WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A004400040001-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 31
• Document Creation Date: December 21, 2016
• Document Release Date: October 23, 2008
• Sequence Number: 1
• Publication Date: March 20, 1964
• Content Type: SUMMARY

State Dept. review completed.
20 March 1964
OCI No b323/64
Copy No.
76
CENTRAL INTELLIGE-NGE AGENCY
GMUP i Exdquded"fromaut?O0atic
nowngrading and declassification
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(Information as of 1200 EST, 19 March 1964)
THE COMMUNIST WORLD
Page
RENEWED SOVIET ATTACKS ON PEIPING APPEAR IMMINENT
Moscow wants to give the impression that it is arraying
an impressive front against Peiping, but obstacles to
the convocation of a world Communist conference to con-
demn the Chinese remain formidable.
USSR PUSHES TIMBER INDUSTRY TO EARN FOREIGN EXCHANGE
No significant rise in exports of wood products seems
likely in the near future, however.
ECONOMIC DEBATE IN BULGARIA
The regime is encouraging discussion and testing of
more liberal methods of economic management both as a
step toward stimulating economic growth and as a means
of winning support among the younger party elements.
THE SITUATION IN SOUTH VIETNAM
The Khanh regime has taken the first step to carry out
its recently publicized counterinsurgency plan. Viet
Cong activity has increased slightly.
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EFFORTS TO ARRANGE MEETING OF LAOTIAN FACTIONAL LEADERS 6
Despite some progress toward a tripartite "summit,"
the mutual suspicions of the factions seem unabated and
scattered fighting between their military forces con-
tinues.
ASIA-AFRICA (continued)
CEYLONESE GOVERNMENT SHAKEN BY ECONOMIC DIFFICULTIES
Prime Minister Bandaranaike has prorogued parliament in
the face of sharp criticism of her cabinet's economic
policies, and she may call for general elections later
this year.
SYRIAN REGIME GROWS MORE HOSTILE TO US
Recent anti-US propaganda and official statements have
coincided with an increasingly friendly Syrian attitude
toward the USSR and Communist China.
CYPRUS SITUATION EASES
Violence has subsided markedly, but the opposing Cypriot
forces maintain armed positions throughout the island
and new flare-ups seem certain. Most of the Canadian UN
contingent has arrived, but units from most other coun-
tries are not expected until April.
BRAZZAVILLE CONGO DRIFTING LEFTWARD
President Massamba-Debat is again under strong pressures
from militant labor leaders, including some pro-Communists,
who are particularly critical of his regime's continu-
ing military ties with France.
SOVIET AND CHINESE COMMUNIST AID PROGRAMS IN AFRICA
The USSR now is applying more stringent criteria for
economic aid than it did in 1959-61, when most of its
offers were made. China's current efforts involve more
propaganda than economic benefit.
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na ge
COMMON MARKET GRAIN PRTCF DECISION APPEARS NEAR
13
Despite the attendant political difficulties, the six
FEC countries seem to be moving toward a decision on
the unification of national grain prices by the 15
April deadline they have set for themselves.
ADVERSE FRENCH INTERNAL DEVELOPMENTS MAR I)E GAULLE IMAGE 14
Renewed strikes by government employees threaten De
Gaulle's economic program and belie the domestic harmony
he fosters, while this month's nationwide local elections
pointed up the weaknesses of the Gaullist party and the
increasing trend toward Socialist-Communist cooperation.
ATTACKS ON ITALY'S CENTER-LEFT GOVERNMENT 15
The Italian Communist Party's conference last week in-
dicates that it intends to exploit Italy's economic
difficulties to undermine the center-left government;
the rightist opposition seems to be increasing its ef-
forts to the same end.
SPANISH LABOR SYNDICATE CONGRESS SPARKS DEMONSTRATIONS 15
Worker displeasure with the Franco regime's refusal to
allow free trade unions may lead to strikes in April,
the usual month for such activity in past years.
FINLAND'S SOCIAL DEMOCRATS CLOSE TO REUNIFICATION 16
A merger of the parent party and the erstwhile splinter
Skogist group could mean substantial Social Democratic
gains in coming elections at the expense of President
Kekkonen's Agrarian Party.
WESTERN HEMISPHERE
LEFTIST PRESIDENTIAL CANDIDATE GAINING GROUND IN CHILE 17
The impressive showing of the Communist-Socialist front
in an important by-election poses the threat of a vic-
tory by its candidate in the September presidential
election and Communist domination of his administration.
PRESIDENT GOULART RENEWS BATTLE WITH BRAZILIAN CONGRESS 18
Hostile reactions to presidential decrees expropriat-
ing oil refineries and certain unused lands, combined
with Goulart's demagogic campaign to pressure Congress
into passing radical reforms, are creating a potentially
critical situation.
ULTRANATIONALISTS PROMOTING NEW TENSION IN PANAMA
Their renewed efforts to stir up public feeling over
the canal issue could lead to trouble during the stu-
dent congress set to begin on 20 March. Presidential
contenders also continue to exploit the canal imbroglio.
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WESTERN HEMISPHERE (continued) Page
COLOMBIAN ELECTION RESULTS
The parties supporting the National Front political
system will retain their two-thirds majority in the
lower house. Voter apathy apparently accounts for a
surprising gain by ex-dictator Rojas Pinilla's party.
THREAT OF ANTIREGIME DEMONSTRATIONS IN GUATEMALA
Leftists may convert traditional pre-Easter student
activities into an antigovernment demonstration--suppres-
sion of which could delay the military regime's plans for
a carefully controlled return to constitutionality.
