WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000300020047-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 20
• Document Creation Date: December 22, 2016
• Document Release Date: March 2, 2011
• Sequence Number: 47
• Publication Date: October 31, 1975
• Content Type: SUMMARY

 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020047-7
Secret
Weekly Summary
Secret
No. 0044/75
October 31, 1975
Copy No
sq-
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h? WfF.KI Y .SUMAn/1RY, i-;suecl (nvnry Fridciy nunnin(1 by the
Offir o of Curnml hilellignnee, reports and annly?u: -tiynifi
(ant devoloprnerits of the weak thruu,.111 noun on Illur-dCly. It
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by tie, Office cif Fcx:nomic Re scorch, the Office of Slrcrtergir
R-,t(mh, tho Office of (nocgrophic crud Curto grophic
Ite,enn.h, and the Directorate of Science and Technology.
Topic, r,~quirinrg more comprehensive trr.nlment curd thrare-
Iore puhli wd i,parcrlely as Spe:inl Rehert; ore listed in
the r litcrlt;.
CONTENTS (Oetohe?-31, /975)
MIDDLE: EAST
AFRICA
1 Spanish Sahara: i.;,rr I1 F)eI yed
2 Soviets Criticize Sinai 11
2 Angola: Fighting Intensifies
4 Lebar on: Crisis Den:,.:ns
6 Spain: Problems of Transition
7 Portugal: Sizing the Reins
9 Yugoslavia: Stalinists in !!,e Dark
10 Iceland: Ta!kinq About Fish
10 USSR: Space Successes
EAST ASIA
PACIFIC
1? Thailand-Indochina: New Realities
12 ".hinese Expand Oil Production
13 Vietnam-USSR: Le Duan in Moscow
WESTERN
HEMISPHERE
15 Oil: Growing Government Ownership
16 OPEC Aid to Developing Countries
17 UN: The Korea Vote
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SECRET
SPANISH SAHARA: MARCH DELAYED
King Hassan has postponed his planned mass
march into Spanish Sahara this week and is
devoting increasing a '-.ration to talks with Spain
that the King hopes will culminate in Madrid's
agreement to turn over the territor.' to Morocco
and Mauritania. Algeria, the fourth party to the
dispute over the future of Spanish Sahara, op-
poses the talks and is continuing diplomatic ef-
forts in support of self-determination for the
territory.
Moroccan Foreign Minister Laraki went to
Madrid on October 28 for another ?ound of talks.
He was accompanied by the foreign minister of
Mauritania, which also claims of rt of the territory.
On October 29, a senior Spanii;* official indicated
that the talks were at an impa'.e because Hassan
is refusing to call off the marsh. Spanish officials
are divided on how to reso! c the Saharan ques-
tion, and the arrival of an Algerian delegation in
midweek may have increased Spain's indecisive
mood.
Morocco, Mauritania, and Spain all have
reason to want the dispute settled quickly. The
two African claimants would like a negotiated
settlement to head off debate on Belt-determina-
tion in the UN General Assembly this fall. Spanish
officials would like to settle this co,t;entious issue
to spare a new government under Juan Carlos an
additional burden and avoid tha problems they
would face if Hassan's marcher; crossed the
border.
The King has received some international
support for the march. Egypt, Saudi Arab; a,
Kuwait, and Gabon have verbally endorsed it, and
Jordan has agreed to send a symbolic delegation.
Algeria is lobbying hard to prevent Arab par-
ticipation or other expressions of support and will
probably succeed in most cases.
Algeria is also trying to return the problem to
the UN General Assembly where it hopes to in-
fluence any decisions reached. Last weekend,
Foreign Minister Bouteflika publicly endorsed UN
Secretary General Waldheim's consultative mis-
sion to the four countries involved that ended on
October 28. Bouteflika maintained, however, that
Waldheim should confine himself to seeking a
reduction of tension in the area and that
decolonization measures should be left to the
General Assembly. He added that these measures
must be in accord with a recent UN repot r and an
advisory opinion of the International Court of
Justice, both of which u held the Saharans' right
to self-determination. 25X1
Concurrent with the quickening pace
of diplomatic activity, Hassan is going ahead
with preparations for the march. Nearly half
the 350,000 Moroccan volunteers that have been
selected are at Tarfaya, the final assembly
point some 18 miles from the border. Hassan's
target date for entering Spanish Sahara now
appears to be sometime next week, but if Mo-
rocco and Spain reach an understanding, the trek
may become a symbolic pilgrimage by less than
1,000 Moroccans. Even on that reduced scale,
however, clashes are likely with indigenous Sa-
harans, especially armed partisans of the Al-
gerian-backed Polisario Front. Leaders of the
Front, which wants independence for the terri-
tory, have said they will forcibly resist any
"invading" Moroccans. Such clashes could
bring Moroccz n mil ' iry intervention.
Spain
*Madrid
* Rabat
Morocco
Canary Islands
Tartaya
Spanish
Sahara
Mauritania
Nouakchott
Page 1 WEEKLY SUMMARY
Alperin
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SECRET
SOVIETS CRITICIZE SINAI II
The USSR chose the eve of President Sada.'s
arrival in the US to issue its strongest attack to
date on Egyptian policies and on the second-stage
Sinai disengagement agreement.
On October 25, Pravda published a lengthy
article vehemently refuting Sadat's allegations
that the USSR has been less than wholehearted in
providing diplomatic, military, and economic
support. The purpose of the article, which was
signed "Observer,"-indicating top-level Kremlin
endorsement-was apparently to discredit Sadat's
arguments for dealing with the US.
