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December 19, 1975
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eclassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 Secret 25X1 Weekly Summary Secret No. 0051/75 December 19, 1975 Copy N! 1399 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 The WEEKLY SUMMARY, issued every Friday morning by the Office of Current Intelligence, reports and analyzes signifi- cant developrnents of the week through noon on Thursday. It frequently includes material coordinated with or prepared by the Office of Economic Research, the Office of Strategic Research, the Office of Geographic and Cartographic Research, and the Directorate of Science and Technology. CONTENTS (Decembe-r /9,075) MIDDLE EAST AFRICA WESTERN HEMISPHERE 1 Angola: On and On 4 Lebanon: Fighting Down 5 Spanish Sahara: Spaniards Departing 7 Italy: Politic.,) Maneuvering 8 Portugal: Military Role; Economy 10 Spain: The King's Men i2 France: New IRf3MSilos 12 Iceland: The UN Approach 13 Law of the Sea: The 200-Mile Zone 14 Europe: Civil Aircraft Market 15 Yugoslavia-USSR: Minic Visit i6 USSR-Egypt: Relations Deteriorate 17 USSR: New Five-Year Plan 17 Poland: Hedging on the Economy 19 Chile-Bolivia: Inching Forward 19 Peru: Purging the Left 19 Argentina: Impeachment Voted Down EAST ASIA 25X1 PACIFIC Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 ANGOLA: ON AND ON None of the contending parties in the civil war scored any major military gains during the past week, although the forces opposing the Soviet-backed Popular Movement for the Libera- tion of Angola made some progress in the west-central sector. Leaders of the two sides are intensifying their efforts to win political support among African states prior to the planned special summit meeting of the Organization of African Unity. The conference apparently will not con- vene before next month. The Military Situation Late last week, a strike force including elements of the National Union for the Total Independence of Angola and the allied National Front for the Liberation of Angola pushed the Popular Movement out of the town of Cela. A National Union communique issued on December 15 had the force moving north toward Quibala, apparently along one of the main routes leading from the south to Luanda, seat of the Popular Movement's government. The muscle of this and other combined National Union - National Front task groups is provided by un- known numbers of South African soldiers, white mercenaries, and black Angolans who fought for the Portuguese against the Popular Movement during the insurgency. In the east, the' National Union consolidated its hold on Luso, recaptured last week. Union leaders and their advisers plan to send one of their combined strike groups against Teixeira de Sousa, which like Luso has changed hands twice in the past month, and another toward Henrique base in eastern Angola. North of Luanda, the military situation has remained essentially static since Popular Move- ment forces, backed by Cuban-manned artillery, advanced two weeks ago to within about 50 miles of Ambriz, the headquarters of the Zairian-sup- ported National Front. Destruction of bridges over several rivers and the start of the rainy season have checked the Movement's drive, at least tem- porarily. African Split Widens African foreign ministers will not meet in Ad- dis Ababa this weekend, as had been announced CAtIMOA . !~ _, ZAIRE) B~npuur~` . Bonpaeb~f" .1- HAnrigll. 11u Cnr=Iho Neu el Unlen e 1~{h~lA '?. I ulen~ s. NM? 4~\ Nellenel Unlen/ { Nellonel ~lonf ANGOLA SOUTN?WIF17 AFRICA IMAMIAIAI _ ~ r~_7N Page 1 WEEKLY SUMMARY Dec 19, 75 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 .! w ~~ :a 1 `'+i ~. n~ LA:_"w~ -."".'d f:~!~fiJ l.-J --I QrVA V-.1 r%1 "Ik by OAU offici; , to set a date and agenda for a later OAU summit. Governments supporting the Popular Movement's Agostinho Neto insisted the two me. tings be held back-to-back, but OAU members have not yet agreed on timing. The Popular Movement's friends are eager for an early summit, believing that, under present cir- cumstances, they can exploit the meeting to the Movement's advantage. At present the diplomatic trend in Afri:a continues to run in favor of the Movement; with Sudan's formal recognition of Neto's regime this week, the score among African states now is 14 for the Luanda government to none for the nominal joint regime proclaimed by his rivals last month. Countries that want to keep the OAU official- ly neutral in the Angolan conflict, on the other hand, are trying to buy time. These countries and the National Union's Savinibi apparently hope to counter the political damage to the Movement's Angolan adversaries from the highly publicized aid they are getting from South Africa by develop- ing a backlash against Soviet and Cuban assistance t) Neto. Support will be sought fora blanket con- demnation of all outside involvement in Angola and for a cease-tire and government of national unity there. With the OAU meetings in abeyance, Savimbi flew to Uganda this week for talks with OAU chairman Idi Amin. The National Union leader is due in Dakar on December 19 to confer with con- servative Sengilese President Senghor and reportedly intends on the same trio to visit Cameroon and Ivory Coast. In his talks with the West African leaders, all of whom oppose the Popular Movement's drive for OAU recognition as the sole legitimate Angolan nationalist group, Savimbi presumably will he focusing on concer- ting tactics for building African support against the Soviets and Cubans. His principal African backers-President Mobutu of Zaire and Presi- dent Kaunda of Zambia-are actually working tov and the same goal. Savimbi and his allies face an uphill struggle in their effort to neutralize the highly emotional South African issue, which mainly motivated Nigeria's and Tanzania's recognition of the Neto regime and is clearly causing other African governments to waver in their adherence to neutrality. The Popular Movement, of course, will continue to exploit the issue for all it is worth. This week the Movement stoked the fire by exhibiting, at a press conference in Luanda, four South African soldiers captured in the recent fighting at Cela. Neto's lieutenant then took the four with him on a visit to Nigeria that began in Lagos on December 16; they are certain to attract wide publicity there and wherever else he may ';,it. Savimbi, while in Kampala, made an attempt to disown Pretoria's assistance by claiming that L Page 2 WEEKLY SUMMARY Dec 19, 75 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 SECRET any South African forces +o Angola are there on Sino-Soviet Rivalry their own and by callir,j on African states to help drive them out. His aw,;ui'.ent is not likely to be Peking is still making an effort to capitalize on persuasive in many Afrir -n capitals. Moscow's heavy-handed support for the Popular Movement. Publicly, the Chinese are maintaining a position of strict neutrality, and there is no Soviet Press Admits SL Fjport evidence that any significant new amounts of Chinese military assistance are reaching the The Soviet central press has, for the first time, National Front or National Union. indirectly admitted that both Moscow and Havana are provid' tij, military support to the 25X1 Popular Movement kj Angola. Earlier this mono Pravda, in reporting on a press conference h: id by President Nyerere in Brussels, cited the Tanzanian President's state- ment that he was "certain" the USSR was providing the MPLA with the "necessary arms" for its struggle against the "interventionists" from South Africa. In an accompanying commentary, As long as other countries maintain their Pravda stated inter aria that the Soviet Union, current levels of assistance to the National Front which stands "among the loyal friends" of the and the National Union, China can be expected Angolan people and was one of the first to to maintain a low profile with its former clients, w;"lcome