WEEKLY REVIEW

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Document Number (FOIA) /ESDN (CREST): 
CIA-RDP85T00875R001000080040-5
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RIPPUB
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T
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25
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December 27, 2016
Document Release Date: 
May 13, 2010
Sequence Number: 
40
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Publication Date: 
September 5, 1975
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REPORT
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Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 Top Secret Weekly Review Top Secret 25X1 Copy N2 665 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23 : CIA-RDP85T00875R001000080040-5 CONTENTS (September 5, 1975) ;The WEEKLY: REVIEW, Issued every Fridey morning by the 1 Office of Current Intelligence, reports and analyses significant 2 deveiorments o?she week through Wean on'Thursday It fre= 3 gtlently'nciudesmaterial coordinated with or prepared by the 'Research, ' Office t :St at th gi Office of Econt~mic; - ; e,: o : r e c Research, the Offlce of. Geographic; and, Cartographic .;: Research, and, the ,Directorate oF; Science; and Technology, MIDDLE EAST Topics requiring ,.,more ~ comprehensive '.troatmeat and AFRICA therefore publlshed'separately as Special Reports are. listed in,the contents. 9 WESTERN HEMISPHERE 11 12 EAST ASIA PACIFIC ILLEGIB Portugal: Goncalves the Issue Portugal-USSR: Plot Thickens Spain: Crackdown on Dissent East European Grain Crop Average 25X6 Egypt-USSR: Playing Tough 25X1 Peru: A New President Argentina: Widening Splits lion Papua New Guinea: Separatism 25X1 19 Nonaligned: On to Sri Lanka 20 Developing Countries: Payments Probh Comments and quer;as on the contents of this publication are welcome. They may be directed to the editor oUthtAURek~ Review, Declassified in Part - Sanitized Copy Approved for Release 2012/02/23 : CIA-RDP85T00875R001000080040-5 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 25X1 PORTUGAL: ISSUE STILL GONCALVES President Costa Gomcs' attempt to retain pro-Communist former prime minister Vasco Goncalves as armed forces chef of staff has been met by intensified efforts to purge Goncalves en- tire.iy from the government. Although Goncalves' antagonists-the Antunes group and the democratic parties-still hope to succeed by political means, a military confrontation with Goncalves' supporters remains a possibility. The announcement on August 29 that Gon- calves would be replaced as prime minister by Naval Chief of Staff Azevedo has prompted some negative comment from the anti-Goncalves forces, but they have reserved their heaviest fire for the appointment of Goncalves as head of .he armed forces. The apparent realization that such a step could increase rather than diminish Gon- calves' power and foster the growth of Com- munist influence in the armed forces has caused some key officers to close ranks behind the An- tunes faction. In addition to the commanders of the central and southern military regions, who were among the original signers of the Antunes document, such political fence-straddlers as security forces chief Carvalho, Army Chief of Staff Fabiao, and even Air Force Chief Morais da Silva have now attested tc the undesirability of confirming Gon- calves in his new position. The support of F ch important military figures has given a strong boost to the :Lntunes group, which ;tas been pursuing a joint strategy with the Socialist and Popular Democratic parties to force Gonsalves out peacefully. The dissident officers hope to outflank Goncalves by ger- rymande.ing the army and air force delegations to the armed forces general assembly meeting on September 5. The assembly is expected to revise the membership of the Revolutionary Council and, by implication, decide Goncalves' futu-e. The army assembly reportedly met for this purpose on Tuesday, and although the results of the meeting were not announced, press reports quoted well-informed sources as saying the vote went heavily against Goncalves. Although the air force chief of staff has publicly condemned the Goncalves appointment, there are conflicting reports on how the other air force representatives will vote. The navy earlier endorsed Goncalves' bid to remain prime minister, and its assembly, which is under Admiral Azevedo, is expected to give Goncalves another vote of confidence. Meanwhile, the Socialist and Popular Democratic parties have refused to participate in the Azevedo government as long as Goncalves remains in a position of influence. They have remained faithful to the joint strategy in spite of reportedly attractive offers of key ministeri?I posts. If the Antunes group fails to achieve its aims by political maneuvering, a variety of reports now suggest that they will resort to military force. Their mDst likely military strategy would be to join up with units in which they enjoy strong support, as Page 1 WEEKLY REVIEW Sep 5, 75 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 25X1 I government would be. in the Central Military Region, and progressively isolate ! )sbon and other strongly pro-Communist areas from the rest of the country. On the other hand, if the political efforts against Goncalves succeed, there is a good chance that the Socialists and Popular Democrats will agree to join the Azevedo government. It is tcn early o predict, however, just what the com- position and overall political coloration of such a PORTUGAL-USSR: PLOT THICKENS The Soviets are still wrestling with the Por- tuguese problem, trying to help their Communist friends in Lisbon even while they protect Soviet interests in Western Europe and in the inter- national Communist movement. Publicly, the Soviets are expressing solidarity with Cunhal, while they blame the Portuguese Socialists, the West Europeans, and such arch villains as China and the CIA for the crisis. In stressing the nefarious activities of outside forces, the Soviets could be laying a rationale either for the support they have already given the Portuguese Communists, or for a new effort by themselves and their Communist allies. It seems even more likely that Moscow is seeking to turn aside charges