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April 18, 1975
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r.rvw Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 Top Secret Weekly Review Top Secret April 18, 1975 Copy 25X1 25X1 N2 658 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 CONTENTS (Aprd 18,1975) 'I he VV[: lsLY REVIEW, issued every F=riday morning by the Gffic of Current Intelligence, ref--ports and analyzes significant (cv ,opr ients c J the week through noon on Thursday. It fle- quentlv includes material coordinated with or prepared by the Office of Economic Research, the Office )f Strategic Rcccercl?, the Office of Ge x;rapliic end Cartographic Research, and the Directorate of Science and Technology. Topics requiring more comprehensive treatment and therefore published separately as Special Rcpcrts are listed in the c ..Rents. EAST ASIA PACIFIC 1 Indochina 3 Lebanon: New Violence MIDDLE EAST AFRICA 4 Egypt: Diverting Attention 5 Syria-Iraq: Troubled Waters 6 Israel: Washington; New Aircraft 7 Chad: Tombalbaye Killed in Coup 8 India-Sikkim: Another Ste{. 9 Aegean: Tensions Ease 10 Turkey: A Narrow Virtnrv roducer-Consumer Talks Collapse Portugal: New Nationalization Measures Spain: Speculation about Franco IV UbbH: Congress Plans; Slowly on Geneva 21 China May Be Cutting 25X1 Military Manpower WESTERN HEMISPHERE 22 Peru: Velasco Reappears 23 Argentina: Modest Victory 23 Brazil: Majority Party Problems 24 Chile: Man with a Mission 25 Cuba: A Draft Constitution 26 Honduras: Repercussions from Neighbors 27 Colombia: State of Siege 23 Law of the Sea: Midpoint Appraisal SPECIAL REPORT (Published separately) Comments and queries on the contents of this publication are welcome. They may be directed to the editor of the Weekly Review 25X1 25X1 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 INDOCHINA Vietnam: Closing on Saigon The government's position east of Saigon appears to be deteriorating, and there are in- creasing signs that the communists are preparing to intensify their attacks close to the capital itself. Along the central coast, a North Vietna- mese force spearheaded by tanks broke through government defenses this week and captured the provincial capital of Phan Rang and its nearby airfield. The South Vietnamese had moved re- inforcements to the area, but they were no match for the three communist divisions con- centrated around the town. Only a few govern- ment troops escaped; others are unaccounted for. The government's remaining enclave along the coast, Phan Thiet, is under pressure and will fall soon. South Vietnamese troops at Xuan Loc have fought well for the past week, but they too appear to be outmanned and outgunned. The communists are known to have massed three full divisions-together with armor, artillery, and air defense units-at Xuan Loc, and captured docc. ments indicate teat elements of a fourth division may have moved into the area. The govern- ment's one infantry division, reinforced by air- borne and armor units, at Xuan Loc is in danger of being isolated and destroyed. Northeast of Saigon, the communists have attacked the big air base at Bien Hoa, from which the South V'etiiarnese mount tactical air operations. Sappers have penetrated the base and, more recently, North Vietnamese gunners have used their heavy artillery to shell the base. An artillery attack closed Bien Hoa for approxi- mately six hours on April 15. In the delta, the fighting has temporarily eased. The government has used its firepower to good advantage thus far to counter communist attacks on Can Tho, the most important city in the delta, and to keep vital Route 1 open to Saigon. Despite ttiese setbacks, however, three communist divisions have moved into position for new attacks along Route 4 in the northern delta. The two South Vietnamese divisions assigned to keep the highway open will be hard pressed to meet this threat. 25X1 Fighting also is likely to intensify along the western approaches to Saigon and close to the capital itself over the next few days. Communist planning calls for a major drive along Route 1 west of Saigon, and the North Vietnamese 9t:h Division has been spotted moving into Hau Nghia Province. the 9th will soon launch a major assault agains the South Vietnamese 25th Division, which is defending this approach to Saigon. Other report- ing also indicates the communists will attack the fringes of Saigon, and sapper units could pene- trate the inner defenses of the city. The attacks along the three major ap- proaches to Saigon will keep many of the gov- ernment's forces tied down, leaving the capital dangerously vulnerable to heavy attacks from the north, a weakness that the communists will soon be in position to exploit. At least six communist divisions, including four reserve units from North Vietnam, are moving toward Military Region 3. The headquarters of a North Vietnamese army corps is fast approaching this Can Th Page 1 WEEKLY REVIEW Apr 18, 75 fliun 110;1 Xuan Lac Phan Thi.l t.~ MR 3 ~ ~ ~ Cr'b~l npdol h,,. ? ) M 4 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 ? 25X1 region from the northeast, and at least one of its four divisions is now in the area north of Saigon. This looming communist threat is pro- ducing a mood of deep pessimism in Saigon. A recent sampling of opinion in the capital seems to reflect a general consensus that ddequate US assistance will not be available and that the communists are too strong to hold off. Tali- of US evacuation plans for Americans and South Vietnamese is adding to the sense of impending disaster. Some middle-level government officials are adopii:.g the attitude that the Americans are the "only card" they have left and that evacuation of Americans sh.juld not be permitted unless guarantees for their own safety are made. More directly, several government officials have waned of reprisals and disorder if the US tries to evacuate its personnel without taking along friendly South Vietnamese. A number of military personnel and some leading government officials fled to T;-ailand aboard military aircraft. The small-scale exodus is likely to continue for several days as military aircraft fly out of the few provincial enclaves that have not yet run up the white flag. The f!u.,,-h of victory will quickly pale for the commun'sts aE they try to cope with the problems they have inherited. Nearly four mil- lion people will now become the responsibility of the new regime, and stocks of basic com- modities are low. To ease the situation, the communists apparently intend to evacuate large numbers of city-dwellers and refugees to the countryside, but conditions there will nct be much better. Ever. before they can start ti ink- ing about postwar reconstruction, the new regime will have to seek rapid and liberal outside assistance to help sustain the pzopidation through the coming months. Cambodia: The Agony Ends The string ran out for the republican gov- ernment this week as Khmer communist forces entered Phnom Penh and accepted the capital's surrender. At week's end, only fragmentary re- ports were reaching the outside, but it appeared that the take-over was effected in a fairly orderly fashion. Following a government order to its troops to lay down their arms, insurgent spokesmen