SALVADORAN OPPOSITION WINS SEATS IN LEGISLATIVE ELECTIONS 20
The Rivera administration may find it more difficult to
implement its program now that opposition parties are
represented in the legislature for the first time since
Rivera took office in 1962.
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The Soviet leaders now
may feel the way is clear for
renewed public attacks on Pei-
ping and increased pressure on
foreign parties to attend a
world Communist conference in
the next few months. A resump-
tion of Soviet polemics report-
edly was postponed last month
to permit a final appeal by the
Rumanians to the Chinese to
agree to halt the exchange.
Since the Rumanians apparently
failed, the Russians probably
intend to publish denunciations
of the Chinese delivered by
Khrushchev and other Soviet
leaders at the Soviet central
committee meeting in mid-Feb-
ruary/
The USSR is seeking to give
the impression that it is making
good progress in arraying an im-
pressive front against Peiping.
Moscow and Bucharest announced
that Khrushchev's talks on 15
and 16 March with the Rumanian
delegation on its return from
Peiping and Pyongyang took place
"in an atmosphere of fraternal
friendship and cordiality."
However, while the announcements
indicated that matters relating
to the unity of the Communist
movement received "particular
attention," no claims were made
that agreement had been reached
on measures for dealing with
the Chinese.
Despite intensive Soviet
efforts over the past month,
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obstacles to the convocation
of an international conference
to condemn the Chinese remain
formidable. Italian Communist
chief Togliatti warned on 15
March against "aggravating the
existing differences between
various Communist parties and
socialist states." Italian
Communist objections apparent-
ly played a major role in block-
ing Soviet attempts to organize
a conference last October. In
a private talk with a US offi-
cial in Belgrade, a Yugoslav
foreign affairs official stated
flatly that an international
Communist meeting along the
lines of the 1957 and 1960 Mos-
cow meetings could not take
place. He said the time is
past when such meetings could
be called at Moscow's behest.
He also predicted that the Ru-
manians would decline to attend
unless a clearly defined agenda
was made known in advance and
that the Poles, Czechs, and
Hungarians probably would adopt
a similar attitude.
While public statements
have provided no clues as to
the course of the Sino-Ruma
riian talks of 3-10 March, it is
possible that the Chinese in-
dicated some flexibility, such
as a willingness to resume bi-
lateral talks with Moscow, in
an effort to undercut Soviet
preparations for a conference.
The Chinese, however, quickly
made it clear that they will
not halt polemical attacks on
the USSR or abandon their charges
against Soviet "revisionism."
The day after the Rumanians left
Peiping, they resumed rebroad-
casting the 4 February Red Flag-_
People's Daily article ate kaccing
K rus c ev as the "greatest
splitter of our times." These
broadcasts had been suspended
since 20 February, a week before
the Rumanian mission was announced.
importance of combating them.
The day before the Rumanians
arrived in Gagra for talks with
Khrushchev, Peiping also began
publishing earlier statements
by Asian Communists friendly to-
ward the Chinese. The output so
far has included an Indonesian
Communist resolution, North
Korean and Japanese Communist
editorials, and statements by
the North Vietnamese and New
Zealand party first secretaries.
Peiping has also reprinted state-
ments by the pro-Chinese faction
of the Belgian Communist Party.
The dominant theme of all these
documents was the danger of re-
visionist ideas and the vital
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USSR PUSHES TIMBER INDUSTRY TO EARN FOREIGN EXCHANGE
Khrushchev urged the Soviet
party presidium on 28 February to
boost the timber and wood products
industry, which he claimed would
provide a foreign exchange earner
at less expense than high-cost gold
mining. The history of the timber
industry, however, is one of fail-
ures and shortcomings stemming from
poor planning, outmoded production
techniques, and a high rate of labor
turnover. Moreover, domestic demand
--for example, that associated with
chemcial packaging--is growing rap-
idly. Although sales of wood and
wood products to the hard-currency
areas were supposed to increase
again this year, commitments to the
UK at least are not being met.
During the past year the Bul-
garian regime has encouraged its
economists to debate methods of eco-
nomic management and has tried out
some of their more liberal ideas
on extending decentralization and
improving incentives. The goal of
this more pragmatic--but still es-
sentially conservative and Communist
--approach is both to stimulate eco-
nomic growth and to gain support
among the younger technicians now
rising in the party.
Some of the proposed economic
reforms were described in articles
and decrees published last month.
For example, a new wage system has
already been successfully tested
in a Sofia textile factory, and a
proposed system for planning and
managing the economy is to be ap-
plied experimentally in various en-
terprises this year. Under a new
system of agricultural planning,
now being tried in five districts,
collective farms may appeal disputes
with their parent organs to a pre-
sumably neutral party--the state
arbitration office.
The first real sign that
changes were contemplated came dur-
The USSR is doing its best to
get the maximum return for its lim-
ited foreign exchange. Negotiations`
for chemical plants are being dragged
out in an attempt to create busi-
ness pressures on governments to
approve deals on terms favorable
to the USSR. Only one $6-million
deal--for cash--has been signed by
the purchasing mission that spent
two months in the UK with a $550-
million shopping list. That list,
large as it was, covered no fer-
tilizer factories, although they
are vital to Khrushchev's program
for agricultural expansion. Mos-
cow may prefer to buy such plants
on the Continent, where it is
flaunting proposed British long-
term credit provisions in an at-
tempt to get matching terms.
ing the central committee plenum
in May 1963, in the form of pro-
posals for agriculture reorganiza-
tion at the local level, greater
realism in economic planning, and
improved incentives. From May
through December, the party's the-
oretical journal carried an arti-
cle each month on methods of in-
jecting incentives into the econ-
oily. Some expressed extremely
conservative views, but some ad-
vocated ideas which resemble those
current in Yugoslavia.
