WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A007700030001-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 52
• Document Creation Date: December 21, 2016
• Sequence Number: 1
• Content Type: SUMMARY

Approved For Release 2008/08/08: CIA-RDP79-00927AO07700030001-6
Secret
STAT
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
Secret
State Dept. review completed
6 March 1970
No. 0360/70
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(Information as of noon EST, 5 March 1970)
VIETNAM
Vietnamese Communists are pressing Washington for
new moves to break the deadlocked Paris talks. In
Saigon, President Thieu's handling of the Tran Ngoc
Chau case has generated much criticism.
PEKING REAPPRAISING TOKYO'S ROLE
Peking's tactics during this year's annual trade
negotiations scheduled to begin next week may fur-
nish some indication of how the Chinese intend to
cope with what they see as an increasingly active
and potentially dangerous force in Asia.
BOTH SIDES IN LAOS CONSOLIDATE FOR NEXT ROUND
The pace of Communist offensive activity in north
Laos has slowed considerably following the swift
reoccupation of the Plaine des Jarres.
CAMBODIA AIRS GRIEVANCES WITH VIETNAMESE COMMUNISTS
Phnom Penh has expressed new concern about several
of its fundamental problems with the Vietnamese Com-
munists.
INFIRMITIES OF GOVERNMENT IN MALAYSIA
Illness and indecisiveness among Malaysia's key
leaders make it likely that their administration
will continue to be weak.
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Europe
THE WEEK IN PERSPECTIVE 11
WEST GERMANS RESUME TALKS WITH COMMUNISTS
East and West German representatives have met to
discuss a summit-level meeting, and Egon Bahr has
returned to Moscow to resume exploratory talks with
Foreign Minister Gromyko.
TITO ADVANCED NONALIGNED SUMMIT ON AFRICAN TOUR
President Tito apparently has breathed new life into
the nonaligned movement.
NATO CONSIDERS BALANCED FORCE REDUJTIONS
The North Atlantic Council will examine closely this
week the prospects for talksiwith the East on mutual
force reductions in centralEurope.
USSR-US DISCUSS PEACEFUL USES/OF NUCLEAR EXPLOSIVES
Recent meetings in Moscow were conducted in an atmos-
phere of friendliness add cooperation. The Soviets
may consider that mutual understanding is necessary
for the accomplishmentof their goals in this area.
PROGRESS EVIDENT AT DISARMAMENT TALKS
A productive sessioi on the seabeds treaty and on
controls on chemical and biological weapons now ap-
pears likely.
GATT'S GENERAL SESSION FAILS TO MAKE PROGRESS ON TRADE 17
GATT's 26th General Session was unable to produce
agreement on any new initiatives to maintain the
momentum of international trade expansion.
AUSTRIANS RETURN TO CONSENSUS POLITICS
The Socialists, who in parliamentary elections on 1
March received their first plurality since World War
II, have turned to the outgoing People's Party with
the intention of reviving the "grand coalition."
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Middle East - Africa
THE WEEK IN PERSPECTIVE
TURMOIL CONTINUES IN MIDDLE EAST
There has been no progress toward a general Arab-
Israeli settlement, and the exchanges of gunfire and
invective are growing ever sharper. Meanwhile, tra-
ditional divisive forces are at work among the Arab
states and the Palestinian commando organizations.
SOVIET PUBLIC PROTESTS AGAINST ISRAEL
Soviet propaganda on the Middle East, most of which
is directed against Israel, now is at the highest level
since the war in June 1967.
DAHOMEAN MILITARY PREPARES FOR ELECTIONS
The national elections -.-''scheduled to begin next week
are unlikely to solve_the country's continuing polit-
ical instability, and the possibility remains that
one or another army faction will intervene to prevent
a return to civilian rule.
Western Hemisphere
THE WEEK IN PERSPECTIVE
UNEASE CONTINUES:'IN PANAMA
Although Panama's strong-man General Torrijos has in-
creased his popular support, there are still indica-
tions of discontent in the business community and
friction within the National Guard.
FEW COUNTRIES SUPPORT CALLS FOR REVIEW OF CUBA'S STATUS
Suggestions by prominent politicians in Chile and in
Trinidad and Tobago that sanctions against Cuba
should be re-examined have drawn a largely negative
response from other Latin American countries.
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REPRESSION INCREASING IN PERU
The military government appears to be reverting to
type with recent political arrests and the expropria-
tion of a major opposition newspaper.
GUATEMALA IS CALM AFTER ELECTION UPSET
Opposition rightist candidate Colonel Carlos Arana
led the three-way presidefntial race, but his victory
THE BRAZILIAN "REVOL[GTION": STAGE THREE
President Medici( has set major social and political
reforms as goa],/s of his administration. These aims
will require him both to expand the very restricted
role of civilians in governing the country, and to
maintain his)essential base of support in the mili-
tary establishment. (Published separately as Special
Report No. O`359/70A)
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The Vietnamese Communists may be setting the stage for .pew ro-
nosals at the deadlocked Paris talks. Hanoi has let it be known
so
th
t
i~ yr ua
a
+-? -y---- --- designed to put pressure on the US to name a new top?' egotiator. In
addition, high-level visits between Moscow and Hanoi, As well as some
statements out of Hanoi, could indicate that the Communists have some new
initiatives in mind.
The relative quiet continues on the battletklds of South Vietnam
following a brief surge of shellings in III and..,IV corps late last week.
Although this Communist effort was rather .halfhearted, the enemy ap-
parently considered it the opening of anothef# "phase" in the winter-spring
campaign.
The Communist offensive in Laos Which had swiftly overrun the Plaine
des Jarres, slowed down this week.;fBoth sides are taking a breather to
resupply and improve their tactical liositions. The government has managed
to retake a few small outposts, Which the enemy has been probing in an
effort to find General Pao'sdefensive line. The Communists' resupply
problem has been compounde4~'by heavy air strikes and the loss of their local
labor force, which was evacuated before the Plaine was recaptured.
The Communists in.:ambodia are beginning to face increasing pressure
from the government,,, which has expressed new concern about insurgent
operations in the pr9mces bordering South Vietnam. Cambodian security
forces have recent made some progress in clearing operations against
insurgents in the 1~brtheast, and they have managed to disrupt some of the
widespread rice imt uggling with the Viet Cong.
Since last May's communal riots in Malaysia, the government has
muddled alVng without taking any decisive steps to reduce the basic causes
of tensions between the dominant Malays and the economically powerful
Chinese,One of the major problems has been the ill health of nearly all the
top leaders and the inability of Prime Minister Rahman to make up his mind
about retirement. Prospects for a continuing infirm hand at the helm and
thus for renewed communal disturbances remain high.
Student demonstrations in the Philippines continued this past week,
but restrained and effective police action kept them from getting out of
hand. The students can be expected to continue to protest their grievances
against the political establishment and against the US, but the inade uacies
of student leadership will help the government to keep the lid on.
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VIETNAM
Will Hanoi Talk or Walk?
The Vietnamese Communists
recently have stepped up their
efforts to press Washington for
new moves to break the deadlock
in the Paris talks. Hanoi has
been testing the atmosphere in
Paris since late January when
Le Duc Tho, the politburo-level
"adviser" to its delegation, re-
turned to the city, ostensibly
for the French Communist Party
congress. When this move failed
to elicit a positive response from
the US, Hanoi apparently decided
on fresh maneuvers to increase
the pressure and smoke out the
allies.
The North/Vi tnamese almost
certainly word pr fer not to
rupture the Paris c8,nference at
this point..' They pr ably hope
that this :threat will e enough
to dramatize their long tanding
contenti6n that the US h "down-
graded"/the talks and to g erate
pressure on Washington to na
a successor to Ambassador Lodge.
It is not certain that they in-
tend to llow thro gh on their
threat, bu venthey do they
can be expects '-first to dress up
their intr,sige image somewhat,
perhaps) hinting at new flexi-
bility-`in their position.
Evidence has been accumu-
lating for several weeks that the
Communists may be getting ready
to do some bargaining in Paris.
Hanoi recently heaped gratuitous
praise on the compromise agree-
ments the Viet Minh concluded
with the French in 1946. Last
month party first secretary Le
Duan, in a long and authorita-
tive article, wrote of a strategy
based on "the exploitation of 25X1
enemy contradictions and on sys-
tematic concessions."
Recent comings and goings
of high-level Soviet and Viet-
namese officials may also have
something to do with Hanoi's
tactics. There is a sting pos-
sibility that LL himself
quietlyj3,,,~u:ed Moscow within
a Soviet
deputy foreign minister who has
dealt with the Paris talks in
the past was in Hanoi two weeks
ago. Despite all these stirrings,
there are no solid indications
of the Communists' plan or of
what they hope to accomplish.
It seems certain, however, that
they have more in mind than
simply lobbying for a successor
to Lodge.
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Chau Hounded in Saigon
The government has come in
for heavy criticism for its han-
dling of the case of Tran Ngoc
Chau, the Lower House deputy who
has twice been found guilty of
pro-Communist activity by a mil-
itary court in the last two weeks.
Following Chau's initial convic-
tion in absentia, Saigon police
entered the National Assembly
building and seized him in a wild
scene during which Chau was man-
handled while resisting arrest
and a number of newsmen covering
the case were roughed up. At his
retrial by the same court in Sai-
gon this week, Ch au was again
found guilty, but his earlier sen-
tence was reduced from 20 to 10
years.
A second deputy sentenced
to death in absentia for treason
by the same military court has
not been apprehended.
Many prominent Vietnamese,
including some who usually sup-
port President Thieu, have ex-
pressed less concern over Chau's
guilt or innocence than over the
government's alleged disregard
of constitutional procedures to
achieve the conviction, as well
as over the manner of the deputy's
arrest. Some observers believe
Page 3
the government should have waited
for a Supreme Court ruling on
the legality of the method by
which Chau's immunity from pros-
ecution was lifted. Even a Sai-
gon paper that takes a firm anti-
Communist line has asserted that
government actions have damaged
the prestige of the regime and
thus have helped the Communists.
The Chau case has once again
heightened executive-legislative
tensions. The Upper House, meet-
ing on the day after the deputy's
arrest, postponed its scheduled
debate on the land-reform bill
in order to air complaints of the
government's treatment of Chau.
