WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000300020036-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 24
• Document Creation Date: December 22, 2016
• Document Release Date: February 18, 2011
• Sequence Number: 36
• Publication Date: August 15, 1975
• Content Type: SUMMARY

Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020036-9
Secret
Weekly Summary
Secret
No. 0033/75
August 15, 1975
Copy N4
1387
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CONTENTS (August IS, 1975)
The WEEKLY SUMMARY, Issued every Friday morning by the
Cffico of Current Intelligence, reports and analyzes significant
dovoioprnonts of the week through noon on Thursdny. It fre-
quon,ly Includos material coordinated with or prepared by the
Office of Economic Research, the Office of Strategic
Research. the Office of Geographic and Cartographic
Rosoareh, and the Directorate of Science and Technology.
Topics requiring more comprohonolvo treatment and
theroforo published soparataly as Special Reports are I1stoc25X1
in the contents.
I Portugal: Military Split Widens
3 Spain: Now Problems for Arias
4 Turkoy: Arms Embargo and NATO
5 CSCE: An Effusive East
6 Yugoslavia: Slowing Economy
MIDDLE EAST
AFRICA 25X6
8 Angola: Luanda Quiet
9 India: Gandhi vs. the Courts
10 Rhodesia: Talks to Begin
EAST ASIA
PACIFIC
11 Cambodia: Sihanouk Marks Time
12 Laos: Quarrels with the Thai
13 Timor: Waves in a Backwater
14 Thailand: Tension on the Rise
WESTERN
HEMISPHERE
15 La Paz Meeting: Sea Nettles
16 Honduras: Leadership Vacuum
17 Cuban Trade: No Change
18 Peru: Government Repression
19 Argentina: Another New Cabinet
20 Panama: Torrijos Seeks Support
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^ SECRET
The retention of Vasco Goncalves as Prime
Minister and his announcement of a cabinet
composed mostly of radical military officers and
Communist sympathizers have forced an open
breach with less radical members of the Armed
Forces Movement. According to a document
released last week, the dissident faction wants to
oust the Goncalves group and return Portugal to
a more temperate, democratic, pro-Western
orientation.
The document, written by former foreign
minister Melo Antunes, and circulated to mili-
tary units throughout the country, denounces
the present regime for betraying the revolution
and the people's trust. It reporteily now has
been signed by 1,000 officers and has the sup-
port of 80-90 percent of the Portuguese mili-
tary.
Nine Revolutionary Council members
among the initial signers were dropped from the
council by the ruling executive and were
ordered to report for reassignment. They have
ignored the order. Two of the signers, the com-
manders of the Central and Southern Military
Regions, have retained their posts.
The loyalties of several key figures in the
Movement leadership could hav3 an important
effect on the outcome. President Costa Gomes is
said to have agreed with the document but to
have disapproved of its timing and the manner
in which it was presented. The influential
Admiral Rosa Coutinho has not indicated his
support. General Carvalho, the powerful secu-
rity chief, reportedly is searching for a com-
promise which would both preserve the unity of
the Movement and advance his own political
ambitions. He is said to have called for an
antiparty populist action plan to resolve the
political crisis and at the same time put an end
to the current wave of violence. The plan, which
places equal blame for the situation in Portugal
on the Communists, the Armed Forces Move-
ment, and the non-communist parties, is not
likely to be endorsed by the Antunes group and
its supporters, even though Carvalho too favors
the removal of Goncalves.
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Aug 15, 75
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The dissidents had hoped for Carvalho's
support, but they represent a formidable threat
to Goncalves with or without the security chief.
They have the strong backing of the Socialist
and Popular Democratic parties, as well as the
militant anti-communists who continued their
attacks on Communist Party offices in the north
this week.
Rumors that the dissidents had already laid
down an ultimatum callin for Goncalves'
resignation have been denied
25X1
The dissidents hope that
Goncalves will comply without a struggle, but
the Prime Minister and his Communist sup-
porters are not likely to relinquish their power
without a test of strength. The dissidents have
implied that they will use force if necessary.
Meanwhile, the Communist Party-which
has pursued a strategy of maintaining very close
ties with the Movement--has now charged that
the military is allowing a witch hunt. The party,
Page
which accused the military of indifference and
even complicity in the numerous incidents of
violence against its headquarters and officials,
has virtually been forced underground in the
populous north.
The gravity of the Communist positicn was
again reflected in a speech by party leader
Alvaro Cunhal on Sunday. Cunhal called for
changes in the new government to broaden its
support, and he renewed an earlier commitment
to work with all groups supporting the revolu-
tion. He stressed the need to overcome rifts
between civilian organizations and even called
for cooperation with capitalist countries, par-
ticularly those of the EC. Cunhal's concern was
echoed in Moscow by Pravda, which noted that
the Soviet Communist Patty-which has been
harshly critical of the Socialists in recent
weeks-now favors "unity of action" by all
forces of the Portuaue-P t, including the
Socialists. 25X1
Portuguese troops face anti-Communist demonstrators
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Arias and the military authorities have
tried to play down the significance of the recent
detention of some ]U-20 officers suspected of
membership in secret political Discussion groups.
Senior officers have stressed the determination
of the armed forces to exclude political activity
frorri its ranks.
The authorities have not yet decided how
to deal with the detained officers. To overreact
might widen the gap in the armed forces
between those who support Franco's policies
and those who would like to see some move-
ment toward democracy. But to be too lenient
might undermine the ban on political activity.
Summary dismissal of the union's ringleaders
from the service is a Wcely choice.
