WEEKLY SUMMARY

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 03192464
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 35
• Document Creation Date: October 23, 2023
• Document Release Date: August 28, 2023
• Case Number: F-2022-01252
• Publication Date: October 17, 1969

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"itcret
DIRECTORATE OF
INTELLIGENCE
(b)(3)
WEEKLY SUMMARY
'Secret_
- 45)
17 October 1969
No. 0392/69
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7I7/ 21 5'3.0
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k�Site"a-4,1
The WEEKLY SUMMARY, issued every Friday morning by the
Office of Current Intelligence, reports and analyzes significant
developments of the week through noon on Thursday. It fre-
quently 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 requir-
ing more comprehensive treatment and therefore published sep-
arately as Special Reports are listed in the contents pages.
WARNING
The WEEKLY SUMMARY contains classified information af-
fecting the national security of the United States, within the
meaning of Title 18, sections 793 and 794, of the US Code, as
amended. Its transmission or revelation of its contents to or re-
ceipt by an unauthorized person is prohibited by law.
GROUP 1
Excluded from automatic
downg rading and
declassification
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CONTENTS
(Information as of noon EDT, 16 October 1969)
Far East
Page
THE WEEK IN PERSPECTIVE 1
VIETNAM 2
Hanoi's campaign to strengthen its ties with its Com-
munist allies moved into high gear as Premier Pham
Van Dong arrived in Moscow for talks with Brezhnev
and Kosygin. In Vietnam, Communist military activity
this week consisted largely of widespread harassing
and small-unit actions. Most Communist main-force
units remain out of action.
CAMBODIAN CABINET AND PRINCE AT ODDS
Serious strains have arisen over the government's
attempt to exercise its administrative authority.
LAO GOVERNMENT HOLDS IN NORTH, FALLS BACK IN SOUTH
The government offensive in the north registered only
limited gains this week, while in the south govern-
ment troops were forced to withdraw from several re-
cently occupied positions.
5
7
Europe
THE WEEK IN PERSPECTIVE 9
CZECHOSLOVAK LEADERS SET FOR MEETINGS IN MOSCOW
Party first secretary Husak is expected to head a
delegation to Moscow on 20 October for a week's dis-
cussion of his regime's progress toward "normaliza-
tion."
EAST GERMANY PROBES NEW BONN COALITION
The East Germans have indicated a qualified willing-
ness to talk about improved relations with Bonn.
10
10
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-SrtiZ-UZ.
WEST GERMANY MODERNIZING ITS NAVY
With the currently programed additions, the navy will
be better able to fulfill its mission in support of
NATO.
CONTROVERSY OVER SWEDISH AID TO HANOI CONTINUES
The Swedish offer of $40 million in unilateral aid to
North Vietnam continues to cause controversy despite
Stockholm's embarrassed postponement of the offer.
BRITISH TRADE PICTURE IMPROVES
The improved trade position signals some success for
a national economic policy geared to erasing persist-
ent balance-of-payments deficits.
PORTUGAL PREPARES FOR FIRST POST-SALAZAR ELECTION
Political contention is sharpening under the stimulus
of approaching National Assembly elections.
SOVIETS BID TO ENTER WEST EUROPE'S NATURAL GAS MARKET
The Soviets are stepping up efforts to enter West
Europe's natural gas market; they are seeking long-
term exchanges of natural gas for large-diameter
steel pipe.
Middle East - Africa
12
13
15
16
17
THE WEEK IN PERSPECTIVE 19
CONGRESS PARTY RIVALRIES RENEWED IN INDIA
The power struggle between Prime Minister Gandhi and
her old-guard opponents has broken into the open
again, and the battle promises to be a long one.
CHINESE CONTINUE TO WORK ON TAN-ZAM RAILROAD
The Chinese Communists have almost completed survey-
ing the Tan-Zam railroad right of way and are sched-
uled to begin construction early next year.
20
21
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-SITE-RET_
CEYLON LOOKS TOWARD ELECTIONS
The ruling United National Party and the leftist
opposition coalition have begun campaign preparations
for the 1970 general elections. Although moderate
Prime Minister Dudley Senanayake presently appears to
hold a slight edge, a mixed economic picture and a
potentially volatile communal situation could help
Mrs. Bandaranaike, the former prime minister, regain
power. (Published separately as Special Report No.
0392/69A)
Western Hemisphere
THE WEEK IN PERSPECTIVE 23
ARGENTINE GOVERNMENT WINS TEMPORARY LABOR PEACE
Reaction to the new wage policy announced by the
Ongania government last week has been mixed, although
labor leaders privately admit their satisfaction with
it.
RISE IN COMMUNIST INSURGENCY EXPECTED IN GUATEMALA
Communist terrorists are again threatening political
figures and US officials in what appears to be the
opening of a campaign to disrupt the Guatemalan elec-
toral process.
BRAZIL'S NEW ADMINISTRATION TAKES POWER ON 30 OCTOBER
On 25 October a joint session of congress will 'elect''
a president and vice president on the basis of an
absolute majority vote, and the new chief executive,
General Emilio Medici, will serve until 15 March 1974.
EL SALVADOR - HONDURAS DISPUTE REMAINS DEADLOCKED
Foreign ministers of both countries who have been in
Washington for the past two weeks attempting to nego-
tiate a settlement have thus far shown little flexi-
bility on the key issues, and no progress has yet
been made.
SURINAM HEADING FOR ANOTHER COALITION GOVERNMENT
The formation of a government after the national elec-
tions on 24 October may be difficult because no party
or party block appears capable of winning a majority.
24
25
26
27
28
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17 Oct 69
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FAR EAST
The North Vietnamese continue to seek a middle way between the
Soviets and the Chinese. Hanoi's recently warmer relations with Peking were
balanced this week by Premier Pham Van Dong's visits to Moscow and
Pankow and the signing of new aid agreements with those two governments.
Viet Cong delegations have also been touring abroad. One delegation has
been on an extended tour of Chinese cities and another, along with a North
Vietnamese labor union group, has been in Hungary. This surge of activity
strongly suggests that Hanoi feels a special need to assure itself of support
from its principal Communist allies.
Lao Government forces have been consolidating their positions in the
mountains northwest and northeast of the Plaine des Jarres in preparation
for an expected large-scale counteroffensive by Communist troops. The
enemy stepped up raiding and patrolling actions this week, but his over-all
posture remained defensive. In southern Laos, intensified enemy activity has
caused at least a temporary setback to the government.
The moribund International Control Commission machinery in Laos
received perhaps a fatal blow with Canada's decision, for budgetary reasons,
to withdraw its staff from the investigative body. The Canadians are also
pulling their personnel out of Cambodia, but Prince Sihanouk had already
taken action that made the future of the commission in Phnom Penh
questionable.