Independents and at least one
prominent supporter of Thieu joined
opposition legislators in denouncin
the government, and a special com-
mittee was established to inves-
tigate the circumstances of Chau's
arrest. Passions appeared to have
cooled somewhat by the following
day when the Assembly met in joint
session, however; after some fur-
ther criticism of the executive,
the members again gave their at-
tention to pending legislation,
approving a presidential amendment
to a bill concerning provincial
election procedures. Since then,
the Upper House has resumed con-
sideration of the long-stalled
land-reform bill.
mhP ~ .an.s::,.for -the govern-
ment's dogged determination and
haste to put Chau behind bars re-
main obscure. The case was clearly
ntended to serve at least as a
waYi""rhi'`oud entertain
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thoughts of secret contacts or
private deals with the Communists,
and it may aT o have been an at-
tempt to disc rage legitimate
constitutional ppositiorl`activ-
ity that had bee increasing re-
cently. The seem'nglyo inept and
harsh handling of e' affair was
probably countenan d, and may have
been calculated,,by esident Thieu
partly with a view to utting teeth
in such warnis .
The olitical cost, however,
has been. nigh. The government's
tactics have not only put new
strains on Thieu's relations with
the Ntional Assembly and raised
doubts about his government's
respect'or the constitution that
gives it egitimacy, but have also
given Thie very bad press-abroad.
Thieu's app ent readiness.: o pay
such political costs cot d reflect
an element of 'gersona-"vindictive-
ness on his pars, o =on the part
of some close ad ,'ers. Chau was
in close contac,, ',4 th Thieu earlier
in his career., and that experience
may have caYitributed to the mutual
antagonism that exists toda be-
tweeny tfie two.
PEKING REAPPRAISING TOKYO'S ROLE
Annual trade negotiations
between the governments of Com-
munist China and Japan are slated
to begin next week at a time when
the Chinese have been forced to
take a cold, hard look at their
current and future relationship
with Japan. Despite their shrink-
ing economic significance, the
formal Memorandum Trade talks and
mechanism represent the only semi-
official channel of communica-
tion between Peking and Tokyo.
Both have considered this medium
a useful political link. The tac-
tics Peking adopts during this
year's discussions could offer
some clues as to how the Chinese
intend to cope with what they see
as an increasingly active and po-
tentially dangerous force in Asia.
The Chinese reappraisal of
Japan has been in process since
last November's Nixon-Sato com-
munique on Okinawan reversion--
a document that reaffirmed basic
US-Japanese solidarity but mapped
out a more active and influential
Japanese role in Asia for the
future. Peking's interpretation
was short and simple: the United
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States, desiring to reduce its
own commitment in Asia, now was
counting on Japan to counterbal-
ance China. The outcome of the
Japanese elections held shortly
after the Nixon-Sato meeting also
was sobering to the Chinese. The
solid victory of the ruling Lib-
eral Democratic Party and the
sharp setback sustained by the
pro-Peking left wing of the So-
cialist Party must have brought
home to Peking the utter failure
of its long-standing policy of
support for inconsequential "pro-
gressive" Japanese political ele-
ments.
As a result of this rude
awakening, Chinese propaganda
has turned away from its standard
treatment of Japan as a simple
pawn of American power and pointed
toward the threat posed by To-
kyo's own imperialist ambitions
in Asia. The specter of Japanese
remilitarization has been given
top billing in this new approach--
a line calculated to play on anti-
Japanese sentiment in Asia left
over from World War II. The Chi-
nese have also appeared partic-
ularly sensitive to Japanese
interests in Taiwan and have
been denouncing with increasing
shrillness what they allege are
Tokyo's plans to convert the
island into a Japanese "satel-
lite."
Given this rather gloomy
polemical setting, the outlook
for the Memorandum Trade talks
is not bright. The Chinese will
probably make their usual demand
that the Japanese delegation
directly condemn Tokyo's "anti-
China policy" before actual trade
discussions begin--a method Pe-
king has successfully used in the
past to embarrass and attack the
Sato government. Conversely,
the Chinese could drop or soften
these demands; such a relatively
flexible approach would exploit
the considerable sentiment in
Japan for closer relations with
China and further Chinese inter-
ests by complicating US-Japanese
relations. To date, however,
there have been few signs that
Peking is ready to make such a
pragmatic departure from past
practice.
Whatever political turn the
talks take, one thing seems fairly
certain: the outcome will not
have a substantial impact on Sino-
Japanese trade. Total trade be-
tween the two countries has in-
creased in recent years, reach-
ing a high of $625 million in
1969, while Memorandum Trade trans-
actions have steadily declined,
accounting for only 10 percent
of all trade last year. 25X1
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BOTH SIDES IN LAOS CONSOLIDATE FOR NEXT ROUND
The pace of Communist offen-
sive activity in north Laos has
slowed considerably following
th swift reoccupati of the
Plai des Jarres.~er the
past w k the ene y has limited
activiti to sm?ll probing at-
tacks and ther-,efforts to ferret
out the cur of disposition of
government fo es south and west
of the Plaint.
Most.`of these fforts have
been directed at gov ment posi-
tions guarding the no ern ap-
proaches to General Pao strong-
hold At Long Tieng. Seve
lightly defended positions ftken
by the enemy were subsequently
recaptured by the government,
there are still too few Commu-
rx'ist troops south of the Plaine
to mount a major thrust at Long
Tieng.
The lull in the fighting
probably can be attributed to
a whole range of problems now
facing Communist forces near the
Plaine. The enemy's first order
of business will likely be the
rebuilding of large stocks of
arms and materiel it lost to gov-
ernment forces in September. Al-
though there is ample evidence
the North Vietnamese have moved
large quantities of supplies into
north Laos over the past several
months, their ability to move
these goods to forward positions
has been complicated considerably
by unusually heavy air strikes.
Furthermore, the enemy lost its
local labor force when the gov-
ernment evacuated 15,000 refugees
from the Plaine before the Com-
munist offensive began. General
Vang Pao is using this welcome
breathing spell to reposition
more troops to bolster his de-
fense line south and west of the
Plaine.
Mev~ewri "`tTef~ lane
Prime Minister Souvanna has put
pressure on his genera4.s"'' in
southern Laos to prow;de rein-
forcements for the fighting in
the north. AlthQgh Souvanna
was able to gethem grudgingly
to supply some-troops to strengthen
government positions north of
Vang Vieng,their limited num-
bers and poor quality indicate
they .will have little effect on
the government's ability to with-
stand a Communist threat from
:tail Lection.
Souvanna also is making an
effort to shift the conflict
back into the diplomatic arena.
The prime minister has officially
requested the co-chairmen of the
1962 Geneva Conference--Great
Britain and the Soviet Union--to
reconvene the signatories to
discuss the deteriorating mili-
tary situation in the north.
IIn a statement,
on 1 March, the Lao Communists
portrayed their capture of the
Plaine as an act of "self-de-
fense" aimed at securing Com-
munist "liberated areas" from
government operations. The state-
ment routinely condemned Souvanna's
call for a new conference, but it
did not explicitly rule out the
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JJCI)JXJG 1
C INA
I 7\f
" M uong Soui
Govern enter .- \
a Iine LongTieng-
Vang Vieng.
Communist-controlled territory
Contested territory
Limit of area claimed under
Communist and Neutralist
control, June 1962
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I?M uong
Rhalane
i ULF
0F
Tt)NKIN
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CAMBODIA AIRS GRIEVANCES WITH VIETNAMESE COMMUNISTS
Phnom Penh has expressed new
concern about several of its fun-
damental problems with the Vietnam-
ese Communists. The government
elaborated on its theme of Viet
Cong support to Cambodian insur-
gents along the eastern frontier
in a recently available article
in an official jouinal. The ar-
ticle, attributed to"Prime Minis-
ter Lon Nol, gave an u`husually
detailed account of Cambodian
guerrilla groups based in\Viet
Cong - controlled areas of\South
Vietnam that have been cros'ing
into three southeastern bord
provinces to spread antigoverk
ment propaganda. The article
leged that these groups, totali
of rice. Moreover, he also re-
peated the widely held Cambodian
conviction that tribal insurgents
in Ratanakiri in the northeast
are being led by the Viet Cong,
who, he said, are using the in-
surgent, to shield Communist sup-
ply movements.
The government is willing
to Fell the Viet Cong as much
ripe as they want to buy, but
the Communists evidently either
Mink Phnom Penh's terms are too
Steep or wish to maintain inde-
pendent sources of supply as a
hedge against future Cambodian
uncooperativeness.
about 450 men, are led by long-./\ With Sihanouk's encourage-
time members of the Cambodian ment from afar, the government
Communist Party, and apparently has been trying to put some real
plan to extend their operations ite into its present campaign
westward. reduce such smuggling.
It is not possible to sub-
stantiate all of the gove'rnment's
claims, but the Cambodidns are
not wont to levy such charges
without some supporting evidence.
The army is taking the insurgent
threat seriously, and has made
plans to drive the;insurgents
into the interior to deprive them
of the support they get from the
Viet Cong. ,
The government also has been
greatly disttrbed by extensive
Vietnamese rice smuggling. Ac-
cording to, recent remarks by Dep-
uty Prime; Minister Matak, covert
Communist resupply operations on
waterways in northern Cambodia
have drained away large amounts
Past antismuggling
drives generally have been de-
feated by Communist logistical
adaptability and-the venality of
government officials. Several
recent Viet Cong ralliers have
stated, however, that increased
Cambodian military pressure
against the Communists in the
southeast has had some disrup-
tive effect on smuggling opera-
tions there.
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INFIRMITIES OF GOVERNMENT IN MALAYSIA
Illness and indecisiveness
among Malaysia's key leaders make
it likely that their administra-
tion will continue to be weak.
Prime Minister Tunku Adbul Rahman
has been ailir for some time
25X6 The Tunku has been talking \
for some time about retiring froIih.
the government, and Razak believes
that he will be asked to take over
in June. Rahman, however, has
stated publicly that he will not
give up the premiership until in-
ternal order is fullyrestored.
June has been his more frequently
named deadline, but.he has also
mentioned November as a possible
date, and he could decide to stay
on in office.
