WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A004000040001-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 30
• Document Creation Date: December 21, 2016
• Document Release Date: September 15, 2008
• Sequence Number: 1
• Publication Date: April 12, 1963
• Content Type: SUMMARY

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12 April 1963
OCI No. 0275/63
Copy No.
81
WEEKLY SUMMARY
OFFICE OF CURRENT INTELLIGENCE
State Dept. review completed.
CENTRAL INTELLIGENCE AGENCY
SECRET
GROUP I Excluded from automatic
downgrading and declassification
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(Information as of 1200 EST, 11 April 1963)
CUBA
CASTRO'S MAY DAY PLANS
They include a four-hour parade of 100,000 work-
ers, invitations to 800 foreign guests, and the
usual address by Castro.
THE USSR AND LARGE-DIAMETER PIPE
Moscow's need for pipe following the West German
ban on sales was not great enough to force it to
accept a British firm's high-priced offer. The
USSR may still get--from Italy, Sweden, and Japan
--a third of planned 1963 imports.
MOSCOW GIVES ATTENTION TO THE CONSUMER
The present efforts to improve public services
and consumer goods supplies will, like others in
the past, probably be inadequate to meet plan-
ning goals or the aspirations of the public.
THE HUNGARIAN AMNESTY
The regime hopes this action--which may have set
free as many as 3,000 political prisoners--will
lead to normalization of Hungary's UN status and
to improvement of relations with the US.
POLISH TEMPERS RISE WITH FUEL PRICES
The prevalent mood could lead to widespread
local disturbances and cause party leader Go-
mulka to make changes in the top leadership.
12 Apr 63
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CURRENT INTELLIGENCE WEEKLY SUMMARY
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THE COMMUNIST WORLD (continued) Page
countries' efforts to assert an "independent" for-
eign policy. (Published separately as Special
Report OCI No. 0275/63D)
LIU SHAO-CHI'S SOUTHEAST ASIAN TOUR
This trip, the first outside the bloc for the Chi-
nese Communist chief of state, is billed as a good-
will tour and probably is intended to offset the
recent visit by Soviet Defense Minister Malinovsky.
SOUTH KOREAN REGIME ACTS TO EASE POLITICAL CRISIS
By deferring until September a decision on hold-
ing a referendum on extending military rule, it
has averted an immediate showdown.
COMMUNIST INROADS AGAINST LAOTIAN NEUTRALISTS
Neutralist forces have been pushed out of key posi-
tions on the Plaine des Jarres and as yet are get-
ting no substantial rightist aid; North Vietnamese
support for the Laotian Communists continues.
CONGO POLITICIANS IRKED AT ADOULA'S TACTICS
The premier is still putting off his cabinet
reshuffle and parliament may be recessed
again to ease his problems.
ALGERIAN-FRENCH COOPERATION IN DIFFICULTY
Premier Ben Bella faces strong domestic pres-
sure to abandon his reliance on Western aid
in developing Algeria's economy.
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EFFECTS OF RECENT EEC MINISTERS MEETING
In a more harmonious atmosphere than has pre-
vailed since mid-January, several important
decisions were taken, but critical agricultural
and trade issues remain unresolved.
Page
ARGENTINE ELECTION PROBLEMS REMAIN AFTER REBELLION
The continued failure of the badly splintered
political parties to agree even on their lists
of candidates may cause at least a brief post-
ponement of the election.
NEW SIGNS OF INSTABILITY IN BRAZIL 21
A dispute between the leftist First Army commander
and the anti-Communist war minister which nearly
provoked a political crisis points up the serious-
ness of the left-right enmity in Brazil.
SOVIET ECONOMIC POLICY TOWARD BRAZIL 22
A long-term trade pact is in the offing, but with
little chance of a sizable trade increase; Moscow
is reluctant to make any significant commitment--
involving either trade or aid--to the Brazilians.
CHANGES IN CHILEAN PARTY STRENGTHS 23
The three parties in the rightist coalition still
have a combined vote higher than that of the three
in the leftist front, but a nonaffiliated leftist
group now is the largest single party.
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WESTERN HEMISPHERE (continued) Page
LABOR DISORDERS IN BRITISH GUIANA 24
The 5-6 April disturbances in the capital may be
followed by widespread strikes and more extensive
disorders throughout the colony later this month.
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The Castro regime has begun
preparations for large-scale
May Day ceremonies in Havana.
Worker units have been prac-
ticing for the parade for more
than two weeks. Fidel Castro
is scheduled to deliver a major
address following the parade,
as he has done in years past.
Cuban broadcasts assert
that 100,000 workers will par-
ticipate in the four-hour parade
and that more than 800 foreign
guests, representing 157 worker
organizations throughout the
world, are to come to Cuba for
the occasion. Members of the
WFTU will attend, and about 150
labor leaders from abroad are
expected to march in the parade.
The Cuban Workers Organization
has in turn received invitations
to send delegates to May Day
celebrations in Soviet bloc
countries.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
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Moscow on 6 April protest-
ed the West German Government
ban which resulted in. the can-
cellation of contracts covering
the export in 1963 of 163,000
tons of 40-inch pipe to the
USSR. The protest demanded
"strict observance by the West
German side of the obligations
assumed by it," suggesting
that the USSR will invoke
penalty clauses for nonfulfill-
ment of the contracts.
