WEEKLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001000080007-2
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 31
• Document Creation Date: December 27, 2016
• Document Release Date: May 11, 2010
• Sequence Number: 7
• Publication Date: February 7, 1975
• Content Type: REPORT

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Too Secret
Weekly Review
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Top Secret
February 7, 1975 GJ/~ 1
COPY No
650
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CONTENTS (February 7, 1975)
The WEEKLY REVIEW, issued every Friday morning by the
Office of Current Intelligence, reports and analyzes ilgnificant
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.
MIDDLE EAST
AFRICA
EAST ASIA
PACIFIC
1 Brezhnev Absence Causing Unease
2 Portugal: Political Turbulence
4 Vietnam: More Action Ahead
6 Gromyko's Middle East Travels
7 Syria: Stronger Missile Defenses
8 Ethiopia: Fighting in Eritrea
10 Mozambique: Five Months to Go
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11 Cambodia: A Turn for the Worse
12 Thailand: Search for a Government
12 South Korea: Pak's Referendum
13 North Korea: Troubles with Trade
15 Indonesia: The Timor Problem
16 China: Putting It Together
20 UK:ToriesattheC- ds
Developing Ties
23 Spain: Political Stirrings
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24 Latin America: Derailed Dialogue
25 Venezuela: Image Building
26 Argentina: Lopez Rega Controversy
27 Chile: Still Trying
28 Brazil: Hitting the Communists
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Comi:ients and queries on the contents of this
publication are welcome. They may be directed to
th:, editor of the Weekly Review
WESTERN
HEMISPHERE
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Brezhnev's Absence Causing Unease
Soviet party leader Brezhnev's absence from
public view has now stretched to almost seven
weeks. His apparent inability to take part in the
daily affairs of the party has probably resulted in
some erosion of his personal authority and caused
some unease within the party, but there has been
no evidence of any challenge to hi- position.
Breznnev last appeared in public on Decem-
ber 24, and since then he has made only two
semi-public appearances. There has been no offi-
cial explanation for his absence, and reports on
the nature of Brezhnev's illness have been con-
tradictory and highly speculative. Around mid-
January, however, the emphasis in the rumors
about Brezhnev began to shift from sreculation
about his health to his political well-being. Specu-
lation in this direction fed on the setbacks to
policies closely associated with Brezhnev: abroga-
tion of the 1972 US-Soviet trade agreement, and
the decision by the December plenum of the
Central Committee to emphasize producer-goods
On January &, an unusual Tass statement
denied Western reports of political instability in
the USSR and ridiculed those who publicize
them. This has been followed by a concerted
effort to keep Brezhnev's name before the public,
with emphasis on his contribution to detente and
on the importance of his role in past and future
summit meetings. Recent speeches by Brezhnev's
Politburo colleagues have also endorsed detente
and have referred favorably to the General Secre-
tary's personal role in t'-ke conduct of Soviet af-
fa i rs.
Meanwhile, Soviet leaders have attempted to
create an atmosphere of normality in Moscow.
Last month, three members of the Politburo
made previously scheduled trips abroad, and
Prime Minister Kosygin apparently spent most of
Ja ,uary on vacation in the Caucasus. This week,
Foreign Minister Gromyko made a swing through
the Middle East, and other political leaders also
seem to be following a business-as-usual routine.
industries over consumer-goods industries in the In spite of the atmosphere of normality,
1975 economic plan. there have been some indicatioris that Brezhnev's
Zil limousine on Kutuzovsky Prospekt, January 30
AP speculates that Brezhnev could be the passenger
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continued absence from the helm is causing con-
cern among the ranks, and that the first tentative
steps at political maneuvering within the leader-
ship may have begun. On January 21, Pravda
published a long article noting that the strength
of the leadership is its collectivity. The article is
somewhat ambiguous, but it may have been in-
tended to reassure the rank and file that no one is
indispensable and that continuity of leadership is
assured by the collective, even in the absence of
one of its members. The author's favorable refer-
ence to long-range planning-which implies sta-
bility and continuity-tends to support this
interpretation, as do references by other leaders
to Moscow's determination to continue detente.
In Brezhnev's absence, leaders outside the
charmed circle of the Kremlin have received
varied treatment in the Soviet press. V. V.
Shcherbitsky, Ukrainian party first secretary and
a full member of the Politburo, appeared in
Pravda last month in an unfavorable light. Pravda
reported that it had received a letter from the
Ukrainian leader acknowledging the correctness
of earlier criticism of of airs in his republic. On
the other hand, the newspaper carried an article
by G. V. Romanov, first secretary of the regional
party organization in Leningrad and a candidate
member of the Politburo, which touted his
region's economic success in 1974. Shcherbitsky
and Romanov have sometimes been listed among
possible successors to Brezhnev, and Pravda's dif-
ferent treatment of the two men may be the first
indication that there is maneuvering for position
within the leadership.
and to write the script for the next congress, he
must reassert his nolitirai vigor fairly
Such maneuvering, never far beneath the sur-
face, can be expected to increase in the coming
months as preparations begir, for the next party
congress, which should be held early in 1976. The
picture is complicated, however, by the length of
Brezhnev's absence, by his recent political set-
backs, and by the doubts that have been raised
about his physical well-being. On previous occa-
sions, Brezhnev has disappeared for several weeks
and then reappeared without any apparent dim-
inution of his authority, but if he hopes to regain
the momentum lie seems to have lost this time
PORTUGAL: Political Turbulence
Rumors of coups and cabinet reshuffles con-
tinue to circulate in Lisbon as virtually all of
Portugal's main ruling bodies deliberate what has
been described as "revolutionary" legislation. The
outcome of these deliberations, and particularly
the final form of the economic plan, should pro-
vide some insights into the relative strengths of
leftists and moderates in Portugal.
The Armed Forces Movement's Superior
Council met often in the past week to draft the
ground rules for the election campaign-due to
begin on March 4-and to discuss the economic
plan. The council also is expected to define
"pluralistic democracy" and the country's
1, antimonopolistic nature." The council's deci-
sions will, in turn, be presented for approval to
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the cabinet and to the Movement's 200-member
General Assembly late this week. Press accounts
of the assembly's agenda indicate that it will
discuss the economic plan and the establishment
of the Movement as a permanent institution as
well as its role in the constituent assembly.
The draft economic plan has been the sub-
ject of bitter debate for many months. Leftists
have argued for the nationalization of most
private industry and for redistribution of the
country's arable land. Moderates acknowledge
that too much of the country's wealth is con-
centrated in too few hands, but have argued for
gradual solutions that will avoid upsetting the
nation's fragile economy.
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A repo: t that the Soviets have asked for port
facilities for their Atlantic fishing fleet has been
denied by the Portuguese Foreign Ministry and by
Moscow. 1-he Portuguese are seeking advice on
the restructuring of their fishing industry, and it
is possible this subject was explored with the
Soviets. A Norwegian mission arrived in Lisbon
on February 3 to study the problems of the
Portuguese fishing industry.
A NATO naval exercise off the Portuguese
coast, meanwhile, provided ultra-leftists with an
excuse to demonstrate against what they billed as
an act of political intimidation. The Com-
munist-dominated press has reported the ma-
neuvers in a sensational fashion, but moderate
papers have been restrained in their comments.
Separate statements explaining the exercises-
issued by Minister Without Portfolio Alves and by
the Armed Forces General Staff-put the issue in
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VIETNAM
The 'week before Tet, the three-day Lunar
New Year holiday beginning on February 11,
witnessed a temporary lull in fighting, but most
indications point to intensified action resuming
again in the weeks ahead with heavy Communist
attacks directed at several vulnerable areas
throughout the country.
The principal area of concern focuses on Tay
Ninh City. Communist propaganda has been
warninn residents of heavy attacks. Elements of
three Communist regiments have recently been
detected moving into Tay Ninh from the eastern
provinces of the region. Two of these units are
part of the newly formed Communist 3rd Divi-
sion, which combined several independent units
for better command and control. There are also
tentative indications that units from the Commu-
nists' 9th Division are shifting from their present
positions in Binh Duong Pro';;nce to spearhead
the attacks. While these repo-ts cannot be con-
firmed, the 9th is the only Communist unit in the
region that has not seen combat recently and its
units are believed fresh.
