WEEKLY SUMMARY

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• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A009600030001-4
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Secret
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
State Department review completed
Secret
9 June 1972
No. 0373/72
Copy N2
47
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25X1
The WEEKLY SUMMARY, issued every Friday CONTENTS (9.Junr. 1972)
11, :'wing by the Office of Cur enti Intelligence reports
analyzes significant developments of the week
noon on Thursday. It frequently includes
'rial coordinated with or ' prepared by the office
)oinic Research, the, Office of Strategic Re- I Novi t ~. s;ve
2 Some Str
and the Directorate of Science and Technol- 3 Mexico: (w _);rk;
pics requiring; more etc tnprehensive treatment
:innd therefore published se arately'as Special Reports FAR EAST
ted in the contents pages.
WARNING
'l'ire WEEKLY SUM(VIAR contains classified infer
Y nation affecting they national security of the United
Mates, within` Il an o Title 18, sections 793
and 7911, ofthe USECos amended.` Its transmis
lion or revelation f its contr nts to or receipt by an
unauthorized l ers pry ted by law.
41-
MIDDLE EAST
AFRICA
WESTERN
HEMISPHERE
9 Indochina
9 The Phiiil)pwe:: grit;: , d Bases;
Payment,
10 Record Hlrhs a! Canton Fair
12 NATO: Beyond the aummic
13 Gromyko to F rai c w :ountries
13 EC: Groundwork for `Ourrlrnit
15 Sweden: Defense and I axes
15 UN: Lnvironrnental Conferer~c-
16 Arab States - Israel: Anniversary
18 Iraq: Nationalization Makes Waves
20 West Africa: Regionalism
22 Tanzam Railroad: Full Stearn Ahead
23 Zanzibar: A Slightly Better Life?
23 Cyprus: Back to the Table
25 OAS: Cuban Review
26 Brazil: Economic Difficulties
27 Cuba: The "Heart of Steel"
27 Panama: More Power for Torrijos
SPECIAL
REPORT
Peronism in Argentina Today
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SOVIET CRITICS ON THE DEFENSIVE
Developments in the USSR suggest that pro-
ponents of detente with the West are now using
the summit results to put their opponents on the
defensive.
Pravda on 4 June admitted that the agree-
ments signed during President Nixon's visit are
criticized by some who argue that such accords
are not permissible while military conflicts exist
and "imperialist aggression" continues. V. Mik-
hailov's international review labels the proponents
of such views "extreme left-wing" elements. It
has long been clear that there is at least some
opposition within the USSR to detente with the
West. But Mikhailov's commentary is the first
acknowledgment in Soviet media that the author-
ities have been criticized for going ahead with the
summit despite US actions in Vietnam.
Last week, Novoye Vremya published a re-
view of Soviet foreign policy by V. Zagladin, a
deputy to party secretary Ponomarev and a mem-
ber of the Party's Auditing Commission. Zagladin
noted that there are those who have an inaccurate
or extremely arbitrary interpretation of the so-
cialist states' international duty and would have
the USSR toughen its position in response to
tough actions by the "imperialists." He endorsed
Moscow's "peace offensive" toward the West, at-
tacked "one-sidedness" in policy or in methods of
struggle, and condemned considering only pres-
ent-day interests rather than long-term prospects.
He may have been speaking as much to the North
Vietnamese as to detente doubters at home. He
made no direct reference to the summit meetings
then in progress.
Mikhailov's review also deals with right-wing
skeptics in the US and the UK. It has them
complaining that Moscow was a new "Munich"
and that the results of the summit negotiations
secure Soviet superiority in nuclear weapons and
in Europe for many years. Other Soviet commen-
taries have also mentioned the unhappiness of
Western "reactionaries," but Mikahilov's manner
of quoting their views implies that the agreements
reached during the President's visit constitute a
good bargain for the USSR. He seems to be argu-
ing that if Moscow's bitterest foes disapprove of
the summit agreements, they must serve Soviet
interests and cannot be the sort of sellout that the
left-wing critics make them out to be.
In the meantime, the Soviet media have
ceased publishing letters from "ordinary citizens"
hailing the Moscow summit and its agreements.
These letters probably were drafted to help pro-
ject an image of broad-based, nationwide support
for the summit. It would appear that Brezhnev
and company no longer feel a need to resort to
such a marshaling of public opinion to make their
case.
At the same time, it is noteworthy that most
of the meetings held by major regional party
groups since the summit have taken up domestic
issues rather than foreign policy questions. One
exception is the Belorussian party organization
headed by politburo candidate member Masherov,
who was particularly slavish in praising Brezhnev
during the "debate" on the Soviet - West German
treaty prior to its ratification by the Supreme
Soviet.
Masherov's support of the Soviet - West Ger-
man treaty is a singular sign of the retreat of
detente opponents now that Brezhnev has tan-
gible achievements to show for his policies and
has successfully sidetracked his most powerful
critic, former Ukrainian party boss Shelest. Ma-
sherov had been one of those whose public utter-
ances, like Shelest's, showed serious misgivings
with Brezhnev's policies, both domestic and for-
eign. He apparently is now backing down from
this critical spmrp at least as, far as for i n olicy
is concerned.
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Since the beginning of the current offensive
and even before, articles in the North Vietnamese
press have been taking a line that bespeaks con-
cern over the state of domestic morale. Some
articles deal with the US-Soviet summit; their
purpose seems to be to allay fears, particularly
among the military, that the Vietnamese Commu-
nist position is endangered politically just when
the army is giving its all in the offensive. Other
.articles address the problem of discipline among
the people. Almost since the offensive began,
North Vietnam's domestic media have been
emphasizing the need to toe the line and warning
of the dire consequences for anyone who fails to
do so.
The first such warning came on 16 April and
rook the unusual form of a joint party-govern-
ment communique. Then, on 11 May, Radio
"Everything Must Be Devoted to
Defeating Pirate American Aggressors"
Hanoi announced that the premier's office had
just authorized strict new security regulations,
backed by stiff penalties, to curb a variety of
"socialist abuses." Subsequently, National Assem-
bly President Truong Chinh advised a Fatherland
Front audience in Hanoi, "We must under all
circumstances maintain order and security and
resolutely punish all counter-revolutionaries."
The daily press has also called for a strengthening
of the apparatus responsible for policing the party
and society.
On 16 May--five days after the mining of
North Vietnamese harbors--a high-ranking munic-
ipal party official in Hanoi leveled harsh criticism
at party members themselves, warning that under
wartime conditions some cadres "become back-
ward and are no longer worthy" of their status.
Referring to the recently enacted security meas-
ures, he gave the first clear indication of how they
might be applied in party circles, noting that "we
must persist in ostracizing [the unworthy cadres]
in order to make the party clean and steadfast."
There clearly are some good reasons for offi-
cial concern over conditions in the north. North
Vietnamese casualties in both the North and the
South as well as the dislocations caused by the
bombing-well over half of Hanoi's population
apparently has been evacuated-have caused much
anguish. It is far from clear, however, that the
strains are serious enough to undercut the war
effort or other aspects of national policy. To
some extent, the regime's criticisms and exhorta-
tions are almost certainly calculated posturing.
During the US bombing in the mid-1960s, the
government responded to similar pressures by
lacing domestic propaganda with patriotic appeals
and ominous warnings designed to avert any
major slippage in morale. I he effort was generally
effective. The regime may also be exaggerating
the need for a crackdown in order to justify
suppression of individuals and interest groups
long considered untrustworthy. Truong Chinh's
advice to the Fatherland Front on combating
"counter-revolutionaries" seems to echo the at-
tack last February by the chief of North Viet-
nam 's secret police on various "subversive
cliques," specifically North Vietnamese Catholics.
There is nothing in recent reporting to indi-
cate that the populace is any more willing than in
the past to challenge its leaders. The people as a
whole seem to accept their fate stoically, and the
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leadership obviously stands ready to employ all
the means at its disposal to ensure that this will
continue to be the case.
Still, the North Vietnamese populace is ex-
periencing considerable hardship, and it almost
certainly will suffer even more as the regime at-
tempts to compensate for the loss of imports by
limiting domestic consumption. Nevertheless, as
difficulties become more routine and security
measures tighten, the population is likely to fall
in step behind the leadership as it has so often in
the past.
MEXICO: NEW DIRECTIONS
President Luis Echeverria comes to Washing-
ton next week backed by a series of successes in
fence-mending between Mexico and the US. He
appears to have no intention of spoiling this
record and will no doubt strive to keep relations
between the two countries on a friendly but frank
basis.
Boundary disputes and the flow of narcotics
across the border are among the newer problems
to be dealt with in a neighborly fashion. Other
problems, such as illegal immigration and salinity
in the Colorado River stand a good chance of
being resolved in the long term. But differences
that are less susceptible to solution may be de-
veloping and these could take some of the gloss
off present amiability.
Most of the latter stem from the new direc-
tions in foreign and domestic policies pushed by
the reform-minded President. Under Echeverria,
Mexico's foreign policy has become more asser-
tive and expansive. He is trying to speak for the
less-developed nations in their "struggle for eco-
nomic and social justice," and in this self-ap-
pointed role he sometimes shows hostility toward
the industrialized nations. Some of this talk is
meant to soothe his leftist critics at home and to
call attention to the social objectives of his
administration. But it also points to a genuine
"Poor Mexico-so far from God and so near the
United States!"
