WEEKLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001000080039-7
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 28
• Document Creation Date: December 27, 2016
• Document Release Date: May 11, 2010
• Sequence Number: 39
• Publication Date: August 29, 1975
• Content Type: REPORT

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Top Secret
Weekly Review
Top Secret
August 29, 1975
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m Copy N? 665
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CONTENTS (August 29, 1975)
Office of Current intelligence, reports and analyzes significant
Research, and the Directorate' of Science, and, Technology.
Topics requiring more comprehensive;,treatment sand
therefore published separately as Special Reports are listed
EAST ASIA
PACIFIC
MIDDLE EAST
AFRICA
1 Portugal: Hanging On
2 Italy: Army Reorganization
3 France: The Corsican Problem
4 Poland: Going Public
5 EC: Economic Cooperation
6 Laos: Little Left to Take
6 Korea: The Nonaligned Conference
7 Timor: Up for Adoption
8 Cambodia: Peripatetic Prince
8 Indonesia: Economy Looking Up
9 China: Troops in the Factories
10 Vietnam: Military Equipment Broker
12 Thailand: Political Tensions
13 Angola: Popular Movement Gaining
14 Jordan-Syria: Closer Cooperation
15 Bahrain: End of an Experiment
16 Namibia: Constitutional Talks
17 Bangladesh: Regime Consolidates
WESTERN
HEMISPHERE
18 Cuba: Reacting to US Move
19 Argentina: The Military Presses
20 Venezuela: After Nationalization
21 Chile: A Crack in the Junta
22 Canada: Labor Militancy
23 Guatemala: Eyes on Belize
24 Ecuador Moves to the Right
Comments and queries on the contents of this
publication are welcome. They may be
directed to the editor of the Weekl Review,
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PORTUGAL: HANGING ON
Efforts to break Prime Minister Goncalves'
tenacious grip on power seem to have lost some
momentum this week. Goncalves appears to have
.bought some time by threatening to bring his
Communist supporters into the streets if he is
removed-an action which could result in civil
war. The deadline of August 25 that Goncalves'
opponents had set for his removal passed with
him still in office. A few days later, however, there
again were reports that he might be ousted at any'
moment.
The anti-Goncalves forces, which had
gathered support for a relentless drive to oust the
Prime Minister and reduce he growing Com-
munist influence, appear to have been sidetrack-
ed by President Costa Gomes' vacillation and fear
that Goncalves would make good on his threat to
provoke civil war. On August 25, representatives
of the original nine dissident Revolutionary
Council members led by former foreign minister
Melo Antunes met with the ruling three-man
directorate, and a compromise seemed in the
making.
The Revolutionary Council issued a com-
munique the same day announcing three
decisions that seemed to contain something for
each faction. General Corvacho, generally con-
sidered sympathetic to the Communists, was
reinstated as commander cf the northern military
region, after having been suspended the week
before. At the same time, the operations of
pro-Communist propaganda division of the arm-
ed forces general staff were suspended, pending
an investigation, and it was announced that the
armed forces general assembly would meet next
week.
Rumors of a compromise took on added
significance when it was learned on August 26
that army chief of staff Fabiao, designated by the
Antunes group to take over as prime minister, had
abandoned his efforts to form a new government.
Speculation then focused on Admiral Azevedo,
navy chief of staff, as a possible successor.
Azevedo might be acceptable to many of Gon-
calves' supporters in the military, but because of
his leftist credentials the admiral would probably
be rejected by the Antunes group.
In the early hours of August 27, commandos
operating on instructions from internal secuii:y
chief Carvalho executed a series of lightning raids
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on offices of the military's propaganda division,
which had defied orders to close down. The move
was viewed by some as a show of force by the an-
ti-Goncalves faction, whose fortunes had seemed
to be slipping. This claim may have been made
after the fact, however, to buck up the morale of
units who saw their chance of reversing the Cocn-
munist tide slipping away while their leaders
bargained in Lisbon and accepted one stall after
another.
The Communists, seeing a chance to retain
Goncalves, took the offensive by organizing a
united front of extreme leftist parties and
revolutionary groups and promising a series of
pro-Goncalves rallies throughout the nation. The
first of these rallies was held on the evening of
August 27, just as another round of emergency
meetings of top military officers was about to get
under way. With the apparent intention of in-
timidating President Costa Gomes, who holds the
ITALY, ARMY REORGANIZATION
The Italian army is beginning to reorganize its
ground forces. Faced with a tight budget, the
army has chosen to maintain expenditures for
equip.- tent and reduce those for personnel.
The present 36 brigades are to be reduced by
one third, and the oldest third of artillery pieces
and tanks phased out. The remaining equipment
will be modernized over a 10- to 12-year period.
Military officials hope the changes will result in a
smaller, less expensive army that is more mobile
and better prepared. The new army reportedly
will be made up of 3 corps commands, 4
mechanized and armored divisions, and 12 in-
dependent brigades with tactical and logistic sup-
port. The reorganization will probably not be in
full swing for several months, and may take years
to complete.
Modernization plans call for a greater
number of armored personnel carriers. Motor
transport will be increased, over half of the
remaining artillery and tanks will be replaced or
re-equipped, and the number of anti-tank
weapons will jump from about 2,000 to 3,000.
key to the situation by virtue of his authority to
dismiss the prime minister, some 35,000
demonstrators cheered Goncalves but roundly
booed the President when lie took the platform.
Underlining the growing chasm between
Lisbon, the center of Communist strength, and
most of the rest of the nation, the Socialist Party
organized a rally of some 50,000 persons in the
northern city of Porto on the 27th to demand
Goncalves' removal and to protest the reinstate-
ment of General Corvacho as regional com-
mander. One member of the Antunes group had
earlier predicted the possibility of civil war,
regardless of the outcome of the current struggle
for power. The growing anti-Communist violence
in the north and the apparent determination of
creasinely likely.
Over the past year, Italian army strength has
dropped from 311,000 to about 225,000 men. The
army believes that reducing the number of units
will allow for more efficient use of the smaller
number of troops. Economies from the reduction
in personnel will probably be lost to inflation,
however, and recent unrest among enlisted per-
sonnel will probably require that the armed
forces allocate more funds to improve living con-
ditions for enlisted men and noncommissioned
officers. Military service chiefs have already
dipped into existing equipment-procurement
funds to give enlisted men a one-time cost-
of-living payment. The Defense Ministry
reportedly looked the other way.
The army has asked parliament for about $1
billion over a ten-year period to provide ad-
ditional funds to support the new army. Earlier
this year, parliament approved similar legislation
for the navy, and chances are good that special
procurement legislation proposed by the air force
will also he naccari
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Police prepare assault on Corsican autonomists
FRANCE: THE CORSICAN PROBLEM
The recent gunbattle between 50 Corsicans
demanding greater auto.,Qmy and 1,000 riot
police from the French mainland is a new step
in the islanders' campaign for more control over
their domestic affairs. The extremist wing of the
movement has set off more than 150 bombs on
the island during the past four years-concen-
trating mainly on destroying unoccupied govern-
ment offices and shops owned by "foreigners"-
but until the confrontation last week there
had been no deliberate threats to human life.
The Corsicans already had a reputation for
rebelliousness when the island was bought by
France in 1768 from the Italian Republic of
Genoa. Corsicans still speak an Italian dialect
and consider '1hemseIves a race apart.
