WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A005000030001-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 36
• Document Creation Date: December 20, 2016
• Document Release Date: July 11, 2006
• Sequence Number: 1
• Publication Date: August 27, 1965
• Content Type: SUMMARY

ase 2007/03/07: CIA-RDP79-00927AV60990jWj1Pt 1965
OCI No. 0304/65
Copy No. t .3
OFFICE OF CURRENT INTELLIGENCE
NAVY review(s), completed. State Dept. review
completed
RETURN TV-
SECRET
IMMEDIATELY AFTER USE GROUP I Excluded from automatic
Approved, ea 31 bRD]57"0927AO05'DOO63ObOj,49toding and deciassificotion
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(Information as of noon EDT, 26 August 1965)
VIETNAM
US Marines and South Vietnamese forces met only scat-
tered resistance in mopping-up operations near Chu Lai
where US Marines scored a decisive victory over Viet
Cong forces last week. Elsewhere the VC launched a
new series of small-scale attacks near Saigon. Weekly
statistics reveal the VC casualties are still running
high and the weapons loss ratio is highly favorable
to the government. Premier Ky is discounting neutralist
coup rumors and concentrating on his plan for an alliance
of non-Communist Asian nations. Six more SAM sites have
been detected in North Vietnam, bringing the total to
16, not all of them capable of firing a missile.
CURRENT SOVIET ATTITUDE TOWARD THE US
Relations between the USSR and the US continue to
deteriorate and there are increasing indications that
the cultural exchange program will be jeopardized.
Moscow is still carefully keeping the breakdown within
limits.
COMMUNIST CHINA BUYS MORE GOLD
The purchases, totaling $135 million, are apparently
intended as a hedge against a devaluation of the pound
as well as to build up China's scanty gold reserves.
IMPLEMENTATION OF THE SOVIET MILITARY AID PROGRAM
Major Soviet military equipment deliveries to free
world underdeveloped countries are now taking place,
largely in fulfillment of aid pacts reached in 1964.
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RESULTS OF THE RECENT RUMANIAN GRAND NATIONAL ASSEMBLY SESSION 13
The session demonstrated the political strength of the
new party secretary, Nicola.e Ceausescu, but the personnel
changes do not appear to signal any fundamental change in
Rumania's policy toward the West.
PUBLIC DISSATISFACTION BLUNTS YUGOSLAVIA'S ECONOMIC REFORM 14
The regime had to reinstate price controls on some
commodities after substantial price increases caused
considerable public dissatisfaction with the government's
month-old economic reform.
MALAYSIA-SINGAPORE WORKING OUT NEW RELATIONS 1 15
Botii recognize their mutual dependence and are making
some progress in matters of trade and defense.
INDIA FACES BLEAK FOOD SUPPLY PROSPECTS
Lack of rain has set the stage for a recurrence of
last year's shortages. Food prices are already
rising rapidly, causing several food riots.
GRADUAL ESCALATION OF FIGHTING CONTINUES IN KASHMIR
The situation is becoming more serious as fighting
spreads along the cease-fire line.
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EGYPT AND SAUDI ARABIA AGREE ON YEMEN SETTLEMENT
The agreement will save face for Nasir and Faysal,
but it may be difficult to get the Yemenis to comply.
NEW GREEK PREMIER AWAITS CONFIDENCE VOTE
Premier Tsirimokos' week-old government faces an un-
predictable parliamentary confidence vote within the
next few days.
CONGO'S KASAVUBU AND TSHOMBE'STILL AT ODDS
They apparently distrust each other as much as ever,
but no showdown is in sight.
Europe
FRENCH MILITARY SALES TO SOUTH AFRICA
Paris contends that a full embargo on military equip-
ment would not induce Pretoria to liberalize its racial
policies and maintains that equipment sold under
France's selective embargo cannot be used for internal
repression.
NORWAY'S NATIONAL ELECTIONS
Norway's four non-Socialist parties have the best
chance in decades to unseat the Labor party which has
governed the country since 1935 in national elections
on 12-13 September.
Western Hemisphere
DOMINICAN REPUBLIC NEGOTIATIONS
A negotiated settlement of the Dominican crisis is
still stalled as both sides have taken positions
that will cause further delay.
VENEZUELAN TERRITORIAL CLAIM ON BRITISH GUIANA
Caracas considers almost 70 percent of British Guiana
a "zone of dispute," claiming that the 1899 border
arbitration is invalid. The decision to press the
claim again now probably results from the belief that
Britain would be more likely to negotiate than would
an independent Guiana.
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STUDENT OPPOSITION TO THE BRAZILIAN GOVERNMENT
A law regulating student affairs and organizations and
curtailing student political activities is at the heart
of the disagreement. The hostility does not presently
pose a serious problem but it could eventually become
one.
URUGUAYAN REFORM PROSPECTS SEEM DIM
Politicians who oppose reform of the unwieldy nine-
man executive seem to be gaining ground, and advocates
of reform cannot agree on how it should be effected.
REACTIONS TO US POSITION ON ARTICLE 19 28
UN members are generally pleased with the new US position
and many are suggesting ways to erase the UN's $107-
million debt. The USSR is still seeking assurances that
the article will not be raised again.
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The Military Situation
In South Vietnam
The most significant engage-
ment to date between Viet Cong
and US ground forces took place
several miles south of Chu Lai
Air Base in Quang Ngai Province
during 18-20 August, resulting
in a decisive US Marine victory
over the First Viet Cong Regi-
ment. Marine forces, with naval,
air, and amphibious support, in-
flicted confirmed Communist
losses of 621 killed and 52 cap-
tured; American casualties to-
taled 51 killed and 203 wounded.
After the main battle, mop-
ping-up operations conducted
over several days by US and Viet-
namese forces met only scattered
resistance. Saturation bombing
of the suspected location of
another enemy regiment 50 miles
south of Da Nang by US B-52 jet
bombers from Guam on 23 August
further highlighted military
actions in the First Corps Tac-
tical Zone.