met with senior government military officers, and then the insurgents went on Phnom Penh's radio to ask for calm. The communist leadership is apparently waiting outside the city while second-echelon insurgent officers oversee the occupation. As yet, there are few clues as to Prince Sihanouk's plans, but his eve'itual return to Phnom Penh as a figurehead leader seems assured. Once in full control of the country, the communists will begin imposing their brand of Marxism on Cambodia as a whole. Essentially, this means the countrywide implementation of programs long udder way in communist-con- trolled territory, including the socialization of the economy and a replacement of the tradi- tional administrative system by a centralized goy -rnment under the leadership of the Khmer Communist Party; such measures have not gone down well with the land-proud and indepen- dent-minded Cambodian peasantry and over the years have caused almost two million peasants to abandon their farms. Smoldering resentment among those that have remained behind has on occasion resulted in small-scale uprisings which the communists have put down ruthlessly. The Cambodian communists can probably he ex- pected, however, to push their efforts to regi- ment and collectivize Khmer society relent- lessly, using force where necessary. Page 2 WEEKLY REVIEW Apr 18, 75 25X1 25X1 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 Lebanon: New Violence Radical fedayeen and militia of the right- wing Phalanges Party engaged in armed clashes for several days this week in Beirut. The Leba- nese army and the major, less radical fedayeen groups stayed mostly on the sidelines. A cease- fire went into effect on April 16, but the dispute left the security situation unsettled and Prime Minister Sulh's government fundamen- tally divided. Leaders of the three most radical fedayeen groups that carried on most of the fighting met with their more moderate colleagues in Beirut on April 16 and agreed to go along with the 'ease-fire. They presumably were persuaded to take this step by their own heavy losses and by doubts that the larger fedayeen organizations, Fatah and Saiqa, would enter the fighting in force. The fighting-the worst in Lebanon since the major clash between the fedayeen and the army in early 1973-grew out of a dispute be- tween a radical Palestinian and a policeman at a roadblock in a Phalangist-controlled area of Beirut. Before the cease-fire w;as declared, more than 150 persons were killed and many more were wounded. Sporadic firing continued after the accord was announced, but it apparently was the work of isolated groups on both sides. As announced by Sulh, the cease-fire agree- ment obliges the two groups to withdraw all their forces from public places. The accord is to be enforced by the Lebanese internal security services, which are to begin patrols of the dis- puted areas accompanied by representatives of the Phalangists and the fedayeen. A separate understanding had been worked out curlier to facilitate an exchange of hostages between the two sides. The Phalangists accepted the cease-fire only after suffering heavy property damage and many casualties. President Franjiyah and other Christian leaders apparently persuaded p, cy leader Pierre Jumayyil that prolonged fighting would bring in major fedayeen units, which could quickly overwhelm the Phalangists. The Phalangists are a strongly nationalist, Christian political party that advocates strict control of Palestinian refugees and fedayeen in Lebanon. They are always ready to use their 5,000-mar militia to defend their interests and what is, in effect, Christian control of Lebanon's govern- ment. Leaders of the Palestine Liberation Organi- zation and the major fedayeen groups worked behind the scenes to contain the fighting and to help arrange the cease-fire. This strategy was probably based on a conviction that a major encounter with the Lebanese during the current uncertainty over Middle East peace talks would only play into the hands of Arabs who reject the efforts to negotiate a settlement and reduce further the likelihood that the PLO would be invited to attend the Geneva conference when it resumes. Actions taken by Zuhayr Muhsin, head of the Syrian-controlled Saiqa organization, to keep his followers out of the dispute suggest that the Syrian government may also have counseled restraint. Prime Minister Sulh proved unable to con- trol either the security situation or his own cabinet; the cease-fire was negotiated primarily by Lebanese political and religious leaders out- side the government and by an official of the Arab Leagt: Two cabinet member. sympa- thetic to th;: Palestinians resigned during the week, and three pro-Phalangist ministers have threatened to follow suit. These resi,,n,ati ins, if not withdrawn, could distort the ;eligious and political balance of the cabinet to the point that Sulh would be forced to step down as well. He is already in a weak position as a result of his handling of the disturbances that occurred last month in the southern port city of Sidon. One Page 3 WEEKLY REVIEW Apr 18, 75 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 5X1 President Sadat reshuffled the cabinet and appointed a new prime minister this week. His move appears to have been motivated largely by a desire to divert popular attention from the slow progress of peace negotiations and to reas- sure the Egyptian people that there will be no let-up in the government's program of economic development. Sadat's choice for prime minister was Inte- rior Minister Maniduh Salim, a loyal supporter of the President who apparently does not harbor any personal political ambitions. Salim replaces Abd al-Aziz Hijazi, who has been the chief tar- get of popular criticism over continuing eco- nomic ills. Hijazi, a competent economist, was overburdened with specific economic duties on top of his prime ministerial responsibilities. At the same time, Sadat named air force commander Husni Mubarak to be vice president, an essentially powerless post that is no longer in the line of succession to the presidency. Most key cabinet posts remain in the same hands. Both Foreign Minister Fahmi and War Minister Gamassy have, in addition, been made deputy prime ministers. Open discontent over economic grievances has traditionally risen in Egypt at times of diplo- matic stagnation on the Arab-Israeli issue, and signs of such discontent have been appearing in recent months. The year began with a violent outburst in Cairo by workers protesting Lom- mod:Ity shortages and rising prices. Last month, demonstrations by angry workers at a textile plant in the Nile Delta led to serious violence that resulted in at least ore death, scores of arrests, and a week-lone shutdown of plan; operations. The appointment of Salim, who as interior minister headed Egypt's security apparatus, will signal malcontents that such public disturbances will not be tolerated. Salim will be no better able than Hijazi, however, to resolve Egypt's basic economic problems, such as the inade- quate system of roads and ports that impedes the distribution of consumer goods. Moreover, although two key economic ministries have been President Sadat with newly appointed Prime Minister Mamduh Salim .0 ice/ 40PP_ Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 )X1 I consolidated, the rest of the cabinet remains an unwieldy conglomerate of 33 overlapping minis- tries. The failure to streamline the cabinet diminishes whatever prospects there were for cutting through the bureaucratic maze that hampered Hijazi and contributed to slowing eco- nomic development. SYRIA-IRAQ: TROUBLED WATERS Relations between liaq and Syria, long troubled by deep-seated hostility between their competing wings of the pan-Arab Baath Party, are seriously strained again. The latest flare-up between the two regimes appears in part a by-product of Iraq's recent rapprochement with Iran, which made it possible for Baghdad to wind up its struggle with its Kurdish rebels and to pursue its differences with Syria more di- rectly. During the past month, the Iraqis appar- er.