WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A009000020001-2
• Release Decision: RIPPUB
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• Document Creation Date: December 21, 2016
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• Content Type: SUMMARY

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Secret
DIRECTORATE OF
INTELLIGENCE
DOJ Review
Completed.
State Dept. review
completed
WEEKLY SUMMARY
Secret
ARMY review(s)
completed.
6 August 1971
No. 0382/71
Copy N2 44
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SECRET
CONTENTS
(Information as of 1200 L'DT, J' August 1971)
Indochina
North Vietnam: Disquiet in Hanoi . . . . . . . . . . . . . . . . . . . . . 1
South Vietnam: Ky Out, Minh Still In . . . . . . . . . . . . . . . . . . . 2
Laos: Slow Going in the South . . . . . . . . . . . . . . . . . . . . . . 3
Cambodia: The Political Pot Boils . . . . . . . . . . . . . . . . . . . . . 4
Communist China: Purge Confirmed . . . . . . . . . . . . . . . . . . . . . 5
A Japanese Paradox: Rapid Wage Hikes With Improved Competitiveness Abroad . . 6
Soviet Economy Maintains Momentum . . . . . . . . . . . . . . . . . . . 8
Crimea Meeting: Where Was Ceausescu? . . . . . . . . . . . . . . . . . . 9
France: Words and Action on International Narcotics . . . . . . . . . . . . . 10
Su er ower Problems at UN Maritime Meeting . 11
Yugoslavia: New Government and New Reforms . . . . . . . . . . . . . . . 13
Sudan: New Directions in Foreign Policy . . . . . . . . . . . . . . . . . 15
Arab States: What If They Held a Summit and Nobody Came? . . . . . . . . . 16
New Trouble May Lie Ahead for Cyprus . . . . . . . . . . . . . . . . . . 17
Guinea: The Purge Continues in Conakry . . . . . . . . . . . . . . . . . . 18
South Asian Crisis: A Continuing Problem for the UN . . . . . . . . . . . . 19
Cuba: Isolation Diminishes . . . . . . . . . . . . . . . . . . . . . . . . 20
Chile: Recent Developments . . . . . . . . . . . . . . . . . . . . . . . 21
The Guatemalization of Uruguay . . . . . . . . . . . . . . . . . . . . . 22
NOTES: Australia; Burma - Communist China; Communist China - UN; Iceland; Eastern
Europe; Jordan-UN
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FAR EAST
Indochina
North Vietnam: Disquiet in Hanoi
Although the Chinese are making special ef-
forts to mollify Hanoi in the wake of the an-
nouncement about President Nixon's proposed
visit to Peking, the treatment has not taken.
Neither the special VIP attention given to Le Duc
Tho on his way home from Paris nor the People's
Daily article disclaiming any Chinese interest in a
new Geneva conference appears to have allayed
fears in Hanoi that North Vietnamese interests
would be endangered by a Sino-US detente. Shrill
propaganda lecturing continues in the North Viet-
namese press and the same points are being made,
albeit in lower key, in statements by high offi-
cials. Le Duc Tho took note of the "unchanging
nature of US imperialism" in a joint communique
with the Soviets as he passed through Moscow,
and Defense Minister Giap took some deliberate
swipes at the Chinese in his remarks at a reception
in Hanoi celebrating Chinese Army day and in his
official letter of congratulations to Lin Piao.
that the larger issue of US-China relations has
upstaged Hanoi's own seven points, there may be
more specific differences between Peking and
Hanoi over the terms for settling the war. China's
newly found enthusiasm for Hanoi's negotiating
posture, in addition to being belated, is am-
biguous. Even Peking's insistence on 3 August
that it does not favor a new Geneva conference is
hedged by qualifications-such a conference is not
appropriate "today," say the Chinese. In almost
all of its commentary endorsing the seven points,
Peking has managed to leave the impression that
troop withdrawal is by far the most important
Communist demand-indeed, almost the only de-
mand. Hanoi, however, gives equal weight to its
demand that the US must also make changes in
the Saigon government. In their own discussions
of the seven points, the North Vietnamese have
acknowledged that it is possible for the. US to
concern itself with withdrawal only and leave the
Vietnamese to work out a political solution, but
the whole thrust of Communist negotiating
strategy is to force the US to make concessions
on continued support for the Thieu government.
Hanoi's highly unusual resort to polemics in
a disagreement with a Communist ally reflects
extreme concern. Although the memory of the
1954 Geneva conference is always with them, the
Vietnamese know that much has changed since
then and that the Sino-Soviet split gives them
much more freedom of maneuver than they had
in the 1950s. Hanoi is well aware that China and
the Soviet Union are unlikely to act in concert
and that a reduction in support from one will
probably result in an increase in support by the
other. Nevertheless, fear of pressure from Peking
seems to be at the heart of Hanoi's distress. The
North Vietnamese probably have already sought
to hedge their bets with Moscow, or will soon do
so.
In addition to North Vietnam's general sus-
picion of a sellout by China and very real concern
By emphasizing only US withdrawal,, Peking
may be reinforcing skepticism in Hanoi that all
the Chinese really want is to force the US out of
Indochina, and that in a bilateral deal with Wash-
ington, Peking would undercut Hanoi's other de-
mands for political concessions. By itself, this is
not the kind of sellout that the Vietnamese ex-
perienced at Geneva, but it may be one' of the
factors triggering the outbursts from Hanoi these
past two weeks.
A new call for stepped-up mobilization was
issued in North Vietnam on 29 July. The pre-
mier's office put all civilian agencies on notice to
upgrade their military reserve units and signifi-
cantly increase both the theoretical and practical
aspects of military training. The publicity and
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ter. )P Lt
authority of the notice suggested that the leader-
ship was making an effort to keep popular
energies focused on the war effort and related
domestic issues. An accompanying editorial was
fairly honest in acknowledging that improvements
in military training were needed to meet "front-
line" requirements-a euphemism for the battle-
fields in Laos, Cambodia, and South Vietnam.
South Vietnam: Ky Out, Minh Still In
Vice President Ky's failure to qualify for the
presidential race by the filing deadline on 4 Au-
gust, came as no surprise to his own campaign
staff.
Ky's appeal to the Supreme Court may spar
additional adverse publicity for President Thieu,
especially overseas, but it seems unlikely to get
him on the ballot with Thieu and Big Minh on 3
October.
Ky is bitter at Thieu
Being frus-
trated y ieu s maneuvers o reeze him out of
the action is not a new experience for Ky, and in
the past he has often responded with a spurt of
activity followed by a longer period of sulking in
seclusion. It is possible, therefore, that Ky will
not sustain his present rate of invective for the
whole campaign.
Page 2
Security in the three southern provinces of
Military Region (MR) 1-Quang Nam, Quang Tin
and Quang Ngai-continues to deteriorate
cials in these three heavily populated provinces
are no longer willing to stay the night in their
hamlets and villages, and each day they return to
the more secure district and province capitals.
