WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A005600010001-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 35
• Document Creation Date: December 21, 2016
• Document Release Date: May 7, 2008
• Sequence Number: 1
• Publication Date: December 23, 1966
• Content Type: SUMMARY

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DIRECTORATE OF
INTELLIGENCE
State Dept. review
completed
WEEKLY SUMMARY
Secret
23 December 1966
No. 0321/66
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SECRET
(Information as of noon EST, 22 December 1966)
VIETNAM
Large allied sweep forces this week made contact with
Viet Cong units in the northern provinces of Thua
Thien and Binh Dinh. The Communists stepped up small-
unit actions and terrorism on the occasion of two Com-
munist holidays. In Saigon, the Constituent Assembly
has decided that the constitution should provide for
a president, a vice president, and a prime minister
.in the executive branch of the future government, and
that all local officials should be elected rather than
appointed.
ommunists have loosed a flood of propaganda protest-
ing the bombings in the Hanoi area.
CHINESE COMMUNIST LEADERS STILL UNDER ATTACK
Despite intensified attacks by the Red Guards, Liu
Shao-chi and Teng Hsiao-ping retain their official
positions as chief of state and party secretary gen-
eral. A series of rallies denouncing early victims
of the cultural revolution may be designed to bring
out charges which might implicate Lin and Teng.
CHINA DOUBLES PETROLEUM OUTPUT
As a result of an increase in output over the past
five years, essential imports have been reduced to a
few additives. Production from known oilfields should
keep pace with any foreseeable expansion of the econ-
omy but would probably not support a large-scale con-
ventional military action of prolonged duration.
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SF CRF T
Europe
SOVIET PLAN AND BUDGET FOR 1967
The economic guidelines for 1967 indicate that defense
expenditures will probably increase again next year.
Progress is planned in the civilian sectors of the
economy as well, but a number of basic problems re-
main.
NATO TALKS ESTABLISH TRANSITION GUIDELINES
The NATO ministerial meetings both confirmed France's
divorce from the military side of the Alliance and
launched a major review of how NATO should adapt itself
to the new and fluid political situation in Europe.
YUGOSLAV PARTY CENTRAL COMMITTEE TO HOLD THIRD PLENUM
IN SIX MONTHS
In the wake of the Rankovic affair, the central com-
mittee is finding it necessary to meet again on 26
December to attempt to contain disruptive trends.
Middle East - Africa
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CEYLON'S COALITION GOVERNMENT FACES GROWING OPPOSITION 20
Prime Minister Senanayake's government, which has
found it necessary to halve the rice ration, is also
in growing political trouble over its failure to cope
with other economic problems.
IRAQ PIPELINE DISPUTE SNARLED BY ARAB POLITICS
The dispute between Syria and the Iraq Petroleum Com-
pany has taken on political overtones. Iraq is being
pressured by Cairo and Damascus to nationalize the
oil company.
JORDAN UNDER PRESSURE TO ACCEPT FOREIGN ARAB TROOPS
The United Arab Command meets on 24 December to dis-
cuss arrangements, but King Husayn still hopes to
avoid the actual entry of these forces.
ZAMBIA SEEKING COMMUNIST ASSISTANCE
Zambia is cautiously broadening its relations with
Communist countries. Although the government re-
mains wary of Communist purposes, the number of Com-
munist personnel in the country is increasing.
MOBUTU TIGHTENS SCREWS ON THE BELGIANS
Relations between the Congolese President and Union
Miniere are once again tense as his 1 January dead-
line for the transfer of the Belgian company's head-
quarters to Kinshasa approaches. There is a good
chance of an accommodation unless one or the other
pushes the dispute beyond the point of compromise.
Western Hemisphere
STRIKE THREATENS CHILEAN GOVERNMENT'S ECONOMIC PROGRAM 26
The public health workers, supported by the Communist-
Socialist labor organization, are conducting an ille-
gal strike that threatens to disrupt the government's
stabilization program.
VENEZUELAN-GUYANESE BORDER DISPUTE BECOMING MORE HEATED 26
Venezuela and Guyana have been unable to agree on a
forum for discussion of their dispute over ownership
of Ankoko Island, and Guyana's prime minister, fear-
ing charges of weakness from his parliamentary op-
position, may yet decide to take this sensitive issue
to the UN.
SECS RET
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oft AM
SEC R E"1'
VENEZUELAN GOVERNMENT WINS ROUND AGAINST TERRORISTS
The stronc steps to curb terrorism in Caracas seem to
have won the approval of the public, but the govern-
ment, having yielded to military pressure on this is-
sue, may find the military difficult to deal with in
the futurE.
SECRET:'
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FAR EAST
Hanoi and its Communist supporters abroad are
seeking to use their allegations about US air at-
tacks in the Hanoi area to stimulate international
opposition to US policy. North Vietnam and China,
however, avoided any specific threats of reprisals
or moves to broaden the conflict. Communist forces
in South Vietnam continued to avoid major contact
with large-scale allied operations and to concen-
trate on small-unit actions and terrorism. The
South Vietnamese Constituent Assembly made further
progress in defining the structure of the future
government.
There were no major changes in the Chinese
leadership struggle. Although standing committee
member Tao Chu made the first reported attack by a
high official on Chief of State Liu Shao-chi and
party general secretary Teng Hsiao-ping, no offi-
cial moves have been made to bring them down. There
is evidence that the "cultural revolution" may be
disrupting work in vital Chinese scientifir no-
grams, de-
spite central committee warnings against interfer-
ence with economic and government enterprises.