~iy were involved with Syrians sympathetic to the Baath Party of Iraq in an attempt to weaken or overthrow the Syrian government. By April 8, some 400 Syrians reportedly were arrested for complicity in what Syrian authorities charged was a Baghdad-inspired conspiracy to oust or assassinate President Asad. The Syrians are said to have placed the Iraqi ambassador in Damascus and his staff under surveillance and to be harassing lower level Iraqi diplomats. Publicly, the two sides have kept up a steady stream of propaganda sniping and pos- turing in recent weeks. The Syrian Baath Party's Congress last week condemned the "suspicious right-wing regime in Iraq, accusing it of collu- sion with non-Arab Iran, of sabotaging Arab solidarity, and abandoning the Palestinians. The Iraqis, for their part, have condemned Damascus for allegedly aiding the Kurds, for supporting Washington's step-by-step approach to Arab- Israeli negotiations, and for diverting the waters of the Euphrates River. The Syrians have denied responsibility for the low water level in the part of the Euphrates DAMASCUS i i~ Jx~1~ MMAN ~~' k {~ rj'~orddn that flows th; ,)ugh Iraq, claiming Turkey is to blame. Last week, Damascus rejected Iraq's cal! for an urgent meeting of Arab foreign ministers to discuss Baghdad's Euphrates complaint. Accjrding to the Egyptian press, Syria has decided not to attend a regularly scheduled Arab League meeting to be held early next week for fear the Iraqis will press the Euphrates issue. Syria could be altering the flow of the Euphrates to retaliate for Baghdad's propaganda attacks on Asad and the apparently increased interference in Syrian affairs. Earlier this month, the Syrians reportedly moved two armored regi- ments and some paramilitary units into the envi- rons of the Euphrates Dam as a precaution against a possible Iraqi sabotage attempt. Although the Syrians are clearly prepared to take strong action against Iraqi intervention in their domestic affairs, they will try to prevent the dispute from growing to a point that might affect Syria's relations with other Arabs. Da- mascus is also apprehensive that Iraq might not provide military support to Syria in the event of another round of hostilities with Israel; it is already questionable whether such assistance would be forthcoming, Page 5 WEEKLY REVIEW Apr 18, 75 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 FOCUS ON WASHINGTON Israel celebrated its 27th anniversary this week, but the real focus of its attention was clearly Washington. Tel Aviv's information cam- paign in the US, designed to explain its stand on negotiations with the Arabs, swung into high gear with the arrival this week of Foreign Min- ister Allon, his predecessor Abba Eban, Prime Minister Rabin's wife, and other prominent Israelis. Former information minister Yariv and ev defense minister Dayan had arrived earlier. In the wake of the suspension of indirect talks with Egypt a month ago, Tel Aviv's pri- mary concern has become the future of its rela- tions with the US. The government is obviously concerned over Washington's open disappoint- ment with Israel's position at the talks, and it is apprehensive that this might adversely affect the nature of US support for the Jewish state. Prime Minister Rabin candidly referred to Allen's trip this week as part of the "difficult struggle" the government is waging to explain Israel's position on negotiations. Allon spoke at several large Jewish fund- raising rallies in major US cities across the coun- try this week. In his scheduled meeting with Secretary Kissinger, Allon will probably press for closer coordination of US-Israeli policy on the Middle East. He will also be trying to obtain a better reading on the implications for Israel of Washington's current policy reassessment. Prime Minister Rabin at the unveiling of the "Kfir" Although Allon said prior to his departure from Tel Aviv that he had no new official in- structions, he is most likely prepared to discuss various possibilities to revive negotiations with Egypt. One such possibility reportedly involves a proposal for an Israeli withdrawal from ap- proximately half the Sinai in exchange for a long-term assurance from Egypt that it will not attack Israel. Tel Aviv, like Cairo, remains in- terested in a resumption of separate Israeli- Egyptian negotiations prior to a reopening of the Geneva conference, but the Israelis appar- ently prefer to await the outcome of Washing- ton's policy reassessment before making any specific new moves of their own. Some Israelis have criticized the gov- ernment for allowing the foreign minister to visit the US soy soon after the suspension of indirect talks with Egypt. Conservatives in particular, including several in the cabinet, apparently conclude that the trip could tempt Washington into believing that Tel Aviv's resolve to stick to its previous negotiating demands with Egypt may be weakening. They are said to believe that the government is unnecessarily exposing itself directly to high-level US pressure for Israeli concessions in order to revive the talks with Cairo. Allon himself said just prior to his dep,-irture that he was beginning to feel the first signs of US pressure, but emphasized that Israel will not be coerced into making con- cessions. Page 6 WEEKLY REVIEW Apr 18, 75 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 classified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 I I The Israelis apparently have begun series production of their "super Mira e" fighter air- cra rt. One of these aircraft was shown tote public on April 14, when the project was officially unveiled in Tel Aviv. The aircraft, which the Israelis call Kfir (Lion Cub), has been under development for about five years. The first of three prototypes flew in mid-1973. The Israeli air force was scheduled to begin receiving the aircraft in September 1974, shortly after the Israelis were to complete any project that involved the assembly of 50 ' .age 5s from parts obtained from France. The September deadline was not met, however, probably because of the require- ment placed on the Israeli aircraft industry to recondition aircraft from the October war. The Kfir, based on a modified Mirage 5 airframe, is powered by a single US J-79 en- gine-the engine used in the F-4 Phantom. The J-79 offers improved performance and greater reliability than the Atar engine used in the French Mirage III and