Pravda was particularly incensed over Egypt's
public criticism of the inadequacy of Soviet
military aid. The article cited the extensive sup-
port Moscow provided Cairo during the Middle
East wars of 1956, 1967, and 1973, and said it was
"shameless distortion" to suggest that all the
USSR had sent to Egypt during the October 1973
war were "several bagfuls of spare parts." In an
apparent allusion to Sadat's plans to discus US
military assistance during his Washington visit,
Moscow reminded the Egyptians that their ex-
perience with the West in the early 1950s
demonstrates that "one would hardly expect im-
perialist states to show concern cr building
Egypt's military strength."
Pravda also went to great lengths to defend
the Soviet record of economic assistance to Egypt,
with emphasis on Aswan and Helwan. These now
criticizing Soviet aid, observer noted, do so "by
the light of electricity and eating bread produced
because of Aswan."
In addition, the article demonstrated con-
tinuing Soviet nervousness about the future of the
1971 Soviet-Egyptian treat' of friendship and
cooperation, contending that Sadat himself had
requested the accord.
Pravda did not attack Sadat by name,
however, and kept the door open for better
Soviet-Egyptian relations. The article clearly put
the burden on Cairo for initiating any such im-
provement, saying that cooperation is impossible
if one country follows policies that undermine the
other.
In its denunciation of Sadat's reliance an
Washington for a Middle East settlement, the arti-
cle provided Moscow's most authoritative public
exposition of its opposition to Sinai II. The state-
ment, which echoes what the Soviets have been
saying privately, is particularly critical of the
provision for US observers in the Sinai, calling it
"a new element fraught with far-reaching,
dangerous consequences."
Pravda again declared that the Geneva con-
ference was the relevant forum for resolving the
Middle East conflict. It added that Moscow does
not completely reject further partial steps toward
a settlemen; as long as these steps are worked out
within the framework of the Geneva conference.
Pravda made clear, however, that Moscow
adamantly opposes Washington's recent
diplomatic initiatives in the Middle East.
Despite these strong words, the Soviets
avoided a confrontation in the UN concerning
renewal of the UN observer force mandate in the
Sinai. Moscow approved the one-year extension
with little fanfare and with no specific rnentio- of
Sinai II or of the stationing of US technicians in
ANGOLA: FIGHTING INTENSIFIES
Fighting among Angola's three warring
liberation groups has intcnsified as each tries to
grab as much territory as possible before
November 11, the scheduled date for in-
dependence. During the past week, the Soviet-
supported Popular Movement for the Liberation
of Angola has come under growing pressure from
the National Front for the Liberation of Angola
and the National Union for the Total
Independence of Angola. No political solution
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WEEKLY SUMMARY Oct 31, 75
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SECRET
that would permit a peaceful transfer of
sovereignty is in sight.
In the south, where the Popular Movement's
forces are stretched thin, a combined force of the
National Front and the National Union captured
the important town of Sa da Bandeira last
weekend. Early this week, the Popular Movement
abandoned Mocaredes, Angola's third largest
port, to advancing Front and Union forces. The
occupation of Mocamedes gives the National
Front and the National Union their first major
resupply point in southern Angola.
The Movement probably withdrew from
Mocamedes in order to bolster its defenses at
Lokrito, Angola's largest port, and at Benguela, an
important rail junction. Recovery of the two cities
before November 11 is a priority objective of the
National Union and the National Front. The
Popular Movement, meanwhile, claimed during
the week to have made significant gains in its
drive toward Nova Lisboa, Angola's second largest
city and the National Union's headquarters.
In northern Angola, the National Front's ad-
vance towards Luanda-controlled since June by
the Popular Movement-is stalled some 12 miles
from the city near Quifangondo, site of the
capital's vital water pumping station. Front forces
apparently are unable to maintain a steady flow of
supplies and may be further delayed by the
Popular Movement's destruction of two bridges
on the main road to Luanda. Since late
September, t'-- Front has been slowly recovering
lost ground north and east of Luanda, meeting
with less resistance than it expected. The morale
if Popular Movement forces in Luanda reported-
ly is low, and many black residents are trying to
flee to the countryside.
The Popular Movement, insisting that it is the
only liberation group capable and deserving of
governing Angola after independence, has
launched a major propaganda campaign to dis-
credit the other two groups as instruments of
foreign powers and not true representatives of
the Angolan people. Movement spokesmen are
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claiming that both Zaire and South Africa have
sent troops to aid its rivals. The campaign is
probably designed in part to set the stage for a
unilateral declaration of independence on or
possibly before November 11. At the same time,
the Movement has ordered the mobilization of all
men between 18 and 35 in an effort to lend a
sense of urgency to the campaign-an o der that
has added to the restiveness in Luanda.
Portugal's latest-and possibly final-direct
initiative to try to reconcile Angola's liberation
groups collapsed this week when a high-ranking
cabinet minister sent to Angola last week was un-
able to bring the top leaders of the three groups
together for talks. Lisbon continues to insist that it
will not hand over power at independence to any
one group. It may simply transfer sovereignty to
the "Angolan people," letting the three groups
fight it out-as they will in any event.
Portugal's evacuation of white refugees from
Angola continues; the airlift now operating only
out of Luanda will be terminated after November
3. Approximately 194,000 Portuguese have been
withdrawn to date and perhaps as many as 2('.000
remain to be repatriated.