Whatever the Tunku's plans,
Razak is making his own tentative
arrangements for a future govern-
ment. He recently stated that
with Ismail as his deputy prime
minister, Malaysia would have vir-
tual dual leadership. Razak also
intends to use in some capacity
the astute and effective permanent
secretary of the Ministry of For-
eign Affairs, Tan Sri Ghazali.
Page 10
These uncertainties have con-
'tributed to the government's fail-
ure to make progress in solving
its communal problems. The com-
bined efforts of the Tunku--
through his much-heralded Goodwill
Committees--and Razak--with his
equally heralded National Consul-
tative Council (NCC)--have done
little to dispel racial tensions.
The NCC, although representative
of various racial and cultural
groups, is essentially a puppet
of the Malay political organiza-
,tion. The government has also
illy-shallied over the problem
of-,whether or not to allow elec-
tious in Sarawak. Elections
them suspended after the racial
distu bances in May 1969, are
necesszy before parliamentary
democra can be restored in Kuala
Lumpur.
FortunNtely for the weakly
led government, no real opposition
seems to have-emerged. Both Chi-
nese and extremist Malay opposi-
tion groups have been lying low,
and the military,',at least in the
higher echelons, is loyal to the
government. If Kuala'Lumpur's
leaders continue to drag their
feet in solving the country's ba-
sic problems, however, some group
may take advantage of general dis-
satisfaction to bring about re-
newed-disturbances.
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During a Foreign Ministry press conference this week, Soviet Deputy
Premier Dymshits-the highest-ranking Jew in the Kremlin hierarchy-
pointedly denied that Egypt had asked Moscow for "MIG-23s" and side-
stepped a question on providing Soviet pilots. The press conference was yet
another facet of Moscow's current anti-Israel campaign. Soviet Deputy
Foreign Minister VinQgradov spent most of the week in Cairo, presumably
coordinating further diplomatic moves on the Middle East.
The entry into fo}ce yesterday of the Nuclear Nonproliferation Treaty
(NPT) opens a new dis' rmament era. The treaty's effectiveness will depend
in part, however, on c untries that have not yet adhered. Two nuclear-
weapon states-France id Communist China-have shown no interest in
becoming members, ands prospects remain poor that two near-nuclear
states-India and Israel-w41 sign.
The Hungarian regimes program for. creation of a more participatory
and democratic political sys.em, which has limped along since last year, has
been given new impetus. Premier Fork on 4 March announced the govern-
ment's firm support of the r .forms and indicated that a rewriting of the
constitution and a reform of to administrative apparatus are in the works.
He firmly rejected criticism from, unnamed sources that the reform program
might be going too far too fasts
Former prime minister Aldo 1V1;~oro has taken over the task of trying to
form a new Italian government. His\;~mandate is more flexible than that of
Mariano Rumor, who gave up the attempt last week. Moro can try for any
combination of the four center-left parties or for a single-party Christian
Democratic government with center-left slpport.
The UN General Assembly's seabeds committee this week began
consideration of principles for a future international regime to govern
peaceful uses of the ocean floor. The less-deyeloped countries want to
prevent potential superpower exploitation of the, natural resources of the
seabeds.
Interest in procedures for dealing with the Soviets' "strengthening
international security" proposal is picking up, well in advance of the fall
session of the UN General Assembly at which it again will be aired. NATO
mpnbers have begun consultations to harmonize their views on the proposal.
is he Finns this week called for periodic, closed meetings of the Security
T
ouncil to provide a forum for discreet exchanges on international security
sues.
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WEST GERMANS RESUME TALKS WITH COMMUNISTS
The pace of diplomatic activ-
ity in Bonn and in East European
capitals picked up again this week
as East and West German represent-
atives met to discuss a summit-level
meeting, and Egon Bahr returned to
Moscow to resume exploratory talks
with Foreign Minister Gromyko on
3 March.
During their first two",.pre-
liminary meetings with West `German
Government representatives, tie
East Germans raised unexpected?.ob-
stacles, insisting that Chance '.or
Brandt must not appear in West iler-
lin during the course of his nego-
tiations with Premier Stoph. This
demand is consistent with the Eas1\
German claim that West Berlin is
a special political entity. Thy
talks recessed until 5 March with
the issue involving West Berlin
not yet resolved.
Pankow's raising this/issue
suggests at the least that the East
Germans will be extremeli tough ne-
gotiators. It also suggests, how-
ever, that the seemingly always in-
secure East German leafders may be
having second thought about the
summit meeting. Recant East Ger-
man propaganda statements and a
hard-hitting speec by Erich Hon-
ecker have impugnq(d Bonn's good
faith and attacked the Social Dem-
ocrats. These tacks appear de-
signed to warn oth East German
populace and P nkow's allies not
to expect a rdsolution of East -
West German ssues.
The we t Germans will find it
very diffi ult to agree that Brandt
will not is it West Berlin, as this
would imply an admission on their
part that they have no right to a
presence there. They will probably
remain firm on this point, hoping
that Moscow will press Pankow into
yielding. In the light of these de-
velopments, Bonn now expects the pre-
paratory talks to drag on for some
time.
Although the West German hope
that Moscow will put pressure on
the East Germans may not prove well
founded, there are some indications
that the Soviets and East Germans
are not in complete agreement con-
cerning policy toward Bonn. While
in East Berlin between 24 and 27
February, Gromyko eschewed attack-
ing Bonn, and the communique is-
sued after his visit was temper-
ately worded and contained no di-
rect demand that Bonn recognize
East Germany. The East Germans
,presumably would have favored a
tougher statement than was in fact
i$sued.
\ Meanwhile, no new developments
have been reported as yet from Bahr's
discuksions with Gromyko. Prior to
his re 'urn to Moscow, Bahr and his
associa s were completely uncer-
tain as to the position Gromyko
would tak Gromyko's statements
in East Blin led them to hope,
however, that the Soviets are still
interested in-an agreement.
In a Bundestag foreign policy
debate last week, Brandt chose his
words carefully to placate Soviet
sensitivities. He spoke of his
hope for a "European peace system,"
and emphatically rejected a sugges-
tion from Franz Josef Strauss that
the Bonn government seek to play
off members of the Eastern bloc
against each other.
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Opposition Christian Demo-
cratic spokesmen state that they
support Brandt's Eastern policies
in principle, but they demand a
greater amount of consultation,
and express fears that Brandt is
making too many'boncessions.
In the interim, he West Ger-
mans have made ano, er effort to
interest the Poles in resuming bi-
lateral econprnic talks, and to
sweeten the atmosphere before the
two sides reopen political negotia-
tions on 9 March in Warsaw. Bonn
has offered Warsaw a new economic
package that presumably contains
concessionsYsimilar to those the
Poles haves''""already obtained from
the Fre-rfch and Italians, including
a relaxation of trade restrictions
o,ydr the next five years.
It is unclear, however, how
flexible the West Germans have be-
come on financing trade. The Poles
have made no secret of their dis-
--satisfaction with previous West
German credit offers and have re-
iterAted that they expect Bonn to
be considerably more forthcoming
before a 'Ibng-term economic agree-
ment can be fmalized.
TITO ADVANCED NONALIGNED SUMMIT ON AFRICAN TOUR
President Tito returned on 27
February from a month's trip to east
Africa, apparently having breathed
new life into the nonaligned move-
ment. Tito and the African leaders
with whom he met urged the convening
of a nonaligned summit before the
25th UN General Assembly session
this coming September--probably in
July or August. A preparatory meet-
ing is scheduled for 13-17 April in
Dar es Salaam.
Support for the summit, previ-
ously lagging, was apparently mus-
tered by heightened tensions in the
Middle East, the absence of progress
toward peace in Southeast Asia, the
alleged threat of a Soviet-US divi-
sion of the world into spheres of
influence during SALT talks, and
Tito's personal commitment to a non-
aligned gathering. Another factor
that heavily influenced the Arab
countries was the prospect that a
large bloc of nations might voice
coordinated and unified support for
the Arab cause when the UN convenes
this fall.
Yugoslav Foreign Minister Tep-
avac will tour Southeast Asia this
month to drum up additional partici-
pation. Addis Ababa is the site
favored by most prospective partic-
ipants.
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NATO CONSIDERS BALANCED FORCE REDUCTIONS
Prospects for talks with the
East on thinning out opposing mil-
itary forces in central Europe will
get another close examination at
a meeting of the North Atlantic
Council this week. The West Ger-
man representative has informally
suggested that NATO,. consider mak-
ing an early propose to the USSR
to negotiate a mutual reduction of
forces in a major multNi_lateral
conference.
In recent months _All.,,
"model" bargaining position in
the event force reduction to ks
are ever held. The German re
resentative, Wilhelm Grewe, ha
now suggested that a firm Allid
offer to negotiate need not awai
~
the completion of such positions.
He proposes that, to counter the
continuing Soviet pressures for
a vaguely defined European secu-
rity conference (ESC), the NATO
ministers at their May meeting
should specify force reductions
as the "real" issue of European
security and call for an ESC to
discuss this subject. This sug-
gestion may have considerable ap-
peal for some of the Allies be-
cause, even if the Soviets refuse
to meet on the issue such an
overture would enable the West
to claim it had regained the in-
itiative for detente.
It is not clear that Bonn
seriously views an ESC as a proper--
or promising--forum for force re-
duction talks. In any event, the
Brandt government would expect
progress on current topics of ne-
gotiation, such as Berlin, prior
to such talks. The Germans prob-
ably believe, however, that their
proposal would act as a brake on
possible unilateral US force re-
ductions and pressures for increased
payments by West Germany to support
US forces there.
The Soviets are almost cer-
tain to'be cool to anything that
would compete with their own pro-
posals for an ESC. Soviet reac-
tion o earlier discussions of
the balanced force reduction issue
within NATO conclaves has been
to regard this as an attempt to
sabotage Moscow's own proposals.
Nevertheless, Soviet offi-
cials have recently begun to take
a slightly less negative position
in private. Ambassador Dobrynin
told Secretary Rogers on 30 Jan-
uary that Moscow might be willing
to discuss force reductions at a
"later" ESC, but only after the
conclusion of an ESC limited to
the negotiation of a multilateral
nunciation-of-force agreement
a an economic and technical co-
op cation agreement. Soviet dip-
loma\s in other NATO capitals have
dropped similar hints in recent
weeks. These diplomatic maneuvers
seem aim td primarily at blocking
any conce .ted Western effort to
add balance force reductions to
the agenda of an ESC.