The most recent outbreak of violence oc-
curred on August 21 when a group called
"Action for the Rebirth of Corsica" (ARC)
seized a l:rge farm belonging to a former French
colonist from Algeria to dramatize autonomist
demands and secure the release of a fellow mili-
tant who went on trial that day. As police
reinforcements arrived from the mainland the
next morning, the besieged Corsicans grabbed
six hostages-four North African laborers and
two tourists-to exchange for their own free-
dom. Two policemen were killed and several
others wounded before the Corsicans were over-
whelmed by tear gas.
The assault on the farm was the first action
by the ARC in suppo: t of its new, uncom-
promising manifesto, which calls for an all-out
struggle for autonomy. The manifesto was
issued at a mass rally on August 17 attended by
8,000 members of ARC-mostly local farmers-
and seems to mark a turning point for the
group, which since its inception in 1967 had
favored legal.means in pursuit of its main objec-
tive-a locally elected assembly that would have
control over the island's domestic affairs.
Most Corsicans do not want independence,
but there is widespread support for increased
autonomy. Complaints center on the "for-
e igners," whose economic success contrasts
markedly with the worsening condition 'of
native islanders.. Corsica now has the highest
proportion of unemployed and the second
lowest per capita income of any French region.
The most bitter resentment is reserved for
15,000 pieds noirs-former colonists in French
Algeria-who were resettled in Corsica during
the 1960s. The refugees benefited heavily from
government subsidies, grants, and loans not
available to the Corsicans.
Noted for their industriousness and effi-
ciency, the pieds noirs took full advantage of
government aid to buy and reclaim barren land
and bring in thousands of North African
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laborers to work their farms. Claiming that the
pieds noirs now own most of the land in Cor-
sica, autonomists demand that all land being
farmed by "foreigners" be returned to Corsican
control.
Another major grievance is the alleged lack
of responsiveness by the highly centralized
French government. Corsicans resent the island's
lagging industrial development and what they
consider to be the lack of a social action pro-
gram tailored to Corsican needs. Advocates of
autonomy accuse Paris of running Corsica like a
colony and of being interested only in the is-
land's development as a tourist area.
Tension has remained high on the island
since the shoot-out last week. ARC members
have attacked businesses owned by pieds noirs
and "mainlanders" and clashed with police. Yes-
terday one policemen was killed and 13 were
injured by demonstrators protesting the govern-
ment's decision to ban the ARC movement. The
proscribing of the autonomist group and arrest
of its leader and ten of its top members have led
to predictions of further serious incidents unless
Paris backs down and makes important conces-
sions. According to press reports, the pieds noirs
fear a civil war may be imminent. The incidents
of the past week have, in any case, given the
Corsican drive for autonomy a momentum that
may force Paris to come to grips with the Drob-
The Polish regime is showing increasing
sensitivity and.even some uncertainty over how
the population might react to domestic and
international events. Warsaw's uneasiness may in
part be because most top-level officials are on
vacation and the second team is minding the
store. It could also reflect genuine concern that
the regime may have trouble controlling public
reactions.
For example, the media managed for more
than two weeks to delay disclosing the details of
agreements reached between party chief Gierek
and West German Chancellor Schmidt in Hel-
sinki. Polish officials at first claimed that the
silence was intended to help the ratification
process in Bonn, but their reticence also suggests
concern about domestic criticism of the agree-
ments and a desire to prevent an immediate
flood of applications for emigration by Poland's
ethnic Germans.
When the press finally did dribble out the
details, it seemed to distort the contents of the
accord in order to give the impression that ior-
ther Polish demands might be forthcoming. A
Foreign Ministry official subsequently dis-
avowed this interpretation, however, blaming it
on a lack of press guidan.c because so many
officials were out of town.
The media have also echoed Gierek's de-
fensiveness about the decisions on humanitarian
issues at CSCE. In fact, the full text of the
Helsinki agreement has not been published.
Those excerpts that have been carried have care-
fully juxtaposed stipulations on sovereignty and
noninterference with the passages on freer
exchanges. The Polish leadership, like other East
European regimes, is no doubt worried that its
citizens may expect more from the freer ex-
change provisions than it is prepared to grant
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Warsaw is also keeping a close watch on
popular reaction to its domestic economic
policies. In an effort to overcome continuing
shortages of meat and milk-and to quiet in-
creased popular grousing about them-the
regime announced on August 11 that prices paid
to producers would be increased. The regime
evidently felt that it was Fall politically unwise
to raise long-frozen consumer prices on these
and other food items; this week the government
announced instead that retail prices for tobacco
would be raised, in some cases as much as 70
percent. Public reaction to this price hike will be
watched carefully, since economic necessity
may force increases on other nonessential com-
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EC: ECONOMIC COOPERATION
Economic and finance ministers of the EC
Nine, joined by central bank governors, met in
/enice last weekend to discuss what their gov-
ernments should do to combat persisting eco-
nomic recession and its consequences for
employment within the community. Another
purpose was to approve a package that would
permit some progress on international monetary
reform at next week's IMF meetings in Washing-
ton, yet avoid a US-French standoff on Paris'
desire to return to fixed exchange rates. An
open confrontation on flexible as opposed to
fixed parities would embarrass the community,
because France's partners are not anxious for an
early end to floating currencies.
France has shifted its tactics somewhat in
no longer holding up agreement on IMF quota
revisions and the role of gold in a future interna-
tional payments system as hostage to an accord
on how flexible the relations between national
currencies, or currency blocs, should be. Paris
still intends to push for a return to exchange-
rate "stability"-and is now even invoking the
argument that monetary "uncertainty" plays
into communist hands-but may hope to elevate
the question to the highest political levels by
making it the centerpiece of a summit of the
"Big Five" free-world industrial countries that
the French want later this year. This meeting
may itself be in doubt, however, since the
smaller members are objecting vociferously, and
the US and Japan are far from enthusiastic.
The package which the EC ministers agreed
to in Venice would:
? Allow central banks to make settle-
ments in gold and engage in gold transac-
tions on the open market, subject to the
provision that central bank gold stocks not
increase over the initial two-year period.
? Have the IMF return one sixth of its
gold to members and sell another sixth, with
the profits going to benefit the developing
countries. (Some ministers, presumably in-
cluding the French, want the money to be
used to support commodity agreements,
while others favor direct aid.)
a Have the IMF quota of the US reduced
to below 20 percent, but increase the qual-
ified majority vote on important issues to 85
percent, thereby allowing the US to retain
its veto power.
Quotas for national IMF contributions
have to be redistributed in order to reflect the
growth of the oil countries' monetary reserves.
Apart from the question of what effect this will
have on US voting strength, the EC is also faced
with reallocating quotas among its members.
They hope to resolve this problem before the
IMF meetings begin.
On overcoming recession, the EC countries,
led by Germany and France, continue to stress
the importance of reflationary measures by the
US and Japan. The Europeans nevertheless seem
to be attaching growing importance to the need
for improved coordination of efforts within the
community; one country's stimulative program
could be largely negated by the lack of com-
plementary measures by its EC partners-with
whom most of its trade is conducted.
In Venice the minister pledged their coun-
tries to coordinated action, but there is little
evidence of any central direction despite EC
Commission recommendations, let alone a
planned recovery program at the community
level. German Chancellor Schmidt is in fact
giving the major impetus to policy coordination,
especially among the members of the joint float
of EC currencies-in which Britain, Italy, and
Ireland do not participate.
