WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000300020033-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 24
• Document Creation Date: December 22, 2016
• Document Release Date: March 1, 2011
• Sequence Number: 33
• Publication Date: July 25, 1975
• Content Type: SUMMARY

 Declassified in Part - Sanitized Copy Approved for Release 2011/11/08: CIA-RDP86T00608R000300020033-2
Secret
Weekly Summary
Secret
No. 0030/75
July 25, 1975
Copy N! 1387
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CONTENTS (Jul), 25, 1975)
MIDDLE EAST
AFRICA
The WEEKLY SUMMARY, Issued every Frida
m
i
y
orn
ng by the
Office of Current intelligence, reports and analyzes significant
developments of the week through noon on Thursda
. It fr
y
e-
quenVy Includes material coordinated with or prepared by the
O''ice of Ec
n
o
omic Research, the Office of Strategic
Ro
earch0 th
Offi
W
e
ce of Geographic and Cartographic
Research,' and the Directorate of Science and Technology.
,Topics requiring more comprehensive treat
ment and
`therefore published separately as Special Reports are listed
the
I
ont--'-
n
c
WESTERN
HEMISPHERE
EAST ASIA
PACIFIC
1 Middle East: Egypt Shifts Gears
2 Egypt-USSR: Breathing Spell
3 India: Parliamentary Approval
4 Angola: Now Cease-fire; Soviets
6 Persian Gulf: Failure at Jidda
7 Portugal: Goncalves at Issue
8 ita!y: Fanfani Falls
9 Spain: New Political Groups
10 CSCE: On to the Summit
10 EC: Leaders Meet
12 MBFR: Deadlock Continues
13 Multilateral Trade Negotiations
25X1
14 Argentina: More Cabinet Chan es
cuador: Payments Problems
17 Peru: Strikes in Arequipa
17 Br zil: Liberalization AttacD.ed
18 Pallima: Options on the Canal
19 Laos: Plodding Forward
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SECRET
MIDDLE EAST: EGYPT SHIFTS GEARS:"
`President Sadat this week turned ofi the
latest crisisi Middle East negotiations as
abruptly as he had turned it on the' week before,,
but. only after Israel underwent *a partial
mobilization of its Sinai reserves in response to
Egyptian warlike, moves. Sadat'sexcursion' into
brinksmanship frayed some nerves ' in'Israel and
elsewhere and exercised his, armed forces' alert-
ing procedures. He ,also raised, thon..left unful-
filled, Arab expectations' that he would force
the pace of negotiations 'toward a general with
drawal of Israeli forces from the occupied ter-
ritorles.
In a letter to the UN Security Council
.president on July 23 the day before the UN
force mandate In the Sinai was scheduled to
expire.-Egyptian Foreign Minister Fahmi
announced that Cairo had decided after all',to
renew the mandate for three three months. He cited
the Security Council's appeal earlier this week as
justification for Cairo's positive response. Fahmi
said,, his government "particularly 'notes" the
emphasis in the council's appeal on Lithe. impor-
tance of achieving, progress toward ,,peace and
considers. this' declaration a "proper' step corn
patible with" th
c
un
'
cil
s responsibilities. Last
e
o
week, Fahml had 'called on the, UN to live up to
its responsibilities-which he, never clearl
y
specified-before Egypt could renew the
mandate.
As tension developed through the week of
uncertainty over the UN,,'force,' Egypt .main
tained an alert posture among its' armed forces.
The alert went into effect on July 16 and was
apparently still being maintained after Egypt \
had announced its decision to renew the
mandate. The deputy director of Egyptian mili-
tary.Intelligence characterized the alert as a
precaution' against Israeli reactions to Cairo's
decision not to renew the mandate.
Israel also mobilized eeveral `thousand
reservists, b6it not 'until six trays after., Foreign
Minister..Fahmi's anno'uncer+eni on July, 15 that
"",Cairdhad,decided not to renew the UN mandate
In the SinO The provalling view in Tel Aviv was
SECRET
President Sadat
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that the Egyptian move was a pressure tactic to
force the pace of the negotiations rather than a
harbinger of military hostilities.
It was not until the date for the expiration
of the mandate drew closer without an Egyptian
agreement to renew it that Tel Aviv began to
have serious second thoughts. It then contended
that Egypt's military measures appeared to have
been planned well in advance of Fahmi's state.'
ment, and that, in any case, the "momentum"
of the Egyptian military activities rec~ uiredprecautionary Israeli military steps
EGYPT-USSR: BREATHING SPELL
The Soviets are probably breathing a little
easier after Egyptian President Sadat failed to
announce new steps against the USSR in his
speech of July 22, but they almost certainly
anticipate more troubles.
Prior to the speech, Soviet concerns
centered on three possibilities:
? Restrictions on Soviet naval use of
Egyptian ports would be increased.
? The remaining Soviet military advisers
would be expelled.
? Sadat would abrogate the Soviet-
Egyptian treaty.
SECRET
A major Pravda article on July 15 sun6med
up the defense of Soviet policy toward Egypt
and indirectly accused Sadat of undermining
Soviet-Egyptian relations.
In an attempt to head off any further
moves by Cairo, the Soviets early last week
implied they might be more fle>;;ble on
Egyptian debt p,iyments. Sadat has '>een
demanding that the USSR postpone rayments
due in 1975 on Cairo's military debt, which is at
least $1.5 million. The Egyptian firii,rrce min-
ister arrived in Moscow on July 22 to i!iscuss the
question; according to the Egyptians, lie went at
the invitation of Moscow.
Moscow may also be using its new proposal
on the Abu Tartur phosphates project to placate
Sadat. The Soviets had refused to provide
financing for the port development and railroad
construction necessary to develop the deposits,
but are now saying they are willing to lend over
$500 million at commercial terms.
The outcome of the finance minister's visit
will provide one clue as to how far the Soviets
are prepared to go in order to prevent a further
erosion of relations with Cairo. Some conces-
sions on economic issues may be in order, but
the Soviets are so dissatisfied with Sadat's for-
eign and domestic policies that they are unlikely
to consider major conciliatory moves such as
resumption of substantial shipments of arms.
