WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A011400110001-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 24
• Document Creation Date: December 21, 2016
• Document Release Date: January 31, 2008
• Sequence Number: 1
• Publication Date: September 3, 1976
• Content Type: SUMMARY

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Secret
Weekly Summary
DOS, NAVY reviews completed
Secret
CI WS 76-036
No. 0036/76
September 3, 1976
Copy Ng 1415
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ments of the week through noon Gera Thursday, it
nt Intelligence, reports and analyzes signifi.
UMMARY, issued every Fridov 'morning by the
material coordinated with or prepared
Economic Research, the 'Office of Strategic
Office of Geographic and Cartographic
the Directorate of Science and Technology.
CONTENTS
1 Middle East - Africa
Egypt-Libya; Lebanon;
Mozambique-Rhodesia;
Iran; Egypt; Kuwait
4 Europe
Cyprus: Spain;
Italy-West Germany;
7 Soviet Union
Cultural Policy; TU-95
8 East Asia - Pacific
Korea; China: Philippines
10 Rhodesia: Rivalry Among Insurgent Factions
13 Italy: Changed Political Situation
15 Spain: Government's Reform Program
17 Uruguay: New President, Old Problems
19 Western Europe: Drought Measures
Comments and queries on the contents of this
publication are welcome. They may be
directed to the editor of the Weekly
Summary
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SECRET
EGYPT-LIBYA
In a clear effort to avoid provoking
Egypt to either military or political action
against him, Libyan President Qadhafi
took a conciliatory tack in a speech on
September 1, the seventh anniversary of
his takeover. Although he had earlier
threatened to break relations with Egypt
and had hinted he might expel Egyptian
workers in Libya if Egypt did not cease its
military build-up on the border, Qadhafi
did neither.
He did not refer specifically to the
workers, and he announced that he would
definitely not sever diplomatic ties. He at-
tributed this decision to the Libyan peo-
ple, mentioning it in the midst of a long
discourse on the "democratic base" of his
government that seemed designed to con-
vince Egypt and any Egyptian-supported
coup-plotters that his regime is too firmly
grounded to be toppled.
Qadhafi may not believe his con-
ciliatory approach will deter the Egyp-
tians, but by adopting this approach he
portrays himself to the Libyan people and
the other Arab states as the reasonable
party to the dispute and Egyptian Presi-
dent Sadat as the unprovoked aggressor.
LEBANON
Syrian officials and Lebanese Christian
leaders reviewed their joint strategy this
week as fighting remained at a relatively
low level. A Phalangist representative
visited Damascus last weekend following
a meeting of Christian leaders, and
president-elect Sarkis held extensive talks
with President Asad on August 31.
Neither Sarkis nor Asad issued a state-
ment after their meeting-the first the
two men have had. The two leaders
doubtless discussed their ideas for peace
negotiations, joint Syrian-Christian
military options, and arrangements for
Sarkis' takeover from President Fran-
jiyah on September 23.
Sarkis is beholden to Syria for his elec-
tion last May and has generally supported
Syrian proposals for a settlement. He
probably shares, however, the concern of
other Christian leaders about Syria's ul-
timate intentions and recognizes that his
effectiveness as president will depend on
his ability to retain the confidence of the
other parties to the conflict. His views on
steps to end the war therefore may not
have been in complete harmony with
Asad's.
Beirut's leftist radio, for example, said
Sarkis has asked the Syrians for a pledge
to withdraw their forces-a pledge he may
well feel he needs if he is to have any
chance of resolving the conflict. The radio
also suggested that Sarkis is pushing for a
step-by-step approach to reconciliation,
apparently beginning with an effort to
reach an accommodation between Syria
and the Palestinians.
Sarkis and Asad probably also discuss-
ed the coming Arab League foreign
ministers' meeting, now scheduled for
September 4. The required number of
Arab states agreed this week to hold an
emergency summit meeting on Lebanon.
The foreign ministers will concentrate on
preparing the agenda and trying to set a
time and place for the meeting.
Arab League mediator al-Khuli con-
tinued to press his own peace plan, but he
suffered a serious setback when Palesti-
nian leader Salah Khalaf rejected his
proposal for a local truce agreement in the
Mount Lebanon area. The Palestinians,
probably fearing that Christian extremists
would not honor the truce, apparently
concluded that they could not afford to
jeopardize their positions in Christian
territory, the loss of which would greatly
reduce their bargaining power in future
negotiations.
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25X1 MOZAMBIQUE-RHODESIA
Mozambican President Machel has
summoned leaders of the feuding Rhode-
sian nationalist factions to a meeting in
Maputo.
The hurried nature of the gathering
strongly suggests that it is keyed to the
25X1 scheduled meeting this weekend between
Secretary Kissinger and South African
Prime Minister Vorster.
Machel has leverage over the
nationalist politicians because he controls
their access to the guerrilla camps in
Mozambique. He may be taking a tough
line with them in yet another effort to
coerce them into submerging their
differences.
Machel probably coordinated the
meeting of the nationalist leaders with
Zambian President Kaunda when the two
met in Mozambique last weekend. Kaun-
da and Machel, together with Tanzanian
President Nyerere and Botswanan Presi-
dent Khama, have cooperated in the past
in several abortive efforts to bring unity to
the Rhodesian nationalist movement. (An
assessment of the prospects for nationalist
unity appears on page 10.)
The assassination on August 28 of three
US civilians in Tehran ends several
months of relative inactivity by Iranian
terrorists.
The killings were probably the work of
an extremist Muslim group, the People's
Strugglers. This is the group that
assassinated a US army officer in 1973
and two US air force Qfficers in 1975. It is
also responsible for killing several Iranian
security officials and for numerous
bombings.
The organization curtailed its activities
after the arrest of the killers of the two
Americans last year.
The most recent victims were civilians
working for a private US company under
contract to the Iranian government.
Earlier American targets were members
of the US official community in Iran.
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SECRET
The terrorists apparently hope to
provoke enough fear among the 17,000
nonofficial US citizens-including
dependents-living in Iran to cause many
to return home. Iran relies heavily on such
foreign technicians and advisers to help
carry out its modernization program.
The Strugglers represent ultraconser-
vative religious groups that deplore the
growth of alien influences in Iran. They
regard the US as a main pillar of support
for the Shah's government and, therefore,
their enemy.
The Strugglers draw sympathy,
recruits, and money from certain religious
centers in Iran and from some merchants.
They received help from the Iraqi govern-
ment before the Iran-Iraq accord last
year, but direct support from that quarter
probably has ended. The Strugglers
almost certainly have some links to
Palestinian and other international
terrorist groups, to dissident Iranian
students abroad, and to a Marxist
terrorist group operating in Iran.
Libya also provides aid, according to
Iranian authorities. Immediately follow-
ing the assassinations last week a
clandestine "Radio of the Patriots"
operating from Libya praised the killings
as a "revolutionary execution."
EGYPT
3
Arab finance ministers, meeting in
Cairo last month to approve a $2-billion
development fund for Egypt, also agreed
to provide Cairo with balance-of-
payments support this year.