Mirage 5 circraft. The Kfir, which can fly at twice the speed of sound, reportedly will have both an interceptor and ground-attack role, and is said to have a payload of some 10,000 p"inds-nearly twice that of the Mirage 5. Componeiits for the aircraft are being man- ufactured and assembled in Israel. The J-79 engine is being built under license from the US. The production rate was originally set at about two aircraft per month, but this rate may not be possible in view of the other demands on the Israeli aircraft industry. As many as 200 of the aircraft ultimately may be produced, but only some 60 to 100 are expected to go to the Israeli air force. The Israelis may hope to find a market for the remainder, which Israeli Defense Min- ister Peres said on Monday will cost about $4 million each. They are likely to encounter strono competition from the French, among 25X1, L )A1 The acting commander of Chad's armed forces, Brigadier General Odingar, ousted Pres- ident Tombalbaye on April 13 in a coup marked by sharp fighting and the death of Tombalbaye, Chad's only leader since independence in 1960. Tombalbaye had appealed for help from France, the former colonial power and Chad's principal source of aid, but French forces stationed in Chad did not intervene. Two uays after the coup, a ruling military council, composed of Odingar and eight other officers, was formed. The council president is General Mallourn, the well-respected former armed forces commander who had been de- tained by Tomba!baye since 1973 for alleged coup-plotting. Col-)nel Djime, the commander of the gendarmerie and one of three top military leaders arrested by Tombalbaye early this month, has been installed as council vice pres- ident. The council has established four com- missions to run the government and has prom- ised additional appointments soon. The consti- tution has been suspended, the National A:-em- bly dissolved, and all political activity has been banned. Odingar's decision to move was probably motivated in part by the late president's recent public criticism of the army's lark< of leadership and Tombalbaye's announceme,it last week that he intended to reorganize the army. Odingar may also have been influenced by widespread dissatisfaction with government corruption and maladministration as well as by the govern- ment's inability to overcome chronic economic stagnation that has been aggravated by six years of serious drought in the area. Page 7 WEEKLY REVIEW Apr 18, 75 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 The small semi-autonomous kingdom of Sikkim came closer to full incorporation with India this week, bringing sharp attacks on New Delhi's "expansionist" policies by both Pakistan and China. Sikkim's hereditary ruler, the Chogyal, was deprived of one of the last vestiges of inde- pendent power on April 9 when his largely cere- monial 400-member palace guard was disarmed, after a brief skirmish, by Indian troops stationed in Sikkim. The Indians acted in response to a request from the chief min :ter of Sikkim, a long-time opponent of the Chogyal. The follow- ing day, the Sikkimese legislature voted unanimousiy to abolish the monarchy and to seek full statehocd in the Indian :anion. In a hastily arranged referendum on April 14, Sikki- mese voters ratified the legislature's action by overwhelming margins. The Chogyal now ap- pears to be under palace arrest in Gangtok. The Inoians have announced their inten- tion to take th' necessary constitutional action to make Sikkim the 22nd Indian state. Attempts to rally support for the Chogyal and against incorporation of Sikkim into India can be handled easily by Indian police and the approx- imately 100,000 Indian troops in the state. The Chogyal presumably will be forced into exile. The latest events follow several months of increasing tension between the Chogyal and the elected government led by the chief minister. Each side has accused the other of instigating attempted assassinations. The chief minister has repeatedly called on New Delhi to intervene and remove the Chogyal, who is accused of refusing to abide by the constitution. The chief minister and his followers represent the ethnic Nepalese majority that gained effective power two years ago. They want to abolish all remnants of the traditional political system, which had been dominated by the ethnic minority headed by the Chogyal. For the past several years, India has fol- lowed an ambiguous course; it has been intent on expanding its role under a 1950 treaty as protector of Sikkim but at the same time seemed concerned that removal of the Chogyal could lead to increased instability in the small but strategically important state. In 1973, New Delhi intervened in Sikkim following disorders in Gangtok and was instrumental in establishing new constitutional order that relegated the Chogyal to a figurehead role. Last September, the Indian parliament voted to make Sikkim an associate state. New Delhi clairns to have tried to mediate between the Chogyal and the chief mink er, but it recently made clear publicly that l. sym- pathies lay with the chief minister -.nd his supporters. Public statements by the Chogyal, during his attendance -it the coronation of the Nepalese king in February, emphasizing Sikkim's "separate identity" and his meetings then with foreign diplomats apparently angered officials in New Delhi. Islamabad, which continues to fear what it regards as India's hegemonic designs on South Asia, issued an official statement on April 11 denouncing the events in Sikkim as an "annexa- tion by force." The statement accused New Delhi of again demonstrating a predilection to use force in ordering its relations with its smaller neighbors. Articles in the Chinese press have con- demned New Delhi's "expansionist" actions and have alleged-as Peking did last September-that th Soviets are backing the Indians in these moves. The comments contain no threats, how- ever, and are generally lower key than the Chinese reaction last year. Events in Sikkim will be of great concern in both Nepai and Bhutan, vhere distrust of India's intentions toward its Himalay.n neigh- bors already existed. Both governments, aware of their nations economic dependence on Indian goodwill, will be %vary of ex ressin their fears publicly. 