WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A005400010001-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 32
• Document Creation Date: December 21, 2016
• Document Release Date: May 27, 2008
• Sequence Number: 1
• Publication Date: July 29, 1966
• Content Type: SUMMARY

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:~.29'Ju1y 196E
Copy No.
~E'I~IT`C~~ II`~ITELLI~-EE ~~E+C1~
-~ : C71~~CTC~RATE ~Q..~` IN~`';~~.L[CaEIV~E,~
:State Dept. review completed ~, ,:
DIA review(s) completed.
GRQUP I "Excluded ?~rom:putprgat4c
downgrodi,'nq bnd declA~iFitpli~!.
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ARMY review(s) completed. `'.
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.SECRET
(Information as of noon EDT, 28 July 1966)
VIETNAM
Allied military activity in South Vietnam remains cen-
tered just below the Demilitarized Zone, where evidence
points to recent heavy infiltration of North Vietnamese.
regulars.. After North Vietnam's month-long propaganda
campaign threatening trial and execution of captured
US pilots, Ho Chi Minh has explicitly stated "no trial
in view." Moscow, through low-level- channels, is
telling the US that, despite the Warsaw Pact pledge of
"volunteers" to the DRV "if requested," the USSR has no
desire for deeper involvement in Vietnam. China too
remains careful not to go beyond previous hedged pledges
of aid to Hanoi.
Page
NEW CAMBODIAN TALKS WITH VIETNAMESE COMMUNISTS IN PROSPECT 5
Sihanouk is preparing for another round of border talks
with the Vietnamese Communists which could lead him to
grant diplomatic recognition to Hanoi and the Viet Cong.
EDUCATIONAL REFORM IN COMMUNIST .CHINA
Recent violent riots
obi to the current cultural purification -drive and LJnI
to proposed radical changes in enrollment procedures,
curricula, and operating methods.
INDONESIA'S NEW CABINET
Installation of the new Indonesian cabinet marks yet
another stage in the consolidation of General Suharto's
power at the expense of Sukarno.
Europe
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SECRET
TALKS ON FUTURE OF FRENCH FORCES IN WEST GERMANY STAhLE~D 9
The French are maintaining a tough stance in the ~.x-par-
ent conviction that German eagerness to reach agreement
on the legal status of the forces strengthens Fra,~icse's
bargaining position regarding their defense role.;
EEC AGRICULTURAL AGREEMENT KEY STEP TOWARD ECONOMIC i:~I~T]:ON 10
These accords complete the long effort to lay the ',basis
for full integration of agriculture within the co~munity.
They also enable the EEC to participate fully in Kennedy
Round talks this fall .aimed at liberalizing world trade
in farm products.
SOVIET INDUSTRIAL GROWTH RATE CONTINUES TO DECLINE
Moscow's official statistics for the first half of 19.6.6
indicate no improvement by the Soviet economy ovE~~ its
unsatisfactory performance of recent years.. Them is
still no evidence that the Brezhnev program to improve
agriculture has been fully implemented.
SOVIET 1966 AGRICULTURAL PROSPECTS REMAIN FAVORABLE
The grain crop may surpass the 1961-65 average of :L06
million metric .tons since the winter grain crop :~s a
fairly good one and the outlook for spring grains; as
above average.
POLICY DIFFERENCES WITHIN THE POLISH LEADERSHIP 15
There are signs of basic policy differences amon~;,lPolish
leaders, the net effect of which is t_o stall US ef:Eorts
to expand relations with Poland and the-rest of ]astern
Europe.
Middle East - Africa
25X1-
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`'~ ~S'ECRET
COMMUNIST ECONOMIC AND MILITARY AID TO PAKISTAN
The extensive press treatment accorded Communist eco-
nomic aid to Pakistan, which has been pitifully small
as compared with free world assistance, may be designed
to elicit even larger amounts from the US and other
Western countries. Pakistan's primary interest in the
Communist capitals has been military aid, received thus
far only from Peking.
NASIR REITERATES EGYPT'S OPPOSITION TO CONSERVATIVE ARABS 17
In his speeches on 23 and 26 July Nasir blamed Arab
"reactionaries" for destroying Arab cooperation and
said he would not change his policies in order to
obtain US aid.
SUDAN CHOOSES NEW PRIME MINISTER
Sadiq al-Mahdi, youthful president of the dominant Umma
party, has finally replaced Mohammed Mahjoub, but in-
fighting within the Umma may continue.
PRESIDENT'S ILLNESS MAY UNSETTLE MALAGASY REPUBLIC
The powerful secretary general of the ruling party, who
is heartily disliked by a large segment of the populace,
may try to take over the presidency during Tsiranana's
convalescence.
ARMY MUTINY IN CONGO (KINSHASA) THREATENS MOBUTU REGIME 19
President Mobutu suspects Belgian connivance in contin-
uing disorders in Kisangani. His arrests of Belgian
mercenaries will further damage relations with Brussels..
Western Hemisphere
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URUGUAYAN LEADERS MAY BE PAVING WAY FOR FUTURE COUI>
There is some suspicion that military appointme>t~i;s made
by National Council of Government President Hek>e~~ are
calculated to assure him military backing in caSe~ he
should decide a concentration of power in his hands is
necessary.