While the USSR has inves-
tigated new sources of pipe in
the UK--which has not banned
such deliveries--no contracts
have been reported. Soviet
refusal to place a contract
with a British firm which asked
too high a price suggests that
Moscow is not desperate for
immediate supplies. It may
for the present prefer to prop-
agandize West German failure
to honor a trade commitment--
at the behest of the US--and
to hope that commercial competi-
tion and industrial unrest fol-
lowing layoffs at mills de-
pending heavily on Soviet orders
will result in eventual break-
down of the ban.
The USSR has imported an
estimated 870,000 tons of West-
ern 40-inch pipe since 1958
and planned to obtain about
300,000 tons from the West
this year--sufficient to com-
plete about 650 miles of pipe-
line. More than half this
amount was covered by the can-
celed West German contracts.
Sweden is scheduled to de-
liver about 45,000 tons in 1963
under a contract covering ship-
ment of 135,000 tons during 1963-
65. In addition, up to 40,000
tons may be supplied this year
under Italian contracts pre-
dating the North Atlantic Council
(NAC) resolution to stop pipe
exports "to the extent possible."
At least 5,000 tons are also
being supplied from Japan, but
Tokyo, although it did not
participate in the NAC resolu-
tion, is discouraging additional
deliveries.
Moscow has just put into
operation a new 40-inch pipe
mill at Chelyabinsk. Stock-
piles, the output of this plant
and of the two other large-diam-
eter Soviet mills, imports of
60,000 tons from Rumania, and
residual deliveries from the
West will permit continued prog-
ress on the "Friendship" crude-
oil pipeline into Eastern Europe.
Not enough pipe will be avail-
able, however, for the almost
1,600 miles scheduled to be
laid this year. More than
400,000 tons would be needed
to complete the 900 miles of
the "Friendship" line within
the USSR, and 300,000 tons to
complete 680 miles of the gas
line from Gazli to Chelyabinsk
in the USSR.
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MOSCOW GIVES ATTENTION TO THE CONSUMER
The Supreme Soviets of several
of the USSR's republics met early
this month to discuss means of
improving public services and in-
creasing the quality and variety of
consumer goods.
These meetings,as well as other
signs of regime concern for the
consumer, probably stem from a reali-
zation that agricultural failures
and the near stagnation in the pro-
duction of many consumer goods are
increasingly serious problems af-
fecting not only worker incentive
but also the image of abundance the
Communists are striving to create
in the underdeveloped countries.
However, such improvements as
are achieved through the present
efforts will--like others in the
past--probably be inadequate to meet
planning goals or the aspirations of
the Soviet public. There is no
indication that national resources
are to be shifted away from defense
and heavy industry. The decree
issued after the meeting in the
Russian Republic--and this decree
was typical of the others--called
merely for greater effort within
the present planning and for the
provision of some additional funds
by local and regional governments.
Another recent evidence of
regime intentions to improve the
situation in consumer goods supply
was the announcement on 27 March
of,an increase in the wholesale
price for raw cotton. Beginning
with the 1963 harvest, collective
farms will receive 20 percent more
and state farms 12 percent more for
the cotton they produce. The
measure is intended to stimulate
production in view of the stagna-
tion of cotton output and the poor
progress in cotton fabric pro-
duction since 1959. Much of the
additional revenue made available
to the farms--which could amount
to about a quarter of a billion
rubles (nominally one ruble equals
$1.11)--is to be used for material
incentives, i.e., wages, and some
of the funds will be used for
investment.
There was no mention in the
announcement of any increase in
the retail price of cotton goods
to offset the cost of the measure
to the state. A similar whole-
sale price increase for meat and
meat products adopted last June
was accompanied by a very unpop-
ular increase in retail prices
for meat and butter. Moscow may
choose to absorb the increase for
raw cotton or may wait until this
fall or next spring to boost re-
tail prices.
The equipment needs of both
the chemical industry and agri-
culture continue to receive con-
siderable press attention. On
15 March the chairman of the USSR's
agricultural equipment supply
organization emphasized the impor-
tance of meeting the 1963 plan
for a 22-percent increase in out-
put of agricultural equipment.
On his "vacation" trip last
month Khrushchev visited several
plants specializing in agricul-
tural chemicals and synthetic fibers.
Near Tula he visited a urea plant,
one of four being supplied by the
Dutch, and said that fertilizer
would receive a "top priority" from
the state. He ordered that four
more urea plants be purchased from
the Dutch.
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Up to 10,000 Hungarian
prisoners, about one third of
them jailed on political
charges, may have been released
in the "general" amnesty com-
pleted on 4 April, Hungary's
"Liberation Day." Only those
1956 revolutionaries convicted
of espionage, treason, murder,
and arson were excluded, and
they may petition for review
of their cases.