Meanwhile, Arias has seen his authority
and his policy of broadening political participa-
The Council of the National Movement last
month approved Solis' Union of the Spanish
People as the first fully accredited political
association. Although Solis nominally gave up
leadership of the group when he was named to
the cabinet, he remains its guiding force. This
fact and the Movement's conservative reputation
have kept democratic opposition groups from
applying for association status.
Solis also appears to have been behind the
recent decision to extend the pre tent Cortes
four months beyond its normal exriration date
in November. Postponemer t of p;trliamentary
elections until next March gives S;)lis and the
rightists more time to manipulate the election
laws to determine how the asso;:iations will
participate. Solis will also play a key role in
nominating the 100-odd national ::ouncilors of
the Movement who are deputies t-) the Cortes.
Thus the rightists have a better opportunity to
ensure their continued dominance of the Cortes
and the 17-member Council of the Realm,
whose complexion Arias had hoped to change
with his now-stalled program of political liberal-
ization. The council is authorized to advise and
clear all important actions of the future king,
and its president will, have a key role during the
period after Franco departs.
The delay in electing the parliament will
give Franco a chance to appoint a new council
president from nominations submitted by the
present council. The incumbent rightist
Alejandro Rodriguez de Valcarcel is close to
Franco and is eligible for reappointment.
SPAIN: NEW PROBLEMS FOR ARIAS
Political activity in the military has com-
pounded Prime Minister Arias' problems just
when his leadership is being challenged by Jose
Solis Ruiz, the recently appointed minister
secretary-general of Franco's National Move-
ment.
tion undermined by Solis. He and other rightist
forces have seized the political initiative. Forced
on Arias by Franco when the incumbent
National Movement minister was killed in an
auto accident in June, Solis has packed the
secretariat of the Movement with his rightist
cronies and has assumed some functions of
other ministers.
Aug 15, 75
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TURKEY: ARMS EMBARGO AND NATO
Six months after the imposition of the US
arms embargo, the capabilities of the Turkish
armed forces are declining, and Turkey would
have difficulty meeting its obligations as a
NATO ally. Ankara is trying to obtain spare
parts and materiel from Europe and probably
the Middle East, but efforts in this direction
have not had much success. Apparently -io
comprehensive plan has been drawn up by either
civilian or military leaders, who continue to
hope that the US Congress will reverse itself in a
new vote on the embargo.
The Impact So Far
Information on the immediate effects of
the termination of US military assistance has
been limited because of new restrictions on the
-iccess of US military personnel in Turkey. Also,
the impact appears to vary from service to
service.
The air force is the most vulnerable service,
despite the arrival of 18 F-104s purchased from
Ita!y and some spare parts from West Germany.
For example, 75 aircraft were reported
grounded for repairs one week this spring, com-
pared to an average of about 16 per week last
year. Flight operations, including training, have
been reduced considerably. There have been un-
confirmed reports of pending aircraft purchases,
but the only additional aircraft Turkey is sched-
uled to receive are 18 more F-104s from Italy
and two F-i04 trainers from West Germany.
The army is resorting both to cannibaliza-
tion and to reduced use of equipment to keen a
high percentage of major items operable
The army is
receiving limited quantities of parts and other
materiel under a West German aid program.
The navy has been the least affected of the
three services. Whatever spare parts are needed,
the Turks ei+.her have in stock, can manufacture,
or are purchasing elsewhere.
Cannibalization and Turkish manufacture
of small parts will not be sufficient to sustain
Ankara's military capabilities much longer.
Policy Reassessment
As one reaction, the Turks have begun to
reassess their defense policy. Ankara is at-
tempting to keep its problems with the US sepa-
rate from its relations with NATO as a wnole,
but it is having difficulty. Although the Turks
are not seriously considering a withdrawal from
NATO-no political leader has called for this-it
seems likely that their role in NATO will be
subjected to increasing scrutiny and possible
revision.
Any review of Turkish policy toward
NA10 is likely to be directly linked to the arms
supply question. The continuation of the US
embargo gives Turkey little choice but to turn
to non-US sources. Ankara prefers to acquire
arms from Western Europe and the Muslim
states in the Middle East, but it will examine all
prospective sources closely. In fact, Ankara has
given the go-ahead to a Soviet offer to demon-
strate two types of helicopters in Turkey this
fall.
The Turks as recently as last month assured
their NATO allies that they would do all they
could to meet their NATO commitments, but
added that increased support from the allies
would be required. So far, the West European
states have riot been forthcoming enough on
arms requests to suit the Turks. The West Euro-
peans are uncertain about the duration of the
US embargo, what Turke%' actually needs, and
the effect of the embargo on equipment
produced under US license. If the arms embargo
continues and their NATO allies fail to fill the
gap, the Turks may in th% long run decide at
least to follow the French or Greek example of
partial withdrawal from NATO.
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Brezhnev is on the Black Sea resting from
the rigors of Helsinki, but back in Moscow the
propagandists are hard at work interpreting the
CSCE agreements in ways that are congenial to
Soviet interests. The effusive Soviet media
coverage of Helsinki points to the MBFR talks
in Vienna as the next item on Moscow's Euro-
pean negotiating agenda. Not surprisingly, the
Soviets have given no sign that they will be more
conciliatory as a result of CSCE.
Soviet commentators are saying that the
Helsinki summit created a climate conducive to
ongoing disarmament negotiations, including
SALT. There has been little evidence that the
Soviets are planning any other major disarma-
ment initiative at this time, although they are
dusting off their world disarmament conference
proposal for display at the UN next month. The
commentaries have given no hint of what else
Moscow has in mind for its European diplo-
macy, nor is there any sign that the Soviets are
going to use CSCE to push soon for regional
conferences elsewhere.
The Politburo communique blessing CSCE
refers to the humanitarian exchanges in the
context of the "observance of the laws and
traditions of each country." This wording had
been specifically rejected by the West during the
negotiations and is not included in the final
document.