Moscow's main interest still
seems to lie in Convening a rela-
tively quick ESC that would support
the Soviet effort to legitimize the
status quo in Europe. Moreover,
the Soviets' conviction that the
US military presence in Europe
will in any event be sharply re-
duced in the near future has al-
most certainly dulled their in-
terest in a negotiated reduction
of forces .
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USSR-US Discuss PEACEFUL USES OF NUCLEAR EXPLOSIVES
Soviet-US talks on the use
of nuclear explosives for peace-
ful purposes were held in Moscow
from 12 to 17 February. This con-
ference was a continuation of
talks held in Vienna,in April
1969. %
The talks concerned the ap-
plication of nuclear explosives
to oil and gas production, the
creation of underground reservoirs,
mining, canal digging, and safety
problems involved in using nuclear
explosives for this program. The
delegations agreed to hold addi
tional talks to exchange research
and engineering data and to dis-
cuss future projects.
The Soviet delegation was co-
operative and discussed 11 under-
ground nuclear tests related to
their peaceful uses program. Al-
though the locations and dates of
the tests were not furnished by
the Soviets, useful information
was provided on several tests
that they had not previously re-
vealed. At least three additional
tests believed by the US to be re-
lated to the Soviet program have
not as yet been acknowledged by
the USSR.
The Soviets disclosed for the
first time that they had used nu-
clear explosives to extinguish
two runaway gas wells. Four nu-
clear cratering experiments, in-
cluding one used to dam a river,
were also discussed, as were other
tests designed to stimulate oil-
and gas-well.-production and to
create large underground storage
cavities.
Soviet scientists had indi-
cated prior to the conference
that the USSR was interested in
using this technology in other
countries. The 1963 Limited Test
Ban p'''eaty bars the spread of
radioagtivity outside the borders
of the snatories . The coopera-
tive atti ude of the Soviets may
be attribu ble to their desire
to achieve understanding with
the US regardicg the treaty pro-
visions that wold be violated by
the release of ra ioactive debris
into the atmosphere as the result
of a Soviet peacefu -nuclear ex-
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PROGRESS EVIDENT AT DISARMAMENT TALKS
The first two weeks of the re-
sumed arms control conference at
Geneva have increased optimism that
this year's meeting will be a pro-
ductive one. Attention continues
to be focused primarily on controls
on chemical and biolog4cal warfare
and on the US-Soviet draft treaty
limiting the military use of the
seabeds.
The UK draft convention to ban
the production and use of biologi-
cal methods of warfare only h&s
picked up increased support. ' e
British may add language to makeU
it compatible with the recent US'_
decision to renounce both offensi
and retaliatory use of toxins. The\
Swedish representative has stated
that his government could support
the British initiative and that h0
will soon address the conference-"
on the difficulties of banning /hem-
ical weapons. Italy has endor ed
London's proposal, and Brazil:?and
Argentina appear sympathetic In-
dia has also been impressed.by the
argument that agreement on/ the UK
draft would avoid a like1 impasse
over the more far-reachi g Soviet
draft treaty, which pro ibits both
chemical and biologicah weapons.
Moscow is holding firmly to
its draft, but does~not appear to
be making a big pu to secure sup-
port for it. Its position could
be strengthened, however, should
the UK, as it now contemplates,
present at NATO/over US objections
a paper that explores various par-
tial measures for control of chemi-
cal weapons.
of the more influential critics of
the present draft. Representatives
of the superpowers are now attempt-
ing to reach agreement on a revised
text that could be presented to the
other 23 participants in the Geneva
talks. The Soviet delegates have
taken a fairly tough line,- stating
that referral to Moscow of US-sug-
gested;changes will necessitate a
lengths] delay in presenting a re-
visedjoint draft. Nevertheless,
gen al endorsement of the seabeds
trey is expected at Geneva by mid-
su(nmer .
s General and complete disarma-
ment, a subject that has not been
discussed in detail since 1964 but
one that has subsequently served as
a Soviet propaganda ploy, may re-
,,ceive significant attention at the
legates have already referred to
need for work on this problem
bue\have indicated they do not want
it t" delay action on specific items
such s the seabeds treaty and con-
trols n chemical and biological
weapons, The Dutch have given the
conferee a paper expressing their
views on general and complete dis-
armament, `nd the Italians are
likely to of~er an initiative soon
in the form of " a disarmament pro-
gram, possibly``,\focusing on some as-
pect of the problem of conventional
arms limitations.`, This week's entry
into force of the Nonproliferation
Treaty, whose Article 6 calls on ad-
herents "to pursue negotiations in
good faith" on general and complete
disarmament, should increase the
pressure for action.
On the -seabeds treaty, the So-
viets have given the US a generally
favorable response to changes sug-
gested by Canada and Argentina, two
Article 6 also prescribes good-
faith negotiations on "effective
measures relating to cessation of
the nuclear arms race at an early
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970 Geneva session. A number of
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date and to nuclear disarmament."
The nonnuclear states represented
at the Geneva conference have in-
dicated they will be watching the
strategic arms limitation-talks
closely and will be pushing for a
comprehensive test ban (CTB) treaty.
Continuing disagreement between the
superpowers over the type of verif3.---"
cation arrangements required to-.p6-
lice such a treaty, however,,-lppar-
ently precludes any immediate pros-
pect for a CTB. Japan is the latest
to join a lengthy list of countries
that would settle for the time be-
ing on a lesser step, the Canadian
proposal for a voluntary exchange
of seismic data.
GATT's GENERAL SESSION FAILS TO MAKE PROGRESS ON TRADE
In an unexpected development,
UN Secretary General Thant suggested
that the conferees consider the mil-
itary implications of the gas centri-
fuge method of producing enriched
uranium. The chief Polish delegate
has--teiterated this concern, citing
t i'e centrifuge project of the UK,
West Germany, and the Netherlands.
This statement is another indication
that the East European states prob-
ably plan to take a tough line dur-
ing the coming safeguards negotia-
tions between the International
Atomic Energy Agency (IAEA) and
EURATOM to ensure that the IAEA has
an inspection role in the centrifuge
project.
The contracting parties (CPs)
to the General Agreement on Tariffs
and Trade (GATT)'-at their 26th Gen-
eral Session late Nlast failed
to agree on a way ntai n
the momentum of inl trade
expansion after thnedy
Round tariff reduceffect
in 1972.
GATT director Long called o
the CPs to agree to avoid any ne
nontariff barriers--such as specr?
quotas, health regulations, import
osit requirements--and t,d plan
de
p
negotiations to remove ,xfsting bar-
riers. The members, hataever, agreed
only to "refrain frpMt aggravating
the problems and bstacles" existing
at present, an/,- hey put off until
the 27th General Session next year
any action-on specific multilateral
measures to facilitate either indus-
trial or agricultural trade.
Underlying the inability of the
CPs to make greater progress are the
growing differences between the
European Communities (EC) and other
GATT members on trade questions.
EC Commission President Rey last
week strongly defended the EC's sys-
tem of preferential trade agreements,
which the-US and other CPs have at-
tacked as violations of the GATT.
The EC also issued a white paper
counterattacking recent US criti-
cism of various EC commercial prac-
tices. The EC maintained that Euro-
pean economic integration had cre-
ated more trade opportunities for
the US than it had denied, and coun-
\tered that there was "concern in the
Nmmunity" that the US itself might
be',moving in a more protectionist
dirb,ction.
Whether GATT in the future can
be succes''sful in liberalizing inter-
national trade will depend largely
on the ability of the US and the EC
to coo erate 1 such an effort.
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AUSTRIANS RETURN TO
The parliamentary election
of 1 March, which gave the Social-
ists their first plurality since
World War II, is a personal tri-
umph for party leader Bruno Krei-
sky. Not only will he be Aus-
tria's first Socialist chancellor,
he will also be the first Jew to
attain this office.
Within hours of his victory,
Kreisky indicated that he would
pursue a moderate course in do-
mestic and foreign policies. This
decision is dictated as much by
his own predilections as by the
fact that in falling two seats
short of a majority in parliament,
the Socialists must take in a
coalition partner. Because a link
with the five-seat, right-wing
Liberals would be politically un-
acceptable, the Socialists by mid-
week began talks with outgoing
Chancellor Klaus' People's Party
to revive the "grand coalition."
The Socialists had been junior
partners in a series of grand
coalitions from 1945 to 1966, when
the People's Party obtained a ma-
jority and went on to form Aus-
tria's first postwar single-party
government.
Reflecting the sentiment of
many Austrians, Kreisky prefers
a grand coalition to a single-
party government. He once com-
mented that he believes Austria
cannot be governed well without
enlisting the cooperation of both
major parties. Because other Aus-
trians, however, believe that ad-
CONSENSUS POLITICS
versary politics are beneficial
to the democratic process, Kreisky
hopes to avoid reviving some of the
stultifying practices of past grand
coalitions. He presumably intends
to revitalize the parliament, which
in past coalitions acted mostly as
a rubber stamp.
The two parties agree on for-
eign policy issues, which center
on Austria's status as a neutral
and as a "bridge" between East and
West. Moreover, differences on
domestic policy are not insurmount-
able. One of the issues facing
coalition negotiators may be de-
fense policy. In the campaign,
the Socialists favored cutting
compulsory military service from
nine to six months, while the Peo-
ple's Party advocated a parliamen-
tary review of the question. A
small group of pacifists and far
leftists, furthermore, wants a
national referendum on whether to
have military service at all.
The election victory should
strengthen Kreisky's hand within
his own party. Championing a mod-
erate, anti-Marxist course, he be-
came party leader in 1967, and most
of this year's new voters--an un-
usually large number because the
voting age was lowered to 19--went
Socialist. rPi?.~---',' ~.itant- Old
Guard is-still a force to be reck-
oned-with in party councils, how-
ever and it could ;:prove' recalci
trant if Kreisky appears to be
giving too much awa to the Peo-
ple's Party.
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Although an intensified Soviet propaganda campaign against "Zionist
aggression" is beginning to cause Tel Aviv some concern, Israel has not been
deterred from making almost daily air raids on Egyptian military installa-
tions along\~the Suez Canal. Israel's drumfire of warnings about increased
fedayeen ach~,ity in Lebanon, meanwhile, has officials in Beirut on edge.
