WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A004800040001-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 36
• Document Creation Date: December 21, 2016
• Document Release Date: June 13, 2008
• Sequence Number: 1
• Publication Date: March 5, 1965
• Content Type: SUMMARY

Approved For
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT` INTELLIGENCE
State Dept. review
completed
Navy review
completed.
SECRET
GROUP] fxciuded fromautornatic
downgrading and declassification
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(Information as of 1200 EAST, 4 March 1965)
Page
THE VIETNAM SITUATION
The US - South Vietnamese air strike on 2 March has so
far drawn a negligible reaction from the Asian Communist
armed forces. Politically, too, the Communists have been
relatively restrained in their response. In South Vietnam
the security situation continues to deteriorate rapidly
in the central and northern provinces as a result of in-
tensive and widespread Viet Cong pressures. The Quat
government is increasingly concerned about peace movements
which are emerging in Buddhist and other civilian circles
and which lend themselves to Communist exploitation.
Military leaders are maneuvering in efforts to step into
General Khanh's vacated strong-man role.
VIET CONG RECEIVING IMPROVED ARMAMENT
The number and types of Chinese weapons captured from
the Viet Cong during 1964 indicate not only that the
firepower of the main force units is being enhanced by
more modern automatic weapons but that steps are being
taken toward standardization.
THE COMMUNIST WORLD
MOSCOW PLAYS MEETING OF COMMUNIST PARTIES IN LOW KEY 5
The minimal publicity given to the meeting convened on
1 March provides further evidence of the USSR's effort
to keep it as innocuous and noncontroversial as possible.
The absent Chinese have not takE.n public notice of
the gathering but are probably preparing to release a
major polemic soon after it is over.
SOVIET NAVAL ACTIVITY IN THE FAR EAST 6
Recent patrol and training activity by five W-class sub-
marines, a subtender, and a guided-missile destroyer in
the western Pacific is unprecedented and may be a prelude
to generally increased Soviet naval activity in the area.
NEW LINK ON SOUTH SIBERIAN RAILROAD OPENS 6
Traffic now can move from the Urals to Eastern Siberia
without using the overburdened Trans-Siberian Railroad.
EASTERN EUROPE'S REACTIONS TO US "BRIDGE-BUILDING" PROPOSALS 7
Although most of the countries need Western equipment and
technology, their political independence of the USSR is
not yet so firm that they are comfortable about entering
into new relationships with the United States.
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THE COMMUNIST WORLD (continued) Page
STALEMATE IN EAST - WEST GERMAN TRADE TALKS ENDS 8
After a three-month stalemate East Germany has accepted
with minor changes a package proposal in which the most
significant West German concession was a one-year post-
ponement of cash settlement of trade imbalances. East
Germany refrained from pressing the credentials question
and the sensitive petroleum products subsidy issue.
INTERNAL OPPOSITION TO POLISH - WEST GERMAN ECONOMIC VENTURES 9
Polish proponents of the negotiations between the Krupp
combine and Poland for joint economic undertakings are
reportedly being hard pressed by others in the regime to
defend their stand. Both Polish and West German spokes-
men have denied that the talks have political implications
but were careful not to disparage the economic benefits.
HUNGARY'S KADAR REBUFFS POLITICAL CRITICS
In an address to Parliament he acknowledged opposition
even among Hungarian Communists to his cautious program
of gradual domestic reform and reaffirmed his commitment
to a policy of national self-interest in both domestic
and foreign affairs.
ASIA -AFRICA
INDONESIA PURSUES ANTI-AMERICAN COURSE
The government has taken over US-owned rubber estates
and closed USIS libraries, and general harassment of
Americans has reached a new high. Military activity
against Malaysia continues.
COMMUNIST MILITARY FORCES STAY ACTIVE IN LAOS
Pathet Lao pressure remains centered in the northeast,
where government forces have lost; several key positions.
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5 Mar 65 CURRENT INTELLIGENCE WEEKLY SUMMARY Page
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ASIA-AFRICA (continued) Page
IRAN TRIES TO COUNTER EGYPTIAN INFLUENCE
In an effort to divert Nasir's attention from the wor-
risome Arab minority in southwestern Iran, Tehran is
fomenting trouble among Iraq's Shia minority
TENSIONS EASE ON CYPRUS
Ankara has agreed to postpone its scheduled troop rota-
tion, and Makarios, under some pressure from Athens, has
eased his stand on this and the issues of constitutional
revision and new elections.
TSHOMBE SCORES MILITARY AND DIPLOMATIC GAINS 15
Rebel activity has slackened off
and the threat
o sex ous Ugandan involvement has receded. At the cur-
rent OAU discussions Tshombe has greater support than
previously.
COAL-STEEL COMMUNITY TAKES STEPS TOWARD COMMON ENERGY POLICY 16
By unanimously approving community subsidies to coal
mines, the CSC Council has begun to carry out the Energy
Protocol Agreement signed last April in which the Six
agreed on the objectives of a community energy policy.
EUROPEAN ATTITUDES TOWARD FRENCH VIEW OF WORLD FINANCE 16
French attacks on the present system of international
financial settlements are criticized in Europe because
of the political overtones and lack of prior consulta-
tion with other governments, but there is almost unan-
imous agreement that the system needs reform. However,
most officials anticipate no sudden change.
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EUROPE (continued) Page
OUTLOOK FOR THE FRENCH ECONOMY 18
Recent indications of an economic Slowdown, are causing
concern in French business circles and among Gaullist
politicians whose sights are on the December presiden-
tial election. The government will be under increasing
pressure to ease its austerity policies in order to as-
sure a solid Gaullist victory at the polls.
FINNISH PRESIDENT CONDEMNS WEST GERMJN MEMBERSHIP IN MLF 19
In a further move to ingratiate himself with the new So-
viet leadership, Kekkonen implied that establishment of a
Western multilateral nuclear force would justify con-
sultations with the USSR under the 1948 Finnish-Soviet
mutual defense treaty. His domestic enemies now may
charge that he has compromised Finland's neutrality.
NETHERLANDS GOVERNMENT RESIGNS 19
Prime Minister Marijnen resigned over the issue of in-
troducing commerical radio and television into the
Netherlands. Chances are his Catholic Party will once
again emerge as the principal partner in a new coalition.
WESTERN HEMISPHERE
ARGENTINE CHAMBER OF DEPUTIES ELECTIONS 20
In elections on 14 March for 98 of 192 seats in the lower
house, President Illia's party should be able to maintain
its position as the chamber's largest party with about a
third of the seats. The Peronists will gain seats but,
because of their own internal breach and the electoral
system of proportional representation, probably will not
achieve gains which the military might deem "excessive."