Porfirio Diaz, Dictator of Mexico (1876-1911)
desire that Mexico assume an independent and
more significant role in the hemisphere and in the
world.
As he develops in his new roles, Echeverria is
likely to assume a more nationalistic stance and at
times voice disapproval of US policies. He said
recently that, while he is in the US, there will be
"no trappings of courtesy or diplomacy that
could dilute Mexico's fundamental intention to
seek justice for oppressed peoples of the world."
At home, Echeverria is concerned over the
stresses in the body politic. He sees the system
that has given Mexico great economic advances
and political stability faced with growing discon-
tent and cynicism from alienated sectors of
society. He sees the need to blunt this both politi-
cally-by providing a "democratic opening" and
greater participation by the masses-and so-
cially-by putting more balance into the country's
economy. He may not succeed or even be willing
to battle the forces that like things the way they
are.
All this is having its impact on the bread-
and-butter issues of trade and investment. Eche-
verria is searching for markets, investment, and
technology that will help to correct Mexico's eco-
nomic ills. For many years the US has provided
Mexico with these things. Echeverria realizes the
importance of the US in the economic arena, and
he intends this relationship to continue to work
to Mexico's advantage. But. he also wants to tap
other developed nations for investment and tech-
nology.
He may in this way also put occasional
strains on US-Mexican relations, but the reservoir
of good will should revent ma.or difficulties
from arisin _
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The military situation in parts of the South
showed some improvement during the past week.
South Vietnamese forces backed by massive air
strikes withstood a major North Vietnamese at-
lack against Kontum City in the highlands. The
city is still threatened, but the successful defense
so far and the absence of major new North Viet-
namese attacks against F-lue or An Loc have en-
couraged the South Vietnamese.
There have been a number of reports that
Communist forces are encountering significant
difficulties. Prominently mentioned are allied air
strikes, stiffer South Vietnamese defenses, and,
more recently, the monsoon rains, which are be-
ginning to muddy the roads and retard enemy
President Thieu on inspection trip of central highlands with MR-.2 commander General Toan.
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troop and supply movements in most of Indo-
china. Despite these difficulties, there are few
indications that the Communists intend to
slacken their effort in the weeks ahead; indeed,
there are persistent reports that they will press on
with major assaults.
Fighting along South Vietnamese defense
lines north and west of Hue has been generally
light for nearly two weeks.
Information from prisoners and other
sources provides strong evidence that the North
Vietnamese intend to try to regain offensive
momentum early this month. The enemy seems
to be thinking in terms of a prolonged siege
against Hue, taking advantage of the relatively
good weather in the region throughout the sum-
mer. The longer the North Vietnamese delay their
next major push on the Hue front, the longer the
South Vietnamese have to strengthen their de-
fenses.
In the central highlands, prisoners make it
clear that the North Vietnamese assaults against
Kontum City that began late last month were a
major effort. Elements of all of the North Viet-
namese regiments in the highlands have been iden-
tified in the recent fighting either at Kontum City
itself or in the Kontum Pass area to the south.
Parts of three enemy regiments put up a partic-
ularly stubborn fight on the northern outskirts of
the city. Nearly all of these regiments have taken
significant casualties. Replacement troops fresh
from North Vietnam are being sent directly to
combat units, however, and a new round of at-
tacks against Kontum may take place after the
enemy has had time to regroup. The Communists
also mounted new attacks along the coast in Binh
Dinh Province during the week, and more fighting
is in the offing there.
The pressure against An Loc, has been mod-
erate, enabling government troops to move out
and expand their perimeter. Nevertheless, deter-
mined enemy attacks south of the city continue
to hold up South Vietnamese relief forces. Enemy
attacks west of Saigon increased during the week,
making this yet another trouble spot competing
for Saigon's thinly stretched reserves.
In the delta, action has remained relatively
light since the stiff fighting for Kien Luong dis-
trict town last month. Captured prisoners state
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that the North Vietnamese Phuoc Long Front,
which infiltrated across the border from Cam-
bodia to make that attack, suffered heavy losses
and is now regrouping and preparing for further
action.
Additional northern reinforcements appear
to be moving into the upper delta, but South
Vietnamese rangers operating along the border
intercepted some enemy units and engaged them
on Cambodian territory.
The Senate's rejection of President Thieu's
bid for emergency powers is a sharp embarrass-
ment and seems likely to lead to a further clash
between the executive and the opposition in the
legislature. Although Thieu personally lobbied for
the bill with key members of the Senate, it was
voted down last week by a 27-21 margin. The
measure now returns to the Lower House, where
the government probably cannot muster the two-
thirds vote necessary to override the Senate.
Nevertheless, Thieu reportedly is optimistic
that he can get both houses of the assembly to
approve a new bill that will restrict his emergency
powers to the fields of security and the economy.
In the event the new bill is approved, Thieu plans
to propose amendments of his own eliminating
the restrictions and restoring the full powers of
the original measure. Presidential amendments
can be overridden only by a majority of the total
assembly membership, with both houses meeting
in joint session.
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The Lower House probably will give quick
approval to the new bill, but it is questionable
whether the Senate will do so. Whatever the out-
come, developments thus far have virtually killed
all hope of Thieu's accomplishing his alleged pur-
pose in seeking the emergency powers: to gain a
strong endorsement from the assembly and to
create an appearance of national unity during the
military crisis. Thieu's defeat in the Senate does
not seriously impair his ability to deal with the
current situation. The government implemented
martial law last month, and without the decree
powers, the President may take further actions on
his own authority.
The Soviet Naval Contingent
The destroyer that had joined the Soviet
naval group off Vietnam in mid-May left for
home port early this week. The Soviet naval con-
tingent, which now consists of one light cruiser
and four destroyers, remains stationary south of
the Paracel Islands. Three cruise-missile E-class
submarines are still believed to be on patrol in the
South China Sea.
The North Vietnamese are continuing to
probe the government's defenses in southern
Laos, but the situation on the ground has not
changed appreciably since the Communists two
weeks ago dispersed the government troops at-
tempting to retake Khong Sedone. North Viet-
namese troops are blocking Route 13 north and
south of Pakse, and heavy rains have washed out
Route 10 to Thailand, so that the city must now
be resupplied by air.
Government officials are distressed about
enemy defector reports that the Communists will
soon attempt to push closer to Pakse and then
shell it with heavy artillery. Prime Minister
Souvanna has sent defense minister - delegate
Sisouk, a respected politician from south Laos, to
take charge of military and civil affairs at Pakse.
Sisouk's first priority will be to bolster flagging
morale and to get a clear assessment of the Com-
munist threat.
According to North Vietnamese defectors,
the Communists in their current efforts in the
Khong Sedone - Bolovens Plateau area have used
one additional infantry battalion as well as some
armor, AAA, and artillery. They have had two
regiments in the Bolovens area since late last year.
The North Vietnamese clearly have the capa-
bility of attacking Pakse with little warning. Such
an attack, however, would involve a significant
change in their policy of avoiding major action
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VIETF AM
Bolovens
Plateau
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against population centers along the Mekong
River. It seems more likely that, as in the past
several years, they are attempting to mount a
believable threat that will keep government forces
away from the Bolovens Plateau and the infil-
tration corridor to the east. This strategy may
have the additional objective of maintaining
psychological pressure on the Lao leadership at a
time when the Communists are on the defensive
in the north.
Lon Nol has achieved his ambition of be-
coming the country's first elected president, but
the results of the voting on 4 June signal wide-
spread dissatisfaction with his leadership. Lon
Nol's margin of victory was far short of the over-
whelming vote of confidence he had hoped for.
The President pulled approximately 55 percent of
the ballots cast, former first deputy prime min-
ister In Tam had 24 percent, and educator Keo
An tallied 21 percent. The surprising showing of
Keo An, a political nonentity who only attracted
attention by advocating that Sihanouk be allowed
to return to Cambodia as a "private citizen," will
be particularly embarrassing because it will be
interpreted as evidence of residual support for the
former Cambodian leader.
In Tam actually ran ahead of Lon Nol in the
Phnom Penh area, where he effectively exploited
both war-weariness as well as unhappiness over
rising prices and continuing high-level govern-
mental corruption. Without the zealous
electioneering of the military, Lon Nol might
have been forced into a runoff election or even
been defeated. Besides campaigning for Lon Nol
and threatening the opposition with a coup if In
Tam won, military leaders appear to have success-
fully persuaded armed forces personnel and their
families to vote for the President.
The government evidently curtailed the
anti - Lon Nol vote with some dubious practices,
perhaps including the removal of the names of In
Tam supporters from the lists of qualified voters.
This could help explain why the total vote was
some 40 percent below that cast in the constitu-
tion referendum on 30 April. Other factors in the
drop probably included fear of Communist
reprisals and voter apathy. Although In Tam has
cried fraud, the actual voting by those who
reached the polls seemed reasonably honest, and
the closeness of the election will enable Lon Nol
to portray the contest as a legitimate expression
of the people's will.
Lon Nol's next important order of business
will be to designate a vice president. He has not
yet given any hints of his choice or when the
appointment will be made. Sirik Matak has been
maintaining that he would not accept the job, and
In Tam seems to be out of the running because of
the military's antipathy. In Tam may set his po-
litical sights on again becoming president of the
National Assembly after elections for that body
are held later this summer.