The Kadar regime claims
that the amnesty was motivated
solely by internal developments
but it clearly hopes that this
action has removed the last
major obstacle to a normaliza-
tion of Hungary's status in
the UN and paved the way for
an improvement in relations
with the US. The first step
in this process will probably
be a visit to Hungary this
summer by UN Secretary General
Thant. Under his mandate from
the General Assembly to follow
Hungarian developments, he had
accepted in principle an
invitation to visit Hungary
but let it be known that he
would not go until a general
amnesty had been declared.
While this amnesty has
been described as "general,"
the regime is being deliberately
vague about its extent and has
refused to publish a list of
those released or to answer
inquiries about specific in-
dividuals. Some Western news-
men estimate that up to 10,000
prisoners of all types have
been freed. Others report that
300 to 400 a day have left
Kobanya prison in Budapest--
apparently the central releas-
ing point--since 26 March, when
the releases began. No reliable
figures are available on how
many were imprisoned for their
role in the 1956 revolt, how
many of these were released under
the partial amnesties in 1959,
1960, and 1961, or how many were
charged with crimes which pre-
clude their release.
Among the prominent prisoners
known to have been released are
Istvan Bibo, a minister in Imre
Nagy's last cabinet, and writer
Sandor Fekete. Others reportedly
included are Nagy's minister of
interior, the Budapest police
chief at the time of the revolt,
Cardinal Mindszenty's secretary,
and two leaders of the Budapest
Workers Council. The British Le-
gation has heard nothing of its
former chauffeur implicated in
smuggling out Nagy's writings.
The one individual known
to have been excluded from the
amnesty is Cardinal Mindszenty,
who had been imprisoned in 1949
on charges of espionage and
treason. He had been released
by revolutionaries during the
revolt, and when it was crushed,
obtained asylum in the US Lega-
tion. Queried by Western news-
men, regime spokesmen have
pointed out that he can petition
for a review of his case. To do
so, however, would be to admit
implicitly the validity of the
charges under which he had been
imprisoned. Any change in his
status presumably will have to
be negotiated between the
Vatican and Budapest, possibly
during the'visit to Budapest
later this spring by Viennese
Cardinal Koenig.
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The Communist World
POLISH TEMPERS RISE WITH FUEL PRICES
Major elements of the
Polish population have recently
shown signs of increased dis-
pleasure with the regime's eco-
nomic policy. The prevalent
mood could lead to widespread
local disturbances and cause
party leader Gomulka to make
changes in the top leadership.
Angry public reactions were
first drawn by the nationally
televised announcement on 28
March of an impending increase
in prices on electricity, coal,
gas, and other fuels. Warsaw
nurses have twice demonstrated
against increased housing costs,
and strikes have been reported
among Silesian coal miners, who
have been working an emergency
seven-da week most
winter.
Polish workers apparently
do not believe regime claims
that concomitant, reductions in
income taxes and small hikes in
the minimum wage and in pensions
will compensate for increased
costs of fuel and power. Nor
do farmers believe that prom-
ised increased payments for
hogs and other agricultural
products will compensate for
additional costs of industrial
products, especially coal.
Actually, the cost of liv-
ing of the average urban family
will rise by about 3 percent.
The effect of the price in-
creases will diminish as warm
weather lowers household needs
for fuel, and will be offset in
part by tax, wage, and pension
adjustments. It is probable,
however, that meat and other
quality foods will be in short
supply next fall as a result
of last year's reduced harvest,
and public dissatisfaction may
again be stimulated at that time.
The price rise comes at a
time when tensions generated by
the Sino-Soviet dispute are
rising in Poland. Wide sections
of the population and even
reasonably well informed party
members increasingly suspect
that the USSR's recent reorgan-
izations of economic and polit-
ical control bodies and the
hardening of its cultural poli-
cies represent concessions to
Chinese Communist pressures.
They fear that Moscow may force
similar changes in Poland, and
thus begin a reversion to rigid
party domination over all aspects
of life.
The Polish party seemingly
has not received adequate in-
formation and guidance on this
subject from Moscow, and ap-
parently top elements of the
party have deferred attempts
to resolve outstanding differ-
ences over domestic policies
until a firm and clearly recog-
nizable course is charted by
Moscow.
The Polish regime will
probably now be forced to turn
its primary attention to domes-
tic problems as a result of the
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extensive popular opposition to
the price rise. It seems to
have been approved while most
top leaders--including Gomulka
--were out of Warsaw. Economic
planners, possibly even polit-
buro member Jedrychowski, may
eventually lose their positions
if public reaction becomes a
serious problem. He and other
top economists reportedly have
been under fire frequently during
the past year for too rigid in-
vestment planning. Possibly in
this connection, hard-line Deputy
Premier Szyr announced in March
that a program was being pre-
pared in detail for the grad-
ual reconstruction of the en-
tire economic apparatus.
The visit of Chinese Com-
munist chief of state Liu Shao-
chi to Indonesia and Burma may
be the first move in a new drive
by Peiping to expand its in-
fluence over Southeast Asia.
This is Liu's first trip out-
side the bloc and the first
foray into the free world by a
Chinese Communist official of
his importance.
The venture has been billed
as a good-will visit, and no
agenda for negotiations has
been publicize
The inclusion in his party
of Foreign Minister Chen Yi,
however, suggests that the Chi-
nese plan a thorough canvas of
major issues affecting the area.