The final, and probably the
most provocative, article was
written by Petko Kunin, purged in
1949 as a Kostovite (3ulgaria's
equivalent of a Titoist) from his
position as minister of industry
but presently a member of the cen-
tral committee and national assem-
bly. Kunin proposed limiting cen-
tral planning, charging interest
on capital advanced to enterprises
by the state, developing self-sup-
porting enterprises, and allowing
enterprises to decide on the kind,
quantities, and prices for goods
of secondary economic importance.
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VIETNAM
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NAMES AND BOUNDARY REPRESENTATION
ARE NOT NECESSARILY AUTHORITATIVE
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The Communists in South Viet-
nam continue to make small-scale
attacks and to harass government
outposts and hamlets. For the
week of 4-11 March, the total of
incidents--including sabotage,
kidnapings, and propaganda--
showed a slight increase over the
previous week, particularly in
sabotage and propaganda catego-
ries. Although the number of
armed attacks declined, there
were three company-size Viet
Cong attacks in the delta.about
80 miles west and southwest of
Saigon. Viet Cong pressure was
applied principally in the
coastal areas of two provinces
in the north, and in the three
provinces bordering the north
bank of the Mekong River.
Government operations last
week in the western delta region
used combined air, land, and
river forces to produce favor-
able results. Many Viet Con
suspects were captured
On 9 March the government
set up a Central Pacification
Committee, composed of Premier
Khanh, Vice Premier in charge
of Pacification Hoan, other key
ministers, and the four military
corps commanders. This committee
represents the first step taken
to provide an organization for
implementing the government's re-
cently publicized counterinsur-
gency plan. The plan envisages
the gradual expansion of govern-
ment control in the countryside
--the "oil slick" technique--
by moving out militarily from
secured "quality" strategic ham-
lets. Success of this new plan
will depend on how quickly guide-
lines can be implemented down to
the lowest administrative levels,
and on the availability of com-
petent personnel to carry it
out.
Khanh has been widely pub-
licizing the new government's
intention to punish corrupt civil
officials and military officers
of the Diem regime, but as yet
none has been brought to trial.
Recently, however, a sergeant
in the Civil Guard was tried and
sentenced to 15 years' hard labor
for shooting a civilian--an ac-
tion indicating that Khanh's gov-
ernment is making some effort
to remedy past abuses by para-
military forces.
Continuing his efforts to
seal South Vietnam's border
against infiltration, Khanh met
with Laotian General Phoumi last
week, and has announced resump-
tion of normal diplomatic rela-
tions with Laos. Khans has also
sent a delegation to Cambodia
in response to Prince Sihanouk's
most recent call for discussion
of Cambodia's differences with
South Vietnam.
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EFFORTS TO ARRANGE MEETING OF LAOTIAN FACTIONAL LEADERS
Representatives of the
three Laotian factions have
made some progress toward ar-
ranging a tripartite "summit"
meeting on the Plaine des Jarres.
At preparatory talks on 16 March
they agreed to establish a 25-
kilometer cease-fire zone around
the meeting site. Questions of
timing and demilitarization of
the meeting area remain unre-
solved, however.
Otherwise,. the mutual sus-
picions of the factions seem
unabated. The Pathet Lao have
sharply attacked the recent
majority decision of the Inter-
national Control Commission
(ICC) to investigate the Na Kay
area in central Laos, charging
the ICC with knuckling under to
the "US - Phoumi Nosavan clique."
Tensions in Vientiane were
heightened by the murder on
17 March of a right-wing intel-
ligence officer. The circum-
stances of the crime suggest
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that it was a retaliation for
the December murder--still un-
solved--of a key neutralist aide
to Premier Souvanna.
There are reports of fight-
ing from scattered areas. A
combined rightist-neutralist
move north of Thakhek has been
sharply rebuffed. A clearing
operation against the Pathet
Lao east of Savannakhet has run
into stiff opposition (see map
facing page five).
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CEYLONESE GOVERNMENT SHAKEN BY ECONOMIC DIFFICULTIES
The political fortunes of
the Bandaranaike government in
Ceylon have declined sharply in
recent months as it has shown
itself unable to deal with the
island's mounting economic prob-
lems. The opposition now charges
that Mrs. Bandaranaike's proro-
gation of Parliament on 13 March
was an act of political desper-
ation to avoid a no-confidence
vote.
The government has been
under vigorous attack on economic
issues. Ceylon's foreign ex-
change reserves have declined to
the lowest level in over two dec-
ades., Essential imported con-
sumer goods are in critically
short supply. These shortages
are for the first time becoming
acute in rural districts--the
traditional source of strength
for Mrs. Bandaranaike's Sri Lanka
Freedom Party (SLFP). In urban
areas rising prices have sparked
disorders among workers seeking
a thaw in the government's long-
standing freeze on wages.
Earlier this month, a
strike of electrical workers and
government physicians forced the
cabinet to declare a state of
emergency to restore essential
services. Opposition elements
accused Mrs. Bandaranaike and
her colleagues of dictatorial
ambitions, a charge which could
well have developed into a suc-
cessful no-confidence motion in
Parliament.
The SLFP still commands a
slight majority in Parliament.
Many SLFP backbenchers have be-
come increasingly critical of the
government, however, and the risk
of defections has been growing.
The prorogation will give the
government four months in which
to mend its political fences be-
fore Parliament reconvenes on
10 July. A similar maneuver last
year was relatively successful,
but this year's prospects are
less encouraging.