Page 3 WEEKLY SUMMARY Oct 31, 75
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LEBANOP': CRISIS DEEPENS
The fighting in Beirut reached a new level of
intensity this week, and for the first time threaten-
ed to draw in large numbers of commandos from
the major fedayeen organizations. Prime Minister
Karami has had little success in finding a political
solution to the crisis and toward the end of the
week was threatening to resign if his calls for a
cease-fire were not heeded.
The fighting entered a new stage last
weekend, when Chri,,t'an and Muslim extremists
for the first time engaged in sustained battles for
control of the heretofore neutral Qantari and Ras
Beirut districts in the central and western parts of
the city. Previously, the two sides had stayed
generally within their respective enclaves, shell-
ing nearby areas controlled by their opponents
and venturing out only for hit-and-run bombing
attacks in commercial areas of the city.
The expanded fighting led to involvement by
some units of Fatah and Saiqa. Until now, these
groups had stayed on the sidelines, limiting their
activity to supplying arms to Lebanese leftists.
Saiga head Zuhayr Muhsin said in Damascus that
the Fatah and Saiqa units had not "participated in
full," implying that the action would not lead to
large-scale fedayeen involvement if the
Phalangist: could be forced back into their
traditional strongholds.
The Lebanese army remains mostly on the
sidelines, although Karami and Interior Minister
Shamun apparently continue to argue about
whether to allow it to play a more forceful role. So
far, the army has been used only to secure the
road from the city center to the inteniational air-
port, to control selected government bui!Jings
and installations in Beirut, and in a very li-nited
way to replace internal security service units on
the periphery of the city.
In an attempt to find a political solution to
the fighting, Karami on October 28 announced
formation of a ten-man ".,ecurity committee" to
put into effect the cease-fire that he called last
weekend. Karami said that the group, which in-
cludes the country's major political leaders,
would meet in his office until the fighting stops.
Socialist leader Kamal Jumblatt quickly dis-
missed the new committee as an outdated
attempt at "tribal reconciliation" and insisted that
Lebanon's problems must be solved through fun-
damental reforms initiated by the now inactive
national dialogue committee. Jumblatt later
grudgingly agreed to participate, apparently at
the urging of Palestinian leader Yasir Arafat.
Shamun and Phalangist leader Pierre Jumayyil, the
two most important Christians named to the com-
mittee, also initially balked at participating, but
later seemed likely to go along.
Karami apparently plars to assemble the
committee, then ask religious and Palestinian
leaders to join it in a "summit conference" to
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hammer out a political agreement. Karami is
known to believe this approach is essential to
solving Lebanon's problems.
Parliament tried several times during the
week to convene, but failed for lack of a quorum.
Many members stayed away because of the
security problem, others to forestall a widely an-
ticipated public split between Karami and
Shamun. The Prime Minister has been inching
toward an open challenge to Shamun and Presi-
dent Franjiyah, and any wide-ranging parliamen-
tary debate could end in a vote of confidence in
Karami or introduction of a motion demanding
Franjiyah's resignation.
Seivmt, Lebanon
Karami probably is prepared to gamble that
he could win confidence vote and at the same
time force critical Muslims and leftists, including
jumblatt, to rally behind him. He may also see this
as a way to force moderate Christians indirectly to
criticize President Franjiyah by acknowledging
that Karami is preferable to any likely alternative.
Karami, despite his inability to end the fighting,
has steadily gained political strength at the
President's expense. Muslim and leftist leaders
are again raising calls for Franjiyah's resignation,
and some of his Christian supporters appear to be
moving toward the view that Franjiyah's depar-
ture would be an acceptable price to pay for
peace. 25X1
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WEEKLY SUMMARY Oct 31, 75
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Newsmen gather outside Pardo Palace to aw,.it news of Frinco's condition
SPAIN: PROBLEMS OF THE TRANSITION
The Spanish government, faced with the
problem of how to transfer power from the failing
General Franco, continues to hod off from
declaring him incapacitated in -;ie hope that his
death will make ii unnecessary to resort to this
potentially controversial course of action. Many
Spaniards believe such a declaration would mark
an ignominious end to the career of a leader who
has ruled Spain for 39 years. In addition, there is
considerable doubt that the staunchly right-wing
Cotes would ratify this step.
Franco is unwilling or possibly unable to
agree to the transfer of power. There is, however,
strong sentiment against leaving Spain leaderless
for an extended period, and this attitude may br-
ing action if Franco lingers on. A temporary
transfer of power to Prince Juan Carlos would
appear less demeaning to Franco and may br the
next move, although the Prince earlier refused to
accept such a solution.
Meanwhile, plans are under way for the
ceremony to swear in Prince Juan Carlos, and
'ttention is shifting to the post-Franco period.
Various opposition groups, which have been il-
legal under Franco but expect to play a role after
his departure, have indicated they will avoid
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direct challenges to Franco's successors, at least
during the initial phases of the trar-sition period.
A leading official of the Communist-dominate:i
Workers' Commissions told the US labor attache
that the commissions have advised their members
to avoid strikes and other protests during the
transition.
Felipe Gonzalez, secretary general of the
Spanish Socialist Workers' Party, told Ambassador
Stabler that his party will give the Prince a chance
"to open up" the political system. A Basque
Socialist Party official echoed these sentiments,
and according to Gonzalez, Spanish Communist
Party leader Santiago Carrillo also supports this at-
titude, despite the contradictory statements made
by Communist Party officials. An intimate of
Enrique Tierno Galvan, leader of the Popular
So,-ialist Party and a rival of Gonzalez, claims that
his party will not make trouble for Juan Carlos, at
least initially.