Saiqa, the Syria -run commando organization, is currently the most active of
these groups, an its cross-border actions could provoke an Israeli military
strike at any time. n Jordan, both sides in the recent confrontation between
the government an the fedayeen have found e'ause for recrimination, either
privately or publicly, . nd each is trying to improve its position.
India's Prime Min ter Gandhi presented parliament with a proposed
union budget that appe s to go just far enough to satisfy her left-wing
supporters. The new bud et, for the fiscal year that begins on 1 April,
contains no radical propos is anal' should give the opposition few oppor-
tunities to embarrass Mrs. ap.dhi's administration. Meanwhile, the latest
round of Indo-Pakistani talks n apportioning the waters of the Ganges has
ended with no apparent progfes
The Black African;`tates areoing their best to get the US to close its
consulate in Salisbury' following Rhodesia's shift to republican status early
this week. They rv1il probably ha e the UK's tacit support in the UN
Security Council hen they call on hose states still maintaining representa-
tives in Salisbu to close their missi s. Rhodesian Prime Minister Smith
obviously hops that the US in particular will retain its consulate
9ne year after an alleged coup attem~t against Equatorial Guinea's
Pre dent Macias, the situation has again become tense in this impoverished
fgmer Spanish colony. In recent weeks, the mercurial Macias has revived his
Charges that Madrid is plotting against him, and has banned the importation
of all Spanish news media. The police have become increasingly active, and
are keeping many establishments-including the US Embassy-under surveil-
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TURMOIL CONTINUES IN MIDDLE EAST
Having made no progress
toward a general Arab-Israeli
settlement--not even a return to
a cease-fire--the contending na-
tions are engaging in ever sharper
exchanges of gunfire and invec-
tive.
Arab chiefs of state and
leaders of the major fedayeen or-
ganizations appear to have been
sobered by the reaction to the
airline bombings, and most have
issued statements deploring the
incidents. Moscow's initial re-
action to the Swissair crash was
to accuse Israel and the US of
using fabricated press reports
to implicate the Arabs. Both
Soviet and Arab propagandists
continue to inveigh against Is-
raeli bombings of Egypt, and to
call for international condemna-
tion of US support for Israeli
"aggression."
Israel's initial fears that
a general panic among civil air-
line operators would cut its aer-
ial lifeline have receded since
the Arab terrorist bombings of
theAustrian aircraft
on 21 February. Suspended pas-
senger, mail, and air-freight
flights to Israel have been almost
completely resumed; concerned gov-
ernments and airlines have taken
additional security precautions;
and international organizations
dealing with civil air traffic
are to hold formal meetings on
the terrorist threat in the near
future.
Israel's hawkish minister
of transportation, General Weiz-
man, has indicated that Israel
will await the results of inter-
national attempts to eliminate
the danger before resorting to
independent action, which would
almost certainly take the form
of retaliation against Arab in-
terests. Prime Minister Golda
Meir and Foreign Minister Eban
have both emphasized that Israel's
objective is to ensure the safety
of civil aircraft flights. At
the same time, they have made it
eminently clear that they would
regard any constriction of Is-
rael's air transport connections
as an extremely serious matter.
Weizman equated the prospect
of a de facto aerial blockade with
Nasir's closing of the Strait of
Tiran in 1967. Mrs. Meir said
flatly that terrorist attacks
against air transportation "must
stop." Unless the airlines adopt
effective security measures of
their own, she added, Tel Aviv
will act to protect the "freedom
of aviation."
Israel-Egypt
International revulsion over
the two airliner explosions served
to divert the critical attention
that had been focused on the
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Israeli air raid
in E ypt
Even e ore this, however, the Is-
raelis had resumed their deep-
penetration bombings of Egypt.
Mrs. Meir told students at
Hebrew University that the pur-
pose of the raids was to relieve
Egyptian pressure on Israeli
forces along the Suez Canal, to
disrupt Nasir's plans for a new
war, and to make the Egyptian
people aware of the falseness of
Cairo's claims of military prow-
ess. Although she soft-pedaled
the thesis that Tel Aviv is seek-
ing Nasir's downfall, it is un-
likely that the Israelis' objec-
tives in this regard have changed.
Moscow side-stepped the ques-
tion of political recognition of
specific fedayeen orgar}izations
by giving Arafat a plgEge to work
for more-official in1, rnational
recognition, but on after the
fedayeen had forme /a single united
organization, almo t an im ossible
prerequisite at pitesent.
z1~.
The
Fedayeen leader Yasir Ara-
fat, already, under attack within
his own organization--Fatah--
because of-his relatively con-
servative stance, may find his
position/even more shaky as a
result of his recent trip to
the Soviet Union. Arafat's
main objective in Moscow was to
gain some measure of political
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creased status for the Palestin-
ian.cause as a national libera-
tian movement.
The government may face re-
newed difficulties because of
fedayeen activities.
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A Damascus press agency last week
quoted Yasir Arafat as saying the
King "agrees" with the commando
organizations regarding the re-
placement of Prime Minister Tal-
huni with Rifai. Arafat is said
to have added that the fedayeen
also want the King's uncle, Sharif
Nasir, removed as commander of the
Jordan Arab Army, but he did not
indicate whether the King had
"agreed" to this as well.
Husayn will probably delay 25X1
k
h
l
i
any res
uff
e for some wee
s
n
order to avoid the appearance of
knuckling under to the fedayeen.
Whatever the King's motivation
for reshuffling the cabinet, how-
ever, he ~E&Imost certainly
suffer some loss of prestige tha
will redound to the fedayeen's
advantage. The replacement of
Sharif Nasir, in particular,
would be widely interpreted as
significant concession on the
King's part.
King Husayn may be mulling
over some changes in his cabinet.
According to press re-
ports, "diplomatic sources" in
Beirut consider Foreign Minister
Rifai the leading contender for
the premiership.
A reshuffle at this time
would be generally construed as
linked to the negotiations sev-
eral weeks ago between the King
and the fedayeen, who had de-
manded various cabinet changes
throughout the preceding crisis.
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SOVIET PUBLIC PROTESTS AGAINST ISRAEL
A two-week campaign of mass
meetings and press articles at-
tacking Israel was climaxed on 2
March with the observance of an
"International Day of Protest" in
the Soviet Union. A number of
nongovernmental organizations par-
ticipated in the activities of the
day, and many well-known Soviet
intellectuals added their names
to petitions in support of the
Arab governments. The day of pro-
test, which was supposed to be ob-
served in all the socialist coun-
tries, had all the earmarks of a
hastily contrived effort to influ-
ence the US decision on arms de-
liveries to Israel. Many Russians
are reportedly comparing the cam-
paign to similar ones in the past
against China and in support of
Soviet actions in Czechoslovakia.
Soviet propaganda on the Mid-
dle East, most of it focusing on
Israel, is currently at the high-
est level since the June war in
1967. Leading Soviet newspapers
have carried scathing indictments
of Israel by prominent Soviet
Jews, including a high-ranking
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general who warned that Israeli
Defense Minister Dayan may soon
have to learn the meaning of the
word "retreat." Both Pravda and
Izvestia have also underscored
Soviet determination to provide
the necessary aid to the Arab
states to strengthen their de-
fensive capabilities.
The anti-Israel crusade has
been carefully orchestrated, of
course, by the Soviet Government.
It is significant, therefore, that
expressions of "rage" over Israeli
aggression have been offset by
continued declarations in support
of peace. Aeto riling to the US
Embassy in .Moscow, the US has
generally not been in the main
line of fire. This manipulation
of press attacks and public pro-
tests seems intended not only to
deter the US from a favorable
response to Israeli arms requests
but simultaneously to prepare the
Soviet public for a possible step-
up in military aid to Egypt--per-
haps including Soviet military
personnel, if that is required.
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DAHOMEAN MILITARY PREPARES FOR ELECTIONS
National elections are sched-
uled to begin in Dahomey next
week, but even if they are held,
they will do little to solve the
continuing political crisis. At
best, the elections will produce
a weak coalition government that
will still be overshadowed by the
country's divided but ambitious
army officers.
As set up by the ruling mil-
itary triumvirate, presidential
and parliamentary elections will
be held on a district-by-district
basis between 9 and 31 March.
Four former heads of government--
Maga, Ahomadegbe, Apithy, and
Zinsou--have filed for the presi-
dency. So far, the brief cam-
paign has been characterized by
strident political propaganda and
scurrilous personal charges.
Each of the four candidates
has a fairly solid following, mak-
ing it virtually impossible for
any one of them to win decisively.
If Dahomey's impetuous army offi-
cers restrain their inclinations
to interfere with the elections,
the most likely outcome will be
a shaky coalition government
over which the army will wield
ultimate control.
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The army, despite internal
divisions, presently seems deter-
mined to hold the elections. It
remains to be seen, however,
whether or not the officers will
accept the verdict, particularly
if the winner is Dr. Zinsou,
whom they ousted last December.
Moreover, there is still a pos-
sibility that one army faction
or another will move to take full
power for itself, perhaps using
indecisive electoral results as
a pretext.
The most likely leaders of
a military intervention are Lieu-
tenant Colonels Alley and Kouan-
dete, archrivals who lead the
army's two most powerful factions.
There is even a possibility, re-
ported in recent weeks, that the
two might combine forces to take
control of the government and
establish some form of mixed mil-
itary-civilian regime. In such
an event, the civilian political
leaders would either have to be
exiled or given sinecures. An
Alley-Kouandete take-over, how-
ever, would do little for long-
term stability, given the depth
of mutual hatred and competing
ambitions of the two politically
minded colonels.
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Attention in Latin America focused this week on the elections in
Guatemala;,where right-wing candidate Colonel Carlos Arana won handily
over both th' government and Christian Democratic candidates. The election
atmosphere was surprisingly calm, despite the kidnaping of the foreign
minister and sine minor terrorism on election eve.
The presidential election situation in the Domihican Republic has been
muddled by the major opposition party's decision to abstain. Moreover, the
Dominican Revolu' ionary Party's official approve of a radicalized position,
including a resolution favoring solidarity with . uba, may drive moderates
out of the party. It .could also encourage an " overnment activity, possibly
including sabotage of overnment installati s, by some cadres who already
cooperate with the Comunists.