The Soviets are also taking the offensive on
the noninterference clause of the CSCE docu-
ment. They used it in Pravda on August 7 to
excoriate the EC for what Moscow argues is
Western interference in the internal affairs of
Portugal. This line is clearly intended to be
pre-emptive. Moscow has already shown its
sensitivity to allegations that it is materially
supporting the Portuguese Communists and the
radical elements of the Armed Forces Move-
ment. The Soviets undoubtedly anticipated that
the West will sooner or later claim they are
violating the Helsinki agreements.
Eastern Europe
The treatment of Helsinki by the East
Europeans has been equally effusive, with
Moscow's loyalist allies dutifully sticking to the
Soviet line. There have been enough differences,
however, to suggest the absence of a common
vision of what comes next. Each regime has
focused as much on its own needs and expecta-
tions as on the broader interests of the socialist
commonwealth.
East Germany, for example, has made clear
that security co- sid,)rations head its list of prior-
ities, and party chief l-fonecker has flatly stated
that the CSCE declaration on peaceful change of
frontiers does not apply to his regime "because
we have no border problems with our neigh-
bors." With an eye to their own western fron-
tier, the Poles also homed in on the border
question, asserting that the results of the
summit signify "once and for all" the rejection
of all territorial cle ims.
Warsaw and Prague hzive emphasized in-
creased economic contacts with the West. The
Czechoslovak media in particular have stressed
the "enormous importance" Prague attaches to
cooperation in the economic sphere.
Most of the East Europeans have been
notably skittish and defensive about humani-
tarian exchanges; media treatment of the freer
movement issue has generally been soft-pedaled.
The most serious concern over the dangers of
increased contacts has been expressed by the
East Germans, the Czechoslovaks, and the Bul-
garians.
Predictably, the Bulgarians have virtually
copied Moscow's output. Romania, marching as
usual to a somewhat off-beat drum, has stressed
the need to abolish blocs and to observe the
principles of state-to-state relations.
At Helsinki, however, Hungary's Kadar dis-
cussed provisions for humanitarian exchanges in
generally favorable terms. He subsequently
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Aug 15, 75
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indicated that Budapest would implement its
provisions when "the political situation im-
proves and we succeed in liquidating the rem-
nants of the cold war and lack of trust." There
is some speculation in Budapest that Kadar had
been designated to take some of the sting out of
the harsher line adopted by Moscow and its
other allies.
Yugoslav media have generally reflected
Tito's cautious assessment of Helsinki as "a
good beginning" and his warnings that the situa-
tion in the Middle East, the arms race, and the
existence of military blocs constitute major
threats to peace. The summit coincided with a
budding improvement in Yugoslav relations with
the West. Belgrade moved promptly and some-
what surprisingly to invoke the "spirit of
Helsinki" in a sudden bid to resolve its long-
simmering dispute with Vienna over the Slovene
minority in Austrian Carinthia.
Belgrade is broadening its economic stabili-
zation program but so far has been unwilling to
take stronger steps because of effects on em-
ployment and growth. Rapid inflation and last
year's record trade deficit with the West have
forced the Yugoslavs to impose increasingly
strict credit and import controls. The growth in
imports from the West dropped partially be-
cause of these controls: 16 percent in the first
six months of 1975, compared with a 60-per-
cent increase for the same period last year.
Industrial production also grew more
slowly in the first half of the year, contributing
to a 19-percent increase in unemployment in the
12 months ending in July. Moreover, the pro-
gram was unable to curb inflation, which is
increasing at a 25-percent annual clip as a result
of unbridled spending by the republics and
booming investment expenditures.
Recession in the West and the EC ban on
meat imports have cut deeply into traditional
Yugoslav exports to the West such as beef, tex-
tiles, metals, and wood manufactures. Exports
to the West declined 20 percent during the first
six months of 1975 compared with the same
period last year, and the trade deficit with hard-
currency trading countries reached an estimated
$2.1 billion-up 40 percent over the comparable
period last year. Remittances from workers
abroad and earnings from tourism have not in-
creased enough to cover the higher deficit. The
current account deficit had reached $220 mil-
lion by February.
25X1
Belgrade has secured enough credits to
maintain its foreign reserves at the level of two
months of imports, but credits are becoming
harder to get. Belgrade petitioned the Interna-
tional Monetary Fund in May to defer re ay-
ment of about $25 million until 1976.
the Yugoslavs claim to have covered at least two
thirds of the $2.7 billion they will need this year
to meet hard-currency obligations, including
debt service.
Belgrade is responding to its inflation and
balance-of-payments problems by tightening
controls on foreign trade and investment. In
June, tougher import restrictions were imposed
on 256 categories of investment and consumer
goods. Banks are being held responsible for proj-
ects they guarantee, and unfunded investment is
subject to criminal penalties. Legislation passed
in August requires a 50-percent deposit on non-
economic investment.
New measures will probably be added to
the stabilization program during the rest of the
year. Senior Yugoslav financial officials have
indicated, however, that the regime will con-
tinue to resist sharp cuts in imports because of
the regime's political interest in maintaining eco?
nomic growth and employment. Belgrade selec-
tively eased credit policy for the purchase of
consumer durables this month to help lagging
consumer goods industries.
