WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A010900220001-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 20
• Document Creation Date: December 21, 2016
• Document Release Date: October 16, 2007
• Sequence Number: 1
• Publication Date: December 27, 1974
• Content Type: SUMMARY

Approved For Release 2007/10/19: CIA-RDP79-00927A010900220001-9
Weekly Summary
DIA review
completed.
State Dept. review
completed
Secret
Secret
No. 0052/74
27 December 1974
COPY N2 71
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CONTENTS (December 27, 1974)
,The WEEKLY SUMMARY? issued every Friday morning by
the Office of current Intelligence, reports and analyzes signif-
icant developments 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, and the Directorate of Science and Technology.
Topics requiring more comprehensive treatment and therefore
published separately as Special Reports are listed in the
contents.
I South Vietnam: Attacks Slacken
2 Japan: Miki's Economic Policies
4 US Gold Auction: Foreign Reaction
4 Cyrr',,! u' ++ar Chance for Talks
6 Portugal: Goncalves Under Fire
8 European Communists: Another Meeting
10 Mexico: Presidential Succession
11 Peru: Strains in US Relations
12 Guyana: Toward a One-Party State
13 India: Democracy Under Pressure
15 Ethiopia: Socialism Adopted
EAST ASIA
PACIFIC
WESTERN
HEMISPHERE
MIDDLE EAST
AFRICA
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_%ftoo' SECKE 1
SOUTH VIETNAM: ATTACKS SLACKEN
~T he Communists' three-week-ofd winter-
spring campaign is less intense than earlier, but
the decline in attacks is probably only temporary.
The Communists almost certainly will intensify
the fighting as soon as they have consolidated
their position and regrouped.
On December 26, North Vietnamese troops
reportedly took the district town of Don Luan in
Phuoc Long Province-the third district capital in
that province to fall since the campaign began
early in the month. Communist troops also are on
the attack in Binh Tuy Province; they captured
the district capital of Tanh Linh on Christmas
day.
Elsewhere in Military Region 3, Communist
military activity was limited mostly to shellings
and small-scale ground probes. In Tay Ninh Prov-
ince, Saigon's troops are trying to clear the
Communists from several villages northeast of the
provincial capital. The South Vietnamese have
not been able to relieve the beleaguered garrison
on Ba Den Mountain, and they fear this outpost
will soon fall to the Communists.
In the delta, Communist forces are attempt-
ing to keep the South Vietnamese off balance by
harassing government positions. Here, too, the
Communists appear to be refitting. They are hold-
ing on to recent-gains in Chuong Thien Province,
but no new attacks have been reported.
There have been a few fairly intense battles
in the northern part of South Vietnam, but these
resulted largely from government initiatives and 25X1
do not mark the start of a new campaign. Heavy
seasonal rains and accompanying floods are
hampering operations by both sides.
SOUTH VIETNAM
0 25 50 75 Miles
0T...t_.r.._e
0 Q5 50 75 Kilometers
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JAPAN: MIKI'S ECONOMIC POLICIES
( r 3 c~ur2cro)
Prime Minister Takeo Miki, with little eco-
nomic experience himself, has assembled a strong
but potentially fractious team to manage Japan's
economic difficulties. Members of the new team
have already differed publicly over how to deal
with the simultaneous problems of inflation and
recession. The minister of international trade and
industry, Toshio Komoto, sees recession as the
more serious problem and has called for a shift to
expansionary policies. Deputy Prime Minister
Fukuda, more concerned with continuing the
fight against inflation, is calling for selective price
freezing-a move opposed by the Cabinet's other
strong man, Finance Minister Ohira.
Ohira's opposition will probably limit any
Fukuda-sponsored move toward extremes in the
anti-inflation campaign. At the same time, it is
clear that agreement between these two would
effectively set policy on any given issue. Polit-
ically dominant in the Miki cabinet, they hold the
power of decision. And despite their long rivalry
and tactical differences, they apparently agree
that inflation must be held below 10 percent next
year and that only a low rate of real economic
growth--perhaps 1 to 3 percent-will therefore be
possible.
Domestic Economic Policy
Given the Japanese emphasis on fighting
inflation, tight: demand-management policies will
probably remain in effect through next spring.
Tokyo thereby hopes to slow inflation from the
current 25 percent annual rate to 15 percent
before wage negotiations start next April. Japa-
nese labor, however, is pressing for a 30 percent
wage hike on the grounds that price increases
have already eroded the 32 percent hourly pay
raise gained last year. Because of the govern-
ment's determination to break the wage-price
spiral, a serious confrontation with labor may be
in the offing.
For the moment, only moderate adjustments
in policy are planned. A slight credit easing,
primarily aimed at avoiding a further rash of
bankruptcies, is scheduled for the first quarter of
1975. The new government will probably acceler-
ate plans to subsidize unemployment compensa-
tion, particularly for hard-hit industries such as
textiles. Such moves would cushion the impact of
the recession in selected areas, but would not
provide significant stimulus to sagging domestic
demand.
