum-
stances, the disagreement seems likely to erode
the effectivenes of Pact.
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Argentina
CABINET SHUFFLES; GUERRILLAS STRIKE
Guerrilla terrorism and more conventional
political problems continue to consume President
Peron's attention. After weeks of speculation over
cabinet changes, Mrs. Peron replaced the ministers
of interior, education, and defense. The full
cabinet reportedly had tendered resignations a
week earlier to allow her to reorganize the govern-
ment, but it is still unclear whether she intends to
make additional changes. Meanwhile, Marxist
guerrillas Lunched their most spectacular opera-
tions in months against several provincial military
targets.
A Minor Facelift
The new ministers appointed last waek ap-
pear to be long-time Peronists who held posts in
Juan Peron's earlier administrations. For instance,
the education minister, 79-year-old Oscar
lvanissevich, held this same post during Peron's
first term when the universities were purged of
opponents to the dictatorship. Student opposi-
tion to Peron subsequently played a part in his
downfall. It is probable, therefore, that Ivanis-
sevich's appointment will meet with an icy recep-
t;on at the huge University of Buenos Aires,
where tension is already running high among
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left-wing Peronist youth who strongly oppose
Mrs. Peron's conservztive policies and advisers.
Students seized several faculty buildings on
August 13 in reaction to rumors that the Presi-
dant had named a conservative Peronist as rector,
and further disturbances can be expected.
To head the Interior Ministry, which has
nominal control over the security organizations
responsible for countering terrorism, the Presi-
dent has named Alberto Rocamora, a former pres-
ident of the lower chamber of congress and a
staunchly orthodox opponent of left-wing
Peronism. The new defense minister, Adolfo
Mario Sevin?, served in a variety of economic
posts during the first Peron presidency and prob-
ably shares the conservative instincts of the other
two appointees.
It is very probable that influential Social
Welfare Minister Lopez Rega, Mrs. Peron's closest
adviser, had a major hand in picking the three
ministers. Should the new officials turn out to be
subservient to Lopez Rega, then the breach in the
unstable Peronist movement will surely widen.
Various Peronist factions are already taking
swipes at one another, and the left-wing Peronist
youth are threatening to abandon Mrs. Peron
unless she dumps Lopez Rega.
A Major Operation
The country's largest guerrilla organization,
the People's Revolutionary Army, attempted two
large-scale assaults against provincial military
installations on August 11?their most ambitious
undertakings since the new regime took office. In
Cordoba Province, an estimated 75 guerrillas
dressed in army uniforms seized a military muni-
tions plant
Almost simultane-
ously, some 40 guerrillas in the rugged mountain
area of Catamarca Province in the far northwest
of Argentina were intercepted by police as they
prepared to attack a local airborne infantry base.
In the course of the ensuing gun battle, the ex-
tremists abandoned the bus they were using and
fled in several commandeered police vehicles.
LOA I
In the subsequent manhunt, at least 21 per-
sons were reported killed during several days of
pitched fighting between government forces and
insurgents attempting to escape the massive secu-
rity dragnet. large
numbers of terrorists were captured in Catamarca
when police and army troops with air support
trapped a fleeing guerrilla contingent and killed
some 15 of them in a fierce shoot-out. 25X1
The guerrilla operations were probably
staged mainly for propaganda purposes and to
replenish arms stockpiles. An underlying reason
might also have been to foster the idea that Mrs.
Peron's government is weak and unstable. Like
the raid on the Azul military garrison last January
and the police discovery of a sizable guerrilla
training camp in Tucuman Province in May, the
latest attacks are further signs that the terrorists
hope to develop active insurgency in the country-
side as well as in the urban centers where they
have been so successful over the past four ;ears.
They have encountered some sympathy in the
rural areas, and probably hope to capitalize on
surprise and the absence of large concentrations
of security forces. US officials in Argentina, how-
ever, believe that the guerrillas' casualties have
dealt a sharp blow to their organization. If so,
they might be forced to drop pans for a rural
front.
In the face of the stepped-up terrorist ac-
tions of recent weeks, the government will almost
certainly feel impelled to demonstrate some visi-
ble response. After months of ineffectual starts at
stamping out terrorism, however, there is little
reason to expect dramatic results. On the con-
trary, there are now signs that the nominally
Peronist Montoneros guerrillas are considering
taking up arms agairct the government and join-
ing dissident left-wing labor groups that have been 25x1
promoting strikes in the turbulent industrial city
25X1
of Cordoba. If the report is true that notorious
Peronist right-winger Jprge Osinde?who has re-
turned from his assignment as ambassador to
Paraguay?is slated to head a new security and
intelligence apparatus, the left would probably
defect en masse. Guerrilla activity by the
Montoneros, who command the allegiance of
large numbers of Peronist youth, would pose the 25X1
most serious challenge yet for Pemnif:
widow.