CASTRO'S 26 JULY SPEECH
.This year's anniversary speech by t:he Cuban leader
pointed to no new developments. It was devoted largely
to international affairs, with the "fight again~i; US
imperialism" as the main theme.
INCREASED TERRORISM THREATENED IN VENEZUELA
A split over policy between the leadership. of t;hE~ Commu-
nist Party of Venezuela and the hard-liners of tYie Armed
Forces of National Liberation, its paramilitary ', organi-
zation, may lead to an increase of terrorist acts.
DOMINICAN PRESIDENT PROPOSES REFORM OF SUGAR INDUS7.')~,Y 24
In his first major effort at long-term improvetr~~nt of
the economy through institutional reform, Balaguer has
outlined a draft law reorganizing the state-owned sugar
industry. This seems to have met in part the a.dmin-
istration's need for some immediate reform measure for
political effect.
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Far East
VIETNAM
Allied military activity re-
mains focused in South Vietnam's
northernmost province, Quang Tri.
In Operation HASTINGS/LAM SON 289
"A" just south of the Demilitarized
Zone, ten US Marine and South Viet-
namese Army (ARVN) battalions are
pressing their offensive against
the North Vietnamese 324 "B" Infan-
try Division. As of 28 July this
operation had resulted in more than
750 Communist troops killed and 225
weapons captured. Friendly losses
were 145 killed (124 US) and 471
wounded (445 US).
In the Tuy Hoa area of coastal
Phu Yen Province, US airborne and
South Korean marine units success-
fully terminated Operation FILLMORE.
This four-month combined harvest/
security operation achieved its pri-
mary objective of denying major Viet
Cong elements access to sorely
needed rice supplies, and in the
process cost the Communists some 450
troops killed and captured.
Communist forces this past week
sharply intensified their guerrilla-
type activity against allied posi-
tions in the Saigon area and key US
air installations in widespread sec-
tions of the country. Heavy mortar
and recoilless rifle attacks were
launched against the US 25th Infan-
try Division headquarters at Cu Chi
(Hau Nghia Province), the recently
opened Special Forces camp at Trai
Bi (Tay Ninh Province), and strategi-
cally important US air bases at Da
Nang, Quang Ngai, and 5oc Trang,
Infiltration Still Heavy
Evidence of large-scale in-
filtration of North Vietnamese
(PAVN) troops into South Vietnam
continues to grow. MACV now con-
firms three more PAVN regiments and
five separate battalions.
The entire 324th "B" Division
--a headquarters element and three
regiments totaling some 5,000 men
--is in Quang Tri Province. As
noted above, these forces have lost
over 750 killed in action in recent
engagements.
MACV also confirms a new regi-
ment and four separate battalions
of the 620th PAVN Division operating
in the Quang Nam - Quang Tin border
area. The fifth newly confirmed
separate battalion is an artillery
unit in the central highlands.
Confirmed PAVN strength in
South Vietnam stands at 41,360 men.
Another 1,100 are carried in the
probable and possible columns.
There are indications that addi-
tional units are en route or re- 25X1
Gently arrived.
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Hanoi Calls Off Pilot Trials
Ho Chi Minh intervened per-
sonally this week to relax some of
the pressure in the DRV threat of
trials and execution of American
pilots. After weeks of intensive
propaganda on the question, Radio
Hanoi announced on 23 July that the
matter had been referred to a
civilian committee which would con-
duct an "investigation"--presumably
over a long period of time. For
good measure Ho sent reassuring
telegrams to private US citizens
and organizations. One of the
clearest was that to the CBS net-
work stating "No trial in view."
This apparent tactical retreat
in a major propaganda campaign may
have been generated by adverse in-
ternational reactions--which Hanoi
may have anticipated in any case.
The regime, for example, never of-
ficially associated itself with the
threatening language used at mass
rallies and in newspaper editorial$
and commentaries. Official state-
ments never went beyond Hanoi's
long-standing contention that the
pilots had committed crimes against
the Vietnamese people, that the
DRV had the right to try them, and
that they were not prisoners of war
under the terms of the Geneva agree-
ments.
The month-long propaganda cam-
paign may have been designed with
a dual purpose--to give the North
Vietnamese people an outlet for out-
rage over the bombings and to serve
as a deterrent to further escalation
of the air war by US policy makers.
Chinese Propaganda Support
Speeches stressing support for
Vietnam continued this week at
rallies in major Chinese cities,
but expressions of support did not
go beyond previous pledges of
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WEEKLY SUMMARY 29 Jul 66
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SE-GREY
assistance. A reference to Chinese
and Vietnamese "joint blows" at the
US conveyed the impression of readi-
ness for Chinese involvement in the
war but did not go as far as Peking's
past ~>ledges to send "volunteers"
to Vietnam "if needed." Statements
by Chief of State Liu Shao-chi and
Vice ~?remier Tao Chu on 22 July made
no reference tQ "volunteers" and
emphasized Vietnamese determination
to fight on even if the war lasted
"20 ye=ars or longer."
Threat of Bloc Volunteers
Since the Warsaw Pact on 7 July
pledged "volunteers" for Vietnam
"if requested," Moscow has put out
conflicting signals. With the Brit-
ish, the Indians, and apparently
the Swedes, the Soviets have stressed
the dangers of the war's "new stage"
and underscored the sincerity of
the pact's offer of "volunteers."