GOVERNMENT FORMS NEW COALITION IN BRAZILIAN CONGRESS 21
The new Parliamentary Action Bloc (BAP) promises to give
the Castello Branco administration at least a slight ma-
jority in Congress on most important issues. The strong
regional and state orientation of its components, however,
could obstruct any effort to convert the BAP into a new
nationwide political party.
URUGUAYAN POLITICAL CLIMATE WORSENS 22
The late president Giannattasio's replacement on the
National Council of Government may join other councilors
in obstructing decision making in the nine-man executive
body. Fear of a coup has intensified public and party
discussion of constitutional reform.
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V400* -*Nw
HANOI
..I
NORTH VIETNAM
A Targets struck on 2 March 1965
5 MARCH 1965
QUANG KHE
XOM BANG
! DEMARCATION
-,..!.+rr ,,.:p.. LINE
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THE VIETNAM SITUATION
So far, the US - South Viet-
namese air strike on 2 March
has drawn a. negligible reaction
from the Asian Communist armed
forces. Politically, too, the
Communists have been relatively
restrained in their response.
Initial reports indicate
that extensive damage was done
to the Xom Bang target area.--
an important ammunition/supply
depot near the Demilitarized
Zone. Damage to the Quang Khe
naval base was also reported
to be extensive.
Six aircraft were lost as
a result of the two raids--five
US and one South Vietnamese.
One US pilot is still missing;
his aircraft was downed inside
North Vietnam.
Asian Communist Reaction
North Vietnamese propaganda.
is attempting to give the impres-
sion that the DRV has taken the
2 March air strike in stride.
The party daily on 3 March dis-
missed the raids as having caused
"no appreciable losses" and re-
peated earlier promises to "deal
the enemy thunderlike blows" if
attacks on North Vietnam con-
tinue.
An official North Vietnam-
ese Government statement on 3
March called the raid a "new
and extremely serious escala-
tion" of the war, and noted
that it marked a US intention
to begin a, "continuous air war"
against the DRV, in the hope of
forcing a. negotiated settlement
of the war. The party daily
flatly rejected the notion that
such strikes would lead to a
negotiated settlement.
Peiping has given the 2
March strikes front-page cover-
age in its press and in a 4
March People's Daily editorial,
praised ffe remen ous victory"
of the North Vietnamese. It
made no mention of damage to
North Vietnamese installations
but described the shooting down
of "nine enemy planes" as a
"sound thrashing."
UNCODED
The Viet Cong "Liberation
Radio" on 3 March broadcast one
of its most vitriolic attacks
to date against the US and re-
affirmed the Communist intention
to step up the war in the south.
The statement warned the US
that further strikes against
the North will result in "many
more accurate blows" by the Viet
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Cong directly against US per-
sonnel.
The Soviet view of the Viet-
nam question as a whole was high-
lighted by Soviet Premier Kosy-
gin's 26 February report on his
Asian mission. Kosygin's re-
marks seemed calculated to strike
a careful balance. He reaffirmed
Moscow's pledge of "necessary
assistance" to North Vietnam
and announced that the Soviet-
DRV agreement on measures to
"safeguard the security and
strengthen the defense potential"
of North Vietnam is being imple-
mented. He also warned that
the conflict "will inevitably
transcend its original boun-
daries" if US aggression con-
tinues. At the same time, al-
though he refrained from endors-
ing any specific proposal for
negotiations, he asserted that
US "aggressive actions" must be
ended to "create conditions
for the exploration of avenues
leading to the normalization of
the situation in Indochina.."
Kosygin's guarded comments
on the possibility of negotia-
tions were designed to avoid
open divergence with Hanoi and
Peiping, and to stimulate fur-
ther initiatives by foreign gov-
ernments toward negotiations.
He voiced the desire of "peace-
loving countries" for an Indo-
china solution "at the confer-
ence table."
Soviet reaction to the lat-
est US actions against North
SECRET
5 Mar 65 CURRENT INTELLIGENCE WEEKLY SUMMARY
Vietnam were along familiar
lines, and contained no new
threats. Pravda reiterated on
3 March Kosyg n s earlier wa.rn-
irig that the US had miscalcu-
lated if it believed that "ag-
gression against a socialist
state would remain unpunished."
Communist Military Reaction
No unusual Chinese Commu-
nist or North Vietnamese mili-
tary deployments have been
noted since the latest air
strikes.
The Situation in South Vietnam
The security situation in
the central and northern provinces
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of South Vietnam is continuing
to deteriorate rapidly as a
result of intensive and wide-
spread Viet Cong pressures.
Sabotage against government
highways, bridges, and railroads
continues, contributing to the
isolation of government forces
in scattered urban centers. The
Viet Cong, meanwhile, are con-
solidating their recent gains
in rural areas. In the south-
ern provinces, they appear for
the time being to be husbanding
their resources. Their actions
have recently been limited pri-
marily to harassment of posts,
hamlets, and district towns.
On the political front,
the emergence of peace movements
in Buddhist and other civilian
circles occupied increasing at-
tention of the Quat government
during the week. After a series
of statements by leading Bud-
dhist monks on the theme of
peace, a small student demon-
stration in Saigon calling for
an end to the war, and the ar-
rest of certain politicians
sponsoring a. peace petition
signed by 300 civil servants,
Quat's cabinet met to take a
stand on the issue. On 1 March,
Quat issued a statement declar-
ing that his government opposed
any negotiated peace until the
Communists ceased infiltration
from North Vietnam and ended
subversion in the South.
SECRET
5 Mar 65 CURRENT INTELLIGENCE WEEKLY SUMMARY
The government has warned
that it will curb Communist-in-
spired peace propaganda. It
has,however, distinguished be-
tween such propaganda and the
statement of the Buddhists.
Buddhist leaders say that a
peace movement led by Quang
Lien, a second-ranking official
of the Buddhist Institute, does
n.ot have official endorsement
of the entire heirarchy. Never-
theless, remarks of various
Buddhist leaders advocating a
return to the "relative calm"
of 1955 suggests they hope to
capitalize on what they feel
is strong public sentiment for
ending the war. Although they
have not so far echoed Commu-
nist terms for a settlement,
their new emphasis on peace
lends itself to Communist ex-
ploitation.
A continuing series of com-
mand changes within the armed
forces reflects the efforts of
various generals to step into
the strong-man role vacated by
General Khanh.
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NAW '1111111111111p
IN 19 4
WEAPONS CAPTURED FROM THE VIETCONG
Number of Weapons by Country of Origin
90mm Rocket Launchers
82mm` Mortars
60mm Mortars
75mm Recoilless Rifles
57mm Recoilless Rifles
50 Cal,Machine _Guns
7,5, 7,62, & 7.92 Machine Guns
Light Machine Guns
Automatic Rifles'
Submachine Guns
Rifles
Carbines
Pistols .
shotguns
Other, .
ota
ro 0 ota67
% fTotal,
COMM. VIET T>OTAL T,OC
CHINA Us FRANCE CONG OTHER 4964,-;
196,3,. ~~
16 32 9?