that they have in- terfered in Portugal by pointing a finger at the West. In all their commentary, the Soviets have taken care to refrain from using language that threatens or implies greater support for Cunhal. On the contrary, they have emphasized that the Portuguese should manage their own affairs. Still unanswered is what Moscow is actually telling Cunh: privately. Moreover, while Soviet commentary is perhaps more bearish on Cunhal's prospect- than the circumstances in Portugal would warrant, this may stem from the problems of following a fast-moving situation coupled with an inclination to prepare for a worse outcome. It does not necessarily mean that Moscow is taking a doom-and-gloom line with Cunhal. The propaganda front will soon get a new im- petus if Moscow goes ahead with plans to back up its calls for "massive solidarity" with the Por- tuguese Communists by staging a "solidarity con- ference" in the Soviet Union. Such an initiative would be a relatively easy way for the Soviets to ,.',how their "solid" backing for Cunhal and ensure that they and their allies speak with one voice on the sensitive doctrinal issues raised for the Com- munist movement by the Portuguese I Page 2 WEEKLY REVIEW Sep 5. 75 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 SPAIN: CRACKDOWN ON DISSENT The contradictions between Prime Minister Arias' public commitment to political liberaliza- tion and the government's turn toward tougher restrictions and controls are becoming in- creasingly apparent in Spain. The recent crackdown on terrorism and political dissent, in particular, has raised a gathering storm of protest That could test the cohesiveness of Spain's domi- nant political and military forces. The tough new anti-terrorist law, which took effect last week, imposes an automatic death penalty on anyone convicted of killing a member of the security forces or a hostage. Despite government denials that the law will be applied retroactively, some 20 terrorists awaiting trial are now more likely to receive the death sentence. Two Basque terrorists convicted last week of kill- ing a member of the paramilitary civil guard have already been sentenced to death. The verdict has been appealed, and Spain's supreme military court must reach a decision before the end of next week. The case is being compared to the famous Burgos trial of 1970 that became a testing ground between hard-liners and those who favor a liberal- ization of the regime. At that time six Basque terrorists were condemned to death. Franco commuted the sentences to 30-years' imprison- ment, but not before there had been strong protests from abroad and widespread demonstrations in Spain involving students, workers, and the church. More importantly, the Burgos affair revealed serious disagreements among various sectors of the power elite-the government, the military, and the church-over how the disturbances shou:;i be handled and what path Spain should follow in its future evolu- tion. The conviction of the two Basque terrorists last week had already sparked domestic and inter- national reactions: ? The Spanish Communist Party and the Communist-dominated Spanish Democratic ;unta have called for mass popular action to prevent the executions. ' There have been strikes and violent demonstrations in the 3asque provinces of Spain, resulting in one demonstrator being killed by police and several others wounded. ? Violent demonstrations directed primarily against Spanish consulates and businesses have also taken place in France, Belgium, and Portugal. ? The governments of Italy, Sweden, Portugal, and the Netherlands and several international organizations have asked Fran- co to intervene and commute the sentences. Meanwhile, provisions in the anti-terrorist law for closing newspapers that show sympathy for the terrorists, as well as the government's re- cent threat of legal action against papers spreading rumors about Franco stepping down, are likely to add fuel to opposition protests and may divide regime supporters. Editions of five of Spain's leading weekly newspapers were con- fiscated after the new law came into effect last week. Since then some political c-)lumnists have responded sarcastically by writing on arcane topics like "On the Subject of Alligators" or "Let Us Talk about Thailand." No visible cracks have appeared yet in Fran- co's power structure, but the strain imposed by the new law could be compounded by any publicity given to the recent arrests of military of- ficers for illegal political activity. Should the defense decide to focus international attention on the case, it could highlight important divisions in the armed forces and the government between hard-liners who oppose any political evolution and those who favor a gradual liberalization. Within the government, the tough approach has clearly been in the ascendancy recently. A sharp reaction to the anti-terrorist law or to the trial of the military officers, however, could lead to a more forceful stand by those, such as Prime Minister Arias, who advocate liberalization of the political system, who are seeking to improve Spain's image abroad, and who believe the only way to achiev- a smooth transfer of power is to begin now to ease political restric- Page 3 WEEKLY REVIEW Sep 5, 75 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 25X6 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 EAST EUROPEAN GRAIN CROP AVERAGE Eastern Europe's grain production will reach about 86 million tons and grain import re- quirements about 9 million tons, both close to the average of recent years. Because of poor harvest prospects in the USSR, Eastern Europe is looking to the West, mainly the US, for the bulk of its grain imports. By last week, Eastern Europe had contracted for some 4 million tons of US grain for this fiscal year. Last year, the US sold about 2.5 million tons of grain to Eastern Europe. Above-average harvests are expected in Czechoslovakia, East Germany, and Hungary, where major grain areas have escaped extensive weather damage. Heavy rains last fall limited planting of winter grains elsewhere in Eastern Europe, and subsequent planting of lower yielding spring grains has covered only part of the deficit. Yields were lowered this summer by floods and drought. Further reduction in corn yields in Bulgaria and fodder crops in East Germany and Poland may result if the drought continues. East Germany and Poland, usually the largest importers of grain, are likely to have higher than average requirements this year. Although the number of livestock is up only slightly over last year, reduced output of forage crops and poor pasture conditions point to a need for more feed grains than usual. The Czechoslovaks, also large importers, have privately estimated their grain im- port requirements at about the same as last year. Romania, normally a grain exporter, will probably require 600,000 tons of grain to replace flood losses. Bulgaria will probably require some corn and other feed grains because of a second year of drought, and Hungary is likely to import its usual amount of barley. O..