Egypt faces a balance-of-payments gap
of at least $1 billion in 1976. The Arab
ministers agreed to treat this short-term
need through a separate guarantee, but we
do not know the amount.
We have no information on how much,
if any, cash aid will be disbursed from the
new development fund. The fund will be
used mainly to attract additional par-
ticipation for development projects under
Egypt's proposed five-year plan.
Although it is likely to generate a far
larger capital flow than the $2 billion
committed, it probably will fall short of
the $10 to $12 billion in Arab financing
that Cairo hoped to attract over the next
five years.
25X1
KUWAIT
put
Emir Sabah al-Sabah on August 29 put
an end to Kuwait's 13-year experiment in
parliamentary government. He dissolved
the National Assembly, suspended key
sections of the constitution, and imposed
tough controls on the press. There has so
far been no popular reaction.
The moves apparently had been under
consideration for some time and stemmed
from the ruling Sabah family's concern
that the disarray elsewhere in the Arab
world might reach Kuwait. The Sabahs
probably believed the government had to
have a free hand to deal with any internal
security problems.
The deputies in recent years had com-
peted for supremacy with the ruling fami-
ly and its proteges in the cabinet.
Numerically, pro-government deputies
dominated the Assembly, but opponents
challenged the government on a variety of
issues and delayed proposals pushed by
the government.
Crown Prince and Prime Minister Jabir
al-Ahmed al-Sabah will soon form a
cabinet to replace the one that resigned as
a prelude to the move against the
legislature. It is unlikely that the govern-
ment will act quickly to re-establish the
parliamentary system. One section of the
constitution that was suspended required
a new parliamentary election within two
months of the dissolution of the
legislature.
The Emir has indicated that a com-
mittee of experts has been established to
propose constitutional changes. The com-
mission is to report back within six
months; the Emir's decree held out the
possibility of a constitutional referendum
within four years.
The Emir's curbs on the press were
designed to deny propaganda outlets for
the partisans of Libya, Egypt, Syria, and
the Palestinians who had bought off much
of the Kuwaiti press. The Sabah family
clearly is anxious to prevent the clashing
appeals of those foreign interests from in-
flaming the passions of the heterogeneous
Kuwaiti population, especially the large
Palestinian c
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SECRET
CYPRUS 2 ?'3 Z)
Greek Cypriots go to the polls on Sun-
day to elect a new House of Represen-
tatives. The election amounts to a contest
between President Makarios and former
Ilouse president Glafkos Clerides.
Makarios and his supporters insist that
only a long, hard struggle and the inter-
nationalization of the Cyprus issue will
bring enough diplomatic, economic, and
moral pressure on the Turks to force them
to agree to a settlement satisfactory to the
Greek Cypriots. Clerides argues that UN
resolutions are no substitute for a genuine
effort to test Turkish intentions with
realistic proposals and that Greek
Cypriots must look to the West for
assistance and not to the nonaligned or
communist states.
Clerides will be hard pressed to make
a respectable showing in the popular vote
because of the winner-take-all election
system and the array of leftist and cen-
trist forces rallying behind Makarios. It
will be even harder for Clerides to win
more than a few of the 35 seats at stake.
Makarios called for the election in
response to leftist pressure and his own
iCK1 M N r4
desire to weaken Clerides. The left views
Clerides as the de facto leader of the right.
Makarios regards Clerides and his sup-
porters as a threat to his own position.
Makarios has worked out an election
deal with the Communists, the Socialists,
and a new pro-Makarios centrist party,
the Democratic Front. Under this
arrangement, each of the parties has
agreed to contest only some of the seats at
stake and to support the candidates of the
other two parties for the remaining seats
in almost all of the districts. The Com-
munists are contesting 9 seats, the
Socialists 6, and the Democratic Front 21.
Clerides' Democratic Rally has can-
didates running for 34 seats. Makarios did
make some last minute overtures to
Clerides aimed at reconciliation and
limited cooperation but was rebuffed.
Clerides is determined to turn the elec-
tion into a clear test between his views and
those of Makarios, even if it means the
end of his political career. If he gets even a
mildly encouraging showing on Sunday,
he would hope to challenge Makarios in
the 1978 presidential election.
The degree of anti-Makarios sentiment
among the voters will determine how well
Clerides does. Clerides' prospects will rise
if most of the 29 percent of the voters who
abstained in the lackluster election in
1970 rally to his cause on Sunday and if
some of the supporters of the
pro-Makarios parties ignore the pre-elec-
tion agreement of their leaders and cast at
least some of their ballots for Clerides'
slates.
SPAIN
Spain has announced a package of mild
economic austerity measures that will do
little to ease inflation or reduce the trade
deficit.
Inheritance and luxury taxes, except on
autos and tobacco, will rise 10 percent.
Gasoline prices will increase 7 percent to
$1.65 per gallon.
The government considers these
measures deflationary. We believe they
will not cut consumer spending enough to
make much of a dent in Spain's 22-per-
cent inflation rate.
Prime Minister Suarez has avoided
stronger measures because he heads a
transition government. He has said that
broad tax reform and firm wage
guidelines will be imposed only after the
installation of a government with a pop-
ular mandate next summer. Suarez is giv-
ing priority to political peace and trying
to appease labor with expansionary
policies and sizable wage increases. (An
assessment of the government's political
liberalization program appears on page
15.)
The new measures will have little im-
pact on the balance of payments. Demand
for gasoline is relatively immune to price
changes while luxury goods account for
only a small share of total imports.
The payments situation so far in 1976 is
slightly improved compared with last
year, but is likely to worsen in the second
half, as drought hurts trade in agricultural
products. For the year as a whole, we ex-
pect a current-account deficit of about
$3.5 billion, up from $3.2 billion in 1975.
In a related move, Madrid has an-
nounced creation of a $180-million fund
to supply credits to developing countries 25X1
for the purchase of Spanish goods in 1977.
Madrid hopes that these credits will
develop new markets.
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JLVnL I
ITALY-WEST GERMANY
West Germany has agreed to renew the
$2-billion, gold-backed loan to Italy
originally scheduled for repayment on
September 5. Italy's present foreign ex-
change holdings would have permitted
only partial repayment.
The amount of gold pledged against the
loan apparently will be increased to offset
the decline in the market price of the
metal. A West German spokesman stated
that Bonn expects Italy to honor its
economic and political obligations, par-
ticularly its promise to dismantle current
restrictions on trade as soon as possible.
With the current market price of gold
around $104 an ounce, the West Germans
might insist that up to 24 million ounces
instead of the present 16.6 million be set
aside for security. Italy's present gold
holdings are estimated at about 90.5
million ounces.
The final details of the rescheduling, in-
cluding the amount of new security, are to
be negotiated by the West German and
Italian central banks.
Beginning in 1972, and especially in
1974, Italian governments covered widen-
ing payments gaps by international
borrowing rather than by trying to reduce
them through domestic austerity
measures. With ample foreign exchange
and massive gold holdings, Italy felt its
credit was assured.
Heavy borrowing has now all but ex-
cluded Italy from the Euromarkets, and
the decline of the price of gold has re-
duced the value of Italy's gold holdings
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SECRET
TURKEY-GREECE
Turkey announced September 1 the
fourth area of operation for its research
ship the Sismik I. The latest mission,
which began Wednesday and is to con-
tinue through September 25, is likely to
heighten Greek-Turkish tensions again.