The Soviets have not, however,
taken a hard line with US representa-
tives. This suggests that their
pitch to Prime Minister Wilson and
several neutrals is mainly meant to
encourage them to press the US to
stop bombing North Vietnam or at
least. to refrain from any further
intensification of US air strikes.
Moscow also remains concerned about
countering Chinese"charges of So-
viet "capitulation"
Since the air strikes on the
DRV's main oil storage facilities
last month, the p:rXvate comments of
Soviet officials tb American repre-
sentatives have been consistently.
restrained, indic~~.'ting that Moscow's
attitude toward t;ne war has not sig-
nificantly altered. The Soviets ap-
pear intent on co~mtnunicating to the
US through private. low-level Chan-
nels that they do :not intend to send
personnel to Vietn=am other than the
technical types al=ready there.
Soviet Mars a Ba ramyan covere
essentially the same ground with
the US Army attache=_ in Moscow.
The East Europeans generally
regard the Vietna~t war as an unwel-
come brake on European detente, as
well as a drain, n terms of aid,
on their resource: However, they
are probably recd ciled to increas-
ing their limited.assistance, possi-
bly by providing $~>ecialized per-
sonnel such as medical technicians.
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NEW CAMBODIAN TALKS WITH V1 ETNAMESE COMMUNISTS I N PROSPECT
Cambodia's Sihanouk is pre-
paring for another round of bor-
der talks with the Vietnamese
Communists which could lead him
to gr-ant diplomatic recognition
to Hanoi and .the Viet Cong.
Phnom Penh has
drafte an agreement, which pre-
sumably it will ask the Viet Cong
to sign, covering delineation of
the Cambodia-Vietnam border.
Sihanouk discussed the prob-
lem of signing a border agreement
with the Communists in a speech
before the Cambodian National Con-
gress on 20 July., He said such
an agreement might bring US re-
taliation, but argued that the
danger of this would be outweighed
by the longer term advantage of
getting the Vietnamese Communists
to agree to Cambodia's version of
its borders. He implied that
even though Communist military
fortunes in South Vietnam have
been waning, he still believes
the Communists will eventually
win there.
Sihanouk also stated in his
speech that in order for the bor-
der agreement to have real mean-
ing, Cambodia would have to agree
to grant diplomatic recognition
to North Vietnam and the National
Liberation Front. In doing this,
he said, Cambodia would not al-
ter its "neutrality" or its de-
sire to avoid entanglement in the
Vietnam war. He indicated, how-
ever, that Cambodia's negotiat-
ing position would remain firm,
and he expressed some doubt that
the Viet Cong will be willing to
sign on his terms.
This apparent new .attempt
by Sihanouk to reach apolitical
accommodation with the Viet Cong
comes at a time when he has been
increasingly critical of the Com-
munist camp. In recent public
statements he has implied that
Cambodia's support for Hanoi and
Peking is ephemeral, and he has
held out the prospect of improved
relations with Bangkok and Sai-
gon. However, .his oft-stated be-
lief that the Communists will
win in South. Vietnam, a view-which
has formed the basis of Cambodia's
foreign policy over the past five
years, apparently has not been
shaken. He evidently feels that
a border agreement with the Com-
munists would establish the
"juridical".grounds for.. warding
off future Communist pressure
against Cambodian.territory.~25X1
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~S'E CRE T
EDUCATIONAL REFORM IN COMMUNIST CHIINA
Communist China's cultural
purification drive has hit its
educational institutions espe-
cially hard and is producing a
strong negative reaction at uni-
versities throughout China.
Part of this general. uproar,
which lasted through much of June,
was doubtless generated by the
regime in connection with the
purification drive. Some of it,
however, was very likely caused
by students who dislike the edu-
cational changes predicted in a
13 June party and government no-
tice and now being openly dis-
cussed. It is still far from
clear how far or how fast the re-
gime intends to push these "thor-
ough reforms" in education. The
only firm steps thus far have
befan a six-month postponement in
the enrollment of the 1966 fresh-
man class at the universities and
the retention of university and
high school students at their
schools for indoctrination this
summer instead of the usual work-
ing "vacation."
The party press, however,
has carried suggestions for radi-
cal departures i.x enrollment pro-
cedures, curricula, and operating
methods. Among ~.hese suggestions,
all attributed to students, have
been recommeridatc~ns that .liberal
arts and even scie:ntific courses
be severely curt.~i.led, that more
peasants and workers be admitted
to the universities, that less
emphasis be put dn. reading books
and more emphasis put on learning
through labor, tHa.t the weight
given scholastic 'marks be re-
viewed in favor of political con-
siderations, and 'that faculty
titles be abandoned as were ranks
in the armed forces.
Despite the damage that ex-
tensive tinkering with the edu-
cational system mould do, some
of these ideas m'i'ght well appeal
to an aging party leadership ob-
sessed with the need it sees to
ensure "revolutio'nary successors."
The 72-yea:r-old leader is
again taking a h~s#~d in major de-
cisions, and the regime is trying
hard--witness this week's near-
idolatrous accou~,z~ts of the Yangtze
swim--to project ~.n image of a
healthy and vigoraus Mao.