131? 14 35==
104 135 10 25 365 323m
241 553 92 55 .441 884?
229 36
X67 -` .30
16 1 25 50 158 35
19 35 54
2 *`
302
66
491 628 705 167 '6(' 215'
127 2,1 7.7
8.4 27.7 49.8 8.9
AK 50 Submachine Gun
Chinese Communist 'Type 53
Light Machine Gun
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VIET CONG RECEIVING IMPROVED ARMAMENT
The number and types of
Chinese weapons captured from
the Viet Cong during 1964 indi-
cate not only that the fire-
power of the main force units
is being enhanced by more modern
automatic weapons but that steps
toward standardization are be-
ing taken.
A much larger percentage
of the captured weapons came
originally from Communist China
--almost 23 percent, compared
with 8.4 percent in 1963. French
weapons still predominated, but
had dropped from almost half the
total in 1963 to about a third
in 1964. The percentage of US
weapons captured during 1964 re-
mained about the same at 27
percent.
Recent captures include
the Chinese Type 53 light ma-
chine gun, the AK 50 submachine
gun (an assault weapon), and a
carbine, all of which use 7.62-:
mm.ammunition. These small arms
have been standard equipment in
the Chinese Communist armed
forces for several years and
have been supplied to the North
Vietnamese.
Weapons of this type first
began to appear with Viet Cong
units last December and have
since been captured in all areas
of South Vietnam. This and the
fact that they use a caliber of
ammunition that cannot be cap-
tured from South Vietnamese
forces indicate the development
of a more dependable supply sys-
tem. The sinking of a North
Vietnamese arms ship off Phu
Yen Province on 17 February and
the subsequent capture of rela-
tively large amounts of arms
and ammunition indicate that
increased deliveries are coming
by sea.
Most of the newer Chinese
weapons are probably still drawn
from North Vietnamese Army stock-
piles. China now may be replen-
ishing this stockpile at a more
rapid rate or perhaps sending
some of this materiel directly
to the Viet Cong through North
Vietnam.
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The minimal publicity
given to the meeting of Commu-
nist parties convened in Mos-
cow on 1 March provides further
evidence of the USSR's effort
to keep it as innocuous and
noncontroversial as possible.
The Soviets have carefully
avoided any mention of the
meeting's original purpose as
a preparatory session of the
26-party "editorial commission"
to make arrangements for a
world party conference. On 28
February, Pravda carried a terse
announcement o the arrival of
delegates to participate in a
"consultative meeting." Repre-
sentatives of 19 parties are
taking part, with the Chinese,
their Albanian and Asian sup-
porters, and the Rumanians, as
expected, refusing to attend.
On 3 March, TASS issued
the text of a statement, "unan-
imously adopted by the members
of the consultative meeting,"
which condemned US "open aggres-
sion" against North Vietnam,
including "barbarous bombings
of populated centers." Although
the statement voices the par-
ties' "international solidarity"
with the Vietnamese people, it
is relatively bland and repre-
sents another Soviet attempt
to underscore the particular
need at present for the unity
of all "progressive" forces.
The USSR also continues to
stress the necessity for Commu-
nist solidarity and to picture
itself as engaged in patient
efforts to resolve difficul-
ties within the movement.
The Chinese Communists have
not yet taken public notice that
the meeting is being held. They
have, however, kept up a steady
low-key attack on Moscow and are
probably preparing to release a
new major polemic soon after the
gathering is over. Red Flag,
the principal vehicleoull-
dress attacks on Moscow, has not
come out since 6 January. The
unusual delay in publishing this
authoritative fortnightly proba-
bly reflects Chinese reluctance
to provide the Russians with a
new target which could be ex-
ploited during the consultative
conference. Peiping may also
have calculated that continua-
tion of the formal truce in major
polemics prior to the meeting
would add to Moscow's problems
in persuading some of the invited
parties to attend.
Chinese preparations for
a renewed assault on Moscow have
included extensive publicity
concerning anti-China materials
which have been appearing in the
USSR. The main line of the next
Chinese attack is not clear as
yet 'but it seems likely that
Peiping will concentrate on what
it now is calling "Khrushchevism
without Khrushchev." The Chi-
nese can be expected to criticize
the present leaders in Moscow
for continuing the policies es-
tablished by Khrushchev, includ-
ing the decision to go through
with the 1 March meeting and al-
leged. Russian softness in deal-
ing with the US and the situa-
tion in Vietnam.
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7Lake\
Balkhash
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SIBS n
USSR
Brest
Odessa
THE SOUTH SIBERIAN RAILROAD
0 100 200 .300
Statute Miles
Scale for enlarged map above,
AIAD
NEWLY COMPLETED
SECTION
V ladscrstsik
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The Communist World
SOVIET NAVAL ACTIVITY IN THE FAR
Seven weeks of unprece-
dented Soviet out-of-area sub-
marine patrol activity in the
western Pacific is apparently
concluding. Three Soviet con-
ventionally powered W-class sub-
marines and a subtender which
have been operating in the Phil-
ippine Sea since mid-January
and a guided-missile destroyer
which has been operating with
two other W-class units south
of Kyushu since mid-February
have entered the Sea of Japan,
apparently on their way home.
The latter two Ws are probably
returning to home waters also.
The activity in the Pacific
is similar to that conducted by
Soviet naval detachments in the
Mediterranean during the past
year. The Pacific Fleet units
conducted routine submarine ex-
ercises while on patrol, gained
experience in extended opera-
tions, and probably obtained
realistic training in submarine
surveillance procedures. This
activity will probably prove to
be a prelude to generally in-
creased-Soviet naval activity
NEW LINK ON SOUTH SIBERIAN RAILROAD OPENS
A strategic 400-mile sec-
tion of the South Siberian Rail-
road which was opened to limited
through traffic in January will
relieve the overburdened Trans-
Siberian Railroad in servicing
the important industrialized
area of the Kuznetsk Basin. For
the first time, railroad traffic
can move about 2,000 miles from
the Urals to Eastern Siberia
without using the Trans-Siberian
Railroad. This new link, cut-
ting through difficult terrain
and built at a high cost, was
one of the major seven-year plan
rail construction projects.
Initially, the principal
traffic will consist of logs
and lumber now straining the
capacity of the Trans-Siberian
Railroad from eastern Siberia
westward to the Kuznetsk Basin
and to Central Asia. The trans-
port distance for this traffic
has been shortened by 210 miles,
and the line should also permit
development of the minerals and
forests of the Vostochnyy Sayan
Mountains.