The visitors are due in
Djakarta on 12 April and will
spend a week touring Indonesia
before moving on to Rangoon.
Chinese concern over security
protection for the group, which
has already been noted by the
press, suggests that Liu and
Chen will attempt to establish
"people-to-people" contacts in
addition to conversations with
officials.
One major Chinese objective
is probably to reassure the coun-
tries of Southeast Asia about
Peiping's intentions. Having
demonstrated Chinese armed might
against the Indians last fall,
Peiping is attempting to refur-
bish its image as a "reasonable"
and" peace- loving" power. Liu
and Chen can be expected to em-
phasize these themes while re-
stating China's case against New
Delhi on the still unsettled
border dispute.
The Chinese will probably
also seek to present themselves
as champions of Asian solidarity
against the West. The eighth
anniversary of the Bandung Con-
ference falls the day before
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Liu Shao-chi and wife (center) with Indonesia's
Madame Sukarno in Peiping last year.
Liu's party is scheduled to leave
Indonesia and would provide an
excellent springboard for a
final communiqud putting for-
ward this idea. While in Dja-
karta the Chinese will be under
heavy pressure to indicate direct
support for Indonesia's attack
on the proposed federation of
Malaysia--something Peiping has
thus far avoided.
Minister Malinovsky.
If Liu and Chen score a
success, they may follow it
up with visits to other coun-
tries in the area.
Another probable Chinese
objective is to undercut Rus-
sian influence in general and
in particular to offset any
gains achieved during the re-
cent visit of Soviet Defense
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SOUTH KOREAN REGIME ACTS TO EASE POLITICAL CRISIS
South Korea's military
regime has avoided an immediate
showdown with civilian leaders
over the extension of military
rule. On 8 April junta leader
Pak Chong-hui declared that the
government was deferring until
late September a decision on
holding a national referendum
on the issue. He also announced
that the ban on political
activity was being lifted in
order to create "a new polit-
ical climate."
Civilian leaders reacted
critically to Pak's decision,
questioning the good faith of
the regime's pledges, especially
the unofficial assurances that
elections would be held this
year
One influential civilian,
former president Yun Po-sun, has
publicly called the regime's
announcement unacceptable and
is demanding that Pak completely
withdraw his referendum plan.
Ex-premier Ho Chong's reaction
was milder in tone, and he prob-
ably would be satisfied by an
official announcement of elec-
tions this fall.
It is questionable whether
even Pak has the power to make
a commitment to elections stick.
The chiefs of the armed forces
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12 Apr 63 CURRENT INTELLIGENCE WEEKLY SUMMARY
who support him for the sake of
stability distrust the civilian
politicians. They fear a civil-
ian regime will stigmatize the
military for scandals in the
present government, thereby weaken-
ing command control. The chiefs
also probably wish more time to
consolidate their power position
and eliminate that of former
security chief Kim Chong-pil.
Postponement of the refer-
endum question leaves the way
open for perpetuating military
government or for Pak to run
for the presidency, regardless
of his pledge to withdraw from
politics.
Pak apparently is not
presently planning any major
modification of his government,
but a few cabinet changes are
likely. Some civilian consult-
ants may be appointed to advise
the ruling Supreme Council.
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,Muong Kheung
Ban Song Hoc
Rt. #,
Muong Soul ... _:..' _Ban Phien Luong
? Khang Khay
Phong Sayan
17.Xieng Khouang
Ban San Louang` - Ban Hine'
Xiang Khang
Ban Ta Viang
so.
VIET
rvAM
4Tha Thom
Road Track or trail
+ Airfield
12 APRIL 1963
0 STATUTE MILES 30
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COMMUNIST INROADS AGAINST LOATIAN NEUTRALISTS
In the confrontation be-
tween neutralist and Communist
forces in the Plaine des Jarres,
Laotian Premier Souvanna Phouma's
coalition government faces the
most dangerous crisis of its
ten-month existence. While
skirmishing has subsided in
recent days and reconciliation
efforts are being pursued, the
situation remains volatile.
Communist forces, using
a mixture of subversion and
armed force, have made serious
inroads in neutralist commander
Kong Le's position. The neutral-
ists have lost control over the
provincial capital of Xieng
Khouang and have been pushed
out of Khang Khay, site of
their joint headquarters with
the Pathet Lao in friendlier
days.
The forces involved in
this aggression mainly comprise
Pathet Lao units acting behind
a front of several hundred dis-
sident neutralists headed by
Kong Le's rival, Colonel Deuane.
In contrast to the desperate
supply situation and poor morale
of the Kong Le forces, the
Pathet Lao are well equipped
and are stiffened by North
Vietnamese cadres.
An estimated two battalions
of regular North Vietnamese
troops deployed to the east of
the Plaine des Jarres make Pathet
Lao communication lines secure.
The step-up in Communist
pressure coincided with the 1
April assassination by the neu-
tralists of pro-Pathet Foreign
Minister Quinim Pholsena. The
Pathet Lao, however, had long
been eroding neutralist influence
throughout the country by throt-
tling supply lines and through
infiltration and intimidation.