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SECRET
INDONESIA'S NEW CABINET
The new Indonesian cabinet
installed on 28 July marks yet
another step in the consolida-
tion of power by the army under
General Suharto. The government
is expected to continue the
gradual reorientation of foreign
and domestic policies that has
been under way since the military
crushed the leftist coup attempt
last October.
Suharto is chairman of the
new presidium and thus heads the
cabinet. He also retains the
defense portfolio. The five
"first ministers" who compose
the presidium include the tri-
umvirate that directed the pre-
ceding cabinet--Suharto, Adam
Malik, and the Sultan of Jogja-
karta. The other two are repre-
sentatives of Indonesia's two
largest parties--Sanusi of the
National Party and Chalid of the
Nahdatul Ulama.
Three minor parties are
also represented in the cabinet
--the Catholic Party, the Chris-
tian Party, and the pro-Army As-
sociation of Supporters for Indo-
nesian Independence.
cession to Sukarno, whose posi-
tion has been further eroded.
Although political parties
appear to have been given a larger
role in the cabinet than in any
for several years, their influence
is likely to remain secondary to
that of the army. Of the 27 in-
dividuals in the cabinet, eight
are representatives of political
parties, 12 are military, and the
remainder are technicians.
With the domestic political
situation increasingly under con-
trol, Indonesia's severe economic
deterioration is the government's
major problem. In the hope of gen-
erating economic assistance for
Indonesia and easing the payments
schedule on Indonesia's large
international debt, the Sultan of
Jogjakarta, first minister for
economics and finance, plans to
go to Western Europe in late Au-
gust and to Tokyo in mid-September,
and to come to the United States
later in September. Foreign Min-
ister Malik plans a similar trip
to the Soviet Union, although no
firm date has been set.
The inclusion in the pre-
sidium of Chalid, a man of un-
savory repute with questionable
backing even within his own party,
represents Suharto's major con-
Indonesia's Western creditors
have agreed that any rescheduling
of Indonesian debts should be ap-
proached on a multilateral basis 25X1
and a formal conference for this
purpose is planned for mid--Se tem-
ber.
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TALKS ON FUTURE OF FRENCH FORCES I N WEST GERMANY STALLED 25X1
Negotiations concerning the
future role in NATO defense of
the French forces in Germany have
stalled. Talks broke down at the
27 July meeting of the North At-
lantic Council (NAC) when the
'French refused to accept without
substantial qualification NATO
Secretary General Brosio's sum-
mary of their position on this
issue. Further discussions have
been postponed until September.
France's fourteen NATO allies
decided that if the permanent
representatives cannot-agree at
that time it may be necessary to
refer the question back to the
NATO foreign ministers.
The tough position of the
French may be the result of con-
viction that their bargaining
position with the Fourteen as a
whole has been strengthened by
the apparent eagerness of the
Germans to reach an agreement in
the parallel French-German nego-
tiations on the legal status of
French troops in German .
Erhard maintained that the
French forces must have a clearly
defined military mission. How-
ever, the US Embassy in Bonn
warns that it would be unrealis-
tic to expect the Germans to
stick to this position if they
had in fact already reached a
"basic political decision" to
allow French troops to remain in
Germany.
Meanwhile, Britain is con-
tinuing its efforts to .obtain
higher payments from Germany to
offset the foreign exchange costs
of maintaining the British Army
of the Rhine (BAOR). Bonn's un-
forthcoming attitude during the
visit of Chancellor of the Ex-
chequer Callaghan to Bonn last
week has prompted new threats to
reduce the size of the BAOR. Al-
though the special British-German
commission on the problem is not
scheduled to report until late
September, Britain's economic
crisis may force a decision on
troop cuts before then.
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~S'E CRE 3'
EEC AGRICULTURAL AGREEMENT KEY STEP TOWARD ECONOMIC UNION
Tree agreements on agriculture
reached in the EEC Council during
the past week will probably rank
among the Common Market's major
achievements. The accords vir-
tually complete the five-year ef-
fort to lay the basis for full in-
tegration of agriculture within
the community, and they thus
carry t:he member states another
major step toward economic union.
While outsiders fear the completed
policy will prove far too protec-
tionst, the EEC is now able in
any case to participate fully in
Kennedy Round negotiations this
fall aimed at liberalizing world
trade i.n farm products.
Last week's agreements pro-
vide specifically for common
prices and marketing regulations
throughout. the EEC for milk, sugar,
meat, oils and fats, and fruits
and vegetables. Once these and
previously agreed regulations are
in full effect, there will be
free trade and competition within
the Common Market in all farm
products, behind a single system
of protection against imports
from outside the EEC. Price sup-
ports, disposal of surpluses,
and improvements in farming meth-
ods will be financed wholly or
in part by the community, whose
annual agricultural budget is ex-
pected to approach $2 billion in
a few years.
The economic and political
significance of this system seems
likely to outweigh considerably
the drawbacks already evident. The
common prices have probably been
set high enough to :h;awe an infla-
tionary effect, and they could
in some cases create';burdensome
surpluses. The Frencch, who had
pressed for these ac~Yeements,
are even now voicing'~their concern
along these lines. Nevertheless,
the opening of inter_h~~l free
trade within the community seems
likely to further the postwar
rationalization proc:~;;s in Euro-
pean agriculture with net gains
in productivity and efficiency.