the birth of an independent regime, "is endorse the Organization of African Unity's call providing help and support to Angola during for neutrality toward Angola, and score these difficult days." propaganda points at Moscow's expense. Peking is clearly concerned, however, that it may not be Last weekend, moreover, the Soviet news able to sustain this approach. agency Tass tcok the unusual step of publicizing MPLA leader Neto's expression of gratitude for Moscow's "all-round help" to the Angolan peo- Any significant reduction in support for the ple. At the same time, Pravda provided the first National Front and National Union by other hint seen thus far in the Soviet press that Cuba is countries, for example, would present the furnishing substantial assistance to the MPLA. The Chinese with difficult decisions. Mobutu would Communist Party daily said that Cuba "always sup- almost certaioly want to divert to Angola large ported all national liberation movements in amounts of the Chinese assistance to his country Africa, including the MPLA-the sole legitimate to make up for the loss of other sources, and such representative of the Angolan people." increased Chinese involvement would soon become public knowledge. Moscow's decision to make public, even in an unofficial way, its role in Angola coincides with The prospect of a reversal of the Organiza- recent VILA gains in the military and diplomatic tion of African Unity's position on Angola or an arena and suggests that the Soviets may want to agreement among its members to go their get their fair share of the credit for these separate ways on the recognition issue would be successes. The decision also dovetails with recent equally unsettling to thn Chinese. This would revel,-.lions in the US press of allegedly substantial almost certainly lead to much wider African and US support for the MPLA's rivals; hence, the Third World recognition for the Popular Move- Soviets may now feel less compelled to mask the ment and leave Pekin on the wrong side of the dimensions of their own involvement. fence. 25X1 SECRET Page 3 WEEKLY SUMMARY Dec 19, 75 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 r Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 SECRET Phalangists take aim at snipers during recent fighting in downtown Beirut LEBANON: FIGHTING DOWN The fighting in Beirut between Christians and their Muslim and leftist foes abated somewhat during the week following the proclamation last Sunday of yet another cease-fire. The new truce was negotiated by Prime Minister Karami and Palestinian leader Yasir Arafat, with the Syrians playing a key role in smocthing the way. Damascus has also made a new mediatory move aimed at getting Lebanon's political leaders talk- ing again. that were sent in last week. Lebanese politicians-Christian, Muslim, and leftist-have over the past two weeks tra ieled to Damascus for consultations, and Syrian Foreign Minister Khaddam may soon come to Be rut to continue the Asad regime's efforts to mediate a political settlement. At present, the Syrians are focusing on helping Prime Minister Karami to form a more representative government. Expansion of the present narrowly based Arafat apparently was instrumental in gaining cabinet to include members of all principal acceptance of the truce from Ibrahim Qulaylat, political groups is one of the few remaining op- the leader of radical leftist forces that spearhead- tions that might help bring about a basic political ed the recent battle with Christian Phalangist settlement. A broadened government would militiamen for dominat;on of the city's inter- strengthen the Muslim Prime Minister's hand in national hotel district. The latest peace controlling the terms and pace of a reform arrangements provided for security forces to program, thus reassuring moderate Muslim replace the army in the embattled district. This groups. At the same time, it would give Christians was a concession tc the leftists who had gained a better chance to prevent or at least delay serious control over much of the area and had refused to erosion of their dominant position. Such a balan- relinquish their vantage points to the army units cing of interests would not satisfy Lebanon's leftist SECRET Page 4 WEEKLY SUMMARY Dec 19, 75 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 groups, however- they oppose the country's pre- sent system of power-sharin among religious groups. Until recently, Kamal Jumblatt-the principal spokesman for the leftists-had refused to be represented in a government that included the Phalanges Party and had insisted that his own reform program be accepted before the forma- tion of any new government. genera lack of confidence that the current cease-fire, still not fully implemented, will hold long enough to permit meaningful political progress. As of December 18, scattered fighting was continuing in Beirut, in villages southeast of the capital, and in the Tripoli-Zagharta area of northern Lebanon. In this uncertain atmosphere elements from any quarter could again upset the SPANISH SAHARA: SPANIARDS DEPARTING Morocco's King Hassan is continuing to send Moroccan security forces into northern Spanish Sahara to fil! the void left by Madrid's withdrawal from the territory well ahead of the late February deadline set in the agreement it signed with Rabat and Nouakchott last month. Algeria, frustrated by the failure of its efforts to obtain a clear-cut dis- avowal of the tripartite agreement by the UN General Assembly last week, is strengthening its general military posture and increasing aid to Polisario Front guerrillas fighting for the in- dependence of the territory. Madrid appears to have virtually completed its evacuation of Spanish forces and civilians. Spanish press reports indicate the few remaining troops will leave in early January; a small diplomatic mission will be maintained in El Aaiun, the territorial capital. The new Spanish regime is anxious to avoid any involvement in hostilities between Morocco and the Polisario Front or its sponsor, Algeria. Moroccan army units recently arrived in El Aaiun to take up security functions. As many as 4,- 000 to 5,000 Moroccan troops reportedly are in the capital and a similar number in Semara. Some 600 Moroccan police are also stationed in El Aaiun and a few outlying towns. Despite the influx of Moroccan forces and their aggressive pursuit of the guerrillas, Polisario r. 0 ? oo D Soan"icsti`1 Page 5 WEEKLY SUMMARY Dec 19, 75 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 SECRET resistance has spread. Several terrorist incidents occurred in El Aaiun last week. Polisario forces reportedly have considerable support among the local population in the territory, with many younger Saharans leaving the towns to join urn with the Front. Last week also brought the first reports of fighting between Mauritanian and Polisario forces, with incidents occurring at several widely separated points along the long border between Mauritania and the Saharan territory. Nouakchott has mobilized its 1,500-man army and is inducting new recruits. President Ould Daddah's govern- ment is especially concerned about protecting a vital rail line that runs parallel to the territory's southern border. In an effort to secure the rail head, Mauritanian troops, aided by a Moroccan unit that arrived by air last week, are trying to wrest control of a nearby town on the Saharan side that was occupied by Polisario forces last month. In their engagements with the Moroccans and Mauritanians, the Polisario guerrillas are now using mortars, machine guns, and grenade launchers. Each side has alleged the other is com- mitting atrocities and both are almost certainly guilty. 