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4WW SECRET --A%
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VIETNAM
Heavy contact between allied
and Communist forces was reported
during the week in northern Thua
Thien and coastal Binh Dinh prov-
inces as allied sweep operations
in search of large enemy concentra-
tions continued throughout South
Vietnam. Two Viet Cong holidays
--National Revolution Day on 19
December and the anniversary of
the founding of the National Front
for the Liberation of South Viet-
nam (NFLSVN) on 20 December--were
celebrated this week with a flurry
of small-unit actions coupled with
terrorism and sabotage in widely
separated areas.
In Bins Dine province units
of the US lst Air Cavalry Divi-
sion killed 131 enemy soldiers
in three days of fighting. About
12 miles northwest of Hue in
Thua Thien Province, a battalion-
strength US Marine task force was
attacked on 20 December by an
estimated battalion-size Commu-
nist force; during the ensuing
three-hour battle, 54 enemy sol-
diers were killed and four cap-
tured. In the central highlands
of Pleiku, a Communist force am-
bushed a 30-truck convoy and killed
15 allied troops.
Constituent Assembly
Continues Debate
The Constituent Assembly con-
tinued to make headway this week
Page 3
in working out the structure of
the future government. The depu-
ties have decided that the execu-
tive branch will have a vice
president as well as a popularly
elected president who will appoint
a prime minister and a cabinet.
The prime minister's role will
be limited to routine administra-
tive duties, and both the presi-
dent and the legislature will have
the power to remove him from of-
fice.
Additionally the deputies
voted in favor of the election
of local chiefs and councils
from the province level down to
the villages. The question of
elected province and municipal
chiefs sparked considerable
controversy, since t.-:e officials
who now run the 44 provinces and
six autonomous cities are almost
exclusively appointed military
officers. Most of the deputies
argued that local elections would
bring the public into the govern-
ment process, but some Catholic,
military, and Dai Viet assembly-
men who have been close to the
present regime strongly opposed
the provision as likely to weaken
central government authority.
The deputies reportedly have
also adopted the principle of an
elected bicameral legislature,
and an independent judiciary,
SECRET
WEEKLY SUMMARY 23 Dec 66
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SECRF'I'
but details have -iot yet been
worked out. Still to be debated
before the assembly moves on to
the actual wording of the constitu-
tion are such questions as a
separate inspectorate branch in
the government and special con.-
stitutional sectiDns. All of the
provisions adopted by the assembly
to date are subject to modifica-
tion by the drafting committee
and possibly by the Directorate.
Communists Continue to Protest
Bombings in Hanoi Area
The Communi3t world is giv-
ing Hanoi intens-ve propaganda
support for its claims that the
US :combed residential areas of
Hanoi on 13 and L4 December. Pe--
king's commentary on Vietnam, for
example, rose sharply for the
first time since last July. On
16 December, the Foreign Ministry
condemned the alleged bombing of
the Chinese Embassy in Hanoi, on
1.9 December Foreign Minister. Chen
Yi addressed a Peking rally at.
which 100,000 people were present,
and on 20 December People's Daily
warned that if the US expands the
war the Chinese "will resolutely
meet the challenge and go to war."
This is a variation on Peking's
standard formulation but does
not extend earlier Chinese com-
mitments to send men to Vietnam
"'if needed," and all Chinese
statements continue to imply that
Peking will avoid provocative ac-
tions.
In the free world, CorMunist-
dominated front groups tried to
organize public demonstrations to
protest the bombings, and on 17
December, the Havana-based Tri-
Continental "anti-imperialist"
organization (which claims to rep-
resent 70 countries in Asia, Af-
rica, and Latin America) called
for harassment of US embassies
throughout the world. Such demon-
strations have already occurred
in Algeria and Yugoslavia, per-
haps independently. On 20 Decem-
ber some 300 Algerians marched on
the US Embassy in Algiers, and
Yugoslavians actually damaged
the US Consulate in Zagreb. ~ 25X1
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CHINESE COMMUNIST LEADERS STILL UNDER ATTACK
The poster campaign being
waged in Peking by the Red Guards
against Chief of State Liu Shao-
chi and party general secretary
Teng Hsiao-ping intensified dur-
ing the past week, but no offi-
cial public move has yet been
made against them. Liu signed
a state message to Kenya on 11
December, and on 14 December
Teng attended the funeral of a
central committee member.
The ability of these once-
powerful leaders of the party
machinery to keep their official
positions suggests that divi-
sions within the current leader-
ship are still blocking a de-
cision on what is to be done to
them. One group, apparently in-
cluding Lin Piao, seems to want
to bring them down in total dis-
grace. Another wants to limit
the charges against them prob-
ably in an effort to reduce reper-
cussions inside the party.
Liu and Teng were criticized
by the standing committee's Tao
Chu in an unpublicized speech
given at a meeting of medical
workers on 13 December--the first
reported criticism of them by a
high official. According to an
account carried on a poster, Tao
criticized them mainly for taking
a "bourgeois reactionary" line
during the past seven months, and
did not mention more serious charges
raised in indictments by the Red
Guards. Tao said that "all the
regions" had been influenced by
the "poisonous" Liu-Teng line.
He did not, however, indicate
what action, beyond "criticism,"
was contemplated against either
Liu and Teng or errant regional
officials.
Meanwhile, a parallel but
much more intense campaign aimed
at "further exposing" former
mayor of Peking Peng Chen and other
early victims of the cultural rev-
olution has been picking up speed
in the capital. Large rallies
attended by Premier Chou En-lai,
Madame Mao, and senior members
of the central committee's cul-
tural revolution group, have been
held almost daily since 12 De-
cember. Reports of speeches
given at these rallies have not
referred to Liu and Teng, but the
impression given is that the new
attacks may bring out charges
which might implicate them.