The government may judge
that it cannot survive the budget
debate this summer. If that is
the case, Prime Minister Banda-
ranaike may be planning to dis-
solve Parliament before it re-
convenes in July and call for
general elections in late sum-
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Iran: Hasan Ali Mansur,
who replaced Asadollah Alam as
prime minister of Iran on 7
March, has appointed a cabinet
largely composed of younger men
apparently dedicated to the
Shah's reform program but not
necessarily well qualified to
implement it. Although the cab-
inet has a large number of tech-
nicians and political unknowns,
there are several holdovers--
including the ministers of for-
eign affairs, agriculture, and
economy. These latter appoint-
ments have diluted the original
idea that a "new team" would
inject a new spirit into the
faltering reform program.
The new government's pro-
gram calls for a slowdown in
land reform to keep it in line
with Iranian administrative cap-
abilities, more large-scale
development projects to stimu-
late the economy, support of
the private sector through pro-
tectionist trade and foreign
exchange policies, and more
direct control of the budget by
the prime minister. These ideas
appear sound economically but
the political practicability of
a slowdown in land reform re-
mains to be seen. Mansur has
organized the New Iran Party
which is eventually to help
mobilize popular support, but
so far the party is little more
than a club.
US Embassy officials doubt
that Mansur is personally qual-
ified for the premiership, but
they feel the new government
nevertheless has a fair chance
of survival.
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SYRIAN REGIME GROWS MORE HOSTILE TO US
The Syrian Baathist regime
is"conducting a concerted anti-
US campaign. For the past sev-
eral weeks, government-controlled-
propaganda media and public
statements by Syrian leaders
have been directed against US
policies. At the same time,
the regime is demonstrating an
increasingly friendly attitude
toward the USSR and Communist
China.
Syrian press and radio re-
porting on the US, particularly
on recent American statements
regarding Israel, has been un-
usually virulent. Local. employ-
ees of the US Embassy have been
arrested, and the government
threatened to expel the Ameri-
can dean of Aleppo College, an
institution supported with pri-
vate American funds. While gov-
ernment censors have delayed
release of USIS material to the
public, there has been a marked
increase in the amount of "hard-
hitting" Soviet and Chinese Com-
munist propaganda.
Government leaders have
been denouncing the US. The
minister of the interior has
accused the US of participation
in a conspiracy against the
Syrian revolution, while the
deputy prime minister has lashed
out at American and British banks
for attempting to obstruct Syr-
ian economic progress. Prime
Minister Major General Hafiz, in
a recent foreign policy statement,
lauded Soviet contributions to
world peace and attacked US "im-
perialism."
Syria's current anti-US and
pro-Soviet maneuverings probably
are a response to what the Syrians
consider US support for Israel.
The Syrians, even more than the
other Arabs, view Israel as the
major threat to their security
and see in Soviet military aid
and diplomatic support a possible
countervailing factor. Their
recent moves have not, however,
included any concessions to Syria's
domestic Communists, who have
been sternly repressed under the
Baath regime.
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The situation on Cyprus
has eased following Turkey's
warning to President Makarios
and the expedited arrival of
most of the Canadian contingent
for the UN peace force. General
Gyani, designated commander of
the UN force on Cyprus (UNFICYP),
will assume command about 22
March. An advance party from
Brazil should arrive 22 March,
and the Swedish, Finnish, Irish,
and Austrian contingents will
arrive in April.
Ankara's 13 March warning,
which threatened military inter-
vention if the assaults on Turk-
ish Cypriots did not cease, has
been re-emphasized by a near-
unanimous vote by the Turkish
Grand National Assembly author-
izing the government to send
troops to Cyprus if necessary.
Almost simultaneously Turkey
announced its intention to ab-
rogate a 1930 treaty with Greece
which provided for special priv-
ileges for Greek nationals re-
siding in Turkey. Ankara says
it is willing to renegotiate
the treaty and denies that the
abrogation is related to the
Cyprus dispute. Turkey's action
nonetheless serves as a warning
to Athens that continued support
of Makarios may lead to economic
retaliation.
terms of reference for the force,
particularly its relationship to
the Cypriot Government, are still
unclear. Frictions between Ma-
karios and the UN force will
probably revolve around the right
of UN troops to disarm Greek Cyp-
riot irregulars who have been
incorporated in the police force.
The Greek Cypriots have already
made it clear that they regard
the primary mission of the UN
force as helping the Cypriot
Government restore law and or-
der and to prevent outside ag-
gression against Cyprus.
Selection of a mediator
acceptable to all parties is
probably the greatest problem
facing Secretary General Thant.
Turkey has rejected Rolz-Bennett
of Guatemala and prefers a West
European. The Greek Cypriots
oppose the selection of anyone
from~a NATO country. A Swiss
national appears to be the most
likely choice at this time.
Until 19 March, when serious
clashes broke out in northwestern
Cyprus, there had been almost no
violence on the island for over
a week. Turkish and Greek Cyp-
riot forces continue to maintain
armed positions and roadblocks
throughout the island, however.
The organization of the
UN peace force has removed only
one of the difficulties in im-
plementing the Security Council
resolution of 4 March. The
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BRAZZAVILLE CONGO DRIFTING LEFTWARD
Moderate President Massamba-'
Debat's government in Brazza-
ville is under growing pres-
sure from restless leftist ele-
ments. These pressures emanate
mainly from the militant labor
and youth leaders--including
some outright pro-Communists
--who spearheaded the overthrow
of conservative President Youlou
last summer. Since December,
when the new regime was "legit-
imized" by elections, a number
of these leftists have occupied
important official positions,
particularly in the National
Assembly. Massamba seemed to
be holding them in check until
early February, when demonstra-
tions by tribal followers of
Youlou again unsettled the
situation.