25X1 So long as they have Algerian backing, the guerrillas can keep up terrorist and sabotage at- tacks. The automated belt conveyor system that moves prosphate ore some 60 miles from Bu Craa to El Aaiun is especially vulnerable to guerrilla operations. Algeria, for its part, has increased its troop strength and added to its supply depots at Bechar and Tindouf, although the actual extent of the buildup is unknown. The Algerians have also ordered tents, medicine, and surgical equipment from French firms. Algeria's efforts are probably intended, for now at least, to exert psychological pressure on Morocco and to strengthen Algerian defenses along the border. Moreover, some of this activity is probably direct support of the Polisario rront. The Algae' ',ins are providing arms, training, and possibly some volunteers to the Front in the hope that the Moroccans will be bogged down fighting a long arid costly insurgency. Algiers is undoubtedly concerned over how Rabat will react to this support and wants to be ready for any contingency. 25X1 Page 6 WEEKLY SUMMARY Dec 19, 75 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 SECRET ITALY: POLITICAL MANEUVERING Italy's Christian Democratic and Socialist par- ties are both troubled by serious internal divisions as they prepare for congresses early next year. Debate will revolve around the central issue of how best to compete with the Communists in local elections this spring and in the next parliameoitary race. In the six months since the Communists near- ly outpolled the long-dominant Christian Democrats in nationwide local elections, the latter have done little to improve their prospects. The question of how to deal with the Communists has deeply divided the Christian Democrats, with the result that they were able to agree on little more than a date for the party congress at their last strategy session. The congress will open on March 4, a date acceptable to both the Christian Democratic left-led by interim party chief Zaccagni::i and Prime Minister Moro-and the opposing center- right group that is seeking to gain control of the party. The latter group, which includes a majority of the party, wanted the congress held as soon as possible, since Zaccagnini is scheduled to step down at the meeting. The center-right maintains that Zaccagnini's support for an open "dialogue" with the Communist opposition threatens to edge the Christian Democrats toward broader collaboration with them. Zaccagnini was in favor of delaying the congress until spring or later in order to consolidate the influence the party left has been gaining since he took over in July. Fearing a split that could cripple the party in the next campaign, some Christian Democrats have begun to work to bridge the gap between these two groups. Foreign Minister Rumor and Treasury Minister Colombo, for example, are part of an emerging centrist faction that is trying to put together a broadly based majority that includes all but the extreme left and extreme right in the party. The Christian Democrats' lack of progress so far, however, has helped convince the Church to take a more active role in domestic politics than it Zaccagnini has since the 1950s. Alarmed in particular by the possibility of the Communists' winning the municipal elections in Rome tllis spring, the Church hierarchy-including the Pope-is taking a harder line on the Communists. The strongest statement came this week, v.hen the Council of Italian Bishops declared that it is impossible to be Marxist and Christian at the same time. For their part, the Soc`.alists have been preoc- cupied by an internal quarrel over whether to continue their crucial parliamentary support for the Moro government. Socialist leader De Mar- tino has been under strong pressure from members of his party who believe that continued support for the government will hurt the Socialists in the next election. Last week, De Martino-while sr;arpening his criticism of the government-convinced the Socialist directorate to postpone until the party congress in February any decision on whether to end support for Moro. De Martino maintained that causing a government crisis now would play into the hands of Christian Democrats and Social Democrats who are opposing the trend in their parties toward an accomodation with the Page 7 WEEKLY SUMMARY Dec 19. 75 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 SECRET Socialists. He also agreed that a crisis in present circumstances could precipitate early parliamen- tary elections, which most political leaders oppose and for which the Socialists would be blamed. De Martino probably also wants to avoid bad publicity prior to or during his visit to the US in January. In addition, divisions among Socialists over what course to follow if Moro falls could destroy the veneer of unity that De Martino hopes to maintain through the party congress. The Communists are also urging the gover- ning parties to avoid actions that could lead to the collapse of Moro's government. Communist leaders fear that dissolution of the government now would lead to early parliamentary elections in which the central issue would be the question of Communist participation in the government. The Communists want to avoid a premature con- frontation and prefer to devote their time to con- solidating the gains they scored at the local level in June. PORTUGAL Portuguese military leaders are proceeding with a plan to reduce the armed forces' role in politics. On December 12 the Revolutionary Council announced a constitutional law forbid- ding military participation in partisan political ac- tivities. Recognizing the changing political situa- tion, the law describes the armed forces as the "guarantor" of democracy and socialism rather than as the "driving force of the revolution," the phrase often heard under former prime minister Vasco Goncalves. It also lays the groundwork for ending months of military domination of the government by relegating the armed forces to a less grandiose role. I.ip constitutional law foreshadows changes in ,greenient reached between the military and th., political parties last spring, in which the civilians agreed that the armed forces would re- tain their dominant role for the next three to five years. Since the pro-Communist regime headed by General Goncalves was overthrown in September, the political parties have demanded revisions in the pact, claiming that it no longer ac- curately represents political realities. Talks began this week between the parties and a five-man commission from the Revolutionary Council for the purpose of making such revisions. This new attitude of the military reflects the views of a group of "professional" soldiers-some of whom are members of the Revolutionary Council-which seeks to return political power exclusively to civilians and to let the Portuguese people decide whether they want a socialist society. The strength of the "professional" officers' group is not known with certainty, but its in- fluence is believed to be growing. It already appears to have played a major role not only in putting down last month's leftist rebellion, but also in bringing about a marked change in the political direction of the country. An early test of the group's strength will be the extent to which the new pact between the civilian political parties and the military reflects the "professionials" call for the military to turn power over to the civilians and return to the barracks. The purge of leftists following the insurrec- tion on November 25 improves prospects for the emergency economic program outlined last month but by no means assures its implementa- tion. Within a week of the uprising, the govern- ment was able to shift attention to economic af- fairs long enough to approve a series of minor measures. Lisbon still faces fundamental economic difficulties and has a limited political capability to deal with them. The emergency economic program is a work- ing document intended to be the basis for discus- sion and development of specific measures. It' calls for a number of unpopular actions, notably a 10 percent cut in consumption to reduce imports WEEKLY SUMMARY Dec 19, 75 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15 CIA-RDP86T00608R000300020054-9 SECRET and free