Several reports also indicate that Viet Cong
sapper units are making preparations for terrorist
actions in Saigon. Members of these units report-
edly are currently stocking supplies and muni-
tions, identifying targets, and improving access
routes into and out of the capital. While the
government has taken steps to contain such activ-
ity, it would be nearly impossible to prevent
scattered attacks.
There also are indications that the Commu-
nists are preparing attacks against the Kien Tuong
units from the Communists' 5th
Division wi ead the assaults
in recent days
Sou Vietnamese forces have inflicted heavy ca-
sualties on the division's units. If these casualties
have indeed been heavy, the 5th will probably not
be used to attack a provincial capital that the
South Vietnamese have indicated they will de-
fend. The Communists are more apt to
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Feb 7, 75
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concentrate on expanding their base areas and
infiltration routes and on harassing traffic on ma-
jor roads and canals.
In the northern section of the country, gov-
ernment commanders are worried about poten-
tially heavy Communist assaults against provincial
capitals in the central highlands near the Cam-
bodian border. The recent deployment of the
North Vietnamese 968th Division into the Kon-
tum/Pleiku province area has heightened this con-
cern, along with tentative indications that another
division-the 320th-may be moving south to at-
tack targets in Darlac and Quang Duc provinces.
In Military Region 1, some intensified action is
anticipated in Quang Nam and Quang Ngai prov-
inces, but government commanders remain confi-
dent that if the Communists do not reinforce
units in position, they can contain the attacks.
Weather conditions will pose no constraints.
Good fighting weather will continue from the
highland provinces to the southern delta until
April or May. The heavy monsoon rains in the
northern coastal areas will begin tapering off
soon, and good weather will begin in March.
Northern Divisions Stirring
The four divisions constitute an unusual
mixture of combat units. Orie of them-the
316th-has :lever fought in South Vietnam and
has seen combat only in northern Laos. The 341st
was reactivated as a line division in 1973, but it
has not fought in Scuth Vietnam as a division for
many years. Two of the divisions-the 308th and
the 312th-fought together in northern South
Vietnam during the 1972 offensive, and they are
part of a mobile strike force-the 1st Corps-in
central North Vietnam. From an organizational
standpoint, it would make little sense to dispatch
the 308th to northern South Vietnam and the
312th to the southern part of the country, as the
evidence now suggests.
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If your divisions were sent to South Viet-
nam, there would be a significant shift in the
balance of forces in favor of the Communists. The
commitment of only one or two fresh divisions
would probably not serious!y upset the balance
unless both went to one area, such as northern
South Vietnam or around Saigon. A single na.v
division in the highlands would, however, tilt the
balance there. North Vietnamese forces saw heavy
action in the northern part of South Vietnam last
summer anO fall, and one unit-the 304th Divi-
sion-suffered extremely heavy 'osses. The arrival
of a single new division in this area probably
would enable the Communists to retake Quang
Tri City and make inroads in the populated low-
lands. A second division would clearly tilt the
balance to the Communists.
The movement of a fresh division such as the
312th into the provinces north of Saigon would
not upset the force balance, but it would prob-
ably be sufficient to ensure new territorial gains
for the Communists. If Hanoi plans to send new
units to this area, it would be more likely to do so
before April. when weather conditions beain to
deteriorate.
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GROMYKO'S MIDDLE EAST TRAVELS
Foreign Minister Gromyko appears to have
made little progress in bridging the differences
between the USSR and Egypt during his visit in
Ca-..,o this week. He avoided acrimonious ex-
changes with President Sadat that could have led
to a further deterioration of relations, but the
USSR and Egypt remain apart on key issues such
-as the Geneva conference and Soviet arms ship-
ments.
Although the Soviets seem resigned to the
possibility of a new Egyptian-Israeli disengage-
ment agreement, Moscow is still seeking some
commitment from the Egyptians that the Soviets
will be accorded a significant negotiating role in
the subsequent rounds of negotiations. Earlier in
the week, in an attempt to put pressure on Cairo,
Gromyko and the Syrians had -ailed for a re-
sumption of the Geneva Talks within one month.
The Egyptians, however, resisted this Soviet gam-
bit and agree,' only to a less specific formula-
tion-the "immediate" resumption of the talks.
In the statement marking the end of the
Cairo visit, the Egyptians conceded that Moscow
should have a role in all aspects of the Middle
East settlement. Sadat, nevertheless, made plain
that he intended to continue to rely on Washing-
ton's step-by-step approach to negotiations. Im-
mediately after meeting with Gromyko, Sadat
publicly stated tha, he continued to welcome the
visit of Secretary Kissinger.
Sadao noted that progress had been made on
some bilateral issues, but added that others would
have to wait until General Secretary Brezhnev
visits Egypt. Gromyko clearly was unwilling to
make any firm commitment regarding a future
Brezhnev trip to Egypt; the joint statement on
the Gromyko visit refers only to the importance
of Brezhnev-Sadat exchanges. Sadat's public re-
marks suggest that Cairo is once again making an
issue out of a Brezhnev visit.
One of the unresolved issues Sadat un-
doubtedly had in mind was his demand for new
Soviet agreements on arms. Although Moscow has
said it would deliver arms ordered prior to the
October war-and apparently did deliver some
MIG-23s on the eve of Gromyko's arrival-it has
refused to make new commitments. The issue of
Egyptian payment of its arms debt also appears to
remain unsettled. A Soviet official has indicated
the debt will be the subject of discussions in
Moscow later this month:
Gromyko's stay in Damascus seemed mainly
aimed at strengthening his hand for his subse-
quent discussions in Cairo. Although Gromyko
reiterated the Soviet commitment to Syria's de-
fense and signed some previously negotiated eco-
nomic and scientific agreements, apparently no
new aid was promised. While in Damascus, Gro-
myko met with fedayeen leader Yasir Arafat and
in a banquet speech referred, for the first time, to
a Palestinian "state." At other times during his
trip, however, Gromyko reverted to the usual
vague Soviet formulations. This suggests that, at
MALAGASY REPUBLIC: NEW LEADER 25X1
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General Ramanantsoa, head of the Malagasy
government since 1972, stepped down on Febru-
ary 5. He handed over full executive powers to
Lt. Colonel Richard Ratsimandrava, head of the
gendarmerie and former interior minister. Rama-
nantsoa had dissolved his cabinet late last month
to diminish mounting political tensions caused in
part by a resurgence of differences between the
coastal tribes and the Merina tribes of central
Madagascar. Early in January, officers from the
coastal tribes had unsuccessfully attempted a
coup. In addition, the economic situation was
getting worse, and personal rivalries within the
government were growing more acute.
Ratsimandrava, though a Merina, has good
relations with the coastal tribes that dominated
the government until Ramanantsoa came to
power. These tribes have been given greater repre-
sentation in the new cabinet. The new govern-
ment's relations with the US are not expected to
undergo any fundamental change. Ratsimandrava
has said publicly that he will continue Ramanant-
soa's nonaligned policies.
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SYRIA: STRONGER MISSILE DEFENSES
The Syrians continue to strengthen their sur-
face-to-air missile defenses along the front with
Israel. They have, for example, recently increased
the pace of work on hardening seven SAM sites.
Work at one SA-3 site already has been com-
pleted, and missile equipment has been installed.
Moreover, the central guidance areas of six SA-2
sites are being reinforced with concrete, and
launch positions have been built at five of these
sites. Missile equipment at temporary sites nearby
will probably be moved into the new ones when
they are completed. Another SA-2 site in the area
is also being hardei,ed, but apparently this one is
not being rushed to completion.
Syria has a total of 25 SAM firing units-15
SA-6s, 7 SA-2s, and 3 SA-3s-along the front with
Israel. The SAIVis generally are positioned to pro-
vide overlapping zones of fire. In the south, where
most of the hardening work is being done, the
Syrians will rely on a mixture of SA-2s, SA-3s,
and SA-6s to provide protection against air at-
tack. The Syrians have only one reinforced in-
fantry division in the ea, and they have built
few field for-iifications for defense against Israeli
ground forces. The terrain there provides some
defensive advantage and this, coupled with the
long distance from Damascus, probably accounts
for the lack of man-made defensive positions.