During a stormy session
of the National Assembly on 7
March the leftists vehemently
criticized Massamba's govern-
ment for its lack of revolu-
tionary spirit. They pointed
particularly to the continued
presence, under treaty arrange
ments, of French troops. Gov-
ernment spokesmen are said to
have been shaken and on the de-
fensive, but apparently held
their ground.
The leftists
are pressing for a major gov-
ernment shakeup. They appear
to be backing the ambitious
prime minister, Pascal Lissouba,
pending an opportunity to make
their own bid for power. If
a showdown develops and the
French do not intervene, the
attitude of the Congolese mili-
tary will again be decisive as
it was last summer. At present
both the army and gendarmerie
chiefs are believed loyal to
Massamba, but the leftist labor-
ites may have support within
army ranks because they helped
the soldiers obtain higher pay
last December.
The results of the leftists'
maneuvers have been most notice-
able in foreign affairs. Last
month Brazzaville abruptly an-
nounced its reco nition of Com-
munist China
The Congolese
foreign minister is currently
leading a delegation on a tour
of Eastern Europe which has al-
ready resulted in an agreement
on diplomatic ties with the
USSR. In an evident attempt to
balance this initiative, the
minister of finance was dis-
patched simultaneously--and with
almost no advance warning--to
the US.
The extremists now are clam-
oring for direct action to dilute
Congo's present close ties with
France. The assembly reportedly
voted unanimously on 17 March
for a speedy revision of some
of Congo's bilateral accords
with Paris--especially the mili-
tary arrangements. It also
voted to withdraw from the Paris-
oriented ensemble of French-speak-
ing African states--the recently
"depoliticized" and restyled
Afro-Malagasy Union for Economic
Cooperation. Massamba, however,
is keenly aware of his country's
dependence on French aid and
appears to recognize that the
continued presence of the French
troops is a major factor restrain-
ing the leftists.
20 Mar 64
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The USSR and Communist
China continue to use aid as an
instrument of their policies in
Africa, but are making few new
credits available for economic
development. The USSR is apply-
ing more stringent criteria
than it did from 1959 to 1961,
when credits were readily offered.
Peiping's efforts have provided
more propaganda than economic
substance.
Soviet aid and trade dele-
gations recently have accepted
invitations to a number of Afri-
can countries which have not yet
received any Communist aid. So-
viet specialists are surveying
economic development potential-
ities in Tanganiyka, Uganda,
and Cameroon, and a similar
group has been invited to visit
newly independent Kenya.
The USSR is unlikely to
come forward with major economic
assistance until these countries
are able to present better de-
fined development plans. At
this time Moscow presumably feels
that what they need most is tech-
nical specialists to assist in
the formulation of development
plans, and Soviet offers are
likely to emphasize this aspect
as well as the provision of train-
ing--both technical and academic
--for local personnel. Moscow
may offer limited amounts of
credit for the construction of
a few small-scale industrial
plants, but even these may be in-
cluded under trade agreements--
as in Senegal and Dahomey--with-
out reference to credit pro-
visions.
Within the past year only
one new economic credit--a $100-
million credit to Algeria--was
made available, and this only
after Soviet specialists had
spent several months making an
extensive developmental survey
of the country.
The USSR provided the bulk
of its $527 million in economic
credits to African countries in
the period 1959-61. To date
only about one fifth of this
amount actually has been utilized
and progress continues to be rel-
atively slow.
In the face of the Soviet
aid program, the Chinese have
shown increasing interest in
Africa. Peiping's foreign aid
resources are limited, but it
has sought nevertheless to ex-
ploit local political situations.
During Chou En-lai's recent
visit only one new credit--to
Ghana--was promised, but since
1960 China has provided credits
to Guinea, Ghana, the Somali
Republic, Zanzibar, and Algeria.
To date, however, projects under
the $140 million in long-term
Chinese credits have progressed
slowly, partly because of delays
in recipient countries. Only
about $8 million--mostly the
cash portion of the credits--
has been drawn.
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COMMON MARKET GRAIN PRICE DECISION APPEARS NEAR
Despite the attendant polit-
ical difficulties, the six Com-
mon Market countries appear to
be moving toward a decision on
the unification of national grain
prices by the 1.5 April deadline
they have set for themselves.
Discussions now in progress
focus on three main questions:
whether grain prices should be
unified in a single step, what
the price should be, and the date
it should come into effect. EEC
Commissioner Mansholt suggested
last October that the EEC treaty
timetable for the gradual estab-
lishment of a common grain market
by 1970 be abandoned in favor of
a bold move to harmonize grain
prices right away at a point about
halfway between the high German
and low French prices. Losses
of income incurred by the German
farmer would be compensated by
direct subsidies.
All of the EEC countries
have some reservations about the
Mansholt proposal, but the main
obstacle to its acceptance in
this form is West Germany. The
Bonn government is reluctant to
acquiesce in any move likely to
alienate German farmer support
prior to the 1965 elections.
Moreover, the conviction remains
widespread in West Germany that,
if price unification is delayed
long enough, inflationary tend-
encies in the other member coun-
tries will raise their grain
prices to German levels.
Pressure from the other
states is strong, however, to
reach a decision now on the price
levels, and a compromise may be
found in postponing implementa-
tion of the new price schedule
until 1966 or 1967. French Ag-
ricultural Minister Pisani has
apparently accepted the price
levels proposed by Mansholt as
the best compromise between the
desire of the French farmer for
higher prices and the govern-
ment's desire to maintain price
stability and avoid unmarketable
surpluses. The Italians, al-
though concerned lest the pro-
posed high feed-grain prices ad-
versely affect the expansion of
Italian poultry and livestock
production, have also indicated
support for a grain price deci-
sion now with delayed implementa-
tion.