Prince Sihanouk has been growing increasingly irritated over what he
believes are moves by the government he appointed last August to exceed its
mandate to resolve Cambodia's economic problems. He has been particularly
critical of Deputy Prime Minister Matak, but he is not likely to make any
changes in the government soon. Sihanouk would be reluctant both to
encourage his critics by interfering and to resume the burden of economic
decision making.
Attempts by North Korea to infiltrate agents into the South have
inadvertently aided Seoul's campaign to secure a third term for President
Pak. The President's supporters have exploited incidents, both seaborne and
across the Demilitarized Zone, to paint an exaggerated picture of an in-
creased threat and to extol the administration's ability to defend the na-
tion.
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VIETNAM
Hanoi's campaign to strengthen
its ties with its Communist al-
lies shifted into high gear this
week. Premier Pham Van Dong and
economic affairs expert Le Thanh
Nghi, who have been abroad since
late September, began conferring
with Brezhnev and Kosygin in Mos-
cow on 14 October. The North Viet-
namese presumably discussed their
intentions in the war and ways in
which the Soviets could be of help,
including military and economic
assistance. A brief press an-
nouncement on 15 October indicated
that agreement was reached quickly
on new but unspecified amounts of
Soviet military and economic as-
sistance. Speeches accompanying
the visit underscored Soviet sup-
port for Hanoi's present course
in the war, and promised unlimited
military assistance until a peace
settlement satisfactory to Hanoi
had been achieved. Kosygin urged
a peaceful settlement based on the
ten points "without delay and pro-
crastination."
A Vietnamese - East German
aid agreement was announced at the
conclusion of the visit of Dong's
party to East Germany on 13 Oc-
tober. The accord included the
establishment of a joint committee
to assist in implementing the aid
program. This innovative step in
Communist assistance to Hanoi may
be the prototype for aid agree-
ments to be reached soon with other
countries. Because this device
would have application in long-
range economic cooperation, the
inclusion of such committees in
other bilateral aid agreements
would indicate that North Viet-
nam was giving increased attention
to problems of postwar reconstruc-
tion.
The Communists are also send-
ing Viet Cong delegations abroad
to show the flag. The Vietnamese
Communists have not indulged in
this kind of barnstorming diplomacy
for a long time. It strongly sug-
gests that the leadership in Hanoi
feels a special need to assure it-
self of support from its principal
Communist allies and has reached
some preliminary conclusions about
economic reconstruction needs.
Communist military activity
in South Vietnam this week con-
sisted largely of widespread har-
assing and small-unit actions.
Enemy emphasis continued to be on
the delta, where sporadic shellings
and occasional ground attacks on
remote and lightly defended out-
posts were staged, possibly in an
effort to shake popular confidence
in the ability of the South Viet-
namese armed forces to protect the
region's more isolated hamlets and
villages.
Most Communist main-force
combat units remained throughout
the week in border sanctuaries or
in remote in-country redoubts. As
in past periods when enemy forces
have been between seasonal cam-
paigns, they are engaged in exten-
sive regrouping and resupplying
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WEEKLY SUMMARY
SUMMARY
17 Oct 69
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Nearly all of the 17 Com-
munist regiments that have been
operating in the five northern
provinces of I Corps are currently
spread out along the Laotian and
North - South Vietnamese borders,
or are in base areas well away
from allied military bases and
population centers. Some 10 Viet
Cong main- and local-force infan-
try battalions and 11 sapper bat-
talions, together with approxi-
mately 13,400 guerrillas, remain
in positions to keep up pressure
in the Corps or to threaten smaller
urban targets.
The five North Vietnamese
infantry regiments and one ar-
tillery regiment earmarked for
operations in II Corps are cur-
rently positioned near the Cam-
bodian border or in base areas
of II Corps' interior. The heav-
iest concentration--equivalent
to nearly a division--is poised
in Cambodian sanctuary near the
II-III Corps border. This enemy
force moved southward during the
summer from Kontum Province, and
may either be targeted against
two Special Forces camps in north-
western Quang Duc Province or
planning to move on into III
Corps.
Other enemy assets available
for operations in central Vietnam
include 16 Viet Cong main- and
local-force infantry battalions,
five sapper battalions, and some
11,000 guerrillas.
In III Corps the current
disposition of Communist units
is much the same as that in I
and II Corps. Major elements of
the four enemy divisions based
in the Corps have repaired to
remote jungle areas or to re-
doubts along the Cambodian border.
Several independent Communist
regiments, however, are still in
their normal operating positions
in the provinces flanking Saigon.
Other enemy forces scattered
throughout III Corps include nine
North Vietnamese/Viet Cong main-
force battalions, six Viet Cong
local-force battalions, 14 sap-
per battalions, and an estimated
6,000 guerrillas.
Most of the eight Communist
main-force regiments in IV Corps
are also positioned in or near
enemy base areas. Still in the
field, however, are some 19 Viet
Cong local force battalions and
nearly 22,000 guerrillas.
Despite the general stand-
down of Communist main forces,
there have been indications that
some are planning to increase
hostilities. Most notably, ar-
tillery units in the eastern De-
militarized Zone area have re-
newed shellings of allied posi-
tions in northwestern Quang Tri
Province. Enemy units in the
area just to the west of Saigon
are preparing for limited tactical
operations, probably against al-
lied artillery positions or remote
field positions.
There are suggestions from
scattered sections of a modifi-
cation this fall of the enemy's
"highpoint" strategy. A regular
-SE.614-EX_
(b)(1)
(b)(3)
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WEEKLY SUMMARY 17 Oct 69
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feature of seasonal campaigns
earlier this year had been the
attempt to mount a coordinated
highpoint of brief, but in-
tense, military action through-
out the country.
The modified enemy strategy
was noted during a series of at-
tacks on South Vietnamese posi-
tions in IV Corps on 4-5 October.
New surges of activity by units
in other areas of South Vietnam
are probably being planned for
the remainder of the month or at
least until the more comprehen-
sive Communist "winter-spring"
campaign gets under way.
South Vietnamese Political
Developments
The National Assembly opened
its regular fall session last
week amid indications that rela-
tions between the Assembly and
the government remain somewhat
strained. Although President
Thieu has initiated efforts in
recent months to increase support
in the Assembly for the govern-
ment and has discussed procedures
for improving executive-legisla-
tive relations, these endeavors
have yet to bear fruit. Many leg-
islators reacted adversely to
Thieu's remark in his speech to
the opening meeting of the As-
sembly that he was prepared to
take necessary actions even if
they went against the desires and
wishes of the Vietnamese people.
The legislators are particularly
sensitive to any hint that Thieu
might ignore their prerogatives
and act on his own, as they be-
lieve he has sometimes done in
the past.