Agreement on the common
agricultural policy will get rid
of one cons-t ant irritant between
France and the otherEEC members,
and will in general provide a
better balance betwe:~n EEC indus-
trial and farm inteY-~s>ts. De-
spite France's antisupranation~al
prejudices, the EEC commission
had a key role in negotiating the
agricultural arrangemE~nts and
will have a prominen.tr place in
their administration.; moreover,
the French went alone with ar-
rangements which are'h.ighly cen-
tralized in character. The ex-
tension of the system of common
prices will exert further pres-
sures toward better coordination
of monetary policies-,' and the
EEC will in general have more
time to deal with other questions,
such as the common energy policy.
Whether outside (suppliers
will turn out to be tie only
serious losers remains to be
seen. Liberal-minded c:ommuriity
sources have describE~c1 the Kennedy
Round offers on farm ~~?oducts ap-
proved by the EEC Cot~nc:il on
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,SE C'RE T `~'~'
27 July as "meager." Neverthe-
less, the Kennedy Round could not
proceed without these offers on
the table, and there is already
some press speculation--even in
in France--that the EEC may come
to see the Kennedy Round as one
way of reducing the price tag
on an integrated a ricizltural
market.
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SOVIET INDUSTRIAL GROWTH RATE CONTINUES TO (aE:CLINE
Moscow's official statistics
for t:he first half of 1966 (see
box) indicate no improvement by
the ~~oviet economy over its un-
~atisfactory performance of recent
years. Moreover, there is still
no evidence that the Brezhnev pro-
gram for agriculture, first an-
nounced in March 1965, has been
dully implemented.
A harbinger of future dif-
~icuaties is the virtual stagna-
'~.ion of gross fixed investment
3n ncaw plant and equipment. State
elan investment--about three
:quarters of the total.--was re-
ported to be only 2 percent more
than last year's midyear figure,
which had represented a 10-per-
cent rise over 1964. The rea-
sons for the slowdown are not
yet apparent, and the 6.3-per-
cent increase envisioned for
1966 as a whole might still be
met by a big push in the second
half of the year. A continued
lag, however, would cause re-
percussions throughout the
growth-oriented Soviet economy
which could have political side
effects.
In contrast to the rela-
tively low 8-percent growth in
gross industrial production,
the output of the machine build-
ing and metalworking industry
increased by 11 percent. A de-
clirle in the rate of growth of
principal civilian uses of ma-
chir>,ery seems to suggest a fur-
ther- increase in the share of
durables devoted to military
and space programs. Ferrous
and nonferrous metallurgy was
,fthe only other major industrial
sector which increased its pro-
duction over the midyear rates of
1965. The growth'of chemical pro-
duction declined somewhat, reflect-
ing the scaling dpwn of Khrushchev-
ian goals.
The energy _L~dustries, with
the exception of ~E~troleum, not
(Percentage Change From Corns ~ nd~ Perlod of PreYious Y42r)
`:- ~
1~5 i966:
Tst b MC}5. ?'1a1LL YEAR "-1st 6 1x~`OS PUCI YEAR
,~ ~ .Aw
17 13,
T4 ~ _ 1 ~'
~ ~ ~
Y1 ~"
13 13
Ctstde,petrole~m 8
Gas 17
Minsro~ Eertil~ers '~L
Plostigs and resins ~b
RaUed steel
Steel pipe
chemical itbars
Oi(esiuipment a '7d
Ccna4mRr Goods
TeleYtsion sets
Washing machines
Gorygn fobrics, _
Leather footwear
Meat ~stote sfaughte'r}~
$tote Plan In~estr~nt
(about 75% of totQl~
Industrial 9ronch~s'
mgtallurgy ,
~hemcais
~~~~i 1
r~lofwarking
L~~ht
?~
SECRET
~0 t5 2B`.
~Q `~~ lid`
~$ ,, ~ 40
3 _. 2 ._ ~_ ~
2 2 ..,a ~:.
33 `~ 16 2#"
? .~ g ~..
32
n.a.
.-
mrlustr A,' ~rawth s~ ~ ~ ~ ~h~ er than A anel er Western estimates:
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only failed to maintain last
year's rate of growth but also
fell short of the planned goal
for 1966. The growth in elec-
tric power consumption was the
lowest for any six-month period
since 1960.
The implementation of Brezh-
nev's agricultural plan has
yielded few results. Although
agriculture is receiving a larger
share of truck and tractor pro-
duction, there were only small
increases in the output of agri-
cultural machinery and tractors.
The increases of 3 percent and 8
percent respectively remain well
below the average annual rates
required by the Brezhnev program.
An increase of 17 percent in
mineral fertilizer production
reflects the introduction of new
capacity from the program ini-
tiated by Khrushchev.
The Soviet consumer is once
again a little better off, al-
though money incomes appear to
be increasing faster than the
supply of consumer goods. An
indication of surplus purchasing
power is the increase in savings
deposits, which reached a new
high of about 21 billion rubles,
21.5 percent higher than at the
same time in 1965. The plan for
housing, an area of chronic dis-
satisfaction to the consumer,
appears to be in trouble. Only
20 million square meters were
built during the first six months
of 1966, slightly more than one
fifth of the goal for the year.