SECRET
Page 2 WEEKLY SUMMARY
Jul 25, 75
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 SECRET
INDIA! PARLIAMENTARY APPROVAL
Parliament reconvened this week and the
large Congress Party majorities in both houses
overwhelmingly approved the month-old state
of emergency amid new signs that Prime ' Minis-
ter Gandhi does not intend to allow India's
political system to become again as free as it was
before her crackdown. The government has
taken additional steps to tighten its control over
foreign correspondents and , to discourage de-
that would approve recent executive ordinances
that have curbed civil liberties, granted the gov-
ernment powers to confiscate the property of
government business. The agenda includes bills
fiance of the recent'authoritarian move.
The parliamentary session-expected to last
one to two weeks-is limited to transaction of
persons evading arrest, and precluded resort to
the courts to challenge the state of emergency.
In her parliamentary presentation, Gandhi re-
fused to speculate on how long the emergency
would remain in force. She stated bluntly, how-
ever, that undor no circumstances would there
be a "return to the pre-emergency days of total
license and political permissiveness." ,
Opposition members-with the exception
of key leaders who were jailed last month-
attended the session only long anough to vote
against the 'emergency and to denounce
Gandhi's authoritarian moves, including the sus-
pension of parliament's normal rules of pro-
cedure.
There are rumors that Gandhi may ask
parliament for constitutional amendments: that
would institutionalize some of the emergency
powers she now exercises temporarily. Such a
move may be foreshadowed in statements by
Indian officials who claim the British parlia-
mentary system has not worked well for India.
A frequently mentioned alternative is a strong
presidential system like France's.
On July 21, the government imposed new
censorship rules that could result in the expul-
sion.of most foreign journalists. While the cen-
soring of news before, it is transmitted from the
country has been dropped, the government now
SECRET
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SEI;RET
ANGOLA
1Governments in the states
where political opposition is strongest-Gujarat,
Bihar, and Tamil Nadu-appear to be avoiding
direct confrontations with New Delhi that might
give the center a pretext for imposing "Presi-
dent's rule"-direct control from New Delhi-
over those states.
School officials have been ordered to pre-
vent anti-government activities by students re-
turning from summer vacation. In some univer-
sities, student elections have been postponed
indefinitely. The government has also delayed,
for at least six months, the state elections in
Kerala that were due in September. The Con-
gress Party lost a state election in Gujarat in
June and would have faced a serious challenge in
Kerala.
The Supreme Court will begin hearing oral
arguments against Gandhi's appeal on August
11, but the decision may not be announced
until tall. Even if the court rules against her, it
seems inrteasingly likely that the Prime Minister
will inskt on remaining in office. She could do
this legal; by amending the election law to
change, i'x post facto, either the basis for her
recent conviction for election violations in
1971, or the penalty-her removal from office.
25X1
After almost two weeks of fighting in
Luanda and the countryside, the National Front
for the Liberation of Angola and the Popular
Movement for thr Liberation of Angola agreed
this week to another cease-fire. The new agree-
ment will probably be no more effective than
earlier ones as the two groups struggle to be in
control of Angola when it gains independence
next November.
The Popular Movement now enjoys mili-
tary dominance in the capital. The Front has
only several hundred troops barricaded in an
industrial complex just north of the city. Under
the terms of the cease-file, these troops will be
allowed to remain there.
The National Front apparently has not
abandoned the idea of fighting its way back into
the city. A relief force that moved down from
the Front's tribal stronghold in the north has
skirmished with Popular Movement troops at
Caxito, some 40 miles northeast of Luanda.
The Portuguese made only half-hearted at-
tempts to stop the latest round of fighting, but
apparently have now decijed to take a firmer
stand, ostensibly to avert further bloodshed.
The Portuguese commander in the territory has
ordered his troops to establish a defense
perimeter around Luanda to protect it if the
National Front moves in from Caxito. The Por-
tuguese action wilt' in effect help protect the
Popular Movement's gains and convince the Na-
tional Front that the Portuguese want the Popu-
lar Movement to win.
Front Regroups
The setbacks suffered by the Front
prompted its leader, Holden Roberto, to make a
quick tour recently of its facilities in northern
Angola. His visit-his first inside Angola since
the insurgency against the Portuguese broke tit
more than a decade ago-was obviously designed
to boost sagging morale. Roberto is apparently
now back in Zaire, but may return to Angola in
the near future.
requires journalists tr) sign a pledge that they
will abide by extremely restrictive press "guide-
lines." Forbidden subjects include opposition
activities, references to the 6,000-10,000 pris-
oners jailed in the past month, and anything
that falls within the range of "unauthorized,
irresponsible, or demoralizing news items, re-
ports, conjectures, or rumors." There are some
50 foreign reporters in India; four, including
two Americans, have already been expelled.
Public opposition to the emergency pro-
visions has been slight. In some areas, under-
ground presses are beginning to publish papers
and handouts, but with little apparent impact.
Jul 25, 75
Page 4 WEEKLY SUMMARY
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 0--;4-;- -,4 f....., A-...,...J F...- D..1-.. 7n11 X11 mn4 ? ('IA ~noQ~Tnn~nQ~nnn4nnn7nn44 ')
The Front's defeats in recent months have
been partly because of its inability to match the
armsand equipment being supplied to its ad-
versary by the Soviet Union. Belatedly, the
Front is now receiving some additional Chinese
and other equipment from stocks held by the
Zairian army. Peking recently authorized Zaire.,
to release the equipment. So far, however, Zaire
apparently has passed on only modest quantities
of small arms and ammunition, and perhaps
some transport vehicles.
An Open Soviet Role
Recent substantial Soviet arms deliveries to
the Popular Movement and harsher press treat-
ment of the rival National Front indicate that
Moscow is playing a more open role in its sup-
port of the Popular Movement.
Moscow and its East European allies are
rumored to have made some direct arms ship-
ments to the Popular Movement in Angola, but
the Congo is the main conduit for Soviet arms.
The Soviet press has consistently accorded
special praise to the Popular Movement, but
until recently it avoided direct attacks on the
National Front and Angola's smallest group, the
National Union for the Total Independence, of
Angola. In the wake of the recent fighting in
Luanda, however, the press has charged that the
National Front Is a client of China and the US,
and has labeled it a "reactionary organization"
whose members are responsible for the death of
hundreds of people.
Moscow probably still has not written off
the prospect of a coalition government in An-
gola. With the Popular Movement now having a
clear military advantage, however, th.: Soviets
appear to expect that the Movement will have
the dominant role following independence.