According to a Turkish navy announce-
ment, the Sismik I will avoid Greek
territorial waters during this mission. The
area of operation delineated in the an-
nouncement, however, encompasses sub-
stantial portions of the Greek-claimed
continental shelf-some of it west of
Greek islands along the Turkish coast.
The area comes close at one point to the
Greek mainland and includes zones where
Greece and Turkey have granted. overlap-
ping oil concessions.
The new Turkish move seems certain to
delay the bilateral negotiations tentatively
set for mid-September by the Greek and
Turkish foreign ministers following last
week's UN resolution on the Aegean.
Greece had told Turkey that it would be
difficult to negotiate while the Sismik I
continued its research.
Greece also is unlikely now to look with
favor on the Turkish demand that the
Greeks withdraw their application to the
International Court of Justice for ad-
judication of Aegean seabed problems
before negotiations begin. The Greeks
had informed the Turks earlier this week
they would be willing to ask the Court to
set the matter aside pending bilateral
talks. Athens completed its presentation
to the Court last Saturday.
Both sides will be alert to the possibility
of incidents arising from the activities
of the Sismik I and a Greek naval ex-
ercise in the northern Aegean, which is
scheduled to continue through Septem-
ber 12.
Most Greek and Turkish military
forces are believed to be at about normal
levels of readiness. In the wake of
Wednesday's announcement, Greece and
Turkey probably will increase the alert
status of some military units.
UNITED KINGDOM
The labor movement's concern over the
state of the British economy will be the
main theme of the annual meeting of the
Trades Union Congress next week. The
chief topic of debate will be the need for
the government to do something; about
unemployment-now at the highest level
since World War II. Other issues, such as
cuts in public spending, long-term wage
restraint, and industrial democracy, will
also be highlighted.
The Congress leadership should have
little difficulty winning approval of the
new "social contract,"' the
social-economic principles governing the
alliance between the unions and the Labor
Party. Nor should the union leaders en-
counter problems in getting the unions to
re-endorse the current wage guidelines. A
motion challenging the guidelines will at-
tract little support.
Unemployment hit a high of 1.5 million
in August. The jobless rate will probably
begin to decline gradually around the turn
of the year, but the prospect of persistent,
high unemployment will cause additional
strains in relations between the govern-
ment and its union allies.
The disquiet is highest among; public
sector unions; their members will bear the
brunt of planned government cuts in
public spending. They have been lobbying
the powerful manufacturing-based unions
to resist further attempts to cut the
budget. As an alternative to additional
spending cuts, one public service union is
calling for import controls and tightened
currency exchange regulations.
Chancellor of the Exchequer Healey is
not likely to be pushed into shifting
policies at a time when curbing inflation
still takes priority over reducing un-
employment swiftly. There have been
some hints, however, that the government
may be willing to give unions a formal
role in initiating investigations of alleged
dumping by foreign manufacturers.
The meeting should provide a clear in-
dication of union sentiment on wage con-
trols after "phase two" pay guidelines ex-
pire next summer. Most union leaders op-
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JVVIl~.
pose a third round of formal wage curbs,
but they also recognize the need for an
"orderly return" to free collective
bargaining in order to avoid a wage explo-
sion that would set off another in-
flationary spiral.
The Congress will debate worker par-
ticipation in industrial decision making.
Some strong unions reject the leadership's
proposals for 50-percent worker represen-
tation on company boards of directors.
An attempt will probably be made to
patch over differences on this contentious
CULTURAL POLICY
Moscow's art community has in-
augurated the cultural season with an un-
usual exhibit that somewhat extended the
official limits of acceptable art, but that
also revealed the sophisticated tactics
used by the authorities to split the ranks
of dissident artists.
The 10-day, officially sponsored exhibit
that closed this week contained about 120
paintings by 12 artists. Although the ex-
hibitors are members of the artists' union,
all but one have participated in past ex-
hibits of "unofficial" art. The works dis-
played were tame by Western standards,
but the abstract themes and novel tech-
niques represented were a sharp depar-
ture from doctrinaire "socialist realism."
The exhibit does not mean that
long-standing Soviet cultural doctrine has
been abandoned. Instead, it illustrates the
continuing pragmatism of Soviet cultural
policy, which now stretches ideological
canons in order to achieve its wider goal
of disorganizing, isolating, and ultimately
liquidating dissidence of any kind. The
authorities have progressed from the
crude disruption with bulldozers of the
outdoor show of dissident art in
September 1974 to limited official spon-
Unofficial art show in Moscow last September
sorship of "unofficial" art and now to of-
ficial acceptance
works.
organizations reportedly are making un-
precedented offers to buy works of unof-
ficial artists. These offers are accom-
panied by promises of officially organized
exhibits and subtle pressures to join the
artists' union.
Those few artists who remain intran-
sigent have been harassed. There are
rumors in Moscow that some of them
may attempt a dramatic gesture of some
kind on the anniversary on September 15
The latest exhibit is one result of a long
and apparently successful drive by the
authorities to co-opt most dissident artists
and to leave the remaining handful of
rebels to wither from lack of publicity.
One member of this minority says that
150,000 rubles (about $200,000) has been
earmarked-he believes by the KGB-for
"buying off" unofficial artists with favors
that include all-expense-paid trips and
vacations in the USSR. Various
of the bulldozing incident. An attempted
commemoration last year fizzled.
TU-95 Salvage Operation
Several Soviet ships are still conducting
salvage operations in the Atlantic off
Newfoundland in an attempt to recover
the wreckage of the TU-95 naval recon-
naissance aircraft that crashed there on
August 4.
The ships-a submarine rescue unit, a
salvage tug, and a hydrographic research
ship supported by an oiler-have been us-
ing scuba divers and manned diving bells
as well as dragging operations to
locate and examine wreckage. Although
some debris was recoved by the Soviets
early in the search, recent efforts
apparently have not been success-
ful.
The Soviets are concerned that sensitive
equipment aboard the aircraft may be
recovered by the US or Canada. The
water where the crash occurred is only
about 185 meters (600 feet) deep. The
TU-95 was equipped with sensors and
communications equipment that could
provide us with useful information on
Soviet surveillance capabilities.
SECRET
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KOREA
Tensions created by the incident on
August 18 at Panmunjom continued to
ease this week as talks proceeded on
North Korea's proposal for separating
armed personnel in the joint security area,
as the US cut back on its show of force,
and as Pyongyang further reduced the
alert status of its forces.
Given Pyongyang's proposals for new
security arrangements in the Panmunjom
joint security area, and the apparently
serious approach of its representatives,
North Korea seems interested in con-
cluding an early agreement.
Additional evidence of North Korea's
desire not to aggravate the situation was
reflected in its handling of a fishing boat
incident off its east coast on August 30. It
seized a South Korean boat that strayed
into its waters, but has not, as in the past,
attempted to exploit the incident as a US -
South Korean provocation. The North
Korean Red Cross responded promptly,
offering to cooperate in early release of
the boat and crew. This moderation may
reflect concern that the UN com-
mand-under pressure from
Seoul-might condition agreement in
separating the security forces of both sides
at Panmunjom on prompt release of the
boat.