At this time last year, about 21 25X1
million square meters, one fourth
of the planned but unachieved
goal, had been completed.
SOVIET 1966 AGRICULTURAL PROSPECTS REMAIN FAVORABLE
As of mid-July, Soviet agri-
cultural prospects for 1966 con-
tinue relatively favorable. The
grain crop may surpass the 1961-
65 average of 106 million metric
tons since the winter grain crop
now being harvested is a fairly
good one (although below 1965)
and the outlook for spring grains
is above average. Conditions
are favorable for most row crops
and the output of livestock
products is increasing due to
ample feed supplies.
Although the area sown to
grain is slightly below 1965, an
early spring in the European USSR
combined with ample moisture sup-
plies throughout most of the im-
portant agricultural regions is
bringing good yields. Rain which
has hampered the winter grain
harvest in some areas, resulting
in excess harvesting losses and
grain with high moisture content.
has not changed the over-all
favorable outlook. A good spring
grain crop, especially spring
wheat, is expected since soil
moisture supplies are above aver-
age in the crucial New Lands re-
gions of Kazakhstan, Siberia,
and the Urals.
SE G''RE T
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The recent trade agreement
with Canada to import at least
3 million tons of wheat annually
during the next three years does
not seem to reflect present
shortages, but is probably de-
signed to ensure a more economi-
cal distribution of domestic
production. Thus, the Canadian
purchases can fulfill the needs
of t:he Soviet Far East, a deficit
area.
Despite the good outlook
for most row crops, cotton pro-
duction will be below that of
recent years. According to the
party first secretary of Uzbek-
istan, the main cotton-growing
repuk~lic, natural disasters have
caused "immense damage, " and
"cott:on has been either destroyed
or severely damaged over large
areas."
Apparently live:stock products
were not greatly ~ifj:ected by the
severe outbreak of` f?oot.-and-
mouth disease in t:hE~ latter part
of 1965, which is ~t:ill in evi-
dence on a small scale in some
areas. The increa.Se in state
procurements of melt. and mills
during the first half of 1966,
especially during the first quar-
ter, may reflect it;creased sales
to the state by the private sec-
tor brought on by foot-and-mouth
disease controls as well as the
increase in procurement prices
effected in 1965. However, in-
creased milk produc`t.ion in the
first half of 1965 w~~s aided con-
siderably by the es~~:1 s rin in
the European USSR.
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WEEKLY SUMMARY 29 Jul 66
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POLICY DIFFERENCES WITH1 N THE POLISH LEADERSHI P
There are signs of basic
policy differences within the
Polish leadership. In addition
to old disputes over domestic
matters, equally severe disagree-
ments have developed in the past
eight months over how to handle
relations with the US. These
could become serious enough to
threaten Wladyslaw Gomulka's
position and continued rule.
The net effect has been to
stall US efforts to expand re-
lations with Poland and the rest
of Eastern Europe. In addition
to the recent disorderly demon-
strations against the US Embassy,
Warsaw's responses have been
characterized by contradictions,
vacillation., and indecision. Am-
bassador Gronouski believes that
this reflects the influence of
elements in the leadership who
are opposed to improving rela-
tions with the US and who are
attempting to eliminate any chance
of progress. These leaders seem
to draw their power from control
of the security services and the
Polish armed forces. Their nega-
tive reaction has come sharply
into focus following each step
the Polish Government has taken
in recent months which might be
construed as friendly toward the
United States.
In general,. diplomatic,
foreign trade, and cultural of-
ficials seem to be the proponents
of better relations. However,
Foreign Minister Rapacki, their
chief spokesman in the upper
levels of the party, is very ill.
When queried about the lack
of progress on specific propos-
als, Polish diplomatic officials
have indicated a high degree of
frustration. A ranking Foreign
Ministry official deeply involved
in negotiations with the US com-
mented in an unusual outburst. of
feeling that-the latest mob at-
tack on the US Embassy building
"made me so god-damned mad." He
also blurted out that the Hun-
garians who had conducted an
orderly Vietnam demonstration
"are just smarter than we are,
that's all."
Party boss Gomulka's posi-
tion is not clearly known, but
it is likely that he is still
trying to preserve the same kind
of political balance among lead-
ers of different party factions
that has characterized his post-
1956 regime. Nevertheless, the
continuing ability of those op-
posed to better relations with
the US to take uncoordinated
actions suggests that the prob-
lem is not immediately suscep-
tible to solution by Gomulka.
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Midtlle East - Africa
COMMUNIST ECONOMIC AND
Pakistan's primary aim in its
contacts with Communist countries
continues to be to obtain military
aid and, diplomatic support to bol-
ster it.s position against India.
Pakistan, however, has given sub-
stantia.l publicity to Communist as-
sistance for its economic develop-
ment pz'ogram, despite the fact that
the amounts received for this pur-
pose have been relatively small.
The extensive press treatment
accorded the Communist aid has been
due in part to its newsworthiness.
It is also possible that the Commu-
nist aid agreements receive pub-
licity in order to elicit even
larger US and other Western aid. In
addition, the Communist practice of
signing a number of small-scale
agreement s, rather than a single
comprehensive one, generates con-
tinual press coverage.