No Solution In Sight
The transitional government has virtually
ceased to function. The Front has not yet an-
nounced a replacement for Johnny, Eduardo
Pinnock, its chief representative to the transi-
tional government, who resigned last week and
fled to Zaire. Portuguese officials apparently
hope that fighting can be averted long enough to
get at least the semblance of a transitional gov-
ernment structure functioning again. In the long
run, however, this solution is simply a return to
a formula that has already proven-to- be no
solution at all.
SECRET
Page 5 WEEKLY SUMMARY Jul 25, 75
25X1
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PERSIAN GULF: FAILURE AT.JIDDA
The foreign ministers of the Persian Gulf
states failed to agree on new steps to strengthen
cooperation on regional security when they met
in Jidda on July 16 during the Islamic confer-
ence. The outcome was surely disappointing to
the Shah of Iran, who has long been pushing for
an alliance of Guif states against outside inter-
ference and local threats to the status quo.
The Shah had been encouraged by political
developments in recent months to believe the
time was ripe to resume his search-begun In
1968-i`or. . a formula under which Iran could
play,. a eater peace-keeping role on the Gulf's
western shore. He believes the political systems
there archaic and susceptible to subversion.
Resulting political . instability, he fears, could
provide an opening for lnterference L y outside
powers in Gulf affairs.
SECRET
25X1
Page 6 WEEE v' SUMMARY Jul 25,76
Tehran' looked to the Jidda meeting to
produce
a statement in wh'~ch the, participants
!
would take a common position on the
desirability of limiting foreign intdrference in
the Gulf. The Shah had also hoped the ministers
conference on the security, question. Neither
w
s
goal
a
realized, ,although the ministers did
agree to coisult further.
The Iranians, are nevertheless portraying
the ,Jidda meeting in the best possible light
,
claiming as progress the fact that representatives
from\.:,all Gulf states met f the first time to
discuss common r ,or
25X1
There are, in fact, substantial differences
among the states. Saudi Arabia was probably the
main obstacle to rapid movement toward formal
security cooperation. The smaller Gulf states
probably followed its lead.
25X6
Iraq reportedly supported the idea of a
formal declaration, but one restricted to
assuring freedom of navigation in the Gulf.
Baghdad,does not favor the more comprehensive
approach being pushed by the Iranians. ~~
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PORTUGAL: GONCALVES AT ISSUE
The military regime in Lisbon is continuing
its efforts to put a government together, despite
a power struggle between moderates and radicals
in its own ranks and the open opposition of
moderate political parties. The military may try
to compromise by offering to reorganize the
government, but this would be only an
expedient and would not solve the country's
worsening problems.
the proposed reorganization would entail
restructuring the government to form an 11-man
directorate drawn from the present all-military
Revolutionary Council. The Revolutionary
Council-whose consensus rule has weakened its
decision-making capability-would be reduced
to playing a pro forma role.
Power would be further concentrated in a
three-man executive composed of President
Costa Gomes, Prime Minister Goncalves, and
security chief Otelo de Carvalho, presumably
representing the moderate, pro-Communist, and
left-nationalist factions within the council. The
executive would be assisted by two deputy
prime ministers-one military and one civilian-
to handle day-to-day administration problems.
Both nominees suggested for the two positions
are acceptable to the moderates; this may be the
quid pro quo for retaining the present prime
minister-whom the moderates want to oust--
and accepting his cabinet nominees.
Such an arrangement might settle surface
differences within the military, but the lull
would be temporary at best. The moderates are
unhappy about Goncalves' pro-Communist
policies and have been trying to bring about his
ouster by frustrating his efforts to form a new
cabinet. They have been counting on the back-
ing of a majority of the Revolutionary Council
in a vote, but the continuing stalemate and the
delay caused by Goncalves' difficulty in forming
a new cabinet may lead to an erosion of the,
moderates' support. Many officers would prob-
ably favor putting a quick end to the present
uncertainty by revamping the governmental
structure.
The 240-member Armed Forces General
Assembly on July 25 will consider the reorgan-
ization and possibly other proposals to restruc-
ture the government-some perhaps designed to
alter the balance of power-but Goncalves'
chances for political survival appear strong. An
attempt by moderates in the assemb!y to oust
Goncalves at this late date may well end in
failure.
The moderate political parties are unlikely
to be pleased with the proposed reorganization.
The Socialists, in particular, buoyed by the
massive turnouts at party rallies in Lisbon and
Oporto over the weekend, will be confronted by
the need to respond decisively if it appears that
the proposed reorganization means that
Goncalves will remain in office. The Socialists
used the rallies to protest the Armed Forces
Movement's new policy of establishing "direct
links" between the military and the people and
bypassing political parties. They also con-
centrated on criticism of the prime minister in
an effort to encourage moderates in the military
to reverse the government's continuing trend to
the left.
The Communists, on the other hand, will
welcome any solution that retains Goncalves-
the Communists' key to power-in the govern-
ment. They responded to the Socialist demon-
strations by taking advantage of their dominant
position in the ',pass media to publicize support
for Goncalves, while playing down the Social-
ists' success in organizing massive popular dem-
onstrations of strength. The Communist-dom-
inated propaganda division of the armed forces
general staff has also expressed its support for
the prime minister and his attempt to form a
new government.
The Communists are concerned, however,
about the wave of violence directed at their
offices and property in northern Portugal. Never
popular in the conservative north, the Commu-
nists have been tolerated until recently, but
incidents of attacks on party offices by angry
citizens are increasing daily. Although nc: single
political group has claimed credit for organizing
the attacks, thoy are becoming too nuriierous to
be dismissed as random outbreaks of anti-Com-
munist sentiment. F_ I 25X1
SECRET
7 WEEKLY SUMMARY Jul 25, 75
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ITALY: FANFANI FALLS
SECRET
Amintore Fanfani was forced out of Italy's
mast powerful, political position-secretary of
the Christian Democratic Party-when he lost a
vote of confidence at the party's national coun-
cil meeting this week. Fanfani's ouster amounts
to a first step by she Christian Democrats to-
.ward ; changing , their conservative , image and
improving relations with the Socialist Party.
Fanfani's power base came apart quickly in
the five week--z-,between the council meeting and
the regional and-, local elections last month. By
late last week, center-and leftist factions repre.
senting about 70 percent of the party had re-
signed---from Fanfani's executive directorate.