Given Kong Le's increasingly
close relationship with the
rightist faction and his recent
open denunciation of Communist
intrigues, the Pathet Lao cam-
paign to eliminate him seems
certain to continue even if some
temporary modus vivendi is
achieved.
Kong Lets pleas for rightist
military aid are being received
thus far with more sympathy than
concrete action. Both Lao army
commander General Phoumi and
Meo guerrilla leader Colonel
Vang Pao are cautious about com-
mitting their assets without
Souvanna Phouma's endorsement.
Souvanna has been reluctant
to face up to the problems of
North Vietnamese involvement in
Laos, although he has asked the
International Control
Commission to investigate neutral-
ist charges of North Vietnamese
presence in the Plaine des Jarres.
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Congolese Premier Adoula's
dilatory tactics over the past
month on his art-proclaimed imminent
cabinet reshuffle appear to be
causing mounting dissatisfaction
instead of dividing the opposi-
it ion.
Thirty-five senators have
signed a motion of no confidence
which may be submitted to the
senate soon. Only 18 additional
votes would assure its passage.
The motion is apparently being
pushed by disgruntled Kivu
senators for bargaining pur-
poses but, given the volatile
nature of Congo politics,its
passage cannot be ruled out.
The lower house, always
more uncontrollable than the
senate, is at the same time
pressing Adoula to heed its
demands to release imprisoned
leftist Stanleyville leader
Antoine Gizenga. The premier
ignored the lower house's unan-
imous call of last December
to free Gizenga within 48 hours
but recently told US officials
that pressure might soon force
him to authorize release. On
9 April the Chamber by acclam-
ation reinstated Bocheley-
Davidson, an extreme Lumumbist
deputy who has been in eclipse
since the collapse of the
Gizenga regime.
The delay in announcing a
cabinet reshuffle appears more
and more to result from the
difficulty of resolving competing
claims for cabinet posts, rather
than from a design to keep the
opposition off balance.
The conflict seems to center
on the foreign and interior
ministries. Reports of Interior
Minister Kamitatu's possible dis-
missalare promoting a reconcili-
ation between his supporters
and the previously hostile pro-
Gizenga wing of his party.
Nendaka, a close but in-
creasingly critical confidant
of Adoula,
Chas joined
the growing number who urge that
President Kasavubu ease the
government's problems by recessing
Parliament about mid-April.
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ALGERIAN-FRENCH COOPERAT]GN"IN DIFFICULTY
Algerian Premier Ahmed
Ben Bella remains under strong
domestic pressure to abandon
his reliance on Western assist-
ance to develop the economy.
Algerian-French collaboration
has weathered two crises within
the past month, but Ben Bella's
pan-Arab rival Mohamed Khider
seems determined to undermine
it, possibly as a means of gain-
ing power for himself. Khider
is secretary general of the
National Liberation Front's
political bureau.
Aided by public lethargy,
Ben Bella pursued a moderate
course after the 18 March French
atomic test in the Sahara
even though Khider pressed for
more drastic action. Explaining
his position to Arab and neutral-
ist ambassadors, Ben Bella con-
tented himself with declaring
his intention to seek a revision
of the clauses of the 1962 Evian
agreements governing France's
military rights in Algeria.
Unless there are additional tests,
however, he is not likely to
attach any urgency to rene-
gotiation of these clauses.
The fact that France is with-
drawing its units in Algeria
at a faster pace than called
for by the Evian accords should
also help his domestic position.
Having failed to arouse
public emotions on the nuclear
test issue, Khider's forces
whipped up demands for the
promised nationalization of
12 Apr 63
French holdings. Their agitation
probably was behind the govern-
ment's seizure of some 18 European
farms and numerous small businesses
in late March. This action was
contrary to recent Algerian commit-
ments to Paris to refrain for the
moment from nationalizing interests
presently under production. Ben
Bella's use of the army in
ostentatiously taking possession
of these properties seems to
have been designed to impress
Khider's followers with the
government's power.
Ben Bella's willingness to
consider compensation for the
dispossessed Europeans, his show
of impartiality in also taking
over some properties occupied
by Algerian profiteers, and France's
moderate public response have
lessened the danger of a dis-
ruption of relations. Neverthe-
less, some French retaliation
is likely.
While these seizures were
generally acclaimed by the popu-
lace, the lack of Algerians capa-
ble of operating the properties
efficiently will add to the re-
gime's economic troubles. Mean-
while,discontent in the Kabylie
region east of Algiers and Ben
Bella's failure to resolve
the split with Khider pose a
continuing threat to his ef-
forts to achieve national unity.
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EFFECTS OF RECENT EEC MINISTERS MEETING
The 1-2 April meeting of
the EEC Council of Ministers
has raised cautious hopes that
the organization may once again
be able to move forward with its
program for European integration.
several decisions of importance
to its future were taken at thV
meeting, and West German pro-
posals for "synchronizing" future
decisions appear to have eased
the tensions caused by the
collapse of the UK accession
talks in January.
There remains, however,
an underlying skepticism over
What was actually achieved. The
specifics of the "action program"
envisaged by Bonn have yet to
be agreed upon, and such crit-
ical issues as trade and agri-
cultural policies are still un-
resolved.