There are continuing signs
that the authority of party com-
mittees has been seriously eroded
by events of recent months, and
that this breakdown may be dis-
rupting work in vital scientific
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students in geology, mathematics,
and other sciences who graduated
last spring are : till waitin
for assignments.
Some Chinese leaders, notably
Chou En-lai, seem to have been
seriously concerned over damage
the "cultural revolution" is do-
ing to China's economy and to
scientific developmental programs.
On 19 December the central com-
mittee reportedly issued another
directive calling for curbs on
"cultural" agitators who inter-
fere with the work of economic
and governmental enterprises.
Like the many similar injunc-
tions issued since August, how-
ever, this one may be nullified
by a group of activist leaders,
probably including Mao and Lin,
who are bent on pushing ahead
with the "revolution" despite
its destructive character.F'
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COMMUNIST CHINA
MAJOR OILFIELDS
December 1966
23 DECEMBER
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CHINA DOUBLES PETROLEUM OUTPUT
Communist China's petroleum
industry has roughly doubled its
output since 1962 and now is pro-
ducing enough to meet domestic
needs at the austerity consump-
tion levels maintained by the re-
gime. Further development of
known oilfields should keep pace
with any foreseeable expansion of
the economy but probably would
not support. a large-scale conven-
tional military action of pro-
longed duration.
The most important factor
in raising crude oil production
to an estimated ten million tons
in 1966 has been the development
of the Ta-ching oilfield in Man-
churia, which began producing in
commercial quantities in 1963 and
now accounts for 45 percent of
total output. Production gains
at China's two older major oil-
fields--at Yumen and Karamai--
have been less dramatic, and fu-
ture increases in crude production
are expected to come from Ta-ching
and from the new Shengli oilfield
in Shantung Province. The exist-
ence of the latter was first an-
nounced in 1966, and it is not
expected to produce on a large
scale until 1968.
Concurrent development of the
refining industry has enabled
China to process the increasing
amounts of crude and improve the
quality and variety of the end
products. In 1966 it produced
jet fuel, the lower grades of
aviation gasoline, and quality
lubricants as well as basic prod-
ucts such as motor gasoline,
kerosene, and diesel fuel.
This rising output, combined
with tight controls over consump-
tion, has brought imports down
from the all-time high of 3.4 mil-
lion tons in 1960 to about 300,000
tons in each of the last two years,
and much of that was low-grade
Albanian crude imported for po-
litical reasons. Peking's only
real import need now is for ad-
ditives to produce some aircraft
fuels and lubricants.
It is believed that supplies
of petroleum were just about ade-
quate for current consumption
through 1964. Since then, the
Chinese may have been able to set
aside up to: a million tons in the
regional bulk storage sites that
have been built throughout the
country.
The achievements of the in-
dustry in recent years, however,
have not changed China's status
as a minor producer and consumer
of petroleum by world standards.
Petroleum still contributes less
than ten percent of its energy con-
sumption.
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EUROPE
As the year draws to a close, Soviet leaders
are still wrestling with economic problems. An ex-
cellent harvest was produced this year, but indus-
trial performance has not measured up and the hard
economic decisions which may well determine the So-
viet leaders' own political futures have clearly
been made no easier for them. The Supreme Soviet
this week approved the plan and budget for 1967
but was given no further word about the five-year
plan (1966-70) which, with a year of the plan pe-
riod gone by, has still not been approved.
Overshadowing the routine economic business was
the award of the Soviet Union's highest military
decoration to Brezhnev on his 60th birthday. The
surrounding fanfare fell just short of that accorded
Khrushchev in similar circumstances and served to
emphasize Brezhnev's pre-eminence in the present
leadership.
In Paris last weekend, the NATO Council of Min-
isters concluded their semiannual meeting with a
minimum of fuss, carefully skirting the boundary
line between France and the other fourteen members.
They handled military matters in their Defense
Planning Committee without France and were thus
able to get some business done. This included es-
tablishment of a Nuclear Defense Affairs Committee
designed to give have-not members more participation
in planning and deployment. Nonmilitary matters
were taken up by the full North Atlantic Council
which, among other things, commissioned a major
review of how the alliance should adapt itself to
the changed political situation in Europe since its
founding 17 years ago.
In Yugoslavia, the ouster last summer of former
heir-apparent Rankovic is still causing considerable
political turmoil. Tito has decided, while he tries
to put things back in order, not to try Rankovic on
criminal changes lest this complicate his task.
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SELECTED INDICATORS OF SOVIET ECONOMIC PERFORMANCE, 1961-70
ANNUAL PERCENTAGE RATES OF GROWTH"
Consi mer- Oriented -Up
f'NVUPON?
[ SHIFTING PATTERN! IN
THE cL1OC TION~CF
CIVILIAN MACHINERY
(Western concept)
1961-65b
1966
1967
'
1966-706
Actual
Plan
I Actual
Plan
Plan
4,5
1 6.5
1 6.5-7 1
5.5-6 a
6.0
2.5
8-10
7.0
400
5.0
6.0
j 6.5
6.0
8.0
8.5
5.0
13.0
7.0
10.5
10.0
7.5
-4
5.0 fi
5.0
7.0
6.5
6.5
1.5
9.0
8.5
3.5
9.5
10.5
12.0
16 +
13.0
14.0
10,0
15.0
11.0
7.0
15.0
14.0 i!