Phnom Penh Hit Again
Although they did not engage in any sys-
tematic efforts to disrupt the election, the Com-
munists did keep up their military pressure in the
Phnom Penh area. In midweek, enemy gunners
fired another barrage of 122-mm. rockets into the
capital, aimed at such targets as the Ministry of
Defense and the city's rail yards. Damage and
casualties were negligible, however. A simulta-
neous and heavier shelling attack-which was
accompanied by some sapper activity-on a subur-
ban area some eight miles south of Phnom Penh
-
resulted in the deaths of an estimated 20 Cain
bodians and heavy dam
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President Marcos, fighting for his political
future in the wake of sensational bribery charges,
has moved, with some success, to divert public
attention from the scandals to the question of US
bases in the Philippines.
The uproar began when an elderly delegate
to the constitutional convention revealed that he
had been accepting money over the past year
from people he implied were agents of the Presi-
dent. Marcos feared that his opponents could use
the resulting public outrage to stymie his effort to
remain in power by changing the constitution.
The palace responded initially by vehemently
denying the charges and trying to impugn the
credibility of the accuser, but this only served to
convince the public of Marcos' guilt..
[he scandal also threatened to alienate some
of his political allies. Convention president
Macapagal, a Marcos appointee and a former pres-
ident of the Philippines, called on Marcos to re-
nounce publicly any desire for public office on
the part of himself or his equally ambitious wife,
Imelda.
Marcos then fell back on the kind of strata-
gem that has proved effective in the past. He
called in the US ambassador and, in the presence
of the media, handed him a note requesting in-
formation on US intentions regarding American
military bases in the Philippines. Subsequently he
demanded immediate high-level negotiations on
the US base agreement. In fact, negotiations have
been under way at the technical level for some
time, and prior American efforts to move them
off dead center have been to no avail. For domes-
tic reasons, however, Marcos couched his call for
negotiations in such a way as to project himself as
a great nationalist bearding the American giant
The stratagem worked like a charm, and the
bribery scandal has been relegated, at least tem-
Convention Delegate Quintero From Leyte:
Accuses Marcos of Bribery
porarily, to the back pages. Marcos has thus
gained breathing room, but he has not defused
the situation permanently. He will have to make
further adroit moves, because the delegate who
made the original charges says he will name names
in the near future.
Manila's balance-of-payments situation is
worsening and will probably force the country to
seek new foreign aid and step up import re-
strictions.
The major problem is a rapidly growing
trade deficit that reached $120 million for the six
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months ending in April, compared with a $30-
million surplus for the same period last year. Low
world market prices for Philippine exports of
copper and coconut products and an increased
import bill, partly traceable to recent interna-
tional monetary adjustments, have caused this
deterioration. Manila's foreign exchange holdings
we now below $200 million, equal to only about
six weeks' imports, and well below the level of
the start of the year.
Foreign debt is aggravating the situation.
Debt service has already reached the level per-
mitted by law, ruling out new foreign borrowing
to alleviate the financial pinch. Even if new legis-
lation were passed to lift the ceiling, Manila
would still have difficulty meeting scheduled re-
lpayments because of the foreign exchange short-
age.
The government will try to convert some
short-term debt to lonqer term obligations and
probably will seek more foreign aid at the June
meeting of the international aid consortium for
the Philippines. It is also likely that further im-
port restrictions will be introduced Fin
the trade account r in a
The Canton Trade Fair this spring seems to
have been the most successful ever in both attend-
ance and transactions. The total value of con-
tracts concluded at the fair and in post-fair nego-
tiations probably exceeds $1 billion. The 21,000
visitors set a new record; at least 8,000 were
major traders. Among these were about 2,200
Japanese and about 1,500 from developed West-
ern countries including, for the first time, US
businessmen. There was also a large increase in
representation from the less-developed countries.
Chinese export sales were up by an esti-
mated 20-30 percent over the previous fall fair
and probably reached $700-800 million. Con-
tracts for Chinese imports, however, declined by
10-30 percent to about $300-400 million. This
continues the trend of the past two years, suggest-
ing that the fairs are reverting to their original
role as a convenient marketplace for China's
goods. As China's requirements increase, impor-
tant negotiations for imports, especially for so-
phisticated items, are being handled in Peking or
by purchasing missions abroad. Textiles, food-
stuffs, light manufactures, and unprocessed ani-
mal and vegetable materials were available in sub-
stantial quantities and sold well. Chinese sales of
non-ferrous metals were again small. Tungsten
was offered, but had few takers due to the de-
pressed world market price. Prices for tin and
antimony were above world market levels and
sales were moderate.
The increased number of buyers led the Chi-
nese to ration many items. Japanese purchases
totaled slightly over $100 million. US pur-
chases--the first directly from China in over 20
years-reached about $5 million and consisted of
such items as foodstuffs, fireworks, carpets,
drugs, and artwork. Sterling was 'the principal
settlement currency. Contracts with US traders
were all written in Chinese or third-country cur-
rencies. American businessmen will be permitted,
however, to make direct payments in US dollars
to specified non-US banks, all of which have
offices in New York. Two of these banks report-
edly have begun to receive letters of credit in US
dollars.
Foreign sellers were generally disappointed
at. the low Chinese bids for their goods. The
Chinese seem to be trying to counter the revalua-
tion of the yen and mark with bids to Japanese
and West German traders bellow prices paid by
China last fall. Nevertheless, Japan reported some
sales of machinery, while chemicals were the
brightest spot for European businessmen. Steel
suppliers were particularly disappointed and
many stayed on in Canton after the fair in hopes
of continuing negotiations.
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The NATO foreign ministers applauded the
results of President Nixon's Moscow trip when
they met last week in Bonn. The allies were
pleased that the US resisted Soviet blandishments
on European issues, particularly regarding mutual
force reductions. With the Moscow summit and
West German ratification of the Eastern treaties
completed and the Four Power signature of the
Berlin accord assured, the ministers authorized
multilateral preparations for a conference on se-
curity and cooperation in Europe.
Now that the way is open for East-West talks
this fall on both mutual force reductions and a
security conference, the allies have mixed emo-
tions about the meaning of all this for their future
security. Although they recognize that Soviet
goals are not compatible with their own, the allies
support the promotion of East-West detente
through a security conference. The actual ap-
proach of the conference will nevertheless create
anxieties--already being expressed in European
capitals-concerning the dominant influence of
the superpowers on European security questions,
the potential erosion of the US commitment to
Europe, and the impact of the conference on
public support for defense spending.
Some allies are already working to shore up
the West European defense role. The West Ger-
mans, British, and Dutch in particular are trying
to expand West European defense cooperation
and to make their efforts more visible to both the
European and American publics.
The allies also show concern about the effect
mutual force reductions will have on their se-
curity. Nevertheless, except for the French, they
are prepared to enter what they expect will be
long and complicated negotiations. The NATO
ministerial made progress toward a compromise
on how to connect the force reduction question
with a security conference. The allies most wor-
ried about this connection are those who will not
participate directly in force reduction negotia-
tions. The non-participants probably will be able
to live with a limited general discussion of troop
cuts at the security conference and an attempt
there to negotiate "confidence building" meas-
ures such as exchanges of observers at military
exercises.
The major tactical question now before
NATO is how to take the next step toward force
reduction negotiations.. The allies believe that
some exploratory talks will be necessary prior to
actual negotiations. The problem for them is how
to devise an approach that the Soviets will not
reject as they rejected the "explorer" mission of
former NATO secretar general Brosio.
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GROMYKO TO FRANCE , LOW COUNTRIES
Soviet Foreign Minister Gromyko is sched-
uled to begin a four-clay official visit to Paris on
1.2 June. Although technically another in the
regular series of Soviet-French consultations, the
visit is awaited with more than casuai interest by
the French.
Paris is, of course, most sensitive to the
summit and its consequences for the s ecial So
viel.-French relationshi .
The same point was riven home in
the ounce of Ministers' public statement, which
noted "with interest" the summit pledge that
"liberty of action of third countries" had not
been affected by accords achieved in Moscow.
Gromyko will visit the Benelux states in the
5-11 July period, spending about two days in
each. This trip apparently was arranged at the
initiative of the USSR, which opted at this time
to pick up long-standing invitations. It reflects
Moscow's growing interest in the regional institu-
tions located there as well as the countries them-
selves.
At all of these stops, the Soviet foreign min-
ister is likely to push for quick movement toward
a conference on security and cooperation in
Europe. He should find his audiences fairly re-
sponsive, especially in Paris. His Benelux hosts
probably will want to add mutual and balanced
force reductions in Europe to the discussions.
Soviet media have been silent on the portion of
the summit exchange dealing with force reduc-
tions, in marked contrast to the trumpeting ac-
corded passages on a security conference. The
French have reservations on implementing force
reductions soon.
EC: GROUNDWORK FOR THE SUMMIT
As preparations for an EC summit meeting
in the fall proceed, substantial differences are
emerging among the members and candidate
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EC Headquarters in Brussels
countries over the European Communities' future
development. As usual, the disagreement is sharp-
est between the French and a majority of the
other countries.
At a meeting of the ten foreign ministers in
Luxembourg on 26-27 May, a number of pro-
posals were offered, notably by the EC Commis-
sion and the Dutch, for strengthening EC institu-
tions-one of the agenda items for the summit.
The proposals focused on increasing the role and
prestige of the European Parliament, on facili-
tating decisions in the EC Council, and on setting
up a secretariat for the existing foreign-policy
consultations among community members. The
French are determined to delay the centralization
of authority as long as possible. The others seem
ready to continue an evolutionary, pragmatic
building upon existing community institutions. In
practical terms, the issues are what review rights
the: parliament should have and whether it should
be directly elected, how rigidly the privilege of
the veto should be insisted on, and whether the
institutions-especially a political secretariat-
should be consolidated in Brussels.