capacity for production of export and in- vestment goods. Consumption would be curbed by increased taxes, wage controls, higher prices, and perhaps rationing. The balance-of-payments deficit would be cut by higher tariffs, export subsidies, and other measures. Employment and output would be r:3is- ed by boosting public sector investment and en- couraging private investors. Civil construction and export industries would be the priority areas for investment. To carry out this program, government of- ficials of varying political stripe must agree on a detai'ed series of laws and regulations. Ever, un- der the best of circumstances, the government is not likely to succeed in reassuring investors because of its commitment to worker control over private enterprise. Lisbon now estimates real gross national product will decline 10 to 15 percent this year. Output fell sharply with the nationalizations and worker seizures that followed the abortive coup in March. Agricultural production has held up, but large-scale nationalization and seizure of land, which began in September, will depress next year's farm output. The government already controls 60 to 75 percent of the modern economy, but has not yet begun to operate it in a coordinated manner or to invest heavily in it. Many of the remaining private businesses are on the brink of ruin, their chance of survival sapped by forced wage increases, price controls, a ban on dismissals, confused and incon- sistent regulations, and denial of credit by leftist- dominated committees in the nationalized banks. Economic activity has been interrupted by fre- quent political meetings and hampered by worker insubordination. Most prerevolutionary mangers and owners have been forced from their positions, leaving a shortage of critical talents. Many have fled to Brazil, while others have been jailed on charges of "economic sabotage." Remaining private businessmen and farm proprietors have been subjected to constant harassment. Legal measures to impose worker control in enterprises still in private hands are pending. Unemployment is believed to be ap- proaching 400,000 persons, or 13 percent of the labor force. The total has been swelled in recent months by the influx of Angolan refugees, the dis- charge of military personnel, a drop in the number of Portuguese finding jobs in France, and the deterioration of the economy. Only about 20,000 people seem to be receiving unemploy- ment benefits. Consumer prices, which rose about 25 per- cent in the 12 months prior to the April 1974 coup, rose at a 20-percent annual rate in the succeeding 16 months, according to official figures. All wage negotiations have been suspended for the remainder of the year, pending enactment of an incomes policy. The serious drain of foreign exchange reserves continues, although this year's current account deficit could be less than the $800 million of 1974. Reserves dropped $400 million in the first eight months of 1975, following a nearly $500- million decline in 1974. Despite expected government borrowing from the IMF and priva,^ banks, Lisbon will have to initiate sizable gold sales by the second quarter of 1976. Foreign aid will neither stop the decline of reserves in the near term nor correct the problems underlying the payments imbalance. So far, the EC has offered more than any other donor-$175 riii1lion in conc'ssionary ioans to finance specific development projects, refugee assistance consisting of $2.5 million in surplus powdered milk and butter oil, and a credit for medicines. Disbursement of the loans cannot begin for several months, as Lisbon has not come up with plans for projects in accord with EC re- quirements. The US and individual West Euro- pean countries also have offered assistance, but little aid has been forthcoming from Communist countries. 25X1 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15 : Dec 19, 75 CIA-RDP86T00608R000300020054-9 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 SECRET SPAIN: THE KING'S MEN Most of the key political portfolios in the new Spanish cabinet are held by men who have publicly supported gradual liberalization of Spain's political system, closer ties with Europe, and continued friendly relations with the US. They are joined by a team of bright technical ex- perts who now hold all of the important economic portfolios. The orientation of the cabinet has thus shifted away from the authoritarian right, and the few rightists remain- ing may find it difficult to stand in the way of gradual change toward a more democratic socie- ty. The cabinet was sworn in on December 1' The King's hand is evident in a number of the appointments Pry Minister Carlos Arias appears to be left with only one personal follower, the hold-over minister of public works, Valdes Gonzalez. Fraga, until recently Spain's ambassador to London, has achieved the strongest position within the cabinet. Strong-willed and outspoken, Fraga has an eye on the prime minister's job. He heads a powerful ministry-charged mainly with internal security-and is one of three deputy New Spanish Cabinet Prime Minister ---- --------- CrrlosAtiasNavarro'c Dept. Prime Minister lot Defense Affairs. Minister wi'haul Portfolio.- - - - - - _ _ _ _ _ - LtSen. Santiago Die: do Mendivil Dept- Prime Minister for the Interior. Minister of the Interior. - - - - - -- - _ _ _ - Manuel Frog...:4rnec Dept. Prime Minister for Economic Affairs. Minister of Finance. - _ - _ _ _ - Juan Miguel Villor Mitt Agriculture - - - - _ - - _ _ _ Virgilio Onate Gilc Air Force - - - - - - - - - - - - - - - - _ - _ - - LIGen. Carlos Franco Idbarnegarey Army - - - - - - - - - - - - - - - - - - - - - - LtGen. Felix Alvan:-Arena, Cmmrr'ee - - - - _ _ - -- - _ _ _ _ -- - - _ Leopoldo Caivo Sotoloe Education and Science _ _ _ - _ _ _ Carlos Robles Piquerc Foreign Affairs Jose Marie de Arailnc Housing - - - _ _ - _ _ _ _ Francisco Lozano Vicarial Industry - - - - - - - - - - Carlos Per,: del Briciot Information and ioutism - - _ -- - _ - _ _ _ Adolfo Martin - Gamatoc labor ------------ _ - . _ _----_.Jos,Solii It ix'm National Movement - - - - - - - - - - _ _ _ - - - - Adolfo Subre: Gonzoia,m Navy - - - - - - - - - - - - - Adm. Gabriel Pita do Volga' Office of the Prime Minister - - - - - - _ _ _ _ - _ Alfonso Oserio Garciac Public Works _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Antonio Valdes Gonzales' t Syndicate Organization _ - _ _ _ _ _ _ _ _ - - - Rodolfa Martin Villain (rho (eonom/c Oweie/mml end Planning Ministry was ehoiishod.) Relainrit from lost cabin. 'Favor gradual ekaege:'"National Movement. Economic (eebnicol experts prime ministers. A brother-in-law and three close colleagues occupy the ministries of education and science, information and tourism, commerce, and industry, giving Fraga important levers in five ma- jor areas. The cabinet is generally considered one of transition. If Fraga succeeds in making his mark, he may well take over from Arias. Fraga has publicly favored legalization of political parties, excluding the Communists, and free arliamen- ,ar elections. The second major personality in the cabinet is the new foreign minister, Jose Maria de Areilza, the Count of Motrico, a former ambassador to Washington and Paris and long-time monarchist. In 1964, Areilza gave up his post in Paris in order to distance himself from the Franco regime, and in recent years he has been outspoken in op- posing the repressive policies of the government. He has many contacts among the democratic left. Widely considered an opportunist, he is political- ly ambitious and, like Fraga, has hopes of becom- ing prime minister. In all, five of the new ministers are former ambassadors who served in countries vital to Spain's foreign relations-the US, the UK, France, Morocco, and the Vatican-pointing perhaps to a determination to improve relations abroad. The National Movement, still Spain's only legal political party, has only three representatives in the new cabinet, and two of them are young