Limited traffic is permitted
on the Abakan-Tayshet line now,
and: full operation is scheduled
to start in the fourth quarter
of this year. The line will be
electrified and a central traf-
fic control system installed to
handle a heavy volume of move-
ment. Construction of this link
began in 1958 with completion
on inall planned f or 1963.
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5 Mar 65 CURRENT INTELLIGENCE WEEKLY SUMMARY
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Most East European regimes
are treating US "bridge-build-
ing" proposals with a cautious
mixture of economic appetite
and political apprehension.
Their economies have generally
reached a stage where they need
Western equipment and technol-
ogy in order to achieve planned
goals, but their growing polit-
ical self-reliance has not
reached a point where they are
comfortable about entering into
new relationships with the US.
Poland, Czechoslovakia,
and Hungary have displayed the
greatest ideological and polit-
ical sensitivity and have is-
sued specific statements de-
signed to allay the anxieties
of domestic and external Com-
munist critics. At the same
time they have taken positive
steps to improve relations with
the US and are expressing strong
interest in increased economic
cooperation. The US proposal
has added impetus to Yugoslav
and Rumanian plans for expand-
ing existing economic and cul-
tural relations without generat-
ing political fears. Bulgaria
appears to feel that the time
is not yet propitious for im-
proved relations with the US,
but it is improving its ties
with West European countries.
Albania views the US initiative
with distaste and apprehension.
The Ulbricht regime, although
not included in the bridge-build-
ing program, has sought to capi-
talize on West German discomfi-
ture over the French - East Ger-
man trade agreement and the evi-
dence of US businessmen's in-
terest in East German contracts.
The Polish regime has wel-
comed the US proposal as an op-
portunity to improve ties and
to revitalize and expand the
"special relationship" estab-
lished in 1957. Since last fall
the Poles have taken a number of
steps to remove irritants to mu-
tual relations, and in private
talks with US officials have re-
peated their interest in expand-
ing trade. Planning boss Jedry-
chovrski reportedly wishes to dis-
cuss a number of political and
economic proposals when he visits
Washington this spring. Domestic
and external counterpressures,
however, may force the regime
to seek a restatement of the
1957 understanding that closer
relations will not lead to al-
teration of Poland's basic po-
litical orientation.
Prague, motivated by eco-
nomic problems and a growing
measure of self-assertion vis-
a-vis Moscow, is seeking to es-
tablish rather than expand.rela-
tions with the US. Despite con-
cern over the recent US decision
not to sign a long-negotiated
claims agreement, Prague
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officials have consistently ex-
pressed a desire for closer re-
lations. Deputy Foreign Trade
Minister Kohout will visit the
US this month. as a member of
a Czechoslovak Chamber of Com-
merce delegation.
However, Prague is deeply
concerned about the political
wisdom and the ideological
rectitude of this course. In
a recent article, Deputy For-
eign Minister Klicka emphati-
cally rejected alleged attempts
to build "bridges of influence
..,,motivated by selfish, im-
perialist interests."
A similar ambivalent atti-
tude was reflected in a recent
official Hungarian statement
which, while rejecting "impe-
rialist plans to use trade" to
drive a wedge between Hungary
and the Soviet Union, also chas-
tised "those who would close the
door to closer economic relations.
with the West."
STALEMATE IN EAST - WEST GERMAN TRADE TALKS ENDS
A three-month stalemate
in talks on German interzonal
trade (IZT) ended on 23 Febru-
ary when the Communist negotia-
tor accepted with minor changes
a package proposal the Federal
Republic had tabled on 5 Febru-
ary. The postponement for one
year of the cash settlement of
imbalances in IZT accounts was
the most significant West Ger-
man concession. In return East
Germany signed the new agreement
without settlement of the sensi-
tive petroleum products subsidy
issue and avoided raising the
question of credentials.
Agreements were signed on
consolidation of IZT subaccounts
covering services and soft goods,
expansion of East German ma-
chinery deliveries, and estab-
lishment of 1965 trade levels
for brown coal and hard coal.
Oral agreement was also reached
on the 1965 level of East Ger-
man purchases of iron and steel.
Despite the unusual length
of time taken in reaching the
settlement, the concessions
granted by each side indicate
that both have a vested inter-
est in maintaining interzonal
trade at its high level
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5 Mar 65 CURRENT INTELLIGENCE WEEKLY SUMMARY
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SECRET
The Communist World
INTERNAL OPPOSITION TO POLISH - WEST GERMAN ECONOMIC VENTURES
The political and emotional
contradictions inherent in the
joint West German - Polish in-
dustrial ventures in Poland now
under negotiation at the initia-
tive of the Krupp combine are
beginning to surface and could
jeopardize conclusion of any
agreement. Exaggerated Western
press speculation on an eventual
East-West ideological and polit-
ical breakthrough had led both
Polish and West German spokesmen
to deny such implications. In
their statements, however, both
sides have been careful not to
disparage the economic aspects,
and'a Polish delegation is sched-
uled to resume the negotiations.
in Essen next month.
However, Polish proponents
of the negotiations are report-
edly being hard pressed by others
within the regime to defend
their stand. The main party
daily on 20 February vehemently
rejected the possibility that
the deal could lead to Western
political penetration of Eastern
Europe. Even Premier Cyran-
kiewicz, who with Krupp general
manager Berthold Beitz is largely
responsible for the discussions,
has felt called upon to deny any
political implications. Accord-
ing to press reports of a speech
he gave on 1 March at the Leip-
zig, Fair, in the presence of
the Soviet and East German pre-
miers, Cyrankiewicz said that
there was "no question of Krupp's
owning a part of the proposed
enterprise, since this would
conflict with the Communist sys-
tem. "
Despite this evidence of
internal opposition, the Poles
have made approaches for sim"
i].ar projects to other Western
f irms.
The West German Cabinet
granted tentative approval of
the Krupp proposal in mid-Janu-
ary, and promised a federal
guarantee of credits if the
pilot project got off the ground.
However, West German delegates
to the NATO Economic Advisers'
meeting on 24 February spoke of
the project in terms radically
different from those detailed
by Beitz in his recent discus-
sions with top US officials.
BeiLtz now is talking of begin-
ning with an investment of three
to four million dollars, but the
German officials intimated that
the deal would be "of modest
size and unlikely to depart sig-
nificantly from existing cooper-
ative Polish sales efforts with
Sweden Austria, and Belgium.
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5 Mar 65 CURRENT INTELLIGENCE WEEKLY SUMMARY
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1%W VW
DEMONSTRATION AGAINST US
LEGATI(N IN BUDAPEST,13 FEBRUARY 1965
Policeman keeps colleague from restrain-
ing demonstrator breaking windows of
legation car.