Prime Minister Moro and his faction did not go
that far, but Moro kept his distance from Fan-
fani by proposing a temporary "collegial". lead-
ership to guide tho party until its congress in the
Despite his isolation, Fanfani resisted pres-
accept his report to the council. In his report,
sure to resign until close to 60 percent of those
attending this week's maeting. voted not to
Fanfani blamed, Christian Democratic losses on
long-term political trends rather , than his
policies.
The Christian Democrats are still discussing
how to. replace Fanfani. If they rule out Moro's
plan,'Fanfani's successor will almost certainly be
a moderate who'.has reached an ac=commodation
with the Christian Democratic left-wing. The
left has consistently opposed Fanfani's policies.
Attention will now shift to the Socialists,
whose central committee is currently evaluating
the results of the Christian Democratic meeting.
By ousting Fanfani, ' the Christian Democrats
have met one of the conditions recently listed
by Socialist chief De Martino for his party's
return, to full participation in another center-left
coalition, still the only workable alternative to
Communist participation at the national level.
The Socialists are now limiting their role to.
"case by case" parliamentary support for Mi no's
cabinet of-Christian Democrats' and Re-
publicans.
In addition, the Socialists want program
matic concessions from the Christian Democrats
that would give any new government a more
leftist cast. Even those Christian Democrats in-
clined to move In.that direction, however, will
have trouble 'with De Martino's idea of bringing
the Communists directly into ti%e government's
policy-making process. Do Martino, although
ruling out government posts for the Communists
in an interview last week, called for formalized
consultations with them on the government's
program. Do Martino said he could not see how
his party could agree to participate in a govern-
.mast that leaves the Communists in opposition.
The Socialists evidently believe their party
will suffer electorally If it remains associated
exclusively with.the Christian Democrats. At the
same time, the Socialists fear they would be
dominated politically In any partnership with
the stronger ,.and better-organized Communists.
Do Martino's idea of getting all three parties
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committed to the same program is an attempt to
solve both problems.
The Communists are still preoccupied with
consolidating their gains at the regional and
local levels, but they regard Fanfani's fall as a
victory. The Communist electoral campaign was
a highly personalized one and directed against
Fanfani, whose political line was more explicitly
anti-communist than most other Christian
Democratic leaders. Fanfani's domination of the
Christian Democrats was seen by Communist
chief Berlinguer as a major obstacle to his "his-
toric compromise" strategy, aimed at an even-
tual rapprochement between the two parties.
SPAIN: NEW POLITICAL GROUPS
Prime Minister Arias' plan to permit con-
trolled political associations is being undermined
by opposition groups who are forming their own
organizations without the regime's sanction.
Last month, 16 center-left opposition par-
ties formed an alliance known as the Democratic
Convergence. The organization is reportedly
unwilling to apply for legal status, apparently
out of concern that ;o do so might tarnish its
opposition image.
The Democratic Convergence has the po-
tential to become a major political force if the
various parties within the alliance maintain their
cohesiveness and if partisan activity is permitted
in the post-Franco era. It will serve as a counter-
weight to the Communist-dominated Demo-
cratic Junta formed in Paris last year. The new
organization made its first public move last
week when it issued a manifesto calling for the
"re-establishment of popular sovereignty
through an essential break with the regime and
the beginning of a constitutional period."
Earlier this month a group of moderates-
most of whom had been associated with the
Franco regime at one time or another-formally
constituted a political action group under the
guise of a research corporation. By organizing as
a research ccrporation instead of applying for
status as a political association, the founders-
whose political credentials are impressive-have
signaled their disapproval of the limitations on
associations while maintaining a political voice
through their new organization.
The founders of the new corporation, to be
known as the Independent Studies Federation-
FEDISA-stated that its purpose is to siudy
political, social, and economic problems con-
fronting Spain. While admitting that they sub-
scribe to different political ideologies, all the
members believe that public liberties and com-
mitment to a democratic system are essential.
FEDISA should become an important pres-
sure group. The most prominent member is
Manuel Fraga Iribarne, currently ambassador to
London, who earlier this year decided not to
form a political association after the government
failed to provide sufficient guarantees of free-
dom of action. A number of other members still
occupy official positions, and many have oc-
cupied important government posts.
The Franco government reportedly is
angered over the organization of FEDISA out-
side the framework of the political associations.
The newly appointed minister of the National
Movement called the device of incorporation "a
fraud against the nation."
General Franco himself criticized dissident
political groups in widely publicized remarks
last week to a conservative organization of Civil
War veterans. His reference to the dissident
groups as "dogs who bark" seems certain to
hinder further Arias' efforts to encourage appli-
cations for political association status. In the
period since last January, when the statute for
political associations took effect, only five, pre-
dominantly rightist, political associations have
been approved by the government.
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The Western allies now believe that Mos-
cow may follow up the CSCE with renewed
emphasis on disarmament negotiations, possibly
including a new push for a world disarmament
conference. A high-ranking French Foreign
Ministry official said his government also
expects Moscow to begin a drive to broaden the
scope of the force reductions talks in Vienna to
include northern and southern Europe.
The meeting in Brussels on July 16-17 of
the European Council fulfilled the aim of the
nine EC leaders to conduct an informal ex-
change of views on major issues without giving
rise to public anticipation of dramatic decisions.
The largely unstructured format was not
without its limitations, despite the keen satisfac-
tion expressed by French President Giscard and
German Chancellor Schmidt. The perennial
complaint of the "Small Six" EC countries that
the "Big Three" dominate such proceedings was
implicitly reflected in comments to the US
embassy by a Dutch foreign office official. The
Hague was also exasperated by what it regards as
the lack of focus to the discussions, which the
Dutch blame on inadequate siaff preparations.
Economic issues relating to the world-wide
recession dominated the talks. As expected, no
Page 10 WEEKLY SUMMARY
Jul 25, 75
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Negotiators at the European security con-
ference reached agreement on military-related
confidence-building measures and several other
issues last weekend following the longest
negotiating session in the history of the confer-
ence. The agreements cleared the way for
acceptance of July 30 as the opening date for a
three-day summit in Helsinki.
Agreement on confidence-building meas-
ures was made possible when Turkey, under
increasing pressure from its NATO Allies,
dropped most of its demands. Compromises
were worked out that give Turkey partial
exemption from notification of maneuvers along
its southern and eastern borders. Turkish con-
cerns were also recognized by the inclusion of a
provision for separate notification of
amphibious and airborne maneuvers.