Since 1956, Communist coun-
tries have extended credits of about
$210 million, compared to more than
$3 billion in free world credits in
the past five years alone. Commu-
nist credits actually used amount
to only about $40 million, almost
all from the Soviet Union, and the
net effect has been slight. About
a thiY-d of the total Soviet credit
has been used to finance various
small emergency purchases, a petro-
leum eaxploration project, and some
agricixltural equipment imports. How-
ever, the Soviets plan to build a
110-megawatt thermal power plant in
East Pakistan during Pakistan's
third five year plan (July 1965 to
June 1970), which would be a sig-
MILITARY AID TO PAICI STAN
nificant addition tq installed
capacity in that pa.~t. of the coun-
try. A sizable por?ti.on of the to-
tal Soviet credit of $94 million
remains unallocated.
The only activity so far gen-
erated by Chinese aid has been the
work of advisers at: can ordnance
plant and of a roa~i~ixi.lding team
and some commodity imports. The
Chinese plan to bu_L`ld a heavy ma-
chinery plant and a ~?aper m111 un-
der a $60-million c:~'edit. Czech
and Polish aid to date has con-
sisted only of promises to build a
sugar mill, cement plants,- and
power plants.
Communist military aid is far
less publicized because of its im-
pact on Pakistan's ''relations with
the West. Here Moscow has not yet
been helpful, despite hopes raised
by a recent Pakistani delegation to
the USSR. Moscow,,m~oreover, re-
mains a major source: Qf arms for
Indian forces, eve.ri though it has
retreated slightly'f`rom the com-
plete diplomatic s~tF>port it has
given India in pa~~t years.
Communist China, on the other
hand, not only has''c~iven Pakistan
diplomatic support'r~gainst the two
countries' common enemy, India, but
also continues to supply military
aid, including ai~.Craft and tanks.
This has done much;~to relieve Paki-
stan's critical artn,s shortage, and
is obviously tran;al~~table to some
degree into closer-;over-all rela-
tions, which the :Pa:kistani Govern-
ment may make more of than it mer-
its.
sEC'RET
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NASIR REITERATES EGYPT'S OPPOSITION TO CONSERVATIVE ARABS
Tn speeches on 23 and 26
~Tuly President Nasir gave rela-
tively calm but firm warning that
his policy of opposition to con-
servative Arab states will con-
tinue, despite alleged US pres-
sure.
Nasir indicated that he
does not expect further aid from
the US since he is unwilling to
submit to what he called "impos-
sible conditions" imposed by the
US Congress. He claimed that the
US is reluctant to renew aid be-
cause Egypt refuses to surrender
"on various foreign policy is-
sues," such as its threat to
strike at the "base of aggres-
sion" in Saudi Arabia if that
country is used to support at-
tacks on the Yemeni revolution
ary regime. He also reiterated
Egypt's determination to wage
preventive war against Israel if
the Israelis acquire atomic weap-
ons.
Nasir announced that he would
not attend the Fourth Arab Summit
Conference--which will almost cer-
tainly scrub the meeting scheduled
for September--because the "reac-
tionary" Arab states have destroyed
the spirit of cooperation estab-.
lished by the summits. He alleged
that Jordan, Saudi Arabia,-and
Tunisia have used the detente to
plot against Egypt instead. of help-
ing to confront Israel, the common
enemy.
Further trouble for Jordan
was indicated in Nasir's praise
for the Palestine Liberation Organ- 25X1
ization, which has called for the
elimination of Jordan's "terrorist"
regime.
SUDAN CHOOSES NEW PRIME MINISTER
Sadiq al-Mahdi, youthful
president of the dominant Umma
party, has finally replaced Mo-
hammed Mahjoub as prime minister
of the Sudan. Infighting within
the Umma--which has largely para-
lyzed the government for months--
may nevertheless continue.
On 25 July Sadiq`s supporters
called for a no-confidence vote
in the Constituent Assembly
against Mahjoub's government and
ousted Mahjoub by a vote of~126
to 30. On 27 July, Sadiq was
elected to farm a new coalition
with the National Union Party (NUP}.
Although a majority of Umma
parliamentarians have long backed
Sadiq's candidacy, Sadiq himself
had been reluctant to provoke an
open conflict with the influential
Imam al-Nadi al-Mahdi, spiritual
leader of the Ansar sect which
forms the Umma's tribal power base.
The Imam and other members of the
Mahdi family had firmly supported
Mahjoub.
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The Imam has called large
numbers of his tribal supporters
intro the Khartoum area, but has
not: yet indicated whether he will
use them to block formation of
Sadiq's new government. He and
Mahjoub may however, withhold
their support from the new cabi-
net. and take their party faction
into opposition in the Assembly.
NUP President Ismail al-
Azhari has apparently agreed to
participate in a new coalition
under Sadiq's leadership, but
an Umma split might encourage
the NUP to stiffen. its require-
ments for cooperation.
In any event;, the new gov-
ernment is likely'?to move cau-
tiously toward so~~;ring the com-
plex economic pro$~:Lems or toward
reaching a political settlement
of the Negroid separatist revolt
in the southern provinces.