The situation in the central
highlands, however, remains se-
rious. On 19 August, an estimated
two Viet Cong battalions in Kon-
tum Province overran the district
town of Dak Sut and a nearby Spe-
cial Forces camp. On 25 August,
a brief mortar attack was made
on Dak To, now the only district
town in the province still under
government control.
On the government side,
the multibattalion relief force
which arrived at the Special For-
ces camp at Duc Co in western
Pleiku Province on 11 August was
unable to re-establish signifi-
cant contact with Viet Cong for-
ces, and withdrew a week later.
A subsequent road-clearing op-
eration conducted by part of the
relief force north along Route
14 from Pleiku city met little
or no opposition. A government
convoy was able to reach Kontum
city for the first time in five
weeks.
Viet Cong activity else-
where during the past week in-
cluded a new series of small-
scale attacks near Saigon. Over-
all statistics for the week end-
ing on 21 August indicated a con-
tinued high level of Viet Cong
casualties, a significant decline
in the number of incidents in-
itiated by the Viet Cong, and
a weapons loss ratio highly fa-
vorable to the government.
The Political Situation
In South Vietnam
The government's recent
manpower mobilization decree ap-
pears to have been the immediate
cause for a series of student
protest meetings in several
cities during the past week.
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HAI LAfND
;*Hue
L -' -Da Nang
Pakse Dak Suf: Gh~u Lai
Dak to uangNgai
.J KunIUrr:
r -Rt 19
Ducf :Co 11 I :tat
Mao-ffi-Mg.:..
s n2.
Ort Bayard ,.. ;
3Hai-an -?i
{ Hai-k'bu
Chia-lai-shih
H A I N AN
tL
.Ling-shui
Yalin
aNha Trang
k,. ,.?A? \ ~..~ ~*.../ - Da Lat
PHNOM-
PENH Phan Rang
~? Bien Hoa -
.. .._/` SAIGON % Phan Thiet
04 -Y
R isifln
MACAO LONG KONG
QUANG
1 NGAI
PHU
YEN
The Indochina - South China Area
iiiiiiiiiiiiia-- >iiuth Vietnamese military
boundaries
II CORPS
`Rung Sat Special Zone (VNN)
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Student rallies in Hue during
20-23 August culminated in a de-
mand for the replacement of the
current military regime with a
legally elected government, while
a subsequent student meeting in
Saigon specifically called for
the abolition of the mobiliza-
tion decree.
A modification of the draft
law has been announced which ex-
empts certain occupational cate-
gories from regular military
Lai has evidently led to some
sensitivity among members of the
Vietnamese Joint General Staff,
although the protests of I Corps
commander General Thi concerning
the independence of American
military operations were met
with indifference by staff mem-
bers earlier this month. Gen-
eral Westmoreland has stated
that, in the future, attempts
will be made to include Viet-
namese forces in the initial
stages of large-scale operations
so that they may share in the
credit.
Military Developments
In North Vietnam
On his return to Saigon from
a brief trip to Thailand, Premier
Ky paid little attention to
neutralist coup rumors which had
developed in his absence and con-
centrated instead upon aspects of
an alliance of non-Communist
Asian nations. He emphasized
that such an alliance should be
primarily economic, since the
commitment of American military
power in Southeast Asia would
deny the Communists a military
victory. Ky also announced that
South Vietnamese delegations
would be sent to South Korea and
Malaysia in the near future,
presumably to further his plan
for a non-Communist alliance.
The recent publicity given
the US Marine victory near Chu
The proliferation of Hanoi's
surface-to-air missile defenses
continued during the past week,
and sites were discovered. The 25X1
total number of sites detected
to date is 16.
Not all of the sites are
capable of firing a missile,
however. The precise amount of
SAM gear in North Vietnam re-
mains uncertain because of the
mobility of the equipment
However, at least five of the
sites in the Hanoi ring are con-
sidered operational and one of
the three most recently detected
sites--site 16--had a full com-
plement of missiles.
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NORTH VIETNAM : SURFACE -TO-AIR MISSILE SITES
oncentration of Surface-to-Air
L M JJ c"
(SAM) radius - 17.8 NM
Possible location of SAM site o SAM SITES
involved in 24 August shoos ?Confirmed
down of US Navy F4B OTentatively identified
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Since many of the sites in
the Hanoi area are in close prox-
imity--some within a mile or two
of each other--it appears that
the number of fixed prepared
positions is intended to be
greater than could be armed with
the SAM equipment available, The
equipment is probably being moved
rapidly from one position to an-
other
In addition to the 16
sites now listed, as yet unde-
tected sites probably exist. On
24 August a navy F4B Phantom was
shot down by a SAM from a probable
temporary site while performing
an armed reconnaissance mission
in the Thanh Hoa area of central
Vietnam. This is the fourth US
aircraft, including one drone, lost
to SAMs. Two other losses this
past week brings the total of US
aircraft lost over North Vietnam
to 90.
The daily pace of 1J air
strikes against the LttV coi: c inueu
during the past week, highlighted
by a strike against a suspected
concentration of missile equip-
ment near Kep, on the Sino-DRV
rail line some 36 miles northeast
of Hanoi. The results of the
raid--the first in this strategic
area--were obscured by smoke and
dust. Further strikes in this
area or along the major rail line
leading to Last China would prob-
ably provoke determined North
Vietnamese and possibly Chinese
Communist defensive measures, pos-
sibly including the commitment
of fighter forces to air-to-air
combat.
Photographyl re-
vealed construction under way on the
northern part of the Hanoi - Dong 25X1
Dang rail line, probably to increase
the capacity of this main supply
route from China.
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Relations between the So-
viet Union and the United States
continue to deteriorate since
President Johnson's 28 July state-
ment on plans to step up US sup-
port in Vietnam. There are in-
creasing indications that the
cultural exchange program between
the two countries will be jeop-
ardized.
Soviet stalling on a num-
ber of scheduled cultural ex-
changes is believed to reflect
a recent policy decision which
may lead to the cancellation of
some exchanges already under
contract. There have been im-
plied threats to stop the dis-
tribution of the US cultural
magazine Amerika.