In the north, Syria's air defenses are largely
SA-2s and SA-6s. This area is heavily fortified,
and a large part of Syria's army is stationed there.
The Syrians also have strong forces and heavy
fortifications in the center of the front. They
have positioned r..-)stly the low-altitude SA-6 in
this area. There are SA-2s and SA-3s along its
edges, but protection by the medium-altitude
SA-3 system is poor in the center, leaving it more
vulnerable to Israeli air attack.
SA-6 would be
the greatest threat in any new conflict, but that
the other CAM systems would have to be elimi-
nated before the SA-6 could be attacked effec-
tively. Israel's air tactics would be first to knock
Syria Strengthens Surface-to-Air Missile Defenses
^ SA-6 site
A SA-' site
? SA-2 site.
^ Site being ha
i f
out the SA-2s and SA-3s, and then to bomb the
SA-6s from medium and high altitudes.
In addition to the SAMs deployed along the
front, Syria has 22 other SAM units. Nineteen of
them-five SA-6s
five SA-2s, and nine 5A-3s-are in the vicinity of
Damascus, while three new SA-2 units are being
formed near Hims some 85 miles north of Damas-
cus. In the past, SAM units have been formed in
the Hims area before being sent south to positic25X1
opposite Israel. The units now being formed,
however, may stay at Hims to help protect the oil
refinery there, which was bombed by the Israelis
during the October 1973 war- F_
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ETHIOPIA: FIGHTING iIN ERITREA
Serious fighting between government forces
and insurgents broke out again in Eritrea Province
last weekend after a lull of many months. Neither
side is likely to score a decisive victory in the near
future, and the resumed fighting could last for
months if not years.
In the fighting this week, the army suffered
serious setbacks, forcing the ruling military coun-
cil in Addis Ababa to send reinforcements. Gov-
ernment forces will probably be able to maintain
control of the provincial capital, Asmara, but
they are not capable of preventing continued
insurgent infiltration and terrorist attacks. The
rebels probably have the capacity for increased
activity, especially now that their two rival fac-
tions are apparently cooperating against the gov-
ernment. Their next targets may be the Red Sea
ports of Massawa and Assab.
A rebel attack on Ethiopian troops and
installations in Asmara started the hostilities. The
attack was evidently designed to pre-empt a re-
sumption of operations by the army. Two days
earlier, the council had announced it was ready to
use force against the rebels.
The army overreacted and went on a shoot-
ing spree, firing indiscriminately at civilians and
buildings. Casualties reportedly ran into the
hundreds. Troops conducted a house-to-house
search for arms and rebels, detaining many Eri-
treans, and also engaged in considerable looting.
Most of the firing in the city ended by February
3, although sporadic shooting continued.
Asrnara's electricity and water systems were dis-
abled; by the end of the week, the water shortage
was becoming critical, and food supplies were
running low.
On February 1, the army began attacking
rebel concentrations in the environs of Asmara.
Air force planes made numerous sorties and
bombed some villages. Most of the heavy fighting
took place north of the city. The army suffered
heavy casualties attempting to dislodge the rebels,
who have spent the past several months estab-
lishing strong positions around Asmara. An
armored column with an estimated 600 reinforce-
ments, which had left Addis Ababa before the
fighting began, was stalled by an ambush about
20 miles southwest of Asmara.
The army has airlifted as many as 1,500
troops into Asmara, however, bringing the total
strength of regulars in the province to about
11,000-about one third of the army. Most of the
reinforcements came from the Addis Ababa area,
but some were also brought in from other north-
ern provinces. Fighter air craft were sent from the
main air base near Addis Ababa.
Serious deficiencies in the Ethiopian army
have been pointed up by the new fighting. Lead-
ership reportedly is poor, and units `wve had
difficulty coordinating their activities. i roop dis-
cipline has been a problem, too. The army chief
of staff apparently has arrived in Asmara to make
a personal effort to remedy these deficiencies.
For the provisional military government, the
Eritrean conflict has become an acid test of lead-
ership. A serious defeat in the field would almost
certainly trigger a military revolt against the
present rulers. In addition, the transfer of a large
number of troops from Addis Ababa might en-
courage some opponents of the council to at-
tempt a coup regardless of how the fighting goes.
Despite the dangers inherent in the Eritrean
situation, the council is pushing ahead with its
plans to impose a socialist regime on Ethiopia. A
policy statement issued on February 3 announced
the nationalization of 72 businesses and the
acquisition of a.controlling interest in 29 others.
The edict affects textile, metal, and other enter
prises. The declaration condemns the middle class
as the principal prop of the old reg,*me and
glorifies the workers, peasants, soldiers, and intel-
ligjntsia as spearheading the Ethiopian revolution.
While inviting foreign participation in the econ-
omy, the declaration accuses foreign investors of
exploiting Ethiopia in the past and states the
government's intention to maintain strict control
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MOZAMBIQUE: FIVE MONTHS TO GO
Prime Minister Chissano and other leaders of
the four-month-old transitional government are
projecting an image of calm purposefulness as the
territory moves toward independence, scheduled
for June 25. The future, however, is clouded with
political and economic uncertainties.
The Front for the Liberation of Mozam-
bique--the nationalist group that dominates the
transitional government-has been trying to
broaden its political base in the territory. Front
officials are giving high priority to political
mobilization, and party functionaries are fanning
out over the countryside preaching "Unity, Work,
and Vigilance" and pushing literacy and health
campaigns. These efforts apparently have won the
Front some new backers, although many people
may support the organization only because it is
the sole legal political party.
In recent weeks, the government has devoted
much of its time to economic matters. A Port?i-
guese delegation arrived on January 19 to discuss
economic issues, including the establishment of a
central bank and the future development of the
Cabora Bassa hydroelectric project. The UN also
is sending an economic su,vey team to the ter-
ritory, but specialists in Lisbon and Lourenco
Marques are reportedly encountering difficulties
in collecting reliable statistics for potential donors
of aid.
Meanwhile, sigri:: of economic decline are
becoming visible throughout the territory, accord-
ing to the L'S consul general. Food staples are in
short supply, transportation facilities are con-
gested, and industries are unable to obtain spare
parts and raw materials. Unemployment and labor
unrest are widespread in the major urban centers.
In rural areas, farmers are cutting back on
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planting, and many white-owned farms and rural
stores are being abandoned.
Chissano's public statements have been
marked by pragmatism and moderation, and the
government has urged everyone to work for a
strong, multiracial society. Nonetheless, there has
been a significant exodus of whites-perhaps in
excess of 20,000-since Portugal agreed last
September to turn over political power to the
Front. This exodus has seriously drained the ter-
ritory of professional and technically skilled
people as well as of needed white- and blue-collar
workers.
The government hopes many whites will
come back if the security situation remains calm
and the economy picks up. Its efforts to encour-
age their return have not been helped, however,
by vague allusions from officials to future eco-
nomic and social changes; and by statements from
Front President SF..mora Machel that reflect a
predilection for Marxism. Machel will probably
become the first president of Mozambique when
it gains independence.
Public order has not been seriously disturbed
since a short-lived outbreak of violence last Octo-
ber that was sparked by a clash between Portu-
guese commandos and troops of the Front. Portu-
guese forces are being gradually withdrawn on
schedule and will be gone by June. Meanwhile,
Front and Portuguese troops are cooperating in
enforcing strict security measures. Many blacks
and whites have been detained on vague charges
of "opposing the decolonization process." For
the most part, these charges are leveled at mem-
bers of anti-Front political groups that emerged
following the coup in Lisbon last year and are
now defunct.