Italy's own ambitious recovery plans,
thought by many ecunomic observers to risk
setting off a new inflationary spiral, already
overstep Commission suggestions. The measures
signaled this week by Germany and France,
meanwhile, are probably inadequate, and there
is nothing yet to indicate that the Venice session
increased or redirected their efforts_l
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LAOS: LITTLE LEFT TO TAKE
In a remarkable display of orgonizational
skill, communist cadre on August 23 turned out
more than 100,000 people for their lorng-
planned mass rally in Vientiane to formally end
the city's joint admiristration, established under
the 1973 peace accords. The event marked the
completion of the communist take-over of the
country's local governing authorities, and with it
the communists ha?'e completed the destruction
of most non-communist institutions.
The Royal Lao army has been disarmed
and integrated into a national army led by the
Pathet Lao. Those military officers and civil
servants who did not flee the country are
thoroughly cowed, and many have been moved
deep into the hinterlands for lengthy, humil-
iating re-education sessions. There is no evidence
that any have been execut'd, but many Lao
believe that the participants will never return to
Vientiane.
Communist officials and sympathizers in
control of local governments throughout Laos
have been steadily tightening control over the
people by restricting travel, establishing people's
militia units, and requiring attendance at daily
political indoctrination sessions. No significant
active resistance to these efforts has been re-
ported.
The communists thus far have been careful
not.to formally alter the coalition status of the
national government established under the 1973
accords and personified by Prime Minister
Souvanna. Communist acting deputy prime min-
ister Phoune Sipraseuth seemed to go out of his
way in his speech at the rally to emphasize that
the PGNU and the Joint National Political
Council, which sets policy guidelines, remain the
"supreme administrations." Phao Phimmaclian,
a senior communist leader who has taken con-
trol of the Vientiane area administration, also
pledged support for the PGNU and Souvanna.
Such forbearance should not be exag-
gerated, since the Pathet Lao have the organs of
the national government firmly under their
thumb. The real question is how long the com-
munists will see political advantage in retaining
the facade of coalition, and how much longer
Souvanna and the remaining non-communist
political figures will be willing to play their
increasingly insignificant roles in a "coalition"
now totally weighted in Pathet Lao favor.
Anti-American statements during the
speeches were surprisingly subdued, and there
were no marches on the embassy or other
actions against US or foreign residents. In an
effort to tighten security and guarantee at`.end-
ance, the communists had '-losed the airport and
the Mekong River border, limited vehicular
traffic on most city streets, and closed stores
KOREA: THE NONALIGNED
The acceptance of North Korea's apr,lica-
tion for membership in the Conference of Non-
aligned Countries in Lima this week-and the
rejection of South Korea's parallel bid-will
improve Pyongyang's prospects for passing a
resolution at the UN General Assembly this fall
calling for withdrawal of US forces from South
Korea.
Pyongyang has worked hard to win support
among the nonaligned in recent years, playing
down its military alliances with Peking and Mos-
cow while hitting hard at the continued pres-
ence of US forces in South Korea.
The South Koreans, hoping to block a
North Korean victory at Lima, mounted a
vigorous lobbying campaign themselves among
the nonaligned this year. A number of foreign
terence, but the North's backers-led by Algeria,
Cuba, and Yugoslavia-prevailed.
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TIMOR: UP FOR ADOPTION
Lisbon has all but washed its hands of
Timor. Admitting that the situation is totally
out of control, the Portuguese have evacuated
all their military and civilian personnel from the
island and called for international humanitarian
aid.
Commercial vessels have evacuated most
non-Timorese from Dili, and Indonesian naval
ships are standing by in the harbor to remove
Jakarta's consulate staff and any other persons
who wish to go. The Portuguese governor of the
colony and a skeleton staff have moved their
headquarters to a small island off the coast.
Lisbon has dispatched a special envoy to visit
both Jakarta and Dili to discuss what can be
done to resolve the situation.
Portugal's public calls for international
intervention have thus far been confined to
humanitarian assistance, In a public statement
on Monday, an Indonesian spokesman said
Jakarta believes that humanitarian assistance
cannot be separated from the more general task
of restorin security and order. The statement
called on Lisbon to recognize this and to act
accordingly. Lisbon apparently did consult
Australia and Indonesia about a joint military
effort to help restore order, but Australia
refused and Indonesia insisted that it must have
full freedom of action. President Suharto wants
Lisbon to Publicly a.k for Indonesian assistance
to restore order, but Portuguese President Costa
Gomes, apr --ontly for domestic political
reasons, has !?portecily decided that he cannot
do so.
Indonesia's preparations for military inter-
vention, however, have probably advanced too
far to turn back now. Suharto's main concern is
to couch Indonesian inter,ention in terms that
will avoid accusations of territorial aggression.
He will undoubtedly insist that any action
Jakarta takes is intended to restore order so that
the decolonization process agreed upon earlier
can continue and the interests of the Timorese
people can be safeguarded.
Recent world-wide publicity about the
deteriorating situation in Timor and the Portu-
guese evacuation of the capital will work to
Jakarta's advantage. Unilateral Indonesian
action undertaken now, in the name of ending.
the bloodshed and with the appropriate dis-
claimers about territorial ambitions, will prob-
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certain. Premier Chou En-lai received 1',e Prince
and other members of the delegation on August
26, at which time his return to Cambodia was
probably discussed.
Sihanouk with North Korean President Kim Ill-song
CAMBODIA
THE PERIPATETIC PRINCE
Prince Sihanouk's plans for further travel,
following his impending visit: to Phnom Penh,
suggest that he will continue as an international
spokesman for Cambodia, at least through the
end of the year. The reception the Cambodian
communists give the Prince during his visit may
,provide some clues concerning the agreement
reached in Pyongyang between Sihanouk and
Deputy Prime Minister Khieu Samphan and a
more precise reading of Sihanouk's future.
Sihanouk's Peking office announced recently
that he will deliver a speech to the UN General
Assembly "before December," but would stay in
New York "only a few hours." Deputy Prime
Minister for Foreign Affairs leng Sary and Foreign
Minister Sarin Chhak will head Camhnrli i'c
delegation
Sihanouk returned to Peking from
Pyongyang on Saturday and was met by vice
premiers Teng Hsiao-ping and Li Hsien-nien. The
date of Sihanouk's departure from Peking is un-
CAMBODIAN VISIT TO PYONGYANG
The Cambodian delegation wound up its
four-day visit to North Korea last Friday with a
joint communique in which each side con-
gratulated the other on its achievements, and
"complete accord" was said to have been reach-
ed. The Cambodian side endorsed the North
Korean call for the withdrawal of US forces from
South Korea and the replacement of the armistice
agreement by a peace treaty. Although no aid
commitments were mentioned in the com-
munique, North Korea may have agreed to give
Cambodia token economic aid.
The Cambodian delegation participated in a
round of public functions in Pyongyang-ban-
quets and a military rally in honor of the Cambo-
dian communist victory-and also met with Presi-
dent Kim II-song. Although the main purpose of
the side trip from Peking was almost certainly to
escort Sihanouk back to Peking, the visit afforded
the Cambodians an opportunity to reaffirm their
North Korean ties followina the' y l ict
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INDONESIA: ECONOMY LOOKING 'JP 25X1
The worst of Indonesia's trade ai id financial
problems have passed, and the second.tialf or this
year should show steady improvement. Real
growth for this year is now estimated at 7-8 per-
cent, and oil earnings should permit this rate to
be sustained well into the late 1970s.