Many irregular military units charged with
protecting rural areas reportedly refuse to patrol
them at night, and lately have not even patrolled
during daylight hours. Some security troops have
been selling their weapons and other equipment
to help pay for their transportation each day to
and from more secure areas. Some of this gear
probably has fallen into enemy hands. Discipline
among the security troops is poor and morale is
low, and many recruits join local units in name
only, statistically inflating the size of these units
but producing no corresponding increase in secu-
rity.
US advisers say that security is worse in
ese areas than at any time since 1968. Some of
this decline can be attributed to US troop with-
drawals and to increased enemy activity since the
first of the year, but timid performances by many
South Vietnamese commanders and troops in this
area seem to be the chief causes of poor local
security. So far, the government has done little to
toughen its demoralized civilian and military
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Laos
is Government-held location
0 Communist-held location
officials and forces there. Unless it does, the Com-
munists seem likely to regain much of their for-
mer influence among the people in these three
provinces.
Laos: Slow Going in the South
Government forces attempting to recapture
Paksong on the Bolovens Plateau have been en-
gaged in some hard fighting. A task force that had
been moving on Paksong from the northwest was
forced to halt after two of its three battalions
were dispersed by an enemy attack. Other regular
units are moving slowly eastward toward the
town along Route 23. Their progress has been
slowed by enemy troops dug in along the road,
but lead elements have moved to about nine, miles
of Paksong.
North of the Bolovens, government forces
still hold Saravane. The irregulars as yet have
found no major enemy supply caches. Several
-kirmishes have occurred as government patrols
have ranged around the town and more serious
clashes may soon occur.
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Vang Pao's forces have pushed farther to the
southeast of the Plaine des Jarres. Elements of
three irregular battalions have taken up positions
about six miles from Xieng Khouangville and are
now in position to take the town if so ordered.
Other irregular units are pushing slowly to the
north from Phou San, north of the Plaine. The
Communists have continued to shell and probe
government positions, but have not gained any
new ground.
_1
As Sirik Matak makes preparations for a trip
to the United States and a meeting with President
Nixon, the political waters in Phnom Penh have
once again become turbulent. The cause lies not
in any one single precipitating factor, but in the
accumulated weight of the seemingly chronic
problems-the deteriorating economy, corruption
in high and low places, rowdyism in the army,
absence of dramatic or convincing military vic-
tories, and the growing perception that no early
end to the war is in prospect. The natural inclina-
tion to blame the men in power for these assorted
woes is aggravated because of the evident divi-
sions and lack of powerful leadership at the top.
Who is running Cambodia, Sirik Matak or Lon
Nol? It is a question that is increasingly being
asked in politically aware circles in Phnom Penh.
The government has moved quickly to ease
the agitated political scene. Thanh was appointed
head of a new government committee charged
with combating inflation and recommending eco-
nomic policy guidelines. Prime Minister Lon Nol
apparently hopes to trade on Thanh's reputation
for incorruptibility and his high standing with
much of the National Assembly, the source of
considerable antigovernment carping recently. At
the same time, he has saddled a potential rival
with one of the country's thorniest problems,
although an improvement in the economic picture
could rebound to Thanh's advantage.
In another move, the politically ambitious
First Deputy Prime Minister In Tam was given
authority over the military police, apparently in
an effort to keep him in the cabinet. Tam has
been insisting that he needed a paramilitary force
to implement his pacification program and had
threatened to resign unless he was provided with
such personnel, a tactic he has employed success-
fully in the past.
Discontent over corruption and leadership
aggrandizement has had a negative effect on mo-
rale within the National Police.
The dissatisfaction of these officials may
also reflect their awareness that the National
Police have been the stepchild in the Cambodian
security structure. In many cases National Police
responsibilities have been either restricted or 25X1
assumed by the military police, and they have 25X1
been relegated to a low priority in the allocation
of money and materiel.
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Communist China: Purge Confirmed
The purge of ultraleftist politburo member
Chen Po-ta
West-
ern press reports of Chen's rumored purge were
correct Mao Tse-tung had been
alluding to Chen's failings in his interview with
American journalist Edgar Snow last December
when Mao condemned "hypocrites" who lied dur-
ing the Cultural Revolution.
Although Chinese media have yet to de-
nounce Chen officially, there have been ample
indications in recent months that Peking is seek-
ing to persuade both domestic and foreign
audiences that the influence of the leftist forces
represented by Chen is on the wane. These signs
include the increasing publicity accorded the
year-old campaign against reputed followers of
the extremist "May 16 Corps"-which Chen al-
legedly organized-and repeated apologies to
Western diplomats in Peking for excesses per-
petrated against foreign missions in the summer
of 1967, the period when the May 16 group was
riding high.
It is still uncertain whether Peking intends to
make Chen a public scapegoat for the May 16
group's extremism. Because other ultraleftist
politburo members, including Madame Mao and
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SLUKh JL
Kang Sheng, also were involved with the group,
Peking may be reluctant to risk exposure of the
full extent of leadership disunity through an open
pillorying of Chen. The case against Chen Po-ta
and the May 16 Corps appears to have been
accompanied by a corresponding strengthening of
Chou En-lai's personal position, and the political
demise of Chen apparently symbolizes Peking's
repudiation of extremist policies in foreign as well
as domestic affairs. Nevertheless, the ranking of
Madame Mao just behind Chou and ahead of
Chief of Staff Huang Yung-sheng at the Army
Day celebrations last weekend suggests that the
jockeying between leftist and moderate elements
within the regime has not ceased.
A Japanese Paradox: Rapid Wage Hikes With Improved Competitiveness Abroad
Japanese trade unions have been able to ob-
tain significant increases in wages during the past
two years, largely because of the country's highly
favorable economic situation. The raises averaged
14 percent in 1969 and 18 percent in 1970. This
year Japanese trade unions during the "spring
wage offensive" hoped for increases of more than
20 percent, but the workers received only 16
percent as a result of the current economic slow-
down plaguing Japan. Furthermore, increases in
total income in 1971 are likely to be even less
than the wage increase suggests. Japanese workers
receive bonuses that account for roughly one
third of their cash income. In the last two years
bonuses increased at about the same rate as
wages, but this year they are unlikely to rise at all
with the result that the wage gain will raise annual
income by only 11 to 13 percent. On an hourly
rate basis this annual income would amount to an
average of $1.15 compared with $3.60 in the US
and $2.05 in West Germany.
Japan has done better than its major inter-
national competitors, the US and West Germany,
in maintaining the relationship between wage
rates and increases in productivity. Between 1963
and 1970 prices on Japanese exports rose ten
percent compared with 21 percent for the US.
Japan also has a small edge over Western Euro-
pean countries. West Germany is the only other
major country that did as well as Japan in avoid-
ing sharp increases in wages relative to produc-
tivity. The German revaluation in 1969 and the
subsequent floating of the mark since May 1971,
however, raised Germany's export prices substan-
tially. These factors accentuate Japan's trading
advantage over the major industrial countries al-
though Japan is losing its competitive edge on
some labor-intensive products such as textiles to
the low-wage, less developed countries.