These comments strongly suggest that a ma-
jority of political groups believe full-scale opposi-
tion tactics at this time would only prejudice their
long-term interests and invite repression. Their
future course will, of course, depend on the per-
formance of Prince Juan Carlos and his govern-
ment.
The first clues to Juan Carlos' intentions
should appear in the nationwide speech he is ex-
pected to make after he is sworn in as king. He
hopes to form a new government, and its com-
position will be used by onposition groups to
measure how far and how fast Juan Carlos is
prepared to press for reform.
The new king will not be able to satisfy all
shades of political opinion, but he has a good
chance of winning support of a commanding ma-
jority if he develops policies that clearly depart
from the tenets of Franco's rule without abruptly
discarding all that has been inherited from the
Franco era.
There is likely to be some trouble regardless
of how skillfully Juan Carlos and his government
manage the transition. Fifteen alleged members
of the far-left terrorist Antifascist and Patriotic
Revolutionary Front were arrested a week ago;
this group will continue, and may intensify, its
terrorist campaign. This week 20 more alleged
Basque terrorists were arrested in a continuing
crackdown.
Violence from the extreme right may also in-
crease. Earlier this week a right-wing group called
the Death Commandos publicly ordered 17
prominent Catalans associated' with leftist political
groups to leave the country 24 hours after ran-
co's death or face death themselves.
PORTUGAL: SEIZING THE REINS
The Portuguese government is gradually as-
serting its authority in the face of determined
efforts by the far left and the Communists to
render it ineffectual.
Last week it replaced the leftist civil gov-
ernor; in key cities in each of the four military
regions, an apparent signal to opponents that it
is capable of enforcing its will anywhere in the
country. A subsequent attempt by a leftist mob
last Weekend to reinstate the pro-Communist
governor in the southern resort city of Faro was
foiled when Sc-ialists and Popular Democrats,
with belated support from the military, suc-
ceeded in recapturing the civil governor's of-
fices.
In his most effective action so far to re-
store military discipline, Prime Mir;ister Azevedo
paid a special visit to Porte when. earlier this
month rebellious troops instigated .j serious anti-
government demonstration that fed to blood-
giied..Azevedo was well received, Fmd his appear-
ance there gave badly needed support to Briga-
dier Pires Veloso in his efforts to restore order.
Azevedo said that this was the first in a ser*kcs of
visits to various parts of the country, pre-
sumably in a bid to rally popular support.
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Last Friday the government took steps to
ensure the loyalty of the Republican Nationa!
Guard and the civil police by replacing the com-
manders of these two security units.
The gc.?vernment has also made it clear to
the Communists that their illegal seizure of over
500,000 acres of privately owned farmland has
not gone unnoticed. Last weekend a unit from
the Santarem Cavalry School arrested a group of
Communist-inspired farm worker squatters.
They will be trird for illegal possession of mili-
tary firearms. "Earlier this week, military units
elsewhere intervened effectively to maintain
public order.
The government has moved slowly in ful-
filling its prom;se to guarantee plu; alisrn in the
media, which have been heavily infiltrated by
the Communists and other leftists. Legal action
is now being taken against Republica-which is
controlled by leftist workers-for vilifying the
chief of the new military intervention force. On
his trip to Porto, Azevedo promised the return
of Radio Renascenza to church authorities, and
the government has dropped several hints that
Portuguese newspapers-many of which are
losing money-cannot expect financial support
if they continue to attack the government.
On the economic front, where government
progress haE been even slower, a series of meas-
ures has been announced to stop the flight of
capital and to strengthen the escudo.
A n( -w problem--and perhaps the gravest
the government will have to face-emerged this
week when a group bel'eved linked to the An-
golan refugees attacked the lefti, t Angolan Cul-
tural Center. The refugees, mostl i destitute and
embittered over Portuguese policy in Angola,
reportedly have been biding their time for fear
of reprisals against friends and relatives still in
Angola. With the Angola airlift due to end soon,
the refugees may now translate their frustration
into political action and perhaps resort to
dramatic measures to call attention; to their
plight.
Although there are now signs that the
Azevedo government is beginning to act with
some assurance, it still has much to do if it is to
last until general elections can be held next year.
It seems likely that Azevedo will have to take
some action against Revolutionary Council
members Carvalho, Fabiao, and Rosa Coutinho,
who have made divisive public statements and
failed to support the government on key issues.
In addition to dealing more forcefully with the
economic situation, it also must continue its
efforts to purge the Communists from key min-
istries, restore military discipline, and wrest con-
trol of the media. 25X1
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YUGOSLAVIA: STALINISTS IN THE DOCK
Belgrade's strongest move against pro-Soviet
subversives in at least four years is rapidly gaining
momentum. Reportedly 123 Cominformists are
now in jail awaiting trial.
Denunciations of the Cominformists-who
are named after Yugoslavs who supported Stalin's
attempts to overthrow Tito-are pouring in from
every corner of the country. The party weekly
Kornunist raised the anti-Stalinist campaign to a
new and implicitly anti-Soviet level two weeks
ago with a stinging attack on "counter-
revolutionaries and traitors" who covertly un-
dermine the country's independence and social
system.
Top-level party and government spokesmen
have followed up with specific accusations that
the subversives want to bring Yugoslavia into the
Soviet "camp." Many of these reflections of suspi-
cion about Moscow's intentions toward the Tito
regime have been broadcast to the USSR.