The Soviets held out until the last hour for
a mention of tha "irreversibility of detente" in
the final declaration, but agreed finally on a
slightly less pointed formulation. The Soviets
also tacitly agreed to allow Italian Prime Min-
ister Moro to sign the final declaration twice-
acting on behalf of the EC as well as Italy.
Attention has now shifted to Helsinki,
where 35 heads of government meet next week
to sign the declaration adopted by the confer-
ence. Each speaker is supposed to limit himself
to 20 minutes. In an order determined by lot,
British Prime Minister Wilson will be the first to
address the conference; General Secretary
Brezhnev will be thirteenth, and President Ford
is twenty-,ixth.
West European leaders are generally on the
defensive as the Helsinki summit approaches.
They hope to counter initial public skepticism
by focusing in Helsinki on the more positive
aspects of the agreement, stressing the potential
for expanded human contacts and increased
cooperation with the East. The UK, France, and
the US will also make coordinated statements
noting the applicability of the conference
documents to Berlin.
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Summit participants congregate in frontof the Royal Palace in Brussels ,
?
full conference would be.. scheduled for late
November or early December. Developments in Portugal and the outlook
for, a' large loan to the Lisbon government were
carefully scrutinized. It. was agreed that ;aid ~o
Giscard did not. ask the other EC members Lisbon French ;objections, notwithstanding
to support his proposal for an economic,; and would bo contingent upon evidence that itt
monetary' summit. of the US,.the, UK, France, intends to adopt a. democratic form.of:govern
West Germany, and Japan. The nine reportedly ment Portuguese Foreign Minister Antunes,
were in full agreement that consultations with however,' decided at the .last moment not ,to
the US and =Japan were necessary, but the keep his'appointmerit with the'.EC foreign:mih-
timing, level, and modalities were not discussed isters..
in detail. Moreover, some of the'smaller mem-
bers are insisting that the Community as an . . The.Council issued a declaration on the UN
entity should.be reresented.to ensure that their which, while not specifically mentioning Israel,
Schmidt and the Schmk.t is rd meetings in Discussion on raw material policy, and on
Germany on Julyi 24 and 25-26 respectively. As' an EC strategy for this fall's special session of
a result,.Schmidt, is' expected to express a Com? the UN General Assembly, apparently .facilitated
munity viewpoint when he urges President Ford the ;compromise "reflected in an agreement
to. pursue similar policy when they, meet in reached at this week's .foreign ministers council
Bonn on July 26 At the 'ministerial, . the Nine agreed on. troad
guidelines which will serve as the basis of tha EC
It ?ras agreed that Paris-which reported, presentation ' ?at the UN meeting. The paper
Washington's agreement-would take steps to. e4jpresents a balance : between those in' the
call a second preparatory conference of oil Community-notably =France-who wanted.to
producers and consumers early this fall: If all emphasize commodity', agreements :and:,those
goes well, and the differences which led to the who preferred. a policy aimed at stabilizing the
breakdown 'of the first meeting are resolved, the export earnings of; developing, countries.
major ;?ommon, ,policies were agreed upon, interests,.ari protected.. Official sources,inBonn'
.?'
alth,,ug!i, the ' discussions probably helped, clear understand that an agenda would focus prima".",*
the way for eventual: decisions. rily _on .coordination ; of demand management
policies.designee to restore economic growth,
A consensus was reached that all members, and thzt a c iscussion of international, monetary
except Britain, Italy,; and Ireland, ' would, questions-and the French effort to' restore?a
Implement, further, reflatio,iary, measures, Par--'' fixed exchange: rate system-would be sec
ticularly increased,public spending, early this c:ndary
E
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was intended to reflect EC concern over recent
Arab moves to exclude that country from the
UN. The leaders also agreed upon z declaration
to be made in connection with the CSCE
summit meeting.
The leaders devoted scant time to EC
institutional questions, although Prime Minister
Wilson took advantage of this first summit meet-
ing since the UK referendum on EC membership
to discuss Britain's new commitment to Europe.
Britain withdrew its reservation on giving the
European Parliament significantly increased
authority over the EC budget, thus enabling the
foreign ministers this week to sign the necessary
documentation and pass it to the member gov-
ernments for ratification. In another move
involving the Parliament, the leaders set up a
committee to prepare a report for the next
European Council in November on the prospec-
tives for direct elections of national representa-
tives to Parliament by 1978. The foreign min-
isters were also charged with providing reports,
by year's end, on the prospects for an EC
passport union and on formulating community-
MBFR: DEADLOCK CONTINUES
The force reduction talks in Vienna have
adjourned until September, with the 22-month
deadlock still unbroken. Western representatives
hope that once the European security confer-
ence is out of the way, some progress can be
made in the next round by introducing Option
III-the West's nuclear proposal.
The nuclear proposal calls for the reduc-
tion in Western Europe of some US nuclear
warheads and delivery systems in return for a
withdrawal of a Soviet tank army and as firm a
Soviet commitment as possible to a common
ceiling for both Warsaw Pact and NATO forces
in Central Europe.
The West continued unsuccessfully to press
for a Soviet reduction in ground forces and a
common ceiling. Although pressed by Western
negotiators to exchange data concerning its
forces, the Eastern side continued to regard such
an exchange as "premature."
The Soviets continued to criticize the
asymmetrical approach advocated by the West
and demanded that the scope of the negotia-
tions be broadened to include reduction of air
and nuclear forces. They also continued to insist
that all West European participants-not just the
US-accept limitations on their forces from the
outset of the agreement.
The only new development came when the
East agreed to discuss how to distinguish ground
from air forces, but no agreement was reached
on definitions. The subject will come up again in
September.
The real focus of Western activity was at
NATO headquarters in Brussels, where the Allies
are still engaged in detailed discussions-
expected to continue into August-of the
nuclear option. Two particularly sensitive issues
were raised: possible limitations on West Euro-
pean armaments, and the issue of restraining
Soviet nuclear systems in the area. Other issues
under discussion included:
? The nature of a Soviet commitment to
a common ceiling for manpower.
? The possible inclusion of air as well as
ground force manpower in the common
ceiling.
? The extent to w;iich these proposals
should be lir ked together and the appro-
priate time to introduce them at Vienna.