The economic slowdown will continue this
year as the restrictive measures of June and
August take hold. Hard-currency earnings prob-
ably will suffer at least through the remainder of
1975. Exports to the USSR and Eastern Europe
are up this year, and the Yugoslavs are likely to
turn to CEMA countries for more of their im-
ports. 25X1
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ANGOLA: LUANDA QUIET
The battlcl for Luanda has came to a close
after almost a month of fighting in and around
the city. On Monday the National Front for the
Liberation of Angola, at the insistence of the
Portuguese military commander, withdrew its
last contingent of troops, leaving the city in the
hands of the Portuguese and the rival Popular
Movement for the Liberation of Angola. At the
same time, the forces of both major liberation
groups withdrew from Nova Lisboa, Angola's
second largest city.
Portuguese military officials showed un-
characteristic firmness in demanding the with-
drawals, largely because they had a major stake
in the outcome. A sizable cont;ngent of Front
troops had barricaded itself in an old fortress
just north of Luanda's port and petroleum
storage facilities. At Nova Lisboa, the fighting
had interfered with the planned evacuation of
some 30,000 whites to Lisbon.
What happens next in Angola is likely to be
determined by the outcome of the political
struggle in Lisbon. The Popular Movement,
which has close ties to radicals in the Armed
Forces Movement, is apparently considering
declaring Angola independent under its own
banner. To succeed, the group would need at
least the acquiescence of the regime in Lisbon.
It may not get this if Prime Minister Goncalves
is ousted. Anti-Goncalves dissidents in Portugal,
who apparently have the support of the military
in Angola, would prefer to see a return to
something resembling the now-defunct transi-
tional government established urider the inde-
pendence agreement.
The Popular Movement has begun a quiet
effort to assume political responsibilities de-
faulted by other liberation groups. On August
11 the Movement announced it was taking
charge of the Ministry of Labor and Social
Services, which was run by a representative from
the National Union for the Total Independence
of Angola when the transitional government was
functioning.
The fighting has created a massive refugee
problem that will have long-term social and
economic effects on the territory. Lisbon plans
to evacuate the entire white population-snrne
270,000 persons-by the end of October. It
clearly does not have the resources for such an
undertaking and will have to depend heavily on
international assistance. Many of the whites who
are leaving are taking with them technical skills
that Angola badly needs; few whites would have
the confidence to return even if a political solu-
tion were found.
Portuguese troops move into Luanda
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Large numbers of blacks also have been
uprooted by the fighting. Portuguese military
officials estimate that at least 15,000 blacks fled
to northern Angola following the heavy fighting
in Luanda last month. The refugee problem has
been further complicated by the return of some
200,000 persons to northern Angola from Zaira
since the transitional government was estab-
lished in January. They were drawn back by the
prospect of independence and the hope of re-
claiming traditional lands abandoned when the
insurgency broke out in the early 1960s.
The UN High Commissioner for Refugees
in Angola recently estimated that a proper
refugee relief program for the territory's
uprooted blacks would cost as much as $50
million. The money is not available in either
Angola or Portugal.
A decision this week by India's Supreme
Court is an irritant but not a serious reversal for
Prime Minister Gandhi. The court rejected a
request by Gandhi's lawyers that it immediately
dismiss her conviction by a lower court of illegal
campaign activities in her election to Parliament
four years ago.
Gandhi's attorneys maintained that the
lower court verdict should be disallowed be-
cause of a constitutional amendment approved
by Parliament last week that retroactively bars
challenges in the courts to the election of a
prime minister. Lawyers for the candidate she
defeated in 1971 argued that the amendment
violated an earlier Supreme Court ruling that
Parliament could not alter the "basic structure"
of the constitution. The court decided to
reconvene on August 25 to consider the con-
stitutionality of the amendment.
The disputed amendment also removes
from the court's jurisdiction several important
pieces of existing legislation, including provi-
sions for preventive detention, nationalization,
and land reform. It is one of several recent
moves by Gandhi to reduce the power of the
judiciary through the use of her party's over-
whelming majority in Parliament and its control
of most state legislatures. Other amendments
soon to be enacted or already in force give the
prime minister immunity from criminal or civil
proceedings and prohibit court challenges to the
state of emergency proclaimed in June.
India's judiciary has a reputation for
independence, and the Supreme Court has made
several efforts in the past to block moves by
Gandhi's government. She usually has thwarted
these attempts by having Parliament enact
constitutional amendments. She argues that
Parliament should have supremacy over the
courts because legislators represent a majority of
the people, while the judiciary speaks only for a
privileged minority.
Four of the five justices on the Supreme
Court panel that will hear arguments in the
current case have b-,en described by the US
embassy in New Delhi as the "most committed"
to Gandhi of the 14 on the court. A finding that
upholds the amendment barring court challenges
to her election thus would not be surprising.
Such a verdict could be based on an article of
the constitution that authorizes parliament to
amend "any provision" therein.
Even if the Supreme Court were to void
the amendment at issue, it could take other
action that would have the effect of invalidating
Gandhi's conviction. If the court fails her
completely, or if she fears that it may do so, she
can once again have Parliament take action to
assist her-possibly through the creation of a
constituent assembly that would make major
new changes in India's governmental structure.
25X1
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RHODESIA: TALKS TO BEGIN
Prime Minister Ian Smith and the black
Rhodesian nationalists have agreed to begin
settlement talks this month. An agreement
announced on August 13 shows new flexibility
on both sides, but neither Smith nor the black
nationalists appear ready to compromise on the
basic issue of transferring power to the black
majority.
Smith and leaders of the African National
Council agreed last December to a truce and an
early settlement conference, but they have since
wrangled over arrangements. Smith has insisted
that the conference take place in P;-,odesia,
while the black nationalists have claimed that
their exiled leaders might be arrested if they
returned.