Tariff Decisions
The most important step
taken by the ministers was to
agree to proceed with the tariff
adjustments scheduled for 1
July. These adjustments call
for another 10-percent reduction
in tariffs on industrial items
traded within the EEC, bringing
the total reductions of such
tariffs so far to 60 percent.
It was also agreed that the mem-
ber countries will take the
second step toward implementin
the EEC's common external tariff
(CXT) on imports from nonmembers
by reducing by another 30 per-
cent the difference between their
basic national rates and the CXT.
Thus by July the EEC will have
gone about two-thirds of the
way toward establishing a cus-
toms union.
In anticipation that the
CXT will be further reduced dur-
ing the coming tariff negotiations
under the US Trade Expansion Act,
West Germany proposed at the
meeting that the July adjustment
be effected toward a CXT pro-
visionally reduced by another
20 percent--as was done in 1960.
Neither France nor Italy would
agree to advance concessions of
any such magnitude, however,
and the formula finally accepted
provides merely that the EEC will
keep open until 1965 the pro-
visional reduction of 1960.
While this gesture toward
a "liberal" trade policy is of
little significance from the
standpoint of US trade, it must
be recognized that failure to
agree on a formula for proceed-
ing with the July tariff moves
could have meant a serious loss
of confidence in the community's
future.
Foreign Relations Decisions
Several decisions with
respect to the EEC's external
policy were also taken at
Brussels.
The most important of these
was an agreement to proceed with
the formal signature of the EEC-
African association conventiop
concluded last December.
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Previously blocked by Italy and
the Netherlands in retaliation
for France's veto of Britain's
application for EEC membership,
the agreement to sign the con-
vention was the result of side
talks between the French and
the Dutch: The French accepted
the Dutch view that comparable
terms should be kept open for
African countries not now as-
sociated with the EEC--including
Commonwealth Africa--and the
convention now is expected to
be signed as soon as a new
cabinet is formed in Italy after
the 28 April national elections
there.
The council also approved
instructions to the EEC Commis-
sion to begin commercial nego-
tiations with Israel and Iran
and asked the Commission to sub-
mit proposals for the opening
of "association" talks with
Austria. The long-pending EEC-
Turkey association agreement was
also discussed, but no progress
was made because of differences
over the amount of aid that the
EEC ought to offer the Turks.
The Schroeder Proposals
Whether Europeans regard
the results of the 1-2 April
Council of Ministers meeting with
optimism or skepticism depends
largely, however, on how they
judge the impact of the West
German position.
In an extensive opening
review of the community situa-
tion, Foreign Minister Schroeder
spelled out four principles for
the resumption of community prog-
ress::integration must proceed
at roughly the same rate in all
fields; all members must be pre-
pared to make comparable sacri-
fices; a synchronized program
for the remainder of 1963 must
be drafted; and institutional
procedures must be strengthened.
With respect to the last
point, Schroeder specifically
mentioned a stronger role for
the EEC assembly and merger of
the executive commissions of the
EEC, EURATOM, and the Coal and
Steel Community. He also stressed
the need for the EEC council to
give "political direction" to
the meetings of "technical"
ministers--e.g., to the agri-
cultural ministers who have been
accused of failure to appreciate
the broad political and interna-
tional responsibilities of the
EEC.
Most observers believe that
the Schroeder statement was an
eloquent plea for restoration
of the "community spirit." In
the opinion of the US mission,
a new phase may have begun in
which carefully negotiated, point-
by-point progress can be made
toward community goals. Over-all,
there is a feeling that the at-
mosphere has cleared; Italy and
the Benelux countries have en-
dorsed the Schroeder approach, and
Belgium's Paul Henri Spaak has
recovered some of his previous
confidence in the Community's
prospects.
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Nevertheless, it remains
questionable whether French at-
titudes have evolved to the point
that a timetable for specific
community actions can be drafted
for the EEC council meeting
scheduled for 7-8 May. Although
more forthcoming than expected,
Foreign Minister Couve de Mur-
ville rejected Schroeder's pro-
posals for strengthening the
EEC parliament and although
not flatly negative, was cool
to the suggestion of any insti-
tutionalized contacts between
the EEC and Britain.
Couve did express willing-
ness to consider a merger of com-
munity executives, but it has
long been suspected that Paris
believes institutional reform
would provide an opportunity
to weaken, rather than strengthen,
the Brussels Bureaucracy.
It also is evident that Paris
will continue to attach the
highest priority to the consoli-
dation of the EEC's controver-
sial agricultural policy.
EEC and TEA
The US mission has cautioned
in particular against excessive
optimism that the EEC has as yet
committed itself even in prin-
ciple to proceed with the nego-
tiations envisaged by the Trade
Expansion Act. The ministers at
their meeting discussed the in-
structions to be given the EEC
12 Apr 63
Commission regarding these negoti-
ations, but took no decision.
The French reiterated that the
EEC could not negotiate on farm
products for which the EEC in-
tends to establish--but has not
yet agreed upon--a common policy.