El Salvador's goverment party n ~y lose its one-seat majority in con-
gressional elections to be;held on 8 March. As no party is likely to have a
majority in the new legislature, intensive postelectoral maneuvering is a
Cuba's sugar harvest is f~ lfi-ng further behind schedule. The production
goal of 10 million tons will.. n - t be reached, but it appears that the Castro
regime's previous high of 6.$`mi 'on tons in 1961 may be surpassed.
Despite the assurances of Velzuelan officials and the apparent lull in
activities, the situation, along the di uted Venezuela-Guyana border remains
he presence of large numbers o
refugees, as well ;as the proximity o warmed troops at the border, could
inhibit an easing,tif tension.
President Pacheco's use of emergency- owers to take over Uruguay's
traditionally autonomous secondary and vocktional schools last month has
laid the groundwork for another executive-legis`t tive battle. Pacheco's move,
which vas made to lessen leftist influence in the schools, has not gained
public/upport. On 5 March the legislature's pertinent commission lifted
the President's emergency powers, but Pacheco immediately declared the
mov,2 illegal. Stormy debates are sure to erupt when the legislature recon-
venes on 15 March.
Bolivia's new press law resulted in the first edition of a "workers'
newspaper" on 2 March. The contents of this issue reflected the views of the
leftist minister of information on press freedom, suggesting that the weekly
publication will be stridently anti-US in tone and will follow the govern-
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UNEASE CONTINUES IN PANAMA
Since the abortive coup at-
tempt by dissident National Guard
officers last December, Panamanian
strong-man General Torrijos has
firmly re-established his power
position, reorganized the govern-
ment, and increased his popu-
lar support somewhat. Nevertheless,
there are still indications of dis-
content in the business community
and of friction within the Guard.
Despite the government's con-
cern for business sensibilities and
the moderate pace of reform, there
has been no noticeable improvement
in business-government relations.
The oligarchy is unhappy at being
deprived of its traditional polit-
ical pre-eminence and is suspi-
cious of the government's prolabor
orientation. It has been further
dismayed
by increased taxes
and
a
proposed
result,
bank-reform law.
private investment
As-'a
has
-
-con-tinued to decline
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FEW COUNTRIES SUPPORT CALLS FOR REVIEW OF CUBA'S STATUS
Recent public statements by
prominent Latin American politi-
cians calling for a review of Cu-
ba's status in the inter-American
community have aroused considerable
press comment but little sympathy
among members of the Organization
of American States (OAS). Several
governments are willing to discuss
the issue if the subject is for-
mally raised but would do so only
within the OAS structure and only
on the condition that Cuba rejects
"export of the revolution" as a
basic tenet of its foreign policy.
These qualifications, of course,
are not acceptable to Havana. In
any event, the Castro regime has
demonstrated no desire to resume
active participation in what Castro
has contemptuously labeled the "US
Ministry of Colonies."
Leaders in the movement for a
review of Cuba's status are Prime
Minister Eric Williams of Trinidad
and Tobago and Foreign Minister
Gabriel Valdes of Chile. The sub-
ject was raised during the recent
Inter-American Economic and Social
Council meeting in Caracas, by
Williams in his capacity as con-
ference chairman. He reiterated
that various countries in the Carib-
bean area--Cuba among them--should
be integrated more closely into
the economic life of the inter-
American community. In so doing,
he acknowledged that Cuba should
be expected to refrain from med-
dling in other countries' affairs.
In a tactful reply the confer-
ence host, Venezuelan President
Caldera, chided Williams for sug-
gesting that economic relations
could be divorced from political
interchange. When Caldera's re-
marks were misinterpreted by the
press as supporting Williams'
stand, Venezuelan Government
spokesmen quickly and firmly re-
peated the two conditions--dis-
cussion within the OAS and Cuban
rejection of meddling.
Similar positions have been
maintained by Bolivia, Costa Rica,
the Dominican Republic, and Peru.
These countries are amenable to
OAS discussions on the subject,
but none wants to take the initia-
tive to request a meeting for that
purpose. If such a meeting were
convened, however, some would be
content to vote either way on the
question of relaxing sanctions
against Cuba, depending on how
the majority leaned. Mexico was
never in favor of ostracizing Cuba
and never broke ties with Havana.
The majority of countries in
Latin America are more adamant in
their anti-Castro stand and see
no advantage to reviewing Cuba's
status under present conditions.
Nevertheless, Williams reportedly
plans to make a trip through South
America seeking support for his
views on Cuba.
The only agreement with Wil-
liams' views has come from Chile,
which has long been out in front
on this issue. Foreign Minister
Valdes has made overtures directed
toward a restudy of the Cuban case,
and a trade pact has just been
signed with Havana. The Frei gov-
ernment denies, however, that its
position on Cuba has changed, and
it has as yet made no move to place
the question of Cuba's status for-
mally before the OAS. Most Chileans
probably approve of the trade agree-
ment, and all three candidates in
the forthcoming presidential elec-
tions have expressed disagreement
with the OAS sanctions against
Cuba.
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REPRESSION INCREASING IN PERU
The military government's ar-
rest of five opposition labor lead-
ers and its expropriation of two
Lima newspapers probably signal a
general move toward greater repres-
sion. The stage has been set in
recent months for a harsher form of
military rule than Peru has expe-
rienced since the coup in October
1968. Since December, decrees have
been issued reorganizing the court
system, restricting press freedom,
and setting strict penalties for
"obstructing" implementation of
agrarian reform.
In the past week the govern-
ment put these laws to use against
its opponents. Five key leaders
of the sugar workers' union, which
is controlled by the military's
principal political adversary APRA,
were arrested last weekend. The
union leaders were charged with ob-
structing the implementation of
agrarian reform when they called a
strike on a large sugar plantation
taken over by the military govern-
ment last summer. The strike,
largely unsuccessful, was called
to protest the death of a child
and injuries to several workers on
24 February, when police dispersed
a group gathered at the plantation
to hear APRA party leader Haya de
la Torre. The decision to try the
accused Apristas before a military
tribunal could result in even more
serious difficulties.
In another move to silence its
critics, the military government
seized two opposition newspapers on
4 March and declared it would turn
them over to a workers' cooperative.
The Communist-dominated union at the
company that published the influen-
tial Expreso and Extra dailies is
participating in the formation of
the cooperative. If the Communists
gain control, as appears likely it
could provide the party with an ex-
cellent vehicle for its propaganda
activities. The expropriation will
probably be greeted by outrage from
other Lima newspapers, but it will
serve the government's purpose of
demonstrating that there is a limit
to how far opposition can go.
The expropriation of the news-
papers and the government's appar-
ent willingness to work with Commu-
nists to thwart opposition will al-
most certainly set back President
Velasco's efforts to regain the con-
fidence of private businessmen. This
would hinder efforts being made to
rejuvenate the Peruvian economy and
could encourage the Velasco govern-
ment to adopt even more repressive
and radical measures.
GUATEMALA IS CALM AFTER ELECTION UPSET
Rightist presidential candi-
date Colonel Carlos Arana's lead
over the favored government slate
in the elections of 1 March and his
party's probable majority in the
legislature have removed much of
the crisis potential for"the post-
electoral period.
Both opposition parties were
prepared to claim fraud if the
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government had won, and the adminis-
tration was doubtful that the mili-
tary would remain loyal in a crisis.
The government's unexpected defeat
demonstrated the honesty of the
vote count and cooled political
passions.
The presidential election re-
mains technically undecided because
Arana failed to gain the required
majority. Formal recognition of
his victory now rests with the Con-
gress, which must select between
Arana and the runner-up, government
candidate Mario Fuentes Pieruccini.
There is some concern that the gov-
ernment will try to use its majority
in the incumbent legislature to
elect Fuentes, because the consti-
tution does not say whether the old
or the new Congress is responsible
for the selection. In view of
Arana's 40,000--vote lead over
Fuentes and the acceptance of Arana
as the next president by the leftist
candidate, who took more than 20
percent of the vote, however, the
Congress seems unlikely to tamper
with the voters' repudiation of the
present government.
Although Arana's political
bent has been unequivocally right-
ist, as president he may develop
a more moderate position, but he
may find it hard to control some
of the extremists in his camp.
Arana's reputation as the country's
peerless fighter of Communists may
incite subversive groups to ter-
rorism before he takes office. Arana
is expected to launch an aggressive
campaign against crime and terror-
ism. He has also taken a hard line
on Guatemalan claims to British Hon-
duras and has even spoken publicly
of the possible need for a military
solution. In office, Arana may dis-
avow efforts by the incumbent gov-
ernment seeking a compromise with
the UK that would allow for the
colony's independence.
Arana's succession on 1 July
would be the first time an elected
government of Guatemala had trans-
ferred power to an elected opposition.
Arana has already displayed states-
manship in his new role by appeal-
ing to former presidents now in
exile--the extreme leftists Juan
Jose Arevalo and Jacobo Arbenz, and
the extreme rightist Miguel Ydig-
oras--to return to Guatemala and
participate in its political life.
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Secret
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
Special Report
The Brazilian "Revolution " Stage Three
Secret
6 March 1970
No. 0360/70A
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The Brazilian "Revolution" Stage Three
President Emilio Medici is the third former military manto govern Brazil since
the armed forces removed leftist-nationalist Joao Goulart in April 1964. Like his
predecessors, Humberto Castello Branco (April 1964 - March 1967) and Arthur da
c, osta e Silva (March 1967 - October 1969), Medici came to the presidency without
actual civilian consultation. He was chosen by, and has his power base in, the
military establishment; and he inherited some well-established policy lines and
practices identiified with the 1964 "revolution." Medici now holds unprecedented
authoritarian powers, and he has cited a return to democracy, as well as long-
overdue reformsin education, health, and agriculture, as major goals of his adminis-
tration. His programs face many potential hazards, however. Lack of communication
and a gulf of mistrust continue to separate the military from civilian politicians, and
Medici will need great imagination and diplomacy to bridge the gap by the end of his
term in 1974.