However much he might pre-
fer his original proposal, Man-
sholt will probably be gratified
with even this kind of compromise.
Because of the key place of grain
in the agricultural economy,
even a start toward an integrated
grain market would facilitate
integration of the European mar-
kets for eggs, poultry, pork,
and other such products. An
agreed, if deferred, price will
also serve notice on the German
farmer that adaptation to the
Common Market is not likely to
be indefinitely delayed. More-
over, while it remains highly
unlikely that the EEC will be
very liberal on farm products in
the Kennedy Round, any serious
negotiation on a better organi-
zation of world markets for such
products would seem to require
a more or less definitive settle-
ment of the grain price issue
in the EEC.
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ADVERSE FRENCH INTERNAIL DEVELOPMENTS MAR DE GAULLE IMAGE
The publicity surrounding
De Gaulle's visit to Mexico has
tended to obscure two adverse
developments at home, one with
immediate, the second with more
long-range implications.
The renewal on 18 March,
after several months' inaction,
of limited strikes in France's
nationalized enterprises and
government services is a direct
challenge to De Gaulle's anti-
inflation program. While the
strikers pose no threat to gov-
ernment stability, they will
probably force some adjustment
of wage policies. If they are
prolonged over several weeks,
they could slow economic growth
and, most important for De Gaulle,
dissipate the myth of domestic
harmony he sets so much store by.
The elections held through-
out France on 8 and 15 March
to fill half the seats in the
departmental general councils
showed no clear national trend,
but they highlighted the weak-
ness of the Gaullist forces
when De Gaulle's personal
prestige is not behind them.
There was some sharpening of
the pro- and the anti- De
Gaulle line between political
parties, but local issues pre-
dominated, the abstention rate
was high, and most incumbents
were re-elected.
As the first nationwide vote
since the Gaullist parliamentary
victory in 1962, however, these
elections have some significance,
In addition to showing that the
Gaullist Union for the New Re-
public (UNR) has not implanted
itself as a political force at
the local level, they demonstrated
the importance for the Socialists
of electoral cooperation with
the Communists.
Electoral agreements between
the Communist (PCF) and Socialist
(SFIO) parties were in effect
in about 60 of the 88 depart-
ments in which runoff elections
were held. Largely as a result
of these agreements, the PCF
gained 49 seats, doubling its
previous holding. The SFIO
made a net gain of only 15, and
was clearly dependent on Commu-
nist votes for most of these.
The Communists can be expected
to exploit these results with
an eye to closer cooperation in
next year's presidential elec-
tion. While the UNR won 33
new seats, its showing was
dismal compared with the 1962
parliamentary elections.
The center parties were
the chief losers in the run-
offs, suggesting that polit-
ical forces may be tending to
polarize into leftist and UNR-
dominated rightist camps.
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Europe
ATTACKS ON ITALY'S CENTER-LEFT GOVERNMENT
The National Conference
on Organization held last week
by the Italian Communist Party
(PCI) apparently made little
progress toward solving organi-
zational problems, but did
provide an opportunity to ex-
press the party's opposition
to Italy's center-left govern-
ment. The public airing of
the party's problem of declin-
ing membership and of the need
for decentralization of control
was intended mainly to create
an impression of a "democratic"
party willing to criticize it-
self as well as the government.
Party chief Togliatti used
some of the strongest language
he has employed thus far to em-
phasize PCI opposition to the
center-left coalition in Rome.
He clearly implied that the
PCI intends to exploit Italy's
current economic difficulties
--the "crisis of the Italian
capitalist system"--to under-
mine the coalition. He may
intend to take advantage of
several unresolved national
labor-management disputes to
provoke further strikes soon.
The US Embassy has commented
that neither-management nor
the Communist-dominated General
Labor Confederation appears
willing to forgo their particu-
lar interests for the good of
the country.
Some right-wing opponents
of the center-left coalition
have used increasing Communist
activity as an excuse for charg-
ing the government with compla-
cency. Christian Democratic
Party Secretary Rumor emphati-
cally rejected this charge last
week, and Premier Moro has
warned that political pressure
from "extremist forces" is grow-
ing.
SPANISH LABOR SYNDICATE CONGRESS SPARKS DEMONSTRATIONS
Strong manifestations of
worker dissatisfaction in Franco
Spain intruded on the rather tame
atmosphere of the third national
congress of the regime-controlled
organization of employers and
workers held last week in Ma-
drid. On 10 March--the second
day of the congress--between
800 and 1,000 workers from
Madrid factories, incited by
secretly circulated leaflets,
demonstrated around the congress
headquarters and clamored for
free trade unions. After some
200 had forced their way into
the entrance hall, the police
broke up the demonstration and
made a number of arrests.
Among the delegates to the
congress, however, there was
little sign of the outspoken
criticism of the regime's labor
policy that had marked the sec-
ond congress two years ago.
Franco did not appear, contra-
ry to his custom. At the
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SECRET
close of the congress the chief
of the syndicates, Jose Solis
Ruiz, was given a standing ova-
tion after he called for con-
tinuing confidence in the exist-
ing syndicate structure which,
he promised, would be made more
representative. A syndicate of-
ficial told the US Embassy labor
attachd that the demonstrations
"proved" Spanish labor is not
yet prepared for complete free-
dom.
The refusal of the syndi-
cate's leadership to consider or-
ganizational reforms is certain
to antagonize the workers, who
have long been restive over the
regime's tight labor controls.