17.0
25,0
1~g
RESOUR ES ALLOCATED
TO AGRICULTUR
(Rates of Graw#fs_$elow
].966 70 la n)
Industrial Production
Agricultural Production`
Total
Consumer-oriented Sectorsd
Growth-oriented Sectors
Commissionings of New Fixed
Capital e
Total Machinery Production
(including military)
Allocated ', Investment
to: Consumer Durables
Investment
Use of Electric Power in
Agriculture
i' Increase in Irrigated Landf
(million acres)
Increase in Drained Landf
(mill ion acres)
INDICATORS OF CONTINUED r Real Income 4.0
Public Consumption Fundss i 7.0
~SN~UI~V`ER WLLEAI~E
(fi r Capita Rote o Change) Housing 2.5
a. Rounded to nearest half-percent.
b. Average annual rate of growth.
c. Rates of increase for 1966 and 1967 plans are for gross production.
d, Includes investment in agriculture, housing, consumer goods industries, and services.
e. Excludes collective farms and private housing for 1966 and 1967.
f. Average annual for 1961-65 and 1966-70.
g. Public consumption funds finance such items as pensions, stipends, leave pay, education, and medical serivces.
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SOVIET PLAN AND BUDGET FOR 1967
The USSR's economic guide-
lines for 1967 indicate that
there will be a continuation of
the regime's economic policy of
the past several years. If the
projected rise of about 6 per-
cent in gross national product
is achieved in 1967, the 1966-
70 plan will be on schedule.
Nevertheless, the drastic under-
fulfillment of the 1966 plan for
commissioning of new plant and
equipment is a harbinger of fu-
ture difficulties.
An increase in military ex-
penditures is foreshadowed by
a planned 8-percent rise in the
explicit defense allocation in
the state budget, although this
published increase is not con-
sidered a conclusive indicator.
However, total outlays for
"science"--a category believed
to include space and defense-
related expenditures--are sched-
uled to rise by nearly 6.5 per-
cent. Also, the 1967 goals for
nonmilitary uses of machinery,
when compared with the increases
scheduled for over-all machinery
output, suggest another boost in
1967 in the output of hardware
for military and space programs.
The regime's intention to im-
prove consumer welfare next year
is reflected in the 5.5-percent
rise planned in per capita real
income. Much of the growth in
consumer welfare will be the
result of better food supplies,
reflecting the sharp increase in
farm output in 1966. A 15-per-
cent increase in housing comple-
tions promised for 1967 will, if
fulfilled, be an additional gain
for the consumer. Further large
increases in disposable money
income scheduled for 1967, how-
ever, will add to latent infla-
tionary pressures now present
in the USSR. Growth in personal
savings, accelerating in recent
years, increased by 23 percent
in 1966, and savings are now
equal to almost one fifth of
total personal disposable income.
Although agriculture is
scheduled to receive increased
resources next year, the alloca-
tion of machinery, fertilizer
and other major inputs to agri-
culture will nevertheless be be-
low the average annual increases
called for in the Brezhnev pro-
gram announced in March 1965.
The lack of evidence of all-out
effort to meet the provisions of
Brezhnev's program may reflect
an official euphoria in the wake
of the bumper 1966 harvest and
a weakening of the original com-
mitments to the farm sector.
Industrial production is
planned to grow by about 7.5
percent, the same as that esti-
mated to have been actually
achieved in 1966. Special at-
tention is to be devoted to
eliminating long-standing bottle-
necks in the petroleum industry
and the shift from coal to oil
and natural gas will continue.
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After several years of relative
neglect, renewed emphasis is to
be placed on the ferrous metals
industry, which is said to have
limited the expansion of the ma-
chinery, oil and natural gas, and
construction brances.
The 1967 plan indicates that
further implementation of the in-
dustrial reform program is expected
to help achieve the planned output
goals in this sector. Progress on
the crucial problen of price re-
form is explicitly recognized in
the plan as essential to the
success of the reform movement.
Although Finance Minister Garbuzov
claimed the reforms had been
instrumental in improving the
performance of the enterprises
that converted to the new sys-
tem during 1966, the fact that
no enterprises have been con-
verted since the beginning of
the third quarter indicates
that difficulties have persisted.
NATC TALKS ESTABLISH TRANSITION GUIDELINES
The NATO ministerial meet-
ing in Paris last week marked an
important transitijn in the life
of the 17-year-old Alliance. The
meetings confirmed France's di-
vorce from the military and many
of the institutional arrangements
of the Alliance, and the remain-
ing fourteen members made impor-
tant decisions affecting the fu-
ture organization of the common
defense in recognition of this
fact. Moreover, with French ac-
quiescence, they also launched a
major review of ho,a the Alliance
should adapt itself to the new
and fluid political situation in
Europe resulting particularly
from France's defection and the
growing emphasis on East-West de-
tente.
The Fourteen, minus France,
functioned smoothly in the field
of defense and all military mat-
ters in the Alliance will hence-
forth be considered by them in
the council-level Defense Plan-
ning Committee (DPC); nonmilitary
issues will be taken up by the
full North Atlantic Council. The
DPC established a Nuclear Defense
Affairs Committee designed to give
all its members fuller participa-
tion in the planning of nuclear
strategy and deployment. A sub-
ordinate seven-member group is to
work out detailed policy proposals
for this committee. The Germans
did not push for a greater role in
nuclear planning, although Defense
Minister Schroeder suggested that
Germany "be given a special influ-
ence on the decision for release
of these weapons." Ambassador
Cleveland believes that since the
Germans no longer appear to be
pressing for a "hardware" approach
to nuclear sharing, the debate on
this question can now be handled
systematically by the new commit-
tee.
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The DPC also approved in
principle new and improved ar-
rangements for the exchange of
communications and information
in times of diplomatic or mili-
tary crisis. It adopted a com-
mon funding procedure for future
military exercises of Allied
Command, Europe, mobile forces.
Plans for a NATO communications
satellite linking SHAPE and sub-
commands were approved. Prog-
ress was made on guidance and im-
provement of forces relating to
the flank regions of NATO, es-
pecially the southeastern area.