Most of the recent improvement in the
payments position derives from higher oil export
earnings. After dropping to 70 percent of capacity
for several months, output turned up at midyear
as the US and Japan began to rebuild stocks. The
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high profit margins allowed the companies by
Jakarta should ensure a progressive increase in
production through the end of the year.
The recent pickup in sales, higher average
prices, and tax revisions favoring the government
will permit Jakarta to exceed last year's oil export
earnings. Earnings from other exports, however,
will decline by an estimated 20 percent because of
soft demand for Indonesian raw materials. Im-
ports, which had been soaring since early 1974,
are expected to decline in the second half of 1975.
Jakarta last month put a temporary ban on foreign
purchases of rice, wheat, sugar, and fertilizer.
Jakarta has overcome the financial crisis that
caused default of the state oil company, Per-
tamina, on a loan earlier this year. It has stepped
in as Pertamina's guarantor and covered the im-
mediate payments due on the enormous debt
owed by the company-$1.5 billion in short-term
loans and $1.6 billion in long-term loans. Private
foreign banks have advanced $575 million, enabl-
ing a rescheduling of some debt payments. Later
this year, the government is expected to call on
private foreign banks for an additional $400
million.
At the same time, Jakarta continues to attract
large-scale foreign support for its development
projects. Japanese banks and corporations are ap-
p,oaching the final stages of an agreement to put
up $2 billion for constructing the large alumina
project at Asahan, Sumatra, and two liquefied
natural gas plants. Similar support probably will
be arranged for the steel project on Krakatau.
Despite the world recession, Indonesia's
domestic economy should fare well this year.
Agricultural output will be buoyed by an ex=
cellent rice harvest. The slowdown in Pertamina's
non-oil projects will put only a minor damper on
the tempo of construction. The rate of in-
flation-40 percent in 1974-abated substantially
in the first six months of this year. The
government's ability to intervene in the market
with huge stocks of rice and fertilizer should hold
down price rises during the remainder of
CHINA: TROOPS IN THE FACTORIES
For the second time this month, China's
official news service has publicized the dis-
patch of troops to factories in Chekiang
Province; the leaders in Peking are apparently
trying to warn other provinces against allowing
factionalism to disrupt production. Peking has
not used troops in this capacity since the up-
heavals of the Cultural Revolution in the
mid-1960s.
Recent broadcasts also indicate that a
relatively small number of troops are par-
ticipating in iron and steel production in Inner
Mongolia, Kiangsu, and Anhwei. The commit-
ment of troops to these tasks followed recent
central directives criticizing sagging iron and
steel production. There is no indication that
factional problems in these proy'
bad as in Chekian
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Communist troops aboard a captured US tank
With their sudden victory in South Viet-
nam last spring, Hanoi's forces captured large
amounts of US-made military equipment,
ranging from small arms to modern ground
attack aircraft and significant quantities of
munitions.
The communists have a problem deciding
how much of this equipment to integrate into
their own forces and what to do with any sur-
plus. One of the options is to provide arms to
insurgents-a possibility that is causing consider-
able concern in nearby countries, notably
Thailand and Malaysia. Thai insurgents have
received aid from Hanoi in the past, and the
North Vietnamese could now increase their sup-
port.
Hanoi could also earn hard currency by
selling the equipment on the world market. The
communists face major economic development
costs in both the North and South and need
foreign exchange for this. The captured equip-
ment is worth about $5 billion, end its sale
would ease the financial burden of development.
A number of countries in Southeast Asia, the
Middle East, and Africa are reportedly
interested in obtaining the equipment. Hanoi,
however, has not yet decided to sell.
P, ge 10
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US-made planes are the most vJuable mili-
tary hardware that was captured. The commu-
nists seized some 1,100 aircraft, including 75
F-5s and 113 A-37 fighter-bombers. The North
Vietnamese apparently are integrating some F-5
and A-37 aircraft, along with M IG fighters from
the North, into an air division in the Saigon
area. The US-made fighter-bombers give the
North Vietnamese a significant ground-attack
capability for the first time. Until now, their air
force has had a clearly defensive orientation.
Spare parts for the aircraft are in short
supply, but the problem does not seem to be
insurmountable. The communists can cannibal-
ize other aircraft and may be able to find re-
placement parts on the international market.
In addition to the fighter-bombers, the
communists seized large numbers of helicopters.
Among these were about three dozen large
transport helicopters and more than 400 smaller
combat-support helicopters, including gunships.
The North Vietnamese appreciate the heli-
copters' mobility and firepower and probably
will keep some for their own forces; many,
however, could still be available for sale. The
communists also captured approximately 50
transports, including C-119s and C-130s, and
will probably retain some of them.
The North Vietnamese got significant
quantities of communications and radar equip-
ment, including relatively sophisticated items
such as navigational equipment for all-weether
operations. This and other electronic gear will
be difficult for them to maintain, and some of it
may be passed along to the Soviets and Chinese
in exchange for continued support.
. With the take-over, the communists came
into possession of some 400 naval craft, which
they do not need, and approximately the same
number of transports. The naval craft, mostly
coastal and river patrol boats along with a few
deepwater ships, may well be available for ex-
port. The North Vietnamese have already
organized some of the transport ships to ferry
cargo between large coastal cities.
Ground Force Weapons
The bulk of the captured US equipment
consisted of ground force weapons and muni-
tions. The inventory includes 500 tanks-mostiy
M-41s and M-48s-approximately 1,200 armored
personnel carriers, about 45,000 trucks and
jeeps, some 1,300 pieces of artillery, nearly 1
million M-16 rifles and other small arms, and
thousands of mortars, antitank weapons,
grenade launchers, and machine guns.
Much of this equipment appears surplus to
Vietnamese requirements. The North Viet-
namese army is already well equipped with
Soviet and Chinese hardware, and Hanoi's stock-
piles declined little as a result of the spring
fighting. The North Vietnamese only recc..tly
standardized their weapons, and they probably
would be reluctant to change, since US weapons
would provide little improvement.
Prospective Purchasers
A number of prospective purchasers are
reportedly waiting for Hanoi to open its doers
for business. Nigeria, for example, plans to send
a team to discuss arms purchases. The Nigerians
are said to be interested in F-5s, helicopters,
105-mm. howitzers, and M-16 rifles.
Aerial photography did show a
US-made landing craft loaded with US-made
105-mm. howitzers in Haiphong harbor; this
suggests that Hanoi may be stockpiling weapons
in preparation for selling them. Since most of
the US equipment is readily marketable, it
seems likely that Hanoi will eventually sell most
of the armor and other ground force equipment,
but serious questions of economic advantage,
political impact, and international reputation
riust t;' decided before Hanoi begins disposing
0 its stockpile of captured arms.
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Long-smoldering political tensions broke
into the open last week, sparking a wave of
violent incidents in Bangkok and shaking public
confidence in Prime Minister Khukrit Pramot's
government. The most serious incident was the
ransacking of Khukrit's house by drunken
policemen. Elsewheie in the capital, striking
government security guards abducted three
Labor Ministry officials, and vocational students
burned and looted Thammasat University.