Second wave of demonstrators. Note organ-
izers (bottom of photo) giving orders.
Besides wrecking vehicles and smashing windows, the demonstrators ripped the US seal
from the legation door and, after breaking into the building, did extensive damage to
the interior.
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SECRET
The Communist World
In a lengthy speech to the
Hungarian parliament on 11 Febru-
ary, Hungarian premier and party
first secretary Kadar candidly ad-
mitted that his program of gradual
domestic reform continues to spark
opposition from both party and non-
party elements. He dismissed such
people, however, as "armchair strat-
egists" who cherish futile and
foolish hopes, and vigorously re-
affirmed his commitment to a policy
of national self-interest in both
domestic and international affairs.
In an unusually frank discussion
which probably reflected the magni-
tude of the opposition--especially
within the party--he asserted that
the regime's stability was amply
demonstrated by its success in
weathering the domestic political
storm following the ouster of Khru-
shchev, his mentor.
Kadar gave no details of his
secret meetings with Brezhnev and
Podgorny from 29 to 31 January. It
is likely, however, that the new
Soviet leaders made the journey to
Budapest at least in part in order
to display support which would help
Kadar quiet his critics.
Kadar's treatment of foreign
affairs centered on Hungary's need
to continue exploration of new trade
and cultural contacts with Western
Europe. He encouraged the expan-
sion of cooperation, including the
establishment of "joint economic
projects," with capitalist enter-
prises and further discussion of the
nebulous Gaullist concept of a "Eu-
ropean Europe."
He sharply criticized US ac-
tions in Indochina and asked the
assembly to pass a resolution of
protest; later, however, he expressed
hope that the US would soon elimi-
nate its "trade embargo" and extend
most-favored-nation status to Hun-
gary as a contribution to peaceful
coexistence.
Progress in normalizing Hun-
ga:rian-US relations suffered a seri-
ous setback two days later when a
Hungarian-led mob of more than a
thousand Asians, Africans, and Hun-
garians stormed the US Legation
building in Budapest after a rally
protesting the US air strikes in
North Vietnam. No demonstration of
such magnitude had been permitted
since 1956, and there are indi-
cations that the regime was seri-
ously split over the advisability
of allowing this one.
Commenting on this year's rela-
tively austere economic plan, Kadar
assured the parliament that no "ad-
venturous experimentation" would
take place and that 1965 would be
a year of study rather than of ma-
jor decisions. He coupled the an-
nouncement of a domestic retrench-
ment in some fields with an attack
on the perpetrators of economic and
social abuses. This reference to
recent scandals--which reportedly
involved politburo members and the
ministers of justice and defense--
probably does not presage drastic
punitive action, however, inasmuch
as proteges as well as opponents of
Kadar had been implicated.
Kadar also scotched rumors
that those guilty of economic
crimes might be released in a gen- 25X1
eral amnesty on 4 April, the 20th
anniversary of Hungarian liberation.
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INDONESIA PURSUES ANTI-AMERICAN COURSE
Anti-American moves in In-
donesia have reached a new high,
and Communist strength appar-
ently continues to grow.
Prolonged Communist agita-
tion over American-owned rubber
estates in North Sumatra cul-
minated on 26 February in the
Indonesian Government's announce-
ment that it was taking control
of them. According to the min-
ister of estates, Indonesia will
run the plantations under con-
tract with the American owners,
but continued American presence
on the estates for more than a
brief interim period seems doubt-
ful. The seven estates involved
are owned by Goodyear, US Rub-
ber, and Hawaiian Sumatran Plan-
tations and are roughly valued
at a total of $80 million. The
Goodyear tire factory in West
Java was placed under "temporary
supervision" on 20 February.
On 27 February, First Dep-
uty Prime Minister Subandrio an-
nounced that the five USIS li-
braries in Indonesia had been
closed "temporarily." Three of
these had in fact been closed
ever since mobs invaded them
last year.
General harassments have
also reached a new high. On
28 February a mob of students
invaded the ambassador's resi-
dence; some 500 youth have dem-
onstrated against American sight-
seers in East Java; Americans
have been harassed in streets
SECRET
5 Mar 65 CURRENT INTELLIGENCE WEEKLY SUMMARY
and shops; Indonesian employees
of the US Embassy has been threat-
ened; and most Americans on the
diplornatic list have received
anonymous letters threatening
physical violence.
Communist domination of the
press was strengthened by the
banning on 25 February of 21
newspapers which last fall sup-
ported the anti-Communist and
now-defunct "Body to Promote
Sukarnoism." Minister of Trade
Adam Malik, the principal leader
of "Sukarnoism" and a major tar-
get of the Communists, retains
his post but has lost his prin-
cipal functions. On 23 February
responsibility for foreign trade
was transferred to Subandrio,
who is close to the Communists.
Despite Indonesia's pro-
posals for peace talks with
Malaysia, anti-Malaysian mili-
tary activity continues. In-
filtration operations against
peninsular Malaysia have picked
up sharply in the past two weeks.
A force landed late last month
is proving the most successful
infiltration of Malaya since
guerrilla landings began last
August. On 28 February this
force ambushed a platoon of Ma-
laysian troops killing eight
and wounding five. Two other
teams that landed last week
have been eliminated.
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COMMUNIST MILITARY FORCES STAY ACTIVE ][N LAOS
Communist military activ-
ity continues in widely scat-
tered areas of northern Laos.
The center of Communist pres-
sure is in the northeastern hill
region, where government forces
have been driven from several
key positions along Route 6, a
fair-weather road linking Ban
Ban with Samneua town. In an
attempt to retain a foothold
in this region, the government
has ordered reinforcements into
the Na Khang area, where right-
ist forces have regrouped.
Farther south, air strikes
were mounted during the past
week against two key "choke-
points" on the overland supply
routes from North Vietnam. One
of these was made on 28 February
against the Mu Gia Pass area on
Route 12, and there are indica-
tions that the road through the
pass has been blocked--at least
temporarily--by a landslide
triggered by the bombing. An-
other strike, launched on 3
March, resulted in considerable
damage to Route 8 in the Nape
area near the North Vietnamese
border.
Before these strikes, road-
watch reports indicated that the
Communists had been moving sub-
sta,ntial quantities of supplies
into south-central Laos. Dur-
ing February, roadwatch teams
spotted more than 200 trucks
moving west through the Mu Gia
Pass from North Vietnam. Other
roadwatch team reports indicate
that the bulk of these trucks
moved south along Route 23 to-
ward the Muong Phine - Tchepone
area on Route 9.