supporters of orderly change. Jose Solis Ruiz--moved from the ministry of the Movement to that of labor--is the only staunch conservative, but he is also considered an opportunist and is not expected to oppose modest political evolu- tion. Regime Christian Democrats have two representatives in the government, including Alfonso Osorio, who is well-liked by the King and SECRET Page 10 WEEKLY SUMMARY Dec 19, 75 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 King Juan Carlos presents his new cabinet replaces Arias' right-hand man, Carro Martinez, as minister of the prime minister's office. Although regime Christian Democrats are the most conservative of the various Christian Democratic factions in Spain, they favor evolutionary change and could provide a bridge to other Christian Democrats in the illegal democratic opposition. Prior to the announcement of the cabinet, there was much speculation that Arias would set up a defense ministry to coordinate the three militar services. The King and Arias apparently decided to compromise and appointed Lieuten- ant General Santiago y Diaz de Mendivil, one of the less conservative members of the armed forces hierarchy, deputy prime minister for defense and minister without portfolio. Santiago will apparently be responsible for defense coor- dination, but it is unclear how much authority he will have over the three service ministries. Following the first meeting of the new cabinet last weekend, the government issued a forward-looking statement of principles emphasizing economic and social welfare and orderly political reforms. Its broad generalities and lack of a timetable have disappointed the left, which will continue to try to organize strikes and protest demonstrations to bring pressure on the government. Nevertheless, some leaders of the democratic opposition have voiced approval of the sweeping cabinet changes. While emphasiz- ing that the changes do not go far enough, they have admitted that the new government is a positive step given the present situation in Spain. I Page 11 WEEKLY SUMMARY Dec 19, 75 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R0003000200544 ICELAND: THE UN APPROACH Iceland last week requested an urgent meeting of the UN Security Council following an incident on December 11 in which an Icelandic patrol boat was rammed by a British support ship inside Iceland's 12-mile limit. The British ship ap- parently was seeking shelter from a storm when the incident occurred. Iceland called the incident a "flagrant violation of Iceland's sovereignty, en- dangering peace and security." Reykjavik first instructed its UN delegation to propose a resolution condemning the ramming incident as a violation of Icelandic sovereignty, but later agreed to a more subdued approach. The UK engaged in some quiet diplomacy and successfully persuaded most of the Security Council members, as well as the Nordic countries, to urge Iceland to limit the Security Council ses- sion to a presentation of views. Iceland has for several weeks been con- sidering an approach to the UN as part of an effort to gain worldwide sympathy and support. Reyk- ja?, ik deferred an approach to the UN General Assembly on a resolution that would have brand- ed the UK an aggressor, but reserved the right to act if other initiatives failed. The ramming inci- dent provoked the request for an emergency meeting of the Security Council. This is the first time in the long history of its fishing dispute with the UK that Iceland has appealed to the UN. In the 1972-73 cod war, Reykjavik considered raising the issue at the UN, but never followed through. Iceland probably felt it could make a better case )ut of the cur ent dis- 25X1 pute because of British violation of Iceland's 12- mile limit, which the UK recognizes. Page 12 WEEKLY SUMMARY Dec 19, 75 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 SECRET Iceland's desire not to antagonize the US probably influenced the decision to tone down its approach to the UN. jthe Icelandic coalition could not go away emp- ty-handed and face the almost certain barrage of criticism by the opposition parties at home. The timing of the ramming incident-it oc- curred during a meeting of NATO foreign ministers in Brussels on December 11-12-may have killed any hopes that Iceland will accept Britain's latest offer on the size of the annual fishing catch. In an effort to get the stalled negotiations going again, Bti'ish Foreign Secr.,tary Callaghan told Icelandic Foreign Minister Agustsson during bilateral talk. in Brussels that the UK was prepared to recognize that fish stocks were dangerously depleted and were vital to Iceland. On the tough issues, t c;i- don would reduce its annual catch to a figure somewhere between the 110,000 tons the British have demanded until now and the 65,000 tons that Iceland wants. He repeated that Britain would withdraw its warships from Icelandic waters if Iceland would stop harassing British trawlers. So far, there has been no response from Reykjavik. Iceland has consistently maintained thai its position on the size of the British -atch is 25X1 non-negotiable and has rejected Londor.'s con- ditions for removing its frigates. r LAW OF THE SEA: THE 200-MILE ZONE Moves in recent months by Mexico and Iceland, to establish 200-mile zones of control off their coasts have raised fears th0t other nations will take similar actions. If many more countries do so, efforts to reach an international consensus at the Law of the Sea Conference may be under- mined. During the session of the conference in Geneva last April and May, most nations agreed in principle that coastal states should have exclusive control over petroleum and other seabed mineral resources, as well as the right to manage coastal fisheries, out to 200 miles. Several major issues re- main to he resolved, however, before an inter- national agreement can be reached: ? The legal slat(? of the economic zones, and residual rights of states that have heretofore operated in the zones to freedom of navigation, marine scientific research, and control over marine pollution within the e'conLlnlic Zone. ? The right of landlocked states to fish in the economic zones of neighboring coastal states. ? The harvesting of coastal fish not taken by the zonal state. ? 'tie management and conservation of highly migratory species of fish. Uncertainty as to whether the Law of the Sea Conference could resolve these issues was probably a major factor in the recent declarations by Mexico and Iceland of 200-mile zones. Other nations may follow suit, and many will, unless substantial progress is made in the next -e~sion of the conference. scheduled for March in New York. Unilateral declarations are most likely from countries that desire to conserve offshore fishing resources. Even Japan, which has long voiced op- position to unilateral declarations, is under in- tense domestic pressure to extend its territorial waters to '12 miles to curb Soviet fishing activity. Nations such as Canada, whose waters are heavily fished by foreign fleets, can be expected to claim the right to manage all living and mineral resources out to 200 miles. Additional Latin American countries, concerned about fishing resources and offshore minerals, may take similar unilateral actions. Major fishing nations, especial- ly the USSR, will seek bilateral agreements to protect their access to their usual fishing grounds. Page 13 WEEKLY SUMMARY D,c 19, 75 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 EUROPE: CIVIL AIRCRAFT MARKET Over the next decade, Wmt Frlropean civil airlines will need to replace aho it 1150 short-haul aircraft, worth .hunt $20 billion in '1975 dollars. I or the p,ISt two decades, Western I urope's civil aircraft manufacturers have been unable to compete with (1S manufacturers in the West F.uro- leilll 111afkot. Fit(, I tiropeans have .I quire(I ad- vanced 11S technology, however, and now have the potential to produce a new cost-effective short-haul aircraft. Within the now