Some of the allies, particularly West
Germany, are extremely sensitive to any pro-
posals involving limitations on Allied weapons.
Bonn might accept some restraints jr) man-
power, but virtually rules out any limitations on
Nest German armaments. The UK insists that
the West require a Soviet commitment to a
specificall enumerated common ceilina.7-
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MULTILATERAL TRADE NEGOTIATIONS
A meeting of the trade r;agotiations com-
mittee in Geneva on July 15-16 set the stage for
substantive talks in the multilateral trade nego-
tiations now under way. Most of the indus-
trialized countries that are participating in the
talks were generally satisfied with their pace.
The developing countries, however, complained
that little has been done for them. Developed
and developing ccuntries alike agree that early
progress in the talks ir, most likely in the area
of tropical products, of principal interest to the
developing countries. As the emphasis in the
negotiations shifts from generalities to specifics,
however, progress in other areas will be more
difficult.
early progress could and should be made to
satisfy the demands of the developing countries
on tropical products. Another EC official said
he was satisfied that the Genova meeting had
been able to end without the EC having been
forced to take a position on interim agreements.
In Brussels, the US and EC agreed to maintain
close bilateral consultations.
Wit rking groups in Geneva conducting
negotiations on specific items will resume their
meetings in September. The groups will con-
tinue to seek a tariff-cutting formula and meth-
ods to remove non-tariff barriers to trade.
The aim of the meeting last week was to
review the work since last February of six nego-
tiating groups and to give it impetus before the
main committee meets again in December. To a
large extent, the tone was set by a US proposal
to identify those areas in which, short of an
overall agreement, accords on "interim concrete
results" might be reached. The developing
states, looking for preferential treatment, gen-
erally favored the proposal.
Japan and th-; EC, who with the US are the
major participants in the talks, did not reject the
proposal, but neither did they endorse it. Japan
and the EC have long had reservations over an
early agreement, but both apparently felt that
the US proposal caused them fewer problems
than an earlier US suggestion that participants
attempt to establish interim deadlines for talks
in selected areas. Both feel that reaching a final
balanced agreement will be difficult in any case
and that failure to reach agreements on interim
goals could deal the talks a serious blow.
In talks with US officials in Brussels after
the committee meeting, EC Commission Vice
President Soames expressed only guarded ap-
proval of the US proposal in Geneva. Soames
did say that, although he could not agree to set
specific target dates for early achievements,
Agriculture will remain the most difficult
topic, because the US and the EC still have
fundamentally different approaches. The US
wants to assure that negotiations on agriculture
are not isolated from talks in other groups so
that EC farm protectionism in fact becomes
subject to bargaining. The EC, fearful of attacks
on its agricultural policy, wants farm trade iso-
lated as much as possible from the negotiations
on industrial tariffs and non-tariff barriers.
Notwithstanding an agreement in May
between the US and the EC, which allowed
negotiations in the agriculture group finally to
get under way, fundamental differences are far
from resolved, and another impasse could de-
velop at any time.
The EC has also seized upon recent Soviet
grain purchases to promote their efforts to
incorporate into the trade negotiations the talks
on crain reserves now being held in London.
Commission Vice President Soames recently
questioned whether the large purchases, by
greatly reducing the amount of grai.i available
for stockpiling, do not vitiate US arguments for
separate, rapid action in the London grains
rou .
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national assistance for Its serious balanco.of.
payments situation. Labor has refused,to accept
that there is any need for decreased spending
and sacrifice. This week, labor loaders galled for
further periodic wage, Increases, as well as price
controls and the nationalization of foreign trade
activities and the banking system.
Despite the changes at the top, the admin.
Istration's woes continue. Critics have already
begun to charge that the newest welfare minis-
tar, Rodolfo Roballos, is also linked to Lopez
Raga. Moreover, work stoppages continue In
Buenos Aires and elsewhere. Striking doctors
wore dispersed by security forces; airline pilots
staged walkouts. In addition, the loft-wing
Poronist youth group has called for the resigna?
tion of Mrs. Peron, charging that her govern-
ment is not truly Peronist. Right-wing youth
replied by threitoning with death anyone who
"touches Isabel." 25X1
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ARGENTINA: MORE CABINET CHANGES
President Peron, whose own days in of f ico
may be numbered, was obliged to make further
cabinet changes this weak. She accepted the
resignation of embattled Economy Minister
Rodrigo, reviled for his support of economic
austerity and for h!s ties to the ousted Lopez
Rega. She also was forced to replace her now
press secretary and the man whom only two
weeks ago she had appointed to succeed Lopez
Rega as welfare minister. Both had boon linked
to Lopez Rega. Still more cabinet changes are
rumored, particularly in the ministries of labor
and foreign relations.
The latest changes, the second major shuf.
fle in two weeks, wore prompted by continuing
pressure from os,gimized labor, backed by the
military. The officers also moved to eliminate
the residual influence of Lopez Rega by insisting
on his departure !from Argentina; he quickly left
few Spain.
Named to take over the top economic
policy post is Pedro Jose Bonanni, a lawyer and
mcierate Peronist who 20 years ago headed
Juan Peron's Finance Ministry. He should be
generally accepted. It would be difficult to at-
tack him politically, given his Peronist creden.
tials. He has given no indication of his policy
Intentions, but further attempts at economic
austerity are highly unlikely.
The repudiation, of Rodrigo and austerity is
another political victory for labor, but further
undercuts the country's ability to secure Inter-
 25X1
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Qllito'S long-standing dispute with the Tex?
ato-Gull co11,0(t otn that produce-, pr,ictico!ly
.=11I of l_c.uador's oil will cause lower export
revenues this year. I'rogress is now being inarle
toward ending the dispute, but a .onIinuin!;
boom in imports is likely to result in a large
current ac.cotint deficit.
Oil shipments began to de':line in May
1914, when the government slapped on con-
sclrvation ceilings that forced iexac o Gulf to
reduce output from 240,000 to 210,000 barrels
a (lay. Technical difficulties will) tl,e Trans.
Andean pipeline and censor tiurn shutdowns
aimed at forcing policy changes led to further
cots in production. Consequently, oil shipments
clipped 18 percent in 1914 and an additional 29
percent in the first 11,11f of 1915, total export
earnings, which soared to $1,1 billion in 1914,
will slip to $I billion this year even if oil ship-
ments soon regain their earlier peak level.
the dispute renter," on Quito's nil tax
policy. Company officials m;iintain that the tax-
paid cost of $11 a barrel for Li uador': crm m in
The sanctions against Cuba will prob-
ably be addressed by the OAS delegates now
in conference in San Jose, Costa Rica.