Institutional improvements arising from the
summit are likely to be modest, both because of
the rigidity of the French position and because
there seems to be growing acceptance that the old
institutions should be given a chance to work
with the new membership. At Luxembourg, all
the candidates indicated, a reluctance to deal so
soon with fundamental issues of political forms.
The Commission's final proposals probably will
combine modest innovations with commitments
to a more politically integrated community over
the longer term. It may also recommend that the
community be given clearer authority to devise
programs for regional and industrial development,
as well as for aid to less-developed countries.
Possibly because France is feeling the pres-
sure from its partners on institutional questions,
President Pompidou publicly lectured visiting
Belgian Prime Minister Eyskens last week about
the need to get on with "frank cooperation" on
outstanding substantive issues and let the eventual
transfer of powers to community organs take care
of itself. Whether the summit can result in the
considerable achievements Pompidou wants with-
out some advance on institutional matters is ques-
tionable. France especially wants the meeting to
make progress on economic and monetary union,
but one of the main components now being
worked on--a European monetary cooperation
fund-will raise problems of delegating sensitive
national prerogatives to a central body.
Like the summit agenda items on institu-
tions and monetary union, the fate of the other
item--external relations of the community-ap-
pears uncertain. Paris is eager to have the summit
confirm a "European identity" with regard to the
US and the Soviet Union as well as the less-de-
veloped world. At the same time, France rejects
the pleas of some of its partners to institution-
alize an EC-US dialogue. With respect to the East,
the French are extremely reluctant to grant the
community as such a representational role, al-
though Paris expects that the positions of the Ten
at a European secur conference for exam le
will
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SWEDEN: DEFENSE AND TAXES
Recent legislative debate on two key bills
has sharpened differences between the governing
Social Democrats and the three bourgeois op-
position parties. The confrontation also promises
to shape Swedish politics into 1973, a national
election year.
The Riksdag (legislature) passed a govern-
ment defense planning and appropriations bill,
over the bitter objections of spokesmen for the
bourgeois parties. The vote was 163 to 151. The
result will be a significant reduction in Sweden's
defense establishment over the next five years. As
Defense Minister Andersson acknowledged,
Sweden is abandoning full territorial defense in
favor of "tenacious" defense of vital areas. The
bourgeois parties' anguish apparently stemmed
less from 'the austerity of the $6.8 billion allo-
cation for the next five years than from the Social
Democrats' refusal to compromise on counter-
proposals that were only four to seven percent
higher. The Social Democrats, for the first time
on a defense budget, relied on Communist
support to win passage. The government cited
President Nixon's trip to Moscow as one reason a
relaxation of Sweden's defense posture was
possible; only recently, the government was ac-
cusing the US of bringing the world to the brink
of war.
Just after the defense controversy, the de-
bate over tax policy drove an additional wedge
between the Social Democrats and the bourgeois
opposition. Tax reform was the chief political
issue during the spring parliamentary session..
When the government's tax bill encountered both
bourgeois and Communist opposition, the Social
Democrats maneuvered to win Communist sup-
port by doubling the employer payroll tax in lieu
of an increase in the value-added tax. The
amended bill, which cleared the Riksdag by a 171
to 165 vote, will help appease popular demand
for a lessening of the tax burden. The Social
Democrats hope that an anticipated rebound
from the economic slump of 1971 will help miti-
gate the adverse effect on business of the higher
payroll tax. Should the economic turnabout fail
to materialize, opposition prospects for 1973
could be considerably improved.
By these votes, the Social Democrats have
managed to drive the bourgeois parties into closer
cooperation and to enhance the credibility of
Center Party chairman Falldin as an opposition
leader. Neither may last long. Over the 35 years
the Social Democrats have been in power, the 25X1
bourgeois opposition has been distinguished by its
disunity and inability to sustain a drive for con-
trol of the government.
UN: ENVIRONMENTAL CONFERENCE
The UN Conference on the Human Environment began in Stockholm on 5 June to the
accompaniment of assorted street demonstrations. The concept of a world cooperating to meet a
common challenge was marred at the outset when the Soviet Union and its Warsaw Pact allies,
except Romania, boycotted the conference in protest over the failure of East Germany to be
accepted as a full participant.
On 6 June, Swedish Prime Minister Palme assailed indiscriminate bombing, large-scale bull-
dozing, and use of herbicides in Vietnam, terming them an ecocidal outrage requiring urgent
international attention. Further moves to discuss Vietnam have failed, at least so far.
Swedish security forces, meanwhile, have controlled a variety of relatively minor street
demonstrations by ecological extremists and Viet Cong sympathizers. The conference of some 105
nations and more than 1,000 delegates will continue through 16 June.
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All week, Lebanon was braced in expecta-
tion of an Israeli reprisal for the Lod airport
massacre on 30 May by fedayeen-sponsored
Japanese terrorists. Public expressions in Israel of
the need to retaliate allowed no easing of Leban-
ese concern.
Although the Israelis sat tight, the Knesset
unanimously resolved on 5 June that any Arab
country harboring terrorists will be held account-
able for their actions. The fact that Lebanon was
not specifically mentioned in the resolution is
small comfort to concerned Lebanese, some of
whom believe that their neighbor to the south
covets Lebanese territory. The Israeli minister of
communications publicly warned that all Middle
Eastern airports must be kept open or none
would be and that all airlines must be assured safe
operation. Defense Minister Dayan spoke of intro-
ducing the death penalty for convicted terrorists;
until now, Israel has avoided capital punishment,
although some terrorists have received very long
prison terms.
In Beirut, Lebanese President Franjiyah pub-
licly "deplored" the Lod massacre, a courageous
stand in light of the large Palestinian and feda-
yeen population in his country and the potential
threat they represent to Lebanon's security. The
Lebanese UN mission categorically denied that
the Japanese terrorists had trained in or had ever
been in Lebanon and quoted a statement by the
Popular Front for the Liberation of Palestine that
its headquarters had been moved sometime ago to
a secret site inside Israeli-occupied territory. The
Israelis insist, as is likely, that the Japanese did
indeed train in Lebanon.
Beirut officials informed the US Embassy
that steps would be taken to curb fedayeen ac-
tivities, but few noticeable restrictions have been
applied. The Popular Front's newspaper in Beirut
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oeportedly has been
closed down, not be-
cause of Lebanese Gov-
ernment action, but as a
result of the unification
of all fedayeen informa-
tion activities.
A Joyless Anniversary
The Lod incident
helped to deepen the
mood of cynicism prev-
alent in the Arab world
on the fifth anniversary
of the war of June
1967. Many in Cairo
cling emotionally to the
optimism that prevailed
in 1971 when diplo-
matic activity held out a
slim prospect for a po-
Iitical settlement.
K n o w l e d g e a b l e
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Egyptians have become pessimistic about the pos-
sibilities for peace, and this makes them disen-
chanted with the country's leaders and political
direction. In particular, there is considerable com-
plaining about the constraining, but at the same
time essential, political and military ties to the
Soviet Union.
Official Arab rhetoric on the anniversary of
the war stressed familiar themes-determination
to regain lost territory and to resist Israeli settle-
ment terms- Both President Sadat and War Min-
i,lter Sadiq publicly recalled past Egyptian vic-
tories and examples of fortitude as they pledged
to redress the situation. Many Egyptians share
this refusal to bow to Tel Aviv, even if, as most
observers believe, an Egyptian military venture
would be disastrous.
Other Arab leaders took the opportunity to
deplore the plight of the Arabs and to grouse
about the Soviets. Libya's Qadhafi was parti-
cularly caustic in his remarks about the USSR.
Sudan's President Numayri decried the lack of
Arab initiative and deplored the attempts of the
big powers, particularly the USSR, to manipulate
the area.
The Israelis would, of course, like to see a
real end to hostilities, but they entertain little
hope that this is on the horizon. The Lod incident
served as a sharp reminder of the deep chasm
between the two peoples. Israeli leaders hope that
the Arabs will eventually realize that their mili-
tary shortcomings necessitate a settlement arrived
at by negotiations. In the meanwhile, they con-
war, and they mean to keep them.
tinue to take comfort in the military and political
advantages they gained during and since the 1967
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In a dramatic move last week, the Iraqi Gov-
ernment nationalized the assets of the Iraq Petro-
leum Company, a consortium of US, British,
Dutch, and French oil firms operating in northern
Iraq. The action, culminating eleven years of
smoldering disputes between the consortium and
the government, has caused reverberations
throughout the international oil industry. In con-
cert with the Iraqi move, Syria nationalized its
portion of the company's pipeline. Lebanon did
not follow suit on company property in that
country.
Both the Organization of Petroleum
Exporting Countries and the Organization of
Arab Petroleum Exporting Countries have sched-
uled meetings to discuss Iraq's moves.
Banlyas
Tartus. ~.'~/ SYRIA
-
Tripoli
LEBANOf4
>~ JORDAN
s
r
Etat
awOilfield -- -- Pipeline
Refinery
Tensions between the company and the gov-
ernment were accentuated this spring when oil
production from the northern oil fields dropped
sharply. The Iraqis, believing it was an attempt to
apply pressure, threatened confiscatory legislation
if the Iraq Petroleum Company did not increase
production and capitulate on several other
demands. An eleventh-hour attempt to move
toward meeting the Iraqi demands was rejected
by Baghdad.