There are increasing indications,
moreover, that the EEC intends
to press hard for major reduc-
tions in those US tariffs which
are exceptionally high and for
modification of US administrative
procedures which EEC countries
believe restrict their export
opportunities.
In any case, the inconclusive
outcome of the ministers' meet-
ing with respect to US trading
interests points up the dilemma
all countriesface in dealing
with the EEC--which, although
economically formidable, is
still relatively formless. Com-
peting national interests and
institutional weaknesses make
it difficult for the EEC to
take the policy decisions es-
sential to negotiation with
outsiders, and once they are
taken, they are for the same
reasons virtually frozen. There
appears to be no short-term
remedy for these difficulties,
but a restoration of comparative
harmony among the member states
would probably be helpful.
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ARGENTINE ELECTION PROBLEMS REMAIN AFTER REBELLION
The Argentine Government
has suppressed the navy-led
rebellion aimed at preventing
Peronist participation in the
23 June elections, but it is
having trouble in persuading
the political parties to make
realistic preparations for the
elections.
Army Commander in. Chief
Ongania, who played the key
role in putting down the 2-6
April rebellion, outlined the
army's views on elections in
his communique announcing the
end of military operations.
He reaffirmed that the army
will allow Peronists to
participate in the elections
within the framework of support-
ing the constitution and dem-
ocratic practice. At the same
time, he warned them that the
army would under no circum-
stances permit re-establishment
of Peron's dictatorship or one
by his agents.
The air force command, which
gave the army close support
against the rebels, issued a
similar statement even before
the cease-fire negotiations
had been completed. Perhaps
to underline this position on
Peronism, government negotiators
reportedly withdrew a demand
that the navy issue a public
statement endorsing Peronist
participation in the elections.
A statement by dissident
Rear Admiral Jorge Palma,
commander of the Puerto
12 Apr 63
Belgrano naval base during the
rebellion, probably reflects
the predominant naval view.
The insurgent admirals, he said,
knew their chances for success
were slight, but proceeded any-
way because Argentina's in-
stitutions were in crisis.
The navy fears that the Peron-
ists--who can probably count on
a third of the vote--will
defeat the splintered non-
Peronist parties. This concern
is widely shared, but the rebel-
lion attracted only limited
support from other military and
civilian commando groups.
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A dispute between anti-
Communist Minister of War
Amaury Kruel and leftist
General Osvino Alves, commander
of the powerful First Army,
brought Brazil to the brink of
a crisis on 9 April. A head-on
clash seemed imminent when
Kruel unsuccessfully attempted
to arrest Alves. Tension now
appears to have subsided,
however, largely because of the
cancellation of a leftist labor
meeting, set for 10 April in
Rio de Janeiro, which Alves
supported and Kruel opposed.
The test of wills grew out
of Alves' desire for federal
intervention to depose rightist
state Governor Carlos Lacerda,
who in late March ordered local
police to occupy the building
in Rio de Janeiro in which the
Communists had planned to hold
their much-heralded Congress
for Solidarity with Cuba. On
29 March, Alves sent First
Army troops to the building to
neutralize the police, a move
just short of federal inter-
vention.
date.
ponement of the election
Since the various
political parties have so far
failed even to produce their
final lists of candidates, the
government may grant, if re-
quested, a 30- to 45-day post-
This action provoked
Lacerda to make a vitriolic
speech in which he denounced
the leftist activity of
President Goulart and impugned
the President's character and
personal life. Alves defended
Goulart, attacking Lacerda with
equal vigor, and again demanded
federal intervention to depose
Lacerda and put the state under
the control of the First Army.
Kruel refused even to consider
such action.
At this point, Alves
threatened to give First Army
protection to the proposed
leftist labor meeting in Rio
de Janeiro, and said he would
order his troops to fire on the
state police if they interfered.
This outburst was the immediate
cause for Kruel's attempt to ar-
rest Alves.
Goulart so far has avoided
taking sides in the quarrel, at
least in public. He apparently
believes that if Kruel does not
attempt to discipline Alves too
harshly, the situation will solve
itself, at least for the short
run. Eventually, the President
may dismiss both men and replace
them with two of his friends, a
solution leaving untouched the
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SOVIET ECONOMIC POLICY TOWARD BRAZIL
The main features of a new
long-term Soviet-Brazilian trade
pact seem to have been worked
out after more than three months
of negotiations. Although So-
viet trade with Brazil has ex-
panded from less than $5 mil-
lion in 1959 to an estimated
$70 million last year, prospects
for further substantial increases
are limited.
Difficulties over commodity
lists are still being resolved.
The USSR has been reluctant to
supply the quantities of wheat
and oil requested, probably be-
cause these commodities are major
hard-currency earners. Moscow
probably would prefer to export
larger amounts of machinery and
equipment, but unfamiliar Soviet
products find few Brazilian
buyers.
The basic problem restrict-
ing this trade, however, con-
tinues to be the limited Soviet
market for Brazil's coffee. In
1962 the USSR bought about 30,-
000 tons--considerably more than
it had, in previous years but
less than four percent of Brazil's
total coffee exports. The cof-
fee quota doubtless has been
a basic issue in recent nego-
tiations, and there are no signs
the Soviet Union is willing or
able to increase its imports
significantly. Other Brazilian
products requested by the USSR
--cotton, rice, cocoa, leather,
and fruits--frequently can be
sold readily on other markets,
so these offers have only lim-
ited appeal for Brazil.