The ability of Japanese trade unions to ob-
tain wage increases in excess of productivity gains
during the last three years has aggravated the
problem of domestic inflation. Tokyo, however,
is now more worried about resuming its rapid
economic growth of recent years than in fighting
inflation. Once the economy is booming the gov-
ernment will probably place greater stress on
combating inflation and may promote a policy
that limits pay increases to productivity gains.
The unions, however, would oppose any such
plan, whether inspired by government or manage-
ment. Similarity of statements released by the
unions on this point indicates a coordinated ap-
proach to the problem. The unions' long-range
wage policy is aimed at boosting Japanese wages
to "high" Western European levels by 1975.
Although Japan may catch up to European
workers' wages by the mid-1970s it is highly
doubtful Japanese wages will match those of the
US. In fact, the absolute difference between US
and Japanese wages will likely remain the same.
Japan's competitive edge over Europe will depend
on its more efficient plants and equipment and
the excellent marketing organizations that have
been developed.
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AUSTRALIA: The cabinet reshuffle of 1 August
should strengthen Prime Minister McMahon's Lib-
eral-Country coalition government. The major
change was the appointment of Nigel Bowen as
foreign minister to replace Leslie Bury who has
shown little flair or forcefulness. Changes in four
other portfolios, while partly necessary to accom-
modate Bury's departure, seem to have been
made with next year's parliamentary elections in
mind. These would appear to be particularly true
of the ministries of education and health, whose
policies inevitably become political issues during
an election year.
Bury may have been made a scapegoat for
the government's discomfiture over China policy.
The government, which had been proceeding cau-
BURMA - COMMUNIST CHINA: General Ne
Win is going to Peking this week in another step
toward restoration of closer Chinese-Burmese re-
lations. Ambassadorial ties were resumed last
spring after a suspension of almost four years
caused by the anti-Chinese riots in Rangoon in
1967.
Ne Win may use the occasion to seek a
resumption of Chinese aid, cut off after the riots,
or a market for Burmese rice. Considering the still
somewhat delicate state of relations, he may be
circumspect in dealing with the question of Chi-
COMMUNIST CHINA - UN: Peking's flat rejec-
tion of the US proposal for dual Chinese repre-
sentation in the UN reiterates its long-standing
opposition to any formula that smacks of "two
Chinas." The New China News Agency article of
4 August labeled Secretary Rogers--acting on be-
half of "US imperialism"-as the instigator of the
tiously toward establishing diplomatic relations
with China, was put on the defensive when op-
position Labor Party leader Gough Whitlam led a
delegation to Peking in early July. In addition,
Bury made undiplomatic and defensive remarks
on President Nixon's intended trip to 'China
which further embarrassed the government.
Nigel Bowen, the new foreign minister and
former attorney general, is close to Prime Minister
McMahon-as his predecessor was not-and has a
reputation as an able and energetic minister.
McMahon himself is being given credit by the
domestic press for taking firm action, 'Which
should strengthen his position as government and
part leader.
nese support for Communist insurgents in north-
east Burma. The Chinese may be prepared to give
Ne Win some assurances on this score, although
there are no signs that they will abruptly or
completely end assistance to the insurgents in the
near future.
Peking is billing the trip as "friendly and
informal" rather than a state visit. This will elimi-
nate the necessity for a final communique and
enable both sides to avoid public mention of their
continuing problems.
new move, but was careful to play down the role
of the President. Peking has maintained a rigid
posture in support of the traditional Albanian
resolution calling for Taipei's expulsion, and there
is no sign the Communists would enter the world
body if the Nationalists remain.
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SEG RE'F
EU ROPE
Soviet Economy Maintains Momentum
Moscow's midyear report on the economy
indicates that the momentum generated in com-
pleting the eighth five-year plan in 1970 has car-
ried over into the first half of 1971. Calculations
based on the report show an increase of about
seven percent in civilian industrial output over the
comparable period of 1970. Although the rise is
below the 7.5 percent posted during the first half
of 1970, last year's rate contains a large element
of rebound from the poor performance of 1969.
Although the midyear growth is in line with
planned goals for 1971, in three of the past four
years growth in the second half was significantly
below that recorded in the first half.
Growth of civilian machinery production is
calculated to have declined by about one percent
from the comparable period last year. In contrast,
Moscow reported no change in the output of total
machinery, suggesting that production of mili-
tary-space hardware increased at a somewhat
accelerated pace over 1970. Moreover, in the
civilian machinery sector, output of most con-
sumer durables continued to stagnate. For the
fourth consecutive quarter, production of TV sets
fell below the corresponding period of a year
earlier. A notable exception was passenger cars,
whose production increased by 44 percent as the
long-awaited Fiat-Zhiguli started rolling off the
assembly line.
At first glance the consumer nondurable
sector recorded a moderately disappointing per-
formance as rates of growth of soft goods and
industrially processed foods were below those of
a year ago. Production levels for some items have
satisfied current consumer demand, causing, in
part, lower growth rates. The results for items still
in short supply were mixed. Sewn goods produc-
tion grew seven percent compared with 11 per-
cent for the same period last year, but industrially
processed meat increased by 16 percent, twice the
rate achieved during the first six months of 1970.
Gross fixed capital investments by the state
rose eight percent over the first half of 1970, or
above the 1971 plan projection of 6.5 percent. A
ten-percent growth in construction work was
primarily responsible for boosting the average
over-all investment growth rate, so investment in
equipment (about one third of the total) prob-
ably grew by considerably less than eight percent.
Agricultural prospects at midyear appear to
match last year's record results. Spring sowing
plans were overfulfilled, and harvesting of winter
crops is progressing satisfactorily. Cattle, hog, and
poultry numbers reached record totals on state
and collective farms. The recent policy of
encouraging private agriculture also appears to be
having some positive effect. The number of pigs
was up by ten percent and private holdings of
cattle, sheep, and goats remained at the level of a
year ago, arresting the decline of recent years.
Consumer welfare scored a modest gain
during the first half of 1971 to continue the
long-run pattern of gradual improvement. The
volume of retail sales was up by seven percent,
approximately the same as for the comparable
period in 1970. The Soviets reported a twofold
growth in automobile sales to the public, al-
though the totals are still minuscule by US stand-
ards. Further brightening the consumer picture,
housing construction-a chronic problem area-
registered a record amount of new comple-
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Crimea Meeting: Where Was Ceausescuu'
Romania's absence from a conclave of top
Soviet, East European, and Mongolian leaders in
the Crimea on 2 August has further underscored
its isolation within the Soviet bloc. Apparently
the meeting with Brezhnev, Podgorny. and
Shelest was called quite abruptly; several of the
non-Soviet leaders seem to have arrived on short
notice. Two days later the participants, minus
Kadar, who had returned home, visited the Soviet
Black Sea fleet. The Soviet announcement of the
excursion pointedly noted the fleet's responsi-
bility to safeguard the "countries of the socialist
community" as well as the USSR.