25X1 Page 8 WEEKLY REVIEW Apr 18, 75 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 assified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 AEGEAN: TENSIONS EASE The chances of a serious incident in the Aegean have lessened for the moment, following nearly a month of tension while Greece and Turkey again tested each other's resolve on the issues. the Turks have s seen a ei -reconnaissance flights over thr^_a Greek islands in the eastern Aegean. These flights had brought the two countries close to a situation from which neither could have backed down easily. Greek officials have stated that Athens would nol allow any more Turkish overflights of the islands. This Greek resolve has not been put to a test, however, and presumably will not be tested anytime soon because of the Turkish decision to halt the flights. The Turks appar- ently decided heir information on Greek arma- ment;, fortifications, and manpower on the three islands is sufficient and that further over- flights are not necessary at this time. Turkish military leaders, nevertheless, will begin a planning session on April 24 that v ill include further work on contingency steps for invading these three islands should the Greeks take some aggressi%e action. Turkish plans re- portedly call f-r the seizure of at least two of the isla;rds quickly to it is not feasible to occupy attacked after the first two had been secured 25X1 Meanwhile, a high-level official in the Greek Foreign Ministry hL, admitted to the US embassy that Athens has sent troops to the Dodecanese and other islands in contravention of international treaties. He said the action was necessary because Turki.,h leaders have re- peatedly made threatening statements about the islands. A relatively large buildup of Greek forces on six major islands has, in fact. been going on ..ince last summer and is continuing. TURKISH SUSPENSION OF FLIGHTS OVER GREEK ISL'ANDS REDUCES, AT25X1 LEAST MPOR'1RILY, THE CHANCE OF A SERIOUS INCIDENT. 25X1 Tirmia ALBANIA 1 Chien Snmon y a honor' lento GREECE ol~ t is r, F:,+ V c 1 stn Page 9 WEEKLY REVIEW Apr 18, 75 ssified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 TURKEY: A NARROW VICTORY The newly installed government of Prime Minister Suleyman Demirel won a vote of con- fidence this week, ending a seven-month polit- ical impasse. The narrowness of the vote-222 votes for the government and 218 against- .illustrates the fragility of the Nationalist Front coalition and the difficulties it will have in getting legislation through parliament. Demirel's four-party right-wing coalition controls only 210 seats in the 450 member parliament. He was able to win his narrow victory only because of support from some independent deputies and the absence of several opposition members. This adds up to a very shaky parliamentary base for a coalition that is riddled with internzl inconsistencies. Whether all the independent deputies will continue to sup- port the Nationalist Front in parliament is uncertain. Feelings were running high during the voting, which was interrupted by fist fights. The speaker of the National Assembly later suffered a mild heart attack. Party crossovers prior to the vote created considerable bitterness, suggesting that Demirel will have an unusually hostile opposition, in addition to the problems involved in holding the coalition together. The Nationalist Front coalition partners are united primarily by their desire to be in the government and avoid elections. One of the partners-the Islamic-oriented National Salva- tion Party-is noted for its uncooperative and obstructionist tactics; it was instrumental in breaking up the previous government in which it participaked along with former prime minister Ecevit's party. The Salvationists, who challenge Turkey's choice of Western models for its modernization, oppose foreign private investment and tourism and advocate a vague, utopian economic policy. Their hording of several important economic portfolios-the price Demirel had to pay to get his coalition together-does not bode well for the economy. Another weakness of the Demirel govern- ment is its dependence on the small pan-Turkish National Action Party, a group even more extreme than the Salvationists. Led by Alpaslan Turkes, the strong man of the 1960 military coup, this national socialist party boasts of its right-wing "commandos," although their num- bers are probably nowhere near the 100,000 claimed. The "commandos," many of whom belong to the party's youth wing, specialize in Demirel and his government Page 10 WEEKLY REVIEW Apr 18, 75 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 eclassified in Part - Sanitized Copy Approved for Release 2012/01/09 : Cl A-RDP85T00875R001000080018-0 1 Current Party Lineup in Parliament Party Seats Justice Party* 150 National Salvation Party* 48 Republican Reliance Party* 9 National Action Party* 3 Republican People's Party 188 Democratic Party 31 Turkish Unity Party 1 Independents 16 (Unfilled) 4 450 stirring up trouble between left- and right-wing students. Clashes between extreme rightists and leftists have in fact been occurring at a fairly high rate during recent weeks and can be ex- pected to continue. Both of the extreme right parties in the coalition take a hard line on Cyprus and can be expected to oppose giving up any of the ter- ritory now held by the Turkish Cypriots. Both also oppose Turkey's membership in NATO and the EC. Although Demirel and his new foreign minister are experienced and moderate figures, they will have a difficult time keeping their colleanues in line. Demirel's success in forming a government will undoubtedly postpone a much-needed elec- tion. Although there is no guarantee that a new election would end the current indecisive bal- ance of strength among the parties, at least it would offer that prospect, particularly if the electoral law is changed. Only Ecevit-who would benefit most-really wants new elections. The army, which dislikes Demirel and forced him to resign in 1971, will probably maintain a "hands off" policy unless there is a Page 11 WEEKLY REVIEW Apr 18, 75 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09 : IA-RDP85T00875R001000080018-0 dramatic rise in civil unrest or Demirel attempts to take some form of revenge against the mili- tary. If Demirel survives until summer, he will be abie to use the annual military promotions, reassignments, and retirements to try to build support within the army and re in its - dence. 25X1 Declassified in Part - Sanitized Copy Approved for Prime Minister Wilson's performance in Parliament last week brought success on two important votes on the EC membership ques- tion, but at the cost of increased friction be- tween the pro- and anti-marketeers within his own Labor Party. Wilson's next hurdle is the special Labor Party conference, whr. e his stand on the EC question will again come under at- tack. The overnment has now decided that the country-wiJe referendum on EC membership will be held on June 5, earlier than expected, because it fears that a lengthy and heated cam- paign will alienate the voters. The House of Commons voted 396 to 170 in support of the government's recommendation that the UK continue its EC membership, a more lop-sided tally than expected. The major- i,y was more than twice as large as in the vote in October 1971, when Parliament opted to join the EC. Wilson, however, fell eight votes short of carrying his own party in Parliament on this vcte. The related referendum bill also sailed through its second reading in Commons by a margin of 64 votes, largely because the govern- ment made some concessions on the method of tailying the vote. Both major parties are allow- ing their members of Parliament to disregard party discipline on the question. The government now must push the refer- endum bill to final enactment before June 5. The principal difficulty appears to be the likely p!ethora of proposed amendments. The govern- ment hopes to finish in time to recess Parlia- ment about May 24 tc allow members to partici- pate in the pre-referendum campaign. Confrontations between the pro- and anti- marketeers within the Labor Party have been highly publicized in recent weeks. Three "confi- dential" party documents published