The hue and cry derives from Belgrade's
awareness that the country's faltering economic
performance this year could create a good oppor-
tunity for a small but highly organized
group-like the Cominformists- ;o undermine
the Tito system. Wary that the group might be
gathering strength for a strong bid for power
once Tito is gone, the regime appears determined
to imprison all the potential Stalinists it can find.
Behind this passionate reaction lies a
deep-seated fear that Moscow's benevolence
over the past few years only masks a plan to
restore Yugoslavia, by whatever means, to the
Soviet orbit. Sometimes, however, the masses
have apparently over-reacted to the current eas-
ing of Be;grade's usual strictures against an-
ti-Soviet propaganda. Last Friday, Komunist stern-
ly warned against "slandering" honest Com-
munists as "Cominformist," because only the sub-
versives stand to gain from the spread of doubts
about the leadership.
Until recently, the details of the conspiracy
and plans for trials were kept under wraps, but
the media are now promising ;hat some sentences
will soon he handed down. Although there are
occasional rumors of a public show trial, insiders
are suggesting that the trials will be held in
camera, with the results carefully used to fuel the
current campaign.
According to the US embassy, the Belgrade
diplomatic circuit is abuzz with speculation about
a new decline in relations with Moscow. While
relations between the two countries are
somewhat clouded by the turn of events in
Yugoslavia-as well as by disagreements over in-
ter-party affairs and China-a complete breach is
not likely. So long as Belgrade restrains itself from
explicit attacks on the current Soviet leadership
and Moscow controls its anger, proper, though
uneasy, relations will continue. F
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ICELAND: TALKING ABOUT FISH
Iceland and the UK have held two fruitless
rounds of talks on a fishing agreement to replace
the pact that expires on November 13. London is
urging Reykjavik to exercise restraint and not
harass British fishermen while negotiations are in
progress, but Iceland will have to begin enforci.-ig
its sovereignty if there is no sign of a break in the
stalemated talks. Iceland also began talks this
week with the West Germans..
Iceland unilaterally extended its fishing limit
to 200 miles on October 15, but the key issue
remains how much, if any, foreign fishing to allow
USSR: SPACE SUCCESSES
Years of Soviet invactment in planetary
research have finally begun to pay off. Venus 9
and Venus 10-launched in June-reached the
planet last week and constitute the most
successful and spectacular Soviet planetary ex-
ploration efforts in 15 years.
The landers of both spacecraft survived on
the planet for about an hour, transmitting u-
nique pictures of the Vettusian surface and data
on physical and chemical properties of the sur-
face and atmosphere. The orbiters of each
probe served as relays for their landers and are
still transmitting ultraviclet images of the Vene-
tian atmosphere back to Earth.
Earlier, the USSR had launched eighteen
spacecraft to explore Venus, but nine failed
completely and, except for Venus 8, the
remainder had only limited success. The
achievements of the two recent probes are be-
ing hailed by the international scientific com-
munity. The Soviets will, probably continue to
release data from the spacecr. 't and try to keep
25X1 world attention focused on. their ac-
complishments.
within the old 50-mile area, where the richest
fishing grounds are located. There is strong
domestic pressure to exclude foreign fishing en-
tirely in this belt, even within the coalition
Independence and Progressive parties. An in-
dependent research institute reported last week,
furthermore, that all foreign fishing must stop if
declining fish stocks are to be conserved.
The major stumbling block last week was the
size of the catch. The British stuck by their
proposal tr keep it at 130,000 tons a year, the
figure in the old agreement. They argued that the
Icelandic counterproposal, to Limit the take to
50,000 tons, would effectively end British fishing
in the area. Neither side evidently was ready
to bargain, although the British earlier hinted
they could settle for some cuts, and there were
press reports suggesting that Iceland might agree
to 90,000 tons.
Other troublesome issues have been scarcely
broached. Still to be discussed are the number
and location of fishing "zones" around Iceland,
the length of Cie fishing "seasons," and the
slumber of trawlers to be permitted.
Iceland will also have to sell essentially the
same terms to the West Germans, so its talks with
Bonn will probably not move much beyond the
more important UK negotiations. An additional
problem with Bonn is freezer trawlers, which
Iceland has adamantly refused to allow to operate
in its waters. In recent years, the West German
fishing fleet has largely converted to these
modern, efficient vessels.
Fishing provides about 75 percent of
Iceland's export earnings, and the specter of
depleted fish resources arouses deep concern
among Icelanders. Leaders of the Reykjavik
government warn privately that they cannot de-
fend continued membership in NATO if their
allies do not support them. Although largely
pressure tactics at this point, such statements may
become significant if the talks drag on and
resulting incidents at sea embitter Iceland's
relations with Britain, West German , and its
other NATO allies. 25X1
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THAILAND-INDOCHINA: NEW REALITIES
With the end of the war in Indochina, the
Thai have been forced to begin building new
relationships with their victorious communist
neighbors. So far they have encountered only
hostility from the Lao and the Vietnamese. This
week Thai leaders are according red carpet treat-
ment to visiting Cambodian leader leng Sary in
the hope that Phnom Penh will prove more flexi-
ble and reciprocate Bangkok's desire to develop
reiat ions.
The question of the disposition of Lao
refugees and former Lao military equipment in
Thailand has stymied efforts to build rapport with
the new communist regime in Laos. The Thai are
unwilling to meet recent Lao demands that they
repatriate or expel the numerous Lao politicians,
military leaders, and ethers who fled across the
Mekong following the kommunist take-over in
May. Bangkok also will not agree to L.:; demands
for the return of the small amount of military
equipment that was in Thailand at the collapse of
the coalition.