Continuing current anti-inflation policies
runs the risk of compounding the downturn. The
Tokyo's New Economic Team
r rsat- Scax2c).
eputy Prime Minister. Takeo _Fuku_da,
concurrently director- of the Economic Plan-
ring Agency and chairman of the cabinet's
new Econprxric Coordinating Committee, will
exert the broadest influence over economic
policy. He is the architect of Japan's current
tough anti inflation program and a strong fis-
cal consrvativ.
--Masayoshi Ohira remains as finance
minister, the most important cabinet post. He
is Fukuda's chief rival for power within the
ruling Liberal Democratic Party, but does not
-differ fr ,ndamentaily in economic philosophy.
--reign Minister Kiichi Miyazawa, like
Fukuda,and Ohira a former career bureaucrat
in the. Finance. Ministry, will give the Foreign
Ministry a stronger role in international eco-
nbnfiic ngotiations. He is a member of Ohira's
faction yithin the party.
-Toshio Komoto, minister of interna
tional trade and industry, appears the weakest
of the lot. He has yet to demonstrate leader-
ship in a cabinet position, but is a member of
Prime Minister Miki's faction and apparently
was appointed as a reward for loyal service,
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1%0.,0; JClirlG l low,
huge inventory buildup over the past year already
promises to force further production cutbacks in
the months ahead and to boost the 1.7 percent
unemployment rate. Because major industries are
working well below capacity, moreover, economic
recovery will tend to be slow even after restraints
on demand are eased.
The Impact Abroad
The economic slump and Tokyo's preoc-
cupation with fighting inflation will affect Japan's
economic role abroad. Japan will find it easier,
for example, to accept proposals that the major
industrial nations significantly reduce their oil
consumption. Trade Minister Komoto has an-
nounced plans to cut oil consumption in 1975 by
3 percent over 1974, or about 150,000 barrels per
day. Japan's consumption in 1974 has declined an
estimated 7 percent from last year because of the
economic downturn.
Japanese demand for non-oil imports will
probably decline, compounding the economic
problems already facing major exporters of raw
materials, such as Australia, and of light manufac-
tured goods, such as South Korea. At the same
tie, stagnant demand in Japan will induce Japa-
nese firms to try to increase exports rapidly. Even
with a very slow export growth, however,
Tokyo's trade surplus in 1975 will probably reach
$5-8 billion, compared with about $1 billion this
year, and the Miki government will face serious
complaints and possibly further trade restrictions
from countries with severe bilateral trade deficits.
Tokyo's commitment to reduce import
barriers in multilateral trade negotiations might
also weaken. Japanese industries hit hard by the
slump might join domestic agricultural interests in
opposing reductions in tariffs and import quotas.
Tokyo, however, will be reluctant to reject tariff
cuts that are acceptable to the US and EC coun-
tries.
Despite the advent of a new administration
and the domestic economic difficulties it faces,
many of Tokyo's international economic policies
will remain almost unchanged. Even with reduced
non-oil import requirements, the Miki govern-
ment will continue to court resource-rich coun-
tries. Although it will be careful to avoid actions
that might be viewed as antagonistic by OPEC
nations, Tokyo will cooperate with the US on
broad international economic issues.
Tokyo will probably go along with US
proposals for recycling petrodollars, for example,
providing that major Western European countries
also agree. Japan, however, will try to minimize
its own financial contribution as well as the risks
involved in guaranteeing credits for financially
shaky countries. Tokyo's own payments position,
as noted earlier, is strong and improving. On food
issues, the new government will agree on the need
for increased international stockpiles, but will be
reluctant to make any financial commitment to
the project.
Japan's economic position and policies in
mid-1975 are more difficult to forecast. They will
be affected by several political and economic
variables, including the results of local elections
this spring. A great deal will depend on the out-
come of the wage negotiations in April. If these
are satisfactory from the government's point of
view, official restraint policies would be relaxed
and, in turn, could help stimulate economic
recovery. If the wage negotiations turn out badly,
however, the high rate of inflation will persist and
relaxation of restraints would come more slowly.
Either way, political considerations could
further complicate the situation. Deputy Prime
Minister Fukuda and Finance Minister Ohira, for
example, might well disagree over how to adjust
policy in the aftermath of the wage negotiations.
In that event, Prime Minister Miki might be
unable to make a command decision, given his
lack of economic expertise and his comparatively
weak political position. Indeed, the continued
existence of the Miki government will probably
be under intensive party review over the next
several months, and its economic performance
will be a critical element in any decision to shift
to a stronger leader.
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6LURET
US GOLD AUCTION: FOREIGN REACTION
~36T SC.tl 'c -t)
The major gold producers have exhibited
slight reactions to the announcement of a US gold
auction on January 6, while the principal holders
in Europe have been mildly critical.
South Africa has announced that it plans no
special action as a result of Washington's decision.