in a leading London newspaper revealed fundamental dis- agreements within the party in embarrassing detail. Following his announcement of the code of conduct for government ministers during the EC debate, Wilson was defied by a non-cab;net minister who spoke against the government's position. Wilson promptly fired him, enraging left-wing, anti-market militants. In addition, the press reported threats to resign by Prime Min- ister Wilson and two anti-market cabinet mem- bers during a stormy cabinet meeting about the code of conduct. Wilson also threatened to walk out of the session. During this period of internal party fric- tion, Employment Secretary Foot, an anti- marketeer, and Jack Jones, head of Britain's largest trade union and also an anti-marketeer, Pace 12 WEEKLY RFC/IFW Anr 18, 75 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09 : CIA-RDP85T00875R001000080018-0 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 have emerged as peacemakers. Only the reported intervention oy Foot kept Wilson from bolting the cabinet meeting. For his part, Jones tried to persuade the junior minister not to defy Wilson's code of conduct. Concerned about party unity, Jones felt that the minister's ac- tion; would place other anti-EC government of- ficials in the awkward position of appearing not to stand up for their own convictions. Wilson's government next faces the special Labor Party conference on April 26. Although this meeting is expected to disapprove continu- ing EC member.,hip, several unions may break ranks with the Trades Union Congress and make the vote closer than earlier expected, giving a boost to the pro-marketeers. Page 13 WEEKLY REVIEW Apr 18, 75. 25X1 25X1 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 eclassified in Part - Sanitized Copy Approved for Release 2012/01/09 : Talks between oil-producing and oil- consuming states collapsed this week after fail- ure to reach agreement on an agenda for a proposed international conference to be held this summer. Both sides agreed to remain in contact, but there is little hope an early com- promise will be reached over the major issue- how raw materials would be treated at the proposed conference. The developed countries-represented by the US, the EC, and Japan-argued for an agenda focusing on energy and energy-related issues. They were willing to discuss raw material issues as they related to energy, but opposed any efforts to link the price of oil with the price of imports from the industrialized countries. The oil-producing states-represented by Algeria, Iran, Saudi Arabia, and Venezuela-and the developing states-represented by Brazil, India, and Zaire-demanded that equal impor- tance be given to the economic problems of the Third World. Algeria, self-appointed spokesman for the seven, insisted that the full conference give equal emphasis to both raw materials and development aid as well as energy, and that the conference address the problems of export-earn- ings stability and inflation. Participants were also sharply divided over demands by the devel- oped states to grant observer status to the Inter- national Energy Agency. Algeria branded the energy agency an organization designed for confrontation. D CI/ %.ICCI.I %I I ICt.I A-)r 18, 75 eclassified in Part - Sanitized Copy Approved for Release 2012/01/09 : k-RDP85T00875R001000080018-0 assified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 X1 I I The French, who originally called for the conference and had the most prestige to gain from its success, made strenuous efforts to find common ground. Early this week, the partici- pants hoped that French President Giscard's visit to Algiers would produce a compromise, but it did not. The developed countries and the seven remained united throughout the ten clays of negotiation.;. The US, the EC, and Japan met daily to coordinate the position of the de- veloped countries with the member states of the International Energy Agency. The representa- tives of the developing states and the less radical o:1-producing states consistently supported Algeria's determination to establish the inclu- sion of raw materials as a sine qua non f Portugal NEW NATIONALIZATION MEASUHES In ar' ^ffort to get a grip on the faltering economy and to establish firmly their own radical economic program, Portuguese leaders this week announced further broad national- ization measures. The Portuguese church hier- archy, meanwhile, has thrown its support behind moderate parties in the coming election in an effort to slow the country's precipitate move to the left. Following up on its nationalization of banks and insurance companies last month, the government announced on April 16 that it ha:, now extended its control in many key indus- tries, including transportation. Fourteen firms producing electric power, four petroleum com- panies, and one steel company, as well as the main rail, maritime, and air transport services, have been nationalized. In addition, the petro- chemical, pharmaceutical, heavy machinery, tobacco, concrete, beer, fertilizer, and cellulose industries, as well as shipyards, are slated for government intervention. A seizure of large land holdings in the south was also announced. The nationalization Measures follow guide- lines issued last week by the Revolutionary Council to combat Portugal's economic ills-- underutilized production capacity, reduced in- vestment levels, a soaring balance of payments deficit, and rampant inflation. The government also announced a national employment program to deal with growing numbers of unemployed, as well as price controls on food staples. The guidelines further call for wage controls and greater worker "control" of production. Portugal's deepening economic crisis is largely a result of the revolutionary regime's own mismanagement. Its policies have fostered industrial anarchy--with workers seizing fac- tories-given rise to phenomenal wage increases, and generally discouraged foreign investment. Repeated attempts ~,y Western countries to lend economic assistance have been frustrated by the new leaders' inability to identify worthwhile projects. The Movement, failing to admit its own shortcomings, continues to hide behind rev- olutionary jargon and to blame the inherited capitalist economic structure for its problems. Meanwhile, Portuguese bishops have urged Catholics to vote against parties participating in the constituent assembly elections on April 25 whose principles violate Christian precepts. Although the Portuguese Communist f ?nty and the ultra-left parties are not mentioned specifi- cally, local parish priests are expected to take the bishops' statement as a signal to get out the vote for the moderate parties. The bishops also said that casting blank ballots was unacceptable. Armed Forces Movement pnrsnnnel reportedly have been urging undecided voters to leave their ballots unmarke: , apparently in an effort to reduce the margin of the expected moderate majority. The church appears to have decided to take a stand now, after months of reticence on politi- cal matters, in order to contribute to the moder- ate parties' efforts to make a good election showing, which they hope will demonstrate to Movement leaders that there is little annular support for their rarlirai policies. 