^.!y Hungary will harvest enough brain to permit net exports, but ac unexpectedly poor wheat crop will limit exports to corn. Hungarian corn will probably meet about 500,000 tons of the total import requirements of other East European countries. The USSR usually supplies about one half of Eastern Europe's grain imports. This year, accord- ing to one report, Moscow has asked East Euro- pean governments to purchase all of their grain in the West. The request is unprecedented, but plausible because of poor harvest r rospects in the USSR and the current US embargo on grain sales to the Soviet Union. In addition to their own requirements, East Europeans may pick up grain for transshipment to the USSR or to replace domestic grain shipped to the Soviets. Yugoslavia is in the market for 500,000 to 700,000 tons of wheat. Neither our estimates nor Belgrade's statements show a domestic need for such a purchase. Page 5 WEEKLY REVIEW Sep 5, 75 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 MIDDLE EAST: NEW SINAI ACCORD Both Israeli and Egyptian !eaders are engaged in an intensive campaign to sell to their skeptical constituents the second-stage disengagement ag; eement the two parties initialed on September 1. For the Israelis, the worst is largely over; the Knesset ratified the agreement on September 3 by a 70-43 majority, and the widespread protest demonstrations during Secretary Kissinger's mis- sion have ceased. For Egypt, which has undercut its leading position in the Arab struggle for the next few years, the worst may be yet to come. Disengagement Terms The agreement commits the two parties to refrain from the use and even the threat of force for what amounts to an indefinite period. The agreement is stipulated to be in effect until superseded by another agreement, and it carries an open-ended call for annual extensions of the mandate for the UN buffer force. Egypt is openly committed to permit the transit of Israeli cargoes, although not Israeli ships, through the Suez Canal. An annex to the agreement-which, unlike the first disengagement in January 1974, has been made public-delineates zones on each side of the buffer zone in which Egyptian and Israeli forces will be limited to 8,000 troops, 75 tanks, and 72 artillery pieces. Weapons that can reach over the buffer zone to the other side's territory are prohibited in these limited arms areas. Within the buffer zone, which covers the strategic Gidi and Mitla passes, Egypt and Israel will each maintain an early warning station monitored by US personnel. The US will maintain three watch stations for the purpose of reporting unauthorized movements of armed forces. Egypt will gain access to the Abu Rudays oil fields on the Suez Gulf coast. Access to the area will be con- trolled by the UN, and no military personnel will be allowed in the area. The agreement was signed by military representatives of both Egypt and Israel in Geneva on September 4. Within five days of that date, the Israeli Prime Minister Rabin (r) and other labor Party leaders vote to endorse the accord Page 6 WEEKLY REVIEW Sep 5, 75 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 _ Declassified in Part - Sanitized Copy Approved for Release 2012/02/23 : CIA-RDP85T00875 R001000080040-5 two sides must meet to draw up a protocol for im- plementing the redeployments called for in the agreement. The protocol must be concluded within two weeks, and the agreement is to be fully implemented within five months after hat. Opposition to the agreement in Israel has been more strident than sizable. Despite acrimonious debate and open opposition from such prominent individuals as former defense minister Moshe Dayan, the government had little trouble in winning a majority of the Knesset over to support of the agreement. Public opinion polls also show lessening domestic opposition. During the final negotiations and since, Israeli leaders have condt d an intensive cam- paign to justify the agree6:tent and point out its advantages. The benefits of the close US-Israeli relationship that will result from the agreement have been emphasized, and "objective" military commentators have been enlisted to enumerate for the press the military advantages of the ac- cord. Defense Minister Peres and other officials have attempted to minimize the effects of Israel's withdrawal from the passes. The government's hard-sell is in large measure an effort at self-persuasion. Despite the expressions of support and the justifications, there is no elation in Israel over the agreement, either within or outside the government. It is looked on with resignation as an inevitability that, in light of recent US pressures, will bring less harm to Israel's long-term interests than would have resulted from a refusal to negotiate. The Israelis are aware that they will be under pressure to repeat the performan'?e with Syria, but their at- titude toward the Egyptian agreement makes con- cessions to Syria more problematical. Egypt Egyptian officials are using the same arguments to justify this agreement that they used for the first disengagement-that it is a military agreement that does not detract from, but in fact Page 7 WEEKLY REVIEW Sep 5, 75 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23 : gives impetus to, efforts to regain other Arab territories. The Egyptians are unable to hide-and not easily able to justify for the other Arabs-the fact, however, that this agreement is radically different from the first. Despite Egypt's claims