Assisted by the recent tri-
partite discussions by the UK, the
US, and Germany, the DPC also in-
itiated a fundamental review of
NATO strategy as related to forces
and budgets to be completed early
in 1968. Although even without
the French there will be continu-
ing disagreements over strategy,
this thoroughgoing review of mil-
itary planning concepts could pro-
duce the Alliance's first real
five-year plan.
France chose not to inter-
vene in any of the military pro-
ceedings, nor did it withdraw any
further on the political side.
The "boundary line" which has by
now been largely drawn between
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Page 15 WEEKLY SUMMARY
France and NATO was not even dis-
cussed. Moreover, France chose
not to argue whether NATO has a
role to play in an East-West de-
tente, nor whether individual mem-
bers of the Alliance should try
to develop a common policy to
guide their separate approaches
to Eastern Europe. This reticence,
however, indicates no change in
France's belief that NATO has no
real function in such matters.
Foreign Minister Couve de Murville
reiterated that Paris remains as
opposed to political integration
as it is to military.
The French also chose not to
dispute the Italian and Belgian
proposals that NATO consider the
problem of the European technologi-
cal lag behind the US, and begin
a fundamental review of the fu-
ture tasks of the Alliance. Paris
was probably operating on the as-
sumption that these studies will
not produce the intended political
strengthening of the Alliance.
Other forums such as the OECD may
eventually take over the techno-
logical area, and in view of the
emphasis which the Belgian pro-
posal places on increasing Euro-
pean weight in NATO, France may
exploited to serve French ends.
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YUGOSLAV PARTY CENTRAL COMMITTEE TO HOLD THIRD PLENUM IN SIX MONTHS
In the wake of the Rankovic
affair, the Yugos:!av party's cen-
tral committee is finding it nec-
essary to meet again on 26 Decem-
ber--the third time in six
months--to attemp'_ to contain
disruptive trends,
The sweeping party reorgan-
ization approved by the central
committee last Oc,:ober was to
be only the start of a wider ef-
fort to decentral:_ze political
power so that anoi:her Rankcvic
could not emerge. Arguments
have arisen over 1--he party's
future shape and role, and sev-
eral prominent figures have gone
so far as to urge that an oppo-
sition be permitted within the
party. Despite T:_to's repeated
rejection of a mu:_tiparty system,
a polarization of liberal and
conservative forces has been tak-
ing place.
In the absence of authori-
tative guidance from the party
Yugoslavia's governmental insti-
tutions have been assuming more
of a life of their own. In early
December, for exariple, when one
house of the Slovenian legisla-
ture refused to pass a health
services bill, the executive
council (cabinet) resigned. Al-
though the regime s press gen-
erally lauded these unprecedented
developments as proof of the
strength of parliamentary develop-
opment, it has also criticized
the Slovenian cabinet for "acting
too precipitately."
Although Tito is essentially
following a liberal line, he ap-
parently does not wish to press
the conservatives at this time.
His decision on 9 December "to
pardon from criminal prosecution"
Pankovic and certain of the lat-
ter's associates widened this
approach and avoided making them
martyrs. However, Tito's action
did not rule out future measures
against Rankovic on new charges,
should he become a rallying point
for disgruntled conservatives and
ultranationalist Serbs.
The Federal Assembly endorsed
Tito's decision after debate on
a government report which criti-
cized the activities of the in-
ternal security service (SDB) un-
der Rankovic's direction. For
the first time, the regime offi-
cially acknowledged that the res-
idences and offices of Tito and
several other high-ranking offi-
cials had been under audiosurveil-
lance at Rankovic's direct order.
The report also heavily stressed
Rankovic's use of his power as
party organizational secretary
to place his followers in key
positions throughout the regime.
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MIDDLE EAST - AFRICA
The catalogue of headaches--none of them new--
in South Asia, the Middle East, and Africa continues
to be a long one.
The Indian Government now appears to have enough
foreign food commitments to get it through January,
but may still face shortages before elections begin
on 15 February. It also faces the possibility of new
communal violence--from the Sikhs over the status of
the new state of Punjab and again among the Hindus
over the slaughter of cows. In Ceylon, the government
is worried over popular reaction to a cut in the rice
ration caused by shortfalls in foreign deliveries and
contracts. Pakistan, too, has food problems but of a
lesser order.
The Cyprus situation may be further complicated
by the government crisis in Athens. The Greek rein
on Makarios may become even looser, a prospect which
cannot but disturb the Turks.
The same Arab problems fester. The Syrian regime
is riven by dissension among moderates, extremists,
and pro- and anti-Nasirists. Jordan's Husayn is still
beleaguered by both internal and external pressures on
his regime and his country's unity; another chapter
opens this weekend when the United Arab Command meets
to implement the Arab Defense Council's recent decision
to station Saudi and Iraqi forces in Jordan. The al-
ready shaky Iraqi Government is feeling the financial
impact of the shutdown of the Iraqi Petroleum Company's
pipeline across Syria. Anti-Egyptian Yemenis are in-
creasingly restive under the Egyptian military presence.
In Africa, Nigerian regional leaders remain at
loggerheads, and the Smith regime in Rhodesia is still
firmly in the saddle. Although tropical African gov-
ernments consider Britain committed to effect majority
rule in Rhodesia before granting independence, London
and Salisbury may yet find some compromise formula.
Congo's Mobutu remains at odds with the Belgians over
the status of the Union Miniere mining firm and the
regimes of several mini-states--particularly Togo,
Dahomey, and Burundi--face continuing internal dis-
content.