The new agreement, as announced by the
Rhodesians, provides that:
? the initial meeting will take place mid-
way between Rhodesia and Zambia on a
bridge spanning the Zambezi River;
? at the meeting, one or more joint com-
mittees will be set up to formulate the
specific terms of a settlement;
? the committees will adjourn to
Rhodesia for detailed negotiations;
? after the committees have completed
their work, a final conference will convene
at a mutually acceptable site to conclude a
formal settlement;
? the governments of South Africa,
Zambia, Tanzania, Mozambique, nd
Botswana will ensure that the settlement
agreement takes effect.
These arrangements are similar to proposals
that South African Prime Minister Vorster pre-
vailed upon Smith to adopt when the two
leaders met in Pretoria last weekend. Zambian
President Kaunda's special aide, Mark Chona,
also visited Pretoria last weekend, then relayed
the Vorster-Smith proposals to President
Kaunda and black Rhodesian leaders in Zambia-
The rival factional leaders have not for-
mulated a common bargaining position for deal-
ing with Smith. Conducting the negotiations in
several joint committees will afford Smith
opportunities for playing off rival black leaders
against each other. Prolonged negotiations could
provoke the black nationalists to resume all-out
guerrilla warfare.
South Africa and the four black states that
have pushed Smith and he nationalists into the
present agreement can influence both sides,
however, if they continue the quietly concerted
efforts they began Iasi October. Their sustained
pressures might eventually bring black and white
Rhodesians to a genuine political accommoda-
tion. 25X1
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Aug 15, 75
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SECRET
CAMBODIA: SIHANOUK MARKS TIME
Prince Sihanouk may be having second
thoughts about returning to Cambodia soon.
According to an AFP correspondent, who cited
a reliable diplomatic source in Pekiry, the Prince
is deliberating on an invitation from communist
leaders in Phnom Penh to return to Cambodia at
a convenient time after August 1. The invitation
was reportedly delivered to Sihanouk, who has
been in North Korea since mid-May, by Foreign
Minister Sarin Chhak and Thiounn Prasith, an
official of the Royal Government of National
Union embassy in Peking.
The AFP report indicated that Sihanouk
would leave Pyongyang for China in late August,
but that he would not decide on a return to
Phnom Penh until he consulted with Chinese
leaders. In early August, Deputy Prime Minister
and Defense Minister Khieu Samphan sent a
message from Phnom Penh to Sihanouk wishing
him "great success" in his patriotic work but
failing to mention the Prince's return.
A recent NCNA item reported that Khieu
Samphan and newly named Deputy Prime Min-
ister for Foreign Affairs leng Sary will make an
official visit to China beginning August 15. They
may intend to meet with Sihanouk if he is back
in China by then.
If he decided to accept the invitation, ac-
cording to AFP, Sihanouk would visit Phnom
Penh briefly in September and then make an
official visit to several friendly countries. Diplo-
matic sources in Pyongyang have reported re-
cently that Sihanouk might attend the UN Gen-
eral Assembly session in September.
Sihanouk's hesitancy may also reflect his
concern with conditions in Cambodia and his
wariness at placing himself even temporarily
under the control of Phnom Penh's communist
Khieu Samphan (I) and Sihanouk
authorities. The Cambodian communists do
have some old scores to settle with Sihanouk,
but they probably view his international prestige
as a useful symbol of legitimacy and may want
to continue to use his foreign contacts.
Although the Chinese, including Siha-
nouk'5 old friend Premier Chou En-lai, may be
sympathetic to the Prince, Peking's desire to
maintain good relations with the Khmer com-
munists probably would preclude any Chinese
effort to secure pledges from Phnom Penh in
regard to Sihanouk's safety or future role in
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LAOS: QUARRELS WITH THE THAI
Despite frequent assertions that they wish Thai reactionaries. The charges appear baseless,
friendly relations with all their neighbors, the but the Lao have increased border security and
Lao have lately been going out of their way to forced the Thai to close their consulates. Several
pick a quarrel with the Thai. Relations are now skirmishes along the Mekong border have been
strained because of the arrest in Vientiane of reported.
two Thai assistant military attaches.
Lao police arrested the diplomats on f?.u-
gust 5 and held them without formal charge fur
nine days. A Lao government spokesman
claimed the police have irrefutable evidence that
the Thai were engaged in espionage activiCes.
The spokesman on August 14 said that the pair
would be declared personae non gratae an7, be
expelled.
Tensions have increased between Bangkok
and the communist-dominated government in
Vientiane for several weeks. A major irritant is
the presence in Thailand of several thousand
Lao refugees, -ricluding many formerly high-
ranking military and government officials. Com-
munist propaganda media have been trumpeting
accusations that these refugees are plotting a
return to Laos in cooperation with unnamed
The Th+i do not wish to see the disputes
escalate and almost certainly want to avoid an
eventual break in relations. Bangkok seems anx-
ious to avoid any sign of weakness, however,
and has remained firm on 'he detention of its
diplomats. The Thai expelled two Lao diplomats
from Bangkok in retaliation and have recalled
their ambassador in Vientiane "for consulta-
tions." Thai government officials publicly de-
nounced the Lao actions .s illegal.
The Lao communists will almost certainly
stop short of provoking a break in relations. The
Lao cannot do without access to the sea through
Thailand, and they want continued access to
Thai rice and other commodities. Nevertheless,
the Thai will find life difficult in Vientiane as
the Lao seek to limit Thai influence and activi-
ties. 25X1
Thai patrol boat cruises the Mekong spotting arms smugglers and illegal crossings from Laos
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SECRET
TIMOR: WAVES IN A BACKWATER
A coup staged by anti-communist, pro-
independence forces in Portuguese Timor last
weekend has upset Lisbon's plans for peaceful
decolonization of its Southeast Asian outpost.