There have been a number of
high-level Soviet denunciations
of US policy,and insulting at-
tacks on the President personally
are occurring more often in the
Soviet press. Kommunist, the So-
viet party's leading eoretical
Journal, devoted a lead editorial
to indicting "Johnsonian global-
ism." A 21 August Pravda "open
letter" signed by leaking Soviet
intellectuals exploited recent
events in Los Angeles to condemn
the President's policies.
Even as Soviet propaganda
media are sounding a more stri-
dent note, Soviet officials pri-
vately are making it quite plain
that under the circumstances bi-
lateral cultural exchanges are
bound to suffer. Premier Kosygin
foreshadowed this shift to a
harder line on 21 July when he
told Governor Harriman that "the
Vietnam issue cannot help but
have its reflection on all these
matters...as the situation ham-
strings us, and you as well, all
along the line."
Moscow, however, apparently
still wants to keep the deterio-
ration in relations within care-
ful limits, and is proceeding
with great caution to avoid a
direct confrontation with the
US in Vietnam. Indeed, the
USSR's unwillingness to react
in kind to US military moves
in Vietnam forces Moscow to turn
to bilateral exchanges as one
of the few alternative avenues
for retaliation.
The Soviet leaders are well
aware that a policy of militant
antagonism toward the US would
play directly into Chinese Com-
munist hands and concede Peking
a major victory. This may, in
part, underlie Moscow's moves to
resume the Geneva disarmament
talks as well as its reluctance
to exploit the recent US action
at the UN to lay aside the
Article 19 question. In any
case, the Soviet leaders appear
determined to pursue their inter-
ests despite the Chinese, who
have persistently attempted to
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impugn the validity of the basic
goals of Soviet foreign policy--
in particular the tenet of peace-
ful coexistence.
Recent authoritative Soviet
editorials have thus attempted
to strike a balance between Mos-
cow's "unflinching" support for
the DRV "not by words, but by
deeds," and the necessity to re-
main flexible in talks and ne-
gotiations with the imperialists
and the US in particular. These
articles bitterly attack "those
inclined toward risky foreign
policy actions and adventurism";
point up the need to be ready
for "agreements in the interest
of peace"; and reaffirm the
USSR's commitment to the policy
of peaceful coexistence despite
the "mounting international
tension" resulting from in-
creased "acts of aggression"
by the US.
Peking's increased trade
earnings this year support its
continued gold buying on the
London market. These purchases
now total $135 million, and are
apparently a hedge against a
possible devaluation of sterling
as well as a way to build up
China's scanty gold reserves
which are estimated at around
$300 million. In addition, Pe-
king maintains substantial hold-
ings of foreign currencies,mostly
in sterling, for trade purposes.
So far, about $75 million
worth of gold has been shipped
to China; the remainder is stored
in the UK. More purchases are
expected, and further shipments
to Peking--probably on chartered
Pakistani International Airlines
(PIA) aircraft--will probably
take place in the near future.
Despite heavy outlays for
Western products such as grain
and fertilizer, China's carefully
managed trade with the free world,
which is expected to be up 20 to
25 percent this year, is provid-
ing Peking with extra foreign ex-
change. China's trade earnings
from Hong Kong, for example, its
largest source of foreign ex-
change, are expected to reach
about $420 million this year,
over $80 million higher than last
year's record level. A sizable
part of these surplus funds is
apparently to be used to buy gold
this year rather than to prepay
grain debts as China has done in
the past. There has been no evi-
dence of prepayments this year,
whereas last year Peking probably 25X1
spent over $100 million paying
off free world debts ahead of
schedule.
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Major Soviet military equip-
ment deliveries to free world un-
derdeveloped countries are now
taking place, largely in fulfill-
ment of aid pacts reached in 1964.
Egypt is believed to have re-
cently received at least three
z'U-7 supersonic tactical fighter
bombers (Fitter), and two more sub-
marines are expected to arrive in
Alexandria shortly. This is the
first time the SU-7 has been ex-
ported to a non-Communist country.
Other recent arms shipments sup-
porting long-range programs in ef-
fect for several years have in-
cluded land armaments, aerial bombs,
MI-6 helicopters,and equipment for
Egypt's surface-to-air missile
(SAM) systems.
Military shipments to Iraq
continue. The latest was the de-
livery of three AN-12 transports
in July. Twenty MIG-21 jet air-
craft, scheduled to arrive in the
second half of 1965, will complete
major equipment deliveries under
the June 1964 arms deal.
Algeria is currently absorb-
ing the large amount of equipment
which flowed in during the past
year. Four Soviet submarine
chasers are expected later this
year, presumably with Algerian
crews who are expected to return
soon from training in the USSR.
Soviet arms aid elsewhere
in Africa has not been massive.
The fifth delivery of ground
forces equipment arrived in Congo
(Brazzaville) in July under an
apparent early 1965 arms pact.
Future deliveries may include
some aircraft. There are at
least 60 Congolese taking avia-
tion training in the USSR.
The USSR appears to be respond-
ing to renewed Guinean interest in
Soviet military aid, and a new ar-
rangement may have been agreed upon
in July when Premier Toure visited
Moscow. Two P-6 motor torpedo
boats were delivered this month--
the first military delivery to
Conakry since 1962 when shipments
were completed under the 1960 So-
viet-Guinean arms agreement.
Somalia, which is coping
with major maintenance problems on
ground forces equipment and planes
already delivered,has just sent
94 more military personnel to the
USSR for training.
In Asia, Moscow's most promis-
ing customer is India. Deliveries
in recent months have included jet
aircraft and SAM equipment, and
for the first time, 130-mm. artil-
lery and PT-76 tanks. On 14 August,
an Indian naval delegation left
for Moscow to discuss the purchase
of four late model submarines and
other naval craft.
The USSR is scheduled to de-
liver MIG-21 aircraft to Afghanistan
this month. Earlier this year
about 60 Afghan Air Force officers
went to the USSR for MIG-21 train-
ing. To "complete" the Afghan air
defense system, the first training
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courses on the operations and main-
tenance of SAM equipment, which
Afghanistan received over a year
ago, are scheduled to begin this
fall.