Operation of the fields has been almost
entirely in the hands of Iraqi nationals, so that
maintaining output from the nationalized fields
should pose no insurmountable problems; neither
should transporting the oil to Mediterranean
ports. The most serious problem will be to find
IPC-.`
llLgIrkuk
aBhdad
A
IRA
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KU AIIT
NEUTRAL
ZONE
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buyers. The consortium is unlikely to agree to
market the nationalized oil without an Iraqi com-
mitment for prompt and adequate compensation,
-end it will undoubtedly take steps to discourage
any other Western oil company from taking the
oil.
In an apparent effort to solve the marketing
~:)roblem, Iraq has offered special consideration to
i[he partly state-owned French firm that is one of
i:he consortium partners. The French concern,
-,n,hich is short of crude oil and could use the
additional supply, has sent a representative to
Iraq with the approval of its partners. French
:)fficials are to meet with US, British, and Dutch
r.presentatives in Paris on 12 June to discuss ques-
bons arising from the Iraqi move.
The Iraqis have also turned to the USSR for
,:assistance in marketing the oil. A delegation
peaded by Foreign Minister Qadduri and in-
: iuding the director of oil affairs left for Moscow
the day after the nationalization, and an agree-
nent for "more economic cooperation" has been
;;included, The Soviet Union probably will not be
be to offer Iraq much assistance. The USSR
might be reluctant or unable to divert or charter
,enough tanker capacity to handle more than a
-', action of Iraq's northern production. Moreover,
the USSR probably could not market a large
amount of the oil either at home or in Eastern
Europe, especially over the short term.
Iraq nationalized the major part of its oil
industry at a time when its negotiating position is
extremely weak. Oil demand is growing at a rate
far below that of the last two decades, tanker
availability is so high that rates are near all-time
lows, several countries are producing well below
capacity, and others are striving to increase
productive capacity substantially.
For Iraq to exert maximum pressure, Bagh-
dad will need the cooperation of other members
of the Organization of Petroleum Exporting
Soldier guards nationalized oil facilities.
Countries. Specifically, the Iraqis will want these
countries to prevent increases in their output that
would offset the decrease in Iraq's production.
Although the organization has announced ap-
proval of the action taken by Iraq, it is doubtful
that there will be any general agreement to con-
trol production. Libya and Algeria appear to be
the most willing to help the Iraqis.. It is unlikely
that Saudi Arabia and Iran, the two countries that
can most easily make up for any reduction in
Ira will be willing to hold back.
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West Africa
REGIONALISM INCHES FORWARD
Economic Community
French-speaking state
English-speaking state
On 3 June in Bamako, Mali, seven French-
speaking West African states signed a treaty set-
ting up a West African Economic Community.
The convention looks to the creation of a com-
mon market, some 30 million people to begin
with, that would start functioning in 1974.
The presidents of Ivory Coast, Senegal,
Mauritania, Niger, Upper Volta, and Mali and a
representative of the Dahomey Government par-
ticipated in the Bamako meeting. Togo, reluctant
to abandon its role as a center of free trade, sent
an observer.
The new group was originally projected at a
meeting of the seven signatory states two years
ago. No visible progress was made toward im-
plementing the scheme, however, until President
Senghor of economically constricted Senegal
began to push it once again. His chief supporters
were the poorer inland states.
The text of the treaty is not yet available.
According to conference spokesmen, the major
provisions include:
? the creation of a unified regional
market with free capital, labor mo-
bility and uniform tariffs;
? the establishment of an industrial de-
velopment organization, a fund to
share financial trade losses, and a
common statistical service;
? the encouragement of regional coop-
eration in transport and communi-
cation.
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It is evident that, within this broad frame-
work, differences still exist among the signatories,
and many important details remain to be worked
out. The Bamako conferees have announced their
intention to meet again next December to deal
with some of these.
The community is theoretically to be open
to all West African states, and some signers of the
treaty strongly favor early expansion to include
the region's English-speaking countries. Niger
President Diori, whose country has important
commercial links with Nigeria, is particularly con-
cerned about this point and is virtually certain to
push its discussion at the meeting in December.
Several earlier efforts to establish an inclusive
regional grouping have foundered, largely because
of Paris' opposition to any organization that
might reduce its long-standing influence in the
area and because some French-speaking countries
fear being swamped by the more populous
English-speaking states. Proponents of a larger
community have been encouraged recently by the
interest being shown by Nigeria, by far the lar est
and strongest state in the area. 25X1
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The Tanzanian, Zambian, and Chinese gov-
ernments are pushing hard to finish the Tanzam
railroad earlier than the original target date of
1975. When completed, the line will link Zam-
bia's copper mines with the Tanzanian port of
Dar es Salaam on the Indian Ocean.
Actual construction got started in late 1970.
The number of Chinese working on the railroad is
still growing and has now reached more than
14,000. About 13,000 Chinese and 35,000 Tan-
zanians are working on the most arduous part of
the project, cutting through the mountainous
terrain in southwestern Tanzania. When this sec-
tion is finished late this year, the line will be
ready to take limited traffic from Dar es Salaam
to the Zambian border area.
Considerable preparatory work is under way
in Zambia. The estimated total of Chinese now
Comp~efed
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working in Zambia has risen to more than 1,000,
including a group that arrived in late May. It is
believed that 2,000 Chinese and 10,000 Zambians
will be working on the Zambian end of the
project by the end of the year. Teams are clearing
the route and beginning to build bridges and
support facilities. Apparently, the aim is to make
it possible for track-laying crews to move over the
relatively flat and open Zambian countryside
when the rainy season ends next April.
The two African governments are interested
in pushing the project forward to reduce Zambia's
need for transport routes through white-ruled
Rhodesia and the Portuguese territories of Angola
and Mozambique. An early completion date
would also boost Chinese prestige, particularly
since Western technical experts doubted that con-
struclion could be finished by the 1975 target
date.
M11 FS
553198 6-72 CIA
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While the ruling Revolutionary Council con-
tinues to sing the praises of its fallen leader,
Abeid Karume, his successor has begun to take
steps to alleviate the conditions wrought by
Karume's brutal, arbitrary rule.
Since succeeding the assassinated leader in
early April, Aboud Jumbe has reportedly moved
to tackle the island's chronic food shortages.
Karume had curtailed the import of staples to
conserve foreign exchange and to force the people
to grow more food. His ruthless drive against
Asian retailers had also disrupted the distribution
of food, working a severe hardship on many.
Jumbe has promised to open more government
shops and has received some foodstuffs from the
Tanzanian Government on the mainland. In ad-
dition, he and his aides have admonished coop-
erative employees and other government workers
to make consumer goods available faster and in
quantities to meet public demand--something
Karume never did.
The government has also announced plans to
expand public health and educational services and
to provide more housing. Four new rural health
clinics and two additional "new towns" have been
promised, and the Communist Chinese have
agreed to build a new technical college special-
izing in medicine and agriculture. This announce-
ment suggests that the Chinese remain on good
terms with the Zanzibar Government despite the
fact that they had close ties at one time with
some of Karume's assassins.
Although Jumbe seems to be making a
genuine effort to shape a government somewhat
more responsive to the people's needs, the Revo-
lutionary Council is unlikely to loosen the tight
controls it has exercised over almost every aspect
of Zanzibar civil and political life since 1964.
Many of the travel and other restrictions slapped 25X1
on by the council after Karume's death remain in
force, and the hundreds of "suspects" rounded u
in police dragnets in April languish in jail,
CYPRUS: BACK TO THE TABLE
After a hiatus of nine months, the intercommunal talks-with representatives from Greece,
Turkey, and the UN joining the Greek-Cypriot and Turkish-Cypriot delegates-got under way in
Nicosia on 8 June. These talks date back to 1968, when representatives of the island's two
communities sat down to talk about, rather than fight about, their differences. There has been
no progress since. There are basic disagreements over how much the Turkish Cypriots should
participate in the island's government and how much local autonomy they should have. Last
fall, Ankara and Athens agreed to help try to break the deadlock, and the present format was
developed with the help of the UN secretary general. Turkey, however, only grudgingly agreed
to UN participation.
Although these new discussions will serve to keep intercommunal tensions down, there is
little reason to believe that they will make any more progress than the preceding efforts.
President Makarios still seems intent on preventing the Turkish Cypriots from acquiring any real
power.
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President Allende and his quarreling coali-
tion partners have met for over a week in search
of a modus operandi. They want to agree on more
effective ways to consolidate and extend their
revolution in the face of growing disunity in the
coalition and a stronger challenge from the oppo-
sition.
Stubborn conflicts have dogged the coalition
since its creation, and there have been few signs
of real progress. Allende blames his government's
many inefficiencies on his partners' refusal to put
the success of the Popular Unity government
above their own interests. He is impatient for
them to settle their differences so that he can
reorganize his cabinet and consolidate the so-
cialist program already well in motion.
The Communist and Socialist parties have
dominated the current discussions, backed by
their sycophants among the smaller parties. The
Communists insist that caution, non-violence,
compromise, and consolidation-particularly in
the economic field-are the most realistic policy.
The Socialists want a much faster pace in over-
turning the political and economic ground rules
they believe are the source of opposition strength.
They argue that armed confrontation is inevi-
table, that coalition forces must prepare for it,
and that a cautious approach is self-defeating.