Pretoria probably will continue to sell enough
gold to cover foreign exchange needs, but it has
left open its option to reduce sales should the
price fall appreciably. South African sales so far
this year have totaled about 720 tons (23 million
ounces), compared with 822 tons in 1973.
The Soviet Union has not indicated how it
will react to the US auction. Moscow traditionally
has sold gold only to cover foreign exchange
requirements. In 1974, however, the Soviets sold
about 91 tons in spite of their foreign exchange
surplus. Moscow now apparently enters the
market when prices are up and withdraws when
they are down. The USSR could afford to with-
hold gold from the market next year, and it is
likely to do so if prices weaken substantially.
Both South Africa and the USSR could restrain
supply sufficiently to offset the impact of US
sales.
European reaction to the US decision has
been mildly critical. Some governments were
probably disturbed by the lack of consultation,
and many are concerned that the January sale
may drive the gold price down and keep it de-
pressed. This would reduce the value of their
gold, which is used to finance payments deficits.
The US auction will cushion the impact of
the previously announced removal of US restric-
tions on private ownership of gold. The longer
term effect of the January sale, and of possible
further US sales, depends on such factors as the
actual level of US demand for gold for specula-
tion and hoarding, the extent to which the
present price already reflects the new US demand,
and the market strategies of the major gold pro-
ducers-South Africa and the USSR.
Gold was fixed at $192.25 per troy ounce in
London on December 24, up $6.50 from Decem-
ber 2, the day before Treasury Secretary Simon.
announced the US auction. The gold market has
rebounded from earlier losses largely because of
the US-French agreement at Martinique to allow
official central bank gold holdings to be calcu-
lated in the future at current market prices. The
French subse uentl announced their intention
to do so.
CYPRUS: BETTER CHANC FOR TALKS
r..q - TJ
Prospects for opening political negotiations
between representatives of the Greek and Turkish
Cypriot communities early next year have im-
proved despite a last minute snag. The progress
appears to be the result of consultations involving
the Greek and 'Turkish foreign ministers at the
NATO meetings in Brussels earlier this month in
which the US secretary of state participated.
On December 19, President Makarios gave
former acting president Clerides written instruc-
tions to begin negotiations with Vice President
Denktash on the political aspects of the Cyprus
question. The instructions were "in accordance"
with the common political line adopted in Athens
earlier this month by Greek and Greek Cypriot
leaders. Clerides and Denktash met on December
19 and 20 to determine the basis for future politi-
cal negotiations and reached agreement on all but
one point. The two negotiators refuse to identify
the unresolved issue, but Denktash noted that the
Turkish side was satisfied with the authority and
mandate that Makarios had given Clerides. While
Denktash did not elaborate, Turkish foreign min-
istry officials noted their "strong impression"
that the Greek side was now prepared to nego-
tiate on the basis of a federal system for the
island.
The two leaders continued their contacts on
the unresolved point-said to be a procedural mat-
ter-last weekend. An unconfirmed Athens radio
broadcast claimed on December 22, that the re-
sumption of regular meetings between Clerides
and Denktash was now considered "definite,"
with only the precise date of the first official
meeting remaining to be fixed. Diplomatic con-
tacts and consultations are expected to diminish
for the holidays, but will begin in earnest early
next month. A period of loncl, hard bara 's
likely to ensue.
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FRANCE TO BUILD NUCLEAR CARRIER
I/ z) 13
The French have announced that they will
begin building their first nuclear-powered heli-
copter carrier next April. The keel will be laid
down in the naval dockyard at Brest, and the ship
reportedly will cost an estimated $184 million.
The new ship, with a crew of 840 and up to 25
Lynx or 10 Super IFrelon helicopters, will be
assigned to escort and anti-submarine missions. It
can also provide fleet air cover when carrying
vertical or short take-off and landing (V/STOL)
aircraft.
The carrier is scheduled to replace the con-
ventionally powered helicopter carrier Arro-
manches, which was decommissioned last Jan-
uary. The new ship, expected to become opera-
tional in 1980, will be the first nuclear-powered
surface warship in a West European navy.
the renc navy is
serious y considering o aining V/STOL-type air-
craft, such as the Anglo-US Super Harrier, for the 25X1
new carrier. he trend in the
world's navies a smaller carriers
equipped with V/STOL fighter aircraft. The new
carrier will displace (15,000-18,000 tons-about
half the size of present French aircraft carriers.
Such smaller ships, or similar follow-on carriers, 25X1
would replace France's present two aircraft car-
riers, the Clemenceau and the Foch, when they ao
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PORTUGAL: GONCALVES UNDER FIRE
IL_2,J
[The flare-up of differences last week be-
tween Prime Minister Goncalves and his cabinet
appears to have subsided as a result of the con-
ciliatory role played by President Costa Gomes.