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CEYLON'S COALITION GOVERNMENT FACING GROWING OPPOSITION
Ceylon's coalition government
appears to be losinc momentum at a
time when unresolvec. economic prob-
lems are becoming acute political
issues.. On 18 December, after a
lapse of only nine c.ays, the govern-
ment found it neces:.ary to reinsti-
tute a state of emergency as a pre-
caution against public reaction to
,3. cut in the rice rE.tion.
Prime Minister Senanayake's
.immediate problem is to find enough
food at prices Ceylon can afford to
pay. Growing reali2 at.ion that in-
sufficient rice is ELvailable in
world markets to continue a costly
rice distribution program finally
led to a decision on 1.7 December to
cut the ration in hzLlf. Normally
about one million tons of rice, sub-
sidized by the government, have
been distributed annually, about
half of it imported. Although two
major suppliers, Corununist China
and Thailand, will provide their
normal quantities in 1967, Burma
has defaulted on scheduled December
deliveries and next year will supply
only half of its usual. 200,000 tons.
There is little prospect that
Senanavake will be able to find
other sources; a cr:.tical shortage
of foreign exchange prohibits him
from raising the ante in world com-
Petition for scarce rice exports.
Senanayake fea:-s a repetition
of the civil disorder which toppled
his government after- it cut rice
rations in 1953. Ho has attempted
to lessen the impac-: by announcing
that the remaining :rice ration will
be distributed free and has launched
a campaign to expla._n the govern-
ment's position. The state of emer-
gency gives him extensive powers to
quell disorder and silence his
leftist critics. No disturbances
have been reported thus far, but
armed police are patrolling Colombo
--prepared, with military assist-
ance, to put down any violence.
The government's inability to
cope with unemployment, the high
cost of living, and shortages of
consumer goods had already begun
to pay political dividends to the
leftist opposition and to sow dis-
illusionment in Senanayake's own
United National Party. There is
also some resentment against the
Federal Party--a communal party of
the minority Tamils, which is a
key member of the governing coali-
tion.
Meanwhile, the leftist oppo-
sition--led by former prime minis-
ter Mrs. Bandaranaike, working
with Communists and Trotskyites--
has been emboldened by its sweep
of three by-elections last October
in which economic issues and commu-
nal appeals were decisive factors.
Though subject itself to internal
strains, the opposition is enthu-
siastically laying plans for labor
agitation and for contestinq sev-
eral other by-elections early next
year. Mrs. Bandaranaike has called
on the public not to create ten-
sion over the rice crisis, but
will probably benefit from any
widespread dissatisfaction.
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IRAQ PIPELINE DISPUTE SNARLED BY ARAB POLITICS
The dispute between Syria
and the Iraq Petroleum Company
(IPC) over pipeline fees, which
led to a shutdown of the line
across Syria, has developed into
more of a political question
than an economic one.
Syrian demands for increased
transit fees and a back payment
of about $100 million for alleged
underpayments by IPC from 1955
to 1965 have faded into the back-
ground, and radical Arab national-
ist elements in Syria, Egypt, and
Iraq are pressing increasingly
for Iraqi nationalization of IPC.
Egyptian and Syrian propaganda
organs are carrying on an insist-
ent campaign for nationaliza-
tion, while Iraqi Prime Minister
Talib threatens the oil company
with demands for oil royalties,
whether or not the pipeline op-
erates?
On the other hand, Iraqi
President Arif, at first taken
in by Talib's conviction that
the West cannot replace Iraqi
oil, now is worried over the eco-
nomic consequences of the pipe-
line shutdown. This threatens
to stop nearly 70 percent of the
country's oil revenues, totaling
about $350 million annually.
Arif, however, is restrained from
dismissing Talib by the fact that
the prime minister's position on
the oil dispute is a popular one.
His dismissal over the issue
would make Arif a target of rad-
ical Arab nationalists within
and without Iraq.
IPC's British and American
parent companies have switched
to oil from southern Iraq and
the Persian Gulf. Their French
partner, Compagnie des Petroles
Francaise (CFP), has contracted
for some Soviet oil to tide it
over the next few weeks, and its
other needs will be taken care
of by American companies. CFP
so far is standing with its part-
ners and has spurned a Syrian
offer for deliveries from the
pipeline, but is caving in on
the Syrian demands for increased
transit fees.
The Syrians have rejected
a company offer to put $10.3 mil-
lion in escrow pending arbitra-
tion of the dispute under the
terms of the 1955 IPC-Syrian oil
transit agreement.
The Soviets, who have taken
a very reserved attitude toward
the Syrian action, may be discom-
fited by Syrian and Iraqi claims
that the Soviet bloc would step
in and buy Iraqi oil if the pipe-
line dispute is not resolved.
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JORDAN UNDER PRESSURE TO ACCEPT FOREIGN ARAB TROOPS
Jordan will again confront
its radical Arab neighbors on the
issue of stationing foreign Arab
troops on its territory at a
meeting in Cairo of the United
Arab Command scheduled for 24
December. The meeting has been
called to arrange the entry of
Iraqi and Saudi troops into Jor-
dan in accordance with the Arab
Defense Council's decision of 10
December. These forces are sup-
posed to move in by 10 February.
King Husayn felt compelled
to agree to the defense council's
decision but hopes to avoid the
actual entry of the foreign Arab
forces. The issue is a critical
one. Ever since Israelis large-
scale raid into west Jordan on
13i November, the King has been
under strong pressure from within
Jordan as well as from the radi-
cal Arab states to strengthen de-
tenses along the Israeli border.
Husayn may decide to accept
the Iraqi and Saudi troops in
order to appease his internal
and external opponents, and to
take some of the steam out of
the propaganda against him emanat-
ing from Damascus and Cairo. His
refusal, on the other hand, would
intensify the verbal onslaught
from these capitals, and probably
would stimulate new agitation in
Palestinian west Jordan. The
King's most radical enemies, in-
cluding the Palestine Liberation
Organization (PLO), are unlikely
to be deterred from their efforts
to bring him down no matter which
course he chooses.