In Vientiane, Premier Sou-
vanna continues to have prob-
lems stabilizing his coalition
cabinet. On 1 March neutralist
Pheng Phongsavan resigned as
minister of foreign affairs,
charging that Souvanna had
failed to back him against po-
lit=ical attacks by the rightist
Sananikone family. However,
he retained his post as inte-
rior minister. Only shortly
before, Souvanna had ousted
ministers Phoumi Nosavan and
Bouavan Norasing as a result
of their roles in the recent
takes-over attempt.
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25X1
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SE CRET
IRAN TRIES TO COUNTER EGYPTIAN INFLUENCE
The Iranian Government is
meddling in Iraq and Yemen in
an effort to oppose what it
sees as a threat from Egypt.
The Shah recently stated in pri-
vate that he considers Nasir a
greater immediate danger than
the Soviet Union.
Iran's historic concern
over signs of Arab expansion-
ism, especially on its western
borders with Iraq, has been
heightened in the past year by
the Iraqi Government's in-
creasingly close ties with
Nasir. Tehran is especially
worried over Nasir's influence
among the predominantly Arab
population in its oil-rich
southwestern province of
Khuzestan. Late last year Iran
approached both the US and
Britain to cooperate in the
development of contingency
plans to deal with this "threat"
--which probably is far less
real at present than the Ira-
nians believe.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
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SECRET
Tensions have eased on
Cyprus in the past two weeks.
At the urging of UN officials,
Ankara has agreed to postpone
the rotation of Turkish troops
on Cyprus, originally scheduled
for 3 March, until after the
20th of the month. President
Makarios under pressure from
Athens, seems ready to forego
a new confrontation on this is-
sue. He has also indicated
that he will not push now for
revision of the constitution
or for new elections. Ankara
and the Turkish Cypriots had
threatened to retaliate if he
acted on these matters.
Athens' warning to General
Grivas, commander of Greek Cyp-
riot forces, has brought at
least a temporary end to harass-
ing tactics against UN troops.
In Famagusta, however, where
both Greek and Turkish Cypriots
have been strengthening their
defenses, violence could still
break out at any time.
SECRET
No progress has been made
toward starting direct negotia-
tions among the disputants, but
all have agreed to extend the
mandate under which UN troops
are stationed on the island an-
other three months beyond 26
March. UN mediator Galo Plaza
plans to submit his report to
Seciretary .General Thant after
the Security Council extends
the mandate. He probably will
propose no specific solution
but will urge direct negotia-
tions between the Greek and Turk-
ish Cypriots.
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CAMEROON
DEMOCRATIC
REPUBLIC
OF THE
CONGO
-??- International boundary
Province boundary
National capital
* Province capital
Approximate area of
uprising
GABON, 0
BRAZZAVILLE
LEOPOLDVILLE
Kenge
Boma
CENTRAL AFRICAN REPUBLIC
Coquilhatville
Lisala Bumba
Befale
?
7 `
11 e M'a'(tagi
Aketi Klungber
Wamba? .;:..
?
01-la
* Lodja
frinia
? Bun a14
Aambasa c t tetzr di
UGANDA lJ
Be - 1 ? Fort Portal
Kasmdi~) (*'
KAMPA~.A
Tt.n nit /
I %-f~LV~I r711 a
.t~..~
WaiIkale Goma
?
7Juba
:, Aba
Kind-1 N auNi~i)
}'JRWANDAI 1??,,
lid ?KIGALI ~1, r v t
Bukavu~
LGluahourg *
Tshikapa*
r.re.. J
I~ l
Kamina?
,^,.,?,rnmwez ? Jadotville
(it_'Fi 1;d` J
Provincial boundaries have been enterpolalcd from existing
maps and intelligence reports, and are not definitive _ j
Kongolo
~l,ay _*)
Tabora
?
Albertville t
Baudouinaille"
?
Manopo
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Nwf -%001
SECRET
TSHOMBE SCORES MILITARY AND DIPLOMATIC GAINS
Tshomb6's fortunes appear
to be looking up this week on
both the military and diplomatic
fronts.
The threat of serious Ugan-
dan military involvement in sup-
port of the rebels on the Congo's
eastern frontier has receded
for the moment at least.)
The US
Embassy in Kampala believes that
Obote's adventures are looked
upon with disfavor by most Ugan-
dans, and that he may find him-
self in political trouble at
home if be pursues his course
or gets more deeply involved.
There are some indications
now that the alleged bombing of
a Ugandan missionary school on
22 February may have been a prov-
ocation by third parties. No
firsthand reports have been re-
ceived, and Congolese aircraft
are believed to have been clear
of the particular area at the
time of the incident.
Rebel military activity
remains at a rather low level.
Rebels still occupy Mahagi,
north of Lake Albert, but their
.assaults on government positions
south of the town have been
desultory and inept. The secu-
rity situation in Stanleyville
is said to be improving, Rebels
Asia-Africa
no longer menace the city's ap-
proaches, and order has been
largely restored. Downriver
near Bumba, two government col-
umns on 27 February started in
the direction of Stanleyville
to clear the river banks of in-
surgents. Southeast of Kindu 25X1
and on the shore of Lake Tangan-
yika government forces have also
taken the offensive.
The Organization of Afri-
can Unity's special Congo com-
mission and the OAU foreign
ministers began meetings on 25
and 26 February in Nairobi, and
here also Tshomb6's prospects
appear to have markedly improved.
His representatives have handled
themselves well and have re-
portedly created a more favor-
able impression than the rebel 25X1
delegates. A broad grouping
of OAU moderates has formed in
support of Leopoldville, and
the radical African states ap-
pear less cohesive and less
enthusiastic in pushing the
rebel cause than previously.
Tshomb6 himself arrived in
Nairobi on 4 March to present
his case.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
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Europe
The European Coal and Steel I by the Six that something had to
Community (CSC) has taken a sig-
nificant first step toward imple-
menting a common energy policy
which the six member states have
been seeking for seven years. By
unanimously approving a key arti-
cle proposing community subsidies
to coal mines, the CSC Council has
begun to carry out the Energy Pro-
tocol Agreement signed in April
1964 in which the Six formally
agreed on the objectives of a com-
munity energy policy. The Coun-
cil's decision gives the communi-
ty's High Authority considerable
supervisory power over the grant-
ing and administration of the sub-
sidies and, with regard to aiding
depressed regions, increases its
powers even beyond the original
agreement.
The agreement on subsidies
is due primarily to a recognition
be done for the declining coal
industry. To reach it, it was
necessary to overcome German
fears about the extension of com-
munity controls over member
states' social security systems
and Dutch concern over stretch-
ing the provisions of the orig-
inal CSC treaty, and to meet
Belgian and French insistence
that subsidy payments be depres-
sive. The use of subsidies avoids
the need for direct protectionist
measures.