This situation is likely to gene-
rate new work stoppages during
.April, the traditional strike
season in postwar Spain.
Government touchiness on
opposition activity has also
sparked student unrest at Ma-
drid University. On 13 March
hundreds of students demon-
strated against the rector's
ban on a lecture by a leading op-
positionist, Tierno Galvan, on as-
pects of "university change." Two
previous lectures on the same gen-
eral subject had been given with-
out incident. The students de-
manded that free university syn-
dicates be legalized along with
the Falange-controlled SEU, the
only one now recognized. A large
number of students "sat in" all
night in the university auditorium
and were then removed by the po-
lice.[
Finland's Social Democratic
Party (SDP)--the third largest
in the country--and the splinter
Skogist group which broke with
the party in 1958 have approved
the first step toward reunifi-
cation. The merger, expected
to be completed by summer, is
likely to mean substantial So-
cial Democratic gains in coming
elections at the expense of
President Kekkonen's Agrarian
Party.
In a policy statement ac-
companying the merger announce-
ment, the Social Democrats denied
the Agrarians' old charge that
the SDP does not support Fin-
land's official policy of
friendship toward the USSR-
an accusation'which has long
kept the SPD in political iso-
lation. They also renewed
their demand that Kekkonen call
for parliamentary elections be-
fore the scheduled 1966 date.
Kekkonen is not likely to
heed this demand, but he may
seek to replace the present
caretaker civil servant cabi-
net, in office since last De-
cember, with a parliamentary
government. He is concerned
that, if the present arrange-
ment were allowed to continue,
the Soviets might conclude that
he lacks control over Finnish
politics. Kekkonen's chances of
achieving a broadly based non-
Communist cabinet seem poor how-
ever, since the Social Demo-
crats have indicated they are
cool to joining any Agrarian-
led coalition before elections.
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RESULTS OF RECENT ELECTIONS IN CHILE'S CURICO PROVINCE
(in %of total vote)
1958
1961
1963
1964
Democratic Front
50.8
56.3
48.5
32.5
Christian Democrats
19.2
20.7
21.9
28.0
,Popular Action Front
28.5
23.0
29.6
39.5
610Q18 3 '.
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14we V4001
SECRET Western Hemisphere
The surprisingly large vic-
tory margin of Chile's Communist-
Socialist Popular Action Front
(FRAP) in a hotly contested 15
March congressional by-election
in Curico Province has psycholog-
ical importance for the 4 Sep-
tember presidential contest.
By common consent of all
concerned, Curico was considered
a trial of relative strength of
candidates for the presidential
race, because voting percentages
there have in the past closely
paralleled those of the nation
at large. Recent voting history
(see table) made the center-right
Democractic Front (FD) an odds-
on statistical favorite, but dif-
ficulties within the coalition
and the individual popularity of
the FRAP candidate somewhat nar-
rowed the advantage. The Chris-
tian Democrats (PDC), apparently
leading in the national presiden-
tial campaign, had little hope
of victory in Curico, and were
primarily seeking an impressively
improved vote. Recognizing the
significance of the by-election,
major national leaders of all
parties campaigned in Curico.
Returns indicated that
roughly 3,000 votes shifted from
the FD to FRAP. The decisive
factor seems to have been Com-
munist success in organizing
and indoctrinating the rural
laborers. The 50-year tradition
that this group votes as instruc-
ted by the landlords was broken
resoundingly. FRAP, to its own
surprise, also increased its share
of the women's'vote, probably,
because its candidate was a pop-
ular pediatrician. A larger
electorate than in the past and
the PDC's stress on solid bread-
and-butter issues gave that party
a significant gain also.
The Curico outcome has al-
ready shaken the FD to its foun-
dations, and Senator Duran has
resigned as its presidential can-
didate.
The dis-
position of the third FD component,
the large Radical Party, is less
clear, but it is likely to split
its presidential support.
There is a possibility Du-
rants resignation will not be ac-
cepted. Or, the FD might attempt
to maintain itself as a force by
nominating someone else
The PDC was "reasonably sat-
isfied with its showing," but F
the big winner nation-
ally was FRAP's Senator Salvador
Allende. Allende claimed that the
psychological boost of Curico will
mean an additional 100,000 votes
for him in September. He now 25X1
feels that the Communists and So-
cialists, whose campaign organiza-
tion has been functioning well,
are less than 150,000 votes short
of their desired plurality of a
million.
If the Curico results are
projected nationally, they afford
serious warning that a Communist-
dominated government could emerge
from the 4 September contest.
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SECRET Wes ern Hemisphere
President Goulart of Brazil
is making his most concentrated
drive thus far to push through
his radical reform program.
Lacking congressional support
for the measures, despite the
government's paper majority
in both houses, he has resorted
to his powers of decree and to
demagogic pressure in an attempt
to force Congress to accede to
his demands.
On 13 March Goulart deliv-
ered an inflammatory address on
reforms to a leftist-sponsored
rally 130,000 strong in Rio de
Janeiro. He announced an ex-
ecutive decree authorizing
government expropriation of
certain unused lands adjacent
to federal highways, railways,
and waterways. He also decreed
the expropriation of oil re-
fineries remaining in private
hands (all Brazilian owned)--
an act which advances the re-
gime's policy of eventually
developing a federal monopoly
in the petroleum industry.
Many of his demagogic statements
were, to some observers, reminis-
cent of those made by Fidel
Castro as recently as 1961.