Racial tensions remain a potentially serious
problem for the government, particularly in
northern Mozambique where suspicions between
the two races have always been strong. There,
many whites have abandoned the towns and
cities. Anti-white wall slogans are becoming com-
mon, and curfews are being imposed against
whites in certain areas. In such are. atmosphere,
rumors or a minor incAnnt could shark a serious
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I I
CAMBODIA: A TURN FOR THE WORSE
Government fortunes sagged this week as the
Khmer Communists began mining the Mekong
River. On February 3, mines destroyed three tugs
in a convoy returning to South Vietnam and two
days later, mines sank three more tugs in a small
convoy attempting the run upriver. The remnants
of the latest convoy turned back to South Viet-
nam. Civilian crews and shipowners may now
refuse to risk the trip upriver, no matter what
monetary incentives are offered. Cambodian navy
personnel could man civilian vessels, but getting
the permission of civilian owners for them to do
so could be difficult.
Even if civilian owners turn their vessels over
to the navy, the Cambodians will have trouble
accumulating enough tugs and cargo vessels to
move the necessary supplies upstream. Already,
three tankers, two coastal steamers, six tugs, and
a number of barges, junks, and navy craft have
been lost. Most of the vessels that made it
through have been heavily damaged. The region is
being scoured for more cargo barges-which are
less vulnerable to shellings than ships-but it may
be impossible to round up enough to carry all of
Phnom Penh's supply requirements.
US officials have informed the government
that a major airlift of supplies into Phnom Penh is
not a realistic alternative to the Mekong supply
route, and military commanders can be expected
to make a major effort to improve security along
the river. Beachheads along the lower reaches of
the river will probably be reinforced, and the
navy will use what little mine-sweeping equip-
ment it has to try to clear the shipping channel. A
massive infusion of manpower could probably
push the insurgents back from the river banks,
but unless Communist pressure against Phnom
Penh's outer defenses eases, such large numbers of
troops will not be available.
The Khmer Communists have been on the
attack in the Phnom Penh area for almost five
weeks. The Cambodian army has done a credit-
able job in containing the insurgents in most
sectors around the capital, but has been unable to
gain the upper hand. Some army units-particu-
larly the 7th Division manning the city's north-
western defenses-are being chewed up. Govern-
ment commanders are shoring up weak points
with units from less active fronts. Reinforcements
will begin to run short, however, if the Commu-
nists sustain their attacks.
From their footholds near the city, insurgent
gunners have launched daily attacks against
Phnom Penh proper and outlying facilities-
-including Pochentong airport. Nearly 500 rock-
ets have hit in and around Phnom Penh since the
beginning of the year, according to government
figures. Given the volume of fire, damage has
been relatively light, but the psychological impact
is beginning io show. On February 5, the French
embassy began advising members of the capital's
sizable French community to be prepared to evac-
uate dependents. The departure of large numbers
of French could precipitate an exodus of foreign-
ers that would cause government morale to drop
further.
The supply situation in Phnom Penh is still
tolerable, but will not remain so for long. The
three convoys in January delivered about a two
weeks' supply of ammunition and rice. Ammuni-
tion stocks on January 31 were sufficient to sus-
tain the current level of fighting for three weeks,
and stocks are being supplemented by air deliv-
eries. With rationing, enough rice is on hand to
meet military and civilian needs for over five
weeks.
Stocks of most fuels will last through the
end of the month. Unless these stocks are replen-
ished soon, the government will have to take
drastic steps, such as closing rice-distribution cen-
te,s and ordering sharp cutbacks in civilian fuel
consumption. Civilian morale will sink as such
measures are implemented. The government's op-
tions for conserving military supplies are more
limited. If the situation deteriorates further, it
may have to consider abandoning territory in the
countryside in order to concentrate its resources
on the defense of Phnom Penh and the Ma-
kong.
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^ 1 1 LOAI
Thailand's newly elected National Assembly
officially convened on February 5 amid con-
tinuing behind-the-scenes negotiations aimed at
forming a coalition government. Although
Democrat Party leader Seni Pramot was given
assurances of support from the political right last
week in his efforts to form a government, he ran
into trouble over the distribution of cabinet
portfolios. One of the key prospective members
of Seni's coalition, the conservative Thai Nation
Party, threatened to stay out of the government
unless given the powerful Ministry of Interior, a
demand that the Democrats are unwilling to
accept. Seni received another setback on Feb-
ruary 6 when the Democrat Party's candidate for
speaker of the lower house lost out to Prasit
Kanchanawat, the candidate of the political right.
Although the Democrats won the largest
number of seats in the 269-man assembly-72-
and may still be able to prevail upon parties of
the political center and left to join in a coalition
in an effort to keep the conservatives out of
office, it seems clear that their chances of doing
so have eroded. There is evidence that the
rightists have begun maneuvering to put together
a government that would exclude the Democrats.
SOUTH KOREA: PAK'S REFERENDUM
The government has taken careful measures
over the past two weeks to ensure solid endorse-
ment of "the major policies of President Pak" in
the national referendum scheduled for February
12. Pak's reasons for seeking at least the appear-
ance of voter approval at this time are apparently
tactical. He hopes to:
? Put his domestic opponei :s on the
defensive; they had been planning a major
anti-government campaign this spring.
? Lay the public relations groundwork for
new suppressive measures if an opposition
campaign materializes.
? Demonstrate to audiences at home and
abroad-particularly in the US-that his op-
position, though vocal, has relatively little
support nationally.
The government program to assure Pak of
his mandate has three main facets. The first is an
all-out, though essentially conventional, effort to
advertise the importance to the nation of Pak's
leadership. This will be coupled with traditional
political inducements, including bribes, to special
interest groups. The second is an absolute prohibi-
tion on public presentation of opposing view-
points.
Should the conservatives' maneuvers suc-
ceed, chances for political stability over the short
run would significantly increase. Although a con-
servative coalition would be unpalatable to large
segments of the press and intellectual community,
it would enjoy the support of the military, a
factor that is no less important today than when
Thailand was governed by military rule. A
Democrat-led coalition, lacking crucial conserva-
tive support, would be extremely- vulnerable to
challenges from the conservative bloc in the lower
house of the assembly.
As a final touch, any detected
election irregularities will be investigated by the
government itself.
A basic defect of Pak's referendum process,
of course, is that it will solve none of his political
headaches. His opponents will continue to
demand limitations on his Dower. no matter what
the final vote tally.
25X1
25X1
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Pyongyang is having difficulties financing its
trade with Western countries. These problems
could reverse North Korea's recent economic tilt
toward the Wcst as well as seriously dampen
prospects for Pyongyang's ambitious industrializa-
tion program.
North Korea's success in industrialization
has been linked to its ability to acquire foreign
industrial equipment and technology on credit. In
the past, the availability of Soviet and Chinese
loans fluctuated with the changing political cli-
mate, while the North's bellicose attitude toward
South Korea during the 1950s and 1960s in-
hibited financial arrangements with the West.
In recent years, however, North Korea's
persistent efforts to expand trade ties and its
more flexible posture in a changing international
environment have led to greater access to Western
credit. Since early 1970, the North Koreans have
signed contracts with firms in Japan and Western
Europe for nearly $600 million worth of indus-
trial plants and related equipment, most of which
is being financed by medium-term credits.
Credit financing for capital imports, as well
as for record grain imports from France, Canada,
and Argentina, permitted North Korea to run a
1973 trade deficit of almost $170 million with
non-Communist countries. A surge in equipment
deliveries raised the deficit to at least $300 mil-
lion last year. In 1970 and 1971, this trade was
roughly in balance.
In the past several months, Pyong-
yang's payments problems have been increasing.
By December, for example, North Korea was in
arrears on a large number of letters of credit
issued to Japanese and West European banks. In
addition, in late 1974, reluctance by the French
government to authorize further credits to North
Korea was holding up the sale of French hel-
icopters, and by the end of the year, North Korea
was delinquent in the payment of $40 million in
outstanding loans from French banks. In January,
therefore, several West European banks were
reducing loans to North Korea because it is a poor
credit risk, and the Japanese Export-Import Bank
had temporarily halted new plant credits to North
Korea. 25X1
Rising import payments and lower than ex-
pected earnings from metals exports probably are
major causes underlying Pyongyang's difficulties
in handling payments to Western creditors. The
North Koreans' inexperience in Western trade and
finance has been compounded by the rising cost
of Western machinery and credit over the past
two years. Pyongyang probably also overes-
timated its ability to expand export earnings,
which did well until he Western industrial boom
turned sour and prices for some of the North's
principal export commodities fell.