The controversy over the long-overdue eco-
nomic program, expected to be released this week
after a delay of a month, is the most serious issue
between Goncalves and the cabinet. The draft has
been weakened by many compromises and is
likely to complicate rather than solve the coun-
try's critical economic problems. Goncalves, who
favors stronger governmental control over private
business, opposed the plan on the grounds that it
is too conservative. Melo Antunes, the leftist
minister without portfolio who was put in charge
of drafting the economic program, has approved
the moderate plan. Apparently Antunes con-
cluded that a more radical program based on
socialist principles might discourage badly needed
private investment and foreign capital.
Goncalves further antagonized his cabinet
when he ordered the arrest of 12 businessmen on
charges of "economic sabotage" without consult-
ing his closest advisers, ministers without port-
folio Antunes and Vitor Alves. The businessmen
were all associated with enterprises that had been
taken over by the government under new laws
authorizing state intervention in troubled com-
panies.
Although the businessmen are probably
guilty of breaking the law, the business com-
munity generally believes that they were engaging
in what was considered "normal practice" under
the previous regime. In view of these circum-
stances, Alves and Antunes reportedly insisted
that the men be tried before civilian judges and
not under the more stringent military laws, as
Goncalves intended. Latest reports indicate that
eight have now been released and Goncalves ap-
pears to have lost a second round.
Another issue dividing the cabinet is Gon-
calves' recent gestures toward Portuguese Com-
munist Party leader Alvaro Cunhal and the Com-
munist-dominated Portuguese Democratic Move-
ment. Although Goncalves did not consult his
cabinet prior to ordering the arrests of the
businessmen, there is some suspicion that he may
have alerted the left. The Democratic Movement
is known to have distributed leaflets condemning
the businessmen almost simultaneously ~arit}iiIie
official announcement of the arrests.)
Goncalves may also be losing ground in the
continuing dispute within the Armed Forces
Movement over the role of the military in the
coming constituent assembly. The Movement's
program promises that the military will withdraw
from politics after the national assembly is
elected, but it does not comment on the military
role in the constituent assembly. The Movement
has been divided over this issue for several weeks.
President Costa Gomes declared last week
that he was "personally hostile" to the Move-
ment's participation in the assembly. This view
was supported by Movement leaders Vitor Alves
and Otelo, de Carvalho, military commander of
the Lisbon region and deputy head of internal
security forces. Goncalves has not expressed his
views, but his continued silence suggests he may
be with the minority favoring active participation,
which also includes the Communist Party and the
Democratic Movement.
Costa Gomes is reported to have acted as
conciliator in these disputes, a role he has as-
sumed several times since the April coup. His
efforts are probably aimed at. reducing friction
within the government and preventing the resigna-
tion of Goncalves and other major officials in the
months leading up to the elections next
spring.
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JClrr[C I
SECURITY CONFERENCE ADJOURNS
t2 c,11, 26 , 27 7
he Conference on Security and Coopera-
tion in Europe recessed on December 20. The
pace of activity in Geneva quickened somewhat
during the latter part of this round of negotia-
tions, and the participants from 35 states were
able to reach agreement on the texts of several
conference documents. Although many delegates
are now speculating that this stage of the security
conference might end next spring, several sensi-
tive issues must still be faced when work resumes
on January 20.
Despite the generally glacial movement in
Geneva, the conferees were able to reach agree-
ment recently on several texts designed to facili-
tate the "freer movement of people and ideas."
For example, after more than eight months of
negotiations, the conference finally agreed on a
paper concerning the reunification of divided
families. Agreement was also reached on texts
concerning marriages between nationals of dif-
ferent states and the study of foreign languages.
The conference still has not reached agree-
ment on the wording of the preamble to the
"human contacts" documents. The Soviets, con-
cerned about the domestic impact, wish to mini-
mize such contacts and have sought language that
would in effect give Moscow the right to disregard
any agreements on this issue. Although the
French and Soviets recently worked out a com-
promise, it was not accepted by the other dele-
gations because the French and Soviets both
made tactical errors in seeking to line up sup-
porters and because they refused to accept any
changes in their draft.
The conference must also resolve major dif-
ferences concerning the military-related "confi-
dence-building measures" and the wording of
documents related to principles that govern rela-
tions among the participants.
Although these and other problems remain
to be solved, many of the delegates in Geneva
believe that they may conclude their work by
next spring. This optimism stems from the fact
that there has been limited progress; from the
belief that the French are now taking a more
positive attitude toward CSCE; and from the
assumption that the Soviets will show more flexi-
bility. Many compromises will have to be nego-
tiated during the next session, however, and the
Western participants, in particular, will have some
hard political decisions to make on how much
they are willing to concede in order to foster
detente.
With the end of the negotiating phase in
sight, however, much attention is now focusing
on arrangements for follow-up procedures. The
Soviets will be attempting to institutionalize as
much as possible in the way of pan-European
arrangements, while the West may be divided on
how stern a test of "good faith" to apply before
European Communists
ANOTHER MEETING
[28-?n
LThe three-day preliminary meeting of Euro-
pean Communist parties, which ended December
21 in Budapest, made further progress toward
arranging a formal European party conference
and apparently avoided most divisive subjects.