The communique issued after the meeting
mentions that a variety of topics were discussed-
European security proposals, Vietnam, the Middle
East, the Sudan and CEMA. In its treatment of
these problems the communique uses the most
routine formulations, suggesting that a major
purpose of the conference was to flaunt its "com-
plete unanimity," a phrase employed several
times. It lends a formal character to the allegedly
informal vacation meeting and underscores
Romania's deviant status.
Although China and Romania are not men-
tioned by name in the communique and no
threats are directed at either, both are implicitly
criticized and probably received the closest atten-
tion. By stressing their "deep satisfaction" that
the recently concluded 25th CEMA session agreed
on closer economic integration, the participants
focused critical attention on Romania's obstruc-
tion of this goal. Similarly, by reiterating their
approval of the conclusions of the anti-Peking
1969 World Communist Conference, the par-
ticipants pointed an accusing finger at China and,
indirectly, at Romania.
The two troublesome countries are by now
closely associated in Soviet minds. The in-
creasingly close cooperation between China and
Romania serves important interests of each.
Romania gains support for its independent poli-
cies, while the Chinese, by gaining a foothold in
the Balkans, hope to relieve Soviet pressure on
themselves. Ceausescu's long process of culti-
vating the Chinese was climaxed during his recent
Asian trip when he signed a joint communique in
Peking whose anti-Soviet overtones particularly
irked Moscow. The announcement of the presi-
dential trip to China has undoubtedly deepened
Moscow's irritation, since the Soviets suspect that
Romania has facilitated the contacts between Pe-
king and Washin ton.
The Crimea meeting thus seems intended as
a warning to Romania to refrain from further
ostentatious displays of independence, although
Moscow apparently has not embarked on an open
campaign to bring Bucharest into line. If the
Soviets intend to step up the pressure, the Warsaw
Pact exercise reportedly scheduled to be held in
Bulgaria later this month offers an opportunity.
In the past the Romanians have refused both to
participate in such exercises and to allow Soviet
troops to transit their country.
Meanwhile, the Romanians appear to have
anticipated increased friction with Moscow., They
launched a campaign for ideological purity in
early July that was probably designed both to
forestall Soviet criticism of their domestic policy
and to prepare the Romanian party and people
for the likelihood of increased pressure. Since the
Crimea meeting, an article in the Romanian: party
daily on 4 August has reaffirmed the independent
attitude Ceausescu took in a blunt s eech on the
eve of the CEMA meetin .
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France: Words and Action on International Narcotics
Reacting to pressure from US diplomats and
to a round of recent biting press criticism de-
manding more action, French officials are now
taking the problem of drug abuse more seriously
than at any time in the past.
Late last month in radio and TV appearances
Interior Minister Raymond Marcellin announced
rewards for information on suspected drug push-
ers reported through special new telephone num-
bers in Paris and Marseilles. Citing statistics on
increased arrests and convictions for drug traf-
fickers since 1 January, Marcellin took the
extremely hard line that the death penalty might
have to be applied if present penalties do not
discourage pushers.
Although applauding the government's pub-
licly expressed concern over drug abuse, which
was seen as responsive to earlier press demands
for action, most papers nonetheless felt that
Marcellin took too harsh a stand. The unusually
wide press coverage-reflecting a new public
awareness of the drug question-was for the most
part opposed to the means propounded by Mar-
cellin for solving the problem. Le Figaro called
the phone system "an invitation to denunciation
[with] a danger of error and [of creating] an
atmosphere of suspicion." Le Monde and several
other papers doubted both the wisdom and effec-
tiveness of instituting the death penalty,
Probably more important than Marcellin's
strong words are recent less publicized actions. In
an effort to improve over-all narcotics enforce-
ment in France and to strike more effectively at
clandestine heroin laboratories in the Marseilles
area, Marcellin has appointed a number of dy-
namic police officers to the Central Narcotics
Office, one of whom will go to the Marseilles
station of the service. The attention paid to
Marseilles is especially important because most of
the heroin seized by US officials is apparently
processed in Marseilles laboratories after being
imported in raw form
from Turkey. US of-
ficials estimate that the
Marseilles component
processes 80 percent of
the heroin bound for the
US although the French
deny that the figure is
this high.
IJS efforts to con-
vince France to take the
drug problem seriously
begai in mid-1969.
Since that time the
French have gradually
. Strong words on drugs
increased the number of officers assigned to
cotics enforcement, and have signed an agree-
ment-negotiated between Attorney General
Mitchell and Marcellin-permitting more US nar-
cotics personnel to operate in France.
Much of France's resistance to pressure from
the US has been a result of the fact that the
French do not perceive their drug problem as
being as serious as that in the US. Although the
use of cannabis has increased sharply since 1965,
it is still not nearly as widespread as in the United
States. Though the number is probably very low,
the French estimate that they have less than
1,000 hard drug addicts, most of whom are over
35, while US officials put known American ad-
dicts at over 300,000.
France's stepped-up attention to the prob-
lem has been paralleled to some extent elsewhere
in Western Europe. In Spain, the government has
increased fines for possession of drugs. In Italy, a
major crackdown on the Mafia is under way
In West
Germany, a drug abuse program has been in effect
for about a year.
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Superpower Problems at UN Maritime Meeting
Midway through the present meeting of the
UN General Assembly's seabeds committee at
Geneva, the United States and the USSR are
facing serious opposition in their chief area of
concern, the right of passage through inter-
national straits. Both Moscow and Washington
have made proposals designed to win them greater
support, but the current of opposition on this and
some other subjects runs strong.
Earlier this week the US formally presented
to the 86-member committee three draft articles
intended to resolve at the 1973 Law of the Sea
conference the present disagreement over the
weak and ambiguous international maritime laws.
The first would set a 12-mile limit to territorial
waters but guarantee a right of free passage
through the approximately 100 straits that are
less than 24 miles wide. The second would
attempt to balance the interests of advanced
states that fish in distant seas with those of de-
veloping countries that rely on the marine re-
sources off their coasts. The third would set the
limit of national jurisdiction over the ocean floor
at a water depth of 200 meters and provide inter-
national machinery to govern exploitation of
potential mineral wealth on and below the deeper
seabeds. On only the last proposal has the US
fared particularly well to date.
The Soviets have long been troubled by the
seabeds regime concept-they traditionally op-
pose limitations by international organizations
ICELAND: Icelandic officials seem somewhat
chastened by the foreign reaction to their new
government's policy proposal for an evacuation of
the US/NATO base at Keflavik. The Norwegians
in particular, who as fellow Nordics carry special
weight, have stressed the importance of the base
in view of the increasing capabilities of the Soviet
Northern Fleet.
over national sovereignty. Last week, however,
they appeared to have been won over in part to
the US view that a more forthcoming superpower
position on ocean floor exploitation would en-
hance prospects for agreement on the straits issue.