Indonesia, which has made no secret of its desire
to absorb the territory, is ambivalent toward the
present state of affairs. On the one hand,
Jakarta sees a chance to turn events to the
advantage of pro-Indonesia forces in the colony,
but on the other it fears that the breakdown of
political stability poses a threat to security for
Indonesia.
Information about the situation in Timor is
sketchy. Members of the Timor Democratic
Union Party, the largest of the colony's three
political groups, reportedly moved against local
Portuguese authorities on August 9 and 10.
They occupied communications centers, the air-
port, and the police station and laid siege to the
military headquarters. They then delivered an
ultimatum to the government in Lisbon de-
manding immediate independence and the arrest
of members of the leftist Fretilin Party, the
Democratic Union's chief rival for power.
Portuguese authorities in Timor have been
trying to arrange negotiations with leaders of
various political groups and have ordered troops
not to fire on the dissidents.
clashes between rival Timorese
factions have occurred in and around the capital
of Dili, causing some casualties. Dependents of
MALAY SIA""r'
Pacific:
Ocean
Jakarta INDONESIA
Portugue e
Timor I'll
Indian
Ocean
Portuguese citizens in Timor are being evac-
uated, and some 300 have already sailed to
Australia.
For the past year, Jakarta has been operat-
ing a large campaign 25X1
'
s peaceful absorption
designed to assure Timor
into Indonesia. If the situation in Timor con-
tinues to deteriorate, Jakarta will be tempted to
move overtly. Indonesia's security chief publicly
warned on August 11 that Jakarta will not allow
a situation to develop in Timor that threatens
Indonesia.
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N SECRET
THL!;I.AND: TENSION ON THE RISE
The arrest of nine student and farmer
activists in northern Thailand last week has
prompted a new round of student protest rallies.
The students are demanding the unconditional
release of those arrested and a full investigation
of recent murders of several farmers.
The government has issued a statement
clarifying its reasons for the arrests--the charges
are kidnaping and arson-and is af`irming its
intent to see the matter through the courts.
Prime Minister Khukrit addressed the natioo in
an effort to dispel the notion that the arrests
presage a government crackdown on students
and other leftists. He premised a high-level
investigation of the murders.
This even-handed, low-key approach
appears to have kept the situation in hand. The
atmosphere in Bangkok remains tense, however,
and there is a growing pol'r;zation between the
public and Thai security officials on the one
hand and student activists on the other. Al-
though the government, at least in this instance,
clearly is not looking for an excuse to crack
down on the students, a provocateur from the
political right or left could spark violence.
The student movement, ridden by fac-
tionalism and chastened by public disenchant-
ment with student-provoked civil disorder, has
been quiescent in recent months. Partly to avoid
public attention, student radicals, in concert
with former leaders of the movement, have
shifted their attention away from political and
economic issues ;n the cities. Instead, they are
attempting to organize farmers as a means of
forcing Bangkok to pay greater attention to
rural problems. It is the membership of one such
farm organization, the Farmer's Federation of
Thailand, that has been the target of the recent
murders, and student leaders suspect the govern-
Anti-government students march on Bangkok's Thammasat University
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LA PAZ MEETING: SEA NETTLES
Chilean, Peruvian, and Bolivian officials
attending the 150th independence day celebra-
tions in La Paz on A;agust 6 avoided any new
initiatives on Bolivia's long-standing aspiration
for an outlet to the sea.
the Venezuelan-Colombian boundary dispute.
Chilean authorities denied this, but they-like
the Peruvians-would oppose interference by
other neighboring countries, and in particular a
campaign to force OAS consideration of the
problem.
Before the gathering, there was widespread
speculat?on in the press of all three countries
that Chile was about to announce some conces-
sion that would bring into play the terms of the
1929 treaty. That treaty, which settled issues
arising from the War of the Pacific almost 100
years ago, provided that any disagreement over
interpretation of certain articles would be
arbitrated by the Preside it of the United States.
A protocol specified that any cession of ter-
ritory would have to have the concurrence of
the two signatories-Peru and Chile.
Despite fears on both sides that a unilateral
decision by Chile would cause military action by
Peru, most of our sources have indicated that
negotiations between Bolivia and Chile will be
prolonged and difficult. Talks between the two
countries which began this past spring have
encountered rough going so far, and there are no
signs that Santiago is prepared for an outright
cession of a corridor through former Peruvian
territory that would satisfy Bolivia's desire for
sovereignty.
For that matter, Chile is beginning to show
irritation over what it sees as efforts by enemies
and ostensible friends alike to force its hand.
The Chilean government obviously resented a
self-serving offer by Venezuelan President Carlos
Andres Perez to mediate the dispute. Foreign
Ministry authorities in Santiago took note of the
Venezuelan proposal but refused to comment
on it officially. At least one press account
claimed that a Chilean official had retorted un-
officially that if Perez wanted to arbitrate,
perhaps Chile could tender its good cffices in
The Pinochet government is concerned
about the implications that a settlement with
Bolivia would have for Chile's relations with
Peru and the difficulties that would result if
Lima did not accept the solution.
Peru's interest stems from the fact that any
land route would most probably cross the ter-
ritory Peru lost to Chile in the war. Though Peru
understands and sympathizes with Bolivia's
desires, it would almost certainly not consent to
the transfer of any of its former territory.
Peruvian concern probably was somewhat
alleviated by the public assurance of a high-level
Chilean military official that Santiago was
willing to consult with "other countries" before
concluding an agreement with Bolivia. Chile's
announcement could pave the way for tripartite
negotiations with Peru and Bolivia. Such a meet-
ing could give Peru the means to buy time and
possibly seize the initiative by proposing in-
creased Bolivian administrative control of a rail
line and port facilities in northern Chile.