The incidents were not the work of any
one group, but rather the result of a general
right-wing backlash against leftist student
protests. Some military and other senior secu-
rity officers have long maintained that civilian
rule cannot provide Thailand with civil order
and political stability..
More specifically, the police have been
upset with the government for releasing-ap-
parently in response to week-long protests by
student radicals-nine student and farmer
activists who had been arrested for kidnaping
local government officials in northern Thailand.
Ostensibly, the destruction at Thammasat
University was prompted by a desire of the
vocational students to avenge the wounding of a
comrade during a protest rally there last week,
but in reality the violence appears to have been
the work of right-wing provocateurs intent on
intimidating the students at the university, the
ideological fountainhead of the radical left.
Khukrit, finding himself in the middle of
the political cross-fire, decided to let the vio-
lence play itself out. He was acutely aware that
any strong-arm reaction by the government
could easily backfire. A crackdown against the
students would probably have sparked a new
wave of student protests, whereas a move
directed at the police would have further
alienated conservatives in both the government
and the military.
The government's agreement to reopen the
investigation of the arrested students has for the
moment restored a sense of calm in the streets,
but the fundamental distrust between conserva-
tives and the political left remains.
While the episode clearly has tarnished
Khtikrit's image as a tough and able adminis-
trator, his popularity seems largely intact.
Nevertheless, Khukrit keeps a wary eye on the
generals. He :,alked at declaring a state of emer-
gency during the height of the disturbances, ?n
part out of fear that it would provide an oppor-
tunity for the military to step in. The strongest
advocate for such a measure was army com-
Kbukrit Pramot
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ANGOLA: POPULAR MOVEMENT GAINING
The leftist Popular Movement for the
Liberation of Angola has made new territorial
gains in the recent fighting in central and south-
ern Angola, which has now tapered off. The
Movement's position is enhanced by weaknesses
within the two rival liberation groups and the
inability of the Portuguese to assert any author-
ity over the territory.
The Popuiar Movement established itself
some time ago as the dominant military and
political force in Luanda and the exclave of
Cabinda. The recent fighting gave it control of
Lobito, Angola's major port, and of most of the
more important urban centers along the central
coastline between Luanda and Lobito. It also
pushed its rivals out of Sa da Bandeira, deep in
the territory of the National Union for the Total
Independence of Angola.
The National Front for the Liberation of
Angola is still entrenched in northern Angola,
where it controls two ports. Since mid-July the
front has been building a large concentration of
troops at Caxito and apparently has moved to
within 20 miles of Luanda this week.
The National Union still holds the dom-
inant position in the rich central highlands,
particularly in the area around Nova Lisboa and
Silva Porto. It is making a determined effort to
recapture Luso, in eastern Angola, and appar-
ently is planning an offensive to regain Lobito,
without which it has no major supply F;oint.
Recently it received fresh supplies from Zaire
and China, airlifted from Zaire, but it lacks a
dependable source of military assistance.
If the National Union and the National
Front can gain the necessary momentum, they
may still be able to squeeze the Popular Move-
ment between them and force it to return to a
coalition government that can assume sover-
`YY1Or Highlands. Silva Porto
Nova Lisboa
JSouth Woat A/ri
(Intemellonat Torr.)
eignty from the Portuguese in November. The
Movement may be overextending itself; in some
areas it is already stretched thin.
The 22,000 Portuguese troops in the ter-
ritory are demoralized and distracted by the
political struggle in Lisbon and are themselves
divided politically. By and large, they have
pulled out of the countryside to regroup in the
coastal cities in order to protect the evacuation
of whites and prepare for their own eventual
withdrawal. The Portuguese cannot maintain
order outside those cities.
Portuguese officials are attempting to
induce the liberation groups to accept a
modified version of the defunct four-party
transltic.ial government. They are also sending
delegations to neighboring African heads of
state to enlist their support for a return to a
coalition-type government in which all three
liberation groups would participate, although
with diminished authority. So far, there have
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King Husayn (r) and President Asad wave to the crowd during the King's recent visit to Syria
A five-day visit ;o Syria last week by King Hu-
sayn capped a series of steps over the past few
months toward closer economic and military
cooperation between the two countries.
In a communique issued following the visit,
the two countries announced the formation of a
"Supreme Syrian-Jordanian Political Command
Council" composed of Husayn and Syrian Presi-
dent Asad. The council is supposed to meet at
least once every three months to act on
recommendations of the ministerial committee
formed at the time of Asad's visit to Jordan last
June.
The communique avoided any mention of a
joint military command, and its specific labeling
of the new command council as "political" seems
designed to relie%e US apprehensions that a joint
military command might be established. The
prerogatives of the command council, which is to
review plans for "coordination and integration"
between the two armed forces, seem sufficiently
broad to permit Husayn to keep his options open
and to move toward military cooperation with
Syria at his own pace.
The communique also lists several other areas
in which the two governments are to work
together. In addition to planning for a "unified
foreign policy," particularly with respect to Arab
issues, the command council will discuss coor-
dination of economic and social development
plans, the formation of joint economic com-
panies, unification of markets, and the establish-
ment of a unified customs policy.
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The trend toward closer ties between the two
countries has created anxiety among some
elements of Jordanian society. The army, for ex-
ample, is reportedly fearful that one consequence
of the new relationship wii h Dama.,cus will be the
return to Jordan of the fedayeen in some form.
Almost without exception, the army is opposed to
any fedayeen presence, no matter how con-
trolled. A large number of Jordanians, espedally
East Bank residents, also fear that in any close
relationship with Syria, Jordan will be dominated
by her larger, more powerful partner.
Husayn sees many benefits from closer
cooperation with Syria. In addition to the obvious
economic zdvantages, the King must be especially
pleased by the more moderate attitude of the
Asad regime toward Jordan. Conscious, however,
of the growing apprehensions among some of his
closest supporters over the new relationship, Hu-
sayn will move slowly, especially eciall In the area of
military cooperation:'[-
BAHRAIN: END OF AN EXPERIMENT
Bahrain's 20-month experiment with con-
stitutional democracy came to an abrupt end this
week when Emir Isa, the ruler of the Persian Gulf
island, dissolved the National Assembly, which he
had recessed two months ago because it was
dragging its feet on a tough law-and-order bill he
wanted passed. The dissolution was justified on
the grounds that the assembly had worked against
the national interest and had become subject to
the manipulation of leftists.
Prime Minister Khalifa al-Khalifa, the Emir's
brother, subsequently pledged new assembly
elections, but the ruling family apparently does
not intend to give the experiment in democracy
another try in the near term. The constitutional
provision requiring new elections within two
months of the legislature's dissolution was
suspended by the ruler.
Page 15 WEEKLY REVIEW Aug 29, 75
Emir Isa's move culminated a carefully
orchestrated plan devised by the Khalifas to rid
themselves of the recalcitrant assembly. It was set
in motion several days earlier by a roundup of left-
ists and the resignation of the Prime Minister.
Khalifa was reappointed hours later and proceed-
ed to form a new government, the Emir having
accepted his "condition" that the assembly be
dissolved.
Most ministers,, including those of interior,
defense, finance, and foreign affairs, retained
their posts. In a move to suggest action on press-
ing social and economic problems, four new
ministries were created. Earlier reports indicated
that the government plans to announ':e a series of
social welfare measures in an effort to secure
popular support in the wake of moves against the
assembly.