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Z-Zx I
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'(T PORTUGUESE
TIMOR
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AUSTRALIA
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INDONESIA: THE TIMOR PROBLEM
Lisbon's decision to dismantle its colonial
empire has rekindled irredentist feelings in Ja-
karta toward Portuguese possessions on Timor
Island. In addition to an emotional belief that
Portuguese Timor rightfully belongs to Indonesia
by virtue of geography and history, Jakarta's
leaders fear that an independent Timor state
would be inherently unstable and thus a threat to
Indonesia's national security. Last year, President
Suharto assigned his close confidant General All
Murtopo the task of arranging the peaceful ab-
sorption of Timor intc Indonesia. Murtopo's
assignment was to engineer the victory of pro-
Indonesia forces in a plebiscite on the future
status of Timor planned by Lisbon for sometime
in 1975.
elements tavoring merger with Indonesia have not
improved. Indeed, their cause was recently set
back when the two largest political groups in
Timor announced on January 22 that they were
forming a united front to work for independence.
Last week, a delegation of government offi-
cials, businessmen, and political party representa-
tives from Timor went Lo Lisbon to discuss the
future of the overseas province. Jakarta has re-
ports that the governor of Portuguese Timor has
designated this group as a "constituent as-
sembly," and the Indonesians fear that Lisbon
may negotiate with the delegation for the im-
mediate independence of Timor. The pro-
Indonesia party boycotted the delegation to
avoid being associated with any adverse decision
it might reach.
Jakarta is at a disadvantage in dealing with
Lisbon. Indonesia has no embassy in Portugal and
has only recently reopened diplomatic relations,
which were severed in 1964 by Sukarno in protest
over Portuguese colonial policies. Jakarta's lack of
first-hand information on the situation in Lisbon
fuels its concern about recent political develop-
ments there. Indonesian leaders believe that the
Communists are gaining ever greater influence in
the Portuguese government and that this will
ultimately spread to Timor as well.
The recent developments in Timor and
Lisbon can only strengthen the hand of those
among Suharto's advisers who have been ad-
vocating a military take-over of the province. In
the past, Suharto has fended them off on the
grounds that force would be unnecessary and
could cause an adverse international reaction. If
Lisbon's present discussions with the visiting
Timorese delegates result in approval for early
independence, however, the pressure on Suharto
will intensify, and he may succumb to arguments
that national security interests override possible
diplomatic problems.
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CHINA: PUTTING IT TOGETHER
Peking hay appointed a new armed forces
chief of staff and a head of the political depart-
ment, thereby filling virtually all top military
posts, most of which were vacated immediately
after the fall of former defense minister Lin Piao
in September 1971. There is still no formally
designated head of the logistics department, but
an aging military veteran has apparently been
filling this slot for over a year.
The two new appointees are civilians, which
is unusual, but the move is consistent with the
drive to strengthen party control over the mili-
tary. The movement of civilians into the posts
does not in itself assure the downgrading of mili-
tary political power. Military men, especially in
the provinces, hava been tenaciously hanging on
to their political influence despite strong pressure,
in part from Chairman Mao personally, who still
appears anxious to press the military to the limit.
The risk of a showdown with the military ap-
peared to be more than Premier Chou En-lai was
willing to run last summer, and he and his sup-
porters apparently chose to concentrate on
completing preparations for the recently con-
cluded National People's Congress. Now that the
government house has been put in order, further
maneuvering against provincial military com-
mands may occur.
The new chief of staff, Teng Hsiao-ping, is
the ranking vice premier and has been filling in
for Premier Chou En-lai since he entered the
hospital last year. Teng had a distinguished mili-
tary career during the civil war, but has been a
party and government administrator since then.
Teng has a well-earned reputation as a disciplinar-
ian.
Chang Chun-chiao, the new head of the Gen-
eral Political Department, rose to the top party
post in Shanghai as a result of the Cultural Revo-
lution. He appears to have been working fairly
closely with moderate Elements in the leadership
in the past several years. A considerable number
of Chinese officials have also reported that he has
moved toward the political center. Chang has
been the first political commissar of the Nanking
Military Region sirce '967, but he does not have
an extensive military background. He is reported
to have clashed on a number of occasions with
powerful professional military figures in the
Nanking region.
Both Teng and Chang are members of the
Politburo standing committee, and Teng was ele-
vated to the rank of party vice chairman at a
party plenum earlier this month. Their unusually
high rank lands emphasis to the party's desire to
assert control over the military establishment.
Furthermore, Teng had been reappointed to the
Politburo and named a vice chairman of the par-
ty's military commission in conjunction with
an earlier move to undercut military political
power--the late December 1973 rotation of the
military region commanders.
Teng's appointment appears to reflect the
wishes of Chairman Mao Tse-tung, who report-
edly told a Politburo meeting in December 1973
that Teng would make "an excellent chief of
staff." There was almost certainly opposition
from the political left to Teng's appointment; he
had been purged and heavily criticized during the
Cultural Revolution.
Teng will probably enlarge his role in mili-
tary policy-making, but it is not yet clear whether
he will take a firm hand in day-to-day military
affairs. His broad government duties would seem
to demand much of his time, unless Premier
Chou's health permits him to resume a more
active role in government affairs. It is also possi-
ble that Teng will rely heavily on his eight deputy
chiefs of staff, several of whom possess the neces-
sary experience to fill the job themselves.
Chang Chun-chiao is now one of the handful
of leaders who hold top party, government, and
army posts. He seems to have been acting as party
secretary general, but his new military duties do
not conflict with his performance of this impor-
tant party function. The concentration of power
tends to increase central control, but it could
create problems over the longer term if the in-
cumbents depart the political stage, thus creating
a number of vacancies that may be difficult
fill. 25X1
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TURKEY REACTS TO US AID CUT
Turkey has said it will review its ties with
NATO and is considering retaliatory moves
against certain US defense facilities in response to
the cutoff of US military assistance that went
into effect on February 5. At the same time, the
Turks appear to be hardening their line toward
Cyprus and may decide to proclaim the part of
the island under their control an independent
Turkish Cypriot state.
In a press conference in Nicosia on February
5, Turkish Cypriot ieader Rauf Denktash said that
if Ankara agreed, he was ready to form an in-
dependent state in the rvarthern part of the island.
He indicated that such a Turkish Cypriot state
would exist autonomously until such time as it
might be confederated with whatever the Greek
Cypriots establish in the southern part of the
island.
Strong indications that
to harden their position on
25X1
25X1
IThe US defense attache reports
that Turkish forces on Cyprus were placed on
alert in "anticipation of announcements to be
made on February 5."
the Turkish commander on Cyprus may have
expected a proclamation of independence and
was pr:pared to make some adjustments in the
cease-rire lines, possibly to create more secure
boundaries or to include some desirable areas in
the Turkish sector 25X1
. 25X1
In addition to considering what action to
take on Cyprus, the Turkish government is study-
ing various other retaliatory moves against the US
for the halt in military assistance. Prime Minister
Irmak's initial reaction was to lash out at the US
Congress, terming the aid halt a unilateral aban-
donment of obligations required by a military
defense alliance and, therefore, an "'inli 'ful
act." He said the action would necessitate changes
in Turkey's contribution to NATO, but the main
impact would be on the US presence in Turkey.
25X1 25X1
Various possibilities appear to be under con-
sideration, ranging from charging rent for US use
of Turkish facilities to canceling some US base
rights.
Cyprus in response to the US aid halt, coupled
with a statement from former prime minister
Ecevit that "the legal framework of the Turkish
Cypriot state should be established" before talks
on a final settlement, suggest Ankara may favor
the move.
Turkish Cypriot Leader Denktash
Ready to form an independent state
e mos likely reac ion
will be to extract rent payments from the US to
offset the cost of purchasing military equipment
elsewhere. The press in Ankara is reporting that
other measures are under consideration, including
a call for an emergency meeting of the NATO
defense committee and a ban on US Sixth Fleet
calls at Turkish ports. 25X1
25X1
Most observers expect a rapid rise in anti-
Americanism that could bring demonstrations
directed against US installations or personnel. So
far, however, there has been no great public
outcry, although the press has carried several
hard-hitting stories and editorials.