Elections for new officers
in each chamber of the Assembly
do not appear to have improved
prospects for greater coopera-
tion with the presidency. Al-
though a supporter of Thieu re-
placed an opposition legislator
in one of the Lower House's lead-
ership positions, the government
did not fare so well in the Up-
per House. The two groups that
had been negotiating to form a
majority bloc to support the gov-
ernment won most of the committee
chairmanships but failed in an at-
tempt to dictate the chairmanship
of the Upper House.
The Assem-
bly's organizational elections,
which revealed the inability of
government supporters in the Upper
House to enforce voting discipline
and showed a hardening of existing
bloc lines in the Lower House, have
cast further doubt on the success
of the effort.
17 Oct 69
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CAMBODIAN CABINET AND PRINCE AT ODDS
Serious strains have arisen
between Prince Sihanouk and the
government over the latter's at-
tempts to exercise its administra-
tive authority. Sihanouk believes
the cabinet has overstepped the
mandate he gave it upon installa-
tion last August to tackle the
country's numerous economic prob-
lems.
Sihanouk has up to now exhib-
ited a public show of support for
the government.
On 6 October he publicly
criticized Deputy Prime Minister
Sink Matak for trying to curtail
his constitutional rights as chief
of state. Referring to a recent
move by Matak to exclude his par-
ticipation in certain educational
matters, Sihanouk accused him of
wrongfully attempting to assume
the palace's responsibilities at
a time when Prime Minister Lon Nol
was on a leave of absence.
Although the government for
the most part has been trying to
exercise what it views as the au-
thority originally vested in it
by Sihanouk, scime of its actions
have clearly gone beyond what Si-
hanouk intended.l
The government has
also sought to stretch its parti-
cipation in foreign affairs, a move
that would particularly vex Siha-
nouk.
Sink Matak, one of the few
Cambodians openly critical of Si-
hanouk's past policies, is emerg-
ing as the cabinet's predominant
figure and has been the driving
force behind much of the effort
to reduce the pressures of princely
interference. He has sought to
assure Sihanouk that his aims are
limited while at the same time
making it clear that he expects
a free rein in carrying out his
responsibilities.
Sihanouk clearly believes his
tolerance is being tested and will
be tempted to make changes in the
government if it continues to whit-
tle away at his position. For the
moment, however, he is probably
reluctant both to encourage his
few but vocal critics by reneging
on his promise to give the govern-
ment a chance or to resume the bur-
den of economic decision making.
In addition, Prime Minister Lon Nol
has recently returned to his post.
He is more responsive to Sihanouk's
sensitivities, and under his direc-
tion the government will probably
ease up on some of the acitivities
most �allin to Sihanouk.
-3E-eR-Fz.
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Laos: Current Situation
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LAO GOVERNMENT HOLDS IN NORTH, FALLS BACK IN SOUTH
The eight-week-old govern-
ment offensive in northern Laos
registered only limited gains this
week amid continuing strong signs
that Communist troops are prepar-
ing for a large-scale counterof-
fensive. In the south, meanwhile,
increased enemy pressure forced
government units to withdraw from
several recently occupied posi-
tions.
Meo General yang Pao's troops
in Xieng Khouang Province have
concentrated on consolidating
their hold over key mountain ter-
rain northwest and northeast of
the Plaine des Jarres. The enemy
stepped up their raiding and pa-
trolling actions, including those
on the Plaine itself, but their
over-all posture remained defen-
sive.
In southern Laos, intensi-
fied enemy activity caused at
least a temporary setback to the
government when government units
were pushed south out of the town
of Toumlane and off an important
piece of high ground southwest of
Tchepone. Muong Phine and its
immediate environs also continue
to be held by the Communists.
Chinese Communist engineers
in northwestern Laos may be pre-
paring to resume their roadbuild-
ing activities durin the dry
season,
(b)(1)
(b)(3)
A new road south from Muong
Sal presumably would be used to
support North Vietnamese and Pathet
Lao troops in Sayaboury and Luang
Prabang provinces and could also
facilitate Chinese support to Com-
munist elements in northern Thai-
land. When construction halted
last spring, the Chinese were
building a road north from Muong
Sai toward Muong Khoua, the ter-
minus of a motorable road from
North Vietnam. Completion of
this road would give the North
Vietnamese their first direct
route to their forces in north-
west Laos.
On the political front, the
almost moribund International Con-
trol Commission (ICC) received
perhaps a fatal blow with the an-
nouncement that Canada, who along
with India and Poland staffs the
investigation body, is pulling
out its Vientiane-based ersonnel
for economy reasons.
Although the ICC has
never effectively fulfilled its
duties under the 1962 Geneva Ac-
cords, it has been of some use
to the Lao Government in document-
ing Communist violations of the
accords.
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WEEKLY SUMMARY
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ITC-REX_
EUROPE
Trouble over a mutually acceptable agenda may cause a delay in the
opening of Sino-Soviet border talks. Negotiations were expected to begin in
Peking sometime next week, but neither side has confirmed that talks
actually will start then. Soviet diplomats have said privately that Moscow
was disturbed by Peking's abrasive statement of 8 October on the border
problem. The Soviets have not yet made a public response, and they may not
do so before going to the bargaining table.
Moscow, although it has been publicly noncommittal, has been
watching with interest and satisfaction the building of a new detente-minded
West German government
Eastern European leaders have reacted quickly to the prospect of the
coalition in West Germany. The East Germans have made an overture
designed to influence the coalition's forthcoming policy statement. The
Poles sent a senior trade representative to Bonn charged with negotiating a
more favorable trade agreement. Hungary concluded an agreement with West
Germany granting the trade missions of the two countries the power to issue
visas and passports.
The Czechoslovaks see possibilities for better relations with Bonn in the
future, but now they are preoccupied with putting their own house in order
in preparation for a visit to Moscow by the Prague leadership, reportedly
scheduled for the week beginning 20 October. During the past week the
parliament was stripped of liberals, and purges were begun in trade unions
and youth organizations.
Some uncertainty has developed regarding the outcome of this year's
UN debate on the Chinese representation question, but the seating of Peking
still remains unlikely. The more fluid situation has resulted from the
Canadian and Italian moves toward Chinese recognition, an undercurrent of
doubt concerning the future course of US-Peking relations, and some erosion
of support for Taiwan among the Latin Americans.
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CZECHOSLOVAK LEADERS SET FOR MEETINGS IN MOSCOW
Party first secretary Husak
is expected to head a delegation
of the country's top leaders to
Moscow on 20 October for a week's
discussion of his regime's progress
toward "normalization." The most
pressing issues are factionalism
within the Czechoslovak party, the
scheduling of a party congress
next year, national elections in
1972, and the rejuvenation of a
deteriorating economy.