Goulart followed the speech
with a recommendation in his
lengthy annual message to Con-
gress that the legislature
study the "advisability of hold-
ing a popular referendum" on
basic reforms. He also re-
quested constitutional amend-
ments to allow payment for ex-
propriated lands in bonds,
rather than cash as now re-
quired, and extension of the
franchise to illiterates. He
included an indirect appeal for
legalization of the Communist
party. He later attacked land-
lords for robbing the people and
established a "Commissariat for
Defense of the Popular Economy"
to enforce new rent controls.
These proposals are creat-
ing apprehension throughout Bra-
zil, particularly among business
and industrial circles, and the
cruzeiro plunged to a record low
early this week. The alarm in
Congress over the threatened en-
croachment on legislative prerog-
atives has led a number of depu-
ties to propose impeachment.
Disagreement over reforms has
long been a chief source of Gou-
lart's friction with Congress,
and the president of the Chamber
of Deputies predicted that, after
the 13 March speech, Congress
would never support Goulart's
plans.
Goulart's primary objective
seems to be to increase his "pop-
ular" support while demonstrat-
ing Congress' intractability.
He may also be testing the chances
of achieving a plebiscite on re-
forms, which might also include
setting aside the constitutional
bar to his re-election in 1965.
The US Embassy believes Goulart
could also be preparing the
psychological climate for a move
against Congress.
The military remains a key
factor. In the past, military
leaders have indicated they would
feel compelled to intervene if
Goulart overstepped constitutional
bounds. However, his success
in replacing his opponents in
key commands with loyal supporters
or opportunists has substantially
weakened the armed forces as a
moderating influence.
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SECRET Western Hemisphere
ULTRANATIONALISTS PROMOTING NEW TENSION IN PANAMA
Two Panama City radio stations
noted for their extreme national-
ist propaganda are again attempt-
ing to stir up public feeling over
the canal issue. Recent broad-
casts have urged meetings of stu-
dent and nationalist organizations
which have been the main vehicle
of Communist and Castroite influ-
ence since the January riots. The
new tension could lead to trouble
during the student congress set to
begin on 20 March.
On 17 March, Radio Mia, which
supports OAS Ambassador-Moreno for
president, proclaimed that the US
had "made fools" of Panama, and
urged Moreno to resign rather than
"sink along with the government."
Ultranationalist UN Ambassador
Aquilino Boyd, who also has presi-
dential ambitions, has suddenly
returned to Panama, probably to
urge again that the canal dispute
be taken to the UN. Although
the party Boyd heads belongs to
the government coalition, the
radio station owned by his family
has accused President Chiari of
bowing to the US, speaks of aban-
doning him, and recommends convo-
cation of a special session of the
National Assembly to abrogate the
1903 treaty with the US.
Meanwhile, other politicians
are also seeking ways to exploit
the Chiari government's increas-
ingly difficult position. Arnulfo
Arias, who still seems to be the
front-running presidential can-
didate for the May election--is
stepping up the pace of his cam-
paign. The other major opposition
alliance is still holding pre-
cariously together, but its
leaders are increasingly divided.
They may yet switch allegiance
either to Arias or the government
coalition.
COLOMBIAN ELECTION RESULTS
Nearly complete returns from
the 15 March election in Colombia
indicate that the parties support-
ing the National Front political
system will retain their two-thirds
control of the 184-seat House of
Representatives by a margin of
five seats. Although the pro-
government Liberals gained two
seats at the expense of the fac-
tionalized opposition Liberals,
the progovernment Conservatives
lost 20 to ex-dictator Rojas Pin-
illa's National Popular Alliance
(ANP), a net loss to the National
Front of 18 seats.
The surprising success of the
ANP, which advocates the return to
power of a dictator deposed seven
years ago and stripped of his civil
rights by act of Congress, appar-
ently was due mainly to voter
apathy. The fact that only 30 per-
cent of the electorate voted en-
abled the opposition parties to
poll 32 percent of the total vote.
Half of the opposition votes was
won by the ANP through vigorous
campaigning and effective exploi-
tation of the cost-of-living issue.
The progovernment Conservatives
and Liberals polled only 36 and 32
percent of the popular vote,respec-
jtively.
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Western Hemisphere
THREAT OF ANTIREGIME DEMONSTRATIONS IN GUATEMALA
Extremists may try to con-
vert student parades planned
to begin on 20 March in Guate-
mala City into demonstrations
against the military regime.
The students' traditional
pre-Easter parade and symbolic
"strike" have long been the
occasion for virulent political
satire.
The government has warned
the students that the activities
they are planning would not be
permissible under the state of
siege imposed a year ago and
scheduled to be lifted by 31
March as the first step toward
a return to constitutionality.
If the students persist despite
the warning, the 'government may
have to use forcible measures to
put down the demonstrations.
This would carry a risk of inci-
UNCODEDs that could delay Peralta's
plans for a carefully controlled
return to constitutional govern-
ment in which the present ruling
group would play a major role.
SALVADORAN OPPOSITION WINS SEATS IN LEGISLATIVE ELECTIONS
Returns thus far from El
Salvador's elections on 8 March
indicate that opposition par-
ties have von 20 of the 52
seats in the national legisla-
ture, as well as control of
the municipal governments in
the country's two largest cities
and several small towns. De-
spite rumors of possible coup
attempts by a variety of ele-
ments, the elections were orderly
and no incidents occurred. Oppo-
sition leaders went so far as
to comment that these were the
first free elections since 1931.
Although the government's
National Conciliation Party still
holds a majority in the legis-
lative assembly, the Rivera ad-
ministration may find it more
difficult to implement its pro-
gram now that opposition parties
are represented for the first
time since Rivera assumed office
in 1962. The opposition seats
are split between the Christian
Democrats (14) and the smaller
Renovating Action party (6).
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