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0
0 Next
le
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UK. TORIES AT THE CROSSROADS
The Tories will have a clear-cut choice next and business interests-and wovId have difficulty
week when they conduct the second round of attracting votes from a wide spectrum of the
their balloting for a new leader. In the vote on electorate.
F
ebruary 11, the principal contenders will be
right-wing Margaret Thatcher and moderate
William Whitelaw. Earlier this week, party !eader
Edward Heath promptly resigned-possibly to
pave the way for Whitelaw- -after his upset defeat
by Thatcher on the first ballot.
Heath's defeat can be attributed primarily to
his inability to establish rapport with many party
members and with the electorate. But his depar-
ture from the Tories' laissez-faire philosophy also
played a part, particularly when he imposed wage
and price controls while prime minister. Discon-
tent with Heath grew after he led the party to
two election defeats last year, and it finally
prompted Tory members of Parliament to press
for new procedures to elect-and oust-the party
leader. Many Tories believed that the party
needed a leader with firm rank-and-file backing to
face up to parliamentary debates on such impor-
tant issues as EC membership, the defense review,
and economic policy.
Because the new Tory election procedure
demands that a candidate win a majority plus 15
percent on the first ballot, Thatcher still has to
face the second round of balloting next Tuesday.
In the first round, she won 130 votes to Heath's
119; a third candidate, Hugh Fraser, picked up 16
votes. In the second ballot, only a simple majority
is needed. In addition to Whitelaw, ''matcher will
be running against three other members of the
shadow cabinet-Geoffrey Howe, James Prior,
and John Peyton.
Thatcher has had considerable experience in
government and n the shadow cabinet as Tory
spokeswoman on education, environment, and
housing. She is known for her strong performance
in parliamentary debate. Late last year, in rec-
ognition of her abilities, Heath appointed her
deputy chancellor of the exchequer recnnncihla
Walking off the scene
however, Thatcher has a relatively narrow base of
Whitelaw, too, has had considerable ex-
perience in government. Now party chairman, he
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is best known for his negotiating skills in trying to
reach a solution to the Ulster problem. In con-
trast to Heath and Thatcher, he has a congenial
personality and is well liked and respected by his
own party rank and file and by the country at
large. On the negative side, however, he has been
close to Heath and he generally comes in second
best in any parliamentary debate. If he should
win next Tuesday, he would be facing a highly
skilled debater in Prime Minister Wilson.
The Tories now are in a position to decide
the image the party will project in the years
leading up to the next general election, which
must be held by 1979. If they choose Thatcher,
the Tories will take on a predominately middle-
class, anti - trade union, right-wing image, thereby
restricting their appeal among the electorate. Con-
versely, if they opt for Whitelaw, the Tories
would broaden their base of su ort and increase
their a eal.
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The agreement, to be known as the Lome
Convention, provides for free entry to the EC of
all industrial products and 96 percent of the agri-
cultural exports of the 46 developing countries.
Additional protocols were negotiated on indus-
trial cooperation, financial aid, and-perhaps most
significant as a precedent-a program that guar:;n-
tees developing countries "stable" earnings from
key commodity exports.
Led by Senegal and Nigeria, the 46 were
remarkably cohesive throughout the negotiations,
given the complexity of the economic issues and
the political diversity among them-in particular
between the French- and Engfish-speaking Afri-
cans. This explains, in great part, the "generosity"
of the community in the new arrangements.
The agreement replaces the Yaounde Con-
vention, which expired on January 31 and linked
the Nine with 19 African states. The Lome agree-
ment establishes new ties between the Nine and
18 commonwealth countries that became eligible
for preferential treatment under the terms'
erms of
Britain's accession to the EC. Also participating in
the negotiations were Kenya, Uganda, and Tan-
zania, which were already linked to the EC by a
1969 accord, and six independent African states,
which had had no previous ties to the EC.
The need for a new agreement grew out of
the recognition that the addition of three new
members to the community in January 1973
would require the renegotiation of the existing
The most innovative provision of the new
convention is the program designed to protect the
developing countries from deteriorating terms of
trade by stabilizing their export earnings. Twelve
agricultural products and iron ore have been
included in this scheme. In addition, over the
next five years the FC will provide $4.1 billion in
development assistance. This replaces the Third
European Development Fund, which since 1969
has made almost $1 billion available to the signa-
tories of the Yaounde Convention.
The most difficult negotiations centered on
the price the EC will pay for imported sugar.
Caribbean sugar producers, hoping io take advan-
tage of still high world sugar prices, initially
demanded four times the current EC price and
guarantees on future sugar imports. Responding
to pressure from UK refiners of cane sugar, the
community agreed to guarantee the import of 1.4
million tons of sugar yearly at a price not lower
than the EC support price. In separate negotia-
tions, the UK agreed to pay more for its sugar
than the community, but this was only about half
that demanded by the sugar producers.
Preferences for EC exports in the dt vel-
oping-country markets-opposed by the US-were
a highly political issue in the negotiations. In the
face of French opposition, the 46 succeeded in
eliminating any such reciprocal obligations from
the new agreement. It is now up to the developing
countries to grant reverse preferences if they
wish, but only Senegal, the Ivory Coast, and pos-
sibly one or two other states will do so.
Both sides will meet regularly at the min-
isterial and the ambassadorial level to administer
EC: DEVELOPING TIES
The EC completed negotiations last week o i
a comprehensive five-year trade-and-aid package
with 46 African, Caribbean, and Pacific countries.
It was immediately hailed by community officials
as a model for the West's future relations with the
Third World. Leaders on both sides expect the
signing of the agreement in Lorne, Togo, on Feb-
ruary 28 to mark an important step toward the
"equality" of relations between rich and poor
nations.
EC association agreements. European industry has
also become increasingly aware of its need to
secure access to raw materials as ;"ell as to expand
its overseas markets. EC trade with the African,
Caribbean, and Pacific states is already substan-
tial; the community absorbs over 50 percent of
their exports, and supplies more than 40 percent
of their imports.
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lash a consultative assembly composed of mem-
bers of the European Parliament and representa-
the agreement. In addition, they will also estab-
25X1 25X1
SPAIN: POLITICAL STIRRINGS
Prime Minister Arias must soon make -a
decision to expedite formation of ;political as-
ociations if they are to provide the means for
liberalizing the political system as he intends.
Meanwhile, his government's crackdown on
strikers has helped diminish labor agitation, al-
though this let-up may be only temporary.
Meanwhile, the government's carrot-and-
stick approach to labor problems may have been a
factor in reducing the strike wave. The interior
minister's declaration three weeks ago that the
government will maintain labor peace and prevent
labor disputes from disrupting public order has
had an inhibiting effect on the workers.
25X1
At the same time, the government has been
granting a significant number of compulsory
arbitration decisions more or less favorable to the
workers' demands. The government also unveiled
its long-promised bill on labor relations, which
will go to the Cortes for debate. Although the bill
provides for improvements in working conditions
and strengthens the workers' legal rights, it omits
any reference to the right to strike or to worker
participation in management. These key issues
reportedly will be dealt with in future laws.
One of the bitterest strikes-at an auto plant
in Barcelona-has ended, reportedly because
Spanish Communist Party members withdrew.
They were the dominant element in the Workers
Commission that was promoting the strike. The
Communists evidently decided that further strike
activity at this time would be too costly. But the
key grievance-the workers' charge that the of-
ficial shop stewards elected four years ago no
longer represented their interests-has not been
settled. Although strike activity may taper off as
more labor contracts are concluded, the failure to
settle important grievances makes further flare-
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Latin America
TRADE ACT DERAILS DIALOGUE
The Latin Americans' continuing reaction
against the newly passed US Trade Reform Act
demonstrates their commitment to regional sol-
idarity, their rebellion against the traditional
world economic "order," and their impatience
with US policy and priorities. A recent OAS res-
olution against the act has mobilized further
Latin pressure cn this and other issues.
Clashing with the US-a technique favored
by the more assertive governments in the area-
discomfits some of the Latin countries, such as
Chile and the smaller republics, but even these
have come to value the force of a united stand.