The USSR offered a draft treaty setting up an
authority for the seabeds, but did not propose
that the international community be a beneficiary
of seabed mineral wealth, a proposition the US
favors.
Spain has launched a frontal attack on the
superpowers' interest in free passage through
straits. Madrid seeks to retain the "innocent pas-
sage" reference in present international law and
to designate nuclear vessels as noninnocent and
therefore subject to regulation by the coastal
state. Three NATO allies-Italy, Denmark, and
Greece-are also most unhappy with the US
straits proposal. Rome is concerned lest interna-
tional rights through Messina loosen mainland ties
with Sicily; Athens and Copenhagen oppose any
agreement that could permit increased Soviet na-
val activity in their territorial waters.
The Latin American states that claim a
200-mile limit for their territorial waters have so
far not been especially vehement in debate at the
committee meeting. Some of the 200-milers may
be willing to accept a 12-mile limit if 4 more
extensive coastal state "economic zone" to
protect fishing areas can be obtained.r-
The prime minister has now revived qld sug-
gestions that the base might be manned by Ice-
landers. In addition, leaders of two of the three
coalition parties have indicated that no action can
be taken with respect to the base until the more
urgent question of Icelandic fishing limits is set-
tled; this issue, however, will lead to sharp differ-
ences with Britain and West German.
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Yugoslavia: New Government and New Reforms
Tito's governmental reform came one step
closer to realization last week with the staffing of
offices in the new federal structure. The new
government, with a few prominent exceptions,
should be ready to begin daily operations soon.
At the same time, preparations have begun on
further constitutional changes and a reorganiza-
tion of the party, two moves which are central to
Tito's plans for orderly development of a decen-
tralized but cohesive federation.
On 30 July, the Yugoslav National Assembly
Krste Crvenkovski
Vice President of the
Collective Presidency and
Number Two Man in the
Government
gave final approval to
the new government.
Formal appointments
within the collective
presidency, the supreme
policy-making authority,
and the federal executive
council (FEC), charged
with policy implementa-
tion, were also an-
nounced at that time.
Tito was of course re-
elected president of the
republic but surprised
the National Assembly by
refusing re-election "for
life." He noted that the
constitution did not
mention life tenure and
he said that he only
wants to help get the
new system on its feet and may serve just "a few
years more."
The only other major business relating to the
collective presidency, was the appointment of a
vice president who would, in case of Tito's death
SECRET
Bosn a- Hercegovina No Jerkic
Croatia Mirjana Krstinic
Dr. Emil Ludviger
Kosovo Imer Pulja
Macedonia Stefan Andev
Trpe Jakovlevski
Blagoe Popov
Montenegro Mencilo Cemovic
Marco orlandic
Serbia Dr. Borislav Jovic
Dusan Gligorjevic
Slovenia Boris Snuderl
Dr. Anton Vratusa
Vojvodina Geza Tikvicki
Page 13 WEEKLY SUMMARY 6 Aug 71
or incapacitation, become president until the end
of his one-year term. The nod went to aMace-
donian, Krste Crvenkovski, who is a faithful lieu-
tenant with an impressive record in the federal
government. By selecting a member of one of the
smaller minorities, Tito side-stepped potential
wrangling between Serbs and Croats over this
political plum and improved the prospects of
other small minorities which have been cut out of
the more prestigious federal posts. In this connec-
tion, several of the FEC portfolios were handed
to representatives of smaller regional groups with
cogent special interest. For instance, the national
President - Dzemal Bijedic (Bosnia-Hercegovina)
Vice President - Dr. Jakov Sirotkovic (Croatia)
Foreign Affairs - Mirko Tepavac (Vojvodina)
National Defense - Nikola Ljubicic (Serbia)
Foreign Trade - Muhamed Hadzic (Bosnia-Hercegovina)
National Economy - Bosko Dimitrijevic (Kosovo)
Finance - Janoo Smole (Slovenia)
Labor and Social Policy - Vuko Dragasevic (Monten(egro)
Internal Affairs - to be filled
Justice - to be tilled
Agriculture - still to be organized
Transport and Communication - still to be organizes
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ELI .dS. J1 1
economy portfolio went to a member from the
economically backward Kosovo.
As a corollary to the installation of the new
state system, the National Assembly announced
the creation of a new commission whose task will
be the preparation of proposals for yet another
constitutional reform. Headed by Yugoslavia's
leading ideologue, Edvard Kardelj, the com-
mission's primary role will be to ensure that the
"second round" of the reforms is better organized
and less chaotic than the first. No timetable was
announced.
All the action last week was not confined to
the government scene. A session of the party
presidium kicked off a reform drive on 28 July by
scheduling discussions for a party conference in
November. Unabashed by the weighty task of
remolding the party into a more influential force,
Tito also directed that the nation's unhealthy
economic situation be added to the agenda of the
EASTERN EUROPE: Budapest has concluded its
first agreement to grant equity to a foreign com-
pany in a cooperative venture located in Hungary.
This may presage similar arrangements by other
East European countries. Romania also passed
legislation last year to permit foreign ownership
up to 49 percent and is negotiating joint ventures
with a number of US companies.
The authority to permit foreign ownership
in Hungary derives from a decree promulgated in
August 1970, but investment is allowed in prac-
tice only where Hungary stands to acquire new
technology. The agreement between the Hun-
garian Infolar Systems Engineering Institute and
the US firm, Control Data Corporation (CDC),
grants CDC a 49-percent interest in a data proc-
essing center. CDC has already applied for a US
export license for the 3500 computer that it is to
provide for the data center. The center will solicit
Hungarian customers for data processing and
engineering services.
Although no joint ventures have yet been
concluded under the new Romanian investment
law passed in March 1971, a number of US com-
panies have expressed interest. US Steel Corpora-
tion reportedly is working on a proposal to build
a cold rolling mill and sell some of the output in
other countries. Ford Motor Company has dis-
cussed the installation of a truck plant and has
indicated its willingness to take some of the
output of the proposed steel mill for use else-
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MIDDLE EAST-AFRICA
Sudan: New Directions in Foreign Policy
Sudan's relations with the USSR and Eastern
Europe, already under a severe strain since the
Numayri countercoup, deteriorated sharply dur-
ing the last week. The Sudanese have recalled
their ambassador in Moscow, who was also ac-
credited to Sofia, and have asked the counselor in
the Soviet Embassy in Khartoum and the Bul-
garian ambassador to leave.
Numayri had at first absolved the Soviets
from any role in the coup attempt, but then
reacted to Soviet press criticism of his purge of
local Communists. The Sudanese leader charged
that the only explanation for the harshness of the
Soviet press attack was that the Soviet Embassy
was an "accomplice of the coup leaders and the
Sudanese [Communist I party." The choice of the
Bulgarians as a particular target for Sudanese ire
may be a delayed reaction to an earlier story in
Cairo's al-Ahram that charged Sudan Communist
Party Secretary General Mahjub with planning the
coup from the safety of the Bulgarian Embassy.