Three MI-6 helicopters have
been delivered to Indonesia un-
der the most recent arms pact--
Four submarine chasers, seven tank
landing craft, and mobile coastal de-
fense cruise missiles are expected to
arrive during the next four months.
The first Soviet military de-
liveries this year to Cuba arrived
in July, and apparently consisted
chiefly of spare parts and mainte-
nance gear. More deliveries are ex-
pected, because much of the solid-
propellant fuel and many booster
engines for Cuba's SAMs are reaching
the limit of serviceability1
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Changes in Rumanian Government
20 August 1965
OLD GOVERNMENT
NEW GOVERNMENT
Council of State
STOICA, Chivu
President
STOICA, Chivu
MAURER, Ion Gheorghe
Vice President
CRACIUN, Constanta
VOITEC, Stefan
Vice President
GERE, Mihai
BORILA, Petre
Vice President
BORILA, Petre
BUNACIU, Avram
Vice President
MURGULESCU, Ilie
GEAMANU, Grigore
Secretary
GEAMANU, Grigore
Council of Ministers
MAURER, Ion Gheorghe
Premier
MAURER, Ion Gheorghe
APOSTOL, G.
First Vice Premier
APOSTOL, G.
BODNARAS, Emil
First Vice Premier
BODNARAS, Emil
DRAGHICI, Alexandru2
First Vice Premier
BIRLADEANU, Alexandru
GASTON-MARIN, G.
Vice Premier
GASTON-MARIN, G.
RADULESCU, Gogu
Vice Premier
RADULESCU, Gogu
RADOI, Gheorghe
Vice Premier
BANC, losif
BLAJOVICI, Petre
Vice Premier
BLAJOVICI, Petre
VERDET, Ilie
Vice Premier
VERDET, Ilie
BIRLADEANU, Alexandru
Vice Premier
FAZEKAS, Janos
SALAJAN, Leontin Gen.
Armed Forces
SALAJAN, Leontin Gen.
MOSORA, Dumitru
Construction Industry
MOSORA, Dumitru
LEVENTE, Mihail
Domestic Trade
LEVENTE, Mikhail
BALAN, Stefan
Education
BALAN, Stefan
VIJOLI, Aurel
Finance
VIJOLI, Aurel
FAZEKAS, Janos
Food Industry
SCHIOPU, Bucur
MANESCU, Corneliu
Foreign Affairs
MANESCU, Corneliu
PETRI, Mihai
Foreign Trade
CIOARA, Gheorghe
SLIDER, Mihai
Forestry
SLIDER, Mihai
MARINESCU, Voinea
Health and Social Welfare
MARINESCU, Voinea
DRAGHICI, Alexandra 2
Internal Affairs
ONESCU, Cornel
DUMITRIU, Adrian
Justice
DUMITRIU, Adrian
SENCOVICI, Alexandru
Light Industry
SENCOVICI, Alexandru
MARINESCU, Mihai
Machine Construction
MARINESCU, Mihai
MARINESCU, Ion
Metallurgical Industry
MARINESCU, Ion
ALMASAN, Bujor
Mines
ALMASAN, Bujor 3
(not applicable)
Electric Power
DRAGANESCU, Emil
FLORESCU, Mihail
Chemical Industry
FLORESCU, Mihail4
( not applicable )
Petroleum Industry
BOABA, Alexandru
SIMULESCU, Dumitriu
Transport and Telecommunications
SIMULESCU, Dumitriu
DALEA, Mihai
President, Higher Agricult. Council
GIOSAN, Nicolae
CRACIUN, Constanta
President, State Committee for
MACOVEI, Pompiliu
Culture and Art
GASTON-MARIN, G.
President, State Planning Commission
MOLDOVAN, Roman
Names in blue are new appointees.
1) Prior to the Grand National Assembly session on 20 August 1965, there was only one First Vice Premier.
2) Relieved of position as Minister of Internal Affairs at 9th Party Congress last July.
3) Formerly head of combined Ministry of Mines and E!ectric Power.
4) Formerly head of combined Ministry of Chemical and Petroleum Industries.
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RESULTS OF RECENT RUMANIAN GRAND NATIONAL ASSEMBLY SESSION
Convened within a month of
the ninth Rumanian party congress,
the 20 August session of the
Grand National Assembly demon-
strated the political strength
of the new party general secre-
tary, Nicolae Ceausescu. A new
constitution enunciating an in-
dependent course for the country
and preparing for further evolu-
tion toward a national Communist
society was ratified. The ses-
sion also enacted certain struc-
tural and personnel changes..of
benefit to Ceausescu.
At Ceausescu's prodding, the
Assembly established a "permanent
bureau of the Council of Minis-
ters." This new supraexecutive
organ corresponds in importance
to the new permanent presidium
of the party established at the
party congress. Both appear de-
signed to stress the collective
nature of decision-making in the
Rumanian party and government,
and to promote executive effi-
ciency. Although the personnel
roster of the permanent bureau
has not been announced, Ceausescu
probably will hand-pick from
among Premier Maurer, State Coun-
cil President Stoica, and First
Vice Premier Apostol to head this
new body which may include the
first vice premiers as well as
all six vice premiers.
Although some significant
changes in the top government
team emerged, the recent Assem-
bly session mainly highlighted
the continuity of Rumania's
collective leadership. Ceausescu,
as the first among equals, con-
solidated his position relative
to the other member's of the rul-
ing quadrumvirate--Apostol,
Maurer, and Stoica--by cutting
back their areas of responsi-
bility and by moving some of
his younger supporters into
state as well as party posi-
tions. In this connection,
Maurer was relieved of his po-
sition as vice president of the
Council of State but retained
his responsibilities as pre-'
mier.
In addition to Maurer,
planning chief Gaston-Marin and
Foreign Trade Minister Petri
were replaced. Each has worked
effectively for closer economic
relations with the West, and
particularly the US, but they
reportedly have been criticized
for failures in some of their
domestic responsibilities.
Their apparent downgrading,
therefore, does not appear to
signal any fundamental changes
in Rumania's policy toward the
West.