Consensus is difficult to rally among the Latins,
nowever, given their great differences in political
outlook and economic conditions. But an issue
like the trade act commands easy agreement as a
symbol of all that is wrong, in their eyes, with US
treatment of the rest of the hemisphere. Specific
grievances vary from country to country, but all
generally fall under the broad notion that the
industrialized world makes a conscious effort to
perpetuate a status quo in which the Third World
is denied access to power and development. Only
two Latin governments are affected by the trade
act's provisions against OPEC, yet all are offended
by the principle of retaliation, and many view the
overall character of the legislation as protec-
tionist.
Even more than a reaction to the trade act
itself, the unanimous OAS condemnation on
January 23 was an expression of frustration over
the non-productive.i:!ss of the "dialogue"-the
informal sessions with the US secretary of state
from which the Lati,is initially expected rapid
and dramatic results. The Argentines, weighing
the possibility for a constructive dialogue against
the risks of confrontation over the trade act and
the Cuba issue, decided-as host-to postpone the
next foreign ministers meeting set for March.
Most of the governments seem content to relegate
inter-American discussion with the US to the
OAS; they think it is up to the US, not Latin
America, to set the dialogue back on track. The
trade act, meanwhile, hzis been placed on the
agendas of several all-Latin forums such as the
'AS meeting in Atlanta, 1974
Andean Pact, the Inter-American Economic and
Social Council, and a proposed summit meeting
of Latin and Caribbean presidents.
The next scheduled forum in which the
Latins will meet en masse with the US is the OAS
General Assembly in April. Although the OAS is
widely regarded as an ineffectual organization,
the next assembly promises to be lively. The
agenda will encompass not only continuing issues
between the Latins and the US, but the still
touchy Cuba problem as well as plans to revitalize
the OAS and the election of a new secr^tary
general, whose role many would like to re-define.
Some Latins still see promise for a rekindled
"dialogue" in the projected visit to several coun-
tries by the US secretary of state. Even Peru,
whose relations with the US are under continuing
strain and whose President prefers a "dialogue in
Spanish" among the Latins without the US and
Brazil, has made a point of keeping an invitation
open to the secretary.
25X1 25X1
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VENEZUELA: IMAGE BUILDING
President Carlos Andres Perez' drive for
Latin American leadership is gathering momen-
tum, but his relations with the US are under
severe strain. The Venezuelans are publicly elated
with their recent success in rallying Latin Amer-
ican condemnation of the US Trade Reform Act
and the subsequent postponement of the foreign
ministers conference, which is interpreted in
Caracas as further enhancing Perez' prestige as a
hemispheric leader. Local political support has
been unanimous in describing the government's
efforts as a "diplomatic triumph."
Thus far, there has been little reaction in
Venezuela to thu two amendments recently
introduced in the US Congress that would exempt
Venezuela and Ecuador from provisions of the
trade act, but a few politicians have claimed that
even with the amendments, the act would still
apply against other OPEC members and that the
move was an obvious attempt to break OPEC
unity. In the present atmosphere of suspicion and
confrontation, this point could find uffic.ial favor.
Perez does not intend to back down in the
dispute with Washington. Rather, there are indica-
tions that he intends to pursue these issues at a
number of forums this year. He has already an-
nounced he will attend thee OPEC summit meet-
ing in Algiers, scheduled for early next month.
The meeting is expected to focus on developing
coordinated OPEC positions for discussions with
oil importers. The gathering will give Perez an
opportunity to achieve maximum publicity in
seeking OPEC support for his currerri dispute
with the US.
In a related move, Perez has advanced the
timetable for a summit meeting of all Latin Amer-
ican chiefs of state to be held in Caracas in March.
An agenda has not yet been circulated, but Perez
probably intends to have the gathering focus on
proposals for reorganizing the OAS, establishing a
permanent forum where Latin leaders can meet to
discuss common problems, setting a fair market
price for Latin raw material exports, and creating
a Latin American economic system. At the meet-
ing of Central American presidents last December
in Puerto Ordaz in Venezuela, President Perez
circulated the first elaboration of the proposal for
a new, exclusively Latin economic organization
that was 'aunched by Mexican President
Echeverria last summer. The group would have a
mandate to promote economic cooperation and
development among Latin nations through
regional programs and policy coordination. Perez
undoubtedly sees it as an umbrella for various
Perez addressing Puerto Ordaz meeting
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Venezuelan bilateral and multilateral initiatives as
well as being a forum for discussions of the Latin
Amerirdn position on economic issues relating to
the industrialized countries, particularly the US.
But such a new organization, clearly identified
with Venezuelan leadership, would also enhance
Perez' efforts to establish himself more firmly as a
Latin American leader.
Notwithstanding the present controversy
with Washington, Perez is intelligent enough not
to want to jeopardize the economic interests of
his country in a prolonged and venomous dispute
with the US. Venezuela will need access to US
technology, if not capital, and the US will con-
tinue to be the natural market for Venezuelan
oil. Nevertheless, several influential Venezuelans
have privately expressed concern that relations
are drifting toward a confrontation. They char-
acterize Perez as supremely confident and likely
to react precipitately to what he sees as slights
from the US.
Secure at home and with his international
image enhanced, Perez can be expected to devote
a large amount of his time in the next few months
not only to the OPEC and Latin summit meetings
but also to developing closer bilateral contacts
with Third World and Latin nations. Several trips
to Latin countries are already planned as well as
visits to Paris, and possibly other European cap-
itals. Relations with the US will probably con-
tinue to be strained until a new relationshin
been worked out.
ARGENTINA: LOPEZ REGA CONTROVERSY
An effort probably was made last week,
while Argentine President Maria Estela Peron was
at an Atlantic beach resort, to clip the wings of
her controversial adviser, Lopez Rega. The effort
was apparently spearheaded by the military high
command, which voiced concern about his ac-
tivities to the President and appealed for a lessen-
ing of his visibility in order to allay fears that he
is running the country.
The military leaders probably did not-and
will not-press their case very hard because they
fear this might cause Mrs. Peron to step down.
Such a development could well present the armed
forces with political problems that they still
prefer to avoid. In any case, government sources
are attempting to play down Lopez Rega's in-
fluence and are lashing out about "rumor-
mongering." Several ministers have denied that
there was d struggle over the issue. Meanwhile,
there is no evidence that Lopez Rega's power has,
in fact, been curtailed.
By his own statement, the President's chief
aide has tried to dispel charges against him by
denying that he has any political function, stress-
ing that he is on an equal footing with other
ministers, and insisting that his relations with the
military are good. While he tried to assure the
public that he intends to confine himself to his
proper duties, the US embassy believes that his
interpretation was based more on subterfuge than
on fact. 25X1
The President will probably ask Interior Min-
ister kocamora to take a more prominent hand in
government affairs in order to move the spotlight
from Lopez Rega. She has used this tactic in the
past when the sniping at the presidential secretary
threatened to undermine confidence in her gov-
ernment. Indeed, an interview with the interior
minister published on February 2 seemed to
indicate that his standing had been boosted,
ostensibly at Lopez Rega's expense. At the same
time, Rocamora brushed aside charges that the
formation of the new presidential secretariat was
an exercise in empire-building. He explained that
because Lopez Rega is the President's closest con-
fidant, he is bound to come into conflict with
others. 25X1
It is very probable that Rocamora was acting
at Mrs. Peron's behest to quash damaging rumors
implying that a rift exists within the government.
The major political actors, however, are not going
to be fooled by cosmetic changes. As long as
Lopez Rega maintains his hold over the President,
he will cause strains among the country's political
forces. 25X1
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CHILE: STILL TRYING
The military government's continuing effort
to improve its international image has picked up
some momentum as Santiago mounts strenuous
diplomatic efforts to blunt attacks at the Geneva
meeting of the UN Human Rights Commission.
Twenty-six detainees, including several
leaders of the Radical Party whose freedom had
been actively sought by Venezuela, were tabbed
for release and deportation to Caracas this week.
Another list of 17 who have been processed for
exile was disclosed, and the government an-
nounced that 70 of the 100 persons on a previous
list already have left the country.