that the accord has no political content, the agreement to renounce the use of force is in fact a political step by which Egypt effectively denies itself, at least for the next few years, the right to use the one means of leverage it has had with Israel. By thus taking itself out of the fray, Egypt also undercuts the other Arabs' ability to apply meaningful pressure on Israel. Whether in fact Egypt loses its ability to in- fluence Arab politics and to continue as a moderating factor in the Middle East will depend almost entirel,:? on who among the Arabs it can line up eithe. to endorse or at least to remain silent about the agreement. Saudi Arabia gave Egypt a considerable boost by acclaiming the agreement, during Secretary Kissinger's visit to Tai, as "a significant and im- portant step toward the final settlement of the Palestinian problem." Saudi Foreign Minister Saud announced that the Saudis were deeply ap- preciative of the US effort to effect a settlement. Much of the favorable impact of the Saudi endorsement will be negated, however, by the Syrian Baath Party's official denunciation of the agreement on September 3. Although the Damascus press had earlier charged t`tat the agreement would only increase Israel,* intran- sigence, Syrian brickbats had until the Baathist statement been few and directed at isr:.el and the US rather than at Egypt. The statement, issued after a party meeting with President Asad, con- demned Egypt's commitment to refrain from the use of force as a move that "freezes the Egyptian front" and "practically and contractually ends the state of war." The statement also condemned Egypt, at least indirectly, for ignoring past Arab in- Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 junctions against negotiating with Israel and for "weakening the march of Arab solidarity." The Palestinians have also been strident in criticizing the accord, although less radical elements have attempted to avoid direct attacks on Egypt. Palestine Liberation Organization leader Yasir Arafat has denounced the accord as an "American solution" and called for coor- dinated Arab action to thwart it. Arafat and other PLO leaders are obviously uncomfortable that their inability to benefit from negotiations leaves them more vulnerable to attack from radical Palestinians, and they are moving to cover their flanks. Soviets Negative on all Counts The Soviets are clearly unhappy with the new second-stage Sinai disengagement agreement. Not only have they decided to boycott the formal signing ceremony in Geneva, but they are also taking an exceedingly tough line against any UN participation there. Moreover, Moscow has weighed in with its first authoritative comments on the agreement since Secreiary Kissinger's trip to the Middle East began. The Soviets are predic- tably negative on all counts. A Soviet Foreign Ministry official told the West German ambassador in Moscow last week that, i!i ignoring the Syrians and the Palestinians, the new Sinai agreement "does not help at all" and serves only to "divide the Arabs further." He criticized the West Germans and other West Europeans for providing help to Secretary Kissinger. The Soviet official urged resumption of the Geneva conference as the best forum for reaching an overall settlement and conceded that, in the end, Moscow will probably "take no position one way or the other" on the new Sinai accord. The same message is being conveyF,,:4 by Soviet media. After a lengthy silence, Pravda, in a major commentary, belittled the new Sinai agree- ment, calling it "partial" and "limited in significance" and arguing that it does not bring a general political settlement any closer. The com- mentary zeroed in on the "complicati ?ig element" posed by the expected presence of US technical observers in the Sinai, claiming that effective observation of the cease-fire is already being provided b the presence of UN con- . tingent! Page 8 WEEKLY REVIEW Sep 5, 75 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 EGYPT-USSR: PLAYING TOUGH The Soviets have taken additional steps in their prolonged war of nerves with Egyptian Presi- dent Sadat. Moscow has abruptly canceled military training courses for Egyptian students Few Esvotians have been trained in the tical effect of the cancellation may not be great. Nevertheless, in taking the step at the eleventh hour, Moscow seems to be going out of its way to demonstrate its displeasure with Cairo. 25X1 One issue irritating Moscow is Egypt's deci- sion to permit minesweeping operations in the Port Said area by the US navy. The Soviet military attache in Cairo recently remarked that Moscow was "furious" over the decision and regarded the action as a violation of an agreement under which Egypt would not make Soviet-supplied military equipment available to a third state without Moscow's permission. According to Egyptian Foreign Minister Fahmi, the Soviets have formally protested this activity. The Soviets may find the US role particularly galling, since they themselves sought to under- take this venture last winter. At that time, Moscow publicly announced that, in response to an Egyp- tian request, it would sweep the port free of charge. The Egyptians subsequently denied privately that they had ever made such a request. In what may well be another aspect of the Soviet campaign against Cairo, an anti-Sadat manifesto attributed to the central secretariat of the Egyptian Communist Party appeared last month in a radical newspaper in Beirut. Tl.e manifesto, which presented a detailed indictment of Sadat's foreign and domestic policies, said that while the Communist Party did not have the overthrow of Sadat as a goal, it would seek to stimulate and organize opposition to his policies. Egyptian Prime Minister Salim recently confirmed that the document was drafted and circulated by some Egyptian Communists. Sadat The Egyptian Communist Party was formally disbanded in 1965, and its members joined the ruling Arab Socialist Union. It is not clear whether the party, which is illegal but has existed as a loose underground grouping, has formally reconstituted itself. It may be that Communist Party members, with Soviet encouragement, prepared the manifesto to threaten Sadat with the possibility of the party's re-emergence. If indeed this is the