Page 15
For its part, Moscow has continued its at-
tacks on Sudan in the same vein as before and has
had additional workers' protests delivered to the
Sudanese Embassy in the USSR. Nevertheless, the
Soviet press has noted neither the withdrawal of
the Sudanese ambassador from Moscow nor the
expulsion of the Soviet counselor from Khartoum,
which suggests that the Soviets are not inclined at
this point to throw down the gauntlet to
Numayri.
Union and its allies.
nese regime. It remains to be seen, however,
whether the Libyans will be willing to make up
for the possible withdrawal of aid by the Soviet
The implications these developments will
have on future Sudanese relations with other
states are still not totally apparent. After the
countercoup, Numayri told the press that rela-
tions with the US would not change because they
were determined by Washington's support for Is-
rael. Moreover, recent statements by government
spokesmen have referred to "imperialist, reac-
tionary complicity" in the coup, apparently to set
the stage for future anti-US fabrications. Qn the
other hand, Sudan's relations with Egypt and
Libya will almost certainly be closer. It seems
likely that Numayri will turn for support to the
Libyans, who will be inclined to look with, favor
upon the new nationalist complexion of the:Suda-
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SECKE L'
Arab States: What If They Held a Summit and Nobody Came?
Libyan Prime Minister Qadhafi's much-
trumpeted efforts to pillory King Husayn have
flopped badly. Only four heads of state showed
up in Tripoli for the summit conference Qadhafi
called last weekend-Egypt's Sadat, Syria's Asad,
and the leaders of the two Yemens. The com-
munique published at the conclusion of the con-
ference included a good deal of predictable rhet-
oric hailing the "steadfastness of the Palestinian
people," but called for none of the sanctions
against Jordan that Qadhafi had urged. The Arab
leaders did endorse the old Cairo and Amman
agreements with the fedayeen, and warned that if
Jordan flouted them other countries would have
to take "appropriate measures."
Qadhafi has made a heroic effort to convey
the impression that the meeting accomplished a
good deal. At a press conference on 1 August, he
hinted darkly of "secret decisions" to be imple-
mented in due course, depending on develop-
ments in Jordan. He also claimed the meeting had
given the Palestinians all they wanted, although
fedayeen radios were quick to blast the outcome
of the conference. The Syrians, too, attempted to
mask the hollowness of the communique by hail-
ing it as a comprehensive, historic document, fit
to stand beside the Cairo and Amman agreements.
actually doing anything.
Tunisian Foreign Minister Masmoudi, mean-
while, has come up with a plan to reconcile
Amman and the fedayeen. According to press
reports, his plan calls for unification of the feda-
yeen under the leadership of Fatah, a highly un-
likely eventuality. The Tunisian initiative would,
however, provide the Arabs with a convenient
device for seeming to help the fedayeen without
JORDAN-UN: The Jordanians are apparently
having second thoughts about the advisability of
calling for a Security Council meeting on Jeru-
salem, at least for the time being. Jordan has
viewed with mounting indignation Israeli efforts
to change the character of Jerusalem from a pre-
dominantly Arab to a predominantly Jewish city,
and has been consulting with the US on a draft
resolution for Security Council consideration.
Jordan now finds itself unable to count on the
support of its fellow Arabs, however, at least until
the hubbub generated by Amman's recent opera-
tion against the fedayeen dies down. Even usually
sympathetic Arab states are apparently unwilling
to support Jordan in public at this time and are
pressing Amman to postpone the meeting.
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SEUKI ;'1'
New Trouble May Lie Ahead for Cyprus
Rising tensions on Cyprus could develop
into a new crisis. President Makarios, fearful that
a projected meeting between Greece and Turkey
will undercut his position, may be trying to pro-
voke an intercommunal clash.
The talks between Greek and Turkish
Cypriot elements on the island, which have served
as a safety valve over the past four years, have
become deadlocked on the question of the degree
of local autonomy to be granted the Turkish
Cypriot community. In the past few weeks, sev-
eral shooting incidents have kept the two com-
munities on edge. Makarios remains openly
critical of the Turkish Cypriots and has been
publicly encouraging Greek Cypriots to protect
their "rights." In these circumstances, even a
slight incident could lead to significant fighting,
which in turn could spill over to embroil Athens
and Ankara directly.
The Turks took a firmer line last March after
the Erim government came to power and now
insist that if the intercommunal talks do not show
progress soon, other alternatives must be sought.
The Erim government discussed the deadlocked
talks with Athens last June and will do so again in
September. The Turkish leaders believe the
Greeks should take a more active role in settling
the problem, but will probably initiate no mili-
tary action as long as there is no real danger of
enosis-union of Cyprus with Greece-or a major
outbreak of violence on the island. Nevertheless,
the Turkish military, which put Erim in power
and now has an influential voice in the govern-
ment, does not intend to allow the status quo on
the island to remain indefinitely.
For their part, the Greeks are fearful of
Makarios' ability to stir up trouble. Athens be-
lieves that Turkey does not fully appreciate the
limits of Greek influence on Makarios, but it is
hoping that the Athens-Ankara talks will prevent
any unilateral Turkish military move on Cyprus.
Athens' major concern is to avoid a confrontation
with Turkey. At the meeting in September, the
Greeks probably will seek to convince the Turks
that the intercommunal talks offer the best route
to a solution.
If the Greek-Turkish meetings in September
do not square with Makarios' ideas, however, he
remains capable of frustrating Greek-Turkish
diplomacy by creating a new crisis on the is-
Page 17
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Guinea: The Purge Continues in Conakry
The latest paroxysm in Guinea's eight-
month-old political purge has included major new
arrests, a second round of "popular trials," and
mounting allegations of US involvement in the
regime's current troubles. Domestic tensions were
also heightened by renewed charges that cross-
border attacks by Portuguese-backed mercenaries
were planned for this week.
The cyclical process of arrests and confes-
sions-leading to more arrests-has become in-
creasingly frenzied, suggesting deepening insecu-
rity on the part of Guinea's leaders. The current
wave of arrests has so far netted over one fourth
of the cabinet, several ranking military officers,
and numerous lower level officials. The total
number in custody is not known, even by Presi-
dent Toure, but it may exceed the 150 sentenced
last January by a "revolutionary" court for their
alleged complicity in the Portuguese-led com-
mando raid on Conakry in November 1970.
Those arrested span the entire political spectrum,
although individuals having foreign educations or
close contacts with Westerners are especially
vulnerable. Only members of the seven-man Polit-
buro seem relatively safe, although there are un-
confirmed rumors that at least two of them have
been questioned in connection with the purge.
A second round of "popular trials" began on
29 July with the broadcast over Radio Conakry
of numerous "confessions." Party militants
listen to these statements,
weigh the "evidence," and recommend sentences.