The North Koreans have also taken
some of the shrill rhetoric out of their
propaganda, although they continue to
warn that the danger of a US-provoked
war is increasing. The propaganda in-
dicates that North Korea still hopes to
gain political advantage from the Pan-
munjom incident in order to increase
pressure for US troop withdrawals, es-
pecially in the third world, and help to
defeat a pro-- South Korea resolution at
the UN General Assembly this fall.
China and the USSR have continued
their cautious handling of the affair. In its
first comment on Korea since August 18,
Moscow this week glossed over what
happened at Panmunjom, but did note
that the current tensions have made North
Korea's UN resolution even more timely.
The Chinese have still made no official
comment on the incident, but have ex-
pressed general support for Pyongyang's
position at the UN.
CHINA
China has little dance of matching last
year's mediocre grain output of about 260
million tons, excluding soybeans, unless
the weather improves markedly.
The early grain harvest appears smaller
than expected. The fall-harvested grains,
especially intermediate and late rice, were
sown late. If fall weather comes early this
year the 1976 grain output will be far
below that of last year.
The Chinese needed a better than nor-
mal early grain harvest this year, especial-
ly in southern China, because the 1975
late rice crop was poor in some areas, and
unusually low temperatures throughout
the winter and spring of 1975-1976 re-
duced the output of winter vegetables
and other important supplemental foods.
Normally, grain supplies are tightest
in the spring and summer prior to the
beginning of the early harvest.
The spring-summer harvest got off to a
poor start because of drought in northern
China and prolonged rainfall in central,
southern, and northwestern China at the
time of seeding. Growth was retarded by a
continuation of dry weather in the ex-
treme north; most other areas received
timely rain, but temperatures were the
lowest in years. Rains delayed harvesting
in most of northern China.
Early rice has been set back by an un-
usually late spring frost and unseasonably
low temperatures throughout the summer.
On balance, bad weather probably
affected the early rice crop more than the
spring-summer harvest.
Roughly 2 million tons of wheat are
scheduled for delivery from Canada and
Australia between April 1976 and March
1977. The Chinese have the option of
purchasing another 2 million tons under
long-term agreements with these
suppliers.
China recently purchased at least
100,000 tons of Brazilian soybeans, appar-
ently as a buffer against a short har-
vest of rapeseed.
Harvesting rapeseed during a good crop year
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PHILIPPINES 62-6_5
The Philippine government has an-
nounced the capture of the country's
second- and third-ranking Communist
leaders. Bernabe Buscayno, better known
as Commander Dante, was the com-
mander of the New People's Army, the
military arm of the pro-Chinese Philip-
pine Communist Party. Victor Corpus, a
Philippine military academy graduate,
had defected to the Communists in 1970.
There is a strong possibility that both
men were bought off by the government.
Dante, a former Huk bandit, was never
comfortable with the young intellectuals
who dominate the Communist Party.
Corpus apparently has been in custody for
some time.
The government is likely to use the two
prisoners in the current treason trial of
former senator Benigno Aquino-Presi-
dent Marcos' chief political rival who has
been imprisoned since martial law was
imposed four years ago. Aquino had an
accommodation with rebels in his home
area.
Government warnings that the Com-
munist insurgency has the support of the
"Christian left" and is still a threat
suggest that Marcos may also be inten-
ding to step up intimidation of activist
priests who have voiced opposition to his
martial law rule.
The principal Communist leader still at
large is chairman Jose Maria Sison, a
bright young university instructor who
went underground after breaking with the
moribund pro-Soviet party in 1968. The
estimated 1,600 regulars of the New
People's Army are located primarily in
northeastern Luzon and are generally
contained by the Philippine armed forces.
The Communist
overshadowed in
larger Muslim
guerrillas have been
recent years by the
insurgency in the
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Unless some accommodation is reached among the rival
black nationalist groups-and we see little prospect for lasting
reconciliation-the eventual collapse of white rule will come
with no widely accepted black leaders among the nationalists.
Rhodesia: Rivalry Among Insurgent Factions
The black Rhodesian nationalists re-
main deeply divided despite the success
they have had this year in extending their
insurgency against the Smith government.
The rivalry among opposing factions
appears to be growing, spurred by the
prospect of an independent black govern-
ment that each hopes to dominate.
Unless some accommodation is
reached-and we see little prospect for
lasting reconciliation-the eventual
collapse of white rule will take place with
no widely accepted black leaders among
the nationalists. The result could be
almost as bad as Angola after the Por-
tuguese left.
The Zimbabwe People's Army or
"third force," the organization that the
Tanzanian and Mozambican presidents
are promoting as an alternative to
Rhodesia's squabbling nationalist groups,
has been primarily responsible for the
guerrilla war this year.
This group, however, has become
dominated by a single political faction
and one tribal group; insurgents of rival
factions who were brought into the ranks
of the "third force" are deserting, some to
start insurgency operations under new
banners.
Divided from the Beginning
The Rhodesian nationalist movement
has been divided almost from its inception
in the 1950s by tribal and political
differences as well as by sharp personal
rivalries. Two groups have struggled for
predominance since the early sixties.
The Zimbabwe African People's
Union, led by Joshua Nkomo, emerged in
1961. Two years later, discontent over
Nkomo's reliance on the British to gain
majority rule led Ndabaningi Sithole to
break away and form the Zimbabwe
African National Union.
In December 1974, the rival nationalist
leaders, just released from 10 years in
Rhodesian jails, agreed to join with
Bishop Abel Muzorewa of the African
National Council-a noninsurgent group
formed in 1971 that operated legally in-
side Rhodesia-in an expanded African
National Council.
The merger and a truce in the guerrilla
fighting were imposed on the nationalists
by presidents Kaunda of Zambia, Nyerere
of Tanzania, and Khama of Botswana,
and Samora Machel-leader of the vic-
torious nationalist movement in Mozam-
bique and now president of that country.
The four African leaders were then in-
volved in a joint effort with South African
Prime Minister Vorster to promote a
negotiated settlement for Rhodesia.
Failure of a Unity Effort
The merger began to fall apart almost
immediately as Nkomo and Sithole vied
for power with each other and with the ex-
ternal leaders of their own factions who
had been in exile while the two were
detained in Rhodesia. Nominally, the
Council still exists-but Nkomo and
Muzorewa, who is now allied with Sithole,
both claim to be its legitimate head.
The failure of the 1974 merger
prompted Nyerere and Machel last
November to form a "third force"-the
Zimbabwe People's Army. This unity ef-
fort, too, seems to have failed. The plan
was to bypass Nkomo and Sithole, as well
as Muzorewa, and create a unified
guerrilla force composed of insurgents
from the ranks of both ZAPU and
ZANU.
Positions in the military high command
of the new organization were evenly
allocated to members of the two groups,
but from the beginning ZANU forces
heavily outnumbered those of ZAPU.