The prisoner release program thus far has
almost exclusively benefited "detainees"-those
arrested under the state of siege but not charged
with specific offenses or brought to trial. The
government apparently plans to broaden the pro-
gram to include at least 1,000 persons already
convicted and sentenced. Arrangements for the
commutation of jail sentences to expulsion may
aiready be in the works and recipient countries
are being sought. The government also is trying to
speed judicial processes--mainly in military
courts-against persons charged and awaiting trial.
There are indications that pressure is build-
ing within the goveri~rnent to rein in the free-
wheeling Directorate of National Intelligence, a
security arm subordinate only to the presidency.
Some army generals are convinced that the di-
rectorate's penchant for mistreating prisoners is
impeding the overall effort to improve the govern-
ment's record on human rights.
Progress on prisoners and efforts to curb
abusive practices notwithstanding, however, the
government is far from complacent where internal
security is concerned. Dragnet sweeps for
common criminals and leftist fugitives were
undertaken in Santiago late last month after a
half-year hiatus. President Pinochet has promised
new interim security legislation this month. It will
probably be designed to fill gaps in existing laws
until the eventual promulgation of an omnibus
legal code.
President Pinochet
The decision will be his
The Human Rights Commission meeting
may help bring a modification in the state of siege
and a restoration of procedural safeguards sus-
pended since the military take-over almost a year
arid a half ago. The success of Chilean efforts to
avoid a condemnatory resolution at the meeting
probably will hinge, however, on Santiago's will-
ingness to accept yet another international fact-
finding missioi;. Previous government policy was
one of almost automatic acceptance of such
groups, but there have been recent intimations
that future fact-finders must also demonstrate
access to the Soviet Union and Cuba. The final
decision on this sensitive point undoubtedly will
be made personally by President
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BRAZIL: HITTING THE COMMUNISTS
A recent crackdown on the Communist
Party represents President Geisel's response to
military hard liners who have been dissatisfied
with what they perceive as his laxness in security
matters. At the same time, Geisel may be using
the opportunity to centralize his authority over
internal security organizations and to warn those
who take endue advantage of his modest liberal-
ization eff< rts.
Justice Minister Falcao, in a televised ad-
dress, highlighted the recent capture of a number
of members of the illegal Brazilian Communist
Party and the seizure of printing presses used to
produce the party's newspaper. Falcao urged all
Brazilians to familiarize themselves with the de-
tails of the government's action, which are being
published.
Although the Moscow-oriented party has
long been docile, the government at times moves
to suppress it still further. By playing up its
actions against the Communists, the government
is going out of its way to praise the security
forces. This, in turn, is meant to reassure hard
liners that security interests are still receiving high
priority. Several leading military conservatives
recently have expressed concern that security
CUBA: SOVIET ARMS DELIVERIES
The quantities and types of equipment
supplied to Cuba in 1974 suggest that the
Soviets are cor.rmitted only to a minimum
replacement program. No new weapons sys-
tems are known to have been introduced,
although the variety of equipment supplied
was greater than in past years.
Most deliveries consisted o sma arms
ammunition, communications equipment, and
assorted military trucks and jeeps. In addi-
tion, Cuba received 14 aircraft: nine were
MIG-21J fighters and five were probably a
newer version of the MIG-21 trainer. These
deliveries bring Cuba's current inventory of
MIG-21s to 87, including 23 of the J model.
consciousness has been declining under Geisel.
This, they feel, led to the opposition electoral
gains last November and could encourage
extremists.
The US embassy reports press speculation
that the justice minister's prominent role in an-
nouncing the arrests signals the government's in-
tention to centralize the administration of secu-
rity matters. Until now, such problems have been
primarily the domain of the armed services. A
desire to centralize control of the many security
organizations would be consistent with Geisel's
operating style in other areas. Moreover, such a
move would enable Brasilia to correct abuses of
operational authority by regional commanders
now operating with viitual autonomy. 25X1
Finally, Falcao's statement that the recent
raids turned up information proving the party's
"participation" in the elections could be designed
as a warning to any congressman-elect contem-
plating some provocative or controversial action-
particularly when congress convenes in March.
The same claim might also he used at some future
time to buttress the government's case should it
opt to remove a politician eeme unacreotab~e.
Moscow also delivered one Osa-class
guided-missile patrol boat in January 1974,
bringing the Cuban navy's inventory of patrol
craft using the SS-N-2 missile to 18 Komars
and 5 Osas; p,_:-paps a,, many as four of the
Komars have been cannibalized. A small
Zhuk-class patrol craft arrived in mid-1974,
the second in Cuba's inventory.
Havana received a variety of other items,
including six SS-N-2 missiles, equipment for
the SA-2 missile system, and 26 T-34 tanks.
The delivery of the SS-N-2 missiles probably
reflects additions to depleted stocks since a
series of test firings occurred before the
25X1
25X1
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OIL: PAYING THE BILLS
Among the major developed countries, only
Italy had a substantial problem paying its in-
creased oil bill in 1974. The status of sterling in
the international monetary system and London's
role as a financial center enabled the UK to
finesse the problem. France, partly because of its
ties with Arab states, was able to cover its deficit
easily. Canada, West Germany, and Japan main-
tained relatively strong current-account positions,
despite the oil price hikes.
Italy, which had payments difficulties before
the oil price increase, encountered serious
financing problems last year. It was able to bor-
row only $2.5 billion from private financial
markets, far short of enough to cover its $8-bil-
lion current-account deficit. The balance was
financed from official sources, including a $2-bil-
lion, gold-secured loan from West Germany and a
$1.9-billion credit from the EC. The IMF also
loaned $1.7 billion, including $826 million from
its oil credit facility.
The United Kingdom had to deal with a
deteriorating non-oil trade position in 1974, as
well as a $5-billion increase in its oil bill. Its
$12.1-billion trade deficit was partly offset by a
$3.4-billion surplus on services. The remaining
$8.7-billion current-account deficit was financed
by an increase of more than $4 billion in OPEC
sterling holdings and Eurodollar borrowing in
excess of $2 billion. In addition, London used
$400 million of a $1.2-billion loan from Iran as
well as substantial amounts of private capital
from abroad, obtained in part for North Sea oil
development, to finance the current-account
deficit.
Japan was able to meet the $14-billion in-
crease in its 1974 oil bill without serious dif-
ficulty. Tokyo borrowed about $8 billion in the
US and Europe to cover its deficit in the first half
of the year. Later, slack domestic demand and
favorable price trends for Japanese exports and
non-oil imports permitted the non-oil trade bal-
ance to be improved by nearly $13 billion. Tokyo
also discouraged investment abroad, causing
capital movement out of the country to fall
sharply, and began to attract OPEC funds, both
directly and in the form of deposits in Japanese
barks abroad.
France encountered little difficulty in meet-
ing its $9-billion o bill last year. The costs were
partly offset by a $3.3-billion surplus in non-oil
trade and services. Paris also relied heavily on
Eurodollar borrowing and bilateral deals with
OPEC to fund its current-account deficit of $5-7
billion.
25X1 25X1
West Germany and Canada experienced no
major financing problems as a result of higher oil
prices. Bonn huge $34-billion surplus in non-oil
trade more than covered its $10-billion oil bill
and a $14-billion deficit in services. Bonn has, in
fact, been preoccupied with preventing capita!
from entering the country, to reduce upward
pressure on the mark. As a net oil exporter,
Canada benefited from the rise in prices. Its
surplus in the oil trade helped keep the current-
accnunt deficit to less than $2 billion.
British Chancellor of the Exchequer Healey's
recent efforts to have the IMF-based credit facil-
ity for oil-deficit countries expanded as quickly as
possible accurately reflect British payments pros-
pects for 1975. The current-account deficit will
probably increase this year, while private bankers
and OPEC monetary officials, who together pro-
vided $5 billion it credit to London last year, will
probably be much less forthcoming.
25X1
Italy's position is tenuous. Utilization of for-
eign credits already arranged, borrowing from the
new IMF credit facility, and the culmination of
one or more of the bilateral deals that are being
discussed with OPEC members may prove suf-
ficient to cover Italy's needs. None of the others
will be applying for multilateral assistance in
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