The emphasis in these latest "trials" has been on
alleged "economic" crimes and participation in
"foreign spy networks." The population has be-
come increasingly apathetic and skeptical of the
charges, but there is no sign that any group is
planning to move against Toure.
There are tentative indications that Toure
would like to wind down the purge this month.
The process may have acquired a momentum of
its own, however, because each new wave of ar-
rests requires further justifications. External
factors also may prevent an early end to the
current tensions. Portugal, for instance, probably
would like to provoke Toure to new domestic
excesses, and may deliberately encourage his fears
of new cross-border attacks.
To date, Toure has singled out Portugal and
West Germany as the main foreign culprits in-
volved with domestic traitors. References in
recent confessions to an "American network"
may foreshadow further attempts to implicate the
US, however.
\Toure mayT
under pressure from party leftists to direct more
fire at the US, which so far has only been
obliquely accused of plotting against his govern-
ment.
Meanwhile, the UN Security Council met in
"urgent" session on 3 August at Guinea's request
to consider charges by Toure that Portuguese-
backed mercenaries were poised to attack his
country. Toure later claimed that the council's
resolution to send a fact-finding mission had "de-
terred the aggression," and he asked that the
mission not be sent. Toure has periodically pre-
dicted the imminence of such attacks since the
Portuguese-directed raid last November, but there
is no independent evidence to support his charges
25X1
25X1
that new attacks were about to take place. 25X1
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South Asian Crisis: A ContinuingProblern for the UN
Since the onset of the civil war in East
Pakistan last March and the subsequent flight of
7.1 million refugees into India the UN has been
trying to prevent the regional crisis from
increasing its disturbing effect on the interna-
tional scene. Secretary General Thant has been
unusually energetic in dealing with this situation,
but various constraints have hindered the interna-
tional community's efforts to resolve the
imbroglio.
The initial impulse, and one which remains
very important, was humanitarian in origin and
directed toward meeting the immense need for
food and health supplies in the refugee areas of
both India and East Bengal. The Pakistani offi-
cials, at first unwilling to accept relief, soon
changed their minds but only recently accepted
the UN staffing arrangements made by the secre-
tariat to assist in delivery to refugees. Compound-
ing the problem, the secessionist Bangla Desh
radio in Calcutta is broadcasting threats against
UN personnel-particularly US nationals-who
participate in any relief effort in East Pakistan.
India, though accepting the influx of assist-
ance to the refugees, regards the international
community's response as inadequate. Moreover,
New Delhi has been troubled by the presence of
three Moslems in high-ranking positions in the
UN's aid effort. Recently, India strongly rejected
Thant's suggestion that UN observers be placed
on each side of the Indo-Pakistani frontier and
requested that foreign personnel withdraw from
refugee camps in West Bengal. Such personnel,
they may fear, could inhibit Indian support for
East Bengali guerrillas.
In the international political arena, Indian
and Pakistani diplomats have filed charges and
countercharges in a number of UN and specialized
agency forums, and the end of that activity'is not
yet in sight. India initially seemed inclined toward
a Security Council session on the conflict, which
Islamabad maintained was an internal matter and
thus not within the UN's purview. As the weeks
passed and the major powers generally remained
chary of airing in the Council what was surely
becoming an international dispute, Thant opted
last month to invoke his powers under Article 99
of the UN Charter and sent a secret report to the
parties and the Council members conveying his
views on the situation in South Asia. His message
implied that the Council should be convened.
Council members responded negatively to
the idea of a meeting on the crisis, and leeks of
the report-apparently by the disputants seeking
to present only those elements tending to support
their case-forced the secretariat to make the text
public this week. The Pakistanis fear Indian mili-
tary intervention and now take the line that a
Council session mi ht be useful.
The Indians now are strongly opposed to a Coun-
cil session.
Meanwhile, accusations of bad faith and hos-
tile actions continue to be exchanged between
Islamabad and New Delhi, and the two nations
appear to be drifting somewhat closer to open
warfare. The armed forces of both countries re-
portedly are on alert, and there is considerable
high-level pessimism that a major clash can be
prevented.
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WESTERN HEMISPHERE
Cuba: Isolation Diminishes
The massive delegation that Havana has sent
to Colombia for the Sixth Pan-American Games is
one of a series of recent indications of Fidel
Castro's intense interest in maximum exploitation
of contacts with other countries in Latin America
and the Caribbean. This policy, adopted after the
failure of Che Guevara's guerrilla expedition in
Bolivia in 1967, has met with far more success
than has the more aggressive tactic of "exporting
the revolution." Although Castro can be expected
to continue to supply training, money, and even
personnel, where appropriate, to revolutionary
groups such as the Rebel Armed Forces in Guate-
mala, he now seems more willing to accept the
thesis that Cuba's foreign policy goals in Latin
America can be achieved in many countries
through peaceful means. He believes that events
in Latin America are developing in his favor, and
he has sought to take advantage of the situation
through cautious diplomacy and a more prag-
matic approach. Castro has had considerable suc-
cess so far and is likely to continue making
inroads on the OAS sanctions, which are con-
sidered by many Latin American political leaders
as having outlived their usefulness.
Until diplomatic relations were renewed
with Chile last November, Cuba had formal ties
only with Mexico. Now, the governments of Peru
and Bolivia have indicated that they are studying
the re-establishment of relations, and Castro has
already indicated that Havana would consider
such moves favorably. Should relations be re-
newed with these countries, others in the hemi-
sphere would probably take steps to follow suit,
partly because of a genuine desire to restore ties
and partly to avoid being the last to climb on the
bandwagon.
Except for modest exchanges with Mexico,
trade with Cuba was formerly conducted by a few
Latin American countries only in limited amounts
and in clandestine fashion through an expensive
and circuitous third-country subterfuge. Now,
Chile trades openly with Cuba, and the Peruvian
Government has given official approval of the sale
to Cuba of more than 100,000 tons of fishmeal to
be transported in Cuban ships.
The national airlines in both Cuba and Chile
fly regularly scheduled flights between their
respective capitals, facilitating considerably the
travel of Latin Americans to and from Havana. As
a result of papering over its differences with
Mexico, Havana also now has expanded an air
agreement that will permit each country to
Basketball at Pan-American games:
Scoring points in the hemisphere
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rUKr, 1
operate up to four flights each week with as many
as 250 passengers on each flight The new agree-
ment, signed on 31 July, will be in effect for
three years. There are also persistent rumors that
the Netherlands Antilles is interested in re-estab-
lishing an air link between Curacao and Cuba, but
nothing concrete has developed yet.