ZANU had important advantages. It had
some limited experience in guerrilla
fighting between 1972 and 1974, while
ZAPU has not had a credible guerrilla
force in the field since the late 1960s.
ZANU had the further advantage of
drawing its main support from the
Shona-speaking tribes, which represent
over 70 percent of Rhodesia's black pop-
ulation. ZAPU has always drawn most of
its adherents from the Ndebele-speaking
tribes, which represent only 15 percent of
Rhodesia's blacks.
ZANU's military commander,
Solomon Mutuswa, apparently is the field
commander of the the Zimbabwe People's
Army, and other ZANU leaders now hold
most of the key positions in its military
structure. Most of the guerrillas consider
themselves members of ZANU's military
arm, the Zimbabwe African Liberation
Army, rather than of the unified organiza-
tion.
The rivalry among the insurgents is
further complicated by the fact that
ZANU itself has largely come under the
control of the largest Shona-speaking sub-
group, the Karangas, while members of
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rival subgroups have been forced either to
accept Karanga leadership or leave
ZANU camps.
The Karangas have long supplied the
bulk of ZANU's military forces, but until
1975 a disproportionate number of
positions in the organization's central
committee were held by members of
another major Shona subgroup, the
Manyika.
Internecine Fighting
Early last year, armed clashes broke
out between the Karanga and Manyika
exiles in Lusaka, Zambia. More than 200
ZANU members were killed and several
Manyika central committee members
were kidnaped and shot by Karangas. The
fighting culminated in March 1975 with
the assassination of Herbert Chitepo, a
Manyika who lived in Lusaka and had
directed the insurgency from 1972 to
1974.
Zambian President Kaunda arrested 57
ZANU leaders, mostly Karangas, in con-
nection with Chitepo's assassination.
Despite continuing Karanga protests, they
are still in Zambian prisons awaiting trial.
Although a number of Karanga leaders
were jailed, the fighting left the Karangas
in almost complete control of ZANU.
Most of the Manyika leaders who sur-
vived left ZANU to join Muzorewa's fac-
tion of the African National Council.
Ndabaningi Sithole, ZANU's founder
and a non-Karanga, was virtually exiled
from ZANU by the Karangas for
associating with Muzorewa and for failing
to press the Zambian government for the
release of the Karangas imprisoned in
Zambia.
When new appointments to ZANU's
central committee are confirmed
sometime in the next few months,
Karangas almost certainly will hold most
of the seats.
Rhodesia: Selected Tribal Groups
N 0 A U Selected Shona-speaking group
O REKO,g,
SALISBURY *
ZEZURU
?e~ Rhodesia
y `\
A RA N G
0
I --
e35go3
200 KILOMETERS
Joshua Nkomo's Group 25X1
ZAPU fighters were never effectively
integrated into the Zimbabwe People's
Army.
Joshua Nkomo may now be in the
process of developing an independent
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v nl
Bishop Muzorewa rl) and Ndabaningi Sithole
guerrilla force in Zambia under the
patronage of President Kaunda.v__
Muzorewa's faction is fairly represen-
tative of Rhodesia's tribal groups in its
top leadership though the Karangas are
under represented. Muzorewa himself is a
Manyika. 25X1
Muzorewa Faction
The relatively few guerrilla supporters
of Bishop Muzorewa-he does not have
an organized military group behind
him-have also had their problems with
the leaders of the Zimbabwe People's
Army and its Mozambican sponsor.
More than 200 members of
25X1 Muzorewa's faction were disarmed, tem-
porarily imprisoned, and then sent to
Mozambican farms near the Malawian
border.
Muzorewa is working hard to build up
his organization inside Rhodesia, where
he probably has significant support
among Manyikas and may have the
largest popular following of any of the
nationalist leaders. He has not, however,
been able to translate his support there
into military strength rivaling that of
ZANU. Many of ZANU's non-Karanga
guerrillas might support Muzorewa as
their leader, but Muzorewa has had vir-
tually no access to the guerrilla camps,
and the Karangas have suppressed any of
his open supporters.
Prospects
The tribal divisions will remain a
serious obstacle to nationalist unity as
long as one group tries to dominate the in-
surgents and as long as guerrilla warfare
continues. There are no real prospects
now for a lasting reconciliation between
LAN U's Karangas and their political and
tribal rivals.
Karanga leaders have consistently held
the view that their people have borne the
brunt of the guerrilla war and therefore
should be the leaders of Rhodesia
after black rule is won.
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For the first time since 1947, the Communists share
responsibility for an Italian government. If the minority Chris-
tian Democratic government succeeds in enacting key legisla-
tion, and if that success is seen as a by-product of cooperation
with the Communists, pressure will build for an expansion of
rapprochement between the two parties.
As Italian politicians return from their
traditional August holiday, they en-
counter a political landscape vastly
different from the one they knew prior to
the sharp Communist election gains in
June.
Before June, the basic characteristics of
Italian politics were:
? The Christian Democrats, Italy's
largest party by a wide margin, played
the dominant role in the government.
? The Communists, the second
largest party, dominated the opposi-
tion.
? The remaining parties, except for
the neo-fascists and other fringe
groups, alternated as supporters or
coalition partners of the Christian
Democrats.
The difficulties Prime Minister Giulio
Andreotti met in winning approval for his
Christian Democratic minority govern-
ment last month demonstrated how
sharply the election outcome had altered
Italian politics. Although they remain the
largest party, with 38.7 percent of the vote
in June, it is clear that the Christian
Democrats no longer dominate the
political arena.
Because of the poor showing of the
smaller parties and the Communists'
steep gains-from 27.2 percent of the vote
in 1972 to 34.4 percent this year-An-
dreotti was able to win a parliamentary
confidence vote only because the Com-
munists agreed to abstain.
The Communist decision, in turn, has
blurred that party's traditional opposition
status, the more so because it was the
Italy: Changed PoliticalUSi~t;ation
determining element in Andreotti's in-
stallation. With the abstention, the Chris-
tian Democrats would have won a majori-
ty even if all the other parties had voted
against Andreotti.
Moreover, none of the smaller parties
that had allied with the Christian
Democrats at one time or another agreed
to support them in the confidence vote.
The Socialists, Social Democrats,
Republicans, and Liberals chose instead
to join the Communists in abstaining.
Andreotti's government is thus a tran-
sitional and experimental one that breaks
most of the old game rules. All Italian
politicians, including Andreotti,
acknowledge the government's temporary
nature, but they are likely to differ sharp-
ly in the corning weeks over what should
come next.
Most Christian Democrats will be try-
ing to rebuild ties to former coalition
partners in the hope of reviving some
semblance of the old order. The Com-
munists, on the other hand, will try to
build on the Andreotti experiment to
move closer to actual government
membership. What finally happens will
depend not only on internal and inter-par-
ty dynamics, but also on how well the An-
dreotti government performs.
The Communists
The Communists face unprecedented
opportunities and some serious risks.
They are the only party to have gained
substantially from the lengthy maneuver-
ing prior to Andreotti's installation. As it
became apparent that Communist
cooperation would be essential to form a
government, the party was able to press
Prime Minister Andreotti (speaking)
and Communist president of the
chamber of deputies Pietro Ingrao
successfully for key parliamentary posts
that had always been the preserve of the
governing parties.