Amendtmmts to the Rio Treaty--the official
business of the conference--should be com-
pleted within a few days. Mexico then hopes
to present a resolution designed to allow
OAS members "freedom of action" on rela?
tions with Cuba --a proposal that most of the
delegates favor. The final decision to deal
with the Cuba problem at San Jose has not
been made, but Mexico appears to have the
votes to push it through.
effect until last Week made it noncornprititive
with most crude oil front the Middle Last. Ie-
c.lininq tanker rites have reduced the shott?haul
advantage Lcuaofot had for its crude, trluch of
which goes to Caribbean to finer ins via the.
Panama Canal.
1e,x;lc.o-Gulf also has bec.ortte increasingly
disturbed because the government has failed to
pay both the ternaining $3 million duw on .1
25-percent equity purchased in the consortium
and ? fair share of operating costs, I aced with
this as well as the tax ,1m1 proclucticm.c.riiling
disputes, the consortium abandoned explora.
tion, postponed plans for opening new fields,
and delayed expansion of tlte. 250,000 - hatter
per day 1 ran, Andean pipeline, The govern'
ment's oil policy also discouiaged a consortium
of American firms f-unn conslrricting a pipeline.
,put to its concnssior- this year,
to force Quito to carte to teiMs, 14,x.iro.
Gulf shut down production for two weak s in
May and suspended operations indefinitely in
early June. At the same time, it offered to make
new investments totaling $165 million in ox-
change for More conciliatory polities. On July
9. the government Igtced to rill taxes by 43
cents per barrel; the consortit-nt demanded a cut
of at least 60 cents. Quito probably will male
adoPhonal confession', Soon because it cannot
afford a prolonged loss of oil revenues.
Int reared expenditures on economic de?
velopment and welfare will bring art v,.liriijIvd
38?psrcent lump in imports this year. Although
Quito has temporarily banned aulornnhil(? ill).
Potts and has restricted crc-'Jit financing of outer
purrhases abroad, it has a, oiclec1 severe curbs for
fear of hurling development programs allot aggra-
valinq inflatio'i. Lven if oil exports are promptly
resumed, a ctirrerlt m(ottnt deficit of nearly
$400 mullion is likely.
The conference as constituted now is
not empowered to act on this matter, but
the delegates can "reconvene" as an Organ
of Consultation immediately after the cur-
rent session ends. A few gove*nments prefer
further delay, but the riiood at San Jose
favors rapid movement.
Page l.6 WEEKLY SUMMARY
Because foreign reserves totaled only 4-974
million at the end of May. Quito will seek for-
eign capital to cover the deficit. It probably will
be forced to rely mainly oil comnlerc1?1I Sources.
A request for $1 billion of credits from Middle
Eastern governments has been ignored. F
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PERU: STRIKES IN AREOUIPA
A g0neral strike in the southern city of
/'rnquipa thi, past week led to sever.ll clashes
with the police and r.ausn(I the government to
dreron a state of olTlergt?ncy in Armluipa,
Moquegua, Tacna, and Prmo provinces and to
suspend constitutional guarantees.
I-our cabinet olinistrrs flaw to Arequipa - a
long-time center of anti?povr.rth enI oppo%ition--
to stick an accommodation with the workers.
Although they made .1 number of concessions,
the talks broke (town. 'Ilia press teports 50,000
workers went on strike. 'The quver0010n1's show
of force, however, caused the strike lc end
shortly allot the emergency decrees worn ini-
tinted. 'file basic issue-- inadequate wage in-
crease:, to compensate for price hikes resulting
ftom the termination of government subsidies
for important itOtns--clues not appear near
resolution, however, and labor unrest may
spread to other parts of Peru.
Worker dissatisfaction with the economic
decrees issued by Prime Minister Morales Ber-
mudet on June 30 is widespread. These meas-
ures were designed to combat spiraling inflation
and a growing budgetary deficit. The plan calls
for the reduction-and in some cases the re-
moval---of government subsidies on essential
agricultural and petroleum products, and for
wage increases to help offset the price hikes.
Labor groups, however, argue that the wage
increases are not commensurate with the price
hikes.
opposition, Morale, limilludet' prasprt strength,
togeth0r with his prospects for succeeding
Velasco as president, will eventually be weak-
0ned. The government's flexibility in last week's
negotiation; may in(Iicatr+. that he recogtll/es
that he must sock 50010 compromise with the
workers to avoid .1 confrontation that would
play into the radical oppocittoil's h,and.F_
BRAZIL: LIBERALIZATION ATTACKED
Conservative military opponents of Presi.
dent Geisel are exerting strong pressure to force
him to abandon his program of political liberal-
ization. No direct confrontations have occurred.
but during the past month security forces on
their own authority have accelerated their ar-
rests of communists and leftists, and a now
series of anonymous pamphlets attacking Geisel
personally has been circulated among high-
ranking officmcs.
About 100 leftist opponents of the regime
have been taken into custody in several states.
Despite the President's strict orders against
torture and illegal detention, some of those ar-
rested in Sao Paulo reportedly were initially
mistreated and held without the requ'red notifi-
cation being given wi.hin 18 hours attet arrest.
Meanwhile, right-wing publications linking gov-
ernment leaders to international communism
have appeared for the second time this year.
It is also quite probable that the commu-
nist General Confederation of the Peruvian
Workers was u..ing the strike to warn against
anti-conlrnunist tendencies in the government.
The confederation has long supported the gov-
ernment's policies, but the shifting of power
from Velasco to the more mode1atc Morales
Bermudez has caused it considerable concern.