Soviet game, it has not rattled Cairo. Salim dismissed the manifesto as insignificant, say- ing Egyptian Communists are under control. Moscow's distaste for Sadat's policies, par- ticularly his increasing ties with the US, is so in- tense that the Soviets are willing to risk further restrictions on their remaining privileges in Egypt, particularly their naval access to Alexandria and its dockyards. Moscow must certainly realize that, in light of the success of the current disengage- ment talks, Sadat will be in a stronger position. The Soviets, however, have not burned all their bridges; for example, they have not engaged Page 9 WEEKLY REVIEW Sep 5, 75 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 ANGOLA: LISBON STILL TRYING With slightly over two months ' remaining before Angola is scheduled to become indepen- dent, the Portuguese are making a last-ditch -attempt to establish a new coalition government in the territory capable of assuming power on November 11. Lisbon's plans conflict with those of the liberation groups, however, particularly the Popular Movement for the Liberation of Angola, which appears determined to establish its own political and military predominance. A new Portuguese high commissioner for the territory was sworn in on August 30 in Lisbon and should arrive in Luanda in the near future to take up his duties. His appointment has been denounced by the Popular Movement and the National Front for the Liberation of Angola. Both groups have refused to recognize the collapse of the transitional government in which Lisbon shared power with the three liberation movements, although only the Popular Move- ment still has official representatives in Luanda. The new high commissioner will have broad executive, judicial, and defense responsibilities not assigned to his predecessor under the terms of the agreement Portugal signed with the libera- tion groups last January. The Portuguese formally suspended that agreement last week hoping to clear the way for the establishment of an "ad- ministrative" government in which the liberation groups would participate, but with diminished Jonas Savimbi UNITA Head authority. Such a government would only barely fill the political vacuum but, the Portuguese calculate, would be enough of a structure to assume political power and allow Lisbon to claim it had carried out its duty toward decolonizing the territory. The major obstacle to Lisbon's plan is the Popular Movement, which maintains that it alone of Angola's liberation groups has lived up to its responsibilities and that it expects to "assume total responsibility for governing Angola" on November 11. The Movement intends to gain military and political control over as much of Angola as possible between now and in- dependence so the Portuguese will be forced to 'dmit that it is the only group capable of running the country. The National Front and the National Union for the Total Independence of Angola have been preoccupied with maintaining their military credibility in the face of the gains made by the Popular Movement in recent weeks. The National Front announced from Zaire earlier this week that its troops have advanced to within 10 miles of Luanda. The Front reportedly does not plan to force its way back into the capital. Rather, it hopes that its military presence close to the capital will discredit the Popular Movement's claim of military dominance and force the Portuguese to overrule any opposition by the Movement to a renewed Front political presence in Luanda. The National Union is isolated in central and southern Angola. It is attempting to buy time to build its military capabilities by negotiating a cease-fire with the Popular Movement. In the final analysis, both the National Front and the National Union, to succeed, must main- tain enough politLal and military strength to con- vince the Portuguese and the Popular Movement that all three liberation groups must share respon- sibility in Angola's independent government. So far, however, the Popular Movement has the up- per hand and it may be too late to redress the Page 10 WEEKLY REVIEW Sep 5, 75 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23 : CIA-RDP85T00875 R001000080040-5 PERU: A NEW PRESIDENT After taking over the presidency last Friday, General Morales Bermudez has appointed the first civilian cabinet minister since the military took power in 1968, filled several other cabinet-level posts with his own supporters, and loosened restraints on the media and civilian critics of the regime. The President's actions thus far indicate an intention to continue many of his predecessor's programs, although the conduct of affairs will be more businesslike and less repressive. He is likely to seek a less rancorous, but still arm's length, relationship with the US. Morales Bermudez' accession to Peru's top post came after an extended period of dissatisfac- tion with former president Velasco's radical and often arbitrary exercise of power. The smooth seizure of the presidency clearly rested on careful planning and came only after all important military and national police leaders had declared their support. Morales Bermudez had been assuming more important decision-making duties since last February and had already obtained Velasco's blessing as his eventual successor. In the end, the former president's continued predilec- tion for personalistic rule, repressive domestic measures, and radical foreign policy actions ap- parently galvanized military support for a com- plete take-over. There has been no indication thus far that the more radical officers will oppose Morales Ber- mudez, and civilian reaction has been generally favorable. Some civilian political groups have publicly welcomed the change in leadership, and even the communist-controlled labor confedera- tion has declared itself in support of the new President. Certain leftist elements, however, are probably uneasy over Velasco's ouster, and the communist group's declaration may reflect more pragmatism than conviction. Nevertheless, for the time being, Morales Bermudez' broad military backing and his decisive victory over Velasco place him in a strong position to carry out his programs. The President's decisions to allow previously closed publications to reopen and permit ^ Page 11 