SE CRE T
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Considerable open dissatis-
faction with Yugoslavia's month-
old economic reform has prompted
the regime to reinstate price
controls on some consumer essen-
tials only a week after they were
lifted. This will reduce some of
the long-range benefits expected
from the reform, one of which was
to allow prices to fluctuate
freely and thus reflect supply
Popular feelings became
clear soon after 26 July when
the reform measures were placed
in effect. The immediate results
were quick price rises and a
drop in real incomes. In Zagreb,
for example, prices of household
gas rose 100 percent, other fuel
75 percent, and bread 46 percent,
sending the cost of living sub-
stantially above the original of-
ficial prediction of 22 percent.
Fed by rumors of further
price increases and job reduc-
tions, pressures began building
for the regime to increase wages
immediately to partly offset the
price increases. On 4 August the
Federal Executive Council an-
nounced that increases in prices
for communal services, electric-
ity, rents, and retail prices of
fresh meat would be temporarily
limited. The Federal Price Of-
fice and Federal Economic Cham-
ber also reportedly are planning
to issue warnings that, if nec-
essary, additional limits could
be set. In addition, a ten-per-
cent advance wage payment to
government agencies was allocated,
and certain enterprises have ap-
parently already paid advances
on salaries.
The regime's actions prob-
ably will allay unrest over the
reforms for awhile. However,
the reinstitution of some price
controls will provide ammunition
for opponents of the liberaliza-
tion program. Certain of the
more orthodox and doctrinaire
Marxists members in the govern-
ment, party, and trade unions are
apparently arguing that the re-
forms are too radical. For the
time being, however, the regime
leadership is committed to eco-
nomic liberalization and it has
the will and the authority to
continue to press for decentrali-
zation despite the temporary
need to interfere in the economy
by controlling prices.
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Asia-Africa
Malaysia and Singapore are
making some progress working out
their new relationships, with each
recognizing its dependence on the
other. Some trade restrictions be-
tween the two have been removed,
and a joint defense council has
been formed. Singapore has agreed
to send an infantry battalion to
Borneo, as scheduled before the
secession.
The Tunku has visited Borneo
to talk to the local leaders and
seems to have blunted the seces-
sionist movements in Sabah and Sara-
wak, at least temporarily. Some in-
crease in autonomy for Sabah may be
planned, which Sarawak will also
claim.
been shelved.
The Indonesians have made it
plain that they intend to continue
the confrontation with both Singa-
pore and Malaysia. The question of
possible diplomatic relations be-
tween Singapore and Djakarta has
Delayed and spotty monsoon
rains have dashed Indian hopes for
an abundant foodgrain harvest later
this year, setting the stage for a
recurrence of last year's severe
food shortages. Food prices have
already begun to rise rapidly,trig-
gering several food riots.
even with abundant
rains from now on, Indian farmers are
unlikely to produce more than 85
million metric tons of foodgrain in
the agricultural year ending June
1966. Last year's output was 87.5
million tons. The lower harvest
would, moreover, represent a seri-
ous setback in Indian efforts to
overtake an annual foodgrain demand
now running at about 94 million tons
and expanding by more than two mil-
lion tons each year.
Such a deficiency would also
require imports at a level that
would severely strain India's out-
moded harbor facilities. Even the
present PL-480 deliveries--one ship-
load daily--are frequently delayed
by port congestion. It is estimated
that no more than 8-10 million tons
of grain can be moved into the coun-
try each year by present cargo-han-
dling methods. Port labor strongly
opposes mechanization, and any im-
provement in port efficiency will
come slowly.
The Shastri government is moving
earlier this year than last to miti-
gate the effects of the shortage.
Food rationing will be extendedtoall
eight of India's cities having a pop-
ulation of over one million. Later
the program will be expanded to in-
clude cities of over 100,000, a move
which would involve 40 million people
in 110 cities. Plans have also been
made for better government control
over the flow of grain from surplus
to deficit states. These programs
will place great demands upon In- 25X1
dia's limited administrative re-
sources, however, and effecti Im-
plementation may take ears.
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The situation in Kashmir is
growing more serious as Pakistani
guerrillas continue to operate
inside Indian Kashmir. The 16-
year-old cease-fire line, more-
over, is taking on the character-
istics of a fluid if limited bat-
tle line.
India's deliberately in-
creased belligerence along the
cease-fire line is at least par-
tially satisfying domestic pres-
sures to escalate the conflict.
Pakistani frustrations are re-
ported mounting as the infiltra-
tors meet with diminishing success
and as the fighting turns more
conventional on the cease-fire
line, which both sides may be in
the process of redrawing.
A major casualty of the pres-
ent confrontation may be the long-
standing UN effort to keep the
peace in Kashmir. The success
of the small UN observer group in
Kashmir has long been predicated
on the tacit willingness of both
protagonists to accept the status
quo, however many potshots might
be fired across the fixed 1949
cease-fire line.
Pakistan's activities since
5 August, and indeed India's ac-
tions in the months before to incor-
porate fully the portion of
Kashmir it rules, have essentially
created a different set of ground
rules. The possibility of further
escalation, even if confined only
to Kashmir, would further outdate
the UN mandate.
India is noticeably unhappy
that the UN has thus far failed
to castigate Pakistan for the
present turn of events, and
New Delhi seems to have weighed
in against Under Secretary
Bunche's proposed trip to South
Asia on the ground that the
situation needed no new fact
finder.
There are indications that
Pakistan too sees no useful role
for the UN and, in fact, some
Pakistanis may be counting in-
stead on British intervention--
as in the Rann of Kutch crisis--
should the situation in Kashmir
verge on war. It may be that only
a direct Commonwealth initiative,
consistent with the new ground
rules now developing in Kashmir
and with the British in the van,
can deter the protagonists
threatening the peace in South
Asia for the second time this
year.
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EGYPT AND SAUDI ARABIA AGREE ON YEMEN SETTLEMENT
Egypt and Saudi Arabia have
agreed on a settlement of the
civil war in Yemen, but implemen-
tation may prove extremely dif-
ficult.