THE MEDICI ADMINISTRATION
Emilio Medici is a tough-minded, retired
career army officer who has spent most of his life
in the service. His only important contact with
political affairs prior to assuming the presidency
occurred during the period from March 1967 to
March 1969, when, as chief of the National In-
telligence Service (SNI), he served as one of the
President's most trusted confidants. Medici con-
tinued to advise Costa e Silva following his assign-
ment to command the Third Army in Rio Grande
do Sul, the native state of both men. When the
President was incapacitated by a stroke last Au-
gust, Medici's closeness to the infirm chief execu-
tive was one of the reasons for his selection as
successor by the military leadership.
The new president is a taciturn, deliberate
individual whose style of governing Brazil un-
doubtedly derives from his 45 years of study and
practice of the principles of military command.
He almost invariably backs his subordinates and
Special Report
protects them from external pressures as long as
their loyalty to him is untarnished and he con-
tinues to find them useful. At the same time, he
would act swiftly against anyone whom he sus-
pected of disloyalty or dishonesty, or of per-
mitting news of bickering in the official family to
become public. The value Medici places on per-
formance and technical competence was reflected
in the selection of officials for his administration.
Most of them are capable civilian and military
technicians who have no personal political
"By the end of my
administration, I hope
to leave democracy
definitively installed
in our country, as well
as firm bases for our
social and economic
development."
President Emilio Medici
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followings. Medici largely reserves the role of
dealing with politicians for himself. In announc-
ing his cabinet selections, Medici stressed that he
intended them to work as a united team and that
he would not tolerate any "solitary or errant
stars" who would use their posts to further their
political ambitions. Six ministers are holdovers
from the Costa e Silva cabinet, and ten are new
appointees. Two of the holdovers-Education
Minister Passarinho and Transportation Minister
Andreazza-are young, politically astute, retired
army colonels, whose military backgrounds and
civilian ties caused them to be considered possible
"transition" candidates for the presidency after
Costa e Silva. Under Medici, however, both ap-
pear to have set aside, at least for a while, their
political aspirations and are concentrating on the
considerable problems facing their departments.
The new ministers of health and agriculture
should perform much better than their predeces-
sors in these key areas. The new justice minis-
ter, Alfredo Buzaid, is the cabinet's most conserva-
tive member. He is heartily disliked by liberals
and students for his alleged role in the purge of
more than 60 professors at the University of Sao
Paulo last spring. He has recently been sharply
attacked by the already semicontrolled press for
issuing a decree authorizing the federal police to
censor books and periodicals before distribution
in order to eliminate "publications and outward
expressions against morality and accepted cus-
tom." More than 100 new censors are being hired
to handle the increased workload.
Medici's actions during his four months in
office suggest that he will place much less reliance
on the cabinet as a consultative body and on the
National Security Council (CSN) than did Costa e
Silva. Currently, in the day-to-day operations of
the government and in advising the chief execu-
tive, the most important official organs are the
SNI and the Presidential Military Household, both
of which are headed by dedicated supporters of
Special Report -2-
2 -
Medici.
Medici. SNI director General Carlos Fontoura
served as chief of staff of the Third Army until he
replaced Medici as head of the SNI in March
1969. Military Household chief General Joao
Figueiredo followed Fontoura as Third Army
chief of staff, and as such was then Medici's
principal assistant and probably now is his closest
adviser. In addition to his army experience,
Figueiredo served as chief of the SNI's predeces-
sor agency, and from 1964 to 1966 headed the
SNI's Rio de Janeiro office. Figueiredo has
brought together in the Military Household a
highly structured group of able young officers of
a somewhat moralistic bent. These officers, and
similar military counterparts in the SNI, have
mainly been responsible for drafting most of
Medici's important policy statements. A new Spe-
cial Presidential Advisory Office apparently will
have increasing responsibilities for coordinating
matters coming before the executive. In contrast,
Medici thus far has given only a minor role to the
Presidential Civil Household, which was quite ac-
tive under Costa e Silva.
An unknown factor in the administration is
Vice President Rademaker, a controversial retired
admiral who made many enemies during his naval
career. A staunch conservative, Rademaker helped
plan the "revolution" against Goulart, and sub-
sequently had an important part in purging sub-
versive elements from the service. As Costa e
Vice President
Rademaker
Silva's navy minister, he
became the senior mem-
ber of the triumvirate
that ruled in Costa e
Silva's name following
his incapacitation. Rade-
maker reportedly re-
jected the vice presi-
dency at least twice, and
accepted it only at
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Medici's insistence. The President apparently
chose Rademaker as a symbol of the continuity
of the "revolution," -now? _may regret this
decision. Although Rademaker has assembled a
large personal staff, with military officers pre-
dominating, his official role remains unclear. The
revisions of the 1967 constitution in 1969 took
from the vice president his principal, traditional
duty of presiding over the Congress. Nonetheless,
Rademaker has worked hard to make new con-
tacts with civilian politicians and to keep u his
ties with military figures
Like that of his two predecessors, Medici's
power base lies in the military establishment, and
he must constantly be concerned i about
preventing any signs of division within the armed
forces. For the present, he holds several strong
cards. His election by top officers was largely due
to his excellent army record and reserved per-
sonality, which made him acceptable to a broad
sector of the armed forces. His selection also
provided a welcome solution to the threat to
military unity posed by ambitious generals ma-
neuvering for the presidency. Costa e Silva's plans
to reopen Congress and overhaul the Constitution
had been bitterly opposed by a substantial sector
of the military, but these steps were taken by the
triumvirate as essential parts of the process of
installing Medici, creating a narrow political open-
ing that Medici can expand if he chooses. He has
achieved a balance among the military factions by
appointing followers of Castello Branco to such
high positions as Military Household chief and
army minister. The latter, General Orlando Geisel,
is a ,trict disciplinarian who will brook no dissent
in the service. Even malcontents such as General
Albuquerque Lima, who bitterly attacked the
military chiefs for failing to consider him for the
Special Report -3
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presidency, appear to have been brought into line,
at least for the present. The triumvirate gave
Medici a powerful tool to curb any military dis-
sension with the issuance of Institutional Act 17,
which authorizes him to transfer to the reserves
any military man whose actions he believes pose a
threat to discipline or to hierarchical principles.
In more serious cases, he can permanently sep-
arate such an individual from the service under
the earlier Institutional Act 5. Medici probably
has also earned some armed forces favor by au-
thorizing pay increases that will mean an approxi-
mately 20 to 25 percent rise in real wages this
year, following a similar increment in 1969.
Immediately after Medici's selection for the
presidency, he said that one of his principal goals
would be to establish democracy firmly in Brazil
by the end of his term. In order to achieve this
goal, he must chart a course through dangerous
waters. The President's powers will have to be
reduced, military support must be maintained,
and a legitimate role for civilians must be found.
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Medici inherited far greater powers than
those held by his two revolutionary predecessors
at their inaugurations. Castello Branco's legacy to
his successor was four institutional acts-decrees
with the force of law-and a constitution incor-
porating broad executive authority. By October
1969, however, Costa e Silva and the triumvirate
had expanded these powers greatly by means of
13 additional institutional acts, a substantial revi-
sion of the 1967 constitution, and a new National
Security Law authorizing trial by military courts
for persons accused of a wide variety of subver-
sive activities. Medici also inherited a list of over
1,000 Brazilians-including three former presi-
dents-whose political rights have been canceled
for ten years on the grounds of corruption or
subversion. In many cases the charges were justi-
fied; in others, however, the sanction was used to
neutralize outspoken opposition spokesmen or to
remove political rivals. The President now has the
authority to add to this list; to apply additional
penalties to persons who have already been de-
prived of their political rights; to confiscate the
property of anyone who has ever held political
office; to suspend the right of habeas corpus and
most other traditional liberties; and to declare a
state of siege for an unlimited time. In order to
carry out his directives, he can rely on the armed
forces with their individual intelligence services,
on the SNI and on the Federal Police, and on the
Police-Military Inquiry (IPM), a formal fact-find-
ing body that has played an important role in the
purging of individuals at many levels on suspicion
of corruption or subversion.
These powers and institutions give Medici a
wide range of options within parameters accept-
able to the military in governing Brazil. He can
operate within the constitution or exercise almost
absolute authority. Medici is said to have a pro-
found belief in representative government and in
the principles of democracy, and these convic-
tions may lead him to preserve democratic forms
Special Report
and appearances even when democratic practice
proves impossible. Because Medici has largely re-
mained aloof from politics during his military
career, there is little information on what his goal
of democracy means or how he intends to achieve
it. Public statements suggest that he views politics
as a means of producing national consensus
around high ideals and "great national goals" that
have universal acceptance, and that he believes
personal ambitions and conflicting pressures by
special interest groups have no constructive func-
tion in the political process.
Medici has said that his joining the progov-
ernment National Renewal Alliance (ARENA)
party shortly after his inauguration represented
the start of the reconstruction of Brazil's political
life. He declared at that time that ARENA's func-
tion was to give political support to his govern-
ment and to the "revolution," and he made it
clear that his role in the party would be that of a
"firm captain and not of an agile politician." He
rapidly implemented his command role by hand-
picking a president for ARENA, as well as its
leaders in the two chambers of Congress. This
departure from tradition surprised party stalwarts
who had expected to get the jobs.
Many facets of Medici's political program
will be tested in the Congress. Under Costa e
Silva, the unexpected refusal of the Chamber of
Deputies to allow the lifting of the parliamentary
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immunities of a member accused of slandering the
armed forces was a prime cause leading to the
imposition of broad new authoritarian powers in
December 1968. This executive action resulted in
the suspension of Congress, which was reopened
only last October to ratify the armed forces'
selection of Medici. The Congress that will func-
tion under Medici has been reduced both in size
and authority. Cancellations of political rights
have eliminated 88 members (27 from ARENA
and 61 from the opposition Brazilian Democratic
Movement-MDB) from the 409-seat Chamber of
Deputies, and five legislators (all from the MDB)
have been removed from the 66-seat Senate.
During an abbreviated session from 20 Octo-
ber to 30 November, the members of Congress
concentrated on avoiding incidents that might
cause the government and the military to retaliate
and on staking out positions on which they could
build a role for the two political parties. The
MDB accepted Medici's guidance that it act as a
loyal opposition, "pointing out errors, agreeing
with correct points, indicating paths." It called
for repeal of the institutional acts; for an end to
arbitrary and punitive political acts such as can-
cellation of political rights, confiscation of prop-
erty, and censorship; for termination of the re-
cently adopted death penalty and banishment; for
full popular participation in the national deci-
sion-making process by means of direct, universal,
secret suffrage; for the restoration of full in-
dividual and political rights and liberties; for the
restoration of the power and autonomy of the
legislative and judicial branches vis-a-vis the exec-
utive; and for greater economic and social justice.