Nonetheless, the USSR ob-
viously hopes to maintain and,
as opportunities permit, grad-
ually expand its economic rela-
tions with Brazil. However, its
reluctance to undertake signifi-
cant economic commitments there
has become increasingly evident
in recent months. This may
stem from its heavy aid obliga-
tions in Cuba and elsewhere,
as well as from the diffi-
culties of competing in the
Brazilian environment and from
the lack of a rational basis
for trade.
As for aid, Moscow prob-
ably has in mind some moderate
program for Brazil, but its
doubts about the efficiency of
such a program may well be
hampering efforts to reach
agreement with the Brazilians.
Rumored schemes for up to a
billion dollars in Soviet cred-
its are clearly unacceptable to
the USSR, particularly when
Brazil expects to repay largely
in surplus coffee. A more mod-
est credit agreement may be in
the making, but so far the aid
issue seems to be confined
largely to rumors aimed at
exerting pressure on Western
economic negotiations with
Brazil.
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Western Hemisphere
Chile's municipal elections
on 7 April--significant for in-
dications of party strengths in
next year's presidential voting--
gave a greater share of the
vote (22.9 percent) to the left-
ist, non-Marxist Christian Demo-
crat Party (PDC) than to any
other single party. The PDC
thus replaces the Radical Party
(21.6 percent) as the country's
largest and now is in a favorable
position to run its own candidate
for president in 1964, in com-
petition with those representing
coalitions of the left and right.
The US Embassy attributes the
Christian Democrat gains to the
support it received from the
large number of new voters on
the rolls.
The right-of-center Demo-
cratic Front, which controls
the government, remains the most
powerful political force in Chile,
but has suffered some slippage
since 1958. It obtained 46.1
percent of the vote, 7 percent
less than five years ago, and
all three of its constituent
elements (Radicals, Liberals,
and Conservatives) lost ground.
The steady increase in
popular support noted between
1958 and 1961, for the leftist
coalition, the Popular Action
Front (FRAP), appears to have
been checked. Its percentage of
the total vote dropped from a
high of 31.2 in 1961 parliamentary
elections to 29.2 in the 7
April contest. The Communist
and Socialist parties managed
to retain their individual ap-
peal,-but their partners the Na-
CONSERVATIVES
15.0%.
LIBERALS
16.1%
12 Apr 63
RADICALS
22.4%
COMMUNISrTS
11.4%
y0o
SOCIAL) STS:
NATIONAL
DEMOCRATS
k 7.2% i
ISTIJ
I CRATS
16.15%,
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Western Hemisphere
The 5-6 April disturbances in
British Guiana's capital, George-
town, may prove to be only a prel-
ude to widespread strikes and
perhaps more extensive disorders
throughout the colony later this
month. The jurisdictional dispute
between two rival unions at the
Rice Marketing Board which pre-
cipitated last week's violence has
not yet been settled, and the more
basic issues causing unrest remain
unresolved. Chief among these are
the Jagan government's determina-
tion to dominate the trade union
movement, the growing political
infighting between the regime and
its opposition, and the ever-pres-
ent racial friction between
Negroes and East Indians.
The government's controver-
sial labor relations bill seems
likely to provoke an early show-
down. The bill is intended pri-
marily to break the power of the
colony's largest union, the Man-
power Citizens Association (MPCA),
which presently represents over
half of the colony's organized
workers. Opposition by the Trades
Union Council (TUC), the president
of which is also the leader of
the MPCA, caused the government
to delay legislative action on its
bill, but debate now has been
rescheduled for 16 April.
Meanwhile, the TUC has called
a membership congress for 21 April
to line up support for its posi-
tion and to consider further ac-
tion, such as a general strike.
Workers on two sugar estates have
already protested the government's
12 Apr 63
bill by one-day wildcat strikes.
How effective a TUC strike call
would be is uncertain at this
point. The labor movement is gen-
erally anti-Jagan, and the leader
of the United Force opposition
political party is ready to join
the TUC in any agitation over the
labor bill. However, several
pro-Jagan unions in the TUC are
unlikely to respond to a strike
call at this time.
Forbes Burnham, as leader of
the principal anti-Jagan politi-
cal party, the People's National
Congress, would prefer that the
general strike tactic be saved
to pressure the government to
meet his long-standing demands
for a proportional representation
electoral system. However, as a
leader of a TUC member union, he
would have to participate if a
strike call were issued.
The ability of local security
forces to contain the situation
if a general strike develops in-
to racial rioting--as it did in
February 1962--remains problem-
atical. The largely Negro
police force proved competent
and effective during the disturb-
ances last weekend and presum-
ably would move quickly into the
breach again if trouble breaks
out. Should the demonstrators
be largely Negro, however, po-
lice loyalties would be severely
tested. In reserve is a force
of 600 British troops which
London could readily supplement
by airlift of troops or movement
of a frigate in the areal i
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