President Nasir met with
King Faysal in Jidda this week,
and the two leaders signed a nine-
point agreement. The pact ap-
pears to have been designed to
The interim conference
will be held in Yemen at Haradh
near the Saudi border and will
be faced with the difficult
problems of deciding the form
of government for the transi-
tional period, of selecting the
members of a caretaker cabinet,
and of choosing the form and
system of the referendum.
ring the war to a
c ose. It was allegedly negotiated
after prior consultation with the
leaders of both Yemeni factions.
The agreement covers the 15
months leading up to a national
referendum by 23 November 1966,
in which the Yemeni people will
determine their political future.
The first and most important step
of the period occurs between now
and 23 November 1965. During
these crucial three months, both
the republicans and loyalists
will have to bring about an ef-
fective cease-fire and cooperate
with Saudi Arabia and Egypt in
setting up an interim conference
of 50 members, "as shall be
agreed on."
The cease-fire is to be en-
forced by a joint peace team which
will have the assistance of a
"joint force from the two states
...to put an end to any violation."
This appears to mean that a Saudi-
Egyptian military unit will help
enforce the peace.
Saudi Arabian aid to the
royalists is to cease completely,
and during the ten months fol-
lowing the conference the Egyp-
tian forces are to withdraw
from Yemen. The last two months
will be used to organize the
national referendum, which may
be supervised by a neutral com-
mittee representing Saudi Arabia
and Egypt, if the national con-
ference feels that this pre-
caution is necessary.
Solution of the Yemen prob-
lem has always involved two
main points. First, the prestige
of the real principals, Nasir
and Faysal, had to be upheld by
whatever agreement was reached.
Second, the intense bitterness,
often having long historical
roots, between warring Yemeni
tribes had to be overcome. The
agreement appears to have ac-
complished the first objective
admirably. The problem of
bringing feuding tribes to the
peace table may prove insuper-
able, however.
SECRET
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SECRET
Premier Tsirimokos' week-old
government faces an unpredictable
parliamentary confidence vote
within the next few days.
Tsirimokos' prospects for par-
liamentary approval suffered a set-
back on 26 August when Progres-
sive Party leader Markezinis an-
nounced he would withhold his sup-
port. At least three of the other
seven progressive deputies, how-
ever, may vote for the new premier.
Tsirimokos now must garner a siz-
able number of defectors from among
the Center Union deputies now sup-
porting ex-Premier Papandreou.
Papandreou continues to de-
mand a new election as the only
"sensible" end to the crisis. Q
the
King may make such a move should
Tsirimokos fail to get a vote of
confidence, although he has pre-
viously been strongly opposed to
early elections.
The security forces will re-
main on the alert during the pro-
ceedings in Parliament, No serious
incidents have occurred since the
riots last week, but there is a
possibility of further trouble in-
asmuch as the Communists and left-
of-center forces are likely to
call for continued demonstrations.
CONGO'S KASAVUBU AND TSHOMBE STILL AT ODDS
The struggle between President
Kasavubu and Premier Tshombd re-
mains unresolved, and the two ap-
parently distrust each other as
much as ever. The planned conven-
ing of parliament in early Septem-
ber is uncertain, now that the
court of appeals has declared elec-
tions irregular in a fourth prov-
ince, Maniema.
Kasavubu continues to say he
intends to rename Tshombd premier
of a new transitional government,
to hold office until presidential
elections some six months after
parliament convenes. Minister of
Interior Victor Nendaka, appointed
by Kasavubu in July to replace
Tshombd henchman Munongo, is hold-
ing a political caucus in the east-
ern Congo. He apparently hopes-to
line up parliamentary support
against Tshombd and assist Kasa-
vubu in cutting the premier down to
manageable size.
Tshomb6 gives every indication
that he would prefer to hang; on to
the premiership, bending to some
of Kasavubu's demands the better
to fight another day. Congo Army
chief General Mobutu continues con-
vinced that the Kasavubu-Tshomb6
"team" must be maintained, if pos-
sible, and it is extremely unlikely
that Kasavubu will take any action
without the general's approval.
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i
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SE CRE T
Europe
French - South African co-
operation in arms supply and re-
lated scientific and technical
fields has been increasing. In
view of the arms embargo ob-
served by some of South Africa's
major trading partners, such as
the US, the UK, and West Germany,
France expects its own sales to
increase in coming months. Paris
evidently hopes it can avoid
compromising its ties with Black
Africa and the "third world" by
maintaining that it is not sell-
ing equipment that can be used
for internal repression.
LJA I
25X1
25X1
Cooperation with South Af-
rica has taken various forms.
In 1964, the two countries signed
a 20-year agreement permitting
establishment of a French space
tracking station in South Africa.
Aircraft have accounted for
a major share of South Africa's
military purchases from France.
The French recently established
an office in South Africa rep-
resenting the entire aircraft
industry. Pretoria has bought
developing air defense surveil-
lance radar for South Africa.
South Africa also remains
interested in the Breguet At-
lantique, a maritime patrol air-
craft produced for NATO. Sale
of this aircraft to South Africa
would require NATO concurrence,
which has not yet been granted.
France has refused to abide
by the 1963 UN resolution impos-
ing a strict embargo on sales
of military equipment to South
Africa. Paris has held that a
full embargo is ineffective as
a means of inducing Pretoria
to liberalize its racial poli-
cies, but has imposed a selec-
tive embargo on weapons useful
for internal repression. Ship-
ments of helicopters, jet train-
ers and armored cars, mortars,
and small arms have been stopped.
French Panhard armored cars are
being built in South Africa un-
der a licensing agreement i
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NORWEGIAN STORTING (PARLIAMENT): OUTCOME OF ' NATIONAL -ELECTIONS
ELECTION RESULTS
(PERCENT OF VOTE)
Communist Party (CP)
Socialist People's Party (SPp)
Liberal Party
Christian People's Party
Center (Agrarian Party)
(2.9-CP
2.4-SPP)
PRESENT COMPOSITION
(150 SEATS)
AUGUST
1965
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SE CRE T
The national elections on
12-13 September will give Norway's
four non-Socialist parties the
best chance in decades to unseat
the Labor Party, which has gov-
erned the country almost unin-
terruptedly since 1935.