One of the Communists' most ex-
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perienced legislators was elected president
of the chamber of deputies. In addition,
the party emerged from the bargaining
over parliamentary committee
assignments with the presidencies of 7 of
the 26 permanent committees. This will
probably give the party more influence in
certain areas of domestic policy than it
would have won with two or three minor
cabinet portfolios-although the latter
would carry more symbolic importance.
As chairmen of parliamentary com-
mittees on finance and budget, for exam-
ple, the Communists will exert major in-
fluence on all economic and fiscal legisla-
tion. The committees review all bills and
can make major changes before-they are
debated on the floor. Committee
presidents, moreover, may slow down or
expedite the progress of any bill.
Even on other matters, Andreotti will
have to take Communist views into ac-
count. Parliamentary arithmetic gives the
Communists the power to defeat any bill,
or even turn Andreotti out of power, un-
less the Prime Minister can line up offset-
ting support among the Christian
Democrats' former allies.
The Communists have paid a high
price, however, for their new influence.
No amount of rhetoric about the inade-
quacies of Andreotti's government can
disguise the fact that the Communists per-
mitted it to be installed, thereby forfeiting
any claim to bear no responsibility for
government actions.
Many party militants must be uneasy
over the new role their leaders have
mapped out for a party that, after all,
scored major gains in the election as an
orthodox opposition party. The Com-
munist leadership will have to devote con-
siderable time to explaining the subtleties
of the new policy to the rank and file.
The Communists have thus invested
considerable political capital in the
government and would have little to gain
from frustrating Andreotti or from bring-
ing him down soon. Indeed, it would
appear to be in the Communists' interest
to ensure that something positive emerges
from Andreotti's tenure. Andreotti's early
failure could damage the party's reputa-
tion as a force for change and dampen the
enthusiasm of the party's supporters.
Although the Communists can be ex-
pected to drive a hard bargain in any
negotiations with Andreotti, they will also
look for points of convergence as justifica-
tion for more progress toward Com-
munist chief Berlinguer's "historic com-
promise"-an eventual governing alliance
with the Christian Democrats.
The Christian Democrats
The Christian Democrats face a dilem-
ma that is likely to test the party's cohe-
sion severely. On the one hand, they will
have to seek Communist cooperation if
Andreotti is to accomplish anything; on
the other, they will be trying to lay the
groundwork for another coalition closed
to the Communists.
In the past, the Christian Democrats
have consulted the Communists informal-
ly and behind the scenes in parliament to
secure their cooperation on specific issues.
The distribution of committee presiden-
cies alone ensures that this process will
become more overt and formal in the new
parliament. Every committee chaired by a
Communist, for example, is chaired by a
ChristianDemocrat in the opposite house.
This juxtaposition will force the two
parties into closer liaison, for bills must be
reviewed by relevant committees in the
senate and the chamber and approved by
both houses.
In these circumstances, Andreotti ob-
viously will have to walk a thin line if the
Christian Democrats are to maintain a
united front and argue convincingly that
another non-Communist coalition is feasi-
ble. In the end, the Christian Democrats'
strongest card may be their former allies'
fear that continued intransigence could
encourage the Christian Democrats to opt
for a formal alliance with the Com-
munists.
The Christian Democrats are also beset
with serious internal problems that were
set aside during the election campaign but
are now returning to the fore. The old
guard is still in command, and competing
factions complicate decision making, but
pressures are mounting for organizational
reforms and leadership changes to dispel
the image of a tired and corrupt organiza-
tion.
For the moment, most Christian
Democrats seem willing to accept the
necessity of limited cooperation with the
Communists to keep Andreotti afloat. If
the Communists seem on the verge of
parlaying the arrangement into a larger
role, however, some influential Christian
Democrats may begin a behind-the-scenes
campaign to bring Andreotti down.
The Socialists
Christian Democratic efforts to escape
dependence on the Communists will focus
on the Socialists-the only party that can
guarantee the Christian Democrats a non-
Communist majority in parliament.
The Socialists have been unable to
capitalize on their pivotal position,
however, and were clearly the major
losers in the post-election maneuvering.
Stung by their failure to advance in an
election they precipitated, they were little
more than passive participants in the
bargaining that led to the Andreotti
government.
The Socialists' failure in the election
plunged the party into a leadership
struggle. Veteran Socialist lleader De
Martino was replaced quickly by 42-year-
old Bettino Craxi, who comes from the
party's right wing and is inclined toward
seeking a deal with the Christian
Democrats.
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He does not yet command a stable ma-
jority, however, and is still tied by the par-
ty's campaign program pledging support
in the short term for an emergency
government including the Communists
and in the long term for an "alternative of
the left."
The Christian Democrats' hope is that
Craxi will be able to turn his party around
and lead it back into coalition with them.
This will probably take months, if it can
be accomplished at all.
The Socialists' fundamental problem is
how to remain a viable party in the face of
the voters' surge toward the Communists.
Most Socialists do not really want to
share cabinet posts with the Communists,
but they have concluded that leaving the
Communists completely in opposition
allows them to outpoll the Socialists
among voters inclined to move left.
In the end, therefore, the Socialists are
likely to cling to at least a vestige of their
demand for Communist association with
the government.
As a condition for renewed participa-
tion in the government, for example, the
Socialists may insist that the Christian
Democrats agree at least to continue con-
sulting the Communists formally on
government programs. According to one
Socialist leader, the party would insist
that the Communists continue to abstain
in parliamentary voting.
Outlook
Andreotti could stumble at any time,
but the absence of alternatives to his
government seems likely to keep it in
place at least until late fall or early winter.
Perhaps the major determinant of the
next government's complexion will be the
nature of the relationship that develops
between the Christian Democrats and
Communists as Andreotti seeks to enact
In his two months as Prime Minister, Adolfo Suarez has
established a dialogue with the political opposition, alleviated
some of the concerns of military leaders, and built widespread
public support for the government's liberalization program.
key legislation. If he is relatively
successful, and if that success is seen
mainly as a by-product of Christian
Democratic - Communist cooperation,
pressure will build for an expansion of the
limited rapprochement between the two
parties.
The principal factor working in the op-
posite direction will be the Christian
Democrats' unequivocal campaign pledge
not to bring the Communists into the
government. The non-Communist majori-
ty is divided and disorganized, however,
and the Christian Democrats will not be
able to hold the line for long unless they
can find the basis for new unity.
Although the game is obviously not
over, there are more factors now pointing
toward Communist chief Berlinguer's
"historic compromise" than at any time
since he launched the proposal in late
Y.7~_ 2 7
Spain: Government's Reform Program
e new Spanish government has done
much to overcome initial criticism and
gain widespread support for its liberaliza-
tion program.
The government must still overcome
some difficult obstacles as it begins to im-
plement its program this fall, but there are
indications that Prime Minister Suarez
has won crucial maneuvering room by
significantly reducing the hostility and
tensions that led to the dismissal of the
previous cabinet.