Meanwhile, the confusion in
Khartoum has inspiz?ed a rash of
~y11 a~zempt a coup
.PRESIDENT'S I LLNES S MAY UNSETTLE 1VIALAGASY REpUBLI C
The illness of President
Tsiranana may bring on a period
of political uncertainty in the
Malagasy Republic.
politburo of his Social Democratic
Party (P6A) may be considering
a constitutional modification
allowing'Interior Minister
Res-amps, who is also the power-
fu1 PSD secretary general, to
assume interim presidential
powers. Vice President Tsiebo,
a political nonentity, would be
unable to prevent such a move.
.?~ take-aver by Resampa, a
coastal tribesman who is heartily
dislilted by the Merina people
inhabiting the country's interior
plateau, would probably raise
tensions between the-rival
ethnic groups. Although most
army officers are .Merina, the
Frenchmen who hold nearly all.
the staff positions; might deter
any military move ;~g;sinst
Resampa. The paramilitary anal
police forces are tance given to
the Frei governr~e~nt would be
viewed as an offense against
Cuba. A Soviet.'',trade mission is
currently in the Chilean capital.
Scoffing at criticism of
Cuba's domestic ',situation, Castro
maintained that ';Cubans are giv-
ing more and more support to the
revolution and that the revolu-
tion is growing stronger. He
attributed to P:re;sident Johnson
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a remark that the revolution is
on the downgrade and denounced
the claim as baseless.
Among the audience were
many of the 150 delegates who
will attend the Fourth Latin
American Students' Congress..
The congress, to be held in Ha-
vana from 29 July to 9 August,
will probably be used for fur-
ther verbal attacks .against
"Xankee im erialism."
INCREASED TERRORISM THREATENED I N VENEZUELA
A split over policy between
the leadership of the Communist
Party of Venezuela (PCV) and the
hard-liners of the Armed Forces
of National Liberation (FALN),
its paramilitary organizat-ion,
may lead to an increase of ter-
rorist acts in Venezuela.
The issue of armed struggle
versus political action has di-
vided the Venezuelan leftist ex-
tremist movement since the fail-
ure of its terrorist campaign
of violence in late 1963. After
a year and a half of feuding, a
split between the soft-line PCV
leadership and the radical dis-
sidents in the-FALN was made
definite and public in June by
the announcement of a separate
hard-line organization led by
guerrilla leader Douglas Bravo.
Bravo had previously attempted
to unseat the PCV soft-line
leadership. He was expelled
from the PCV politburo and sus-
pended from party activities in
May. His group now threatens
heightened violence as a show
of strength to win national and
international Communist recogni-
tion and support.
Page 23
A 24-June PCV editorial,
listing charges against Bravo,
indicated that until his._expulsion
he had exploited his politburo po-
sition to create the competing
hard-line guerrilla movement.
Existence of the movement was
announced by a sympathetic Ha-
vana broadcast on 11 June. The
FALN representative in Cuba is
pro-Bravo, and the propaganda 25X1
emanating from Cuba indicates
Cuban blessing of Bravo's group.
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DOMINICAN PRESIDENT PROPOSES REFORM OF SUGAR :INDUSTRY
President Joaquin Balaguer
has followed up his emergency
measures to salvage the faltering
Dominican economy with. proposed
legislation to reorganize the
sugar industry. This is-his first
major effort at long-term improve-
ment of the economy through insti-
tutional reform.
In a speech before the Do-
minican Congress on 20 July, Bala-
guer outlined a draft law which
would dissolve the state-owned
Dominican Sugar Corporation. The
corporation controls most of the
country's principal industry and
its continued operating deficits
are a serious obstacle to improve-
ment of general economic condi-
tions.
Balaguer named political in-
terference, poor administration,
and corruption as the principal
causes of the industry's precarious
financial condition. He said a
reformed sugar organization would
not only lower production costs
but would serve as a springboard
for agricultural diversification
and land reform. The speech and
draft law indicate that the Pres-
ident intends to maintain the per-
sonal control of the state sugar
industry which he assumed shortly
after his inauguration.
Balaguer's proposal calls for
a nine-man council to supervise
the government's 12 sugar centrals.
Page 24
Although this changE. would not
basically alter the administrative
machinery of the ziui:onomous
sugar centrals it would give
Balaguer a freer Yiarid in making
personnel changes Arid organiza-
tional modifications.
7'he new orgar~i~:ation would
begin free of debt:. Halaguer
proposed that the government
assume the corporation's present
indebtedness of an Estimated
$67 million. He ctici not specify,
however, where money for operating
capital and financ:irig long-term
improvements would come from.
To make the c:ha~nges more
palatable to the industry's
some 70,000 employees, the pro-
posed legislation pY~ovides for
two labor representatives on
the council. All pY~ofits after
taxes and improvements are to
be distributed among the workers.
Balaguer promised tl-iat there
would be no mass dismissals,
but did indicate t.Yiat some po-
sitions would be abolished.
The US Embassy comments
that the proposed crxanges are
less revolutionary 'than the
President' s speech ' a.nd news-
paper accounts would. suggest.
These reforms could, however,
lead to improvement; in the
chronically ill sugar industry
and appear to have 'met in part
the administration's need for
some immediate reform measure
for political effect..
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