The deepening dispute has focused on their
respective attitudes toward the far leftist Move-
ment of the Revolutionary Left. The disruptive
activities of the miristas have been a provocation
to rightist groups and an irritant to security forces
who, the Communists fear, may react by at-
tempting a coup. The Communists are sensitive to
the miristas' moving in on the party's role of
champion of lower class groups. The Communists
fear they are losing ground because of the party's
participation in a government that is unable to
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rv influence.
Page 24 WEEKLY SUMMARY
fulfill many of its promises. Finally, the Com-
munists see the movement as a potent weapon
used against them by Socialist left wingers, under
Secretary General Altamirano, who sponsor and
assist the miristas.
In mid-May the Communists took advantage
of resentment against Altamirano within his own
party to force him into a lukewarm disavowal of
the revolutionaries' excesses. The disorcanized
Socialist Party, although it boasts Allende as a
member and has been the largest vote-getter in
the coalition, is now significantly weakened by
rivalries and corruption. Altamirano's tactical
retreat on the miristas is not popular with
extremist Socialists. As a quid pro quo, however,
he may have gained Communist acquiescence in
the plebiscite he wants on some key issues.
For Allende, conflict between the two
parties has given him opportunities to play his
favorite role as the ultimate arbiter of political
power. To get the more effective government he
wants, he needs an end to the struggle, but he
recognizes that the Socialists' and Communists'
strongest point in common is that they must act
in concert to control him.
The Christian Democrats, meanwhile, plug
away at the difficult job of coordinating the
growing but disparate opposition. They have few
really effective weapons against a government
that is powerful despite its weaknesses, and their
abhorrence of being identified with corservative
political forces further constrains them. The mili-
tary services, disturbed by the excesses of the
government, are trying unobtrusively to moderate
its policies. Allende's tendency is to defer to some
of their demands, but the Communists and So-
cialists so far have found ways to block most
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OAS: CUBAN REVIEW
True to its word that it would come to the OAS before moving unilaterally, Peru has asked the
OAS Permanent Council to vote on a resolution permitting each nation to establish relations with
Cuba if it so desires. The Peruvian initiative is an attempt to avoid a direct request to lift the
sanctions imposed against Cuba in 1964. Such a request would require a two-thirds majority for
passage. The matter is being studied by a committee-of-the-whole, where procedural objections to
the Peruvian initiative are being raised along with accusations that the Castro regime is still involved
in exporting subversion.
A vote may come as early as next week. There appears to be no chance the resolution will pass,
but the Peruvians would be happy with a sizable minority. The best estimate is that no more than
seven or eight will vote "yes," although there may be several abstentions on procedural grounds.
Peruvian President Velasco has announced that Peru will feel free to establish relations with Cuba
no matter what transpires at the OAS. To justify this action, the Peruvians are likely to add the
abstentions to the "yes" votes in an effort to demonstrate that the sanctions against Cuba are no
longer strongly supported in the hemisphere.
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The architect of Brazil's "economic mir-
acle," Finance Minister Delfim Neto, has come
under increasing attack in recent weeks. The most
frequent theme in the attacks has been the inabil-
ity of his economic team to halt inflation. Delfim
Neto has been the principal spokesman for the
position that as long as the country is achieving
an annual increase in gross domestic product ex-
ceeding 9 percent, it can tolerate the approxi-
mately 20-percent rise in the cost of living re-
corded during each of the last three years.
Delfim Neto's critics now are questioning
this assertion. A federal congressman from the
only legal opposition party claims that the infla-
tion rate has been worse than the government
admits. The legislator charged that the govern-
ment's control over economic figures prevents
outsiders from making an accurate judgment
about Delfim Neto's performance. Dissatisfaction
with the way the economy is going has also been
voiced by members of the armed forces. In early
May, a group of army captains in Rio de Ja-
neiro-who were probably motivated at least in
part by losses suffered in the fall of the stock
market over the past year-sought the finance
minister's ouster. The officers apparently found
sympathy among other military men; in any case
the army minister, General Geisel, refrained from
using his well-known iron hand aga nst the
captains.
More general criticism of other aspects of
the "economic miracle" has also surfaced. Under-
employment and mal-distribution of income are
cited as key problems. Delfim Neto replies that
these problems result from the nation's general
low level of development and that the administra-
tion has initiated major programs to alleviate
them as rapidly as possible. Some of these are
well under way but others, such as the ambitious
project to modernize agriculture in the Northeast,
are still in the talking stage.
President Medici recognizes Delfiri Neto's
achievements in establishing domestic and foreign
confidence in the Brazilian economy and in
securing capital from abroad for financing eco-
nomic development. There is some evidence, how-
ever, that Medici has begun to listen to other
economic views as well. In his speech last March
commemorating the eighth anniversary of the
Brazilian "revolution," Medici stressed that more
progress had to be made in cutting inflation; he
has since ordered Delfim Neto to put priority on
this goal.
The President's concern about the perform-
ance of his finance minister is based on his belief
that a marked deterioration of the economy, or a
substantial sharpening of inflation, would pose a
serious risk for his administration. As long as
senior military officers and important economic
groups such as the Sao Paulo financial aid indus-
trial community have confidence that tFe admin-
istration is fully in control of the economy and is
following sound policies, support for the govern-
ment probably will remain solid. On the other
hand, divergences over economic issues could
broaden into a major dispute that could strain
military unity and undermine his authority.
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Reports that Fidel Castro was suffering from
some form of heart irregularity turned out to be
incorrect, though they did provide a little pub-
licity for his generally humdrum tour through
Eastern Europe.
Press stories on Castro's alleged illness while
graveling in Poland infuriated the Cuban leader,
and the journalist whr nitially reported him to
be in poor health wa~; L,(-,aten lip by Cuban jour-
nalists. Fidel told ow, reporter that the stories
were "nonsense" sine{; r' had a "heart of steel,"
has become quite fra(imontary, but it is evident
that his discussions with top officials have not
Information regarding Fidel's current doings
been going well lately.
The government ciu ved last week to end the
threat of a blackout in Panama City by taking
over operation of the Li -owned power and light
company. In an effort t:, get the government to
pay over $2 million in verdue utiibty bills, the
company had refused h) pay its oil suppliers.
Government efforts at negotiation were not
successful, and Torrijo~. ,rdered a 30-day inter-
vention. Panama is demanding that the company
pay its debts and underl_jke a $48 million five-
year investment prograurr to keep up with cus-
tomer demand.
Reaction to the q(r:wernment decision has
been favorable. The coinnany has long been in
bad odor with the public , and even the business
community had been critical of the power com-
pany's negotiating tactics. The attitude of the
company has been one +,f defiance, prompting
speculation that it prefers to be expropriated and
compensated for its assets, which it computes at
$74 million. The government remains reluctant to
expropriate, but popular sentiment in favor of
nationalization is growing If the company does
not show additional flexibility in negotiations
Torrijos may feel he has little choice.
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ARMS EXPORTS: BIG BUSINESS
A record $2.9 billion worth of arms were
delivered by the developed to the developing
countries in 1971. From 1955 through 1971,
these countries received almost $31 billion worth
of military equipment; the pace of deliveries has
been stepped up in the past six years when the
average reached $2.3 billion a year. Western coun-
tries have provided nearly three fourths of the
military equipment, while Communist countries
have supplied the remainder.
The equipment covers the range from small
arms and ammunition to supersonic fighter air-
craft and guided missiles. Most of the weaponry is
new, and some comes out of current production.
Moreover, the developing countries are purchasing
more sophisticated weapons systems that are not
only expensive but also usually require an exten-
sive technical assistance program. In recent years,
more than 13,000 trainees from the less-devel-
oped countries annually have received military
training abroad, and more than
Arms Exports to Less-Developed Countries
#9e`f #968 .7969
ntn2iorarmseCipients..are Egypt. Greece
People's Republics
of China
? Eastern Europe
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15,000 foreign military advisers
and technicians have been em-
ployed each year by these coun-
tries.
Since 1955, the US has
been the most important source
of arms, accounting for an esti-
mated $17 billion, or about 56
percent of total deliveries, ex-
cluding deliveries to South Viet-
nam. The USSR is next, provid-
ing about 22 percent. While
almost all less-developed coun-
tries have bought some arms,
ten countries account for two
thirds of all purchases. Egypt is
the largest recipient.
Military grant aid has been
declining, but the arms-export-
ing countries are extending lib-
eral credit terms of up to ten
years at rates of interest averag-
ing about five percent. In addi-
tion, barter arrangements are
being concluded to promote
arms sales, and special conces-
sions are being given to certain
buyers, including the granting
of licenses allowing partial as-
sembly, and even full produc-
tion, of equipment in the reci -
ient country.
Page 28 WEEKLY SUMMARY 9 Jun 72
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Secret
Secret
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Secret
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
Special Report
Peronism in Argentina Today
Secret
N! 47
9 June 1972
No. 0373/72A
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PERONISM IN
ARGENTINA
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/v,Ite:l I / years of beinq on the outside look-
nq in, the Followers of Juan Peron stand their
Lest chance of obtaining at east a share of power
Fri Argentina. From Madrid, the aging lormer dic-
.:ator is pulling the strings ar d trying to maneuver
I its forces into the nest possible position for the
elections promised for March 19/3. To strengthen
Iris pc,isit on, he is attempting to unify a mass
novement that he has deliberately kept divided
>ince he was Forced out of office and the country
ir 1955. In the intervening years, he has
con-sistently cut down promising Peronist leaders in
Argentina when they seemed on the way to
achieving a position from wnich they could chal-
enge his authority. I he labor movement, the base
:rf Peronist strength, has developed deep divisions,
as have the political, women, and youth sectors of
the movement. Only the intense loyalty to Peron
ei the rank and file can bring about the reunifi-
.ition that is necessary it Peronism is to share in
tie important decisions that will be made in the
text year regarding Argentina's future form of
sJovernment.