Husak, harassed by increasing
pressure from regime conservatives,
probably will seek and receive a
more open and direct endorsement
for his leadership. Moscow no
doubt is pleased with the Czecho-
slovak party chief's record to
date, particularly his continuing
nationwide campaign to remove Dub-
cek liberals from virtually all in-
fluential posts.
The National Assembly this
week formalized Dubcek's removal as
head of parliament, and replaced
him with a conservative. The purge
of progressives is also gaining
momentum in the trade unions and in
the scientific and technical com-
munity. In addition, the govern-
ment has threatened the workers
with a six-day work week--reduced
to five by Dubcek last year--un-
less they end the production slow-
down that has plagued Czechoslovak
industry since the invasion.
While in Moscow, Czechoslovak
officials probably also will dis-
cuss plans for a new, positive eco-
nomic program to follow the auster-
ity measures already in effect.
They may also ask for a large
credit from the USSR, and, as a
token of Soviet confidence in the
Husak regime, greater freedom to
work out domestic problems in their
own way. The Soviets possibly
might extent a credit--although
less than Husak would like--but
they probably will not loosen the
reins on Prague to any perceptible
degree.
EAST GERMANY PROBES NEW BONN COALITION
The East Germans, perhaps sens-
ing a more forthcoming attitude
among the leaders of the prospec-
tive Socialist-Free Democratic
coalition in West Germany, have in-
dicated a qualified willingness to
talk about improving relations with
Bonn.
An East German functionary
who claims to speak for Premier
Stoph recently informed the West
Germans that his government is "par-
ticularly pleased" with the pros-
pect of a new administration in
Bonn. East Germany, he said, would
agree to a meeting between Stoph
and Willy Brandt if the latter makes
certain concessions in a public dec-
laration of the new coalition's pol-
icy.
-greRLF64-:_
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-FatRA;a:
The East Germans asked Brandt
to commit Bonn to negotiate on the
basis of East Germany's draft treaty
of 1967, which was a catalog of Pan-
kow's maximum demands. Brandt was
also specifically asked to state
that Bonn is willing to conclude
an agreement on the renunciation of
force, to ratify the nuclear non-
proliferation treaty, to partici-
pate in a European security confer-
ence, and to ban the right-wing Na-
tional Democratic Party. This done,
the eventual high-level talks might
address "humanitarian" issues, such
as reduced travel restrictions for
West Germans visiting East Germany
and, possibly, similar freedom for
West Berliners. Questions relating
to West Berlin, however, would be
dealt with by special representa-
tives from the two parts of the di-
vided city and not by the principal
East - West German negotiators.
Whether the East Germans are
seriously interested in such talks
is uncertain. West Germany would
find it almost impossible to con-
duct meaningful negotiations if the
East Germans require strict adher-
ence to the principles of the 1967
draft treaty. Pankow, however, prob-
ably is under pressure from its al-
lies--particularly the Soviet Union--
to seek some improvement in relations
with Bonn. This recent proposal may
be intended to relieve such pressure
and at the same time sound out the
new coalition on its policy toward
East Germany.
This could be a re-run of the
fruitless Kiesinger-Stoph exchange
in 1967. One significant difference,
however, is the new coalition in
Bonn, which is expected to be more
forthcoming toward East German de-
mands. In addition, there are va-
rious tempting nuances in the East
German proposal. The 1967 draft
treaty called for recognition of
West Berlin as a separate political
entity, but the recent proposal by
Pankow asks only that discussion
of topics relating to the city be
conducted outside the context of the
main negotiations. This might pro-
vide more flexibility for the main
negotiators, who would not have to
deal with the thorny Berlin problem
at the outset. Furthermore, the
East Germans have not made full dip-
lomatic recognition a prerequisite
for talks and the draft treaty
simply calls for "normalization" of
relations. In addition, the East
German emissary stated that, if
Brandt insisted, Pankow would ac-
cept negotiations on the state-sec-
retary level prior to a meeting of
the heads of government.
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.--sre.R.Ez 7
WEST GERMANY MODERNIZING ITS NAVY
The Bundesmarine is in the
midst of a modernization program.
The first of three US-built guided-
missile destroyers (DDG) is com-
pleting shakedown and will berth
in Germany this month for the
first time. A contract has been
signed for the construction of
12 additional submarines, and the
Bundestag has approved plans for
the production of four guided-mis-
sile frigates.
Germany's other two DDGs have
been launched by an American ship-
yard and shortly will be delivered
to the German Navy. The crews of
all three ships and civilian main-
tenance and repair technicians
received their training in the
US.
The 12 new submarines will
be small coastal defense units
weighing 450 tons--the maximum
allowed by treaty. They will
bring to 23 the number of this
class of submarine operated by
the navy. The new units will be
built by German firms at a total
cost of about $90 million. De-
liveries will take place from
1971 to 1973.
Four missile frigates are
scheduled to enter service in
1974. They will be powered by
a relatively new, combined die-
sel and gas turbine propulsion
system that will provide greater
speed and endurance. Like the
destroyers, they will be armed
with a missile system developed
by the US Navy as a replacement
for the Tartar weapons system.
The missile, called the Standard,
is effective against both air
and surface targets. It will
substantially improve the German
Navy's ability to defend against
air attacks and will also pro-
vide a defense against Osa- and
Komar-class missile patrol boats.
Each frigate also will carry
torpedoes and four 76-mm. guns.
Beginning in the mid-1970s,
the four frigates and three DDGs
will be the principal command
ships of the German Navy. In
an effort to improve command and
control, the Germans have pro-
vided these ships with electronic
data processing equipment similar
to the US Naval Tactical Data
System.
Of the three West German
services, the navy is handicapped
the most by inadequate and ob-
solescent equipment. With the
currently programed additions to
the fleet, it will be better able
to fulfill its missions of pro-
viding forces to NATO for the
control of the western Baltic
Sea, supporting the left flank
of NATO forces in central Europe,
and keeping open sea lines of
communication across the North
Sea.
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-rei;tgX_
CONTROVERSY OVER SWEDISH
The controversy over the
Swedish offer of $40 million in
unilateral aid to North Vietnam
continues despite Stockholm's
embarrassed postponement of the
offer.
Foreign Minister Nilsson had
proposed the aid program strictly
as a Swedish effort that was to
include loans and grants extended
over a three-year period for re-
construction purposes beginning
in mid-1970. This proposal rep-
resented a sharp reversal of
Stockholm's previous policy that
reconstruction aid was to be ex-
tended to both North and South
Vietnam only at the end of hos-
tilities and would be part of a
comprehensive Nordic program
jointly agreed on by Denmark,
Norway, Finland, and Sweden.
A storm of criticism broke
out in the other Nordic countries
as a result of Nilsson's sur-
prise announcement. In addition,
questions were raised in Wash-
ington as to whether the Export-
Import Bank could extend further
credits to Sweden if aid were ex-
tended to Hanoi. Almost immedi-
ately the Swedes backed off.