The new government has succeeded
where former prime minister Arias failed
because it has made a stronger effort to
involve the democratic opposition in its
reform program and, aided by the direct
involvement of King Juan Carlos, has
been more successful in dealing with the
military hierarchy. Obstruction by the
four military ministers on penal code
reforms had reportedly threatened Arias
with a major defeat in parliament on a bill
crucial to the government's effort to
change Spain's political system through
existing institutions.
Strongly supported by the King, Suarez
worked with the military ministers to
hammer out a new government program
that strongly supports democratic
reforms. A compromise version of the
penal code reform bill was then passed in
mid-July, opening the way for the King's
second royal amnesty for political
prisoners.
Suarez also managed to persuade arm-
ed forces leaders to allow the amnesty to
cover military prisoners-notably con-
scientious objectors and members of the
politically oriented Democratic Military
Union.
The amnesty won valuable good will
from the opposition, which had made the
release of political prisoners a precondi-
tion to any negotiations with the govern-
ment.
Leftists carped at the exclusion of
terrorists-arguing that terrorist tactics,
though abhorrent, were a response to
Francoist brutality-but privately con-
ceded that Suarez and the King had
delivered on one of their most important
promises concerning democratization.
One opposition leader told US embassy
officials that the government had "won
the summer" with the amnesty.
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Dialogue with the Left
Even before the amnesty, Suarez had
opened consultations with the opposition
on democratic reforms-the first open
contact between a Spanish head of
government and the left since the Civil
War. During the last days of July and the
first two weeks of August, he met with
most of the principal opposition Christian
Democratic and Socialist leaders.
Suarez' three-hour meeting with Felipe
Gonzalez, the charismatic young head of
the major Socialist faction, the Socialist
Workers Party, was particularly fruitful.
The Socialist came away convinced that
Suarez is committed to democratic elec-
tions in Spain and to continue con-
sultations with the opposition on the
shape and pace of reform.
Gonzalez told the US embassy that his
party will participate in the government's
program if Suarez follows through with
the approach he outlined in their meeting.
Suarez was equally impressed by the
Socialist leader and has stated publicly
that they see eye to eye on almost all
problems.
One of the major issues on which the
two are still far apart is the emotion-laden
question of Communist participation in
the democratization process. The
democratic opposition would prefer to
have the Communists out in the open, but
the government insists that its hands are
tied by uncompromising military
resistance.
Even here there has been progress this
summer. In recent months the Com-
munist Party has enjoyed much the same
freedom as the democratic opposition.
Many Communist leaders have returned
from exile, and the recent amnesty has
released others from prison. Perhaps to
blunt criticism by the military, the
government turned down requests for
visas from exiled party President Dolores
lbarruri and Secretary General Santiago
Carrillo.
The government's more relaxed at-
titude toward the party has coincided with
a markedly softer line by Communist
leaders. They have grudgingly praised the
amnesty, toned down their criticism of the
government, and formally called for
negotiations. Some political observers
have even inferred that the government
and the Communists have reached a tacit
agreement-perhaps including legaliza-
tion of the party some time after the
parliamentary election scheduled for next
spring.
In the meantime, the government has
reportedly arranged to meet officially
with the Communist-dominated Workers
Commissions-a considerable change
from the Arias government's refusal to
have any dealings at all with the Com-
munists.
The Suarez government has also ex-
tended the political amnesty to include
workers dismissed from their jobs for
political reasons, an indication that
Suarez is concerned about potential labor
unrest this fall as contracts come up for
renewal.
Spain faces an annual inflation rate of
over 20 percent, and official unemploy-
ment figures have moved up to 5.5 per-
cent. Worried by predictions of a "hot
autumn," Syndical Minister Enrique de la
Mata has opened a dialogue with the ma-
jor non-Communist labor confederation,
the Socialist-affiliated General Workers
Union, and will soon meet with other
labor representatives.
These informal meetings are likely
to lead to more formal negotiations on
ground rules for labor reform.
The Basque Problem
There are other signs that the Suarez
government's conciliatory approach is
yielding dividends. In the troubled Basque
provinces, for example, Madrid's more
permissive policy toward political
demonstrations and Basque national com-
memorations, combined with an en-
couragement of local government in-
stitutions, has improved the atmosphere
considerably.
The new foreign minister, Marcelino
Oreja, a Basque who is extremely popular
in the region, is in a good position to act
as a go-between for the government.
Basques appear ready to go along with the
government's program, providing it in-
cludes some special arrangement for their
region.
Even the Basque terrorist organization,
Basque Fatherland and Liberty, has
avoided violence since the Suarez govern-
ment took office, and-according to an
Communist Party leaders, released from prison under
royal amnesty, celebrate with families and supporters
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v9 l
influential news magazine-terrorist
leaders have decided to move toward
more overt, nonviolent political activity.
The terrorists have spoken of negotiating
a truce but have demanded as precon-
ditions the release of all terrorist prisoners
and the installation of a provisional Bas-
que government.
These demands are clearly unaccep-
table to the Madrid government, and
further violence is possible, but at least
the terrorists seem to be rethinking their
methods and goals in light of the new
political situation in Spain.
Further Evolution
Political evolution in Spain has eroded
the raison d'etre of the Democratic
Military Union, an illegal association of
military officers espousing political
liberalization. One of nine officers con-
victed last March of membership in the
Union pointed out in a recent press inter-
view that many of the goals of the Union
have been endorsed in the published
program of the new government.
Extremists in the military on both the
left and the right may not be willing,
however, to let the Union disappear quiet-
ly.
Suarez' open overtures to the left have
exposed the weakness of the civilian far
The military will continue to be the dominant political
force in Uruguay following the inauguration of a civilian front
man as president this week. Most Uruguayans give higher
priority to economic growth and domestic tranquility than to
the country's democratic traditions.
right, which-so far-has limited its
response to strident criticism and slogan
painting.
The most important result of the more
relaxed political atmosphere is that it
allows government and opposition to con-
sider each other's positions rationally and
to work toward compromises. The
vagueness of the government's program
allows ample room for negotiation.
~l_(?6
The terms of the referendum on con-
stitutional reform, which may be an-
nounced next month, will provide an im-
portant clue to how far the government
feels it can go toward accepting the
opinions it has solicited from the opposi-
tion.
In pursuing his declared goal of secur-
ing the participation of the democratic op-
position in the liberalization process,
Suarez is limited by the military es-
tablishment's sensitivity in three principal
areas:
? He cannot move very far toward
meeting regional demands for more
autonomy without stepping on
military concerns about national
territorial unity.
? He cannot allow demonstrations
or labor disturbances to get out of
hand.
? He cannot make any overt moves
toward legalizing the Communist Par-
ty.
If Suarez can maintain the delicate
balance he has achieved between opposi-
tion demands and military concerns, there
is a good chance that the momentum 25X1
gained this summer will carry the govern-
ment over the crucial referendum hurdle
Uruguay New President, Old Problems
Uruguay's new president, who took of-
fice September 1, will be primarily a front
for a military junta that hopes to restruc-
ture the country's political system.
As president, Aparicio Mendez will
take nominal charge of a nation that was
once a model democracy known for its
high standard of living, its literate urban
middle class, and one of the most
developed social welfare systems in the
world.