There has been no public reaction to either
the dissolution or the roundup of leftists. The
arrests were presumably made to forestall agita-
tion against the diss-.!:::1'on. Leftists were caught
off guard by the government's move, and for the
moment they are more concerned about evading
the security forces than with organizing
counteraction. Students may demonstrate when
schools open in the fall, but most Bahrainis seem
indifferent to the demise of the parliament.
When the Emir granted a constitution in late
1973, he expected that the assembly would be a
docile participant in the new arrangements.
Bahrain's legislators took their responsibilities
seriously, however, and resisted the government's
efforts to have its way.
The Emir's sudden move to dissolve the
assembly is the response to be expected of a ruler
accustomed to almost unlimited freedom of ac-
tion. The government's justification for rounding
up leftists exaggerated their subversive threat.
deteriorated.
ere is little evidence that
the immediate security situation was cause for
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-~ " African economy. On the other hand, the
fr'Ovambo tribe makes up almost half of the pop,.
ulation, but Ovamboland, situated along the
Angolan border, has inadequate resources.
Ovambos provide most of the unskilled labor for
the mines.
Pretoria apparently reasons that fears of
Ovambo domination will motivate delegates
Prime Minister Vorster from the smaller tribes to back tha whites in
voting for a federal system that will perpetuate
the present ethnic homelands. Although the
Ovambos theoretically might control a pop-
NAMIBIA: CONSTITUTIONAL TALKS ularly elected central government, the tribal
leaders who will go to the conference actually
A constitutional conference on the future want maximum autonomy for Ovamboland.
of Namibia (South-West Africa), sponsored by
the South African government, opens in Wind- A federation might involve no more than
hoek, the territorial capital, on September 1. cosmetic changes in South Africa's policy of
South African Prime Minister Vorster claims separate development, which has long incurred
that the delegates, representing most of the ter- international censure. Although some of the
ritory's 12 ethnic groups, are free to choose any "petty apartheid" rules that Pretoria has applied
form of government for Namibia-including in the white sector of Namibia have been li'rted,
independence for the whole territory as a uni- Vorster has not proposed to abandon the basic
fied state. The make-up of the conference, how- discriminatory measures that have kept non-
ever, presages the eventual emergence of a loose whites from advancing in the territory's modern
federal system that would maintain white industries.
control of the territory's major mineral
resources. Inside Namibia, the most articulate opposi-
tion to separate development has come from the
The delegates to the conference have been South-West African People's Organization,
chosen indirectly by legislative or advisory which wants Namibia to have a unified, pop-
bodies that have been formed for every ethnic ularly elected government. The People's Organ-
group. A few of the legislative councils for non- ization, whose membership is predominantly
white groups have been popularly elected, but Ovambo, is the only Namibian nationalist group
even the elected bodies are dominated by old- recognized by the UN or the Organization of
line tribal chiefs who usually have gone along African Unity. Its foreign-based guerrillas have
with South African tutelage. seldom penetrated Namibian territory, but its
youth wing organized a highly effective boycott
The South Africans say that all ethnic of Ovambo legislative elections in 1973-the
groups in Namibia are to have equal standing in first r',:)ular elections to be held in Namibia. To
the conference, even though the groups vary offset the fiasco, South African administrators
widely in numbers and in their capabilities for held a new election in Ovamboland last January
autonomous existence. Some 9'),000 whites and achieved a 55-percent turnout of eligible
comprise only 12 percent of the population, yet voters.
the sector of the territory that is reserved for
whites includes much of the better grazing lands Vorster may have no illusions that the out-
as well as the rich diamond and copper mines come of the constitutional conference will be
that contribute substantially to the South acceptable to the UN. His primary intention is
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to show that there is no serious Namibian op-
position to separate development. If his case is
to gain credibility, the proceedings of the con-
ference must be publicized and any draft con-
stitution must eventually be submitted to a
freely conducted referendum. Meanwhile, South
African and tribal authorities must refrain from
the mass arrests of nationalists they employed in
1973 during the rOvarnbo elections.
Vorster's strategy has already been threat-
ened by the assassination of the Ovambo prime
minister on August 16. Although the identity of
the assas,1in is unknown, the deed has been ap-
plauded L )y several exiled leaders of the People's
Organization. Moreover, the principal chief of
the Herero ethnic group claims that agents of
the People's Organization are plotting his death.
The South Africans have reinforced their se-
curity forces in Namibia and arrested some
members of the People's Organization, but they
have not clamped down on the whole roup.
The new government in Dacca, which came
to power in a military-led coup two weeks ago,
appears firmly in control. There have been no
signs of significant resistance.
Within the army, which dominates the re-
gime, a power struggle between the young offi-
cers who led the coup and a faction of senior
officers seems to be easing, at least for now. The
senior officers, led by the army's number-three
man, Brigadier Musharraf, appear to have ac-
quiesced in the appointment this week of other
senior officers to the country's top military
positions. The appointments had been ad-
vocated by the coup leaders.
Musharraf, unhappy because the coup lead-
ers broke the military chain of command and
sought an influential voice in the government,
had been threatening to use force against them.
His apparent decision to back off probably re-
flects his uncertainty over whether he could
count on the loyalty of key army units and his
awareness that fighting within the army could
1.rovide a pretext for Indian intervention.
The power struggle in the ar,ny has made it
difficult for President Mushtaque Ahmed to
establish government policies., Mushtaque has
not taken any major steps in the economic
sphere; he is said to favor an increased role for
private enterprise and foreign investment.
So far, his government has been concen-
tfating on the problem of corruption. Tough
martial law . yulations have been announced,
in^luding one that empowers the government to
dea,' h7rshly with corrupt activities by past and
present government officials. A number of high
officials from the late president Mujib's govern-
ment and Awa;ni League party have been ar-
rested on charges of having illegally enriched
themselves.
The new government has continued to
make efforts to convince India of its desire for
friendly relations. The Indians have been par-
ticularly concerned that the regime's apparent
Islamic orientation-a departure from Mujib's
heavy emphasis on secularism-could frighten
many of Bangladesh's 10 million Hindus into
fleeing to eastern India. To reassure New Delhi,
Dacca has announced that Bangladesh remains a
secular state. But it is likely to remain interested
in improving relations with Pakistan, whose
friendship it views as necessary if it is to obtain
economic aid from the Islamic countries and
establish ties with China.
New Delhi is trying, at least for now, to
maintain good relations with Dacca. The Indians
have assured the new regime of their friendly
intentions and reportedly have banned anti-
Bangladesh propaganda in India. They have also
denied earlier rumors that they had reinforced
army units near the Bangladesh border. New
Delhi acknowledges, however, that it has
strengthened its paramilitary border security
forces as a precaution against a refugee exodus
from Bangladesh, should communal strife occur
there. India and the Soviet Union have given cle
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Fidel Castro with Raul Castro (I) and President Dorticos
The announcement of the partial lifting of
the US embargo so as to allow American sub-
sidiaries abroad to trade with Cuba received a
swift and favorable reaction last week in Havana.
Prime Minister Fidel Castro ce.ntinued to insist,
however, on termination of the embargo on
direct trade between the two countries as a
prerequisite to what he called "deep
negotiations."