Nilsson insisted that his pro-
posal was meant to be part of
the Nordic program, was intended
only to facilitate planning, and
would not go into effect before
the end of hostilities. He ex-
plained that any aid extended by
Sweden to North Vietnam while the
war was still in progress would
be humanitarian, such as the hos-
pital and medical equipment now
being delivered via the Swedish
AID TO HANOI CONTINUES
Red Cross and fertilizer for
delivery in mid-1970.
At a meeting of Nordic of-
ficials in Helsinki on 10 Octo-
ber to discuss the joint Nordic
plan, the Swedes were lectured
for their discourtesy in not con-
sulting their Nordic partners
prior to announcing their pro-
posal and were accused of dis-
rupting previously agreed plans.
Attempts by the Swedes to have
their offer included in the over-
all Nordic program as well as
their definition of humanitarian
aid were rejected, and the meet-
ing adjourned in confusion and
acrimony. From the US came re-
ports of cancellations of talks
for new contracts with Swedish
companies and the threat of a
boycott of Swedish shipping by
American longshoremen.
The new government of Prime
Minister Olof Palme is taking
steps to repair the damage. Palme
has made himself available for
extensive interviews with Ameri-
can newspapers, magazines, and
television, while Foreign Minis-
ter Nilsson has been sent to the
US to clarify Swedish policy fur-
ther. At the same time, Nilsson
has assured the Swedish public
and the other Nordic countries
that this is all a misunderstand-
ing created by garbled newspaper
reports. Having been pilloried
by the Swedish press for this at-
tack on its journalistic integrity,
Nilsson is now hearing calls from
the right for his resignation.
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(b)(1)
(b)(3)
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BRITISH TRADE PICTURE IMPROVES
Britain's improved trade
position signals some success for
a national economic policy geared
to erasing persistent balance-of-
payments deficits. Substantial
over-all surpluses must be achieved
and maintained, however, if Brit-
ain is to meet scheduled foreign
debt repayments.
Britain's trade balance in
September showed a surplus for
the second consecutive month.
Exports, although down from the
record level in August, were strong
enough to continue their rising
trend. Imports grew slightly as
a result of larger purchases of
food, beverages, and tobacco.
Last month's surplus of some $62
million was sufficient to yield
a cumulative trade surplus of
$70 million for the third quarter
of 1969, and trade surpluses of
the past two months have bolstered
the pound in foreign exchange
markets.
The recent strong trade per-
formance results from a spurt in
exports and a slowdown in the
growth of imports. Stimulated
by world demand, exports, particu-
larly of machinery, transport equip-
ment, and chemicals, have risen
sharply. The demand for imports,
on the other hand, has been sub-
dued somewhat by deflationary
budgets and by the use of an im-
port deposit scheme discouraging
the purchase of foreign goods.
Because Britain's current ac-
count, which includes merchandise
trade and such invisibles as in-
vestment earnings and shipping
receipts, has also been in sur-
plus this year, London's balance
of payments will probably show
an over-all surplus for the en-
tire year. Continued improvement
in the international payments
picture will not be easy, how-
ever. The anticipated removal of
the import deposit scheme this
December, coupled with increased
political pressures for higher
domestic growth, probably will
spur imports in 1970. In addi-
tion, any slowdown in world trade
would dampen British export pros-
pects.
(b)(3)
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PORTUGAL PREPARES FOR FIRST POST-SALAZAR ELECTION
Political contention, sup-
pressed for 40 years under the
Salazar dictatorship, is sharp-
ening under the stimulus of ap-
proaching National Assembly elec-
tions. Marcello Caetano, who
took over the prime ministership
last year, has tried to move
somewhat away from the ultra-
conservatives but has apparently
run into a military roadblock.
All political factions still
plan to play some role in the
elections on 26 October although
the relaxation of Salazarist
controls will evidently be
slight.
Within the government's
National Union, old-line sup-
porters of Salazar are vying for
power with moderate reformers,
including some Christian Demo-
crats, who are led by a close as-
sociate of Caetano. The two
groups appear to be represented
more or less equally among the
great majority of National Union
candidates who appear on the gov-
ernment slate for the first time.
In two provinces, government
party splinters are running
separately from the National
Union.
The antigovernment elements
are split because Socialist
leader Mario Soares and his
group refuse to associate with
the Communists. Caetano allowed
Soares to return to Portugal from
his Salazar-imposed exile. Soares
now apparently reasons that his
best strategy is to gamble on
Caetano's wanting a moderate,
anti-Communist opposition to play
more of a role in Portugal. The
remaining opposition is associ-
ated with the Communists and is
stronger numerically than the
group led by Soares, but is weak
in leadership. Its adherents are
younger and include some Social-
ists and Christian Democrats,
as well as orthodox and pro-
Peking Communists and other ex-
tremists.
The prime minister has made
some small moves to modify pol-
icies established by Salazar.
In early September in a campaign
speech he asked the people to
support a policy working toward
eventual autonomy for the over-
seas territories of Angola, Mo-
zambique,and Portuguese Guinea.
Caetano also eased election reg-
ulations to permit, for example,
the opposition to provide wit-
nesses for the vote count.
Such relaxation evidently
caused concern among the ultra-
conservatives.
The military
opposes even raising the question
of granting autonomy to the Afri-
can provinces, refuses to have
the military eased out of govern-
ment positions, insists on more
pay and equipment, and will not
tolerate student or opposition
demonstrations.
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WEEKLY SUMMARY
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In apparent deference to
this military pressure, the prime
minister in late September advo-
cated strengthening the powers
of the presidency, and a few days
later made an emotional public
defense of Portugal's traditional
overseas policy. Thus, at least
for the moment, he met the mili-
tary's demands on the African
provinces.
The firm position of the mil-
itary has served notice on the
moderates, and especially on the
opposition, that they must oper-
ate within narrow limits. In
any case, even the opposition
candidates themselves do not ex-
pect to be elected except in
token numbers.
SOVIETS BID TO ENTER WEST EUROPE'S NATURAL GAS MARKET
The Soviets are stepping up
efforts to enter West Europe's
natural gas market; they are seek-
ing long-term exchanges of nat-
ural gas for large-diameter steel
pipe.
Technical discussions are
well along for sales of Soviet
natural as to West Germany, and
France also recently agreed to
discuss future purchases of So-
viet natural gas. Although price
differences stalled Soviet-Italian
negotiations last year, the So-
viets reportedly are still inter-
ested in supplying gas to Italy
via a proposed pipeline extending
through Austria to Trieste.
Natural gas is a commodity
the Soviets can logically seek to
barter in Western Europe for much-
needed supplies of large-diameter
steel pipe. Current Soviet pro-
duction of this size pipe is in-
adequate to meet ambitious Soviet
plans to bring oil and gas from
new West Siberian fields to con-
suming areas in European Russia.