Although no progress was made in last
week's meeting in La Paz to accommodate
Bolivia's aspirations, there will be more discus-
sions. visiting 25X1
Peruvian Prime Minister Morales Bermudez
proposed a nonaggression pact, and officials of
the three countries may hold preliminary talks
on this subject when the Andean Arms Limita-
tion Meeting convenes in Santiago on September
1. 25X1
SECRET
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SECRET
HONDURAS: LEADERSHIP VACUUM
The government of Colonel Juan A. Melgar
appears incapable of swift and decisive action.
The Superior Defense Council, dominated by
the reform-minded young officers who ap-
pointed Melgar chief of state last April, has been
reluctant to grant the colonel and his ministers
the authority necessary for effective operation
of the government. Moreover, in its delibera-
tions the council seems to have rejected ma-
jority rule in favor of consensus because of the
diverse political views of its members, and it is
thus unable to give the government clear-cut
direction. Unless the council decides to improve
its liaison with the government, delegate ade-
quate authority to it, or take full charge itself,
the country appears headed for further turmoil
and bloodshed.
One of the country's main problems, and
one that has already led to violence, is agrarian
reform. Peasants of the National Union of
Campesinos, urged on by drought-inspired
hunger and the slow pace of long-promised land
reform, attempted a march on Tegucigalpa from
the eastern Department of Olancho in late June
Melgar
but dispersed after a clash with the army left
five of their number dead. Reform-wary
ranchers and farmers largely blame the clergy
for encouraging peasant activism. On this occa-
sion two Olancho landowners reportedly col-
laborated with the local police and military in
arresting and later murdering two Catholic
priests, t io female missionary workers, and at
least six peasants.
This incident might have been buried with
its victims had not one of the priests been a US
citizen and the other priest and one of the lay
workers Colombians, causing the US to demand
an investigation and Colombia to withdraw its
ambassador. Moreover, three Peace Corps
volunteers and more than 30 other priests and
nuns-several of them US citizens-were
rounded up and jailed temporarily. International
attention forced the government to investigate,
and eventually the two landowners, two other
civilians, and eight military and police officials
directly implicated in the killings were arrested
and taken to Tegucigalpa for trial.
In the wake of the incident, the govern-
ment and military are being viewed with
extreme suspicion and have suffered a loss of
prestige, despite what appears to have become
an unprecedented effort to pinpoint respon-
sibility for the murders. No matter how vigor-
ously the government pursues land reform the
peasants and their organizations are not likely to
forget quickly the repression to which they were
subjected.
The landowners, on the other hand, were
stung by the arrests and by the efforts of the
government's investigating commission to link
the murders to a "plan" by the National Federa-
tion of Landowners and Cattlemen to create a
climate of chaos and confrontation. Many land-
owners are convinced that radical leftists have
acquired a strong influence in the government
and the Superior Defense Council and are using
agrarian reform to divest them of their holdings.
The Catholic Church has probably found
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Whatever the clergy's true role in working
with' the peasants, the church stands accused-
and condemned, in the eyes of the land-
owners-of leftist political agitation. The clergy
presumably realize tha' many in the military,
despite a lack of credible evidence, suspect
priests of involvement in arming and organizing
peasants into the formidable guerrilla force that
is rumored to be in the mountains of southeast
Honduras.
The Olancho incident has served as a cen-
trifugal force, alienating the various social
sectors from the government and from each
other. It has created a climate in which the
government, already hampered by its still un-
defined relationship with the Superior Defense
Council, is bound to encounter serious opposi-
tion no matter what path it chooses to follow
with regard to its land reform commitment.
The scenario is made even more complex
by the prolongation of the severe drought,
which reportedly has destroyed 80 percent of
the nation's corn crop, a major staple in the
Honduran diet. In addition, the national polit-
ical parties, taking advantage of the military
leadership's indecision, are pressing for a return
The OAS decision to allow members to
trade with Cuba is not likely to result in a major
increase in such trade.
Even before the de facto lifting of the
11-year-old embargo, Havana had been trading
on a smal! scale with several of its neighbors.
Such trade however, has accounted for only
about 3 percent of Cuba's total and an even
smaller share for its Latin partners. Most of the
exchange consists of Argentine, Mexican, and
Peruvian sales of foodstuffs and transporation
equipment; Cuban exports are for the most part
small, occasional sales of sugar.
Most of whatever growth there is in Cuban-
OAS trade will come about because of Argen-
tina's $1.2-billion credit to Cuba. There is little
potential for large-scale Cuban trade with other
Latin American cour,tries. Cuba's main export is
sugar-a commodity in which almost all the
other Latin and Caribbean countries are either
self-sufficient or are net exporters.
The Cubans are unlikely to make large
'direct purchases of Venezuelan or Mexican
crude so long as they buy practically all their
petroleum needs from the USSR at about half
the world price. Nciiher Caracas nor Mexico
City has shown interest in subsidizing Cuban
purchases, which total only 185,000 barrels per
day. 25X1
25X1
Cuba will continue to emphasize trade with
communist and developed non-communist coun-
tries. The USSR and other communist countries
account for about three fifths of total Cuban
trade, providing a reliable market for about 60
percent of Cuba's sugar exports at premium
prices and supplying the bulk of its imports of
food, intermediate products, and capital goods.
The hard-currency proceeds from sugar sales in
the West are spent mostly in Japan, Canada, and
Western Europe, which supply equipment and
technology not available in Latin America.
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SECRET
' Velasco, who has headed the military
y 1: regime since it came to power in a coup in
,.r October 1968, periodically has exiled or jailed
critics who overstep the increasingly narrow
limits for public dissent. These deportations, the
first reported since last November, coincide with
the military's efforts to organize its own polit-
wal movement. Although military leaders prob-
.;+)ly hope the deportations will facilitate these
efforts, public resentment over the repressive
measures is more likely to harden civilian op-
position.