Although a policy covering
all energy markets remains a dis-
tant goal, the High Authority's
increasing prestige is undoubtedly
an important factor in moves to-
ward closer consultation between 25X1
the community and the member
states on other aspects of the
energy protocol.
Recent French attacks on
the present system of interna-
tional financial settlements
have been criticized in European
financial circles because of the
political overtones and the lack.
of prior French consultation
with other interested parties.
There is nevertheless almost
unanimous agreement that reform
of the present arrangements is
in order and that the French
may have achieved one desired
result: spurring the US to
remedy its balance-of-payments
deficit. Most officials, how-
ever, anticipate no sudden
change in the present payments
system and note that French pro-
posals would have the effect of
restricting world trade.
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%wo
European suspicions of
French motives and intentions
include some feeling that the
French hope to increase their
role in the international mone-
tary area before a reversal of
their payments position and in-
tensifying internal problems
(see next article) reveal eco-
nomic weaknesses. Some offi-
cials, however, speculate that
De Gaulle's extreme position
calling for a return to the gold
standard is in fact intended only
to gain support for France's
more moderate proposals for a
new international composite re-
serve unit (CRU).
Some diplomatic circles
note that unless an adequate sub-
stitute is found for the inter-
national monetary reserves which
are presently made available by
the large US deficits, the trend
will be toward creation of "com-
mon currency areas." De Gaulle's
somewhat vague call for a "Eu-
ropean reserve currency" is gen-
erally regarded as premature in
most Common Market capitals,
but EEC President Hallstein has
apparently been pushing the EEC
Commission to undertake studies
:Looking toward "monetary union,"
and German Economics Minister
Schmuecker is advocating, at the
least, agreement among the Six
on common monetary policies.
The EEC Monetary Committee's
report published this week
stressed the importance of
prior consultation among the
Six in order to present a com-
mon front in the IMF and other
international forums.
Some Europeans have also
indicated that EEC differences
with the US and UK now will be-
come more pronounced, and there
is concern these strains could
be aggravated if the UK requests
additional credits from the
IME' before May, when repayment
of its current loan is due.
The immediate issue raised
In Europe by the French posi-
tion on world finance is the
willingness of West Germany and
Italy to continue holding large
dollar and sterling reserves.
Officials in both countries have
indicated that no shift in pol-
icy is in the immediate offing.
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Indications in recent
months of an economic downturn
in France are causing pessimism
in business circles and concern
among Gaullist politicians whose
sights are on the presidential
election in December. These in-
dications include a slow de-
cline in industrial activity,
reduced private capital invest-
ment, rising inventories, and
a general weakening of domestic
demand. The textile industry
has been particularly hard hit,
and its contraction is aggravat-
ing the poor psychological cli-
mate that now prevails in French
industry. These circumstances
do not augur well for the gov-
ernment's aim to achieve a 4-
percent growth in the GNP this
year.
Underlying France's pres-
ent difficulties is the prob-
lem of adapting the country's
economic structures to meet in-
creasing international competi-
tion. France is still handi-
capped by obsolescent, family-
owned enterprises, an inade-
quate, government-dominated
capital market, and insufficient
expenditure on basic and applied
research.
Meanwhile, the government's
economic policy continues to
rest on a stabilization program,
initiated in 1963, which is
keyed to price controls, credit
restraints, and a tight budget.
This program succeeded in hold-
ing; last year's price increases
to less than half the 1963 rate,
but the rigidity with which it
was enforced was partially re-
sponsible for the slowdown in
economic activity.
Finance Minister Giscard
d'Estaing maintains that con-
tinued austerity is necessary
until the economy has made the
adjustment from an inflationary
situation to one of stability.
Other cabinet officials, however,
believe that restraints should
be eased to stimulate an immedi-
ate upturn even though this might
have the undesirable effect of
driving prices up in an election
year. A little inflation, in
their view, would be a lesser
evil than the deepening reces-
sion that would be the price of
inaction.
The government, faced with
more severe economic difficul-
ties than any it has had to deal
with since 1958, will be under
increasing pressure to allevi-
ate the situation to assure a
solid Gaullist victory in Decem-
ber. There are already indica-
tions that some relief measures,
such as limited tax reductions,
are being prepared. French fis-
cal officials, however, are non-
committal about easing the more
drastic restraints like the in-
dustrial price freeze and credit
controls.
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Europe
FINNISH PRESIDENT CONDEMNS WEST GERMAN MEMBERSHIP IN MLF
Finnish President Urho
Kekkonen at the end of his
Moscow visit on 24 February
publicly took the position that
West Germany's inclusion in a
Western multilateral nuclear
force (MLF) would endanger the
peace of Europe. Kekkonen at
least appeared to imply that
the Soviets would be justified
in calling the Finns into
"joint consultations" for mutual
defense under the 1948 Finnish-
Soviet treaty if an MLF were
established. The treaty pro-
vides that Moscow may demand
such talks if the USSR is at-
tacked, or is threatened with
attack, by West Germany or its
allies.
The Soviets had for some
time been pressing Helsinki to
condemn the MLF, but with no
success. Kekkonen, who stayed
NETHERLANDS GOVERNMENT RESIGNS
Prime Minister Marijnen
submitted his resignation on
27 February in the wake of a
cabinet split on the question
of introducing commercial ra-
dio and television into the
Netherlands. Popular opinion
strongly favors entertainment
financed by advertising rather
than the government-sponsored
programs, which are regarded
as too heavily cultural and
educational. Certain influen-
tial religious and political
organizations, however, favor
the status quo.
SECRET
5 Mar 65 CURRENT INTELLIGENCE WEEKLY SUMMARY
on in Moscow after the other
members of his delegation de-
paxted, presumably decided that
an accommodation on the MLF was
a reasonable price to pay to
gel: in good standing with the
new Soviet leaders. His polit-
ical stock in trade has always
been his capacity to get along
with the Soviets, which was
epitomized by a friendly rela-
tionship with Khrushchev.
Kekkonen has nonetheless
touched a sensitive Finnish
nerve and may have handed his
domestic enemies a useful weapon.
The Finns fear that "joint con-
sultations" might give rise to
Soviet demands infringing on
their sovereignty. Kekkonen's
remarks in Moscow have already
provoked the reaction by some
Finnish papers that he departed
from Finland's olic of strict
neutrality.
For the present, efforts
are being directed toward put-
ting together a new cabinet,
and there is hope of averting a
general election. Considerable
time, however, may elapse before
a new government is installed
and able to act on new issues.