Although the Soviets have
obtained West German assistance
in fabricating pipe up to 99
inches in diameter--the USSR
currently uses up to 48-inch pipe
for its pipelines--production of
the larger sized pipe will not be
ready for at least another two
years. Meanwhile, progress on
Soviet pipeline programs will
continue to depend to a consid-
erable extent on Soviet ability
to import Western pipe and steel
plate.
"S'reREI
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The USSR and France signed
an agreement last month that pro-
vides for continuing discussions
on Soviet gas exports to France,
with deliveries to start around
1977. Many matters, including
price and quantity, must be set-
tled, however, before final ac-
cord can be reached. In addition,
West Germany's approval may have
to be obtained, because France
prefers to receive Soviet gas via
a pipeline through West Germany
to facilitate delivery to major
French consuming areas. Recent
press reports claim that discus-
sions involve the sale of gas in
exchange for large-diameter steel
pipe valued at between $180 mil-
lion and $200 million.
The West European nations may
find it necessary to coordinate
their requirements for Soviet
natural gas because of the need
to provide adequate pipelines for
delivery, or from the standpoint
of arriving at a Common Market
policy on such purchases.
-greRLEz.
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WEEKLY SUMMARY
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reit.E1
MIDDLE EAST - AFRICA
Israel continued its almost daily bombing of Egyptian positions along
the Suez Canal this week, as well as guerrilla bases near the cease-fire line in
Jordan. Prospects for a peace settlement dimmed further as Cairo repudiated
its earlier apparent willingness to engage in "Rhodes-type" negotiations with
Israel. In Lebanon, the Beirut office of the Palestine Liberation Organization
(PLO) was hit by rocket fire, an attack for which the organization promptly
blamed Israeli intelligence�probably to prevent PLO adherents from taking
vengeance on rival fedayeen groups.
The Somali Republic remains calm following the assassination of its
President, Abdirascid Ali Scermarche, on Wednesday. A policeman whose
motivation is unknown was arrested for the murder. There is no obvious
successor in the wings, but pro-Western Prime Minister Egal and the powerful
minister of interior will play important roles in the political manuevering
preceding the election of a new chief of state.
The Biafran Air Force has struck another oil company installation in
the Mid-West State, the seventh such raid since May. This one caused some
damage to storage facilities.
Tanzanian authorities have arrested seven people, including four army
officers, for allegedly plotting to overthrow the government while President
Nyerere is out of the country. If there was a plot, it must have been a minor
one because the army is overwhelmingly loyal to Nyerere.
Sierra Leone's Prime Minister Stevens is coming under increasing fire
from within his faction-ridden All Peoples' Congress.
In India, the struggle for control of the Congress Party between Prime
Minister Gandhi and her old-guard opponents has again flared into the open.
Meanwhile, New Delhi is once more examining the possibility of granting full
diplomatic recognition to East Germany. As in the past, however, the
Indians will be hesitant to take any action that would imperil continued
economic aid from Bonn.
The recent lull in antigovernment agitation in East Pakistan is expected
to continue, in part because schools will be closed over the next two months
for a succession of holidays. President Yahya Khan is moving ahead with
reforms, however.
Page 19
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-sre.R.Ez_
CONGRESS PARTY RIVALRIES RENEWED IN INDIA
India's Prime Minister
Gandhi has acted quickly to pro-
tect her newly won dominance
over the Congress Party. On 15
October, she summarily requested
the resignations of four junior
cabinet officers who had sided
with her opponents in earlier
party contests. This followed
equally decisive and even more
dramatic action late last week.
Upon learning that party
president Nijalingappa, a tra-
ditional opponent, was prepar-
ing to oust three of her sup-
porters from leadership posi-
tions within the organization,
Mrs. Gandhi successfully fore-
stalled the move by bringing
his maneuvering into the open.
Even though Nijalingappa was
thus blocked, at least initi-
ally, in his attempt to move
against Mrs. Gandhi's supporters,
he has staunchly defended his
right to do so, and the struggle
is far from over.
Despite a "unity resolu-
tion" passed by the Congress
leadership after Mrs. Gandhi's
triumph in the presidential con-
test less than two months ago,
the party's old guard has been
seeking an opportunity to re-
assert itself. A meeting of
-gr
the party's governing Working
Committee is scheduled for 30
October and will be the scene
of a further test of strength
between the two sides.
Mrs. Gandhi probably be-
lieves she now has the strength
to defeat her opponents and con-
solidate her control over the
party or she would not have
moved so decisively against Nijal-
ingappa. Her letter of protest
to the party president was signed
not only by herself and four old
allies, but also by the politi-
cally powerful home minister, Y.
B. Chavan. Although Chavan op-
posed Mrs. Gandhi during the pres-
idential race, he acted as the
party peacemaker after she had
won. His presence on her team is
a formidable asset and may con-
vince undecided Congress Party
leaders that Mrs. Gandhi repre-
sents the "wave of the future,"
which prudent politicians would
be well advised to join.
Nevertheless, the old guard
party bosses are unlikely to give
in without a fight, and the lead-
ership struggle, in which the im-
mediate contest is only one round,
is expected to be prolonged.
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CHINESE CONTINUE TO WORK
Work on the Communist Chi-
nese - sponsored, 1,200-mile Tan-
Zam railroad is progressing on
schedule. According to a Zambian
official, the engineering survey
will be finished in November and
construction will start next
March. The first consignment of
material and equipment has al-
ready arrived in Tanzania.
The Tan-Zam railroad is the
largest Chinese aid project in
Africa. As many as 1,000 Chinese
railroad technicians may now be
in Tanzania and Zambia, and up
to some 5,000 Chinese workers may
eventually be brought in to help
build the railroad.
Although the over-all cost
of the project and the terms of
repayment will not be worked out
by the three governments until
December, the terms are expected
to be generous. The Chinese have
already agreed to supply equip-
ment, material, and the salaries
of Chinese personnel under an in-
terest-free loan. Local costs
are to be financed from the re-
sale of Chinese goods furnished
under a commodity credit arrange-
ment.
Tanzania and Zambia have
been impressed by the scale and
speed with which the Chinese have
provided aid, as exemplified by
the railroad project, and also
by their unobtrusiveness. More-
over, the Chinese have not only
been generous but are willing to
ON TAN-ZAM RAILROAD
tailor their assistance to the
two African countries' highest
priorities--economic development
and the-liberation:struggle against
the white regimes in southern
Africa, In .this Way, Peking
hopes steadily to :erode Western
and Soviet influence: in the area
and thus gain- predominance.