year, the I uropean ttlanufac- torers will have engine and airframe technology comparable to that of US manufacturers and can therefore sleet the performance req(liremmnts established for the new short-haul aircraft. They also have the necessary production capacity to built) most of the 1150 aircraft that are needed. They will have to marshal their resources and cooperate to the fullest, however, if they are to get their short-haul aircraft off the ground ahead of their US competitors, who last year exported $2.7 billion worth of civil transport aircraft. The Soviet aircraft industry is expected to be no more than an onlooker. The Soviets have neither a current production model nor plans for a new model that would come close to the re- quirements established by the West Europeans. Aircraft Requirements About a year ago, at the urging of their governments, a group of West European aircraft manufacturers and national airline companies ex- amined requirements for the 1980 to 2000 period. They decided they would need two sizes of replacement aircraft: ? A smaller aircraft with 90 to 120 seats and a range of up to 1,000 miles. Such a plane is expected to evolve from modifications in US and West European air- craft now under production. ? A larger shirt-haul aircraft with 170 to 200 seats and a range of about 2,500 miles. I he Ieadilrl; ( ontenders in this class are Air- bus Industrie A 100 1310, 115 Boeing 7X7, and Us Ihnrglas I)('X200. the 11S-(Nesigne(1 aircraft differ from the Air- hus principally in minimum take-oaf (lis- tanc e-7,000 to 9,(X)0 feet versus 5,000 feet. This performance characteristic alone would give the I urope,uls an advantage over their 1IS competi- tion he( ause many I elropean ?lirfields have runways of only 5,000 to 6,000 feet, I he 5(iledule(I 1310 variant of the A.300 may have the hest combination of performance and econonlic features for ,he future West European market. this family of aircraft has the sue and design flexibility, coupled with advanced technology-new wing aerodynamics arld new structural materials, including composites-to meet performance and economic requirements. Since some of the research and development expenses have already been absorbed and since the A.300 I31() variant could be ready perhaps as early as 1979-one to two years earlier than any all-new, design-the 1310 is currently the strongest Europvarl candidate. The 1310 variant could be powered initially by current engines and later by advanced high-performance engines. High-Performance Engine The early availability of an advanced high-performance engine is important to West F.urop:'an manufacturers. If they were to wait for the development in Western Europe of such an engine or for US manufacturers to develop the engine for US airlines, the US would he able to keep its market advantage. Thus, the develop- ment of such an engine and the advanced air- frame technnt ,y will be important in the selec- tion of a replacern .. d;craft. Fortunately for the West Europeans, a new en;ine, the CFM 56 high-bypass engine with a nominal 20,000-pound thrust-the so-called 10- ton engine-should be available in early 1979. It is being jointly developed by General Electric and French-government-owned Snecma. Page 14 WEEKLY SUMMARY Dec 19, 75 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 SECRET Ihis engine meets the requirements c,1 low fuel consunipt!on, as well as lower noise and emissions; it is expected to be ready for series production ;n 19711. A new, competitive US engirie, the JTIOI), will probably not he ready for s( rids production until at least 1980. Whatever the West European decision, France almost certainly will insist that the aircraft ultimately selected he powered by the 10-ton engine. Manufa( turers wishing to compete for the West European replacement contracts will have to commit themselves to,i new aircraft program now or in the very near fu!urc. Several models of air- craft in existing fleets have been out of produc- tion for a~ long as it decade and have reached retirement age. About half the cur, ent l /eSI Euro- pean short-haul fleet-assuming a 16-year aircraft life-will be out of service by mid-1983. YUGOSLAVIA-USSR: MINIC VISIT Yugoslav Foreign Minister Minic's early Decemter visit to Moscow produced several bland statements that suggest a deliberate attempt to play down the failure to resolve basic Soviet-Yugoslav differences. Before the trip, considerable Western press attention had focused on Belgrade's dis- agreements with the Soviets over the proposed European Communist Conference and on Yugoslav suspicions that Moscow is behind pro-Soviet subversive activity in Yugoslo .1a. Neither side, however, has wanted a serious deterioration in relations, and the Minic mis- sion prcvided a useful opportunity to quiet speculation about an impending break. The communique on the visit said the talks occurred in an atmosphere of "friendliness, mutual understanding and frankness." There were no direct references to differences, but neither were there any hints that the Yugoslavs accept Soviet denials of involvement with Stalinist subversives in Yugoslavia. I uropean replacenu'nt need',, in fact, are some Iwo to three years ahead of the needs of US airlines, I he availability of .i quiet, economical engine with r 10-ton thrust provides West Europeans with an o iportunity to supply Western I trope's needs for short-haul aircraft. III(, f uropean manufacturers need this market to maintain eniployntent and to keep production lines going. They are suffering from the failure of some past civil aircraft programs and from US success in winning the competition for replacement fighter aircraft with the F-16. A r,ieeting in the near future of the I'C Court- cil is expected to address European civil aviation plans and policies. The results of this meeting will affect Western Europe's ability to capture a major portion of its own market and to remain corn- petitive in the into-national arena. The communique ev;dently was drafted after considerable wrangling, and Yugoslav observers are privately discounting its significance. Instead, they are stressing Mi.iic's toast to Gromyko which, they say, amounted to a lecture on the principles of non-interference in Yugoslav internal affairs. Given the contentious political substance of the talks, economic relations emerged center stage in media coverage. A new five-year trade plan calling for $14 billion in two-way trade was signed by the foreign trade ministers at the outset of Minic's trip. The growth in bilateral trade will thus continue through 1980, but at a somewhat slower rate. By September of this year, the USSR had supplanted West Germany as Yugoslavia's leading trading partner, and bilateral trade in 1975 will probably reach nearly $2 billion. Two years ago, trade amounted to only $815 million, but higher prices for Soviet oil and raw ma- terials have since then rapidly inflated the dol- Page 15 WEEKLY SUMMARY Dec 19, 75 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 USSP-EG'(PT: RELATIONS DETERI )RATE The mcent irllpac se In Soviet-Egyptian debt negotiations is a further indication of the deterioration in their relationship. Egypt's finan- cial options have increased as a result o onerous Arab aid, which has reduced the effectiveness of Moscow's withholding of arms deliveries and its hard line on debt rescheduling. Debt talks reached a stilleniat(' over Cairo's refusal to accept Soviet conditions fo, reschedul- ing Egypt's $2- to 4-billion aid debt. Moscow refused Sadat's demand for it ten-year moratorium On all payments and for spreading repayments over a 30- 40-year period. Despite the failure to reschedule the debt, it 1976 trade protocol signed at the recent meeting allows Egypt to export roughly $140 million more than it receives, Presumably, some of the excess could be used for debt repayments. Until recently Moscow had deferred most of Egypt's military repayments, although service on economic debt was maintained. The