Vientiane's position, particularly on the issue
of the return of military equipment, almost cer-
tainly reflects Hanoi's influence on the Lao com-
munists. The North Vietnamese have been citing
the Thai refusal to return Vietnamese equipment
as a rna;or stumbling block to improved relations
with Bangkok, and progress on Lao-Thai relations
will probably have to await a resolution of the im-
passe between Bangkok and Hanoi.
The Cambodians, who do not march to
Hanoi's tune, have not yet revealed whether they
will make resolution of the question of Cambo-
dian refugees and equipment in Thai;and a
prerequisite for the development of relations.
Bangkok would find itself in an awkward position
if Phnom Penh should make a serious demand for
the return of military equipment because
Bangkok can hardly accede to a Khmer request
while continuing to resist similar demands from
Hanoi and Vientiane. The Thai foreign minister
has said publicly that Thailand is willing to return
Page 11 WEEKLY SUMMARY Oct 31, 75
Cambodian refugees
Although the issue
is potentially troublesome, Bangkok is hopeful
that it will not become a major stumbling block.
Hosting leng Sary
lerig Sary's current visit to Bangkok and the
absence of anti-Thai propaganda in the Cambo-
dian media have no doubt encouraged Thai
leaders, who have publicly expressed their desire
to establish diplomatic relations with Cambodia.
Bangkok clearly attaches considerable impor-
tance to Sary's visit.
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SECRET
Ieng Sary's agenda for the talks is open ?o
conjecture, but the Cambodians all-frost certainly
are interested in regularising border trade with
Thailand, especially in -;ce and petroleum. The
Cambodians may also be receptive to any
economic concessions the Thai may offer.
Shooting Along the Mekong
Although Bangkok may have some reason to
be hopeful on the Cambodian front, its prospects
for better relations with Laos appear bleak. Since
the collapse of the Lao non-communists in May,
communist troops have been involved in
numerous skirmishes with Thai security forces all
along tlic Mekong border. 'I he most serious oc-
curred on October 12 when'Ihai aircraft interven-
ed to assist patrol boats under fire about 30 miles
south of Savannakhet in south Laos. The Lao re-
jeclecl out of hand a Thai proposal for joint river
patrols to assist in preventing clashes along the
border arid launched a more in;enw propaganda
campaign berating Bangkok for its failure to niece
Lao conditions for improved relations.
The Thai, F v reducing the frequency of
patrols and issuing strict rules of engagement,
hope to prevent the situation from getting out of
control along he Mekong. Lao refusal to par-
ticipate in joint efforts to ease tensions or to
restrain troops on its banks, however, will ensure
continuing; trouble along; the border.
CHINESE EXPAND OIL PRODUCTION
China's oil prooaction is not likely to
become an important factor in the inter-
national oil market during the next five years.
?eking's own energy requirements will con-
strain petroleum exports, even as crude oil
production is growing. Oil earnings none-
theless will be important to Peking's eco-
nomic development plans.
China ranked fifth as a producer of energy
in 1974, behind the US, the USSR, Saudi `.rabia,
and Iran. Propelled by a 23-percer.c average
growth in crude oil production, overall energy
output ,as grown by .. percent a year since
1965. Despite the growing importance of oil,
coal remains the dominant source of energ,, in
China.
China is the world's fourth largest user of
energy. Overa!! ciiergy consumption has
growii at an annual rate of 8 percent since 1965.
The growth has been largely caused by in-
dustry, where consumption has grown by 11
percent annually.
Until recently, Chinese energy exports
consisted almost entirely of a few million tons
of coal. By 1974, petroleum exports had grown
to 120,000 barrels per day, worth $450 million a
year. These exports were particularly important
since the demand for China's traditional ex-
ports had slackened. Petroleum exports this
year will reach an estimated 200,000 barrels per
day-12 percent of oil output and less than 3
percent of total energy production.
In the likely event that China's energy
supply and demand continue to grow at nearly
the same rate, oil exports would reach about
600,000 barrels per day by 1980. If Peking insists
on exporting one million barrels per day by
1980, as discussed with the Japanese, domestic 25X1
economic growth will suffer.
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VIETNAM-USSR: LE DUAN IN MOSCOW
Le Duan, North Vietnamese party chief, arriv-
ed in Moscow on Monday, undoubtedly to seek
long-term Soviet economic aid for Vietnamese
development and reconstruction. He is the first
high Vietnamese official to visit the Soviet Union
since the communist victories in Indochina last
April.
Le Duan's visit has provided Moscow with an
opportunity not only to issue reminders to its
domestic and international audiences that it has
provided substantial support to Hanoi but also to
stress the need for international communist unity.
The So Diets are glad to display a counterpoint to
their more prominent theme of detente.
Moscow is undoubtedly seeking to capitalize
on the differences that emerged between Le
Duan and the Chinese leaders when he visited
Peking late last month. The Soviets are convinced
that North Vietnam is closer to the USSR than to
China or most world issues and will surely try to
strengthen the already good relations that exist
between Moscow and Hanoi. Nevertheless, they
seem to have a realistic appreciation of the con-
straints under which Hanoi operates. Mikhail
Kapitsa, a leading Soviet Foreign Ministry authori-
ty on Asia, recently told US officials that he ex-
pects Hanoi to continue to maintain a balance
between Moscow and Peking.