25X1
LIIIIco'sactionsthus
appear to -be a move to forestall the opposition
challenge and to minimize the danger that such
talks might increase military dissatisfaction with
his policies. The President may also want to
~~$ y demonstrate that he remains in control of
domestic policy-making, in spite of the fact that
Prime Minister Morales Bermudez has assumed
Velasco increasingly important government responsi-
bilities since Velasco's stroke last February.
The exiling of the Alliance leaders may
upset certain of the less radical officers, but the
PERU: GOVERNMENT REPRESSION ousting of the leftist critics probably will go far
to balance these concerns; Velasco may have
had this in mind in deciding who should be sent
Despite President Velasco's public pro- abroad. Nor is the army likely to object to the
nouncement on July 28 that his military regime closing of the biweekly Alarka since this is in
would engage in "open" and "democratic" com- line with the military's policy of keeping the
petition with civilian opposition groups, the gov- news media subservient to the revolutionary
ernment last week deported over two dozen process. In practice, this has come to mean
politicians, journalists, and peasant and labor virtually no criticism of any government deci-
figures. A far-left magazine was shut down at sion.
the same time.
A number of civilian groups already have
Most of those exiled were radical leftists, called for public demonstrations to protest the
but the groups included three leaders of the deportations and related repressive measures.
reformist American Popular Revolutionary The regime's actions will add to the population's
Alliance. No Communist Party members were general dissatisfaction with the military and
deported, even though Velasco in his speech probably will give rise to strikes and demonstra-
included "communist groups" among the op- tions, but no widespread, organized o osit'
ponents of the revolution. is likely to develop in the near term. 25X1
SECRET
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? SECRET
ARGENTINA: ANOTHER NEW CABINET
This week's cabinet shakeup, the third in a
month, was designed to create a government
with which labor and the military, who share
power uneasily, could live comfortably. The
reorganization involved the departure of all but
two ministers. In the process, the cabinet was
purged of the remaining ministers said to be
linked to exiled presidential adviser Lopez Rega.
The departure of the previous cabinet's
only relatively strong figure, Interior Minister
Benitez, is of particular interest. Benitez had
emerged as the head of the so-called minicab-
inet, a trio of ministers who had assumed a
growing role in conducting day-to-day govern-
ment business. Benitez' attempts to take posi-
tive but unpopular initiatives in office may well
have unnerved both labor and the military, who
are unprepared to accept such independence of
action.
The kinds of individuals chosen for the
new cabinet reflect this concern and indicate
that the power groups want people they can
control. Two of the new ministers are known to
be particularly responsive to the wishes of the
armed forces. Another is drawn from the ranks
of organized labor. Most of the remaining cab-
inet officers, such as Defense Minister Garrido,
formerly the presidential scribe, are men of
limited personal stature.
Reaction to the new cabinet has been gen-
erally positive, if not enthusiastic. Some crit-
icism has been heard, however, of the appoint-
ment of an army colonel to head the Interior
Ministry. Ironically, that criticism comes from
the military, who fear that the appointment will
be interpreted as military interference in the
conduct of government. They may also fear that
the colonel's presence will encourage those of-
ficers, still a minority, who do favor military
intervention.
The administration so far has failed to fill
the particularly demanding post of economic
minister, probably because those most capable
of taking the job have declined. One who might
accept is Peronist economist Antonio Cafiero,
who has been summoned from Europe, where
he represents Argentina at the Common Market.
There is no reason to believe that the new
cabinet will be more able than its preuecessors
to cope with %rgentina's problems. Indeed, the
weakness of the cabinet is the very factor that
makes it politically acceptable to the important
power groups. 25X1
President Peron swears in new interior minister
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Geneial Torrijos (second from right) at the conference on forming a Latin American Economic System
PANAMA: TORRIJOS SEEKS SUPPORT
General Torrijos, although heartened by
the US decision to have Ambassador Bunker
return in early September for another round of
canal treaty talks, has shown no signs of sus-
pending his search for foreign support of
Panama's case.
Concerned about the four-month delay in
the negotiations and about hardening attitudes
in the US on the canal issue, Torrijos has spent
considerable time presenting Panama's case to
foreign leaders. Late last month, he signed a
joint declaration with the presidents of Colom-
bia and Venezuela calling for early transfer of
the canal to Panamanian control. The three
leaders also proposed that all Latin American
chiefs of state meet in Panama next June on the
anniversary of the 1826 Panama Conference-
the first pan-American conclave-presumably to
focus further attention on the canal issue.
Torrijos has missed only one recent op-
portunity-the conference on forming Latin
American Economic System-to raise the sub-
ject. In that case he may have believed that
playing host to the meeting was enough of a
boost for Panama's prestige.
The general has announced that Panama
will join the nonaligned movement at the con-
ference that begins in Lima on August 25, and
the Panamanian delegation there will almost
certainly make a strong pitch for Third World
support. Previously Torrijos has been reluctant
to become affiliated too closely with the non-
aligned organization, primarily because he
thought he would antagonize the US and jeop-
ardize the treaty negotiations while they were in
an early stage.
The faltering course of the negotiations
since March, and doubts that a treaty can
actually be achieved, have caused Torrijos to
decide in favor of establishing diplomatic ties
with the USSR and China. Relations with
Moscow reportedly will be opened before the
end of September. Torrijos also is considering
moves to improve bilateral ties with Cuba, and
he may travel to Havana later this year for a first
meeting with Castro. These steps are calculated
to help Torrijos maintain his nationalist cre-
dentials and demonstrate his independence from
the US.
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