latter has been paid as scheduled over 5-12 years at 2.5 to 3.0 percent interest. Payments have amounted to $60 million to $85 million a year since completion Net Flow of Soviet Economic Aid to Egypt 01 1 I i i l 1969 1970 1971 !972 1973 1974 1975 of the Aswan Dam in 1970, about equal to annual aid receipts from the U.ISR. In 1975, Egypt paid back more than it received in new aid. Moscow', cguick replacement of most of Cairo's military equipment losses in the 1967 and 1973 wars underlined the extent of the Soviet comillitnivnt to the Middle East. Since the 1973 Arab-Israeli conflict, however, no new Soviet-Egyptiall military agreements have been signed. Deliveries under old ,k cords continued, but even these have been reduced to it trickle since early summer. Deliveries totaled $80 million in 1974. Three squadrons of fighters, including 2C MIG-23s, and other equipment worth about $155 million were delivered in the first half of 1975, bringing total Soviet arms shipments to Egypt in the last two decades to at least $3.5 billion, Recent Arab iini,ncing has decreased Egypt's dependence on the USSR and allowed it to con- tract with the UK and France for let fi 'h; ors, helicopters, and air-to-air missiles. /Egypt also seeking Arab and Western financing to ex- pand its military aircraft industry. Nevertheless, the Soviet arms embargo has had a serious impact on Egyptian military readiness, and substantial amounts of Western arms are a long way off. Strains in Soviet-Egyptian political and military relations have not directly affected ongo- ing Soviet development assistance to Egypt. Dur- ing 1975, more than 1,500 Soviet economic technicians were in Egypt, many working on the expansion of its only integrated steel mill and on a Soviet-built aluminum plant. They also were employed on ship repair work and shipbuilding at the Alexandria shipyard, and in providing assistance to Egypt's fishing industry and large-scale irrigation and rural electrification programs. Here too, however, Arab financin^ has reduced the relative importance of Soviet aid. Although no new Soviet development aid has been extended since 1971, some $400 million of Page 16 WEEKLY SUMMARY Dec 19, 75 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15 CIA-RDP86T00608R000300020054-9 SECRET credits remain to he drawn on old agreements that total $1.4 hilli< n. Moscow has bean cautious in undertaking new assistance, however. A $20- million grant for clearing mines from the Gulf of Suez was the only eniergenc -related assistance provided in the aftermath of the October 1973 war. Moscow, still anxious to maintain ,1 role in Egypt, has recently been seeking to revitalize its economic aid program. It agreed earlier this year to go ahead with a cement plant at Asyut and to increase the capacity of the aluminum plant, both to be financed under existing credits. The USSR has also offered to underwrite the development of the Abu Tartur phosphate deposits and related facilities, for which at least $600 million of new Soviet credits would be required. Egypt is ap- parently shopping elsewhere for funding the Nbu Tartur, however. 25X1 USSR: NEW FIVE-YEAR PLAN On December 13, the Soviets outlined a five-year rlan for 1976-80 that apparently commits the country to lower, more realistic goals than did the previous five-year plan. The highest targets are in the agricultural sector; investment there is to be further increased and the annual grain harvest is set close to the record level. Thrift, efficiency, and quality production are stressed, and there is little encouragement for the consumer to expect anything more than a gradual increase in the standard of living. This was foreshadowed in the 1976 plan announced earlier this month. The new plan calls for the following increases over the five-year period: ? Agriculture: 14-17 percent versus 37.4'i pc,-cent originally planned for 1971-75. he goal for grain is set at between 215 and 220 million metric tons a ye, r; only once has the harvest been higher than 215 million tons. Me already heavy investment program in agriculture will be further emphasized, rising from 1.11 billion rubles in 1971-75 to 172 billion rubles in 1976-80 ? Industry: .35-39 percent versus 47 )orcent originally planned for 1971-75; I)eavy industr y is to grow by 38-42 percent and light industry by 30-32 percent. The 1976- 80 plan thus continues the midterm reversal of the current plan, which at first promised to accelerate the production of consumer goods faster than that of producer goods. ? National income (roughly com- parable to the Western concept of gross national product): 24-28 percent, compared with 39 percent originally set for 1971-75. ? Wages: 16-18 percent for salaried workers and 24-27 percent for collective farmers. The difference is in line with the current policy of reducing the disparity between the two groups. ? Foreign trade: 30-35 percent in volume, roughly comparable to the increase planned for 1971-75. The outline of the new five-year plan, while acknowledging the negative impact on the economy caused by weather-connected harvest failures, criticizes production shortfalls and other shortcomings in the non-agricultural sectors as POLAND: HEDGING ON THE ECONOMY With a cautious eye on the volatile working class, the Polish party congress ended last Friday with promises of further economic progress. Both party leader Gierek and Prime Minister )aroszewicz acknowledged that serious economic problems beset the country-including in- M Page 17 WEEKLY SUMMARY Dec 19, 75 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15 : CIA-RDP86T00608R000300020054-9 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 67 sa F u flationary pressures, consumer goods shortages, s speech at the party congress g , is regarded by many Poles as a comer. Tadeusz and mushrooming repayments on a soaring hard Wrzaszczyk, who was appointed head of the plan- currency debt. Instead of shifting growth ning commission and a deputy premier earlier priorities to alleviate th,'se problems however h the leadership outlined a program that would continue the current economic momentum. Thus, investment, consumption, and production targets for 1976-80 are the same as those set for the last five-year period. Gierek and Jaroszewicz claimed repeatedly that the projected goals can be achieved through better management and worker performance and through increased productivity based on imported Western machinery and equipment. Both leaders hedged on the sensitive issue of price increases for basic foodstuffs. Gierek, for ex- aniple, justified the need for removing the price free.-e, but added quickly that a final decision will be made only "after further study and con- sultations with the people." Every Pole knows that this means the price of food will go up, but the bureaucratic maneuvering could last until after Easter. The leadership most certainly recognizes th at any sudden large price increases could lead to violent worker reaction as they did in 1970. The few changes in the top leadership an- nounced at the congress were obviously designed to strengthen Gierek's control. His pre-congress team was re-elected virtually in toto. Two newcomers were elected candidate members of the Politburo. Jerzy Lukaszewicz, party secretary for press and propaganda matters, t is fall, is a strong supporter of Gierek's efforts to use Western credits and technology to modernize the economy. The party secretariat and the central com- mittee were enlarged, but the changes will not affect power relations at the top. More then 70 foreign delegations attended the congress. Soviet party leader Brezhnev's speech was short on substance, but-as is his wont in recent months-bearish on relations with the West. CSCE was clearly on his mind. He demanded that no one aspect of the Helsinki agreements be emphasized over another, and he criticized the West for its failure to disseminate the text sifficiently. In addition, he repeated his earlier references to "ideological penetration." The unexceptional speeches of the other East European party leaders were generally refrains of Brezhnev's themes. Now that the congress ,tas promised a con- tinued rise in the standard of living, and with special supplies of f i;,,; available for Christmas, tensions in Polani will remain low for the next few weeks. Wars....w cannot continue its special supply efforts indefinitely, however, and signs )f discontent will soon resurface as Poles go back to their normal business of rumor-mongering in an- ticipation of rice increases and renewed food shortages. 