WEEKLY REVIEW Sep 5, 75 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23 : CIA-RDP85T00875 R001000080040-5 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 deported civilian critics to return are a clear in- dication of his sensitivity to the military's con- tinued inability to attract needed civilian support. Although Morales Bermudez remains committed to Velasco'; goal of restructuring Peruvian society along socialist lines, his pragmatism and less ex- treme political views presage a more open and presumably more effective government. Another aspect of this approach may be seen in his appointment of a civilian economist as minister of economy and finance. This apparently reflects a conclusion that the economic expertise necessary to resolve the country's serious problems cannot be found in the armed forces. These moves do not signal a rapid return to civilian rule, but pragmatic and political reasons may dictate further increasing civilian participa- tion in national policy making. At the same time, Morales Bermudez' sensitivity to concerns of other officers, including more radical generals who supported Velasco, augurs a ainst a change in the military's basic ororams. ARGENTINA: WIDENING SPLITS The crises that have rocked Argentina recent- ly have weakened the unity of conservative Peronist groups that still profess loyalty to Presi- dent Peron. Politicians and labor leaders are attempting to preserve a strong image, but events of the past week demonstrate that this is only a facade. Peronist party leaders, elected in a conven- tion last week, are calling for a return to "consen- sus politics"-the dialogue with political allies that was begun by Juan Peron. The directive that is to accomplish this, however, contains no guidelines for reconciling groups that are openly antagonistic toward each other. In addition, the leaders ignore the fact that Peronists who disap- proved the party slate have organized a rival group called the "Peronist Affirmation." This appears to be the first time in Peronist history that any group has formally challenged the leaders without resigning from the party. Meanwhile, tensions within the Peronist labor movement-long the dominant civilian political force in the country-have been exacer- bated by the recent conflict between President Peron and the military over the appointment of an army officer as minister of interior. According to reliable press reports, the leaders of the two major union organizations, Casildo Herreras and Lorenzo Miguel, disagreed strongly last week on the issue of taking sides in the dispute and are un- likely to reconcile their differences. Although Herreras and Miguel have generally cooperated on important issues, their relationship is a con- fusing one since the organizations they head overlap each other in terms of political respon- sibilities. In addition, the future of both union bosses is in jeopardy because of their past ties to the now-discredited Lopez Rega and their inabili- ty to prevent price hikes and to curb rising un- employnent. 25X1 25X1 Their latest disagreement will probably be papered over publicly, but behind the scenes it appears that Miguel, who backed President Peron during her most recent confrontation with the military high command, has lost political ground to Herreras. A protracted fight could seriously weaken the movement by causing a collapse of union discipline. This latest flare-up is a further indication of the lack of organization cohesiveness that prevents labor as well as the military from exer- cising the leadership needed to cope with major political and economic problems. Although power passed to military and labor leaders two months ago with the downfall of Lopez Rega, they have been unable to work effectively with Mrs. Peron, are unwilling to oust her, and cannot agree among themselves on a course of a.-- Page 12 WEEKLY REVIEW Sep 5, 75 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 25X1 ECUADOR: SHORT-LIVED COUP The first armed effort to oust the three- and-a-half-year-old Rodriguez regime oc- curred on September 1 when a small group of senior army officers led by joint command chief of staff General Raul Gonzalez Alvear captured the presidential palace and held it briefly. The poorly conceived plan was doomed when navy, air force, and other army units did not join in with the small armored force supporting Gonzalez. The rebels failed to capture Rodriguez, who promptly began to marshal support in Riobamba, a hundred miles south of Quito. The rebels also inexplicably failed to secure key transportation and communication centers in Quito, thus permitting loyalist units stationed near the airport to rally a successful countermove. Several dozen officers and -civilian sycn- pathizers have been arrested, and Gonzalez has taken asylum in the Chilean embassy. Other op- ponents of the regime have gone into hiding in anticipation of a government crackdowij. Press censorship and a strict dusk-to-dawn curfew in Quito and Guayaquil helped maintain calm following the attempted coup. The loyalties of several troop commanders remained ambiguous at week's end, leaving open a small chance of further tensions and possible troop movements. Although there has been no other armed move against the Rodriguez regime, there have been periodic reports of plotting by conservative ,business and political leaders. Conservative back- ing for the rebel officerswas apparent in theword- ing of a communique issued by Gonzalez at- tacking the President for mismanaging the coun- try's oil resources and making other economic and political errors. The communique also pledged to abolish a recent 60-percent surtax on imports, carry out an economic reform program, and hold elections in two years- promises that echoed demands often heard from the conservative business community. Since the coup attempt, Rodriguez has begun to strike out at these critics of his government, Rebels temporarily occupy the national palace in Quito Page 13 WEEKLY REVIEW Sep 5, 75 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 particularly their spokesmen among the coun- try's civilian politicians. In his first public state- ment on returning to Quito on Monday, he charged that "treasonous and disloyal politicians" instigated the rebellion, obliquely