Iraqi troops have taken posi-
tions near the Jordanian border
in preparation for entering Jor-
dan, Iraqi Defense Minister Shukri
said last weekend. He also stressed
that Iraq supports the entry into
Jordan of the PLO's "army." Jordan
refused to accept the PLO forces
at the Arab Defense Council meet-
ing and almost certainly will ad-
here to that position.
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ZAMBIA SEEKING COMMUNIST ASSISTANCE
Zambia is moving cautiously
to broaden its relations with Com-
munist countries.
Zambia is short of qualified
technicians to carry out its bur-
geoning development program, and
this, combined with Zambian dis-
trust of resident expatriates from
Rhodesia, South Africa, and the
UK makes the government receptive
to Communist assistance. More-
over, the Zambian Government's
irritation at major Western coun-
tries which refuse to break com-
mercial ties with Rhodesia is
causing it to turn increasingly
to lesser Western powers and the
Communists. For example, it has
begun to sponsor secondary and
university education in the USSR
and Poland, and has accepted a
group of some 80 Yugoslav road
construction technicians.
Since mid-1966, Zambia has
established diplomatic relations
with Poland and Hungary and has
exchanged several trade and cul-
tural missions with Communist
countries. President Kaunda in-
cluded China and the USSR in his
official world tour last August.
It also appears that a series
of preliminary trade and aid dis-
cussions begun in mid-October will
result in Soviet technical help
to Zambia--probably to develop
roads, rural electrical power,
and university-level education.
Fthe two
countries probably have also
agreed to expand the almost non-
existent trade between them. It
is most likely that this would in-
volve an exchange of Zambian cop-
per for Soviet construction equip-
ment or manufactured goods to be
used in development projects. A
Chinese offer of economic assist-
ance is under consideration.
Even though it has supported
some Communist positions--defend-
ing Chinese nuclear testing, for
example--Kaunda's government has
been suspicious of Communist mo-
tives and is determined to avoid
introducing the East-West ideo-
logical struggle into volatile
southern Africa. Furthermore,
even the most militant Zambian
leaders do not wish to alienate
the Western powers, who in their
eyes, hold the key to any realis-
tic chance for bringing majority
rule to southern Africa. Despite
this wariness, the Zambians' sus-
ceptibility in certain respects
to Communist pressures may bring
them new problems.
Recently the Soviets were
able to circumvent strict Zambian
limitations on the number of for-
eign diplomatic personnel assigned
to Lusaka by insisting on and ob-
taining permission to post there
some 25 "couriers." Their presence
in Lusaka and that of Communist
technicians in the countryside will
increase opportunities for Commu-
nist contacts with the many Zam-
bian-based African nationalist
groups and refugees and with local
Zambian groups who are disgruntled
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NOBUTU TIGHTENS SCREW.) ON THE BELGIANS
Congolese President Mobutu
is once again at odds with Union
Miniere, the Belgian mining con-
cern, as his 1 January deadline
for the transfer of the Belgian
company's headquarters to Kinshasa.
approaches.
Mobutu and tr,e company, who
have long deeply cistrusted one
another, very nearly reached an
mined and in the pipeline--which
the Congolese discovered the com-
pany had been keeping at abnor-
mally high levels.
Mobutu has now given a "sol-
emn commitment before the people"
that he will implement a law al-
ready on the books to revoke Union
Miniere's concessions unless an
agreement late in November. This agreement is reached, and he claims
would have provided that the Con- to be willing to accept the eco-
golese operations of Union Miniere nomic consequences of such a move.
be run by a Kinshasa-based company, He has also moved army units no-
half of whose shares would be held torious for their indiscipline
by the Congolese Government. The
firm's extensive holdings outside
the Congo would have been con-
trolled by a Brussels-based com-
pany, in which Mobutu's government
would. retain its present holdings
of about 17 percent.
Union Miniere actually se-
cured Mobutu's tentative agree-
ment to this arrangement, but he
broke off talks just before the
agreement was to have been signed
and reverted to his demand that
the entire company move its head-
quarters to Kinshasa. The last-
minute snag arose over the rate
at which the profits of the pro-
spective Congo-based company could
be repatriated to Belgium and over
the ownership of minerals already
into the mining region in Sud-
Katanga Province. This ostensibly
is to protect the region against
an alleged plot by former premier
Tshombe, but Mobutu quite clearly
is also reminding the company that
its personnel and investments in
the Congo can be used as hostages.
Previous confrontations be-
tween the Congolese President and
Union Miniere have had in them a
large element of brinksmanship,
and there is a good chance that
the two sides will reach an ac-
commodation before the deadline.
Nevertheless, their mutual dis-
trust is genuine, and either may
push the other into a position in
which compromise is impossible.
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WESTERN HEMISPHERE
Border disputes have come into the spotlight in
Latin America with new developments in three long-
standing bilateral quarrels over territory. Many
other similar disputes in the area continue dormant.
Although they seldom blow up into serious military
confrontations, they frequently have a highly impor-
tant effect on both bilateral and multilateral rela-
tions.
Guyanese Prime Minister Forbes Burnham is becom-
ing increasingly disturbed over Venezuela's responses
to Guyana's efforts to take the sting out of a quar-
rel over ownership of a small river island on the
border. Venezuelan officials claim heatedly that
Ankoko Island is and always has been occupied by
Venezuela and they appear to be hardening their posi-
tion against any concession to Burnham on the matter.