The Soviets will probably try to match the
generous economic assistance China has already
pledged to Vietnam. A large majority of the Viet-
narnesc delegation are economic specialists,
which -,uggests that Hanoi sees a major economic
agreement as the most important outcome of the
visit.
Moscow may have to question Le Duan dis-
creetly on the future of US-Vietnamese relations,
including the specific question of American
prisoners and MIAs in Indochina. In recent con-
versations, Soviet officials have suggested tha,
Moscow will not press Hanoi on these issues, in-
dicating instead that the US must take the in-
itiative to improve ties with North Vietnam, The
Soviets have, nevertheless, made plain their hope
that the US will maintain a role in Southeast Asia
sufficient to counter what they see as Peking's
growing influence. 25X1
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ARGENTINA: THE SEARCH FOR CONSENSUS
The administration, trying to buy time while it
gropes for solutions to the naion's economic
problems, has announced an accord recently
worked out with segments of the labor and
business communities. Termed iie "social truce,"
the document is a pledge to approach disputes by
means other than outright confrontation. It seeks
to revive th social Pact hammered out in 1973 by
the late Juaf, Peron, which committed labor and
business to limiting thc'. demands in the interest
of social peace and nationa: development..
The new accord comes amid a wdve
protest strikes and increased tension among
workers, following President Peron's recent an-
nouncement that there will be no new wage
hikes. Workers for some time have been com-
plaining that even the huge increases they
wrested from the government last June have been
eroded by rampant inflation. Thus far, there have
been five walkouts at major auto plants in Buenos
/'f
Economy Minister Cafiero
Aires and volatile Cordoba, and bank workers are
out as well.
The truce seeks to stem the tide of
strikes-and thus end the almost constant disrup-
tion of production-by offering job guarantees to
those who agree not to strike. Workers, however,
are likely to see this clause as an intolerable in-
fringement of their rights.
Union leaders, fearful of losing the support of
the rank and file, generally echo the workers' sen-
timents on the pay issue, but have so far avoided a
major confrontation with Economy Minister
Cafiero. He publicly advocates holding the line
on wages and seeks to tie future increases to
greater productivity. Cafiero, despite his strong
Peronist credentials and long association with
labor, cannot survive indefinitely without giving
the powerful workers at least some of what they
want; indeed, he has already compromised
somewhat by increasing family allowances.
Those labor leaders still committed to Peron's
presidency eventually could break with her if
worker pressure becomes too heavy. In that
event, the administration would be deprived of
most of its few remaining active supporters. Some
government critics, particularly among the
military, may well hope for such an occurrence as
further proof of the administration's weakness
and the need to replace it. While some officers
undoubtedly feel this way, others fear the
emergence of an undisciplined, leaderless labor
movement that would, at the very least, greatly
complicate any military attempt to govern.
The Peron administration also continues to
encounter problems in congress, where opposi-
tion leaders are pushing for an investigation of
alleged high-level corruption. Peronist
politicians, while trying to steer the investigation
away from the President herself, have reversed
their earlier position and voted to pursue the
matter. Presumably, they consider the inve t g:~-
tion inevitable and hope to lessen the potential
for damage by insisting that it be cor,t;ucted in
private.
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SECRET
V
s
ccnt
enezuela
re
ty nati~
~naliz d Lake Maracaibo oil production facilities
OIL: GOVERNMENT OWNERSHIP GROWS
Government ownership of world oil produc-
tion and refining, begun well before the Aral oil
embargo in 1973, is still increasing. The most im-
portant changes in ownership patterns have been
in states belonging to the Organization of
Petroleum Exporting Countries, where the goal is
100-percent national ownership of local facilities
and eventual participation in downstream ac-
tivities.
Previously, a handful of major Western inter-
national companies had dominated the world oil
industry, controlling supply and setting prices.
Although the oil companies find their participa-
tion increasingly constricted, they continue to
play a vital role, notably in exploration, refining,
marketing, and technical services.
Privatc ownership of the production stage of
the industry was already declining rapidly by late
1973. At that time, the international companies
had equity interests outside the US and Canada
equaling about 56 percent of free world produc-
tion, compared with an average of 87 percent in
1972. gran had nationalized the properties of the
consortium of operating companies, allowing
members access to crude for a 20-year period.
Other Gulf states, led by Saudi Arabia, had
negotiated 25 percent par" :ipation arrangements
with the foreign producers in December 1972.
Algeria had taken 77-percent participation in-
terest in crude production, Libya 51 percent, and
Nigeria 35 percent.
In the two years since the embargo, the
private share of free world production has fallen
to 40 percent, largely because of new participa-
tion arrangements worked out by OPEC states.
Iraq nationalized US and Dutch interests in the
Basrah Petroleum Company and now owns 85
percent of its production.
Kuwait contended that under the most-
favored-nation provision in its contracts with the
companies it was entitled to majority control. In a
new participation arrangement worked out with
Gulf Oil and British Petroleum in January 1974,
Kuwait took 60-percent ownership in their
operations-including production and export
facilities, a refinery, and a liquefied gas
plant-and retained complete title to all natural
gas output. The Kuwait formula became a model
for several other OPEC states.
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WEEKLY SUMMARY
Oct 31, 75
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? SECRET
Kuwait is unique among those countries op-
ting for an increased equity share. Most other
states have been satisfied to sell crude back to the
operating companies; Kuwait has sought to ex-
pand direct government sales to third parties. In
the past two years, it already has signed medium-
and long-term contracts with third parties, cover-
ing more than one-fourth of national oil produc-
tion, thus further reducing the marketing role
played by the operating companies.