recalling the concerted civilian plotting' that s..irfaced last March. Courts-martial are likely to be convened against those individuals-both military and civilian-who tried to oust Rodriguez. How these events will affect the government's disputed economic policies is a matter on which Rodriguez has not commented. He has always been fairly responsive to criticism, however, and had already begun moderating some policies several months ago. He will probably continue in that direction and may now make some cabinet changes in an effort to deflect further criticism from himself. A new minister of industries and commerce was appointed Ist month; now the ministers of finance and natural resources, the former a civilian and the latter a naval officer, appear to be handy scapegoats. The main ' thrust of government policy making- regarding petroleum, tuna fishing, foreign oil, companies and tuna boats, and foreign policy in genera,-is unlikely to change significantly. Page 14 WEEKLY REVIEW Sep 5, 75 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 MORI BUNDLE ,Y 13ax FO We r Foy- BEST COpy A VA IL ABLE Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23 : CIA-RDP85T00875 R001000080040-5 ILLEGIB Declassified in Part - Sanitized Copy Approved for Release 2012/02/23 : CIA-RDP85T00875 R001000080040-5 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: ASIA-USSR: WHAT ABOUT SECURITY? Soviet propagandists are turning more atten- tion to the need for a security conference in Asia similar to that recently concluded in Europe. Re- cent press articles have stressed the applicability to Asia of the principles agreed to at the Helsinki summit. thinkers who argue for a softer line toward Pek- ing so as to bring the Chinese back to the fold Not surprisingly, the principle the Soviets deem most relevant for Asia is that of inviolability of frontiers. A recent Izvestia article attacked Maoists and "revanchists" in Japan for favoring territorial revision and claimed that most Asian countries, including India, favor resolving frontier disputes by peaceful means. Moscow is under no illusions, however, about the short-term prospects for its idea. Mikhail Kapitsa, chief of the Foreign Ministry's By calling attention tote territoria disputes with China and Japan, Moscow, of course, has made it more difficult for many Asian nations to endorse the scheme. 25X1 lzvestia and Kapitsa both suggested that the Middle cast should be included in the area covered by an Asian security arrangement. This is a new wrinkle and may be nothing more than an attempt to reassert Soviet interests in the Middle East. In adding that region, Moscow in effect h;.; extended the area to be covered by collective security arrangements to the entire Soviet fron- tier. The renewed emphasis on Asian collective security is not only a logical follow-on to the European security conference, but it also appears part of a new propaganda campaign against China. The latest ?,?sue of the party theoretical journal, Kornmunist, carries a lengthy editorial ar- ticle on China intended to show that Mao has now institutionalized anti-Sovietism in China. The article warns against neutral or concilatory at- titudes toward China to counter wayward 25X1 25X1 25X1 Page 16 WEEKLY REVIEW Sep 5. 75 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23 : Declassified in Part - Sanitized Copy Approved for Release 2012/02/23 : CIA-RDP85T00875 R001000080040-5 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23 : CIA-RDP85T00875 R001000080040-5 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 PAPAU NEW GUINEA: SEPARATISM Two weeks short of independence on September 16, Papua New Guinea is already threatened with schism. The announcement of secession by Bougainville separatists on September 1 illustrates the deep-seated divisions that will plague the new nation. The separatists hope that the announcement will underscore their contention that the copper- rich island, which contributes heavily to the cen- tral treasury, is not getting its share of central government development funds. Few workers stayed off the job on the proclaimed in- dependence day, however, and celebrations were orderly. Authorities in the Papua New Guinean capital of Port Moresby are taking a relaxed view of the Bougainville situation in the belief that it will blow over. Central government offices in Bougainville remain open, and the island police are still under central control. Although Bougainville independence lacks island-wide support and one leading separatist admits that the goal of being a separate state is a long way off, the breakaway movement is better-defined and better-led than similar groups elsewhere in the country, such as the one in Papua. As a sop to local sentiment, Bougainville was granted provincial status last year. No other region in Papua New Guinea has comparable status, and it has given the separatists added ex- perience in handling island affairs. So far, the separatists have stopped short of any action that would impel the central govern- ment to intervene. The separatists contend, however, that the giant Bougainville Copper Limited must come to terms with the new "independent government." The separatists are confident of union leadership support and may take a tough line with the copper combine. Any move to divert substantial copper tax revenues now paid to the central government would force Port Moresby to act. Bougainville has been unable to muster any international support. Australia, which has ad- ministered Papua New Guinea as a UN trust territory, has made clear i;s disapproval of the separatists, and a plea for Bougainville in- dependence to the UN trusteeship council was unanimously rejected. But lack of such support is unlikely to deter the separatists, who see prospects of self-sufficiency from copper profits. Some separatists may accept Chief Minister Somare's offer of further discussion of the island's grievances, but an early damping down of separatist activity does not seem in the off- ing. Page 18 WEEKLY REVIEW Sep 5, 75 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 25X1 NONALIGNED: ON TO SRI LANKA Fraternal secrecy fortified the facade of non- aligned unity, but bitter differences were aired at the meetings of foreign ministers at Lima. The