Speaking to a news conference on the occa-
sion of Mexican President Echeverria's visit,
Castro made clear his desire to continue the
momentum in Cuban-US relations. He called the
muve a positive gesture that "implies an advance
tolvard the possibility of creating conditions that
will allow us to engage in discussion on an equal
basis and with dignity." Furthermore, he stated,
"We are willing to negotiate with the US with ab-
solute seriousness, frankness, and responsibility.
But we would not like to do so with a dagger at
our throat."
Even with the embargo still in effect, Castro
appears willing to countenance "negotiations on
how to negotia,_." He publicly acknowledged an
interest in preliminary discussions with official US
representatives, but he resurrected some familiar
themes concerning his government's likely
bargaining strategy. Castro indicated that Havana
intends to counter US demands for compensation
for expropriated American property with claims
for restitution for the damage inflicted by the
economic denial program. He also mentioned the
return of the US naval base at Guantanamo as a
problem that will have to be resolved.
Castro is in no hurry and appears confident
that he does not have to make any significant con-
cessions. He apparently believes Washington is
under more pressure than he is to make the next
move. Some in the Cuban leadership will view the
lifting of the third-country sanctions as primarily
an effort by the US to end its problems with
governments that have urged Washington to
allow local subsidiaries of US companies to trade
with Cuba. As a consequence, the most Havana is
likely to do of a concrete nature is to release a f,:w
US political prisoners.
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ARGENTINA: THE MILITARY PRESSES
The replacement of army commander in
chief General Numa Laplane and the reported
retirement from active duty of Interior Minister
Damasco as a result of strong military pressure
have defused %/et another crisis. A military revolt
has been ave'ted for the time being, but military
critics of the administration are in a much
stronger position. They may yet seek Damasco's
removal from the cabinet.
The new army commander is General Jorge
Rafael Videla, formerly head of the armed
forces joint staff and one of the leaders of the
group that pressed hardest for the changes. He
and others in the group are said to be more
disposed than other top officers to the idea of a
military take-over.
The appointment of Damasco, a 48-year-
old army colonel, to the cabinet earlier this
month sparked considerable unhappiness among
a number of top military commanders. Publicly
they claimed that their opposition stemmed
from the fear that Damasco's elevation would be
interpreted as military interference in the gov-
ernment. They also raised the issue of protocol
problems posed by the elevation of a colonel to
a position technically above that of a general.
Actually, Damasco's rise, supported by
Numa Laplane, raised other, more fundamental
problems for them. There was considerable
resentment of Damasco's prominent role in
forming the new cabinet-he directed the
process-end his failure to consult fellow of-
ficers. There was widespread anxiety that
Damasco, already a second-echelon presidential
adviser T'nd an opportunist long identified with
Peronism, was seeking to build an image of
indispensability, as the ousted Lopez Reg,a had
done before him. Top officers also regarded his
presence in the cabinet while on active duty as
linking the armed forces to a hopelessly inept
government.
Early in the controversy the army issued a
communique acknowledging the President's
legal right to name to the cabinet, an.officer on
active duty but dissociating the service from
active support for him. Despite this attempt to
paper over the problem, it became apparent that
the issue was important z~d potentially divisive.
A desire to preserve military unity may well
have been the reason even uncommitted officers
eventually joined the ranks of those who had
opposed Damasco and Numa Laplanp from the
beginning.
The military's strong stand against
Damasco and Nurna Laplane points up several
factors. Like it or not, the officers are inti-
mately involved in national politics. Moreover,
military conservatives have gained the upper
hand and thus are in an even better position to
exert pressure on the government, or even alter
or replace it. Indeed, most Argentines will prob-
ably interpret the military's move as signaling its
national decision-making.
General Numa Laplane
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Venezuelan congressmen applaud following their approval of a bill nationalizing the oil industry
VENEZUELA: AFTER NATIONALIZATION
On the same day that the oil nationaliza-
tion bill was passed by the Venezuelan Congress,
the government set forth its position on the
future of the foreign companies.
Mines Minister Valentin Hernandez
announced on August 21 that the large
operating concessionaires, Exxon, Gulf, Texaco,
Shell, and Mobil, will remain basically intact for
three or four years until a more efiicient
organization is developed. Petroleos do Ven-
ezuela (Petroven), the holding company estab-
lished by the government, will have overall
responsibility for directing and administering
the industry. Each company will come under
Petroven and will have a board of directors
composed entirely of Venezuelans.
After reversion, technical assistance con-
tracts to be negotiated with the oil companies
will allow foreign technicians to remain in Ven-
ezuela and willpermit additional personnel to be
brought in as needed to help run the industry.
These contracts will be of limited duration, pos-
sibly two years, but may be extended if the
government considers such action advantageous.
Caracas hcpes international marketing of oil will
continue unchanged between Petroven and the
present buyers, but Hernandez has 1noted that
negotiations on this issue are likely to prove
troublesome. At least initially, Venezuela will
need the oil companies' marketing skill, but the
companies are unlikely to be interested in
smoothing the way for sales of oil they no
longer own.
The government is allowing the oil in-
dustry, under Petroven, to operate as before in
order to ensure continuous production and thus
keep the workers from demanding benefits they
would be entitled to if the companies ceased to
exist. The government thus hopes to avert
strikes, such as those staged after the iron com-
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Aug 29, 70
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25X1
CHILE: WIDENING CRACK IN THE JUNTA
The friction between President Pinochet
and air force commander Leigh, a key junta
member, has become public. In an exclusive
interview published in the newspaper El Mer-
curio last week, Leigh said the government's
economic policies are having a greater adverse
effect on the poor than had been expected. He
also acknowledged that unemployment is higher
than had been estimated. The c cism is mild,
but it reflects both dissatisfaction with the way
the Pinochet government is handling the econ-
omy and Leigh's irritation that junta members
like himself are not being consulted on most
important policy decisions by Pinochet and his
coterie.
A recent example was Pinochet's unusual
gesture of meeting with a group of 20 labor
leaders for a lengthy private session to hear their
grievances. Leigh has general c-tersight respon-
sibilities in the labor sector, but on this occasion
he was evidently bypassed-a clear move by
Pinochet to extend the presidential presence to
this area also.
25X1 25X1
Readjustments of this nature would have
little real effect on the unity of thejunta, how-
ever. Pinochet's problems will continue, and
may even increase, as long as he arrogates to
himself powers that the other members, particu-
larly Leigh, believe should be shared by all four.
Pinochet can ill afford open discontent in the
junta; military unity is extremely important to
the survival of the government.
E_ I is week, however, the regime
took steps to tighten its internal security law by
imposing stiffer prison sentences for a newly
defined series of offenses. These crimes range
from inciting members of the armed forces to
disobey government orders to "sending abroad
false information aimed at disturbing consti-
tutional order." Since the military seized power
in 1973, several thousand Chileans have been
jailed under a less stringent version of this law.
Meanwhile, the government, concerned
about being suspended from the UN, is trying to
head off the anti-Chilean move that seems to be
recent talks with US Ambassador i-Jpper and
visiting USIA Director Keogh, Leigh was also
critical of policies directly linked to Pinochet.
Leigh's candid views will do little to im-
prove relations between the two men. Addi-
tional economic relief for the poor would ease
Leigh's concern and give him a sense of making
his weight felt. Scaling down internal security
measures-a move which the government says it
intends to make known shortly-would improve
Chile's poor international reputation.