A highlight of the session was the particu-
larly strong defense of detente by Boris Pono-
marev, CPSU Central Committee secretary in
charge of relations with nonruling parties. Ac-
cording to the US embassy, Ponomarev tackled
head-on the arguments of some Western Commu-
nists who believe that Moscow's policy of detente
is sacrificing their interests. He implied that
Soviet pursuit of detente takes precedence over
the aspirations of the Western Communist parties
and that these parties should therefore refrain
from taking advantage of the West's economic
distress.
Ponomarev's remarks were probably distaste-
ful to those Western Communist parties that are
anxious to participate in government and hope
the West's economic troubles will improve their
prospects. The brief communique issued at the
end of the session stated only that the partici-
pants in the meeting "set forth their parties' view-
points," indicating a lack of unanimity.
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14000, J L. v I I L_ I N%ve
Ponomarev (r) addressing Communist meeting
Sergio Segre, head of the Italian party's in-
ternational section, said the participants had fol-
lowed a "gentleman's agreement" to avoid con-
troversial issues, such as China, that were not on
the agenda. The Romanian delegate, however,
reiterated his party's position that the European
conference should not criticize or censure other
parties. He also was less enthusiastic about de-
tente than the Soviets. Ponomarev seemed to re-
serve the right to criticize China in the future by
saying that the conference should struggle against
foes of detente "wherever they are found."
The Yugoslavs and Romanians strongly
reasserted their independent stance at the meet-
ing. Belgrade flatly "demanded" that the meeting
recognize the sovereign equality of all participants
and that it declare itself against the use or threat
of force and for nonintervention in the internal
affairs of others. The Romanians may also have
raised some eyebrows in the Kremlin by saying
that the conference must mobilize not only the
workers, but "the middle class," the intelligentsia,
and the most diverse circles of public opinion
behind the struggle for peace.
The 28 parties represented at the meeting
agreed to set up a drafting committee to prepare
documents for the European conference and also
to hold seminars on substantive issues raised at
Budapest. Another preliminary meeting to con-
sider these draft documents may be held before
the actual conference takes place.
No date has been set for the conference,
which will be held in East Berlin. The Soviets
apparently want to wait until after the European
security conference, which is not likely to end
before next spring at the earliest. The Budapest
meeting issued another call for an early con-
clusion of the security conference.
The communique makes no mention of a
world communist conference, one of the poten-
tially disruptive questions that the meeting may
have intentionally avoided. Presumably, however,
the Soviets are still interested in using the Euro-
pean conference as a stepping-stone toward a
world gathering.
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VLVI \L I
MEXICO: PRESIDENTIAL SUCCESSION
[31-33
he "uncovering" of the Ins itutional Rev-
olutionary Party's choice for president of Mexico
in the election scheduled for July 1976 is slightly
less than a year away, but the guessing game is
already in full swing. The person picked by the
party is certain of election. President Echeverria
cannot run again, since Mexico's presidents are
limited to a single term.
At this early point, the front-runner is Secre-
tary of Government Mario Moya Palencia. Moya,
41, is the choice of the private business sector,
which believes he would head a more conservative
administration in which the investment climate
would be more favorable than it is under Eche-
verria. His chances are buoyed by the fact that
the Ministry of Government is a well-traveled
route to the presidency. Four recent presidents,
including Echeverria, have come directly from
service at the head of this ministry.
Moya's chief competitor is Treasury Secre-
tary Jose Lopez Portillo, 54, a close friend of
Echeverria's since the two were schoolmates in
the early 1940s at the National Autonomous
University of Mexico. Lopez, a moderate, is in
step with Echeverria's ideas on development
priorities and would probably continue the cur-
rent emphasis on the social aspects of economic
development.
On the left of the political spectrum is Labor
Secretary Porfirio Munoz Ledo, 41, a trusted
adviser of the President who is said to have strong
influence on Echeverria's foreign policy initia-
tives. He reportedly wrote the speech Echeverria
gave before the US Congress in June 1972 in
which he scolded Washington for failing to solve
"minor" problems with its friends. Munoz is also
said to be a principal author of the recently
approved UN Charter of Economic Rights and
Duties of States. His chances of becoming presi-
dent hinge on the backing of conservative
interests, including the organized labor move-
ment, which he currently does not seem to have.
Apart from these three possible choices,
there are a few dark horses who could con-
Mario Moya Palencia
Presidential front-runner
ceivably win the nomination if the front-runners
prove too controversial. Secretary of the Presi-
dency Hugo Cervantes del Rio would be a likely
compromise candidate.
Premature political maneuvering by presi-
dential aspirants or by their supporters is usually
frowned on. This time, Echeverria, perhaps know-
ing he could not prevent it, has given the green
light to public discussion of the succession. He is
being careful to'-treat- each bidder equally, how-
ever, so that a successor is not picked too soon.
This would cause ambitious politicians to
circumvent the President in order to endear them-
selves to the chosen candidate and, in effect,
make Echeverria a lame duck.