controversy and confusion that permeated the closed sessions, and particularly the bad blood between the African group and a bloc of Arabs and same Asians, seem to promise further fireworks when Sri Lanka hosts the nonaligned summit next August. Public solidarity nevertheless seems likely to endure. The Arabs' style of ramrodding their own pet issues while cavalierly dismissing the interests of the poorer Africans has created deep resentment and evidently the beginning of some resistance. Syrian militancy on the expulsion of Israel from the UN failed at Lima, and this defeat of the hard line perhaps will stiffen the resolve of the Africans and other nonradical members to think positively about defending their positions in future non- aligned assemblies. The relative mildness-in the Third-World context-of the Document of Lima, however, only partly reflects a revolt by the more conser- vative in the movement. Discord within the Arab bloc itself may have been the strongest brake on the radical steamroller, and outside con- siderations served also to temper the hard line. Forward movement in the Middle East negotiations certainly affected the Israeli issue. In the economic sphere, signs that the developed world was beginning to accept some of the prin- ciples formulated by the have-not nations also had an impact. Algeria's standard-bearer of Third-World radicalism, Foreign Minister Bouteflika, for example, spoke at Lima in measured and conciliatory terms that suggested he anticipated the start of constructive com- promise with the industrialized nations. While the radical bloc withdrew or suffered losses on certain key questions, overall, the hard The opening session of the conference Page 19 WEEKLY REVIEW Sep 5, 75 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP85T00875R001000080040-5 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23 : line carried the conference. Extreme positions were maintained on most purely political issues, with heavy rhetoric launched against ir"'eriaiism, Zionism, racism, and other code words selected for the West and its allies. The cause of "evenhandedness" toward applicants for membership among he nonaligned suffered bad- ly. North Korea was enthusiastically admitted, while Seoul's bid was rejected. The Philippines were permitted to attend only in the category of "invited guest." Given the tight security that characterizes nonaligned meetings, specific points of dissent and friction will begin to leak only slowly and piecemeal as the nonaligned delegates review their experiences at Lima. An Austrian diplomatic guesi and frequent apologist for the nonaligned described the atmosphere of the conference as "wild" and asserts that the four new Asians- in- volved-Cambodia, the two Vietnams, and North Korea-will move the group another notch to the left. DEVELOPING COUNTRIES Payments Problems The payments position of those developing countries that do not export oil deteriorated rapidly in the first six months of this year. Changes in bank borrowing, aid flows, and reserve levels indicate that their current account deficit taken as a group increased by $4 to 6 billion. We estimate that the deficit in the last half of 1974 was about $16 billion. Because the current level of their borrowing is unsugtainable, they have already begun to cut back on imports. Thus the deficit in the second half of this year, while still formidable, will decline. Some debt rescheduling is inevitable, and exchange holdings will continue to dwindle. Preliminary statistics on trade alone indicate that the developing countries' deficit with the major developed countries increased $2.7 billion in the first half of 1975. Indirect evidence indicates that the current account balance deteriorated by roughly $5 billion. Based on data through May, we estimate the developing countries borrowed a net $5.5 billion from US commercial banks in the first half of 1975. South Korea and Mexico borrowed nearly $500 million each and Chile about $100 million. In- complete data for 1975 on developing countries' borrowing from commercial banks in London, the other major market, show a surge of new credits, perhaps amounting to $3.5 billion net. Owing to increases in concessionary lending, total aid flows to the developing countries rose by roughly y7 billion in the first half of 1975. OPEC accounted i'or most of the increase, growing from $3 billion for the whole of 1974 to an estimated $3.5 billion in January through June of 1975. Muslim countries received about 70 percent of the OPEC total. We estimate aid from the remainder of the world, mainly from OECD coun- tries, at $5.5 billion compared with roughly 15 billion in second half of 1974. 25X1 The rate of lending by the International Monetary Fund declined from last year's record pace. On balance, the developing countries withdrew $570 million from the IMF in the first half of 1975, compared with $1.1 billion in the se- cond half of 1974. The new oil facility accounted for 80 percent of the 1975 total. Foreign Reserves Fall Despite the increased aid and borrowing the developing countries' foreign reserves fell from $30.1 billion at the end of 1974 to $29.6 billion by May 1975. Aid flows are unlikely to increase sub- stantially in the second half of 1975. Any increases will probably be concentrated in those Muslim countries that received the bulk of OPEC aid in the first half. We expect export earnings to pick up moderately as raw material prices start to recover. A substantial increase in volume, however, will not happen until the economic up- turn in the developed countries picks up steam. The developing countries are under pressure to reduce the size of their current account deficits during the remainder of the year, if only because they cannot continue to borrow at the same rate from US and UK banks. Most of the cut in the deficit will have to be accomplished by reducing imports. Some governments have already taken steps to cut back foreign purchases. Page 20 WEEKLY REVIEW Sep 5, 75 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23 : CIA-RDP85T00875 R001000080040-5 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23 : CIA-RDP85T00875 R001000080040-5 Declassified in Part - Sanitized Copy Approved for Release 2012/02/23 : CIA-RDP85T00875 R001000080040-5