For the Tanzanians and Zam-
bians, who are well aware of the
dangers of the Chinese presence,
the importance of the railroad
is as much political as economic,
and therefore worth the risk. When
the line is completed sometime in
1975, Zambia will be able to ship
most of its copper exports, which
over 90 percent of its for-
exchange, through the port
earn
eign
Lobito
96316 10-69
DE MOCRATIC
REPUBLIC
OF
0
Copperbelt
ZAMBIA
Lusaka,*
4
jeira
Dar es Salaam
of Dar es Salaam. Zambia now
must export the bulk of its cop-
per over the railways running
through the white-ruled states
of Rhodesia, Mozambique, and
Angola.
Page 21
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�.S'refUl._
* * *
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.1EcRgz_
WESTERN HEMISPHERE
Last week's outburst of terrorist activity has subsided. The Uruguayan
Tupamaros, in fact, may have been dealt a staggering reversal as a result of an
attempted holdup in the suburbs of Montevideo. Three of the guerrillas were
killed and 16 captured in a gunbattle with police. The following day three
more were captured in a raid on a photographic shop where the guerrillas
had been fabricating documents. On 13 October, police discovered a
Tupamaro arsenal of firearms and bombs. At the present time more than 100
of the guerrillas are in jail.
In Bolivia, pressures are increasing on President Ovando to nationalize
the US-owned Bolivia Gulf Oil Company. Initially, at least, nationalistic
sentiment and expectations that the company would be expropriated were
deliberately aroused by Ovando and other top government officials to build
popular support for their coup-installed government. Several cabinet minis-
ters are now pushing for nationalization, and Ovando may be unwilling or
unable to withstand the pressure from within and outside the government,
even if he is convinced that expropriation would be economically unsound.
In the Caribbean area, the Jamaican government's banning of a visit by
a leftist Guyanese professor has raised hackles at several university campuses.
In Jamaica, especially, there is a danger that student demonstrations could
turn into a confrontation with police. In October last year, student protests
over a similar exclusion by the government led to serious rioting in Kingston.
In the Bahamas, Prime Minister Pindling has temporarily quelled opposition
to his leadership by making some cabinet changes. He assigned several
ministerial posts to party legislators, probably in order to buy enough
"loyalty" to fend off any attempts to oust him at the party convention later
this month. Deputy Prime Minister Hanna, a focal point for discontent, has
remained in power, however, and Pindling still faces opposition from the
important Freeport business community.
In Middle America, Mexican President Diaz Ordaz' successor will be
identified soon when the country's ruling Institutional Revolutionary Party
announces its presidential candidate. There have been rumors in recent
weeks that the party's nominee will be a complete surprise. Indications are,
however, that Minister of Government Luis Echeverria will be the next
president. Panama's provisional junta government last weekend celebrated
the first anniversary of the coup and left little doubt that it intended to
maintain tight political control indefinitely. The government promised to
call a constituent assembly late in 1970 to amend the constitution, but
revealed that the political parties would not he Unix/Pei fin f;,.n.,�, in the
selection of delegates.
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ARGENTINE GOVERNMENT WINS TEMPORARY LABOR PEACE
The new wage-price policy
announced by the Ongania govern-
ment last week will probably pro-
duce a temporary respite from the
labor unrest that has plagued Ar-
gentina since May.
On 9 October, the minister
of labor and economy announced
that a wage increase of nearly
18 percent would be given all
workers, except civil servants,
in two increments--1 November
1969 and I March 1970. In addi-
tion, the government intends to
increase all pensions by 8 percent
at the beginning of the year.
It is expected that the 10-
to 12-percent raise on 1 Novem-
ber will about equal this year's
inflation rate and will provide
approximate wage-price parity
for the year. The minister also
announced that a national council
on prices and salaries would be-
gin operating at the same time
the wage hike goes into effect.
He said the Ongania government
would take all measures necessary,
including the denial of tax cred-
its and the imposition of price
controls, to ensure that employers
do not pass on the wage increases
in the form of higher prices.
Reaction to the announce-
ment has been mixed.
labor leaders have publicly crit-
icized the new wage policy as in-
adequate
Despite government
disclaimers, the new wage in-
creases appear to have been part
of a deal negotiated with leaders
of the Peronist-dominated Gen-
Page 24
eral Labor Confederation (CGT)
in return for their calling off
a potentially crippling general
strike early this month.
Labor appears to have won
nearly all the concessions it
had hoped for. These include
an automatic review of wages by
1 January 1971, to be followed
by wage adjustments if prices
have risen during 1970; the re-
lease of political prisoners,
elections in government-inter-
vened unions; and the reorgani-
zation and unification of the
CGT. On 10 October the govern-
ment released 58 unimportant po-
litical prisoners who had been
held without trial under a state
of siege imposed on 30 June.
Still in custody, however, are
140 others, including militant
antigovernment labor leader Rai-
mundo Ongaro.
There has been little em-
ployer reaction to the new meas-
ures, but some economists have
expressed dismay at the infla-
tionary aspects of the wage hike
and the adverse effect it will
have on the government's economic
stabilization program. It is
feared that employers may con-
strue the government's recent
action as capitulation in the
face of labor threats and as in-
dicative of future action if la-
bor demands further wage hikes in
1970. Although leaders of the
CGT are ready to cooperate with
the government, some dissident
unions are accusing national
labor leaders of a sellout and
are formulating plans to set up
a dissident confederation and
to attempt a "general strike"
on 28-29 October.
WEEKLY SUMMARY 17 Oct 69
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RISE IN COMMUNIST INSURGENCY EXPECTED IN GUATEMALA
Communist terrorists are
again threatening political fig-
ures and US officials in what
appears to be the opening of a
campaign to disrupt the Guate-
malan electoral process.
The elections must be for-
mally convoked in early November,
and the FAR may initiate their
campaign at that time.
Flores'
guerrilla attack against\s
301/ drilling cangis
4-5 Oct r
/ �
Alta
Verapaz
Sa Guatemala
%via. cos
Esu Ma
96315 10-69 CIA
NuatemlaCity.4.
NI
El Salvador /
15.0
MILE'S
Igo
Honduras
There are signs that rural
insurgency, which has been at a
low level over the past year and
a half, may pick up. On 11 Oc-
tober, Col. Carlos Lopez Mendija-
bal was assassinated in Catarina,
Department of San Marcos. Three
other assassinations took place
this week, two of them in Es-
cuintla, and there were minor
acts of sabotage elsewhere.
A large guerrilla attack
against three oil drilling camps
near the Mexican border took
place on 4 and 5 October. Wit-
nesses described the attackers
as a well-disciplined FAR group
of 40 men in terrible physical
condition. 1
The leader of the band
told witnesses that the group
planned to cross into Mexico and
make trouble that would embar-
rass the Guatemalan Government.
After rearming, the guerrillas
would then return to begin pre-
electoral disturbances.