No sharply controversial
domestic or foreign policy issues
have developed thus far in the
campaign,although the opposition
is trying to exploit a controversy
over an oil exploration conces-
sion on Spitsbergen (Svalbard)
which the government granted to
a US firm. In order to rally sup-
porters, the leaders of the Labor
Farty appear to have felt con-
strained to move somewhat to the
left--or at least to give the im-
pression of doing so--on domestic
problems. Labor is concerned
over the steady, relative decline
in its popularity since 1957 and
over indications that a sizable
number of its supporters may de-
fect to either the Conservatives
or the "national Communists"--
the Socialist People's Party
(SPP).
The evidence of a decline
in Labor's influence has naturally
heartened the leadership of the
four non-Socialist parties. In
an anticipated close election,
they stand a chance of reducing
Labor's plurality to the point
where the political complexion
of the next government would be
in doubt. The 150-seat Storting
now is almost evenly divided be-
tween Labor and the other parties,
and the election could result in
a deadlock in which 75 seats
would be held by Labor and the
SPP, and an equal number by the
four non-Socialist parties.
In the current Storting,
Labor has only 74 seats and must
accept the support of the SPP's
two deputies in any showdown vote
over domestic matters with the
opposition, which also controls
74 seats. Labor receives the
support of the non-Socialists on
foreign policy and defense mat-
ters. Of the parties with par-
liamentary representation, only
the SPP advocates withdrawal
from NATO and pursues an anti-
US line.
Labor had sought earlier to
offset growing disaffection by
speeding up its program to in-
crease pensions, establish a com-
pulsory national pensions system,
and institute a four-week annual
paid vacation for all workers.
This appears to have had little
impact on two of the largest dis-
affected groups: radical youth
who favor greater emphasis on in-
ternational issues, and increas-
ingly affluent white-collar workers
who no longer unhesitatingly ac-
cept Labor and the unions as their
most effective advocates.
The failure of either Labor
or the four disparate non-So-
cialist parties to obtain a
plurality which could be con-
sidered a mandate to form a
cabinet, would lead, in all prob-
ability, to the formation of a
weak and indecisive government.
In this situation the SPP's
potential for creating mischief
would be greatly increased.
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SE CRE T
Western Hemisphere
A negotiated settlement of
the Dominican crisis is still
stalled as both sides have taken
positions that will cause fur-
ther delay.
Last week the rebel nego-
tiating team tentatively accept-
ed the OAS terms after modifi-
cations and a formal reservation.
The rebel decision to sign could
be jeopardized either by extrem-
ist pressure or because of dis-
agreement with counterproposals
that Imbert's regime might
advance.
The rebels object to the
provision making the departure
of the Inter-American Peace
Force (IAPF) a matter to be
agreed on by the provisional
government and the OAS. They
cabled 12 Latin American govern-
ments asking their support for
the provisional government's
right to determine the date of
the withdrawal of the IAPF.
Initial reaction from the govern-
ments appears to be cool. The
rebels' strongly worded message
could, perhaps, become a crucial
document affecting the concept
of a permanent regional armed
force.
Imbert and the armed forces
are resisting acceptance of the
revised OAS proposals and are
reiterating that their earlier
acceptance was conditioned on
no changes being made to mollify
the rebels.
There is far from unanimous
agreement in the rebel camp.
The "Constitutionalist" nego-
tiating team reached a qualified
decision to sign the document
only after acrimonious debate
among the followers of Juan Bosch
and Hector Aristy and Jottin Cury
who appear to respond to ex-
tremist pressures. The three
Communist parties in the rebel
enclave have indicated that they
will not abide by any agreement
and plan to continue the struggle
by guerrilla. and terrorist ac-
tivities.
Dominican Communists have
substantially improved their
capabilities to promote in -
surgency.since the insurrection
perience gained during the fight-
ing,
will
provide the trained cadres need-
ed to utilize the cached weapons.
There is a general agree-
ment among the three Communist
SE CRE T
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Venezuela
r~ ~s u aria ? r er r u
Dominica
W K.
Martinique(
Saint Luciaq
(U K) V
Aruba
1(Neth)
,P bados
{O K.)
8(renado
U.K1
)
Apps
SURINAM
(Neth.)
*Georgetown
Inglands rarriaribo.
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SECRET
parties that the violent struggle
must be maintained. The pro-Chi-
nese Dominican Popular Movement
(MPD) is attempting to capture
control of all leftist extremist
forces. The party concluded a
highly publicized party congress
this week during which plans were
launched for the formation of two
popular fronts. A proposed
united front would be an open
anti-imperialist movement under
local Dominican direction. A
covert liberation front, on the
other hand, would be patterned
after the Venezuelan National
Liberation Front and subject to
international Communist guidance.
MPD leaders sharply criticized
the orthodox Dominican Communist
Party (PCD) at the congress for
revisionism and adherence to
Moscow's policy of peaceful co-
existence.
PCD leaders, worried over
the upsurge of the MPD, have at
least ostensibly swung their
party's orientation toward vio-
lent action and have initiated
"self-criticism" of the party's
role in the April coup. The
PCD's news organ, El Popular,
stated on 16 August that the
party now considers armed in-
surrection necessary for tak-
ing revolutionary power.
The Communist-dominated
14th of June Group (APCJ) is
undergoing both an ideological
and personal power struggle
which makes definition of its
position difficult. Should the
hard-line faction prevail, APCJ
strength would add considerably
to the Communists' insurgency
capability--F-
Venezuela is once again re-
asserting its claim to almost
70 percent of British Guiana.
It maintains that the arbitra-
tion tribunal, composed of US
and Russian arbiters, which set
the boundary in 1899 was influ-
enced by Russian collusion with
Britain and that in any case
Venezuela had been bullied into
agreeing in 1897 to accept the
tribunal's findings. In pushing
the subject now, Caracas appears
to be acting less on logic than
on emotion, inasmuch as it also
wants to maintain good relations
with the UK and British Guiana.