Morales Bermudez' economic policy has
been a matter of controversy since he suspended
Velasco's use of economic subsidies to hell,
Peru's lower classes. If it provokes increased
The reasons for the resurgence of concern
at this particular time are not clear. Geisel has
not made any major political changes recently,
nor 11.15 he indicated that he plans to do so. It
may all be an effort to block the appointment
of a strong liberal to replace General Golbery.
the architect of moves to ease restrictions on
political activit
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extensive, conrrssions prior to lilt r onJusion of
.illy irealy,
The third option wrrrrlrl he to adroit that
the negotialiorls had broken Clown arid to move
toward a possibly violent ronfrrn'ation with Ili"
US, the author it ins would allow students to
make incursions into the Canal Lone, tak.. the
issue before the UN, and begin a vitriolic anti-
US propaganda campaign. 'This approach would
ent,iil serious drawbacks. Oiso-ders would ag-
gravate oxistin,t Peonnic: problems, and the
government alight have difficulty maintaining
control once anti-US activities had begun. 25X1
1orrijos seems to he trying to gauge the
mood of the public before tlecidirlg on a co-rrse
of action. 'lbus far, he has mixed moderation
with pressure but may decide later to rise, some
parts of each option.
The gelreral app"' s to want to continue to
negotiate. The pro government press stresses
thA 1or'llos is convinced this is the best path to
ohievc l''nama's aspirations. The US embassy
runs been told that Vice Presidc,_' Arturo Sucre
was removed because he opposed compromise in
thu negotiations. At the same time, however,
1orrijos has muddied the water by declaring he
no longer feels bound to protect the confiden-
tiality of the talks. Panamanian officials have
begun making public the details of the nego-
tiations. These statements could make it diffi-
cult for the Panamanian negotiators to retain
flexibility on certain key issues.
Torrijos may have decided that the possi.
bility of a new treaty in effect before 1977 is
very remote. He almost certainly believes, how.
ever, that considerably before that time he must
have a major accomplishment, such as the sign-
ing of a draft, to show the people. If he is
unable to produce such an accomplishment
through negotiation, he will more than likely
give serious thought to the possible benefits-as
well as hazards-of using violence
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thero is no firm evidence that opposition
to (;vise,, Is well organi>ed or widespread enough
to once a serious threat to the stability of his
government. f he attacks ,f.*larently are in-
tended to warn him that he ly already have
gone too far in promoting ',.,rralijalior-, fay
initiating a controlled dialogue with politician;,
Geisel departed substantially fror-1 the attitudes
of his predecessors. I-gosh indications of con-
tinuing strong opposition to these moves make
PANAMA: OPTIONS ON THE CANAL
Senior Panamanian officials, pessimistic
about the canal treaty negotiations with the us.
are discussinq possible courses of action.
General 7orrijos and his
advisers are concentrating on three options:
The first involves compromising on some
treat,/ issues in order to reach an agreement It- is
year, with the understanding that US rat.fi.
cation would probably be delayed until 1977.
The Panamanians believe this course would
retain the confidence of foreign investors but
by forcing the government to yield somrwhat
on key issues would incur opposition from c,'r.
tain student and other rationalist groups,
The second alternative, to draw out nego*
Iiations until 1977, would involve taking o
tough stance on key issues in the belief that the
US position would become even more vul-
nerable as a result of intensi`ied world-wide
criticism. it is felt that this international pres-
s;rre would force Washinr'on to gr.-nt more
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LAOS tODDlNO PORWARD
Communist efforts to assert more author.
tty-at toast on the national level-have slowed
down since the end of the communist central
committee meeting in Sam Noun in late June.
Communist Deputy Prime Minister Phoune
SI rasouth
!`that the "revolution" at Its present pace would
not be completed for two years.
In Vientiane, the communists are still
chlpp;ng away at the coalition facade, but there
have bon few dramatic changes In recant weeks.
The Joint Commission to Implement the Agree.
mont, which had boon active in negotiating
thorny cease-fire Issues and enjoyed equal status
with the cabinet, has been declared "unneces-
sary" and dissolved. The Joint National Political
Council, which supposedly sets policy guidelines
for the cabinet, , hiss postponed its summer to
Sion until October, Non-communist cabinet
ministers are virtually powrlorf, Defense Min.
istor Pheng Phongsaven, at ono time a force In
his own right, cannot oven sign chits authorizing
use of gasoline. Deference continues to be paid
Prime Minister Souvanna Phouma, however. and
his presence In the country may serve to inhibit
those communists who would like to push the
revolution with more vigor. ;
Reports from the countryside suggest that
the communists are moving more rapidly toward
setting up a traditional communist administra?
tive system in the provinces--particularly in the
south. Noncommunist police and military units
have been disarmed, communist officials
installed In local government posts, hair and
dross regulations promulgated, and In :omo areas
the Lao flag discarded. In the city of Thakhek in
the central panhandle, several reports indicate
that earlier this month several students and
Pathet Lao troops
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 Declassified in Part - Sanitized Copy Approved for Release 2011/11/08: CIA-RDP86T00608R000300020033-2
other young people were set busty if)jr-red when
Pathet Lao troops used gunfire to enforce an
order. In response to these measures, former
officers and goverr-rivenI officials hove been
slipping across the border to Iu nil,and. No
orq: nixed resistance Itos been reported, nor is it
likely to develop,
The Lao I,nrhaps in an effort to remove
foreign witnesses to their activities in the coun?
trysida--are elimina!ing all non?cornrmntist
diplomatic presenco outside Vientiane, The Thai
have closed three consulates b.,r:ausn. of rtn?
certainty about the safety of their personnel.
The French have been asked to cl,-se their three
small military missions in the provinces, and
Japanese and Australian voluntary agencies are
bringing their activities outside the
capital to nn
end. f ravel by fore!gners outside the capital hav
also been limited.
Pressure is building on non cont-nunisl
diplomatic missions in Vientiane, although they
are not being subjected to the kind of intense
harassment directed at the US embassy. All ,inn
finding it increasingly difficult to Transact
busines. with the government. In contras!, the
Soviets claim they have no problems. A pro-
communist Vientiane daily recently lumped the
Australians with the 'that as "obstructors of
progress toward national reconciliation." Leftist
students, who in the past have been intprrtant
now claim to t-e
"examining th~.f size of tr,r,:i n diplomatic rnis?
sloes." 25X1
SECRET
Page 20 WEEKLY SUMMARY Jul 25, 75
Declassified in Part - Sanitized Copy Approved for Release 2011/11/08: CIA-RDP86T00608R000300020033 2
 Declassified in Part - Sanitized Copy Approved for Release 2011/11/08: CIA-RDP86T00608R000300020033-2
Declassified in Part - Sanitized Copy Approved for Release 2011/11/08: CIA-RDP86T00608R000300020033-2