In the end, the chances are that
Marijnen's Catholic Party, to
which Foreign Minister Luns also
belongs, will once again emerge
as the principal partner in a
new coalition. i
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Nw
ARGENTINA:
PARTY COMPOSITION OF NATIONAL CHAMBER OF DEPUTIES
Party
Seats Won 1963
Present Seats
Seats at Stake in 14 March Election
People's Radical Civic Union (UCRP)
72
64
37
Intransigent Radical Civic Union (UCRI)
40
18
10
Movement of Integration and
Development (MID)
18
11
National Federation of Center
Parties (FNPC)
Progressive Democrat Party(PDP)
12
11
Christian Democrat Party (PDC)
7
7
Argentine Socialist Party (PSA)
6
6
Democrat Socialist Party (PSD)
5
5
awcNcnuc III
TOTAL
192 180
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SMO
SECRET
Western Hemisphere
ARGENTINE CHAMBER OF DEPUTIES ELECTIONS
The 17-month record of the
Illia government in Argentina
faces its first test by ballot
on 14 March when 98 of 192 Cham-
ber of Deputies seats will be
contested in general elections.
The government party, the
People's Radical Civic Union
(UCRP), should be able to main-
tain its position as the cham-
ber's largest party with about
a third of the seats, even
though many more of these are
at stake than of those held by
other parties. In the UCRP's
favor are a good legislative
record and improving economic
conditions. The government's
effective handling of Peronist
agitation during the past year
as well as the fiasco of Peron's
recent attempt to return also
stands the UCRP in good stead.
In addition, the continuing frag-
mentation and disunity of major
opposition parties, particularly
in the Peronist movement, pre-
sumably will benefit the UCRP.
The Peronist movement is
at present roughly divided be-
tween orthodox supporters of
the pro-Peron Popular Union (UP)
party and the neo-Peronist Con-
federation of Popular Justicial-
ist Parties and Movements. The
majority orthodox Peronists,
who obeyed Peron's order to
cast blank ballots in the 1963
election, accounted for about
16 percent of the ballots in
that election. The neo-Peron-
ists polled 9 percent of the
total and won 22 seats in the
chamber--12 of which they will
have to defend in the coming
election. Both Peronist wings
are expected to gain seats at
the expense of other parties,
but their own incompatibility,
together with the proportional
representation system now in
effect, will probably preclude
gains in the lower house which
the military might consider
"excessive." The orthodox Per-
onists will probably receive
considerable support from the
Argentine Communist Party.
The government's attitude
of "tolerance" toward the Peron-
ists, along with its controver-
sial economic policies, has pro-
duced a sense of uneasiness in
certain Argentine circles, par-
ticularly among the military.
The military probably will not
try to prevent Peronists from
participating in the elections,
but they will carefully observe
the results in terms of judging
the government's ability to cope
with Peronism in the future.
There are indications that
on 14 March Peron will temporar-
ily leave Spanish soil--where
he is forbidden to engage in po-
litical activity--in order to
deliver a speech to his Argentine
supporters. This could deter-
mine how the Peronists will vote
and thus provide a new measure-
ment of their current strength
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
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SECRET
Western Hemisphere
The Castello Branco ad-
ministration has strengthened
its position by persuading
members of several political
parties to form a progovern-
ment coalition in the Brazil-
ian Chamber of Deputies. The
nucleus of the coalition,
known as the Parliamentary
Action Bloc (BAP), is the
conservative National Demo-
cratic Union (UDN). Its other
elements are factions of the
two other major Brazilian
parties--the Social Democrats
and the Labor Party--as well
as deputies from several small
political groups.
In the past, the admin-
istration has had the consist-
ent support of only about one
third of the 409 deputies.
The BAP, however, promises to
give it at least a slight ma-
jority in Congress on most im-
portant issues.
The BAP weathered its
first test of strength last
week when the chamber elected
its officers. Most of the
coalition candidates won, some
in hard-fought races. Its
nominee for chamber president,
Bilac Pinto, won a three-way
contest by polling 200 of the
393 votes cast.
Should the BAP consolidate
its early success, there is a
strong possibility that Castello
Branco will move a step further
and attempt to turn it into a
political party.
The strong regional and
state orientation of Brazil's
present parties present for-
midable obstacles to the estab-
lishment of a new, nationwide
party. Many political leaders
nevertheless fear that the
emergence of the BAP may cause
splits in their respective
parties which will be difficult
if not impossible to repair.
They note, in particular, the
Social Democrat and Laborite
defections to the BAP. In any
case, the development of a
solid government bloc may well
tend to promote a political
polarization between those who
support the government and those
who oppose it, regardless of
their present obligations.
SECRET
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NOW
SECRET
ern Hemis
Western
POLITICAL CLIMATE WORSENS
The recent death of Presi-
dent Giannattasio and his re-
placement on the nine-man Na-
tional Council of Government
(NCG) by former foreign minis-
ter Zorrilla de San Martin may
hasten the deterioration in
Uruguay's political situation
by paralyzing decision making
in the NCG. Although Zorrilla,
like Giannattasio, represents
the Orthodox Herrerista faction
of the governing Blanco party,
he is much truer to Herrerista
nationalism and will undoubtedly
join fellow Herrerista Heber
and the three minority Colorado
party councilors in frequent
obstruction of proposals of the
four Blanco Democratic Union
(UBD) members.
Government ineptitude and
a worsening economic situation
have combined to produce a seri-
ous decline in public morale.
Uruguay's democratic traditions
and apolitical military estab-
lishment have been major factors
in discouraging extraconstitu-
tional change, but the climate
is rapidly becoming more propi-
tious for a coup, and the mili-
tary is showing an unusual will-
ingness to speak out on politi-
cal matters. Influential civil-
ians who have stoutly supported
democratic government have
stated that they could no longer
defend the present system. A
major deterrent to a coup is
the lack of a leader capable of
forming a viable government.
Fear of a coup has inten-
sified public and party discus-
sion of constitutional reform.
Al'.l Blanco factions have pub-
licly supported re-establishment
of the single executive. The
new NCG president, UBD Councilor
Beltran, is a strong proponent
of reform but will face a per-
plexing variety of proposals
from within his own party and
the opposition Colorados. His-
torically tied to the plural
executive system, the Colorados
nevertheless also realize the
need for a, change and favor a.
collegial system with a permanent
president and four members re-
presenting only the majority
party. Colorados will move slowly
toward reform, believing that
they stand to win the 1966 elec-
tions and will then be able to
make changes favorable to them-
selves.
Uruguay's vocal leftist
labor and student groups continue
to call for economically unreal-
istic pay increases. The threat
of crippling strikes, a serious
economic setback, or a. breakdown
in public order could trigger
a coup before the forces working
for constitutional reform are
able to produce an acceptable
SECRET
phere
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err'' *404
SECRET
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