-""Srekt-E-12_
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BRAZIL'S NEW ADMINISTRATION
On 14 October the governing
triumvirate issued Institutional
Act 16 declaring the presidency and
vice presidency vacant and setting
an "election" to fill the posts.
The act states that President
Costa e Silva is unable to exercise
his responsibilities, and that it
is necessary to replace him imme-
diately and permanently. The na-
tion's only two authorized politi-
cal parties are instructed to reg-
ister their candiates for the presi-
dency and vice presidency with the
officers of the Senate. On 25 Oc-
tober a joint session of Congress
will "elect" a president and vice
president on the basis of an abso-
lute majority vote. Although this
provision raises the possibility
that there will be more than one
candidate for the top post, there
is no doubt that the choice of the
military high command--General Emi-
lio Medici--will be the victor.
The new chief executive will take
office on 30 October and will serve
until 15 March 1974.
Although no official announce-
ment has been made, the new vice
president probably will be retired
Admiral Rademaker Grunewald, the
Navy minister and a member of the
present ruling triumvirate. Some
cabinet members and military of-
ficers, particularly in the air
force, have criticized Medici's
selection of the staunchly conserv-
ative Rademaker instead of a
younger and more progressive man.
Medici's probable cabinet se-
lections suggest that the general
TAKES POWER ON 30 OCTOBER
policies of the Costa e Silva admin-
istration will be maintained. Some
projected appointments, however, may
lead to improvements in certain key
areas. For example, the nomination
of Labor Minister Jarbas Passarinho
to replace Education Minister Tarso
Dutra would indicate that some at-
tempts at reform may be made in this
long-neglected field, and the sub-
stitution of Brazil's ambassador
to the US, Mario Gibson, for strong
nationalist Jose Magalhaes Pinto
as foreign minister could be a
boost to US-Brazilian relations.
Finance Minister Antonio Delfim
Neto will probably continue to be
the architect of Brazil's economic
policy.
Institutional Act 16 specifies
that the triumvirate will continue
to exercise the powers of the exec-
utive until the inauguration, and
authorizes it to issue decree-laws
as it considers necessary. This
provision suggests that additional
cancellations of the political
rights of persons allegedly im-
plicated in subversive and corrupt
activities are likely.
Institutional Act 17, issued
on the same day, authorizes the chief
executive to transfer to reserve
status for a specified period any
officers deemed guilty of endan-
gering the unity of the armed forces.
This sanction may be aimed directly
at controversial General Albuquerque
Lima, whose protests about not being
considered for the presidency an-
gered top army commanders.
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eL
Early reaction to the future
Medici administration has been mod-
erately optimistic. In Sao Paulo,
for example, progressive churchmen
and some leftist intellectuals and
politicians approve Medici's speech
of 7 October emphasizing the need
for basic reforms in areas such as
education. Opinion leaders in the
underdeveloped Northeast reportedly
also are favorably disposed to Medi-
ci's designation. In general, how-
ever, the attitude remains one of
waiting to see how far the new pres-
ident will actually go in implement-
ing much-needed reforms.
EL SALVADOR - HONDURAS DISPUTE
The El Salvador - Honduras dis-
pute remains deadlocked despite the
persistant efforts of the Organiza-
tion of American States to promote
a settlement.
At the urging of the OAS, the
foreign ministers of both countries
came to Washington for extended ne-
gotiations after attending the open-
ing session of the UN General As-
sembly. The meetings, which are
still under way, have been generally
cordial, but the two delegations
thus far have shown virtually no
flexibility on the key issues. The
Salvadorans are demanding that Hon-
duras open its section of the Pan
American Highway to Salvadoran trade
with Nicaragua and Costa Rica, but
have refused to bow to Honduran
pressure for immediate talks on the
border dispute. The Hondurans, on
the other hand, have refused to
open the highway unless El Salvador
agrees to demarcation of the border
and revision of the Central Ameri-
can Common Market.
This inflexibility is firmly
rooted in the domestic political
pressures on both governments. The
Salvadoran government in particular
seems to have little room for maneu-
ver. Sensitive to charges that it
withdrew from Honduran territory
without any clear gains, the gov-
ernment apparently fears that fur-
ther concessions would be politi-
REMAINS DEADLOCKED
cally damaging. At the same time,
public reaction to the continuing
exodus of Salvadorans from Honduras
and the closure of the highway has
become increasingly bitter. De-
mands that the government do some-
thing about the situation are mount-
ing. One step might be to close
the border to Nicaragua, Guatemala,
and Costa Rica to force them to
put pressure on Honduras.
Although Honduran President
Lopez' domestic position is some-
what more secure, he has not wanted
to oppose the anti-Salvadoran,
anti - Common Market mood of his
country and has been unwilling to
give up his strongest bargaining
point without getting something
in return. Continued OAS pressure
and fear of another Salvadoran in-
vasion, however, might soften the
Honduran position.
Honduras may also find itself
under pressure from the other Com-
mon Market countries. Honduran ob-
struction of Common Market trade
has already affected Nicaragua, and
President Somoza has decided to call
a meeting of the five member states
in an effort to resolve the problem.
Should his efforts be unsuccessful,
he may try to protect his country's
economy by a temporary embargo of
all Common Market imports. This
would lead to a further paralvsiq
of the Market.
-SreR-ET__
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SURINAM HEADING FOR
The formation of a govern-
ment after the national elections
on 24 October may be difficult
because it appears that no party
or party block can win a major-
ity. The elections will mark the
end of the nine-month interim
government headed by Arthur May
that took over after labor un-
rest and cabinet dissension top-
pled the administration of Johan
Pengel last February.
The United Hindu Party and
the National Progressive Party
seem to be in the strongest posi-
tion to win enough seats to form
a ruling coalition. These two
parties now control 14 of the 39-
seats in the Staten, the uni-
cameral legislature. They stand
to gain others from the Surinam
National Party because of wide-
spread dissatisfaction over the
National Party's performance and
the well-known corruption of its
leader, former minister-president
Pengel.
ANOTHER COALITION GOVERNMENT
The incoming administration
will be faced with important de-
cisions regarding independence,
the border dispute with Guyana,
and the serious problems of un-
employment and economic develop-
ment. All major parties espouse
independence from the Netherlands,
but each has widely varying time
tables and degrees of enthusiasm.
The left-wing Nationalistic Re-
publican Party wants all ties
severed completely and immedi-
ately. On the other hand, the
United Hindu Party block reluc-
tantly agrees in principle to
independence but believes it
should come after several years
of careful study and preparation.
All parties support Surinam's
claim to the area in dispute
with Guyana but believe the
matter should be settled by
peaceful means.
No major disturbances are
expected before the elections,
but racial tensions might pro-
duce isolated incidents.
(b)(1)
(b)(3)
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(b)(1)
(b)(3)
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