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The party will officially reveal the successor
next fall after a mysterious process that has puz-
zled political observers for years. The incumbent
is doubtless the chief arbiter in the decision, but
it is not clear to what extent he must weigh and
adhere to the opinions of other politicians and
interest groups.
Some observers believe the party applies the
"pendulum theory" to pick presidential succes-
sors. This involves shifting every six years be-
tween left and right, or as some Mexicans describe
it, between "innovators" and "consolidators."
Echeverria could be called an "innovator."
Among the current favorites, "consolidator" best
fits Mo'a.
PERU: STRAINS IN US RELATIONS
L2,361
[Peru's sharp criticism oft h --e US uring the
past week was occasioned by Washington's dis-
position of compensation funds paid to the US
government. Although the criticism was largely a
result of domestic political sensitivities in Peru,
recent events suggest that strains in relations with
Washington may increase in the coming weeks.
The immediate cause of Peru's concern is
that Exxon received a portion of the $76-million
compensation agreement signed in Lima last
February. The International Petroleum Com-
pany-a Canadian subsidiary of Exxon-was na-
tionalized by the Peruvian military regime after
taking power in October 1968. It was the
previous civilian government's handling of the
case that provided the immediate impetus for the
military intervention, and the regime has main-
tained consistently since then that the oil com-
pany is entitled to no compensation.
The agreement signed in February settled all
investment disputes between Peru and the US,
but, as noted in the final document, the so-called
International Petroleum case was not considered
to be a part of the negotiations. At the same time,
however, both sides agreed that the US would
decide unilaterally on how to distribute the
money.
In an effort to ward off any embarrassment
that might result from news that International
Petroleum was receiving compensation, the Peru-
vian government publicized its position on the
matter even before the decision to distribute the
money was made public here. In addition, there
appears to be a genuine concern that, since the
case had been officially "closed," the US broke
the spirit, if not the letter, of the February ac-
cord. At a minimum, Peruvian officials maintain
that the US had an obligation to hold off dis-
tributing the fund until other unsettling events in
Peru subsided. Specifically, these officials have in
mind the furor over a recent loan agreement with
Japan and continuing allegations that the US is
committed to "destabilizing" the Velasco regime.
Postponing the distribution would not necessarily
have made Lima's response less acrimonious, how-
ever, since Peruvian leaders feel that Washington
has been less than forthcoming on other bilateral
issues such as trade concessions, aid, arms sales,
and inter-American diplomatic affairs.
While the regime's maneuvering on the cur-
rent flap will probably deflect most criticism,
some more radical government leaders may take
the opportunity to sow further discord between
the US and Peru by pressing President Velasco on
other divisive bilateral issues. Velasco may now be
more receptive to anti-US moves as one method
of boosting his sagging popularity at home.
For example, after the initial publicity last
week, the Peruvian mines minister publicly
implied that the large, US-owned Marcona Mining
Company is being actively considered for ex-
propriation. While the take-over of Marcona re-
portedly has been a topic of cabinet discussion
for some time, officials who favor such a move
may now feel more secure to press Velasco to
support their position. Some Peruvian leaders
may also be less willing to compromise on other
bilateral economic concerns and less willing to
accept what they view as unsatisfactory responses
to their arms requests.
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GUYANA: TOWARD A ONE-PARTY STATE
Prime Minister Forbes`Burnha~m~ has an-
nounced plans that would transform Guyana
from a parliamentary democracy into a one-party
socialist state.
Burnham carefully staged a massive rally last
week to mark the 10th anniversary of the govern-
ing People's National Congress. At the rally, he
said that a new constitution suited to the needs of
Guyana will be drafted next year to replace the
present one, which he described as "a replica of
the ethics and ideology of former colonial
masters." Burnham left little doubt about the
trend of things to come when he stated that "the
party comes before the government-which is
inferior to the party."
Capitalizing on the widespread fraud that
marked the 1973 general election and provided
his party with a two-thirds majority in the parlia-
ment, Burnham has since reduced to impotence
whatever opposition remained. In the past year
and a half, the Prime Minister has virtually elim-
inated press freedom, at first through libel suits
and restrictions on importation of newsprint and
machinery, later by forcing outspoken newspaper-
men to leave their jobs, and finally this past
autumn by purchasing the Guyana Graphic, the
country's major independent newspaper. He has
politicized the civil service by basing appoint-
ments on party loyalty. Finally, he has under-
mined labor's traditional independence and has
exploited its numerous internal rivalries. In a re-
cent statement to the press, Labor Minister
Carrington suggested that labor unions might now
be unnecessary and, in fact, irrelevant in the new
socialist Guyanese society being created since
"they were established in circumstances of colo-
nial suppression and exploitation."
Even the churches have not been immune
from government pressure, and the Roman and
Anglican communities may be Burnham's next
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To prepare the party for its paramount role
in the "cooperative socialist" society, Burnham
has outlined a rigorous code of conduct for party
leaders to contend with the indiscipline, venality,
and corruption that he finds within the party and
the government. He has promised "to purge"
those who put personal advancement above the
party and has ordered a tightening of membership
requirements and the building up of a cadre of
disciplined, committed socialist leaders.