The impasse, should it last much longer, could in-
crease the possibility of a shooting incident. It
might also lead Burnham to seek relief in the UN Se-
curity Council
The attendance of Peru or Ecuador at any of sev-
eral coming inter-American meetings may be jeopardized
by the emergence of a new round in the old border
dispute between those two countries. In view of re-
cent Ecuadorean statements, Peru has asked the guar-
antor powers--Argentina, Brazil, Chile, and the US--of
the 1942 protocol establishing the present boundary
to issue a statement reaffirming the validity of the
protocol. The guarantor powers are discussing the
request under full realization that making such a
statement would inflame Ecuadorean emotions while
remaining silent would offend the Peruvians.
An old Chilean-Argentine quarrel over the owner-
ship of some 230 square miles of territory in the
southern Andean highlands near Palena, Chile, was of-
ficially resolved by a British arbitral settlement
announced on 14 December. The award gives Argentina
most of the territory and Chile most of the usable
land. Other areas alon this border remain in con-
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S FCRL;'1'
STRIKE THREATENS CHILEAN GOVERNMENT'S ECONOMIC PROGRAM
Chile's public health workers
are. now in the third week of an il-
lectal strike for wage rises higher
than are offered them under the
government's wage readjustment pro-
gram. The government is determined
not to exceed its offer of a 20-
percent increase. Failure to main-
tain this position would deal a
severe blow to the government's
economic stabilization policy, and
would hamper other measures aimed
at stemming inflation. Several
smaller sympathy strikes have been
called, but there is as yet no ma-
- tie-up.
Unless the strike is settled
soon, growing public indignation
and the health hazard may force
the government to take drastic meas-
ures. President Frei has alerted
the army to be reac.y to deal with
any disorders. Several deaths are
attributed to the .ack of medical
Services. Frei is under some pres-
sure to use the array to run the
hospitals, but is reluctant to
do so.
The public health workers are
among the lowest paid government
employees, and there is consider-
able sympathy for their position
both within and outside the govern-
ment. They appear to have strong
backing from the Communist-Social-
ist labor central (CUTCh). The
Communists
have seized on the
issue to embarrass the government
and to criticize the over-all eco-
nomic program.
VENEZUELI\N-GUYANESE BORDER DISPUTE BECOMING MORE HEATED
The dispute between Venezuela
and Guyana over ownership of small
Ankoko Island is becoming increas-
ingly thorny. The inability of
the parties to agree on the proper
forum in which to discuss a solu-
tion is the latest difficulty.
The Venezuelans insist that
any discussions be held in the
joint Venezuelan-Guyanese commis-
sion which is examining Venezuela's
earlier claim to same 60 percent
of Guyana. They maintain that An-
koko was always theirs and that be-
cause Guyana is asserting a new
claim, it must be discussed in the
joint commission.
The Guyanese maintain that by
setting up a base on the island in
October, Venezuela violated an
agreement to maintain the terri-
torial status quo until the commis-
sion made its final report. As
authority for their territorial
claim with respect to Ankoko, the
Guyanese point to an official 1905
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,(Bogota
VENEZUELA
map which shows half of Ankoko to
be Guyanese. Although they con-
tend that the commission has no
jurisdiction and that the Ankoko
issue should be settled in separate
bilateral talks, they have suggested
various formulas by which the dis-
pute could be taken to the joint
commission.
Venezuela has refused so far
to accept any of these proposals
on grounds they would unduly limit
the scope of the talks. The Vene-
zuelans insist that commission talks
on Ankoko begin unconditionally.
Venezuela appears to be using
Ankoko as a means of pressure in
its larger campaign to acquire ter-
ritory now held by Guyana.
Guyana's Prime Minister Burn-
ham stands to lose prestige unless
he can handle the Ankoko issue in
a way that seems to give strong
protection to Guyana's interests.
Opposition leader Cheddi Jagan
stands ready to accuse Burnham of
weakness. In order to counter
Jagan's charges, Burnham might take
the issue to the UN Security Coun-
cil, where he would expect US sup- 25X1
port, or take some other rash ac-
tion in the name of "national pride."
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- SECRET ""W
VENEZUELAN GOVERNMENT WINS ROUND AGAINST TERRORISTS
The Venezuelan public seems
to have approved the government's
measures to curb terrorist action
in Caracas, and the terrorists
have so far been unable to react.
More than a week has passed
since the suspension of constitu-
tional guarantees and the occupa-
tion of Central University. The
lack of adverse reaction and the
failure of the Communists to re-
taliate leave the government in a
strong position to continue its
antiterrorist campaign.
The government, having yielded
to military pressure for decisive
action against the terrorists, is
in a difficult position vis-a-vis
the military. If it gives the of-
ficers free rein in an anti-Com-
munist campaign, further encroach-
ment on civilian prerogatives is
possible. The public can be ex-
pected to react unfavorably if
it appears that the military are
exercising undue influence on
the government. On the other
hand, the military are likely to
resist firmly any relaxation of
the government's present strong
stand against the terrorists or
any too-hasty move by the govern-
ment to reassert its authority
over the military.
Failure of the terrorists
to react immediately does not
necessarily mean that their
organization in Caracas has been
crippled. Furthermore, the Com-
munists remain a threat elsewhere
in the country, since military
operations this year against re-
newed guerrilla activity have
not yielded significant results.
SECRET
Approved For Release 2008/05/07: CIA-RDP79-00927AO0560001 0001 -1
 25X1 Approved For Release 2008/05/07: CIA-RDP79-00927AO0560001 0001 -1
Approved For Release 2008/05/07: CIA-RDP79-00927AO0560001 0001 -1
 Approved For Release 2008/05/07: CIA-RDP79-00927AO0560001 0001 -1
Secret `''
Secret
Approved For Release 2008/05/07: CIA-RDP79-00927AO0560001 0001 -1