25X1 20A] Page 15 WEEKLY REVIEW Apr 18, 75 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 r1GV.1 lassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 SPAIN: SPECULATION ABOUT FRANCO Attention in Spain is increasingly being focused on the prospects for the post-Franco period, which many believe has already begun. Extensive press coverage is being given to Prince Juan Carlos and his role as the futu; e head of state. These articles have reinforced recent i umors that Franco may indeed be considering relinquishing power, wholly or partially, some- time this year. At a meeting with editors late last month, the minister of the National Movement re- portedly explained that it is increasingly neces- sary to prepare the public for the eventual tran- sition of power. He said that the Spanish press should begin such a campaign by building up the public image of the Prince and by stressing the political maturity of the people and their ability to make the transition smoothly. Most of the eoitors were reported to have left the meeting with the impression that the succession is rap- idly approaching and that a green light had been given to write on it. A number of articles have since been published, some of which have gone so far as to suggest that a partial transfer of power should take place in the near future. The argument advanced by those favoring a changeover now is that the monarchy should be given an opportunity to function while Franco is still alive and in a position to ensure a smooth transfer of power. Possible elates mentioned are July-the anniversary of the Nationalist uprisinq that began the civil war--anL early fall--when a new legislature will have been seated and a new political year begun. One recent report alleges that the changeover "will he a fact by June." Press discussion of immediate succession appears to stem -,ore from a desire that this should take pla, than from solid indications that Franco is contemplating stepping down. Indeed, two regime figures have discounted such a possibility. Second Deputy Prime Minister Cabello de Alba, in a recent interview, was 25X1 25X1 reported to have said that there was no aced to speed up the succession because Franco is in excellent health. Even more pointed was col- umnist Emilio Romero, director of the National Movement's daily Arrihu, who quoted "a crys- tal-ciear source at the t,,p" to the offect that no early transfer of power is contemplated. The unprecedented public discussion of the succession issue has been accompanied by in- creasing evidence of political awareness among junior and middle-grade officers. the 25X1 feeling is growing among the younger officers that recent developments in Portugal, increasing anti-government leftist activity in Spain, and growing social problems caused by economic difficulties have made it imperative that genuine political parties be organized and democratic reforms initiated promptly but in 25X1 25X1 Page 16 WEEKLY REVIEW Apr 18, 75 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 25X1 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 25X1 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 25X1 Aii The fifth round -)f the force reduction talks in Vienna ended on April 17; the talks will resume in mid-May. Both East and West marked time during this round. The Soviets and their allies offered a revised scenario for negotiating their proposal of last October that called for initial reductions of 20,000 men by both sides in 1975. They also of- fered to an,end slightly their basic proposal of November 1973. Eastern representatives commented informally that they did not expect the West to take these proposals seriously, and were not surprised when the Western delegations rejected them. Neither East nor West have shown signs during the round that they are overly dis- turbed by the lack of progress. For their part, the Soviets have never appeared to be under the pressure of time during the talks. Various Soviet officials have implied that there would be no movement in Vienna until the European security conference in Geneva concludes in a satisfz -.,:pry manner. In addition, there have been some indica- tions that Moscow is aware that the West might substantially modify its basic pro. posals, and the Soviets apparently are con- tent to await such an initiative. The West Europeans, who have ex- pressed some concern about the stalemate in the past, apparently are also willing to wait until the US formally proposes that the West modify its position. Page 18 WEEKLY REVIEW Apr 18, 75 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 Kosygin USSR PLANNING THE CONGRESS The Soviet party Central Committee meet- ing on April 16 signaled the start of preparations for the 25th party congress and eliminated one of the runners in the long-term race to succeed General Secretary Brezhnev. The removal of trade unions chief Aleksandr Shelepin from the Politburo does little to clarify the succession question, however, and additional moves within the leadership could well occur before the con- grkiss convenes. Brezhnev was clearly in charge at the plenum, delivering a report on plans for the next congress, now set for February 24, 1976. For- eign Minister Gromyko gave a report on foreign affairs, which is usually given by Brezhnev. This continues the show of greater colk,z'l"ity in the leadership evident since the General Secretary's illness this winter. Brezhnev has been limiting his activities, thus allowing greater public ex? posure for his colleagues. Shelepin has long been regarded warily by some of his colleagues as a dangerous combina- tion of ability and ambition, and his departure from the Kremlin removes a potential elem3nt of instability in the leadership. In 1965, he mounted a serious but unsuccessful challenge to Brezhnev's leadership. When that failed, his career took a precipitous slide. In 1967 he was removed from the party Secretariat and given the trade unions post-traditionally a powerless, figurehead position. Shelepin's visit to England and Scotland last month was greeted by a tremendous outcry in the British press against him personally as a former chief of the Soviet secret police (KGB) and clearly hurt his pros- pects for the future. The decision setting the date for the con- gress was made earlier and more smoothly than was the case for the 24th party congress. Then, it was not decided until mid-July 1970 that the congress, originally promised for that year, would open in late March 1971. The present pattern suggests the leaders' satisfaction with the present political situation and their confi- dence that they can set the country's course over the next five years. The plenum resolution called for continued vigilance, but reconfirmed the policy of detente, including the value of summit meetings. Academic studies in preparation for the congress seem to be under wayj scholars at several institutes are engaged in 25X1 25X1 25X1 Page 19 WEEKLY REVIEW Apr 18, 75 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 an effort similar to that undertaken before the last congress, with the Institute of World Economy and International Relations taking the lead in the work. The study addresses the de- velopments over the past five years in