25X1 SECRET Page 18 WEEKLY SUMMARY Dec .19, 75 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 SECRET PERU: PURGING THE LEFT During Army Day speeches on December 9, both the President and Prime Minister Vargas wai ned "counterrv olutioriaries" against attemp- ting to "destabilize" the government. l'\lorales Bermudez went on to declare that, if necessary, force would be used to protect the military-led revolution. The government is in fact facing serious economic problems, and balance-of-payments difficulties may be more troublesome than it had anticipated. The problems have been com- pounded by labor strife, which continues despite government efforts to respond to worker grievances. A crackdown against leftists would give rise to charges that the President has sold out to the right wing and reneged on earlier promises of more open political debate. Morales Bermudez' support within the military, however, almost cer- tainly will not suffer and may even be enhanced b such a move. CHILE-BOLIVIA: INCHING FORWARD The Chilean government is apparently still not agreed on just how far to go toward satisfying Bolivia's aspiration for a sovereign outlet to the sea. A Foreign Ministry spokesman in Santiago meanwhile has issued a formal opinion that early resolution of the problem is unlikely, a move calculated to lower the heat that Banzer has applied to the issue. Pinochet nevertheless recognizes that pressures are building on Banzer for some sign of progress in the talks before February-the first anniversary of the decision to resume diplomatic relations and begin bilateral discussions on the century-old problem. Lima would have serious reservations about any agreement involving the erstwhile Peruvian provinces won by Chile in the War of the Pacific (1879-1883). A 1929 protocol requires Peruvian consent to any alteration of boundaries. For the time being, the Peruvians are willing to let Chile and Bolivia grapple with the issue by themselves, but the Morales Bermudez government will insist on a voice in the settlement if it affects areas sub- ject to Irredentist claims. 25X1 ARGENTINA: IMPEACHMENT VOTED DOWN The Argentine congress has not yet been able to translate its grave objections to President Peron's administration into concrete action. This week a congressional committee finally rejected an impeachment motion offered well Page 19 WEEKLY SUMMARY Dec 19, 75 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 over a month ago by a group of opposition deputies. The motion, which charged poor presidential performance on a variety of fronts, wds defeated on grounds that it contained no concrete charges, only political criticism. The committee's action is not surprising. In the first place, the strongest support for impeach- ment has come from a handful of congressmen representing a tiny splinter party. Thus far the larger opposition groups have not followed through on their threats to push for impeach- ment. Moreover, members of the governing coalition have the largest representation on the chamber's impeachment committee. Although spared the immediate threat of im- peachment, the government lost ground in the chamber as a whole, when, for the first time, it ceased to command an absolute majority. The set- back came last week when 27 members of the coalition officially left it. The 27 then formed their SECRET own group, joining other congressmen trying to fend off administration efforts to hinder congress' investigation of high-level corruption. The split merely formalized the steady ero- sion of the President's authority. She is the titular head of the Peronist party, which forms the core of the coalition. The attack on her leadership began many months ago and is highlighted by the passage of a succession law she strongly opposed and by the ouster of a close associate from the presidency of the chamber of deputies. The President's loss of authority does not, however, mean a corresponding increase in the power of the forces ranged against her. Indeed, the latter seem more and more disorganized despite the generally agreed need to "do something." Thus, congressional action on the impeachment and investigation questions faces protracted wrangling and ma of produce con- crete results. 25X1 SECRET Page 20 WEEKLY SUMMARY Dec 19, 75 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 11 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 SECRET CHINA: A VOICE FROM THE LEFT Party leftists have been remarkably silent all year as many of their pet policies, adopted during the Cultural Revolution, have been overturned by a moderate coalition headed by vice premier Teng Hsiao-ping. Early this month, however, they launched a propaganda counterattack in their last remaining area of influence-education-and have attempted to expand this into a general defense of the Cultural Revolution and the policies of that period. Chairman Mao has reportedly endorsed several changes in educational policy that would raise the level of academic training in Chinas u- niversities. These changes were elaborated on in a speech made by the minister of education this fall. On December 4, however, the day the educa- tion minister returned from a trip abroad, the par- ty newspaper carried an article on the front page that attacked each of the educational changes point by point. The leftist outcry over education has probably thrown enough of a scare into educators to prevent them from making any changes in educational policy. Attempts to expand this attack into a defense of the Cultural Revolution in order to regain some lost ground are likely to meet with less success. Several articles lauding the Cultural Revolu- tion appeared recently, calling for a defense of the "new things," policies that emerged from the Cultural Revolution. This broader attack is a response not only to the changes in Cultural Revolution policies-and to Mao's apparent abandonment of the left-but also undoubtedly to the growing power and prestige of the rehabilitated Teng Hsiao-ping. Teng is a particular irritant to the party's left wing because, as one of the most prominent victims of the Cultural Revolution, he personifies all of the evils that the leftists wanted to eradicate during that period. One article, in fact, specifically warns officials who were purged during the Cultural Revolution but have now been reinstated to mind their p's and q's. Teng Hsiao-ping Teng's power, greater now thar. before the Cultural Revolution, is likely to confine leftists' at- tacks to propaganda broadsides while limiting their actual influence over policy. Nevertheless, these recent articles demonstrate that leftists re- tain access to the media and are capable of stir- ring up propaganda debates despite a steady decline in their political influence. In the past year, the left has not been able to mount a sustained attack on current policies. If kept up over time, such leftist activity could force the hard-nosed Teng to take firm action against his antagonists or, in the tradition of Premier Chou En-lai, to tread more cautiously in overturnin the policies of the Cultural Revolut gyn. Page 21 WEEKLY SUMMARY Dec 19, 75 `Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 25X1 Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9 Next 2 Page(s) In Document Denied Iq Declassified in Part - Sanitized Copy Approved for Release 2011/11/15: CIA-RDP86T00608R000300020054-9