In the raid-1940s, Juan Peron, with the able
assistance of his wife Eva, organized the Argen-
Iine workinq masses into a powerful political ve-
hicle that carried him to power and kept him
there for ten years. Peron',, demagoguery, Eva's
glamor and political astuteness, and a broad pro-
gram of social welfare measures earned Peron an
Intensely loyal following among the working
masses and the bitter enmity of the wealthy
classes and the military. I 1955, he was forcibly
removed from Office by military revolt, but all
efforts by succeeding gerv,rrnrnents to tarnish his
image with charge,, of corruption and moral de-
generation have failed to ,vay his followers.
While in Power (1 ' o 1955), Peron put to-
gether a coalition of organized labor, some parts
of the middle class, aria a few ntellectuals.
Peronist ideology has never been precisely de-
fined, but it is highly nil . iralistic arid puts heavy
emphasis on social justice In economics, Peron-
ism is basically statist are leans toward autarky.
Peron's rule of Argentina coincided with the
emergence of the cold ,var, prompting him to
advocate the development of a "third position"
between the two ''impci ilist powers." Peronists
now proudly call this the precursor of the "third-
world" concept being idolpted by the less-
developed nations. Pert:rtiism has traditionally
been strongly anti-Comliiunist; in fact, its adop-
tion of some of the morn attractive precepts of
Communist ideology h,-r', been a strong impedi-
ment to the development of a viable Communist
movement in Argentina. I yen today, most of the
revolutionaries who have prunq up in Argentina
have aligned themselves \,vith, or at least. describe
themselves as, Peronists.
Despite the persecrrt on of Peronists follow-
ing the ouster of the ' L.c.rder" in 1955 and their
proscription from full political participation in
later years, Peronism ha; continued to be the
largest and strongest political movement in Ar-
gentina. The deep loyalty of the masses has en-
abled Peron to maintain pis pre-eminence in the
movement despite 17 ye,iFs of living in exile. the
exclusion of Peronists tr -rn national politics and
long periods of military ;rile have helped prevent
the rise of new nationai political leaders. Peron
has encouraged a wide 'jariety of political and
labor activists, both to confound his political
opponents in Argentina -lid to retain his power
by keeping the Peronist movement divided. He
has dismissed his political lieutenants in Argentina
whenever they seemed to he developing a base of
their own, and there have been allegations that he
ordered the assassination, of Auqusto Vendor arid
Jose Alonso when they it tairred too much power
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m the labor inovenrent. H.(, ieorganizaton of the
uperiot Council in Noverber 1971 and his role
in preventing a national strike in March 1972
denurnstrale that he ,fit wields considerable
control.
III(- main Peronist governing body is the
lustn iahst Superior Council, which has repre-
serrtalivcs Iron the particpating sectors of the
movement political, labor- women, and youth.
Iuan Peron and his third wife, Isabel Martinezde
Peron, ire rnembers of tIre council, although a
ecreiary general Jorge (ianola watches over
he daily atlairs of the movement in Argentina.
l 1w council has never been particularly powerful.
Peron makes the major decisions from Madrid;
otherwise, the various sectors seem to operate on
their own. Nevertheless, important Peronist fiq-
ures do sit on the council. Jorge Paladino, one of
the most astute Peronist politicians to come along
in inany years, was dismissed as Peron's personal
iepr-e,entative and secretary general of the coun-
il last November. Hector C:ampora, Peron's new
representative, and Gianola, the new secretary
rfeneral, are not strong leaders, but Peron, perhaps
in in attempt to breathe some life into the coun-
il, has given new representation to the more
radical and dynamic wings of the movement.
Marry of the more prominent moderate Peronists
were forced out with Paladino.
In his attempts to prepare the movement for
the national elections scheduled for March 1973,
Pcron appears to be putting emphasis on ortho-
dox, completely loyal Peronists and, to a lesser
. xtenl, on younger, more leftist elements in the
iuovernerrt. He has had Borne success so tar, but
will prohahly have to make full use of the moder-
wrtr/s it he is to achieve any significant degree of
tinily for the elections.
I he Pnlitical Sector Although the basic
.frerntlh of Peronism lies in its labor underpin-
ning,, a separate group of Neionist politici,ins has
long vied with labor leaders for coritrol of the
rnovernent. I hose politicians ate primarily those
who served in a political capacity cabinet
min- and provincial officials during
Peron's ten years it) povorr i Since Peron had many
young officials in his i~ vernment, a number of
these politicians are only in then early fit-
ties. In their I / year gut of power, however,
they have sought their ; in political fortunes and
have moved in different directions. Many of the
nationally known fici:!~ s Raid Materu, Lloy
Carnes, Roberto /-\res, rtonio Catiero fall into
what could be called Moderate group. Others,
such as Hector Campos,, and Jorge Gianola, have
no identifiable politica! I )riings of their own and
exist only to serve Peron Also in this category are
Jorge Antonio, art unscu:uulous businessman who
advises and helps finan, Peron in Madrid, and
Jose Lopez Rega, Peron', personal secretary and
confidant.
In addition, their' are neo-Peronists who
advocate the principlcoof Peronism but reject
Peron's resumption of power, and provincial
caudillos who have hit ill local orqanizations of
their own. the neo-Per mists are likely to be
squeezed out is Peron ~r r,serts his authority and
moves to unify the mov,-ment. The others, how-
ever, must be dealt with l he provincial caudillos,
especially, will pose dilhc tilt problems for Peron.
With their own bases c,1 power, these risen--who
range from the conserv dive caLA dillo of Salta,
Ricardo Durand, to the leftist Julio /\ntun of
Cordoba-are in a positin to exact concessions.
The Lanusse governn-rerr' s requirement that po-
litical parties hold interm, elections in the process
of selecting candidates it ry help Peron overcome
some of these difficr.dtia' Peron will, in effect, be
able to go over the he,w of local leaders to the
masses, most of whorl ,\/ill vote as he directs.
These internal election . row are being held, and
the first indications arc that Perorr's official lists
are winning in almost every case.
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The Labor Sector- It was on the shoulders
of the working masses- neglected by other poli-
icians, but not by Juan and Eva---that Peron rode
Lo power in the .t940s- In Peron's ten years in
power, the working man henefited greatly from
the social welfare measures spearheaded by Eva
and from the new power given labor organizations
by President Peron. Labor as the base of Peron's
power then, and it is the backbone of the move-
ment today. The main labor organization, the
General Confederation of Labor, is second only
to the military as a political force in Argentina-
-he confederation boasts ii membership in excess
of two million--at least 80 percent control@ed by
Peronists and is recoqnized as the largest and
best organized labor movement in Latin America.
Lven under the restrictions imposed by the mili-
lary when it took power in 1966, the confeder-
ation has frequently dc-monstrated its ability to
paralyze the nation with teneral strikes.
Although a strike ( ill nearly always receives
full cooperation, this 1 uld not he taken as an
indication of labor we '. In fact, the divisions
evident in other Peron- t sectors are even more
troublesome in the I;dmo movement. In recent
months, there has been serious attempt to bring
unity to the "62 Orgarnezations," long the Tam-
many Hall of Peronist -rbor. Peron ordered the
"62" to reorganize to ,irengthen his position in
negotiations with the I inusse government, and
the labor leaders have strong incentive of their
own to reunify the movr,nrent. Union leaders have
long disputed leadershii of the movement with
the Peronist politiciam> surd believe that a unified
1'eronist Leaders Meet in Strategy Session with Juan Peron in Madrid in May 1972
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front is necessary if labor is to obtain a significant
number of the candidate slots for the elections
next March. Jose Rucci, the current secretary
general of the General Confederation of Labor,
carries little weight in Peronist inner circles and
has done little to aid reunification or further the
labor cause vis-a-vis the other Peronist sectors. He
is generally inept and is likely to lose his position
later this year if an alternative can be agreed
upon.
There are at least five basic groups in Peron-
ist labor, and they work in shifting alliances that
make it extremely difficult to determine where
the majority strength lies at any particular time:
? The Group of 8, or Neo-Vandoristas,
have generally favored negotiating
with the government;
? The Participationists, following the
line of Jose Alonso who was mur-
dered in 1970, have sought to par-
ticipate in the government;
? The Authentic 62, led by the power-
ful metalworkers union, represent
the orthodox Peronist line, but have
been in a minority position in recent
years;
? The Combative Unions, led by the
telephone and port workers unions,
are in open opposition to the govern-
merit;
? The Independents, which include the
important Light and Power Workers
Federation, tend to steer clear of in-
ternal disputes.
The Neo-Vandoristas have been the pivotal group
since 1970, .usually siding with the Participation-
ists to swing the balance of power to the mod-
erates, but sometimes voting with the Combative
unions. In addition to the above blocs, there are a
number of more radical unions, whose stock rises
as the nation's economic problems deepen. Rad-
ical Peronists allied with Marxist and Trotskyist
unions, for instance, have recently gained control
of the important Cordoba regional confederation.