the scientific-technological revolution" and its effect on the capitalist and socialist systems. Soviet academics earlier about the problems of their own system and are convinced that the policy of detente has proven its worth. Their confidence apparently stems in part from difficulties being experienced in the West, but they still attribute great strength and r' iliency to the capitalist system. In fact, thr it study of the impact of tech- nological trznsfer from the West is lea Mo them to conclude, that some funds re orms will s r be required in the Soviet Union if it is to close the tech- nological gap. Now that the Soviets have a chance of gaining some of the diplomi tic spotlight in the Middle East, Moscow has come down with a touch of stage fright. While still voicing support for an early resumption of the Geneva confer- ence, Soviet officials are also saying that careful preparations must be made to ensure its success. The Soviet hesitancy is partly attributable to concern that the US will employ the confer- ence as a cover to continue step-by-step nego- tiations. Furthermore, tlie Soviets have invested substantial capital in the idea that Geneva provides th-, only solution to the Arab-Israeli problem. A failure would not only damage their prestige but would also increase the prospect of war. In an attempt to smooth the way toward Geneva, the Soviets reportedly have been talking to Israel. The Israeli press-basing its stories on government "backgrounders"-reported that two Soviet emissaries had recently discussed Geneva with Prime Minister Ra5in and Foreign Minister Allon. The Soviets were said to have urged Israel to attend the conference in return for Soviet guarantees of Israel's pre-1967 bound- aries, and held out the prospect of an eventual resumption of diplomatic ties. The Soviet show of evenhandedness apparently was designed to convince Tel Aviv that Moscow did not intend to turn Geneva into a propaganda show. The Soviets also probably wanted to suggest that they-as well as Wash- ington-could bargain with both sides. Tel Aviv probably had an interest in leaking the story to impress Washington that it could develop al- ternate channels to the Arabs. The USSR's interest in promoting a facade of Arab unity was apparent during a visit to Moscow this week by Iraqi strong man Saddam hlusayn. Premier Kosygin laid heavy stress on the importance of cooperation between Syria, Egypt, and Iraq. Although Moscow would like to enlist Iraq in the Middle East negotiations-if only to further complicate Egypt's ability to pursue independent initiatives-the Soviets once again appear to have failed to moderate Baghdad's rigid opposition to talking with Israel. The Soviets will try again to reach a common position with Cairo on the conference when Foreign Minister Fahmi is in Moscow on April 19-20. The Soviets were hardly pleased by President Sadat's pronouncement that Geneva is not the only negotiating avenue open to Cairo, by Egypt's suggestion that the Geneva con- ference be expanded to include Britain, France, India, and Yugoslavia. The latter arrangement will be viewed as an effort to reduce Soviet influence at Geneva. The problem of Palestinian representation at the conference is sure to come up in the discussions with Fahmi. Comments by Soviet officials indicate that Moscow is search- ing for a way to get around this issue and is willing to defer it until the talk; arp ;irtl, y under way. Page 20 WEEKLY REVIEW Apr 18, 75 25X1 25X1 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 CHINA: CUTTING MILITARY MANPOWER? Peking reportedly plans a significant reduc- tion in military manpower this year, primarily because of a need to reduce spending on the armed forces a decision to demobilize one million men in 1975 was announced at a recent conference presided over by Politburo member Chu T e, a veteran military leader. It is not yet possible, however, to make a precise estimate of the size of any resulting net reduction. China is believed to demobilize routinely between 500,000 and one million men every year and to take in an equal number. The Chinese armed services ostensibly have fixed terms of service, but some troops are held beyond the regular tours. China's army, navy, and air force are row estimated to have we,l over 4 million men. The bulk of a reduction would have to be taken by the army, which has over 3.5 million men in main force units, local forces, and support troops. Military leaders probably would try to minimize the effect of demobilization by reducing manning Ic rels rather than eliminating units and by taking as few men as possible from the more important main forces. Perception o! Threats I f a large-scale reduction were to occur, it would be further evidence that the Chinese believe the threat of imminent hostilities with the USSR or the US has dec;ined. Although Poking almost certainly will continue to main- tain ;arge numbers of troops in its four northern military regions, it would have fewer troop, immediately available for reinforcement. 25X1 Peking did not call up additional recruits following the Sino-Soviet border- incidents of 1.969, but it did extend the term of service of all the troops then under arms. Because this served to swell the ranks of the army, the reported demobilization this year may be designed in part to offset that increase. In recent years, demo- bilization of men whose terms of service were completed and induction of replacements appear to have taken place in normal fashion. 25X1 25X1 During the past several years, Pekin ig has been making strong efforts to reduce the mili- tary's role in politics. These efforts-which have included the transfer of military region com- manders, withdrawal of personnel on nonmili- tary assignment, and reversion of units of the paramilitary Production Construction Corps to civilian control-are all indicative of Peking's desire to focus its military establishment on purely military matters. Peking may have determined that it now has more troops than can be economically and effectively used. There have been recent indica- tions of debates over questions of budgetary allocations, particularly with respect to the armed forces. 25X1 A significant reduction of forces probably could not be accomplished without incident. For instance, administrative and logistic diffi- culties could arise in trying to transport pc?rson- nel to areas throughout China if demobilization came quickly. Moreover, many soldiers probably saw the army as a steppingstone to employment in major population centers and would resent being sent back to the countryside. A number of recent incidents have invclved demobilized serv- icemen demonstrating against Uiie leadership's failure to give them the benefits they expected. A flurry of domestic propaganda broadcasts ex- tolling demobilized soldiers who are going to the countryside satisfaction. Page: 21 WEEKLY REVIEW Apr 18, 75 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP85T00875R001000080018-0 PEPU: VELASCO REAPPEARS In an obvious effort to reasb,:-+ himself in the public eye, President Velasco prFiued over a heavily publicized cabinet mea+ing on April 11. The session was held at a bNoch resort south of Lima, where the Presidp.-.i ha, been recuperating from a strc'