He also has plans to implement legislation in
the coming year to:
? take over all private lands not in produc-
tive use;
? assume control of all foreign trade;
? nationalize the Reynolds Guyana Mines
facilities on January 1, 1975;
? abolish fees at Guyana's only university;
? institute compulsory courses on coop-
erative socialism in the schools.
Although Burnham's announced plans are
certain to arouse the fears of the majority East
Indian population that the measures are intended
to ensure the complete political dominance of his
minority black-based party, the East Indians do
not possess the leadership or the inclination to
challenge him. Even Cheddi Jagan, the leader of 25X1
the East Indians and former prime minister during
British rule, is apathetic and isolated and ap-
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INDIA: DEMOCRACY UNDER PRESSURE
d Despite periodic, wi1esprea Lest brought
on by seemingly hopeless economic difficulties
and by tensions among the country's diverse
regions and cultures, India's democratic institu-
tions have held together since independence in
1947. Most fundamental rights still seem safe, but
a bitter controversy is developing between Prime
Minister Gandhi and her opponents over the
government's use of special powers to contain
opposition activities.
The Prime Minister's opponents are incensed
by the government's refusal to revoke the "state
of emergency," in effect since the war with
Pakistan in December 1971. Despite the consider-
able progress in resolving the many problems with
Pakistan, the emergency has been extended inde-
finitely. Formal proclamation of an "emergency"
gives the government expanded powers to censor
publications, to ban strikes, and to make "preven-
tive" arrests. Under this preventive detention,
arrested persons may be jailed up to two years
before gaining access to the courts.
Opposition groups charge the government is
using such powers to muzzle critics and to cover
up corruption. They also say there is a threat of
press control. The recent dismissal of the editor
of one of India's leading independent dailies, The
Hindustan Times, is attributed to his persistent
editorial criticism of government policies, capped
by his condemnation of India's virtual take-over
last September of the Himalayan protectorate of
Sikkim.
The government is reluctant to give up its
extraordinary powers, which the drafters of the
constitution intended only for use in "grave"
national emergencies. According to Mrs. Gandhi,
the upswing in internal disturbances is a serious
threat to national security. In the past year,
frequent outbreaks of civil strife have occurred
during strikes and demonstrations to protest food
shortages, rising prices, and corruption in public
office. This has resulted in several hundreds killed
and thousands injured or arrested.
Power Used With Moderation
To contain the unrest, Mrs. Gandhi has made
increasing use of the various paramilitary forces
that have been formed to assist local police. These
mobile, armed gendarmerie are stationed in all
but 6 of the 21 states. About 8,000 are on duty
in Bihar, the northeastern state of 60 million,
where discontent is especially high. Damage to
government property, a prime target of dissenters,
has led to increasing reliance on the industrial and
railway security forces.
Abuses, including an unknown number of
political arrests, have probably occurred, but
there appears to be no basis for believing that
New Delhi has routinely resorted to imprison-
ment for political dissent. Political "trouble-
makers" are frequently expelled from disturbed
states rather than jailed. The Unlawful Activities
Act does permit the arrest of members of banned
political parties, but the government has rarely
outlawed a political organization. Even the most
extreme of India's communist parties, which led a
terrorist upheaval in West Bengal in the late 1960s
and again shows signs of resurgent terrorism has
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JCL'r%l=
not been banned. A number of radical religious
and separatist parties are also permitted to
operate.
The opposition's unhappiness with the
"emergency" increased last September when New
Delhi added smugglers to those subject to arrest
under "preventive detention." The opposition
opposed expanding the list of potential detainees
on such grounds. Nevertheless, hundreds were
seized in a crackdown on the massive smuggling
traffic to the Persian Gulf, which is estimated to
cost India hundreds of millions of dollars in for-
eign exchange annually. When legal loopholes
enabled key suspects to obtain release, the gov-
ernment denied smugglers access to the courts.
The Congress Party majority in parliament
enabled Mrs. Gandhi to secure easy passage of the
controversial legislation.
Opposition parties brand the move draco-
nian and accuse Mrs. Gandhi of fascist aspirations.
Some charge she wants to prevent smugglers from
revealing in court their links with leading Con-
gress politicians and illegal campaign contribu-
tions of "black money" (that on which income
tax has not been paid) to operate Congress'
electoral machine.
A Conglomerate Opposition
Mrs. Gandhi's most formidable challenger
since she came to power in 1966, J. P. Narayan,
warns that the country is moving toward dictator-
ship. Narayan's nine-month-old campaign to
"restore" democracy and to rid the government
of corrupt politicians and practices, beginning in
his home state of Bihar, continues to gain
momentum. Mrs. Gandhi probably does not
expect that the 72-year-old pacifist and disciple
of Mahatma Gandhi will be able to challenge the
predominant Congress Party on a national scale,
but at the same time she recognizes that he is
stimulating increasing dissatisfaction with
Congress Party policies.