In the years since Peron's ouster, labor has
demonstrated more independence of Peron than
has the political sector. Labor leaders have paid
lip service to Peron, but probably hoped in secret
that the aging dictator would quietly pass away.
As is true throughout the movement, the labor
leaders carefully avoid public disagreement with
Peron for fear of losing rank-and-file support.
Peron demonstrated his continuing dominance
last March when unions seeking a confrontation
with the government seemed to have gained con-
trol. Meetings to consider a strike were postponed
when Peron appealed to labor for calm and reason
in dealing with the government. The Neo-Van-
doristas, who had earlier joined the militant
unions, subsequently sided with the Participa-
tionists, giving the moderates control.
The Women's Sector--The women's sector,
particularly important during the lifetime of Eva
Peron, has declined considerably in recent years.
It, too, has the factional problems that trouble
the rest of the movement:. In the case of the
women, tensions actudlly flared into violence
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when a dispute over leadership arose last Novem-
ber. When the women's representative on the
Superior Council, Juana Laurrauri, was ousted
from Peronist headquarters in Buenos Aires, a
group allegedly supporting her stormed the head-
quarters using firearms and bombs. Peron later
confirmed Juana Laurrauri in her leadership post,
but sharp divisions lie just beneath the surface.
The Youth Sector The youth vying of the
movement was the last to develop. In fact,youth
was strongly opposed to Peron while he was in
power. As succeeding governments failed to deal
effectively with Argentina's economic and social
l.rroblems, however, youth began to turn toward
Peronist social welfare policies. Youth found the
nationalist content of Peronist doctrine partic-
ularly attractive. The origins of the youth move-
ment have been traced to 1965, when Peronist
leaders began to turn their attention to the uni-
versities, and to 1966, when President Ongania's
intervention of the universities served to radi-
calize many previously apolitical students. Non-
Marxists found it convenient to turn to Peronism
as a solution to the nation's economic problems
and the establishment's alleged reliance on "im-
perialist monopolies.''
Special Report
In recent years the Peronist youth move-
ment has grown rapidly and, like the parent
organization, has been subject to divisions. Peron
recognized the growing Significance of the youth
movement by appointing two of its members--
Francisco Licastro and Rodolfo Galimberti- to
the Peronist Superior Council. In April, it was
announced that the youth wing was being re-
organized to combine a number of independent
organizations into a single unit. Galimberti par-
ticularly is given to radical statements and has so
alienated moderates on the Superior Council that
such men as Eloy Camus have threatened to quit.
The more radical youth fit well into Peron's
strategy of being prepared for all eventualities. If
moderation fails to achieve Peronist goals through
participation in national elections, Peron will be
in position to try the radical approach.
Peronist Extremist Groups
Most moderate Peronist leaders consistently
deny any association with terrorist or guerrilla
groups, but there are occasional references to
so-called "special forces." Without question, there
are terrorist groups that identify with Peronism.
Just as with many of the youth adherents, how-
ever, the dedication of these groups to Peronism
is tenuous. Extremists, and youth in general, find
it good politics to call themselves Peronists, al-
though many are much closer to Marxist, Cas-
troist, or Maoist ideology- Peron himself has been
reluctant to condemn violence, despite consid-
erable government pressure on him to do so fol-
lowing the April murders of Fiat executive
Sallustro and General Sanchez. The usual Peronist
reaction has been to express shock or disapproval
of the particular act, but to couple this with a
statement charging the government with creating
a climate that fosters violence.
There are three major terrorist groups in
Argentina that claim to be Peronist. The Revo-
lutionary Armed Forces is usually described as
Marxist/Peronist, but seems to have little in
common with Peronism other than the label. The
Revolutionary Armed Forces has in recent
months worked closely with the Trotskyist
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People's Revolutionary Army, which has publicly
rejected Peron. A second group, the Montoneros,
are Peronists. The group draws primarily from the
universities and is usually described as being made
up of ultra-Catholic nationalists. The Peronist
Armed Forces appears to be most closely aligned
with the Peronist movement and most responsive
to directives from Madrid. As Peronism has
become more committed to full and active par-
ticipation in the 1973 elections, the Peronist
Armed Forces has reduced its activities, pre-
sumably on orders from Peron. The majority of
activists for all these so-called Peronist extremist
groups carne from disenchanted youth who
believe that violence is the only way to bring the
revolution to Argentina. The Montoneros and the
Peronist Armed Forces--and more recently a
group called the Descamisados, the "shirtless
ones," the name given to the poor masses who
brought Peron to power-have been claimed as
part of the Peronist movement by leftist Peronist
leaders, such as Superior Council member
Galimberti, but have been disclaimed by the
moderates.
Special Report
Peronism and Argentine Politics
When General's Lanusse ousted President
Levingston in March 1971, he announced that the
objective of his government would be to return
Argentina to elected government. He recognized
that political stability could be achieved only if
the Peronists were reintegrated into the political
process. At the same time, he was aware that Juan
Peron's return to power was absolutely unac-
ceptable to the military and that there was little
likelihood that a Peronist would be permitted to
assume the presidency. f hus began a long process
of maneuvering and negotiating that has yet to
reach its climax.
Lanusse's original strategy was to divide the
Peronist movement even further while seeking the
support of Peronist moderates for his cause. At
the same time, he sought to pacify Peron with
offers of financial assistance and-equally im-
portant-the rehabilitation of his image in Argen-
tina. Serious economic problems have impeded
Lanusse's efforts, but he has received some en-
couragement from moderate Peronists, particu-
larly among labor. Negotiations with Peron so far
have led to the dropping of all legal charges
against the former president; Eva Peron's body,
which had been spirited out of Argentina after
Peron's ouster, has been handed over to Peron;
and there have been reports of some financial
assistance to Peron. In return, Peron apparently
has agreed, at least for now, to play by Lanusse's
rules.
To strengthen his bargaining position with
the Lanusse government, Peron is seeking to re-
unify the movement that he kept divided for so
long. Peronists have sat out previous elections
when they were denied full participation, but this
time Peron is encouraging his followers to join in
the electoral process. Peronists have participated
in the Hour of the People-a loose coalition in-
volving Peronists, Radicals, and other smaller
parties-formed in late 1970 to press for elec-
tions. With that accomplished, Peron is calling for
his supporters and former enemies to join in a
"civic front" of all parties and movements to take
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part in the elections. There has been some re-
sponse to this call, but the larger parties have so
far refused the Peron invitation.
Several Peronist leaders have proclaimed
Peron's candidacy, and this too appears to be part
of his strategy. Although he and his followers are
aware that it is unlikely he can ever become
president again, maintaining his candidacy for the
present will help to unify the movement. It also
provides something to trade off in the negotia-
tions with Lanusse, who reportedly is also main-
taining his candidacy for bargaining purposes. In
the end, each may be willing to step down if the
other does. The Peronists would obviously like to
elect one of their own as president next March,
but, barring this, they may well seek a deal in
which they will support a candidate acceptable to
the military in exchange for a major role in the
next government. If Peronist negotiating terms
are too tough, however, President Lanusse may
yet attempt to keep the Peronists out of power
through manipulation of the electoral laws. The
Radical Party has joined with the military to keep
the Peronists out of power on two previous occa-
sions and probably would not be reluctant to do
so again.
Peron's strategy now seems to be to move
cautiously toward cooperation with the military
government in moving the nation toward elec-
tions. At the same time, he is aware that Lanusse
has many hurdles to clear before elections are
held. Peron will be helpful when he can, as when
he urged restraint on labor, but he will also seek
to keep his options open as long as possible. An
upsurge in terrorism, a further decline of the
economy, or even the appearance of overwhelm-
ing Peronist strength could prompt the armed
forces to remove Lanusse and postpone elections.
Thus, in Peron's eyes, a move too close to La-
nusse at the present time could court disaster.
Special Report
There is no doubt that in free elections the
Peronists, under the Justicialist banner, would
make a very strong showing, and in all probability
they would win. It seems a reasonable possibility
that some form of coalition government including
the military, Peronists, and perhaps the Radical
Party will take power on 25 May 1973 if elections
are held as scheduled. Long and arduous negotia-
tions and probably several coup threats stand
between the Peronist movement and its best
chance in 18 years to taste political power.
If Peronists are indeed permitted to partici-
pate in directing the affairs of Argentina, what
will become of Juan Peron? He certainly will not
be permitted to participate directly in the gov-
ernment and may well remain in Madrid as some-
thing of an elder statesman until the day he dies.
The former dictator, who has had such an impact
on modern Argentine history, is now 76 years old
In any event, at fi-is-ag-e-ft-e-c-an-n-Ot
persona y guide the Peronist movement much
longer, and the question of whether it will survive
him is a very real one. Participation in govern-
ment would help to create new national leaders
and thus reduce, but not eliminate, the struggle
for power in the movement that will follow
Peron's death or incapacitation.
It seems almost certain that without his uni-
fying figure, the extremes on the left and the
right will drift away from the movement. The
so-called moderates and orthodox Peronists will
struggle for control. Labor is the base, however,
and it will ultimately decide the life or death of
the movement. With bread and butter economic
issues holding labor together, the Peronist labor
movement can probably survive Peron's death,
although perhaps with reduced strength and
power. With or without Peron, the Peronist move-
ment seems likely to survive, probably moving
somewhat to the left, and to be an important
force in Argentina for the foreseeable fu-
ture.
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