At least three OPEC states are close to their
100-percent participation goal:
? VENEZUELA, which had not
previously taken any ownership of produc-
tion, will assume total control on January 1,
1976 under legislation already enacted. The
companies are to receive compensation in
the form of long-term government bonds.
? KUWAIT has nearly completed talks
with the operating companies to arrange a
100-percent take-over. Negotiations center
on the issues of company margins and
guaranteed volumes of company liftings.
? SAUDI ARABIA is engaged in similar
talks with its partners in Aramco.
In non-OPEC countries of the free world, ex-
cluding the U5 and Canada, 28 governments have
ownership of crude production. The total volume
of output in these countries is less than 5 million
barrels a day. The share of equity held by the
governments crept up from 54 to 58 percent in
the past two years, primarily because of a sharp
rise in Mexican production, which is entirely state
owned.
The shift to increased government ownership
of free-world refining has been far less pronounc-
ed. The government share of ownership of refin-
ing capacity in OPEC countries expanded
moderately-from 42 to 55 percent-in the past
two years.
During the same period in non-OPEC coun-
tries, which account for 92 percent of total free
world refining capacity, the government share
remained at 13 percent. Overall, government
control of total free world refining capacity is now
16 percent, compared with 15 percent in early
OPEC AID TO DEVELOPING COUNTRIES
OPEC has become a major source of
economic assistance for non-communist develop-
ing countries. Since October 1973, more than $21
billion in aid has been pledged by member states
bilaterally and through a special fund of the Inter-
national Monetary Fund, and almost half of this
amount has already been paid out. Total OPEC
disbursements this year, estimated at some $6
billion, will amount to one third of all official aid
going to the developing countries.
OPEC aid is highly skewed in favor of Muslim
countries. Half the aid of the past two years has
gone to Egypt and Syria, both net oil exporters, to
help them recover quickly from the 1973 war and
to assist their ambitious development programs.
Another 20 percent has gone to other Muslim
states, leaving only about 30 percent for non-
Muslim countries.
Almost all oil-importing Muslim countries
have been able to cover the increase in their oil
outlays through OPEC aid. India, a major non-
Muslim recipient, received 46-percent, but as a
group the non-Muslim developing countries hav,:
been able to meet only 15 percent of the increase
from this source. For the largest oil importers,
such as Brazil, South Korea, and Taiwan, OPEC
assistance has barely made a dent in their
skyrocketing petroleum bills.
Saudi Arabia and Kuwait have pledged
almost two thirds of the OPEC aid so far this year,
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compared with abo~ t half in 1974. New assistance
from other OPEC st, tes has fallen off. Iran, Libya,
Qatar, and Venezuela, for example, have reviuced
their aid by roughly half. Abu Dhabi, hit by
balance-of-payments problems last year, has cut
back its aid 65 percent.
All OPEC countries, even Saudi Arabia and
Kuwait, have begun to switch more heavily this
year to credits. Grant aid, which represented 40
percent of pledges in 1974, has been lowered to
25 percent. Iran continues to demand the stiffest
terms-repayment in 5 to 10 years, sometimes
with near market interest rates. Only 1 percent of
Tehran's aid has been outright grants.
In contrast to 1974, more than half of this
year's total aid has been targeted for project
assistance-often to assure raw material supplies
for new OPEC countries. Lacking the institutional
structures to direct project aid, OPEC has
channeled funds through regional development
UN: THE KOREA VOTE
The UN General Assembly's Political Com-
mittee this week passed conflicting resolutions
on Korea, thus setting the stage for hard
bargaining to get around the impasse when the
G' neral Assembly's plenary session considers
the Korean issue early next month.
The pro-Seoul resolution-emphasizing
the need to maintain the Korean Armistice
Agreement and Seoul's right to participate in
future security arrangements--passed by a vote
of 59 to 51, with 29 abstentions. The
pro-Pyongyang draft-featuring a call for un-
conditional dissolution of the UN Command
and withdrawal of all "foreign" forces-passed
51 to 38, with 50 abstentions.
The North Koreans, not unexpectedly,
proclaimed a major victory. T,%e vote reflected
banks, used multilateral institutions to oversee
project implementation, and entered into tripar-
tite arrangements with Western countries.
Economic assistance from OPEC will probably
level off or decline next year. Much will depend
on the extent to which OPEC Arab states un-
derwrite the Egyptian and Syrian current-account
deficits. Even a moderate cut in aid to these two
recipients would more than offset expected in-
creases in disbursements to other countries. the
greater importance of project aid will tend to slow
down the tempo of disbursements.
A proposed $1 to $2 billion multilateral fund
for offsetting the recent further hike in oil bills for
the developing countries is now under discussion.
Such a fund would have little immediate impact.
Only four of the six OPEC multilateral aid agen-
cies created since 1973 have begun operations,
and they have disbursed negligible amounts of
their growing diplomatic support in Southeast
Asia and among the nonaligned countries. Lob-
bying on both sides was intense; Pyongyang,
for example, threatened to break relations if
Australia voted against their draft. Australia
along with the Philippines, Turkey, Greece,
Brazil and several other countries shifted from
votes against the pro-Pyongyang draft last year
to abstentions.
Having for the first time won a UN en-
dorsement-however ambiguous-of their
views, the North K' reans will strongly resist
abandoning their major positions. There will be
strong pressures at the plenary session for a
compromise, but the only viable formula may
be one that avoids addressing the maior
Korean security issues.
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