Mrs. Gandhi is unable to attack Narayan
directly because he is revered by the Indian
public, including many Congress Party members.
Attempts to reach an understanding have failed
because the Prime Minister refuses to comply
with his demand that the Congress government in
Bihar be dissolved.
A call by Mrs. Gandhi for elections early
next spring-a year before 'required-would
indicate she feels threatened by Narayan's sup-
porters, a conglomerate of opposition parties and
student groups. They have formed a front aimed
at breaking the present large Congress majority in
parliament. Narayan has reluctantly agreed to
cooperate, but it is too early to tell whether the
front will hold together outside of Bihar. Early
elections would catch them unprepared.
Tensions Likely to Persist
India's gloomy economic outlook ensures
that the government will continue to face internal
discontent. Civilian security forces, rather than
the military, will play the key role in controlling
the 600 million population. Senior army officers
have made clear their opposition to performing
police functions.
Considering all the resources available to the
Congress government, opposition forces will have
an uphill fight. Narayan's participation makes the
challenge unique, but opposition groups have not
stayed together long enough in the past to
threaten the Congress Party seriously.
The government's use of force and repressive
legislation could enhance the prospects of
Narayan's reform movement. So far, however,
New Delhi appears to have used the extraordinary
powers available to it with sufficient restraint.
The recent stinging criticism of government
policies in the legislature and in the press in-
prevails.
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bLL Kt I
ETHIOPIA: SOCIALISM AD TED
4 3-'fSJ
The provisional military government appar-
ent) feels secure enough now to turn to Ethi-
opia's formidable problems. On December 20, the
ruling military council broadcast a long statement
of its new socialist philosophy, and on the follow-
ing day it organized a large rally, under tight
security, to inaugurate the long-promised rural
development campaign.
The announcement of the adoption of
"socialism" is a formalization of social and eco-
nomic views that appear to have been held all
along by many members of the council. The
policy statement of December 20 is, however, a
general statement of intentions and not an outline
of specific programs. There will be much debate-
and delay-before the military can come up with
specifics. Even then, the task of implementation
will place heavy burdens on the military council
and the bureaucracy.
The adoption of "Ethiopian socialism" is an
attempt by the provisional government to iden-
tify with the aspirations of Ethiopians for im-
proved living standards and to give the appearance
of a coherent ideological foundation for the
changes the council is promoting in Ethiopian
society. The council has been criticized for its
failure to move the revolution along. It hopes that
its avowal of socialism will place Ethiopia in the
mainstream of African thinking and help empha-
size the government's sharp break with the feudal
regime of Haile Selassie.
In its announcement, the government
stressed its intention to introduce a uniquely
Ethiopian brand of socialism, as well as the im-
portance of the local community as the basis for
social order. This tends to parallel the philosophy
of the Tanzanian government, and an Ethiopian
military delegation arrived in Dar es Salaam on
December 20 for the purpose of studying that
country's program for uprooting the rural popula-
tion and relocating them in socialist villages.
In addition to outlining its goals, the provi-
sional military government announced that a sin-
gle "progressive" national political party will be
organized. The council may establish a rudimen-
tary party in Addis Ababa and in military camps
around the country, but any attempt to create a
national party will run into problems caused by
the country's religious, ethnic, and geographic
diversity.
The adoption of socialism does not seem to
presage a sudden shift in foreign policy, despite
the strong emphasis now being given to the elimi-
nation of foreign influences on Ethiopian culture
and internal affairs. Several high-ranking officials,
including the defense minister and a high official
of the Ministry of Foreign Affairs, have reassured
US officials that the military council continues to
value US friendship as well as US military and
economic assistance.
On December 21, the government began the
Development Through Cooperation Program,
which involves sending 60,000 students, including
15,000 women, to the countryside. In a speech to
20,000 students at the kick-off rally, General
Teferi Benti, the head of government, sum-
marized the program's objectives-literacy train-
ing, the indoctrination of the rural population in
the objectives of the Ethiopian revolution, and
preparing the peasants for land reform, promised
for sometime in the future.
Students and parents are apprehensive about
the rural development program. Some students
argue that land reform should come first, main-
taining that as long as the landlords hold their
land and retain their power they could influence
the peasants to take violent action against the
students. Moreover, the military council has not
yet inducted students in the rebellious province
of Eritrea into the program, and probably will not
dare send them to the Eritrean countryside.
The military council, which at present ap-
pears to be unchallenged in the capital, is faced
with a worsening security situation in Eritrea,
despite sending army reinforcements there two
weeks ago. Last weekend, there were incidents in
Asmara, the provincial capital, involving shootings
and two attacks on crowded cafes by Eritrean
Liberation Front terrorists. Seven people were
killed and 30 wounded in the attacks. The army's
countermeasures resulted in some civilian deaths,
which increased the hostility of Asmara's popula-
tion and of the predominantly Eritrean para-
military police.
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