In the past 20 years, Uruguay has suf-
fered from economic stagnation, balance
of payments problems, and weak, ineffec-
tive government as lavish social services
overextended the country's essentially
pastoral economy. An economic stabiliza-
tion program has begun to turn the
economy around, but the military does
not intend to step aside soon.
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or~
The military-controlled Mendez ad-
ministration faces a cloudy future. The
new president is not popular and has
made a bad initial impression by appoint-
ing friends and old political hacks to
posts in his government.
The capable outgoing minister of
economy, Alejandro Vegh Villegas, and
other top civilian officials are concerned
about the new government's lack of com-
mitment to political liberalization. One
proposed decree-which would take
political rights away from a number of in-
dividuals-is of particular concern.
Military-Civilian Friction
Disputes between the generals and
civilian officials are not new. Former
president Juan Maria Bordaberry, elected
in November 1971, was removed from of-
fice in June after a long struggle for power
with military leaders.
In cooperation with the armed forces,
Bordaberry's government eliminated the
Tupamaros, one of the world's best-
organized urban guerrilla movements,
drove the Soviet-backed communist party
into hiding, destroyed the power of the
communist-led labor movement, and
deprived leftists of their sphere of in-
fluence in the university.
Even after this, the generals became
convinced that corruption and Marxist in-
filtrators pervaded the country's political
and economic institutions. In 1973,
military leaders announced that they in-
tended to change Uruguayan society so
that the country would no longer be
vulnerable to internal and external
threats.
The armed forces began playing an in-
creasingly dominant role. Congress was
closed and most traditional political ac-
tivities suspended. Though ill-prepared
and often reluctant to overrule the presi-
dent, military leaders tried to govern
through him. Because the lines of authori-
ty were vague, frequent disputes arose
between the president and his aides on the
one hand and the generals on the other.
After Bordaberry's ouster, military
leaders began restructuring the political
system. They chose 80-year-old Alberto
Demicheli to serve as interim president
and established a "Council of the
Nation"-composed of 45 military and
civilian leaders-to select a new president
and begin drafting a constitution. In the
meantime, the generals have ruled by issu-
ing "institutional acts," following the ex-
ample of their counterparts in Brazil.
The New Government
The Mendez government is made up
of two chambers, a political one com-
posed of senators, and an apolitical one
composed of workers, businessmen, and
the country's more important cultural
figures. Political parties and labor unions
will gradually be allowed a limited role in
government, but the parties themselves
will probably not be consulted concerning
the "new order."
Under armed forces guidance, Mendez
will continue the reforms-largely
economic-that were initiated during the
Bordaberry administration.
Bordaberry launched an economic
stabilization program based on free
market policies and trade liberalization.
The plan has reoriented the economy
from the earlier import substitution policy
toward an export expansion program.
These policies, combined with the
recovery of world markets, seem likely to
lead to an improvement in Uruguay's
1976 balance of payments.
Domestically, chronic budget deficits
are being eased by efforts to remodel the
antiquated social security system,
denationalize selected public enterprises,
and cut excess government personnel. The
1976 deficit has already been cut as a
result of a reduction in consumer sub-
sidies and better enforcement of the tax
laws.
The National Development Plan has
considerably improved economic con-
ditions. Nevertheless, much remains to be
done to curb inflation further and expand
Uruguay's nascent agricultural and
manufacturing industries.
Prospects
The amorphous but authoritarian
system evolving in Uruguay runs counter
to the country's tradition of democratic
participation, but most Uruguayansgive
higher priority to economic growth and
domestic tranquility.
Although the military pays lip service
to an eventual return to representative
democracy, a return to democratic
government is probably years away.
Whatever the future structure of the
government, the country's conservative
foreign and domestic policies will con-
tinue in close step with those of the
military governments in neighboring
countries, and relations with the US will
remain good.
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West European governments and the EC are taking a
variety of measures to deal with falling farm income and rising
food prices, results of the continuing severe drought.
Western Europe: Drought Measures
Continuing dry weather in Western
Europe has led to a flurry of economic
measures to deal with falling farm in-
comes and rising food prices.
France so far has initiated the most am-
bitious aid program. The cabinet, before
its dissolution last week, decided to
provide "immediately" about $450
million to the most seriously affected
farmers. Due to administrative delays,
however, farmers will probably have to
wait 30 to 45 days before receiving the
alloted aid.
Direct payments will go to livestock
producers based on the size of their herds
and the intensity of the drought's impact
on their operations.
Payments will be limited to a maximum
of about $1,200 per farmer. The repay-
ment period for drought-related loans
granted this year from the state-owned
farmers' bank has been extended to seven
years from the usual four. In addition,
Paris will pay the interest charged this
year on loans to young farmers in the
most seriously affected areas.
The aid package is the first installment
of an overall $1.5-billion program to be
announced on September 29. To pay for
it, the government proposed that parlia-
ment increase direct taxes; only those on
middle and upper incomes are likely to be
affected.
On August 25, West Germany alloted
$24 million to drought-stricken farmers;
comparable aid contributions from state
governments are expected. About $17
million of the federal funds will subsidize
interest rates for farmer credits. The
remainder will be dispensed as direct aid
to the most needy farmers.
With the economic loss to the farm sec-
tor estimated at $1 billion to $2 billion
and approximately 55,000 farmers in
financial trouble, the aid program will be
only marginally effective.
The European Community is continuing
to ease import restrictions on agricultural
products in an attempt to offset reduced
domestic production and contain food
price increases. Because vegetable prices
are expected to be the most volatile, the
EC Council has recently agreed to sus-
pend import duties through the end of
September on a variety of fresh
vegetables.
While duties on frozen and processed
vegetables will continue, persistent dry
conditions may move the EC to suspend
these levies as well. Those on potatoes had
earlier been discontinued, and some grain
import restrictions eased.
A special meeting of EC farm ministers
is planned for September 9 to discuss the
impact of the drought. The ministers will
probably decide on additional measures to
safeguard food supplies and contain price
rises. They will probably also give their
blessing to national farm aid measures but
call for coordination at the Community
level. The Commission has already in-
dicated its willingness to allow as many
national measures as possible to assist
farms.
So far, the UK's major concern has
been maintaining employment in in-
dustries facing water shortages. Drought
conditions are so severe in south Wales
that water supplies to industry will be cut
50 percent starting September 15.
Households in the area already have their
water supplies shut off for 17 hours a day.
Some local industry leaders are
Dried reservoir in English Midlands
warning of a return to a 3-day work
week. The seriousness of the situation has
prompted the government to appoint a
water czar to coordinate conservation and
supply efforts.
Some form of aid to British farmers
appears imminent. London is most likely
to accept a 10-percent devaluation of the
"green pound"-the special exchange rate
used in agricultural trade with the EC.
This move would meet farmers' demands
for higher support prices, as well as please
other EC members who dislike sub-
sidizing UK food imports.
The inevitable rise in food prices
following such a move will create ad-
ditional strains on the government's
all-important relationship with its trade
union allies.
Because the drought's impact has been
less severe in Italy, the adoption of signifi-
cant agricultural aid programs there
appears unlikely.
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Secret
Secret
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