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25X1
CANADA: LABOR MILITANCY
Despite rising unemployment, Canada is
getting no respite from labor's push for higher
wages. Rather than confront the unions directly,
Ottawa hopes to taKe the starch out of their
demands by letting the economic slide run its
course. In the interim, rising wage costs are
aggravating inflation, and Canada's in+Qrnational
competitive position is slipping.
Labor unions show no sign of moderating
their wage demands after winning record 15-per-
cent gains last year. This year, hourly rates are
up 19 percent, while labor productivity has
remained unchanged. In addition to cost-of-
living adjustments, the many small unions are
holding out for wage schedules similar to those
in higher paying industries and regions. Paper
mill workers in Ontario, for example, are press-
ing for a 42-percent increase over the next year
to bring hourly rates in line with those in other
basic industries.
Unions are backing their demands with
lengthy, disruptive walkouts. Strikes at pulp and
paper mills since mid-July have reduced
Canada's paper production capacity by 30
percent. Based on the number of walkouts to
data and the schedule of cotr:)ng contracts, time
lost from strikes this year will approach the
record 9.3 million man-days in 1974. From now
until the and of the ,,ear, contracts covering one
million workers-including railway, mining, con-
struction, and textile workers-come up for
negotiations.
The wage spiral has given a strong shove to
labor costs and inflation. Unit labor costs in
manufacturing rose at a 20-percent annual pace
in the first half of 1975-double last year's rate.
Canada thus suddenly finds itself facing one of
the worst inflation problems of any major
country. Industrial wholesale prices have moved
up 14 percent annually since the start of 1975,
and consumer prices have risen 9 percent. The
comparable US figures are 5.6 and 6.8 percent.
The wage spiral has already pushed hourly
rates in many industries above US !Giels-a
marked change from the early 1970s, when
Canadian firms enjo,!ed a 10-15 percent wage
advantage. The loss in competitiveness is partly
responsible for Canada's growing trade deficit in
manufactured goods. Since January, this deficit
has been running at a $9 billion annual rate, up
from $8 billion in 1974 and $700 million in
1970.
The rapid rise in unit labor costs, the
increasing frequency of strikes, and the general
atmosphere of labor militancy have made
Canada less attractive for foreign inv'stment. US
manufacturers have lost some of their en-
thusiasm for investing in a country where unit
labor costs have been increasing at nearly double
the US rate since 1970.
The government is reluctant to move
forcibly because of labor's poiitical clout in
Ontario and Quebec, provinces vital to Prime
Minister Trudeau's Liberal Party. To avoid
adding fuel to wage oemands, Ottawa is main-
taining its go-slow policy toward stimulating the
sagging economy.
It is also permitting the Canadian dollar to
drift downward to help compensate for the loss
in competitiveness. Since early 1975 the
Canadian dollar h;is depreciated 3 percent, and
most observers expect a further 3- to 5-percent
slump before the end of the year. This would
hike the cost of imported manufactures, but at
the same time it would cushion the impact of
sharply rising labor costs on Canada's inter-
national competitive position.
25X1 25X1
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I I
GUATEMALA: EYES ON BELIZE 25X1
Guatemalan officials are reportedly
beginning to think about military action against
neighboring Belize, formerly British Honduras,
in order to make good their historical claim to ac~?~l
that self-governing colony. Action is apparently M E X I C O e`% f
conditioned on whether the UN thlj fall issues a
resolution that the Guatemalans view as un-
favorable .~N-'?
7~7:
~' I - /~ I j,AN04
~~(elmopan z'1 ti~~
~Stann reek;
B E L I Z E CARIBBEAN
SEA
Menker f~
Guatemalan President Laugerud re ortedl Monkey River
believes that the UN will either order the British
to grant independence to Belize or, at the least,
instruct them to speed up the process. In view
of Guatemala's previous insistence that unilat- GUATEMALA
eral action in this respect woulu bs unaccept- logo de%'
able, Laugerud is said to fear that the Guate- fro? _ HONDURAS
malan military would be humiliated should it '~ 1 ?~
fail to take immediate action. s Belizean Proposal
L% Guatemalan Proposal
This concern apparently led Laugerud and r?
his top advisers early this month to draw up
plans for paramilitary operations in the area
south of the Monkey River. Guatemala report- 1
edly would agree to independence for Belize in
?Neu ..f,
exchange for this MEXICO a ELIZE
piece of I-ind, but Belize has MEX
refused to concede it. A negotiating session last NI- ,---_EM? C -1.--~ CAMBEANSEA
month among Guatemala, the UK, and Belize ?'?I~
ended in deadlock. The session was the latest in Cwi~ec N
a series the three parties have had over the past
year to try to settle the dispute. PACIFIC OCEAN
1, rode _
The Guatemalan army-and to a consider-
able ~ . I
extent the government-has staked its
5W395 e?75 CIA
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reputation on its promise to return Belize to
Guatemala. The Guatemalan constitution
recognizes Belize as part of Guatemalan ter-
ritory, and nationalistic fervor over the issue
runs high. Laugerud refers frequently in na-
tionalistic tones to Guatemala's historical claim
and is suspicious of British and Belizean inten-
tions.
The army's desire to move against Belize is
tempered by its appreciation of how limited its
ability actually is and by the realization that
even one or two minor incidents on Belizean soil
would set back prospects for a negotiated settle-
ment. The imponderable factor in the equation
is Guatemalan jingoism, which could lead to a
military adventure in defiance of good sense.
Reacting to economic setbacks, complaints
from commercial and industrial sectors, and
criticism from the press and proscribed political
parties, the Rodriguez government is mo"i:ig
slightly to the right. In recent weeks, private
business groups have made known their concern
regarding the deteriorating state of the economy
as manifested in lower foreign exchange earn-
ings, deficits in the balance of payments,
reduced re~erv's, and a decrease in foreign
investment.
To allay this concern, the government has
expanded incentives for petroleum exploration,
which had virtually ceased in the face of restric-
tive legislation. The government has also crit-
icized the former natural resources minister,
who was responsible for creating this problem,
and appointed a pragmatic, middle-of-the-road
director of national planning. It intends also to
replace leftist-oriented doctrinaire economists
and technicians who had created for themselves
a "malevolent role affecting all areas of the
economy and society."
The confusion in the Ministry of Com-
merce-a new minister has just been named fol-
lowing the resignation of two others-is being
attributed in Quito to the influence of leaders of
industry and commerce. Appointments below
cabinet rank also reflect a government effort to
meet the needs of business.
In another area, President Rodriguez has
made several speeches whose purpose apparently
has been to assure the public and to reduce
anxieties regarding his regime's intentions, In
these speeches, Rodriguez has stressed that his 25X1
goals are to eliminate the differences between
military and civilian attitudes and to establish
peace and harmony. At the same time, he has
denied that the military intends to create a
military state or to perpetuate itself in power.
Rodriguez' primary concern has been to
take the heat out of recent criticism of his
regime, and some of his actions should have this
effect. His moves also appear to be a tacit
admission that his government has not been able
to cope with major problems facing the country.
Rodriguez may also be trying to portray himself
as more democratically oriented in order to
build a following that will support his candidacy
in the event that he decides presidential elec-
tions should be held.
Any hopes that Rodriguez will respond to
pressure to move further to the right are likely
to be short-lived. No person or group thus far is
capable of removing the President by force, but
the political discontent brewing for more than
three and a half years may begin to boil in
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