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Dominican Republic
BALAGUER ENDURES
Joaquin Baiaguer will be inaugurated today
for his third consecutive four-yr ar term as presi-
dent of the Dominican Reput c. The durable
politician, who once served as vice president
under dictator Rafael Trujillo, won an over-
whelming victory last May 16 in an election boy-
cotted by all major opposition groups. His Re-
formist Party also retained nearly complete con-
trol of both houses of congress.
Balaguer begins his third term backed by the
military and enjoying considerable popular sup-
port. Business favors him because his stable admin-
istrations have attracted large amounts of foreign
investment and have spurred unprecedented eco-
nomic growth. Although much of the economic
progress has been in the towns and cities, Bala-
guer also remains popular in the rural areas where
most of the voters live. He has personally iden-
tified himself with government-sponsored con-
struction in the countryside, making frequent
trips to small towns to inaugurate new schools
Balaguer handing out shoes and money as he campaigns
2bK1
and health clinics. His support among subsistence
farmers has been enhanced by the government's
agrarian reform program.
Although numerically strong, the country's
opposition political groups remain poorly organ-
ized. Personal rivalries and ideological squabbling
prevent them from getting together to mount an
effective challenge to the oovernment. Balaguer
has been very successful in the past in exploiting
these weaknesses and keeping the opposition
divided and off balance; no change in this pattern
appears likely soon.
The Dominican chief of state is not likely to
altet his goals and programs significantly. ThAre
has been growing public unhappiness about infla-
tion?caused mainly by the rising cost of im-
ported pettoleum and food. He is likely to move
rapidly to combat inflation by readjusting price
and wage controls that were too touchy to handle
in an election period. He is also likely to push
ahead firmly with the agrarian reform program.
Although his government is following Jamaica's
lead in seeking increased taxes and royalties on
bauxite exports, he is unlikely to introduce meas-
ures that would scare off the foreign investment
that has played the primary role in sustaining
economic growth.
Balaguer spoke in his campaign about using
his third term as a transition period to bring
about a truer form of representational govern-
ment in place of what he calls the present "cir-
cumstantial democracy." He reportedly would
favor a strong two-party system with constitu-
tional guarantees against abuse by the party iit
power, perhaps patterned along the line of the
Liberal-Conservative agreement that brought po-
litical stability to Colombia. Chances that he will
succeed in this endeavor seem bleak because
Dominican political groups are customarily vehi-
cles for the personal ambitions of their leaders
and generally disintegrate without caudillo-type
leadership. Perhaps the most Balaguer might real-
istically be expected to accomplish during his
third term is to preside over four more years of
relative political stability and economic
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International
WORLD POPULATION CONFERENCE
Delegates from around the world will gather
in Romania from August 19 to 30 for the UN-
sponsored World Population Conference. The
meeting, which will address the political repercus-
sions of population planning and control, is the
first UN gathering of this magnitude to be held in
Eastern Europe, and Bucharest is pullMg out all
the stops to make it a success.
A number of problems are likely to plague
the meeting. Even a request for pro forma adop-
tion of some plan of action could stir bitter
debate. The developing countries reportedly
believe that one proposed plan tends to stress
their poor performance in implementing family
planning programs. They also believe that it tends
to neglect the resource and environmental prob-
lems imposed on the world by industrialized na-
tions. In addition, a number of developing coun-
tries protest that even the limited population
goals endorsed in the plan infringe on their sov-
ereign right to set birth-rate goals.
In an effort to accommodate these crit-
icisms, drafters have revised the plan, but in the
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process they have raised problems for the indus-
trialized nations. For instance, a number of na-
tions, including the US, are worried that the
highly technical recommendations of the latest
version are likely to be misunderstood or ignored
by government planners in those countries where
population control is most needed.
Despite the problems, the Romanians appear
glad that the meeting will be held in Bucharest
and will lay out the red carpet for the large
number of delegates and news teams that will be
on hand from the Third World and the West.
President Ceausescu aspires to have Romania play
a greater role in world affairs and reasons that
keeping Romania in the international limelight
makes it more difficult for Moscow to bring pres-
sure on him to change his maverick ways.
There is an element of irony in Bucharest's
playing host to a meeting devoted to seeking
methods to curb population growth. Romania has
the most stringent anti-abortion laws in Eastern
Eu rope.
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