The disputed area consists
of about 55,000 square miles of
unpopulated jungle and marsh-
land west of the Esequibo River.
It is largely unexplored, but
its general terrain suggests
that it may have valuable min-
eral and oil deposits. British
SE CRE T
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Guiana recently offered oil ex-
ploration concessions in the
area to the Continental Oil Com-
Venezuela has revived the
issue sporadically. It was men-
tioned specifically at a foreign
ministers' meeting in Washington
in 1951 and the Inter-American
Conference in Caracas in 1954.
The downfall of the Perez Jime-
nez dictatorship in 1958 inter-
rupted preparations to renew the
claim, and the issue lay dormant
until Cheddi Jagan's election
victory in August 1961 and the
start of talk of independence
for British Guiana. Since then
Venezuela has brought up its
claim more frequently. It ob-
viously believes Britain would
be more inclined to negotiate
than would an independent--and
possibly leftist, Jagan-domi-
nated--British Guiana.
In addition, in December
1964 President Leoni ordered the
printing of 15 million postage
stamps depicting a map support-
ing Venezuela's claim and, in
February 1965, he published a
new official map showing the
area as a "zone in dispute."
In recent months the Vene-
zuelan Government has demon-
strated renewed determination
regarding its claim. A congres-
sional committee was appointed
on 21 July to study a proposal
that the congress officially
support Venezuela's claim to
western British Guiana and to
coordinate action on it. The
chief of the joint staff said
on 30 July that the military
fully supports the government's
claim and is distributing some
30,000 pamphlets in several
languages justifying it. He
stated that the government is
taking the claim to a world
court, and that a military so-
lution is not ruled out if
legal means fail.
Resort to military activity
seems unlikely, however. In-
stead the government is prob-
ably setting the stage for pre-
senting its case to the UN if
further negotiations with the
UK are unfruitful.
The UK, although reluctant
to reopen the 1899 arbitration,
has considered suggesting that
the dispute be referred to the
International Court of Justice.
SE CRE T
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STUDENT OPPOSITION TO THE BRAZILIAN GOVERNMENT
Brazil's university popula- student grouping that the regime
tion and the Castello Branco I seeks to supplant by creating an
government are becoming increas- ; apolitical, government-supported
ingly alienated. Although hos-
tility to the regime on the na-
tion's campuses is neither uni-
versal nor so sharp as to pose
a serious problem now, it prom-
ises to become so eventually
unless the government makes con-
certed and early efforts to im-
prove its relations with the
students.
National Students Directorate
(DNE). At the UNE's 27th na-
tional congress in Sao Paulo
from 25 to 31 July, delegates
passed a resolution calling for
students to boycott the elec-
tions to be held at universities
throughout Brazil on 16 August,
or if this were not feasible, to
submit blank or defaced ballots.
At the heart of the students'
quarrel with the government is
the so-called "Suplicy law," pro-
mulgated last November. Named
after Minister of Education Su-
plicy de Lacerda, the law regu-
lates student affairs and organ-
izations and generally curtails
their political activities. Re-
sentment of the law has been so
strong, and the government has
been so preoccupied with other
matters, that university-level
elections for the new student
organizations called for in the
new law have been deferred twice
from their original December
1964 date and were carried out
only in mid-August.
The loudest opposition to
the Suplicy law has come from
the National Union of Students
(UNE), the leftist-controlled
The Suplicy law provides
that students must vote in order
to be eligible to take exami-
nations; consequently, only a
handful of students failed to
vote on 16 August. In many
cases, however, blank or defaced
ballots were more numerous than
valid ones, and students at uni-
versities in Brasilia and Goias
State did not even register
slates of candidates. The gov-
ernment nevertheless expects
that further steps in the elec-
toral process to complete the
organization of the DNE within
the next few weeks will be ac-
complished without incident.
On the other hand, it seems
clear that the majority of Bra-
zil's university students will
continue to support the extra-
legal and leftist-dominated TTY'; 25X1
future.
rather than the officially rec-
ognized DNE for the foreseeable
Politicians who oppose re-
form of Uruguay's unwieldy nine-
man executive seem to be gaining
ground, and prospects for a con-
stitutional change prior to the
October 1966 elections have de-
clined. Although reform of the
executive has been an avowed
goal of all the major political
groups, they have been unable
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to agree on what form the change
should take.
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United Nations members are
generally pleased with the new US
position on Article 19, which will
permit the General Assembly to re-
sume normal operations this fall.
Many of them are now concentrating
on trying to restore the UN's sol-
vency by erasing its $107-million
debt.
.Britain and Canada are again
heading a campaign for voluntary
contributions, especially from the
major powers. Britain is urging
the US to make a contribution as
soon As possible in the hope that
other members--particularly the
USSR And France, the biggest debtors
--will follow. Canada has proposed
that the Assembly convene a special
pledging conference like those held
regularly to solicit contributions
to UN aid programs and for refugee
relief.
The Soviets are hinging their
contribution on adequate assurance
that Article 19 will not be raised
again. Soviet officials in private
conversation continue to indicate
Moscow's desire to obtain a binding
statement on the issue. Assurance
through a statement of consensus by
the Committee of 33, as proposed by I
the Afro-Asians, may be enough to
get Moscow to pay.
France may stick by its posi-
tion that it will make no contribu-
tion until a formula on future
peacekeeping is worked out. Paris
also is concerned about the possi-
ble effects of the US reservation
on opting out of future UN assess-
ments.
As for other delinquent mem-
bers, Rumania has decided to pay "a
nice amount" on a voluntary basis
and the Rumanian delegate believes
that other East Europeans will also
make payments.
The Committee of 33 will prob-
ably make a formal statement that
the Assembly should resume normal
operations, that Article 19 will
not be raised, and that voluntary
contributions should be made to
ease the financial crisis. On the
thorny problem of whether the As-
sembly or the Security Council has
the right to initiate peacekeeping
operations, the Committee of 33 will
probably take the easy way out and
postpone discussion to a later date.
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