Cultural contacts are also expanding, and
Cuban film showings and book displays havebeen
held recently in Chile, Peru, and Colombia. Dur-
ing Chilean Foreign Minister Almeyda's visit to
Havana for the celebration on 26 July, a five-year
cultural, scientific, and technical cooperation
agreement was signed between the two govern-
ments. Sports delegations from several countries,
Chile: Recent Del'elojnnents
including Panama and Colombia, have visited
Cuba, and large Cuban delegations take part in
such international events as the Central American
and Caribbean Games and the Pan-American
Games. Considerable effort is currently being ex-
pended in Havana to enlarge the local stadium so
that Cuba can host a regional baseball competi-
tion later this year. The official Cuban press
agency, which is an arm of the Cuban intelligence
service, has played an important part in expanded
contacts. Although its office in Uruguay was re-
cently closed, since 1968 it has opened new of-
fices in Lima, La Paz. Quito, and Caracas to
supplement the already-established offices in
Mexico City and Santiago.
The Christian Left grouping within the PDC
developed during the PDC-inspired "revolution in
liberty" of former President Eduardo Frei's ad-
ministration. It was a factor in the formation of
the Unitary Popular Action Movement (MAPU),
which broke away from the PDC two years ago
and now is a member of Allende's UP coalition.
The MIC and some dissatisfied MAPU founders
reportedly will join forces. The formalization of
the MIC as an independent organization is, at the
least, a propaganda boon for Allende. Although
the MIC leadership includes some imaginative and
energetic workers, many of its members have long
been considered troublemakers and will not be
missed by the parent party. The leverage that the
group may try to exert in the congressional elec-
tion of 1973 is likely to be slight as the members
of the MIC are generally poor vote-getters.
The Christian Democratic Party (PDC),
Chile's largest political group and principal voice
of opposition to President Allende's Popular
Unity (UP) coalition, underwent a serious division
this week. A left-wing group, accusing the party
leadership of collaborating with conservative ele-
ments, broke away from the main body of the
PDC, taking with it at least eight members of the
Chamber of Deputies. The PDC's representation
in that chamber is now reduced by about 13
percent, but opposition forces still make up the
majority in congress. Another PDC deputy has
threatened to join the group, which calls itself the
Movement of the Christian Left (MIC).
The splinter group's first formal meeting was
dominated by the former leadership of the PDC's
youth organization. At that meeting it was an-
nounced that the MIC would not join the UP
coalition but would be in close "fraternal con-
tact" with it. An organizational meeting is sched-
uled to be held on 15 August, at which time a
network of cells to be known as "communities
for socialism" will be set up.
As Allende moved to capitalize on the PDC's
problems, all was not well in his own camp. The
Radical Party (PR), the only non-Marxist member
of the UP coalition and the self-proclaimed voice
of democracy within the government, also under-
went a split this week. Following the PR's na-
tional convention, during which one of the
party's three factions was frozen out of the
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balloting for party president, five senators and
seven deputies representing that faction bolted
and said they would form the Independent Radi-
cal Party (PRI). The leader of the dissidents,
long-time PR official and left-wing ideologue Luis
Bossay, pointedly distinguished the new group's
"proletarian" character from the PR's traditional
middle-class orientation. At an organizational
meeting, the group created a cellular structure of
"committees of radical action," to take full effect
in February. The division of Radical strength into
two separate groups, although another indication
of the decline of the Radical Party, is a significant
complication in Allende's effort to build support
for a unicameral legislative body.
The recent partial devaluation of the escudo
should help to cut foreign exchange losses and
may also increase Allende's control over business.
The measure, effective on 27 July, was billed
mainly as a move to cut tourist expenditures
abroad and follows closely the imposition of sev-
eral new foreign exchange taxes that in effect had
already partially devalued the escudo.
Chile has traditionally maintained two ex-
change rates: a "bankers rate" for commodity
trade and a "brokers rate" for all other transac-
tions. When Allende took office, the rates were
12.2 and 14.3 escudos per US dollar, respectively.
Allende has pledged not to raise the cost of im-
ports by devaluing, and all of these moves, plus
recent quantity restrictions on tourist expendi-
tures, have concentrated on nontrade transac-
tions. As a result, however, Chile now has a full-
fledged multiple exchange rate system.
There are presently three selling rates and
two buying rates for foreign exchange. Chileans
purchasing foreign exchange from the Central
Bank now pay 12.2 escudos per dollar for ap-
proved imports, 38 escudos for payments to for-
eign creditors, and 43 escudos per dollar for funds
for foreign travel or payment of royalty or li-
censing fees. Exporters receive only 12.2 escudos
for dollars sold to the Central Bank, and foreign
tourists receive 28. None of these rates ap-
proaches the current black market rate of about
65 escudos per dollar.
The devaluation will have a severe impact on
travelers and private firms committed to foreign
payments. The Chilean National Manufacturers'
Association (SOFOFA) estimates that private
firms owe about $300 million in short- and
medium-term debts abroad-largely to US banks
and companies. About $50-70 million of this to-
tal is clue this year, as are large royalty and license
payments. SOFOFA has warned the administra-
tion that the new rates may bankrupt many firms
and increase unemployment. Responding to the
complaints of businessmen the minister of econ-
omy advised them "not to pay and see what
happens."
The new rates, combined with complete gov-
ernment control of the banking system, will give
President Allende strong leverage over the remain-
ing private firms, as they will be hard-pressed to
come up with enough escudos to meet their for-
eign obligation s and will need additional bank
loans.
The Guatemalization of Uruguay
The counterterrorist effort against the
Tupamaros intensified last week. As the presiden-
tial election campaign unfolds it is increasingly
clear that the unchecked urban guerrilla activity
and resulting political repercussions are distinct
liabilities for the Pacheco administration, the gov-
ernment appears to be looking with increasing
favor upon counterviolence as a remedy.
The discovery of a policeman's body in a
park in the capital last Friday was balanced off 24
hours later when the corpse of a Tupamaro was
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found. The apparent torture-murder of the
Tupamaro is the first known instance of a killing
by an Uruguayan counterterrorist organization.
Pamphlets near the body identified the group
only as the "Tupamaros Hunt Command," but it
may be a government-sponsored operation./
Page 23
The incipient counterterror movement has
yet to slow the pace of terrorist activities, how-
ever. Last week the Tupamaros embarrassed the
government with another spectacular operation
when they engineered a mass escape of 37 female
terrorists from prison. The escape was carried off
despite open speculation about a pending Tupa-
maro mass jailbreak attempt, as police acciden-
tally discovered a half-completed tunnel' to the
men's prison in February. To add to the govern-
ment's chagrin, responsibility for prison adminis-
tration had been transferred earlier this year from
the Ministry of Culture to that of Interior to
improve security. The terrorists also recently
made public a ransom demand of one hundred
million pesos ($US 400,000) in exchange for a
prominent Uruguayan businessman, one of five
hostages they presently hold.
Although the latest government gaffe, unlike
previous incidents, has produced no immediate
resignations, the Congress will probably seek to
interpellate one or more of the cabinet ministers.
Congressional-executive relations are already
badly strained; the senate is still considering an
impeachment move against the President for over-
stepping his constitutional authority in lighting
the terrorists. Enthusiasm for the politically in-
spired move appears on the wane, however. The
government has used the mass escape to highlight
its contention that the Congress has not delegated
sufficient power to allow it to deal effectively
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