In setting forth this all-inclusive program, the
MDB was careful not to blame Medici for the
present authoritarian political situation and ap-
plauded his aspirations to correct it. The MDB
spokesmen stressed the party's intention to act
exclusively within the law and expressed its
abhorrence of any sort of violence.
Special Report -5
ARENA leaders in Congress often were torn
between a desire to act with some degree of
independence and their need to demonstrate to
the President that they were loyally defending his
programs and the "revolution." As a result, the
MDB seized the initiative and adopted positions
that in fact often were held by the entire "politi-
cal class."
THE ILLEGAL OPPOSITION
The great majority of the 92 million Bra-
zilians have little knowledge of politics and do
not believe that anything they do will signifi-
cantly affect those who govern them. Those who
are politically aware-mainly professional politi-
cians and the economic decision-makers-look
upon the present government with views ranging
from firm approval to resignation. There is, how-
ever, a small minority completely alienated from
"the system" and willing to use violence to ex-
press opposition to it. This nebulous and frag-
mented sector, probably numbering not more
than a few hundred, includes some purged politi-
cians, former military men cashiered because of
their leftist political or subversive activity, stu-
dents expelled from universities for similar rea-
sons, and members of the radical wing of the
Catholic Church who consider the military a reac-
tionary force. In addition, there is probably a
considerably larger sector of society that does not
engage in violence, but at times expresses consid-
erable sympathy-and at times gives concrete as-
sistance-to those who do.
Some of the individuals who have turned to
violence claim they have adopted this course be-
cause all channels of peaceful opposition have
been closed off by the government's authoritarian
measures. Others say they have resorted to clan-
destine activity because they found their live-
lihood cut off as a result of government action.
These individuals, particularly former students,
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have formed the nucleus of several subversive
organizations that have carried on an extensive
campaign of antigovernment terrorism over the
past two years. In several cases, the leadership has
been provided by professional extreme leftists,
many of whom have been expelled from the Mos-
cow-line Brazilian Communist Party (PCB) be-
cause of their espousal of violent tactics and their
admiration for the revolutionary theories of Mao
Tse-tung and Fidel Castro. Terrorist activities,
which have hit Sao Paulo hardest, have included
bombings, kidnapings, robberies of banks and
stores selling arms, and airliner highjackings.
One of the reasons for the government's
improved record in repressing subversives is better
coordination of security forces
25X1I--
SECURITY FORCES ACTIVE
Following the kidnaping of US Ambassador
Elbrick last September, security forces went on
an all-out campaign to wipe out these subversive
groups, and they recently claimed to have neu-
tralized some of the most important ones. These
include the National Liberating Action (ALN),
the Revolutionary Armed Vanguard-Palmares
(VAR-P), and the Revolutionary Brazilian Com-
munist Party (PCBR). Numerous arrests of mem-
bers of the PCBR and Popular Action (AP) mili-
tants in the northeast may have prevented an
outbreak of rural violence in that potentially vola-
tile area. The security forces' greatest triumph
was the killing last November of dissident Com-
munist Carlos Marighella, chief of the ALN and
the country's most effective terrorist leader. Sev-
eral key figures in other terrorist groups have
been arrested, and others have been forced to go
into hiding or flee the country. Marighella's heir
apparent, Joaquim Camara Ferreira, received a
warm reception in Cuba. The fact that terrorism
does continue, even though on a considerably
lower scale, indicates that remnants of these
groups remain at large. Probably the most dan-
gerous of their leaders is renegade Army Captain
Carlos Lamarca, who heads the Popular Revolu-
tionary Vanguard (V-PR).
Special Report
6 March 1970
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Competent civilian professionals who have
largely designed Brazil's economic policy since
1964 have achieved considerable success in cor-
recting their predecessors' mistakes and establish-
ing conditions for sustained growth. They have
emphasized curbing credit, halting the inherited
wage/price spiral, and reducing the federal budget
deficit by controlling expenditures and increasing
revenue through improved tax collection and
other reforms. Financial stabilization efforts
under Castello Branco reduced the cost-of-living
increase from a projected annual rate of 140
percent in early 1964 to 41 percent by 1966.
Continued austerity under the Costa e Silva team
held the increases under 25 percent during the
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past three years. Exports, previously stagnant,
have increased throughout the period, and grew
by 20 percent in 1969 to the record level of $2.3
billion. Although imports rose sharply, growing
export earnings and capital inflows have enabled
exchange reserves to increase steadily. Invest-
ment, which remained depressed under Castello
Branco, rose rapidly under Costa e Silva. Even
though a recession slowed growth early in 1967,
total output grew by nearly 5 percent that year;
the 8.5 and 9 percent increases in 1968 and 1969
were the highest in Latin America. Many serious
problems remain, however. Some industrial
growth has been attained at the expense of neg-
lecting agriculture. There are great lags in the
development of some regions, and the foreign
debt burden is heavy.
GOVERNMENT-LABOR RELATIONS
Despite these major economic gains, the
austerity programs of the post-1964 governments
have resulted in some decline in the real wages of
many workers. The Medici regime's labor minister
has said that the government plans to increase the
purchasing power of the workers indirectly by
providing more educational scholarships, in-
creased medical assistance, and greater funds for
the acquisition of private housing. He called for
the cooperation of all unions in these endeavors
and urged them to organize consumer coopera-
tives and local schools to assist the government.
Workers were unable to find in his words or in
those of President Medici any indication that rigid
governmental controls over the unions would be
relaxed or that the salary policy would be modi-
fied.
The armed forces appear determined to re-
main in control of Brazil for at least the next four
years. Although differences exist, the military are
Special Report
united in the conviction that their principal role is
to control corruption and subversion, and that
the conduct of national affairs must never be
allowed to return to those whom they hold re-
sponsible for the pre-1964 political turmoil. At
the local level, military leaders are confident of
their ability to control and direct the areas under
their command and have little or no fear of the
development of significant opposition to the re-
gime or to themselves. They sympathize with
workers but regard unions and union leaders with
deep suspicion and with a measure of contempt.
The officers are particularly mistrustful of the
ability of the electorate to vote intelligently and
of the capacity of the political parties to organize
and lead the nation.
These widely held attitudes will require the
Medici government to be "extremely attentive to
its duties toward its base of military support,"
according to a leading Brazilian political column-
ist. Medici will almost certainly continue to use
all methods available, including the issuing of
decree laws, cancellation of political rights, cen-
sorship, and suspension of habeas corpus, to make
certain that he retains control of the limited re-
turn to more normal political processes. He has
indicated that campaigning for the gubernatorial
elections in October and the congressional elec-
tions in November can proceed only when he
gives the green light, and he will rely on the SNI
and on the army's regional commands to assure
him that the political credentials of candidates of
both the two parties are acceptable. Medici will
certainly exercise a veto over candidates not
firmly committed to the goals of the "revolution"
and he in fact will take an active role in selecting
the men who will collaborate with him as gov-
ernors, and possibly in Congress as well. This
decision not to make any rapid move toward
restoring "full democracy" probably is both a
reflection of his own inclinations and a judgment
that his military base will not allow such a course
now.
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The regular sessions of the national Congress
and state legislatures scheduled to open in March
are likely to test whether the civilian politicians
will maintain the cooperative attitude they have
shown the government thus far. Some ARENA
members may grow restive about the
organization's identification as the "1,000 per-
cent" progovernment party, and not all MDB
members are satisfied with the limited role of
constructive criticism that has been assigned to
the opposition. The politicians generally are
aware of the military's ingrained distrust of them,
and they know that any harsh criticism of the
armed forces or of the government could result in
civilians being denied even the very restricted
participation they now have. The President might
make such a decision on his own initiative, or he
could be pushed into it, as was Costa e Silva in
1968.
It seems doubtful that Medici can gain much
support among those elements that have become
deeply alienated from the government particu-
larly some of the university youth and professors
and certain liberal sectors of the clergy. Most
activist university students have been cowed by
the possibility that they could be expelled and
prohibited from attending any university for en-
gaging in political activity, but some will probably
continue to engage in clandestine antigovernment
activity through terrorist groups. The implement-
ation of long-needed reforms in education could
reduce their number and influence, but the chal=
lenge to the government in this area is indeed a
massive one. The arrest of clergymen linked to
the Marighella organization was a severe blow, but
opposition to the government-in some cases vio-
lent-within the liberal sector of the church is
likely to grow and to present an increasing
dilemma for the hierarchy.
Labor remains unhappy about the govern-
ment's restrictive wage policies. The unions tradi-
Special Report -9
tionally have been run largely from the Labor
Ministry, however, and because they have little
independent power, it is unlikely that they will be
able to pose any significant challenge to these
policies in the foreseeable future.
Medici's economic team is expected to con-
tinue its predecessors' policies of restraining
credit, controlling wages and prices, and promot-
ing increased investments and exports. Further
efforts to broaden the capital market and to
strengthen regional development will also be
made. Prospects, thus seem favorable for realiza-
tion of the government's goal of maintaining the
annual increase in the gross domestic product at 7
to 9 percent during 1970-73. Administration offi-
cials have said that agriculture, education, health,
and science will receive particular attention from
the Medici government. Brazil's economic prog-
ress since the revolution has provided an increas-
ing capability to tackle deficiencies in these areas,
but such programs will have to compete for scarce
resources with other priorities essential to sus-
tained high growth.
Brazil's long-range plans for becoming an
important world power are likely to result in
adopting some economic policies that frequently
will not parallel those of the US, and at times
may be in direct conflict with them. Friction has
already arisen over issues such as coffee prices,
the allocation to shipping lines of goods carried to
and from Brazil, and some other bilateral ques-
tions.
There remains :a possibility that Medici
might not be able to complete his term of office.
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Special Report
Lima.
Thus the succession issue could
again provoke serious differences within the mili-
tary, a circumstance that could provide an open-
ing for ambitious officers with some civilian back-
ers, such as General Albuquerque
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